PRIOR PRINTER'S NO. 2929 PRINTER'S NO. 3583
No. 2125 Session of 2005
INTRODUCED BY PAYNE, ARMSTRONG, BAKER, BELARDI, CALTAGIRONE,
CAPPELLI, CAWLEY, CREIGHTON, DENLINGER, FLEAGLE, GEIST,
GEORGE, GINGRICH, GOOD, GRELL, HARHAI, HENNESSEY, HERMAN,
HERSHEY, KAUFFMAN, KILLION, LEH, MACKERETH, MAITLAND, MANN,
MARKOSEK, McILHATTAN, METCALFE, MICOZZIE, PICKETT, PISTELLA,
REED, REICHLEY, SAYLOR, SCHRODER, SOLOBAY, TIGUE, TURZAI,
WALKO, WILT, YOUNGBLOOD, ZUG, BOYD, FABRIZIO, HARRIS,
SIPTROTH AND JAMES, OCTOBER 25, 2005
AS REPORTED FROM COMMITTEE ON HEALTH AND HUMAN SERVICES, HOUSE
OF REPRESENTATIVES, AS AMENDED, FEBRUARY 14, 2006
AN ACT
1 Amending the act of July 14, 2005 (P.L.278, No.48), entitled "An <--
2 act authorizing the establishment and maintenance of health
3 savings accounts; providing for special tax provisions; and
4 imposing restrictions on health savings accounts," further
5 providing for special tax provisions by excluding from
6 personal income taxation any amounts deposited into a health
7 savings account.
8 AMENDING THE ACT OF MARCH 4, 1971 (P.L.6, NO.2), ENTITLED "AN <--
9 ACT RELATING TO TAX REFORM AND STATE TAXATION BY CODIFYING
10 AND ENUMERATING CERTAIN SUBJECTS OF TAXATION AND IMPOSING
11 TAXES THEREON; PROVIDING PROCEDURES FOR THE PAYMENT,
12 COLLECTION, ADMINISTRATION AND ENFORCEMENT THEREOF; PROVIDING
13 FOR TAX CREDITS IN CERTAIN CASES; CONFERRING POWERS AND
14 IMPOSING DUTIES UPON THE DEPARTMENT OF REVENUE, CERTAIN
15 EMPLOYERS, FIDUCIARIES, INDIVIDUALS, PERSONS, CORPORATIONS
16 AND OTHER ENTITIES; PRESCRIBING CRIMES, OFFENSES AND
17 PENALTIES," FURTHER PROVIDING, IN PERSONAL INCOME TAX, FOR
18 MEDICAL AND HEALTH SAVINGS ACCOUNTS; AND REPEALING PROVISIONS
19 RELATING TO TAXATION OF MEDICAL AND HEALTH SAVINGS ACCOUNTS.
20 THE GENERAL ASSEMBLY FINDS AND DECLARES AS FOLLOWS:
21 IT IS THE INTENT OF THE GENERAL ASSEMBLY TO ADDRESS THE
22 PERSONAL INCOME TAX TREATMENT OF HEALTH SAVINGS ACCOUNTS
23 PURSUANT TO SECTION 223 OF THE INTERNAL REVENUE CODE OF 1986
1 (PUBLIC LAW 99-514, 26 U.S.C. § 223).
2 The General Assembly of the Commonwealth of Pennsylvania
3 hereby enacts as follows:
4 Section 1. Section 4(a) of the act of July 14, 2005 <--
5 (P.L.278, No.48), known as the Health Savings Account Act, is
6 amended to read:
7 Section 4. Special tax provisions.
8 (a) General rule.--The following shall be excluded from
9 taxation under Article III of the act of March 4, 1971 (P.L.6,
10 No.2), known as the Tax Reform Code of 1971:
11 (1) any amount deposited into or otherwise placed into a
12 health savings account;
13 (1.1) any income of a health savings account;
14 (2) any amount paid or distributed out of a health
15 savings account that is used exclusively to pay the qualified
16 medical expenses of the account beneficiary; and
17 (3) any amount paid or distributed out of a health
18 savings account that is used exclusively to reimburse an
19 account beneficiary for qualified medical expenses.
20 * * *
21 Section 2. This act shall take effect in 60 days.
22 SECTION 1. SECTION 303(A)(6) OF THE ACT OF MARCH 4, 1971 <--
23 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, AMENDED
24 JULY 7, 2005 (P.L.149, NO.40), IS AMENDED AND THE SECTION IS
25 AMENDED BY ADDING A SUBSECTION TO READ:
26 SECTION 303. CLASSES OF INCOME.--(A) THE CLASSES OF INCOME
27 REFERRED TO ABOVE ARE AS FOLLOWS:
28 * * *
29 (6) INTEREST DERIVED FROM OBLIGATIONS WHICH ARE NOT
30 STATUTORILY FREE FROM STATE OR LOCAL TAXATION UNDER ANY OTHER
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1 ACT OF THE GENERAL ASSEMBLY OF THE COMMONWEALTH OF PENNSYLVANIA
2 OR UNDER THE LAWS OF THE UNITED STATES AND ANY AMOUNT PAID UNDER
3 CONTRACT OF LIFE INSURANCE OR ENDOWMENT OR ANNUITY CONTRACT,
4 WHICH IS INCLUDABLE IN GROSS INCOME FOR FEDERAL INCOME TAX
5 PURPOSES[.] AND ANY AMOUNT PAID OUT OF THE ARCHER MEDICAL
6 SAVINGS ACCOUNT OR HEALTH SAVINGS ACCOUNT THAT IS INCLUDABLE IN
7 THE GROSS INCOME OF AN ACCOUNT BENEFICIARY FOR FEDERAL INCOME
8 TAX PURPOSES.
9 * * *
10 (A.6) EXCEPT AS PROVIDED IN THIS ARTICLE AND WITHOUT REGARD
11 TO SECTIONS 220(F)(4) AND 223(F)(4) OF THE INTERNAL REVENUE CODE
12 OF 1986, THE REQUIREMENTS OF SECTIONS 106(B) AND (D), 220 AND
13 223 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED TO JANUARY
14 1, 2005, SHALL BE APPLICABLE.
15 * * *
16 SECTION 2. REPEALS ARE AS FOLLOWS:
17 (1) THE GENERAL ASSEMBLY DECLARES THAT THE REPEALS UNDER
18 THIS SECTION ARE NECESSARY TO EFFECTUATE THE AMENDMENT OF
19 SECTION 303 OF THE ACT.
20 (2) SECTIONS 2 AND 3 OF THE ACT OF DECEMBER 19, 1996
21 (P.L.1335, NO.179), KNOWN AS THE MEDICAL CARE SAVINGS ACCOUNT
22 ACT, ARE REPEALED.
23 (3) SECTION 4 OF THE ACT OF JULY 14, 2005 (P.L.278,
24 NO.48), KNOWN AS THE HEALTH SAVINGS ACCOUNT ACT, IS REPEALED.
25 SECTION 3. THIS ACT SHALL APPLY RETROACTIVELY TO TAX YEARS
26 BEGINNING AFTER DECEMBER 31, 2005.
27 SECTION 4. THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
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