Good Tax News For Businesses! (Eventually)

At a community briefing on Friday morning, April 20, 2018, Councilman Domb announced that a bill he introduced regarding use and occupancy ("U&O") taxes has passed and will, beginning July 1, 2019, grant businesses some U&O tax relief.

Since 2013, the City has been required to certify property values for tax purposes on or before March 31st of  the year prior to the year such values become effective for tax purposes. See 53 Pa. C.S. § 8565.  U&O tax bills are based on a property's assessed value. If that value changes, based on current law, business owners are affected first, when they receive U&O tax bills just three months later, in July, the beginning of the City's fiscal year. See Phila. Code §19-1806(4)(a).

As I wrote about here, I do not believe this is authorized by the Act of 1939, P.L. 1199, at 72 P.S. § 5341.1, et seq., otherwise known as the First Class County Assessment Law, which provides that a property tax assessment isn’t valid “for tax purposes” until the “next ensuing calendar year.” 72 P.S. § 5341.8.  Because the City does not, as a matter of policy, provide interest on refunds or credits when a tax assessment is reduced through the appeals process, the City's current practice essentially allows it to take interest-free loans from businesses' U&O taxes when the property assessments for those businesses are too high.

The bill passed by City Council on April 5, 2018, will relieve businesses from such forced interest-free loans by requiring the City to use current-year assessed values for U&O bills, rather than future-year assessed values.  Still, because Council's U&O bill doesn’t come into effect until July 1, 2019, it won't help businesses who were subjected yet again to property assessment increases this year. Business owners should, consequently, expect to see U&O tax bills based on 2019 assessments come July 1, 2018, which can be ascertained by searching here. The deadline to apply for a First Level Review is May 25th.


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