PICPA Hosts Revenue Department Tax Amnesty Webinar
With the Pennsylvania Tax Amnesty Program in full swing, the PICPA hosted a webinar on Friday, May 12, with representatives of the Department of Revenue. John Kaschak, CPA and PICPA member, deputy secretary for taxation, and Mark Morabito, special assistant at the department, were joined by Jason Skrinak, CPA, state and local tax practice leader at RKL and member of the PICPA State Taxation Committee, to review the amnesty program and respond to members’ questions.
Act 84 of 2016 established the amnesty program, and the department selected Pioneer Credit Recovery as the third-party coordinating entity. All taxes owed to the Commonwealth administered by the department are eligible for the program. Taxes, interest, and penalties collected under the International Fuel Tax Agreement owed to other states or provinces are not eligible for the program.
Program guidelines are available on the Department of Revenue website. Eligible periods are those where a known or unknown delinquency exists as of Dec. 31, 2015. Unpaid taxes, penalties, and interest that result from periods after Dec. 31, 2015, are not eligible for the program. However, if a taxpayer has unpaid taxes or unfiled returns for periods not eligible for amnesty (due after Dec. 31, 2015), those periods must be filed for the taxpayer’s participation in the 2017 program to be approved.
The program runs from April 21, 2017, to June 19, 2017.
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Mission Funding Alpha Oral Arguments Heard
On May 9, the Pennsylvania Supreme Court heard oral argument on the Mission Funding Alpha case. The PICPA filed an amicus brief in the case seeking clarity as to what constitutes “payment of the tax” for purposes of calculating the deadline for requesting a refund of overpayment of franchise tax.
The Department of Revenue has taken the position that the tax is paid on the due date if enough estimated payments have been received by that date or upon the payment of the balance if that is after the due date. This is confusing and does not conform with IRS rules and other local states rules. To be clear and consistent, the PICPA has argued that the tax is paid when the funds are applied to a tax liability shown on a tax return.
The PICPA has had some impact on the decision making process as Justice Todd asked the Commonwealth’s attorney what the response was to the positions outlined in the PICPA amicus brief.
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Pennsylvania Primary Recap
Candidates for Pennsylvania’s top appellate courts were narrowed down in Tuesday’s primary election.
Democratic voters across the state advanced Superior Court candidates Maria McLaughlin, Deborah Kunselman, Carolyn Nichols, and Geoffrey Moulton to be on the November ballot; Republican voters selected Craig Stedman, Emil Giordano, Wade Kagarise, and Mary Murray.
In the race for Commonwealth Court, Ellen Ceisler and Irene McLaughlin Clark came out on top with 24.27 percent and 20.45 percent, respectively, of the Democratic vote. The two will face off against Paul Lalley and Christine Fizzano Cannon, who were unopposed in the GOP primary, in the general election.
The last of the judicial races was the noncompetitive primaries for state Supreme Court. Republican Sallie Mundy of Tioga County and Democrat Dwayne Woodruff of Allegheny County went unchallenged and will advance to the November general election, when Chief Justice Thomas Saylor and Justice Debra Todd will stand for retention, too.
In other notable races, incumbent mayors appeared to fare well in their Democratic primaries. Pittsburgh’s Mayor Bill Peduto, Harrisburg’s Mayor Eric Papenfuse, Allentown’s Mayor Ed Pawlowski, and York’s Mayor Kim Bracey all pulled out wins in their respective primaries.
State Rep. Brandon Neuman (D-Washington) won a crowded Democratic primary fight for a chance to gain a seat on the Washington County Court of Common Pleas in November.
Complete statewide and county-by-county election results can be found at www.electionreturns.pa.gov.
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A Look at the Week of May 22 in Harrisburg
Following a brief recess for the May 16 primary elections, state House and Senate members return to Harrisburg. With legislators back in town, and the budget deadline a little more than a month away, committees will start to pick up their level of activity as each chamber begins the process of moving legislative vehicles into place for budget negotiations.
Two Tax Reform Code measures are on the House Calendar for possible consideration on Monday, May 22. House Bill 331, sponsored by Rep. Steve Bloom (R-Cumberland) addresses "like-kind" exchanges, while Rep. Eric Nelson’s (R-Westmoreland) House Bill 333 provides for Section 179 deductions for small businesses. The PICPA supports HB 333.
Also on the 22nd, the Senate Appropriations Subcommittee on Public Safety and Criminal Justice and the Senate Judiciary Committee will convene a joint public hearing on mandatory minimum sentencing, the House Democratic Policy Committee has a public hearing on Marcellus Shale severance tax, the House Gaming Oversight Committee has a public hearing on video gaming terminals, and the Joint Legislative Conservation Committee will hold an environmental issues forum.
On Tuesday, May 23, the House Finance Committee will meet to consider House Bill 966 (optional occupational tax elimination), House Bill 1285 (homestead exclusion), House Bill 1390 (provides for operational provisions), and House Bill 1406 (organ and tissue donation awareness trust fund income tax check-off). The House Health Committee has a public hearing on anti-obesity medications, and the House Judiciary Subcommittee on Family Law will meet to consider House Bill 1250 (alimony pendente lite - APL - reform) and House Bill 983 (ensuring a victim of domestic violence is not forced to pay their abuser APL).
On Wednesday, May 24, the Senate and House Education Committees will hold a joint public hearing on education savings accounts, and the Joint Legislative Budget & Finance Committee will meet to release reports on public charter school fiscal impact on school districts and the impact of tavern gaming on the
Pennsylvania State Lottery.
On Thursday, May 25, the House Judiciary Committee will hold a public hearing on the proposed consolidation of the Department of Corrections and the Board of Probation and Parole.
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Avoiding Errors when Filing an RCT-101
The Department of Revenue (DOR) receives thousands of RCT-101 returns each year where the apportionment schedule C-1 is either incomplete or inaccurate. If the apportionment schedule is left blank, has a zero denominator, or contains alpha characters (i.e., “None”), the DOR interprets this as opting out of apportionment of taxable income. Reports with incomplete or inaccurate apportionment schedules will be suspended by the department to prevent erroneous assessments.
To prevent delays and errors in the review of an RCT-101, the following information is necessary:
- If positive income is reported on Line 6 and a tax due or a loss is reported on Line 15, and the taxpayer is attempting to qualify for apportioned income, apportionment must be reported on Line 7 and on schedule C-1.
- If the return includes a completed RCT-106 Insert Sheet, providing apportionment, that apportionment must be carried into the calculation (Line 7 and schedule C-1) of the RCT-101 tax report.
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Package of Bills to Tax Nonprofits on Land Value Introduced
Sen. Wayne Fontana (D-Allegheny) reintroduced a package of bills, Senate Bill 717 and Senate Bill 718, that would require nonprofit organizations that own real property to pay taxes on the assessed value of the land only (not building), with the first $500,000 of land value being exempt from taxation. The exemption would apply to all property owned by the organization, not per parcel.
Land conservancies, whose primary function is the preservation of open space, natural areas, or wildlife will be exempt from this legislation, as will all buildings, enterprises, and improvements within the grounds of the land conservancy. This is to guarantee that local gardens, for example, can operate with the garden being the primary attraction, but also have facilities on site to house events like seminars, bathrooms, or small gift shops.
The bills have been referred to the Senate Finance Committee and are awaiting consideration.
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Bill Protects Seniors’ Prescription Drug Assistance Eligibility
The House Aging and Older Adult Services Committee recently approved legislation to prevent seniors from losing their eligibility for state prescription drug assistance due to a Social Security cost-of-living adjustment (COLA).
The state’s PACE and PACENET programs provide prescription drug assistance to about 300,000 Pennsylvania seniors. A 2015 state law allowed seniors previously eligible to not lose their PACE and PACENET benefits due to a Social Security COLA, but this law sunsets in December. Under House Bill 425, sponsored by Rep. Eric Nelson (R-Westmoreland), the COLA moratorium would be extended through Dec. 31, 2019.
The bill now goes to the full House for consideration.
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“EpiPen” Bill Signed into Law
Legislation sponsored by Rep. Justin Simmons (R-Lehigh/Montgomery/Northampton) that helps ensure the health and safety of Pennsylvania school students who suffer from severe allergic reactions has been signed into law by Gov. Tom Wolf as Act 2 of 2017.
The law amends the Public School Code to provide civil immunity to school bus drivers and crossing guards who administer an epinephrine auto-injector, or EpiPen, to a student who experiences an allergic reaction.
Under Act 2, a bus driver or crossing guard must first complete a training program developed by the state Department of Health and comply with school district policy to be qualified to use the epi-pen. It does not mandate that school districts or school bus companies enact an EpiPen policy, only that such a policy would allow for civil immunity if the guidelines are met.
The new law takes effect in 60 days.
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Torsella Warns of Possible Unclaimed Property Scams
Pennsylvania Treasurer Joe Torsella warned of a surge in unclaimed property scams that target victims through fake letters and e-mails in which scammers portray themselves as National Association of Unclaimed Property Administrators (NAUPA) or state treasury representatives.
The phony correspondence in many instances has been found to use NAUPA letterhead, where it claims the state is holding on to your unclaimed property, which may be worth hundreds of thousands of dollars. Scammers then request personal information along with the need to collect a small fee with the promise to obtain the unclaimed property.
Claimants may search the Pennsylvania Treasury’s website for unclaimed property, or independent “finders” are also available to assist. Pennsylvania state law requires that all finders and property recovery professionals who assist potential claimants for a fee must complete an application and be certified as a finder by the Pennsylvania Treasury. Finders may provide their services for a fee, but those fees are now capped at 15 percent through Pennsylvania law. The Pennsylvania Treasury assists claimants prepare and file claims for free.
To learn more about Pennsylvania’s Unclaimed Property Program or to search for money or other items held by the Treasury, visit www.patreasury.gov or call (800) 222-2046.
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