Oregon Inheritance Tax Return Filing Deadline Extended for Some 2010 Estates

 — But Not The Tax Due Date

As a result of Congress passing the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 in December 2010, the Oregon Legislature had to act expeditiously to determine which 2010 federal tax changes Oregon would adopt. As part of this review the 2010 Oregon Inheritance Tax return (“OIT return”) filing requirements for some 2010 decedents were changed to follow the federal filing requirements. Thus, if a decedent died after December 31, 2009, and before December 17, 2010, with property taxable in Oregon and a federal estate tax return is required, the due date for the OIT return is extended to the same date the federal estate tax is due.

Generally, this means that for 2010 decedents who died before December 17, 2010 with gross estates valued over $5 million, the extended filing deadline is September 19, 2011, for an OIT return (Form IT-1), plus six additional months if a timely extension request is applied for. For 2010 decedents with gross estates under $5 million, the 2010 OIT return remains due nine months after the date of decedent’s death. For 2010 decedents dying after December 16, 2010, the filing requirements remain unchanged and the OIT returns are due nine months following the date of decedent’s death.

Because of the revenue shortfalls, the Oregon Legislature did not extend the Oregon Inheritance Tax due date. Oregon Inheritance Taxes remain due and payable nine months after the date of the decedent’s death. Also, any penalties and interest must be calculated based on nine months after the date of the decedent’s death irrespective of the filing extension. The filing extension provision, tax due date, penalty and interest changes are contained in Section 33 of SB 301. (http://www.leg.state.or.us/11reg/measpdf/sb0300.dir/sb0301.en.pdf)

The Governor signed SB 301 on March 9, 2011, but it will not become law until the 91st day after the close of the legislative session. After SB 301 becomes law, Section 33 will be retroactive to estates of decedents who died after December 31, 2009. A representative from the Oregon Department of Revenue has confirmed that the Department will currently follow the intent of the new law and allow the filing deadline extension for 2010 returns.

If you are working with an estate that may be eligible for this filing extension, consider contacting the Oregon Department of Revenue to confirm the estate’s eligibility for these changes. Please note these changes in the law do not address the filing deadline for estates over $5 million that elect not to pay any federal estate tax and instead elect a modified carryover basis and file the Form 8939 information return in lieu of the federal estate tax return.

Recent Ruling: Fed. Estate Tax Not Binding

From time to time, we will publish blurbs on recent local court opinions and state legislation: 

Force v. Dep’t. of Rev., 2008 WL 5191844 (Or.Tax Magistrate Div.) (pdf)

Background: Decedent’s personal representative completed federal and state estate tax returns resulting in no tax owed on decedent’s farm. The state of Oregon issued a notice of deficiency for approximately $27,000. The personal representative argued that the state of Oregon, by statute, had to use the federal valuation method, which would result in $0 in state tax. 


Holding: The federal determination of federal estate tax is not binding upon the state in its separate and distinct calculation of the Oregon inheritance tax. Instead, the state tax imposed is appropriately determined based upon the formula contained in IRC section 2011(b)(1) (2000) as expressly adopted in ORS 118.010(2).