United States

Pennsylvania: Two Pending Bills Would Address Unconstitutional NOL Cap

Jun 19, 2017
From KPMG TaxWatch

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Two bills are pending in the Pennsylvania General Assembly that, if enacted, would address the ongoing litigation over the constitutionality of Pennsylvania’s flat dollar cap on NOLs. Recall, in the Nextel case, the Commonwealth Court held that Pennsylvania’s flat dollar NOL cap violated the Uniformity Clause of the Pennsylvania Constitution. In determining the appropriate remedy, the court allowed the taxpayer to apply an uncapped NOL for the closed tax year at issue. The case is currently on appeal to the Pennsylvania Supreme Court; oral arguments were held on April 5, 2017. Both House Bill 1537 and Senate Bill 515 would limit the NOL deduction to 44 percent of Pennsylvania taxable income. The difference between the two bills is that Senate Bill 515 would apply for tax years beginning after December 31, 2016 whereas House Bill 1537 would apply to taxable years following a taxable year in which the current NOL limitation provisions are deemed invalid. Please stay tuned to TWIST for updates on these bills.


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.