To amend sections 5731.16, 5731.21, 5731.37, and 5731.38 of the Revised Code to exclude from the estate tax land subject to an agricultural or conservation easement.

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

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

(1) Funeral expenses;

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

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

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

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

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

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

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

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

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

(i) The fact that the return was filed;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(B) The executor, administrator, trustee, or other person in possession of property, the transfer of which is subject to the taxes, or any transferee of the property, except a bona fide purchaser for an adequate and full consideration in money or money's worth, is personally liable for all the taxes to the extent that their collection is reduced by his the omission of the executor, administrator, or other person or of the transferee to perform a statutory duty, with interest as provided in section 5731.23 of the Revised Code, until they have been paid. An administrator, executor, or trustee of any property, the transfer of which is subject to the taxes shall deduct the taxes from the property, or collect them from any person entitled to the property. He The administrator, executor, or trustee shall not deliver or be compelled to deliver any property, the transfer of which is subject to the taxes, to any person, until the taxes on it have been collected, and on any other property of the same decedent that has been, or is to be, transferred to the person or his the person's spouse or minor child. He The administrator, executor, or trustee may sell so much of the estate of the decedent as will enable him the administrator, executor, or trustee to pay the taxes in the same manner as for the payment of the debts of the decedent. Knowledge that the property is being sold by a fiduciary and that it otherwise would be subject to the estate tax lien does not preclude the purchaser from being classified as a bona fide purchaser.

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

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

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

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

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