R&D Electronic Application Demonstration Webinar
The Pennsylvania Department of Revenue (DOR) on June 1 launched a new online application system for the Research and Development Tax Credit. The PICPA and the DOR are teaming up to host a webinar demonstrating the system.
The new application process gives users instant access to an automated application, eliminating the inefficiencies and costs associated with filing paper applications. In addition, the system allows users to check the status of their applications and respond quickly to department notifications. This initiative is part of the DOR’s goal to continually improve customer service and promote “Government that Works.”
Tom Bordner, director of the department’s Bureau of Corporation Taxes, and Gloriose Habimana, a research analyst manager for the department who has overseen the administration of the Research and Development Tax Credit for the past nine years, will lead the July 12 webinar on the new online application system.
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State Provides PICPA with Update on Expungement Process
The process by which CPAs and other licensees under the jurisdiction of the Bureau of Professional and Occupational Affairs (BPOA) may apply for expungement is likely months away, according to an update provided to the PICPA.
Act 6 of 2018, which the PICPA supported, authorizes the commissioner of the BPOA to expunge certain minor disciplinary records, provided a number of conditions are met. One of those conditions is that “the licensee, registrant, certificate holder, or permit holder shall pay all costs associated with the expungement as established by the commissioner by regulation.”
The BPOA is in the process of establishing the administrative process to apply for expungement through the Pennsylvania Licensing System (PALS) and promulgating a regulation establishing the fee associated with processing an application for expungement. Applications cannot be considered until the process has been developed and the fee has been established. Once these steps are completed, according to the BPOA, licensees will be able to apply for expungement. A notice to that effect will appear on various professional and occupational licensing boards’ websites.
The PICPA will continue to monitor the regulatory process and provide updates as necessary. Members with questions should contact the PICPA government relations office at (717) 232-1821.
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Effect of Wayfair in Pennsylvania Expected to be Modest
Last month’s U.S. Supreme Court decision in South Dakota v. Wayfair has left some uncertainty at the state level. While the court held that South Dakota's online sales tax law was not burdensome to interstate commerce, the decision did not give states a blank slate to tax internet sales.
According to a recent Capitolwire story, the ruling should not have a significant impact in Pennsylvania.
Stacey Knavel, the principal revenue analyst at the Independent Fiscal Office (IFO), said her office believes that any impact on the state will be modest because the legislature made similar tax changes last year.
Act 43 of 2017 requires businesses that earn at least $10,000 in sales in Pennsylvania annually – but do not have physical presence in the state – to collect sales tax. The law is rolling out in two phases, with the first phase completed last April and the second phase to be completed in April 2019. The second phase will require businesses to collect sales tax on online goods like electronic copies of books or music.
The Department of Revenue is still reviewing the case, and it plans to comment on the ruling in the near future, a spokesperson said. It has not released any revenue projections from the ruling.
The IFO projects the state will garner an additional $93.8 million in sales tax over several years and phases from Act 43, Knavel added.
“[The ruling] really does reinforce what the legislature was trying to do,” Knavel said.
Amazon began collecting sales tax on all orders shipped to customers in Pennsylvania in April due to Act 43 provisions, becoming only the second state to require the online giant to collect a state’s sales tax.
Online vendors selling in Pennsylvania could have challenged Act 43 of 2017 on the basis of the 1992 Quill ruling, but due to Wayfair that would now be unsuccessful, Knavel said.
“The court case buttresses the state position with the legislation that was passed last year,” she added. “A lot of the tax was already going to be collected under [the state’s] provisions.”
To learn more about the local implications of the ruling, register to attend this one hour webinar on July 17, The Wayfair Decision and Its Impact on Pennsylvania Businesses.
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Revenue Department Releases Fiscal Year 2017-2018 Collections
The Independent Fiscal Office (IFO) issued its Monthly Trends Report for June.
General Fund revenues collected were $3.1 billion for June, a decrease of $180 million (-5.5 percent) compared with June 2017. General Fund collections were $154 million below estimate due to the lack of a funds transfer ($200 million) from the Pennsylvania Professional Liability Joint Underwriting Association (JUA). Pennsylvania ended the 2017-2018 fiscal year with $34.6 billion in General Fund collections, an increase of $2.9 billion (9.2 percent) from the prior year.
Other revenue highlights:
- Tax revenue decreased by 7.4 percent for the month.
- Corporate net income tax decreased by 12.5 percent for the month.
- Nonmotor sales tax decreased by 3.8 percent for the month, bringing the three-month average growth rate (after adjustments for various transfers) to 6.5 percent and the 12-month average growth rate to 4.8 percent.
- Motor vehicle sales tax increased by 2.8 percent for the month, bringing the three-month average growth rate to 7.1 percent and the 12-month average growth rate to 1.9 percent.
- Personal income tax withholding increased by 2.2 percent for the month. Adjusted for due dates, the three- and 12-month average growth rates were 4.8 percent and 4.3 percent, respectively.
- Realty transfer tax decreased by 147 percent for the month, bringing the three-month average growth rate to 3.7 percent and the 12-month average growth rate to 8.4 percent.
- Cigarette tax decreased by 2.4 percent for the month.
- Nontax revenue increased by 152.8 percent for the month.
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Governor Signs Mental Health Provider Bill
Gov. Tom Wolf signed legislation authored by Sen. Tom Killion (R-Delaware) that had been long sought by marriage and family therapists, social workers, and professional counselors.
Senate Bill 530, now Act 76 of 2018, will allow a broader array of treatment options by professionals, clarify by law who may provide mental health services, and define who may call themselves a licensed professional. It will also provide new consumer protections.
This law will bring Pennsylvania up to national standards by adding practice protection and diagnosis for clinical social work. Currently, 48 states have similar practice protection.
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Life Insurance Database Bill Becomes Law
Legislation that will allow for faster disbursement of life insurance policies to better assist families of the deceased was signed by the governor on June 28. Rep. Marguerite Quinn (R-Bucks) authored the proposal.
Under House Bill 152, now Act 48 of 2018, the loved ones or a legal representative of a deceased individual will be able to query the Pennsylvania Department of Insurance to see if a life insurance policy for that individual was in place.
All companies with life insurance policies in Pennsylvania will be required to participate in the life policy locator service and respond to search requests for life insurance policies or annuities.
The law will become effective 180 days after it is signed.
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Property Tax/Rent Rebate Deadline Extended to Dec. 31
The deadline for older adults and Pennsylvania residents with disabilities to apply for rebates on rent and property taxes paid in 2017 has been extended from June 30 to Dec. 31, 2018. As specified by law, rebate distributions cannot begin until July 1, and applications typically take four to six weeks to process.
Applicants may obtain Property Tax/Rent Rebate claim forms (PA-1000) and related information on the Department of Revenue’s website or by calling, toll-free, (888) 222-9190.
Claimants who already applied for rebates may check the status of claims online at www.revenue.pa.gov by clicking on the “Where’s My Property Tax/Rent Rebate?” link. Claimants may also call 1-888-PATAXES to check the status.
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English Withdraws from November Election
State Rep. Hal English (R-Allegheny) is the latest state legislator to announce his retirement.
“I want to thank the residents of Shaler, Hampton, Richland, Fox Chapel, and O’Hara for the privilege of serving as their state representative in Harrisburg for the last six years to help maintain and improve our wonderful communities,” said English.
English was first elected in 2013. He currently is a member of the Education, Game & Fisheries, Insurance, and Judiciary committees.
Last month, Rep. Eli Evankovich (R-Westmoreland), who previously announced that he would not seek reelection this year, said that he would be stepping down in August.
Twenty-seven state lawmakers are not seeking reelection this year, while another four incumbents lost in the 2018 primary election.
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