Questions Raised Over City of Philadelphia’s Continued Use of Ratio for Real Estate Tax Assessments

  by Stewart Weintraub and Jennifer Weidler

Each year the Pennsylvania State Tax Equalization Board (“STEB”) calculates and publishes the common level ratio (“CLR”) for each county in the state.  The Pennsylvania General County Assessment Law provides that there cannot be more than a 15% differential between the STEB CLR and the county’s Established Predetermined Ratio (“EPR”). 72 P.S. § 5020-511(c).  For decades the STEB CLR for Philadelphia County fell slightly below, but within 15% of the county’s EPR of 32%.  This year marked a drastic change for Philadelphia.  For tax year 2012, the STEB CLR fell to 18.1%, a differential significantly greater than 15%.

Since the STEB CLR and the EPR differ my more than 15%, questions have been raised concerning how the City Philadelphia (“City”) will address the issue.  Recently, inquiries were made regarding the City’s position during the Philadelphia Local Taxes CLE program sponsored by the Pennsylvania Bar Institute and the Philadelphia Bar Association Tax Section.  However, representatives from the City did not directly respond to questions.    Instead of adjusting the EPR to conform with the STEB CLR, the City plans to maintain the same 32% EPR it has used for decades.  The program also addressed updates from the City and practitioners relating to various Philadelphia taxes, including the wage and net profit tax, business privilege tax, transfer tax, and use and occupancy tax.  For an audio copy of the program, click here.

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