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Legislative Update

Week Ending March 2, 2007

• Extensions Available for Unclaimed Property Reports
• Revenue Department Clarifies PA Form 1099
• Oil Company Gross Profits Tax Comes Under Scrutiny
• February Revenue Collections Released

Extensions Available for Unclaimed Property Reports

Pennsylvania’s Treasury Department will consider extension requests for filers of first-time unclaimed property reports, on a case-by-case basis. The deadline for all filers is April 17. Extension requests must be sent in writing, stating the reasons for the request, and can be sent to unclaimedpropertyreporting@patreasry.org. View the fact sheet for more filing requirements and resources.

Unclaimed property is any financial asset that has been left with a “holder,” such as a bank, insurance company or other business or organization, without activity or contact for a period of about five years. Examples of unclaimed property include bank accounts that become inactive; stocks and bonds whose owners cannot be found; contents of safe deposit boxes that become dormant; insurance proceeds; and expired gift cards that are not redeemed.

Revenue Department Clarifies PA Form 1099

As we reported in last week’s issue, PICPA and the Department of Revenue have been engaged in a dialogue concerning the department’s position regarding Form 1099 reporting for 2006 Personal Income Tax (PIT) purposes.

According to the department, taxpayers receiving and reporting 1099R distributions on their PA-40 income tax returns are to report and include all 1099R distributions whether or not the distributions are taxable to Pennsylvania on PA Schedule W-2S, Part B. Taxpayers should also report on PA Schedule W-2S, Part B, all 1099MISC income not reported on Schedule C, whether or not taxable to Pennsylvania. E-filers are not required to submit the 1099R forms separately.

Members are encouraged to contact PICPA with tax filing-related issues. Your concerns will be raised at a post-tax season meeting with the department.

Oil Company Gross Profits Tax Comes Under Scrutiny

Gov. Ed Rendell’s plan to subject oil companies doing business in Pennsylvania to a new 6.17 percent gross profits tax came under heavy questioning this week in both the House and Senate as lawmakers continue sifting though the details of the 2007-08 budget.  

On Monday, Acting Revenue Secretary Tom Wolf told the Senate Appropriations Committee that gross profits are at the end of the pricing chain, making it hard for oil companies to price for the tax, so the Rendell administration believes it will not be passed on to consumers. When questioned if there is any kind of legal opinion on whether this is even possible, Sec. Wolf reiterated that since this is a new tax he does not know if a court will find it legal. The secretary also noted that under the proposal oil companies would be exempt from paying the Corporate Net Income Tax.

Budget Secretary Michael Masch appeared before the Senate committee Wednesday to answer more questions about the proposed state budget. The committee questioned the legality of prohibiting passing on the additional tax to the consumer. Sec. Masch indicated that the Governor would not have made the proposal if he did not think it could pass legal muster.

State Attorney General Tom Corbett, appearing before the House Appropriations Committee, told legislators that he was contacted an hour and a half before Gov. Rendell’s Feb. 6 budget address about the proposed tax, but prior to that he received no consultation or proposed legislation regarding the plan. Corbett acknowledged that it is “impossible” to be able to predict how his office could enforce such a proposal.

Budget hearings continue next week in both the House and Senate.

February Revenue Collections Released

The state collected $1.6 billion in General Fund revenue in February, $17.2 million, or 1.1 percent more than anticipated, the Department of Revenue reported this week. Fiscal year-to-date General Fund collections total $15.3 billion, which is $112.1 million, or 0.7 percent, above estimate.

Sales Tax receipts totaled $612.3 million for February, which was $15.1 million above estimate. Sales Tax collections year-to-date total $5.7 billion, which is $27.4 million below estimate or 0.5 percent less than anticipated.

Personal Income Tax (PIT) revenue in February was $697.7 million, which was $6.3 million below estimate. This brings year-to-date PIT collections to $6 billion, which is $67.2 million or 1.1 percent above estimate.

February Corporation Tax revenue of $79 million was $2.3 million below estimate. Year-to-date Corporation Tax collections total $1.8 billion, which is $82.2 million, or 4.9 percent, above estimate.

Other General Fund revenue figures for the month included $51.5 million in Inheritance Tax, which was $8 million below estimate and brought the year-to-date total to $481.3 million, which is $27.6 million below estimate.

Realty Transfer Tax was $33.9 million for February, bringing the total to $386.7 million for the year, which is $26.2 million less than anticipated.

Other General Fund revenue including the Cigarette, Malt Beverage and Liquor Tax totaled $113.4 million for the month, $23.6 million above estimate, bringing the year-to-date total to $918.5 million, which is $44 million above estimate.

The Gaming Fund received $168.5 million in unrestricted revenues for February. Fiscal year-to-date collections for the fund total $344.2 million. Gaming Fund receipts include taxes, fees and interest. Of the total for the month, $17.7 million was collected in state taxes for property tax relief, bringing the year-to-date total to $42.5 million.

Other gaming-related revenues collected for February included $2.1 million for the Local Share Assessment, for a total of $6 million for the year; $2.6 million for the Economic Development and Tourism Fund, for a year-to-date total of $6.2 million; and $6.2 million for the Race Horse Development Fund, bringing the total for the year to $15 million.