OUR THOUGHTS ON:

Transportation Update: Impact of PA's Proposed Budget

Transportation & Logistics

By Jeffrey Wlahofsky

In February of 2010, Governor Rendell announced his proposed budget for the Commonwealth of Pennsylvania for the 2010-2011 fiscal year. The Governor’s budget proposes significant changes to corporate net income and sales tax, which will have a tremendous impact on Pennsylvania taxpayers.

Specifically, the proposed changes to the Pennsylvania sales tax include a decrease in the state tax rate from 6% to 4%. The proposed changes also include taxing an additional 74 categories of goods and services that are currently tax-exempt in the Commonwealth of Pennsylvania. As part of these changes, the Governor has proposed eliminating the exemption to common carriers and for truck transportation. Elimination of this exemption may result in trucking companies being required to:

1) Charge and collect sales tax on all freight invoices;
2) Pay sales tax on the purchase or lease of all tractors and trailers utilized in moving freight; and
3) Pay sales tax on all repairs and maintenance provided to registered vehicles.

The proposed changes, if approved, would take effect on October 1, 2010.

If the sales and use tax provisions detailed in the Governor’s budget are enacted, they will have a major impact on how trucking companies conduct business in the Commonwealth of Pennsylvania. As possible passage of the Governor’s proposed sales tax changes are announced, we will endeavor to provide additional details.

Schneider Downs provides accounting, tax, wealth management and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA, and Columbus, OH.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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