Legislative Update

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  • Week Ending Jan. 25, 2019

    by PICPA Government Relations | Jan 25, 2019

    Greiner Readies Two PICPA Legislative Initiatives for Introduction 

    PICPA member and State Rep. Keith Greiner (R-Lancaster) will be introducing two bills that are part of the PICPA’s legislative agenda, addressing issues that are important to CPAs and the business community. Both bills are carryovers from the last legislative session.

    Greiner’s first bill clarifies and streamlines the 1099-MISC withholding of nonresident income requirement, which was included in Act 43 of 2017. The legislation makes technical fixes that address some of the more ambiguous language in Act 43 and addresses issues that have arisen during its implementation. It will also correct omissions in the current law, including reporting and remittance rules for withheld tax on lease payments. Finally, the bill simplifies compliance by requiring the Department of Revenue to issue an information form to facilitate payor withholding and reduces payor liability. The measure is similar to Greiner’s House Bill 2413 of last session. That bill was reported by the House Finance Committee, but it never came before the full House for a vote.

    The other bill, House Bill 2303 of last session, would permit 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. This is currently permitted under federal law. Because Pennsylvania does not permit this practice, a decedent’s estate and revocable trust are required to file separate state income tax returns (Form PA-41) to report income earned by each. HB 2303 was approved unanimously by the House last session, but it died in the Senate.

    Both bills will be referred to a House committee once formally introduced.


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    DOR Bulletin Addresses Treatment of GILTI and FDII

    The Pennsylvania Department of Revenue (DOR) issued Corporation Tax Bulletin 2019-02, Pennsylvania Corporate Net Income Tax Treatment of Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income. The bulletin was issued Jan. 24, 2019.

    The federal Tax Cuts and Jobs Act of 2017 added Sections 951A and 250 to the Internal Revenue Code. For federal income tax purposes, Section 951A subjects certain U.S. taxpayers to tax on their global intangible low-taxed income (GILTI) for tax years beginning on or after Jan. 1, 2018. Section 250 authorizes a federal deduction for taxpayers reporting GILTI and taxpayers with foreign-derived intangible income (FDII). Bulletin 2019-02 provides guidance on how GILTI and FDII are treated for state corporate net Income tax purposes.

    DOR notes that it anticipates providing further guidance once clarification comes from the IRS.


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    PICPA Legislative Update Webinar—Wednesday, Feb. 13

    The 2019-2020 legislative session of the Pennsylvania General Assembly is officially underway. With 43 new members of the House and seven new senators, the PICPA government relations team is busy meeting these new lawmakers and introducing them to the PICPA. At the same time, new legislation is being prepared to start moving through the process, and Gov. Tom Wolf’s Feb. 5 budget address will add to the capital’s agenda.

    To learn more about the happenings in Harrisburg, join Peter Calcara, PICPA’s vice president of government relations, in this quarterly PICPA Legislative Update Webinar. He will discuss the new session, Wolf’s 2019-2020 state budget proposal, and PICPA’s legislative plans. Register today!

    You can also listen to PICPA’s CPA Conversations podcast, “What New State Legislators Could Mean for Pennsylvania CPAs,” with Calcara.


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    Proposed Pa. Supreme Court Rule Could Bring Back “Venue Shopping”

    The Pennsylvania Coalition for Civil Justice Reform (PCCJR), of which PICPA is a member, is fighting a proposed rule change that would effectively balloon medical liability premiums for long-term-care facilities and threaten patient access to quality care.

    The proposed rule change pending before the Civil Procedural Rules Committee of the Pennsylvania Supreme Court would undo protections enacted to ensure continued access to health care for Pennsylvanians. Under venue reform in 2002, medical liability cases must be filed only in the county where the cause of action, or injury, arose. This rule prevents plaintiffs’ lawyers from filing suit in Philadelphia – which tends to be more favorable toward plaintiffs – when there is little to no connection with the city and the injury at issue.

    “This proposed rule needs to be suspended for a fuller examination of its implications for medical care and for the overall economy,” said Sen. Lisa Baker (R-Luzerne), chair of the Senate Judiciary Committee. “We need to have a reputable entity such as the Legislative Budget and Finance Committee do an economic analysis of the expected impact of the promulgation. This will give the legal community, the medical community, the business community, and the public ample opportunity to weigh in with statistics, trends, arguments, and philosophies. The committee can put forward their reasoning for change, but the jury will be the public at large rather than a small segment of the legal community.”

    The Interbranch Commission on Venue, created under Act 13 of 2002, is composed of appointments from the legislative, executive, and judicial branches of government. A majority of the commission recommended that medical malpractice cases only be filed in the county where the cause of action arose. The Pennsylvania Supreme Court adopted the commission's recommendation.

    Comments on the rule change must be submitted to the Civil Procedural Rules Committee at civilrules@pacourts.us by Feb. 22, 2019.


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    Performance-Based Budget Board Wraps Up First Hearings

    The Performance-Based Budget Board heard testimony from the Independent Fiscal Office (IFO) on reports developed from its performance-based budget review of certain state agencies and tax credit programs.

    “This is an important opportunity to do a deeper review of agency programs and tax credit programs to determine if they meet their intended goals and justify continued funding,” said PICPA member Sen. Pat Browne, CPA, chair of the board. “Performance-based budgeting provides transparency in government spending, helps eliminate wasteful government spending, prevents excessive budget growth for outdated programs, and outlines measurable objectives for state agencies.”

    Agencies that were reviewed included Corrections, Board of Probation and Parole, Pennsylvania Commission on Crime and Delinquency, Juvenile Court Judges’ Commission, Banking and Securities, and General Services. Tax credits reviewed include Film Production, New Jobs, and Historic Preservation.

    The Performance-Based Budgeting and Tax Credit Efficiency Act, which was sponsored by Sen. Bob Mensch (R-Montgomery), established a five-member performance-based budget board to review the IFO’s findings and reports. The board consists of the Secretary of the Budget and both the majority and minority party chairs of the Appropriations Committee in both the state Senate and House.

    This year’s board consists of Budget Secretary Jen Swails, Sens. Browne and Vincent Hughes (D-Philadelphia) and Reps. Stan Saylor (R-York) and Matthew Bradford (D-Montgomery).


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    Senators to Introduce Bipartisan Election Reform Package

    Sens. Mike Folmer (R-Lebanon), Judy Schwank (D-Berks), Tom Killion (R-Delaware), Pat Stefano (R-Fayette), and Scott Martin (R-Lancaster) plan to unveil a bipartisan election reform package later this month.

    The package, which was drafted after public hearings, work group meetings, and many discussions with county election officials, commissioners, and interested parties from both sides of the political aisle, will include legislation that addresses the following:

    • Absentee ballots
    • A permanent early voting list
    • Vote centers and curbside voting
    • Number of votes to qualify as a write-in winner
    • Number of ballots to be printed
    • Consolidation of smaller precincts

    The package will also include three constitutional amendments regarding absentee ballots, poll workers, and separate ballot judicial retention elections.

    This package seeks to provide a long-overdue update to the Pennsylvania Election Code.


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    Property Tax Relief Plan Proposed for Pittsburgh

    State lawmakers, including Senate Democratic Leader Jay Costa (D-Allegheny) and Reps. Ed Gainey (D-Allegheny) and Sara Innamorato (D-Allegheny), joined Pittsburgh Mayor William Peduto this week to announce plans for a property tax relief program for the city.

    Current state law requires Allegheny County to enact an ordinance that would allow other municipalities within the county to enact their own programs to defer or exempt increasing taxes. However, Allegheny County has been unable to create a program that meets the parameters enough to satisfy court challenges while also meeting the varying needs of many local governments.

    Costa is currently seeking cosponsors on a bill that would allow Allegheny County to create a longtime owner occupant program (LOOP).


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    Philadelphia to Continue to Allow Deduction for Employee Business Expenses

    The Philadelphia Department of Revenue announced on Jan. 16 its position regarding allowable deductions for employee business expenses and moving expenses in calculating compensation subject to the city wage tax.

    The Tax Cuts and Jobs Act of 2017 modified the federal tax code to eliminate most miscellaneous deductions for individuals for years 2018 through 2025, including deductions for employee business expenses. Moving expenses are also no longer deductible.

    Read the city’s Advisory Notice – Employee Business Expenses Update. Also, the department provided an FAQ on the Section 199A deduction.


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    Alloway Announces Retirement from Senate

    After serving in the Pennsylvania Senate for 10 years, Sen. Richard Alloway (R-Franklin) announced that he will retire effective Feb. 28, 2019.

    Alloway served on the Senate Republican leadership team as Majority Caucus Secretary since 2014. He was responsible for overseeing and reviewing all executive nominations submitted to the Senate for confirmation. He previously served as Senate Majority Caucus Administrator and as chair of the Senate Game and Fisheries Committee.

    Lt. Gov. John Fetterman will set the date for a special election to fill the seat.


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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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2018 Q&A with the DOR

The PICPA met with the Pennsylvania Department of Revenue on Oct. 24, 2018. View the full transcript or watch the recording.

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