PICPA Election Guide Available for Pennsylvania Primary
To help members prepare for the upcoming Pennsylvania primary elections, the PICPA government relations team prepared an election guide that includes information on the gubernatorial, U.S. Senate, U.S. Congressional, and Pennsylvania Senate and House races. The 2018 General Primary Election will be held on Tuesday, May 15th.
Pennsylvania holds closed primary elections, meaning you must be a registered member of a party to vote for that party's candidates. The candidates who receive the highest number of votes in the primary election will be the nominee representing their respective party on the November election ballot.
To check your registration status or for help finding your polling place, visit votesPA.com.
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PICPA Champions Two New Legislative Initiatives
Working with our legislative allies in the state House, the PICPA is championing two legislative proposals that address problems members have raised with the new 1099-MISC withholding requirement and the filing of an income tax report for estates and revocable trusts.
House Bill 2413, sponsored by PICPA member Rep. Keith Greiner, CPA (R-Lancaster), would clarify and streamline recent changes made as part of Act 43 of 2017 to withhold nonresident income for personal income tax purposes. The bill would establish a methodology for determining how much tax to withhold on payments attributable to services performed, both within and outside Pennsylvania, and how to withhold when the aggregate amount of payments is not known.
In January, the PICPA wrote to Revenue Secretary Dan Hassell requesting a delay in the implementation of the new provision. In response, Hassell wrote that the “1099-MISC income that is subject to the withholding provisions of Act 43 of 2017 will not be subject to assessment for a failure to withhold for a period ending prior to July 1, 2018. However, when tax is withheld, it must be filed and remitted as required by law.”
In response to a request by the PICPA, Rep. Michael Corr, CPA (Inactive) (R-Montgomery), introduced House Bill 2303. PICPA reached out to Corr in response to an issue raised by Sharon Greenberg, CPA, a tax manager with Isdaner & Company LLC in Bala Cynwyd.
Under federal law, the estate of a decedent who dies with a revocable trust in place can elect to file a single annual income tax return (Form 1041) that reports income earned by both entities (the estate and trust). Pennsylvania does not permit this practice, so a decedent’s estate and revocable trust are required to file separate income tax returns (Form PA 41) to report income earned by each during the year.
Corr’s HB 2303 will address this by permitting the executor or administrator of a decedent’s estate to elect to file a combined annual income tax return for an estate and revocable trust during the period the estate is open.
Both bills will be referred to committees for review.
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IFO Releases New Analysis of Federal Tax Code Conformity
In response to a legislative request, the Independent Fiscal Office (IFO) released an analysis of the impact on state revenues from conformity with certain federal tax provisions.
The analysis provides a brief description of certain code sections and how Pennsylvania tax law differs from federal tax law. The report examines bonus depreciation (Section 168(k)), expensing for certain small businesses (Section 179), nonrecognition of gain from the exchange of certain property (Section 1031), net operating loss deductions for pass-through entities, one-half federal self-employment tax, self-employed health insurance costs, new deduction for certain qualified business income of pass-through entities, and unreimbursed expenses subject to the two percent floor.
Provisions not address in the IFO’s analysis include nonrecognition of gain from sales of stock to employee stock ownership plans or certain cooperatives (Section 1042), exclusion of gain on qualified small business stock (Section 1202), and losses on small business stock (Section 1244).
Revenue estimates use both federal and state tax data to assess the impact from federal conformity. The estimates are static, and do not include any potential impact that conformity with federal tax provisions might have on the state economy.
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Legislators Introduce Bipartisan Severance Tax Legislation
A bipartisan coalition of state lawmakers is pursuing a severance tax on the natural gas industry. The announcement this week of the introduction of a new proposal was strongly supported by Gov. Tom Wolf.
“Since day one of my term as governor, I have fought to enact a reasonable severance tax that would give Pennsylvanians their fair share of the energy boom that is powered by resources that belong to all of us,” Wolf said. “I, along with this bipartisan coalition, am here to call on the House and Senate to pass these bills and get them to my desk so that they can become law and Pennsylvanians can begin to get the benefits that other states have had for years.”
Senate Bill 1000, sponsored by Sens. Tom Killion (R-Delaware) and John Yudichak (D-Luzerne), and its companion House Bill 2253, sponsored by Reps. Bernie O’Neill (R-Bucks) and Jake Wheatley (D-Allegheny), would generate an estimated $248.7 million in the next fiscal year. It would also keep the current impact fee in place.
The legislation proposes a tax structure based on the price of gas from the preceding calendar year as follows:
||Rate per MCF
|$1.00 - $3.00
|$3.01 - $4.99
|$5.00 – $5.99
|$6.00 or greater
The bills have been referred to committees for review.
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Career and Technical Education Package Clears House
A package of bipartisan bills boosting career and technical education was approved by the Pennsylvania House this week. The bills stem from recommendations made by the state House Select Subcommittee on Technical Education and Career Readiness.
The package of bills is as follows:
- House Bill 2155 would provide for new vocational instructional certification requirements.
- House Bill 2156 would create the Career and Technical Education Partnership Tax Credit Program. Tax credits would be available to business firms that contribute to career and technical partnership organizations. The available tax credits would be capped at $15 million in a fiscal year. The state would increase the aggregate tax credit amount by $5 million if 90 percent of the tax credit amount were used during the prior fiscal year.
- House Bill 2157 would require the Commission for Agriculture Education Excellence to issue guidelines and the state Department of Education to issue guidelines and expedite the approval process for schools to initiate new career and technical education programs.
- House Bill 2158 would provide all students in grades 4 through 12 at least one opportunity to receive career information from career presenters and would open schools to a wide range of educational contributors.
- House Bill 2159 would expand an online database of articulation agreements.
- House Bill 2203 would require the Department of Education, in consultation with the Department of Labor and Industry and the Department of Agriculture, to create and annually update an easily accessible online career resource center.
- House Bill 2204 would encourage a continuum of career and workforce development.
- House Bill 2206 would require Workforce Development Boards to include an administrator of a career and technical education center.
The bills now go to the Senate for consideration.
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Regulatory Reform Package Gains State House Approval
The state House this week gave approval to a series of bills that would reform Pennsylvania’s sometimes burdensome permitting and regulatory processes.
House Bill 209 would establish the Independent Office of the Repealer to review statutes and regulations for possible revision and repeal.
House Bill 1237 would require that any state agency wishing to impose a regulation with an annual financial impact of $1 million or more reference the specific law that gives them the authority to propose a regulation.
House Bill 1792 would allow the General Assembly to initiate the repeal of any state regulation in effect by a concurrent resolution.
House Bill 1959 would direct the Department of Environmental Protection (DEP) to contract with a third-party to review permits that have been delayed and issue them in accordance with DEP’s Permit Decision Guarantee Program or 30 days following submission if a deadline is not specified.
House Bill 1960 would require each state agency to appoint a regulatory compliance officer who would respond both to violations and new regulations, working cooperatively with the business community.
The bills now advance to the Senate for consideration.
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Lawmakers Introduce 100 Percent Tax Exclusion Program
To enable school districts to exclude up to 100 percent of a homeowner’s school property tax bill, state Reps. Rosemary Brown (R-Monroe/Pike) and Marcia Hahn (R-Northampton) have introduced a bill to establish a property tax reform program.
House Bill 2329 is geared toward achieving school tax elimination for primary homeowners through an increase to the personal income tax (PIT). The bill proposes an increase in the state PIT by 1.72 percent to cover the amount needed to offset owner-occupied residential school property taxes.
On Nov. 7, 2017, an amendment to the Pennsylvania Constitution was approved by voters to further expand the property tax relief program known as the Homestead Exclusion. The amendment increased the allowable homestead and farmstead exclusion to 100 percent of the assessed value of all homesteads and farmsteads.
The bill has yet to be referred to a House committee.
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State Revenue Collections Up Slightly for April
Pennsylvania collected $3.8 billion in General Fund revenue in April. The tax revenue collected exceeded estimate by $33.3 million, which was 0.9 percent above what was anticipated. Fiscal year-to-date General Fund collections total $29 billion, which is $164.1 million, or 0.6 percent, above estimate.
The Department of Reveue received in February $85.1 million in liquor store profits. The deposit was anticipated in April, rather than in February, which created the artificial deficit in April collections.
Sales tax receipts totaled $893.8 million for April, $34.9 million above estimate. Year-to-date sales tax collections total $8.5 billion, which is $21.5 million, or 0.3 percent, more than anticipated.
Personal income tax (PIT) revenue in April was $2.1 billion, $8.9 million above estimate. This brings year-to-date PIT collections to $11.3 billion, which is $124 million, or 1.1 percent, above estimate.
April corporation tax revenue of $313.2 million was $8.3 million above estimate. Year-to-date corporation tax collections total $4 billion, which is $143.6 million, or 3.4 percent, below estimate.
To read IFO’s Monthly Trends Report, click here.
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Pa. Submits Nominations for Qualified Opportunity Zones
Gov. Wolf announced that his administration has submitted Pennsylvania’s allotted 300 census tracts across the state as Qualified Opportunity Zones, as created by the federal Tax Cuts and Jobs Act (TCJA) in December 2017.
The U.S. Treasury Department is in the process of developing the Opportunity Zones program, and the IRS is expected to provide further information regarding opportunities for investment in zones in the coming months.
Pennsylvania had 1,197 census tracts eligible for Qualified Opportunity Zone status, and was given the opportunity to designate 25 percent, or a maximum 300 low-income community tracts as zones. The list of nominated tracts, additional data, evaluation criteria, and an interactive map can be found at DCED’s Qualified Opportunity Zones website. Final approval from the Department of Treasury is expected in May.
The TCJA created the Qualified Opportunity Zones as a tool for promoting long-term investment in low-income communities. Through this program, investors are provided tax benefits for investing capital gains in low-income community census tracts, as well as certain tracts adjacent to low-income tracts.
The new tax incentive is for private investors making private equity investments in funds that will then invest in businesses, real estate, and other ventures in low-income communities. The incentive offers deferral, reduction, and potential elimination of certain federal capital gains taxes.
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