When Nathan Lerner got a $280,772 tax bill from the city of Philadelphia, he knew something fishy was going on.
In fact, he claimed he didn't owe the city a cent — and Philadelphia's revenue manager essentially backed him up.
But last week, as the Patriot-News reported, a judge reluctantly ruled that Lerner couldn't challenge the fabricated bill, all because Lerner had tried to represent himself in court and bungled a bureaucratic order.
The case began in 2009, when the city of Philadelphia alerted Lerner that he owed more than $200,000 in unpaid business privilege, wage and net profits taxes for 2003 to 2006.
The notice was a "jeopardy assessment," or in layman's terms, a totally made-up tax bill.
During questioning in 2013, Lerner's attorney Matthew J. Wolfe asked Philadelphia's revenue collection manager, Denise Reynolds, whether a jeopardy assessment "is just something you make up to scare the taxpayers to come in [to the tax offices]."
Her response: "Basically, yes."
Asked where the specific amount due on a jeopardy assessment comes from, Reynolds said her manager "really just makes them up."
"We try to make it really high," she elaborated. "We want [the taxpayer] to come in and make sure the figures are accurate."
But despite the fact that Lerner's owed tax amount came from thin air, he apparently made a major error when he first began fighting the bill, representing himself in court.
A county judge had ordered Lerner to pay for a transcript of a city tax review board hearing on his case, but Lerner didn't do it.
Because of that refusal, the county judge ruled that despite the fact that the city's tax bill "was unsupported by any evidence," Lerner had waived his right to challenge the bill by not following procedure.
Commonwealth Judge Mary Hannah Leavitt wrote last week that "challenges to the city's 'fictional' assessment may have merit; the city's strong-arm collection tactics may well lack authority in law" — but she upheld the county judge's decision, writing that she was "constrained" to uphold the county judge's "reluctant" decision that Lerner had to pay since he'd flubbed a technicality.
Lerner's lawyer, Wolfe, is representing Lerner pro bono, and said they may try to take the case to the state supreme court.
In court proceedings, Lerner claimed that he didn't own a business, as Philadelphia tax collectors said he did, and that he lives primarily on Social Security.
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