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CHAPTER 231.

[S. B. No. 227-Allen.]

TAXATION.

An Act Providing for the Taxation of Inheritance Devises, Bequests, Legacies, and Gifts and Fixing the Rate thereof, and Providing for the Manner of Payment and Manner of Enforcing the Payment Thereof.

Be it Enacted by the Legislative Assembly of the State of North Dakota:

§ 1. TAX ON TRANSFERS, EXCEPTIONS.] A tax shall be and is hereby imposed upon any transfer of property, real, personal, or mixed, or any interest therein, or income therefrom in trust or otherwise, to any person, association or corporation, except county, town or municipal corporations within the state, for strictly county, town or municipal purposes, and corporations of this state organized under its laws solely for religious, charitable or educational purposes, which shall use the property so transferred exclusively for the purposes of their organization, within the state, in the following cases, except as hereinafter provided:

1. By a Resident of State. When the transfer is by will or by the interstate laws of this state from any person dying possessed of the property while a resident of the state.

2. Non-Resident's Property within State. When a transfer is by will or interstate law, of property within the state or within its jurisdiction and the decedent was a non-resident of the state at the time of his death.

3. In Contemplation of Death. When the transfer is of property made by a resident or by a non-resident when such nonresident's property is within the state or within its jurisdiction, by deed, grant, bargain, sale or gift, made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, sale, or gift, made within six years prior to the death of the grantor, vendor, or donor, of a material part of his estate, or in the nature of a final disposition or distribution thereof, and without an adequate valuable consideration, shall be construed to have been made in contemplation of death within the meaning of this section.

4. When Imposed. Such tax shall be imposed when any such person or corporation becomes beneficially entitled, in possession or expectancy to any property or the income thereof by any such transfer whether made before or after the passage of this Act.

5. Transfer Under Power of Appointment. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this Act, such appointment, when made, shall be deemed a transfer taxable under the provisions of this

Act, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power, and has been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this Act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure.

6. On Clear Market Value. The tax so imposed shall be upon the clear market value of such property at the rates hereinafter prescribed and only upon the amount in excess of the exemptions hereinafter granted.

§ 2. PRIMARY RATES, WHERE NOT IN EXCESS OF $25,000.] When the property of any beneficial interest therein passes by any such transfer where the amount of the property shall exceed in value the exemption hereinafter specified and shall not exceed in value twenty-five thousand dollars the tax hereby imposed shall be:

1. One Per Centum, Where. Where the person or persons entitled to any beneficial interest in such property shall be the husband, wife, lineal issue, lineal ancestor of the decedent or any child adopted as such in conformity with the laws of this state, or any child to whom such decedent for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided, however, such relationship began at or before the child's fifteenth birthday, and was continuous for said ten years thereafter, or any lineal issue of such adopted or mutually acknowledged child, at the rate of one per centum of the clear value of such interest in such property.

2. One and One-half Per Centum, Where. Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister or a descendant of a brother or sister of the decedent, a wife or widow of a son, or the husband of a daughter of the decedent, at the rate of one and one-half per centum of the clear value of such interest in such property.

3. Three Per Centum, Where. Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the father or mother or a descendant of a brother or sister of the father or mother of the decedent, at the rate of three per centum of the clear value of such interest in such property.

4. Four Per Centum, Where. Where the person or persons entitled to any beneficiali nterest in such property shall be the brother or sister of the grandfather or grandmother or a descendant of the brother or sister of the grandfather or grandmother of the

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decedent at the rate of four per centum of the clear value of such interest in such property.

5. Five Per Centum, Where. Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of collateral consanguinity than is hereinbefore stated, or shall be a stranger in blood to the decedent, or shall be a body politic or corporate, at the rate of five per centum of the clear value of such interest in such property.

§ 3. OTHER RATES. WHERE IN EXCESS OF $25,000.] The foregoing rates in Section 2 are for convenience termed the primary rates.

Where the amount of the clear value of such property or interest exceeds twenty-five thousand dollars, the rates of tax upon such excess shall be as follows:

1. Rate, Where Amount $25,000 to $50,000. Upon all in excess of twenty-five thousand dollars and up to fifty thousand dollars one and one-half times the primary rates.

Upon all in

2. Rate Where Amount $50,000 to $100,000. excess of fifty thousand dollars and up to one hundred thousand dollars, two times the primary rates.

Upon all in

Rate Where Amount $100,000 to $500,000. excess of one hundred thousand dollars and up to five hundred thousand dollars, two and one-half times the primary rates. 4. Rate Where Amount over $500,000. Upon all in excess of five hundred thousand dollars, three times the primary rates. § 4. EXEMPTIONS DEFINED. FROM FIRST $25,000.] The following exemptions from the tax, to be taken out of the first twenty-five thousand dollars, are hereby allowed.

1. Transfers Totally Exempt. All property transferred to municipal corporations within the state for strictly county, town or municipal purposes, or to corporations of this state organized under its laws solely for religious, charitable, or educational purposes, which shall use the property so transferred exclusively for the purposes of their organization within the state shall be exempt.

2. $10,000; $2,000 Exempt, When. Property of the clear value of ten thousand dollars transferred to the huspand or wife of the decedent, and two thousand dollars transferred to each of the other persons described in the first sub-division of Section 2 shall be exempt.

3. $500 Exempt, When. Property of the clear value of five hundred dollars transferred to each of the persons described in the second sub-division of Section 2 shall be exempt.

4. $250 Exempt, When. Property of the clear value of two hundred and fifty dollars transferred to each of the persons described in the third sub-division of Section 2 shall be exempt.

5. $150 Exempt, When. Property of the clear value of one hundred and fifty dollars transferred to each of the persons described in the fourth sub-division of Section 2 shall be exempt.

6. $100 Exempt, When. Property of the clear value of one hundred dollars transferred to each of the persons and corporations described in the fifth sub-division of Section 2 shall be exempt.

7. Property Without the State Exempt, When. No tax shall be imposed upon any tangible personal property of a resident decedent when such property is located without this state, and when the transfer of such property is subject to an inheritance or transfer tax in the state where located and which tax has actually been paid, provided such property is not without this state temporarily nor for the sole purpose of deposit or safe-keeping; and provided the laws of the state where such property is located allow a like exemption in relation to such property left by a resident of that state and located in this state.

§ 5. WHEN TAX DUE. TO BE A LIEN.] All taxes imposed by this Act shall be due and payable at the time of the transfer, except as hereinafter provided; and every such tax shall be and remain a lien upon the property transferred until paid, and the person to whom the property is transferred and the administrators, executors, and trustees of every estate so transferred shall be personally liable for such tax until its payment.

§ 6. COUNTY TREASURER'S RECEIPTS.] The tax shall be paid to the treasurer of the county in which the county court is situated having jurisdiction as herein provided; and said treasurer shall make duplicate receipts of such payment, one of which he shall immediately send to the state treasurer, whose duty it shall be to charge the county treasurer so receiving the tax, with the amount thereof, and the other receipt shall be delivered to the executor, administrator, or trustee, whereupon it shall be a proper voucher in the settlement of his accounts.

7. FINAL ACCOUNTING ON FILING RECEIPT.] But no executor, administrator, or trustee shall be entitled to a final accounting of an estate in settlement of which a tax is due under the provisions of this Act, unless he shall produce such receipts.

8. PENALTY, WHEN.] If such tax is not paid within one year from the accruing thereof, interest shall be charged and collected thereon at the rate of ten per centum per annum from the time the tax accrued; unless by reason of claims made upon the estate, necessary litigation or other unavoidable cause of delay, such tax shall not be determined and paid as herein provided, in which case interest at the rate of six per centum per annum shall be charged upon such tax from the accrual thereof until the causeof such delay is removed, after which ten per centum shall be charged.

89. POWERS OF EXECUTORS, ETC.] Where Legacy Not in Money. Every executor, administrator, or trustee shall have full power to sell so much of the property of the decedent as will enable him to pay such tax in the same manner as he might be entitled by law to do for the payment of the debts of the testator or intestate. Any such administrator, executor, or trustee, having in

charge or in trust any legacy or property for distribution, subject to such tax, shall deduct the tax therefrom; and within thirty days therefrom shall pay over the same to the county treasurer, as herein provided. If such legacy or property be not in money, he shall collect the tax thereon upon the appraised value thereof, from the person entitled thereto. He shall not deliver or be compelled to deliver any specific legacy or property subject to tax under this Act, to any person until he shall have collected the tax thereon. If any such legacy shall be charged upon or payable out of real property, the heir or devisee shall deduct such tax therefrom and pay it to the administrator, executor, or trustee, and the tax shall remain a lien or charge on such real property until paid. If any such legacy shall be given in money to any such person for a limited period, the administrator, executor, or trustee shall retain the tax upon the whole amount, but if it be not in money, he shall make application to the court having jurisdiction of an accounting to him to make an apportionment if the case require it, of the sum to be paid into the hands of such legatees, and for such further order relative thereto as the case may require.

§ 10. SUBSEQUENT DEBTS. STATE TREASURER MAY REFUND TAX.] If any debt shall be proved against the estate of the decedent after the payment of any legacy or distributive share thereof, from which any such tax has been deducted, or upon which it has been paid by the person entitled to such legacy or distributive share and such person is required by the order of the county court having jurisdiction thereof on notice of the state treasurer to refund the amount of such debts or any part thereof, an equitable proportion of the tax shall be repaid to such person by the executor, administrator, trustee or officer to whom said tax has been paid.

§ 11. How REFUND OF TAX MADE.] When any amount of said tax shall have been paid erroneously into the state treasury, it shall be lawful for the state treasurer upon receiving a transcript from the county court record showing the facts to refund the amount of such erroneous or illegal payment to the executor, administrator, trustee, person or persons, who have paid any such tax in error, from the treasury; or the said state treasurer may order, direct, and allow the treasurer of any county to refund the amount of any illegal or erroneous payment of such tax out of the funds in his hands or custody to the credit of such taxes, and credit him with the same in his account rendered to the state treasurer under this Act. Provided, however, that all applications for such refunding of erroneous taxes shall be made within one year from the payment thereof, or within one year after the reversal or modification of the order fixing such tax.

§ 12. BEQUESTS TO EXECUTORS FOR SERVICE] If a testator bequeaths property to one or more executors or trustees in lieu of their commissions or allowances, or makes them his legatees to an amount exceeding the commissions or allowances prescribed

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