Changes to State Tax Provisions Effecting Estate Tax Filing Timelines

Effective July 1, 2006, the North Carolina General Assembly enacted this House Bill 1892, Session Law 2006-18, in an attempt to conform several state tax provisions to federal tax law.

Of importance to estate law practitioners, the time required for a personal representative to file an estate tax return after he or she has been notified by the federal government regarding the amount of estate taxes owed has been changed from two years to six months. They’ve also changed the timeline for filing estate tax returns with the Secretary after a person receives notice regarding a state generation‑skipping transfer tax credit that was allowed. Something to watch out for if you are either preparing estate taxes for a client or advising them in that area. Here are the changes as posted:

SECTION 3. G.S. 105‑32.8 reads as rewritten:

"§ 105‑32.8. Federal determination that changes the amount of tax payable to the State.

If the federal government corrects or otherwise determines the gross estate tax imposed under section 2001 of the Code or the amount of the maximum state death tax credit allowed an estate under section 2011 of the Code, the personal representative must, within two years six months after being notified of the correction or final determination by the federal government, file an estate tax return with the Secretary reflecting the correct amount of tax payable under this Article. If the federal government corrects or otherwise determines the amount of the maximum state generation‑skipping transfer tax credit allowed under section 2604 of the Code, the person who made the transfer must, within two yearssix months after being notified of the correction or final determination by the federal government, file a tax return with the Secretary reflecting the correct amount of tax payable under this Article.

The Secretary must assess and collect any additional tax due as provided in Article 9 of this Chapter and must refund any overpayment of tax as provided in Article 9 of this Chapter. A person who fails to report a federal correction or determination in accordance with this section forfeits the right to any refund due by reason of the determination."