Q&A with Pennsylvania Department of Revenue

The PICPA State and Federal Taxation Committees meet with the Pennsylvania Department of Revenue annually to discuss issues affecting both practitioners and their clients. Topics covered include personal income tax and corporate tax, sales and use tax, and administrative issues.

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Q&A with Pennsylvania Department of Revenue

Corporate Tax

Scenario: Applying the add-back provision

As a follow-up to Corporation Tax Information Notice 2016-1, does the Department of Revenue plan to provide additional guidance related to part III?

When a personal income tax return is audited, (unreimbursed business expenses), does the Department respond to the taxpayer/practitioner indicating that the information has been received?

Personal Income Tax

Scenario: Reporting income earned outside of the U.S. on a joint return

Scenario: Unreimbursed expense claims

Scenario: Claiming resident credits on trusts

Administrative

With the due date of the federal returns changing for many corporations to Oct. 15, does the Department intend to change the due date of the R&D credit application to Oct. 15?

Scenario: A Pennsylvania Limited Partnership (LP) has sold its last piece of real estate and has decided not to continue this business entity

Has the Department considered including a longer look back period on the e-SOA for sales and employer taxes?

Sales and Use Tax

What is the time span for the Department to complete an audit after receipt of information?

Scenario: An IT provider bills a client via a flat, lump-sum, recurring monthly charge, of which the largest portion relates to the value of the services provided by the vendor’s employees

Scenario: Claiming a refund for the sales tax paid on the purchase of wine which is then resold

Pass Through

Scenario: A taxpayer is a resident of Pennsylvania who receives an inter-vivos gift of an interest in a pass-through entity which does business in Pennsylvania. The Donor is not a resident of Pennsylvania.

Scenario: A taxpayer is a Pennsylvania resident who owns 100 percent of a PA S Corporation which does business in PA and several other states, including Ohio.

If a partnership fails to provide a noncorporate partner with a NRK-1 and/or RK-1 a corporate partner with a Schedule H – Corp. would it be subject to the penalty in Section 352 (f)(2) and/or Section 352 (f)(3)?

Specialty Taxes

Why is filed inheritance tax return response from the Department taking so long (4 - 6 months) now? In the past written response was received in about 30 days.

Can insolvent insurance companies participate in amnesty, similar to bankrupt entities?

Is a PA trust company subject to the Bank Shares Tax also subject to the Corporate Net Income Tax and the Capital Stock and Franchise Tax?