THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY D. EVANS, TAYLOR, BRENNAN, BROWNLEE, COHEN, DALEY, DAVIS, FRANKEL, HARKINS, JOSEPHS, LONGIETTI, MAHONEY, MATZIE, MIRABITO, MURPHY, MYERS, M. O'BRIEN, PRESTON, READSHAW, SABATINA, SANTARSIERO, SANTONI, STABACK, WATERS, WHEATLEY, YOUNGBLOOD AND GOODMAN, FEBRUARY 22, 2012

REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 22, 2012  

AN ACT

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

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," providing for a manufacturing jobs tax credit.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

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

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

read:

ARTICLE XVIII-E

MANUFACTURING JOBS TAX CREDIT

Section 1801-E.  Definitions.

The following words and phrases when used in this article

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

context clearly indicates otherwise:

"Approval."  A document submitted by the Department of

Community and Economic Development to the qualified

manufacturing facility or qualified supplier that states the

benefits that may be provided under this article.

"Department."  The Department of Community and Economic

Development of the Commonwealth.

"Employee."  A person employed by a qualified manufacturing

facility or qualified supplier.

"NAICS."  The 1997 edition of the North American Industry

Classification System as prepared by the Executive Office of the

President, Office of Management and Budget.

"New job."  The number of full-time employees located at the

project facility that exceeds the project facility base

employment, less any decrease in the number of full-time

employees at related facilities below the related facility base

employment. The term does not include a job that was created

prior to the date of the notice of intent. An employee that

spends less than 50% of the employee's work time at the facility

is deemed to be located at a facility if:

(1)  the employee receives direction and control from

that facility;

(2)  is on the facility's payroll;

(3)  one hundred percent of the employee's income from

such employment is Pennsylvania income; and

(4)  the employee is paid at or above the industry

average wage for Pennsylvania, as determined by the

Department of Community and Economic Development using NAICS

industry classifications.

"Notice of intent."  A form developed by the Department of

Community and Economic Development, completed by the qualified

manufacturing facility or qualified supplier and submitted to

the department, which states the qualified manufacturing

facility's or qualified supplier's intent to hire individuals

for new jobs or retain current jobs and request benefits under

this article.

"Qualified manufacturing facility."  A taxpayer that meets

all of the following:

(1)  Manufactures goods in this Commonwealth.

(2)  Derives more than 10% of total sales revenues of the

facility from goods produced at the facility, which are

exported outside the United States or sold to the Federal

Government for export outside the United States or that

derives more than 20% of all total sales revenues of the

facility from goods produced at the facility which are

exported outside this Commonwealth.

(3)  Makes an additional capital investment of at least

$50,000 per full-time employee equivalent retained at the

facility.

(4)  Manufactures a new product that has not been

manufactured in this Commonwealth by the company that owns

the facility at any time prior to the date of the notice of

intent.

(5)  Continues to manufacture goods under paragraphs (1),

(2), (3) and (4) for a period of at least five years from the

date of the notice of intent.

"Qualified supplier."  A taxpayer that meets all of the

following:

(1)  Derives more than 10% of the total annual revenues

of the company from sales to a qualified manufacturing

facility.

(2)  Adds five or more new jobs.

(3)  Pays wages for the new jobs that are equal to or

exceed the industry average wage for Pennsylvania as

determined by the Department of Community and Economic

Development using NAICS industry classifications.

(4)  Provides health insurance to employees and pays at

least 50% of the premiums of the insurance.

"Retained job."  The number of full-time employees located at

the project facility that existed in the taxable year

immediately preceding the year in which application for the

program is made.

"Taxpayer."  Any individual or entity subject to the tax

imposed under Article III, IV or VI.

Section 1802-E.  Notice of intent.

(a)  Department response.--The department shall respond

within 30 days to a qualified manufacturing facility or a

qualified supplier that provides a notice of intent to receive

benefits under this article with either an approval or a

rejection of the notice of intent.

(b)  Deemed approval.--Failure to respond on behalf of the

department shall result in the notice of intent being deemed an

approval for the purposes of this article.

(c)  Effect of approval.--A qualified manufacturing facility

or qualified supplier that is provided an approval shall be

allowed a benefit as provided in this article.

Section 1803-E.  Benefit for qualified manufacturing facility.

(a)  General rule.--A qualified manufacturing facility may

retain, upon approval of a notice of intent by the department,

50% of the amount of tax required to be withheld under section

316 from retained jobs for a period of ten years.

(b)  Department of Revenue regulation.--The method of

determining the amount to be withheld shall be prescribed by

regulation of the Department of Revenue.

Section 1804-E.  Benefit for qualified supplier.

A qualified supplier may retain, upon approval of a notice of

intent by the department, the total amount of tax required to be

withheld under section 316 from new jobs for a period of:

(1)  three years from the date of approval of the notice

of intent; or

(2)  five years if the supplier pays wages for the new

jobs equal to or greater than 120% of the industry average

wage for Pennsylvania as determined by the department using

NAICS industry classifications.

Section 1805-E.  Limitation.

The total aggregate amount of retained withholding tax

authorized under this article shall not exceed $35,000,000 per

year.

Section 1806-E.  Other tax credits and hiring.

(a)  Ineligibility to receive other tax credit.--

Notwithstanding any provision of law to the contrary, any

qualified manufacturing facility that is awarded benefits under

this article shall not simultaneously receive tax credits

otherwise under this act or any other law of this Commonwealth.

(b)  Certain hiring prohibited.--Any taxpayer who is awarded

benefits under this article who knowingly hires individuals who

are not allowed to work legally in the United States shall

immediately forfeit the benefits and shall repay the

Commonwealth an amount equal to any withholding taxes already

retained.

Section 1807-E.  Regulations.

The department may promulgate regulations to implement the

provisions of this article.

Section 1808-E.  Report.

Prior to March 1 each year, the department shall provide a

report to the General Assembly. The report shall include:

(1)  The names of participating qualified manufacturing

facilities or qualified suppliers.

(2)  The location of participating qualified

manufacturing facilities or qualified suppliers.

(3)  The annual amount of benefits provided.

(4)  The estimated net State fiscal impact.

(5)  The number of new jobs created or jobs retained.

Section 2.  The addition of Article XVIII-E of the act shall

apply to taxable years beginning after December 31, 2012.

Section 3.  This act shall take effect immediately.