Recently Enacted Legislation in Pennsylvania

June 2014Articles In the Zone

Local Business Privilege Tax

Act 42, which was enacted May 6, 2014, and applies to taxable years commencing on or after January 1, 2014, attempts to clear up uncertainty regarding the business privilege tax that was created by the Pennsylvania Supreme Court’s 2007 decision in V.L. Rendina v. City of Harrisburg, 938 A.2d 988 (Pa. 2007). The Local Tax Enabling Act (LTEA) provides local taxing authorities with the right to impose the business privilege tax. Act 42 amends the LTEA to clarify the “nexus” required to allow a local taxing authority to impose its business privilege tax on a business. Act 42 provides that a local taxing authority may level a tax on the privilege of doing business in the jurisdiction of the local taxing authority if the privilege is (1) exercised by conducting transactions in the jurisdiction of the levying local taxing authority for all or part of 15 or more calendar days within the calendar year or (2) exercised through a “base of operations” in the jurisdiction of the levying local taxing authority (provided, however, that the gross receipts subject to this tax shall not include any receipts subject to a tax measured by such gross receipts which is imposed under (1) above). The term “base of operations” is defined to mean an actual, physical and permanent place of business where a taxpayer manages, directs and controls its business activities at that location.

Municipal Claim and Tax Lien Law

Act 93, which was enacted November 27, 2013, and took effect 60 days thereafter, provides taxing authorities with additional means to collect delinquent property taxes. By way of example, Act 93 will allow the following: A real estate tax lien is filed of record in the jurisdiction where the real estate is located; the lien can be reduced to a judgment; and that judgment can then be filed in any jurisdiction within the Commonwealth of Pennsylvania where the owner of the delinquent real estate taxes owns real property.

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