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Inheritance tax

What's new for 2012?

In 2012, the Oregon Inheritance tax changed to the Oregon Estate Transfer tax. For deaths on or after January 1, 2012, you'll need to file our new Form OR 706, Oregon Estate Transfer tax return, 150-104-001, instead of Form IT-1, Oregon Inheritance tax return, which will only be filed for 2011 and prior dates of death. See Estate and Trust Taxes (Home) for more information.
 
For dates of death in 2011 and prior use the following information to help file your Oregon Inheritance Tax return, Form IT-1.
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Filing requirement

The list below shows the filing threshold for filing the Oregon Inheritance tax return, Form IT-1. The gross estate is the fair market value of all assets owned by the decedent at the date of death. The Oregon filing threshold is not the same for all tax years and is not always the same as the federal amount. See the list below.  
  • For 2011, an estate with a gross value of $1,000,000 or more. The unified credit amount is $345,800. If you meet this filing threshold, you need to file Oregon Form IT-1 even if you do not need to file a federal 2011 Form 706.
  • For 2010, an estate with a gross value of $1,000,000 or more. The unified credit amount is $345,800. If you meet this filing threshold, you need to file Oregon Form IT-1 even if you do not need to file a federal 2010 Form 706 or if you elect not to file a federal 2010 Form 706. 
  • For 2006 through 2009, an estate with a gross value of $1,000,000 or more. The unified credit amount is $345,800.
 
The executor of the estate is required to file Form IT-1. For inheritance tax purposes, an executor is a personal representative, administrator, fiduciary, or custodian of the property, or any person who has actual or constructive possession of the decedent's property.
 
A copy of the federal Form 706, schedules and supporting documents must be attached to your Oregon Form IT-1, even if you are not required to file a federal estate return.

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Due date of the return and payment

The return and payment of the Oregon Inheritance Tax is due nine months after the date of death.

Oregon requires:
  1. The Oregon inheritance tax return, Form IT-1, and inheritance tax payment received by the department nine months after the decedent’s date of death (due date); or
  2. A request for an extension to file the Oregon inheritance tax return, Form IT-1, and payment of the Oregon inheritance tax received by the department nine months after the decedent’s date of death (due date); or
  3. A request for an extension to file the Oregon inheritance tax return, Form IT-1, and request for extension of time to pay the Oregon inheritance tax received no later than nine months after the decedent’s date of death (due date).
Payment received after the original or Oregon approved extended payment due date will be subject to interest and penalty. Please see the interest and penalty sections below.  
 
If the estate cannot file or pay by the original due date please see Extensions below. 

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Extensions

Attach a copy of your extension request to your return when you file. An extension of time to file an estate tax return, or an extension of time to pay estate tax will be accepted for Oregon, as granted by the Internal Revenue Service. If you aren’t requesting a federal extension, you may mark "For Oregon Only" at the top of the federal extension Form 4768. We will use federal guidelines to approve. If an extension of time to pay is granted, the tax must be secured by collateral acceptable to the Oregon Department of Revenue. See OAR 150-118.225 for more details. An extension of time to file your return does not extend the time to pay the tax. A separate, approved extension request to extend the time to pay the tax must be obtained from the department on or before the original payment due date. Interest will accrue during the extension period.
 
To avoid penalty and interest, you must use the Oregon Inheritance Tax Payment Voucher (Form IT-V) to make a payment by the due date.
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Interest

If the tax is not paid by the original due date, interest is charged on the unpaid tax at the annual interest rate of:
  • For 20134 percent .
  • For 2012, 5 percent.
  • For 2011, 5 percent.
  • For 2010, 5 percent.
Contact us at estate.help.dor@state.or.us if you need help with how to calculate the interest amount to include with your payment.

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Penalty

LATE FILING. A penalty of 5 percent of the tax is imposed if the return is not filed by the due date, including extensions. If the return is filed more than three months after the original or extended due date, there is an additional 20 percent penalty, for a combined total penalty of 25 percent.
 
FAILURE TO MAKE PAYMENT. A delinquency penalty of 5 percent of the tax is imposed if the tax is not paid within nine months from the date of death or by an approved extended payment date. An extension of time to file does not extend the time to pay. An exception to the penalty is provided for deferral of payment pursuant to an extension under ORS 118.225, or a timely election made under ORS 118.300.
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Amended returns

If an amended federal estate tax return (Form 706) is filed, or an adjustment made which results in a change in the amount of tax, it is the executor's responsibility to file an amended Oregon inheritance tax return within 90 days. Use a year specific Form IT-1, check the ‘amended return’ box and attach the federal amended Form 706, a complete copy of the federal audit report, and schedules to explain the changes made.
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Apportionment of the tax

If the decedent has property located outside of Oregon, the tax will be apportioned on the Form IT-1.
 
RESIDENT DECEDENT. For a resident decedent, Oregon taxes real property and tangible personal property located in Oregon and intangible personal property wherever it is located.
 
NONRESIDENT DECEDENT. For a nonresident decedent, Oregon taxes real property, tangible personal property, and intangible personal property located in Oregon. An exemption is allowed for intangible personal property located in Oregon if a like exemption is allowed by the state of residence.
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Laws, rules, and forms

Inheritance tax advisories (archived): Oregon is tied to federal estate tax law; therefore, Oregon inheritance taxes will be determined under Internal Revenue Code in effect December 31, 2000, and Oregon Revised Statutes, chapter 118 prior to enrollment of HB 2541. View archived inheritance tax advisories.
 
Helpful links: 

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Tax professionals and estate attorneys

In order to assist you efficiently, please include your name and daytime telephone number if you are e-mailing us a question. We require all estate tax professionals to research questions before contacting us for assistance.
 
Helpful links:

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Questions?

If you have questions, you can e-mail us at: estate.help.dor@state.or.us
 

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