CHAPTER 119. LIABILITIES AND ASSESSMENT—PROCEDURE
AND ADMINISTRATION

 (a)  In general. The Department is authorized and required to make inquiries necessary to the determination and assessment of taxes imposed by this article. The Department is further authorized and required to make the determinations and assessments of the taxes. Certain inquiries and determinations may, by direction of the Department, be made by other officials. The term taxes includes interest, additional amounts, additions to the taxes and assessible penalties.

 (b)  Failure to file return. If a taxpayer fails or neglects to file a return as required by this article, the Department may make an estimated assessment of the proper amount of tax due and owing by the taxpayer. This estimated assessment may be based upon information available to the Department at the time of the estimated assessment. A notice of assessment of the estimated amount will be sent to the taxpayer at his last known address.

 (c)  False or fraudulent returns. If an examination of a return by the Department discloses that a taxpayer has filed a false or fraudulent return or that the tax disclosed by the return is less than the tax disclosed by the examination, the Department may issue a notice of assessment of additional tax due sent to the taxpayer’s last known address. For purposes of this subsection, the term income as it relates to a trade or business, means the total of the amounts received or approved from the sale of goods or services, to the extent required to be shown on the return, without reduction for the cost of the sales or services. An item may not be considered as omitted from income if information, sufficient to apprise the Department of the nature and amount of the item, is disclosed in the return or in a schedule or statement attached thereto.

 (d)  Clerical error or mistake. If an examination of a return by the Department discloses that due to a clerical error or mistake in preparing the return or in computing the tax, the tax has been understated, the Department will immediately issue a notice to the taxpayer requesting him to pay the tax due together with interest, penalties or additions within 30 days of receipt of the notice by a taxpayer. The provisions of §  119.6 (Reserved) may not apply to notices issued under this subparagraph.

 (a)  Assessment. Upon the adjudication of bankruptcy of a taxpayer in a bankruptcy proceeding or the appointment of a receiver for a taxpayer in receivership proceeding before court, the Department will immediately assess and proceed to collect tax due or estimated to be due together with interest, penalties and additions. The Department may determine the amount of the tax due by means of information available to it. The Department will cause an investigation to be made of the taxpayer’s books and records to assist it in processing its claims.

 (b)  Proof of claim. Promptly after ascertaining the existence of a tax due or estimated to be due by a taxpayer in a proceeding under 11 U.S.C. § §  101—151326, known as the Federal Bankruptcy Act or in a receivership proceeding, the Department will file proof of claim covering the tax in accordance with law in the court in which the proceeding is pending. At the same time the proof of claim is filed with the bankruptcy or receivership court, the Department will send notice and demand for payment to the taxpayer together with a copy of the proof of claim.

 (c)  Preexisting appeals. A petition for reassessment or an appeal therefrom which has not been adjudicated prior to the date of initiation of bankruptcy or receivership proceeding may in no way affect the rights of the Department to proceed under this section.

 (a)  Jeopardy assessments, filing and notice. If the Department believes that the assessment or collection of a deficiency of a tax under this article will be jeopardized by delay, in whole or in part, it is required to assess the deficiency immediately, together with the interest, additional amounts and additions to the tax provided by law by mailing or issuing notice of its finding to the taxpayer, together with a demand for immediate payment of the deficiency declared to be in jeopardy.

 (b)  Closing of taxable year. If a taxpayer designs by immediate departure from this Commonwealth or otherwise, to avoid the payment of a tax imposed by this article for the preceding or current taxable year, the Department may, upon evidence satisfactory to it, declare the taxable period for the taxpayer immediately terminated and serve upon him notice and demand for immediate payment of the tax for the short taxable period resulting from the termination, and of a tax for the preceding taxable year, or so much of the tax as is unpaid. This tax shall be due and payable immediately, even though the time otherwise allowed by law for filing a return and paying the tax has not expired.

 (c)  Payment and collection of jeopardy assessment. After a jeopardy assessment has been made, the Department will be required to send notice and demand to the taxpayer for the amount of the jeopardy assessment. The amount of the jeopardy assessment shall be immediately due and payable and proceedings for collection may be commenced by the Department at once. Collection of the jeopardy assessment may be stayed if the taxpayer, within 10 days after the date of the notice of the jeopardy assessment, files a petition for reassessment, accompanied by a bond or other security. The amount of the bond or security shall be the amount of the tax assessed, including interest, penalties and additions computed to the date of the notice plus 60 days together with an amount equaling 10% of the total figure. A bond given by a taxpayer under this subsection shall be executed by a surety company which is licensed with or under the supervision of the Insurance Commissioner of the Commonwealth. A security given by a taxpayer under this subsection may be any one of the following items or combination of items:

   (1)  The amount of the bond or security shall be in the amounts as the Department may deem necessary.

   (2)  A certified check on a State or national bank within the Commonwealth payable to the Department.

   (3)  Satisfactory municipal bonds negotiable by delivery, or obligations of the United States government negotiable by delivery.

 (d)  Additional security. The Department may require additional security whenever, in its opinion, the value of the security given is no longer sufficient to adequately secure the total amount of taxes and additions thereto.

 (e)  Finality of jeopardy assessment. A jeopardy assessment shall become final if a petition for reassessment, accompanied by bond or other security, is not filed within the 10 day period provided for in subsection (c).

 (f)  Hearing and action on petition for reassessment. The Department will grant a taxpayer or his authorized representative an oral hearing if the taxpayer so requests it in his petition for reassessment.

 (g)  Decision. The taxpayer will be notified by the Department of its decision after the oral hearing, if requested, and after considering the petition for reassessment. The decision of Department as to the validity of the jeopardy assessment will be final unless, within 90 days after notification of the Department’s decision, the taxpayer files a petition for review by the Board of Finance and Revenue as provided under §  119.7 (relating to review by Board of Finance and Revenue).

 (h)  Presumptive evidence of jeopardy. In the event of a jeopardy assessment, the belief of the Department, whether made after notice to the taxpayer or not, will be, for purposes, presumptive evidence that the assessment or collection of the tax or the deficiency was in jeopardy. A certificate of the Department of the mailing or issuing of the notices specified in this section will be presumptive evidence that the notices were so mailed or issued.

 (a)  Petition for review of reassessment. The taxpayer has the right to file with the Board of Finance and Revenue a petition for review of a reassessment made by the Department within 90 days after the date of mailing the notice of the action taken upon a petition for reassessment. Failure of the Department to notify the petitioner of a decision within the 6-month period as provided for under §  119.6 (Reserved) shall act as a denial of the petition, and a petition for review may be filed with the Board of Finance and Revenue within 120 days after written notice is mailed to the petitioner that the Department has failed to dispose of his petition within the six-month period.

 (b)  Information from the Department. The Department may, if requested by the Board, furnish the Board with such information as it may have which may assist the Board in making a determination on the petition.

 (c)  Action by the Board. The Board of Finance and Revenue shall dispose of any petition within six months of its receipt thereof. Failure of the Board to dispose of any such petition within the 6-month period shall be deemed an affirmance of the action of the Department. The Board may sustain the action taken by the Department with respect to the petition for reassessment, or it may reassess the tax due upon such basis, as it shall deem, according to law.

 (d)  Notice of action by Board. The Board of Finance and Revenue shall give written notice by mail of any action taken by it to the Department and to the petitioner, his attorney, authorized agent or representative.

 From any decision or ruling made by the Board of Finance and Revenue, or upon the failure of the Board to act upon a petition for review, an aggrieved taxpayer shall have the right of an appeal to the Commonwealth Court. If the Commonwealth is aggrieved by a decision of the Board of Finance and Revenue, it also has the right of an appeal to the Commonwealth Court. Such appeals shall be filed within 30 days from the date of the mailing of the decision of the Board of Finance and Revenue or within 30 days from the end of the six-month period when the Board fails to act. From the action of the Commonwealth Court, further appeal to the Supreme Court of the Commonwealth may be had. For the rules and form of the petition to the Commonwealth Court, see the Commonwealth Court Procedural Rules.

 (a)  Collection. The Department will proceed to collect any tax due including interest, penalties, and additions as follows:

   (1)  Immediately in all cases of bankruptcies, receiverships, assignments, judicial sales, and clerical errors or mistakes in preparing a return or in computing the tax.

   (2)  Immediately in all cases if a jeopardy assessment notice has been issued unless a taxpayer has filed a petition for reassessment and posted the required bond within ten days after mailing of the notice by the Department.

   (3)  After 90 days from the date of mailing of a notice of assessment, unless a taxpayer has filed a petition for reassessment within 90 days after mailing of the notice by the Department.

   (4)  After 90 days from the date of mailing of notice of a decision by the Department on a petition for reassessment unless a taxpayer has filed a petition for review with the Board of Finance and Revenue within 90 days after mailing of the notice by the Department.

   (5)  After 120 days from the date of mailing of notice by the Department that it failed to dispose of the petition for reassessment unless a taxpayer has filed a petition for review with the Board of Finance and Revenue within 120 days after mailing of the notice by the Department.

   (6)  After 30 days from the date of mailing of notice of a decision by the Board of Finance and Revenue on a petition for review unless a taxpayer shall have perfected an appeal to the Commonwealth Court within 30 days after mailing of notice by the Board, and shall have filed with the prothonotary of the Commonwealth Court appropriate security in the amount of 120% of the amount of taxes found due by the Board and remaining unpaid.

   (7)  After 30 days from the last day the Board of Finance and Revenue should have disposed of the petition for review if no decision was made unless a taxpayer shall have perfected an appeal to the Commonwealth Court within 30 days of the date the Board should have disposed of the petition, and shall have filed with the prothonotary of the Commonwealth Court appropriate security in the amount of 120% of the amount of taxes found due by the Board and remaining unpaid.

   (8)  Immediately upon a final order of the Commonwealth court or upon a final order of the Supreme Court of this Commonwealth if an appeal was taken to that court.

 (b)  Defenses. In any proceeding for the collection of tax due including interest, penalties, and additions, the taxpayer against whom an assessment was made shall not be permitted to set up any ground of defense that might have been presented to the Department, the Board of Finance and Revenue, or the Commonwealth court if he had properly pursued his administrative remedies under this article.

 (a)  If any person liable for any tax including interest, penalties, and addition neglects or for any reason refuses to pay the same on the date such becomes due, the amount of such tax, interest, penalties, and additions together with any other costs that accrue shall be a lien in favor of the Commonwealth against the real estate of such person. The following requirements shall apply:

   (1)  The Department may forward for filing a certified copy of such lien, interest, penalties, additions, and prothonotary’s costs and fees and upon

   (2)  The lien will be considered perfected when filed and docketed by the prothonotary.

   (3)  The lien shall continue for five years from the date of docketing and may be revived and continued by the Department in the manner now or hereafter provided by law.

   (4)  The Department may seek a writ of scire facias in the Court of Common Pleas of the county where the real estate is situated and prosecute to judgment and execution in the manner now or hereafter provided by law in order to satisfy taxes including interest, penalties, and additions due and owing.

 (b)  Upon receipt from the Department of a certified copy of a lien the prothonotary shall forthwith enter and docket the lien which shall be indexed as judgments are now indexed. No prothonotary shall require the payment of any costs or fees as a condition precedent to the filing and docketing of any such liens. Any wilful failure of any prothonotary to carry out any duty imposed upon him by this section shall be a misdemeanor and, upon conviction thereof, he shall be sentenced to pay a fine not exceeding $1,000 and cost of prosecution, or to undergo imprisonment not exceeding one year, or both.

 (c)  The lien of the Department will have priority to and be fully paid before any other obligation, judgment, claim, lien, or estate with which the real estate may become charged with or liable for after the filing and docketing of the lien of the Department.

 (d)  The lien of the Department will be subordinate to the following:

   (1)  Mortgages against the real estate which have been duly recorded prior to the tax lien.

   (2)  Cost of the writ and the judicial sale.

   (3)  Real estate taxes imposed or assessed upon the real estate.

 (a)  General rule. The Department, within the applicable period of limitations may credit any overpayment of tax, including interest thereon, against any outstanding liability for any tax, or for any interest, additional amount, addition to tax, or assessable penalty, owed by the person making the overpayment, and the balance, if any, will be refunded to such person by the Department.

 (b)  Overpayment of installment of estimated tax. If a taxpayer has paid an installment of estimated tax in excess of the correct amount of such installment, such overpayment will be credited against any unpaid installments. If the amount so paid, whether or not on the basis of installments, exceeds the amount determined to be the correct amount of the tax, such overpayment will be credited or refunded as provided in subsection (a).

 (a)  General rule. Except as provided in subsection (b), no credit or refund will be made under §  119.12 (relating to refund or credit of overpayment) without the approval of the Board of Finance and Revenue.

 (b)  Exceptions. Credits or refunds may be made without application to the Board of Finance and Revenue if one of the following occurs:

   (1)  The credit or refund arises by reason of the overpayment of an installment of estimated tax.

   (2)  Such credit or refund arises upon the filing of a final return showing less tax due after the application of the allowable credits than the amount of tax withheld from the compensation of the taxpayer or the amount of tax paid by him as estimated tax under this article or pursuant to Article III of the act of March 4, 1971 (P. L. 6, No. 2) (72 P. S. § §  7301—7361).

 (c)  Form of claims for credit or refund. Credits or refunds of overpayments may not be allowed or made after the expiration of the statutory period of limitation properly applicable unless, before the expiration of such period, a claim therefor has been filed by the taxpayer. The following requirements apply:

   (1)  No refund or credit will be allowed after the expiration of the statutory period of limitation applicable to the filing of a claim therefor except upon one or more of the grounds set forth in a claim filed before the expiration of such period. The claim shall set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Department of the exact basis thereof. The statement of the grounds and facts shall be verified by a written declaration that it is made under the penalties of perjury. A claim which does not comply with this paragraph will not be considered for any purpose as a claim for refund or credit.

   (2)  In the case of any tax imposed by this article, a separate claim shall be made for each type of tax for each taxable year or period.

   (3)  If a return is filed by an individual and, after his death, a refund claim is filed by a legal representative, certified copies of the letters testamentary, letters of administration, or other similar evidence shall be annexed to the claim to show the authority of the legal representative to file the claim. If an executor, administrator, guardian, trustee, receiver, or other fiduciary files a return and thereafter a refund claim is filed by the same fiduciary, documentary evidence to establish the legal authority of the fiduciary need not accompany this claim, if a statement is made in the claim showing that the return was filed by the fiduciary and that the latter is still acting. In such cases, if a refund is to be paid, letters testamentary, letters of administration, or other evidence may be required but should be submitted only upon the receipt of a specific request therefor. If a claim is filed by a fiduciary other than the one by whom the return was filed, the necessary documentary evidence should accompany the claim. A claim may be executed by an agent of the person assessed, but in such case a power of attorney shall accompany the claim.

 (a)  The amount of any tax imposed by this article will be assessed within three years after the return was filed.

   If the taxpayer omits from the income stated in the return of a tax imposed by this article an amount properly includable therein which is in excess of 25% of the income so stated, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 6 years after the return was filed.

 (a)  False return. In the case of a false or fraudulent return with the intent to evade any tax, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time after such false or fraudulent return is filed.

 (b)  Wilful attempt to evade tax. In the case of a wilful attempt in any manner to defeat or evade any tax imposed by this article, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.

 (c)  No return. In the case of a failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time after the date prescribed for filing the return.

 Interest at the rate of 0.75% per month, for each month or fraction thereof for which any amount of tax imposed by this article is not paid on or before the last day prescribed for payment, shall be imposed for the period from such last date to the date paid. The last date prescribed for payment shall be determined without regard to any extension of time for filing the return, however, this section shall not apply to any failure to pay estimated tax.

 (a)  Failure to file tax return. In the event of failure to file any return required under §  117.1 (relating to general requirement of a return) on the date prescribed therefor (determined with regard to any extension of time for filing), there shall be added to the tax required to be shown on the return the amount specified in subsection (b) unless the failure to file the return within the prescribed time is shown to the satisfaction of the Department to be due to reasonable cause and not to wilful neglect. The amount to be added to the tax is 5% thereof, if the failure is for not more than one month, with an additional 5% for each additional month or fraction thereof during which the failure continues, but which shall not exceed 25% in the aggregate.

 (b)  Penalty imposed on net amount due. The amount of tax required to be shown on the return for the purposes of this section shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed on the return.

   If any part of any underpayment is due to negligence or intentional disregard to rules and regulations, but without intent to defraud, there will be added to the tax an amount equal to 5% of the underpayment.

 (a)  Except as provided in subsection (c), any individual who is required to file a declaration of estimated tax shall be deemed to have made an underpayment of estimated tax if he fails to pay all or any part of an installment when due. The amount of the underpayment shall be the excess of the amount of the installment which would be required to be paid if the estimated tax were equal to 80% of the tax (2/3 in the case of an individual) shown on the return for the taxable year (or if no return was filed of the tax for such year) over the amount, if any, of the installments paid on or before the last day prescribed for such payment.

 (b)  Any individual making an underpayment shall pay, in addition to the tax, an amount at the rate of 9% per annum of the underpayment for the period of the underpayment. The period of the underpayment shall begin on the day after such payment was due and continue until such tax is actually paid but not beyond the 15th day of the fourth month following the close of the taxable year of the individual.

 (c)  No additions to the tax will be imposed if such installment is paid on or before the last date prescribed for payment, and the amount of such payment is one of the following:

   (1)  At least 80% (66 2/3% for an individual who expects to obtain at least 2/3 of his total estimated taxable income from farming for the year) of the amount due on the basis of the tax shown on the return for the taxable year.

   (2)  At least as much as would have been paid if based on the tax shown on the return of the prior year of the taxpayer.

   (3)  Based on a tax computed by using the income of the taxpayer for the prior year and the current tax rate.

   (4)  At least 90% of the tax due on the actual income earned in the months preceding the due date of the installment in question.

 To facilitate the settlement and distribution of a decedent’s estate, the Department will, at the request of the fiduciary, executor, administrator, or other person who may have any liability for any income tax due from a decedent or his estate, determine the amount of income taxes due, if any, from the decedent or his estate and upon payment of the amount of tax plus appropriate penalty and interest so determined, the fiduciary or the person otherwise liable, shall be discharged from personal liability for any tax deficiency thereafter found to be due.

   (1)  After the filing of all returns due from the decedent and his estate, a request for such determination may be made, in duplicate, to the Department, on the form, ‘‘Request for Final Determination of Personal Income Tax Liability.’’

   (2)  The determination by the Department shall be final and conclusive, and if not appealed by the fiduciary and except upon proof of fraud, misrepresentation or nondisclosure of a material fact by the fiduciary:

     (i)   The determination shall not be reopened or modified by any officer, employe or agent of the Commonwealth.

     (ii)   In any suit, action or proceeding, such determination, or any collection, payment, abatement, refund or credit made in accordance therewith, shall not be annulled, modified, set aside or disregarded.

REQUEST FOR FINAL DETERMINATION OF PERSONAL INCOME
TAX LIABILITY

 Decedent’s Final Return was filed
by the Fiduciary on

 Estate Final Return was filed

   (1)  Was the decedent at any time subsequent to June 1, 1971, an ‘‘employer’’ within the meaning of the Tax Reform Code of 1971?
Yes

   (2)  Are there any outstanding assessments against decedent or the estate for Personal Income Tax liability?
Yes

 (administrator, executor,
guardian trustee) of the estate of

 hereby requests that the Department of Revenue, Personal Income Tax Bureau, make a final determination of the Personal Income Tax liability of the subject individual and of his estate in accordance with the provisions of Section 338 of the Tax Reform Code of 1971 and the regulations thereunder. Said

    I hereby certify under the penalties of perjury
that the statements contained herein are true and correct
to the best of my knowledge, information and belief.

 Whenever payment of all or any portion of the tax imposed by this article is required to be received by the Department on or before a certain date, the taxpayer shall be deemed to have complied with this article if the letter transmitting payment of such tax is received by the Department and is postmarked by the United States Postal Service on or prior to the final day on which the payment is required to be received. Any private postage meter or similar device imprinting a postmark or date shall not be controlling upon the Department.

 The following procedures shall be employed for claiming the special tax provisions:

   (1)  The claimant may claim the special tax provisions upon the expiration of his taxable year by completing a Special Tax Provisions Schedule (Schedule SP) and filing it in conjunction with the annual return required under the provisions of this article.

   (2)  If the claimant is required to file an estimated tax return under the provisions of this article, he may utilize the special tax provisions in computing the tax due with such returns.

   The provisions of this §  119.29 adopted June 12, 1975, effective 5 Pa.B. 1561.