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Property Tax Rebate Limitation Nixed by Court

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A Pennsylvania Appeals Court has invalidated regulations that prevent an estate from claiming a property tax or rent rebate for a decedent who did not survive beyond the year of the claim.

According to the decision, an estate can claim a property tax or rent rebate if the decedent lived at any time during the year of the claim and was otherwise eligible. This means that estates can claim a property tax or rent rebate for tax year 2013 even though the decedent died during 2013.

The case is Muscarella v. Commonwealth of PA (Pa. Commw. Ct., March 14, 2014). The 4-3 decision almost certainly will be appealed to the Pennsylvania Supreme Court. 

Personal representatives of estates should note that property tax and rent rebate claims for the 2013 tax year must be filed by June 30, 2014.

A majority of the court construed the Pennsylvania Act as allowing a decedent’s estate to pursue a claim for a rebate so long as the decedent met any one of the three eligibility criteria set forth in the definition of “Claimant” under section 1303 of the Act, 53 P.S. §6926.1303.

Section 1303 of the Act defines an eligible “claimant” as:

A person who files a claim for property tax rebate or rent rebate in lieu of property taxes and:

(1)    was at least 65 years of age or whose spouse, if a member of the household, was at least 65 years of  age during a calendar year in which real property taxes or rent were due and payable;

(2)    was a widow or widower and was at least 50 years of age during a calendar year or part thereof in which real property taxes or rent were due and payable; or

(3)    was a permanently disabled person 18 years of age or older during a calendar year or part thereof in which the real property taxes or rent were due and payable.

53 P.S. §6926.1303.5

The invalidated regulation states: “A claim for a property tax rebate or a rent rebate in lieu of property taxes may be filed by the personal representative of a decedent’s estate if, and only if, the decedent lived during some part of the year next succeeding the calendar year for which a rebate is claimed.” 61 Pa. Code §401.1(iv) and the similar Section 401.43(a).

The court rejected the Department of Revenue attempt to re-interpret its regulations to deny a rebate to any estate (regardless of whether the decedent had lived into the succeeding year) as precluded by non-compliance with the Commonwealth Documents law, 45 P.S. §§1102-1602; 45 Pa.C.S. §§501-907.