The Rhode Island Division of Taxation announced last month that Meaghan Kelly is the new chief of its Estate Tax Section.
In this interview, Ms. Kelly discusses her new position, the common issues she has seen arise in the estate tax world, and some of the do’s and don’ts of filing Rhode Island estate taxes.
Bloomberg BNA: When did you officially begin in your new role?
Kelly: My start date was effective as of May 25, 2015.
Bloomberg BNA: What are your new responsibilities as Chief of the Rhode Island Division of Taxation’s Estate Tax Section?
Kelly: My new duties include, but are not limited to: supervising the estate tax section at the Division, auditing the estate tax returns along with all supporting documentation (wills, trust agreements, probate notifications, etc.) to insure the decedent’s personal representative is including all assets in the gross estate for tax purposes, reviewing all payments of estimated and tentative tax, approving or denying all requests for extensions to file the estate tax return, approving or denying requests for early discharge of liens, tracking any legislation changes that would affect the estate tax section at the Division, and reviewing and approving all billings from the estate tax section. In addition, I would handle all preliminary conferences if the personal representative were to disagree with a Notice of Deficiency Determination with regard to estate tax.
Bloomberg BNA: How will your new position differ from your previous position as Senior Legal Counsel for the Division of Taxation?
Kelly: The new position differs in that it is a management position and I have auditing aspects. As Senior Legal Counsel I was in charge of handling all types of contested tax hearings when a taxpayer disputed a Notice of Deficiency Determination (Sales Tax, Withholding Tax, Hotel Tax, Personal Income Tax, etc.). I have agreed to continue handling litigation cases for the Division, so my Senior Legal Counsel duties will continue at a reduced level. In addition to the administrative litigation, I will continue to represent the Division at the various courts when a taxpayer challenges an action of the Tax Administrator or Division (for example, proceedings for Temporary Restraining Orders—TROs, Appeals of final decisions of the Tax Administrator to the Rhode Island Sixth Division District Court, appearances in Superior Court when a taxpayer mistakenly selects an improper forum, etc.).
Bloomberg BNA: What estate tax issues do you see arise most often in Rhode Island?
Kelly: Thus far, I have seen estate tax returns seeking improper deductions, returns that do not provide substantiation for the asserted date of death value of assets that are includible in the decedent’s gross estate, and trust agreements that were improperly drafted and result in tax consequences for the estate.
Bloomberg BNA: What is the one piece of advice you would give to estate taxpayers?
Kelly: Read the laws carefully or seek professional advice when drafting trust agreements and other potential “tax-savings” tools. There are several reasons why even a nontaxable estate must file the estate tax return for the decedent. One reason is to obtain discharge of our automatic statutory lien that attaches to any and all real property held by the decedent as of the date of death. In addition, some estates will need a waiver to allow the sale of Rhode Island securities that the decedent held. I have heard of estates not submitting a return because they fall below the taxable threshold, and this is a simple mistake—it can be a costly mistake if it turns out the estate was above the threshold and will now receive a Notice of Deficiency determination for all tax, interest, and penalties dating back to when the return was originally due to the Division. The final area I would urge caution with is the fact that the heir, devisee, or other donee is personally liable for the tax on the real estate held by the decedent at the time of death, as well as the executor, administrator, or trustee.
Bloomberg BNA: What do you hope to accomplish as Chief of the estate tax section?
Kelly: I hope to continue the good work of the Chiefs before me and simplify the estate tax processing and disputes. I learned a tremendous amount from Linda Riordan, who held the position immediately before me. I hope to assist the decedent’s family and representatives to efficiently and accurately close out the estate for tax purposes. The Division is also in the process of converting to an electronic system (called STAARS, short for State Tax Administrators and Revenue Systems). It is a novel program that will have every return, check, correspondence, etc., electronically scanned as it comes into the Division and processed and stored in electronic format. I am in charge of overseeing the conversion to the new platform as it relates to the estate tax section.
Bloomberg BNA: Do you have any other comments?
Kelly: I am very excited about my new role within the Division and look forward to working with an amazing, knowledgeable staff. I cannot stress enough how amazing my Tax Aides are in the estate tax section.
For more information about state estate and gift taxes, check out the Estates, Gifts, & Trusts Tax Navigator, which is part of the Premier State Tax Library.
With a free trial to Premier State Tax Library, practitioners have a single, trusted resource that provides all of the tools and information they need to develop, and implement the right tax strategies.
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