Extended Due Date for Inheritance Tax Exemptions

Section 41 of the Act of October 30, 2017, No. 43, extends by one year the due date for inheritance tax returns that claim an agricultural or small business exemption from inheritance tax.

Specifically, section 41 of the Act amends section 2166 of the Tax Reform Code of 1971 (72 P.S. 9166) by adding the following sentence at the end:

Any inheritance tax return filed after July 1, 2012, under section 20136 that reports transfers of property that are exempt from the inheritance tax under section 2111(s), (s.1) and (t) shall be considered timely if filed within one year of the tax return due date, including an extended due date.

The exemptions for agricultural property that are found in sections 2111(s) and (s.1), and the exemption for family owned business interests in section 2111(t), all require that the property be reported on a timely filed inheritance tax return.  This change to section 2166 (which otherwise provides that timely mailed is timely filed) allows an additional year for inheritance tax returns to be considered timely filed when the return claims an exemption under one of those sections, and the change applies retroactively to returns filed after July 1, 2012.  However, it is possible that this change will not provide retroactive relief if the tax has already been assessed and the time for filing an appeal or challenge to the assessment has expired.

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