By Peter N. Calcara, PICPA vice president, government relations

As the long days of summer come to an end, Pennsylvania state lawmakers are heading back to Harrisburg for a quick legislative session. House members will be the first to return to the Capitol, coming in Sept. 12; Senators will return Sept. 19. While there are only a handful of session days before November’s election recess, lawmakers can use this narrow window to add to their list of 2021-2022 legislative accomplishments.

One noncontroversial bill the PICPA continues to press lawmakers on deals with the CPA Law. House Bill 1328, sponsored by Rep. Keith Greiner, CPA, will codify a nationally recognized code of professional conduct standard, strengthen peer review requirements of CPA firms, expand the scope of education that can be applied toward an accounting degree, and allow accounting students to sit for the CPA Exam with 120 credit hours. The bill received unanimous support in the House and is pending in the Senate.

Taking up tax legislation outside the spring and summer budget process is typically a nonstarter, but this year has been anything but typical. The PICPA will continue to pursue legislation that creates an optional pass-through entity (PTE) tax. Legislation sponsored by Rep. Martina White (R-Philadelphia) and Sen. Ryan Aument (R-Lancaster) would introduce this state tax to open up a federal tax benefit to many PTEs and small-business owners who are limited in their ability to deduct state and local taxes due to the 2017 Tax Cuts and Jobs Act (TCJA). Additionally, the bill would clarify the statutory language under which the Department of Revenue currently penalizes Pennsylvania resident partners who elect to pay similar PTE taxes in other states.

From a competitiveness perspective, Pennsylvania is the last remaining large state that has not yet enacted SALT parity legislation. In fact, 29 of the 41 states that impose a personal income tax have adopted this new taxing regime, as permitted by the IRS. States surrounding Pennsylvania that have enacted PTE laws include New York, Maryland, New Jersey, Ohio, Virginia, and Connecticut.

The federal TCJA created a $10,000 state and local tax deduction limitation through 2025 (with extensions of this date regularly proposed in Congress). The cap prevents many individuals from being able to fully deduct state and local income and property taxes on their federal income tax returns. With the adoption of the PTE tax, there should be no fiscal impact on Pennsylvania, as it is structured to allow federal tax deductions.

Two other state tax measures may also still be in play. House Bill 1059, sponsored by Rep. Dave Hickernell (R-Lancaster), provides a phase-in schedule for increasing the threshold for making required quarterly estimated payments under the personal income tax, from $8,000 to $20,000, with an annual increase of $500 each year thereafter. The bill passed the House unanimously and is pending in the Senate Finance Committee.

House Bill 2277, sponsored by Rep. Jesse Topper (R-Bedford), eliminates the current accelerated sales tax prepayment provisions that require certain businesses to prepay sales taxes prior to actually collecting the taxes from consumers on monthly sales. Unanimously approved by the House last April, the bill is pending in the Senate Finance Committee.

With only a handful of legislative days remaining in the 2021-2022 session and the General Election in November, Pennsylvania lawmakers have an opportunity to enact important tax legislation that will benefit taxpayers and businesses.

The PICPA government relations team advocates for CPAs in Harrisburg 52 weeks a year. You can help us by contributing to the CPA-PAC. These funds open doors for us, and allow us to fight for the CPA community face to face.

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