SENATE AMENDED
PRIOR PRINTER'S NO. 1320 PRINTER'S NO. 2831
No. 1176 Session of 1979
INTRODUCED BY PITTS, THOMAS, SIRIANNI, YAHNER, E. R. LYNCH,
E. H. SMITH, E. Z. TAYLOR, ARMSTRONG, HELFRICK, FRYER,
STUBAN AND WENGER, MAY 2, 1979
SENATOR STAPLETON, AGRICULTURE AND RURAL AFFAIRS, IN SENATE,
AN AMENDED, FEBRUARY 4, 1980
AN ACT
1 Amending the act of June 15, 1961 (P.L.373, No.207), entitled
2 "An act providing for the imposition of certain taxes upon
3 the transfer of property passing from a decedent who was a
4 resident of the Commonwealth at the time of his death or
5 presumed death and of property having its situs in the
6 Commonwealth of a decedent who was a nonresident of the
7 Commonwealth at the time of his death or presumed death;
8 imposing additional taxes to equal Federal Estate Tax
9 Credits; defining and taxing certain transfers made in
10 contemplation of death, or to take effect in possession or
11 enjoyment at or after death; defining as a transfer and
12 taxing the right of survivorship in certain property as to
13 which such right exists; defining and exempting from tax,
14 transfers to certain persons or for certain purposes or of
15 certain property; providing for the valuation of property and
16 interests in property, the transfer of which is subject to
17 tax; defining and allowing deductions from the value of
18 property, the transfer of which is subject to tax; providing
19 for the persons ultimately liable for taxes in the absence of
20 a direction by the decedent to the contrary; providing for
21 the reporting of transfers and collection of taxes; imposing
22 penalties upon banks or other financial institutions for
23 failure to give notice to the Department of Revenue of the
24 death of a party to a joint or trust deposit therein and upon
25 persons who fail to file tax returns and documents; providing
26 for the compromise of taxes in the case of alleged
27 nonresidents of the Commonwealth; making it unlawful for any
28 person to make a false return or report; providing for liens
29 upon real property, the transfer of which is subject to tax,
30 and release thereof; authorizing the Secretary of Revenue to
31 bring suits in other jurisdictions for the collection of
1 taxes, and authorizing officials of other jurisdictions to
2 bring suits in the Commonwealth for the collection of death
3 taxes imposed by their jurisdictions; providing for the
4 refund of taxes to which the Commonwealth is not rightfully
5 or equitably entitled; providing for appeals and protests
6 from the imposition of taxes; regulating the entry into safe
7 deposit boxes of a decedent by certain persons, and providing
8 penalties; dealing with the jurisdiction, powers and
9 procedure of the orphans' court, Secretary of Revenue,
10 Department of Revenue, Attorney General, and register of
11 wills in matters relating to taxes; and citing certain acts
12 for repeal," providing for preferential valuation of land in
13 agricultural use or, agricultural reserve use OR FOREST <--
14 RESERVE.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. Clause (24) of section 102, act of June 15, 1961
18 (P.L.373, No.207), known as the "Inheritance and Estate Tax Act
19 of 1961," is amended to read:
20 Section 102. Definitions.--The following words, when used in
21 this act, unless the context clearly indicates otherwise, shall
22 have the meanings ascribed to them in this section:
23 * * *
24 (24) "Value," except as provided in subdivision (b) B. of <--
25 Article V, as to land in agricultural use or, agricultural <--
26 reserve use OR FOREST RESERVE, value means the value which such <--
27 land has for its particular use according to the standards
28 provided in subdivision (b) B. of Article V, means the price at <--
29 which the property would be sold by a willing seller, not
30 compelled to sell, to a willing buyer, not compelled to buy,
31 both of whom have reasonable knowledge of the relevant facts.
32 Section 2. Article V of the act, is amended by adding a
33 subdivision heading to read:
34 ARTICLE V. <--
35 Valuation
36 A. In General
19790H1176B2831 - 2 -
1 Section 3. Article V of the act is amended by adding a
2 subdivision and sections to read:
3 ARTICLE V. <--
4 Valuation
5 * * *
6 B. Valuation of Certain Farmland
7 Section 511. Definitions.--As used in this act, the <--
8 following words and phrases shall have the meanings ascribed to
9 them in this section unless the context obviously otherwise
10 requires: THE FOLLOWING WORDS, WHEN USED IN THIS ACT, UNLESS THE <--
11 CONTEXT CLEARLY INDICATES OTHERWISE, SHALL HAVE THE MEANINGS
12 ASCRIBED TO THEM IN THIS SECTION:
13 "Agricultural commodity." Any <--
14 (1) "AGRICULTURAL COMMODITY" MEANS ANY and all plant and <--
15 animal products including Christmas trees produced in this
16 State for commercial purposes.
17 "Agricultural reserve." Noncommercial <--
18 (2) "AGRICULTURAL RESERVE" MEANS NONCOMMERCIAL open <--
19 space lands used for outdoor recreation or the enjoyment of
20 scenic or natural beauty and open to the public for such use,
21 without charge or fee, on a nondiscriminatory basis.
22 "Agricultural use." Use <--
23 (3) "AGRICULTURAL USE" MEANS USE of the land for the <--
24 purpose of producing an agricultural commodity or when
25 devoted to and meeting the requirements and qualifications
26 for payments or other compensation pursuant to a soil
27 conservation program under an agreement with an agency of the
28 Federal Government.
29 (4) "FOREST RESERVE" MEANS LAND, TEN (10) ACRES OR MORE, <--
30 STOCKED BY FOREST TREES OF ANY SIZE AND CAPABLE OF PRODUCING
19790H1176B2831 - 3 -
1 TIMBER OR OTHER WOOD PRODUCTS.
2 (5) "SEPARATION" MEANS A DIVISION, BY CONVEYANCE OR OTHER
3 ACTION OF THE OWNER, OF LANDS DEVOTED TO AGRICULTURAL USE,
4 AGRICULTURAL RESERVE OR FOREST RESERVE AND PREFERENTIALLY
5 ASSESSED UNDER THE PROVISIONS OF THIS ACT INTO TWO (2) OR MORE
6 TRACTS OF LAND WHICH CONTINUE TO BE AGRICULTURAL USE,
7 AGRICULTURAL RESERVE OR FOREST RESERVE AND ALL TRACTS SO FORMED
8 MEET THE REQUIREMENTS OF SECTION 3 OF THE ACT OF DECEMBER 19,
9 1974 (P.L.973, NO.319), KNOWN AS THE "PENNSYLVANIA FARMLAND AND
10 FOREST LAND ASSESSMENT ACT OF 1974,"
11 (6) "SPLIT-OFF" MEANS A DIVISION, BY CONVEYANCE OR OTHER
12 ACTION OF THE OWNER, OF LANDS DEVOTED TO AGRICULTURAL USE,
13 AGRICULTURAL RESERVE OR FOREST RESERVE AND PREFERENTIALLY
14 ASSESSED UNDER THE PROVISIONS OF THIS ACT INTO TWO (2) OR MORE
15 TRACTS OF LAND, THE USE OF WHICH ON ONE OR MORE OF SUCH TRACTS
16 DOES NOT MEET THE REQUIREMENTS OF SECTION 3 OF THE ACT OF
17 DECEMBER 19, 1974 (P.L.973, NO.319), KNOWN AS THE "PENNSYLVANIA
18 FARMLAND AND FOREST LAND ASSESSMENT ACT OF 1974."
19 Section 512. Land Devoted to Agricultural Use or, <--
20 Agricultural Reserve Woodlots.-- OR FOREST RESERVE.-- <--
21 (a) The value for transfer inheritance tax purposes of land
22 or an interest in land which is owned by a decedent and devoted
23 to agricultural use or, agricultural reserve use OR FOREST <--
24 RESERVE shall be that value which such land has for its
25 particular use if it also meets the following conditions:
26 (1) Land devoted to agricultural use: such land was devoted
27 to agricultural use the three (3) years preceding the death of <--
28 such decedent and is not less than ten (10) contiguous acres in <--
29 area or has an anticipated yearly gross income derived from
30 agricultural use of two thousand dollars ($2,000).
19790H1176B2831 - 4 -
1 (2) Land devoted to agricultural reserve: such land is not
2 less than ten (10) contiguous acres in area.
3 (3) LAND PRESENTLY DEVOTED TO FOREST RESERVE: SUCH LAND IS <--
4 NOT LESS THAN TEN (10) CONTIGUOUS ACRES IN AREA.
5 (3) (4) The contiguous tract of land for which application <--
6 is made is not less than the entire contiguous area of the owner
7 used for agricultural use or, agricultural reserve OR FOREST <--
8 RESERVE purposes.
9 (b) In determining the value of land in agricultural use or, <--
10 agricultural reserve use OR FOREST RESERVE for its particular <--
11 use, consideration shall be given to available evidence of such
12 land's capability for its particular use as derived from the
13 soil survey at the Pennsylvania State University, the National
14 Cooperative Soil Survey, the United States Census of
15 Agricultural Categories of land use classes, and other evidence
16 of the capability of the land devoted to such use, and also if
17 the land is assessed under the provisions of the act of December
18 19, 1974 (P.L.973, No.319), known as the "Pennsylvania Farmland
19 and Forest Land and Assessment Act of 1974," to the valuation
20 determined by the local county assessor thereunder.
21 Section 513. Imposition of Tax When Use Abandoned.--
22 (a) If any tract of land in agricultural use or, <--
23 agricultural reserve use, OR FOREST RESERVE, which is valued for <--
24 Transfer Inheritance Tax purposes under the provisions of this
25 article, is applied to a use other than agricultural USE, <--
26 agricultural reserve, OR FOREST RESERVE, or for any other <--
27 reason, except condemnation thereof, is removed from the
28 category of land preferentially valued under this article within
29 seven (7) years following the death of such decedent, the owner <--
30 at such time the land is so removed shall be subject and liable
19790H1176B2831 - 5 -
1 to tax due the Commonwealth in an amount equal to the
2 difference, if any, between the taxes paid or payable on the
3 basis of the valuation authorized hereunder and the taxes that
4 would have been paid or payable had that land been valued and
5 taxed on the basis of its market value at the death of such
6 decedent, plus interest thereon at the rate of six (6) percent
7 (6%) per annum for the period from the date of death to the <--
8 change of use.
9 (b) Such tax shall be a lien upon the property in favor of
10 the Commonwealth collectible in the manner provided by law for
11 the collection of delinquent real estate taxes, as well as the
12 personal obligation of the owner at the time of such change of
13 use. Such tax shall become due on the date of change of use.
14 (c) Every owner of land preferentially valued under this
15 article shall notify the register of wills of the county or
16 counties in which the land is located of any change or proposed
17 change in use thereof. Any owner failing to make such
18 notification shall be guilty of a misdemeanor and, on conviction
19 thereof, shall be sentenced to pay a fine not exceeding ten
20 thousand dollars ($10,000) or undergo imprisonment not exceeding
21 one (1) year, or both.
22 Section 514. Separation or Split-off.-- <--
23 (a) Separation or split-off of a part of the land which was
24 valued under this article, and taxed under this act, either by
25 conveyance or other action of the owner of such land for a use
26 other than agricultural or agricultural reserve within the seven
27 year period provided for by section 513, except when the
28 separation occurs through condemnation, shall subject the owner
29 of the land so separated, and the entire parcel from which the
30 land was separated, to liability for tax as otherwise set forth
19790H1176B2831 - 6 -
1 in this act except as provided in subsection (b).
2 (b) The owner of property subject to a preferential tax
3 valuation may transfer land covered by the preferential tax
4 valuation within the seven year period: Provided, That the tract
5 of land so transferred shall not exceed two acres annually and
6 may only be used for residential or agricultural use and the
7 construction of a residential dwelling to be occupied by the
8 person to whom the land is transferred: And further provided,
9 That the total parcel or parcels of land so transferred under
10 the provisions of this subsection shall not exceed ten percent
11 (10%) or ten acres, whichever is lesser, of the entire tract
12 subject to the original preferential tax valuation. The transfer
13 of a parcel of land which meets the requirements of this section
14 shall not invalidate the preferential tax valuation or incurs
15 additional tax: Provided, That the land retained by the
16 landowner continues to meet the minimum acreage or, if devoted
17 to agricultural use, gross income requirements established by
18 this act.
19 SECTION 514. SEPARATION, SPLIT-OFF OR TRANSFER.--(A) THE <--
20 SPLIT-OFF OF A PART OF THE LAND, WHICH HAS BEEN VALUED, ASSESSED
21 AND TAXED UNDER THIS ACT, FOR A USE OTHER THAN AGRICULTURAL USE,
22 AGRICULTURAL RESERVE OR FOREST RESERVE WITHIN THE SEVEN-YEAR
23 PERIOD PROVIDED FOR BY SECTION 513 SHALL, EXCEPT WHEN THE SPLIT-
24 OFF OCCURS THROUGH CONDEMNATION, SUBJECT THE LAND SO DIVIDED AND
25 THE ENTIRE PARCEL FROM WHICH THE LAND WAS DIVIDED TO LIABILITY
26 FOR TAXES AS OTHERWISE SET FORTH IN THIS ACT EXCEPT AS PROVIDED
27 IN SUBSECTION (B).
28 (B) THE OWNER OF PROPERTY SUBJECT TO A PREFERENTIAL TAX
29 ASSESSMENT MAY SPLIT-OFF LAND COVERED BY THE PREFERENTIAL TAX
30 ASSESSMENT WITHIN THE SEVEN-YEAR PERIOD: PROVIDED, THAT THE
19790H1176B2831 - 7 -
1 TRACT OF LAND SO SPLIT-OFF SHALL NOT EXCEED TWO (2) ACRES
2 ANNUALLY AND MAY ONLY BE USED FOR RESIDENTIAL USE, AGRICULTURAL
3 USE, AGRICULTURAL RESERVE, OR FOREST RESERVE AND THE
4 CONSTRUCTION OF A RESIDENTIAL DWELLING TO BE OCCUPIED BY THE
5 PERSON TO WHOM THE LAND IS TRANSFERRED: AND FURTHER PROVIDED,
6 THAT THE TOTAL PARCEL OR PARCELS OF LAND SO SPLIT-OFF UNDER THE
7 PROVISIONS OF THIS SUBSECTION SHALL NOT EXCEED TEN (10) PERCENT
8 OR TEN (10) ACRES, WHICHEVER IS LESS, OF THE ENTIRE TRACT
9 SUBJECT TO THE PREFERENTIAL TAX ASSESSMENT. THE SPLIT-OFF OF A
10 PARCEL OF LAND WHICH MEETS THE REQUIREMENTS OF THIS SECTION
11 SHALL NOT INVALIDATE THE PREFERENTIAL TAX ASSESSMENT IF IT
12 CONTINUES TO MEET THE REQUIREMENTS OF SECTION 512 OF THIS ACT.
13 (C) THE OWNER OF PROPERTY SUBJECT TO A PREFERENTIAL USE
14 ASSESSMENT MAY SEPARATE LAND COVERED BY THE PREFERENTIAL USE
15 ASSESSMENT. SUCH A SEPARATION SHALL NOT INVALIDATE THE
16 PREFERENTIAL TAX ASSESSMENT UNLESS A SUBSEQUENT ABANDONMENT OF
17 PREFERENTIAL USE OCCURS WITHIN SEVEN (7) YEARS OF THE
18 SEPARATION. SUCH ABANDONMENT SHALL SUBJECT THE ENTIRE TRACT OF
19 LAND SO SEPARATED TO LIABILITY FOR TAXES, WHICH ARE TO BE PAID
20 BY THE PERSON CHANGING THE USE, AS SET FORTH IN THIS ACT.
21 (D) WHEN PROPERTY SUBJECT TO PREFERENTIAL TAX ASSESSMENT IS
22 SEPARATED AMONG THE BENEFICIARIES DESIGNATED AS CLASS A FOR
23 INHERITANCE TAX PURPOSES, A SUBSEQUENT CHANGE WITHIN THE SEVEN-
24 YEAR PERIOD PROVIDED FOR IN SECTION 512 IN THE USE OF ONE SUCH
25 BENEFICIARY'S PORTION OF THE PROPERTY SHALL SUBJECT ONLY THAT
26 TRACT HELD BY THE BENEFICIARY WHO CHANGES THE USE TO LIABILITY
27 UNDER THIS ACT.
28 Section 4. The act is amended by adding a section to read:
29 Section 1001.1. Farmland Appeals.--Whenever any appeal or
30 protest is brought pursuant to Article X and the subject matter
19790H1176B2831 - 8 -
1 of the appeal concerns the valuation of certain farmland as set
2 forth in Article V-B the forum designated by the department to
3 hear such appeal or protest shall consist of at least two (2) <--
4 farmers and the Secretary of Agriculture. The said farmers and
5 the Secretary of Agriculture shall be accorded full powers
6 within the forum with full voting rights.
7 Section 5. This act shall take effect immediately.
D23L22HVY/19790H1176B2831 - 9 -