Ask the Probate Judge—State Estate Tax
Rudd, appeared February 5, 2004, Albuquerque Journal, Business Outlook
Reprinted with permission
Editor's note: This column may not be quoted or reproduced in whole or part without express written permission of the author.
Q: Does a personal representative of a deceased person have to mail a certificate of no estate tax due, or a receipt for payment of the tax due to the New Mexico Department of Revenue? If so, where can the certificate or receipt be obtained? J.P, Deming
It is the Department of Tax and Revenue's ("Department") job to file a "certificate of no estate tax due" or "certificate that estate tax due has been paid" with the county clerk when it is required, not the personal representative's job. The Department issues the appropriate certificate to the personal representative or attorney for the estate.
Section 7-7-8(B) of New Mexico's Estate Tax law states, "If the estate is not required to file a federal estate tax return, the filing of a certificate by the department is not required."
I checked the New Mexico Administrative Code's tax regulations relating to this section of the law. Regulation 184.108.40.206(C) reads, "No certificate is required nor will a certificate be provided or filed for estates for which no federal estate tax return is required by the [IRS]…. The mere fact that no federal estate tax return is required is sufficient to demonstrate that no New Mexico estate tax is due." This regulation confirms that you do not need to submit state estate tax paperwork for non-taxable estates.
New Mexico's estate tax law also says that a probate case should not be finally settled until either a certificate is filed if required or "the personal representative demonstrates that the estate was not required to file a federal estate tax return."
Therefore, some attorneys still submit the one-page New Mexico Estate Tax Return, Form RPD 41058, showing $0 tax due even though no return is required. Although this is not necessary to close a probate, doing so is one way to "demonstrate" that the personal representative is not liable for unpaid state estate tax. The Department issues a certificate of no tax due in this instance, even though the above regulation says otherwise.
For decedents dying in 2004, an estate must exceed $1.5 million before a federal estate tax return must be filed. In 2003 the figure was $1 million. In New Mexico, if no federal estate tax is due, then no state estate tax is due. If an estate were under these dollar limits, the Department would not need to file or issue any certificates unless the estate wanted one for some reason.
The Department's Special Tax Program Unit, 505-827-0763, can provide more information. The Tax and Rev folks with whom I spoke were all very knowledgeable. Or visit the Department's web site at: www.state.nm.us/tax. For a copy of the state estate tax return, click on "Forms," "Miscellaneous Forms," then "RPD 41058."
Readers, if you are still awake and somewhat coherent, be advised that I spent five hours researching and writing this column. Yet clarity still eludes me. The moral: tax law is not for sissies.
© 2004, Merri Rudd & Albuquerque Journal, All Rights Reserved