Lessors in Pennsylvania not Subject to Local Business Privilege Taxes
The LTEA is a long standing state law that gives certain cities, townships, boroughs and school districts across the state the right to impose a BPT if a “privilege” is exercised within the jurisdiction by the conduct of a business activity. A business activity is defined by Lower Merion as, “engaging in a business, trade, occupation or profession within the township.”
The court found that Section 301.1(f)(1) of the LTEA restricts any LTEA taxing jurisdiction’s right to “levy, assess, or collect any tax on leases or lease transactions.”
This finding applies to any LTEA taxing jurisdiction. Philadelphia is not governed by the LTEA, so this decision has no impact on that city’s BPT. Philadelphia’s BPT is authorized by the Commonwealth of Pennsylvania’s First Class City Business Tax Reform Act.
Please contact your WithumSmith+Brown State & Local Tax professional immediately if you have filed a BPT return which reported rental income to an LTEA jurisdiction in Pennsylvania. An amended 2010 return must be filed by October 15, 2014, or the ability to recoup that year’s BPT will be lost.
NEED MORE INFORMATION?
If you have any questions about this Tax Tip, please contact your WithumSmith+Brown professional, a member of WS+B’s National Tax Services Group or email us at [email protected].
David Springsteen, CPA, MBA
Practice Leader, Tax Services Group
609.520.1188
[email protected]
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