THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY FERLO, FONTANA, ERICKSON, TARTAGLIONE, RAFFERTY, WOZNIAK AND BREWSTER, FEBRUARY 18, 2011

REFERRED TO FINANCE, FEBRUARY 18, 2011  

AN ACT

Amending the act of November 26, 1997 (P.L.508, No.55), entitled

"An act providing for the tax exemption of institutions of

purely public charity; exempting real property owned by

State-related universities or Federal Government

instrumentalities from taxation; providing for unfair

competition; imposing penalties; and making repeals," further

providing for criteria.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 5(c) of the act of November 26, 1997

(P.L.508, No.55), known as the Institutions of Purely Public

Charity Act, is amended to read:

Section 5.  Criteria for institutions of purely public charity.

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(c)  Private profit motive.--The institution must operate

entirely free from private profit motive. Notwithstanding

whether the institution's revenues exceed its expenses, this

criterion is satisfied if the institution meets all of the

following:

(1)  Neither the institution's net earnings nor donations

which it receives inures to the benefit of private

shareholders or other individuals, as the private inurement

standard is interpreted under section 501(c)(3) of the

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §

501(c)(3)).

(2)  The institution applies or reserves all revenue,

including contributions, in excess of expenses in furtherance

of its charitable purpose or to funding of other institutions

which meet the provisions of this subsection and subsection

(b).

(3)  Compensation, including benefits, of any director,

officer or employee is not based primarily upon the financial

performance of the institution.

(4)  The governing body of the institution of purely

public charity has adopted as part of its articles of

incorporation or, if unincorporated, other governing legal

documents a provision that expressly prohibits the use of any

surplus funds for private inurement to any person in the

event of a sale or dissolution of the institution of purely

public charity.

(5)  In any taxable year, the institution does not enter

into a contract for services which will be provided by

individuals located outside of this Commonwealth if the

services could otherwise be provided by the institution's

employees or through a contract with an entity or individuals

located in this Commonwealth.

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Section 2.  This act shall take effect in 60 days.