AN ACT relating to inheritance and estate tax.

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AN ACT relating to inheritance and estate tax. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 140.160 is amended to read as follows: 3
(1) The Department of Revenue shall have full supervision of the collection of all taxes 4
due under the provisions of this chapter, including the power to institute suit in this 5
and other states. It may employ attorneys and other persons necessary to carry out 6
the full intent and purpose of this chapter. The department shall furnish, upon 7
application, blank forms covering information as may be necessary to determine the 8
amount of tax due the state on the transfer of all property subject to tax. 9
(2) The department may cause personal representatives or beneficiaries to file all 10
statements required by this chapter with the clerks of the proper courts and with the 11
department, and may require them to furnish any addit ional information deemed 12
necessary to support the computation of the amount of tax that should be paid by 13
the estate. The personal representative, or the beneficiaries in the absence of a 14
personal representative, shall compute the taxes imposed by this cha pter on the tax 15
return provided by the department when: 16
(a) 1. A United States estate tax return is required to be filed under federal law 17
and applicable regulations; and 18
2. The estate includes property over which Kentucky has jurisdiction for 19
purposes of the taxes imposed by this chapter; or 20
(b) Any assets from the estate subject to the taxes imposed by this chapter pass to 21
a beneficiary taxable under KRS 140.070. 22
(3) (a) For deaths prior to August 1, 2026, the tax return, when required, shall be 23
filed with the department within eighteen (18) months after the death of the 24
decedent or at the time payment of the tax is made pursuant to KRS 140.210. 25
(b) For deaths on or after Aug ust 1, 2026, the tax return, when required, shall 26
be filed with the department within thirty -six (36) months after the death of 27
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the decedent or at the time payment of the tax is made pursuant to Section 2 1
of this Act. 2
(4)[(3)] Except as herein provided, no action to enforce the collection of the tax 3
imposed by this chapter shall be commenced more than ten (10) years after the 4
cause of action first accrued. In case the settlement of an estate is delayed because 5
of litigation or other unavoidable cause, the d elay shall suspend the limitation, 6
prescribed by this subsection, until the cause of delay is removed. In the case of a 7
fraudulent return or any other fraudulent representation affecting the amount of or 8
the liability for the tax imposed by this chapter no twithstanding any provision of 9
limitation provided elsewhere, the tax due by reason thereof may at any time be 10
assessed and collected by the methods set out in this chapter, including action in a 11
court of competent jurisdiction. 12
Section 2. KRS 140.210 is amended to read as follows: 13
(1) (a) For deaths prior to August 1, 2026, all taxes imposed by this chapter, unless 14
otherwise provided in this chapter, shall be due at the death of the decedent 15
and shall be payable to the D epartment of Revenue within eighteen (18) 16
months thereafter. If they are paid within nine (9) months, a discount of five 17
percent (5%) shall be allowed, and if they are paid within eighteen (18) 18
months, no interest shall be charged and collected thereon. If the taxes due are 19
not paid within eighteen (18) months, interest at the tax interest rate as defined 20
in KRS 131.010(6) shall be paid from the expiration of the eighteen (18) 21
months until payment is actually made to the department. 22
(b) For deaths on or aft er August 1, 2026, all taxes imposed by this chapter, 23
unless otherwise provided in this chapter, shall be due at the death of the 24
decedent and shall be payable to the Department of Revenue within thirty -25
six (36) months thereafter. If they are paid within e ighteen (18) months, a 26
discount of five percent (5%) shall be allowed, and if they are paid within 27
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thirty-six (36) months, no interest shall be charged and collected thereon. If 1
the taxes due are not paid within thirty -six (36) months, interest at the tax 2
interest rate as defined in KRS 131.010(6) shall be paid from the expiration 3
of the thirty -six (36) months until payment is actually made to the 4
department. 5
(2) In all cases where the personal representatives or trustees do not pay the taxes by 6
the applicable eighteen (18) month or thirty -six (36) month deadline established 7
in subsection (1) of this section[within eighteen (18) months from the death of the 8
decedent], they shall be required to give bond, in the form and to the effect 9
prescribed by the department, for the payment of the taxes and interest. 10
Section 3. KRS 140.222 is amended to read as follows: 11
(1) When the net tax due from a beneficiary's distributive share exceeds five thousand 12
dollars ($5,000), the benefici ary may elect to pay the inheritance tax in ten (10) 13
equal installments. The first installment shall be due at the time the return is filed 14
with succeeding payments due in annual installments beginning one (1) year after 15
the return is filed. 16
(2) (a) For deaths prior to August 1, 2026, the portion of the tax deferred under this 17
section shall be charged with interest at the tax interest rate as defined in KRS 18
131.010(6) commencing eighteen (18) months after the date of death. 19
(b) For deaths on or after August 1, 2026, the portion of the tax deferred under 20
this section shall be charged with interest at the tax interest rate as defined 21
in KRS 131.010(6) commencing thirty -six (36) months after the date of 22
death. 23
(3) When the beneficiary elects to pay the tax on h is or her share as provided in this 24
section, such election must be made in writing and signed by the beneficiary and 25
must be filed with the Department of Revenue at the time of filing the tax return for 26
the decedent's estate under KRS 140.160 (3)[(2)]. The filing of the election together 27
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with payment of the first installment shall relieve the personal representative or 1
trustee of the estate from further liability for the tax payments deferred under this 2
section and the bond requirements of KRS 140.210, subje ct to the final approval by 3
the Department of Revenue of all other taxes due under this chapter. 4
(4) A beneficiary electing to defer the payment of taxes under this section shall be 5
personally liable for the amount of deferred taxes until paid. 6
(5) The period of limitations for actions to enforce the collection of taxes imposed by 7
this chapter as provided by KRS 140.160 (4)[(3)] shall be suspended for the period 8
of time for deferred payment granted by this section. 9