PA Enacts New Revenue Measures to Fund 2016-17 State Budget

Pennsylvania Governor Tom Wolf has signed legislation raising approximately $1.3 billion in additional tax and other revenues required to balance the Commonwealth's 2016-17 budget, which was enacted earlier this month.

The new measures leave the personal income and state sales tax rates unchanged.

The new provisions include the following:

1. While the sales tax rate remained unchanged, the application of the sales tax was extended to apply to digital downloads effective August 1, 2016. Digital purchases now taxable will include e-books, games, music (including satellite radio subscriptions), photographs, and video (including streaming services such as Amazon and Netflix).

2. While the personal income tax rate has not changed, lottery winnings will now be subject to personal income taxation -- retroactive to January 1, 2016.

3. The new legislation includes a tax amnesty program which will allow taxpayers to pay outstanding taxes without penalty and with a 50% reduction of accrued interest on the unpaid balance. Details on the amnesty program will follow in a separate Client Alert. The legislation requires the Pennsylvania Department of Revenue to publish details on the amnesty program by mid-September, 2016.

4. Effective August 1, 2016, a $1.00 per pack tax increase on cigarettes will result in a total tax of $2.60 per pack.

5. A new tobacco tax on e-cigarettes and other vaping devices (40% of purchase price), smokeless tobacco, and roll-your-own tobacco purchases (55¢ per ounce) begins on October 1, 2016. The tax does not apply to cigars.

6. State casinos will now pay an additional 2% tax on table game revenues, beginning August 1, 2016.

7. Several new tax credits are included in the new legislation that will take effect in 2017. These include credits for investments in rural businesses, an increase to the film production tax credit, a credit for manufacturers that increases payroll over four consecutive quarters, credits for certain brewing operations, and credits for certain mixed-use developments and water front developments.

While personal income tax and sales rates remain unchanged, many individuals will see an increase in the taxes they pay as a result of the broadening of the bases on which these taxes are assessed.

Kevin F. Israel is a Partner in Meyer, Unkovic & Scott's Corporate Law and Tax and Succession Planning  Groups. He can be reached at 412.456.2841 or kfi@muslaw.com.

For more information about the tax measures, please contact Kevin or any of the attorneys in Meyer, Unkovic & Scott's Tax Group.

Washington County Real Estate Tax Re-Assessments: Appeals DEADLINE This Summer

Frank Kosir, Jr.
412-456-2825
fk@muslaw.com

Property owners in Washington County will soon be receiving notices of real estate reassessments. This will mark the first County-wide reassessment in Washington County since 1981. County and municipal taxes will be calculated based on the new valuations starting on January 1, 2017, and school taxes will be calculated on these new values starting on July 1, 2017.

Washington County assessments are currently based on 25% of a parcel's fair market value. However, after the reassessment, the assessments will be based on 100% of the fair market value. For example, under the current system, a property valued at $200,000.00 is assessed at $50,000.00. However, after the reassessment, a property valued at $200,000.00 will be assessed at $200,000.00. As a result, most property owners will see a significant increase in the assessed values of their properties. However, this does not translate into a commensurate increase in real estate taxes, as Pennsylvania law prohibits school districts from receiving a windfall in total taxes collected from a reassessment, and municipalities cannot receive more than a five percent (5%) increase in total taxes collected as a result of the reassessment.

The first notice that property owners will receive will be a Notice of Informal Review, which was scheduled to be mailed to each property owner in late March or early April of 2016, depending upon the municipality in which their property is located. This Notice will include both a new assessed valuation of the property, as well as a description of the property.

Any property owner who believes that the notice incorrectly describes their property will have the opportunity to request an informal review with Tyler Technologies, the firm that the County hired to conduct the reassessment. The sole purpose of the informal review is to address any errors in the assessment records, such as the total square footage of the structure, total number of rooms, total number of garages, etc. The informal review process does not specifically address valuation, and property owners will not have an opportunity to present evidence of value at the informal review.

Following the completion of informal reviews, on July 1, 2016, the County will issue a Change of Assessment Notice, setting forth the final assessed value for the property. Property owners will have forty (40) days from the date of this notice (August 10, 2016) to file a formal assessment appeal with the Washington County Tax Revenue Department; although, the Department has indicated that the deadline for filing appeals may be extended to September 1, 2016. Failure to participate in the informal review process will not impact a property owner's right to pursue an appeal. At the formal hearing, property owners will be able to present evidence in opposition to the assessed value. This evidence can include, but is not limited to, sales of comparable properties, defects in the structure or in the condition of the land, and negative aspects of the property's location. Following the appeal hearing, the Department will issue a decision, and any aggrieved party will have 30 days to appeal that decision to the Washington County Court of Common Pleas.

At Meyer, Unkovic & Scott LLP, our experience and hard work can help property owners through the appeal process, possibly saving property owners money, by obtaining a lower assessed value. While every case is unique, factors such as the size and use of the property, comparable sales of properties in the area, and age and nature of structures in the property have an impact on the assessed value. It is important to evaluate the possibility of a tax assessment appeal and to consider obtaining an independent appraisal when you believe that your property was inaccurately assessed. Analysis of the accuracy of the property assessment is an essential component to managing your valuable real estate assets.

Schools can target commercial real estate tax assessments

The article, “Schools can target commercial real estate tax assessments”, by Frank Kosir, Jr. recently appeared in the Pittsburgh Post-Gazette. You can access the online version here.

Delay in Affordable Care Act Health Coverage Reporting Requirements Announced

On Monday, December 28, 2015, the IRS issued Notice 2016-4. The Notice announced that the IRS extended the due dates for reporting the information required under Sections 6055 and 6056 of the Internal Revenue Code for the 2015 tax year as follows:

• the due date for furnishing to individuals the 2015 Form 1095-B and the 2015 Form 1095-C is extended from February 1, 2016 to March 31, 2016; and
• the due date for filing with the IRS the 2015 Form 1094-B, the 2015 Form 1095-B, the 2015 Form 1094-C, and the 2015 Form 1095-C is extended from February 29, 2016 to May 31, 2016 (the electronic filing deadline is also extended from March 31, 2016 to June 30, 2016).

The IRS indicated that it is prepared to accept the filing of these information returns, but decided to extend the deadlines for 2015 only following consultation with stakeholders that caused the Service to conclude that employers and other coverage providers needed additional time to take the necessary actions to report this information. The IRS explicitly encouraged employers and other coverage providers to furnish the statements and file the information returns as soon as they are ready.

The IRS further indicated that, for 2015, it was suspending the provisions regarding automatic and permissive extensions of time for furnishing these forms to individuals and filing them with the Service. In other words, the extended deadlines for 2015 cannot be further extended. The IRS encourages employers and other coverage providers not meeting the extended deadlines to nevertheless furnish and file the forms, and indicated that the Service would take such actions into consideration when determining whether to abate penalties for reasonable cause.

The Notice also provided limited transition relief to individual taxpayers that file their 2015 tax returns before receiving either their 2015 Form 1095-B or 2015 Form 1095-C and whose eligibility for a premium tax credit was affected as a result of the extension.

Please contact us if you have any questions or concerns.

For more information about this announcement and other employee benefi ts law matters, contact Jason Mettley, Richard Kennedy, Levi Logan, or any other Meyer, Unkovic & Scott attorney with whom you have worked.

Local, State and Federal Taxes Affecting Real Estate Transactions

Frank Kosir, Jr. will be speaking at The Pennsylvania Bar Institute’s (PBI) upcoming continuing education program entitled, “Local, State and Federal Taxes Affecting Real Estate Transactions” in Pittsburgh on Friday, September 25, 2015 from 8:30 am - 12:45 pm.  For additional information, please visit the PBI website.

Radio Show Tomorrow

Tune in tomorrow at 11:30 a.m. to 101.5 WORD-FM to hear Michele Conti discuss strategies to avoid the net investment income tax for high net worth individuals, estates and trusts.

Radio Show - Gifting and Tax Implications

Tune in this Saturday at 11:30 a.m. to 101.5 WORD-FM. Michele Conti will discuss the pros and cons of gifting and how gifts may be subject to potential tax implications with regard to PA Inheritance Tax, Federal Estate Tax and applying for Medical Assistance.

Natural Gas Title Washing

Ronald Hicks, Jr. and David Oberdick recently wrote "Debunking The Myths Surrounding Natural Gas Title Washing" for Pennsylvania Bar Association Quarterly. You can read the full article here or by clicking this image.