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

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

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

17ARTICLE XIX-B

18MANUFACTURING AND AGRICULTURE TAX CREDIT

19Section 1901-B. Short title.

20This article shall be known and may be cited as the
21Manufacturing and Agriculture Tax Credit Act.

22Section 1902-B. Definitions.

1The following words and phrases when used in this article
2shall have the meanings given to them in this section unless the
3context clearly indicates otherwise:

4"Business firm." An agricultural, manufacturing or research
5and development enterprise as defined in section 3 of the act of
6May 17, 1956 (1955 P.L.1609, No.537), known as the Pennsylvania
7Industrial Development Authority Act, authorized to do business
8in this Commonwealth subject to taxes imposed by Article III,
9IV, VI, VII, VIII, IX or XV, and physical product production
10generates 51% or more of the firm's daily business. The term
11shall include a pass-through entity.

12"New product development." Activities directly related to
13the product development process, including, but not limited to,
14the referral screen and formation of a product development
15committee, the initial screen, preliminary and detailed
16investigations of business plans and models, markets and project
17needs, product development and postdevelopment review, testing
18and validation.

19"Pass-through entity." A partnership as defined under
20section 301(n.0) or a Pennsylvania S corporation as defined
21under section 301(n.1).

22"Product development." Creating a new good to sell to
23consumers.

24"Qualified investment." An investment made by a business
25firm that develops, sustains or enhances Pennsylvania's
26manufacturing or agriculture sectors through new product
27development. Eligible activities include, but are not limited
28to, new construction, infrastructure improvements, machine and
29equipment purchases, new product development and market
30research.

1"Secretary." The Secretary of Community and Economic
2Development of the Commonwealth.

3Section 1903-B. Tax credit.

4(a) Eligibility.--A business firm that makes qualified
5investment shall receive a tax credit as provided in section
61904-B if the secretary annually approves the proposal of the
7business firm. The proposal shall set forth the qualified
8investment to be made, the estimated amount to be invested and
9the plans for implementing the investment.

10(b) Report of proposals.--The secretary is hereby authorized
11to promulgate rules and regulations for the approval or
12disapproval of the proposals by business firms. The secretary
13shall provide a report listing all applications received and
14their disposition in each fiscal year to the General Assembly by
15October 1 of the following fiscal year. The secretary's report
16shall include all taxpayers utilizing the credit and the amount
17of credits approved, sold or assigned. Notwithstanding any law
18providing for the confidentiality of tax records, the
19information in the report shall be public information, and all
20report information shall be posted on the secretary's Internet
21website.

22(c) Special consideration.--The secretary shall take into
23special consideration, when approving applications for the tax
24credit under this article, applications that involve multiple
25projects in various markets throughout this Commonwealth.

26(d) Limit.--The total amount of tax credit granted for
27programs approved under this article shall not exceed
28$18,000,000 of tax credit in any fiscal year.

29(e) Distribution.--The tax credits shall have two rounds of
30funding each fiscal year. The grants shall be evenly distributed

1over the two rounds. The grant funds shall be distributed as
2follows:

3(1) Ten million dollars to companies with 500 employees
4or more. Five million dollars shall be distributed during
5each round of funding.

6(2) Four million dollars to companies with 100-499
7employees. Two million dollars shall be distributed during
8each round of funding.

9(3) Three million dollars to companies with 20-99
10employees. One million five hundred thousand dollars shall be
11distributed during each round of funding.

12(4) One million dollars to companies with 1-19
13employees. Five hundred thousand dollars shall be distributed
14during each round of funding.

15(f) Sale or assignment.--A taxpayer, upon application to and
16approval by the Department of Community and Economic
17Development, may sell or assign, in whole or in part, a tax
18credit granted to the business firm under this article if no
19claim for allowance of the credit is filed within one year from
20the date the credit is granted by the Department of Revenue
21under section 1904-B. The Department of Community and Economic
22Development and the Department of Revenue shall jointly
23promulgate guidelines for the approval of applications under
24this subsection.

25(g) Time provisions.--The purchaser or assignee of a tax
26credit under subsection (f) shall immediately claim the credit
27in the taxable year in which the purchase or assignment is made.
28The purchaser or assignee may not carry over, carry back, obtain
29a refund or sell or assign the tax credit. The purchaser or
30assignee shall notify the Department of Revenue of the seller or

1assignor of the tax credit in compliance with procedures
2specified by the Department of Revenue.

3(h) Application.--The tax credit approved by the Department
4of Community and Economic Development shall be applied against
5the business firm's tax liability for the taxes under section
61904-B for the current taxable year as of the date on which the
7credit was approved before the tax credit may be carried over,
8sold or assigned.

9Section 1904-B. Grant of tax credit.

10The Department of Revenue shall grant a tax credit against 
11any tax due under Article III, IV, VI, VII, VIII, IX or XV, or 
12any tax substituted in lieu thereof, in an amount that shall not 
13exceed 45% of the total amount invested during the taxable year 
14by a business firm as approved pursuant to section 1903-B. A tax 
15credit of up to 75% of the total amount invested during the 
16taxable year by a business firm may be allowed for investment in 
17projects where activities fall within the scope of special 
18program priorities as defined with the approval of the Governor 
19in regulations promulgated by the secretary. No tax credit may 
20be granted to any bank, bank and trust company, insurance 
21company, trust company, national bank, savings association, 
22mutual savings bank or building and loan association for 
23activities that are a part of its normal course of business. Any 
24tax credit not used in the period the contribution or investment 
25was made may be carried over for the next five succeeding 
26calendar or fiscal years until the full credit has been allowed. 
27A business firm shall not be entitled to carry back or obtain a 
28refund of an unused tax credit. The total amount of all tax 
29credits allowed pursuant to this article shall not exceed 
30$18,000,000 in any one fiscal year. Of that amount, $2,000,000 

1shall be allocated exclusively for pass-through entities. 
2However, if the total amounts allocated to either the group of 
3applicants, exclusive of pass-through entities, or the group of 
4pass-through entity applicants is not approved in any fiscal 
5year, the unused portion shall become available for use by the 
6other group of qualifying taxpayers.

7Section 1905-B. Decision in writing.

8The decision of the secretary to approve or disapprove a
9proposal pursuant to section 1903-B of this article shall be in
10writing, and, if it approves the proposal, it shall state the
11maximum credit allowable to the business firm. A copy of the
12decision of the secretary shall be transmitted to the Governor
13and to the Secretary of Revenue.

14Section 1906-B. Pass-through entity.

15(a) General rule.--If a pass-through entity has any unused
16tax credit under section 1904-B, the entity may elect, in
17writing, according to the Department of Revenue's procedures, to
18transfer all or a portion of the credit to shareholders, members
19or partners in proportion to the share of the entity's
20distributive income to which the shareholder, member or partner
21is entitled.

22(b) Credit.--The credit provided under subsection (a) is in
23addition to any other tax credit to which a shareholder, member
24or partner of a pass-through entity is otherwise entitled under
25this article. However, a pass-through entity and a shareholder,
26member or partner of a pass-through entity may not claim a
27credit under this article for the same investment.

28(c) Time frame for claim.--A shareholder, member or partner 
29of a pass-through entity to whom credit is transferred under 
30subsection (a) must immediately claim the credit in the taxable 

1year in which the transfer is made. The shareholder, member or 
2partner may not carry forward, carry back, obtain a refund or 
3sell or assign the credit.

4Section 2. This act shall take effect in 60 days.