As of today, April 21, 2017, Pennsylvania’s 2017 Tax Amnesty Program has officially commenced. Those individuals with potential Pennsylvania tax liabilities should consider taking advantage of the program, which is slated to run through June 19, 2017. During those sixty (60) days, the Pennsylvania Department of Revenue will waive all penalties and half of the interest for anyone who participates. For more information, see our previous blog post here. Contact us to find out if amnesty is the right choice for you.
Categories: Corporate Tax, Franchise Tax, Income Tax, Pennsylvania, Sales and Use Tax, SALT, SALT Update, Uncategorized
Categories: Michigan, SALT, SALT Update, U.S. Supreme Court, Washington
Tags: retroactive, retroactive tax changes, retroactivity, U.S. Supreme Court
By Adam Koelsch
As previously reported on the SALT Blawg, Chamberlain Hrdlicka attorneys Stewart M. Weintraub and Adam M. Koelsch, together with Peter L. Faber of McDermott, of Will & Emery LLP, filed in the U.S. Supreme Court an amicus brief on behalf of the American College of Tax Counsel in support of the petitioners challenging a retroactive repeal of tax legislation by the state of Michigan. Although the petitioners and the amici had asserted various reasons for granting certiorari, the most prominent of those assertions was that the repeal, stretching seven years into the past, violates the Due Process Clause of the U.S. Constitution.
Subsequent to those submissions, the Supreme Court removed from its conference calendar the petition submitted in another pending retroactive tax legislation case from Washington state (Dot Foods, Inc. v. State of Washington), presumably to consider it jointly with the Michigan cases at a later date, and also ordered Michigan to submit a response to the petitions filed — moves widely seen as signaling that the Court is interested in addressing Due Process issue.
Michigan has since submitted its response, setting forth a novel basis for denying cert.: that the 2014 legislation challenged by the petitioners — which repealed retroactive to 2008 a statute authorizing a three-factor apportionment election that had existed since 1970 — was a “legislative clarification” of a 2008 Business Tax statute that had supposedly mandated single-factor apportionment for all prospective years, and was therefore not retroactive at all. Thus, according to Michigan, application of that principle of state statutory-construction law constitutes an adequate and independent state law ground to uphold the decision of the Michigan state court, thereby depriving the Supreme Court of jurisdiction to review the issue.
Not so, replied the petitioners. IBM and Skadden Arps submitted reply briefs on March 24 and 27, respectively. IBM’s brief challenged the assertion that the doctrine of “legislative clarification” in fact exists, and asserted that the any new law that applies to activities (or tax years) in the past is, by definition, retroactive. Skadden Arps, in its brief, added that the Michigan Court of Appeals had never mentioned the doctrine in its decision, while explicitly acknowledging the statute’s retroactive effect, and that, in any event, “the Supremacy Clause does not allow federal retroactivity doctrine to be supplanted by the invocation of a contrary approach to retroactivity under state law.” On March 28, a brief filed on behalf of Goodyear Tire, Deluxe Financial Services, and Monster Beverage reiterated the arguments of IBM and Skadden Arps.
The briefs for the Michigan petitioners and for the petitioners in Dot Foods will all be considered during the Court’s conference on April 13, and the Court’s decisions could be announced as early as April 17.
Categories: Colorado, Pennsylvania, Sales and Use Tax, Uncategorized
Tags: Colorado, notice, online retailer, Pennsylvania, pennsylvania legislature, remote sellers, reporting, sales and use tax
By Adam Koelsch
Just a few months after the U.S. Supreme Court declined to review the decision of the Tenth Circuit in Direct Mktg. Ass’n v. Brohl — which upheld Colorado’s sales tax notice and reporting requirements for out-of-state retailers — a Pennsylvania lawmaker has reintroduced a bill requiring online retailers to notify Pennsylvania purchasers when sales and use tax is due on their purchases.
In 2010, the Colorado legislature enacted a statute which requires a remote retailer that sells products to Colorado customers, but does not collect Colorado sales tax, to notify those customers that sales or use tax is due on certain purchases made from the retailer and that Colorado requires those customers to file sales or use tax returns. Colo. Rev. Stat. § 39-21-112 (3.5)(c)(I). Failure to provide that notice subjects the retailer to a penalty of five dollars ($5.00) for each such failure, unless the retailer shows reasonable cause for such failure. Colo. Rev. Stat. § 39-21-112 (3.5)(c)(II).
In addition, the statute requires that such retailers must send a notification to each Colorado customer by January 31 of each year showing, among other information, the total amount paid by the customer for Colorado purchases made from the retailer in the previous calendar year. Colo. Rev. Stat. § 39-21-112 (3.5)(d)(I)(A). Failure to send that notification subjects the retailer to a penalty of ten dollars ($10.00) for each such failure, unless the retailer shows reasonable cause for such failure. Colo. Rev. Stat. § 39-21-112 (3.5)(d)(III)(A).
The statute further requires that such retailers file an annual statement for each Colorado customer with the Department of Revenue showing the total amount paid for Colorado purchases by such customers during the preceding calendar year, to be filed on or before March 1 of each year. Colo. Rev. Stat. § 39-21-112 (3.5)(d)(II)(A). Failure to file that annual statement subjects the retailer to a penalty of ten dollars ($10.00) for each purchaser that should have been included in the statement, unless, again, the retailer shows reasonable cause for such failure. Colo. Rev. Stat. § 39-21-112 (3.5)(d)(III)(B).
The Data & Marketing Association (“DMA,” formerly the Direct Marketing Association), challenged the above Colorado notice and reporting requirements in federal court, claiming that those requirements violated the Interstate Commerce Clause of the U.S. Constitution by imposing burdens on out-of-state retailers that were not imposed upon in-state retailers. In 2011, a preliminary injunction was issued by the federal district court, which, in 2012, also concluded that the Colorado statute violated the Commerce Clause. In 2013, the Tenth Circuit dissolved the injunction and reversed the decision of the district court — holding that the district court did not have jurisdiction pursuant to the Tax Injunction Act — only to, in turn, have its decision reversed by the U.S. Supreme Court on March 3, 2015, in Direct Mktg. Ass’n v. Brohl, 135 S. Ct. 1124 (2015). On remand, the Tenth Circuit again reversed the district court, holding that the Colorado statute did not violate the Commerce Clause. On December 12, 2016, the U.S. Supreme Court denied DMA’s petition for a writ of certiorari.
Meanwhile, after the Tenth Circuit had dissolved the preliminary injunction in 2013, DMA had filed for, and had obtained, another injunction in Colorado state court.
But, on February 23, 2017, DMA and the State of Colorado settled the case, thereby dissolving the state court injunction and finally ending the litigation. As part of that settlement, the Department of Revenue agreed that the litigation involving DMA over the constitutionality of the statute had constituted reasonable cause for non-compliance with the statute, and that, therefore, the Department would not require compliance with the statute and its accompanying regulations before July 1, 2017, and that it would waive any penalties for failure to comply with the statute and the regulations before that date.
Subsequent to the U.S. Supreme Court’s refusal to review the Tenth Circuit’s decision, a number of states have introduced bills to create notice and reporting requirements similar to those of Colorado. In particular, in Pennsylvania, on February 17, 2017, Rep. W. Curits Thomas introduced H.B. 542 — a bill substantially similar to the one which he had introduced in 2015, only to have it die in committee when the legislative session adjourned.
H.B. 542 imposes more modest requirements than the Colorado statute. For instance, H.B. 542 does not require that annual notifications be sent to purchasers, or require that an annual statement be filed with the Pennsylvania Department of Revenue. Instead, the proposed statute requires that a seller or a remote seller “conspicuously provide” to a Pennsylvania purchaser, on each separate sale of tangible personal property or taxable services via an Internet website operated by that seller or remote seller, the following notice:
Unless you paid Pennsylvania sales tax on this purchase, you may owe a Pennsylvania use tax on this purchase based on the total sales price of the purchase in accordance with the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971. Visit http://www.revenue.state.pa.us for more information. If you owe a Pennsylvania use tax on this purchase, you must report and remit the tax on your Pennsylvania income tax form.
H.B. 542 § 279(a). The proposed statute provides no guidance regarding what constitutes a sufficiently “conspicuous” notice.
A failure by the seller to provide such notice will subject the seller to a fine of “not less than” five dollars ($5.00) for each such failure. H.B. 542 § 279(b). The proposed statute would be applicable only to transactions occurring more than sixty (60) days after its enactment.
In light of this proposed statute, and those like it introduced in other states, remote sellers should be alert to any newly imposed notice and reporting requirements in each of the states in which they sell their products.
The text of H.B. 542 is available here.
Categories: Corporate Tax, Franchise Tax, Income Tax, Pennsylvania, Sales and Use Tax, SALT Update
In less than two (2) months, Pennsylvania’s 2017 Tax Amnesty Program will commence. Those individuals with potential Pennsylvania tax liabilities should consider taking advantage of the program, which is slated to run from April 21, 2017 through June 19, 2017. During those sixty (60) days, the Pennsylvania Department of Revenue (“Department”) will waive all penalties and half of the interest for anyone who participates.
The program applies to delinquencies existing as of December 31, 2015 – whether or not the delinquency is known to the Department. The litany of taxes eligible for the program includes:
- Agriculture Cooperative Tax;
- Bank and Trust Company Shares Tax;
- Capital Stock or Foreign Franchise Tax;
- Cigarette Tax;
- Corporate Loans Tax;
- Electric Cooperative Tax;
- Employer Withholding Tax;
- Financial Institutions/Title Insurance Company Shares Tax;
- Fuel Use Tax;
- Gross Premiums Tax;
- Gross Receipts Tax;
- Hotel Occupancy Tax (including state administered 1% local Hotel Occupancy Tax for Philadelphia and Allegheny);
- Inheritance and Estate Tax;
- Liquid Fuels Tax;
- Malt Beverage Tax;
- Marine Underwriting Profits Tax;
- Motor Carriers Road Tax, for IFTA vehicles, PA portion only;
- Motor Vehicle Carriers Gross Receipts Tax;
- Mutual Thrift Institutions Tax;
- Oil Company Franchise Tax;
- Parimutuel Wagering and Admissions Tax;
- Personal Income Tax;
- Public Transportation Assistance (“PTA”);
- Public Utility Realty Tax;
- Realty Transfer Tax, including Local Realty Transfer Tax;
- Sales and Use Tax, including Local Sales and Use Tax for Philadelphia and Allegheny;
- Surplus Lines Tax;
- Unauthorized Insurance Tax; and
- Vehicle Rental Tax.
Notably, the 2017 Tax Amnesty Program does not include Unemployment Compensation (which is administered by the Department of Labor and Industry), nor does it include any tax administered by another state, local government, or the Federal government.
Pursuant to the program, the taxpayer is responsible for paying the principal tax due, plus one-half interest. The Department will, in turn, rescind any liens or other enforcement actions for that debt; waive all penalties associated with the debt; waive one-half interest; and waive any fees (ex. lien filing fees or collection agency fees).
Along with the payment for all taxes and one-half of the interest, all missing tax returns or reports must be filed no later than June 19, 2017. However, a taxpayer with unknown liabilities reported and paid pursuant to the Tax Amnesty Program is eligible for a limited look-back period whereby the taxpayer will not be liable for any taxes of the same type due prior to January 1, 2011.
Those taxpayers who are eligible for the 2017 Tax Amnesty Program, but do not participate will be subject to a five-percent (5%) non-participation penalty. Generally speaking, individuals, businesses and other entities with state tax delinquencies as of December 31, 2015 (whether known or unknown to the Department) are eligible to participate in the program. However, any taxpayer who participated in the Department’s 2010 Tax Amnesty Program is ineligible to participate in the 2017 program. Taxpayers who have entered into Voluntary Disclosure Agreements with the Department are likewise ineligible to participate. Nevertheless, taxpayers who have entered into deferred payment agreements with the Department are eligible for the 2017 Tax Amnesty Program. Notably, a taxpayer who applies for tax amnesty forfeits all future appeal rights for liabilities paid through the program.
Business taxpayers may request a statement of account that shows all liabilities by visiting e-TIDES at http://www.etides.state.pa.us. Individual taxpayers may review account information, including all liabilities, by visiting the Personal Income Tax e-Services Center at http://www.doreservices.state.pa.us. Please contact us if you need assistance in determining whether you qualify for the 2017 Tax Amnesty Program and whether participation in the program is the right choice for you.
U.S. Supreme Court Extends Time to File Petitions for Certiorari in Ohio Commercial Activity Tax CasePosted February 22, 2017 by Jennifer Weidler Karpchuk
Categories: Income Tax, Ohio, Sales and Use Tax, SALT Update, U.S. Supreme Court
By Order dated January 31, 2017, the United States Supreme Court granted Crutchfield Corporation (“Crutchfield”) an extension of time until April 16, 2017 to file a petition for certiorari for what could be a precedential decision if the Court decides to grant it. See Crutchfield Corp. v. Joseph W. Testa, Tax Commissioner of Ohio (U.S. Supreme Court Docket No. 16A774). During November 2016, the Ohio Supreme Court ruled for the State, upholding its commercial activity tax (“CAT”). See Crutchfield Corp. v. Joseph W. Testa, Tax Commissioner of Ohio, 2016 WL 6775765 (2016). The CAT is a gross receipts tax that replaced Ohio’s corporate income tax. Pursuant to the CAT, a company with more than $500,000 of Ohio sales has nexus with the state such that it is subject to the tax.
Crutchfield appealed from imposition of the CAT upon revenue it earned from sales of electronic products within Ohio. Crutchfield is based outside of Ohio, maintains no employees in Ohio, and maintains no facilities in Ohio. The sole business that Crutchfield conducts in Ohio is via the shipment of goods from outside the state to consumers within the state using the United States Postal Service or common-carrier delivery services. Crutchfield contested the issuance of CAT assessments contending that substantial nexus within a state is a necessary prerequisite to imposing the tax pursuant to the United States Constitution’s dormant Commerce Clause and that Crutchfield lacked substantial nexus with Ohio since it did not maintain a “physical presence” within the state.
Responding, the State advanced two (2) arguments. First, it argued that the Commerce Clause does not impose a physical presence requirement and, thus, the $500,000 sales-receipts threshold set forth by the statute satisfies the Commerce Clause’s requirement of substantial nexus. Second, the State argued that assuming arguendo the Commerce Clause does impose a physical presence standard, Crutchfield’s computerized connections with Ohio consumers involves the presence of tangible personal property in Ohio and the presence of that property on computers located in the state constitutes physical presence. The Ohio Supreme Court found in favor of the State based upon its first argument and therefore it did not address the State’s secondary argument.
At first glance, the Ohio Supreme Court’s decision stands in stark contradiction to the United States Supreme Court’s decision in Quill v. North Dakota, 504 U.S. 298 (1992), which held that for a state to subject a company to a use tax collection obligation, it must have a physical presence in the taxing state. However, the Ohio Supreme Court distinguished Quill in a number of ways. Primarily, the tax at issue in Quill was a sales and use tax, whereas the tax at issue in Crutchfield was a business privilege tax. The Ohio Supreme Court found that Quill’s holding does not apply to business privilege taxes. This is not the first time a court has drawn such a distinction. See Couchot v. State Lottery Comm., 659 N.E.2d 1225 (Ohio 1996) (“There is no indication in Quill that the Supreme Court will extend the physical-presence requirement to cases involving taxation measured by income derived from the state”); Capital One Bank v. Commr. of Revenue, 899 N.E.2d 76 (Mass. 2009) (declining to “expand the [United States Supreme] Court’s reasoning [in Quill] beyond its articulated boundaries” and upholding imposition of tax on out-of-state banks in relation to in-state servicing of credit cards based on the volume of business conducted and profits realized); MBNA Am. Bank, N.A. v. Indiana Dept. of State Revenue, 895 N.E.2d 140 (Ind. Tax 2008) (“Based on [Quill] and a thorough review of relevant case law, this Court finds that the Supreme Court has not extended the physical presence requirement beyond the realm of sales and use taxes”); KFC Corp. v. Iowa Dept. of Revenue, 792 N.W.2d 308 (Iowa 2010) (“We * * * doubt that the United States Supreme Court would extend the ‘physical presence’ rule outside the sales and use context of Quill ”).
The United States Supreme Court has not addressed the physical presence nexus standard issue since its landmark decision in Quill twenty-five (25) years ago. Many argue that the Supreme Court in Quill could not and did not anticipate the internet boom and, with it, the vastly different way that business would be conducted. Since then, the Court has denied certiorari for every case since Quill where nexus was at issue, e.g., Tax Com’r of State v. MBNA America Bank, N.A. 640 S.E.2d 226 (W. Va. 2006), cert. denied, 551 U.S. 1141 (2007); Capital One Bank v. Commissioner of Revenue, 9 N.E.2d 76 (Mass. 2009), cert. denied, 557 U.S. 919 (2009); Geoffrey, Inc. v. South Carolina Tax Com’n, 37 S.E.2d 13 (S.C. 1993), cert. denied, 510 U.S. 992 (1993); Lanco, Inc. v. Director, Div. of Taxation, 908 A.2d 176 (2006), cert. denied, 551 U.S. 1131 (2007); see also, Direct Marketing Ass’n v. Brohl, 135 S.Ct. 1124, 1134-1135 (2015) (Kennedy, J., concurring) (“The Internet has caused far-reaching systemic and structural changes in the economy, and, indeed, in many other societal dimensions. Although online businesses may not have a physical presence in some States, the Web has, in many ways, brought the average American closer to most major retailers. A connection to a shopper’s favorite store is a click away—regardless of how close or far the nearest storefront…Today buyers have almost instant access to most retailers via cell phones, tablets, and laptops. As a result, a business may be present in a State in a meaningful way without that presence being physical in the traditional sense of the term. Given these changes in technology and consumer sophistication, it is unwise to delay any longer a reconsideration of the Court’s holding in Quill.”). If the United States Supreme Court grants Crutchfield’s petition for certiorari, we might finally receive an answer to Quill’s application in the age of the internet.
Recent Developments Regarding the “Throw Out Rule” by the New Jersey Tax Court and the Multistate Tax CommissionPosted February 20, 2017 by SALT Blawg
Categories: Corporate Tax, New Jersey, SALT
Tags: apportionment, multistate taxation, new jersey, throwout rule
By Adam Koelsch
Recently, in Elan Pharm. v. Division of Taxation, the Tax Court of New Jersey issued a non-binding opinion that further limits the Division of Taxation’s enforcement of the controversial “throw out rule.”
Sometimes, when a multi-state taxpayer apportions its income, that taxpayer will source a receipt to a state in which the receipt is not subject to tax, either because the state has chosen not to tax it or because the state is not able to do so. One reason that a receipt may not be taxable, and a reason at issue in Elan Pharm., is P.L. 86-272 — a federal law that prohibits a state from taxing a business whose activities in that state are limited to the sale and/or the solicitation of sales of tangible personal property shipped from another state. This type of income sourcing creates “nowhere income,” that is, income that is not taxed by any jurisdiction.
In order to combat this, some states have employed a tactic known as a “throw out rule.” Under the rule, non-taxed receipts are ignored in calculating the state’s share of total receipts by subtracting the non-tax receipts from the apportionment denominator. As the Tax Court noted, “[b]y throwing out receipts from the denominator, the sales fraction always increases, causing the apportionment formula and the taxpayer’s resultant CBT [Corporation Business Tax] liability to New Jersey to increase.” The New Jersey throw out rule (former N.J. Stat. Ann. § 54:10A-6[B]), which was repealed by legislation in late 2008, continues to be enforced by the Division for the tax periods between January 1, 2002 and June 30, 2010.
Previously, in Whirlpool Properties, Inc. v. Director, Division of Taxation, 26 A.3d 446 (N.J. 2011), the New Jersey Supreme Court had held that, under the fair apportionment prong of the U.S. Supreme Court’s Complete Auto Transit test, application of the throw out rule to receipts sourced to states that simply choose not to impose a tax (as opposed to being unable constitutionally to impose a tax) is unconstitutional.
Recently, on February 7, 2017, the Multistate Tax Commission, in a staff comment regarding the operation of a proposed throw out rule in its Model Regulations, has suggested that the rule should apply only when a state cannot impose an income-based tax under the constitution or P.L. 86-272, and should not consider whether the state actually chooses to impose a tax.
In Elan Pharm., the taxpayer had filed income tax returns in six states, including New Jersey, for 2002. The taxpayer had received receipts from forty-four states in which it had claimed it was not taxable because the state lacked jurisdiction under P.L. 86-272. The taxpayer had property in thirty-nine states and payroll in forty-eight states. Nevertheless, the Division had included in the apportionment denominator only those receipts from the six states in which the taxpayer had filed, excluding the remainder of the receipts under the throw out rule.
The Tax Court, however, disagreed with the Division’s application of the rule. The Tax Court noted that several states in which the taxpayer conducted business (not just the six in which it had filed) had “throwback rules” — that is, a rule by which sales receipts are reassigned to the state from which goods are shipped when the purchaser’s state cannot impose an income or franchise under the constitution or P.L. 86-272. Thus, because certain receipts captured under the throwback rule could have been taxed by the shipping states, those receipts could not be excluded by application of the throw out rule by New Jersey.
In addition, the Court found that the presence of taxpayer’s property and/or payroll in many of the states from which excluded receipts had been sourced created sufficient nexus to render the receipts taxable in those states despite P.L. 86-272, and therefore could not be excluded using the throw out rule.
Despite its repeal, the throw out rule remains a subject of controversy which will continue to impact businesses operating in New Jersey. Indeed, understanding application of the rule is especially important to business entities that had never previously filed CBT returns in New Jersey — and therefore cannot benefit from the statute of limitations for the years that the rule was effective — because of their mistaken belief that their activities were insufficient to create nexus.
The New Jersey Tax Court opinion can be found here
PA Commonwealth Court Holds That A Sheriff’s Sale “Restarted” to Allow Completion of Sale Terms Is Subject to the Same Procedures as an Initial SalePosted February 8, 2017 by SALT Blawg
Categories: Pennsylvania, Philadelphia
Tags: MCTLA, sheriff's sale
In an unreported opinion, on February 6, 2017, the Commonwealth Court vacated an order of the Philadelphia Court of Common Pleas, which had granted the motion of a Sheriff’s sale purchaser to intervene and to extend time to complete payment of the Sheriff’s sale purchase price. The Commonwealth Court characterized the Purchaser’s motion as a “restart” of the Sheriff’s sale subject to the same detailed notice and hearing procedures as the initial sale.
In City of Philadelphia v. Singhal, No. 128 C.D. 2016, it was undisputed that the City of Philadelphia had properly served notice of the Sheriff’s sale upon the Owner by posting, and by certified mail at the property address and at the Owner’s registered mailing address in Philadelphia. Although the Municipal Claims and Tax Liens Act (“MCTLA”), which governs Sheriff’s sales in the City, requires that an owner register a notice of interest in the property with the City and update the mailing address shown on the notice (53 P.S. §7193.1), the Owner had failed to amend the notice to show that she was living in Maryland. As a result, the Owner was supposedly unaware that the property had been sold at Sheriff’s sale.
The Purchaser at the Sheriff’s sale had paid a down payment for the property, but had failed to pay the remaining amount within 30 days, causing the Sheriff to file a writ of return for the Purchaser’s failure to comply with the sale terms.
Meanwhile, the Owner had become aware of the Sheriff’s sale, had paid the remaining delinquent taxes, and had rented the property to a third-party tenant.
Thereafter, the Purchaser filed a motion to intervene and requested permission from the Court of Common Pleas to complete the terms of the sale. The court ordered the Purchaser to serve a notice of hearing on all interested parties, which included the Owner. Knowing that the Owner did not reside at the property, the Purchaser sent notice to the Owner only at the property, failing to send it to the Owner’s out-of-date registered address in Philadelphia. A hearing was held without the Owner, and the Purchaser’s motion was granted, allowing him to pay the balance of the purchase price. The Commonwealth Court noted that the lower court’s order had stated that there was “[n]o objection by the City,” which was troubling in light of the fact that the Owner had paid all of the taxes due before the hearing.
Eleven months later, the Owner filed a motion to vacate the order. The court denied the Owner’s motion without a hearing as “untimely and procedurally improper” under 53 P.S. § 7193.3, which requires any petition to set aside a Sheriff’s sale to be filed within three months after the acknowledgement of the Sheriff’s sale deed.
On review of that denial, the Commonwealth Court characterized the Purchaser’s motion as a “restart” of the Sheriff’s sale not expressly provided for in the MCTLA. In other words, the sale of the property had “included some improvisational aspects” beyond the relevant provisions of the governing law. The Court, however, reasoned that at least some of the requirements set forth in the MCTLA relating to a Sheriff’s sale in the first instance — particularly, the requirements of notice to the Owner by mailing of a rule to show cause, and an inquiry by the trial court into whether the facts underlying the petition for sale are true — are likewise applicable to a “restart” sale.
Therefore, the Purchaser was required to serve notice of his motion, just as the City had done with respect to the initial Sheriff’s sale, upon the Owner at her registered address in Philadelphia. This was despite the fact, as acknowledged by the Court, that the Owner would not have actually received the notice because she was living in Maryland. Nevertheless, the Purchaser had failed to comply with the statutory notice requirements.
Because there was no legal authority to make the sale, the grant of an equitable remedy, such as the grant of the Owner’s untimely motion to set aside a Sheriff’s sale, was permissible. Thus, according to the Commonwealth Court, the lower court had abused its discretion by summarily denying the motion, and thereby failing to inquire into whether the notice of motion was properly served and whether the delinquent property taxes were still outstanding.
While the Commonwealth Court highlighted what the Purchaser had done wrong in this case, it was not explicit about what the proper procedure would be for such a “restart” sale in the future. For instance, the Court said nothing about the whether the Purchaser was required to post his motion and notice at the property, which is a requirement applicable to the notice of any initial Sheriff’s sale, and which was apparently not done in this case. Whatever the proper procedure is, it requires, at minimum, a mailed notice to the registered address of the property owner, and an inquiry by the trial court as to whether the factual predicate for the sale (i.e., a tax delinquency) still exists.
The Commonwealth Court opinion is available here