2015 Pennsylvania Tax and Budget Update

04/15/23

04/15/23

2015 PENNSYLVANIA TAX UPDATE AND BUDGET SUMMARY

Presented by:Jason Skrinak, Principal

Michael Eby, Senior Manager

AGENDA• 2015-16 Governor Wolf’s Proposed Budget

• 2015 Corporate Tax Year in Review

• Pennsylvania Top Ten ITS Filing Tips

• Questions

2015-16 STATE BUDGET

PENNSYLVANIA PROPOSED STATE BUDGETAlthough “state budget” is often used to refer to the General Fund, the overall state budget is much larger.

FY 2014-15 (current)TOTAL: $71.8 billion

• $29.4 billion: General Fund • $24.2 billion: Fed. Funds• $18.2 billion: Other Funds

FY 2015-16 TOTAL: $78.6 billion (+9.5%)

• $29.9 billion: General Fund (+1.7%)• $27.9 billion: Fed. Funds (+15.3%)• $20.8 billion: Other Funds (+14.3%)

– (“Other funds” include the Motor License Fund, the Lottery Fund, the Tobacco Settlement Fund, and the Property Tax Relief Fund.)

PROPOSED BUDGET HIGHLIGHTS• Increase Personal Income Tax• Corporate Net Income Tax Rate Reduction• Combined Reporting• Net Operating Loss Limitations• Increase Sales and Use Tax Rate• Increase Sales and Use tax Base• Property Tax Relief• Increase Cigarette Tax• New Bank Shares Tax Rate

ITEMS OF ISSUE• State Pension Reform – PSERS & SERS

‒ Municipal Pension Reform • Liquor Sales Reform• Severance or Drillers Tax• Combined Reporting• Vendors Discount• Smokeless Tobacco• On-line Gaming

2015 CORPORATE TAX YEAR IN REVIEW

DEPARTMENT OF REVENUE UPDATES

June/July 2014• Budget summary• Tips to avoid corporate tax processing errors• General Fund FY 2013-2014 totaled $28.6B, $508.8M under estimate (-

1.7%)


August/September 2014• Expansion of Property Tax Rebate Program• Debut of a new Department of Revenue website• Philadelphia Cigarette Tax• General Fund totaled $4B, $10.7M under estimate (-.3%)


October/November 2014• Property Tax Rebate deadline approaching• Business Tax transition to the Integrated Taxing System• General Fund FY 2014-2015 totaled $8.9B, $103.4M over estimate (1.2%)


December 2014/January 2015• Bonus depreciation clarification• Sales and use tax desk audit announced• General Fund FY 2014-2015 totaled $8.9B, $103.4M over estimate (2.1%)


February/March 2015• Governor Wolf’s proposed budget announced• Pennsylvania joins Multistate Tax Commission• Department of Revenue eliminated billing notices• General Fund FY 2014-2015 totaled $17.4B, $377.6M over estimate

(2.2%)


April/May 2015• Additional electronic filing and payment options available to taxpayers• Budget Secretary certifies more than $783M for statewide property tax

relief• General Fund FY 2014-2015 totaled $25.7B, $569.1M over estimate (2.3%)

DEPARTMENT OF REVENUE – INFORMATIONAL NOTICES

Bank Shares Tax Notice (2015-01)• Bank Shares Tax Receipts Factor

Corporation Tax Bulletin (2014-04) • The Application and Sale of Restricted Tax Credit

PENNSYLVANIA DEPARTMENT OF REVENUE TOP TEN INTEGRATED

TAX SYSTEM FILING TIPS

TOP 10 ITS FILING TIPS1. Use the correct form. • All corporate tax reports for tax years beginning after Jan. 1, 2000, must be filed using the

non-year specific form.2. Properly submit amended returns.• If an amended return must be filed, taxpayers must complete the non-year specific RCT-101.

All sections of the return, regardless of what items are being amended, must be completed. The amended report check box under Step B, Page 1 of the RCT-101 must also be checked.

3. Use only numbers in numeric fields.• Use of “NA” in an apportionment field will cause the integrated tax system to calculate a

100% apportionment factor.

TOP 10 ITS FILING TIPS4. Use checkboxes appropriately.• Checkbox indicators on the return:• If the corporation has an extension of time to file its federal income tax return, or if

the income of the entity is included on the income tax return of another business or individual with an extension of time to file the federal income tax return, “Federal Extension Granted” must be checked.

• If checking “Holding Company,” do not use three-factor apportionment.• If checking “Investment in LLC” or “Family Farm,” do not complete Section A.• If checking “Solicitation Only,” “Single-Member LLC,” “Multi-Member LLC,” or “PA S

Corporation,” do not complete Section C, Corporate Net Income Tax, on Page 3.

TOP 10 ITS FILING TIPS5. Provide all demographic Information.• “Corp Tax Account ID,” “Federal EIN,” “Business Activity Code,” “Corporation Name,”

Address Lines, “City,” “State,” and “ZIP” must be completed in Step C on Page 1 of the RCT-101. Indicate a change of corporate address under Step B, Page 1 of the RCT-101.

6. Complete history of earnings correctly.• History of earnings for capital stock/foreign franchise tax must be in order, starting

with the oldest year on Year 1. If only one year is applicable, the first year should be entered on the Current Year line. There should be no gaps in the history of earnings period begin and period ending dates, and the most recent consecutive five years must be provided.

TOP 10 ITS FILING TIPS7. Claim bonus depreciation properly.• If taking a deduction for bonus depreciation, Section B1, Current Year Federal Depreciation of 168K

Property, must be completed on Page 3. Also, Schedule C-3 (REV-799) must be filled out and included with the RCT-101.

8. Calculate apportionment appropriately.• When claiming three-factor apportionment, the denominator of each factor must equal the property,

payroll, and sales reported on the federal income tax return regardless of the activity in Pennsylvania. ‒ NOTE: The integrated tax system considers a factor of 0/0 = 1.000000 and 0/1 = 0.000000. ‒ The numerators and denominators must be entered on Schedule A-1 and Schedule C-1.

TOP 10 ITS FILING TIPS9. Report foreign corporations’ lack of activity.• A foreign corporation with no property, payroll, or sales anywhere must complete Schedule A-1 and/or

C-1 on Page 4 of the RCT-101, using zero as the numerator and one as the denominator.

10. Account for partnership activity.• If a corporation owns underlying partnerships, the corporation’s share of the partnerships’ property,

payroll, and sales factors must be included in the property, payroll, and sales of the corporation.

BONUS: Apply electronic payments properly.• In order to ensure proper application of tax payments, follow the detailed instructions regarding ACH

debit and credit electronic funds transfer. Visit www.etides.state.pa.us, selecting “Instructions” under the “Options” category, then “Payment Methods” under the Electronic Funds Transfer (EFT) header.

Jason Skrinak, CPAPrincipal, State and Local Tax

[email protected](717) 972-5828

QUESTIONS?

Michael Eby, CPASenior Tax Manager


04/15/23

04/15/23

04/15/23

Jason Skrinak, CPAPrincipal, State and Local Tax


QUESTIONS?

Michael Eby, CPASenior Tax Manager


2015 Pennsylvania Tax and Budget Update

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