House Panel OKs Expanding School Choice Scholarships
The Pennsylvania House Education Committee advanced a proposal to enhance an important school choice program in the Commonwealth. House Bill 800, sponsored by House Speaker Mike Turzai (R-Allegheny), would expand Pennsylvania’s Educational Improvement Tax Credit (EITC) program with $100 million in additional tax credits for scholarship organizations.
Additionally, it includes an automatic escalator that would increase funding for these scholarships by 10 percent in any year where 90 percent of the credits are claimed, allowing the program to grow to meet demand.
The bill makes other improvements to this program. It would increase the household income limit by $10,000, allowing more middle-class families to benefit from the scholarships. Once a student qualifies, he or she would remain eligible for the program
through high school graduation, regardless of changes to family income. To ensure that more of this tax money goes directly to students, House Bill 800 lowers the amount that can be retained for administrative costs from 20 percent to 10 percent.
House Bill 800 now goes to the full House for a vote.
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PICPA Holds Meet-and-Greet for New Legislators
With the most recent election in November, the composition of the Pennsylvania General Assembly underwent a major transformation. Twenty percent of its members took office for the first time, with 43 new representatives in the state House of Representatives
and seven new legislators in the Senate.
Building relationships with newly elected officials is one of our priorities this session. To help facilitate these connections we held a Meet-and-Greet in the state capitol on April 30. The event included a panel of PICPA members representing various
facets of the accounting profession: Nicole Buckman, CPA, senior tax accountant with Kohanski & Company; Jessica Chen, CPA, vice president and operational controller with Comcast Corp.; Cheri Freeh, CPA, partner with Hutchinson, Gillahan & Freeh PC; Martin Levin, CPA, managing director with RLB Accountants
and incoming PICPA president; Ian McDowell, CPA, senior vice president and shareholder with S.R. Snodgrass PC; and Jason Skrinak, CPA, state and local tax practice leader with RKL.
State legislators and staff attended the informal networking breakfast where PICPA members could get to know the freshman legislators.
“Having informal chat time with so many members of the legislature was good for the PICPA,” Levin said. “Let’s definitely do this again.” Check out our video of attendees discussing the event.
The PICPA takes pride in its ability to act as a nonpartisan resource for legislators. We encourage House and Senate members to reach out for a neutral perspective on any proposal pertaining to tax policy.
The PICPA State Taxation Committee held a meeting immediately following the event. The committee was visited by a friend of the PICPA, Rep. Mike Peifer, CPA-inactive (R-Pike/Wayne), chair of the House Finance Committee. Meeting discussions included legislative
priorities for the session, relevant court cases, joint initiatives with the Department of Revenue, and upcoming state tax conferences.
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Revenue Department Releases New 163(j) Guidance
The Pennsylvania Department of Revenue released new guidance on the implementation of a key provision from last year’s federal tax reform law. Corporation Tax Bulletin 2019-03 – Pennsylvania Corporation Net Income Tax Treatment of IRC Section
163(j) – was issued April 29, 2019.
The Tax Cuts and Jobs Act of 2017 amended Section 163(j) of the Internal Revenue Code. For federal income tax purposes, Section 163(j) limits the deductibility of interest expense in the current tax year of certain U.S. taxpayers for tax years beginning
on or after Jan. 1, 2018. The 2019-03 Bulletin provides guidance
on how the Federal limitations imposed by the amended Section 163(j) are treated for Pennsylvania corporate net income tax (CNIT) purposes.
It is anticipated that additional guidance regarding the CNIT implications of Section 163(j) will be published in the future as a need arises.
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Finance Committee Approves Sales Tax Clarification
The Senate Finance Committee approved a measure that clarifies the tax status of certain bank purchases. Senate Bill 568, introduced by Sen. Scott Hutchinson (R-Venango), chair of the committee, clarifies the Sales and Use Tax on canned and customized software and security equipment for financial institutions.
“While Pennsylvania has taxed canned software, the Revenue Department had until recently taken the position that bank core processor services and purchase of canned software and related support services should not be taxed. But that has since changed,”
said Hutchinson. “My bill clarifies the application of the tax and will preserve the long-standing policies that have reasonably applied to the banking community.”
The committee also approved Senate Bill 613, a measure introduced by Sen. Bob Mensch
(R-Chester) that amends the Administrative Code repealing provisions relating to employees with access to federal tax information and providing for criminal history background checks of employees and contractors with access to federal tax information.
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Revenue Department Releases April 2019 Collections
Pennsylvania collected $4.4 billion in General Fund revenue in April, which was $464.7 million, or 11.8 percent, more than anticipated. Fiscal year-to-date General Fund collections total $29.2 billion, which is $828.2 million, or 2.9 percent, above estimate.
Since the start of the 2018-2019 fiscal year, overall tax revenue is $1.8 billion, or 6.9 percent, more than was collected in the same period last fiscal year.
Sales tax receipts totaled $974.9 million for April, $43.2 million above estimate. Year-to-date sales tax collections total $9.2 billion, which is $273.9 million, or 3.1 percent, more than anticipated.
Personal income tax (PIT) revenue in April was $2.5 billion, $330.5 million above estimate. This brings year-to-date PIT collections to $11.9 billion, which is $40.6 million, or 0.3 percent, below estimate.
April corporation tax revenue of $386 million was $89.7 million above estimate. Year-to-date corporation tax collections total $4.6 billion, which is $543.3 million, or 13.5 percent, above estimate.
Inheritance tax revenue for the month was $93.3 million, $6.2 million below estimate, bringing the year-to-date total to $855.3 million, which is $24.2 million, or 2.7 percent, below estimate.
Realty transfer tax revenue was $49.9 million for April, $6.1 million above estimate, bringing the fiscal-year total to $433.4 million. This is $21.2 million, or 4.7 percent, less than anticipated.
Other General Fund tax revenue, including cigarette, malt beverage, liquor and gaming taxes, totaled $148.8 million for the month, $300,000 below estimate. This brings the year-to-date total to $1.4 billion, which is $900,000, or 0.1 percent, above estimate.
Nontax revenue totaled $240.4 million for the month, $1.7 million above estimate. This brings the year-to-date total to $768.7 million, which is $96 million, or 14.3 percent, above estimate.
In addition to the General Fund collections, the Motor License Fund received $322.4 million for the month, $63.6 million above estimate. Fiscal year-to-date collections for the fund – which include the gas and diesel taxes as well as other license,
fine, and fee revenues – total $2.3 billion, which is $55.8 million, or 2.4 percent, below estimate.
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Wolf Announces State Climate Action Plan, Joins U.S. Climate Alliance
Gov. Tom Wolf announced Pennsylvania’s membership in the U.S. Climate Alliance and released the state’s new climate action plan.
“We’ve seen lately even more evidence that there is a need for leadership on climate change. For that reason, Pennsylvania will join the U.S. Climate Alliance, a bipartisan coalition of 24 governors, representing over half of the U.S. population,
to work to implement policies that uphold the commitments our nation made in the Paris Agreement,” Wolf said.
The Pennsylvania Climate Action Plan 2018 is the state climate
plan developed by Department of Environmental Protection (DEP) and state agency partners that includes recommendations for government leaders, businesses, and citizens to reduce greenhouse gas emissions and adapt to a changing climate.
The plan describes more than 100 actions, 15 of which the DEP and its partners analyzed quantitatively for potential greenhouse gas emissions reduction. The analysis showed that just those 15 actions, such as increasing renewable energy, incentivizing
energy efficient buildings, and increasing the use of electric vehicles, would reduce emissions 21 percent by 2025. Any combination of the 85 additional actions would likely achieve even more emissions reductions.
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Ag Committee Approves Two “Farming First” Measures
The Senate Agriculture & Rural Affairs Committee approved two bills that are included in the “Farming First” legislative package that will help promote and support Pennsylvania’s agriculture industry.
Senate Bill 583, sponsored by Sen. Ryan Aument (R-Lancaster), ensures that agritourism
activities are considered and treated as part of agriculture authorized on farms preserved under the state farmland preservation program.
Senate Bill 585, sponsored by Senate Majority Leader Jake Corman (R-Centre), establishes
the Pennsylvania Dairy Future Commission to review the state of the dairy industry in Pennsylvania and make recommendations on how to support its future.
Senate Bills 583 and 585 now go to the full Senate for consideration.
Other bills in the “Farming First” package, include the following:
- Senate Bill 145, sponsored by Sen. Gene Yaw (R-Lycoming), changes the state’s
farmland preservation program to allow farmers more flexibility for building or subdividing residences.
- Senate Bill 338, sponsored by Sen. Wayne Langerholc Jr. (R-Bedford/Cambria/Clearfield),
updates Pennsylvania’s Vehicle Code to allow the transportation of large farm equipment.
- Senate Bill 478, sponsored by Sen. Elder Vogel Jr. (R-Beaver/Butler/Lawrence),
introduces a tax credit program for landowners to lease or sell farmland to future generations of farmers.
- Senate Bill 588, sponsored by Sen. Judy Ward (R-Blair/Cumberland/Franklin/Fulton/Huntingdon),
exempts milk haulers from weather-related travel bans.
- Senate Bill 453, sponsored by Ward, sets safety standards and removes costly requirements
for barn weddings and other social events on farms.
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Pam Iovino Sworn into State Senate
The Pennsylvania Senate swore in its newest member, Pam Iovino (D-Allegheny/Washington). Sen. Iovino won her seat in a special election held April 2 to replace Republican Sen. Guy Reschenthaler who had resigned to run for Congress. She will represent
the 37th Senatorial District, which includes parts of Allegheny and Washington counties.
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Cleanup Package Clears House
The Pennsylvania House of Representatives this week approved a package of bills that resolve old and outdated Tax Code provisions related to the Capital Stock Tax, Intangible Personal Property Tax Law, and Personal Property Tax Act. The package of bills
is part of the House Republicans’ government reform initiative, which aims to eliminate outdated laws and make government more efficient.
The package of bills include the following:
These bills now move to the Senate for consideration.
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