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The Pennsylvania Capital Stock Tax is no More––Now What?

04/04/2016

With the April 15 deadline for calendar year Pennsylvania Corporate Tax Report (RCT-101) filers right around the corner, it is worth remembering that the Pennsylvania Capital Stock/Foreign Franchise Tax (“CS/FFT”) has finally been allowed to expire for tax years beginning after December 31, 2015.

Since the 1840’s, most business entities organized in Pennsylvania were subject to the Capital Stock Tax while foreign entities were subject to the Foreign Franchise Tax on capital stock value attributed to Pennsylvania. This included corporations and, more recently, LLC’s. The CS/FFT was in addition to the corporate net income tax and the liability was calculated using a formula that included owners’ equity and a five-year average of income. Legislation passed in 2000 would have phased out the CS/FFT by the end of the previous decade, but a series of amendments postponed their demise as Pennsylvania wrestled with budget woes.

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