At the March 14, 2023, PPGC members’ meeting, I discussed some updates mostly to Pennsylvania and local tax matters, with some federal mixed in.

The updates affecting nonprofit charitable organizations are as follows:

1. At the last PPGC meeting on January 10, 2023, we discussed the significant SECURE 2.0 changes as part of the federal Consolidated Appropriations Act of 2023. For further detail, please consult our January 2023 Legislative Update (www.ppgc.net).

2. On March 1, 2023, a bipartisan group of U.S. Senators introduced a non-itemized, universal charitable deduction bill (S. 566). Our members may want to contact our U.S. Senators (Senators Casey and Fetterman) as neither have co-signed this legislation.

3. The recent Inflation Reduction Act (H.R. 5376, enacted 8/16/2022) contains an energy-efficient tax deduction (Section 179D of the Internal Revenue Code) which can benefit tax-exempt organizations. Generally, tax-exempt organizations do not benefit from tax deductions, but this provision allows charities (and other nonprofits) to benefit by passing the deduction through to a taxpayer (typically an architect or engineer) via an allocation letter. This provision can help charities who upgrade their facilities to save some valuable dollars.

4. At the state level, Pennsylvania recently updated its Nonprofit Corporation Law (Act 122 of 2022), generally effective as of January 3, 2023, but with some provisions phased in over several years. Act 122 of 2022 is the first update to the NPCL in nearly a decade and is significant, well beyond this simplified report. Significantly, Pennsylvania eliminates the 10-year decennial reports and joins most other states in requiring annual reports (Section 146 of Title 15). These reports will be due July 1 of each year starting in 2024. Failure to file the new annual report within 6 months of the due date can result in administrative dissolution of the corporation. There are numerous other changes updating and modernizing the NPCL, and some will require changes to the bylaws of nonprofit corporations.

5. Locally, there have been property tax developments in Pittsburgh and Allegheny County. City of Pittsburgh Mayor Ed Gainey signed an executive order calling for the review of the real estate tax-exempt status of thousands of properties listed as tax-exempt in the City. With respect to Allegheny County, the County has had to reopen the 2022 tax year for property assessment appeals due to a court ruling invalidating the 2022 common level ratio. All Allegheny County taxpayers have until March 31, 2023, to file appeals for both the 2022 and 2023 tax years.

As always, the devil is in the details with the above complicated changes.

Please do not hesitate to contact any PPGC Board member if you have any questions on the above changes or any other matter related to charitable organizations.