Legislative Update - Week Ending April 8, 2022

by PICPA Government Relations | Apr 08, 2022


Tax Proposals on House Committee Agenda

Pennsylvania lawmakers return to legislative session April 11, the first time both the House and Senate have been in session since early February. The two chambers’ appropriations committees recently concluded their reviews of Gov. Tom Wolf’s $43.7 billion proposed spending plan for the new fiscal year beginning July 1. A full slate of public hearings and committee meetings is scheduled for the week.

The PICPA government relations team will be watching the House Finance Committee, which has a voting meeting on April 12 to consider several tax proposals. The committee is tentatively scheduled to consider the following bills:

  • House Bill 2277, sponsored by Rep. Jesse Topper (R-Bedford), would repeal the Accelerated Sales Tax (AST) prepayment requirement for Pennsylvania businesses. The PICPA supports this measure.
  • House Bill 2386, sponsored by Rep. Brett Miller (R-Lancaster), would exclude fencing materials and supplies used for agricultural purposes from state sales tax.
  • House Bill 2396, sponsored by Rep. Keith Greiner (R-Lancaster), would extend the state’s Rural Jobs and Investment Tax Credit (RJTC).
  • Senate Bill 347, sponsored by Sen. John DiSanto (R-Dauphin), would conform Pennsylvania’s personal income tax to federal Internal Revenue Code like-kind exchange of property. The PICPA supports this measure.
  • Senate Bill 349, sponsored by Sen. Scott Hutchinson (R-Venango), allows conformity to the federal income tax code for Section 179 expensing for pass-through entities. The PICPA supports this measure.

The Senate Finance Committee has a voting meeting planned on April 13, but the agenda has not been posted as of this writing. 

 

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DOR Prepares to Transition Business Taxpayers to myPATH

The Pennsylvania Department of Revenue is in the midst of the fifth and final major phase of its modernization project. This phase involves the transition of all business taxes – including employer withholding tax, sales tax, and corporation taxes – into the Pennsylvania Tax Hub (PATH) system. That means all business taxpayers will be required to register their accounts in myPATH later this year.

The transition, which is expected to start in late November 2022, will coincide with the retirement of e-TIDES, the current online filing system for business taxpayers. Customers currently using the services offered through e-TIDES, such as filing returns and making payments, will instead use myPATH to complete these tasks and manage their accounts.

For more on the transition, visit the Department of Revenue website.

 

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PICPA, AICPA Urge Additional Relief for Taxpayers and Practitioners

As we move closer to the April 18 federal tax filing deadline, the PICPA continues to push for meaningful relief for taxpayers and practitioners.

Recently, 42 U.S. Senators and 65 U.S. Representatives signed a letter to Commissioner Charles P. Rettig asking why the IRS has not taken certain actions, particularly the suspension of additional notices, IRS statutory authority on suspending additional notices, a delay on the implementation of K-2/K-3 requirements, and targeted penalty relief. Pennsylvania Sen. Pat Toomey and Reps. Mike Kelly, Madeleine Dean, Brian Fitzpatrick, and Chrissy Houlahan signed the letter urging the IRS and the Treasury Department to implement the recommendations proposed by the AICPA and state societies, including the PICPA, that would ease the burden of this tax season.

The IRS announced on March 25 that it was suspending the issuance of several notices generally mailed to tax-exempt or governmental entities in case of a delinquent return. Due to the pandemic’s crippling effect on normal work processes, the IRS has not yet processed several million returns previously filed by individuals and entities. The suspension of the notices will help avoid confusion when a filing is still in process. The IRS will assess the inventory of pending returns moving forward to determine the appropriate time to resume mailing these notices.

The PICPA continues to work with the AICPA and members of Congress to advance meaningful relief for taxpayers and practitioners. The IRS has acknowledged the challenges and frustrations of this tax season and, thanks to the work of PICPA members and others, it has taken steps to ease some of the burden.

See the full list of suspended notices. 

 

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Pa. Senate Fails to Override Wolf’s RGGI Veto

The state Senate failed to override Gov. Wolf’s veto of Senate Concurrent Regulatory Review Resolution 1, which disapproves Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI). With a vote of 32-17, the effort failed by one vote of the necessary two-thirds needed for an override.

RGGI is an effort among several regional states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia – to cap and reduce CO2 emissions from the power sector. It is the first cap-and-invest regional initiative implemented in the United States. Joining RGGI has been an environmental priority for the Wolf administration. Republican lawmakers in both the state House and Senate have attempted to block the administration’s attempt to join RGGI.

On April 5, Commonwealth Court gave Republicans some hope of blocking the administration from joining RGGI when it issued a stay of the rule pending further order of the court.

Pennsylvania could join RGGI as early as in the second quarter of 2022.

 

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Newly Introduced Legislation

The PICPA State Taxation Steering Committee and the government relations team are monitoring the flow of legislation being introduced in the state House and Senate this spring. Here are a few recent or soon-to-be introduced pieces of legislation we are following.

  • House Bill 2431: Rep. David Rowe (R-Union, Snyder) introduced legislation to reduce Pennsylvania’s corporate net income tax rate. House Bill 2431 would reduce the rate from 9.99% to 7.99% for taxable years 2023, 2024, and 2025. The rate would drop to 6.99% for taxable year 2026 and 5.99% for each taxable year after Jan. 1, 2027. The bill is pending in the House Finance Committee.
  • House Bill 2432: Rowe also introduced House Bill 2432, which requires a two-thirds vote of General Assembly for any new tax or tax increase voters have disapproved. The bill is pending in the House Finance Committee.
  • House Bill 2382: Rep. Martina White (R-Philadelphia) sponsored House Bill 2382, which would enact an earned income tax credit in Pennsylvania. The bill is under consideration in the House Finance Committee.
  • House Bill 2438: Introduced by Rep. Rob Mercuri (R-Allegheny), House Bill 2438 would streamline, centralize, and modernize the process for releasing taxpayers who have satisfied their tax liens for Pennsylvania taxes. The bill is before the House Finance Committee for consideration.
  • House Bill 2487: State Rep. Bob Merski (D-Erie) introduced House Bill 2487, which would appropriate money for small start-up businesses that were ineligible for previous COVID-19 assistance. A county block-grant program will award eligible applicants that began operations between Jan. 1, 2020, and Dec. 31, 2021, with grants of up to $15,000. The bill has been referred to the House Commerce Committee for consideration.
  • House Bill 2359: State Reps. Elizabeth Fiedler (D-Philadelphia), Sara Innamorato (D-Allegheny), and Rick Krajewski (D-Philadelphia) introduced House Bill 2359, which would allocate $500 million of the state’s remaining American Rescue Plan funds to the Emergency Rental Assistance Program (ERAP). The bill is pending in the House Appropriations Committee.

Rep. Joseph Hohenstein (D-Philadelphia) plans to introduce legislation to recapitalize the COVID-19 Relief Statewide Small Business Assistance Program to provide $225 million for small businesses still struggling financially from the pandemic. The program prioritizes historically disadvantaged businesses and communities targeted for business investment by existing programs.

 

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March General Fund Revenues Continue Strong Showing

Pennsylvania collected $5.6 billion in General Fund revenue in March, which was $659.1 million, or 13.5%, more than anticipated, according to the state Department of Revenue. Fiscal year-to-date General Fund collections total $34.1 billion, which is $2.7 billion, or 8.5%, above estimate.

The March Independent Fiscal Office (IFO) Monthly Revenue Update shows that actual collections were $579.2 million above IFO projections. March 2022 General Fund revenues of $5.56 billion reflect an increase of $714.3 million (14.8%) compared to the same month in the prior year.

Sales tax receipts totaled $1.1 billion for March, $208.1 million above estimate. Year-to-date sales tax collections total $10.3 billion, which is $767.7 million, or 8.1%, more than anticipated.

Personal income tax (PIT) revenue in March was $1.6 billion, $158.6 million above estimate. This brings year-to-date PIT collections to $11.2 billion, which is $687.6 million, or 6.5%, above estimate.

Corporate tax revenue was $2.4 billion in March, $188.0 million above estimate. Year-to-date corporate tax collections total $5.2 billion, which is $810.6 million, or 18.6%, above estimate.

Inheritance tax revenue for the month was $158.8 million, $31.4 million above estimate. Year-to-date, the total is $1.2 billion, which is 11.7%, above estimate. Realty transfer tax revenue was $74.8 million for March, $21.8 million above estimate. This brings the fiscal-year total to $624.3 million, or 22.4% more than anticipated. Cigarette, malt beverage, liquor, and gaming taxes, totaled $67.7 million for the month, or $9.2 million above estimate.

Nontax revenue totaled $192.5 million for the month, $42.0 million above estimate. This brings the year-to-date total to $4.3 billion, which is $126.3 million, or 3.0%, above estimate.

 

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Special Elections Held in Three State Districts

Voters in three Pennsylvania state House districts went to the polls this week to fill vacant seats.

Aerion A. Abney (D) ran unopposed in the state House 19th Legislative District in Allegheny County to fill the seat held by former Rep. Jake Wheatley (D).

In the race for the 24th Legislative District, a seat vacated by Ed Gainey who is now mayor of Pittsburgh, Democrat Martell X. Covington easily won victory.

In the 116th Legislative District in Luzerne County, Republican Robert Schnee bested two candidates for the win. Schnee replaces former Rep. Tara Toohil (R).

The House is now at its full complement of 203 members, with 113 Republicans and 90 Democrats.

 

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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