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The Pennsylvania Department of Revenue's Board of Appeals
has issued about 45 orders remanding refund claims to the Bureau of
Audits. As we discussed last October, there are questions regarding
the Department's authority to do so. An appeal of a remand has
now made its way to Pennsylvania's Commonwealth Court.
The Pennsylvania Department of Revenue's Board of Appeals
has issued about 45 orders remanding refund claims to the Bureau of
Audits. As we discussed last October, there are questions regarding
the Department's authority to do so. An appeal of a remand has
now made its way to Pennsylvania's Commonwealth Court.
The Pennsylvania Board of Appeals has issued about 45 orders
dismissing sales tax refund petitions and directing the
Department's Bureau of Audits to open field audits. These
orders are the result of a new program that the Department
announced in April 2017.1 In that announcement,
the Department indicated that it may "dispose of a refund
petition by issuing a decision" requiring a field audit.
We have advised taxpayers to consider appealing these orders to
the Board of Finance and Revenue because it is unclear how this
process fits within the statutory scheme.2 Now, at
least one taxpayer has had success in doing so. In that case,
the Board of Finance and Revenue accepted jurisdiction of the
appeal and also granted partial relief to the taxpayer. The
taxpayer has filed a petition with the Commonwealth Court of
Pennsylvania seeking relief on the remaining refund
issues. 3
It will be interesting to see whether the court appeal resolves
the refund matter on the merits, thereby paving a path for avoiding
the Department's new "remand-for-audit" process. In
the meantime, the Board of Finance and Revenue has indicated that
the traditional appeal path remains viable for taxpayers that do
not wish to have their refund petition handled through audit.
We encourage anyone who receives a remand order to contact the
authors of this alert or the Reed Smith lawyers with whom they work
to discuss their options.
Footnotes
1 Pennsylvania Department of Revenue Sales & Use Tax
Bulletin 2017-01 (April 10, 2017).
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