Thank You for Another Successful Year
With 2018 now behind us, the PICPA Government Relations Team once again thanks you for your commitment to our efforts throughout the past year. At this time last year, we made a pledge to build upon the success we achieved in 2017. We are excited to report that it has been another successful year. We couldn’t have done it without you, the 22,000 members of the PICPA. The role you play in advocating for your profession is truly invaluable.
A special thanks must go to our government relations committee chairs – Bill Lazor (CPA-PAC), Jeff Spengler (State Taxation), Sean Brennan (Federal Taxation), Charles Waring (Legislation), J. Andrew Weidman (Fiscal Responsibility Task Force), and Donald Pierce (Local Government Auditing and Accounting) – for their exceptional work and dedication to our efforts throughout 2018. We look forward to making 2019 the best yet!
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Advocacy in Action in 2018
The PICPA, its members, and its Government Relations Team fight hard to protect the profession and to improve the business climate for CPAs in Pennsylvania. A quick inventory of the 2017-2018 session (which closed Nov. 30, 2018) shows that 3,949 separate pieces of legislation were introduced between the House (2,688) and Senate (1,261). Of the bills introduced, only 276 (7.0 percent) made it through the process and were signed or became law. The PICPA had a very successful 2017-2018 legislative session. The PICPA initiated three bills that became law and assisted on several other significant initiatives.
- Act 72 of 2018 – Sponsored by Sen. Michele Brooks (R-Crawford, Erie, Mercer, and Warren) – Act 72 allows for depreciation deductions for corporate taxpayers that take 100 percent bonus depreciation for federal income tax purposes. The law disallows the federal bonus depreciation deduction from taxable income, and provides an additional deduction. It also reverses guidance that appeared in Pennsylvania Corporate Tax Bulletin 2017-02, which had disallowed all depreciation on certain property. A more in-depth overview is available in this PICPA CPA Now blog.
- Act 18 of 2018 – Sponsored by Rep. George Dunbar (R-Westmoreland) – Gov. Tom Wolf signed Act 18 on May 4, 2018, marking the culmination of a four-year effort led by Dunbar and the PICPA to address inconsistencies and the potential for double taxation on the local income of Pennsylvania residents. It was a second effort on this legislation, which had suffered an unexpected gubernatorial veto in the previous session (2015-2016). An in-depth overview is available in this CPA Now blog post.
- Act 6 of 2018 – Sponsored by Rep. Robert Tomlinson (R-Bucks) – Act 6 allows for a one-time expungement of minor violations from the disciplinary records of CPAs and other state licensees. It was signed into law on Feb. 15, 2018, and details are available on CPA Now.
In addition, we held another successful Day on the Hill event where members met with their state legislators, we testified several times before standing state committees of the General Assembly, we offered technical input on numerous bills and amendments, and we provided written comments on various proposed regulations. The PICPA held meetings with the Pennsylvania Department of Revenue (DOR) and assisted the department in crafting new bonus depreciation forms and instructions. The PICPA also hosted a series of quarterly legislative update webinars, several in conjunction with the DOR.
A full summary of the year’s advocacy efforts is available here.
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The Certified Public Accountant Political Action Committee (CPA-PAC) is a nonpartisan, member-managed organization representing CPAs in public practice, industry, and government, as well as new and veteran members of the profession. CPA-PAC is the only PAC to specifically represent the interests of Pennsylvania CPAs.
In 2018, thanks to generous contributions from PICPA members and firms, we raised $179,276 in pledged donations. Your funds supported the successful election of 89 pro-business candidates who were running for office last year and 14 who will be on the ballot this year.
The CPA-PAC also supported the reelection of five CPA legislators – Sen. Pat Browne (R-Lehigh), Rep. Mike Peifer (R-Pike), Rep. George Dunbar (R-Westmoreland), Rep. Keith Greiner (R-Lancaster), and Rep. Frank Ryan (R-Lebanon) —our strongest allies in promoting and protecting the CPA profession. A new CPA legislator – Ben Sanchez (D-Montgomery) – was elected for the first time, and we look forward to working with him.
As we enter the new legislative session, our work is just beginning. On Jan. 1, the composition of the Pennsylvania General Assembly underwent a major transformation, with 20 percent of its members taking office for the first time: 43 new representatives in the state House of Representatives and seven new legislators in the Senate. Building relationships with the newly elected officials and maintaining existing relationships takes time and resources. A contribution to the CPA-PAC ensures that we will continue to have a role in providing input on critical policy decisions that would otherwise be made on your behalf.
In spring of 2019, we are planning to release a PAC Annual Report that will include detailed information about CPA-PAC spending for the 2018 year.
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Looking Ahead to the 2019-2020 Session
The PICPA Government Relations Team is ready for the new legislative session that began Jan. 1. Aside from meeting with the new legislators elected in November, we have several legislative priorities that have carried over from last session.
Topping our agenda is getting a fix for the 1099-MISC nonresident withholding requirements. Act 43 of 2017 requires withholding at a 3.07 percent rate on nonwage Pennsylvania source income payments made to nonresidents. Compliance with the new requirements has been challenging and costly as taxpayers have had to implement new procedures and modify systems. The Department of Revenue (DOR) nonresident withholding website is a great starting point for a fix, but certain provisions in Act 43 need to be addressed through corrective legislation. We are working with PICPA member Rep. Keith Greiner (R-Lancaster), who sponsored House Bill 2413 in the last session, to address many of the concerns raised by fellow PICPA members.
A second PICPA-supported measure deals with income tax reporting for estates and revocable trusts. House Bill 2303, introduced last session, would allow the executor of an estate and the trustee of a qualified revocable trust the option to treat the trust as part of the estate for all taxable years after a decedent’s death, rather than as two separate entities. Currently, the state Tax Reform Code requires a decedent’s estate and revocable trust to file a separate Form PA-41 to report income earned by each during the year. Federal law allows the estate of a decedent with a revocable trust to elect to file a single annual income tax return that reports income earned by both the estate and the trust on federal Form 1041.
We are also working with PICPA member Rep. Frank Ryan (R-Lebanon) on a bill to establish a statute of limitations for the DOR on collecting assessed personal income tax. Under current law, there is no time period for the DOR to collect assessed personal income taxes. During the last tax amnesty program, the DOR mailed out notices for taxes owed that were, in some cases, decades old or to businesses that were no longer active.
We look forward to continuing work on these efforts and anticipate their enactment in the new session. Be sure to mark your calendars for this year’s Day on the Hill, which will take place on Tuesday, June 11.
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Pennsylvania Tax Reform Debate Is Coming
State tax reform efforts are already under way in Harrisburg for this 2019-2020 legislative session. Talk of reform stems from two separate efforts that the PICPA has been monitoring for some time—the House Finance Committee Select Subcommittee on Tax Modernization and Reform and a report issued by the Tax Foundation.
The Select Subcommittee on Tax Modernization and Reform was established by House Resolution 327, sponsored by Rep. Jake Wheatley (D-Allegheny). The bipartisan subcommittee held several hearings and heard from key stakeholders last session, including the PICPA, in its review of Pennsylvania’s tax laws and other states’ best practices and methods for levying various taxes. Recommendations for appropriate legislation or other action are expected in 2019.
In September 2018, the Tax Foundation, one of the nation’s leading independent tax policy organizations, released Pennsylvania: A 21st Century Tax Code for the Commonwealth. The report outlines many barriers within the state tax code that hobble Pennsylvania’s economic competitiveness.
The PICPA believes both the Select Subcommittee’s efforts and the Tax Foundation report are excellent catalysts for starting a thorough and much-needed discussion between state policymakers and stakeholders on state tax reform. The PICPA's Committee on State Taxation will take on a prominent role in the debate by educating policymakers and acting as a technical resource.
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Civil Justice Coalition Update
In 2016, the PICPA joined a group of six prominent business and health care organizations as a founding member of the Pennsylvania Coalition for Civil Justice Reform (PCCJR). The PCCJR is dedicated to improving the state’s civil justice system by elevating awareness of problems and advocating for legal reform in the legislature and fairness in the courts. The coalition works to ensure that our elected officials understand the extent of the civil justice problems and the importance of acting now to address them.
In 2018, the PCCJR released it first election guide and scoring system to help voters identify which candidates are committed to preventing lawsuit abuse and reversing the impact of activist judicial decisions detrimental to the state’s economy and health care system. PCCJR also played an integral role in obtaining state House passage of SB 936, legislation to create a prescription drug formulary in the Workers’ Compensation program. This bill would also curb the abuses of pharmacies owned by workers’ compensation law firms that fill prescriptions for compounded pain creams and charge thousands of dollars over the ingredient level prices.
Pennsylvania's legal climate was ranked below 36 other states by the U.S. Chamber's Institute for Legal Reform. In addition, the American Tort Reform Association recently cited the Pennsylvania Supreme Court, the Philadelphia Court of Common Pleas, and Allegheny County courts as being on its “Judicial Hellholes” watch list. Areas of Pennsylvania law that have met with criticism include the treatment of mass torts, discovery abuse, evidentiary procedures, excessive awards, unpredictability, forum shopping, and improprieties in state contracting with private attorneys, among others.
This was a year of tremendous growth for the PCCJR, and the PICPA is looking forward to building on that success in 2019.
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