Estate Tax FAQs
- Do I have to file a Maine estate tax return?
- How do I file for an extension?
- How do I request a lien release for real and tangible personal property in an estate?
- Does Maine conform to the federal law and regulations regarding the alternate valuation date?
- Is the federal value of an estate automatically accepted as its value for Maine purposes?
- The IRS gives a credit for tax paid on recently inherited assets. Does Maine have a similar credit?
- If a nonresident decedent owns property in Maine and the property qualifies for the estate tax marital deduction, is a Maine return required?
- Can I ask to have interest and penalties waived?
- Maine property in a trust, LLC or pass-through entity is included in the estate of a nonresident decedent. What Maine property held by the trust, LLC or pass-through entity is sourced to Maine under 36 M.R.S. § 4104?
If you answer “yes” to either of the following questions, you must file a Maine estate tax return.
A) Is a federal estate tax return required?
If a federal Form 706 is required, then a Maine estate tax return is also required if there is any Maine property in the decedent’s estate.
B) Does the value of the federal gross estate plus taxable gifts made within one year of the date of death plus Maine elective property exceed the filing requirement threshold?
For deaths occurring in 2014 and 2015, the filing threshold is $2,000,000. For deaths occurring in 2016 and 2017, the filing threshold is equal to the federal threshold amount. For 2016 deaths, that amount is $5,450,000; for 2017 deaths, the amount is $5,490,000. For 2018 deaths, the threshold is $5,600,000 and for 2019 deaths, the threshold is $5,700,000.
If the answers to questions A) and B) are "no," you probably do not have to file an estate tax return. However, the fact that a federal Form 706 is not required does not mean that an estate is not liable for Maine estate tax. For example, if the Maine exclusion amount in the year of death is less than the federal exclusion amount, a “gap” estate is created making the estate taxable to Maine but not to the federal government. This would be the case for deaths occurring in 2014, as well as for deaths occurring in 2018 where the Maine exclusion amount is $5,600,000 and the federal exclusion amount is $11,180,000 and for deaths occurring in 2019 where the Maine exclusion amount is $5,700,000 and the federal exclusion amount is $11,400,000. More information on Maine's estate taxability threshold for each year can be found at the Estate Tax homepage on our web site at http://www.maine.gov/revenue/incomeestate/estate.
For deaths occurring in 2016 and 2017, the Maine exclusion amount is the same as the federal exclusion amount ($5,450,000 for 2016 and $5,490,000 for 2017). While there would be no “gap” estate for 2016 and 2017 deaths, tax may still be due if any taxable gifts were made within one year of the date of death or the estate includes Maine elective property.
If an estate is not required to file Form 706ME, but contains real property (land or buildings) or tangible personal property located in Maine, a Statement of Value (700-SOV) may be filed with a completed Certificate of Discharge of Estate Tax Lien to release the automatic lien on that property. On the date of death, an automatic estate tax lien applies to any property located in Maine that is owned by the decedent. The purpose of the lien is to prevent the property from being sold before the estate tax is paid. See FAQ #3.
If an estate is subject to the probate process in Maine, you may be required to file Statement 700-SOV or Form 706ME, even though taxes are not owed. The probate court may require a copy of an official letter from Maine Revenue Services certifying that an estate tax return has been filed (Certification of Filing) and that any tax due has been paid.Rev. 2/22/19
If you are unable to file an estate tax return within nine months of the date of death, Maine allows an automatic six-month extension of time to file. If you received an extension to file your federal return, Maine allows an extension for the same period. If you are making an estimated payment prior to filing a return, send a copy of the federal Form 4768 with the payment.
A request for an extension in addition to the automatic six-month period must be submitted in writing prior to the expiration of the automatic six-month extension period. Generally, the total extension period cannot exceed eight months.
CAUTION: An extension to file the Maine estate tax return is not an extension for the payment of tax. If the estate owes tax, a payment of at least 90% of the amount due must be paid by the original due date for filing the return in order to avoid a failure to pay penalty. Interest is charged on any tax paid after the original due date of the return.
When someone owning Maine real or tangible personal property dies, Maine estate tax law places an automatic lien on that property. To request a release of the lien, the representative must take the following steps:
1) Complete an appropriate Certificate of Discharge of Estate Tax Lien (either or both for real or tangible personal property). The Registry of Deeds for the county in which the property is located will be able to help if you do not have the proper book and page numbers for the property.
2) Complete Form 706ME or Statement 700-SOV as appropriate.
3) Submit the completed form, including documentation of value if required, with the appropriate Certificate of Discharge of Estate Tax Lien.
4) Make sure to include any payment due with the return (Form 706ME only). The return must show that all tax, interest, and penalties are being or have been paid.
5) The Certificate of Discharge of Estate Tax Lien, signed by the State Tax Assessor, will be mailed back to you. Bring the original document to the county Registry of Deeds and they will record the lien release.
For a list of the county Registries of Deeds, go to: http://www.maine.gov/sos/cec/ucc/county.pdf
Yes. Maine accepts the federal alternate valuation date, even for gap estates. Alternate valuation is not automatic. It must be elected by checking the box for the alternate valuation election on page 2 of federal Form 706. The election, once made, cannot be changed. When filing the Maine estate tax return, a copy of the entire federal return or pro forma return must be attached. Also, write “Alternate Valuation Date Elected” across the top of Form 706ME.
No. Maine law provides that where an estate has a federal tax liability, the federal value will be the value for Maine purposes unless the State Tax Assessor determines a different value. For estates with no federal filing, the Assessor will determine the value of the estate in accordance with principles of federal tax law.
6. The IRS gives a credit for tax paid on recently inherited assets. Does Maine have a similar credit?
No. Maine law does not provide a credit for Maine estate tax previously paid by another estate on the same property.
7. If a nonresident decedent owns property in Maine and the property qualifies for the estate tax marital deduction, is a Maine return required?
Yes, if the federal gross estate plus taxable gifts made within one year of the date of death plus Maine elective property is equal to or greater than the Maine exclusion amount, regardless of whether the property is included in the marital deduction. For deaths occurring in 2014 and 2015 the Maine exclusion amount is $2,000,000. For deaths occurring in 2016 and 2017 the Maine exclusion amount is the same as the federal exclusion amount ($5,450,000 and $5,490,000, respectively). The Maine exclusion amount for deaths occurring in 2018 is $5,600,000 and for deaths occurring in 2019, it is $5,700,000.
Yes. The State Tax Assessor shall waive penalties on a showing of reasonable cause as provided by 36 M.R.S. § 187-B (7). The State Tax Assessor may waive interest in certain unusual circumstances. However, these cases are very rare. You can ask for reconsideration of interest and penalty charges in writing within 60 days of receiving an assessment. Use the Petition for Reconsideration form available at http://www.maine.gov/revenue/forms/general/generalforms.htm for this purpose. Reasonable causes include, but are not limited to, erroneous information provided by MRS, death or serious illness of the taxpayer or member of the taxpayer's immediate family or a natural disaster.
9. Maine property in a trust, LLC or pass-through entity is included in the estate of a nonresident decedent. What Maine property held by the trust, LLC or pass-through entity is sourced to Maine under 36 M.R.S. § 4104?
Generally, Maine property held by a pass-through entity is sourced to Maine, if included in a nonresident decedent's estate, and:
1) The entity does not carry on a business for the purpose of profit and gain;
2) The ownership of the property in the entity was not for a valid business purpose; or
3) The property was acquired by other than a bona fide sale for full and adequate consideration and the decedent retained a power with respect to or interest in the property that would bring the real or tangible personal property located in this state within the decedent’s adjusted federal gross estate.
See MRS Rule 603 for further, more comprehensive, information.