DENMARK. IMPOSITION IN THE UNITED STATES OF AN INHERITANCE TAX ON NON-RESIDENT DANISH HEIRS. APPLICATION OF ARTICLE 7 OF THE TREATY OF 1826 BETWEEN DENMARK AND THE UNITED STATES. File No. 811.5124/5.] The Danish Legation to the Department of State. [Memorandum.] According to the statutes of the State of Iowa, an inheritance tax of 10-20% is imposed on inheritance of property left in that State when the heirs are non-resident aliens, in addition to the tax of 5% imposed on heirs either United States citizens or resident aliens of the same degree of kinship to the decedent. In the estate of the late Ane Margrethe Andersen, born Hansen, of which C. L. Hansen is an administrator, and which estate, with will, is now before the District Court of Iowa in and for Mitchell County, the State Treasurer of Iowa claims the right to impose upon the portion of the estate to be distributed amongst heirs residents of Denmark, a collateral inheritance tax of 15%+5%, or 20%. The attention of the State Treasurer has been called to the terms of Article 7 of the Convention of Commerce and Navigation concluded between Denmark and the United States on April 26, 1826, which reads as follows: The United States and His Danish Majesty mutually agree that no higher or other duties, charges or taxes of any kind shall be levied in the territories or dominions of either party, upon any personal property, money or effects of their respective citizens or subjects, on the removal of the same from their territories or dominions reciprocally, either upon the inheritance of such property, money or effects or otherwise, than are or shall be payable in each State upon the same, when removed by a citizen or subject of such State, respectively. Against the application of this article, to the effect of placing the said Danish heirs on equality of right with citizens or subjects of the United States, and therefore also citizens or subjects of the State of Iowa, the State Treasurer of that State makes the claim that in comparatively recent cases construing collateral inheritance tax statutes and treaties, such as the one referred to, it has been held that the treaty does not apply to the estate of a citizen or subject of the United States dying at home and leaving property here to subjects of the foreign country. The State Treasurer further states that article 7 of the DanishAmerican convention relates to property belonging to citizens of Denmark that may be located in the United States and passes as an inheritance to subjects of Denmark; but that it does not apply where the owner of the property is a subject of the United States, owning property here that passes to subjects of Denmark. Against this decision the Danish Minister hereby has the honor to enter a protest. This protest is based, 1. upon the wording of said Article 7, which does not consider the status of the testator, but merely that of the legatee. It is the freedom of removal of property that is mutually assured, for the benefit of the person in whose favor the transfer of "personal property, money or effects," "upon inheritance or otherwise" takes place, on terms of equality with citizens or subjects of the State from which such removal is made; cases, 2. upon the fact that this same article has, in several previous been respected in the sense as mentioned under 1; not only in other States (Washington for instance) but even previously in the State of Iowa, in consequence of consular representations. The Danish Minister, being of the opinion that the question under contention is one over which the State courts have no exclusive authority, ventures to submit the case to the consideration of the Department of State, with the respectful request that such action as can properly be taken by the Federal authorities be taken for information as to the position of the United States of America as one party to the convention above referred to in regard to the question involved. THE DANISH LEGATION, Washington, January 27, 1912. File No. 811.5124/6.] [Memorandum.] In continuation of the memorandum of this Legation dated the 27th ultimo, in regard to the interpretation of Article 7 of the Danish-American Convention of Commerce and Navigation in its application to the case now pending before the District Court of Iowa, for the settlement of the estate of Ane Margrethe Andersen, the Danish Minister begs to submit the following supplementary information, proving that the claim of the Consul of Denmark at Chicago, with jurisdiction over the State of Iowa, to equality of treatment of non-resident Danish heirs with resident heirs, has on a previous occasion been acceded to by the proper authorities. The non- The estate in question then was that of Jens Andersen, before the District Court of Pottawattamie County, State of Iowa. resident Danish heirs were brother and sister of the deceased. extra inheritance tax was imposed of 5%. Counsel for the Danish Consulate, Messrs. Harl and Tinley of Council Bluffs protested against this assessment, basing such protest on the text of the said Article 7; and on November 30, 1908, Messrs Harl and Tinley were able to report to their representative in Chicago, Messrs Bastrup & O'Neil, 323 Reaper Block, the successful result of their protest, by the letter which is given in extract as follows: Gentlemen: In re Estate of Jens Andersen. In the above-entitled estate our contention with reference to the amount of inheritance tax was presented to the State Treasurer, and he concedes the obligation to pay upon the same basis of [sic] a resident of this State. Yours truly, (signed) Harl & Tinley. In that case, consequently, the State Treasurer agreed with the views as presented by the Consul of Denmark. THE DANISH LEGATION, Washington, February 2, 1912. The Department of State to the Danish Legation. [Memorandum.] The Department of State has the honor to acknowledge the receipt of the memorandum of the Danish Legation, dated the 27th ultimo, in regard to the interpretation of Article 7 of the Treaty of April 26, 1826, between the United States and Denmark, in connection with the settlement and distribution of the estate of Ane Margrethe Andersen, now before the Mitchell County (Iowa) District Court. In reply the Department of State has the honor to advise the Danish Legation that this case is receiving the attentive consideration of this Government, and that the Legation will be informed of the result at the earliest practicable moment. DEPARTMENT OF STATE, Washington, February 7, 1912. File No. 811.5124/8.] The Danish Legation to the Department of State. [Memorandum.] The final report to the District Court of the State of Iowa, in and for Plymouth County, from the Administrator of the Estate of Metta K. Peterson, deceased, a resident of Le Mars, Plymouth County, Iowa, was subscribed and sworn to by the Administrator, Frank Spiecker, on the 26th day of December, 1911, before Nelson Miller, Notary Public in and for said Plymouth County, Iowa. The Administrator's report states in part: That all of said estate passes collaterally. That the inheritance tax levied by the State of Iowa in such cases has been paid to the Treasurer of the State of lowa at Des Moines, and the Treasurer's receipt for the same is filed in the office of the Clerk of this Court. The report furthermore states: on That one of the heirs of said estate, viz: Karoline Krag, lives in Copenhagen, Denmark. That the rate of inheritance tax upon that portion of said estate inherited by her is 10%, and the total amount of said tax was, her share, $711.06. That another of the heirs is Marie Johanson, lives in Germany, and by virtue of treaty covenants with the German Empire the tax on her portion is 5%, and the total sum $355.53. That the remaining heir, P. H. Schmidt, lives in Iowa, and the amount of tax on his portion is $355.53. The reason for the higher taxation of the heir living in Copenhagen, Denmark, is not given in the Administrator's report, whereas a letter from Nelson Miller, lawyer, First National Bank Building, Le Mars, Iowa, dated January 19th, 1912, and addressed to M. Godskesen, attorney, Copenhagen, Denmark, on the same matter says in part: The tax on the share going to Germany and on that remaining in Iowa is only 5%, and therefore you will see from the papers that Mrs. Krag.gets $355.53 less than either one of the other two heirs. The reason for this is that the treaty between Germany and the United States forbids this country from taxing German citizens any larger sum than it does its own citizens, whereas the treaty with Denmark makes no such provisions. If the higher taxation as used against the Danish heir is based on the view as expressed by Mr. Miller, it rests on an error. Renewing his protest contained in the memorandum of this Legation of January 27th, 1912, in regard to the estate of the late Ane Margrethe Andersen, now before the District Court of Iowa, in and for Mitchell County, and referring to the subsequent memorandum of February 2nd, 1912, the Danish Minister has the honor to submit the case of Karoline Krag to the consideration of the Department of State with the respectful request that such action as can properly be taken by the Federal authorities, be taken, in order to obtain the reimbursement of the sum of $355.53 to said Karoline Krag, this amount having been levied in excess of what can lawfully be levied in accordance with Article 7 of the Convention of Commerce and Navigation concluded between Denmark and the United States on April 26th, 1826, and which reads as follows: [Article 7 of the treaty is here quoted, as in the first foregoing memorandum.] LEGATION OF DENMARK, Washington, April 17, 1912. File No. 811.5124/8.] The Department of State to the Danish Legation. [Memorandum.] The Department of State has the honor to acknowledge the receipt of the memorandum of the Danish Legation, dated the 17th instant, in regard to the interpretation of Article 7 of the Treaty of April 26, 1826, between the United States and Denmark, in connection with the settlement and distribution of the estate of Metta K. Peterson, deceased, now before the District Court of Iowa for Plymouth County. The Department of State has the honor to advise the Danish Legation that this case is receiving the attentive consideration of this Government, and that the Legation will be informed of the result at the earliest practicable moment. DEPARTMENT OF STATE, File No. 811.5124/10.] The Assistant Attorney General to the Secretary of State. DEPARTMENT OF JUSTICE, Washington, April 30, 1912. SIR: Referring again to your letter of the 26th of February,1 in connection with the settlement and distribution of the estate of Ane 1 Not printed. Margrethe Anderson, I beg to enclose for your information copy of a letter dated the 22nd instant from the United States Attorney for the Northern District of Iowa, reporting the status of the intervening petition filed by him. Respectfully, The United States Attorney for the Northern District of Iowa to the Attorney General. OFFICE OF THE UNITED STATES ATTORNEY, Storm Lake, Iowa, April 22, 1912. SIR: Replying to your favor of April 18th1 in regard to the proceedings in the estate of Ane Margrethe Andersen in the District Court of Iowa in and for Mitchell County, I would say that agreeable to your instructions, I have filed a petition of intervention, to which the Treasurer of Iowa has filed a demurrer, claiming that the United States has no right to intervene and that the treaty in question does not apply to a case where a subject of the United States dies and leaves property to a subject of Denmark and that the tax imposed by the State is on the succession to the property and not upon its removal. I expect to submit the matter to said court during the term which convenes April 29th and will report to you promptly what action is taken in the matter. Yours very truly, F. F. FAVILLE, File No. 811.5124/9.] The Department of State to the Danish Legation. [Memorandum.] 1 Referring to the memorandum of the Legation of Denmark, dated April 17, 1912, the Department of State has the honor to advise the Legation of the receipt of a letter of the 26th ultimo 1 from the Department of Justice stating that, in compliance with the request of the Department of State, instructions had been issued to the United States Attorney at Sioux City, Iowa, to endeavor to obtain the reimbursement of Karoline Krag, a resident of Denmark, of $355.53, in connection with the settlement of the estate of Metta K. Peterson, which seems to be the amount levied in excess of the rate of taxation contemplated by the Treaty of April 26, 1826, between the United States and Denmark. DEPARTMENT OF STATE, File No. 811.5124/11.] The Secretary of State to the Minister of Denmark. No. 170.] DEPARTMENT OF STATE, SIR: In further reply to your Legation's memorandum of April 17 last, in the matter of the inheritance tax on the share of the estate 1 Not printed. |