Pennsylvania Statutes Title 72 P.S. Taxation and Fiscal Affairs § 7231. Mode and time of assessment

(a) Underpayment of Tax.  Within a reasonable time after any return is filed, the department shall examine it and, if the return shows a greater tax due or collected than the amount of tax remitted with the return, the department shall issue an assessment for the difference, together with an addition of three per cent of such difference, which shall be paid to the department within ten days after a notice of the assessment has been mailed to the taxpayer.  If such assessment is not paid within ten days, there shall be added thereto and paid to the department an additional three per cent of such difference for each month thereof during which the assessment remains unpaid, but the total of all additions shall not exceed eighteen per cent of the difference shown on the assessment.

(b) Understatement of Tax.  If the department determines that any return or returns of any taxpayer understates the amount of tax due, it shall determine the proper amount and shall ascertain the difference between the amount of tax shown in the return and the amount determined, such difference being hereafter sometimes referred to as the “deficiency.”  A notice of assessment for the deficiency and the reasons therefor shall then be sent to the taxpayer.  The deficiency shall be paid to the department within thirty days after a notice of the assessment thereof has been mailed to the taxpayer.

(c) Failure to File Return.  In the event that any taxpayer fails to file a return required by this article, the department may make an estimated assessment (based on information available) of the proper amount of tax owing by the taxpayer.  A notice of assessment in the estimated amount shall be sent to the taxpayer.  The tax shall be paid within thirty days after a notice of such estimated assessment has been mailed to the taxpayer.

(d) Authority to Establish Effective Rates by Business Classification.  The department is authorized to make the studies necessary to compute effective rates by business classification, based upon the ratio between the tax required to be collected and taxable sales and to use such rates in arriving at the apparent tax liability of a taxpayer.

Any assessment based upon such rates shall be prima facie correct, except that such rate shall not be considered where a taxpayer establishes that such rate is based on a sample inapplicable to him.