Mission Funding Alpha v. Pennsylvania

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Appellee Mission Funding Alpha was a calendar-year taxpayer that conducted business in the Commonwealth of Pennsylvania during the year ending December 31, 2007, and subject to the Pennsylvania Foreign Franchise Tax. In this case, appellee’s annual tax report (the Report) was due to be filed on or before April 15, 2008. As of that date, appellee had timely remitted to the Pennsylvania Department of Revenue (the Department) quarterly estimated payments totaling $430,000 for its 2007 Tax Year liability. A credit overpayment was also carried forward for appellee’s 2007 Tax Year liability. Without first seeking an extension of time to file its Report after the due date of April 15, 2008, appellee filed it late, on September 19, 2008. The Department accepted appellee’s reported franchise tax liability and imposed a $913 late-filing penalty because appellee had not requested a filing extension and had not filed its Report by the due date of April 15, 2008. On September 16, 2011, appellee filed a petition for refund with the Board of Appeals, seeking a refund of the entire amount of its reported 2007 franchise tax liability ($66,344). The Board of Appeals dismissed the petition as untimely, stating it was filed more than three years after the payment date of April 15, 2008. Appellee then appealed to the Board of Finance and Revenue, arguing its refund petition was timely because the time to file a petition did not begin to run until its tax was defined or deemed paid, which did not occur until appellee filed its 2007 Report on September 19, 2008. The Board of Finance and Revenue affirmed the decision of the Board of Appeals, concluding although appellee paid $66,344 in franchise tax for 2007 on the due date of April 15, 2008, the refund petition was filed more than three years after that due date, and therefore was untimely. Appellee argued the applicable statute of limitations for a refund claim is three years from the date of payment of tax but a tax is not deemed “paid” until amounts are applied to a definite tax liability. The Pennsylvania Supreme Court held the Commonwealth Court erred in holding the three-year tax refund period specified in Section 3003.1(a) of the Tax Reform Code of 1971 (Tax Code), 72 P.S. 10003.1(a), began to run on the date the corporate taxpayer files its annual tax report. Appellee’s refund petition was not timely filed because the three-year tax refund period began to run on April 15, 2008, and expired prior to the September 16, 2011 filing date. View "Mission Funding Alpha v. Pennsylvania" on Justia Law