Justia Tax Law Opinion Summaries

Articles Posted in Pennsylvania Supreme Court
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Appellant Lebanon Valley Farmers Bank (LVFB) is a Pennsylvania chartered bank, and a subsidiary of Fulton Financial Corporation, which merged with Keystone Heritage Group, Inc. The merger made Fulton the parent company of Lebanon Valley National Bank, which merged with Farmers Bank as part of the transaction, thereby forming LVFB. Prior to the merger, both Farmers Bank and National Bank were "institutions" subject to the Shares Tax. For the 2002 tax year, LVFB filed a Bank Shares Tax return, which included National Bank's pre-merger value in its calculation of its six-year average share value, as required by the combination provision. However, in 2005, LVFB filed a petition with the Board of Appeals, seeking a refund of the portion of its 2002 tax payment attributable to National Bank’s pre-merger share value. It claimed disparate treatment because the combination provision was inapplicable when mergers involved out-of-state banks or banks less than six years old. The Commonwealth Court has held, under the plain language of the statute, the combination provision applied only to combinations of "institutions" (i.e., banks with Pennsylvania locations). The trial court held LVFB, as the survivor of the merger of two Pennsylvania banks, should have reported a taxable share value which averaged the combined share value of each constituent institution over the past six years and was, therefore, not entitled to a refund. However, the court ordered the Commonwealth "to provide meaningful retrospective relief" to cure LVFB’s non-uniform treatment. The Commonwealth Court affirmed the Board of Finance and Revenue's classification of the merged LVFB and the 2002 tax assessment. After careful review, the Supreme Court disagreed with the Commonwealth Court's decision and reversed for further proceedings. View "Lebanon Valley Farmers Bank v. Pennsylvania" on Justia Law

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The issue before the Supreme Court in this case was the interpretation of Section 602 of the Real Estate Tax Sale Law, which concerned the notice requirements for an upset tax sale for non-payment of delinquent taxes. Specifically, the issue centered on whether the Commonwealth Court correctly held that “proof of mailing” in subsection 602(e)(2) referred exclusively to United States Postal Service Form 3817 (a Certificate of Mailing). Upon review of the facts of this case, the Supreme Court concluded that although the Washington County Tax Claim Bureau did not obtain a Certificate of Mailing, it did proffer other documents from the USPS as evidence to establish “proof of mailing.” The Court held that these USPS documents satisfied the statutory mandate for “proof of mailing” in subsection 602(e)(2). View "Horton v. Washington County Tax Claim Bureau" on Justia Law

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Appellees (husband and wife) created The Dorothy M. Miller Family Irrevocable Trust, naming Mrs. Miller as settlor, and her and her husband as co-trustees. The sole beneficiaries of the trust were appellees and their only child. Appellees transferred title to their house and farm to the trust, but did not pay realty transfer tax on the transfer, claiming it was an excluded transaction under the Realty Transfer Tax Act as a transfer to a "living trust." The Department of Revenue issued a Realty Transfer Tax Notice of Determination providing the transfer was subject to realty transfer taxes, plus applicable interest and fees. Appellees unsuccessfully petitioned for redetermination with the Department’s Board of Appeals. The Commonwealth Court reversed, finding that Mrs. Miller's testimony that she intended the Trust to be a substitute for her will was sufficient to define it as a living trust. The Commonwealth appealed. The Supreme Court found the Miller Trust failed to meet the statutory definition of a living trust or will substitute. As such, the Court reversed and remanded for calculation of transfer tax. View "Miller v. Pennsylvania" on Justia Law

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In November 2002, Appellee Beverly Roethlein, an Allentown taxpayer, filed a class action complaint against Portnoff Law Associates, Ltd., and Michelle Portnoff, Esquire (the firm's sole shareholder) seeking recovery for unjust enrichment and violations of Section 502 of Act 6, Pennsylvania’s Loan Interest and Protection Law. Portnoff serves as a private tax collector for various municipalities and school districts, and had contracts with 22 municipalities to represent them in the collection of delinquent real estate taxes. Taxpayers would be charged $150 for the opening of a file and preparation of a demand letter; $150 for the filing of a lien and preparation of a second letter; and $150 for preparation and filing of a writ of scire facias. The contracts required the municipalities to enact an ordinance or resolution authorizing Portnoff to impose legal fees upon the delinquent taxpayer. From the time a file was sent to her for collection, Portnoff began charging 10% interest on the principal. The issue before the Supreme Court in this case was whether the Loan Interest and Protection Law provided taxpayers with a cause of action to challenge costs imposed for the collection of delinquent taxes or to seek damages and attorneys’ fees for improperly-imposed costs. Furthermore, at issue was whether Section 7103 of the Municipal Claims and Tax Liens Act authorized a municipality to recover the administrative costs it incurs in collecting delinquent taxes. After review, the Court concluded that Act 6 does not provide a cause of action for claims which do not involve the loan or use of money. Furthermore, the Court concluded Section 7103 of the MCTLA allows a municipality to recover fees it pays to a third-party tax collector for the purpose of collecting delinquent taxes. In light of these conclusions, the Court reversed the decision of the Commonwealth Court, and remanded the case to the Commonwealth Court for further proceedings. View "Roethlein v. Portnoff Law Assoc." on Justia Law

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The issue before the Supreme Court in this appeal was whether certain property in Cumberland County, which was owned by the City of Philadelphia as trustee of the Stephen Girard Trust and leased by the Board of Directors of City Trusts to the Pennsylvania Office of Attorney General, was subject to local real estate taxation in Cumberland County. The trial court held that the property was both immune and exempt from local real estate taxation. The Commonwealth Court reversed. After its review, the Supreme Court reversed the Commonwealth Court and reinstated the trial court’s order on grounds of tax immunity. View "City of Philadelphia v. Cumberland Cty Brd Assess Appeals" on Justia Law

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Appellant Glatfelter Pulpwood Company challenged the Commonwealth Court's affirmance of the Board of Finance and Revenue's determination that Appellant's gains from the sale of a tract of Delaware timberland be characterized as "business income," subject to taxation in Pennsylvania. Concluding that none of Appellant's issues raised on appeal entitled it to any relief, the Supreme Court affirmed the Commonwealth Court. View "Glatfelter Pulpwood Co. v. Pennsylvania" on Justia Law

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The issue before the Supreme Court in this case was whether an ordinance imposing a fixed tax on businesses with gross receipts over a certain threshold violated a statute prohibiting business privilege taxes "on gross receipts or parts thereof." Appellants argued that, because the ordinance imposed a flat tax for businesses earning over $1,000,000, while exempting businesses with gross receipts below that amount, it constituted a tax "on gross receipts or part thereof." The common pleas court upheld the ordinance, explaining that it imposed a flat tax with an exemption for any business earning no more than $1,000,000 in a particular year. Thus, because the tax is not levied as a percentage of a business's gross receipts, the court reasoned that it does not constitute an improper tax "on" gross receipts. The Commonwealth Court affirmed in an unpublished disposition, rejecting Appellants' contention that the ordinance levied a tax on that part of a taxpayer's annual gross receipts in excess of $1,000,000. After its review, the Supreme Court concluded that, regardless of how well intentioned, the taxing authority's actions were contrary to statute. Accordingly the order of the Commonwealth Court was reversed, and the matter was remanded for entry of judgment in favor of Appellants. View "Shelly Funeral Homes v. Warrington Twp." on Justia Law

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The Pennsylvania Public Utility Commission appealed the decision of the Commonwealth Court to vacate an operations fee assessed against a public utility, appellee Mercury Trucking, Inc. for the operating period of July 1, 2005, through June 30, 2006 (the "2005 annual assessment"). At the Supreme Court’s request, the parties also addressed issues related to the appropriate process by which disputes of this nature should proceed in the courts of the Commonwealth. Upon review of the briefs submitted and the Commonwealth Court record, the Supreme Court held that judicial review of a public utility’s challenge to its annual assessment shall proceed in the courts of this Commonwealth in accordance with the procedures of the Administrative Agency Law, Chapter 7, Subchapter A. Accordingly, the Court quashed the Commission’s direct appeal. However, given that the proper procedure was unclear, and that the underlying issue merited review, the Court treated the Commission’s notice of appeal as a petition for allowance of appeal, which the Court granted. On the merits, the Court reversed the decision of the Commonwealth Court, vacated its judgment in favor of the public utility, and reinstated the Commission’s adjudication. View "Mercury Trucking v. Public Utilities Comm'n" on Justia Law

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At issue before the Supreme Court was whether the common pleas court appropriately decertified a class based on its conclusion that a necessary element of the plaintiffs' proof (the presence of a confidential relationship) was not amenable to class treatment. In 1993, Sandra J. Basile commenced a civil action against H&R Block, Inc., H&R Block Eastern Tax Services, Inc. and Mellon Bank. She alleged, among other things, that the Block companies maintained maintained and breached fiduciary duties in connection with their "Rapid Refund" program. Basile sought to assert claims on behalf of herself and others who were similarly situated. However, summary judgment subsequently was awarded in Block's favor on the ground that it had no fiduciary relationship with the plaintiffs. The common pleas court's conclusion, in this respect, was based on the premises that Block was not the plaintiffs' agent and that no confidential relationship otherwise existed between the parties. In the ensuing appellate litigation, the court's decision on the agency score ultimately was conclusively sustained. In 2001, the Superior Court overturned the common pleas court's summary-judgment award, finding that Ms. Basile had proffered sufficient evidence to establish a prima facie case of a confidential relationship. In 2003, upon consideration of the appellate rulings, the common pleas court determined that class treatment was no longer appropriate. The common pleas court found that the need for individualized inquiries on the dispositive question of trust precluded a finding that common issues predominated. Upon review of the matter, the Supreme Court held that that the common pleas court did not err in decertifying the class based on its conclusion that the presence of a confidential relationship was not amenable to class treatment. The order of the Superior Court was reversed, the common pleas court's decertification order was reinstated, and the matter was remanded for further proceedings. View "Basil. v. H & R Block, et al." on Justia Law

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The issue before the Supreme Court concerned the validity of a single unified tax assessment of both a tract of land, and the buildings of a shopping center, movie theater, and restaurant located on the land. The land was owned by Appellant Tech One Associates, and the buildings and surrounding improvements to the land were constructed and owned by a second entity, "Terra Century Associates" (Lessee). Upon review, Appellees the Board of Property Assessment Appeals and Review of Allegheny County, the Borough of West Mifflin, and the West Mifflin Area School District correctly treated the land, the buildings, and the improvements to the land as real estate subject to taxation under Section 201(a) of the Commonwealth's General County Assessment Law. Further, the Court upheld the rulings of the lower courts that its previous decision in "In re Appeal of Marple Springfield Center, Inc," (607 A.2d 708 (1992)) did not preclude the valuation of real estate owned as a leasehold interest, and that the market value for the land, buildings, and improvements determined at trial accurately reflected the "economic reality" of the impact of the long-term lease between Appellant and its lessee. View "Tech One Assoc. v. Bd. of Prop. Assessment Appeal & Review" on Justia Law