Impact of Proposed Changes to the NOL CapThe IFO published a letter in response to a request from Senator Pennycuick. The letter contains projections for the impact of proposed changes to the amount of taxable income that C corporations may offset through net operating loss deductions. Tags: cap, letter, nol, response |
Impact of Proposed Changes to the nol CapThe IFO published a letter in response to a request from Senator Pennycuick. The letter contains projections for the impact of proposed changes to the amount of taxable income that C corporations may offset through net operating loss deductions. 02/24/2023 |
Glossary of Natural Gas TerminologyGlossary of technical terms to supplement the Natural Gas Production Report for the first half of 2015. 09/15/2015 |
RB_2023_07_CNIT_Data.pdfi.e., positive income) apportioned to Pennsylvania totaled $34.21 billion. Firms claimed $4.26 billion of net operating loss (NOL) deductions to reduce taxable income by 12.5%. NOLs are unused tax losses carried forward from prior tax years that can be used to offset current year taxable income Hits: 12 |
Revenue-Proposal-Analysis-2020-04.pdfof combined reporting: (1) the timing of payments, (2) proposed treatment of prior and future net operating losses (NOLs), (3) any pre- existing addback provisions and (4) taxpayer behavior related to changes in liability. The text that follows discusses the potential uncertainty of combined reporting. Treatment of Net Operating Losses The DOR estimates that the stock of prior-year NOL carryforwards is $2 billion for firms that file a Pennsyl- vania CNIT return. Therefore, restrictions on NOL deductions for unitary group members Hits: 8 |
Senate Budget Hearing Request.pdfbudget hearing for the Independent Fiscal Office (IFO). Specifically, Senator Vulakovich inquired about the treatment of corporate net operating losses (NOLs) in other states as compared to Pennsylvania. Current federal law allows 20 years of NOL carryforwards and 2 years of NOL carrybacks. Thirty states (including Pennsylvania) and the District of Columbia conform to the federal Hits: 7 |
Revenue_Proposal_Analysis_2021_04.pdfthe adoption of combined reporting: (1) the timing of payments, (2) proposed treatment of prior and future net operating losses (NOLs), (3) any pre-existing addback provisions and (4) taxpayer behavior related to changes in liability. The text that follows discusses the year (i.e., September or December estimated payments or final payments). Treatment of Net Operating Losses The treatment of NOL deductions for unitary group members can have a significant impact on the revenue estimate for combined reporting. The administration’s Hits: 7 |
IFO_Response_Letter_Feb_21_2023.pdfthe impact of an increase in the share of taxable income that C corporations may offset through net operating loss (NOL) deductions in accordance with the two scenarios detailed below: 1. A one-time adjustment of the cap on NOL deductions from 40% to 44% of taxable income, applicable to tax year (TY) 2023 and later. 2. An adjustment of Hits: 5 |
Revenue-Proposal-Analysis-2019-03.pdfexpansion parameter to use for the estimate: (1) pro- posed restrictions on the use of net operating losses (NOLs), (2) by FY 2023-24, the CNIT rate will have declined by 4.0 percentage points under the administration’s proposal and planning. However, Pennsyl- vania also has a higher tax rate than the six CR states and more restrictive NOL provisions. Both charac- teristics suggest that combined reporting could have larger revenue implications for Pennsylvania. The analysis assumes that these effects generally Hits: 4 |
Revenue-Proposal-Analysis-2018-04.pdfthe appropriate parameter to apply to this estimate: (1) proposed restrictions on the use of net operating losses (NOLs) and (2) by FY 2023-24, the CNIT rate will have declined by 2.0 percentage points under the administration’s proposal March 2013) http://www.ifo.state.pa.us./Releases.cfm. 3 Under the administration’s proposal, sharing of NOLs between members of a unitary business group is not permitted and the 40 percent NOL cap is applied to the member’s Hits: 3 |
Presentation-2018-06-PICPA.pdf9 Corporate Income: multiple revenue impacts. TCJA of 2017: rate reduction and base broadening. Elimination of $5 million NOL cap. Tax Bulletin 2017-02 eliminates certain deductions. Personal Income: broad gains, timing issues. 4 th estimated payment million from Farm Show Complex lease). June.12.2018 12 Final payments underperform (March-May). Expected strong gains from NOL change. Smaller NOL impact? More income shifting? U.S. non-financial domestic profits rebound. 2015 -1.6% | 2016 Hits: 3 |
IFO_Hearing_Packet_Feb2018.pdfSignificant Uncertainty in IFO Revenue Estimate for Four Revenue Sources Corporate Net Income Includes $215 million from the recent NOL court case. Estimate assumes most will be received in final payments in March to May. PIT Non-Withholding Revenues 2005-06. All Other Tax excludes cigarette, CSFT and other tobacco products. CNIT excludes revenue impact from tax year 2017 NOL changes. CPI-U represents the Philadelphia metro region. CNIT is corporate net income tax. PIT is personal income tax. SUT Hits: 3 |
2018_Mid-Year_Update.pdf20 Revenues Outstanding Official Estimate Updated Estimate Dollar Change Revenue Outstanding Baseline Revenues $32,442 $32,459 $17 $14,904 NOL and Tax Changes 200 200 0 nearly all Gaming Expansion 103 188 85 92 Tobacco Fund Securitization 1,500 1 until property is sold/disposed. Hedge: IFO has not reflected revenue impact in projections. Risk: assumed revenue impact from NOL court case. IFO assumes +$215 million for FY 2017-18. Nearly all shows up in April-May final Hits: 3 |
Tax-Foundation-Presentation-11-14-2019.pdfFoundation kloughead@taxfoundation.org PENNSYLVANIA’S TAX CODE CONTAINS MULTIPLE BARRIERS TO BUSINESS TAX COMPETITIVENESS STATE Uncompetitive treatment of NOLs Room for improvement in treatment of capital investment High Corporate Net Income Tax (CNIT) rate Regular property Local Services Taxes PENNSYLVANIA'S TREATMENT OF NET OPERATING LOSSES IS UNCOMPETITIVE REGIONALLY AND NATIONALLY Treatment of Net Operating Losses (NOLs) Pennsylvania and Select Regional Competitors (2019) Carrybacks Carryforwards State Years Cap Years Cap Pennsylvania 0 $0 20 40% of liability Hits: 2 |
Presentation-Initial-Revenue-Estimate-2018-05.pdfIFO Official (June 17) $32,491 2.6% Revenue Package (Nov 17) Gaming Expansion 103 Transfers-Revenue Bonds 2,000 NOLs-Other 151 IFO Revised Official 34,745 9.7% Administration Official (Nov 17) 34,704 9.6% Executive Budget (Feb May.01.2018 16 Final payments underperform (March-April). Another portion of final payment remitted in May. Smaller NOL impact? More income shifting? How did firms respond to Tax Bulletin? Has it been fully reflected in recent payments Hits: 2 |
IFO_Hearing_Materials_Feb_22_2022.pdf2022 Corporate Net Income Tax State Comparison Corporate Net Income Tax State Comparison State 1 Income Tax Rate 2 Method NOL Deduction Cap 3 New Jersey 11.5% Combined None Pennsylvania 9.99 Separate 40% of taxable income on CFs Iowa tax bracket for states with a graduated corporate income tax. 3 Reflects conformity with the 2017 TCJA, which limited the NOL carryforward (CF) deduction to 80% of taxable income and removed the carryback (CB) provision for tax years beginning after December Hits: 2 |
Economic_and_Revenue_Update_2021.pdfmillions) Independent Fiscal Office 26 March 2021 States with Corporate Net Income Tax State 1 Income Tax Rate 2 Method NOL Deduction Cap 3 Alabama 4 6.50% Separate None Alaska 9.40 Combined Conforms to Federal Arizona 4.90 Combined 3.Does not reflect conformity with 2020 federal CARES Act provisions. Reflects conformity with the 2017 TCJA, which limited the NOL carryforward (CF) deduction to 80% of taxable income and removed the carryback (CB) provision for tax years beginning after December Hits: 2 |
Economic_and_Revenue_Update_2020.pdfof workers) Employment Status (share of workers) 27 States with Corporate Net Income Tax State 1 Income Tax Rate Method NOL Deduction Cap 2 Alabama 3 6.50% Separate None Alaska 0.00 - 9.40% Combined Conforms to Federal Arizona 4 to 50% of federal taxes paid from state taxable income. 2 The federal Tax Cuts and Jobs Act limited the NOL deduction to 80% of taxable income and removed the carryback provision for tax years beginning after Dec. 31, 2017. 3 Hits: 2 |
Revenue-Estimate-2019-05-Presentation.pdfIncome Revenues 4.4% 17.9% Growth Rate Differential +1.2% +7.2% Underprediction $311 Stronger Profits $150 Income Shifting/NOL changes/Base Expansion $161 Estimated Tax Payments (Annual Growth) March June Sept Dec 2018 9.0% 5.5% 20.0% Hits: 1 |
PICPA_Presentation.pdf516 $1,426 $1,395 Note: Dollar amounts are in millions. Corporate net income includes combined reporting, rate reduction and NOL threshold. Sales tax includes taxation of custom programming and certain business storage services. Source: Analysis of Revenue Proposals, IFO, April Hits: 1 |
PICPA Presentation_ June 11, 2019.pdfIncome Revenues 4.4% 17.9% Growth Rate Differential +1.2% +7.2% Underprediction $311 Stronger Profits $150 Income Shifting/NOL changes/Base Expansion $161 Estimated Tax Payments (Annual Growth) March June Sept Dec 2018 9.0% 5.5% 20.0% Hits: 1 |
PBB_2019_JCJC_Report.pdfrequired supervision without a new offense that results in a Consent Decree, Adjudication of Delinquency, Accelerated Rehabilitative Disposition, Nolo Contendere, or finding of guilt in a criminal proceeding. 2013 2014 2015 2016 2017 2018 10,205 8,837 8,718 9 Hits: 1 |
MSC_March_31_2021.pdfRate reduction phased in to 5.99% over 5 years 27 states use Combined Reporting 2 of them have an NOL cap (CT at 50%, NH at $10m) IFO projects Combined Reporting expands tax base by 12% DOR projects it is Hits: 1 |
Initial-Revenue-Estimate-2018-05.pdfexceed the one-time revenues anticipated in FY 2018-19 (-$123 million). Phase-in of October 2017 NOL court case and tax law changes enacted in No- vember 2017 (roughly -$58 million). Initial Revenue Estimate | Page 8 Dollar Amount Growth Hits: 1 |
IFO_Testimony_Feb2018.pdfpoint, we cannot be certain regarding the magnitude of any shift. Finally, we have assumed that recent changes to the NOL thresholds will provide a $200 million boost to corporate net income tax revenues, and nearly all of that impact should Hits: 1 |
IFO_Testimony_CR_June_29_2023.pdfState Legislatures, various state fiscal notes, analyses and reports. 12% Base Expansion $600 to $650 million • Impacts assume that legacy NOLs cannot be shared among unitary group members. Base Expansion Impact 6% Base Expansion $300 to $350 million per annum, full Hits: 1 |
IFO_Response_Letter_March_7_2022.pdflike-kind exchanges); HB 333 PN 1160 (Section 179 expensing); and HB 1960 PN 2247 (raise the net operating loss (NOL) deduction threshold). You request that the estimates “be prepared on the basis of assumptions that consider the probable behavioral responses Hits: 1 |
IFO_Hearing_Packet_Feb2019.pdfwage reflects changes from newly enacted law. 24 Corporate Net Income Tax by State State 1 Income Tax Rate Method NOL Deduction Cap Alabama 6.50% Separate None Alaska 0.00 - 9.40% Combined None Arizona 4.90% Combined None Arkansas Hits: 1 |
Five_Year_Outlook_2017_Presentation.pdf20 20-21 21-22 Tobacco Fund Securitization $1,500 -- -- -- -- Fund Transfers 500 -- -- -- -- Gaming Expansion 103 $68 $43 $23 $23 NOL Case and Statutory Change 207 104 56 24 8 Other Changes -8 44 41 44 46 Total 2,303 216 Hits: 1 |
Econ Summit Presentation Feb 28 2017.pdfSales – Storage and Aircraft 160 Insurance Premiums Tax 142 Tax Reform Corporate – Combined Reporting 0 Corporate – Rate Reduction 0 Corporate – NOL Threshold 81 New Severance Tax – 6.5% 294 TOTAL $1,006 Note: millions of dollars. The combined reporting and lower Hits: 1 |
CompetePA_March_11_2021.pdfRate reduction phased in to 5.99% over 5 years 27 states use Combined Reporting 2 of them have an NOL cap (CT at 50%, NH at $10m) IFO projects Combined Reporting expands tax base by 12% DOR projects it is Hits: 1 |
2020_Mid_Year_Update.pdffinal payment March to May ~+2.0% Strong correlation between growth estimated and finals Phase in to 40% NOL offset taxable income Profits shift into tax year 2018 Outlook for 2020: 3.5% taxable profits growth January 28 Hits: 1 |
index.cfmacross all states. The next largest state (AL) exported 40% less electricity. ... (Full Report) Impact of Proposed Changes to the NOL Cap Economics and Other February 24, 2023 The IFO published a letter in response to a request from Senator Pennycuick Hits: 1 |