               IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jeffrey M. Mandler and Nuclear             :
Imaging Systems, Inc.,                     :
                        Petitioners        :
                                           :
                    v.                     :
                                           :
Commonwealth of Pennsylvania,              :    No. 483 F.R. 2014
                     Respondent            :


Jeffrey M. Mandler and Cardiovascular :
Concepts, P.C.,                       :
                        Petitioners   :
                                      :
                  v.                  :
                                      :
Commonwealth of Pennsylvania,         :         No. 484 F.R. 2014
                        Respondent :            Argued: February 11, 2020


BEFORE:      HONORABLE ANNE E. COVEY, Judge
             HONORABLE CHRISTINE FIZZANO CANNON, Judge
             HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY
JUDGE COVEY                                     FILED: March 2, 2020

             Jeffrey M. Mandler (Mandler), Nuclear Imaging Systems, Inc. (NIS) and
Cardiovascular Concepts, P.C. (CVC) (collectively, Taxpayers) petition this Court for
review of the Board of Finance and Revenue’s (Board) August 27, 2014 orders 1
denying their Petitions for Refund (Refund Petitions) of the $180,168.46 Taxpayers
remitted to the Pennsylvania Department of Revenue (Revenue) on July 31, 2013 to
satisfy employer withholding liens. There are two issues before this Court: (1)


      1
         The Board’s August 27, 2014 orders were mailed on September 3, 2014. See Taxpayers’
Br. Attachments.
whether Taxpayers waived their appeal because their brief does not comply with the
Pennsylvania Rules of Appellate Procedure (Rules); and (2) whether Taxpayers
satisfied their burden of proving entitlement to the refunds. After review, we affirm.


                                                Facts
               Pursuant to Pennsylvania Rule of Appellate Procedure (Rule) 1571(f),
Taxpayers and the Commonwealth of Pennsylvania (Commonwealth) submitted a
joint Stipulation of Facts (Stipulation).2 According to the Stipulation, Mandler owned
NIS and CVC, Pennsylvania corporations with principal places of business in
Malvern, Pennsylvania.3         See Stip. ¶¶ 3-4. Pursuant to Sections 316(a) and 320 of
the Tax Reform Code of 1971 (Code),4 72 P.S. §§ 7316.1(a),5 7320, Taxpayers were
employers responsible for withholding their employees’ payroll taxes in trust for the
Commonwealth. See Stip. ¶¶ 2-4. On August 4, 2000, NIS and CVC commenced



       2
               A review of determinations of the Board is governed by [Rule] 1571.
               Although this Court hears such cases in its appellate jurisdiction, it
               functions essentially as a trial court. Therefore, this Court must
               consider a record made by the parties specifically for the Court rather
               than one certified to the Court from the proceedings below.
Armco, Inc. v. Commonwealth, 654 A.2d 1191, 1192 (Pa. Cmwlth. 1993) (citations omitted). Rule
1571(f) mandates that the parties “prepare and file a stipulation of such facts as may be agreed to[.]”
Pa.R.A.P. 1571(f). “The facts stipulated by the parties are binding and conclusive and should be
regarded as this Court’s findings of fact.” Quest Diagnostics Venture, LLC v. Commonwealth, 119
A.3d 406, 410 n.4 (Pa. Cmwlth. 2015), aff’d, 148 A.3d 448 (Pa. 2016). “‘However, this Court may
draw its own legal conclusions.’” Am. Elec. Power Serv. Corp. v. Commonwealth, 184 A.3d 1031,
1034 n.7 (Pa. Cmwlth.), aff’d, 199 A.3d 880 (Pa. 2018) (quoting Kelleher v. Commonwealth, 704
A.2d 729, 731 (Pa. Cmwlth. 1997)). The parties declared in the Stipulation: “[N]o evidence of []
facts other than in this Stipulation need be adduced in this matter.” Stip. at 2.
           Revenue is represented by the Commonwealth’s Office of Attorney General, which has
acted on Revenue’s behalf throughout these proceedings.
        3
           NIS was a Pennsylvania corporation and CVC was a Pennsylvania professional
corporation. See Stip. ¶¶ 3-4.
        4
          Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §§ 7101-10004.
        5
          Added by Section 4 of the Act of August 31, 1971, P.L. 362.
                                                  2
voluntary reorganization bankruptcy proceedings in the United States Bankruptcy
Court for the Eastern District of Pennsylvania (Bankruptcy Court), pursuant to
Chapter 11 of the Bankruptcy Code.6 See Stip. ¶ 4. On September 18, 2000, the
Bankruptcy Court ordered the joint administration of NIS’s and CVC’s bankruptcy
actions. See Stip. ¶ 8. On October 6, 2000, Revenue filed proofs of claims with the
Bankruptcy Court seeking, among other taxes,7 NIS’s and CVC’s Pennsylvania
employer withholding taxes (Taxes).8 See Stip. ¶ 9, Stip. Ex. A.
               From October 29, 2000 to September 1, 2001, Revenue issued 10
assessment notices to NIS and Mandler (individually, and in his capacity as NIS’s
president) for their Taxes for consecutive tax periods from January 1, 1999 to June
30, 2001, plus interest and penalties, in the total amount of $110,331.60. See Stip. ¶
14. Between October 29, 2000 and June 3, 2001, Revenue issued nine assessment
notices to CVC and Mandler (individually, and in his capacity as CVC’s president)
for their Taxes for consecutive tax periods from January 1, 1999 to March 31, 2001,
plus interest and penalties, in the total amount of $70,486.89. See Stip. ¶ 15.
               On April 17, 2001, Taxpayers entered into an Amended Stipulation of
Settlement and Order (Settlement Order) to resolve certain creditor claims, and to
allow the sale of NIS’s and CVC’s assets to Integral Nuclear Associates, LLC
(Integral) pursuant to an April 11, 2001 Asset Purchase Agreement9 (as amended by


       6
          11 U.S.C. §§ 1101-1195. Mandler also filed for Chapter 11 bankruptcy on September 12,
2000. See Stip. ¶ 7.
        7
           The other taxes included corporate net income taxes, capital stock-franchise taxes and
corporate loan taxes. See Stip. Ex. A at 2, 7.
        8
          In addition to the Taxes, NIS and CVC owed taxes to other creditors, including the Internal
Revenue Service (IRS), the Pennsylvania Department of Labor & Industry, and state taxing
authorities in Delaware, Maryland and New Jersey. See Stip. ¶ 13, Stip. Ex. D. By April 26, 2001
Amended Stipulation of Settlement and Order, Taxpayers settled the claims made by DVI Financial
Services, Inc., National Century Financial Enterprises, Inc., NPF X, Inc., NPF VI, Inc. and the IRS.
See Stip. ¶ 10, Stip. Ex. B.
        9
          The parties did not include the Asset Purchase Agreement as a Stipulation exhibit.
                                                 3
the Settlement Order), which would facilitate reorganization.10 See Stip. ¶ 10, Stip.
Ex. B. Thereunder, Integral agreed to purchase certain of NIS’s and CVC’s assets
out of bankruptcy, and to issue a “promissory note made payable to [Taxpayers] to
fund payments to state taxing authorities.”11 Stip. Ex. B at 8. On May 1, 2001,
Integral’s counsel sent United Savings Bank, inter alia, $66,215.49 to be held in an
interest-bearing state tax escrow account. See Stip. ¶¶ 37-38, Stip. Exs. R, S.
               On June 8, 2001, Taxpayers filed a proposed Second Amended Joint
Plan of Reorganization (Proposed Plan), in which they suggested in Section 4.2.B:
“[Taxpayers] shall distribute $66,000[.00] to state taxing authorities. These claims
are estimated at $300,000[.00]. . . .           Mandler shall make monthly payments to
[Taxpayers] to pay any deficiency.” Stip. Ex. P at 13; see also Stip. ¶ 35. Revenue
objected to the Proposed Plan. See Stip. ¶ 36, Stip. Ex. Q.
               On August 20, 2001, the Bankruptcy Court converted NIS’s and CVC’s
bankruptcy actions to Chapter 7 liquidation proceedings. See Stip. ¶ 11. Thereafter,
Revenue filed amended proofs of claim – on September 14, 2001 against CVC and on
November 15, 2001 against NIS – seeking the Taxes.12 See Stip. ¶ 12, Stip. Ex. C.
               On January 7, 2002, Integral’s counsel instructed United Savings Bank
to close out the state tax escrow account and forward the proceeds thereof (which was



       10
           In their brief to this Court, Taxpayers reference an April 17, 2001 Bankruptcy Court order
which, in paragraph 4, “provides for a transfer of [Taxpayers’] assets [to Integral] . . . free of all
liens.” Taxpayers’ Br. at 12. However, the Settlement Order does not contain that language, and no
such order is referenced in or attached to the Stipulation. See Stip. Ex. B.
        11
           The amount of the promissory note specified in paragraph 10(b) of the Settlement Order is
illegible. See Stip. Ex. B at 8. However, Taxpayers contend in their brief to this Court that the
amount was $50,000.00. See Taxpayers’ Br. at 17. The amount was later amended to $66,215.49.
See Taxpayers’ Br. at 17.
        12
           Like in the original proofs of claim, the amended proofs of claim sought corporate net
income taxes, capital stock-franchise taxes and corporate loan taxes in addition to the Taxes. See
Stip. Ex. C at 2, 7.


                                                  4
then $67,113.00) to Bankruptcy Trustee Christine Shubert (Trustee). See Stip. ¶ 39,
Stip. Exs. T, U. Revenue did not receive any of the escrowed funds.
               During 2002 and 2005, Revenue filed liens against Taxpayers in the
Chester County Common Pleas Court. See Stip. ¶ 16, Stip. Ex. E. On May 18, 2005,
Trustee issued her amended Chapter 7 Proposed Distribution of Property, pursuant to
which the Trustee paid Revenue $1,043.29 relative to claims against CVC and
$755.49 for claims against NIS on August 3, 2005. See Stip. ¶¶ 17-18, Stip. Exs. F,
G. Those payments were not made in satisfaction of the Taxes or Taxpayers’ other
state tax debts.13 On April 13, 2006, Trustee certified that the estate was fully
administered – all bankruptcy estate money had been distributed to creditors and the
bankruptcy estate accounts had zero balances. See Stip. ¶ 40, Stip. Ex. U.
               By July 30, 2013 letter, Revenue notified Taxpayers’ counsel (Counsel)
that their lien payoff figure was $180,168.46. See Stip. ¶ 19, Stip. Ex. H. Taxpayers
remitted $180,168.46 to Revenue on July 31, 2013. See Stip. ¶ 20, Stip. Ex. I. On
August 20, 2013, Revenue asked the Chester County Common Pleas Court to mark
Taxpayers’ liens satisfied. See Stip. ¶ 21, Stip. Ex. J.
               However, on November 13, 2013, Taxpayers filed the Refund Petitions
with Revenue’s Board of Appeals (BOA) seeking return of their $180,168.46,
arguing that the Taxes had already been paid from the escrow account. See Stip. ¶¶
22-24. On January 23, 2014, the BOA denied the Refund Petitions, stating relative to
both NIS and CVC:

               [Taxpayers] filed for bankruptcy and [] an escrow account
               was established for the payment of state taxes. The record

       13
           According to the Trustee’s itemized payment list, the $1,043.29 was paid on CVC’s
$22,343.31 administrative priority claim and $755.49 was paid on NIS’s $16,158.09 administrative
priority claim. See Stip. Ex. C at 2, 7 and Stip. Ex. F at 7. The amended proofs of claim reflect that
those administrative priority claims were made pursuant to Section 507(a)(1) of the Bankruptcy
Code, 11 U.S.C. § 507(a)(1) (relating to trustee expenses and domestic support obligations). See
Stip. Ex. C at 2, 7.
                                                  5
               does not provide any evidence that notice of the escrow
               account was provided to [Revenue]. There is no evidence
               indicating that these funds were used to pay the outstanding
               state tax liabilities. In fact, [Revenue’s] records indicate
               that [Revenue] did not receive payment from these
               escrowed funds. Accordingly, [Taxpayers] ha[ve] failed to
               prove that [they are] entitled to a refund.

Stip. Exs. K (BOA NIS Dec. at 2), L (BOA CVC Dec. at 2);14 see also Stip. ¶¶ 25-26.
On April 4, 2014, Taxpayers appealed to the Board. See Stip. ¶¶ 27-29.
               The Board conducted hearings on December 19, 2013. On August 27,
2014, the Board denied the Refund Petitions. See Stip. Exs. M (Board NIS Dec. at 5),
L (Board CVC Dec. at 4-5); see also Stip. ¶¶ 30-31. On September 24, 2014,
Taxpayers appealed to this Court.15


                                            Discussion
   1. Briefing Defects
               Revenue argues that Taxpayers’ appeal should be dismissed because
their brief fails to comply with the Rules.16 Specifically, Revenue contends that
Taxpayers’ brief contains substantial defects, including: incomplete citations and

       14
           Taxpayers also requested abatement of the penalties and interest, which the BOA denied
on the basis that Taxpayers were delinquent for 9 (CVC) and 10 (NIS) consecutive tax periods since
1999, and they failed to prove that they acted in good faith, without negligence or intent to defraud.
See Stip. ¶¶ 14, 15; Stip. Exs. K (BOA NIS Dec. at 2), L (BOA CVC Dec. at 2).
       15
              ‘Our scope of review in tax appeals is . . . limited to the construction,
               interpretation and application of a [s]tate tax statute to a given set of
               facts.’ United Serv[s.] Auto[.] Assoc[’]n v. Commonwealth, . . . 618
               A.2d 1155, 1156 ([Pa. Cmwlth.] 1992) (quoting Escofil v.
               Commonwealth, . . . 406 A.2d 850, 852 ([Pa. Cmwlth.] 1979)).
Am. Elec. Power Serv. Corp., 184 A.3d at 1034 n.7.
        By October 5, 2015 order, this Court consolidated Taxpayers’ appeals. By October 4, 2016
order, the parties were ordered to file a stipulation of facts.
        16
           Despite Taxpayers’ claim that they filed an amended Brief of Petitioner correcting their
briefing errors, see Taxpayers’ Reply Br. at 10, App. C, simply attaching an amended brief as an
appendix to Taxpayers’ Reply Brief was not the proper method of doing so.
                                                  6
missing page numbers in the Table of Authorities; misreferenced, incomplete or
missing case and rule citations which do not appear in the Table of Authorities; and
missing headings, legal authority and record citations in the Argument portion of
their brief. Revenue asserts that Taxpayers’ errors have forced Revenue to speculate
about Taxpayers’ legal arguments and ultimately preclude this Court’s proper review.
             This Court recognizes that “[t]he [Rules] . . . set forth the fundamental
requirements every appellate brief must meet.” Commonwealth v. Perez, 93 A.3d
829, 837 (Pa. 2014). In particular, Rule 2119 specifies, in relevant part:

             (a) General rule. The argument shall be divided into as
             many parts as there are questions to be argued; and shall
             have at the head of each part--in distinctive type or in type
             distinctively displayed--the particular point treated therein,
             followed by such discussion and citation of authorities as
             are deemed pertinent.
             (b) Citations of authorities. Citations of authorities in
             briefs shall be in accordance with [Rule] 126 governing
             citations of authorities.
             (c) Reference to record. If reference is made to the
             pleadings, evidence, charge, opinion or order, or any other
             matter appearing in the record, the argument must set forth,
             in immediate connection therewith, or in a footnote thereto,
             a reference to the place in the record where the matter
             referred to appears (see [Rule] 2132).
Pa.R.A.P. 2119. Further, Rule 2101 mandates:
             Briefs . . . shall conform in all material respects with the
             requirements of these rules as nearly as the circumstances
             of the particular case will admit, otherwise they may be
             suppressed, and, if the defects are in the brief . . . of the
             appellant and are substantial, the appeal or other matter may
             be quashed or dismissed.

Pa.R.A.P. 2101. Thus, when “the Court is unable to conduct any meaningful review
of [the] argument, it is waived for lack of development.” Dep’t of Envtl. Prot. v.
Green ‘N Grow Composting, LLC, 201 A.3d 282, 286 (Pa. Cmwlth. 2018).

                                           7
              However,

              [w]hile an appeal may be dismissed or quashed when a
              defect in a brief is ‘substantial,’ Pa.R.A.P. 2101, we may
              ignore even ‘egregious violations’ of the Rules . . . if these
              defects do not preclude meaningful appellate review.
              Richardson v. P[a.] Ins[.] Dep[’t], 54 A.3d 420, 426 (Pa.
              Cmwlth. 2012) (quoting Seltzer v. Dep[’]t of Educ[.], 782
              A.2d 48, 53 (Pa. Cmwlth. 2001)). Our Supreme Court has
              cautioned that the ‘extreme action of dismissal should be
              imposed by an appellate court sparingly, and clearly would
              be inappropriate when there has been substantial
              compliance with the [R]ules and when the moving party has
              suffered no prejudice.’ Stout v. Universal Underwriters
              Ins[.] Co., . . . 421 A.2d 1047, 1049 ([Pa.] 1980); see also
              Giovagnoli v. State Civil Serv[.] Comm[’n] (Monroe C[ty.]
              Children [&] Youth Ser[s.]), . . . 868 A.2d 393, 399 ([Pa.]
              2005).

Arnold v. Workers’ Comp. Appeal Bd. (Lacour Painting, Inc.), 110 A.3d 1063, 1067-
68 (Pa. Cmwlth. 2015).
              Here, although Taxpayers did not complete and reference their citations
and/or the Table of Authorities, and failed to include specific headings, legal
authority and record citations in the Argument portion of their brief, because
Taxpayers’ position is clearly stated, such failures did not prejudice Revenue and do
not preclude this Court’s meaningful review of Taxpayers’ appeal. Accordingly, this
Court declines to dismiss Taxpayers’ appeal based solely on these briefing defects.17
              Notwithstanding, this Court acknowledges that under the Conclusion
section of their brief to this Court, “Taxpayer[s] request relief pursuant to [Section
1983 of the United States Code,] 42 U.S.C. § 1983 [(relating to civil rights
deprivation actions)] and attorney’s fees pursuant to [Section 1988 of the United


       17
          Though we chose not to do so in this case, Counsel is reminded that this Court could have
quashed this appeal for the Rules violations; accordingly, Counsel is admonished that future
infractions will be at his clients’ peril.


                                                8
States Code,] 42 U.S.C. § 1988 [(relating to proceedings in vindication of civil
rights)].” See Taxpayers’ Br. at 23. Because Taxpayers failed to mention any civil
rights violations in their petition for review or their Statement of Questions Involved
and did not develop arguments to support any such claims, those claims are waived.
See Batoff v. State Bd. of Psychology, 718 A.2d 364, 367 (Pa. Cmwlth. 1998), rev’d
on other grounds, 750 A.2d 835 (Pa. 2000) (“Under [Rule] 1513(a), . . . constitutional
issues not raised in the petition for review, nor fairly comprised in the objections
stated therein, are waived.”); see also Commonwealth v. Spotz, 18 A.3d 244 (Pa.
2011) (such waiver applies to undeveloped constitutional rights claims); Mun. of Mt.
Lebanon v. Gillen, 151 A.3d 722, 727 n.5 (Pa. Cmwlth. 2016) (“Appeal of an issue is
waived where the appellant fails to include it in the statement of questions involved
section of her brief and fails to address the issue in the argument section of the
brief.”).


   2. Refund Entitlement
            Initially, “a party appealing from a denial of a tax refund . . . has the
burden of proof in a de novo proceeding before th[is Court].”             Sabatine v.
Commonwealth, 442 A.2d 210, 212 n.6 (Pa. 1981) (italics added). Taxpayers argue
that they satisfied their burden of proving their entitlement to the refunds.
Specifically, they contend that Integral set aside escrow funds for the express purpose
of satisfying their state tax obligations and that Revenue’s failure to timely claim
those funds during the bankruptcy proceedings resulted in the Trustee using them to
pay other debts and, thus, Revenue was estopped from thereafter collecting those
monies from Taxpayers.
            Section 316(a) of the Code specifies:

            Every employer maintaining an office or transacting
            business within [the Commonwealth] and making payment

                                          9
               of compensation (i) to a resident individual, or (ii) to a
               nonresident individual taxpayer performing services on
               behalf of such employer within this Commonwealth, shall
               deduct and withhold from such compensation for each
               payroll period a tax computed in such manner as to result,
               so far as practicable, in withholding from the employe’s
               compensation during each calendar year an amount
               substantially equivalent to the tax reasonably estimated to
               be due for such year with respect to such compensation.
               The method of determining the amount to be withheld shall
               be prescribed by regulations of [Revenue].
72 P.S. § 7316.1(a). Section 320 of the Code clarifies:
               Every person[18] required to deduct and withhold tax under
               [S]ection 316[(a) of the Code] is hereby made liable for
               such tax. For purposes of assessment and collection, any
               amount required to be withheld and paid over to [Revenue]
               and any additions to tax penalties and interest with respect
               thereto, shall be considered the tax of the person. All taxes
               deducted and withheld pursuant to [S]ection 316[(a) of the
               Code] or under color of [S]ection 316[(a) of the Code] shall
               constitute a trust fund for the Commonwealth and shall be
               enforceable against such person, his representative or any
               other person receiving any part of such fund.

72 P.S. § 7320. “[T]he employer has no right to this withholding once wages are
paid; such withholding is commonly referred to as ‘trust fund tax’ precisely because
the employer holds it in trust for the [g]overnment.” In re Dutch Masters Meats, Inc.,
182 B.R. 405, 411 (Bankr. M.D. Pa. 1995).                    Accordingly, the Code required
Taxpayers to withhold employee payroll taxes and hold them in trust for the
Commonwealth, and further authorized Revenue to enforce liens against Taxpayers
for the withheld monies.
               Moreover, Section 523(a)(1)(A) of the Bankruptcy Code provides:

       18
           Section 201(e) of the Code defines “person” as “[a]ny natural person, association,
fiduciary, partnership, corporation or other entity . . . . Whenever used in any clause prescribing
and imposing a penalty . . . the term ‘person,’ . . . as applied to a corporation, [shall include] the
officers thereof.” 72 P.S. § 7201(e). This Court has ruled that a corporate officer can be personally
liable for a corporation’s withholding taxes during periods in which he controlled the corporation.
Brown v. Commonwealth, 670 A.2d 1222 (Pa. Cmwlth. 1996).
                                                 10
               A discharge under [Chapter 7 of the Bankruptcy Code] does
               not discharge an individual debtor from any debt . . . for a
               tax . . . of the kind and for the periods specified in [S]ection
               . . . 507(a)(8) of [the Bankruptcy Code], whether or not a
               claim for such tax was filed or allowed[.19]

11 U.S.C. § 523(a)(1)(A). Section 507(a) of the Bankruptcy Code specifies:

               The following expenses and claims have priority in the
               following order: . . . Eighth, allowed unsecured claims of
               governmental units, only to the extent that such claims are
               for . . . a tax required to be collected or withheld and for
               which the debtor is liable in whatever capacity[.]

11 U.S.C. § 507(a).
               Further, the United States Bankruptcy Court for the Northern District of
Illinois, has ruled that “taxes described in [Section] 507(a)([8])(C) [of the Bankruptcy
Code], often referred to as ‘trust fund’ taxes, are never dischargeable[,] no matter
how long the unpaid tax obligations have been outstanding. 1 Robert E. Ginsberg,
Bankruptcy § 11.06[b] at 899 (2[]d ed. 1989).” In re Torres, 117 B.R. 379, 384
(Bankr. N.D. Ill. 1990); see also Dutch Masters Meats, Inc., 182 B.R. at 411 (“It is
because of th[e] trust relationship that, unlike other tax obligations, trust fund taxes
are nondischargeable . . . .”). Therefore, whether or not Revenue filed claim petitions
for them, and no matter how much time has passed, the Taxes were trust fund taxes
that Taxpayers could not discharge in a Chapter 7 bankruptcy proceeding.
               Taxpayers’ claim that the Chapter 7 bankruptcy proceeding relieved
them of their liability for the Taxes because the escrowed funds were “for the sole
purpose of paying the [Taxes] . . .” is meritless. Taxpayers’ Br. at 14. This Court
acknowledges that, pursuant to the Settlement Order, Integral agreed to, and paid into
an escrow account, monies “to fund payments to state taxing authorities.” Stip. Ex. B


       19
           A taxing body’s failure to file a proof of claim bars it from obtaining a distribution from
the estate in a bankruptcy proceeding, but does not affect its authority to collect the tax debt. City of
Phila. v. Carpino, 915 A.2d 169 (Pa. Cmwlth. 2006).
                                                  11
at 8. However, neither the Settlement Order nor the May 1 and June 12, 2001 escrow
letters, or any other record document, specifies that the escrowed funds were set aside
for the express purpose of satisfying the Taxes. A taxpayer’s bare assertions are
generally insufficient proof in tax cases. See Camp Hachshara Moshava of New York
v. Wayne Cty. Bd. for Assessment and Revision of Taxes, 47 A.3d 1271 (Pa. Cmwlth.
2012); see also Fiore v. Commonwealth, 668 A.2d 1210 (Pa. Cmwlth. 1995), aff’d,
690 A.2d 234 (Pa. 1997); Bruce & Merrilees Elec. Co. v. Commonwealth, 530 A.2d
994 (Pa. Cmwlth. 1987).
                The record likewise belies Taxpayers’ assertion that “adequate cash
funds had been set aside by [the Settlement Order] to pay to [Revenue] the [Taxes] . .
. .” Taxpayers’ Br. at 13. It is evident from the Proposed Plan that Taxpayers knew
they owed more than $300,000.00 in various state taxes and, based on the amended
proofs of claim, they were aware that more than $180,000.00 thereof was owed to
Revenue for the Taxes.            See Stip. Ex. C at 3-5, 8-9, 11 and Ex. P at 13.
Notwithstanding, only $66,215.49 was placed into the state tax escrow account,
which was clearly inadequate to satisfy Taxpayers’ liability for the Taxes. See Stip.
¶¶ 37-38, Stip. Exs. R, S.
                In addition, there is no record evidence that Revenue was aware that the
escrowed funds existed. Taxpayers did not point to any record notifying Revenue
about the escrowed funds. The May 1 and June 12, 2001 escrow letters are neither
addressed nor copied to Revenue, and Revenue was not a party to the Settlement
Order.20 A settlement agreement is essentially a contract that is binding on the parties
thereto, and is governed by contract law principles. Roe v. Pa. Game Comm’n, 147
A.3d 1244 (Pa. Cmwlth. 2016). A “general principle of contract law [is] that an
agreement cannot legally bind persons who are not parties [thereto].” Chambers Dev.


      20
           The IRS negotiated and was a party to the Settlement Order. See Stip. Ex. B at 7-9, 13.
                                                 12
Co., Inc. v. Commonwealth ex rel. Allegheny Cty. Health Dep’t, 474 A.2d 728, 731
(Pa. Cmwlth. 1984).        Here, the Settlement Order declared: “Nothing in this
[Settlement Order] may be relied upon or is intended for the benefit of any party
other [than] those who have executed this [Settlement Order] below.” Stip. Ex. B at
10, ¶ 20. Therefore, notwithstanding Taxpayers’ claims to the contrary, neither the
Settlement Order nor any other record document informed Revenue about the
escrowed funds.
            Based on the foregoing, the Board properly denied Taxpayers relief,
because employer-withheld income taxes are trust fund taxes which are not
dischargeable in bankruptcy. The Board further reasoned:

            [T]he [Settlement Order] does not prohibit [Revenue] from
            collecting the outstanding employer withholding liability
            from [Taxpayers]. [Revenue] was not a party to [the
            Settlement Order], as a representative of [Revenue] did not
            sign the [Settlement Order]. The [Settlement Order] merely
            required that [Taxpayers’] assets transfer to Integral free of
            encumbrances, and it did not remove [Taxpayers’] liability
            for the tax. Lastly, the documentation provided by
            [Taxpayers] fails to show that the funds were set aside
            specifically for [Revenue], as [Taxpayers] owed tax
            liabilities to multiple states.

Stip. Exs. M (Board NIS Dec. at 5), L (Board CVC Dec. at 4-5); see also Stip. ¶¶ 30-
31.
            Notwithstanding, Taxpayers declare that Revenue was barred by the
equitable legal principles of estoppel and laches from collecting the Taxes in 2013
because it failed to claim them during the bankruptcy proceedings. This argument is,
likewise, without merit.
            This Court has held that “[e]quitable estoppel [and] laches . . . cannot
vary the statutory requirements in the [Code]. Neither the [Board] nor this Court has
the power to alter . . . the [Code] based on equitable principles.” Quest Diagnostics


                                         13
Venture, LLC v. Commonwealth, 119 A.3d 406, 413-14 (Pa. Cmwlth. 2015), aff’d,
148 A.3d 448 (Pa. 2016) (citations omitted).

             [I]n order to apply the doctrine of equitable estoppel to a
             Commonwealth agency: the party sought to be estopped 1)
             must have intentionally or negligently misrepresented some
             material fact, 2) know[n] or ha[d] reason to know that the
             other party would justifiably rely on the misrepresentation
             and 3) induc[ed] the other party to act to his detriment
             because of his justifiable reliance on the misrepresentation.
             In addition, ‘[o]ne who asserts estoppel must establish the
             essential elements thereof by clear, precise, and
             unequivocal evidence.’ [Pa. Liquor Control Bd. v. Venesky,
             516 A.2d 445,] 448 [(Pa. Cmwlth. 1986)].

Yurick v. Commonwealth, 568 A.2d 985, 990 (Pa. Cmwlth. 1989) (emphasis added).
However, “‘estoppel cannot be created by representations or opinions concerning
matters of law.’” Id. at 990 (quoting Gabovitz v. State Auto. Ins. Ass’n, 523 A.2d
403, 406 (Pa. Super. 1987) (citations omitted)) (emphasis added). This Court has
more specifically concluded that “[n]o errors or misinformation . . . can estop the
government from collecting taxes legally due.” Am. Elec. Power Serv. Corp. v.
Commonwealth, 160 A.3d 950, 960 (Pa. Cmwlth. 2017) (quoting DS Waters of Am.,
Inc. v. Commonwealth, 150 A.3d 583, 592 (Pa. Cmwlth. 2016)); see also Yurick.
             “The essence of any claim of laches is an estoppel as a result of
prejudicial delay.” Stahl v. First Pa. Banking & Tr. Co., 191 A.2d 386, 390 (Pa.
1963); see also Commonwealth ex rel. Pa. Attorney Gen. Corbett v. Griffin, 946 A.2d
668, 676 n.9 (Pa. 2008) (“[T]he doctrine of laches contains an estoppel component . .
. , and it is sometimes referred to as estoppel by laches.)” (quotation marks omitted)).

             ‘[L]aches . . . bars relief when a . . . party is guilty of want
             of due diligence in failing to promptly institute an action to
             the prejudice of another.’ Stilp v. Hafer, . . . 718 A.2d 290,
             292 ([Pa.] 1998); accord Sprague v. Casey, . . . 550 A.2d
             184, 187 ([Pa.] 1988). . . . Whether laches applies is a
             question of law. . . . However, applicability of the doctrine

                                           14
            of laches is a factual determination made on a case-by-case
            basis. []

Wheels Mech. Contracting & Supplier, Inc. v. W. Jefferson Hills Sch. Dist., 156 A.3d
356, 362 (Pa. Cmwlth. 2017).

            Historically, our Supreme Court has been reluctant to
            permit a party to assert the doctrine of laches against a
            state’s exercise of its taxing power.              See, e.g.,
            Commonwealth v. W[.] M[d.] [R.R.] Co[.], . . . 105 A.2d 336
            ([Pa.] 1954) . . . (cannot estop the government from
            collecting taxes which are legally due); Commonwealth v.
            A.M. Byers Co[.], . . . 31 A.2d 530 ([Pa.] 1943) (no estoppel
            can be asserted against the Commonwealth in the exercise
            of its taxing power). In the Western Maryland Railway
            Co[.][, formerly Western Maryland Railroad Co.,] case,
            ou[r] Supreme Court held that the laches defense could not
            be asserted so as to prevent the state from collecting legally
            due taxes on property when it failed to assess the same for a
            number of years. Further, in that case, the [Supreme] Court
            held that a state or other sovereignty cannot be estopped by
            any acts or conduct of its officers or agents in the
            performance of a governmental function and that no errors
            or misinformation of the officers or agents can estop the
            government from collecting legally due taxes.

In re Estate of Trowbridge, 920 A.2d 901, 906 n.5 (Pa. Cmwlth. 2007); see also
Borough of Braddock v. Sullivan Plumbing, Inc., 954 A.2d 672 (Pa. Cmwlth. 2008).
Although courts have held that a taxing authority’s delay may bar its claims for
interest and penalties attributable thereto, the courts have consistently upheld the
imposition of the underlying taxes owed. See W. Md. R.R. Co.; see also Borough of
Braddock; In re Estate of Leitham, 726 A.2d 1116 (Pa. Cmwlth. 1999).
            In the instant matter, pursuant to Section 523(a)(1)(A) of the Bankruptcy
Code and Sections 316(a) and 320 of the Code, regardless of when or whether
Revenue claimed the Taxes, the record reflects that Taxpayers collected the Taxes,
Taxpayers were aware that they owed them, and Taxpayers were at all times liable for
them. Moreover, Taxpayers were cognizant of Revenue’s ongoing attempts to collect

                                         15
the Taxes. Revenue filed proofs of claim for the Taxes on October 6, 2000 relative to
Taxpayers’ Chapter 11 reorganization cases, and amended proofs of claim relative to
their Chapter 7 liquidation proceedings in September and November 2001. From
October 2000 to September 2001, Revenue issued assessment notices to Taxpayers
for the Taxes. Revenue also filed liens for the Taxes in 2002 and 2005. In 2013,
Revenue sought and Taxpayers paid the outstanding liens. Taxpayers did not prove
based on the record before this Court that Revenue intentionally or negligently
misrepresented any material fact that induced Taxpayers to act to their detriment,
Yurick, or that any lack of due diligence by Revenue prejudiced Taxpayers. Wheels
Mech. Contracting & Supplier, Inc. Accordingly, Taxpayers’ equity arguments fail.


                                    Conclusion
            For all of the above reasons, the Board’s August 27, 2014 orders
denying Taxpayers’ Refund Petitions are affirmed.


                                      ___________________________
                                      ANNE E. COVEY, Judge




                                         16
            IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jeffrey M. Mandler and Nuclear        :
Imaging Systems, Inc.,                :
                        Petitioners   :
                                      :
                  v.                  :
                                      :
Commonwealth of Pennsylvania,         :      No. 483 F.R. 2014
                        Respondent :
                                      :
Jeffrey M. Mandler and Cardiovascular :
Concepts, P.C.,                       :
                        Petitioners   :
                                      :
                  v.                  :
                                      :
Commonwealth of Pennsylvania,         :      No. 484 F.R. 2014
                        Respondent :


                                      ORDER

            AND NOW, this 2nd day of March, 2020, the Board of Finance and
Revenue’s August 27, 2014 orders are affirmed.
            Unless exceptions are filed within 30 days pursuant to Pennsylvania
Rule of Appellate Procedure 1571(i), this Court’s order shall become final.



                                      ___________________________
                                      ANNE E. COVEY, Judge
