The collateral inheritance tax refers to a tax levied upon the estate of the decedent. It is levied on what passes to the heir or devisee other than the spouse, a parent or a descendant of the decedent. An heir acquires title to that portion of the estate remaining after the payment and satisfaction of the collateral inheritance tax.
In Northern Trust Co. v. Lederer, 257 F. 812, 814 (D. Pa. 1919), the court held that the collateral inheritance tax is a tax or charge upon the estate of the decedent and included within items of deduction, the collection of the amount in suit was unwarranted. When the collateral inheritance tax is in fact a tax against the legatee upon the privilege of receiving the transfer of the legacy passing from the decedent at his death, and not within the items of deduction, its collection was lawful.