Gentex Corporation v. Department of Revenue

Gentex Corporation applied for Pennsylvania's Research and Development Tax Credit for the 2017 tax year on September 18, 2017, three days after the September 15 statutory deadline. The Department of Revenue rejected the application as untimely in a December 15, 2017 letter that provided no information about Gentex's appeal rights or next steps. Gentex, relying on general guidance from the Department's website describing the Board of Appeals as the standard first step for contesting adverse Department decisions, filed an appeal with the Board — which, roughly five months later, ruled that it lacked jurisdiction because the Research and Development Tax Credit Law contains no administrative appeal provision, and that the December 2017 letter was instead a final determination appealable directly to the Commonwealth Court.

The Taxpayers' Bill of Rights Required Notice of Appeal Procedures

The court held that Section 202 of Pennsylvania's Taxpayers' Bill of Rights (TBOR) obligated the Department's Secretary to establish and disclose 'the procedures by which a taxpayer may appeal or seek review of any adverse decision of the department,' and that this obligation applied to the credit denial even though the Research and Development Tax Credit Law itself contains no appeal provision. Because neither the December 2017 denial letter nor any other guidance told Gentex that the letter constituted a final, directly appealable determination, the court found Gentex reasonably relied on the Department's general website guidance describing the Board of Appeals as the proper venue.

Departmental Misdirection Supported a Nunc Pro Tunc Appeal

Applying Walker v. Unemployment Compensation Board of Review, the court held that notice of appeal procedures which misleads a party into filing an untimely appeal can furnish adequate grounds for a nunc pro tunc appeal of the agency's decision. Because the Department's own conduct — failing to identify the correct forum or the finality of its December 2017 letter — caused Gentex's confusion, and because Gentex filed its Petition for Review with the Commonwealth Court within 30 days of the Board informing it of the correct procedure, the court found Gentex had adequate grounds for a nunc pro tunc appeal.

The court vacated the Board's determination and remanded the matter to the Department to give Gentex an opportunity to be heard and to develop a factual record, expressly declining to reach the merits of whether Gentex was entitled to the Research and Development Tax Credit itself.

Significance: While the court did not decide whether Gentex actually qualified for the credit, this decision is significant for confirming that Pennsylvania's Taxpayers' Bill of Rights imposes an independent notice obligation on the Department of Revenue even for tax credit programs, like the Research and Development Tax Credit, whose enabling statute contains no administrative appeal provision of its own — and that the Department's failure to satisfy that obligation can revive an otherwise-lapsed appeal.