Estate / Succession / Inheritance

Two New Tax Notices Regarding the Sunset of Estate Tax

Inheritance Tax on Estates of Decedents Dying Prior to July 1, 1998 Ends on July 1, 2008

Estates of persons who died before July 1, 1998 were subject to an inheritance tax.  The inheritance tax has continued to apply to these estates for the last ten years.  Now, however, because of a “sunset” provision in the law, if an inheritance tax return has not been filed by July 1, 2008 for the estate of a decedent dying before July 1, 1998 neither the estate nor any distributee of the estate is liable for inheritance tax.  In addition, the running of the statute of limitations serves to release the state’s lien from any property considered to be an asset of the decedent’s estate.  As a result, with the exception of matters currently pending before the Department of Revenue, the Kansas inheritance tax ends July 1, 2008.

Please note the Kansas estate tax, which applies to the estates of decedents dying on or after July 1, 1998, continues in effect.

For additional information, please see Department of Revenue Notice 08-01 below.

Estate Tax Act On Estates of Decedents Dying after Jan. 1, 2007
The 2006 Kansas Legislature made substantial changes to the Kansas Estate Tax. The Kansas Estate Tax Act, found in SB365, Chapter 199 of the 2006 Session Laws, provides for a stand alone Kansas Estate Tax. The law applies to the estates of decedents dying on or after Jan. 1, 2007, and is effective for the years 2007, 2008, and 2009. Estates of decedents dying after 2009 are not subject to the Kansas estate tax. The estate tax can be roughly divided into two parts. The first includes those provisions which provide for the calculation and imposition of tax. The second includes administrative and enforcement provisions. Although the Kansas law is independent of federal law, it does parallel many aspects of federal estate tax law with regard to the composition and valuation of the estate, and with regard to the types and amount of deductions which are allowed. There are, however, notable differences such as the filing threshold, rate of tax, and valuation of land devoted to an agricultural use. For additional information, see Notice 06-08 Changes to the Kansas Estate Tax.

Estate Tax On Estates of Decedents Dying Prior to Jan. 1, 2007
The State of Kansas imposes an estate tax on the estates of persons who die on or after July 1, 1998. It is a tax on the value of the decedent's estate. Generally, no Kansas tax is due unless the gross value of the estate exceeds the current filing threshold for federal estate tax purposes. Estates of persons who died before July 1, 1998 are subject to the inheritance tax. For deaths occurring on or after Jan. 2, 2002 - Estates of persons who died on or after Jan. 2, 2002 continue to be subject to a Kansas Estate Tax. However, the Kansas tax is equal to the federal credit for state death taxes computed on the basis of 1997 federal law. Thus, a Kansas Estate Tax return must be filed if the value of the estate exceeds the filing threshold found in the 1997 federal law. The Kansas Estate Tax is equal to 100% of the amount of the federal credit for state death taxes under the 1997 federal law. Generally, no Kansas Estate Tax is due unless the gross value of the estate exceeds the filing threshold found in the 1997 federal law Kansas has incorporated by reference.

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