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Tue Jan 24, 2012, 10:15 AM

Efforts Underway to Try to Close the "Delaware Loophole" that costs PA millions in taxes


"The state of Delaware doesn't tax franchise fees, intellectual property payments and other 'passive' income. As a result, thousands of companies with operations in higher-tax states (in the past including energy companies like Shell and Enron, and telecom companies like Comcast and News Corp.) set up Delaware subsidiaries to collect fees from their out-of-state subsidiaries, rendering them effectively state-income-tax-free.

New Jersey, Ohio and other states have changed their laws to make it tougher to claim a Delaware exemption. But Pennsylvania Republicans turned back efforts by former Gov. Ed Rendell and his Democratic allies to do the same.

... the Reed-Depasquale Bill's "add-on" requirements would enable the state Revenue Department to collect from companies that attempted to use the Delaware loophole, without burdening other businesses."

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