Pennsylvania Supreme Court approves local BPT on leases
TAX ALERT |
On Dec. 21, 2015, the Pennsylvania Supreme Court issued its decision in G. Fish, et al v. Twp of Lower Merion, reversing the decision of the Commonwealth Court and holding that the Local Tax Enabling Act does not prohibit the imposition of a business privilege tax on businesses that conduct leasing activity because the tax is imposed on the right to do business, and not on the lease or lease transaction itself. The taxpayers may file a request for rehearing. However, the decision was 4-2, and it would be unlikely for the taxpayers to obtain a different result upon rehearing.
In the past 15 months, many property owners filed for refunds, and may have taken the position on their 2014 return that revenue from leases and lease transactions are not subject to local business privilege taxes in accordance with the Commonwealth Court’s taxpayer-friendly result. Many local municipalities asked taxpayers to sign a waiver of the statute of limitations concerning the hearing of the refund requests. To make sure the statute of limitations closes, taxpayers that agreed to this waiver may want to take affirmative action to withdraw the refund petition by sending a letter to the municipality notifying it of its desire to withdraw. Taxpayers that excluded the revenue from lease transactions from their 2014 tax return should consider amending their return to limit the imposition of interest and penalties.