What changes have been made to the Integrated Tax System within the Department of Revenue?by Kenneth E. Stoops, Deloitte Tax LLP

demographic data and “check box” responses.Also, the presentation of corporateapportionment data has been the source ofnumerous adjustments.

The automated notices generated by ITS havebeen a source of confusion for taxpayers. Thebilling notice, for example, sets forth a balancedue without any detail. Furthermore, thespecific tax adjustments resulting in thesebalances due could not be appealed until thesubsequent issuance of an assessment. TheDepartment has announced the elimination ofbilling notices; prospectively, any tax increasewill automatically generate an assessmentpackage that includes an assessment notice, abasis for the assessment, a worksheet and astatement of account. Although this willfacilitate the filing of appeals, it also effectivelyshortens the timeframe to address adjustmentsdirectly with the Department.

The overpayment offset process has also been acause of concern. When an overpayment existson a tax return, ITS scans for any outstandingbalances due, including open assessments. Anoffset adjustment can leave an unexpectedshortfall in the tax account for the currentperiod. The Department announced that offsetswill be locked out once an appeal is filed, butoffsets will continue to be made prior to thefiling of an appeal. Taxpayers may request theDepartment to reverse such offsets once anappeal is filed.

Finance/Tax

What changes have been made tothe Integrated Tax System withinthe Department of Revenue?

The Pennsylvania Department of Revenue is inthe midst of a multi-phased ModernizationProject in which a new Integrated Tax System isreplacing an antiquated system based on adecades-old programming language. At a recentmeeting of the Modernization ProjectProfessional Advisory Workgroup, of which theauthor is a member, the Department shared astatus update and announced several changes.

After the initial ITS implementation forcorporation taxes in 2013, taxpayers experiencedseveral difficulties: the elimination of tax ledgerreports resulted in limited visibility to taxaccounts; notices were not issued consistently;and there were lapses handling items such asbonus depreciation and loss carryforwards. Thevolume of issues and the learning curve forDepartment personnel created backlogsthroughout the system. The Departmentaddressed many of these concerns through ITSprogramming changes and redeployment ofresources. The November 2014 implementationfor trust fund taxes (including sales tax andemployer withholdings) went more smoothly,but businesses should be mindful of lingeringissues. A key point to remember is that ITS hasstrictly regimented protocols for processingdata. Taxpayers should pay close attention to theentry of items on tax returns, including

Kenneth E. Stoops, CPADeloitte Tax, LLP

ITS has already had many profound effects onbusiness taxpayers and the impact will becomemore widespread as additional phases arebrought on line. The Department has announcedthat it will not move forward with future phasesuntil existing issues and backlogs can becleared. The Department is planning otherinitiatives to be announced later this year,aiming to provide more detailed tax accountinformation to taxpayers. Businesses shouldclosely monitor any notices received from theDepartment in order to track adjustments andassessments; verify the accuracy of theprocessing of carryovers, payments andoverpayments; and preserve their appeal rights.

■ Kenneth E. Stoops is director of Multistate TaxServices in the Philadelphia office of Deloitte Tax,LLP. This article does not constitute tax, legal orother advice from Deloitte Tax LLP, which assumesno responsibility with respect to assessing oradvising the reader as to tax, legal or otherconsequences arising from the reader’s particularsituation. Copyright © 2015 Deloitte DevelopmentLLC. All rights reserved.