103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB2921

 

Introduced 1/26/2024, by Sen. David Koehler - Paul Faraci

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 405/2  from Ch. 120, par. 405A-2
35 ILCS 405/5  from Ch. 120, par. 405A-5

    Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Makes certain changes concerning estates that contain qualified farm property. Provides that, for the purposes of calculating the State Death Tax Credit, those estates are subject to an exemption of $6,000,000 (rather than an exclusion amount of $4,000,000), which shall be deducted from the net estate value after the net estate value is computed in accordance with the Act. Provides that the exemption shall be adjusted each year according to the increase in the Consumer Price Index. Makes changes concerning the calculation of the deceased spousal unused exclusion amount for those estates. Provides for a special use valuation to provide that the value of the qualified farm property shall be calculated without regard to certain limitations under the Internal Revenue Code. Makes changes concerning the definition of "qualified heir" to provide that a decedent's brother, sister, uncle, aunt, niece, nephew, or first cousin is also included.


LRB103 38952 HLH 69089 b

 

 

A BILL FOR

 

SB2921LRB103 38952 HLH 69089 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Estate and Generation-Skipping
5Transfer Tax Act is amended by changing Sections 2 and 5 as
6follows:
 
7    (35 ILCS 405/2)  (from Ch. 120, par. 405A-2)
8    Sec. 2. Definitions.
9    "Federal estate tax" means the tax due to the United
10States with respect to a taxable transfer under Chapter 11 of
11the Internal Revenue Code.
12    "Federal generation-skipping transfer tax" means the tax
13due to the United States with respect to a taxable transfer
14under Chapter 13 of the Internal Revenue Code.
15    "Federal return" means the federal estate tax return with
16respect to the federal estate tax and means the federal
17generation-skipping transfer tax return with respect to the
18federal generation-skipping transfer tax.
19    "Federal transfer tax" means the federal estate tax or the
20federal generation-skipping transfer tax.
21    "Illinois estate tax" means the tax due to this State with
22respect to a taxable transfer.
23    "Illinois generation-skipping transfer tax" means the tax

 

 

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1due to this State with respect to a taxable transfer that gives
2rise to a federal generation-skipping transfer tax.
3    "Illinois transfer tax" means the Illinois estate tax or
4the Illinois generation-skipping transfer tax.
5    "Internal Revenue Code" means, unless otherwise provided,
6the Internal Revenue Code of 1986, as amended from time to
7time.
8    "Non-resident trust" means a trust that is not a resident
9of this State for purposes of the Illinois Income Tax Act, as
10amended from time to time.
11    "Person" means and includes any individual, trust, estate,
12partnership, association, company or corporation.
13    "Qualified heir" means a qualified heir as defined in
14Section 2032A(e)(1) of the Internal Revenue Code.
15    "Resident trust" means a trust that is a resident of this
16State for purposes of the Illinois Income Tax Act, as amended
17from time to time.
18    "State" means any state, territory or possession of the
19United States and the District of Columbia.
20    "State tax credit" means:
21    (a) For persons dying on or after January 1, 2003 and
22through December 31, 2005, an amount equal to the full credit
23calculable under Section 2011 or Section 2604 of the Internal
24Revenue Code as the credit would have been computed and
25allowed under the Internal Revenue Code as in effect on
26December 31, 2001, without the reduction in the State Death

 

 

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1Tax Credit as provided in Section 2011(b)(2) or the
2termination of the State Death Tax Credit as provided in
3Section 2011(f) as enacted by the Economic Growth and Tax
4Relief Reconciliation Act of 2001, but recognizing the
5increased applicable exclusion amount through December 31,
62005.
7    (b) Except as provided in subsection (c), for For persons
8dying after December 31, 2005 and on or before December 31,
92009, and for persons dying after December 31, 2010, an amount
10equal to the full credit calculable under Section 2011 or 2604
11of the Internal Revenue Code as the credit would have been
12computed and allowed under the Internal Revenue Code as in
13effect on December 31, 2001, without the reduction in the
14State Death Tax Credit as provided in Section 2011(b)(2) or
15the termination of the State Death Tax Credit as provided in
16Section 2011(f) as enacted by the Economic Growth and Tax
17Relief Reconciliation Act of 2001, but recognizing the
18exclusion amount of only (i) $2,000,000 for persons dying
19prior to January 1, 2012, (ii) $3,500,000 for persons dying on
20or after January 1, 2012 and prior to January 1, 2013, and
21(iii) $4,000,000 for persons dying on or after January 1,
222013, and with reduction to the adjusted taxable estate for
23any qualified terminable interest property election as defined
24in subsection (b-1) of this Section.
25    (b-1) The person required to file the Illinois return may
26elect on a timely filed Illinois return a marital deduction

 

 

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1for qualified terminable interest property under Section
22056(b)(7) of the Internal Revenue Code for purposes of the
3Illinois estate tax that is separate and independent of any
4qualified terminable interest property election for federal
5estate tax purposes. For purposes of the Illinois estate tax,
6the inclusion of property in the gross estate of a surviving
7spouse is the same as under Section 2044 of the Internal
8Revenue Code.
9    (c) For persons dying on or after the effective date of
10this amendatory Act of the 103rd General Assembly whose estate
11contains property that qualifies for the special use valuation
12under subsection (d) of Section 5 of this Act, whether the
13person who is required to file an Illinois return makes a
14special use valuation election or not, an amount equal to the
15full credit calculable under Section 2011 or 2604 of the
16Internal Revenue Code as the credit would have been computed
17and allowed under the Internal Revenue Code on December 31,
182001, without the reduction in the State Death Tax Credit as
19provided in Section 2011(b)(2) of the Internal Revenue Code or
20the termination of the State Death Tax Credit as provided in
21Section 2011(f) as enacted by the Economic Growth and Tax
22Relief Reconciliation Act of 2001, plus any deceased spousal
23unused exclusion amount, but recognizing the exemption amount
24calculated under this subsection (c), which shall be deducted
25from the net estate value after the net estate value is
26computed in accordance with this Act, and with reduction to

 

 

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1the adjusted taxable estate for any qualified terminable
2interest property election, as defined in subsection (b-1) of
3this Section. In no event shall the exemption under this
4Section reduce the estate's value to less than zero.
5    For persons dying on or after the effective date of this
6amendatory Act of the 103rd General Assembly and before
7January 1, 2025 whose estates qualify under this subsection
8(c), the exemption amount under this subsection (c) is
9$6,000,000. On January 1, 2025, and on January 1 of each
10subsequent year, the exemption amount under this subsection
11(c) shall be the exemption amount for the previous calendar
12year, multiplied by one plus the percentage increase, if any,
13in the Consumer Price Index for the 12 months ending in
14September of the calendar year immediately preceding the
15calendar year in which the increase takes place, rounded to
16the nearest whole dollar.
17    For the purposes of this subsection (c), with respect to a
18surviving spouse who dies on or after the effective date of
19this amendatory Act of the 103rd General Assembly and whose
20deceased spouse died on or after the date that is 24 months
21prior to the effective date of this amendatory Act of the 103rd
22General Assembly, the term "deceased spousal unused exclusion
23amount" means the excess of the applicable exclusion amount of
24the last deceased spouse of the surviving spouse over the
25amount with respect to which the tentative maximum State Death
26Tax Credit would have been determined under Section 2011 or

 

 

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12604 of the Internal Revenue Code on December 21, 2001. A
2deceased spousal unused exclusion amount may not be taken into
3account by the surviving spouse under this subsection unless
4the person required to file the Illinois estate tax return for
5the estate of the deceased spouse files an Illinois estate tax
6return, including an amended return for a deceased spouse
7dying prior to the effective date of this amendatory Act of the
8103rd General Assembly, on which such amount is computed and
9makes an election on such return that the amount may be so
10taken into account. Such an election, once made, shall be
11irrevocable. No election may be made under this subsection if
12the return for the deceased spouse is filed after the time
13prescribed by law, including extensions, for filing such
14return.
15    As used in this subsection (c), "Consumer Price Index"
16means the index published by the Bureau of Labor Statistics of
17the United States Department of Labor that measures the
18average change in prices of goods and services purchased by
19all urban consumers, United States city average, all items,
201982-84 = 100.
21    (d) In the case of any trust for which a State or federal
22qualified terminable interest property election is made, the
23trustee may not retain non-income producing assets for more
24than a reasonable amount of time without the consent of the
25surviving spouse.
26    (e) As used in this Act:

 

 

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1    "Taxable transfer" means an event that gives rise to a
2state tax credit, including any credit as a result of the
3imposition of an additional tax under Section 2032A(c) of the
4Internal Revenue Code.
5    "Transferee" means a transferee within the meaning of
6Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
7Code.
8    "Transferred property" means:
9        (1) With respect to a taxable transfer occurring at
10    the death of an individual, the deceased individual's
11    gross estate as defined in Section 2031 of the Internal
12    Revenue Code.
13        (2) With respect to a taxable transfer occurring as a
14    result of a taxable termination as defined in Section
15    2612(a) of the Internal Revenue Code, the taxable amount
16    determined under Section 2622(a) of the Internal Revenue
17    Code.
18        (3) With respect to a taxable transfer occurring as a
19    result of a taxable distribution as defined in Section
20    2612(b) of the Internal Revenue Code, the taxable amount
21    determined under Section 2621(a) of the Internal Revenue
22    Code.
23        (4) With respect to an event which causes the
24    imposition of an additional estate tax under Section
25    2032A(c) of the Internal Revenue Code, the qualified real
26    property that was disposed of or which ceased to be used

 

 

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1    for the qualified use, within the meaning of Section
2    2032A(c)(1) of the Internal Revenue Code.
3    "Trust" includes a trust as defined in Section 2652(b)(1)
4of the Internal Revenue Code.
5(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
697-636, eff. 6-1-12.)
 
7    (35 ILCS 405/5)  (from Ch. 120, par. 405A-5)
8    Sec. 5. Determination of tax situs and valuation.
9    (a) Illinois estate tax.
10        (1) For purposes of the Illinois estate tax, in the
11    case of a decedent who was a resident of this State at the
12    time of death, all of the transferred property has a tax
13    situs in this State, including any such property held in
14    trust, except real or tangible personal property
15    physically situated in another state.
16        (2) For purposes of the Illinois estate tax, in the
17    case of a decedent who was not a resident of this State at
18    the time of death, the transferred property having a tax
19    situs in this State, including any such property held in
20    trust, is only the real estate and tangible personal
21    property physically situated in this State.
22    (b) Illinois generation-skipping transfer tax.
23        (1) For purposes of the Illinois generation-skipping
24    transfer tax, all transferred property from or in a
25    resident trust has a tax situs in this State, including

 

 

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1    any such property held in trust, except real or tangible
2    personal property physically situated in another state on
3    the date that the taxable transfer occurs.
4        (2) For purposes of the Illinois generation-skipping
5    transfer tax, none of the transferred property from or in
6    a non-resident trust has a tax situs in this State, except
7    that portion of the transferred property that is real or
8    tangible personal property physically situated in this
9    State, including any such property held in trust, on the
10    date that the taxable transfer occurs.
11    (c) Valuation. Except as otherwise expressly provided, for
12purposes of this Act, the gross value of transferred property
13shall be its value as finally determined for purposes of the
14federal transfer tax, undiminished by any mortgages, liens or
15other encumbrances upon such transferred property for which
16the decedent was personally liable.
17    (d) Special Use Valuation. For purposes of the Illinois
18estate tax, the gross value of transferred property used for
19farming purposes that constitutes "qualified real property"
20allowed under Section 2032A of the Internal Revenue Code, as
21in effect on January 1, 2024, for which an election has been
22made by the person required to file the Illinois return shall
23be its value as determined under Section 2032A without regard
24to any limitation on the reduction in the fair market value. In
25addition to a qualified heir or member of the family allowed
26under Section 2032A of the Internal Revenue Code, a decedent's

 

 

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1brother, sister, uncle, aunt, niece, nephew, or first cousin
2shall also be considered a qualified heir or member of the
3family. The person required to file an Illinois return may
4make a Section 2032A election for Illinois estate tax purposes
5which is separate and independent of any election made under
6Section 2032A for federal estate tax purposes.
7(Source: P.A. 93-30, eff. 6-20-03.)