IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Greenwood Gaming and : Entertainment, Inc., :

: Petitioner :

:

v. : No. 609 F.R. 2015

: Submitted: July 27, 2018 Commonwealth of Pennsylvania, :

: Respondent :

BEFORE: HONORABLE P. KEVIN BROBSON, Judge

HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY JUDGE WOJCIK FILED: September 6, 2018

Before the Court is the application for summary relief filed by the

Commonwealth of Pennsylvania (Commonwealth) , Department of Revenue

(Department) to the petition for review filed in our appellate jurisdiction by

Greenwood Gaming and Entertainment, Inc. (Taxpayer) seeking review of the order

of the Board of Finance a nd Revenue ( F&R ) that denied Taxpayer’s request for a

refund of slot machine taxes . We grant the application and affirm F&R ’s order.

The stipulated facts are as follows. Taxpayer is a Pennsylvania

corporation that operates Parx Casino and Racetrack (Cas ino) pursuant to a Category

1 slot machine license and table game operation certificate issued by the

Pennsylvania Gaming Control Board ( Gaming Board)

. Taxpayer is subject to the

provisions of the Pennsylvania Racehorse Development and Gaming Act ( Gaming2

Act) 1 including those governing the calculation of gross terminal revenue (GTR) 2 for

purposes of calculating the slot machine taxes due. 3 The amounts at issue in the case

1 4 Pa. C.S. §§1101

- 1904.

2 Section 1103 of the Gaming Act defines GTR as follows:

The total of:

(1) cash or cash equivalent wagers received by a slot machine minus

the total of :

(i) Cash or cash equivalents paid out to players as a result of playing a slot machine, whether paid manually or paid out by the slot machine

.

(ii) Cash or cash equivalents paid to purchase annuities to fund prizes payable to players over a period of time as a result of playing a slot machine

.

(iii) Any personal property distributed to a player as a result of playing a slot machine. This does not include travel expenses, fo od, refreshments, lodging or service s.

(2) cash received as entry fees for slot machine contests or slot

machine tournaments

.

The term does not include counterfeit cash or tokens; coins or currency of other countries received in slot machines, except to the extent that the coins or currency are readily convertible to cash; or cash taken in a fraudulent act perpetrated against a slot machine

licensee for which the licensee is not reimbursed

.

4 Pa. C.S. §1103.

In turn, Section 1103 defines “slot machine

, ” in pertinent part, as follows:

Any mechanical, electrical or computerized contrivance, terminal, machine or other device approved by the [ Board ] which, upon insertion of a coin, bill, ticket, token or similar object therein or upon3 payment of any consid eration whatsoever,

. . . is available to play or operate, the play or operation of which, whether by reason of skill or application of the element of chance or both :

(A) May deliver or entitle the person or persons playing or operating the contrivance, t erminal, machine or other device to receive cash, billets, tickets, tokens or electronic credits to be exchanged for cash or to receive merchandise or anything of value whatsoever, whether the payoff is made automatically from the machine or manually

.

(B) May utilize spinning reels or video displays or both

.

(C) May or may not dispense coins, tickets or tokens to winning
patrons

.

(D) May use an electronic credit system for receiving wagers and making payouts

.

Id.

3 As this Court has explained, in relev ant part:

In casinos operated in

. . . Pennsylvania,

. . . the [ Department ] has

installed a central control computer system that provides information to the Department about various financial events that occur during the operation of slot machines. According to the Department ’ s regulations, the determination of GTR and the calculation of taxes and other assessments due to the Department based upon slot machine play are determined based on the actual calculations made by the CCS. The [ Gaming Act ] pro vides for several deductions from GTR, i.e. , for awards such as cash or cash equivalents paid out to patrons, cash paid to purchase annuities to fund prizes, and any personal property, all of which are measured by the CCS. The CCS, however, only measures for the deduction of those payments made to patrons which are made within the algorithm of the slot machine, which results from a patron ’ s physical operation of the slot machine. [Taxpayer] has requested that cash

and non

- cash prizes that it distributed t o casino patrons

. . . , but that were not recorded by the CCS, such as promotional items it distributes to patrons who hold Players Cards, be included as

allowable deduction s

.4

sub judice relate to distributions by Taxpayer to patrons that were not accounted fo r
by the Department ’s central control computer system (CCS) 4 and were not deducted

from the GTR on which Taxpayer paid its slot machine taxes.

* * *

The prizes [Taxpayer] seeks to deduct from GTR were distributed to pa trons who are said to have won the prizes at issue in one of the following ways: 1) by having their Players Card inserted into a slot machine during a designated period or at a designated time; 2) by having entries deposited in and selected from a drawing drum by a computer using a random number generator; 3) by bringing to a specific place at the casino, usually the Players’ Services Desk, a postcard or other mailer the casino had sent to a patron; or 4) by being a specific patron receiving them as part of what the casino would refer to as player development. [Taxpayer] sought a refund of slot machine tax and local assessment fees under the Gaming Act [collected in 2007 and 2008] , and filed a petition for review with the Department ’ s Board of Appeals. The Board of Appeals denied [Taxpayer’s] petition

. . . , finding that the refund sought was not the direct result of a metered win from playing a slot

machine. [Taxpayer] timely appealed to [F&R] which denied its appeal

.

Greenwood Gaming and Entertainment , Inc. v. Commonwealth , 29 A.3d 1215, 1216

- 17 (Pa. Cmwlth. 2011) ( Greenwood I ), exceptions overruled , 45 A.3d 455 (Pa. Cmwlth. 2012) ( en banc )

, rev’d sub nom. Greenwood Gaming and Entertainment, Inc. v. Department of Revenue , 90 A.3d 699 (Pa. 2014) ( Greenwood II ) (footnotes omitted)

.

4 Section 1103 defines “Central control computer,” in relevant part, as follows:

A central site computer controlled by the [ Department ] and accessible by the [ Gaming Board ] to which all slot machines communicate for the purpose of auditing capacity, real

- time information retrieval of the details of any financial event that occurs in the operation of a slot machine, including, but not limited to, coin in, coin out, ticket in, ticket out, jackpots, machine door openings and power failure, and remote machine activation and disabling of

slot machines

.5 In February 2009, Taxpayer filed a refund request with the

Department’s Board of Appeals challenging the Department’s calculation of the

GTR tax paid for the years 2007 and 2008 for awards given as promotions. Taxpayer

argued that the Department incorrectly excluded deductions from the GTR for prizes

awar ded outside the algorithm of the slot machines. The B oard of Appeals denied

the refund request and F&R denied Taxpayer’s appeal. This Court affirmed F&R’s

order and overruled Taxpayer’s exceptions, Greenwood I , but the Supreme Court

reversed our holding with respect to the deductions from the GTR on further appeal

and remanded for further consistent proceedings

. Greenwood II

.

On June 18, 2014, Taxpayer filed a petition with the Board of Appeals

for the refund of an overpayment of $1,122,654.89 in taxes paid during the period

of January 1, 2009, through January 4 , 201 1

. The Board of Appeals dismissed the

refund request

, and F&R denied a subsequent appeal based on Taxpayer’s failure to

file the request “within three years of actual payment of the tax” as required by

Section 3003.1(a) of the Tax Reform Cod e of 1971 (Tax Code)

. 5

4 Pa. C.S. § 1103.

5 Act of March 4

, 1971, P.L. 6, as amended

, added by the Act of July 1, 1985, P.L. 78, 72 P.S. §10003.1. Sect ion 3003.1(a) states:

(a) For a tax collected by the [ Department ] , a taxpayer who has actually paid tax, interest or penalty to the Commonwealth or to an agent or licensee of the Commonwealth authorized to collect taxes may petition the [ Department ] for refund or credit of the tax, interest or penalty. Except as otherwise provided by statute, a petition for refund must be made to the department within three years of actual payment of the tax, interest or penalty

.6 Taxpayer filed a petition for review in this Court , arguing that the

imposition of the three

- year limitations period on its latest refund request violates its

due process rights and that it is inequitable to apply the statutory three

- year period

in this case. In essence , Taxpa yer alleges that this Court’s opinion in Greenwood I

was the controlling law during th at three

- year period so it would have been futile

and improper to seek a refund from the Department’s Board of Appeals during that

time. Taxpayer contends that such a refund request could have only been filed after

the Supreme Court issued its opinion in Greenwood II in 2014 reversing our order

. Taxpayer acknowledges the case law that precludes the application o f equitable

considerations in tax refund cases , but asks this Court to reconsider these decisions

and to change and/or clarify the law to authorize such equitable considerations. The

Commonwealth then filed the instant application for summary relief

, 6 ass erting that

the Board of Appeals was without jurisdiction to entertain Taxpayer’s refund request

as a matter of law because Taxpayer failed to file the request within the required

three

- year period and that F&R properly affirmed its order.

As the Suprem e Court has explained:

“[ A ] voluntary payment of taxes can be subsequently recovered by a taxpayer only as a statute provides.” Calvert [ Distillers Corp. v. Bd. of Fin. & Revenue , 103 A.2d 668, 669 (Pa. 1954)] ; Philadelphia Gas Works ex rel. City of Philadelphia v. Com. , 741 A.2d 841, 846 (Pa. Cmwlth. 1999), aff ’ d

, [ 757 A.2d 360 ( Pa. 2000) ] (refund

6 Rule 1532(b) of the Pennsylvania Rules of Appellate Procedure states, “At any time after the filing of a petition for review in an appellate or original jurisdiction matter the court may on application enter judgment if the right of the applicant thereto is clear.” P a. R.A.P. 1532(b). “ An application for summary relief is to be granted only if there are no material factual disputes and

the movant ’ s entitlement to relief is clear. In the determination, the factual averments and the existing record are assessed in the light most favorable to the nonmoving party .” Northwestern Youth Services, Inc. v. Department of Public Welfare , 66 A.3d 301, 309 n.11 (Pa. 2013) (citations omitted).7 of voluntarily paid tax is matter of legislative grace). Where, as here, a statute provides a remedy, the directions of the statute must be strictly pursu ed to obtain the remedy. 1 Pa. C.S. §1504. The time limitation in a tax statute must be “strictly enforced to prevent any uncertainty in the budgetary planning and fiscal affairs of the Commonwealth.” Philadelphia Gas Works , 741 A.2d at 846; Fed. Deposi t Ins. Corp. v. Bd. of Fin. & Revenue

, [ 84 A.2d 495, 498 ( Pa. 1951) ] (“[N]o doubt the legislature considered that to allow refunds [years after tax was paid] would create great uncertainty in the budgetary planning and fiscal affairs of the Commonwealth.”)

. Compliance with the time limitation in the Tax Code is “an absolute condition to obtaining a refund.” Id. See also Bethlehem Steel Co. v. Bd. of Fin. & Revenue

, [2 44 A.2d 767 ( Pa. 1968) ] (“Equitable principles cannot vary the statutory requirement and we lack the power to alter the explicit language of the statute.”).

Mission Funding Alpha v. Commonwealth , 173 A.3d 748, 762

- 63 (Pa. 2017).

Based on the foregoing, it is clear that the Department’s Board of

Appeals did not err in dismissing Taxpayer’s re fund request that was not submitted

“within three years of actual payment of the tax” as required by Section 3003.1(a)

of the Tax Code, and F&R did not err in denying Taxpayer’s appeal. Taxpayer’s

failure to file a refund request within the mandatory thre e

- year period extinguished

its right to such a refund and neither t he Department nor this Court may rely on

equitable principles to revive its statutory right to request a refund. 7 Moreover, with

7 See, e.g.

, Lopresti v. Workers’ Compensation Appeal Board (Taylor Wharton Co.) , 692

A .2d 629, 631 (Pa. Cmwlth. ), appeal denied , 701 A.2d 580 (Pa. 1997) (“ Claimant contends that

the 500

- week statute of repose [ for filing a petition to reinstate benefits] had not expired because the time period during the pendency of his successful appeal to this Court, a period of one year, nine months, and six days, should be excluded from the running of the statute of repose. In making this argument, Claimant does not cite any cases to support the proposition that the pendency of an appeal tolls the statu te of repose upon another action. Nor has this Court ’ s research uncovered any

such cases. Furthermore, because Claimant has offered no evidence to establish that Employer should be estopped from asserting the 500

- week statute of repose, the only defense available to8

respect to Taxpayer’s due process claim, “[b]ecause it is a statute of repose,

taxpayers’ rights to a refund are extinguished and once quashed, due process

demands nothing because there are no rights to ‘process.’” DaimlerChrysler

Corporation v. Commonwealth , 885 A.2d 117, 121 (Pa. Cmwlth. 2005), aff’d , 927

A.2d 201 (Pa. 2007) (citation and footnote omitted). 8

Claimant, the statute of repose was not tolled by the pendency of a related appeal before this

Court .”).

8 Taxpayer’s reliance on the concurring opinions of Chief Justice Saylor and Senior Judge

Leadbetter in DaimlerChrysler Corporation do es not support its claim of a due process violation. As the Chief Justice explained:

In the present case, it seems clear that [the automobile seller] could not sustain a facial due process challenge to Section 3003.1(a). In this regard, the United States Supreme Court has recognized the need for reasonable procedural limitations applicable to tax refund

claims

— including “relatively short statutes of limitation”

— as a means of insuring financial security in relation to state tax schemes. McKesson Corporation v. Division of Alcoholic Beverages and Tobacco, Department of Business Regulation of Florida , 496 U.S. 18, 45 [ (1990) ] (stating, in dicta , that enforcement of fairly short limitation periods for tax refund claims is a co nstitutionally valid means of securing a state ’ s interest in fiscal stability). Thus, the statute is plainly constitutional at least with regard to those categories of claims for which the statute provides a reasonable opportunity to obtain a refund

.

927 A.2d at 204 (Saylor, J., concurring)

. Chief Justice Saylor recognized the facial constitutionality of Section 3003.1(a) in cases such as this case where the taxpayer was aware of the tax liability and had the ability to request a refund during the releva nt three

- year statutory period. Id. H e expressed his concern in DaimlerChrysler Corporation as limited “ to the repurchases [by the automobile seller as required by the Pennsylvania Automobile Lemon Law (Lemon Law), Act of March 28, 1994, P.L. 150, as ame nded, 73 P.S. §§1951

- 1963, ] that occurred after the expiration of the three

- year period as to which there is at least the possibility that [the seller] lacked a reasonable opportunity to obtain a refund [of the sales tax paid at the time of purchase ]. ” Id

.9 Finally, Taxpayer’s assertion that filing a timely refund in the instant

matter would have subjected it to liability under those sections of the Judicial Code

commonly referred to as the Dragonetti Act 9 is specious. B y prosecuting the appeals

of the Department’s prior denial of its refund request in Greenwood I and

Greenwood II , Taxpayer demonstrat ed its reasonable belief that the Department

incorrectly excluded the asserted deductions from the GTR in calcu lating its tax

liability. S uch reasonable belief provided Taxpayer with p robable cause to file a

timely refund request in this case during the pendency of those appeals and such a

filing would not support any such liability. See Section 8352(1) of the Dr agonetti

Act, 42 Pa. C.S. §8352(1) (“A person who takes part in the . . . initiation . . . of civil

proceedings against another has probable cause for doing so if he reasonably

believes in the existence of the facts upon which the claim is based, and . . .

reasonably believes that under those facts the claim may be valid under the existing

or developing law[.]”); Restatement (Second) of Torts §676 ( Am. Law Inst. 1977)

(“ To subject a person to liability for wrongful civil proceedings, the proceedings

must ha ve been initiated

. . . primarily for a purpose other than that of securing the

proper adjudication of the claim on which they are based .”); id.

, cmt. c (“ One may

believe that his claim is meritorious even though he knows that the decisions in the

state do not sustain it if he believes that the law is potentially subject to modification

Likewise, Senior Judge Leadbetter acknowledged the facial constitutionality of Section 3003.1(a) in a case such as this, yet “ belie ve[d] the application of the three

- year statute of repose

in the Lemon Law result [ed] in an unintended and inequitable co nsequence, but this result must be addressed by the General Assembly, [and] not this Court.” 885 A.2d at 122 (Leadbetter, J., concurring) . She concluded that, as in this case, “[b]ecause the three

- year limitation on filing refund requests is, on its face , both crystal clear and reasonable, this Court must affirm the orders of [F&R].” Id.

9 42 Pa. C.S. §§8351

- 8355.10

and that this case may be a suitable vehicle for producing further development or

change .”).

Accordingly, we grant the application for summary relief and affirm

F&R’s order

.

MICHAEL H. WOJCIK, Judge

Judge Fizzano Cannon did not participate in the result of the decision in this case.IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Greenwood Gaming and : Entertainment, Inc., :

: Petitioner :

:

v. : No. 609 F.R. 2015

: Commonwealth of Pennsylvania, :

: Respondent :

O R D E R

AND NOW, this 6 th day of September , 201 8

, the Commonwealth of

Pennsylvania’s application for summary relief is GRANTED

, and the Board of

Finance and Revenue’s order is AFFIRMED. Unless exceptions are filed within

thirty ( 30 ) days pursua nt to Pa. R.A.P. 1571(i), this O rder shall become final

.

__ ________________________________ MICHAEL H. WOJCIK, JudgeIN THE COMMONWEALTH COURT OF PENNSYLVANIA

Greenwood Gaming and : Entertainment, Inc., : Petitioner :

:

v. : No. 609 F.R. 2015

: Submitted: July 27, 2018 Commonwealth of Pennsylvania, : Respondent :

BEFORE: HONORABLE P. KEVIN BROBSON, Judge

HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

CONCURRING OPINION BY JUDGE BROBSON FILED: September 6, 2018

I join in the majority’s well

- reasoned opinion. In doing so, I recognize

that our decision allows the Commonwealth to keep money that Petitioner

Greenwood Gaming and Entertainment, Inc. (Taxpayer) paid to the Commonwealth

under protest, while its appeal o f the methodology that the Commonwealth used to

calculate the amount of slot machine tax due made its way through the courts.

Accordingly, I would hardly consider what Taxpayer paid to the Commonwealth for

tax years 2009 and 2010 a “voluntary payment of t axes.” See Maj. Op. at 7 (quoting

Mission Funding Alpha v. Commonwealth , 173 A.3d 748 (Pa. 2017)). In Greenwood

Gaming and Entertainment, Inc. v. Department of Revenue , 90 A.3d 699 (Pa. 2014)

( Greenwood Gaming I

), the Pennsylvania Supreme Court vindicate d Taxpayer’sPKB

- 2

legal argument and remanded the matter for recalculation of the slot machine tax due

for the 2007 and 2008 tax years. The issue before the Court is whether that decision,

by itself, entitled Taxpayer to a recalculation or refund of the taxes paid in

subsequent years under protest.

I have reviewed Taxpayer’s 2009 refund petition, which was the

initiating document in Greenwood Gaming I. It is clear that the 2009 refund petition

sought relief only with respect to the 2007 and 2008 tax years. Ta xpayer argues,
nonetheless, that its 2009 refund petition should be construed as raising and

preserving a refund request for all years thereafter based on the same legal challenge

to the Commonwealth’s methodology. This Court heard a similar argument rece ntly

in Starwood Airport Realty v. School District of Philadelphia , 115 A.3d 410 (Pa.

Cmwlth. 2015). There, we agreed with a taxpayer that the taxpayer’s property

assessment appeal for the 2012 tax year operated as an automatic appeal of

the 2013 and 2014 tax year assessments under Section 518.1(b) of The General

County Assessment Law, 1 which provides, in relevant part:

If a taxpayer has filed an appeal from an assessment, so long as the appeal is pending before the board or before a court on appeal from t he determination of the board, as provided by statute, the appeal will also be taken as an appeal by the taxpayer on the subject property for any valuation for any assessment subsequent to the filing of such appeal with the board and prior to the determina tion of the appeal by the board or the court. This provision shall be applicable to all pending appeals as well as future appeals.

1 Act of May 22, 1933, P.L. 853, added by the Act of December 28, 1955, P.L. 917, as amended , 72 P.S. § 5020

- 518.1(b).PKB

- 3

(Emphasis added.) The General Assembly, however, did not include similar

automatic appeal language in Section 3003.1(a) of Tax Reform Code of 1971

(Tax Code). 2

I must agree with the majority that Taxpayer’s remedy for subsequent

tax years was a timely refund petition under Section 3003.1(a) of the Tax Code and

that Taxpayer failed to file a timely refund petition(s) for the ye ars at issue in this

matter, 2009 and 2010. Because the filing of a refund petition for a specific tax year

under Section 3003.1(a) of the Tax Code does not operate as an automatic appeal

with respect to subsequent tax years, I am compelled to agree with the majority’s

disposition of this appeal.

P. KEVIN BROBSON, Judge

2 Act of March 4, 1971, P.L. 6, added by the Act of July 1, 1985, P.L. 78, as amended

, 72 P.S. § 10003.1(a).