George D. Fish, Stephen Hrabrick, and Jonathan A. Briskin v. Township of Lower Merion

Summary

The Supreme Court of Pennsylvania held that the Local Tax Enabling Act does not prohibit Lower Merion Township from applying its general business privilege tax to businesses whose income consists solely of rental payments from leased real property. The court distinguished a tax imposed directly on leases or lease transactions from a general tax on the privilege of doing business, measured by gross receipts. The court reversed the Commonwealth Court and remanded for reinstatement of the common pleas court’s order dismissing the complaint.

Holdings

1. The LTEA does not bar Lower Merion Township from applying its general business privilege tax to businesses whose sole income consists of rental payments, because the tax is imposed on the privilege of doing business rather than directly on leases or lease transactions.
2. The LTEA's prohibition on taxes on leases or lease transactions does not encompass a general business privilege tax merely because the taxpayer's receipts derive exclusively from leasing.
3. Lynnebrook remains controlling insofar as a tax directed specifically to lease transactions is prohibited, but it does not invalidate the general business privilege tax at issue here.

Questions Presented

1. Whether the Local Tax Enabling Act's prohibition on municipal taxation of leases or lease transactions bars application of Lower Merion Township's general business privilege tax to businesses whose sole income consists of rental payments.
2. Whether a business privilege tax measured by gross receipts from leasing is a tax on leases or lease transactions, or instead a permissible tax on the privilege of doing business.

Disposition

reversed_and_remanded