IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Richard A. Alberti, :

Petitioner :

:

v. :

:

Commonwealth of Pennsylvania, : Nos. 336 and 468 F.R. 2015

Respondent : Submitted: May 7, 2018

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge

HONORABLE ANNE E. COVEY, Judge

HONORABLE CHRISTINE FIZZANO CANNON, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY 

JUDGE COVEY FILED: May 31, 2018

Richard A. Alberti (Alberti) petitions this Court for review of the Board 

of Finance and Revenue’s (Board) April 30, 2015 order (May Order)1affirming the 

Board of Appeals’ (BOA) dismissal of his Petitions for Reassessment (Reassessment 

Petitions) as untimely, and the Board’s July 16, 2015 order (July Order)2affirming

the BOA’s refusal to adjust the assessments based on Alberti’s 2005 and 2006 tax 

year income. The issues before the Court are: (1) whether Alberti’s appeals from his

2002 to 2004, and 2007 to 2011 tax assessments were timely filed;3and (2) whether 

Alberti’s 2005 and 2006 income from Pennsylvania lottery winnings was exempt 

from personal income tax. 

Although this Court hears [appeals from Board of Finance 

and Revenue orders] in its appellate jurisdiction, it 

functions essentially as a trial court. Therefore, this Court 

 

1 The Board’s April 30, 2015 order was mailed on May 8, 2015. See Alberti Br. Ex. A.

2 The Board’s July 16, 2015 order was mailed on July 21, 2015. See Alberti Br. Ex. B.

3 Although Alberti challenges the Board’s May Order in his brief to this Court, Alberti fails 

to specifically address the jurisdictional issues created by his late filings. See Alberti Br. at 1-2.
2

must consider a record made by the parties specifically for 

the Court rather than one certified to the Court from the 

proceedings below.[4] Furthermore, a party appealing . . . 

has the burden of proof in a de novo proceeding before this 

Court. 

Armco, Inc. v. Commonwealth, 654 A.2d 1191, 1192-93 (Pa. Cmwlth. 1993) (italics 

added; citations omitted).

Background

Alberti is an attorney and professional gambler. See Alberti Br. at 1, 3; 

see also Commonwealth Br. at 7. On July 8, 1995, Alberti won the Pennsylvania 

Super 7 lottery’s (Super 7) $25,876,090.50 jackpot, payable by John Hancock Mutual 

Life Insurance Company in 25 annual installments of $995,234.25. See Alberti Br. at 

3-4; see also Alberti Br. Ex. C. “In 2009, [Alberti] sold a portion of the [John] 

Hancock annuity to Settlement Funding LLC for $1,062,720.00. In 2010, [Alberti] 

sold the remainder of the [John] Hancock annuity to Settlement Funding LLC for 

$5,451,480.00.” Alberti Br. at 4-5. 

Section 330(a) of the Tax Reform Code of 1971 (Code),5 72 P.S. § 

7330(a), requires every Pennsylvania taxpayer having income for a taxable year to 

file a Pennsylvania Income Tax Return (PA-40) with the Commonwealth of 

Pennsylvania (Commonwealth), Department of Revenue (Department) on or before 

April 15th of the following year. Alberti did not timely file state income tax returns 

 

4 The facts in Board appeals are typically stipulated by the parties pursuant to Rule 1571(f) 

of the Pennsylvania Rules of Appellate Procedure. On September 6, 2017, Alberti filed a proposed 

stipulation of facts. On October 6, 2017, the Commonwealth “disagree[d]” with all of Alberti’s 

proposed facts. Commonwealth Resp. to Proposed Stip. of Facts. Notwithstanding, the parties filed 

a Joint Application for Submission of Decision on Briefs, which this Court granted on April 18, 

2018. Therefore, this Court relied upon the parties’ briefs in reaching its decision. 

5 Act of March 4, 1971, P.L. 6, as amended, added by Section 4 of the Act of August 31, 

1971.
3

for tax years 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010 or 2011.6 As a 

result, the Department created returns for those years based upon information it 

obtained from the Internal Revenue Service (IRS). See Alberti Br. at 2. 

On October 12, 2011, the Department issued Personal Income Tax 

Assessment Notices (Assessment Notice) to Alberti for tax years 2002, 2003, 2004, 

2007, 2008 and 2009.7 See Commonwealth Br. Ex. A. On July 16, 2012, the 

Department issued an Assessment Notice for tax year 2010. See Commonwealth Br. 

Ex. A. On July 14, 2014, the Department issued an Assessment Notice for tax year

2011. See Commonwealth Br. Ex. A. 

Alberti filed the Reassessment Petitions with the BOA on October 15, 

2014 (relative to the 2007 tax year); on October 16, 2014 (for the 2004, 2008, 2009 

and 2010 tax years); on November 1, 2014 (relative to the 2011 tax year); and on 

November 14, 2014 (for the 2002 and 2003 tax years). See Commonwealth Br. Ex. 

B. The BOA dismissed Alberti’s Reassessment Petitions as untimely. Alberti 

appealed to the Board. On April 30, 2015, the Board affirmed the BOA’s 

determination. Alberti appealed from the Board’s May Order to this Court (No. 336 

F.R. 2015).

Alberti also failed to timely file Commonwealth income tax returns for 

tax years 2005 and 2006, thereby requiring the Department to create those returns 

 

6 The Department’s Assessment Notices reflect that Alberti’s Commonwealth tax returns 

were received for the following tax years on the specified date: 2002 on September 27, 2011; 2003, 

2004, 2005, 2007 and 2008 on September 29, 2011; 2006 on September 23, 2011; 2009 on 

September 30, 2011; 2010 on July 3, 2012; and, 2011 on April 1, 2014. Alberti clarified: “The 

[Department] prepared [tax] returns for [Alberti] for the [tax] years 2002 through 2011, based on 

information provided by the [IRS]. Since then, [Alberti] has filed [tax] returns for all years in 

question with both the Commonwealth and the IRS.” Alberti Br. at 2-3.

7 Section 119.14(a) of the Department’s Regulations requires taxes to “be assessed within 

three years after the return was filed.” 61 Pa. Code § 119.14(a).
4

based on IRS information.8 The Department initially assessed Alberti taxes based on 

multiple income classes, including gambling and lottery winnings totaling 

$7,452,359.00 for 2005 and $1,783,834.00 in 2006. See Commonwealth Br. at 7. 

The Department’s Assessment Notices reflect that Alberti’s 2005 tax return was 

eventually received on September 29, 2011, and his 2006 tax return was received on 

September 23, 2011. See Commonwealth Br. Ex. A; see also Alberti Br. at 2-3. 

Therein, Alberti reported that his 2005 and 2006 gambling income was $0.00. See

Alberti Br. Ex. B (July Order) at 2. After review, the Department issued a Notice of 

Reopened Assessment on September 26, 2014, in which the Department reduced 

Alberti’s gambling and lottery income to $5,780,071.00 for the 2005 tax year and 

$819,416.00 for the 2006 tax year, and assessed him taxes in the amounts of 

$298,360.64 and $44,449.44, respectively. See Commonwealth Br. at 7. Alberti 

appealed to the BOA. 

The BOA requested Alberti to supply evidence to support his 2005 and 

2006 income adjustments, but Alberti failed to do so. See Alberti Br. Ex. B at 2. 

Thereafter, the BOA dismissed Alberti’s appeal. Alberti appealed to the Board for an 

adjustment to his taxable income for both years, and also requested a reduction in his 

$995,234.00 tax burden because his 1995 Super 7 lottery winnings were exempt from 

personal income tax at the time he won. See Alberti Br. Ex. B at 2. “[Alberti] 

acknowledged that he sold his Pennsylvania lottery annuity winnings to a third party 

for cash.” Commonwealth Br. at 8. On July 16, 2015, the Board affirmed the BOA’s 

determination, stating that the third-party sale was taxable income since Alberti 

realized gain from the disposition of property. See Alberti Br. Ex. B at 2. Alberti 

appealed from the Board’s July Order to this Court (No. 468 F.R. 2015). 

 

8 Alberti acknowledged that the Department initially prepared his 2005 and 2006 tax returns 

based on IRS information. See Alberti Br. at 2-3.
5

On November 18, 2015, this Court stayed Alberti’s appeal from the 

Board’s May Order. On December 9, 2015, this Court stayed Alberti’s appeal from 

the Board’s July Order. On June 2, 2016, this Court ordered Alberti’s appeals 

consolidated for purposes of filing status reports. On October 31, 2017, this Court 

ordered the consolidated matters listed for argument.

 

May Board Order

Relative to the Board’s May Order dismissing Alberti’s Reassessment 

Petitions as untimely, Alberti argued to the Board9that the law does not prohibit his 

appeals. Section 340 of the Code provides: “Any taxpayer against whom an 

assessment is made may petition the [D]epartment for a reassessment pursuant to 

Article XXVII.” 72 P.S. § 7340. However, at the time the Department’s Assessment 

Notices were issued, Section 2702(a) of the Code stated: “A taxpayer may file a 

petition for reassessment with the [D]epartment within 90 days after the mailing date 

of the notice of assessment.”10 72 P.S. § 9702(a); see also Section 344 of the Code, 

72 P.S. § 7344 (“The [D]epartment may collect any tax . . . [a]fter [90] days from the 

mailing of . . . the notice of assessment, if no petition for reassessment has been 

filed[.]”); Section 119.10(a) of the Department’s Regulations, 61 Pa. Code § 

119.10(a) (“The Department will proceed to collect any tax due . . . , unless a 

taxpayer has filed a petition for reassessment within 90 days after mailing of the 

notice by the Department.”). 

The Department’s Assessment Notices for the 2002, 2003, 2004, 2007, 

2008, 2009, 2010 and 2011 tax years declared: “YOU HAVE THE RIGHT TO APPEAL FOR 

A REASSESSMENT . . . . AN APPEAL CAN BE FILED . . . ON OR BEFORE THE FILING 

 

9 Alberti does not discuss or argue this issue in his brief to this Court.

10 The 90-day appeal period was amended to 60 days by Section 44 of the Act of October 

30, 2017, P.L. 672.
6

DEADLINES LISTED ABOVE.” See Commonwealth Br. Ex. A. The Department’s 

October 12, 2011 Assessment Notices listed January 10, 2012 as the appeal deadline 

for the 2002, 2003, 2004, 2007, 2008 and 2009 tax year assessments. See

Commonwealth Br. Ex. A. The Department’s July 16, 2012 Assessment Notice 

specified October 14, 2012 as the appeal deadline for the 2010 tax year assessment. 

See Commonwealth Br. Ex. A. The Department’s July 14, 2014 Assessment Notice 

designated October 12, 2014 as the appeal deadline for the 2011 tax year assessment. 

See Commonwealth Br. Ex. A. 

Nevertheless, Alberti filed his Reassessment Petitions on October 15, 

2014 for the 2007 tax year; on October 16, 2014 for the 2004, 2008, 2009 and 2010 

tax years; on November 1, 2014 for the 2011 tax year; and, on November 14, 2014 

for the 2002 and 2003 tax years. See Commonwealth Br. Ex. B. Accordingly, 

Alberti’s Reassessment Petitions for the 2002, 2003, 2004, 2007, 2008, 2009 and 

2010 tax years were filed more than 2 years late, and his Reassessment Petition for 

the 2011 tax year was filed 20 days late.11 Alberti offered no explanation for his

delayed filings.

Relevantly, 

in Biro v. Commonwealth, 707 A.2d 1205 (Pa. Cmwlth. 

1998), this Court has recognized the well-established 

principle that ‘limitations periods are absolute conditions 

 

11 Alberti filed his Reassessment Petitions as follows:

Tax Year Due Filed Overdue

2002 January 10, 2012 November 14, 2014 2y 10m 5d

2003 January 10, 2012 November 14, 2014 2y 10m 5d

2004 January 10, 2012 October 16, 2014 2y 9m 6d

2007 January 10, 2012 October 15, 2014 2y 9m 5d

2008 January 10, 2012 October 16, 2014 2y 9m 6d

2009 January 10, 2012 October 16, 2014 2y 9m 6d

2010 October 14, 2012 October 16, 2014 2y 2d

2011 October 12, 2014 November 1, 2014 20d 

See Commonwealth Br. Exs. A, B.
7

to the right to obtain relief.’ Id. at 1206 (quoting Fed[.]

Deposit Ins[.] Corp. v. B[d.] of Fin[.] [&] Revenue, . . . 84 

A.2d 495, 498 ([Pa.] 1951)).

Scholastic Servs. Org., Inc. v. Commonwealth, 721 A.2d 74, 76 (Pa. Cmwlth. 1998)

(emphasis added). Thus, “[i]t is well established that failure to timely appeal an 

administrative agency’s action is a jurisdictional defect[.]” H.D. v. Pa. Dep’t of 

Pub. Welfare, 751 A.2d 1216, 1219 (Pa. Cmwlth. 2000) (emphasis added); see also

Scholastic Servs. Consequently, “[n]either the [Board] nor this Court has the 

power to alter the explicit time limitations in the [Code] based on equitable 

principles.” Quest Diagnostics Venture, LLC v. Commonwealth, 119 A.3d 406, 414 

(Pa. Cmwlth. 2015), aff’d, 148 A.3d 448 (Pa. 2016) (emphasis added). 

Because it is clear that Alberti’s appeals from his 2002, 2003, 2004, 

2007, 2008, 2009, 2010 and 2011 tax year assessments were late-filed, the Board’s 

May Order properly upheld the BOA’s dismissal of Alberti’s Reassessment Petitions

for lack of jurisdiction. Accordingly, this Court affirms the Board’s May Order.

 

July Board Order 

Alberti asserts relative to the Board’s July Order that the Department 

erroneously included his $995,234.00 lottery payment in its calculation of his taxable 

income in 2005 and 2006, despite that lottery prizes were exempt from personal 

income tax. The Department rejoins that, although state lottery prizes are taxexempt, when Alberti sold his winnings for cash, he realized gain from the 

disposition of property which was taxable, and Alberti has not supplied 

documentation to the contrary.

Effective July 21, 1983, state lottery prizes were excluded from 

Pennsylvania’s personal income tax. Section 103.17 of the Department’s Regulations 

states, in pertinent part:
8

Gambling and lottery winnings, other than prizes of the 

State Lottery won on or after July 21, 1983, shall be 

taxable. These consist of gains arising from gambling and 

lotteries. In calculating gains, the taxpayer may deduct 

gambling and lottery losses, other than losses incurred in 

the State Lottery on or after July 21, 1983, but may not 

deduct the costs and expenses incurred in connection with 

the gambling and lottery activity. 

61 Pa. Code § 103.17. Accordingly, Alberti’s 1995 Super 7 annuity payments were 

not subject to personal income tax.

Significantly, Section 302(a) of the Code12 provides: 

Every resident individual . . . shall be subject to, and shall 

pay for the privilege of receiving each of the classes of 

income hereinafter enumerated in [S]ection 303 [of the 

Code, 72 P.S. § 7303], a tax upon each dollar of income 

received by that resident during that resident’s taxable year 

at the rate of three and seven hundredths per cent [(3.07%)].

72 P.S. § 7302(a) (emphasis added). Section 303(a)(3) of the Code lists eight classes 

of taxable income, including, in relevant part:

Net gains or income from disposition of property. Net 

gains or net income, less net losses, derived from the sale, 

exchange or other disposition of property . . . on or after 

the effective date of this amendatory act by the 

Commonwealth . . . . For the purpose of this article:

. . . . 

(iii) The term ‘net gains or income’ and ‘net losses’ shall 

not include gains or income or loss derived from obligations 

which are statutorily free from [s]tate or local taxation 

under the [A]ct of August 31, 1971 (P.L. 395, No. 94) [(Act 

94)13], entitled ‘An act exempting from taxation for [s]tate 

 

12 Added by Section 8 of the Act of August 4, 1991, P.L. 97.

13 Section 2 of Act 94 states:

Notwithstanding the provisions of any law presently or hereafter 

enacted to the contrary, all obligations, their transfer and the income 

therefrom (including any profits made on the sale thereof), issued by 
9

and local purposes within the Commonwealth certain 

obligations, their transfer and the income therefrom 

(including any profits made on the sale thereof), issued by 

the Commonwealth . . . .

72 P.S. § 7303(a)(3)14 (italic and bold emphasis added). However, Section 7 of Act 

of December 3, 1993, P.L. 473, repealed Act 94 with respect to obligations arising on 

or after its effective date (i.e., February 1, 1994). Section 103.13(j) of the 

Department’s Regulations clarifies: “For purpose of determining net gains or income 

from the disposition of property, gain or loss shall be recognized on the sale, 

exchange or other disposition of obligations issued by the Commonwealth . . . on 

or after February 1, 1994.” 61 Pa. Code § 103.13(j) (emphasis added). Therefore, 

as of February 1, 1994, taxable net gains or income include income derived from

exempt obligations. Accordingly, net gains or income derived from Alberti’s 1995 

lottery winnings are taxable in the years during which they are sold or 

exchanged. See 72 P.S. § 7303(a)(3).

Moreover, under the authority of Section 335 of the Code, 72 P.S. § 

7335 (relating to recordkeeping requirements), the Department promulgated Section 

103.17 of the Department’s Regulations, wherein it declared that “the taxpayer shall 

maintain detailed records substantiating losses[, and] . . . shall have the burden of 

proving losses.” 61 Pa. Code § 103.17. Despite that Alberti claimed $0.00 income in 

his 2005 and 2006 PA-40s, he failed to produce documentation to substantiate any 

losses in those years.

 

the Commonwealth . . . shall at all times be free from taxation for 

[s]tate and local purposes within the Commonwealth . . . . 

72 P.S. § 4752-2.

14 Notably, Section 303(a)(7) of the Code includes “[g]ambling and lottery winnings other 

than noncash prizes of the Pennsylvania State Lottery[,]” in its taxable income list. 72 P.S. § 

7303(a)(7). Section 7 of the Act of July 13, 2016, P.L. 526, added “noncash” to this subsection. 

Thus, state lottery cash winnings became subject to personal income tax as of July 13, 2016.
10

Because Alberti’s sale of his lottery annuity to a third party represented a 

taxable disposition of property, and Alberti failed to prove losses in those years, the 

Board’s July Order properly upheld the BOA’s denial of Alberti’s 2005 and 2006 

assessment appeals. Accordingly, this Court affirms the Board’s July Order.

Conclusion

Based on the foregoing, the Board’s orders are affirmed.

___________________________

ANNE E. COVEY, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Richard A. Alberti, :

Petitioner :

:

v. :

:

Commonwealth of Pennsylvania, : Nos. 336 and 468 F.R. 2015

Respondent :

O R D E R

AND NOW, this 31st day of May, 2018, the Board of Finance and 

Revenue’s April 30, 2015 order (mailed May 8, 2015) and July 16, 2015 order 

(mailed July 21, 2015) are affirmed. 

Unless exceptions are filed within 30 days pursuant to Pennsylvania 

Rule of Appellate Procedure 1571(i), this Court’s order shall become final.

___________________________

ANNE E. COVEY, Judge