Small Biz Tax Package Clears House Committee
The Pennsylvania House Finance Committee voted out a package of small-business tax reform measures in its first action of the new year. The package of bills is now before the full House for a vote, which could come when the House reconvenes the week of Jan. 24. House Republicans hope to have these bills in the Senate before Gov. Tom Wolf gives his final budget presentation on Feb. 8.
House Bill 105, introduced by Rep. Eric Nelson (R-Westmoreland), permits tax deferrals for certain like-kind exchanges in accordance with the federal tax code.
House Bill 199, introduced by Rep. George Dunbar (R-Westmoreland), allows a deduction for the depletion of mines, oil and gas wells, and other natural deposits through the use of a percent-depletion method as prescribed under the federal tax code.
House Bill 285, introduced by Daryl Metcalfe (R-Butler), chair of the Environmental Resources & Energy Committee, defines income relating to distributions from an employee stock ownership plan, also known as an “ESOP.”
House Bill 324, introduced by Rep. Martina White (R-Philadelphia), amends the First Class City Business Tax Reform Act so that net operating losses incurred in another tax period may be carried over for 20 tax years following the year it was incurred in a city of the first class. Philadelphia is the only city of the first class in Pennsylvania.
House Bill 333, introduced by Nelson, permits full expense deductions in accordance with Section 179 of the federal tax code.
House Bill 1960, introduced by Rep. Joshua Kail (R-Beaver), amends the Tax Reform Code, providing for net losses incurred by corporations in Pennsylvania to be aligned with federal law.
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2022 Tax Filing Season to Begin Jan. 24
The IRS announced that it will begin accepting and processing tax returns on Monday, Jan. 24, although it opened its IRS Free File service on Jan. 14.
Both federal and Pennsylvania filing deadlines are April 18 this year. The date was extended from the standard April 15 because Washington, D.C., is celebrating the Emancipation Day holiday on that date.
The IRS made due date changes for the counties identified by the IRS as being impacted by Hurricane Ida in 2021. In response to inquiries made by the PICPA, the Pennsylvania Department of Revenue has said that it will be following the IRS’s due date changes. Additional guidance for corporate and pass-through entity returns will be forthcoming.
Here are key federal dates for the upcoming tax season:
- Jan. 14: IRS Free File opens; tax returns will be transmitted to the IRS starting Jan. 24.
- Jan. 18: Due date for 2021 fourth quarter estimated tax payment.
- Jan. 24: IRS begins 2022 tax season.
- Jan. 28: Earned Income Tax Credit Awareness Day to raise awareness of the tax credits available to many taxpayers.
- Mid-February: IRS begins issuing refunds for returns claiming the Earned Income Tax Credit or Additional Child Tax Credit.
- April 18: Due date to file 2021 tax return or request an extension for most of the nation.
- April 19: Due date to file 2021 tax return or request an extension for individuals living in Maine or Massachusetts due to the Patriots’ Day holiday.
- Oct. 17: Due date to file for those receiving an extension to file on their 2021 tax returns.
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Wolf Vetoes Measure Blocking Regional Greenhouse Adoption
Gov. Wolf vetoed Senate Concurrent Regulatory Review Resolution 1, which would have stopped the administration from joining the Regional Greenhouse Gas Initiative (RGGI). The Senate now has 30 calendar or 10 legislative days, whichever is longer, to attempt to override the veto.
Republican lawmakers were quick to condemn Wolf’s action. “RGGI will spell disaster for our state,” said Sen. Gen Yaw, (R-Lycoming), chair of the Senate Environmental Resources and Energy Committee. “The program’s de facto carbon tax levied on power producers will translate into electricity bills spiking by double digits, ballooning fuel costs and price increases on just about everything we use daily.”
Joining RGGI has been a centerpiece of Wolf’s environmental agenda. RGGI, run by RGGI Inc. of New York, is a consortium of states that have voluntarily joined a cap-and-tax program for carbon emissions by energy producers.
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Final Rule Issued for State and Local Fiscal Recovery Funds Program
The U.S. Department of Treasury issued the final rule implementing the State and Local Fiscal Recovery Funds (SLFRF) program. Created as part of the American Rescue Plan, the program provides $350 billion to state, local, and tribal governments to support their response to the COVID-19 pandemic.
The final rule, announced Jan. 6, includes some changes from the interim final rule that was issued and went into effect in May 2021. According to a summary document issued by Treasury, the final rule adds flexibility and enhances simplicity.
The Treasury Department said it distributed more than $245 billion in funds under this program in 2021.
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House Advances Citizen’s Congressional Map
State House lawmakers approved a revised map of Pennsylvania’s congressional districts. The proposal now goes to the state Senate for consideration. The plan was approved 110-91, largely along party lines but with two Republicans voting with Democrats.
House Bill 2146, sponsored by Rep. Seth Grove (R-York), chair of the House State Government Committee, contains a plan largely designed by Amanda Holt, a resident of the Lehigh Valley. The revised map divides the state into 17 districts (down from 18) for the purpose of electing representatives to Congress.
The new map is required as part of the redistricting process mandated by the U.S. Constitution. Using data collected through the U.S. Census every 10 years, districts across the country must be redrawn to be nearly equal in population to ensure fair and equal representation in Congress.
Pennsylvania is also required to redraw its state House and Senate districts based on data from the census. Changes to these districts are not subject to the typical legislative process, but are instead developed by a Legislative Reapportionment Commission. The commission approved preliminary maps and is now accepting public comment.
To view the congressional map, visit www.paredistricting.com.
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House, Senate Special Elections Scheduled
Special elections have been set for open seats in the General Assembly.
Lt. Gov. John Fetterman called a special election to replace Sen. John Sabatina (D-Philadelphia), who resigned on New Year’s Eve after being elected to the Philadelphia County Court of Common Pleas last November. The special election will be held Tuesday, May 17, 2021. Sabatina represented the 5th District of the Senate from 2015 through 2021.
House Speaker Bryan Cutler (R-Lancaster) ordered special elections to be held on Tuesday, April 5, to fill vacant seats in the 24th Legislative District in Allegheny County and in the 116th Legislative District in Luzerne County. The seats were vacated when Rep. Ed Gainey (D) was sworn in as mayor of Pittsburgh and Rep. Tarah Toohil (R) was sworn in to serve on the Luzerne County Court of Common Pleas.
Candidates for the office will be selected by a process designated by their respective political parties, and the winner of the special election will take office after the results are confirmed.
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Two More State Lawmakers Announce Retirement
State Rep. Curt Sonney (R-Erie) and Rep. Gerald Mullery (D-Luzerne) are the latest two lawmakers to announce that they will retire at the end of the 2021-2022 Legislative Session.
Sonney was first elected to the House in 2005. He currently serves as majority chair of the House Education Committee. Mullery was elected in 2011 and is currently the Democratic chair of the House Labor and Industry Committee.
Here are the state representatives and senators who have announced they will not run for reelection:
- Rep. Gerald Mullery (D-Luzerne)
- Rep. Curt Sonney (R-Erie)
- Rep. Daryl Metcalfe (R-Butler)
- Rep. Dave Hickernell (R-Lancaster)
- Rep. David Millard (R-Columbia)
- Rep. Michael Peifer (R-Pike)
- Rep. Brian Sims (D-Philadelphia), running for lieutenant governor
- Senate President Pro Tempore Jake Corman (R-Centre), running for governor
- Sen. Bob Mensch (R-Montgomery)
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