Reports are circulating that the Pa. Dept. of Revenue has told Registers of Wills that it will no longer be issuing Forms REV-1543 to the surviving owners of joint bank accounts or the beneficiaries of “in trust for” or “pay on death” accounts in order to collect the inheritance tax believed to be owed when one of the owners of the account dies.
Banks and other financial institutions are required to notify the Dept. of Revenue when an owner of a joint or “in trust for” account dies, as provided by section 2147 of the Inheritance and Estate Tax Act, 72 P.S. § 9147. It has been the practice of the Department to then give notice to the surviving joint owners of the tax that may be owed (by applying the highest possible inheritance tax rate of 15%), and to give them an opportunity to claim a different tax rate, claim deductions, or make a payment within the 3 month period that allows a 5 percent discount. This was done through a Form REV-1543.
Instead of issuing a Form REV-1543, the Department apparently intends to wait 13 months after death and, if no inheritance tax return has been filed (or a return is filed that does not report the joint account), issue a notice of appraisement for the tax believed to be owed, together with interest.
It is not clear whether this change in procedure is temporary or permanent. One practitioner has reported that this is a temporary stoppage due to a shortage of envelopes.
This change in procedure will be detrimental to those members of the public who have not consulted a lawyer about the administration of the estate or about the inheritance tax liabilities of the estate and beneficiaries because it will deprive them of (a) an opportunity to prepay the tax and claim the 5% discount, (b) a relatively easy way of claiming deductions for debts and expenses when there is no estate administration, and (c) force them to file a protest to a notice of appraisement if they have deductions or if a different tax rate should apply, which will be more complicated than responding to a Form REV-1543.