Appeal from the Circuit Court of Cook County; the Hon. Joseph
Schneider, Judge, presiding.
JUSTICE BILANDIC DELIVERED THE OPINION OF THE COURT:
Appellee, the estate of Nelle M. Allyn (estate), sought a reassessment of the Illinois inheritance tax and additional tax pursuant to sections 8 and 30c of the Illinois Inheritance and Transfer Taxes Law (the Act) (Ill. Rev. Stat. 1981, ch. 120, pars. 382, 403c). The estate sought a refund of $72,552.66. Appellant, the State of Illinois, moved to dismiss the petition on the grounds that it was filed more than five years after the tax had been paid and that the petition was barred by section 30b of the Act. (Ill. Rev. Stat. 1981, ch. 120, par. 403b.) The circuit court denied the State's motion, reassessed the taxes, and ordered the State Treasurer to refund the amount sought by the estate. The State of Illinois appeals.
The issues presented on review are whether: (1) the estate filed its petition for reassessment and refund of overpayment of Illinois death taxes within the time allowed by the applicable statute; and (2) the State Treasurer was properly named in the court's refund order.
The decedent, Nelle M. Allyn, a resident of Evanston, died on October 8, 1971. Her will was admitted to probate on December 6, 1971. An Illinois inheritance tax return was timely filed. On June 25, 1973, the circuit court entered an order under Inheritance Tax Appraisement No. 72 CoIT 7161 assessing an inheritance tax of $94,218.27 and an additional tax of $101,896.48, for a total tax of $196,114.75.
On December 20, 1973, the Internal Revenue Service and the estate agreed to certain adjustments with respect to the Federal estate tax liability of the estate. The value of the gross estate was increased by $206,288.07. Because of the increase, a supplemental inheritance tax return under Inheritance Tax Appraisement No. 75 CoIT 4952 was filed, showing an inheritance tax of $103,413.41 and an additional tax of $112,505, for a total tax due of $215,918.41. On March 18, 1976, the estate paid $215,918.41 in full payment of the total inheritance and additional tax liability.
Under normal circumstances, this would have ended the matter to the satisfaction of all concerned. However, in October 1977, almost four years after all believed the inheritance tax proceedings concluded, the Federal government asserted a Federal gift tax and Federal income tax deficiency against the estate. Extensive litigation between the Federal government and the estate ensued in the United States Tax Court and the United States District Court. This litigation was concluded by the entry of appropriate orders in the Tax Court and District Court resulting in the payment by the estate of gift taxes and income taxes. As a result, the amount of additional taxes and additional costs of administration, which are valid deductions for Illinois inheritance tax purposes, was increased by $820,429.47, thereby reducing the amount of the Illinois inheritance tax and additional tax due from the estate. On February 3, 1984, the estate filed a petition in the circuit court of Cook County asserting the additional deductions and seeking a reassessment of the Illinois inheritance tax and additional tax liability, and a refund of the overpayment of Illinois inheritance and additional taxes.
On May 16, 1984, an order was entered by the circuit court of Cook County reassessing and redetermining the Illinois inheritance tax in the amount of $71,205.06 and additional tax in the amount of $72,160.09, for a total tax of $143,365.75. Because $215,918.41 was paid on March 18, 1976, the court ordered the State Treasurer to refund $72,552.66 to the estate.
There is no dispute about the fact that the estate overpaid Illinois taxes, or the amount of the overpayment. The State claims that the refund is barred by the statute of limitations. We disagree.
• 1, 2 An inheritance tax is a tax on the right to succeed to the beneficial interest of property upon the death of a decedent; it is a tax on the right to receive property by descent or devise, and is not a tax on the property itself. (21A Ill. L. & Prac. Inheritance & Transfer Taxes sec. 2 (1977).) Because the Act imposes a special tax and burden, it should be strictly construed against the State and in favor of the taxpayer. In re Estate of Voss (1973), 55 Ill.2d 313, 316, 303 N.E.2d 9; 21A Ill. L. & Prac. Inheritance and Transfer Taxes sec. 6 (1977).
The Act is a code covering the whole subject of Illinois death taxes. *fn1 It deals with assessment, payment and the method of securing a refund of overpaid taxes. Under the Act, the amount of death taxes payable to Illinois consists of two separate taxes, the inheritance tax imposed under section 1 (Ill. Rev. Stat. 1981, ch. 120, par. 375), and the additional tax imposed under sections 30a, 30b and 30c of the Act (Ill. Rev. Stat. 1981, ch. 120, pars. 403a, 403b, 403c). The estate's petition claimed an inheritance tax refund of $32,208.35 and a refund of additional tax in the sum of $40,344.31, for a total refund of Illinois death taxes in the sum of $72,552.66. In Illinois, the combined inheritance and additional taxes are referred to as Illinois death taxes.
• 3 We will first consider the refund of the inheritance tax. Section 8 of the Act provides in relevant part:
"(c) Whenever additional claims, taxes or additional costs of administration which are valid deductions have been proved and allowed against an estate subsequent to the appraisement, assessment and payment of tax, [said] claims, taxes and costs not having been allowed as deductions in the inheritance tax proceedings, [said] estate shall be entitled to a redetermination and reassessment of the tax and a refund from ...