Week Ending Jan. 26, 2018

by Matthew McCann | Jan 26, 2018

PICPA Submits Comments on Marketplace Sales Proposal 

The PICPA Committee on State Taxation submitted comments to the Department of Revenue (DOR) on its draft marketplace sales proposal.

Under Act 43 of 2017, sellers of products on the internet not maintaining a place of business in Pennsylvania and not collecting state sales tax, making sales of at least $10,000 into Pennsylvania in the previous calendar year, must file an election by March 1, 2018, opting either to begin to collect sales and use tax by April 1 or commit to sending use tax notices with each sale. Additionally, sellers sending notices must also send an annual summary of purchases both to the customer and to the DOR.

For those opting to collect sales tax, the new provisions require collection to begin by April 1, 2018, for tangible personal property. The effective date is delayed until April 1, 2019, for digital goods such as electronic copies of books, canned software, music, and similar items.

This week, Amazon informed its third-party sellers whose products are stored in its facilities in Massachusetts that it will be providing information to the state tax authority in what is believed to be a first for the company.


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State Rep. Wants to Repeal New 1099 Reporting Requirement

PICPA member and state Rep. Frank Ryan, CPA (R-Lebanon), introduced legislation to repeal the reporting requirements for 1099-MISC income paid to nonresidents.

Last year’s Tax Code bill (Act 43) contained a provision that requires entities to withhold Pennsylvania personal income taxes and other taxes where applicable on out-of-state payments made to taxpayers of other states where a 1099-MISC tax reporting form is used. Act 43 also makes the tax a liability of the payor. This is a dangerous precedent, Ryan says, because it may encourage the payee to not file, thereby putting the payor on notice as being liable for the tax, shifting the tax burden effectively to an in-state business.

The PICPA continues to work with state legislators, the Department of Revenue, and business stakeholders to address implementation and compliance concerns with the new requirement. The provision went into effect Jan. 1, 2018.

Ryan's House Bill 2027 has been referred to the House Finance Committee for consideration.   


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Licensee Expungement Bill Headed to Governor’s Desk

The Pennsylvania House unanimously approved legislation this week that allows licensees from the 29 state boards and commissions under the authority of the Bureau of Professional and Occupational Affairs to expunge, under limited conditions, a disciplinary record, which has been a longstanding legislative objective for the PICPA. The bill now heads to the governor for his signature.

Senate Bill 354, sponsored by Sen. Tommy Tomlinson (R-Bucks), amends Act 48 of 1993 to require licensees of all boards within the Bureau of Professional and Occupational Affairs to report disciplinary actions taken by a licensing agency of another state, and felony, misdemeanor, and drug or alcohol related summary convictions, to their licensing board within 30 days.

SB 354 provides for expungement of a disciplinary record if the discipline was for a violation involving failure to complete continuing education requirements or practicing for six months or less on a lapsed license, registration, certificate, or permit. The bill provides specific criteria for expungement.


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Greiner, Blake Lead Municipal Pension Reform Effort

PICPA member and state Rep. Keith Greiner, CPA (R-Lancaster), and Sen. John Blake (D-Lackawanna) are spearheading a bipartisan effort to reduce the burden of municipal pension debt. The proposal, which has not yet been formally introduced, was the subject of a joint public hearing of the House and Senate local government committees.

The legislation would establish the Municipal Pension Plan Sustainability Act. The act would create a new standard pension plan that applies to all municipalities that have pensions funded under 80 percent, require municipalities with pensions under 50 percent funded to turn control of current plans and their standard plans over to the Pennsylvania Municipal Retirement System (PMRS), authorize a bond using part of the Foreign Fire Insurance Tax to help pay down the unfunded liability of the municipalities that are funded under 80 percent, and incorporate a number of recommendations from the auditor general's office designed to improve sustainability of municipal pensions.

Statewide municipal pension liabilities are estimated to be between $8 billion and $10 billion.


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Pa. Supreme Court Throws Out Congressional Maps

In a 5-2 decision, the state Supreme Court ruled the current Congressional maps as unconstitutional. The court ordered new maps to be drawn and submitted to the Gov. Tom Wolf by Feb. 9.

"The court finds as a matter of law that the Congressional Redistricting Act of 2011 clearly, plainly and palpably violates the Constitution of the Commonwealth of Pennsylvania, and, on that sole basis, we hereby strike it as unconstitutional," the court wrote. "Accordingly, its further use in elections for Pennsylvania seats in the United States House of Representatives, commencing with the upcoming May 15, 2018, primary, is hereby enjoined."

Democrats were quick to praise the decision while Republicans condemned it.

"I strongly believe that gerrymandering is wrong, and consistently have stated that the current maps are unfair to Pennsylvanians. My administration is reviewing the order, and we are assessing the executive branch's next steps in this process," Wolf said in a statement released after the decision.

Senate President Pro Tempore Joe Scarnati (R-Jefferson) and Senate Majority Leader Jake Corman (R-Centre) expressed outrage with the ruling: "Today’s ruling by the State Supreme Court is a partisan action showing a distinct lack of respect for the Constitution and the legislative process. The Pennsylvania Supreme Court has overstepped its legal authority and set up an impossible deadline that will only introduce chaos in the upcoming Congressional election."

Scarnati and House Speaker Mike Turzai (R-Allegheny) have filed a petition to the U.S. Supreme Court. Since the initial case and decision were based on the state’s constitution, there are questions concerning the success of an appeal to the U.S. Supreme Court.


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House Committee Approves Workers Comp Measure

The House Labor and Industry Committee approved legislation to provide for the implementation of a prescription drug formulary for worker compensation claims.

Senate Bill 936, sponsored by Sen. Don White (R-Indiana), was approved along a party line vote—15 Republicans to 11 Democrats. The bill requires the Pennsylvania Department of Labor and Industry to select a nationally recognized, evidence-based prescription drug formulary appropriate for resolving issues related to drugs prescribed for, or related to, the treatment of work-related injuries.

The bill goes to the full House for consideration.


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New Study on Cost to Pa. of Insufficient Retirement Savings

State Treasurer Joe Torsella released the findings of an independent study that evaluates the impact that insufficient retirement savings will have on the commonwealth. The study was released in conjunction with the third hearing of Treasury’s Task Force on Private Sector Retirement Security, of which the PICPA is a member.

The study determined that Pennsylvania spent an estimated $702 million in public assistance costs and lost about $70 million in tax revenue in 2015 due to insufficient retirement savings by Pennsylvania residents. These amounts are projected to grow to $1.1 billion in extra public assistance costs and $106 million in lost revenue in 2030, for a total of $14.3 billion by 2030.

The study—undertaken by Econsult Solutions Inc.—is the first of its kind to quantify the fiscal and economic costs of insufficient savings in the form of increased state public assistance costs and reduced tax revenue, household spending, and jobs.


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Legislative Comings and Goings

State House Majority Leader Rep. Dave Reed (R-Indiana) announced that he will be running for Congress to represent the 9th Congressional District, which will be vacated by Rep. Bill Shuster at the end of this term. Reed was first elected to the Pennsylvania House in 2001 and has served as Majority Leader since January 2015.

Democrat Austin Davis defeated Republican Fawn Walker-Montgomery in a special election to fill the 35th District state House seat vacated by former Rep. Marc Gergely (D-Allegheny). Davis won 74 percent of the vote while Walker-Montgomery got 26 percent in an election that had 10.6 percent voter turnout.

Also, this week Sen. Stewart Greenleaf (R-Montgomery) and Reps. C. Adam Harris (R-Juniata) and Kevin Haggerty (D-Lackawanna) announced that they would not seek re-election in November. Greenleaf chairs the Senate Judiciary Committee, and Harris chairs the House Liquor Committee.


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The Pennsylvania Institute of Certified Public Accountants (PICPA) is a premiere statewide association of more than 22,000 members working in public accounting, industry, government, and education. Founded in 1897, the PICPA is the second-oldest and fourth-largest state CPA organization in the United States.

Learn more about how you can become involved in the legislative process, through PICPA's Key Contact Program and CPA-PAC.

Contact the Government Relations Team at governmentrelations@picpa.org or (717) 232-1821.

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