The State of Pennsylvania has recently begun to treat transfers from an employee to a relocation management company (RMC) or the employer using a blank deed as taxable transactions for the purpose of the Pennsylvania transfer tax. Although there is as yet nothing in writing concerning this change, Pennsylvania recently issued new transfer tax regulations, which require two taxes in situations in which two transfers are combined in one document. See Section 91.170(b). Those regulations do not mention relocation blank deed transactions, but their interpretation of the Pennsylvania transfer tax statute presumably would extend to such transactions.
Pennsylvania County Recorders are now seeking to collect two taxes on relocation transactions using a blank deed. In some instances, Worldwide ERC® understands that Recorders have balked at recording the deed at all unless either a separate deed from the transferee to the RMC, or a “statement of value” as to the first transfer is also recorded. Worldwide ERC® further understands that the Pennsylvania Department of Revenue has instructed Recorders to collect two taxes on blank deed transactions.
Accordingly, Worldwide ERC® suggests that members consider using two deeds in Pennsylvania home sale transactions, as is done in a number of other states. For a discussion of the issues that arise, and other states in which two deeds are often used, see the article “Blank Deed: State Issues and Rev. Rul. 2005-74” in the Worldwide ERC® Tax & Legal MasterSource.