PRINTER'S NO. 578
No. 549 Session of 1997
INTRODUCED BY GREENLEAF, HART, HECKLER, LEMMOND, AFFLERBACH,
EARLL, KASUNIC, MELLOW, MOWERY, WHITE AND TOMLINSON,
FEBRUARY 25, 1997
REFERRED TO FINANCE, FEBRUARY 25, 1997
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 the definition of "value"
11 for purposes of the State real estate transfer tax and for
12 transactions excluded from the tax.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. The definition of "value" in section 1101-C of
16 the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
17 Code of 1971, amended July 2, 1986 (P.L.318, No.77), is amended
18 to read:
19 Section 1101-C. Definitions.--The following words when used
20 in this article shall have the meanings ascribed to them in this
21 section:
22 * * *
1 "Value."
2 (1) In the case of any bona fide sale of real estate at
3 arm's length for actual monetary worth, the amount of the actual
4 consideration therefor, paid or to be paid, including liens or
5 other encumbrances thereon existing before the transfer and not
6 removed thereby, whether or not the underlying indebtedness is
7 assumed, and ground rents, or a commensurate part thereof where
8 such liens or other encumbrances and ground rents also encumber
9 or are charged against other real estate: Provided, That where
10 such documents shall set forth a nominal consideration, the
11 "value" thereof shall be determined from the price set forth in
12 or actual consideration for the contract of sale;
13 (2) in the case of a gift, sale by execution upon a judgment
14 or upon the foreclosure of a mortgage by a judicial officer,
15 transactions without consideration or for consideration less
16 than the actual monetary worth of the real estate, a taxable
17 lease, an occupancy agreement, a leasehold or possessory
18 interest, any exchange of properties, or the real estate of an
19 acquired company, the actual monetary worth of the real estate
20 determined by adjusting the assessed value of the real estate
21 for local real estate tax purposes for the common level ratio of
22 assessed values to market values of the taxing district as
23 established by the State Tax Equalization Board, or a
24 commensurate part of the assessment where the assessment
25 includes other real estate;
26 (3) in the case of an easement or other interest in real
27 estate the value of which is not determinable under clause (1)
28 or (2), the actual monetary worth of such interest; [or]
29 (4) the actual consideration for or actual monetary worth of
30 any executory agreement for the construction of buildings,
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1 structures or other permanent improvements to real estate
2 between the grantor and other persons existing before the
3 transfer and not removed thereby or between the grantor, the
4 agent or principal of the grantor or a related corporation,
5 association or partnership and the grantee existing before or
6 effective with the transfer[.]; or
7 (5) in the case of annuities, life estates, terms for years,
8 remainders and reversions the value shall be determined in
9 accordance with the rules and regulations promulgated by the
10 Department of Revenue for inheritance tax purposes. Until the
11 promulgation of rules and regulations to the contrary, the
12 regulations in effect for Federal estate tax purposes shall
13 apply.
14 Section 2. Section 1102-C.3(8) and (9) of the act, added
15 July 2, 1986 (P.L.318, No.77), are amended to read:
16 Section 1102-C.3. Excluded Transactions.--The tax imposed by
17 section 1102-C shall not be imposed upon:
18 * * *
19 (8) A transfer for no or nominal actual consideration to a
20 [trustee of an ordinary trust where the transfer of the same
21 property would be exempt if the transfer was made directly from
22 the grantor to all of the possible beneficiaries, whether or not
23 such beneficiaries are contingent or specifically named. No such
24 exemption shall be granted unless the recorder of deeds is
25 presented with a copy of the trust instrument that clearly
26 identifies the grantor and all possible beneficiaries.] trustee
27 of a revocable or irrevocable inter vivos trust or a trustee of
28 a testamentary trust.
29 (9) A transfer for no or nominal actual consideration from a
30 trustee to a beneficiary of [an ordinary] a testamentary trust.
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1 (9.1) A transfer from a trustee of a revocable or
2 irrevocable inter vivos trust of real estate previously conveyed
3 to the trust by the settlor thereof:
4 (i) to the settlor of that trust;
5 (ii) to a person to whom a direct transfer by the settlor of
6 the trust would have been exempt; or
7 (iii) for no or nominal actual consideration to a
8 beneficiary of the trust following the death of the settlor of
9 the trust.
10 * * *
11 Section 3. (a) The amendment of section 1102-C.3 of the act
12 shall apply retroactively to a transfer to a trust executed on
13 or after January 1, 1991.
14 (b) A person who paid the tax imposed by Article XI-C of the
15 act on a transfer to a trust executed on or after January 1,
16 1991, where the transfer would be an excluded transaction under
17 the amendment of section 1102-C.3 of the act, shall be eligible
18 for a refund of the tax paid, including any penalty and interest
19 paid.
20 Section 4. This act shall take effect in 60 days.
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