Taxpayer victory imminent in Pennsylvania.

• Position: Recent Activities

Last December, TEI filed comments with the Pennsylvania Department of Revenue taking issue with the department's proposed definition of "Eligible Retirement Benefit Plan." TEI's comments (which were published in the January-February 2004 issue of The Tax Executive) contended that the Commonwealth's expansive view of constructive receipt to nonqualified deferred compensation plans (based on rulings in recent court cases) was inappropriate.

TEI's comments stressed the advantages of harmonizing Pennsylvania's rules with applicable federal authority relating to retirement plans and also highlighted the administrative and compliance issues that could arise from inconsistencies in the Pennsylvania and federal rules. In acknowledging the Institute's comments, the department observed that the proposed rules had generated significant discussion, and reported that it had deferred final action until later this year to permit more thorough consideration of the issues raised.

In a related development, Pennsylvania has conceded two cases involving when deferred compensation becomes subject to personal income tax in the state. The...