SENATE AMENDED

 

PRIOR PRINTER'S NOS. 784, 2590, 3345, 3559

PRINTER'S NO.  3883

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

761

Session of

2011

  

  

INTRODUCED BY CUTLER, MIRABITO, BAKER, BOYD, CLYMER, COX, DENLINGER, FLECK, FREEMAN, GILLEN, GINGRICH, GODSHALL, GRELL, HARHART, HENNESSEY, HICKERNELL, HUTCHINSON, KAUFFMAN, KORTZ, LAWRENCE, LONGIETTI, MARSHALL, METZGAR, MILLER, MOUL, PICKETT, PYLE, REICHLEY, ROAE, ROSS, STERN, SWANGER, TOEPEL, VULAKOVICH, WATSON, QUINN, FARRY, BEAR, ROCK, CALTAGIRONE, SAINATO, MILLARD, M. K. KELLER AND GIBBONS, FEBRUARY 23, 2011

  

  

SENATOR CORMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS AMENDED, JUNE 29, 2012   

  

  

  

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 and

3

enumerating certain subjects of taxation and imposing taxes

4

thereon; providing procedures for the payment, collection,

5

administration and enforcement thereof; providing for tax

6

credits in certain cases; conferring powers and imposing duties

7

upon the Department of Revenue, certain employers, fiduciaries,

8

individuals, persons, corporations and other entities;

9

prescribing crimes, offenses and penalties," in personal income

<--

10

tax, further providing for classes of income and for income tax

11

returns; in realty transfer tax, further providing for

12

definitions, for excluded transactions and for acquired company, 

<--

13

for documents relating to associations or corporations and

14

members, partners, stockholders or shareholders thereof and for

15

acquired company; and, in inheritance tax, further providing for

16

transfers not subject to tax. in sales and use tax, further

<--

17

providing for definitions, for exclusions from tax, for time for

18

filing returns, for time of payment, for assessment and for

19

collection of tax; in personal income tax, further providing for

20

returns of married individuals, deceased or disabled individuals

21

and fiduciaries, for requirements concerning returns, notices,

22

records and statements, for assessment and for additions,

23

penalties and fees; in corporate net income tax, further

24

providing for definitions, for extension of time to file

25

reports, for changes made by Federal Government and for

26

assessments; in insurance premiums tax, further providing for

27

definitions and for imposition of tax; in realty transfer tax,

 


1

further providing for definitions, for excluded transactions,

2

for documents relating to associations or corporations and

3

members, partners, stockholders or shareholders thereof, for

4

acquired company and for assessment and notice of tax and

5

review; in cigarette tax, further providing for definitions; in

6

research and development tax credit, further providing for

7

limitation on credits and for termination; in film production

8

tax credit, further providing for definitions, for credit for

9

qualified film production expenses, for carrying and assigning

10

credits and for limitations; repealing the educational

11

improvement tax credit; providing for a resource manufacturing

12

tax credit, for a rehabilitation of historic structures tax

13

credit and a community-based services tax credit; in tax credit

14

for new jobs, further providing for definitions, for application

15

process and for tax credit; in neighborhood assistance tax

16

credit, further providing for definitions and for tax credit; in

17

malt beverage tax, further providing for assessment by

18

department; in inheritance tax, further providing for

19

definitions and for transfers not subject to tax; in procedure

20

and administration, further providing for petition for

21

reassessment and for petition procedure and providing for

22

compromise by secretary; in general provisions, further

23

providing for petitions for refunds and providing for

24

administrative bank attachment for accounts of obligors to the

25

Commonwealth; making related repeals; abrogating a regulation;

26

and providing for applicability.

27

The General Assembly of the Commonwealth of Pennsylvania

28

hereby enacts as follows:

29

Section 1.  The definitions of "association," "corporation,"

<--

30

"family farm corporation" and "family farm partnership" in

31

section 1101-C of the act of March 4, 1971 (P.L.6, No.2), known

32

as the Tax Reform Code of 1971, amended July 2, 1986 (P.L.318,

33

No.77) and April 23, 1998 (P.L.239, No.45), are amended to read:

34

Section 1101-C.  Definitions.--The following words when used

35

in this article shall have the meanings ascribed to them in this

36

section:

37

"Association."  A partnership, limited partnership, limited

38

liability partnership or any other form of unincorporated

39

enterprise, owned or conducted by two or more persons other than

40

a private trust or decedent's estate.

41

"Corporation."  A corporation, limited liability company, 

42

joint-stock association, business trust or banking institution

43

which is organized under the laws of this Commonwealth, the

- 2 -

 


1

United States, or any other state, territory, or foreign

2

country, or dependency.

3

* * *

4

"Family farm [corporation.] business."  A corporation or

5

association of which at least seventy-five per cent of its

6

assets are devoted to the business of agriculture and at least

7

seventy-five per cent of each class of stock of the corporation 

8

or interest in the association is continuously owned by members

9

of the same family.  The business of agriculture shall include

10

the leasing to members of the same family or the leasing to a

11

corporation or association owned by members of the same family 

12

of property which is directly and principally used for

13

agricultural purposes. The business of agriculture shall not be

14

deemed to include:

15

(1)  Recreational activities such as, but not limited to,

16

hunting, fishing, camping, skiing, show competition or racing;

17

(2)  The raising, breeding or training of game animals or

18

game birds, fish, cats, dogs or pets or animals intended for use

19

in sporting or recreational activities;

20

(3)  Fur farming;

21

(4)  Stockyard and slaughterhouse operations; or

22

(5)  Manufacturing or processing operations of any kind.

23

["Family farm partnership."  A partnership of which at least

24

seventy-five per cent of its assets are devoted to the business

25

of agriculture and at least seventy-five per cent of the

26

interests in the partnership are continuously owned by members

27

of the same family. The business of agriculture shall include

28

the leasing to members of the same family of property which is

29

directly and principally used for agricultural purposes. The

30

business of agriculture shall not be deemed to include:

- 3 -

 


1

(1)  recreational activities such as, but not limited to,

2

hunting, fishing, camping, skiing, show competition or racing;

3

(2)  the raising, breeding or training of game animals or

4

game birds, fish, cats, dogs or pets or animals intended for use

5

in sporting or recreational activities;

6

(3)  fur farming;

7

(4)  stockyard and slaughterhouse operations; or

8

(5)  manufacturing or processing operations of any kind.]

9

* * *

10

Section 2.   sections 1102-C.3(19), (19.1) and (20) and 1102-

11

c.5 of the act, amended or added July 2, 1986 (P.L.318, No.77)

12

and June 16, 1994 (P.L.279, No.48), are amended to read:

13

Section 1102-C.3.  Excluded Transactions.--The tax imposed by

14

section 1102-C shall not be imposed upon:

15

* * *

16

(19)  A transfer of real estate devoted to the business of

17

agriculture to a family farm [corporation] business by a member

18

of the same family which directly owns at least seventy-five per

19

cent of each class of the stock thereof or interest therein.

20

[(19.1)  A transfer of real estate devoted to the business of

21

agriculture to a family farm partnership by a member of the same

22

family, which family directly owns at least seventy-five per

23

cent of the interests in the partnership.]

24

(20)  A transfer between members of the same family of an

25

ownership interest in a real estate company[,] or family farm

26

[corporation or family farm partnership which] business that 

27

owns real estate.

28

* * *

29

Section 1102-C.5.  Acquired Company.--(a)  A real estate

30

company is an acquired company upon a change in the ownership

- 4 -

 


1

interest in the company, however effected, if the change:

2

(1)  does not affect the continuity of the company; and

3

(2)  of itself or together with prior changes has the effect

4

of transferring, directly or indirectly, ninety per cent or more

5

of the total ownership interest in the company within a period

6

of three years.

7

(b)  [With respect to real estate acquired after February 16,

8

1986, a family farm corporation is an acquired company when,

9

because of voluntary or involuntary dissolution, it ceases to be

10

a family farm corporation or when, because of issuance or

11

transfer of stock or because of acquisition or transfer of

12

assets that are devoted to the business of agriculture, it fails

13

to meet the minimum requirements of a family farm corporation

14

under this act.

15

(b.1)  A family farm partnership is an acquired company when,

16

because of voluntary or involuntary dissolution, it ceases to be

17

a family farm partnership or when, because of transfer of

18

partnership interests or because of acquisition or transfer of

19

assets that are devoted to the business of agriculture, it fails

20

to meet the minimum requirements of a family farm partnership 

21

under this act.] A family farm business is an acquired company

22

when, because of voluntary or involuntary dissolution, it ceases

23

to be a family farm business, or when, because of the issuance

24

or transfer of stock in the corporation or transfer of interests

25

in the association or because of an acquisition or transfer of

26

assets that are devoted to the business of agriculture, it fails

27

to meet the minimum requirements of a family farm business under

28

this act.

29

(c)  Within thirty days after becoming an acquired company,

30

the company shall present a declaration of acquisition with the

- 5 -

 


1

recorder of each county in which it holds real estate for the

2

affixation of documentary stamps and recording. Such declaration

3

shall set forth the value of real estate holdings of the

4

acquired company in such county.

5

Section 3.  This act shall apply retroactively to

6

transactions occurring after December 31, 2008.

7

Section 4.  The provisions of 61 Pa. Code 91.222 (relating to

8

family farm corporation) are abrogated.

9

Section 5.  This act shall take effect immediately.

10

Section 1.  The definitions of "association," "family farm

<--

11

corporation" and "family farm partnership" in section 1101-C of

12

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

13

Code of 1971, amended July 2, 1986 (P.L.318, No.77) and April

14

23, 1998 (P.L.239, No.45), are amended and the section is

15

amended by adding a definition to read:

16

Section 1.  Section 303(a.7) of the act of March 4, 1971

<--

17

(P.L.6, No.2), known as the Tax Reform Code of 1971, added July

18

6, 2006 (P.L.319, No.67), is amended to read:

19

Section 303.  Classes of Income.--* * *

20

(a.7)  The following shall apply:

21

(1)  An amount paid as a contribution into a qualified

22

tuition program under Chapter 3 of the act of April 3, 1992

23

(P.L.28, No.11), known as the "Tuition Account Programs and

24

College Savings Bond Act," shall be deductible from taxable

25

income on the annual personal income tax return. The amount paid

26

as a contribution to a qualified tuition program allowable as a

27

deduction under this subsection shall be subject to an annual

28

limitation not to exceed the threshold for exclusion from gifts

29

as provided in section 2503(b) of the Internal Revenue Code of

30

1986, as amended, per designated beneficiary. The deduction

- 6 -

 


1

shall not result in taxable income being less than zero.

2

(2)  (i)  The following shall not be subject to tax under

3

this article:

4

(A)  Any amount distributed from a qualified tuition program

5

that is excludable from tax under section 529(c)(3)(B) of the

6

Internal Revenue Code of 1986, as amended.

7

(B)  Any rollover that is excludable from tax under section

8

529(c)(3)(C) of the Internal Revenue Code of 1986, as amended.

9

The exception under this clause does not apply to a rollover

10

from a qualified tuition program under Chapter 3 of the "Tuition

11

Account Programs and College Savings Bond Act."

12

(C)  Undistributed earnings on a qualified tuition program.

13

(ii)  A change in designated beneficiaries under section

14

529(c)(3)(C) of the Internal Revenue Code of 1986, as amended,

15

shall not constitute a taxable event under this article.

16

(3)  Any amount distributed from a qualified tuition program 

17

that is not described under paragraph (2) shall be taxable under

18

this article.

19

(4)  For purposes of this subsection:

20

(i)  The term "designated beneficiary" shall have the same

21

meaning as provided in section 529(e)(1) of the Internal Revenue

22

Code of 1986, as amended.

23

(ii)  The term "qualified tuition program" shall have the

24

same meaning as provided in section 529(b)(1) of the Internal

25

Revenue Code of 1986, as amended.

26

* * *

27

Section 1.1.  Section 331(e) of the act, repealed and added

28

August 31, 1971 (P.L.362, No.93), is amended and the section is

29

amended by adding subsections to read:

30

Section 331.  Returns of Married Individuals, Deceased or

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1

Disabled Individuals and Fiduciaries.--* * *

2

(e)  [The] Except as provided under subsections (e.1) and

3

(e.2), the final return for any deceased individual shall be

4

made and filed by his executor, administrator, or other [person] 

5

personal representative charged with his property.

6

(e.1)  (1)  A surviving spouse may file a joint return for

7

the year in which his or her spouse died if the joint return

8

could have been filed if both spouses were living for the entire

9

taxable year.

10

(2)  If a personal representative, executor or administrator

11

is appointed on behalf of the deceased spouse before the tax

12

return is filed, the surviving spouse may not file a joint

13

return without the consent of the fiduciary. Both the fiduciary

14

and the surviving spouse must sign the joint return. The

15

surviving spouse may file a joint return with the deceased

16

spouse if the deceased spouse did not previously file a return

17

for that taxable year and if a personal representative, executor

18

or administrator has not been appointed by the time the joint

19

return is made or before the due date for filing the return of

20

the surviving spouse, including extensions. If the surviving

21

spouse properly files a joint return under this paragraph, the

22

fiduciary may supersede the surviving spouse by filing a

23

separate return for the decedent within one year after the due

24

date, including extensions. Any joint return improperly filed by

25

the surviving spouse or disaffirmed by the fiduciary shall be

26

treated as a separate return of the survivor. The surviving

27

spouse shall be required to file an amended return.

28

(e.2)  If both taxpayers die during the same tax year, a

29

joint final return may be filed if a joint return could have

30

been filed had both spouses lived for the entire taxable year

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1

and with the consent of the personal representatives, executors

2

or administrators of both deceased spouses under subsection

3

(e.1) by the due date, including extensions, of the joint tax

4

return. Both fiduciaries must sign the joint return.

5

* * *

6

Section 1.2.  The definitions of "association," "family farm

7

corporation" and "family farm partnership" in section 1101-C of

8

the act, amended July 2, 1986 (P.L.318, No.77) and April 23,

9

1998 (P.L.239, No.45), are amended and the section is amended by

10

adding a definition to read:

11

Section 1101-C.  Definitions.--The following words when used

12

in this article shall have the meanings ascribed to them in this

13

section:

14

"Association."  A general partnership, limited partnership,

15

limited liability partnership or any other form of

16

unincorporated enterprise, owned or conducted by two or more

17

persons other than a private trust or decedent's estate.

18

* * *

19

["Family farm corporation."  A corporation of which at least

20

seventy-five per cent of its assets are devoted to the business

21

of agriculture and at least seventy-five per cent of each class

22

of stock of the corporation is continuously owned by members of

23

the same family. The business of agriculture shall include the

24

leasing to members of the same family of property which is

25

directly and principally used for agricultural purposes. The

26

business of agriculture shall not be deemed to include:

27

(1)  Recreational activities such as, but not limited to,

28

hunting, fishing, camping, skiing, show competition or racing;

29

(2)  The raising, breeding or training of game animals or

30

game birds, fish, cats, dogs or pets or animals intended for use

- 9 -

 


1

in sporting or recreational activities;

2

(3)  Fur farming;

3

(4)  Stockyard and slaughterhouse operations; or

4

(5)  Manufacturing or processing operations of any kind.

5

"Family farm partnership."  A partnership of which at least

6

seventy-five per cent of its assets are devoted to the business

7

of agriculture and at least seventy-five per cent of the

8

interests in the partnership are continuously owned by members

9

of the same family. The business of agriculture shall include

10

the leasing to members of the same family of property which is

11

directly and principally used for agricultural purposes. The

12

business of agriculture shall not be deemed to include:

13

(1)  recreational activities such as, but not limited to,

14

hunting, fishing, camping, skiing, show competition or racing;

15

(2)  the raising, breeding or training of game animals or

16

game birds, fish, cats, dogs or pets or animals intended for use

17

in sporting or recreational activities;

18

(3)  fur farming;

19

(4)  stockyard and slaughterhouse operations; or

20

(5)  manufacturing or processing operations of any kind.]

21

"Family farm business."  A corporation or association of

22

which at least seventy-five per cent of its assets are devoted

23

to the business of agriculture and at least seventy-five per

24

cent of each class of stock of the corporation or the interests

25

in the association is continuously owned by members of the same

26

family. The business of agriculture shall include the leasing to

27

members of the same family or the leasing to a corporation or

28

association owned by members of the same family of property

29

which is directly and principally used for agricultural

30

purposes. The business of agriculture shall not be deemed to

- 10 -

 


1

include:

2

(1)  recreational activities such as, but not limited to,

3

hunting, fishing, camping, skiing, show competition or racing;

4

(2)  the raising, breeding or training of game animals or

5

game birds, fish, cats, dogs or pets or animals intended for use

6

in sporting or recreational activities;

7

(3)  fur farming;

8

(4)  stockyard and slaughterhouse operations; or

9

(5)  manufacturing or processing operations of any kind.

10

* * *

11

Section 2.  Section 1102-C.3(19), (19.1) and (20) of the act,

12

amended or added July 2, 1986 (P.L.318, No.77) and June 16, 1994

13

(P.L.279, No.48), are amended to read:

14

Section 1102-C.3.  Excluded Transactions.--The tax imposed by

15

section 1102-C shall not be imposed upon:

16

* * *

17

(19)  A transfer of real estate devoted to the business of

18

agriculture to a family farm [corporation] business by:

19

(i)  a member of the same family which directly owns at least

20

seventy-five per cent of [each class of the stock thereof] the

21

interests in that family farm business; or

22

(ii)  a family farm business, which family directly owns at

23

least seventy-five per cent of the interests in that family farm

24

business.

25

[(19.1)  A transfer of real estate devoted to the business of

26

agriculture to a family farm partnership by a member of the same

27

family, which family directly owns at least seventy-five per

28

cent of the interests in the partnership.]

29

(20)  A transfer between members of the same family of an

30

ownership interest in a real estate company[,] or family farm

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1

[corporation or family farm partnership which] business that 

2

owns real estate.

3

* * *

4

Section 3.  Section 1102-C.4 of the act, added July 2, 1986

5

(P.L.318, No.77), is amended to read:

6

Section 1102-C.4.  Documents Relating to Associations or

7

Corporations and Members, Partners, Stockholders or Shareholders

8

Thereof.--Except as otherwise provided in [section] sections 

9

1102-C.3 and 1102-C.5, documents which make, confirm or evidence

10

any transfer or devise of title to real estate between

11

associations or corporations and the members, partners,

12

shareholders or stockholders thereof are fully taxable. For the

13

purposes of this article, corporations and associations are

14

entities separate from their members, partners, stockholders or

15

shareholders.

16

Section 4.  Section 1102-C.5 of the act, amended or added

17

July 2, 1986 (P.L.318, No.77) and June 16, 1994 (P.L.279,

18

No.48), is amended to read:

19

Section 1102-C.5.  Acquired Company.--(a)  A real estate

20

company is an acquired company upon a change in the ownership

21

interest in the company, however effected, if the change:

22

(1)  does not affect the continuity of the company; and

23

(2)  of itself or together with prior changes has the effect

24

of transferring, directly or indirectly, ninety per cent or more

25

of the total ownership interest in the company within a period

26

of three years.

27

[(b)  With respect to real estate acquired after February 16,

28

1986, a family farm corporation is an acquired company when,

29

because of voluntary or involuntary dissolution, it ceases to be

30

a family farm corporation or when, because of issuance or

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1

transfer of stock or because of acquisition or transfer of

2

assets that are devoted to the business of agriculture, it fails

3

to meet the minimum requirements of a family farm corporation

4

under this act.

5

(b.1)  A family farm partnership is an acquired company when,

6

because of voluntary or involuntary dissolution, it ceases to be

7

a family farm partnership or when, because of transfer of

8

partnership interests or because of acquisition or transfer of

9

assets that are devoted to the business of agriculture, it fails

10

to meet the minimum requirements of a family farm partnership 

11

under this act.]

12

(b.2)  A family farm business is an acquired company when,

13

because of voluntary or involuntary dissolution, it ceases to be

14

a family farm business or when, because of the issuance or

15

transfer of stock in the corporation or transfer of interests in

16

the association or because of acquisition or transfer of assets

17

that are devoted to the business of agriculture, it fails to

18

meet the minimum requirements of a family farm business under

19

this article.

20

(b.3)  The conveyance of assets held by one family farm

21

business to another family farm business shall not be considered

22

a transfer of assets under this article if the same individuals

23

hold at least fifty per cent of the ownership interest in each

24

family farm business.

25

(c)  Within thirty days after becoming an acquired company,

26

the company shall present a declaration of acquisition with the

27

recorder of each county in which it holds real estate for the

28

affixation of documentary stamps and recording. Such declaration

29

shall set forth the value of real estate holdings of the

30

acquired company in such county.

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1

Section 5.  Section 2102 of the act is amended by adding

2

definitions to read:

3

Section 2102.  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

* * *

8

"Business of agriculture."  The term shall include the

9

leasing to members of the same family or the leasing to a

10

corporation or association owned by members of the same family

11

of property which is directly and principally used for

12

agricultural purposes. The business of agriculture shall not be

13

deemed to include:

14

(1)  recreational activities such as, but not limited to,

15

hunting, fishing, camping, skiing, show competition or racing;

16

(2)  the raising, breeding or training of game animals or

17

game birds, fish, cats, dogs or pets or animals intended for use

18

in sporting or recreational activities;

19

(3)  fur farming;

20

(4)  stockyard and slaughterhouse operations; or

21

(5)  manufacturing or processing operations of any kind.

22

* * *

23

"Members of the same family."  Any individual, such

24

individual's brothers and sisters, the brothers and sisters of

25

such individual's parents and grandparents, the ancestors and

26

lineal descendents of any of the foregoing, a spouse of any of

27

the foregoing and the estate of any of the foregoing.

28

Individuals related by the half blood or legal adoption shall be

29

treated as if they were related by the whole blood.

30

* * *

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1

Section 6.  Section 2111 of the act is amended by adding a

2

subsection to read:

3

Section 2111.  Transfers Not Subject to Tax.--* * *

4

(s)  A transfer of real estate devoted to the business of

5

agriculture between members of the same family, provided that

6

after the transfer the real estate continues to be devoted to

7

the business of agriculture for a period of seven years beyond

8

the transferor's date of death and the real estate derives a

9

yearly gross income of at least two thousand dollars ($2,000),

10

provided that:

11

(1)  Any tract of land under this article which is no longer

12

devoted to the business of agriculture within seven years beyond

13

the transferor's date of death shall be subject to inheritance

14

tax due the Commonwealth under section 2107, in the amount that

15

would have been paid or payable on the basis of valuation

16

authorized under section 2121 for nonexempt transfers of

17

property, plus interest thereon accruing as of the transferor's

18

date of death, at the rate established in section 2143.

19

(2)  Any tax imposed under section 2107 shall be a lien in

20

favor of the Commonwealth upon the property no longer being

21

devoted to agricultural use, collectible in the manner provided

22

for by law for the collection of delinquent real estate taxes,

23

as well as the personal obligation of the owner of the property

24

at the time of the change of use.

25

(3)  Every owner of real estate exempt under this subsection

26

shall certify to the department on an annual basis that the land

27

qualifies for this exemption and shall notify the department

28

within thirty days of any transaction or occurrence causing the

29

real estate to fail to qualify for the exemption. Each year the

30

department shall inform all owners of their obligation to

- 15 -

 


1

provide an annual certification under this subclause. This

2

certification and notification shall be completed in the form

3

and manner as provided by the department.

4

Section 7.  A reference in any law to the former definition

5

of "family farm corporation" or "family farm partnership" in

6

section 1101-C of the act shall be deemed to be references to a

7

"family farm business" under section 1101-C of the act.

8

Section 7.1.  The amendment of section 303(a.7) of the act

<--

9

shall not apply to contributions or rollovers made prior to

10

January 1, 2013.

11

Section 7.2.  The amendment of section 331(e) of the act

12

shall apply to taxable years beginning after December 31, 2011.

13

Section 8.  The amendment of Article XXI of the act shall

14

apply to the estates of decedents dying after December 31, 2011.

15

Section 9.  The amendment of Article XI-C of the act shall be

16

retroactive to any document made, executed, delivered, accepted

17

or presented for recording on or after July 1, 2010.

18

Section 10.  The provisions of 61 Pa. Code § 91.222 (relating

19

to acquired family farm partnership) are abrogated.

20

Section 11.  This act shall take effect immediately.

21

Section 1.  Section 201(d) of the act of March 4, 1971

<--

22

(P.L.6, No.2), known as the Tax Reform Code of 1971, amended May

23

7, 1997 (P.L.85, No.7), April 23, 1998 (P.L.239, No.45), May 12,

24

1999 (P.L.26, No.4), May 24, 2000 (P.L.106, No.23), June 22,

25

2001 (P.L.353, No.23) and December 23, 2003 (P.L.250, No.46), is

26

amended to read:

27

Section 201.  Definitions.--The following words, terms and

28

phrases when used in this Article II shall have the meaning

29

ascribed to them in this section, except where the context

30

clearly indicates a different meaning:

- 16 -

 


1

* * *

2

(d)  "Processing."  The performance of the following

3

activities when engaged in as a business enterprise:

4

(1)  The filtering or heating of honey, the cooking, baking

5

or freezing of fruits, vegetables, mushrooms, fish, seafood,

6

meats, poultry or bakery products, when the person engaged in

7

such business packages such property in sealed containers for

8

wholesale distribution.

9

(1.1)  The processing of fruits or vegetables by cleaning,

10

cutting, coring, peeling or chopping and treating to preserve,

11

sterilize or purify and substantially extend the useful shelf

12

life of the fruits or vegetables, when the person engaged in

13

such activity packages such property in sealed containers for

14

wholesale distribution.

15

(2)  The scouring, carbonizing, cording, combing, throwing,

16

twisting or winding of natural or synthetic fibers, or the

17

spinning, bleaching, dyeing, printing or finishing of yarns or

18

fabrics, when such activities are performed prior to sale to the

19

ultimate consumer.

20

(3)  The electroplating, galvanizing, enameling, anodizing,

21

coloring, finishing, impregnating or heat treating of metals or

22

plastics for sale or in the process of manufacturing.

23

(3.1)  The blanking, shearing, leveling, slitting or burning

24

of metals for sale to or use by a manufacturer or processor.

25

(4)  The rolling, drawing or extruding of ferrous and non-

26

ferrous metals.

27

(5)  The fabrication for sale of ornamental or structural

28

metal or of metal stairs, staircases, gratings, fire escapes or

29

railings (not including fabrication work done at the

30

construction site).

- 17 -

 


1

(6)  The preparation of animal feed or poultry feed for sale.

2

(7)  The production, processing and bottling of non-alcoholic

3

beverages for wholesale distribution.

4

(8)  The operation of a saw mill or planing mill for the

5

production of lumber or lumber products for sale. The operation

6

of a saw mill or planing mill begins with the unloading by the

7

operator of the saw mill or planing mill of logs, timber,

8

pulpwood or other forms of wood material to be used in the saw

9

mill or planing mill.

10

(9)  The milling for sale of flour or meal from grains.

11

(9.1)  The aging, stripping, conditioning, crushing and

12

blending of tobacco leaves for use as cigar filler or as

13

components of smokeless tobacco products for sale to

14

manufacturers of tobacco products.

15

(10)  The slaughtering and dressing of animals for meat to be

16

sold or to be used in preparing meat products for sale, and the

17

preparation of meat products including lard, tallow, grease,

18

cooking and inedible oils for wholesale distribution.

19

(11)  The processing of used lubricating oils.

20

(12)  The broadcasting of radio and television programs of

21

licensed commercial or educational stations.

22

(13)  The cooking or baking of bread, pastries, cakes,

23

cookies, muffins and donuts when the person engaged in such

24

activity sells such items at retail at locations that do not

25

constitute an establishment from which ready-to-eat food and

26

beverages are sold. For purposes of this clause, a bakery, a

27

pastry shop and a donut shop shall not be considered an

28

establishment from which ready-to-eat food and beverages are

29

sold.

30

(14)  The cleaning and roasting and the blending, grinding or

- 18 -

 


1

packaging for sale of coffee from green coffee beans or the

2

production of coffee extract. 

3

(15)  The preparation of dry or liquid fertilizer for sale.  

4

(16)  The production, processing and packaging of ice for

5

wholesale distribution.

6

(17)  The producing of mobile telecommunications services.

7

(18)  The collection, washing, sorting, inspecting and

8

packaging of eggs.

9

* * *

10

Section 1.1.  Section 204(10), (13) and (57) of the act,

11

amended April 23, 1998 (P.L.239, No.45), May 12, 1999 (P.L.26,

12

No.4) and June 29, 2002 (P.L.559, No.89) and repealed in part

13

December 20, 2000 (P.L.841, No.119), are amended to read:

14

Section 204.  Exclusions from Tax.--The tax imposed by

15

section 202 shall not be imposed upon any of the following:

16

* * *

17

(10)  The sale at retail to or use by (i) any charitable

18

organization, volunteer firemen's organization, volunteer

19

firefighters' relief association as defined in 35 Pa.C.S. § 7412

20

(relating to definitions) or nonprofit educational institution,

21

or (ii) a religious organization for religious purposes of

22

tangible personal property or services other than pursuant to a

23

construction contract: Provided, however, That the exclusion of

24

this clause shall not apply with respect to any tangible

25

personal property or services used in any unrelated trade or

26

business carried on by such organization or institution or with

27

respect to any materials, supplies and equipment used and

28

transferred to such organization or institution in the

29

construction, reconstruction, remodeling, renovation, repairs

30

and maintenance of any real estate structure, other than

- 19 -

 


1

building machinery and equipment, except materials and supplies

2

when purchased by such organizations or institutions for routine

3

maintenance and repairs. If the department has issued sales tax

4

exempt status to a volunteer firefighters' organization or a

5

volunteer firefighters' relief association, the sales tax exempt

6

status may not expire unless the activities of the organization

7

or association change so that the organization or association

8

does not qualify as an institution of purely public charity in

9

which case the organization or association shall immediately

10

notify the department of the change. If the department

11

ascertains that an organization or association no longer

12

qualifies as an institution of purely public charity, the

13

department may revoke the sales tax exempt status of the

14

organization or association.

15

* * *

16

(13)  The sale at retail, or use of wrapping paper, wrapping

17

twine, bags, cartons, tape, rope, labels, nonreturnable

18

containers and all other wrapping supplies, when such use is

19

incidental to the delivery of any personal property, except that

20

any charge for wrapping or packaging shall be subject to tax at

21

the rate imposed by section 202, unless the property wrapped or

22

packaged will be resold by the purchaser of the wrapping or

23

packaging service.

24

* * *

25

(57)  The sale at retail to or use by a construction

26

contractor of building machinery and equipment and services

27

thereto that are:

28

(i)  transferred pursuant to a construction contract for any

29

charitable organization, volunteer firemen's organization,

30

volunteer firefighters' relief association, nonprofit

- 20 -

 


1

educational institution or religious organization for religious

2

purposes, provided that the building machinery and equipment and

3

services thereto are not used in any unrelated trade or

4

business; or

5

(ii)  transferred to the United States or the Commonwealth or

6

its instrumentalities or political subdivisions[; or].

7

* * *

8

Section 1.2.  Sections 217 and 222 of the act, amended

9

October 9, 2009 (P.L.451, No.48), are amended to read:

10

Section 217.  Time for Filing Returns.--(a)  Quarterly[,] and 

11

Monthly [and Semi-monthly] Returns:

12

(1)  For the year in which this article becomes effective and

13

in each year thereafter a return shall be filed quarterly by

14

every licensee on or before the twentieth day of April, July,

15

October and January for the three months ending the last day of

16

March, June, September and December.

17

(2)  For the year in which this article becomes effective,

18

and in each year thereafter, a return shall be filed monthly

19

with respect to each month by every licensee whose [total]

20

actual tax [reported, or in the event no report is filed, the

21

total tax which should have been reported,] liability for the

22

third calendar quarter of the preceding year equals or exceeds

23

six hundred dollars ($600) and is less than twenty-five thousand

24

dollars ($25,000). Such returns shall be filed on or before the

25

twentieth day of the next succeeding month with respect to which

26

the return is made. Any licensee required to file monthly

27

returns hereunder shall be relieved from filing quarterly

28

returns.

29

(3)  [After May 31, 2011, a return shall be filed semi-

30

monthly with respect to each month by every licensee whose total

- 21 -

 


1

tax reported, or in the event no report is filed, the total tax

2

which should have been reported, for the third calendar quarter

3

of the preceding year equals or exceeds twenty-five thousand

4

dollars ($25,000). For the period from the first day of the

5

month to the fifteenth day of the month, the returns shall be

6

filed on or before the twenty-fifth day of the month. For the

7

period from the sixteenth day of the month to the last day of

8

the month, the returns shall be filed on or before the tenth day

9

of the next succeeding month with respect to which the return is

10

made. Any licensee required to file semi-monthly returns under

11

this section shall be relieved from filing monthly or quarterly

12

returns.] With respect to every licensee whose actual tax

13

liability for the third calendar quarter of the preceding year

14

equals or exceeds twenty-five thousand dollars ($25,000) and is

15

less than one hundred thousand dollars ($100,000), the licensee

16

shall, on or before the twentieth day of each month, file a

17

single return consisting of all of the following:

18

(i)  Either of the following:

19

(A)  An amount equal to fifty per centum of the licensee's

20

actual tax liability for the same month in the preceding

21

calendar year if the licensee was a monthly filer or, if the

22

licensee was a quarterly or semi-annual filer, fifty per centum

23

of the licensee's average actual tax liability for that tax

24

period in the preceding calendar year. The average actual tax

25

liability shall be the actual tax liability for the tax period

26

divided by the number of months in that tax period. For

27

licensees that were not in business during the same month in the

28

preceding calendar year or were in business for only a portion

29

of that month, fifty per centum of the average actual tax

30

liability for each tax period the licensee has been in business.

- 22 -

 


1

If the licensee is filing a tax liability for the first time

2

with no preceding tax periods, the amount shall be zero.

3

(B)  An amount equal to or greater than fifty per centum of

4

the licensee's actual tax liability for the same month.

5

(ii)  An amount equal to the taxes due for the preceding

6

month, less any amounts paid in the preceding month as required

7

by subclause (i).

8

(4)  With respect to each month by every licensee whose

9

actual tax liability for the third calendar quarter of the

10

preceding year equals or exceeds one hundred thousand dollars

11

($100,000), the licensee shall, on or before the twentieth day

12

of each month, file a single return consisting of the amounts

13

under clause (3)(i)(A) and (ii).

14

(5)  The amount due under clause (3)(i) or (4) shall be due

15

the same day as the remainder of the preceding month's tax.

16

(6)  The department shall determine whether the amounts

17

reported under clause (3) or (4) shall be remitted as one

18

combined payment or as two separate payments.

19

(7)  The department may require the filing of the returns and

20

the payments for these types of filers by electronic means

21

approved by the department.

22

(8)  Any licensee filing returns under clause (3) or (4)

23

shall be relieved of filing quarterly returns.

24

(9)  If a licensee required to remit payments under clause

25

(3) or (4) fails to make a timely payment or makes a payment

26

which is less than the required amount, the department may, in

27

addition to any applicable penalties, impose an additional

28

penalty equal to five per centum of the amount due under clause

29

(3) or (4) which was not timely paid. The penalty under this

30

clause shall be determined when the tax return is filed for the

- 23 -

 


1

tax period.

2

(b)  Annual Returns. For the calendar year 1971, and for each

3

year thereafter, no annual return shall be filed, except as may

4

be required by rules and regulations of the department

5

promulgated and published at least sixty days prior to the end

6

of the year with respect to which the returns are made. Where

7

such annual returns are required licensees shall not be required

8

to file such returns prior to the twentieth day of the year

9

succeeding the year with respect to which the returns are made.

10

(c)  Other Returns. Any person, other than a licensee, liable

11

to pay to the department any tax under this article, shall file

12

a return on or before the twentieth day of the month succeeding

13

the month in which such person becomes liable for the tax.

14

(d)  Small Taxpayers. The department, by regulation, may

15

waive the requirement for the filing of quarterly return in the

16

case of any licensee whose individual tax collections do not

17

exceed seventy-five dollars ($75) per calendar quarter and may

18

provide for reporting on a less frequent basis in such cases.

19

Section 222.  Time of Payment.--(a)  Monthly[, Semi-monthly] 

20

and Quarterly Payments. The tax imposed by this article and

21

incurred or collected by a licensee shall be due and payable by

22

the licensee on the day the return is required to be filed under

23

the provisions of section 217 and such payment must accompany

24

the return [for such preceding period].

25

(b)  Annual Payments. If the amount of tax due for the

26

preceding year as shown by the annual return of any taxpayer is

27

greater than the amount already paid by him in connection with

28

his monthly[, semi-monthly] or quarterly returns he shall send

29

with such annual return a remittance for the unpaid amount of

30

tax for the year.

- 24 -

 


1

(c)  Other Payments. Any person other than a licensee liable

2

to pay any tax under this article shall remit the tax at the

3

time of filing the return required by this article.

4

Section 1.3.  Section 230 of the act, amended July 25, 2007

5

(P.L.373, No.55), is amended to read:

6

Section 230.  Assessment.--(a)  The department is authorized

7

and required to make the inquiries, determinations and

8

assessments of the tax (including interest, additions and

9

penalties) imposed by this article. A notice of assessment and

10

demand for payment shall be mailed to the taxpayer. The notice

11

shall set forth the basis of the assessment.

12

[(b)  The notice required by subsection (a) shall be mailed

13

by certified mail if the assessment is for $300 or more.]

14

Section 1.4.  Section 237(c) of the act, amended July 1, 1985

15

(P.L.78, No.29), is amended to read:

16

Section 237.  Collection of Tax.--* * *

17

(c)  Exemption Certificates. If the tax does not apply to the

18

sale or lease of tangible personal property or services, the

19

purchaser or lessee shall furnish to the vendor a certificate

20

indicating that the sale is not legally subject to the tax. The

21

certificate shall be in substantially such form as the

22

department may, by regulation, prescribe. Where the tangible

23

personal property or service is of a type which is never subject

24

to the tax imposed or where the sale or lease is in interstate

25

commerce, such certificate need not be furnished. Where a series

26

of transactions are not subject to tax, a purchaser or user may

27

furnish the vendor with a single exemption certificate in

28

substantially such form and valid for such period of time as the

29

department may, by regulation, prescribe. The department shall

30

provide all school districts and intermediate units with a

- 25 -

 


1

permanent tax exemption number. An exemption certificate, which

2

is complete and regular and on its face discloses a valid basis

3

of exemption if taken in good faith, shall relieve the vendor

4

from the liability imposed by this section. An exemption

5

certificate accepted by a vendor from a natural person domiciled

6

within this Commonwealth or any association, fiduciary,

7

partnership, corporation or other entity, either authorized to

8

do business within this Commonwealth or having an established

9

place of business within this Commonwealth, in the ordinary

10

course of the vendor's business, which on its face discloses a

11

valid basis of exemption consistent with the activity of the

12

purchaser and character of the property or service being

13

purchased or which is provided to the vendor by a charitable,

14

religious, educational, volunteer firefighters' relief

15

association or volunteer firemen's organization and contains the

16

organization's charitable exemption number and which, in the

17

case of any purchase costing two hundred dollars ($200) or more,

18

is accompanied by a sworn declaration on a form to be provided

19

by the department of an intended usage of the property or

20

service which would render it nontaxable, shall be presumed to

21

be taken in good faith and the burden of proving otherwise shall

22

be on the Department of Revenue.

23

Section 2.  Section 331(e) of the act, repealed and added

24

August 31, 1971 (P.L.362, No.93), is amended and the section is

25

amended by adding subsections to read:

26

Section 331.  Returns of Married Individuals, Deceased or

27

Disabled Individuals and Fiduciaries.--* * *

28

(e)  [The] Except as provided under subsections (e.1) and

29

(e.2), the final return for any deceased individual shall be

30

made, signed and filed by his executor, administrator, or other

- 26 -

 


1

[person] personal representative charged with his property.

2

(e.1)  (1)  During the year in which a spouse dies, a

3

surviving spouse may file his or her return for the year jointly

4

with the final return of his or her deceased spouse if the joint

5

return could have been filed if both spouses were living for the

6

entire taxable year. If a personal representative, executor or

7

administrator or other fiduciary is appointed on behalf of the

8

deceased spouse before the deceased spouse's tax return is

9

filed, the surviving spouse may not file a joint return without

10

the consent of the fiduciary. If a joint return is filed, both

11

the fiduciary of the deceased spouse's estate and the surviving

12

spouse must sign the joint return.

13

(2)  A surviving spouse may make, sign and file the final tax

14

return of his or her deceased spouse if the deceased spouse did

15

not previously file a return for that taxable year and if a

16

personal representative, executor or administrator has not been

17

appointed by the time the return is made, signed and filed. If

18

the surviving spouse properly files a final return for the

19

deceased spouse under this paragraph, a fiduciary who is later

20

appointed for the deceased spouse may supersede the final return

21

filed by the surviving spouse by filing a separate return for

22

the deceased spouse. Any joint return improperly filed by the

23

surviving spouse or superseded by the fiduciary shall be treated

24

as void. If the surviving spouse files his or her own tax return

25

jointly with the deceased spouse's return under this paragraph

26

and the return is superseded by the filing of a return by the

27

deceased spouse's fiduciary, the surviving spouse shall be

28

required to file separate return within 90 days of the filing of

29

the fiduciary's return. The surviving spouse's separate return

30

shall be deemed to be filed:

- 27 -

 


1

(i)  on the day the joint return was filed if it is filed

2

within such time; or

3

(ii)  the date the department receives it.

4

(e.2)  If both taxpayers die during the same tax year, a

5

final return for each deceased spouse may be jointly filed if a

6

joint return could have been filed had both spouses lived for

7

the entire taxable year and with the consent of the personal

8

representatives, executors or administrators of both deceased

9

spouses under subsection (e.1) by the due date, including

10

extensions, of the joint tax return. Both fiduciaries must sign

11

the joint return.

12

* * *

13

Section 2.1.  Section 335 of the act is amended by adding a

14

subsection to read:

15

Section 335.  Requirements Concerning Returns, Notices,

16

Records and Statements.--* * *

17

(f)  The following apply:

18

(1)  Any person who:

19

(i)  makes payments of income from sources within this

20

Commonwealth;

21

(ii)  makes payments of nonemploye compensation or payments

22

under an oil and gas lease under subparagraph (i) to a resident

23

or nonresident individual, an entity treated as a partnership

24

for tax purposes or a single member limited liability company;

25

and

26

(iii)  is required to make a form 1099-MISC return to the

27

Secretary of the Treasury of the United States with respect to

28

the payments, shall file a copy of form 1099-MISC with the

29

department and send a copy of form 1099-MISC to the payee by the

30

Federal filing deadline each year.

- 28 -

 


1

(2)  If the payor is required to perform electronic filing

2

for Pennsylvania employer withholding purposes, the form 1099-

3

MISC shall be filed electronically with the department.

4

Section 3.  Section 338 of the act, amended July 25, 2007

5

(P.L.373, No.55), is amended to read:

6

Section 338.  Assessment.--(a)  The department is authorized

7

and required to make the inquiries, determinations and

8

assessments of all taxes imposed by this article.

9

(b)  If the mode or time for the assessment of any tax is not

10

otherwise provided for, the department may establish the same by

11

regulations.

12

(c)  In the event that any taxpayer fails to file a return

13

required by this article, the department may make an estimated

14

assessment (based on information available) of the proper amount

15

of tax owing by the taxpayer. A notice of assessment in the

16

estimated amount shall be sent to the taxpayer. The tax shall be

17

paid within ninety days after a notice of such estimated

18

assessment has been mailed to the taxpayer, unless within such

19

period the taxpayer has filed a petition for reassessment in the

20

manner prescribed by Article XXVII.

21

(d)  A notice of assessment issued by the department pursuant

22

to this article shall be mailed to the taxpayer. The notice

23

shall set forth the basis of the assessment.

24

[(e)  The notice required by subsection (d) shall be mailed

25

by certified mail if the assessment is for $300 or more.]

26

Section 4.  Section 352(d)(2) and (f) of the act, amended

27

August 4, 1991 (P.L.97, No.22) and July 7, 2005 (P.L.149,

28

No.40), are amended to read:

29

Section 352.  Additions, Penalties and Fees.--* * *

30

(d)  * * *

- 29 -

 


1

(2)  No addition to tax shall be imposed if the total amount

2

of all payments of estimated tax made on or before the last date

3

prescribed for the payment of such installment equals or exceeds

4

the lesser of:

5

(A)  The amount which would have been required to be paid on

6

or before such date if the estimated tax were an amount equal to

7

the tax computed after consideration of the special tax

8

provisions for poverty, at the rates applicable to the taxable

9

year, but otherwise on the basis of the facts shown on his

10

return for, and the law applicable to, the preceding taxable

11

year; or

12

(B)  An amount equal to ninety per cent of the tax computed,

13

at the rates applicable to the taxable year, on the basis of the

14

actual income for the months in the taxable year ending before

15

the month in which the installment is required to be paid, or,

16

in the case of a trust or estate, an amount equal to ninety per

17

cent of the applicable percentage of the tax for the taxable

18

year as determined pursuant to section 6654(d)(2)(C)(ii) of the

19

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §

20

6654), as amended, at rates applicable to the taxable year,

21

computed on an annualized basis in accordance with United States

22

Treasury regulations, based upon the actual income for the

23

months of the taxable year ending with the last day of the

24

second preceding month prior to the month in which the

25

installment is required to be paid.

26

* * *

27

(f)  (1)  Any person required under the provisions of section

28

317 to furnish a statement to an employe who wilfully furnishes

29

a false or fraudulent statement, or who wilfully fails to

30

furnish a statement in the manner, at the time, and showing the

- 30 -

 


1

information required under section 317 and the regulations

2

prescribed thereunder, shall, for each such failure, be subject

3

to a penalty of fifty dollars ($50) for each employe.

4

(2)  Any person required by regulation to furnish an

5

information return who furnishes a false or fraudulent return

6

shall for each failure be subject to a penalty of two hundred

7

fifty dollars ($250).

8

(3)  Every Pennsylvania S corporation required to file a

9

return with the department under the provisions of section 330.1

10

who furnishes a false or fraudulent return or who fails to file

11

the return in the manner and at the time required under section

12

330.1 shall be subject to a penalty of $250 for each failure.

13

(4)  Any person required to file a copy of form 1099-MISC

14

with the department under the provisions of section 335(f) who

15

wilfully furnishes a false or fraudulent form or who wilfully

16

fails to file the form in the manner, at the time and showing

17

the information required under section 335(f) shall, for each

18

such failure, be subject to a penalty of fifty dollars ($50).

19

(5)  Any person required under the provisions of section

20

335(f) to furnish a copy of form 1099-MISC to a payee who

21

wilfully furnishes a false or fraudulent form or who wilfully

22

fails to furnish a form in the manner, at the time and showing

23

the information required by section 335(f) shall, for each such

24

failure, be subject to a penalty of fifty dollars ($50).

25

* * *

26

Section 4.1.  Section 401(3)2(a)(9) of the act, amended

27

October 9, 2009 (P.L.451, No.48), is amended to read:

28

Section 401.  Definitions.--The following words, terms, and

29

phrases, when used in this article, shall have the meaning

30

ascribed to them in this section, except where the context

- 31 -

 


1

clearly indicates a different meaning:

2

* * *

3

(3)  "Taxable income."  * * *

4

2.  In case the entire business of any corporation, other

5

than a corporation engaged in doing business as a regulated

6

investment company as defined by the Internal Revenue Code of

7

1986, is not transacted within this Commonwealth, the tax

8

imposed by this article shall be based upon such portion of the

9

taxable income of such corporation for the fiscal or calendar

10

year, as defined in subclause 1 hereof, and may be determined as

11

follows:

12

(a)  Division of Income.

13

* * *

14

(9)  (A)  Except as provided in subparagraph (B):

15

(i)  For taxable years beginning before January 1, 2007, all

16

business income shall be apportioned to this State by

17

multiplying the income by a fraction, the numerator of which is

18

the property factor plus the payroll factor plus three times the

19

sales factor and the denominator of which is five.

20

(ii)  For taxable years beginning after December 31, 2006,

21

all business income shall be apportioned to this State by

22

multiplying the income by a fraction, the numerator of which is

23

the sum of fifteen times the property factor, fifteen times the

24

payroll factor and seventy times the sales factor and the

25

denominator of which is one hundred.

26

(iii)  For taxable years beginning after December 31, 2008,

27

all business income shall be apportioned to this State by

28

multiplying the income by a fraction, the numerator of which is

29

the sum of eight and a half times the property factor, eight and

30

a half times the payroll factor and eighty-three times the sales

- 32 -

 


1

factor and the denominator of which is one hundred.

2

(iv)  For taxable years beginning after December 31, 2009,

3

all business income shall be apportioned to this State by

4

multiplying the income by a fraction, the numerator of which is

5

the sum of five times the property factor, five times the

6

payroll factor and ninety times the sales factor and the

7

denominator of which is one hundred.

8

(v)  For taxable years beginning after December 31, 2012, all

9

business income shall be apportioned to this State by

10

multiplying the income by the sales factor.

11

* * *

12

Section 5.  Section 405 of the act is amended to read:

13

Section 405.  Extension of Time to File Reports.--The

14

department may, upon application made to it, in such form as it

15

shall prescribe, on or prior to the last day for filing any

16

annual report, and upon proper cause shown, grant to the

17

corporation, required to file such report, an extension of not

18

more than sixty days within which such report may be filed[, and

19

in case the Federal income tax authorities at any time grant a

20

longer extension of time for filing such reports with the

21

Federal Government, the department may grant an additional

22

extension of time for filing the annual report under this

23

article of not more than]. If the Federal income tax authorities

24

grant an extension of time for filing the reports with the

25

Federal Government, the department shall automatically grant an

26

extension of time for filing the annual report under this

27

article of thirty days after the termination of the Federal

28

extension, but the amount of tax due shall, in such cases,

29

nevertheless, be subject to interest from the due dates and at

30

the rates fixed by this article.

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1

Section 6.  Section 406 of the act, amended October 18, 2006

2

(P.L.1149, No.119), is amended to read:

3

Section 406.  Changes Made by Federal Government.--(a)  If

4

the amount of the taxable income, as returned by any corporation

5

to the Federal Government, is finally changed or corrected by

6

the Commission of Internal Revenue or by any other agency or

7

court of the United States, such corporation, within [thirty

8

days] six months after the receipt of such final change or

9

correction, shall make a report of change, under oath or

10

affirmation, to the department showing such finally changed or

11

corrected taxable income, upon which the tax is required to be

12

paid to the United States. In case a corporation fails to file a

13

report of change, which results in an increase in taxable income

14

within the time prescribed, there shall be added to the tax, a

15

penalty of five dollars ($5) for every day during which such

16

corporation is in default, but the department may abate any such

17

penalty in whole or in part.

18

(b)  If, as a result of such final change or correction, a

19

corporation should report any change in the amount of the

20

taxable income of any corporation upon which tax is imposed by

21

this article, the department shall adjust the corporation's tax

22

on the department's records to conform to the revised tax as

23

reported and shall credit the taxpayer's account to the extent

24

of any overpayment resulting from the adjustment. The department

25

shall then have the power, and its duty shall be, to determine

26

and assess the taxpayer's unpaid and unreported liability for

27

tax, interest or penalty due the Commonwealth, or to credit the

28

taxpayer's account.

29

(c)  Where a report of change, of Federal income, or Federal

30

tax, has been filed after an administrative or judicial appeal

- 34 -

 


1

has been taken, the report shall be deemed a part of the

2

original annual report upon petition of the taxpayer at any

3

subsequent proceeding as though it had been filed with the

4

original report, and no separate appeal from an assessment

5

resulting from the report of change, correction, or

6

redetermination shall be necessary to the extent the identical

7

issues for the taxable year have been raised in the appeal.

8

(d)  The provisions of this section shall not be construed so

9

as to permit an assessment based upon the allowance of any

10

deduction on account of net operating losses, sustained in other

11

fiscal or calendar years, that are not allowed as deductions

12

under the definition of "taxable income" as contained in this

13

article.

14

(e)  The provisions of this section shall apply to every

15

corporation which was doing business in Pennsylvania in the year

16

for which the Federal income has been changed, irrespective of

17

whether or not such corporation has thereafter merged,

18

consolidated, withdrawn or dissolved. Any clearance certificate

19

issued by the department shall be conditioned upon the

20

requirement that in the event of a change in Federal income for

21

any year for which taxes have been paid to the Commonwealth, the

22

corporation or its successor or its officers or its directors

23

shall file with the department a report of change and pay any

24

additional State tax resulting therefrom.

25

Section 6.1.  Section 407.1 of the act, amended July 25, 2007

26

(P.L.373, No.55), is amended to read:

27

Section 407.1.  Assessments.--(a)  If the department

28

determines that unpaid or unreported tax is due the

29

Commonwealth, the department shall issue an assessment under

30

this section and sections 407.2, 407.3, 407.4 and 407.5. Such an

- 35 -

 


1

assessment is not subject to the settlement procedure in the act

2

of April 9, 1929 (P.L.343, No.176), known as The Fiscal Code.

3

(b)  A notice of assessment and demand for payment shall be

4

mailed to the taxpayer. The notice shall set forth the basis of

5

the assessment. The assessment shall be paid to the department

6

upon receipt of the notice of assessment. Payment of the

7

assessment shall be without prejudice to the right of the

8

taxpayer to file a petition for reassessment in the manner

9

prescribed by Article XXVII.

10

(c)  In the event that a taxpayer fails to file a report for

11

a tax governed by this article, the department may issue an

12

estimated assessment based upon the records and information

13

available or that may come into the department's possession. If

14

prior to the filing of a report the department estimates that

15

additional unpaid or unreported tax is due the Commonwealth, the

16

department may issue additional estimated assessments.

17

(d)  A notice of estimated assessment and demand for payment

18

shall be mailed to the taxpayer. The assessment shall be paid to

19

the department upon receipt of the notice of assessment. Payment

20

of the estimated assessment does not eliminate the taxpayer's

21

obligation to file a report.

22

(e)  A taxpayer shall have no right to petition for

23

reassessment, petition for refund or otherwise appeal a notice

24

of estimated assessment except as provided in subsection (f).

25

(f)  The department shall remove an estimated assessment

26

within ninety days of the filing of a report and other

27

information required to determine the tax due the Commonwealth,

28

whereupon the department may issue an assessment as provided in

29

subsection (a). Any tax due the Commonwealth that is included in

30

an estimated assessment shall retain its lien priority as of the

- 36 -

 


1

date of the estimated assessment to the extent such amount is

2

included with an assessment issued upon the review of the filed

3

report.

4

[(g)  The notice required by subsections (b) and (d) shall be

5

mailed by certified mail if the assessment is for $300 or more.]

6

Section 7.  Section 901 introductory paragraph of the act,

7

amended December 1, 1983 (P.L.228, No.66), is amended to read:

8

Section 901.  Definitions.--The following terms, when used in

9

this [act] article, shall have the meaning ascribed to them in

10

this section:

11

* * *

12

Section 8.  Section 902(b) and (c) of the act, amended June

13

30, 1995 (P.L.139, No.21), are amended to read:

14

Section 902.  * * *

15

(b)  Disposition of Taxes.--The taxes paid by foreign fire

16

insurance companies under this [act] article shall continue to

17

be distributed and used for firemen's relief pension or

18

retirement purposes, as provided by section two of the act,

19

approved the twenty-eighth day of June, one thousand eight

20

hundred ninety-five (Pamphlet Laws 408), as amended; and the

21

taxes paid by foreign casualty insurance companies under this

22

[act] article shall continue to be distributed and used for

23

police pension, retirement or disability purposes as provided by

24

the act, approved the twelfth day of May, one thousand nine

25

hundred forty-three (Pamphlet Laws 259), as amended.

26

(c)  Other Taxes.--All other taxes received under this [act]

27

article shall be credited to the General Fund for general

28

revenue purposes.

29

Section 9.  The definitions of "association," "family farm

30

corporation" and "family farm partnership" in section 1101-C of

- 37 -

 


1

the act, amended July 2, 1986 (P.L.318, No.77) and April 23,

2

1998 (P.L.239, No.45), are amended and the section is amended by

3

adding a definition to read:

4

Section 1101-C.  Definitions.--The following words when used

5

in this article shall have the meanings ascribed to them in this

6

section:

7

"Association."  A general partnership, limited partnership,

8

limited liability partnership or any other form of

9

unincorporated enterprise, owned or conducted by two or more

10

persons other than a private trust or decedent's estate.

11

* * *

12

["Family farm corporation."  A corporation of which at least

13

seventy-five per cent of its assets are devoted to the business

14

of agriculture and at least seventy-five per cent of each class

15

of stock of the corporation is continuously owned by members of

16

the same family. The business of agriculture shall include the

17

leasing to members of the same family of property which is

18

directly and principally used for agricultural purposes. The

19

business of agriculture shall not be deemed to include:

20

(1)  Recreational activities such as, but not limited to,

21

hunting, fishing, camping, skiing, show competition or racing;

22

(2)  The raising, breeding or training of game animals or

23

game birds, fish, cats, dogs or pets or animals intended for use

24

in sporting or recreational activities;

25

(3)  Fur farming;

26

(4)  Stockyard and slaughterhouse operations; or

27

(5)  Manufacturing or processing operations of any kind.

28

"Family farm partnership."  A partnership of which at least

29

seventy-five per cent of its assets are devoted to the business

30

of agriculture and at least seventy-five per cent of the

- 38 -

 


1

interests in the partnership are continuously owned by members

2

of the same family. The business of agriculture shall include

3

the leasing to members of the same family of property which is

4

directly and principally used for agricultural purposes. The

5

business of agriculture shall not be deemed to include:

6

(1)  recreational activities such as, but not limited to,

7

hunting, fishing, camping, skiing, show competition or racing;

8

(2)  the raising, breeding or training of game animals or

9

game birds, fish, cats, dogs or pets or animals intended for use

10

in sporting or recreational activities;

11

(3)  fur farming;

12

(4)  stockyard and slaughterhouse operations; or

13

(5)  manufacturing or processing operations of any kind.]

14

"Family farm business."  A corporation or association of

15

which at least seventy-five per cent of its assets are devoted

16

to the business of agriculture and at least seventy-five per

17

cent of each class of stock of the corporation or the interests

18

in the association is continuously owned by members of the same

19

family. The business of agriculture shall include the leasing to

20

members of the same family or the leasing to a corporation or

21

association owned by members of the same family of property

22

which is directly and principally used for agricultural

23

purposes. The business of agriculture shall not be deemed to

24

include:

25

(1)  recreational activities such as, but not limited to,

26

hunting, fishing, camping, skiing, show competition or racing;

27

(2)  the raising, breeding or training of game animals or

28

game birds, fish, cats, dogs or pets or animals intended for use

29

in sporting or recreational activities;

30

(3)  fur farming;

- 39 -

 


1

(4)  stockyard and slaughterhouse operations; or

2

(5)  manufacturing or processing operations of any kind.

3

* * *

4

Section 10.  Section 1102-C.3(6), (19), (19.1) and (20) of

5

the act, amended or added July 2, 1986 (P.L.318, No.77) and June

6

16, 1994 (P.L.279, No.48), are amended to read:

7

Section 1102-C.3.  Excluded Transactions.--The tax imposed by

8

section 1102-C shall not be imposed upon:

9

* * *

10

(6)  A transfer between husband and wife, between persons who

11

were previously husband and wife who have since been divorced,

12

provided the property or interest therein subject to such

13

transfer was acquired by the husband and wife or husband or wife

14

prior to the granting of the final decree in divorce, between

15

parent and child or the spouse of such child, between a

16

stepparent and a stepchild or the spouse of the stepchild, 

17

between brother or sister or spouse of a brother or sister and

18

brother or sister or the spouse of a brother or sister and

19

between a grandparent and grandchild or the spouse of such

20

grandchild, except that a subsequent transfer by the grantee

21

within one year shall be subject to tax as if the grantor were

22

making such transfer.

23

* * *

24

(19)  A transfer of real estate devoted to the business of

25

agriculture to a family farm [corporation] business by:

26

(i)  a member of the same family which directly owns at least

27

seventy-five per cent of each class of the stock thereof or the

28

interests in that family farm business; or

29

(ii)  a family farm business, which family directly owns at

30

least seventy-five per cent of each class of stock thereof or

- 40 -

 


1

the interests in that family farm business.

2

[(19.1)  A transfer of real estate devoted to the business of

3

agriculture to a family farm partnership by a member of the same

4

family, which family directly owns at least seventy-five per

5

cent of the interests in the partnership.]

6

(20)  A transfer between members of the same family of an

7

ownership interest in a real estate company[,] or family farm

8

[corporation or family farm partnership which] business that 

9

owns real estate.

10

* * *

11

Section 11.  Section 1102-C.4 of the act, added July 2, 1986

12

(P.L.318, No.77), is amended to read:

13

Section 1102-C.4.  Documents Relating to Associations or

14

Corporations and Members, Partners, Stockholders or Shareholders

15

Thereof.--Except as otherwise provided in [section] sections 

16

1102-C.3 and 1102-C.5, documents which make, confirm or evidence

17

any transfer or devise of title to real estate between

18

associations or corporations and the members, partners,

19

shareholders or stockholders thereof are fully taxable. For the

20

purposes of this article, corporations and associations are

21

entities separate from their members, partners, stockholders or

22

shareholders.

23

Section 12.  Section 1102-C.5 of the act, amended or added

24

July 2, 1986 (P.L.318, No.77) and June 16, 1994 (P.L.279,

25

No.48), is amended to read:

26

Section 1102-C.5.  Acquired Company.--(a)  A real estate

27

company is an acquired company upon a change in the ownership

28

interest in the company, however effected, if the change:

29

(1)  does not affect the continuity of the company; and

30

(2)  of itself or together with prior changes has the effect

- 41 -

 


1

of transferring, directly or indirectly, ninety per cent or more

2

of the total ownership interest in the company within a period

3

of three years.

4

(3)  For the purposes of paragraph (2), a transfer occurs

5

within a period of three years of another transfer or transfers

6

if, during the period:

7

(i)  the transferring party provides a legally binding

8

commitment, enforceable at a future date, to execute the

9

transfer;

10

(ii)  the terms of the transfer are fixed and not subject to

11

negotiation; and

12

(iii)  the transferring party receives full consideration, in

13

any form, in exchange for the transfer.

14

[(b)  With respect to real estate acquired after February 16,

15

1986, a family farm corporation is an acquired company when,

16

because of voluntary or involuntary dissolution, it ceases to be

17

a family farm corporation or when, because of issuance or

18

transfer of stock or because of acquisition or transfer of

19

assets that are devoted to the business of agriculture, it fails

20

to meet the minimum requirements of a family farm corporation

21

under this act.

22

(b.1)  A family farm partnership is an acquired company when,

23

because of voluntary or involuntary dissolution, it ceases to be

24

a family farm partnership or when, because of transfer of

25

partnership interests or because of acquisition or transfer of

26

assets that are devoted to the business of agriculture, it fails

27

to meet the minimum requirements of a family farm partnership 

28

under this act.]

29

(b.2)  A family farm business is an acquired company when,

30

because of voluntary or involuntary dissolution, it ceases to be

- 42 -

 


1

a family farm business or when, because of the issuance or

2

transfer of stock in the corporation or transfer of interests in

3

the association or because of acquisition or transfer of assets

4

that are devoted to the business of agriculture, it fails to

5

meet the minimum requirements of a family farm business under

6

this article.

7

(b.3)  The conveyance of assets held by one family farm

8

business to another family farm business shall not be considered

9

a transfer of assets under this article if the same individuals

10

hold at least fifty per cent of the ownership interest in each

11

family farm business.

12

(c)  Within thirty days after becoming an acquired company,

13

the company shall present a declaration of acquisition with the

14

recorder of each county in which it holds real estate for the

15

affixation of documentary stamps and recording. Such declaration

16

shall set forth the value of real estate holdings of the

17

acquired company in such county.

18

Section 12.1.  Section 1111-C of the act, amended July 25,

19

2007 (P.L.373, No.55), is amended to read:

20

Section 1111-C.  Assessment and Notice of Tax; Review.--(a)

21

If any person shall fail to pay any tax imposed by this article

22

for which he is liable, the department is hereby authorized and

23

empowered to make an assessment of additional tax and interest

24

due by such person based upon any information within its

25

possession or that shall come into its possession. All of such

26

assessments shall be made within three years after the date of

27

the recording of the document, subject to the following:

28

(1)  If the taxpayer underpays the correct amount of the tax

29

by twenty-five per cent or more, the tax may be assessed at any

30

time within six years after the date of the recording of the

- 43 -

 


1

document.

2

(2)  If any part of an underpayment of tax is due to fraud or

3

an undisclosed, intentional disregard of rules and regulations,

4

the full amount of the tax may be assessed at any time.

5

(b)  Promptly after the date of such assessment, the

6

department shall send a copy thereof, including the basis of the

7

assessment, to the person against whom it was made. Any taxpayer

8

against whom an assessment is made may petition the department

9

for a reassessment pursuant to Article XXVII.

10

[(d)  The notice required by subsection (b) shall be sent by

11

certified mail if the assessment is for $300 or more.]

12

Section 12.2.  The definition of "wholesaler" in section 1201

13

of the act, added October 9, 2009 (P.L.451, No.48), is amended

14

to read:

15

Section 1201.  Definitions.--As used in this article:

16

* * *

17

"Wholesaler."  Any of the following:

18

(1)  Any person that meets all of the following:

19

(i)  In the usual course of business, purchases cigarettes

20

from a cigarette stamping agent or other wholesaler and

21

receives, stores, sells and distributes within this Commonwealth

22

at least seventy-five per cent of the cigarettes purchased by

23

him or her to retail dealers or wholesale dealers or any

24

combination who buys the cigarettes from him or her for the

25

purpose of resale to the ultimate consumer.

26

(ii)  Maintains an established place of business for the

27

receiving, storage and distribution of cigarettes.

28

(2)  Any person that meets all of the following:

29

(i)  Is engaged in the business of distributing cigarettes

30

through vending machines to the ultimate consumer by means of

- 44 -

 


1

placing the cigarette vending machines, owned or leased by him,

2

in various outlets within this Commonwealth.

3

(ii)  Pays to the owner or lessee of the premises a

4

commission or rental for the use of the premises.

5

(iii)  Operates at least ten vending machines.

6

(iv)  Meets all the other requirements for licensing of

7

wholesalers under Article II-A of the act of April 9, 1929

8

(P.L.343, No.176), known as "The Fiscal Code," including

9

maintaining an established place of business for the receiving,

10

storage and distribution of cigarettes.

11

(3)  Any person, including a franchisee, that meets all of

12

the following:

13

(i)  Owns and operates no fewer than [five] three retail

14

outlets in this Commonwealth, having one hundred per cent common

15

ownership.

16

(ii)  Purchases cigarettes from a cigarette stamping agency

17

or another wholesaler for resale to the ultimate consumer.

18

(iii)  Maintains complete and accurate records of all

19

purchases and sales in his or her main office and also in the

20

retail outlet.

21

Section 13.  Section 1709-B(a) of the act, amended July 12,

22

2006 (P.L.1137, No.116), is amended to read:

23

Section 1709-B.  Limitation on Credits.--(a)  The total

24

amount of credits approved by the department shall not exceed

25

[forty million dollars ($40,000,000)] fifty-five million dollars

26

($55,000,000) in any fiscal year. Of that amount, [eight million

27

dollars ($8,000,000)] eleven million dollars ($11,000,000) shall

28

be allocated exclusively for small businesses. However, if the

29

total amounts allocated to either the group of applicants

30

exclusive of small businesses or the group of small business

- 45 -

 


1

applicants is not approved in any fiscal year, the unused

2

portion will become available for use by the other group of

3

qualifying taxpayers.

4

* * *

5

Section 14.  Section 1712-B of the act, amended July 12, 2006

6

(P.L.1137, No.116), is repealed:

7

[Section 1712-B.  Termination.--The department shall not

8

approve a research and development tax credit under this article

9

for taxable years ending after December 31, 2015.]

10

Section 15.  The definition of "qualified tax liability" in

11

section 1702-D of the act, added July 25, 2007 (P.L.373, No.55),

12

is amended and the section is amended by adding definitions to

13

read:

14

Section 1702-D.  Definitions.

15

The following words and phrases when used in this article

16

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

17

context clearly indicates otherwise:

18

* * *

19

"Minimum stage filming requirements."  Include:

20

(1)  Taxpayers with a Pennsylvania production expense of

21

less than $30,000,000 per production must:

22

(i)  build at least one set at a qualified production

23

facility;

24

(ii)  shoot for a minimum of ten days at a qualified

25

production facility; and

26

(iii)  spend or incur a minimum of $1,500,000 in

27

direct expenditures relating to the use or rental of

28

tangible property or for performance of services provided

29

by a qualified production facility.

30

(2)  Taxpayers with a Pennsylvania production expense of

- 46 -

 


1

at least $30,000,000 per production must:

2

(i)  build at least two sets at a qualified

3

production facility;

4

(ii)  shoot for a minimum of 15 days at a qualified

5

production facility; and

6

(iii)  spend or incur a minimum of $5,000,000 in

7

direct expenditures relating to the use or rental of

8

tangible property at or for performance of services

9

provided by a qualified production facility.

10

* * *

11

"Qualified production facility."  A film production facility

12

located within this Commonwealth that contains at least one

13

sound stage with a column-free, unobstructed floor space and

14

meets either of the following criteria:

15

(1)  Has had a minimum of $10,000,000 invested in the

16

film production facility in land or a structure purchased or

17

ground-up, purpose-built new construction or renovation of

18

existing improvement.

19

(2)  Meets at least three of the following criteria:

20

(i)  A sound stage having an industry standard noise

21

criteria rating of 25 or better.

22

(ii)  A permanent grid with a minimum point load

23

capacity of no less than 1,000 pounds at a minimum of 25

24

points.

25

(iii)  Built-in power supply available at a minimum

26

of 4,000 amps per sound stage without the need for

27

supplemental generators.

28

(iv)  A height from sound stage floor to permanent

29

grid of a minimum of 20 feet.

30

(v)  A sound stage with a sliding or roll-up access

- 47 -

 


1

door with a minimum height of 14 feet.

2

(vi)  A built-in HVAC capacity during shoot days with

3

a minimum of 50 tons of cooling capacity available per

4

sound stage.

5

(vii)  Perimeter security that includes a 24-hour,

6

seven-days-a-week security presence and use of access

7

control identification badges.

8

(viii)  On-site lighting and grip department with an

9

available inventory stored at the film production

10

facility with a minimum cost of investment of $500,000.

11

(ix)  A sound stage with contiguous production

12

offices with a minimum of 5,000 square feet per sound

13

stage.

14

"Qualified tax liability."  The liability for taxes imposed

15

under Article III, IV [or], VI, VII or IX. The term shall not

16

include any tax withheld by an employer from an employee under

17

Article III.

18

* * *

19

Section 15.1.  Section 1703-D(b) of the act, added July 25,

20

2007 (P.L.373, No.55), is amended to read:

21

Section 1703-D.  Credit for qualified film production expenses.

22

* * *

23

(b)  Review and approval.--[The department shall review and

24

approve or disapprove the applications in the order in which

25

they are received.] The department shall establish application

26

periods not to exceed 90 days each. All applications received

27

during the application period shall be reviewed and evaluated by

28

the department based on the following criteria:

29

(1)  The anticipated number of production days in a

30

qualified production facility.

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1

(2)  The anticipated number of Pennsylvania employees.

2

(3)  The number of preproduction days through

3

postproduction days in Pennsylvania.

4

(4)  The anticipated number of days spent in Pennsylvania

5

hotels.

6

(5)  The Pennsylvania production expenses in comparison

7

to the production budget.

8

(6)  The use of studio resources.

9

Upon determining the taxpayer has incurred or will incur

10

qualified film production expenses, the department may approve

11

the taxpayer for a tax credit. Applications not approved may be

12

reviewed and considered in subsequent application periods. The

13

department may approve a taxpayer for a tax credit based on its

14

evaluation of the criteria under this subsection.

15

* * *

16

Section 16.  Sections 1705-D and 1707-D of the act, added

17

July 25, 2007 (P.L.373, No.55), are amended to read:

18

Section 1705-D.  Carryover, carryback and assignment of credit.

19

(a)  General rule.--If the taxpayer cannot use the entire

20

amount of the tax credit for the taxable year in which the tax

21

credit is first approved, then the excess may be carried over to

22

succeeding taxable years and used as a credit against the

23

qualified tax liability of the taxpayer for those taxable years.

24

Each time the tax credit is carried over to a succeeding taxable

25

year, it shall be reduced by the amount that was used as a

26

credit during the immediately preceding taxable year. The tax

27

credit provided by this article may be carried over and applied

28

to succeeding taxable years for no more than three taxable years

29

following the first taxable year for which the taxpayer was

30

entitled to claim the credit.

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1

(b)  Application.--A tax credit approved by the department in

2

a taxable year first shall be applied against the taxpayer's

3

qualified tax liability for the current taxable year as of the

4

date on which the credit was approved before the tax credit can

5

be applied against any tax liability under subsection (a).

6

(c)  No carryback or refund.--A taxpayer is not entitled to

7

carry back or obtain a refund of all or any portion of an unused

8

tax credit granted to the taxpayer under this article.

9

(d)  (Reserved).

10

(e)  Sale or assignment.--The following shall apply:

11

(1)  A taxpayer, upon application to and approval by the

12

department, may sell or assign, in whole or in part, a tax

13

credit granted to the taxpayer under this article.

14

(2)  The department and the Department of Revenue shall

15

jointly promulgate regulations for the approval of

16

applications under this subsection.

17

(3)  Before an application is approved, the Department of

18

Revenue must make a finding that the applicant has filed all

19

required State tax reports and returns for all applicable

20

taxable years and paid any balance of State tax due as

21

determined at settlement, assessment or determination by the

22

Department of Revenue.

23

(4)  Notwithstanding any other provision of law, the

24

Department of Revenue shall settle, assess or determine the

25

tax of an applicant under this subsection within 90 days of

26

the filing of all required final returns or reports in

27

accordance with section 806.1(a)(5) of the act of April 9,

28

1929 (P.L.343, No.176), known as The Fiscal Code.

29

(f)  Purchasers and assignees.--Except as set forth in

30

subsection (g), the following apply:

- 50 -

 


1

(1)  The purchaser or assignee of all or a portion of a

2

tax credit under subsection (e) shall immediately claim the

3

credit in the taxable year in which the purchase or

4

assignment is made.

5

(2)  The amount of the tax credit that a purchaser or

6

assignee may use against any one qualified tax liability may

7

not exceed 50% of such qualified tax liability for the

8

taxable year.

9

(3)  The purchaser or assignee may not carry forward,

10

carry back or obtain a refund of or sell or assign the tax

11

credit.

12

(4)  The purchaser or assignee shall notify the

13

Department of Revenue of the seller or assignor of the tax

14

credit in compliance with procedures specified by the

15

Department of Revenue.

16

(g)  Limited carry forward of tax credits by a purchaser or

17

assignee.--A purchaser or assignee may carry forward all or any

18

unused portion of a tax credit purchased or assigned in calendar

19

year 2010 against qualified tax liabilities incurred in taxable

20

years 2011 and 2012.

21

Section 1707-D.  Limitations.

22

(a)  Cap.--In no case shall the aggregate amount of tax

23

credits awarded in any fiscal year under this article exceed

24

[$75,000,000.] $60,000,000. The department may, in its

25

discretion, award in one fiscal year up to:

26

(1)  Thirty percent of the dollar amount of film

27

production tax credits available to be awarded in the next

28

succeeding fiscal year.

29

(2)  Twenty percent of the dollar amount of film

30

production tax credits available to be awarded in the second

- 51 -

 


1

successive fiscal year.

2

(3)  Ten percent of the dollar amount of film production

3

tax credits available to be awarded in the third successive

4

fiscal year.

5

(a.1)  Advance award of credits.--The advance award of film

6

tax credits under subsection (a) shall:

7

(1)  count against the total dollar amount of credits

8

that the department may award in that next succeeding fiscal

9

year; and

10

(2)  reduce the dollar amount of credits that the

11

department may award in that next succeeding fiscal year.

12

The individual limitations on the awarding of film production

13

tax credits apply to an advance award of film production tax

14

credits under subsection (a), and to a combination of film

15

production tax credits awarded against the current fiscal year

16

cap and against the next succeeding fiscal year's cap.

17

(b)  Individual limitations.--The following shall apply:

18

(1)  [The] Except as set forth in paragraph (1.1), the

19

aggregate amount of film production tax credits awarded by

20

the department under section 1703-D(d) to a taxpayer for a

21

film may not exceed 25% of the qualified film production

22

expenses to be incurred.

23

(1.1)  In addition to the tax credit under paragraph (1),

24

a taxpayer is eligible for a credit in the amount of 5% of

25

the qualified film production expenses incurred by the

26

taxpayer if the taxpayer:

27

(i)  films a feature film, television film or

28

television series, which is intended as programming for a

29

national audience; and

30

(ii)  films in a qualified production facility which

- 52 -

 


1

meets the minimum stage filming requirements.

2

(2)  A taxpayer that has received a grant under 12

3

Pa.C.S. § 4106 (relating to approval) shall not be eligible

4

for a film production tax credit under this act for the same

5

film.

6

(c)  Qualified production facility.--To be considered a

7

qualified production facility under subsection (b)(1.1), the

8

owner of a facility shall provide evidence to the department to

9

verify the development or facility specifications and capital

10

improvement costs incurred for the facility so that the

11

threshold amounts set in the definition of "qualified production

12

facility" under section 1702-D are satisfied, and upon

13

verification, the facility shall be registered by the department

14

officially as a qualified production facility.

15

(d)  Waiver.--The department may make a determination that

16

the financial benefit to this Commonwealth resulting from the

17

direct investment in, or payments made to, Pennsylvania

18

facilities outweighs the benefit of maintaining the 60%

19

requirement contained in the definition of "qualified film

20

production expense." If such determination is made, the

21

department may waive the requirement that 60% of a film's total

22

production expenses be comprised of Pennsylvania production

23

expenses for a feature film, television film or television

24

series that is intended as programming for a national audience

25

and is filmed in a qualified production facility if the taxpayer

26

who has Pennsylvania production expenses of at least $30,000,000

27

per production meets the minimum stage filming requirements.

28

Section 17.  (Reserved).

29

Section 18.  Article XVII-F of the act, added October 9, 2009

30

(P.L.451, No.48), is repealed:

- 53 -

 


1

[ARTICLE XVII-F

2

EDUCATIONAL IMPROVEMENT TAX CREDIT

3

Section 1701-F.  Scope of article.

4

This article establishes the educational improvement tax

5

credit.

6

Section 1702-F.  Definitions.

7

The following words and phrases when used in this article

8

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

9

context clearly indicates otherwise:

10

"Business firm."  An entity authorized to do business in this

11

Commonwealth and subject to taxes imposed under Article III, IV,

12

VI, VII, VIII, IX or XV. The term includes a pass-through

13

entity.

14

"Contribution."  A donation of cash, personal property or

15

services, the value of which is the net cost of the donation to

16

the donor or the pro rata hourly wage, including benefits, of

17

the individual performing the services.

18

"Department."  The Department of Community and Economic

19

Development of the Commonwealth.

20

"Educational improvement organization."  A nonprofit entity

21

which:

22

(1)  is exempt from Federal taxation under section 501(c)

23

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

24

26 U.S.C. § 1 et seq.); and

25

(2)  contributes at least 80% of its annual receipts as

26

grants to a public school for innovative educational

27

programs.

28

For purposes of this definition, a nonprofit entity

29

"contributes" its annual cash receipts when it expends or

30

otherwise irrevocably encumbers those funds for expenditure

- 54 -

 


1

during the then current fiscal year of the nonprofit entity or

2

during the next succeeding fiscal year of the nonprofit entity.

3

"Eligible pre-kindergarten student."  A student, including an

4

eligible student with a disability, who is enrolled in a pre-

5

kindergarten program and is a member of a household with a

6

maximum annual household income as increased by the applicable

7

income allowance.

8

"Eligible student."  A school-age student, including an

9

eligible student with a disability, who is enrolled in a school

10

and is a member of a household with a maximum annual household

11

income as increased by the applicable income allowance.

12

"Eligible student with a disability."  A pre-kindergarten

13

student or a school-age student who meets all of the following:

14

(1)  Is either enrolled in a special education school or

15

has otherwise been identified, in accordance with 22 Pa. Code

16

Ch. 14 (relating to special education services and programs),

17

as a "child with a disability," as defined in 34 CFR § 300.8

18

(relating to child with a disability).

19

(2)  Needs special education and related services.

20

(3)  Is enrolled in a pre-kindergarten program or in a

21

school.

22

(4)  Is a member of a household with a household income

23

of not more than the maximum annual household income.

24

"Household."  An individual living alone or with the

25

following: a spouse, parent and their unemancipated minor

26

children, other unemancipated minor children who are related by

27

blood or marriage or other adults or unemancipated minor

28

children living in the household who are dependent upon the

29

individual.

30

"Household income."  All moneys or property received of

- 55 -

 


1

whatever nature and from whatever source derived. The term does

2

not include the following:

3

(1)  Periodic payments for sickness and disability other

4

than regular wages received during a period of sickness or

5

disability.

6

(2)  Disability, retirement or other payments arising

7

under workers' compensation acts, occupational disease acts

8

and similar legislation by any government.

9

(3)  Payments commonly recognized as old-age or

10

retirement benefits paid to persons retired from service

11

after reaching a specific age or after a stated period of

12

employment.

13

(4)  Payments commonly known as public assistance or

14

unemployment compensation payments by a governmental agency.

15

(5)  Payments to reimburse actual expenses.

16

(6)  Payments made by employers or labor unions for

17

programs covering hospitalization, sickness, disability or

18

death, supplemental unemployment benefits, strike benefits,

19

Social Security and retirement.

20

(7)  Compensation received by United States servicemen

21

serving in a combat zone.

22

"Income allowance."

23

(1)  As follows:

24

(i)  Before July 1, 2011, $10,000 for each eligible

25

student, eligible pre-kindergarten student and dependent

26

member of the household.

27

(ii)  After June 30, 2011, $12,000 for each eligible

28

student, eligible pre-kindergarten student and dependent

29

member of the household.

30

(2)  Beginning July 1, 2012, the Department of Community

- 56 -

 


1

and Economic Development shall annually adjust the income

2

allowance amounts under paragraph (1) to reflect any upward

3

changes in the Consumer Price Index for All Urban Consumers

4

for the Pennsylvania, New Jersey, Delaware and Maryland area

5

in the preceding 12 months and shall immediately submit the

6

adjusted amounts to the Legislative Reference Bureau for

7

publication as a notice in the Pennsylvania Bulletin.

8

"Innovative educational program."  An advanced academic or

9

similar program that is not part of the regular academic program

10

of a public school but that enhances the curriculum or academic

11

program of the public school or provides pre-kindergarten

12

programs to public school students.

13

"Maximum annual household income."

14

(1)  Except as set forth in paragraph (2), as follows:

15

(i)  Before July 1, 2011, not more than $50,000.

16

(ii)  After June 30, 2011, not more than $60,000.

17

(2)  With respect to an eligible student with a

18

disability, as calculated by multiplying:

19

(i)  the sum of:

20

(A)  the applicable amount under paragraph (1);

21

and

22

(B)  the applicable income allowance; by

23

(ii) the applicable support level factor according to

24

the following table:

25

Support Level

Support Level Factor

26

1

1.50

27

2

2.993

28

(3)  Beginning July 1, 2012, the Department of Community

29

and Economic Development shall annually adjust the income

30

amounts under paragraphs (1) and (2) to reflect any upward

- 57 -

 


1

changes in the Consumer Price Index for All Urban Consumers

2

for the Pennsylvania, New Jersey, Delaware and Maryland area

3

in the preceding 12 months and shall immediately submit the

4

adjusted amounts to the Legislative Reference Bureau for

5

publication as a notice in the Pennsylvania Bulletin.

6

"Pass-through entity."  A partnership as defined in section

7

301(n.0), a single-member limited liability company treated as a

8

disregarded entity for Federal income tax purposes or a

9

Pennsylvania S corporation as defined in section 301(n.1). 

10

"Pre-kindergarten program."  A program of instruction for

11

three-year-old or four-year-old students that utilizes a

12

curriculum aligned with the curriculum of the school with which

13

it is affiliated and which provides one of the following:

14

(1)  A minimum of two hours of instructional and

15

developmental activities per day at least 60 days per school

16

year.

17

(2)  A minimum of two hours of instructional and

18

developmental activities per day at least 20 days over the

19

summer recess.

20

"Pre-kindergarten scholarship organization."  A nonprofit

21

entity which:

22

(1)  either is exempt from Federal taxation under section

23

501(c)(3) of the Internal Revenue Code of 1986 (Public Law

24

99-514, 26 U.S.C. § 1 et seq.) or is operated as a separate

25

segregated fund by a scholarship organization that has been

26

qualified under section 1703-F; and

27

(2)  contributes at least 80% of its annual cash receipts

28

to a pre-kindergarten scholarship program by expending or

29

otherwise irrevocably encumbering those funds for

30

distribution during the then current fiscal year of the

- 58 -

 


1

organization or during the next succeeding fiscal year of the

2

organization.

3

"Pre-kindergarten scholarship program."  A program to provide

4

tuition to eligible pre-kindergarten students to attend a pre-

5

kindergarten program operated by or in conjunction with a school

6

located in this Commonwealth and that includes an application

7

and review process for the purpose of making awards to eligible

8

pre-kindergarten students and awards scholarships to eligible

9

pre-kindergarten students without limiting availability to only

10

students of one school.

11

"Public school."  A public pre-kindergarten where compulsory

12

attendance requirements do not apply or a public kindergarten,

13

elementary school or secondary school at which the compulsory

14

attendance requirements of this Commonwealth may be met and

15

which meets the applicable requirements of Title VI of the Civil

16

Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

17

"Scholarship organization."  A nonprofit entity which:

18

(1)  is exempt from Federal taxation under section 501(c)

19

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

20

26 U.S.C. § 1 et seq.); and

21

(2)  contributes at least 80% of its annual cash receipts

22

to a scholarship program.

23

For purposes of this definition, a nonprofit entity

24

"contributes" its annual cash receipts to a scholarship program

25

when it expends or otherwise irrevocably encumbers those funds

26

for distribution during the then current fiscal year of the

27

nonprofit entity or during the next succeeding fiscal year of

28

the nonprofit entity.

29

"Scholarship program."  A program to provide tuition to

30

eligible students to attend a school located in this

- 59 -

 


1

Commonwealth. A scholarship program must include an application

2

and review process for the purpose of making awards to eligible

3

students. The award of scholarships to eligible students shall

4

be made without limiting availability to only students of one

5

school.

6

"School."  A public or nonpublic pre-kindergarten,

7

kindergarten, elementary school or secondary school at which the

8

compulsory attendance requirements of the Commonwealth may be

9

met and which meets the applicable requirements of Title VI of

10

the Civil Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

11

"School age."  Children from the earliest admission age to a

12

school's pre-kindergarten or kindergarten program or, when no

13

pre-kindergarten or kindergarten program is provided, the

14

school's earliest admission age for beginners, until the end of

15

the school year the student attains 21 years of age or

16

graduation from high school, whichever occurs first.

17

"Special education school."  A school or program within a

18

school that is designated specifically and exclusively for

19

students with any of the disabilities listed in 34 CFR § 300.8

20

(relating to child with a disability) and meets one of the

21

following:

22

(1)  Is licensed under the act of January 28, 1988

23

(P.L.24, No.11), known as the Private Academic Schools Act.

24

(2)  Is accredited by an accrediting association approved

25

by the State Board of Education.

26

(3)  Is a school for the blind or deaf receiving

27

Commonwealth appropriations.

28

(4)  Is operated by or under the authority of a bona fide

29

religious institution or by the Commonwealth or any political

30

subdivision thereof.

- 60 -

 


1

"Support level."  The level of support needed by an eligible

2

student with a disability, as set forth in the following matrix:

3

Support Level 1 - The student is not enrolled in a

4

special education school.

5

Support Level 2 - The student is enrolled as a student in

6

a special education school.

7

Section 1703-F.  Qualification and application.

8

(a)  Establishment.--In accordance with section 14 of Article

9

III of the Constitution of Pennsylvania, an educational

10

improvement tax credit program is hereby established to enhance

11

the educational opportunities available to all students in this

12

Commonwealth.

13

(b)  Information.--In order to qualify under this article, a

14

scholarship organization, a pre-kindergarten scholarship

15

organization or an educational improvement organization must

16

submit information to the department that enables the department

17

to confirm that the organization is exempt from taxation under

18

section 501(c)(3) of the Internal Revenue Code of 1986 (Public

19

Law 99-514, 26 U.S.C. § 1 et seq.).

20

(c)  Scholarship organizations and pre-kindergarten

21

scholarship organizations.--A scholarship organization or pre-

22

kindergarten scholarship organization must certify to the

23

department that the organization is eligible to participate in

24

the program established under this article and must agree to

25

annually report the following information to the department by

26

December 1, 2005, and September 1 of each year thereafter:

27

(1)  (i)  The number of scholarships awarded during the

28

immediately preceding school year to eligible pre-

29

kindergarten students.

30

(ii)  The total and average amounts of the

- 61 -

 


1

scholarships awarded during the immediately preceding

2

school year to eligible pre-kindergarten students.

3

(iii)  The number of scholarships awarded during the

4

immediately preceding school year to eligible students in

5

grades kindergarten through eight.

6

(iv)  The total and average amounts of the

7

scholarships awarded during the immediately preceding

8

school year to eligible students in grades kindergarten

9

through eight.

10

(v)  The number of scholarships awarded during the

11

immediately preceding school year to eligible students in

12

grades nine through 12.

13

(vi)  The total and average amounts of the

14

scholarships awarded during the immediately preceding

15

school year to eligible students in grades nine through

16

12.

17

(vii)  Where the scholarship organization or pre-

18

kindergarten scholarship organization collects

19

information on a county-by-county basis, the total number

20

and the total amount of scholarships awarded during the

21

immediately preceding school year to residents of each

22

county in which the scholarship organization or pre-

23

kindergarten scholarship organization awarded

24

scholarships.

25

(2)  The information required under paragraph (1) shall

26

be submitted on a form provided by the department. No later

27

than September 1, 2005, and May 1 of each year thereafter,

28

the department shall annually distribute such sample forms,

29

together with the forms on which the reports are required to

30

be made, to each listed scholarship organization and pre-

- 62 -

 


1

kindergarten scholarship organization.

2

(3)  The department may not require any other information

3

to be provided by scholarship organizations or pre-

4

kindergarten scholarship organizations, except as expressly

5

authorized in this article.

6

(d)  Educational improvement organization.--

7

(1)  An application submitted by an educational

8

improvement organization must describe its proposed

9

innovative educational program or programs in a form

10

prescribed by the department. The department shall consult

11

with the Department of Education as necessary. The department

12

shall review and approve or disapprove the application. In

13

order to be eligible to participate in the program

14

established under this article, an educational improvement

15

organization must agree to annually report the following

16

information to the department by December 1, 2005, and

17

September 1 of each year thereafter:

18

(i)  The name of the innovative educational program

19

or programs and the total amount of the grant or grants

20

made to those programs during the immediately preceding

21

school year.

22

(ii)  A description of how each grant was utilized

23

during the immediately preceding school year and a

24

description of any demonstrated or expected innovative

25

educational improvements.

26

(iii)  The names of the public schools and school

27

districts where innovative educational programs that

28

received grants during the immediately preceding school

29

year were implemented.

30

(iv)  Where the educational improvement organization

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1

collects information on a county-by-county basis, the

2

total number and the total amount of grants made during

3

the immediately preceding school year for programs at

4

public schools in each county in which the educational

5

improvement organization made grants.

6

(2)  The information required under paragraph (1) shall

7

be submitted on a form provided by the department. No later

8

than September 1, 2005, and May 1 of each year thereafter,

9

the department shall annually distribute such sample forms,

10

together with the forms on which the reports are required to

11

be made, to each listed educational improvement organization.

12

(3)  The department may not require any other information

13

to be provided by educational improvement organizations,

14

except as expressly authorized in this article.

15

(e)  Notification.--The department shall notify the

16

scholarship organization, pre-kindergarten scholarship

17

organization or educational improvement organization that the

18

organization meets the requirements of this article for that

19

fiscal year no later than 60 days after the organization has

20

submitted the information required under this section.

21

(f)  Publication.--The department shall annually publish a

22

list of each scholarship organization, pre-kindergarten

23

scholarship organization or educational improvement organization

24

qualified under this section in the Pennsylvania Bulletin. The

25

list shall also be posted and updated as necessary on the

26

publicly accessible Internet website of the department.

27

Section 1704-F.  Application.

28

(a)  Scholarship organization or pre-kindergarten scholarship

29

organization.--A business firm shall apply to the department for

30

a tax credit under section 1705-F. A business firm shall receive

- 64 -

 


1

a tax credit under this article if the scholarship organization

2

or pre-kindergarten scholarship organization that receives the

3

contribution appears on the list established under section 1703-

4

F(f).

5

(b)  Educational improvement organization.--A business firm

6

must apply to the department for a credit under section 1705-F.

7

A business firm shall receive a tax credit under this article if

8

the department has approved the program provided by the

9

educational improvement organization that receives the

10

contribution.

11

(c)  Availability of tax credits.--Tax credits under this

12

article shall be made available by the department on a first-

13

come, first-served basis within the limitation established under

14

section 1706-F(a).

15

(d)  Contributions.--A contribution by a business firm to a

16

scholarship organization, pre-kindergarten scholarship

17

organization or educational improvement organization shall be

18

made no later than 60 days following the approval of an

19

application under subsection (a) or (b).

20

Section 1705-F.  Tax credit.

21

(a)  Scholarship or educational improvement organizations.--

22

In accordance with section 1706-F(a), the Department of Revenue

23

shall grant a tax credit against any tax due under Article III,

24

IV, VI, VII, VIII, IX or XV to a business firm providing proof

25

of a contribution to a scholarship organization or educational

26

improvement organization in the taxable year in which the

27

contribution is made which shall not exceed 75% of the total

28

amount contributed during the taxable year by the business firm.

29

Such credit shall not exceed $300,000 annually per business firm

30

for contributions made to scholarship organizations or

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1

educational improvement organizations.

2

(b)  Additional amount.--The Department of Revenue shall

3

grant a tax credit of up to 90% of the total amount contributed

4

during the taxable year if the business firm provides a written

5

commitment to provide the scholarship organization or

6

educational improvement organization with the same amount of

7

contribution for two consecutive tax years. The business firm

8

must provide the written commitment under this subsection to the

9

department at the time of application.

10

(c)  Pre-kindergarten scholarship organizations.--In

11

accordance with section 1706-F(a), the Department of Revenue

12

shall grant a tax credit against any tax due under Article III,

13

IV, VI, VII, VIII, IX or XV to a business firm providing proof

14

of a contribution to a pre-kindergarten scholarship organization

15

in the taxable year in which the contribution is made which

16

shall be equal to 100% of the first $10,000 contributed during

17

the taxable year by the business firm, and which shall not

18

exceed 90% of the remaining amount contributed during the

19

taxable year by the business firm. Such credit shall not exceed

20

$150,000 annually per business firm for contributions made to

21

pre-kindergarten scholarship organizations.

22

(d)  Combination of tax credits.--A business firm may receive

23

tax credits from the Department of Revenue in any tax year for

24

any combination of contributions under subsection (a) or (b) or

25

(c). In no case may a business firm receive tax credits in any

26

tax year in excess of $300,000 for contributions under

27

subsections (a) and (b). In no case shall a business firm

28

receive tax credits in any tax year in excess of $150,000 for

29

contributions under subsection (c).

30

(e)  Pass-through entity.--

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1

(1)  If a pass-through entity does not intend to use all

2

approved tax credits under this section, it may elect in

3

writing to transfer all or a portion of the credit to

4

shareholders, members or partners in proportion to the share

5

of the entity's distributive income to which the shareholder,

6

member or partner is entitled for use in the taxable year in

7

which the contribution is made or in the taxable year

8

immediately following the year in which the contribution is

9

made. The election shall designate the year in which the

10

transferred credits are to be used and shall be made

11

according to procedures established by the Department of

12

Revenue.

13

(2)  A pass-through entity and a shareholder, member or

14

partner of a pass-through entity shall not claim the credit

15

under this section for the same contribution.

16

(3)  The shareholder, member or partner may not carry

17

forward, carry back, obtain a refund of or sell or assign the

18

credit.

19

(f)  Restriction on applicability of credits.--No credits

20

granted under this section shall be applied against any tax

21

withheld by an employer from an employee under Article III.

22

(g)  Time of application for credits.--

23

(1)  Except as provided in paragraphs (2) and (3), the

24

department may accept applications for tax credits available

25

during a fiscal year no earlier than July 1 of each fiscal

26

year.

27

(2)  The application of any business firm for tax credits

28

available during a fiscal year as part of the second year of

29

a two-year commitment may be accepted no earlier than May 15

30

preceding the fiscal year.

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1

(3)  The application under subsection (a) of any pass-

2

through entity for approval of single-year tax credits

3

available during a fiscal year against the taxes imposed

4

under Article III or under subsection (b) for approval of

5

credits against such taxes for the first year of a two-year

6

commitment may be accepted by the department no earlier than

7

the first business day following July 7 of the fiscal year.

8

Section 1706-F.  Limitations.

9

(a)  Amount.--

10

(1)  The total aggregate amount of all tax credits

11

approved shall not exceed $67,000,000 in a fiscal year. No

12

less than $44,666,667 of the total aggregate amount shall be

13

used to provide tax credits for contributions from business

14

firms to scholarship organizations. No less than $22,333,333

15

of the total aggregate amount shall be used to provide tax

16

credits for contributions from business firms to educational

17

improvement organizations.

18

(2)  (i)  For the fiscal years 2004-2005, 2005-2006 and

19

2006-2007, the total aggregate amount of all tax credits

20

approved for contributions from business firms to pre-

21

kindergarten scholarship programs shall not exceed

22

$5,000,000 in a fiscal year.

23

(ii)  For the fiscal year 2007-2008 and each fiscal

24

year thereafter, the total aggregate amount of all tax

25

credits approved for contributions from business firms to

26

pre-kindergarten scholarship programs shall not exceed

27

$8,000,000 in a fiscal year.

28

(b)  Activities.--No tax credit shall be approved for

29

activities that are a part of a business firm's normal course of

30

business.

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1

(c)  Tax liability.--

2

(1)  Except as provided in paragraph (2), a tax credit

3

granted for any one taxable year may not exceed the tax

4

liability of a business firm.

5

(2)  In the case of a credit granted to a pass-through

6

entity which elects to transfer the credit according to

7

section 1705-F(e), a tax credit granted for any one taxable

8

year and transferred to a shareholder, member or partner may

9

not exceed the tax liability of the shareholder, member or

10

partner.

11

(d)  Use.--A tax credit not used by the applicant in the

12

taxable year the contribution was made or in the year designated

13

by the shareholder, member or partner to whom the credit was

14

transferred under section 1705-F(e) may not be carried forward

15

or carried back and is not refundable or transferable.

16

(e)  Nontaxable income.--A scholarship received by an

17

eligible student or eligible pre-kindergarten student shall not

18

be considered to be taxable income for the purposes of Article

19

III.

20

Section 1707-F.  Lists.

21

The Department of Revenue shall provide a list of all

22

scholarship organizations, pre-kindergarten scholarship

23

organizations and educational improvement organizations

24

receiving contributions from business firms granted a tax credit

25

under this article to the General Assembly by June 30th of each

26

year.

27

Section 1708-F.  Guidelines.

28

The department in consultation with the Department of

29

Education shall develop guidelines to determine the eligibility

30

of an innovative educational program.]

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1

Section 19.  The act is amended by adding articles to read:

2

ARTICLE XVII-G

3

RESOURCE MANUFACTURING TAX CREDIT

4

Section 1701-G.  Scope.

5

This article establishes a resource manufacturing tax credit.

6

Section 1702-G.  Definitions.

7

The following words and phrases when used in this article

8

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

9

context clearly indicates otherwise:

10

"Company."  Any corporation, partnership, limited liability

11

company, limited liability partnership, business trust,

12

affiliate, unincorporated joint venture or other business

13

entity, doing business within this Commonwealth.

14

"Department."  The Department of Revenue of the Commonwealth.

15

"Downstream company."  Includes a company that uses chemical

16

products or chemical compounds manufactured or processed by a

17

qualified taxpayer as a raw material in its production process

18

in this Commonwealth.

19

"Ethane."  A colorless, odorless gaseous alkane, C2H6, which

20

occurs as a constituent of natural gas and is used as the raw

21

material in the manufacturing of ethylene.

22

"Ethylene."  An organic hydrocarbon compound with the formula

23

C2H4 or H2C=CH2, that is derived from natural gas and petroleum.

24

"Gallon."  A United States liquid gallon equal to a volume of

25

231 cubic inches and equal to 3.785411784 liters or 0.13368

26

cubic feet, where volumetric measurements made at ambient

27

flowing conditions are typically adjusted for composition and to

28

standard conditions using established industry standard

29

practices.

30

"Pass-through entity."  Any of the following:

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1

(1)  A partnership as defined in section 301(n.0).

2

(2)  A Pennsylvania S corporation as defined in section

3

301(n.1).

4

(3)  An unincorporated entity subject to section 307.21.

5

"Qualified tax liability."  The liability for taxes imposed

6

under Articles III, IV, VI, VII, VIII, IX, XI and XV. The term

7

does not include tax withheld under section 316.

8

"Qualified taxpayer."  A company that satisfies all of the

9

following:

10

(1)  Purchases ethane for use in manufacturing ethylene

11

at a facility in this Commonwealth which has been placed in

12

service on or after the effective date of this article.

13

(2)  Has made a capital investment of at least

14

$1,000,000,000 in order to construct the facility and place

15

it into service in this Commonwealth.

16

(3)  Has created at least 2,500 full-time equivalent jobs

17

during the construction phase in order to construct the

18

facility and place it into service in this Commonwealth.

19

"Tax credit."  The resource manufacturing tax credit provided

20

under this article.

21

"Upstream company."  Includes a company that is engaged in

22

the exploration, development, production, processing, refining

23

or transportation of natural gas, natural gas liquids or

24

petroleum in this Commonwealth.

25

Section 1703-G.  Application and approval of tax credit.

26

(a)  Rate.--The tax credit shall be equal to $0.05 per gallon

27

of ethane purchased and used in manufacturing ethylene in this

28

Commonwealth by a qualified taxpayer.

29

(b)  Application.--

30

(1)  A qualified taxpayer may apply to the department for

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1

a tax credit under this section.

2

(2)  The application must be submitted to the department

3

by March 1 for the tax credit claimed for ethane purchased

4

and used by the qualified taxpayer during the prior calendar

5

year. The application must be on the form required by the

6

department.

7

(3)  The department may require information necessary to

8

document the amount of ethane purchased and used.

9

(c)  Review and approval.--

10

(1)  The department shall review and approve or

11

disapprove the applications by March 20.

12

(2)  Upon approval, the department shall issue a

13

certificate stating the amount of tax credit granted for

14

ethane purchased in the prior calendar year.

15

Section 1704-G.  Use of tax credits.

16

(a)  Initial use.--Prior to sale or assignment of a tax

17

credit under section 1706-G, a qualified taxpayer must first use

18

a tax credit against the qualified tax liability incurred in the

19

taxable year for which the tax credit was approved.

20

(b)  Eligibility.--The credit may be applied against up to

21

20% of the qualified taxpayer's qualified tax liabilities

22

incurred in the taxable year for which the credit was approved.

23

(c)  Application.--The tax credit shall be applied against

24

the qualified taxpayer's liability only after all other

25

statutory tax credits and deductions available to the qualified

26

taxpayer have been used.

27

(d)  Limit.--A qualified taxpayer that has been granted a tax

28

credit under this article shall be ineligible for any other tax

29

credit provided under this act.

30

Section 1705-G.  Carryover, carryback and refund.

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1

A tax credit cannot be carried back, carried forward or be

2

used to obtain a refund.

3

Section 1706-G.  Sale or assignment.

4

(a)  Authorization.--If a qualified taxpayer holds a tax

5

credit through the end of the calendar year in which the tax

6

credit was granted, the qualified taxpayer may sell or assign a

7

tax credit, in whole or in part.

8

(b)  Application.--

9

(1)  To sell or assign a tax credit, a qualified taxpayer

10

must file an application for the sale or assignment of the

11

tax credit with the Department of Community and Economic

12

Development. The application must be on a form required by

13

the Department of Community and Economic Development.

14

(2)  To approve an application, the Department of

15

Community and Economic Development must receive:

16

(i)  a finding from the department that the applicant

17

has:

18

(A)  filed all required State tax reports and

19

returns for all applicable taxable years; and

20

(B)  paid any balance of State tax due as

21

determined by assessment or determination by the

22

department and not under timely appeal; and

23

(ii)  in the case of a sale or assignment to a

24

company that is not an upstream company or downstream

25

company, a certification from the qualified taxpayer that

26

the qualified taxpayer had offered to sell or assign the

27

tax credit:

28

(A)  exclusively to a downstream company for a

29

period of 30 days following approval of the tax

30

credit under section 1703-G(c); and

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1

(B)  to an upstream company or downstream company

2

for a period of 30 days following expiration of the

3

period under clause (A).

4

(c)  Approval.--Upon approval by the Department of Community

5

and Economic Development, a qualified taxpayer may sell or

6

assign, in whole or in part, a tax credit.

7

Section 1707-G.  Purchasers and assignees.

8

(a)  Time.--The purchaser or assignee under section 1706-G

9

must claim the tax credit in the calendar year in which the

10

purchase or assignment is made.

11

(b)  Amount.--The amount of the tax credit that a purchaser

12

or assignee under section 1706-G may use against any one

13

qualified tax liability may not exceed 50% of any of the

14

qualified tax liabilities for the taxable year.

15

(c)  Resale and reassignment.--

16

(1)  A purchaser under section 1706-G may not sell or

17

assign the purchased tax credit.

18

(2)  An assignee under section 1706-G may not sell or

19

assign the assigned tax credit.

20

(d)  Notice.--The purchaser or assignee under section 1706-G

21

shall notify the department of the seller or assignor of the tax

22

credit in compliance with procedures specified by the

23

department.

24

Section 1708-G.  Pass-through entity.

25

(a)  Election.--If a pass-through entity has an unused tax

26

credit, it may elect in writing, according to procedures

27

established by the department, to transfer all or a portion of

28

the credit to shareholders, members or partners in proportion to

29

the share of the entity's distributive income to which the

30

shareholders, members or partners are entitled.

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1

(b)  Limitation.--The same unused tax credit under subsection

2

(a) may not be claimed by:

3

(1)  the pass-through entity; and

4

(2)  a shareholder, member or partner of the pass-through

5

entity.

6

(c)  Amount.--The amount of the tax credit that a transferee

7

under subsection (a) may use against any one qualified tax

8

liability may not exceed 20% of any qualified tax liabilities

9

for the taxable year.

10

(d)  Time.--A transferee under subsection (a) must claim the

11

tax credit in the calendar year in which the transfer is made.

12

(e)  Sale and assignment.--A transferee under subsection (a)

13

may not sell or assign the tax credit.

14

Section 1709-G.  Administration.

15

(a)  Audits and assessments.--The department has the

16

following powers:

17

(1)  To audit a qualified taxpayer claiming a tax credit

18

to ascertain the validity of the amount claimed.

19

(2)  To issue an assessment against a qualified taxpayer

20

for an improperly issued tax credit. The procedures,

21

collection, enforcement and appeals of any assessment made

22

under this section shall be governed by Article II.

23

(b)  Guidelines and regulations.--The department shall

24

develop written guidelines for the implementation of this

25

article. The guidelines shall be in effect until the department

26

promulgates regulations for the implementation of the provisions

27

of this article.

28

Section 1710-G.  Reports to General Assembly.

29

(a)  Annual report.--By October 1, 2018, and October 1 of

30

each year thereafter, the department shall submit a report on

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1

the tax credit provided by this article to the chairman and

2

minority chairman of the Appropriations Committee of the Senate,

3

the chairman and minority chairman of the Finance Committee of

4

the Senate, the chairman and minority chairman of the

5

Appropriations Committee of the House of Representatives and the

6

chairman and minority chairman of the Finance Committee of the

7

House of Representatives. The report must include the names of

8

the qualified taxpayers utilizing the tax credit as of the date

9

of the report and the amount of tax credits approved for,

10

utilized by or sold or assigned by a qualified taxpayer.

11

(b)  Reconciliation report.--On May 1, 2028, the Department

12

of Community and Economic Development shall submit to the

13

Secretary of the Senate and the Chief Clerk of the House of

14

Representatives a reconciliation report on the effectiveness of

15

this article. This report shall include, at a minimum, the

16

following information for the preceding ten years:

17

(1)  The name and business address of all qualified

18

taxpayers who have been granted tax credits under this

19

article.

20

(2)  The amount of tax credits granted to each qualified

21

taxpayer.

22

(3)  The total number of jobs created by the qualified

23

taxpayer, upstream company and downstream company and any

24

companies that provide goods, utilities or other services

25

that support the business operations of the qualified

26

taxpayer and upstream company and downstream company. This

27

paragraph includes the average annual salary and hourly wage

28

information.

29

(4)  The amount of taxes paid under Article II by the

30

qualified taxpayer, upstream company and downstream company

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1

and any companies that provide goods, utilities or other

2

services that support the business operations of the

3

qualified taxpayer and upstream company and downstream

4

company.

5

(5)  The amount of taxes withheld from employees or paid

6

by members, partners or shareholders of the pass-through

7

entities under Article III of the qualified taxpayer,

8

upstream company and downstream company, and any companies

9

that provide goods, utilities or other services that support

10

the business operations of the qualified taxpayer and

11

upstream company and downstream company.

12

(6)  The amount of taxes paid under Article IV by the

13

qualified taxpayer, upstream company and downstream company

14

and any companies that provide goods, utilities or other

15

services that support the business operations of the

16

qualified taxpayer and upstream company and downstream

17

company.

18

(7)  The amount of taxes paid under Article VI by the

19

qualified taxpayer, upstream company and downstream company

20

and any companies that provide goods, utilities or other

21

services that support the business operations of the

22

qualified taxpayer and upstream company and downstream

23

company.

24

(8)  The amount of taxes paid under Article XI by the

25

qualified taxpayer, upstream company and downstream company

26

and any companies that provide goods, utilities or other

27

services that support the business operations of the

28

qualified taxpayer and upstream company and downstream

29

company.

30

(9)  The amount of any other State or local taxes paid by

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1

the qualified taxpayer, upstream company and downstream

2

company and any companies that provide goods, utilities or

3

other services that support the business operations of the

4

qualified taxpayer and upstream company and downstream

5

company.

6

(10)  Any other information pertaining to the economic

7

impact of this article in this Commonwealth.

8

(c)  Reduction.--If the reconciliation report issued under

9

subsection (b) reveals that the total amount of the tax credits

10

granted under this article exceeds the total amount of tax

11

revenue reported under subsection (b)(4) through (9), the report

12

must include any recommendation for changes in the calculation

13

of the credit.

14

(d)  Publication.--The reports required by this section shall

15

be public records and shall be available electronically on the

16

Internet website of either the department or the Department of

17

Community and Economic Development. The reports required by this

18

section shall not contain "confidential proprietary information"

19

as defined in section 102 of the act of February 14, 2008

20

(P.L.6, No.3), known as the Right-to-Know Law.

21

Section 1711-G.  Expiration.

22

This article shall expire December 31, 2044.

23

ARTICLE XVII-H

24

HISTORIC PRESERVATION INCENTIVE TAX CREDIT

25

Section 1701-H.  Scope of article.

26

This article relates to the historic preservation incentive

27

tax credit.

28

Section 1702-H.  Definitions.

29

The following words and phrases when used in this article

30

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

- 78 -

 


1

context clearly indicates otherwise:

2

"Commission."  The Pennsylvania Historical and Museum

3

Commission.

4

"Completed project."  The completion of the restoration of a

5

qualified historic structure in accordance with a qualified

6

rehabilitation plan and the receipt of an occupancy certificate

7

for the structure.

8

"Department."  The Department of Revenue of the Commonwealth.

9

"Internal Revenue Code."  The Internal Revenue Code of 1986

10

(Public Law 99-514, 26 U.S.C. 1 et seq.).

11

"Qualified expenditures."  The costs and expenses incurred by

12

a qualified taxpayer in the restoration of a qualified historic

13

structure pursuant to a qualified rehabilitation plan and which

14

are defined as qualified rehabilitation expenditures under

15

section 47(c)(2) of the Internal Revenue Code of 1986 (Public

16

Law 99-514, 26 U.S.C. § 47(c)(2)).

17

"Qualified historic structure."  A commercial building

18

located in this Commonwealth that qualifies as a certified

19

historic structure under section 47(c)(3) of the Internal

20

Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 47(c)(3)).

21

"Qualified rehabilitation plan."  A plan to rehabilitate a

22

qualified historic structure that is approved by the

23

Pennsylvania Historical and Museum Commission as being

24

consistent with the standards for rehabilitation and guidelines

25

for rehabilitation of historic buildings as adopted by the

26

United States Secretary of the Interior.

27

"Qualified tax liability."  Tax liability imposed on a

28

taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV,

29

excluding any tax withheld by an employer under Article III.

30

"Qualified taxpayer."  Any natural person, corporation,

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1

business trust, limited liability company, partnership, limited

2

liability partnership, association or any other form of legal

3

business entity that:

4

(1)  Is subject to a tax imposed under Article III, IV,

5

VI, VII, VIII, IX, XI or XV, excluding any tax withheld by an

6

employer under Article III.

7

(2)  Owns a qualified historic structure.

8

"Region."  A Community Action Team region as established by

9

the Department of Community and Economic Development.

10

Section 1703-H.  Tax credit certificates.

11

(a)  Application.--

12

(1)  A qualified taxpayer may apply to the Department of

13

Community and Economic Development for a tax credit

14

certificate under this section.

15

(2)  The application shall be on the form required by the

16

Department of Community and Economic Development and shall

17

include a qualified rehabilitation plan.

18

(3)  The application shall be filed on or before February

19

1 for qualified expenditures incurred and to be incurred in

20

connection with the completed project.

21

(b)  Review, recommendation and approval.--

22

(1)  The Department of Community and Economic Development

23

shall forward applications received under this section to the

24

commission for review.

25

(2)  The commission shall review the proposed

26

rehabilitation plan, verify that the building is a qualified

27

historic structure and recommend approval or disapproval to

28

the Department of Community and Economic Development within

29

30 days of receipt of the application. The commission shall

30

notify the qualified taxpayer within 15 days of its

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1

determination.

2

(3)  The commission shall notify the Department of

3

Community and Economic Development of verification of a

4

completed project and notify the Department of Community and

5

Economic Development of the amount of qualified expenditures

6

incurred by the taxpayer in connection with the completed

7

project.

8

(4)  If the Department of Community and Economic

9

Development has approved the application and received

10

notification of a completed project, it shall issue the

11

qualified taxpayer a tax credit certificate by April 1. A tax

12

credit certificate issued under this section shall not exceed

13

25% of qualified expenditures determined by the commission to

14

have been incurred by the qualified taxpayer in connection

15

with the completed project.

16

(5)  In granting tax credit certificates under this

17

article, the Department of Community and Economic

18

Development:

19

(i)  Shall not grant more than $3,000,000 in tax

20

credit certificates in any fiscal year.

21

(ii)  Shall not grant more than $500,000 in tax

22

credit certificates to a single qualified taxpayer in any

23

fiscal year.

24

(iii)  Shall assure that credits are awarded in an

25

equitable manner to each region in this Commonwealth.

26

However, credits allocated to a region that are unclaimed

27

shall be promptly reallocated to eligible projects in

28

other regions.

29

(6)  Tax credits under this article shall be made

30

available on a first-come, first-served basis within the

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1

limitation established under subsection (b)(5).

2

Section 1704-H.  Claiming the credit.

3

Upon presenting a tax credit certificate to the department,

4

the qualified taxpayer may claim a tax credit against the

5

qualified tax liability of the qualified taxpayer.

6

Section 1705-H.  Carryover, carryback and assignment of credit.

7

(a)  General rule.--If a qualified taxpayer cannot use the

8

entire amount of the tax credit for the taxable year in which

9

the tax credit is first approved, then the excess may be carried

10

over to succeeding taxable years and used as a credit against

11

the qualified tax liability of the qualified taxpayer for those

12

taxable years. Each time the tax credit is carried over to a

13

succeeding taxable year, it shall be reduced by the amount that

14

was used as a credit during the immediately preceding taxable

15

year. The tax credit provided by this article may be carried

16

over and applied to succeeding taxable years for not more than

17

seven taxable years following the first taxable year for which

18

the qualified taxpayer was entitled to claim the credit.

19

(b)  Application.--A tax credit certificate received by the

20

department in a taxable year first shall be applied against the

21

qualified taxpayer's qualified tax liability for the current

22

taxable year as of the date on which the credit was issued

23

before the tax credit can be applied against any qualified tax

24

liability under subsection (a).

25

(c)  No carryback or refund.--A qualified taxpayer may not

26

carry back or obtain a refund of all or any portion of an unused

27

tax credit granted to the qualified taxpayer under this article.

28

(d)  Sale or assignment.--The following shall apply:

29

(1)  A qualified taxpayer, upon application to and

30

approval by the Department of Community and Economic

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1

Development, may sell or assign, in whole or in part, a tax

2

credit granted to the qualified taxpayer under this article.

3

(2)  Before an application is approved, the department

4

must find that the applicant has filed all required State tax

5

reports and returns for all applicable taxable years and paid

6

any balance of State tax due as determined at settlement,

7

assessment or determination by the department.

8

(e)  Purchasers and assignees.--The purchaser or assignee of

9

all or a portion of a tax credit obtained under section 1703-H

10

shall immediately claim the credit in the taxable year in which

11

the purchase or assignment is made. The purchaser or assignee

12

may not carry forward, carry back or obtain a refund of or sell

13

or assign the tax credit. The purchaser or assignee shall notify

14

the department of the seller or assignor of the tax credit in

15

compliance with procedures specified by the department.

16

Section 1706-H.  Pass-through entity.

17

(a)  General rule.--If a pass-through entity has any unused

18

tax credit under section 1705-H, it may elect in writing,

19

according to procedures established by the department, to

20

transfer all or a portion of the credit to shareholders, members

21

or partners in proportion to the share of the entity's

22

distributive income to which the shareholder, member or partner

23

is entitled.

24

(b)  Limitation.--A pass-through entity and a shareholder,

25

member or partner of a pass-through entity shall not claim the

26

credit under subsection (a) for the same qualified expenditures.

27

(c)  Application.--A shareholder, member or partner of a

28

pass-through entity to whom a credit is transferred under

29

subsection (a) shall immediately claim the credit in the taxable

30

year in which the transfer is made. The shareholder, member or

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1

partner may not carry forward, carry back, obtain a refund of or

2

sell or assign the credit.

3

Section 1707-H.  Administration.

4

The Department of Community and Economic Development, the

5

commission and the department shall jointly develop written

6

guidelines for the implementation of the provisions of this

7

article.

8

Section 1708-H.  Application of Internal Revenue Code.

9

The provisions of section 47 of the Internal Revenue Code and

10

the regulations promulgated regarding those provisions shall

11

apply to the department's interpretation and administration of

12

the credit provided under this article. References to the

13

Internal Revenue Code shall mean the sections of the Internal

14

Revenue Code as existing on any date of interpretation of this

15

article, except if those sections of the Internal Revenue Code

16

referenced in this article are repealed or terminated,

17

references to the Internal Revenue Code shall mean those

18

sections last having full force and effect. If after repeal or

19

termination the Internal Revenue Code sections are revised or

20

reenacted, references in this article to Internal Revenue Code

21

sections shall mean those revised or reenacted sections.

22

Section 1709-H.  Limitation.

23

Taxpayers shall not be entitled to apply for historic

24

preservation tax credits after the seventh fiscal year following

25

the effective date of this article.

26

ARTICLE XVII-I

27

COMMUNITY-BASED SERVICES TAX CREDIT

28

Section 1701-I.  Scope of article.

29

This article relates to community-based services tax credits.

30

Section 1702-I.  Definitions.

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1

The following words and phrases when used in this article

2

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

3

context clearly indicates otherwise:

4

"Business firm."  An entity authorized to do business in this

5

Commonwealth and subject to taxes imposed under Article III, IV,

6

VI, VII, VIII, IX or XV.

7

"Contribution."  A donation of cash, personal property or

8

services, the value of which is the net cost of the donation to

9

the donor or the pro rata hourly wage, including benefits, of

10

the individual performing the service.

11

"Department."  The Department of Community and Economic

12

Development of the Commonwealth.

13

"Individual."  An individual who is eligible for community-

14

based services funded through the Office of Developmental

15

Programs and the Office of Mental Health and Substance Abuse

16

Services of the Department of Public Welfare.

17

"Provider."  A nonprofit entity that meets all of the

18

following:

19

(1)  Provides community-based services to individuals

20

with intellectual disabilities or mental illness.

21

(2)  Is exempt from Federal taxation under section 501(c)

22

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

23

26 U.S.C. § 1 et seq.).

24

Section 1703-I.  Community-based services tax credit program.

25

(a)  Establishment.--A community-based services tax credit

26

program is established to supplement, not supplant, existing

27

Federal and State funding for community-based services for

28

individuals in this Commonwealth.

29

(b)  Information.--In order to qualify under this article, a

30

provider must submit information to the department that enables

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1

the department to confirm that the provider is exempt from

2

taxation under section 501(c)(3) of the Internal Revenue Code of

3

1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

4

(c)  Provider application.--

5

(1)  An application submitted to the department by the

6

provider must describe the community-based services it

7

provides to individuals on a form provided by the department.

8

(2)  The department shall consult with the Department of

9

Public Welfare as necessary to determine that the provider

10

provides community-based services for individuals. The

11

department shall review and approve or disapprove the

12

application.

13

(d)  Notification.--The department shall notify the provider

14

that the provider meets the requirements under this article for

15

that fiscal year no later than 60 days after the provider has

16

submitted the application required under this section.

17

(e)  Publication.--The department shall annually publish a

18

list of each provider qualified under this section in the

19

Pennsylvania Bulletin. The list shall also be posted and updated

20

as necessary on the publicly accessible Internet website of the

21

department.

22

Section 1703.1-I.  Restriction on use of contributions.

23

The contributions received by a provider from a business firm

24

claiming a tax credit under this article must be used for direct

25

care or services relating to direct care of individuals.

26

Section 1704-I.  Availability of tax credits.

27

(a)  Application.--A business firm may apply to the

28

department for a tax credit under section 1705-I. A business

29

firm may receive a tax credit under this article if the provider

30

that receives the contribution from the business firm appears on

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1

the list under section 1703-I(e).

2

(b)  Availability of tax credits.--Tax credits under this

3

section shall be made available by the department on a first-

4

come-first-served basis within the limitation established under

5

section 1706-I(a).

6

(c)  Contributions.--A contribution by a business firm to a

7

provider shall be made no later than 60 days following the

8

approval of an application under subsection (a).

9

Section 1705-I.  Grant of tax credits.

10

(a)  General rule.--In accordance with section 1706-I(a), the

11

department shall grant a tax credit certificate. The certificate

12

may be used against a tax liability owed to the department by a

13

business firm that provides proof of a contribution to a

14

provider in the taxable year in which the contribution is made.

15

The business firm may apply the credit against any tax due under

16

Article III, IV, VI, VII, VIII, IX or XV, excluding any tax

17

withheld by an employer under Article III.

18

(b)  Limitation.--The tax credit shall not exceed 50% of the

19

total amount contributed by a business firm to a provider during

20

the taxable year of the business firm. The tax credit shall not

21

exceed $100,000 annually per business firm.

22

(c)  Additional amount.--

23

(1)  A business firm that contributes to a provider in

24

two or more consecutive years shall qualify for a 75% tax

25

credit for the contributions made in the second year and

26

every consecutive year of making a contribution to a

27

provider.

28

(2)  Nothing in this section shall be construed to

29

require a business firm to contribute to the same provider

30

every year in order for the business firm to qualify for a

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1

tax credit under this subsection.

2

Section 1706-I.  Amount of tax credits.

3

(a)  General rule.--The total aggregate amount of all tax

4

credits approved shall not exceed $3,000,000 in a fiscal year.

5

(b)  Activities.--No tax credit shall be approved for

6

activities that are part of a business firm's normal course of

7

business.

8

(c)  Tax liability.--A tax credit granted for any one taxable

9

year may not exceed the tax liability of a business firm.

10

(d)  Use.--A tax credit not used in the taxable year the

11

contribution was made may not be carried forward or carried back

12

and is not refundable or transferable.

13

Section 1707-I.  Guidelines.

14

The department, in conjunction with the Department of Revenue

15

and the Department of Public Welfare may establish guidelines as

16

necessary to implement this article.

17

Section 1708-I.  Limitation.

18

A business firm shall not be entitled to apply for a tax

19

credit after the seventh fiscal year following the effective

20

date of this article.

21

Section 19.1.  Section 1801-B of the act is amended by adding

22

definitions to read:

23

Section 1801-B.  Definitions.

24

The following words and phrases when used in this article

25

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

26

context clearly indicates otherwise:

27

* * *

28

"Small business."  A company that is engaged in a for-profit

29

enterprise and that employs 100 or fewer individuals.

30

* * *

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1

"Unemployed individual."  An individual who at the time of

2

hiring meets all of the following:

3

(1)  Is hired on or after July 1, 2012.

4

(2)  Certifies by signed affidavit, under penalty of

5

perjury, that the individual has not been employed during the

6

60-day period ending on the date the individual begins

7

employment.

8

(3)  Is not employed by the company to replace another

9

employee of the company unless the other employee separated

10

from employment voluntarily or for cause.

11

(4)  Will perform duties connected to the new job for at

12

least 52 consecutive weeks.

13

* * *

14

Section 19.2.  Sections 1803-B(b) and (c) and 1804-B(a), (d)

15

and (e) of the act, added June 22, 2001 (P.L.353, No.23), are

16

amended to read:

17

Section 1803-B.  Application process.

18

* * *

19

(b)  Creation of jobs.--[The] Except as provided under this

20

subsection, an applicant must agree to create at least 25 new

21

jobs or to increase the applicant's number of employees by at

22

least 20% within three years of the start date. A small business

23

applicant must agree to increase the applicant's number of

24

employees by at least 10% within three years after the start

25

date.

26

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

27

application, the department and the company shall execute a

28

commitment letter containing the following:

29

(1)  A description of the project.

30

(2)  The number of new jobs to be created.

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1

(3)  The amount of private capital investment in the

2

project.

3

(3.1)  A statement authorizing the per job credit as a

4

single year or multiple year credit.

5

(4)  The maximum job creation tax credit amount the

6

company may claim.

7

(5)  A signed statement that the company intends to

8

maintain its operation in this Commonwealth for five years

9

from the start date.

10

(6)  Such other information as the department deems

11

appropriate.

12

* * *

13

Section 1804-B.  Tax credits.

14

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

15

$1,000 per new job created, or $2,500 per each new job created

16

if the newly created job is filled by an unemployed individual, 

17

up to the maximum job creation tax credit amount specified in

18

the commitment letter.

19

* * *

20

(d)  Tax credit term.--A company may claim the job creation

21

tax credit for each new job created, as approved by the

22

department, for a [period determined by the department but not

23

to exceed] one-year, two-year or three-year period as authorized

24

by the department, except that no tax credit may be claimed for

25

more than five years from the date the company first submits a

26

job creation tax credit certificate.

27

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

28

[$22,500,000] $10,100,000 in tax credits shall be made available

29

to the department and may be awarded by the department in

30

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

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1

the department may reissue or assign prior fiscal year tax

2

credits which have been recaptured under section 1806-B(a) or

3

(b) and may award prior fiscal year credits not previously

4

issued. Prior fiscal year credits may be reissued, assigned or

5

awarded by the department without limitation by section 1805-

6

B(b).

7

Section 20.  The definition of "community services" in

8

section 1902-A of the act, amended May 7, 1997 (P.L.85, No.7),

9

is amended and the section is amended by adding a definition to

10

read:

11

Section 1902-A.  Definitions.--The following words, terms and

12

phrases, when used in this article, shall have the meanings

13

ascribed to them in this section, except where the context

14

clearly indicates a different meaning:

15

* * *

16

"Charitable food program."  An emergency food provider or a

17

regional food bank as defined in section 2 of the act of

18

December 11, 1992 (P.L.807, No.129), known as the "State Food

19

Purchase Program Act."

20

"Community services."  Any type of counseling and advice,

21

emergency assistance, food assistance or medical care furnished

22

to individuals or groups in an impoverished area.

23

* * *

24

Section 21.  Section 1904-A(b.1) of the act, amended July 25,

25

2007 (P.L.373, No.55), is amended and the section is amended by

26

adding a subsection to read:

27

Section 1904-A.  Tax Credit.--* * *

28

(b.1)  The secretary shall take into special consideration,

29

when approving applications for neighborhood assistance tax

30

credits, applications which involve:

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1

(1)  multiple projects in various markets throughout this

2

Commonwealth; and

3

(2)  charitable food programs.

4

(b.2)  The secretary, in cooperation with the Department of

5

Agriculture, shall promulgate guidelines for the approval or

6

disapproval of applications for tax credits by business firms

7

that contribute food or money to charitable food programs.

8

* * *

9

Section 21.1.  Section 2005 of the act, amended July 25, 2007

10

(P.L.373, No.55), is amended to read:

11

Section 2005.  Assessment by Department.--(a)  If any person

12

shall fail to pay any tax imposed by this article for which he

13

is liable, the department is hereby authorized and empowered to

14

make an assessment of additional tax due by such person, based

15

upon any information within its possession, or that shall come

16

into its possession.

17

(b)  Promptly after the date of such assessment, the

18

department shall send a copy of the assessment, including the

19

basis of the assessment, to the person against whom it was made.

20

Within ninety days after the date upon which the copy of any

21

such assessment was mailed, such person may file with the

22

department a petition for reassessment of such taxes. Every

23

petition for reassessment shall state specifically the reasons

24

which the petitioner believes entitle him to such reassessment,

25

and it shall be supported by affidavit that it is not made for

26

the purpose of delay, and that the facts set forth therein are

27

true. It shall be the duty of the department, within six months

28

after the date of any assessment, to dispose of any petition for

29

reassessment. Notice of the action taken upon any petition for

30

reassessment shall be given to the petitioner promptly after the

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1

date of reassessment by the department.

2

[(b.1)  The notice required by subsection (b) shall be sent

3

by certified mail if the assessment is for $300 or more.]

4

(c)  Within ninety days after the date of mailing of notice

5

by the department of the action taken on any petition for

6

reassessment filed with it, the person against whom such

7

assessment was made, may, by petition, request the Board of

8

Finance and Revenue to review such action. Every petition for

9

review filed hereunder shall state specifically the reason upon

10

which the petitioner relies, or shall incorporate by reference

11

the petition for reassessment in which such reasons shall have

12

been stated. The petition shall be supported by affidavit that

13

it is not made for the purpose of delay, and that the facts

14

therein set forth are true. If the petitioner be a corporation,

15

joint-stock association or limited partnership, the affidavit

16

must be made by one of the principal officers thereof. A

17

petition for review may be amended by the petitioner at any time

18

prior to the hearing, as hereinafter provided. The Board of

19

Finance and Revenue shall act finally in disposition of such

20

petitions filed with it within six months after they have been

21

received, and, in the event of the failure of said board to

22

dispose of any such petition within six months, the action taken

23

by the department upon the petition for reassessment shall be

24

deemed sustained. The Board of Finance and Revenue may sustain

25

the action taken on the petition for reassessment, or it may

26

reassess the tax due upon such basis as it shall deem according

27

to law and equity. Notice of the action of the Board of Finance

28

and Revenue shall be given by mail, or otherwise, to the

29

department and to the petitioner.

30

(d)  In all cases of petitions for reassessment, review or

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1

appeal, the burden of proof shall be upon the petitioner or

2

appellant, as the case may be.

3

(e)  Whenever any assessment of additional tax is not paid

4

within ninety days after the date of the assessment, if no

5

petition for reassessment has been filed, or within ninety days

6

from the date of reassessment, if no petition for review has

7

been filed, or within thirty days from the date of the decision

8

of the Board of Finance and Revenue upon a petition for review,

9

or the expiration of the board's time for acting upon such

10

petition, if no appeal has been made, and in all cases of

11

judicial sales, receiverships, assignments or bankruptcies, the

12

department may call upon the Office of Attorney General to

13

collect such assessment. In such event, in a proceeding for the

14

collection of such taxes, the person against whom they were

15

assessed shall not be permitted to set up any ground of defense

16

that might have been determined by the department, the Board of

17

Finance and Revenue or the courts. The department may also

18

certify to the Liquor Control Board, for such action as the

19

board may deem proper, the fact that any person has failed to

20

pay or duly appeal from such assessment of additional tax. The

21

department may also provide, adopt, promulgate and enforce such

22

rules and regulations, as may be appropriate, to prevent further

23

shipment or transportation of malt or brewed beverages into this

24

Commonwealth by any person against whom such unpaid assessment

25

shall have been made.

26

Section 22.  Section 2102 of the act is amended by adding

27

definitions to read:

28

Section 2102.  Definitions.--The following words, terms and

29

phrases, when used in this article, shall have the meanings

30

ascribed to them in this section, except where the context

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1

clearly indicates a different meaning:

2

* * *

3

"Business of agriculture."  The term shall include the

4

leasing to members of the same family or the leasing to a

5

corporation or association owned by members of the same family

6

of property which is directly and principally used for

7

agricultural purposes. The business of agriculture shall not be

8

deemed to include:

9

(1)  recreational activities such as, but not limited to,

10

hunting, fishing, camping, skiing, show competition or racing;

11

(2)  the raising, breeding or training of game animals or

12

game birds, fish, cats, dogs or pets or animals intended for use

13

in sporting or recreational activities;

14

(3)  fur farming;

15

(4)  stockyard and slaughterhouse operations; or

16

(5)  manufacturing or processing operations of any kind.

17

* * *

18

"Members of the same family."  Any individual, such

19

individual's brothers and sisters, the brothers and sisters of

20

such individual's parents and grandparents, the ancestors and

21

lineal descendents of any of the foregoing, a spouse of any of

22

the foregoing and the estate of any of the foregoing.

23

Individuals related by the half blood or legal adoption shall be

24

treated as if they were related by the whole blood.

25

* * *

26

Section 23.  Section 2111 of the act is amended by adding

27

subsections to read:

28

Section 2111.  Transfers Not Subject to Tax.--* * *

29

(s)  A transfer of real estate devoted to the business of

30

agriculture between members of the same family, provided that

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1

after the transfer the real estate continues to be devoted to

2

the business of agriculture for a period of seven years beyond

3

the transferor's date of death and the real estate derives a

4

yearly gross income of at least two thousand dollars ($2,000),

5

provided that:

6

(1)  Any tract of land under this article which is no longer

7

devoted to the business of agriculture within seven years beyond

8

the transferor's date of death shall be subject to inheritance

9

tax due the Commonwealth under section 2107, in the amount that

10

would have been paid or payable on the basis of valuation

11

authorized under section 2121 for nonexempt transfers of

12

property, plus interest thereon accruing as of the transferor's

13

date of death, at the rate established in section 2143.

14

(2)  Any tax imposed under section 2107 shall be a lien in

15

favor of the Commonwealth upon the property no longer being

16

devoted to agricultural use, collectible in the manner provided

17

for by law for the collection of delinquent real estate taxes,

18

as well as the personal obligation of the owner of the property

19

at the time of the change of use.

20

(3)  Every owner of real estate exempt under this subsection

21

shall certify to the department on an annual basis that the land

22

qualifies for this exemption and shall notify the department

23

within thirty days of any transaction or occurrence causing the

24

real estate to fail to qualify for the exemption. Each year the

25

department shall inform all owners of their obligation to

26

provide an annual certification under this subclause. This

27

certification and notification shall be completed in the form

28

and manner as provided by the department.

29

(s.1)  A transfer of an agricultural commodity, agricultural

30

conservation easement, agricultural reserve, agricultural use

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1

property or a forest reserve, as those terms are defined in

2

section 2122(a), to lineal descendants or siblings is exempt

3

from inheritance tax.

4

Section 24.  Sections 2702 and 2703 of the act, added October

5

18, 2006 (P.L.1149, No.119), are amended to read:

6

Section 2702.  Petition for reassessment.

7

(a)  General rule.--A taxpayer may file a petition for

8

reassessment with the department within 90 days after the

9

mailing date of the notice of assessment.

10

(a.1)  Petition for review of tax adjustment not resulting in

11

an increase in liability.--

12

(1)  A petition for reassessment under subsection (a) may

13

include a request for review of the department's adjustment

14

of a tax item if the adjustment did not result in a tax

15

increase in the year of adjustment but may increase the tax

16

due in a subsequent year. A request for review may include:

17

(i)  Recalculation of the taxpayer's corporate net

18

income tax net loss under Article IV as adjusted by the

19

department.

20

(ii)  Recalculation of the taxpayer's capital stock

21

franchise tax average net income under Article VI as

22

adjusted by the department.

23

(iii)  Recalculation of the personal income tax basis

24

of an asset under Article III as adjusted by the

25

department.

26

(2)  A taxpayer must file a petition for review under

27

this subsection within 90 days of the mailing date of the

28

department's notice of adjustment. A taxpayer's failure to

29

file a petition under this subsection shall not prejudice the

30

taxpayer's right to file a petition in a subsequent tax year.

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1

(b)  Special rule for shares taxes.--Notwithstanding any

2

provision of law to the contrary, section 1104.1 of the act of

3

April 9, 1929 (P.L.343, No.176), known as The Fiscal Code, shall

4

constitute the exclusive method by which an appeal from the

5

assessment of the tax imposed by Article VII or VIII may be

6

made.

7

(c)  Application to inheritance and estate taxes.--This

8

section shall not apply to the taxes imposed by Article XXI.

9

Part XI of Article XXI shall provide the exclusive procedure for

10

protesting the appraisement and assessment of taxes imposed by

11

Article XXI.

12

Section 2703.  Petition procedure.

13

(a)  Content of petition.--

14

(1)  A petition for reassessment shall state:

15

(i)  The tax type and tax periods included within the

16

petition.

17

(ii)  The amount of the tax that the taxpayer claims

18

to have been erroneously assessed.

19

(iii)  The basis upon which the taxpayer claims that

20

the assessment is erroneous.

21

(iv)  The basis upon which the taxpayer claims that

22

the adjustment of a tax item is erroneous.

23

(2)  A petition for refund shall state:

24

(i)  The tax type and tax periods included within the

25

petition.

26

(ii)  The amount of the tax that the taxpayer claims

27

to have been overpaid.

28

(iii)  The basis of the taxpayer's claim for refund.

29

(3)  The petition shall be supported by an affidavit by

30

the petitioner or the petitioner's authorized representative

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1

that the petition is not made for the purpose of delay and

2

that the facts set forth in the petition are true.

3

(b)  Request for hearing.--Upon written request of the

4

petitioner or when deemed necessary by the department, the

5

department shall schedule a hearing to review a petition. The

6

petitioner shall be notified by the department of the date, time

7

and place where the hearing will be held.

8

(c)  Decision and order.--The department shall issue a

9

decision and order disposing of a petition on such basis as it

10

deems to be in accordance with law. The department shall provide

11

a written explanation of the basis for any denial of relief.

12

(d)  Time limit for decision and order.--The department shall

13

issue a decision and order disposing of a petition within six

14

months after receipt of the petition. The petitioner and the

15

department may agree to extend the time period for the

16

department to dispose of the petition for one additional six-

17

month period. Notice of the department's decision and order

18

disposing of the petition shall be issued to the petitioner.

19

(e)  Exception to time limit for decision and order.--If at

20

the time of the filing of a petition proceedings are pending in

21

a court of competent jurisdiction wherein any claim made in the

22

petition may be established, the department, upon the written

23

request of the petitioner, may defer consideration of the

24

petition until the final judgment determining the question or

25

questions involved in the petition has been decided. If

26

consideration of the petition is deferred, the department shall

27

issue a decision and order disposing of the petition within six

28

months after the final judgment.

29

(f)  Failure of department to take action.--The failure of

30

the department to dispose of the petition within the time period

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1

provided for by subsection (d) or (e) shall act as a denial of

2

the petition. Notice of the department's failure to take action

3

and the denial of the petition shall be mailed to the

4

petitioner.

5

Section 25.  The act is amended by adding a section to read:

6

Section 2707.  Compromise by secretary.

7

(a)  General rule.--A taxpayer who has filed a petition for

8

relief under section 2703, or any other statutory provision

9

allowing for administrative tax appeal to the department, may

10

propose a compromise of the amount of liability for tax,

11

interest, penalty, additions or fees administered by the

12

department. The compromise offer must be submitted prior to a

13

final decision by the department on the petition. An informal

14

conference, in person or by telephone, may be conducted by the

15

department with representatives of the department and the

16

petitioner. If the compromise offer is accepted, the department

17

shall issue an order reflecting the compromise that shall not be

18

subject to further appeal.

19

(b)  Bases for compromise.--There shall be two bases for

20

compromise:

21

(1)  doubt as to liability; and

22

(2)  the promotion of effective tax administration.

23

(c)  Ineligible for compromise.--The following are not

24

eligible for compromise:

25

(1)  a petition of denial of property tax or rent rebate

26

claim;

27

(2)  a petition of denial of a charitable tax exemption;

28

(3)  a petition of the revocation of a sales tax license;

29

(4)  a petition of jeopardy assessments; or

30

(5)  a petition arising under 4 Pa.C.S. Pt. II (relating

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1

to gaming).

2

Section 26.  Section 3003.1 of the act, amended May 7, 1997

3

(P.L.85, No.7) and repealed in part June 29, 2002 (P.L.559,

4

No.89), is amended to read:

5

Section 3003.1.  Petitions for Refunds.--(a)  For a tax

6

collected by the Department of Revenue, a taxpayer who has

7

actually paid tax, interest or penalty to the Commonwealth or to

8

an agent or licensee of the Commonwealth authorized to collect

9

taxes may petition the Department of Revenue for refund or

10

credit of the tax, interest or penalty. Except as otherwise

11

provided by statute, a petition for refund must be made to the

12

department within three years of actual payment of the tax,

13

interest or penalty.

14

(b)  The department may grant a refund or credit to a

15

taxpayer for all tax periods covered by a departmental audit. If

16

a credit is not granted by the department in the audit report,

17

the taxpayer must file a petition for refund for taxes paid with

18

respect to the audit period within six months of the mailing

19

date of the notice of assessment, determination or settlement or

20

within three years of actual payment of the tax, whichever is

21

later.

22

(d)  In the case of amounts paid as a result of an

23

assessment, determination, settlement or appraisement, a

24

petition for refund must be filed with the department within six

25

months of the [mailing date of the notice of assessment,

26

determination, settlement or appraisement] actual payment of the

27

tax.