SENATE AMENDED

PRIOR PRINTER'S NOS. 1573, 1750, 2683

PRINTER'S NO. 3731

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1198

Session of

2015

Report of the Committee of Conference

To the Members of the House of Representatives and Senate:

We, the undersigned, Committee of Conference on the part of

the House of Representatives and Senate for the purpose of

considering House Bill No. 1198, entitled:

"An act amending the act of March 4, 1971 (P.L.6, No.2),

entitled 'An act relating to tax reform and State taxation by

codifying and enumerating certain subjects of taxation and

imposing taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and imposing

duties upon the Department of Revenue, certain employers,

fiduciaries, individuals, persons, corporations and other

entities; prescribing crimes, offenses and penalties,' IN TAX

FOR EDUCATION, FURTHER PROVIDING FOR CRIMES; AND, in corporate

net income tax, providing for amended reports,"

respectfully submit the following bill as our report:

DAVE REED

WILLIAM F. ADOLPH, JR.

FRANK DERMODY

(Committee on the part of the House of Representatives.)

JAKE CORMAN

PATRICK M. BROWNE

VINCENT J. HUGHES

(Committee on the part of the Senate.)

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AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," as follows:

In sales and use tax:

further providing for definitions, for exclusions,

for discount and for crimes.

In personal income tax:

further providing for definitions, for classes of

income and for tax withheld;

providing for contributions for tuition account

programs; and

further providing for requirement of withholding tax,

for information statement, for time for filing employers'

returns, for payment of taxes withheld, for employer's

liability for withheld taxes, for employer's failure to

withhold, for declarations of estimated tax and for

citation authority.

In corporate net income tax:

further providing for reports and payment of tax;

providing for amended reports; and

further providing for enforcement, rules and

regulations and inquisitorial powers of the department.

In bank and trust company shares tax:

further providing for imposition, for ascertainment

of taxable amount and exclusion of United States

obligations, for apportionment and for definitions.

In gross receipts tax:

further providing for imposition.

In realty transfer tax:

further providing for definitions, for exempt parties

and for excluded transactions.

In cigarette tax:

further providing for incidence and rate, for floor

tax, for stamp as evidence, for commissions on sales and

for disposition of certain funds.

Imposing a tobacco products tax.

In research and development tax credit:

further providing for time limitations.

In film production tax credit:

making editorial changes;

further providing for definitions and for

limitations;

2016/90MSP/HB1198A09559 - 3 -

providing for reissuance of film production tax

credits, for concert rehearsal and tour; and

providing for video game production.

Establishing the coal refuse energy and reclamation tax

credit.

Establishing the waterfront development tax credit.

In tax credit for new jobs:

further providing for definitions and for tax

credits.

In city revitalization and improvement zones:

further providing for definitions and for

establishment of contracting authority;

providing for contracting authority duties;

further providing for approval, for functions of

contracting authorities, for qualified businesses, for

funds, for reports, for calculation of baseline, for

certification, for transfers, for restrictions, for

transfer of property, for Commonwealth pledges and for

guidelines; and

providing for review.

Establishing the Manufacturing and Investment Tax Credit.

In neighborhood assistance tax credit:

further providing for definitions, for tax credit and

for grant of tax credit.

In neighborhood improvement zones:

further providing for definitions and for funds; and

providing for taxes, for property assessment and for

exceptions.

In Keystone Special Development Zone Program:

further providing for tax credit.

Providing for keystone opportunity zones, keystone

opportunity expansion zones and keystone opportunity

improvement zones.

Providing for mixed-use development tax credit, the

Mixed-use Development Program and Mixed-use Development

Program Fund.

Providing for Keystone Innovation Zones.

In malt beverage tax:

further providing for limited tax credits.

In inheritance tax:

further providing for definitions, for transfers not

subject to tax and for deductions not allowed.

In procedure and administration:

further providing for petition procedure.

Providing for table game taxes.

Establishing the computer data center equipment incentive

program.

Providing for a tax amnesty program.

Making related repeals.

Further providing for preemption of local government tax.

Directing the Office of Attorney General to attempt to

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obtain the consent of participating manufacturers under the

Master Settlement Agreement for amendments.

Providing for applicability for imposed taxes.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 201(k)(8), (m) and (o)(4)(B) of the act

of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of

1971, amended April 23, 1998 (P.L.239, No.45) and May 24, 2000

(P.L.106, No.23), are amended to read:

3731Section 201. Definitions.--The following words, terms

and phrases when used in this Article II shall have the meaning

ascribed to them in this section, except where the context

clearly indicates a different meaning:

* * *

(k) "Sale at retail."

* * *

(8) Any retention of possession, custody or a license to use

or consume tangible personal property or any further obtaining

of services described in subclauses (2), (3) and (4) of this

clause pursuant to a rental or service contract or other

arrangement (other than as security).

The term "sale at retail" shall not include (i) any such

transfer of tangible personal property or rendition of services

for the purpose of resale, or (ii) such rendition of services or

the transfer of tangible personal property including, but not

limited to, machinery and equipment and parts therefor and

supplies to be used or consumed by the purchaser directly in the

operations of--

(A) The manufacture of tangible personal property.

(B) Farming, dairying, agriculture, timbering, horticulture

or floriculture when engaged in as a business enterprise. The

2016/90MSP/HB1198A09559 - 5 -

term "farming" shall include the propagation and raising of

ranch raised fur-bearing animals and the propagation of game

birds for commercial purposes by holders of propagation permits

issued under 34 Pa.C.S. (relating to game) and the propagation

and raising of horses to be used exclusively for commercial

racing activities. The term "timbering" shall include:

(1) The business of producing or harvesting trees from

forests, woodlots or tree farms for the purpose of the

commercial production of wood, paper or energy products derived

from wood by a company primarily engaged in the business of

harvesting trees.

(2) All operations prior to the transport of the harvested

product necessary for the removal of timber or forest products

from the site, in-field processing of trees into logs or chips,

complying with environmental protection and safety requirements

applicable to the harvest of forest products, loading of forest

products onto highway vehicles for transport to storage or

processing facilities and postharvest site reclamation,

including those activities necessary to improve timber growth or

ensure natural or direct reforestation of the site. The term

shall not include the harvesting of trees for clearing land for

access roads.

utility service, or in constructing, reconstructing, remodeling,

repairing or maintaining the facilities which are directly used

in producing, delivering or rendering such service.

(D) Processing as defined in clause (d) of this section.

The exclusions provided in paragraphs (A), (B), (C) and (D)

shall not apply to any vehicle required to be registered under

The Vehicle Code, except those vehicles used directly by a

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public utility engaged in business as a common carrier; to

maintenance facilities; or to materials, supplies or equipment

to be used or consumed in the construction, reconstruction,

remodeling, repair or maintenance of real estate other than

directly used machinery, equipment, parts or foundations

therefor that may be affixed to such real estate.

The exclusions provided in paragraphs (A), (B), (C) and (D)

shall not apply to tangible personal property or services to be

used or consumed in managerial sales or other nonoperational

activities, nor to the purchase or use of tangible personal

property or services by any person other than the person

directly using the same in the operations described in

paragraphs (A), (B), (C) and (D) herein.

The exclusion provided in paragraph (C) shall not apply to

(i) construction materials, supplies or equipment used to

construct, reconstruct, remodel, repair or maintain facilities

not used directly by the purchaser in the production, delivering

or rendition of public utility service, (ii) construction

materials, supplies or equipment used to construct, reconstruct,

remodel, repair or maintain a building, road or similar

structure, or (iii) tools and equipment used but not installed

in the maintenance of facilities used directly in the

production, delivering or rendition of a public utility service.

The exclusions provided in paragraphs (A), (B), (C) and (D)

shall not apply to the services enumerated in clauses (k)(11)

through (18) and (w) through (kk), except that the exclusion

provided in this subclause for farming, dairying and agriculture

shall apply to the service enumerated in clause (z).

* * *

(m) "Tangible personal property."

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(1) Corporeal personal property including, but not limited

to, goods, wares, merchandise, steam and natural and

manufactured and bottled gas for non-residential use,

electricity for non-residential use, prepaid telecommunications,

premium cable or premium video programming service, spirituous

or vinous liquor and malt or brewed beverages and soft drinks,

interstate telecommunications service originating or terminating

in the Commonwealth and charged to a service address in this

Commonwealth, intrastate telecommunications service with the

exception of (i) subscriber line charges and basic local

telephone service for residential use and (ii) charges for

telephone calls paid for by inserting money into a telephone

accepting direct deposits of money to operate, provided further,

the service address of any intrastate telecommunications service

is deemed to be within this Commonwealth or within a political

subdivision, regardless of how or where billed or paid. In the

case of any such interstate or intrastate telecommunications

service, any charge paid through a credit or payment mechanism

which does not relate to a service address, such as a bank,

travel, credit or debit card, but not including prepaid

telecommunications, is deemed attributable to the address of

origination of the telecommunications service.

(2) The term shall include the following, whether

electronically or digitally delivered, streamed or accessed and

whether purchased singly, by subscription or in any other

manner, including maintenance, updates and support:

(i) video;

(ii) photographs;

(iii) books;

(iv) any other otherwise taxable printed matter;

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(v) applications, commonly known as apps;

(vi) games;

(vii) music;

(viii) any other audio, including satellite radio service;

(ix) canned software, notwithstanding the function

performed; or

(x) any other otherwise taxable tangible personal property

electronically or digitally delivered, streamed or accessed.

* * *

(o) "Use."

* * *

(4) The obtaining by a purchaser of the service of

repairing, altering, mending, pressing, fitting, dyeing,

laundering, drycleaning or cleaning tangible personal property

other than wearing apparel or shoes or applying or installing

tangible personal property as a repair or replacement part of

other tangible personal property other than wearing apparel or

shoes, whether or not the services are performed directly or by

any means other than by means of coin-operated self-service

laundry equipment for wearing apparel or household goods, and

whether or not any tangible personal property is transferred to

the purchaser in conjunction therewith, except such services as

are obtained in the construction, reconstruction, remodeling,

repair or maintenance of real estate: Provided, however, That

this subclause shall not be deemed to impose tax upon such

services in the preparation for sale of new items which are

excluded from the tax under clause (26) of section 204, or upon

diaper service: And provided further, That the term "use" shall

not include--

* * *

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(B) The use or consumption of tangible personal property,

including but not limited to machinery and equipment and parts

therefor, and supplies or the obtaining of the services

described in subclauses (2), (3) and (4) of this clause directly

in the operations of--

(i) The manufacture of tangible personal property.

(ii) Farming, dairying, agriculture, timbering, horticulture

or floriculture when engaged in as a business enterprise. The

term "farming" shall include the propagation and raising of

ranch-raised furbearing animals and the propagation of game

birds for commercial purposes by holders of propagation permits

issued under 34 Pa.C.S. (relating to game) and the propagation

and raising of horses to be used exclusively for commercial

racing activities. The term "timbering" shall include:

(1) The business of producing or harvesting trees from

forests, woodlots or tree farms for the purpose of the

commercial production of wood, paper or energy products derived

from wood by a company primarily engaged in the business of

harvesting trees.

(2) All operations prior to the transport of the harvested

product necessary for the removal of timber or forest products

from the site, in-field processing of trees into logs or chips,

complying with environmental protection and safety requirements

applicable to the harvest of forest products, loading of forest

products onto highway vehicles for transport to storage or

processing facilities and postharvest site reclamation,

including those activities necessary to improve timber growth or

ensure natural or direct reforestation of the site. The term

shall not include the harvesting of trees for clearing land for

access roads.

2016/90MSP/HB1198A09559 - 10 -

(iii) The producing, delivering or rendering of a public

utility service, or in constructing, reconstructing, remodeling,

repairing or maintaining the facilities which are directly used

in producing, delivering or rendering such service.

(iv) Processing as defined in subclause (d) of this section.

The exclusions provided in subparagraphs (i), (ii), (iii) and

(iv) shall not apply to any vehicle required to be registered

under The Vehicle Code except those vehicles directly used by a

public utility engaged in the business as a common carrier; to

maintenance facilities; or to materials, supplies or equipment

to be used or consumed in the construction, reconstruction,

remodeling, repair or maintenance of real estate other than

directly used machinery, equipment, parts or foundations

therefor that may be affixed to such real estate. The exclusions

provided in subparagraphs (i), (ii), (iii) and (iv) shall not

apply to tangible personal property or services to be used or

consumed in managerial sales or other nonoperational activities,

nor to the purchase or use of tangible personal property or

services by any person other than the person directly using the

same in the operations described in subparagraphs (i), (ii),

(iii) and (iv).

The exclusion provided in subparagraph (iii) shall not apply

to (A) construction materials, supplies or equipment used to

construct, reconstruct, remodel, repair or maintain facilities

not used directly by the purchaser in the production, delivering

or rendition of public utility service or (B) tools and

equipment used but not installed in the maintenance of

facilities used directly in the production, delivering or

rendition of a public utility service.

The exclusion provided in subparagraphs (i), (ii), (iii) and

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(iv) shall not apply to the services enumerated in clauses (o)

(9) through (16) and (w) through (kk), except that the exclusion

provided in subparagraph (ii) for farming, dairying and

agriculture shall apply to the service enumerated in clause (z).

* * *

Section 2. Section 204(13) of the act, amended July 2, 2012

(P.L.751, No.85), is amended and the section is amended by

adding a clause to read:

Section 204. Exclusions from Tax.--The tax imposed by

section 202 shall not be imposed upon any of the following:

* * *

(13) The sale at retail, or use of wrapping paper, wrapping

twine, bags, cartons, tape, rope, labels, nonreturnable

containers and all other wrapping supplies, when such use is

incidental to the delivery of any personal property, except that

any charge for wrapping or packaging shall be subject to tax at

the rate imposed by section 202, unless the property wrapped or

packaged will be resold by the purchaser of the wrapping or

packaging service. As used in this paragraph, the term "cartons"

includes corrugated boxes used by a person engaged in the

manufacture of snack food products to deliver the manufactured

product, whether or not the boxes are returnable for potential

reuse.

* * *

(70) The sale at retail or use of services related to the

set up, tear down or maintenance of tangible personal property

rented by an authority to exhibitors at a convention center or a

public auditorium, established under 64 Pa.C.S. Ch. 60 (relating

to Pennsylvania Convention Center Authority), the act of July

28, 1953 (P.L.723, No.230), known as the Second Class County

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Code, or the act of August 9, 1955 (P.L.323, No.130), known as

The County Code.

Section 3. Section 227 of the act is amended to read:

Section 227. Discount.--If a return is filed by a licensee

and the tax shown to be due thereon less any discount is paid

all within the time prescribed, the licensee shall be entitled,

as compensation for the expense of collecting and remitting the

tax and as a consideration of the prompt payment of the tax, to

credit and apply against the tax payable by [him] the licensee a

discount of the lesser of:

(1) one per cent of the amount of the tax collected [by him

on and after the effective date of this article, as compensation

for the expense of collecting and remitting the same and as a

consideration of the prompt payment thereof.]; or

(2) as follows:

(i) twenty-five dollars ($25) per return for a monthly

filer;

(ii) seventy-five dollars ($75) per return for a quarterly

filer; or

(iii) one hundred fifty dollars ($150) per return for a

semiannual filer.

Section 4. Section 268(b) of the act, amended June 29, 2002

(P.L.559, No.89), is amended and the section is amended by

adding a subsection to read:

Section 268. Crimes.--* * *

(b) Other Crimes. [(1)] Except as otherwise provided by

subsection (a) of this section, any person who advertises or

holds out or states to the public or to any purchaser or user,

directly or indirectly, that the tax or any part thereof imposed

by this article will be absorbed by such person, or that it will

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not be added to the purchase price of the tangible personal

property or services described in subclauses (2), (3), (4) and

(11) through (18) of clause (k) of section 201 of this article

sold or, if added, that the tax or any part thereof will be

refunded, other than when such person refunds the purchase price

because of such property being returned to the vendor, and any

person selling or leasing tangible personal property or said

services the sale or use of which by the purchaser is subject to

tax hereunder, who shall wilfully fail to collect the tax from

the purchaser and timely remit the same to the department, and

any person who shall wilfully fail or neglect to timely file any

return or report required by this article or any taxpayer who

shall refuse to timely pay any tax, penalty or interest imposed

or provided for by this article, or who shall wilfully fail to

preserve his books, papers and records as directed by the

department, or any person who shall refuse to permit the

department or any of its authorized agents to examine his books,

records or papers, or who shall knowingly make any incomplete,

false or fraudulent return or report, or who shall do, or

attempt to do, anything whatever to prevent the full disclosure

of the amount or character of taxable sales purchases or use

made by himself or any other person, or shall provide any person

with a false statement as to the payment of tax with respect to

particular tangible personal property or said services, or shall

make, utter or issue a false or fraudulent exemption

certificate, shall be guilty of a misdemeanor, and, upon

conviction thereof, shall be sentenced to pay a fine not

exceeding one thousand dollars ($1000) and costs of prosecution,

or undergo imprisonment not exceeding one year, or both:

Provided, however, That any person maintaining a place of

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business outside this Commonwealth may absorb the tax with

respect to taxable sales made in the normal course of business

to customers present at such place of business without being

subject to the above penalty and fines: and Provided further,

That advertising tax-included prices shall be permissible, if

the prepaid services are sold by the service provider, for

prepaid telecommunications services not evidenced by the

transfer of tangible personal property or for prepaid mobile

telecommunications services.

[(2) The penalties imposed by this section shall be in

addition to any other penalties imposed by any provision of this

article.]

any person who purchases, installs or uses in this Commonwealth

an automated sales suppression device or zapper or phantomware

with the intent to defeat or evade the determination of an

amount due under this part commits a misdemeanor.

(i) Any person who, for commercial gain, sells, purchases,

installs, transfers or possesses in this Commonwealth an

automated sales suppression device or zapper or phantomware with

the knowledge that the sole purpose of the device is to defeat

or evade the determination of an amount due under this part

commits an offense which shall be punishable by a fine specified

under subparagraph (ii) or by imprisonment for not more than one

year, or by both. A person who uses an automated sales

suppression device or zapper or phantomware shall be liable for

all taxes, interest and penalties due as a result of the use of

that device.

(ii) If a person is guilty of an offense under this

paragraph and the person sold, installed, transferred or

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possessed not more than three automated sales suppression

devices or zappers or phantomware, the person commits an offense

punishable by a fine of not more than five thousand dollars

($5,000).

(iii) If a person commits an offense under this paragraph

and the person sold, installed, transferred or possessed more

than three automated sales suppression devices or zappers or

phantomware, the person commits an offense punishable by a fine

of not more than ten thousand dollars ($10,000).

(2) This subsection shall not apply to a corporation that

possesses an automated sales suppression device or zapper or

phantomware for the sole purpose of developing hardware or

software to combat the evasion of taxes by use of automated

sales suppression devices or zappers or phantomware.

(3) For purposes of this subsection:

"Automated sales suppression device" or "zapper" means a

software program carried on a memory stick or removable compact

disc, accessed through an Internet link or through any other

means, that falsifies the electronic records of electronic cash

registers and other point-of-sale systems, including, but not

limited to, transaction data and transaction reports.

"Electronic cash register" means a device that keeps a

electronic device or computer system designed to record

transaction data for the purpose of computing, compiling or

processing retail sales transaction data in whatever manner.

"Phantomware" means a hidden programming option, which is

either preinstalled or installed at a later time, embedded in

the operating system of an electronic cash register or hardwired

into the electronic cash register that can be used to create a

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virtual second till or may eliminate or manipulate a transaction

record that may or may not be preserved in digital formats to

represent the true or manipulated record of transactions in the

electronic cash register.

"Transaction data" includes information regarding items

purchased by a customer, the price for each item, a taxability

determination for each item, a segregated tax amount for each of

the taxed items, the amount of cash or credit tendered, the net

amount returned to the customer in change, the date and time of

the purchase, the name, address and identification number of the

vendor and the receipt or invoice number of the transaction.

(d) This section shall not preclude prosecution under any

other law.

(e) The penalties imposed by this section shall be in

addition to any other penalties imposed by any provision of this

article.

Section 5. (Reserved).

Section 6. Section 301(k), (o) and (w) of the act, amended

March 13, 1974 (P.L.179, No.32), December 23, 1983 (P.L.370,

No.90) and December 23, 2003 (P.L.250, No.46), are amended to

read:

Section 301. Definitions.--Any reference in this article to

the Internal Revenue Code of 1986 shall mean the Internal

Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.),

as amended to January 1, 1997, unless the reference contains the

phrase "as amended" and refers to no other date, in which case

the reference shall be to the Internal Revenue Code of 1986 as

it exists as of the time of application of this article. The

following words, terms and phrases when used in this article

shall have the meaning ascribed to them in this section except

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where the context clearly indicates a different meaning:

* * *

(k) "Income from sources within this Commonwealth" for a

nonresident individual, estate or trust means the same as

compensation, net profits, gains, dividends, interest or income

enumerated and classified under section 303 of this article to

the extent that it is earned, received or acquired from sources

within this Commonwealth:

(1) By reason of ownership or disposition of any interest in

real or tangible personal property in this Commonwealth; or

(2) In connection with a trade, profession, occupation

carried on in this Commonwealth or for the rendition of personal

services performed in this Commonwealth; or

(3) As a distributive share of the income of an

unincorporated business, Pennsylvania S corporation, profession,

enterprise, undertaking or other activity as the result of work

done, services rendered or other business activities conducted

in this Commonwealth, except as allocated to another state

pursuant to regulations promulgated by the department under this

article; or

(4) From intangible personal property employed in a trade,

profession, occupation or business carried on in this

Commonwealth; or

(5) As gambling and lottery winnings by reason of a wager

placed in this Commonwealth, the conduct of a game of chance or

other gambling activity located in this Commonwealth or the

redemption of a lottery prize from a lottery conducted in this

Commonwealth, other than noncash prizes of the Pennsylvania

State Lottery.

Provided, however, That "income from sources within this

2016/90MSP/HB1198A09559 - 18 -

Commonwealth" for a nonresident individual, estate or trust

shall not include any items of income enumerated above received

or acquired from an investment company registered with the

Federal Securities and Exchange Commission under the Investment

Company Act of 1940.

* * *

(o) "Person" means any individual, employer, association,

fiduciary, partnership, corporation or other entity, estate or

trust, resident or nonresident, and the plural as well as the

singular number. For the purpose of determining eligibility for

special tax provisions, the term "person" means a natural

individual.

* * *

(w) "Taxpayer" means any individual, estate or trust subject

to the tax imposed by this article, any partnership having a

partner who is a taxpayer under this act, any Pennsylvania S

corporation having a shareholder who is a taxpayer under this

act and any [employer] person required to withhold tax [on

compensation paid] under this article.

Section 7. Section 303(a)(7) and (a.8) of the act, amended

or added July 21, 1983 (P.L.63, No.29) and July 9, 2013

(P.L.270, No.52), are amended and the section is amended by

adding a subsection to read:

Section 303. Classes of Income.--(a) The classes of income

referred to above are as follows:

* * *

(7) Gambling and lottery winnings other than noncash prizes

of the Pennsylvania State Lottery.

* * *

(a.8) A person who incurs intangible drilling and

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development costs [shall capitalize the costs unless the

taxpayer elects to currently expense the costs for Federal

income tax purposes under] as defined in section 263(c) of the

Internal Revenue Code of 1986, as amended, and regulations

thereunder, is required to capitalize the costs and recover them

over a ten-year period in the taxable year the costs are

incurred; or a person may elect to currently expense up to one-

third of the costs in the taxable year in which the costs are

incurred and recover the remaining costs over a ten-year period

beginning in the taxable year the costs are incurred.

(a.9) The provisions of section 1033 of the Internal Revenue

Code of 1986 (Public Law 99-514, 26 U.S.C. § 1033), as amended,

shall be applicable.

* * *

Section 8. Section 312 of the act, added August 31, 1971

(P.L.362, No.93), is amended to read:

Section 312. Tax Withheld.--The amount withheld under

section 316 shall be allowed to the [recipient of the

compensation] taxpayer from whose income the tax was withheld as

a credit against the tax imposed on him by this article.

Section 8.1. The act is amended by adding a section to read:

Section 315.12. Contributions for Tuition Account

Programs.--(a) Beginning with the 2016 Pennsylvania individual

income tax return, the department shall provide a space on the

income tax return form by which a taxpayer who is an account

owner may voluntarily designate a contribution to a

beneficiary's Tuition Account Guaranteed Savings Program or the

Tuition Account Investment Program established under the act of

April 3, 1992 (P.L.28, No.11), known as the "Tuition Account

Programs and College Savings Bond Act."

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(b) The amount designated under subsection (a) by a taxpayer

on the income tax return form shall be deducted from the tax

refund to which the individual is entitled and shall not

constitute a charge against the income tax revenues due to the

Commonwealth.

under this section and shall report the amount to the State

Treasurer, who shall transfer the amount from the General Fund

to the appropriate account within the Tuition Account Guaranteed

Savings Program or the Tuition Account Investment Program.

(d) For purposes of this section, the following words and

phrases shall have the meanings ascribed to them in this

subsection:

"Account owner." As defined in section 302 of the "Tuition

Account Programs and College Savings Bond Act."

"Beneficiary." As defined in section 302 of the "Tuition

Account Programs and College Savings Bond Act."

Section 9. Section 316 of the act, added August 31, 1971

(P.L.362, No.93), is amended to read:

Section 316. Requirement of Withholding Tax.--(a) Every

employer maintaining an office or transacting business within

this Commonwealth and making payment of compensation (i) to a

resident individual, or (ii) to a nonresident individual

taxpayer performing services on behalf of such employer within

this Commonwealth, shall deduct and withhold from such

compensation for each payroll period a tax computed in such

manner as to result, so far as practicable, in withholding from

the employe's compensation during each calendar year an amount

substantially equivalent to the tax reasonably estimated to be

due for such year with respect to such compensation. The method

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of determining the amount to be withheld shall be prescribed by

regulations of the department.

(b) Whenever the Pennsylvania State Lottery or a person

making a Pennsylvania State Lottery prize payment in the form of

an annuity is required to withhold Federal income tax under

section 3402 of the Internal Revenue Code of 1986, as amended

(Public Law 99-514, 26 U.S.C. § 1 et seq.), or backup

withholding under section 3406 of the Internal Revenue Code of

1986, as amended, from a gambling or lottery prize payment

awarded by the Pennsylvania State Lottery that is taxable under

this article, the Pennsylvania State Lottery or the person

making the annuity payment shall deduct and withhold from the

prize payment an amount equal to the amount of the prize payment

subject to withholding under section 3402 or 3406 multiplied by

the tax rate in effect under this article at the time the prize

payment is made.

Section 10. Section 317 of the act, amended December 20,

1985 (P.L.489, No.115), is amended to read:

Section 317. Information Statement.--(a) Every employer

required to deduct and withhold tax under this article shall

furnish to each such employe to whom the employer has paid

compensation during the calendar year a written statement in

such manner and in such form as may be prescribed by the

department showing the amount of compensation paid by the

employer to the employe, the amount deducted and withheld as

tax, pursuant to this article, and such other information as the

department shall prescribe. Each statement required by this

section for a calendar year shall be furnished to the employe on

or before January 31 of the year succeeding such calendar year.

If the employe's employment is terminated before the close of

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such calendar year, the employer, at his option, shall furnish

the statement to the employe at any time after the termination

but no later than January 31 of the year succeeding such

calendar year. However, if an employe whose employment is

terminated before the close of such calendar year requests the

employer in writing to furnish him the statement at an earlier

time, and, if there is no reasonable expectation on the part of

both employer and employe of further employment during the

calendar year, then the employer shall furnish the statement to

the employe on or before the later of the 30th day after the day

of the request or the 30th day after the day on which the last

payment of wages is made.

(b) Every person required to deduct and withhold tax under

section 316(b) of this article shall report the prize and the

amount of withholding to the taxpayer on Internal Revenue

Service Form W-2G, or similar form used for reporting Federal

income tax withholding from the prize.

Section 11. Section 318 of the act, added August 31, 1971

(P.L.362, No.93), is amended to read:

Section 318. Time for Filing [Employers'] Withholding

Returns.--(a) Every employer required to deduct and withhold

tax under this article shall file a quarterly withholding return

on or before the last day of April, July, October and January

for the three months ending the last day of March, June,

September and December. Such quarterly returns shall be filed

with the department at its main office or at any branch office

which it may designate for filing returns.

(b) Every person required to deduct and withhold tax under

section 316(b) shall file a withholding tax return at the same

time the person is required to file its annual return of

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withheld Federal income tax (IRS Form 945) from nonpayroll

payments. The return shall be filed with the department.

Section 12. Section 319 of the act, amended October 9, 2009

(P.L.451, No.48), is amended to read:

Section 319. Payment of Taxes Withheld.--(a) Every employer

withholding tax under this article shall pay over to the

department or to a depository designated by it the tax required

to be deducted and withheld under this article.

(1) Where the aggregate amount required to be deducted and

withheld by any employer for a calendar year can reasonably be

expected to be less than twelve hundred dollars ($1,200), such

employer shall file a return and pay the tax on or before the

last day for filing a quarterly return under section 318.

(2) Where the aggregated amount required to be deducted and

withheld by any employer for a calendar year can reasonably be

expected to be twelve hundred dollars ($1,200) or more but less

than four thousand dollars ($4,000), such employer shall pay the

tax monthly, on or before the fifteenth day of the month

succeeding the months of January to November, inclusive, and on

or before the last day of January following the month of

December.

(3) Where the aggregated amount required to be deducted and

withheld by any employer for a calendar year can reasonably be

expected to be four thousand dollars ($4,000) or more but less

than twenty thousand dollars ($20,000), such employer shall pay

the tax semi-monthly, within three banking days after the close

of the semi-monthly period.

(4) Where the aggregated amount required to be deducted and

withheld by any employer for a calendar year can reasonably be

expected to be twenty thousand dollars ($20,000) or more, such

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employer shall pay the tax on the Wednesday after payday if the

payday falls on a Wednesday, Thursday or Friday and on the

Friday after payday if the payday falls on a Saturday, Sunday,

Monday or Tuesday.

Notwithstanding anything in this [section] subsection to the

contrary, whenever any employer fails to deduct or truthfully

account for or pay over the tax withheld or file returns as

prescribed by this article, the department may serve a notice on

such employer requiring him to withhold taxes which are required

to be deducted under this article and deposit such taxes in a

bank approved by the department in a separate account in trust

for and payable to the department, and to keep the amount of

such tax in such account until payment over to the department.

Such notice shall remain in effect until a notice of

cancellation is served on the employer by the department.

(b) Every person deducting and withholding tax under section

316(b) shall remit the tax to the department on the same

frequency that the person is required to remit Federal income

tax withheld from nonpayroll payments.

Section 13. Sections 320 and 321 of the act, added August

31, 1971 (P.L.362, No.93), are amended to read:

Section 320. [Employer's] Liability for Withheld Taxes.--

Every [employer] person required to deduct and withhold tax

under this [article] part is hereby made liable for such tax.

For purposes of assessment and collection, any amount required

to be withheld and paid over to the department and any additions

to tax penalties and interest with respect thereto, shall be

considered the tax of the [employer] person. All taxes deducted

and withheld [from employes] pursuant to this [article] part or

under color of this article shall constitute a trust fund for

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the Commonwealth and shall be enforceable against such

[employer] person, his representative or any other person

receiving any part of such fund.

Section 321. [Employer's] Failure to Withhold.--If [an

employer] a person fails to deduct and withhold tax as

prescribed [herein] in this part and thereafter the tax against

which such tax may be credited is paid, the tax which was

required to be deducted and withheld shall not be collected from

the [employer] person, but the [employer] person shall not be

relieved of the liability for any penalty, interest, or

additions to the tax imposed with respect to such failure to

deduct and withhold.

Section 14. Section 325(a) of the act, amended May 12, 1999

(P.L.26, No.4), is amended to read:

Section 325. Declarations of Estimated Tax.--(a) Every

resident and nonresident individual, trust and estate shall at

the time hereinafter prescribed make a declaration of his or its

estimated tax for the taxable year, containing such information

as the department may prescribe by regulations, if his or its

income, other than from [compensation] income on which tax is

withheld under this article, can reasonably be expected to

exceed eight thousand dollars ($8,000).

* * *

Section 15. Section 352.2(a) of the act, added July 9, 2013

(P.L.270, No.52), is amended to read:

Section 352.2. Citation Authority.--(a) Notwithstanding any

other provision of this act, any person who does any of the

following commits a summary offense and, upon conviction, shall

be subject to the fines and penalties imposed under section

208(c):

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(1) Does not pay [employer] withholding tax, interest or

penalty within ninety days after the due date, and the tax

liability due has not been timely appealed or subject to a duly

authorized deferred payment plan.

(2) Underpays [an employer] a withholding tax, interest or

penalty within ninety days after the due date, and the tax

liability due has not been timely appealed or subject to a duly

authorized deferred payment plan.

(3) Fails to file a tax [employer] withholding return or

report or any other reporting document within ninety days after

the due date of the applicable payment or return, report or any

other sales document.

(b) Retailer.--A retailer may only purchase tobacco products

from a licensed dealer. If the tax is not collected by the

seller from the retailer, the tax is imposed on the retailer at

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the time of purchase at the same rate as in subsections (a) and

(a.1) based on the retailer's purchase price of the tobacco

products. The retailer shall remit the tax to the department.

unclassified importer at the time of purchase at the same rate

as in subsections (a) and (a.1) based on the unclassified

importer's purchase price of the tobacco products. The

unclassified importer shall remit the tax to the department.

(d) Exceptions.--The tax shall not be imposed on any tobacco

products that:

(1) are exported for sale outside this Commonwealth; or

(2) are not subject to taxation by the Commonwealth

pursuant to any laws of the United States.

Section 1203-A. Floor tax.

(a) Payment.--

(1) Any retailer that, as of the effective date of this

paragraph, possesses tobacco products subject to the tax

imposed by section 1202-A other than roll-your-own tobacco

shall pay the tax in accordance with the rates specified in

section 1202-A. The tax shall be paid and reported on a form

prescribed by the department within 90 days of the effective

date of this paragraph.

(2) Any retailer that, as of the effective date of this

paragraph, possesses roll-your-own tobacco subject to the tax

imposed by section 1202-A shall pay the tax in accordance

with the rates specified in section 1202-A. The tax shall be

paid and reported on a form prescribed by the department

within 90 days of the effective date of this paragraph.

(b) Administrative penalty; license.--If a retailer fails to

file the report required by subsection (a) or fails to pay the

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tax imposed by subsection (a), the department may, in addition

to the interest and penalties provided in section 1215-A, do any

of the following:

(1) Impose an administrative penalty equal to the amount

of tax evaded or not paid. The penalty shall be added to the

tax evaded or not paid and assessed and collected at the same

time and in the same manner as the tax.

(2) Suspend, revoke or refuse to issue the retailer's

license.

under subsection (b), a person that willfully omits, neglects or

refuses to comply with a duty imposed under subsection (a)

commits a misdemeanor and shall, if convicted, be sentenced to

pay a fine of not less than $2,500 nor more than $5,000, to

serve a term of imprisonment not to exceed 30 days, or both.

Section 1204-A. Remittance of tax to department.

Wholesalers, retailers, unclassified importers and

manufacturers shall file monthly reports on a form prescribed by

the department by the 20th day of the month following the sale

or purchase of tobacco products from any other source on which

the tax levied by this article has not been paid. The tax is due

at the time the report is due. The department may require the

filing of reports and payment of tax on a less frequent basis at

its discretion.

Section 1205-A. (Reserved).

Section 1206-A. Procedures for claiming refund.

A claim for a refund of tax imposed by this article under

section 3003.1 and Article XXVII shall be in the form and

contain the information prescribed by the department by

regulation.

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Section 1207-A. Sales or possession of tobacco product when tax

not paid.

(a) Sales or possession.--Any person who sells or possesses

any tobacco product for which the proper tax has not been paid

commits a summary offense and shall, upon conviction, be

sentenced to pay costs of prosecution and a fine of not less

than $100 nor more than $1,000 or to imprisonment for not more

than 60 days, or both, at the discretion of the court. Any

tobacco products purchased from a wholesaler properly licensed

under this article shall be presumed to have the proper taxes

paid.

(b) Tax evasion.--Any person that shall falsely or

fraudulently, maliciously, intentionally or willfully with

intent to evade the payment of the tax imposed by this article

sells or possesses any tobacco product for which the proper tax

has not been paid commits a felony and shall, upon conviction,

be sentenced to pay costs of prosecution and a fine of not more

than $5,000 or to imprisonment for not more than five years, or

both, at the discretion of the court.

Section 1208-A. Assessment.

The department is authorized to make the inquiries,

determinations and assessments of the tax, including interest,

additions and penalties, imposed by this article.

Section 1209-A. (Reserved).

Section 1210-A. (Reserved).

Section 1211-A. Failure to file return.

Where no return is filed, the amount of the tax due may be

assessed and collected at any time as to taxable transactions

not reported.

Section 1212-A. False or fraudulent return.

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Where the taxpayer willfully files a false or fraudulent

return with intent to evade the tax imposed by this article, the

amount of tax due may be assessed and collected at any time.

Section 1213-A. Extension of limitation period.

Notwithstanding any other provision of this article, where,

before the expiration of the period prescribed for the

assessment of a tax, a taxpayer has consented, in writing, that

the period be extended, the amount of tax due may be assessed at

any time within the extended period. The period so extended may

be extended further by subsequent consents, in writing, made

before the expiration of the extended period.

Section 1214-A. Failure to furnish information, returning false

information or failure to permit inspection.

(a) Penalty.--Any taxpayer who fails to keep or make any

record, return, report, inventory or statement, or keeps or

makes any false or fraudulent record, return, report, inventory

or statement required by this article commits a misdemeanor and

shall, upon conviction, be sentenced to pay costs of prosecution

and a fine of $500 and to imprisonment for not more than one

year, or both, at the discretion of the court.

(b) Examination.--The department is authorized to examine

the books and records, the stock of tobacco products and the

premises and equipment of any taxpayer in order to verify the

accuracy of the payment of the tax imposed by this article. The

person subject to an examination shall give to the department or

its duly authorized representative, the means, facilities and

opportunity for the examination. Willful refusal to cooperate

with or permit an examination to the satisfaction of the

department shall be sufficient grounds for the suspension or

revocation of a taxpayer's license. In addition, a person who

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willfully refuses to cooperate with or permit an examination to

the satisfaction of the department commits a misdemeanor and

shall, upon conviction, be sentenced to pay costs of prosecution

and a fine of $500 or to imprisonment for not more than one

year, or both, at the discretion of the court.

manufacturer shall keep and maintain for a period of four years

records in the form prescribed by the department. The records

shall be maintained at the location for which the license is

issued.

(d) Reports.--A dealer or manufacturer shall file reports at

times and in the form prescribed by the department.

(e) Manufacturer, wholesaler or dealer records.--A

manufacturer, wholesaler or dealer located or doing business in

this Commonwealth who sells tobacco products to a wholesale or

retail license holder in this Commonwealth shall keep records

showing:

(1) A list by tobacco product and by brand family of the

number and kind of tobacco products sold, the amount of tax

due and the amount of tax paid. For roll-your-own tobacco,

the records shall include the total weight and the equivalent

stick count of roll-your-own tobacco by brand family which

the manufacturer, wholesaler or dealer sold, the amount of

tax due and the amount of tax paid. For purposes of this

paragraph, 0.09 ounces of roll-your-own tobacco shall

constitute one stick.

(2) The date the tobacco products were sold.

(3) The name and license number of the dealer the

tobacco products were sold to.

(4) The total weight of each of the tobacco products

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sold to the license holder.

(5) The place where the tobacco products were shipped.

(6) The name of the common carrier.

(f) Manufacturer, wholesaler or dealer.--A manufacturer,

wholesaler or dealer shall file with the department, on or

before the 20th day of each month, a report showing the

information listed in subsection (e) for the previous month.

(g) Records.--Each manufacturer, wholesaler and dealer shall

maintain and make available to the department and to the Office

of Attorney General all invoices and documentation of sales of

all tobacco products and any other information relied upon to

prepare the reports required under subsection (f) for a period

of five years after each report is filed with the department.

Section 1215-A. Other violations, peace officers and fines.

Sections 1278, 1279, 1280 and 1291 are incorporated by

reference into and shall apply to the tax imposed by this

article.

Section 1216-A. Sales reporting.

For purposes of reporting sales of roll-your-own tobacco

under the act of June 22, 2000 (P.L.394, No.54), known as the

Tobacco Settlement Agreement Act, 0.09 ounces of tobacco shall

constitute one individual unit sold.

Section 1217-A. (Reserved).

Section 1218-A. (Reserved).

Section 1219-A. Records of shipments and receipts of tobacco

products required.

The department may, in its discretion, require reports from

any common or contract carrier who transports tobacco products

to any point or points within this Commonwealth, and from any

bonded warehouseman or bailee who has in the possession of the

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warehouseman or bailee any tobacco products. The reports shall

contain the information concerning shipments of tobacco products

that the department determines to be necessary for the

administration of this article. All common and contract

carriers, bailees and warehousemen shall permit the examination

by the department or its authorized agents of any records

relating to the shipment or receipt of tobacco products.

Section 1220-A. Licensing of dealers and manufacturers.

(a) Prohibition.--No person, unless all sales of tobacco

products are exempt from Pennsylvania tobacco products tax,

shall sell, transfer or deliver any tobacco products in this

Commonwealth without first obtaining the proper license provided

for in this article.

(b) Application.--An applicant for a dealer's or

manufacturer's license shall complete and file an application

with the department. The application shall be in the form and

contain information prescribed by the department and shall set

forth truthfully and accurately the information desired by the

department. If the application is approved, the department shall

license the dealer or manufacturer for a period of one year and

the license may be renewed annually thereafter.

Section 1221-A. Licensing of manufacturers.

Any manufacturer doing business within this Commonwealth

shall first obtain a license to sell tobacco products by

submitting an application to the department containing the

information requested by the department and designating a

process agent. If a manufacturer designates no process agent,

the manufacturer shall be deemed to have made the Secretary of

State its agent for the service of process in this Commonwealth.

Section 1222-A. Licensing of wholesalers.

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(a) Requirements.--Applicants for a wholesale license or

renewal of that license shall meet the following requirements:

(1) The premises on which the applicant proposes to

conduct business are adequate to protect the revenue.

(2) The applicant is a person of reasonable financial

stability and reasonable business experience.

(3) The applicant, or any shareholder controlling more

than 10% of the stock if the applicant is a corporation or

any officer or director if the applicant is a corporation,

shall not have been convicted of any crime involving moral

turpitude.

(4) The applicant shall not have failed to disclose any

material information required by the department, including

information that the applicant has complied with this article

by providing a signed statement under penalty of perjury.

(5) The applicant shall not have made any material false

statement in the application.

(6) The applicant shall not have violated any provision

of this article.

(7) The applicant shall have filed all required State

tax reports and paid any State taxes not subject to a timely

perfected administrative or judicial appeal or subject to a

duly authorized deferred payment plan.

(b) Multiple locations.--The wholesale license shall be

valid for one specific location only. Wholesalers with more than

one location shall obtain a license for each location.

Section 1223-A. Licensing of retailers.

Applicants for retail license or renewal of that license

shall meet the following requirements:

(1) The premises in which the applicant proposes to

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conduct business are adequate to protect the revenues.

(2) The applicant shall not have failed to disclose any

material information required by the department.

(3) The applicant shall not have any material false

statement in the application.

(4) The applicant shall not have violated any provision

of this article.

(5) The applicant shall have filed all required State

tax reports and paid any State taxes not subject to a timely

perfected administrative or judicial appeal or subject to a

duly authorized deferred payment plan.

Section 1224-A. License for tobacco products vending machines.

Each tobacco products vending machine shall have a current

retail license which shall be conspicuously and visibly placed

on the machine. There shall be conspicuously and visibly placed

on every tobacco products vending machine the name and address

of the owner and the name and address of the operator.

Section 1225-A. License fees and issuance and display of

license.

(a) Application.--At the time of making any application or

license renewal application:

(1) An applicant for a tobacco products manufacturers

license shall pay the department a license fee of $1,500.

(2) An applicant for a wholesale tobacco products

dealer's license shall pay to the department a license fee of

$1,500.

(3) An applicant for a retail tobacco products dealer's

license shall pay to the department a license fee of $25.

(4) An applicant for a vending machine tobacco products

dealer's license shall pay to the department a license fee of

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$25.

(b) Proration.--Fees shall not be prorated.

and payment of the fees, the department shall issue the proper

license which must be conspicuously displayed at the location

for which it has been issued.

Section 1226-A. Electronic filing.

The department may at its discretion require that any or all

returns, reports or registrations that are required to be filed

under this article be filed electronically. Failure to

electronically file any return, report, registration or other

information the department may direct to be filed electronically

shall subject the taxpayer to a penalty of 5% of the tax due on

the return, up to a maximum of $1,000, but not less than $10.

This penalty shall be assessed at any time and collected in the

manner provided in this article. This penalty shall be in

addition to any civil penalty imposed in this article for

failure to furnish information or file a return. The criminal

penalty for failure to file a return electronically shall be the

same as the criminal penalty for failure to furnish information

or file a return under this article.

Section 1227-A. Expiration of license.

(a) Expiration.--A license shall expire on the last day of

February next succeeding the date upon which it was issued

unless the department at an earlier date suspends, surrenders or

revokes the license.

(b) Violation.--After the expiration date of the license or

sooner if the license is suspended, surrendered or revoked, it

shall be illegal for any dealer to engage directly or indirectly

in the business heretofore conducted by the dealer for which the

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license was issued. Any licensee who shall, after the expiration

date of the license, engage in the business theretofore

conducted by the licensee either by way of purchase, sale,

distribution or in any other manner directly or indirectly

engaged in the business of dealing with tobacco products for

profit shall be in violation of this article and be subject to

the penalties provided in this article.

Section 1228-A. Administration powers and duties.

(a) Department.--The administration of this article is

hereby vested in the department. The department shall adopt

rules and regulations for the enforcement of this article. The

department may impose fees as may be necessary to cover the

costs incurred in administering this section.

(b) Joint administration.--The department is authorized to

jointly administer this article with other provisions of this

act, including joint reporting of information, forms, returns,

statements, documents or other information submitted to the

department.

Section 1229-A. Sales without license.

(a) Penalty.--Any person who shall, without being the holder

of a proper unexpired dealer's license, engage in purchasing,

selling, distributing or in any other manner directly or

indirectly engaging in the business of dealing with tobacco

products for profit commits a summary offense and shall, upon

conviction, be sentenced to pay costs of prosecution and a fine

of not less than $250 nor more than $1,000, or to imprisonment

for not more than 30 days, or both, at the discretion of the

court.

(b) Prima facie evidence.--Open display of tobacco products

in any manner shall be prima facie evidence that the person

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displaying such tobacco products is directly or indirectly

engaging in the business of dealing with tobacco products for

profit.

Section 1230-A. Violations and penalties.

(a) Suspension.--The license of any person who violates this

article may be suspended after due notice and opportunity for a

hearing for a period of not less than five days or more than 30

days for a first violation and shall be revoked or suspended for

any subsequent violation.

(b) Fine.--In addition to the provisions of subsection (a),

upon adjudication of a first violation, the person shall be

fined not less than $2,500 nor more than $5,000. For subsequent

violations, the person shall, upon adjudication thereof, be

fined not less than $5,000 nor more than $15,000.

(b), (c) or (d) or 1225-A(c) shall be subject to a civil penalty

not to exceed $300 per violation but shall not be subject to

subsections (a) and (b).

Section 1231-A. Property rights.

(a) Incorporation.--Subject to subsection (b), section 1285

is incorporated by reference into and shall apply to this

article.

(b) Alterations.--

(1) References in section 1285 to cigarettes shall apply

to tobacco products in this article.

(2) References in section 1285 to 2,000 or more

unstamped cigarettes shall apply to tobacco products worth at

least $500 in this article.

(3) References in section 1285 to more than 200

unstamped cigarettes shall apply to tobacco products worth at

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least $50 in this article.

Section 1232-A. Sample of tobacco products.

(a) Samples.--The department shall, by regulation, govern

the receipt, distribution of and payment of tax on sample

tobacco products issued for free distribution.

(b) Construction.--Nothing in this article or the

regulations promulgated under this article shall prohibit the

bringing into this Commonwealth by a manufacturer samples of

tobacco products to be delivered and distributed only through

licensed dealers or the manufacturers or their sales

representatives. The tax shall be paid by the manufacturer

provided all such packs bear the legend "all applicable State

taxes have been paid." Under no circumstances shall any untaxed

tobacco products be sold within this Commonwealth.

Section 1233-A. Labeling and packaging.

It shall be unlawful to knowingly possess, sell, give,

transfer or deliver to any person, any tobacco product where the

packaging of which has been modified or altered by a person

other than the original manufacturer. Modification or alteration

shall include the placement of a sticker, writing or mark to

cover information on the packages. For purposes of this section,

a tobacco product package shall not be construed to have been

modified or altered by a person other than the manufacturer if

the most recent modification or alteration was made by the

manufacturer or person authorized by the manufacturer and

approved by the department.

Section 1234-A. Information exchange.

The department is authorized to exchange information with any

other Federal, State or local enforcement agency for purposes of

enforcing this article.

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Section 18.1. Section 1707-B of the act, amended July 12,

2006 (P.L.1137, No.116), is amended to read:

Section 1707-B. Time Limitations.--[A taxpayer is not

entitled to a research and development tax credit for

Pennsylvania qualified research and development expenses

incurred in taxable years ending after December 31, 2015.] The

termination date in section 41(h) of the Internal Revenue Code

of 1986 (Public Law 99-514, 26 U.S.C. § 41(h)) does not apply to

a taxpayer who is eligible for the research and development tax

credit under this article for the taxable year in which the

Pennsylvania qualified research and development expense is

incurred.

Section 19. The heading of Article XVII-D of the act, added

July 25, 2007 (P.L.373, No.55), is amended to read:

ARTICLE XVII-D

[FILM] ENTERTAINMENT PRODUCTION TAX CREDIT

Section 20. Article XVII-D of the act is amended by adding a

subarticle heading to read:

SUBARTICLE A

PRELIMINARY PROVISIONS

Section 21. Section 1701-D of the act, added July 25, 2007

(P.L.373, No.55), is amended to read:

Section 1701-D. Scope of article.

This article relates to [film] entertainment production tax

credits.

Section 22. The act is amended by adding a section to read:

Section 1702-D. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

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"Department." The Department of Community and Economic

Development of the Commonwealth.

Section 23. Article XVII-D of the act is amended by adding a

subarticle heading to read:

SUBARTICLE B

FILM PRODUCTION

Section 24. Sections 1702-D and 1703-D of the act, amended

July 9, 2013 (P.L.270, No.52), are amended to read:

Section [1702-D] 1711-D. Definitions.

The following words and phrases when used in this [article]

subarticle shall have the meanings given to them in this section

unless the context clearly indicates otherwise:

["Department." The Department of Community and Economic

Development of the Commonwealth.]

"Film." A feature film, a television film, a television talk

or game show series, a television commercial or a television

pilot or each episode of a television series which is intended

as programming for a national audience. The term does not

include a production featuring news, current events, weather and

market reports, public programming, sports events, awards shows

or other gala events, a production that solicits funds, a

production containing obscene material or performances as

defined in 18 Pa.C.S. § 5903(b) (relating to obscene and other

sexual materials and performances) or a production primarily for

private, political, industrial, corporate or institutional

purposes.

"Minimum stage filming requirements." Include:

(1) Taxpayers with a Pennsylvania production expense of

less than $30,000,000 per production must:

(i) build at least one set at a qualified production

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facility;

(ii) shoot for a minimum of ten days at a qualified

production facility; and

(iii) spend or incur a minimum of $1,500,000 in

direct expenditures relating to the use or rental of

tangible property or for performance of services provided

by a qualified production facility.

(2) Taxpayers with a Pennsylvania production expense of

at least $30,000,000 per production must:

(i) build at least two sets at a qualified

production facility;

(ii) shoot for a minimum of 15 days at a qualified

production facility; and

(iii) spend or incur a minimum of $5,000,000 in

direct expenditures relating to the use or rental of

tangible property at or for performance of services

provided by a qualified production facility.

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

(1) A partnership as defined in section 301(n.0) [or a].

(2) A Pennsylvania S corporation as defined in section

301(n.1).

(3) An unincorporated entity subject to section 307.21.

"Pennsylvania production expense." Production expense

incurred in this Commonwealth. The term includes:

(1) [Compensation paid to an individual on which the tax

imposed by Article III will be paid or accrued.] A payment

made by a taxpayer to a person upon which withholding will be

made on the payment by the taxpayer as required under Part

VII of Article III.

(2) Payment to a personal service corporation

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representing individual talent if the tax imposed by Article

IV will be paid or accrued on the net income of the

corporation for the taxable year.

(3) Payment to a pass-through entity representing

individual talent [if the tax imposed by Article III will be

paid or accrued by all of the partners, members or

shareholders of the pass-through entity for the taxable year

for which the tax imposed under Article III has been withheld

and remitted under the requirements of Article III by the

production company.] for which withholding will be made by

the pass-through entity on the payment as required under Part

VII or VII-A of Article III.

(4) The cost of transportation incurred while

transporting to or from a train station, bus depot or

airport, located in this Commonwealth.

(5) The cost of insurance coverage purchased through an

insurance agent based in this Commonwealth.

(6) The purchase of music or story rights if any of the

following subparagraphs apply:

(i) The purchase is from a resident of this

Commonwealth.

(ii) The purchase is from an entity subject to

taxation in this Commonwealth, and the transaction is

subject to taxation under Article III, IV or VI.

(7) The cost of rental of facilities and equipment

rented from or through a resident of this Commonwealth or an

entity subject to taxation in this Commonwealth.

(8) A qualified postproduction expense.

"Postproduction expense." A postproduction expense of

original content for a film as follows:

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(1) The term includes traditional, emerging and new work

flow techniques used in postproduction for any of the

following:

(i) Picture, sound and music editorial, rerecording

and mixing.

(ii) Visual effects.

(iii) Graphic design.

(iv) Original scoring.

(v) Animation.

(vi) Musical composition.

(vii) M astering.

(viii) D ubbing.

(2) The term does not include any of the following:

(i) Editing previously produced content for a film.

(ii) News or current affairs.

(iii) Talk shows.

(iv) Instructional videos.

(v) Content which contains obscene material or

performance as defined in 18 Pa.C.S. § 5903(b).

"Production expense." As follows:

(1) The term includes all of the following:

(i) Compensation paid to an individual employed in

the production of the film.

(ii) Payment to a personal service corporation

representing individual talent.

(iii) Payment to a pass-through entity representing

individual talent.

(iv) The costs of construction, operations, editing,

photography, sound synchronization, lighting, wardrobe

and accessories.

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(v) The cost of leasing vehicles.

(vi) The cost of transportation to or from a train

station, bus depot or airport.

(vii) The cost of insurance coverage.

(viii) The costs of food and lodging.

(ix) The purchase of music or story rights.

(x) The cost of rental of facilities and equipment.

(2) The term does not include any of the following:

(i) Deferred, leveraged or profit participation paid

or to be paid to individuals employed in the production

of the film or paid to entities representing an

individual for services provided in the production of the

film.

(ii) Development cost.

(iii) Expense incurred in marketing or advertising a

film.

(iv) Cost related to the sale or assignment of a

film production tax credit under section [1705-D(e)]

1714-D(e).

"Qualified film production expense." All Pennsylvania

production expenses if Pennsylvania production expenses comprise

at least 60% of the film's total production expenses. The term

shall not include more than $15,000,000 in the aggregate of

compensation paid to individuals or payment made to entities

representing an individual for services provided in the

production of the film.

"Qualified postproduction expense." A postproduction expense

incurred at a qualified postproduction facility.

"Qualified postproduction facility." A permanent facility

where Pennsylvania postproduction activities are conducted and

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expenses are incurred to which all of the following apply:

(1) The facility is located in this Commonwealth.

(2) The facility is approved by the department.

(3) The facility employs at least ten full-time

employees who reside in this Commonwealth.

(4) There is at least $500,000 of capital investment in

the facility.

"Qualified production facility." A film production facility

located within this Commonwealth that contains at least one

sound stage with a column-free, unobstructed floor space and

meets either of the following criteria:

(1) Has had a minimum of $10,000,000 invested in the

film production facility in land or a structure purchased or

ground-up, purpose-built new construction or renovation of

existing improvement.

(2) Meets at least three of the following criteria:

(i) A sound stage having an industry standard noise

criteria rating of 25 or better.

(ii) A permanent grid with a minimum point load

capacity of no less than 1,000 pounds at a minimum of 25

points.

(iii) Built-in power supply available at a minimum

of 4,000 amps per sound stage without the need for

supplemental generators.

(iv) A height from sound stage floor to permanent

grid of a minimum of 20 feet.

(v) A sound stage with a sliding or roll-up access

door with a minimum height of 14 feet.

(vi) A built-in HVAC capacity during shoot days with

a minimum of 50 tons of cooling capacity available per

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sound stage.

(vii) Perimeter security that includes a 24-hour,

seven-days-a-week security presence and use of access

control identification badges.

(viii) On-site lighting and grip department with an

available inventory stored at the film production

facility with a minimum cost of investment of $500,000.

(ix) A sound stage with contiguous production

offices with a minimum of 5,000 square feet per sound

stage.

"Qualified tax liability." The liability for taxes imposed

under Article III, IV, VI, VII [or], VIII, IX or XV. The term

shall not include any tax withheld by an employer from an

employee under Article III.

"Start date." As follows:

(1) For a film:

(i) the first day of principal photography in this

Commonwealth; or

(ii) an earlier date approved by the Pennsylvania

Film Office.

(2) [an earlier] For a postproduction project, a date

[than the date under subparagraph (i),] approved by the

Pennsylvania Film Office.

"Tax credit." The film production tax credit provided under

this [article] subarticle.

"Taxpayer." A film production company subject to tax under

Article III, IV or VI. The term does not include contractors or

subcontractors of a film production company.

Section [1703-D] 1712-D. Credit for qualified film production

expenses.

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

a tax credit under this section. The application shall be on the

form required by the department.

(b) Review and approval.--The department shall establish

application periods not to exceed 90 days each. All applications

received during the application period shall be reviewed and

evaluated by the department based on the following criteria:

(1) The anticipated number of production days in a

qualified production facility.

(2) The anticipated number of Pennsylvania employees.

(3) The number of preproduction days through

postproduction days in Pennsylvania.

(4) The anticipated number of days spent in Pennsylvania

hotels.

(5) The Pennsylvania production expenses in comparison

to the production budget.

(6) The use of studio resources.

(7) If the application includes a qualified

postproduction expense:

(i) The qualified postproduction facility where the

activity will occur.

(ii) The anticipated type of postproduction activity

that will be conducted.

[(7)] (8) Other criteria that the Director of the

Pennsylvania Film Office deems appropriate to ensure maximum

employment and benefit within this Commonwealth.

Upon determining the taxpayer has incurred or will incur

qualified film production expenses, the department may approve

the taxpayer for a tax credit. Applications not approved may be

reviewed and considered in subsequent application periods. The

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department may approve a taxpayer for a tax credit based on its

evaluation of the criteria under this subsection.

application under subsection (b), the department and the

taxpayer shall enter into a contract containing the following:

(1) An itemized list of production expenses incurred or

to be incurred for the film.

(2) An itemized list of Pennsylvania production expenses

incurred or to be incurred for the film.

(3) With respect to a contract entered into prior to

completion of production, a commitment by the taxpayer to

incur the qualified film production expenses as itemized.

(4) The start date.

(5) Any other information the department deems

appropriate.

(d) Certificate.--Upon execution of the contract required by

subsection (c), the department shall award the taxpayer a film

production tax credit and issue the taxpayer a film production

tax credit certificate.

Section 25. Section 1704-D of the act, added July 25, 2007

(P.L.373, No.55), is amended to read:

Section [1704-D] 1713-D. Film production tax credits.

A taxpayer may claim a tax credit against the qualified tax

liability of the taxpayer.

Section 26. Section 1705-D of the act, amended July 2, 2012

(P.L.751, No.85) and July 9, 2013 (P.L.270, No.52), is amended

to read:

Section [1705-D] 1714-D. Carryover, carryback and assignment of

credit.

(a) General rule.--If the taxpayer cannot use the entire

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amount of the tax credit for the taxable year in which the tax

credit is first approved, then the excess may be carried over to

succeeding taxable years and used as a credit against the

qualified tax liability of the taxpayer for those taxable years.

Each time the tax credit is carried over to a succeeding taxable

year, it shall be reduced by the amount that was used as a

credit during the immediately preceding taxable year. The tax

credit provided by this [article] subarticle may be carried over

and applied to succeeding taxable years for no more than three

taxable years following the first taxable year for which the

taxpayer was entitled to claim the credit.

(b) Application.--A tax credit approved by the department in

a taxable year first shall be applied against the taxpayer's

qualified tax liability for the current taxable year as of the

date on which the credit was approved before the tax credit can

be applied against any tax liability under subsection (a).

carry back or obtain a refund of all or any portion of an unused

tax credit granted to the taxpayer under this [article]

subarticle.

(d) (Reserved).

(e) Sale or assignment.--The following shall apply:

(1) A taxpayer, upon application to and approval by the

department, may sell or assign, in whole or in part, a tax

credit granted to the taxpayer under this [article]

subarticle.

(2) The department and the Department of Revenue shall

jointly promulgate regulations for the approval of

applications under this subsection.

(3) Before an application is approved, the Department of

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Revenue must make a finding that the applicant has filed all

required State tax reports and returns for all applicable

taxable years and paid any balance of State tax due as

determined at settlement, assessment or determination by the

Department of Revenue.

(4) Notwithstanding any other provision of law, the

Department of Revenue shall settle, assess or determine the

tax of an applicant under this subsection within 90 days of

the filing of all required final returns or reports in

accordance with section 806.1(a)(5) of the act of April 9,

1929 (P.L.343, No.176), known as The Fiscal Code.

(f) Purchasers and assignees.--Except as set forth in

subsection (g), the following apply:

(1) The purchaser or assignee of all or a portion of a

tax credit under subsection (e) shall immediately claim the

credit in the taxable year in which the purchase or

assignment is made.

(2) The amount of the tax credit that a purchaser or

assignee may use against any one qualified tax liability may

not exceed 50% of such qualified tax liability for the

taxable year.

(3) The purchaser or assignee may not carry forward,

carry back or obtain a refund of or sell or assign the tax

credit.

(4) The purchaser or assignee shall notify the

Department of Revenue of the seller or assignor of the tax

credit in compliance with procedures specified by the

Department of Revenue.

(g) Limited carry forward of tax credits by a purchaser or

assignee.--A purchaser or assignee may carry forward all or any

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unused portion of a tax credit purchased or assigned in:

(1) Calendar year 2010 against qualified tax liabilities

incurred in taxable years 2011 and 2012.

(2) Calendar year 2013 against qualified tax liabilities

incurred in taxable year 2014.

(3) Calendar year 2014 against qualified tax liabilities

incurred in taxable year 2015.

Section 27. Section 1706-D of the act, added July 25, 2007

(P.L.373, No.55), is amended to read:

Section [1706-D] 1715-D. Determination of Pennsylvania

production expenses.

In prescribing standards for determining which production

expenses are considered Pennsylvania production expenses for

purposes of computing the credit provided by this [article]

subarticle, the department shall consider:

(1) The location where services are performed.

(2) The location where supplies are consumed.

(3) Other factors the department determines are

relevant.

Section 28. Section 1707-D of the act, amended July 2, 2012

(P.L.751, No.85), is amended to read:

Section [1707-D] 1716-D. Limitations.

(a) Cap.--[In] Except for tax credits reissued under section

1761.1-D, in no case shall the aggregate amount of tax credits

awarded in any fiscal year under this [article] subarticle

exceed [$60,000,000] $65,000,000. The department may, in its

discretion, award in one fiscal year up to:

(1) Thirty percent of the dollar amount of film

production tax credits available to be awarded in the next

succeeding fiscal year.

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(2) Twenty percent of the dollar amount of film

production tax credits available to be awarded in the second

successive fiscal year.

(3) Ten percent of the dollar amount of film production

tax credits available to be awarded in the third successive

fiscal year.

(a.1) Advance award of credits.--The advance award of film

tax credits under subsection (a) shall:

(1) count against the total dollar amount of credits

that the department may award in that next succeeding fiscal

year; and

(2) reduce the dollar amount of credits that the

department may award in that next succeeding fiscal year.

The individual limitations on the awarding of film production

tax credits apply to an advance award of film production tax

credits under subsection (a) and to a combination of film

production tax credits awarded against the current fiscal year

cap and against the next succeeding fiscal year's cap.

(b) Individual limitations.--The following shall apply:

(1) Except as set forth in paragraph (1.1) or (1.2), the

aggregate amount of film production tax credits awarded by

the department under section [1703-D(d)] 1712-D(d) to a

taxpayer for a film may not exceed 25% of the qualified film

production expenses to be incurred.

(1.1) In addition to the tax credit under paragraph (1),

a taxpayer is eligible for a credit in the amount of 5% of

the qualified film production expenses incurred by the

taxpayer if the taxpayer:

(i) films a feature film, television film or

television series, which is intended as programming for a

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national audience; and

(ii) films in a qualified production facility which

meets the minimum stage filming requirements.

(1.2) A qualified postproduction expense shall qualify

for a 30% credit.

(2) A taxpayer that has received a grant under 12

Pa.C.S. § 4106 (relating to approval) shall not be eligible

for a film production tax credit under this act for the same

film.

qualified production facility [under subsection (b)(1.1)] or

qualified postproduction facility, the owner of a facility shall

provide evidence to the department to verify the development or

facility specifications and capital [improvement] investment

costs incurred for the facility so that the threshold amounts

set in the [definition] definitions of "qualified production

facility," [under section 1702-D] and "qualified postproduction

facility" are satisfied, and upon verification, the facility

shall be registered by the department officially as a qualified

production facility or qualified postproduction facility.

(d) Waiver.--The department may make a determination that

the financial benefit to this Commonwealth resulting from the

direct investment in or payments made to Pennsylvania facilities

outweighs the benefit of maintaining the 60% requirement

contained in the definition of "qualified film production

expense." If such determination is made, the department may

waive the requirement that 60% of a film's total production or

postproduction expenses be comprised of Pennsylvania production

expenses for a [feature] film, television film or television

series that is intended as programming for a national audience

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and is filmed or produced in a qualified production facility or

qualified postproduction facility if the taxpayer who has

Pennsylvania production expenses of at least $30,000,000 per

production meets the minimum stage filming requirements.

Section 28.1. The act is amended by adding a section to

read:

Section 1716.1-D. Reissuance of film production tax credits.

(a) Reissuance.--In any fiscal year, the department may

reissue a tax credit which meets all of the following:

(1) The tax credit was approved under section 1712-D(b).

(2) The contract was signed under section 1712-D(c).

(3) The tax credit was awarded and a certificate was

issued under section 1712-D(d).

(b) Amount.--The amount of a tax credit to be reissued shall

be calculated as the difference between the amounts in

subsection (a)(1) and (3).

awarded under this article in any fiscal year beginning after

June 30, 2017.

Section 29. Sections 1708-D, 1709-D, 1710-D, 1711-D and

1712-D of the act, added July 25, 2007 (P.L.373, No.55), are

amended to read:

Section [1708-D] 1717-D. Penalty.

A taxpayer which claims a tax credit and fails to incur the

amount of qualified film production expenses agreed to in

section [1703-D(c)(3)] 1712-D(c)(3) for a film in that taxable

year shall repay to the Commonwealth the amount of the film

production tax credit claimed under this [article] subarticle

for the film.

Section [1709-D] 1718-D. Pass-through entity.

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(a) General rule.--If a pass-through entity has any unused

tax credit under section [1705-D] 1714-D, it may elect in

writing, according to procedures established by the Department

of Revenue, to transfer all or a portion of the credit to

shareholders, members or partners in proportion to the share of

the entity's distributive income to which the shareholder,

member or partner is entitled.

(b) Limitation.--A pass-through entity and a shareholder,

member or partner of a pass-through entity shall not claim the

credit under subsection (a) for the same qualified film

production expense.

pass-through entity to whom a credit is transferred under

subsection (a) shall immediately claim the credit in the taxable

year in which the transfer is made. The shareholder, member or

partner may not carry forward, carry back, obtain a refund of or

sell or assign the credit.

Section [1710-D] 1719-D. Department guidelines and regulations.

The department shall develop written guidelines for the

implementation of the provisions of this [article] subarticle.

The guidelines shall be in effect until such time as the

department promulgates regulations for the implementation of the

provisions of this [article] subarticle. The department shall

promulgate regulations for the implementation of this [article]

subarticle within two years of the effective date of this

section.

Section [1711-D] 1720-D. Report to General Assembly.

(a) General rule.--No later than June 1, 2008, and September

1 of each year thereafter, the Secretary of Community and

Economic Development shall submit a report to the General

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Assembly summarizing the effectiveness of the tax credit

provided by this [article] subarticle. The report shall include

the name of the film produced, the names of all taxpayers

utilizing the credit as of the date of the report and the amount

of credits approved for, utilized by or sold or assigned by each

taxpayer. The report may also include any recommendations for

changes in the calculation or administration of the tax credit.

The report shall be submitted to the chairman and minority

chairman of the Appropriations and Finance Committees of the

Senate and the chairman and minority chairman of the

Appropriations and Finance Committees of the House of

Representatives. In addition to the information set forth above,

the report shall include the following information, which shall

be separated by geographic location within this Commonwealth:

(1) The amount of credits claimed during the fiscal year

by film.

(2) The total amount spent in this Commonwealth during

the fiscal year by film.

(3) The total amount of tax revenues generated by this

Commonwealth during the fiscal year by film.

(4) The total number of jobs created during the fiscal

year by film, including the duration of the jobs.

(b) Public information.--Notwithstanding any law providing

for the confidentiality of tax records, the information in the

report shall be public information, and all report information

shall be posted on the department's Internet website.

Section [1712-D] 1721-D. Film Advisory Board.

(a) Composition.--A Film Advisory Board is established. The

board shall work with the Pennsylvania Film Office and the

regional film offices to promote the film industry throughout

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this Commonwealth and to examine and file a written report on

the effectiveness of the tax credit and grant programs. The

report shall be included in the department's report required

under section [1711-D] 1720-D. The board shall consist of the

following members:

(1) The Secretary of Community and Economic Development,

or a designee.

(2) A member appointed by the Governor.

(3) A member appointed by the President pro tempore of

the Senate.

(4) A member appointed by the Minority Leader of the

Senate.

(5) A member appointed by the Majority Leader of the

House of Representatives.

(6) A member appointed by the Minority Leader of the

House of Representatives.

(b) Compensation.--Members of the board shall not be

compensated for their service as board members, but shall be

compensated for their reasonable expenses. The department shall

provide administrative support for the board.

year.

(d) Chairman.--The members of the board shall elect the

chairman.

Section 30. Article XVII-D of the act is amended by adding

subarticles to read:

SUBARTICLE C

CONCERT REHEARSAL AND TOUR

Section 1731-D. Definitions.

The following words and phrases when used in this subarticle

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shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Class 1 venue." A stadium, arena, other structure or on

property owned by a municipality or an authority formed pursuant

to Article XXV-A of the act of July 28, 1953 (P.L.723, No.230),

known as the Second Class County Code, at which concerts are

performed and which is all of the following:

(1) Located in a city of the first class or a county of

the second class.

(2) Is constructed in a manner in which the venue has a

seating capacity of at least 14,000.

"Class 2 venue." A stadium, arena or other structure at

which concerts are performed and which is all of the following:

(1) Located outside the geographic boundaries of a city

of the first class or a county of the second class.

(2) Is constructed in a manner in which the venue has a

seating capacity of at least 6,000.

"Class 3 venue." A stadium, arena or other structure which

is any of the following:

(1) Located within a neighborhood improvement zone, as

defined in section 1902-B.

(2) Owned by or affiliated with a State-related

institution, as defined in 62 Pa.C.S. § 103 (relating to

definitions).

(3) Owned by the Commonwealth and affiliated with the

State System of Higher Education.

"Concert." A live performance of music in the presence of

individuals who view the performance.

"Concert tour equipment." Includes stage, set, scenery,

design elements, automation, rigging, trusses, spot lights,

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lighting, sound equipment, video equipment, special effects,

cases, communication devices, power distribution equipment,

backline and other miscellaneous equipment or supplies used

during a concert or rehearsal.

"Minimum rehearsal and tour requirements." During a tour,

all of the following must occur:

(1) the purchase or rental of concert tour equipment

delivered to a location in this Commonwealth, in an amount of

at least $3,000,000, from companies located and maintaining a

place of business in this Commonwealth for use on the tour;

(2) a rehearsal at a qualified rehearsal facility for a

minimum of 10 days;

(3) at least one concert performed at a class 1 venue;

and

(4) at least one concert performed at a venue which is

located in a municipality other than the municipality in

which the class 1 venue under paragraph (3) is located.

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

(1) A partnership as defined in section 301(n.0).

(2) A Pennsylvania S corporation as defined in section

301(n.1).

(3) An unincorporated entity subject to section 307.21.

"Pennsylvania rehearsal and tour expenses." The sum of

Pennsylvania rehearsal expenses and tour expenses.

"Pennsylvania rehearsal expense." A rehearsal expense which

is incurred or will be incurred within this Commonwealth. The

term includes:

(1) A payment made by a taxpayer to a person upon which

withholding will be made on the payment by the taxpayer as

required under Part VII of Article III.

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(2) Payment to a personal service corporation

representing individual talent if the tax imposed by Article

IV will be paid or accrued on the net income of the

corporation for the taxable year.

(3) Payment to a pass-through entity representing

individual talent for which withholding will be made by the

pass-through entity on the payment as required under Part VII

or VII-A of Article III.

"Qualified rehearsal and tour expense." All Pennsylvania

rehearsal and tour expenses if Pennsylvania rehearsal expenses

comprise at least 60% of the total rehearsal expenses. The term

shall not include more than $2,000,000 in the aggregate of

compensation paid to individuals or payment made to entities

representing an individual for services provided in the tour.

"Qualified rehearsal facility." A rehearsal facility which

meets at least six of the following criteria:

(1) Has had a minimum of $8,000,000 invested in the

rehearsal facility in land or structure, or a combination of

land and structure.

(2) Has a permanent grid system with a capacity of

1,000,000 pounds.

(3) Has a built-in power supply system available at a

minimum of 3,200 amps without the need for any supplemental

generators.

(4) Has a height from floor to permanent grid of a

minimum of 80 feet.

(5) Has at least two sliding or roll-up access doors

with a minimum height of 14 feet.

(6) Has a perimeter security system which includes 24-

hour, seven-days-a-week security cameras and the use of

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access control identification badges.

(7) Has a service area with production offices, catering

and dressing rooms with a minimum of 5,000 square feet.

(8) Is located within one mile of a minimum of two

companies which provide concert tour equipment for use on a

tour.

"Qualified tax liability." The liability for taxes imposed

under Article III, IV or VI. The term shall not include any tax

withheld by an employer from an employee under Article III.

"Rehearsal." An event or series of events which occur in

preparation for a tour prior to the start of the tour or during

a tour when additional preparation may be needed.

"Rehearsal expense." All of the following when incurred or

will be incurred during a rehearsal:

(1) Compensation paid to an individual employed in the

rehearsal of the performance.

(1.1) Payment to a personal service corporation

representing individual talent.

(1.2) Payment to a pass-through entity representing

individual talent.

(2) The costs of construction, operations, editing,

photography, staging, lighting, wardrobe and accessories.

(3) The cost of leasing vehicles.

(4) The cost of transportation of people or concert tour

equipment to or from a train station, bus depot, airport or

other transportation facility or directly from a residence or

business entity.

(5) The cost of insurance coverage.

(6) The cost of food and lodging.

(7) The cost of purchase or rental of concert tour

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equipment.

(8) The cost of renting a rehearsal facility.

(9) The cost of emergency or medical support services

required to conduct a rehearsal.

"Rehearsal facility." As follows:

(1) A facility primarily used for rehearsals which is

all of the following:

(i) Located within this Commonwealth.

(ii) Has a minimum of 25,000 square feet of column-

free, unobstructed floor space.

(2) The term does not include a facility at which

concerts are capable of being held.

"Start date." The date the first set of concert tour

equipment arrives or is expected to arrive at a qualified

rehearsal facility.

"Tax credit." The concert rehearsal and tour tax credit

provided under this subarticle.

"Taxpayer." A concert tour promotion company, concert tour

management company or other concert management company subject

to tax under Article III, IV or VI. The term does not include

contractors or subcontractors of a concert tour promotion

company, concert tour management or other concert management

company.

"Tour." A series of concerts performed by a musical

performer in more than one location.

"Tour expense." As follows:

(1) Costs incurred or which will be incurred during a

tour for venues located in this Commonwealth. The term

includes all of the following:

(i) A payment made by a taxpayer to a person upon

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which withholding will be made on the payment by the

taxpayer as required under Part VII of Article III.

(ii) The cost of transportation of people or concert

touring equipment incurred while transporting to or from

a train station, bus depot, airport or other

transportation facility or while transporting directly

from a residence or business entity, located in this

Commonwealth or incurred for transportation provided by a

company which is subject to the tax imposed under Article

III or IV.

(iii) The cost of leasing vehicles upon which the

tax imposed by Article II will be paid or accrued.

(iv) The cost of insurance coverage purchased

through an insurance agent based in this Commonwealth.

(v) The cost of purchasing or renting facilities and

equipment from or through a resident of this Commonwealth

or an entity subject to taxation in this Commonwealth.

(vi) The cost of food and lodging incurred from a

facility located in this Commonwealth.

(vii) Expenses incurred in marketing or advertising

a tour at venues located within this Commonwealth.

(viii) The cost of merchandise purchased from a

company located within this Commonwealth and used on the

tour.

(2) The term does not include development cost,

including the writing of music or lyrics.

"Venue." A class 1, class 2 or class 3 venue.

Section 1732-D. Procedure.

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

a tax credit under this section. The application shall be on the

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form required by the department.

(b) Review and approval.--

(1) The department shall establish application periods

not to exceed 30 days. All applications received during an

application period shall be reviewed and evaluated by the

department based on the following criteria:

(i) The anticipated number of rehearsal days in a

qualified rehearsal facility.

(ii) The anticipated number of concerts at class 1

venues.

(iii) The anticipated number of concerts at class 2

venues.

(iv) The anticipated number of concerts at class 3

venues.

(v) The amount of Pennsylvania rehearsal expenses in

comparison to the aggregate amount of rehearsal expenses.

(vi) The anticipated tour expenses.

(vii) The anticipated concert tour equipment

expenses which are or will be purchased or rented from a

company located in this Commonwealth and which will be

used on the tour.

(viii) The anticipated number of days spent in

Commonwealth hotels.

(ix) Other criteria that the department deems

appropriate to ensure maximum employment opportunities

and entertainment benefits for the residents of this

Commonwealth.

(2) Upon determining that the taxpayer has paid the

applicable application fee, not to exceed $300, has met the

minimum rehearsal and tour requirements and has incurred or

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will incur qualified rehearsal and tour expenses, the

department may approve the taxpayer for a tax credit.

Applications not approved may be reviewed and considered in

subsequent application periods. The department may approve a

taxpayer for a tax credit based on its evaluation of the

criteria under this subsection.

application under subsection (b), the department and the

taxpayer shall enter into a contract containing the following:

(1) An itemized list of rehearsal expenses incurred or

to be incurred for the tour.

(2) An itemized list of Pennsylvania rehearsal expenses

incurred or to be incurred for the tour.

(3) With respect to a contract entered into prior to

completion of a tour, a commitment by the taxpayer to incur

the Pennsylvania rehearsal expenses as itemized.

(4) An itemized list of the qualified rehearsal and tour

expenses incurred or to be incurred for the tour.

(5) With respect to a contract entered into prior to

completion of a tour, a commitment by the taxpayer to incur

the qualified rehearsal and tour expenses as itemized.

(6) With respect to a contract entered into prior to

completion of a tour, a commitment by the taxpayer to hold at

least one concert at a class 1 venue.

(7) With respect to a contract entered into prior to

completion of a tour, a commitment by the taxpayer to hold at

least one concert at a venue located in a municipality other

than the municipality in which the class 1 venue under

paragraph (6) is located.

(8) The start date or the expected start date.

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(9) Any other information the department deems

appropriate.

(c.1) Prohibition.--A tax credit may not be awarded for

fiscal years prior to fiscal year 2017-2018.

(d) Certificate.--Upon execution of the contract required by

subsection (c), the department shall award the taxpayer a

concert rehearsal and tour tax credit and issue the taxpayer a

tax credit certificate.

Section 1733-D. Claim.

Beginning July 1, 2017, a taxpayer may claim a concert

rehearsal and tour tax credit against the qualified tax

liability of the taxpayer.

Section 1734-D. Carryover, carryback and assignment of tax

credit.

(a) General rule.--If a taxpayer cannot use the entire

amount of a tax credit for the taxable year in which the tax

credit is first approved, the excess may be carried over to

succeeding taxable years and used as a tax credit against the

qualified tax liability of the taxpayer for those taxable years.

Each time the tax credit is carried over to a succeeding taxable

year, the tax credit shall be reduced by the amount that was

used as a credit during the immediately preceding taxable year.

The tax credit may be carried over and applied to succeeding

taxable years for no more than three taxable years following the

first taxable year for which the taxpayer was entitled to claim

the tax credit.

(b) Application.--A tax credit approved by the department in

a taxable year first shall be applied against the taxpayer's

qualified tax liability for the current taxable year as of the

date on which the tax credit was approved before the tax credit

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can be applied against any tax liability under subsection (a).

entitled to carry back or obtain a refund of all or any portion

of an unused tax credit granted to the taxpayer under this

subarticle.

Section 1735-D. Determination of Pennsylvania rehearsal and

tour expenses.

When prescribing standards for determining which rehearsal or

tour expenses are considered Pennsylvania rehearsal and tour

expenses for purposes of computing the tax credit provided by

this subarticle, the department shall consider:

(1) The location where services are performed.

(2) The location where concert tour equipment is

purchased, rented, delivered and used.

(3) The location where rehearsals or concerts are held.

(4) Other factors the department determines are

relevant.

Section 1736-D. Limitations.

(a) Cap.--The aggregate amount of tax credits awarded in any

fiscal year under this subarticle may not exceed $4,000,000. The

department may, in the department's discretion, award in one

fiscal year up to 50% of the dollar amount of tax credits

available to be awarded in the next succeeding fiscal year.

(b) Advance award of credits.--

(1) The advance award of tax credits under subsection

(a) shall:

(i) count against the total dollar amount of tax

credits that the department may award in that next

succeeding fiscal year; and

(ii) reduce the dollar amount of tax credits that

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the department may award in that next succeeding fiscal

year.

(2) The individual limitations under subsection (c) on

the awarding of tax credits apply to an advance award of tax

credits under subsection (a) and to a combination of tax

credits awarded against the current fiscal year's cap and

against the next succeeding fiscal year's cap.

(1) A taxpayer may not be awarded more than $800,000 of

tax credits for a tour.

(2) Except as provided under paragraph (5), the

aggregate amount of tax credits awarded by the department

under section 1732-D(d) to a taxpayer for a tour with

concerts at two class 1 venues or a class 1 venue and a class

2 venue may not exceed 25% of the qualified rehearsal and

tour expenses incurred or to be incurred.

(3) Except as provided under paragraph (5), the

aggregate amount of tax credits awarded by the department

under section 1732-D(d) to a taxpayer for a tour with

concerts at a class 1 venue and a class 3 venue may not

exceed 30% of the qualified rehearsal and tour expenses

incurred or to be incurred.

(4) Except as provided under paragraph (5), the

aggregate amount of tax credits awarded by the department

under section 1732-D(d) to a taxpayer for a tour with

concerts at a class 1 venue and a class 3 venue which does

not serve alcohol may not exceed 35% of the qualified

rehearsal and tour expenses incurred or to be incurred.

(5) In addition to the tax credits under paragraph (2),

(3) or (4), a taxpayer is eligible for a tax credit in the

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amount of 5% of the qualified rehearsal and tour expenses

incurred or to be incurred by the taxpayer if the taxpayer

holds concerts at a total of two or more class 2 venues or

class 3 venues.

(d) Qualified rehearsal facility.--To be considered a

qualified rehearsal facility under this subarticle, the owner of

a rehearsal facility shall provide evidence to the department to

verify the development or facility specifications and capital

improvement costs incurred for the rehearsal facility so that

the threshold amounts set in the definition of "qualified

rehearsal facility" under section 1731-D are satisfied, and upon

verification, the rehearsal facility shall be registered by the

department officially as a qualified rehearsal facility.

(e) Waiver.--The department may make a determination that

the financial benefit to this Commonwealth resulting from the

direct investment in or payments made to Pennsylvania rehearsal

and concert facilities outweighs the benefit of maintaining the

60% Pennsylvania rehearsal expenses requirement contained in the

definition of qualified rehearsal and tour expense. If such

determination is made, the department may waive the requirement

that 60% of a tour's aggregate rehearsal expenses be comprised

of Pennsylvania rehearsal expenses.

Section 1737-D. Penalty.

A taxpayer which claims a tax credit and fails to incur the

amount of qualified rehearsal and tour expenses agreed to in

section 1732-D(c)(4) for a tour in that taxable year shall repay

to the Commonwealth an amount equal to 110% of the difference

between the amount agreed to in section 1732-D(c)(4) and the

amount of qualified rehearsal and tour expenses actually

incurred by the taxpayer. The penalty shall be assessed and

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collected under Article II.

Section 1738-D. Pass-through entity.

(a) General rule.--If a pass-through entity has any unused

tax credits under section 1734-D, it may elect in writing,

according to procedures established by the Department of

Revenue, to transfer all or a portion of the tax credits to

shareholders, members or partners in proportion to the share of

the entity's distributive income to which the shareholder,

member or partner is entitled.

(b) Limitation.--A pass-through entity and a shareholder,

member or partner of a pass-through entity shall not claim the

tax credit under subsection (a) for the same qualified rehearsal

and tour expense.

pass-through entity to whom a tax credit is transferred under

subsection (a) shall immediately claim the tax credit in the

taxable year in which the transfer is made. The shareholder,

member or partner may not carry forward, carry back, obtain a

refund of or sell or assign the tax credit.

Section 1739-D. Department guidelines and regulations.

The department shall develop written guidelines for the

implementation of the provisions of this subarticle. The

guidelines shall be in effect until such time as the department

promulgates regulations for the implementation of the provisions

of this subarticle. The department shall promulgate regulations

for the implementation of this subarticle within two years of

the effective date of this section.

Section 1740-D. Report to General Assembly.

No later than June 1, 2018, and September 1 of each year

thereafter, the Secretary of Community and Economic Development

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shall submit a report to the General Assembly summarizing the

effectiveness of the tax credits provided by this subarticle.

The report shall include the name of the tours which rehearsed

in this Commonwealth, the names of all taxpayers utilizing the

tax credit as of the date of the report and the amount of tax

credits approved for each taxpayer. The report may also include

any recommendations for changes in the calculation or

administration of the tax credits provided by this subarticle.

The report shall be submitted to the chairman and minority

chairman of the Appropriations Committee of the Senate, the

chairman and minority chairman of the Finance Committee of the

Senate, the chairman and minority chairman of the Appropriations

Committee of the House of Representatives and the chairman and

minority chairman of the Finance Committee of the House of

Representatives. In addition to the information set forth above,

the report shall include the following information, which shall

be separated by geographic location within this Commonwealth:

(1) The amount of tax credits claimed during the fiscal

year by tour.

(2) The total amount spent in this Commonwealth during

the fiscal year by tours and concert tour promotion companies

for services and supplies.

(3) The total amount of tax revenues, both directly and

indirectly, generated for the Commonwealth during the fiscal

year by the concert rehearsal and tour industry.

SUBARTICLE D

VIDEO GAME PRODUCTION

Section 1751-D. Scope of subarticle.

This subarticle relates to video game production tax credits.

Section 1752-D. Definitions.

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The following words and phrases when used in this subarticle

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

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

(1) A partnership as defined in section 301(n.0).

(2) A Pennsylvania S corporation as defined in section

301(n.1).

(3) An unincorporated entity subject to section 307.21.

"Pennsylvania production expense." Production expense

incurred in this Commonwealth. The term includes:

(1) A payment made by a taxpayer to a person upon which

withholding will be made on the payment by the taxpayer as

required under Part VII of Article III.

(2) Payment to a personal service corporation

representing individual talent if the tax imposed by Article

IV will be paid or accrued on the net income of the

corporation for the taxable year.

(3) Payment to a pass-through entity representing

individual talent if withholding will be made by the pass-

through entity on the payment as required under Part VII or

VII-A of Article III.

(4) The cost of transportation incurred while

transporting to or from a train station, bus depot or airport

located in this Commonwealth.

(5) The cost of insurance coverage purchased through an

insurance agent based in this Commonwealth.

(6) The purchase of music or story rights if any of the

following subparagraphs apply:

(i) The purchase is from a resident of this

Commonwealth.

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(ii) The purchase is from an entity subject to

taxation in this Commonwealth, and the transaction is

subject to taxation under Article III or IV.

(7) The cost of rental of facilities and equipment

rented from or through a resident of this Commonwealth or an

entity subject to taxation in this Commonwealth.

(8) The development and manufacture of video game

equipment.

"Production expense." As follows:

(1) The term includes all of the following:

(i) Compensation paid to an individual employed in

the production of a video game.

(ii) Payment to a personal service corporation

representing individual talent.

(iii) Payment to a pass-through entity representing

individual talent.

(iv) The costs of construction, operations, editing,

photography, sound synchronization, lighting, wardrobe

and accessories.

(v) The cost of leasing vehicles.

(vi) The cost of transportation to or from a train

station, bus depot or airport.

(vii) The cost of insurance coverage.

(viii) The costs of food and lodging.

(ix) The purchase of music or story rights.

(x) The cost of rental of facilities and equipment.

(xi) Development and production costs relating to

video games.

(2) The term does not include any of the following:

(i) Deferred, leveraged or profit participation paid

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or to be paid to individuals employed in the production

of a video game or paid to entities representing an

individual for services provided in the production of a

video game.

(ii) Expense incurred in marketing or advertising a

video game.

(iii) Cost related to the sale or assignment of a

video game production tax credit under section 1755-D(e).

"Qualified tax liability." The liability for taxes imposed

under Article III, IV, VI, VII, VIII, IX or XV. The term does

not include a tax withheld by an employer from an employee under

Article III.

"Qualified video game production expense." All Pennsylvania

production expenses if Pennsylvania production expenses comprise

at least 60% of the video game's total production expenses. The

term does not include more than $1,000,000 in the aggregate of

compensation paid to individuals or payment made to entities

representing an individual for services provided in the

production of the video game.

"Start date." The first day of principal production of a

video game in this Commonwealth.

"Tax credit." The video game production tax credit provided

under this subarticle.

"Taxpayer." A video game production company subject to tax

under Article III, IV or VI. The term does not include

contractors or subcontractors of a video game production

company.

"Video game." An electronic game that involves interaction

with a user interface to generate visual feedback on a video

device. The term does not include a game that contains obscene

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material or performances as defined in 18 Pa.C.S. § 5903(b)

(relating to obscene and other sexual materials and

performances) or a game designed primarily for private,

political, industrial, corporate or institutional purposes.

"Video game equipment." Equipment that is required for the

development or functioning of a video game. The term includes:

(1) Integrated video and audio equipment, networking

routers, switches, network cabling and any other computer-

related hardware necessary to create or operate a video game.

(2) Software, notwithstanding the method of delivery,

transfer or access.

(3) Computer code.

(4) Image files, music files, audio files, video files,

scripts and plays.

(5) Concept mock-ups.

(6) Software tools.

(7) Testing procedures.

(8) A component part of an item listed under paragraph

(2), (3), (4), (5), (6) or (7), necessary and integral to

create, develop or produce a video game.

Section 1753-D. Credit for qualified video game production

expenses.

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

a tax credit under this section. The application shall be on the

form required by the department.

(b) Review and approval.--The department shall review and

approve or disapprove the applications in the order in which

they are received. Upon determining the taxpayer has incurred or

will incur qualified video game production expenses, the

department may approve the taxpayer for a tax credit.

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application under subsection (b), the department and the

taxpayer shall enter into a contract containing the following:

(1) An itemized list of production expenses incurred or

to be incurred for the video game.

(2) An itemized list of Pennsylvania production expenses

incurred or to be incurred for the video game.

(3) With respect to a contract entered into prior to

completion of production, a commitment by the taxpayer to

incur the qualified video game production expenses as

itemized.

(4) The principal production start date.

(5) Any other information the department deems

appropriate.

(c.1) Prohibition.--A tax credit may not be awarded for

fiscal years prior to fiscal year 2017-2018.

(d) Certificate.--Upon execution of the contract required by

subsection (c), the department shall award the taxpayer a video

game production tax credit and issue the taxpayer a video game

production tax credit certificate.

Section 1754-D. Video game production tax credits.

Beginning July 1, 2017, a taxpayer may claim a tax credit

against the qualified tax liability of the taxpayer.

Section 1755-D. Carryover, carryback and assignment of credit.

(a) General rule.--If the taxpayer cannot use the entire

amount of the tax credit for the taxable year in which the tax

credit is first approved, the excess may be carried over to

succeeding taxable years and used as a credit against the

qualified tax liability of the taxpayer for those taxable years.

Each time the tax credit is carried over to a succeeding taxable

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year, it shall be reduced by the amount that was used as a

credit during the immediately preceding taxable year. The tax

credit may be carried over and applied to succeeding taxable

years for no more than three taxable years following the first

taxable year for which the taxpayer was entitled to claim the

tax credit.

(b) Application.--A tax credit approved by the department in

a taxable year first shall be applied against the taxpayer's

qualified tax liability for the current taxable year as of the

date on which the tax credit was approved before the tax credit

can be applied against any tax liability under subsection (a).

carry back or obtain a refund of all or any portion of an unused

tax credit granted to the taxpayer under this subarticle.

(d) (Reserved).

(e) Sale or assignment.--The following shall apply:

(1) A taxpayer, upon application to and approval by the

department, may sell or assign, in whole or in part, a tax

credit granted to the taxpayer under this subarticle.

(2) The department and the Department of Revenue shall

jointly promulgate regulations for the approval of

applications under this subsection.

(3) Before an application is approved, the Department of

Revenue must make a finding that the applicant has filed all

required State tax reports and returns for all applicable

taxable years and paid any balance of State tax due as

determined at settlement, assessment or determination by the

Department of Revenue.

(4) Notwithstanding any other provision of law, the

Department of Revenue shall settle, assess or determine the

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tax of an applicant under this subsection within 90 days of

the filing of all required final returns or reports in

accordance with section 806.1(a)(5) of the act of April 9,

1929 (P.L.343, No.176), known as The Fiscal Code.

(f) Purchasers and assignees.--The purchaser or assignee of

all or a portion of a tax credit under subsection (e) shall

immediately claim the tax credit in the taxable year in which

the purchase or assignment is made. The amount of the tax credit

that a purchaser or assignee may use against any one qualified

tax liability may not exceed 50% of such qualified tax liability

for the taxable year. The purchaser or assignee may not carry

forward, carry back or obtain a refund of or sell or assign the

tax credit. The purchaser or assignee shall notify the

Department of Revenue of the seller or assignor of the tax

credit in compliance with procedures specified by the Department

of Revenue.

Section 1756-D. Determination of Pennsylvania production

expenses.

In prescribing standards for determining which production

expenses are considered Pennsylvania production expenses for

purposes of computing the tax credit, the department shall

consider:

(1) The location where services are performed.

(2) The location where supplies are consumed.

(3) Other factors the department determines are

relevant.

Section 1757-D. Limitations.

(a) Cap.--In no case shall the aggregate amount of tax

credits awarded in a fiscal year under this subarticle exceed

$1,000,000.

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(b) Individual limitations.--The aggregate amount of video

game production tax credits awarded by the department under

section 1753-D(d) to a taxpayer for a video game may not exceed

25% of the qualified video game production expenses to be

incurred during each of the first four years that the video game

production expenses are incurred and 10% for each year

thereafter that the video game production expenses are incurred.

Section 1758-D. Penalty.

A taxpayer which claims a tax credit and fails to incur the

amount of qualified video game production expenses agreed to in

section 1753-D(c)(3) for a video game in that taxable year shall

repay to the Commonwealth the amount of the video game

production tax credit claimed under this subarticle for the

video game.

Section 1759-D. Pass-through entity.

(a) General rule.--If a pass-through entity has an unused

tax credit under section 1755-D, it may elect in writing,

according to procedures established by the Department of

Revenue, to transfer all or a portion of the tax credit to

shareholders, members or partners in proportion to the share of

the entity's distributive income to which the shareholder,

member or partner is entitled.

(b) Limitation.--A pass-through entity and a shareholder,

member or partner of a pass-through entity shall not claim the

tax credit under subsection (a) for the same qualified video

game production expense.

pass-through entity to whom a tax credit is transferred under

subsection (a) shall immediately claim the tax credit in the

taxable year in which the transfer is made. The shareholder,

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member or partner may not carry forward, carry back, obtain a

refund of or sell or assign the tax credit.

Section 1760-D. Department guidelines and regulations.

The department shall develop written guidelines for the

implementation of the provisions of this subarticle. The

guidelines shall be in effect until such time as the department

promulgates regulations for the implementation of the provisions

of this subarticle. The department shall promulgate regulations

for the implementation of this subarticle within two years of

the effective date of this section.

Section 1761-D. Report to General Assembly.

(a) General rule.--No later than June 1 of the second year

that commences after the effective date of this section, and

September 1 of each year thereafter, the Secretary of Community

and Economic Development shall submit a report to the General

Assembly summarizing the effectiveness of the tax credit. The

report shall include the name of the video game produced, the

names of all taxpayers utilizing the tax credit as of the date

of the report and the amount of tax credits approved for,

utilized by or sold or assigned by each taxpayer. The report may

also include recommendations for changes in the calculation or

administration of the tax credit. The report shall be submitted

to the chairperson and minority chairperson of the

Appropriations Committee of the Senate and the chairperson and

minority chairperson of the Finance Committee of the Senate and

the chairperson and minority chairperson of the Appropriations

Committee of the House of Representatives and the chairperson

and minority chairperson of the Finance Committee of the House

of Representatives. In addition to the information stated in

this section, the report shall include the following information

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which shall be separated by geographic location within this

Commonwealth:

(1) The amount of tax credits claimed by taxpayers

during the fiscal year.

(2) The total amount spent on video game production in

this Commonwealth during the fiscal year.

(3) The total amount of tax revenues collected from the

production of video games in this Commonwealth during the

fiscal year.

(4) The total number of jobs created by taxpayers during

the fiscal year, including the duration of the jobs.

(b) Public information.--Notwithstanding any law providing

for the confidentiality of tax records, the information in the

report shall be public information, and all report information

shall be posted on the department's publicly accessible Internet

website.

Section 31. (Reserved).

Section 32. (Reserved).

Section 33. The act is amended by adding articles to read:

ARTICLE XVII-J

COAL REFUSE ENERGY AND

RECLAMATION TAX CREDIT

Section 1701-J. Scope of article.

This article establishes a coal refuse energy and reclamation

tax credit in recognition of the significant and tangible

benefits to the environment and savings in Commonwealth funds

provided by eligible facilities in reclaiming coal refuse piles

and previously mined lands.

Section 1702-J. (Reserved).

Section 1703-J. Definitions.

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The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Affiliate." A person that directly or indirectly through

one or more intermediaries controls, is controlled by or is

under common control with a qualified taxpayer. For purposes of

this definition, the terms "control," "controlling," "controlled

by" and "under common control with" mean the possession,

directly or indirectly, of the power to direct or cause the

direction of management and policies of a person, whether

through the ownership of 20% or more of the voting securities,

capital interests, profit interests or any similar equity

interests in a business association of a person by contract or

otherwise.

"Department." The Department of Community and Economic

Development of the Commonwealth.

"Eligible facility." An electric generating facility placed

in service before the effective date of this section consisting

of one or more units placed in service before the effective date

of this section that generates electricity located on the same

property and that:

(1) combusts qualified coal refuse or fuel composed of

at least 75% qualified coal refuse by BTU energy value in the

prior calendar year;

(2) utilizes at a minimum a circulating fluidized bed

combustion unit or pressurized fluidized bed combustion unit

equipped with a limestone injection system for control of

acid gases and a fabric filter particulate emission control

system; and

(3) beneficially uses ash produced by the facility in

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the prior calendar year to reclaim mining-affected sites in

accordance with 25 Pa. Code Ch. 290 (relating to beneficial

use of coal ash) in amounts equal to at least 50% of the ash

produced by the facility in the prior calendar year.

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

(1) A partnership as defined in section 301(n.0).

(2) A Pennsylvania S corporation as defined in section

301(n.1).

(3) An unincorporated entity subject to section 307.21.

"Qualified coal refuse." Any waste coal, rock, shale,

slurry, culm, gob, boney, slate, clay and related materials

associated with or near a coal seam that are either brought

above ground or otherwise removed from a coal mine in the

process of mining coal or that are separated from coal during

the cleaning or preparation operations. The term includes

underground development wastes, coal processing wastes and

excess spoil, but does not include overburden from surface

mining activities.

"Qualified tax liability." The liability for taxes imposed

under Article III, IV, VI, VII, VIII, IX, XI or XV. The term

does not include tax withheld by an employer from an employee

under Article III.

"Qualified taxpayer." A person that owns an eligible

facility in this Commonwealth or is a transferor, purchaser,

affiliate or assignee of a person to which a tax credit

certificate is issued under this article.

"Tax credit." The coal refuse energy and reclamation tax

credit provided under this article.

"Ton." Two thousand pounds of qualified coal refuse,

including inherent moisture, ash, sulphur and other noncalorific

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substances, but excluding excess moisture.

Section 1704-J. Application and approval of tax credit.

(a) Application.--The following shall apply:

(1) A qualified taxpayer may apply to the department for

a tax credit under this section. The application shall be on

the form required by the department.

(2) The application must be submitted to the department

by February 1 of each year for the tax credit claimed for

qualified coal refuse used at an eligible facility during the

prior calendar year.

(b) Amount.--Except as otherwise provided under section

1707-J, a qualified taxpayer shall receive a tax credit equal to

$4 multiplied by the tons of qualified coal refuse used to

generate electricity at an eligible facility in this

Commonwealth by a qualified taxpayer in the previous calendar

year.

(1) The department shall review and approve applications

meeting the requirements of this article by March 20 of each

year.

(2) The department may require information necessary to

document that a facility qualifies as an eligible facility

and the amount of qualified coal refuse used to generate

electricity at the eligible facility.

(3) In the review of applications for tax credits, the

department shall consult with the Department of Environmental

Protection with respect to whether a facility qualifies as an

eligible facility and to review the eligible facility's

calculation of the amount of qualified coal refuse used to

generate electricity.

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(3.1) Prior to approving an application, the applicant

must have:

(i) filed all required State tax reports and returns

for all applicable taxable years; and

(ii) paid any balance of State tax due as determined

by assessment or determination by the Department of

Revenue and not under timely appeal.

(4) Upon approval, the department shall issue a

certificate stating the amount of tax credit granted for

qualified coal refuse used in the prior calendar year.

(d) Expiration.--The department may not approve an

application for a tax credit under this article after December

31, 2026.

Section 1705-J. Claim of tax credit.

(a) General rule.--A qualified taxpayer may claim a tax

credit against the qualified tax liability of the qualified

taxpayer.

(b) Coal refuse use.--A tax credit may be claimed against a

qualified tax liability for a taxable year which begins in the

same calendar year that the qualified coal refuse was used at

the eligible facility to generate the tax credit.

Section 1706-J. Carryover and carryback.

(a) General rule.--If a qualified taxpayer does not use all

or any portion of a tax credit for the taxable year in which the

tax credit is first approved, then the excess may be carried

over to succeeding taxable years and used as a credit against

the qualified tax liability of the qualified taxpayer for those

taxable years. Each time the tax credit is carried over to a

succeeding taxable year, it shall be reduced by the amount that

was used as a credit during the immediately preceding taxable

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year. The tax credit provided by this article may be carried

over and applied to succeeding taxable years for no more than 15

taxable years following the first taxable year for which the

taxpayer was entitled to claim the credit.

(b) No carryback or refund.--A qualified taxpayer is not

entitled to carry back or obtain a refund of all or any portion

of an unused tax credit granted to the qualified taxpayer under

this article.

Section 1707-J. Limitation on tax credits.

(a) Amount.--The total amount of tax credits issued by the

department may not exceed $7,500,000 in fiscal year 2016-2017

and $10,000,000 in each fiscal year thereafter.

(b) Proration.--If the total amount of otherwise approvable

tax credits applied for by all qualified taxpayers exceeds the

amount under subsection (a), the tax credit to be received by

each qualified taxpayer shall be the product of the amount under

subsection (a) multiplied by the quotient of the tax credits

otherwise approvable for the qualified taxpayer divided by the

total of all tax credits otherwise approvable for all qualified

taxpayers.

department may not grant more than 22.2% of the amount under

subsection (a) in tax credits to a single eligible facility in

any fiscal year.

Section 1708-J. Pass-through entity.

(a) Election.--If a tax credit certificate is issued to a

pass-through entity, the pass-through entity may elect in

writing, according to procedures established by the department,

to transfer all or a portion of the credit to shareholders,

members or partners in proportion to the share of the entity's

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distributive income to which the shareholders, members or

partners are entitled or in any other manner designated by the

pass-through entity in accordance with its governance documents

and without regard to how distributive income, losses or credits

are allocated for other tax purposes.

(b) Limitation.--The same unused tax credit under subsection

(a) may not be claimed by:

(1) the pass-through entity; and

(2) a shareholder, member or patron of the pass-through

entity.

tax credit during a taxable year for which use of the credit is

authorized under sections 1704-J(c)(4) and 1706-J.

Section 1709-J. Use of credits by affiliates.

In addition to reducing or eliminating the qualified tax

liability of a qualified taxpayer, a tax credit under this

article may be applied to reduce or eliminate the qualified tax

liability of any affiliate of a qualified taxpayer. An affiliate

may only use a tax credit during a taxable year for which use of

the credit is authorized under sections 1704-J(c)(4) and 1706-J.

Section 1710-J. Sale or assignment.

(a) Authorization.--Upon approval by the Department of

Revenue, a qualified taxpayer may sell or assign, in whole or in

part, a tax credit granted to the taxpayer under this article.

(b) Application.--The following shall apply:

(1) To sell or assign a tax credit, a qualified taxpayer

must file an application for the sale or assignment of the

tax credit with the Department of Revenue. The application

must be on a form required by the Department of Revenue.

(2) The Department of Revenue shall approve a sale or

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assignment if the purchaser or assignee has:

(i) filed all required State tax reports and returns

for all applicable taxable years; and

(ii) paid any balance of State tax due as determined

by assessment or determination by the Department of

Revenue and not under timely appeal.

Section 1711-J. Purchasers and assignees.

(a) Claim.--The purchaser or assignee of all or a portion of

a tax credit under section 1710-J shall immediately claim the

credit in the taxable year in which the purchase or assignment

is made.

(b) Amount.--The amount of the tax credit that a purchaser

or assignee may use against any one qualified tax liability may

not exceed 75% of such qualified tax liability for the taxable

year.

carry back or obtain a refund of or sell or assign the tax

credit.

Section 1712-J. Administration.

(a) Audits and assessments.--The Department of Revenue has

the following powers:

(1) To audit a qualified taxpayer claiming a tax credit

to ascertain the validity of the amount claimed.

(2) To issue an assessment against a qualified taxpayer

for an improperly issued tax credit. The procedures,

collection, enforcement and appeals of any assessment made

under this section shall be governed by Article IV.

(b) Guidelines.--The department shall develop written

guidelines for the implementation of this article.

Section 1713-J. Annual report to General Assembly.

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By October 1, 2017, and October 1 of each year thereafter,

the department shall submit a report on the tax credit provided

by this article to the chairperson and minority chairperson of

the Appropriations Committee of the Senate, the chairperson and

minority chairperson of the Finance Committee of the Senate, the

chairperson and minority chairperson of the Appropriations

Committee of the House of Representatives and the chairperson

and minority chairperson of the Finance Committee of the House

of Representatives. The report must include:

(1) the names of the qualified taxpayers utilizing the

tax credit as of the date of the report and the amount of tax

credits approved for, utilized by or sold or assigned by a

qualified taxpayer; and

(2) data concerning the benefits provided to the

Commonwealth in terms of the quantity of coal refuse utilized

by qualifying facilities and the volume of coal ash generated

by qualifying facilities which is beneficially used to

reclaim mine-affected lands.

Section 1714-J. Applicability.

The tax credit established under this article shall apply to

taxable years beginning after December 31, 2015.

ARTICLE XVII-K

WATERFRONT DEVELOPMENT TAX CREDIT

Section 1701-K. Scope of article.

This article relates to the Waterfront Development Tax

Credit.

Section 1702-K. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

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"Business firm." An entity authorized to do business in this

Commonwealth and subject to taxes imposed under Article III, IV,

VI, VII, VIII, IX or XV or the tax under Article XVI of the act

of May 17, 1921 (P.L.682, No.284), known as The Insurance

Company Law of 1921. The term includes a pass-through entity.

"Contribution." A donation of cash or personal property made

by a business firm to a waterfront development organization to

fund a waterfront development project under this article.

"Department." The Department of Community and Economic

Development of the Commonwealth.

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

(1) A partnership as defined under section 301(n.0).

(2) A Pennsylvania S corporation as defined under

section 301(n.1).

(3) An unincorporated entity subject to section 307.21.

"Tax credit." The waterfront development tax credit

authorized by this article.

"Waterfront." A site that is directly adjacent to a body of

water.

"Waterfront development organization." An authority

established under the act of December 6, 1972 (P.L.1392,

No.298), known as the Third Class City Port Authority Act, or a

nonprofit entity that meets all of the following:

(1) For a nonprofit entity, is exempt from Federal

taxation under section 501(c)(3) of the Internal Revenue Code

of 1986 (Public Law 99-514, 26 U.S.C. § 501(c)(3)).

(2) Has been in existence for a minimum of five years.

(3) Has a board of directors which meets at least once

annually.

(4) Has completed a waterfront development plan.

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"Waterfront development plan." A plan approved by the

Department of Community and Economic Development that meets all

of the following:

(1) Provides for the development or enhancement of

waterfront property that creates public access to the water,

increases property values, restores ecology and catalyzes

further financial investment and job creation to incentivize

future economic development.

(2) Adheres to current environmental practices.

(3) Considers and integrates approaches that support

natural and native habitat.

(4) Considers and integrates architectural and landscape

design elements and standards.

"Waterfront development project." A project to develop a

waterfront site or area or a project that creates or improves

public access and connections to the waterfront. The term may

include:

(1) Streets and public rights-of-way.

(2) Waterfront parks, gardens and open spaces.

(3) Enhancement of access to public utilities.

(4) The promotion of erosion control, storm water

management and other environmental projects that promote

economic development.

(5) Water transportation facilities for use by the

public, including water transit landings and boat docking.

(6) Amenities, including infrastructure and recreational

projects.

Section 1703-K. Waterfront Development Tax Credit Program.

The Waterfront Development Tax Credit Program is established

in the department to encourage private investment in waterfront

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property that creates public access to the water, increases

property values, restores ecology and catalyzes further

financial investment and job creation.

Section 1704-K. Waterfront development organizations.

(a) Applications.--An application to qualify as a waterfront

development organization must be submitted on a form and in a

manner as required by the department.

(b) Information.--An application to qualify as a waterfront

development organization shall include all of the following:

(1) Confirmation that the organization is a waterfront

development organization.

(2) The age of the organization.

(3) The board of directors meeting schedule.

(4) Waterfront development plans completed within the

last five years.

(5) A list of completed, ongoing and planned waterfront

development projects.

development organization has submitted an application under this

section, the department shall notify a waterfront development

organization if the organization meets the requirements of this

section for the current fiscal year.

(d) Renewal of waterfront organization status.--A waterfront

development organization shall annually file a renewal

application on a form provided by the department to maintain

eligibility as a waterfront development organization. The

renewal application shall include:

(1) The total number of waterfront development projects

funded, by municipality, during the immediately preceding

year.

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(2) The total amount expended for waterfront development

projects, by municipality, during the immediately preceding

year.

(3) The total amount expended on waterfront development

projects, by municipality, attributable to contributions from

business firms.

(4) The number of waterfront development projects

completed, by municipality, during the immediately preceding

year.

(5) A copy of the Federal Form 990 or other Federal form

of the waterfront development organization that indicates the

tax status of the organization for Federal tax purposes, if

any.

(6) A copy of a compilation, review or audit of the

financial statements of the waterfront development

organization conducted by a certified public accounting firm.

Section 1705-K. Waterfront development projects.

(a) General rule.--To qualify for a tax credit,

contributions made to a waterfront development organization must

be used by the waterfront development organization for a

waterfront development project approved under this section.

(b) Submission.--After approval of a waterfront development

organization's application under section 1704-K(c), the

organization may submit, on a form and in a manner required by

the department, waterfront development projects for approval by

the department. The submission shall include for each waterfront

development project:

(1) The location of the waterfront development project.

(2) The type of waterfront development project.

(3) A detailed description of the waterfront development

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project, including architectural and engineering drawings.

(4) The status of the waterfront development project.

(5) The anticipated start date and completion date for

the waterfront development project.

(6) The life expectancy of the waterfront development

project and a plan for maintenance following completion.

(7) The estimated cost of the waterfront development

project.

(8) Analysis of the direct current and future economic

benefits derived from the waterfront development project,

including indirect and direct job creation projections.

(9) The manner in which the waterfront development

organization will do all of the following:

(i) Verify eligibility of costs.

(ii) Monitor progress of the waterfront development

project.

(iii) Assure that contributions received are used

for the waterfront development project for which the

contributions have been designated.

(10) Any other information required by the department.

with the Department of Conservation and Natural Resources, shall

review applications received from waterfront development

organizations under this section.

(d) Notice of approval or disapproval.--

(1) Within 60 days after receipt of an application, the

department shall notify the waterfront development

organization of its approval or disapproval of a waterfront

development project.

(2) If the application is disapproved, the notice of

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disapproval shall include the reasons for disapproval.

(3) A waterfront development organization may resubmit

the application within 30 days after receipt of a notice of

disapproval.

(e) Publication.--The department shall annually publish a

list of each waterfront development organization, its approved

waterfront development projects under this section and the total

aggregate cost of the waterfront development projects in the

Pennsylvania Bulletin. The list shall be posted and updated as

necessary on the publicly accessible Internet website of the

department.

(f) Completion.--Upon completion of a waterfront development

project approved under subsection (b), the waterfront

development organization shall submit written notice of project

completion to the department. The notice shall include all of

the following information:

(1) Certification that the waterfront development

project is complete.

(2) An upkeep and maintenance plan, if applicable, to

the waterfront development project.

(3) Any other information required by the department.

(g) Inspection.--Waterfront development projects approved

under subsection (b) may be subject to inspection by the

department or its designated agent.

(h) Administrative fees.--No more than 5% of the

contributions received under this article may be used for

administrative fees.

Section 1706-K. Tax credit.

(a) General rule.--A business firm that provides

contributions to a waterfront development organization to fund

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waterfront development projects approved by the department under

section 1705-K shall receive a tax credit as provided in section

1707-K, within the limitations of section 1708-K, if the

department approves the waterfront development projects. The

application must specify the waterfront development organization

the contribution is being made to and the waterfront development

projects being conducted by the organization.

(b) Rules and regulations.--

(1) The department may promulgate rules and regulations

for the approval or disapproval of applications by business

firms.

(2) The department shall provide a report listing all

applications received and the disposition of the applications

in each fiscal year to the General Assembly by October 1 of

the following fiscal year. The department's report shall

include all taxpayers utilizing the tax credit and the amount

of tax credits approved, sold or assigned.

(3) Notwithstanding any law providing for the

confidentiality of tax records, the information in the report

shall be public information and all report information shall

be posted on the department's publicly accessible Internet

website.

available by the department on a first-come, first-served basis

within the limitation established under section 1708-K.

(d) Sale or assignment of tax credits.--

(1) A taxpayer, upon application to and approval by the

department, may sell or assign, in whole or in part, a

waterfront development tax credit granted to the business

firm under this article if no claim for allowance of the

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credit is filed within one year from the date the credit is

granted by the Department of Revenue under section 1707-K.

The department and the Department of Revenue shall jointly

promulgate guidelines for the approval of applications under

this subsection.

(2) The purchaser or assignee of a waterfront

development tax credit under subsection (d) shall immediately

claim the tax credit in the taxable year in which the

purchase or assignment is made.

(3) The purchaser or assignee may not carry over, carry

back, obtain a refund of or sell or assign the tax credit.

(4) The purchaser or assignee shall notify the

Department of Revenue of the seller or assignor of the

waterfront development tax credit in compliance with

procedures specified by the Department of Revenue.

(e) Application of tax credit.--The waterfront development

tax credit approved by the department shall be applied against

the business firm's tax liability for the taxes under section

1707-K for the current taxable year as of the date on which the

tax credit was approved before the waterfront development tax

credit may be carried over, sold or assigned.

Section 1707-K. Grant of tax credits.

(a) General rule.--The Department of Revenue shall grant a

tax credit against any tax due under Article III, IV, VI, VII,

VIII, IX or XV or Article XVI of the act of May 17, 1921

(P.L.682, No.284), known as The Insurance Company Law of 1921,

or any tax substituted in lieu thereof.

(b) Prohibition.--A tax credit may not be granted for fiscal

years prior to fiscal year 2017-2018.

Section 1708-K. Limitations.

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The following limitations shall apply to the tax credits:

(1) No tax credit may exceed 75% of the total

contribution made by a business firm during a taxable year.

(2) No tax credit shall be granted to a business firm

for activities that are a part of its normal course of

business or in which the business firm has a pecuniary

interest.

(3) A tax credit not used in the period the contribution

or investment was made may be carried over for the next five

succeeding calendar or fiscal years until the full credit has

been allowed. No business firm may carry back or obtain a

refund of an unused tax credit.

(4) The total amount of all tax credits shall not exceed

$1,500,000 in any one fiscal year.

(5) In any one fiscal year, the department may not

approve more tax credits for contributions made to a

waterfront development organization than the total aggregate

cost of waterfront development projects approved under

section 1705-K(d).

Section 1709-K. Decision in writing.

The decision of the department to approve or disapprove a

project under section 1705-K(d) shall be in writing and, if the

project is approved by the department, it shall state the

maximum credit allowable to the business firm. A copy of the

decision of the department shall be transmitted to the Governor

and to the Secretary of Revenue.

Section 1710-K. Pass-through entity.

(a) General rule.--If a pass-through entity has an unused

tax credit under section 1707-K, the entity may elect, in

writing, according to the department's procedures, to transfer

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all or a portion of the tax credit to shareholders, members or

partners in proportion to the share of the entity's distributive

income to which the shareholder, member or partner is entitled.

(b) Limitations.--

(1) The credit provided under subsection (a) is in

addition to any waterfront development tax credit to which a

shareholder, member or partner of a pass-through entity is

otherwise entitled under this article. However, a pass-

through entity and a shareholder, member or partner of a

pass-through entity may not claim a credit under this article

for the same waterfront development project.

(2) A shareholder, member or partner of a pass-through

entity to whom credit is transferred under subsection (a)

must immediately claim the credit in the taxable year in

which the transfer is made.

(3) The shareholder, member or partner may not carry

forward, carry back, obtain a refund of or sell or assign the

credit.

Section 33.1. Section 1801-B of the act is amended by adding

a definition to read:

Section 1801-B. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Veteran." An individual who served on active duty in the

United States Armed Forces, including any of the following:

(1) A reservist or member of the National Guard who was

discharged or released from the service under honorable

conditions.

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(2) A reservist or member of the National Guard who

completed an initial term of enlistment or qualifying period

of service.

(3) A reservist or member of the National Guard who was

disabled in the line of duty during training.

* * *

Section 33.2. Section 1804-B(a) and (d) of the act, amended

July 2, 2012 (P.L.751, No.85) and July 9, 2013 (P.L.270, No.52),

are amended to read:

Section 1804-B. Tax credits.

(a) Maximum amount.--A company may claim a tax credit of

$1,000 per new job created, or $2,500 per each new job created

if the newly created job is filled by a veteran or an unemployed

individual, up to the maximum job creation tax credit amount

specified in the commitment letter.

* * *

(d) Tax credit term.--

(1) A company may claim the job creation tax credit for

each new job created, as approved by the department, for a

one-year, two-year or three-year period as authorized by the

department, except that no tax credit may be claimed for more

than five years from the date the company first submits a job

creation tax credit certificate. The department may award the

total amount of tax credit authorized for a multiple-year tax

credit in the first year in which the new job is created and

the tax credit earned.

(2) Notwithstanding the provisions of paragraph (1),

nothing in this article shall be construed to prohibit the

Department of Community and Economic Development from

awarding the total amount of tax credit authorized for a

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multiple-year tax credit in the first year in which the new

job is created and the tax credit earned.

* * *

Section 34. Section 1802-C of the act, amended or added July

9, 2013 (P.L.270, No.52) and October 31, 2014 (P.L.2929,

No.194), is amended to read:

Section 1802-C. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Baseline tax amount." The amount of State or local eligible

taxes paid relating to each qualified business that is not a new

business, less eligible State or local tax refunds, relating to

each qualified business for the first full calendar year in

which the qualified business established a presence in the zone.

"Baseline year." The calendar year in which a zone was

established.

"Bond." The term includes any public or private financing,

note, mortgage, loan, deed of trust, instrument, refunding note

or other evidence of indebtedness or obligation.

"Business personal property." The term includes furniture,

fixtures, equipment and other similar property purchased and

used in the zone.

"City." A city of the second class A or third class or a

home rule municipality with a population of at least [30,000]

20,000 based on the most recent Federal decennial census. [The

term shall not include a city that has had a receiver appointed

under Chapter 7 of the act of July 10, 1987 (P.L.246, No.47),

known as the Municipalities Financial Recovery Act.]

"City revitalization and improvement zone." An area of not

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more than 130 acres, that may include an area in one or more

contiguous municipalities, comprised of parcels designated by

the contracting authority, which will provide economic

development and job creation within a city.

"Contracting authority." [An authority established under 53

Pa.C.S. Ch. 56 (relating to municipal authorities) by a city,

borough, township or home rule county for the purpose of:

(1) designating zones; and

(2) engaging in the construction, including related site

preparation and infrastructure, reconstruction or renovation

of facilities.] A new or existing authority established or

designated by a city, municipality or home rule county to

designate and administer zones. The term shall include:

(i) An authority established under 53 Pa.C.S. Ch. 56

(relating to municipal authorities).

(ii) An authority established under the former act

of December 27, 1994 (P.L.1375, No.162), known as the

Third Class County Convention Center Authority Act, or

under Article XXIII(n) or (o) of the act of August 9,

1955 (P.L.323, No.130), known as the County Code.

(iii) An authority established by a contiguous

municipality under 53 Pa.C.S. Ch. 56 for the purposes of

this act.

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

"Earned income tax." A tax imposed on earned income within a

zone under the act of December 31, 1965 (P.L.1257, No.511),

known as The Local Tax Enabling Act, which a city, or a school

district contained entirely within the boundaries of or

coterminous with the city, is entitled to receive.

"Eligible tax." Any of the following taxes:

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(1) Corporate net income tax, capital stock and

franchise tax, bank shares tax, personal income tax paid by

shareholders, members or partners of Subchapter S

corporations, limited liability companies, partnerships or

sole proprietors on income other than passive activity income

as defined under section 469 of the Internal Revenue Code of

1986 (Public Law 99-516, 26 U.S.C. § 1 et seq.) or business

privilege tax, calculated and apportioned as to amount

attributable to the location within the zone and calculated

under section 1904-B(b) and (c).

(2) Amusement tax, only to the extent the tax is related

to the activity of a qualified business within the zone.

(3) Sales and use tax, only to the extent the tax is

related to the activity of a qualified business within the

zone. The term includes sales and use taxes on material used

for construction in the zone and business personal property

to be used by the qualified business in the zone.

(3.1) The hotel occupancy tax imposed under Part V of

Article II.

(4) Personal income tax withheld from its employees by a

qualified business for work performed in the zone.

(5) Local services tax withheld from its employees by a

qualified business for work performed in the zone.

(6) Earned income tax withheld from its employees by a

qualified business for work performed in the zone.

(7) [Tax] All taxes paid to the Commonwealth [on the],

or an amount equal to all of the taxes paid to the

Commonwealth, related to the purchase or sale of liquor, wine

or malt or brewed beverages by a licensee located in the zone

for purchases that occurred outside the zone.

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The term does not include cigarette tax.

"Facility." A structure or complex of structures in a zone

to be used for commercial, industrial, sports, exhibition,

hospitality, conference, retail, community, office, recreational

or mixed-use purposes.

"Increment." The amount of eligible taxes generated by a new

business, taxes excluded from the baseline tax amount pursuant

to section 1810-C(b)(3), and amount of eligible taxes generated

by a qualified business above the qualified business's baseline

tax amount.

"Infrastructure." Any improvements in or out of the zone

primarily related to the development of and required by a

facility in the zone, including, but not limited to, utilities,

water, sewer, storm water, parking, road improvements or

telecommunications within the city or municipality or within a

municipality contiguous to that city or municipality.

"Licensee" shall mean an individual licensed under the act of

April 12, 1951 (P.L.90, No.21), known as the Liquor Code.

"Lobbyist." As defined in 65 Pa.C.S. § 13A03 (relating to

definitions).

"Municipality." An incorporated town, township or borough.

"New business." Any of the following:

(1) any new or separate legal entity that locates or has

a location in the zone; or

(2) a business already located in this Commonwealth and

conducting operations outside the zone which expands into the

zone with a new operation as evidenced by a new facility,

business personal property, products or additional employees

and continues operations outside the zone without substantial

change in business . Only eligible taxes related to activity

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within the zone shall be attributable to the location in the

zone.

"Office." The Office of the Budget.

"Pilot zone." An area of not more than [130] 100 acres

designated by the contracting authority following application

and approval by the Department of Community and Economic

Development, the office and the department which will provide

economic development and job creation within [a township or

borough] one or more municipalities, with a total population of

at least 7,000 based on the most recent Federal decennial

census.

"Professional services." Any of the following:

(1) Legal services.

(2) Advertising or public relations services.

(3) Engineering services.

(4) Architectural, landscaping or surveying services.

(5) Accounting, auditing or actuarial services.

(6) Security consultant services.

(7) Computer and information technology services, except

telephone service.

(8) Insurance underwriting services.

(9) Compliance services.

(10) Financial auditing services.

"Qualified business." As follows:

(1) An entity located or partially located in a zone

which meets the requirements of all of the following:

(i) Has conducted an active trade or business in the

zone.

(ii) Appears on the timely filed list under section

1807-C(a).

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(2) A construction contractor engaged in construction,

including infrastructure or site preparation, reconstruction

or renovation of a facility [located in or partially in the

zone].

(3) The term does not include an agent, broker or

representative of a business.

"Zone." Any of the following:

(1) A city revitalization and improvement zone.

(2) A pilot zone.

"Zone Fund." A city revitalization and improvement zone or

pilot zone fund established under section 1808-C.

Section 35. Section 1803-C heading and (a) of the act,

amended October 31, 2014 (P.L.2929, No.194), are amended to

read:

Section 1803-C. Establishment or designation of contracting

authority.

(a) Authorization.--Except as set forth in subsection (b), a

city, [borough or township] municipality or home rule county may

establish or designate a contracting authority to designate a

zone under this article.

* * *

Section 36. The act is amended by adding a section to read:

Section 1803.1-C. Contracting authority duties.

A contracting authority shall:

(1) Hold at least one public hearing on the plan for the

designation of a zone. At the public hearing, any interested

party may be heard.

(2) Prior to designation of the zone, post the name and

address of the owner of each business and property to be

located within the zone and a map of the zone on the website

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of the city or municipality where the zone will be located,

if one exists. If a website does not exist, the map and list

of names shall be published in a newspaper of general

circulation serving the county where the zone is located. The

map and list of names shall be made available for public

inspection.

(3) Issue bonds and engage in the financing,

construction, acquisition, development, related site

preparation and infrastructure, reconstruction or renovation

of facilities in accordance with this article.

Section 37. Sections 1804-C, 1806-C, 1807-C, 1808-C, 1809-C,

1810-C, 1811-C, 1812-C, 1813-C, 1814-C, 1816-C and 1818-C of the

act, added July 9, 2013 (P.L.270, No.52), are amended to read:

Section 1804-C. Approval.

(a) Submission.--A contracting authority may apply to the

Department of Community and Economic Development for approval of

a zone plan. The application must include all of the following:

(1) A plan to establish one or more facilities which

will promote economic development.

(2) An economic development plan, including a plan for

the repayment of all bonds.

(3) Specific information relating to the facility which

will be constructed, including infrastructure and site

preparation, reconstructed or renovated as part of the plan.

(4) Other information as required by the Department of

Community and Economic Development, the office or the

department.

(5) A designation of the specific geographic area,

including parcel numbers and a map of the zone with parcel

numbers, of which the zone will consist.

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(b) Agencies.--The Department of Community and Economic

Development, the office and the department must approve each

application.

(b.1) Review.--The Department of Community and Economic

Development, the department and the office shall consider the

following when determining a designation:

(1) Economic impact of the zone.

(2) Number of jobs that will be created.

(3) Potential State and local tax revenue impact.

(4) Financial fitness and ability of the applicant to

repay bonds.

(5) The proximity to previously approved zones.

(6) Any other relevant factor.

Economic Development shall develop a schedule for the approval

of applications under this section as follows:

(1) Following the effective date of this paragraph,

applications for two initial city revitalization and

improvement zones and one pilot zone may be approved.

(2) Beginning in 2016, applications for two additional

zones may be approved each calendar year.

[(3) Following the effective date of this paragraph, the

Department of Community and Economic Development, the office

and the department, may approve one pilot zone.]

(c.1) Agreement.--An area that covers contiguous cities or

municipalities shall require an agreement among each participant

to be included in the zone, evidenced by a resolution of each

participant.

(d) Time.--[An application under this section shall be

approved or disapproved within 90 days of the postmark date of

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submission. An application which is not disapproved within the

time period under this subsection shall be deemed to be

approved.] The Department of Community and Economic Development

shall establish and publish application deadlines in the

Pennsylvania Bulletin and on its publicly accessible Internet

website.

(e) Reapplication.--If an application is not approved under

this section, the applicant may revise and resubmit the

application and plan [and reapply] for approval.

(f) Limitation.--No more than one zone may exist in a city

or municipality at any given time.

Section 1806-C. Functions of contracting authorities.

(a) Powers.--The contracting authority may do all of the

following:

(1) Designate a zone where a facility may be acquired,

constructed, including infrastructure and site preparation,

reconstructed or renovated.

(2) [Provide or borrow money for any of the following

purposes:

(i) Development or improvement within a zone.

(ii) Construction, including infrastructure and site

preparation, reconstruction or renovation of a facility

within a zone which will result in economic development

in accordance with the contracting authority's plan.]

Engage in the acquisition, development, construction,

including infrastructure and site preparation,

reconstruction or renovation of facilities.

(3) Engage in the public or private financing of the

acquisition, development, construction, including

infrastructure and site preparation, reconstruction or

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renovation of facilities.

(4) Utilize money under section 1813-C.

(b) Money from fund.--A member of the contracting authority

may not receive money directly or indirectly from the fund.

(1) A member, officer or employee of the contracting

authority or a member of the governing body or the chief

executive officer of the city, municipality or home rule

county that created the contracting authority may not:

(i) Receive money from the zone fund for personal

use.

(ii) Have a direct ownership interest in a property

or parcel included in the zone.

(2) No member, officer, director or employee of the

contracting authority, no member of the governing body and no

chief executive officer may:

(i) Solicit, accept or receive from a person, firm,

corporation or other business or professional

organization doing business in the zone or with the

contracting authority a gift or a gratuity. This

subparagraph shall not apply to a gift or business

entertainment of less than $250.

(ii) Directly or indirectly use for personal gain

information not available to the public concerning the

development of a project which comes to that individual

as a result of the affiliation with the contracting

authority city or municipality involved in the

development or operation of the zone.

(c.1) Disclosure.--The board of directors of the contracting

authority, governing body of a city or municipality, consultant,

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lobbyist or independent contractor of the contracting authority,

city or municipality or home rule county creating the

contracting authority must disclose the nature and extent of any

financial interest as defined in 65 Pa.C.S. Ch. 11 (relating to

ethics standards and financial disclosure) or that of his or her

immediate family in property within the zone to the contracting

authority, the city or municipality where the zone is located

and to the Department of Community and Economic Development. The

Department of Community and Economic Development must place the

disclosures on the Department of Community and Economic

Development's publicly accessible Internet website.

(d) Action by contracting authority.--The board of directors

of the contracting authority or the governing body of a city or

municipality in which the zone is located must avoid a conflict

of interest or impropriety with regard to a property or project

in the zone or the operation or management of the zone. Each

disclosure statement shall be made a part of the minutes of the

contracting authority, city or municipality at a regular or

special meeting.

(e) Copy.--The contracting authority must provide a copy of

the disclosure under this section to each member, officer,

director, employee, consultant, lobbyist and independent

contractor of the contracting authority or governing body of the

city or municipality in which the zone is located.

(f) Disciplinary action.--The contracting authority shall

refer suspected violations to the State Ethics Commission or the

county district attorney, if appropriate.

(g) Ethics.--A member of the contracting authority must

comply with 65 Pa.C.S. Ch. 11 (relating to ethics, standards and

financial disclosure).

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Section 1807-C. Qualified businesses.

(a) List.--By June 1 following the end of the baseline year,

and for every year thereafter, each contracting authority shall

file with the department a complete list of all businesses

located in the zone and all [construction contractors]

businesses engaged in [construction,] acquisition, development,

construction, including infrastructure and site preparation,

reconstruction or renovation of a facility in the zone in the

prior calendar year. The list shall include for each business

the address, the names of the business owners or corporate

officers, State tax identification number and parcel number and

a map of the zone with parcel numbers.

(b) Time.--If the list under subsection (a) is not timely

provided to the department, no eligible State tax shall be

certified by the department for the prior calendar year.

independent auditing firm to perform an annual audit verifying

all of the following[:] and shall submit the audit to the

Department of Community and Economic Development and the

Department of Revenue as well as post on the contracting

authority's publicly accessible Internet website:

(1) The correct amount of the eligible local tax was

submitted to the local taxing authorities.

(2) The local taxing authorities transferred the correct

amount of eligible local tax to the State Treasurer.

(3) The moneys transferred to the fund were [properly]

expended in accordance with this article.

(4) The correct amount was requested under section 1812-

C(c).

Section 1808-C. Funds.

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(a) Notice.--Following the designation of a zone, the

contracting authority shall notify the State Treasurer.

(b) Establishment.--Upon receipt of notice under subsection

(a), the State Treasurer shall establish for each zone a special

fund for the benefit of the contracting authority to be known as

the City Revitalization and Improvement Zone Fund or Pilot Zone

Fund. Interest income derived from investment of money in [a]

the zone fund shall be credited by the State Treasury to the

zone fund.

Section 1809-C. Reports.

(a) State zone report.--[By] No later than June 15 following

the baseline year and each year thereafter, each qualified

business shall file a report with the department in a form or

manner required by the department which includes all of the

following:

(1) Amount of each eligible tax which was paid to the

Commonwealth by the qualified business in the prior calendar

year.

(2) Amount of each eligible tax refund received from the

Commonwealth in the prior calendar year by the qualified

business.

(b) Local zone report.--[By] No later than June 15 following

the baseline year and for each year thereafter, each qualified

business shall file a report with the local taxing authority

which includes all of the following:

(1) Amount of each eligible tax which was paid to the

local taxing authority by the qualified business in the prior

calendar year.

(2) Amount of each eligible tax refund received from the

local taxing authority in the prior calendar year by the

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qualified business.

(1) Failure to file a timely and complete report under

subsection (a) or (b) may result in the imposition of a

penalty of the lesser of:

(i) ten percent of all eligible tax due the taxing

authority in the prior calendar year; or

(ii) one thousand dollars.

(2) A penalty for a violation of subsection (a) shall be

imposed, assessed and collected by the department under

procedures set forth in Article II. Money collected under

this paragraph shall be deposited in the General Fund.

(3) A penalty for a violation of subsection (b) shall be

imposed, assessed and collected by the [political

subdivision] city or municipality under procedures for

imposing penalties under local tax collection laws.

(4) If a local taxing authority imposes the penalty, the

money shall be transferred to the State Treasurer for deposit

in the zone fund [of the contracting authority].

Section 1810-C. Calculation of baseline.

(a) Baseline tax amount.--By October 15 following the end of

the baseline year and for each year thereafter, the department

shall verify the State baseline tax amount for each qualified

business in a zone which consists of the following:

(1) For each qualified [businesses that file] business

that files timely State zone reports under section 1809-C(a),

the amount of eligible State tax paid, less State eligible

[State] tax refunds.

(2) For each qualified [businesses] business not

included under paragraph (1) but located or partially located

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in the zone as determined by the department or included in

the information received by the department under section

1809-C(a), the amount of State eligible [State] tax paid,

less State eligible [State] tax refunds.

(b) Moves and noninclusions.--

(1) This subsection applies to a qualified business

that:

(i) moves into a zone from within this Commonwealth

after the baseline year; or

(ii) is in a zone but not included in the

calculation of the State baseline tax amount under

subsection (a).

(2) A qualified business subject to paragraph (1) shall

file a State zone report under section 1809-C following the

end of the first full calendar year in which the qualified

business conducted business in the zone and each calendar

year thereafter. The amount of eligible State tax verified by

the department for the qualified business for the [prior

calendar year shall be added to the State baseline tax amount

for the zone for the prior calendar year and each year

thereafter.] first full calendar year shall be the qualified

business' fixed baseline tax amount. The amount added shall

remain part of the baseline tax amount each year thereafter

until such time as the qualified business ceases to conduct

business in the zone, upon which event such amount previously

added shall be deducted from the State baseline tax amount.

(3) [The calculation under this section may not include

the eligible taxes of a qualifying business moving into the

zone from outside this Commonwealth.] The following taxes

shall be excluded from the baseline tax amount calculation

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under this section:

(i) Taxes on business personal property to be

utilized at a new facility.

(ii) The eligible taxes of:

(A) A new business.

(B) A qualified business moving into the zone

from outside this Commonwealth.

development or construction, including infrastructure

and site preparation, reconstruction or renovation of

a facility.

baseline of a zone designated prior to the effective date of

this subsection to include the hotel occupancy tax imposed under

Part V of Article II.

Section 1811-C. Certification.

(a) Amounts.--By the October 15 following the baseline year,

and each year thereafter, the department shall do all of the

following for each qualified business within a zone for the

prior calendar year:

(1) [Make] Subject to paragraph (1.1), make the

following calculation for qualified businesses which file

State zone reports under section 1809-C(a), separately for

each [zone] business:

(i) Subtract:

(A) the amount of eligible State tax refunds

received; from

(B) the amount of eligible State tax paid.

(ii) [Subtract] Except as set forth in subparagraph

(iii), subtract:

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(A) the State tax baseline amount for the [zone]

business; from

(B) the difference under subparagraph (i).

(iii) If the difference under subparagraph (ii) is a

negative number, state the difference as zero.

(1.1) Make the following calculation for a qualified

business subject to section 1810-C(b)(1) separately for each

business:

(i) Subtract:

(A) the amount of State eligible tax refunds

received; from

(B) the amount of State eligible tax paid.

(ii) Except as set forth in subparagraph (iii),

subtract:

(A) the State tax baseline amount for the

business; from

(B) the difference under subparagraph (i).

(iii) If the difference under subparagraph (ii) is a

negative number, state the difference as zero.

(2) Certify to the office the [difference under

paragraph (1)(ii)] sum derived from adding paragraph (1) to

paragraph (1.1).

(b) Content.--

(1) The certification may include the following:

(i) Adjustment made to timely filed zone reports by

the department for State eligible [State] tax actually

paid by a qualified business in the prior calendar year.

(ii) [Eligible State] State eligible tax refunds

paid to a qualified business in the zone in a prior

calendar year.

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(iii) State tax penalties paid by a qualified

business in the prior year under section 1809-C(c).

(2) The certification shall not include the following:

(i) Tax paid by a qualified business that did not

file a timely State zone report under section 1809-C(a).

(ii) Tax paid by a qualified business whose tax was

not included in the State tax baseline amount calculation

under section 1810-C.

(iii) Tax paid by a qualified business not appearing

on a timely filed list under section 1807-C(a).

(1) An entity collecting [an] a local eligible [local]

tax within the zone for each qualified business which files a

zone report under section 1809-C(b) shall, by October 15

following the baseline year and each year thereafter, submit

the following to the State Treasurer for transfer to the

fund:

(i) [the] The local eligible [local] tax collected

in the prior calendar year[;].

(ii) [less] Less the amount of local eligible

[local] tax refunds issued in the prior calendar year[;

and].

(iii) [less] Less the amount of local baseline tax

[for the zone.] amount.

(iv) If the difference under subparagraph (iii) is a

negative number, state the difference as zero.

(2) The information under this subsection shall also be

certified by the local taxing authority to the Department of

Community and Economic Development, the office and the

department.

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(d) Confidential report.--No later than October 15 of the

baseline year and each year thereafter, the department and the

local taxing authority shall provide the contracting authority

with a report detailing the baseline tax amount for each

qualified business and the amount of eligible tax paid by each

qualified business. The report shall be confidential and shall

not be publicly accessible under the act of February 14, 2008

(P.L.6, No.3), known as the Right-to-Know Law.

Section 1812-C. Transfers.

(a) Office.--Within ten days of receiving the certification

from the department under section 1811-C, the office shall

direct the State Treasurer to transfer the amount of certified

eligible State zone tax from the General Fund to each fund of a

contracting authority.

(b) State Treasurer.--Within ten days of receiving direction

under subsection (a), the State Treasurer shall pay into the

fund the amount directed under subsection (a) until bonds issued

to finance the acquisition, development, construction, including

related infrastructure and site preparation, reconstruction or

renovation of a facility or other eligible project in the zone,

are retired.

(1) If the transfers under subsection (a) and section

1811-C(c) are insufficient to make payments on the bonds

issued under section 1813-C(a)(1) for the calendar year when

the transfers are made, the contracting authority shall

notify the Department of Community and Economic Development,

the office and the department of the amount of the deficiency

and may request the additional money necessary to make

payments on the bonds.

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(2) The notification under paragraph (1) must be

accompanied by a detailed account of the contracting

authority's expenditures and the calculation which resulted

in the request for additional money. The Department of

Community and Economic Development, the office or the

department may request additional information from the

contracting authority and shall jointly verify the proper

amount of money necessary to make the payments on the bonds.

(3) Notwithstanding 53 Pa.C.S. § 5607(e) (relating to

purposes and powers), within 90 days of the date of the

notification request, the office shall direct the State

Treasurer to establish a restricted account within the

General Fund. The office shall direct the State Treasurer to

transfer the amount verified under paragraph (2) from the

General Fund to the restricted account for the use of the

contracting authority to make payments on the bonds issued

under section 1813-C(a)(1).

(4) Money transferred under paragraph (3):

(i) shall be limited to 50% of the State tax

baseline amount for the calendar year prior to the date

the amount is verified under paragraph (2), not to exceed

[$10,000,000] $7,500,000; and

(ii) must occur in the first seven calendar years

following the baseline year.

(4.1) Under extraordinary circumstances, a contracting

authority may request money in excess of the limitations in

paragraph (4)(i). The Department of Community and Economic

Development, the office and the department shall determine

whether the circumstances merit additional money and the

amount to be transferred. The money shall be transferred

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under the procedure under this section.

(5) Money transferred under paragraph (3) shall be

repaid to the General Fund by the contracting authority. If

money transferred under paragraph (3) is not repaid to the

General Fund by the contracting authority [by the date of the

final payment on the bonds originally issued under section

1813-C(a)(1), the city or county which established] within 12

calendar years following the baseline year, the city,

municipality or home rule county which established or

designated the contracting authority shall pay the money not

repaid to the General Fund plus an additional penalty of 10%

of the amount outstanding on the date of the final payment on

the bonds originally issued under section 1813-C(a)(1).

Section 1813-C. Restrictions.

(a) Utilization.--[If the use was approved in an application

filed under section 1804-C, money] Money transferred under

section 1812-C may only be utilized for the following:

(1) Payment of debt service on bonds issued or

refinanced for the acquisition, development, construction,

including related infrastructure and site preparation,

reconstruction [or], renovation or refinancing of a facility

in the zone and normal and customary fees for professional

services associated with the issuance or refinance of the

bonds.

(2) [Construction] Acquisition, development,

construction, including related infrastructure and site

preparation, reconstruction [or], renovation or refinancing

of all or a part of a facility.

(3) Replenishment of amounts in debt service reserve

funds established to pay debt service on bonds.

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(4) Employment of an independent auditing firm to

perform the duties under section 1807-C(c).

(5) Improvement or development of all or part of a zone.

(6) Improvement projects, including fixtures and

equipment for a facility owned, in whole or in part, by a

public authority.

(7) Payment or reimbursement of reasonable

administrative, auditing and compliance services required by

this article. Reasonable administrative costs may not exceed

5% of the money transferred under section 1812-C. For

purposes of this paragraph, professional services shall not

be considered administrative costs.

(b) Prohibition.--Money transferred under section 1812-C may

not be utilized for maintenance or repair of a facility.

(1) If the amount of money transferred to the fund under

sections 1811-C(c) and 1812-C in any one calendar year

exceeds the money utilized under this section in that

calendar year, the contracting authority shall submit by

[January] April 15 following the end of the calendar year the

excess money to the State Treasurer for deposit into the

General Fund.

(2) At the time of submission to the State Treasurer,

the contracting authority shall submit to the State

Treasurer, the office and the department a detailed

accounting of the calculation resulting in the excess money.

(3) The excess money shall be credited to the

contracting authority and applied to the amount required to

be repaid under section 1812-C(c)(5) until there is full

repayment.

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(d) Matching funds.--

(1) The amount of money transferred from the fund

utilized for the acquisition, development, construction,

including related site preparation and infrastructure,

reconstruction or renovation of facilities, or normal and

customary fees for professional services shall be matched by

private, Federal or local money at a ratio of five fund

dollars to one private, Federal or local dollar. The

contracting authority shall verify the private, Federal or

local match for a project at the time of the bond and report

proof of the match to the agencies. All of the following

shall be deemed private money:

(i) Equity.

(ii) Private developer debt and financing.

(iii) Soft costs associated with land development.

(iv) Costs of professional services associated with

development.

(v) Costs associated with improvements of the

parcel.

(vi) Costs of land acquisition and real estate

transactions.

(1.1) Private, Federal or local dollars invested in any

single year or multiple years may be amortized over the term

of the private or public financing provided to the project in

order to meet the matching fund ratio of five fund dollars to

one private, Federal or local dollar invested in the project.

(2) By April 1 following the baseline year and for each

year thereafter, the contracting authority shall file an

annual report with the Department of Community and Economic

Development, the office and the department that contains a

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detailed account of the fund money expenditures and the

private, Federal or local money expenditures and a

calculation of the ratio in paragraph (1) for the prior

calendar year. [The agencies shall determine whether

sufficient private money was utilized.]

(3) If it is determined that insufficient private,

Federal or local money was utilized under paragraph (1), the

amount of fund money utilized under paragraph (1) in the

prior calendar year shall be deducted from the next transfer

of the fund.

Section 1814-C. Transfer of property.

(a) Property.--[Portions of a zone where a facility has not

been constructed, reconstructed or renovated using money under

this article may be transferred out of the zone. Additional

acreage, not to exceed the acreage transferred out of the zone,

may be added to the zone.] Parcels in a zone where a facility

has not been constructed, reconstructed or renovated using money

under this article may be transferred out of the zone, if the

contracting authority provides a notarized certification,

confirmed in the annual audit required under section 1807-C(c),

that no fund dollars were used on the property. Additional

acreage, not to exceed the acreage transferred out of the zone,

may be simultaneously added to the zone.

(a.1) Public meeting.--Prior to requesting approval, the

contracting authority shall hold a public meeting to consider

the proposed transfer. At the meeting, any interested party may

attend and offer comment on the proposal change.

(a.2) Infeasibility.--

(1) If no activity in furtherance of development has

taken place on the parcel within eight years of the enactment

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of this section or designation of the zone, whichever occurs

later, the contracting authority may conduct a public hearing

on the feasibility of the parcel to continue with the

designation pursuant to a request from the city or

municipality where the parcel sits. The hearing shall be held

and notice provided to the owner of the parcel in accordance

with section 908 of the act of July 31, 1968 (P.L.805,

No.247), known as the Pennsylvania Municipalities Planning

Code. For purposes of this section, activity shall include,

but not be limited to, construction, building, renovation,

reconstruction, site preparation and site development.

(2) If the contracting authority determines that the

project is no longer feasible, the contracting authority

shall issue a written opinion within 45 days of the hearing

setting forth the reasons supporting the determination and

verifying that no activity has taken place. The decision may

be appealed in accordance with section 1001-A the

Pennsylvania Municipalities Planning Code.

(b) Approval.--A transfer under [subsection (a)] subsections

(a) and (a.2) must be approved by the Department of Community

and Economic Development in consultation with the office and the

department.

Section 1816-C. Commonwealth pledges.

(a) Pledge.--If and to the extent the contracting authority

pledges amounts required to be transferred to its fund under

section 1812-C for payment of bonds [issued by the contracting

authority, until all bonds secured by the pledge of the

contracting authority, together with interest on the bonds, are

fully paid or provided for,] until all of the bonds, together

with interest, are fully paid or provided for, the Commonwealth

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pledges to and agrees with any person, firm, corporation or

government agency, in this Commonwealth or elsewhere, and

pledges to and agrees with any Federal agency subscribing to or

acquiring the bonds [of the contracting authority] that the

Commonwealth itself will not nor will it authorize any

government entity to do any of the following:

(1) Abolish or reduce the size of the zone, or transfer

zone designation from a parcel contrary to section 1814-C.

(2) Amend or repeal section 1810-C [or], 1811-C, 1812-C,

1813-C, 1814-C, 1815-C or this section to the detriment of

the issuer of any bonds.

(3) Limit or alter the rights vested in the contracting

authority in a manner inconsistent with the obligations of

the contracting authority with respect to the bonds issued by

the contracting authority.

(4) Impair revenue to be paid under this article to the

contracting authority necessary to pay debt service on bonds.

(b) Limitation.--Nothing in this section shall limit the

authority of the Commonwealth or a political subdivision

government entity to change the rate, base or subject of a

specific tax or to repeal or enact any tax.

Section 1818-C. Guidelines.

[By October 31, 2013, the] The Department of Community and

Economic Development, the office and the department shall

develop, update and publish guidelines necessary to implement

this article.

Section 38. The act is amended by adding a section to read:

Section 1819-C. Review.

(a) Department of Community and Economic Development.--By

December 31, 2021, the Department of Community and Economic

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Development shall, in cooperation with the office and the

department, complete a review and analysis of all active zones.

The review shall include an analysis of:

(1) The number of new jobs created.

(2) The cost to and impact of the zones on the

Commonwealth and the revenue of the Commonwealth.

(3) Economic development to the city, or municipality in

a zone and to the Commonwealth.

(4) Any negative impact on adjacent municipalities or

the Commonwealth.

(b) Other review.--By June 30, 2021, the Independent Fiscal

Office shall complete a review and analysis of all zones. The

review shall include an analysis of the factors under subsection

(a).

posted on the Department of Community and Economic Development's

publicly accessible Internet website as well as the Independent

Fiscal Office's publicly accessible Internet website.

Section 38.1. The act is amended by adding an article to

read:

ARTICLE XVIII-G

MANUFACTURING AND INVESTMENT

TAX CREDIT

PART I

MANUFACTURING TAX CREDIT

Section 1801-G. Definitions.

The following words and phrases when used in this part shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Annual taxable payroll." The total amount of wages paid by

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an employer for the base year or year one, as applicable, from

which personal income tax under Article III is withheld.

"Base year." The four calendar quarters preceding the start

date.

"Department." The Department of Community and Economic

Development of the Commonwealth.

"Manufacturing tax credit." A tax credit for which the

department has issued a certificate under this part.

"New job." A full-time job created in year one which has an

average wage at least equal to the county average wage where the

job is located and which includes employer-provided health

benefits.

"Pass-through entity."

(1) A partnership as defined in section 301(n.0).

(2) A Pennsylvania S Corporation as defined in section

301(n.1).

(3) An unincorporated entity subject to section 307.21.

"Qualified tax liability." A taxpayer's tax liability under

Article III, IV, VI, VII, VIII, IX, XI or XV.

"Start date." The first day of the calendar quarter in which

an application is submitted to the department unless the

applicant requests and the department agrees to a later start

date.

"Taxpayer." An entity that is engaged in the mechanical,

physical or chemical transformation of materials, substances or

components into new products that are creations of new items of

tangible personal property for sale.

"Wages." Remuneration paid by an employer to an individual

with respect to the individual's employment.

"Year one." The four calendar quarters immediately following

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the start date.

Section 1802-G. Eligibility.

In order to be eligible to receive a manufacturing tax

credit, a taxpayer must demonstrate to the department the

following:

(1) The ability of the taxpayer to create an increase in

the taxpayer's annual taxable payroll in year one by at least

$1,000,000 above the amount in the base year solely through

the creation of new jobs and to maintain the increase for a

period of at least five years from the start date.

(2) The ability to maintain new jobs for a period of at

least five years from the start date.

(3) The intent to maintain existing operations in this

Commonwealth for a period of at least five years from the

start date.

Section 1803-G. Procedure.

(a) Application.--A taxpayer applying to claim a

manufacturing tax credit must complete and submit to the

department a manufacturing tax credit application on a form and

in a manner as determined by the department.

(b) Creation of new jobs.--In order to receive a

manufacturing tax credit, the taxpayer must agree to create in

year one new jobs that increase the taxpayer's annual taxable

payroll above the base year annual taxable payroll by

$1,000,000. The taxpayer must agree to retain the new jobs and

increase in payroll for at least five years from the start date.

application, the department and the taxpayer shall execute a

commitment letter containing the following:

(1) A description of the new jobs created.

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(2) The number of new jobs to be created.

(3) The amount of private capital investment in the

creation of new jobs.

(4) The increase in year one of the annual taxable

payroll for new jobs above the base year amount of annual

taxable payroll.

(5) The maximum manufacturing tax credit amount the

taxpayer may claim.

(6) A signed statement that the taxpayer intends to

maintain existing operations in this Commonwealth for at

least five years from the start date.

(7) Any other information as the department deems

appropriate.

(d) Commitment letter.--After a commitment letter has been

signed by both the Commonwealth and the taxpayer, the taxpayer

must increase the annual taxable payroll in year one by at least

$1,000,000 above the base year amount from the creation of new

jobs up to the amount specified in the commitment letter. If the

taxpayer does not increase the annual taxable payroll as

provided under this subsection, the commitment letter shall be

revoked and deemed to be null and void.

Section 1804-G. Manufacturing tax credit.

(a) Maximum amount.--The department may award a

manufacturing tax credit of up to 5% of the taxpayer's increase

in annual taxable payroll, if the annual taxable payroll

increases in year one by at least $1,000,000 above the base year

amount from the creation of new jobs up to the amount specified

in the commitment letter.

(b) Determination.--The annual taxable payroll in year one

for a new job shall be the sum of the amount of annual taxable

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payroll in year one for the new jobs created above the taxable

payroll in the base year.

the taxpayer has increased the annual taxable payroll in year

one by at least $1,000,000 above the base year amount from the

creation of new jobs up to the amount specified and any other

conditions required by the department and specified in the

commitment letter, the taxpayer shall receive a manufacturing

tax credit certificate and filing information.

(d) Applicable taxes.--A taxpayer may apply the

manufacturing tax credit to 100% of the taxpayer's qualified tax

liability.

(e) Term.--A taxpayer may claim the manufacturing tax credit

for a period determined by the department, not to exceed the

earlier of:

(1) five years from the date the taxpayer receives the

manufacturing tax credit certificate; or

(2) six years from the start date.

(f) Availability.--A manufacturing tax credit shall be made

available by the department on a first-come, first-served basis.

(g) Limitation.--For each fiscal year beginning after June

30, 2017, $4,000,000 in manufacturing tax credits shall be made

available to the department and may be awarded by the department

in accordance with this part. In any fiscal year, the department

may reissue, assign or award prior fiscal year manufacturing tax

credits which have been recaptured under section 1808-G(a) or

(b) and may award prior fiscal year manufacturing tax credits

not previously issued.

Section 1805-G. Limitations.

The following apply to manufacturing tax credits:

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(1) If the taxpayer cannot use the entire amount of the

manufacturing tax credit for the taxable year in which the

manufacturing tax credit is first approved, the excess may be

carried over to succeeding taxable years and used as a credit

against the qualified tax liability of the taxpayer for the

taxable years. Each time the manufacturing tax credit is

carried over to a succeeding taxable year, the manufacturing

tax credit shall be reduced by the amount of the

manufacturing tax credit used as a credit during the

immediately preceding taxable year. The manufacturing tax

credit may be carried over and applied to succeeding taxable

years for no more than three taxable years following the

first taxable year for which the taxpayer was entitled to

claim the credit.

(2) A manufacturing tax credit approved by the

department in a taxable year first shall be applied against

the taxpayer's qualified tax liability for the current

taxable year as of the date on which the credit was approved

before the manufacturing tax credit can be applied against

any tax liability under paragraph (1).

(3) A taxpayer shall not be entitled to carry back or

obtain a refund of all or any portion of an unused

manufacturing tax credit granted to the taxpayer under this

part.

Section 1806-G. Sale or assignment.

(a) Application.--A taxpayer, upon application to and

approval by the department, may sell or assign, in whole or in

part, a manufacturing tax credit granted to the taxpayer. The

following shall apply:

(1) The department and the Department of Revenue shall

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jointly issue guidelines for the approval of applications

under this paragraph.

(2) Before an application is approved, the Department of

Revenue must make a finding that the applicant has filed all

required State tax reports and returns for all applicable

taxable years and paid any balance of State tax due as

determined at settlement, assessment or determination by the

Department of Revenue.

(3) Notwithstanding any other provision of law, the

Department of Revenue must settle, assess or determine the

tax of an applicant under this paragraph within 90 days of

the filing of each required final return or report in

accordance with section 806.1(a)(5) of the act of April 9,

1929 (P.L.343, No.176), known as The Fiscal Code.

(b) Use by purchaser or assignee.--The purchaser or assignee

of all or a portion of a manufacturing tax credit under

subsection (a) must immediately claim the credit in the taxable

year in which the purchase or assignment is made.

(1) The amount of the manufacturing tax credit that a

purchaser or assignee may use against any one qualified tax

liability may not exceed 50% of the qualified tax liability

for the taxable year.

(2) The purchaser or assignee may not carry forward,

carry back or obtain a refund of or sell or assign the

manufacturing tax credit.

(3) The purchaser or assignee shall notify the

Department of Revenue of the seller or assignor of the

manufacturing tax credit in compliance with procedures

specified by the Department of Revenue.

Section 1807-G. Pass-through entity.

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(a) General rule.--If a pass-through entity has any unused

tax credits under section 1805-G, the entity may elect in

writing, according to procedures established by the Department

of Revenue, to transfer all or a portion of the credit to

shareholders, members or partners in proportion or the share of

the entity's distributive income to which the shareholder,

member or partner is entitled.

(b) Limitation.--A pass-through entity and a shareholder,

member or partner of a pass-through entity may not claim the

credit under subsection (a) for the same new job.

pass-through entity to whom a credit is transferred under

subsection (a) shall immediately claim the credit in the taxable

year in which the transfer is made. The shareholder, member or

partner may not carry forward, carry back, obtain a refund of or

sell or assign the credit.

Section 1808-G. Penalties.

(a) Failure to maintain operations.--A taxpayer which

receives a manufacturing tax credit and fails to maintain

existing operations related to the manufacturing tax credits in

this Commonwealth for a period of at least five years from the

start date must refund to the Commonwealth the total amount of

manufacturing tax credits granted. The Department of Revenue may

issue an assessment, including interest, additions and

penalties, for the total amount of each manufacturing tax credit

to be refunded to the Commonwealth.

(b) Failure to maintain jobs.--A taxpayer which receives a

manufacturing tax credit and fails to maintain new jobs along

with the increase in taxable payroll for a period of at least

five years from the start date must refund to the Commonwealth

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the total amount of manufacturing tax credits granted. The

Department of Revenue may issue an assessment, including

interest, additions and penalties, for the total amount of

manufacturing tax credits to be refunded to the Commonwealth.

subsections (a) and (b) if it is determined that a company's

existing operations were not maintained or the new jobs and

increase to payroll were not created because of circumstances

beyond the company's control. Circumstances shall include

natural disasters, unforeseen industry trends or a loss of a

major supplier or market.

Section 1809-G. Guidelines.

The department shall develop and publish guidelines necessary

to implement this part.

PART II

RURAL JOBS AND INVESTMENT TAX CREDIT

Section 1821-G. Scope of part.

This part relates to the Rural Jobs and Investment Tax

Credit.

Section 1822-G. Definitions.

The following words and phrases when used in this part shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Affiliate." An entity that directly, or indirectly through

one or more intermediaries, controls, is controlled by, or is

under common control with another entity. For the purposes of

this part, an entity is "controlled by" another entity if the

controlling person holds, directly or indirectly, the majority

voting or ownership interest in the controlled entity or has

control over the day-to-day operations of the controlled entity

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by contract or by law.

"Business firm." An entity authorized to do business in this

Commonwealth and subject to taxes imposed under Article VII,

VIII, IX or XV, the tax under Article XVI of the act of May 17,

1921 (P.L.682, No.284), known as The Insurance Company Law of

1921, or amounts imposed under section 212 of the act of May 17,

1921 (P.L.789, No.285), known as The Insurance Department Act of

1921.

"Closing date." The date on which a rural growth fund has

collected all of the amounts specified by section 1825-G.

"Credit-eligible capital contribution." An investment of

cash by a business firm in a rural growth fund that equals the

amount specified on a tax credit certificate issued by the

department under section 1829-G. The investment shall purchase

an equity interest in the rural growth fund or purchase, at par

value or premium, a debt instrument that has a maturity date at

least five years from the closing date.

"Department." The Department of Community and Economic

Development of the Commonwealth.

"Investment authority." The amount stated on the notice

issued under section 1824-G approving the rural growth fund.

"Principal business operations." The place or places where

at least 60% of a rural business' employees work or where

employees that are paid at least 60% of the business' payroll

work. An out-of-State business that has agreed to relocate

employees using the proceeds of a rural growth investment to

establish principal business operations in a rural area in this

Commonwealth shall be deemed to have the principal business

operations in this new location if the business satisfies this

definition within 180 days after receiving the rural growth

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investment, unless the department agrees to a later date.

"Qualified tax liability." The liability for taxes imposed

under Article VII, VIII, IX or XV, the tax under Article XVI of

the act of May 17, 1921 (P.L.682, No.284), known as The

Insurance Company Law of 1921, or amounts imposed under section

212 of the act of May 17, 1921 (P.L.789, No.285), known as The

Insurance Department Act of 1921 .

"Rural area." Either of the following:

(1) An area of the Commonwealth that is not in:

(i) A city with a population of more than 50,000

according to the latest decennial census of the United

States.

(ii) An urbanized area contiguous and adjacent to a

city that has a population of more than 50,000

inhabitants.

(2) An area determined to be rural in character by the

under-secretary of agriculture for rural development within

the United States Department of Agriculture.

"Rural business." A business that, at the time of the

initial investment in the business by a rural growth fund, meets

the following conditions:

(1) Has fewer than 250 employees and not more than

$15,000,000 in net income as determined by generally accepted

accounting principles for the preceding calendar year.

(2) Has principal business operations in one or more

rural areas in this Commonwealth.

(3) Is engaged in industries related to manufacturing,

plant sciences, services or technology or, if not engaged in

those industries, the department makes a determination that

the investment will be highly beneficial to the economic

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growth of this Commonwealth.

"Rural growth fund." An entity approved by the department

under section 1824-G.

"Rural growth investment." A capital or equity investment in

a rural business or any loan to a rural business with a stated

maturity at least one year after the date of issuance.

"Tax credit." The Rural Jobs and Investment Tax Credit

provided under this part.

Section 1823-G. Rural Jobs and Investment Tax Credit Program.

The Rural Jobs and Investment Tax Credit Program is

established in the department to attract capital to:

(1) Stimulate business development in rural areas.

(2) Retain and attract new rural business and industry

to the Commonwealth.

(3) Create good-paying rural jobs.

(4) Stimulate growth in rural businesses that are

prepared to make impactful economic development investments.

Section 1824-G. Rural growth funds.

(a) Application.--Beginning on the effective date of this

section, an application to qualify as a rural growth fund must

be submitted on a form and in a manner as required by the

department.

(b) Information.--An application to qualify as a rural

growth fund shall include all of the following:

(1) The total investment authority sought by the

applicant under the business plan.

(2) Documents and other evidence sufficient to prove, to

the satisfaction of the department, that the applicant meets

all of the following criteria:

(i) The applicant or an affiliate of the applicant

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is licensed as a rural business investment company under

the Consolidated Farm and Rural Development Act (Public

Law 87-128, 75 Stat. 307) or as a small business

investment company under the Small Business Investment

Act of 1958 (Public Law 85-699, 72 Stat. 689).

(ii) Evidence that as of the date the application is

submitted, the applicant or affiliates of the applicant

have invested at least $100,000,000 in nonpublic

companies located in rural areas of this Commonwealth or

other states.

(3) An estimate of the number of jobs that will be

created or retained in this Commonwealth as a result of the

applicant's rural growth investments.

(4) A business plan that includes a revenue impact

assessment projecting State and local tax revenue to be

generated by the applicant's proposed rural growth

investments prepared by a nationally recognized third-party

independent economic forecasting firm using a dynamic

economic forecasting model that analyzes the applicant's

business plan over the 10 years following the date the

application is submitted to the department.

(5) A signed affidavit from each investor stating the

amount of credit-eligible capital contributions each business

firm commits to make.

(6) A nonrefundable application fee of $500.

applications received from rural growth funds under this

section. Subject to the limitation in subsection (f), the

department shall make allocations of investment authority for

approved applications in the order in which the applications are

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received. Applications received on the same day shall be deemed

to have been received simultaneously. If requests for investment

authority on approved applications exceed the limitation in

subsection (f), the department shall reduce the investment

authority and the credit-eligible capital contributions

proportionally based upon the amount of investment authority

sought in the application for each approved application as

necessary to not exceed the limitation in subsection (f).

(d) Notice of approval or disapproval.--

(1) Within 60 days after receipt of an application, the

department shall notify the applicant of its approval or

disapproval as a rural growth fund under this part.

(2) A notice of approval shall specify the amount of the

applicant's investment authority as determined by the

department after reviewing the information submitted in

accordance with subsection (b) and the amount of credit-

eligible contribution authority allocated to each business

firm that submitted an affidavit in the application.

(3) If the application is disapproved, the notice of

disapproval shall include the reasons for disapproval.

(4) An applicant may resubmit the application within 30

days after receipt of a notice of disapproval.

(e) Request for determination.--A rural growth fund, before

making a rural growth investment, may request from the

department a written opinion as to whether the business in which

the growth fund proposed to invest is a rural business. The

department shall notify the rural growth fund of the

determination within 15 days after receipt of the request. If

the department fails to notify a rural growth fund of the

determination within 15 days, the business in which the growth

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fund proposes to invest shall be considered a rural business.

(f) Limitation.--The department may not approve more than

$100,000,000 in investment authority under this part.

Section 1825-G. Requirements.

(a) Collections.--Upon receiving approval under section

1824-G, a rural growth fund must do all of the following within

60 days:

(1) Collect the credit-eligible capital contributions

from each business firm issued a tax credit certificate under

section 1829-G.

(2) Collect one or more investments of cash that, when

added to the contributions collected under paragraph (1),

equal the fund's investment authority. At least 10% of the

fund's investment authority shall be comprised of equity

investments contributed by affiliates of the rural growth

fund, including employees, officers and directors of the

affiliates.

(b) Documentation.--Within 65 days of approval under section

1824-G, a rural growth fund must provide to the department

documentation sufficient to prove that the amounts specified in

subsection (a) have been collected.

Section 1826-G. Rural growth fund failure to comply.

(a) Revocation.--If a rural growth fund fails to meet the

requirements of section 1825-G, the fund's approval shall be

revoked and the corresponding investment authority and credit-

eligible capital contributions may not be included in

determining the limits on total investment authority and credit-

eligible capital contributions prescribed in sections 1824-G(f)

and 1828-G(c), respectively.

(b) Reallocation.--Any investment authority and credit-

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eligible capital contributions related to a rural growth fund

whose approval has been revoked under subsection (a) shall be

reallocated by awarding the investment authority related to a

revocation on a pro rata basis to each rural growth fund that

was awarded less than the requested investment authority under

section 1824-G.

investment authority reallocated to it under subsection (b) to

its investor business firms at its discretion.

(d) Unallocated investment authority.--Subsequent to the

reallocation in subsection (b), any remaining investment

authority may be awarded by the department to new applicants.

Section 1827-G. Reporting obligations.

(a) Initial report.--Each rural growth fund shall submit a

report to the department on or before the fifth business day

after the second anniversary of the closing date. The report

shall provide documentation as to the rural growth fund's rural

growth investments and include the following information:

(1) A bank statement evidencing each rural growth

investment.

(2) The name, location and industry of each business

receiving a rural growth investment, including either the

determination letter issued by the department under section

1824-G(e) or other evidence that the business qualified as a

rural business at the time the investment was made.

(3) The number of jobs created or retained as a result

of the fund's rural growth investments as of the last day of

the preceding calendar year.

(4) Any other information required by the department.

(b) Annual report.--No later than March 1 of each year

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following the year in which the report required under subsection

(a) is due, the rural growth fund shall submit an annual report

to the department that includes the following information:

(1) The number of jobs created or retained as a result

of the fund's rural growth investments as of the last day of

the preceding calendar year.

(2) The average annual salary of the jobs reported in

paragraph (1).

(3) Any other information required by the department.

Section 1828-G. Business firms.

(a) General rule.--To qualify for a tax credit, credit-

eligible capital contributions made by a business firm to a

rural growth fund must be used by the rural growth fund for

rural growth investments in a rural business under this part.

(b) Submission.--In connection with the documentation

submitted under section 1825-G(b), a rural growth fund shall

submit, on behalf of its business firm investors, on a form and

in a manner required by the department, a description of credit-

eligible capital contributions for approval by the department.

The submission shall include for each credit-eligible capital

contribution:

(1) The amount of the credit-eligible capital

contribution.

(2) The name of the rural growth fund to which the

credit-eligible capital contribution was made.

(3) The closing date.

(4) Any other information required by the department.

$4,000,000 in credit-eligible capital contributions under this

part.

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Section 1829-G. Tax credit certificates.

(a) Application.--

(1) A business firm may apply to the department for a

tax credit certificate under this section for the tax credits

that are earned and vested as a result of the business firm's

credit-eligible capital contribution.

(2) The application shall be on a form required by the

department and shall include the amount of the business

firm's credit-eligible capital contribution approved under

section 1828-G(b).

(3) The application shall be filed no later than

February 1 for credit-eligible capital contributions made in

the preceding calendar year.

(b) Review, recommendation and approval.--

(1) The department shall review the credit-eligible

capital contributions, verify that the credit-eligible

capital contributions were made to an approved rural growth

fund with adequate investment authority and approve or

disapprove the application within 30 days of receipt of the

application for review.

(2) If the department has approved the application, it

shall award the business firm a tax credit certificate by

April 1.

(2.1) A tax credit awarded under this section shall not

exceed 90% of the credit-eligible capital contributions made

by a business firm.

(3) In awarding tax credit certificates under this part,

the department:

(i) Beginning with fiscal year 2017-2018, may not

award tax credit certificates that would result in the

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utilization of more than $1,000,000 in tax credits in any

fiscal year, except for tax credits carried forward.

(ii) May not award more than $4,000,000 in tax

credit certificates, in the aggregate, under this part.

Section 1830-G. Claiming the tax credit.

(a) Presentation.--Beginning July 1, 2017, upon presenting a

tax credit certificate to the Department of Revenue, a business

firm may claim a tax credit of up to 25% of the amount awarded

under section 1829-G for each of the taxable years that includes

the third through sixth anniversaries of the closing date,

exclusive of any tax credit amounts carried over under section

1831-G(b).

(b) Allowance.--The Department of Revenue shall allow a tax

credit against any tax due under Article VII, VIII, IX or XV,

the tax under Article XVI of the act of May 17, 1921 (P.L.682,

No.284), known as The Insurance Company Law of 1921, amounts

imposed under section 212 of the act of May 17, 1921 (P.L.789,

No.285), known as The Insurance Department Act of 1921, or any

tax substituted in lieu of one of the taxes under this

subsection.

Section 1831-G. Restrictions on tax credit utilization.

(a) Limitation.--A tax credit to be applied in any one year

may not exceed the qualified tax liability of the business firm

or affiliate to which a tax credit was sold or assigned for that

taxable year.

(b) Carryover.--A tax credit not used in the period the

credit is first eligible for use under subsection (a) may be

carried over for the next five succeeding calendar years until

the full tax credit has been allowed.

Section 1832-G. Prohibitions.

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(a) Sale or assignment.--A business firm may not sell or

assign, in whole or in part, a tax credit awarded under this

part other than to an affiliate having a qualified tax

liability.

(b) Carryback or refund.--A business firm may not carry back

or obtain a refund of an unused tax credit.

any business firm that invests in the rural growth fund shall be

an affiliate of or have a pecuniary interest in a rural business

that receives a rural growth investment from the rural growth

fund prior to the fund's initial rural growth investment in the

rural business.

Section 1833-G. Revocation of tax credit certificates.

(a) Revocation.--The department shall revoke a tax credit

certificate awarded under section 1829-G if any of the following

occur with respect to a rural growth fund before the fund exits

the program under section 1834-G:

(1) The rural growth fund in which the credit-eligible

capital contribution was made does not invest all of its

investment authority in rural growth investments in this

Commonwealth within two years of the closing date with at

least 25% of its investment authority initially invested in

rural businesses engaged in manufacturing.

(2) The rural growth fund, after satisfying the

conditions of paragraph (1), fails to maintain rural growth

investments equal to 100% of its investment authority until

the sixth anniversary of the closing date. For the purposes

of this paragraph, an investment is "maintained" even if the

investment is sold or repaid so long as the rural growth fund

reinvests an amount equal to the capital returned or

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recovered by the fund from the original investment, exclusive

of any profits realized, in other rural growth investments in

this Commonwealth within 12 months of the receipt of the

capital. Amounts received periodically by a rural growth fund

shall be treated as continually invested in rural growth

investments if the amounts are reinvested in one or more

rural growth investments by the end of the following calendar

year. A rural growth fund is not required to reinvest capital

returned from rural growth investments after the fifth

anniversary of the closing date and the rural growth

investments shall be considered held continuously by the

rural growth fund through the sixth anniversary of the

closing date.

(3) The rural growth fund, before exiting the program in

accordance with section 1834-G, makes a distribution or

payment that results in the rural growth fund having less

than 100% of its investment authority invested in rural

growth investments in this Commonwealth or available for

investment in rural growth investments and held in cash and

other marketable securities.

(4) The rural growth fund invests more than 20% of its

investment authority in the same rural business, including

amounts invested in affiliates of the rural business.

(5) The rural growth fund makes a rural growth

investment in a rural business that directly or indirectly

through an affiliate owns, has the right to acquire an

ownership interest, makes a loan to, or makes an investment

in the rural growth fund, an affiliate of the rural growth

fund, or an investor in the rural growth fund. This paragraph

does not apply to investments in publicly traded securities

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by a rural business or an owner or affiliate of a rural

business. For purposes of this paragraph, a rural growth fund

shall not be considered an affiliate of a rural business

solely as a result of its rural growth investment.

(b) Notification.--Before revoking one or more tax credit

certificates under this section, the department shall notify the

rural growth fund of the reasons for the pending revocation. The

rural growth fund shall have 90 days from the date the notice

was made to correct any violation outlined in the notice to the

satisfaction of the department and avoid revocation of a tax

credit certificate.

under this section, the associated investment authority and

credit-eligible capital contributions may not count toward the

limit on total investment authority and credit-eligible capital

contributions allowed under this part. The department shall

first reallocate investment authority on a pro rata basis to

each rural growth fund that was allocated less than the

requested investment authority under section 1824-G. The

department may then allocate any remaining investment authority

to new applicants.

Section 1834-G. Exit.

(a) Application for exit.--On or after the sixth anniversary

of the closing date, a rural growth fund may apply to the

department to exit the Rural Jobs and Investment Tax Credit

Program and no longer be subject to regulation under this part.

The department shall respond to the application within 30 days

after receipt. In evaluating the application, the fact that no

tax credit certificates have been revoked and that the rural

growth fund has not received a notice of revocation that has not

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been cured under section 1833-G(b) shall be sufficient evidence

to show that the rural growth fund is eligible for exit. The

department may not deny an application submitted under this

subsection without reasonable cause. If the application is

denied, the department shall issue a notice which shall include

the reasons for the denial.

(b) Exit.--The department may not revoke a tax credit

certificate after a rural growth fund exits from the Rural Jobs

and Investment Tax Credit Program under this section.

Section 1835-G. Duties of department.

(a) Rules and regulations.--The department may promulgate

rules and regulations to administer this part.

(b) Reports by department.--The department shall provide a

report listing all applications received for tax credit

certificates and the disposition of the applications in each

fiscal year to the General Assembly by October 1 of the

following fiscal year. The department's report shall include all

business firms approved for a tax credit certificate and the

amount of tax credit certificates approved for each business

firm.

the confidentiality of tax records, the information in the

report under subsection (b) shall be public information and all

report information shall be posted on the department's publicly

accessible Internet website.

Section 38.2. The definition of "neighborhood organization"

in section 1902-A of the act, amended May 7, 1997 (P.L.85,

No.7), is amended and the section is amended by adding

definitions to read:

Section 1902-A. Definitions.--The following words, terms and

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phrases, when used in this article, shall have the meanings

ascribed to them in this section, except where the context

clearly indicates a different meaning:

"Affordable housing." Housing that serves median-income,

low-income, very low-income and extremely low-income families as

those terms are defined in section 3 of the United States

Housing Act of 1937 (50 Stat. 888, 42 U.S.C. § 1437 et seq.)

based on the area median income as determined by the Federal

Housing Finance Agency.

* * *

"Domestic violence or veterans' housing assistance."

Furnishing financial assistance, labor, material and technical

advice to aid in the acquisition, construction, renovation or

rehabilitation of real property in an impoverished area that

will be used to provide housing for victims of domestic violence

or veterans.

* * *

"Neighborhood organization." Any organization performing

community services, offering neighborhood assistance or

providing job training, affordable housing, domestic violence or

veterans' housing assistance, education or crime prevention in

an impoverished area, holding a ruling from the Internal Revenue

Service of the United States Department of the Treasury that the

organization is exempt from income taxation under the provisions

of the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 1 et seq.) and approved by the Department of Community

[Affairs] and Economic Development.

* * *

Section 38.3. Section 1904-A of the act, amended July 25,

2007 (P.L.373, No.55) and July 2, 2012 (P.L.751, No.85), is

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amended to read:

Section 1904-A. Tax Credit.--(a) Any business firm which

engages or contributes to a neighborhood organization which

engages in the activities of providing neighborhood assistance,

comprehensive service projects, affordable housing, domestic

violence or veterans' housing assistance, job training or

education for individuals, community services or crime

prevention in an impoverished area or private company which

makes qualified investment to rehabilitate, expand or improve

buildings or land located within portions of impoverished areas

which have been designated as enterprise zones shall receive a

tax credit as provided in section 1905-A if the secretary

annually approves the proposal of such business firm or private

company. The proposal shall set forth the program to be

conducted, the impoverished area selected, the estimated amount

to be invested in the program and the plans for implementing the

program.

(b) The secretary is hereby authorized to promulgate rules

and regulations for the approval or disapproval of such

proposals by business firms or private companies. The secretary

shall provide a report listing of all applications received and

their disposition in each fiscal year to the General Assembly by

October 1 of the following fiscal year. The secretary's report

shall include all taxpayers utilizing the credit and the amount

of credits approved, sold or assigned. Notwithstanding any law

providing for the confidentiality of tax records, the

information in the report shall be public information, and all

report information shall be posted on the secretary's Internet

website.

(b.1) The secretary shall take into special consideration,

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when approving applications for neighborhood assistance tax

credits, applications which involve:

(1) multiple projects in various markets throughout this

Commonwealth; and

(2) charitable food programs.

(b.2) The secretary, in cooperation with the Department of

Agriculture, shall promulgate guidelines for the approval or

disapproval of applications for tax credits by business firms

that contribute food or money to charitable food programs.

(b.3) The secretary, in cooperation with the Department of

Military and Veterans Affairs, shall promulgate guidelines for

the approval or disapproval for tax credits by business firms

that contribute to veterans' housing assistance.

approved under this act shall not exceed eighteen million

dollars ($18,000,000) of tax credit in any fiscal year.

(d) A taxpayer, upon application to and approval by the

Department of Community and Economic Development, may sell or

assign, in whole or in part, a neighborhood assistance tax

credit granted to the business firm under this article if no

claim for allowance of the credit is filed within one year from

the date the credit is granted by the Department of Revenue

under section 1905-A. The Department of Community and Economic

Development and the Department of Revenue shall jointly

promulgate guidelines for the approval of applications under

this subsection.

(e) The purchaser or assignee of a neighborhood assistance

tax credit under subsection (d) shall immediately claim the

credit in the taxable year in which the purchase or assignment

is made. The purchaser or assignee may not carry over, carry

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back, obtain a refund of or sell or assign the neighborhood

assistance tax credit. The purchaser or assignee shall notify

the Department of Revenue of the seller or assignor of the

neighborhood assistance tax credit in compliance with procedures

specified by the Department of Revenue.

(f) The neighborhood assistance tax credit approved by the

Department of Community and Economic Development shall be

applied against the business firm's tax liability for the taxes

under section 1905-A for the current taxable year as of the date

on which the credit was approved before the neighborhood

assistance tax credit may be carried over, sold or assigned.

Section 38.4. Section 1905-A of the act, amended July 25,

2007 (P.L.373, No.55), is amended to read:

Section 1905-A. Grant of Tax Credit.--The Department of

Revenue shall grant a tax credit against any tax due under

Article III, IV, VI, VII, VIII, IX or XV of this act, or any tax

substituted in lieu thereof in an amount which shall not exceed

fifty-five per cent of the total amount contributed during the

taxable year by a business firm or twenty-five per cent of

qualified investments by a private company in programs approved

pursuant to section 1904-A of this act: Provided, That a tax

credit of up to seventy-five per cent of the total amount

contributed during the taxable year by a business firm or up to

thirty-five per cent of the amount of qualified investments by a

private company may be allowed for investment in programs where

activities fall within the scope of special program priorities

as defined with the approval of the Governor in regulations

promulgated by the secretary, and Provided further, That a tax

credit of up to seventy-five per cent of the total amount

contributed during the taxable year by a business firm in

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comprehensive service projects with five-year commitments and up

to eighty per cent of the total amount contributed during the

taxable year by a business firm in comprehensive service

projects with six-year or longer commitments shall be

granted[.], and Provided further, That a tax credit of up to

seventy-five per cent of the total amount contributed during the

taxable year by a business firm in veterans' housing assistance

approved under section 1904-A(b.3) shall be granted. Such credit

shall not exceed five hundred thousand dollars ($500,000)

annually for contributions or investments to fewer than four

projects or one million two hundred fifty thousand dollars

($1,250,000) annually for contributions or investments to four

or more projects. No tax credit shall be granted to any bank,

bank and trust company, insurance company, trust company,

national bank, savings association, mutual savings bank or

building and loan association for activities that are a part of

its normal course of business. Any tax credit not used in the

period the contribution or investment was made may be carried

over for the next five succeeding calendar or fiscal years until

the full credit has been allowed. A business firm shall not be

entitled to carry back or obtain a refund of an unused tax

credit. The total amount of all tax credits allowed pursuant to

this act shall not exceed eighteen million dollars (18,000,000)

in any one fiscal year. Of that amount, two million dollars

($2,000,000) shall be allocated exclusively for pass-through

entities. However, if the total amounts allocated to either the

group of applicants, exclusive of pass-through entities, or the

group of pass-through entity applicants is not approved in any

fiscal year, the unused portion shall become available for use

by the other group of qualifying taxpayers.

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Section 39. Section 1902-B of the act is amended by adding

definitions to read:

Section 1902-B. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Master list." A list maintained by the contracting

authority of the legal business names, principal business

addresses within a neighborhood improvement zone and parcel

numbers of all qualified businesses which are required to file

reports for the calendar year under section 1904-B(a.1)(1). The

term shall also include the name, telephone number and e-mail

address of the person employed by the qualified business who is

primarily responsible for completing reports for the qualified

business required under section 1904-B(a.1).

* * *

"Operating organization." An entity which contracts directly

with the contracting authority to lease or operate a facility.

* * *

Section 40. Section 1904-B(a.1) and (b) of the act, added

July 9, 2013 (P.L.270, No.52), are amended and the section is

amended by adding subsections to read:

Section 1904-B. Neighborhood Improvement Zone Funds.

* * *

(a.1) Certification.--

(1) Within [30] 31 days of the end of each calendar

year, each qualified business shall file a report with the

department which complies with all of the following:

(i) States each State tax, calculated in accordance

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with subsection (b), which was paid by the qualified

business in the prior calendar year.

(ii) Lists each State tax refund which complies with

all of the following:

(A) The refund is for a tax:

(I) set forth in subsection (b); and

(II) certified as paid under subsection (b).

(B) The refund was received in the prior

calendar year by the qualified business.

(iii) Is in a form and manner required by the

department.

(2) In addition to any penalties imposed under this act

for failure to timely pay State taxes, [failure] the

following shall apply:

(i) Failure to file a timely and complete report

under paragraph (1) shall result in the imposition of a

penalty of 10% of all State taxes, calculated in

accordance with subsection (b), which were payable by the

qualified business in the prior calendar year. In no case

shall the penalty imposed be less than $1,000. When the

penalty is received, the money shall be transferred from

the General Fund to the fund of the contracting authority

that designated the neighborhood improvement zone in

which the qualifying business is located. Failure to file

a timely and complete report under paragraph (4) shall

result in the imposition of a penalty of 10% of all local

taxes, calculated in accordance with subsection (b) by a

contracting authority which were payable by the qualified

business in the prior calendar year. In no case shall the

penalty imposed be less than $250.

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(ii) Failure to report a qualified business

operating in the facility to the contracting authority by

an operating organization in accordance with subsection

(a.3)(2) shall result in the imposition of a penalty by

the contracting authority upon the operating

organization, of 100% of the taxes which would be

certified under subsection (b) for each qualified

business which is not reported to the contracting

authority or $1,000, whichever is greater. The

contracting authority may not waive or abate any

penalties imposed under this subparagraph. When the

penalty is received, the money shall be transferred from

the General Fund to the fund of the contracting authority

that designated the neighborhood improvement zone in

which the qualifying business is located.

(iii) Failure to file a timely and complete report

under paragraph (1) by a qualified business engaged in

the active conduct of a trade or business during the

calendar year in the facility shall result in the

imposition of a penalty by the contracting authority upon

the operating organization equal to 100% of the taxes

paid which would be certified under subsection (b) for

each qualified business which fails to file a timely and

complete report. The penalty may not be less than $1,000.

If the qualified business is properly included on the

master list provided under subsection (a.3), the

contracting authority may waive or abate penalties

imposed under this subparagraph equal to the total taxes

paid by the qualified business which are certified under

subsection (b). When the penalty is received, the money

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shall be deposited in the fund of the contracting

authority that designated the neighborhood improvement

zone in which the qualifying business is located.

(3) [Any] Except as otherwise provided under paragraph

(2)(ii) and (iii), any penalty imposed under this subsection

shall be imposed, assessed and collected by the department

under the provisions for imposing, assessing and collecting

penalties under Article II. When the penalty is received, the

money shall be transferred from the General Fund to the fund

of the contracting authority that designated the neighborhood

improvement zone in which the qualified business is located.

(4) Within [30] 31 days of the end of each calendar

year, each qualified business shall file a report with the

local taxing authority reporting all local taxes, calculated

in accordance with subsection (b), which were paid by the

qualified business in the prior calendar year. The report

from each qualified business shall also list any local tax

refunds of taxes set forth in subsection (b) received in the

prior calendar year by the qualified business and any refunds

related to the local taxes as calculated in accordance with

subsection (b). The report shall be in a form and manner

required by the department.

* * *

(a.3) Master list.--The following shall apply:

(1) Except as provided under paragraph (2), within five

days of the end of each month, the legal business names,

business addresses within the neighborhood improvement zone

and parcel numbers of all qualified businesses engaged in the

active conduct of a trade or business during the previous

month shall be provided to the contracting authority by or on

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behalf of the qualified business for purposes of inclusion on

the master list. The name, telephone number and e-mail

address of the person employed by the qualified business who

is primarily responsible for completing reports for the

qualified business required under subsection (a.1) shall also

be provided.

(2) For purposes of inclusion on the master list, within

five days of the end of each month during a calendar year, an

operating organization shall provide to the contracting

authority the legal business names and business addresses

within the neighborhood improvement zone of all qualified

businesses engaged in the active conduct of a trade or

business in the facility during the previous month along with

the name, phone number and e-mail address of the individual

employed by the qualified business who is primarily

responsible for completing the reports for the qualified

business required under subsection (a.1).

(3) Within 10 days of the end of each calendar year, the

contracting authority shall provide to the department the

master list. The department may not certify any taxes paid

directly or indirectly by a qualified business as provided

under subsection (b) during the prior calendar year when the

qualified business is not included on the master list.

(4) A contracting authority shall impose penalties for

failure to comply with this section.

(b) Calculation.--Within 60 days of the end of each calendar

year, the department shall certify separately for each

neighborhood improvement zone the amounts of State taxes paid,

less any State tax refunds received, by the qualified businesses

filing reports under subsection (a.1)(1) to the Office of the

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Budget. Beginning in the first full calendar year following the

designation of a neighborhood improvement zone and in each

calendar year thereafter, by November 1, the department shall

calculate, in accordance with this subsection, amounts of State

taxes actually received by the Commonwealth from each qualified

business that filed a report under subsection (a.1)(1) in the

prior calendar year, and the department shall certify the

amounts received to the office. The department shall include

reports filed five months after the due date under subsection

(a.1)(1) in the November 1 certification. An entity collecting a

local tax within the neighborhood improvement zone shall, within

[30] 31 days of the end of each calendar year, submit all of the

local taxes that are to be calculated under this subsection and

which were paid in the prior calendar year, less any certified

local tax refunds received by a qualified business in the prior

calendar year, to the State Treasurer to be deposited in the

fund under subsection (d) of the contracting authority that

established the neighborhood improvement zone. This subsection

shall not apply to any taxes subject to a valid pledge or

security interest entered into in order to secure debt service

on bonds if the pledge or security interest was entered into

prior to May 1, 2011, or, in the case of the neighborhood

improvement zone designated after July 1, 2011, on the date of

the designation, and is still in effect. The following shall be

the amounts calculated and certified separately for each

neighborhood improvement zone:

(1) An amount equal to all corporate net income tax,

capital stock and franchise tax, personal income tax,

business privilege tax, business privilege licensing fees and

earned income tax related to the ownership and operation of a

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professional sports organization conducting professional

athletic events at the facility or facility complex.

(2) An amount equal to all of the following:

(i) All personal income tax, earned income tax and

local services tax withheld from its employees by a

professional sports organization conducting professional

athletic events at the facility or facility complex.

(ii) All personal income tax, earned income tax and

local services tax withheld from the employees of any

provider of events at or services to or any operator of

an enterprise in the facility or facility complex.

(iii) All personal income tax, earned income tax and

local services tax to which the Commonwealth would be

entitled from performers or other participants, including

visiting teams, at an event or activity at the facility

or facility complex.

(3) An amount equal to all sales and use tax related to

the operation of the professional sports organization and the

facility and enterprises developed as part of the facility

complex. This paragraph shall include sales and use tax paid

by any provider of events or activities at or services to the

facility or facility complex, including sales and use tax

paid by vendors and concessionaires and contractors at the

facility or facility complex.

(4) An amount equal to all tax paid to the Commonwealth

related to the sale of any liquor, wine or malt or brewed

beverage in the facility or facility complex.

(5) The amount paid by the professional sports

organization or by any provider of events or activities at or

services to the facility or facility complex of any new tax

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enacted by the Commonwealth following October 9, 2009.

(6) An amount equal to all personal income tax, earned

income tax and local services tax withheld from personnel by

the professional sports organization or by a contractor or

other entity involved in the construction of the facility or

facility complex.

(7) An amount equal to all sales and use tax paid on

materials and other construction costs, whether withheld or

paid by the professional sports organization or other entity,

directly related to the construction of the facility or

facility complex.

(8) An amount equal to all of the following:

(i) All corporate net income tax, capital stock and

franchise tax, personal income tax, business privilege

tax, business privilege licensing fees and earned income

tax related to the ownership and operation of any

qualified business within the neighborhood improvement

zone.

(ii) All personal income tax, earned income tax and

local services tax withheld from its employees by a

qualified business within the neighborhood improvement

zone.

(iii) All personal income tax, earned income tax and

local services tax withheld from the employees of a

qualified business that provides events, activities or

services in the neighborhood improvement zone.

(iv) All personal income tax, earned income tax and

local services tax to which the Commonwealth would be

entitled from performers or other participants at an

event or activity in the neighborhood improvement zone.

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(v) All sales and use tax related to the operation

of a qualified business within the neighborhood

improvement zone. This subparagraph shall include sales

and use tax paid by a qualified business that provides

events, activities or services in the neighborhood

improvement zone.

(vi) All tax paid by a qualified business to the

Commonwealth related to the sale of any liquor, wine or

malt or brewed beverage within the neighborhood

improvement zone.

(vii) The amount paid by a qualified business within

the neighborhood improvement zone of any new tax enacted

by the Commonwealth following October 9, 2009.

(viii) All personal income tax, earned income tax

and local services tax withheld from personnel by a

qualified business involved in the improvement,

development or construction of the neighborhood

improvement zone.

(ix) All sales and use tax paid on materials and

other construction costs, whether withheld or paid by the

professional sports organization or other qualified

business, directly related to the improvement,

development or construction of the neighborhood

improvement zone.

(x) An amount equal to any amusement tax paid by a

qualified business operating in the neighborhood

improvement zone. No political subdivision or other

entity authorized to collect amusement taxes may impose

or increase the rate of any tax on admissions to places

of entertainment, exhibition or amusement or upon

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athletic events in the neighborhood improvement zone

which are not in effect on the date the neighborhood

improvement zone is designated by the contracting

authority.

(9) Except for a tax levied against real property and

notwithstanding any other law, an amount equal to any tax

imposed by the Commonwealth or any of its political

subdivisions on a qualified business engaged in an activity

within the neighborhood improvement zone or directly or

indirectly on any sale or purchase of goods or services,

where the point of sale or purchase is within the

neighborhood improvement zone.

* * *

(h) Audit.--

(1) The contracting authority shall hire an independent

auditing firm to perform an annual audit verifying all of the

following:

(i) The correct amount of the eligible local tax was

submitted to the local taxing authorities.

(ii) The local taxing authorities transferred the

correct amount of eligible local tax to the State

Treasurer.

(iii) The money transferred to the fund was properly

expended.

(iv) The correct amount of excess money was refunded

in accordance with the provisions of subsection (g).

(2) A copy of the annual audit shall be sent to the

Department of Revenue and the Secretary of the Budget.

(3) For purposes of this paragraph, an auditing firm

will not be considered independent if it provides services to

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an operating organization or any qualified business within a

neighborhood improvement zone which is a party to a separate

agreement with a contracting authority for the allocation of

funds from the contracting authority.

Section 41. The act is amended by adding sections to read:

Section 1904.1-B. Taxes.

(a) Prohibition.--A division of local government may not

assess real estate taxes on any property in a neighborhood

improvement zone owned by a contracting authority.

(b) Local hotel tax.--Notwithstanding any other law, revenue

generated from local hotel taxes levied in a neighborhood

improvement zone must first be set aside for new development and

capital improvement of hotel properties in the neighborhood

improvement zone. If there is no new hotel property development

or capital improvement in the neighborhood improvement zone, the

revenue generated from hotel taxes must be distributed as

provided under local hotel tax law.

from local hotel taxes shall only include the amount of local

hotel taxes collected from hotel activities which exceed the

amount collected from hotel activities occurring prior to the

designation of a neighborhood improvement zone by the

contracting authority.

Section 1904.2-B. Property assessment.

Notwithstanding 53 Pa.C.S. Ch. 88 (relating to consolidated

county assessment), for purposes of determining the assessed

value of property located in a neighborhood improvement zone,

the actual fair market value of the property shall be

established without utilizing or considering the cost approach

to valuation and any funds received by the contracting authority

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and utilized directly or indirectly in connection with the

property shall not be considered real property or income

attributable to the property.

Section 1909-B. Exceptions.

Beginning with the 2016 calendar year, none of the following

may be employed by, be contracting with or provide services for

a contracting authority:

(1) An individual employed by, contracting with or

providing service for a city that has a neighborhood

improvement zone.

(2) An entity contracting with or providing services for

a city that has a neighborhood improvement zone.

(3) An individual owning an entity or an entity with

ownership interest in a separate entity which is contracting

with a city that has a neighborhood improvement zone.

(4) An individual or an entity employed by, contracting

with or providing services for a qualified business within

the neighborhood improvement zone which is party to a

separate agreement with a contracting authority for the

allocation of funds from the contracting authority.

(5) An individual or an entity employed by, contracting

with or providing services for an operating organization.

(6) A current board member of a contracting authority.

(7) An entity which is owned by or employs a current

board member of a contracting authority.

Section 42. Section 1903-C(e)(1) of the act, added July 9,

2013 (P.L.270, No.52), is amended to read:

Section 1903-C. Keystone Special Development Zone tax credit.

* * *

(e) Use and carryforward.--

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(1) A Keystone Special Development Zone employer may

earn the tax credit allowed under this article beginning in

any tax year beginning in 2012 and for a period of up to ten

tax years during the [15-year] period beginning July 1, 2012,

and ending June 30, [2026] 2035.

* * *

Section 43. The act is amended by adding articles to read:

ARTICLE XIX-D

KEYSTONE OPPORTUNITY ZONES, KEYSTONE OPPORTUNITY EXPANSION

ZONES AND KEYSTONE OPPORTUNITY IMPROVEMENT ZONES

PART I

PRELIMINARY PROVISIONS

Section 1901-D. Scope.

This article relates to keystone opportunity zones, keystone

opportunity expansion zones and keystone opportunity improvement

zones.

Section 1902-D. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Business." As defined in section 103 of the KOZ Act.

"Department." The Department of Community and Economic

Development of the Commonwealth.

"Keystone opportunity expansion zone." As defined in section

103 of the KOZ Act.

"Keystone opportunity zone." As defined in section 103 of

the KOZ Act.

"KOZ Act." The act of October 6, 1998 (P.L.705, No.92),

known as the Keystone Opportunity Zone, Keystone Opportunity

Expansion Zone and Keystone Opportunity Improvement Zone Act.

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"Person." As defined in section 103 of the KOZ Act.

"Political subdivision." As defined in section 103 of the

the KOZ Act.

"Qualified business." As defined in section 103 of the KOZ

Act.

"Qualified political subdivision." As defined in section 103

of the KOZ Act.

"Subzone." As defined in section 103 of the KOZ Act.

"Unoccupied parcel." As defined in section 103 of the KOZ

Act.

PART II

KEYSTONE OPPORTUNITY ZONES

Section 1911-D. Additional keystone opportunity zones.

(a) Establishment.--In addition to any designations under

section 301.1 of the KOZ Act, the department may designate up to

12 additional keystone opportunity expansion zones that will

create new jobs in accordance with this section. Each additional

keystone opportunity expansion zone shall:

(1) Not be less than 10 acres in size, unless contiguous

to an existing zone.

(2) Not exceed, in the aggregate, a total of 375 acres.

(3) Be comprised of parcels that are deteriorated,

underutilized or unoccupied on the effective date of this

paragraph.

(b) Authorization.--Persons and businesses within an

additional keystone opportunity expansion zone authorized under

subsection (a) shall be entitled to all tax exemptions,

deductions, abatements or credits set forth under this section

and exemptions for sales and use tax under section 511(a) or

705(a) of the KOZ Act for a period of 10 years. Exemptions for

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sales and use taxes under sections 511 and 705 of the KOZ Act

shall commence upon issuance of a certificate under section 307

of the KOZ Act by the department.

this section, the department must receive an application from a

political subdivision or its designee no later than October 1,

2016. The application must contain the information required

under section 302(a)(1), (2)(i) and (ix), (5) and (6) of the KOZ

Act. The department, in consultation with the Department of

Revenue, shall review the application and, if approved, issue a

certification of all tax exemptions, deductions, abatements or

credits under this act for the zone within three months of

receipt of the application. The department shall act on an

application for a designation under section 302(a)(1) of the KOZ

Act by December 31, 2016. The department may make designations

under this section on a rolling basis during the application

period.

(d) Additional eligibility.--A parcel previously included in

an application submitted for designation in a city of the first

class prior to the effective date of this subsection that

previously complied with all requirements of section 302 of the

KOZ Act shall be eligible for designation as a zone under this

section if the parcel was acquired by a new owner and will be

used for a higher and better use or will provide greater levels

of job creation or investment.

(e) Applicability.--All exemptions, deductions, abatements

and credits authorized under the KOZ Act shall apply to the

parcels for a period of 10 years.

Section 1912-D. Extension for new job creation or new capital

investment.

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(a) Approval and effect.--

(1) The department may approve an application to grant

an extension for a parcel located within a keystone

opportunity zone, keystone opportunity expansion zone or

keystone opportunity improvement zone upon application by:

(i) one qualified business as a sole applicant; or

(ii) two or more qualified businesses as a joint

applicant.

(2) All exemptions, deductions, abatements and credits

authorized under Chapter 5 of the KOZ Act shall be extended

to the continued parcel for an additional period of 10 years

following the expiration date of the existing keystone

opportunity zone, keystone opportunity expansion zone or

keystone opportunity improvement zone or subzone.

(b) Application.--

(1) In order to receive approval under subsection (a)

(1), the department must receive an application from one or

more qualified businesses located within the zone or subzone

no later than three months prior to the expiration date of

the existing zone or subzone. The application shall include

all information required by the department as set forth in

guidelines to be published by the department.

(2) In order to submit an application under paragraph

(1), the applicant must:

(i) Have a cumulative minimum of 2,500 employees

located within this Commonwealth at the time of the

application.

(ii) Demonstrate a total prior minimum capital

investment within this Commonwealth of at least $300

million.

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(iii) Conduct active business operations from one or

more facilities located on the parcel or parcels which

are the subject of the application.

(iv) Otherwise be in compliance with the provisions

of the KOZ Act.

(3) The department, in consultation with the Department

of Revenue, shall review the application and, if approved,

issue a certification of all tax exemptions, deductions,

abatements or credits authorized under Chapter 5 of the KOZ

Act for the extended parcel within three months of receipt of

the application, subject to the requirements of this section.

If the department determines that all qualifications and

requirements under this section and the KOZ Act have been

met, a certification for the extension period shall be issued

within 90 days of receipt of the application.

(4) The certification under paragraph (3) shall be

effective as of the day following the expiration date of the

existing zone or subzone and shall be effective for an

additional period of 10 years.

(1) The department shall issue to each qualified

business that is approved as part of the application

submitted under subsection (a) a certification as described

under section 307 of the KOZ Act.

(2) For an applicant with multiple parcels that will

expire during the time periods under subsection (e), in order

to receive certification under paragraph (1), the applicant

must commit that between the effective date of this paragraph

and three years following the date of certification of the

initial parcel applied for, the applicant shall:

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(i) create at least 350 new jobs in this

Commonwealth; or

(ii) make a capital investment of at least

$35,000,000 in this Commonwealth.

(3) Each qualified business that fails to meet the

requirements of paragraph (2) shall refund to the

Commonwealth the amount of the exemptions, deductions,

abatements and credits under Chapter 5 of the KOZ Act which

were received by that business during the three years

following receipt of the certification under paragraph (1).

(d) Expiration.--

(1) All continuations shall expire no later than 10

years following the effective date of certification by the

department.

(2) If the qualified business that is a sole applicant

removes itself from the continued parcel or parcel prior to

the expiration of the continuation, the continuation shall

expire upon the date of departure of that qualified business.

(3) If two or more qualified businesses submitted an

application under subsection (a) as joint applicants, this

subsection shall apply only if all the qualified businesses

that were the joint applicants remove themselves from the

parcel prior to the expiration of the continuation. In that

case, the continuation shall expire upon the date of

departure of the last qualified business.

(e) Applicability.--

(1) This section applies only to existing zones or

subzones that expire in 2018 or at any time following 2018

and prior to January 1, 2026.

(2) This section does not apply to exemptions,

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deductions, abatements or credits authorized under Chapter 7

of the KOZ Act, and the department may not require that the

qualified political subdivision in which the continued parcel

or parcels are located approve any application submitted

under subsection (b).

(3) The exemptions, deductions, abatements or credits

authorized under Chapter 5 of the KOZ Act apply only to

business activity carried out within the parcel or parcels

which are approved for extension.

(4) A determination by the department as to whether the

employment or capital investment requirements of subsections

(b) and (c) have been met shall be binding upon the

Department of Revenue.

ARTICLE XIX-E

MIXED-USE DEVELOPMENT TAX CREDIT

Section 1901-E. Scope of article.

This article establishes the Mixed-use Development Tax

Credit, the Mixed-use Development Program and the Mixed-use

Development Program Fund.

Section 1902-E. Purpose.

The implementation and use of this program shall be for the

purposes of:

(1) Increasing affordable housing and commercial

corridor development opportunities in areas of this

Commonwealth where significant need and impact can be

identified.

(2) Maximizing the leveraging of private and public

resources.

(3) Fostering sustainable partnerships committed to

addressing community needs.

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(4) Ensuring that resources are used to effectively and

efficiently meet community needs.

(5) Establishing a transparent application, allocation

and reporting process for all stakeholders.

(6) Providing financing to critical projects as part of

an overall strategy for revitalizing communities.

Section 1903-E. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Agency." The Pennsylvania Housing Finance Agency.

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

"Eligible projects." A building or buildings to be

constructed or rehabilitated and any related real or personal

property:

(1) located in a commercial corridor where a

comprehensive neighborhood revitalization strategy is either

in place or being developed;

(2) sponsored by an entity with development experience

in this Commonwealth, with capacity to complete the project

and qualified under the criteria established in guidelines

developed by the agency;

(3) financed by a combination of public or private debt

financing, gap financing or owner equity sufficient to ensure

the financial feasibility of the project;

(4) has sufficiently demonstrated site control and

ability to proceed;

(5) complies with any other eligibility requirements the

agency determines to be appropriate.

"Fund." The Mixed-use Development Program Fund established

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under section 1906-E.

"Mixed-use development tax credits." Amounts made available

to qualified taxpayers to offset against qualified tax liability

as authorized and allocated under this article, as evidenced by

tax credit certificates and meeting all of the criteria set

forth in this article.

"Program." The Mixed-use Development Program established

under section 1904-E.

"Qualified tax liability." The tax liability imposed on a

taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV,

excluding any tax withheld by an employer under Article III.

"Qualified taxpayer." Any natural person, business firm,

corporation, business trust, limited liability company,

partnership, limited liability partnership, association or any

other form of legal business entity that:

(1) is subject to a tax imposed under Article III, IV,

VI, VII, VIII, IX, XI or XV, excluding any tax withheld by an

employer under Article III; and

(2) meets the criteria set forth in guidelines

established by the agency.

"Tax credit certificates." The document provided by the

agency to the qualified taxpayer evidencing the allocation of

mixed-use development tax credits under section 1907-E.

Section 1904-E. Mixed-use Development Program.

(a) Establishment.--The Mixed-use Development Program is

established as a program of the agency.

(b) Administration.--The program shall be administered by

the agency in accordance with section 1905-E and with guidelines

adopted and promulgated pursuant to this article.

Section 1905-E. Program administration.

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(a) Authorization.--The agency is authorized to perform all

necessary and convenient actions to implement the program.

(b) Application.--Eligible project owners may apply to the

agency for program funding for an eligible project. The agency

shall promulgate guidelines for applying for program funding

under this section.

submitted for program funds and, in accordance with the

procedures established in the agency guidelines, shall select

and shall conditionally commit program funds to the eligible

projects. Eligible project owners shall provide the agency with

all program requirements necessary for closing and funding of

the eligible project in a form and a timely manner as determined

by the agency.

(d) Disbursement.--Funds shall be disbursed to the eligible

project owner as determined by the agency.

(e) Monitoring and cost certification.--The agency shall

establish procedures for the monitoring of the use of funds and

for a cost certification process at the end of the construction

or rehabilitation process.

(f) Agency guidelines.--Within 180 days of the effective

date of this article, the agency shall perform the following:

(1) Adopt guidelines establishing the agency's

priorities.

(2) Establish a method for:

(i) applying and distributing program funds; and

(ii) the sale of the tax credits under section 1907-

E(d).

(g) Notice and comment.--The agency shall publish proposed

guidelines, including a comment response document, in the

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Pennsylvania Bulletin and on the agency's publicly accessible

Internet website for public comments no later than 45 days prior

to adoption. All comments submitted to the agency in writing

shall be public records and shall be incorporated into the

comment response document.

(h) Report.--Within 90 days following the close of the first

calendar year in which tax credits are made available, and by

July 1 of every year thereafter, the agency, in consultation

with the department, shall issue a report containing:

(1) A financial statement.

(2) An itemized list of the following:

(i) projects funded;

(ii) qualified taxpayers applying for tax credits;

and

(iii) tax credits certificates issued.

(3) A description of other expenditures in the preceding

calendar year.

(i) Submission of report.--The report under subsection (h)

shall constitute a public record and shall be published on the

agency's publicly accessible Internet website and submitted to

the following:

(1) The Governor.

(2) The Auditor General.

(3) The chair and minority chair of the Urban Affairs

and Housing Committee of the Senate.

(4) The chair and the minority chair of the Commerce

Committee of the House of Representatives.

Section 1906-E. Mixed-use Development Program Fund.

(a) Establishment.--The Mixed-use Development Program Fund

is established as a separate account within the agency for the

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sole purpose of implementing the provisions of this article.

(b) Prohibition.--No other agency funds, money or interest

earnings shall be utilized for purposes of this article.

program shall be deposited into the fund and shall be

appropriated to the agency on a continuing basis to carry out

the provisions of this article.

(d) Funds.--The fund shall include money and proceeds

generated through the sale and allocation of mixed-use

development tax credits, capital investments, penalties, fees

and costs, interest and earnings pursuant to this article as

well as grants or donations from other sources and any funds

that may be appropriated for these purposes by the General

Assembly under this article. Interest and any other earnings

shall remain in the fund.

(e) Use of money.--The agency may use any available money in

the fund for administrative costs and for purposes consistent

with this article.

Section 1907-E. Mixed-use development tax credits.

(a) Tax credit authority.--For purposes, and in accordance

with the provisions of this article, the agency may allocate an

amount not to exceed $2,000,000 in each fiscal year in mixed-use

development tax credits and is directed to deposit proceeds and

earnings derived from the sale into the fund.

(b) Establishment and authorization.--The agency shall have

the authority to perform actions necessary or convenient to

establish protocols and procedures to sell and distribute mixed-

use development tax credits, directly or indirectly, to achieve

the purposes of this program.

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mixed-use development tax credits from the agency and may only

apply such credits against the qualified taxpayer's qualified

tax liability in accordance with this article.

(d) Sale procedures.--Mixed-use development tax credits may

be offered by the agency through direct or negotiated sale to

qualified taxpayers.

(e) Procedures.--The agency shall adopt procedures and

application criteria that shall be designed to deliver the

mixed-use development tax credits in the manner deemed most

appropriate to maximize the highest yield to the Commonwealth,

to achieve a timely and equitable execution of the delivery of

mixed-use development tax credits and to achieve the goals and

purposes of the program. Procedures for the sale and application

criteria proposed by the agency shall be made available for

public comment in a manner consistent with section 1905-E(g).

(f) Application.--A qualified taxpayer seeking to purchase a

mixed-use development tax credit may apply to the agency in the

manner prescribed by the agency as set forth in the guidelines

adopted pursuant to this article. The agency may require

applicants provide evidence of the taxpayer's qualifications.

Section 1908-E. Payment for mixed-use development tax credits.

(a) Payment of capital.--Capital committed by a qualified

taxpayer shall be paid to the agency for deposit into the Mixed-

use Development Program Fund. The agency may establish an

installment payment schedule for payments to be made by the

qualified taxpayer in accordance with guidelines established by

the agency.

(b) Issuance of tax credit certificates.--Beginning July 1,

2017, the agency shall issue to each qualified taxpayer a tax

credit certificate upon receipt of payment of capital.

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certificates to qualified taxpayers in a form determined by the

agency in consultation with the department.

(d) Contents.--The tax credit certificate shall contain all

of the following:

(1) The total amount of tax credits that a qualified

taxpayer may claim.

(2) The amount of capital that the qualified taxpayer

has contributed or agreed to contribute in return for the

issuance of the tax credit certificate.

(3) The possible penalties or other remedies for

noncompliance.

(4) The requirements for transferring the tax credits to

other qualified taxpayers.

(5) Limitations and procedures for carryover of the tax

credit.

(6) Reporting requirements.

(7) Any other requirements or content the agency, in

consultation with the department, considers appropriate.

Section 1909-E. Failure to make contribution of capital and

reallocation.

(a) Prohibition.--A tax credit certificate under section

1908-E may not be issued to a qualified taxpayer who fails to

comply with agency guidelines.

(b) Penalty.--After the agency issues a tax credit

certificate, a qualified taxpayer who fails to contribute

capital in accordance with the agreed upon schedule of payments,

or other conditions as determined by the agency, shall be

subject to a penalty equal to 10% of the amount of capital that

remains unpaid and assessment of costs and fees by the agency.

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The penalty shall be paid to the agency within 30 days after

demand. A qualified taxpayer who fails to make a contribution

within the specified time period may be subject to Commonwealth

debarment, forfeiture or liquidation of any pledged collateral

or to such other actions as deemed appropriate by the agency.

All penalties, fees and costs shall be deposited into the fund

to be used for the program.

promulgated by the agency, recapture and redeploy any defaulted

capital. The agency shall make the credit available to other

qualified taxpayers with minimal delay and cost to the program.

(d) Avoidance of penalty.--The agency may allow a qualified

taxpayer that fails to make a contribution of capital within the

time specified to avoid a penalty by transferring the allocation

of tax credits to another qualified taxpayer within 30 days

after the due date of the defaulted installment. Any transferee

of an allocation of tax credits of a defaulting qualified

taxpayer under this subsection shall be subject to all

requirements of the agency and must agree to make the required

contribution of capital within 30 days after the date of the

transfer.

Section 1910-E. Claiming the credit.

(a) General rule.--Upon presenting a tax credit certificate

issued and verified by the agency to the department, the

qualified taxpayer may claim a tax credit against the qualified

tax liability of the qualified taxpayer.

(b) Time period.--Presentation must be made no later than

the last day of the second calendar month of the calendar year

in which the credit is available. No tax credit will be provided

unless the qualified taxpayer provides presentation to both the

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agency and to the department.

Section 1911-E. Carryover, carry back and assignment of credit.

(a) General rule.--The agency, in consultation with the

department, shall establish guidelines that include procedures

for the carryover, assignment and transfer of credits and

reports on utilization.

(b) Carryover.--If a qualified taxpayer cannot use the

entire amount of the tax credit for the taxable year in which

the tax credit is first approved, the excess credit may be

carried over to subsequent taxable years and used as a credit

against the qualified tax liability of the qualified taxpayer

for those taxable years. Each time the tax credit is carried

over to a succeeding taxable year, it shall be reduced by the

amount that was used as a credit during the immediately

preceding taxable year. In no event shall tax credits provided

by this article be carried over and applied to succeeding

taxable years more than seven taxable years following the first

taxable year for which the qualified taxpayer was entitled to

claim the credit.

a taxable year shall first be applied against the qualified

taxpayer's qualified tax liability for the current taxable year

as of the date on which the credit was issued before any carried

over tax credits can be applied against any qualified tax

liability.

(d) No carry back or refund.--A qualified taxpayer may not

carry back or obtain a refund of all or any portion of an unused

tax credit granted to the qualified taxpayer under this article.

(e) Sale or assignment.--A qualified taxpayer, upon

application and approval by the agency and in conformance with

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the agency's guidelines, may sell or assign, in whole or in

part, a tax credit granted to the qualified taxpayer under this

article.

(f) Purchasers and assignees.--The purchaser or assignee of

all or a portion of a tax credit obtained under subsection (e)

must be a qualified taxpayer and must immediately claim the

credit in the taxable year in which the purchase or assignment

is made. The purchaser or assignee may not carry over, carry

back or obtain a refund or otherwise sell or assign the tax

credit. The purchaser or assignee shall notify the agency of the

utilization of the tax credit in compliance with procedures

specified by the agency.

(g) Pass-through entity distributions.--The following shall

apply:

(1) A pass-through entity may elect, in writing,

according to procedures established by the agency, to

transfer all or a portion of unused tax credits to

shareholders, members or partners in proportion to the share

of the entity's distributive income to which the shareholder,

member or partner is entitled.

(2) A pass-through entity and a shareholder, member or

partner of a pass-through entity shall not claim the credit

under paragraph (1) for the same qualified expenditures.

(3) A shareholder, member or partner of a pass-through

entity to whom a credit is transferred under paragraph (1)

must claim the credit in the taxable year in which the

transfer is made. The shareholder, member or partner may not

carry over, carry back, obtain a refund of or sell or assign

the credit.

ARTICLE XIX-F

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KEYSTONE INNOVATION ZONES

Section 1901-F. Scope of article.

This article relates to the Keystone Innovation Zone Program.

Section 1902-F. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Department." The Department of Community and Economic

Development of the Commonwealth.

"Institution of higher education." A public or private

institution within this Commonwealth authorized by the

Department of Education to grant an associate degree or higher

degree. The term includes branch or satellite campus of the

institution.

"Keystone innovation zone." A clearly defined contiguous

geographic area comprised of portions of one or more political

subdivisions.

"Keystone innovation zone company." A for-profit business

entity which is all of the following:

(1) Located within a keystone innovation zone.

(2) Has been in operation for less than eight years.

(3) Falls within one of the targeted industry segments

adopted by the keystone innovation zone partnership in its

strategic plan.

"Keystone innovation zone coordinator." A nonprofit

organization which is all of the following:

(1) Not an institution of higher education.

(2) Chosen by a keystone innovation zone partnership and

agreed to by the department to administer the activities of a

keystone innovation zone.

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"Keystone innovation zone partnership." Any association or

group which is all of the following:

(1) Comprised of at least one institution of higher

education and a combination of private businesses, business

support organizations, commercial lending institutions,

venture capital companies, angel investor networks or

foundations.

(2) Formed for the creation and administration of a

keystone innovation zone.

"KIZ." A keystone innovation zone.

"KIZ company." A keystone innovation zone company.

"KIZ coordinator." A keystone innovation zone coordinator.

"KIZ partnership." A keystone innovation zone partnership.

Section 1903-F. Program.

(a) Establishment.--There is established a program in the

department to be known as the Keystone Innovation Zone Program.

The program shall provide economic assistance to KIZ companies

for the purpose of improving and encouraging research and

development efforts and technology commercialization efforts

resulting in employment growth and revitalization of

communities.

(b) Application.--A keystone innovation zone partnership may

apply to the department to establish a keystone innovation zone.

All applications must be received by July 1, 2007, be on the

form required by the department and include and demonstrate all

of the following:

(1) The KIZ coordinator's name and address.

(2) A statement that the applicant is a KIZ partnership

and the identity of its members.

(3) The geographic boundaries of the proposed keystone

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innovation zone.

(4) A copy of a written strategic plan adopted by the

KIZ partnership describing the targeted industry segments

which the KIZ will foster.

(5) Any other information required by the department.

application. Upon being satisfied that all requirements have

been met, the department may approve the application. If the

department approves the application, the department shall

designate the identified area as a keystone innovation zone and

accept the organization designated as the KIZ coordinator for

the zone.

Section 1904-F. Assistance.

(a) Existing programs.--A KIZ company shall be eligible and

may be given priority consideration in applying for assistance

under any of the following:

(1) 12 Pa.C.S. (relating to commerce and trade).

(2) The act of May 17, 1956 (1955 P.L.1609, No.537),

known as the Pennsylvania Industrial Development Authority

Act.

(3) The act of August 23, 1967 (P.L.251, No.102), known

as the Economic Development Financing Law.

(4) The act of June 22, 2001 (P.L.569, No.38), known as

The Ben Franklin Technology Development Authority Act.

(5) The act of June 29, 1996 (P.L.434, No.67), known as

the Job Enhancement Act.

(6) The act of June 26, 2001 (P.L.755, No.77), known as

the Tobacco Settlement Act.

(7) Any other act enacted after the effective date of

this subsection which has economic development assistance as

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its primary objective.

(b) Loans of the Pennsylvania Industrial Development

Authority.--The board of the Pennsylvania Industrial Development

Authority may provide loans to entities for land and structures,

including structures providing space for research and

development activities, in which, when completed, at least one

KIZ company will be located. If the structure is intended to

accommodate more than one KIZ company, at least 80% of the space

in the structure must be leased to KIZ companies. The board may

establish the eligibility criteria, the interest rate, the loan

term and the participation rate to be applied to these projects.

(1) The Ben Franklin Technology Development Authority

may provide an annual KIZ operation grant of up to $250,000

to a keystone innovation zone coordinator for administrative

costs incurred in establishing and implementing the keystone

innovation zone.

(2) In subsequent years, a grant shall be reduced in

accordance with all of the following:

(i) By 25% of the initial amount in the second year.

(ii) By 50% of the initial amount of the grant in

the third year.

(iii) By 75% of the initial amount of the grant in

the fourth year.

(3) The Ben Franklin Technology Development Authority

shall develop guidelines for the application, receipt and use

of operation grant funds.

Section 1905-F. Keystone innovation grants.

(a) Grants.--The department may provide keystone innovation

grants to institutions of higher education to facilitate

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technology transfer, including patent filings, technology

licensing, intellectual property and royalty agreements and

other designated resource needs. The application must be on the

form required by the department and must include or demonstrate

all of the following:

(1) The applicant's name and address.

(2) The KIZ partnership of which the applicant is a

member.

(3) A written proposal. The proposal must state all of

the following:

(i) The technology transfer activities to be

undertaken. The activities may include the addition of

personnel who are directly related in transferring

technology to the local businesses.

(ii) The quantifiable goals and objectives to be

achieved.

(iii) How the activities, goals and objectives will

integrate with the strategic plan adopted for the KIZ.

(iv) The role of the applicant and other members of

the KIZ partnership.

(4) Identification of a dollar-to-dollar match, which

may be in kind if the department determines that the proposed

match can be readily identified and tracked and which is

directly related to the stated goals and objectives.

(5) Any other information required by the department.

(b) Approval.--The department shall review the application

and, upon being satisfied that all requirements have been met,

the department may approve the application. Prior to releasing

grant funds, the department shall enter into a contract with the

applicant that contains all of the following:

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(1) The grant may not exceed $250,000 per year.

(2) Grants under this program shall not exceed $750,000

in the aggregate per applicant under this program.

(3) The aggregate amount of grants awarded to all

applicants under this subsection shall not exceed $10,000,000

under this program.

(1) Except as provided in paragraph (2), the department

shall impose a penalty upon a recipient of a grant for any of

the following:

(i) If the recipient fails to use the grant for the

technology transfer activities specified in the

application.

(ii) If the recipient's membership in the KIZ

partnership is terminated voluntarily or involuntarily.

(2) The department may waive the penalty required by

paragraph (1) if the department determines that the failure

was due to circumstances outside the control of the grant

recipient.

(3) A penalty imposed under paragraph (1) shall be equal

to the full amount of the grant received plus an additional

amount of up to 10% of the amount of the grant received. The

penalty shall be payable in one lump sum or in installments,

with or without interest, as the department deems

appropriate.

Section 1906-F. Keystone innovation zone tax credits.

(a) Tax credit.--A KIZ company may claim a tax credit equal

to 50% of the increase in the KIZ company's gross revenues in

the immediately preceding taxable year attributable to

activities in the KIZ over the KIZ company's gross revenues in

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the second preceding taxable year attributable to its activities

in the KIZ. A tax credit for a KIZ company shall not exceed

$100,000 annually. For the purposes of the keystone innovation

zone tax credit, the term "gross revenues" may include grants

received by the KIZ company from any source whatsoever.

(b) Application for tax credit.--A KIZ company may file an

application for a tax credit with the department. An application

under this subsection must be filed by September 15 of each year

for the prior taxable year, beginning September 15, 2006. The

application must be submitted on a form required by the

department and must be accompanied by a certification from the

KIZ coordinator that the KIZ company falls within a targeted

industry segment identified in the strategic plan adopted by the

KIZ partnership. The department shall review the application

and, upon being satisfied that all requirements have been met,

the department shall issue a tax credit certificate to the KIZ

company. All certificates shall be awarded by December 15 of

each year.

(1) The total amount of tax credits approved by the

department shall not exceed $15,000,000 for any one taxable

year.

(2) If $15,000,000 of the tax credits are not approved

for any one taxable year, the unused portion shall not be

available for use in future taxable years.

(3) If the total amount of tax credits applied for by

all taxpayers for any one taxable year exceeds $15,000,000,

then the tax credit to be received by each applicant shall be

determined as follows:

(i) Divide:

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(A) the eligible tax credit applied for by the

applicant; by

(B) the total of all eligible tax credits

applied for by all applicants.

(ii) Multiply:

(A) the quotient under subparagraph (i); by

(B) $15,000,000.

(d) Application of tax credit and election.--A tax credit

approved under this section must be first applied against the

KIZ company's tax liability under Article III, IV or VI, for the

taxable year during which the tax credit is approved. If the

amount of tax liability owed by the KIZ company is less than the

amount of the tax credit, the KIZ company may elect to carry

forward the amount of the remaining tax credit for a period not

to exceed four additional taxable years and to apply the credit

against tax liability incurred during those tax years; or the

KIZ company may elect to sell or assign a portion of the tax

credit in accordance with the provisions of subsection (f). A

KIZ company may not carry back or obtain a refund of an unused

keystone innovation zone tax credit.

(e) Pennsylvania S corporation shareholder pass-through.--

(1) If a Pennsylvania S corporation does not have an

eligible tax liability against which the tax credit may be

applied, a shareholder of the Pennsylvania S corporation is

entitled to a tax credit equal to the product of:

(i) the tax credit determined for the Pennsylvania S

corporation for the taxable year; and

(ii) the percentage of the Pennsylvania S

corporation's distributive income to which the

shareholder is entitled.

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(2) The credit provided under paragraph (1) is in

addition to any tax credit to which a shareholder of the

Pennsylvania S corporation is otherwise entitled. However, a

Pennsylvania S corporation and a shareholder of the

Pennsylvania S corporation may not claim a tax credit under

this section for the same activity.

(f) Sale or assignment of tax credit.--

(1) Upon application to and approval by the department,

a KIZ company which has been awarded a tax credit may sell or

assign, in whole or in part, the tax credit granted to the

KIZ company. The application must be on the form required by

the department and must include or demonstrate all of the

following:

(i) The applicant's name and address.

(ii) A copy of the tax credit certificate previously

issued by the department.

(iii) A statement as to whether any part of the tax

credit has been applied to tax liability of the applicant

and the amount so applied.

(iv) Any other information required by the

department.

(2) The department shall review the application and,

upon being satisfied that all requirements have been met, the

department may approve the application and shall notify the

Department of Revenue.

(g) Use of sold or assigned tax credit.--The purchaser or

assignee of all or a portion of a keystone innovation zone tax

credit under this section shall claim the credit in the taxable

year in which the purchase or assignment is made. The purchaser

or assignee of a tax credit may use the tax credit against any

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tax liability of the purchaser or assignee under Article III,

IV, VI, VII, VIII, IX or XV. The amount of the tax credit used

may not exceed 75% of the purchaser's or assignee's tax

liability for the taxable year. The purchaser or assignee may

not carry over, carry back, obtain a refund of or assign the

keystone innovation zone tax credit. The purchaser or assignee

shall notify the department and the Department of Revenue of the

seller or assignor of the keystone innovation zone tax credit in

compliance with procedures specified by the department.

Section 1907-F. Guidelines.

Before any keystone innovation zone is approved by the

department, the department shall approve written guidelines for

the program and shall provide a copy of the guidelines to the

Majority Leader and Minority Leader of the Senate, the Majority

Leader and Minority Leader of the House of Representatives, the

chairman and minority chairman of the Appropriations Committee

of the Senate and the chairman and minority chairman of the

Appropriations Committee of the House of Representatives.

Section 1908-F. Annual report.

The department shall submit an annual report to the Secretary

of the Senate and the Chief Clerk of the House of

Representatives indicating the effectiveness of the keystone

innovation zone tax credit provided by this article by December

31 of each year, beginning December 31, 2007. Notwithstanding

any law providing for the confidentiality of tax records, the

report shall include the names of all taxpayers awarded the

credits, all taxpayers utilizing the credits, the amount of

credits approved and utilized by each taxpayer and the locations

of the KIZ companies awarded the credits. The report shall be a

public document.

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Section 44. Section 2010 of the act, amended December 23,

2003 (P.L.250, No.46), is amended to read:

Section 2010. Limited Tax Credits.--(a) The General

Assembly of the Commonwealth, conscious of the financial

pressures facing small brewers in Pennsylvania and the attendant

risk of business failure and loss of employment opportunity,

declares it public policy that renewal and improvement of small

brewers be encouraged and assisted by a limited tax subsidy to

be granted during the period set forth in this section.

(b) As used in this section:

"Amounts paid." The phrase means (i) amounts actually paid,

or (ii) at the taxpayer's election, amounts promised to be paid

under firm purchase contracts actually executed during any

calendar year falling within the effective period of this

section: Provided, however, That there shall be no duplication

of "amounts paid" under this definition.

"Effective period." The period from January 1, 1974, to

December 31, 2008, and the period after June 30, 2017,

inclusive.

"Qualifying capital expenditures." Amounts paid by a

taxpayer during the effective period of this section for the

purchase of items of plant, machinery or equipment for use by

the taxpayer within this Commonwealth in the manufacture and

sale of malt or brewed beverages: Provided, however, That the

total amount of qualifying capital expenditures made by a

taxpayer within a single calendar year shall not exceed two

hundred thousand dollars ($200,000).

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

Pennsylvania where not otherwise qualified.

"Taxpayer." A manufacturer of malt or brewed beverages

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claiming a tax credit or credits under this section [and having

an annual production of malt or brewed beverages that does not

exceed one million five hundred thousand (1,500,000) barrels].

calendar year to a taxpayer, as hereinafter provided, not to

exceed in total amount the amount of qualifying capital

expenditures made by the taxpayer and certified by the

secretary.

(d) A taxpayer desiring to claim a tax credit or credits

under this section shall, within one year of the date of the

original purchase of the qualifying capital expenditures, in

accordance with regulations promulgated by the secretary, report

annually to the secretary the nature, amounts and dates of

qualifying capital expenditures made by him and such other

information as the secretary shall require. If satisfied as to

the correctness of such a report, the secretary shall issue to

the taxpayer a certificate establishing the amount of qualifying

capital expenditures made by the taxpayer and included within

said report. The taxpayer shall also provide to the secretary

the number of employes, total production of malt or brewed

beverages and the amount of capital expenditures made by the

taxpayer at each location operated by the taxpayer or a parent

corporation, subsidiary, joint venture or affiliate. Also, the

taxpayer shall notify the secretary of any contract for

production held with another manufacturer. The secretary shall

file a report annually with the Chief Clerk of the House of

Representatives and with the Secretary of the Senate outlining

the employment, production, expenditures and tax credits

authorized under this section.

(e) Upon receipt from a taxpayer of a certificate from the

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secretary issued under subsection (c), the Secretary of Revenue

shall grant a tax credit or credits in the amount certified

against any tax due under this article in the calendar year in

which the expenditures were incurred or against any tax becoming

due from the taxpayer under this article in the following three

calendar years. No credit shall be allowed against any tax due

for any taxable period ending after December 31, 2008, and

beginning before July 1, 2017.

(f) The total amount of tax credits granted under this

section shall not exceed five million dollars ($5,000,000) in

any fiscal year.

(g) If the total amount of tax credits granted for all

taxpayers exceeds the limitation on the amount of tax credits

under this section in a fiscal year, the tax credit to be

received by each applicant shall be determined as follows:

(1) Divide:

(i) the tax credit granted for the taxpayer; by

(ii) the total of all tax credits granted for all taxpayers.

(2) Multiply:

(i) the amount under subsection (f); by

(ii) the quotient under paragraph (1).

(3) The algebraic form of the calculation under this

subsection is:

Taxpayer's tax credit = amount allocated for those tax

credits X (tax credit granted to the taxpayer/total of all tax

credits granted to all taxpayers).

Section 45. The definition of "members of the same family"

in section 2102 of the act, added July 2, 2012 (P.L.751, No.85),

is amended to read:

Section 2102. Definitions.--The following words, terms and

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phrases, when used in this article, shall have the meanings

ascribed to them in this section, except where the context

clearly indicates a different meaning:

* * *

"Members of the same family." Any individual, such

individual's brothers and sisters, the brothers and sisters of

such individual's parents and grandparents, the ancestors and

lineal descendents of any of the foregoing, a spouse of any of

the foregoing and the estate of any of the foregoing.

Individuals related by the half blood or legal adoption shall be

treated as if they were related by the whole blood. For a

transfer made by a surviving spouse, the term shall include any

individual considered to be a member of the same family of the

decedent spouse.

Section 46. Section 2111(s), (s.1) and (t) of the act, added

July 2, 2012 (P.L.751, No.85) and July 9, 2013 (P.L.270, No.52),

are amended to read:

Section 2111. Transfers Not Subject to Tax.--* * *

(s) A transfer of real estate devoted to the business of

agriculture [between] to or for the benefit of members of the

same family, provided that after the transfer the real estate

continues to be devoted to the business of agriculture for a

period of seven years beyond the transferor's date of death

[and], the real estate derives a yearly gross income of at least

two thousand dollars ($2,000) and the real estate is reported on

a timely filed inheritance tax return, provided that:

(1) Any tract of land under this article which is no longer

devoted to the business of agriculture within seven years beyond

the transferor's date of death or does not derive a yearly gross

income of at least two thousand dollars ($2,000) shall be

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subject to inheritance tax due the Commonwealth under section

2107, in the amount that would have been paid or payable on the

basis of valuation authorized under section 2121 for nonexempt

transfers of property, plus interest thereon accruing as of the

transferor's date of death, at the rate established in section

2143.

(2) Any tax imposed under section 2107 shall be a lien in

favor of the Commonwealth upon the property no longer being

devoted to [agricultural use, collectible in the manner provided

for by law for the collection of delinquent real estate taxes,]

the business of agriculture or which does not derive a yearly

gross income of at least two thousand dollars ($2,000), as well

as the personal obligation of the owner of the property at the

time of the [change of use.] event causing the property to fail

to qualify for exemption and all beneficiaries of any trust that

is an owner of the property. Liability for the tax shall be

joint and several.

(3) Every owner of real estate exempt under this subsection

shall certify to the department on an annual basis that the land

qualifies for this exemption and shall notify the department

within thirty days of any transaction or occurrence causing the

real estate to fail to qualify for the exemption. Each year the

department shall inform all owners of their obligation to

provide an annual certification under this subclause. This

certification and notification shall be completed in the form

and manner as provided by the department.

(s.1) A transfer of an agricultural commodity, agricultural

conservation easement, agricultural reserve, agricultural use

property or a forest reserve, as those terms are defined in

section 2122(a), to or for the benefit of lineal descendants or

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siblings is exempt from inheritance tax, provided the foregoing

property is reported on a timely filed inheritance tax return.

(t) A qualified family-owned business. The following shall

apply:

(1) A transfer of a qualified family-owned business interest

to [one or more qualified transferees] or for the benefit of

members of the same family is exempt from inheritance tax if the

qualified family-owned business interest:

(i) continues to be owned by [a qualified transferee]

members of the same family or a trust whose beneficiaries are

comprised solely of members of the same family for a minimum of

seven years after the decedent's date of death; and

(ii) is reported on a timely filed inheritance tax return.

(2) A qualified family-owned business interest that was

exempted from inheritance tax under this subsection that is no

longer owned by [a qualified transferee] members of the same

family or a trust whose beneficiaries are comprised solely of

members of the same family at any time within seven years after

the decedent's date of death shall be subject to inheritance tax

due the Commonwealth under section 2107, in an amount equal to

the inheritance tax that would have been paid or payable on the

value of the qualified family-owned business interest using the

valuation authorized under section 2121 for nonexempt transfers

of property. Interest shall accrue from the payment date

established under section 2142 at the rate established under

section 2143.

(2.1) The exemption under this subsection shall not apply to

property transferred by the decedent into the qualified family-

owned business within one year of the death of the decedent

unless the property was transferred for a legitimate business

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purpose.

(3) Inheritance tax due under section 2107 as a result of

disqualification under paragraphs (2) or (4), plus interest on

the inheritance tax, shall be a lien in favor of the

Commonwealth on the real and personal property of the owner of

the qualified family-owned business interest at the time of the

transaction or occurrence that disqualified the qualified

family-owned business interest from the exemption provided under

this subsection. The inheritance tax due and interest shall be

[collectible in the manner provided for by law for the

collection of delinquent taxes and shall be] the personal

obligation of the owner of the qualified family-owned business

interest at the time of the transaction or occurrence that

disqualified the qualified family-owned business interest from

the exemption provided under this subsection[.] and all

beneficiaries of any trust that is an owner of the qualified

family-owned business interest. Liability for the tax shall be

joint and several. The lien shall remain until the inheritance

tax and accrued interest are paid in full.

(4) Each owner of a qualified family-owned business interest

exempted from inheritance tax under this subsection shall

certify to the department, on an annual basis, for seven years

after the decedent's date of death, that the qualified family-

owned business interest continues to be owned by [a qualified

transferee] members of the same family or a trust whose

beneficiaries are comprised solely of members of the same family

and shall notify the department within thirty days of any

transaction or occurrence causing the qualified family-owned

business interest to fail to qualify for the exemption. Each

year, the department shall inform all owners of a qualified

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family-owned business interest exempted from inheritance tax

under this subsection of their obligation to provide an annual

certification under this paragraph. The certification and

notification shall be completed in the form and manner as

provided by the department. An owner's failure to comply with

the certification or notification requirements shall result in

the loss of the exemption, and the qualified family-owned

business interest shall be subject to inheritance tax due the

Commonwealth under section 2107, in an amount equal to the

inheritance tax that would have been paid or payable on the

value of the qualified family-owned business interest using the

valuation authorized under section 2121 for nonexempt transfers

of property. Interest shall accrue from the payment date

established in section 2142 at the rate established in section

2143.

(5) For purposes of this subsection, [the following terms

shall have the meanings given to them in this paragraph:

"Qualified family-owned business interest." As follows:] the

term "qualified family-owned business interest" shall be as

follows:

(i) an interest as a proprietor in a trade or business

carried on as a proprietorship, if the proprietorship has fewer

than fifty full-time equivalent employees as of the date of the

decedent's death, the proprietorship has a net book value of

assets totaling less than five million dollars ($5,000,000) as

of the date of the decedent's death and has been in existence

for five years prior to the date of the decedent's death; or

(ii) an interest in an entity carrying on a trade or

business, if:

(A) the entity has fewer than fifty full-time equivalent

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employees as of the date of the decedent's death;

(B) the entity has a net book value of assets totaling less

than five million dollars ($5,000,000) as of the date of the

decedent's death;

wholly owned by the decedent [or], by the decedent and members

of the [decedent's family that meet the definition of a

qualified transferee] same family, by a trust whose

beneficiaries are comprised solely of members of the same family

or by an entity that is owned solely by members of the same

family;

(D) the entity is engaged in a trade or business the

principal purpose of which is not the management of investments

or income-producing assets owned by the entity; and

(E) the entity has been in existence for five years prior to

the decedent's date of death.

["Qualified transferee." A decedent's:

(i) husband or wife;

(ii) lineal descendants;

(iii) siblings and the sibling's lineal descendants; and

(iv) ancestors and the ancestor's siblings.]

Section 47. Section 2130 of the act, amended July 9, 2013

(P.L.270, No.52), is amended to read:

Section 2130. Deductions Not Allowed.--The following are not

deductible:

(2) Claims of a former spouse, or others, under an agreement

between the former spouse and the decedent, insofar as they

arise in consideration of a relinquishment or promised

relinquishment of marital or support rights.

(3) Litigation expenses of beneficiaries.

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(4) Indebtedness secured by real property or tangible

personal property, all of which has its situs outside of this

Commonwealth, except to the extent the indebtedness exceeds the

value of the property.

(5) Expenses, debts, obligations and liabilities incurred in

connection with a qualified family-owned business interest

exempted from inheritance under section 2111(t) and any property

exempted from inheritance tax under section 2111(s) or (s.1).

Section 47.1. The act is amended by adding an article to

read:

ARTICLE XXV

TABLE GAME TAXES

Section 2501. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Certificate holder." As defined in 4 Pa.C.S. § 1103

(relating to definitions).

"Gross table game revenue." As defined in 4 Pa.C.S. § 1103.

"Table game." As defined in 4 Pa.C.S. § 1103.

Section 2502. Table game taxes.

Commencing August 1, 2016, in addition to the tax payable

under 4 Pa.C.S. § 13A62(a)(1) (relating to table game taxes),

each certificate holder shall report to the Department of

Revenue and pay from its daily gross table game revenue an

additional tax of 2% of its daily gross table game revenue. The

additional tax shall be subject to all provisions of 4 Pa.C.S.

Ch. 13A (relating to table games) relating to the payment of

taxes by a certificate holder in the same manner as the tax

payable under 4 Pa.C.S. § 13A62(a)(1) (relating to table game

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taxes).

Section 2503. Expiration.

(a) Expiration.--This article shall expire June 30, 2019.

(b) Tax not applicable.--Notwithstanding any law to the

contrary, the tax imposed by 4 Pa.C.S. § 13A62(a)(3) (relating

to table game taxes) shall not apply for the period from the

effective date of this section until after the expiration date

in subsection (a).

Section 47.2. Section 2703(a) of the act is amended by

adding a paragraph to read:

Section 2703. Petition procedure.

(a) Content of petition.--

* * *

(2.1) A petition for review of the denial of an amended

report under section 406.1 shall state:

(i) The tax type and tax period included within the

petition.

(ii) The reasons why the tax stated in the amended

report should be accepted.

* * *

Section 48. Article XXIX-D heading of the act, added October

9, 2009 (P.L.451, No.48), is amended to read:

ARTICLE XXIX-D

[(RESERVED)]

COMPUTER DATA CENTER EQUIPMENT

INCENTIVE PROGRAM

Section 49. The act is amended by adding sections to read:

Section 2901-D. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

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context clearly indicates otherwise:

"Computer data center." All or part of a facility that may

be composed of one or more businesses, owners or tenants, that

is or will be predominantly used to house working servers or

similar data storage systems and that may have uninterruptible

energy supply or generator backup power, or both, cooling

systems, towers and other temperature control infrastructure.

"Computer data center equipment." Equipment that is used to

outfit, operate or benefit a computer data center and component

parts, installations, refreshments, replacements and upgrades to

the equipment, whether any of the equipment is affixed to or

incorporated into real property, including:

(1) All equipment necessary for the transformation,

generation, distribution or management of electricity that is

required to operate computer servers or similar data storage

equipment, including generators, uninterruptible energy

supplies, conduit, gaseous fuel piping, cabling, duct banks,

switches, switchboards, batteries and testing equipment.

(2) All equipment necessary to cool and maintain a

controlled environment for the operation of the computer

servers or data storage systems and other components of the

computer data center, including mechanical equipment,

refrigerant piping, gaseous fuel piping, adiabatic and free

cooling systems, cooling towers, water softeners, air

handling units, indoor direct exchange units, fans, ducting

and filters.

(3) All water conservation systems, including facilities

or mechanisms that are designed to collect, conserve and

reuse water.

(4) All software, including, but not limited to,

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enabling software and licensing agreements, computer servers

or similar data storage equipment, chassis, networking

equipment, switches, racks, cabling, trays and conduit.

(5) All monitoring equipment and security systems.

(6) Modular data centers and preassembled components of

any item described in this definition, including components

used in the manufacturing of modular data centers.

(7) Other tangible personal property that is essential

to the operations of a computer data center.

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

"Facility." One or more parcels of land in this Commonwealth

and any structures and personal property contained on the land.

"New investment." Construction, expansion or build out of

data center space at either a new or an existing computer data

center on or after January 1, 2014, and the purchase and

installation of computer data center equipment, except for items

described under paragraph (4) of the definition of "computer

data center equipment."

"Owner or operator." Includes a single entity, multiple

entities or affiliated entities.

"Qualification period." As follows:

(1) With respect to the owner or operator of a computer

data center certified under this article, a period of time

beginning on the date of certification of the computer data

center and expiring at the end of the fifteenth full calendar

year following the calendar year in which the owner or

operator filed an application for certification.

(2) With respect to a qualified tenant of the owner or

operator of a computer data center certified under this

article, a period of time beginning on the date that the

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qualified tenant enters into an agreement concerning the use

or occupancy of the computer data center and expiring at the

earlier of the expiration of the term of the agreement or the

end of the 10th full calendar year following the calendar

year in which the qualified tenant enters into the agreement.

"Qualified tenant." An entity that contracts with the owner

or operator of a computer data center that is certified pursuant

to this article to use or occupy part of the computer data

center for at least 100 kilowatts per month for two or more

years.

"Tax refund." The tax refund provided for under this

article.

"Tenant." An entity that contracts with the owner or

operator of a computer data center to use or occupy part of the

computer data center.

Section 2902-D. Sales and use tax refund.

(a) Application.--Beginning July 1, 2017, an owner or

operator or qualified tenant of a computer data center certified

under this article may apply for a tax refund of taxes paid

under Article II upon the sale at retail or use of computer data

center equipment for installation in a computer data center,

purchased by:

(1) An owner or operator of a computer data center

certified under this article.

(2) A qualified tenant certified under this article.

(b) Applicability.--Taxes paid under Article II during the

qualification period shall be eligible for a refund under this

article.

refund:

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(1) Computer data center equipment used by the computer

data center to:

(i) generate electricity for resale purposes to a

power utility, except for sales incidental to the primary

sale to computer data centers and which qualify under

subparagraph (ii); or

(ii) generate, provide or sell more than 5% of its

electricity outside of the computer data center.

(2) (Reserved).

Section 2903-D. Application for certification.

To be considered for a certification, an owner or operator of

a computer data center shall submit to the department an

application on a form prescribed by the department that includes

the following:

(1) The owner's or operator's name, address and

telephone number.

(2) The address of the site where the facility is or

will be located, including, if applicable, information

sufficient to identify the specific portion or portions of

the facility comprising the computer data center.

(3) If the computer data center is to qualify under

section 2906-D(1), the following information:

(i) The anticipated investment associated with the

computer data center for which the certification is being

sought.

(ii) An affirmation, signed by an authorized

executive representing the owner or operator, that the

computer data center is expected to satisfy the

certification requirements prescribed in section 2906-

D(1).

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(4) If the computer data center is to qualify under

section 2906-D(2), an affirmation, signed by an authorized

executive representing the owner or operator, that the

computer data center has satisfied, or will satisfy, the

certification requirements prescribed in section 2906-D(2).

(5) The department shall begin accepting applications no

later than 90 days after the effective date of this section.

Section 2904-D. Review of application.

(a) General rule.--Within 60 days after receiving a complete

and correct application, the department shall review the

application and either issue a written certification that the

computer data center qualifies for the certification or provide

written reasons for its denial.

(b) Deemed approval.--Failure of the department to approve

or deny an application within 60 days after the date the owner

or operator of a computer data center submits the application to

the department constitutes certification of the computer data

center, and the department shall issue written certification to

the owner or operator within 14 days. The department may not

certify any computer data center after December 31, 2029.

Section 2905-D. Separation of facilities.

(a) Separate certification.--An owner or operator of a

computer data center may separate a facility into one or more

computer data centers, which may each receive a separate

certification, if each computer data center individually meets

the requirements prescribed in section 2906-D.

(b) Limitation.--A portion of a facility or an article of

computer data equipment shall not be deemed to be a part of more

than one computer data center.

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more parcels, buildings or condominiums in a facility into a

single computer data center if, in the aggregate, the parcels,

buildings and condominiums meet the requirements of this

article.

Section 2906-D. Eligibility requirements.

A computer data center must meet one of the following

requirements, after taking into account the combined investments

made and annual compensation paid by the owner or operator of

the computer data center or the qualified tenant:

(1) On or before the fourth anniversary of

certification, the computer data center creates a minimum

investment of:

(i) At least $25,000,000 of new investment if the

computer data center is located in a county with a

population of 250,000 or fewer individuals; or

(ii) At least $50,000,000 of new investment if the

computer data center is located in a county with a

population of more than 250,000 individuals.

(2) One or more taxpayers operating or occupying a

computer data center, in the aggregate, pay annual

compensation of at least $1,000,000 to employees at the

certified computer data center site for each year of the

certification after the fourth anniversary of certification.

Section 2907-D. Notification.

(a) Requirements satisfied.--On or before the fourth

anniversary of the certification of a computer data center, the

owner or operator of a computer data center shall notify the

department in writing whether the computer data center for which

the certification is requested has satisfied the requirements

prescribed in section 2906-D.

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(b) Records.--Until a computer data center satisfies the

requirements prescribed in section 2906-D, the owner, operator

and qualified tenants shall maintain detailed records of all

investment created by the computer data center, including costs

of buildings and computer data center equipment, and all tax

refunds directly received by the owner, operator or qualified

tenant.

Section 2908-D. Revocation of certification.

(a) Revocation.--If the department determines that the

requirements of section 2906-D have not been satisfied, the

department may revoke the certification of a computer data

center.

(b) Appeal.--The owner or operator of the computer data

center may appeal the revocation. Appeals filed under this

section shall be governed by Article II.

section, the qualification period of any owner, operator or

qualified tenant of the computer data center expires, and the

department may recapture from the owner, operator or qualified

tenant all or part of the tax refund provided directly to the

owner or operator or qualified tenant. The department may give

special consideration or allow a temporary exemption from

recapture of the tax refund if there is extraordinary hardship

due to factors beyond the control of the owner or operator or

qualified tenant.

Section 2909-D. Guidelines.

The department shall publish guidelines and prescribe forms

and procedures as necessary for the purposes of this article.

Section 2910-D. Confidential information.

Proprietary business information contained in the application

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form described in section 2903-D and the written notice

described in section 2907-D, as well as information concerning

the identity of a qualified tenant, are confidential and may not

be disclosed to the public. The department may disclose the name

of a computer data center that has been certified under this

article.

Section 2911-D. List of tenants.

An owner or operator of a computer data center shall provide,

to the extent permissible under Federal law, the department with

a list of qualified tenants, including the commencement and

expiration dates of each qualified tenant's agreement to use or

occupy part of the computer data center. The list shall be

provided to the department annually, upon request by the

department.

Section 2912-D. Sale or transfer.

Except as provided in section 2908-D, a computer data center

retains its certification regardless of a transfer, sale or

other disposition, directly or indirectly, of the computer data

center.

Section 2913-D. Application.

(a) General rule.--An owner, operator or qualified tenant

may apply for a tax refund under this article on or before July

30, 2017, and each July 30 thereafter.

(b) Notification.--No later than September 30, 2017, and

each September 30 thereafter, the department shall notify each

applicant of the amount of tax refund approved by the

department.

Section 2914-D. Limitations.

(a) Total.--The total amount of State tax refunds approved

by the department under this article shall not exceed $5,000,000

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in any fiscal year.

(b) Allocation.-- If the total amount of tax refunds approved

for all applicants exceeds the limitation on the amount of tax

refunds in subsection (a) in a fiscal year, the tax refund to be

received by each applicant shall be determined as follows:

(1) Divide:

(i) the tax refund approved for the applicant; by

(ii) the total of all tax refunds approved for all

applicants.

(2) Multiply:

(i) the amount under subsection (a); by

(ii) the quotient under paragraph (1).

(3) The algebraic form of the calculation under this

subsection is:

Taxpayer's tax refund = amount allocated for those

tax refunds X (tax refund approved for the

applicant/total of all tax refunds approved for all

applicants).

Section 49.1. The act is amended by adding an article to

read:

ARTICLE XXIX-G

TAX AMNESTY PROGRAM FOR FISCAL YEAR 2016-2017

Section 2901-G. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Amnesty period." The time period of 60 consecutive days

established by the Governor ending no later than June 30, 2017.

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

"Eligible tax." Any tax administered by the Department of

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Revenue delinquent as of December 31, 2015. The term includes

any interest, penalty or fees on an eligible tax. For an unknown

liability, the term shall only include taxes due within five

years prior to December 31, 2015. For purposes of taxes

collected under the International Fuel Tax Agreement, the term

shall apply only to taxes, interest and penalties owed to the

Commonwealth, not to other states or Canadian provinces.

"Program." The tax amnesty program established under section

2902-G as provided for in this article.

"Taxpayer." Any person, association, fiduciary, partnership,

corporation or other entity required to pay or collect any of

the eligible taxes. The term shall not include a taxpayer who,

prior to the amnesty period, has received notice that the

taxpayer is the subject of a criminal investigation for an

alleged violation of any law imposing an eligible tax or who,

prior to the amnesty period, has been named as a defendant in a

criminal complaint alleging a violation of any law imposing an

eligible tax or is a defendant in a pending criminal action for

an alleged violation of any law imposing an eligible tax.

"Unknown liability." A liability for an eligible tax for

which either:

(1) no return or report has been filed, no payment has

been made and the taxpayer has not been contacted by the

department concerning the unfiled returns or reports or

unpaid tax; or

(2) a return or report has been filed, the tax was

underreported and the taxpayer has not been contacted by the

department concerning the underreported tax and is not

already under audit when the amnesty period begins.

Section 2902-G . Establishment of program.

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(a) General rule.--Except as provided in section 2902-F(c),

a tax amnesty program is established and shall be administered

by the department.

(b) Applicability.--Except as provided in section 2902-F(c),

the program shall apply to a taxpayer who is delinquent on

payment of a liability for an eligible tax as of December 31,

2015, including a liability for returns not filed, liabilities

according to records of the department as of December 31, 2015,

liabilities not reported, underreported or not established, but

delinquent as of December 31, 2015.

participates in the program shall not be eligible to participate

in a future tax amnesty program.

(d) Deferred payment plan agreement.--Existing deferred

payment plan agreements between a taxpayer and the department

where the agreement applies to a tax liability for which amnesty

is sought by the taxpayer for amounts remaining on the tax

liability, the taxpayer, as a condition of receiving amnesty,

shall pay the liability, notwithstanding terms of the agreement

to the contrary, in full during the amnesty period.

Section 2903-G. Required payment.

(a) Taxpayer requirements.--Subject to section 2904-G, all

taxpayers who participate in the program shall comply with all

of the following:

(1) During the amnesty period, file a tax amnesty return

in such form and containing such information as the

department shall require. A tax amnesty return shall be

considered to be timely filed if it is postmarked during the

amnesty period or timely electronically or otherwise filed.

(2) During the amnesty period, make payment of all taxes

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and one-half of the interest due to the Commonwealth in

accordance with the tax amnesty return that is filed. The

taxpayer shall not be required to pay any penalty or fees

applicable to an eligible tax.

(3) File complete tax returns for all required years for

which the taxpayer previously has not filed a tax return and

file complete amended returns for all required years for

which the taxpayer underreported eligible tax liability.

(b) Prohibitions.--

(1) The department may not collect the penalties,

interest or fees waived under subsection (a)(2). Except as

otherwise provided in this article, the department shall not

pursue administrative or judicial proceeding against a

taxpayer with respect to an eligible tax that is disclosed on

a tax amnesty return.

(2) A taxpayer with unknown liabilities reported and

paid under the program and who complies with all other

requirements of this article shall not be liable for any

taxes of the same type due prior to January 1, 2011. A

taxpayer shall not be owed a refund under this article.

Section 2904-G. Amnesty contingent on continued compliance.

Notwithstanding any other provision of this article, the

department may assess and collect from a taxpayer all penalties

and interest waived through the program if, within two years

after the end of the program, either of the following occurs:

(1) the taxpayer granted amnesty under this article

becomes delinquent for three consecutive periods in payment

of taxes due or filing of returns required on a semimonthly,

monthly, quarterly or other basis and the taxpayer has not

contested the tax liability through a timely valid

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administrative or judicial appeal; or

(2) the taxpayer granted amnesty under this article

becomes delinquent and is eight or more months late in

payment of taxes due or filing of returns on an annual basis

and the taxpayer has not contested the liability through a

timely valid administrative or judicial appeal.

Section 2905-G. Limitation of deficiency assessment.

If, subsequent to the amnesty period, the department issues a

deficiency assessment with respect to a tax amnesty return, the

department may impose penalties and pursue a criminal action

only with respect to the difference between the amount shown on

that tax amnesty return and the current amount of tax.

Section 2906-G. Overpayment of tax.

Notwithstanding any other provisions of this article or any

other act, if an overpayment of eligible tax is refunded or

credited within 180 days after the tax amnesty return is filed

or the eligible tax is paid, whichever is later, no interest

shall be allowed on the overpayment.

Section 2907-G. Previously paid interest and penalties.

No refund or credit shall be allowed for any interest or

penalty on eligible taxes paid to the department prior to the

amnesty period.

Section 2908-G. Proceedings relating to tax amnesty return

barred.

Participation in the program shall be conditioned upon the

taxpayer's agreement that the right to protest or pursue an

administrative or judicial proceeding with regard to tax amnesty

returns filed under the program or to claim any refund of money

paid under the program is barred.

Section 2909-G. Undisclosed liabilities.

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Nothing in this article shall be construed to prohibit the

department from instituting civil or criminal proceedings

against a taxpayer with respect to an amount of tax that is not

disclosed on the tax amnesty return or an amount disclosed on

the amnesty return that is not paid.

Section 2910-G. Duties of department.

(a) Guidelines.--The department shall develop guidelines to

implement the provisions of this article. The guidelines shall

be published in the Pennsylvania Bulletin within 60 days of the

effective date of this section and shall contain, but not be

limited to, the following information:

(1) An explanation of the program and the requirements

for eligibility for the program.

(2) The dates during which a tax amnesty return may be

filed.

(3) A specimen copy of the tax amnesty return.

(4) The amnesty revenue estimates required under section

2912-G(b).

(b) Publicity.--The department shall publicize the program

to maximize public awareness of and participation in the

program. The department shall coordinate to the highest degree

possible its publicity efforts and other actions taken to

implement this article.

General Assembly detailing program implementation. The reports

shall contain the following information:

(1) Within 30 days after the end of the amnesty period:

(i) A detailed breakdown of the department's

administrative costs in implementing the program.

(ii) The total dollar amount of revenue collected by

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the program.

(2) Within 180 days after the end of the amnesty period:

(i) The number of tax amnesty returns filed and a

breakdown of the number and dollar amount of revenue

raised for each tax by calendar year during which the tax

period ended. In addition, the gross revenues shall be

broken down in the following categories:

(A) Amounts represented by assessments

receivable established by the department on or before

the first day of the amnesty period.

(B) All other amounts.

(ii) The total dollar amount of penalties and

interest waived under the program.

(iii) The demographic characteristics of tax amnesty

participants, including North American Industry

Classification System codes of participants, type of

taxpayer, consisting of individual, partnership,

corporation or other entity, size of tax liability and

geographical location.

(d) Notification.--The department shall notify in writing

all known tax delinquents at the taxpayers' last known valid

addresses of the existence of the program. The sole purpose of

the letter sent by the department to taxpayers shall be

notification of the program.

Section 2911-G. Method of payment.

All tax payments under the program shall be made by certified

check, money order, electronic transfer, credit card or other

financial instrument acceptable to the department.

Section 2912-G. Use of revenue.

(a) Restricted revenue account.--Except as set forth in

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subsection (c), all revenue generated by this article shall be

deposited into a restricted revenue account in the General Fund.

Revenue from the restricted revenue account shall be distributed

as follows:

(1) All money from General Fund sources shall be

deposited in the General Fund no later than June 30, 2017,

less repayment of any costs for administration of the program

to the department.

(2) All revenue from Motor License Fund sources shall be

deposited in the Motor License Fund no later than June 30,

2017.

(3) All revenue from Liquid Fuels Tax Fund sources shall

be deposited in the Liquid Fuels Tax Fund no later than June

30, 2017.

(b) Revenue estimates.--

(1) The department shall submit, for publication in the

Pennsylvania Bulletin:

(i) a separate amnesty revenue estimate for revenue

generated under this article from the following sources:

(A) The General Fund.

(B) The Motor License Fund.

(ii) The methodology used to develop the estimate.

(2) All amnesty revenue estimates shall be submitted for

publication pursuant to section 2910-G(a)(4).

Section 2913-G. Additional penalty.

(a) General rule.--Subject to the limitations provided under

subsection (b), a penalty of 5% of the unpaid tax liability and

penalties and interest shall be levied against a taxpayer

subject to an eligible tax if the taxpayer failed to remit an

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eligible tax due or had an unreported or underreported liability

for an eligible tax on or after the first day following the end

of the amnesty period.

(b) Nonapplicability.--The penalty provided in this section

shall not apply to a taxpayer who:

(1) pays the liability in full or entered into a duly

approved and executed deferred payment plan on or before the

last day of the amnesty period; or

(2) has filed a timely and valid administrative or

judicial appeal contesting the liability on or before the

last day of the amnesty period.

section shall be in addition to all other penalties provided by

law.

Section 2914-G. Construction.

Except as expressly provided in this article, this article

shall not:

(1) be construed to relieve a person, corporation or

other entity from the filing of a return or from a tax,

penalty or interest imposed by the provisions of any law;

(2) affect or terminate a petition, investigation,

prosecution, legal or otherwise, or other proceeding pending

under the provisions of any such law; or

(3) prevent the commencement or further prosecution of a

proceeding by the proper authorities of the Commonwealth for

violation of any such law or for the assessment, settlement,

collection or recovery of tax, penalty or interest due to the

Commonwealth under any such law.

Section 2915-G. Suspension of inconsistent acts.

All acts or parts of acts inconsistent with the provisions of

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this article are suspended to the extent necessary to carry out

the provisions of this article.

Section 50. Repeals are as follows:

(1) The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate the amendment of the

following provisions of the act:

(i) Section 301(k) and (w).

(ii) Section 303(a)(7).

(iii) Section 312.

(iv) Section 316.

(v) Section 317.

(vi) Section 318.

(vii) Section 319.

(viii) Section 320.

(ix) Section 321.

(x) Section 325(a).

(xi) Section 352.2(a).

(2) Section 312 of the act of August 26, 1971 (P.L.351,

No.91), known as the State Lottery Law, is repealed insofar

as it is inconsistent with this act.

(3) The General Assembly declares that the repeal under

paragraph (4) is necessary to effectuate the addition of

Article XVIII-G of the act.

(4) The act of October 25, 2012 (P.L.1664, No.206),

known as the Promoting Employment Across Pennsylvania Act, is

repealed.

(5) The General Assembly declares that the repeal under

paragraph (6) is necessary to effectuate the addition of

Article XIX-F of the act.

(6) 12 Pa.C.S. Ch. 37 is repealed.

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(7) The General Assembly declares that the repeal under

paragraph (8) is necessary to effectuate the addition of

section 1296(c) of the act.

(8) 53 Pa.C.S. § 8722(k) is repealed.

Section 51. This act shall apply as follows:

(1) The amendment of section 227 of the act shall apply

to returns due on or after August 1, 2016.

(1.1) The amendment of sections 2102 and 2111(s) and

(s.1) of the act shall apply to inheritance tax imposed as to

a decedent whose date of death is after December 31, 2012.

(1.2) The amendment of section 1707-B of the act shall

apply retroactively to January 1, 2016.

(2) The amendment of section 2111(t) of the act shall

apply to inheritance tax imposed as to a decedent whose date

of death is after June 30, 2013.

(3) The following provisions shall apply retroactively

to January 1, 2014:

(i) The amendment of section 303(a.8) of the act.

(ii) The amendment or addition of section 701.1(b)

and (b.1) of the act.

(iii) The amendment of section 701.4(3)(xiii) of the

act.

(3.1) The amendment of section 403(a) of the act shall

apply to taxable years beginning after December 31, 2015.

(4) The amendment of sections 301(k)(5) and 303(a)(7) of

the act concerning lottery winnings shall apply retroactively

to January 1, 2016.

(5) The following provisions shall apply to taxable

years beginning after December 31, 2016:

(i) (Reserved).

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(ii) The amendment of the definitions of "doing

business in this Commonwealth" and "receipts" in section

701.5 of the act.

(iii) The amendment of sections 1702-D (renumbered

as section 1711-D of the act) and 1703-D (renumbered as

section 1712-D of the act) of the act.

(6) The addition of Subarticles C and D of Article XVII-

D of the act shall apply to fiscal years beginning after June

30, 2016.

(7) The amendment or addition of sections 1707-D(a)

(renumbered as section 1716-D of the act) and 1716.1-D of the

act shall apply to fiscal years beginning after June 30,

2017.

(8) The addition of sections 406.1 and 2703(a)(2.1) of

the act shall apply to amended reports filed after December

31, 2016.

(9) The amendment of section 1101(b.1), (c), (c.1), (e)

and (j) of the act shall apply to gross receipts received

after December 31, 2016.

(10) The addition of section 204(70) of the act shall

apply to the sale at retail or use of services occurring

after June 30, 2016.

(11) The amendment or addition of the following

provisions of the act shall apply to transfers at least 60

days following the effective date of this section:

(i) The definitions of "conservancy" and "veterans'

organization" in section 1101-C.

(ii) Section 1102-C.2.

(iii) Section 1102-C.3(18) and (24).

Section 52. Notwithstanding the provisions of the act of

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August 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as the

Sterling Act, and the act of December 31, 1965 (P.L.1257,

No.511), known as The Local Tax Enabling Act, the amendment or

addition of the following provisions of the act shall not

preempt any tax imposed by a unit of local government as of the

effective date of this section unless specifically provided for

in this act:

(1) Sections 201(k), (m) and (o), 204(13) and (70), 227

and 268(b) and (c).

(2) Article XII-A.

Section 53. The following shall apply:

(1) The inclusion of roll-your-own tobacco in the

addition of Article XII-A of the act requires the amendment

of the definition of "units sold" in section 3 of the act of

June 22, 2000 (P.L.394, No.54), known as the Tobacco

Settlement Agreement Act, and in section 102 of the act of

December 30, 2003 (P.L.441, No.64), known as the Tobacco

Product Manufacturer Directory Act.

(2) The Office of Attorney General shall attempt to

obtain the consent of the participating manufacturers under

the Master Settlement Agreement to the amendments specified

under paragraph (1). For the purposes of this paragraph, the

term "Master Settlement Agreement" shall mean the settlement

agreement and related documents entered into on November 23,

1998, by the Commonwealth and leading United States tobacco

product manufacturers and approved by the court in

Commonwealth v. Philip Morris, April Term, 1997, No.2443

(C.P. Philadelphia County), on January 13, 1999.

(3) If the consents under paragraph (2) are obtained,

the Office of Attorney General shall:

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(i) provide notice to the Secretary of Revenue; and

(ii) submit for publication in the Pennsylvania

Bulletin a notice of the consent.

(4) If the consents under paragraph (2) are not

obtained, the Office of Attorney General shall:

(i) notify the Secretary of Revenue; and

(ii) submit for publication in the Pennsylvania

Bulletin a notice of the refusal.

(5) The following provisions shall take effect 60 days

after the Office of Attorney General publishes the notice of

the consents under paragraph (3)(ii):

(i) The amendment of section 1215(g) of the act.

(ii) The addition of the following:

(A) The definition of "roll-your-own tobacco" in

section 1201-A of the act.

(B) Paragraph (2) of the definition of "tobacco

products" in section 1201-A of the act.

(D) Section 1216-A of the act.

Section 53.1. The addition of section 204(70) of the act may

not be used by the Department of Revenue or any party to an

audit, appeal or proceeding before the Department of Revenue to

determine the applicability of the tax imposed under section 202

prior to the effective date of section 204(70).

Section 54. This act shall take effect as follows:

(1) The following provisions shall take effect in 30

days:

(i) The addition of the definitions of "master list"

and "operating organization" in section 1902-B of the

act.

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(ii) The amendment or addition of section 1904-

B(a.1), (a.3), (b) and (h) of the act.

(iii) The addition of section 1904.1-B of the act.

(iv) The addition of section 1904.2-B of the act.

(v) The addition of section 1909-B of the act.

(2) The following provisions shall take effect in 60

days:

(i) The addition of section 204(70) of the act.

(ii) The addition of section 303(a.9) of the act.

(iii) The addition of Article XIX-E of the act.

(3) The following provisions shall take effect August 1,

2016:

(i) The amendment of section 201(m) of the act.

(ii) The amendment of sections 1206, 1206.1 and 1216

of the act.

(iii) The addition of section 2503 of the act.

(4) Except as set forth in section 53(5) of this act,

the addition of Article XII-A of the act shall take effect

October 1, 2016.

(5) Section 50(4) of this act shall take effect December

1, 2016.

(6) The amendment or addition of section 1101(b.1), (c),

(c.1), (e) and (j) of the act shall take effect January 1,

2017.

(7) The amendment of section 201(k)(8) and (o)(4)(B) of

the act shall take effect July 1, 2017.

(8) The remainder of this act shall take effect

immediately.

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