The City of Philadelphia is claiming that Pottsville, Pa.-based beer maker D.G. Yuengling and Son Inc. owes it more than $6 million in unpaid business taxes and fines, arguing in a recently filed civil action that the brewery, a Pennsylvania staple, has failed to pay business income and receipts taxes for the tax years 2008 through 2011.
In a suit filed Jan. 30 at the Philadelphia Court of Common Pleas by Assistant City Solicitor Susan M. Crosby, the city alleges that Richard L. Yuengling, Jr. owes the Philadelphia Revenue Department $6,634,290.89 in the levy formerly known as the business privilege tax and other fees.
The city, in its filing, breaks down that figure as follows: $3,960,335 in taxes, $963,125.78 in accrued interest, and $1,710,830.11 in penalties.
The Audit Division of the city’s Revenue Department attempted to examine and audit the records of the beer company for the tax years of 2008 through 2011, the complaint states, but the defendant was not cooperative.
The lawsuit states that the tax assessments were made based solely on the accounts payable list of a Philadelphia beer distributor, since the defendant did not cooperate and supply its records as requested.
“Original assessments mean that the Defendant Corporation did not file the required Business and Income Receipts Tax returns for the years 2008 through 2011,” the suit reads.
City attorneys claim that the brewery was notified of the assessments back in October, when the audit bill was mailed to its Schuylkill County headquarters, and that Yuengling failed to file a timely Petition for Review on the merits with the Tax Review Board for the allegedly unpaid taxes.
“Plaintiff made demands upon Defendant Corporation for the payment of the sums set forth above,” the suit states. “Defendant Corporation has failed to pay the same or any part thereof.”
Yuengling, billed as America’s oldest brewery, has become a Pennsylvania favorite throughout the years since its founding as the Eagle Brewery back in 1829, according to a biography on the company’s website.
The company has since branched outside of the commonwealth, with its beer being sold in about 14 states and Washington, D.C.
The website says it has two breweries, the one in Pottsville, Pa., and another in Tampa, Fla.
The fact that the business has no brewery or plant in Philadelphia has raised some red flags surrounding the city’s civil action, with the Philadelphia Inquirer recently reporting that it is unclear how the beer company supposedly came to owe the contested back taxes because nobody from the city would comment on the lawsuit or even “explain the basic foundation of the claims.”
The paper reported that the Business Income and Receipts Tax, which up until recently was known as the Business Privilege Tax, can be levied on any individual or corporation that engages in any type of taxable activity within Philadelphia.
David A. Casinelli, chief operating officer at Yuengling, told the Republican Herald newspaper in Pottsville this week that the foundation for the lawsuit seems to be a tax dispute between the company and the city with regard to who should and shouldn’t pay the business income and receipts tax.
Casinelli told the paper that Yuengling sells its beer in the Philadelphia area through an independent beer distributor called Origlio Beverage in Northeast Philadelphia.
“The wholesaler already pays a business privilege tax for having their business in Philadelphia,” Casinelli told the Republican Herald. “Under Pennsylvania state law, the brewery is not allowed to self-distribute. We have to go through an independent business distributor, and where the contingent will probably be is whether or not there will be double taxation and the brewery is liable for a business privilege tax.”
Mark McDonald, the spokesman for Mayor Michael Nutter’s Office, told both the Republican Herald and the Inquirer that the city wouldn’t be commenting further on the matter because it is active litigation.
Aside from D.G. Yuengling and Son Inc. and its owner, Richard Yuengling, Jr., the lawsuit names company officer George R. Smith as a defendant.
In addition to the back taxes, the lawsuit seeks to have a judge fine the defendants $1,200.
The case ID number is 130103549.