{"id":10616,"date":"2022-07-13T21:41:31","date_gmt":"2022-07-13T21:41:31","guid":{"rendered":"https:\/\/taxops.com\/?p=10616"},"modified":"2022-07-14T22:20:22","modified_gmt":"2022-07-14T22:20:22","slug":"pennsylvania-shows-its-business-friendly-side","status":"publish","type":"post","link":"https:\/\/taxops.com\/pennsylvania-shows-its-business-friendly-side\/","title":{"rendered":"Pennsylvania Shows Its Business-Friendly Side"},"content":{"rendered":"\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-gallery has-nested-images columns-default is-cropped wp-block-gallery-1 is-layout-flex wp-block-gallery-is-layout-flex\">\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" data-id=\"10618\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania-1024x536.png\" alt=\"\" class=\"wp-image-10618 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><noscript><img decoding=\"async\" width=\"1024\" height=\"536\" data-id=\"10618\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania-1024x536.png\" alt=\"\" class=\"wp-image-10618 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><\/noscript><\/figure>\n<\/figure>\n\n\n\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em><em><em><em><em><em><em><em><em><em><em><em><em><em>Lawmakers in Pennsylvania are showing off their business-friendly side with historic corporate net income tax rate reductions in legislation signed into law July 8, 2022.&nbsp;<\/em>&nbsp;<\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/p><\/blockquote>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">By <a href=\"https:\/\/www.linkedin.com\/in\/judyvorndran\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"\">Judy Vorndran<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Lawmakers in Pennsylvania are showing off their business-friendly side with substantial corporate net income tax rate reductions in legislation signed into law July 8, 2022. As part of the state\u2019s tax reform, <a href=\"https:\/\/www.legis.state.pa.us\/CFDOCS\/Legis\/PN\/Public\/btCheck.cfm?txtType=PDF&amp;sessYr=2021&amp;sessInd=0&amp;billBody=H&amp;billTyp=B&amp;billNbr=1342&amp;pn=3370\" target=\"_blank\" rel=\"noreferrer noopener\">House Bill 1342 <\/a>moves the Commonwealth\u2019s net income tax from a high of 9.99% to below 5% within nine years. Other changes implemented with H.B. 1342 include market-based sourcing for intangible income and economic nexus for entities subject to the corporate net income tax.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Corporate net income tax rate reduction<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Pennsylvania\u2019s current corporate net income tax rate is 9.99%, making it one of the highest in the country. Six states\u2014Alaska, Illinois, Iowa, Minnesota, New Jersey, and Pennsylvania\u2014levy top marginal corporate income tax rates of 9 percent or higher (<a href=\"https:\/\/taxfoundation.org\/state-corporate-income-tax-rates-brackets-2022\/\">Tax Foundation<\/a>).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">H.B. 1342 reduces that rate incrementally over a nine-year period to 4.99%. This would put Pennsylvania in a class of eleven states that, as of today, have top rates at or below 5%\u2014Arizona, Colorado, Indiana, Kentucky, Mississippi, Missouri, North Carolina, North Dakota, Oklahoma, South Carolina, and Utah (<a href=\"https:\/\/taxfoundation.org\/state-corporate-income-tax-rates-brackets-2022\/\">Tax Foundation<\/a>).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Pennsylvania\u2019s corporate rate reductions will happen automatically according to a schedule and will occur independent of state revenues for the year. The first rate reduction occurs for the tax year 2023 drops the corporate net income tax rate from 9.99% to 8.99%. Further reductions are as follows.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>8.49% for tax year 2024<\/li><li>7.99% for tax year 2025<\/li><li>7.49% for tax year 2026<\/li><li>6.99% for tax year 2027<\/li><li>6.49% for tax year 2028<\/li><li>5.99% for tax year 2029<\/li><li>5.49% for tax year 2030<\/li><li>4.99% for tax years 2031 and thereafter<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Economic Nexus<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">H.B. 1342 codifies Corporation Tax Bulletin 2019-04 in which the Commonwealth tax authority announced that for tax years beginning on or after January 1, 2020, corporations meeting an economic nexus standard would be required to file corporate net income tax returns (unless protected under Public Law 86-272). Further, a corporation with $500,000+ in receipts sourced to Pennsylvania will have nexus with the Commonwealth without regard to physical presence in the state.&nbsp;Affiliated entities domiciled in a foreign nation that have entered into comprehensive income tax treaties with the United States are excepted in certain cases.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Sourcing<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">In 2023, Pennsylvania will repeal the costs of performance treatment applied to various sales, as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Lease or license of intangible property<\/strong>. Gross receipts are sourced to Pennsylvania based on property use in the state.<\/li><li><strong>Intangible property.<\/strong>\u00a0Gross receipts from the sale of intangible property are sourced to Pennsylvania for property used or associated with the state.<\/li><li><strong>Securities<\/strong>. Gross receipts of securities held by taxpayer for sale to customers in the course of business are sourced to customer location.<\/li><li><strong>Credit card receivables<\/strong>. Gross receipts are sourced to cardholder billing address within the state.<\/li><li><strong>Loans between unaffiliated entities or individuals.<\/strong>\u00a0Loans secured by real property receipts are sourced to the location of that property. Loans secured by tangible personal property gross receipts are sourced to the state where the property is delivered or shipped to a purchaser. Use is deciding factor on sourcing related to transportation property, like an airplane. All other loans gross receipts are sourced to location of borrower. \u00a0<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This is an abbreviated summary of the sourcing section. Please <a href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Contact Us\">contact us<\/a> for specifics.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Car Sharing<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Pennsylvania will extend a car-sharing fee as of January 1, 2023, to peer-to-peer car sharing programs. H.B. 1342 requires car sharing marketplace facilitators to collect sales and use tax on shared vehicle rentals of up to $2 per day as well as vehicles rented as part of a peer-to-peer car sharing program. The Commonwealth\u2019s 2% vehicle rental tax does not apply to a shared vehicle rented through a peer-to-peer car sharing program.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Talk to a Tax Advocate<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If tax is not your day-to-day job, hire the right professionals to help keep your business ahead of tax issues and clean up past faults with repeatable processes and a tax advocacy at your back. &nbsp;<\/p>\n\n\n\n<div style=\"height:38px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Let&#8217;s Talk Tax<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">More Tax News<\/h3>\n\n\n<ul class=\"wp-block-latest-posts__list wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/auditor-independence-in-the-age-of-private-equity\/\">Auditor Independence in the Age of Private Equity: What CFOs Need to Know<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/r-d-credits-for-software-companies\/\">R&amp;D Credits for Software Companies: Scrum Teams, Qualifiers, and Section 174 After OBBBA<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/section-174-decoupling-what-tax-pros-need-to-know-state-by-state\/\">Section 174 Decoupling: What Tax Pros Need To Know State By State<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/sean-espy-new-partner\/\">TaxOps Welcomes Sean Espy as Partner, Tax Minimization<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/state-nexus-demystified-navigating-tax-compliance-after-wayfair-episode-1-2\/\">Your Tax Footprint Is Probably Bigger Than You Think: What Finance Leaders Need to Know About State Nexus<\/a><\/li>\n<\/ul>\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/#subscribe\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe to Tax News<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Lawmakers in Pennsylvania are showing off their business-friendly side with historic corporate net income tax rate reductions in legislation signed into law July 8, 2022.&nbsp;&nbsp; By Judy Vorndran Lawmakers in Pennsylvania are showing off their business-friendly side with substantial corporate net income tax rate reductions in legislation signed into law July 8, 2022. As part [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":10618,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:gallery {\"linkTo\":\"none\"} -->\n<figure class=\"wp-block-gallery has-nested-images columns-default is-cropped\"><!-- wp:image {\"id\":10182,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/04\/Texas-High-Court-Clarifies-Service-Receipt-Apportionment-1-1024x536.png\" alt=\"\" class=\"wp-image-10182\"\/><\/figure>\n<!-- \/wp:image --><\/figure>\n<!-- \/wp:gallery -->\n\n<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><em><em>The Texas Supreme Court has ruled in favor of apportioning service receipts to the location of personnel or equipment, a position providing clarity to taxpayers on whether to source receipts from services performed versus where customers are at.<\/em>&nbsp;<\/em><\/p><\/blockquote>\n<!-- \/wp:quote -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><\/p><\/blockquote>\n<!-- \/wp:quote -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https:\/\/taxops.com\/tram-le\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Tram Le\">Tram Le<\/a> <\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>On March 25, 2022, the Texas Supreme Court held in favor of the taxpayer that services revenue is apportioned to the location where services are performed, consistent with Texas law.<sup>1<\/sup> The Court found that the performance of service is located where the taxpayer\u2019s personnel or equipment is physically doing useful work for the customer.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The case involves Sirius XM (Sirius XM Radio, Inc. v. Hegar, Tx. Sup. Ct. No. 20-0462 (3\/25\/22)), whose headquarters, transmission equipment and production studios used in providing a subscription-based satellite radio service are largely located outside of Texas. In the 2010 and 2011 tax years, Sirius XM apportioned tax based on costs of activities in Texas and outside of Texas. Under Texas rules, service revenue is apportioned to Texas based on the \u201cfair value of the services\u201d rendered in Texas where services are performed in more than one state.<sup>2<\/sup>&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>For those tax years, the Texas Comptroller adjusted on audit to base the tax on the percentage of Sirius XM\u2019s Texas subscribers. The Comptroller argued that service revenue is sourced to Texas if the \u201creceipt-producing, end-product act\u201d takes place in Texas. In this case, such an act was considered the decryption of the satellite network and enabling of each subscriber\u2019s radio to receive Sirius XM\u2019s signal. However, Sirius XM argued that its services \u2013 the production and broadcasting of radio content \u2013 was mainly performed outside of Texas.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The Texas Supreme Court ultimately agreed that Sirius XM was providing satellite radio content and those services are performed in Texas if the labor employed in that service is doing the work in Texas. This constitues a natural reading of the law, which requires taxes due \u201cwhere service [is] performed in this state.\u201d This rejects the Comptroller premise of service taking place at the customer location. The Court also rejected the use of the \u201creceipt-producing, end-product\u201d test to determine where a service is being performed.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the Court ruled in favor of the taxpayer, the case was remanded to the Appellate court for further review of Sirius XM\u2019s cost of performing services and evidence to support its \u201cfair value of services\u201d performed in Texas.&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The Texas Supreme Court opinion provides clarification in apportioning service revenue in Texas and determining whether services are performed in the state. Taxpayers doing business in Texas should carefully review business operations, nature of services, i.e., properly characterizing the services provided to customers and location of equipment, facilities, and personnel to properly apportion revenue.&nbsp;&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In addition, if services are being performed in Texas and outside of Texas, taxpayers must properly evaluate methods of determining the fair value of services and maintain sufficient evidence to support what revenue is apportioned to Texas. Contact a TaxOps advisor is you need assistance assessing nexus and taxability in the state of Texas and everywhere you do business.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Tram Le is a member of the SALTovation team at TaxOps and an adjunct professor at the University of Texas at Arlington. She writes about hot topics in state and local tax affecting business operations and growth strategies and the Spreading SALTovation column for Tax Notes.&nbsp;Reach out to Tram at <a href=\"mailto:tle@taxops.com\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Tram Le\">tle@taxops.com<\/a>.&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Let's Talk Tax<\/a><\/div>\n<!-- \/wp:button --><\/div>\n<!-- \/wp:buttons -->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>More Tax News<\/h3>\n<!-- \/wp:heading -->\n\n<!-- wp:latest-posts \/-->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/#subscribe\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe to Tax News<\/a><\/div>\n<!-- \/wp:button --><\/div>\n<!-- \/wp:buttons -->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->","_et_gb_content_width":"","spt_transcript":"","footnotes":""},"categories":[229,226],"tags":[252,967,993,284,12,126,975,83,265,968,913,365,976,269,992,19,101,80,964],"class_list":["post-10616","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-state-and-local","category-tax-news","tag-accountant","tag-amazon-web-services","tag-business-friendly","tag-cfo","tag-colorado","tag-cpa","tag-delivery-fee","tag-fees","tag-finance-professional","tag-mainframe-access","tag-new-tax","tag-pennsylvania","tag-retail-delivery","tag-returns","tag-ride-share","tag-sales-tax","tag-state-tax","tag-tax-provider","tag-tax-service"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2022\/07\/Pennsylvania.png","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/comments?post=10616"}],"version-history":[{"count":7,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10616\/revisions"}],"predecessor-version":[{"id":10630,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10616\/revisions\/10630"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/10618"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=10616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=10616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=10616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}