Appeal from the Order of the Court of Common Pleas of York County in case of Commonwealth of Pennsylvania Department of Revenue, Bureau of Corporation Taxes v. Gust A. Marros and Kathryn G. Marros, husband and wife v. West York Inn, Inc. and Joseph Morello, No. 79-S-2144.
Robert Patrick Coyne, Deputy Attorney General, with him Vincent J. Dopko, Deputy Attorney General, for petitioner.
W. Bruce Wallace, Stock and Leader, for respondents, Gust A. and Kathryn G. Marros.
Victor Dell'Alba, for respondent, Joseph Morello.
President Judge Crumlish and Judges Blatt and MacPhail, sitting as a panel of three. Opinion by Judge MacPhail.
[ 60 Pa. Commw. Page 265]
Before us in this appeal is the very narrow issue of whether purchasers of more than 51% of a corporation's assets who fail to secure a bulk sale clearance certificate as provided for in Section 1403 of The Fiscal Code (Code), Act of April 9, 1929, P.L. 343, as amended, 72 P.S. § 1403 may contest the accuracy of a corporate net income tax assessment made by the Department of Revenue (Department) against the corporation in a suit in assumpsit by the Department for the collection of the tax.
Factually, it appears from the pleadings that Mr. and Mrs. Marros (Marroses) purchased the real estate of West York Inn, Inc. on March 23, 1970. The real estate constituted more than 51% of the corporation's assets. At the time of the conveyance, corporate net income taxes due the Commonwealth of Pennsylvania for the year 1968 had been settled and taxes for the years 1969 and 1970 were owed by the corporation but not settled until 1974. On June 25, 1979, the Department filed a complaint against Marroses in the Court of Common Pleas of York County for the collection of the unpaid taxes. Marroses admit that they have not complied with Section 1403 of the Code and they do not contest the tax assessments for the years 1968 and 1969. With respect to the 1970 taxes, however, Marroses contend that the Department erred because it did not base its tax computation on the United States Corporation Income Tax Return filed by West York Inn, Inc.*fn1
[ 60 Pa. Commw. Page 266]
All of the recited facts appear in the complaint and answer containing new matter. The Department has filed preliminary objections to the answer and new matter raising the question of jurisdiction of the Court of Common Pleas of York County, the standing of the Marroses to attack the tax assessment and setting forth a demurrer. The trial court sustained the preliminary objection raising the subject matter jurisdiction of that court to determine the amount of tax due but overruled the Department's preliminary objections in all other respects. The trial court then stayed the proceedings until the Marroses "have been given a meaningful opportunity to contest the amount of taxes due." In its opinion in support of its order, the trial court held that the Department cannot seek to collect taxes against a third party without giving that party an opportunity to be heard on the amount due. To hold otherwise, the court maintained, would violate Marroses' constitutional right to due process of law.
This Court has allowed the Department's appeal from that interlocutory order on the basis of a certification from the trial court that its order involves a controlling question of law. 42 Pa. C.S. § 702(b); Pa. R.A.P. 1311(b).
Section 1403 of the Code specifically provides that where there is a "bulk sale" of a corporation's assets, the purchaser must require the seller to present a certificate from the Department showing that all State taxes have been paid to and including the date of transfer and that the failure of the purchaser to require such a certificate "shall render such purchaser liable to the Commonwealth for the unpaid taxes owing by the seller. . . ." Nothing in Section ...