Two New Estate Tax Bills Introduced

The week before Thanksgiving 2009 was a busy one for some legislators with an eye on our country's estate tax system.  Through November 20, 2009 the tally of estate tax related bills has reached 20, including the two newest bills discussed below.  The eleventh month does not translate into the eleventh hour, but we are quickly approaching what we would naturally think is the last possible time to act since the estate tax as we know it is set to change dramatically on January 1, 2010.  I do not believe that the December 31, 2009 "deadline" is as much of a call to action as I once did.  In fact, it would not surprise me to see little or no action by Congress prior to the end of 2009.  If that is the case, I would not be surprised to see Congress address the estate tax issue with retroactive legislation.  I have hoped for years that our lawmakers would take a more proactive approach, but I have grown less and less confident as each month and year has passed.

With that, let's turn our attention to the latest round of entrants (bills) in the estate tax lottery.  The first bill, S. 2784, A bill to amend the Internal Revenue Code of 1986 to permanently extend the estate tax as in effect in 2009, and for other purposes, was introduced on November 17, 2009 by Sen. Thomas R. Carper (D-DE) and Sen. George V. Voinovich (R-OH).  The highlights are as follows:

• Making the $3.5 million estate tax exemption permanent and indexing it for inflation starting in 2011;
• Tax rate of 45%;
• Unification of the gift and estate tax exemptions; and
• Portability of the exemption between spouses.

Late last week Rep. Earl Pomeroy (D-ND) introduced his second estate tax related bill this year.  The most recent, H.R. 4154, Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009, was introduced on November 19, 2009.  Rep. Pomeroy's earlier bill, H.R. 436, Certain Estate Tax Relief Act of 2009, was introduced in January and has received a fair amount of attention, mostly attributable to the restrictions it places on valuation discounts.  The highlights of H.R. 4154 are as follows:

• Repeal of EGTRRA (a/k/a the 2001 Bush tax cuts)
• Making the $3.5 million estate tax exemption permanent;
• Freezing gift tax and estate tax rates at 45%
• Repeal of carryover basis rules

This is admittedly a very brief summary of the two estate tax related bills.  As always there is much more than meets the eye with new legislation.  What I take from last week's activity is that at least a few lawmakers have this issue on their radar as we near the end of November.  With the amount of time and attention that the health care bill is garnering it would be a major surprise to see any substantive movement on any estate tax bill for the foreseeable future.