hb 1270

CHAPTER 232

HB 1270-FN - FINAL VERSION

AN ACT making technical corrections due to the repeal of the legacies and succession tax, relative to the exception from the meals and rooms tax for gratuities, and relative to appeals for redetermination or reconsideration of assessments or demands for payment made by the department of revenue administration.

SPONSORS: Rep. Almy, Graf 14; Rep. McGuirk, Ches 1

This bill makes technical corrections due to the repeal of RSA 86:6, relative to the taxable property and tax rate under the legacies and successions tax, in 2001, 158 (HB 170). The bill repeals the remainder of RSA 86 and RSA 89.

The bill also changes requirements and procedures for the exception for gratuities from the meals and rooms tax.

This bill also establishes procedural requirements for appeals for redetermination or reconsideration of assessments or demands for payment made by the department of revenue administration.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

232:1 New Sections; Technical Corrections. Amend RSA 87 by inserting after section 13 the following new sections:

87:14 Books; Blanks. The department of revenue administration shall provide the judges and registers of probate of the state with such books and blanks as are requisite for the execution of this chapter.

87:15 Expenses. The expenses of the execution of this chapter shall be paid by the state treasurer upon the certification of the department of revenue administration and charged to the appropriations for the department of revenue administration and the bills therefor shall be submitted to the governor and council for their approval.

87:16 Disposal of Records. Whenever in the opinion of the department of revenue administration any books, records, or papers more than 6 years old are no longer required, the department of revenue administration may destroy or cause such records to be destroyed.

87:17 Prerequisite to Administration. Letters of administration shall not be issued to any executor or administrator until he or she has given bond to the judge of probate with sufficient sureties containing, in addition to the other conditions required by law, a condition in terms that he or she shall "pay all taxes for which he or she may be or become liable under the provisions of this chapter, and comply with all the provisions of this chapter."

87:18 Inventory; Appraisal. An inventory and appraisal under oath of the whole of every estate, any part of which may be subject to a tax hereunder, in the form prescribed by the probate court, shall be filed in probate court by the executor, administrator, or trustee within 3 months after appointment and a copy of such inventory shall be provided to the department of revenue administration by the executor, administrator, or trustee at such time.

87:19 Penalty. If an executor, administrator, trustee, fiduciary, or custodian neglects or refuses to comply with any of the requirements of RSA 87:17 or RSA 87:18, such person shall be liable to a penalty of not more than $1,000, to be recovered by the department of revenue administration for the use of the state, and, upon petition by the department, notice and hearing, the probate court may remove such person, and appoint another person administrator with the will annexed, or administrator, as the case may be.

87:20 Report of Trusts. Every executor, administrator, trustee, fiduciary, or custodian having knowledge of the existence of a trust funded either prior to or as a result of the decedent's death in whole or in part with property of a decedent and which transfers a beneficial interest in property of the decedent to another effectively in the same manner as a will or other testamentary instrument shall, within 6 months of the decedent's death, file with the department of revenue administration, upon a form prescribed by the department of revenue administration, a report of the existence and provide a copy of such trust document, including any schedule of beneficiaries, to the department.

87:21 Notifying Department of Revenue Administration. The register of probate shall notify the department of revenue administration, within 30 days after the expiration of the 3-month period under RSA 87:18, of the failure of any executor, administrator or trustee to file such inventory and appraisal.

87:22 Copies to Department of Revenue Administration. The register of probate shall send to the department of revenue administration, by mail, a copy of every will within 7 days after it is filed, unless notified by the department of revenue administration that such copies will not be required. The register of probate shall also furnish such copies of papers, and such information as to the records and files in his or her office, in such form as the department of revenue administration may require. A refusal or neglect of the register to send such copies or to furnish such information shall be a breach of his or her official bond.

87:23 Special Appraisal. If an executor or administrator shall fail to file an inventory and appraisal in the probate court as provided in RSA 87:18, or if the department of revenue administration is not satisfied with the inventory and appraisal which is filed, the department of revenue administration may employ a suitable person to appraise the property and the executor or administrator shall show the property of the decedent to such appraiser upon demand, and shall make and subscribe his or her oath that the property thus shown includes all the property of the decedent that has come to his or her knowledge or possession. Such appraiser shall prepare an inventory of said property, and shall appraise it at its actual market value at the time of the decedent's death, and shall return such inventory and appraisal to the department of revenue administration.

87:24 Expense. The expense of such appraisal shall be a charge upon the estate of the decedent, as an expense of administration, in all cases where an inventory and appraisal has not been filed as provided in RSA 87:18; otherwise the expense shall be paid by the state treasurer.

87:25 Conditions of Allowance of Account or Motion for Summary Administration. No final account or motion for summary administration of an executor, administrator, or trustee shall be allowed by the probate court until the certificate of the department of revenue administration has been filed in said court, stating that all tax returns required by the provisions of this chapter have been filed and that the amounts of taxes have been paid, and that provision has been made for any taxes which may become due on said property or interest secured by deposit, or by lien on real estate.

87:26 Certificate and Receipt. A certificate from the department of revenue administration verifying that the required returns have been filed and the amount of the self-assessed tax reported has been paid may be requested by the executor, administrator, the register of probate, or the judge of the probate court having jurisdiction over the estate.

87:27 Continuance of Account. Whenever a final account is otherwise in order for allowance by the court, but the certificate of the department of revenue administration, as provided in RSA 87:26, is not produced or on file in the probate court, the account shall be continued by the judge of probate until the certificate of the department of revenue administration is filed with the court.

87:28 Determination of Amount. The executor or administrator shall compute the amount of all taxes due and payable under the provisions of this chapter, and shall prepare and submit the required returns to the department of revenue administration.

87:29 Lien. The taxes and interest shall be a lien on the property subject to the taxes until the same are paid; however, commencing with the date of decedent's death there shall be a 20-year statute of limitations for said lien.

87:30 Discharge of Lien. Whenever any real estate or separate parcel thereof is subject to a lien created by this chapter, the probate court shall have jurisdiction to make such order or decree as will otherwise secure to the state the payment of any tax due, or to become due, on such real estate or separate parcel thereof, and, upon the performance of such order or decree, to discharge such lien.

87:31 Collection. An executor, administrator, trustee, grantee or donee holding property subject to said tax shall deduct the tax therefrom, or collect it from the legatee or person entitled to said property, and he or she shall not deliver property or a specific legacy subject to said tax until he or she has collected the tax thereon.

87:32 Suit for Tax. The department of revenue administration may commence an action for the recovery of any of said taxes at any time after the same become payable; and shall do so whenever the judge of probate certifies to it that the final account of an executor, administrator or trustee has been filed in such court, and that the settlement of the estate is delayed because of the nonpayment of said tax.

87:33 Notice to Appear. Whenever the department of revenue administration shall desire the attendance of an executor, administrator, or beneficiary as herein provided, it shall issue an administrative summons to appear, give testimony or produce documentation as provided in RSA 21-J:3 or RSA 21-J:5, to such person or corporation, 14 days prior to the date when such person or corporation is required to appear.

87:34 Appearance by Department. The department of revenue administration shall be entitled to appear and shall represent the state in any proceeding in any court in which the decree may in any way affect the tax. No decree in any such proceeding, or upon appeal therefrom, shall be binding upon the state, or upon a probate appeal, unless personal notice of such proceeding shall have been given to the department of revenue administration.

I. Keep such records as may be necessary to determine the amount of liability for tax under this chapter.

II. Preserve such records for a period of 3 years after the returns required by this chapter have been filed or until any litigation or prosecution under this chapter is finally determined, whichever is later.

III. Make such records available for inspection by the commissioner or the commissioner's authorized agents, upon demand, at reasonable times during regular business hours. Whoever violates the provisions of this section shall be subject to the penalties provided in RSA 21-J for such actions.

87:36 Authority to Audit. The department of revenue administration shall have the authority to audit the returns required by this chapter to determine whether there has been an error in the assessment of the taxes imposed by this chapter in accordance with the following provisions:

I. An executor, administrator, legatee, or probate court may request in writing within 2 years of the decedent's death an audit of the return.

II. The department may, on its own motion, undertake such an audit upon written notice to the executor, administrator, or legatee within the statute of limitations as provided in RSA 21-J:29, except that where a change is reported as provided in RSA 87:10, such notice shall be provided within 6 months of the receipt of such amended return.

III. An executor, administrator, or legatee may request an administrative hearing pursuant to RSA 21-J:28-b, I, II, and III.

IV. Within 30 days after notice of any adjustment ordered by the commissioner as a result of an administrative hearing, an executor, administrator, or legatee may appeal the revenue commissioner's determination to the probate court having jurisdiction over the decedent's estate. The probate court shall determine de novo the correctness of the commissioner's action.

I. The commissioner of revenue administration shall collect the taxes, interest, additions to tax and penalties imposed under this chapter and RSA 21-J.

(b) The recovery of any tax, interest or penalties imposed by this chapter and RSA 21-J.

III. The commissioner may institute actions in the name of the state to recover any tax, interest, or penalties imposed by this chapter and RSA 21-J.

IV. In the collection of the tax imposed by this chapter, the commissioner may use all of the powers granted to tax collectors under RSA 80 for the collection of taxes. The commissioner shall also have all of the duties imposed on tax collectors by RSA 80 that are applicable to the commissioner.

V. The commissioner may take the oath of any person in the course of any hearing authorized under RSA 87:36, III. In connection with hearings, the commissioner and the executor or administrator shall have the power to compel attendance of witnesses and the production of books, records, papers, vouchers, accounts, or other documents. The commissioner and executor or administrator may take the deposition of witnesses residing within or without the state pertaining to any matter under this chapter, in the same way as depositions of witnesses are taken in civil actions in the superior court. Fees of witnesses are the same as those allowed to witnesses in the probate court and in the case of witnesses summoned by the commissioner shall be considered as an expense of administration of this chapter.

VI. Any notice required by this chapter to be given by the commissioner to an executor or administrator shall be made by first class mail to the last known address of the executor or administrator, but in the case of hearings, notice shall be given at least 10 days before the date of the hearing.

232:2 References to Repealed Taxes Deleted. Amend RSA 21-J:14, X to read as follows:

X. Disclosure of returns and return information filed under RSA [~~86,~~] 87 [~~and 89~~] may be made to the register of probate and the probate court having jurisdiction over the estate of the decedent, but only for the purpose of and to the extent necessary for the administration of such tax laws.

232:3 Reference to Repealed Tax Deleted; Estate Tax. Amend RSA 87:1, I to read as follows:

I. [~~In addition to the taxes imposed by RSA 86~~] An estate tax is hereby imposed upon the transfer of the estate of every decedent leaving an estate which is subject to an estate tax under the provisions of the United States Internal Revenue Code of 1986, as amended, and who has property within this state.

232:4 Reference to Repealed Tax Deleted; Banks; Distribution of Joint Accounts. Amend RSA 384:32 to read as follows:

384:32 Effect on Other Legislation. This subdivision shall in no way affect the provisions of RSA 386:19 relative to savings banks and RSA 393:12 relative to building and loan associations [~~as well as RSA 86:8 and 9, relative to the inheritance tax~~].

232:5 Reference to Repealed Tax Deleted; Banks; Pledge of Savings Account in Joint Tenancy. Amend RSA 384:35 to read as follows:

384:35 Pledge of Savings Account in Joint Tenancy. The pledge of any savings account held in joint tenancy or of any joint savings account of the type described in RSA 384:28 and 386:19, when made in writing by any one of the co-depositors or co-owners having the authority to make withdrawals from such account, shall, unless the terms of the savings account provide specifically to the contrary, be a valid pledge and transfer of so much or all of such savings account as may be necessary to secure the collateral obligation for which it is pledged, but such pledge shall not operate to destroy the joint and survivorship character of that portion of such account which is not encumbered by the pledge or which may subsequently be redeemed therefrom. This section shall apply to savings accounts maintained in any institution described in RSA 384:1, or in any federally-chartered institution of like nature having a place of business in this state. [~~This section shall in no way affect the provisions of RSA 86:8 and 9, relative to the inheritance tax.~~]

232:6 Reference to Repealed Tax Deleted; Banks; Trust Deposits in Banks. Amend RSA 384-D:5 to read as follows:

384-D:5 Effect on Other Legislation. This chapter shall in no way affect or modify the provisions of RSA 386:19, RSA 393:12, and RSA 384:28-31[~~, and RSA 86:8, 9~~].

232:7 Reference to Repealed Tax Deleted; Banks; Joint Renters of Safe Deposit Boxes. Amend RSA 385:6 to read as follows:

385:6 Joint Renters of Safe Deposit Boxes. When a safe deposit box is rented to 2 or more persons under a rental contract granting a separate right of access to either or any one of such persons or the survivor or survivors of them, the survivor or survivors of such joint renters shall have a right of access to such box for any purpose[~~, subject only to the provisions of RSA 86:72~~]; and the lessor of the box shall be protected against all renters of the box, their heirs, assigns, executors and administrators, in recognizing such right.

232:8 Reference to Repealed Tax Deleted; Banks; Surviving Deputies with Authorized Access to Safe Deposit Boxes. Amend RSA 385:7 to read as follows:

385:7 Surviving Deputies with Authorized Access to Safe Deposit Boxes. When a safe deposit box is rented to a person, and such renter appoints a deputy on the records of the lessor by written power of attorney expressly providing that the deputy shall have a continued right of access to the box after the death of the renter, and the renter dies survived by such deputy, then, notwithstanding any rule of law to the effect that a power of attorney is terminated by the death of the principal, such surviving deputy shall have a right of access to such box for any purpose[~~, subject only to the provisions of RSA 86:72~~]; and the lessor of the box shall be protected against the heirs, assigns, executors and administrators of such deceased renter in recognizing such right.

232:9 Reference to Repealed Tax Deleted; Banks; Joint Deposits. Amend RSA 386:19 to read as follows:

386:19 Joint Deposits. When a deposit has been made in any savings bank in the names of 2 persons, payable to either, or payable to either or the survivor, such deposit or any part thereof, or any interest or dividend thereon, may be paid to either of said persons, whether the other be living or not; and the receipt or acquittance of the person so paid shall discharge the bank for any payment so made[; provided, that if one of the parties has deceased, and the bank has knowledge of the fact, payment shall not be made to the survivor, until the department of revenue administration has certified that no taxes are due the state under the provisions of RSA 86, on account of the interest of said decedent in said deposit, or that all taxes due have been paid; except as otherwise provided in RSA 86].

232:10 Reference to Repealed Tax Deleted; Building and Loan Associations; Joint Accounts. Amend RSA 393:12 to read as follows:

393:12 Joint Accounts. When an account in any building and loan association has been opened in the names of 2 persons payable to either or payable to the survivor, such account together with dividends thereon may be withdrawn by either of said persons whether the other be living or not, and the payment by said bank to either of said persons of the whole or any part of said account upon the demand or request of either of said persons shall discharge the bank for any payment so made[; provided that if one of the parties has deceased and the bank has knowledge of the fact, payment shall not be made to the survivor until the state treasurer has certified that no taxes are due the state under the provisions of RSA 86, on account of the interest of the deceased in said account, or that all taxes have been paid].

232:11 References to Repealed Taxes Deleted; Probate Courts; Administrations, Bond. Amend RSA 553:13, I(d) to read as follows:

(d) To pay all taxes for which he or she may be or become liable under [~~RSA 86,~~] RSA 87[~~, and RSA 89~~].

232:12 Technical Corrections; Probate Courts; Administration of Small Estates. Amend RSA 553:31, I to read as follows:

I. If the estate of a person, whether testate or intestate, consists entirely of personal property of a gross value not exceeding $10,000, and the will has been allowed, or if no will, after the expiration of 30 days from date of death, and no petition under RSA 552:7 or 552:8 or any other sections of RSA 553 has been filed, the right to administer shall be in the executor named in the will, if any, and otherwise as set forth in RSA 553:2, upon filing with the probate court in the county in which the deceased was domiciled at the time of death, a petition stating that the petitioner has undertaken to act as executor or voluntary administrator of such estate and will administer the same according to law. Such executor or voluntary administrator shall, at the time of filing such petition, also file:

(b) [~~A list of heirs or list of legatees or devisees as required under RSA 86:18;~~

~~(c) A report of gifts and transfers in accordance with RSA 86:22 with the register of probate and with the department of revenue administration;~~

~~(d)~~] An appointment of some person residing in this state as an agent pursuant to RSA 553:25 for every nonresident executor or voluntary administrator;

[~~(e)~~] (c) A list of assets owned by the deceased and to be administered, sufficiently described to afford reasonable identification, along with a list of the value of each. The list of assets shall be incorporated into the petition. The form of the petition, and the rules governing proceedings under this section, shall be prescribed in the manner referenced by RSA 547:33; and

[~~(f)~~] (d) A certification that a copy of the petition has been forwarded to all persons beneficially interested, as defined in RSA 550:12.

232:13 Technical Corrections; Probate Courts; Summary Administration. Amend RSA 553:33, III(a)(3) to read as follows:

(3) No New Hampshire estate [~~or inheritance~~] taxes are due[,]; or all applicable New Hampshire estate [~~and inheritance~~] taxes have been paid, and a certificate from the department of revenue administration under RSA [~~86:32~~] 87:26 has been filed with the court.

III. RSA 89, relative to the transfer tax upon the personal property of nonresident decedents.

232:15 Intent of Sections 16-17. The intent of sections 16 and 17 of this act is to conform RSA 78-A, relative to the tax on meals and rooms, with the legislative intent that gratuities that are properly paid to service personnel shall not be subject to the meals and rooms tax.

232:16 Meals and Rooms Tax; Definition of Gratuity. Amend RSA 78-A:3, XII to read as follows:

XII. "Gratuity" means a [~~voluntarily given~~] gift of money in return for a service.

232:17 Meals and Rooms Tax; Exceptions to Tax. RSA 78-A:6-a is repealed and reenacted to read as follows:

I. Advance deposits which are forfeited by a prospective occupant shall not be taxed under this chapter. However, if such advance deposit is a payment in full for a room rent, including tax, and is retained by the operator, the operator shall remit that portion of the payment which represents the meals and rooms tax to the state.

II. Gratuity charges added to the charge for a taxable meal or taxable room shall not be taxed under this chapter if:

(a) The gratuity is not used by the operator as a supplement to or in lieu of wages, or as a pool from which bonuses are paid to managerial personnel;

(b) The gratuity is paid to the service personnel providing the service for which the gratuity is charged;

(e) The payroll or other business records of the operator substantiate the distribution of the gratuity to the service employees as a payment that does not supplement wages or is not in lieu of wages.

III. Gratuity charges arranged by written contract between operators and motorcoach service providers or other businesses making group purchases on behalf of purchasers or occupants shall not be taxed under this chapter if:

(b) The amount of the gratuity was determined based on the usual and customary practice of the industry.

IV. The amount of any gratuity charge excepted from tax by RSA 78-A:6-a, II or III shall be limited to that amount actually received by the service personnel providing the service for which such gratuity is charged.

V. Any auxiliary charges, not including gratuity charges, such as, but not limited to, service charges, house charges, management fees, or housekeeping charges, added to the charge for a taxable meal or taxable room, shall not be taxed under this chapter if:

(a) The taxable meal or taxable room rental may be purchased without such auxiliary charges at the option of the purchaser or occupant; and

(b) The amount of the auxiliary charge is separately stated on the contract or receipt.

VI. The portion of a single aggregate charge allocated to items which are not customarily associated with the purchase of a taxable room or taxable meal, including but not limited to ski lift tickets, boat ride fees, amusement park admission tickets, theater tickets or other similarly packaged items shall not be taxable if the packaged item or service is not part of the operator's standard room rental or meal and the allocated cost of the package item or service is equal to the amount paid to an outside vendor or the allocated cost of the package item or service is the amount over and above the amount which a consumer would be ordinarily charged for the room rental and/or meal had the consumer purchased the room or meal without the packaged item or service; and

(a) The allocated cost of the package for gratuities meets the requirements of RSA 78-A:6-a, II(a), (b), (d), and (e); and

(b) The operator's business records provide the documentation necessary for the department to determine the allocation of costs and the proper application of the tax.

232:18 Department of Revenue Administration; Appeal for Redetermination or Reconsideration; Procedure. Amend RSA 21-J:28-b, IV to read as follows:

IV. Within 30 days of the notice of decision, the taxpayer may appeal such decision by written application to the board of tax and land appeals or the superior court, in the county in which the taxpayer resides or has a place of business or resident agent. The board of tax and land appeals or the superior court, as the case may be, shall [~~determine de novo the correctness of the commissioner's actions~~.] hear the appeal de novo. Each party may introduce whatever evidence it believes necessary, limited only by the evidentiary rules of the forum. Legal issues shall be limited to those raised before the commissioner, with the exception that the taxpayer may raise additional legal claims addressing constitutional issues, and either party may raise additional legal claims upon a showing of good cause.

II. The remainder of this act shall take effect January 1, 2003)