Changes would bring PA tax code closer in line to IRS tax code and virtually all other states
The National Federation of Independent Business (NFIB), which represents 15,000 small-business owners in Pennsylvania, applauded recent action by the state Senate Finance Committee for reporting a package of bills which will simplify the state’s tax code and make it more consistent with federal law.
“Pennsylvania’s tax code doesn’t align with the federal IRS code and forces small employers to maintain two sets of tax books,” said Kevin Shivers, NFIB’s executive state director. “Tax collection and reporting is expensive and confusing for many small employers. These changes will save employers time and headaches and would encourage expansion and hiring.
“NFIB members would like to thank Finance Committee chairman state Sen. Scott Hutchinson (R- Venango) and the members of the committee who recognized the value and voted in favor of these critical job-creating reforms.”
Senate Bill 201, sponsored by state Sen. Mike Folmer (R-Lebanon), would allow taxes to be deferred if the company sells a building or equipment and immediately purchases another property or buys more modern technology of a similar nature. The federal tax code and every other state except Pennsylvania currently allow for like-kind exchanges. Rep. Steve Bloom (R- Cumberland) has introduced similar legislation, HB 331, in the state House.
Senate Bill 203, sponsored by state Sen. Scott Hutchinson (R-Venango) would increase the allowable amount of the purchase to $500,000, a level recently adopted by the federal government. While large businesses, organized as C-corporations, currently can utilize the full deduction, small businesses are limited to $25,000. Rep. Eric Nelson (R- Westmoreland) has introduced similar legislation, HB 333, in the state House.
Senate Bill 202, sponsored by state Sen. John Eichelberger (R-Blair) would allow a small-business owner to deduct losses from one category of income against gains in another. Most small businesses report income on their personal tax return. If an owner sells some personal items to help his business make payroll, he can take the business loss against the tax bill he creates selling the personal items. Rep. Seth Grove (R- York) sponsored similar legislation, HB 202, in the state House.