Week Ending Dec. 11, 2020

Dec 11, 2020


SPECIAL NOTE: The PICPA wishes to extend our best wishes to Gov. Tom Wolf for his full and speedy recovery from his COVID-19 diagnosis. Our thoughts and prayers go out to him, First Lady Frances Wolf, and their entire family.


PICPA Joins Call to Pass PPP Expense Forgiveness Legislation

The PICPA has joined the American Institute of CPAs (AICPA) and a coalition of more than 560 organizations representing millions of employers and workers to urge Congressional leaders to pass legislation making it clear that expenses related to a forgiven Paycheck Protection Program (PPP) loan are tax deductible.

“At the onset of the COVID-19 pandemic, Congress responded with speed, cooperation, and an eye to preventing the worst potential economic outcomes. We ask that you bring that same spirit of urgency and cooperation during this ‘lame duck’ session to prevent an avoidable catastrophe for millions of small businesses that, without Congressional action, will face a surprising and, in many cases, insurmountable tax bill next year,” the coalition wrote in its letter.

While the Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide relief to businesses by allowing the deductibility of expenses related to loan forgiveness, IRS Notice 2020-32 directly contradicts this intent, instead transforming tax-free loan forgiveness into taxable income. The accounting profession has made repeated calls on Congress to fix this problem.

A separate letter cosigned by state CPA societies from all 50 states, four territories, and the AICPA has also been sent to Congressional leadership urging immediate action on this issue.

The PICPA has more on what to expect on this issue and additional PPP efforts in this CPA Now blog by Jennifer Cryder, PICPA’s COO and executive vice president.  

 

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New State Coronavirus Mitigation Efforts Announced

As COVID-19 cases skyrocket, Gov. Tom Wolf and Secretary of Health Dr. Rachel Levine implored Pennsylvanians to take the next three weeks and consciously combat the virus by adhering to existing mitigation orders and a series of stricter efforts announced on Dec. 10.

The newly announced mitigation efforts include the following:

  • All in-person indoor dining at businesses including, but not limited to, bars, restaurants, breweries, wineries, distilleries, social clubs, and private catered events, is prohibited.
  • Outdoor dining, take-out food service, and take-out alcohol sales may continue, subject to limitations or restrictions imposed by Pennsylvania law.
  • Indoor gatherings and events of more than 10 persons are prohibited. Churches, synagogues, temples, mosques, and other places of congregate worship are excluded from the order during religious services; however, these institutions are strongly encouraged to find alternative methods for worship.
  • Outdoor gatherings of more than 50 persons are prohibited.
  • All in-person businesses serving the public may only operate at 50% of the maximum capacity stated on the applicable certificate of occupancy, except as limited by existing orders to a smaller capacity limit.
  • Indoor operations at gyms and fitness facilities are prohibited.
  • Outdoor facilities and outdoor classes can continue, but all participants must practice physical distancing requirements and wear face coverings in accordance with the Secretary of Health’s Updated Order Requiring Universal Face Coverings, including any subsequent amendments.
  • All in-person businesses in the entertainment industry serving the public within a building or indoor-defined area, including, but not limited to, theaters, concert venues, museums, movie theaters, arcades, casinos, bowling alleys, private clubs, and all other similar entertainment, recreational, or social facilities, are prohibited from operation.
  • Voluntary activities sponsored or approved by a school entity's governing body or administration are suspended, but these extracurricular activities may be held virtually. This includes, but is not limited to, attendance at or participation in activities such musical ensembles, school plays, student council, clubs, and school dances.
  • All K-12 public school, nonpublic school, and private school sports, as well as club, travel, recreational, intermural, and intramural sports, are paused. Professional or collegiate sports activities may continue in accordance with guidance from the CDC and the Department of Health. Spectators may not attend such activities in person.

For more information on the announcement, visit the following:

The new, limited-time mitigation orders take effect at 12:01 a.m. on Dec. 12, and remain in effect until 8 a.m. on Jan. 4, 2021.

 

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PICPA to Assist Auditor General-Elect DeFoor with Transition Effort

The PICPA has accepted the invitation of Auditor General-Elect Tim DeFoor to serve on his transition team. Peter Calcara, PICPA vice president of government relations, will join current PICPA members Peter Barsz and former state Rep. John Maher and former PICPA member Derrick Roman on DeFoor’s transition team.

DeFoor stated, “I am extremely proud of the team we have assembled. We have gathered the best of the best from a diverse blend of experts from across Pennsylvania. I am honored that they agreed to serve, and we are excited to get to work.”

DeFoor has more than 25 years of combined experience in law enforcement and auditing, in both the public and private sectors. He began his public service as a special investigator in the state Office of Inspector General, investigating government and contractor fraud, waste, and abuse within state government. He later became a special agent with the Office of Attorney General, investigating Medicaid fraud and illegal prescription drug diversion.

In November, DeFoor defeated Democrat Nina Ahmad, a former deputy Philadelphia mayor, to become the first Republican auditor general since the 1980s. DeFoor is also the first person of color elected to a statewide row office.

 

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Pass-Through Withholding Guidance Repealed

Pennsylvania is repealing the statement of policy relating to income taxation of partnerships, associations, and Pennsylvania S corporations having nonresident partners, members, or shareholders. Notice was published in the Dec. 5, 2020, PA Bulletin. The statement of policy no longer reflects current tax processes and systems that will be incorporated into a new personal income tax system, notes the Department of Revenue (DOR).

In response to the proposed change, the PICPA State Taxation Committee wrote in September to the DOR questioning the change.

 

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DOR’s John Kaschak Named President of NESTOA

John Kaschak, the Pennsylvania Department of Revenue's executive deputy secretary, was recently named president of the North Eastern States Tax Officials Association (NESTOA). Kaschak is a CPA and a member of the PICPA.

As president of NESTOA, Kaschak will play a leading role in bringing together tax administrators to discuss regional topics and trends in the tax industry. He'll also be working to plan the 2021 annual NESTOA meeting where tax administrators share their ideas and present on successful projects and initiatives.

NESTOA is a collaborative association that includes the states of Maryland, Delaware, New Jersey, Pennsylvania, New York, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine. It also includes the District of Columbia, New York City, and the City of Philadelphia. NESTOA is a section of the Federation of Tax Administrators. 

 

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State Senate Democrats Introduce $4 Billion COVID Aid Plan

The Pennsylvania Senate Democratic Caucus announced a $4 billion pandemic relief plan last week. The plan aims to stimulate Pennsylvania’s economy by providing direct aid to workers, families, small businesses, and other vulnerable populations.

The Pennsylvania Coronavirus Aid, Relief & Economic Security Act of 2021 (PA CARES 21) would fund previously existing aid programs and establish new efforts to help Pennsylvanians and struggling areas of the economy.

Where appropriate, this proposal utilizes programs created under Act 24 of 2020 to drive out the funds. If proposed funding does not fit into an existing program (e.g., utility assistance), a new program will be created. Additionally, the caucus supports fixing programs created by Act 24 (such as Pennsylvania's Housing Finance Agency’s rental assistance program) as requested by stakeholders to maximize effectiveness.

 

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Bipartisan Legislative Caucus Formed

Democratic state Rep. Stephen Kinsey and Republican state Rep. Greg Rothman joined forces to form a first-of-its-kind bipartisan caucus for the upcoming 2021-2022 legislative session.

The newly formed group has a growing number of lawmakers pledging membership from both sides of the political aisle and is meant to serve as a medium for Democrats and Republicans to come together through open dialogue. The goal is to enact meaningful policy that centers on helping the people of Pennsylvania.

“Our caucus aims to buck this undercurrent of centering party matters in legislative matters, which sometimes deters members on both sides of the aisle from collaborating with each other. As lawmakers, working toward a better and more equitable commonwealth for all should be our top priority, and legislating with a focus on party is a direct detriment to this goal,” said Kinsey (D-Philadelphia).

Reciprocating those sentiments, Rothman (R-Cumberland) said that he too has found friendship in Kinsey and called for civility among lawmakers on both sides of the aisle.

“Democracy requires unity and civility,” Rothman said. “Representative Kinsey is my best friend in the legislature, despite our being from different districts and different political parties. We want to set the example that we can disagree with respect and civility. We should always be looking for what we have in common.”

Kinsey and Rothman not only come from opposite sides of the aisle in the House chamber, but also different geographical landscapes within the commonwealth. Kinsey hails from Philadelphia, the state’s predominantly Democratic and most populous urban area, while Rothman hails from Cumberland County, a mostly Republican mix of urban, suburban, and rural constituencies.

 

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