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February 10, 2017

Pennsylvania Governor Signs Act Authorizing Municipalities to Provide Fire and EMS Volunteers with Tax Credits

The Public Record On November 21, 2016, Governor Tom Wolf signed Act 172 of 2016 (Act 172) into law. Act 172 authorizes municipalities to offer tax credits against the earned income and real estate tax liability of certified fire company and nonprofit emergency medical services agency (EMS) volunteers. The purpose of the law is to incentivize current fire and EMS volunteers to remain active and increase recruitment of new volunteers. Under Act 172, municipalities may establish, by ordinance, an earned income tax credit up to the full amount of the volunteer’s municipal income tax liability, and a real property tax credit up to 20 percent of the volunteer’s municipal real estate tax liability. In this ordinance, the municipality must, among other things, set forth the total amount of the tax credit that will be offered to a volunteer, a process to reject a request by a volunteer who does not satisfy the criteria for a tax credit, and a procedure by which a volunteer can appeal a rejected request. In order to qualify for a tax credit authorized by Act 172, a volunteer must be an active volunteer, subject to the tax of a municipality that has authorized a credit pursuant to Act 172, and certified pursuant to the municipality’s established “volunteer service credit program.” Once a municipality authorizes an earned income and/or real estate tax credit, it must create a “volunteer service credit program” with annual volunteer certification requirements. Pursuant to this program, municipalities must consider the following factors when determining a volunteer’s certification eligibility: (1) the number of emergency calls to which the volunteer responds; (2) the volunteer’s level of training and participation in formal training and drills; (3) the amount of time the volunteer spends on administrative and other support services in aid of the fire company or EMS; and…

April 19, 2015

Pennsylvania Supreme Court to Offer Clarity on the Scope of Local Tax Enabling Act’s Prohibition Against Taxing Leases or Lease Transactions

The Public Record On April 8, 2015, the Pennsylvania Supreme Court agreed to hear an appeal from the Pennsylvania Commonwealth Court’s decision in Fish v. Township of Lower Merion. In Fish, the Commonwealth Court determined that the Local Tax Enabling Act (LTEA), the state law that authorizes and regulates local taxes, prohibits a political subdivision from imposing a business privilege tax on lease revenue. The Supreme Court’s decision in Fish will constitute an important development in the law as many municipalities currently collect business privilege tax on lease income. Read more.

April 6, 2015

Pennsylvania Supreme Court to Offer Clarity on the Scope of Local Tax Enabling Act’s Prohibition Against Taxing Leases or Lease Transactions

The Public Record On April 8, 2015, the Pennsylvania Supreme Court agreed to hear an appeal from the Pennsylvania Commonwealth Court’s decision in Fish v. Township of Lower Merion. In Fish, the Commonwealth Court determined that the Local Tax Enabling Act (LTEA), the state law that authorizes and regulates local taxes, prohibits a political subdivision from imposing a business privilege tax on lease revenue. The Supreme Court’s decision in Fish will constitute an important development in the law as many municipalities currently collect business privilege tax on lease income. In Fish, several individuals who own and rent property in Lower Merion Township (Township) challenged the Township’s collection of a 1.5 mill business privilege tax on their lease revenue. The property owners based their challenge on an exclusion set forth under Section 301.1(f)(1) of the LTEA, which expressly prohibits a political subdivision from taxing leases or lease transactions if the tax was not imposed prior to July 1, 2008. According to the property owners, a tax on gross receipts from lease revenue is the same as a tax on individual leases or lease transactions, as prohibited under Section 301.1(f)(1). The Township took the position that Section 301.1(f)(1) prohibits the imposition of a “direct tax,” e.g. a per-lease tax, but not the imposition of a tax on lease revenue. The Township argued that it was taxing the privilege of doing business in the Township, as authorized under the LTEA, not leases or lease transactions. Rejecting the lessors’ argument, the Montgomery County Court of Common Pleas ruled in favor of the Township. On appeal, however, the Commonwealth Court, strictly construing Section 301.1(f)(1) of the LTEA against the Township, disagreed and reversed. In doing so, the Pennsylvania Commonwealth Court concluded that Section 301.1(f (1) of the LTEA “bars ‘any tax’ – i.e., privilege, transactional, or otherwise – on leases or lease transactions”, noting that it is thus immaterial that the challenged tax was characterized by the Township as a…