PICPA to Offer Tax Policy Ideas at State House Hearing
The PICPA will testify before the Pennsylvania House Finance Committee on Wednesday, Oct. 6, regarding the state’s business tax climate. Drew VandenBrul, CPA, a member of the PICPA State Taxation Steering Committee, will discuss revitalizing Pennsylvania’s business climate, with a specific focus on tax policy.
One topic VandenBrul will discuss is the trend among states to use work-arounds at the state level to address the state and local tax deduction caps at the federal level as part of the 2017 Tax Cuts and Jobs Act. To mitigate the impact of the state and local tax cap, states have experimented with solutions that facilitate the deduction of additional state taxes on federal returns. Over 18 jurisdictions have enacted work-around legislation, with the common thread being the imposition of a pass-through-entity-level tax (PTE tax). VandenBrul will urge lawmakers to consider a similar solution within Pennsylvania tax law.
Another area of Pennsylvania tax law that continues to be problematic, VandenBrul will tell committee members, is bonus depreciation. Federal bonus depreciation has been used since 2001 as a means of spurring economic investment, but complexities surrounding Pennsylvania’s law make compliance with, and administration of, these provisions difficult and costly. The state’s provisions frequently result in desk review or audit adjustments or assessments.
Finally, VandenBrul will highlight Pennsylvania’s net operating loss law and the tax administration and appeals process.
The goal of the informational meeting is to provide a forum in which lawmakers can engage with stakeholders to discuss the state’s business climate, identify competitive disadvantages, and develop legislative solutions intended to attract prospective businesses while incentivizing further growth and investment by those who currently reside in Pennsylvania.
The hearing will be streamed live at 9:00 a.m. on Oct. 6.
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Legislature Extends Pandemic Waivers of Regulations
The General Assembly recently approved, and Gov. Tom Wolf signed into law, legislation to extend waivers of an array of regulatory statutes, rules, and regulations to aid in Pennsylvania’s recovery from the COVID-19 pandemic.
House Bill 1861 temporarily extends certain suspensions of regulations and statutes that were issued by agencies under the COVID-19 disaster declaration through March 31, 2022. The continued suspensions give Pennsylvania the necessary resources to fight COVID-19 and help the state get back on track.
Wolf also signed into law legislation that allows additional designated personnel to access information through Pennsylvania’s Prescription Drug Monitoring Program. House Bill 1774, now Act 72 of 2021, amends the Achieving Better Care by Monitoring All Prescriptions Program (ABC-MAP) Act, enabling important information-sharing among commonwealth agencies to help reduce overdose deaths among Pennsylvanians.
A final report from agencies on the waivers extended through March 2022 must be issued and posted on the agency’s publicly accessible website by May 1, 2022.
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DOR Launches Data Center Tax Exemption Program
The Pennsylvania Department of Revenue has launched a Computer Data Center Sales and Use Tax Exemption Program. Guidelines have been posted, and applications are currently being accepted by the program office.
Authorized under Act 84 of 2016 and amended under Act 13 of 2019 and Act 25 of 2021, the Computer Data Center Equipment Program is designed to attract new investment from businesses that own or operate within a computer data center.
Specific information is available in the program guidelines and FAQs. If you have questions, please contact the department’s Office of Economic Development at (717) 772-3896 or email@example.com.
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Growing Greener III Package Clears Senate Committee
The Senate Environmental Resources and Energy Committee approved legislation to launch a Growing Greener III program with $500 million in unspent federal American Rescue Plan (ARP) monies.
Senate Bill 525, sponsored by Sens. John Gordner (R-Columbia) and Bob Mensch (R-Lehigh), would allocate funding for the state’s Farmland Preservation Program, Chesapeake Bay Cleanup, a backlog of infrastructure projects in the state parks and forests, and grants for the Municipal Separate Storm Sewer System program.
The funding breakdown is $225 million for programs run by the Department of Conservation and Natural Resources, $200 million for the Department of Environmental Protection, and $75 million for the Agriculture Department.
The committee also approved Senate Bill 832, sponsored by Sen. Gene Yaw (R-Lycoming). The bill would appropriate $250 million in ARP money to create a new state Clean Streams Fund. The fund will be used to protect and restore Pennsylvania’s streams and rivers to stimulate economic growth.
Both bills are now before the full Senate for a vote.
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Small-Business Procurement Proposals Unveiled in House and Senate
Lawmakers in both the state House and Senate introduced legislation to improve the participation of small, diverse, and veteran businesses in state and local procurement opportunities and to encourage minority, women, and veteran-owned small businesses to bid for and compete in state and local government bidding opportunities.
Under Senate Bill 900, sponsored by Sens. Vincent Hughes (D-Philadelphia) and Camera Bartolotta (R-Washington), the Department of General Services’ (DGS) duties relating to small, disadvantaged businesses and veteran-owned businesses would be updated and enhanced.
Under the bill, which has been referred to the Senate Military Affairs and Emergency Preparedness Committee, DGS would be required to complete a disparity study every five years, which shall be used by the secretary of DGS to set aspirational targets of participation. Provisions that mirror the small, diverse provisions would be added for veteran-owned businesses.
Reps. Carrie Lewis DelRosso (R-Allegheny/Westmoreland) and Jake Wheatley (D-Allegheny) introduced legislation in the state House designed to encourage minority, women, and veteran-owned small businesses to bid for and compete in state and local government bidding opportunities.
House Bill 1887 addresses impediments of small, minority, and veteran-owned small businesses and requires state agencies and state-affiliated agencies, including state-owned universities, to significantly increase contracting opportunities for disadvantaged businesses.
The bill has been referred to the House State Government Committee for consideration.
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Bill to Legalize Marijuana Introduced in Pa. House
State Reps. Jake Wheatley and Dan Frankel, both Allegheny County Democrats, unveiled new legislation to decriminalize, regulate, and tax adult-use recreational marijuana in Pennsylvania. The lawmakers have introduced similar legislation in the past.
House Bill 2050 would make it legal for anyone 21 and older to purchase and consume recreational marijuana in Pennsylvania. The bill would also establish multiple grant programs that would benefit small, minority, and women-owned businesses in Pennsylvania. These programs would be funded by revenue collected from a marijuana sales tax.
If passed, the lawmakers say Pennsylvania would join 16 other states, including neighboring New York and New Jersey, in legalizing adult-use recreational marijuana. The bill will be referred to a House committee for consideration upon its formal introduction.
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IFO Reports on Keystone Credit, Public Pensions
The Independent Fiscal Office (IFO) has issued a report on the state’s Keystone Special Development Zone (KSDZ) tax credit. Pennsylvania is one of 11 states that offer a tax credit to incentivize brownfield remediation and redevelopment. This analysis examines available data and other issues that determine the effectiveness of the KSDZ tax credit.
The IFO initially released this analysis as a research brief in April 2021. Since that release, the IFO was notified of a new recipient (two total) of the KSDZ Tax Credit. As a result, the analysis has been updated to include historical data, an economic impact analysis, and revised recommendations.
The IFO also released a research brief that provides a status update and outlook for the public pension systems in Pennsylvania. Data for state and local systems show that while the fiscal health of the public pension systems has improved in recent years, the overall unfunded liability remains significant.
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