PRINTER'S NO. 2159
No. 1599 Session of 2007
INTRODUCED BY BROOKS, S. H. SMITH, CIVERA, MAJOR, STERN, TURZAI,
ADOLPH, ARGALL, BAKER, BEAR, BENNINGHOFF, BENNINGTON, BEYER,
BOBACK, BOYD, CALTAGIRONE, CAUSER, CLYMER, CREIGHTON, CUTLER,
DALLY, DENLINGER, DiGIROLAMO, ELLIS, J. EVANS, EVERETT,
FLECK, GABIG, GEIST, GILLESPIE, GINGRICH, GODSHALL, GRELL,
HARHART, HARPER, HARRIS, HELM, HENNESSEY, HERSHEY, HESS,
HICKERNELL, HUTCHINSON, KAUFFMAN, M. KELLER, W. KELLER,
KENNEY, MACKERETH, MAHER, MANN, MANTZ, MARSHALL, MARSICO,
McILHATTAN, MENSCH, METCALFE, MICOZZIE, MILLARD, R. MILLER,
MILNE, MOUL, MOYER, MURT, MUSTIO, NAILOR, NICKOL, O'NEILL,
PAYNE, PERRY, PERZEL, PETRI, PHILLIPS, PICKETT, PYLE,
QUIGLEY, QUINN, RAPP, RAYMOND, READSHAW, REED, REICHLEY,
ROAE, ROSS, RUBLEY, SAYLOR, SCAVELLO, SCHRODER, SONNEY,
STEIL, R. STEVENSON, SWANGER, J. TAYLOR, R. TAYLOR, THOMAS,
TRUE, VEREB, VULAKOVICH, WANSACZ, WATSON AND YOUNGBLOOD,
JUNE 29, 2007
REFERRED TO COMMITTEE ON FINANCE, JUNE 29, 2007
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," further providing, in corporate net income tax,
11 for definitions and for imposition of tax.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 401(3)2(a)(9) of the act of March 4, 1971
15 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended
1 July 12, 2006 (P.L.1137, No.116), is amended to read:
2 Section 401. 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 * * *
7 (3) "Taxable income." * * *
8 2. In case the entire business of any corporation, other
9 than a corporation engaged in doing business as a regulated
10 investment company as defined by the Internal Revenue Code of
11 1986, is not transacted within this Commonwealth, the tax
12 imposed by this article shall be based upon such portion of the
13 taxable income of such corporation for the fiscal or calendar
14 year, as defined in subclause 1 hereof, and may be determined as
15 follows:
16 (a) Division of Income.
17 * * *
18 (9) (A) Except as provided in subparagraph (B):
19 (i) For taxable years beginning before January 1, 2007, all
20 business income shall be apportioned to this State by
21 multiplying the income by a fraction, the numerator of which is
22 the property factor plus the payroll factor plus three times the
23 sales factor and the denominator of which is five.
24 (ii) For taxable years beginning [after December 31, 2006,]
25 before January 1, 2008, all business income shall be apportioned
26 to this State by multiplying the income by a fraction, the
27 numerator of which is the sum of fifteen times the property
28 factor, fifteen times the payroll factor and seventy times the
29 sales factor and the denominator of which is one hundred.
30 (iii) For taxable years beginning after December 31, 2007,
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1 all business income shall be apportioned to this State by
2 multiplying the income by a fraction, the numerator of which is
3 the sum of ten times the property factor, ten times the payroll
4 factor and eighty times the sales factor and the denominator of
5 which is one hundred.
6 (B) For purposes of apportionment of the capital stock -
7 franchise tax as provided in section 602 of Article VI of this
8 act, the apportionment fraction shall be the property factor
9 plus the payroll factor plus the sales factor as the numerator,
10 and the denominator shall be three.
11 * * *
12 Section 2. Section 402 of the act, amended June 29, 2002
13 (P.L.559, No.89), is amended to read:
14 Section 402. Imposition of Tax.--(a) A corporation shall be
15 subject to and shall pay an excise tax for exercising, whether
16 in its own name or through any person, association, business
17 trust, corporation, joint venture, limited liability company,
18 limited partnership, partnership or other entity, any of the
19 following privileges:
20 (1) Doing business in this Commonwealth.
21 (2) Carrying on activities in this Commonwealth, including
22 solicitation which is not protected activity under the act of
23 September 14, 1959 (Public Law 86-272, 15 U.S.C. § 381 et seq.).
24 (3) Having capital or property employed or used in this
25 Commonwealth.
26 (4) Owning property in this Commonwealth.
27 (b) The annual rate of tax on corporate net income imposed
28 by subsection (a) for taxable years beginning for the calendar
29 year or fiscal year on or after the dates set forth shall be as
30 follows:
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1 Taxable Year Tax Rate
2 January 1, 1995, [and
3 each taxable
4 year thereafter 9.99%]
5 through December
6 31, 2007 9.99%
7 January 1, 2008,
8 through December
9 31, 2008 8.99%
10 January 1, 2009, and
11 each taxable
12 year thereafter 7.99%
13 (c) An entity subject to taxation under Article VII, VIII,
14 IX or XV shall not be subject to the tax imposed by this
15 article.
16 Section 3. This act shall take effect immediately.
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