June 18, 2021
The Pennsylvania Department of Revenue has posted a warning to taxpayers about a scam involving letters from the “Tax Processing Center,” the “Tax Processing Unit,” the “Benefits Suspension Unit,” or other similar entities with deceiving names. The letters make dubious claims, include suspicious details, or make threats, including the seizure of taxpayers’ property unless they immediately pay back taxes. The Department is encouraging taxpayers to keep the following tips in mind to safeguard against this scam: look closely for imposters; examine the notice for identifying information that can be verified; avoid scenarios asking for unusual payment methods; and conduct research online for a potentially fraudulent notice. Taxpayers should not call the toll-free number provided in a suspicious notice, but rather directly contact the appropriate tax agency through a published phone number or website. For specific information, please visit the posting on the Pennsylvania Department of Revenue website.
May 26, 2021
The Pennsylvania Department of Revenue has announced that it is offering a Voluntary Compliance Program for any business that has inventory or stores property in Pennsylvania but is not registered to collect and pay Pennsylvania taxes. The program announcement does not specify which taxes are affected; however, the program is listed under the Department of Revenue’s website section for Tax Obligations for Online Retailers, which specifically refers to sales and use tax, personal income tax, corporate net income tax, and other taxes such as cigarette taxes and fuels taxes. This program runs through June 8, 2021 and offers a limited lookback period and penalty relief when the business becomes compliant. Taxpayers who choose to participate in this program will not be liable for taxes owed prior to January 1, 2019. Taxpayers who participate in the program will also be given penalty relief for any noncompliance for past due tax returns that were not filed and taxes that were not paid. For additional information, please visit the Pennsylvania Department of Revenue website, which provides a Business Activity Questionnaire (“BAQ”) that must be completed.
May 13, 2021
Effective June 15, 2019, energy drinks or shots that are four (4) ounces or greater will be subject to sales tax in Pennsylvania, but energy drinks or shots less than four (4) ounces will be exempt. For purposes of determining the 4-ounce threshold, taxpayers should not aggregate the ounces in a given package when the drinks are sold in a multi-pack. For instance, if each bottle in a 6-pack of energy drinks or energy shots contains 1.98 ounces, but the total fluid ounces for the 6-pack amounts to 11.88 ounces, the 6-pack is not subject to tax because the individual products making up the 6-pack are all below the 4-ounce threshold. For specific information, please see Pennsylvania Sales Tax Bulletin No. 2021-02, 05/04/2021.
The Pennsylvania Department of Revenue has issued a reminder to low-income taxpayers that they may be eligible for a refund or reduction of their personal income taxes through Pennsylvania’s Tax Forgiveness Program. Many eligible taxpayers do not take advantage of the program because they fail to file a Pennsylvania personal income tax return (Form PA-40) to claim the reduction or refund on their taxes. For taxpayers who earn a wage, the employee can give his or her employer Form REV-419 (Employee’s Non-withholding Application Certificate) to ask that withholding not be done in cases of 100% tax forgiveness. In cases where withholding does occur, the taxpayer must file Form PA-40 and complete Schedule SP (Special Tax Forgiveness) to claim the tax forgiveness. The Department noted that people who are claimed as a dependent of another taxpayer are not eligible to receive tax forgiveness. For specific information, please see information on Pennsylvania’s Low-Income Tax Forgiveness Program, Pa. Dept. of Rev., 05/05/2021.
The Philadelphia Department of Revenue has revised its answers to a list of frequently asked questions (FAQs) regarding the Department’s wage tax policies throughout the coronavirus (COVID-19) pandemic. The FAQs address different circumstances for determining the extent to which a nonresident employee’s compensation is treated as compensation for services performed in Philadelphia and, thus, subject to the Philadelphia wage tax. For example, for employers who have a policy consistent with Philadelphia’s current guidance that all employees who are able to work from home are required to do so, but allow access only if employees prearrange to come to the Philadelphia workplace and pass a health assessment, the wages of the nonresident employees are subject to the wage tax only with respect to the days that they passed the health assessment and spent the day working at the Philadelphia workplace. For answers to additional questions, and other specific examples, please see Philadelphia Wage Tax Q&A applicable to COVID-19 policies, Philadelphia Dept. of Rev., 05/01/2021.
May 5, 2021
Under Pennsylvania’s Medical Marijuana Act (the “Act”), Pennsylvania imposes a tax on the gross receipts a grower/processor receives from the sale of medical marijuana at the point a grower/processor sells or transfers product to a dispensary. The tax is paid by the grower/processor at the rate of 5%. Grower/processors and clinical registrant grower/processors must submit quarterly medical marijuana gross receipts tax returns, even for periods where no taxable sales occurred. Returns and payments must be submitted electronically through the Pennsylvania Department of Revenue’s online filing system (mypath.pa.gov.). For further information, please see Pennsylvania’s recently released Medical Marijuana Tax Bulletin 2021-01.
April 28, 2021
Effective for tax years beginning after December 31, 2020, Pennsylvania has changed the corporate net income tax (“CNIT”) return filing deadline to the 15th day of the month following the due date of the federal corporate income tax return. Previously the filing deadline was 30 days after the due date of the federal corporate income tax return.
Via House Bill 766 (signed into law on April 22, 2021), the Pennsylvania Department of Revenue is authorized to disregard the period after April 14 and before May 17 in the calculation of interest, a penalty, or an addition to tax for failure to meet an extended deadline as a result of the Coronavirus Pandemic. Further, the Pennsylvania Department of Community and Economic Development is permitted to coordinate with local governing bodies and agencies of political subdivisions to extend filing and payment deadlines for local income taxes.
April 23, 2021
The Philadelphia Department of Revenue announced taxpayers will not receive a paper Philadelphia School Income Tax (“SIT”) tax return and coupon in the mail for the 2020 tax year. Taxpayers must instead pay the tax online, or by printing their own copy of the return and paying via check. Taxpayers have until May 17, 2021 to pay their SIT without added interest or penalty.
April 17, 2021
The Employee Retention Credit (ERC) under the CARES Act encourages businesses to keep employees on their payroll. According to the IRS, the refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19. Any reduction to the wage expense for federal tax purposes that is a result of a credit against taxes withheld from the employee would be deductible for Pennsylvania Personal Income Tax purposes. Any reduction to the wage expense for federal tax purposes that is a result of a credit against the employer’s (taxpayer’s) own FICA liability would not be deductible for Pennsylvania Personal Income Tax purposes.
In recently released Realty Transfer Tax Bulletin No. 2010-01 (04/07/202), Pennsylvania outlines that the application for refund is an informal, administrative process for requesting a refund of overpayments of Realty Transfer Tax to correct simple or noncomplex issues, such as duplicate payments, mathematical errors, clerical errors, or exemptions clear on the face of the deed transferring the property. The application for refund is filed with the department’s Bureau of Individual Taxes (“BIT”) on the “Application for Refund Pennsylvania Realty Transfer Tax” form REV-1651 available on the department’s website. Mailing instructions are found on the application form. An application must be filed within the same period as required for the filing of a petition for refund. Please see bulletin 2010-01 for additional details, or reach out to Withum’s SALT team with questions.
April 1, 2021
The Philadelphia Department of Revenue has updated its guidance regarding the employee business expense deduction for purposes of the Philadelphia wage tax. Philadelphia will not conform to the changes to the deductibility of employee business expenses under the federal Tax Cuts and Jobs Act of 2017 (TCJA). The TCJA eliminated most miscellaneous itemized deductions for individuals, including deductions for employee business expenses for tax years 2018 through 2025; and suspended the moving expense deduction for most individual taxpayers for tax years 2018 through 2025. However, Philadelphia will continue to allow a deduction for expenses directly connected with employment that are ordinary, necessary, and reasonable; and Philadelphia will allow a deduction for unreimbursed expenses of moving to a new home that are incurred to retain employment. Taxpayers should use Pennsylvania Schedule UE to report deductions for the applicable employee business expense; also include a letter from your employer indicating that the expenditures were necessary and not reimbursed (or if not available, a signed affidavit or a copy of the employer’s employee expenses reimbursement policy).
March 23, 2021
The Pennsylvania Department of Revenue alerts taxpayers that the filing and payment due dates for 2020 Pennsylvania personal income tax returns have been extended to May 17, 2021. The IRS recently announced the extension of federal returns due to the coronavirus (COVID-19) pandemic. Pennsylvania law requires the deadline for filing state income tax returns to be tied to the deadline set at the federal level. The Department will waive penalties and interest on returns and payments filed by the extended due date. If additional time is needed to file, taxpayers may request a 6-month extension to November 15, 2021, but such an extension does not extend the time for payment. Regarding estimated income tax payments, these should continue to follow the normal filing schedule, including payments due April 15, 2021. ( Pennsylvania Extends Personal Income Tax Filing Deadline To May 17, 2021, Pa. Dept. of Rev., 03/18/2021 .)
February 18, 2021
The Decennial Report is used by the Pennsylvania Department of State, not the Department of Revenue. The state department requires most all entities registered to do business in Pennsylvania (in 2021) to identify business names and marks that are no longer in use. That way, the state may reissue the name and place it back into the stream of commerce. The decennial report must be filed every ten years. The form “Decennial Report of Association Continued Existence” must be completed and mailed with the payment.
If the report is not timely filed, the entity is deemed to be no longer registered with the Department of State and registration may be restored only by filing an original application of registration. The business may also lose exclusive rights to use of its name on or after January 1, 2022.
Further information can be found on the state website. Please let us know if you have any questions or would like to discuss.
February 11, 2021
The Pennsylvania Department of Revenue is currently offering a 90-day voluntary compliance program available to unregistered retailers that have inventory or store property in Pennsylvania. For participating in the program, qualified retailers are offered penalty relief and a limited lookback period beginning from January 1, 2019.
To participate in the program, a retailer must submit a Business Activities Questionnaire, which requires disclosure of the retailer’s identity, Pennsylvania activities and Pennsylvania sales. After receiving contact from the Department regarding participation, the retailer is required to register, file any returns due, and remit the tax due. Penalty relief is contingent on the retailer maintaining compliance with its Pennsylvania tax obligations.
Businesses are advised to refer to the voluntary compliance program guidance as issued by the state for more information regarding the specifics of the program, or reach out to Withum’s State and Local Tax Group for a deeper discussion.
May 2, 2020
Governor Wolf signed into law S841, effective April 20, 2020, which provides property tax relief due to Covid-19. The law temporarily authorizes the governing body of a taxing district to apply the taxing district’s discount rate to taxes collected by August 31, 2020, and to waive any fee or penalty for late payment of property taxes paid in full by December 31, 2020.
March 21, 2020
Pennsylvania’s Department of Revenue announced the deadline for taxpayers to file their 2019 Pennsylvania personal income tax returns is extended to July 15, 2020. Giving taxpayers an additional 90 days to file from the original deadline of April 15, no extension is necessary. This extension applies to both final 2019 tax returns and payments, and estimated payments for the first and second quarters of 2020.
Due to the recent closing of commonwealth and county office buildings to help prevent the spread of COVID-19, the Department of Revenue is aware that taxpayers have been unable to meet their Inheritance Tax filing and payment obligations. To address these concerns, the Department is asking County Register of Wills offices to implement the following procedures when their operations resume:
If a taxpayer is filing a return or making a payment and indicates that either was due during the timeframe that offices were closed, please place a date received as of March 12, 2020, on the return and the receipt.
In addition, the Department is making system modifications to not apply penalties for payments received late, that otherwise would have been timely during office closures.
The Department of Revenue is waiving penalties for businesses that are required to make Accelerated Sales Tax (AST) prepayments by the deadline of Friday, March 20, 2020. For April sales tax payments, the Department is waiving the AST prepayment requirement and asking businesses to remit the sales tax that they have collected in March.
May 2, 2020
The City of Philadelphia has changed the extended due date for real estate taxes from April 30, 2020 to July 15, 2020. The Department has also extended the deadline to July 15th for senior citizens over the age of 65, and eligible low-income homeowners, to apply for an installment payment plan for their real estate taxes.
April 2, 2020
March 30, 2020
The City of Philadelphia issued payroll tax guidance on March 26, 2020, pertaining to the Covid-19 pandemic. The City uses a “requirement of employment” standard for payroll taxes. Philadelphia asserts for nonresidents who work from their home for their own convenience, then the nonresident employee would be still be subject to tax. This is similar to the New York convenience of employer rules. However, in respect to the pandemic, the City states even if the employer’s base of operation is in Philadelphia, the employer is not required to withhold on wages on nonresident employees if they are required/ordered to work from outside of the City.