Appeal from the Order of the Court of Common Pleas of Allegheny County in case of Dorothy D. Tucker, t/a Lynn Dohoney v. City of Pittsburgh, a Municipal Corporation, and David L. Donahoe, Treasurer of the City of Pittsburgh, No. SA 480-79.
Grace S. Harris, Assistant City Solicitor, with her Mead J. Mulvihill, Jr., City Solicitor, for appellants.
Richard B. Tucker, III, for appellee.
President Judge Crumlish, Jr. and Judges Williams, Jr. and Doyle, sitting as a panel of three. Opinion by Judge Doyle.
[ 74 Pa. Commw. Page 291]
Before this Court is an appeal by the City of Pittsburgh from a decision and order of the Court of Common Pleas of Allegheny County which sustained an appeal by Dorothy D. Tucker, t/a Lynn Dohoney (Appellee), from a determination by the City that her activities as a commercial illustrator were taxable under the City's Business Privilege Tax. We reverse.
The facts in the instant matter are essentially undisputed. During calendar year 1977, Appellee was self-employed as a commercial illustrator. Some of her clients were obtained through the services of a commissioned agent and others were found through a brief affiliation with an art studio which, for a commission, exhibited her work and provided Appellee with the use of a lucidograph machine*fn1 and some supplies. Once a client was retained, Appellee would get a description of the type of illustration that was desired and a price for the project would be agreed on. Through the use of reference materials such as photographs of the subject of the illustration, Appellee would then produce a "rough" which was sent to the client for approval. The materials going into such a "rough" included paper, paint, pencils and/or ink. Appellee purchased approximately ninety per cent of her supplies. After the client indicated what, if any, changes were desired, Appellee would, using the "rough" as a reference, produce a final illustration. This generally involved the application of ink line work to illustration paper, the use of a lucidograph or photostat machine and coloring followed by the application
[ 74 Pa. Commw. Page 292]
of a coat of spray varnish for protection. The completed illustration was then delivered to the client for incorporation into whatever use was desired such as magazines, newspapers, billboards or annual reports.
On August 4, 1978, Appellee was audited by the City and assessed a Business Privilege Tax for the year 1978 based upon her gross receipts from 1977.*fn2 When she filed her tax return, however, Appellee claimed a manufacturing exemption as to all such receipts. Under Section 2(4) of The Local Tax Enabling Act, Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. § 6902(4), local taxing authorities are specifically denied the authority to levy a tax on "manufacturing" or acts or transactions related to the business thereof.*fn3 The Act, however, fails to define "manufacturing." The exemption claim was disallowed by the City and, following a Treasurer's Hearing which was held at Appellee's request, the disallowance was affirmed. Appellee then appealed to the common pleas court which, after a hearing, sustained her appeal on the grounds that
[o]ur consideration of the facts and the testimony in this case leads us to conclude that a profound change occurs in the composition and
[ 74 Pa. Commw. Page 293]
character of the materials utilized by the petitioner in producing the end result for which she is paid. We believe that a new, different and useful article emerges from the application of labor and skill of the ...