PICPA Legislative Update – Election Results and Year-End Wrap-Up
Join Peter Calcara, PICPA vice president of government relations, as he provides an insider’s perspective on the year-end legislative and regulatory landscape in the state capital. This free-to-members one-hour webcast will be on Nov. 30. Register today!
PICPA-Sponsored CPA Law Changes on Governor’s Desk
Legislation championed by the PICPA that amends the Pennsylvania CPA Law is now with Gov. Tom Wolf for his signature following the state Senate unanimously passing the measure on Oct. 26 – the last scheduled voting day of the 2021-2022 session. The bill previously passed the state House in February.
House Bill 1328, sponsored by Rep. Keith Greiner, CPA (R-Lancaster), makes the following changes to the law:
- Directs the State Board of Accountancy to adopt a nationally recognized code of professional conduct
- Expands the scope of classes a student can take toward earning an accounting degree to include economics and technology
- Permits an applicant for licensure to sit for the licensing examination upon completing 120 semester credits and no degree
- Makes numerous updates to peer review standards, including the following:
- Specifies that the firms that require a peer review will need to be enrolled in a board-approved peer review program
- Eliminates the exception to the peer review requirements that allow firms with two or fewer licensees to have a five-year peer review cycle rather than a three-year cycle
- Streamlines the peer review submission requirements to allow board access
- Makes conforming changes to comply with current peer review standards
The PICPA thanks Rep. Greiner for his unwavering support and shepherding this bill through an often challenging and unpredictable legislative process.
The bill takes effect 60 days following the governor’s approval.
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Lawmakers Approve Plan for New Tax Credit Programs
State lawmakers and the Wolf administration agreed to legislation that creates and expands tax credit programs to support targeted investments in key industries. House Bill 1059, sponsored by Rep. Dave Hickernell (R-Lancaster), was approved in the Senate by a vote of 41-8 on Oct. 26. The House approved the measure 139-53 later the same day.
The bill, supported by the PICPA, provides a phase-in schedule for increasing the threshold that requires quarterly estimated personal income tax (PIT) payments, from $8,000 to $9,500 in tax year 2024; $11,000 in tax year 2025; $14,000 in tax year 2026; $17,000 in tax year 2027; and $20,000 in tax year 2028.
House Bill 1059 was amended in the Senate to include resources for job growth under the newly established Pennsylvania Economic Development for a Growing Economy (PA EDGE) tax credit program. The program will be made up of four components to attract investments in Pennsylvania.
One of the new programs is the Regional Clean Hydrogen Hub Tax Credit program, which is designed to support projects requiring a capital investment of at least $500 million. Projects would also be required to make a good faith effort to use the local labor market and create at least 1,200 permanent and new jobs. The bill authorizes $50 million in tax credits annually, which are not to exceed 50% of facility construction costs.
The bill also establishes a new Pennsylvania Milk Processing Tax Credit program to support Pennsylvania’s dairy industry. The tax credit would be equal to 5 cents per gallon of milk purchased and processed from within Pennsylvania. This program, too, requires capital investment of at least $500 million, efforts to use local labor, and the creation of at least 1,200 permanent and new jobs. Tax credits of $15 million would be authorized annually, not to exceed 25% of the capital investment.
The legislation creates the Semiconductor Manufacturing, Biomedical Manufacturing and Research Tax Credit program through which $20 million in tax credits would be available annually, split evenly between semiconductor manufacturing and biomedical projects. Total tax credits awarded may not exceed 25% of the capital cost to construct a facility.
Additionally, House Bill 1059 increases the cap on the Local Resource Manufacturing Tax Credit Program from $26.6 million to $56.6 million annually, while ensuring tax credits remain available for construction of a smaller project facility in the near future.
The tax credit language in House Bill 1059 is modeled after a 2020 law creating the Local Resource Manufacturing Tax Credit program. That legislation led to Nacero Inc. committing to build a new $6 billion lower-carbon gasoline manufacturing facility in northeastern Pennsylvania.
Gov. Wolf is expected to sign the bill into law.
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Senate Approves Three to State Accountancy Board
The state Senate unanimously confirmed three of Gov. Wolf’s nominations to the State Board of Accountancy.
Michael Ocker, CPA, from Mercersburg, Franklin County, was confirmed for a second four-year term. Ocker, a PICPA member, has served on the board since 2018 and is its current vice chair. He is president of Ocker Accountants & Consultants.
Benjamin Holland, CPA, was confirmed to his first four-year term. Holland is the current controller for Butler County, Pa. Holland has been county controller since 2014, and was in public accounting before taking that position.
The Senate also approved the nomination of John Petchel of McAdoo, Pa., as a public member.
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Philadelphia NOL Carryforward Extension Heads to Gov. Wolf
House Bill 324, sponsored by Rep. Martina White (R-Philadelphia), passed the Senate unanimously during one of the legislature’s final voting days this session. The legislation, which the PICPA supports, received unanimous approval in the House back in January.
House Bill 324 extends the ability of businesses operating in the City of Philadelphia to carry forward net operating losses (NOLs) from three years to 20 years. In December 2018, Philadelphia City Council voted to extend this ability to 20 years, but the General Assembly had to authorize the change in the First Class City Business Tax Reform Act before it could go into effect.
If signed by Gov. Wolf, the law would take effect immediately. According to information provided to the PICPA by the city’s Department of Revenue, the 20-year carryover period will apply to NOLs generated in years beginning in and after 2022. Tax years prior to 2022 will still have a three-year carryover.
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Bill Simplifying Grantor Trust Process Falls Short
PICPA-backed legislation to simplify and streamline the process for irrevocable grantor trusts was unanimously passed by the Pennsylvania Senate but fell short of becoming law as the 2021-2022 legislative session came to a close.
Irrevocable grantor trusts are a type of trust that cannot be modified, amended, or terminated without the permission of the grantor’s beneficiaries. These types of trusts are often established by someone as a means of reducing taxes and protecting property. In many cases, though, the grantor who established the trust wants to pay the income taxes so the trust beneficiaries are not negatively impacted. Senate Bill 1321, sponsored by Sen. Lisa Baker (R-Luzerne), would have removed the present barriers, allowing grantors to meet this obligation if they choose to do so.
The House did not vote on this legislation, and with no voting days scheduled for the remainder of this legislative session, Senate Bill 1321 will have to be reintroduced in the new legislative session that begins in January 2023.
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Legislation Modernizing Business Corporation Law Passes
House Bill 2057, introduced by Rep. Brad Roae (R-Crawford), is headed to the governor for signature after receiving unanimous support by the Senate. The legislation updates Pennsylvania corporation laws and related provisions of Title 15 of the Consolidated Statutes. It was drafted by the Title 15 Committee of the Pennsylvania Bar Association.
House Bill 2057 is a comprehensive update and modernization of Pennsylvania’s Business Corporation Law. It represents the last in a series of much needed revisions to the Business Corporation Law ushered through the legislature by the Pennsylvania Bar Association. Except for amendments to those chapters of the Business Corporation Law that apply only to specific types of corporations (namely nonstock, registered, and benefit corporations), the amendments in House Bill 2057 will benefit all Pennsylvania corporations, including many small businesses.
The overarching goal of this very technical legislation is to modernize corporation law for the benefit and growth of Pennsylvania businesses.
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Data Breach Notification Legislation with Governor
The General Assembly approved a bill that would require state agencies and their contractors, as well as local governments, to notify victims of a data breach involving personally identifiable information within one week of such a breach being determined.
In addition to requiring any state agency, county, municipality, public school, or state agency contractor to provide notice of a breach to affected victims within seven business days of determination, Senate Bill 696 requires the state attorney general to be notified concurrently of a breach that occurs in a state agency. A county’s district attorney would be notified within three business days if the breach occurred in a county, school district, or municipality.
Senate Bill 696, sponsored by Sen. Dan Laughlin (R-Erie), is with Gov. Wolf awaiting his signature to become law.
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