THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY BOYD, BELFANTI, BENNINGHOFF, CALTAGIRONE, CAUSER, CLYMER, CREIGHTON, FAIRCHILD, GEIST, GINGRICH, HALUSKA, HENNESSEY, HICKERNELL, HUTCHINSON, KAUFFMAN, M. KELLER, KILLION, MARKOSEK, MENSCH, METCALFE, MILLARD, MILLER, MILNE, MUSTIO, O'NEILL, PEIFER, PICKETT, PYLE, REICHLEY, ROCK, ROHRER, ROSS, SCAVELLO, SIPTROTH, SWANGER AND WALKO, FEBRUARY 24, 2009

REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 24, 2009  

AN ACT

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," further defining "installment sales method of

reporting" for purposes of the personal income tax; and

providing for exclusion of fire departments from requirements

to pay realty transfer tax.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 301(l.1) of the act of March 4, 1971

(P.L.6, No.2), known as the Tax Reform Code of 1971, added

December 23, 1983 (P.L.370, No.90), is amended to read:

Section 301.  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, and, unless specifically

provided otherwise, any reference in this article to the

Internal Revenue Code of 1986 shall mean the Internal Revenue

Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as

amended to January 1, 1997:

* * *

(l.1)  "Installment sales method of reporting" means the

method by which a taxpayer reports the gain upon the sale of

[tangible personal property or real property when at least one

payment is to be received in any taxable year following the

taxable year of sale, whether such property is sold or otherwise

disposed of in an isolated transaction or from the inventory of

a dealer or broker.] property when the sale of such property

qualifies for treatment as an installment sale as defined under

section 453 of the Internal Revenue Code of 1986 (Public Law

99-514, 26 U.S.C. § 453). Taxpayers may elect to allocate the

gain upon such transactions in equal proportion to each payment

to be received. Taxpayers who do not elect to allocate the gain

upon such transactions in equal proportion to each payment

received shall report all gains upon the sale in the taxable

year in which the transaction occurred. For the purposes of this

definition: (i) the gain upon the transaction shall be the

difference between the sales price and the seller's basis in the

property; and (ii) the sales price shall be the face amount of

the evidence of indebtedness given in exchange for the property

sold or otherwise disposed of together with the value of any

other consideration received by the seller. Where the evidence

of indebtedness fails to state a price, the evidence of

indebtedness will be valued at the fair market value of the

property sold, less the value of other property or cash received

in the same transaction. The installment sales method of

reporting shall not be used for transactions the object of which

is the lending of money or the rendering of services.

* * *

Section 2.  Section 1102-C.3 of the act is amended by adding

a clause to read:

Section 1102-C.3.  Excluded Transactions.--The tax imposed by

section 1102-C shall not be imposed upon:

* * *

(23)  A transfer between a municipality and a volunteer fire

company as defined in the act of July 15, 1976 (P.L.1036, No.

208), known as the "Volunteer Fire Company, Ambulance Service

and Rescue Squad Assistance Act."

Section 3.  This act shall apply to taxable years beginning

after December 31, 2008.

Section 4.  This act shall take effect immediately.