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PEOPLES GAS SYSTEM v. COMMONWEALTH PENNSYLVANIA (01/18/74)

decided: January 18, 1974.

PEOPLES GAS SYSTEM, INC., APPELLANT,
v.
COMMONWEALTH OF PENNSYLVANIA, BOARD OF FINANCE AND REVENUE, APPELLEE



Appeals from the Orders of the Board of Finance and Revenue in case of Petitions of Peoples Gas System, Inc., Docket Nos. R-23166-8. Transferred from the Court of Common Pleas of Dauphin County to the Commonwealth Court of Pennsylvania, September 1, 1970.

COUNSEL

David H. Rosenbluth, with him Lane Taylor, Jr. and, of counsel, Stradley, Ronon, Stevens & Young, for appellant.

Eugene J. Anastasio, Deputy Attorney General, for appellant.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Mencer, Rogers and Blatt. Judge Wilkinson, Jr. did not participate. Opinion by Judge Kramer.

Author: Kramer

[ 11 Pa. Commw. Page 468]

This is an appeal by Peoples Gas System, Inc. (Peoples) from three orders of the Board of Finance and Revenue (Board) refusing Peoples' petitions for review of its corporate net income tax, corporation income tax, and foreign franchise tax for the year ending December 31, 1966.

Peoples contends that it is "doing business" within Pennsylvania, and therefore is subject to taxation under the Foreign Franchise Tax Act*fn* (FFTA), Act of June 1, 1889, P.L. 420, as amended, 72 P.S. § 1871(b) et seq., and the Corporate Net Income Tax Act*fn* (CNITA), Act of May 16, 1935, P.L. 208, as amended, 72 P.S. § 3420a et seq. If Peoples is subject to the CNITA tax, it is not subject to taxation under the Corporation Income Tax Law,*fn* Act of August 24, 1951, P.L. 1417, as amended, 72 P.S. § 3420n-1 et seq., nor would its shareholders be liable for county personal property taxes.

The Commonwealth contends that Peoples is not "doing business" within Pennsylvania so as to subject it to taxation under the FFTA and the CNITA. Concomitantly, the Commonwealth urges that Peoples' activities within Pennsylvania are sufficient to subject it to the Corporation Income Tax Law.

The parties have submitted a stipulation of facts which is accepted and made a part hereof by reference thereto. A summary of the pertinent facts follows:

[ 11 Pa. Commw. Page 469]

Peoples is a Florida corporation with general offices in North Miami. Peoples processes and supplies natural and artificial gas to residents of the Miami and Tampa areas of Florida.

Peoples has been qualified by the Commonwealth to do business in Pennsylvania since 1965. It does not render any public utility services in Pennsylvania. In 1965, Peoples rented office space in Philadelphia, pursuant to a written lease providing for an annual rental of $1,200. Peoples' name appears on the building directory in the lobby of the building in which it rents space. Since 1966, Peoples has been listed in both the white pages and yellow pages of the Philadelphia telephone directories; its annual reports have listed the Philadelphia office, and all annual shareholders' meetings have been held in Philadelphia.

One of four meetings of Peoples' Board of Directors held in 1966 took place in Philadelphia. Four of the five Executive Committee meetings ...


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