A Tax News Update in Three Acts, and an Encore
By Renu Zaretsky :: May 5th, 2014
Act 1: Some Pennsylvania school districts may need to raise taxes this year. In setting their budgets for the coming year, nearly 1/3 of school districts (164 out of 497) sought and received exceptions to Act 1, a state law that limits how much districts can raise property taxes without voter approval. The state Department of Education approved exceptions totaling $121.1 million, largely to meet pension obligations and special education costs.
Act 47: Distressed towns walk in, but they don’t walk out. Shamokin, Pennsylvania, a coal-country town in debt and out of options, is the latest to join Act 47, a state financial oversight program. Designed in 1987 to help cities after the fall of the steel industry, it offers a loan and allows the levying of certain taxes. But only 7 of the 27 local governments in the program have ever left Act 47, and 6 of the remaining 20 have been in it for over 25 years. Legislators are trying to cap the time a city can be in Act 47, forcing a choice when time’s up: Elected city officials can fix the budget (cut jobs and services, raise taxes) or, at worst, face disincorporation.
Finale: “Everything is awesome,” elsewhere. Meanwhile in Florida, Republican Governor Rick Scott is set to sign an election-year tax cut package worth $105 million. State Representative Ritch Workman described the tax cut plan as a “patchwork of awesomeness” when the Florida House approved it on April 3; when a deal with Senate was reached, the deal was called “awesomer.” The plan features nearly $37 million in sales tax holidays, which while common, are not necessarily that awesome for state economies.
Encore! Budget scoring for expired tax cuts. The Committee for a Responsible Federal Budget walks readers through the maze of budget accounting for the now-expired tax extenders. If you ever wanted to know why temporary spending and temporary tax cuts are treated differently, here is your answer.
Coming soon (or later) to a bank near (or far from) you: FATCA. The Treasury has announced a transition period lasting through 2015 for the Foreign Account Tax Compliance Act, which goes into effect on July 1. The IRS will take into account the “good faith effort” made by banks to comply with the act. “Good faith” may, however, be in the eye of the beholder, as the term is not clearly defined.
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