PA has new creative ways to get rid of businesses, people
First off, let me say the area around Lancaster and York Counties in Pennsylvania is beautiful, crime is low, and you can still safely turn your back on most folks. I love the area. It is in the Bible belt. We may have invented the Bible belt. The people are conservative and honest, hard-working, and the number one cause of death is OD’ing on scrapple and shoe-fly pie. People die content and a near-record number go to heaven.
But is Pennsylvania business-friendly?
Well, imagine receiving this notice from the Department of revenues of your state about a new tax few outside of government have ever heard of:
“PA Department of Revenues records indicate your company has not reported or remitted Use Tax in the previous three years. Your company incurs a Use Tax liability when purchases are not taxed by the selling vendor…”
Sounds like you’ve been a negligent business person, right? So then why didn’t my tax accountant know, who is himself a government auditor?
Answer: no one knew. And they weren’t supposed to. It’s that old taxation without notification. The Department admits in that same notification:
“Many businesses are first made aware of Use Tax when a Department auditor reviews their financial records, and a tax assessment including penalty and interest results.”
Translation: Governor Ed Rendell’s Department of Revenue admits it failed to properly announce this Use Tax in time and most are surprised by it. So how can a government levy a tax and then, the first year it is enforced, demand payment of “back taxes”?
Technically, the DOR had said, back in 2006, at their web site, which no one was, or is, obliged to visit:
”The DOR has now moved on to the enforcement phase of the program, while the education and outreach phase continues. In January 2006, self-audit Use Tax Returns were mailed to PA businesses, permitting them to audit their books for 2006, as well as the previous three (3) years, to determine any use tax liabilities.”
The letter, which is part of a “voluntary compliance program” (ve have our vays), ends with a friendly reminder that failure to pay could lead to jail. Thank you and have a nice day.
Use tax? As far as anyone in PA can remember, Use Tax was devised to scrape a few tax dollars from out-of-staters who worked in PA. They were using the state to pursue gainful employment, and hence, theoretically, were putting wear and tear on the highways and using our public services, and had to pay their “fair share” – 6% of their earnings. It had nothing to do with items purchased out of state.
Maybe the notices were supposed to go out, but the fact is, many businesses did not receive word of this creative new interpretation of the Use Tax, at least not in understandable enough terms, before now. My own accountant – who had never mentioned this to me, through no fault of his own, because his own colleagues didn’t know either – just told me today that the mailings from the Department to his clients started about a month ago, which was as much a surprise to them as mine was to me when it arrived yesterday. Other PA colleagues I checked with have not yet received notice. But we will all be paying “back” taxes on a new tax no one knew they were supposed to pay 3 years ago, and many will pay hefty penalties for not paying now that credit is tight and businesses are faltering!
In fact, so stealthy was the assault on PA businesses that as soon as the terrifying notices went out, a new web site opened up to discuss the new compliance initiative and how to deal with it. Obviously, the site visitors didn’t know what had hit them either!
And guess how much time Ed Rendell’s sweethearts are giving us to make the necessary calculations from 3 years of tax returns and send in a check for the last 3 years’ tax liability? Until January 15, about a month, to get the credit needed to pay this potentially crushing amount – just in time for Christmas (let them eat scrapple, eh, Ed?) and for the credit crunch. Clearly they are hoping many will not be able to pay by then and will incur juicy late fees to help bolster big spender Governor Ed Rendell’s treasury.
But would I bother to warn you about this if Pennsylvania were otherwise a business-friendly state?
But there is that other little matter of the order to reduce electrical power output, imposed on utilities in PA. That’s right. No matter how many new residents PA acquires in the next few years (the government is friendly to illegal immigrants, of course), the overall power output will decrease. It has to. Otherwise the power companies pay a hefty fine. Sure, it’s their fault you moved here. How dare they?
So how does a power company go about refusing you power? Who goes first? Are hospitals exempted? How about the elderly? Do they freeze in the winter and gasp in the summer? Does anyone care for people any more? Well, as the Dems would say: the environment was here first (interpretation: get lost, humans!).
As one blog poster commented: “forget about electric cars because they will need places to plug them in to recharge the batteries.”
The post ends with the words: “Rendell, you are an idiot! The loonies are running the asylum!”
My advice to you if you live in PA or are considering starting a business here: you may want to check around first for a more business-friendly and people-friendly venue - say, Venezuela.