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Local Chocolate Factory Reopens Following Tax Dispute With City

By Mike Dunn

PHILADELPHIA (CBS) - A Kensington chocolate factory is open for business today and tomorrow after coming to terms with the city over a tax dispute that prompted a forced closure on Wednesday (see related story).  The owner, though, is fuming and threatening legal action.

The chocolate Easter bunnies at the Blasius Chocolate Factory in Kensington will be hopping off the shelves this weekend now that the owners have agreed to settle their tax bill with the city.

Owner Phil Kerwick says he reluctantly agreed to pay $5,000 as a down payment on back taxes in order to stay open:

"I had to sign papers to pay full penalty and interest on taxes that I do not owe.  It was extortion, and my lawyer says its illegal, and we will be fighting that."

phil kerwick
Blasius Chocolate Factory owner Phil Kerwick. (Credit: CBS3)

The dispute date is over the city's "Use and Occupancy Tax."  Kerwick says he should not have to pay a full year's worth of the tax, given that he's only open half the year, but he says the Revenue Department doesn't want to hear that:

"They just laugh at you.  It's the third world.  Its anti-business, and they just extort money.  This is not a democracy anymore.  This is a fascist dictatorship."

A spokesman for the Nutter Administration, Mark McDonald, says this week's actions had nothing to do with Easter, but rather were the culmination of a process that began back in December:

"The first Cease Operations order was sent to them in January, following which they received five more.  Its just a long line of failure to follow the orders that the city has sent this gentleman."

McDonald says the effort to reclaim back taxes from the firm is part of a larger Revenue Department effort aimed at companies that are tax delinquent:

"Starting last May, the city began a program where it started to use commercial activity licenses -- which is something that all businesses have to have to operate in the city -- started to use it as a lever to encourage tax delinquents to settle with the city."

McDonald says that effort has resulted in 700 firms paying $17 million in delinquent taxes, and $7 million in negotiated agreement amounts.  Kerwick, though, claims he's been targeted as political payback:

"I was a ward leader at one time, and I went to the FBI on corruption in the city, and identified all the judges that took bribes."

Kerwick says the Blasius Chocolate Factory opened in 1926.

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