The ins and outs of the Florida estate tax.

• Author: Jablow, Benjamin A.

Lawyers regularly are asked to deal with property owned by a decedent, and to help clients' estates comply with the Florida estate tax. In 2001, Congress enacted and President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001 (Pub. L. No. 107-16) (the "tax act") (1) which directly affected the Florida estate tax. The new estate tax law changes the responsibilities of personal representatives of estates under both federal and Florida law.

This article will discuss which decedents are subject to the Florida estate tax. Also, the article will explain a personal representative's responsibilities and describe how the tax act changed these responsibilities.

Florida Estate Tax and Responsibilities of Personal Representatives

The Florida estate tax is directly linked to the federal estate tax. Therefore, if no federal estate tax is due, then no Florida estate tax would be due. (2) F.S. Ch. 198 provides in part that a resident decedent is subject to Florida estate tax equal to the credit for state death taxes provided in Internal Revenue Code [section] 2011, less any death taxes paid to another state. F.S. [section] 198.03 provides that a nonresident decedent is subject to the Florida estate tax on the pro rata share of the credit for state death taxes provided in IRC [section] 2011, based upon the ratio of the taxable Florida property over the federal gross estate.

Personal representatives may be called on to: 1) file Florida estate tax returns; 2) request refunds of Florida estate tax; 3) claim credits for prior transfers of tax in related estates; 4) comply with tax recapture provisions; 5) seek deferral of estate tax payment in certain circumstances; 6) receive release from estate tax liens on property; and 7) claim benefits of Florida generation-skipping transfer tax provisions. The personal representative (3) of a decedent's estate is required to file an estate tax return with the Florida Department of Revenue (DOR) within nine months following the decedent's death (4) and pay the Florida estate tax due. (5) However, the requirement to file an estate tax return with the DOR is contingent upon the value of the federal gross estate. If the value of the decedent's federal gross estate is equal to or exceeds the decedent's remaining applicable exclusion amount, (6) then the personal representative is required to file the estate tax return with the DOR. If the value of the decedent's federal gross estate is less than the decedent's remaining applicable exclusion amount, then the personal representative may either be required to file a Preliminary Notice and Report form DR-301 for estates of decedents who died prior to January 1, 2000, and obtain a nontaxable certificate, or file an Affidavit of No Florida Estate Tax Due form DR-312 for estates of decedents who died after December 31, 1999. This affidavit should be filed in the county in which the decedent owned real estate. (7)

After the personal representative files the Florida estate tax return with the DOR, the DOR will require a copy of the Internal Revenue Service federal estate tax closing letter to determine the amount of the Florida estate tax due. The federal estate tax closing letter provides the credit for state death taxes and the amount of the credit for prior transfers. The personal representative also needs to provide a copy of any audit adjustments made by the IRS regarding the federal estate tax, credit for state death taxes, and credit for prior transfers. In addition to the information received by the IRS, the personal representative needs to submit a copy of the certificate(s) of payment of death taxes it receives from other states to determine the amount of the Florida estate tax. Upon receipt of this information, the DOR will determine the final Florida estate tax due and issue a final certificate to the estate once all taxes have been paid to the DOR.

* Requesting Refunds

F.S. [section] 198.29(1) provides that the DOR will issue a refund to the personal representative of the estate due to the overpayment of the Florida estate tax. F.S. [section] 198.29(2) provides a four-year period in which to request the refund from the date the estate paid the tax to the DOR. If the determination of the federal estate tax takes longer than the four-year period, the personal representative can request the refund of Florida estate tax...