Fish v. Twp. of Lower Merion
| Decision Date | 19 September 2014 |
| Docket Number | No. 1940 C.D. 2013,1940 C.D. 2013 |
| Citation | 100 A.3d 746 |
| Parties | George D. FISH, Stephen Hrabrick and Jonathan A. Briskin, Appellants v. TOWNSHIP OF LOWER MERION. |
| Court | Pennsylvania Commonwealth Court |
Allan H. Freedman, Bryn Mawr, for appellants.
Kathleen M. Thomas, North Wales, for appellee.
BEFORE: DAN PELLEGRINI, President Judge, BONNIE BRIGANCE LEADBETTER, Judge, RENÉE COHN JUBELIRER, Judge, ROBERT SIMPSON, Judge, MARY HANNAH LEAVITT, Judge, P. KEVIN BROBSON, Judge, and PATRICIA A. McCULLOUGH, Judge.
Appellants George D. Fish (Fish), Stephen Hrabrick (Hrabrick), and Jonathan A. Briskin (Briskin) (collectively, Lessors) initiated this declaratory judgment action in the Court of Common Pleas of Montgomery County (trial court), challenging the Township of Lower Merion's (Township) imposition of its business privilege tax (BPT), calculated using gross receipts, on Lessors, who lease real property within the Township. On cross-motions for judgment on the pleadings, the trial court, in a September 24, 2013 Order, found in favor of the Township and against the Lessors. Because we conclude that the imposition of the BPT on Lessors' rental income (i.e., their gross receipts from lease transactions) violates Section 301.1(f)(1) of the Local Tax Enabling Act (LTEA),1 we reverse the trial court's order in part.
Each of the Lessors owns and leases real property within the Township, thereby deriving rental income from those properties. The Township's BPT is set forth in Section 138–42 of the Township's Municipal Code (Code), which provides:
Every person engaging in a business, trade, occupation or profession in the Township shall pay an annual business privilege tax for the year beginning January 1, 1981, and for each tax year thereafter, at the rate of 1.5 mills on such person's gross receipts.
(Emphasis added.) In addition to payment of the BPT, the Code imposes an annual registration requirement and related fee:
Every person desiring to continue to engage in or hereafter to begin to engage in a business, trade, occupation or profession at an actual place of business in the Township shall, on or before the 15th day of April of the tax year or prior to commencing business in such tax year, make application with the Collector for registration for each place of business in the Township, and if such person has no actual place of business within the Township, then one registration. Such registration shall be made by the completion of an application furnished by the Collector and the payment of a fee of $20 for each place of business. Each application for registration shall be signed by the applicant, if a natural person, and, in the case of an association or a partnership, by a member or partner thereof, and, in the case of a corporation, by an officer thereof, or by the authorized person of any other legal entity. The Collector shall, upon receipt of the completed registration form, issue a certificate of registration to such person which must be displayed in each place of business.
Section 138–41 of the Code (emphasis added).
The Code defines “business, trade, occupation or profession” as follows:
Any business, trade, occupation or profession in which there is offered any service or services to the general public or a limited number thereof, including but not limited to financial businesses and those enterprises engaged in by hotel operators; motel operators; office and/or residential apartment building operators; parking lot and garage operators; warehouse operators; lessors of tangible personal property; physicians and surgeons; osteopaths; podiatrists; chiropractors; veterinarians; optometrists; pharmacists; lawyers; dentists; engineers; architects; chemists; certified public accountants; public accountants; funeral directors; promoters; agents; brokers; manufacturers' representatives; advertising and public relations agencies; real estate brokers; insurance brokers and agents; cable television operators; operators of places of amusement providing either passive or active recreation; vending machine operators; barbershop operators and beauty shop operators; cleaning, pressing and dyeing establishment operators; laundry operators; shoe repair shop operators; tailors; upholsterers; electrical, plastering, bricklaying, carpentry, heating, ventilating, plumbing and painting contractors engaged in the class of heavy building or other construction of any kind or in the alteration, maintenance or repair thereof; and repairers of electrical, electronic and automotive machinery and equipment or other machinery and equipment and other wares and merchandise.
Section 138–40 of the Code (footnote omitted). “Gross receipts” is defined, in relevant part, as:
Section 301.1(a) of the LTEA, 53 P.S. § 6924.301.1(a). The Township's BPT is a tax authorized under the LTEA. The authority to impose such a tax, however, is subject to restrictions, also contained in Section 301.1 of the LTEA. Relevant to this matter is the restriction in Section 301.1(f)(1), which provides that local authorities do not have the power under the LTEA to levy, assess, or collect “any tax on ... leases or lease transactions.” 53 P.S. § 6924.301.1(f)(1).
In their declaratory judgment action, Lessors contend that they are not subject to the BPT or the annual registration requirement in the Code. With respect to the tax specifically, Lessors argue that the Township is prohibited from imposing the tax on Lessors' lease income by operation of Section 301.1(f)(1) of the LTEA. With respect to both the BPT and the annual registration requirement, Lessors contend that by their terms, the relevant Code provisions do not apply to Lessors' real estate lease transactions in the Township. Finally, Lessors contend that the Township was not authorized to impose a separate registration fee for each leased property of a single owner.
In its opinion in support of its September 24, 2013 Order (see Pa.R.A.P. 1925(a) ), the trial court rejected each of Lessors' contentions. The trial court found that the BPT did not violate the LTEA's prohibition against taxing leases or lease transactions because the Code imposes the tax on Lessors' aggregate annual income/proceeds from the leases, not on each lease transaction. In this regard, the trial court differentiated the BPT from the lease tax that the Pennsylvania Supreme Court found invalid in Lynnebrook and Woodbrook Associates, L.P. ex rel. Lynnebrook Manor, Inc. v. Borough of Millersville, 600 Pa. 108, 963 A.2d 1261 (2008). The trial court also concluded that Lessors' activities fall within the purview of the Code provisions imposing the registration and BPT requirements. Finally, the trial court found no authority to support Lessors' contention that the Code's scheme of requiring separate registrations and fees for each rental property was illegal.
On appeal, Lessors renew their challenge to imposition of the BPT on their rental property income based on Section 301.1(f)(1) of the LTEA. They also press their argument that their activities do not fall within the scope of the relevant Code provisions. This Court's scope of review of an order granting a motion for judgment on the pleadings is limited to determining whether the trial court committed an error of law or whether questions of material fact remain outstanding such that the case should have gone to the jury. Tobias v. Halifax Twp., 28 A.3d 223, 225 n. 4 (Pa.Cmwlth.2011), appeal denied, 616 Pa. 640, 47 A.3d 849 (2012). Our standard of review is plenary. Id.
We begin with Lessors' contention that their gross receipts from their rental properties are excluded from the Township's taxing authority by virtue of Section 301.1(f)(1) of the LTEA. This is a question of statutory construction, and, therefore, we are guided by the Statutory Construction Act of 1972 (Act), 1 Pa.C.S. §§ 1501 –1991. The Act provides that “[t]he object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly.” 1 Pa.C.S. § 1921(a). “The clearest indication of legislative intent is generally the plain language of a statute.” Walker v. Eleby, 577 Pa. 104, 842 A.2d 389, 400 (2004). “When the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit.” 1 Pa.C.S. § 1921(b). Only “[w]hen the words of the statute are not explicit” may this Court resort to statutory construction. 1 Pa.C.S. § 1921(c). “A statute is ambiguous or unclear if its language is subject to two or more reasonable interpretations.” Bethenergy Mines Inc. v. Dep't of Envtl. Prot., 676 A.2d 711, 715 (Pa.Cmwlth.), appeal denied, 546 Pa. 668, 685 A.2d 547 (1996). Moreover, “[e]very statute shall be construed, if possible, to give effect to all its provisions.” 1 Pa.C.S. § 1921(a). It is presumed “[t]hat the General Assembly intends the entire statute to be effective and certain.” 1...
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Pennsylvania Tax Developments - July 2015
...On April 8, the Pennsylvania Supreme Court agreed to hear Lower Merion Township's appeal in Fish, et al. v. Township of Lower Merion, 100 A.3d 746 (Commw. Ct. 2014), in which the Commonwealth Court held that the Township was statutorily prohibited from imposing its business privilege tax on......