The opinion of the court was delivered by: Judge Leavitt
BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE JOHNNY J. BUTLER, Judge, HONORABLE JIM FLAHERTY, Senior Judge.
Pizzutti, Inc. petitions for review of an order of the Board of Finance and Revenue (Board) sustaining the Department of Revenue's (Department) assessment issued for the sales tax collected, but not remitted, by another corporation, Le Perroquet, Inc. The Board concluded that Pizzutti, Inc. could be held liable for these unpaid sales taxes because it was using the restaurant equipment of Le Perroquet, Inc. In this case, we consider whether Section 1403 of The Fiscal Code*fn1 authorizes a bulk sales assessment against a taxpayer using the assets of another corporate taxpayer that is delinquent in its taxes.
The facts of this matter are not in dispute, having been established by joint stipulation of the parties. "Le Perroquet" was a restaurant in Pittsburgh that did business from October 1, 2003, to April 14, 2005, and was operated by Le Perroquet, Inc. Alain Pizzutti was the sole shareholder and corporate officer of Le Perroquet, Inc. In early 2005, after a contentious divorce, Alain Pizzutti handed his ex-wife, Susan Pizzutti, the keys to the building where "Le Perroquet" was located and informed her that if she wanted to support their two children, she could operate the restaurant. Up to this point, Susan Pizzutti's involvement with the restaurant had been minimal. Susan Pizzutti tendered an offer to purchase Le Perroquet, Inc., but Alain Pizzutti did not respond. Shortly after Susan Pizzutti began to operate "Le Perroquet," she discovered that the restaurant owed approximately $240,000 to various creditors. The debts relevant to this case included Le Perroquet, Inc.'s debt of $18,000 in back rent; its debt of $40,000 to National City Bank, which had a security interest in all of Le Perroquet, Inc.'s assets; and its debt of $18,939.84 to the Commonwealth for sales tax that had been collected but not remitted.
On April 14, 2005, the Department revoked Le Perroquet, Inc.'s sales tax license. It also commenced an enforcement action against Le Perroquet, Inc., the pleading for which it served on Susan Pizzutti. "Le Perroquet" closed its doors.
On April 21, 2005, Susan Pizzutti incorporated Pizzutti, Inc. and obtained a sales tax license. Pizzutti, Inc. negotiated a lease with the owner of the building formerly occupied by "Le Perroquet" for a term from July 1, 2005, to December 31, 2006, "in its present 'AS IS, WHERE IS' condition." Lease Agreement, ¶1, Commonwealth Brief, Appendix A, Exhibit B. Pizzutti, Inc. then opened a restaurant called "Pizzutti's." Pizzutti, Inc. uses all the equipment, furniture, and other tangible assets owned by Le Perroquet, Inc., which, as noted, are encumbered by National City Bank's lien, which lien remains viable until March 4, 2012. Pizzutti, Inc. did not pay Le Perroquet, Inc. for the use of its equipment, and there has been no formalized transfer of the assets from Le Perroquet, Inc. to Pizzutti, Inc. Stipulation of Fact No. 16.
On April 25, 2006, the Department issued a bulk sale assessment against Pizzutti, Inc. for sales tax in the amount of $18,939.84, a penalty of $4,338.54 and interest of $1,951.49 for a total of $25,229.87. The assessment seeks to recover from Pizzutti, Inc. the sales tax collected, but not remitted, by Le Perroquet, Inc. for the period October 1, 2003, through December 31, 2004.
Pizzutti, Inc. filed a petition for review with the Board of Appeals, and the Board requested evidence that the assets of Le Perroquet, Inc. had not been transferred to Pizzutti, Inc. By affidavit from Susan Pizzutti, its sole shareholder and officer, Pizzutti, Inc. attested to the fact that there had been no transfer of assets from Le Perroquet, Inc. to Pizzutti, Inc. The Board concluded that this affidavit was inadequate and denied the petition. The Board of Finance and Revenue affirmed, concluding that Pizzutti, Inc.'s possession and use of the assets of Le Perroquet, Inc. constituted a transfer, thereby subjecting Pizzutti, Inc. to the bulk sale assessment for unpaid taxes of Le Perroquet, Inc. The present appeal followed.*fn2
Pizzutti, Inc. contends that the Board misconstrued the bulk sale provisions of Section 1403 of The Fiscal Code by concluding that mere "use" and "possession" of another corporation's assets is sufficient to impose bulk sale tax liability upon the user. It contends that Section 1403 imposes tax liability only on a "purchaser," which is defined to be "[a]ny person who acquires, for a consideration," tangible personal property. Section 201 of the Tax Reform Code of 1971, Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §7201 (emphasis added).*fn3 Because Pizzutti, Inc. is not a "purchaser" of Le Perroquet, Inc.'s assets, it argues that the Department lacks the statutory authority to hold it liable for the unpaid taxes of Le Perroquet, Inc.
In response, the Department contends that the General Assembly's use of the terms "sale" or "transfer" in Section 1403 means that a "transfer" is something other than a "sale" and does not require consideration. In support, it directs the Court to the dictionary definition of the verb "transfer," which states, in relevant part, as follows:
[T]o make over or negotiate the possession or control of (a right, title, or property) by a legal process usually for a consideration;. the conveyance of right, title, or interest in either real or personal property from one person to another by sale, gift, or other process.
WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 2427 (2002) (emphasis added). Accordingly, consideration is "usual," but it is not essential to a transfer. Indeed, a gift can effect a transfer. The Department argues that Le Perroquet, Inc. transferred, or gifted, its equipment to Pizzutti, Inc. The gift included, in the Department's view, a responsibility for the unpaid taxes of Le Perroquet, Inc.
We begin our analysis with a review of the applicable statutory law. The Department issued its assessment to Pizzutti, Inc. under Section 240 of the Tax ...