City of Harrisburg, PA Chapter 5-715 Business Privilege and Mercantile Tax

[HISTORY: Adopted by the City Council of the City of Harrisburg by Ord. No. 31-1982. Amendments noted where applicable.]

CROSS-REFERENCES

Local Agency Law, Subchapter B of Chapters 5 and 7 of the Act of April 28, 1978, P.L. 202 (2 Pa.C.S.A. §§ 105, 551 to 555 and 751 to 754).

Local services tax: see Ch. 5-705.

Power to tax: see Local Tax Enabling Act, Act of Dec. 31, 1965, P.L. 1257, as amended (53 P.S. § 6924.101 et seq.).

Transient wholesale and retail business: see Ch. 5-303.

§ 5-715.1 Definitions.

[Amended 11-13-2001 by Ord. No. 21-2001[1]]

See also Glossary of Terms, Chapter 1-302. As used in this chapter, unless otherwise expressly stated or clearly indicated by the context, the following terms shall have the meanings indicated:

ASSESSMENT

The determination by the City of the amount of underpayment by a taxpayer.

BUSINESS

An enterprise, activity, profession or any other undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, partnership, association, corporation or any other entity, or any activity carried on or exercised for gain or profit in the City of Harrisburg, including, but not limited to, the sale of merchandise or other tangible personalty or the performance of services. The businesses of taxpayers having their principal places of business within the City of Harrisburg shall include all activities carried on within the City and those carried on outside the City attributable to the place of business within the City.

CONTRACTOR

A person engaged in the business of furnishing labor, materials, or both labor and materials, in connection with all or any part of the construction, alteration, repairing, dismantling or demolition of buildings, roads, bridges, viaducts, sewers, water and gas mains, and every other type of improvement, alteration or development of real property.

DATE OF OVERPAYMENT

The later of the date paid or the date tax is deemed to have been overpaid.

DATE OF RESOLUTION

The date the overpayment is refunded or credited.

DOING BUSINESS

Any act which furthers the purpose of a business, as defined herein.

GROSS RECEIPTS

Cash, credits or property of any kind received in exchange for merchandise sold or services performed or other business activity conducted within or attributable to the City, without deduction therefrom:

A. The cost of the merchandise sold;

B. The cost of the materials, labor or services furnished;

C. The amount of any interest or discount paid;

D. Any other business-related expense, as permitted by regulation.

LANDLORD

A person who is in the business of leasing or renting out three or more dwelling units or one or more commercial spaces. For the purposes of this chapter, "commercial" shall include all business uses, including but not limited to manufacturing/industrial use, retail/wholesale use, office space and provision of services.

LEASE

A transfer of the right to possession and/or use of real or personal property (including intangible personal property) for a term in return for consideration. For the purposes of this chapter, any rental of property shall be treated as a lease of property.

MERCHANDISE

Produce, goods, commodities, food or foodstuffs, wares, items, products, crops, livestock, animals, metals, gems, or any other property of whatever description, whether new or used.

OVERPAYMENT

Any payment of tax which is determined in the manner provided by law not to be legally due.

RETAIL SALES

Sales made by persons engaged, as owner or agent, in the business of selling or exchanging merchandise for cash or barter or any consideration on the assumption that the purchaser of such goods has acquired the same for ultimate consumption or use and not for resale.

SALE

The passing of ownership from a seller to a buyer for consideration.

SERVICES

Any activity (other than retail or wholesale vending of merchandise) done for the benefit of another or others for consideration, including but not limited to consulting, maintenance and repairs, construction, engineering, planning, design, installation, commission sales, training, the lease or use of real of personal property (tangible or intangible), and the providing of legal or accounting expertise.

TAX or THE TAX

The Harrisburg business privilege and mercantile tax.

TAXPAYER

A person subject to the payment of the tax or one who would be subject to the payment of the same but for an exemption granted by state or local law.

UNDERPAYMENT

The amount or portion of any tax determined to be legally due for which payment or remittance has not been made.

VOLUNTARY PAYMENT

A payment of the tax made pursuant to the free will of the taxpayer. The term does not include a payment made as a result of distraint or levy or pursuant to a legal proceeding filed by the City to collect delinquent taxes.

WHOLESALE SALES

Sales made by persons engaged, as owners or agents, in the business of selling to, or exchanging with, another person goods for cash or barter or any consideration, for the purpose of resale by the person acquiring the goods sold or exchanged.

[1] Editor's Note: Amended at time of adoption of Code (see Ch. 1-303).

§ 5-715.2 Levy of tax.

There is hereby levied for the tax year beginning January 1, 1983, a tax for general revenue purposes on the privilege of doing business, as herein defined, in the City.

§ 5-715.3 Rate and basis of tax.

A. Rate of tax.

(1) Business privilege tax. On receipts attributable to the performance of service, the rate imposed shall be two mills, or $2 per $1,000 of gross volume of business, up to gross receipts of $3,300,000; for gross receipts in excess of $3,300,000, the rate imposed shall be 1/2 mill or $0.50 per $1,000. Collection of estimated tax shall not be construed to levy an increase in the annual rate of the tax.

(2) Wholesale mercantile tax. On receipts attributable to wholesale sales of merchandise, the rate imposed shall be one mill or $1 per $1,000 of gross volume of business, up to gross receipts of $5,000,000; for gross receipts in excess of $5,000,000, the rate imposed shall be 1/8 mill or $0.125 per $1,000. Collection of past due taxes, penalties or estimated tax shall not be construed to levy an increase in the annual rate of the tax.

(3) Retail mercantile tax. On receipts attributable to retail sales of merchandise, the rate imposed shall be 1 1/2 mills or $1.50 per $1,000, up to gross receipts of $3,300,000; for gross receipts in excess of $3,300,000, the rate imposed shall be 1/8 mill or $0.125 per $1,000. Collection of past due taxes, penalties or estimated tax shall not be construed to levy an increase in the annual rate of the tax.

B. Computation of volume of business.

(1) Every person subject to the payment of the tax hereby imposed who has commenced business prior to the beginning of the tax year shall compute gross volume of business upon the actual gross volume of business transacted during such immediately preceding tax year.

(2) Every person subject to the payment of the tax hereby imposed who has commenced or commences business subsequent to the beginning of the tax year shall compute gross volume of business upon the actual gross amount of business transacted during that tax year.

(3) Every person subject to the payment of the tax hereby imposed who engages in a business temporary, seasonal or itinerant in nature shall compute estimated gross amount of business within the City by a method to be determined by the Business Administrator or designee.

C. Exemptions.

(1) Persons and businesses. Persons employed for a wage or salary, nonprofit corporations or associations organized for religious, charitable or educational purposes, agencies of the government of the United States or the Commonwealth of Pennsylvania and any political subdivision thereof, or any authority created or organized under and pursuant to any law are exempt from the provisions of this chapter.

(2) State preemption. No such tax shall be assessed and collected on a privilege, transaction, subject, or occupation which is subject to a revenue-producing state tax or license fee, which tax or license fee has been held by the courts of Pennsylvania to be the basis for exemption from the imposition of a business privilege or mercantile tax by a municipality.

(3) Utilities. No such tax shall be assessed and collected on the gross receipts from utility service of any person or company whose rates of service are fixed and regulated by the Pennsylvania Public Utility Commission or on any public utility service rendered by any such person or company or on any privilege or transaction involving the rendering of any such public utility service.

(4) State tax on tangible property. No such tax shall be assessed and collected on the privilege of employing tangible property subject to a state tax, except on sales of admission to places of amusement or on sales or other transfers of title or possession of property.

(5) Landlords and rental property. No such tax shall be assessed and collected on the gross receipts received as rent by a landlord or his agent.

(6) Production and manufacture. No such tax shall be assessed and collected on goods, articles, products, or by-products of manufacture or on minerals, timber, natural resources, and farm products manufactured, produced or grown in the City, or on the preparation or processing thereof for use or market, or on any privilege, act or transaction related to the business of manufacturing, the production, preparation or processing of minerals, timber and natural resources or farm products by manufacturers, producers, and farmers with respect to the goods, articles and products of their own manufacture, production or growth; or any privilege, act or transaction relating to the business of processing by-products of manufacture; or on the transportation, loading, unloading, dumping or storage of such goods, articles, products or by-products.

(7) Gross receipts tax or fee. No such tax shall be assessed or collected on any receipts which are subject to a gross receipts tax or fee under any other ordinance of the City.

D. Determination of gross or whole volume of business. Gross or whole volume of business upon which the tax hereunder is computed shall include the gross consideration credited or received for or on account of sales made and/or services rendered, subject only to the following allowable deductions and exemptions:

(1) The dollar volume of business transacted by wholesale and retail dealers derived from the resale of goods, wares, and merchandise taken by any dealer as trade-in or as part payment for other goods, wares and merchandise, except to the extent that the resale price exceeds the trade-in allowance;

(2) Refunds, credits, or allowances given by a taxpayer to a purchaser on account of defects in goods, wares or merchandise sold, or on account of goods, wares or merchandise returned;

(3) Any commissions paid by a broker to another broker on account of a purchase or sales contract initiated, executed or cleared with such other broker;

(4) Bad debts, where the deduction is also taken in the same year for federal income and taxation purposes; and

(5) Taxes collected as agent for the United States of America, the Commonwealth of Pennsylvania, or the City.

E. Partial exemptions. Where gross or whole volume of business in its entirety cannot be subjected to the tax imposed by this chapter by reason of the provisions of the Constitution of the United States, or any other provisions of law, the Business Administrator or designee, under the direction of the Mayor, shall establish rules and regulations and methods of allocation and evaluation so that only that part of the gross or whole volume of business which is properly attributable and allowable to doing business in the City shall be taxed hereunder.

F. Rate when same tax is imposed by two taxing bodies. If any person is liable for the same tax on the same subject to the City and one or more political subdivisions of the commonwealth, then and in that event, the tax shall be apportioned by such percentage as may be agreed upon by such political subdivisions, but in no event shall the combined taxes of both subdivisions exceed a maximum rate of tax, if any, fixed by law.

G. Records. The exempt or partially exempt taxpayer, to obtain the foregoing enumerated exclusions and deductions, shall keep books and records of business so as to show clearly, accurately and separately the amount of such sales and services which may be deducted from the gross volume of business as hereinbefore provided.

§ 5-715.4 Declaration and installment payment of estimated tax.

A. Every person subject to the provisions of this chapter shall file a declaration of estimated tax in the form and manner prescribed by the Business Administrator or designee, provided that this section shall apply only to taxpayers whose estimated annual gross volume of business can reasonably be expected to exceed $2,000,000.

B. Every person filing a declaration shall certify the correctness thereof by affidavit. The fact that an individual's name is signed on the return shall be prima facie evidence that such individual is authorized to sign the return on behalf of the taxpayer.

C. Any person required under Subsection A hereof to file a declaration of estimated tax shall file such declaration and make payment of the estimated tax in quarterly installments of 25% of the tax estimated to be due for the year, which payment shall be made on or before the 30th day of the month following a quarter, that is, before the 30th day of April, July, October, and January, respectively.

[Ord. No. 33-1993]

D. If, after a declaration is filed, the estimated tax due is substantially increased or decreased, an amended declaration shall be filed on or before the next date for payment of an installment of the estimated tax. The remaining unpaid installments shall be proportionately increased or decreased, as the case may be, to reflect any increase or decrease in the estimated tax.

E. An overpayment of tax due may be credited to the next year's first installment of estimated tax or may be applied evenly over all installments.

§ 5-715.5 Returns.

A. Every return shall be made upon a form furnished by the Business Administrator or designee. Every person making a return shall certify the correctness thereof by affidavit.

B. The fact that an individual's name is signed on the return shall be prima facie evidence that such individual is authorized to sign the return on behalf of the taxpayer.

C. Every person subject to the tax imposed by this chapter who commences business subsequent to the beginning of any tax year and/or continues a business into another tax year shall, on or before the 15th day of April of the next year, file with the Business Administrator or designee a return setting forth the taxpayer's name, business, business address, the amount of estimated tax paid which is attributed to the tax, year and such information as may be necessary in arriving at the actual gross amount of business transacted and the tax due.

D. Any person going out of or ceasing to do business shall, within seven days from the date of ceasing to do business, file a return showing the actual gross volume of business conducted and done by such person during that tax year in which said person ceased doing business and pay the tax due as computed thereon at the rate herein provided at the time of filing the return. If such tax has been previously paid based upon estimated gross receipts, the taxpayer shall be entitled to a refund of any excess tax paid for the tax year in which business was terminated.

E. Any person required to file a return by this chapter shall attach to such return the Internal Revenue Service Schedule C, Form 1065 or Form 1120.

§ 5-715.6 Payment of tax.

A. The tax levied pursuant to this chapter shall be due and payable without further notice or demand on the date which the taxpayer is required to file a declaration of estimated tax.

B. If the taxpayer is not required to file a declaration of estimated tax or if for some other reason a declaration was not filed, the full tax is due and payable without further notice or demand on April 15 of the succeeding year, with interest and penalties, where applicable.

C. At the time of filing the final return after proper filing of declarations of estimated tax, the taxpayer shall pay the balance of tax due.

D. At the election of the taxpayer, any installment of the estimated tax may be paid before the date prescribed for its payment.

E. Payment of the tax shall be made to the City Treasurer. The Treasurer shall, upon payment of said tax, give the person paying the same a receipt therefor.

F. The Business Administrator is hereby authorized to accept payment under protest of the amount of business privilege and/or mercantile tax claimed by the City in any case where the taxpayer disputes the validity or amount of the City's claimed tax. If it is thereafter judicially determined by a court of competent jurisdiction that the City has been overpaid, the amount of the overpayment shall be refunded to the taxpayer. The provisions of this section shall be applicable to cases clearly analogous to those in a case litigated in a court of competent jurisdiction.

§ 5-715.7 Underpayment or nonpayment.

A. If there is an underpayment of or failure to pay any installment of estimated tax or to pay the entire tax due, an addition to the tax due at the rate of 10% per annum for the period of the underpayment or nonpayment shall be imposed.

B. An underpayment is determined to be the excess of the installment payment that would be required if the estimated tax were 80% of the tax due for the year over the amount of the installments paid by the due date.

§ 5-715.8 Business privilege and mercantile license.

[Amended by Ord. No. 33-1993; by Ord. No. 5-1995; 11-13-2001 by Ord. No. 21-2001; 11-22-2016 by Ord. No. 21-2016]

A. Any person desiring to conduct, or to continue to conduct, any business within the City shall file with the Business Administrator or designee an application for a business privilege and mercantile license and shall pay a fee of $50 for the license and $50 for each renewal thereof. The license issued shall be conspicuously posted in the place of business for which the license is issued. In cases where more than one place of business is conducted, a separate license shall be issued for each place of business. Any taxpayer who is in default in payment of tax due hereunder shall be refused a license until such tax is paid in full. A business privilege and mercantile license, once issued, shall remain valid until the indicated activity or business changes owner, goes out of business or until the end of the tax year.

B. The issuance of a business privilege and mercantile license is predicated upon the applicant first receiving the approval of the Zoning Administrator and/or Health Officer, where applicable, for the operation of his or her business.

C. Regardless of whether or not a license is procured, the tax required to be paid pursuant to this chapter is due if a person operates a business within the City. Regardless of whether or not a business is exempt from paying the tax, a person or entity who operates a business within the City shall obtain a mercantile license.

D. Any mercantile/business privilege license issued by the City is subject to revocation by the issuing authority upon a determination that the licensee has violated one or more provisions of the Codified Ordinances of the City.

E. Any person whose license is subject to revocation shall have the right to request an administrative hearing before the Business Administrator or designee within 10 days of the notice of violation and prior to revocation. The decision of the Business Administrator or designee may be appealed in accordance with the Local Agency Law.[1]

[1] Editor's Note: See 2 Pa.C.S.A. § 551 et seq. and 2 Pa.C.S.A. § 751 et seq.

§ 5-715.9 Administration and enforcement; records.

A. The City Treasurer is charged with the duties of receiving the taxes, fines and penalties imposed by this chapter.

B. The Business Administrator and/or duly appointed designee, under the direction of the Mayor, is hereby empowered with the approval of the Mayor to prescribe, adopt, and promulgate rules and regulations relating to any matter pertaining to the administration and enforcement of this chapter, including provisions for the examination and correction of declarations and returns and payments alleged or found to be incorrect, or as to which an overpayment is claimed or found to have occurred, and is charged with enforcing the provisions of this chapter and any rules and/or regulations promulgated pursuant hereto.

C. The taxpayer shall maintain such records and books of account as will enable him or her to make a true and accurate declaration and return in accordance with the provisions of this chapter. Such accounts and records shall disclose in detail the gross receipts and other data pertaining to the taxpayer's gross volume of business and shall be sufficiently complete to enable the Business Administrator or appointed designee to verify all transactions.

[Ord. No. 33-1993]

D. Any person aggrieved by any decision of the Business Administrator shall have the right to appeal to the Court of Common Pleas, as in other cases.

§ 5-715.10 Legal proceedings authorized.

The Business Administrator or duly appointed designee shall have the power in the name of the City to institute proceedings against any and all persons who violate the provisions of this chapter or to take any other action provided by law.

§ 5-715.11 Confidentiality of returns.

Any information gained by the Business Administrator or any other official, agent or employee of the City as a result of any declarations, returns, investigations, hearings or verifications required or authorized by this chapter shall be confidential, except in accordance with proper judicial order or as otherwise provided by law.

§ 5-715.99 Penalty.

See Chapter 5-717, Enforcement and Penalties.