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HTML Version Copyright
1995-2000 Daniel B. Evans. All rights reserved.
The Inheritance and Estate Tax Act
(Article XXI of the Tax Reform Code of 1971, Act of
March 4, 1971, P.L. 6, No. 2, added by Act of Aug. 4,
1991, P.L. 97, No. 22, as amended.)
PART VII
PAYMENT OF TAX
___(a) The following persons shall make a return:
______(1) The personal representative of the estate
of the decedent as to property of the decedent
administered by him and additional property which is or
may be subject to inheritance tax of which he shall have
or acquire knowledge.
______(2) The transferee of property upon the
transfer of which inheritance tax is or may be imposed by
this article, including a trustee of property transferred
in trust. No separate return need be made by the
transferee of property included in the return of a
personal representative.
___(b) The inclusion of property in the return shall
not constitute an admission that its transfer is taxable.
___(c) Any person required to file a return under
subsection (a) shall promptly file a supplemental return
with respect to additional assets and transfers which
come to his knowledge after the original return has been
filed.
___(d) The returns required by subsection (a) shall
be filed within nine months after the death of the
decedent. At any time prior to the expiration of the
nine-month period, the department, in its discretion, may
grant an extension of the time for filing a return for an
additional period of six months.
___(e) The returns required by subsections (a) and
(c) shall be made in the form prescribed by the
department.
___(f) When the decedent was a resident, the returns
shall be filed with the register. When the decedent was a
nonresident, the returns shall be filed with the register
who issued letters, if any, in this Commonwealth;
otherwise, the returns shall be filed with the
department.
___The department shall have supervision over, and
make or cause to be made, fair and conscionable
appraisements of property the transfer of which is
subject to tax under this article. The appraisement,
unless suspended until audit, shall be made within six
months after the return has been filed and, if not so
made, shall be made within an additional period as the
court, upon application of any party in interest,
including the personal representative, shall fix.
___The official with whom the return is required by
subsection (f) of section 2136 to
be filed shall determine the allowance or disallowance of
all deductions claimed. The determination, unless
suspended until audit, shall be made within six months
after the claim for allowance has been filed and, if not
so made, shall be made within such further period as the
court, upon application by any party in interest,
including the personal representative, shall fix.
However, the court, at the request of the fiduciary at
the audit of his account, may determine and allow, as
deductions, all properly deductible credits claimed in
the account or allowed at the audit without requiring the
filing of a separate claim for them, and the court may
then fix the amount of the tax and decree payment of the
tax. Deductions exceeding one hundred dollars ($100) in
the aggregate shall not be allowed by the court unless
the Commonwealth is represented at the audit by counsel
or unless there is proof that the register has had at
least thirty days notice of the claim.
___After the appraisement has been made and the
allowance or disallowance of deductions determined, the
inheritance tax, as affected by the court's determination
of the allowance or disallowance of deductions as
provided in section 2138, shall be
assessed by the official with whom the return is required
to be filed under subsection (f) of
section 2136. The assessment,
unless suspended until audit, shall be made within one
month after the filing of the appraisement or
determination of deductions, whichever occurs later, and,
if not so made, shall be made within an additional period
as the court, upon application by any party in interest,
including the personal representative, shall fix.
___The department shall give, or cause to be given,
notice of the filing of the appraisement, the
determination of the allowance or disallowance of
deductions and the amount of tax assessed, and all
supplements, to the personal representative and to any
transferee who filed a tax return or to their respective
attorneys.
___Failure to file a return of a taxable transfer
shall not bar the making of an appraisement or
supplemental appraisement or assessment of tax or
supplemental assessment of tax based upon taxable
transfers not returned under the provisions of this
article.
___Inheritance tax is due at the date of the
decedent's death and shall become delinquent at the
expiration of nine months after the decedent's death. To
the extent that the inheritance tax is paid within three
months after the death of the decedent, a discount of
five per cent shall be allowed.
___If the inheritance tax is not paid before the date
it becomes delinquent, interest on the unpaid tax shall
be charged after the date of delinquency at the rate
established pursuant to section 806 of the Act of April
9, 1929 (P.L. 343, No. 176), known as "The Fiscal
Code." When payment of inheritance tax is not made
because of litigation or other unavoidable cause of delay
and the property on which the tax has been calculated has
remained in the hands of a fiduciary and has not produced
a net income equal to the rate of interest provided in
this section annually, interest for such period shall be
calculated at the rate of the net income produced by the
property. Any payment on delinquent inheritance tax shall
be applied first to any interest due on the tax at the
date of payment and then, if there is any balance, to the
tax itself.
___(a) In the absence of a contrary intent appearing
in the will, the inheritance tax, including interest, on
the transfer of property which passes by will absolutely
and in fee, and which is not part of the residuary
estate, shall be paid out of the residuary estate and
charged in the same manner as a general administration
expense of the estate. The payments shall be made by the
personal representative and, if not so paid, shall be
made by the transferee of the residuary estate.
___(b) In the absence of a contrary intent appearing
in the inter vivos trust, the inheritance tax, including
interest, on the transfer of property which passes
absolutely and in fee by inter vivos trust, and which is
not part of the residue of the inter vivos trust, shall
be paid out of the residue of the trust and charged in
the same manner as a general administration expense of
the trust. The payment shall be made by the trustee and,
if not so paid, shall be made by the transferee of the
residue of the trust.
___(c) In the absence of a contrary intent appearing
in the will, the inheritance tax, including interest, on
the transfer of property which passes by will other than
absolutely and in fee, and which is not part of the
residuary estate, shall be paid out of the residuary
estate and charged in the same manner as a general
administration expense of the estate. The payment shall
be made by the personal representative and, if not so
paid, shall be made by the transferee of the residuary
estate.
___(d) In the absence of a contrary intent appearing
in the inter vivos trust, the inheritance tax, including
interest, on the transfer of property which passes other
than absolutely and in fee by inter vivos trust, and
which is not part of the residue of the inter vivos
trust, shall be paid out of the residue of the trust and
charged in the same manner as a general administration
expense of the trust. The payment shall be made by the
trustee and, if not so paid, shall be made by the
transferee of the residue of the trust.
___(e) In the absence of a contrary intent appearing
in the will or other instrument of transfer, the
inheritance tax, in the case of a transfer of any estate,
income or interest for a term of years, for life or for
other limited period, shall be paid out of the principal
of the property by which the estate, income or interest
is supported, except as otherwise provided in subsection
(c) or (d). The payment shall be made by the personal
representative or trustee and, if not so paid, shall be
made by the transferee of such principal.
___(e.1) In the absence of a contrary intent
appearing in the will or other instrument of transfer
creating the trust or similar arrangement, and in the
absence of a contrary intent appearing in the will or
other instrument of transfer of the surviving spouse
which expressly refers to the trust or similar
arrangement, the inheritance tax, including interest, due
at the death of a surviving spouse with respect to a
trust or similar arrangement to which
section 2113(b) is
applicable shall be paid out of the residue of the
principal of the trust or similar arrangement and charged
as a general administration expense of the trust or
similar arrangement. The payment shall be made by the
trustee or other fiduciary in possession of the property
and, if not so paid, shall be made by the transferee of
the residue of the trust or similar arrangement.
___(f) In the absence of a contrary intent appearing
in the will or other instrument of transfer and except as
otherwise provided in this section, the ultimate
liability for the inheritance tax, including interest,
shall be upon each transferee.
[Subsection (e.1) was added by the Act of June 16,
1994, P.L. 279, No. 48, and was reenacted and amended by
Section 21 of the Act
of June 30, 1995, P.L. 139, No. 21,
effective for decedents dying on or after January 1,
1995.]
___(a) The person or persons required by
section 2136 to make the
inheritance tax return shall be initially liable for
payment of the estate tax.
___(b) The personal representative of every decedent
or, if there is no personal representative, any other
fiduciary charged by law with the duty of filing a
Federal estate tax return, within one month of the filing
or receipt of the return shall file with the register or,
if the decedent was a nonresident, with the register who
issued letters, if any, in this Commonwealth, or
otherwise with the department, a copy of his Federal
estate tax return and of any communication from the
Federal Government making any final change in the return
or of the tax due. The assessment of estate tax shall be
made by the register or department within three months
after the filing of the documents required to be filed
and, if not so made, shall be made within an additional
period as the court, upon application of any party in
interest, including the personal representative, shall
fix.
___(c) The estate tax is due at the date of the
decedent's death but shall not become delinquent until
the expiration of nine months after decedent's death. Any
estate tax occasioned by a final change in the Federal
return or of the tax due shall not become delinquent
until the expiration of one month after the person or
persons liable to pay the tax have received final notice
of the increase in the Federal estate tax.
___(d) No discount shall be allowed in paying the
estate tax.
___(e) If the estate tax is not paid before the date
it becomes delinquent under subsection (c), interest on
the unpaid tax shall be charged after the date of
delinquency at the rate established in
section 2143.
___(f) The estate tax shall be apportioned and
ultimately borne in accordance with the provisions of 20
Pa.C.S. Ch. 37 (relating to apportionment of death taxes)
unless otherwise provided by this article or in the
instrument of transfer.
___(g) When the decedent was a resident, the estate
tax shall be paid to the register. When the decedent was
a nonresident, the estate tax shall be paid to the
register who issued letters, if any, in this
Commonwealth; otherwise, it shall be paid to the
department.
___Subject to the provisions of
sections 2144 and
2154, every personal
representative or other fiduciary (other than a trustee
of a pension, stock-bonus, profit-sharing, retirement
annuity, deferred compensation, disability, death
benefit, or other employee benefit plan) in charge of or
in possession of any property, or instrument evidencing
ownership of property, the transfer of which is subject
to a tax imposed by this article other than a tax on a
future interest not yet delinquent, shall deduct the tax
from the property, if money, or shall collect the tax
from the transferee. Any delivery of property or
instrument by the fiduciary to a transferee, except in
accordance with a decree of distribution of the court or
pursuant to a duly executed notice of election filed
under section 2154, shall not
relieve him of personal liability for a tax imposed by
this article. No personal representative or other
fiduciary in charge of or in possession of any property
subject to this article shall be compelled to pay or
deliver it to the transferee except upon payment to him
of the tax due other than tax on a future interest not
yet delinquent. If the transferee neglects or refuses to
pay the tax, the personal representative or other
fiduciary may sell the property subject to the tax, or so
much of the property as is necessary, under direction of
the court. All money retained by the personal
representative or other fiduciary, or paid to him on
account of the taxes imposed by this article, shall be
remitted by him before the tax becomes delinquent or, if
received after the tax becomes delinquent, shall be
remitted by him promptly upon its receipt.
___When money is deposited or invested in a financial
institution located in this Commonwealth in the names of
two or more persons, other than husband and wife, or in
the name of a person or persons in trust for another or
others, and one of the parties to the deposit or
investment dies, it shall be the duty of the financial
institution, within ten days after knowledge of the
death, to notify the department, giving the name of the
deceased person, the date of the creation of the joint or
trust deposit or investment, the amount invested or on
deposit at the date of death with the financial
institution and the name and address of the survivor or
survivors to the account. No notification shall be
required in regard to the account when the deposit at the
time of death does not exceed three hundred dollars
($300).
___The department, with the approval of the Attorney
General, may compromise in writing, with the person
liable, the tax, including interest on the tax, payable
on any transfer of property included in the estate of any
decedent who it is alleged was a nonresident at the time
of his death. A copy of the compromise agreement shall be
filed with the register who issued letters, if any, in
this Commonwealth; otherwise, it shall be filed with the
department. The compromise agreement shall constitute a
final determination of the matters covered by it and the
payment of the tax, as fixed by the agreement, shall
discharge all persons and property from liability with
respect to the tax.
___When the register or the department alleges that a
decedent was a resident of this Commonwealth at the time
of his death, and the taxing authorities of another state
or territory make a like claim on behalf of their state
or territory, a written agreement of compromise or a
written agreement to submit the controversy to a board of
arbitrators may be made under Part VIII.
___The department may, for reasonable cause, extend
the time for payment of any part of the inheritance tax
and may, if deemed necessary for the protection of the
interest of this Commonwealth, require the transferee in
present possession or, if a trust is involved, the
trustee to file a bond in the name of the Commonwealth
with sufficient surety, in an amount not exceeding twice
the tax computed when the bond is given at the highest
rate possible in the specific contingencies involved
(reduced by the amount of any partial payment made) and
conditioned for the payment of the tax at such postponed
due date, together with interest from the due date to the
payment date. No bond shall be required under this
section if the trustee or one of the trustees is a bank
and trust company or a trust company incorporated in this
Commonwealth or a national banking association having its
principal office in this Commonwealth. The bond required
shall be filed in the office of the register.
___The court, in its discretion, at any time after a
tax imposed by this article becomes delinquent, upon
application of the department, may require any person
liable for a tax imposed by this article to give a bond
for its payment. The bond shall be in the name of the
Commonwealth, in such amount and with such surety as the
court approves and conditioned for the payment of the
tax, plus interest at the same rate as the interest rate
on deficiencies provided for in
section 2143, commencing on the
date the tax became delinquent, within a time certain to
be fixed by the court and specified in the bond. The bond
required shall be filed in the office of the register.
___When any tax is imposed and paid under this article
on real estate located in a county other than that of the
register who received payment, the register shall
immediately forward to the register of the county where
the real estate is located a certificate of the payment
of the tax on the real estate which shall be entered of
record in his office. The register of the county where
the real estate is located shall be entitled to a fee of
two dollars ($2) for entering the record of payment to be
paid as a part of the administration expenses of the
decedent's estate.
___(a) Any person who willfully fails to file a
return or other report required of him under the
provisions of sections 2136 and
2145 shall be personally liable,
in addition to any liability imposed elsewhere in this
article, to a penalty of twenty-five per cent of the tax
ultimately found to be due or one thousand dollars
($1,000), whichever is less, to be recovered by the
department as debts of like amount are recoverable by
law.
___(b) Any financial institution which fails to give
the notice required by section
2147 shall be liable to a penalty of one hundred
dollars ($100) to be recovered by the department as debts
of like amount are recoverable by law.
___(c) Any person who willfully makes a false return
or report required of him under the provisions of this
article, in addition to any liability imposed elsewhere
in this article, commits a misdemeanor of the third
degree.
___(a) Notwithstanding the provisions of
section 2142, the inheritance tax
due under this article on the transfer of a small
business interest may be paid by the qualified transferee
in consecutive quarterly installments beginning
immediately following the expiration of nine months after
the decedent's death. The tax may be paid in twenty
consecutive quarterly installments.
___(b) The tax shall be paid in consecutive quarterly
installments due on March 31, June 30, September 30 and
December 31 of each year, provided the return required by
section 2136 is timely filed,
along with a notice of election executed by the qualified
transferee and joined in by the personal representative
which shall relieve the personal representative or other
fiduciary of liability for the collection and payment of
tax under section 2146. The notice
of election shall be completed on a form prescribed by
the department containing at least the following
information:
______(1) The name of the decedent and date of death.
______(2) The name or names of the personal
representative or other fiduciary.
______(3) The name or names of the qualified
transferees filing the election.
______(4) A description and estimated valuation of
the business interest on which tax is due.
______(5) A statement that the qualified transferees
assume full personal responsibility for the tax. Each
notice of election shall be affirmed before an officer
empowered to administer oaths. The installment payment of
tax shall bear interest at the rate of nine per cent per
annum.
___(c) In the event any portion of a small business
interest on which the installment payment of tax has been
elected is sold, exchanged or otherwise disposed of prior
to the expiration of five years following the date of
death and that portion equals or exceeds fifty per cent
of the total value of the small business interest
received by the qualified transferee, the transferee
shall immediately provide written notice of the sale,
exchange or disposition to the department, and the full
amount of the tax then outstanding on that portion shall
become due and payable at the expiration of sixty days
following the date of sale, exchange or other
disposition.
___(d) For purposes of this section, the term
"small business interest" means an interest in
an operating trade or business entity the principal
purpose of which is not the management of investments or
income producing assets owned by the entity which has
employed an average of less than fifty full-time
employees during the twelve months immediately preceding
the date of death and which meets one of the following
criteria:
______(1) An interest as a proprietor in a trade or
business carried on as a proprietorship.
______(2) An interest as a partner in a partnership
carrying on a trade or business if:
_________(i) twenty per cent or more of the total
capital interest in the partnership is included in
determining the gross estate of the decedent; or
_________(ii) the partnership had ten or less
partners.
______(3) Stock in a corporation carrying on a trade
or business if:
_________(i) twenty per cent or more in value of the
voting stock of the corporation is included in
determining the gross estate of the decedent; or
_________(ii) the corporation had ten or less
shareholders.
___(e) Qualified transferee defined. For purposes of
this section, the term "qualified transferee"
means a legatee or other transferee receiving:
______(1) ten per cent or more of the value of a
proprietorship qualifying as a small business interest as
defined in subsection (d);
______(2) ten per cent or more of the total capital
interest in a partnership qualifying as a small business
interest as defined in subsection (d); or
______(3) ten per cent or more in value of the voting
stock of a corporation qualifying as a small business
interest as defined in subsection (d).
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