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In Inheritance Tax Bulletin 2015-01 and Realty Transfer Tax Bulletin 2015-01, issued on February 25, 2015, the PA Department of Revenue announced its policy concerning same-sex marriages and the impact of the May 20, 2014 decision by the United States District Court for the Middle District of Pennsylvania in Whitewood v. Wolf, 992 F. Supp.2d 410 (M.D. Pa. 2014). In Whitewood, the court ruled that Pennsylvania laws prohibiting same-sex marriages and refusing to recognize same-sex marriages validly performed in other jurisdictions were unconstitutional. As a result, the Department of Revenue has confirmed that, for an estate in which the decedent was party to a same-sex marriage which is legally recognized in Pennsylvania as a result of the Whitewood decision, the surviving same-sex spouse will be treated as a "husband" or "wife" for purposes of establishing rights and responsibilities under the Inheritance and Estate Tax Act. In addition, a natural or adopted child of any individual and that individual's spouse, or a step-descendant, will be considered a lineal heir for purposes of establishing tax rates. Finally, financial institutions are to treat joint accounts titled in the name of individuals in a same-sex marriage as accounts held by "husband" and "wife."
For purposes of Realty Transfer Tax exemptions, the Department has clarified that the phrase "husband and wife" will be deemed to include same-sex spouses and that an individual's child (whether natural or adopted) is in a stepchild/stepparent relationship with the individual's same-sex spouse.
Refund petitions may be filed with the Department to recover taxes paid on transfers to same-sex spouses or their descendants as a result of the non-recognition of a same-sex marriage within the applicable limitations periods for these taxes.