As Introduced

128th General Assembly Regular Session 2009-2010

H. B. No. 532

Representatives Murray, Okey 

Cosponsors: Representatives Book, Pryor, Garrison, Zehringer, Domenick, Hollington 

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A BILL

To amend sections 5731.16, 5731.21, 5731.37, and

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5731.38 of the Revised Code to exclude from the

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estate tax land subject to an agricultural or

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conservation easement.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 5731.16, 5731.21, 5731.37, and	5
5731.38 of the Revised Code be amended to read as follows:	6

Sec. 5731.16.  (A) For purposes of the tax levied by section	7
5731.02 of the Revised Code, the value of the taxable estate shall	8
be determined by deducting from the value of the gross estate	9
amounts for the following:	10

(1) Funeral expenses;

11

(2) Administration expenses, excluding the value of any money	12
or property set off and allowed under section 2106.13 of the	13
Revised Code, to the extent that such expenses have been or will	14
be actually paid;	15

(3) Claims against the estate that are outstanding and unpaid	16
as of the date of decedent's death;	17

(4) Unpaid mortgages on, or any indebtedness in respect of,	18
property if the value of the decedent's interest in the property,	19
undiminished by the mortgage or indebtedness, is included in the	20
value of the gross estate, as are allowable by the laws of this	21
state;	22

(5) Real property subject to an agricultural easement or	23
conservation easement authorized under section 901.21 or sections	24
5301.67 to 5301.70 of the Revised Code.	25

(B) There shall be deducted in determining the taxable estate	26
amounts representing expenses incurred in administering property	27
not subject to claims which is included in the gross estate, to	28
the same extent such amounts would be allowable as a deduction	29
under division (A) of this section if such property were subject	30
to claims and such amounts are paid before the expiration of the	31
period of limitations provided for in section 5731.38 of the	32
Revised Code.	33

(C) The deduction allowed by this section in the case of	34
claims against the estate, unpaid mortgages, or any indebtedness,	35
when founded on a promise or agreement, is limited to the extent	36
that they were contracted bona fide and for an adequate and full	37
consideration in money or money's worth, except that in any case	38
in which any such claim is founded on a promise or agreement of	39
the decedent to make a contribution or gift to or for the use of	40
any donee described in section 5731.17 of the Revised Code for the	41
purposes specified in that section, the deduction is not so	42
limited, but is limited to the extent that it would be allowable	43
as a deduction under section 5731.17 of the Revised Code if the	44
promise or agreement constituted a bequest.	45

(D) Any income taxes on income received after the death of	46
the decedent, or property taxes not accrued before histhe death	47
of the decedent, or any estate, succession, legacy, or inheritance	48
taxes, shall not be deductible under this section.	49

Sec. 5731.21.  (A)(1)(a) Except as provided under division	50
(A)(3) of this section, the executor or administrator, or, if no	51
executor or administrator has been appointed, another person in	52
possession of property the transfer of which is subject to estate	53
taxes under section 5731.02 or division (A) of section 5731.19 of	54
the Revised Code, shall file an estate tax return, within nine	55
months of the date of the decedent's death, in the form prescribed	56
by the tax commissioner, in duplicate, with the probate court of	57
the county. The return shall include all property the transfer of	58
which is subject to estate taxes, whether that property is	59
transferred under the last will and testament of the decedent or	60
otherwise. The time for filing the return may be extended by the	61
tax commissioner.	62

(b) The estate tax return described in division (A)(1)(a) of	63
this section shall be accompanied by a certificate, in the form	64
prescribed by the tax commissioner, that is signed by the	65
executor, administrator, or other person required to file the	66
return, and that states all of the following:	67

(i) The fact that the return was filed;

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(ii) The date of the filing of the return;

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(iii) The fact that the estate taxes under section 5731.02 or	70
division (A) of section 5731.19 of the Revised Code, that are	71
shown to be due in the return, have been paid in full;	72

(iv) If applicable, the fact that real property listed in the	73
inventory for the decedent's estate is included in the return;	74

(v) If applicable, the fact that real property not listed in	75
the inventory for the decedent's estate, including, but not	76
limited to, survivorship tenancy property as described in section	77
5302.17 of the Revised Code or transfer on death property as	78
described in sections 5302.22 and 5302.23 of the Revised Code,	79
also is included in the return. In this regard, the certificate	80
additionally shall describe that real property by the same	81
description used in the return.	82

(2) The probate court shall forward one copy of the estate	83
tax return described in division (A)(1)(a) of this section to the	84
tax commissioner.	85

(3) A person shall not be required to file a return under	86
division (A) of this section if the decedent was a resident of	87
this state and the value of the decedent's gross estate is	88
twenty-five thousand dollars or less in the case of a decedent	89
dying on or after July 1, 1968, but before January 1, 2001; two	90
hundred thousand dollars or less in the case of a decedent dying	91
on or after January 1, 2001, but before January 1, 2002; or three	92
hundred thirty-eight thousand three hundred thirty-three dollars	93
or less in the case of a decedent dying on or after January 1,	94
2002.	95

(4)(a) Upon receipt of the estate tax return described in	96
division (A)(1)(a) of this section and the accompanying	97
certificate described in division (A)(1)(b) of this section, the	98
probate court promptly shall give notice of the return, by a form	99
prescribed by the tax commissioner, to the county auditor. The	100
auditor then shall make a charge based upon the notice and shall	101
certify a duplicate of the charge to the county treasurer. The	102
treasurer then shall collect, subject to division (A) of section	103
5731.25 of the Revised Code or any other statute extending the	104
time for payment of an estate tax, the tax so charged.	105

(b) Upon receipt of the return and the accompanying	106
certificate, the probate court also shall forward the certificate	107
to the auditor. When satisfied that the estate taxes under section	108
5731.02 or division (A) of section 5731.19 of the Revised Code,	109
that are shown to be due in the return, have been paid in full,	110
the auditor shall stamp the certificate so forwarded to verify	111
that payment. The auditor then shall return the stamped	112
certificate to the probate court.	113

(5)(a) The certificate described in division (A)(1)(b) of	114
this section is a public record subject to inspection and copying	115
in accordance with section 149.43 of the Revised Code. It shall be	116
kept in the records of the probate court pertaining to the	117
decedent's estate and is not subject to the confidentiality	118
provisions of section 5731.90 of the Revised Code.	119

(b) All persons are entitled to rely on the statements	120
contained in a certificate as described in division (A)(1)(b) of	121
this section if it has been filed in accordance with that	122
division, forwarded to a county auditor and stamped in accordance	123
with division (A)(4) of this section, and placed in the records of	124
the probate court pertaining to the decedent's estate in	125
accordance with division (A)(5)(a) of this section. TheExcept as	126
provided under division (D) of section 5731.37 of the Revised	127
Code, the real property referred to in the certificate shall be	128
free of, and may be regarded by all persons as being free of, any	129
lien for estate taxes under section 5731.02 and division (A) of	130
section 5731.19 of the Revised Code.	131

(B) An estate tax return filed under this section, in the	132
form prescribed by the tax commissioner, and showing that no	133
estate tax is due shall result in a determination that no estate	134
tax is due, if the tax commissioner within three months after the	135
receipt of the return by the department of taxation, fails to file	136
exceptions to the return in the probate court of the county in	137
which the return was filed. A copy of exceptions to a return of	138
that nature, when the tax commissioner files them within that	139
period, shall be sent by ordinary mail to the person who filed the	140
return. The tax commissioner is not bound under this division by a	141
determination that no estate tax is due, with respect to property	142
not disclosed in the return.	143

(C) If the executor, administrator, or other person required	144
to file an estate tax return fails to file it within nine months	145
of the date of the decedent's death, the tax commissioner may	146
determine the estate tax in that estate and issue a certificate of	147
determination in the same manner as is provided in division (B) of	148
section 5731.27 of the Revised Code. A certificate of	149
determination of that nature has the same force and effect as	150
though a return had been filed and a certificate of determination	151
issued with respect to the return.	152

Sec. 5731.37.  (A) Taxes levied by this chapter shall be,	153
until restricted, transferred, or discharged pursuant to this	154
division, until paid, or unless division (A)(5)(b) of section	155
5731.21 of the Revised Code applies to them, a lien upon all	156
property subject to the taxes. This lien:	157

(1) Is discharged, as to property applied to costs and	158
expenses of administration, property constituting the allowance	159
made to the surviving spouse, minor children, or surviving spouse	160
and minor children of the decedent under section 2106.13 of the	161
Revised Code for their support, and all of the property of a	162
decedent that is subject to inclusion in the gross estate and that	163
has been disclosed to the tax commissioner by the time a	164
certificate of discharge is issued;	165

(2) Is transferred, to the extent of any such property sold	166
by the executor, administrator, or trustee for the purpose of	167
paying debts, administration expenses, or taxes of the estate, or	168
for any purpose to a bona fide purchaser for an adequate and full	169
consideration in money or money's worth, to the money or other	170
property received from the purchaser. Knowledge that the property	171
is being sold by a fiduciary and that it otherwise would be	172
subject to the estate tax lien does not preclude the purchaser	173
from being classified as a bona fide purchaser.	174

(3) May be, by written authorization of the tax commissioner,	175
restricted to all property that is subject to such taxes, and not	176
specifically released, transferred to other property on conditions	177
acceptable to the tax commissioner, or fully discharged, each upon	178
conditions, including payment of a reasonable fee, prescribed by	179
rules adopted under section 5703.14 of the Revised Code, when he	180
the tax commissioner determines that any of these actions will not	181
jeopardize the collection of the taxes;	182

(4) Shall be restricted, transferred, or discharged, as	183
authorized in division (A)(3) of this section, by the tax	184
commissioner, upon order of the probate court after notice to the	185
commissioner and any other person whose substantial rights may	186
reasonably be affected by the lien and hearing on an application	187
of the executor, administrator, trustee, or the owner of an	188
interest in any property subject, or reasonably the object of a	189
claim to be subject, to the lien, and proof that the collection of	190
the taxes will not be jeopardized by the action, and that the tax	191
commissioner failed to grant a reasonable request for the action	192
within sixty days of his receipt of a written request.	193

(B) The executor, administrator, trustee, or other person in	194
possession of property, the transfer of which is subject to the	195
taxes, or any transferee of the property, except a bona fide	196
purchaser for an adequate and full consideration in money or	197
money's worth, is personally liable for all the taxes to the	198
extent that their collection is reduced by histhe omission of the	199
executor, administrator, or other person or of the transferee to	200
perform a statutory duty, with interest as provided in section	201
5731.23 of the Revised Code, until they have been paid. An	202
administrator, executor, or trustee of any property, the transfer	203
of which is subject to the taxes shall deduct the taxes from the	204
property, or collect them from any person entitled to the	205
property. HeThe administrator, executor, or trustee shall not	206
deliver or be compelled to deliver any property, the transfer of	207
which is subject to the taxes, to any person, until the taxes on	208
it have been collected, and on any other property of the same	209
decedent that has been, or is to be, transferred to the person or	210
histhe person's spouse or minor child. HeThe administrator,	211
executor, or trustee may sell so much of the estate of the	212
decedent as will enable himthe administrator, executor, or	213
trustee to pay the taxes in the same manner as for the payment of	214
the debts of the decedent. Knowledge that the property is being	215
sold by a fiduciary and that it otherwise would be subject to the	216
estate tax lien does not preclude the purchaser from being	217
classified as a bona fide purchaser.	218

(C) If an election is made, pursuant to division (B)(1)(b) or	219
(c) of section 5731.011 of the Revised Code to have qualified farm	220
property valued at its value for actual qualified use, an amount	221
equivalent to the estate tax savings realized in the decedent's	222
estate by valuating the property at its value for its actual	223
qualified use, instead of at its fair market value pursuant to	224
division (B) of section 5731.01 of the Revised Code, shall be a	225
lien in favor of this state on the property for four years after	226
the decedent's death, unless it is earlier discharged. The tax	227
commissioner may issue a certificate of subordination of any lien	228
imposed by this division upon any part of the property subject to	229
the lien, if the tax commissioner determines that the state will	230
be adequately secured after the subordination.	231

(D) If an election is made under division (A)(5) of section	232
5731.16 of the Revised Code to exclude the value of real property	233
that is subject to an agricultural easement or conservation	234
easement from a decedent's taxable estate, a recapture tax shall	235
be imposed in an amount equal to the decedent's estate tax	236
liability reduction that results from the exclusion, plus interest	237
compounded annually at the rate prescribed under section 5703.47	238
of the Revised Code, and that amount shall be a lien in favor of	239
this state on real property under the agricultural or conservation	240
easement the value of which was excluded from the decedent's	241
estate. A lien under this division may be discharged by payment of	242
the tax and interest.	243

Sec. 5731.38.  No liability for the payment of taxes levied	244
under Chapter 5731. of the Revised Code, including all interest	245
and penalties thereon, may be determined as to the return required	246
to be filed under section 5731.21 of the Revised Code, subsequent	247
to three years after such return is filed, and as to the return	248
required to be filed under section 5731.24 of the Revised Code,	249
subsequent to three years after such return is filed. AnyExcept	250
for a lien under division (D) of section 5731.37 of the Revised	251
Code, which shall be perpetual until discharged, any lien in	252
realty created under Chapter 5731. of the Revised Code shall	253
become void upon the expiration of ten years after the date of	254
decedent's death.	255

In the event there is litigation pending at the expiration of	256
such three-year period for the determination or collection of any	257
such tax, including interest or penalties thereon, the liability	258
for the payment thereof continues until the expiration of one year	259
after final determination of such litigation.	260

Section 2. That existing sections 5731.16, 5731.21, 5731.37,	261
and 5731.38 of the Revised Code are hereby repealed.	262