PRIOR PRINTER'S NOS. 784, 2590, 3345, 3559, 3883

PRINTER'S NO.  3894

  

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

  

  

AS RE-REPORTED FROM COMMITTEE ON RULES, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 30, 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

3

and enumerating certain subjects of taxation and imposing

4

taxes thereon; providing procedures for the payment,

5

collection, administration and enforcement thereof; providing

6

for tax credits in certain cases; conferring powers and

7

imposing duties upon the Department of Revenue, certain

8

employers, fiduciaries, individuals, persons, corporations

9

and other entities; prescribing crimes, offenses and

10

penalties," in sales and use tax, further providing for

11

definitions, for exclusions from tax, for time for filing

12

returns, for time of payment, for assessment and for

13

collection of tax; in personal income tax, further providing

14

for returns of married individuals, deceased or disabled

15

individuals and fiduciaries, for requirements concerning

16

returns, notices, records and statements, for assessment and

17

for additions, penalties and fees; in corporate net income

18

tax, further providing for definitions, for extension of time

19

to file reports, for changes made by Federal Government and

20

for assessments; in insurance premiums tax, further providing

21

for definitions and for imposition of tax; in realty transfer

22

tax, further providing for definitions, for excluded

23

transactions, for documents relating to associations or

24

corporations and members, partners, stockholders or

25

shareholders thereof, for acquired company and for assessment

26

and notice of tax and review; in cigarette tax, further

27

providing for definitions; in research and development tax

 


1

credit, further providing for limitation on credits and for

2

termination; in film production tax credit, further providing

3

for definitions, for credit for qualified film production

4

expenses, for carrying and assigning credits and for

5

limitations; repealing the educational improvement tax

<--

6

credit; in educational improvement tax credit, further

<--

7

providing for definitions, for qualification and application,

8

for tax credit and for limitations; providing for a resource

9

manufacturing tax credit, for an educational opportunity

<--

10

scholarship program, for a rehabilitation of historic

11

structures tax credit and a community-based services tax

12

credit; in tax credit for new jobs, further providing for

13

definitions, for application process and for tax credit; in

14

neighborhood assistance tax credit, further providing for

15

definitions and for tax credit; in malt beverage tax, further

16

providing for assessment by department; in inheritance tax,

17

further providing for definitions and for transfers not

18

subject to tax; in procedure and administration, further

19

providing for petition for reassessment and for petition

20

procedure and providing for compromise by secretary; in

21

general provisions, further providing for petitions for

22

refunds and providing for administrative bank attachment for

23

accounts of obligors to the Commonwealth; making related

24

repeals; abrogating a regulation; and providing for

25

applicability.

26

The General Assembly of the Commonwealth of Pennsylvania

27

hereby enacts as follows:

28

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

29

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

30

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

31

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

32

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

33

amended to read:

34

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

35

phrases when used in this Article II shall have the meaning

36

ascribed to them in this section, except where the context

37

clearly indicates a different meaning:

38

* * *

39

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

40

activities when engaged in as a business enterprise:

41

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

42

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

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1

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

2

such business packages such property in sealed containers for

3

wholesale distribution.

4

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

5

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

6

sterilize or purify and substantially extend the useful shelf

7

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

8

such activity packages such property in sealed containers for

9

wholesale distribution.

10

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

11

twisting or winding of natural or synthetic fibers, or the

12

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

13

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

14

ultimate consumer.

15

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

16

coloring, finishing, impregnating or heat treating of metals or

17

plastics for sale or in the process of manufacturing.

18

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

19

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

20

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

21

ferrous metals.

22

(5)  The fabrication for sale of ornamental or structural

23

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

24

railings (not including fabrication work done at the

25

construction site).

26

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

27

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

28

beverages for wholesale distribution.

29

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

30

production of lumber or lumber products for sale. The operation

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1

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

2

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

3

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

4

mill or planing mill.

5

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

6

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

7

blending of tobacco leaves for use as cigar filler or as

8

components of smokeless tobacco products for sale to

9

manufacturers of tobacco products.

10

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

11

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

12

preparation of meat products including lard, tallow, grease,

13

cooking and inedible oils for wholesale distribution.

14

(11)  The processing of used lubricating oils.

15

(12)  The broadcasting of radio and television programs of

16

licensed commercial or educational stations.

17

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

18

cookies, muffins and donuts when the person engaged in such

19

activity sells such items at retail at locations that do not

20

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

21

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

22

pastry shop and a donut shop shall not be considered an

23

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

24

sold.

25

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

26

packaging for sale of coffee from green coffee beans or the

27

production of coffee extract. 

28

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

29

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

30

wholesale distribution.

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1

(17)  The producing of mobile telecommunications services.

2

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

3

packaging of eggs.

4

* * *

5

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

6

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

7

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

8

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

9

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

10

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

11

* * *

12

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

13

organization, volunteer firemen's organization, volunteer

14

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

15

(relating to definitions) or nonprofit educational institution,

16

or (ii) a religious organization for religious purposes of

17

tangible personal property or services other than pursuant to a

18

construction contract: Provided, however, That the exclusion of

19

this clause shall not apply with respect to any tangible

20

personal property or services used in any unrelated trade or

21

business carried on by such organization or institution or with

22

respect to any materials, supplies and equipment used and

23

transferred to such organization or institution in the

24

construction, reconstruction, remodeling, renovation, repairs

25

and maintenance of any real estate structure, other than

26

building machinery and equipment, except materials and supplies

27

when purchased by such organizations or institutions for routine

28

maintenance and repairs. If the department has issued sales tax

29

exempt status to a volunteer firefighters' organization or a

30

volunteer firefighters' relief association, the sales tax exempt

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1

status may not expire unless the activities of the organization

2

or association change so that the organization or association

3

does not qualify as an institution of purely public charity in

4

which case the organization or association shall immediately

5

notify the department of the change. If the department

6

ascertains that an organization or association no longer

7

qualifies as an institution of purely public charity, the

8

department may revoke the sales tax exempt status of the

9

organization or association.

10

* * *

11

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

12

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

13

containers and all other wrapping supplies, when such use is

14

incidental to the delivery of any personal property, except that

15

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

16

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

17

packaged will be resold by the purchaser of the wrapping or

18

packaging service.

19

* * *

20

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

21

contractor of building machinery and equipment and services

22

thereto that are:

23

(i)  transferred pursuant to a construction contract for any

24

charitable organization, volunteer firemen's organization,

25

volunteer firefighters' relief association, nonprofit

26

educational institution or religious organization for religious

27

purposes, provided that the building machinery and equipment and

28

services thereto are not used in any unrelated trade or

29

business; or

30

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

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1

its instrumentalities or political subdivisions[; or].

2

* * *

3

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

4

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

5

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

6

Monthly [and Semi-monthly] Returns:

7

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

8

in each year thereafter a return shall be filed quarterly by

9

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

10

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

11

March, June, September and December.

12

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

13

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

14

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

15

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

16

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

17

third calendar quarter of the preceding year equals or exceeds

18

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

19

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

20

twentieth day of the next succeeding month with respect to which

21

the return is made. Any licensee required to file monthly

22

returns hereunder shall be relieved from filing quarterly

23

returns.

24

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

25

monthly with respect to each month by every licensee whose total

26

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

27

which should have been reported, for the third calendar quarter

28

of the preceding year equals or exceeds twenty-five thousand

29

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

30

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

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1

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

2

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

3

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

4

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

5

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

6

this section shall be relieved from filing monthly or quarterly

7

returns.] With respect to every licensee whose actual tax

8

liability for the third calendar quarter of the preceding year

9

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

10

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

11

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

12

single return consisting of all of the following:

13

(i)  Either of the following:

14

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

15

actual tax liability for the same month in the preceding

16

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

17

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

18

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

19

period in the preceding calendar year. The average actual tax

20

liability shall be the actual tax liability for the tax period

21

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

22

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

23

preceding calendar year or were in business for only a portion

24

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

25

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

26

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

27

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

28

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

29

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

30

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

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1

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

2

by subclause (i).

3

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

4

actual tax liability for the third calendar quarter of the

5

preceding year equals or exceeds one hundred thousand dollars

6

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

7

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

8

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

9

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

10

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

11

(6)  The department shall determine whether the amounts

12

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

13

combined payment or as two separate payments.

14

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

15

the payments for these types of filers by electronic means

16

approved by the department.

17

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

18

shall be relieved of filing quarterly returns.

19

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

20

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

21

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

22

addition to any applicable penalties, impose an additional

23

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

24

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

25

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

26

tax period.

27

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

28

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

29

be required by rules and regulations of the department

30

promulgated and published at least sixty days prior to the end

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1

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

2

such annual returns are required licensees shall not be required

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

waive the requirement for the filing of quarterly return in the

11

case of any licensee whose individual tax collections do not

12

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

13

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

14

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

15

and Quarterly Payments. The tax imposed by this article and

16

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

17

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

18

the provisions of section 217 and such payment must accompany

19

the return [for such preceding period].

20

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

21

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

22

greater than the amount already paid by him in connection with

23

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

24

with such annual return a remittance for the unpaid amount of

25

tax for the year.

26

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

27

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

28

time of filing the return required by this article.

29

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

30

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

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1

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

2

and required to make the inquiries, determinations and

3

assessments of the tax (including interest, additions and

4

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

5

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

6

shall set forth the basis of the assessment.

7

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

8

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

9

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

10

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

11

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

12

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

13

sale or lease of tangible personal property or services, the

14

purchaser or lessee shall furnish to the vendor a certificate

15

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

16

certificate shall be in substantially such form as the

17

department may, by regulation, prescribe. Where the tangible

18

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

19

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

20

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

21

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

22

furnish the vendor with a single exemption certificate in

23

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

24

department may, by regulation, prescribe. The department shall

25

provide all school districts and intermediate units with a

26

permanent tax exemption number. An exemption certificate, which

27

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

28

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

29

from the liability imposed by this section. An exemption

30

certificate accepted by a vendor from a natural person domiciled

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1

within this Commonwealth or any association, fiduciary,

2

partnership, corporation or other entity, either authorized to

3

do business within this Commonwealth or having an established

4

place of business within this Commonwealth, in the ordinary

5

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

6

valid basis of exemption consistent with the activity of the

7

purchaser and character of the property or service being

8

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

9

religious, educational, volunteer firefighters' relief

10

association or volunteer firemen's organization and contains the

11

organization's charitable exemption number and which, in the

12

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

13

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

14

by the department of an intended usage of the property or

15

service which would render it nontaxable, shall be presumed to

16

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

17

be on the Department of Revenue.

18

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

19

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

20

amended by adding subsections to read:

21

Section 331.  Returns of Married Individuals, Deceased or

22

Disabled Individuals and Fiduciaries.--* * *

23

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

24

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

25

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

26

[person] personal representative charged with his property.

27

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

28

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

29

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

30

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

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1

entire taxable year. If a personal representative, executor or

2

administrator or other fiduciary is appointed on behalf of the

3

deceased spouse before the deceased spouse's tax return is

4

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

5

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

6

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

7

spouse must sign the joint return.

8

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

9

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

10

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

11

personal representative, executor or administrator has not been

12

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

13

the surviving spouse properly files a final return for the

14

deceased spouse under this paragraph, a fiduciary who is later

15

appointed for the deceased spouse may supersede the final return

16

filed by the surviving spouse by filing a separate return for

17

the deceased spouse. Any joint return improperly filed by the

18

surviving spouse or superseded by the fiduciary shall be treated

19

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

20

jointly with the deceased spouse's return under this paragraph

21

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

22

deceased spouse's fiduciary, the surviving spouse shall be

23

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

24

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

25

shall be deemed to be filed:

26

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

27

within such time; or

28

(ii)  the date the department receives it.

29

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

30

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

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1

joint return could have been filed had both spouses lived for

2

the entire taxable year and with the consent of the personal

3

representatives, executors or administrators of both deceased

4

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

5

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

6

the joint return.

7

* * *

8

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

9

subsection to read:

10

Section 335.  Requirements Concerning Returns, Notices,

11

Records and Statements.--* * *

12

(f)  The following apply:

13

(1)  Any person who:

14

(i)  makes payments of income from sources within this

15

Commonwealth;

16

(ii)  makes payments of nonemploye compensation or payments

17

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

18

or nonresident individual, an entity treated as a partnership

19

for tax purposes or a single member limited liability company;

20

and

21

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

22

Secretary of the Treasury of the United States with respect to

23

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

24

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

25

Federal filing deadline each year.

26

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

27

for Pennsylvania employer withholding purposes, the form 1099-

28

MISC shall be filed electronically with the department.

29

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

30

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

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1

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

2

and required to make the inquiries, determinations and

3

assessments of all taxes imposed by this article.

4

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

5

otherwise provided for, the department may establish the same by

6

regulations.

7

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

8

required by this article, the department may make an estimated

9

assessment (based on information available) of the proper amount

10

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

11

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

12

paid within ninety days after a notice of such estimated

13

assessment has been mailed to the taxpayer, unless within such

14

period the taxpayer has filed a petition for reassessment in the

15

manner prescribed by Article XXVII.

16

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

17

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

18

shall set forth the basis of the assessment.

19

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

20

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

21

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

22

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

23

No.40), are amended to read:

24

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

25

(d)  * * *

26

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

27

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

28

prescribed for the payment of such installment equals or exceeds

29

the lesser of:

30

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

- 15 -

 


1

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

2

the tax computed after consideration of the special tax

3

provisions for poverty, at the rates applicable to the taxable

4

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

5

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

6

year; or

7

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

8

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

9

actual income for the months in the taxable year ending before

10

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

11

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

12

cent of the applicable percentage of the tax for the taxable

13

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

14

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

15

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

16

computed on an annualized basis in accordance with United States

17

Treasury regulations, based upon the actual income for the

18

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

19

second preceding month prior to the month in which the

20

installment is required to be paid.

21

* * *

22

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

23

317 to furnish a statement to an employe who wilfully furnishes

24

a false or fraudulent statement, or who wilfully fails to

25

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

26

information required under section 317 and the regulations

27

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

28

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

29

(2)  Any person required by regulation to furnish an

30

information return who furnishes a false or fraudulent return

- 16 -

 


1

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

2

fifty dollars ($250).

3

(3)  Every Pennsylvania S corporation required to file a

4

return with the department under the provisions of section 330.1

5

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

6

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

7

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

8

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

9

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

10

wilfully furnishes a false or fraudulent form or who wilfully

11

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

12

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

13

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

14

(5)  Any person required under the provisions of section

15

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

16

wilfully furnishes a false or fraudulent form or who wilfully

17

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

18

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

19

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

20

* * *

21

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

22

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

23

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

24

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

25

ascribed to them in this section, except where the context

26

clearly indicates a different meaning:

27

* * *

28

(3)  "Taxable income."  * * *

29

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

30

than a corporation engaged in doing business as a regulated

- 17 -

 


1

investment company as defined by the Internal Revenue Code of

2

1986, is not transacted within this Commonwealth, the tax

3

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

4

taxable income of such corporation for the fiscal or calendar

5

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

6

follows:

7

(a)  Division of Income.

8

* * *

9

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

10

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

11

business income shall be apportioned to this State by

12

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

13

the property factor plus the payroll factor plus three times the

14

sales factor and the denominator of which is five.

15

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

16

all business income shall be apportioned to this State by

17

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

18

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

19

payroll factor and seventy times the sales factor and the

20

denominator of which is one hundred.

21

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

22

all business income shall be apportioned to this State by

23

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

24

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

25

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

26

factor and the denominator of which is one hundred.

27

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

28

all business income shall be apportioned to this State by

29

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

30

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

- 18 -

 


1

payroll factor and ninety times the sales factor and the

2

denominator of which is one hundred.

3

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

4

business income shall be apportioned to this State by

5

multiplying the income by the sales factor.

6

* * *

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

longer extension of time for filing such reports with the

16

Federal Government, the department may grant an additional

17

extension of time for filing the annual report under this

18

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

19

grant an extension of time for filing the reports with the

20

Federal Government, the department shall automatically grant an

21

extension of time for filing the annual report under this

22

article of thirty days after the termination of the Federal

23

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

24

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

25

the rates fixed by this article.

26

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

27

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

28

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

29

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

30

to the Federal Government, is finally changed or corrected by

- 19 -

 


1

the Commission of Internal Revenue or by any other agency or

2

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

3

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

4

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

5

affirmation, to the department showing such finally changed or

6

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

7

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

8

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

9

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

10

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

11

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

12

penalty in whole or in part.

13

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

14

corporation should report any change in the amount of the

15

taxable income of any corporation upon which tax is imposed by

16

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

17

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

18

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

19

of any overpayment resulting from the adjustment. The department

20

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

21

and assess the taxpayer's unpaid and unreported liability for

22

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

23

taxpayer's account.

24

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

25

tax, has been filed after an administrative or judicial appeal

26

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

27

original annual report upon petition of the taxpayer at any

28

subsequent proceeding as though it had been filed with the

29

original report, and no separate appeal from an assessment

30

resulting from the report of change, correction, or

- 20 -

 


1

redetermination shall be necessary to the extent the identical

2

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

3

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

4

as to permit an assessment based upon the allowance of any

5

deduction on account of net operating losses, sustained in other

6

fiscal or calendar years, that are not allowed as deductions

7

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

8

article.

9

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

10

corporation which was doing business in Pennsylvania in the year

11

for which the Federal income has been changed, irrespective of

12

whether or not such corporation has thereafter merged,

13

consolidated, withdrawn or dissolved. Any clearance certificate

14

issued by the department shall be conditioned upon the

15

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

16

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

17

corporation or its successor or its officers or its directors

18

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

19

additional State tax resulting therefrom.

20

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

21

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

22

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

23

determines that unpaid or unreported tax is due the

24

Commonwealth, the department shall issue an assessment under

25

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

26

assessment is not subject to the settlement procedure in the act

27

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

28

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

29

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

30

the assessment. The assessment shall be paid to the department

- 21 -

 


1

upon receipt of the notice of assessment. Payment of the

2

assessment shall be without prejudice to the right of the

3

taxpayer to file a petition for reassessment in the manner

4

prescribed by Article XXVII.

5

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

6

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

7

estimated assessment based upon the records and information

8

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

9

prior to the filing of a report the department estimates that

10

additional unpaid or unreported tax is due the Commonwealth, the

11

department may issue additional estimated assessments.

12

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

13

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

14

the department upon receipt of the notice of assessment. Payment

15

of the estimated assessment does not eliminate the taxpayer's

16

obligation to file a report.

17

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

18

reassessment, petition for refund or otherwise appeal a notice

19

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

20

(f)  The department shall remove an estimated assessment

21

within ninety days of the filing of a report and other

22

information required to determine the tax due the Commonwealth,

23

whereupon the department may issue an assessment as provided in

24

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

25

an estimated assessment shall retain its lien priority as of the

26

date of the estimated assessment to the extent such amount is

27

included with an assessment issued upon the review of the filed

28

report.

29

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

30

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

- 22 -

 


1

Section 7.  Section 901 introductory paragraph of the act,

2

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

3

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

4

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

5

this section:

6

* * *

7

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

8

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

9

Section 902.  * * *

10

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

11

insurance companies under this [act] article shall continue to

12

be distributed and used for firemen's relief pension or

13

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

14

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

15

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

16

taxes paid by foreign casualty insurance companies under this

17

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

18

police pension, retirement or disability purposes as provided by

19

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

20

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

21

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

22

article shall be credited to the General Fund for general

23

revenue purposes.

24

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

25

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

26

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

27

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

28

adding a definition to read:

29

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

30

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

- 23 -

 


1

section:

2

"Association."  A general partnership, limited partnership,

3

limited liability partnership or any other form of

4

unincorporated enterprise, owned or conducted by two or more

5

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

6

* * *

7

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

8

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

9

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

10

of stock of the corporation is continuously owned by members of

11

the same family. The business of agriculture shall include the

12

leasing to members of the same family of property which is

13

directly and principally used for agricultural purposes. The

14

business of agriculture shall not be 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:

- 24 -

 


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

"Family farm business."  A corporation or association of

10

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

11

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

12

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

13

in the association is continuously owned by members of the same

14

family. The business of agriculture shall include the leasing to

15

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

16

association owned by members of the same family of property

17

which is directly and principally used for agricultural

18

purposes. The business of agriculture shall not be deemed to

19

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

* * *

29

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

30

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

- 25 -

 


1

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

2

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

3

section 1102-C shall not be imposed upon:

4

* * *

5

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

6

were previously husband and wife who have since been divorced,

7

provided the property or interest therein subject to such

8

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

9

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

10

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

11

stepparent and a stepchild or the spouse of the stepchild, 

12

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

13

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

14

between a grandparent and grandchild or the spouse of such

15

grandchild, except that a subsequent transfer by the grantee

16

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

17

making such transfer.

18

* * *

19

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

20

agriculture to a family farm [corporation] business by:

21

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

22

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

23

interests in that family farm business; or

24

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

25

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

26

the interests in that family farm business.

27

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

28

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

29

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

30

cent of the interests in the partnership.]

- 26 -

 


1

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

2

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

3

[corporation or family farm partnership which] business that 

4

owns real estate.

5

* * *

6

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

7

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

8

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

9

Corporations and Members, Partners, Stockholders or Shareholders

10

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

11

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

12

any transfer or devise of title to real estate between

13

associations or corporations and the members, partners,

14

shareholders or stockholders thereof are fully taxable. For the

15

purposes of this article, corporations and associations are

16

entities separate from their members, partners, stockholders or

17

shareholders.

18

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

19

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

20

No.48), is amended to read:

21

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

22

company is an acquired company upon a change in the ownership

23

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

24

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

25

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

26

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

27

of the total ownership interest in the company within a period

28

of three years.

29

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

30

within a period of three years of another transfer or transfers

- 27 -

 


1

if, during the period:

2

(i)  the transferring party provides a legally binding

3

commitment, enforceable at a future date, to execute the

4

transfer;

5

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

6

negotiation; and

7

(iii)  the transferring party receives full consideration, in

8

any form, in exchange for the transfer.

9

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

10

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

11

because of voluntary or involuntary dissolution, it ceases to be

12

a family farm corporation or when, because of issuance or

13

transfer of stock or because of acquisition or transfer of

14

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

15

to meet the minimum requirements of a family farm corporation

16

under this act.

17

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

18

because of voluntary or involuntary dissolution, it ceases to be

19

a family farm partnership or when, because of transfer of

20

partnership interests or because of acquisition or transfer of

21

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

22

to meet the minimum requirements of a family farm partnership 

23

under this act.]

24

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

25

because of voluntary or involuntary dissolution, it ceases to be

26

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

27

transfer of stock in the corporation or transfer of interests in

28

the association or because of acquisition or transfer of assets

29

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

30

meet the minimum requirements of a family farm business under

- 28 -

 


1

this article.

2

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

3

business to another family farm business shall not be considered

4

a transfer of assets under this article if the same individuals

5

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

6

family farm business.

7

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

8

the company shall present a declaration of acquisition with the

9

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

10

affixation of documentary stamps and recording. Such declaration

11

shall set forth the value of real estate holdings of the

12

acquired company in such county.

13

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

14

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

15

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

16

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

17

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

18

empowered to make an assessment of additional tax and interest

19

due by such person based upon any information within its

20

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

21

assessments shall be made within three years after the date of

22

the recording of the document, subject to the following:

23

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

24

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

25

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

26

document.

27

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

28

an undisclosed, intentional disregard of rules and regulations,

29

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

30

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

- 29 -

 


1

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

2

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

3

against whom an assessment is made may petition the department

4

for a reassessment pursuant to Article XXVII.

5

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

6

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

7

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

8

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

9

to read:

10

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

11

* * *

12

"Wholesaler."  Any of the following:

13

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

14

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

15

from a cigarette stamping agent or other wholesaler and

16

receives, stores, sells and distributes within this Commonwealth

17

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

18

him or her to retail dealers or wholesale dealers or any

19

combination who buys the cigarettes from him or her for the

20

purpose of resale to the ultimate consumer.

21

(ii)  Maintains an established place of business for the

22

receiving, storage and distribution of cigarettes.

23

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

24

(i)  Is engaged in the business of distributing cigarettes

25

through vending machines to the ultimate consumer by means of

26

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

27

in various outlets within this Commonwealth.

28

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

29

commission or rental for the use of the premises.

30

(iii)  Operates at least ten vending machines.

- 30 -

 


1

(iv)  Meets all the other requirements for licensing of

2

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

3

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

4

maintaining an established place of business for the receiving,

5

storage and distribution of cigarettes.

6

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

7

the following:

8

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

9

outlets in this Commonwealth, having one hundred per cent common

10

ownership.

11

(ii)  Purchases cigarettes from a cigarette stamping agency

12

or another wholesaler for resale to the ultimate consumer.

13

(iii)  Maintains complete and accurate records of all

14

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

15

retail outlet.

16

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

17

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

18

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

19

amount of credits approved by the department shall not exceed

20

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

21

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

22

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

23

be allocated exclusively for small businesses. However, if the

24

total amounts allocated to either the group of applicants

25

exclusive of small businesses or the group of small business

26

applicants is not approved in any fiscal year, the unused

27

portion will become available for use by the other group of

28

qualifying taxpayers.

29

* * *

30

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

- 31 -

 


1

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

2

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

3

approve a research and development tax credit under this article

4

for taxable years ending after December 31, 2015.]

5

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

6

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

7

is amended and the section is amended by adding definitions to

8

read:

9

Section 1702-D.  Definitions.

10

The following words and phrases when used in this article

11

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

12

context clearly indicates otherwise:

13

* * *

14

"Minimum stage filming requirements."  Include:

15

(1)  Taxpayers with a Pennsylvania production expense of

16

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

17

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

18

facility;

19

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

20

production facility; and

21

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

22

direct expenditures relating to the use or rental of

23

tangible property or for performance of services provided

24

by a qualified production facility.

25

(2)  Taxpayers with a Pennsylvania production expense of

26

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

27

(i)  build at least two sets at a qualified

28

production facility;

29

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

30

production facility; and

- 32 -

 


1

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

2

direct expenditures relating to the use or rental of

3

tangible property at or for performance of services

4

provided by a qualified production facility.

5

* * *

6

"Qualified production facility."  A film production facility

7

located within this Commonwealth that contains at least one

8

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

9

meets either of the following criteria:

10

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

11

film production facility in land or a structure purchased or

12

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

13

existing improvement.

14

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

15

(i)  A sound stage having an industry standard noise

16

criteria rating of 25 or better.

17

(ii)  A permanent grid with a minimum point load

18

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

19

points.

20

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

21

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

22

supplemental generators.

23

(iv)  A height from sound stage floor to permanent

24

grid of a minimum of 20 feet.

25

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

26

door with a minimum height of 14 feet.

27

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

28

a minimum of 50 tons of cooling capacity available per

29

sound stage.

30

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

- 33 -

 


1

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

2

control identification badges.

3

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

4

available inventory stored at the film production

5

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

6

(ix)  A sound stage with contiguous production

7

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

8

stage.

9

"Qualified tax liability."  The liability for taxes imposed

10

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

11

include any tax withheld by an employer from an employee under

12

Article III.

13

* * *

14

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

15

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

16

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

17

* * *

18

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

19

approve or disapprove the applications in the order in which

20

they are received.] The department shall establish application

21

periods not to exceed 90 days each. All applications received

22

during the application period shall be reviewed and evaluated by

23

the department based on the following criteria:

24

(1)  The anticipated number of production days in a

25

qualified production facility.

26

(2)  The anticipated number of Pennsylvania employees.

27

(3)  The number of preproduction days through

28

postproduction days in Pennsylvania.

29

(4)  The anticipated number of days spent in Pennsylvania

30

hotels.

- 34 -

 


1

(5)  The Pennsylvania production expenses in comparison

2

to the production budget.

3

(6)  The use of studio resources.

4

Upon determining the taxpayer has incurred or will incur

5

qualified film production expenses, the department may approve

6

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

7

reviewed and considered in subsequent application periods. The

8

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

9

evaluation of the criteria under this subsection.

10

* * *

11

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

12

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

13

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

14

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

15

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

16

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

17

succeeding taxable years and used as a credit against the

18

qualified tax liability of the taxpayer for those taxable years.

19

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

20

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

21

credit during the immediately preceding taxable year. The tax

22

credit provided by this article may be carried over and applied

23

to succeeding taxable years for no more than three taxable years

24

following the first taxable year for which the taxpayer was

25

entitled to claim the credit.

26

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

27

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

28

qualified tax liability for the current taxable year as of the

29

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

30

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

- 35 -

 


1

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

2

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

3

tax credit granted to the taxpayer under this article.

4

(d)  (Reserved).

5

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

6

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

7

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

8

credit granted to the taxpayer under this article.

9

(2)  The department and the Department of Revenue shall

10

jointly promulgate regulations for the approval of

11

applications under this subsection.

12

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

13

Revenue must make a finding that the applicant has filed all

14

required State tax reports and returns for all applicable

15

taxable years and paid any balance of State tax due as

16

determined at settlement, assessment or determination by the

17

Department of Revenue.

18

(4)  Notwithstanding any other provision of law, the

19

Department of Revenue shall settle, assess or determine the

20

tax of an applicant under this subsection within 90 days of

21

the filing of all required final returns or reports in

22

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

23

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

24

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

25

subsection (g), the following apply:

26

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

27

tax credit under subsection (e) shall immediately claim the

28

credit in the taxable year in which the purchase or

29

assignment is made.

30

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

- 36 -

 


1

assignee may use against any one qualified tax liability may

2

not exceed 50% of such qualified tax liability for the

3

taxable year.

4

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

5

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

6

credit.

7

(4)  The purchaser or assignee shall notify the

8

Department of Revenue of the seller or assignor of the tax

9

credit in compliance with procedures specified by the

10

Department of Revenue.

11

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

12

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

13

unused portion of a tax credit purchased or assigned in calendar

14

year 2010 against qualified tax liabilities incurred in taxable

15

years 2011 and 2012.

16

Section 1707-D.  Limitations.

17

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

18

credits awarded in any fiscal year under this article exceed

19

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

20

discretion, award in one fiscal year up to:

21

(1)  Thirty percent of the dollar amount of film

22

production tax credits available to be awarded in the next

23

succeeding fiscal year.

24

(2)  Twenty percent of the dollar amount of film

25

production tax credits available to be awarded in the second

26

successive fiscal year.

27

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

28

tax credits available to be awarded in the third successive

29

fiscal year.

30

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

- 37 -

 


1

tax credits under subsection (a) shall:

2

(1)  count against the total dollar amount of credits

3

that the department may award in that next succeeding fiscal

4

year; and

5

(2)  reduce the dollar amount of credits that the

6

department may award in that next succeeding fiscal year.

7

The individual limitations on the awarding of film production

8

tax credits apply to an advance award of film production tax

9

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

10

production tax credits awarded against the current fiscal year

11

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

12

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

13

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

14

aggregate amount of film production tax credits awarded by

15

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

16

film may not exceed 25% of the qualified film production

17

expenses to be incurred.

18

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

19

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

20

the qualified film production expenses incurred by the

21

taxpayer if the taxpayer:

22

(i)  films a feature film, television film or

23

television series, which is intended as programming for a

24

national audience; and

25

(ii)  films in a qualified production facility which

26

meets the minimum stage filming requirements.

27

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

28

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

29

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

30

film.

- 38 -

 


1

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

2

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

3

owner of a facility shall provide evidence to the department to

4

verify the development or facility specifications and capital

5

improvement costs incurred for the facility so that the

6

threshold amounts set in the definition of "qualified production

7

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

8

verification, the facility shall be registered by the department

9

officially as a qualified production facility.

10

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

11

the financial benefit to this Commonwealth resulting from the

12

direct investment in, or payments made to, Pennsylvania

13

facilities outweighs the benefit of maintaining the 60%

14

requirement contained in the definition of "qualified film

15

production expense." If such determination is made, the

16

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

17

production expenses be comprised of Pennsylvania production

18

expenses for a feature film, television film or television

19

series that is intended as programming for a national audience

20

and is filmed in a qualified production facility if the taxpayer

21

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

22

per production meets the minimum stage filming requirements.

23

Section 17.  (Reserved).

<--

24

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

25

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

26

[ARTICLE XVII-F

27

EDUCATIONAL IMPROVEMENT TAX CREDIT

28

Section 1701-F.  Scope of article.

29

This article establishes the educational improvement tax

30

credit.

- 39 -

 


1

Section 1702-F.  Definitions.

2

The following words and phrases when used in this article

3

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

4

context clearly indicates otherwise:

5

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

6

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

7

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

8

entity.

9

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

10

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

11

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

12

the individual performing the services.

13

"Department."  The Department of Community and Economic

14

Development of the Commonwealth.

15

"Educational improvement organization."  A nonprofit entity

16

which:

17

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

18

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

19

26 U.S.C. § 1 et seq.); and

20

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

21

grants to a public school for innovative educational

22

programs.

23

For purposes of this definition, a nonprofit entity

24

"contributes" its annual cash receipts when it expends or

25

otherwise irrevocably encumbers those funds for expenditure

26

during the then current fiscal year of the nonprofit entity or

27

during the next succeeding fiscal year of the nonprofit entity.

28

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

29

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

30

kindergarten program and is a member of a household with a

- 40 -

 


1

maximum annual household income as increased by the applicable

2

income allowance.

3

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

4

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

5

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

6

income as increased by the applicable income allowance.

7

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

8

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

9

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

10

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

11

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

12

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

13

(relating to child with a disability).

14

(2)  Needs special education and related services.

15

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

16

school.

17

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

18

of not more than the maximum annual household income.

19

"Household."  An individual living alone or with the

20

following: a spouse, parent and their unemancipated minor

21

children, other unemancipated minor children who are related by

22

blood or marriage or other adults or unemancipated minor

23

children living in the household who are dependent upon the

24

individual.

25

"Household income."  All moneys or property received of

26

whatever nature and from whatever source derived. The term does

27

not include the following:

28

(1)  Periodic payments for sickness and disability other

29

than regular wages received during a period of sickness or

30

disability.

- 41 -

 


1

(2)  Disability, retirement or other payments arising

2

under workers' compensation acts, occupational disease acts

3

and similar legislation by any government.

4

(3)  Payments commonly recognized as old-age or

5

retirement benefits paid to persons retired from service

6

after reaching a specific age or after a stated period of

7

employment.

8

(4)  Payments commonly known as public assistance or

9

unemployment compensation payments by a governmental agency.

10

(5)  Payments to reimburse actual expenses.

11

(6)  Payments made by employers or labor unions for

12

programs covering hospitalization, sickness, disability or

13

death, supplemental unemployment benefits, strike benefits,

14

Social Security and retirement.

15

(7)  Compensation received by United States servicemen

16

serving in a combat zone.

17

"Income allowance."

18

(1)  As follows:

19

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

20

student, eligible pre-kindergarten student and dependent

21

member of the household.

22

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

23

student, eligible pre-kindergarten student and dependent

24

member of the household.

25

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

26

and Economic Development shall annually adjust the income

27

allowance amounts under paragraph (1) to reflect any upward

28

changes in the Consumer Price Index for All Urban Consumers

29

for the Pennsylvania, New Jersey, Delaware and Maryland area

30

in the preceding 12 months and shall immediately submit the

- 42 -

 


1

adjusted amounts to the Legislative Reference Bureau for

2

publication as a notice in the Pennsylvania Bulletin.

3

"Innovative educational program."  An advanced academic or

4

similar program that is not part of the regular academic program

5

of a public school but that enhances the curriculum or academic

6

program of the public school or provides pre-kindergarten

7

programs to public school students.

8

"Maximum annual household income."

9

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

10

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

11

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

12

(2)  With respect to an eligible student with a

13

disability, as calculated by multiplying:

14

(i)  the sum of:

15

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

16

and

17

(B)  the applicable income allowance; by

18

(ii) the applicable support level factor according to

19

the following table:

20

Support Level

Support Level Factor

21

1

1.50

22

2

2.993

23

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

24

and Economic Development shall annually adjust the income

25

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

26

changes in the Consumer Price Index for All Urban Consumers

27

for the Pennsylvania, New Jersey, Delaware and Maryland area

28

in the preceding 12 months and shall immediately submit the

29

adjusted amounts to the Legislative Reference Bureau for

30

publication as a notice in the Pennsylvania Bulletin.

- 43 -

 


1

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

2

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

3

disregarded entity for Federal income tax purposes or a

4

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

5

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

6

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

7

curriculum aligned with the curriculum of the school with which

8

it is affiliated and which provides one of the following:

9

(1)  A minimum of two hours of instructional and

10

developmental activities per day at least 60 days per school

11

year.

12

(2)  A minimum of two hours of instructional and

13

developmental activities per day at least 20 days over the

14

summer recess.

15

"Pre-kindergarten scholarship organization."  A nonprofit

16

entity which:

17

(1)  either is exempt from Federal taxation under section

18

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

19

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

20

segregated fund by a scholarship organization that has been

21

qualified under section 1703-F; and

22

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

23

to a pre-kindergarten scholarship program by expending or

24

otherwise irrevocably encumbering those funds for

25

distribution during the then current fiscal year of the

26

organization or during the next succeeding fiscal year of the

27

organization.

28

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

29

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

30

kindergarten program operated by or in conjunction with a school

- 44 -

 


1

located in this Commonwealth and that includes an application

2

and review process for the purpose of making awards to eligible

3

pre-kindergarten students and awards scholarships to eligible

4

pre-kindergarten students without limiting availability to only

5

students of one school.

6

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

7

attendance requirements do not apply or a public kindergarten,

8

elementary school or secondary school at which the compulsory

9

attendance requirements of this Commonwealth may be met and

10

which meets the applicable requirements of Title VI of the Civil

11

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

12

"Scholarship organization."  A nonprofit entity which:

13

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

14

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

15

26 U.S.C. § 1 et seq.); and

16

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

17

to a scholarship program.

18

For purposes of this definition, a nonprofit entity

19

"contributes" its annual cash receipts to a scholarship program

20

when it expends or otherwise irrevocably encumbers those funds

21

for distribution during the then current fiscal year of the

22

nonprofit entity or during the next succeeding fiscal year of

23

the nonprofit entity.

24

"Scholarship program."  A program to provide tuition to

25

eligible students to attend a school located in this

26

Commonwealth. A scholarship program must include an application

27

and review process for the purpose of making awards to eligible

28

students. The award of scholarships to eligible students shall

29

be made without limiting availability to only students of one

30

school.

- 45 -

 


1

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

2

kindergarten, elementary school or secondary school at which the

3

compulsory attendance requirements of the Commonwealth may be

4

met and which meets the applicable requirements of Title VI of

5

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

6

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

7

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

8

pre-kindergarten or kindergarten program is provided, the

9

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

10

the school year the student attains 21 years of age or

11

graduation from high school, whichever occurs first.

12

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

13

school that is designated specifically and exclusively for

14

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

15

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

16

following:

17

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

18

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

19

(2)  Is accredited by an accrediting association approved

20

by the State Board of Education.

21

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

22

Commonwealth appropriations.

23

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

24

religious institution or by the Commonwealth or any political

25

subdivision thereof.

26

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

27

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

28

Support Level 1 - The student is not enrolled in a

29

special education school.

30

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

- 46 -

 


1

a special education school.

2

Section 1703-F.  Qualification and application.

3

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

4

III of the Constitution of Pennsylvania, an educational

5

improvement tax credit program is hereby established to enhance

6

the educational opportunities available to all students in this

7

Commonwealth.

8

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

9

scholarship organization, a pre-kindergarten scholarship

10

organization or an educational improvement organization must

11

submit information to the department that enables the department

12

to confirm that the organization is exempt from taxation under

13

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

14

Law 99-514, 26 U.S.C. § 1 et seq.).

15

(c)  Scholarship organizations and pre-kindergarten

16

scholarship organizations.--A scholarship organization or pre-

17

kindergarten scholarship organization must certify to the

18

department that the organization is eligible to participate in

19

the program established under this article and must agree to

20

annually report the following information to the department by

21

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

22

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

23

immediately preceding school year to eligible pre-

24

kindergarten students.

25

(ii)  The total and average amounts of the

26

scholarships awarded during the immediately preceding

27

school year to eligible pre-kindergarten students.

28

(iii)  The number of scholarships awarded during the

29

immediately preceding school year to eligible students in

30

grades kindergarten through eight.

- 47 -

 


1

(iv)  The total and average amounts of the

2

scholarships awarded during the immediately preceding

3

school year to eligible students in grades kindergarten

4

through eight.

5

(v)  The number of scholarships awarded during the

6

immediately preceding school year to eligible students in

7

grades nine through 12.

8

(vi)  The total and average amounts of the

9

scholarships awarded during the immediately preceding

10

school year to eligible students in grades nine through

11

12.

12

(vii)  Where the scholarship organization or pre-

13

kindergarten scholarship organization collects

14

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

15

and the total amount of scholarships awarded during the

16

immediately preceding school year to residents of each

17

county in which the scholarship organization or pre-

18

kindergarten scholarship organization awarded

19

scholarships.

20

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

21

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

22

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

23

the department shall annually distribute such sample forms,

24

together with the forms on which the reports are required to

25

be made, to each listed scholarship organization and pre-

26

kindergarten scholarship organization.

27

(3)  The department may not require any other information

28

to be provided by scholarship organizations or pre-

29

kindergarten scholarship organizations, except as expressly

30

authorized in this article.

- 48 -

 


1

(d)  Educational improvement organization.--

2

(1)  An application submitted by an educational

3

improvement organization must describe its proposed

4

innovative educational program or programs in a form

5

prescribed by the department. The department shall consult

6

with the Department of Education as necessary. The department

7

shall review and approve or disapprove the application. In

8

order to be eligible to participate in the program

9

established under this article, an educational improvement

10

organization must agree to annually report the following

11

information to the department by December 1, 2005, and

12

September 1 of each year thereafter:

13

(i)  The name of the innovative educational program

14

or programs and the total amount of the grant or grants

15

made to those programs during the immediately preceding

16

school year.

17

(ii)  A description of how each grant was utilized

18

during the immediately preceding school year and a

19

description of any demonstrated or expected innovative

20

educational improvements.

21

(iii)  The names of the public schools and school

22

districts where innovative educational programs that

23

received grants during the immediately preceding school

24

year were implemented.

25

(iv)  Where the educational improvement organization

26

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

27

total number and the total amount of grants made during

28

the immediately preceding school year for programs at

29

public schools in each county in which the educational

30

improvement organization made grants.

- 49 -

 


1

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

2

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

3

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

4

the department shall annually distribute such sample forms,

5

together with the forms on which the reports are required to

6

be made, to each listed educational improvement organization.

7

(3)  The department may not require any other information

8

to be provided by educational improvement organizations,

9

except as expressly authorized in this article.

10

(e)  Notification.--The department shall notify the

11

scholarship organization, pre-kindergarten scholarship

12

organization or educational improvement organization that the

13

organization meets the requirements of this article for that

14

fiscal year no later than 60 days after the organization has

15

submitted the information required under this section.

16

(f)  Publication.--The department shall annually publish a

17

list of each scholarship organization, pre-kindergarten

18

scholarship organization or educational improvement organization

19

qualified under this section in the Pennsylvania Bulletin. The

20

list shall also be posted and updated as necessary on the

21

publicly accessible Internet website of the department.

22

Section 1704-F.  Application.

23

(a)  Scholarship organization or pre-kindergarten scholarship

24

organization.--A business firm shall apply to the department for

25

a tax credit under section 1705-F. A business firm shall receive

26

a tax credit under this article if the scholarship organization

27

or pre-kindergarten scholarship organization that receives the

28

contribution appears on the list established under section 1703-

29

F(f).

30

(b)  Educational improvement organization.--A business firm

- 50 -

 


1

must apply to the department for a credit under section 1705-F.

2

A business firm shall receive a tax credit under this article if

3

the department has approved the program provided by the

4

educational improvement organization that receives the

5

contribution.

6

(c)  Availability of tax credits.--Tax credits under this

7

article shall be made available by the department on a first-

8

come, first-served basis within the limitation established under

9

section 1706-F(a).

10

(d)  Contributions.--A contribution by a business firm to a

11

scholarship organization, pre-kindergarten scholarship

12

organization or educational improvement organization shall be

13

made no later than 60 days following the approval of an

14

application under subsection (a) or (b).

15

Section 1705-F.  Tax credit.

16

(a)  Scholarship or educational improvement organizations.--

17

In accordance with section 1706-F(a), the Department of Revenue

18

shall grant a tax credit against any tax due under Article III,

19

IV, VI, VII, VIII, IX or XV to a business firm providing proof

20

of a contribution to a scholarship organization or educational

21

improvement organization in the taxable year in which the

22

contribution is made which shall not exceed 75% of the total

23

amount contributed during the taxable year by the business firm.

24

Such credit shall not exceed $300,000 annually per business firm

25

for contributions made to scholarship organizations or

26

educational improvement organizations.

27

(b)  Additional amount.--The Department of Revenue shall

28

grant a tax credit of up to 90% of the total amount contributed

29

during the taxable year if the business firm provides a written

30

commitment to provide the scholarship organization or

- 51 -

 


1

educational improvement organization with the same amount of

2

contribution for two consecutive tax years. The business firm

3

must provide the written commitment under this subsection to the

4

department at the time of application.

5

(c)  Pre-kindergarten scholarship organizations.--In

6

accordance with section 1706-F(a), the Department of Revenue

7

shall grant a tax credit against any tax due under Article III,

8

IV, VI, VII, VIII, IX or XV to a business firm providing proof

9

of a contribution to a pre-kindergarten scholarship organization

10

in the taxable year in which the contribution is made which

11

shall be equal to 100% of the first $10,000 contributed during

12

the taxable year by the business firm, and which shall not

13

exceed 90% of the remaining amount contributed during the

14

taxable year by the business firm. Such credit shall not exceed

15

$150,000 annually per business firm for contributions made to

16

pre-kindergarten scholarship organizations.

17

(d)  Combination of tax credits.--A business firm may receive

18

tax credits from the Department of Revenue in any tax year for

19

any combination of contributions under subsection (a) or (b) or

20

(c). In no case may a business firm receive tax credits in any

21

tax year in excess of $300,000 for contributions under

22

subsections (a) and (b). In no case shall a business firm

23

receive tax credits in any tax year in excess of $150,000 for

24

contributions under subsection (c).

25

(e)  Pass-through entity.--

26

(1)  If a pass-through entity does not intend to use all

27

approved tax credits under this section, it may elect in

28

writing to transfer all or a portion of the credit to

29

shareholders, members or partners in proportion to the share

30

of the entity's distributive income to which the shareholder,

- 52 -

 


1

member or partner is entitled for use in the taxable year in

2

which the contribution is made or in the taxable year

3

immediately following the year in which the contribution is

4

made. The election shall designate the year in which the

5

transferred credits are to be used and shall be made

6

according to procedures established by the Department of

7

Revenue.

8

(2)  A pass-through entity and a shareholder, member or

9

partner of a pass-through entity shall not claim the credit

10

under this section for the same contribution.

11

(3)  The shareholder, member or partner may not carry

12

forward, carry back, obtain a refund of or sell or assign the

13

credit.

14

(f)  Restriction on applicability of credits.--No credits

15

granted under this section shall be applied against any tax

16

withheld by an employer from an employee under Article III.

17

(g)  Time of application for credits.--

18

(1)  Except as provided in paragraphs (2) and (3), the

19

department may accept applications for tax credits available

20

during a fiscal year no earlier than July 1 of each fiscal

21

year.

22

(2)  The application of any business firm for tax credits

23

available during a fiscal year as part of the second year of

24

a two-year commitment may be accepted no earlier than May 15

25

preceding the fiscal year.

26

(3)  The application under subsection (a) of any pass-

27

through entity for approval of single-year tax credits

28

available during a fiscal year against the taxes imposed

29

under Article III or under subsection (b) for approval of

30

credits against such taxes for the first year of a two-year

- 53 -

 


1

commitment may be accepted by the department no earlier than

2

the first business day following July 7 of the fiscal year.

3

Section 1706-F.  Limitations.

4

(a)  Amount.--

5

(1)  The total aggregate amount of all tax credits

6

approved shall not exceed $67,000,000 in a fiscal year. No

7

less than $44,666,667 of the total aggregate amount shall be

8

used to provide tax credits for contributions from business

9

firms to scholarship organizations. No less than $22,333,333

10

of the total aggregate amount shall be used to provide tax

11

credits for contributions from business firms to educational

12

improvement organizations.

13

(2)  (i)  For the fiscal years 2004-2005, 2005-2006 and

14

2006-2007, the total aggregate amount of all tax credits

15

approved for contributions from business firms to pre-

16

kindergarten scholarship programs shall not exceed

17

$5,000,000 in a fiscal year.

18

(ii)  For the fiscal year 2007-2008 and each fiscal

19

year thereafter, the total aggregate amount of all tax

20

credits approved for contributions from business firms to

21

pre-kindergarten scholarship programs shall not exceed

22

$8,000,000 in a fiscal year.

23

(b)  Activities.--No tax credit shall be approved for

24

activities that are a part of a business firm's normal course of

25

business.

26

(c)  Tax liability.--

27

(1)  Except as provided in paragraph (2), a tax credit

28

granted for any one taxable year may not exceed the tax

29

liability of a business firm.

30

(2)  In the case of a credit granted to a pass-through

- 54 -

 


1

entity which elects to transfer the credit according to

2

section 1705-F(e), a tax credit granted for any one taxable

3

year and transferred to a shareholder, member or partner may

4

not exceed the tax liability of the shareholder, member or

5

partner.

6

(d)  Use.--A tax credit not used by the applicant in the

7

taxable year the contribution was made or in the year designated

8

by the shareholder, member or partner to whom the credit was

9

transferred under section 1705-F(e) may not be carried forward

10

or carried back and is not refundable or transferable.

11

(e)  Nontaxable income.--A scholarship received by an

12

eligible student or eligible pre-kindergarten student shall not

13

be considered to be taxable income for the purposes of Article

14

III.

15

Section 1707-F.  Lists.

16

The Department of Revenue shall provide a list of all

17

scholarship organizations, pre-kindergarten scholarship

18

organizations and educational improvement organizations

19

receiving contributions from business firms granted a tax credit

20

under this article to the General Assembly by June 30th of each

21

year.

22

Section 1708-F.  Guidelines.

23

The department in consultation with the Department of

24

Education shall develop guidelines to determine the eligibility

25

of an innovative educational program.]

26

Section 17.  The definitions of "business firm," "educational

<--

27

improvement organization," "eligible student with a disability,"

28

"income allowance," "innovative educational program," "maximum

29

annual household income," "pre-kindergarten scholarship

30

organization," "pre-kindergarten scholarship program" and

- 55 -

 


1

"scholarship program" in section 1702-F of the act, added

2

October 9, 2009 (P.L.451, No.48), are amended and the section is

3

amended by adding definitions to read:

4

Section 1702-F.  Definitions.

5

The following words and phrases when used in this article

6

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

7

context clearly indicates otherwise:

8

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

9

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

10

VI, VII, VIII, IX or XV or a tax under Article XVI of the act of

11

May 17, 1921 (P.L.682, No.284), known as The Insurance Company

12

Law of 1921. The term includes a pass-through entity.

13

* * *

14

"Educational improvement organization."  A nonprofit entity

15

which:

16

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

17

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

18

26 U.S.C. § 1 et seq.); and

19

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

20

grants to a public school, a chartered school as defined in

21

section 1376.1 of act of March 10, 1949 (P.L.30, No.14),

22

known as the Public School Code of 1949, or a private school

23

approved under section 1376 of the Public School Code of

24

1949, for innovative educational programs.

25

For purposes of this definition, a nonprofit entity

26

"contributes" its annual cash receipts when it expends or

27

otherwise irrevocably encumbers those funds for expenditure

28

during the then current fiscal year of the nonprofit entity or

29

during the next succeeding fiscal year of the nonprofit entity.

30

A nonprofit entity shall include a school district foundation,

- 56 -

 


1

public school foundation, charter school foundation or cyber

2

charter school foundation.

3

* * *

4

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

5

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

6

(1)  Is [either] enrolled in a special education school

7

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

8

Code Ch. 14 (relating to special education services and

9

programs), as a "child with a disability," as defined in 34

10

CFR § 300.8 (relating to child with a disability).

11

(2)  Needs special education and related services.

12

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

13

school.

14

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

15

of not more than the maximum annual household income.

16

* * *

17

"Income allowance."

18

(1)  As follows:

19

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

20

student, eligible pre-kindergarten student and dependent

21

member of the household.

22

(ii)  After June 30, 2011, and through June 30, 2013,

23

$12,000 for each eligible student, eligible pre-

24

kindergarten student and dependent member of the

25

household.

26

(iii)  After June 30, 2013, and through June 30,

27

2014, $15,000 for each eligible student, eligible pre-

28

kindergarten student and dependent member of the

29

household.

30

(2)  Beginning July 1, [2012] 2014, the Department of

- 57 -

 


1

Community and Economic Development shall annually adjust the

2

income allowance amounts under paragraph (1) to reflect any

3

upward changes in the Consumer Price Index for All Urban

4

Consumers for the Pennsylvania, New Jersey, Delaware and

5

Maryland area in the preceding 12 months and shall

6

immediately submit the adjusted amounts to the Legislative

7

Reference Bureau for publication as a notice in the

8

Pennsylvania Bulletin.

9

"Innovative educational program."  An advanced academic or

10

similar program that is not part of the regular academic program

11

of a public school but that enhances the curriculum or academic

12

program of the public school [or provides pre-kindergarten

13

programs to public school students.], chartered school or

14

private school, or provides pre-kindergarten programs to public

15

school students, students of a chartered school or students of a

16

private school. For the purposes of this definition, a chartered

17

school shall mean a chartered school as defined in section

18

1376.1 of the act of March 10, 1949 (P.L.30, No.14), known as

19

the Public School Code of 1949, and a private school shall mean

20

a private school approved under section 1376 of the Public

21

School Code of 1949.

22

"Maximum annual household income."

23

(1)  Except as set forth in paragraph (2) and subject to

24

paragraph (3), as follows:

25

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

26

(ii)  After June 30, 2011, and through June 30, 2013,

27

not more than $60,000.

28

(iii)  After June 30, 2013, not more than $75,000.

29

(2)  With respect to an eligible student with a

30

disability, as calculated by multiplying:

- 58 -

 


1

(i)  the sum of:

2

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

3

and

4

(B)  the applicable income allowance; by

5

(ii) the applicable support level factor according to

6

the following table:

7

Support Level

Support Level Factor

8

1

1.50

9

2

2.993

10

(3)  Beginning July 1, [2012] 2014, the Department of

11

Community and Economic Development shall annually adjust the

12

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

13

upward changes in the Consumer Price Index for All Urban

14

Consumers for the Pennsylvania, New Jersey, Delaware and

15

Maryland area in the preceding 12 months and shall

16

immediately submit the adjusted amounts to the Legislative

17

Reference Bureau for publication as a notice in the

18

Pennsylvania Bulletin.

19

* * *

20

"Pre-kindergarten scholarship organization."  A nonprofit

21

entity which:

22

(1)  [either] is exempt from Federal taxation under

23

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

24

(Public Law 99-514, 26 U.S.C. § 1 et seq.) or is operated as

25

a separate segregated fund by a scholarship organization that

26

has been 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

- 59 -

 


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 or one building within a school district

11

or nonpublic school entity.

12

* * *

13

"Scholarship."  An award under a scholarship program to pay

14

tuition and school-related fees to attend a school.

15

* * *

16

"Scholarship program."  A program to provide tuition and

17

school-related fees to eligible students to attend a school

18

located in this Commonwealth. A scholarship program must include

19

an application and review process for the purpose of making

20

awards to eligible students. The award of scholarships to

21

eligible students shall be made without limiting availability to

22

only students of one school or one building within a school

23

district or nonpublic school entity.

24

* * *

25

"School-related fees."  Fees charged by a school to all

26

students for books, instructional materials, technology

27

equipment and services, uniforms and activities.

28

* * *

29

Section 18.  Sections 1703-F(c) and (d), 1705-F and 1706-F of

30

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

- 60 -

 


1

read:

2

Section 1703-F.  Qualification and application.

3

* * *

4

(c)  Scholarship organizations and pre-kindergarten

5

scholarship organizations.--A scholarship organization or pre-

6

kindergarten scholarship organization must certify to the

7

department that the organization is eligible to participate in

8

the program established under this article and must agree to

9

annually report the following information to the department by

10

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

11

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

12

immediately preceding school year to eligible pre-

13

kindergarten students.

14

(ii)  The total and average amounts of the

15

scholarships awarded during the immediately preceding

16

school year to eligible pre-kindergarten students.

17

(iii)  The number of scholarships awarded during the

18

immediately preceding school year to eligible students in

19

grades kindergarten through eight.

20

(iv)  The total and average amounts of the

21

scholarships awarded during the immediately preceding

22

school year to eligible students in grades kindergarten

23

through eight.

24

(v)  The number of scholarships awarded during the

25

immediately preceding school year to eligible students in

26

grades nine through 12.

27

(vi)  The total and average amounts of the

28

scholarships awarded during the immediately preceding

29

school year to eligible students in grades nine through

30

12.

- 61 -

 


1

(vii)  Where the scholarship organization or pre-

2

kindergarten scholarship organization collects

3

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

4

and the total amount of scholarships awarded during the

5

immediately preceding school year to residents of each

6

county in which the scholarship organization or pre-

7

kindergarten scholarship organization awarded

8

scholarships.

9

(viii)  The total number of scholarship applications

10

processed, the amounts of any application fees charged,

11

either per scholarship application or in the aggregate

12

through a third-party processor.

13

(ix)  The organization's Federal Form 990 or other

14

Federal form indicating the tax status of the

15

organization for Federal tax purposes, if any, and a copy

16

of a compilation, review or audit of the organization's

17

financial statements conducted by a certified public

18

accounting firm.

19

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

20

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

21

than [September 1, 2005, and] May 1 of each year

22

[thereafter], the department shall annually distribute such

23

sample forms, together with the forms on which the reports

24

are required to be made, to each listed scholarship

25

organization and pre-kindergarten scholarship organization.

26

(3)  The department may not require any other information

27

to be provided by scholarship organizations or pre-

28

kindergarten scholarship organizations, except as expressly

29

authorized in this article.

30

(d)  Educational improvement organization.--

- 62 -

 


1

(1)  An application submitted by an educational

2

improvement organization must describe its proposed

3

innovative educational program or programs in a form

4

prescribed by the department. The department shall consult

5

with the Department of Education as necessary. The department

6

shall review and approve or disapprove the application. In

7

order to be eligible to participate in the program

8

established under this article, an educational improvement

9

organization must agree to annually report the following

10

information to the department by December 1, 2005, and

11

September 1 of each year thereafter:

12

(i)  The name of the innovative educational program

13

or programs and the total amount of the grant or grants

14

made to those programs during the immediately preceding

15

school year.

16

(ii)  A description of how each grant was utilized

17

during the immediately preceding school year and a

18

description of any demonstrated or expected innovative

19

educational improvements.

20

(iii)  The names of the public schools and school

21

districts where innovative educational programs that

22

received grants during the immediately preceding school

23

year were implemented.

24

(iv)  Where the educational improvement organization

25

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

26

total number and the total amount of grants made during

27

the immediately preceding school year for programs at

28

public schools in each county in which the educational

29

improvement organization made grants.

30

(v)  The organization's Federal Form 990 or other

- 63 -

 


1

Federal form indicating the tax status of the

2

organization for Federal tax purposes, if any, and a copy

3

of a compilation, review or audit of the organization's

4

financial statements conducted by a certified public

5

accounting firm.

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

* * *

16

Section 1705-F.  Tax credit.

17

(a)  Scholarship or educational improvement organizations.--

18

In accordance with section 1706-F(a), the Department of Revenue

19

shall grant a tax credit against any tax due under Article III,

20

IV, VI, VII, VIII, IX or XV or under Article XVI of the act of

21

May 17, 1921 (P.L.682, No.284), known as The Insurance Company

22

Law of 1921, to a business firm providing proof of a

23

contribution to a scholarship organization or educational

24

improvement organization in the taxable year in which the

25

contribution is made which shall not exceed 75% of the total

26

amount contributed during the taxable year by the business firm.

27

[Such] For fiscal year 2012-2013, the tax credit shall not

28

exceed [$300,000] $400,000 annually per business firm for

29

contributions made to scholarship organizations or educational

30

improvement organizations. For fiscal year 2013-2014, and each

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1

fiscal year thereafter, the tax credit shall not exceed $750,000

2

annually per business firm for contributions made to scholarship

3

organizations or educational improvement organizations.

4

(b)  Additional amount.--The Department of Revenue shall

5

grant a tax credit of up to 90% of the total amount contributed

6

during the taxable year if the business firm provides a written

7

commitment to provide the scholarship organization or

8

educational improvement organization with the same amount of

9

contribution for two consecutive tax years. The business firm

10

must provide the written commitment under this subsection to the

11

department at the time of application.

12

(c)  Pre-kindergarten scholarship organizations.--In

13

accordance with section 1706-F(a), the Department of Revenue

14

shall grant a tax credit against any tax due under Article III,

15

IV, VI, VII, VIII, IX or XV or under Article XVI of The

16

Insurance Company Law of 1921 to a business firm providing proof

17

of a contribution to a pre-kindergarten scholarship organization

18

in the taxable year in which the contribution is made which

19

shall be equal to 100% of the first $10,000 contributed during

20

the taxable year by the business firm, and which shall not

21

exceed 90% of the remaining amount contributed during the

22

taxable year by the business firm. Such credit shall not exceed

23

[$150,000] $200,000 annually per business firm for contributions

24

made to pre-kindergarten scholarship organizations.

25

(d)  Combination of tax credits.--A business firm may receive

26

tax credits from the Department of Revenue in any tax year for

27

any combination of contributions under subsection (a) or (b) or

28

(c). In no case may a business firm receive tax credits in any

29

tax year in excess of [$300,000] $400,000 for contributions

30

under subsections (a) and (b) made during fiscal year 2012-2013

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1

or in excess of $750,000 for contributions under subsections (a)

2

and (b) made after fiscal year 2012-2013. In no case shall a

3

business firm receive tax credits in any tax year in excess of

4

[$150,000] $200,000 for contributions under subsection (c).

5

(e)  Pass-through entity.--

6

(1)  If a pass-through entity does not intend to use all

7

approved tax credits under this section, it may elect in

8

writing to transfer all or a portion of the credit to

9

shareholders, members or partners in proportion to the share

10

of the entity's distributive income to which the shareholder,

11

member or partner is entitled for use in the taxable year in

12

which the contribution is made or in the taxable year

13

immediately following the year in which the contribution is

14

made. The election shall designate the year in which the

15

transferred credits are to be used and shall be made

16

according to procedures established by the Department of

17

Revenue.

18

(2)  A pass-through entity and a shareholder, member or

19

partner of a pass-through entity shall not claim the credit

20

under this section for the same contribution.

21

(3)  The shareholder, member or partner may not carry

22

forward, carry back, obtain a refund of or sell or assign the

23

credit.

24

(f)  Restriction on applicability of credits.--No credits

25

granted under this section shall be applied against any tax

26

withheld by an employer from an employee under Article III.

27

(g)  Time of application for credits.--

28

(1)  Except as provided in [paragraphs (2) and (3)]

29

paragraph (2), the department may accept applications for tax

30

credits available during a fiscal year no earlier than July 1

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1

of each fiscal year.

2

(2)  The application of any business firm for tax credits

3

available during a fiscal year as part of the second year of

4

a two-year commitment or as a renewal of a two-year

5

commitment which was fulfilled in the previous fiscal year 

6

may be accepted no earlier than May 15 preceding the fiscal

7

year.

8

[(3)  The application under subsection (a) of any pass-

9

through entity for approval of single-year tax credits

10

available during a fiscal year against the taxes imposed

11

under Article III or under subsection (b) for approval of

12

credits against such taxes for the first year of a two-year

13

commitment may be accepted by the department no earlier than

14

the first business day following July 7 of the fiscal year.]

15

Section 1706-F.  Limitations.

16

(a)  Amount.--

17

(1)  The total aggregate amount of all tax credits

18

approved shall not exceed [$67,000,000] $100,000,000 in a

19

fiscal year. No less than [$44,666,667] $60,000,000 of the

20

total aggregate amount shall be used to provide tax credits

21

for contributions from business firms to scholarship

22

organizations. No less than [$22,333,333] $30,000,000 of the

23

total aggregate amount shall be used to provide tax credits

24

for contributions from business firms to educational

25

improvement organizations.

26

(2)  The following apply to specific fiscal years:

27

(i)  For [the] fiscal years 2004-2005, 2005-2006 and

28

2006-2007, the total aggregate amount of all tax credits

29

approved for contributions from business firms to pre-

30

kindergarten scholarship programs shall not exceed

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1

$5,000,000 in a fiscal year.

2

(ii)  For [the] fiscal [year] years 2007-2008,

3

2008-2009, 2009-2010, 2010-2011 and [each fiscal year

4

thereafter] 2011-2012, the total aggregate amount of all

5

tax credits approved for contributions from business

6

firms to pre-kindergarten scholarship programs shall not

7

exceed $8,000,000 in a fiscal year.

8

(iii)  For fiscal year 2012-2013 and each fiscal year

9

thereafter, the total aggregate amount of all tax credits

10

approved for contributions from business firms to pre-

11

kindergarten scholarship programs shall not exceed

12

$10,000,000 in a fiscal year.

13

(b)  Activities.--No tax credit shall be approved for

14

activities that are a part of a business firm's normal course of

15

business.

16

(c)  Tax liability.--

17

(1)  Except as provided in paragraph (2), a tax credit

18

granted for any one taxable year may not exceed the tax

19

liability of a business firm.

20

(2)  In the case of a credit granted to a pass-through

21

entity which elects to transfer the credit according to

22

section 1705-F(e), a tax credit granted for any one taxable

23

year and transferred to a shareholder, member or partner may

24

not exceed the tax liability of the shareholder, member or

25

partner.

26

(d)  Use.--A tax credit not used by the applicant in the

27

taxable year the contribution was made or in the year designated

28

by the shareholder, member or partner to whom the credit was

29

transferred under section 1705-F(e) may not be carried forward

30

or carried back and is not refundable or transferable.

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1

(e)  Nontaxable income.--A scholarship received by an

2

eligible student or eligible pre-kindergarten student shall not

3

be considered to be taxable income for the purposes of Article

4

III.

5

Section 19.  The act is amended by adding articles to read:

6

ARTICLE XVII-G

7

RESOURCE MANUFACTURING TAX CREDIT

8

Section 1701-G.  Scope.

9

This article establishes a resource manufacturing tax credit.

10

Section 1702-G.  Definitions.

11

The following words and phrases when used in this article

12

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

13

context clearly indicates otherwise:

14

"Company."  Any corporation, partnership, limited liability

15

company, limited liability partnership, business trust,

16

affiliate, unincorporated joint venture or other business

17

entity, doing business within this Commonwealth.

18

"Department."  The Department of Revenue of the Commonwealth.

19

"Downstream company."  Includes a company that uses chemical

20

products or chemical compounds manufactured or processed by a

21

qualified taxpayer as a raw material in its production process

22

in this Commonwealth.

23

"Ethane."  A colorless, odorless gaseous alkane, C2H6, which

24

occurs as a constituent of natural gas and is used as the raw

25

material in the manufacturing of ethylene.

26

"Ethylene."  An organic hydrocarbon compound with the formula

27

C2H4 or H2C=CH2, that is derived from natural gas and petroleum.

28

"Gallon."  A United States liquid gallon equal to a volume of

29

231 cubic inches and equal to 3.785411784 liters or 0.13368

30

cubic feet, where volumetric measurements made at ambient

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1

flowing conditions are typically adjusted for composition and to

2

standard conditions using established industry standard

3

practices.

4

"Pass-through entity."  Any of the following:

5

(1)  A partnership as defined in section 301(n.0).

6

(2)  A Pennsylvania S corporation as defined in section

7

301(n.1).

8

(3)  An unincorporated entity subject to section 307.21.

9

"Qualified tax liability."  The liability for taxes imposed

10

under Articles III, IV, VI, VII, VIII, IX, XI and XV. The term

11

does not include tax withheld under section 316.

12

"Qualified taxpayer."  A company that satisfies all of the

13

following:

14

(1)  Purchases ethane for use in manufacturing ethylene

15

at a facility in this Commonwealth which has been placed in

16

service on or after the effective date of this article.

17

(2)  Has made a capital investment of at least

18

$1,000,000,000 in order to construct the facility and place

19

it into service in this Commonwealth.

20

(3)  Has created at least 2,500 full-time equivalent jobs

21

during the construction phase in order to construct the

22

facility and place it into service in this Commonwealth.

23

"Tax credit."  The resource manufacturing tax credit provided

24

under this article.

25

"Upstream company."  Includes a company that is engaged in

26

the exploration, development, production, processing, refining

27

or transportation of natural gas, natural gas liquids or

28

petroleum in this Commonwealth.

29

Section 1703-G.  Application and approval of tax credit.

30

(a)  Rate.--The tax credit shall be equal to $0.05 per gallon

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1

of ethane purchased and used in manufacturing ethylene in this

2

Commonwealth by a qualified taxpayer.

3

(b)  Application.--

4

(1)  A qualified taxpayer may apply to the department for

5

a tax credit under this section.

6

(2)  The application must be submitted to the department

7

by March 1 for the tax credit claimed for ethane purchased

8

and used by the qualified taxpayer during the prior calendar

9

year. The application must be on the form required by the

10

department.

11

(3)  The department may require information necessary to

12

document the amount of ethane purchased and used.

13

(c)  Review and approval.--

14

(1)  The department shall review and approve or

15

disapprove the applications by March 20.

16

(2)  Upon approval, the department shall issue a

17

certificate stating the amount of tax credit granted for

18

ethane purchased in the prior calendar year.

19

Section 1704-G.  Use of tax credits.

20

(a)  Initial use.--Prior to sale or assignment of a tax

21

credit under section 1706-G, a qualified taxpayer must first use

22

a tax credit against the qualified tax liability incurred in the

23

taxable year for which the tax credit was approved.

24

(b)  Eligibility.--The credit may be applied against up to

25

20% of the qualified taxpayer's qualified tax liabilities

26

incurred in the taxable year for which the credit was approved.

27

(c)  Application.--The tax credit shall be applied against

28

the qualified taxpayer's liability only after all other

29

statutory tax credits and deductions available to the qualified

30

taxpayer have been used.

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1

(d)  Limit.--A qualified taxpayer that has been granted a tax

2

credit under this article shall be ineligible for any other tax

3

credit provided under this act.

4

Section 1705-G.  Carryover, carryback and refund.

5

A tax credit cannot be carried back, carried forward or be

6

used to obtain a refund.

7

Section 1706-G.  Sale or assignment.

8

(a)  Authorization.--If a qualified taxpayer holds a tax

9

credit through the end of the calendar year in which the tax

10

credit was granted, the qualified taxpayer may sell or assign a

11

tax credit, in whole or in part.

12

(b)  Application.--

13

(1)  To sell or assign a tax credit, a qualified taxpayer

14

must file an application for the sale or assignment of the

15

tax credit with the Department of Community and Economic

16

Development. The application must be on a form required by

17

the Department of Community and Economic Development.

18

(2)  To approve an application, the Department of

19

Community and Economic Development must receive:

20

(i)  a finding from the department that the applicant

21

has:

22

(A)  filed all required State tax reports and

23

returns for all applicable taxable years; and

24

(B)  paid any balance of State tax due as

25

determined by assessment or determination by the

26

department and not under timely appeal; and

27

(ii)  in the case of a sale or assignment to a

28

company that is not an upstream company or downstream

29

company, a certification from the qualified taxpayer that

30

the qualified taxpayer had offered to sell or assign the

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1

tax credit:

2

(A)  exclusively to a downstream company for a

3

period of 30 days following approval of the tax

4

credit under section 1703-G(c); and

5

(B)  to an upstream company or downstream company

6

for a period of 30 days following expiration of the

7

period under clause (A).

8

(c)  Approval.--Upon approval by the Department of Community

9

and Economic Development, a qualified taxpayer may sell or

10

assign, in whole or in part, a tax credit.

11

Section 1707-G.  Purchasers and assignees.

12

(a)  Time.--The purchaser or assignee under section 1706-G

13

must claim the tax credit in the calendar year in which the

14

purchase or assignment is made.

15

(b)  Amount.--The amount of the tax credit that a purchaser

16

or assignee under section 1706-G may use against any one

17

qualified tax liability may not exceed 50% of any of the

18

qualified tax liabilities for the taxable year.

19

(c)  Resale and reassignment.--

20

(1)  A purchaser under section 1706-G may not sell or

21

assign the purchased tax credit.

22

(2)  An assignee under section 1706-G may not sell or

23

assign the assigned tax credit.

24

(d)  Notice.--The purchaser or assignee under section 1706-G

25

shall notify the department of the seller or assignor of the tax

26

credit in compliance with procedures specified by the

27

department.

28

Section 1708-G.  Pass-through entity.

29

(a)  Election.--If a pass-through entity has an unused tax

30

credit, it may elect in writing, according to procedures

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1

established by the department, to transfer all or a portion of

2

the credit to shareholders, members or partners in proportion to

3

the share of the entity's distributive income to which the

4

shareholders, members or partners are entitled.

5

(b)  Limitation.--The same unused tax credit under subsection

6

(a) may not be claimed by:

7

(1)  the pass-through entity; and

8

(2)  a shareholder, member or partner of the pass-through

9

entity.

10

(c)  Amount.--The amount of the tax credit that a transferee

11

under subsection (a) may use against any one qualified tax

12

liability may not exceed 20% of any qualified tax liabilities

13

for the taxable year.

14

(d)  Time.--A transferee under subsection (a) must claim the

15

tax credit in the calendar year in which the transfer is made.

16

(e)  Sale and assignment.--A transferee under subsection (a)

17

may not sell or assign the tax credit.

18

Section 1709-G.  Administration.

19

(a)  Audits and assessments.--The department has the

20

following powers:

21

(1)  To audit a qualified taxpayer claiming a tax credit

22

to ascertain the validity of the amount claimed.

23

(2)  To issue an assessment against a qualified taxpayer

24

for an improperly issued tax credit. The procedures,

25

collection, enforcement and appeals of any assessment made

26

under this section shall be governed by Article II.

27

(b)  Guidelines and regulations.--The department shall

28

develop written guidelines for the implementation of this

29

article. The guidelines shall be in effect until the department

30

promulgates regulations for the implementation of the provisions

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1

of this article.

2

Section 1710-G.  Reports to General Assembly.

3

(a)  Annual report.--By October 1, 2018, and October 1 of

4

each year thereafter, the department shall submit a report on

5

the tax credit provided by this article to the chairman and

6

minority chairman of the Appropriations Committee of the Senate,

7

the chairman and minority chairman of the Finance Committee of

8

the Senate, the chairman and minority chairman of the

9

Appropriations Committee of the House of Representatives and the

10

chairman and minority chairman of the Finance Committee of the

11

House of Representatives. The report must include the names of

12

the qualified taxpayers utilizing the tax credit as of the date

13

of the report and the amount of tax credits approved for,

14

utilized by or sold or assigned by a qualified taxpayer.

15

(b)  Reconciliation report.--On May 1, 2028, the Department

16

of Community and Economic Development shall submit to the

17

Secretary of the Senate and the Chief Clerk of the House of

18

Representatives a reconciliation report on the effectiveness of

19

this article. This report shall include, at a minimum, the

20

following information for the preceding ten years:

21

(1)  The name and business address of all qualified

22

taxpayers who have been granted tax credits under this

23

article.

24

(2)  The amount of tax credits granted to each qualified

25

taxpayer.

26

(3)  The total number of jobs created by the qualified

27

taxpayer, upstream company and downstream company and any

28

companies that provide goods, utilities or other services

29

that support the business operations of the qualified

30

taxpayer and upstream company and downstream company. This

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1

paragraph includes the average annual salary and hourly wage

2

information.

3

(4)  The amount of taxes paid under Article II by the

4

qualified taxpayer, upstream company and downstream company

5

and any companies that provide goods, utilities or other

6

services that support the business operations of the

7

qualified taxpayer and upstream company and downstream

8

company.

9

(5)  The amount of taxes withheld from employees or paid

10

by members, partners or shareholders of the pass-through

11

entities under Article III of the qualified taxpayer,

12

upstream company and downstream company, and any companies

13

that provide goods, utilities or other services that support

14

the business operations of the qualified taxpayer and

15

upstream company and downstream company.

16

(6)  The amount of taxes paid under Article IV by the

17

qualified taxpayer, upstream company and downstream company

18

and any companies that provide goods, utilities or other

19

services that support the business operations of the

20

qualified taxpayer and upstream company and downstream

21

company.

22

(7)  The amount of taxes paid under Article VI by the

23

qualified taxpayer, upstream company and downstream company

24

and any companies that provide goods, utilities or other

25

services that support the business operations of the

26

qualified taxpayer and upstream company and downstream

27

company.

28

(8)  The amount of taxes paid under Article XI by the

29

qualified taxpayer, upstream company and downstream company

30

and any companies that provide goods, utilities or other

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1

services that support the business operations of the

2

qualified taxpayer and upstream company and downstream

3

company.

4

(9)  The amount of any other State or local taxes paid by

5

the qualified taxpayer, upstream company and downstream

6

company and any companies that provide goods, utilities or

7

other services that support the business operations of the

8

qualified taxpayer and upstream company and downstream

9

company.

10

(10)  Any other information pertaining to the economic

11

impact of this article in this Commonwealth.

12

(c)  Reduction.--If the reconciliation report issued under

13

subsection (b) reveals that the total amount of the tax credits

14

granted under this article exceeds the total amount of tax

15

revenue reported under subsection (b)(4) through (9), the report

16

must include any recommendation for changes in the calculation

17

of the credit.

18

(d)  Publication.--The reports required by this section shall

19

be public records and shall be available electronically on the

20

Internet website of either the department or the Department of

21

Community and Economic Development. The reports required by this

22

section shall not contain "confidential proprietary information"

23

as defined in section 102 of the act of February 14, 2008

24

(P.L.6, No.3), known as the Right-to-Know Law.

25

Section 1711-G.  Expiration.

26

This article shall expire December 31, 2044.

27

ARTICLE XVII-G.1

<--

28

EDUCATIONAL OPPORTUNITY

29

SCHOLARSHIP TAX CREDIT

30

Section 1701-G.1.  Scope of article.

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1

This article establishes the educational opportunity

2

scholarship tax credit.

3

Section 1702-G.1.  Definitions.

4

The following words and phrases when used in this article

5

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

6

context clearly indicates otherwise:

7

"Applicant."  An eligible student who applies for a

8

scholarship.

9

"Assessment."  The Pennsylvania System of School Assessment

10

test, the Keystone Exam, an equivalent local assessment or

11

another test established by the State Board of Education to meet

12

the requirements of section 2603-B(d)(10)(i) of the Public

13

School Code of 1949 and required under the No Child Left Behind

14

Act of 2001 (Public Law 107-110, 115 Stat. 1425) or its

15

successor statute or any other test required to achieve other

16

standards established by the Department of Education for the

17

public school or school district under 22 Pa. Code § 403.3

18

(relating to single accountability system).

19

"Attendance boundary."  A geographic area of residence used

20

by a school district to assign a student to a public school.

21

"Average daily membership."  As defined in section 2501(3) of

22

the Public School Code of 1949.

23

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

24

Commonwealth and subject to a tax under Article XVI of the act

25

of May 17, 1921 (P.L.682, No.284), known as The Insurance

26

Company Law of 1921, or taxes imposed under Article III, IV, VI,

27

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

28

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

29

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

30

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

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1

the individual performing the services.

2

"Department."  The Department of Community and Economic

3

Development of the Commonwealth.

4

"Elementary school."  A school which is not a secondary

5

school.

6

"Eligible student."  A student or a student with a disability

7

who:

8

(1)  resides within the attendance boundary of a low-

9

achieving school as of the first day of classes of the school

10

year; and

11

(2)  is a member of a household which has a household

12

income no greater than the maximum annual household income

13

allowance.

14

"Household."  An individual who lives alone or with the

15

following: a spouse, parent and their unemancipated minor

16

children, other unemancipated minor children who are related by

17

blood or marriage or other adults or unemancipated minor

18

children living in the household who are dependent upon the

19

individual.

20

"Household income."  All moneys or property received by a

21

household of whatever nature and from whatever source derived.

22

The term does not include the following:

23

(1)  Periodic payments for sickness and disability other

24

than regular wages received during a period of sickness or

25

disability.

26

(2)  Disability, retirement or other payments arising

27

under workers' compensation acts, occupational disease acts

28

and similar legislation by any government.

29

(3)  Payments commonly recognized as old-age or

30

retirement benefits paid to persons retired from service

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1

after reaching a specific age or after a stated period of

2

employment.

3

(4)  Payments commonly known as public assistance or

4

unemployment compensation payments by a governmental agency.

5

(5)  Payments to reimburse actual expenses.

6

(6)  Payments made by employers or labor unions for

7

programs covering hospitalization, sickness, disability or

8

death, supplemental unemployment benefits, strike benefits,

9

Social Security and retirement.

10

(7)  Compensation received by United States servicemen

11

serving in a combat zone.

12

"Income allowance."

13

(1)  The following shall apply:

14

(i)  After June 30, 2012, and through June 30, 2013,

15

$12,000 for each dependent member of the household.

16

(ii)  After June 30, 2013, and through June 30, 2014,

17

$15,000 for each dependent member of the household.

18

(2)  Beginning July 1, 2014, the Department of Community

19

and Economic Development shall annually adjust the income

20

allowance amounts under paragraph (1) to reflect any upward

21

changes in the Consumer Price Index for All Urban Consumers

22

for the Pennsylvania, New Jersey, Delaware and Maryland area

23

in the preceding 12 months and shall immediately submit the

24

adjusted amounts to the Legislative Reference Bureau for

25

publication as a notice in the Pennsylvania Bulletin.

26

"Kindergarten."  A one-year formal educational program that

27

occurs during the school year immediately prior to first grade.

28

The term includes a part-time and a full-time program.

29

"Low-achieving school."  A public school that ranked in the

30

lowest 15% of its designation as an elementary school or a

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1

secondary school based on combined mathematics and reading

2

scores from the annual assessment administered in the previous

3

school year and for which the Department of Education has posted

4

results on its publicly accessible Internet website. The term

5

does not include a charter school, cyber charter school or area

6

vocational-technical school.

7

"Maximum annual household income allowance."

8

(1)  Except as stated in paragraph (2) and subject to

9

adjustment under paragraph (3), the sum of:

10

(i)  Either:

11

(A)  after June 30, 2012, and through June 30,

12

2013, not more than $60,000; or

13

(B)  after June 30, 2013, not more than $75,000.

14

(ii)  The applicable income allowance.

15

(2)  With respect to a student with a disability, as

16

calculated by multiplying:

17

(i)  the applicable amount under paragraph (1); by

18

(ii)  the applicable support level factor according

19

to the following table:

20

Support Level

Support Level Factor

21

1

1.50

22

2

2.993

23

(3)  Beginning July 1, 2014, the Department of Community

24

and Economic Development shall annually adjust the income

25

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

26

changes in the Consumer Price Index for All Urban Consumers

27

for the Pennsylvania, New Jersey, Delaware and Maryland area

28

in the preceding 12 months and shall immediately submit the

29

adjusted amounts to the Legislative Reference Bureau for

30

publication as a notice in the Pennsylvania Bulletin.

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1

"Nonpublic school."  A school which is a nonprofit

2

organization and which is located in the Commonwealth. The term

3

does not include a public school.

4

"Parent."  An individual who:

5

(1)  is a resident of the Commonwealth; and

6

(2)  either:

7

(i)  has legal custody or guardianship of a student;

8

or

9

(ii)  keeps in his home a student and supports the

10

student gratis as if the student were a lineal descendant

11

of the individual.

12

"Participating nonpublic school."  A nonpublic school which

13

notifies the Department of Education under section 1710-G.1 that

14

it wishes to participate in the program.

15

"Participating public school."  A public school in a school

16

district which notifies the Department of Education under

17

section 1710-G.1(b) that it wishes to participate in the

18

program. The term shall not include a low-achieving school.

19

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

20

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

21

disregarded entity for Federal income tax purposes or a

22

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

23

"Public School Code of 1949."  The act of March 10, 1949

24

(P.L.30, No.14), known as the Public School Code of 1949.

25

"Program."  The Educational Opportunity Scholarship Tax

26

Credit Program established under this article.

27

"Recipient."  An applicant who receives a scholarship.

28

"Scholarship."  An award given to an applicant for the

29

recipient to pay tuition and school-related fees necessary to

30

attend a participating nonpublic school or a participating

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1

public school located in a school district which is not the

2

recipient's school district of residence.

3

"Scholarship organization."  A nonprofit entity which:

4

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

5

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

6

26 U.S.C. § 1 et seq.); and

7

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

8

to a scholarship program.

9

For purposes of this definition, a nonprofit entity

10

"contributes" its annual cash receipts to a scholarship program

11

when it expends or otherwise irrevocably encumbers those funds

12

for distribution during the then current fiscal year of the

13

nonprofit entity or during the next succeeding fiscal year of

14

the nonprofit entity.

15

"School."  An elementary school or a secondary school at

16

which the compulsory attendance requirements of the Commonwealth

17

may be met and which meets the applicable requirements of Title

18

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

19

241).

20

"School age."  The age of an individual from the earliest

21

admission age to a school's kindergarten or, when no

22

kindergarten is provided, the school's earliest admission age

23

for beginners, until the end of the school year the individual

24

attains 21 years of age or graduation from high school,

25

whichever occurs first.

26

"School district of residence."  The school district in which

27

the student's primary domicile is located.

28

"School-related fees."  Fees charged by a school to all

29

students for books, instructional materials, technology

30

equipment and services, uniforms and activities.

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1

"Secondary school."  A school with an eleventh grade.

2

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

3

school that is designated specifically and exclusively for

4

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

5

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

6

following:

7

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

8

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

9

(2)  is accredited by an accrediting association approved

10

by the State Board of Education;

11

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

12

Commonwealth appropriations; or

13

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

14

religious institution or by the Commonwealth or any political

15

subdivision thereof.

16

"Student."  An individual who meets all of the following:

17

(1)  Is school age.

18

(2)  Is a resident of this Commonwealth.

19

(3)  Attends or is about to attend a school.

20

"Student with a disability."  A student who meets all of the

21

following:

22

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

23

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

24

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

25

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

26

(relating to child with a disability).

27

(2)  Needs special education and related services.

28

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

29

student with a disability, as provided in the following matrix:

30

Support Level 1 - The student is not enrolled in a

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1

special education school.

2

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

3

a special education school.

4

Section 1703-G.1.  Qualification and application.

5

(a)  Establishment.--The Educational Opportunity Scholarship

6

Tax Credit Program is established. The program shall provide tax

7

credits to entities that provide contributions to scholarship

8

organizations. The scholarship organizations must enhance the

9

educational opportunities available to students in this

10

Commonwealth by providing scholarships to eligible students who

11

reside within the attendance boundary of low-achieving schools

12

to attend schools which are not low-achieving schools and which

13

are not a public school within the school district of residence.

14

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

15

scholarship organization must submit information to the

16

department that enables the department to confirm that the

17

scholarship organization is exempt from taxation under section

18

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

19

99-514, 26 U.S.C. § 1 et seq.).

20

(c)  Annual certification of eligibility.--By August 15,

21

2012, and by February 15, 2013, and each February 15 thereafter,

22

a scholarship organization must certify to the department that

23

the organization is eligible to participate in the program.

24

(d)  Report.--

25

(1)  A scholarship organization must agree to report the

26

following information on a form provided by the department by

27

September 1, 2013, and each September 1 thereafter:

28

(i)  The total number of applications for

29

scholarships received during the immediately preceding

30

school year from eligible students in grades kindergarten

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1

through eight.

2

(ii)  The number of scholarships awarded during the

3

immediately preceding school year to eligible students in

4

grades kindergarten through eight.

5

(iii)  The total and average amounts of the

6

scholarships awarded during the immediately preceding

7

school year to eligible students in grades kindergarten

8

through eight.

9

(iv)  The total number of applications for

10

scholarships received during the immediately preceding

11

school year from eligible students in grades 9 through

12

12.

13

(v)  The number of scholarships awarded during the

14

immediately preceding school year to eligible students in

15

grades 9 through 12.

16

(vi)  The total and average amounts of the

17

scholarships awarded during the immediately preceding

18

school year to eligible students in grades 9 through 12.

19

(vii)  Where the scholarship organization collects

20

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

21

and the total amount of scholarships awarded during the

22

immediately preceding school year to residents of each

23

county in which the scholarship organization awarded

24

scholarships.

25

(viii)  The number of scholarships awarded during the

26

immediately preceding school year to applicants with a

27

household income that does not exceed 185% of the Federal

28

poverty level.

29

(ix)  The total and average amounts of the

30

scholarships awarded during the immediately preceding

- 86 -

 


1

school year to applicants with a household income that

2

does not exceed 185% of the Federal poverty level.

3

(x)  The number of scholarships awarded during the

4

immediately preceding school year to applicants with a

5

household income that does not exceed 185% of the Federal

6

poverty level and who reside within a first class school

7

district.

8

(xi)  The total and average amounts of the

9

scholarships awarded during the immediately preceding

10

school year to applicants with a household income that

11

does not exceed 185% of the Federal poverty level and who

12

reside within a first class school district.

13

(xii)  The number of scholarships awarded during the

14

immediately preceding school year to applicants with a

15

household income that does not exceed 185% of the Federal

16

poverty level and who reside within a school district

17

with an average daily membership greater than 7,500 and

18

that receives an advance of its basic education subsidy

19

at any time.

20

(xiii)  The total and average amounts of the

21

scholarships awarded during the immediately preceding

22

school year to applicants with a household income that

23

does not exceed 185% of the Federal poverty level and who

24

reside within a school district with an average daily

25

membership greater than 7,500 and that receives an

26

advance of its basic education subsidy at any time.

27

(xiv)  The number of scholarships awarded during the

28

immediately preceding school year to applicants with a

29

household income that does not exceed 185% of the Federal

30

poverty level and who reside within a school district

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1

that receives an advance of its basic education subsidy

2

at any time and is either subject to a declaration of

3

financial distress under section 691 of the Public School

4

Code of 1949 or engaged in litigation against the

5

Commonwealth in which the school district seeks financial

6

assistance from the Commonwealth to allow the school

7

district to continue to operate.

8

(xv)  The total and average amounts of the

9

scholarships awarded during the immediately preceding

10

school year to applicants with a household income that

11

does not exceed 185% of the Federal poverty level and who

12

reside within a school district that receives an advance

13

of its basic education subsidy at any time and is either

14

subject to a declaration of financial distress under

15

section 691 of the Public School Code of 1949 or is

16

engaged in litigation against the Commonwealth in which

17

the school district seeks financial assistance from the

18

Commonwealth to allow the school district to continue to

19

operate.

20

(xvi)  The total number of scholarship applications

21

processed and the amounts of any application fees charged

22

either per scholarship application or in the aggregate

23

through a third-party processor.

24

(xvii)  The scholarship organization's Federal Form

25

990 or other Federal form indicating the tax status of

26

the scholarship organization for Federal tax purposes, if

27

any, and a copy of a compilation, review or audit of the

28

scholarship organization's financial statements conducted

29

by a certified public accounting firm.

30

(2)  No later than May 1, 2013, and each May 1

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1

thereafter, the department shall annually distribute such

2

sample forms, together with the forms on which the reports

3

are required to be made, to each listed scholarship

4

organization.

5

(3)  The department may not require any other information

6

to be provided by scholarship organizations, except as

7

expressly authorized in this article.

8

(e)  Notification.--The department shall notify a scholarship

9

organization that it meets the requirements of this article for

10

that fiscal year no later than 60 days after the scholarship

11

organization submits the information required under this

12

section.

13

(f)  Publication.--The department shall annually publish a

14

list of each scholarship organization qualified under this

15

section in the Pennsylvania Bulletin and shall post and update

16

the list as necessary on the publicly accessible Internet

17

website of the department.

18

Section 1704-G.1.  Tax credit application.

19

(a)  Scholarship organization.--A business firm shall apply

20

to the department for a tax credit under section 1705-G.1. A

21

business firm shall receive a tax credit under this article if

22

the scholarship organization that receives the contribution

23

appears on the list published under section 1703-G.1(f).

24

(b)  Availability of tax credits.--Tax credits under this

25

article shall be made available by the department on a first-

26

come-first-served basis within the limitation established under

27

section 1706-G.1(a).

28

(c)  Contributions.--A contribution by a business firm to a

29

scholarship organization shall be made no later than 60 days

30

following the approval of an application under subsection (a).

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1

Section 1705-G.1.  Tax credit.

2

(a)  Scholarship organizations.--

3

(1)  In accordance with section 1706-G.1(a), the

4

Department of Revenue shall grant a tax credit against any

5

tax due under Article XVI of the act of May 17, 1921

6

(P.L.682, No.284), known as The Insurance Company Law of

7

1921, or under Article III, IV, VI, VII, VIII, IX or XV to a

8

business firm providing proof of a contribution to a

9

scholarship organization in the taxable year in which the

10

contribution is made which shall not exceed 75% of the total

11

amount contributed during the taxable year by the business

12

firm.

13

(2)  For the fiscal year 2012-2013, the tax credit shall

14

not exceed $400,000 annually per business firm for

15

contributions made to scholarship organizations.

16

(3)  For the fiscal years 2013-2014 and each fiscal year

17

thereafter, the tax credit shall not exceed $750,000 annually

18

per business firm for contributions made to scholarship

19

organizations.

20

(b)  Additional amount.--

21

(1)  The Department of Revenue shall grant a tax credit

22

of up to 90% of the total amount contributed during the

23

taxable year if the business firm provides a written

24

commitment to provide the scholarship organization with the

25

same amount of contribution for two consecutive tax years.

26

(2)  The business firm must provide the written

27

commitment under this subsection to the department at the

28

time of application.

29

(c)  Combination of tax credits.--

30

(1)  A business firm may receive tax credits from the

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1

Department of Revenue in any tax year for any combination of

2

contributions under subsection (a) or (b).

3

(2)  In no case may a business firm receive tax credits

4

in any tax year:

5

(i)  in excess of $400,000 for contributions under

6

subsections (a) and (b) made during fiscal year

7

2012-2013; or

8

(ii)  in excess of $750,000 for contributions under

9

subsections (a) and (b) made during fiscal year 2013-2014

10

or any fiscal year thereafter.

11

(d)  Pass-through entity.--

12

(1)  If a pass-through entity does not intend to use all

13

approved tax credits under this section, it may elect in

14

writing to transfer all or a portion of the credit to

15

shareholders, members or partners in proportion to the share

16

of the entity's distributive income to which the shareholder,

17

member or partner is entitled for use in the taxable year in

18

which the contribution is made or in the taxable year

19

immediately following the year in which the contribution is

20

made. The election shall designate the year in which the

21

transferred credits are to be used and shall be made

22

according to procedures established by the Department of

23

Revenue.

24

(2)  A pass-through entity and a shareholder, member or

25

partner of a pass-through entity shall not claim the credit

26

under this section for the same contribution.

27

(3)  The shareholder, member or partner may not carry

28

forward, carry back, obtain a refund of or sell or assign the

29

credit.

30

(e)  Restriction on applicability of credits.--No credits

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1

granted under this section shall be applied against any tax

2

withheld by an employer from an employee under Article III.

3

(f)  Time of application for credits.--

4

(1)  Except as provided in paragraph (2), the department

5

may accept applications for tax credits available during a

6

fiscal year no earlier than July 1 of each fiscal year.

7

(2)  The application of any business firm for tax credits

8

available during a fiscal year as part of the second year of

9

a two-year commitment or as a renewal of a two-year

10

commitment that was fulfilled in the previous fiscal year may

11

be accepted no earlier than May 15 preceding the fiscal year.

12

Section 1706-G.1.  Tax credit limitations.

13

(a)  Amount.--The total aggregate amount of all tax credits

14

approved shall not exceed $50,000,000 in a fiscal year.

15

(b)  Activities.--No tax credit shall be approved for

16

activities that are a part of a business firm's normal course of

17

business.

18

(c)  Tax liability.--

19

(1)  Except as provided in paragraph (2), a tax credit

20

granted for any one taxable year may not exceed the tax

21

liability of a business firm.

22

(2)  In the case of a credit granted to a pass-through

23

entity which elects to transfer the credit according to

24

section 1705-G.1(d), a tax credit granted for any one taxable

25

year and transferred to a shareholder, member or partner may

26

not exceed the tax liability of the shareholder, member or

27

partner.

28

(d)  Use.--A tax credit not used by the applicant in the

29

taxable year the contribution was made or in the year designated

30

by the shareholder, member or partner to whom the credit was

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1

transferred under section 1705-G.1(d) may not be carried forward

2

or carried back and is not refundable or transferable.

3

(e)  Nontaxable income.--A scholarship received by an

4

eligible student shall not be considered to be taxable income

5

for the purposes of Article III.

6

Section 1707-G.1.  Tax credit lists.

7

The Department of Revenue shall provide a list of all

8

scholarship organizations receiving contributions from business

9

firms granted a tax credit under this article to the General

10

Assembly by June 30 of each year.

11

Section 1708-G.1.  Scholarships.

12

(a)  Notice.--By August 15, 2012, and by February 1 of each

13

year thereafter, the department shall provide all scholarship

14

organizations with a list of the low-achieving schools located

15

within each school district.

16

(b)  Award.--A scholarship organization may award a

17

scholarship to an applicant who resides within the attendance

18

boundary of a low-achieving school to attend a participating

19

public school or a participating nonpublic school selected by

20

the parent of the applicant. In awarding scholarships, a

21

scholarship organization shall give preference to any of the

22

following:

23

(1)  An applicant who received a scholarship for the

24

prior school year.

25

(2)  An applicant of a household with a household income

26

that does not exceed 185% of the Federal poverty level for

27

the school year preceding the school year for which the

28

application is being made.

29

(3)  An applicant of a household with a household income

30

that does not exceed 185% of the Federal poverty level for

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1

the school year preceding the school year for which the

2

application is being made and who resides within any of the

3

following:

4

(i)  a first class school district;

5

(ii)  a school district with an average daily

6

membership greater than 7,500 and that receives an

7

advance of its basic education subsidy at any time; or

8

(iii)  a school district that receives an advance of

9

its basic education subsidy at any time and is either

10

subject to a declaration of financial distress under

11

section 691 of the Public School Code of 1949 or engaged

12

in litigation against the Commonwealth in which the

13

school district seeks financial assistance from the

14

Commonwealth to allow the school district to continue to

15

operate.

16

(c)  Home schooling.--A scholarship organization shall not

17

award a scholarship to an applicant for enrollment in a home

18

education program under section 1327.1 of the Public School Code

19

of 1949.

20

(d)  Funding.--The aggregate amount of scholarships shall not

21

exceed the aggregate amount of contributions made by business

22

firms to the scholarship organization.

23

(e)  Amount.--

24

(1)  The maximum amount of a scholarship awarded to

25

an applicant without a disability shall be $8,500.

26

(2)  The maximum amount of a scholarship awarded to

27

an applicant with a disability shall be $15,000.

28

(3)  In no case shall the combined amount of the

29

scholarship awarded to a recipient and any additional

30

financial assistance provided to the recipient exceed the

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1

tuition rate and school-related fees for the

2

participating public school or participating nonpublic

3

school that the recipient will attend.

4

(f)  Taxation.--A scholarship shall not be considered taxable

5

income for purposes of Article III, or a local taxing ordinance.

6

(g)  Financial assistance.--A scholarship shall not

7

constitute financial assistance or an appropriation to the

8

participating public school or the participating nonpublic

9

school attended by a recipient.

10

Section 1709-G.1.  Low-achieving schools.

11

(a)  List of low-achieving schools.--By September 1, 2012,

12

and by February 1 of each year thereafter, the Department of

13

Education shall publish on its publicly accessible Internet

14

website and in the Pennsylvania Bulletin a list of the low-

15

achieving schools for the following school year.

16

(b)  Notice.--By August 1, 2012, and by February 1 of each

17

year thereafter, the Department of Education shall notify every

18

school district identified as having at least one low-achieving

19

school of its designation and shall furnish the school district

20

with a list of the low-achieving schools located within the

21

school district.

22

(c)  Publication.--Within 15 days of receipt of a

23

notification under subsection (b), a school district shall post

24

on its publicly accessible Internet website notice of all of the

25

following:

26

(1)  A description of the program.

27

(2)  Instructions for applying for a scholarship.

28

(3)  A list of schools in the school district that have

29

been designated by the Department of Education as low-

30

achieving schools.

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1

(4)  Notice that a parent must contact directly a school

2

district of a participating public school or a participating

3

nonpublic school if the parent seeks to enroll the student in

4

the program.

5

(d)  Notification to parents.--

6

(1)  Within 15 days of receipt of a notification under

7

subsection (b), a school district shall notify the parents of

8

each student who is currently attending or residing within

9

the attendance boundary of a low-achieving school during the

10

school year of the school's designation.

11

(2)  Upon registration of a kindergarten student, a

12

school district shall notify the parents of the kindergarten

13

student that the student will be assigned to a low-achieving

14

school during the school year of the school's designation.

15

(3)  The notice shall be in a form provided by the

16

Department of Education and shall provide the following

17

information regarding the program:

18

(i)  A description of the program.

19

(ii)  Instructions for obtaining information about

20

applying for a scholarship under the program.

21

(iii)  Notice of the parent's responsibilities with

22

regard to applying to a school district of a

23

participating public school or a participating nonpublic

24

school if the parent seeks to enroll the student in the

25

program.

26

(e)  Average daily membership.--

27

(1)  Notwithstanding any other provision of law to the

28

contrary, a recipient who was enrolled in the recipient's

29

resident school district or in a charter school, regional

30

charter school or cyber charter school when the recipient

- 96 -

 


1

first received a scholarship shall continue to be counted in

2

the average daily membership of the school district for a

3

period of one year after enrolling in a participating public

4

school or a participating nonpublic school.

5

(2)  During the year referenced in paragraph (1) and each

6

school year thereafter, a school district of a participating

7

public school in which the recipient is enrolled shall not

8

include the recipient in the school district's average daily

9

membership.

10

Section 1710-G.1.  School participation in program.

11

(a)  Election.--

12

(1)  By August 15, 2012, and by February 15 of each year

13

thereafter, a nonpublic school may elect to participate in

14

the program for the following school year.

15

(2)  By August 15, 2012, and by February 15 of each year

16

thereafter, a school district may elect to participate in the

17

program for the following school year.

18

(b)  Notice.--

19

(1)  A school district or nonpublic school that elects to

20

participate under subsection (a) must notify the Department

21

of Education of its intent to participate.

22

(2)  For a school district, the notice under paragraph

23

(1) must be submitted on a form developed by the Department

24

of Education and shall specify all of the following:

25

(i)  Each school within the school district which the

26

school district intends to make a participating public

27

school.

28

(ii)  The amount of tuition and school-related fees

29

attributable to each available seat. The amount under

30

this subparagraph shall not exceed the amount calculated

- 97 -

 


1

under section 2561 of the Public School Code of 1949.

2

(3)  For a nonpublic school, the notice under paragraph

3

(1) must be submitted on a form developed by the Department

4

of Education and shall specify the amount of tuition and

5

school-related fees attributable to an available seat.

6

(c)  Tuition rates.--

7

(1)  No school district of a participating public school

8

or participating nonpublic school may charge a recipient a

9

higher tuition rate or school-related fee than the

10

participating public school or participating nonpublic school

11

would have charged to a similarly situated student who is not

12

receiving a scholarship.

13

(2)  Notwithstanding the provisions of section 2561 of

14

the Public School Code of 1949, a school district of a

15

participating public school may charge a recipient a tuition

16

rate that is lower than that charged to students who are not

17

recipients of scholarships.

18

(d)  Participating public school criteria.--The following

19

criteria apply to a participating public school:

20

(1)  Except as otherwise provided in this article, a

21

school district shall enroll students in a participating

22

public school on a lottery basis from a pool of recipients

23

who meet the application deadline set by the Department of

24

Education until the participating public school fills its

25

available seats. The pool may not include a recipient who:

26

(i)  has been expelled or is in the process of being

27

expelled under section 1317.2 or 1318 of the Public

28

School Code of 1949 and applicable regulations of the

29

State Board of Education; or

30

(ii)  has been recruited by the school district or

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1

its representatives for athletic purposes.

2

(2)  The enrollment of recipients may not place the

3

school district in violation of a valid and binding

4

desegregation order.

5

(3)  Priority shall be given to:

6

(i)  An existing recipient.

7

(ii)  A recipient who is a sibling of a student

8

currently enrolled in the school district.

9

(e)  Participating nonpublic school criteria.--The following

10

criteria apply to a participating nonpublic school:

11

(1)  The participating nonpublic school may not

12

discriminate on a basis which is illegal under Federal or

13

State laws applicable to nonpublic schools.

14

(2)  The participating nonpublic school shall comply with

15

section 1521 of the Public School Code of 1949.

16

(3)  The participating nonpublic school or its

17

representatives may not recruit a student for athletic

18

purposes.

19

(f)  Student rules, policies and procedures.--

20

(1)  Prior to enrollment of a recipient, a school

21

district of a participating public school or a participating

22

nonpublic school shall inform the parent of a recipient of

23

any and all rules, policies and procedures of the

24

participating public school or participating nonpublic

25

school, including any academic policies, disciplinary rules

26

and administrative procedures of the participating public

27

school or participating nonpublic school.

28

(2)  Enrollment of a recipient in a participating public

29

school or participating nonpublic school shall constitute

30

acceptance of any rules, policies and procedures of the

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1

participating public school or participating nonpublic

2

school.

3

(g)  Transportation.--

4

(1)  Transportation of recipients shall be provided under

5

section 1361 of the Public School Code of 1949.

6

(2)  Reimbursement shall be as follows:

7

(i)  Transportation of a recipient attending a

8

participating public school shall be subject to

9

reimbursement under section 2541 of the Public School

10

Code of 1949.

11