SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GEORGE, MELIO, BELFANTI, BRADFORD, BRENNAN, BRIGGS, BROWN, CALTAGIRONE, CARROLL, CASORIO, COHEN, CONKLIN, D. COSTA, DONATUCCI, FRANKEL, GIBBONS, GOODMAN, GRUCELA, HALUSKA, HARHAI, HORNAMAN, JOHNSON, JOSEPHS, W. KELLER, KOTIK, KULA, LONGIETTI, McGEEHAN, McILVAINE SMITH, MUNDY, MURPHY, READSHAW, SEIP, SIPTROTH, STABACK, STURLA, WATERS, YOUNGBLOOD, YUDICHAK, EACHUS, KORTZ, HOUGHTON, BURNS AND MIRABITO, MAY 26, 2009

SENATE AMENDMENTS TO HOUSE AMENDMENTS, OCTOBER 5, 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," in sales and use tax, further providing for

exclusions, for time for filing returns and for time of

payment; in personal income tax, further providing for

classes of income, for operational provisions and for payment

of withheld taxes; in corporate net income tax, further

providing for definitions; in capital stock franchise tax,

further providing for definitions and reports, for imposition

and for expiration; in gross receipts tax, further providing

for imposition; in cigarette tax, further providing for

incidence and rate, for floor tax, for the Health Care

Provider Retention Account and for commissions on sales;

further providing for other violations; providing for tobacco

products tax and for severance tax; in research and

development tax credit, further providing for carrying of

credit; providing for educational improvement tax credit;

repealing tax amnesty provisions; providing for reduction of

tax credits; providing for tax amnesty for fiscal year

2009-2010; providing for penalties for corporate officers,

for examination of books and records and for table games; and

making related repeals.

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

exclusions, for time for filing returns and for time of

payment; in personal income tax, further providing for

classes of income, reenacting provisions on contributions and

further providing for operational provisions and for payment

of withheld taxes; in corporate net income tax, further

providing for definitions; in capital stock franchise tax,

further providing for definitions and reports, for imposition

and for expiration; in gross receipts tax, further providing

for imposition; in cigarette tax, further providing for

definitions, for incidence and rate, for floor tax, for

liability for collection of tax, for the Health Care Provider

Retention Account, for stamp to evidence tax and for

commissions on sales and providing for return and payment of

tax for unstamped cigarettes and further providing for sales

of unstamped cigarettes, for possession of unstamped

cigarettes and for other violations; in research and

development tax credit, further providing for carrying of

credit; providing for educational improvement tax credit;

repealing tax amnesty provisions; providing for reduction of

tax credits; providing for tax amnesty for fiscal year

2009-2010; providing for penalties for corporate officers and

for examination of books and records; and making related

repeals.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 204 of the act of March 4, 1971 (P.L.6,

<--

No.2), known as the Tax Reform Code of 1971, is amended by

adding clauses to read:

Section 204.  Exclusions from Tax.--The tax imposed by

section 202 shall not be imposed upon any of the following:

* * *

(67)  The sale at retail of repair or replacement parts,

including the installation of those parts, exclusively for use

in helicopters and similar rotorcraft or in overhauling or

rebuilding of helicopters and similar rotorcraft or helicopter

and similar rotorcraft components.

(68)  The sale at retail of helicopters and similar

rotorcraft.

Section 2.  Section 217 of the act, amended July 1, 1985

(P.L.78, No.29), is amended to read:

Section 217.  Time for Filing Returns.--(a)  Quarterly [and], 

Monthly and Semi-monthly Returns:

(1)  For the year in which this article becomes effective and

in each year thereafter a return shall be filed quarterly by

every licensee on or before the twentieth day of April, July,

October and January for the three months ending the last day of

March, June, September and December.

(2)  For the year in which this article becomes effective,

and in each year thereafter, a return shall be filed monthly

with respect to each month by every licensee whose total tax

reported, or in the event no report is filed, the total tax

which should have been reported, for the third calendar quarter

of the preceding year equals or exceeds six hundred dollars

($600) and is less than twenty-five thousand dollars ($25,000).

Such returns shall be filed on or before the twentieth day of

the next succeeding month with respect to which the return is

made. Any licensee required to file monthly returns hereunder

shall be relieved from filing quarterly returns.

(3)  After May 31, 2010, a return shall be filed semi-monthly

with respect to each month by every licensee whose total tax

reported, or in the event no report is filed, the total tax

which should have been reported, for the third calendar quarter

of the preceding year equals or exceeds twenty-five thousand

dollars ($25,000). For the period from the first day of the

month to the fifteenth day of the month, the returns shall be

filed on or before the twenty-fifth day of the month. For the

period from the sixteenth day of the month to the last day of

the month, the returns shall be filed on or before the tenth day

of the next succeeding month with respect to which the return is

made. Any licensee required to file semi-monthly returns under

this section shall be relieved from filing monthly or quarterly

returns.

(b)  Annual Returns. For the calendar year 1971, and for each

year thereafter, no annual return shall be filed, except as may

be required by rules and regulations of the department

promulgated and published at least sixty days prior to the end

of the year with respect to which the returns are made. Where

such annual returns are required licensees shall not be required

to file such returns prior to the twentieth day of the year

succeeding the year with respect to which the returns are made.

(c)  Other Returns. Any person, other than a licensee, liable

to pay to the department any tax under this article, shall file

a return on or before the twentieth day of the month succeeding

the month in which such person becomes liable for the tax.

(d)  Small Taxpayers. The department, by regulation, may

waive the requirement for the filing of quarterly return in the

case of any licensee whose individual tax collections do not

exceed seventy-five dollars ($75) per calendar quarter and may

provide for reporting on a less frequent basis in such cases.

Section 3.  Section 222 of the act is amended to read:

Section 222.  Time of Payment.--(a)  Monthly, [Bimonthly] 

Semi-monthly and Quarterly Payments. The tax imposed by this

article and incurred or collected by a licensee shall be due and

payable by the licensee on the day the return is required to be

filed under the provisions of section 217 and such payment must

accompany the return for such preceding period,

(b)  Annual Payments. If the amount of tax due for the

preceding year as shown by the annual return of any taxpayer is

greater than the amount already paid by him in connection with

his monthly, semi-monthly or quarterly returns he shall send

with such annual return a remittance for the unpaid amount of

tax for the year.

(c)  Other Payments. Any person other than a licensee liable

to pay any tax under this article shall remit the tax at the

time of filing the return required by this article.

Section 4.  Section 303(a.6) of the act, added July 6, 2006

(P.L.319, No.67), is amended to read:

Section 303.  Classes of Income.--* * *

(a.6)  Except as provided in this article and without regard

to sections 220(f)(4) and 223(f)(4) of the Internal Revenue Code

of 1986, the requirements of sections 106(b) and (d), 220 and

223 of the Internal Revenue Code of 1986[, as amended to January

1, 2005,] shall be applicable.

* * *

Section 5.  Section 315.9 of the act, amended July 25, 2007

(P.L.373, No.55), is amended to read:

Section 315.9.  Operational Provisions.--(a)  Except for the

checkoff established under sections 315.2, 315.6 and 315.7 and

except as otherwise provided [under subsection (b)] in this

section, the checkoffs established under this part shall apply

through taxable years ending December 31, 2007.

(b)  [Any] Except as set forth in subsection (c), any 

checkoff established under this part and applicable for the

first time in a taxable year beginning after December 31, 2003,

shall expire four years after the beginning of such first

taxable year.

(c)  Sections [315.3 and 315.4 shall expire January 1, 2010] 

315.3, 315.4, 315.7 and 315.8 shall expire January 1, 2014.

Section 6.  Section 319 of the act, repealed and added August

31, 1971 (P.L.362, No.93), is amended to read:

Section 319.  [Monthly, Semi-monthly and Quarterly] Payment

of Taxes Withheld.--Every employer withholding tax under this

article shall pay over to the department or to a depository

designated by it the tax required to be deducted and withheld

under this article.

(1)  Where the aggregate amount required to be deducted and

withheld by any employer for [each quarterly period] a calendar

year can reasonably be expected to be less than [three hundred

dollars ($300)] 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 aggregate amount required to be deducted and

withheld by any employer for [each quarterly period] a calendar

year can reasonably be expected to be [three hundred dollars

($300) or more but less than one thousand dollars ($1,000)] 

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 aggregate amount required to be deducted and

withheld by any employer for [each quarterly period] a calendar

year can reasonably be expected to be [one thousand dollars

($1,000) or more] 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 aggregate 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 section 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 and deposit such taxes in a bank

approved by the department in a separate account 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.

Section 7.  Section 401(3)2(a)(9) and 4(c) of the act,

amended July 12, 2006 (P.L.1137, No.116), are amended 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."  * * *

2.  In case the entire business of any corporation, other

than a corporation engaged in doing business as a regulated

investment company as defined by the Internal Revenue Code of

1986, is not transacted within this Commonwealth, the tax

imposed by this article shall be based upon such portion of the

taxable income of such corporation for the fiscal or calendar

year, as defined in subclause 1 hereof, and may be determined as

follows:

(a)  Division of Income.

* * *

(9)  (A)  Except as provided in subparagraph (B):

(i)  For taxable years beginning before January 1, 2007, all

business income shall be apportioned to this State by

multiplying the income by a fraction, the numerator of which is

the property factor plus the payroll factor plus three times the

sales factor and the denominator of which is five.

(ii)  For taxable years beginning after December 31, 2006,

all business income shall be apportioned to this State by

multiplying the income by a fraction, the numerator of which is

the sum of fifteen times the property factor, fifteen times the

payroll factor and seventy times the sales factor and the

denominator of which is one hundred.

(iii)  For taxable years beginning after December 31, 2008,

all business income shall be apportioned to this State by

multiplying the income by a fraction: the numerator of which is

the sum of eight and a half times the property factor, eight and

a half times the payroll factor and eighty-three times the sales

factor; and the denominator of which is one hundred.

(iv)  For taxable years beginning after December 31, 2009,

all business income shall be apportioned to this State by

multiplying the income by a fraction: the numerator of which is

the sum of five times the property factor, five times the

payroll factor and ninety times the sales factor; and the

denominator of which is one hundred.

(B)  For purposes of apportionment of the capital stock -

franchise tax as provided in section 602 of Article VI of this

act, the apportionment fraction shall be the property factor

plus the payroll factor plus the sales factor as the numerator,

and the denominator shall be three.

* * *

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); [or]

(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); 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:

(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

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.

* * *

Section 7.1.  The definition of "capital stock value" in

section 601 of the act, amended July 6, 2006 (P.L.319, No.67),

is amended to read:

Section 601.  Definitions and Reports.--(a)  The following

words, terms and phrases when used in this Article VI shall have

the meaning ascribed to them in this section, except where the

context clearly indicates a different meaning:

* * *

"Capital stock value."  The amount computed pursuant to the

following formula: the product of one-half times the sum of the

average net income capitalized at the rate of nine and one-half

per cent plus seventy-five per cent of net worth, from which

product shall be subtracted [one hundred fifty thousand dollars

($150,000)] one hundred sixty thousand dollars ($160,000), the

algebraic equivalent of which is

(.5 X (average net income/.095 + (.75)

(net worth))) - [$150,000] $160,000

* * *

Section 8.  Section 602(h) of the act, amended July 6, 2006

(P.L.319, No.67), is amended to read:

Section 602.  Imposition of Tax.--* * *

(h)  The rate of tax for purposes of the capital stock and

franchise tax for taxable years beginning within the dates set

forth shall be as follows:

* * *

Section 9.  Section 607 of the act, amended December 23, 2003

(P.L.250, No.46), is amended to read:

Section 607.  Expiration.--This article shall expire for

taxable years beginning after December 31, [2010] 2013.

Section 9.1.  Section 1101(c), (c.1), (e) and (j) of the act,

amended or added August 4, 1991 (P.L.97, No.22), December 23,

2003 (P.L.250, No.46) and October 18, 2006 (P.L.1149, No.119),

are amended and the section is amended by adding a subsection to

read:

Section 1101.  Imposition of Tax.--* * *

(b.1)  Managed Care Organizations.--Every managed care

organization now or hereafter incorporated or organized by or

under any law of the Commonwealth or a political subdivision

thereof, or now or hereafter organized or incorporated by any

other state or by the United States or any foreign government

and doing business in this Commonwealth that is a party to a

Medicaid managed care contract with the Department of Public

Welfare, shall pay to the State Treasurer, through the

Department of Revenue, a tax of 59 mills upon each dollar of the

gross receipts received from payments pursuant to a Medicaid

managed care contract with the Department of Public Welfare

through its Medical Assistance Program under Subchapter XIX of

the Social Security Act (49 Stat. 620, 42 U.S.C. § 1396 et

seq.). This subsection shall also apply to a Medicaid managed

care organization, as defined in section 1903(m)(1)(A) of the

Social Security Act (42 U.S.C. § 1396b(m)(1)(A)); to a county

Medicaid managed care organization; and to a permitted assignee

of a Medicaid managed care contract. This subsection shall not

apply to an assignor of a Medicaid managed care contract. The

revenue collected under this subsection shall be placed in a

restricted receipts account in the General Fund and is

appropriated as an augmentation to the capitation appropriation

of the Department of Public Welfare.

(1)  If the Centers for Medicare and Medicaid Services of the

Department of Health and Human Services issues a written

determination of a deferral, disallowance or disapproval of

Federal financial participation on the grounds that the tax

imposed under this subsection constitutes an impermissible

health care-related tax under Subchapter XIX of the Social

Security Act, the Secretary of Public Welfare shall notify the

Secretary of Revenue of that determination. If notification is

made under this paragraph, the tax under this subsection shall

cease to be imposed after the last day of the month in which

notification is made.

(2)  If, within sixty days after issuance of the notice under

paragraph (1), legislation is not enacted to provide a

substitute for the funds lost due to the cessation of the tax

under paragraph (1), the Department of Public Welfare may

exercise any rights under its Medicaid managed care contract to

cease payments under or terminate the contract for services with

a managed care organization.

(c)  Payment of Tax; Reports.--The said taxes imposed under

subsections (a) [and], (b) and (b.1) shall be paid within the

time prescribed by law, and for the purpose of ascertaining the

amount of the same, it shall be the duty of the treasurer or

other proper officer of the said company, copartnership, limited

partnership, association, joint-stock association or

corporation, or person or persons, to transmit to the Department

of Revenue on or before March 15 of each year an annual report,

and under oath or affirmation, of the amount of gross receipts

of the said companies, copartnerships, corporations,

associations, joint-stock associations, limited partnerships,

person or persons, derived from all sources, and of gross

receipts from business done wholly within this State and in the

case of electric energy producers that transmit energy to other

states referred to in clause (2) of subsection (b), a

compilation of the relevant information regarding operating and

maintenance expenses and depreciation, during the period of

twelve months immediately preceding January 1 of each year. [It

shall be the further duty of the treasurer or other proper

officer of every such corporation or association and every

individual liable by law to report or pay said taxes imposed

under subsections (a) and (b) except municipalities to transmit

to the Department of Revenue on or before April 30 of each year,

a tentative report in like form and manner for each twelve-month

period beginning January 1, of each year. The tentative report

shall set forth (i) the amount of gross receipts received in the

period of twelve months next preceding and reported in the

annual report; or (ii) the gross receipts received in the first

three months of the current period of twelve months; and (iii)

such other information as the Department of Revenue may

require.]

(c.1)  Safe Harbor Base Year.--For purposes of the estimated

tax requirements under sections 3003.2 and 3003.3, the "safe

harbor base year" tax amount for providers of mobile

telecommunications services and for a Medicaid managed care

organization subject to the provisions of subsection (b.1) shall

be the amount that would have been required to be paid by the

taxpayer if the taxpayer had been subject to this article.

* * *

(e)  Time to File Reports.--The time for filing annual

reports may be extended, estimated assessments may be made by

the Department of Revenue if reports are not filed, and the

penalties for failing to file reports and pay the taxes imposed

under subsections (a) [and], (b) and (b.1) shall be as

prescribed by the laws defining the powers and duties of the

Department of Revenue. In any case where the works of any

corporation, company, copartnership, association, joint-stock

association, limited partnership, person or persons are operated

by another corporation, company, copartnership, association,

joint-stock association, limited partnership, person or persons,

the taxes imposed under subsections (a) [and], (b) and (b.1) 

shall be apportioned between the corporations, companies,

copartnerships, associations, joint-stock associations, limited

partnerships, person or persons in accordance with the terms of

their respective leases or agreements, but for the payment of

the said taxes the Commonwealth shall first look to the

corporation, company, copartnership, association, joint-stock

association, limited partnership, person or persons operating

the works, and upon payment by the said company, corporation,

copartnership, association, joint-stock association, limited

partnership, person or persons of a tax upon the receipts, as

herein provided, derived from the operation thereof, no other

corporation, company, copartnership, association, joint-stock

association, limited partnership, person or persons shall be

held liable for any tax imposed under subsections (a) [and], (b)

and (b.1) upon the proportion of said receipts received by said

corporation, company, copartnership, association, joint-stock

association, limited partnership, person or persons for the use

of said works.

* * *

(j)  Schedule for Estimated Payments.--

(1)  For calendar year 2004, the following schedule applies

to the payment of the tax under subsection(a)(3):

(i)  Forty per cent of the estimated tax shall be due on

March 15, 2004.

(ii)  Forty per cent of the estimated tax shall be due on

June 15, 2004.

(iii)  Twenty per cent of the estimated tax shall be due on

September 15, 2004.

(2)  For calendar years after 2004, the payment of the

estimated tax under subsection (a)(3) shall be due in accordance

with section 3003.2.

(3)  For calendar year 2009, the tax applicable to the

payment of the tax under subsection (b.1) shall be due on March

15, 2010.

(4)  For calendar year 2010, payments of the estimated tax

under subsection (b.1) shall be due on May 15, 2010. For

calendar year 2011 and each calendar year thereafter, the

payment of the estimated tax under subsection (b.1) shall be due

in accordance with section 3003.2.

* * *

Section 9.2.  Sections 1206 and 1206.1 of the act, amended

December 23, 2003 (P.L.250, No.46), are amended to read:

Section 1206.  Incidence and Rate of Tax.--An excise tax is

hereby imposed and assessed upon the sale or possession of

cigarettes within this Commonwealth at the rate of [six and

seventy-five hundredths] eight cents per cigarette.

Section 1206.1.  Floor Tax.--(a)  A person who possesses

cigarettes on which the tax imposed by section 1206 has been

paid as of the effective date of this section shall pay an

additional tax at a rate of [one and seventy-five] one and

twenty-five hundredths cents per cigarette. The tax shall be

paid and reported on a form prescribed by the department within

ninety days of the effective date of this section.

(b)  If a cigarette dealer fails to file the report required

by subsection (a) or fails to pay the tax imposed by subsection

(a), the department may, in addition to the interest and

penalties provided in section 1278, do any of the following:

(1)  Impose an administrative penalty equal to the amount of

tax evaded or not paid. The penalty shall be added to the tax

evaded or not paid and assessed and collected at the same time

and in the same manner as the tax.

(2)  Suspend or revoke a cigarette dealer's license.

(c)  In addition to any penalty imposed under subsection (b),

a person who wilfully omits, neglects or refuses to comply with

a duty imposed under subsection (a) commits a misdemeanor and

shall, upon conviction, be sentenced to pay a fine of not less

than two thousand five hundred dollars ($2,500) nor more than

five thousand dollars ($5,000), to serve a term of imprisonment

not to exceed thirty days or both.

Section 9.3.  Sections 1211 and 1216 of the act, amended or

added December 23, 2003 (P.L.250, No.46), are amended to read:

[Section 1211.  Health Care Provider Retention Account.--

There is established in the General Fund a special account to be

known as the Health Care Provider Retention Account. Eighteen

and fifty-two hundredths per cent of the proceeds of the tax

imposed by section 1206 shall be deposited in the account. Funds

in the account shall be subject to an annual appropriation and

shall be administered as provided by law.]

Section 1216.  Commissions on Sales.--A cigarette stamping

agent shall be entitled to a commission for the agent's services

and expenses in affixing cigarette tax stamps. The commission

shall be equal to [ninety-eight] eighty-five hundredths per cent

of the total value of Pennsylvania cigarette tax stamps

purchased by the agent from the department or its authorized

agents to be used in the stamping of packages of cigarettes for

sale within this Commonwealth. The cigarette stamping agent may

deduct from the moneys to be paid to the department or its

authorized agents for the stamps an amount equal to [ninety-

eight] eighty-five hundredths per cent of the value of the

stamps purchased. This section shall not apply to purchases of

stamps by a cigarette stamping agent in an amount less than one

hundred dollars ($100).

Section 9.4.  Section 1278 of the act, amended or added

December 21, 1981 (P.L.482, No.141) and June 22, 2001 (P.L.353,

No.23), is amended to read:

Section 1278.  Other Violations.--(a)  Any person who

wilfully omits, neglects, or refuses to comply with any duty

imposed upon him by this article or does anything prohibited by

this article for which no specific penalty is otherwise

provided, shall upon conviction in a summary proceeding be

sentenced to pay a fine not to exceed five hundred dollars

($500) and costs of prosecution, and, in default of payment

thereof, to undergo imprisonment for not more than thirty days.

(b)  Any person who wilfully omits or neglects to file any

return required or pay any tax imposed by this article, or

attempts in any manner to evade or defeat the tax or payment

thereof, shall, in addition to any other penalty provided in

this article, be liable to a penalty equal to the amount of tax

evaded or not paid, which penalty shall be added to the tax and

assessed and collected at the same time in the same manner as a

part of the tax.

(c)  Any person who fails to file any return required or pay

tax at the time prescribed shall, in addition to any other

penalty provided in this article, be liable to a penalty of five

per cent of the tax due but unpaid for each month or fraction

thereof the tax remains unpaid together with the interest at the

rate established pursuant to section 806 of the act of April 9,

1929 (P.L.343, No.176), known as "The Fiscal Code," on such tax

from the time the tax became due. The penalties provided in this

subsection shall be added to the tax and assessed and collected

at the same time in the same manner and as a part of the tax.

Section 9.5.  The act is amended by adding articles to read:

ARTICLE XII-A

TOBACCO PRODUCTS TAX

Section 1201-A.  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:

"Cigar."  Any roll of tobacco wrapped in tobacco.

"Cigarette."  Includes any roll for smoking made wholly or in

part of tobacco, irrespective of size or shape, and whether or

not such tobacco is flavored, adulterated or mixed with any

other ingredient, the wrapper or cover of which is made of paper

or any other substance or material, excepting tobacco, and shall

not include cigars or roll your own tobacco.

"Cigarillo."  A short, narrow cigar, wrapped in whole-leaf

tobacco. The term includes filtered cigarillos, which are

sometimes called little cigars.

"Consumer."  An individual who purchases tobacco products for

personal use and not for resale.

"Contraband."  Any tobacco product for which the tax imposed

by this article has not been paid.

"Dealer."  A wholesaler or retailer. Nothing in this article

shall preclude any person from being a wholesaler or retailer,

provided the person meets the requirements for a license in each

category of dealer.

"Department."  The Department of Revenue of the Commonwealth.

"Manufacturer."  A person that produces tobacco products.

"Person."  An individual, unincorporated association,

company, corporation, joint stock company, group, agency,

syndicate, trust or trustee, receiver, fiduciary, partnership,

conservator, any political subdivision of the Commonwealth or

any other state. Whenever used in any of the provisions of this

article prescribing or imposing penalties, the word "person" as

applied to a partnership, unincorporated association or other

joint venture, means the partners or members thereof, and as

applied to a corporation, means all the officers and directors

thereof.

"Purchase price."  The total value of anything paid or

delivered, or promised to be paid or delivered, whether it be

money or otherwise, in complete performance of a sale or

purchase, without any deduction on account of the cost or value

of the property sold, cost or value of transportation, cost or

value of labor or service, interest or discount paid or allowed

after the sale is consummated, any other taxes imposed by the

Commonwealth or any other expense.

"Retailer."  A person that purchases or receives tobacco

products from any source for the purpose of sale to a consumer,

or who owns, leases or otherwise operates one or more vending

machines for the purpose of sale of tobacco products to the

ultimate consumer. The term includes a vending machine operator

or a person that buys, sells, transfers or deals in tobacco

products and is not licensed as a tobacco products wholesaler

under this article.

"Roll-your-own tobacco."  Any tobacco which, because of its

appearance, type, packaging or labeling, is suitable for use and

is likely to be offered to, or purchased by, consumers as

tobacco for making cigarettes. For purposes of reporting sales

of this product under the act of June 22, 2000 (P.L.394, No.54),

known as the Tobacco Settlement Agreement Act, 0.09 ounces of

tobacco shall constitute one individual unit sold.

"Sale."  Any transfer of ownership, custody or possession of

tobacco products for consideration; any exchange, barter or

gift; or any offer to sell or transfer the ownership, custody or

possession of tobacco products for consideration.

"Taxpayer."  Any person subject to tax under this article.

"Tobacco products."  Cigars, cigarillos, cheroots, stogies,

periques, granulated, plug cut, crimp cut, ready rubbed and

other smoking tobacco, roll-your-own tobacco, snuff, dry snuff,

snuff flour, cavendish, plug and twist tobacco, fine-cut and

other chewing tobaccos, shorts, refuse scraps, clippings,

cuttings and sweepings of tobacco and other kinds and forms of

tobacco, prepared in such manner as to be suitable for chewing

or ingesting or for smoking in a pipe or otherwise, or both for

chewing and smoking. The term does not include cigarettes.

"Unclassified importer."  A person in this Commonwealth that

acquires a tobacco product from any source on which the tax

imposed by this article was not paid and that is not a person

otherwise required to be licensed under the provisions of this

article. The term includes, but is not limited to, consumers who

purchase tobacco products using the Internet or mail order

catalogs for personal possession or use in this Commonwealth.

"Vending machine operator."  A person who places or services

one or more tobacco product vending machines whether owned,

leased or otherwise operated by the person at locations from

which tobacco products are sold to the consumer. The owner or

tenant of the premises upon which a vending machine is placed

shall not be considered a vending machine operator if the

owner's or tenant's sole remuneration therefrom is a flat rental

fee or commission based upon the number or value of tobacco

products sold from the machine, unless the owner or tenant

actually owns the vending machine or leases the vending machine

under an agreement whereby any profits from the sale of the

tobacco products directly inure to the owner's or tenant's

benefit.

"Wholesaler."  A person engaged in the business of selling

tobacco products that receives, stores, sells, exchanges or

distributes tobacco products to retailers or other wholesalers

in this Commonwealth or retailers who purchase from a

manufacturer or from another wholesaler who has not paid the tax

imposed by this article.

Section 1202-A.  Incidence and rate of tax.

(a)  Imposition.--A tobacco products tax is hereby imposed on

the dealer, manufacturer or any person at the time the tobacco

product is first sold to a retailer in this Commonwealth at the

rate of 30% on the purchase price charged to the retailer for

the purchase of any tobacco product. The tax shall be collected

from the retailer by whomever sells the tobacco product to the

retailer and remitted to the department. Any person required to

collect this tax shall separately state the amount of tax on an

invoice or other sales document.

(b)  Retailer.--If the tax is not collected by the seller

from the retailer, the tax is imposed on the retailer at the

time of purchase at the same rate as in subsection (a) based on

the retailer's purchase price of the tobacco products. The

retailer shall remit the tax to the department.

(c)  Unclassified importer.--The tax is imposed on an

unclassified importer at the time of purchase at the same rate

as in subsection (a) based on the unclassified importer's

purchase price of the tobacco products. The unclassified

importer shall remit the tax to the department.

(d)  Exceptions.--The tax shall not be imposed on any tobacco

products that:

(1)  are exported for sale outside this Commonwealth; or

(2)  are not subject to taxation by the Commonwealth

pursuant to any laws of the United States.

Section 1203-A.  Floor tax.

(a)  Payment.--Any retailer that, as of the effective date of

this article, possesses tobacco products subject to the tax

imposed by section 1202-A, shall pay the tax on the tobacco

products in accordance with the rates specified in section 1202-

A. The tax shall be paid and reported on a form prescribed by

the department within 90 days of the effective date of this

section.

(b)  Administrative penalty; license.--If a retailer fails to

file the report required by subsection (a) or fails to pay the

tax imposed by subsection (a), the department may, in addition

to the interest and penalties provided in section 1215-A, do any

of the following:

(1)  Impose an administrative penalty equal to the amount

of tax evaded or not paid. The penalty shall be added to the

tax evaded or not paid and assessed and collected at the same

time and in the same manner as the tax.

(2)  Suspend, revoke or refuse to issue the retailer's

license.

(c)  Criminal penalty.--In addition to any penalty imposed

under subsection (b), a person that willfully omits, neglects or

refuses to comply with a duty imposed under subsection (a)

commits a misdemeanor and shall, if convicted, be sentenced to

pay a fine of not less than $2,500 nor more than $5,000, to

serve a term of imprisonment not to exceed 30 days, or both.

Section 1204-A.  Remittance of tax to department.

Wholesalers, retailers, unclassified importers and

manufacturers shall file monthly reports on a form prescribed by

the department by the 20th day of the month following the sale

or purchase of tobacco products from any other source on which

the tax levied by this article has not been paid. The tax is due

at the time the report is due. The department may required the

filing of reports and payment of tax on a less frequent basis at

its discretion.

Section 1205-A.  (Reserved).

Section 1206-A.  Procedures for claiming refund.

A claim for a refund of tax imposed by this article under

section 3003.1 and Article XXVII shall be in the form and

contain the information prescribed by the department by

regulation.

Section 1207-A.  Sales or possession of tobacco product when tax

not paid.

(a)  Sales or possession.--Any person who sells or possesses 

any tobacco product for which the proper tax has not been paid

commits a summary offense and shall, upon conviction, be

sentenced to pay costs of prosecution and a fine of not less

than $100 not more than $1,000 or to imprisonment for not more

than 60 days, or both, at the discretion of the court. Any

tobacco products purchased from a wholesaler properly licensed

under this article shall be presumed to have the proper taxes

paid.

(b)  Tax evasion.--Any person that shall falsely or

fraudulently, maliciously, intentionally or willfully with

intent to evade the payment of the tax imposed by this article

sells or possesses any tobacco product for which the proper tax

has not been paid commits a felony and shall, upon conviction,

be sentenced to pay costs of prosecution and a fine of not more

than $15,000 or to imprisonment for not more than five years, or

both, at the discretion of the court.

Section 1208-A.  Assessment.

The department is authorized to make the inquiries,

determinations and assessments of the tax, including interest,

additions and penalties, imposed by this article.

Section 1209-A.  (Reserved).

Section 1210-A.  (Reserved).

Section 1211-A.  Failure to file return.

Where no return is filed, the amount of the tax due may be

assessed and collected at any time as to taxable transactions

not reported.

Section 1212-A.  False or fraudulent return.

Where the taxpayer willfully files a false or fraudulent

return with intent to evade the tax imposed by this article, the

amount of tax due may be assessed and collected at any time.

Section 1213-A.  Extension of limitation period.

Notwithstanding any other provision of this article, where,

before the expiration of the period prescribed for the

assessment of a tax, a taxpayer has consented, in writing, that

the period be extended, the amount of tax due may be assessed at

any time within the extended period. The period so extended may

be extended further by subsequent consents, in writing, made

before the expiration of the extended period.

Section 1214-A.  Failure to furnish information, returning false

information or failure to permit inspection.

(a)  Penalty.--Any taxpayer who fails to keep or make any

record, return, report, inventory or statement, or keeps or

makes any false or fraudulent record, return, report, inventory

or statement required by this article commits a misdemeanor and

shall, upon conviction, be sentenced to pay costs of prosecution

and a fine of $500 and to imprisonment for not more than one

year, or both, at the discretion of the court.

(b)  Examination.--The department is authorized to examine

the books and records, the stock of tobacco products and the

premises and equipment of any taxpayer in order to verify the

accuracy of the payment of the tax imposed by this article. The

person subject to an examination shall give to the department or

its duly authorized representative, the means, facilities and

opportunity for the examination. Willful refusal to cooperate

with or permit an examination to the satisfaction of the

department shall be sufficient grounds for the suspension or

revocation of a taxpayer's license. In addition, a person who

willfully refuses to cooperate with or permit an examination to

the satisfaction of the department commits a misdemeanor and

shall, upon conviction, be sentenced to pay costs of prosecution

and a fine of $500 or to imprisonment for not more than one

year, or both, at the discretion of the court.

(c)  Records; dealer or manufacturer.--A dealer or

manufacturer shall keep and maintain for a period of four years

records in the form prescribed by the department. The records

shall be maintained at the location for which the license is

issued.

(d)  Reports.--A dealer or manufacturer shall file reports at

times and in the form prescribed by the department.

(e)  Records; manufacturer or wholesaler.--A manufacturer or

wholesaler located or doing business in this Commonwealth who

sells tobacco products to a wholesale license holder in this

Commonwealth shall keep records showing:

(1)  The number and kind of tobacco products sold.

(2)  The date the tobacco products were sold.

(3)  The name and license number of the dealer the

tobacco products were sold to.

(4)  The total weight of each of the tobacco products

sold to the license holder.

(5)  The place where the tobacco products were shipped.

(6)  The name of the common carrier.

(f)  Manufacturer or wholesaler.--A manufacturer or

wholesaler shall file with the department, on or before the 20th

of each month, a report showing the information listed in

subsection (e) for the previous month.

Section 1215-A.  Other violations; peace officers; fines.

Sections 1278, 1279, 1280 and 1291 are incorporated by

reference into and shall apply to the tax imposed by this

article.

Section 1216-A.  (Reserved).

Section 1217-A.  (Reserved).

Section 1218-A.  (Reserved).

Section 1219-A.  Records of shipments and receipts of tobacco

products required.

The department may, in its discretion, require reports from

any common or contract carrier who transports tobacco products

to any point or points within this Commonwealth, and from any