Upper Burrell-Washington Township tax lawsuit sets state precedent

In a first-of-its-kind ruling, a panel of Pennsylvania judges this month declared that a business that crosses municipal borders must pay at least some local services taxes to any municipality its building touches.

In a decision on the four-year-old case, Commonwealth Court judges wrote that local services taxes should not be split evenly but paid based on how much of that business is located in a municipality.

The specific case in question stems from 2014, when Washington Township sued neighboring Upper Burrell, seeking half of the estimated $39,000 in annual local services tax revenue collected from Leed's, also known as Polyconcept North America or Welsh Leedsworld. With an estimated 750 employees on site, Leed's, which supplies promotional products, is one of the larger employers in the Westmoreland Business & Research Park along Route 780.

The park straddles the Washington Township-Upper Burrell border, and the Leed's property there also straddles that border.

Upper Burrell and Burrell School District had been collecting all of the $52-per-worker tax paid by the employees working at the company's building at 400 Hunt Valley Road.

However, since about 25 percent of those employees work primarily in Washington Township's portion of the building, Westmoreland County Judge Richard E. McCormick in 2015 awarded the township 25 percent of the tax revenue.

Lawyers for Washington Township appealed that decision, saying the township should get half of the tax revenue, since taxing workers based on where they specifically work in a building would result in, according to court documents, “an overly strict and narrow interpretation of an employee's place of employment not intended by the general assembly.”

Commonwealth Court Judge Michael Wojcik, who authored the most recent decision, agreed with the appeal in part, saying that making municipalities or employers determine where, exactly, inside of a building a worker did their work would be needlessly burdensome. Still, Wojcik wrote, the matter isn't such that it should be split right down the middle between the towns, because the business itself isn't split evenly.

“Because the place of employment encompasses the whole facility, not just the building, the proper allocation must relate to the division between townships,” Wojcik wrote, in part.

As a result of the decision, Upper Burrell will receive 72 percent of the local services tax, while Washington Township will receive the remaining 28 percent — mirroring the percentage of the Leed's building in each township.

Steve Yakopec, Upper Burrell's solicitor, said the decision strikes him as remarkably fair.

“This is what Upper Burrell wanted,” he said. “This makes sense to me.”

Yakopec said that, because this is the first time a case of this nature has been heard by the courts, it will affect any business that straddles two or more municipalities in the state.

“This will be a law statewide. This has never been decided by an appellate court before,” he said.

Wes Long, Washington Township solicitor, did not immediately return a request for comment.

Matthew Medsger is a Tribune-Review staff writer. Reach him at 724-226-4675, mmedsger@tribweb.com or via Twitter @matthew_medsger.