8 Pa. Commw. 468 | Pa. Commw. Ct. | 1978
Opinion by
It is entirely appropriate that we should introduce this opinion with the introduction used by Justice Pomeroy in his able opinion when this taxing ordinance was attacked in F. J. Busse Company, et al. v. Pittsburgh, 443 Pa. 349, 352, 279 A. 2d 14, 15 (1971).
“The City of Pittsburgh, as a municipal corporation and a city of the second class, acting under the authority of the Local Tax Enabling Act of December 31, 1965, P. L. 1257, as amended, 53 P.S. §6901 et seq. (Supp. 1971) (hereinafter The Act’ or The Enabling Act’) enacted Ordinance No. 675 of 1968, known as the Business Privilege Tax Ordinance, imposing a tax upon the privilege of engaging in business in the City of Pittsburgh. This tax is measured by the gross receipts of a business and is assessed at the rate of six mills per dollar of volume of gross annual receipts. The appellants, a group of domestic and foreign corporations engaged in the contracting and construction industry, filed a complaint in equity attacking the validity of the ordinance and seeking to have the City and its officials enjoined from collecting the tax. The chancellor found the tax ordinance to be valid and applicable to the appellants; after exceptions his decree was affirmed and made final by the court en bane. This appeal followed.
Appellants, a partnership of attorneys practicing in Pittsburgh, state the two narrow questions presented in this case as:
“1. Is a municipal levy of a gross receipts tax adopted under the authority of the Local Tax Enabling Act fatally defective as to persons engaging in an occupation as partners where the ordinance purports to levy and assess the tax on a partnership as a separate entity and does not levy and assess the tax on individual partners?
“2. May a municipality levy, assess and collect under the Local Tax Enabling Act a 6 mill gross re
Appellants have not directed our attention to any cases in Pennsylvania which declared a tax to be invalid because it was levied on a partnership. Indeed, in the cases relied upon by appellants, the partnerships in fact paid tax on that part of the subject of the tax which the court held taxable. Stated another way, in each instance the partnership taxpayer challenged only part of the tax. In Tax Review Board v. Belmont Laboratories Company, 392 Pa. 473, 474, 141 A. 2d 234, 235 (1958) : “The question involved may be thus stated: Does the Philadelphia ordinance validly assess a net profits tax upon a partnership whose sole office is in Philadelphia upon profits earned in a foreign corporation on goods manufactured and sold in a foreign country, when the residence and domicile of all members of the partnership is outside of Philadelphia? . . . The partnership’s sole office and place of business was and is at 4730 Market Street, Philadelphia. The partners paid the Philadelphia Wet Profits Tax on all Mason Ointment anid Mason Soap manufactured and sold in Philadelphia (and distributed throughout the United States).” In Tax Review Board v. D. H. Shapiro Company, 409 Pa. 253, 254, 185 A. 2d 529, 530 (1962) :
“D. H. Shapiro Company is a partnership engaged in the practice of public accounting, having its only office in the City of Philadelphia. . . .
“In filing net profits tax returns for the years in question, Shapiro excluded from its tax base the distrib
“The question presented for our determination is whether a partnership composed of residents and nonresidents of Philadelphia, having its sole office in Philadelphia and performing services both outside and inside Philadelphia, is subject to the Philadelphia Net Profits Tax on all of its profits, or whether the profits earned by nonresident partners for services performed outside Philadelphia are properly excludable from the partnership’s net profits for purposes of the tax.” Justice, later Chief Justice, Bell stated affirmatively in Belmont, supra:
“While that is the general rule, it does not follow that for purposes of taxation a partnership may not be taxed, or may not have a domicile for tax purposes, separate and distinct from that of the individuals who compose it. In other words, a partnership may be recognized as a legal entity for certain purposes. In Burnet v. Leininger, 285 U.S. 136, the Court held that Congress has power to tax a partnership as an entity, or to tax the partners individually. The Court said (page 142) : We find no reason to doubt the validity of the tax. The Congress, having the authority to tax the net income of partnerships, could impose the liability upon the partnership directly, as it did under the Revenue Act of 1917 (40 Stat. 300, 303), or upon the “individuals carrying on business in partnership,” as in the statutes here involved.’
“The modem trend of both the Courts and legislative bodies is to treat a partnership for certain purposes as an entity.” 392 Pa. at 479, 141 A. 2d at 237.
The second question raised by appellants was answered directly against their position by the Superior Court of Pennsylvania in Munnell Appeal, 219 Pa. Superior Ct. 525, 281 A. 2d 906 (1971), when a similar challenge was made to a similar ordinance of the City
Affirmed.
Judge Mencer dissents.