Flournoy v. Amar

STEPHENS, J. Eloi J. Amar died on May 24, 1963, and his will was duly admitted to probate in the Superior Court of Los Angeles County. A state inheritance tax appraisement and report were made, dated Stepember 30, 1964, and a hearing on the report was set for October 20, 1964. On that date the report was approved and the tax set at $725.28. This amount was paid on November 6, 1964. Thereafter, a federal estate tax return was made, and the amount of state tax actually paid was allowed as a credit against the am mint, found to be due the federal government. Final distribution of the estate was made, and the eo-exeeutors were discharged by order of the superior court on April 2, 1965. Thereafter, on November’ 18, 1966, the appointed state inheritance tax appraiser filed a “supplemental” report with the court in the probate proceeding, claiming a further amount of tax due under Revenue and Taxation Code, section 13441.1 This section provides for the so-called “additional” or “pickup” tax. In essence, it allows the state to take advantage of a revenue raising opportunity afforded it by the federal government. The federal government allows an amount as a credit against the federal estate tax due for state inheritance taxes paid, but it bases the credit allowable on its own tables. Under section 13441, if the amount allowable is more than that actually paid to the state, the difference is imposed as an additional tax, and the money is paid to the state government, and the federal credit is increased. There is no increase in the total tax bill of the estate; the amount that would have been paid the federal government is simply paid to the state government instead, and is subtracted in the form of a larger credit from that amount that is owed to the federal government.

[403]The “supplemental” report was made pursuant to Revenue and Taxation Code, section 13443, subdivision (a).2 This section sets out the available procedure to the state for the collection of this tax. Objections to the report were filed, and the matter was set for hearing. Both sides submitted briefs, and the matter was taken under submission without oral argument. On January 17, 1967, the court adopted the supplemental report, and an order was entered directing that the amount of additional tax be paid. This appeal followed.

The objectors, appellants here, do not challenge the constitutionality of the tax itself (see Estate of Good, 213 Cal.App.2d 45 [28 Cal.Rptr. 378]); rather, they challenge the procedural device invoked for its collection. They seem to argue that the section puts them in the position of not being able to avoid having to pay the tax to the federal government and in addition pay the “pickup tax” amount to the state government. They argue that the state tax may not be imposed until after the final determination of the federal tax, in which case it may be too late to gain federal tax credit for the additional amount paid.