Pennsylvania Legislature Proposes New Statute of Limitations for Tax Collection

The Pennsylvania House of Representatives is currently considering House Bill 17 (HB 17) that would limit the Department of Revenue’s ability to collect taxes to ten years after assessment. The reduced statute of limitations would also apply to most tax returns even when returns were not made by a taxpayer. Currently, the Department has no required time limit to assess tax when a return has not been filed or to collect tax when an assessment has been issued. Many taxpayers grappled with the unlimited statute during Pennsylvania’s most recent tax amnesty program in 2017, as notices were generated for decades-old tax liabilities. The proposed legislation would remove or reduce the risk of surprise from these long-forgotten tax assessments.

The new statute of limitations would not apply to trust fund tax liabilities such as sales tax or employee withholding.  HB 17 also excludes taxpayers from the ten-year limitations period if they file false or fraudulent returns, willfully fail to file, purposefully evade their taxes or are convicted of a tax offense. The proposed statute change also does not apply to inheritance tax.

We will continue to post updates on the progress of HB 17, so please continue to visit the Our Thoughts On blog or contact your Schneider Downs representative.