How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Dwayne B. Your Own Question
Dwayne B.
Dwayne B., Attorney
Category: Estate Law
Satisfied Customers: 33250
Experience:  Estate Law Expert
11068102
Type Your Estate Law Question Here...
Dwayne B. is online now
A new question is answered every 9 seconds

My Father passed away in 2006 in. In 2007 did away with

Customer Question

My Father passed away in 2006 in Virginia. In 2007 Virginia did away with Estate tax. A large amount of tax was paid to the State of Virginia. The Accounting firm mis-figured what was due by Virginia State law at the time. The Estate qualified for Estate Tax deferral of a Closely held Business Under IRC 6166. This is federal law. Virginia did not collect the outstanding amount for a law that no longer existed in the state since July of 2007. The estate taxes were filled and uncontested in 2008 I believe. Over 7 years have passed since then. I got a letter from the Department of taxation in Virginia this week stating they want to be paid $254K + 148K interest for a total of 413K+. They state that this should have been paid under federal section 6166. How are they applying Federal law and has not the time they had to collect the obsolete death tax expired?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Dwayne B. replied 1 year ago.

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.