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COMMONWEALTH PENNSYLVANIA v. KING CROWN CORPORATION AND KING CROWN CORPORATION (06/11/80)

decided: June 11, 1980.

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF REVENUE, BUREAU OF SALES AND USE TAX, APPELLANT
v.
KING CROWN CORPORATION AND KING CROWN CORPORATION, T/A MT. HAVEN COTTAGE AND RESTAURANT, INC., APPELLEES



Appeal from the Order of the Court of Common Pleas of Pike County in case of Commonwealth of Pennsylvania, Department of Revenue, Bureau of Sales and Use Tax v. King Crown Corporation and King Crown Corporation t/a Mt. Haven Cottage & Restaurant, Inc., Nos. J32 March Term, 1977, J33 March Term, 1977, J343 May Term, 1977, J360 September Term, 1977, J66 March Term, 1976 and J275 March Term, 1975.

COUNSEL

Walter T. Grabowski, Assistant Attorney General, for appellant.

Warren D. Utermahlen, Krawitz & Ridley, P.C., for appellees.

Judges Blatt, Craig and Williams, Jr., sitting as a panel of three. Opinion by Judge Craig.

Author: Craig

[ 52 Pa. Commw. Page 157]

The Department of Revenue, Bureau of Sales and Use Tax (the Commonwealth) appeals from the order of the Court of Common Pleas of Pike County, which granted the petition of King Crown Corporation (King) to strike and set aside all writs and execution process issued upon several assessments and liens against certain of King's property for sales and use tax liability. We will affirm in part but are of the opinion that a remand is necessary to conclude the matter.

King's petition to the court below requested relief from executions based on tax liabilities covered by a "compromise agreement." This agreement, alleged to be a "compromise settlement for all sales taxes assessed through [September 22, 1977]," was evidenced by a letter of that date, from an assistant attorney general of the Commonwealth which stated:

Per our discussions regarding the above referenced account, please be advised that the

[ 52 Pa. Commw. Page 158]

Commonwealth of Pennsylvania accepts your settlement proposal of $30,000.00 inclusive of interest for the payments of delinquent Sales Taxes.

Accordingly, based upon your 1972 income tax report and conversations with Mr. Edwards, I am satisfied that the assessment as originally made was in error and should be adjusted.

As you stated, the debt now is $30,000.00, payable over a 12 year period, at $200.00 per month. Note that payment of this account has no bearing on Sales Taxes presently being assessed and thus you must pay currently on both. Should you default in any way, this agreement will be revoked and new terms instituted.

Your checks should be made payable to the Commonwealth of Pennsylvania, sent to the address above and marked for Ms. Walsh's attention. Should you have any questions, use the number provided above.

I trust your business is successful and greatly appreciate your cooperation in this regard.

The Commonwealth's answer admitted that King had made monthly $200 payments as described in that letter, but denied that that letter constituted a valid compromise and settlement agreement with regard to any delinquent taxes, because it was not approved by the Chief, Commonwealth Collections Division, nor was it properly documented in the Commonwealth file. The Commonwealth argues that those omissions render the alleged agreement null and void, in view of the requirements of 37 Pa. Code §§ 131.11, 131.23, which regulations provide, respectively, that:

No compromise or writeoff of a claim due the Commonwealth may be approved unless there

[ 52 Pa. Commw. Page 159]

    appears in the file of the case documentation, in the form of memoranda or investigation reports, verifying or controverting some or all of the facts relevant to the claim. If no such documentation is present, the file shall contain a memorandum ...


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