Check out our Upcoming Events page for news and updates on our future seminars and webinars at http://www.macpas.com/events/. View a full recap of this webinar at http://www.macpas.com/pennsylvania-2014-budget-and-corporate-tax-update This webinar was hosted by Jason Skrinak (Tax Principal) and Michael Eby (Tax Manager) from McKonly & Asbury. The presentation included a detailed discussion of the 2014 Pennsylvania Budget where we reviewed key tax implications and compared the changes to the corporate tax reform initiated from last year’s budget. We also discussed recent corporate tax changes in Pennsylvania including Business Privilege Tax, Pennsylvania Department of Revenue modernization, revisions of Pennsylvania’s Board of Finance and Revenue, among other topics. Finally, we highlighted potential corporate tax issues that are being debated by the Pennsylvania legislature.

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4. MCKONLY & ASBURY, LLP
• Audit, Tax and Advisory Firm
• Regional presence in Pennsylvania
• Variety of clients ranging from construction to manufacturing and other clients
• Pennsylvania State and Local Tax Specialty
• Best Places to Work and Best Accounting Firm

5. 2014 PENNSYLVANIA
BUDGET & CORPORATE TAX UPDATE
JASON SKRINAK
MICHAEL EBY

6. INTRODUCTIONS
Jason Skrinak, CPA
• Principal with McKonly & Asbury, LLP
• Focus on state and local tax (SALT)
Michael Eby, CPA
• Manager with McKonly & Asbury, LLP
• Focus on state and local tax (SALT)

7. AGENDA
• 2014-15 State Budget
• 2014 Corporate Tax Year in Review
• Potential Tax Legislation
• Questions

8. 2014-15 STATE BUDGET
UPCOMING CHANGES FOR
2014-2014

9. PENNSYLVANIA STATE BUDGET
Although “state budget” is often used to refer to the General Fund, the
overall state budget is much larger.

10. GENERAL FUND OVERVIEW
• General Fund Budget (House Bill 2328, PN 3895)
• Line item vetoes of $72M
• Fiscal Code (House Bill 278, PN 3930)
• Non-Preferred Appropriations (House Bills 2334-2338)
• Capital Budget (House Bill 2355, PN 3897)

11. GENERAL FUND OVERVIEW
• $29.0B overall spending
• $430M, or 1.5% increase over the current 2013/14 FY
• Less than the Governor’s proposed budget of $29.4B
• Assumes year-over-year revenue growth of 3.0%, which is less than
the Independent Fiscal Office’s estimate, which assumed 3.2%
growth

12. GENERAL FUND BUDGET
Transfers to General Fund = $246M
• Local Law Enforcement Block Grant $8M
• Alternative Fuels Incentive Grant Fund $6.2M
• Manville Property Damage Settlement Account $2.335M
• Small Business First Fund (was $100M) $95M
• Machinery & Equipment Loan Fund (Was $100M) $85M
• Volunteer Company Loan Fund $30M

13. GENERAL FUND BUDGET
Education
• Basic Education level funded at $5.526B
• Special Education -- $20M increase to total funding of $1.047B
• PlanCon funding increased by $20M to $306M
• Ready to Learn Block Grants (includes PA Accountability Block Grants) at $200M

14. GENERAL FUND BUDGET
Higher Education
• Pitt, Penn State, Temple, & Lincoln -- Level funded
• State System of Higher Education -- Level funded
• Community Colleges -- $3.5M increase to $215.6M
Pensions
• $1.67B, $555M increase, for PSERS & SERS
• Transfers $225M from Tobacco Settlement Fund & Health Venture Investment accts
to PSERS

15. GENERAL FUND BUDGET
Health & Human Services
• County welfare assistance offices -- $40M increase to $499M
• Mental health services -- $41M increase to $732M
• Community-based health care program -- $2M increase to $6M
• County child welfare services -- $28M increase to $1.07B
• Postpones nearly $400M to providers of medical care and mental health services
under Medicaid

16. GENERAL FUND BUDGET
Revenue Enhancers
• Unclaimed Property $150M
• Non-Impact Lease Drilling $95M
• Philadelphia Casino Licenses $75M
• Bank Shares Tax “Fix” $40M
• Enhanced Revenue Collections $40M

17. “LEFT ON THE TABLE”
• State Pension Reform – PSERS & SERS
• Municipal Pension Reform
• Liquor Sales Reform
• Severance or Drillers Tax
• Medicaid Expansion
• Combined Reporting
• Vendors Discount
• Smokeless Tobacco
• On-line Gaming

18. 2013-14 CORPORATE
TAX YEAR IN REVIEW
A RECAP OF THE 2013-2014
TAX YEAR

19. DEPARTMENT OF REVENUE UPDATES
August – September 2013
• Touts Tax Appeal Reform
• Announces Council on State Taxation grade for State Tax Administration
(improved from D in 2010 to A-)
• Slightly below revenue collections compared to budgeted for fiscal year to
date

20. DEPARTMENT OF REVENUE UPDATES
October – November 2013
• E-file mandate on 3rd party preparers (prepare at least 11)
• Notice of EFT requirements reduced from payments of $10,000 to $1,000
• Reminder to use fax cover sheet (DEX-93) to submit documentation associated with
electronically filed personal income tax returns
• Slightly above revenue collections compared to budgeted for fiscal year to date

21. DEPARTMENT OF REVENUE UPDATES
December 2013 – January 2014
• Announces new personal income tax security program
• $2.6M above revenue collections compared to budgeted for fiscal
year to date

22. DEPARTMENT OF REVENUE UPDATES
February – March 2014
• Executive budget introduced
• Summarized business tax reform initiatives
• Slightly below revenue collections compared to budgeted for fiscal
year to date

23. DEPARTMENT OF REVENUE UPDATES
April – May 2014
• New Board of Finance and Revenue discussed
• Discuss changes to fiduciary returns
• Announces that $779M of gaming revenue is available for Property Tax Relief in
2014
• $424.5M below revenue collections compared to budgeted for fiscal year to date

24. DEPARTMENT OF REVENUE (INFORMATIONAL NOTICES)
Bank Shares Tax Notice (2014-01, issued April 14, 2014)
• Pertains to change in calculation
• Notice to generate additional funds as shown in budget
Corporation Tax Notice (Discussion Draft, dated June 16, 2014)
• Pertains to switch of sourcing services from cost-of-performance to market based
sourcing

25. DEPARTMENT OF REVENUE (INFORMATIONAL NOTICES)
Corporation Tax Processing – Notices and Statement Explanation
(Draft)
• Notice of Adjustment and worksheet
• Billing Notice
• Notice of Assessment
• Statement of Account
• Tax Period Overstatement Summary
• Common Return Errors
• Filing Apportionment on RCT-101

26. THANK YOU
Additional Questions? Please contact us.
• Jason Skrinak jskrinak@macpas.com
• Michael Eby meby@macpas.com

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