Philadelphia Passes Tax Cuts and Breaks for Businesses and Residents

Date June 29, 2022
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Philadelphia’s 2023 budget, passed by the City Council on June 23, will include tax cuts on business income and wages. The city’s business income and receipts tax rate will be reduced from 6.2 percent to 5.99 percent. Taxes on wages are being reduced as of July 1, 2022, for residents from 3.8398 percent to 3.79 percent, and for non-residents from 3.4481 to 3.44 percent. Mayor Jim Kenney heralded the changes to wage taxes, considered among the highest in the nation, as being reduced to their lowest levels in more than 50 years.

In a related move, the Council passed an ordinance designed to move the city toward market-based sourcing for business income and receipts taxes on sales of intangibles and services by providing exclusions for receipts on intangibles used outside the city limits.

Market-based sourcing generally taxes services based on where the benefit of the service is received. In moving toward market-based sourcing, service businesses in Philadelphia will only be required to pay business income and receipts tax on sales delivered to customers located within the city. Market-based sourcing is the trend in state and local taxation. The transition to market-based sourcing should help level the playing field for Philadelphia-based service providers with companies located outside of Philadelphia.

For more information on how rulings and legislation related to state and local taxes might impact your business, contact us at hbksalt@hbkcpa.com or visit our website here.

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Philadelphia Looking to Shift Tax Burden to Out-Of-City Businesses

Date May 12, 2022
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On May 9, Philadelphia Mayor Jim Kenney said the city will ask state lawmakers to pass legislation that would allow the city to adopt market-based sourcing for its business income and receipts tax (BIRT). The market-based approach would source receipts to where a customer is located.

Kenney’s statement read, “This change in policy is meant to promote fairness by leveling the playing field for Philadelphia-based service providers with companies based outside of Philadelphia,” noting that it would match the state’s corporate income tax sourcing rules.

According to a city spokesperson, Philadelphia doesn’t currently have a projection for how shifting to market-based sourcing would affect its business income tax collections, but the plan is consistent with city officials’ goals, which include shifting its BIRT tax liabilities and the related tax burden to out-of-city businesses.

The proposal was part of a broader announcement in response to an increase in the aggregate value of property assessments of 21 percent since the previous assessments of 2020 that would hike property tax collections by a projected $460 million over the next five years. The mayor proposed $200 million in property tax relief through a higher homestead exemption and boosting funds for other programs. As well, he suggested a cut in the residential wage tax rate to 3.7% from 3.8398% and the nonresident wage tax rate to 3.44% from its current 3.4481% over the next two years as a means of providing $260 million in tax relief.

If you have questions on the Philadelphia legislation or other SALT matters, please contact HBK’s SALT Advisory Group at hbksalt@hbkcpa.com.

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City of Philadelphia Extends Property Tax & Business Tax Deadlines

Date March 24, 2020
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HBK CPAs & Consultants

The Philadelphia Department of Revenue recognizes that the extraordinary measures necessary to keep Philadelphians safe are having a profound impact on many residents and businesses.  To offer relief, Mayor Kenney and Revenue Commissioner Frank Breslin announced that the Department is changing the following:

  • The due date for 2020 Real Estate Taxes has been extended 30 days. The new due date for real estate taxes is now April 30, 2020.
  • The Department of Revenue will honor the federal extensions granted to businesses from the IRS for filing and payments until July 15, 2020 for the Business Income and Receipts Tax and the Net Profits Tax. This policy includes estimated payments.

No action is required from businesses to take advantage of this extension policy in Philadelphia.

Click the link below for additional information:
https://www.phila.gov/2020-03-23-city-of-philadelphia-extends-property-business-tax-deadlines/

HBK will continue to follow developments and provide guidance and clarity surrounding COVID-19 business issues. To discuss COVID-19’s effect on your business, contact your HBK advisor.

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City of Philadelphia and PIDC Open Applications to Philadelphia COVID-19 Small Business Relief Fund

Date March 24, 2020
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HBK CPAs & Consultants

The City of Philadelphia and the Philadelphia Industrial Development Corporation (PIDC) today launched the COVID-19 Small Business Relief Fund, a more-than-$9 million grant and loan program designed to support Philadelphia small businesses, help maintain payroll obligations, and preserve jobs impacted by the spread of the COVID-19 virus.

The Philadelphia COVID-19 Small Business Relief Fund is a tiered program providing targeted support for small businesses, which face an unprecedented challenge due to the ongoing global pandemic. The fund offers a mix of new grants and zero-interest loans for businesses that make under $5 million in annual revenue.

Click the link below for additional information on the Philadelphia COVID-19 Small Business Relief Fund:
https://www.phila.gov/2020-03-23-city-of-philadelphia-and-pidc-open-applications-to-philadelphia-covid-19-small-business-relief-fund/

Click the link below for additional information on how businesses can apply for assistance from the Philadelphia COVID-19 Small Business Relief Fund:
https://www.phila.gov/programs/philadelphia-covid-19-small-business-relief-fund/?mc_cid=e610c84755&mc_eid=701a23fa37

HBK will continue to follow developments and provide guidance and clarity surrounding COVID-19 business issues. To discuss COVID-19’s effect on your business, contact your HBK advisor.

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