Legislative Update

Get the latest news on Pennsylvania government and the issues affecting the CPA profession through Legislative Update.

  • Week Ending April 20, 2018

    by PICPA Government Relations | Apr 20, 2018

    PICPA Local Tax Collection Bill Goes to Governor 

    PICPA’s four-year effort to further improve and streamline Pennsylvania’s local earned income tax collection system is a step closer to becoming law after the state Senate approved corrective legislation this week by a vote of 44-6. House Bill 866 was approved by the state House last June by a vote of 189-0. The bill now goes to Gov. Tom Wolf.

    HB 866, sponsored by Rep. George Dunbar (R-Westmoreland), provides consistency to the local earned income tax crediting provisions to protect taxpayers from double taxation. Some tax collectors have used Act 32 of 2008 as an opportunity to limit the local tax crediting provisions historically available to Pennsylvania taxpayers.

    Other important taxpayer protections include a safe harbor provision that is consistent with the Internal Revenue Code, limited oversight of the system by the Department of Community and Economic Development, a prohibition against charging taxpayers with no income a penalty when they do not file a return, clarification of the withholding tax rates for employees who are on a temporary assignment, prohibition of assessment of earned income tax more than five years after the date on which the tax should have been filed (except in cases of fraud), prohibition of the collection of delinquent taxes through contingent fee audits, and authorization for the local tax collector to abate any penalty imposed under the law.

    In a surprise action in November 2016, Wolf vetoed a similar bill (House Bill 245). The PICPA met with the governor earlier this year to discuss the proposal and how it will benefit taxpayers.

    The PICPA has urged the governor to sign the bill into law.


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    Senate Panel Clears Depreciation Deduction Measure

    The state Senate Finance Committee approved legislation to restore depreciation deductions for Pennsylvania businesses. The bill, which now goes to the full Senate for a vote, was approved in committee by a vote of 9-3.

    As originally introduced, Senate Bill 1056, sponsored by Sen. Michelle Brooks (R-Crawford, Erie, Mercer), allowed the temporary 100 percent bonus depreciation enacted under last year’s federal Tax Cuts and Jobs Act. However, an amendment to the bill adopted in committee decouples the state’s corporate net income tax law from the federal provision, and instead allows accelerated depreciation similar to the approach taken by most other states.

    This legislation is a response to Pennsylvania Corporate Tax Bulletin 2017-02, which disallows all depreciation on certain property, making Pennsylvania the only state to fully disallow depreciation on certain assets. For more information on bonus depreciation, please read PICPA's issue brief.

    A similar bill (House Bill 2017) passed the House in March. The PICPA supports both measures, and is urging state lawmakers to expedite passage of legislation prior to May 15, 2018, when 2017 corporate net income tax returns are due.


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    Business Privilege Tax Consolidation Clears Senate

    PICPA member and state Sen. Pat Browne’s (R-Lehigh) bill to further consolidate tax collections at the local level cleared the Senate this week, 39-10.

    As amended, Senate Bill 653 provides a way to opt out from consolidated collection for mercantile or business privilege tax if a political subdivision adopts a resolution to retain its tax collection authority over a mercantile or business privilege tax not less than 90 days prior to the effective date (Jan. 1, 2020). It also excludes payroll preparation tax from consolidated collection, and provides that appeals are to be made to the Tax Collection Committee Board of Appeals.

    The bill now goes to the House for consideration.


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    Bill Approved that Reduces Costs, Opioid Abuse Under Workers’ Comp

    Legislation that would reduce costs and address opioid abuse under the Pennsylvania Workers’ Compensation program received final legislative approval and was sent to Gov. Wolf.

    Senate Bill 936 would require the Pennsylvania Department of Labor and Industry to adopt an evidence-based drug formulary for the Workers’ Compensation program. Sen. Don White (R-Indiana) is the primary sponsor of the legislation. Proponents say it will lower costs and help fight opioid addiction. The legislation would also eliminate payments for overpriced, unproven pain creams.


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    House OKs Work Requirement Measure

    The state House approved legislation establishing work requirements for able-bodied recipients of Medical Assistance (MA) benefits.

    Under House Bill 2138, sponsored by Rep. Matthew Dowling (R-Fayette/Somerset), requires able-bodied recipients to meet work requirements to continue receiving benefits. According to data from the state Department of Human Services (DHS), 51 percent of the state’s able-bodied MA recipients do not work.

    Requirements include either being employed, attending a job training program for 20 weeks or more, or completing 12 job training program-related activities in a month.

    House Bill 2138 heads to the Senate for consideration.


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    Panel Approves Increasing Transparency on State Finances

    The Pennsylvania House State Government Committee gave bipartisan approval to legislation that will enhance the Treasury’s Transparency Portal website and codify the program.

    House Bill 1843, sponsored by Rep. Seth Grove (R-York), would create the Commonwealth Checkbook, a user-friendly online ledger to show the public how and where tax dollars are spent. The checkbook is partially based on the Ohio Checkbook, a popular online tool that tracks government spending in Ohio.

    The bill additionally would require agencies to post budget requests online and make the Transparency Portal permanent.

    House Bill 1843 now goes to the full House for consideration.


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    Measure to Assist Distressed Neighborhoods Advances

    The Pennsylvania House advanced legislation that would expand a program that encourages revitalization of distressed neighborhoods.

    Created in 1967, the Neighborhood Assistance Program (NAP) is a tax credit program that incentivizes businesses to invest in affordable housing programs, community services, crime prevention, education, job training, and neighborhood assistance.

    House Bill 675, sponsored by Rep. Bernie O’Neill (R-Bucks), chair of the House Finance Committee, would increase NAP’s funding from $18 million to $36 million. NAP’s funding allocation has not been increased since its inception.

    HB 675 now moves to the Senate for consideration.


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    IRS Reform Package Clears U.S. House

    The U.S. House of Representatives approved several measures over a two-day period related to IRS administration and taxpayer protections. The package of bills includes the following:

    • H.R. 2901 – Volunteer Income Tax Assistance Permanence Act of 2017 was passed by unanimous consent.
    • H.R. 5437 – To require the Secretary of the Treasury to establish a program for the issuance of identity protection personal identification numbers upon request, was passed by unanimous consent.
    • H.R. 5438 – To amend the Internal Revenue Code (IRC) of 1986 to allow employees of the IRS and the Department of the Treasury to provide taxpayers with information on low-income taxpayer clinics, was passed by unanimous consent.
    • H.R. 5439 – To provide for a single point of contact at the IRS for taxpayers who are victims of tax-related identity theft, was passed by unanimous consent.
    • H.R. 5440 – To require notice from the Secretary of the Treasury in the case of any closure of a Taxpayer Assistance Center, was passed by unanimous consent.
    • H.R. 5443 – To amend the IRC of 1986 to require electronic filing of the annual returns of exempt organizations and to provide for making such returns available for public inspection, was passed by unanimous consent.
    • H.R. 5444 – The Taxpayer First Act that (among other things) would establish an IRS Independent Office of Appeals and eliminate the IRS Oversight Board was passed 414-0.
    • H.R. 5445 – The 21st Century IRS Act, which relates to cybersecurity and online services, was passed 414-3.
    • H.R. 5446 – To amend the IRC of 1986 to restrict the immediate sale of seized property by Secretary of the Treasury to perishable goods, was passed by unanimous consent.


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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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