With undisguised reluctance, Commonwealth Court has issued an order requiring a Philadelphia man to pay a $280,772 tax bill that he probably doesn't really owe.



In fact, city officials acknowledged in court that the tax bill they sent Nathan Lerner was a "jeopardy assessment" based on a fabrication.



The problem is that Lerner didn't follow the right procedural course in challenging it, a Commonwealth Court panel found in a ruling issued this week. And so, the state judges determined, he's stuck with that unfounded tax tab.





The Pennsylvania Judicial Center

Lerner's saga illustrates the complexity of the tax appeals system, the difficulty in navigating it and the peril of not obeying court orders. He initially tried to tackle the appeal process without a lawyer after the city filed a complaint against him in 2009, alleging that he owed more than $200,000 in unpaid business privilege, wage and net profits taxes for 2003 to 2006.



That figure had no basis in fact, however.



Philadelphia has a policy of sending out tax delinquency notices with fictional "jeopardy assessments." Those assessments aren't based on any actual tax determination, and are set deliberately high to induce the targeted taxpayer to contact the city's revenue department to determine the true amount of tax owed, Judge Mary Hannah Leavitt wrote in the Commonwealth Court opinion on the Lerner case.



Philly's revenue collection manager, Denise Reynolds, admitted as much during a 2013 Philadelphia County Court hearing on the Lerner dispute. Leavitt highlighted Reynolds' testimony in her court's opinion.



When Lerner's attorney asked Reynolds whether the jeopardy assessment "is just something you make up to scare the taxpayers to come in," Reynolds replied, "Basically, yes."



Asked about the origin of the numbers for the jeopardy assessments, Reynolds said her manager "really just makes them up."



"We try to make it really high," she said. "We want them to come in and make sure the figures are accurate."



Leavitt noted Lerner's contention that he didn't owe any of the taxes sought by the city. He claimed he didn't even own a business and subsisted primarily on Social Security. In a footnote to her opinion, Leavitt cited the city's claim that Lerner had a business partnership with another man who had made payments to him. Lerner refused to provide the city with any financial records.



According to court filings, Lerner made some legal missteps while trying to fight the tax battle on his own. The fatal one, the Commonwealth Court found, is that he didn't obey county Judge Leon W. Tucker's order to pay for a transcript of a city Tax Review Board hearing on the matter.



That refusal left Tucker, despite his finding that the city's tax figure "was unsupported by any evidence," with no option but to dismiss the tax appeal on grounds that Lerner had waived his right to challenge the validity of the assessment. Her court is "constrained" to uphold Tucker's "reluctant" decision, Leavitt concluded.



Still, Leavitt wrote that Lerner's "challenges to the city's 'fictional' assessment may have merit; the city's strong-arm collection tactics may well lack authority in law."



Lerner's lawyer, Matthew J. Wolfe, who is representing him at no charge, said Friday that no decision had yet been made on whether to appeal the Commonwealth Court ruling to the state Supreme Court.

Wolfe, who called Lerner's tax plight "ludicrous," said there is a good chance such an appeal will be filed, however.