The Pennsylvania General Assembly has passed a bill to provide COVID-19-related deadline extensions for state and local taxes and to return control of funds from an enhanced collections account to the General Assembly.
H.B. 1232 passed unanimously in the Senate and by a 198–0 vote in the 203-seat House on March 25 and was sent to the governor’s desk.
The bill was amended to include emergency provisions extending the 2019 state individual income tax return deadline as well as the 2020 first and second quarter estimated return filing and tax payment deadlines to July 15. Interest and penalties would be waived if the return and payment are received by that date.
The bill would also require the Department of Community and Economic Development to coordinate with local governments and agencies to extend local earned income tax filing and payment deadlines to July 15.
H.B. 1232 would authorize $50 million in transfers from special funds to purchase medical equipment and supplies to combat the coronavirus.
Under the bill, the state’s Enhanced Revenue Collection Account (ERCA) — which keeps $30 million in collections each year to fund collection activities, returning the remainder to the general fund — would be changed to return control of the funding used in the account to the General Assembly. The bill would also make the account permanent but require legislators to authorize the funding each year.
The ERCA program funds additional staff to increase the Department of Revenue’s scrutiny of returns requesting refunds and to initiate additional audits, enhanced compliance, and collections. In 2018 ERCA funded 17 additional staff for the Bureau of Corporation Taxes, 35 additional staff for the Bureau of Individual Taxes, and three staff for the Voluntary Disclosure Program, and it covered the expense of 252 employees for compliance and collections, according to a 2018 report to the General Assembly.
The program generated $379.7 million in 2018, the report says.
In November 2019 Gov. Tom Wolf (D) signed H.B. 17, sponsored by Rep. Francis X. Ryan (R), which provided for a 10-year statute of limitations on the collection of assessed taxes and a three-year statute of limitations on the prosecution of tax crimes. The bill was filed in response to aggressive enforcement under ERCA, Ryan told Tax Notes at the time.