On February 8th, Governor Ron DeSantis unveiled his budget for fiscal year 2023 – 2024 which includes significant tax relief for Florida residents. The governor, along with leaders from the Florida House and Senate, unveiled a tax plan to save Florida residents $2 billion in the coming year with an expected tax savings of $1,000 per family. The budget press release detailed the potential sales tax exemptions that Florida legislators intend to implement. Notably, in response to recent debate on impact of cooking indoors with natural gas, the budget includes a permanent exemption from sales tax on the purchase of gas stoves.

The governor’s proposal includes several sales tax exemptions related to childcare and purchases for children. The tax relief plan includes permanent exemptions on necessities for babies and toddlers such as clothing, cribs, diapers, and strollers. One-year exemptions will be enacted for children’s books, toys, and athletic equipment. The annual back-to-school sales tax exemption events will also be expanded to four weeks in total and occur in the spring and fall.

The tax relief proposal includes one-year and seasonal sales tax exemptions that apply to households without children as well. These sales tax exemptions include purchases of household items (detergents, toilet paper, etc.), medicinal cosmetics (soap, shampoo, deodorant, etc.), and oral hygiene products (toothbrushes, floss, mouthwash, etc.). Pet owners will also benefit under the tax relief as there is a one-year exemption on pet food and a permanent exemption on over-the-counter pet medications.

The largest sales tax exemption in the tax relief offering applies to outdoor recreation and entertainment purchases and is expected to run from Memorial Day to Labor Day. The “Freedom Summer” exemption will apply to purchases of items such as boating, camping, and fishing supplies as well as event tickets and admissions for concerts and sporting events.

Since Florida Republicans hold a trifecta in state government, residents can expect the proposed exemptions to be enacted this spring. Residents and businesses should monitor the Florida Department of Revenue website for details on each of the exemptions once the legislation is enacted. The governor’s press release can be viewed here.

If you have questions on State and Local Tax matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.

New Jersey’s new tax law, A.B. 4295, which was enacted on December 22, 2022, includes key changes for corporations, including New Jersey’s position on a requirement for certain businesses to elect S-corporation status. Tax professionals are pointing to three key provisions of the new law:

In particular, the elimination of the requirement to elect S-corporation status for purposes of New Jersey state taxes is being hailed as providing significant relief to those companies as the new law simplifies compliance and eliminates potential pitfalls for unsuspecting taxpayers.

If you have questions on State and Local Tax matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.

The Florida Department of Revenue recently issued property tax guidance to homeowners impacted by major hurricanes that affected the state in 2022. On January 17, 2023, the Department issued PTO 23-01, Refund of Taxes for Residential Improvement Rendered Uninhabitable by Hurricane Ian or Hurricane Nicole – Revised Form. The bulletin provides taxpayers with information on the property tax relief legislation enacted in December 2022.

The property tax law grants relief to taxpayers if their residential properties were rendered uninhabitable for 30 days or more due to Hurricane Ian or Hurricane Nicole. The property tax relief applies retroactively to January 1, 2022, and expires on January 1, 2024. If applicable, property owners may request a refund of property taxes paid for in 2022 relative to the time their residential property was uninhabitable due to a hurricane. The law defines “uninhabitable” as “the loss of use and occupancy of a residential improvement for the purpose for which it was constructed resulting from damage to or destruction of, or from a condition that compromises the structural integrity of, the residential improvement which was caused by Hurricane Ian or Hurricane Nicole during the 2022 calendar year.”

The Department has adopted Form DR-5001, N. 01/23, to facilitate the application for refund of property taxes due to the property being uninhabitable in 2022. The application must be filed by April 3, 2023. If the application is not filed by the deadline, then the property owner waives their claim for refund under the property tax law. Supporting documentation must accompany the application and may include insurance information, statements from contractors, building permit applications and similar documents detailing the damage to the property. The application must be signed by under penalties of perjury, with the property owner attesting that the facts and information provided on the application are true.

The county property appraiser must notify the applicant of their determination no later than June 1, 2023. If an application is approved, the tax collector will calculate and process the refund of property taxes. If an application is denied, the property owner has the option to file an appeal with the value adjustment board.

The full Bulletin, PTO 23-01, can be viewed on Department’s website here.

For more hurricane-related information, including property taxes, visit the Department’s dedicated Hurricane Ian website here.

Form DR-5001, N. 01/23, can be found at the Florida Department of Revenue website,

Questions on Florida’s real property taxes can be directed to the Department at dorpto@floridarevenue.com.

If you have questions on State and Local Tax matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.

In communication issued on January 9th, the Pennsylvania Department of Revenue reminded taxpayers that e-Tides, the Department’s prior online tax filing system, will be retired on February 24, 2023. Pennsylvania’s new system, myPATH, commenced operation in late November. Taxpayers that have not established their tax accounts on myPATH should act now to ensure access to the new system.

A myPATH account is required to file returns and make payments for many taxes, including sales tax and employer withholding. In addition, W-2 and 1099 reporting is housed on the myPATH system and the deadline for W-2/1099 reporting is rapidly approaching on January 31, 2023.

In its communication, the Department discusses the myPATH account creation process and provides links to instruction videos and tutorials on myPATH. Taxpayers are advised to make the transition early to allow time to address any account issues and avoid the risk of missing filing deadlines.

The complete communication from the Department can be viewed here.

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

The Florida Department of Revenue (“Department”) has issued DR-15DSS, its annual listing of discretionary sales surtax rates for the coming year. Several counties have increased their local surtax rates for 2023 and additional counties have extended their surtax rates for future years.

The following counties have issued surtax rate changes for 2023:

The counties of Monroe, Osceola, Pasco, Sarasota have extended their local surtax for future years.

Florida vendors and remote sellers should ensure registers and point-of-sales systems are updated to reflect the rate changes, effective January 1, 2023. In addition, businesses must update the use tax rates in their accounting software or ERP system to reflect the changes. As a best practice, taxpayers should review sales reports on the effective date of the rate change to confirm systems are properly calculating the surtax.

The full discretionary sales surtax publication for 2023 can be reviewed on the Department’s website.

If you have questions on the local surtax rate changes or other SALT matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.

The Pennsylvania Department of Revenue (“Department”) issued Realty Transfer Tax Bulletin 2022-01 on December 5, 2022. The Bulletin addresses issues of tax payment and refund procedures for realty transfer tax (“RTT”). RTT applies to the transfer of real estate unless an exemption applies. The tax generally consists of state (1%) and local (1%) components for a total tax of two percent.

The Bulletin covers refund scenarios when the RTT is paid to the local Recorder of Deeds (“Recorder”) as well as when it is paid to the Department. How the RTT is paid determines the course of action when a refund is requested.

When RTT is paid to the Recorder of Deeds, the local RTT refund must be requested from the Recorder, but the state portion is requested from the Department. When RTT is paid to the Department (usually as the result of an assessment), the refund must be requested from the Department. The taxpayer is responsible for notifying the Recorder of the Department’s refund determination to obtain the local portion of the refund.

RTT refunds can be obtained by either application or petition for refund. The application for refund typically applies to clerical or administrative issues such as calculation errors or duplicate payments. A petition for refund is the statutory method to obtain a tax refund. A petition for refund should be utilized when maintaining the rights to appeal is necessary (for example, statute of limitations).

RTT is commonly paid by both parties to a real estate transaction which can complicate the refund process. The bulletin addresses several scenarios and provides guidance for all parties on how to proceed with their individual refund claims.

The full Realty Transfer Tax Bulletin can be reviewed on the Department’s website.

If you have questions on the Realty Transfer Tax Bulletin or other SALT matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.

The Pennsylvania Department of State (“Department”) currently requires a decennial (every ten years) filing for entities registered to do business in the Commonwealth. The reporting requirements will change significantly in 2024 with the recent passage of House Bill 2057. The legislation creates an annual report filing requirement, like that imposed by most states, for domestic and foreign entities. The new annual report filing requirement applies to, “a domestic filing entity, domestic limited liability partnership, domestic electing partnership that is not a limited partnership or registered foreign association.”

The new annual report filing deadlines are based on entity type with corporations (including nonprofit) due to file by July 1st. Limited liability companies are due October 1st and any other form of domestic or foreign association must file by December 31st. The legislation requires the Department to notify entities of their filing obligations two months prior to the due date of the annual report.

Entities that fail to file annual reports will be subject to administrative dissolution or cancellation. The Department is to provide entities with a period of transition (until 2027) before imposing any dissolution or cancellation for failure to file annual reports. The new annual reporting is a significant change for Pennsylvania entities that will require additional time and planning. Fortunately for entities new to annual reporting, Pennsylvania is allowing long runway to prepare and comply.

For more on the legislation impacting annual reporting visit here.

If you have questions on SALT matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.

I played a lot of golf with a former colleague and the matches were quite competitive. Looking for an edge, I took lessons from a well-known local professional. These lessons allowed me to prevail more often than not in our friendly contests. Fortunately for me, the golf lessons always took place in Pennsylvania, a state that taxes relatively few services. Golfers in Kentucky will not be as lucky come January 1, 2023 when the state expands its taxation of services.

As previously reported here – Kentucky is expanding its sales tax base to include many more services in 2023. One of the most significant changes is the pending taxation of instructional, camp and training services. Training services including golf lessons, swimming lessons, yoga lessons, fitness classes and other instructor-led recreational classes and will be subject to Kentucky sales tax. Notably, camps where recreational activities represent more than 10% of planned activities will also be subject to tax even when operated by a nonprofit organization. The changes will increase the cost of these services to consumers, but more significantly, result in tax compliance responsibilities for the providers of these services. Service providers should review their obligations and register for sales tax with the Kentucky Department of Revenue (“Department”), if required.

The tax changes scheduled for 2023 are not limited to instruction and recreational activities. The Department’s recent publication here – addresses several types of transactions that will be taxable in the new year. The publication provides guidance and examples of services that may be taxable come January 1, 2023. Additional taxable services include photography, interior decorating and design, and certain repair, maintenance, and warranty services. The Department’s publication also discusses the pending taxation on the rental of space for meetings, weddings, etc. Rental charges related to hotel conference rooms, convention centers, picnic shelters and recreational spaces will be taxable in the new year.

Kentucky vendors and service providers should continue to monitor the Department of Revenue website for guidance on services subject to tax on January 1, 2023. If you have questions on Kentucky’s sales tax changes or other SALT matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.

Property damaged during Hurricane Ian will be evaluated by the Lee County Property Appraiser’s office. The office is currently closed but is expecting to review all properties in the county to redetermine property values. This review will likely take months for Lee County to complete. The Appraiser’s office website has links available for residents to report property damage and submit documents and photographs.

For more property tax information or to submit hurricane damage documentation to the Appraiser’s office, visit https://www.leepa.org/.

If you have questions on SALT matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.

The Allegheny County Common Pleas Court ruled Pittsburgh’s non-resident sports facility usage fee (“fee”) unconstitutional and issued an injunction against further imposition. The suit was brought by three professional athletes that had paid the fee in prior years. The fee is 3% of the income earned by a non-resident when playing in one of the Pittsburgh major sports venues. By contrast, local players are subject to the city’s 3% income tax (2% to schools and 1% to the city) which was the basis of the city’s argument.

The presiding judge, Ms. Christine Ward, however ruled that the fee was a tax and violated the state’s Uniformity Clause. Pennsylvania’s Uniformity Clause provides that, “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax and shall be levied and collected under general laws.” Essentially, the fee imposed a tax on non-residents that did not apply to residents and players (in the same profession) were subject to different tax rates. It remains to be seen whether Pittsburgh will appeal this ruling to a higher court.

If you have questions on this ruling or other SALT matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.