State tax disputes could become significantly easier in Pennsylvania

21 March 2024- Pennsylvania Treasurer Stacy Garrity applauded the Senate Finance Committee’s approval of Senate Bill 1051 today. The legislation, sponsored by Sen. Scott Hutchinson (R-21), will streamline and improve the process of resolving tax disputes with the Pennsylvania Department of Revenue (DOR).

SB 1051 will allow the Board of Finance and Revenue (BF&R) to accept late-filed applications in certain circumstances and to create a new settlement process for taxpayers as an alternative to the formal and lengthy court appeals process.

“For me, this legislation boils down to one question. Do you want to create an even playing field for Pennsylvania taxpayers, or do you want to maintain a system that’s tilted in favor of the massive bureaucracy at the Department of Revenue? I think the answer is clear, and residents and businesses across the state will benefit from this commonsense, pro-taxpayer legislation.”
 Pennsylvania State Treasurer Stacy Garrity

“This bill is designed to protect taxpayers. We need to be sure that average citizens and small businesses have a fair chance when they appeal tax decisions in Pennsylvania, and SB 1051 will do that. I’ve heard from constituents who have been through the appeal process and feel like they were treated unfairly, and I agree with them. It doesn’t happen in every case – but it shouldn’t happen in any case.”
 Senator Scott Hutchinson (R-21)

SB 1051 is supported by numerous 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).

Currently, taxpayers who disagree with a final decision made by DOR have a 60-day deadline to appeal the decision to BF&R. That often leads to cases being dismissed on a technicality rather than being decided on its merits. SB 1051 will allow BF&R to accept late-filed applications if good cause is shown by the taxpayer and the reason permitting the late-filed appeal is agreed to by any other party.

The bill also empowers BF&R to create a formal settlement process, which will allow more tax disputes to be resolved without a final Board decision – thus reducing litigation costs for taxpayers. Under current law, BF&R has no authority to direct a settlement process.

“The current tax appeal process can be bureaucratic and cumbersome, and it’s a real burden for too many hardworking Pennsylvanians. Sen. Hutchinson’s legislation will help taxpayers and business owners resolve tax issues more quickly and help BF&R be more efficient by directing resources to more complex appeals.”
 Pennsylvania State Treasurer Stacy Garrity

BF&R receives approximately 4,200 appeals annually. The Board must resolve each appeal within six months of its filing; otherwise, the underlying DOR decision is upheld. Currently, only about 13% of eligible appeals are resolved through settlement prior to an appeal before the Commonwealth Court.