THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY SMUCKER, ERICKSON, ARGALL, RAFFERTY, COSTA, ALLOWAY, FONTANA, WASHINGTON, BOSCOLA, YUDICHAK, WAUGH, YAW, SCHWANK, FERLO, PICCOLA, BROWNE AND BLAKE, JUNE 26, 2011

SENATOR CORMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, MARCH 26, 2012   

AN ACT

Providing tax credits for the rehabilitation of historic

structures.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the Historic

Preservation Incentive Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Commission."  The Pennsylvania Historical and Museum

Commission.

"Completed project."  The completion of the restoration of a

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qualified historic structure in accordance with a qualified

rehabilitation plan and the receipt of an occupancy certificate

for the structure.

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

"Internal Revenue Code."  The Internal Revenue Code of 1986

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

"Qualified expenditures."  The costs and expenses incurred by

a qualified taxpayer in the restoration of a qualified historic

structure pursuant to a qualified rehabilitation plan and which

are defined as qualified rehabilitation expenditures under

section 47(c)(2) of the Internal Revenue Code of 1986 (Public

Law 99-514, 26 U.S.C. § 47(c)(2)).

"Qualified historic structure."  A commercial building

located in this Commonwealth that qualifies as a certified

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historic structure under section 47(c)(3) of the Internal

Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 47(c)(3)).

"Qualified rehabilitation plan."  A project plan to

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rehabilitate a qualified historic structure that is approved by

the Pennsylvania Historical and Museum Commission as being

consistent with the standards for rehabilitation and guidelines

for rehabilitation of historic buildings as adopted by the

United States Secretary of the Interior.

"Qualified tax liability."  Tax liability imposed on a

taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV of

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

Code of 1971, excluding any tax withheld by an employer under

Article III of the Tax Reform Code of 1971.

"Qualified taxpayer."  Any natural person, corporation,

business trust, limited liability company, partnership, limited

liability partnership, association or any other form of legal

business entity that:

(1)  Is subject to a tax imposed under Article III, IV,

VI, VII, VIII, IX, XI or XV of the act of March 4, 1971

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

excluding any tax withheld by an employer under Article III

of the Tax Reform Code of 1971.

(2)  Owns a qualified historic structure.

Section 3.  Tax credit certificates.

(a)  Application.--

(1)  A qualified taxpayer may apply to the Department of

Community and Economic Development for a tax credit

certificate under this section.

(2)  The application shall be on the form required by the

Department of Community and Economic Development and shall

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include a qualified rehabilitation plan.

(3)  The application shall be filed on or before February

1 for qualified expenditures incurred in the prior calendar

year or to be incurred in the current year.

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(b)  Review, recommendation and approval.--

(1)  The Department of Community and Economic Development

shall forward applications received under this section to the

commission for review.

(2)  The commission shall determine the amount of the

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qualified expenditures incurred by the taxpayer in the prior

calendar year.

(3)  If the commission determines that the qualified

taxpayer has incurred qualified expenditures, the commission

may recommend approval of the application and shall notify

the Department of Community and Economic Development of its

recommendation within 30 days following receipt of the

completed application by the commission.

(4)  Upon receipt of the commission's recommendation for

approval, the Department of Community and Economic

Development:

(i)  may approve the application; and

(ii)  by April 1, shall notify the applicant and the

commission of its action. review the proposed

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rehabilitation plan, verify that the building is a

qualified historic structure and recommend approval or

disapproval to the Department of Community and Economic

Development within 30 days of receipt of the application.

The commission shall notify the qualified taxpayer within

15 days of its determination.

(3)  The commission shall notify the Department of

Community and Economic Development of verification of a

completed project and notify the Department of Community and

Economic Development of the amount of qualified expenditures

incurred by the taxpayer in the prior calendar year.

(5) (4)  If the Department of Community and Economic

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Development approves has approved the application and

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received notification of a completed project, it shall issue

the qualified taxpayer a tax credit certificate by April 1. A

tax credit certificate issued under this section shall not

exceed 25% of qualified expenditures determined by the

commission to have been incurred by the qualified taxpayer in

the prior calendar year.

(6) (5)  In granting tax credit certificates under this

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act, the Department of Community and Economic Development:

(i)  Shall not grant more than $10,000,000 in tax

credit certificates in any fiscal year.

(ii)  Shall not grant more than $500,000 in tax

credit certificates to a single qualified taxpayer in any

fiscal year in which the approval of all recommendations

received from the commission would cause the limit in

subparagraph (i) to be exceeded.

(iii)  Shall take into account the geographical

distribution of tax credit certificates when taking

action to implement the limit in subparagraph (i).

(6)  Tax credits under this act shall be made available

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on a first-come, first-served basis within the limitation

established under subsection (b)(5).

Section 4.  Claiming the credit.

Upon (a)  General rule.--Except as provided in subsection

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(b), upon presenting a tax credit certificate to the department,

the qualified taxpayer may claim a tax credit against the

qualified tax liability of the qualified taxpayer.

(b)  Prohibition.--A qualified taxpayer shall not claim a tax

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credit against a qualified tax liability before July 1, 2013.

Section 5.  Carryover, carryback and assignment of credit.

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

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

the tax credit is first approved, then the excess may be carried

over to succeeding taxable years and used as a credit against

the qualified tax liability of the qualified taxpayer for those

taxable years. Each time the tax credit is carried over to a

succeeding taxable year, it shall be reduced by the amount that

was used as a credit during the immediately preceding taxable

year. The tax credit provided by this act may be carried over

and applied to succeeding taxable years for not more than seven

taxable years following the first taxable year for which the

qualified taxpayer was entitled to claim the credit.

(b)  Application.--A tax credit certificate received by the

department in a taxable year first shall be applied against the

qualified taxpayer's qualified tax liability for the current

taxable year as of the date on which the credit was issued

before the tax credit can be applied against any qualified tax

liability under subsection (a).

(c)  No carryback or refund.--A qualified taxpayer may not

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

tax credit granted to the qualified taxpayer under this act.

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

(1)  A qualified taxpayer, upon application to and

approval by the Department of Community and Economic

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

credit granted to the qualified taxpayer under this act.

(2)  Before an application is approved, the department

must find that the applicant has filed all required State tax

reports and returns for all applicable taxable years and paid

any balance of State tax due as determined at settlement,

assessment or determination by the department.

(3)  Notwithstanding any other provision of law, the

department shall settle, assess or determine the tax of an

applicant under this subsection within 90 days of the filing

of all required final returns or reports in accordance with

section 806.1(a)(5) of the act of April 9, 1929 (P.L.343,

No.176), known as The Fiscal Code.

(e)  Purchasers and assignees.--The purchaser or assignee of

all or a portion of a tax credit obtained under section 3 shall

immediately claim the credit in the taxable year in which the

purchase or assignment is made. The purchaser or assignee may

not carry forward, carry back or obtain a refund of or sell or

assign the tax credit. The purchaser or assignee shall notify

the department of the seller or assignor of the tax credit in

compliance with procedures specified by the department.

Section 6.  Pass-through entity.

(a)  General rule.--If a pass-through entity has any unused

tax credit under section 5, it may elect in writing, according

to procedures established by the department, to transfer all or

a portion of the credit to shareholders, members or partners in

proportion to the share of the entity's distributive income to

which the shareholder, member or partner is entitled.

(b)  Limitation.--A pass-through entity and a shareholder,

member or partner of a pass-through entity shall not claim the

credit under subsection (a) for the same qualified expenditures.

(c)  Application.--A shareholder, member or partner of a

pass-through entity to whom a credit is transferred under

subsection (a) shall immediately claim the credit in the taxable

year in which the transfer is made. The shareholder, member or

partner may not carry forward, carry back, obtain a refund of or

sell or assign the credit.

Section 7.  Administration.

The Department of Community and Economic Development, the

commission and the department shall jointly develop written

guidelines for the implementation of the provisions of this act.

Section 8.  Report to General Assembly.

(a)  General rule.--Not later than September 1 of each year

after the first year in which tax credit certificates are issued

by the Department of Community and Economic Development, the

Secretary of Community and Economic Development and the

Secretary of Revenue shall submit a report to the General

Assembly summarizing the tax credit certificates awarded and the

tax credits claimed under this act. The report shall be

submitted to the chairman and minority chairman of the

Appropriations and Finance Committees of the Senate and the

chairman and minority chairman of the Appropriations and Finance

Committees of the House of Representatives. The report shall

include all awards of tax credit certificates, claims for tax

credits, sale or assignment of credits and tax credit

utilization that have occurred since the conclusion of the

period covered by the prior year's report through the June 30

immediately preceding the date of the report. The report shall

include:

(1)  The name of each qualified taxpayer that has been

awarded a tax credit certificate.

(2)  The name of each qualified taxpayer that has claimed

a credit and the amount of the credit claimed by the

qualified taxpayer.

(3)  The name of each qualified taxpayer that has

received approval to sell or assign a credit and the amount

of the credit sold or assigned by the qualified taxpayer.

(4)  The name of each taxpayer who has acquired a credit

by sale or assignment, the amount of the credit acquired by

sale or assignment by the taxpayer, the amount of the credit

acquired by sale or assignment that has been utilized by the

taxpayer and the taxes and tax years against which the

taxpayer utilized the credit.

(b)  Public information.--Notwithstanding any law providing

for the confidentiality of tax records, the information in the

report shall be public information and all report information

shall be posted on the department's publicly accessible Internet

website.

Section 9.  Application of Internal Revenue Code.

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The provisions of section 47 of the Internal Revenue Code and

the regulations promulgated regarding those provisions shall

apply to the department's interpretation and administration of

the credit provided under this act. References to the Internal

Revenue Code shall mean the sections of the Internal Revenue

Code as existing on any date of interpretation of this act,

except if those sections of the Internal Revenue Code referenced

in this act are repealed or terminated, references to the

Internal Revenue Code shall mean those sections last having full

force and effect. If after repeal or termination the Internal

Revenue Code sections are revised or reenacted, references in

this act to Internal Revenue Code sections shall mean those

revised or reenacted sections.

Section 10.  Limitation.

Taxpayers shall not be entitled to use historic preservation

tax credits for more than seven taxable years following the

effective date of this section.

Section 9 11.  Repeal.

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(a)  Declaration.--The General Assembly declares that the

repeal under subsection (b) is necessary to effectuate the

provisions of this act.

(b)  Specific law repealed.--The provisions of 27 Pa.C.S. §

6104(d.2)(2) are repealed.

Section 10 20.  Effective date.

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This act shall take effect July 1, 2012, or immediately,

whichever is later.