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XEROX CORPORATION v. CITY PITTSBURGH (10/17/74)

decided: October 17, 1974.

XEROX CORPORATION, APPELLANT,
v.
CITY OF PITTSBURGH, APPELLEE



Appeal from the Order of the Court of Common Pleas of Allegheny County in case of In Re: Appeal of Xerox Corporation from City of Pittsburgh, a municipal corporation, No. SA 294 of 1973.

COUNSEL

Harry W. Miller, with him C. Leon Sherman and Royston, Robb, Leonard, Edgecombe, Miller & Urbanik, for appellant.

Grace S. Harris, Special Assistant City Solicitor, with her Ralph Lynch, Jr., City Solicitor, for appellee.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Blatt.

Author: Blatt

[ 15 Pa. Commw. Page 412]

This appeal primarily raises the question as to whether or not the appellant, Xerox Corporation (Xerox), must pay the City of Pittsburgh's "Business Privilege Tax" for the years 1971 and 1972 on receipts gained from the leasing of equipment to Pittsburgh customers. Xerox also failed to pay the tax on such revenues for 1969 and 1970, but the imposition of the tax for those years is not being challenged in this appeal.

In December of 1968, the City of Pittsburgh (City) enacted Ordinance No. 675 imposing a tax upon the privilege of operating or conducting business in the City. This ordinance, which became effective on February 1, 1969, required the tax to be paid annually and its amount to be determined by the volume of the taxpayer's gross annual receipts. The term "gross receipts" was defined in Section 2(f) of the ordinance as: "Cash, credits, property of any kind or nature, received in or allocable or attributable to the City of Pittsburgh from

[ 15 Pa. Commw. Page 413]

    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 the City of Pittsburgh, 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." Section 2(f) then enumerated five specific exclusions from "gross receipts," the fifth of which was: "Receipts or that portion thereof attributable to interstate or foreign commerce or to an office or place of business regularly maintained by the taxpayer, outside the limits of the City of Pittsburgh, and not for the purpose of evading payment of this tax and those receipts which the City is prohibited from taxing by law. Such receipts shall be segregated as set forth in Section 4(c) of this Ordinance." As to the authority of the City Treasurer to promulgate rules and regulations where a receipt in its entirety could not be subjected to the tax, Section 4(c) provided in part: "Where a receipt in its entirety cannot be subjected to the tax imposed by this ordinance by reason of the provisions of the Constitution of the United States, or any other provision of law, including the exemptions within this ordinance, the Treasurer 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 City of Pittsburgh shall be taxed hereunder. The Treasurer 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 City of Pittsburgh to the total property or assets of the taxpayer wherever owned and situated, or

[ 15 Pa. Commw. Page 414]

    any other method or methods of calculation other than the foregoing, calculated to effect a fair and proper allocation."

Allegedly pursuant to the authority herein granted, the City Treasurer established regulations in 1969, and Section 402(c)(2) of these regulations provided:

"Where the original situs of the property is outside Pittsburgh, the receipts from tangible personal property ...


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