Legislative Update

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

  • Week Ending May 25, 2018

    by PICPA Government Relations | May 25, 2018

    PICPA’s Federal Tax Committee Holds Spring Meeting 

    Members of the PICPA Committee on Federal Taxation recently met to discuss their key initiatives for the coming months. Topics included IRS modernization and federal tax reform advocacy, developing tax topics, and a rundown of relevant court cases and other helpful resources for practitioners. The committee plans to provide recommendations on the IRS’s 2018-2019 Priority Guidance Plan in the coming weeks.

    The committee has added several new members over the past year and welcomes all interested PICPA members to join. You can sign up via the Federal Taxation Committee page. As federal tax changes continue to move through Congress, this committee is expected to have an increasingly key role to play.


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    Senate Panel Approves Savings Bill to Counter Failing Schools

    The state Senate Education Committee passed legislation that establishes education savings accounts (ESAs) to help students attending low-achieving schools.

    Senate Bill 2, sponsored by Sen. John DiSanto (R-Dauphin), creates ESAs for students who attend low-achieving public schools ranked in the bottom 15 percent in the state. These ESAs are grants in the amount of the average state funding per student held in an account administered by the state Department of the Treasury.

    Parents can use the account only for approved educational purposes, such as tuition at a private school, tutoring, textbooks, and services for students with special needs. The funds will be transferred electronically from the state directly to the providers.

    Senate Bill 2 will go before the full Senate for consideration.


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    PlanCon Committee Recommendations and Report

    The PA Public School Building Construction and Reconstruction Advisory Committee (commonly known as PlanCon) made several recommendations regarding the state’s reimbursement program for school districts for costs associated with construction, reconstruction, and lease of public school buildings.

    The current process includes 11 steps, and it takes an average of 14 months to get through the first seven steps of the process. In its report, the advisory committee recommends eliminating five of the original administrative steps and combining the remaining six steps into four. The new four-step process would include project justification, construction, project bid awards, and project completion.

    The advisory committee then developed a new reimbursement formula focused on four key factors: per pupil amount, adjustment factor, building capacity, and wealth factor. These four factors considered together develop the state’s share.

    The advisory committee suggested designating 75 percent of the state’s share to new construction, while 20 percent would be allocated to maintenance, repairs, and modernization projects through a new small project building maintenance and repair grant program. The final 5 percent would be allocated for the new building reimbursement program dedicated to school safety projects.

    Finally, the advisory committee set a maximum payment amount from the state and a payment schedule. The maximum state share cannot exceed 65 percent of a school district project’s structural costs. The payment schedule will divide the state’s share into 20 equal payments to be made over 20 years.

    The advisory committee held eight hearings, receiving testimony from 50 stakeholders, and toured six school facilities.


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    Online Home-Sharing Registration Advances in House

    To keep up with the new ways people book overnight lodging, the House Tourism and Recreational Development Committee approved legislation by Rep. Doyle Heffley (R-Carbon) to ensure online rental websites, such as Airbnb and Homeaway, pay their taxes like their competitors.

    House Bill 1810 would require online hosting platforms that facilitate the booking of overnight lodging to register with the Pennsylvania Department of Revenue. The registration would allow counties and state government to better collect the hotel occupancy taxes from patrons, and hosting platforms would not be able to facilitate the booking of lodging until they are registered.

    This bill would not create new taxes, but rather it would ensure the payment and facilitate the collection of the local county hotel room tax from patrons that is used to promote local tourism.

    The bill now goes to the full House for consideration.


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    Committee Backs Compromise on Redistricting Bill

    A state Senate committee approved a measure this week that would create an independent citizens’ commission to redraw Congressional and state legislative district maps.

    Senate Bill 22, sponsored by Sen. Lisa Boscola (D-Northampton, Lehigh), was amended in the Senate State Government Committee to retain the 11-member citizens' commission while specifying that the commission be comprised of citizens who are registered Democrats, Republicans, and independents. The amended bill also requires significant public input, applies sound map-drawing standards, and establishes a fair process for final map adoption.

    The measure now goes to the full Senate for a vote.


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    Measure to Update Mobile Telecommunications Law

    A bill clarifying that certain telecommunications devices and accessories are exempt from state tax was approved by the Senate Finance Committee this week. The legislation already passed the state House on April 9, 2018, by a vote of 195-0.

    House Bill 994, sponsored by Rep. Seth Grove (R-York), amends the state Tax Reform Code to specifically exclude the sale of telephones, telephone handsets, modems, tablets, and related accessories from the gross receipts tax.

    If enacted, the bill would take effect immediately, and would apply retroactively to gross receipts from transactions occurring on or after Jan. 1, 2004, and there can be no claim for refund or credit for a tax paid prior to the effective date of the bill.

    The bill is now before the full Senate for consideration.


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    Clean Energy Proposal Heads to Governor

    The state House overwhelmingly approved legislation creating a financing mechanism that enables low-cost, long-term funding for energy efficiency, renewable energy, and water conservation upgrades to commercial, agricultural, or industrial properties. Senate Bill 234, sponsored by state Sen. John Blake (D-Lackawanna/Luzerne/Monroe), now heads to the governor’s desk.

    The bill will establish Pennsylvania’s Property Assessed Clean Energy (PACE) program. Under Senate Bill 234, a local government would be able to choose to participate in or develop a PACE financing program. PACE financing would not require any public funds; participating local communities would be tasked with collecting the assessment on the improved building and remit it for payment on the debt incurred from the building’s energy efficiency and clean energy technology upgrades.


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    Civil Service Reform Bill Advances in Senate

    Senate Bill 1037, introduced by Sens. Mike Folmer (R-Lebanon) and Randy Vulakovich (R-Allegheny), to modernize the state’s Civil Service Commission, was unanimously approved by the Senate State Government Committee.

    The legislation streamlines the commission by transferring several responsibilities to Pennsylvania’s Office of Administration, including merit-based hiring, civil service applications, certifications, examinations, and promotions. The bill furthers the modernization efforts that began with the passage of Act 69 of 2016, which brought modest changes, including notifying applicants of job openings or tests by email, expanding its “Rule of Three” provision, and establishing vacancy-based hiring.

    The legislation advances to the full Senate for consideration.


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    AICPA Comments on Proposed Regulations for Valuing Inventories

    The American Institute of CPAs (AICPA) has recommended changes to the IRS’s proposed dollar value last-in first-out (LIFO) regulations: Inventory Price Index Computation (IPIC) Method Pool.

    The proposed regulations (REG-125946-10) would amend IPIC method pooling rules to clarify that the rules are applied consistently with the general LIFO pooling rule so manufactured or processed goods and resale goods are not included in the same dollar-value LIFO pool.

    In a May 21 letter, the AICPA recommended that the U.S. Department of the Treasury and the IRS make three changes to the proposed regulations to reduce the compliance burden on taxpayers and IRS exam controversy:

    • Allow the inclusion of resale goods in the same LIFO IPIC pool with manufactured or processed goods under the IPIC pooling rules
    • Provide test year, qualifying period, retest year, and extended qualifying period rules similar to the rules provided in Treas. Reg. Sections 1.263A-2(b)(4) and -3(d)(4) for using the historic absorption ratio
    • Provide an exception from the requirement to change pools as a result of the application of the 5 percent rules

    The dollar-value method of valuing LIFO inventories is a method of determining cost by using a base-year cost expressed in terms of total dollars rather than the quantity and the price of specific goods as the unit of measurement. Under Treas. Reg. Section 1.472-8(b)(1), manufacturers or processors are required to establish one pool for each natural business unit unless the manufacturer or processor elects under Treas. Reg. Section 1.472-8(b)(3) to establish multiple pools.


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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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