George D. Fish, Stephen Hrabrick and Jonathan A. Briskin, Appellants
Township of Lower Merion
Argued May 14, 2014
BEFORE: HONORABLE DAN PELLEGRINI, President Judge, HONORABLE BONNIE BRIGANCE LEADBETTER, Judge, HONORABLE RENé E COHN JUBELIRER, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE P. KEVIN BROBSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge. OPINION BY JUDGE BROBSON. DISSENTING OPINION BY PRESIDENT JUDGE PELLEGRINI. Judge Leadbetter joins in this dissenting opinion.
P. KEVIN BROBSON, Judge
Appellants George D. Fish (Fish), Stephen Hrabrick (Hrabrick), and Jonathan A. Briskin (Briskin) (collectively, Lessors) initiated this declaratory judgment action in the Court of Common Pleas of Montgomery County (trial court), challenging the Township of Lower Merion's (Township) imposition of its business privilege tax (BPT), calculated using gross receipts, on Lessors, who lease real property within the Township. On cross-motions for judgment on the pleadings, the trial court, in a September 24, 2013 Order, found in favor of the Township and against the Lessors. Because we conclude that the imposition of the BPT on Lessors' rental income ( i.e., their gross receipts from lease transactions) violates Section 301.1(f)(1) of the Local Tax Enabling Act (LTEA), we reverse the trial court's order in part.
Each of the Lessors owns and leases real property within the Township, thereby deriving rental income from those properties. The Township's BPT is set forth in Section 138-42 of the Township's Municipal Code (Code), which provides:
Every person engaging in a business, trade, occupation or profession in the Township shall pay an annual business privilege tax for the year beginning January 1, 1981, and for each tax year thereafter, at the rate of 1.5 mills on such person's gross receipts.
(Emphasis added.) In addition to payment of the BPT, the Code imposes an annual registration requirement and related fee:
Every person desiring to continue to engage in or hereafter to begin to engage in a business, trade, occupation or profession at an actual place of business
in the Township shall, on or before the 15th day of April of the tax year or prior to commencing business in such tax year, make application with the Collector for registration for each place of business in the Township, and if such person has no actual place of business within the Township, then one registration. Such registration shall be made by the completion of an application furnished by the Collector and the payment of a fee of $20 for each place of business. Each application for registration shall be signed by the applicant, if a natural person, and, in the case of an association or a partnership, by a member or partner thereof, and, in the case of a corporation, by an officer thereof, or by the authorized person of any other legal entity. The Collector shall, upon receipt of the completed registration form, issue a certificate of registration to such person which must be displayed in each place of business.
Section 138-41 of the Code (emphasis added).
The Code defines " business, trade, occupation or profession" as follows:
Any business, trade, occupation or profession in which there is offered any service or services to the general public or a limited number thereof, including but not limited to financial businesses and those enterprises engaged in by hotel operators; motel operators; office and/or residential apartment building operators; parking lot and garage operators; warehouse operators; lessors of tangible personal property; physicians and surgeons; osteopaths; podiatrists; chiropractors; veterinarians; optometrists; pharmacists; lawyers; dentists; engineers; architects; chemists; certified public accountants; public accountants; funeral directors; promoters; agents; brokers; manufacturers' representatives; advertising and public relations agencies; real estate brokers; insurance brokers and agents; cable television operators; operators of places of amusement providing either passive or active recreation; vending machine operators; barbershop operators and beauty shop operators; cleaning, pressing and dyeing establishment operators; laundry operators; shoe repair shop operators; tailors; upholsterers; electrical, plastering, bricklaying, carpentry, heating, ventilating, plumbing and painting contractors engaged in the class of heavy building or other construction of any kind or in the alteration, maintenance or repair thereof; and repairers of electrical, electronic and automotive machinery and equipment or other machinery and equipment and other wares and merchandise.
Section 138-40 of the Code (footnote omitted). " Gross receipts" is defined, in relevant part, as:
The gross amount of cash, credits or property of any kind or nature received in both cash and credit transactions allocable or attributable to the Township, whether derived from within or outside the Township, and regardless of the taxpayer's method of accounting, for services rendered (including labor and any materials employed in or becoming part of the service) or commercial or business transaction performed by any business, trade, occupation or profession.
As a first class township, the Township is authorized under the LTEA to levy, assess, and collect
taxes as they shall determine on persons, transactions, occupations, privileges, subjects and personal property within the limits of such political ...