PRIOR PRINTER'S NOS. 473, 1122, 1661, 2199, 2202
PRINTER'S NO. 2211
THE GENERAL ASSEMBLY OF PENNSYLVANIA
INTRODUCED BY MACKENZIE, AUMENT, BOBACK, CAUSER, CONKLIN, CUTLER, DAY, DENLINGER, DUNBAR, EVANKOVICH, EVERETT, FLECK, GROVE, HAGGERTY, HAHN, HICKERNELL, KAUFFMAN, KNOWLES, KORTZ, MAHONEY, MICOZZIE, MILLARD, R. MILLER, READSHAW, ROCK, ROSS, SACCONE, SAINATO, SANTARSIERO, SAYLOR, SCHLOSSBERG, SIMMONS, STEPHENS, SWANGER, TALLMAN, WATSON, GOODMAN, GILLEN, C. HARRIS, KULA, GIBBONS, NEUMAN, MALONEY, BARRAR, PYLE, GODSHALL, GABLER, COHEN, MATZIE, FARRY, TOEPEL, MOLCHANY, J. HARRIS, TRUITT, BRADFORD, DAVIDSON, CLYMER, ENGLISH, KRIEGER AND REED, JANUARY 30, 2013
AS RE-REPORTED FROM COMMITTEE ON RULES, HOUSE OF REPRESENTATIVES, AS AMENDED, JULY 1, 2013
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," in tax for education, further providing for
11definitions, for exclusions from tax, for credit against tax,
12for licenses and for local receivers of use tax; providing
13for remote sales reports; providing for special taxing
14authority; in personal income tax, further providing for
15definitions, for classes of income and for taxability of
16partners; providing for tax treatment determined at
17partnership level and for tax imposed at partnership level;
18further providing for income of a Pennsylvania S Corporation,
19for income taxes imposed by other states and for operational
20provisions; providing for contributions for the Children's
21Trust Fund and for contributions for American Red Cross;
22further providing for general rule, for return of
23Pennsylvania S Corporation, for requirements concerning
1returns, notices, records and statements and for additions,
2penalties and fees; providing for citation authority; in
3corporate net income tax, further providing for definitions
4and for reports and payment of tax; in corporate stock and
5franchise tax, further providing for imposition and for
6expiration; in bank and trust company shares tax, further
7providing for imposition of tax, ascertainment of taxable
8amount and exclusion of United States obligations, for
9apportionment and for definitions; in realty transfer tax,
10further providing for definitions, for excluded transactions,
11for imposition of tax and for acquired company; providing for
12nonlicensed corporation pari-mutuel wagering tax; in film
13production tax credit, further providing for definitions, and
14for credit for qualified film production expenses; in
15educational opportunity scholarship tax credit, further
16providing for scholarships; repealing provisions relating to
17coal waste removal and ultraclean fuels tax credit; making an
18editorial change; in job creation tax credit, further
19providing for tax credits; providing for city revitalization
20and improvement zones, for mobile telecommunications
21broadband investment tax credit, for the Innovate in PA
22Program, for neighborhood improvement zones and for Keystone
23Special Development Zone program; in inheritance tax, further
24providing for transfers not subject to tax and for exemption
25for poverty; in inheritance tax, further providing for
26liabilities and for deductions not allowed; in procedure and
27administration, further providing for definitions and for
28petition for reassessment; providing for the Board of Finance
29and Revenue; further providing for review by the Board of
30Finance and Revenue; providing for a report concerning the
31significant changes in the structure and regulatory
32environment within the banking industry; and making related
39Section 201. Definitions.--The following words, terms and
40phrases when used in this Article II shall have the meaning
41ascribed to them in this section, except where the context
42clearly indicates a different meaning:
43* * *
46(1) where at least one hundred and fifty employes are
1employed to initiate or answer telephone calls;
7(A) customer service and support;
8(B) technical assistance;
9(C) help desk service;
10(D) providing information;
11(E) conducting surveys;
12(F) revenue collections; or
13(G) receiving orders or reservations.
21* * *
22(69) The sale at retail or use of aircraft parts, services
23to aircraft and aircraft components. For purposes of this
24clause, the term "aircraft" shall include a fixed-wing aircraft,
25powered aircraft, tilt-rotor or tilt-wing aircraft, glider or
1tangible personal property or services purchased for use outside
2the Commonwealth equal to the tax paid to another state by
3reason of the imposition by such other state of a tax similar to
4the tax imposed by this article: Provided, however, That no such
5credit shall be granted unless such other state grants
6substantially similar tax relief by reason of the payment of tax
7under this article or under the Tax Act of 1963 for Education.
8[(b) A credit against the tax imposed by section 202 on
9telecommunications services shall be granted to a call center
10for gross receipts tax paid by a telephone company on the
11receipts derived from the sale of incoming and outgoing
12interstate telecommunications services to the call center under
13section 1101(a)(2). The following apply:
14(1) A telephone company, upon request, shall notify a call
15center of the amount of gross receipts tax paid by the telephone
16company on the receipts derived from the sale of incoming and
17outgoing interstate telecommunications services to the call
22(3) By February 15, a taxpayer must submit an application to
23the department for gross receipts tax paid on the receipts
24derived from the sale of incoming and outgoing interstate
25telecommunications services incurred in the prior calendar year.
26(4) By April 15 of the calendar year following the close of
27the calendar year during which the gross receipts tax was
28incurred, the department shall notify the applicant of the
29amount of the applicant's tax credit approved by the department.
30(5) The total amount of tax credits provided for in this
1subsection and approved by the department shall not exceed
2thirty million dollars ($30,000,000) in any fiscal year. If the
3total amount of tax credits applied for by all applicants
4exceeds the amount allocated for those credits, then the credit
5to be received by each applicant shall be determined as follows:
7(A) the tax credit applied for by the applicant; by
11(A) the quotient under subparagraph (i); by
12(B) the amount allocated for all tax credits.]
13Section 208. Licenses.--(a) Every person maintaining a
14place of business in this Commonwealth, selling or leasing
15services or tangible personal property, the sale or use of which
16is subject to tax and who has not hitherto obtained a license
17from the department, shall, prior to the beginning of business
18thereafter, make application to the department, on a form
19prescribed by the department, for a license. If such person
20maintains more than one place of business in this Commonwealth,
21the license shall be issued for the principal place of business
22in this Commonwealth.
23(b) The department shall, after the receipt of an
24application, issue the license applied for under subsection (a)
25of this section, provided said applicant shall have filed all
26required State tax reports and paid any State taxes not subject
27to a timely perfected administrative or judicial appeal or
28subject to a duly authorized deferred payment plan. Such license
29shall be nonassignable. All licensees as of the effective date
30of this subsection shall be required to file for renewal of said
1license on or before January 31, 1992. Licenses issued through
2April 30, 1992, shall be based on a staggered renewal system
3established by the department. Thereafter, any license issued
4shall be valid for a period of five years.
5(b.1) If an applicant for a license or any person holding a
6license has not filed all required State tax reports and paid
7any State taxes not subject to a timely perfected administrative
8or judicial appeal or subject to a duly authorized deferred
9payment plan, the department may refuse to issue, may suspend or
10may revoke said license. The department shall notify the
11applicant or licensee of any refusal, suspension or revocation.
12Such notice shall contain a statement that the refusal,
13suspension or revocation may be made public. Such notice shall
14be made by first class mail. An applicant or licensee aggrieved
15by the determination of the department may file an appeal
16pursuant to the provisions for administrative appeals in this
17article, except that the appeal must be filed within thirty (30)
18days of the date of the notice. In the case of a suspension or
19revocation which is appealed, the license shall remain valid
20pending a final outcome of the appeals process. Notwithstanding
21sections 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 of the
22act or any other provision of law to the contrary, if no appeal
23is taken or if an appeal is taken and denied at the conclusion
24of the appeal process, the department may disclose, by
25publication or otherwise, the identity of a person and the fact
26that the person's license has been refused, suspended or revoked
27under this subsection. Disclosure may include the basis for
28refusal, suspension or revocation.
1tangible personal property, the sale or use of which is subject
2to tax, without having [first been licensed by the department] a
3valid license at the time of the sale or lease shall be guilty
4of a summary offense and, upon conviction thereof, be sentenced
5to pay a fine of not less than three hundred dollars ($300) nor
6more than one thousand five hundred ($1,500) and, in default
7thereof, to undergo imprisonment of not less than five days nor
8more than thirty days. The penalties imposed by this subsection
9shall be in addition to any other penalties imposed by this
10article. For purposes of this subsection, the offering for sale
11or lease of any service or tangible personal property, the sale
12or use of which is subject to tax, during any calendar day shall
13constitute a separate violation. The Secretary of Revenue may
14designate employes of the department to enforce the provisions
15of this subsection. The employes shall exhibit proof of and be
16within the scope of the designation when instituting proceedings
17as provided by the Pennsylvania Rules of Criminal Procedure.
21Section 4. Section 226 of the act is repealed:
22[Section 226. Local Receivers of Use Tax.--Beginning on and
23after the effective date of this article, in every county,
24except in counties of the first class, the county treasurer is
25hereby authorized to receive use tax due and payable under the
26provisions of this article from any person other than a
27licensee. The receiving of such taxes shall be pursuant to rules
28and regulations promulgated by the department and upon forms
29furnished by the department. Each county treasurer shall remit
30to the department all use taxes received under the authority of
1this section minus the costs of administering this provision not
2to exceed one per cent of the amount of use taxes received,
3which amount shall be retained in lieu of any commission
4otherwise allowable by law for the collection of such tax.]
5Section 5. The act is amended by adding a section to read:
6Section 278. Remote Sales Reports.--(a) Within 90 days of
7the publication of the notice under subsection (b), the
8Independent Fiscal Office, in conjunction with the Department of
9Revenue, shall submit a detailed report to the chairman and
10minority chairman of the Appropriations Committee of the Senate,
11the chairman and minority chairman of the Finance Committee of
12the Senate, the chairman and minority chairman of the
13Appropriations Committee of the House of Representatives and the
14chairman and minority chairman of the Finance Committee of the
15House of Representatives outlining the plans concerning the
16implementation of the legislation referenced in subsection (b)
17or other substantially similar Federal legislation, which would
18grant the Commonwealth the authority to impose and collect the
19tax under this article due on sales from remote sellers. The
20report shall include all of the following:
21(1) The amount of State funds necessary to implement the
22legislation referenced in subsection (b) or other substantially
23similar legislation. The amount needed shall be itemized, and
24all costs, including personnel, office expenses and other
25related costs, shall be included.
26(2) The amount of State tax revenue expected to result from
27the implementation of the legislation referenced in subsection
28(b) or other substantially similar legislation for the fiscal
29year and for five fiscal years thereafter.
30(3) The source of funds which will be utilized to pay for
19Section 301. Definitions.--Any reference in this article to
20the Internal Revenue Code of 1986 shall mean the Internal
21Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.),
22as amended to January 1, 1997, unless the reference contains the
23phrase "as amended" and refers to no other date, in which case
24the reference shall be to the Internal Revenue Code of 1986 as
25it exists as of the time of application of this article. The
26following words, terms and phrases when used in this article
27shall have the meaning ascribed to them in this section except
28where the context clearly indicates a different meaning:
29* * *
30(d.2) "Corporate item" means an item, including income, gain
4* * *
5(n.2) "Partnership item" means an item, including income,
6gain or loss, deduction or credit determined at the partnership
7level, which is required to be taken into account for a
8partnership's taxable year.
9* * *
10(o.4) "Publicly traded partnership" means an entity defined
11under section 7704 of the Internal Revenue Code of 1986 (Public
12Law 99-514, 26 U.S.C. § 7704) with equity securities registered
13with the Securities and Exchange Commission under section 12 of
14the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. §
16* * *
17(t) "State" means, except as provided under section 314(a),
18any state or commonwealth of the United States, the District of
19Columbia, the Commonwealth of Puerto Rico, any territory or
20possession of the United States and any foreign country.
21* * *
25SPECIAL TAXING AUTHORITY
26Section 201-B. Special taxing authority.
27(a) Imposition of tax.--
3(2) The tax imposed under this section shall be in
4addition to the tax authorized under section 503(a) and (b)
5of the act of June 5, 1991 (P.L. 9, No. 6), known as the
6Pennsylvania Intergovernmental Cooperation Authority Act for
7Cities of the First Class.
11(4) A tax imposed under this subsection on sales or uses
12shall be paid to and received by the Department of Revenue
13and, along with interest and penalties, less any refunds and
14credits paid, shall be credited to the local sales and use
15tax fund created under the Pennsylvania Intergovernmental
16Cooperation Authority Act for Cities of the First Class.
17Money in the fund shall be disbursed as provided in section
18509 of the Pennsylvania Intergovernmental Cooperation
19Authority Act for Cities of the First Class.
20(b) Rate.--The tax authorized under subsection (a) shall be
21imposed and collected at the rate of 1% and shall be computed as
22set forth in section 503(e)(2) of the Pennsylvania
23Intergovernmental Cooperation Authority Act for Cities of the
25(c) Collection.--The tax authorized under subsection (a)
26shall be administered, collected, deposited and disbursed in the
27same manner as the tax imposed under Chapter 5 of the
28Pennsylvania Intergovernmental Cooperation Authority Act for
29Cities of the First Class and the situs of the tax shall be
30determined in accordance with the Pennsylvania Intergovernmental
1Cooperation Authority Act and Article II-A. The Department of
2Revenue shall use the money received from the tax authorized
3under Chapter 5 of the Pennsylvania Intergovernmental
4Cooperation Authority Act for Cities of the First Class to cover
5costs for the administration of the tax authorized under
6subsection (a). The Department of Revenue shall not retain any
7additional amounts for the cost of collecting the tax authorized
8under subsection (a). No additional fee shall be charged for a
9license or license renewal other than the license or renewal fee
10authorized and imposed under Article II.
11(d) Municipal action.--In order to impose the tax, the
12governing body of the city shall adopt an ordinance stating the
13tax rate. The ordinance may be adopted prior to the effective
14date of this subsection. The ordinance shall take effect no
15earlier than 20 days after the adoption of the ordinance or 20
16days after the effective date of this section, whichever is
17later. A certified copy of the city ordinance shall be delivered
18to the Department of Revenue within ten days prior to or after
19the effective date of the ordinance. A certified copy of an
20ordinance to repeal the tax authorized under subsection (a)
21shall be delivered to the Department of Revenue at least 30 days
22prior to the effective date of repeal.
23(e) Use of tax receipts.--
24(1) Money received by the city from the levy, assessment
25and collection of the tax authorized under subsection (a) may
26only be paid to a school district of the first class in an
27amount of up to $120,000,000 if the Secretary of Education
28has made a determination, in the form of an annual
29certification published in the Pennsylvania Bulletin, that
30the school district of the first class has, in the judgment
8(i) Deliver written certification of the
9determination to the majority and minority chairpersons
10of the Appropriations Committees of the Senate and the
11House of Representatives, the majority and minority
12chairpersons of the Education Committees of the Senate
13and the House of Representatives, the chief executive of
14the school district of the first class and the Secretary
15of the Department of Revenue.
16(ii) Upon receipt of the certification from the
17Secretary of Education, the Secretary of the Department
18of Revenue shall direct the State Treasurer to disburse,
19on or before the 10th day of every month, to the school
20district of the first class the total amount of money
21which is, as of the last day of the previous month,
22contained in the Local Sales and Use Tax Fund.
23(iii) If the Secretary of Education does not issue a
24written certification on or before December 31 of each
25year all money contained in the Local Sales and Use Tax
26Fund shall be paid to a city of the first class.
30(1) for fiscal years 2014-2015, 2015-2016, 2016-2017 and
5(2) the remaining money shall be paid to a city of the
6first class in accordance with the act of December 18, 1984
7(P.L.1005, No.205), known as the Municipal Pension Plan
8Funding Standard and Recovery Act.
14* * *
15(2) Net profits. The net income from the operation of a
16business, profession, or other activity, after provision for all
17costs and expenses incurred in the conduct thereof, determined
18either on a cash or accrual basis in accordance with accepted
19accounting principles and practices but without deduction of
20taxes based on income. For purposes of calculating net income
21under this paragraph, to the extent a taxpayer properly deducts
22an amount under section 195(b)(1)(A) of the Internal Revenue
23Code of 1986 (26 U.S.C. § 195(b)(1)(A)), as amended, and the
24regulations promulgated under section 195(b)(1)(A) of the
25Internal Revenue Code of 1986, the taxpayer shall be permitted a
26deduction in equal amount in the same taxable year.
27* * *
1purposes under section 263(c) of the Internal Revenue Code of
21986, as amended, and regulations thereunder, is required to
3capitalize the costs and recover them over a ten-year period in
4the taxable year the costs are incurred; or a person may elect
5to currently expense up to one-third of the costs in the taxable
6year in which the costs are incurred and recover the remaining
7costs over a ten-year period beginning in the taxable year the
8costs are incurred.
11Section 306. Taxability of Partners.--[A] Except as provided
12under section 306.2, a partnership as an entity shall not be
13subject to the tax imposed by this article, but the income or
14gain of a member of a partnership in respect of said partnership
15shall be subject to the tax and the tax shall be imposed on his
16share, whether or not distributed, of the income or gain
17received by the partnership for its taxable year ending within
18or with the member's taxable year.
19Section 9. The act is amended by adding sections to read:
20Section 306.1. Tax Treatment Determined at Partnership
21Level.--The classification or character of a partnership item
22shall be determined at the partnership level. This section shall
23not prohibit the department from adjusting a partner's return.
24Section 306.2. Tax Imposed at Partnership Level.--(a) A
25partnership underreporting income by more than one million
26dollars ($1,000,000) for any tax year shall be liable for the
27tax, excluding interest, penalties or additions at the tax rate
28applicable to the tax year, on the underreported income without
29regard to the tax liability of the partners for the
30underreported income. The department shall assess the
1partnership for the tax on the underreported income. The
2department shall not assess the partners for the underreported
3income or the tax thereon; rather, the partnership shall be
4required to provide an amended statement to each partner as
5required under section 335(c)(3) of the partner's pro rata share
6of the underreported income within ninety days of the assessment
7becoming final. Nothing in this subsection shall relieve the
8partners of their tax liability on the underreported income.
9(a.1) Each partner shall be allowed a credit for such
10partner's share of the tax assessed against the partnership
11under subsection (a) and paid by the partnership. The credit
12shall be allowed for the partner's taxable year in which the
13underreported income was required to be reported.
20(3) A partnership which has only partners who are natural
21persons and which elects to be subject to this subsection. The
22election must be included on the partnership return to be filed
23with the department.
4Section 307.8. Income of a Pennsylvania S Corporation.--(a)
5A Pennsylvania S corporation shall not be subject to the tax
6imposed by this article, except as provided under subsection
7(f), but the shareholders of the Pennsylvania S corporation
8shall be subject to the tax imposed under this article as
9provided in this article.
10* * *
13(1) A Pennsylvania S corporation underreporting income
14by more than one million dollars ($1,000,000) for any tax
15year shall be liable for the tax, excluding interest,
16penalties or additions, at the tax rate applicable to the tax
17year, on the underreported income without regard to the tax
18liability of the shareholders for the underreported income.
19The department shall assess the Pennsylvania S corporation
20for the tax on the underreported income. The department shall
21not assess the shareholders for the underreported income or
22the tax thereon; rather, the Pennsylvania S corporation shall
23be required to provide an amended statement to each
24shareholder as required under section 330.1 of the
25shareholder's pro rata share of the underreported income
26within 90 days of the assessment becoming final. Nothing in
27this subsection shall relieve the shareholders of their tax
28liability on the underreported income.
1S corporation under paragraph (1) and paid by the Pennsylvania S
2corporation. The credit shall be allowed for the shareholder's
3taxable year in which the underreported income was required to
22Section 314. Income Taxes Imposed by Other States.--(a) A
23resident taxpayer before allowance of any credit under section
24312 shall be allowed a credit against the tax otherwise due
25under this article for the amount of any income tax, wage tax or
26tax on or measured by gross or net earned or unearned income
27imposed on him or on a Pennsylvania S corporation in which he is
28a shareholder, to the extent of his pro rata share thereof
29determined in accordance with section 307.9, by another state
30with respect to income which is also subject to tax under this
1article. For purposes of this subsection, the term "state" shall
2only include a state of the United States, the District of
3Columbia, the Commonwealth of Puerto Rico and any territory or
4possession of the United States.
5* * *
8Section 315.9. Operational Provisions.--
9(b) Except as set forth in subsection (b.1), any checkoff
10established under this part and applicable for the first time in
11a taxable year beginning after December 31, 2009, shall expire
12four years after the beginning of such first taxable year.
17Section 13. The act is amended by adding sections to read:
18Section 315.10. Contributions for the Children's Trust
19Fund.--(a) The department shall provide a space on the
20Pennsylvania individual income tax return form whereby an
21individual may voluntarily designate a contribution of any
22amount desired to the Children's Trust Fund established in
23section 8 of the act of December 15, 1988 (P.L.1235, No.151),
24known as the "Children's Trust Fund Act."
25(b) The amount designated under subsection (a) by an
26individual on the income tax return form shall be deducted from
27the tax refund to which that individual is entitled and shall
28not constitute a charge against the income tax revenues due the
30(c) The department shall determine annually the total amount
1designated pursuant to this section, less reasonable
2administrative costs, and shall report the amount to the State
3Treasurer, who shall transfer the amount from the General Fund
4to the Children's Trust Fund.
5Section 315.11. Contributions for American Red Cross.--(a)
6The department shall provide a space on the Pennsylvania
7individual income tax return form by which an individual may
8voluntarily designate a contribution of any amount desired to
9the American Red Cross established under 36 U.S.C. Ch. 3001
10(relating to the American National Red Cross).
11(b) The amount designated under subsection (a) by an
12individual on the income tax return form shall be deducted from
13the tax refund to which the individual is entitled and shall not
14constitute a charge against the income tax revenues due the
16(c) The department shall determine annually the total amount
17designated under this section, less reasonable administrative
18costs, and shall report the amount to the State Treasurer, who
19shall transfer the amount from the General Fund to the American
23Section 324. General Rule.--(a) When a partnership, estate,
24trust or Pennsylvania S corporation receives income from sources
25within this Commonwealth for any taxable year and any portion of
26the income is allocable to a nonresident partner, beneficiary,
27member or shareholder thereof, the partnership, estate, trust or
28Pennsylvania S corporation shall pay a withholding tax under
29this section at the time and in the manner prescribed by the
30department; however, notwithstanding any other provision of this
4(b) This section shall not apply to any publicly traded
5partnership as defined under section 7704 of the Internal
6Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 7704) with
7equity securities registered with the Securities and Exchange
8Commission under section 12 of the Securities Exchange Act of
91934 (48 Stat. 881, 15 U.S.C. § 78a).
13Section 330.1. Return of Pennsylvania S Corporation.--(a)
14Every Pennsylvania S corporation shall make a return for each
15taxable year, stating specifically all items of gross income and
16deductions, the names and addresses of all persons owning stock
17in the corporation at any time during the taxable year, the
18number of shares of stock owned by each shareholder at all times
19during the taxable year, the amount of money and other property
20distributed by the corporation during the taxable year to each
21shareholder, the date of each distribution, each shareholder's
22pro rata share of each item of the corporation for the taxable
23year and such other information as the department may require.
27(c) Every Pennsylvania S corporation shall also submit to
28the department a true copy of the income tax return filed with
29the Federal Government at the time the return required under
30subsection (a) is filed.
1(d) Each Pennsylvania S corporation required to file a
2return under subsection (a) for a taxable year shall, on or
3before the day on which the return for the taxable year was
4filed, furnish to each person who is a shareholder at any time
5during the taxable year, a written statement of the
6shareholder's pro rata share of each item on the corporate
7return, in a form required by the department.
11Section 335. Requirements Concerning Returns, Notices,
12Records and Statements.--(a) The department may prescribe by
13regulation for the keeping of records, the content and form of
14returns, declarations, statements and other documents and the
15filing of copies of Federal income tax returns and
16determinations. The department may require any person, by
17regulation or notice served upon such person, to make such
18returns, render such statements, or keep such records, as the
19department may deem sufficient to show whether or not such
20person is liable for tax under this article.
23(i) Any person required under the authority of this article
24to make a return, declaration, statement, or other document
25shall include in such return, declaration, statement or other
26document such identifying number as may be prescribed for
27securing proper identification of such person.
1document with respect to another person, shall request from such
2other person, and shall include in any such return, declaration,
3statement, or other document, such identifying number as may be
4prescribed for securing proper identification of such other
9(c) (1) Every partnership, estate or trust having a
10resident partner or a resident beneficiary or every partnership,
11estate or trust having any income derived from sources within
12this Commonwealth shall make a return for the taxable year
13setting forth all items of income, loss and deduction, and such
14other pertinent information as the department may [by
15regulations prescribe] require. Such return shall be filed on or
16before the fifteenth day of the fourth month following the close
17of each taxable year. For purposes of this subsection, "taxable
18year" means year or period which would be a taxable year of the
19partnership if it were subject to tax under this article.
20(2) Every partnership, estate or trust required to file a
21return under paragraph (1) shall also file with the department a
22true copy of the income tax return filed with the Federal
23Government at the time the return required under paragraph (1)
25(3) Every partnership, estate or trust required to file a
26return under paragraph (1) for any taxable year shall, on or
27before the day the return is filed, furnish to each partner or
28nominee for another person or to each beneficiary to whom the
29income or gains of the estate or trust is taxable, a written
30statement of the partner's pro rata share of each item on the
4(4) A partnership required to file a return under paragraph
5(1) for a taxable year shall, on or before the day the return is
6filed, furnish to each partner classified as a corporation,
7partnership or disregarded entity for Federal income tax
8purposes a copy of the Pennsylvania income tax form reporting
9corporate partner apportioned business income or loss. A
10reporting partnership shall not be required to provide a partner
11who is either a partnership or disregarded entity a copy of this
12form, if the reporting partnership is able to determine that an
13entity classified as a corporation for Federal income tax
14purposes is not an indirect owner of the reporting partnership.
15(d) The department may prescribe regulations requiring
16returns of information to be made and filed on or before
17February 28 of each year as to the payment or crediting in any
18calendar year of amounts of ten dollars ($10) or more to any
19taxpayer. Such returns may be required of any person, including
20lessees or mortgagors of real or personal property, fiduciaries,
21employers and all officers and employes of this Commonwealth, or
22of any municipal corporation or political subdivision of this
23Commonwealth having the control, receipt, custody, disposal or
24payment of interest, rents, salaries, wages, premiums,
25annuities, compensations, remunerations, emoluments or other
26fixed or determinable gains, profits or income, except interest
27coupons payable to bearer. A duplicate of the statement as to
28tax withheld on compensation required to be furnished by an
29employer to an employe, shall constitute the return of
30information required to be made under this section with respect
1to such compensation.
2(e) Any person who is required to make a form W-2G return to
3the Secretary of the Treasury of the United States in regard to
4taxable gambling or lottery winnings from sources within this
5Commonwealth shall file a copy of the form with the department
6by March 1 of each year or, if filed electronically, by March 31
7of each year.
8(f) The following apply:
9(1) Any person who:
12(ii) makes payments of nonemploye compensation or payments
13under an oil and gas lease under subparagraph (i) to a resident
14or nonresident individual, an entity treated as a partnership
15for tax purposes or a single member limited liability company;
17(iii) is required to make a form 1099-MISC return to the
18Secretary of the Treasury of the United States with respect to
19the payments shall file a copy of form 1099-MISC with the
20department and send a copy of form 1099-MISC to the payee by the
21Federal filing deadline each year.
25(g) (1) Every estate, trust, Pennsylvania S Corporation or
26partnership, other than a publicly traded partnership, shall
27maintain at the end of the entity's taxable year an accurate
28list of partners, members, beneficiaries or shareholders. The
29list shall include the name, current address and tax
30identification number of all existing partners, members,
5(2) If the entity under paragraph (1) does not maintain an
6accurate list as required, the tax, penalty and interest with
7respect to the entity shall be considered the tax, penalty and
8interest of the partnership, estate, trust or Pennsylvania S
9Corporation and of the general partner, tax matters partner,
10corporate officer or trustee.
13Section 352. Additions, Penalties and Fees.--* * *
14(f) (1) Any person required under the provisions of section
15317 to furnish a statement to an employe who wilfully furnishes
16a false or fraudulent statement, or who wilfully fails to
17furnish a statement in the manner, at the time, and showing the
18information required under section 317 and the regulations
19prescribed thereunder, shall, for each such failure, be subject
20to a penalty of fifty dollars ($50) for each employe.
21(2) Any person required [by regulation] to furnish an
22information return who furnishes a false or fraudulent return or
23who fails to file or provide an information return shall [for
24each failure] be subject to a penalty of two hundred fifty
26(3) Every partnership, estate, trust or Pennsylvania S
27corporation required to file a return with the department under
28the provisions of section 330.1 or 335(c) who furnishes a false
29or fraudulent return or who fails to file the return in the
30manner and at the time required under section 330.1 or 335(c)
1shall be subject to a penalty of $250 for each failure.
2(4) Any person required to file a copy of form 1099-MISC
3with the department under the provisions of section 335(f) who
4wilfully furnishes a false or fraudulent form or who wilfully
5fails to file the form in the manner, at the time and showing
6the information required under section 335(f) shall, for each
7such failure, be subject to a penalty of fifty dollars ($50).
8(5) Any person required under the provisions of section
9335(f) to furnish a copy of form 1099-MISC to a payee who
10wilfully furnishes a false or fraudulent form or who wilfully
11fails to furnish a form in the manner, at the time and showing
12the information required by section 335(f) shall, for each such
13failure, be subject to a penalty of fifty dollars ($50).
14* * *
15Section 18. The act is amended by adding a section to read:
16Section 352.2. Citation Authority.--(a) Notwithstanding any
17other provision of this act, any person who does any of the
18following commits a summary offense and, upon conviction, shall
19be subject to the fines and penalties imposed under section
20208(c) (relating to licenses):
21(1) Does not pay employer withholding tax, interest or
22penalty within ninety days after the due date and the tax
23liability due has not been timely appealed or subject to a duly
24authorized deferred payment plan.
25(2) Underpays an employer withholding tax, interest or
26penalty within ninety days after the due date and the tax
27liability due has not been timely appealed or subject to a duly
28authorized deferred payment plan.
5(c) The Secretary of Revenue may designate employes of the
6department to enforce this subsection. The employes shall
7exhibit proof of and be within the scope of the designation when
8instituting proceedings as provided under the Pennsylvania Rules
9of Criminal Procedure.
10Section 19. Section 401(3)1, 2(a)(17) and 4(c)(1)(A)(IV) of
11the act, amended September 9, 1971 (P.L.437, No.105), are
12amended, clause (3)1 and 2 are amended by adding phrases,
13subclause 2(a) is amended by adding a paragraph, paragraphs
14(3)4(c)(1)(A) and 2(B) are amended by adding subparagraphs and
15the section is amended by adding clauses to read:
16Section 401. Definitions.--The following words, terms, and
17phrases, when used in this article, shall have the meaning
18ascribed to them in this section, except where the context
19clearly indicates a different meaning:
20* * *
21(3) "Taxable income." 1. * * *
22(t) (1) Except as provided in paragraph (2), (3) or (4) for
23taxable years beginning after December 31, 2014, and in addition
24to any authority the department has on the effective date of
25this paragraph to deny a deduction related to a fraudulent or
26sham transaction, no deduction shall be allowed for an
27intangible expense or cost, or an interest expense or cost,
28paid, accrued or incurred directly or indirectly in connection
29with one or more transactions with an affiliated entity. In
30calculating taxable income under this paragraph, when the
1taxpayer is engaged in one or more transactions with an
2affiliated entity that was subject to tax in this Commonwealth
3or another state or possession of the United States on a tax
4base that included the intangible expense or cost, or the
5interest expense or cost, paid, accrued or incurred by the
6taxpayer, the taxpayer shall receive a credit against tax due in
7this Commonwealth in an amount equal to the apportionment factor
8of the taxpayer in this Commonwealth multiplied by the greater
9of the following:
10(A) the tax liability of the affiliated entity with respect
11to the portion of its income representing the intangible expense
12or cost, or the interest expense or cost, paid, accrued or
13incurred by the taxpayer; or
17The credit issued under this paragraph shall not exceed the
18taxpayer's liability in this Commonwealth attributable to the
19net income taxed as a result of the adjustment required by this
21(2) The adjustment required by paragraph (1) shall not apply
22to a transaction that did not have as the principal purpose the
23avoidance of tax due under this article and was done at arm's
24length rates and terms.
25(3) The adjustment required by paragraph (1) shall not apply
26to a transaction between a taxpayer and an affiliated entity
27domiciled in a foreign nation which has in force a comprehensive
28income tax treaty with the United States providing for the
29allocation of all categories of income subject to taxation, or
30the withholding of tax, on royalties, licenses, fees and
3(4) The adjustment required by paragraph (1) shall not apply
4to a transaction where an affiliated entity directly or
5indirectly paid, accrued or incurred a payment to a person who
6is not an affiliated entity, if the payment is paid, accrued or
7incurred on the intangible expense or cost, or interest expense
8or cost, and is equal to or less than the taxpayer's
9proportional share of the transaction. The taxpayer's
10proportional share shall be based on relative sales, assets,
11liabilities or another reasonable method.
122. In case the entire business of any corporation, other
13than a corporation engaged in doing business as a regulated
14investment company as defined by the Internal Revenue Code of
151986, is not transacted within this Commonwealth, the tax
16imposed by this article shall be based upon such portion of the
17taxable income of such corporation for the fiscal or calendar
18year, as defined in subclause 1 hereof, and may be determined as
20(a) Division of Income.
21* * *
22(16.1) (A) Sales from the sale, lease, rental or other use
23of real property, if the real property is located in this State.
24If a single parcel of real property is located both in and
25outside this State, the sale is in this State based upon the
26percentage of original cost of the real property located in this
1(II) If the tangible personal property is subsequently taken
2out of this State, the taxpayer may use a reasonably determined
3estimate of usage in this State to determine the extent of sale
4in this State.
5(C) (I) Sales from the sale of service, if the service is
6delivered to a location in this State. If the service is
7delivered both to a location in and outside this State, the sale
8is in this State based upon the percentage of total value of the
9service delivered to a location in this State.
10(II) If the state or states of assignment under subparagraph
11(I) cannot be determined for a customer who is an individual
12that is not a sole proprietor, a service is deemed to be
13delivered at the customer's billing address.
14(III) If the state or states of assignment under
15subparagraph (I) cannot be determined for a customer, except for
16a customer under subparagraph (II), a service is deemed to be
17delivered at the location from which the services were ordered
18in the customer's regular course of operations. If the location
19from which the services were ordered in the customer's regular
20course of operations cannot be determined, a service is deemed
21to be delivered at the customer's billing address.
26(B) The income-producing activity is performed both in and
27outside this State and a greater proportion of the income-
28producing activity is performed in this State than in any other
29state, based on costs of performance.
30* * *
1(e) Satellite Television Services Providers.
2(1) All business income of providers of satellite television
3services shall be apportioned to this Commonwealth by
4multiplying the income by a fraction, the numerator of which is
5the value of equipment located in this Commonwealth that is
6owned or rented by the taxpayer or owned by an entity that is
7included with the taxpayer in a controlled group, as defined in
8section 267(f) of the Internal Revenue Code of 1986 (Public Law
999-514, 26 U.S.C. § 166), and used by the taxpayer in
10generating, processing or transmitting satellite television
11services whether or not such equipment is affixed to real
12estate, and the denominator of which is the value of all such
13equipment located everywhere. The value of property owned by the
14taxpayer or owned by an entity included with the taxpayer in a
15controlled group and used by the taxpayer shall be its cost less
16depreciation per the books and records of the owner. The value
17of rented equipment shall be determined in accordance with
18paragraph (11) of phrase (a) of subclause 2 of this definition.
22* * *
234. * * *
24(c) (1) The net loss deduction shall be the lesser of:
25(A) * * *
26(IV) For taxable years beginning after December 31, 2009,
27the greater of twenty per cent of taxable income as determined
28under subclause 1 or, if applicable, subclause 2 or three
29million dollars ($3,000,000); [or]
30(V) For taxable years beginning after December 31, 2013, the
4(VI) For taxable years beginning after December 31, 2014,
5the greater of thirty per cent of taxable income as determined
6under subclause 1 or, if applicable, subclause 2 or five million
7dollars ($5,000,000); or
8* * *
9(2) * * *
10(B) The earliest net loss shall be carried over to the
11earliest taxable year to which it may be carried under this
12schedule. The total net loss deduction allowed in any taxable
13year shall not exceed:
14* * *
15(V) The greater of twenty-five per cent of taxable income as
16determined under subclause 1 or, if applicable, subclause 2 or
17four million dollars ($4,000,000) for taxable years beginning
18after December 31, 2013.
19(VI) The greater of thirty per cent of taxable income as
20determined under subclause 1 or, if applicable, subclause 2 or
21five million dollars ($5,000,000) for taxable years beginning
22after December 31, 2014.
23* * *
24(8) "Intangible expense or cost." Royalties, licenses or
25fees paid for the acquisition, use, maintenance, management,
26ownership, sale, exchange or other disposition of patents,
27patent applications, trade names, trademarks, service marks,
28copyrights, mask works or other similar expenses or costs.
6(i) a stockholder who is an individual, or a member of the
7stockholder's family as set forth in section 318 of the Internal
8Revenue Code of 1986 (26 U.S.C. § 318), if the stockholder and
9the members of the stockholder's family own, directly,
10indirectly, beneficially or constructively, in the aggregate,
11more than fifty per cent of the value of the taxpayer's
13(ii) a stockholder, or a stockholder's partnership, limited
14liability company, estate, trust or corporation, if the
15stockholder and the stockholder's partnerships, limited
16liability companies, estates, trusts and corporations own
17directly, indirectly, beneficially or constructively, in the
18aggregate, more than fifty per cent of the value of the
19taxpayer's outstanding stock;
20(iii) a corporation, or a party related to the corporation
21in a manner that would require an attribution of stock from the
22corporation to the party or from the party to the corporation
23under the attribution rules of the Internal Revenue Code of
241986, if the taxpayer owns, directly, indirectly, beneficially
25or constructively, more than fifty per cent of the value of the
26corporation's outstanding stock. The attribution rules of
27section 318 of the Internal Revenue Code of 1986 shall apply for
28purposes of determining whether the ownership requirements of
29this definition have been met;
30(iv) a component member as defined in section 1563(b) of the
1Internal Revenue Code of 1986 (26 U.S.C. § 1563(b)); or
7Section 403. Reports and Payment of Tax.--* * *
8(d) If the officers of any corporation shall neglect, or
9refuse to make any report as herein required, or shall knowingly
10make any false report, [the following percentages of the amount
11of the tax shall be added by the department to the tax
12determined to be due on the first one thousand dollars ($1,000)
13of tax ten per cent, on the next four thousand dollars ($4,000)
14five per cent, and on everything in excess of five thousand
15dollars ($5,000) one per cent, no such] a penalty of five
16hundred dollars ($500) plus an additional one per cent for every
17dollar of tax determined to be due in excess of twenty-five
18thousand dollars ($25,000) shall be added to the tax determined
19to be due. No amounts added to the tax shall bear any interest
21* * *
24Section 602. Imposition of Tax.--* * *
11Section 701. Imposition of Tax.--(a) Every institution
12doing business in this Commonwealth shall, on or before March 15
13in each and every year, make to the Department of Revenue a
14report in writing, verified as required by law, setting forth
15the full number of shares of the capital stock subscribed for or
16issued, as of the preceding January 1, by such institution, and
17the taxable amount of such shares of capital stock determined
18pursuant to section 701.1.
19(b) It shall be the duty of the Department of Revenue to
20assess such shares for the calendar years beginning January 1,
211971 through January 1, 1983, at the rate of fifteen mills and
22for the calendar years beginning January 1, 1984 through January
231, 1988, at the rate of one and seventy-five one thousandths per
24cent and for the calendar year beginning January 1, 1989, at the
25rate of 10.77 per cent and for the calendar [year] years
26beginning January 1, 1990[, and each calendar year thereafter]
27through January 1, 2013, at the rate of 1.25 per cent and for
28the calendar year beginning January 1, 2014, and each calendar
29year thereafter at the rate of 0.89 per cent upon each dollar of
30taxable amount thereof, the taxable amount of each share of
3(c) It shall be the duty of every institution doing business
4in this Commonwealth, at the time of making every report
5required by this section, to compute the tax and to pay the
6amount of said tax to the State Treasurer, through the
7Department of Revenue either from its general fund, or from the
8amount of said tax collected from its shareholders.[: Provided,
9That for the calendar years beginning January 1, 1971 through
10January 1, 1991, such institution, upon the date its report,
11herein required is made for such calendar years beginning
12January 1, 1971 through January 1, 1991, shall pay to the
13Department of Revenue not less than eighty per cent of the tax
14due to the Commonwealth by it for such calendar year, and the
15remaining tax due shall be paid at the time when the report
16herein required for the year next succeeding is made:] Provided,
17That in case any institution shall collect, annually, from the
18shareholders thereof said tax, according to the provisions of
19this article, that have been subscribed for or issued, and pay
20the same into the State Treasury, through the Department of
21Revenue, the shares, and so much of the capital and profits of
22such institution as shall not be invested in real estate, shall
23be exempt from local taxation under the laws of this
24Commonwealth; and such institution shall not be required to make
25any report to the local assessor or county commissioners of its
26personal property owned by it in its own right for purposes of
27taxation and shall not be required to pay any tax thereon.
30Section 701.1. Ascertainment of Taxable Amount; Exclusion of
1United States Obligations.--(a) [The taxable amount of shares
2shall be ascertained and fixed by adding together the value
3determined under subsection (b) for the current and preceding
4five years and dividing the resulting sum by six. If an
5institution has not been in existence for a period of six years,
6the taxable amount of shares shall be ascertained and fixed by
7adding together the values determined under subsection (b) for
8the number of years the institution has been in existence and
9dividing the resulting sum by such number of years.] The taxable
10amount of shares shall be ascertained and fixed by the book
11value of total bank equity capital as determined by the Reports
12of Condition at the end of the preceding calendar year in
13accordance with the requirements of the Board of Governors of
14the Federal Reserve System, the Comptroller of the Currency, the
15Federal Deposit Insurance Corporation or other applicable
17(b) [The value for each year required by subsection (a)
18shall be determined by deducting from the book value of total
19equity capital] A deduction for the value of United States
20obligations shall be provided from the taxable amount of shares
21in an amount equal to the same percentage of total bank equity
22capital as the book value of obligations of the United States
23bears to the book value of the total assets, except that, for
24the value of shares reported on tax returns due on March 15,
252008, and thereafter, any goodwill recorded as a result of the
26use of purchase accounting for an acquisition or combination as
27described in this section and occurring after June 30, 2001, may
28be subtracted from the book value of total bank equity capital
29and disregarded in determining the deduction provided for
30obligations of the United States. [for the six-year period
1described in subsection (a). For purposes of this subsection,
2book values and deductions for United States obligations for
3each year shall be determined by the Reports of Condition for
4each calendar quarter of the preceding calendar year in
5accordance with the requirements of the Board of Governors of
6the Federal Reserve System, the Comptroller of the Currency, the
7Federal Deposit Insurance Corporation or other applicable
8regulatory authority; and book values shall be averaged as
9calculated by averaging book values as determined by such
10Reports of Condition.] For purposes of this article, United
11States obligations shall be obligations coming within the scope
12of 31 U.S.C. § 3124. [For any year in which an institution does
13not file four quarterly Reports of Condition, book values and
14deductions for United States obligations shall be determined by
15adding together the book values and deductions for United States
16obligations from each quarterly Reports of Condition filed for
17such year and dividing the resulting sums by the number of such
18Reports of Condition.] In the case of institutions which do not
19file such Reports of Condition, book values shall be determined
20by generally accepted accounting principles as of the end of
21[each calendar quarter. For any year in which an institution
22which does not file Reports of Condition is not in existence for
23four quarters, the book value for that year shall be determined
24by adding together the book values for each quarter in which the
25institution was in existence and dividing by that number of
26quarters. For purposes of this section, a partial year shall be
27treated as a full year.] the preceding calendar year.
28(c) For purposes of this section:
3(2) [the] if there is a combination of two or more
4institutions into one [shall be treated as if the constituent
5institutions had been a single institution in existence prior to
6as well as after the combination and], the book values and
7deductions for United States obligations from the Reports of
8Condition of the constituent institutions shall be combined. For
9purposes of this section, a combination shall include any
10acquisition required to be accounted for by using the purchase
11method in accordance with generally accepted accounting
12principles or a statutory merger or consolidation.
15Section 701.4. Apportionment.--An institution may apportion
16its taxable amount of shares determined under section 701.1 in
17accordance with this subsection if the institution is subject to
18tax in another state based on or measured by net worth, gross
19receipts, net income or some similar base of taxation, or if it
20could be subject to such tax, whether or not such a tax has in
21fact been enacted. The following shall apply:
22(1) [The] (i) For calendar years beginning prior to January
231, 2014, the taxable amount of shares shall be apportioned in
24accordance with a fraction, the numerator of which is the sum of
25the payroll factor, the receipts factor and the deposits factor,
26and the denominator of which is three. If one of the factors is
27inapplicable, the denominator is two. If two of the factors are
28inapplicable, the denominator is one.
3(2) The payroll factor is a fraction, the numerator of which
4is the total wages paid in this Commonwealth and the denominator
5of which is the total wages paid in all states. Wages are paid
6in a state if paid to an employe having a regular presence
8(3) The receipts factor is a fraction, the numerator of
9which is total receipts located in this Commonwealth and the
10denominator of which is the total receipts located in all
11states. [Receipts do not include principal repayments on loans
12or credit, travel and entertainment cards. Receipts from sale or
13disposition of intangible and tangible property include only the
14net gain therefrom.] The method of calculating receipts for
15purposes of the denominator shall be the same as the method used
16in determining receipts for purposes of the numerator. The
17location of receipts shall be determined as follows:
20(ii) All receipts from performance of services are located
21in a state to the extent the services are performed in the
22state. If services are performed partly within two or more
23states, the receipts located in each state shall be measured by
24the ratio which the time spent in performing such services in
25the state bears to the total time spent in performing such
26services in all states. Time spent in performing services in a
27state is the time spent by employes having a regular presence in
28the state in performing such services.
1(iv) Interest or service charges, excluding merchant
2discounts, from credit, travel and entertainment card
3receivables and credit card holders' fees are located in the
4state in which the credit card holder resides in the case of an
5individual or, if a corporation, in the state of the
6cardholder's commercial domicile if, in either case, the
7institution maintains an office in such state. Otherwise, the
8receipts are located in the state in which the institution
9maintains an office which treats such receivables as assets on
10its books or records.
11(v) Interest, dividends and net gains from the sale or
12disposition of intangibles, exclusive of those receipts
13described elsewhere in this section, are located in the state in
14which the institution maintains an office which treats such
15intangibles as assets on its books or records.
19(vii) Receipts from sales of tangible property are located
20in the state in which the property is delivered or shipped to a
21purchaser, regardless of the f.o.b. point or other conditions of
23(viii) All receipts not specifically treated under this
24subsection are located in the state where the greatest portion
25of the income-producing activities are performed, based on costs
27(i) The numerator of the receipts factor shall include
28receipts from the lease or rental of real property owned by the
29institution if the property is located within this Commonwealth
30or receipts from the sublease of real property if the property
1is located within this Commonwealth.
4(A) Except as provided under clause (B), the numerator of
5the receipts factor shall include receipts from the lease or
6rental of tangible personal property owned by the institution if
7the property is located within this Commonwealth when it is
8first placed in service by the lessee.
9(B) The following shall apply:
10(I) Receipts from the lease or rental of transportation
11property owned by the institution shall be included in the
12numerator of the receipts factor to the extent that the property
13is used in this Commonwealth.
14(II) The extent an aircraft shall be deemed to be used in
15this Commonwealth and the amount of receipts that shall be
16included in the numerator of this Commonwealth's receipts factor
17shall be determined by multiplying all the receipts from the
18lease or rental of the aircraft by a fraction, the numerator of
19which is the number of landings of the aircraft in this
20Commonwealth and the denominator of which is the total number of
21landings of the aircraft.
24(IV) If the extent of the use of transportation property
25within this Commonwealth cannot be determined, the property
26shall be deemed to be used wholly in the state in which the
27property has its principal base of operations.
30(A) The following shall apply to a calculation under this
6(II) If the real property under subclause (I) is located
7both within this Commonwealth and one or more other states, the
8receipts under this subsection shall be included in the
9numerator of the receipts factor if more than fifty per cent of
10the fair market value of the real property is located within
12(III) If more than fifty per cent of the fair market value
13of real property under subclause (I) is not located within any
14single state, the receipts under this subsection shall be
15included in the numerator of the receipts factor if the borrower
16is located in this Commonwealth.
17(B) The determination of whether real property securing a
18loan is located within this Commonwealth shall be made as of the
19time the original agreement was made and all subsequent
20substitutions of collateral shall be disregarded.
21(iv) The numerator of the receipts factor shall include
22interest, fees and penalties imposed in connection with loans
23not secured by real property if the borrower is located in this
25(v) The numerator of the receipts factor shall include net
26gains from the sale of loans. Net gains from the sale of a loan
27shall include income recorded under the coupon stripping rules
28of section 1286 of the Internal Revenue Code of 1986 (Public Law
2999-514, 26 U.S.C. § 1286). The following shall apply:
30(A) The amount of net gains, equal to zero or above, from
1the sale of loans secured by real property included in the
2numerator shall be determined by multiplying the net gains by a
3fraction, the numerator of which is the amount included in the
4numerator of the receipts factor under subparagraph (iii) and
5the denominator of which is the total amount of interest and
6fees or penalties in the nature of interest from loans secured
7by real property.
8(B) The amount of net gains, equal to zero or above, from
9the sale of loans not secured by real property included in the
10numerator shall be determined by multiplying the net gains by a
11fraction, the numerator of which is the amount included in the
12numerator of the receipts factor under subparagraph (iv) and the
13denominator of which is the total amount of interest and fees or
14penalties in the nature of interest from loans not secured by
16(vi) The numerator of the receipts factor shall include
17interest, fees and penalties charged to credit, debit or similar
18cardholders, including annual fees and overdraft fees, if the
19billing address of the cardholder is in this Commonwealth.
20(vii) The numerator of the receipts factor shall include net
21gains, equal to zero or above, from the sale of credit card
22receivables multiplied by a fraction, the numerator of which is
23the amount included in the numerator of the receipts factor
24under subparagraph (vi) and the denominator of which is the
25institution's total amount of interest and fees or penalties in
26the nature of interest from credit card receivables and fees
27charged to cardholders.
30(A) All credit card issuer's reimbursement fees multiplied
1by a fraction, the numerator of which is the amount of fees,
2interest and penalties charged to credit cardholders included in
3the numerator of the receipts factor under subparagraph (vi) and
4the denominator of which is the institution's total amount fees,
5interest and penalties charged to credit cardholders.
6(B) All card issuer's reimbursement fees, except as provided
7under clause (A), multiplied by a fraction, the numerator of
8which is the amount of the fees, interest and penalties charged
9to all other cardholders included in the numerator of the
10receipts factor under subparagraph (vi) and the denominator of
11which is the institution's total amount of fees, interest and
12penalties charged to all other cardholders.
15(A) If the institution can readily determine the location of
16the merchant and if the merchant is in this Commonwealth, the
17numerator of the receipts factor shall include receipts from
23(I) For a merchant discount related to the use of a credit
24card, the numerator of which shall be the amount of fees,
25interest and penalties charged to credit cardholders that is
26included in the numerator of the receipts factor under
27subparagraph (vi) and the denominator of which is the
28institution's total amount of fees, interest and penalties
29charged to credit cardholders.
30(II) For a merchant discount related to the use of a debit
1card, the numerator of which shall be the amount of fees,
2interest and penalties charged to debit cardholders that is
3included in the numerator of the receipts factor under
4subparagraph (vi) and the denominator of which is the
5institution's total amount of fees, interest and penalties
6charged to debit cardholders.
7(III) For a merchant discount related to the use of cards,
8except as provided under subclauses (I) and (II), the numerator
9of which shall be the amount of fees, interest and penalties
10charged to all other cardholders that is included in the
11numerator of the receipts factors under subparagraph (vi) and
12the denominator of which is the institution's total amount of
13fees, interest and penalties charged to all other cardholders.
17(A) The numerator of the receipts factor shall include fees
18charged to a cardholder for the use at an Automated Teller
19Machine of a card issued by the institution if the cardholder's
20billing address is in this Commonwealth.
21(B) The numerator of the receipts factor shall include fees
22charged to a cardholder, other than the institution's
23cardholder, for the use of the card at an Automated Teller
24Machine owned or rented by the institution, if the Automated
25Teller Machine is in this Commonwealth.
26(xi) The following shall apply to loan servicing fees:
27(A) (I) The numerator of the receipts factor shall include
28loan servicing fees derived from loans secured by real property
29multiplied by a fraction, the numerator of which is the amount
30included in the numerator of the receipts factor under
4(II) The numerator of the receipts factor shall include loan
5servicing fees derived from loans not secured by real property
6multiplied by a fraction, the numerator of which is the amount
7included in the numerator of the receipts factor under
8subparagraph (iv) and the denominator of which is the total
9amount of interest and fees or penalties in the nature of
10interest from loans not secured by real property.
11(B) If the institution receives loan servicing fees for
12servicing the secured or the unsecured loans of another
13institution, the numerator of the receipts factor shall include
14loan servicing fees if the borrower is located in this
16(xii) The numerator of the receipts factor shall include
17receipts from services not otherwise apportioned under this
18section if the recipient of the services receives all of the
19benefit of the services in this Commonwealth. If the recipient
20of the services receives some of the benefit of the services in
21this Commonwealth, the receipts shall be included in the
22numerator of the apportionment factor in proportion to the
23extent that the recipient receives benefit of the services in
1factor. Investment assets and activities and trading assets and
2activities shall include investment securities, trading account
3assets, Federal funds, securities purchased and sold under
4agreements to resell or repurchase, options, futures contracts,
5forward contracts, notional principal contracts such as swaps,
6equities and foreign currency transactions. For the investment
7and trading assets and activities under subclauses (I) and (II),
8the receipts factor shall include the amounts under subclauses
9(I) and (II). The following shall apply:
10(I) The receipts factor shall include the amount by which
11interest from Federal funds sold and securities purchased under
12resale agreements exceeds interest expense on Federal funds
13purchased and securities sold under repurchase agreements.
14(II) The receipts factor shall include the amount by which
15interest, dividends, gains and other income from trading assets
16and activities, including assets and activities in the matched
17book, in the arbitrage book and foreign currency transactions,
18exceed amounts paid in lieu of interest, amounts paid in lieu of
19dividends and losses from the assets and activities.
20(B) The numerator of the receipts factor shall include
21interest, dividends, net gains, equal to zero or above, and
22other income from investment assets and activities and from
23trading assets and activities under clause (A) that are
24attributable to this Commonwealth using one of the following
26(I) Method 1. The numerator shall be determined by
27multiplying the total amount of receipts from trading assets and
28activities under clause (A) by a fraction the numerator of which
29is the total amount of all other receipts attributable to this
30Commonwealth and the denominator of which is the total amount of
1all other receipts.
2(II) Method 2. The numerator shall be determined by
3multiplying the total amount of receipts under clause (A) by a
4fraction the numerator of which is the average value of the
5assets which generate the receipts which are properly assigned
6to a regular place of business of the institution within this
7Commonwealth and the denominator of which is the average value
8of all such assets.
9(C) Upon the election by the institution to use one of the
10methods under clause (B), the institution shall use the method
11on all subsequent returns unless the institution receives prior
12permission from the Department of Revenue to use a different
14(D) The following shall apply:
15(I) An institution electing to use Method 2 shall have the
16burden of proving that an investment asset or activity or
17trading asset or activity was properly assigned to a regular
18place of business outside of this Commonwealth by demonstrating
19that the day-to-day decisions regarding the asset or activity
20occurred at a regular place of business outside this
22(II) If the day-to-day decisions regarding an investment
23asset or activity or trading asset or activity occur at more
24than one regular place of business and one regular place of
25business is in this Commonwealth and one regular place of
26business is outside this Commonwealth, the asset or activity
27shall be considered to be located at the regular place of
28business of the institution where the investment or trading
29policies or guidelines with respect to the asset or activity are
1(III) Unless the institution demonstrates to the contrary,
2the investment or trading policies and guidelines under
3subclause (II) shall be presumed to be established at the
4commercial domicile of the institution.
12(III) interest, dividends, gains and other income from
13trading assets and activities, including assets and activities
14in the matched book, in the arbitrage book and foreign currency
18(A) The numerator of the receipts factor shall include
19receipts from the sale or disposition of tangible personal
20property if the property is delivered or shipped to a purchaser
21within this Commonwealth regardless of the f.o.b. point or other
22conditions of the sale.
30(II) if the purchaser or recipient does not have a
16(c) the customer does not have a commercial domicile.
20(xvi) For purposes of determining the location where
21benefits are received from under subparagraphs (xii) and (xv),
22if a service or other activity generating the receipts provides
23benefits to two or more recipients located in different states
24or provides benefits to a recipient in more than one state, the
25location where benefits are received may be estimated using
26reasonable procedures to estimate the locations in which
27benefits are received.
1income, a franchise tax for the privilege of doing business or a
2corporate stock tax or shares tax of the type imposed under this
3article shall be included in the numerator of the receipts
4factor, if the institution's commercial domicile is in this
6(4) The deposits factor is a fraction, the numerator of
7which is the average value of deposits located in this
8Commonwealth during the taxable year and the denominator of
9which is the average value of the total deposits during the
10taxable year. The average value of deposits is to be computed on
11a quarterly basis. Deposits are located in the state in which
12the institution maintains an office which properly treats the
13deposits as a liability on its books or records. A deposit is
14considered to be properly treated as a liability on the books or
15records of the office with which it has a greater portion of
16contact. In determining whether a deposit has a greater portion
17of contact with a particular office, consideration is given to:
30(v) Whether essential records relating to the deposit are
3Section 701.5. Definitions.--The following words, terms and
4phrases when used in this article shall have the meaning
5ascribed to them in this section, except where the context
6clearly indicates a different meaning:
7"Billing address." The location indicated in the books and
8records of an institution on the first day of the taxable year
9or on a later date in the taxable year when the customer
10relationship began, as the address where a notice, statement and
11bill relating to a customer's account is mailed.
12"Commercial domicile." As follows:
15(2) if a trade or business is organized under the laws of a
16foreign country, the person's commercial domicile shall be
17deemed to be the state of the United States or the District of
18Columbia from which the institution's trade or business in the
19United States is principally managed and directed. It shall be
20presumed, subject to rebuttal, that the location from which a
21trade or business is principally managed and directed is the
22state of the United States or the District of Columbia to which
23the greatest number of employes are regularly connected or out
24of which they are working, notwithstanding where the services of
25the employes are performed, as of the last day of the taxable
27"Card issuer's reimbursement fee." The fee an institution
28receives from a merchant's bank because one of the persons to
29whom the institution has issued a credit, debit or similar type
30of card has charged merchandise or services to the card.
4"Debit card." A card, or other means of providing
5information, that enables the holder to charge the cost of
6purchases or cash withdrawal, against the holder's bank account
7or a remaining balance on the card.
8"Deposits." Deposits consist of those items specified for
9inclusion as such in quarterly Reports of Condition, but do not
10include deposits made by the Federal Government, its agencies or
12"Doing business in this Commonwealth." As follows:
13(1) An institution is engaged in doing business in this
14Commonwealth and is subject to the tax imposed under this
15article if it satisfies any of the following requirements and
16generates gross receipts apportioned to this Commonwealth under
17section 701.4 in excess of $100,000:
23(iii) A person, including an employe, representative,
24independent contractor, agent or affiliate of the institution,
25or an employe, representative, independent contractor or agent
26of an affiliate of the institution, directly or indirectly
27solicits business in this Commonwealth by or for the benefit of
28the institution, through:
10(vii) The institution has a physical presence in this
11Commonwealth for a period of more than one day during the tax
12year or conducts an activity sufficient to create a nexus in
13this Commonwealth for tax purposes under the Constitution of the
15(2) The term shall not include:
16(i) The use by the institution of a professional performing
17a service on behalf of the institution in this Commonwealth if
18the services are not significantly associated with the
19institution's ability to establish and maintain a market in this
27"Institution." As follows:
28(1) The term shall mean:
3[(2)] (ii) Every operating company having capital stock
4[located within this Commonwealth] and having any of the powers
5of companies entitled to the benefits of an act, entitled "An
6act conferring upon certain fidelity, insurance, safety deposit,
7trust, and savings companies, the powers and privileges of
8companies incorporated under the provisions of section 29 of an
9act, entitled 'An act to provide for the incorporation and
10regulation of certain corporations,' approved April 29, 1874,
11and of the supplements thereto," approved June 27, 1895,
12commonly known as trust companies.
13[(3)] (iii) Every company organized and operating as a bank
14and trust company or as trust company having capital stock
15[located in this Commonwealth], whether the institution is
16incorporated under any law of this Commonwealth, the law of the
17United States or any law of any jurisdiction. The term shall not
18include any of such companies, all of the shares of capital
19stock of which, other than shares necessary to qualify
20directors, are owned by a company which is liable to pay to the
21Commonwealth a tax pursuant to this article.
30"Lease." Any leasing transaction in which the lessor would
14(4) Such institution engages in regular solicitation in this
15Commonwealth, whether at a place of business, by traveling loan
16officers or other representatives, by mail, by telephone or
17other electronic means, and the solicitation results in the
18creation of a depository or direct debtor/creditor relationship
19with a resident of this Commonwealth. For purposes of this
20article, mere processing or transfer through financial
21intermediaries of checks, credit card receivables, commercial
22paper and the like does not create a debtor/creditor
23relationship. A financial institution is engaged in regular
24solicitation within this Commonwealth if it has entered into any
25of the relationships listed in this clause with twenty or more
26residents of this Commonwealth during any tax period or if it
27has five million dollars ($5,000,000) or more of assets
28attributable to sources within this Commonwealth at any time
29during the tax period.
30(5) Such institution owns tangible property which is located
6"Loan." As follows:
7(1) The term shall mean any of the following:
14(3) The term shall not include:
15(i) Futures or forward contracts.
16(ii) An option.
17(iii) A notional principal contract such as swaps.
22(vi) A cash item in the process of collection.
23(vii) A Federal fund sold.
24(viii) A security purchased under an agreement to resell.
25(ix) An asset held in a trading account.
26(x) A security.
1"Loan secured by real property." A loan for which at least
250 per cent of the aggregate value of the collateral used to
3secure a loan or other obligation, when valued at fair market
4value as of the time the original loan or obligation was
5incurred, was real property.
9"Merchant discount." The fee or negotiated discount charged
10to a merchant by an institution for the privilege of
11participating in a program by which a credit, debit or similar
12type of card is accepted in payment for merchandise or services
13sold to the cardholder, net of any cardholder charge-back and
14unreduced by any interchange transaction or issuer reimbursement
15fee paid to another for a charge or purchase made by its
17"Origination of loans." A loan is deemed to have originated
18in the state in which the office is located which properly
19treats the loan as an asset on its books or records. However, if
20an institution maintains an office in a state, the following
22(1) Loans secured primarily by real property are deemed to
23have originated at an office within the state in which the
24predominant part of the security real property is or will be
25located, if at least one of the following activities occurs at
26an office in the state:
27(i) application for the loan;
28(ii) negotiation for the loan;
29(iii) approval of the loan; or
30(iv) administrative responsibility for the loan.
1(2) All other loans made to borrowers residing or having
2their commercial domicile within the state are deemed to have
3originated at an office within the state, if at least one of the
4following activities occurs at an office in the state:
5(i) application for the loan;
6(ii) negotiation for the loan;
7(iii) approval of the loan; or
8(iv) administrative responsibility for the loan.
9"Principal base of operations." As follows:
16(ii) communicates with customers or other people; or
19"Property located in a state."
24(2) Tangible personal property which is characteristically
25moving property, such as motor vehicles, rolling stock,
26aircraft, vessels, mobile equipment and the like, shall be
27deemed to be located in a state if:
4(iii) the state is the residence or commercial domicile of
5the lessee or other user of the property, where there is no
6principal base of operations and the operation of the property
7is in two or more states.
10(1) Real and tangible personal property, respectively,:
13(ii) property to which the institution holds legal title and
14on which no other person may claim depreciation for Federal
15income tax purposes, or could claim depreciation if subject to
16Federal income tax.
19"Receipts." As follows:
23(2) If consolidated returns are filed with the Federal
24Government, an item that would be included in taxable income
25returned to and ascertained by the Federal Government if a
26separate return had been made to the Federal Government by the
27institution, including the taxable income of a subsidiary of the
28institution that are disregarded entities for purposes of
30"Regular place of business." An office at which an
15"Syndication." An extension of credit in which two or more
16people provide funds and each person is at risk for up to a
17specified percentage of the total extension of credit or for up
18to a specified dollar amount.
19"Transportation property." A vehicle and vessel capable of
20moving under its own power, such as aircraft, a train, water
21vessel and motor vehicle. The term includes equipment or a
22container attached to the property, such as rolling stock, a
23barge, trailer or similar equipment or container.
24Section 24. The definitions of "document," "real estate" and
25"real estate company" in section 1101-C of the act, amended July
262, 1986 (P.L.318, No.77), are amended and the section is amended
27by adding definitions to read:
1* * *
2"Document." Any deed, instrument or writing which conveys,
3transfers, devises, vests, confirms or evidences any transfer or
4devise of title to real estate in this Commonwealth, but does
5not include wills, mortgages, deeds of trust or other
6instruments of like character given as security for a debt and
7deeds of release thereof to the debtor, land contracts whereby
8the legal title does not pass to the grantee until the total
9consideration specified in the contract has been paid or any
10cancellation thereof unless the consideration is payable over a
11period of time exceeding thirty years or instruments which
12solely grant, vest or confirm a public utility easement.
13"Document" shall also include a declaration of acquisition
14required to be presented for recording under section 1102-C.5 of
16* * *
18(1) Any lands, tenements or hereditaments [within this
19Commonwealth], including, without limitation, buildings,
20structures, fixtures, mines, minerals, oil, gas, quarries,
21spaces with or without upper or lower boundaries, trees and
22other improvements, immovables or interests which by custom,
23usage or law pass with a conveyance of land, but excluding
24permanently attached machinery and equipment in an industrial
26(2) A condominium unit.
30"Real estate company." A corporation or association which
1[is] meets any of the following:
8[(2)] (ii) holds real estate, the value of which comprises
9ninety per cent or more of the value of its entire tangible
10asset holdings exclusive of tangible assets which are freely
11transferable and actively traded on an established market.
12(2) Ninety percent or more of the ownership interest in the
13corporation or association is held by thirty-five or fewer
14persons and the corporation or association owns, as ninety
15percent or more of the fair market value of its assets, a direct
16or indirect interest in a real estate company. An indirect
17ownership interest is an interest in a corporation or
18association, ninety percent or more of the ownership interest
19which is held by thirty-five or fewer persons whose purpose is
20the ownership of a real estate company.
21* * *
30Section 25. Section 1102-C of the act, amended July 2, 1986
1(P.L.318, No.77), is amended to read:
2Section 1102-C. Imposition of Tax.--Every person who makes,
3executes, delivers, accepts or presents for recording any
4document or in whose behalf any document is made, executed,
5delivered, accepted or presented for recording, shall be subject
6to pay for and in respect to the transaction or any part
7thereof, or for or in respect of the vellum parchment or paper
8upon which such document is written or printed, a State tax at
9the rate of one per cent of the value of the real estate within
10this Commonwealth represented by such document, which State tax
11shall be payable at the earlier of the time the document is
12presented for recording or within thirty days of acceptance of
13such document or within thirty days of becoming an acquired
19* * *
20(23) A transfer of real estate:
21(i) for no or nominal consideration from the Commonwealth or
22any of its instrumentalities, agencies or political subdivisions
23to a volunteer emergency medical services agency, volunteer fire
24company or volunteer rescue company; or
30Section 1102-C.5. Acquired Company.--(a) A real estate
3(1) does not affect the continuity of the company; and
4(2) of itself or together with prior changes has the effect
5of transferring, directly or indirectly, ninety per cent or more
6of the total ownership interest in the company within a period
7of three years.
16(iii) the transferring party receives full consideration, in
17any form, in exchange for the transfer.], the transferring party
18provides the transferee a legally binding commitment or option,
19enforceable at a future date, to execute the transfer.
20* * *
24NONLICENSED CORPORATION PARI-MUTUEL WAGERING TAX
25Section 1601-B. Scope.
29Section 1602-B. Definitions.
30The following words and phrases when used in this article
6"Association." A general partnership, limited partnership,
7limited liability partnership or any other form of
8unincorporated enterprise, owned or conducted by two or more
9persons other than a private trust or decedent's estate.
13"Corporation." A corporation, joint-stock association or
14business trust which is organized under the laws of this
15Commonwealth, the United States, or any other state, territory,
16foreign country or dependency.
17"Department." The Department of Revenue of the Commonwealth.
21"Nonlicensed corporation." A person other than a licensed
22corporation that offers and accepts pari-mutuel wagers made
23within this Commonwealth, including an advance deposit account
24wagering, in which the wagers are included in common pool
25wagering through a pari-mutuel system.
26"Pari-mutuel system." The hardware, software and
27communications equipment used to record wagers, calculate
28payouts for winning wagers and transmit wagering transactions
29and pari-mutuel pool data for display to patrons and to
30communicate with other pari-mutuel systems linked to facilitate
1common pool wagering.
2"Pari-mutuel wagering." A form of wagering on the outcome of
3a horse race or harness horse race in which all wagers are
4pooled and held by a pari-mutuel pool host for distribution of
5the total amount, minus the deductions authorized by law, to
6holders of tickets on the winning contestants.
7"Person." A natural person, association or corporation. The
8term shall, when used in any provision prescribing and imposing
9a penalty, include the responsible members or general partners
10of an association or the officers of a corporation.
11Section 1603-B. Tax.
12(a) Imposition.--A tax is imposed on the privilege of
13conducting pari-mutuel wagering in this Commonwealth by all
14nonlicensed corporations. A nonlicensed corporation shall pay a
15tax through the department for deposit into the restricted
16account established under section 1606-B.
17(b) Rate.--The tax imposed under subsection (a) shall be a
18percentage tax of 10% on the amount of pari-mutuel wagers made
19each day through the nonlicensed corporation where the wagers
20were placed from within this Commonwealth, including wagers made
21by an advance deposit account wagering system, in which the
22wagers are included in common pool wagering through a pari-
24Section 1604-B. Pari-mutuel tax return.
25(a) Returns.--A nonlicensed corporation subject to this
26article shall file with the department, on a form prescribed by
27the department, a nonlicensed corporation pari-mutuel wagering
28tax return. The return shall be filed under oath or affirmation
29of an authorized officer, member or partner reporting the tax
30due under this part in the prior calendar month. A return shall
4(1) The total amount of pari-mutuel wagers made within
5this Commonwealth, including wagers made by an advance
6deposit account wagering system, in which the wagers are
7included in common pool wagering through a pari-mutuel
8system, on thoroughbred meets.
9(2) The total amount of pari-mutuel wagers made within
10this Commonwealth, including wagers made by an advance
11deposit account wagering system, in which the wagers are
12included in common pool wagering through a pari-mutuel
13system, on harness meets.
14(3) Calculation of the tax due at 10%.
15(4) Other information required by the department.
19(c) Penalties and interest.--If a nonlicensed corporation
20fails to file the return required under subsection (a) or fails
21to pay the tax imposed under section 1603-B, the department may
22do any of the following:
23(1) Assess the amount of tax due.
24(2) Impose and assess an administrative penalty equal to
255% of the tax or $500, whichever is greater, due but unpaid
26for each quarter or fraction of the quarter that the tax
27remains unpaid together with interest at the rate established
28under section 806 of the act of April 9, 1929 (P.L.343,
29No.176), known as The Fiscal Code, on the tax from the time
30when the tax became due. The penalties provided under this
1paragraph shall be added to the tax and assessed and
2collected at the same time and in the same manner as a part
3of the tax. Unless otherwise specified, the tax shall be
4assessed, collected and enforced by the department under the
5provisions of Article II.
6Section 1605-B. Regulations.
10Section 1606-B. Advanced Deposit Wagering Collections Account.
11(a) Advanced Deposit Wagering Collections Account.--There is
12created within the General Fund a restricted account to be known
13as the Advanced Deposit Wagering Collections Account. Revenues
14collected under this article shall be deposited into the
16(b) Transfer.--Of the funds deposited in the Advanced
17Deposit Wagering Collections Account, beginning fiscal year
182013-2014 and each fiscal year thereafter, up to $5,000,000 is
19transferred to the State racing commissions in the Department of
20Agriculture for general government operations of the
21commissions. For fiscal year 2013-2014, any funds that exceed
22the $5,000,000 shall be transferred to the Pennsylvania Race
23Horse Development Fund.
27Section 1702-D. Definitions.
3"Film." A feature film, a television film, a television talk
4or game show series, a television commercial or a television
5pilot or each episode of a television series which is intended
6as programming for a national audience. The term does not
7include a production featuring news, current events, weather and
8market reports, public programming, sports events, awards shows
9or other gala events, a production that solicits funds, a
10production containing obscene material or performances as
11defined in 18 Pa.C.S. § 5903(b) (relating to obscene and other
12sexual materials and performances) or a production primarily for
13private, political, industrial, corporate or institutional
15"Minimum stage filming requirements." Include:
30(ii) shoot for a minimum of 15 days at a qualified
1production facility; and
17(3) Payment to a pass-through entity representing
18individual talent if the tax imposed by Article III will be
19paid or accrued by all of the partners, members or
20shareholders of the pass-through entity for the taxable year
21for which the tax imposed under Article III has been withheld
22and remitted under the requirements of Article III by the
9"Production expense." As follows:
10(1) The term includes all of the following:
20(v) The cost of leasing vehicles.
23(vii) The cost of insurance coverage.
24(viii) The costs of food and lodging.
25(ix) The purchase of music or story rights.
26(x) The cost of rental of facilities and equipment.
27(2) The term does not include any of the following:
3(ii) Development cost.
8"Qualified film production expense." All Pennsylvania
9production expenses if Pennsylvania production expenses comprise
10at least 60% of the film's total production expenses. The term
11shall not include more than $15,000,000 in the aggregate of
12compensation paid to individuals or payment made to entities
13representing an individual for services provided in the
14production of the film.
15"Qualified production facility." A film production facility
16located within this Commonwealth that contains at least one
17sound stage with a column-free, unobstructed floor space and
18meets either of the following criteria:
23(2) Meets at least three of the following criteria:
30"Taxpayer." A film production company subject to tax under
3Section 1703-D. Credit for qualified film production expenses.
7(b) Review and approval.--The department shall establish
8application periods not to exceed 90 days each. All applications
9received during the application period shall be reviewed and
10evaluated by the department based on the following criteria:
13(2) The anticipated number of Pennsylvania employees.
20(6) The use of studio resources.
24Upon determining the taxpayer has incurred or will incur
25qualified film production expenses, the department may approve
26the taxpayer for a tax credit. Applications not approved may be
27reviewed and considered in subsequent application periods. The
28department may approve a taxpayer for a tax credit based on its
29evaluation of the criteria under this subsection.
30(c) Contract.--If the department approves the taxpayer's
10(4) The start date.
13(d) Certificate.--Upon execution of the contract required by
14subsection (c), the department shall award the taxpayer a film
15production tax credit and issue the taxpayer a film production
16tax credit certificate.
20Section 1705-D. Carryover, carryback and assignment of credit.
21* * *
30(3) Calendar year 2014 against qualified tax liabilities
1incurred in taxable year 2015.
2Section 1708-G.1. Scholarships.
3* * *
4(b) Award.--A scholarship organization may award a
5scholarship to an applicant who resides within the attendance
6boundary of a low-achieving school to attend a participating
7public school or a participating nonpublic school selected by
8the parent of the applicant. If an applicant who received an
9educational opportunity scholarship under this article for the
10prior school year resides within the attendance boundary of a
11school that was removed from the list of low-achieving schools
12provided by the department under subsection (a), the applicant
13may receive an educational opportunity scholarship. The
14scholarship may be for each year of enrollment in a
15participating public school or participating nonpublic school
16for up to the lesser of five years or until completion of grade
1712 provided the applicant otherwise remains eligible. In
18awarding scholarships, a scholarship organization shall give
19preference to any of the following:
22(2) An applicant of a household with a household income
23that does not exceed 185% of the Federal poverty level for
24the school year preceding the school year for which the
25application is being made.
26(3) An applicant of a household with a household income
27that does not exceed 185% of the Federal poverty level for
28the school year preceding the school year for which the
29application is being made and who resides within any of the
1(i) a first class school district;
5(iii) a school district that receives an advance of
6its basic education subsidy at any time and is either
7subject to a declaration of financial distress under
8section 691 of the Public School Code of 1949 or engaged
9in litigation against the Commonwealth in which the
10school district seeks financial assistance from the
11Commonwealth to allow the school district to continue to
13* * *
17COAL WASTE REMOVAL AND ULTRACLEAN FUELS
22Section 1802-A. Definitions.--The following words, terms and
23phrases, when used in this article, shall have the meanings
24ascribed to them in this section, except where the context
25clearly indicates a different meaning:
9"Qualified fuels" means those fuels produced from
10nontraditional coal culm and silt feedstocks as defined in
11section 29(c) of the Internal Revenue Code of 1986 (Public Law
1299-514, 26 U.S.C. § 29(c)).
24(4) Be located within this Commonwealth.
1"Tax credit base" means only the cost or other basis of
2qualifying property that is properly transferred to the
3facility's basis for depreciation for Federal income tax
4purposes between January 1, 2000, and December 31, 2012.
5Section 1803-A. Investment Tax Credits Program.--(a) A
6developer of a new facility for the production of one or more
7qualified fuels shall be allowed an investment tax credit
8against the taxes imposed under Articles II, IV and VI of this
9act. The amount of the credit shall be computed as a percentage
10applied to the cost or other basis for Federal income tax
11purposes of qualifying property.
17(3) Any amount of allowable investment tax credit not used
18in the tax year for which the credit was claimed can be carried
19forward by the claiming taxpayer to succeeding years until the
20full amount of allowable credit has been used.
21(c) (1) The developer, upon notice to the department as
22specified by the department, may sell or assign, in whole or in
23part, any investment tax credit afforded under this section to
24one or more taxpayers if no claim for allowance of such credit
25has been filed.
26(2) A taxpayer recipient by purchase or assignment of any
27portion of the developer's investment tax credit under paragraph
28(1) shall initially claim such credit, upon notice to the
29department of the derivative basis of the credit in compliance
30with procedures specified by the department, for the tax year in
4(3) Any taxpayer who acquires any portion of the developer's
5investment tax credit by sale or assignment for value and
6without notice by the developer of any irregularity or
7invalidity shall not suffer any disallowance of the credit or
8the imposition of any adjustment or fraud penalty attributable
9to conduct by the developer.
10(d) (1) If prior to the expiration of any qualifying
11property's useful life, as used to calculate depreciation for
12Federal income tax purposes, the developer, upon mandatory
13notice to the department in compliance with procedures specified
14by the department, disposes of any qualifying property, in a
15transaction other than a sale-leaseback transaction, upon which
16the department has previously allowed an investment tax credit
17claimed by any taxpayer, a portion of all such credit shall be
18recaptured and added to the developer's tax liability for the
19tax year in which the qualifying property is disposed.
20(2) The portion of the investment tax credit previously
21allowed, which is subject to recapture from the developer, shall
22be equal to a fraction whose numerator is the number of years
23remaining to fully depreciate for Federal income tax purposes
24the qualifying property disposed and whose denominator is the
25total number of years over which the property otherwise would
26have been subject to depreciation by the developer.
30(e) The department shall verify the validity of any claim
1for allowance of any investment tax credit afforded under this
2section and, in the case of a fraudulent claim, may assess
3against the developer a penalty of one hundred and twenty-five
4per cent of the credit improperly claimed.
8Section 1804-A. Contract Required.--(a) In order for a
9developer to claim investment tax credits under this article,
10the developer must enter into a contract with the Commonwealth
11that provides as follows:
15(2) The developer shall make periodic payments to the
16Commonwealth, which payments may not exceed in the aggregate
17forty-six million eight hundred thousand dollars ($46,800,000)
18over the term of the contract.
19(3) The periodic payments shall occur every five years and
20each payment shall be nine million three hundred sixty thousand
21dollars ($9,360,000), except as provided in paragraphs (4), (5)
25(i) An amount equal to the business losses of the developer,
26if any, relating to the facility that are sustained in the first
27and second years of the contract, provided such amount does not
28exceed three million seven hundred forty-four thousand dollars
29($3,744,000) for both years.
30(ii) Allowable offsets identified in subsection (b),
3(5) For the remaining five-year periods, the amount
4specified in paragraph (3) shall be reduced by the amount of
5allowable offsets identified in subsection (b), provided that
6such offsets do not exceed nine million three hundred sixty
7thousand dollars ($9,360,000) during any five-year period.
8(6) To the extent the amount of allowable offsets during any
9five-year period exceeds nine million three hundred sixty
10thousand dollars ($9,360,000), the excess may be carried over
11and added to the allowable offsets taken in the following five-
12year period, provided that the excess is applied first.
25Section 1805-A. Requirements.--Tax credits authorized by
26this article shall not be granted unless the developer has
27obtained an investment tax credit from the Federal Government or
28an investment by a person other than an agency or
29instrumentality of the Commonwealth, or any combination thereof,
30in an amount equal to or greater than the tax credit granted by
4Section 1804-B. Tax credits.
5* * *
6(d) Tax credit term.--
7(1) A company may claim the job creation tax credit for each
8new job created, as approved by the department, for a one-year,
9two-year or three-year period as authorized by the department,
10except that no tax credit may be claimed for more than five
11years from the date the company first submits a job creation tax
13(2) Notwithstanding the provisions of paragraph (1), nothing
14in this article shall be construed to prohibit the Department of
15Community and Economic Development from awarding the total
16amount of tax credit authorized for a multiple year tax credit
17in the first year in which the new job is created and the tax
19* * *
24CITY REVITALIZATION AND IMPROVEMENT ZONES
25Section 31. The act is amended by adding sections to read:
26Section 1801-C. Scope of article.
29Section 1802-C. Definitions.
30The following words and phrases when used in this article
7"City." A city of the third class with a population of at
8least 30,000 based on the most recent Federal decennial census.
9The term shall not include a city that has had a receiver
10appointed under Chapter 7 of the act of July 10, 1987 (P.L.246,
11No.47), known as the Municipalities Financial Recovery Act.
12"City revitalization and improvement zone." An area of not
13more than 130 acres, comprised of parcels designated by the
14contracting authority, which will provide economic development
15and job creation within a city.
19(1) designating zones; and
23"Department." The Department of Revenue of the Commonwealth.
24"Earned income tax." A tax imposed on earned income within a
25zone under the act of December 31, 1965 (P.L.1257, No.511),
26known as The Local Tax Enabling Act, which a city, or a school
27district contained entirely within the boundaries of or
28coterminous with the city, is entitled to receive.
29"Eligible tax." Any of the following taxes:
30(1) Corporate net income tax, capital stock and
19The term does not include cigarette tax.
23"Office." The Office of the Budget.
24"Pilot zone." An area of not more than 130 acres designated
25by the authority following application and approval by the
26Department of Community and Economic Development, the office and
27the department which will provide economic development and job
28creation within a township or borough, with a population of at
29least 7,000 based on the most recent Federal decennial census.
30"Qualified business." As follows:
13"Zone." Any of the following:
14(1) A city revitalization and improvement zone.
15(2) A pilot zone.
18Section 1803-C. Establishment of contracting authority.
22(b) Distressed cities.--A city that is a distressed city
23under the act of July 10, 1987 (P.L.246, No.47), known as the
24Municipalities Financial Recovery Act, and is located in a home
25rule county may not establish a contracting authority under this
27(c) Counties.--The home rule county where a distressed city
28under the Municipalities Financial Recovery Act is located may
29establish a contracting authority to designate a zone under this
30article within the distressed city.
1Section 1804-C. Approval.
7(2) An economic development plan.
30(d) Time.--An application under this section shall be
8Section 1805-C. Exclusions.
9A part of a zone may not include a keystone opportunity zone,
10keystone opportunity expansion zone, keystone opportunity
11improvement zone, keystone innovation zone, keystone special
12development zone, neighborhood improvement zone or strategic
14Section 1806-C. Functions of contracting authorities.
22(i) Development or improvement within a zone.
23(ii) Construction, including infrastructure and site
24preparation, reconstruction or renovation of a facility
25within a zone which will result in economic development
26in accordance with the contracting authority's plan.
29Section 1807-C. Qualified businesses.
30(a) List.--By June 1 following the end of the baseline year,
1and for every year thereafter, each contracting authority shall
2file with the department a complete list of all businesses
3located in the zone and all construction contractors engaged in
4construction, reconstruction or renovation of a facility in the
5zone in the prior calendar year. The list shall include for each
6business address, State tax identification number and parcel
7number and a map of the zone with parcel numbers.
22Section 1808-C. Funds.
25(b) Establishment.--Upon receipt of notice under subsection
26(a), the State Treasurer shall establish for each zone a special
27fund for the benefit of the contracting authority to be known as
28the City Revitalization and Improvement Zone Fund. Interest
29income derived from investment of money in a fund shall be
30credited by the State Treasury to the fund.
1Section 1809-C. Reports.
2(a) State zone report.--By June 15 following the baseline
3year and each year thereafter, each qualified business shall
4file a report with the department in a form or manner required
5by the department which includes all of the following:
12(b) Local zone report.--By June 15 following the baseline
13year and for each year thereafter, each qualified business shall
14file a report with the local taxing authority which includes all
15of the following:
28(ii) one thousand dollars.
10Section 1810-C. Calculation of baseline.
18(2) For qualified businesses not included under
19paragraph (1) but located or partially located in the zone as
20determined by the department or included in the information
21received by the department under section 1809-C(a), the
22amount of eligible State tax paid, less eligible State tax
24(b) Moves and noninclusions.--
2(2) A qualified business subject to paragraph (1) shall
3file a State zone report under section 1809-C following the
4end of the first full calendar year in which the qualified
5business conducted business in the zone and each calendar
6year thereafter. The amount of eligible State tax verified by
7the department for the qualified business for the prior
8calendar year shall be added to the State baseline tax amount
9for the zone for the prior calendar year and each year
14Section 1811-C. Certification.
24(B) the amount of eligible State tax paid.
28(B) the difference under subparagraph (i).
2(1) The certification may include the following:
10(2) The certification shall not include the following:
18(c) Submission.--The following shall apply:
19(1) An entity collecting an eligible local tax within the
20zone shall, by October 15 following the baseline year, and each
21year thereafter, submit the following to the State Treasurer for
22transfer to the fund:
3Section 1812-C. Transfers.
4(a) Office.--Within ten days of receiving the certification
5from the department under section 1811-C, the office shall
6direct the State Treasurer to transfer the amount of certified
7eligible State zone tax from the General Fund to each fund of a
9(b) State Treasurer.--Within ten days of receiving direction
10under subsection (a), the State Treasurer shall pay into the
11fund the amount directed under subsection (a) until bonds issued
12to finance the construction, including related infrastructure
13and site preparation, reconstruction or renovation of a facility
14or other eligible project in the zone are retired.
15(c) Notification.--The following shall apply:
16(1) If the transfers under subsection (a) and section
171811-C(c) are insufficient to make payments on the bonds
18issued under section 1813-C(a)(1) for the calendar year when
19the transfers are made, the contracting authority shall
20notify the Department of Community and Economic Development,
21the office and the department of the amount of additional
22money necessary to make payments on the bonds.
23(2) The notification under paragraph (1) must be
24accompanied by a detailed account of the contracting
25authority's expenditures and the calculation which resulted
26in the request for additional money. The Department of
27Community and Economic Development, the office or the
28department may request additional information from the
29contracting authority and shall jointly verify the proper
30amount of money necessary to make the payments on the bonds.
1(3) Notwithstanding 53 Pa.C.S. § 5607(e), (relating to
2purposes and powers), within 90 days of the date of the
3notification request, the office shall direct the State
4Treasurer to establish a restricted account within the
5General Fund. The office shall direct the State Treasurer to
6transfer the amount verified under paragraph (2) from the
7General Fund to the restricted account for the use of the
8contracting authority to make payments on the bonds issued
9under section 1813-C(a)(1).
10(4) Money transferred under paragraph (3):
17(4.1) Under extraordinary circumstances, a contracting
18authority may request money in excess of the limitations in
19paragraph (4)(i). The Department of Community and Economic
20Development, the office and the department shall determine
21whether the circumstances merit additional money and the
22amount to be transferred. The money shall be transferred
23under the procedure under this section.
24(5) Money transferred under paragraph (4) shall be
25repaid to the General Fund by the contracting authority. If
26money transferred under paragraph (3) is not repaid to the
27General Fund by the contracting authority by the date of the
28final payment on the bonds originally issued under section
291813-C(a)(1), the city or county which established the
30contracting authority shall pay the money not repaid to the
4Section 1813-C. Restrictions.
19(5) Improvement or development of all or part of a zone.
24(c) Excess money.--
25(1) If the amount of money transferred to the fund under
26sections 1811-C(c) and 1812-C in any one calendar year
27exceeds the money utilized under this section in that
28calendar year, the contracting authority shall submit by
29January 15 following the end of the calendar year the excess
30money to the State Treasurer for deposit into the General
2(2) At the time of submission to the State Treasurer,
3the contracting authority shall submit to the State
4Treasurer, the office and department a detailed accounting of
5the calculation resulting in the excess money.
10(d) Matching funds.--
11(1) The amount of money transferred from the fund
12utilized for the construction, including related site
13preparation and infrastructure, reconstruction or renovation
14of facilities shall be matched by private money at a ratio of
15five fund dollars to one private dollar.
16(2) By April 1, following the baseline year and for each
17year thereafter, the contracting authority shall file an
18annual report with the Department of Community and Economic
19Development, the office and the department that contains
20detailed account of the fund money expenditures and the
21private money expenditures and a calculation of the ratio in
22paragraph (1) for the prior calendar year. The agencies shall
23determine whether sufficient private money was utilized.
24(3) If it is determined that insufficient private money
25was utilized under paragraph (1), the amount of fund money
26utilized under paragraph (1) in the prior calendar year shall
27be deducted from the next transfer of the fund.
28Section 1814-C. Transfer of property.
7Section 1815-C. Duration.
8A zone shall be in effect for a period equal to the length of
9time for the repayment of debt incurred for the zone, including
10bonds issued. Bonds shall be paid, and all zones shall cease no
11later than 30 years following the initial issuance of the bonds.
12Section 1816-C. Commonwealth pledges.
13(a) Pledge.--If and to the extent the contracting authority
14pledges amounts required to be transferred to its fund under
15section 1812-C for payment of bonds issued by the contracting
16authority, until all bonds secured by the pledge of the
17contracting authority, together with interest on the bonds, are
18fully paid or provided for, the Commonwealth pledges to and
19agrees with any person, firm, corporation or government agency,
20in this Commonwealth or elsewhere, and pledges to and agrees
21with any Federal agency subscribing to or acquiring the bonds of
22the contracting authority that the Commonwealth itself will not,
23nor will it authorize any government entity to, do any of the
25(1) Abolish or reduce the size of the zone.
26(2) Amend or repeal section 1810-C or 1811-C.
27(3) Limit or alter the rights vested in the contracting
28authority in a manner inconsistent with the obligations of
29the contracting authority with respect to the bonds issued by
30the contracting authority.
3(b) Limitation.--Nothing in this section shall limit the
4authority of the Commonwealth or a political subdivision
5government entity to change the rate, base or subject of a
6specific tax or to repeal or enact any tax.
7Section 1817-C. Confidentiality.
8(a) Sole use.--A zone report or certification under this
9article shall only be used by the contracting authority to
10verify the amount of the State tax baseline amount calculated
11under section 1810-C and State tax certification under section
16Section 1818-C. Guidelines.
20Section 32. The act is amended by adding articles to read:
22MOBILE TELECOMMUNICATIONS BROADBAND
23INVESTMENT TAX CREDIT
24Section 1801-E. Definitions.
30"Qualified broadband equipment." Machinery and equipment
1located in this Commonwealth that is used by a mobile
2telecommunication services provider to provide Internet access
3service and is capable of sending, receiving, storing,
4transmitting, retransmitting, amplifying, switching or routing
5data, video or other electronic information. The term does not
6include machinery or equipment that is used to provide voice
8"Tax credit." The credit provided under this article.
9Section 1802-E. Tax credit.
10(a) General rule.--For tax years beginning after December
1131, 2013, and ending before January 1, 2024, a taxpayer that is
12a provider of mobile communications services shall be allowed a
13tax credit against the tax imposed under Article IV for
14investment in qualified broadband equipment placed into service
15in this Commonwealth during a taxable year.
23(3) Any credit claimed under this article, but not used
24in the taxable year, may be carried forward for not more than
25five consecutive taxable years. The tax credit may not be
26used to obtain a refund.
27Section 1803-E. Pass-through entity.
4(b) Additional tax credit.--The tax credit provided under
5subsection (a) shall be in addition to any tax credit to which a
6shareholder, member or partner of a pass-through entity is
7otherwise entitled under this article, except that a pass-
8through entity and a shareholder, member or partner of a pass-
9through entity may not claim a tax credit under this article for
10the same qualified broadband equipment.
11(c) Claim.--A shareholder, member or partner of a pass-
12through entity to whom credit is transferred under subsection
13(a) must immediately claim the credit in the taxable year in
14which the transfer is made. The shareholder, member or partner
15may not carry forward, carry back, obtain a refund of or sell or
16assign the tax credit.
17Section 1804-E. Procedure.
18(a) Application.--A taxpayer who purchased and placed into
19service qualified broadband equipment in a taxable year may
20apply for a tax credit as provided in this article. By October
2115, 2015, and every October 15 thereafter, a taxpayer must
22submit an application to the department for the purchase price
23of qualified broadband equipment placed into service in the
24taxable year that ended in the prior calendar year.
25(b) Notification.--By December 15, 2015, and of the calendar
26year following the close of the taxable year during which the
27qualified broadband equipment was placed into service and every
28December 15 thereafter, the department shall notify the taxpayer
29of the amount of the taxpayer's tax credit approved by the
1Section 1805-E. Limitation.
4(b) Allocation.--If the total amount of tax credits applied
5for by all taxpayers exceeds the limitation on the amount of tax
6credits in subsection (a) in a fiscal year, the tax credit to be
7received by each application shall be the product of the
8allocated amount multiplied by the quotient of the tax credit
9applied for by the applicant divided by the total of all tax
10credits applied for by all applicants, the algebraic equivalent
11of which is:
16INNOVATE IN PA TAX CREDIT
17Section 1801-F. Scope of article.
18This article relates to the Innovate in PA Tax Credit.
19Section 1802-F. Legislative intent.
20It is the intent of this article to invest in innovation as a
21catalyst for economic growth. Investment, in the Ben Franklin
22Technology Development Authority, the Ben Franklin Technology
23Partners, regional biotechnology research centers, the
24department and venture capital funds will advance the
25competitiveness of this Commonwealth's companies in the global
26economy. <-It is the goal of this article to maximize the
27available funding from a minimum amount of $131,250,000 and up
28to and exceeding $147,800,000.
29Section 1803-F. Definitions.
30The following words and phrases when used in this article
5"Authority." The Ben Franklin Technology Development
6Authority established to manage and fund programs in this
7Commonwealth that support the development of technology as
8described in the act of June 22, 2001 (P.L.569, No.38), known as
9The Ben Franklin Technology Development Authority Act.
10"Ben Franklin Technology Partners Program." A program under
11the Ben Franklin Technology Development Authority that funds
12four regionally based economic development organizations
13dedicated to a common mission of technology commercialization.
18"Fund." The Innovate in PA Fund.
19"Impact investment." An investment intended to solve social
20or environmental challenges while generating financial profit.
21Impact investing recognizes that investments have social and
22environmental returns in addition to financial returns and
23attempts to maximize the three returns rather than one at the
24expense of others.
27"Program." The Innovate in PA Program.
19Section 1804-F. Tax credit.
20A qualified taxpayer may purchase tax credits from the
21department in accordance with this article and may apply the tax
22credits against its insurance premiums tax liability in
23accordance with this article.
24Section 1805-F. Duties.
25(a) Sale of tax credits.--The department shall have the
26authority to sell up to <-$175,000,000 <-$100,000,000 in tax credits
27to qualified taxpayers. The sale of the tax credits shall be in
28accordance with section 1808-F.
4(1) Transfer an amount from the General Fund equal to
5the amount of premiums tax credits claimed by a foreign fire
6insurance company against taxes that otherwise would be
7distributed in accordance with Chapter 7 of the act of
8December 18, 1984 (P.L.1005, No.205), known as the Municipal
9Pension Plan Funding Standard and Recovery Act, to the fund
10as defined in section 702 of the Municipal Pension Plan
11Funding Standard and Recovery Act.
12(2) Transfer from the General Fund an amount equal to
13the amount of a premiums tax credit claimed by a foreign
14casualty insurance company against taxes that otherwise would
15be distributed and used for police pension, retirement or
16disability purposes as provided by the act of May 12, 1943
17(P.L.259, No.120), referred to as the Foreign Casualty
18Insurance Premium Tax Allocation Law, for distribution in
19accordance with the Foreign Casualty Insurance Premium Tax
21Section 1806-F. Use of tax credits by qualified taxpayers.
22(a) Use against insurance premiums tax liability.--A
23qualified taxpayer that purchases tax credits under section
241805-F may claim the credits beginning in calendar year 2017
25against insurance premiums tax liability incurred for a taxable
26year that begins on or after January 1, 2016.
30(c) Construction.--The following shall apply:
1(1) A qualified taxpayer may not be required to reduce
2the amount of insurance premiums tax included by the taxpayer
3in connection with rate making for any insurance contract
4written in this Commonwealth because of a reduction of the
5taxpayer's insurance premiums tax liability derived from the
6tax credit purchased under this article.
7(2) If, under the insurance laws of this Commonwealth,
8the assets of the qualified taxpayer are examined or
9considered, the taxpayer's balance of tax credits shall be
10treated as an admitted asset subject to the same financial
11rating as held by the Commonwealth.
12(d) Limitations.--The following shall apply:
13(1) The total amount of tax credits applied against
14insurance premiums tax liability by all qualified taxpayers
15in a fiscal year may not exceed <-$35,000,000 <-$20,000,000 per
16year beginning in calendar year 2017.
20Section 1807-F. Sale, carryover and carryback.
21(a) Carryover.--If the qualified taxpayer cannot use the
22entire amount of the tax credit for the taxable year in which
23the taxpayer is eligible for the credit, the excess may be
24carried over to succeeding taxable years and used as a credit
25against the qualified tax liability of the taxpayer for those
26taxable years, provided that the credit may not be carried over
27to any taxable year that begins after December 31, 2025.
1transfer tax credits held without restriction to any entity that
2is a qualified taxpayer in good standing with the Insurance
3Department and that agrees to assume all of the transferor's
4obligations with respect to the tax credit.
7Section 1808-F. Sale of tax credits to qualified taxpayers.
11(b) Process.--The department may sell the tax credits
12authorized under this article or may contract with an
13independent third party to conduct a bidding process among
14qualified taxpayers to purchase the credits. In raising capital
15for the program, the department shall have the discretion to
16distribute credits using a market-driven approach or any
17approach that maximizes the yield to the Commonwealth.
21(d) Bidding process.--Using procedures adopted by the
22department or, if applicable, by an independent third party,
23each qualified taxpayer that submits an application shall make a
24timely and irrevocable offer, subject only to the department's
25issuance to the taxpayer of tax credit certificates, to make
26specified contributions of capital to the department on dates
27specified by the department.
30(1) The requested amount of tax credits, which may not
1be less than $500,000.
7(ii) The percentage of the requested dollar amount
8of tax credits that the department and, if applicable,
9the independent third party, determines to be consistent
10with market conditions as of the offer date.
13(f) Notice of approval.--Each qualified taxpayer that
14submits an application under this section shall receive a
15written notice from the department indicating whether or not it
16has been approved as a purchaser of tax credits and, if so, the
17amount of tax credits allocated.
23(a) Payment of capital.--Capital committed by a qualified
24taxpayer shall be paid to the department for deposit into the
25fund. Nothing under this section shall prohibit the department
26from establishing an installment payment schedule for capital
27payments to be made by the qualified taxpayer.
1credit against insurance premium tax liability.
2(c) Certificate issued in accordance with bidding process.--
3The department shall issue tax credit certificates to qualified
4taxpayers in accordance with the bidding process selected by the
5department or the independent third party.
15(4) Any penalties or other remedies for noncompliance.
26(b) Penalty.--A qualified taxpayer that fails to make a
27contribution of capital within the time the department specifies
28shall be subject to a penalty equal to 10% of the amount of
29capital that remains unpaid. The penalty shall be paid to the
30department within 30 days after demand.
1(c) Reallocation.--The department may offer to reallocate
2the defaulted capital among other qualified taxpayers, so that
3the result after reallocation is the same as if the initial
4allocation had been performed without considering the tax credit
5allocation to the defaulting qualified taxpayer.
6(d) Contribution.--If the reallocation of capital under
7subsection (c) results in the contribution by another qualified
8taxpayer of the amount of capital not contributed by the
9defaulting qualified taxpayer, the department may waive the
10penalty provided under subsection (b).
11(e) Transfer.--A qualified taxpayer that fails to make a
12contribution of capital within the time specified may avoid the
13imposition of the penalty by transferring the allocation of tax
14credits to a new or existing qualified taxpayer within 30 days
15after the due date of the defaulted installment. Any transferee
16of an allocation of tax credits of a defaulting qualified
17taxpayer under this subsection shall agree to make the required
18contribution of capital within 30 days after the date of the
20Section 1811-F. Innovate in PA Program.
1(2) Forty-five percent shall be distributed to the
2Venture Investment Program for use according to program
3guidelines, including traditional venture investments or
4impact investments. The authority may consider impact
5investments based on performance. Impact investments may not
6exceed 15% of the Venture Investment Program distribution
7under this paragraph.
11Section 1812-F. Guidelines.
15Section 1813-F. Report.
16(a) Duties.--On or before January 1, 2015, and January 1 of
17each subsequent year, the department, in consultation with the
18authority and each regional biotechnology research center, shall
19do the following:
22(i) The Governor.
1(1) The name of the purchaser of premiums tax credits.
24NEIGHBORHOOD IMPROVEMENT ZONES
25Section 1901-B. Scope of article.
26This article relates to neighborhood improvement zones.
27Section 1902-B. Definitions.
6"City." A city of the third class with, on the date of the
7designation of a neighborhood improvement zone by the
8contracting authority, a population of at least 106,000, based
9on the most recent Federal decennial census.
10"Contracting authority." An authority created under 53
11Pa.C.S. Ch. 56 (relating to municipal authorities) for the
12purpose of designating a neighborhood improvement zone and
13constructing a facility or other authority created under the
14laws of this Commonwealth which is eligible to apply for and
15receive redevelopment assistance capital grants under Chapter 3
16of the act of February 9, 1999 (P.L.1, No.1), known as the
17Capital Facilities Debt Enabling Act.
18"Department." The Department of Revenue of the Commonwealth.
19"Earned income tax." A tax or portion of a tax imposed on
20earned income within a neighborhood improvement zone under the
21act of December 31, 1965 (P.L.1257, No.511), known as The Local
22Tax Enabling Act, which a city, or a school district contained
23entirely within the boundaries of or coterminous with the city,
24is entitled to receive.
25"Facility." A stadium, arena or other structure owned or
26leased by a professional sports organization at which
27professional athletic events are conducted in the presence of
28individuals who pay admission to view the event constructed or
29operated by the contracting authority.
30"Facility complex." A development or complex of residential,
1commercial, exhibition, hospitality, conference, retail and
2community uses which includes a stadium arena or other place
3owned, leased or utilized by a professional sports organization
4at which a professional athletic event or other events are
5conducted in the presence of individuals who pay admission to
6view the event.
15(1) Owns a professional sports franchise.
18"Qualified business." An entity authorized to conduct
19business in this Commonwealth which is located or partially
20located within a neighborhood improvement zone and is engaged in
21the active conduct of a trade or business for the taxable year.
22An agent, broker or representative of a business shall not be
23considered to be in the active conduct of trade or business for
25Section 1903-B. Facility.
26The contracting authority may designate a neighborhood
27improvement zone of not greater than 130 acres in which a
28facility or facility complex may be constructed and may borrow
29funds for the purpose of improvement and development within the
30neighborhood improvement zone and construction of a facility or
1facility complex within the zone.
2Section 1904-B. Neighborhood Improvement Zone Funds.
3(a) Special funds.--Following the designation of a
4neighborhood improvement zone, the contracting authority shall,
5within ten days of making the designation or, in the case of a
6neighborhood improvement zone designated prior to July 1, 2012,
7within ten days of July 2, 2012, notify the State Treasurer of
8the designation. Upon the notice, the State Treasurer shall
9establish a special fund for the benefit of each contracting
10authority to be known as the "Neighborhood Improvement Zone
11Fund." Interest income derived from investment of the money in
12each fund shall be credited by the Treasury Department to the
23(A) The refund is for a tax:
24(I) set forth in subsection (b); and
25(II) certified as paid under subsection (b).
30(2) In addition to any penalties imposed under this act
1for failure to timely pay State taxes, failure to file a
2timely and complete report under paragraph (1) shall result
3in the imposition of a penalty of 10% of all State taxes,
4calculated in accordance with subsection (b), which were
5payable by the qualified business in the prior calendar year.
6(3) Any penalty imposed under this subsection shall be
7imposed, assessed and collected by the department under the
8provisions for imposing, assessing and collecting penalties
9under Article II of this act. When the penalty is received,
10the money shall be transferred from the General Fund to the
11fund of the contracting authority that designated the
12neighborhood improvement zone in which the qualifying
13business is located.
14(4) Within 30 days of the end of each calendar year,
15each qualified business shall file a report with the local
16taxing authority reporting all local taxes, calculated in
17accordance with subsection (b), which were paid by the
18qualified business in the prior calendar year. The report
19from each qualified business shall also list any local tax
20refunds of taxes set forth in subsection (b) received in the
21prior calendar year by the qualified business and any refunds
22related to the local taxes as calculated in accordance with
23subsection (b). The report shall be in a form and manner
24required by the department.
1improvement zone; and
6(2) An entity collecting a local tax that, on July 2,
72012, is in possession of money attributable to a local tax
8not included in the amount to be calculated and certified
9under subsection (b) shall promptly remit that money to the
10local taxing authority entitled to receive the money.
11(3) Transfer and repayment is subject to the following:
21(ii) If any amount of the money under subparagraph
22(i)(A) has already been transferred to a contracting
23authority, the State Treasurer shall take action as
24necessary to recover the money from the contracting
25authority, including by way of setoff from money to be
26paid to the contracting authority under paragraph (1).
27The contracting authority shall comply with a demand made
28by the State Treasurer for the repayment of money under
30(4) As to the money deducted or recovered under
1paragraph (3), the State Treasurer shall:
9(b) Calculation.--Within 60 days of the end of each calendar
10year, the department shall certify separately for each
11neighborhood improvement zone the amounts of State taxes paid,
12less any State tax refunds received, by the qualified businesses
13filing reports under subsection (a.1)(1) to the Office of the
14Budget. Beginning in the first full calendar year following the
15designation of a neighborhood improvement zone and in each
16calendar year thereafter, by November 1, the department shall
17calculate, in accordance with this subsection, amounts of State
18taxes actually received by the Commonwealth from each qualified
19business that filed a report under subsection (a.1)(1) in the
20prior calendar year, and the department shall certify the
21amounts received to the office. An entity collecting a local tax
22within the neighborhood improvement zone shall, within 30 days
23of the end of each calendar year, submit all of the local taxes
24that are to be calculated under this subsection and which were
25paid in the prior calendar year, less any certified local tax
26refunds received by a qualified business in the prior calendar
27year, to the State Treasurer to be deposited in the fund under
28subsection (d) of the contracting authority that established the
29neighborhood improvement zone. This subsection shall not apply
30to any taxes subject to a valid pledge or security interest
1entered into in order to secure debt service on bonds if the
2pledge or security interest was entered into prior to May 1,
32011, or in the case of the neighborhood improvement zone
4designated after July 1, 2011, on the date of the designation,
5and is still in effect. The following shall be the amounts
6calculated and certified separately for each neighborhood
8(1) An amount equal to all corporate net income tax,
9capital stock and franchise tax, personal income tax,
10business privilege tax, business privilege licensing fees and
11earned income tax related to the ownership and operation of a
12professional sports organization conducting professional
13athletic events at the facility or facility complex.
14(2) An amount equal to all of the following:
15(i) All personal income tax, earned income tax and
16local services tax withheld from its employees by a
17professional sports organization conducting professional
18athletic events at the facility or facility complex.
19(ii) All personal income tax, earned income tax and
20local services tax withheld from the employees of any
21provider of events at or services to, or any operator of
22an enterprise in, the facility or facility complex.
23(iii) All personal income tax, earned income tax and
24local services tax to which the Commonwealth would be
25entitled from performers or other participants, including
26visiting teams, at an event or activity at the facility
27or facility complex.
1complex. This paragraph shall include sales and use tax paid
2by any provider of events or activities at or services to the
3facility or facility complex, including sales and use tax
4paid by vendors and concessionaires and contractors at the
5facility or facility complex.
9(5) The amount paid by the professional sports
10organization or by any provider of events or activities at or
11services to the facility or facility complex of any new tax
12enacted by the Commonwealth following October 9, 2009.
13(6) An amount equal to all personal income tax, earned
14income tax and local services tax withheld from personnel by
15the professional sports organization or by a contractor or
16other entity involved in the construction of the facility or
18(7) An amount equal to all sales and use tax paid on
19materials and other construction costs, whether withheld or
20paid by the professional sports organization or other entity,
21directly related to the construction of the facility or
23(8) An amount equal to all of the following:
24(i) All corporate net income tax, capital stock and
25franchise tax, personal income tax, business privilege
26tax, business privilege licensing fees and earned income
27tax related to the ownership and operation of any
28qualified business within the neighborhood improvement
30(ii) All personal income tax, earned income tax and
4(iii) All personal income tax, earned income tax and
5local services tax withheld from the employees of a
6qualified business that provides events, activities or
7services in the neighborhood improvement zone.
8(iv) All personal income tax, earned income tax and
9local services tax to which the Commonwealth would be
10entitled from performers or other participants at an
11event or activity in the neighborhood improvement zone.
12(v) All sales and use tax related to the operation
13of a qualified business within the neighborhood
14improvement zone. This subparagraph shall include sales
15and use tax paid by a qualified business that provides
16events, activities or services in the neighborhood
25(viii) All personal income tax, earned income tax
26and local services tax withheld from personnel by a
27qualified business involved in the improvement,
28development or construction of the neighborhood
30(ix) All sales and use tax paid on materials and
1other construction costs, whether withheld or paid by the
2professional sports organization or other qualified
3business, directly related to the improvement,
4development or construction of the neighborhood
6(x) An amount equal to any amusement tax paid by a
7qualified business operating in the neighborhood
8improvement zone. No political subdivision or other
9entity authorized to collect amusement taxes may impose
10or increase the rate of any tax on admissions to places
11of entertainment, exhibition, amusement or upon athletic
12events in the neighborhood improvement zone which are not
13in effect on the date the neighborhood improvement zone
14is designated by the contracting authority.
15(9) Except for a tax levied against real property and
16notwithstanding any other law, an amount equal to any tax
17imposed by the Commonwealth or any of its political
18subdivisions on a qualified business engaged in an activity
19within the neighborhood improvement zone or directly or
20indirectly on any sale or purchase of goods or services,
21where the point of sale or purchase is within the
22neighborhood improvement zone.
23(c) State tax liability apportionment.--For the purpose of
24making the calculations under subsection (b), the State tax
25liability of a qualified business shall be apportioned to the
26neighborhood improvement zone by multiplying the Pennsylvania
27State tax liability by a fraction, the numerator of which is the
28property factor plus the payroll factor plus the sales factor
29and the denominator of which is three, in accordance with the
1(1) The property factor is a fraction, the numerator of
2which is the average value of the taxpayer's real and
3tangible personal property owned or rented and used in the
4neighborhood improvement zone during the tax period and the
5denominator of which is the average value of all the
6taxpayer's real and tangible personal property owned or
7rented and used in this Commonwealth during the tax period
8but shall not include the security interest of any
9corporation as seller or lessor in personal property sold or
10leased under a conditional sale, bailment lease, chattel
11mortgage or other contract providing for the retention of a
12lien or title as security for the sale price of the property.
13(2) The following apply:
14(i) The payroll factor is a fraction, the numerator
15of which is the total amount paid in the neighborhood
16improvement zone during the tax period by the taxpayer
17for compensation and the denominator of which is the
18total compensation paid in this Commonwealth during the
24(B) the person's service is performed both
25within and without the neighborhood improvement zone,
26but the service performed without the neighborhood
27improvement zone is incidental to the person's
28service within the neighborhood improvement zone; or
1operations or, if there is no base of operations, the
2place from which the service is directed or
3controlled is in the neighborhood improvement zone,
4or the base of operations or the place from which the
5service is directed or controlled is not in any
6location in which some part of the service is
7performed, but the person's residence is in the
8neighborhood improvement zone.
9(3) The sales factor is a fraction, the numerator of
10which is the total sales of the taxpayer in the neighborhood
11improvement zone during the tax period and the denominator of
12which is the total sales of the taxpayer in this Commonwealth
13during the tax period.
14(i) Sales of tangible personal property are in the
15neighborhood improvement zone if the property is
16delivered or shipped to a purchaser that takes possession
17within the neighborhood improvement zone regardless of
18the F.O.B. point or other conditions of the sale.
23(B) the income-producing activity is performed
24both within and without the neighborhood improvement
25zone and a greater proportion of the income-producing
26activity is performed in the neighborhood improvement
27zone than in any other location, based on costs of
30(1) Within ten days of receiving certification under
1subsection (b), the Secretary of the Budget shall direct the
2State Treasurer to, notwithstanding any other law, transfer
3the amounts certified under subsection (b) for each
4neighborhood improvement zone from the General Fund to the
5fund of the contracting authority that established the
6neighborhood improvement zone. Beginning in the second
7calendar year following the designation of a neighborhood
8improvement zone and in each year thereafter, the amounts
9certified by the secretary to the State Treasurer and the
10amounts transferred by the State Treasurer to the fund of
11each contracting authority shall be determined as follows:
20(iv) Subtract from the sum under subparagraph (iii)
21any amounts certified under subsection (b) which are less
22than the amounts previously certified under subsection
23(b) with respect to the second prior calendar year.
24(2) The State Treasurer shall provide an annual transfer
25to the contracting authority until the bonds issued to
26finance and refinance the improvement and development of the
27neighborhood improvement zone and the construction of the
28facility or facility complex are retired. Each annual
29transfer to the contracting authority shall be equal to the
30balance of the fund of the contracting authority on the date
1of the transfer under paragraph (1).
4(1) The money may only be utilized as follows:
5(i) For payment of debt service, directly or
6indirectly through a multitiered ownership structure or
7other structure authorized by a contracting authority to
8facilitate financing mechanisms, on bonds or on
9refinancing loans used to repay bonds issued to finance
20(1.1) The term of a bond to be refunded shall not exceed
21the maximum term permitted for the original bond issued for
22the improvement or development of the neighborhood
23improvement zone and the construction of a facility or
7(2) Upon the expiration of the neighborhood improvement
8zone under section 1906-B, any and all portions of the fund
9attributable to the ticket surcharge shall be immediately
10transferred to the contracting authority to be held in escrow
11where they shall be unencumbered and maintained by the
12contracting authority in the same manner as the fund. Upon
13the transfer, any ticket surcharge collected by the operating
14entity shall thereafter be deposited in the account
15maintained by the contracting authority and dispersed for a
16capital repair and improvement project upon request by the
18(g) Excess money.--Within 30 days of the end of each
19calendar year, any money remaining in the fund of each
20contracting authority at the end of the prior calendar year
21after the required payments under subsection (d)(2) were made in
22the prior calendar year shall be refunded in the following
27(2) Money shall next be paid to the contracting
28authority to the extent that the amounts paid under
29subsection (d)(2) consisted of local taxes. The contracting
30authority shall return the money to the appropriate entities
3Section 1905-B. Keystone Opportunity Zone.
4Within four months following the designation of a
5neighborhood improvement zone, a city may apply to the
6Department of Community and Economic Development to decertify
7and remove the designation of all or part of the Keystone
8Opportunity Zone on behalf of all political subdivisions. The
9provisions of section 309 of the act of October 6, 1998
10(P.L.705, No.92), known as the Keystone Opportunity Zone,
11Keystone Opportunity Expansion Zone and Keystone Opportunity
12Improvement Zone Act shall be deemed satisfied as to all
13political subdivisions. The Department of Community and Economic
14Development shall act on the application within 30 days.
15Section 1906-B. Duration.
16The neighborhood improvement zone shall be in effect for a
17period equal to one year following retirement of all bonds
18issued to finance or refinance the improvement and development
19of the neighborhood improvement zone or the construction of the
20facility or the facility complex. The maximum term of the bond,
21including the refunding of the bond, shall not exceed 30 years.
22Section 1907-B. Commonwealth pledges.
23If and to the extent that the contracting authority pledges
24amounts required to be transferred to the fund of the
25contracting authority under section 1904-B for the payment of
26bonds issued by the contracting authority, until all bonds
27secured by the pledge of the contracting authority, together
28with the interest on the bonds, are fully paid or provided for,