Yaw Pleased with Revised Marcellus Shale Inheritance Tax Policy

HARRISBURG – State Senator Gene Yaw (R-Bradford, Lycoming, Sullivan, Susquehanna, Union counties) applauded the recent decision by the Pennsylvania Department of Revenue to revisit their policy concerning the taxation of mineral rights and natural gas interests for Pennsylvania inheritance tax purposes.

Yaw, along with State Senator Elder Vogel (R-Allegheny, Beaver, Lawrence counties) met with Secretary of Revenue Dan Meuser on May 7, 2012 to discuss ways to achieve a consistent valuation method for mineral and gas rights without burdening a descendant’s estate. The senators then had a productive follow-up meeting with the Secretary and his staff on June 18, 2012.

“Prior to bringing Secretary Meuser into the picture, the intent of the Department of Revenue was to tax the value of shale interests in the ground whether they were producing or even without regard to whether they were leased,” Yaw said. “I believe the new regulation is a significant change from that position.”

According to Revenue, the taxable value of mineral and natural gas rights must be determined using the same methodology used to value any real property or tangible personal property interest. The revised policy provides inheritance tax valuation guidance in the following ways:

  • For leased and producing properties, the value should be reported as the sum of all payments received for production of natural gas interests during the 12 months prior to the date of death, multiplied by two.
  • Interests in leased, non-producing properties should be reported at zero value unless at the time of death the gas rights are generating fixed future payments. In such cases, value is calculated by reducing the fixed future payments to present value at the time of death using IRS actuarial tables.
  • Interests in non-leased, non-producing properties are valued at zero.

“I commend Secretary Meuser and his staff for their willingness to work with Senator Vogel and I on this very important matter, which could have potentially impacted hundreds of leaseholders and their descendants throughout our senate districts.”

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