1Amending Title 12 (Commerce and Trade) of the Pennsylvania
2Consolidated Statutes, providing for equipment donation tax
3credit.

4The General Assembly of the Commonwealth of Pennsylvania
5hereby enacts as follows:

6Section 1. Title 12 of the Pennsylvania Consolidated
7Statutes is amended by adding a chapter to read:

8CHAPTER 43

9EQUIPMENT DONATION TAX CREDIT

10Sec.

114301. Scope of chapter.

124302. Definitions.

134303. Establishment.

144304. Credit for qualified equipment donation.

154305. Carryover, application of tax credit, carryback, refund
16and assignment.

174306. Time limitation.

184307. Limitation on tax credits.

14308. Shareholder, owner or member pass through.

24309. Repayment.

34310. Reports.

44311. Termination.

54312. Guidelines.

6§ 4301. Scope of chapter.

7This chapter relates to equipment donation tax credits.

8§ 4302. Definitions.

9The following words and phrases, when used in this chapter,
10shall have the meanings given to them in this section, unless
11the context clearly indicates otherwise:

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

13"Pass-through entity." A partnership as defined in section
14301(n.o) of the act of March 4, 1971 (P.L.6, No.2), known as the
15Tax Reform Code of 1971, or a Pennsylvania S corporation as
16defined in section 301(n.1) of the Tax Reform Code of 1971.

17"Qualified equipment donation." Equipment donated by a
18taxpayer to an area vocational-technical school that is used to
19train individuals in a specified vocation.

20"Qualified tax liability." The liability for taxes imposed
21under Article III, IV or VI of the act of March 4, 1971 (P.L.6,
22No.2), known as the Tax Reform Code of 1971. The term shall
23include the liability for taxes imposed under Article III of the
24Tax Reform Code of 1971 on an owner of a pass-through entity.

25"Secretary." The Secretary of Revenue of the Commonwealth.

26"Tax credit." The equipment donation tax credit authorized
27under this chapter.

28"Taxpayer." A person subject to tax under Article III, IV or
29VI of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
30Reform Code of 1971. The term shall include the shareholder,

1owner or member of a pass-through entity that receives an
2equipment donation tax credit.

3§ 4303. Establishment.

4There is established a tax credit program to be known as the
5Equipment Donation Tax Credit.

6§ 4304. Credit for qualified equipment donation.

7(a) Application.--A taxpayer that made a qualified equipment
8donation to an area vocational-technical school, as defined in
9section 1841 of the act of March 10, 1949 (P.L.30, No.14), known
10as the Public School Code of 1949, in a taxable year may apply
11for a tax credit. The application must be on a form required by
12the department and shall include all of the following:

13(1) The name and address of the taxpayer.

14(2) The name and address of the area vocational-
15technical school to which the taxpayer donated equipment.

16(3) Documentation establishing the current value of the
17qualified equipment donation.

18(4) Documentation that the qualified equipment donation
19has been made by the applicant.

20(5) Any other information required by the department.

21(b) Review.--The department shall review the application and
22determine if:

23(1) All requirements established under this chapter have
24been met.

25(2) The applicant has filed all required State tax
26reports and returns for all taxable years and paid any
27balance of State tax due.

28(c) Approval.--Upon being satisfied with the requirements
29under subsection (b), the department shall approve the
30application and award the taxpayer a tax credit for the taxable

1year in the amount equal to the current value of the qualified
2equipment donation. The total amount of tax credits awarded to a
3taxpayer under this chapter shall not exceed $10,000 each fiscal
4year.

5(d) Notification.--The department shall notify the taxpayer
6of the amount of the taxpayer's tax credit within 30 days after
7approval by the department.

8(e) Purchasers and assignees.--The purchaser or assignee of
9all or a portion of a tax credit under subsection (d) shall
10immediately claim the tax credit in the taxable year in which
11the purchase or assignment is made, although the purchaser or
12assignee may carry over unused tax credits to the succeeding
13taxable year for up to two years. The amount of the tax credit
14that a purchaser or assignee may use against any one qualified
15tax liability may not exceed 75% of the qualified tax liability
16for the taxable year. The purchaser or assignee may not carry
17back or obtain a refund of or sell or assign the tax credit. The
18purchaser or assignee shall notify the department of the seller
19or assignor of the tax credit in compliance with procedures
20specified by the department.

21§ 4305. Carryover, application of tax credit, carryback, refund
22and assignment.

23(a) Carryover.--If the taxpayer cannot use the entire amount
24of the tax credit for the taxable year in which the tax credit
25is first approved, the excess may be carried over to succeeding
26taxable years and used as a credit against the qualified tax
27liability of the taxpayer for those taxable years. Each time
28that the tax credit is carried over to a succeeding taxable
29year, it shall be reduced by the amount that was used as a
30credit during the immediately preceding taxable year. The tax

1credit may be carried over and applied to succeeding taxable
2years for no more than seven taxable years following the first
3taxable year for which the taxpayer was entitled to claim the
4tax credit.

5(b) Application of tax credit.--A tax credit approved by the
6department for a qualified equipment donation in a taxable year
7shall first be applied against the taxpayer's qualified tax
8liability for the current taxable year as of the date on which
9the tax credit was approved before the tax credit is applied
10against any tax liability under subsection (a).

11(c) Carryback or refund.--A taxpayer is not entitled to
12carry back or obtain a refund of an unused tax credit.

13(d) Sale or assignment.--A taxpayer, upon application to and
14approval by the department, may sell or assign, in whole or in
15part, a tax credit granted to the taxpayer under this chapter if
16the taxpayer does not have a qualified tax liability against
17which the tax credit may be applied in the current taxable year.
18The department shall establish guidelines for the approval of
19applications under this subsection. Before an application is
20approved, the department shall make a finding that the taxpayer
21and its assignee have filed all required State tax reports and
22returns for all taxable years and paid any balance of State tax
23due as determined by the department.

24(e) Purchasers and assignees.--The purchaser or assignee of
25all or a portion of a tax credit under subsection (d) shall
26immediately claim the credit in the taxable year in which the
27purchase or assignment is made, although the purchaser or
28assignee may carry over unused tax credits to the succeeding
29taxable year for up to two years. The amount of the tax credit
30that a purchaser or assignee may use against any one qualified

1tax liability may not exceed 75% of the qualified tax liability
2for the taxable year. The purchaser or assignee may not carry
3back or obtain a refund of or sell or assign the tax credit. The
4purchaser or assignee shall notify the department of the seller
5or assignor of the tax credit in compliance with procedures
6specified by the department.

7§ 4306. Time limitation.

8A taxpayer shall not be entitled to a tax credit for
9qualified equipment donations made in taxable years ending after
10December 31, 2022.

11§ 4307. Limitation on tax credits.

12(a) Total amount.--The total amount of tax credits approved
13by the department in any calendar year shall not exceed
14$5,000,000.

15(b) Allocation.--Tax credits shall be allocated by the
16department on a first-come-first-served basis.

17§ 4308. Shareholder, owner or member pass through.

18(a) Shareholder entitlement.--If a Pennsylvania S
19corporation does not have an eligible tax liability against
20which the tax credit may be applied, a shareholder of the
21Pennsylvania S corporation shall be entitled to a tax credit
22equal to the tax credit determined for the Pennsylvania S
23corporation for the taxable year multiplied by the percentage of
24the Pennsylvania S corporation's distributive income to which
25the shareholder is entitled.

26(b) Pass-through entity entitlement.--If a pass-through
27entity other than a Pennsylvania S corporation does not have tax
28liability against which the tax credit may be applied, an owner
29or member of the pass-through entity shall be entitled to a tax
30credit equal to the tax credit determined for the pass-through

1entity for the taxable year multiplied by the percentage of the
2pass-through entities' distributive income to which the owner or
3member is entitled.

4(c) Additional credit.--

5(1) Except as provided under paragraph (2), the tax
6credit provided under subsection (a) or (b) shall be in
7addition to any other tax credit to which a shareholder,
8owner or member of a pass-through entity is otherwise
9entitled under this chapter.

10(2) A pass-through entity and a shareholder, owner or
11member of a pass-through entity shall not claim a tax credit
12under this chapter for the same qualified equipment donation.

13§ 4309. Repayment.

14The department shall require the taxpayer to repay any tax
15credit received under this chapter that is in excess of the
16current value of the qualified equipment donation where the
17department determines that any of the following conditions
18exists:

19(1) the area vocational-technical school is no longer in
20operation;

21(2) the area vocational-technical school returns any or
22all donated equipment to the taxpayer; or

23(3) the taxpayer received the tax credit as a result of
24fraud.

25§ 4310. Reports.

26The secretary shall submit an annual report to the chairmen
27and minority chairmen of the standing committees in the Senate
28and the chairmen and minority chairmen of the standing
29committees in the House of Representatives with jurisdiction
30over the department indicating the effectiveness of the tax

1credit provided under this chapter no later than March 15
2following the fiscal year in which the tax credits were
3approved. Notwithstanding any law providing for the
4confidentiality of tax records, the report shall include the
5names of all taxpayers awarded the tax credits, all taxpayers
6utilizing the tax credits, the amount of tax credits approved
7and utilized by each taxpayer and the names and locations of the
8qualified business ventures for which the tax credits were
9awarded. The report may also include any recommendations for
10changes in the calculation or administration of the tax credit.
11The report and the information contained in it shall be
12considered a public record under section 102 of the act of
13February 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law.

14§ 4311. Termination.

15The department shall not approve a tax credit for qualified
16equipment donations incurred in taxable years ending after
17December 31, 2022.

18§ 4312. Guidelines.

19The department shall develop written guidelines for the
20implementation and administration of this chapter. The
21guidelines shall be posted on the department's publicly
22accessible Internet website.

23Section 2. The addition of 12 Pa.C.S. Ch. 43 shall apply to
24qualified equipment donations made in taxable years beginning
25after December 31, 2012.

26Section 3. This act shall take effect immediately.