On September 19, 2014, the Pennsylvania Commonwealth Court in Fish, Hrabrick and Briskin v. Township of Lower Merion, No. 1940 C.D. 2013, held that lease receipts are not taxable under local business privilege tax ordinances.  The Court held that the Local Tax Enabling Act, the statute that allows localities to impose business privilege taxes, forbids taxation of leases or lease transactions.  In doing so, the Court rejected the township’s argument that its tax was really a tax on the privilege of doing business, not on specific lease receipts.  The township has filed a Petition for Allowance of Appeal with the Pennsylvania Supreme Court.  Until the Supreme Court decides whether to hear the appeal, those businesses (except in the city of Philadelphia) that have included lease receipts in the tax base should file protective refund appeals for all expiring periods (generally the statute of limitations is three years).  If the Supreme Court declines to hear the appeal, then refund appeals should be filed for all open periods.

As most business privilege taxes returns are due either in March or April each year, for dealers that are subject to the payment of business privilege taxes, dealers should mark their calendars to note a potential filing of an appeal of business privilege taxes for the first quarter of 2015.  For example, dealers should note the target date for filing leases or lease transactions refund claims for the 2011 year would be either March or April of 2015.