PRINTER'S NO. 681
No. 650 Session of 1999
INTRODUCED BY RHOADES, HELFRICK, ROBBINS, SLOCUM, HART, MOWERY, KUKOVICH, COSTA, STAPLETON, MELLOW, KASUNIC, BRIGHTBILL, LEMMOND, O'PAKE, CORMAN, SCHWARTZ, STOUT, CONTI AND WOZNIAK, MARCH 22, 1999
REFERRED TO FINANCE, MARCH 22, 1999
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 a program of tax incentives, 11 including investment tax credits to remove coal waste from 12 the environment and to stimulate the development of a 13 synthetic fuels industry within this Commonwealth. 14 The General Assembly of the Commonwealth of Pennsylvania 15 hereby enacts as follows: 16 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as 17 the Tax Reform Code of 1971, is amended by adding an article to 18 read: 19 ARTICLE XVIII-A 20 COAL WASTE REMOVAL AND ULTRACLEAN FUELS 21 TAX CREDIT 22 Section 1801-A. Short Title.--This article shall be known
1 and may be cited as the "Coal Waste Removal and Ultraclean Fuels 2 Act." 3 Section 1802-A. Definitions.--The following words, terms and 4 phrases, when used in this article, shall have the meanings 5 ascribed to them in this section, except where the context 6 clearly indicates a different meaning: 7 "Act" means the act of March 4, 1971 (P.L.6, No.2), known as 8 the "Tax Reform Code of 1971," as amended. 9 "Department" means the Department of Revenue of the 10 Commonwealth of Pennsylvania. 11 "Developer" means the owner-operator of a facility as defined 12 herein or the operator of such a facility that has sold the 13 facility in new condition to a third party from whom that 14 operator has simultaneously leased back such facility for a 15 minimum period of twelve (12) years. 16 "Facility" means and includes all plant and equipment, 17 purchased or constructed by or on behalf of the developer, used 18 within this Commonwealth by the developer to produce one or more 19 qualified fuels. 20 "Internal Revenue Code" means the Internal Revenue Code of 21 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended. 22 "Qualified fuels" means those fuels produced from non- 23 traditional coal culm and silt feedstocks, as further defined in 24 section 29(c) of the Internal Revenue Code of 1986 (Public Law 25 99-514, 26 U.S.C. § 1 et seq.). 26 Section 1803-A. Investment Tax Credits Program.--(a) A new 27 developer of a new facility for the production of one or more 28 qualified fuels shall be allowed an investment tax credit 29 against the taxes imposed under Articles II, IV and VI of the 30 act. The amount of the credit shall be computed as a percentage 19990S0650B0681 - 2 -
1 applied to the cost or other basis, for Federal income tax 2 purposes, of tangible personal property and other forms of 3 tangible property described in subsection (b). 4 (b) Tangible personal property and other forms of tangible 5 property which qualify for investment tax credit treatment under 6 this section, hereinafter collectively identified as "qualifying 7 property," shall meet all of the following requirements: 8 (1) Be acquired through a purchase, as defined under section 9 179(d)(2) of the Internal Revenue Code, or constructed by the 10 developer for its own use. 11 (2) Be depreciable under section 167 of the Internal Revenue 12 Code. 13 (3) Have a useful life of greater than or equal to four 14 years. 15 (4) Be located within this Commonwealth. 16 (5) Be used by the developer in the production of qualified 17 fuels. 18 (6) Be acquired by purchase or constructed on or after 19 January 1, 2000, and before January 1, 2013. 20 (7) Not be the subject of any tax credit otherwise available 21 to the developer under this act. 22 (c) Only such portion of the cost or other basis of 23 qualifying property that is properly transferred to the 24 facility's basis for depreciation for Federal income tax 25 purposes between January 1, 2000, and December 31, 2012, 26 hereinafter identified as the "tax credit base," shall be 27 subject to the investment tax credit. 28 (d) (1) The investment tax credit shall be computed as 29 fifteen per cent of the tax credit base. 30 (2) The maximum investment tax credit available for 19990S0650B0681 - 3 -
1 application, whether claimed by one or more taxpayers, shall not 2 exceed fifteen per cent of the capital cost of the facility. 3 (3) Any amount of allowable investment tax credit not used 4 in the tax year for which the credit was claimed can be carried 5 forward by the claiming taxpayer to succeeding years until the 6 full amount of allowable credit has been used. 7 (e) (1) The developer, upon notice to the department as 8 specified by the department, may sell or assign, in whole or in 9 part, any investment tax credit afforded under this section to 10 one or more taxpayers, provided that no claim for allowance of 11 such credit has been filed. 12 (2) A taxpayer recipient by purchase or assignment of any 13 portion of the developer's investment tax credit under paragraph 14 (1) shall initially claim such credit, upon notice to the 15 department of the derivative basis of the credit in compliance 16 with procedures specified by the department, for the tax year in 17 which the purchase or assignment is made, but in no event 18 subsequent to the filing of an income tax return for the year 19 2012. 20 (3) Any taxpayer who acquires any portion of the developer's 21 investment tax credit by sale or assignment, for value and 22 without notice of any irregularity or invalidity, shall not 23 suffer any disallowance of the credit or the imposition of any 24 adjustment or fraud penalty attributable to conduct by the 25 developer. 26 (f) (1) If, prior to the expiration of any qualifying 27 property's useful life, as used to calculate depreciation for 28 Federal income tax purposes, the developer, upon mandatory 29 notice to the department in compliance with procedures specified 30 by the department, disposes of any qualifying property in a 19990S0650B0681 - 4 -
1 transaction other than a sale-leaseback, upon which the 2 department has previously allowed an investment tax credit 3 claimed by any taxpayer, a portion of all such credit shall be 4 recaptured and added to the developer's tax liability for the 5 tax year in which the qualifying property is disposed. 6 (2) The portion of the investment tax credit previously 7 allowed, which is subject to recapture from the developer, shall 8 be equal to a fraction whose numerator is the number of years 9 remaining to fully depreciate for Federal income tax purposes 10 the qualifying property disposed and whose denominator is the 11 total number of years over which the property would otherwise 12 have been subject to depreciation by the developer. 13 (3) In calculating the recapture percentage, the year of 14 disposition of the qualifying property is considered a year of 15 remaining depreciation. 16 (g) The department shall verify the validity of any claim 17 for allowance of any investment tax credit afforded under this 18 section and, in the case of a fraudulent claim, may assess 19 against the developer a penalty of one hundred and twenty-five 20 per cent of the credit improperly claimed. 21 Section 1804-A. Tax Exemption.--Any qualified fuel produced 22 by a facility subject to an investment tax credit afforded by 23 section 1803-A shall be exempt from any tax otherwise imposed by 24 75 Pa.C.S. Ch. 90 (relating to liquid fuels and fuels tax). 25 Section 2. This act shall take effect immediately. B19L72RZ/19990S0650B0681 - 5 -