*1 Dеpart- it the ty tax in contested hereby ment of Corrections are sustained the determination of ment Revenue’s for filed of petition and the аmended review utility real- El, of Daniel and state value PECO’s by Lloyd James Marsh taxable George hereby ty- Jones dismissed. the exceptions present
Because the by questions and issues addressed same opinion, PECO’s this Court in our earlier overruled, opinion the exceptions are COMPANY, PECO ENERGY adoptеd as three-judge panel of the Petitioner banc. Court en COMMONWEALTH of ORDER Respondent. 2004, NOW, day May AND this 4th
Commonwealth Court petitioner’s exceptions the in the above- 3, Argued 2004. March The captioned matter are overruled. judgment directed to Chief Clerk is enter 4,May 2004. Pennsyl- favor of the Commonwealth
vania. by
Dissеnting opinion Judge joined by Judge LEADBETTER COHN. BY Judge Roberts, Dissenting OPINION Philadelphia, H. pe- William for LEADBETTER. titioner. DeLuca, Jr., Bart J. Harrisburg, for re- joined panel Although original
spondent. appeal, further con- opinion issued exceptions by filed the sideration of COLINS, BEFORE: President Judge, taxpayer and the Commonwealth’s SMITH-RIBNER, PELLEGRINI, Judge, me tо conclusion sponse have forced LEADBETTER, Judge, Judge, and that our decision was error. COHN, Judge. repeat background I will not here Judge OPINION BY President alrеady re- facts procedural COLINS. majority. question by counted The Petitioner, Energy Company here is whether PECO understated its Public exceptions filed to this Court’s State taxable value As Utility Tax for 1997 based. Realty and order was (Pa.Cmwlth. monwealth, majority, by noted PURTA1 defined as, utili- 2003), affirming “[t]he the Board of Finance аnd “state taxable value” reserves for petition ty realty, Revenue’s denial of for PECO’s depletion, as shown the books resettlement of its 1997 reаl- (PURTA), those Utility Realty P.L. Tax Act 6, Act of The Public amended, 4, 1971, Act of March P.L. as apply to the tax amendments §§ As 8101-A—8111-A. noted issue. majority, amended in 1999 PURTAwas *2 1100 objectives, any presumptive
acсount of a ...”2 It iety, equiva- is not disputed that the State taxable value de- lency tax and financial accounting between ” was, fact, clared in the. cost of its unacceptable.’ Energy would be utility realty as shown on its books of Commonwealth, 500 account, depletion and (Pa.Cmwlth.2003) Thor [quoting Power Depreciation reserves. depletion and re- Commissioner, 439 Tool U.S. Co. issue, only serves are not here in L.Ed.2d 542-43, 785 S.Ct. value, cost specifiсally whether cost for however, (1979)]. see, I fail to What purposes must be accounting applica- what of tax principle may or be writtеn down when some ex- financial conflicts with the ble here which traordinary impairs realty’s event val- accounting principles which undisputed ue. It is also that the write- Tool, Power the court relies. In Thor down taken on PECO’s books was re- of the Internal Rev- provision considered a quired in generally accordance with ac- allowed the enue Code which cepted accounting [GAAP], principles income based on comрutation of taxable genuine flected a decrease value3 and in accordance with records maintained was mandated PECO’s outsidе audi- if, Com- tors, approved by the PUC and the missioner, “clearly re- computations Federal such Regulatory Commission reasonably [FERC].4 flect Because he de- income.” that GAAP records did termined Thor’s disagree with majority’s income, clearly the Commis- reflect statement that accounting “financial in re- his discretion sioner did not abuse accounting objectives tax have different calculation. method of quiring a different purposes serve different .... [and diversity, Here, however, Department hence] ‘Given this even contrar- neither the 1101-A(4), § 2. Section period operating or сash e.A current operating flow combined with provides: 3. SFAS-121 projection or fore- or cash flow losses or a Recognition Impairment and Measurement of continuing losses as- cast that demonstrates entity long-lived 4. An shall review assets purpose for the sociated an asset used with intangibles and certain identifiable to be producing revenue. impairment held and used for whenever Stipulation Exhibit 15 of Facts. to changes events or circumstances indicate plainly val- These are related to the factors carrying may that the amount of an asset particularly utility’s property, ue of real not be recoverable. approach. using capitalization of income following examples 5. Thе are of events or to local are tied statute Since PURTAtaxes changes in circumstances indicate values, logical that a dimi- real estate tax it is recoverability carrying amount of may well decrease nution in the latter an asset should be assessed: notes, tax since the former. As the significant a. A decrease in the market question, amended PURTA has been value of an asset comput- provide value be to that State taxable significant change b. A in the extent or using upon which local the same factors an asset is used or a manner significant physical change properly in an asset tax values are based. significant legal c. A adverse out, correctly points 4. As the Commonwealth factors or in the business climate could approval regulatory agencies affect the value of are not bind- an asset or an adverse by regulator action or assessment ing ap- However these authorities. significantly d. An accumulation of costs provals legitimacy attest to the of the write- originally expected in excess of the amount down. acquire to or construct an asset
HOI short, may be majority points any provision of while the nor the to Assembly may any Tax correct General part nor other of our (and au- had reason constitutional Code, may “trump” the have be said to *3 Indeed, thority) to mandate that PURTA State taxpayers recordkeeping. GAAP some account- instance, taxable value be based PURTA bases GAAP, I am ing method other than its definition on values shown According- that it has done so. convinced Thus, does company’s boоks. from the respectfully I must dissent ly, over prevails not contend excep- taxpayer’s to overrule the decision incorporates tiоns. GAAP, since that is the manner which keeps its financial records. joins dissenting Judge COHN this support In notion that the opinion. compute
factor used to state PURTA’s cost, may only taxable value be First, majority suggests bases. two plain meaning
that “the of cost is A.2d at 501. Energy,
cost.” PECO if
This is so ignores one PURTA’s by the
qualifying language, “as shown of public utility.”
books of account a See interpreting Section a stat- Ryals Jean RYALS and Jesse ute, give provi- we must effect to all its and this the to do. sions has failed OF PHILADELPHIA CITY Next, that, “the Gen- posits Depart monwealth Assembly contemplat- eral could not have Transportation, ment of SEPTA one-time, a extraordinary reduction utility realty deregu- the value of based City Philadelphia. Appeal of aspect (i.e., one genera- lation of electric tion) type permit- or one of utility because Commonwealth Court of ting utility such a reduction type to one shouldering would result other utilities Argued Nov.
greater portion gross amount of real 7, 2004. estatе taxes the local authori- imposed prop- could have ties on the real
erty.” Id. at 501-02. It does not seem in- unlikely legislature
all to me that the
tended, where sea the law has
significantly diminished the value of assets type utility, one to reallocate
held share of the to those
greater tax burden for a property
utilities whose now accounts the total val-
greater proportional share of events, I
ue. At all do not believe would that we
such an intent be so absurd it to legislature.
cannot attribute