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Sevices at Chuff and Kosierowski. Servicing justice and guidance to all.Services by Chuff and Kosierowski, exceeding your expectations.
Chuff and Kosierowski, p.c. Attorneys at Law
Services at the law firm Chuff & Kosierowski

Services offered:

bullet Residential and Commercial
   Real Estate Transactions

bullet Land Use Issues

bullet Tax Assessment Appeals

bullet Civil Litigation

 

bullet Estate Planning

bullet Probate and Estate Administration

bullet Succession Planning

bullet Business and Corporate Law

Income Tax Appeals

The personal income tax is levied against the taxable income of resident and nonresident individuals, estates and trusts, partnerships, S corporations, business trusts and limited liability companies that are not taxed as corporations for federal purposes.

Pennsylvania taxes eight classes of income: (1) compensation; (2) interest; (3) dividends; (4) net profits from the operation of a business, profession or farm; (5) net gains or income from the dispositions of property; (6) net gains or income from rents, royalties, patents and copyrights; (7) income derived through estates or trusts; and (8) gambling and lottery winnings (except Pennsylvania Lottery winnings won on or after July 21, 1983). A loss in one class of income may not be offset against income in another class, nor may gains or losses be carried backward or forward from year to year.

Act 4 of 1999 eliminated the 25 percent passive income test. A corporation with a valid S election under the Internal Revenue Code is allowed to have passive income in excess of 25 percent of total income and still qualify as a PA S corporation. The five-year waiting period for corporations whose S election was terminated for exceeding the passive income limitation is repealed.

Pennsylvania State Income Tax Rates

Before using our Income Tax Calculator, here are some basic tax principles that you should know. Pennsylvania state income tax along with a federal tax is usually withheld from your paycheck as you receive it each pay cycle. While the federal income tax rates are set for each income bracket, PA state income tax rates do not necessarily align with the federal figures. 

The variable income tax rate for Pennsylvania is determined by PA state tax legislation. How much income tax that is withheld from your paycheck depends on which tax bracket you fall under. In general, the more you make, the more you will be taxed. To find out more about PA income tax, sales tax, W4 forms, 1040 forms, tax returns, current state tax rates and general Pennsylvania tax information, click here for the P.A Department of Revenue Bureau of Individual Taxes.

Chuff and Kosierowski can help with your tax questions or appeals.

How Pennsylvania State income tax rates are structured?

The tax table below will show in detail the Pennsylvania state income tax rates by income tax bracket(s). There are 1 income tax brackets for Pennsylvania. 

If your income range is $0 and over, your tax rate on every dollar of income earned is 3.07%.
 
Income tax brackets data as of December 31st, 2004. 

Filing for Pennsylvania State Income Tax Return 

The Pennsylvania state income tax and federal income tax filing deadline falls on April 15th of every year (but may fall later if April 15th falls on a day when there is no mail service). An increasingly popular option to filing your federal and state income taxes is through the use of the web by e-file. E-file allows you to fill-out and submit all your income tax forms through the federal or state government websites. You can access the Pennsylvania e-file page here. For any snail mail correspondence, you can contact the Pennsylvania State Department of Revenue at the address below. 

P.A Department of Revenue Bureau of Individual Taxes
PO BOX 280509
HARRISBURG PA 17128-0509

The Pennsylvania personal income tax does not provide for a standard deduction or personal exemption.  However, individuals are able to reduce tax liabilities through allowable deductions, credits and exclusions.

Deductions:

bullet Taxpayers may reduce taxable compensation for allowable unreimbursed expenses that are ordinary, actual, reasonable, necessary and directly related to the taxpayer’s occupation or employment.

bullet PA law allows three deductions against income. Deductions are allowed for medical savings account contributions, health savings account contributions and IRC Section 529 tuition account program contributions. 

Credits:

bullet A credit against tax is allowed for gross or net income taxes paid by Pennsylvania residents to other states or foreign countries.

bullet Credit is available to individuals receiving tax forgiveness under the Special Provisions for Poverty. For the 2008 tax year, the eligibility income allowance is $6,500 for a claimant.  If married, there is also an income allowance of $6,500 for the spouse.  Married couples filing joint returns are given claimant allowances of $13,000. The income bracket increment used to determine partial forgiveness is $250. The dependent allowance is $9,500 for each dependent.  For a married couple with two children, the income allowance for 100 percent tax forgiveness would be $32,000.  For a single parent with two children, the income allowance for 100 percent tax forgiveness is $25,500.

bullet Taxpayers may use employment incentive payment credits, job creation tax credits, research and development credits, film production tax credits, organ and bone marrow donor credits, PA innovation zone tax credits, PA resource enhancement tax credits and PA neighborhood assistance tax credits to offset personal income tax liabilities.

Exclusions:

bullet Act 7 of 1997 allows taxpayers to exclude from compensation qualified payments made under a cafeteria plan, qualifying under Section 125 of the Internal Revenue Code, for programs covering hospitalization, sickness, disability or death.

bullet Effective Jan. 1, 1998, Act 45 exempts from taxable income capital gain from the sale of a principal residence for all taxpayers who satisfy ownership and use requirements. Previously, a one-time exclusion of up to $100,000 of gain from the sale of a taxpayer’s principal residence was allowed for persons 55 years of age or older (for sales made after July 1, 1987) who satisfied ownership and use requirements.

bullet Act 45 of 1998 provides an exclusion for personal use of employer-owned property.

The commonwealth employs three primary methods for collecting personal income taxes: (1) estimated and final payments from individuals; (2) employer withholding; and (3) estimated withholding from nonresident partners or shareholders by partnerships and S corporations.

1. Individuals, Estates and Trusts must file annual returns on or before April 15th for the previous year's income. Individuals, estates and trusts with non-withheld income in excess of $8,000 annually must file and remit estimated payments by the 15th day of April, June, September and January for the preceding calendar quarter. There are special estimated tax provisions for farm income.

2. Employers withhold and remit employees' taxes on wage and salary income according to the following schedule:

a. Quarterly — If total withholding tax is under $300 per quarter, payments are due the last days of April, July, October and January for the preceding calendar quarter.

b. Monthly — If $300 to $1,000 of tax is withheld per quarter, payments are due the 15th days of the following months.

c. Semi-Monthly — If $1,000 or more in tax is withheld per quarter, payment is due within three banking days of the close of each semi-monthly period.

Employers receive coupon books containing a year's supply of deposit and quarterly reconciliation forms, which must be filed by the last day of the month following the end of each quarter.

An employer reconciliation statement must be filed by Jan. 31 following the calendar year for which taxes were withheld or within 30 days after the termination of a business.

3. Partnerships and S corporations with nonresident partners or shareholders must remit tax on income from sources within Pennsylvania and allocable to a nonresident. The nonresident partner or shareholder may take a credit on his/her annual return for the tax remitted by the partnership or S corporation.

The income tax was first imposed in 1971 and was later declared unconstitutional as imposed because of its graduated structure. The tax was modified to a flat rate tax on the eight separate classes of income described above, effective June 1, 1971.

The tax is imposed at the following rates:

Year

Rate

1993-2003

2.80%

2004-2009

3.07%

 

If you are a PA resident, nonresident or a part-year PA resident, you must file a  PA tax return if:

bullet You received total PA gross taxable income in excess of $33, even if no tax is due with your PA return; and/or
bullet You incurred a loss from any transaction as an individual, sole proprietor, partner in a partnership or PA S corporation shareholder.

PA law does not exempt a minor from the above requirements to file a PA tax return even if claimed as a dependent on a federal return.

The executor, administrator, or other person responsible for the affairs of a decedent must file a PA tax return if the decedent met the above requirements.

Preservation of Appeal Rights

Taxpayers and their representatives are reminded that discussion with the Department of Revenue employees by telephone, letter, e-mail, or any other exchange of correspondence will not stop the running time to file an appeal to the Board of Appeals. If a Notice of Assessment, Settlement, or Determination indicated that tax, penalty, or interest is owed, you must file an appeal within the period set forth in the Notice. Your appeal may be filed even if you have not paid the assessed liability. Be advised that the appeal must be physically received by the Board of Appeals or post-marked by the Untied States Post Office on or before the due date. An appeal may be filed to the Board of Appeals via the Internet; the Department of Revenue's websites should not be consulted for the rules for filing online. Appeals field after the due date may be dismissed by the Board of Appeals without review.

 

HOW CAN I BEST AVOID TAX PROBLEMS?

Be an informed citizen. Have a complete understanding of your tax liabilities relating to both your personal finances and business activities. If you have any questions contact attorneys Chuff and Kosierowski.

HOW DO I CONTACT THE DEPARTMENT OF REVENUE?

The Department has an Online Customer Service Center on its Web site at www.revenue.state.pa.us. If you cannot find the answer to your question, you can e-mail your question to a customer service representative. The following is a list of phone numbers which you may call to have specific questions answered. Taxpayers with special hearing and/or speaking needs should call 1-800-447-3020.
Personal Income Tax . . . . . . . . . . . .(717) 787-8201
Inheritance Tax . . . . . . . . . . . . . . . .(717) 787-8201
Realty Transfer Tax . . . . . . . . . . . . .(717) 787-8201

WHOM DO I CONTACT IF I FEEL THE TAX PAID WAS INCORRECT OR THE ASSESSMENT ISSUED IS IN ERROR?

If you want to appeal an assessment, a determination, or request a refund, a petition must be filed with the Board of Appeals.
You can file a petition electronically with the Board of Appeals by going to the Board’s Web site at www.boardofappeals.state.pa.us.

How do I appeal penalty and interest?

You may appeal the penalty & interest with the Board of Appeals AFTER you have received a Notice of Assessment. To appeal, complete a Board of Appeals Petition Form, REV-65.

To file a petition, complete the REV-65.

You can also file your petition on-line at the following link: http://www.boardofappeals.state.pa.us/

If you wish to appeal the penalty & interest prior to receiving a Notice of Assessment, you must pay the balance in full and then file the petition with the Board of Appeals.

There are deadlines for filing with the Board of Appeal. The time limits are different for each tax. Therefore, you should double check the limitations so you don't lose some important rights.

What are the Practices and Procedures of the Board of Appeals?

A taxpayer filing an appeal may appear on his own behalf or be represented by someone else with the required technical knowledge. There is no requirement that the Petitioner be represented by an accountant, attorney or other representative. However, a Petitioner's representative must be authorized in writing to represent the Petitioner before the Board of Appeals.

The Board of Appeals will review evidence submitted and conduct hearings, as necessary, to decide the merits of the Petitioner's appeal. It is important to note that the burden of proof shall be with the Petitioner on all issues except fraud.

What do I do if I disagree with the decision of the Board of Appeals?

If you disagree with the Board's decision, an appeal may be filed with the Board of Finance and Revenue for all taxes except Inheritance Tax. Consult rules governing appeals to the Board of Finance & Revenue to make sure deadlines for filing are met. Inheritance Tax appeals must be filed with the Court of Common Pleas, Orphan's Court Division, in the appropriate county.

How long do I have to appeal an assessment?

The appeal must be filed within 90 of the date of the assessment notice.

How are hearings scheduled before the Board and how are they conducted?

Generally, appeals do not require a hearing. Most hearings are scheduled at the Petitioner's request. Hearings are informal and it is not necessary to have professional representation. However, testimony will be under oath and the hearing may be recorded. Adequate pre-hearing preparation will expedite the proceedings.