[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5315 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 5315

 To amend the Internal Revenue Code of 1986 to reduce estate and gift 
                   tax rates, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 27, 2000

Mr. Tanner (for himself, Mr. Stenholm, Mr. Boyd, Ms. Hooley of Oregon, 
Mr. Spratt, Mr. Dooley of California, Ms. Eshoo, Mr. Abercrombie, Mrs. 
McCarthy of New York, Ms. Lofgren, Mr. Crowley, Mr. Lucas of Kentucky, 
Ms. Danner, Mr. Hall of Texas, Mr. Sisisky, Mr. Turner, Mrs. Tauscher, 
    Mr. Smith of Washington, Mr. Berry, Mr. Shows, Mr. Thompson of 
California, Mr. Holden, Mr. Hill of Indiana, Mr. John, Mr. Cramer, and 
  Mr. Doyle) introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to reduce estate and gift 
                   tax rates, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Death Tax Relief 
Now Act of 2000''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. 20 PERCENT REDUCTION OF ESTATE TAX RATES.

    (a) In General.--Subsection (c) of section 2001 is amended by 
redesignating paragraph (2) as paragraph (3) and by striking paragraph 
(1) and inserting the following new paragraphs:
            ``(1) In general.--

``If the amount with respect to     The tentative tax is:
        which the tentative tax is 
        to be computed is:
    Not over $10,000...............
                                        14.4% of such amount.
    Over $10,000 but not over 
        $20,000.
                                        $1,440, plus 16% of the excess 
                                                of such amount over 
                                                $10,000
    Over $20,000 but not over 
        $40,000.
                                        $3,040, plus 17.6% of the 
                                                excess of such amount 
                                                over $20,000
    Over $40,000 but not over 
        $60,000.
                                        $6,560, plus 19.2% of the 
                                                excess of such amount 
                                                over $40,000
    Over $60,000 but not over 
        $80,000.
                                        $10,400, plus 20.8% of the 
                                                excess of such amount 
                                                over $60,000
    Over $80,000 but not over 
        $100,000.
                                        $14,560, plus 22.4% of the 
                                                excess of such amount 
                                                over $80,000
    Over $100,000 but not over 
        $150,000.
                                        $19,040, plus 24% of the excess 
                                                of such amount over 
                                                $100,000
    Over $150,000 but not over 
        $250,000.
                                        $31,040, plus 25.6% of the 
                                                excess of such amount 
                                                over $150,000
    Over $250,000 but not over 
        $500,000.
                                        $56,640, plus 27.2% of the 
                                                excess of such amount 
                                                over $250,000
    Over $500,000 but not over 
        $750,000.
                                        $124,640, plus 29.6% of the 
                                                excess of such amount 
                                                over $500,000
    Over $750,000 but not over 
        $1,000,000.
                                        $198,640, plus 31.2% of the 
                                                excess of such amount 
                                                over $750,000
    Over $1,000,000 but not over 
        $1,250,000.
                                        $276,640, plus 32.8% of the 
                                                excess of such amount 
                                                over $1,000,000
    Over $1,250,000 but not over 
        $1,500,000.
                                        $358,640, plus 34.4% of the 
                                                excess of such amount 
                                                over $1,250,000
    Over $1,500,000 but not over 
        $2,000,000.
                                        $444,640, plus 36% of the 
                                                excess of such amount 
                                                over $1,500,000
    Over $2,000,000 but not over 
        $2,500,000.
                                        $624,640, plus 39.2% of the 
                                                excess of such amount 
                                                over $2,000,000
    Over $2,500,000 but not over 
        $3,000,000.
                                        $820,640, plus 42.4% of the 
                                                excess of such amount 
                                                over $2,500,000
    Over $3,000,000................
                                        $1,032,640, plus 44% of the 
                                                excess of such amount 
                                                over $3,000,000.
            ``(2) Reduction in maximum rate after 2009.--In the case of 
        decedents dying, and gifts made, after 2009, the following item 
        shall be substituted for the last 2 items in the schedule 
        contained in paragraph (1):

    Over $2,500,000................
                                        $820,640, plus 39.6% of the 
                                                excess of such amount 
                                                over $2,500,000.''
    (b) Restoration of Phaseout of Unified Credit.--Paragraph (2) of 
section 2001(c) is amended by striking ``$10,000,000'' and all that 
follows and inserting ``$10,000,000. The amount of the increase under 
the preceding sentence shall not exceed the sum of--
                    ``(A) the applicable credit amount under section 
                2010(c), and
                    ``(B) the excess of the amount equal to 44 percent 
                of $3,000,000 over the amount of the tentative tax 
                under paragraph (1) on $3,000,000.
        In the case of decedents dying, and gifts made, after 2009, 
        subparagraph (B) shall be applied by substituting `39.6 
        percent' for `44 percent' and `$2,500,000' for `$3,000,000'.''
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2000.

SEC. 3. INCREASE IN EXEMPTION EQUIVALENT OF UNIFIED CREDIT; INFLATION 
              ADJUSTMENT OF CREDIT.

    (a) In General.--The table contained in section 2010(c) (relating 
to applicable credit amount) is amended to read as follows:

        ``In the case of estates of decedents
                                                         The applicable
          dying, and gifts made, during:
                                                   exclusion amount is:
                  2001 and 2002......................       $1,300,000 
                  2003 and 2004......................       $1,500,000 
                  2005 and 2006......................       $1,700,000 
                  2007 and 2008......................       $1,900,000 
                  2009 or thereafter.................     $2,000,000.''

    (b) Inflation Adjustment.--
            (1) In general.--Section 2010 is amended by redesignating 
        subsection (d) as subsection (e) and by inserting after 
        subsection (c) the following new subsection:
    ``(d) Inflation Adjustment.--In the case of any decedent dying, and 
gift made, in a calendar year after 2010, the $2,000,000 amount set 
forth in subsection (c) shall be increased by an amount equal to--
            ``(1) $2,000,000, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for such calendar year by sub- stituting 
`calendar year 2009' for `calendar year 1992' in subparagraph (B) 
thereof.
If any amount as adjusted under the preceding sentence is not a 
multiple of $10,000, such amount shall be rounded to the nearest 
multiple of $10,000.''
            (2) Conforming amendments.--Sections 2033A(a)(2), 
        6018(a)(1), 6601(j)(2)(A)(i) are each amended by striking 
        ``section 2010(c)'' and inserting ``section 2010''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2000.

SEC. 4. REPEAL OF ESTATE TAX BENEFIT FOR FAMILY-OWNED BUSINESS 
              INTERESTS.

    (a) In General.--Section 2057 is hereby repealed.
    (b) Conforming Amendments.--
            (1) Paragraph (10) of section 2031(c) is amended by 
        inserting ``(as in effect on the day before the date of the 
        enactment of the Death Tax Relief Now Act of 2000)'' before the 
        period.
            (2) The table of sections for part IV of subchapter A of 
        chapter 11 is amended by striking the item relating to section 
        2057.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2000.

SEC. 5. CREDIT FOR STATE DEATH TAXES REPLACED WITH DEDUCTION FOR SUCH 
              TAXES.

    (a) Repeal of Credit.--Section 2011 (relating to credit for State 
death taxes) is hereby repealed.
    (b) Deduction for State Death Taxes.--Part IV of subchapter A of 
chapter 11 is amended by adding at the end the following new section:

``SEC. 2058. STATE DEATH TAXES.

    ``(a) Allowance of Deduction.--For purposes of the tax imposed by 
section 2001, the value of the taxable estate shall be determined by 
deducting from the value of the gross estate the amount of any estate, 
inheritance, legacy, or succession taxes actually paid to any State or 
the District of Columbia, in respect of any property included in the 
gross estate (not including any such taxes paid with respect to the 
estate of a person other than the decedent).
    ``(b) Period of Limitations.--The deduction allowed by this section 
shall include only such taxes as were actually paid and deduction 
therefor claimed within 4 years after the filing of the return required 
by section 6018, except that--
            ``(1) If a petition for redetermination of a deficiency has 
        been filed with the Tax Court within the time prescribed in 
        section 6213(a), then within such 4-year period or before the 
        expiration of 60 days after the decision of the Tax Court 
        becomes final.
            ``(2) If, under section 6161 or 6166, an extension of time 
        has been granted for payment of the tax shown on the return, or 
        of a deficiency, then within such 4-year period or before the 
        date of the expiration of the period of the extension.
            ``(3) If a claim for refund or credit of an overpayment of 
        tax imposed by this chapter has been filed within the time 
        prescribed in section 6511, then within such 4-year period or 
        before the expiration of 60 days from the date of mailing by 
        certified mail or registered mail by the Secretary to the 
        taxpayer of a notice of the disallowance of any part of such 
        claim, or before the expiration of 60 days after a decision by 
        any court of competent jurisdiction becomes final with respect 
        to a timely suit instituted upon such claim, whichever is 
        later.
Refund based on the deduction may (despite the provisions of sections 
6511 and 6512) be made if claim therefor is filed within the period 
above provided. Any such refund shall be made without interest.''
    (c) Conforming Amendments.--
            (1) Subsection (a) of section 2012 is amended by striking 
        ``the credit for State death taxes provided by section 2011 
        and''.
            (2) Subparagraph (A) of section 2013(c)(1) is amended by 
        striking ``2011,''.
            (3) Paragraph (2) of section 2014(b) is amended by striking 
        ``, 2011,''.
            (4) Sections 2015 and 2016 are each amended by striking 
        ``2011 or''.
            (5) Subsection (d) of section 2053 is amended to read as 
        follows:
    ``(d) Certain Foreign Death Taxes.--
            ``(1) In general.--Notwithstanding the provisions of 
        subsection (c)(1)(B) of this section, for purposes of the tax 
        imposed by section 2001, the value of the taxable estate may be 
        determined, if the executor so elects before the expiration of 
        the period of limitation for assessment provided in section 
        6501, by deducting from the value of the gross estate the 
        amount (as determined in accordance with regulations prescribed 
        by the Secretary) of any estate, succession, legacy, or 
        inheritance tax imposed by and actually paid to any foreign 
        country, in respect of any property situated within such 
        foreign country and included in the gross estate of a citizen 
or resident of the United States, upon a transfer by the decedent for 
public, charitable, or religious uses described in section 2055. The 
determination under this paragraph of the country within which property 
is situated shall be made in accordance with the rules applicable under 
subchapter B (sec. 2101 and following) in determining whether property 
is situated within or without the United States. Any election under 
this paragraph shall be exercised in accordance with regulations 
prescribed by the Secretary.
            ``(2) Condition for allowance of deduction.--No deduction 
        shall be allowed under paragraph (1) for a foreign death tax 
        specified therein unless the decrease in the tax imposed by 
        section 2001 which results from the deduction provided in 
        paragraph (1) will inure solely for the benefit of the public, 
        charitable, or religious transferees described in section 2055 
        or section 2106(a)(2). In any case where the tax imposed by 
        section 2001 is equitably apportioned among all the transferees 
        of property included in the gross estate, including those 
        described in sections 2055 and 2106(a)(2) (taking into account 
        any exemptions, credits, or deductions allowed by this 
        chapter), in determining such decrease, there shall be 
        disregarded any decrease in the Federal estate tax which any 
        transferees other than those described in sections 2055 and 
        2106(a)(2) are required to pay.
            ``(3) Effect on credit for foreign death taxes of deduction 
        under this subsection.--
                    ``(A) Election.--An election under this subsection 
                shall be deemed a waiver of the right to claim a 
                credit, against the Federal estate tax, under a death 
                tax convention with any foreign country for any tax or 
                portion thereof in respect of which a deduction is 
                taken under this subsection.
                    ``(B) Cross reference.--

                                ``See section 2014(f) for the effect of 
a deduction taken under this paragraph on the credit for foreign death 
taxes.''
            (6) Subparagraph (A) of section 2056A(b)(10) is amended--
                    (A) by striking ``2011,'', and
                    (B) by inserting ``2058,'' after ``2056,''.
            (7)(A) Subsection (a) of section 2102 is amended to read as 
        follows:
    ``(a) In General.--The tax imposed by section 2101 shall be 
credited with the amounts determined in accordance with sections 2012 
and 2013 (relating to gift tax and tax on prior transfers).''
            (B) Section 2102 is amended by striking subsection (b) and 
        by redesignating subsection (c) as subsection (b).
            (C) Section 2102(b)(5) (as redesignated by subparagraph 
        (B)) and section 2107(c)(3) are each amended by striking ``2011 
        to 2013, inclusive,'' and inserting ``2012 and 2013''.
            (8) Subsection (a) of section 2106 is amended by adding at 
        the end the following new paragraph:
            ``(4) State death taxes.--The amount which bears the same 
        ratio to the State death taxes as the value of the property, as 
        determined for purposes of this chapter, upon which State death 
        taxes were paid and which is included in the gross estate under 
        section 2103 bears to the value of the total gross estate under 
        section 2103. For purposes of this paragraph, the term `State 
        death taxes' means the taxes described in section 2011(a).''
            (9) Section 2201 is amended--
                    (A) by striking ``as defined in section 2011(d)'', 
                and
                    (B) by adding at the end the following new flush 
                sentence:
``For purposes of this section, the additional estate tax is the 
difference between the tax imposed by section 2001 or 2101 and the 
amount equal to 125 percent of the maximum credit provided by section 
2011(b), as in effect before its repeal by the Estate Tax Relief Act of 
2000.''
            (10) Paragraph (2) of section 6511(i) is amended by 
        striking ``2011(c), 2014(b),'' and inserting ``2014(b)''.
            (11) Subsection (c) of section 6612 is amended by striking 
        ``section 2011(c) (relating to refunds due to credit for State 
        taxes),''.
            (12) The table of sections for part II of subchapter A of 
        chapter 11 is amended by striking the item relating to section 
        2011.
            (13) The table of sections for part IV of subchapter A of 
        chapter 11 is amended by adding at the end the following new 
        item:

                              ``Sec. 2058. State death taxes.''
    (d) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after December 31, 2000.

SEC. 6. INCREASE IN NUMBER OF ALLOWABLE PARTNERS AND SHAREHOLDERS IN 
              CLOSELY HELD BUSINESSES FOR PURPOSES OF EXTENSION OF TIME 
              FOR PAYING ESTATE TAX.

    (a) In General.--Paragraphs (1)(B)(ii), (1)(C)(ii), and 
(9)(B)(iii)(I) of section 6166(b) of the Internal Revenue Code of 1986 
(relating to definitions and special rules) are each amended by 
striking ``15'' and inserting ``45''.
    (b) Effective Date.--The amendment made by this section shall apply 
to estates of decedents dying after December 31, 2000.
                                 <all>