Pennsylvania

Pennsylvania State and Local Tax Update—Fourth Quarter 2023

Published

2 years ago

January 17, 2024

Pennsylvania State and Local Tax Update—Fourth Quarter 2023

The last three months of 2023 offered some interesting developments of note for Pennsylvania taxpayers, particularly those who work in Delaware and New York, Philadelphia residents, and executors of trusts.

Philadelphia Wage Tax Credit Denied

In a 3-2 decision, the Pennsylvania Supreme Court upheld the Commonwealth Court and sided with the Philadelphia Department of Revenue in Zilka v. Tax Review Board, a case addressing whether a city resident was entitled to a credit for state-level taxes paid to Delaware.

During the tax years at issue, the taxpayer lived in Philadelphia but worked full-time in Wilmington, Del. Accordingly, she was subject to state and local tax in Delaware as well as to Pennsylvania personal income tax and city wage tax.

Under the Pennsylvania and Philadelphia laws, she was able to claim a credit for Delaware tax against her personal income tax liability. Likewise, she was able to claim a credit for Wilmington tax against her wage tax liability. The city, however, denied her claim for a credit against wage tax based on the tax paid to Delaware that she was unable to use against her Pennsylvania liability.

The taxpayer appealed, arguing that denying the credit amounted to unconstitutional double taxation. The high court agreed that the city’s taxing system is constitutional and that the city is required by the state constitution to give a credit only for taxes paid to other local jurisdictions, not for state-level taxes.

The court reasoned that any increased tax burden was the result of rate disparities between the various jurisdictions and that, because of her living and work arrangements, the taxpayer was effectively subject to state tax at the Delaware rate and local tax at the city rate because those rates are higher than their counterparts.

This case is a blow to taxpayers who live in Pennsylvania (and particularly in Philadelphia) but who are subject to income tax in states with which Pennsylvania doesn’t have reciprocity (including Delaware and New York) because those taxpayers are essentially subject to two taxing systems and may not be able to fully use credits.

Property Tax Uniformity Challenges

In Downingtown Area School District v. Chester County Board of Assessment Appeals, the Commonwealth Court held that Downingtown’s policy of appealing any real property tax assessment that “may potentially result in total annual revenue of $10,000 or more” violated the uniformity clause of the Pennsylvania constitution.

The court reasoned that the purpose of the appeal process is to correct mistakes in the most recent countywide reassessment and not to function as a substitute for a countywide reassessment.

It found that by targeting only assessment appeals that were likely to result in material revenue to the school district, the district was unfairly burdening owners of overassessed properties. It also found that the threshold therefore created a “systematic and disparate treatment” of property owners.

In School District of Philadelphia v. Board of Revision of Taxes, the Commonwealth Court addressed nearly identical facts and the Philadelphia school district’s policy of appealing any real property tax assessment where it was “reasonably likely that an appeal of [the] assessed value will yield a minimum of an additional $7,500.” The court again found that this policy violated the uniformity clause.

As shown by these cases, school districts likely will continue to target certain types of properties for real estate tax appeals and the Pennsylvania Supreme Court may need to weigh in again on the constitutional limits of such policies. Buyers should consider this possibility when determining the appropriate purchase price for a property.

Realty Transfer Tax Ruling

In a case involving realty transfer taxes, or RTT, the Commonwealth Court held in Ebersole v. Commonwealth that deleting a contingency clause with retroactive effect—which authorizes distributions to persons other than the grantor if one of the grantors became incapacitated—allowed a trust to qualify as a living trust.

Under the RTT law, transfers to living trusts may be exempt from RTT, but only if the distributions from the transferee trust can be made only to the settlor(s) prior to the death of the settlor(s). As originally drafted, the trust at issue would have allowed the trustee, in the case of incapacity, to make distributions to charitable organizations.

That language would have rendered the transfer to the trust taxable. However, the Commonwealth Court overruled the Board of Finance and Revenue and held that an amendment to the trust, which was approved by the Orphans’ Court and retroactive to the formation date of the trust, reflected the intent of the grantor and meant that the transfer was exempt as a transfer to a living trust.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Christopher A. Jones co-leads Ballard Spahr’s tax and real estate team, focused on a wide range of matters, including tax consequences of complex transactions and associated planning opportunities.

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Pennsylvania

Bethlehem man sentenced under Pennsylvania’s new AI child porn law

Published

6 hours ago

December 16, 2025

Press Room

Bethlehem man sentenced under Pennsylvania’s new AI child porn law

A Bethlehem man is among the first to be sentenced under a Pennsylvania law passed last year, making it a crime to possess AI-generated child sex abuse material.

On Monday, Lehigh County Court of Common Pleas Judge Kristie M. Marks sentenced 35-year-old Adam Erdman to two years, four months to 10 years.

Erdman in September pleaded guilty to felony possessing child sex abuse material. He faced a possible sentence of 5 to 10 years in prison.

Lehigh County District Attorney Gavin Holihan announced the sentencing in a news conference Monday afternoon. The DA credited U.S. Rep. Ryan Mackenzie, who introduced the new legislation and state Sen. Tracy Pennycuick, who championed the final version of the law last year.

“Before this law was passed, the use of AI to generate child sexual abuse materials went unpunished,” Holihan said. “Prosecutors like me need legislation like this to arrest and convict the criminals who use evolving technology to victimize others.”

Macungie-based attorney Michael Ira Stump, representing Erdman, couldn’t immediately be reached for comment Tuesday morning.

Bethlehem police on March 31 were called by Erdman’s estranged wife, who reported finding three AI-generated nude images of juvenile girls on his personal computer.

Prosecutors said Erdman downloaded photos of the children on vacation from their parent’s social media account, and then used artificial intelligence photo-editing software to make the children appear naked.

Erdman was charged on April 17.

The case was investigated by Bethlehem Police Det. Stephen Ewald and was prosecuted by Lehigh County Senior Deputy District Attorney Sarah K. Heimbach.

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Pennsylvania

Central Pennsylvania awarded over $1M for Chesapeake Bay Watershed conservation

Published

19 hours ago

December 16, 2025

Press Room

Central Pennsylvania awarded over M for Chesapeake Bay Watershed conservation

PENNSYLVANIA (WTAJ) — Over $17 million has been awarded to county teams across the Commonwealth for projects in reducing nutrient and sediment pollution in the Chesapeake Bay Watershed.

Grants were awarded to counties with projects taking place over the next 12 to 24 months. Many different human activities cause nutrient pollution and eroded sediment to enter streams, rivers, and lakes. This pollution can come from fertilizer, plowing and tilling farm fields and can cause stripping away of trees and vegetation, and increasing paved surfaces.

Here are the grants awarded in our area:

Blair County Conservation District: $308,095
Cambria County Conservation District: $200,000
Centre County Government: $566,399
Clearfield County Conservation District: $368,209
Huntingdon County Conservation District: $409,134

“Pennsylvania’s clean water successes are rooted in collaboration—state, local, federal, legislative, and non-governmental partners, and of course landowners,” Department of Environmental Protection (DEP) Secretary Jessica Shirley said. “The work will continue to evolve, and our focus will remain on setting our collaborative partnerships up for success well beyond 2025. The momentum is real, and you can see it in our improved water quality.”

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In total, 222 projects were approved, and it’s estimated to reduce nitrogen by 113,493 pounds/year, phosphorus by 28,816 pounds/year, and sediment delivered to the Chesapeake Bay by 1.8 million pounds/year.

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Pennsylvania

Inside the legislative effort to expel cellphones from Pa.’s K-12 schools

Published

1 day ago

December 15, 2025

Press Room

Inside the legislative effort to expel cellphones from Pa.’s K-12 schools

The case against a complete ban

There’s limited research available to date regarding the efficacy of school cellphone bans. Some studies, like one from 2024 at Auburn University, suggest such a policy could improve student engagement and social interactions with some limitations.

However, researchers at the University of Birmingham could not find much of a difference in academic and social outcomes between students who attended schools with cellphone bans and those who attended schools that did not.

School District of Philadelphia Superintendent Dr. Tony Watlington said in an interview with Philadelphia Magazine in August that he believes the decision is best made by each school.

“There are parents who feel very strongly that they need to be able to reach their children at all times, and there are others who feel the complete opposite,” Watlington told the magazine. “Cellphones can certainly be a distraction, but they can also be a walking library in the classroom.”

Some parents critical of legislative-level cellphone bans also highlight the need to reach their children in an era of school shootings and mass violence.

Santarsiero argued that cellphones, in those instances, may do more harm than good. Some school safety experts might agree.

Santarsiero recalled a time when he was a teacher where an armed robbery several blocks away prompted a lockdown at the school. Unaware of the robbery, he locked the classroom door, gathered his students to the corner of the room, away from the windows, and waited for instructions.

“We did that, and for the next hour and a half, before the incident was resolved, the kids started going on their phones, and they were texting home and really spreading a lot of rumors that turned out not to be true: that there was an armed shooter roaming the halls, that we were in imminent danger. And this was now filtering out to parents,” he said. “It was filtering out to other students, and it was creating a level of anxiety that was not helpful to trying to manage the situation.”

Pennsylvania School Boards Association, or PSBA, opposes Senate Bill 1014.

“While PSBA supports the goal of fostering learning-focused environments, the proposed legislation imposes a statewide, mandatory bell-to-bell ban on student cell phone use—stripping locally elected school boards of the ability to make decisions that best serve their communities,” the association wrote in a statement. “PSBA believes that locally elected school directors are in the best position to make decisions for their school communities concerning the use and possession of cell phones and other electronic devices in schools.”

According to PSBA, the bill “usurps local control.”

“PSBA also has some concerns with the wording of SB 1014, specifically the language regarding restriction of device possession and with the language regarding public comment,” PSBA wrote. “The bill would require schools to establish the manner in which a student’s possession of a device is to be restricted. It is unclear whether this language would require schools to take some sort of action to separate a student from their phone at the start of each school day (such as by purchasing and using lockable cell phone bags).”

Hughes said that officials must acknowledge the “good” that comes with the advancements in communication technology. However, he said the harm cannot be ignored.

“We need to have thoughtful conversations to come up with thoughtful policies that advantages the best of this technology, and minimizes the pain and the hurt that the technology can have on people — especially our children,” Hughes said.

The Senate is scheduled to return to session in January.

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