Memo #
4967
PENNSYLVANIA SENATE APPROVES BILL PERMITTING PASS-THROUGH OF FEDERAL OBLIGATION INTEREST
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July 9, 1993
TO: TAX COMMITTEE NO. 32-93
PENNSYLVANIA MEMBERS
RE: PENNSYLVANIA SENATE APPROVES BILL PERMITTING PASS-THROUGH
OF FEDERAL OBLIGATION INTEREST
__________________________________________________________
As you know, Pennsylvania is the last state which does not permit the
character of federal obligation interest to flow through to shareholders exempt
from state tax. The Institute has been working at both the administrative and
legislative levels to have this unconstitutional treatment changed.
The Institute is pleased to report that the Pennsylvania Senate has passed
attached Senate Bill 565 by a 48-0 vote. The bill would amend the Pennsylvania
personal income tax to exempt from that tax investment company dividends derived
from interest on federal obligations. We have been informed by our
representatives in Pennsylvania that shareholder letters generated as a result
of member efforts were an important factor in convincing the Pennsylvania Senate
of the importance of the legislation to individual Pennsylvania shareholders.
The Pennsylvania legislature is currently in recess until sometime this
fall. When the General Assembly reconvenes, we anticipate that the House will
consider H.B. 1121, the companion bill to S.B. 565.
We will keep you informed of further developments.
David J. Mangefrida Jr.
Assistant Counsel - Tax
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