Legislative Update - Week Ending May 20, 2022

by PICPA Government Relations | May 20, 2022


Changing Politics of Pa. Apparent in Primary Results

The May 17 primary election was marked with landslide victories, incumbent defeats, and a few unknown outcomes in high-profile races.

On the federal level, the winner in Pennsylvania’s Republican U.S. Senate primary election had yet to be projected as of this posting. Mehmet Oz and Dave McCormick were within a few thousand votes of each other in a race in which more than 1.2 million votes were cast. Some counties had yet to tabulate their mail-in ballots, as well as provisional, overseas, and military absentee ballots. There is no runoff law in Pennsylvania, but the race could be close enough to trigger Pennsylvania’s automatic recount law should the separation between Oz and McCormick fall inside a 0.5% margin. On the other side of the aisle, despite suffering a stroke days before the primary, John Fettermen, the current lieutenant governor, won every single county in the state and held a 30-point lead over U.S. Rep. Conor Lamb (D-PA 17th) with almost 94% of the expected total counted.

There weren’t many surprises on the congressional level, although the Democratic primary between state Rep. Summer Lee (D-Allegheny) and Squirrel Hill attorney Steve Irwin to fill Pennsylvania’s redrawn 12th Congressional District is still too close to call. This race highlighted a fracture between the county’s party establishment and its growing progressive wing. Lee declared victory over Irwin, but acknowledged that there are still votes to be counted in the razor-thin race. Irwin did not concede.

Of note, Republican incumbent Brian Fitzpatrick (R-Bucks), a CPA and champion for the profession, won the GOP nomination for Pennsylvania’s 1st Congressional District.

On the state level, Sen. Doug Mastriano (R-Franklin) emerged as the winner from a crowded Republican primary for governor, he will face Attorney General Josh Shapiro in the fall. Shapiro ran unopposed in the Democratic primary.

Voters in both parties also chose state representatives to be their nominees for lieutenant governor this fall. Republicans elected state Rep. Carrie Lewis DelRosso (R-Allegheny) to run with Mastriano, while Democrats gave Shapiro his choice for second-in-command, state Rep. Austin Davis (D-Allegheny). In Pennsylvania, candidates for governor and lieutenant governor are not paired on the primary ballot but do run as a ticket in the fall.

In the state legislature, there was the historic outcome of eight incumbents losing to or currently behind challengers in their respective primary.

Incumbent Pat Browne (R-Lehigh), the senate appropriations chair and CPA member, is in a tight battle with Jarrett Coleman in the 16th District, which covers parts of Lehigh and Bucks counties. With 98 of 104 precincts reporting, Coleman, a school board director in the Parkland School District, has a 30-vote lead. The PICPA is watching this race closely.

GOP state house appropriations chair Stan Saylor (R-York) was defeated by upstart Wendy Fink in the 94th District race. Saylor, who has held the York County seat since 1993, fell by about an 11% margin, 55% to 44%. In the other shocking results from Tuesday:

  • Keith Gillespie (R-York) was defeated by challenger Joe D’Orsie in the 47th District.
  • Two-term Rep. Brian Kirkland (D-Delaware) was defeated in the 159th District primary by Carol Kazeem.
  • Five-term incumbent Pam DeLissio (D-Philadelphia, Montgomery) was ousted by Tarik Khan in the 194th House District.
  • Two-term Rep. Mike Puskaric (R-Allegheny, Washington) was defeated in the 39th House District by Andrew Kuzma.
  • Jill Cooper unseated first-term incumbent Jason Silvis (R-Westmoreland, Armstrong, Indiana) in the newly redrawn 55th District.
  • Martell Covington (D-Allegheny), after winning a special election in April for the 24th District, was defeated by La’Tasha D. Hayes, who becomes the first openly LGBTQ person to represent the majority-Black neighborhoods in Pittsburgh.

Incumbents who were ousted in member vs. member races due to redrawn districts included Rep. John Hershey (R-Juniata, Franklin, Mifflin), who fell to Rep. Perry Stambaugh (R-Perry, Cumberland) for the GOP nomination in the 86th District, which now covers Perry and Juniata counties.

Rep. Chris Rabb (D-Philadelphia) beat out Rep. Isabella Fitzgerald (D-Philadelphia) in the redrawn 200th District race. Fitzgerald had represented Philadelphia in the 200th District.

Check back next week for an update or follow us on Twitter.

 

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State Lawmakers Return to Harrisburg

House and Senate lawmakers return to the state capital for session on May 23. The General Assembly moves into budget season as the July 1 deadline for a new spending plan is fast approaching. There are several public hearings and committee meetings scheduled for the week.

The PICPA continues to pursue changes to the state’s CPA Law as part of its legislative agenda. House Bill 1328, sponsored by Rep. Keith Greiner, CPA (R-Lancaster), revises and updates the law’s peer review requirements, requires the accountancy board to adopt a code of professional conduct, and allows students to sit for the CPA Exam with 120-credits hours and no degree. The bill passed the House unanimously in February and is pending in the Senate Consumer Protection and Professional Licensure Committee.

Another issue on PICPA’s agenda is legislation to allow an elective pass-through entity tax (PTE tax) as a work around to the federal cap on state and local tax deductions. More than 26 states have enacted PTE-type legislation. House Bill 1709, sponsored by Rep. Martina White (R-Philadelphia), is pending in the House Finance Committee. Read more here. 

On May 23, the Independent Fiscal Office will release an updated revenue estimate for fiscal year 2021-2022 and an initial estimate for fiscal year 2022-2023. The presentation will review and discuss recent and projected economic trends that impact General Fund revenues. 

 

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DOR Responds to PICPA EFT Payment Inquiries

In response to numerous questions from members concerning the new $15,000 electronic payment requirement, the PICPA received clarification from the Department of Revenue (DOR).

Under Act 25 of 2021, which passed the General Assembly last June with bipartisan support, personal income tax payments made after Dec. 31, 2021, that are equal to or greater than $15,000, must be made electronically. Payments not made electronically will be subject to a penalty equal to 3% of the payment amount, not to exceed $500. The electronic funds transfer, or EFT, threshold for taxes other than personal income tax is still $1,000. The fastest and easiest way to submit an electronic payment is by visiting myPATH.pa.gov.

The DOR has begun automatically granting relief for first-time recipients of a penalty for one of the following three reasons:

  • Bad payment fee
  • EFT penalty
  • Late filing penalty

To qualify, taxpayers must not have received a bad payment fee, EFT penalty, late filing penalty, underpayment penalty, or estimated underpayment penalty in the past. The new process generates a Notice of Penalty Adjustment and eliminates the need for customers to file a petition with the Board of Appeals.

The PICPA would like to remind practitioners to update taxpayers’ filing instructions – particularly quarterly estimated payment coupons – as previous communications may not reflect the new EFT filing requirement. To date, the new requirements are not appearing in some leading tax software packages, so instruction letters to clients should be changed accordingly.

PICPA members with problems or questions should contact the PICPA government relations team at governmentrelations@picpa.org

 

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Commonwealth Court Orders Halt to Proposed Bridge Tolling Plan

Pennsylvania Commonwealth Court this week granted a preliminary injunction stopping the Wolf administration’s plan to toll nine major bridges across the state until further court action occurs.

The order halts PennDOT’s tolling of the following bridges:

  • I-78 Lenhartsville Bridge Replacement Project in Berks County
  • I-79 Widening, Bridges, and Bridgeville Interchange Reconfiguration in Allegheny County
  • I-80 Canoe Creek Bridges in Clarion County
  • I-80 Nescopeck Creek Bridges in Luzerne County
  • I-80 North Fork Bridges Project in Jefferson County
  • I-80 Over Lehigh River Bridge Project in Luzerne and Carbon Counties
  • I-81 Susquehanna Project in Susquehanna County
  • I-83 South Bridge Project in Dauphin County
  • I-95 Girard Point Improvement Bridge Project in Philadelphia County

In November 2020, PennDOT’s public-private partnership (P3) bridge program voted to toll interstate bridges it planned to repair or replace, but did not name the specific ones. Three months later, in February 2021, PennDOT announced the list. Three municipalities filed suit in November 2021 demanding PennDOT be stopped as it violated this law.

 

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SCOTUS to Take Up Pa. Case about Out-of-State Corporations

The U.S. Supreme Court agreed to review a Pennsylvania Supreme Court decision regarding general jurisdiction for corporations based outside Pennsylvania. The issue is whether corporations would have to defend themselves against all manner of lawsuits in any and every state in which they register to conduct business. A reversal could lead to more litigation.

In Mallory v. Norfolk Southern Railway Company, the Pennsylvania Supreme Court ruled that the “mere registration to conduct business within the Commonwealth did not subject the foreign company to general personal jurisdiction in Pennsylvania.” This unanimous decision – as most state courts have similarly ruled – was based on past U.S. Supreme Court rulings on personal jurisdiction.

The Pennsylvania Coalition for Civil Justice Reform (PCCJR), of which PICPA is a member, is likely to file an amicus brief on this matter.

 

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AICPA Weighs in on Supply Chain Disruption Relief Act

The AICPA Tax Executive Committee sent a letter to several U.S. senators in response to growing supply chain concerns in the auto industry. The letter touched on S. 4105, the Supply Chain Disruptions Relief Act, which would allow dealerships to choose to wait until as late as 2025 for their inventory to be replaced in order to determine the income attributable to the sale of inventory during 2020 or 2021.

The letter states, “The various government restrictions implemented in response to the COVID-19 pandemic severely limited manufacturing capacity and caused major interruptions in foreign trade and the global supply chain. These restrictions made it extremely difficult for U.S. companies to replace their inventories in 2020 and 2021, resulting in a significant reduction to inventory levels, and the difficulties have continued. As a result of these circumstances, many companies will realize additional taxable income and unexpected tax liabilities, which may continue to hamper their recovery, as they may not have the cash readily available to pay taxes on the additional income.”

The PICPA has been partnering with the AICPA on federal issues related to the COVID-19 pandemic and shares in AICPA’s support of S. 4105.

 

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IFO Revises Property Tax Replacement Estimates

The Independent Fiscal Office (IFO) recently provided updated estimates for potential property tax replacement revenues proposed under House Bill 13, sponsored by Rep. Frank Ryan (R-Lebanon). In April, IFO updated its revenue estimates for potential property tax replacement proposals.

House Bill 13 calls for the elimination of school property tax and associated school debt within Pennsylvania. The replacement revenue will come from the following:

  • An additional sales and use tax of 2% on all currently taxable items that would be paid to the county to be distributed to the local school districts
  • A new sales tax of 2% only on food and clothing will be distributed to the counties to then be distributed to the local school districts
  • A personal income tax of 1.85% paid directly to the local school district, in addition to the current state personal income tax of 3.07%, for a total personal income tax of 4.92%
  • Expansion of the 4.92% personal income tax to include retirement income, with 3.07% going to state and 1.85% going to local districts, with limited exemptions

According to IFO, its estimates should be viewed as approximations and include the impact of changes in behavior and compliance at full implementation for each of the proposed tax increases. In the short term, taxpayers may have a strong reaction to the tax increase. In addition, IFO says estimates are not reduced for administrative costs, which would likely be significant under House Bill 13.

 

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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