City can’t impose business tax on parent of health system

The City of Allentown, PA, cannot impose a business privilege tax on revenue received by the parent entity of a healthcare system from providing services to its nonprofit affiliates.  A trial court has held that the activity is not engaged in for profit and is therefore not subject to the tax.

The City of Allentown imposes a business privilege tax on any activity “carried on or exercised for gain or profit in the City, including … the sale of merchandise or other tangible personality or the performance of services.”