AN ACT

 

1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," providing for a natural gas fleet vehicle tax
11credit; and imposing penalties.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15the Tax Reform Code of 1971, is amended by adding an article to
16read:

17ARTICLE XVII-G.2

18NATURAL GAS FLEET VEHICLE TAX CREDIT

19Section 1701-G.2. Definitions.

20The following words and phrases when used in this article

1shall have the meanings given to them in this section unless the
2context clearly indicates otherwise:

3"Applicant." A company which meets the eligibility
4requirements for the tax credit issued under this article.

5"Committee." The Natural Gas Fleet Vehicle Tax Credit
6Committee.

7"Company." An entity doing business in this Commonwealth
8which owns five or more vehicles and which is subject to tax
9under Article III, IV or VI. The term includes the shareholder
10of a Pennsylvania S corporation that is eligible for the tax
11credit provided under this article.

12"Conversion plan." A natural gas conversion plan.

13"Dedicated compressed natural gas vehicle." A vehicle that
<-14operates on 100% natural gas fuel and is manufactured by an
15original equipment manufacturer or original and third party
16equipment manufacturers provided that the third party
17manufacturers provide the parts or services prior to the
18original sale of the vehicle to a purchaser and the vehicle
19components, including the alternative fuel system, are covered
20by the original equipment manufacturer or under separate
21warranties.

22"Dedicated liquefied natural gas vehicle." A vehicle that
23operates on 90% or more liquefied natural gas fuel and 10% or
24less on gasoline or diesel fuel and is manufactured by an
25original equipment manufacturer or original and third party
26equipment manufacturers provided that the third party
27manufacturers provide the parts or services prior to the
28original sale of the vehicle to a purchaser and the vehicle
29components, including the alternative fuel system, are covered
30by the original equipment manufacturer or under separate

1warranties.

2"Department." The Department of Community and Economic
3Development of the Commonwealth.

4"Fleet vehicle." A vehicle registered to a company.

5"Incremental cost." The excess cost of a new <-natural gas
6motor vehicle <-dedicated compressed natural gas vehicle or a new
7dedicated liquefied natural gas vehicle over the price for a
8gasoline or diesel fuel <-motor vehicle of the same model. The
9term does not include the cost to retro-fit a vehicle to operate
10on natural gas.

<-11"Natural gas conversion plan." A company's plan to convert 
12its vehicle fleet to compressed or liquefied natural gas-fueled
13vehicles by purchasing new natural gas-fueled vehicles.

<-14"Natural gas conversion plan." A company's plan to convert 
15at least five fleet vehicles to dedicated compressed natural gas 
16or dedicated liquefied natural gas vehicles by purchasing new 
17dedicated compressed natural gas or new dedicated liquefied 
18natural gas vehicles.

19"Natural gas fleet vehicle tax credit." Tax credits for
20which the Department of <-Revenue Community and Economic
21Development has issued a certificate under this article.

22"Start date." The date on which the company <-may will begin
23the company's conversion plan to natural gas-fueled fleet
24vehicles

25Section 1702-G.2. Eligibility.

26(a) Demonstration.--In order to be eligible to receive a
27natural gas fleet vehicle tax credit, a company must demonstrate
28to the department the following:

29(1) A <-comprehensive natural gas conversion plan of fleet
30vehicles within four years of the start date.

1(2) A natural gas conversion plan with financial
2viability.

3(3) A statement of the projected usage of natural gas
4stated in gasoline gallon equivalents for <-dedicated 
5compressed natural gas vehicles and diesel gallon equivalents 
6for <-dedicated liquefied natural gas vehicles accompanied by
7the methodology utilized.

8(4) The intent to maintain operations in this
9Commonwealth for a period of no less than five years from the
<-10start date completion of the natural gas conversion plan.

11(5) Minimum fuel usage of 900 gasoline or diesel gallon
12equivalents per day. Fuel usage requirements may be met from
13a single applicant or multiple companies under a single
14application if:

15(i) The companies have an agreement to utilize a
16natural gas fueling facility.

17(ii) The companies demonstrate that the utilization
18of a natural gas fueling facility would be at a minimum
19level of 900 gasoline or diesel gallon equivalents per
20day or have an existing contract with a third party fuel
21provider that is willing to construct the station if the
22natural gas vehicle tax credit is awarded.

23(b) Eligible vehicle types.--The following shall constitute
24eligible vehicle and retrofit types under this <-chapter article:

25(1) Dedicated compressed natural gas vehicles having a
26gross vehicle weight rating of at least 14,000 pounds.

27(2) Dedicated liquefied natural gas vehicles having a
28gross vehicle weight rating of at least 14,000 pounds.

29Section 1703-G.2. Application process.

30(a) Application.--A company may apply to the department for

1a natural gas fleet vehicle tax credit under this article. The
2application must be on the form required by the department and
3include the documentation to establish eligibility as required
4by section 1702-G.2.

5(b) Natural Gas Fleet Vehicle Tax Credit Committee.--The
6Natural Gas Fleet Vehicle Tax Credit Committee is established
7and shall consist of members designated by the following, except
8that none of the following may be designees:

9(1) The Secretary of Community and Economic Development.

10(2) The Secretary of Transportation.

11(3) The Secretary of Environmental Protection.

12(4) The Secretary of Revenue.

<-13(5) The chairman of the Marcellus Shale Coalition.

14(6) The Executive Director of Associated Petroleum
15Industries of Pennsylvania.

16(c) Application period and review.--The department shall
17establish application periods that may not exceed 90 days. The
18applications received during an application period shall be
19reviewed by the committee and ranked based on natural gas
20utilization. The committee shall recommend applications to the
21department.

22(d) Approval.--Once applications are ranked by the committee
23under subsection (c), the department may approve the
24applications according to their discretion and availability of
25natural gas fleet vehicle tax credits. Applications that are not
26approved must be returned to the committee for review during the
27next application period.

<-28(e) Limitation of application roll-over.--An application not
29approved by June 30 may not be returned to the committee for
30review. The department shall notify an applicant whose

1application has not been approved by June 30 that a new
2application for the natural gas fleet vehicle tax credit must be
3filed with the department in order for the applicant to continue
4to be considered for a natural gas fleet vehicle tax credit.

<-5(e) <-(f) Contract.--The department and the company shall
6execute a contract containing the following:

7(1) A description of the natural gas conversion plan.

8(2) The amount of private capital investment in the
9natural gas conversion plan.

<-10(3) A signed statement that the company intends to
11complete its conversion plan and remain in this Commonwealth
12for five years from the start date.

13(4) Any other information as the department deems
14appropriate.

<-15(3) The start date.

16(4) A signed statement that the company intends to
17complete its conversion plan within four years from the start
18date and remain in this Commonwealth for five years from the
19date its conversion plan is completed.

20(5) Any other information as the department, in
21conjunction with the Department of Revenue, deems
22appropriate.

<-23(f) Certificate.--Upon execution of the contract required in 
24subsection (e), the department shall award the company a natural 
25gas fleet vehicle tax credit and issue the company a natural gas 
26fleet vehicle tax credit certificate.

<-27(g) Certificate.--Upon execution of the contract required
28under subsection (f), the department shall:

29(1) verify with the Department of Revenue that the
30company has filed all required State tax reports and returns

1for all applicable tax years and paid any balance of State
2tax due as determined at settlement, assessment or
3determination by the Department of Revenue;

4(2) award the company a natural gas fleet vehicle tax
5credit; and

6(3) issue the company a natural gas fleet vehicle tax
7credit certificate.

8(h) Notice of completion.--Upon completion of the conversion
9plan, the company shall notify the department on a form required
10by the department.

11Section 1704-G.2. Natural gas fleet vehicle tax credits.

12(a) Maximum amount.--A company may claim a natural gas fleet
13vehicle tax credit of up to 60% of the incremental cost for
14vehicles having a gross vehicle weight rating of at least 14,000
15pounds but no more than 26,000 pounds, or 50% of the incremental
16cost for vehicles having a gross vehicle weight rating over
1726,000 pounds. The incremental cost for vehicles with a gross
18vehicle weight rating between 14,000 pounds and 26,000 pounds
19shall be capped at $25,000. The incremental cost for vehicles
20with a gross vehicle weight rating of more than 26,000 pounds
21shall be capped at $50,000.

22(b) Applicable taxes.--A company may apply the natural gas
23fleet vehicle tax credit to 100% of all or a combination of any
24of the following taxes of the company:

25(1) State corporate net income tax.

26(2) Capital stock and franchise tax or the capital stock
27and franchise tax of a shareholder of the company if the
28company is a Pennsylvania S corporation.

29(3) Gross premiums tax.

30(4) Gross receipts tax.

1(5) Bank and trust company shares tax.

2(6) Mutual thrift institution tax.

3(7) Title insurance company shares tax.

4(8) Personal income tax or the personal income tax of
5shareholders of a Pennsylvania S corporation.

<-6(c) Term.--A company may claim the natural gas fleet vehicle
7tax credit in one year or spread the credit over a period
8determined by the department but not to exceed five years from
9the date the company first submits a certificate.

<-10(c) Carryforward, carryback and refund.--A company may carry
11forward all or any unused portion of the tax credit for a period
12of five years from the start date. A company may not carry back
13or obtain a refund of the natural gas fleet vehicle tax credit.

14(d) Sale or assignment.--

15(1) A natural gas fleet vehicle tax credit recipient,
16upon application to and approval by the department, may sell
17or assign, in whole or in part, a natural gas fleet vehicle
18tax credit granted to the recipient if no claim for allowance
19of the credit is filed within one year from the date the
20credit is granted by the department.

21(2) The purchaser or assignee of a natural gas fleet
22vehicle tax credit shall immediately claim the credit in the
23taxable year in which the purchase or assignment is made. <-The 
24amount of the tax credit a purchaser or assignee may use 
25against any one qualified tax liability may not exceed 75% of 
26the qualified tax liability for the taxable year. The
27purchaser or assignee may not carry back, obtain a refund of
28or sell or assign the natural gas fleet vehicle tax credit.
29The purchaser or assignee shall notify the department of the
30seller or assignor of the natural gas fleet vehicle tax

1credit in compliance with procedures specified by the
2department.

3(3) The department shall promulgate guidelines for the
4approval of applications under this subsection.

<-5(4) Before an application is approved, the Department of
6Revenue shall make a finding that the applicant has filed all
7required State tax reports and returns for all applicable tax
8years and paid any balance of State tax due as determined at
9settlement, assessment or determination by the Department of
10Revenue.

11(e) Limitation.--In granting a natural gas fleet vehicle tax
12credit certificate under this article, the department:

13(i) may not grant more than $25,000,000 in natural
14gas fleet vehicle tax credit certificates in a fiscal
15year; or

16(ii) may not grant more than $1,000,000 in natural
17gas fleet vehicle tax credit certificates to a single
18company in a fiscal year.

<-19Section 1704.1-G.2. Verification of continued eligibility.

20(a) Tax credit.--Each fiscal year, a company awarded a tax
21credit under this article shall, on a form required by the
22department, provide the department with documentation that the
23company is in compliance with this article and the contract
24executed under section 1703-G.2(f).

25(b) Notice of completion.--A company that has provided
26notice of completion as required under section 1703-G.2(h) shall
27annually provide documentation that the company is in compliance
28with this article for a period of five years from the date the
29notice of completion is given to the department.

30Section 1705-G.2. <-Penalties Recapture.

1(a) Failure to maintain operations.--A company which
2receives natural gas fleet vehicle tax credits and fails to
3maintain Pennsylvania registration for the <-natural gas dedicated
4compressed natural gas or dedicated liquefied natural gas
5vehicles for which they received the tax credits for a period of
6five years from the start date <-notice of completion was given to
7the department shall refund to the Commonwealth the total amount
8of credits granted.

9(b) Failure to complete conversion plan.--A company which
10receives a natural gas fleet vehicle tax credit and fails to
11complete the conversion plan within four years <-from the start 
12date shall refund to the Commonwealth the total amount of
13credits granted.

14(c) Waiver.--The department may waive the penalties under
15subsections (a) and (b) if it is determined that a <-company did 
16not maintain Pennsylvania registration or a company's conversion
17plan was not completed because of circumstances beyond the
18company's control. Circumstances shall include natural
19disasters, unforeseen industry trends or a loss of a major
20supplier or market. The company must promptly notify the
21department of circumstances beyond its control which would delay
22completion of the project.

23Section 1706-G.2. Report to General Assembly

24No later than June 1, 2014, and each June 1 thereafter, the
25department shall submit a report on the natural gas fleet
26vehicle tax credits granted under this article. The report shall
27include the names of taxpayers who utilized the credit as of the
28date of the report and, the amount of credits approved<-, the
29names of taxpayers who receive a waiver under section 1705-
30G.2(c), the amount of penalties waived under 1705-G.2(c), and

1the reason for the waiver. The report may include
2recommendations for changes in the calculation or administration
3of the natural gas fleet vehicle tax credit and other
4information as the department deems appropriate. The report
5shall be submitted to all of the following:

6(1) The chairman and minority chairman of the
7Appropriations Committee of the Senate.

8(2) The chairman and minority chairman of the
9Appropriations Committee of the House of Representatives.

10(3) The chairman and minority chairman of the Finance
11Committee of the Senate.

12(4) The chairman and the minority chairman of the
13Finance Committee of the House of Representatives.

14Section 1707-G.2. Time limitations.

<-15A company shall not be entitled to The department may not
16award a natural gas fleet vehicle tax credit for taxable years
17ending after December 31, 2016.

18Section 1708-G.2. Guidelines.

19The department, in conjunction with the Department of
20Revenue, shall promulgate guidelines necessary for the
21implementation and administration of this article.

22Section 2. This act shall take effect in 60 days.