Hello and thank you for contacting us. This is Dwayne B. and I’m an expert here and looking forward to assisting you today. If at any point any of my answers aren’t clear please don’t hesitate to ask for clarification. Also, I can only answer the questions you specifically ask and based on the facts that you give so please be sure that you ask the questions you want to ask and provide all necessary facts.
First, Virginia can collect tax from estates in which the person passed away before July 1, 2007. I'm not sure what you mean by "federal section 6166" since that could mean several things. Based on what you said earlier in the post I am going to assume you are referring to Internal Revenue Code Section 6166 which is, essentially, a definitions section that states various definitions for use when looking at a closely held corporation. Many states use these definitions but then apply their own taxes which is what it sounds like is being done here, although to know for sure would take a complete audit of all the paperwork which I can't do. However, 90% of the time in situations like yours that is the context in which they would be discussing Section 6166. There is a pretty good article which discusses the various definitions in that section at https://conversations.wfmagazines.com/article/deferring_estate_taxes_on_a_closely_held_business_with_irc_6166
As to you second question: "has not the time they had to collect the obsolete death tax expired?"
The state of Virginia has up to twenty years to collect taxes and penalties and, in addition, that is twenty years from the time a correct form is filed. If the form is not correct or isn't filed at all then the statute of limitations doesn't start running (generally).
The time limit can be shorter if it turns out that everything was filed correctly, even as short as four and a half years in some situations.