Ordinarily, the Pennsylvania General Assembly can be slow and methodical. Moving policy options through 203 members of the Pennsylvania House, 50 members of the Senate, plus staff is fraught with significant administrative and logistical hurdles. Add a pandemic to the equation, and the process takes on a new level of complication.
However, the pace of activity in the first quarter of 2021 was more of a whirlwind for the PICPA government relations team.
Analyzing and reviewing newly introduced legislation is a major undertaking because of the sheer volume of bills. The members of the PICPA State Taxation Committee play a critical role in this process. The committee serves as an unbiased technical resource and strategic partner on state tax matters with lawmakers and the administration. The committee reviews legislation to ensure adherence to our guiding principles of good tax policy, guard against unintended consequences, and ensure technical accuracy.
One of the government relations team’s first orders of business during a new legislative session is to introduce the PICPA and our 20,000 members to the new members of the General Assembly – this year there were 25 in the House and six in the Senate. These meet-and-greets are typically in-person affairs, but COVID-19 has postponed such meetings. Instead, the PICPA government relations team held virtual meet-and-greets with 25 of the new members as of mid-May. In some cases, this was the first time a new lawmaker had heard of the PICPA.
In February, the PICPA hosted a series of six advocacy updates. Sixty-three PICPA members spoke directly with state House and Senate leaders about the 2021-2022 Pennsylvania budget and other legislative issues in these PICPA-exclusive town-hall-style discussions. Some topics included Gov. Tom Wolf’s proposed budget, the ongoing COVID-19 pandemic and the fiscal challenges associated with it, an increase in the minimum wage, redistricting, property tax reform, and strategies for addressing skilled worker shortages. The series gave members an opportunity to hear from elected officials in an informal setting and ask questions.
In early February, the PICPA won a significant legislative victory when state lawmakers added a provision addressing Paycheck Protection Program (PPP) loan forgiveness to legislation providing COVID-19 relief to Pennsylvania businesses. Now Act 1 of 2021, the PICPA-backed provision excludes forgiveness of PPP loans from state personal income tax. Without this clarifying language, the Department of Revenue would have included such forgiveness in the taxable income of taxpayers. This fix saves small businesses an estimated $220 million according to the department.
On the heels of the PPP-related legislative success, the PICPA turned its attention to Wolf’s $37.8 billion spending plan for fiscal year 2021-2022. The governor’s plan includes several tax proposals and tax law changes that require PICPA’s attention. We have been busy conducting outreach to legislators who have questions about the practical application of these changes.
Jason C. Skrinak, CPA, a member of the PICPA State Taxation Committee, provided testimony on Feb. 24 on behalf of the PICPA to the Pennsylvania House Majority Policy Committee on Wolf’s proposed tax changes and what they mean to working families.
Skrinak told the policy committee, “Eighty percent of businesses in Pennsylvania are not subject to Pennsylvania’s corporate net income tax; these businesses fall under the personal income tax regime and would be directly impacted by the proposed rate increase.”
In early March, the PICPA Fiscal Responsibility Task Force released its fifth report providing state lawmakers with a variety of policy options to address Pennsylvania’s financial and economic challenges. The task force provides objective, nonpartisan analysis on various public policy issues.
Members of the task force unveiled its findings March 9 to members of the Tax Modernization and Reform Subcommittee of the Pennsylvania House Finance Committee. The report was well-received by lawmakers.
Suzanne P. Leighton, CPA, who chairs the task force, noted, “CPAs are uniquely qualified to assist ... with meeting the fiscal challenges that lie ahead because of COVID and the shutdowns. We routinely face the challenge of developing strategic plans of action to return businesses or clients to sound financial footing.”
The PICPA scored another early legislative victory with House Bill 766. Wolf signed the bill into law on April 22 as Act 10 of 2021.
Act 10 moves the corporate tax-filing due date in Pennsylvania to the 15th day of the month following the due date of the federal return. This change was advocated for by members of the PICPA State Taxation Committee to create more certainty and eliminate confusion. It is effective for tax years beginning after Dec. 31, 2020. Act 10 also protects taxpayers from interest and penalties for failing to file a local return by April 15 this year. Many local tax jurisdictions failed to extend the 2021 filing due date to May 17 following the federal government and the state. Local tax collectors must waive interest, penalty, or additional tax that may have otherwise been assessed for failure to file or remit a payment. Importantly, Act 10 permanently aligns the local earned income tax deadlines to match federal and state tax returns.
Each two-year session of the General Assembly holds challenges and opportunities. Issues rise and fall depending on the political climate. PICPA members should rest assured that your government relations team will continue to maintain an active presence in Harrisburg and serve as the voice of the CPA profession. Plan to join us when we host our town halls and you can make that voice even stronger.
Peter N. Calcara, CAE, is PICPA vice president of government relations. He can be reached at email@example.com.