Last week’s Elert contained information about state taxes that came to us courtesy of your Chamber’s audit firm, RKL. Their information was gleaned out of the 2022-2023 State Budget. This week's update, also courtesy of RKL, is related to tax information that you need to know which wasn’t necessarily part of this year’s state budget.
According to RKL Public Policy/Tax advisors these are three non-budget items of significance: Elective pass-through entity tax, accelerated sales tax payment requirements, plus the sales and use tax on non-fungible tokens (NFTs).
As always, please note that this information is for background information only. You should contact your accountant or tax advisor before making any decisions related to this information.
Elective pass-through entity tax:
Pennsylvania is now one of only 13 states that have not passed a law to allow owners of pass-through entities to avoid the federal $10,000 state and local tax deduction cap. There has been a bill pending for over a year in the General Assembly, but the state Department of Revenue (DOR) is opposed to it and its future is unclear.
Accelerated sales tax payment requirements:
Although the business community hoped it would be eliminated, the requirement for certain businesses to prepay their monthly sales tax liability continues to exist. This applies to companies with sales tax remittances of at least $25,000 in the third quarter of the prior year, with these companies needing to continue to prepay about half of their sales tax by the 20th of each month instead of being able to remit their entire balance by the 20th of the following month.
Sales and use tax on NFTs:
Without any fanfare or explanation, the PA Department of Revenue announced in June that NFTs are subject to sales and use tax as a digital product. This emerging technology and market present many questions regarding state taxes, and Pennsylvania is one of the first states to address the matter at all. Hopefully, the Dept. of Revenue will provide more robust guidance soon to support their assertion of taxability.
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