Justia Tax Law Opinion Summaries

In September 2004, an anonymous informant sent the City of Philadelphia a letter claiming that appellant Nathan Lerner was concealing taxable business income from the City. The City made numerous attempts to meet with Lerner in person to resolve his case, but Lerner refused the City’s offers. In 2010, Lerner filed a petition for review with the City’s Tax Review Board. The Board held a hearing, concluded that it lacked jurisdiction in light of a collection action pending at a trial court, and dismissed Lerner’s petition. Lerner appealed the Board’s dismissal to the trial court, which consolidated Lerner’s appeal with the City’s collection action. The Commonwealth Court affirmed the trial court’s order quashing Lerner’s appeal. Lerner sought to delay the City’s collection action with onerous discovery requests and frivolous filings. Meanwhile, Lerner simultaneously disregarded the City’s discovery requests and refused to disclose information about his income, expenses, assets, and business interests. When the trial court ordered Lerner to comply, he violated the court’s order. As a result, the court precluded Lerner from entering any evidence at trial that he had not disclosed to the City. At the outcome of a bench trial, though the trial court found that the amount Lerner owed was “basically an amount pulled out of the sky,” Lerner had waived his right to challenge that assessment when he failed to timely petition the Board for review. Lerner appealed when the trial court denied his post-trial motion for relief. In that appeal, Lerner argued for the first time that the ground upon which the trial court's judgment was premised was misplaced. Lerner decided to assert on appeal that a taxpayer who fails to exhaust his or her administrative remedies may nonetheless challenge a tax assessment in a subsequent collection action when the taxing authority’s own evidence demonstrates that the assessment has no basis in fact. Although Lerner espoused the same argument before the Supreme Court, he did not preserve it. Accordingly, the Supreme Court affirmed the Commonwealth Court's judgment. View "City of Philadelphia v. Lerner" on Justia Law

Mount Airy #1, LLC operated a hotel and casino located in Mount Pocono. Mount Airy challenged the constitutionality of Section 1403(c) of the Pennsylvania Race Horse Development and Gaming Act. That section levied a “local share assessment” against all licensed casinos’ gross slot machine revenue. According to Mount Airy, the statutory provision violated the Uniformity Clause of the Pennsylvania Constitution because it imposed grossly unequal local share assessments upon similarly situated slot machine licensees. After review of the parties' arguments, the Pennsylvania Supreme Court held that the local share assessment was a non-uniform tax of the sort prohibited by Article 8, Section 1 of the Pennsylvania Constitution. Therefore, the Court severed Subsections 1403(c)(2) and (c)(3) from the Gaming Act. View "Mount Airy #1, LLC v. Pa. Dept. of Revenue, et al." on Justia Law

In this appeal, the issue raised for the Supreme Court's review was whether freight brokerage services were excepted from local business privilege taxation1 under the “public utility” exception found in Section 301.1(f)(2) of the Local Tax Enabling Act (“LTEA”), Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. sec. 6924.301.1(f)(2). The Commonwealth Court concluded that S&H Transport was not excepted. The Supreme Court affirmed the Commonwealth Court’s decision because the Supreme Court concluded that the rates of the common motor carriers with whom S&H did business were not fixed and regulated by the Pennsylvania Public Utility Commission, and thus the entire exception was inapplicable. View "S & H Transport v. City of York" on Justia Law

Appellant Lower Merion Township was a township of the first class. Article IV of its municipal code required every person engaging in a business, trade, occupation, or profession in the Township to pay an annual business privilege tax calculated as a percentage of gross receipts. Appellees Fish, Hrabrick, and Briskin (“Lessors”) each own one or more parcels of real estate in the Township that they rent to tenants pursuant to lease agreements. The Township notified Lessors that, for every such parcel, they were obligated to purchase a separate business registration certificate and pay the business privilege tax based on all rental proceeds. Lessors sought a declaratory judgment stating that, pursuant to the Local Tax Enabling Act (the “LTEA”), the Township’s business privilege tax could not be applied to rental proceeds from leases and lease transactions. Lessors did not challenge the validity of Article IV generally. Rather, they observed that the LTEA’s general grant of power in this regard is subject to an exception stating that such local authorities lack the ability to “levy, assess, or collect . . . any tax on . . . leases or lease transactions[.]” Lessors argued their real property rental activities fell within the scope of this exception. The trial court granted the Township's motion, denied the Lessors' motion and dismissed the complaint. A divided Commonwealth Court reversed, but the Supreme Court agreed with the trial court's judgment, reversed the Commonwealth Court and reinstated the trial court's order dismissing the complaint. View "Fish v. Twp of Lower Merion" on Justia Law

A series of cross-appeals involved tax credits and refunds for overpayments of the City of Philadelphia’s Business Privilege Tax (BPT). The City appealed the Commonwealth Court’s decision affirming the award of credits to Keystone Health Plan East, Inc., and QCC Insurance Company (collectively, Taxpayers), who appealed the same decision affirming the denial of their refund requests. The Philadelphia Department of Revenue agreed Taxpayers overpaid their taxes, but denied the refund requests as untimely. Taxpayers appealed to the Philadelphia Tax Review Board, arguing the net income corrections effectively reset the “due date” since they had 75 days from the completion of an IRS audit to file the amended returns. The Review Board rejected Taxpayers’ argument, determining “due date” referred to the date the returns were initially due (April 15, 2004 and 2005, respectively). Notwithstanding this denial of refunds, the Review Board, sua sponte, awarded Taxpayers credits for their overpayments. The trial court affirmed the Review Board’s decision. Both parties appealed, and a divided three-judge panel of the Commonwealth Court affirmed. The majority further held the trial court did not err in affirming the award of credits. Finding no reversible error in the Commonwealth Court's decision, the Supreme Court affirmed. View "City of Phila. v. Tax Review Bd." on Justia Law

At issue in these cross-appeals by Verizon Telephone Company of Pennsylvania and the Commonwealth was the taxability of Verizon’s gross receipts under the Pennsylvania Gross Receipts Act, for: (1) the installation of private phone lines; (2) the provision of directory assistance services; and (3) certain non-recurring charges levied on its customers for the installation of telephone lines; moves of, and changes to telephone lines and services; and from repairs of telephone lines. After careful consideration, the Supreme Court concluded that revenue derived from all such activities constitutes gross receipts taxable under 72 P.S. 8101(a)(2), and, thus, affirmed the portion of the order of the Commonwealth Court which determined revenue from the first two above-enumerated activities were taxable. The Supreme Court reversed the portion of the Commonwealth Court’s order finding revenue from the third activity was not. View "Verizon, PA, Inc. v. Pennsylvania" on Justia Law