PICPA Charitable Purposes Reforms Signed into Law
On Dec. 22, 2017, two legislative measures, supported by the PICPA, that amend the Pennsylvania Solicitation of Funds for Charitable Purposes Act were signed into law by Gov. Tom Wolf. State Rep. Keith Greiner (R-Lancaster), CPA and PICPA member, was the prime sponsor of both pieces of legislation.
House Bill 1420, now Act 71 of 2017, raises the threshold of annual contributions to $750,000 before it triggers the need for an audit by a CPA. Those receiving annual contributions of at least $250,000, but less than $750,000, will be required to have a review or audit; and those with annual contributions of at least $100,000, but less than $250,000, will be required to have a compilation, review, or audit. A compilation, review, or audit will be optional for any charitable organization that receives annual contributions of less than $100,000.
House Bill 1421, now Act 72 of 2017, clarifies that any state registration form filed for charitable purposes will be timely filed if postmarked on or before the renewal date. Currently, registration statements are only considered timely filed if they are received before the renewal date. This bill also provides for a uniform 15-day review period for the Department of State’s Bureau of Corporations and Charitable Organizations.
Both measures go into effect 60 days after enactment.
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Bills Proposed to Streamline State Individual Tax Law
Senate Majority Leader Jake Corman (R-Centre) introduced legislation to streamline the state’s individual income tax law to make it more consistent with federal law.
Senate Bill 1008 would allow taxpayers to offset a gain within one class of income with a loss occurring within another class of income. The Pennsylvania personal income tax is currently levied against eight classes of income. A loss in one class of income may not be offset against income in another class.
Senate Bill 1009 adds language allowing the carryforward of losses by individual taxpayers. Current state law does allow for carryforward of losses by corporations, but does not provide the same policy for individual tax payers. The legislation would allow a taxpayer to carry forward a loss within a class of income over a period of three years.
Both bills have been referred to the Senate Finance Committee for review.
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IRRC Submits Comments to Department of Revenue on Filing Reconciliations
The Independent Regulatory Review Commission (IRRC) recently submitted public comments in response to a Department of Revenue (DOR) proposed regulation changing the time and place for filing reconciliation and withholding statements. The PICPA Committee on State Taxation submitted comments in November.
The proposal amends DOR’s Withholding of Tax regulation by reducing the threshold for the electronic transmission requirement for the annual reconciliation statement from 250 to 10 or more withholding statements (Form W-2). IRRC raised several issues, and asked for clarification in its comments to the department.
IRRC provides oversight and review of all proposed and existing rules and regulations issued by most departments, boards, commissions, agencies, or other authorities of the commonwealth. IRRC also acts as a clearinghouse for complaints, comments, and other input regarding existing, proposed, final-form, and final-omitted regulations.
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Legislation Would End Sale of Tax Credits
Rep. Jason Ortitay (R-Washington/Allegheny) recently introduced legislation that would end the practice of selling state tax credits.
House Bill 1999 would disallow state tax credit recipients from selling their state tax credits. It would only apply to tax credit programs with currently eligible taxpayers and ones that allow for the sale or transfer of tax credits to taxpayers other than shareholders.
The bill has been referred to the House Finance Committee for consideration.
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Pa. House Lawmakers Unveil Welfare System Plan
A group of state House Republican lawmakers announced a package of bills to contain costs and reform Pennsylvania’s welfare system.
House Bill 1659, sponsored by Mike Tobash (R-Schuylkill/Dauphin), would prohibit the Department of Human Services from applying for waivers of the work requirement for Supplemental Nutrition Assistance Program (SNAP) recipients. The bill would require able-bodied adults without dependents to work, perform community service, participate in a work program, or be enrolled as a full-time student to receive SNAP benefits.
House Bill 1788, sponsored by Rep. Kerry Benninghoff (R-Centre/Mifflin), would eliminate the extended Temporary Assistance for Needy Families (TANF) benefits beyond the five-year time span, known as E-TANF, and would establish a cumulative 48-month lifetime limit.
A bill not yet introduced, to be sponsored by Rep. Aaron Kaufer (R-Luzerne), would establish a pilot program that encourages companies to hire individuals receiving welfare. It would allow TANF recipients to continue to collect welfare benefits plus a wage for a 20-hour week.
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December Revenue Trends Report
The Independent Fiscal Office (IFO) December Monthly Trends Report compares fiscal year 2017-2018 revenues to IFO’s monthly estimate, originally released in August and updated in December to reflect the impact of tax law changes enacted with the state budget.
Through December, General Fund revenues were $95 million above estimate. This overage is primarily the result of strong personal income tax estimated payments ($79.6 million above estimate in December), which exceed the estimate by $46.9 million for the fiscal year. The December strength was likely due to taxpayers remitting payments early to maximize the state and local tax deduction on their 2017 federal tax return (the last year that this deduction will be uncapped).
The report also compares collections to the prior year. December 2017 General Fund revenues of $2.82 billion reflect an increase of $198.1 million (7.6 percent) compared with the same month in the prior year. Here are other revenue highlights:
- Tax revenue increased by 8.1 percent for the month.
- Corporate net income tax declined by 0.3 percent for the month. Collections were likely affected by federal tax legislation that encourages firms to accelerate deductions into 2017 and shift income into 2018 to take advantage of the lower federal corporate tax rate in 2018.
- Nonmotor sales tax increased by 6.7 percent, bringing the three-month average growth rate (after adjustments for various transfers) to 4.7 percent and the 12-month average growth rate to 4.2 percent.
- Motor vehicle sales tax increased by 4.3 percent for the month, bringing the three-month average growth rate to 4.8 percent and the 12-month average growth rate to 3.3 percent.
- Personal income tax withholding increased by 4.6 percent for the month. Adjusted for due dates, the three- and 12-month average growth rates were 4.3 percent and 4.0 percent, respectively.
- Realty transfer tax decreased by 2.7 percent for the month, bringing the three-month average growth rate to 7.9 percent and the 12-month average growth rate to 5.1 percent.
- Cigarette tax increased by 1.0 percent for the month.
- Nontax revenue decreased by 29.2 percent for the month. Collections were affected by a large decline (-92.2 percent) in escheats collections.
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Jeanne McNeill Takes Oath as New State Rep.
In a special ceremony at the Pennsylvania Capitol on Jan. 2, state Rep. Jeanne McNeill was sworn in to represent the Lehigh Valley’s 133rd Legislative District. McNeill won a Dec. 5 special election to complete the term of her late husband Dan, who passed away in September.
McNeill becomes the 48th female currently serving in the Pennsylvania General Assembly.
The 133rd Legislative District includes the Lehigh County portion of Bethlehem, Hanover Township, parts of Salisbury and Whitehall townships, and Catasauqua, Coplay, and Fountain Hill.
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