Appeal from the Order of the Court of Common Pleas of Philadelphia County in case of Bryon L. Clough v. Tax Review Board, No. 4258 May Term, 1973.
Harry D. Shargel, for appellant.
Stewart M. Weintraub, Assistant City Solicitor, with him James M. Penny, Jr., Assistant City Solicitor, and Sheldon L. Albert, City Solicitor, for appellee.
President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Crumlish, Jr. Dissenting Opinion by Judge Kramer.
[ 20 Pa. Commw. Page 466]
Byron L. Clough (Appellant) began working for the Philadelphia Defense Personnel Support Center, a federal agency, in May of 1956. Prior to that, he had worked for a federal agency in New York. While in New York, Appellant accumulated 571 hours of sick leave provided by the Sick Leave Act of 1951, 5 U.S.C. § 6301 et seq. From 1956 to August 1970, while employed in Philadelphia, he accumulated 1435 sick pay hours in addition to the earlier earned hours. In August 1970, Appellant was struck by a lightning bolt and went on disability retirement. From then until October 1971, Appellant received his regular salary rate, at which time his accumulated sick pay time expired.
The Philadelphia Department of Collections then assessed Appellant a deficiency for 1970 and 1971 for these payments. The 1971 assessment was paid, but the 1970 assessment was challenged in a petition for review filed with the Philadelphia Tax Review Board (Board). Following rejection by the Board, he appealed to the Philadelphia Court of Common Pleas for relief. It was there held that Appellant could not be assessed tax on sick pay which was not "earned" within the City and, therefore, sick leave pay accumulated for sick days which resulted from work in New York were non-taxable by the City of Philadelphia.
However, while the question of the 1970 tax was before the Board, Appellant made a claim for refund of the
[ 20 Pa. Commw. Page 467]
previously paid 1971 tax on the grounds that sick leave pay is not taxable, regardless of the situs where it is earned. The Commissioner of Revenue, the Board and the Court of Common Pleas denied that claim. We affirm.
The tax at issue is captioned "Wage and Net Profits Tax" by the Philadelphia Code §§ 19-1500 to 19-1504. It is imposed upon "all salaries, wages, commission, bonuses, incentive payments, fees and tips that may accrue or be received by an individual . . . for services rendered, but excluding : (a) periodical payments for sick or disability benefits and those commonly recognized as old age benefits." (Emphasis added.) Philadelphia Code § 19-1501(8)(a).
The Revenue Commissioner has also promulgated an interpretive regulation which tells us of the meaning of Section 19-1501(8)(a). That regulation Income Tax Regulations and Ordinances of Philadelphia § 104(a)(2) (Regulation) states:
"Periodical payments received by an individual under a sickness or disability plan are not taxable. Where, however, an employee shall receive the full amount of his regular salary from his employer, during a period of sickness or disability, by virtue of his contract of ...