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Recent Pennsylvania local business privilege tax developments

Two notable developments involving the Pennsylvania Business Privilege and/or Mercantile Tax (BPT) imposed by localities present potential traps and opportunities for taxpayers. The adoption of Act 42 creates a bright-line test to determine whether or not a business is subject to a township’s BPT and is retroactively effective as of Jan. 1, 2014. Additionally, the Pennsylvania Commonwealth Court has ruled in Fish, Hrabrick and Briskin v. Township of Lower Merion that townships are not allowed to impose the BPT upon lease or rental income.

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