Court Opinion

ID: 9533686
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:33:58.354511+00
Date Added: 2024-06-11T13:29:07.890268
License: Public Domain

*269Justice SAYLOR,
dissenting.
I agree with the majority that the existence of an adequate post-deprivation procedure for challenging an asserted tax obligation and obtaining a concomitant remedy will ordinarily satisfy the dictates of the Due Process Clause. Here, however, Appellants raise a substantial question concerning the adequacy of the post-deprivation procedure actually afforded them.
It is undisputed that Appellants’ initial PURTA tax (the “surtax”) is self-assessing: each year, the taxpayer calculates how much it owes under PURTA, submits this calculation to the Department of Revenue (the “Department”), and pays the tax. The supplemental assessment (the “suptax”) is an entirely different matter. It is unclear in any given year whether any suptax payment will be required. This depends on whether the realty tax equivalent, see 72 P.S. § 8101-A(6), exceeds the cumulative total of the surtaxes paid by all utilities. A utility taxpayer lacks access to this information, and it is thus unaware of the existence or size of any shortfall until it receives a notice from the Department listing the ratio to be multiplied by its state taxable value, and demanding remittance of the suptax obligation within 45 days on pain of penalties and interest.1
As suggested above, a utility’s suptax liability is directly controlled by the reports filed by the LTAs pursuant to Section 1106-A, 72 P.S. § 8106-A, listing their individual realty tax equivalents, as well as the returns filed by all other Pennsylvania utilities pursuant to Section 1102-A, 72 P.S. § 8102-A, specifying their state taxable value and their resultant surtax liabilities. These reports may be highly subjective, as they depend upon the LTAs’ own methods of determining the assessed value of the real estate involved, the *270LTAs’ own determinations as to how to calculate their total tax receipts, and the other utilities’ specific accounting methods utilized in determining their state taxable values. While Appellants would appear to retain the right to participate in any Departmental audit of the annual reports of the LTAs, see 61 Pa.Code § 159.1(d), they lack access to other utilities’ PURTA tax returns. Without this information, it is impossible to determine whether the other utility companies have paid their commensurate share of the initial PURTA tax, including whether the assessments against similarly situated utilities were uniformly ascertained in compliance with the Pennsylvania Constitution, see Pa. Const, art. XIII, § 1 (pertaining to uniformity of taxation), or whether the Department acted correctly in accepting and/or settling these returns.2 In light of the above, it is evident that, absent some procedure by which these figures can be aired and tested, Appellants do not have the ability to confirm the accuracy of the data from which their own suptax liability is calculated.3
In accordance with the analysis furnished by the majority, Appellants’ substantial disadvantage in this regard may not serve as an adequate predicate to permit them to resist payment of the tax, so long as the Commonwealth provides a *271later cure by supplying an adequate post-deprivation procedure meeting the minimum requirements of due process. The United States Supreme Court has clarified that, in the field of taxation, if a state fails to offer any predeprivation process its post-deprivation proceedings must be “meaningful” in that they must provide taxpayers with a “fair opportunity to challenge the accuracy’ of their tax obligations. McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Dep’t of Business Regulation of Florida, 496 U.S. 18, 39, 110 S.Ct. 2238, 2251, 110 L.Ed.2d 17 (1990). Plainly, there can be no meaningful post-deprivation opportunity to challenge the accuracy of a suptax assessment unless the taxpayer has access to all the other utilities’ PURTA returns (which, as noted, have a direct effect upon the taxpayer’s suptax obligation), as well as the Department’s records memorializing the manner in which it computed the PURTA assessment ratio.4
As discussed, Appellants contend that they lack the necessary information to determine the correctness of the Department’s suptax assessment, as some of the necessary records are confidential under the Fiscal Code,5 which, inter alia, prohibits the divulgence of tax returns submitted to the Commonwealth except for “official purposes.” See 72 P.S. § 731. While there may be some basis to argue that the official-purposes exception provides the trial court with discretion to require disclosure of these returns during post-deprivation judicial review, see Commonwealth v. Mellon Nat’l Bank & Trust Co., 360 Pa. 103, 111-12, 61 A.2d 430, 435 (1948), overruled in part on other grounds, Commonwealth v. Caplan, 411 Pa. 563, 568 n. 4, 192 A.2d 894, 896 n. 4 (1963), I am unaware of any authority stating that the trial court must compel such disclosure; indeed, Appellants’ present efforts to *272view this information were not entirely successful, as the Commonwealth Court merely allowed redacted copies of certain of the utilities’ returns to be viewed by Appellants’ counsel only, and expressly prohibited Appellants themselves from having access to this data. See RR. 257a-58a. It thus appears that, even on post-deprivation review, the taxpayers were left with insufficient data to assess the accuracy of the Department’s derivation of the PURTA assessment ratio, which directly determined the size of their suptax obligation. As the Commonwealth Court stated in its initial opinion overruling the Department’s preliminary objections:
The Commonwealth avers that the utilities’ problems with any lack of information will be solved merely by first paying the tax as demanded and then filing for a refund.... Here, Petitioners cannot meet their burden of proof in the refund process because the documents, assumptions, determinations and calculations are in the exclusive control of [the Department]. Without such information a refund petition cannot be properly drafted and there would be no substantial evidence in the record to sustain an administrative appeal to the Board of Finance and Revenue or to this Court.
Safe Harbor Water Power Corp. v. Judge, 758 A.2d 259, 266 (Pa.Cmwlth.2000).6
Under these circumstances, I would conclude that the post-deprivation process fails scrutiny under the Due Process Clause pursuant to the principles announced in McKesson, and would, accordingly, require a full refund of the suptaxes paid pending settlement (or other reasonably structured) proceed*273ings at which Appellants can assess the accuracy of their tax obligations as reflected in the Department’s notices.

. In this regard, I do not concur with the Commonwealth Court's characterization of the suptax obligations as "self-assessing.” Safe Harbor Water Power Corp. v. Williams, 825 A.2d 733, 742 (Pa.Cmwlth. 2003). As discussed, the taxpayers lack the information necessary to compute the PURTA assessment ratio, and must rely upon the Department to supply that figure as part of the notice of tax due and payable. See RR. 41a.

. Although each utility company must calculate its tax liability premised upon its state taxable value, see 72 P.S. § 8102-A, and this value is statutorily defined as the cost minus depreciation as per books of any qualifying piece of realty, see 72 P.S. § 8101-A(4), the methodology is not insulated from controversy, as reflected in litigation surrounding the allowable manner of determining asset depreciation, see, e.g., PP&L v. Commonwealth, 828 A.2d 1181 (Pa.Cmwlth.2003); PECO Energy Co. v. Commonwealth, 828 A.2d 497 (Pa.Cmwlth.2003), exceptions overruled en banc, 848 A.2d 1099 (Pa.Cmwlth.2004), appeal pending, 73 MAP 2004, as well as, more generally, the question of whether a given parcel of realty is covered by this provision in the first instance. See, e.g., Commonwealth v. Philadelphia Elec. Co., 472 Pa. 530, 372 A.2d 815 (1977). Without access to the relevant calculations, moreover, there is no opportunity for a given utility to assess whether the accounting methods employed by other utility companies were applied correctly or the arithmetic computations involved were performed without error.

. Indeed, the Departmental notices do not even state the total size of the shortfall. Hence, the taxpayers are left without the ability, predeprivation, to assess whether the Department correctly calculated the PURTA assessment ratio based upon the shortfall and the cumulative state taxable value shown in the Section 1102-A(b) reports.

. PURTA was amended after the tax period in question to specify that the LTAs' Section 1106-A reports are public documents, notwithstanding Section 731 of the Fiscal Code. See 72 P.S. § 8106-A(c) (as amended by the Act of May 12, 1999, P.L. 26, No. 4, § 20). It appears that the utilities' PURTA returns, however, remain confidential. In the present case, they were not disclosed to Appellants during discovery, as discussed infra.

. Act of April 9, 1929, P.L. 343 (as amended, 72 P.S. §§ 1-1804).

. The Department maintains that the post-deprivation procedures provided by the Commonwealth comport with due process because Appellants have available administrative and judicial review, and during such review they are guaranteed the right to representation by counsel, oral and deposition testimony, affidavits and subpoenas, a written decision, and the like. See Brief for Appellees at 22-23. Absent access to the information necessary to test the accuracy of the amount of tax owed as stated by the Department, however, these facets of the post-deprivation process do not, by themselves, satisfy the McKesson standard as recited above.