449 Pa. 481 | Pa. | 1972
Lead Opinion
Opinion by
Cities Service Oil Company, doing business in the City of Pittsburgh, operated a retail service station at Coltart and Bates Streets and maintained a business office at 32 East Carson Street.
The Commonwealth Court held that Cities Service was not subject to the mercantile taxes on its Carson Street business office and that, even if Cities Service was subject to the taxes, the deficiency assessments were barred by the legislation’s statute of limitations.
Review was sought by the City and the School District on whether the tax assessment on the Carson Street business office was improper and by Cities Service on whether the lower court judge properly exercised his equitable powers in awarding interest from the date of appeal and demand on August 29, 1957. We granted review only to determine the date from which interest should be computed when a taxpayer has paid an improper mercantile tax assessment and subsequently made demand for a refund.
If a taxpayer is entitled to a tax refund, he is also entitled to interest on the refund so long as no statute or public policy militates against it. Philadelphia & Reading Coal & Iron Company v. Tamaqua, Borough School District, 304 Pa. 489, 496, 156 Atl. 75, 77 (1931). The Commonwealth Court, in determining the date from which to compute the interest due Cities Service, stated, . . before interest will accrue there must be an improper detention by the taxing authority; and the taxpayer must make a demand for refund. Girard Trust Company v. City and County of Philadelphia, 359 Pa. 319, 59 A. 2d 124 (1948). However, the taxing authority’s detention of the taxpayer’s money is not improper until there has been a decision to this effect.” 2 Pa. Commonwealth Ct. at 571, 280 A. 2d at 465.
We agree that there must be an improper detention and that the taxpayer must make a demand for refund. We disagree that in all cases improper detention commences from the date of a decision to that effect. Rather, we believe that a court can decide that a taxing body has improperly detained the taxpayer’s money from a point in time prior to the determination that the detention is improper. As argued by Judge Kramer
Neither Koolvent Aluminum Awning Company of Pittsburgh v. Pittsburgh, 192 Pa. Superior Ct. 650, 162 A. 2d 256 (1960), nor Girard Trust Company v. Philadelphia, 359 Pa. 319, 59 A. 2d 124 (1948), require a contrary rule. In Koolvent the taxpayer sued for interest from the date the lower court rendered a judgment against the School District of Pittsburgh for a refund of mercantile taxes. The Superior Court granted what the taxpayer asked for and was not asked to decide if the taxpayer could receive interest from the date the tax was paid and demand for refund made. Moreover, the Superior Court in Koolvent distinguished those cases where the lower court determines the amount of refund from those cases where the amount of refund
Here the taxpayer has asked that interest be computed from the date of payment and demand for refund. Courts in charging and allowing interest need not limit themselves by hard and fast rules but should charge and allow interest in accordance with principles of equity. McDermott v. McDermott, 130 Pa. Superior Ct. 127, 196 Atl. 889 (1938). That the taxpayer’s money was improperly detained and demand for refund made should be sufficient to justify a court’s exercise of its equity powers. Here, however, the taxpayer paid the taxes promptly once they were assessed; inflation has deteriorated the value of the dollar that was improperly detained by the City and School District; and the City and School Districts, never having any right to the money, were able to borrow less or invest the money. Since the City and School District benefited from the use of the taxpayer’s money, it is only fair that the taxpayer receive simple interest for the period the money was improperly detained.
Moreover, if taxing authorities are authorized to collect combined interest and penalties on back taxes to their original due dates (at a rate greater than the simple interest sought here on a refund), we see no hardship in requiring them to pay simple interest on amounts improperly detained from the date of payment
The Commonwealth Court also suggested that the record’s silence as to the reason for a twelve-year delay between the filing of the appeal and formal demand for a refund, August 29, 1957, and the date of the lower court’s decision, November 17, 1970, also justified limiting interest from the date of the lower court’s decision. 2 Pa. Commonwealth Ct. at 572, 280 A. 2d at 465-66. Once it has been determined that the tax was improperly collected, the delay becomes irrelevant since the taxing authority had been put on notice by the taxpayer’s timely demand for a refund. The record fails to show that as to the interest the City and School District were sufficiently prejudiced by the delay. If concerned about the delay, the City and School District could have requested a hearing prior to 1970.
We reverse the Commonwealth Court’s order as to the date from which the interest is to.be computed and affirm the lower court’s allowance of simple interest from August 29, 1957.
Mr. Justice Manderino took no part in the consideration or decision of this case.
Pursuant to the Act of 1947, June 20, P. L. 745, 24 P.S. §582.1, and City of Pittsburgh Ordinance 509, approved December 15, 1948, imposing mercantile license taxes, Cities Service filed returns for 1949, 1950, 1951 and 1952 (all prior to March 15, 1952) and paid mercantile taxes on its sales at the retail service station.
The Act of 1947, June 20, P. L. 745, 24 P.S. §582.8 (b), provides in part: “Section 8(b). The collector is hereby charged with the administration and enforcement of the provisions of this act, and is hereby empowered to prescribe, adopt, promulgate and enforce rules and regulations relating to any matter pertaining to the administration and enforcement of this act, including provisions for the re-examination and correction of returns, and payments alleged or found to be incorrect, or as to which an overpayment is claimed, or found to have occurred. No assessment may be made more than five years after the date on which such taxes should have been paid, except where a fraudulent return or no return has been filed. Any person aggrieved by any decision of the collector shall have the right of appeal to the County Court of Allegheny County.” Ordinance No. 465, approved November 27, 1956, under which the city taxes were levied, contains an identical limitation for deficiency assessments.
Dissenting Opinion
Dissenting Opinion
The Allegheny Court of Common Pleas awarded appellant repayment of improperly assessed and collected mercantile taxes along with simple interest from the time the appeal and demand for refund was filed on August 29, 1957. On appeal the Commonwealth Court modified that order, granting interest to appellant only from the date of the court’s decision—November 17, 1970. I would affirm the Commonwealth Court.
Clearly there is a presumption of validity of a tax assessment, and the burden is on the taxpayer to establish that the assessment is invalid. Hammermill Paper
Moreover, in this case there is an equally compelling reason for the result reached by the Commonwealth Court denying interest from the date of appellant’s payment under protest in 1957. For reasons not apparent from the record, appellant, as the moving party, delayed for 13 years—an incredibly undue delay—in diligently pursuing its remedy in the courts. Nor has appellant attempted to justify such delay. Consequently, no reason has been advanced—and certainly none exists—for using general tax revenues to pay interest on a tax claim which appellant has permitted to languish in the courts for more than a dozen years.
The decision of the Commonwealth Court awarding interest only from November 17, 1970—the date of the Allegheny Court or Common Pleas’ entry of judgment —is fully supported in law and reason and should be affirmed.
I dissent.