Franklin Co. ready to refund if necessary

April 08, 1998|By DON AINES

CHAMBERSBURG, Pa. - Franklin County has money set aside in case a recent Pennsylvania Supreme Court ruling should lead to an order that county residents get refunds for taxes paid on stocks and bonds.

The state's highest court ruled Tuesday that county tax on stocks and bonds unfairly discriminates against out-of-state companies, but it stopped short of deeming the tax unconstitutional.

The court ordered the Montgomery County Common Pleas Court to hold a hearing to determine whether the tax violates the commerce clause of the U.S. Constitution, which could set the stage for forcing many counties to refund money already collected from taxpayers.

The County Commissioners voted out the unpopular tax on Aug. 6, 1996, but the Tuesday ruling could mean 42 of the 67 counties in the state owe millions to taxpayers, according to the County Commissioners Association of Pennsylvania.


When the commissioners eliminated the four-mill tax on stocks, bonds and other holdings, the county set aside $2.5 million for any court-ordered refunds in case the tax was found to be unconstitutional, according to Commissioner Cheryl Plummer. The tax generated about $4 in revenues on every $1,000 of taxable investments.

"We felt it was an unfair tax because there was no way to determine whether everyone who owed the tax was paying it," Plummer said Wednesday.

"It was a tax pretty much paid on the honor system," said Fulton County, Pa., Solicitor Stanley Kerlin. County Chief Clerk Richard Wible said the Fulton County Commissioners also eliminated the tax at the end of 1996.

The $2.5 million banked by Franklin County represents the last two years of collections, but a successful court challenge may mean refunds could apply back to 1994, when the county collected $1.15 million.

It's less of an issue for Fulton County.

According to Wible, the county sent out tax bills each of those years averaging $22,000. He did not have figures available on how much was collected.

The case the high court ruled on extends back three years when billionaire Walter Annenberg challenged the tax in Montgomery County, Pa. He refused to pay $3 million in taxes on the $720 million trust fund he oversees.

Annenberg claims the tax is unconstitutional because it unfairly taxes stocks of out-of-state corporations doing business in Pennsylvania.

In 1996, the U.S. Supreme Court declared unconstitutional "a virtually identical personal property tax" in North Carolina, according to a fax sent to counties Wednesday from Douglas E. Hill, executive director of the County Commissioners Association.

"If there's a decision to repay, that's what we're going to do," said Franklin County Commissioner G. Warren Elliott.

The high court gave the Montgomery County Court six months in which to determine the tax's constitutionality.

"I don't know if, at this point, we have a clue how many people have filed or how many dollar bills they're asking for," Franklin County Solicitor Welton Fischer said. "There's a lot.".

Fischer said some are valid tax appeals, while others are letters from taxpayers asking for their money back. He said sorting it out could be "a massive undertaking."

Kerlin said the number in Fulton County is "less than 10."

Hill's fax stated that as much as $230 million could be owed statewide.

The Herald-Mail Articles