997. Extensions of time for payment of estate tax where estate consists largely of interest in closely held businesses. The provisions of section 6166 of the internal revenue code shall apply to this section to the same extent as if such section of such code were contained in and made part of this section (whether or not a federal estate tax return is required to be filed) except as provided herein:
(a) The phrase "adjusted gross estate" shall be read as "adjusted federal gross estate determined without reference to paragraphs (1), (2) and (3) of subsection (a) of section nine hundred fifty-four" of this article.
(b) The phrase "section 2001" shall be read as "section nine hundred fifty-two or section nine hundred sixty" of this article.
(c) The phrase "the date prescribed by section 6151(a) for payment of the tax" shall be read as "the date prescribed by this article for the payment of the tax (without regard to any extension of time)".
(d) The term "secretary" shall be read as "commissioner of taxation and finance".
(e) Election. The election under this section shall not be allowed unless a similar election was made and allowed with respect to the federal estate tax return required to be filed under the provisions of the internal revenue code. If such election was made for the purposes of the federal estate tax, the time for making the election under this article shall be the same as is required under the federal estate tax. Where no federal estate tax return is required to be filed, the election with respect to the tax imposed under this article shall be made no later than the date prescribed for the filing of the return under this article (including extensions thereof) or any time thereafter as the commissioner of taxation and finance may by regulation prescribe.
(f) The commissioner of taxation and finance may, at any time, require a bond to be filed with him, which bond has been issued by a surety company approved by the superintendent of financial services as to solvency and responsibility and authorized to transact business in this state or other security acceptable to such commissioner, in an amount not exceeding twice the amount for which the time for payment has been extended under this section, to secure the payment of the estate tax and interest, the time for payment of which has been extended under this section.
(g) If an acceleration of payment occurs with respect to the tax imposed by this article, the extension of time for payment of the tax imposed by this article shall cease to apply and any unpaid portion of the tax payable in installments shall be paid upon notice and demand from the commissioner of taxation and finance. If any such acceleration of payment is avoided by a payment within six months of the due date thereof, then the provisions of subsection (j) of this section with respect to a two percent rate of interest shall not apply to said payment and there is imposed a penalty of five percent of the amount of such payment multiplied by the number of months, or fractions thereof, after the due date of the payment and before payment is made. Such acceleration of payment shall occur if:
(1) any installment of estate tax imposed by this article is not paid on or before the date fixed for its payment (including any extension of time for the payment of such installment), or
(2) the executor has been notified by the commissioner of taxation and finance that a bond or other security is required, but no such bond or other security has been filed within thirty days from the date of mailing of such notification, or
(3) an acceleration of payment has occurred with respect to the election by the executor to pay part or all of the federal estate tax in installments or, where no federal estate tax return is required to be filed, an acceleration of payment has occurred by virtue of the provisions of subsection (g) of section 6166 of the internal revenue code.
(h) The commissioner of taxation and finance may, for reasonable cause and if his interests would not be jeopardized thereby, extend the time for payment of any part of any installment under this subsection, including any part of a deficiency prorated to any installment under this subsection, for a reasonable period (1) not in excess of ten years from the date prescribed for the filing of the return under this article (without regard to any extension of time to file) or (2) if the date prescribed for such filing is earlier than the date which is twelve months after the due date of the last installment, such later date.
(i) If the time for payment of any amount of tax has been extended under this subsection, interest shall be paid annually together with the installment of tax on any unpaid portion of such amount (including the amount of any deficiency), at the rate prescribed in subsection (b) of section nine hundred seventy-six of this article with respect to extensions of time for payment of estate tax (other than the extensions of time provided for in this section) or as otherwise provided for in subsection (j) of this section.
(j) If the time for payment of any amount of tax has been extended under this section, the provisions of section 6166 of the internal revenue code applicable to the payment of interest are modified as follows:
(1) Interest on the two percent portion of such amount shall be paid at the rate of two percent per annum. For purposes of this section, the amount of any deficiency which is prorated to installments payable under this section, shall be treated as an amount of tax payable in installments under such section.
(2) For purposes of this paragraph, the term "two percent portion" means the lesser of fifty-four thousand dollars or the amount of the tax imposed by this article which is extended as provided in this section.
(3) If the amount of tax imposed by this article which is extended exceeds the two percent portion, any payment of a portion of such amount shall, for purposes of computing interest for periods after such payment, be treated as reducing the two percent portion by an amount which bears the same ratio to the amount of such payment as the amount of the two percent portion (determined without regard to this paragraph) bears to the amount of tax which is extended.
(4) Interest on any portion of the amount of tax which is not includible in the two percent portion of such amount shall be payable at the rate provided for in subsection (i) of this section.
(5) (A) Interest payable on any unpaid portion of the amount of tax due attributable to the first five years after the date prescribed for payment of the tax shall be paid annually;
(B) interest payable on any unpaid portion of such amount of tax attributable to any period after the five year period referred to in subparagraph (A) of this paragraph shall be paid annually at the same time as and as part of, each installment payment of the tax;
(C) in the case of a deficiency to which subsection (e) of section 6166 of the internal revenue code applies is determined after the close of the five year period referred to in subparagraph (A) of this paragraph, interest attributable to such five year period, and interest assigned under subparagraph (B) of this paragraph to any installment, the date of payment of which has arrived on or before the date of such determination, shall be paid upon notice and demand from the commissioner of taxation and finance; and
(D) if the executor has selected a period shorter than five years, such shorter period shall be substituted for five years in subparagraphs (A), (B) and (C) of this paragraph. Any period of time selected for the purposes of the tax under this article shall in no event be greater than the period of time selected for the purpose of the estate tax imposed by the internal revenue code.
(k) The lien of the tax provided for in section nine hundred eighty-two of this article shall be applicable to the same extent as if no election had been made to extend the time for payment of estate tax under this section.
Last modified: February 3, 2019