PRINTER'S NO. 2920
No. 2227 Session of 2000
INTRODUCED BY CALTAGIRONE, HASAY, L. I. COHEN, M. COHEN, DALEY,
GEORGE, GORDNER, GRUCELA, HENNESSEY, HORSEY, JAMES, LaGROTTA,
LAUGHLIN, LEDERER, MANN, MELIO, S. MILLER, MUNDY, MYERS,
PETRARCA, PRESTON, READSHAW, ROBERTS, SEMMEL, STABACK,
STETLER, TANGRETTI, THOMAS, TRELLO, WOJNAROSKI, YOUNGBLOOD,
ZUG, ALLEN, BAKER, TULLI, SANTONI, CLARK, KENNEY, PISTELLA,
GEIST, HABAY, HARHAI, WASHINGTON AND TRICH, FEBRUARY 7, 2000
REFERRED TO COMMITTEE ON URBAN AFFAIRS, FEBRUARY 7, 2000
AN ACT
1 Amending the act of October 6, 1998 (P.L.705, No.92), entitled
2 "An act providing for the creation of keystone opportunity
3 zones to foster economic opportunities in this Commonwealth,
4 to facilitate economic development, stimulate industrial,
5 commercial and residential improvements and prevent physical
6 and infrastructure deterioration of geographic areas within
7 this Commonwealth; authorizing expenditures; providing tax
8 exemptions, tax deductions, tax abatements and tax credits;
9 creating additional obligations of the Commonwealth and local
10 governmental units; and prescribing powers and duties of
11 certain State and local departments, agencies and officials,"
12 providing a partial credit against the bank shares tax for
13 certain institutions.
14 The General Assembly of the Commonwealth of Pennsylvania
15 hereby enacts as follows:
16 Section 1. Section 307 of the act of October 6, 1998
17 (P.L.705, No.92), known as the Pennsylvania Keystone Opportunity
18 Zone Act, is amended by adding a subsection to read:
19 Section 307. Qualified businesses.
20 * * *
21 (c) Banking institution.--An institution as defined in
1 Article VII, VII-A or XV of the act of March 4, 1971 (P.L.6,
2 No.2), known as the Tax Reform Code of 1971, and subject to the
3 taxes imposed thereby shall be considered a qualified business
4 in any taxable year in which any of the amount of the taxable
5 shares of the institution is attributable to a keystone
6 opportunity zone in accordance with the provisions of section
7 517.
8 Section 2. The act is amended by adding a section to read:
9 Section 517. Bank shares tax.
10 (a) Credits.--For tax years that begin on or after January
11 1, 1999, an institution that is a qualified business under
12 section 307(c) may claim a credit against the tax imposed by
13 Article VII, VII-A or XV of the act of March 4, 1971 (P.L.6,
14 No.2), known as the Tax Reform Code of 1971, for the taxable
15 year to the extent of the tax liability for the amount of the
16 taxable shares attributable to a keystone opportunity zone in
17 the taxable year.
18 (b) Tax liability.--The institution's tax liability for the
19 amount of the taxable shares attributable to a keystone
20 opportunity zone shall be determined by multiplying the amount
21 of the taxable shares attributable to the keystone opportunity
22 zone by the rate of tax imposed under Article VII, VII-A or XV
23 of the Tax Reform Code of 1971 for the taxable year. The
24 institution shall compute the Pennsylvania taxable amount of its
25 shares in conformity with Article VII, VII-A or XV of the Tax
26 Reform Code of 1971 with no adjustments or subtractions for the
27 taxable amount of shares attributable to the keystone
28 opportunity zone.
29 (c) Determination of attributable taxable shares.--The
30 determination of the amount of an institution's taxable shares
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1 attributable to a keystone opportunity zone shall be determined
2 in conformity with Articles VII, VII-A and XV of the Tax Reform
3 Code of 1971 and with specific reference to the following:
4 (1) If the entire business of the institution in this
5 Commonwealth is transacted wholly within a keystone
6 opportunity zone, the amount of the taxable shares
7 attributable to a keystone opportunity zone shall consist of
8 the Pennsylvania taxable amount as determined under Article
9 VII, VII-A or XV of the Tax Reform Code of 1971.
10 (2) If the entire business of the institution in this
11 Commonwealth is not wholly transacted within a keystone
12 opportunity zone, the amount of the taxable shares
13 attributable to a keystone opportunity zone shall be
14 determined by apportionment in accordance with a fraction,
15 the numerator of which is the sum of the payroll factor, the
16 receipts factor and the deposits factor, and the denominator
17 of which is three.
18 (3) The payroll factor is a fraction, the numerator of
19 which is the total wages paid in a keystone opportunity zone
20 during the tax period and the denominator of which is the
21 total wages paid in this Commonwealth during the tax period.
22 Wages are paid in a keystone opportunity zone if paid to an
23 employee having a regular presence therein.
24 (4) The receipts factor is a fraction, the numerator of
25 which is total receipts located in a keystone opportunity
26 zone and the denominator of which is the total receipts
27 located in this Commonwealth. Receipts do not include
28 principal repayments on loans or credit, travel and
29 entertainment cards. Receipts from sale or disposition of
30 intangible and tangible property include only the net gain
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1 therefrom. The location of receipts shall be determined as
2 follows:
3 (i) Receipts from loans are located in a keystone
4 opportunity zone if the place of origination of the loan
5 is in a keystone opportunity zone, or if the proceeds of
6 the loan will be used by the borrower to conduct activity
7 within a keystone opportunity zone, including, but not
8 limited to, the conduct of business activities in a
9 keystone opportunity zone; the construction, alteration
10 or repair of real property located in a keystone
11 opportunity zone; or for the personal use of individuals
12 residing in a keystone opportunity zone.
13 (ii) All receipts from performance of services are
14 located in a keystone opportunity zone to the extent the
15 services are performed in the keystone opportunity zone.
16 If services are performed partly within a keystone
17 opportunity zone and partly outside a keystone
18 opportunity zone, the receipts located in each area shall
19 be measured by the ratio which the time spent in
20 performing such services in a keystone opportunity zone
21 bears to the total time spent in performing such services
22 in this Commonwealth. Time spent in performing services
23 in a keystone opportunity zone is the time spent by
24 employees having a regular presence in the keystone
25 opportunity zone in performing such services.
26 (iii) Receipts from lease transactions are located
27 in a keystone opportunity zone if the leased property is
28 deemed located in a keystone opportunity zone.
29 (iv) Interest or service charges, excluding merchant
30 discounts, from credit, travel and entertainment card
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1 receivables and credit card holders' fees are located in
2 a keystone opportunity zone if the credit card holder, in
3 the case of an individual, resides in a keystone
4 opportunity zone or, if a corporation, if the
5 corporation's commercial domicile is located in a
6 keystone opportunity zone.
7 (v) Interest, dividends and net gains from the sale
8 or disposition of intangibles, exclusive of those
9 receipts described elsewhere in this section, are located
10 in a keystone opportunity zone if the institution
11 maintains an office in a keystone opportunity zone which
12 treats such intangibles as assets on its books or
13 records.
14 (vi) Fees or charges from the issuance of traveler's
15 checks and money orders are located in a keystone
16 opportunity zone if such traveler's checks or money
17 orders are issued in a keystone opportunity zone.
18 (vii) Receipts from sales of tangible property are
19 located in a keystone opportunity zone if the property is
20 delivered or shipped to a purchaser located in a keystone
21 opportunity zone, regardless of the F.O.B. point or other
22 conditions of the sale.
23 (viii) All receipts not specifically treated under
24 this subsection are located in a keystone opportunity
25 zone if the greatest portion of the income-producing
26 activities are performed in a keystone opportunity zone,
27 based on costs of performance.
28 (5) The deposits factor is a fraction, the numerator of
29 which is the average value of deposits located in a keystone
30 opportunity zone during the taxable year and the denominator
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1 of which is the average value of the total deposits in this
2 Commonwealth during the taxable year. The average value of
3 deposits is to be computed on a quarterly basis. Deposits are
4 located in a keystone opportunity zone if the institution
5 maintains an office in a keystone opportunity zone which
6 properly treats the deposits as a liability on its books or
7 records. A deposit is considered to be properly treated as a
8 liability on the books or records of the office with which it
9 has a greater portion of contact. In determining whether a
10 deposit has a greater portion of contact with a particular
11 office, consideration is given to:
12 (i) Whether the deposit account was opened at or
13 transferred to that office by or at the direction of the
14 depositor, regardless of where subsequent deposits or
15 withdrawals are made.
16 (ii) Whether employees regularly connected with that
17 office are primarily responsible for servicing the
18 depositor's general banking and other financial needs.
19 (iii) Whether the deposit was solicited by an
20 employee regularly connected with that office, regardless
21 of where such deposit was actually solicited.
22 (iv) Whether the terms governing the deposit were
23 negotiated by employees regularly connected with that
24 office, regardless of where the negotiations were
25 actually conducted.
26 (v) Whether essential records relating to the
27 deposit are kept at that office and whether the deposit
28 is serviced at that office.
29 (d) Limitation on amount of credit.--The credit allowed
30 under this section shall not exceed the tax liability of the
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1 taxpayer under Article VII, VII-A or XV of the Tax Reform Code
2 of 1971 for the tax year.
3 Section 3. This act shall take effect immediately.
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