How does Pennsylvania collect inheritance tax from out-of-state children?

Asked about 1 year ago - Reno, NV

Pennsylvania imposes a 4% inheritance tax on children who inherit from parents who are Pennsylvania residents. The parent had assets in a pay-on-death account and the financial institution paid out the assets without taking out any inheritance tax. Practically speaking, how does Pennsylvania collect the inheritance tax from children who are not Pennsylvania residents?

Additional information

There was no probate and no executor as all assets were in the POD account. There was a will but no instructions on paying inheritance tax. Will not submitted to Register of Wills.

Attorney answers (3)

  1. Dennis Michael Phillips

    Contributor Level 17

    2

    Lawyers agree

    Answered . Since it's an inheritance tax and not an estate tax, then whoever inherits should be filing the PA inheritance tax return and paying the tax. I didn't research this in depth; but I would expect some sort of exemption amount or threshhold level that the asset must exceed to be taxable. But I'm not a PA attorney.

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  2. Steven M Zelinger

    Pro

    Contributor Level 20

    2

    Lawyers agree

    Answered . Actually the tax is 4.5%. If a return had been filed you could request separate billing. Therefore I would advise that the executor probate the will and file the return and request separate billing providing the information of the family in the return so they can be billed. Even if that is not done, the PA Dept of Rev. typically catches up with people who inherit PA accounts because the bank knows the SS# of the person who inherited the POA account... and they send a bill - but by that time interest and penalty will accrue.

    This is not legal advice nor intended to create an attorney-client relationship. The information provided here is... more
  3. Michael Lawrence Doyle

    Pro

    Contributor Level 20

    Answered . You need to contact an attorney licensed in PA.

    This is not intended as individual legal advice and there is no attorney client relationship established by this... more

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