Commonwealth v. Safe Harbor Water Power Corp.

Dissenting Opinion by

Mr. Justice Roberts:

In my view, the majority by its exceedingly narrow construction of the words “so far as possible” in §8(a) of the Act, limits the operative effect of the language to only those delays created by the taxpayer. In the future in order to find that the Commonwealth has met the burden of proof as required by our opinion in Commonwealth v. Allied Bldg. Credits, Inc., 385 Pa. 370, 123 A. 2d 686 (1956), upon which the majority expressly relies, a court will have to conclude that the taxpayer is estopped by his own actions from asserting the one year limitation. But since even without this phrase, a taxpayer could not successfully charge the Commonwealth with the failure of timely action because of his own delay in furnishing the taxing authorities with the required records, the majority’s construction renders the phrase in question a nullity. The Court’s present per se rule, moreover, is totally inconsistent with the view taken in Allied Bldg. Credits, Inc., supra at 378, 123 A. 2d at 691, where the term “so far as possible” was construed to: “carry with it the notion of ‘reasonableness’ or ‘within reason’. This relative use of the term suggests that there are conditions under which it would be unreasonable to require the Department of Revenue to act within the required time, i.e., circumstances wherein the department would be unable to act, or where, even though able to act, it was under some disability whereby the required acts could not be accomplished efficiently and properly. *110The inclusion of the phrase ‘so far as possible’ indicates an intent on the part of the Legislature that the provision is not mandatory upon the Department of Revenue. It recognizes that the duty placed on the department to act within one year is not absolute and immutable, saying, in effect, there may be circumstances present which, if proven, would allow a settlement of the taxpayer’s account to be made after the one (1) year period has elapsed. What would constitute sufficient cause to allow a settlement to be made after the one (1) year period has expired is a question that would have to be determined in each case upon its own particular facts.” (Emphasis supplied. )

I fail to understand how the majority can conclude that circumstances “are not sufficient if they stem solely from the Commonwealth’s own procedure in making a settlement” and not overrule Allied. I view this rigid limitation as being contrary to the express holding in Allied which clearly recognizes as a proper reason for delay “circumstances wherein the department would be unable to act, or where, even though able to act, it was under some disability whereby the required acts could not be accomplished efficiently and properly.” (Emphasis supplied.) The effect of the majority’s conclusion is to make the provision “so far as possible” mandatory whereas in Allied this Court said that phrase “indicates an intent on the part of the Legislature that the provision is not mandatory upon the Department of Revenue.” (Emphasis supplied.) I see no sound basis, factual or otherwise, for creating the new mandatory limitation on the settlement process which the majority today imposes.

I must also reject the majority’s suggestion that the Board of Finance and Revenue assess the taxpayer “even if the Commonwealth is unsure of what to do with regard to a settlement, [since] it can still act *111within the year and can then reconsider its action during the two year resettlement period.” To mandate or encourage “unsure”, and hence uninformed, action on the part of governmental agencies is an unwise and hazardous approach to achieving administrative competency and efficiency. Moreover, settlements made under the pressure of the one year deadline will frequently be arbitrary and unreasonably high, thus further burdening the taxpayer with the necessity of seeking resettlement in order to resolve the matter properly*

The majority’s holding again ignores this Court’s determination in Allied that reasonable delay is permissible in the interest of having the taxing body perform its function “efficiently and properly,” nor does it give any reason for its present willingness to shift the emphasis from governmental action accomplished by efficient means to “unsure” action.1 In the absence of any such reasoning, I would continue to adhere to the principles spelled out in Allied that the Commonwealth need not adhere to the strict one year period, provided that it has a reasonable basis for the delay.

Today’s opinion has the obvious effect of giving a substantial windfall to the taxpayer who in the past *112has underassessed himself.2 3This is unfair not only to the Commonwealth, whose practice in these cases was justifiably based upon our decision in Allied / but also to those numerous taxpayers who paid their just obligations when due. It must also be apparent that this decision will encourage taxpayers to underassess themselves in the future in the hope that the Commonwealth will not act within the time limit now prescribed by this Court. 1

I am satisfied that on this record the Commonwealth has fully met its burden under the Allied case of explaining the delay in making the settlement Therefore, I agree with the court below that the settlement was timely. See Commonwealth v. Safe Harbor Water Power Corp., 83 Dauph. 11, 15-19 (1964).

The majority’s disposition does not require it to consider the second question raised by this appeal, whether the gross receipts’ allocation was proper. Therefore, I also refrain from expressing a view on this issue.

The majority admits quite frankly that it does not understand how the administrative practices, which led to this delay, could possibly be a basis for bringing this settlement within the “so far as possible” exception. Yet the necessity for these procedures are explained in the opinions of the Commonwealth Court in cases arising since Commonwealth v. Allied Bldg. Credits, Inc., 385 Pa. 370, 123 A. 2d 686 (1956). See Commonwealth v. Fruehauf Trailer Co., 71 Dauph. 7 (1957) ; Commonwealth v. Dresser Indus., 75 Dauph. 111 (1960) ; Commonwealth v. Andale Co., 75 Dauph. 250 (1960) ; Commonwealth v. Lehval Indus., Inc., 75 Dauph. 254 (1960) ; Commonwealth v. Pennsylvania Manufacturers’ Ass’n Cas. Ins. Co., 76 Dauph. 275, 78 Dauph. 28, modified on other grounds, 410 Pa. 207, 188 A. 2d 729 (1963) ; cf. Commonwealth v. Tonopah Miming Co., 83 Dauph. 279 (1965).

The majority seems to conclude that this windfall is offset by the fact that the taxpayer is entitled to notice of settlement within the one year period. Any prejudice to the taxpayer, especially one like the present appeUant who has taken full advantage of all appellate procedures, is de minimis. In this case, for example, the taxpayer has had full use of $30,000. Moreover, he has not paid any interest or penalty due to his own initial under-assessment. What he now asks is that in addition to having this advantage, his debt to the Commonwealth should be forgiven.

It is undisputed that as a result of today’s decision a substantial amount of money already assessed will be lost to the Commonwealth. Thus the general taxpaying public is the ultimate loser.