Tax Update – PA Allowing Limited Carry Forward of Unused Tax Credits

By February 11, 2021Industry Updates

On February 8, 2021, the Pennsylvania Department of Revenue issued Restricted Tax Credit Bulletin 2021-01. This guidance discusses the limited carry forward of unused corporate income tax educational tax credits, which include the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC).

Carryforward

For EITC and OSTC credits awarded during fiscal years 2020–2021 and 2021–2022, a business entity may carry forward unused credits or credits not passed through to the entity’s owners for two years. A business entity may include a C corporation or a pass-through entity, such as an S corporation, partnership, limited liability company, or special purpose entity. Only the business entity awarded the credits may carry the credits forward. The owners of a business entity that has been awarded credits may not carry forward any credits passed through to them.

The limited carry forward of unused EITC or OSTC credits will not affect future applications for the credits. When credits are carried forward, the amount of credits carried forward will not reduce the amount of credits that an applicant can apply for or use in a subsequent year.

If you wish to discuss any of the matters in this update in more detail, please contact Chuck Marston, Danelle Stewart, or Tyler Feith at cmarston@srsnodgrass.comdstewart@srsnodgrass.com, or tfeith@srsnodgrass.com or 724-934-0344.