Pennsylvania Act 1949-508 — FIRST CLASS SCHOOL DISTRICT BUSINESS TAX ACT

Act text

(Reenacted and amended May 10, 1951, P.L.265, No.45)

AN ACT

To provide revenue for school districts of the first class by imposing a tax on persons engaging in certain businesses, professions, occupations, trades, vocations and commercial activities therein; providing for its levy and collection; conferring and imposing powers and duties on the Board of Public Education, receiver of school taxes and school treasurer in such districts; and prescribing penalties.

TABLE OF CONTENTS

Section 1. Definitions.

Section 2. Authority to Levy and Collect Tax; Use of Tax.

Section 3. Imposition and Rate of Tax.

Section 4. Computation of Annual Receipts.

Section 5. Returns.

Section 6. Payment at the Time of Filing the Return.

Section 7. Powers and Duties of Collector; Board of Appeals.

Section 8. Suit on Collection; Penalty.

Section 9. Penalties.

Section 10. Employes; Compensation.

Section 11. Applicability and Related Matter (Repealed).

Section 12. Saving Clauses.

Section 13. Repeal.

The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1. Definitions.--The following words and phrases when used in this act shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning.

(1) "Person." Any individual, partnership, limited partnership, association or corporation. Whenever used in any clause prescribing or imposing a penalty, the term "person," as applied to associations, shall mean the partners or members thereof, and as applied to corporations, the officers thereof.

(2) "Business." Carrying on or exercising for gain or profit within a school district of the first class, any trade, business, including financial business as hereinafter defined, profession, vocation, or commercial activity, or making sales to persons within such school district of the first class. "Business" shall not include the following: Any business conducted by a non-profit corporation or association organized for religious, charitable, or educational purposes, the business of any political subdivision, or of any authority created and organized under and pursuant to any act of Assembly, the specific business conducted by any public utility operating under the laws, rules and regulations administered by the Pennsylvania Public Utility Commission of furnishing or supplying service or services at the fixed rates specified in its tariffs, the business of any insurance company, association or exchange, or any fraternal, benefit, or beneficial society of any other state under the laws of which insurance companies, associations or exchanges, or fraternal, benefit, or beneficial societies of this Commonwealth doing business in such other state are subjected, by reason of the tax imposed by this act, to additional or further taxes, fines, penalties or license fees by such other state, and any employment for a wage or salary.

(3) "Financial Business." The services and transactions of private banks and bankers, building and loan associations, savings and loan associations, credit unions, savings banks, banks, bank and trust companies, trust companies, investment companies registered as such with the Federal Securities and Exchange Commission, holding companies, dealers and brokers in money, credits, commercial paper, bonds, notes, securities and stocks, monetary metals, factors and commission merchants.

(4) "Tax Year." The twelve month period from January 1 to December 31.

(5) "Receipts." Cash, credits, property of any kind or nature, received in or allocable to a school district of the first class from any business or by reason of any sale made, including resales of goods, wares or merchandise taken by a dealer as a trade-in or as part payment for other goods, wares or merchandise or services rendered or commercial or business transaction had within a school district of the first class, without deduction therefrom on account of the cost of property sold, materials used, labor, service, or other cost, interest or discount paid, or any other expense. "Receipts" shall exclude (a) the amount of any allowance made for goods, wares or merchandise taken by a dealer as a trade-in or as part payment for other goods, wares and merchandise in the usual and ordinary course of his business; (b) in the case of a financial business, the cost of securities and other property sold, exchanged, paid at maturity, or redeemed, and moneys or credits received in repayment of advances, credits and loans, but not to exceed the principal amount of such advances, credits and loans, and shall also exclude, deposits, and in the case of building and loan or savings and loan associations, payments received on account of shares purchased by shareholders; (c) in the case of a broker, any commissions paid by him to another broker on account of a purchase or sales contract initiated, executed or cleared in conjunction with such other broker; (d) the receipts or the portion thereof attributable to any sale involving the bona fide delivery of goods, commodities, wares or merchandise of the taxpayer's own manufacture, growth or produce, to a location regularly maintained by the other party to the transaction outside the limits of such school district, and not for the purpose of evading or avoiding payment of the tax or any portion thereof imposed under this act; (e) receipts by dealers from sales to other dealers in the same line, where the dealer transfers title or possession at the same price for which he acquired the goods, wares or merchandise. For the purpose of determining taxable receipts from sales made by a manufacturing corporation of goods, commodities, wares and merchandise of its own manufacture through a wholly owned distributing corporation, such sales shall be treated as if made directly by the manufacturing corporation to the vendees of the distributing corporation. For the purpose of determining taxable receipts from sales made by a manufacturing corporation of goods, commodities, wares and merchandise of its own manufacture made through a distributing corporation, such sales shall be treated as if made directly by the manufacturing corporation to the vendees of the distributing corporation, if a majority of the shares of stock of both the manufacturing corporation and the distributing corporation is owned by the same individual, association or corporation. For the purpose of determining receipts from the business of insurance, such receipts shall mean those from premiums received from risks within the school district of the first class, whether by mutual or stock companies, domestic or foreign, without any deductions therefrom for any cost or expense whatsoever. The collector shall determine from such data as he shall require from insurance companies subject to this act, the amount of such receipts, and shall ascertain the amount of the tax in accordance with such determination; (f) dividends received by one corporation from another corporation of which it owns at least twenty (20) per centum of the voting power of all classes of stock and at least twenty (20) per centum of each class of non-voting stock; (g) receipts by a corporation which is a member of an affiliated group from other members of the same affiliated group. ((5) amended June 27, 1974, P.L.392, No.134)

(6) "Collector." The receiver of school taxes, or in a school district of the first class in which there is no such receiver of school taxes, the school treasurer.

(7) "Net Income." Net income shall be the income from any business activity as returned to and ascertained by the Federal Government.

(8) "Dividend." Any distribution made by a corporation to its shareholders in respect of its stock, whether ordinary, extraordinary or in liquidation. ((8) added June 27, 1974, P.L.392, No.134)

(9) "Affiliated group." One or more chains of corporations connected through stock ownership with a common parent corporation if (a) stock possessing at least eighty (80) per centum of the voting power of all classes of stock and at least eighty (80) per centum of each class of the non-voting stock of each such corporation (except the common parent corporation) is owned directly by one or more of the other such corporations; and (b) the common parent corporation owns directly stock possessing at least eighty (80) per centum of the voting power of all classes of stock and at least eighty (80) per centum of each class of the non-voting stock of at least one of the other such corporations. As used in this definition, "stock" does not include non-voting stock which is limited and preferred as to dividends. ((9) added June 27, 1974, P.L.392, No.134)

(1 amended Nov. 16, 1967, P.L.504, No.246)

Section 2. Authority to Levy and Collect Tax; Use of Tax.--For the year one thousand nine hundred fifty, and annually thereafter, every school district of the first class shall levy and collect an annual tax in the manner and at the rate hereinafter set forth: Provided, That in school districts of the first class coterminous with cities of the first class, for the year 1968, and annually thereafter, if authorized to do so by city council of the said city of the first class, every such school district of the first class coterminous with a city of the first class, shall levy and collect an annual tax in the manner and at the rates hereinafter set forth. Such tax shall be in addition to any other tax every such school district is empowered to levy and collect under any existing law. The taxes and penalties collected under the provisions of this act shall be used by every such school district for general public school purposes.

(2 amended Nov. 16, 1967, P.L.504, No.246)

Section 3. Imposition and Rate of Tax.--Every person engaging in any business in any school district of the first class shall pay an annual tax at the rate of one (1) mill on each dollar of the annual receipts thereof, and beginning with the tax year 1968, and annually thereafter, shall pay an annual tax at the rate of two (2) mills on each dollar of the annual receipts thereof: Provided, however, That the amount payable shall not exceed two (2) per centum of his net income.

Where a receipt in its entirety cannot be subjected to the tax imposed by this act by reason of the provisions of the Constitution of the United States, or any other provisions of law, the collector shall establish rules and regulations and methods of allocation and evaluation so that only that part of such receipt which is properly attributable and allocable to the doing of business in the school district levying the tax shall be taxed hereunder. The collector may make such allocation with due regard to the nature of the business concerned on the basis of mileage, division of the receipt according to the number of jurisdictions in which it may be taxed, the ratio of the value of the property or assets of the taxpayer owned and situated in the school district levying the tax to the total property or assets of the taxpayer wherever owned and situated, and any other method or methods of allocation other than the foregoing, calculated to effect a fair and proper allocation. Every person who ceases to carry on a business during any tax year shall be permitted to apportion his tax for such tax year on the basis of the number of months during which he did business.

(3 amended Nov. 16, 1967, P.L.504, No.246)

Section 4. Computation of Annual Receipts.--(a) Every person subject to the payment of the tax hereby imposed who has commenced his business at least one (1) full year prior to the beginning of any tax year shall compute his annual receipts upon the actual receipts received by him during the preceding calendar year.

(b) Every person subject to the payment of the tax hereby imposed who has commenced his business less than one (1) full year prior to the tax year one thousand nine hundred fifty for the tax year one thousand nine hundred fifty, or who has commenced his business subsequent to the beginning of any tax year for such tax year, shall compute his annual receipts upon the actual receipts received by him during the part of such tax year remaining, and on his actual receipts of his first full year for the first full tax year he engages in business, as the case may be. ((b) amended Feb. 10, 1956, 1955 P.L.1014, No.318)

(c) Every person subject to the payment of the tax hereby imposed who engages in a business, temporary, seasonal or itinerant by its nature, shall compute his annual receipts upon the actual receipts received by him during such license year.

(d) Any person who pays his tax based only on his gross receipts shall not be required to show on his return his net income. ((d) added Nov. 16, 1967, P.L.504, No.246)

Section 5. Returns.--(a) Every return shall be made upon a form furnished by the collector. Every person making a return shall certify the correctness thereof.

(b) Every person subject to the tax imposed by this act who has commenced his business at least one (1) full year prior to the beginning of any tax year shall, on or before May fifteenth, one thousand nine hundred fifty, and annually thereafter, file with the collector a return setting forth his name, his business and business address, and such other information as the collector may consider to be necessary.

(c) Every person subject to the tax imposed by this act who has commenced his business less than one (1) full year prior to the beginning of the tax year one thousand nine hundred fifty shall, on or before May fifteenth, one thousand nine hundred fifty, file with the collector a return setting forth his name, his business, business address, and such other information as may be necessary in arriving at the actual receipts received by him during his first month of business and the amount of the tax due.

(d) Every person subject to the tax imposed by this act who commences business subsequent to the beginning of any tax year for such tax year and for his first full tax year shall on or before January thirty-first of the succeeding tax year, file a return with the collector setting forth his name, his business and business address, and such information as the collector may consider to be necessary.

(e) Every person subject to the payment of the tax imposed by this act who engages in a business, temporary, seasonal or itinerant by its nature, shall, within seven (7) days from the day he completes such business, file a return with the collector setting forth his name, his business and business address, and such information as the collector may consider to be necessary.

(5 amended Nov. 16, 1967, P.L.504, No.246)

Section 6. Payment at the Time of Filing the Return.--The person making the return shall pay the amount of tax shown as due thereon to the collector.

(6 amended Nov. 16, 1967, P.L.504, No.246)

Section 7. Powers and Duties of Collector; Board of Appeals.(Hdg. amended July 14, 1961, P.L.657, No.338)--(a) It shall be the duty of the collector to collect and receive the taxes, fines and penalties imposed by this act, for payment over to the school treasurer. Where such school treasurer is not the collector as in the case of other school taxes collected, it shall also be his duty to keep a record showing the amount received by him from each person paying the tax and the date of such receipt.

(b) The collector is hereby charged with the 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. Any person aggrieved by any decision of the collector shall have the right of appeal to the court of common pleas, as in other cases: Provided, however, in cases exclusively involving compromise of taxes or abatement in whole or in part of penalties and interest, the taxpayer shall have the right by petition to request relief by the Board of Appeals to be established as hereinafter directed and constituted.

The Board of Public Education in each school district of the first class shall establish a Board of Appeals consisting of at least three (3) members of the board and such other person or persons as it shall designate. A majority of the members of the Board of Appeals may act upon any matter within its jurisdiction. There shall be no appeal from any decision of the Board of Appeals.

The Board of Appeals shall receive, consider and render decisions on petitions filed with it requesting either or both of--

(1) An abatement in whole or in part of penalties and interest.

(2) A compromise of the tax.

Petitions shall be filed by the taxpayer within sixty (60) days after the date of mailing of notice of assessment to the taxpayer, or his representative, in cases involving assessments made after the effective date of this act, and within six (6) months from the effective date of this act in cases involving taxes due after January 1, 1950, and prior to the effective date of this act. All such petitions shall be under oath and shall state the reasons supporting the request for relief. The petitioner shall have the right to be heard in person or by counsel, or both, before the Board of Appeals which shall hear the case within sixty (60) days of receipt of the petition. Decisions of the Board of Appeals shall be rendered within ninety (90) days after hearing and a copy thereof shall be promptly transmitted to the taxpayer or his representative. Upon the rendition of a decision by the Board of Appeals approving the request for compromise or for abatement of penalties and interest and upon payment by the taxpayer of the amount of tax in the manner stated in the decision of the Board of Appeals, the claim of the school district shall be marked paid upon the records of the Department of Collections and any judgment or lien of record which may exist with respect to such claim shall be marked satisfied by the school district. The cost of satisfying such judgment or lien shall be paid by the taxpayer unless otherwise ordered by the Board of Appeals.

The Board of Appeals shall have the power to prescribe, promulgate and enforce such rules and regulations as may be necessary to implement the administration of the provisions of this section.

((b) amended July 14, 1961, P.L.657, No.338)

(c) The collector is hereby authorized to examine the books, papers and records of any taxpayer or supposed taxpayer in order to verify the accuracy of any return made, or, if no return was made, to ascertain the tax imposed. Every such taxpayer or supposed taxpayer is hereby directed and required to give to the collector the means, facilities and opportunity for such examinations and investigations as are hereby authorized. The collector is hereby authorized to examine any person connected with any business concerning any receipts which were or should have been returned and to this end may compel the production of books, papers and records and the attendance of all persons before him, whether as parties or witnesses, whom he believes to have knowledge of such receipts.

(d) The powers conferred by this act upon the collector relating to the administration and enforcement of this act shall be in addition to, but not exclusive of, any other powers heretofore or hereafter conferred upon him.

Section 8. Suit on Collection; Penalty.--(a) It shall be the duty of the collector to sue for the recovery of all taxes due him, not paid when due. No suit shall be begun for unpaid taxes later than five (5) years after the date on which such taxes should have been paid. There shall be no limitation against the bringing of suit for taxes, including penalty and interest, due for years for which the taxpayer did not file any return, and there shall be no limitation against the bringing of suit for taxes, including penalty and interest, on taxable gross receipts which were not included by the taxpayer in his returns but which taxes were assessed against the taxpayer by the collector. The provisions of this subsection shall be retroactive to the tax year one thousand nine hundred fifty. ((a) amended June 19, 1961, P.L.471, No.237)

(b) If for any reason the tax is not paid when due in each year, interest at the rate of six per centum (6%) per annum on the amount of said tax and an additional penalty of one-half per centum (1/2%) of the amount of the unpaid tax for each month or fraction thereof during which the tax remains unpaid after said tax becomes due, shall be added and collected by the collector: Provided, That the maximum penalty added for non-payment of the tax shall be seven per centum (7%). Where suit is brought for the recovery of any such tax, the person shall be liable for and it shall be the duty of the collector to collect, in addition to the tax assessed against such person, the costs of such collection and the interest and penalties herein imposed.

(8 amended July 17, 1957, P.L.961, No.414)

Section 9. Penalties.--(a) Whoever wilfully makes any false or untrue statement on his return shall be guilty of a misdemeanor and, upon conviction thereof, shall be sentenced to pay a fine of not more than two thousand dollars ($2000), or to undergo imprisonment for not more than two (2) years, or both.

(b) Whoever wilfully fails or refuses to appear before the collector in person with his books, records or accounts for examination when required under the provisions of this act to do so, or who wilfully refuses to permit inspection of the books, records or accounts of any business in his custody or control when the right to make such inspection by the collector is requested, shall be guilty of a misdemeanor, and shall be sentenced to pay a fine of not more than five hundred dollars ($500), or to undergo imprisonment for not more than six (6) months, or both.

(c) Whoever wilfully fails or refuses to file a return required by this act shall be guilty of a misdemeanor and, upon conviction thereof, shall be sentenced to pay a fine of not more than one thousand dollars ($1000), or to undergo imprisonment for not more than one (1) year, or both.

Section 10. Employes; Compensation.--Upon the recommendation of the collector, the Board of Public Education shall appoint and fix the salaries of such assistants and employes as may be necessary to aid such collector in the proper administration of this act.

Section 11. Applicability and Related Matter.--(11 repealed May 10, 1951, P.L.265, No.45)

Section 12. Saving Clauses.--(a) The validity of any ordinance or part of any ordinance providing for or relating to the imposition, levy or collection of any tax for municipal purposes passed by the council of a city coextensive with a school district of the first class, and any amendments or supplements thereto, shall not be affected or impaired by anything contained in this act. ((a) amended Nov. 16, 1967, P.L.504, No.246)

(b) Nothing contained in this act shall be construed to empower any school district of the first class to levy and collect the taxes hereby imposed not within the taxing power of this Commonwealth under the Constitution of the United States.

(c) If the tax or any portion of the tax imposed upon any person or if any exception from the imposition of the tax or any portion of the tax imposed upon any person under the provisions of this act shall be held by any court of competent jurisdiction to be in violation of the Constitution of the United States or of the Commonwealth of Pennsylvania, the decision of the court shall not affect or impair the right to impose the taxes or the validity of taxes so excepted from imposition. It is the intent of the General Assembly that the taxes imposed or excepted, so held to be unconstitutional, were not to be imposed or excepted, but that the remainder of said taxes imposed hereunder were to be imposed and collected and the taxes so excepted were to be imposed.

Section 13. Repeal.--All acts or parts of acts inconsistent herewith are hereby repealed.