Local Government Emergency Bill Includes EITC Extension
Gov. Tom Wolf now has legislation on his desk that contains emergency measures to help local governments respond to the COVID-19 public health emergency and includes a provision addressing a popular state education tax credit program. The bill was unanimously approved by both the state Senate and House.
Senate Bill 841, sponsored by Sen. Scott Martin (R-Lancaster), extends deadlines for businesses to make payments under the state’s Educational Improvement Tax Credit (EITC) program until the end of the business tax year, allows local governments to extend property tax discount periods and/or waive penalties or late fees, saves school districts money by allowing various contracts to be renegotiated for the school closure period, allows for remote notary services, and authorizes local governments to meet through authorized telecommunications devices for the duration of the COVID-19 emergency declaration.
In addition to providing emergency provisions for local governments, the bill also reauthorizes the Pennsylvania Health Care Cost Containment Council, which is responsible for collecting and analyzing data about the cost and quality of health care in the state and making recommendations to reduce the cost of care. The panel would be responsible for preparing a report on the effect of the COVID-19 disaster emergency on health care facilities, including expenses and lost revenue during the crisis to determine additional financial assistance.
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PICPA Advocacy Moving Beyond Day on the Hill
PICPA’s Day on the Hill program, part of PICPA’s advocacy efforts since 2001, is not taking place this year. The PICPA government relations team had been contemplating making a change to this annual gathering for several reasons before the COVID-19 pandemic; now, it seems, our hand has been forced.
Read Successful Advocacy Requires Finding New Paths Forward and help us find new ways to bring together members and state lawmakers. We welcome your thoughts and ideas on this matter. Please email us at email@example.com.
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COVID-19 Update: Tax Filing Relief
The Wolf administration and the Department of Revenue (DOR) have provided taxpayers and businesses affected by the COVID-19 pandemic with additional relief. The DOR is offering taxpayers increased flexibility, additional time to meet their tax obligations, and a pause on several of its standard enforcement actions.
In addition, the DOR has provided follow-up answers to questions submitted during the PICPA-DOR March 31 webinar. You can find those Q&As on PICPA’s COVID-19 webpage.
Businesses that collect state sales tax will not have to make Accelerated Sales Tax (AST) prepayments over the next three months. Under normal circumstances, certain business taxpayers are required to make monthly sales tax prepayments if their actual tax liability was more than $25,000 during the third quarter of the preceding year. The DOR is waiving the prepayment requirement in April, May, and June of 2020 to help business owners with their cash flow during the COVID-19 pandemic. Under the scenario announced this week, the DOR is asking businesses to simply remit the sales tax that they collected during the prior month. The due dates to remit sales tax will be April 20, May 20, and June 22, which follows the standard due dates for monthly filers who have no prepayment requirement.
The DOR also announced it was providing taxpayers increased flexibility, additional time to meet their tax obligations, and a pause on several of its standard enforcement actions. The DOR will:
- Pause payments for existing payment plans upon requests from taxpayers.
- Provide flexible terms for new payment plans.
- Work to boost customer service for taxpayers impacted by the pandemic.
- Suspend or reduce automatic enforcement actions regarding liens, wage garnishments, bank attachments, license inspections, requirements for tax clearances and use of private collection agencies.
- Suspend the creation of new desk reviews and field audits in most cases.
- Suspend in-person meetings with taxpayers in most cases.
- Broaden audit penalty abatement and interest relief.
- Continue to administer tax credit and incentive programs.
- Abate penalties in most cases if taxpayers have remitted trust fund taxes they collected.
Taxpayers and tax professionals are encouraged to visit the DOR’s COVID-19 information page for additional guidance and updates on DOR operations.
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Lawmakers Battle Over When to Open Pa. for Business
State lawmakers clashed over when to reopen Pennsylvania businesses and return people to work. The divide fell largely along party lines. Republicans argued that the Wolf administration had taken a harsh and uneven hand in determining which businesses are life sustaining and which are not; Democrats defended Gov. Wolf’s actions noting that his decisions are being guided by professional medical opinion. The Republicans in the House and Senate were able to send a bill to the governor that would create a process for determining which businesses can continue to remain open.
Senate Bill 613, sponsored by Sen. Bob Mensch (R-Berks, Bucks, Montgomery), requires the governor to create clear guidelines for businesses to operate during the COVID-19 pandemic. Businesses that are able to operate safely under the new guidelines would be permitted to reopen so long as they comply with mitigation strategies. The bill would require COVID-19 mitigation plans to be developed by the Wolf administration based on guidelines issued by the U.S. Centers for Disease Control and the U.S. Cybersecurity and Infrastructure Security Agency (CISA). Twenty-two states and the District of Columbia follow CISA guidelines. Wolf is expected to veto the legislation.
Another bill moves control to the local level by giving county governments the option to develop and implement their own plans to mitigate the spread of COVID-19 following CISA guidelines. Under Senate Bill 327, sponsored by Sen. David Argall (R-Berks, Schuylkill), businesses already identified as essential could continue to operate. However, counties would also be given the authority to develop plans to allow other industries to operate if it is safe to do so. It passed the Senate but was returned to the House because of amendments added to the legislation.
The state House is scheduled to be back in session and may consider the legislation.
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Worker Safety Measures Ordered to Combat COVID-19
Gov. Wolf announced that Dr. Rachel Levine, under her authority as Secretary of the Department of Health to take any disease control measure appropriate to protect the public from the spread of infectious disease, signed an order directing protections for critical workers who are employed at businesses that are authorized to maintain in-person operations during the COVID-19 disaster emergency.
“This order provides critical protections for the workers needed to run and operate these life-sustaining establishments," Wolf said. "Businesses across the state have already begun to implement many of these protocols on their own, and we applaud their efforts to protect employees and customers."
“This order will ensure continuity across all life-sustaining businesses and will further our efforts to protect the health and safety of all Pennsylvanians," Dr. Levine said. "Together, we can all help mitigate the spread of COVID-19.”
The order establishes protocols to help employees maintain a social distance during work, provides measures for businesses to take if an employee is a probable or confirmed case of COVID-19, and businesses that serve the public within a building or defined area are ordered to implement specific safety measures based on the size of the building and number of employees.
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Loan Deferrals for Businesses Impacted by COVID-19 Announced
Dennis Davin, secretary of the Department of Community and Economic Development (DCED), announced the forbearance of loans administered by DCED.
Next week, Gov. Wolf and Sec. Davin will request loan deferrals for all borrowers with the Ben Franklin Technology Development Authority, the Commonwealth Financing Authority (excluding PENNWORKS program loans), the Pennsylvania Industrial Development Authority, and the Pennsylvania Minority Business Development Authority.
In March, DCED took the emergency executive step of halting April payments, late fees, and accruing interest for these loans. The additional forbearance will apply to May and June payments, and will include no accrual of interest or fees. Automatic payments will be halted, and borrowers paying by check will not be required to submit a payment until the scheduled July payment. As a result of the forbearance, the maturity of loans will be extended for three months.
Resources and information for businesses are regularly posted online. Businesses seeking further guidance and clarification from DCED can contact its customer service resource account at firstname.lastname@example.org.
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Legislators Seek More Relief for Businesses and Individuals
As the COVID-19 pandemic continues to wreak havoc on state and local economies, the Pennsylvania legislature is working on policy measures to provide relief to Pennsylvanians.
The state House approved legislation that would establish a Volunteer Emergency Responders Employer Tax Credit program for employers who allow an employee who serves with a volunteer emergency service organization to respond to an emergency call during work hours. House Bill 1189, sponsored by Rep. Jerry Knowles (R-Schuylkill, Berks, Carbon), also would extend disability benefits for first responders so they are covered in the event they contract COVID-19 in the line of duty. The bill goes to the Senate for consideration.
Rep. Brandon Markosek (D-Allegheny), introduced House Bill 2408, legislation that exempts CARES Act cash payments from state and local taxes. While these dollars are exempt from federal taxes, it is up to Pennsylvania to decide whether they are subject to state tax. This is companion legislation to Sen. James Brewster's Senate Bill 1104, and has been referred to the House Finance Committee.
Sen. Vincent Hughes (D-Philadelphia) introduced Senate Bill 1114 to address the concerns around business interruption insurance during the COVID-19 pandemic. A provision included in many business insurance policies prohibit payments on claims if a loss is due to an outbreak during a public health emergency. This provision has the potential to harm businesses already facing uncertain times. This legislation is modeled off legislation currently moving through the legislative process in New Jersey. It would temporarily override these provisions in business interruption insurance and allow businesses with this insurance to submit claims for losses during the COVID-19 pandemic. The legislation has been referred to the Senate Banking and Insurance Committee.
Rep. Thomas Murt (R-Montgomery, Philadelphia) plans to introduce student loan forgiveness legislation for front-line workers and first responders during the COVID-19 pandemic. The loan forgiveness program would provide health care professionals, first responders, and individuals deemed life-sustaining workers the opportunity to apply for student loan forgiveness. For those professionals who no longer have student loan debt, this bill would also include language regarding a benefit transfer to a child or relative of an individual directly involved with the COVID-19 pandemic. This would allow these essential front-line workers the financial freedom to focus on their careers and combating the COVID-19 pandemic instead of their debt. This legislation is awaiting formal introduction.
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PTIN Fees Resurrected Under New IRS Rules
Paid tax return preparers would again have to pay an annual fee to obtain or renew mandatory ID numbers under proposed IRS regulations.
Preparers have in the past challenged the legality of the IRS charging an annual fee for the number, called a preparer tax identification number (PTIN). A judge ruled last spring in Montrois v. United States that the IRS could reinstate the fee.
The IRS’s proposed regulations suggest an annual fee of $21, plus a processing charge. The last time preparers had to pay a fee it cost them $33, plus an additional processing charge for third-party vendors. A valid PTIN must be obtained by anyone who prepares or assists in preparing a federal tax return for compensation. The PTIN system provides tax return preparers an identifying number that is not a Social Security number to include on tax returns.
The IRS is accepting comments on the proposed regulations until 30 days after April 16, the date the proposed regulations are scheduled to be published in the Federal Register. It recommends that comments be sent electronically because the coronavirus pandemic has caused a reduction in staff available to process mail. The regulations are proposed to apply to applications for, or renewals of, PTINs filed on or after 30 days after the date the regulations are published as final in the Federal Register.
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GASB Proposes Postponement of Pronouncement Effective Dates
The Governmental Accounting Standards Board (GASB) has proposed postponing the effective dates of provisions in almost all statements and implementation guides scheduled to be applied by state and local governments for fiscal years 2019 and later.
The Postponement of the Effective Dates of Certain Authoritative Guidance exposure draft is intended to provide relief to governments during the COVID-19 crisis. The proposal would postpone by one year the effective dates of provisions in the following pronouncements:
- Statement No. 83, Certain Asset Retirement Obligations
- Statement No. 84, Fiduciary Activities
- Statement No. 87, Leases
- Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements
- Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period
- Statement No. 90, Majority Equity Interests
- Statement No. 91, Conduit Debt Obligations
- Statement No. 92, Omnibus 2020, paragraphs 6–10 and 12
- Statement No. 93, Replacement of Interbank Offered Rates, paragraphs 13 and 14
- Implementation Guide No. 2017-3, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting), questions 4.85, 4.103, 4.108, 4.109, 4.225, 4.239, 4.244, 4.245, 4.484, 4.491, and 5.1–5.4
- Implementation Guide No. 2018-1, Implementation Guidance Update – 2018
- Implementation Guide No. 2019-1, Implementation Guidance Update – 2019
- Implementation Guide No. 2019-2, Fiduciary Activities
- Implementation Guide No. 2019-3, Leases
The GASB did not propose postponing other provisions in Statements 93 and 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, because the pandemic was factored into the establishment of the effective dates for those pronouncements. The GASB is working under an expedited schedule to issue this guidance as quickly as practicable. The exposure draft is available on the GASB website www.gasb.org with a comment deadline of April 30. The GASB invites stakeholders to review the proposal and provide comments. GASB is scheduled to review stakeholder feedback and consider a final statement for issuance on May 8.
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