Tax Type
Estate Tax
Description
Generation skipping transfer (GST)
Topic
Estates and Trusts
Date Issued
12-27-1996
December 27, 1996
Re: §58.1-1821 Application: Estate Tax
Dear*************
This letter is in reply to the amended return in which you request a refund of the Virginia generation skipping transfer tax assessed against the Estate of (the "Taxpayer"). I apologize for the delayed response.
FACTS
The Taxpayer has paid the federal and Virginia estate taxes due. Two of the beneficiaries are "skip persons" as defined by Internal Revenue Code (IRC) §2613(a). The Taxpayer paid federal generation skipping transfer ("GST") tax on transfers of property that had been included in the taxable estate subject to the estate tax. The Taxpayer was subsequently assessed GST tax by the department. The assessment was paid through the reduction of a refund requested in the Taxpayer's amended return for federal adjustments.
In accordance with the department's ruling in Public Document (P.D.) 93-193 (8131193), the Taxpayer has requested an abatement of the department's GST tax assessment and a refund of the Taxpayer's payment.
DETERMINATION
Code of Virginia §58.1-936 imposes a tax on all generation skipping transfers where the original transferor was a resident of Virginia at the date of the original transfer. In P.D. 93-193, the department ruled that the Virginia GST tax may not be imposed on "direct skip" transfers when IRC§ 2604 does not permit a credit for state legacy taxes.
The information provided in your request shows that two of the beneficiaries, the transferor's grandchildren, are skip persons who are the recipients of a direct transfer. Under IRC 2604, in instances where a skip person receives property from a direct skip transfer subject to the federal estate or gift tax, the credit for state legacy taxes is zero. Thus, Virginia is not entitled to a GST tax.
Pursuant to Code of Virginia §58.1-1823, an amended return refund request must be filed within the later of: (i) three years from the due date of the return; (ii) 90 days from the final determination of a change in the Taxpayer's federal income tax liability upon which the state tax is based; or (iii) one year from the filing of an amended return resulting in the payment of additional tax. The Taxpayer's amended return for the refund of the GST tax was filed with the department on January 24,1995.
The extended due date of the estate return was December 14, 1988. The final determination for the federal GST tax adjustments was May 31,1991. The Taxpayer's amended return due to the federal adjustments was filed on June 18,1991. The department's assessment for GST tax was issued on July 11, 1991, and paid by the Taxpayer on May 31, 1992.
In this case, the Taxpayer's refund request was not filed within the time period allowed under the law. Consequently, the department does not have the necessary statutory authority to issue a refund.
Although I am sympathetic to your situation, the department must comply with the statutory restrictions with respect to refund claims as specified in Code of Virginia § 58.1 -1823. Accordingly, your request for the department to issue a refund of the GST tax paid by the Taxpayer must be denied. Should you have any questions regarding this matter, please contact **********of my staff at*********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10745M
Rulings of the Tax Commissioner