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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

http://www.philly.com/philly/blogs/inq-phillydeals/GOP-rep-backs-Pa-business-tax-loophole-ban.html

"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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