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On July 2, Gov. Tom Corbett signed into law Act 85 that, because
of last minute amendments in the Senate, makes a number of changes
to the Tax Code, many of which had been included in various other
bills and were the subject of much debate.
Corporate Net Income Tax — Single Sales
Factor: Starting January 1, 2013, business income must be
apportioned using a single sales factor to compute the corporate
net income tax.
Procedural Changes:
Extension to File Automatically Granted if Federal
Extension. Where the federal government has granted a taxpayer
an extension to file, the Department of Revenue now must
automatically grant an extension equal to the federal extension
plus 30 days.
Report of Change as the Result of a Federal RAR Due Date
Extended. The time in which a taxpayer must report changes to
taxable income made by the federal government is extended from 30
days to six months after receipt of the notice of final change.
Certified Mail No Longer Required for Assessments. The
Department no longer has to mail assessment and estimated
assessment notices for assessments of more than $300 by certified
mail.
Adjustments Not Resulting in Tax Increase. Taxpayers
may now contest any adjustments that do not result in a tax
increase in either the year that the adjustment occurs or the year
in which the adjustment has a tax effect. For example, taxpayers
have the option of appealing the Department's recalculation of
a net loss when adjusted or when the NOL could be used in a
subsequent tax year. This provision applies to all pending appeals
and open tax periods.
Statute of Limitations for Refund Claims. Act 85 amends
the statute of limitations for refund claims to make it clear that
a taxpayer can file a petition for refund within the later of six
months from the mailing date of the notice of assessment, or
three years from actual payment of the tax. For refund
claims filed after July 1, 2012, the Department's current
position that refund claims must be filed within the earlier of
three years of payment or six months of the notice of assessment is
inapplicable.
In the case of amounts paid as the result of an assessment,
determination, or settlement, a petition for refund must be filed
within six months of the actual payment of tax. This is a
big change from the current statute requiring the refund claim be
filed within six months of the mailing date of the notice. Thus,
any taxpayer with unpaid assessments that were time-barred under
the old statute, may now pay the assessment and open the appeal
period.
Attachment and Seizure of Funds When Amounts are Owed to
Commonwealth. The Department may now order the attachment and
seizure of funds in an account that the Department reasonably
believes holds property subject to a recorded tax lien.
Compromise Authority. Act 85 codifies the
Department's compromise authority policy by using the language
from Misc. Tax Bulletin 2011-02. Therefore, the Board of Appeals
now has statutory authority to settle cases when the following two
conditions apply: doubt as to liability, and the promotion of
effective tax administration.
Sales and Use Tax:
Semi-Monthly Filing Obligation Removed. The
semi-monthly sales tax filing requirement is removed and replaced
with monthly filing requirements. Now, all licensees whose actual
tax liability for the third calendar quarter of the preceding year
equals or exceeds $600, must file monthly returns.
Wrapping Supplies Exemption Expanded to Services.
Charges for wrapping or packaging services are now exempt from
sales and use tax if the "property wrapped or packaged will be
resold by the purchaser of the wrapping or packaging
services."
Tax Credits:
Act 85 modified a number of existing tax credits, such as
expanding the Educational Improvement Tax Credit. Additionally, Act
85 created new tax credits, such as the Resource Manufacturing Tax
Credit, which provides an incentive for the creation of ethane
crackerplants in Pennsylvania.
This article is presented for informational purposes only
and is not intended to constitute legal advice.
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