American Solution for Simplifying the Estate Tax Act of 2014 - Amends the Internal Revenue to: (1) allow taxpayers an election to make annual payments of 1% of their adjusted gross income for a minimum seven-year period in lieu of existing estate and generation-skipping transfer taxes, and (2) allow a step-up in basis for estate property of a taxpayer making an election under this Act. Sets forth requirements for the filing of an estate tax return for taxpayers who have made an election under this Act.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5872 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 5872
To amend the Internal Revenue Code of 1986 to allow an annual elective
surcharge in lieu of estate tax, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 11, 2014
Mr. Harris introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow an annual elective
surcharge in lieu of estate tax, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``American Solution
for Simplifying the Estate Tax Act of 2014''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings.
Sec. 3. Elective simplified estate tax.
Sec. 4. Carry-over basis.
Sec. 5. Returns.
Sec. 6. Special rule for revocation of trusts in connection with
election.
SEC. 2. CONGRESSIONAL FINDINGS.
Congress finds the following:
(1) The current method of collecting Federal estate tax
often cripples American family owned businesses, farms, and
ranches by forcing the sale of ongoing concerns in order to pay
tax liability arising from the death of an owner, creating
inefficiencies, dislocation, and often job losses.
(2) From farmers and ranchers to urban business owners, the
Federal estate tax looms heavily and has a counterproductive
effect on our Nation's family owned businesses that costs
numerous jobs.
(3) The job losses, economic dislocation, and excessive
compliance costs are not justified given the fact that the
estate tax has averaged one percent of total IRS collections
since 1960, with $14 billion collected in Fiscal Year 2013
(less than \1/2\ percent of total IRS collections).
(4) The Joint Economic Committee in its May 2006 study
concluded that in order to avoid wealth transfer taxes,
individuals' costs of complying with the estate tax roughly
equals the revenue yield of the estate tax for the U.S.
Treasury.
(5) The current method of collection of the estate tax
leads many wealthy Americans to lock up capital in trusts to
minimize or eliminate tax liability, meaning that billions of
dollars are left idle instead of facilitating the creation of
new business ventures that could stimulate the economy.
(6) As recently as 2009, of the 34,000 estate tax returns
filed that year, only half owed any estate tax, indicating that
many wealthy Americans have found means to avoid paying this
tax. In 2012, 9,400 Americans still had to file estate tax
returns, even with the higher $5 million threshold.
(7) It is in the national interest to modify the mechanism
for collection of revenues from those Americans who have the
largest estates, provided that it is done in a revenue neutral
manner that ensures the ongoing collection of an appropriate
percentage of the historical average of 1 percent of total IRS
tax receipts that reflects the lower amount of estate tax
revenues generated under the 2010 and 2012 amendments due to a
higher exemption amount.
SEC. 3. ELECTIVE SIMPLIFIED ESTATE TAX.
(a) In General.--Chapter 11 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subchapter:
``Subchapter D--Simplified Estate Tax
``Sec. 2301. Simplified estate tax.
``Sec. 2302. Imposition and rate.
``Sec. 2303. Election.
``Sec. 2304. Seven taxable year minimum.
``SEC. 2301. SIMPLIFIED ESTATE TAX.
``In the case of an individual (and, if married, such individual's
spouse) who elects the application of this subchapter--
``(1) chapter 11 shall thereafter not apply with respect to
the transfer of the estate of such individual (or such spouse),
``(2) chapter 13 shall thereafter not apply with respect to
any generation-skipping transfer (as defined in section 2611)
made by such individual (or such spouse), and
``(3) a tax shall be imposed by section 2302 with respect
to such individual (and such spouse) for the taxable year of
the election and each taxable year thereafter.
``SEC. 2302. IMPOSITION AND RATE.
``(a) In General.--The tax imposed by this section for any taxable
year shall be treated as an increase in the taxpayer's tax under
chapter 1 for the taxable year by an amount equal to 1 percent of the
modified adjusted gross income of the taxpayer for the taxable year.
``(b) Modified Adjusted Gross Income.--For purposes of this
section, the term `modified adjusted gross income' means adjusted gross
income increased by--
``(1) any amount excluded from gross income under section
911, 931, or 933, or
``(2) any amount of interest received or accrued by the
taxpayer during the taxable year which is exempt from tax.
``SEC. 2303. ELECTION.
``(a) In General.--Except as the Secretary shall by regulation
prescribe in the case of separation, divorce, remarriage, or other
circumstances the Secretary determines equitable, election for this
subchapter to apply, once made, shall be irrevocable.
``(b) Married Couples To File Jointly.--If the taxpayer and the
taxpayer's spouse elect the application of this subchapter and are
married (within the meaning of section 7703) at the end of the taxable
year, the taxpayer and the taxpayer's spouse shall file a joint return
for the taxable year.
``SEC. 2304. SEVEN TAXABLE YEAR MINIMUM.
``(a) In General.--In the case of a decedent whose last taxable
year is not at least the 7th taxable year for which the tax under
section 2302 is imposed, the application of this subchapter shall be
treated as not having been elected.
``(b) Transition Rule for 2015 and 2016.--
``(1) In general.--In the case of a decedent who first
elected the application of this subchapter during 2015 or 2016,
subsection (a) shall not apply if the executor of the
decedent's estate elects to increase the amount of the tax
imposed under chapter 1 for the decedent's last taxable year by
an amount equal to--
``(A) the highest amount of tax imposed by section
2302 with respect to such decedent for any taxable year
(including the decedent's last taxable year),
multiplied by
``(B) an amount equal to the difference of--
``(i) 7, over
``(ii) the number of taxable years for
which such tax was imposed with respect to such
decedent (including the decedent's last taxable
year).
``(2) Special rule for decedent dying during year of
election.--In the case of a decedent to whom paragraph (1)
applies and who first elected the application of this
subchapter with respect to the last taxable year of the
decedent, the amount under subparagraph (A) shall not be less
than the amount of tax which would have been imposed by section
2302 had such election first been elected with respect to the
preceding taxable year.
``(c) Credit for Taxes Paid.--
``(1) In general.--In the case of a decedent to which
subsection (a) applies, the Secretary shall by regulation
provide for allowing for a credit against the tax imposed by
chapter 11 with respect to the decedent to account for any
taxes paid by the decedent under section 2302.
``(2) Interest.--The amount of any credit determined under
paragraph (1) with respect to any tax paid shall include
interest, which shall be determined--
``(A) at the overpayment rate established under
section 6621, and
``(B) from the date of payment of such tax to the
due date of the amount against which the credit is
allowed.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after, and estates of decedents dying
after, December 31, 2014.
SEC. 4. CARRY-OVER BASIS.
(a) In General.--Part II of subchapter O of chapter 1 of such Code
is amended by inserting after section 1021 the following new section:
``SEC. 1022. TREATMENT OF PROPERTY ACQUIRED FROM A DECEDENT WHO ELECTED
SIMPLIFIED ESTATE TAX TREATMENT.
``(a) In General.--In the case of property acquired from a decedent
who elected the application of subchapter D of chapter 11--
``(1) such property shall be treated for purposes of this
subtitle as transferred by gift, and
``(2) the basis of the person acquiring property from such
a decedent shall be the lesser of--
``(A) the adjusted basis of the decedent, or
``(B) the fair market value of the property at the
date of the decedent's death.
``(b) Property Acquired From the Decedent.--For purposes of this
section, the following property shall be considered to have been
acquired from the decedent:
``(1) Property acquired by bequest, devise, or inheritance,
or by the decedent's estate from the decedent.
``(2) Property transferred by the decedent during his
lifetime--
``(A) to a qualified revocable trust (as defined in
section 645(b)(1)), or
``(B) to any other trust with respect to which the
decedent reserved the right to make any change in the
enjoyment thereof through the exercise of a power to
alter, amend, or terminate the trust.
``(3) Any other property passing from the decedent by
reason of death to the extent that such property passed without
consideration.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to estates of decedents dying after December 31,
2014.
SEC. 5. SIMPLIFIED ESTATE TAX RETURNS.
(a) Information Returns.--
(1) In general.--Subpart C of part II of subchapter A of
chapter 61 of such Code is amended by inserting after section
6018 the following new section:
``SEC. 6018A. SIMPLIFIED ESTATE TAX RETURNS.
``(a) In General.--In the case of property acquired from a decedent
who has in effect an election under subchapter D of chapter 11, the
executor of the estate of such decedent shall make a return containing
the following information with respect to such property:
``(1) The name and TIN of the recipient of such property.
``(2) An accurate description of such property.
``(3) The adjusted basis of such property in the hands of
the decedent and its fair market value at the time of death.
``(4) The decedent's holding period for such property.
``(5) Sufficient information to determine whether any gain
on the disposition of the property would be treated as ordinary
income.
``(b) Property Acquired From Decedent.----For purposes of this
section, section 1022 shall apply for purposes of determining the
property acquired from a decedent.
``(c) Statements To Be Furnished to Certain Persons.--Every person
required to make a return under subsection (a) shall furnish to each
person whose name is required to be set forth in such return (other
than the person required to make such return) a written statement
showing--
``(1) the name, address, and phone number of the person
required to make such return, and
``(2) the information specified in subsection (a) with
respect to property acquired from, or passing from, the
decedent to the person required to receive such statement.
The written statement required under the preceding sentence shall be
furnished not later than 30 days after the date that the return
required by subsection (a) is filed.
``(d) Annual Beneficiary Asset Status Return.--Each recipient of
property with respect to whom a statement is required to be furnished
under subsection (c) and who owns any such property during the taxable
year shall make a return with respect to such property containing the
following information:
``(1) An accurate description of such property.
``(2) An accounting of the disposition of any such property
during the taxable year.
``(3) The adjusted basis of such property as of the later
of the end of the taxable year or the date of any such
disposition.
``(e) Excepted Property.--
``(1) In general.--Subsections (a) and (b) shall not apply
with respect to--
``(A) any property the fair market value of which,
at the time of the decedent's death, does not exceed
$10,000, and
``(B) any property the basis of which was
determined by reference to the fair market value of the
property at the date of the decedent's death.
``(2) Inflation adjustment.--
``(A) In general.--In the case of any calendar year
after 2015, the $10,000 amount under paragraph (1)
shall be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year, determined by substituting
`calendar year 2014' for `calendar year 1992'
in subparagraph (B) thereof.
``(B) Rounding.--If any amount as adjusted under
subparagraph (A) is not a multiple of $100, such amount
shall be rounded to the next lowest multiple of
$100.''.
(2) Clerical amendment.--The table of sections for subpart
C of part II of subchapter A of chapter 61 of such Code is
amended by inserting after the item relating to section 6018
the following new item:
``Sec. 6018A. Simplified estate tax returns.''.
(b) Time for Filing Returns.--Section 6075(a) of such Code is
amended--
(1) by striking ``Estate Tax Return.--Returns made'' and
inserting the following: , ``Estate Tax Return.--
``(1) In general.--Returns made'', and
(2) by adding at the end the following new paragraph:
``(2) Simplified estate tax.--
``(A) In general.--Returns made under section
6018A(a) shall be filed not later than 180 days after
the date of the decedent's death.
``(B) Annual beneficiary asset status returns.--
Returns made under section 6018A(d) for a taxable year
shall be filed concurrently with the individual's
return of income tax for the taxable year.''.
(c) Penalty for Failure To File Returns.--
(1) In general.--Part 1 of subchapter B of chapter 68 of
such Code is amended by adding at the end the following new
section:
``SEC. 6720D. FAILURE TO FILE INFORMATION WITH RESPECT TO SIMPLIFIED
ESTATE TAX RETURNS.
``(a) Information Required To Be Filed With Secretary.--Any person
required to furnish any information under section 6018A(a) who fails to
do so on the date prescribed therfor (determined with regard to any
extension of time for filing) shall pay a penalty of $10,000 for each
such failure.
``(b) Information Required To Be Furnished to Beneficiaries.--Any
person required to furnish in writing to each person described in
section 6018A(c) the information required under such section who fails
to do so shall pay a penalty of $250 for each such failure.
``(c) Annual Information Return Required To Be Furnished by
Beneficiary.--Any person required to furnish any information under
section 6018A(d) who fails to do so on the date prescribed therefor
(determined with regard to any extension of time for filing) shall pay
a penalty of $5,000 for each such failure.
``(d) Reasonable Cause Exception.--No penalty shall be imposed
under subsection (a), (b), or (c) with respect to a failure if it is
shown that such failure is due to reasonable cause.
``(e) Intentional Disregard.--If any failure under subsection (a),
(b), or (c) is due to intentional disregard of the requirements under
sections 6018A, the penalty under such subsection shall be 5 percent of
the fair market value as of the date of death (in the case of section
6018A(d), as of the date prescribed for furnishing such return
(determined with regard to any extension of time for filing)) of the
property with respect to which the information is required.
``(f) Deficiency Procedures Not To Apply.--Subchapter B of chapter
63 (relating to deficiency procedures for income, estate, gift, and
certain excise taxes) shall not apply in respect of the assessment or
collection of any penalty imposed by this section.''.
(2) Clerical amendment.--The table of sections for part 1
of subchapter B of chapter 68 of such Code is amended by adding
at the end the following new item:
``Sec. 6720D. Failure to file information with respect to simplified
estate tax returns.''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to estates of decedents dying after December 31,
2014.
SEC. 6. SPECIAL RULE FOR REVOCATION OF TRUSTS IN CONNECTION WITH
ELECTION.
Any revesting in the grantor of title to property held in a trust,
whether by revocation, dissolution, or otherwise, shall not be subject
to any tax imposed by the Internal Revenue Code of 1986 if such
revesting occurs in 2015 or 2016 and is in connection with the
grantor's election for subchapter D of chapter 11 to apply.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Sponsor introductory remarks on measure. (CR E1807-1808)
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