We continued our Celebrating 40 Years of Excellence! Webinar Series with a webinar focusing on an overview of the Pennsylvania Budget, presented by Jason Skrinak, Principal with McKonly & Asbury! During this webinar, Jason provided a detailed analysis of the Pennsylvania 2013/2014 budget. The webinar focused on the corporate tax reforms included within the budget. 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/mckonly-asburys-pa-budget-overview-webinar/.

1. 7/16/2013
PA BUDGET OVERVIEW
JASON SKRINAK, CPA (PRINCIPAL)

2. 07/19/13

3. 07/19/13

4. 7/16/2013
PA BUDGET OVERVIEW
JASON SKRINAK, CPA (PRINCIPAL)

5. AGENDA
•2013/2014 PA Budget Overview
•Tax Components of the Budget
•Possible Tax Legislation
•Questions

6. PA BUDGET HIGHLIGHTS
• $28.4 Billion General Fund Budget
• $645 Million Increase over PY (2.3% Increase)
• Pension Reform, Transportation and Liquor Privatization
not Included in the Passed Budget
• Corporate Tax Reforms

7. GENERAL FUND SPENDING
• $9.9 Billion Pre-K through 12 Education (34.86% of Spending)
• $5.5 Billion for Basic Education, $122 Million Increase
• $1.6 Billion Higher Education (5.63% of Spending)
• $6.5 Billion Medical Assistance
• $4.5 Billion Other Welfare
• $2.1 Billion Corrections/Probation & Parole
• $11.2 Billion Debt Service
• $2.6 Billion All Other

8. TAX IMPACT
Continued Modernization of Department of Revenue
No Tax Increases on PA Working Families
Eliminates Inheritance Tax on Small Business
• Fewer than 50 Full-Time Employees
• Net Book Value Under $5 Million
• Does not Include an Entity whose Business Purpose is to Manage Investments and Assets in
which it owns.
City Revitalization & Improvement Zones

9. TAX LAW CHANGES – ACT 52
Capital Stock/Foreign Franchise Tax
• Elimination of Tax in 2014 Stalled
• .89 mils for 2013
• .67 mils for 2014
• .45 mils for 2015
• New Expiration Date – 2016

10. TAX LAW CHANGES – ACT 52
Corporate Net Income Tax
• Inter-Company Intangible Expense Add-Back – Effective 2015
• Sales Factor – Market Sourcing for Services
• Net Operating Loss Deduction
• 2013: $3M or 20% Taxable Income
• 2014: $4M or 25% Taxable Income
• 2015: $5M or 30% Taxable Income
• Non-Filer Penalty – Minimum $500

11. TAX LAW CHANGES – ACT 52
Sales and Use Tax
• New Exclusion for Fixed-Wing Aircraft Repairs & Maintenance
• Shortens Appeal Period for Sales Tax License Revocation (From 90 to 30
Days)
• Call Center Tax Credit Repealed
• Federal Marketplace Fairness Act Report
• Removes Sunset of Additional 1% Use Tax for Philadelphia (Still 8% in City)

12. TAX LAW CHANGES – ACT 52
Personal Income Tax
• $5,000 Start Up Business Deduction (Similar to Federal)
• Eliminates Resident Credit for Taxes Paid to Foreign Countries
• Allows Expensing of Intangible Drilling Costs
• PIT Checkoffs
• Authorization of Assessment of Tax at Entity Level in Certain Cases for Pass-Throughs
• Underreported Income more than $1 Million
• At Least 11 or More Partners

13. TAX LAW CHANGES – ACT 52
Board of Finance and Revenue Reform
• Reorganizes Board from 6 to 3 Members
• Treasurer Representative
• 2 Appointed by Governor and Confirmed by Senate
• Greater Independence
• Greater Transparency
• Compromise Authority

14. TAX LAW CHANGES – ACT 52
Bank Shares Tax
• Adjusts Rate from 1.25% to .89% of Total Bank Equity Capital
• New 1 Year Valuation Formula
• Single Receipts Factor
Realty Transfer Tax – 89-11 Loophole Changed

15. TAX LAW CHANGES – ACT 52
Credits
• Mobile Telecom Broadband Investment Tax Credit
• Innovate in PA Tax Credit
• Amendments for Film Tax Credit
• Amendments to Educational Opportunity Scholarship Credit
• Repeal Coal Waste Removal & Ultraclean Fuels Tax Credit
• Job Creation Tax Credit Available Increased

16. TAX LAW CHANGES – ACT 52
What was not Included:
• CNI Rate Reduction
• Elimination of Capital Stock/Foreign Franchise Tax in 2014
• Like-Kind Exchanges

17. PROBABLE TAX LEGISLATION
Fiscal Code Bill (Senate Bill 591)
• Repeal Corporate Loans Tax, Effective 1/1/2014
• Electronic Fund Transfers Required for Payments of $1,000 (was $10,000)
• Mandatory E-Filing of Returns for 3rd Party Preparers Reduced From 50 to 10 Returns
• Enhanced Collections Account Extended to Increase Tax Enforcement
• Prohibits Contingent Fee Audits Contracted out to 3rd Parties
Hospital Utilization Project (HUP Test) v. Act 55
Business Privilege Tax Clarification

18. POTENTIAL TAX ISSUES
Property Tax Reform
Sales Tax on Services
Combined Reporting

19. CONTACT JASON
Jason Skrinak, CPA
• Principal, State and Local Tax
• jskrinak@macpas.com
• 717-972-5828

21. 07/19/13

22. 07/19/13