Week Ending April 9, 2021

Apr 09, 2021

PICPA-Supported Bill to Change Tax Due Dates Approved in House

The Pennsylvania House unanimously passed legislation authored by Rep. Keith Greiner, CPA (R-Lancaster), and supported by the PICPA to change the due date of state corporate tax returns from 30 days after the due date of the federal return to the 15th day of the month following the due date of the federal return.

House Bill 766 also includes an amendment authored by Greiner that provides temporary authorizations for the Department of Revenue and the Department of Community and Economic Development (DCED) to extend the filing and payment deadlines for annual local income taxes to May 17, 2021. May 17 is currently the deadline for federal and state tax returns. The amendment also waives interest, penalty, or additional tax that may have otherwise been assessed or accrued for failure to file or remit a payment for state and local tax liabilities through the extended deadline.

“I’m very pleased that we had bipartisan support for this legislation to move forward,” Greiner said. “I encourage my Senate colleagues to approve this legislation soon to bring much-needed clarity for Pennsylvania taxpayers.”

Greiner worked with the PICPA on House Bill 766 to create more predictability and eliminate confusion regarding corporate taxpayer due dates. Significantly, the legislation provides for individual taxpayers’ returns to be filed in conjunction with federal and state returns.

The local tax provision was made necessary because the DCED would not act to extend the local earned income tax to May 17. (Read DCED Sec. Dennis Davin’s letter to state municipal officials.)

House Bill 766 now goes to the Senate for consideration.


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U.S. Rep. Smucker Leads Fight for Federal Tax Filing and Payment Extensions

Pennsylvania Congressman Lloyd Smucker (R-11th District) continues to be a leading voice in Congress to extend the federal tax filing deadline for first quarter estimated tax payments.

On March 31, 60 members of Congress signed on to a letter requesting that IRS Commissioner Charles Rettig extend the federal tax filing deadline for first quarter estimated tax payments to May 17, 2021. The change would streamline tax filings, help ensure tax compliance, and ease the burden of millions of small businesses and other taxpayers.

The PICPA thanks Reps. Brian Fitzpatrick (R-1st District), Guy Reschenthaler (R-14th District), and Daniel Meuser (R-9th District) for also signing the letter and supporting the small-business community, individual taxpayers, and the CPA profession in Pennsylvania.

Smucker has also introduced legislation moving the estimated payment due date.

Small businesses and the CPAs who advise them recently had a huge success when Congress decided to extend the Paycheck Protection Program application deadline. The PICPA and AICPA will continue to advocate for proposals that support economic recovery.


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Pa. House Approves Limited COVID-19 Liability Protection

To deter the filing of frivolous lawsuits relating to COVID-19, the Pennsylvania House approved legislation that would provide limited, temporary liability protections to small businesses, educational institutions, and others.

House Bill 605, sponsored by Rep. Torren Ecker (R-Adams, Cumberland), would offer limited civil liability protections to health care providers, schools, small business owners, farmers, restaurants, and others that did their part to help keep people safe. The bill does not protect those who put anyone at risk; anybody who exhibits gross negligence can still be held accountable. Legitimate actions alleging personal injury or death related to exposure to COVID-19 would first be heard by a board of three bar members of the court in a compulsory arbitration.

As a member of the Pennsylvania Coalition for Civil Justice Reform (PCCJR), PICPA was one of more than 60 state organizations to sign a letter in support of the measure.

Across the country, 26 states and the District of Columbia have enacted various forms of legislation that provide targeted and temporary protections, noted Ecker.

Gov. Tom Wolf vetoed a similar measure at the end of 2020.

House Bill 605 is now in the Senate for consideration. 


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PICPA State Tax Committee Reviewing Tax Proposals

The PICPA State Taxation Committee is reviewing a series of newly or soon to be introduced legislation. Here’s a look at the legislation under review.

Proposed legislation by Rep. Mary Jo Daley (D-Montgomery) would implement Gov. Wolf’s proposed corporate tax changes. The bill will require the use of combined reporting by multistate corporations with a corresponding decrease in the state’s corporate net income tax (CNIT). Daley’s legislation will reduce the CNIT from its current 9.99% rate to 5.99% by 2026.

For more information on PICPA’s position on combined reporting, see our issue brief.

House Bill 1059, sponsored by Rep. Dave Hickernell (R-Lancaster), would amend the Tax Reform Code to increase the personal income tax threshold from $8,000 to $20,000 whereby a taxpayer is required to make estimated payments. Under this legislation, a taxpayer receiving income that is not subject to withholding in excess of $20,000 will be required to make estimated payments to the Department of Revenue.

Rep. Mike Jones (R-York) is working on legislation to remove the limitation on the amount that a taxpayer may deduct as a result of incurring a net operating loss.

Lastly, the committee is reviewing a three-piece package introduced by Rep. Eric Nelson (R-Westmoreland). House Bill 105 (like-kind exchanges), House Bill 333 (Section 179 expense deductions), and House Bill 395 (small business to similarly use a net loss deduction) are all pending in the House Finance Committee.

PICPA’s State Taxation Committee review of legislation ensures compliance with our guiding principles of good tax policy, guards against unintended consequences, and ensures technical accuracy. 

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House Advances Economic Recovery, Government Reform Bills

The Pennsylvania House was in voting session from April 5 to April 7, and lawmakers approved several bills addressing a broad array of topics. Some of the bills address helping bar and restaurant owners recover from the pandemic shutdown, reforming state government, and assisting municipalities in identifying owners of blighted properties. The bills outlined below are going to the Senate for consideration.

House Bill 425, sponsored by Rep. Matt Dowling (R-Fayette), would allow a liquor licensee whose business closes permanently to sell remaining liquor or wine to another licensee qualified to sell such products. Current law only permits the licensee to sell leftover product to the entity that purchases his or her liquor license.

PICPA member Rep. Frank Ryan’s (R-Lebanon) House Bill 120 would establish a bipartisan commission to analyze past and projected economic conditions to secure Pennsylvania’s solvency.

Legislation sponsored by Rep. Doyle Heffley (R-Carbon) would assist municipalities in identifying the owners of blighted properties by requiring registration prior to a tax sale. House Bill 264 would create a preregistration requirement for potential bidders at tax sales. Any potential bidder must appear at the county tax claim bureau no less than 10 days before the scheduled sale to register. Counties may establish a registration fee under the proposal.

House Bill 39, sponsored by Rep. Seth Grove (R-York), directs the Office of the Budget to establish a review schedule of all Commonwealth agencies that have $50 million or more in payments to individuals, vendors, or entities for improper payments and payment recovery by contracting with an auditor to perform a recovery audit.

The House and Senate return to session on April 19. 


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Mensch Announces Bill to Enhance Education Funding Formula

Sen. Bob Mensch (R-Berks, Bucks, Montgomery) circulated a cosponsorship memo on legislation he is sponsoring that would ensure more state funding is run through the Basic Education Funding Formula.

Known as the “hold harmless” provision, the law starts the allocation with the amount received by the school district for the 2013-2014 school year before remaining funds can be distributed through the formula, which was adopted in a bipartisan manner. While the formula takes demographic information into account, the “hold harmless” provision prevents some funds from going to where the formula says they should be distributed.

Mensch says his legislation does not repeal “hold harmless,” but rather states that amounts a school district has in reserves – which is in excess of 10% of budgeted expenditures – will be subtracted from the “hold harmless” amount. He says this will allow school districts to have adequate reserves while simultaneously boosting the effects of the Basic Education Funding Formula.

Funding for public education is the subject of a lawsuit pending before the Pennsylvania Supreme Court.


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Senators Announce Climate Change Proposal

State Sens. Amanda Cappelletti (D-Montgomery, Delaware) and Katie Muth (D-Berks, Chester, Montgomery) will be introducing legislation to transition Pennsylvania to 100% renewable energy by 2050.

State Rep. Christopher Rabb (D-Philadelphia) plans to introduce similar legislation.

According to the lawmakers, seven states representing more than 68 million people have passed similar policies, including New York and Virginia.


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