Pennsylvania Changes Policy Concerning Financial Security for Court Appeals

State and Local Tax

By Jennifer Koehler

The Pennsylvania Department of Revenue (“Department”) issued Tax Bulletin 2011-01 concerning new procedures for filing security for court appeals. As of May 2, 2011, if a taxpayer files a petition for review of a Board of Finance and Revenue decision with the Pennsylvania Commonwealth Court (“Court”), the taxpayer must also submit a current financial statement to the Board of Appeals. The Department will review the financial statements to ensure that ultimate collection of any unpaid amount contested is not in jeopardy.

When an appeal is filed with the Court, taxpayers will receive an acknowledgement letter from the Pennsylvania Office of the Attorney General. This letter will include a request that the taxpayer provide a current financial statement within 30 days of filing the appeal.

To comply with the request, taxpayers should submit a copy of the most recent financial statements, including an income statement, a balance sheet and any notes to the statements. Alternatively, a taxpayer can submit a copy of the most recent federal tax return, including Schedule L and applicable notes. Individuals may be required to submit a personal balance sheet.

The Department will review the submitted documents and notify the taxpayer as to whether or not collection of the unpaid amount under appeal is in jeopardy. If the Department determines that the unpaid amount is not in jeopardy, the Department will not pursue collection action, including the filing of a lien, pending resolution of the appeal even if the taxpayer has not filed the “appropriate security” with the Prothonotary of the Pennsylvania Commonwealth Court (“Prothonotary”). If the Department intends to file a lien or pursue collection action, the taxpayer will be allowed 15 days to file “appropriate security” with the Prothonotary.

For further information, please contact Jennifer Koehler.

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