HF166

Purpose

• Align Minnesota’s estate tax with the federal estate tax exclusion amount, by updating Minnesota’s thresholds for when an estate tax return is required and how much tax may be due.

Main Provisions

• For estates with a property situs in Minnesota, the personal representative must file a Minnesota estate tax return if:
  • a federal estate tax return is required to be filed, or
  • the sum of the federal gross estate and federal adjusted taxable gifts made within three years of the decedent’s death exceeds specified thresholds.
• The thresholds are tied to the year of death:
  • 2014: $1,200,000
  • 2015: $1,400,000
  • 2016: $1,600,000
  • 2017: $2,100,000
  • 2018: $2,400,000
  • 2019: $2,700,000
  • 2020 and thereafter: $3,000,000
• The return must include a computation of the Minnesota estate tax due and must be signed by the personal representative.
• The form used for filing is prescribed by the Minnesota commerce (commissioner).

What Changes This Bill Makes to Minnesota Law

• Changes the trigger for filing a Minnesota estate tax return to directly reflect federal estate tax exposure, using federal gross estate plus federal adjusted taxable gifts and the relevant three-year window.
• Establishes a moving (increasing) threshold that mirrors the federal estate tax exclusion, culminating in a $3,000,000 threshold for deaths in 2020 and later.
• Requires explicit calculation of Minnesota tax due on the return, ensuring Minnesota taxes are calculated and collected when the threshold is exceeded.

Filing and Compliance Requirements

• Personal representative (executor) must file the Minnesota estate tax return if the criteria above are met.
• Filing is required even if a federal estate tax return is required for the same estate; both returns (federal and Minnesota) may be needed.
• The return must be properly completed, include Minnesota tax computation, and be signed by the personal representative.
• The form and filing process are defined by the Minnesota Commissioner (agency in charge).

Notable Terms and Concepts

• Estate tax return
• Personal representative
• Minnesota estate tax due
• Federal gross estate
• Federal adjusted taxable gifts
• Internal Revenue Code section 2001b
• Three-year window (gifts within three years of death)
• Situs in Minnesota
• Commissioner (Minnesota tax authority)

Relevant Terms - Minnesota estate tax return - personal representative - federal estate tax return - federal gross estate - federal adjusted taxable gifts - Internal Revenue Code section 2001b - three years of the decedent’s death - situs in Minnesota - commissioner - Minnesota estate tax due - thresholds (1,200,000 to 3,000,000)