Credits for Overpaid Taxes Affirmed

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A divided panel of the Commonwealth Court affirmed a decision below that taxpayers were entitled to credits for overpaid Philadelphia Business Privilege Tax, notwithstanding a three-year limit on the refund of taxes. City of Philadelphia v. City of Philadelphia Tax Review Board ex rel. Keystone Healthplan East, Inc., No. 97 C.D. 2013 (Pa Commw. Nov. 18, 2013). The taxpayers made estimated BPT payments in April of 2004 and 2005. They received extensions of time to file the tax reports by September 15 of the respective year, but the parties agreed that the extension to file reports did not extend the time for the estimated payments. After an audit of federal taxable income by the Internal Revenue Service, the taxpayers claimed refunds after three years from the respective April dates. Below, the Tax Review Board held that refund claims were barred, but nonetheless granted the taxpayers credits for the overpayments, on the grounds that the three-year limit applied only to claims for refund, as opposed to claims for credits. The board noted that elsewhere the city ordinances distinguished between refunds and credits. The court affirmed, holding that the plain language of the three-year limit did not apply to credits. A dissenting judge stated that there should be no material difference between the two.

 

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