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PRINTER'S NO. 527
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
516
Session of
2017
INTRODUCED BY MENSCH, BARTOLOTTA, GREENLEAF, BROOKS, GORDNER,
VULAKOVICH, VOGEL, STEFANO, AUMENT, BOSCOLA AND MARTIN,
MARCH 16, 2017
REFERRED TO FINANCE, MARCH 16, 2017
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," establishing a career development tax credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding an article to
read:
ARTICLE XVII-G.2
CAREER DEVELOPMENT TAX CREDIT
Section 1701-G.2. Short title of article.
This article shall be known and may be cited as the Career
Development Tax Credit Act.
Section 1702-G.2. 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:
" Career development tax credit " or " tax credit. " The credit
provided under this article.
" Department. " The Department of Revenue of the Commonwealth.
" Nonqualified individual. "
(1) An individual who is one of the following:
(i) an officer of a business entity;
(ii) a member or shareholder owning more than 5% of
the voting power or value of all classes of stock of a
business entity; or
(iii) an individual who, for the preceding taxable
year:
(A) received compensation from an employer in
excess of the Federal limitation, after adjustment by
the Secretary of the United States Treasury for
inflation, set forth in section 414(q)(1)(B) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. ยง 414 (q)(1)(B)); or
(B) is in the group consisting of the top 20% of
all full-time employees of the employer with at least
three years of service when ranked on the basis of
compensation paid during the taxable year.
(2) A partner or self-employed individual.
(3) A physician.
(4) A veterinarian.
(5) An attorney.
(6) An executive.
" Nonqualified training expense. " All of the following:
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(1) Expenditures either reimbursed or subject to
reimbursement through any Federal or State training program.
(2) Federal, State or local grants or other payments to
provide training or retraining.
(3) Capital expenses.
(4) Equipment, materials and software used beyond the
training program.
(5) Expenses for out-of-State travel.
(6) Convention or conference expenses, unless directly
related to a qualified career development training program.
" Qualified career development training program. " A training
program that is certified by the Department of Labor and
Industry as meeting recognized industry standards, designed to
meet the special requirements of an employer, and conducted with
a commitment by the employer to continue to employ an individual
on successful completion of the training. The term does not
include the following:
(1) Any program in which 50% or more of the employee's
time is spent on activities other than those directly related
to the training program.
(2) An executive training program.
(3) A personal enrichment program.
(4) A general health program.
(5) A seminar or conference unless directly related to
the employee's job requirements.
" Qualified employee. " A Commonwealth resident who is
employed in this Commonwealth by a taxpayer and who averages at
least 30 hours of work per week at the time training commences
and for a period of 12 months following the employee's
completion of the qualified career development program. The term
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excludes an individual who is a nonqualified individual.
" Qualified tax liability. " The liability for taxes imposed
under Article III, IV or VI. The term includes the liability for
taxes imposed under Article III on a shareholder of a
Pennsylvania S corporation.
" Qualified training expense. " Wages paid to a qualified
employee during normal working hours while participating in a
qualified career development training program. The term includes
preskill and postskill assessment, direct costs of instructors,
instructional materials, instructional supplies, instructional
media, necessary training equipment, tuition reimbursement,
travel costs to and from class and other instructional
activities. The term excludes nonqualified training expense.
" Secretary. " The Secretary of Revenue of the Commonwealth.
" Taxpayer. " An entity that is engaged in the business of
manufacturing and subject to tax under Article III, IV or VI.
The term includes the shareholder of a Pennsylvania S
corporation that receives a career development tax credit or the
member of a limited liability company that receives a career
development tax credit.
Section 1703-G.2. Tax credit for qualified training expenses.
(a) General rule.--A taxpayer who incurs qualified training
expenses in a taxable year may apply for a career development
tax credit as provided in this article. By September 15, a
taxpayer must submit an application to the department for
qualified training expense incurred in the taxable year that
ended in the prior calendar year.
(b) Amount of tax credit.--A taxpayer that is qualified
under subsection (a) shall receive a career development tax
credit for the taxable year in the amount of 25% of the
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taxpayer's total qualified training expense for the taxable
year.
(c) Notification of approved tax credit.--By December 15 of
the calendar year following the close of the taxable year during
which the qualified training expense was incurred, the
department shall notify the taxpayer of the amount of the
taxpayer's career development tax credit approved by the
department.
Section 1704-G.2. Carryover, carryback, refund and assignment
of tax credit.
(a) General rule.--If the taxpayer cannot use the entire
amount of the career development tax credit for the taxable year
in which the career development 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 that the career
development tax credit is carried over to a succeeding taxable
year, it is to be reduced by the amount that was used as a
credit during the immediately preceding taxable year. The career
development 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) Taxable year in which tax credit applied.--A career
development tax credit approved by the department for qualified
training expenses 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 career development tax credit is applied against any
tax liability under subsection (a).
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(c) Limitation.--A taxpayer is not entitled to carry back or
obtain a refund of an unused career development tax credit.
Section 1705-G.2. Time limitations.
A taxpayer is not entitled to a career development tax credit
for qualified training expenses incurred in taxable years ending
after December 31, 2017.
Section 1706-G.2. Limitation on tax credits.
(a) General rule.--The total amount of career development
tax credits approved by the department shall not exceed
$20,000,000 in any fiscal year.
(b) Proration required.--If the total amount of career
development tax credits applied for by all taxpayers exceeds the
amount allocated for those credits, then the career development
tax credit to be received by each applicant shall be prorated by
the department among all applicants who have qualified for the
tax credit.
Section 1707-G.2. Pennsylvania S corporation shareholder pass-
through.
(a) General rule.--If a Pennsylvania S corporation does not
have an eligible tax liability against which the career
development tax credit may be applied, a shareholder of the
Pennsylvania S corporation is entitled to a tax credit equal to
the tax credit determined for the Pennsylvania S corporation for
the taxable year multiplied by the percentage of the
Pennsylvania S corporation's distributive income to which the
shareholder is entitled.
(b) Operation of tax credit.--The career development tax
credit provided under subsection (a) is in addition to any
career development tax credit to which a shareholder of a
Pennsylvania S corporation is otherwise entitled under this
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article. However, a Pennsylvania S corporation and a shareholder
of a Pennsylvania S corporation may not claim a tax credit for
the same qualified training expense.
Section 1708-G.2. Pennsylvania limited liability company member
pass-through.
(a) General rule.--If a limited liability company does not
have an eligible tax liability against which the career
development tax credit may be applied, a member of the limited
liability company is entitled to a tax credit equal to the tax
credit determined for the limited liability company for the
taxable year multiplied by the percentage of the limited
liability company's distributive income to which the member is
entitled.
(b) Operation of tax credit.--The career development tax
credit under subsection (a) is in addition to any career
development tax credit to which a member of a limited liability
company is otherwise entitled under this article. A limited
liability company and a member of a limited liability company
may not claim a tax credit for the same qualified training
expense.
Section 1709-G.2. Recapture of credit.
(a) General rule.--If an employee for whom a credit has been
awarded does not maintain continuous employment with the
taxpayer for a period of 12 months following the completion of
the qualified career development training program, the
department shall recapture any credit awarded to the taxpayer
for the qualified training expense of that employee.
(b) Nonapplicability.--This section shall not apply if the
employee:
(1) is deceased;
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(2) is disabled;
(3) voluntarily leaves employment; or
(4) is discharged for cause as certified by the
Department of Labor and Industry.
Section 1710-G.2. Report to General Assembly.
The secretary shall submit an annual report to the General
Assembly indicating the effectiveness of the career development
tax credit no later than March 15 following the year in which
the tax credits were approved. The report shall include the
names of all taxpayers utilizing the tax credit as of the date
of the report and the amount of tax credits approved and
utilized by each taxpayer. Notwithstanding any law providing for
the confidentiality of tax records, the information contained in
the report shall be public information. The report may also
include any recommendations for changes in the calculation or
administration of the tax credit.
Section 1711-G.2. Termination.
The department shall not approve a career development tax
credit for taxable years ending after December 31, 2017.
Section 1712-G.2. Regulations.
The secretary shall promulgate regulations necessary for the
implementation and administration of this article.
Section 2. This act shall apply to taxable years commencing
after December 31, 2014.
Section 3. This act shall take effect immediately.
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