Banking Industry to Loose Hundreds of Millions in Tax Benefits

 

The Pennsylvania Department of Revenue is proposing to repeal Rule Sec. 46.9 Financial Institution Security Equipment.  The department argues that Sec. 46.9 is redundant, being covered by Chapters 31 and 46 which relate to construction contractors.  The Department proposes to add a list of limited security equipment to the construction contractor regulation that the Department considers to be installed under a construction contract.

 

Under the current banking regulation, Financial Institution Security Equipment is defined as - systems, devices and equipment, and their components, utilized by a financial institution for its protection or convenience in conducting financial transactions.

 

The removal of this regulation and underlying definition will cost the banking industry hundreds of millions of dollars. Currently the banking industry, when petitioning for tax refund, receives tax relief on all systems; both hardware and software related its protection or convenience.  These purchases will now become taxable.

 

• Computer hardware:

Main frame computer containing customer records

Teller Machines

Proof Machines and Encoders

Data Lines

• Customer related software
• Banking telephone system
• Banking LAN and WAN
• All maintenance of the above software and hardware

 

By eliminating this regulation all of the above will become taxable.  Comments regarding the proposed rule changes should be sent to both your legislators and the Department of Revenue.  

 

Mary R. Sprunk

Office of Chief Counsel

PA Department of Revenue

Dept. 281061

Harrisburg, PA 17128-1061

 

            Comments must be received by the Department by January 15, 2006

 

 

*Attached is Req. Sec. 46.9 Financial Institution Security Equipment  and Proposed rule changes.