TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, February 4, 2005

Washington Supreme Court Invalidates State's Estate Tax

WashingtonThe Washington Supreme Court yesterday invalidated the state's estate tax in Estate of Hemphill v. State of Washington (No. 74974-4, 2/3/05):

The estate tax scheme in Washington as currently written, though not automatically adopting specific federal law, must be administered complementary to federal law to guarantee that a separate state tax does not burden estates. A new tax burden can be created only by law that states such a purpose.

By taking no action, the legislature has created an internal conflict within the statute. Such a conflict can be resolved only through a clear directive by the legislature. The statute cannot be so ambiguous as to say, "[n]o Washington return need be filed if no federal return is required," while also referencing an old federal code that requires Washington returns when no federal return is filed. The same incongruity exists when dealing with state tax burdens that exceed the current federal credit.

Ambiguities in taxing statutes are construed "most strongly against the government and in favor of the taxpayer." In this case, the original initiative creating this tax statute, our prior interpretation of the statute, and the current wording of the statute show that Washington still has a "pickup" tax based on current federal law. Any amount of a state estate tax not fully absorbed by a current federal credit is an invalid independent tax.

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