HOUSE BILL No. 5503


     January 27, 1998, Introduced by Reps. McNutt, Voorhees, Goschka and Geiger and referred to the Committee on Tax Policy.


        A bill to amend 1899 PA 188, entitled

   "Michigan estate tax act,"

   by amending sections 40, 41, 43, 50, and 56 (MCL 205.240,

   205.241, 205.243, 205.250, and 205.256), sections 40, 41, 43, and

   50 as added by 1993 PA 54 and section 56 as amended by 1994 PA

   372.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         Sec. 40.  (1) Penalties and interest provided for under sec-

 2    tions 23 and 24 of  Act No. 122 of the Public Acts of 1941, being

 3     sections 205.23 and 205.24 of the Michigan Compiled Laws  1941 PA

 4    122, MCL 205.23 AND 205.24, shall be calculated on the balance of

 5    the tax due.

 6         (2) Interest on refunds shall accrue  from 45 days after the

 7     date the tax was paid or the due date of the tax excluding




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 1    extensions, whichever is later  IN ACCORDANCE WITH SECTION 30 OF

 2    1941 PA 122, MCL 205.30.

 3         Sec. 41.  Upon payment of the tax under this act, the

 4    department shall issue to the personal representative receipts in

 5    triplicate, each of which is sufficient evidence of payment and

 6    entitles the personal representative to be credited and allowed

 7    that amount by the probate court having jurisdiction.  If the

 8    personal representative files a complete return and makes a writ-

 9    ten application to the department for determination of the amount

10    of the tax and discharge from personal liability for the tax, the

11    department as soon as possible, but not later than 1 year after

12    receipt of the application, shall notify the personal representa-

13    tive of the amount of the tax.  Upon payment of the tax, the per-

14    sonal representative is discharged from personal liability for

15    any additional tax found to be due and is entitled to receive

16    from the department a receipt in writing showing the discharge.

17    THE DEPARTMENT SHALL PREPARE THE DISCHARGE OF LIABILITY RECEIPT

18    IN A FORM RECORDABLE BY THE REGISTER OF DEEDS. However, a dis-

19    charge does not operate to release the gross estate of the lien

20    of any additional tax subsequently found to be due while the

21    title to the gross estate remains in the personal representative

22    or in the heirs, devisees, or distributees.  If after a discharge

23    is given the title to any portion of the gross estate has passed

24    to a bona fide purchaser for value, that portion of the gross

25    estate is not subject to a lien or any claim or demand for the

26    tax.





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 1         Sec. 43.  The tax imposed under section 32 is a lien upon

 2    the gross estate of the decedent until paid in full.  Any part of

 3    the gross estate used for the payment of claims against the

 4    estate and expenses of its administration is divested of any lien

 5    for taxes.  Any part of the gross estate, other than real estate,

 6    of a resident decedent transferred to a bona fide purchaser,

 7    mortgagee, or pledgee for an adequate and full consideration in

 8    money or money's worth is divested of the lien, and the lien

 9     shall  then  attach  ATTACHES to the consideration received for

10    the property from the purchaser, mortgagee, or pledgee.  Any real

11    estate that is part of the gross estate of a decedent transferred

12    to a bona fide purchaser or mortgagee  shall be  IS divested of

13    the lien, the lien  shall attach  ATTACHES to the consideration

14    received for the real property, and the department shall issue a

15    waiver releasing the property from the lien IN A FORM RECORDABLE

16    WITH THE REGISTER OF DEEDS if 1 OR MORE of the following

17     applies  APPLY:

18         (a) The transfer of the real estate is necessary for payment

19    of claims against the estate and expenses of administration even

20    though other assets are then available for sale or mortgage.

21         (b) The department is satisfied that no tax liability exists

22    or that the tax liability of an estate has been fully discharged

23    or provided for.

24         (c) Except when the department has filed a notice of tax

25    lien with the county in which the real estate is located,  there

26     is made  a partial payment IS MADE with the department of an





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 1    amount equal to either of the following, whichever is

 2    applicable:

 3         (i) If the transfer occurs before the due date for the

 4    filing of the return including extensions, 8% of the net cash

 5    proceeds payable at closing to the seller  in the case of  FOR a

 6    sale or to the mortgagor  in the case of  FOR a mortgage.

 7         (ii) If the transfer occurs after the due date for the

 8    filing of the return including extensions, 16% of the net cash

 9    proceeds payable at closing to the seller  in the case of  FOR a

10    sale or to the mortgagor  in the case of  FOR a mortgage, or the

11    amount of the unpaid tax as reflected on the return filed with

12    the department, whichever is less.

13         (d) The seller, purchaser, or mortgagee makes a partial pay-

14    ment of an amount determined by the department to be sufficient

15    to ensure payment of the tax.

16         (e) The seller, purchaser, or mortgagee makes a partial pay-

17    ment of an amount determined by the probate court to be suffi-

18    cient to ensure payment of the tax.

19         (f) The seller or mortgagor is a person who holds the real

20    property as a surviving joint tenant or tenant by the

21    entireties.

22         Sec. 50.  If it appears to the department that an estate is

23    not subject to any tax under this act, the department shall issue

24    to the personal representative OR, IF SO REQUESTED, TO HIS OR HER

25    LEGAL REPRESENTATIVE, or to the heirs, devisees, or distributees

26    of the decedent a certificate in writing to that effect, showing

27    nonliability to tax.  The certificate of nonliability has the



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 1    same force and effect as a receipt showing payment.  The

 2    certificate of nonliability shall be in a form recordable with

 3    the register of deeds and admissible in evidence in the same

 4    manner as receipts showing payment of taxes.

 5         Sec. 56.  As used in this act:

 6         (a) "Decedent" means a deceased person and includes, but is

 7    not limited to, a testator, grantor, bargainor, vendor, donor, or

 8    person who dies intestate.

 9         (b) "Department" means the BUREAU OF revenue  division  of

10    the department of treasury.

11         (c) "Federal generation-skipping transfer tax" means the tax

12    imposed by chapter 13 of subtitle B of the internal revenue

13    code.

14         (d) "Federal return" means any United States transfer tax

15    return including federal estate tax returns and

16    generation-skipping tax returns unless the context indicates a

17    similar Michigan tax return.

18         (e) "Generation-skipping transfer" means every transfer

19    subject to the federal generation-skipping transfer tax in which

20    the original transferor is a resident of this state at the date

21    of the transfer by the original transferor or the property trans-

22    ferred is real or personal property situated in this state.

23         (f) "Gross estate" means the gross estate determined under

24    the internal revenue code.

25         (g) "Internal revenue code" means the United States internal

26    revenue code of 1986, in effect on  January 1, 1993  NOVEMBER 1,





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 1    1997 OR, AT THE OPTION OF THE PERSONAL REPRESENTATIVE, IN EFFECT

 2    ON THE DATE OF THE DECENDENT'S DEATH.

 3         (h) "Intangible personal property" means incorporeal per-

 4    sonal property including, but not limited to, deposits in banks,

 5    negotiable instruments, mortgages, debts, receivables, shares of

 6    stock, bonds, notes, credits, evidences of an interest in proper-

 7    ty, evidences of debt, and choses in action generally.

 8         (i) "Nonresident" means an individual who is not a

 9    resident.

10         (j) "Original transferor" means any grantor, donor, trustor,

11    testator, or person who by grant, gift, trust, will, or other-

12    wise, makes a transfer of real or personal property that results

13    in a federal generation-skipping transfer tax.

14         (k) "Person" means an individual, firm, partnership, joint

15    venture, association, corporation, limited liability company,

16    company, estate, or any other group or combination acting as a

17    unit.  Person does not include public corporations.

18         (l) "Personal representative" means the personal representa-

19    tive appointed by the probate court, including an independent

20    personal representative, or, if a personal representative is not

21    acting, then any person who is in the actual or constructive pos-

22    session of any property included in the gross estate of the dece-

23    dent or any other person who is required to file a return or pay

24    the taxes due under any provision of this act.  A safe and col-

25    lateral deposit company, trust company, corporation, bank, or

26    other institution is not the personal representative of property

27    held in a safe deposit box or of money or property on deposit if



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 1    the indicated ownership or registered title denotes ownership by

 2    right of survivorship.  A safe and collateral deposit company,

 3    trust company, corporation, bank, or other institution is the

 4    personal representative of property that it is holding if it is a

 5    court-appointed personal representative, including an independent

 6    personal representative, or, if a personal representative is not

 7    acting, if it is holding property in a fiduciary capacity as a

 8    trustee or successor trustee.

 9         (m) "Resident" means that term as defined in section 18 of

10    the income tax act of 1967,  Act No. 281 of the Public Acts of

11     1967, being section 206.18 of the Michigan Compiled Laws  1967 PA

12    281, MCL 206.18.  However, nothing in this act diminishes the

13    settling of domiciles of decedents under  Act No. 173 of the

14     Public Acts of 1956, being sections 205.601 to 205.607 of the

15     Michigan Compiled Laws  1956 PA 173, MCL 205.601 TO 205.607.

16         (n) "Tangible personal property" means corporeal personal

17    property.

18         (o) "Transfer" means the passing of property or any interest

19    in property, in possession or enjoyment, present or future, by

20    inheritance, descent, devise, succession, bequest, grant, deed,

21    bargain, sale, gift, or appointment.

22         (p) "Transfer tax" includes an estate, generation-skipping,

23    inheritance, legacy, or succession tax for residents and nonresi-

24    dents, including aliens.

25         (q) "United States" when used in a geographical sense

26    includes only the 50 states and the District of Columbia.





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 1         Enacting section 1.  This amendatory act takes effect

 2    January 1, 1998.




















































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