PRINTER'S NO. 1581
No. 1365 Session of 1995
INTRODUCED BY HARHART, CAWLEY, HERMAN, FARMER, GRUPPO,
L. I. COHEN, MILLER, BROWNE, HUTCHINSON, DENT AND KING,
APRIL 19, 1995
REFERRED TO COMMITTEE ON FINANCE, APRIL 19, 1995
AN ACT
1 Providing for a child-care tax credit.
2 The General Assembly of the Commonwealth of Pennsylvania
3 hereby enacts as follows:
4 Section 1. Short title.
5 This act shall be known and may be cited as the Child-care
6 Tax Credit Act.
7 Section 2. Definitions.
8 The following words and phrases when used in this act shall
9 have the meanings given to them in this section unless the
10 context clearly indicates otherwise:
11 "Business firm." Any corporation, partnership, sole
12 proprietorship or other entity authorized to do business in this
13 Commonwealth and subject to any of the taxes imposed by Article
14 III, IV, VI, VII, VIII, IX or XV of the act of March 4, 1971
15 (P.L.6, No.2), known as the Tax Reform Code of 1971.
16 "Contributions." Net payments made to a child-care facility
17 not operated by the business firm for child-care services for
1 the children of employees of the business firm.
2 "Credit." The child-care tax credit.
3 "Highly compensated individuals." Those individuals who, in
4 the aggregate, receive the top 25% of all employee compensation
5 paid by the business firm.
6 "Net costs." Amounts expended for the operation of a child-
7 care facility reduced by the fees or charges paid by the users
8 of the child-care facility services.
9 Section 3. Authorization of credit.
10 (a) Eligibility.--A business firm that operates its own
11 child-care facility which meets the following requirements shall
12 be eligible for the tax credit:
13 (1) The child-care facility has been issued a valid
14 license by the Department of Public Welfare.
15 (2) Children of the business firm's employees utilize
16 the facility on a regular basis.
17 (3) At least 50% of the employees utilizing the child-
18 care facility are not individuals who own more than 10% of
19 the business firm.
20 (4) The child-care program equitably benefits groups of
21 employees who qualify under a classification set up by the
22 business firm which is not discriminatory in favor of highly
23 compensated individuals, officers, shareholders, owners or
24 their dependents.
25 (5) At least 80% of the children utilizing the child-
26 care facility shall be children of the business firm's
27 employees.
28 (b) Eligibility of nonoperation.--A business firm which
29 makes contributions to a child-care facility not operated by the
30 business firm shall be eligible for the tax credit if the
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1 following requirements are met:
2 (1) The child-care facility has been issued a valid
3 license by the Department of Public Welfare.
4 (2) At least 50% of the employees utilizing the child-
5 care facility are not individuals who own more than 10% of
6 the business firm.
7 (3) The child-care program equitably benefits groups of
8 employees who qualify under a classification set up by the
9 business firm which is not discriminatory in favor of highly
10 compensated individuals, officers, shareholders, owners or
11 their dependents.
12 Section 4. Calculation of credit.
13 (a) Amount.--The amount of the tax credit available to a
14 business firm which qualifies under this act and operates its
15 own not-for-profit child-care facility shall be equal to 25% of
16 the net costs of the child-care facility.
17 (b) Amount for nonoperation.--The amount of the tax credit
18 available to a business firm which qualifies under this act and
19 contributes to a child-care facility not operated by the
20 business firm shall be equal to 25% of the contributions made by
21 the business firm to the child-care facility.
22 (c) Maximum tax credit.--The annual credit allowed under
23 this section shall not exceed $10,000 per business firm.
24 Section 5. Taxes against which credit may be taken.
25 (a) Application.--Except as provided in (b), the tax credits
26 provided for in this act may be applied against any tax due
27 under Article III, IV, VI, VII, VIII, IX or XV of the act of
28 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
29 1971.
30 (b) Exception.--The tax credits provided for in this act
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1 shall not be applied against employer withholding taxes required
2 under Article III of the Tax Reform Code of 1971.
3 Section 6. Powers and duties.
4 (a) Department of Revenue.--The Department of Revenue, in
5 cooperation with the Department of Public Welfare, shall
6 administer the provisions of this act, promulgate appropriate
7 rules, regulations and forms for that purpose and make such
8 determinations as may be required.
9 (b) Authorization certificate.--Child-care tax credits may
10 be claimed only upon presentation of an authorizing certificate.
11 Certificates will be issued to a business firm upon presentation
12 to the Department of Public Welfare of evidence of eligibility
13 under this act.
14 (c) Department of Public Welfare.--The Department of Public
15 Welfare shall:
16 (1) Publish as a notice in the Pennsylvania Bulletin, no
17 later than November 30, 1995, or 60 days after the effective
18 date of this act, whichever is later, forms upon which
19 business firms may apply for the tax credit authorized by
20 this act.
21 (2) Within five months after the close of any calendar
22 year during which authorization certificates granted pursuant
23 to this act were issued, furnish to the members of the
24 General Assembly an annual report providing, as to each
25 business firm which was issued authorization certificates for
26 tax credits during the preceding calendar year pursuant to
27 this act, the employer's name, address, standard industrial
28 classification code and the amount of tax credits authorized.
29 (3) The provisions of section 408(b) of the act of March
30 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971,
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1 relating to confidentiality of information, and any other
2 provisions of law preventing the disclosure of information
3 required pursuant to this paragraph, shall not apply when the
4 information is divulged for the purposes of paragraph (2).
5 Section 7. Limitations.
6 The total amount of child-care credits authorized by this act
7 shall not exceed $7,500,000 in any fiscal year. The Department
8 of Public Welfare shall promulgate regulations to issue
9 certificates and avoid certificate issuances in excess of the
10 maximum authorized amount for any fiscal year.
11 Section 8. Time periods for earning and using credits.
12 Child-care credits may be issued for net costs or
13 contributions occurring on or after January 1, 1995, and before
14 January 1, 2000. Child-care credits issued may be claimed
15 against taxes payable for tax years beginning on or after
16 January 1, 1996, and before January 1, 2002.
17 Section 9. Effective date.
18 This act shall take effect immediately.
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