SALT Blog - SALT Blawg

Pennsylvania and Philadelphia have implemented important changes to their taxes, affecting both businesses and individuals.  Below are the highlights of those recent changes.   

Pennsylvania Tax Changes

Pennsylvania’s 2022-2023 Budget Bill (H.B. 1342), adopted July 8, 2022, implements significant corporate net income tax (CNIT) and personal income tax (PIT) changes for taxpayers.  While many taxpayers within Pennsylvania will be happy to hear of these changes, those outside of Pennsylvania may not be so jubilant.

CNIT Rate Reduction

Under the new law, the corporate net income ...

The SALT deduction cap, enacted by a Republican-controlled Congress in 2017, is a quagmire for Democrats.  They’ve made promises to repeal it, and have made a wedge issue out of it.  But repealing the cap would be regressive (it would benefit higher-income earners), which contradicts the party’s broader platform. 

Aside from repeal, leaders in the kill-the-cap campaign have sought to undo the SALT deduction cap by challenging its constitutionality in court and by enacting State statutes that seek to end-run the cap (known as “workaround statutes”).  But challenges to the ...

Since 2017 when the Tax Cuts & Jobs Act was enacted and placed a hard cap on state and local tax deductions, critics of the cap have campaigned to reverse it.  These critics (as well as the cap’s proponents) hail from every walk of life and political stripe.  But the mantel against the cap has been taken on most prominently by the Democratic Party and a handful of high-tax States that in recent election cycles have tended to vote Democrats into office, often labeled “Blue States.”  The efforts to overturn the cap have been three-fold: (1) state workaround statutes that seek to end-run the ...

Judicial review of agency action is a critical part of the fair administration of tax laws. Effective September 2021, two new procedures are available for taxpayers to seek judicial review of actions by the Texas Comptroller to either deny a refund claim or impose an assessment based on alleged tax deficiencies.

First, the Texas legislature created a refund claim superhighway for taxpayers. This was part of Senate Bill 903. Prior to the law change, taxpayers were required to exhaust certain administrative remedies including having their claim heard by the State Office of ...

With the start of the new fiscal year comes another change: a reversion to standard nexus policies for Pennsylvania and Philadelphia.  During the pandemic, both Pennsylvania and Philadelphia implemented temporary nexus policies.  Pennsylvania implemented temporary nexus waivers for purposes of its Corporate Net Income Tax (“CNIT”), while Philadelphia implemented similar waivers for purposes of its Business Income and Receipts Tax (“BIRT”).  Those temporary waivers for both Philadelphia and Pennsylvania expired on June 30, 2021.  While nothing has changed with ...

The U.S. Supreme Court has declined to hear the case of New Hampshire v. Massachusetts, but this is not the last we will hear of the underlying issue.  During October 2020, Massachusetts adopted an emergency regulation addressing remote workers’ tax obligations.  The emergency regulation adopted a “status quo” approach, whereby Massachusetts treated employees who had been working in Massachusetts before the pandemic, but were now working remotely, as if they were still working in Massachusetts.  The tax implication of that policy was that nonresidents working entirely out ...

It has been a year since a large portion of the workforce was required to work from home almost overnight.  A majority of employers learned that they could function well remotely and many employees enjoyed the flexibility of remote work, including the ability to work from states different than their traditional work location. Since there seems to be light at the end of the tunnel, many employers are considering whether or not they will maintain a permanent remote workforce.  Such a decision should not be made without consideration of the state and local tax ramifications of a remote ...

The Pennsylvania Department of Revenue (“Department”) released an article discussing the deduction of home office expenses.  Since many residents are working from home due to the pandemic, it may be tempting to claim such deductions – yet, taxpayers should be aware of the potential ramifications of claiming home office deductions.

In order to qualify to take a home office deduction, a taxpayer must work through a three-part analysis.  First, the taxpayer’s employer must either not provide a suitable work area, or the taxpayer must be prohibited from reporting to work due to ...

Philadelphia applies the “requirement of employment” test in order to determine whether a non-resident’s base of operations is the employer’s Philadelphia location. If a Philadelphia employer requires a non-resident employee to perform duties outside of Philadelphia (including working from home), that employee is exempt from the Wage Tax for those days spent fulfilling that requirement.  However, if a non-resident works from home for his or her own convenience, that employee is not exempt from the Wage Tax, even if the Philadelphia employer authorizes the work from ...

The City of Philadelphia Department of Revenue issued Frequently Asked Questions (“FAQs”) regarding its Wage Tax policies in light of COVID-19.  Philadelphia applies the “requirement of employment” test in order to determine whether a non-resident’s base of operations is the employer’s Philadelphia location. If a Philadelphia employer requires a non-resident employee to perform duties outside of Philadelphia (including working from home), that employee is exempt from the Wage Tax for those days spent fulfilling that requirement.  However, if a non-resident ...