SB1170 - 472R - House Bill Summary

House of Representatives

SB 1170

estate; generation skipping taxes; repeal

Sponsors: Senator Martin, Senator Blendu

DP	Committee on Ways and Means
x	Caucus and COW
	As Engrossed and As Passed the House

SB 1170 permanently repeals the Arizona estate tax.

History

The Arizona estate tax is imposed on the transfer of wealth that occurs upon the death of an estate owner. The tax is also imposed on any generation-skipping transfer of property. The Arizona estate tax is equal to the maximum allowable federal tax credit for state death taxes. Estate taxes are collected by the Department of Revenue (DOR) and are deposited into the state General Fund.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) included significant changes to the estate and generation-skipping transfer tax. The federal provisions in EGTRRA reduced the state death tax by 25% each year beginning in 2002 and ending at a 0% rate in 2005. Because the Arizona estate tax is based on this federal credit for state death taxes, the Arizona estate tax was subsequently phased out between 2002 and 2005. This bill will permanently repeal the Arizona estate tax.

According to DOR, the fiscal impact is unknown. While no tax will be owed on an estate of a person who dies after December 31, 2004, the sate General Fund may still continue collecting estate taxes through March 31, 2006 (the estate tax return may be filed no later than 9 months after a person’s death, but the filer may be granted a 6 month extension).

Provisions

· Repeals the Arizona estate tax.

· Subtracts from the Arizona gross income the amount of federal estate taxes paid in the current taxable year.

· Removes the references to filing extensions granted for the Federal estate tax return.

· Removes the six month limit for filing extensions granted by the DOR for Arizona estate tax returns.

· Makes conforming and technical changes.

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Forty-seventh Legislature