Article by Jennifer Karpchuk on “Top 4 Pa. Tax Changes of 2019 and What to Expect in 2020"
In an article for The Legal Intelligencer published Wednesday, October 16, 2019, Chamberlain attorney Jennifer Karpchuk discusses Pennsylvania’s budget bill, Act 13 of 2019 (H.B. 262), signed by Gov. Tom Wolf on June 28, that made four significant changes to state tax law.
Karpchuk outlines the Pennsylvania personal income tax (PIT) advantages associated with investments related to the federal Qualified Opportunity Zone (federal QOZ). She explains that, “Effective for tax years beginning after Dec. 31, 2019, Act 13 grants taxpayer QOZ benefits for PIT purposes by clarifying that ‘net gains,’ ‘net losses’ and ‘dividends’ do not include any amounts of gain, loss or income that are excluded from federal taxation pursuant to the federal QOZ rules.” For taxpayers looking to take advantage of the federal QOZ, the recent decision by legislature to conform to the deferral of income provides an added benefit.
The Pennsylvania Department of Revenue followed the South Dakota v. Wayfair decision by announcing a company’s physical presence in a state is not required for sales and use tax (SUT) to be imposed on sales. Act 13 explains that all venders and marketplace facilitators with $100,000 or more of sales into and in Pennsylvania must collect and remit SUT. “Act 13 specifically eliminates the option to elect to report rather than collect for those meeting the $100,000 economic nexus threshold,” emphasized Karpchuk.
Additionally, Act 13 made changes to the malt beverage tax which impacts breweries by deeming “retail price of sales directly to the ultimate consumer for consumption on or off their premises is 25% of the retail price of the product sold,” said Karpchuk. Previously, SUT of malt beverages was collected from the retailer by the distributor of the beverages and not on the retail sales to consumers.
There were also changes made to ease the trust and estate administrative burden. Karpchuk explains that, “Act 13 amends the Pennsylvania tax code at 72 P.S. Section 7331 to recognize the IRC Section 645 election for tax years beginning after Dec. 31,” which allows federal returns to combine estate and trusts as one for tax purposes.
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