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the court. The surrogate himself, if not satisfied with the result, may send the report back to the appraiser for further action, or the state may do the same by its representatives, or those who must pay the tax may appeal from the pro forma taxing order to the surrogate.

In Massachusetts, the tax commissioner determines the tax and notifies the executor or administrator who is liable. His determination is final unless some of those interested apply to the probate court within one year after the payment of the tax, for an abatement. If the court finds in the applicant's favor, the amount abated will be repaid with interest.

In Kansas, the tax commission assesses the tax and sends a certificate of its findings to the probate judge, the county treasurer, and the persons who are to pay the tax. In each state it is necessary to consult the local statutes to know the exact procedure prescribed. The federal tax is assessed by the Bureau of Internal Revenue.

§ 258. Appeals from Assessment

Methods of appealing from the assessment of tax are provided by both state and federal legislation. In New York, either party may appeal and the appeal is first to the surrogate himself from the pro forma order. Notice of appeal must be filed within sixty days and must state the grounds of the appeal. This appeal is usually decided on the briefs filed by the attorneys for the appellant and for the comptroller. The surrogate after hearing the appeal may affirm the order, may modify or reverse it, or may direct a further appraisal and supplemental report.

Either party, the state or the taxpayer, may appeal from the final decision of the surrogate to the court above. In all states it is possible to appeal to the higher courts. The question in each case is whether the appeal will justify the costs and the delay incurred. Such proceedings would be controlled

by the attorneys and would follow the court procedure customary in the state.

§ 259. Payment of State Tax

New York allows a discount of 5 per cent for payment in six months after accrual (time of transfer). An executor should secure this discount if possible. The benefit resulting from it should be given to all persons paying any part of the tax, because otherwise the person receiving the residue of the estate would be enriched by the amount of the discount at the expense of the other beneficiaries. If the tax is not paid within eighteen months, interest will be charged and collected at the rate of 10 per cent from the time of accrual.

§ 260. Payment of Tax on Land Values

It is the executor's duty to pay the state tax on realty and then collect from those who take possession. The executor may use what he has collected from the personal assets to pay all the transfer taxes on both personalty and realty. Then he may collect the amount of tax he has paid on the realty from those who take the realty. He can, if necessary, bring the proper proceedings in the surrogate's court to have the land sold if the tax is not repaid voluntarily. As he has had no possession of the land he must get a court decree to sell the land to get back the tax paid if the reimbursement is not voluntarily made. This order may be secured in the same manner as an order to sell land to satisfy debts when the personalty is not sufficient.

Under state laws levying the tax on individual legacies the person taking real estate upon which a legacy payable to another is charged, takes it with the burden and must pay the legacy without subtracting anything for the tax; that is, he must pay all the tax from his own interest in the land.

The transfer tax is a lien on real property until paid, save

that after six years an innocent purchaser for value would hold the property free of liens. Against the heirs or the devisees, the obligation would continue indefinitely because no statutory limitations run against the state.

§ 261. Payment of Tax on Legacies

State laws generally provide that the tax shall accrue immediately after death, and interest begins to run from that date as soon as the amount of the legacy is ascertained. (But see § 267 in next chapter.) Each legacy is liable for the tax. due upon it, which the executor must pay, and the legatee is entitled to the remainder. The testator may provide that any or all inheritance taxes shall be paid from the residuary estate. The effect of this is to increase the legacy or legacies by the amount of the tax paid.

A legacy in trust is usually taxed as if it went directly to the objects of the trust. In Illinois this is not the case, and if the trust was a secret one, the tax levied would be as against the trustee individually.

A lapsed legacy pays tax according to its final destination. The usual rule is that when a legatee dies before the testator, the legacy lapses unless it is left to the legatee or his heirs. In some states a legacy will go to the heirs of the legatee if the legatee dies before the legacy vests. Usually a lapsed legacy goes to the residuary legatee or legatees.

§ 262. Responsibility for Payment of Inheritance Taxes

The primary responsibility for payment of the tax upon the transfer of the entire estate, including property which will not come into his possession, rests upon the executor or administrator. Generally, all persons on whom rests the responsibility for payment of the tax are personally liable therefor, and if the executor pays he may compel reimbursement.

Although the executor is generally charged with the duty

of paying state inheritance taxes, such taxes are borne not by the estate but by the persons who take the property under the will. Consequently, the executor must reimburse the estate by collecting from each person who takes property the amount of the tax on his respective share, deducting this from each legacy and paying over only the remainder. If the legacy is of specific stock or other articles of value, he may retain them until the legatee reimburses him for his advances. From legacies of money, he may deduct the amount of tax paid.

It is the duty of the personal representative in every case
where a tax is due under this act, before paying over any
legacy or distributive share, to exact from the person who
is to receive it, or retain in his hands out of the legacy or
distributive share, a sum sufficient to pay the tax. If he
does not he runs the risk of paying it out of his own prop-
erty.

The New York tax is payable to the state comptroller in all counties when there is a salaried appraiser. In other counties it is payable to the county treasurer. An executor should pay within six months and secure the discount and avoid the penalty. (See § 259.)

§ 263. Special Cases

There are cases where large legacies have been left in pursuance of contract, but in all such cases the state has been able to enforce the usual tax.7

In the same way the law does not take notice of compromise among the claimants. The tax accrues at the time of death. What those who are entitled to the property do among themselves does not concern the state. In one case a large amount of property was left to a charitable organization and was exempt. The charitable organization compromised with some of the heirs who brought suit, and paid them one-third

Hunter v. Husted, 45 N. C. 141.

'Matter of Owis, 173 App. Div. (N. Y.) 1 (affirmed 223 N. Y. 1).

of the estate. The court let them take it free of tax as it was not left to them but to an exempt party. In Pennsylvania and Colorado the rule is otherwise.

A bequest to a creditor would be taxable. If made to discharge the debt, the creditor need not accept; if he does, he must pay the tax.8

REVIEW QUESTIONS

1. Where must a decedent's principal inheritance tax be paid? 2. What courts have jurisdiction over the collection of inheritance taxes? In your state, what officer must enforce the payment of such taxes?

3. What time is allowed for the filing of an inventory and appraisal in your state? Who values the items?

4. When is the value of the property taken to compute the transfer tax? How is the taxable value of real estate and personal property ascertained? How are active stocks valued? How is the present value of life estates, annuities, remainders, dower, curtesy, and the like determined?

5. In your state, who assesses the tax?

6. In your state, what rights of appeal exist?

7. To whom, in your state, is the tax payable? Who is primarily to pay the tax? How can he collect taxes advanced on land? Who must pay the tax on realty? If a legacy is charged on land, must it bear its proportion of any tax on the land? How long is an unpaid inheritance tax a lien on land?

8. When does the transfer tax accrue? Who pays the tax primarily? How is a legacy left in trust usually taxed? How is the tax assessed on a lapsed legacy?

9. Who is responsible for the payment of inheritance taxes? How is the estate reimbursed for taxes paid on legacies?

10. If legacies are left pursuant to a contract, would that affect the tax? If the heirs compromise, does it affect the tax? Would

a bequest to a creditor be taxable? Is a gift to take effect at death taxable?

Matter of Gould, 156 N. Y. 423.

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