Gov. Tom Corbett signed into law legislation introduced by Rep. George Dunbar (R-Westmoreland) that protects Pennsylvania businesses against double taxation. House Bill 1513, now Act 42 of 2014, clarifies the assessment of the business privilege tax in Pennsylvania by restoring predictability and fairness.
“This new law is all about providing tax fairness and predictability for Pennsylvania’s job creators,” says Dunbar. “When businesses are double-taxed, they cannot invest that lost money in their operations or hire more workers.”
HB 1513, which passed the House 182-15 in October and the Senate 34-16 last week, is a response to a 2007 Pennsylvania Supreme Court decision, Rendina Inc. v. Harrisburg and the Harrisburg School District. In that case, the court reversed its previous position that a municipality cannot tax an entity that lacks a permanent base of operation within its borders. This decision created a great deal of uncertainty and, in some cases, the potential for double taxation of gross receipts.
Taking effect on Jan. 1, 2014, Act 42 will specifically prohibit municipalities, cities, and other local governments from arbitrarily or excessively applying local business taxes to any company or employer that performs work within their boundaries for 15 days or less within the calendar year. Act 42 will also protect businesses from being charged the gross receipts tax twice by separate municipalities for the same earnings.
“What we have witnessed under previous law is that municipalities and other local governments were over-stretching to find ways to expand existing revenues,” says Dunbar. “In doing so, many of them viewed out-of-area businesses as prime targets for increased taxation. Now that my legislation has become law, this double-taxation loophole is finally closed and all local business taxes can be collected fairly and equitably without stunting economic expansion and job creation.”
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