Legislative Update - Week Ending June 17, 2022

by PICPA Government Relations | Jun 17, 2022


Tax Cut Proposals Advance with Budget Discussions

With a new fiscal year state spending plan still being hammered out, lawmakers advanced two pieces of tax-reduction legislation, one of which could make its way into the final budget agreement. The state Senate passed two plans to decrease Pennsylvania’s corporate net income (CNI) tax rate.

By a vote of 31-19, the Senate approved Senate Bill 771, sponsored by Sen. Ryan Aument (R-Lancaster). The bill would gradually reduce the CNI tax from its current rate of 9.99% to 6.99% by 2024. The rate could then be further reduced only if it meets or exceeds certain revenue projections for 2024.

Senate Bill 447, sponsored by Sen. Michele Brooks (R-Mercer), would reduce the CNI tax from its current rate by a half a percentage point every year over six years until it reaches 6.99%. The bill also passed the Senate by a vote of 31-19.

During the debate on both bills, Sen. Katie Muth (D-Montgomery) offered an amendment that would have mandated corporations engage in combined reporting. The amendment was rejected by a 30-20 vote. Learn more about PICPA’s position on combined reporting.

Both bills now go to the state House for consideration.

The PICPA continues to pursue its pass-through-entity tax proposal as part of the budget. That bill is pending before the full House for consideration.

 

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PHFA: Mixed-Use Development Tax Credits Open for Bids

The Pennsylvania Housing Finance Agency (PHFA) announced that it is accepting bids for the purchase of $4.5 million in mixed-use development tax credits. Collected funds will be used for the construction or rehabilitation of mixed-use developments in Pennsylvania communities. The deadline for bids is 2:00 p.m. July 15.

The credits up for bid can be used by companies or individuals to reduce state tax liability. The intent behind the bidding process is to raise as much funding as possible from the $4.5 million in credits being made available in order to provide for revitalization projects in various communities. The projects that will receive this funding will be selected during a competitive request-for-proposals process later this year.

This tax credit program was created as part of Pennsylvania’s fiscal year 2016-2017 budget, and PHFA was directed to administer the credit. It is expected that the tax credit awards will be made within 90 days after bidding closes, but, although made in 2022, the awards are not effective for use until 2023 against a 2022 tax liability.

More information is available on the PHFA website. Program guidelines and bid criteria are posted there (you will need to scroll down). Interested organizations can learn more by contacting Bryce Maretzki at PHFA at (717) 780-1867 or by email at bmaretzki@phfa.org

 

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DOR Updates Taxable and Exempt Property List

The Pennsylvania Department of Revenue (DOR) recently updated its sales and use tax notice that lists personal property and services as taxable or nontaxable.

One item of note newly added to the list as a taxable is nonfungible tokens.

The taxability of the following items or services has been changed or clarified as indicated:

  • CBD/hemp to be vaped (also subject to Other Tobacco Tax) – taxable
  • Building supplies and materials used to build and repair a roofed structure or facility, or a portion of the facility, used for occupation by livestock or poultry – nontaxable
  • Building supplies and materials used to build and repair a shed or other structure not used for occupation by livestock or poultry – taxable
  • Parking fees (may be subject to Hotel Occupancy Tax) – nontaxable
  • Flea collars, flea powder, flea and tick soap and tick sprays for use on pets – nontaxable
  • Firewood, kindling, and wood pellets or bricks made from pure sawdust for residential use – nontaxable

This list is required to be published at least once every three years. The last update was published Dec. 11, 2021. 

 

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House Committee Advances Data Breach Notification Legislation

The House State Government Committee sent legislation for consideration to the full Pennsylvania House that would require state agencies to notify victims of a data breach within one week.

Under Senate Bill 696, sponsored by Sen. Dan Laughlin (R-Erie), any state agency, county, municipality, public school, or third-party vendor that conducts business with a state or local agency that experiences a data breach would be required to provide notice of the breach to affected victims within seven days of determination.

The measure would also require the state’s attorney general to be notified concurrently of the breach that had occurred in a state agency. A county’s district attorney would be notified within three business days if a breach occurred in a county, school district, or municipality.

For more on the growth of state-mandated data breach notifications, read this CPA Now blog by James Vinocur, JD. 

 

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Proposal Would Lower Income Tax, Impose Tax on Some Gains

A newly introduced bill would reduce individual income tax rates while imposing a new tax on some income from net profits, dividends, and net gains.

Senate Bill 1266, introduced by Sens. Art Haywood (D-Montgomery) and Vincent Hughes (D-Philadelphia), would reduce income taxes on employees' wages and interest from 3.7% to 2.8%. The bill would also impose a 6.5% tax on the income from net profits, dividends, and net gains that come from rent, royalties, patents and copyrights, gambling and lottery winnings, and trusts and estate net gains, according to the bill memorandum.

Similar legislation is expected to be introduced in the state House. If enacted, the changes would apply beginning in the 2020 taxable year.

 

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Philadelphia DOR Post-Tax-Season Rundown

Now that the 2021 tax filing deadlines have passed, the Philadelphia Department of Revenue offers practitioners some general tax updates and a quick highlight of Philadelphia’s newly released property assessments in its latest newsletter.

Over 580,000 properties in the city will have new assessments for tax year 2023. The Office of Property Assessment (OPA) released the preliminary values online May 9, but property owners will still receive written notices with their new assessments by September of this year. Residential, commercial, industrial, and institutional property owners last saw changes to their assessments in 2020. The department advises that if you have questions about an assessment, visit www.phila.gov/OPA or call (215) 686-9200.

The department will produce an e-newsletter monthly to provide key updates. Send questions to revenue@phila.gov or call (215) 686-6600.

 

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Dillon Named Chair of Senate Finance Committee

A week after being sworn into office to represent the 5th District in the Pennsylvania Senate (Northeast Philadelphia), Sen. Jimmy Dillon was named Democratic Chair of the Finance Committee. Dillon was also assigned as a member of the Aging and Youth, Communications and Technology, and Community, Economic, and Recreational Development committees.

Dillon was elected May 17 to fill the unexpired term of Sen. John Sabatina, who was elected judge in the Philadelphia County Court of Common Pleas.

 

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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