SENATE AMENDED
PRIOR PRINTER'S NOS. 835, 3318, 3947 PRINTER'S NO. 3999
No. 769 Session of 1979
INTRODUCED BY MESSRS. POTT AND BRUNNER, MARCH 20, 1979
AS AMENDED ON SECOND CONSIDERATION, IN SENATE, SEPTEMBER 30,
1980
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," PROVIDING FOR EXCLUSION FROM TAX FOR THE SALE AT <--
11 RETAIL OF SUPPLIES AND MATERIALS TO TOURIST PROMOTION
12 AGENCIES, AND revising the definition of "taxable income" for
13 purposes of the corporate net income tax and limiting the
14 Utilities Gross Receipts Tax.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 SECTION 1. SECTION 204, ACT OF MARCH 4, 1971 (P.L.6, NO.2), <--
18 KNOWN AS THE "TAX REFORM CODE OF 1971," IS AMENDED BY ADDING A
19 CLAUSE TO READ:
20 SECTION 204. EXCLUSIONS FROM TAX.--THE TAX IMPOSED BY
21 SECTION 202 SHALL NOT BE IMPOSED UPON
22 * * *
23 (39) THE SALE AT RETAIL OF SUPPLIES AND MATERIALS TO TOURIST
1 PROMOTION AGENCIES, WHICH RECEIVE GRANTS FROM THE COMMONWEALTH,
2 FOR DISTRIBUTION TO THE PUBLIC AS PROMOTIONAL MATERIAL OR THE
3 USE OF SUCH SUPPLIES AND MATERIALS BY SAID AGENCIES FOR SAID
4 PURPOSES.
5 Section 1 2. Subclause 1 of clause (3) of section 401, act <--
6 of March 4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of
7 1971," OF THE ACT, amended November 26, 1978 (P.L.1287, No.306), <--
8 is amended to read:
9 Section 401. Definitions.--The following words, terms, and
10 phrases, when used in this article, shall have the meaning
11 ascribed to them in this section, except where the context
12 clearly indicates a different meaning:
13 * * *
14 (3) "Taxable income." 1. In case the entire business of the
15 corporation is transacted within this Commonwealth, for any
16 taxable year which begins on or after January 1, 1971, taxable
17 income for the calendar year or fiscal year as returned to and
18 ascertained by the Federal Government, or in the case of a
19 corporation participating in the filing of consolidated returns
20 to the Federal Government, the taxable income which would have
21 been returned to and ascertained by the Federal Government if
22 separate returns had been made to the Federal Government for the
23 current and prior taxable years, subject, however, to any
24 correction thereof, for fraud, evasion, or error as finally
25 ascertained by the Federal Government: Provided, That additional
26 deductions shall be allowed from taxable income on account of
27 any dividends received from any other corporation but only to
28 the extent that such dividends are included in taxable income as
29 returned to and ascertained by the Federal Government: Provided
30 further, That additional deductions shall be allowed from
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1 taxable income in an amount equal to the amount of any reduction
2 in an employer's deduction for wages and salaries as required by
3 section 280C of the Internal Revenue Code as a result of the
4 employer taking a credit for "new jobs" pursuant to section 44B
5 of the Internal Revenue Code: Provided further, That taxable
6 income will include the sum of the following tax preference
7 items as defined in section 57 of the Internal Revenue Code, as
8 amended, (i) excess investment interest; (ii) accelerated
9 depreciation on real property; (iii) accelerated depreciation on
10 personal property subject to a net lease; (iv) amortization of
11 certified pollution control facilities; (v) amortization of
12 railroad rolling stock; (vi) stock options; (vii) reserves for
13 losses on bad debts of financial institutions; (viii) and
14 capital gains but only to the extent that such preference items
15 are not included in "taxable income" as returned to and
16 ascertained by the Federal Government. No deduction shall be
17 allowed for net operating losses sustained by the corporation
18 during any other fiscal or calendar year. In the case of
19 regulated investment companies as defined by the Internal
20 Revenue Code of 1954, as amended, "taxable income" shall be
21 investment company taxable income as defined in the aforesaid
22 Internal Revenue Code of 1954, as amended. [In] For purposes of
23 this definition, in arriving at "taxable income" for Federal tax
24 purposes for any taxable year beginning on or after [January 1,
25 1971, any corporate net income tax due to the Commonwealth
26 pursuant to the provisions of this article shall not be allowed
27 as a deduction and the amount of corporate tax so due and
28 excluded from Federal taxable income under the Internal Revenue
29 Code shall not be apportioned but shall be subject to tax at the
30 rate imposed under this article.] January 1, 1979, no deduction
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1 shall be allowed for taxes imposed on or measured by net income.
2 * * *
3 Section 2 3. Section 1101 of the act is amended by adding a <--
4 subsection to read:
5 Section 1101. Imposition of Tax.--* * *
6 (g) Annual Adjustment.--The rate of the tax imposed by this
7 section shall be adjusted annually by the Pennsylvania Public
8 Utility Commission to produce the revenue equal to the amount of
9 revenue due and payable during the 1979-1980 fiscal year of the
10 Commonwealth.
11 Section 3 4. The act is amended by adding a section to read: <--
12 Section 1101.3. Certain Purchased Energy Costs Not Taxed.--
13 Notwithstanding any provision of law to the contrary, no tax
14 shall be imposed pursuant to this article on any public
15 utility's revenues resulting from higher purchased energy costs
16 incurred as a direct consequence of an unscheduled outage
17 lasting two months or longer at a nuclear generating facility
18 resulting from a major accident or natural disaster as
19 determined by the Public Utility Commission. To determine
20 purchased energy costs the Public Utility Commission shall make
21 a determination of the estimated reliability of the plant
22 operating under normal conditions prior to such unscheduled
23 outage. Any utility where the tax liability is reduced pursuant
24 to this section shall appropriately adjust to the rates charged
25 to the ratepayers pursuant to procedures established by the
26 Public Utility Commission to fully reflect the tax reduction.
27 Any exemption granted under this section shall be calculated
28 beginning with the original date of the unscheduled outage and
29 shall extend until regular service at the generating facility is
30 resumed but not for more than twenty-four months without another
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1 review by the commission.
2 Section 4. (a) Section 2 5. (A) SECTION 1 OF THIS ACT <--
3 SHALL TAKE EFFECT IN 60 DAYS.
4 (B) SECTION 3 of this act shall take effect July 1, 1980 or, <--
5 if this act is enacted after July 1, 1980, section 2 shall take
6 effect immediately and shall be retroactive to July 1, 1980 1,
7 1981.
8 (b) (C) Section 3 4 of this act shall take effect <--
9 immediately and shall be retroactive to January 1, 1979.
10 (c) (D) The remaining provisions of this act shall take <--
11 effect immediately and shall apply to taxable income for the
12 calendar or fiscal year of the corporation beginning on or after
13 January 1, 1979.
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