PRINTER'S NO. 1028
No. 906 Session of 2005
INTRODUCED BY S. MILLER, ARMSTRONG, BAKER, BALDWIN, BARRAR,
BASTIAN, BENNINGHOFF, BOYD, BROWNE, BUNT, CALTAGIRONE,
CAPPELLI, CAWLEY, CLYMER, CRAHALLA, CREIGHTON, DALLY, DeLUCA,
ELLIS, FAIRCHILD, FICHTER, FORCIER, GABIG, GEIST, GEORGE,
GINGRICH, GODSHALL, GOOD, GOODMAN, GRUCELA, HARRIS, HERMAN,
HERSHEY, HESS, HUTCHINSON, KAUFFMAN, KILLION, LEDERER, LEH,
MACKERETH, MAHER, MAJOR, McILHATTAN, McNAUGHTON, METCALFE,
MILLARD, MUSTIO, NAILOR, O'NEILL, PETRARCA, PHILLIPS,
PICKETT, PISTELLA, PYLE, READSHAW, REICHLEY, ROBERTS, ROHRER,
RUBLEY, SAINATO, SATHER, SCAVELLO, SCHRODER, SHANER,
B. SMITH, SOLOBAY, STERN, R. STEVENSON, E. Z. TAYLOR, THOMAS,
TURZAI, WANSACZ, WASHINGTON, WATSON, WILT, YEWCIC, YOUNGBLOOD
AND ZUG, MARCH 14, 2005
REFERRED TO COMMITTEE ON FINANCE, MARCH 14, 2005
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further providing for inheritance tax and for
11 estate tax.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 2116(a) of the act of March 4, 1971
15 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended May
16 24, 2000 (P.L.106, No.23), is amended to read:
17 Section 2116. Inheritance Tax.--(a) (1) Inheritance tax
1 upon the transfer of property passing to or for the use of [any
2 of the following shall be at the rate of four and one-half per
3 cent:
4 (i) grandfather, grandmother, father, mother, except
5 transfers under subclause (1.2), and lineal descendants; or
6 (ii) wife or widow and husband or widower of a child.] a
7 grandfather, grandmother, father, mother, except transfers under
8 subclause (1.2), lineal descendants, wife or widow and husband
9 or widower of a child shall be at the rate of:
10 (i) four and one-half per cent for the estate of a decedent
11 dying before or during calendar year 2004.
12 (ii) four per cent for the estate of a decedent dying during
13 calendar year 2005.
14 (iii) three per cent for the estate of a decedent dying
15 during calendar year 2006.
16 (iv) two per cent for the estate of a decedent dying during
17 calendar year 2007.
18 (v) one per cent for the estate of a decedent dying during
19 calendar year 2008.
20 (vi) zero per cent for the estate of a decedent dying during
21 or after calendar year 2009.
22 (1.1) Inheritance tax upon the transfer of property passing
23 to or for the use of a husband or wife shall be:
24 (i) At the rate of three per cent for estates of decedents
25 dying on or after July 1, 1994, and before January 1, 1995.
26 (ii) At a rate of zero per cent for estates of decedents
27 dying on or after January 1, 1995.
28 (1.2) Inheritance tax upon the transfer of property from a
29 child twenty-one years of age or younger to or for the use of a
30 natural parent, an adoptive parent or a stepparent of the child
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1 shall be at the rate of zero per cent.
2 (1.3) Inheritance tax upon the transfer of property passing
3 to or for the use of a sibling shall be at the rate of twelve
4 per cent.
5 (2) Inheritance tax upon the transfer of property passing to
6 or for the use of all persons other than those designated in
7 subclause (1), (1.1), (1.2) or (1.3) or exempt under section
8 2111(m) shall be at the rate of [fifteen per cent.]:
9 (i) fifteen per cent for the estate of a decedent dying
10 before or during calendar year 2004.
11 (ii) thirteen per cent for the estate of a decedent dying
12 during calendar year 2005.
13 (iii) eleven per cent for the estate of a decedent dying
14 during calendar year 2006.
15 (iv) nine per cent for the estate of a decedent dying during
16 calendar year 2007.
17 (v) seven per cent for the estate of a decedent dying during
18 calendar year 2008.
19 (vi) five per cent for the estate of a decedent dying during
20 calendar year 2009.
21 (vii) three per cent for the estate of a decedent dying
22 during calendar year 2010.
23 (viii) zero per cent for the estate of a decedent dying
24 during or after calendar year 2011.
25 (3) When property passes to or for the use of a husband and
26 wife with right of survivorship, one of whom is taxable at a
27 rate lower than the other, the lower rate of tax shall be
28 applied to the entire interest.
29 * * *
30 Section 2. Section 2117 of the act, amended December 23,
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1 2003 (P.L.250, No.46), is amended to read:
2 Section 2117. Estate Tax.--(a) In the event that a Federal
3 estate tax is payable to the Federal Government on the transfer
4 of the taxable estate of a decedent who was a resident of this
5 Commonwealth at the time of his death, and the inheritance tax,
6 if any, actually paid to the Commonwealth by reason of the death
7 of the decedent (disregarding interest or the amount of any
8 discount allowed under section 2142) is less than the maximum
9 credit for State death taxes allowable under section 2011 of the
10 Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
11 2011), a tax equal to the difference is imposed. If a resident
12 decedent owned or had an interest in real property or tangible
13 personal property having a situs in another state, the tax so
14 imposed shall be reduced by the greater of:
15 (1) the amount of death taxes actually paid to the other
16 state with respect to the estate of the decedent, excluding any
17 death tax expressly imposed to receive the benefit of the credit
18 for state death taxes allowed under section 2011 of the Internal
19 Revenue Code of 1986 (26 U.S.C. § 2011); or
20 (2) an amount computed by multiplying the maximum credit for
21 state death taxes allowable under section 2011 of the Internal
22 Revenue Code of 1986 (26 U.S.C. § 2011) by a fraction, the
23 numerator of which is the value of the real property and
24 tangible personal property to the extent included in the
25 decedent's gross estate for Federal estate tax purposes and
26 having a situs in the other state and the denominator of which
27 is the value of the decedent's gross estate for Federal estate
28 tax purposes.
29 (b) In the event that a Federal estate tax is payable to the
30 Federal Government on the transfer of the taxable estate of a
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1 decedent who was not a resident of this Commonwealth at the time
2 of his death but who owned or had an interest in real property
3 or tangible personal property having a situs in this
4 Commonwealth, a tax is imposed in an amount computed by
5 multiplying the maximum credit for State death taxes allowable
6 under section 2011 of the Internal Revenue Code of 1986 (26
7 U.S.C. § 2011) by a fraction, the numerator of which is the
8 value of the real property and tangible personal property to the
9 extent included in the decedent's gross estate for Federal
10 estate tax purposes having a situs in this Commonwealth and the
11 denominator of which is the value of the decedent's gross estate
12 for Federal estate tax purposes.[, and deducting from that
13 amount the inheritance tax, if any, actually paid to the
14 Commonwealth (disregarding interest or the amount of any
15 discount allowed under section 2142).]
16 (c) When an inheritance tax is imposed after an estate tax
17 imposed under subsection (a) or (b) has been paid, the estate
18 tax paid shall be credited against any inheritance tax later
19 imposed.
20 Section 3. This act shall take effect immediately.
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