What Are the Filing Requirements?
Florida's estate tax system is commonly referred to as a "pick up" tax. Florida picks up all or a portion of the credit for state death taxes allowed by the federal government. Under this system, Florida estate tax is not due unless an estate is required to file a federal estate tax return. When the gross value of an estate is below the minimum federal estate filing requirements as noted below, estate tax is not due in Florida.The federal filing thresholds are:
Federal Filing Requirements
Date of Death Minimum Filing Requirement
1998 $ 625,000
1999 $ 650,000
2000 and 2001 $ 675,000
2002 and 2003 $ 700,000
2004 $ 850,000
2005 $ 950,000
2006 and thereafter $1,000,000
See § 2010 and 6018(a), Internal Revenue Code
How does an Executor Obtain a Release of Lien on Real Property?
Case 1: Below Federal Filing Requirements
For dates of death on or after January 1, 2000. The 1999 Legislature amended the estate tax law to allow an affidavit to be filed directly with the Florida county(ies) where a decedent owned real property. For these estates the personal representative must:
By recording the Affidavit with the court in every Florida county where the decedent owned real property, the property may be disposed of with clear title as far as Florida estate tax is concerned. The Affidavit may also be used for probate purposes.
For dates of death before January 1, 2000. The personal representative must:
The Nontaxable Certificate will be mailed to the personal representative within six weeks of the postmark date of Florida Form DR-301. The personal representative may wish to record the certificate with the clerk of the court. By recording the certificate with the court in every Florida county where the decedent owned real property, the property may be disposed of with clear title as far as Florida estate tax is concerned. The Nontaxable Certificate may also be used for probate purposes.
Case 2 - Above Federal Filing Requirements - Forms Required
Florida's estate tax is based on the federal credit for state death taxes. If the estate's gross value meets or exceeds minimum federal estate tax filing requirements, the personal representative must within nine months of the date of death:
If the death occurs on or after January 1, 2000:
If an extension of time is needed to file or make payment, a federal filing extension must first be requested from the IRS. For more information about extensions, see "Extensions of Time."
What Happens after Federal Form 706 is Filed?
When the signed copy of federal Form 706 and payment is received, the Florida Department of Revenue issues an acknowledgment letter to the personal representative and sends a copy to the IRS. The IRS reviews the federal estate tax return (Form 706) and may audit the estate. The audit can increase or decrease the amount of tax due. When the review is completed, the IRS issues a closing letter to the personal representative who sends a copy of the closing letter to the Florida Department of Revenue. The Department reviews the closing letter and sends a Final Certificate to the personal representative.
How is the Tax Calculated?
For Florida Residents
If all of the estate property was located in Florida, the amount shown as the credit for state death taxes on the federal estate tax return is the amount of Florida estate tax due. (See line 15 of federal Form 706 and Part II of Florida Form F-706.) The Florida Form F-706 return and payment of Florida estate tax is due at the same time the federal estate tax is due.
If any of the property was located in other states, the Florida estate tax due is adjusted to allow for the amount of any estate taxes properly paid (see definitions) to other states. Along with payment and the Florida Estate Tax Return Form F-706, the personal representative must send a signed copy of federal Form 706, signed copies of other state tax returns, and proof of payment (see definitions) for estate tax paid to other states. If a credit from another state is determined to be due after the Florida estate tax is paid, this amount must be paid to the State of Florida with an amended Florida Form F-706.
For Residents of Other States
If a nonresident decedent owned Florida real property, tangible personal property located in Florida, stock of Florida corporations or certain other intangible personal property, a pro rata portion of the credit for state death taxes (see Part III and Part IV, Florida Form F-706) is due to Florida.
The pro rata portion of the estate tax due Florida is due for nonresidents regardless of the amount of estate taxes paid or to be paid to other states.
Extensions of Time
If additional time is needed to file a return and payment, the personal representative must:
Even with an approved extension, any Florida estate tax determined to be due is subject to interest from the original due date until paid. For more information about how interest is calculated, see "Penalty and Interest."
IRS Audits
If federal Form 706 is audited by the IRS, send a copy of the changes to the Florida Department of Revenue within 30 days of receipt, along with any additional tax and interest due. If the estate tax liability is reduced, the appropriate refund will be processed automatically.
Sale of Real Property
If the estate must sell or transfer real property before the Final Certificate is issued, the personal representative may apply for a waiver of the Florida estate tax lien by filing a request for release of lien (Florida Form DR-308). Upon the processing of Florida Form DR-308, a certificate releasing the Florida estate tax lien is issued to the personal representative.
A deposit is required of a nonresident's estate of at least the amount of tentative estate tax due. A deposit may be required of a resident's estate if the Department determines it necessary to cover the estate tax estimated to be due.
Penalty and Interest
Florida estate tax not paid by the due date (nine months from the date of death) or the approved extension date, is subject to a late-payment penalty of 10 percent of the unpaid tax. If the tax is not paid by the 30th calendar day after the due date or the approved extension date, the late-payment penalty increases to 20 percent.
Other penalties that may apply are:
Interest is due on late payments and is calculated from the due date until paid. For late payments due on or before December 31, 1999, the interest rate is one percent per month. For late payments due on or after January 1, 2000, a floating rate of interest applies. The floating rates are updated January 1 and July 1 of each year by using the formula established in Section 213.235, Florida Statutes. To obtain floating interest rates, see "For More Information" on the last page.
Domicile Disputes
To obtain a refund of estate tax when domicile in another state is involved or at issue, Florida must be named as a party to any settlement agreement between the estate and the other state, or Florida must be allowed to intervene in the court of the state where the domicile issue is being decided. Otherwise, refunds of Florida estate tax will not be made based on an assertion of domicile by another state.
Definitions
Personal Property: Includes (but is not limited to): tangible personal property, such as automobiles, boats, furniture, jewelry, and any other item whose chief value is intrinsic to the item itself; and intangible personal property, meaning all forms of property where value is based upon the property represented rather than its own intrinsic value, such as money, stocks, bonds, receivables, and negotiable instruments.Personal Representative: Means the fiduciary appointed by the court to administer the estate and refers to what has otherwise been known as the executor or administrator.
Proof of payment: Means the final certificate of payment showing the specific amounts of tax, penalty, or interest assessed and paid.
Properly paid: Means net of any refunds claimed or to be claimed in the future.
Any documentation sent to the IRS should be copied and sent to the Florida Department of Revenue.
For assistance regarding estate tax matters, including estate planning advice, contact us to set up a free initial consultation. We can work with you and your attorney to be sure that your wishes are carried out and that tax burdens are reduced.
FAQs on the Florida Estate Tax
© Copyright 2000 Raymond S. Kulzick. All rights reserved. 000201.
This publication provides business, financial planning, and/or tax information to our clients. All material is for general information only and should not be acted upon without seeking appropriate professional assistance.