HARRISBURG, May 2, 2011 – State Sen. Christine M. Tartaglione, along with Democratic colleagues, today urged the state Department of Revenue to aggressively audit the tax filings of Marcellus Shale drilling companies in light of proliferation of Delaware subsidiaries.
“The boom in natural gas drilling in Pennsylvania has been mirrored by a similar rise in the number Delaware subsidiaries registered by Marcellus Shale energy companies,” Tartaglione said. “All Pennsylvania taxpayers should question the reason for these numerous affiliates and seek assurance that energy companies are paying their share of state taxes.”
(CLICK HERE for detailed information)
Tartaglione is the prime sponsor of Senate Bill 679, which would require “combined reporting” for businesses in Pennsylvania and close the “Delaware Loophole.”
“Nearly three quarters of Pennsylvania companies pay no income tax and 80 percent pay less than the average family of four,” Tartaglione said. “At the same time, the number of business entities registered in Delaware over the past 20 years has jumped from 6,000 to more than 115,000. Pennsylvania’s revenue department should closely monitor this activity.”
Tartaglione noted that hundreds of Delaware business entities have been registered in the names of Marcellus Shale drilling companies in the past five years even though Delaware doesn’t have a single gas well.
“Instead of making egregious cuts to education and social services, Pennsylvania should do everything in its power to make sure its tax rates are enforced and that no person or company can play accounting games to escape their share,” said Senate Democratic Leader Jay Costa. “Businesses who fairly account for their income are paying the highest corporate income tax rate in the nation because we let the largest companies off the hook.”
Several years ago, the revenue department estimated that $400 million in corporate taxes could be recouped by adopting a combined reporting standard, as 23 states have already done.
Facing drastic cuts in education outlined in Gov. Corbetts’s budget address, proponents of Tartaglione’s legislation said preserving tax loopholes is unconscionable.
“It’s simply wrong to slash funding for college kids, teachers and seniors – to cut more jobs rather than going after tax-dodging corporations hiding out in Delaware, or out of state drilling companies removing our resources,” Pennsylvania AFL-CIO President Rick Bloomingdale said.
Tartaglione is asking the revenue department to issue a new, good-faith estimate based on the proliferation of Delaware business entities and the expansion of gas exploration in Pennsylvania.
“I ask that your department aggressively audit the returns of gas industry entities, especially as they relate to expenses and deductions claimed for Delaware companies,” Tartaglione wrote in a letter to acting Revenue Secretary Dan Meuser.
Last week the department rebutted findings by the Pennsylvania Budget and Policy Center that 85 percent of Marcellus-related companies paid no income tax over the past two years.
“We need an accurate assessment of the problem, not defense of one industry over another,” Tartaglione said.