Legislative Update - Week Ending Oct. 7, 2022

Legislative Update - Week Ending Oct. 7, 2022

Oct 07, 2022

Pennsylvania Extends Filing for Taxpayers Affected by Hurricane Ian

The Pennsylvania Department of Revenue (DOR) is giving taxpayers impacted by Hurricane Ian who have an Oct. 17 filing requirement in Pennsylvania until Feb. 15 to file their 2021 tax returns. The DOR recommends sending in a request to the resource account it included in the announcement just in case the system does not pick it up automatically. Also, DOR will abate penalties if it finds that it should have extended the deadline, based on the taxpayer’s address, and did not.

Here are other important details to keep in mind:

  • The tax relief for those affected by Hurricane Ian postpones various tax return filing deadlines that occurred starting on Sept. 23, 2022.
  • Affected individuals who had a valid extension to file their 2021 Pennsylvania personal income tax return (PA-40) that was due to run out Oct. 17, 2022, will now have until Feb. 15, 2023, to file. Affected taxpayers seeking an extension on their 2021 personal income tax returns should email RA-BITDIRECTORFAX@pa.gov to request an extension.
  • Although there is an extension for the filing of 2021 personal income tax returns, DOR is reminding taxpayers that the payments related to these 2021 returns are not eligible for an extension. Pennsylvania income tax payments were due on April 18, 2022.
  • Businesses and estates/trusts with an original or extended due date also have additional time to file.

See this press release for more information. 


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PICPA Advocates for Extending COVID-19 Filing Deadline

The PICPA joined the American Institute of Certified Public Accountants (AICPA) and colleagues from several other state CPA societies in urging for an extension of the filing deadline for COVID-19-related taxpayer relief.

The PICPA has urged members of the Pennsylvania congressional delegation to sign on to a letter led by U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and U.S. House Ways and Means Committee Ranking Member Kevin Brady (R-Texas). The bicameral letter asks Assistant Treasury Secretary for Tax Policy Lily Batchelder and IRS Commissioner Charles Rettig to extend the COVID-19-related penalty deadline as taxpayers continue to encounter IRS customer service challenges resulting from the pandemic. The following Pennsylvania elected officials support this effort: Sen. Pat Toomey (R), Rep. Mike Kelly (R), and Rep. Lloyd Smucker (R).

The letter states, “We have heard from both constituents and also large segments of the tax professional community that the deadline is simply too soon for some taxpayers. The Notice only provided 36 days (5 weeks) for self-filers and practitioners to check their records and file any outstanding 2019 and 2020 tax returns. We therefore urge IRS to extend the Notice 2022-36 relief deadline to provide taxpayers, practitioners, and IRS more time to benefit from the relief, increase voluntary compliance, further reduce the IRS correspondence and paper return processing backlog, and help taxpayers who continue to feel the effects of the IRS’s customer service challenges.”

Extending the relief deadline through mid-to-late November 2022, with whatever appropriate procedural guardrails are determined to be necessary, would provide needed time for more taxpayers to come into voluntary tax compliance without unduly burdening the IRS.


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DOR Revises Like-Kind Exchange Bulletin

The Pennsylvania Department of Revenue revised its bulletin governing the tax treatment of like-kind exchanges in the state. The updated bulletin was posted Sept. 27, 2022.

The bulletin discusses the treatment of like-kind exchanges for the purposes of state personal income tax, sales and use tax, and realty transfer tax. The revision reflects changes passed by the General Assembly and signed into law by Gov. Tom Wolf earlier this year. Act 53 of 2022 incorporated the requirements of federal Internal Revenue Code Section 1031 into state law. 


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Max Baer, State Supreme Court Chief, Passes

Pennsylvania Supreme Court Chief Justice Max Baer, 74, died at his home in Pittsburgh on Oct. 1. He was elected to the state Supreme Court in 2003 and was sworn in as chief justice at the start of 2021.

Baer earned his bachelor’s degree from the University of Pittsburgh in 1971 and his law degree from Duquesne University School of Law in 1975. Baer served as a deputy in the state attorney general’s office from 1975 to 1980, and then worked as a private practice lawyer until he was elected as an Allegheny County Common Pleas judge in 1989. Baer was named the Family Court Division administrative judge in 1993.

Justice Debra Todd now becomes chief justice.

The PICPA extends its condolences to the Baer family. 


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PICPA Seeks Volunteers for Comment Opportunity

The AICPA released proposed revisions to the Statements on Standards for Tax Services (SSTSs) for public comment. The proposed changes include revisions to existing standards and three new standards. Additionally, there is an invitation to comment on the subject of quality management in tax. The combined document is divided into two separate sections: part one is an exposure draft on the three new standards and part two is an invitation to comment on the subject of quality management in tax.

The AICPA says updates to the SSTSs will better reflect the issues and needs of members and tax and will ensure the highest ethical standards for members who provide tax services. “Revising the standards is a powerful step forward to enhancing services provided by AICPA members so that they continue to be perceived as the premier providers of tax services,” said Jan Lewis, chair of the AICPA Tax Executive Committee.

The PICPA is seeking volunteers to take part in a virtual working group that will provide feedback. The time commitment is minimal, and comments are due Dec. 31. If you are interested, please email Alex Fabian at afabian@picpa.org.


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September State Revenue Collections Better Than Expected

Pennsylvania collected $4.2 billion in General Fund revenue in September, which was $135.8 million, or 3.3%, more than anticipated. Fiscal year-to-date General Fund collections total $9.8 billion, which is $196.2 million, or 2.0%, above estimate.

According to the Independent Fiscal Office September Revenue Update, actual collections were $422.4 million above its projections. The report, which also compares collections to the prior year, shows that the September 2022 General Fund revenues of $4.22 billion reflect an increase of $214.8 million (5.4%) compared to the same month last year.

Corporate tax receipts was the only one of the big three revenue sources that was up for the month. September corporate tax revenue of $1.1 billion was $202.4 million above estimate. Year-to-date corporate tax collections total $1.4 billion, which is $197.3 million, or 16.9%, above estimate.  The other two of the big three, sales and personal income tax (PIT) receipts, were below estimates for the month: sales tax at $2.3 billion and PIT at $1.6 billion.

Nontax revenue totaled $32.3 million for the month, $9.4 million above estimate. This brings the year-to-date total to $109.8 million, which is $27.5 million, or 33.5%, above estimate.


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U.S. Supreme Court Hears Pennsylvania Unclaimed Property Case

The U.S. Supreme Court heard oral arguments on Oct. 3 in a dispute first filed in 2016 by Pennsylvania against Delaware involving unclaimed property. Following Pennsylvania’s lead, 29 other states have joined the suit.

Delaware could owe as much as $400 million in escheated funds to other states – including nearly $19 million to Pennsylvania – as unclaimed property from MoneyGram Payment Systems Inc., a provider of money transfer and bill payment services.

This is the first time in almost 30 years that the Supreme Court will consider a question involving laws governing unclaimed property.

Pennsylvania argues that uncashed “official checks” sold by MoneyGram in Pennsylvania are a form of money order. According to federal law, uncashed money orders and similar instruments are to be escheated to the state in which they were originally purchased. Delaware argues that MoneyGram’s “official checks” do not fall under this classification and are therefore due to the state where the company is incorporated.

The other states that joined Pennsylvania include Alabama, Arizona, Arkansas, California, Colorado, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, all of which are represented by their respective attorney general offices.


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