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MATTER ESTATE ROSALIE K. NEISS COMMONWEALTH PENNSYLVANIA (06/13/89)

filed: June 13, 1989.

IN THE MATTER OF THE ESTATE OF ROSALIE K. NEISS; COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF REVENUE, APPELLANT


Appeal from Common Pleas Court, Dauphin County, Honorable Lee F. Swope, PRES. JUDGE.

COUNSEL

Arthur F. McNulty, Esq., ASST. COUNSEL, Harrirsburg, Pennsylvania, for appellant.

Lloyd R. Persun, Esq., SHEARER, METTE, EVANS & WOODSIDE, Harrisburg, Pennsylvania, for appellee.

Before: Honorable David W. Craig, Judge, Honorable Bernard L. McGINLEY, Judge (p.), Honorable Emil E. Narick, Senior Judge

Author: Craig

[ 126 Pa. Commw. Page 574]

OPINION BY JUDGE DAVID W. CRAIG

The Department of Revenue appeals a decision of Judge Lee F. Swope of the Court of Common Pleas of Dauphin County which set aside an order of the department's Board of Finance and Revenue and directed the board to pay a refund of transfer inheritance tax to the estate of Rosalie K. Neiss.

Rosalie K. Baldwin, the executrix of the Neiss estate, filed a Taxpayer Inheritance Tax Return with the Dauphin County Register of Wills on May 23, 1986. That return included, as a taxable asset, the value of Neiss' employee retirement plan. Ms. Neiss' employer had invested Neiss' interest in the retirement plan in the employer's stock fund.

The Department of Revenue issued to the estate a notice of Inheritance Tax Appraisement which accepted the Inheritance Tax Return as filed. The estate never appealed that

[ 126 Pa. Commw. Page 575]

    assessment, but instead, after the assessment appeal limitation period had expired, filed a Petition for Refund with the Board of Finance and Review for the tax paid on the retirement plan stocks, and for accrued interest on that amount, apparently after determining that that asset is not taxable under the inheritance tax law.

There appears to be no dispute concerning the fact that this asset is not taxable under the Inheritance and Estate Tax Act. The Department and the estate stipulated that the asset in question was a retirement plan, the interest in which the decedent, before her death, had no right to possess, enjoy, assign or anticipate. Stipulation of Facts Nos. 9 and 10, Reproduced Record, p.27a. Under 72 Pa. C.S. § 1711(r), such an asset is not taxable.

The board refused to make the refund, asserting that 72 Pa. C.S. § 1786, the assessment appeal provision of the Inheritance and Estate Tax Act (Act), provides the exclusive remedy for challenges to an inheritance tax assessment. On appeal to the Dauphin County Court of Common Pleas, the trial court judge concluded that the refund provision of the Act, 72 Pa. C.S. § 1781, provides an alternative to the assessment appeal provision for parties contesting an allegedly erroneous tax assessment.

The sole issue we must address is whether a taxpayer who fails to appeal an inheritance tax assessment within the statutory time period may petition for a refund for the overpayment of taxes because the assessment erroneously included tax on a non-taxable asset. We note initially that Pennsylvania courts recognize the general principle that a party may not seek a refund of taxes paid except as provided by statute. Reed v. Commonwealth, 107 Pa. Commonwealth Ct. 434, 528 A.2d 699 (1987).

The assessment appeal provision reads as follows:

§ 1786. Protest, notice and appeal

(a) General rule.-Any party in interest, including the Commonwealth and the personal representative, not satisfied with the appraisement, the allowance or disallowance

[ 126 Pa. Commw. Page 576]

    of deductions, the assessment or tax . . . within 60 days after receipt of notice of the action complained of may:

(1) file with the department a written protest . . . .

(2) notify the register in writing that he elects to have the correctness of the action complained of determined at the audit of the account of the personal representative; or

(3) appeal to the court to have the correctness of the action complained of determined at the audit of the account of the personal representative, or at a time the court shall fix.

The refund provision of the ...


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