GOP Maintains Control of State House, Senate
Republicans in the state House and Senate had a good election night. Final results in some races are still pending as of this writing, but GOP leaders in the General Assembly are hopeful that they will return to session in January with slightly larger majorities.
Before the election, House Republicans held a 109-93 majority (with one vacancy). Preliminary results show that Republicans could gain as many as three additional seats. House Democrats anticipated picking up a handful of seats from Republicans in the southeast, but those wins did not materialize as hoped. In fact, Republicans will be returning all their incumbents and perhaps adding a seat from the region. The western part of the state proved just as challenging to Democrats, as early indications show at least two incumbents in jeopardy of losing.
CPA-PAC, the political arm of the PICPA, is pleased to report that five current or former CPAs – Rep. Mike Peifer (R-Pike), Rep. George Dunbar (R-Westmoreland), Rep. Keith Greiner (R-Lancaster), Rep. Frank Ryan (R-Lebanon), and Rep. Ben Sanchez (D-Montgomery) – were all reelected. In addition, CPA Nick Pisciottano (D-Allegheny) will be joining the group in January. Congratulation to all six members of the “PA CPA Caucus.”
In the 50-member state Senate, Republicans currently hold a 29-21 (with one independent who caucuses with the GOP) majority. Heading into Nov. 3, Republicans had more seats to protect. While it looks as if the GOP’s most vulnerable incumbent – Sen. Tom Killion (R-Delaware) – will not be returning, other targeted Republicans look solid in their races. Out west, Sen. Pam Iovino (D-Allegheny) has conceded her race to her challenger, Republican Devlin Robinson. In another western Pennsylvania seat, incumbent James Brewster (D-Allegheny) was trailing Republican Nicole Ziccarelli on Friday morning with district mail-in ballots still to be counted.
In the election for statewide row offices, Democrat Josh Shapiro appears headed for another term as attorney general. Republican Tim DeFoor defeated Democrat Nina Ahmad for auditor general, and incumbent Treasurer Joe Torsella (D) is currently trailing his opponent Republican Stacy Garrity.
All 18 members of Pennsylvania’s delegation to Congress appear poised to return to Washington, D.C., in January, including CPA Rep. Brian Fitzpatrick (R-Bucks), who defeated Democratic challenger Christina Finello.
As of this writing, Democrat Joe Biden held a small but growing lead over President Donald Trump for Pennsylvania’s 20 Electoral votes.
Find complete statewide election results here.
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State Lawmakers Return Nov. 10 for Leadership Elections
The General Assembly returns to Harrisburg Nov. 10 for another round of elections. House and Senate lawmakers will elect their caucus leadership teams for the 2021-2022 legislative session that begins in January.
With the retirement of Sen. Joe Scarnati (R-Jefferson), the Senate will elect a new President Pro Tempore, the highest ranking official in that chamber. Scarnati announced in February that he would not seek reelection and would not retire at the end of his fifth term on Nov. 30, 2020. Current Senate Majority Leader Jake Corman (R-Centre) and Sen. Gene Yaw (R-Lycoming) are vying to replace Scarnati. Should Corman be successful in his bid to succeed Scarnati, it will set in motion another election to replace him as majority leader.
House Democrats may be looking for a new leader as Rep. Frank Dermody (D-Allegheny) is running behind in his reelection bid. Dermody has served as Democratic Leader since the 2011-2012 session. Republicans will need to replace Rep. Marcy Toepel (R-Montgomery), who currently serves as majority caucus chair.
The PICPA anticipates additional session days will be added before Thanksgiving so lawmakers can finalize a 2020-2021 state budget.
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Sales Tax Receipts Propel Strong October Revenue Report
Pennsylvania collected $2.6 billion in General Fund revenue in October, which was $365.6 million, or 16.4%, more than anticipated. Fiscal year-to-date General Fund collections total $12.5 billion, which is $824.5 million, or 7.1%, above estimate.
According to the Independent Fiscal Office’s (IFO) Monthly Revenue Update, fiscal year-to-date (FYTD) collections exceed estimates by $1.01 billion (8.8%). Sales and use tax revenues for October totaled $1.09 billion, $132.5 million (13.8%) overestimate, mainly due to stronger than anticipated nonmotor vehicle collections, which were $117.2 million (14.2%) above estimate. Motor vehicle sales and use tax collections for October exceeded estimate by $15.4 million (11.4%). FYTD sales and use tax collections remain strong, surpassing the estimate by $586.4 million (15.5%) and growing at a year-over-year rate of 5.7% through October.
IFO notes that FYTD growth is likely driven by substantial federal transfer payments distributed earlier in the year, a significant increase in home refinancings that likely lowered household monthly payments/increased cash flow, and a shift in spending from out-of-state travel, gasoline, etc., to home furnishings, electronics, and other taxable household goods. IFO anticipates sales and use tax growth to slow in the coming months, with less federal support flowing to households.
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Taxpayers Unaware of State Tax Liabilities Related to Working Remotely
A survey of 2,053 U.S. adults conducted in October by The Harris Poll on behalf of the AICPA showed that among the 58% of Americans currently employed, 42% have worked remotely during the COVID-19 pandemic and 25% are currently working remotely. The survey also revealed that 55% of those who have worked remotely during the pandemic were not aware that a failure to change their state tax withholding to reflect their remote work situation could result in tax consequences.
The AICPA survey also found the following of remote workers during the pandemic:
- 47% were not aware that each state has their own tax laws related to remote work
- 71% were not aware that working remotely in other states can have an impact on the amount of state taxes owed
- 54% were unaware that the number of days worked out of the state where their physical workplace is located may also impact the amount of state taxes owed
Among those currently working remotely who have worked in a state other than where their prepandemic physical workplace was located, many have done so across multiple states (on average three) for relatively short periods of time. Most of these remote workers (75%) have worked out-of-state for 60 days or less, and 51% have worked out-of-state for fewer than 30 days total.
The survey also provides some optimistic results, noting that 67% of those who have worked out-of-state notified their employer of the state they are working in, 51% have tracked the number of days worked in each state, and 41% have changed their state income tax withholding.
The PICPA is seeking guidance from the state Department of Community and Economic Development on work site definitions as a result of the pandemic.
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Modernization Update from Pa. Department of Revenue
The Pennsylvania Department of Revenue (DOR) is going through a multiyear modernization of its internal computer legacy systems. It is currently in the third phase of its rollout, which includes the replacement of the current Modernized e-file (MeF) gateway. The scheduled go-live date for implementation is Nov. 30, 2020. To prepare for this, the DOR will have to shut down its MeF system temporarily on Nov. 22.
DOR will resume accepting MeF submissions on Nov. 30. When it begins accepting submissions, however, DOR will not accept tax year 2017 returns for the remainder of the filing season. This is strictly for the remainder of this filing season; when DOR begins processing for filing season 2021, DOR will resume supporting three tax years of returns.
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Gov. Wolf Signs Bills into Law, Vetoes Another
Gov. Tom Wolf signed several bills into law the week of Nov. 2. In addition, he vetoed his fourteenth bill of the session.
Senate Bill 30 amends the Tax Reform Code to make changes to city revitalization and improvement zones and to establish the PA Housing Tax Credit.
Senate Bill 94 revises the definition of “employee” in the Workers' Compensation Act to clarify coverage requirements of members of volunteer emergency service organizations.
Senate Bill 395 amends the act titled "An act granting to the Governor of the Commonwealth the sole authority for regulating the display of the flag of the United States from any public ground or building and from any ground or building of certain other institutions,” further providing for display of the POW/MIA flag.
Senate Bill 530 amends the Public School Code regarding attendance for students convicted or adjudicated delinquent of sexual assault of another student.
Senate Bill 976 allows the establishment of commerce courts and veterans’ courts.
Senate Bill 1110 amends the Disease Prevention and Control Law, providing for reports from health care facilities and personal care homes when a patient or resident is suffering from a communicable disease related to a disaster emergency and for confidentiality of reports and records.
Senate Bill 1195 amends the Insurance Company Law to adopt the Credit for Reinsurance Model Law and the Health and Life Insurance Guaranty Association Model Law.
Wolf vetoed Senate Bill 1164, which would have added additional reporting requirements to certify a natural death.
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Federal Legislation to Protect State Licensing Boards from Antitrust Damages
U.S. Reps. Mike Conaway (R-Texas), Jamie Raskin (D-Md.), and David Cicilline (D-R.I.), recently introduced the Occupational Licensing Board Antitrust Damages Relief Act of 2020 (H.R. 8680), which protects state licensing boards, their board members, and staff from legal damages while performing licensing regulation duties that protect the public interest.
The purpose of this legislation is to address the practical antitrust law implications for state professional and occupational licensing boards affected by the Supreme Court’s 2015 decision in North Carolina State Board of Dental Examiners v. Federal Trade Commission by shielding state boards, board members, and their staff members from legal damages occurring from their public service.
In its letter to the bill’s sponsors, a coalition of state licensing boards writes, “Passage of this legislation will ensure that all volunteer members, including those representing the public, of state regulatory boards are not deterred from civic-minded service because of the potential for personal monetary damages.”
The bipartisan bill still allows for enforcement of anti-trust laws by federal and private entities and sets standards for licensing boards if they are to be immune from damages.
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