Bill Introduced to Allow Bonus Depreciation in Pa.
Citing the changing tax landscape brought on by legislation overhauling the federal tax system, PICPA member and state Rep. Frank Ryan, CPA (R-Lebanon), introduced legislation to allow Pennsylvania businesses to take advantage of the law’s depreciation provisions.
Under the federal Tax Cuts and Jobs Act, bonus depreciation doubles from 50 percent to 100 percent for property purchased between Sept. 27, 2017, and Jan. 1, 2023 (or Jan. 1, 2024, for a small category of property). After that date, a 20 percent phase-down takes effect. Also, bonus depreciation is now permitted for the purchase of used property. This is a common tax plan strategy used by virtually all businesses at some point, both large and small.
But not Pennsylvania taxpayers, notes Ryan. “Businesses looking to expand in Pennsylvania will not be able to take advantage of this provision,” he says.
On Dec. 22, 2017, the Pennsylvania Department of Revenue issued Corporate Tax Bulletin 2017-02. Under 2017-02, in the best-case scenario, a taxpayer gets no deduction until the asset is sold or disposed of. If the taxpayer has equipment that may be used indefinitely, it could effectively get no depreciation write-off in Pennsylvania.
In response to the department’s bulletin, the PICPA Committee on State Taxation has prepared an brief explaining the issue and potential legislative fixes.
House Bill 2017 is pending in the state House Finance Committee.
Back to Top ^
Wolf Proposes Modernizing Outdated State Overtime Rules
Gov. Tom Wolf announced a proposal intended to modernize Pennsylvania’s overtime rules. State and federal overtime rules have not been updated in more than 40 years, Wolf says. As a result, many employees are covered by an exemption to overtime that was intended for high-wage, white-collar employees.
At the governor’s direction, the state Department of Labor & Industry is finalizing a plan to modernize rules and clarify requirements. The new rules will phase in over four years to increase the salary threshold that requires employers to pay overtime to most salaried workers.
The first step will raise the salary level to determine overtime eligibility for most workers from the federal minimum of $455 per week ($23,660 annually) to $610 per week ($31,720 annually) on Jan. 1, 2020. The threshold will increase to $39,832 on Jan. 1, 2021, followed by $47,892 in 2022, thus extending overtime eligibility to 370,000 workers, and up to 460,000 in four years.
Starting in 2022, the salary threshold will update automatically every three years so workers are not left behind. Additionally, the duties for executive, administration, and professional workers will be clarified to make it easier for employers to know if a worker qualifies for overtime.
The Department of Labor & Industry anticipates releasing the proposal to update the regulations for public comments in March.
Back to Top ^
A Look at the Week of Jan. 22 in the State Capital
State House and Senate return to session on Jan. 22.
With lawmakers back in the capitol, the PICPA is again urging the Senate to take up House Bill 866, sponsored by Rep. George Dunbar, CPA (Inactive) (R-Westmoreland). The bill addresses inconsistencies in the local tax collection system and clarifies certain provisions related to the consolidated collection of local income taxes and delinquent taxes, while also making the system more consistent and uniform. HB 866 is on the Senate’s tabled calendar.
Here’s a look at some key legislative meetings for the week.
On Jan. 22, the Senate and House Local Government committees convene a joint public hearing on municipal pensions, and the House Labor and Industry Committee holds an informational meeting on the Uninsured Employers Guarantee Fund (UEGF).
On Jan. 23, the House Finance Committee meets to consider House Bill 994 and House Bill 1098, while the House State Government Committee will vote on House Bill 153, a joint resolution reducing the size of the state General Assembly.
For a complete listing of committee meetings for the week, visit the General Assembly’s website.
Back to Top ^
Final Report on 2017 Tax Amnesty
The state Department of Revenue released its Final Report on the 2017 PA Tax Amnesty Program on Dec. 15, 2017. The program ran from April 21 to June 19, 2017.
According to the report, the program generated $142.9 million in state back taxes. It also provided net revenue of $130.4 million, surpassing the $100 million revenue estimate by $30.4 million. More than 35,400 taxpayers participated in the amnesty, and over 65 percent of payments received were for tax periods of 2010 and later. The tax year with the highest number of payments was 2014.
The department mailed about 860,000 notices to business and individuals. In total, approximately $36.4 million in interest, penalties, and fees were waived.
Back to Top ^
Fiscal Policy Subcommittee Hears Proposals for Fixing Pa.’s Tax Structure
The state House Appropriations subcommittee on fiscal policy, chaired by Rep. Warren Kampf (R-Montgomery), heard testimony from several economists who provided ideas about how to get Pennsylvania’s fiscal house in order.
The economists were Robert Strauss, professor of economics at Carnegie Mellon University, Jared Walczak, senior policy analyst at the Tax Foundation, and Paul Yakovlev, associate professor of economics at Duquesne University. They discussed the budgetary pressures facing Pennsylvania and provided solutions for lawmakers.
The focus of the hearing was on Pennsylvania's tax structure, climate, and competitiveness and the impact of the recently enacted federal Tax Cuts and Jobs Act. The economists agreed that Pennsylvania lawmakers should consider expanding the base of some state taxes and lowering tax rates to address long-standing fiscal issues.
Gov. Wolf will unveil his proposed fiscal year 2018-2019 state budget on Feb. 6 before the General Assembly. The governor’s address will be followed by hearings held by the House and Senate Appropriations committees later in the month to kick off the 2018-2019 budget process.
Back to Top ^
State Lawmakers Propose Reforms to Regulatory Process
State lawmakers and business leaders joined together to announce the introduction of the Regulatory Overreach Report and five pieces of legislation designed to rein in overregulation.
House Bill 1792, sponsored by Rep. Kerry Benninghoff (R-Centre/Mifflin), would give the Pennsylvania General Assembly the ability to initiate the repeal of any state regulation in effect by concurrent resolution.
House Bill 209, introduced by Rep. Kristin Phillips-Hill (R-York), would establish the Independent Office of the Repealer to undertake an ongoing review of existing regulations; receive and process recommendations; and make recommendations to the General Assembly, the governor, and executive agencies for repeal.
Rep. Dawn Kiefer (R-York/Cumberland) introduced House Bill 1237, which would require the General Assembly to vote on a concurrent resolution to approve an economically significant regulation (which has an annual fiscal impact totaling $I million or more on the government or private sector) for that regulation to go into effect.
House Bill 1959, sponsored by Rep. Greg Rothman (R-Cumberland), would require state agencies to create and develop a navigable online permit tracking system, cite specific legal authority for permit denial, and allow certain permit reviews to be transferred to third-party reviewers.
House Bill 1960, sponsored by Rep. Brian Ellis (R-Butler), would require each agency to appoint a regulatory compliance officer to better educate the regulated community regarding implementation for any new regulation and the requirements prior to the effective date.
The bills have been referred to committees in the state House for review.
Back to Top ^
2017 Unclaimed Property Return Historic, Says Torsella
Pennsylvania Treasurer Joe Torsella this week announced that Treasury returned more than $254 million in unclaimed property to Pennsylvania taxpayers in calendar year 2017. This historic return is a 34 percent increase from 2016.
Unclaimed property is any financial asset that has gone unclaimed for a period, usually three years. Under Pennsylvania law, businesses are required to report this to Treasury. Each year, Treasury receives millions of dollars in unclaimed property – items such as abandoned bank accounts, forgotten stocks, uncashed checks, and contents of safety deposit boxes. The property remains available for claim by the owners or their heirs in perpetuity, and Treasury serves as the custodian until it can find and verify its rightful legal owner.
Torsella announced in December that the Treasury would be implementing a new “lost contact” standard designed to better protect Pennsylvanians by helping to prevent the reporting of securities that are, in fact, not abandoned, but rather buy-and-hold investments.
Back to Top ^
Retirement Announcements and Date Set for Special Elections
Four more state lawmakers announced that they will be retiring at the end of November 2018 following the conclusion of the current legislative session. Reps. Bob Godshall (R-Montgomery), Ron Marsico (R-Dauphin), and Rep. Katharine Watson (R-Bucks) and Sen. Charles McIlhinney (R-Bucks) join a growing list of retirees that includes Reps. Eli Evankovich (R-Westmoreland), Harry Lewis (R-Chester), Will Tallman (R-Adams), and John Taylor (R-Philadelphia).
Several other state lawmakers have announced that they will be running for a different office.
To fill currently vacant seats in the General Assembly, Speaker of the House Mike Turzai (R-Allegheny) ordered two special elections to be held on Tuesday, May 15, to fill seats in the 48th District (Allegheny County) and the 178th District (Bucks County). The vacancies were created by the Dec. 31 resignation of former Rep. Brandon Neuman (D-Washington) and the Jan. 1 resignation of former Rep. Scott Petri (R-Bucks).
Back to Top ^