Opinion ID: 2341641
Heading Depth: 1
Heading Rank: 1

Heading: settlements for the years 1-31-58 to 1-31-62

Text: The delays in this group of taxes range from five months to almost five years beyond the statutory expiration date. The first year on appeal is that of the year ending January 31, 1958. One year after the actual filing date was November 15, 1959. Notice of settlement was given January 22, 1964. The Commonwealth purports to justify the glaring tardiness of these settlements by embroidering its argument of the general necessity for pairing with the further notion that here such operations could not be commenced until after the prior year had been resettled. The taxes for the previous year (1-31-57) were not settled until March 18, 1959. On June 17, 1959 appellee filed petitions for resettlement and the taxes were resettled November 4, 1960. As the first year on appeal awaited final action on the year previous several subsequent tax years also fell due and were held in abeyance pending the resettlement. The lower court found that the Commonwealth had not timely acted as to the 1957 settlement and had not demonstrated that this late settlement was without impact upon timely settlement of the 1958 taxes. Thus the court did not deem it necessary to answer the Commonwealth's contention that a prior year's tax settlement does not become available for pairing purposes until the conclusion of the resettlement procedure. It is clear to us, however, that the practice of consolidating subsequent tax reports to await resettlement of a prior year, can be, and here was, destructive of the legislative time scheme for the settlement and resettlement of taxes. [7] A rather similar argument was advanced and rejected in Commonwealth v. Safe Harbor Water Power Corp., supra. There we observed that [R]eliance on the time of resettlement . . . as the date for `pairing' can only lead to an absurd result because the Commonwealth had a full two years to make this resettlement. Had it chosen to utilize this entire period, the date for `pairing' would have been extended for another sixteen months! 423 Pa. at 106, 107. The record discloses that no effort was made to settle the taxes for the years ending 1-31-59 and 1-31-60 within a year from the time they were filed. As to the fourth year in this group (year ending January 31, 1961), one year after the filing date of the report was November 15, 1962. It was not until after November 15, 1962 that the taxing authorities initiated any steps towards settlement of these taxes. The fifth and final year of this group was that of the year ending January 31, 1962. One year after the filing date was August 15, 1963. Although the Commonwealth undertook a field examination during this period, the real reason for delay seems to be the Commonwealth's action of consolidating this report for consideration with the four others then pending. The stipulation notes that from November 22, 1960 to September 24, 1963 requests for further information were made of appellee; that there was a federal examination of the corporate net income tax reports for federal purposes which then required a report of change to state taxing authorities; that the Department of Revenue questioned appellee's entitlement to a manufacturing exemption, requiring an opinion from the legal division and that these authorities felt impelled to and did conduct a field examination of appellee. However, as we stated in Safe Harbor, supra, The Commonwealth may investigate as it pleases, but it must settle within the statutory period. 423 Pa. at 108. There we also conceded that a report of change does prevent final ascertainment of the tax at least until after the date such report is made. But we further observed that in such a situation the Commonwealth's right to resettle is extended by statute so that the Commonwealth is fully protected. Our review of the record reveals that for all seven tax years appellee requested and received time extensions for filing these reports. Further, appellee did not respond immediately to a request for information on certain securities and there was a delay of some months in furnishing manufacturing information. In the proper case these facts would have merit in justifying the Commonwealth's delay but they have none instantly. The securities information was requested on March 26, 1959 in connection with the 1-31-58 tax reports. The taxpayer took two and one-half months to forward the requested data. These taxes were not settled, however, until January of 1964. On September 29, 1960, the Commonwealth informed appellee by letter that the 1958 and 1959 Capital Stock Tax reports were under consideration for settlement and requested information on the claimed manufacturing exemption. After a series of time extensions this information was forwarded June 15, 1961. Such delay is minimized by the fact that an additional thirty-one months elapsed before these taxes were ever settled!