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State and Local Taxation
Temple University School of Law
Weintraub, Stewart M.

 
PA State & Local Taxation
Fall 2015
Professor Stuart Weintraub
 
–          Look at the type of tax in question; Look at who is issuing the tax; Is there an exclusion, exemption that applies?
 
I.                   Tax Appeal Procedure:
–          Procedure differs between state level taxes, Philly level taxes, and the rest of the state
–          Municipalities throughout PA are put into clarifications by population: city 1st class, city 2nd class, township 1st class, borough 3rd class, borough 8th class, etc.
o   Only 1 city of the 1st class: Philly (this is why the rules in Philly frequently are different than the rest of the state, but you can try to cite case law from the rest of the state)
A.     Pennsylvania: (PA Board can waive the penalty for not paying taxes, but not the interest, City can waive penalty and interest)
o   Up until about 10 years ago, the different taxes at the state level had the same appeal procedures, but different time limits (30 day, 90 day, etc.)
o   Used to have different terminology (filing a petition for reassessment, petition for redetermination, petition for resettlement)
o   Now the time limits are all uniform and all called “petition for reassessment”
–          To appeal:
o   Within 90 days of the mailing date of the notice for assessment, you must file a petition for reassessment with the Board of Appeals (BoA) (administrative agency within the Department of Revenue); filed means postmarked by statute
§  Practice Hint: client usually waits until the end of the period (can submit it electronically now), stick postage marked mail receipt in the envelope so they already have the documentation proving when it was mailed
§  One question is “do you want a hearing?” (usually say yes)
o   Within 6 months of the petition being filed, the BoA must decide the petition
§  If it is a legal issue, the BoA is virtually a rubber stamp to the Department’s assessment, so you will lose
§  If it is a factual issue, your odds of success go up; you must convince them that the facts of your case are different than the auditor said they are
§  If a corporate tax appeal: there will be a hearing with a member of the BoA and a representative of the Department of the Auditor General
§  All other tax appeals: there will be a hearing in front of a hearing officer at BoA; hearing officers are not always attorneys
·         At the hearing, the Rules of Evidence do not apply, the hearing will be taped, you can testify for your client
·         After the hearing, the hearing officer makes recommendations and then BoA will render a decision
o   If BoA does not issue a decision within 6 months, then the first level appeal is deemed denied and it is automatically appealed to the next level
§  HOWEVER, BoA can request that you extend the 6 month deadline for an additional 6 months
§  If there is another case that you are waiting to see the outcome of, you can ask that you have your appeal held in abeyance until the outcome of that case (if you are active in the field, you generally have an idea of what cases are out there)
o   Within 90 days of the mailing of notice of BoA’s decision, you must file an appeal with the Board of Finance and Revenue (BFR) (filing means date of postmark again)
§  BFR is not an agency within the Department of Revenue; it used to be housed in the State Treasury’s Office and composed of 6 executive branch designee; there were a lot of issues with the process and procedure
§  April 2014 – BFR is now a 3 member Board: State Treasury appoints the chair, Governor with the advice and consent of the State Senate appoints the other 2 members
·         To be a Board member, you must be a US citizen, PA resident, Esq or CPA, and have 10 years of experience in SALT; this becomes your full time job
§  At the BFR hearing, an atty from the Dept of Revenue argues against you
·         “briefer” will contact you for all documents ahead of time and prepare a brief for the BFR Board (can meet the briefer ahead to discuss case, but the only time you can talk with briefer alone is to discuss scheduling)
o   Within 6 months of the petition being filed, the BFR Board must decide the petition
§  HOWEVER, BFR can request that you extend the 6 month deadline for an additional 6 months
§  If there is another case that you are waiting to see the outcome of, you can ask that you have your appeal held in abeyance until the outcome of that case (if you are active in the field, you generally have an idea of what cases are out there)
§  All BFR decisions are published in redacted form
o   Now you can try to negotiate a settlement with the Department of Revenue, which will be confirmed by the BFR
o   Within 30 days of the mailing date of the BFR decision, you must appeal to the Commonwealth Court (trial court for appeals from PA state agencies)
§  File petition for review (electronically)
·         Rules of Appellate Procedure has a separate section of rules for appeals from the BFR
·         You will get an email back saying they received it and that’s the ticket you need (if you file late in the day, you will just get the email saying its received, but won’t get accepted email until the next day); if it is rejected and you correct it, it’ll still be timely if you have the received email
§  Within 4-8 weeks of filing the appeal, you will get an electronic filing of notice of appearance from the other side
·         Practice Hint: after you file petition, start drafting Stipulation of Facts and send to deputy AG for review; try to get draft to AG within 6 months of filing appeal – Court generally allows the attys 1 year to move the case, if no movement, then Court will issue an Order requesting a status report or a few reports and then Court will order you to come in
§  After you do your trial records (full or partial Stipulation of Facts or depositions, etc.), then Court schedules fling of briefs (30 days for appellant’s brief, 30 days for appellee’s brief, 14 days for appellant’s reply), then it is conducted like appellate argument
·         The Court will decide if you get the en banc court of 7 or the panel of 3
o   Within 30 days from when the Court renders a decision, you are required to file exceptions to the decisions (if you lose)
§  Then there will be another briefing schedule and the Court will decide if you get oral argument or not
·         If you get oral argument and you had the panel of 3, you will then go before the en banc court
·         If you were before the en banc court of 7, you probably won’t get oral argument)
o   Within 30 days from when the Court renders a decision on the exceptions, you must file an appeal with the Supreme Court (general rules apply there)
§  You will likely get a decision within 3-4 months of the argument
§  Supreme Court on tax cases: very slow and they typically think the Commonwealth is wrong
o   Keystone opportunity zone (KOZ): exempt from corporate taxes, sales and use taxes, realty transfer taxes, income taxes, etc. (state and local); have to show you own or lease property in the KOZ, you have employees there, and are conducting active trade or business in KOZ
–          State Statute of Limitations:
o   For an assessment: three years from the return or filing of the return (9)
§  Except for sales tax, which is the last three full calendar years plus the current year; ex. assessment made today, then it’s 2012, 2013, 2014, and 8 months of 2015
o   Refund: three years from the date of payment
o   If y

; if they want to hear it (they grant allocatur) you will get the rescheduling order, if they don’t want to hear the case, it is over unless you have a US constitutional issue (apply to US Supreme Court… good luck)
–          All taxes are found in Chapter 19 of the Philadelphia Code separated by section (Section 1500- wage, Section 1600 – business and receipts tax, etc.); Section 1700 is the procedure section and the different types of petitions that the Board can hear
–          Tax Review Board (TRB) (hears appeals on everything except real estate assessments)
o   Tax Review Board hears 4 types of matters:
1.      Petition to challenge the assessment (Section 1702);
–          Within 60 days from the mailing of an assessment, must appeal by filing petition with TRB
2.      Abatement of interest or penalty (Section 1705)
–          May be filed with TRB and it is a discretionary act by TRB (can grant/deny in whole or in part for the waiver of interest and/or penalty); 3 factors: 1. Did the taxpayer act in good faith? 2. Without negligence?, 3. Without intent to defraud); Board typically abates penalty, but not interest
3.      Refund (Section 1703)
–          1st step: file a petition for refund with Department of Revenue
–          Dept will review it and may begin an audit; then grant in full, deny in full, grant/deny in part
–          To whatever extent it is granted, it must be approved by TRB; if the TRB disagrees, they schedule a hearing, if they agree you get the money;
–          To the extent you are denied, the taxpayer has 90 days to appeal to the TRB
4.      Offer in compromise (Section 1704)
–          Process where a taxpayer goes to Dept of Revenue and says it is in the city’s best interest to take $x instead of what you claim is due (collectability)
–          Must put a check in escrow with the offer amount; if they deny offer it is over; if they accept offer it is reviewable by the TRB
o   Once you filed your petition with TRB, the process is the same for each
§  You will get letter with docket number
§  Then letter scheduling you for hearing (trial)
§  More often than not the case will not try after that first letter because the city lawyer will not see it
§  No authorization for formal discovery, burden of proof is on the taxpayer
§  5 member board all appointed by the mayor
·         2 requirements for TRB: there has to be a lawyer, there has to be an accountant (they could be the same person in theory)
§  Decision has to be made in public under the Sunshine Law, but discussion can be in executive session
o   Within 30 days of TRB’s decision, you must file appeal to the Court of Common Please (Rule 320)
§  You will receive a notice of appeal, then get scheduling order that is different than BRT (it’ll say no sooner than x date)
§  It is not a de novo hearing as it is based on the record made before the TRB
§  Appeals from here forward are the same procedure as the BRT (Rules of Appellate Procedure) (look to ***)