             IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Mid-Atlantic Systems of WPA, Inc.,              :
                        Appellant               :
                                                :
                      v.                        :    No. 588 C.D. 2018
                                                :    Submitted: February 11, 2019
The Tax Office of the Municipality              :
of Monroeville                                  :



BEFORE:        HONORABLE RENÉE COHN JUBELIRER, Judge
               HONORABLE ROBERT SIMPSON, Judge
               HONORABLE P. KEVIN BROBSON, Judge


OPINION BY
JUDGE COHN JUBELIRER                                FILED: March 4, 2019


       Mid-Atlantic Systems of WPA, Inc. (Mid-Atlantic) appeals from the March
27, 2018 Order of the Court of Common Pleas of Allegheny County (common pleas)
denying Mid-Atlantic’s appeal from the Decision of a Tax Hearing Officer (THO)
of the Tax Office of the Municipality of Monroeville (Tax Office). The THO denied
Mid-Atlantic’s Consolidated Tax Appeal and Petition for Refund of Business
Privilege Taxes for Tax Years 2012 to 2016 (Tax Appeal) and found that Mid-
Atlantic owed $51,712.15 in additional Business Privilege Taxes (BPT), penalties,
and interest. On appeal, Mid-Atlantic argues the Municipality of Monroeville
(Monroeville) cannot assess the BPT against it because Monroeville is precluded
from doing so by Section 12 of the Home Improvement Consumer Protection Act1

       1
          Act of October 17, 2008, P.L. 132, 73 P.S. § 517.12 (providing for the preemption of
local registration, licensing, or fee requirements by a political subdivision for home improvement
contractors that are licensed under the Home Improvement Consumer Protection Act).
(HICPA) and Subsections 301.1(f)(1) and (f)(11) of the Local Tax Enabling Act2
(LTEA). Mid-Atlantic further asserts that, because Monroeville’s taxing scheme as
applied to it is invalid under HICPA and the LTEA, that scheme violates the
Uniformity Clause of the Pennsylvania Constitution3 and the Equal Protection
Clause of the United States Constitution.4 Finally, Mid-Atlantic seeks the abatement
of the penalties, interest, and costs as permitted by Monroeville’s BPT Regulations.
Discerning no error, we affirm.

                                           I. Background
                          A. Monroeville’s BPT Ordinance and Regulations
       Section 3.A of Monroeville’s Ordinance 2329 (BPT Ordinance), enacted
pursuant to the LTEA, assesses “an annual tax . . . on each dollar of volume of the
gross annual receipts” on “[e]very person engaging in any business in the
Municipality . . . .” (Reproduced Record (R.R.) at 97a.) The BPT “is a tax on the
privilege of doing business in . . . Monroeville.” (Id. at 122a.) For corporations, the
BPT is calculated on the corporation’s gross receipts. (Id. at 121a.) In order to
ascertain what businesses are subject to the BPT, Monroeville’s BPT Regulations
state that anyone “desiring to do business in . . . Monroeville [is] required to obtain
a business privilege . . . license (business license) . . . .” (Id. at 110a; see also Section
5 of the BPT Ordinance, R.R. at 98a.) To obtain a business license, Monroeville


       2
          Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. § 6924.301.1(f)(1), (11)
(relating to the delegation of taxing powers to local municipalities and exceptions from those
taxes).
        3
          Article VIII, section 1 of the Pennsylvania Constitution, Pa. Const. art. VIII, § 1 (requiring
uniformity in taxation).
        4
          Fourteenth Amendment to the United States Constitution, U.S. Const. amend. XIV
(providing, in relevant part, that a state shall not “deny to any person within its jurisdiction the
equal protection of the laws”).


                                                   2
requires the completion and filing of a business registration form with Monroeville’s
Tax Collector and payment of a yearly fee of $25.00. (R.R. at 113a.) If a business
owes taxes to Monroeville, including the BPT, no license will be issued. (Id.) An
entity that engages in business in Monroeville without obtaining a license can be
subject to a penalty and fine. (Id. at 116a.)


                 B. Monroeville’s Assessment of the BPT Against Mid-Atlantic
       Mid-Atlantic is a Pennsylvania corporation that “improv[es] real property
through customization, installation and application of basement waterproofing
materials, technologies and techniques.” (Common Pleas 1925(a) Opinion (1925(a)
Op.) at 2.) It began its business operations in Monroeville on March 1, 2012, and
this location is its principal place of business. Mid-Atlantic registered with the Tax
Collector, obtaining a business license and paying the annual business license fee
for the tax years 2012 through 2016 (Reassessment Years). It also filed BPT returns
and paid that tax in the Reassessment Years. In August 2016, the Tax Office
requested Mid-Atlantic to provide records of its gross receipts for the Reassessment
Years. Upon reviewing those records, the Tax Office issued Notices of Assessment,
assessing additional BPTs, penalties, and interest based on Mid-Atlantic’s purported
failure to report all of its gross receipts. After an informal conference to discuss
excluding Mid-Atlantic’s gross receipts from the BPT and an abatement, the Tax
Office rejected Mid-Atlantic’s arguments and abatement request.
       Mid-Atlantic filed an appeal with the Tax Office.5 The Tax Office requested
that Mid-Atlantic submit additional records to support claims made in that appeal.


       5
       Mid-Atlantic filed one petition on November 17, 2016, and a supplement to that petition
on December 13, 2016. (R.R. at 3a-86a.)


                                              3
Thereafter, the Tax Office issued Revised Notices of Assessment, which reflected
adjustments based on the additional records:


                               BPT
                                          Additional
 Year Reported              Adjusted       Assessed Penalties           Interest        Total
 2012           $0.00       $3,818.07      $3,818.07      $1,164.51 $1,164.51         $6,147.09
 2013          $74.95       $4,581.69      $4,506.74      $1,104.15 $1,104.15         $6,715.04
 2014         $179.88       $9,450.79      $9,270.91      $1,715.12 $1,715.12 $12,701.15
 2015         $205.81      $11,382.12 $11,176.31 $1,397.04 $1,397.04 $13,970.39
 2016           $0.00      $10,277.42 $10,277.42           $668.03       $668.03     $12,178.48
 Total        $460.64      $39,510.09 $39,049.45 $6,048.85 $6,048.85 $51,712.15


(R.R. at 174a (emphasis in original).) Mid-Atlantic timely filed a BPT return for
2017 and paid $6,056 under protest.


                         C. Mid-Atlantic’s Tax Appeal and the THO’s Decision
        On July 31, 2017, Mid-Atlantic filed the Tax Appeal,6 asserting Monroeville
improperly assessed the BPT against it. Therein, it sought relief related to the
Reassessment Years (2012-2016).7 Mid-Atlantic first argued that Monroeville could
not assess the BPT and related penalties and interest against Mid-Atlantic because
Monroeville was preempted from doing so by Section 12 of HICPA, which states
that “[r]egistration under [HICPA] shall preclude any requirement of payment of a

        6
            It appears that the Tax Appeal is the same appeal as that filed in November and December
2016.
        7
         Mid-Atlantic included the 2017 tax year in its appeal to common pleas of the THO’s
decision. (R.R. at 171a.)


                                                  4
fee or registration or licensing of any home improvement contractor by any political
subdivision,” 73 P.S. § 517.12. Mid-Atlantic asserted it could not be made to pay
the BPT because doing so required it to register and obtain a license from
Monroeville.
      The THO rejected this argument, holding there is a distinction between the
licensing or registration of an entity or person and the taxation of the privilege of
doing business within a municipality under the LTEA. (Decision at 3.) The
assessment of the BPT and the related registration/licensing requirement on Mid-
Atlantic, the THO reasoned, was not based on Mid-Atlantic’s status as a home
improvement contractor or the intention of regulating Mid-Atlantic’s contracting
business, but on the privilege of Mid-Atlantic conducting its business operation
within Monroeville. The BPT and the registration/licensing requirements, the THO
explained, were “imposed upon all business enterprises in [Monroeville] which may
be lawfully subject to the tax pursuant to the LTEA.” (Id. (emphasis added).)
      The THO additionally rejected Mid-Atlantic’s attempt to “bootstrap” the
HICPA’s prohibition against local registration and licensing of home improvement
contractors to the assessment of the BPT. The THO concluded this argument was
not supported by the Supreme Court’s decision in City of Philadelphia v. Clement &
Muller, Inc., 715 A.2d 397, 398 (Pa. 1998), which described the boundaries of
preemption. (Decision at 4.) The THO observed that, even if Monroeville’s
licensing/registration scheme was preempted, this did not lead to the conclusion that
Mid-Atlantic was not subject to the BPT. According to the THO, the intended target
of Section 12 of HICPA was clear on its face and was limited to the registration and
licensing of home improvement contractors in order to regulate those entities’
construction activities. Because of that clear target, the “permitted” “outer bounds”



                                         5
of that preemption could be determined and did not include the preemption of the
assessment of a BPT. (Id. (citing City of Philadelphia, 715 A.2d at 398).)
       Mid-Atlantic next argued it does not have to pay the BPT, citing Subsections
301.1(f)(1) and (f)(11) of the LTEA. Subsection (f)(1), Mid-Atlantic asserted,
excepts certain activities “from any tax . . . on a privilege, . . . subject, [or] occupation
. . . which is now or does hereafter become subject to a State tax or license fee,”
53 P.S. § 6924.301.1(f)(1) (emphasis added), and, citing National Biscuit Co. v. City
of Philadelphia, 98 A.2d 182 (Pa. 1953) (National Biscuit), Mid-Atlantic claimed
the fee it pays under HICPA is the type of “State tax or license fee” that falls under
this exception. Subsection (f)(11) likewise supported an exception here, Mid-
Atlantic argued, because that provision precludes taxation “on the construction of or
improvement to residential dwellings . . . ,” 53 P.S. § 6924.301.1(f)(11), and Mid-
Atlantic provides these services.
       The THO was unpersuaded by Mid-Atlantic’s arguments and held that
National Biscuit, as well as School District of City of Scranton v. Dale and Dale
Design Development, Inc., 741 A.2d 186 (Pa. 1999) (Dale and Dale), and
Middletown Township v. Alverno Valley Farms, 524 A.2d 1039 (Pa. Cmwlth. 1987),
did not support Mid-Atlantic’s asserted exceptions under the LTEA. National
Biscuit, the THO concluded, held that not all State licensing or registration fees are
true licensing fees that support a preemption or tax exception claim. Relying on the
factors used by the Supreme Court in National Biscuit, such as the amount of the
asserted fee, the nature of the fee, and the fee’s purpose, the THO concluded that the
HICPA registration fee is not a true license fee. As for the exception for construction
and improvement to residential dwellings, the THO noted that both the Supreme
Court, and this Court, rejected similar arguments in Dale and Dale and Alverno



                                             6
Valley Farms, respectively. The THO observed that the Supreme Court in Fish v.
Township of Lower Merion, 128 A.3d 764, 770 (Pa. 2015), recently reiterated that
“business privileges and transactions are separate and distinct subjects of taxation”
and that the former could be taxed by a municipality under the LTEA. (Decision at
6 (quoting Fish, 128 A.3d at 770).) These decisions, the THO reasoned, supported
Monroeville’s assessment of the BPT on Mid-Atlantic.
        Mid-Atlantic next argued that “[i]n addition to violating the HICPA,
Monroeville’s business registration, licensing and taxation regime violates the
Uniformity Clause of the Pennsylvania Constitution” “and the Equal Protection
Clause of the United States Constitution . . . by resulting in the unequal treatment of
a whole class of taxpayers, home improvement contractors.” (Tax Appeal at 4, R.R.
at 65a.) Reviewing Mid-Atlantic’s argument, the THO found that Mid-Atlantic
“offer[ed] no specifics on precisely how these constitutional infirmities arise, only
stating their existence in conclusory fashion,” nor did it provide a “specific
explanation to support it[s] assertion that [Monroeville’s] business registration,
licensing and taxation scheme is unconstitutional.” (Decision at 6-7.) Absent the
averment of such facts, the THO held that Mid-Atlantic had not sustained its burden
of establishing that Monroeville’s assessment of the BPT “clearly, palpably and
plainly violate[d] the Constitution.” (Decision at 7 (citing City of Allentown v. MSG
Assocs., Inc., 747 A.2d 1275 (Pa. Cmwlth. 2000); D/K Beauty Supply, Inc. v. N.
Huntingdon Twp., 446 A.2d 986 (Pa. Cmwlth. 1982)).)
        For these reasons, the THO denied Mid-Atlantic’s Tax Appeal. (Decision at
7-8.)




                                          7
                            D. Mid-Atlantic’s Appeal to Common Pleas
       Mid-Atlantic appealed to common pleas, which affirmed the THO’s Decision.
After filing an appeal with this Court, Mid-Atlantic filed, at common pleas’
direction, a Concise Statement of Errors Complained of on Appeal (Statement)
pursuant to Rule 1925(b) of the Pennsylvania Rules of Appellate Procedure,
Pa.R.A.P. 1925(b). After reviewing the Statement, common pleas issued its 1925(a)
Opinion, in which it held that the THO’s findings were supported by substantial
evidence, all local procedures were followed, and the THO did not err or violate the
Constitutions by denying the Tax Appeal. Common pleas, therefore, adopted as its
own the THO’s findings, conclusions, and analysis for denying the Tax Appeal.
Mid-Atlantic now appeals to this Court, reiterating many of the same arguments.8


                          II. Mid-Atlantic’s Appeal to this Court
                                     A. Section 12 of HICPA
       Mid-Atlantic first argues, as a matter of first impression, that Section 12 of
HICPA “prohibits Monroeville from imposing any registration or licensing
requirements on Mid-Atlantic.” (Mid-Atlantic’s Brief (Br.) at 9 (emphasis added).)
This prohibition, Mid-Atlantic argues, extends to the assessment of the BPT because,
under the BPT Regulations, the payment of the BPT is inseparable from a business’s
obligation to register with and obtain a license from Monroeville. Because it cannot
be required to register and obtain a license from Monroeville under HICPA, Mid-
Atlantic maintains it cannot be subject to the BPT. Further, Mid-Atlantic argues



       8
          “In reviewing [common pleas’] decision in a tax assessment appeal, we will reverse that
decision only if [common pleas] committed an abuse of discretion, [or] an error of law, or where
its decision is unsupported by the evidence.” Douglass Vill. Residents Grp. v. Berks Cty. Bd. of
Assessment Appeals, 84 A.3d 407, 408 n.3 (Pa. Cmwlth. 2014).


                                               8
common pleas erred by finding that the BPT was enforceable against it as a
“permitted” “outer bounds” under City of Philadelphia, 715 A.2d at 398.
       Tax Office acknowledges that local taxation cannot intrude into preempted
areas, but argues that the legislature is not presumed to have preempted an entire
area simply by legislating therein. Rather, the legislature must show an intent to
preempt that field and, contrary to Mid-Atlantic’s assertions, neither HICPA
generally, nor Section 12 particularly, reflect an intent to preempt the assessment of
local taxes on home improvement contractors. Instead, the scope of Section 12’s
preemption, Tax Office argues, is clear on its face and is aimed at registering home
improvement contractors for the purposes of regulating their operational conduct.
According to Tax Office, the purpose of the “informational registration” that
Monroeville requires all business entities operating within its boundaries to undergo
is to obtain the information necessary for it to exercise its taxing power, not to
control the operational activities of those businesses.9
       The doctrine of preemption “provides, generally, that when the legislature has
preempted a field the state has retained all regulatory and legislative power for itself
and therefore prohibits local legislation in that area.” Nutter v. Dougherty, 938 A.2d
401, 406 (Pa. 2007) (internal quotation marks omitted).                 Preemption “is the
exception, not the rule,” and “[p]reemption does not result simply because the
General Assembly legislates in the field; rather, the legislature must manifest its
intent entirely to preempt that field.” Id. Thus, “absent a pervasive regulation of
every aspect of an industry or profession, the preemption doctrine does not apply.”


       9
         Alternatively, Tax Office argues that, even if the registration requirements were
preempted as to home improvement contractors, such provisions are severable from the tax
provisions pursuant to Section 11(C) of the BPT Ordinance. However, because of our disposition,
we need not discuss Tax Office’s alternative argument.


                                              9
Rose View Manor, Inc. v. City of Williamsport, 630 A.2d 474, 477 (Pa. Cmwlth.
1993) (emphasis added). On the issue of preemption and the assessment of local
taxes, the Supreme Court has explained:

      There is generally no difficulty of application where a statute explicitly
      removes a given subject from local control. Similarly, where some
      local regulation is permitted its outer bounds can usually be clearly
      determined; municipal ordinances are valid if they are not contradictory
      to or inconsistent with the statutory law. In such situations any
      questions are readily resolved because, almost by definition, the
      intention of the General Assembly is plain. Difficulties arise only when
      the legislative intent is not explicit but must be inferred.

      [In] Western Pennsylvania Restaurant Association v. Pittsburgh, [77
      A.2d 616, 619-20 (Pa. 1951), the Supreme Court] offered the following
      analytical outline:

             the question whether municipal action is permissible must
             be determined by an analysis of the provisions of the act
             itself in order to ascertain the probable intention of the
             legislature in that regard . . . . [I]f the general tenor of the
             statute indicates an intention on the part of the legislature
             that it should not be supplemented by municipal bodies,
             that intention must be given effect and the attempted local
             legislation held invalid.

City of Philadelphia, 715 A.2d at 398 (last alteration in the original). In local tax
preemption cases, this Court has cautioned that “courts should be hesitant to expand
the preemption doctrine and declare industries off limits to local taxation because
such a declaration further erodes the tax base of local taxing bodies forcing those
entities to increase the tax burden on other taxpayers.” Rose View Manor, 630 A.2d
at 477.
      Absent from HICPA is any explicit language addressing the subject of the
taxation, let alone completely removing that subject from the authority of local


                                           10
municipalities. Therefore, this is not a matter of express preemption. See id.at 478
(noting that because the asserted state laws were “silent on the issue of taxation”
they “contain[ed] no express prohibition or permission”). Because there is no
express preemption, we must determine whether, in enacting Section 12, the
legislature had the probable intention of prohibiting the assessment of BPTs against
home improvement contractors that operate a business within a political subdivision
that collects a business’s tax information via a registration or licensing process.
       HICPA was enacted in 2008 with the purpose of protecting consumers from
a variety of fraudulent and deceptive practices by home improvement contractors.
To meet that purpose, HICPA requires home improvement businesses wishing to
conduct home improvement activities on private residences in Pennsylvania to
register with the Bureau of Consumer Protection (Bureau), which maintains a
database of registered contractors. Section 3 of HICPA, 73 P.S. § 517.3. HICPA
further governs the contents of home improvement contracts and how those contracts
can be enforced, creates the offense of “[h]ome improvement fraud” and directs who
may prosecute that offense, sets forth what acts are prohibited under HICPA,10 and
provides that a violation of HICPA is a violation of the Unfair Trade Practices and
Consumer Protection Law.11 Sections 7-10 of HICPA, 73 P.S. §§ 517.7-517.10.
       Section 12 prohibits political subdivisions from registering, licensing, or
charging a fee on any “home improvement contractor” registered under HICPA. 73
P.S. § 517.12. This is consistent with the general tenor of HICPA, which focuses on


       10
          Prohibited acts include: failing to register with the Bureau; failing to issue refunds under
the enumerated circumstances; abandoning or failing to perform under a home improvement
contract; deviating from the plans or specifications without a signed change order; advertising to
perform home improvements if the person does not intend to do so; or demanding or receiving
payment before a contract is signed. Section 9 of HICPA, 73 P.S. § 517.9.
       11
          Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §§ 201-1—201-9.3.


                                                 11
consumer protection, the creation of a centralized database of registered home
improvement contractors to be used by consumers for informational purposes, and
the punishment of contractors that engage in fraudulent or prohibited acts. To
register under HICPA, contractors are required to provide the Bureau with certain
information regarding their business, such as contact information, the names and
addresses of each principal, the names and addresses of any prior home contractor
businesses operated, and the names of any business registered or licensed in other
jurisdictions. Sections 3 and 4 of HICPA, 73 P.S. §§ 517.3, 517.4. By prohibiting
the imposition of additional registration, licensing, or fees by political subdivisions,
consumers are not forced to go to multiple sources for information and contractors
are not burdened by multiple and/or differing registration requirements and fees.12
As the emphases of HICPA are on ensuring that the relationship between the
consumer and home improvement contractor is fair and protecting consumers from
fraud, among other problems, it cannot be said to “pervasive[ly] regulate[] . . . every
aspect of [the home improvement contractor] industry or profession.” Rose
View Manor, 630 A.2d at 477 (emphasis added). Accordingly, Section 12 relates to
the local registration or licensing of a “home improvement contractor” for the
purpose of regulating the home improvement activities the contractor may conduct
within the political subdivision for consumer protection purposes.
       The “registration” and “licensing” provisions complained of here are not
prompted by Mid-Atlantic’s status as “a home improvement contractor,” but by Mid-
Atlantic’s operation of a business in Monroeville. All businesses operating in


       12
         Section 12 thereby addressed a concern, expressed prior to HICPA’s passage, about the
number of municipalities with which home improvement contractors had to register. H. 192nd
Sess., Oct. 8, 2008, at 2292-93, available at https://www.legis.state.pa.us/WU01/LI/HJ/2008/0/
20081008.pdf (last visited Feb. 13, 2019).


                                             12
Monroeville are required to register with and obtain a business license from the Tax
Collector, (Section 5 of the BPT Ordinance, R.R. at 98a), and Monroeville is treating
Mid-Atlantic as it would any other business operating within its boundaries. Unlike
HICPA’s registration, which requires a significant amount of information about the
home improvement contractor, its principals, and its business history, see 73 P.S.
§§ 517.3-517.4, Monroeville’s registration requires only a business’s name, address,
business address, tax identification number, and a description of the type of business
in which it is engaged, (Section 5 of the BPT Ordinance, R.R. at 98a). Permitting
Monroeville to require Mid-Atlantic, the business, to register and obtain a license
so that Monroeville may assess the BPT, is not inconsistent or in conflict with
Section 12’s prohibition against Monroeville requiring Mid-Atlantic, the home
improvement contractor, to register and obtain a license in order for Mid-Atlantic
to perform those construction activities within Monroeville. As such, Monroeville’s
registration and licensing requirements fall within the “permitted” “outer bounds”
of local registration of home improvement contractors. City of Philadelphia, 715
A.2d at 398. Accordingly, we do not read Section 12 as evidencing a probable
intention by the legislature to prohibit the general business registration or licensing
of a home improvement contractor by a political subdivision for the sole purpose of
allowing the exercise of its taxing authority under the LTEA.
      This conclusion is consistent with our Supreme Court’s decision in National
Biscuit. Relevant to this issue, our Supreme Court explained in National Biscuit that
the $3.00 mercantile license fee businesses operating in the City of Philadelphia
(City) had to pay to obtain a mercantile license, which was used for the purpose of




                                          13
assessing the City’s equivalent of a BPT,13 was not a license fee. 98 A.2d at 189.
Instead, it was “a mere registration charge designed to inform the [C]ity of the
identity of those liable for the payment of the tax.” Id. at 189 n.4. In essence, the
fee was charged to cover the clerical expenses of registration and issuing the
mercantile license certificate. Id. at 189. Similar to the situation in National Biscuit,
all businesses operating in Monroeville must register with the Tax Collector and pay
a yearly $25.00 fee to obtain a business license. (R.R. at 113a.) This business license
is used “to inform [Monroeville] of the identity of those liable for the payment of
the tax” and the fee to cover the costs associated with registration. National Biscuit,
98 A.2d at 189 n.4. Monroeville’s collection of this information and a registration
fee for tax purposes is not inconsistent or in conflict with Section 12 and, therefore,
is not preempted by that provision.
       It is also consistent with this Court’s limited application of the preemption
doctrine in local tax cases. This Court has found few areas that have been so
pervasively regulated as to reflect the legislature’s intent to preempt any local
taxation, which include harness racing and liquor. Rose View Manor, 630 A.2d at
477. Other areas found not to be subject to such pervasive regulation include: the
licensing and regulation of the nursing home industry under the Pennsylvania Health
Care Facilities Act14 and the Department of Health’s corresponding regulations, Rose
View Manor, 630 A.2d at 477-78; the licensing and professional regulation of
lawyers by the Supreme Court, Rieders, Travis, Mussina, Humphrey & Harris v.


       13
           The issues in National Biscuit involved whether the mercantile license tax, assessed
against all qualifying businesses operating within the City for the privilege of those operations and
calculated on the businesses’ gross receipts, was preempted by various state taxes or licensing fees.
98 A.2d at 184-85.
        14
           Act of July 19, 1979, P.L. 130, as amended, 35 P.S. §§ 448.101–448.904b.



                                                14
City of Williamsport, 578 A.2d 618, 619-20 (Pa. Cmwlth. 1990); and the licensing
and professional regulation of real estate agents under the Real Estate Licensing and
Registration Act,15 Helsel, Inc. v. City of Harrisburg, 564 A.2d 546, 547 (Pa.
Cmwlth. 1989). The regulation of the relationship between consumers and home
improvement contractors under HICPA is no more pervasive than these other areas
and, therefore, we apply the holdings of Rose View Manor, Rieders, and Helsel to
conclude that Section 12 of HICPA does not preempt the assessment of the BPT
here.

                                     B. Section 301.1(f) of the LTEA
        Mid-Atlantic next asserts that Monroeville is precluded by Subsections
301.1(f)(1) and 301.1(f)(11) from assessing the BPT against it. As a preliminary
issue, we note Mid-Atlantic characterizes these provisions as exceptions and,
therefore, as having to be strictly construed against the taxing authority. Lynnebrook
& Woodbrook Assocs., L.P. v. Borough of Millersville, 963 A.2d 1261, 1265-66 (Pa.
2008). In contrast, Tax Office characterizes these provisions as exemptions, which
would be interpreted against the taxpayer. Our Supreme Court has recognized that
the exclusions set forth in Section 301.1(f) are exceptions, and, therefore, those
provisions must be strictly construed against the taxing authority. Fish, 128 A.3d at
766, 769; Lynnebrook, 963 A.2d at 1266.


                                       1. Subsection 301.1(f)(1)
        Mid-Atlantic maintains that it is subject to a “State tax or license fee” on its
construction business because it pays licensing fees to the Bureau pursuant to
HICPA and, therefore, Monroeville cannot “assess and collect . . . any tax . . . on

        15
             Act of February 19, 1980, P.L. 15, as amended, 63 P.S. §§ 455.101–455.902.


                                                15
[its] privilege . . . [or] occupation.” 53 P.S. § 6924.301.1(f)(1). These fees,
according to Mid-Atlantic, cover administrative costs but also “raise revenue to
enforce the provisions of [HICPA] and to provide for consumer education and other
programs.” (Mid-Atlantic’s Br. at 12 (citing Section 5(b) of HICPA, 73 P.S.
§ 517.5(b)).) It further maintains that HICPA’s scope and regulation of home
improvement contractors is broad and encompassing, and its specific language
preempting local registration and licensing reflects the legislature’s intent that the
only regulation of home improvement contractors should be by the state. Thus, it
asserts, the HICPA fee it pays is a true licensing fee that, pursuant to National
Biscuit, preempts the imposition of local taxes on its business, and common pleas
erred in holding otherwise.
      Tax Office argues that the fee Mid-Atlantic pays pursuant to Section 5 of
HICPA, 73 P.S. § 517.5, is not a true licensing fee that would preclude Monroeville
from assessing the BPT against Mid-Atlantic under Subsection 301.1(f)(1). Tax
Office maintains that National Biscuit does not support Mid-Atlantic’s arguments,
but the determination of the THO and common pleas that Subsection 301.1(f)(1)
does not apply here. It notes that the HICPA fee, even if paid by large numbers of
home improvement contractors, is insufficient to finance the total regulation of the
home improvement industry. The HICPA fee, Tax Office argues, is like the fee paid
by realtors to their state regulators, which has been found not to preclude the
imposition of the BPT under Subsection 301.1(f)(1). Helsel, 564 A.2d at 547.
      Subsection 301.1(f)(1) provides that “local authorities shall not have authority
by virtue of this act” “[t]o levy, assess and collect or provide for the levying,
assessment and collection of any tax on . . . a privilege, transaction, subject,
occupation or personal property which is now or does hereafter become subject to a



                                         16
State tax or license fee.” 53 P.S. § 6924.301.1(f)(1). In considering whether a local
BPT violates this provision, our Courts have applied two tests: (1) the true licensing
fee test; and (2) the duplicative tax test. Rose View Manor, 630 A.2d at 475-76.
      Under the true licensing fee test, we review “whether a charge exacted by the
Commonwealth and designated as a license fee is really a ‘true license fee,’” the
distinguishing features of which

             are (1) that it is applicable only to a type of business or
             occupation which is subject to supervision and regulation
             by a licensing authority under its police power; (2) that
             such supervision and regulation are in fact conducted by
             the licensing authority; (3) that the payment of the fee is a
             condition upon which the licensee is permitted to transact
             his business or pursue his occupation; and (4) that the
             legislative purpose in exacting the charge is to reimburse
             the licensing authority for the expense of the supervision
             and regulation conducted by it. If, therefore, even though
             the charge be labeled a “license fee,” it cannot be regarded
             as such if, being merely nominal in amount and not
             apparently equated to the probable cost of supervision and
             regulation of the licensee’s activities, it presumably was
             not legislatively intended to provide for such a cost; in
             such a case it must be considered as merely a registration
             charge intended to cover clerical costs of the issuance of
             the license certificate and general office expenses, and in
             that event it does not, of course, prevent municipal
             taxation . . . .

Id. at 475 (quoting National Biscuit, 98 A.2d at 188). In determining whether a fee
is a true licensing fee, rather than a registration charge covering clerical costs, the
Supreme Court looked to, among other factors, the amount of the fee, whether that
fee was a flat fee or a graduated fee based on the volume of business in which the
purported licensee engaged, and whether the charged fee was likely to cover the
level of regulation imposed by the statute. National Biscuit, 98 A.2d at 188-90.


                                          17
      The duplicative tax test involves “determin[ing] whether a local tax duplicates
a Commonwealth tax,” or license fee and, to do so, “the incidence of each tax must
be examined to determine if the subject matter embraced by each tax and the tax
base to which each is applied is duplicative.” Rose View Manor, 630 A.2d at 476.
“If the Commonwealth and local taxes are applied to different subject matter and to
a different tax base there is no duplication.” Id. We applied this test in Helsel to
determine whether the City of Harrisburg could impose a BPT against a real estate
agent who argued that the biannual license fee the agent paid to the Commonwealth
precluded the imposition of local taxes. 564 A.2d at 546, 548. In comparing the
state licensing fee and the local tax, we held that “it [was] readily apparent that the
nature of the taxes are so different that they are not duplicative.” Id. at 548. We
likewise applied it in Rose View Manor and came to the same conclusion after
reviewing the licensing fee a nursing home paid to the Commonwealth and the BPT
the nursing home was challenging. 630 A.2d at 477.
      The THO and common pleas applied the true licensing fee test, and the parties
agree that the true licensing fee test applies to this appeal. While the true licensing
fee test and duplicative tax test “are different, they are not inapposite,” id. at 476,
and the application of either test in this matter results in the same outcome. The
HICPA fee charged to register home improvement contractors is more akin to a
registration fee, rather than a true license fee as defined in National Biscuit, and the
BPT is not duplicative of the HICPA fee because the incidences of taxation are
different.
      Initially, we note that HICPA does not designate the fee paid by home
improvement contractors subject to its provisions a “license fee.” HICPA’s statutory
language speaks in terms of the “registration,” not licensing, of home improvement



                                          18
contractors. See, e.g., Sections 2, 3, 4, and 6 of HICPA, 73 P.S §§ 517.2 (defining
“Certificate” as “[a] certificate of registration”), 517.3 (“Registration of
contractors”), 517.4 (“Procedures for registration as a contractor”), 517.6 (“Proof of
Registration”). This is consistent with a frequent theme that arose during the debate
on HICPA: that HICPA was about registering, not licensing, home improvement
contractors. H. 192nd Sess. (House Legislative Journal), Oct. 7, 2008, at 2196,
2198; House Legislative Journal, Oct. 8, 2008, at 2293.16 However, we will not rely
solely on the nomenclature of the HICPA fee to decide whether it is a true licensing
fee.
       The initial HICPA application fee is $50.00 and the subsequent renewal fees
are $50.00 biennially, which makes this fee the equivalent of a $25.00 yearly fee.
Section 5(a) of HICPA, 73 P.S. § 517.5(a). This fee is regardless of the size of the
home improvement contractor, the volume of that contractor’s business, the amount
of advertising in which it engages, or the number of consumer contracts into which
it enters. A true licensing fee is intended to cover “the probable cost of supervision
and regulation of the licensee’s activities,” National Biscuit, 98 A.2d at 188, and it
is unlikely that the legislature could have intended that this small, flat fee was
responsible for covering the costs associated with regulating and enforcing HICPA’s
provisions. This is borne out by Section 5(b) of HICPA, which provides that this
fee, along with the penalties collected, are deposited into a “Home Improvement
Account,” the funds of which may be used for enforcement and educational
purposes. 73 P.S. § 517.5(b). Our Supreme Court has explained that “[a] license
fee cannot be conjured up merely by aggregating a number of registration fees,” but
is based on “the unit fee imposed” because as the number of licenses increases, the

       16
          Available at https://www.legis.state.pa.us/WU01/LI/HJ/2008/0/20081007.pdf and
https://www.legis .state.pa.us/WU01/LI/HJ/2008/0/20081008.pdf (last visited Feb. 13, 2019).


                                            19
amount of regulation likewise grows. National Biscuit, 98 A.2d at 190 (internal
quotation marks omitted). Given the small amount of the HICPA fee imposed per
home improvement contractor, we conclude it is not a true licensing fee, but a
registration fee meant more to cover the clerical costs of registering and issuing the
HICPA certificate than the costs of enforcing HICPA’s provisions. See, e.g., id. at
189-90 (considering the amount of a number of state fees to determine whether those
fees were true licensing fees or registration fees to cover clerical expenses); Rose
View Manor, 630 A.2d at 477 (observing that “[t]he annual renewal fee of $200.00
plus $2.00 per in-patient bed that the Commonwealth charges Rose View is more
akin to a registration fee than a true license fee as defined”).
      Further, comparing the HICPA fee and the BPT here and applying the
“duplicative tax test,” we come to the same conclusion as we did in Rose View
Manor and Helsel. As in those cases, “[t]he tax paid to [Monroeville] is a tax on
gross receipts while the [HICPA fee] paid to the Commonwealth is . . . not dependent
on the amount of gross receipts. [Monroeville’s] tax is placed on all businesses[,]
while the [HICPA] fee is directed only towards” certain home improvement
contractors. Helsel, 564 A.2d at 548; see also Rose View Manor, 630 A.2d at 476-
77.
      Accordingly, because the HICPA fee is not a true licensing fee under National
Biscuit and that fee and the BPT “are not duplicative under the LTEA,” Helsel, 564
A.2d at 548, Monroeville is not precluded by Subsection 301.1(f)(1) from assessing
the BPT against Mid-Atlantic.


                                 2. Subsection 301.1(f)(11)




                                           20
      Mid-Atlantic also contends the exception set forth in Subsection 301.1(f)(11),
related to the authority to “assess or collect a tax on the construction of or
improvement to residential dwellings,” applies here because it is engaged in that
type of business. 53 P.S. § 6924.301.1(f)(11). It argues the cases relied upon by
common pleas to find this provision inapplicable are distinguishable because Dale
and Dale and Alverno Valley Farms were decided before HICPA’s enactment, and
Fish, which was decided “only by the narrowest of margins and over a strong
dissent,” did not involve a business in the home improvement industry. (Mid-
Atlantic’s Br. at 12.)
      Tax Office responds that Mid-Atlantic’s proposed interpretation of
Subsection 301.1(f)(11) was rejected in both Dale and Dale and Alverno Valley
Farms, and Mid-Atlantic’s attempts to distinguish those cases are unavailing. It is
well-settled, Tax Office argues, that there is a distinction between the taxation of the
services a business may provide to its customers and the taxation of that business for
the privilege of operating within a municipality. Fish, 128 A.3d at 770; Gilberti v.
City of Pittsburgh, 511 A.2d 1321, 1324 (Pa. 1986). According to Tax Office, the
BPT is not a tax on home improvement contractors’ construction or renovation
services, but on the privilege of their conducting business operations in Monroeville.
The distinction between taxing the services a business entity provides and taxing the
privilege of operating a business within a municipality was reiterated, Tax Office
maintains, by a majority of the Supreme Court in Fish, notwithstanding a strong
dissent.
      Subsection 301.1(f)(11) provides that “local authorities shall not have
authority by virtue of this act” “[t]o levy, assess or collect a tax on the construction
of or improvement to residential dwellings . . . .” 53 P.S. § 6924.301.1(f)(11). In



                                          21
Alverno Valley Farms, a contractor challenged a township’s assessment of the BPT
based on the contractor’s gross receipts because, it argued, those gross receipts were
earned through its construction activities. 524 A.2d at 1040. Thus, it asserted, the
BPT was the equivalent of taxing the construction of residential dwellings and,
therefore, fell within this exception to the township’s taxing authority.               After
observing that the legislature had not demonstrated an intent to control the entire
building industry via comprehensive legislation and that the challenged tax would
be valid so long as it did not duplicate another tax, we rejected the contractor’s
argument. In doing so, we explained:

       [t]he local tax in this case does not tax the same subject matter as
       specified in section 2(11) of the Act,[17] nor is it measured by the same
       base. The local tax is a tax on the privilege to do business and it is
       measured by the gross volume, determined by receipts, of business
       conducted by the taxpayer, whereas the prohibition under section 2(11)
       of the Act addresses taxes on the construction of a residence, and thus
       has no relationship to the volume of business conducted. The impact
       of the two taxes is on a totally different basis. Carrying on a
       construction business, such as that in which appellee is engaged,
       involves much more than the construction of a residence. Section 2(11)
       of the Act therefore does not prohibit the local tax which was enacted
       pursuant to [the local o]rdinance.

Id. at 1040-41 (emphasis omitted). In Dale and Dale, the Supreme Court, citing
Alverno Valley Farms, held that the assessment of the BPT based on the gross
receipts of a contractor was “not a tax upon the construction of a residential dwelling
or the issuance of a building permit, which is prohibited.” Dale and Dale, 741 A.2d
at 189. The Supreme Court, in Fish, explained it “is established law in Pennsylvania
that business privileges and transactions are separate and distinct subjects of


       17
        Alverno Valley Farms cited Section 2(11) of the LTEA, formerly 53 P.S. § 6902(11),
which was renumbered as Section 301.1(f)(11) by Section 4 of the Act of July 2, 2008, P.L. 197.


                                              22
taxation,” and cited Dale and Dale as reflecting this distinction. Fish, 128 A.3d at
770.
       Dale and Dale and Alverno Valley Farms are directly on point and, as Tax
Office argues, rejected the argument made by Mid-Atlantic in this matter. Although
Mid-Atlantic maintains these cases are distinguishable because they occurred prior
to HICPA’s enactment, we are not persuaded.             HICPA addresses consumer
protection, not the permissible subjects of local taxation under the LTEA. Thus, its
enactment does not limit the Court’s interpretation of what subject may and may not
be taxed under the LTEA. And, under the LTEA and the decisions of our courts, the
taxation of a construction company’s gross receipts for the privilege of its operating
a business is separate and distinct from a tax on the construction services that
company may provide. While a local taxing authority is precluded from taxing the
latter under Subsection 301.1(f)(11), it is well-settled that the former is permissible.
As the BPT assessed here is based on a business’s gross receipts and is for the
privilege of operating a business in Monroeville, Subsection 301.1(f)(11) is
inapplicable here.


                     C. Uniformity Clause and Equal Protection Clause.
       Mid-Atlantic next argues it met its burden of proving that Monroeville’s
taxing scheme is constitutionally infirm because that scheme, as applied to Mid-
Atlantic, has been invalidated by HICPA and the LTEA. According to Mid-Atlantic,
Monroeville’s continued attempts to impose the invalidated BPT against it reflect an
unreasonable classification of Mid-Atlantic for the purposes of taxation. Tax Office
responds that Mid-Atlantic has not specified how the alleged constitutional
infirmities arise. Therefore, Tax Office argues, Mid-Atlantic has not met its heavy



                                          23
burden of showing that the BPT clearly, palpably, and plainly violates the
Constitutions by creating an unreasonable classification for taxation.
      Where a taxpayer attacks “the constitutionality of a tax, the burden is on the
taxpayer to show that the tax clearly, palpably and plainly violates the Constitution
by demonstrating that a classification for purposes of taxation is unreasonable.”
MSG Assocs., 747 A.2d at 1278. The taxpayer’s burden of proof is a heavy one
because “there is a presumption that the tax is constitutional.” Id. A review of Mid-
Atlantic’s constitutional arguments reveals that they are premised on this Court
finding that Monroeville’s BPT taxing scheme was invalid under HICPA and/or the
LTEA. Having not invalidated the assessment of the BPT against Mid-Atlantic
under HICPA or the LTEA, this cannot be the basis of a successful constitutional
claim. And, as Mid-Atlantic presents no other explanation or argument for how the
BPT “clearly, palpably and plainly violates the Constitution,” id., Mid-Atlantic has
not met its heavy burden of demonstrating a constitutional violation.

                                        D. Abatement
      Mid-Atlantic finally asserts that, if it prevails on its arguments on the merits,
the assessed penalties and interests would be obviated but, to the extent any
penalties, interests, or costs remain, those amounts should be abated in full. Citing
Section 508.B of the BPT Regulations, Mid-Atlantic maintains that Monroeville is
required to abate any penalty or interest that can be attributed to “erroneous advice
furnished to the taxpayer in writing” that is reasonably relied upon by the taxpayer.
(Mid-Atlantic’s Br. at 17.) Mid-Atlantic argues that the BPT Regulations and
representations by the Tax Office that Mid-Atlantic had to register and obtain a
license, contrary to HICPA, is such “erroneous advice.” (Id.) Tax Office argues
that, because Mid-Atlantic cannot prevail on the merits of its substantive arguments


                                         24
and the Revised Notices properly reflected the BPT Mid-Atlantic owed to
Monroeville, Mid-Atlantic is not entitled to any abatement under Section 508.B of
the BPT Regulations.
      Because we have found that the BPT is not invalid under HICPA, the LTEA,
or the United States or Pennsylvania Constitutions, Mid-Atlantic has not established
an entitlement to an abatement on the basis that it has prevailed on the merits of its
Tax Appeal. Moreover, we are not persuaded by Mid-Atlantic’s argument that it
received “erroneous advice,” upon which it reasonably relied that resulted in its
underpaying the BPT. Section 508.B of the BPT Regulations provides

      Monroeville shall abate any portion of any penalty or interest
      attributable to erroneous advice furnished to the taxpayer in writing by
      an officer, employee or agent of . . . Monroeville, acting in their official
      capacity . . . if:

             (1) The written advice was reasonably relied upon by the
                 taxpayer and was in response to a specific written request of
                 the taxpayer; and

             (2) The portion of the additional tax, penalty and interest did not
                 result from the failure of the taxpayer to provide adequate or
                 accurate information.

(R.R. at 156a (emphasis in original).) As discussed above, the general business
registration and licensing process set forth in the BPT Ordinance and BPT
Regulations is not preempted by Section 12 of HICPA, and, there is nothing
otherwise invalid about the assessment of the BPT. Therefore, it was not “erroneous
advice” to require Mid-Atlantic to register and obtain a business license for the
limited purpose of ascertaining tax liability in accordance with those provisions. Id.
Thus, abatement pursuant to Section 508.B of the Regulations is unavailable to Mid-
Atlantic.


                                          25
                                  III.    Conclusion
      For the foregoing reasons, Monroeville is not preempted by Section 12 of
HICPA or precluded by Subsections 301.1(f)(1) or (11) of the LTEA from assessing
the BPT against Mid-Atlantic. Further, Mid-Atlantic has not met its burden of proof
on its constitutional claims and has not established any entitlement to an abatement
of the penalties, interests, or costs imposed by the THO. Accordingly, common
pleas’ Order is affirmed.

                                         _____________________________________
                                         RENÉE COHN JUBELIRER, Judge




                                          26
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Mid-Atlantic Systems of WPA, Inc.,      :
                        Appellant       :
                                        :
                  v.                    :   No. 588 C.D. 2018
                                        :
The Tax Office of the Municipality      :
of Monroeville                          :


                                     ORDER


      NOW, March 4, 2019, the Order of the Court of Common Pleas of Allegheny
County is AFFIRMED.



                                      _____________________________________
                                      RENÉE COHN JUBELIRER, Judge
