On March 3, 2021, the Commonwealth Court in Mandler and Nuclear Imaging Systems, Inc. v. Commw., No. 483 F.R. 2014, overruled taxpayers’ exceptions to the Court’s decision affirming the denial of the taxpayers’ petition for refund of employer withholding taxes paid to the Pennsylvania Department of Revenue (the “Department”) in satisfaction of $180,000 in liens.  As part of a prior bankruptcy proceeding, a third-party purchaser had received approval to buy equipment from the taxpayers and had agreed to escrow the funds as payments to state taxing authorities.  The bankruptcy trustee, however, used the funds to pay other liabilities of the taxpayers.  Thus, the Department, which had filed proofs of claim for the taxes in the bankruptcy proceeding, was not paid and it thereafter filed liens against the taxpayers for the taxes owed.

As an initial matter, the Court held that the taxpayers had waived arguments asserting civil rights violations by the Department because they had failed to mention them in their original petition for review or Statement of Questions Involved and did not develop those arguments in their brief, and because they had not raised the arguments in their exceptions apart from “mere declarations without accompanying developed arguments, record citations, or legal authorities” in the supporting briefs.

The Court reaffirmed its holding in its prior opinion that the taxpayers had failed to satisfy their burden of proving their entitlement to refunds.  As Pennsylvania employers, the taxpayers were required under the Tax Code to withhold income taxes from their employees’ compensation and hold those funds in trust on behalf of the Commonwealth.  Trust fund taxes of that kind are not dischargeable in bankruptcy and therefore the bankruptcy proceeding did not relieve the taxpayers of their liabilities.  The taxpayers argued that the Department was barred from collecting the taxes because funds had been escrowed for the express purpose of paying the taxes and the Department failed to claim those funds during the bankruptcy proceedings.  But, although the third-party purchaser had agreed to escrow the funds to pay taxes, nothing in the bankruptcy proceeding specified that the funds were set aside for that purpose.  Moreover, the evidence showed the taxpayers knew that the escrowed funds did not satisfy their tax debt because only $66,215.19 was put into the account, and because documents filed during the bankruptcy proceeding showed that the taxpayers owed $300,000 in taxes to various states, including $180,000 to the Commonwealth.  Furthermore, there was no evidence the Department knew the funds existed, especially given that the Commonwealth was not a party to the bankruptcy settlement.

The Court also reaffirmed its holding in its prior opinion that the doctrine of laches did not bar the Department from collecting the taxes through the liens.  Laches, as applicable to a Commonwealth agency, has three requirements:  (1) the agency intentionally or negligently misrepresented a material fact; (2) the agency knew or had reason to know the other party would justifiably rely on the misrepresentation; and (3) the misrepresentation induced the other part to act to its detriment.  In their exceptions, the taxpayers relied on the decision of In re Estate of Leitham, 726 A.2d 1116 (Pa. Cmwlth. 1999) for the proposition that laches can preclude the Commonwealth from collecting past taxes due.  In response, the Court pointed to its decision nine years later in Borough of Braddock v. Sullivan Plumbing Inc., 654 A.2d 672 (Pa. Cmwlth 2008).  The Braddock court held that laches precluded a borough from collecting interest and penalties because those amounts resulted from the borough’s delay in attempting to collect the tax principal.  But the Braddock court also held that the borough could collect the tax principal because the borough’s delay did not change the fact that the taxpayer owed the tax.  Thus, in the current case, the Court held that the taxpayers had failed to establish laches from the Department’s failure to claim the funds during the bankruptcy because:  (1) the Department had not intentionally or negligently misrepresented any material fact that induced the taxpayers to act to their detriment; (2) the escrowed funds had not been set aside specifically for taxes and therefore the Department could not have necessarily claimed them; (3) the taxpayer’s conclusory statement that “there was prejudice” was insufficient to show it; and (4) the taxpayers, quite simply, owed the taxes.

Finally, the taxpayers claimed, for the first time in their exceptions, that the doctrine of collateral estoppel barred the Department from collecting the taxes.  Collateral estoppel requires, among other things, that “the issue decided in the prior adjudication was identical with the one presented in the later action,” and that “there was a final judgment on the merits.”  The taxpayers had not offered a specific argument on the issue in their exceptions.  But, in any event, the Court concluded that the Department was not estopped because the issues in the current case differed from the issues in the bankruptcy proceedings, and because there was no final judgment on the merits since the tax liens were not satisfied in the bankruptcy proceedings.

If you are considering bankruptcy and know that you have outstanding Pennsylvania tax issues, please contact one of our state and local tax attorneys – Adam Koelsch (717-237-5305), Sharon Paxton (717-237-5393) or Paul Morcom (717-237-5364) to ensure that all of your outstanding Pennsylvania tax issues are addressed properly.

The deadline for filing a real estate tax assessment appeal for the 2021 tax year is fast approaching in Allegheny County.  The deadline is March 31, 2021.  Property owners of hotels, restaurants, bars or any property type that has been affected by the government restrictions due to COVID 19 should be taking a close look at their assessed values for 2021 and possibly filing assessment appeals for the 2021 tax year.   Allegheny County is the only county out of the 67 counties in Pennsylvania whereby you appeal the assessed value when the assessed value is already effective.

If you have any questions about appealing your real property in Allegheny County, please contact Paul Morcom (717-237-5364).

On November 9, 2020, the Pennsylvania Department of Revenue issued guidance relating to telecommuting and related tax implications.  If an employee is working from home temporarily due to the COVID-19 pandemic, the Department does not consider that as a change to the sourcing of the employee’s compensation.  For non-residents who were working in Pennsylvania before the pandemic, their compensation would remain Pennsylvania-sourced income for all tax purposes, including PA-40 reporting, employer withholding and 3-factor business income apportionment purposes for S corporations, partnerships and individuals.  Conversely, for Pennsylvania residents who were working out-of-state before the pandemic, their compensation would remain sourced to the other state and they would still be able to claim a resident credit for tax paid to the other state on the compensation.  For a Pennsylvania employer with a non-resident employee temporarily working from home due to the COVID-19 pandemic in a state that does not have a reciprocity agreement with Pennsylvania, the Department advises that the employee’s compensation remains Pennsylvania sourced, and the employer is required to withhold on the compensation.  This guidance will be in effect until the earlier of June 30, 2021, or 90 days after the Proclamation of Disaster Emergency in Pennsylvania is lifted (“end date”).  As of that end date, the guidance is rescinded and all prior tax rules are applicable. (Telework During the COVID-19 Pandemic, PA Department of Revenue, 11/09/2020.)

The Pennsylvania State Tax Equalization Board (“STEB”) has released the Common Level Ratio (“CLR”) real estate valuation factors for 2019.  The common level ratio is the ratio of assessed value to market value used to value properties in a particular county for property tax purposes, and is used for purposes of appealing property tax assessments effective for tax year 2021.  Click here 2019 STEB Ratios (A7555681) to see the 2019 CLR list.  To determine if your property is currently over-assessed – take the properties current assessed value and divide it by the CLR listed for your county.  This will give you your property’s current implied fair market value.  If you know that your property’s current fair market value is for example $100,000 (based on a recent appraisal value) and the current implied fair market value is $200,000, then your property is over-assessed and an annual assessment appeal should be filed to lower your assessed value and consequently your real estate taxes.  If you have any questions regarding the CLR and how to determine if your property is over-assessed, please call Paul Morcom (717-237-5364) to discuss.

The Pennsylvania Department of Revenue has announced additional relief from tax enforcement and collection activities due to the COVID-19 pandemic.  A complete list of newly announced relief for taxpayers is available at https://www.revenue.pa.gov/Pages/Relief-For-Taxpayers.aspx.  Some of the highlights are summarized below.

Pause Payments for Existing Payment Plans

Taxpayers with existing installment payment agreements may request that payments be suspended without canceling the agreement by emailing a request to RA-RV-CEC-DPP@pa.gov. The department will not default any payment plans during this limited timeframe, even if new delinquencies or non-filed periods arise. However, interest will continue to accrue on any unpaid tax balances.

Flexible Terms for New Payment Plans

The Department will revise general payment plan guidelines to permit greater flexibility on payment amounts and the duration of installment payment agreements. Taxpayers will have the ability to request payment plans for outstanding liabilities without the Department imposing a lien. Also, the Department will not require financial disclosure documentation for payment plans that are under $12,000 and can be resolved within 12 months.

Collections and Enforcement Activities

Certain automatic enforcement actions will be temporarily reduced or suspended.  There will be a significant reduction in the number of tax liens filed by the Department and license inspections, revocations and citations will be limited.  In addition, no wage garnishment or bank attachment actions will be taken for new tax debts, and tax clearances and compliance checks will be conducted consistently with the more lenient debt collection/resolution approach.

Assessed Penalties

During this limited period, the Department will generally abate penalties provided that taxpayers have remitted all outstanding trust fund taxes that they have collected.

Desk Review and Field Audit

During this period, the Department, through its Bureau of Desk Review & Analysis and Bureau of Audits, will not initiate new desk reviews or field audits in most cases. There may be exceptions if it is deemed necessary to protect the Commonwealth’s interest in preserving the applicable statute of limitations or as it relates to refund claims..

The Bureau of Audits will continue to work with taxpayers to complete audit work that is in process through correspondence where possible and avoid in-person meetings until at least July 15, 2020. The Department of Revenue will continue to take the steps necessary to protect applicable statutes of limitations. In instances where statute expirations might be jeopardized during this period, taxpayers are encouraged to cooperate in extending such statutes and the Department will also be flexible with taxpayers in granting requests to provide more time.

Audit Penalty Abatement and Interest Relief

The Department will broaden existing audit penalty abatement parameters for audits that are completed during the remainder of 2020.  Additionally, to take into account the impact of halting field work, currently in-progress sales tax, fuels tax, and IFTA audits that are completed and assessed prior to December 31, 2020 will include up to 90 days of interest relief to address delays in fieldwork.

Sales Tax Prepayments

The PA Department of Revenue has announced that businesses that collect Pennsylvania sales tax will not have to make accelerated sales tax prepayments in April, May or June. Businesses that normally have a monthly prepayment requirement will not be charged penalties for missing the prepayment deadline during this three-month period.

Under this new scenario, the Department is asking businesses to simply remit the sales tax that they collected during the prior month. The due dates to remit sales tax will be April 20, May 20 and June 22, which follows the standard due dates for monthly filers who have no prepayment requirement.

Tax Impact of Employees Temporarily Working from Home

As reflected in Q&A’s available in its Online Customer Service Center, the Department of Revenue has indicated that, when making Corporate Net Income Tax and Sales Tax nexus determinations, it will not consider employees that are temporarily required to telework due to COVID-19.  That is, the presence of employees temporarily working at home in Pennsylvania due to the pandemic will not create nexus for businesses that otherwise do not have nexus with Pennsylvania.

The Department also provided information regarding the tax treatment of those employees temporarily working at home in other states.  If an employee who normally works from home in Pennsylvania and receives Pennsylvania-sourced compensation works from home in another state temporarily due to the COVID-19 pandemic, the Department will not consider that as a change to the sourcing of the employee’s compensation.  That is, according to the Department, the employee’s income would remain Pennsylvania-sourced income for all tax purposes, including PA-40 reporting, employer withholding tax and three-factor business income apportionment purposes for S corporations, partnerships and individuals.

In response to the COVID-19 coronavirus emergency, the City of Philadelphia Department of Revenue has issued the following:


The deadline to pay 2020 Real Estate Tax has been extended an additional 30 days.  The due date for 2020 Real Estate Tax is now April 30, 2020.

Additionally, the Department has extended the deadline to apply for an installment payment plan for 2020 Real Estate Tax.  All senior citizens over the age of 65, and eligible low-income homeowners can apply for this installment plan by April 30, 2020.  For more information about applying for a Real Estate Tax Installment Plan, please visit:  http://www.phila.gov/real-estate-relief.



The deadline for filing and paying BIRT and NPT has been extended to July 15, 2020 to coincide with the IRS extensions granted to businesses.  This extension policy includes estimated payments and requires no additional action from businesses.



The Wage Tax policy has not changed.   Schedules to withhold and remit the tax to the City remain the same.  The Department of Revenue published the following guidance to ensure employees that are no forced to work from home understand the Wage Tax standard:

The City of Philadelphia uses a “requirement of employment” standard that applies to all non-residents whose base of operation is the employer’s location within Philadelphia. Under this standard, a non-resident employee is not subject to the Wage Tax when the employer requires him or her to perform a job outside of Philadelphia (i.e. their home).  A non-resident who works from home for the sake of convenience is not exempt from the Wage Tax- even with his or her employer’s authorization.   On the other hand, if a Philadelphia employer requires a non-resident to perform duties outside the city, he or she is exempt from the Wage Tax for the days spent fulfilling that work.  Non-resident employees who mistakenly had Wage Tax withheld during the time they were required to perform their duties from home in 2020, will have the opportunity to file for a refund with a Wage Tax reconciliation form in 2021.  The City of Philadelphia requires an employer to withhold and remit Wage Tax for all its Philadelphia residents, regardless of where they perform their duties.



The payment and filing deadline for the 2019 School Income Tax (SIT) remains April 15, 2020.  Taxpayers who cannot meet this deadline should use an extension payment coupon to submit a payment equal to the previous year’s liability by April 15, 2020.  Taxpayers have until July 15, 2020 to file a return and pay any difference in tax owed.  Taxpayers who overpay in April should indicate on their 2019 SIT return how the Department of Revenue should apply their overpayment.  Payments received after July 15, 2010 will accrue interest and penalty from April 15, 2020.  A payment coupon was mailed to taxpayers along with their return.  Taxpayers who need a payment coupon should visit the Department’s efile/epay website, www.phila.gov/pay.



Businesses ordered to close beginning March 17, 2020 as a result of safety measures enacted by the Mayor of Philadelphia are not subject to the Use & Occupancy Tax while occupancy of their place of business is prohibited.  Businesses that are ordered to close by order of the Mayor beginning March 17, 2020, are not considered to “occupy” the space.  The due dates to pay the tax remain the same.  Businesses deemed essential, whether they choose to operate or not, are subject to Use & Occupancy Tax.  Businesses continuing operations, businesses that have employees on-site, or businesses that maintained employee occupancy to their place of business throughout the Mayor’s order, are also subject to Use & Occupancy Tax.  Landlords should file and remit the Use & Occupancy Tax collected from the tenants of the property still using their space for business purposes.

When filing, taxpayers should use “Line 3-Non-taxable Exempt Amount” of the filing form to indicate the portion of their property that was not occupied through the closure order.

Landlords who do not remit the tax, but have collected it through regular rent collection, must refund applicable portions of the tax to tenants.

Once the order to close non-essential businesses is lifted, all property legally available for business purposes, that has not been vacated, is subject to Use & Occupancy Tax.



The City of Philadelphia has enacted an emergency regulation (Special Regulation of the City of Philadelphia Department of Revenue and Law Department for Waiver of Interest and Penalties for Late Filing and Payment Due to COVID-19 emergency) to provide for the abatement of interest and penalties on real estate tax, business income and receipts tax (BIRT), net profits tax (NPT) and school income tax (SIT) paid by the extended deadlines provided by various emergency orders signed by the Mayor.  The regulation abates interest and penalties on the following:

  1. tax year 2020 real estate taxes paid no later than April 30, 2020;
  2. 2019 BIRT and 2019 NPT taxes, and 2020 estimated BIRT and NPT taxes filed and paid no later than July 15, 2020; and
  3. 2019 school income taxes where the taxpayer pays amount equal to the amount due for 2018 by April 15, 2020 and files a 2019 return and pays any balance due by July 15, 2020.


For any questions related to the City of Philadelphia Department of Revenue’s tax guidance in response to COVID-19, please contact Paul Morcom, Esquire at 717-237-5364 or Sharon Paxton, Esquire at 717-237-5393.

The Department of Revenue has announced that the stimulus checks, otherwise known as economic impact payments, being distributed by the Federal government are not subject to Pennsylvania personal income tax. Rather, the payments being distributed as part of the Federal economic stimulus legislation that was signed into law in March in response to the COVID-19 pandemic, will be considered a rebate that is non-taxable in Pennsylvania.

The Department has also clarified that the stimulus checks will not be considered as income for applicants of the Property Tax/Rent Rebate Program.  Further, the deadline for older adults and Pennsylvania residents with disabilities to apply for rebates on rent and property taxes paid in 2019 has been extended from June 30 to December 31, 2020.


The Department of Revenue’s offices and customer service call centers are currently closed as the commonwealth takes steps to help slow the spread of COVID-19 in Pennsylvania. As a result, the Department of Revenue is extending all business tax licenses and certifications that are set to expire until further communication is received from the department.

This extension applies to:

·     Sales, Use and Hotel Occupancy tax licenses

·     Public Transportation Assistance (PTA) Fund taxes and fees

·     Small Games of Chance Manufacturer Certificates

·     Sales Tax Exemption Certificates

·     If you need documentation of the sales tax exemption extension, please use the department’s Online Customer Service Center to submit a question. If your religious organization’s sales tax exemption certificate is due to expire on March 31, 2020, the Department of Revenue is issuing an extension letter. If documentation is needed, religious organizations are encouraged to contact their parent institutions to obtain the extension letter.

The Online Customer Service Center, available at https://revenue-pa.custhelp.com/, can be used to electronically submit a question to a department representative. The department representative will be able to respond through a secure, electronic process that is similar to receiving an email. Additionally, the Online Customer Service Center includes thousands of answers to common tax-related questions.

For more alerts from the Department of Revenue during the COVID-19 pandemic, check out the department’s COVID-19 information page.

Board of Finance and Revenue
Operations Under the Exigent Circumstances Created by the Public Health Emergency
March 26, 2020

In order to protect public health and in recognition of the Proclamation of Disaster Emergency issued by Governor Tom Wolf on March 6, 2020, and the national emergency that was declared by the President of the United States on March 13, 2020, the Commonwealth of Pennsylvania Board of Finance and Revenue (“Board”) hereby issues the following notice:

Effective immediately and until further notice:

  • Hearings. Any public hearings scheduled to be held in the Board of Finance and Revenue Courtroom, 1101 South Front Street, Suite 400, Harrisburg, PA 17104 or teleconferenced from the Allegheny Bar Association 322 Koppers Building, 436 Seventh Avenue, Pittsburgh, PA 15219, will be conducted telephonically pursuant to the attached schedule, pending further notice of the Board.
  • Oral Hearing Waiver. The petitioner may waive its right to an oral hearing and the Board will decide the appeal based on the submissions. The reconsideration process will be available to the parties.  Oral hearing waivers shall be submitted to bfr@patreasury.gov no later than 48 hours prior to the scheduled hearing.
  • Continuance Requests. Either party may request a continuance to a future hearing.
  • Hearing Reply Notice. To participate in a telephonic hearing, the petitioner must electronically submit the hearing reply to the Board via email bfr@patreasury.gov at least 10 days prior to the scheduled hearing. Telephonic hearings will be conducted according to the attached Board of Finance and Revenue Guidelines for Telephonic Hearings and the attached schedule. No adjustments will be made to the hearing schedule except for exigent circumstances.
  • Failure to Submit a Hearing Reply Notice. If the petitioner fails to timely submit a hearing reply notice, the Board will decide the appeal based on the submissions. Issuance of Orders may be delayed as a consequence of restricted workplace access.
  • Recording Hearings.  In order to assist the Board in maintaining a record of proceedings before it, telephonic hearings will be recorded.
  • Board Orders.  Every effort will be made to issue Board Orders electronically after the hearings. However, issuance of Orders may be delayed as a consequence of restricted workplace access.
  • Board Filings and Correspondence.  Board personnel are available to receive electronic filings of tax appeals, liquid fuels claims and other correspondence submitted to the Board via email to bfr@patreasury.gov.
  • Deadlines and Extensions. Appeals to the Board from the Board of Appeals will continue to be considered timely filed based on the:
    • United State Postmark or other commercial delivery service as approved by Board regulations; or
    • date an email is received (bfr@patreasury.gov); or
    • the Board’s timestamp on a facsimile transmission (717-783-4499); or
    • date of the hand-delivery (when the office is physically open).

Written requests by parties to accept late filed appeals due to disruptions caused by the public health emergency will be liberally granted.

Requests for deadline extensions for responsive pleadings due to disruptions caused by the public health emergency will also be liberally granted.

All such requests shall be in writing and clearly state the disruption causing the late filing or request for extension.

Jacqueline A. Cook, Chairman
Designee for Joe Torsella, State Treasurer

David R. Kraus, Member

Paul J. Gitnik, Member

Board of Finance and Revenue
Guidelines for Telephonic Hearings

  1. The Board of Finance and Revenue (“Board”) shall provide the parties with the call information including the date and time of the hearing and the toll-free call-in number and the access code. There will be a different call in number for the morning hearings and the afternoon hearings. It is the responsibility of the representatives to provide this information to their clients.
  2. All parties must call into the conference line indicated on the schedule for morning or afternoon sessions at least five minutes before the scheduled starting time of their assigned call in for the morning or afternoon session.
  3. All telephonic proceedings will be recorded. Such recordings shall be the official record and will be available to the public in accordance with Board policy.
  4. When the Board is ready to hear a particular petition, that petition will be called for a hearing.
  5. To maintain sound clarity, please place the call on mute until your petition is called for hearing.
  6. Each time a telephonic party speaks, the speaker should identify themselves. Parties shall refrain from speaking until called by a board member.
  7. When the Board informs the participants that the hearing is completed, the telephonic participant may disconnect, and the next petition will be called.
  8. If a party does not timely call and connect to the scheduled hearing, the hearing may proceed in their absence, and the Board may decide the appeal.
  9. Issuance of Orders may be delayed under these circumstances.

NOTICE: In the event parties experience connectivity issues when attempting to connect to the call, the party must notify the Board immediately by emailing to bfr@patreasury.com.

Board of Finance and Revenue
Time Schedule for April Hearings

  • April 7th 9 a.m. (Morning call in number: 1-888-251-2909 Access code: 8091742)
    • Corporation Tax
      • #101-102  Costco Wholesale Membership Inc. (1815877, 1815878) Michele Borens
      • #111 Energy Power Investment Company LLC (1905743) Roger Seminara
      • #128  Lancaster Buffet Inc. (1909928) William Spade
    • Personal Income Tax
      • #4 Simeon and Eleanor D Isayeff (1913026) Simeon Isayeff
      • #5 Robert and Shelley M Casciato (1913440) Simeon Isayeff
      • #23 Shawmak Associates (1819430) William Rosoff
  • April 7th 1 p.m. (Afternoon call in number: 1-888-808-6929 Access code: 6875209)
    • Miscellaneous Tax
      • #1 Fazliddin Kalanov (1910627) Douglas Roeder
      • #9 Jerome and Lori Marcus (1823979) Jerome Marcus
      • #10 Shandra S. Kisailus (1906737, 1906741) Samantha Wolfe
    • Sales Tax
      • #6 Vintage Garden Florist (1915953) Cindy Curtis
      • #29 Markop Inc. (1912612) Douglas Roeder
  • April 8th 9 a.m. (Morning call in number: 1-888-251-2909 Access code: 8091742)
    • Corporation Tax
      • #129-130 Ansaldo STS USA Inc. (1916129, 1916208) Charles Potter
    • Personal Income Tax
      • #21 Alfred A. Kuehn (1906995) Charles Potter
      • #24 Gary and Patti Pagenkopf (0813548) Charles Potter
      • #25 Jennifer L. Gordon (0822642) Charles Potter
      • #26 Richard Cray (0812900) Charles Potter


patreasury.gov/bfr | Board of Finance & Revenue | 717-787-2974 | Joe Torsella, State Treasurer