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

11The General Assembly of the Commonwealth of Pennsylvania
12hereby enacts as follows:

13Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
14the Tax Reform Code of 1971, is amended by adding an article to
15read:

16ARTICLE XVII-J

17SCHOOL-TO-WORK TAX CREDIT

18Section 1701-J. Scope of article.

19This article relates to school-to-work tax credits.

20Section 1702-J. Definitions.

21The following words and phrases when used in this article

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

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

4"Pass-through entity." Any of the following:

5(1) A partnership, limited partnership, limited
6liability company, business trust or other unincorporated
7entity that for Federal income tax purposes is taxable as a
8partnership.

9(2) A Pennsylvania S corporation.

10"Qualified intern." An individual who is:

11(1) enrolled and in good standing at a four-year
12institution of higher education, a community college or an
13accredited postsecondary business, technical, trade or
14vocational school located in this Commonwealth;

15(2) employed and supervised in this Commonwealth in a
16position that provides training and experience to the
17individual in the chosen field of study; and

18(3) paid a wage of no less than $8 per hour by the
19taxpayer during a term of employment that lasts at least 12
20weeks and includes a minimum of 14 hours of service per week.

21"Qualified tax liability." The liability for taxes imposed
22under Article III, IV or VI. The term shall include the
23liability for taxes imposed under Article III on an owner of a
24pass-through entity.

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

26"Small business." An employer who employs 50 or fewer
27individuals.

28"Tax credit." The school-to-work tax credit authorized under
29this article.

30"Taxpayer." A business subject to tax under Article III, IV

1or VI. The term shall include the shareholder, owner or member
2of a pass-through entity that receives a tax credit.

3Section 1703-J. Employer credit for employing qualified
4interns.

5(a) Application.--A taxpayer who employs a qualified intern
6in a taxable year may apply for a tax credit as provided under
7this article. By September 15 of each year, a taxpayer must
8submit an application for the tax credit to the department,
9which shall include the following certifications by the
10taxpayer:

11(1) the qualified intern was employed and supervised in
12this Commonwealth in a position that provides training and
13experience to the individual in the chosen field of study;

14(2) the qualified intern was paid a wage of no less than
15$8 per hour for a term of employment that lasts at least 12
16weeks and includes a minimum of 14 hours of service per week;

17(3) the total hours and weeks worked by the qualified
18intern for the taxable year; and

19(4) the total compensation paid to the qualified intern
20for the taxable year.

21(b) Amount.--A taxpayer that is qualified under subsection
22(a) shall receive a tax credit for the taxable year in the
23amount of 50% of the value of the salaries, wages or other
24remuneration for services paid to a qualified intern, or $1,000,
25whichever is less.

26(c) Notification.--By December 15 of the calendar year
27following the close of the taxable year during which the
28qualified intern was employed, the department shall notify the
29taxpayer of the amount of the taxpayer's tax credit approved by
30the department.

1Section 1704-J. Carryover, carryback, refund and assignment of
2credit.

3(a) Carryover.--If the taxpayer cannot use the entire amount
4of the tax credit for the taxable year in which the tax credit
5is first approved, the excess may be carried over to succeeding
6taxable years and used as a credit against the qualified tax
7liability of the taxpayer for those taxable years. Each time
8that the tax credit is carried over to a succeeding taxable
9year, it shall be reduced by the amount that was used as a
10credit during the immediately preceding taxable year. The tax
11credit may be carried over and applied to succeeding taxable
12years for no more than 15 taxable years following the first
13taxable year for which the taxpayer was entitled to claim the
14credit.

15(b) Application.--A school-to-work tax credit approved by
16the department for employing qualified interns in a taxable year
17first shall be applied against the taxpayer's qualified tax
18liability for the current taxable year as of the date on which
19the credit was approved before the tax credit is applied against
20any tax liability under subsection (a).

21(c) Unused credit.--A taxpayer shall not be entitled to
22assign, carry back or obtain a refund of an unused tax credit.

23Section 1705-J. Limitation on credits.

24(a) Total amount.--The total amount of school-to-work tax
25credits approved by the department shall not exceed $10,000,000
26in any fiscal year, except that the sum of $2,500,000 shall be
27used exclusively for school-to-work tax credits for small
28business.

29(b) Proration among applicants.--If the total amount of tax
30credits applied for by all taxpayers exceeds the amount

1allocated for those credits, the tax credit to be received by
2each applicant shall be prorated by the department among all
3applicants who have qualified for the credit.

4Section 1706-J. Shareholder, owner or member pass-through.

5(a) Shareholder credit.--If a Pennsylvania S corporation
6does not have an eligible tax liability against which the tax
7credit may be applied, a shareholder of the Pennsylvania S
8corporation is entitled to a tax credit equal to the tax credit
9determined for the Pennsylvania S corporation for the taxable
10year multiplied by the percentage of the Pennsylvania S
11corporation's distributive income to which the shareholder is
12entitled.

13(b) Pass-through entity credit.--If a pass-through entity
14other than a Pennsylvania S corporation does not have an
15eligible tax liability against which the tax credit may be
16applied, an owner or member of the pass-through entity is
17entitled to a tax credit equal to the tax credit determined for
18the pass-through entity for the taxable year multiplied by the
19percentage of the pass-through entities' distributive income to
20which the owner or member is entitled.

21(c) Credit cumulation.--The credit provided under subsection
22(a) or (b) shall be in addition to any tax credit to which a
23shareholder, owner or member of a pass-through entity is
24otherwise entitled under this article, except that a pass-
25through entity and a shareholder, owner or member of a pass-
26through entity may not claim a credit under this article for the
27same expense.

28Section 1707-J. Report to General Assembly.

29The secretary shall submit an annual report to the General
30Assembly indicating the effectiveness of the credit provided

1under this article no later than March 15 following the year in
2which the credits were approved. The report shall include the
3names of all taxpayers utilizing the credit as of the date of
4the report and the amount of credits approved and utilized by
5each taxpayer. Notwithstanding any law providing for the
6confidentiality of tax records, the information contained in the
7report shall be public information. The report may include any
8recommendations for changes in the calculation or administration
9of the credit.

10Section 1708-J. Regulations.

11The secretary shall promulgate regulations necessary for the
12implementation and administration of this article.

13Section 2. The addition of Article XVII-J of the act shall
14apply to taxable years beginning after December 31, 2013.

15Section 3. This act shall take effect in 60 days.