By James (Jay) Brower, PICPA Member

The PICPA State Taxation Steering Committee, of which I currently serve as chair,  convened on Feb. 13, virtually bringing its members together to discuss key developments in Pennsylvania tax policy, recent court rulings, and legislative updates. The session offered valuable insights into the evolving state tax landscape and its implications for practitioners statewide. As technical experts and strategic thought leaders, State Taxation Steering Committee members play a critical role in shaping state tax policy and providing guidance on complex tax matters.

The committee meets in-person twice a year – including its annual meeting with the Department of Revenue in the fall – but also meets virtually throughout the legislative session and when new issues warrant the committee’s engagement and attention.

Recent Pennsylvania Court Cases

Members received updates on key Pennsylvania tax cases that could impact businesses and individuals. Discussions covered recent Commonwealth Court and Supreme Court rulings that address corporate tax apportionment, sales and use tax exemptions, and procedural issues in tax appeals. Court decisions provide important precedents that practitioners should be aware of when advising clients. The committee also reviewed several local tax cases.

Budget and Legislative Updates

The PICPA government relations staff provided an overview of the legislative landscape in the Pennsylvania General Assembly. They noted that the state Senate remains under Republican control with a 27-22 majority and one vacancy. In the House, while Democrats initially secured a majority in the November elections, the chamber is now deadlocked at 101-101 following the passing of Rep. Matt Gergely (D-Allegheny) in January. Special elections are scheduled for March for both chambers’ seats, with the House election determining the balance of power in the Capitol.

Staff also briefed committee members on Gov. Josh Shapiro’s proposed $51.5 billion state budget for the fiscal year beginning July 1, highlighting its tax-related implications. The budget prioritizes workforce development, public safety, energy independence, and expanded access to education, health care, and housing.

Key tax proposals in the governor’s budget were discussed, including combined reporting and new taxes on skill games and adult-use cannabis. Shapiro’s plan would also subject banks and similar institutions to the corporate net income tax while eliminating the bank and trust company shares tax, thrift tax, and private bank tax. This initiative aligns with an accelerated phase-down of the corporate net income tax. Committee members noted PICPA’s position on combined reporting. 

The PICPA government relations team also outlined upcoming PICPA-backed tax legislation. Sen. Doug Mastriano (R-Franklin) and Rep. Keith Greiner (R-Lancaster) will introduce a bill allowing pass-through entities to elect a state and local tax (SALT) workaround at the entity level. Pennsylvania is one of only five states left in the country without such a solution, with Delaware, Vermont, Montana, and Maine being the others. Additionally, Rep. Ben Sanchez (D-Montgomery) and Rep. Greiner will introduce legislation extending the resident credit for taxes paid by partners, aligning it with the credit already available to S corporation shareholders.

Thought Leadership Reports

Each of the subcommittees provided updates to the committee as a whole:

• The Local Tax Thought Leadership Committee continues to advocate for e-filing of local earned income tax returns via the Modern e-Filing system.
• The Sales and Use Tax Thought Leadership Committee reviewed recent Department of Revenue guidance on canned software.
• The Pennsylvania Corporate Tax Thought Leadership Committee discussed proposed legislation on tradable net operating losses. Committee members reviewed a draft of the bill and provided extensive feedback to its chief sponsors. Introduction in the Pennsylvania House is expected soon.

All of these discussions are instrumental in helping the PICPA focus its advocacy efforts and keeping members informed and engaged in Pennsylvania tax policy. Stay tuned for future updates as the committee monitors legislative developments and advocates for tax policy improvements.

James Brower is a managing director with CBIZ Inc. in Philadelphia and 2024-2025 chair of the PICPA State Taxation Steering Committee. He can be reached at james.brower@cbiz.com.

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^{Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of the PICPA's officers or members. The information contained herein does not constitute accounting, legal, or professional advice. For actionable advice, you must engage or consult with a qualified professional.}