Appeal from the Order of the Court of Common Pleas of Allegheny County in the case of Sgro Brothers Restaurant, Inc. v. The School District of the City of Pittsburgh, No. S.A. 1359 of 1979.
Robert J. Stefanko, Solicitor, with him, David H. Dille, Assistant Solicitor, for appellants.
Jerome M. Meyers, Meyers & Keyser, for appellee.
Judges Mencer, MacPhail and Palladino, sitting as a panel of three. Opinion by Judge Mencer.
[ 61 Pa. Commw. Page 237]
The School District of the City of Pittsburgh (District) and David L. Donahoe, its treasurer, have appealed from an order of the Court of Common Pleas of Allegheny County which sustained a challenge by Sgro Brothers Restaurant, Inc. (Sgro Brothers) to a wage tax assessment for the years 1968 through 1977. We affirm.
During the years in question, the District annually adopted tax levy resolutions imposing a wage tax on District residents, pursuant to the Act of August 24, 1961, P.L. 1135, as amended (Act), 24 P.S. §§ 588.1-588.12. These resolutions required that resident and nonresident employers withhold the 1-percent tax from all salaries, wages, commissions, and other compensation earned by resident employees. The monies withheld were then to be paid to the District. Sgro Brothers, a nonresident employer, did not withhold any money for payment to the District from any employee.
In 1979, after an audit of Sgro Brothers, the District made an "assessment" of the amount Sgro Brothers should have withheld from resident employees during the years 1968 through 1977. We presume that this assessment was made for the purpose
[ 61 Pa. Commw. Page 238]
of bringing suit under Section 6 of the Act, 24 P.S. § 588.6. The District then requested payment of $13,683.75, which represented the amount of the assessment plus interest and penalties. Sgro Brothers appealed the assessment to the Court of Common Pleas of Allegheny County, which sustained the appeal.*fn1
This is a case of first impression before our court. A careful reading of the Act, however, shows that the actions of the District were well beyond its authority.
The Act creates a rather narrow framework within which school districts of the first class A may impose a tax on salaries, wages, commissions, and other compensation earned by residents and on net profits earned from businesses, professions, and other activities carried on by residents. Section 2 of the Act, 24 P.S. § 588.2. Since Sgro Brothers is a nonresident, it is not directly subject to taxation under the Act.
Section 4 of the Act, 24 P.S. § 588.4, authorizes the District to impose a duty on nonresident employers to withhold taxes from resident employees who are subject to the tax. The District imposed this duty on Sgro Brothers and other nonresident employers by adopting the annual tax levy resolutions. Sgro Brothers breached this duty by failing to withhold the taxes. The controlling issue in this case is whether the ...