PRINTER'S NO. 1791
No. 1529 Session of 1981
INTRODUCED BY KUKOVICH, MICHLOVIC, WACHOB, MURPHY, COHEN,
PISTELLA, VAN HORNE, PETRARCA, MORRIS, HOEFFEL, SHOWERS,
DOMBROWSKI, BROWN, EVANS, STUBAN, RICHARDSON, SWAIM,
J. D. WILLIAMS, CLARK, WAMBACH, WHITE AND GALLAGHER, JUNE 15,
1981
REFERRED TO COMMITTEE ON FINANCE, JUNE 15, 1981
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 certain corporate taxes on
11 integrated oil companies.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 401, act of March 4, 1971 (P.L.6, No.2),
15 known as the "Tax Reform Code of 1971," clause (3) amended
16 September 9, 1971 (P.L.437, No.105) and May 5, 1981 (No.14), is
17 amended to read:
18 Section 401. Definitions.--The following words, terms, and
19 phrases, when used in this article, shall have the meaning
20 ascribed to them in this section, except where the context
21 clearly indicates a different meaning:
1 (1) "Corporation." A corporation having capital stock,
2 joint-stock association, or limited partnership either organized
3 under the laws of this Commonwealth, the United States, or any
4 other state, territory, or foreign country, or dependency, and
5 doing business in this Commonwealth, or having capital or
6 property employed or used in this Commonwealth by or in the name
7 of itself, or any person, partnership, association, limited
8 partnership, joint-stock association or corporation. The word
9 "corporation" shall not include building and loan associations,
10 banks, bank and trust companies, national banks, savings
11 institutions, trust companies, insurance and surety companies.
12 (2) "Department." The Department of Revenue of this
13 Commonwealth.
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: Provided, That for the
19 calendar year 1981 and fiscal years beginning in 1981 and
20 thereafter, a net operating loss, as provided by section 172 of
21 the Internal Revenue Code, shall be allowed as a deduction and a
22 carryover pursuant to the following schedule:
23 Net Operating Loss for Year Carryover
24 1981 1 year
25 1982 2 years
26 1983 and thereafter 3 years
27 The net operating loss shall be carried to the earliest of the
28 taxable years to which, under this schedule, such loss may first
29 be carried. In the case of regulated investment companies as
30 defined by the Internal Revenue Code of 1954, as amended,
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1 "taxable income" shall be investment company taxable income as
2 defined in the aforesaid Internal Revenue Code of 1954, as
3 amended. In arriving at "taxable income" for Federal tax
4 purposes for any taxable year beginning on or after January 1,
5 1981, no deduction shall be allowed for taxes imposed on or
6 measured by net income.
7 2. In case the entire business of any corporation, other
8 than a corporation engaged in doing business as a regulated
9 investment company as defined by the Internal Revenue Code of
10 1954, as amended, is not transacted within this Commonwealth,
11 the tax imposed by this article shall be based upon such portion
12 of the taxable income of such corporation for the fiscal or
13 calendar year, as defined in subclause 1 hereof, and may be
14 determined as follows:
15 (a) Division of Income.
16 (1) As used in this definition, unless the context otherwise
17 requires:
18 (A) "Business income" means income arising from transactions
19 and activity in the regular course of the taxpayer's trade or
20 business and includes income from tangible and intangible
21 property if the acquisition, management, and disposition of the
22 property constitute integral parts of the taxpayer's regular
23 trade or business operations.
24 (B) "Commercial domicile" means the principal place from
25 which the trade or business of the taxpayer is directed or
26 managed.
27 (C) "Compensation" means wages, salaries, commissions and
28 any other form of remuneration paid to employes for personal
29 services.
30 (D) "Nonbusiness income" means all income other than
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1 business income.
2 (E) "Sales" means all gross receipts of the taxpayer not
3 allocated under this definition other than gross receipts
4 heretofore or hereafter received from the sale, redemption,
5 maturity or exchange of securities, except those held by the
6 taxpayer primarily for sale to customers in the ordinary course
7 of its trade or business.
8 (F) "State" means any state of the United States, the
9 District of Columbia, the Commonwealth of Puerto Rico, any
10 territory or possession of the United States, and any foreign
11 country or political subdivision thereof.
12 (G) "This state" means the Commonwealth of Pennsylvania or,
13 in the case of application of this definition to the
14 apportionment and allocation of income for local tax purposes,
15 the subdivision or local taxing district in which the relevant
16 tax return is filed.
17 (2) Any taxpayer having income from business activity which
18 is taxable both within and without this State other than
19 activity as a corporation whose allocation and apportionment of
20 income is specifically provided for in section 401 (3) 2 (b) (c)
21 [and], (d) and (e) shall allocate and apportion taxable income
22 as provided in this definition.
23 (3) For purposes of allocation and apportionment of income
24 under this definition, a taxpayer is taxable in another state if
25 in that state he is subject to a net income tax, a franchise tax
26 measured by net income, a franchise tax for the privilege of
27 doing business, or a corporate stock tax, or that state has
28 jurisdiction to subject the taxpayer to a net income tax
29 regardless of whether, in fact, the state does or does not.
30 (4) Rents and royalties from real or tangible personal
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1 property, gains, interest, patent or copyright royalties, to the
2 extent that they constitute nonbusiness income, shall be
3 allocated as provided in paragraphs (5) through (8).
4 (5) (A) Net rents and royalties from real property located
5 in this State are allocable to this State.
6 (B) Net rents and royalties from tangible personal property
7 are allocable to this State if and to the extent that the
8 property is utilized in this State, or in their entirety if the
9 taxpayer's commercial domicile is in this State and the taxpayer
10 is not organized under the laws of or taxable in the state in
11 which the property is utilized.
12 (C) The extent of utilization of tangible personal property
13 in a state is determined by multiplying the rents and royalties
14 by a fraction, the numerator of which is the number of days of
15 physical location of the property in the state during the rental
16 or royalty period in the taxable year and the denominator of
17 which is the number of days of physical location of the property
18 everywhere during all rental or royalty periods in the taxable
19 year. If the physical location of the property during the rental
20 or royalty period is unknown or unascertainable by the taxpayer,
21 tangible personal property is utilized in the state in which the
22 property was located at the time the rental or royalty payer
23 obtained possession.
24 (6) (A) Gains and losses from sales or other disposition of
25 real property located in this State are allocable to this State.
26 (B) Gains and losses from sales or other disposition of
27 tangible personal property are allocable to this State if the
28 property had a situs in this State at the time of the sale, or
29 the taxpayer's commercial domicile is in this State and the
30 taxpayer is not taxable in the state in which the property had a
19810H1529B1791 - 6 -
1 situs.
2 (C) Gains and losses from sales or other disposition of
3 intangible personal property are allocable to this State if the
4 taxpayer's commercial domicile is in this State.
5 (7) Interest is allocable to this State if the taxpayer's
6 commercial domicile is in this State.
7 (8) (A) Patent and copyright royalties are allocable to
8 this State if and to the extent that the patent or copyright is
9 utilized by the payer in this State, or if and to the extent
10 that the patent copyright is utilized by the payer in a state in
11 which the taxpayer is not taxable and the taxpayer's commercial
12 domicile is in this State.
13 (B) A patent is utilized in a state to the extent that it is
14 employed in production, fabrication, manufacturing, or other
15 processing in the state or to the extent that a patented product
16 is produced in the state. If the basis of receipts from patent
17 royalties does not permit allocation to states or if the
18 accounting procedures do not reflect states of utilization, the
19 patent is utilized in the state in which the taxpayer's
20 commercial domicile is located.
21 (C) A copyright is utilized in a state to the extent that
22 printing or other publication originates in the state. If the
23 basis of receipts from copyright royalties does not permit
24 allocation to states or if the accounting procedures do not
25 reflect states of utilization, the copyright is utilized in the
26 state in which the taxpayer's commercial domicile is located.
27 (9) All business income shall be apportioned to this State
28 by multiplying the income by a fraction, the numerator of which
29 is the property factor plus the payroll factor plus the sales
30 factor, and the denominator of which is three.
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1 (10) The property factor is a fraction, the numerator of
2 which is the average value of the taxpayer's real and tangible
3 personal property owned or rented and used in this State during
4 the tax period and the denominator of which is the average value
5 of all the taxpayer's real and tangible personal property owned
6 or rented and used during the tax period but shall not include
7 the security interest of any corporation as seller or lessor in
8 personal property sold or leased under a conditional sale,
9 bailment lease, chattel mortgage or other contract providing for
10 the retention of a lien or title as security for the sales price
11 of the property.
12 (11) Property owned by the taxpayer is valued at its
13 original cost. Property rented by the taxpayer is valued at
14 eight times the net annual rental rate. Net annual rental rate
15 is the annual rental rate paid by the taxpayer less any annual
16 rental rate received by the taxpayer from subrentals.
17 (12) The average value of property shall be determined by
18 averaging the values at the beginning and ending of the tax
19 period but the tax administrator may require the averaging of
20 monthly values during the tax period if reasonably required to
21 reflect properly the average value of the taxpayer's property.
22 (13) The payroll factor is a fraction, the numerator of
23 which is the total amount paid in this State during the tax
24 period by the taxpayer for compensation and the denominator of
25 which is the total compensation paid everywhere during the tax
26 period.
27 (14) Compensation is paid in this State if:
28 (A) The individual's service is performed entirely within
29 the State;
30 (B) The individual's service is performed both within and
19810H1529B1791 - 8 -
1 without this State, but the service performed without the State
2 is incidental to the individual's service within this State; or
3 (C) Some of the service is performed in this State and the
4 base of operations or if there is no base of operations, the
5 place from which the service is directed or controlled is in
6 this State, or the base of operations or the place from which
7 the service is directed or controlled is not in any state in
8 which some part of the service is performed, but the
9 individual's residence is in this State.
10 (15) The sales factor is a fraction, the numerator of which
11 is the total sales of the taxpayer in this State during the tax
12 period, and the denominator of which is the total sales of the
13 taxpayer everywhere during the tax period.
14 (16) Sales of tangible personal property are in this State
15 if the property is delivered or shipped to a purchaser, within
16 this State regardless of the f.o.b. point or other conditions of
17 the sale.
18 (17) Sales, other than sales of tangible personal property,
19 are in this State if:
20 (A) The income-producing activity is performed in this
21 State; or
22 (B) The income-producing activity is performed both in and
23 outside this State and a greater proportion of the income-
24 producing activity is performed in this State than in any other
25 state, based on costs of performance.
26 (18) If the allocation and apportionment provisions of this
27 definition do not fairly represent the extent of the taxpayer's
28 business activity in this State, the taxpayer may petition the
29 Secretary of Revenue or the Secretary of Revenue may require, in
30 respect to all or any part of the taxpayer's business activity:
19810H1529B1791 - 9 -
1 (A) Separate accounting;
2 (B) The exclusion of any one or more of the factors;
3 (C) The inclusion of one or more additional factors which
4 will fairly represent the taxpayer's business activity in this
5 State; or
6 (D) The employment of any other method to effectuate an
7 equitable allocation and apportionment of the taxpayer's income.
8 (b) Railroad, Truck, Bus or Airline Companies.
9 (1) All business income of railroad, truck, bus or airline
10 companies shall be apportioned to this Commonwealth by
11 multiplying the income by a fraction, the numerator of which is
12 the taxpayer's total revenue miles within this Commonwealth
13 during the tax period and the denominator of which is the total
14 revenue miles of the taxpayer everywhere during the tax period.
15 For purposes of this paragraph revenue mile shall mean the
16 average receipts derived from the transportation by the taxpayer
17 of persons or property one mile. Where revenue miles are derived
18 from the transportation of both persons and property, the
19 revenue mile fractions attributable to each such class of
20 transportation shall be computed separately, and the average of
21 the two fractions, weighted in accordance with the ratio of
22 total receipts from each such class of transportation everywhere
23 to total receipts from both such classes of transportation
24 everywhere, shall be used in apportioning income to this
25 Commonwealth.
26 (2) Nonbusiness income of railroad, truck, bus or airline
27 companies shall be allocated as provided in paragraphs (5)
28 through (8) of phrase (a) of subclause 2 of the definition of
29 taxable income.
30 (c) Pipeline or Natural Gas Companies.
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1 (1) All business income of pipeline companies shall be
2 apportioned to this Commonwealth by multiplying the income by a
3 fraction, the numerator of which is the revenue ton miles,
4 revenue barrel miles or revenue cubic feet miles within this
5 Commonwealth during the tax period and the denominator of which
6 is the total revenue ton miles, revenue barrel miles or the
7 revenue cubic feet miles of the taxpayer everywhere during the
8 tax period. For purposes of this paragraph a revenue ton mile,
9 revenue barrel mile or a revenue cubic foot mile shall mean
10 respectively the receipts derived from the transportation by the
11 taxpayer of one ton of solid property, one barrel of liquid
12 property or one cubic foot of gaseous property transported one
13 mile.
14 (2) All business income of natural gas companies subject to
15 regulation by the Federal Power Commission or by the
16 Pennsylvania Public Utility Commission shall be apportioned to
17 this Commonwealth by multiplying the income by a fraction, the
18 numerator of which shall be the cubic foot capacity of the
19 taxpayer's pipelines in this Commonwealth, and the denominator
20 of which shall be the cubic foot capacity of the taxpayer's
21 pipelines everywhere, at the end of the tax period. For the
22 purpose of this paragraph, the cubic foot capacity of a pipeline
23 shall be determined by multiplying the square of its radius (in
24 feet) by its length (in feet).
25 (3) Nonbusiness income of pipeline companies or natural gas
26 companies subject to regulation by the Federal Power Commission
27 or by the Pennsylvania Public Utility Commission shall be
28 allocated as provided in paragraphs (5) through (8) of phrase
29 (a) of subclause 2 of the definition of taxable income.
30 (d) Water Transportation Companies.
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1 (1) Water Transportation Companies Operating on High Seas.
2 All business income of water transportation companies operating
3 on high seas shall be apportioned to this Commonwealth by
4 multiplying the business income by a fraction, the numerator of
5 which is the number of port days spent inside the Commonwealth
6 and the denominator of which is the total number of port days
7 spent inside and outside of the Commonwealth. The term "port
8 days" does not include periods when the ships are not in use
9 because of strikes or withheld from service for repair or
10 because of seasonal reduction of services. Days in port are
11 computed by dividing the aggregate number of hours in all ports
12 by twenty-four.
13 (2) Water Transportation Companies Operating in Inland
14 Waters. All business income of water transportation companies
15 operating on inland waters shall be apportioned to this
16 Commonwealth by multiplying the business income by a fraction,
17 the numerator of which is the taxpayer's total revenue miles
18 within this Commonwealth during the tax period and the
19 denominator of which is the total revenue miles of the taxpayer
20 everywhere during the tax period. In the determination of
21 revenue miles, one-half of the mileage of all navigable
22 waterways bordering between the Commonwealth and another state
23 shall be considered Commonwealth miles. For purposes of this
24 paragraph, revenue miles shall mean the revenue receipts derived
25 from the transportation by the taxpayer of persons or property
26 one mile.
27 (3) Nonbusiness income of water transportation companies
28 shall be allocated as provided in paragraphs (5) through (8) of
29 phrase (a) of subclause 2 of the definition of taxable income.
30 (e) Integrated Oil Companies.
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1 (1) As used in this definition, unless the context otherwise
2 requires:
3 (A) "Allocable income" means a fraction of a subsidiary's
4 taxable income equal to the fraction of the subsidiary's voting
5 stock owned by an integrated oil company.
6 (B) "Excess taxable income" means taxable income as computed
7 under section 401(3)2(e)(2) minus normal taxable income as
8 computed under section 401(3)2(e)(1)(D). However, excess taxable
9 income shall be adjusted to exclude any increase or decrease in
10 taxable income that is solely attributable to a statutory or
11 regulatory change in the method of determining taxable income
12 for Federal purposes which change is implemented subsequent to
13 the enactment of this amendatory act.
14 (C) "Integrated oil company" means a corporation engaged in
15 all of the following activities in respect to petroleum or
16 products made from petroleum: extraction, production, refining,
17 transportation, distribution and marketing. In determining
18 whether a particular corporation is an integrated oil company,
19 the department shall treat as one company the parent corporation
20 and its subsidiaries.
21 (D) "Normal taxable income" means the in-state sales of the
22 company for the current year under this chapter with the
23 modifications under section 401(3)2(e)(2) multiplied by an
24 amount determined by dividing the company's in-state taxable
25 income for taxable year 1978 by the company's in-state sales for
26 taxable year 1978. If a company's calendar or fiscal year 1978
27 taxable income, as determined under the methods described in
28 section 401(3)2(e)(2), fell below its calendar or fiscal year
29 1977 taxable income as computed by these methods and the
30 integrated oil company has received the written permission of
19810H1529B1791 - 13 -
1 the department following full disclosure of all information
2 requested by the department, the company may use an adjusted or
3 alternative base year instead of using in-state taxable income
4 and in-state sales for taxable year 1978. A company computing an
5 alternative base year may either recalculate fiscal or calendar
6 year 1978 taxable income without regard for any extraordinary or
7 nonrecurring expenses; or using taxable income for a base fiscal
8 or calendar year preceding 1978, increase it by an amount that
9 reflects that increase in taxable income that customarily would
10 have occurred between the base year chosen and fiscal or
11 calendar year 1978. "In-state sales" is the amount the
12 corporation reports as the numerator of the sales factor under
13 section 401(3)2(a)(15). "In-state taxable income" for the
14 current calendar or fiscal year is that taxable income
15 apportioned to this State under section 401(3)2(e)(2). "In-state
16 taxable income" for calendar or fiscal year 1978 is that taxable
17 income the corporation would have reported in 1978 if it had
18 computed its income under section 401(3)2(e)(2).
19 (E) "Subsidiary" means any domestic or foreign corporation
20 more than fifty per cent of the voting stock of which is owned
21 by an integrated oil company, and which engages in at least one
22 of the activities under section 401(3)2(e)(1)(C).
23 (2) The "taxable income" of any corporation which
24 constitutes an integrated oil company within the meaning of this
25 section shall be the combined taxable income of the parent
26 corporation and the allocable income of its subsidiaries, if
27 any. If a subsidiary constituting part of an integrated oil
28 company does business in this State, the allocable income of
29 that subsidiary shall be combined with the taxable income of the
30 parent corporation of the integrated oil company and the
19810H1529B1791 - 14 -
1 allocable income of all its subsidiaries; except that only that
2 portion of the parent's taxable income attributable to the
3 petroleum activities enumerated under section 401(3)2(e)(1)(C)
4 shall be combined. If any subsidiary, in addition to its
5 petroleum activities enumerated under section 401(3)2(e)(1)(C),
6 engaged in activities unrelated to such petroleum activities,
7 only that allocable income attributable to the petroleum
8 activities shall be combined; however, any income derived by
9 parent or subsidiary corporation of an integrated oil company
10 from the production, transportation, distribution or marketing
11 of natural gas shall also be combined in the same manner
12 provided for petroleum activities. In computing the denominators
13 of the property, payroll and sales factors under section
14 401(3)2(a), the taxpayer shall include amounts of property,
15 payroll and sales associated with all the combined income of the
16 parent corporation and its subsidiaries. Except as specifically
17 modified in this definition, "taxable income" for any
18 corporation which constitutes an integrated oil company shall be
19 "taxable income" as defined and determined pursuant to section
20 401(3)2(a). The requirement of a combined report for integrated
21 oil companies shall apply notwithstanding any other provision of
22 this act. Taxable income shall include any amount currently
23 deductible for Federal tax purposes for intangible drilling and
24 development costs as defined under section 263(c) of the
25 Internal Revenue Code, as amended to the effective date of this
26 amendatory act. All intangible drilling and development costs
27 associated with a productive well shall be capitalized over the
28 life of the well.
29 3. In case the entire business of a corporation which has
30 filed a timely election and has qualified to be taxed as a
19810H1529B1791 - 15 -
1 regulated investment company under the provisions of the
2 Internal Revenue Code of 1954, as amended, is not transacted
3 within this Commonwealth, the tax imposed by this article shall
4 be based upon such portion of the taxable income of such
5 corporation for the fiscal or calendar year as defined in
6 subclause 1 hereof, as shall be attributable to business
7 transacted within this Commonwealth by multiplying such taxable
8 income by a fraction, the numerator of which is the sum of the
9 corporation's gross receipts from (i) sales of its own shares to
10 Pennsylvania investors and (ii) sales of its portfolio
11 securities, where the orders for such sales are placed with or
12 credited to Pennsylvania offices of registered securities
13 dealers and the denominator of which fraction is the
14 corporation's total gross receipts from (i) sales of its own
15 shares and (ii) sales of its portfolio securities. Pennsylvania
16 investors shall mean individuals residing in Pennsylvania at the
17 time of the sale or corporations or other entities having their
18 principal place of business located in Pennsylvania at such
19 time.
20 (4) "Person." Every natural person, association or
21 corporation. Whenever used in any clause prescribing and
22 imposing a fine or imprisonment, or both, the term "person," as
23 applied to associations, shall mean the partners or members
24 thereof, and as applied to corporations the officers thereof.
25 Section 2. Section 402 of the act, amended May 5, 1981
26 (No.14), is amended to read:
27 Section 402. Imposition of Tax.--(a) Every corporation
28 shall be subject to, and shall pay for the privilege of doing
29 business in this Commonwealth, or having capital or property
30 employed or used in this Commonwealth, by or in the name of
19810H1529B1791 - 16 -
1 itself, or any person, partnership, association, limited
2 partnership, joint-stock association, or corporation, a State
3 excise tax at the rate of twelve per cent per annum upon each
4 dollar of taxable income of such corporation received by, and
5 accruing to, such corporation during the calendar year 1971 and
6 the first six months of 1972 and at the rate of eleven per cent
7 per annum upon each dollar of taxable income of such corporation
8 received by, and accruing to, such corporation during the second
9 six months of calendar year 1972 through the calendar year 1973
10 and at the rate of nine and one-half per cent per annum upon
11 each dollar of taxable income of such corporation received by,
12 and accruing to, such corporation during the calendar years
13 1974, 1975 and 1976 and at the rate of ten and one-half per cent
14 per annum upon each dollar of taxable income of such corporation
15 received by, and accruing to, such corporation during the
16 calendar year 1977 and each calendar year thereafter to the
17 beginning of calendar year 1984 and at a rate of nine and one-
18 half per cent for each calendar year thereafter, except where a
19 corporation reports to the Federal Government on the basis of a
20 fiscal year, and has certified such fact to the department as
21 required by section 403 of this article, in which case, such
22 tax, at the rate of twelve per cent, shall be levied, collected,
23 and paid upon all taxable income received by, and accruing to,
24 such corporation during the first six months of the fiscal year
25 commencing in the calendar year 1972 and at the rate of eleven
26 per cent, shall be levied, collected, and paid upon all taxable
27 income received by, and accruing to, such corporation during the
28 second six months of the fiscal year commencing in the calendar
29 year 1972 and during the fiscal year commencing in the calendar
30 year 1973 and at the rate of nine and one-half per cent, shall
19810H1529B1791 - 17 -
1 be levied, collected, and paid upon all taxable income received
2 by, and accruing to, such corporation during the fiscal year
3 commencing in the calendar years 1974, 1975 and 1976 and at the
4 rate of ten and one-half per cent, shall be levied, collected,
5 and paid upon all taxable income received by, and accruing to,
6 such corporation during the fiscal year commencing in the
7 calendar year 1977 and during each fiscal year thereafter to the
8 fiscal year commencing in the calendar year 1984 and at a rate
9 of nine and one-half per cent for each fiscal year commencing in
10 the calendar year 1984 and each fiscal year thereafter. No
11 penalty prescribed by subsection (e) of section 1202.1 shall be
12 assessed against a corporation for the additional tax which may
13 be due as a result of the increase in tax rate from nine and
14 one-half per cent to ten and one-half per cent imposed
15 retroactively by this section for the calendar year 1977 or for
16 the fiscal year commencing in 1977.
17 (b) In lieu of the tax imposed by subsection (a), each
18 integrated oil company shall pay for the privilege of doing
19 business in this Commonwealth, or having capital or property
20 employed or used in this Commonwealth, by or in the name of
21 itself, or any person, partnership, association, limited
22 partnership, joint stock association, or corporation, a State
23 excise tax, at the rate per annum established in subsection(a),
24 upon each dollar of normal taxable income, as defined in and
25 determined under section 401(3)2(e), of such integrated oil
26 company, received by and accruing to, such integrated oil
27 company.
28 (c) In addition to the tax imposed under subsection (b),
29 each integrated oil company shall pay for the privilege of doing
30 business in this Commonwealth, or having capital or property
19810H1529B1791 - 18 -
1 employed or used in this Commonwealth, by or in the name of
2 itself, or any person, partnership, association, limited
3 partnership, joint stock association, or corporation, a State
4 excise tax at the rate of fifty per cent per annum upon each
5 dollar of excess taxable income, as defined in and determined
6 under section 401(3)2(e), of such integrated oil company,
7 received by and accruing to, such integrated oil company.
8 Section 3. Section 403 of the act, amended September 9, 1971
9 (P.L.437, No.105), is amended to read:
10 Section 403. Reports and Payment of Tax.--(a) For the
11 purpose of ascertaining the amount of tax payable under this
12 article, it shall be the duty of every corporation, liable to
13 pay tax under this article, on or before April 15, 1972, and
14 each year thereafter, to transmit to the department, upon a form
15 prescribed, prepared and furnished by the department, an annual
16 report under oath or affirmation of its president, vice-
17 president or other principal officer, and of its treasurer or
18 assistant treasurer of net income taxable under the provisions
19 of this article. Such report shall set forth:
20 (1) A true copy of its return to the Federal Government of
21 the annual taxable income arising or accruing in the calendar or
22 fiscal year next preceding, or such part or portions of said
23 return, as the department may designate;
24 (2) If no return was filed with the Federal Government the
25 report made to the department shall show such information as
26 would have been contained in a return to the Federal Government
27 had one been made; and
28 (3) Such other information as the department may require.
29 (b) For the purpose of ascertaining the amount of tax
30 payable under this article for the taxable year 1971, and each
19810H1529B1791 - 19 -
1 taxable year thereafter, it shall be the duty of every
2 corporation liable to pay tax under this article, on or before
3 April 30, 1971, and on or before the end of the fourth month
4 after the close of its previous fiscal year for fiscal year
5 taxpayers, and each year thereafter, to transmit in like form
6 and manner an additional tentative report and make payment
7 pursuant to the provisions of the act of March 16, 1970
8 (P.L.180): Provided, That in making such report and payment for
9 the calendar year 1971 and each year thereafter and for fiscal
10 years commencing during the calendar year 1971, and each year
11 thereafter the tax base from the immediate prior year, upon
12 which the tentative tax computation is to be made under said act
13 of March 16, 1970 (P.L.180), shall be computed as if the tax
14 base for such immediate prior year had been determined under the
15 applicable provisions of the act of March 4, 1971 (Act No. 2).
16 (c) The amount of all taxes, imposed under the provisions of
17 this article, not paid on or before the times as above provided,
18 shall bear interest at the rate of six per cent per annum from
19 the date they are due and payable until paid, except that if the
20 taxable income has been, or is increased by the Commissioner of
21 Internal Revenue, or by any other agency or court of the United
22 States, interest shall be computed on the additional tax due
23 from thirty days after the corporation receives notice of the
24 change of income until paid: Provided, however, That any
25 corporation may pay the full amount of such tax, or any part
26 thereof, together with interest due to the date of payment,
27 without prejudice to its right to present and prosecute a
28 petition for resettlement, a petition for review, or an appeal
29 to court: And provided further however, That no State court
30 shall enjoin, suspend or restrain the assessment, levy or
19810H1529B1791 - 20 -
1 collection of this tax. If it be thereafter determined that such
2 taxes were overpaid, the department shall enter a credit to the
3 account of such corporation, which may be used by it in the
4 manner prescribed by law.
5 (d) If the officers of any corporation shall neglect, or
6 refuse to make any report as herein required, or shall knowingly
7 make any false report, the following percentages of the amount
8 of the tax shall be added by the department to the tax
9 determined to be due on the first one thousand dollars ($1,000)
10 of tax ten per cent, on the next four thousand dollars ($4,000)
11 five per cent, and on everything in excess of five thousand
12 dollars ($5,000) one per cent, no such amounts added to the tax
13 shall bear any interest whatsoever.
14 (e) If any corporation closes its fiscal year not upon
15 December 31, but upon some other date, and reports to the
16 Federal Government as of such other date, or would so report
17 were it to make a return to the Federal Government, such
18 corporation shall certify such fact to the department, and shall
19 make the annual report, herein required, within thirty days
20 after the return to the Federal Government is due, or would be
21 due were it to be required of such corporation, subject in all
22 other respects to the provisions of this article. The tentative
23 report required of such corporation shall be due not later than
24 four months after the end of the next preceding fiscal year.
25 (f) If the corporation shall claim in its report that the
26 return made to the Federal Government was inaccurate, the amount
27 claimed by it to be the taxable income, taxable under this
28 article, and the basis of such claim of inaccuracy, shall be
29 fully specified.
30 Section 4. Section 501 of the act, clause (3) amended
19810H1529B1791 - 21 -
1 September 9, 1971 (P.L.437, No.105), is amended to read:
2 Section 501. Definitions.--The following words, terms and
3 phrases when used in this article shall have the meaning
4 ascribed to them in this section, except where the context
5 clearly indicates a different meaning:
6 (1) "Corporation." A corporation having capital stock,
7 joint-stock association or limited partnership, either organized
8 under the laws of this Commonwealth, the United States, or any
9 other state, territory or foreign country or dependency, and
10 carrying on activities in this Commonwealth, or owning property
11 in this Commonwealth by or in the name of itself or any person,
12 partnership, association, limited partnership, joint-stock
13 association, or corporation. The word "corporation" shall not
14 include nonprofit corporations, building and loan associations,
15 banks, bank and trust companies, national banks, savings
16 institutions, trust companies, insurance and surety companies.
17 (2) "Department." The Department of Revenue of this
18 Commonwealth.
19 (3) "Taxable income."
20 1. taxable income shall be defined as set forth in Article
21 IV.
22 2. In the case of corporations owning property or carrying
23 on activities within and without this Commonwealth, the taxable
24 income of such corporations derived from sources within this
25 Commonwealth for the fiscal or calendar year shall be determined
26 by allocations and apportionments of taxable income as set forth
27 in Article IV.
28 (3.1) "Excess taxable income." Excess taxable income as
29 defined in section 401(3)2(1)(B).
30 (3.2) "Normal taxable income." Normal taxable income as
19810H1529B1791 - 22 -
1 defined in section 401(3)2(1)(D).
2 (4) "Sources within this Commonwealth" includes tangible or
3 intangible property located or having a situs in this
4 Commonwealth and any activities carried on in this Commonwealth,
5 regardless of whether carried on in intrastate, interstate or
6 foreign commerce.
7 (5) "Carrying on activities" shall include every act, power
8 or privilege exercised or enjoyed in this Commonwealth as an
9 incident to, or by virtue of, the powers and privileges acquired
10 by the nature of the corporate organization.
11 Section 5. Section 502 of the act, amended May 5, 1981
12 (No.14), is amended to read:
13 Section 502. Imposition of Tax.--(a) Every corporation
14 carrying on activities in this Commonwealth or owning property
15 in this Commonwealth by or in the name of itself or any person,
16 partnership, joint-stock association or corporation shall be
17 subject to and shall pay a State property tax on taxable income
18 derived from sources within this Commonwealth at the rate of
19 twelve per cent per annum upon each dollar of such taxable
20 income received by and accruing to such corporation during the
21 calendar year 1971 and the first six months of 1972 and at the
22 rate of eleven per cent per annum upon each dollar of taxable
23 income of such corporation received by, and accruing to, such
24 corporation during the second six months of calendar year 1972
25 through the calendar year 1973 and at the rate of nine and one-
26 half per cent per annum upon each dollar of taxable income of
27 such corporation received by, and accruing to, such corporation
28 during the calendar years 1974, 1975 and 1976 and at the rate of
29 ten and one-half per cent per annum upon each dollar of taxable
30 income of such corporation received by, and accruing to, such
19810H1529B1791 - 23 -
1 corporation during the calendar year 1977 and each calendar year
2 thereafter to the beginning of calendar year 1984 and at a rate
3 of nine and one-half per cent for each calendar year thereafter,
4 except where a corporation reports to the Federal Government on
5 the basis of a fiscal year and has certified such fact to the
6 department as required by section 403 of Article IV, in which
7 case such tax at the rate of twelve per cent shall be levied,
8 collected and paid upon each dollar of such taxable income
9 received by and accruing to such corporation during the first
10 six months of the fiscal year commencing in the calendar year
11 1972 and at the rate of eleven per cent shall be levied,
12 collected, and paid upon all taxable income received by, and
13 accruing to, such corporation during the second six months of
14 the fiscal year commencing in the calendar year 1972 and during
15 the fiscal year commencing in the calendar year 1973 and at the
16 rate of nine and one-half per cent, shall be levied, collected,
17 and paid upon all taxable income received by, and accruing to,
18 such corporation during the fiscal year commencing in the
19 calendar years 1974, 1975 and 1976 and at the rate of ten and
20 one-half per cent, shall be levied, collected, and paid upon all
21 taxable income received by, and accruing to, such corporation
22 during the fiscal year commencing in the calendar year 1977 and
23 each fiscal year thereafter to the fiscal year commencing in the
24 calendar year 1984 and at a rate of nine and one-half per cent
25 for each fiscal year commencing in the calendar year 1984 and
26 each fiscal year thereafter: Provided, however, That such
27 taxable income shall not include income for any period for which
28 the corporation is subject to taxation under Article IV: And,
29 provided further, That no penalty prescribed by subsection (e)
30 of section 1202.1 shall be assessed against a corporation for
19810H1529B1791 - 24 -
1 the additional tax which may be due as a result of the increase
2 in tax rate from nine and one-half per cent to ten and one-half
3 per cent imposed retroactively by this section for the calendar
4 year 1977 or for the fiscal year commencing in 1977.
5 (b) In lieu of the tax imposed under subsection (a), each
6 integrated oil company carrying on activities in this
7 Commonwealth or owning property in this Commonwealth by or in
8 the name of itself or any person, partnership, joint-stock
9 association or corporation shall be subject to and shall pay a
10 State property tax on normal taxable income at the rate per
11 annum established in subsection (a) upon each dollar of such
12 normal taxable income, as defined in and determined under
13 section 401(3)2(e), received by and accruing to such integrated
14 oil company.
15 (c) In addition to the tax imposed under subsection (a),
16 each integrated oil company carrying on activities in this
17 Commonwealth or owning property in this Commonwealth by or in
18 the name of itself or any person, partnership, joint-stock
19 association or corporation shall be subject to and shall pay a
20 State property tax on excess taxable income at the rate of fifty
21 per cent per annum upon each dollar of such excess taxable
22 income, as defined in and determined under section 401(3)2(e),
23 received by and accruing to such integrated oil company.
24 Section 6. This act shall take effect immediately and shall
25 be applicable to fiscal and calendar tax years commencing on and
26 after January 1, 1982.
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