Legislative Update - Week Ending Jan. 21, 2022

Jan 21, 2022


General Assembly Returns to Session Jan. 24

State House and Senate lawmakers return to legislative session on Jan. 24. This will be the first time both chambers are in session at the same time in the new year. Lawmakers have a busy week ahead of them.

The House is poised to vote on a package of small-business tax reform bills. Lawmakers, however, have dozens of amendments to debate before final votes on the bills can be tallied.

Although negotiations are ongoing, a revised state congressional district map is before the Senate for a possible vote. The legislation (House Bill 2146) redistricts the state into 17 congressional districts, down from 18.

The House Professional Licensure Committee meets on Jan. 24 to consider a bill sponsored by Rep. Keith Greiner (R-Lancaster) and supported by the PICPA. House Bill 1328 updates and modernizes key provisions of the CPA Law. The law was last amended by the General Assembly in 2016. For a more detailed explanation of the changes proposed in HB 1328, read our issue brief.

The Performance-Based Budget Board will hold public hearings Jan. 24-26. The board will review reports from the Independent Fiscal Office on various state departments and agencies.

The Senate Community, Economic & Recreational Development Committee has a public hearing scheduled Jan. 26 on small-business assistance and economic recovery.

Here’s a complete list of committee meetings and hearings for the week.

 

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DOR Provides Additional Hurricane Ida Filing Extension Guidance

The Department of Revenue is again extending the due dates to file various individual and business tax returns for taxpayers in parts of Pennsylvania who were affected by the storms spawned by Hurricane Ida. Importantly, taxpayers should know that this extension does not apply to tax payments.

This guidance follows an announcement from the IRS that extended the filing dates for various individual and business tax returns at the federal level. The extension applies to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance due to storm damage. This includes Bedford, Bucks, Chester, Dauphin, Delaware, Fulton, Huntingdon, Luzerne, Montgomery, Northampton, Philadelphia, Schuylkill, and York counties. Taxpayers in Ida-impacted localities in other parts of Pennsylvania that were subsequently designated by FEMA as qualifying for assistance are eligible for the same filing relief.

Here are other important details to keep in mind:

  • Relief for those affected by Ida postpones various tax return filing deadlines that occurred starting on Aug. 31, 2021.
  • Affected individuals who had a valid extension to file their 2020 Pennsylvania personal income tax return (PA-40) due to run out on Nov. 15, 2021, now have until Feb. 15, 2022, to file. This is filing only: the Department of Revenue is reminding taxpayers that payments related to the 2020 returns are not eligible for an extension. These Pennsylvania income tax payments were due May 17, 2021.
  • Businesses and estates/trusts with an original or extended due date also have additional time to file. This includes calendar-year partnerships and S corporations whose 2020 extensions ran out Sept. 15, 2021; calendar year estates or trusts whose 2020 extensions ran out Sept. 30, 2021; and calendar-year corporations whose 2020 extensions ran out Nov. 15, 2021.

Revised charts can be found here.

 

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Senate Committee Approves School Choice Expansion

The Senate Education Committee approved legislation that will expand school choice in Pennsylvania.

Senate Bill 527, sponsored by Sen. Mike Regan (R-Cumberland/York), would automatically raise the caps for the Educational Improvement Tax Credit (EITC) Scholarship and Opportunity Scholarship Tax Credit (OSTC) programs by 25% annually, so long as at least 90% of the credits were claimed in the year prior. Senate Bill 527 could increase the EITC/OSTC programs by $100 million annually.

Pennsylvania’s $225 million EITC and $55 million OSTC programs, notes Regan, provide scholarships to more than 48,000 students seeking an education outside their assigned public school.

Senate Bill 527 now goes to the full Senate for consideration.

 

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Cybersecurity Measures Clear State Senate

A package of cybersecurity legislation is now headed to the state House after the Senate approved the bills this week.

Senate Bill 482, sponsored by Sen. Kristen Phillips-Hill (R-York), would create a new Office of Information Technology. The new office will oversee the administration and management of Pennsylvania’s information technology operations.

Senate Bill 696, sponsored by Sen. Dan Laughlin (R-Erie), would require state and local governments to notify potential victims within seven days when a data breach occurs. The requirement applies to any state agency, county, school district, municipality, or third-party vendor experiencing a breach.

Senate Bill 726, also sponsored by Phillips-Hill, ensures state agencies have strong safeguards in place to discourage, combat, and recover from ransomware attacks. Senate Bill 726 would set state penalties for the possession, use, or threatened use of ransomware, and would prohibit state agencies from paying ransom.

 

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Wolf Moves to Fill Seats on Pa. Accountancy Board

Gov. Tom Wolf nominated John “Jack” Grater Jr., CPA, MST, to the State Board of Accountancy. If approved by the Pennsylvania Senate, he will replace Erik Scully, CPA, whose term expired.

Grater, a PICPA member, has more than 30 years of tax and accounting knowledge, expertise, and practical experience from both the business and government point of view. He also had taught in the master’s in taxation program at Robert Morris University for more than 10 years.

Wolf also nominated Philip R. Reck, an accountant from York, to replace Alfred Whitcomb, who was the only public accounting member of the State Board of Accountancy.

 

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Ryan Announces Retirement from State House

State Rep. Frank Ryan (R-Lebanon), a PICPA member, announced he will not be seeking reelection to the Pennsylvania House this fall.

“It has been an honor to serve the citizens of the 101st Legislative District the past five years and to advocate on behalf of all Pennsylvanians on the issues of property tax reform, sound fiscal management in the state’s budgeting and pension systems, and the protection of individual freedoms. Now it is time for the next generation of leaders to do the same,” he said.

Here are the state representatives and senators who have announced they will not run for reelection in 2022:

  • Rep. Rosemary Brown (R-Monroe)
  • Rep. Dave Hickernell (R-Lancaster)
  • Rep. Jerry Knowles (R-Schuylkill)
  • Rep. Daryl Metcalfe (R-Butler)
  • Rep. David Millard (R-Columbia)
  • Rep. Gerald Mullery (D-Luzerne)
  • Rep. Michael Peifer (R-Pike)
  • Rep. Frank Ryan (R-Lebanon)
  • Rep. Brian Sims (D-Philadelphia), running for lieutenant governor
  • Rep. Curt Sonney (R-Erie)
  • Senate President Pro Tempore Jake Corman (R-Centre), running for governor
  • Sen. Bob Mensch (R-Montgomery)

 

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State Tax Comparison

An Independent Fiscal Office (IFO) report compares how states generate revenue, and ranks them in descending order based on the ratio of tax revenue to state personal income. For example, in the ranking of states on the ratio of personal income tax to personal income Pennsylvania places 19th with a ratio of 2.62%. The report also ranks states based on the ratio of total state and local tax revenue to state personal income among other comparisons.

The IFO also issued a report that estimates impact fee collections for 2021 (remitted April 2022). Estimated collections are $233.8 million, an increase of $87.6 million from the prior year. The growth is largely due to an increase in the fee schedule resulting from a higher price for natural gas.

 

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