Pennsylvania Senate Passes Bill to Streamline Tax Dispute Resolution

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HARRISBURG, PA — On Tuesday, the Pennsylvania Senate approved Senate Bill 1051, a bipartisan measure aimed at simplifying and improving the process of resolving tax disputes with the Pennsylvania Department of Revenue (DOR). The bill, sponsored by Sen. Scott Hutchinson (R-21), received praise from Pennsylvania Treasurer Stacy Garrity for its pro-taxpayer approach.

Senate Bill 1051 amends the Tax Reform Code of 1971, enhancing procedural and administrative processes. Notably, it introduces provisions to allow the Board of Finance and Revenue (BF&R) to accept late-filed applications under specific circumstances and establishes an independent, mediated settlement process as an alternative to the formal court appeals procedure.

“The current tax appeal process tends to be bureaucratic, cumbersome, and inflexible,” said Treasurer Garrity. “Sen. Hutchinson’s legislation will create an even playing field for Pennsylvania taxpayers, and it will help tax issues get resolved more quickly. I applaud the Senate for approving this commonsense, taxpayer-friendly legislation.”

Sen. Hutchinson highlighted the need for the bill, noting that the DOR can sometimes be “overzealous” in interpreting tax laws. “Senate Bill 1051 gives taxpayers a little more time and some options when responding to assessments by the Department, while also benefiting our Commonwealth by resolving tax issues sooner,” Hutchinson said. “Plain and simple, SB 1051 is a taxpayer protection proposal that makes a complicated system clearer, simpler, and taxpayer-friendly – it’s a win-win for all parties.”

The bill has garnered support from various organizations, including the Pennsylvania Chamber of Business and Industry, the NFIB, the Pennsylvania Institute of Certified Public Accountants (PICPA), and the Pennsylvania Society of Enrolled Agents. A companion bill, House Bill 1994, was introduced by Rep. Tim Briggs (D-29).

Under the current system, taxpayers who disagree with a final decision by the DOR have a strict 60-day deadline to appeal to the BF&R. This often results in cases being dismissed on technicalities rather than being judged on their merits. SB 1051 allows BF&R to accept late-filed applications if the taxpayer shows good cause and neither party would be prejudiced.

Additionally, the bill authorizes BF&R to establish an independent settlement process to resolve more tax disputes without requiring a final Board decision. This provision aims to reduce litigation costs for taxpayers. Currently, BF&R lacks the authority to direct such mediations. Treasury estimates that up to 500 cases annually could be resolved under the new settlement process.

BF&R receives approximately 4,200 appeals each year and must resolve them within six months of filing, unless an extension is requested. If not resolved within this timeframe, the DOR’s original decision stands. Presently, only about 13 percent of eligible appeals are settled before reaching the Commonwealth Court.

Improving Tax Disputes in PA: SB 1051 Paves the Way!

The passage of SB 1051 is significant for several reasons. First, it simplifies the tax appeal process, making it more accessible and fair for taxpayers. By allowing late-filed applications and creating a mediation option, the bill provides taxpayers with more flexibility and reduces the likelihood of dismissals based on technicalities.

Second, the independent settlement process could save both taxpayers and the state considerable resources. Litigation is costly and time-consuming; a streamlined settlement process could lead to quicker resolutions and lower expenses.

Finally, the bill’s bipartisan support indicates a shared recognition of the need to improve the tax dispute resolution process. This cooperation could pave the way for further reforms aimed at enhancing fairness and efficiency in Pennsylvania’s tax system.

In summary, the Senate’s approval of SB 1051 marks a significant step toward a more taxpayer-friendly tax dispute resolution process in Pennsylvania. As the bill moves forward, the hope is that it will lead to faster, fairer outcomes for individuals and businesses alike.

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