New Tax Laws – Pennsylvania and Virginia

The SALT Shaker

Listed below are the highlights of the recently passed tax legislation in Pennsylvania and Virginia.  Please contact Andy Bareham for the details of all of the recently passed legislation.

Pennsylvania

  • The phase-out of the capital stock & franchise tax has been preserved.  The tax rate will phase-out in 2012 and 2013 with full elimination on January 1, 2014
  • For tax years beginning after 12/31/2012, business income will be apportioned using a single sales factor.
  • For tax years beginning on or after 01/01/13, Pennsylvania will automatically extend the corporate tax return due date where a federal extension is granted.
  • Effective immediately a copy of federal form 1099 Misc. shall also be filed with the PA Department of Revenue.

Virginia

  • All corporations must file and pay estimated tax payments and annual income tax returns and final payments using an electronic medium.  Waivers will be granted if unreasonable burden on corporation.  Effective 01/01/2013.
  • All sales and use tax returns must be filed electronically. Again waivers will be granted if unreasonable burden.  Beginning with the July 2012 return, due August 2012.
  • Will continue to follow federal tax law with the exception of bonus depreciation and the five year carry back of net operating losses.
  • Continue to partially deconform from the domestic production deduction under IRC 199.  The federal deduction is nine percent of production activities whereas Virginia allows six percent. The law was changed in 2012 to allow the full federal deduction starting 01/01/2013.
  • The corporation apportionment formula is changing to a single sales factor for retail companies.  This modification will be phased in starting with tax years beginning 07/01/2012.
  • The individual credit for taxes paid to another state does not include the DC Unincorporated Business Franchise Tax, the Texas Margin Tax and the Ohio Commercial Activity Tax (CAT).  This is a clarification of existing law saying that credits are allowed only for income taxes that are similar to Virginia’s individual income tax.

Please contact the KatzAbosch SALT Group if you have any questions regarding the application of these new laws or would like a copy of all of the state legislation.

The SALT Shaker is prepared by Andy Bareham, Chair of the KatzAbosch SALT Group

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