Taxation

BPT Statute Limitations Set to Expire in Philadelphia

A special alert from the PICPA Greater Philadelphia Chapter Committee on Legislation and Local Taxes

By: Robert D. Hornick, CPA, committee chair and
Matthew D. Melinson, CPA, committee member

Most businesses would not want to make an involuntary contribution to the City of Philadelphia. That could be the outcome, however, if no action is taken by some companies. Recently, an official of the Revenue Department of the City of Philadelphia advised the Greater Philadelphia Chapter on Legislation and Local Taxes Committee that the statute of limitations is running out for a significant number and/or dollar amount of Business Privilege Tax (BPT) credits.

These credits that are in jeopardy primarily relate to the BPT change that took place in 2002, when the BPT went from a prospective to a retrospective tax. That change came with a provision for payment of a “mandatory 100 percent estimate.”

Many taxpayers, it appears, may have failed to properly claim credits relating to the estimated payment. Those taxpayers have unused credits sitting with the city of Philadelphia. For example, the credits for estimated payments associated with the 2003 BPT return, which was due April 15, 2004, will expire April 15, 2007.  After three years, the credits cannot be used.

Although the Revenue Department routinely mails notices to taxpayers, those notices do not always reach the CPA. We advise CPAs, clients, and all BPT taxpayers to review BPT filings since 2002, to make sure that credits have been used or a refund has been requested.