Legislative Update

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  • Week Ending Oct. 5, 2018

    by PICPA Government Relations | Oct 05, 2018

    A Look at the Week Ahead in the State House 

    State House lawmakers return to session Oct. 9 for three days following the Columbus Day holiday. Lawmakers will be busy with floor votes on legislation, committee meetings, and retirement speeches. The Senate will not be in session this week.

    On Oct. 9, the House Finance Committee convenes to consider a PICPA-supported measure that will address the 1099-MISC withholding requirement. House Bill 2413, sponsored by PICPA member Rep. Keith Greiner (R-Lancaster), will address many concerns raised by practitioners. The committee will also consider House Bill 2556, a bill clarifying sales and use tax regarding financial institutions.

    Also, on Oct. 9, the House Environmental Resources and Energy Committee meets off the floor to consider Senate Bill 138 (which amends the Oil & Gas Lease Act), and the House Local Government Committee will consider Rep. Greg Rothman’s (R-Cumberland) House Bill 2557 (Municipalities Financial Recovery Act Tax).

    For a complete listing of committee meetings and hearings click here.


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    PICPA Advocacy Recognized at Bill Signing

    Gov. Tom Wolf, Sens. Michelle Brooks and Pat Browne, Tom Horan, and PICPA's Peter Calcara.

    Ceremonial signing for Act 72 of 2018. PICPA's Peter Calcara (top right) was invited to join (bottom, left to right) Sen. Pat Browne, Gov. Tom Wolf, Sen. Michelle Brooks, and (top, left) Tom Horan, assistant executive director of the Senate Appropriations Committee.

    This week, the PICPA attended a ceremonial bill signing of Act 72 of 2018, a law that decouples Pennsylvania’s corporate net income tax law from the bonus depreciation provided in last year’s federal Tax Cuts and Jobs Act. Sen. Michelle Brooks (R-Crawford, Erie, Mercer, Warren), prime sponsor of Senate Bill 1056, invited the PICPA to attend because of our work on the bill, particularly the State Taxation Committee. SB 1056 was signed into law on June 28, 2018.

    Act 72 disallows the federal bonus depreciation deduction from taxable income provided in Section 168(k) of the Internal Revenue Code (IRC), and provides an additional deduction equal to the depreciation as determined in accordance with IRC Section 167 (Depreciation) and IRC Section 168 (Accelerated Cost Recovery System).

    The PICPA thanks Brooks and Rep. Frank Ryan, CPA (R-Lebanon), sponsor of a companion bill (House Bill 2017), for their leadership on this issue.


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    Bill Clarifies Sales and Use Tax on Software, Security Equipment

    A bill clarifying state law on the imposition of the sales and use tax as it relates to canned software was approved by the Senate Finance Committee.

    Senate Bill 1258, sponsored by state Sen. Don White (R-Indiana), adds to the law definitions of the terms canned and custom software, clarifies that the nontaxable performance of computer services does not become taxable using canned software, and preserves the validity of the Department of Revenue’s financial institution security equipment regulation. The bill also provides that financial services do not become taxable when tangible personal property is used incidental to the delivery of the services.

    A similar bill—House Bill 2556—is scheduled for a vote by the House Finance Committee on Oct. 9.

    The committee also approved House Bill 645, which increases the allocation for the Neighborhood Assistance Tax Credit Program from $18 million to $36 million. The bill is now before the full Senate.


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    Corporate Receipts Lead to Strong September Collections

    Pennsylvania collected $3 billion in General Fund revenue in September, which was $183.8 million, or 6.4 percent, more than anticipated. Fiscal year-to-date General Fund collections total $7.6 billion, which is $209.8 million, or 2.9 percent, above estimate.

    Overall tax revenue collected in the first quarter of the 2018-2019 fiscal year is $608.1 million more, or 8.8 percent, than was collected in the first quarter of the previous fiscal year.

    Sales tax receipts totaled $900.8 million for September, $32.1 million above estimate. Year-to-date sales tax collections total $2.8 billion, which is $67.7 million, or 2.5 percent, more than anticipated.

    Personal income tax (PIT) revenue in September was $1.2 billion, $14.8 million below estimate. This brings year-to-date PIT collections to $3 billion, which is $35.4 million, or 1.2 percent, below estimate.

    September corporation tax revenue of $647 million was $135.3 million above estimate. Year-to-date corporation tax collections total $830.3 million, which is $169.3 million, or 25.6 percent, above estimate.

    For more information on the revenue numbers, click here


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    Senate Approves Bill to Create Homebuyers Savings Accounts

    The state Senate approved legislation creating First-Time Homebuyers Savings Accounts in Pennsylvania. The bill moves to the state House Urban Affairs Committee for review.

    Senate Bill 1066, sponsored by Sen. Bob Mensch (R-Berks, Bucks, Montgomery), would permit eligible Pennsylvanians to open special savings accounts and take state tax deductions for savings toward expenses such as a down payment and closing costs.

    “Home ownership strengthens communities and provides stability for families. A first-time homebuyer savings account will be an important tool in helping people overcome the financial obstacles to home ownership,” Mensch said.

    The bill would apply to first-time homebuyers and those who have not owned or purchased a home within the three years leading up to the purchase. Account holders would be permitted to contribute a total of $50,000 over a 10-year period. Annual contributions would be capped at $5,000 for single taxpayers and $10,000 for those filing a joint return.


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    House Panel Approves Prevailing Wage Measure

    The state House Labor and Industry Committee approved legislation updating the state’s prevailing wage law. Enacted in 1961, the law mandates that contractors pay wages that “prevail” in each region on all government construction projects more than $25,000.

    House Bill 297, sponsored by Rep. Cris Dush (R-Jefferson), would clarify that work related to dirt and gravel roads as well as low-maintenance roads are to be considered maintenance efforts rather than construction projects, exempting them from the prevailing wage requirement.

    The bill is now pending before the full House for a vote.


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    Measure Would End State Cars for Lawmakers

    State House lawmakers this week passed a measure that eliminates future assignment of state-owned vehicles to members of the General Assembly. The legislation passed by a vote of 140 to 44.

    House Bill 482, sponsored by Rep. Brad Roae (R-Crawford), establishes the freestanding State-Owned Vehicle Assignment Limitation Act. Under the bill, members of the General Assembly may not be assigned a state-owned vehicle, and Commonwealth funds may not be used to lease a vehicle to or on behalf of a member of the General Assembly.

    Members of the General Assembly assigned a vehicle before the effective date of the act may continue to use the vehicle until the individual is no longer a member of the General Assembly, relinquishes control of the vehicle, or is otherwise no longer eligible to use the vehicle.

    The bill goes to the Senate for a vote.


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    Pennsylvania Granted REAL ID Enforcement Extension

    The U.S. Department of Homeland Security (DHS) has granted Pennsylvania an extension to REAL ID enforcement through Aug. 1, 2019. This extension means that Pennsylvania residents will not face access issues when entering federal facilities or boarding commercial aircraft through at least that date.

    REAL ID-compliant driver’s licenses and photo ID cards will be available as a customer option in March 2019. Customers are encouraged to preverify the required documentation for REAL ID as soon as possible, giving them ample time to prepare. More information about what documents will be required along with answers to other common questions are available on PennDOT’s Driver and Vehicle Services website.


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Contact Government Relations

Peter Calcara | 717-232-1821
Alexandra Fabian | 717-232-1821
Annette Knapp | 717-232-1821

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2018 Q&A with the DOR

The PICPA met with the Pennsylvania Department of Revenue on Oct. 24, 2018. View the full transcript or the recording.

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