CPA Law Amendments, Tax Law Changes Take Effect
There have been several important changes in Pennsylvania law that may have an impact on CPAs’ practices and the clients they serve. These changes highlight the importance of PICPA’s advocacy efforts in Harrisburg and the need for our membership’s continued engagement with state lawmakers.
Amendments to the Pennsylvania CPA Law spearheaded by the PICPA took effect on Jan. 2, 2023. Act 110 of 2022, sponsored by Rep. Keith Greiner, CPA (R-Lancaster), directs the State Board of Accountancy to adopt a nationally recognized code of professional conduct, permits an applicant for licensure to sit for the CPA Exam upon completing 120 semester credits and no degree, and expands the scope of classes students can take toward earning an accounting degree, including economics and technology. Act 110 also makes much-needed revisions and updates to peer review standards.
Act 53 of 2022 ushered in several important state tax law changes advanced by the PICPA, including the first reduction in the corporate net income (CNI) tax rate in two decades. Beginning Jan. 1, 2023, Pennsylvania’s CNI tax rate was reduced by one point, from 9.99% to 8.99%. For more in-depth analysis of Act 53 and its changes, read the Pennsylvania CPA Journal’s “Historic CNIT Reductions and Small-Business Tax Reform” by Drew VandenBrul, CPA, and Michael Semes, JD.
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Sen. Ward Elected President Pro Tempore
Sen. Kim Ward (R-Westmoreland) was unanimously elected president pro tempore of the Pennsylvania Senate on Jan. 3. Ward, who succeeds retired Sen. Jake Corman, becomes the first woman to be elected to the top position in the Pennsylvania Senate. She is also the first female majority leader of the chamber.
“All of us arrived here because we had a passion for an issue or saw something we believed was an injustice, and in our hearts felt we had a duty to do something,” Ward told colleagues. “We are not all the same party or ideology, but we are all here for one basic reason – to make change for the betterment of the people we represent.”
In addition to her Senate duties, Ward will serve as interim lieutenant governor until state Rep. Austin Davis (D-Allegheny) gets sworn in on Jan. 17. The position is vacant because John Fetterman was elected to the U.S. Senate.
Republicans hold a 27-22 majority in the Senate with one vacancy.
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Rep. Rozzi Elected Speaker of Pa. House
In a move that surprised the most seasoned observers of the Pennsylvania political scene, state Rep. Mark Rozzi (D-Berks) was elected by his colleagues to be Speaker of the Pennsylvania House. Rozzi defeated Rep. Carl Walker Metzgar (R-Somerset) by a vote of 115 to 85.
“I’m proud to say that I’ve served the residents of the 126th Legislative District for the last decade, and I’m humbled to now serve every Pennsylvanian,” Rozzi said. “As speaker, my goal is to remain nonpartisan in order to deliver a sense of unity within the legislature. It’s past time that we work together and restore trust in the people’s House.”
Rozzi pledged to caucus with neither Democrats nor Republicans. He affirmed that while at the rostrum, typical politics and the division they subsequently create will have no place in the House chamber.
“Sometimes Republicans will win, and sometimes Democrats will win, and that is fine so long as the beneficiaries are the people of this commonwealth,” he said.
Rozzi, known for his work protecting children through abolishing Pennsylvania’s criminal statute of limitations on childhood sexual abuse, said his top priority as speaker will be to put people over politics and eradicate instances of hyperpartisanship.
The Speaker of the House possesses several critical responsibilities, including selecting committee chairs and managing floor debate.
Rozzi has been a member of the State House since 2012.
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Shapiro Continues to Build Staff, Cabinet
In keeping with a campaign pledge to safeguard the integrity of Pennsylvania elections, Governor-Elect Josh Shapiro announced the nomination of former Philadelphia City Commissioner Al Schmidt to be Pennsylvania’s next secretary of the commonwealth.
A native of Pittsburgh and a graduate of Allegheny College, Schmidt has served in local government for a decade. Schmidt served as vice chair of the Board of Elections of Philadelphia County. In January 2022, Schmidt joined the Committee of Seventy as president and CEO. Schmidt is a former senior analyst at the nonpartisan U.S. Government Accountability Office and served as a policy analyst for the Presidential Commission on Holocaust Assets in the United States.
Shapiro also announced two more key appointments to his executive team. The governor-elect named Akbar Hossain and Mike Vereb to be secretary of policy and planning and secretary of legislative affairs, respectively. Hossain currently serves as the executive director of the transition team and was the policy director for the Shapiro-Davis campaign. Vereb serves as the director of government affairs for the Pennsylvania Office of Attorney General and was a state representative for the 150th District from 2007-2017.
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December State Revenue Collections Exceed Expectations
Pennsylvania collected $4.0 billion in General Fund revenue in December, which was $319.9 million, or 8.6%, more than anticipated, according to the state Department of Revenue. Fiscal year-to-date General Fund collections total $19.7 billion, which is $503.1 million, or 2.6%, above estimate.
The Independent Fiscal Office's (IFO) December Monthly Revenue Update shows General Fund collections were $429.8 million above its projections. The report finds that December 2022 General Fund revenues of $4.04 billion reflect an increase of $195.9 million (5.1%) compared with the same month in the prior year. The implementation of the Department of Revenue’s tax modernization project resulted in a shift to December of roughly $200 million of revenue that would normally have been receipted in November.
Sales tax receipts totaled $1.2 billion for December, $2.3 million below estimate. Year-to-date sales tax collections total $7.1 billion, which is $134.8 million, or 1.9%, more than anticipated.
Personal income tax (PIT) revenue in December was $1.4 billion, $204.9 million above estimate. This brings year-to-date PIT collections to $7.5 billion, which is $27.1 million, or 0.4%, above estimate.
December corporation tax revenue of $1.0 billion was $116.3 million above estimate. Year-to-date corporation tax collections total $2.7 billion, which is $328.7 million, or 13.6%, above estimate.
Nontax revenue totaled $55.5 million for the month, $23.3 million above estimate. This brings the year-to-date total to $346.7 million, which is $88.0 million, or 34.0%, above estimate.
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Pa.’s Civil Justice System Costs Taxpayers Billions
A new study by the U.S. Chamber’s Institute for Legal Reform has found that Pennsylvania has the sixth highest tort costs in the nation.
The report, which analyzed the impact of lawsuit abuse nationally and by state, asserts that in 2020 tort costs reached $443 billion nationally and nearly $17 billion in the Commonwealth (representing 2.1% of the state’s gross domestic product), or $3,316 per household. Pennsylvania ranked 18th highest in the nation when it comes to cost per household.
The study found that the nation’s tort system is relatively inefficient, with only 53% of total tort costs going toward claimant compensation. The rest goes to litigation costs and other expenses.
In a press release highlighting the report, Curt Schroder, executive director of the Pennsylvania Coalition for Civil Justice Reform, noted, “This study shows that our Commonwealth’s notoriously litigious civil justice system is costing Pennsylvania taxpayers. These excessive tort costs impact the productive sector of our economy and place a financial burden on every family in the state.”
Schroder called on the General Assembly and Governor-Elect Shapiro to focus on legislation and policies that will bring greater fairness, predictability, and efficiency to Pennsylvania’s civil justice system. Schroder also called on candidates for Supreme Court to address this issue in their campaigns so voters can evaluate their commitment to litigation reform.
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New Guide Details State Unemployment Benefits
A new guide published by the state Department of Labor and Industry provides updated information on Pennsylvania's unemployment benefits. The revised Unemployment Compensation Handbook was designed to be easier to understand than previous versions and includes links to additional information on the department’s website. Unemployment compensation provides temporary income between jobs to workers who lost their job through no fault of their own.
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