By Elizabeth Cha and Amy Nogid

Pennsylvania’s Commonwealth Court agreed with the Department of Revenue (Department) that the Department’s letter rulings addressing the taxability of actual transactions were not subject to review by the Board of Finance and Revenue (Board). Members of BJ’s Wholesale Club, Inc. (Taxpayers) alleged that they were due a refund of sales taxes because tax should only have been collected on the net amount of the sales price on taxable items after reduction for the value of the manufacturer’s coupon. The Department’s Office of Chief Counsel had issued two letter rulings concluding that Taxpayers’ purchases were properly taxed in full because the receipts did not adequately describe the items to which the coupons related. Taxpayers petitioned the Board to overturn the letter rulings, but the Board dismissed on the basis that it did not have jurisdiction to reverse letter rulings. The court agreed that letter rulings are a subset of advisory opinions and are not appealable under either the Taxpayer’s Bill of Rights or other statutory provisions addressing claims for refunds.

While the letter rulings here are arguably refund denials since they relate to actual and not hypothetical transactions, and are not “advisory opinions” which provide guidance on future transactions, this decision is consistent with the positions of many state revenue departments (and confirmed by many state courts) that review is available for only certain types of notices that constitute “jurisdictional” documents. Myers v. Commw., No. 706 F.R. 2014 (Pa. Commw. Ct. Nov. 24, 2015).