PICPA State Tax Committee Hosts Annual DOR Q&A
The PICPA Committee on State Taxation held its annual session with the Pennsylvania Department of Revenue (DOR) on Oct. 22. The meeting is an opportunity for committee members to have an exchange with the senior level team at the DOR about issues affecting practitioners and their clients and to bring clarity to complex issues.
This year’s meeting was held virtually. Secretary Dan Hassell opened the session by thanking the PICPA and its members for the ongoing working relationship and their patience through a uniquely difficult tax season and the DOR’s shutdown caused by the pandemic. The DOR provided an update on its Pennsylvania Tax Hub (PATH) online initiative. Starting in 2021, the system will offer a free option for filing Pennsylvania personal income tax returns. Taxpayers and users with IFTA, MCRT, Motor Fuel Tax, Alternative Fuels Tax, Inheritance Tax, Realty Transfer Tax, and Medical Marijuana Tax responsibilities were introduced to the system in 2019.
Topics covered in the Q&A portion ranged from personal income, corporate, and sales and use taxes, to specialty tax and administrative issues. Written responses to the questions will be posted on PICPA’s advocacy webpage. Prior year “Q&As” are available here. As we wait for the formal written responses to this year's questions, members can view the 2019 session.
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IFO 2020-2021 Revenue and Economic Update
The Independent Fiscal Office (IFO) released its updated revenue estimate and economic trends for fiscal year 2020-21 this week. This report is based on revenues received over the first four months of the fiscal year and the latest state economic data. Typically, IFO would release a five-year revenue and economic outlook report in November. However, due to the partial-year budget, IFO has postponed release of that document.
Compared to its June 2020 forecast, IFO’s October projections show signs that Pennsylvania’s economy is ever so slightly improving. IFO projects a smaller contraction of real GDP (-4.6% v. -5.6%), a smaller reduction in wages and salaries paid to workers (-2.0% v. -3.2%), the same magnitude of average job losses (-450,000 v. -453,000), and slightly stronger inflation (0.9% v. 0.5%) as measured by the Philadelphia CPI-U for calendar year 2020. However, the forecast for calendar year 2021 has been revised down for all economic variables, except for inflation. The latest employment data for calendar year 2020 show rapid labor market improvement in May, June, and July, but more modest gains in August and September, IFO reports.
An interesting aspect of IFO’s report centers on “lost labor income.” IFO estimates that wage and salary income declined by roughly $20.8 billion in calendar year 2020. However, this lost income was offset by the federal government’s stimulus efforts. According to the report, the unemployment compensation and economic impact payments injected $42.3 billion into the state economy, which more than offsets lost labor income. This is also one of the factors in IFO’s improved revenue forecast for fiscal year 2020-2021.
In June 2020, IFO released its official fiscal year 2020-2021 General Fund revenue estimate of $35.87 billion. Based on actual revenue collections through October 2020 and the current economic outlook, IFO’s updated revenue estimate for fiscal year 2020-2021 is $36.52 billion, $650 million above the initial estimate. This revision is largely driven by sales and use tax collections, which have substantially outperformed expectations for the first four months of the fiscal year.
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PICPA Legislative Update Webinar
PICPA’s next Legislative Update webinar is scheduled for Dec. 16, 2020, at 9:00 a.m.
Join Peter Calcara, PICPA vice president of government relations, as he provides an insider’s perspective on the legislative and regulatory landscape in the state capital. In the 50-minute Legislative Update Webinar, you will receive the latest update on the 2020 general election, a recap of proposals the General Assembly considered this fall, and an update on the PICPA’s proposals and how we’ll move them forward in the new year.
Register today for this member-exclusive event.
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U.S. Supreme Court Rejects Another Election Appeal by Republicans
The U.S. Supreme Court rejected an appeal from Pennsylvania Republicans to review the state’s three-day window to count ballots. Ballots postmarked by 8:00 p.m. on Nov. 3 will be counted if they are received by the county elections office by 5:00 p.m. on Friday, Nov. 6.
The Court said there is not enough time before the election to consider the constitutionality of the timeframe for receiving mail-in ballots, but Justice Samuel Alito, who wrote the opinion, stated that it did not preclude the possibility of reviewing the case's merits after the election.
Pennsylvania Secretary of State Kathy Boockvar this week provided an update on how elections will be administered throughout the state, while urging voters to return their ballots as soon as possible. She urged counties to begin counting ballots as soon as they can. According to Boockvar, more than 1.9 million ballots have been already cast.
Have questions about the candidates running for office? PICPA’s 2020 Pennsylvania Election Guide provides nonpartisan information on candidates from president of the United States to members of the Pennsylvania House and Senate.
Your voice matters. Remember to vote on Nov. 3.
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Expansion of Clean Slate, Mental Health Parity, and Other Bills Signed
Gov. Tom Wolf signed more than two dozen bills into law on Oct 29, including proposals that expand the state’s Clean Slate law and support mental health parity.
House Bill 440 expands the state’s Clean Slate law by removing an obligation to pay any outstanding court-ordered financial obligations before eligible cases can be sealed. Restitution owed for convictions committed, however, is not waived. The bill also requires that when a person receives a pardon, that record is automatically sealed; if they receive a not-guilty verdict the record is expunged.
Clean Slate also expanded the number of misdemeanor convictions that can be sealed after a petition is filed in court. Sealed records are not available to the public, helping people access employment, housing, and education.
House Bills 1439 and 1696 require health insurers that want to offer comprehensive health insurance coverage in Pennsylvania to verify that they have completed and fully documented analyses of their efforts to provide mental health and substance-abuse coverage that is comparable to physical health services with respect to cost sharing, in- and out-of-network coverage, and other treatment limits.
Insurers must also make that documentation available to the Pennsylvania Insurance Department upon request to demonstrate compliance with the Mental Health Parity and Addiction Equity Act of 2008. Documentation must also be available to policyholders and providers upon request.
The new requirements are one element of Gov. Wolf’s multiagency effort and anti-stigma campaign, Reach Out PA: Your Mental Health Matters, dedicated to expanding resources and the state’s comprehensive support of mental health and related health care priorities in Pennsylvania.
House Bill 1984 provides safety, protection, and stability for survivors of rape or incest, and the children who are conceived as a result of the offense. The legislature passed this bill unanimously. The bill makes it possible for the victim of rape or sexual assault to terminate the parental rights of the person who committed rape or sexual assault that resulted in the birth of a child.
Senate Bill 1076 amends Title 51 (Military Affairs), in military leave of absence, by providing for military family relief assistance.
Other bills signed by the governor include the following:
House Bill 81 provides for certification of central service technicians, imposes continuing education requirements, provides for duties of health care facilities and the Department of Health, and regulates the practice of surgical technology and surgical technologists.
House Bill 86 amends the act granting the governor the sole authority for regulating the display of the flag of the United States from any public ground or building by providing for the display of the official POW/MIA flag.
House Bill 375 amends the State Lottery Law, in pharmaceutical assistance for the elderly, by providing definitions.
House Bill 703 amends the Public School Code, under school directors, by providing for publication of email addresses for school directors, and under charter schools for publication of email addresses for board of trustees and for applicability.
House Bill 716 amends the Administrative Code regarding powers and duties of the Department of Labor and Industry, its departmental administrative and advisory boards and officers, and the task force on misclassification of employees.
House Bill 885 amends the Public Works Contractors' Bond Law, further providing a duty of prime contractors to provide financial security in certain contracts involving public works and public improvements.
House Bill 1032 amends the Real Estate Appraisers Certification Act, providing for definitions and the State Board of Certified Real Estate Appraisers.
House Bill 1033 amends the Assessors Certification Act, providing for definitions and the duties of board, for the repeal of provisions relating to qualifications, for certification, for employees of political subdivisions, and for disciplinary measures.
House Bill 1584 amends Title 30 (Fish), under Pennsylvania Fish and Boat Commission, by repealing provisions relating to waterways patrolmen and employees.
House Bill 1673 amends Title 35 (Health and Safety), under commonwealth services, for scope of subchapter, legislative findings, and declaration of purpose; for definitions; for assistance to volunteer fire companies, ambulance service, and rescue squads; and for loan fund.
House Bill 1838 amends Titles 35 (Health and Safety) and 75 (Vehicles) in the emergency medical services system, providing for support of emergency medical services, EMS costs, and Accelerated Rehabilitative Disposition.
House Bill 1961 amends Title 71 (State Government) regarding state employees' defined contribution plan, individual investment accounts, participant contributions, employer-defined contributions, vesting, and powers and duties of board.
House Bill 2073 amends the First Class Township Code for taxation and legal advertising, elections and population ascertainment, construction of boundaries, public official salaries and pensions, the filling of vacancies, and repealing provisions.
House Bill 2370 amends Title 57 (Notaries Public) regarding the Revised Uniform Law on Notarial Acts for authority to perform notarial act, notarial act performed for remotely located individual, and for notification regarding performance of notarial act.
House Bill 2438 amends Title 68 (Real and Personal Property) providing for broadband services.
House Bill 2561 amends the Optometric Practice and Licensure Act, further providing for definitions, approval of drugs, exemptions and exceptions, and violations and penalties.
Senate Bill 273 amends the Community-Based Health Care Act under health care assistance, further providing for Community-Based Health Care program.
Senate Bill 940 provides for filing and recording by municipalities of condemnation orders and for statements of vacated condemnation orders.
Senate Bill 952 amends Title 51 (Military Affairs) under the veterans' preference section, repeals provisions relating to soldier defined, providing for purpose and definition; repeals provisions relating to credits in civil service exams; and preference in appointment or promotion.
Senate Bill 995 amends Title 75 (Vehicles) to allow an increase in the width of multipurpose agricultural vehicles that are allowed on public roadways in limited circumstances.
Senate Bill 1281 amends Title 75 (Vehicles): under licensing of drivers, for schedule of convictions and points; under rules of the road, for duty of driver in emergency response areas; and under offenses, for homicide by vehicle and aggravated assault by vehicle.
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Court Rules on Behalf of Scranton in Act 511 Case
Pennsylvania Commonwealth Court gave the city of Scranton a much-needed legal victory this week. In the case of Gary St. Fleur, et al. v. City of Scranton, the court held that the city is exempt from certain state constraints on tax revenue that municipalities can raise. The decision reverses a Lackawanna Court of Common Pleas decision against the city.
The court held that as a home-rule jurisdiction, Scranton is not subject to provisions of Act 511, the Local Tax Enabling Act. Specifically, as a home-rule city, Scranton is not confined by Act 511’s caps of certain tax rates and the amount of taxes it can collect. Had the ruling been upheld, Scranton potentially had to repay $50 million in excess taxes collected.
In July, state lawmakers, led by Sen. John Blake (D-Lackawanna), passed legislation clarifying this provision in the law. Blake’s measure was signed into law by Gov. Wolf on July 23, 2020.
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Major Changes Coming to PASSHE
With an eye toward expanding opportunity and service, the board of governors for Pennsylvania’s State System of Higher Education (PASSHE) affirmed the System’s efforts to continue planning for the integration of six of its universities.
The board unanimously affirmed the process and its next step after Chancellor Dan Greenstein presented findings from an initial financial review of the proposed integrations. PASSHE is exploring two possible combinations – California-Clarion-Edinboro and Bloomsburg-Lock Haven-Mansfield – and each integration would operate as a single, accredited entity with a single leadership, faculty, enrollment management strategy, and budget while honoring local identity.
The next step in the integrations process is development of an implementation plan, which could be presented to the board as early as April 2021. The process, laid out in Act 50 of 2020, includes a 60-day public comment period and periodic updates to members of the General Assembly. The earliest an integrated university could begin accepting students would be August 2022.
PASSHE oversees 14 four-year public universities, which educate more than 93,000 students. The schools include Bloomsburg, California, Cheyney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock, and West Chester universities of Pennsylvania.
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