This year has proven to be a busy year in Pennsylvania's state and local tax (SALT) world, with some notable taxpayer wins and losses. This article will highlight the top three taxpayer SALT victories of 2019.

Taxpayer Uniformity Argument Wins (Again)

The uniformity clause of Pennsylvania's Constitution has a long and storied past, wrought with inequity in the form of special tax laws applicable only to particular industries or individuals. During the early 19th century, such special tax laws began to thrive in Pennsylvania during a time when many states were trying to foster infrastructure development within their borders and engage in the boom of the Industrial Revolution. The Pennsylvania legislature directly financed many of these ventures and also provided indirect subsidies by bestowing preferential tax treatment upon certain industries. The railroad industry was especially successful in the field of taxation—so much so that in 1861 the Pennsylvania legislature voted to exempt the railroad industry from taxation altogether. Not surprisingly, this preferential treatment spurred anger among the people. This resentment ultimately pressured the legislature to authorize a constitutional convention to address the issue—resulting in the establishment of Pennsylvania's uniformity clause. The uniformity clause provides that "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 rules."

Fast forward to present day, in the recent case of Valley Forge Towers N v. Upper Merion Area School District, 163 A.3d 962 (Pa. 2017), the Pennsylvania Supreme Court held that the uniformity clause requires that all property be viewed as a single class entitled to uniform treatment. Thus, all property, regardless of type, is a single class, thereby prohibiting a government from treating sub-classifications of properties in a disparate or different manner. Spurred by the decision in Valley Forge Towers, a number of property owners filed suit arguing that the city of Philadelphia violated the uniformity clause during 2018 when the Office of Property Assessment (OPA) reassessed commercial and industrial properties but not residential parcels. See Duffield House v. City of Philadelphia, No. 170901536. The Philadelphia Court of Common Pleas found that for 2018 the OPA's reassessments focused on nonresidential property while only reassessing 1% of residential properties. Thus, it held that effectively "the city conducted only a commercial reassessment for tax year 2018." During September 2019, based upon the clear discriminatory treatment of commercial properties, the court ordered the city's 2018 reassessments to be stricken and directed the city to issue refunds, plus interest, for the overpayment of taxes. The cases were recently appealed to the Pennsylvania Commonwealth Court and should be watched as they will be important in determining what methods municipalities are permitted to use in reassessing property in future tax years.

Ambiguities in Taxing Laws Construed in Favor of Taxpayer

Courts have long held that ambiguities in taxing statutes should be resolved in favor of a taxpayer and against a taxing authority. This axiom was again upheld in the 2019 case of S & H Transportation v. City of York, Pa. S.Ct., No. 8 MAP 2018, 07/17/2019. S&H was a freight broker that received money from its customers for arranging the shipment of commercial goods with freight carriers on the customer's behalf. S&H deducted its commission from the money it received and remitted the remainder to the freight carriers to pay the carrier's shipping fees. Pursuant to the Pennsylvania Local Tax Enabling Act (LTEA), municipalities cannot "levy, assess and collect a mercantile or business privilege tax on gross receipts or part thereof which are: charges advanced by a seller for freight, delivery or other transportation for the purchaser in accordance with the terms of a contract of sale." The city's regulation excluded from taxation of a business's gross receipts any: "freight delivery or transportation charges paid by the seller for the purchaser." The issue before the court was whether York's Business Privilege Tax (BPT) applied to all of the money S&H received, or only to the company's commission.