Source: https://www.cozen.com/practices/corporate/tax
Timestamp: 2019-04-18 15:27:45+00:00

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The Cozen O’Connor tax team has been providing sound advice to clients for decades. We serve public and private companies, joint ventures, real estate interests, high net worth individuals, and exempt organizations. In our federal tax practice, we advise clients on the tax implications of mergers and acquisitions, financings, real estate deals, entity structure, contractual arrangements, cross-border transactions, and other business arrangements. In our state and local tax practice, we provide the full range of transactional counsel and represent clients in tax controversies and litigation. On occasion, the tax team also supports client efforts to reform state and local tax statutes or regulations.
Tax is a key element of Cozen O’Connor’s transactional practice. Our tax group works in close collaboration with colleagues from corporate law, real estate, public and project finance, private client services, health law, labor and employment, and mergers and acquisitions on a full range of business matters. The firm’s culture of cross-disciplinary cooperation benefits clients enormously. Our tax advisors are involved from the start to ensure that every project is structured and carried out to achieve tax efficiency.
Cozen O’Connor’s tax lawyers provide support at inception and throughout the entire life cycle of a deal. For pure transactional lawyers, work is done at closing. But our tax attorneys provide tactical advice for as long as a business decision has tax implications, which can be several years or several decades. Having continuous tax counsel is essential because our attorneys accrue invaluable institutional knowledge over time. They learn the hot-button issues and logic of prior decisions so they can quickly assess how future changes will affect a client’s tax position.
Because every tax matter is inherently case-specific and subject to interpretation, attorneys at Cozen O’Connor carefully avoid generic solutions and reject a this-is-how-it’s-always-done mentality. For analytical purposes, we often calculate the cost of following a standard model. But that figure simply represents an opening bid. We then undertake to lawfully improve on that baseline by adding nuance and creativity. Through innovation, we are often able to reduce tax costs considerably.
An essential aspect of a strong tax practice is good communication. Because few people other than tax lawyers are fully fluent in code-speak, a good tax attorney must be able to translate the tax code into plain English, focus on core issues, and present information to clients in a manner that is at once sophisticated and comprehensible. Cozen O’Connor attorneys are able to operate at a high level using a common lexicon and are known for their candor and lack of pretense.
Cozen O’Connor’s Tax Practice is made up of exceptionally qualified practitioners, including a former tax adviser to the U.S. Department of Treasury and a former chief counsel to the Pennsylvania Department of Revenue. Several attorneys are certified public accountants and have master’s degrees in taxation law. Many also have prior professional experience as in-house general counsel, which gives them unique insight into the needs of clients. Our most seasoned attorneys are leading scholars in the field and have authored or edited widely referenced treatises on state tax law and real estate tax.
The firm differentiates itself, in part, through its staffing model. In plain terms, we do not believe clients are best served by sprawling teams of undermanaged associates. While we have the capacity to add support as necessary, at Cozen O’Connor tax matters are primarily handled by experienced tax professionals who are deeply knowledgeable about the relevant subject area and have credibility with judges and counterparts. Because veteran attorneys are fully cognizant of the details of every matter, they are prepared to engage in peer-to-peer dialogue with clients at any time. When clients call at 3 a.m., they don’t just get a response – they get an answer.
Dennis Cohen takes a humorous (or as humorous as tax attorneys get) look at tax law developments from 2018.
Joseph C. Bright and Heidi R. Schwartz discuss Downs Racing, LP v. Commonwealth and the court's decision that royalty fees are intangible legal rights that do not fall within the meaning of corporeal personal property or canned software.
Tom Gallagher discusses the proposed regulations, highlighting those rules that should be important to investors and sponsors of QOZ investments, and points out several key areas under the proposed regulations where guidance is lacking and where the absence of guidance could create obstacles to successfully implementing investments in a QOZ.
Heidi Schwartz and Richard Silpe discuss three cases published this past summer that provide guidance to cannabis businesses and their owners in preparing their federal income tax returns. These cases turn on the application of IRC Section 280E, which precludes taxpayers from deducting any expense relating to a business that consists of trafficking in cannabis.
Joseph Bright discusses the decision in Williams v. City of Philadelphia holding that whether a city tax is preempted under the Sterling Act will depend on the incidence of the tax — that is, on what or whom the tax is imposed.
Dan Schulder discusses the 5-4 Supreme Court ruling that out-of-state online retailers can be held responsible for collecting use tax from their customers without having a physical presence in the state.
Joe Bright discusses recent decisions by the Commonwealth Court that will impact Pennsylvania taxpayers.
Cheryl A. Upham and Heidi R. Schwartz discuss new Personal Income Tax withholding obligations on certain lessees of non-residential real property and non-employer payors of Pennsylvania source compensation and business income.
Tom Gallagher discusses how the Tax Cuts and Jobs Act may impact real estate professionals.
Robert Friedman and Alexia Fishman discuss important changes to the estate and gift tax rules that likely will have an impact on your estate plan.
David Zambito, Ira Megdal, Rich Silpe, and Rory Moore discuss the Tax Cuts and Jobs Act and the changes to the taxation of business enterprises that have significant implications for public utilities.
Thomas Gallagher discusses changes made by Section 11011 of the Act, which added new Code Section 199A that creates a tax benefit to owners of passthrough entity businesses, i.e., partnerships and limited liability companies not taxed as corporations, S corporations, and sole proprietorships.
Sarah Kelly, Kate Ericsson and Rory Moore discuss a provision in the new Tax Act proposed by Senator Robert Menendez, (D-N.J.) that bars deductions for settlement payments, including attorney’s fees, related to sexual harassment or sexual abuse if the settlement payment is subject to a nondisclosure agreement.
Rory Moore discusses the Trump administration's Tax Cuts and Jobs Acts and how these changes will impact individuals.
Dennis Cohen continues the firm's series summarizing the Tax Cuts and Jobs Act, specifically focusing on changes to the tax code that impact exempt organizations.
Joseph Bright and Heidi Schwartz, members of Cozen O’Connor’s Tax Practice Group, discuss the Nextel Communications of the Mid-Atlantic, Inc. v. Commonwealth case in Bloomberg BNA.
Rich Silpe, co-chair of Cozen O'Connor's Tax Group, discusses key business tax changes under the Tax Cuts and Jobs Act. This is the first in a series of Alerts that our firm will be issuing on select topics of the Act.
Dennis Cohen takes a humorous (or as humorous as tax attorneys get) look at tax law developments from 2017.
Joe Bright and Bob Careless, members of Cozen O’Connor’s Tax Practice Group, discuss the Pennsylvania Commonwealth Court’s decision that a freight broker, who was taxed on delivery charges although it did not provide delivery services, does not fall within the freight delivery exception of the Local Tax Enabling Act (LTEA) in Bloomberg BNA.
Joseph Bright and Heidi Schwartz, members of Cozen O’Connor’s Tax Practice, discuss the Saturday Family L.P. v. Commonwealth case in Bloomberg BNA, in which the Commonwealth Court en banc held that Pennsylvania Realty Transfer Tax could not be imposed on a ground lease that contained an option for renewal at fair rental value that included an appraisal procedure.
Joseph Bright and Heidi Schwartz, members of Cozen O’Connor’s Tax Practice, discuss a case which found that all nuts, bolts, and washers used to install a guardrail system on a road or highway for Pennsylvania were exempt from sales tax in Bloomberg BNA.
Joseph Bright, a member of Cozen O’Connor’s Tax Practice, discusses the Pennsylvania Supreme Court’s finding that selective appeals of only commercial property violated the state uniformity clause in Valley Forge Towers Apartments N LP v. Upper Merion School District in Bloomberg BNA.
Heidi Schwartz discusses the validity of Philadelphia’s Sugar-Sweetened Beverage Tax (SBT) and the tax being challenged in Williams v. City of Philadelphia.
The Tax Court has allowed the owners of the Boston Bruins hockey team (a subchapter S corporation) to deduct 100 percent of the cost of pre-game meals at hotels for employees while traveling for away games.
Joseph Bright, a member of Cozen O’Connor’s Tax Practice Group, discusses a recent Pennsylvania Commonwealth Court case that found American Electric Power liable for the gross receipts tax in an article for Bloomberg BNA.
The court overruled the trial court that the assessment must be stricken, and instead remanded the case to the lower court to apportion the receipts consistent with its opinion.
Joseph Bright and Heidi Schwartz discuss the impact of the Nextel case in Bloomberg BNA.
Joseph C. Bright discusses three recent rulings by the Commonwealth Court regarding sales and use tax.
Joe Bright discusses the Saturday Family case and its impact on determining the length of leases subject to realty transfer taxes in Bloomberg BNA.
Dennis Cohen takes a humorous look back at the developments in tax law.
The court held that the $2 million cap on a net loss carryover deduction for 2006 Corporate Net Income Tax purposes is unconstitutional because it results in two classes of taxpayers: one for taxpayers that can completely eliminate their taxable income; and another that can only limit the deduction to the extent of the cap.
Richard J. Silpe discusses the Bipartisan Budget Act of 2015 that repealed the TEFRA partnership regime and replaced it with an entirely new regime for federal tax audits of partnerships (including LLCs taxed as partnerships) for tax years beginning after December 31, 2017.
An informative and humorous look back at 2015 tax matters.
The taxpayer filed a complaint in the nature of a request for declaratory judgment to void the tax sale. After a trial, the taxpayer filed a Statement of Matters Complained of on Appeal, but had not previously filed post-trial motions.
The court held that the regulation was a reasonable interpretation of the statute and under its plain terms, an amended report did not constitute a petition for refund in because the amended report lacked information that must be included with a complete refund claim.
A divided panel of The Commonwealth Court of Pennsylvania held that a reassessment of property upon the expiration of a KOZ abatement was an unlawful spot assessment. Duke Energy Fayette II, LLC v. Fayette County Board of Assessment Appeals, No. 1406 C.D. 2014 (Pa. Commw. Apr. 14, 2015).
The Commonwealth Court of Pennsylvania held that a trial court correctly held that a charitable exemption in Allegheny County begins only on the next assessment day, not when the property was acquired. Global Links v. Keystone Oaks School District, No. 1511 C.D. 2014 (Pa. Commw. May 8, 2015).
A panel of The Commonwealth Court of Pennsylvania held that attorney’s fees are collectable in a tax sale, notwithstanding that Act 2003-20, which authorized the collection of reasonable attorney’s fees, was retroactive to 1996.
In Comptroller of the Treasury of Maryland v. Wynne, the Court concluded that the system did not grant a resident credit for Maryland county income tax paid on income earned and taxed in another state.
A divided Commonwealth Court held that a township’s business privilege tax on gross receipts enacted under the Local Tax Enabling Act could not be applied to lease payments in Fish v. Township of Lower Merion.
The substantial volume of tax sale decisions from appellate courts continues. The high volume of decisions suggests that it may be time for the General Assembly to review the tax sales statutes.
A tax appeal from an interim assessment was properly preserved, notwithstanding that the taxpayer did not appeal a subsequent assessment that reflected a tax abatement under LERTA.
The Philadelphia Office of Property Assessment (OPA) recently mailed notices to each owner of property listed as tax exempt on the OPA’s records indicating that the owner must file a form to certify that the property continues to be entitled to exemption.
A panel of the Commonwealth Court affirmed a decision that an assessment board correctly increased the use value of properties enrolled under the Clean and Green program, notwithstanding that the increased use values exceeded the certified market values. Herzog v. McKean County Board of Assessment, No. 413 C.D. 2014 (Pa. Commw. Jan. 27, 2015). The court rejected the argument that the assessor did not have the power to increase the use value of the properties after they were enrolled in the program.
The Philadelphia Office of Property Assessment (OPA) has begun mailing notices to each owner of property listed as tax exempt on the OPA’s records indicating that the owner must file a form to certify that the property continues to be entitled to exemption. The notice and form are confusing as they list different due dates and effective dates for the certification. The OPA has confirmed that the due date for filing the form is March 31, 2015 and that the certification of exemption is for tax year 2016.
Continuing a line of recent appellate decisions, a panel of the Commonwealth Court set aside a tax sale because the tax claim bureau failed to note in the file additional efforts that it had made to notify the owner. In re: 2013 Perry County Tax Claim Bureau Sale, Appeal of Tufarolo.
A panel of the Commonwealth Court held that a tax sale of owner-occupied property was void because of the failure of the sheriff to include a copy of the notice of the tax sale with affidavits filed in the proceeding. Montgomery County Tax Claim Bureau v. Queenan, No. 209 C.D. 2014 (Pa. Commw. Jan. 12, 2015). The owner had actual notice of the tax sale in advance of the sale. Notwithstanding, the Court held that the failure of the Sheriff to include a copy of the notice did not meet the mandatory requirement of the statute in 72 P.S. §601(a)(3). The tax sale of owner-occupied property requires stricter requirements than requirements of notice to property owners generally under 72 P.S. §5860.602.
A panel of the Commonwealth Court held that a taxpayer failed to prove that he was a nonresident of Pennsylvania in 2005. Lust v. Commonwealth, No. 645 F.R. 2011 (Pa Commw. Jan. 9, 2015) (unreported). The taxpayer filed Pennsylvania, New York and New Jersey tax returns reflecting part year residency in Pennsylvania in 2005. Several years later, the taxpayer filed an amended Pennsylvania return claiming nonresidency for the entire year. The court stated that, when asked about the conflicting documentary evidence on cross examination, the taxpayer was evasive, repeatedly declined to identify documents that he had filed, would not confirm information contained therein, testified that he could not remember critical facts, and provided only the most basic information. The court found the taxpayer’s testimony not credible and held that he had failed to prove nonresidency in Pennsylvania.
A panel of the Commonwealth Court held that taxpayers could not be reassessed when they subdivided a parcel into two parcels but retained title. Raup v. Dauphin County Board of Assessment Appeals, No. 237 C.D. 2014 (Pa. Commw. Jan. 14, 2015). The taxpayers owned a property that they subdivided into two lots. One of the parcels had been improved with half of a duplex property long before the subdivision. The court held that the subdivision could not be the occasion for a reassessment when the improvements were not made contemporaneously, citing 53 Pa. C. S. § 8817(a). Any improvement to the property could justify a reassessment at the time the improvements are made but not at an arbitrary time in the future. A subdivision does not constitute an improvement; an improvement requires an addition to the property. The court further held that the subdivision by a deed for $1.00 did not constitute a sale taking the conveyance out of the protection of the subdivision.
A divided panel of the Commonwealth Court concluded that real estate used by a railroad as a transloading facility was not exempt from local real estate tax. CSX Transportation, Inc., v. Delaware County Board of Assessment Appeals, No. 1276 C.D. 2014 (Pa. Commw. Nov. 19, 2014). The appeal may not be correctly decided.
A panel of a Commonwealth Court concluded that a mixed-use housing project owned by municipality was exempt from real estate tax. Reading Housing Authority v. Board of Assessment Appeals of Berks County, No. 1937 C.D. 2013 (Pa. Commw. Nov. 12, 2014). The Reading Housing Authority owned and operated a mixed-use housing project known as a 20-80 project. Twenty percent of the units were set aside for low income persons. The balance were rented at commercial rates.
An informative and humorous look back at 2014 tax matters, including the IRS's 2015 inflation adjustments, employment tax matters, accounting matters and court decisions.
A divided panel of the Commonwealth Court held that a city was not prohibited from imposing its Business Privilege Tax on the gross receipts of a freight broker. S & H Transport, Inc. v. City of York, No. 165 C. D. 2014 (Pa. Commw. Oct. 15, 2014). The taxpayer contracted with its customer to provide common carrier transportation services. The taxpayer would then contract with a common carrier to transport the items, negotiating the lowest feasible price. The difference between what the taxpayer charged its customer and what the common carrier charged the taxpayer constituted the taxpayer's profit.
A panel of the Commonwealth Court held that portions of a 45-acre tract were entitled to exemption as places of regularly stated religious worship. Four Quarters Interfaith Sanctuary of Earth Religion v. Medford County Board of Assessment and Revision of Taxes, No. 1963 C.D. 2013 (Pa. Commw. Sept. 16, 2014). The tract in question was used to conduct open air religious practices of a religious faith. The property was secluded, which served to protect the privacy of the participants. The trial court held that certain portions of the property were exempt but others were not.
The statute requires notice to be given to each owner of the property. The notice requirements of the statute are strictly construed. Rinier v. Tax Claim Bureau of Delaware County, 606 A.2d 635 (Pa Commw. 1992). There were four owners of the property. Notice was sent addressed only to one owner followed by et al. The court held that such notice was inadequate under the statute. Therefore the tax sale was invalidated.
A panel of the Commonwealth Court held that the trial court properly denied a mortgage holder’s petition to set aside the judicial tax sale of a property in Lackawanna County due to alleged improper service of notice and other errors committed under the Real Estate Tax Sale Law (RETSL). HSBC Bank USA, N.A. v. Lackawanna County Tax Claim Bureau, No. 2027 C.D. 2013 (Pa. Commw. Aug. 1, 2014).
A panel of the Commonwealth Court held that a pro se taxpayer waived all issues on appeal because he failed to comply with the lower court’s order directing him to file a statement of matters complained of on appeal. City of Philadelphia v. Tax Review Board, Appeal of Samuel Cook, No. 1070 C.D. 2013 (Pa. Commw. May 21, 2014) (unreported). Issues not stated in a statement are waived. Commonwealth v. Castillo, 888 A.2d 775 (Pa. 2005). Since the taxpayer filed no statement, all issues were waived.
A panel of the Commonwealth Court held that an owner of property was entitled to pursue a base year evaluation appeal, notwithstanding that the initial appeal was taken by a school district. Corey v. Washington County Board of Assessment Appeals, No. 370 C.D. 2013 (Pa. Commw. May 13, 2014) (unreported).
A panel of a Commonwealth Court held that a mortgagee is not an aggrieved party for purposes of standing to take an appeal of the assessment of real property. Mountain Manor Development Company LP v. Monroe County Board of Assessment Appeals, No. 1187 C.D. 2013 (Pa. Comm. May 22, 2014) (unreported).
A divided Commonwealth Court panel vacated an order of the Court of Common Pleas of Lackawanna County dismissing a property owner’s (Pascal) set aside petition to void the judicial sale of her property and remanded the case for an evidentiary hearing.
A panel of the Commonwealth Court held that the Westmoreland Tax Claim Bureau had the discretion under the Real Estate Tax Sale Law (RETSL) to allow an owner of a tax delinquent property (Rowe) to redeem the property through the payment of all tax and costs after the property failed to sell at a tax sale and a judicial sale and had been placed in the bureau’s repository of unsold property. Consequently, the court dismissed a complaint for mandamus and declaratory judgment filed by an individual (Sanders) seeking to force the bureau to accept his bid for the property.
A nearly unanimous Pennsylvania Supreme Court reversed the Commonwealth Court and held that certain promotional expenses were deductible in calculating gross terminal revenue for purposes of the 34 percent Pennsylvania tax on slot machines.
The Commonwealth Court affirmed on several grounds an assessment under the Liquid Fuels and Fuels Use Tax Act. Luther P. Miller, Inc. v. Commonwealth, No. 550 F.R. 2009 (Pa. Commw. Mar. 20, 2014). The taxpayer raised three issues. The court rejected the argument that sales to bus operators that provided services to a school district were exempt from taxation as sales to political subdivisions, as addressed in 61 Pa. C.S. § 315.3.
In a four to three decision, the en banc Commonwealth Court held that a senior citizen’s estate was entitled to a rebate under the Senior Citizens Property Tax and Rent Rebate Assistance Act, 53 P.S. §§ 6926.1301-6926.1313 (the Senior Rebate Act), so long as the decedent met any of the claimant eligibility criteria under Section 1303 even if the decedent did not live throughout the tax year for which the rebate was sought.
The New York Court of Appeals reversed the decision of the Appellate Division of the New York Supreme Court and held that in order for an individual to have a “permanent place of abode” in New York for purposes of determining whether the individual is a statutory tax resident, there must be some basis to conclude that the property owned by the individual was actually used as the individual’s residence. Matter of Gaied v. New York State Tax Appeals Tribunal, et al., Docket No. 26 (N.Y. Ct. App. Feb. 18, 2014). While the decision is not binding in states other than New York, the analysis is pertinent in the myriad states, including Pennsylvania, that have a statutory definition of a resident for tax purposes that is the same or similar to that of New York.
A panel of the Commonwealth Court concluded that a continuing care retirement community qualified as an institution of purely public charity and was therefore exempt from real estate tax, except for a remand regarding application of the exemption to two relatively minor parcels. Albright Care Services v. Union County Board of Assessment, No. 2094 C.D. 2012 (Pa. Commw. Jan. 29, 2014) (unreported). The questions were whether the institution qualified as a purely public charity under case law and under Act 1997-55.
A panel of the Commonwealth Court modified an order of the Monroe County Court of Common Pleas that quashed certain real estate assessment appeals filed on a consolidated basis, but permitted the property owners to file amended appeals beyond the statutory appeal period provided they do so within 60 days of the order and pay the necessary filing fees.
Since the implementation in 2011 of federal legislation increasing the federal estate and gift tax exemption to $5,000,000, many New York residents have been making large lifetime gifts in order to substantially reduce their New York estate tax. Recently proposed legislation, if passed, will eliminate this tax reduction strategy by pulling back into the New York taxable estate at death lifetime gifts made by New York residents after March 30, 2014.
A federal district court remanded to state court an action that made various contractual and consumer oriented claims regarding the collection of sales tax. Farneth v. Wal-Mart Stores, Inc., 2:3-cv-01062 (W.D.PA. Dec. 30, 2013). The plaintiff purchased two items of shaving gel at a Wal-Mart store taking advantage of a two-for-one promotional sale. The store charged Pennsylvania Sales Tax as though both items were purchased at full price.
On December 30, 2013, the Internal Revenue Service issued its long-awaited historic rehabilitation tax credit guidance in the form of a Revenue Procedure that outlines a safe harbor for allocations of the Code Sec. 47 tax credits to partners in a partnership. The impetus for this guidance grew out of the 2012 3rd Circuit opinion in Historic Boardwalk Hall, LLC v. Commissioner, 694 F.3d 425 (3rd Cir. 2012), cert. denied, U.S., No. 12-901, May 28, 2013. In Boardwalk, the court determined that the tax credit investor’s return from the historic tax credit partnership was effectively fixed and that the investor had no meaningful downside risk. It concluded that the investor “lacked a meaningful stake in either the success or failure” of the partnership and was not a “bona fide partner.” As a result, the allocation of the rehabilitation tax credits to the partner by the partnership was disallowed.
A plurality of the full Pennsylvania Supreme Court held that the disparity in valuations that results from the application of the statutory averaging formula for valuations and a combination provision are not unconstitutional. Lebanon Valley Farmers Bank v. Commonwealth, No. 78 MAP 2011 (Pa. Dec. 27, 2012) (3 to 2), reversing 27 A.3rd 288 (Pa Commw. 2011) . The decision may be incorrectly decided.
We are pleased to present the 2013 Year-End Tax Update, as presented by Dennis L. Cohen at the Brindisi Tax Academy. It combines humor and important tax developments.
A panel of the Commonwealth Court reversed and remanded for further findings several assessments determined by a trial court. In re appeal of Harley-Davidson Motor Company, No. 159 C.D. 2013 (Pa Commw. Oct. 30, 2013). The property was approximately 229 acres formerly used for the manufacture of munitions and certain other industrial activities. The property had significant continuing environmental problems. The Commonwealth Court reversed for several reasons.
A divided panel of the Commonwealth Court affirmed a decision below that taxpayers were entitled to credits for overpaid Philadelphia Business Privilege Tax, notwithstanding a three-year limit on the refund of taxes. City of Philadelphia v. City of Philadelphia Tax Review Board ex rel. Keystone Healthplan East, Inc., No. 97 C.D. 2013 (Pa Commw. Nov. 18, 2013).
A panel of the Commonwealth Court reversed and remanded assessments on a property regarding the impact of obsolescence on the buildings. In re Appeal of Council Rock School District, Appeal of LMC Properties, Inc., No. 354 C.D. 2013 (Pa Commw. Nov. 8, 2013) (unreported). The property consisted of 52 acres and an office, research and industrial center used for research and manufacturing. The court first rejected an argument that the trial court used a value-in-use methodology. The court held that the appraiser upon which the trial court relied did not take into account specialized equipment in the buildings.
The Pennsylvania Supreme Court reversed the Commonwealth Court and held that property owned by the Board of City Trusts acting as trustee under the will of Stephen H. Girard was immune from real estate taxation because the trust is a state agency. City of Philadelphia, Trustee v. Cumberland County Board of Assessment Appeals, No. 902 MAP 2011 (Pa. Oct. 30, 2013). The court was unanimous in the result; two justices filed a concurring opinion.
A panel of the Commonwealth Court remanded a decision by the Montgomery County Court of Common Pleas for specific findings on certain aspects of a valuation for real estate tax purposes. 36 Township Line Storage, L.P. v. Montgomery County Board of Assessment Appeals, No. 1540 C.D. 2012 (Pa Commw. Oct. 18, 2013) (unreported). The court remanded, on the grounds of the now black-letter rule that a court may adopt some, a portion, or all of an expert’s report that it finds credible, but must explain which parts its relies upon so that a review in court can determine whether the conclusion is reasonably based on the record.
A panel of the Commonwealth Court sustained a decision that upheld the assessment of a township’s business privilege tax, interest and penalties. Whitehall Township Treasurer v. Allentown Power Center, L.P. No. 248 C.D. 2012 (Pa. Commw. Aug. 8, 2013). The taxpayer was assessed business privilege tax for 15 years beginning in 1995 on gross receipts from a rental commercial property.
Two tax bills will make substantial changes to Pennsylvania taxes if finally enacted. The bills were part of the budget process. House Bill 465 has passed the House and Senate and requires the governor’s signature. Senate Bill 591 needs Senate concurrence in certain House amendments and the governor’s approval.
The en banc Commonwealth Court held that private telephone line charges and directory assistance services were subject to the Public Utility Gross Receipts Tax (GRT), but non-recurring service charges were exempt. Verizon Pennsylvania, Inc. v. Commonwealth.
A panel of the Commonwealth Court held that a taxpayer had standing to challenge a LERTA designation, but the complaint nonetheless was dismissed because it alleged no facts in support of the claim that the property was incorrectly classified as deteriorated.
The Pennsylvania Supreme Court affirmed per curiam a decision that the burden of proving a change of domicile is on the person claiming the change. Hvizdak v. Commonwealth, 92 MAP 2012 (Pa. June 17, 2013) (per curiam), aff’g 50 A.3d 788, (Pa. Commw. 2012).
Bank Shares Tax Calculation Modified - Tax Alert! - The Commonwealth Court en banc dismissed exceptions from a panel decision and held that the calculation of Bank Shares Tax must be modified to cure a constitutional defect in the application of the tax to certain post-merger institutions. Lebanon Valley Farmers Bank v. Commonwealth, No. 698 F.R. 2005 (Pa. Commw. Aug. 4, 2011).
Declaratory Judgment on Hotel Tax Application May Proceed - Tax Alert! - panel of the Commonwealth Court held that a county could proceed with a declaratory judgment action seeking to establish that online reservation companies are subject to the county’s hotel tax. County of Lawrence v. Hotels.com LP, No. 2541 C.D. 2010 (Pa. Commw., Aug. 3, 2011).
STEB Sets 2010 Philadelphia Common Level Ratio at 18.1% - Tax Alert! - The Pennsylvania State Tax Equalization Board (STEB) recently released the 2010 Common Level Ratios (CLR) for counties across Pennsylvania. The 2010 CLR for Philadelphia is 18.1% — not quite half what it has been for the past twenty-five years. The large shift will have an important impact in two areas of Philadelphia taxation.
IRS Issues Guidance to Examiners on the Codified Economic Substance Doctrine and Associated Penalties - Tax Alert! - On July 15, the IRS Large Business and International Division (LB&I) issued an Industry Director’s Directive (Directive) providing guidance to examiners and their managers regarding the Codified Economic Substance Doctrine (ES Doctrine) and its penalties. The Directive describes when it is appropriate to raise the ES Doctrine in a case and the series of steps the examiner must take to seek approval for the application of the ES Doctrine in the particular case.
Further Updates - FBAR Reporting Requirements for Employee Benefit Plans - Employee Benefits & Executive Compensation Alert! - Since our previous Alert, the Treasury Department has issued final regulations and a new disclosure form for the Report of Foreign Bank and Financial Accounts (FBAR), instituted a new Offshore Voluntary Disclosure Program, and provided certain individuals with extensions of filing deadlines.
Class Action Stayed - Tax Alert! - The Pennsylvania Superior Court held that a trial court correctly ruled that a purported class action for the refund of Sales and Use Tax must be decided in the first instance by the Department of Revenue. It should have stayed the action until the Department of Revenue acted on the refund claim. Stoloff v. Neiman Marcus Group, Inc., No. 2674 EDA 2009 (Pa. Super. May 23, 2011).
Air Pump Sales Not Taxable - Tax Alert! - In a divided panel decision, the Commonwealth Court held that sales from coin operated air vending machines located in gas stations and convenience stores were not taxable for Sales and Use Tax purposes. Air-Serv Group, LLC v. Commonwealth, No. 459 F.R. 2008 (Pa. Cmwth. April 14, 2011). The majority held that the sales were not taxable for several reasons.
Reassessment to Comparables Denied - Tax Alert! - A panel of the Commonwealth Court concluded that, although a taxpayer demonstrated that his property was assessed at a much greater value than certain comparable properties in a development, he was entitled to no relief beyond application of the common level ratio. Smith v. Carbon County Board of Assessment Appeals, 10 A.3d 393 (Pa. Commw. 2010).
Use Value of Forest Reserve Correctly Determined - Tax Alert! - A panel of the Commonwealth Court concluded that, although a taxpayer demonstrated that his property was assessed at a much greater value than certain comparable properties in a development, he was entitled to no relief beyond application of the common level ratio. Smith v. Carbon County Board of Assessment Appeals, 10 A.3d 393 (Pa. Commw. 2010).
Community Center Was Not a Charity - Tax Alert! - An en banc decision of the Commonwealth Court held that a community center that provided free services for all its programs was not a purely public charity entitled to an exemption for real estate tax purposes. Church of the Overcomer v. Delaware County Board of Assessment Appeals, No. 269 C.D. 2010 (Pa. Commw. Mar. 17, 2011). The decision appears to be incorrectly decided. Click here for the entire story.
License for Canned Software is Taxable - Tax Law Alert! - The Supreme Court of Pennsylvania held that a license to use canned software is a license to use tangible personal property and is therefore taxable for Sales and Use Tax purposes. Dechert LLP v. Commonwealth, No. 12 MAP 2008 (Pa., July 20, 2010). Oral argument on the appeal was held over 1 ½ years ago.
Update - FBAR Reporting Requirements for Employee Benefit Plans - Employee Benefits & Executive Compensation Alert! - During the past year, we have reported on expanded obligations of retirement and other employee benefit plans, along with other taxpayers, to file the Report of Foreign Bank and Financial Accounts (“FBAR”). This report must be received by the U.S. Department of Treasury (not merely mailed) by June 30, 2010. There are no extensions of time to file. Recently, further guidance and administrative relief have been provided by the IRS for the 2009 FBAR.
because it did not give free or discounted services to the students.
CHF-Kutztown, LLC v. Berks County Board of Assessment Appeals, No.
1663 C.D. 2009 (Pa. Cmwlth. Apr. 13, 2010) (unreported).
substitute. 72 P.S. §8101-C. A transfer to a qualifying living trust is excluded from tax. 72 P.S. §8102-C.3(8.1).
Flat Tax on Businesses Upheld - Tax Alert! - A panel of the Commonwealth Court concluded that a flat tax of $2,600 on all businesses in a township with gross receipts of over $1 million was lawful. Shelly Funeral Home, Inc. v. Warrington Township, No. 769 C.D. 2009 (Pa. Cmwlth. Dec. 31, 2009) (unreported). The appeal is probably correctly decided, but it highlights several serious policy mistakes by the General Assembly.
with gross receipts of over $1 million was lawful.
Shelly Funeral Home, Inc. v. Warrington Township, No. 769 C.D.
policy mistakes by the General Assembly.
that mobile homes were taxable as real estate for real estate tax purposes. Lazor v. Board of Assessment Appeals, No. 2372 D.C. 2008 (Pa. Cmwlth., Dec. 15, 2009); Gelormino v.
estate taxes on mobile homes permanently attached to the land or connected to utility facilities.
Religious Summer Camp is Not a Charity - Tax Alert! - A panel of the Commonwealth Court held that a Jewish religious camp located in Pike County was not entitled to exemption as a purely public charity because it did not meet one of the case law requirements that an institution relieve the government of some of its burden. Mesivtah Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals, No. 2343 C.D. 2008 (Pa. Cmwlth. Dec. 29, 2009) (unreported).
Pennsylvania Tax Amnesty Program - Tax Alert! - Act 48 of 2009 established a new tax amnesty program in Pennsylvania (the “Program”). This Program will run 54 days commencing on April 26, 2010 and ending on June 18, 2010 (the “Amnesty Period”). Eligible periods for the Program include all those known and unknown periods that exist as of June 30, 2009. Periods subsequent to June 30, 2009 are not eligible for the program.
Local Head Tax Prohibited by Federal Act - Tax Alert! - The federal Third Circuit Court of Appeals held that the U.S. Department of Transportation correctly determined that a head tax imposed by Tinicum Township was prohibited by the Anti-Head Tax Act, 48 U.S.C. §40116. Township of Tinicum v. United States, No. 08-1830 (3rd Cir. Sept. 14, 2009).
Pennsylvania Tax Changes - 2009/2010 Budget Bill - Tax Alert! - More than 100 days after the due date mandated by law, the Pennsylvania budget for fiscal year 2009/2010 budget was finally passed and signed into law by Governor Rendell.
Self-Storage Facilities Correctly Valued - Tax Alert! - In an unreported decision, a panel of the Commonwealth Court concluded that certain self-storage facilities were correctly valued for real estate tax purposes based on the actual financial results from the property, since the trial court had found that the properties were optimally managed and a buyer could not reasonably expect to improve the financial performance. Guardian Self Storage WD v. Board of Property Assessment Appeals & Review, No. 119 C.D. 2009 (Pa. Cmwth., Nov. 16, 2009).
Investment Loss Disallowed - Tax Alert! - A panel of the Commonwealth Court disallowed a claimed business loss of over $21 million on the grounds that a settlement with the Internal Revenue Service regarding the same loss amounted to an admission that the investment was not made with the intention of making a profit. Hvizdak v. Commonwealth, No. 739 F.R. 2006 (Pa. Cmwlth., Nov. 19, 2009).
Electricity Delivery and Stranded Cost Charges are Taxable - Tax Alert! - The Pennsylvania Supreme Court held that after deregulation of the electricity industry, charges by a distribution company for the transmission of electricity and for stranded costs are taxable for Sales and Use Tax purposes. Spectrum Arena Limited Partnership v. Commonwealth, No. 42 MAP 2008 (Pa. Nov. 5, 2009). This was a hard case, and it made bad law.
Denial of Tax Credit is Appealable - Tax Alert! -A panel of the Commonwealth Court held that the denial by the Department of Community and Economic Development of a tax credit claimed under the Neighborhood Assistance Act is appealable. Dijas v. Department of Community and Economic Development, No.1388 C.D. 2008 (Pa. Commw. Apr. 28, 2009). The Act authorizes the Department to grant a tax credit to a taxpayer that contributes to certain approved improvements or programs in needy communities.
failure to satisfy the notice and consent requirements could result in the loss of a significant tax exclusion.
IRS Life Insurance Guidance - Tax Alert! - On May 1, 2009, the IRS issued two revenue rulings to clarify the income tax treatment relating to the surrender, sale and purchase of certain life insurance policies. They are in response to a congressional request for guidance for life settlement transactions in which such life insurance policies are sold to unrelated third parties. However, the principles in the revenue rulings may extend beyond such transactions.
May 10, 2013 - Washington, D.C.
May 11, 2012 - Washington, D.C.
Dennis Cohen, co-chair of the firm’s Tax Practice, discusses Major League Baseball’s opposition to a tax regulation that would deny sports franchises a deduction in The Wall Street Journal.
Joseph Bright, a member of the firm’s Tax Practice, discusses the inaccurate assessment of home values in Philadelphia an article in The Philadelphia Inquirer.
Joseph Bright, a member of Cozen O’Connor’s Tax Practice, authored an article in Bloomberg Daily Tax Report: State on The Pennsylvania Commonwealth Court’s ruling that the Pennsylvania Department of Revenue can tax electronic cigarettes as tobacco products.
Dan Schulder, a member of Cozen O'Connor’s Tax Practice, authored in the article “U.S. Supreme Court: E-commerce Subject to Use Tax Collection,” in CPA Now, a Pennsylvania Institute of Certified Public Accountants publication.
Can real estate brokers cash in on this tax deduction?
Thomas Gallagher, a member of Cozen O'Connor's Tax group, spoke with New York Real Estate News about the impact the tax deduction may have on real estate brokers.
Joseph Bright discusses the Lerner case in which the Pennsylvania Supreme Court upheld a fraudulent assessment intended to coerce the taxpayer into supplying information.
Joseph C. Bright, a member in the firm's tax group, speaks about how Pennsylvania's taxing authorities and bureaus are held to strict rules when it comes to notice of tax sales, and how the Commonwealth Court has cracked down on some authorities in recent cases.
Joe Bright, of the Tax Practice Group, was recently quoted on Philly.com in an article titled, "City of Philly Defends Wiping Clean SEPTA's $22M Tax Bill in Letter to Bill Green, Darrell Clarke." In the article, Joe offers his thoughts regarding the history of litigation over similar arguments by stating, "There are a couple of very well known Pennsylvania Supreme Court cases that say that a commercial hotel located at an airport and located on city or state or county ground is not taxable because you need hotels to operate an air transit system."

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