What Is a PA Tax Waiver and When Is It Required?

A PA tax waiver is a written clearance from the Pennsylvania Department of Revenue showing that inheritance tax or other state taxes on specific property have been satisfied or properly reported. You most often need one in two situations: a bank or brokerage is holding a deceased person’s account and won’t release it without the Department’s acknowledgment, or a business is selling 51% or more of its assets and the buyer needs a certificate confirming the seller’s state taxes are paid. The form you file, where you send it, and how long it takes depend on which situation you’re in.

When You Need a Waiver

For estates, the trigger is any stock, bond, security, or account held in beneficiary form, including “transfer on death” (TOD) and “payable on death” (POD) registrations. Under 20 Pa.C.S. § 6411, a financial institution can release these assets only if the inheritance tax has been paid or the Department of Revenue receives written notice of the transfer within ten days.¹ In practice, most banks and brokerages hold the account frozen until they see the Department’s acknowledgment letter.²

For business sales, Section 1403 of the Fiscal Code requires a tax clearance certificate whenever a business sells or transfers 51% or more of its goods, equipment, fixtures, buildings, or real estate. The seller must give the Department ten days’ notice before closing and present the buyer with a certificate showing all state tax reports have been filed and all state taxes paid.³ A buyer who closes without the certificate becomes personally liable for all of the seller’s unpaid state taxes, including taxes not yet assessed at the time of sale. The same clearance is required to dissolve a Pennsylvania corporation, withdraw a foreign corporation from the state, or merge into an entity outside Pennsylvania’s jurisdiction.⁴

Life insurance paid directly to a named beneficiary doesn’t need a waiver, because those proceeds aren’t subject to Pennsylvania inheritance tax at all.⁵

Getting the Waiver for a Deceased Person’s Accounts

The form is the REV-516, Notice of Transfer. This is what people usually mean when they say “PA tax waiver” in an estate context, and it applies specifically to accounts with a named beneficiary.⁶

The notice has to include the name of the deceased, the purchase date of the security, the date-of-death value, and the name, address, and Social Security number of the person receiving the transfer.¹ Attach a valuation report if you have one. Report the gross amount in the account as of the date of death; don’t deduct debts or expenses.

Mail the completed form to:

Pennsylvania Department of Revenue
Bureau of Individual Taxes
Inheritance Tax Division
PO Box 280601
Harrisburg PA 17128-0601⁶

After the Department reviews the filing, it issues an acknowledgment letter. That letter is what you give the bank or brokerage to lift the hold. Inheritance tax actions are not available through the myPATH online portal, so expect to handle this on paper.²

The Waiver Is Not the Inheritance Tax Return

Filing the REV-516 for an account doesn’t take the place of filing the full Pennsylvania inheritance tax return. The return is Form REV-1500, and the estate must file it in duplicate with the Register of Wills in the county where the deceased lived, within nine months of the date of death. It reports everything the deceased owned, whether held solely, as tenants-in-common, jointly, or in trust, and must include a copy of any will or living trust.⁷

The executor or administrator is normally responsible for filing, but if they don’t file or leave property out, the person who received that property becomes responsible for reporting it. Assets are valued at fair market value on the date of death; there is no six-month alternate valuation date like the federal estate tax allows.⁷

One number worth knowing: if you pay the inheritance tax within three months of the date of death, you get a 5% discount on the amount paid.⁸ On a $9,000 tax bill, that’s $450. If you can estimate the tax reasonably early, pay before the return is finalized to lock in the discount.

Clearing an Inheritance Tax Lien on Real Estate

Real property owned by someone who died is automatically subject to an inheritance tax lien, and selling or refinancing requires a separate release from the Department. The Department does not issue the release automatically when you file the return; you have to ask for it.

Under 72 P.S. § 9175, the Department will release the lien on specific real estate once the inheritance tax attributable to that property has been paid. It can also release the lien if the tax is sufficiently secured by other estate property or if releasing it won’t jeopardize collection. The release certificate is conclusive evidence for any buyer, lender, or lessee that the lien has been cleared.⁹

For mortgage foreclosures where the lender has no connection to the estate, use Form REV-1839 instead. The lender reports the property, gets a valuation, pays any tax owed, and receives the release. The property has to have an estate file number at the Register of Wills before you file the REV-1839. If no estate has been opened, the mortgagee can create a file by recording an affidavit of death with the Register of Wills.¹⁰

Getting a Business Tax Clearance Certificate

The application is Form REV-181, and there is no filing fee. The form asks for the business’s federal EIN, information about any predecessor entities, and, for bulk sales, the sale date.¹¹ The Department of Revenue and the Department of Labor & Industry both have to clear the business before the certificate issues.⁴

Plan on six to eight weeks from the date you file, assuming every tax return has been filed and every balance paid.¹² Any missing returns or open balances will push that out further. Build the timeline into the deal, because closing without the certificate shifts the seller’s unpaid state tax liability to the buyer, including taxes not yet assessed at the time of sale.³

If the Department Denies or Delays Your Clearance

If the Department refuses a clearance, assesses additional tax, or disputes a valuation, you can appeal to the Board of Appeals. File the petition through the Board’s Online Petition Center or mail it to the Board of Appeals, PO Box 281021, Harrisburg PA 17128-1021. The Board does not accept petitions by email or fax.¹³

Your filing deadline is on the assessment notice itself, so read it before anything else. You carry the burden of proof on all issues except fraud. Hearings are virtual and recorded, and you can waive the hearing and let the Board decide on the written record. You can represent yourself or authorize someone else in writing. If you want to negotiate the amount owed down rather than fight it, submit Form DBA-10, Request for Compromise, with your petition.¹³

1
Pennsylvania General Assembly. Pennsylvania Consolidated Statutes Title 20, Section 6411 – Transfers of Securities and Security Accounts Held in Beneficiary Form
2
Pennsylvania Department of Revenue. Inheritance Tax Waiver
3
New York Codes, Rules and Regulations. Pennsylvania Code 72 P.S. 1403 – Protection of Commonwealth Tax Claims in Case of Bulk Sales
4
Commonwealth of Pennsylvania. Request a Corporate Clearance From the Office of Unemployment Compensation Tax Services
5
Pennsylvania Department of Revenue. Inheritance Tax
6
Pennsylvania Department of Revenue. Instructions for REV-516 Notice of Transfer
7
Pennsylvania Department of Revenue. REV-1500 Inheritance Tax Return
8
Pennsylvania Department of Revenue. Is There a Discount Allowed on PA Inheritance Tax
9
New York Codes, Rules and Regulations. Pennsylvania Code 72 P.S. 9175 – Release of Lien
10
Pennsylvania Department of Revenue. Application for Mortgage Foreclosure Inheritance Tax Release of Lien
11
Pennsylvania Department of Revenue. Application for Tax Clearance Certificate
12
Pennsylvania Department of Revenue. How Long Until I Receive My Non-Corporate Clearance Certificate
13
Commonwealth of Pennsylvania. Board of Appeals