The Pennsylvania Board of Finance and Revenue recently released decisions in more than 350 cases heard in June and July. More than half the cases dealt with personal income tax, more than 130 dealt with sales and use tax, and nearly 50 cases dealt with corporate tax. What was remarkable about these decisions, apart from the sheer volume, was the number of decisions in which the Board of Finance and Revenue overturned decisions from the Board of Appeals on substantive matters apart from penalty abatements.
Over the past several years, the Board of Finance and Revenue earned a reputation for upholding Board of Appeals decisions on the grounds that the taxpayers failed to present sufficient evidence to justify reversal. That trend may be coming to an end. Many of the decisions dealt with nontaxable construction services or building machinery and equipment purchased on behalf of exempt taxpayers. Several of the sales and use tax cases dealt with software, with the Board granting refunds on software used out-of-state or to provide public utility services. The Board also granted relief in several realty transfer tax cases, finding the Board of Appeals had improperly assessed tax in situations where property was properly transferred with no or nominal consideration.
Not all taxpayers were successful. A case involving a major software company found that the taxpayer did not provide sufficient evidence to establish that the purchase of server-based software was accessed remotely outside Pennsylvania, although the Board still abated penalties in that case. Despite some losses, the number of cases in which taxpayers were successful is notable.
Argi O’Leary, Principal in Ryan’s Advocacy practice, commented, “Although it is too soon to predict whether this slate of decisions portends a shift in the Board of Finance and Revenue’s willingness to overturn the Board of Appeals, the sheer volume of taxpayer wins will go a long way in giving taxpayers hope of a fair opportunity to challenge Board decisions. It is critical in any appeals process that taxpayers trust they have the ability to challenge tax agency decisions before a fair and impartial tribunal.”
Ryan’s experts have extensive experience arguing cases at all levels of the Pennsylvania appeals process, including the Board of Finance and Revenue. If you have questions or concerns about your Pennsylvania taxes, reach out to one of the experts below today.
TECHNICAL INFORMATION CONTACTS:
Argi O’Leary
Principal
Ryan
212.871.3901
argi.oleary@ryan.com
Adam Rupp
Principal
Ryan
484.253.7000
adam.rupp@ryan.com
AUTHORS:
Mark L. Nachbar
Principal
Ryan
630.515.0477
mark.nachbar@ryan.com
Jonathan Geiger
Manager
Ryan
425.440.2333
jonathan.geiger@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.