Colorado Legislative Council Staff



TABOR Refund Impact

General Fund Revenue Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-218

Rep. Spradley

Sen. Dennis


Bill Status:

Fiscal Analyst:

January 28, 1998

House Finance

Harry Zeid (866-4753)



Summary of Legislation

            This bill would amend the definition of “federal additional estate tax return” and “qualified heir” in Section 39-23.5-102, C.R.S., in order to allow the state to continue to receive its share of the state death tax allowable under the federal internal revenue code.

            The bill will increase General Fund revenues as compared to current law. Therefore, the bill is assessed as having state revenue fiscal impact. The bill would become effective July 1, 1998, and would apply to estates of decedents who die on or after January 1, 1998.


FY 1998/99

FY 1999/2000

State Revenues

General Fund

Other Fund

General Fund Revenue Increase

State Expenditures

General Fund

Other Fund



FTE Position Change



Local Government Impact — None

State Revenues

            The Colorado Estate Tax (Article 23.5, Title 39, C.R.S.) is based on the state death tax allowable on the federal estate tax return. The state death tax appears as a dollar for dollar credit on the federal return. Federal tax liability is then reduced by the amount of the allowable state death tax. The federal Taxpayer Relief Act of 1997 included tax provisions affecting estate taxes. If a recapture event occurs, the federal estate tax must be recalculated. When federal estate tax is recalculated, the bill would allow the state to receive the maximum amount of the state death tax that is allowable on the recalculation of the federal estate tax return. Under these circumstances, any increase in a state death tax will reduce the federal tax liability by the same amount. The total estate tax paid by the estate would remain unchanged.

            The number of estates that will be affected by a change in the state death tax statute or other provisions of the bill affecting business or easement exclusions have not been estimated. Therefore, an estimate of the additional General Fund revenues that would occur as a result of the bill has not been determined.

TABOR Refund Impact

            Section 20 of Article X of the Colorado Constitution, limits the maximum annual percentage increase in state fiscal year spending. Once total state revenue from all sources that are not specifically excluded from fiscal year spending exceeds these limits for the fiscal year, the state constitution requires that the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset. Based on the current Legislative Council economic forecast, it is projected that the state will be in a TABOR refund position during each of the next five fiscal years. Any increase or decrease in state revenue from changes in fees, fines, licenses, or other revenue sources will affect the amount of the state revenue to be refunded.

Spending Authority

            The fiscal note would imply that no appropriations or spending authority are required in FY 1998-99 to implement the provisions of the bill.

Departments Contacted