Seize the Day: The Vagaries of the Pennsylvania Tax Refund Limitations Period

Mission-Funding-Alpha-v.-CommonwealthCarpe diem, the Latin exhortation to “seize the day” (or more accurately pluck it) has been a favorite theme of poets ranging from Horace to Andrew Marvell. And for Pennsylvania taxpayers, it happens to be good advice concerning tax refunds, because the seemingly straight-forward limitations provision for refund claims continues to confound courts, lawyers, and taxpayers.

Here’s what it says:

For a tax collected by the Department of Revenue, a taxpayer who has actually paid tax, interest or penalty to the Commonwealth or to an agent or licensee of the Commonwealth authorized to collect taxes may petition the Department of Revenue for refund or credit of the tax, interest or penalty.

Read More

State and Local Taxation: Pennsylvania Taxing Authorities Cannot Limit Assessment Appeals to Commercial Property

pa-taxThe Pennsylvania Constitution imposes a requirement that taxes be uniform: “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.” Pa. Const. Art. VIII, § 1. On July 5th, the Pennsylvania Supreme Court unanimously held that a tax authority cannot selectively target commercial property for assessment appeals in light of this uniformity requirement. Valley Forge Towers Ap’ts N. LP v. Upper Merion Area Sch. Dist., No. 49 MAP 2016, 2017 Pa. LEXIS 1520 (Pa. July 5, 2017).

Taxpayers who owned commercial property in Upper Merion School District brought an action for declaratory and injunctive relief asserting that the school district had a practice of discriminating against commercial properties by targeting them for assessment appeals, while ignoring the fact that many single family homes were significantly under assessed to a greater degree than commercial properties.… Read More

Has the Challenge Lost its Fizz? The Commonwealth Court Upholds the Soda Tax

Philadelphia Soda TaxWhatever you may think about the wisdom of Philadelphia’s “Soda Tax,” the City has certainly done well against some fairly stiff opposition:

  • The beverage industry spent millions lobbying against the ordinance creating the tax. It passed anyway. City 1, Industry 0.
  • The beverage industry launched a case challenging the tax in the Court of Common Pleas. The plaintiffs’ complaint was promptly tossed as presenting no legally viable challenge to the tax. City 2, Industry 0.
  • The beverage industry appealed, enlisting thirty-six state legislators as support. On June 14th, the Commonwealth Court rejected that challenge. Williams v. City of Philadelphia, No.
Read More

State and Local Taxation: Franchise Fees Must Be Apportioned for Purposes of a Business Privilege Tax

PA State and local taxIn Pennsylvania, the Local Tax Enabling Act authorizes a variety of municipalities to impose a tax “on the privilege of doing business in the jurisdiction of the local taxing authority.” 53 P.S. § 6924.301.1(a.1)(1). As with any state or local tax, the tax cannot violate the Commerce Clause; as a consequence, a local business privilege tax may only be imposed “when the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.” Complete Auto Transit, Inc. v.Read More

What Can Slot Machines Tell Us About the Treatment of NOLs under Pennsylvania’s Corporate Net Income Tax?

pa-taxIn December of 2015, Pennsylvania’s Commonwealth Court issued an important decision holding that the structure of the net loss carryover deduction for the Corporate Net Income Tax violated the uniformity clause of the Pennsylvania Constitution. Nextel Communs. of the Mid-Atlantic, Inc. v. Commw., 129 A.3d 1 (Pa. Commw. 2015). Specifically, the court held that the cap on the deductibility of losses violated the uniformity clause by treating taxpayers in a disparate fashion based on their taxable income without any reasonable justification. Nextel, 129 A.3d at 9-10. The court ordered a refund to remedy the violation. Id. at 12-13. Currently, the case is on appeal to the Supreme Court of Pennsylvania; all briefs have been filed and the matter is awaiting further action from the court.… Read More

State and Local Taxation: PA Supreme Court Invalidates Local Share Assessment Levied Against Casino’s Slot Revenue Outside Philadelphia

slotsThe Pennsylvania Constitution requires that taxes be uniform: “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.” Pa. Const. art. VIII, § 1. While this provision sounds similar to the equal protection clause of the Fourteenth Amendment, in practice, it is much more robust.

On September 28, 2016, the Pennsylvania Supreme Court ruled that the local share assessment imposed under Section 1403 of the Pennsylvania Race Horse Development and Gaming Act violated the uniformity clause of the Pennsylvania Constitution because casinos were taxed differently based upon the amount of their gross revenue.… Read More

State and Local Taxation: Business Privilege Taxes and the Utility Exception in Pennsylvania

logistics, taxation, pennsylvaniaThe Local Tax Enabling Act authorizes municipalities in Pennsylvania to enact business privilege taxes; it applies throughout the Commonwealth, with the exception of Philadelphia, which is governed by separate legislation. While the scope of the act is quite broad, it does include an exclusion associated with utilities. The exclusion bars the following types of taxes:

  • “a tax on the gross receipts from utility service of any person or company whose rates and services are fixed and regulated by the Pennsylvania Public Utility Commission” (PUC); or
  • a tax on the gross receipts from “any public utility services rendered by any such person or company”; or
  • a tax on the gross receipts from “any privilege or transaction involving the rendering of any such public utility service.” See 53 P.S.
Read More

State and Local Taxation: Philadelphia Taxpayers Are Entitled to Open-Ended Credits for Overpayments

city of PhiladelphiaOn December 21st, the Supreme Court of Pennsylvania issued an opinion that carries significant potential benefits to Philadelphia taxpayers; a divided court held that taxpayers were entitled to credit for overpayments under Section 19-2610 of the Philadelphia Code, even if the period in which a refund can be sought had expired. City of Philadelphia v. City of Phila. Tax Rev. Board ex rel. Keystone Health Plan East, Inc., No. 19 EAP 2014, 2015 Pa. LEXIS 2988 (Pa. Dec. 21, 2015). While the City sought reargument, that motion was recently denied.

The taxpayers were subsidiaries of Independence Blue Cross that did business in the City of Philadelphia and were subject to its Business Privilege Tax (“BPT”), now known as the Business Income and Receipts Tax.… Read More

State and Local Taxation: The Tenth Circuit Sustains Colorado’s Reporting Requirement for Out-of-State Retailers

quill v. northdakotaUnder controlling precedent, sales and use taxes stop at the state line:

  • In 1967, the Supreme Court held that under the due process clause and the dormant commerce clause, Illinois could not require a mail order business based in Missouri to collect use taxes associated with goods that it sold to Illinois residents when its sole connections with Illinois involved the mail and common carriers. See Nat’l Bellas Hess v. Dep’t of Revenue, 386 U.S. 753, 758-60 (1967).
  • In 1992, the Supreme Court revisited the area; the Court overturned its prior due process ruling in National Bellas Hess while upholding a bright-line physical presence rule for purposes of the dormant commerce clause.
Read More

State and Local Taxation: What’s in a Name? That Which We Call a Privilege Can Be Taxed

state and local taxJust before Christmas 2015, the Supreme Court of Pennsylvania addressed the scope of a business privilege tax imposed by Lower Merion Township; the case was brought by a group of landlords, who contended that the township could not tax revenue generated from leasing property, and a divided Court sustained the tax. Fish v. Township of Lower Merion, No. 29 MAP 2015, 2015 Pa. LEXIS 2979 (Pa. Dec. 21, 2015).

Under the Local Tax Enabling Act, various municipalities are entitled to impose a tax “on persons, transactions, occupations, privileges, subjects and personal property within the limits of such political subdivisions, and upon the transfer of real property, or of any interest in real property, situate within the political subdivision levying and assessing the tax .… Read More