On March 5, 2024, Partner and Chair of the Firm’s Local Taxation and Assessment Practice Group, Jonathan M. Huerta, argued Circle of Seasons Charter School, Appellee v. Northwestern Lehigh School District, Appellant before the Pennsylvania Supreme Court in Philadelphia, on behalf of Northwestern Lehigh School District.
Recently, the Supreme Court unanimously ruled in favor of the District, thereby dismissing a Charter’s School attempt to collaterally attack real estate taxes collected and preserving over a quarter of a million dollars of school district funds.
Facts In The Case
The case involves Circle of Seasons Charter School, which purchased properties from Pennsylvania State University in 2017. Following the sale, Lehigh County issued assessment notices changing the properties’ status from non-taxable to taxable, effective January 1, 2018.
While the notices lacked the a specific mailing date, they nevertheless informed the Charter School of its right to appeal and deadline for same. The Charter School claimed it did not receive the notices but later paid delinquent taxes during a property refinancing.
After filing an appeal and obtaining tax-exempt status from January 1, 2019, the Charter School sought a refund of taxes paid for 2017 and 2018.
Issues and Arguments
The key issues are whether the Charter School failed to exhaust its administrative remedies by not challenging the reassessment before the Board, and whether the Commonwealth Court erred in granting nunc pro tunc relief based on the defective notices. The School District argues that the Charter School was required to establish its eligibility for the exemption and failed to do so timely. The Charter School contends that its property was presumed exempt and that the School District had no basis to levy taxes.
Discussion and Holding
The Supreme Court held that when a tax-exempt property is sold, the county assessment office can reassess it as taxable, and the new owner bears the burden of establishing the property’s continued right to tax exemption.
Moreover, the Court held that public schools and approved charter schools that own property used for public purposes, while entitled to tax exemption, do not enjoy tax immunity. Further, the Charter School waived its claims by failing to request a refund or to challenge the effective date of the exemption when it appealed to the Board in 2018.
The Court also found the Commonwealth Court erred in granting nunc pro tunc relief because the Charter School had an opportunity to challenge the assessments but neglected to diligently pursue relief.
The Court reversed the Commonwealth Court’s order and reinstated the trial court’s dismissal of the Charter School’s complaint.
Bottom Line for Schools
Charter Schools, as public schools, are entitled to tax exemption, but not tax immunity. Exemptions are not automatic, and the requesting party bears the burden of applying for and proving entitlement to exemption.
Where the County’s Notice of a change in assessment lacks certain statutorily required information, a taxpayer is entitled to a hearing before the Board of Assessment but can waive that right by not presenting the issues during the hearing and/or by not being diligent in exercising their right to a hearing.
