Evening star., 1931-12-18
RETROACTIVE ITEM
NOT IN TAX BILL
Provision, Included by Some
States, Left From
D. c. Measure.

Hurther examination Of the new Dis
trlct OF Columbia estate tax bill dis
closes that the measure does not include
provision for making the tax retro
aCtlVe, provision which has been in
cluoeo py some of the States for the
purpose of getting back from the Fed
eial government some of the funds
already paid in by estates under Fed
eral law.
The State OF Florida, for instance, Is
Just beginning to benefit from the retro
actiVe feature of its estate tax law, one
OF the latest to be adopted.
Inc District estate tax measure,
whlcn passed the House yesterday and
mas gone TO the Senate, has undergone
Sharp scrutiny by experts, who feel some
loopholes already have been found.
Retroactive Feature.
II understood the Federal Govern
ment would not welcome the retroactive
feature OF the law because it might re-
suit In the turning back into District
OF Columbia funds 80 per cent of the
estate taxes recently paid by local es-
tates into the Federal Government
Ihere is time limit however, under
present law, back of which the credit of
80 per cent to States and the District
OF Columbia may not be granted nor
refunds made
Under present law, it was explained
the bureau OF Internal Revenue can
give credit to a State only for estate
tax paid within three years after the
filing of return. If a refund Is de-
sired, whether the refund is based on
this credit or any other matter. the
claim for this refund must be filed with
IN three years after payment of the tax
sought to be refunded.
Florida Law Cited.
The Florida law. which became ef-
fectiVe May is, 1881, was made retro
active to November 4, 1890. In other
words, 1t affected the estate of anv
person who died on or after November
OF last year The Federal estate tax
Is not due until one year after death,
When the return must be filed, SO the
hrSt claims to the United States for 80
per cent credit from Florida began COM
ing in in volume only last month a
| year after the death of the decedents
A few estates are known to settle
shortly after death, but usually the ex-
ecutors wait for the full year, in order
to save the interest on the tax which
must be paid to the Federal Gov
ernment
| The State of Maine was one of the
States early to adopt the retroactive
feature. after the 1926 Federal act with
its 80 per cent exemption became ef-
! fectiVe. Names estate tax law ef-
| fectlve July 16, 1927, was made retro
active to 1926 SO as to get the full
benefit of the 80 per cent credit al
| lowed by the Federal Government.
Figures OF the latest Internal Reve-
/ IL, -
Maine, during the calendar year 1890,
was levied with Federal estate tax of
$402,05l, Of which the credit allowed
for the commemorative estate tax
amounted to S255 253. which was 63.49
| per cent OF the total Federal tax
State Credits Shown.
These same reports show that the
various States received credits from the
Federal Government in differing
amounts running as high as 80 per cent.
but with several substantially short of
30 per cent.
| In 1880, for instance, Florida had not
| yet begun to benefit from the credit,
and was levied with a total Federal
estate tax of S964,677, of which S57.6
was credited to estate taxes of Florida
decedents. This small credit, amount
:
! Federal estate tax paid out of Florida,
/ is understood to have been accounted
for by the estate taxes levied by other
States upon the property of decedents
who died in Florida.
The same situation pertained to the
District OF Columbia last year, which
was levied with Federal estate tax of
1881 ,496. of which S17249 was credited
to the estate taxes of the States. This
was only l.76 per cent of the total esti-
mated Federal estate tax.
New York Leads.
In 1929, estates of this CITY were
levied with a Federal estate tax of
! $440,017 and received a tax credit for
other States of only $14807, thus pay
ing balance Of the difference to Uncle
Sam.
The largest estate tax was paid to the
! Federal Government by the decedents
of the State of New York. who last wear
were assessed a total of S49016.79I. of
which S38,205,54l was credited to the
New York estate tax, a percentage of
| 1884.
The total estate taxes paid in 1880
by all the States and the District of
Columbia to the Federal Government
| amounted to Sl52,391 ,25O. on which
there was credit of Sl13388,l79 or
| 74.41 per cent, leaving an actual tax
paid to the United States of the re-
mainder, S39.003 ,06l.
One danger which the District of CO.
lumbia would be running in case the
new local estate tax bill were made
retroactive would be the possibility of
forcing the estates of decedents to pav
the local tax without the 80 per cent
credit. Those familiar with this kind
OF tax warn that this kind of virtual
double taxation is to be studiouslv
avoided. 1t might be possible, accord
ing to one suggestion, to include a pro-
viso in any retroactive tax feature tn
provide that it would apply only to
those estates which could be allowed
the 80 per cent credit by the Federal
| Government.