PA Court: Business Privilege Tax Sanctioned Under Local Tax Act Do Not Apply to Lease Payments  

Tax Alert

April 20, 2015

The Pennsylvania Supreme Court granted allocatur in Fish v. Township of Lower Merion, No. 760 MAL 2014 (Pa. Apr. 8, 2015). A divided Commonwealth Court held that a township’s business privilege tax on gross receipts enacted under the Local Tax Enabling Act could not be applied to lease payments. Fish v. Township of Lower Merion, No. 1940 C.D. 2013 (Pa. Commw. Sept. 19, 2014) (5-2). The Local Tax Enabling Act grants broad taxing authorities to localities, including the power to impose a business privilege tax on gross receipts. 53 P.S. § 6924.301.1(a). However, the Act states that local tax authorities do not have the power to levy any tax on leases or lease transactions. Id. § 6924.301.1(f)(1). The court held that the prohibition was violated by including in the base of the business privilege tax receipts from leases, citing the Pennsylvania Supreme Court’s decision in Lynnebrook and Woodbrook Associates, L.P. ex rel. Lynnebrook Manor, Inc. v. Borough of Millersville, 963 A.2d 1261 (Pa. 2008). A dissent for two judges cited the Supreme Court’s decision in School District of City of Scranton v. Dale & Dale Design and Development Inc., 741 A.2d 186 (Pa. 1999), which rejected an argument that a business privilege tax could not be imposed on a contractor’s receipts from residential construction. To the same effect was Middletown Township v. Alverno Valley Farms, 524 A.2d 1039 (Pa. Commw. 1987). In Cheltenham Township v. Cheltenham Cinema, Inc., 697 A.2d 258 (Pa. 1997), the Supreme Court held that a business privilege tax was not preempted with respect to receipts from admissions to a cinema. However, in Baltimore Life Insurance Co. v. Spring Garden Township, 699 A.2d 847 (Pa. Commw. 1997), the court held that a township business privilege tax was preempted as to premiums received by a life insurance company.


Joseph C. Bright


(215) 665-2053

Dan A. Schulder


(717) 703-5905

Cheryl A. Upham


(215) 665-4193

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To discuss any questions you may have regarding the opinion discussed in this Alert, or how it may apply to your particular circumstances, please contact: Joseph C. Bright at or 215.665.2053, Dan A. Schulder at or 717.703.5905 or Cheryl A. Upham at or 215.665.4193.