corporate tax update recent developments in pa taxes · 2020-05-15 · • wayfair supreme court...
TRANSCRIPT
RECENT DEVELOPMENTS IN PA TAXES
Presented By:
JASON SKRINAK, CPAState and Local Tax Practice Leader
Corporate Tax Update
• Pennsylvania Budget Review and What to Expect Going Forward
• Corporate Tax Updates
• Sales Tax Updates
• Federal Tax Reform Impact on Pennsylvania
• Tax Foundation – Pennsylvania Report
• Wayfair Supreme Court Decision
Agenda
• Passed on time!
• Combined reporting and severance tax proposed, did not make the budget
• Increased education and healthcare spending
• Expands the Education Improvement Tax Credit by $25 million
2018-2019 Pennsylvania Budget
• Combined reporting?
• Review credit programs
• Review overall tax landscape• Personal income tax
• Corporate net income tax
• Sales and use tax
2019-2020 Budget Forecast
• Pennsylvania Research and Development applications required to be filed online
• Final phase of Modernization Project – Personal Income Tax, Pass-Through Entity Processing, Property Tax Rebate, etc.
• Electronic correspondence available in E-Tides
PA Department of Revenue Updates
• New Modernization Project kick-off, May 2018 – goal to improve customer service• Phase 1 – Motor & Alternative Fuels Tax, International Fuels
Tax (IFTA)
• Phase 2 – Realty Transfer and Inheritance Tax
• Phase 3 – Personal Income Tax, Property Tax/Rent Rebate and Pass-Through Entity
• Pennsylvania bonus depreciation – Corporate Tax Bulletin 2018-03
• 1099 non-resident withholding updates• Originally effective 1/1/18, now 7/1/18
• Withholding exemption form – Rev-1832
PA Department of Revenue Updates (continued)
• Increased audit activity• Restaurants, bars, pubs and other eateries
• Vehicle sales tax enforcement
• Desk audits – 1099-K credit sales vs. cash sales reported
• Computer software and services policy• Digital goods deemed taxable tangible personal property
• Information retrieval services taxable
• Maintenance, updates and support to digital goods are taxable – Act 84
• Letter Ruling SUT-17-001, issued 2/2017 and revised 4/2017
Pennsylvania Sales Tax Updates
• Pennsylvania does not automatically conform to IRC for individual taxes
• Pennsylvania conforms to IRC for corporate taxes unless they specifically decouple from certain provisions
• Corporate Net Operating Loss – Pennsylvania does not conform (Nextel Case)• Prior capped amount or percentage of taxable income
• Current, Nextel Decisions – Percentage of Net Income
• Net Interest Expense – Pennsylvania has not decoupled from federal treatment. Issues for intercompany debt.
Federal Tax Reform Impact on PA
• 100% Bonus Depreciation• Pennsylvania prior policy to accept bonus depreciation
• New policy to not allow any depreciation on bonus assets until disposed
• Act 72 – decouples from federal bonus but allows MACRS depreciation
• Repatriation Transition Tax (RTT)• Pennsylvania Information Notice 2018-01, dated April 20, 2018
• RTT income subject to Pennsylvania corporate net income tax
• RTT deduction included in calculation
• Net RTT income treated as dividend received deduction
• No portion of RTT is included in sales factor
Federal Tax Reform Impact on PA (continued)
• Personal Income Tax• The Good
• Low tax rate
• Imposed on broad-based income
• The Bad• Rate difference between corporate and personal
• Retirement income carve-out
• Various classes of income
• Corporate Income Tax• The Good • The Bad
• Tax rate (2nd highest)• NOL limitations (1 of 2 states)
• Corporate credits
Tax Foundation – Pennsylvania Tax Study
• Sales and use tax nexus case – decided June 21, 2018• Provides economic nexus standard
• $100,000 and/or 200 separate transactions
• Impact on business• States starting to implement Wayfair standard going forward
• Physical presence standard for prior periods
• Registration and sales tax compliance going forward
South Dakota v. Wayfair
QUESTIONS?
FOCUSED.ON YOU.JASON [email protected] | RKLcpa.com