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Pennsylvania House of Representatives
04/23/2024 07:21 AM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20190&cosponId=30872
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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2019 - 2020 Regular Session

MEMORANDUM

Posted: January 10, 2020 02:16 PM
From: Representative Wendy Ullman
To: All House members
Subject: Protecting PA Tax Credits from Fraud and Abuse
 
Right now, two of Pennsylvania’s tax credit programs are vulnerable to widespread fraud and abuse.

This is evidenced by the grand jury report released in December 2019 which highlighted a deceitful couple who created 20 fake companies to cheat the state’s Keystone Innovation Zone and Research & Development tax credit programs. These crooks gained nearly $11 million in tax credits which they later resold for over $6 million dollars.

Not only did this foul play hurt law-abiding business owners in our state, but it also harmed the people of Pennsylvania in the process. Jobs, businesses, community, and development all suffered.

Knowing that these bad actors started their scam in Bucks County, I feel a strong responsibility to introduce the grand jury’s recommendations which include the following:
  • Implement independent audits for these tax credits;
  • Require applicants to be interviewed face-to-face and to submit photographic identification, receipts, account statements and financial records;
  • Extend the amount of time regulators are required to review applications;
  • Require unscheduled site visits for each applicant and verification of a company’s existence;
  • Require tax credit brokers to be licensed; and
  • Require tax credit awardees to submit annual proof of how tax credits were used, or if they were sold, how the funds were used.
The passage of this legislation will ensure the integrity of these programs and protect the best interest of business owners, workers, and neighbors across our state. Supporting this effort will also prevent these fraudulent schemes from happening again and send a message to scammers that their theft and corruption isn’t welcome in Pennsylvania.