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LANECO v. COMMONWEALTH PENNSYLVANIA (01/28/87)

decided: January 28, 1987.

LANECO, INC., PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT



Appeal from the Order of the Board of Finance and Revenue in the case of In Re: Laneco, Incorporated, No. RST-6030.

COUNSEL

Norman A. Peil, Jr., for petitioner.

Paul S. Roeder, Deputy Attorney General, with him, LeRoy S. Zimmerman, Attorney General, for respondent.

Judges Doyle and Barry, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Barry.

Author: Barry

[ 103 Pa. Commw. Page 356]

Laneco, Inc., the petitioner, appeals from an order of the Board of Finance and Revenue which affirmed a decision of the Department of Revenue's Board of Appeals that petitioner owed $202,494.78 plus interest to the Commonwealth for use taxes.

The following relevant facts were stipulated: Petitioner is the owner of a number of supermarkets and combination retail food-discount stores in eastern Pennsylvania. As part of its advertising, petitioner has circulars printed in Ohio. These circulars are then distributed by (1) mailing them directly to petitioner's customers in Pennsylvania, (2) placing them in petitioner's own stores for the customers and (3) shipping them from Ohio to a number of newspapers in eastern Pennsylvania where the circulars are inserted by the newspapers' employees prior to regular delivery of the newspapers.

The Department of Revenue assessed petitioner $202,494.78 for use taxes plus interest for the period from January 1, 1979 through December 31, 1981. The Board of Appeals affirmed the assessment as did the Board of Finance and Revenue. This appeal followed.

Petitioner concedes that it owes $33,952.10 plus interest for the circulars that were placed in its own stores. No assessment was ever made on the circulars placed in the mail and addressed to petitioner's customers. The sole issue remaining is whether the use tax is due on those circulars distributed with the local newspapers in eastern Pennsylvania.

At the time in question, Section 204 of the Tax Reform Code of 1971, Act of March 4, 1971, P.L. 6, as amended, 72 P.S. ยง 7204, read as follows:

The tax imposed by Section 202 shall not be imposed upon

[ 103 Pa. Commw. Page 357]

(30) The sale at retail or use of periodicals and publications which are published at regular intervals not exceeding three months, and which are circulated among the general public and containing matters of general interest and reports of current events published for the purpose of disseminating information of a public ...


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