THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY WHITE, M. SMITH, BARBIN, BELFANTI, CALTAGIRONE, DALEY, DEASY, DeLUCA, DePASQUALE, DERMODY, FRANKEL, GERGELY, GIBBONS, GOODMAN, HARHAI, HORNAMAN, KOTIK, LONGIETTI, MARSHALL, MATZIE, MELIO, MURPHY, PYLE, SAINATO, SHAPIRO, SIPTROTH, SWANGER, VULAKOVICH AND WAGNER, JUNE 24, 2010

REFERRED TO COMMITTEE ON FINANCE, JUNE 24, 2010  

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," providing for Marcellus Shale employs

Pennsylvania workers - job tax credits.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971, is amended by adding an article to

read:

ARTICLE XIX-B

MARCELLUS SHALE EMPLOYS PENNSYLVANIA WORKERS - JOB TAX CREDIT

Section 1901-B.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Department."  The Department of Labor and Industry of the

Commonwealth.

"Job."  A full-time employment position, the average hourly

rate, excluding benefits, for which must be at least 150% of the

Federal minimum wage, created within three years from a

company's start date within this Commonwealth. The term does not

include temporary or seasonal work.

"Pennsylvania Marcellus Shale job tax credit."  Tax credits

for which the Department of Labor and Industry has issued a

certificate under this article.

"Qualified apprenticeship training program."  A program

registered with the Apprenticeship and Training Council within

the Department of Labor and Industry that is in compliance with

applicable Federal and State laws and regulations and which

requires at least 2,000 but not more than 10,000 hours of on-

the-job apprenticeship training.

"Resident."  Any natural person who is considered a resident

under the act of March 4, 1971 (P.L.6, No.2), known as the Tax

Reform Code of 1971, and who has completed a qualified

apprenticeship training program or a job training program

approved by the Department of Labor and Industry.

"Start date."  The date on which a company may begin

employing residents which may be eligible for job creation tax

credits.

Section 1902-B.  Eligibility.

In order to be eligible to receive Pennsylvania Marcellus

Shale job tax credits, a company must demonstrate to the

department the following:

(1)  The ability to conduct business in Pennsylvania,

including the appropriate licenses and certifications.

(2)  Leadership in the Marcellus Shale drilling industry,

including conformity to industry laws and regulations

overseen and enforced by the Department of Environmental

Protection.

(3)  Financial stability and the company's financial

viability.

(4)  The intent to maintain operations in this

Commonwealth and employ residents for a period of five years

from the date the company submits its tax credit certificate

to the Department of Revenue.

(5)  The intent to employ residents with full-time

family-sustaining jobs with an average hourly rate and

benefits.

Section 1903-B.  Application process.

(a)  Application.--A company must complete and submit to the

department a Pennsylvania Marcellus Shale job tax credit

application along with a copy of the permit issued by the

Department of Environmental Protection providing that the

company has obtained the necessary permit allowing the company

to drill in this Commonwealth or a statement from the Department

of Environmental Protection stating the same. The Department of

Environmental Protection shall notify the department and the

Department of Revenue upon suspension or revocation of drilling

permits or other changes that affect the company's ability to

continuously drill in this Commonwealth.

(b)  Employment of residents.--At least 75% of the

applicant's workforce in the Commonwealth must be composed of

residents.

(c)  Approval.--If the department approves the company's

application, the department and the company shall execute a

commitment letter containing the following:

(1)  A description of the project.

(2)  The number of Pennsylvania residents employed.

(3)  The amount of private capital investment in the

project.

(4)  The maximum Pennsylvania Marcellus Shale job tax

credits amount the company may claim.

(5)  A signed statement that the company intends to

maintain its operation in this Commonwealth and employ

residents for five years from the start date.

(6)  A signed statement from the company that the company

will provide to the department a list of workers for which

the company will claim tax credit, including documentation of

each worker's status as a Pennsylvania resident and

fulfillment of apprenticeship or job training requirements.

(7)  A signed statement that the company will refund the

Commonwealth all Pennsylvania Marcellus Shale job tax credits

in accordance with section 1906-B for noncompliance.

(8)  Such other information as the department deems

appropriate.

(d)  Commitment letter.--After a commitment letter has been

signed by both the Commonwealth and the company, the company

shall receive a Pennsylvania Marcellus Shale job tax credit

certificate and filing information.

Section 1904-B.  Tax credits.

(a)  Maximum amount.--A company may claim a tax credit of

$2,500 per resident employed up to the maximum tax credit amount

specified in the commitment letter.

(b)  Applicable taxes.--A company may apply the tax credit to

100% of the company's State corporate net income tax, capital

stock and franchise tax or the capital stock and franchise tax

of a shareholder of the company if the company is a Pennsylvania

S corporation, gross premiums tax, gross receipts tax, bank and

trust company shares tax, mutual thrift institution tax, title

insurance company shares tax, personal income tax or the

personal income tax of shareholders of a Pennsylvania S

corporation or any combination thereof.

(c)  Tax credit term.--A company may claim Pennsylvania

Marcellus Shale job tax credits for each resident employed, as

approved by the department, for a period determined by the

department but not to exceed five years from the date the

company first submits a Pennsylvania Marcellus Shale job tax

credit certificate.

(d)  Availability of tax credits.--Each fiscal year,

$25,000,000 in tax credits shall be made available to the

department and may be awarded by the department in accordance

with this article. In addition, in any fiscal year, the

department may reissue or assign prior fiscal year tax credits

which have been recaptured under section 1906-B(a) or (b) and

may award prior fiscal year credits not previously issued. Prior

fiscal year credits may be reissued, assigned or awarded by the

department.

Section 1905-B.  Prohibitions.

(a)  Prohibitions.--The following actions with regard to

Pennsylvania Marcellus Shale job tax credits are prohibited:

(1)  Approval of residents who were employed prior to the

start date.

(2)  The assignment, transfer or use of credits by any

other company, provided, however, that tax credits may be

assigned in whole or in part to an affiliated entity. As used

in this paragraph, the term "affiliated entity" means an

entity which is part of the same "affiliated group," as

defined by section 1504(a)(1) of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 1504(a)(1)), as the

company awarded the credit.

Section 1906-B.  Penalties.

(a)  Failure to maintain operations.--A company which

receives Pennsylvania Marcellus Shale job tax credits and fails

to substantially maintain existing operations and the operations

related to the Pennsylvania Marcellus Shale job tax credits in

this Commonwealth for a period of five years from the date the

company first submits a Pennsylvania Marcellus Shale job tax

credit certificate to the Department of Revenue shall be

required to refund to the Commonwealth the total amount of

credit or credits granted.

(b)  Failure to employ residents.--A company which receives

Pennsylvania Marcellus Shale job tax credits and fails to

continuously employ the approved number of qualified residents

within three years of the start date will be required to refund

to the Commonwealth the total monetary amount of credit or

credits granted. It shall not be considered failure to employ

residents under this section if a company continues to provide

remuneration to employees during a work stoppage that is due to

an event or circumstances beyond the employer's control.

(c)  Waiver.--The department may waive the penalties outlined

in subsections (a) and (b) if it is determined that a company's

operations were not maintained or the residents were not

employed because of circumstances beyond the company's control.

Such circumstances include natural disasters, unforeseen

industry trends or a loss of a major supplier or market.

Section 1907-B.  Annual reports.

(a)  Report.--The department shall provide an annual report

on the operation of the program, which at a minimum shall

include:

(1)  A list of all Marcellus Shale job tax credit

certificates provided during the previous fiscal year.

(2)  The name and location of each company receiving

Marcellus Shale job tax credit certificates.

(3)  An analysis of the Marcellus Shale job tax credit

program's ability to create jobs in this Commonwealth.

(4)  Any other information that may be deemed relevant by

the department.

(b)  Submission.--The annual report shall be submitted to the

Governor, the Majority Leader of the Senate, the Minority Leader

of the Senate, the Majority Leader of the House of

Representatives and the Minority Leader of the House of

Representatives by March 1 of the first full year following the

implementation of this section and March 1 of each year

thereafter.

Section 1908-B.  Notice of availability of tax credits.

The department shall publish notice of the availability of

this tax credit on its publicly accessible Internet website and

make information available annually to the Statewide Workforce

Investment Board for distribution to local boards.

Section 2.  This act shall take effect in 60 days.