Joe Bright and Bob Careless, members of Cozen O’Connor’s Tax Practice Group, discuss the Pennsylvania Commonwealth Court’s decision that a freight broker, who was taxed on delivery charges although it did not provide delivery services, does not fall within the freight delivery exception of the Local Tax Enabling Act (LTEA) in Bloomberg BNA. Under LTEA, local authorities are prohibited from levying, assessing, and collecting business privilege tax (BPT) on gross receipts that are ‘‘charges advanced by a seller for freight, delivery or other transportation for the purchaser in accordance with the terms of a contract of sale.’’ In S&H Transport, Inc. v. City of New York, the plaintiff argued that, because it acts as a middleman between the customers and the freight companies, it was entitled to deduct freight delivery charges from its taxable gross receipts. The trial court held that S&H Transport was entitled to deduct the charges, applying a fairness standard. The Commonwealth Court reversed, stating that the plaintiff did not fall within the freight delivery exception because the company was neither a seller nor a purchaser, but merely a broker.
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