IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jeffrey M. Mandler and Nuclear :

Imaging Systems, Inc., :

Petitioners :

:

v. :

:

Commonwealth of Pennsylvania, : No. 483 F.R. 2014

Respondent :

Jeffrey M. Mandler and Cardiovascular :

Concepts, P.C., :

Petitioners :

:

v. :

:

Commonwealth of Pennsylvania, : No. 484 F.R. 2014

Respondent : Submitted: February 10, 2021

BEFORE: HONORABLE P. KEVIN BROBSON, President Judge

HONORABLE MARY HANNAH LEAVITT, Judge

HONORABLE PATRICIA A. McCULLOUGH, Judge

HONORABLE ANNE E. COVEY, Judge

HONORABLE MICHAEL H. WOJCIK, Judge

HONORABLE CHRISTINE FIZZANO CANNON, Judge

HONORABLE ELLEN CEISLER, Judge

OPINION BY 

JUDGE COVEY FILED: March 3, 2021

Before the Court are Jeffrey M. Mandler (Mandler), Nuclear Imaging 

Systems, Inc. (NIS) and Cardiovascular Concepts, P.C.’s (CVC) (collectively, 

Taxpayers) exceptions (Exceptions)1to this Court’s March 2, 2020 Memorandum

1 Pennsylvania Rule of Appellate Procedure 1571(i) states:

Any party may file exceptions to an initial determination by [this 

C]ourt under this rule within 30 days after the entry of the order to 

which exception is taken. Such timely exceptions shall have the 
2

Opinion and Order (March 2, 2020 Opinion) affirming the Board of Finance and 

Revenue’s (Board) August 27, 2014 orders denying Taxpayers’ Petitions for Refund 

(Refund Petitions) of the $180,168.46 Taxpayers remitted to the Pennsylvania 

Department of Revenue (Revenue) on July 31, 2013, to satisfy employer withholding 

liens.2 Therein, Taxpayers present three issues for this Court’s review: (1) whether 

Taxpayers satisfied their burden of proving their entitlement to the $180,168.46 

refund; (2) whether the United States Bankruptcy Court for the Eastern District of 

Pennsylvania (Bankruptcy Court) set aside the funds necessary for Taxpayers to 

satisfy their payroll tax obligations, and the Commonwealth of Pennsylvania 

(Commonwealth) was on notice that those funds were available; and (3) whether 

Taxpayers are entitled to prevail under the doctrine of estoppel by laches or collateral 

estoppel. After review, this Court en banc overrules Taxpayers’ Exceptions.

 

Facts

On January 11, 2019, pursuant to Pennsylvania Rule of Appellate 

Procedure (Rule) 1571(f), Taxpayers and the Commonwealth submitted a joint 

Stipulation of Facts (Stipulation).3 According to the Stipulation, Mandler owned NIS 

effect, for the purposes of Rule 1701(b)(3) (authority of lower court 

or agency after appeal) of an order expressly granting reconsideration 

of the determination previously entered by the court. Issues not raised 

on exceptions are waived and cannot be raised on appeal.

Pa.R.A.P. 1571(i).

2 The Board’s August 27, 2014 orders were mailed on September 3, 2014. See Taxpayers’

Initial Br. Attachments.

3 A review of determinations of the Board is governed by [Rule] 1571. 

Although this Court hears such cases in its appellate jurisdiction, it 

functions essentially as a trial court. Therefore, this Court must 

consider a record made by the parties specifically for the Court rather

than one certified to the Court from the proceedings below. 

Armco, Inc. v. Commonwealth, 654 A.2d 1191, 1192 (Pa. Cmwlth. 1993) (citations omitted). Rule 

1571(f) mandates that the parties “prepare and file a stipulation of such facts as may be agreed to[.]” 
3

and CVC, which are Pennsylvania corporations with principal places of business in 

Malvern, Pennsylvania.4 See Stip. ¶¶ 3-4. Pursuant to Sections 316(a) and 320 of the 

Tax Reform Code of 1971 (Code),5 72 P.S. §§ 7316.1(a),

6 7320, Taxpayers were 

employers responsible for withholding their employees’ payroll taxes in trust for the 

Commonwealth. See Stip. ¶¶ 2-4. On August 4, 2000, NIS and CVC commenced 

voluntary reorganization bankruptcy proceedings in the Bankruptcy Court, pursuant 

to Chapter 11 of the Bankruptcy Code.7 See Stip. ¶ 4. On September 18, 2000, the 

Bankruptcy Court ordered the joint administration of NIS’s and CVC’s bankruptcy

actions. See Stip. ¶ 8. On October 6, 2000, Revenue filed proofs of claim with the 

Bankruptcy Court seeking, among other taxes,8 NIS’s and CVC’s Pennsylvania 

employer withholding taxes (Taxes).9 See Stip. ¶ 9, Stip. Ex. A. 

Pa.R.A.P. 1571(f). “The facts stipulated by the parties are binding and conclusive and should be 

regarded as this Court’s findings of fact.” Quest Diagnostics Venture, LLC v. Commonwealth, 119 

A.3d 406, 410 n.4 (Pa. Cmwlth. 2015), aff’d, 148 A.3d 448 (Pa. 2016). “‘However, this Court may 

draw its own legal conclusions.’” Am. Elec. Power Serv. Corp. v. Commonwealth, 184 A.3d 1031, 

1034 n.7 (Pa. Cmwlth.), aff’d, 199 A.3d 880 (Pa. 2018) (quoting Kelleher v. Commonwealth, 704 

A.2d 729, 731 (Pa. Cmwlth. 1997)). The parties declared in the Stipulation: “[N]o evidence of [] 

facts other than in this Stipulation need be adduced in this matter.” Stip. at 2.

 Revenue is represented by the Commonwealth’s Office of Attorney General, which has 

acted on Revenue’s behalf throughout these proceedings. 

4 NIS was a Pennsylvania corporation and CVC was a Pennsylvania professional 

corporation. See Stip. ¶¶ 3-4.

5 Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §§ 7101-10004. 

6 Added by Section 4 of the Act of August 31, 1971, P.L. 362.

7 11 U.S.C. §§ 1101-1195. Mandler also filed for Chapter 11 bankruptcy on September 12, 

2000. See Stip. ¶ 7. 

8 The other taxes included corporate net income taxes, capital stock-franchise taxes and 

corporate loan taxes. See Stip. Ex. A at 2, 7.

9

In addition to the Taxes, NIS and CVC owed taxes to other creditors, including the Internal 

Revenue Service (IRS), the Pennsylvania Department of Labor & Industry, and state taxing

authorities in Delaware, Maryland and New Jersey. See Stip. ¶ 13, Stip. Ex. D. By April 26, 2001 

Amended Stipulation of Settlement and Order, Taxpayers settled the claims made by DVI Financial 

Services, Inc., National Century Financial Enterprises, Inc., NPF X, Inc., NPF VI, Inc., and the IRS. 

See Stip. ¶ 10, Stip. Ex. B.
4

From October 29, 2000 to September 1, 2001, Revenue issued 10 

assessment notices to NIS and Mandler (individually, and in his capacity as NIS’s 

president) for their Taxes for consecutive tax periods from January 1, 1999 to June 

30, 2001, plus interest and penalties, in the total amount of $110,331.60. See Stip. ¶ 

14. Between October 29, 2000 and June 3, 2001, Revenue issued nine assessment 

notices to CVC and Mandler (individually, and in his capacity as CVC’s president) 

for their Taxes for consecutive tax periods from January 1, 1999 to March 31, 2001, 

plus interest and penalties, in the total amount of $70,486.89. See Stip. ¶ 15. 

On April 17, 2001, Taxpayers entered into an Amended Stipulation of 

Settlement and Order (Settlement Order) to resolve certain creditor claims, and to 

allow the sale of NIS’s and CVC’s assets to Integral Nuclear Associates, LLC 

(Integral) pursuant to an April 11, 2001 Asset Purchase Agreement10 (as amended by 

the Settlement Order), which would facilitate reorganization.11 See Stip. ¶ 10, Stip. 

Ex. B. Thereunder, Integral agreed to purchase certain of NIS’s and CVC’s assets 

out of bankruptcy, and to issue a “promissory note made payable to [Taxpayers] to 

fund payments to state taxing authorities.”12 Stip. Ex. B at 8. On May 1, 2001, 

Integral’s counsel sent United Savings Bank, inter alia, $66,215.49 to be held in an 

interest-bearing state tax escrow account. See Stip. ¶¶ 37-38, Stip. Exs. R, S. 

On June 8, 2001, Taxpayers filed a proposed Second Amended Joint 

Plan of Reorganization (Proposed Plan), in which they suggested in Section 4.2.B: 

“[Taxpayers] shall distribute $66,000[.00] to state taxing authorities. These claims 

10 The parties did not include the Asset Purchase Agreement as a Stipulation exhibit.

11 In their brief to this Court, Taxpayers reference an April 17, 2001 Bankruptcy Court order 

which, in paragraph 4, “provides for a transfer of [Taxpayers’] assets [to Integral] . . . free of all 

liens.” Taxpayers’ Initial Br. at 12. However, the Settlement Order does not contain that language, 

and no such order is referenced in or attached to the Stipulation. See Stip. Ex. B.

12 The amount of the promissory note specified in paragraph 10(b) of the Settlement Order is

illegible. See Stip. Ex. B at 8. However, Taxpayers contend in their brief to this Court that the 

amount was $50,000.00. See Taxpayers’ Initial Br. at 17. The amount was later amended to 

$66,215.49. See Taxpayers’ Initial Br. at 17. 
5

are estimated at $300,000[.00]. . . . Mandler shall make monthly payments to 

[Taxpayers] to pay any deficiency.” Stip. Ex. P at 13; see also Stip. ¶ 35. Revenue

objected to the Proposed Plan. See Stip. ¶ 36, Stip. Ex. Q.

On August 20, 2001, the Bankruptcy Court converted NIS’s and CVC’s 

bankruptcy actions to Chapter 7 liquidation proceedings.13 See Stip. ¶ 11. Thereafter, 

Revenue filed amended proofs of claim - on September 14, 2001, against CVC and 

on November 15, 2001, against NIS - seeking the Taxes.14 See Stip. ¶ 12, Stip. Ex. C. 

On January 7, 2002, Integral’s counsel instructed United Savings Bank 

to close out the state tax escrow account and forward the proceeds thereof (which was 

then $67,113.00) to Bankruptcy Trustee Christine Shubert (Trustee). See Stip. ¶ 39, 

Stip. Exs. T, U. Revenue did not receive any of the escrowed funds.

During 2002 and 2005, Revenue filed liens against Taxpayers in the 

Chester County Common Pleas Court. See Stip. ¶ 16, Stip. Ex. E. On May 18, 2005, 

Trustee issued her amended Chapter 7 Proposed Distribution of Property, pursuant to 

which the Trustee, on August 3, 2005, paid Revenue $1,043.29 relative to claims 

against CVC and $755.49 for claims against NIS. See Stip. ¶¶ 17-18, Stip. Exs. F, G. 

Those payments were not made in satisfaction of the Taxes or Taxpayers’ other state 

tax debts.15 On April 13, 2006, Trustee certified that the estate was fully 

administered - all bankruptcy estate money had been distributed to creditors and the 

bankruptcy estate accounts had zero balances. See Stip. ¶ 40, Stip. Ex. U.

13 11 U.S.C. §§ 701-784.

14 Like in the original proofs of claim, the amended proofs of claim sought corporate net 

income taxes, capital stock-franchise taxes, and corporate loan taxes in addition to the Taxes. See

Stip. Ex. C at 2, 7.

15 According to the Trustee’s itemized payment list, the $1,043.29 was paid on CVC’s 

$22,343.31 administrative priority claim and $755.49 was paid on NIS’s $16,158.09 administrative 

priority claim. See Stip. Ex. C at 2, 7; Stip. Ex. F at 7. The amended proofs of claim reflect that

those administrative priority claims were made pursuant to Section 507(a)(1) of the Bankruptcy 

Code, 11 U.S.C. § 507(a)(1) (relating to trustee expenses and domestic support obligations). See

Stip. Ex. C at 2, 7. 
6

By July 30, 2013 letter, Revenue notified Taxpayers’ counsel (Counsel)

that Taxpayers’ lien payoff figure was $180,168.46. See Stip. ¶ 19, Stip. Ex. H. 

Taxpayers remitted $180,168.46 to Revenue on July 31, 2013. See Stip. ¶ 20, Stip. 

Ex. I. On August 20, 2013, Revenue asked the Chester County Common Pleas Court 

to mark Taxpayers’ liens as satisfied. See Stip. ¶ 21, Stip. Ex. J.

However, on November 13, 2013, Taxpayers filed the Refund Petitions 

with Revenue’s Board of Appeals (BOA) seeking return of their $180,168.46, 

arguing that the Taxes had already been paid from the escrow account. See Stip. ¶¶ 

22-24. On January 23, 2014, the BOA denied the Refund Petitions, stating relative to 

both NIS and CVC: 

[Taxpayers] filed for bankruptcy and [] an escrow account 

was established for the payment of state taxes. The record 

does not provide any evidence that notice of the escrow 

account was provided to [Revenue]. There is no evidence 

indicating that these funds were used to pay the outstanding 

state tax liabilities. In fact, [Revenue’s] records indicate 

that [Revenue] did not receive payment from these 

escrowed funds. Accordingly, [Taxpayers] ha[ve] failed to 

prove that [they are] entitled to a refund.

Stip. Exs. K (BOA NIS Dec. at 2), L (BOA CVC Dec. at 2);16 see also Stip. ¶¶ 25-26. 

On April 4, 2014, Taxpayers appealed to the Board. See Stip. ¶¶ 27-29. 

On August 27, 2014, the Board denied the Refund Petitions. See Stip. 

Exs. M (Board NIS Dec. at 5), L (Board CVC Dec. at 4-5); see also Stip. ¶¶ 30-31. 

On September 24, 2014, Taxpayers appealed to this Court, which affirmed the 

Board’s orders on March 2, 2020.

17

 Mandler v. Commonwealth (Pa. Cmwlth. Nos. 

16 Taxpayers also requested abatement of the penalties and interest, which the BOA denied 

on the basis that Taxpayers were delinquent for 9 (CVC) and 10 (NIS) consecutive tax periods since

1999, and that they failed to prove they acted in good faith, without negligence or intent to defraud. 

See Stip. ¶¶ 14, 15; Stip. Exs. K (BOA NIS Dec. at 2), L (BOA CVC Dec. at 2).

17

“[A] party appealing from a denial of a tax refund . . . has the burden of proof in a de novo

proceeding before th[is Court].” Sabatine v. Commonwealth, 442 A.2d 210, 212 n.6 (Pa. 1981)

(italics added). “Our scope of review in tax appeals is . . . limited to the construction, interpretation 
7

483, 484 F.R. 2014, filed March 2, 2020). On April 1, 2020, the Commonwealth 

filed an Application to Redesignate the Court’s Unreported Memorandum Opinion as 

a Reported Opinion (Application), to which no response was filed. Taxpayers timely 

filed the Exceptions seeking to reverse the Court’s March 2, 2020 Opinion and grant 

their refund request.18 The Commonwealth filed a brief in opposition to Taxpayers’ 

Exceptions.19

 

Discussion

1. Waiver

Preliminarily, in their initial appeal to this Court, Taxpayers “request[ed]

relief pursuant to [Section 1983 of the United States Code,] 42 U.S.C. § 1983 

[(relating to civil rights deprivation actions)] and attorney’s fees pursuant to [Section 

1988 of the United States Code,] 42 U.S.C. § 1988 [(relating to proceedings in 

vindication of civil rights)].” See Taxpayers’ Initial Br. at 23. However, because 

Taxpayers failed to mention any civil rights violations in their Statement of Questions 

Involved and did not develop arguments in their brief to support any such claims, this 

Court ruled that Taxpayer waived those claims. See Commonwealth v. Spotz, 18 

A.3d 244 (Pa. 2011) (such waiver applies to undeveloped constitutional rights 

claims); Mun. of Mt. Lebanon v. Gillen, 151 A.3d 722, 727 n.5 (Pa. Cmwlth. 2016) 

(“Appeal of an issue is waived where the appellant fails to include it in the statement 

and application of a [s]tate tax statute to [the] given set of facts.” United Servs. Auto. Ass’n v. 

Commonwealth, 618 A.2d 1155, 1156 (Pa. Cmwlth. 1992) (quoting Escofil v. Commonwealth, 406 

A.2d 850, 852 (Pa. Cmwlth. 1979), aff’d per curiam, 452 A.2d 1012 (Pa. 1982)).

18 “[E]xceptions filed pursuant to [Rule] 1571(i) have the effect of an order granting 

reconsideration.” Kalodner v. Commonwealth, 636 A.2d 1230, 1231 (Pa. Cmwlth. 1994), aff’d, 675 

A.2d 710 (Pa. 1995).

19 Taxpayers filed a reply brief. The reply brief was identical to their principal brief in 

support of Exceptions. Relative to reply briefs, Rule 2113 specifies, in relevant part: “[T]he 

appellant may file a brief in reply to matters raised by appellee’s brief . . . and not previously 

addressed in appellant’s brief.” Pa.R.A.P. 2113.
8

of questions involved section of [his/]her brief and fails to address the issue in the 

argument section of the brief.”).

Notwithstanding, in their brief in support of Exceptions, Taxpayers again 

request[] relief pursuant to [Section 1983 of the United 

States Code,] 42 U.S.C. § 1983[,] [] attorney’s fees pursuant 

to [Section 1988 of the United States Code,] 42 U.S.C. § 

1988 [] and . . . fees and expenses pursuant to [the statute 

commonly known as the Costs Act (relating to fees and 

expenses for administrative agency actions)

20].

Taxpayers’ Exceptions Br. at 18. Therein, Taxpayers also include the following 

limited general argument:

1. The [] actions of the Commonwealth violate the [D]ue 

[P]rocess and Equal Protection clause[s] of the United 

States Constitution[21]and the Uniformity Clause of the 

Pennsylvania Constitution, the Pennsylvania Taxpayers[’]

Bill of Rights[22]and give rise to the right to attorney’s fees 

pursuant to [Section 1983 of the United States Code,] 42 

U.S.C. § 1983 [(relating to civil rights deprivation actions)].

. . . . 

4. [sic] The actions of the Commonwealth and its officials 

have deprived [] [T]axpayer[s] of property without the 

process of law in violation of Article I, [Sections] 9[ and]

10 of the Pennsylvania Constitution[, Pa. Const. art. I, §§ 9, 

10,] and the due process clause of Section 1 of the 

Fourteenth Amendment of the United States Constitution[, 

U.S. Const. amend. XIV,] and the Commerce Clause of the 

U[nited] S[tates] Constitution.[23]

5. [sic] The administrative decisions further violate Article 

II, [Section] 1 of the Pennsylvania Constitution[, Pa. Const. 

art. II, § 1,] which requires that administration actions 

conform to the statue under which the action is taken and 

20 Act of December 13, 1982, P.L. 1127, as amended, 71 P.S. §§ 2031-2035. The Costs Act 

expired on July 1, 2007.

21 U.S. Const. amend. XIV.

22 Act of December 20, 1996, P.L. 1504, 72 P.S. §§ 3310-101 - 3310-402.

23 U.S. Const. art. I, § 8, cl. 3.
9

Article 8, [Section] 1 of the Pennsylvania Constitution[, Pa. 

Const. art. VIII, § 1,] requiring that all tax be uniform upon 

the same class of subjects.

6. [sic] [] Taxpayer[s] also reserve[] the right to raise any

other issues and arguments that might present themselves 

on this matter.

Taxpayers’ Exceptions Br. at 17. However, because Taxpayers previously waived 

any constitutional argument, and because they did not specifically raise these issues 

in their Exceptions, they are waived.24 See Rule 1571(i) (“Issues not raised on 

exceptions are waived[.]”).

2. Exceptions

In their Exceptions, Taxpayers claim that (a) they satisfied their burden 

of proving their entitlement to the $180,168.46 refund; (b) the Bankruptcy Court set 

aside the funds necessary for Taxpayers to satisfy their payroll tax obligations and the 

Commonwealth was on notice that those funds were available; and (c) they are 

entitled to prevail under the doctrine of estoppel by laches or collateral estoppel. 

Taxpayers made identical arguments in their initial appeal to this Court.

25

 

24 Despite this Court’s warning in its March 2, 2020 Opinion, Taxpayers failed to raise these

issues in their new Statement of Questions Involved. In fact, despite having raised four Exceptions, 

in their brief supporting the Exceptions, Taxpayers sole issue in the Statement of Questions 

Involved is: “Were [Taxpayers’] tax liabilities satisfied in full per the deposit into the escrow 

account as explained by [Taxpayers]?” See Taxpayers’ Exceptions Br. at 7; see also Taxpayers’ 

Exceptions Reply Br. at 7. Clearly, Taxpayers merely copied the Statement of Questions Involved 

from its initial brief on appeal. See Taxpayers’ Initial Br. at 7 (Taxpayers’ Exceptions Br. App. C at 

7). Moreover, Taxpayers’ purported constitutional arguments are nothing more than declarations 

without accompanying developed arguments, record citations, or legal authority.

25 In their initial appeal, Taxpayers asserted that Integral set aside escrow funds for the 

express purpose of satisfying Taxpayers’ state tax obligations and that Revenue’s failure to timely 

claim those funds during the bankruptcy proceedings resulted in the Trustee using them to pay other 

debts and, thus, Revenue was estopped from thereafter collecting those monies from Taxpayers.
10

a. Refund Entitlement

Here, as they did in their initial appeal, Taxpayers claim that they 

satisfied their burden of proving their entitlement to the $180,168.46 refund. In 

concluding that the Code required Taxpayers to withhold employee payroll taxes and 

hold them in trust for the Commonwealth, and further authorized Revenue to enforce 

liens against Taxpayers for the withheld monies, this Court reasoned:

Section 316(a) of the Code specifies: 

Every employer maintaining an office or transacting 

business within [the Commonwealth] and making 

payment of compensation (i) to a resident 

individual, or (ii) to a nonresident individual 

taxpayer performing services on behalf of such 

employer within this Commonwealth, shall deduct 

and withhold from such compensation for each 

payroll period a tax computed in such manner as to 

result, so far as practicable, in withholding from the 

employe’s compensation during each calendar year 

an amount substantially equivalent to the tax 

reasonably estimated to be due for such year with 

respect to such compensation. The method of

determining the amount to be withheld shall be 

prescribed by regulations of [Revenue].

72 P.S. § 7316.1(a). Section 320 of the Code clarifies:

Every person[FN][18]required to deduct and withhold 

tax under [S]ection 316[(a) of the Code] is hereby 

made liable for such tax. For purposes of 

assessment and collection, any amount required to 

be withheld and paid over to [Revenue] and any 

additions to tax penalties and interest with respect 

thereto, shall be considered the tax of the person. 

All taxes deducted and withheld pursuant to 

[S]ection 316[(a) of the Code] or under color of 

[S]ection 316[(a) of the Code] shall constitute a 

trust fund for the Commonwealth and shall be 

enforceable against such person, his representative 

or any other person receiving any part of such fund.
11

72 P.S. § 7320. ‘[T]he employer has no right to this 

withholding once wages are paid; such withholding is 

commonly referred to as “trust fund tax” precisely because 

the employer holds it in trust for the [g]overnment.’ In re 

Dutch Masters Meats, Inc., 182 B.R. 405, 411 (Bankr. M.D.

Pa. 1995). Accordingly, the Code required Taxpayers to 

withhold employee payroll taxes and hold them in trust for 

the Commonwealth, and further authorized Revenue to 

enforce liens against Taxpayers for the withheld monies.

[FN][18] Section 201(e) of the Code defines 

‘person’ as ‘[a]ny natural person, association, 

fiduciary, partnership, corporation or other 

entity . . . . Whenever used in any clause 

prescribing and imposing a penalty . . . the 

term “person,” . . . as applied to a corporation, 

[shall include] the officers thereof.’ 72 P.S. § 

7201(e). This Court has ruled that a corporate 

officer can be personally liable for a 

corporation’s withholding taxes during periods 

in which he controlled the corporation. Brown 

v. Commonwealth, 670 A.2d 1222 (Pa. 

Cmwlth. 1996).

Mandler, slip op. at 9-10. Accordingly, this Court concluded that Taxpayers did not 

satisfy their burden of proving entitlement to the $180,168.46 refund. After review, 

this Court discerns no error in its March 2, 2020 conclusion.

b. Bankruptcy Proceedings

Taxpayers also argue that the Bankruptcy Court set aside the funds 

necessary for Taxpayers to satisfy their payroll tax obligations and the 

Commonwealth was on notice that those funds were available. Taxpayers made an 

identical argument in their initial appeal. Therein, this Court concluded that the 

Board properly denied Taxpayers relief because employer-withheld income taxes 

were trust fund taxes which were not dischargeable in bankruptcy, based on the 

following analysis:

Section 523(a)(1)(A) of the Bankruptcy Code provides: 
12

A discharge under [Chapter 7 of the Bankruptcy 

Code] does not discharge an individual debtor from 

any debt . . . for a tax . . . of the kind and for the 

periods specified in [S]ection . . . 507(a)(8) of [the 

Bankruptcy Code], whether or not a claim for such 

tax was filed or allowed[.FN19]

[FN19] A taxing body’s failure to file a proof of 

claim bars it from obtaining a distribution from 

the estate in a bankruptcy proceeding, but does 

not affect its authority to collect the tax debt. 

City of Phila. v. Carpino, 915 A.2d 169 (Pa. 

Cmwlth. 2006).

11 U.S.C. § 523(a)(1)(A). Section 507(a) of the 

Bankruptcy Code specifies: 

The following expenses and claims have priority in 

the following order: . . . [A]llowed unsecured 

claims of governmental units, only to the extent that 

such claims are for . . . a tax required to be collected 

or withheld and for which the debtor is liable in 

whatever capacity[.]

11 U.S.C. § 507(a). 

Further, the United States Bankruptcy Court for the 

Northern District of Illinois, has ruled that ‘taxes described 

in [Section] 507(a)([8])(C) [of the Bankruptcy Code], often 

referred to as ‘trust fund’ taxes, are never dischargeable[,]

no matter how long the unpaid tax obligations have been 

outstanding. 1 Robert E. Ginsberg, Bankruptcy § 11.06[b] 

at 899 (2[]d ed. 1989).’ In re Torres, 117 B.R. 379, 384 

(Bankr. N.D. Ill. 1990); see also Dutch Masters Meats, Inc., 

182 B.R. at 411 (‘It is because of th[e] trust relationship

that, unlike other tax obligations, trust fund taxes are 

nondischargeable . . . .’). Therefore, whether or not 

Revenue filed claim petitions for them, and no matter how 

much time has passed, the Taxes were trust fund taxes that

Taxpayers could not discharge in a Chapter 7 bankruptcy 

proceeding.

Taxpayers’ claim that the Chapter 7 bankruptcy proceeding 

relieved them of their liability for the Taxes because the 

escrowed funds were ‘for the sole purpose of paying the 

[Taxes] . . .’ is meritless. Taxpayers’ [Initial] Br. at 14. 
13

This Court acknowledges that, pursuant to the Settlement 

Order, Integral agreed to, and paid into an escrow account, 

monies ‘to fund payments to state taxing authorities.’ Stip. 

Ex. B at 8. However, neither the Settlement Order nor the 

May 1 and June 12, 2001 escrow letters, or any other record 

document, specifies that the escrowed funds were set aside 

for the express purpose of satisfying the Taxes. A 

taxpayer’s bare assertions are generally insufficient proof in 

tax cases. See Camp Hachshara Moshava of New York v. 

Wayne C[n]ty. Bd. for Assessment [&] Revision of Taxes, 47 

A.3d 1271 (Pa. Cmwlth. 2012); see also Fiore v. 

Commonwealth, 668 A.2d 1210 (Pa. Cmwlth. 1995), aff’d, 

690 A.2d 234 (Pa. 1997); Bruce & Merrilees Elec. Co. v. 

Commonwealth, 530 A.2d 994 (Pa. Cmwlth. 1987). 

The record likewise belies Taxpayers’ assertion that 

‘adequate cash funds had been set aside by [the Settlement 

Order] to pay to [Revenue] the [Taxes] . . . .’ Taxpayers’

[Initial] Br. at 13. It is evident from the Proposed Plan that 

Taxpayers knew they owed more than $300,000.00 in 

various state taxes and, based on the amended proofs of 

claim, they were aware that more than $180,000.00 thereof 

was owed to Revenue for the Taxes. See Stip. Ex. C at 3-5, 

8-9, 11 and Ex. P at 13. Notwithstanding, only $66,215.49

was placed into the state tax escrow account, which was 

clearly inadequate to satisfy Taxpayers’ liability for the 

Taxes. See Stip. ¶¶ 37-38, Stip. Exs. R, S. 

In addition, there is no record evidence that Revenue was 

aware that the escrowed funds existed. Taxpayers did not 

point to any record notifying Revenue about the escrowed 

funds. The May 1 and June 12, 2001 escrow letters [we]re 

neither addressed nor copied to Revenue, and Revenue was 

not a party to the Settlement Order.[FN20] A settlement 

agreement is essentially a contract that is binding on the 

parties thereto, and is governed by contract law principles. 

Roe v. Pa. Game Comm’n, 147 A.3d 1244 (Pa. Cmwlth. 

2016). A ‘general principle of contract law [is] that an 

agreement cannot legally bind persons who are not parties 

[thereto].’ Chambers Dev. Co., Inc. v. Commonwealth ex 

rel. Allegheny C[n]ty. Health Dep’t, 474 A.2d 728, 731 (Pa. 

Cmwlth. 1984). Here, the Settlement Order declared: 

‘Nothing in this [Settlement Order] may be relied upon or is 

intended for the benefit of any party other [than] those who 

have executed this [Settlement Order] below.’ Stip. Ex. B 
14

at 10, ¶ 20. Therefore, notwithstanding Taxpayers’ claims 

to the contrary, neither the Settlement Order nor any other 

record document informed Revenue about the escrowed 

funds.

Based on the foregoing, the Board properly denied 

Taxpayers relief, because employer-withheld income taxes 

are trust fund taxes which are not dischargeable in

bankruptcy. The Board further reasoned: 

[T]he [Settlement Order] does not prohibit 

[Revenue] from collecting the outstanding employer 

withholding liability from [Taxpayers]. [Revenue]

was not a party to [the Settlement Order], as a 

representative of [Revenue] did not sign the 

[Settlement Order]. The [Settlement Order] merely 

required that [Taxpayers’] assets transfer to Integral 

free of encumbrances, and it did not remove 

[Taxpayers’] liability for the [T]ax[es]. Lastly, the

documentation provided by [Taxpayers] fails to 

show that the funds were set aside specifically for

[Revenue], as [Taxpayers] owed tax liabilities to 

multiple states.

[FN20] The IRS negotiated and was a party to the 

Settlement Order. See Stip. Ex. B at 7-9, 13.

Stip. Exs. M (Board NIS Dec. at 5), L (Board CVC Dec. at

4-5); see also Stip. ¶¶ 30-31.

Mandler, slip op. at 10-13. 

Accordingly, this Court concluded that the Board properly denied 

Taxpayers relief because employer-withheld income taxes were trust fund taxes that 

were not dischargeable in bankruptcy, and funds were not set aside to satisfy the 

Taxes. After review, this Court discerns no error in its March 2, 2020 conclusion.

c. Estoppel

Lastly, Taxpayers claim that the doctrine of estoppel barred Revenue 

from collecting the Taxes in 2013 because it failed to claim them during the 
15

bankruptcy proceedings. As alleged in their initial appeal, Taxpayers specifically 

contend that Revenue is estopped by laches. This Court declared that argument to be 

without merit based on the following:

This Court has held that ‘[e]quitable estoppel [and] laches .

. . cannot vary the statutory requirements in the [Code]. 

Neither the [Board] nor this Court has the power to alter . . . 

the [Code] based on equitable principles.’ Quest 

Diagnostics Venture, LLC v. Commonwealth, 119 A.3d 406, 

413-14 (Pa. Cmwlth. 2015), aff’d, 148 A.3d 448 (Pa. 2016)

(citations omitted). 

[I]n order to apply the doctrine of equitable estoppel 

to a Commonwealth agency: the party sought to be 

estopped [(]1) must have intentionally or 

negligently misrepresented some material fact[;]

[(]2) know[n] or ha[d] reason to know that the other 

party would justifiably rely on the 

misrepresentation[;] and [(]3) induc[ed] the other 

party to act to his detriment because of his 

justifiable reliance on the misrepresentation. In 

addition, ‘[o]ne who asserts estoppel must establish 

the essential elements thereof by clear, precise, and 

unequivocal evidence.’ [Pa. Liquor Control Bd. v. 

Venesky, 516 A.2d 445,] 448 [(Pa. Cmwlth. 1986)].

Yurick v. Commonwealth, 568 A.2d 985, 990 (Pa. Cmwlth. 

1989) (emphasis added). However, ‘“estoppel cannot be 

created by representations or opinions concerning matters 

of law.”’ Id. at 990 (quoting Gabovitz v. State Auto. Ins.

Ass’n, 523 A.2d 403, 406 (Pa. Super. 1987) (citations

omitted)) (emphasis added). This Court has more

specifically concluded that ‘[n]o errors or misinformation . . 

. can estop the government from collecting taxes legally 

due.’ Am. Elec. Power Serv. Corp. v. Commonwealth, 160 

A.3d 950, 960 (Pa. Cmwlth. 2017) (quoting DS Waters of 

Am., Inc. v. Commonwealth, 150 A.3d 583, 592 (Pa. 

Cmwlth. 2016)); see also Yurick.

‘The essence of any claim of laches is an estoppel as a 

result of prejudicial delay.’ Stahl v. First Pa. Banking & 

Tr. Co., 191 A.2d 386, 390 (Pa. 1963); see also

Commonwealth ex rel. Pa. Attorney Gen. Corbett v. Griffin, 
16

946 A.2d 668, 676 n.9 (Pa. 2008) (‘[T]he doctrine of laches

contains an estoppel component . . . , and it is sometimes 

referred to as estoppel by laches.)’ (quotation marks 

omitted)[]. 

“[L]aches . . . bars relief when a . . . party is guilty 

of want of due diligence in failing to promptly 

institute an action to the prejudice of another.” Stilp 

v. Hafer, . . . 718 A.2d 290, 292 ([Pa.] 1998); 

accord Sprague v. Casey, . . . 550 A.2d 184, 187 

([Pa.] 1988). . . . Whether laches applies is a 

question of law. . . . However, applicability of the 

doctrine of laches is a factual determination made 

on a case-by-case basis. []

Wheels Mech. Contracting & Supplier, Inc. v. W. Jefferson 

Hills Sch. Dist., 156 A.3d 356, 362 (Pa. Cmwlth. 2017). 

Historically, our Supreme Court has been reluctant 

to permit a party to assert the doctrine of laches

against a state’s exercise of its taxing power. See,

e.g., Commonwealth v. W[.] M[d.] [R.R.] Co[.], . . . 

105 A.2d 336 ([Pa.] 1954) . . . (cannot estop the 

government from collecting taxes which are legally 

due); Commonwealth v. A.M. Byers Co[.], . . . 31 

A.2d 530 ([Pa.] 1943) (no estoppel can be asserted 

against the Commonwealth in the exercise of its 

taxing power). In the Western Maryland Railway 

Co[.][, formerly Western Maryland Railroad Co.,] 

case, ou[r] Supreme Court held that the laches

defense could not be asserted so as to prevent the 

state from collecting legally due taxes on property 

when it failed to assess the same for a number of 

years. Further, in that case, the [Supreme] Court 

held that a state or other sovereignty cannot be 

estopped by any acts or conduct of its officers or 

agents in the performance of a governmental

function and that no errors or misinformation of the 

officers or agents can estop the government from 

collecting legally due taxes.

In re Estate of Trowbridge, 920 A.2d 901, 906 n.5 (Pa. 

Cmwlth. 2007); see also Borough of Braddock v. Sullivan 

Plumbing, Inc., 954 A.2d 672 (Pa. Cmwlth. 2008). 

Although courts have held that a taxing authority’s delay 
17

may bar its claims for interest and penalties attributable 

thereto, the courts have consistently upheld the imposition 

of the underlying taxes owed. See W. Md. R.R. Co.; see 

also Borough of Braddock; In re Estate of Leitham, 726 

A.2d 1116 (Pa. Cmwlth. 1999).

In the instant matter, pursuant to Section 523(a)(1)(A) of 

the Bankruptcy Code and Sections 316(a) and 320 of the 

Code, regardless of when or whether Revenue claimed the 

Taxes, the record reflects that Taxpayers collected the 

Taxes, Taxpayers were aware that they owed them, and 

Taxpayers were at all times liable for them. Moreover, 

Taxpayers were cognizant of Revenue’s ongoing attempts 

to collect the Taxes. Revenue filed proofs of claim for the 

Taxes on October 6, 2000[,] relative to Taxpayers’ Chapter 

11 reorganization cases, and amended proofs of claim 

relative to their Chapter 7 liquidation proceedings in 

September and November 2001. From October 2000 to

September 2001, Revenue issued assessment notices to 

Taxpayers for the Taxes. Revenue also filed liens for the 

Taxes in 2002 and 2005. In 2013, Revenue sought and

Taxpayers paid the outstanding liens. Taxpayers did not 

prove based on the record before this Court that Revenue 

intentionally or negligently misrepresented any material fact 

that induced Taxpayers to act to their detriment, Yurick, or 

that any lack of due diligence by Revenue prejudiced 

Taxpayers. Wheels Mech. Contracting & Supplier, Inc.

Accordingly, Taxpayers’ equity arguments fail.

Mandler, slip op. at 13-16. 

In their brief in support of Exceptions, Taxpayers nevertheless argue 

that, in 1999, in Leitham, this Court applied the doctrine of estoppel by laches to 

preclude the Commonwealth’s collection of past due taxes. Indeed, in Leitham, this 

Court held that Revenue’s assessment against an estate (Estate) for inheritance taxes 

on a decedent’s retirement plan proceeds eight years after its statutory deadline was 

barred by estoppel by laches.

26

 The Leitham Court acknowledged that, in 

26 Therein,

[t]he Estate reported the proceeds of [the decedent’s] retirement plan 

as $180,224.26 on its federal estate tax return. Because the Estate did 
18

Department of Public Welfare v. UEC, Inc., 397 A.2d 779 (Pa. 1979), the 

Pennsylvania Supreme Court ruled that estoppel can be asserted against the 

government. The Leitham Court explained:

Courts nonetheless retain a general reluctance to apply the 

estoppel doctrine against the government and therefore will 

require a stronger showing when estoppel is asserted against 

a governmental entity than when it is asserted against an 

individual. Weinberg v. State B[d.] of Examiners of Pub[.]

Accountants, . . . 501 A.2d 239 ([Pa.] 1985).

not believe that the retirement plan was subject to Pennsylvania 

inheritance tax, it did not report this asset on its Pennsylvania 

inheritance tax return and, accordingly, paid no inheritance tax on the 

retirement plan to this Commonwealth. The Estate, however, 

included a copy of its federal return with its Pennsylvania return, and 

both returns were filed with the appropriate authorities on June 27, 

1988. The Estate also distributed real estate in the decedent’s will 

subject to certain real estate expenses incident to transfer of the 

property and deducted $4,491.50 in expenses on its Pennsylvania 

return. Thereafter, the personal representative received her 

commission, distributed the remaining assets to the beneficiaries and 

closed the Estate.

Leitham, 726 A.2d at 1117.

The undisputed facts of this case amply establish the essential 

elements of estoppel by laches. The retirement plan was disclosed on 

the Estate’s federal return, and thus the necessary information was 

within the possession and knowledge of [Revenue]. During the years 

since [Revenue] failed to file a timely appraisement, determination or 

assessment, the Estate ha[d] been closed and all assets distributed to

the beneficiaries. Defending against or complying with the 

[assessment] now presents an unfair hardship for the Estate. See In re

Ramsay’s Estates, . . . 20 A.2d 213 ([Pa.] 1941). [Revenue] offers no 

explanation that would justify its delay. 

Id. at 1119. 

In Ramsay’s Estates, the Pennsylvania Supreme Court upheld an orphan court’s decree 

setting aside the Commonwealth’s supplemental appraisement filed nearly five years after an estate 

was settled because it was unclear whether deeds of trust were known when the first appraisement 

was issued, and the Commonwealth failed to show some later-discovered fraud, accident, mistake 

or concealment, to warrant the filing of a second appraisement.
19

These modern advances in case law left intact the principle 

which the Supreme Court enunciated in [Western Maryland 

Railroad Co.]. In that case, the Supreme Court held that 

‘failure to collect the tax in the past is no bar to present 

collection.’ UEC, . . . 397 A.2d [at 785] n[.]6 (discussing 

Western Maryland R.R. Co.); Weinberg, . . . 501 A.2d at 

243 n[.]5 (quoting UEC). Unlike the appellant in Western 

Maryland [Railroad] Co., however, the Estate does not seek 

insulation from future tax liability. The Estate instead 

asserts estoppel by laches against [Revenue’s]

appraisement, determination and assessment of the specific 

tax liability that became due upon [the decedent’s] death, 

which [Revenue] failed to claim with due diligence. 

Because the Estate does not seek to bar present collection of 

taxes, but instead seeks to estop [Revenue’s] claim for taxes 

previously due, the Western Maryland [Railroad] Co.

principle is inapposite to the instant case.

The Court recognizes that it applied the Western Maryland 

[Railroad] Co. principle in Kirkpatrick v. Butler County 

Commissioners, . . . 298 A.2d 607 ([Pa. Cmwlth.] 1972), to 

prevent a taxpayer from asserting estoppel against a county 

attempting to collect taxes previously due based on the 

county’s intervening errors. Any distinctions between the 

Court’s outcome in Kirkpatrick and the outcome today 

merely illustrate the settled principle that ‘the application of 

laches involves a factual determination and an ad hoc 

balancing of conflicting interests in each case.’ Weinberg, . 

. . 501 A.2d at 243. Moreover, Kirkpatrick was decided 

before the Supreme Court’s decisions in UEC and 

Weinberg. Since UEC was decided[,] this Court has 

approved application of the doctrine of estoppel to limit the 

Commonwealth’s efforts to collect taxes previously due 

under appropriate circumstances. See Dep[’t] of Revenue, 

Bureau of Sales [&] Use Tax v. King Crown Corp., . . . 415 

A.2d 927 ([Pa. Cmwlth.] 1980). 

Leitham, 726 A.2d at 1120. 

Nine years after Leitham, this Court decided Borough of Braddock, 

wherein this Court reiterated: “Application of the doctrine [of laches] depends not 

just on the passage of time but on whether, under the circumstances, the complaining 

party’s lack of due diligence actually does prejudice the other party. Therefore, the 
20

question is to be determined by examining the factual circumstances of each case.” 

Id. at 674 (citation omitted). In Borough of Braddock, the borough waited until 2003 

to collect business privilege taxes owed by a contractor from 1994 to 2003. The 

contractor claimed that the borough was barred by the doctrine of laches from 

collecting those past due taxes. The trial court held that the contractor owed the taxes 

plus interest and penalties. On appeal, this Court examined Leitham and concluded

based on the laches defense that the contractor did not owe interest and penalties

because the contractor would not “knowingly and willingly incur liability for interest

and penalties for a period of ten years, and its incurring such liability constituted a 

change in the parties’ condition during the period that the [b]orough failed to act.” 

Borough of Braddock, 954 A.2d at 677. The Court nevertheless upheld the trial 

court’s holding that the contractor owed the underlying taxes, ruling that the 

borough’s delay in collecting them did not change the fact that the contractor owed 

them. Therefore, notwithstanding Leitham, Borough of Braddock represents

established precedent, which this Court observed in its March 2, 2020 Opinion, that

“the courts have consistently upheld the imposition of the underlying taxes owed.” 

Mandler, slip op. at 15.

In the instant matter, Taxpayers’ sole argument in support of their 

estoppel by laches defense is that the “requirements are clearly satisfied by the facts 

of [this] case[:] (1)[] [Revenue] failed to claim the funds set aside . . . [; and] (2)[]

[t]here was prejudice to [Taxpayers] by [Revenue’s] failure to claim these funds.” 

Taxpayers’ Exceptions Br. at 14. However, the record is devoid of evidence to 

support Taxpayers’ conclusion. First, based on the stipulated facts, no funds were set 

aside in the bankruptcy proceeding to satisfy Revenue’s liens for the Taxes and, thus, 

Revenue could not have claimed them. Second, Taxpayers’ conclusory declaration 

that “there was prejudice,” alone, is insufficient to establish prejudice. Taxpayers’ 

Exceptions Br. at 14. Third, Taxpayers owed the Taxes. Accordingly, this Court 
21

discerns no error in its March 2, 2020 conclusion that the doctrine of estoppel by 

laches did not bar Revenue from collecting the Taxes in 2013.

In addition, Taxpayers newly contend in the Exceptions that Revenue 

was barred by collateral estoppel from collecting the Taxes in 2013 because it failed 

to claim them during the bankruptcy proceedings.

Collateral estoppel or issue preclusion forecloses 

relitigation in a subsequent action of a necessary issue that 

was actually litigated in a prior proceeding. Lamborn v. 

Workmen’s Comp[.] Appeal B[d.] (A[]moroso Baking), 656 

A.2d 593 (Pa. Cmwlth. 1995). Accordingly, collateral

estoppel will apply if:

[(]1) the issue decided in the prior adjudication was 

identical with the one presented in the later action[;]

[(]2) there was a final judgment on the merits[;]

[(]3) the party against whom the plea is asserted was 

a party . . . to the prior adjudication[;] and [(]4) the 

party against whom it is asserted has had a full and 

fair opportunity to litigate the issue in question in a 

prior action.

Safeguard Mut[.] Ins[.] Co. v. Williams, . . . 345 A.2d 664, 

668 ([Pa.] 1975) (citations omitted). 

In re Judicial Sale, Tax Claim Bureau of Northampton Cnty., Easton, Pa., 720 A.2d 

818, 822 (Pa. Cmwlth. 1998).

After reciting collateral estoppel principles in their brief in support of 

Exceptions, Taxpayers offered no specific argument on that issue beyond their

declaration: “[Taxpayers] have clearly met the requirements for applying collateral 

estoppel to this case and the application of collateral estoppel to this case precludes 

the Commonwealth from denying that these funds were not set aside for them and 

they should have claimed them.” Taxpayers’ Exceptions Br. at 16. However, it is 

clear from the stipulated facts that the parties and the issues presented here differ 

from those litigated in the bankruptcy proceeding and, since Revenue’s liens for the 
22

Taxes were not satisfied in the bankruptcy proceeding, the bankruptcy proceeding did

not represent a final judgment as to the Taxes. Accordingly, Taxpayers have failed to 

establish their claim that collateral estoppel barred Revenue from collecting the Taxes 

in 2013 because it failed to claim them during the bankruptcy proceedings.

Conclusion

With the exception of Taxpayers’ new collateral estoppel argument, 

which does not apply here, 

Taxpayers’ [E]xceptions . . . raise precisely the same issues 

that they raised in their initial appeal. . . .

After reviewing our previous opinion and revisiting the 

arguments Taxpayers presented in their briefs . . . , we 

concur with both the result and the reasoning of this Court’s 

[O]pinion of [March 2, 2020]. None of the authority cited 

by Taxpayers changes our conclusion or the rationale of 

that [O]pinion.

Accordingly, we [overrule] Taxpayers’ [E]xceptions.

Kalodner v. Commonwealth, 636 A.2d 1230, 1231-32 (Pa. Cmwlth. 1994) (citation 

omitted), aff’d, 675 A.2d 710 (Pa. 1995).27

_________________________________

ANNE E. COVEY, Judge

27 Because this is a reported Opinion, the Commonwealth’s Application is denied as moot.
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jeffrey M. Mandler and Nuclear :

Imaging Systems, Inc., :

Petitioners :

:

v. :

:

Commonwealth of Pennsylvania, : No. 483 F.R. 2014

Respondent :

:

Jeffrey M. Mandler and Cardiovascular :

Concepts, P.C., :

Petitioners :

:

v. :

:

Commonwealth of Pennsylvania, : No. 484 F.R. 2014

Respondent :

O R D E R

AND NOW, this 3

rd day of March, 2021, the exceptions filed by Jeffrey 

M. Mandler, Nuclear Imaging Systems, Inc. and Cardiovascular Concepts, P.C. to 

this Court’s March 2, 2020 Opinion and Order are OVERRULED, and the 

Prothonotary is directed to enter judgment in favor of the Commonwealth of 

Pennsylvania (Commonwealth).

The Commonwealth’s Application to Redesignate the Court’s 

Unreported Memorandum Opinion as a Reported Opinion is DENIED as moot.

_________________________________

ANNE E. COVEY, Judge