On November 27, Pennsylvania Governor Tom Wolf signed House Bill 17, which establishes a 10-year window for the state’s Department of Revenue to collect assessed tax. The bill, sponsored by Rep. Frank Ryan with support from nearly 20 other cosponsors, is very similar to the current laws of other states, as well as the Internal Revenue Code (IRC). Originally introduced in January 2019, the bill passed with a vote of 48-1 in the Senate, and was approved in the House by a 178-9 margin. With Governor Wolf’s signature, the bill becomes law January 1, 2021.
Prior to HB17 being signed, Pennsylvania law did not specify a maximum period of time for which the revenue department could collect outstanding tax. While the state should expect to be able to reasonably collect unpaid taxes, the old law did not only create additional burden for taxpayers, but also for the Department of Revenue itself. It’s not uncommon for taxpayers to receive notices regarding decades old tax return filings, but often in these cases, taxpayers no longer have records to support their filings from the year(s) in question and, in some cases, the business the tax was assessed on may no longer be active.
As with similar laws in place in other states and with the IRC, HB17 excludes certain circumstances to prevent taxpayers from evading taxes. Exceptions include trust fund tax liabilities, the filing of a false or fraudulent returns, failure to file a return, attempts to evade a tax, unpaid liabilities resulting from offenses in which a taxpayer has been criminally charged and convicted, and for liabilities of eligible taxes unknown to the department that have not been extinguished within a 10-year period prior to the commencement of the tax amnesty period of a subsequently enacted or approved tax amnesty program.
