Week Ending Oct. 15, 2021

by PICPA Government Relations | Oct 15, 2021


Pa. Judicial Elections Have Big Policy Implications

Every two years, Pennsylvania voters elect judges at every level of the court system, from municipal courts to the state Supreme Court. Such is the case in this odd-numbered year, when judges and magisterial district judges are the primary focus of the Nov. 2 general election.

Judicial elections are very important in Pennsylvania, particularly those for the state Supreme and Commonwealth courts. Both courts rule on issues impacting individuals, business taxpayers, and tax policy.

Recently, members of the CPA-PAC Board and the PICPA government relations team interviewed six of the eight Pennsylvania judicial candidates up for election in November.

Important election details, such as how to register to vote, where to locate your polling location, and much more, are available on the Department of State website. The last day to register to vote in the November election is Monday, Oct. 18.

For more insight on the candidates, check out the 2021 PA Judicial Voter Guide from the Pennsylvania Coalition for Civil Justice Reform, of which the PICPA is a member.

We encourage you to educate yourself on the candidates so you can make an informed decision about who to cast your vote for on Nov. 2. Your vote matters!

 

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State Senate Returns to Legislative Session

After a brief recess, the Pennsylvania Senate returns to session Oct. 18. The state House is not in session and will return Oct. 25.

On the Senate calendar for possible final consideration is Senate Bill 1, The Excellence in Education for All Act. Sponsored by Sen. Scott Martin (R-Lancaster), the bill would provide additional resources for the most vulnerable students, while ensuring all families have equal access and maximum flexibility in schooling options. The bill also increases the caps on the earned income tax credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC) program and expands access and funding to the Economically Disadvantaged School program.

Also up for final consideration are Senate Bill 696, which amends the Breach of Personal Information Notification Act (Act 94 of 2005), and Senate Bill 457, which proposes amending the Pennsylvania Constitution to require the state attorney general to hold an active Pennsylvania law license.

Here is a complete list of committee meetings and public hearings.

 

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Philadelphia Tax Relief for Victims of Hurricane Ida

The Philadelphia Department of Revenue is extending the due dates to file Business Income and Receipts Tax (BIRT), Net Profits Tax (NPT), and School Income Tax (SIT) returns for taxpayers affected by the storms spawned by Hurricane Ida. Taxpayers who received an extension from the state or the IRS for returns due after Aug. 31, 2021, and were affected by the Ida storms, have until Jan. 3, 2022, to file BIRT, NPT, and SIT returns for tax year 2020.

This filing extension does not apply to any other Philadelphia tax returns, and does not extend the deadline for payment of BIRT, NPT or SIT taxes.

For more, click here.

 

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Bill to Increase Corporate Net Loss Deduction Limitation

State Rep. Joshua Kail (R-Washington) introduced legislation that aligns Pennsylvania’s treatment of net operating losses more favorably with federal law.

House Bill 1960, pending in the House Finance Committee, would increase the limitation for the net loss deduction by 10% annually until the limitation reaches 80% of taxable income for taxable years beginning after Dec. 31, 2024.

Pennsylvania is the only state that permanently limits the use of net operating losses (NOLs) calculated for CNIT purposes. Currently, NOL use is limited to 40% of the taxpayer’s Pennsylvania taxable income in a particular tax year. This means taxpayers may pay CNIT even when they have generated NOLs otherwise sufficient to offset income. If the losses are significant enough relative to taxable income, it is possible that the 40% limitation will not only delay use of the NOLs but may cause some of the NOLs to expire unused.

In recent testimony to the House Finance Committee, PICPA noted, “These provisions may have a particularly negative impact on businesses that experience cyclical changes in earnings, as well as businesses that generate significant losses early in their life cycle (e.g., start-ups, biotechnology, and technology businesses). These limitations to NOL use may directly impact businesses’ decisions to locate or remain in Pennsylvania.” 

 

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Bipartisan Adult-Use Cannabis Measure Hailed in Pa. Senate

State Sens. Dan Laughlin (R-Erie) and Sharif Street (D-Philadelphia) introduced bipartisan legislation to legalize recreational adult-use marijuana in Pennsylvania. Earlier this month, Reps. Jake Wheatley (D-Allegheny) and Dan Frankel (D-Allegheny) introduced similar legislation.

Senate Bill 473 establishes protocols for the legal sale, regulation, consumption, and taxation of cannabis while prioritizing safety, community reinvestment, social and economic equity, and agriculture.

The senators note that the Pennsylvania Independent Fiscal Office says legalization would generate between $400 million to $1 billion of new tax revenue annually. The senators also point to the potential the industry has to create thousands of family-sustaining jobs.

Laughlin and Street drafted their bill with extensive feedback from advocates and stakeholders across the commonwealth and are committed to working with them to improve the bill as it progresses through the legislative process.

 

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Charitable Gift Annuities Legislation Clears State House

The Pennsylvania House recently approved a measure to provide protections for annuitants who are donors to a charity that provides for charitable gift annuities. Similar legislation passed the state House last year but failed to move through the Senate.

House Bill 520, sponsored by Rep. Ryan Mackenzie (R-Lehigh), amends the Charitable Gift Annuity Exemption Act to allow charities to transfer their risk to a commercial insurance company that will match substantially all future payments of the charity arising from a charitable gift annuity contract obligation. Under the current law, a smaller foundation or charity must commit a significant amount of foundation resources to the annuity, which takes those resources away from their mission.

The bill is pending in the Senate Banking and Insurance Committee.

 

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Shapiro Announces Bid for Governor

One of the worst-kept secrets in state political circles was that Pennsylvania Attorney General Josh Shapiro is running for governor. This week he formally announced his bid.

“I understand people feel like our politics are divided and broken right now, but we can’t just take our ball and go home. There’s too much on the line,” Shapiro said in an announcement video. “We all have a responsibility to show up, stand up, and fight for what’s right. As governor, I’ll stay in the game – no matter what. Together, we’ll build a future we can all believe in.”

Republican candidates who have announced a run for governor include former U.S. Rep. Lou Barletta, former U.S. attorney Bill McSwain, political strategist Charlie Gerow, and former Chester County Chamber of Commerce president and CEO Guy Ciarrocchi. Other Republicans are expected to announce.

In other political news, after serving as an elected official for more than 18 years, state Sen. Bob Mensch (R-Montgomery) will be retiring at the end of his current term in 2022. Mensch, 76, was first elected to the Pennsylvania Senate in a special election in 2009 after serving three years in the state House. His district covers portions of Berks, Bucks, and Montgomery counties. Mensch was elected by his colleagues in January to serve as Majority Caucus Chairman.

 

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About PICPA

The Pennsylvania Institute of Certified Public Accountants (PICPA) is a premier 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.

Address:
500 N. 3rd St., Ste. 600A 
Harrisburg, PA 17101

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