H0542B2536A04076 MSP:CMD 10/17/17 #90 A04076
AMENDMENTS TO HOUSE BILL NO. 542
Sponsor: REPRESENTATIVE SAYLOR
Printer's No. 2536
Amend Bill, page 2, lines 27 through 52; page 3, lines 1
through 40; by striking out all of said lines on said pages and
inserting
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties,"
in sales and use tax, further providing for definitions,
for imposition of tax and for exclusions from tax, providing
for marketplace providers and marketplace sellers and further
providing for remote sales reports;
in personal income tax, providing for the Pennsylvania
ABLE Savings Program Tax Exemption, repealing provisions
relating to contribution for Korea/Vietnam Memorial National
Education Center, further providing for operational
provisions, providing for definitions, further providing for
requirement of withholding tax, providing for withholding tax
requirement for non-employer payors, further providing for
information statement, providing for information statement
for non-employer payors and for information statement for
payees, further providing for time for filing withholding
returns, providing for time for filing payors' returns,
further providing for payment of taxes withheld, providing
for payment of taxes withheld for non-employer payors,
further providing for liability for withheld taxes, providing
for payor's liability for withheld taxes and for payor's
failure to withhold, further providing for amount of
withholding tax and for treatment of nonresident partners,
members or shareholders, providing for withholding on income
and for annual withholding statement and further providing
for requirements concerning returns, notices, records and
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statements and for additions, penalties and fees;
in corporate net income tax, further providing for
definitions and providing for qualified manufacturing
innovation and reinvestment deduction;
in realty transfer tax, further providing for definitions
and for exempt parties;
providing for tax credit eligibility;
in entertainment production tax credit, further providing
for definitions and for credit for qualified film production
expenses, providing for film production tax credit districts
and establishing the Entertainment Economic Enhancement
Program;
in city revitalization and improvement zones, further
providing for certifications, for restrictions and for
transfer of property;
in neighborhood improvement zones, providing for transfer
of property;
in keystone opportunity zones, keystone opportunity
expansion zones and keystone opportunity improvement zones,
further providing for additional keystone opportunity zones;
in inheritance tax, further providing for timely mailing
treated as timely filing and payment;
in Public Transportation Assistance Fund, further
providing for fund;
providing for fireworks;
in procedure and administration, further providing for
petition for reassessment and for review by board;
providing for tobacco master settlement payment revenue
bonds and sale of revenue;
making related repeals; and
making editorial changes.
Amend Bill, page 104, lines 8 through 30; pages 105 through
187, lines 1 through 30; page 188, lines 1 through 28; by
striking out all of said lines on said pages and inserting
Section 1. Section 201(m) of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, amended
July 13, 2016 (P.L.526, No.84), is amended to read:
Section 201. Definitions.--The following words, terms and
phrases when used in this Article II shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
* * *
(m) "Tangible personal property."
(1) Corporeal personal property including, but not limited
to, goods, wares, merchandise, steam and natural and
manufactured and bottled gas for non-residential use,
electricity for non-residential use, prepaid telecommunications,
premium cable or premium video programming service, spirituous
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or vinous liquor and malt or brewed beverages and soft drinks,
interstate telecommunications service originating or terminating
in the Commonwealth and charged to a service address in this
Commonwealth, intrastate telecommunications service with the
exception of (i) subscriber line charges and basic local
telephone service for residential use and (ii) charges for
telephone calls paid for by inserting money into a telephone
accepting direct deposits of money to operate, provided further,
the service address of any intrastate telecommunications service
is deemed to be within this Commonwealth or within a political
subdivision, regardless of how or where billed or paid. In the
case of any such interstate or intrastate telecommunications
service, any charge paid through a credit or payment mechanism
which does not relate to a service address, such as a bank,
travel, credit or debit card, but not including prepaid
telecommunications, is deemed attributable to the address of
origination of the telecommunications service.
(2) The term shall include the following, whether
electronically or digitally delivered, streamed or accessed and
whether purchased singly, by subscription or in any other
manner, including maintenance[,] and updates [and support]:
(i) video;
(ii) photographs;
(iii) books;
(iv) any other otherwise taxable printed matter;
(v) applications, commonly known as apps;
(vi) games;
(vii) music;
(viii) any other audio, including satellite radio service;
(ix) canned software, notwithstanding the function
performed, including support, except separately invoiced help
desk or call center support; or
(x) any other otherwise taxable tangible personal property
electronically or digitally delivered, streamed or accessed.
* * *
Section 2. Section 202(a) of the act is amended to read:
Section 202. Imposition of Tax.--(a) There is hereby
imposed upon each separate sale at retail of tangible personal
property or services, as defined herein, within this
Commonwealth a tax of six per cent of the purchase price, which
tax shall be collected by the vendor or any other person
required by this article from the purchaser, and shall be paid
over to the Commonwealth as herein provided.
* * *
Section 3. Section 204(13) of the act, amended July 13, 2016
(P.L.526, No.84), is amended to read:
Section 204. Exclusions from Tax.--The tax imposed by
section 202 shall not be imposed upon any of the following:
* * *
(13) The sale at retail, or use of wrapping paper, wrapping
twine, bags, cartons, tape, rope, labels, nonreturnable
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containers [and], all other wrapping supplies and kegs used to
contain malt or brewed beverages, when such use is incidental to
the delivery of any personal property, except that any charge
for wrapping or packaging shall be subject to tax at the rate
imposed by section 202, unless the property wrapped or packaged
will be resold by the purchaser of the wrapping or packaging
service. As used in this paragraph, the term "cartons" includes
corrugated boxes used by a person engaged in the manufacture of
snack food products to deliver the manufactured product, whether
or not the boxes are returnable for potential reuse.
* * *
Section 4. Article II of the act is amended by adding a part
to read:
PART V-A
MARKETPLACE SALES
Section 213. Definitions.--For the purposes of this part V-A
only, the following words, terms and phrases shall have the
meaning ascribed to them in this section, except where the
context clearly indicates a different meaning:
(a) "Affiliated person." A person that, with respect to
another person:
(1) has a direct or indirect ownership interest of more than
five percent in the other person; or
(2) is related to the other person because a third person,
or group of third persons who are affiliated with each other as
defined in this subsection, holds a direct or indirect ownership
interest of more than five percent in the related person.
(b) "Forum." A place where sales at retail occur, whether
physical or electronic. The term includes a store, a booth, a
publicly accessible Internet website, a catalog or similar
place.
(c) "Marketplace facilitator." A person that facilitates
the sale at retail of tangible personal property. For purposes
of this section, a person facilitates a sale at retail if the
person or an affiliated person:
(1) lists or advertises tangible personal property for sale
at retail in any forum; and
(2) either directly or indirectly through agreements or
arrangements with third parties, collects the payment from the
purchaser and transmits the payment to the person selling the
property.
The term includes a person that may also be a vendor.
(d) "Marketplace seller." A person that has an agreement
with a marketplace facilitator pursuant to which the marketplace
facilitator facilitates sales for the person.
(e) "Notice and reporting requirements." The notice
requirements under section 213.2 and the reporting requirements
under sections 213.3 and 213.4.
(f) "Referral." The transfer by a referrer of a potential
purchaser to a person that advertises or lists products for sale
on the referrer's platform.
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(g) "Referrer." A person, other than a person engaging in
the business of printing or publishing a newspaper, that,
pursuant to an agreement or arrangement with a marketplace
seller or remote seller, does the following:
(1) Agrees to list or advertise for sale at retail one or
more products of the marketplace seller or remote seller in a
physical or electronic medium.
(2) Receives consideration from the marketplace seller or
remote seller from the sale offered in the listing or
advertisement.
(3) Transfers by telecommunications, internet link or other
means, a purchaser to a marketplace seller, remote seller or
affiliated person to complete a sale.
(4) Does not collect a receipt from the purchaser for the
sale.
The term does not include a person that:
(1) provides internet advertising services; and
(2) does not provide the marketplace seller's or remote
seller's shipping terms or advertise whether a marketplace
seller or remote seller collects a sales or use tax.
The term includes a person that may also be a vendor.
(h) "Remote seller." A person, other than a marketplace
facilitator, marketplace seller or referrer, that does not
maintain a place of business in this Commonwealth that, through
a forum, sells tangible personal property at retail, the sale or
use of which is subject to the tax imposed by this article. The
term does not include an employe who in the ordinary scope of
employment renders services to his employer in exchange for
wages and salaries.
Section 213.1. Election.--(a) Subject to the provisions of
subsections (c) and (d), on or before March 1, 2018, and on or
before June 1 of each calendar year thereafter, beginning June
1, 2019, a remote seller, a marketplace facilitator or a
referrer that had aggregate sales at retail of tangible personal
property subject to tax under this article within this
Commonwealth or delivered to locations within this Commonwealth
worth at least ten thousand dollars ($10,000) during the
immediately preceding twelve calendar month period shall file an
election with the department to collect and remit the tax
imposed under section 202 or to comply with the notice and
reporting requirements. The election shall be made on a form and
in a manner prescribed by the department and, except as provided
in subsection (e), shall apply to the next succeeding fiscal
year.
(b) A remote seller, a marketplace facilitator or a referrer
that makes an election under subsection (a) to collect and remit
the tax imposed under section 202 shall obtain a license under
Part IV of this article.
(c) The requirement by a marketplace facilitator to make an
election under subsection (a) shall only apply to the following:
(1) sales at retail through the marketplace facilitator's
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forum made by or on behalf of a marketplace seller that does not
maintain a place of business in this Commonwealth; and
(2) sales at retail made by a marketplace facilitator on its
own behalf if the marketplace facilitator does not maintain a
place of business in this Commonwealth.
(d) The requirement by a referrer to make an election under
subsection (a) shall only apply to sales at retail:
(1) directly resulting from a referral of a purchaser to a
marketplace seller that does not maintain a place of business in
this Commonwealth;
(2) directly resulting from a referral of a purchaser to a
remote seller; and
(3) of the referrer's own products if the referrer does not
maintain a place of business in this Commonwealth.
A referrer may make an election under subsection (a) for the
sales described in paragraphs (1) and (2) that is different from
the election made for the sales described in paragraph (3).
(e) An election made on or before March 1, 2018, shall be in
effect for the balance of the 2017-2018 fiscal year and for the
2018-2019 fiscal year. A remote seller, marketplace facilitator
or referrer may change an election to comply with the notice and
reporting requirements to an election to collect and remit the
tax imposed under section 202 at any time during a fiscal year
by filing a new election with the department and obtaining a
license under Part IV of this article. The new election shall be
effective thirty days after the filing and shall be effective
for the balance of the fiscal year in which the new election was
filed and for the next succeeding fiscal year.
(f) A remote seller, marketplace facilitator or referrer who
does not submit an election under subsection (a) or a new
election under subsection (e) shall be deemed to have elected to
comply with the notice and reporting requirements.
(g) In addition to records that may be required to be
maintained under other applicable provisions of this article by
a remote seller, marketplace facilitator or referrer, a remote
seller, marketplace facilitator or referrer subject to this part
shall also be subject to section 271 relating to the keeping of
records and section 272 relating to the examination of records
by the department and agents and employes of the department.
Section 213.2. Notice requirements.--(a) A remote seller,
marketplace facilitator or referrer required to make an election
under section 213.1(a) that does not elect to collect and remit
the tax imposed by section 202 shall comply with the applicable
notice requirements of this section.
(b) A remote seller or marketplace facilitator subject to
the requirements of this section shall:
(1) Post a conspicuous notice on its forum that informs
purchasers intending to purchase tangible personal property for
delivery to a location within this Commonwealth that includes
all of the following:
(i) sales or use tax may be due in connection with the
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purchase and delivery of the tangible personal property;
(ii) the Commonwealth requires the purchaser to file a
return if use tax is due in connection with the purchase and
delivery; and
(iii) the notice is required by this section.
(2) Provide a written notice to each purchaser at the time
of each sale at retail that includes all of the following:
(i) a statement that sales tax is not being collected in
connection with the purchase;
(ii) a statement that the purchaser may be required to remit
use tax directly to the department; and
(iii) instructions for obtaining additional information from
the department regarding whether and how to remit use tax to the
department.
(c) The notice required by subsection (b)(2) must be
prominently displayed on all invoices and order forms and on
each sales receipt or similar document, whether in paper or
electronic form, provided to the purchaser. No statement that
sales or use tax is not imposed on a transaction may be made by
a remote seller or marketplace facilitator unless the
transaction is exempt from sales and use tax pursuant to this
article or other applicable Commonwealth law.
(d) A referrer subject to the requirements of this section
shall post a conspicuous notice on its platform that informs
purchasers intending to purchase tangible personal property for
delivery to a location within this Commonwealth that includes
all of the following:
(1) Sales or use tax may be due in connection with the
purchase and delivery.
(2) The person to which the purchaser is being referred may
or may not collect and remit sales tax to the department in
connection with the transaction.
(3) The Commonwealth requires the purchaser to file a return
if use tax is due in connection with the purchase and delivery
and not collected by the person.
(4) The notice is required by this section.
(5) Instructions for obtaining additional information from
the department regarding whether and how to remit sales or use
tax to the department.
(6) If the person to whom the purchaser is being referred
does not collect sales tax on a subsequent purchase by the
purchaser, the person may be required to provide information to
the purchaser and the department about the purchaser's potential
sales or use tax liability.
(e) The notice required under subsection (d) must be
prominently displayed and may include pop-up boxes or
notification by other means that appears when the referrer
transfers a purchaser to another person to complete the sale.
Section 213.3. Reports to purchasers and marketplace
sellers.--(a) A remote seller or marketplace facilitator
required to make an election under section 213.1(a) that does
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not elect to collect and remit the tax imposed by section 202
shall, no later than January 31 of each year, provide a written
report to each purchaser required to receive the notice under
section 213.2(b)(2) during the immediately preceding calendar
year that includes all of the following:
(1) A statement that the remote seller or marketplace
facilitator did not collect sales tax in connection with the
purchaser's transactions with the remote seller or marketplace
facilitator and that the purchaser may be required to remit use
tax to the department.
(2) A list, by date, indicating the type and purchase price
of each product purchased or leased by the purchaser from the
remote seller or marketplace facilitator and delivered to a
location within this Commonwealth.
(3) Instructions for obtaining additional information from
the department regarding whether and how to remit use tax to the
department.
(4) A statement that the remote seller or marketplace
facilitator is required to submit a report to the department
under section 213.4 that includes the name of the purchaser and
the aggregate dollar amount of the purchaser's purchases from
the remote seller or marketplace facilitator.
(5) Such additional information as the department may
reasonably require.
(b) The department shall prescribe the form of the report
required under subsection (a) and shall make the form available
on its publicly accessible Internet website.
(c) The report required under subsection (a) shall be mailed
by first-class mail in an envelope prominently marked with words
indicating that important tax information is enclosed to the
purchaser's billing address, if known, or, if unknown, to the
purchaser's shipping address. If the purchaser's billing and
shipping address are unknown, the report shall be sent
electronically to the purchaser's last known e-mail address with
a subject heading indicating that important tax information is
being provided.
(d) A referrer required to make an election under section
213.1(a) that does not elect to collect and remit the tax
imposed by section 202 shall, no later than January 31 of each
year, provide a written notice to each remote seller to whom the
referrer transferred a potential purchaser located in this
Commonwealth during the immediately preceding calendar year that
includes all of the following:
(1) A statement that a sales or use tax may be imposed by
the Commonwealth on the transaction.
(2) A statement that the remote seller may be required to
make the election required by section 213.1(a).
(3) Instructions for obtaining additional information
regarding sales and use tax from the department.
Section 213.4. Reports to department.--(a) A remote seller
or marketplace facilitator required to make an election under
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section 213.1(a) that does not elect to collect and remit the
tax imposed by section 202 shall, no later than January 31 of
each year, submit a report to the department. The report shall
include, with respect to each purchaser required to receive the
notice under section 213.2(b)(2) during the immediately
preceding calendar year, the following:
(1) The purchaser's name.
(2) The purchaser's billing address and, if different, the
purchaser's last known mailing address.
(3) The address within this Commonwealth to which products
were delivered to the purchaser.
(4) The aggregate dollar amount of the purchaser's purchases
from the remote seller or marketplace facilitator.
(5) The name and address of the remote seller, marketplace
facilitator or marketplace seller that made the sales to the
purchaser.
(b) A referrer required to make an election under section
213.1(a) that does not elect to collect and remit the tax
imposed by section 202 shall, no later than January 31 of each
year, submit a report to the department. The report shall
include a list of persons who received the notice required under
section 213.3(d).
(c) The department shall prescribe the forms of the reports
required under this section and shall make them available on its
publicly accessible Internet website. The reports shall be
submitted electronically in such manner as the department shall
require.
(d) A report required under this section shall be submitted
by an officer of the remote seller, marketplace facilitator or
referrer and shall include a statement, made under penalty of
perjury, by the officer that the remote seller, marketplace
facilitator or referrer made reasonable efforts to comply with
the notice and reporting requirements of this part.
Section 213.5. Liability and penalties.--(a) The department
shall assess a penalty in the amount of twenty thousand dollars
($20,000) or twenty per cent of total sales in Pennsylvania
during the previous twelve months, whichever is less, against a
remote seller, marketplace facilitator or referrer that makes an
election under section 213.1(a) to comply with the notice and
reporting requirements, or is deemed to have made such election
under section 213.2(f), and fails to comply with the
requirements under section 213.3 or 213.4. The penalty shall be
assessed separately for each violation, but may only be assessed
once in a calendar year.
(b) A remote seller, marketplace facilitator or referrer
that makes an election under section 213.1(a) to collect and
remit the tax imposed under section 202 shall be subject to all
of the provisions of this article with respect to the collection
and remittance of such tax and shall be subject to all of the
penalties, interest and additions for failing to comply with the
provisions of this article, except as provided in this section.
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(c) For a period of five years after the effective date of
this section, the department may abate or reduce any penalty or
addition imposed under subsection (b) due to hardship or for
good cause shown.
(d) A marketplace facilitator or referrer is relieved of
liability under subsection (b) if the marketplace facilitator or
referrer can show to the satisfaction of the department that the
failure to collect the correct amount of tax was due to
incorrect information given to the marketplace facilitator or
referrer by a marketplace seller or remote seller.
(e) A class action may not be brought against a marketplace
facilitator or referrer on behalf of purchasers arising from or
in any way related to an overpayment of sales or use tax
collected by the marketplace facilitator or referrer, regardless
of whether such action is characterized as a tax refund claim.
Nothing in this subsection shall affect a purchaser's right to
seek a refund from the department under other provisions of this
article.
Section 213.6. Application.--Nothing in this section affects
the obligations of a vendor to register with the department and
to collect and remit sales tax or use tax.
Section 5. Section 278 of the act is amended by adding
subsections to read:
Section 278. Remote Sales Reports.--* * *
(c) If Federal legislation relating to remote sellers has
not been enacted by December 31, 2018, the Independent Fiscal
Office, in conjunction with the department, shall conduct a
study assessing the legal implications and fiscal impact of
mandating notice requirements for remote sellers. By April 1,
2019, results of the study, if a study is produced, shall be
provided to the chairman and minority chairman of the
Appropriations Committee of the Senate, the chairman and
minority chairman of the Finance Committee of the Senate, the
chairman and minority chairman of the Appropriations Committee
of the House of Representatives and the chairman and minority
chairman of the Finance Committee of the House of
Representatives.
(d) As used in this section, the term "remote seller" shall
have the same meaning as defined in section 213.
Section 6.
(Reserved).
Section 7. The act is amended by adding a section to read:
Section 304.2. Pennsylvania ABLE Savings Program Tax
Exemption.--(a) The following shall be exempt from all taxation
by the Commonwealth and its political subdivisions:
(1) Undistributed earnings on an account.
(2) An amount distributed from an account that is not
included in gross income under section 529A(c)(1) of the
Internal Revenue Code .
(b) The following shall apply:
(1) An amount contributed to an account shall be deductible
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from the taxable income of the contributor under this article
for the tax year the contribution was made.
(2) The total contributions made by a contributor during a
taxable year to all accounts that are allowable as a deduction
under this section shall not exceed the dollar amount under
section 2503(b) of the Internal Revenue Code .
(3) The deduction shall not result in the contributor's
taxable income being less than zero.
(4) The department and the Treasury Department shall
cooperate in verifying account information relating to
contributions to an account itemized by a contributor and the
contributor's specific contributions.
(c) An amount that is distributed from an account and not
otherwise exempt from taxation under this section shall be
taxable income to the designated beneficiary under this article.
(d) A change in designated beneficiaries under section
529A(c) of the Internal Revenue Code shall not constitute a
taxable event.
(e) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection unless
the context clearly indicates otherwise:
"Account." An ABLE savings account as defined in section 102
of the Pennsylvania ABLE Act.
"Contributor." An individual who makes a contribution to an
account as defined in section 102 of the Pennsylvania ABLE Act.
"Designated beneficiary." The term shall have the same
meaning as provided in section 102 of the Pennsylvania ABLE Act.
"Internal Revenue Code." The Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended.
"Pennsylvania ABLE Act." The act of April 18, 2016 (P.L.128,
No.17), known as the Pennsylvania ABLE Act.
"Pennsylvania ABLE Savings Program." The program established
under the Pennsylvania ABLE Act.
"Qualified disability expense." The term shall have the same
meaning as provided in section 102 of the Pennsylvania ABLE Act.
Section 8. Section 312 of the act, amended July 13, 2016
(P.L.526, No.84), is amended to read:
Section 312. Tax Withheld.--The amount withheld under
section [316] 316.1 shall be allowed to the taxpayer from whose
income the tax was withheld as a credit against the tax imposed
on him by this article.
Section 9. Section 315.6 of the act is repealed:
[Section 315.6. Contribution for Korea/Vietnam Memorial
National Education Center.--(a) For tax years 1997, 1998, 1999,
2000, 2001, 2002, 2003 and 2004, the department shall provide a
space on the face of the Pennsylvania individual income tax
return form whereby an individual may voluntarily designate a
contribution of any amount from the individual's tax refund to
the Korea/Vietnam Memorial National Education Center.
(b) The amount designated by an individual on the
Pennsylvania individual income tax return form shall be deducted
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from the tax refund to which the individual is entitled and
shall not constitute a charge against the income tax revenues
due the Commonwealth.
(c) The department shall determine annually the total amount
designated by individual taxpayers under this section and shall
report the amount to the State Treasurer, who shall prepare the
appropriate documentation and transfer the designated amount
from the General Fund to the Korea/Vietnam Memorial National
Education Center.
(d) The department shall provide adequate information
regarding the center and its purposes in its instructions for
tax years 1997, 1998, 1999, 2000, 2001, 2002, 2003 and 2004
which accompany Pennsylvania individual income tax return forms
to include the address of the Korea/Vietnam Memorial National
Education Center to which contributions may be sent by taxpayers
who wish to make additional contributions to the center.
(e) On or before March 31 of each year, the Korea/Vietnam
Memorial National Education Center shall submit a report
detailing contributions received and activities undertaken
during the prior calendar year to the Military and Veterans'
Affairs Committee of the Senate and the Veterans Affairs and
Emergency Preparedness Committee of the House of
Representatives.
(f) This section shall expire December 31, 2005.]
Section 10. Section 315.9(b.1) and (c) of the act are
amended to read:
Section 315.9. Operational Provisions.--
* * *
(b.1) Notwithstanding subsection (b), the checkoffs
established in sections 315.2 [and], 315.3, 315.4, 315.7, 315.8,
315.10 and 315.11 shall not expire.
[(c) Sections 315.3, 315.4 and 315.8 shall expire January 1,
2018.]
Section 11. The act is amended by adding a section to read:
Section 316. Definitions.--The following words, terms and
phrases, when used in this part, shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Payee." The person receiving the payments subject to
withholding under this part.
"Payments." The term does not include a partner or
shareholder's distributive share of income from a partnership or
Pennsylvania S corporation.
"Payor." The person required to withhold under this part.
Section 12. Section 316 of the act, amended July 13, 2016
(P.L.526, No.84), is renumbered to read:
Section [316] 316.1. Requirement of Withholding Tax.--(a)
Every employer maintaining an office or transacting business
within this Commonwealth and making payment of compensation (i)
to a resident individual, or (ii) to a nonresident individual
taxpayer performing services on behalf of such employer within
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this Commonwealth, shall deduct and withhold from such
compensation for each payroll period a tax computed in such
manner as to result, so far as practicable, in withholding from
the employe's compensation during each calendar year an amount
substantially equivalent to the tax reasonably estimated to be
due for such year with respect to such compensation. The method
of determining the amount to be withheld shall be prescribed by
regulations of the department.
(b) Whenever the Pennsylvania State Lottery or a person
making a Pennsylvania State Lottery prize payment in the form of
an annuity is required to withhold Federal income tax under
section 3402 of the Internal Revenue Code of 1986, as amended
(Public Law 99-514, 26 U.S.C. § 1 et seq.), or backup
withholding under section 3406 of the Internal Revenue Code of
1986, as amended, from a gambling or lottery prize payment
awarded by the Pennsylvania State Lottery that is taxable under
this article, the Pennsylvania State Lottery or the person
making the annuity payment shall deduct and withhold from the
prize payment an amount equal to the amount of the prize payment
subject to withholding under section 3402 or 3406 of the
Internal Revenue Code of 1986 multiplied by the tax rate in
effect under this article at the time the prize payment is made.
Section 13. The act is amended by adding a section to read:
Section 316.2. Withholding Tax Requirement for Non-Employer
Payors.--(a) To the extent not already required to withhold tax
on payments under section 316.1, a person that:
(1) makes payments of income from sources within this
Commonwealth described in section 303(a)(1) or (2) to either a
nonresident individual or an entity that is disregarded under
section 307.21 that has a nonresident member; and
(2) is required under section 335(f)(1) to file a copy of
form 1099-MISC with the department regarding the payments;
shall deduct and withhold from the payments an amount equal to
the net amount of the payments multiplied by the tax rate
specified under section 302(b).
(b) Withholding of tax by payors is optional and at the
discretion of the payor with respect to payees who receive
payments of less than $5,000 annually from the payor.
(c) This section shall not apply to payments made by a payor
to a payee if the payor is:
(1) The United States or an agency or instrumentality
thereof; or
(2) The Commonwealth or an agency, instrumentality or
political subdivision thereof.
(d) The department may prescribe regulations to implement and
clarify the withholding requirement set forth in this section.
Section 14. Section 317 of the act, amended July 13, 2016
(P.L.526, No.84), is amended to read:
Section 317. Information Statement.--(a) Every employer
required to deduct and withhold tax under [this article] section
316.1(a) shall furnish to each such employe to whom the employer
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has paid compensation during the calendar year a written
statement in such manner and in such form as may be prescribed
by the department showing the amount of compensation paid by the
employer to the employe, the amount deducted and withheld as
tax, pursuant to [this article] section 316.1(a), and such other
information as the department shall prescribe. Each statement
required by this section for a calendar year shall be furnished
to the employe on or before January 31 of the year succeeding
such calendar year. If the employe's employment is terminated
before the close of such calendar year, the employer, at his
option, shall furnish the statement to the employe at any time
after the termination but no later than January 31 of the year
succeeding such calendar year. However, if an employe whose
employment is terminated before the close of such calendar year
requests the employer in writing to furnish him the statement at
an earlier time, and, if there is no reasonable expectation on
the part of both employer and employe of further employment
during the calendar year, then the employer shall furnish the
statement to the employe on or before the later of the 30th day
after the day of the request or the 30th day after the day on
which the last payment of wages is made.
(b) Every person required to deduct and withhold tax under
section [316(b)] 316.1(b) shall report the prize and the amount
of withholding to the taxpayer on Internal Revenue Service Form
W-2G, or similar form used for reporting Federal income tax
withholding from the prize.
Section 15. The act is amended by adding sections to read:
Section 317.1. Information Statement for Non-Employer
Payors.--Every payor required to deduct and withhold tax under
section 316.2 shall furnish to a payee to whom the payor has
paid income from sources within this Commonwealth during the
calendar year a copy of form 1099-MISC required under section
335(f)(1). The copy of form 1099-MISC required by this section
for each calendar year shall be forwarded to the payee on or
before March 1 of the year succeeding the calendar year.
Section 317.2. Information Statement for Payees.--Every
payee receiving a copy of form 1099-MISC from a payor under
section 317.1 shall file a duplicate of such information return
with the payee's State income tax return.
Section 16. Section 318 of the act, amended July 13, 2016
(P.L.526, No.84), is amended to read:
Section 318. Time for Filing Withholding Returns.--(a)
Every employer required to deduct and withhold tax under [this
article] section 316.1(a) shall file a quarterly withholding
return on or before the last day of April, July, October and
January for the three months ending the last day of March, June,
September and December. Such quarterly returns shall be filed
with the department at its main office or at any branch office
which it may designate for filing returns.
(b) Every person required to deduct and withhold tax under
section [316(b)] 316.1(b) shall file a withholding tax return at
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the same time the person is required to file its annual return
of withheld Federal income tax (IRS Form 945) from nonpayroll
payments. The return shall be filed with the department.
Section 17. The act is amended by adding a section to read:
Section 318.1. Time for Filing Payors' Returns.--Every payor
required to deduct and withhold tax under section 316.2 shall
file a quarterly withholding return on or before the last day of
April, July, October and January for each three month period
ending the last day of March, June, September and December. The
quarterly returns shall be filed with the department in the
manner prescribed by regulation.
Section 18. Section 319 of the act, amended July 13, 2016
(P.L.526, No.84), is amended to read:
Section 319. Payment of Taxes Withheld.--(a) Every employer
withholding tax under [this article] section 316.1(a) shall pay
over to the department or to a depository designated by it the
tax required to be deducted and withheld under [this article]
section 316.1(a).
(1) Where the aggregate amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be less than twelve hundred dollars ($1,200), such
employer shall file a return and pay the tax on or before the
last day for filing a quarterly return under section 318.
(2) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be twelve hundred dollars ($1,200) or more but less
than four thousand dollars ($4,000), such employer shall pay the
tax monthly, on or before the fifteenth day of the month
succeeding the months of January to November, inclusive, and on
or before the last day of January following the month of
December.
(3) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be four thousand dollars ($4,000) or more but less
than twenty thousand dollars ($20,000), such employer shall pay
the tax semi-monthly, within three banking days after the close
of the semi-monthly period.
(4) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be twenty thousand dollars ($20,000) or more, such
employer shall pay the tax on the Wednesday after payday if the
payday falls on a Wednesday, Thursday or Friday and on the
Friday after payday if the payday falls on a Saturday, Sunday,
Monday or Tuesday.
Notwithstanding anything in this subsection to the contrary,
whenever any employer fails to deduct or truthfully account for
or pay over the tax withheld or file returns as prescribed by
this article, the department may serve a notice on such employer
requiring him to withhold taxes which are required to be
deducted under [this article] section 316.1(a) and deposit such
taxes in a bank approved by the department in a separate account
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in trust for and payable to the department, and to keep the
amount of such tax in such account until payment over to the
department. Such notice shall remain in effect until a notice of
cancellation is served on the employer by the department.
(b) Every person deducting and withholding tax under section
[316(b)] 316.1(b) shall remit the tax to the department on the
same frequency that the person is required to remit Federal
income tax withheld from nonpayroll payments.
Section 19. The act is amended by adding a section to read:
Section 319.1. Payment of Taxes Withheld for Non-Employer
Payors.--Every payor withholding tax under section 316.2 shall
pay over to the department or to a depository designated by the
department the tax required to be deducted and withheld under
section 316.2. The time for paying over the withheld tax shall
be as set forth in section 319(1), (2), (3) and (4).
Section 20. Section 320 of the act, amended July 13, 2016
(P.L.526, No.84), is amended to read:
Section 320. Liability for Withheld Taxes.--Every person
required to deduct and withhold tax under [this part] section
316.1 is hereby made liable for such tax. For purposes of
assessment and collection, any amount required to be withheld
and paid over to the department and any additions to tax
penalties and interest with respect thereto, shall be considered
the tax of the person. All taxes deducted and withheld pursuant
to [this part] section 316.1 or under color of [this part]
section 316.1 shall constitute a trust fund for the Commonwealth
and shall be enforceable against such person, his representative
or any other person receiving any part of such fund.
Section 21. The act is amended by adding sections to read:
Section 320.1. Payor's Liability for Withheld Taxes.--Every
payor required to deduct and withhold tax under section 316.2 is
hereby made liable for such tax. For purposes of assessment and
collection, any amount required to be withheld and paid over to
the department and any additions to tax, penalties, and interest
with respect thereto shall be considered the tax of the payor.
All taxes deducted and withheld from payees pursuant to section
316.2 or under color of section 316.2 shall constitute a trust
fund for the Commonwealth and shall be enforceable against such
payor, his representative or any other person receiving any part
of such fund.
Section 321.2. Payor's Failure to Withhold.--If a payor
fails to deduct and withhold tax as prescribed under section
316.2 and thereafter the tax which may be credited is paid, the
tax which was required to be deducted and withheld shall not be
collected from the payor, but the payor shall not be relieved of
the liability for any penalty, interest or additions to the tax
imposed with respect to such failure to deduct and withhold.
Section 22. The heading of Part VII-A of Article III of the
act is amended to read:
PART VII-A
WITHHOLDING TAX ON [SHARES ON] INCOME FROM SOURCES
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WITHIN THIS COMMONWEALTH
Section 23. Section 324.1 of the act is amended by adding a
subsection to read:
Section 324.1. Amount of Withholding Tax.--* * *
(c) There shall not be taken into account any share of
income of nonresident partner, member or shareholder from
sources within this Commonwealth to the extent that the amount
was subject to withholding under section 324.4 and to the extent
withholding actually occurred under section 324.4 by the time
withholding is required to be made by the partnership,
association or Pennsylvania S corporation under section 324.
Section 24. Section 324.2 of the act is amended to read:
Section 324.2. Treatment of Nonresident Partners, Members or
Shareholders.--(a) Each nonresident partner, member,
shareholder or holder of a beneficial interest shall be allowed
a credit for such partner's, member's, shareholder's or holder
of a beneficial interest's share of the withholding tax paid by
the partnership, association or Pennsylvania S corporation. Such
credit shall be allowed for the partner's, member's,
shareholder's or holder of a beneficial interest's taxable year
in which, or with which, the partnership, association or
Pennsylvania S corporation taxable year (for which such tax was
paid) ends.
(b) Each nonresident lessor shall be allowed a credit for
the nonresident lessor's share of the withholding tax paid by
the lessee under section 324.4.
(c) The credits under this section shall be allowed for the
nonresident lessor's taxable year in which the lessee withheld
tax.
Section 25. The act is amended by adding sections to read:
Section 324.4. Withholding on Income.--(a) Every lessee of
Pennsylvania real estate who makes a lease payment in the course
of a trade or business to a nonresident lessor shall withhold
Pennsylvania personal income tax on rental payments to such
nonresident lessor.
(b) Every lessee shall withhold from each payment made to a
lessor an amount equal to the net amount payable to the lessor
multiplied by the tax rate specified under section 302(b).
(c) (Reserved).
(d) The withholding of tax under this section is optional
and at the discretion of the lessee with respect to payments to
a lessor who receives less than $5,000 annually on a lease.
(e) For purposes of this section, the term or phrase:
(1) "Lessor" shall include an individual, estate, or trust.
(2) "Lease payment" shall include, but not be limited to
rents, royalties, bonus payments, damage payments, delay rents
and other payments made pursuant to a lease, other than
compensation derived from intangible property having a taxable
or business situs in this Commonwealth. Classification as a
"lease payment" under this section is solely for the purposes of
establishing withholding requirements and shall not be relevant
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for a determination as to the proper income classification of
any such lease payment.
(3) "In the course of a trade or business" shall include any
person or business entity making lease payments to a nonresident
or agent of a nonresident who collects rent or lease payments on
behalf of a nonresident owner, other than a tenant of
residential property.
Section 324.5. Annual Withholding Statement.--(a) Every
lessee shall furnish to each lessor an annual statement at such
time and in such manner as may be prescribed by the department
showing the total payments made by the lessee to the lessor
during the preceding taxable year and showing the amount of the
tax deducted and withheld from the payments under section 324.4.
(b) Every lessee shall file with the department an annual
statement at such time and in such manner as may be prescribed
by the department showing the total payments made to each lessor
subject to withholding during the preceding taxable year or any
portion of the preceding taxable year and the total amount of
tax deducted and withheld under section 324.4.
(c) Every lessor shall file a duplicate of the annual
statement furnished by the lessee under this section with the
lessor's State income tax return.
Section 26. Sections 335(f) and 352(f), (h) and (j) of the
act are amended to read:
Section 335. Requirements Concerning Returns, Notices,
Records and Statements.--* * *
(f) The following apply:
(1) Any person who:
(i) makes payments of Pennsylvania source income [from
sources within this Commonwealth] that fall within any of the
eight classes of income enumerated in section 303(a);
(ii) makes such payments [of nonemploye compensation or
payments under an oil and gas lease under subparagraph (i) to a
resident or nonresident] to an individual, an entity treated as
a partnership for tax purposes or a single member limited
liability company; and
(iii) is required to make a form 1099-MISC return to the
Secretary of the Treasury of the United States with respect to
[the] such payments, shall file a copy of such form 1099-MISC
with the department and send a copy of such form 1099-MISC to
the payee by [the Federal filing deadline] March 1 each year[.]
or, if filed electronically, by March 31 of each year. If the
form 1099-MISC filed by a payor with the Secretary of the
Treasury of the United States is not completed in such a manner
that State income and State tax withheld information, currently
boxes 16 through 18 on Federal form 1099-MISC, is reflected
thereon, the payor shall update the copies of form 1099-MISC to
be provided pursuant to this section to reflect such information
prior to filing it with the department and sending it to the
payee.
(2) If the payor is required to perform electronic filing
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for Pennsylvania employer withholding purposes, the form 1099-
MISC shall be filed electronically with the department.
(3) As used in this subsection, the following words and
phrases shall have the meanings given to them in this paragraph
unless the context clearly indicates otherwise:
"Payee." The person receiving the payments subject to
withholding under this subsection.
"Payments." The term does not include a partner or
shareholder's distributive share of income from a partnership or
Pennsylvania S corporation.
"Payor." The person required to withhold under this
subsection.
* * *
Section 352. Additions, Penalties and Fees.--* * *
(f) (1) Any person required under the provisions of section
317 to furnish a statement to an employe who wilfully furnishes
a false or fraudulent statement, or who wilfully fails to
furnish a statement in the manner, at the time, and showing the
information required under section 317 and the regulations
prescribed thereunder, shall, for each such failure, be subject
to a penalty of fifty dollars ($50) for each employe.
(2) Any person required to furnish an information return who
furnishes a false or fraudulent return or who fails to file or
provide an information return shall be subject to a penalty of
two hundred fifty dollars ($250).
(3) Every partnership, estate, trust or Pennsylvania S
corporation required to file a return with the department under
the provisions of section 330.1 or 335(c) who furnishes a false
or fraudulent return or who fails to file the return in the
manner and at the time required under section 330.1 or 335(c)
shall be subject to a penalty of $250 for each failure.
(4) Any person required to file a copy of form 1099-MISC
with the department under the provisions of section 335(f) who
wilfully furnishes a false or fraudulent form or who wilfully
fails to file the form in the manner, at the time and showing
the information required under section 335(f) shall, for each
such failure, be subject to a penalty of fifty dollars ($50).
(5) Any person required under the provisions of section
335(f) to furnish a copy of form 1099-MISC to a payee who
wilfully furnishes a false or fraudulent form or who wilfully
fails to furnish a form in the manner, at the time and showing
the information required by section 335(f) shall, for each such
failure, be subject to a penalty of fifty dollars ($50).
(6) Any person required to file an annual statement with the
department under the provisions of section 324.5 who wilfully
furnishes a false or fraudulent statement or who wilfully fails
to file the statement in the manner, at the time and showing the
information required under section 324.5 and the regulations
prescribed under section 324.5 shall, for each such failure, be
subject to a penalty of fifty dollars ($50).
(7) Any person required under the provisions of section
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324.5 to furnish an annual statement to a lessor who wilfully
furnishes a false or fraudulent statement or who wilfully fails
to furnish a statement in the manner, at the time and showing
the information required by section 324.5 and the regulations
prescribed under section 324.5 shall, for each such failure, be
subject to a penalty of fifty dollars ($50).
(h) If any amount of tax required to be withheld by an
employer and paid over to the department under section 319 or
319.1 is not paid on or before the due date prescribed for
filing the quarterly return under section 318 or 318.1,
determined without regard to an extension of time for filing,
there shall be added to the tax and paid to the department each
month five per cent of such underpayment for each month or
fraction thereof from the due date, for the period from the due
date to the date paid; but the underpayment shall, for purposes
of computing the addition for any month, be reduced by the
amount of any part of the tax which is paid by the beginning of
that month. The total of such additions shall not exceed fifty
per cent of the amount of tax required to be shown on the return
reduced by the amount of any part of the tax which is paid by
the return due date and by the amount of any credit against the
tax which may be claimed on the return.
* * *
(j) If any amount of tax required to be withheld by a
partnership, association [or], Pennsylvania S corporation or
lessee and paid over to the department under section 324 or
324.4 is not paid on or before the date prescribed therefor,
there shall be added to the tax and paid to the department each
month five per cent of such underpayment for each month or
fraction thereof from the due date, for the period from the due
date to the date paid; but the underpayment shall, for purposes
of computing the addition for any month, be reduced by the
amount of any part of the tax which is paid by the beginning of
that month. The total of such additions shall not exceed fifty
per cent of the amount of such tax.
Section 27. Section 401(3)4(c) of the act is amended and the
subsection is amended by adding a clause to read:
Section 401. Definitions.--The following words, terms, and
phrases, when used in this article, shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
* * *
(3) "Taxable income." * * *
4. * * *
(c) (1) The net loss deduction shall be the lesser of:
(A) (I) For taxable years beginning before January 1, 2007,
two million dollars ($2,000,000);
(II) For taxable years beginning after December 31, 2006,
the greater of twelve and one-half per cent of taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
three million dollars ($3,000,000);
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(III) For taxable years beginning after December 31, 2008,
the greater of fifteen per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or three
million dollars ($3,000,000);
(IV) For taxable years beginning after December 31, 2009,
the greater of twenty per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or three
million dollars ($3,000,000);
(V) For taxable years beginning after December 31, 2013, the
greater of twenty-five per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or four million
dollars ($4,000,000);
(VI) For taxable years beginning after December 31, 2014,
the greater of thirty per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or five million
dollars ($5,000,000); [or]
(VII) For taxable years beginning after December 31, 2017,
thirty-five per cent of taxable income as determined under
subclause 1 or, if applicable, subclause 2;
(VIII) For taxable years beginning after December 31, 2018,
forty per cent of taxable income as determined under subclause 1
or, if applicable, subclause 2; or
(B) The amount of the net loss or losses which may be
carried over to the taxable year or taxable income as determined
under subclause 1 or, if applicable, subclause 2.
(1.1) In no event shall the net loss deduction include more
than five hundred thousand dollars ($500,000), in the aggregate,
of net losses from taxable years 1988 through 1994.
(2) (A) A net loss for a taxable year may only be carried
over pursuant to the following schedule:
Taxable Year Carryover
1981 1 taxable year
1982 2 taxable years
1983-1987 3 taxable years
1988 2 taxable years plus
1 taxable year
starting with the
1995 taxable year
1989 1 taxable year plus
2 taxable years
starting with the
1995 taxable year
1990-1993 3 taxable years
starting with the
1995 taxable year
1994 1 taxable year
1995-1997 10 taxable years
1998 and thereafter 20 taxable years
(B) The earliest net loss shall be carried over to the
earliest taxable year to which it may be carried under this
schedule. The total net loss deduction allowed in any taxable
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year shall not exceed:
(I) Two million dollars ($2,000,000) for taxable years
beginning before January 1, 2007.
(II) The greater of twelve and one-half per cent of the
taxable income as determined under subclause 1 or, if
applicable, subclause 2 or three million dollars ($3,000,000)
for taxable years beginning after December 31, 2006.
(III) The greater of fifteen per cent of the taxable income
as determined under subclause 1 or, if applicable, subclause 2
or three million dollars ($3,000,000) for taxable years
beginning after December 31, 2008.
(IV) The greater of twenty per cent of the taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
three million dollars ($3,000,000) for taxable years beginning
after December 31, 2009.
(V) The greater of twenty-five per cent of taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
four million dollars ($4,000,000) for taxable years beginning
after December 31, 2013.
(VI) The greater of thirty per cent of taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
five million dollars ($5,000,000) for taxable years beginning
after December 31, 2014.
(VII) Thirty-five per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 for taxable
years beginning after December 31, 2017.
(VIII) Forty per cent of taxable income as determined under
subclause 1 or, if applicable, subclause 2 for taxable years
beginning after December 31, 2018.
(c.1) A deduction under Part IV.1 shall be allowed from
taxable income as prescribed in a satisfaction commitment letter
executed between the Department of Community and Economic
Development and a taxpayer under section 407.7(c).
* * *
Section 28. Article IV of the act is amended by adding a
part to read:
PART IV-A
QUALIFIED MANUFACTURING INNOVATION
AND REINVESTMENT DEDUCTION
Section 407.6. Definitions.--(a) For the purposes of this
part only, the following words, terms and phrases shall have the
meaning ascribed to them in this subsection, except where the
context clearly indicates a different meaning:
(1) "Annual taxable payroll." The total amount of wages
paid in this Commonwealth by a taxpayer for the base year or
year one, as applicable, from which personal income tax under
Article III is withheld.
(2) "Base year." The four calendar quarters preceding the
start date.
(3) "Department." The Department of Community and Economic
Development of the Commonwealth.
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(4) "Manufacture." The mechanical, physical, biological or
chemical transformation of materials, substances or components
into new products that are creations of new items of tangible
personal property for sale.
(5) "Qualified manufacturing innovation and reinvestment
deduction." An allowable deduction as determined, calculated
and executed in a commitment letter between the department and
the taxpayer.
(6) "Qualified tax liability." A taxpayer's tax liability
under this article.
(7) "Start date." The first day of the calendar quarter in
which a taxpayer advises the department of the taxpayer's intent
to initiate an eligible project unless the applicant requests
and the department agrees to a later start date.
(8) "Taxpayer." An employer subject to the tax under this
article.
(9) "Year one." The four calendar quarters immediately
following the start date.
Section 407.7. Manufacturing Innovation and Reinvestment
Deduction.--(a) In order to be eligible to receive a
manufacturing innovation and reinvestment deduction, a taxpayer
must demonstrate to the department a capital investment in
excess of one hundred million dollars ($100,000,000) for the
creation of new or refurbished manufacturing capacity within
three years of a designated start date.
(b) (1) A taxpayer must advise the department in advance of
the start date of any project for which the taxpayer may seek a
qualified manufacturing innovation and reinvestment deduction. A
taxpayer must attest the taxpayer's intent to meet the
eligibility criteria and provide relevant information pertinent
to the project's size and scope in a manner as determined by the
department.
(2) Within five years of a project's start date, a taxpayer
must complete to the department's satisfaction an application on
a form and in a manner as determined by the department to attest
that the project has been completed and the eligibility criteria
has been satisfied.
(c) Upon the receipt of the taxpayer's application, the
Department of Revenue must make a finding that the applicant has
filed all required State tax reports and returns for all
applicable tax years and paid any balance of State tax due as
determined at settlement, assessment or determination and the
department, then in conjunction with the Department of Revenue,
shall make an eligibility or satisfaction determination within
ninety days of submission. If the department makes a
satisfaction determination, the department and the taxpayer
shall execute a satisfaction commitment letter containing the
following:
(1) The number of new jobs created and their corresponding
description.
(2) The number of new jobs created during construction of
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the project.
(3) The amount of private capital investment in the creation
of new jobs.
(4) The increase in the annual taxable payroll attributable
to new manufacturing jobs.
(5) A determination of the maximum allowable deduction
against a taxpayer's qualified tax liability under this article.
(6) Any other information as the department deems
appropriate.
(d) (1) Upon determining a taxpayer's satisfaction of the
eligibility criteria, the department shall calculate the maximum
allowable deduction that a taxpayer may claim against the
taxpayer's taxable income under this article. The deduction
shall be equal to five per cent of the private capital
investment utilized in the creation of new or refurbished
manufacturing capacity per tax year for a period of five years.
(2) A taxpayer may utilize the amount of the deduction in
each year of the succeeding five tax years immediately following
the department's satisfaction determination and the execution of
a satisfaction commitment letter.
(3) A taxpayer cannot use the deduction to reduce its tax
liability by more than fifty per cent of the tax liability under
this article for the taxable year. The deduction is
nontransferable and any unused portion in a tax year shall
expire at the end of the corresponding tax year.
Section 29. The definition of "veterans' organization" in
section 1101-C of the act, added July 13, 2016 (P.L.526, No.84),
is amended to read:
Section 1101-C. Definitions.--The following words when used
in this article shall have the meanings ascribed to them in this
section:
* * *
"Veterans' service organization." A not-for-profit
organization that [is recognized by the Internal Revenue Service
as a tax exempt organization described under section 501(c)(19)
of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. § 501(c)(19)). For the purposes of this article, the term
shall only include a not-for-profit organization for the period
in which the organization has a valid tax exemption under
section 501(c)(19) of the Internal Revenue Code of 1986, as
determined by the Internal Revenue Service.] has been chartered
by the Congress of the United States to service veterans or is a
member of the Pennsylvania State Veterans' Commission under 51
Pa.C.S. Ch. 17 (relating to State Veterans' Commission and
Deputy Adjutant General for Veterans' Affairs).
* * *
Section 30. Section 1102-C.2 of the act, amended July 13,
2016 (P.L.526, No.84), is amended to read:
Section 1102-C.2. Exempt Parties.--The United States, the
Commonwealth or any of their instrumentalities, agencies or
political subdivisions, or veterans' service organizations shall
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be exempt from payment of the tax imposed by this article. The
exemption under this section shall not, however, relieve any
other party to a transaction from liability for the tax.
Section 31. The act is amended by adding an article to read:
ARTICLE XVII-A.1
TAX CREDIT ELIGIBILITY
Section 1701-A.1. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of Revenue of the Commonwealth.
"Tax credit." A tax credit authorized under any of the
following:
(1) Article XVII-B.
(2) Article XVII-D.
(3) Article XVII-E.
(4) Article XVII-G.
(5) Article XVII-H.
(6) Article XVII-I.
(7) Article XVII-J.
(8) Article XVII-K.
(9) Article XVIII.
(10) Article XVIII-B.
(11) Article XVIII-D.
(12) Article XVIII-E.
(13) Article XVIII-F.
(14) Article XVIII-G.
(15) Article XIX-A.
(16) Article XIX-E.
(17) Section 2010.
(18) Article XXIX-D.
(19) Article XX-B of the act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949.
Section 1702-A.1. Eligibility.
(a) Except as otherwise provided by law, before a tax credit
can be awarded, the department may make a finding that the
taxpayer has filed all required State tax reports and returns
for all applicable taxable years and paid any balance of State
tax due as determined at settlement or assessment by the
department, unless the tax due is currently under appeal.
(b) (Reserved).
Section 32. Section 1711-D of the act is amended by adding
definitions to read:
Section 1711-D. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Deteriorated property." Any blighted, impoverished area
containing industrial, commercial or other real property that is
abandoned, unsafe, vacant, undervalued, underutilized,
overgrown, defective, condemned, demolished or which contains
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economically undesirable land use.
* * *
"Film production tax credit district." A district authorized
under section 1716.2-D.
* * *
Section 33. Section 1712-D of the act is amended by adding a
subsection to read:
Section 1712-D. Credit for qualified film production expenses.
* * *
(b.1) Review and approval of applications for film
production tax credit district activity.--For applications
involving film production expenses incurred within a designated
film production tax credit district authorized under section
1716.2-D, the department shall accept applications at any time.
Applications shall be reviewed by the department utilizing the
criteria required under subsection (b). Upon determining the
taxpayer has incurred or will incur qualified film production
expenses, the department shall approve the taxpayer for a tax
credit utilizing the tax credits authorized under section
1716.2-D, not to exceed the amount authorized for the fiscal
year.
* * *
Section 34. The act is amended by adding a section to read:
Section 1716.2-D. Film production tax credit districts.
(a) Establishment.--The department may designate not more
than two film production tax credit districts for the purpose of
enhancing, promoting and expanding film production opportunities
and establishing a film production industry within this
Commonwealth.
(b) Criteria.--A film production tax credit district shall:
(1) Be at least 55 acres in size.
(2) Be located on deteriorated property.
(3) Be comprised of a parcel that is or will be occupied
by two or more qualified businesses that:
(i) in the aggregate, make a capital investment of
at least $400,000,000 within the district within five
years after the effective date of the designation of the
district; and
(ii) are dedicated to film production activity,
postproduction activity or other activities that directly
or indirectly support film production activity occurring
within the district or within this Commonwealth.
(4) Contain at least one qualified production facility
and six sound stages.
(c) Application.--The following apply:
(1) An application to designate a film production tax
credit district may be made by the county or municipality in
which all or part of the district will be located. The
department shall review the application and, if approved,
issue a designation for the film production tax credit
district. The application period shall be set by the
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department.
(2) The application shall contain the following
information:
(i) The geographic area of the proposed film
production tax credit district.
(ii) A detailed map of the proposed district,
including geographic boundaries, total area and present
use and conditions of the land and structures.
(iii) A description of the current social, economic
and demographic characteristics of the proposed district
and anticipated improvements in education, health, human
services, public safety and employment that will result
from designation of the district.
(iv) A description of anticipated film production
activity and ancillary activities in the proposed
district.
(v) Evidence of potential private and public
investment in the proposed district.
(vi) The role of the proposed district in regional
economic and community development.
(d) Designation period.--A district designated under
subsection (c) shall expire 15 years after the effective date of
the designation.
(e) Construction.--The tax credits authorized under this
section are in addition to the tax credits under section 1716-
D(a) and are available exclusively for activities occurring
within the designated district.
(f) Annual tax credits.--The department may authorize a tax
credit for a film production tax credit district in fiscal year
2019-2020 and in each fiscal year thereafter.
Section 35. Article XVII-D of the act is amended by adding a
subarticle to read:
SUBARTICLE E
ENTERTAINMENT ECONOMIC ENHANCEMENT PROGRAM
Section 1771-D. Scope of subarticle.
This subarticle relates to the Entertainment Economic
Enhancement Program.
Section 1772-D. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Class 1 venue." A stadium, arena, other structure or
property owned by a municipality or an authority formed under
Article XXV-A of the act of July 28, 1953 (P.L.723, No.230),
known as the Second Class County Code, at which concerts are
performed and which is all of the following:
(1) Located in a city of the first class or a county of
the second class.
(2) Constructed in a manner in which the venue has a
seating capacity of at least 14,000.
"Class 2 venue." A stadium, arena or other structure at
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