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Chamber members' biz privilege tax remedy advancing in Senate
Goal is to stop double taxation on job creators The Senate Finance Committee recently advanced legislation (S.B. 601) supported by PA Chamber members that would prevent businesses from being assessed the Business Privilege Tax twice. The legislation would correct a December 2007 Pennsylvania Supreme Court ruling that determined that a local base of operations is not required for Pennsylvania's local governments to assess the Business Privilege Tax. The decision was a reversal of the court's previous position that a municipality cannot tax an entity that lacks a permanent base of operations within its borders. Prior rulings held that contractors that did not maintain a permanent office in the city were not subject to that city's Business Privilege Tax. However, in V.L. Rendina Inc. v. City of Harrisburg, the state Supreme Court ruled that the location of the Lancaster-based Rendina's job-site trailer for a major, long-term construction project represented commercial activity that relied on the privilege to do business afforded by the municipality. This decision could allow local jurisdictions that impose a Business Privilege Tax to have greater ability to tax companies that are doing business in their area, but are not located there. The most recent decision has created considerable confusion regarding the assessment of the BPT. The clarifying legislation, which would amend Pennsylvania's Local Tax Enabling Law, was introduced by Sen. Pat Browne, D-Lehigh/Monroe/Northampton, Republican chairman of the House Finance Committee. Senate Bill 601 would reverse the Rendina decision and specifically spell out when a municipality could tax a company performing work within its borders. The chamber's Tax Work Group had been working with lawmakers on the clarifying language. The legislation is a revenue-neutral fix, ensuring only that business is not assessed the tax twice. |
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