PRINTER'S NO. 1681
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1137
Session of
2018
INTRODUCED BY SCAVELLO, YUDICHAK, BREWSTER, MENSCH AND BOSCOLA,
APRIL 23, 2018
REFERRED TO FINANCE, APRIL 23, 2018
AN ACT
Providing for the imposition of a Statewide personal income tax;
authorizing the imposition of a personal income tax or an
earned income tax by a school district subject to voter
approval; providing for school property tax exclusion; and
making repeals.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. Tax
Subchapter A. Education Tax
Section 301. Education tax.
Subchapter B. Taxation by School Districts
Section 311. Scope.
Section 312. Definitions.
Section 313. (Reserved).
Section 314. Preemption.
Section 315. General tax authorization.
Section 316. Referendum.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Section 317. Continuity of tax.
Section 318. Collections.
Section 319. Credits.
Section 320. Exemption and special provisions.
Section 321. Regulations.
Chapter 5. Procedure and Exclusion
Section 501. Administration and procedure.
Section 502. Exclusion of school property taxes.
Chapter 7. Funding Provisions
Section 701. Definitions.
Section 702. School District Funding Reserve Account.
Section 703. Sources and transfers.
Section 704. Standard disbursements to school districts.
Chapter 9. Miscellaneous Provisions
Section 901. Regulations.
Section 902. Severability.
Section 903. Repeals.
Section 904. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the School
Property Tax Exclusion Act.
Section 102. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account." The School District Funding Reserve Account
20180SB1137PN1681 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
established in section 702.
"Applicant." An individual making an application under
section 501.
"Department." The Department of Revenue of the Commonwealth.
"Fiscal year." The fiscal year of the Commonwealth beginning
on July 1 and ending on June 30 of the immediately following
calendar year.
"Governing body." The board of school directors of a school
district, except that the term shall mean the city council of a
city of the first class for purposes of the levy and collection
of any tax in a school district of the first class.
"Homestead property." A dwelling, which is owned and not
rented, and so much of the land surrounding it as is reasonably
necessary for the use of the dwelling as a home, occupied by an
applicant. The term includes, but is not limited to:
(1) Premises occupied by reason of ownership or lease in
a cooperative housing corporation.
(2) Mobile homes which are assessed as realty for local
property tax purposes and the land, if owned by the
applicant, upon which the mobile home is situated, and other
similar living accommodations.
(3) A part of a multidwelling or multipurpose building
and a part of the land upon which it is built.
(4) Premises occupied by reason of the applicant's
ownership of a dwelling located on land owned by a nonprofit
incorporated association of which the applicant is a member
if the applicant is required to pay a pro rata share of the
property taxes levied against the association's land.
(5) Premises occupied by a applicant if the applicant is
required by law to pay a property tax by reason of the
20180SB1137PN1681 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
applicant's ownership, including a possessory interest, in
the dwelling, the land or both. An owner includes a person in
possession under a contract of sale, deed of trust, life
estate, joint tenancy or tenancy in common or by reason of
statutes of descent and distribution.
"Local Tax Enabling Act." The act of December 31, 1965
(P.L.1257, No.511), known as The Local Tax Enabling Act.
"Public School Code of 1949." The act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949.
"School district." A school district of the first class,
first class A, second class, third class or fourth class,
including any independent school district. For purposes of the
levy, assessment and collection of any tax in a school district
of the first class, the term shall include the city council.
"Secretary." The Secretary of Revenue of the Commonwealth.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
CHAPTER 3
TAX
SUBCHAPTER A
EDUCATION TAX
Section 301. Education tax.
(a) General rule.--In addition to the tax collected under
section 302 of the Tax Reform Code of 1971, the Commonwealth
shall impose and administer the tax set forth in subsection (b)
in the same manner as the tax under Article III of the Tax
Reform Code of 1971.
(b) Imposition of tax.--
(1) Every resident individual, estate or trust shall be
subject to, and shall pay for the privilege of receiving each
20180SB1137PN1681 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
of the classes of income enumerated in section 303 of the Tax
Reform Code of 1971, a tax upon each dollar of income
received by that resident during that resident's taxable year
at the rate of 1.98%.
(2) Every nonresident individual, estate or trust shall
be subject to, and shall pay for the privilege of receiving
each of the classes of income enumerated in section 303 of
the Tax Reform Code of 1971 from sources within this
Commonwealth, a tax upon each dollar of income received by
that nonresident during that nonresident's taxable year at
the rate of 1.98%.
(c) Deposit.--All money collected under this section shall
be deposited in the account.
(d) Combination of tax forms.--The department shall
incorporate the taxpayer reporting requirement for the
implementation of this section into the forms utilized by the
department under Article III of the Tax Reform Code of 1971.
(e) Definitions.--The words and phrases used in this section
shall have the same meaning given to them in Article III of the
Tax Reform Code of 1971.
SUBCHAPTER B
TAXATION BY SCHOOL DISTRICTS
Section 311. Scope.
This subchapter authorizes school districts to levy, assess
and collect a tax on personal income or a tax on earned income
and net profits as a means of abolishing property taxation by
the school district.
Section 312. Definitions.
The words and phrases used in this subchapter shall have the
same meanings given to them in the Tax Reform Code of 1971 or
20180SB1137PN1681 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
the Local Tax Enabling Act unless the context clearly indicates
otherwise.
Section 313. (Reserved).
Section 314. Preemption.
No act of the General Assembly shall vacate or preempt any
resolution passed or adopted under the authority of this
subchapter, or any other act, providing authority for the
imposition of a tax by a school district unless the act of the
General Assembly expressly vacates or preempts the authority to
pass or adopt resolutions.
Section 315. General tax authorization.
(a) General rule.--A board of school directors may, by
resolution, levy, assess and collect or provide for the levying,
assessment and collection of a tax on personal income or a tax
on earned income and net profits for general revenue purposes.
(b) Personal income tax.--
(1) A board of school directors may levy, assess and
collect a tax on the personal income of resident individuals
at a rate determined by the board of school directors.
(2) A school district which seeks to levy the tax
authorized under paragraph (1) must comply with section 316.
(3) If a board of school directors seeks to impose a
personal income tax under this subsection and the referendum
under section 316 is approved by the electorate, the board of
school directors shall have no authority to impose an earned
income and net profits tax under subsection (c) or any other
act.
(4) A personal income tax imposed under the authority of
this section shall be levied by the school district on each
of the classes of income specified in section 313 of the Tax
20180SB1137PN1681 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Reform Code of 1971 and regulations under that section,
provisions of which are incorporated by reference into this
subchapter.
(i) Notwithstanding the provisions of section 353(f)
of the Tax Reform Code of 1971, the department may permit
the proper officer or an authorized agent of a school
district imposing a personal income tax under this
subchapter to inspect the tax returns of any taxpayer of
the school district or may furnish to the officer or an
authorized agent an abstract of the return of income of
any current or former resident of the school district or
supply information concerning any item of income
contained in any tax return. The officer or authorized
agent of the school district imposing a tax under this
subchapter shall be furnished the requested information
upon payment to the department of the actual cost of
providing the requested information.
(ii) (A) Except for official purposes or as
provided by law, it shall be unlawful for any officer
or authorized agent of a school district to do any of
the following:
(I) Disclose to any other individual or
entity the amount or source of income, profits,
losses, expenditures or any particular
information concerning income, profits, losses or
expenditures contained in any return.
(II) Permit any other individual or entity
to view or examine any return or copy of a return
or any book containing any abstract or
particulars.
20180SB1137PN1681 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(III) Print, publish or publicize in any
manner any return; any particular information
contained in or concerning the return; any amount
or source of income, profits, losses or
expenditures in or concerning the return; or any
particular information concerning income,
profits, losses or expenditures contained in or
relating to any return.
(B) Any officer or authorized agent of a school
district that violates clause (A):
(I) May be fined not more than $1,000 or
imprisoned for not more than one year, or both.
(II) May be removed from office or
discharged from employment.
(c) Earned income and net profits tax.--
(1) A board of school directors may levy, assess and
collect a tax on earned income and net profits of resident
individuals at a rate determined by the board of school
directors.
(2) A school district which seeks to levy the tax
authorized under paragraph (1) must comply with section 316.
(3) If a board of school directors seeks to impose a tax
on earned income and net profits under this subsection and
the referendum under section 316 is approved by the
electorate, the board of school directors shall have no
authority to impose a personal income tax under subsection
(b) or any other act.
Section 316. Referendum.
(a) General rule.--In order to levy a personal income tax or
an earned income and net profits tax under this subchapter, a
20180SB1137PN1681 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
governing body shall use the procedures set forth in subsections
(b), (c), (d), (e), (f) and (g).
(b) Approved by electorate.--
(1) Subject to notice and public hearing requirements of
subsection (g), a governing body may levy the personal income
tax or earned income and net profits tax under this
subchapter only by obtaining the approval of the electorate
of the affected school district in a public referendum at
only the primary election preceding the fiscal year when the
personal income tax or earned income and net profits tax will
be initially imposed or the rate increased.
(2) The referendum question must state the initial rate
of the proposed personal income tax or earned income and net
profits tax, the purpose of the tax, the duration of the tax
and the amount of revenue to be generated by the
implementation of the tax.
(3) The question shall be in clear language that is
readily understandable by a layperson. For the purpose of
illustration, a referendum question may be framed as follows:
Do you favor paying a personal income tax of X% for
the purpose of X, for X years, which will generate
$X?
Do you favor paying an earned income and net profits
tax of X% for the purpose of X, for X years, which
will generate $X?
(4) A nonlegal interpretative statement must accompany
the question in accordance with section 201.1 of the act of
June 3, 1937 (P.L.1333, No.320), known as the Pennsylvania
Election Code, that includes the following:
(i) the initial rate of the personal income or
20180SB1137PN1681 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
earned income and net profits tax imposed under this
subchapter; and
(ii) the estimated revenues to be derived from the
initial rate imposed under this subchapter.
(c) School district located in more than one county.--In the
event a school district is located in more than one county,
petitions under this section shall be filed with the election
officials of the county in which the administrative offices of
the school district are located.
(d) Review and certification.--The election officials who
receive a petition shall perform all administrative functions in
reviewing and certifying the validity of the petition and
conduct all necessary communications with the school district.
(e) Notification.--
(1) If the election officials of the county who receive
the petition certify that it is sufficient under this section
and determine that a question should be placed on the ballot,
the decision shall be communicated to election officials in
any other county in which the school district is also
located.
(2) Election officials in the other county or counties
shall cooperate with election officials of the county that
receives the petition to ensure that an identical question is
placed on the ballot at the same election throughout the
entire school district.
(f) Certification of results.--Election officials from each
county involved shall independently certify the results from
their county to the governing body.
(g) Adoption of resolution.--
(1) In order to levy the tax under this section, the
20180SB1137PN1681 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
governing body shall adopt a resolution which shall refer to
this subchapter prior to placing a question on the ballot.
(2) Prior to adopting a resolution imposing the tax
authorized by this section, the governing body shall give
public notice of its intent to adopt the resolution in the
manner provided by the Local Tax Enabling Act and shall
conduct at least two public hearings regarding the proposed
adoption of the resolution. One public hearing shall be
conducted during normal business hours and one public hearing
shall be conducted during evening hours or on a weekend.
Section 317. Continuity of tax.
Every tax levied under this subchapter shall continue in
force on a fiscal year basis without annual reenactment unless
the rate of the tax is subsequently changed or the duration
placed on the referendum has expired.
Section 318. Collections.
Any income tax imposed under this subchapter shall be subject
to the provisions for collection and delinquency found in the
Local Tax Enabling Act.
Section 319. Credits.
(a) Credit.--Except as set forth in subsection (b), the
provisions of the Local Tax Enabling Act shall be applied by a
board of school directors to determine any credits applicable to
a tax imposed under this subchapter.
(b) Limitation.--Payment of any tax on income to any state
other than Pennsylvania or to any political subdivision located
outside the boundaries of this Commonwealth by a resident of a
school district located in this Commonwealth shall not be
credited to and allowed as a deduction from the liability of
such person for any income tax imposed by the school district of
20180SB1137PN1681 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
residence under this subchapter.
Section 320. Exemption and special provisions.
(a) Earned income and net profits tax.--A school district
that imposes an earned income and net profits tax authorized
under section 315(c) may exempt from the payment of that tax any
person whose total income from all sources is less than $12,000.
(b) Applicability to personal income tax.--Section 314 of
the Tax Reform Code of 1971 shall apply to any personal income
tax levied by a school district under section 315(b).
Section 321. Regulations.
A school district that imposes:
(1) an earned income and net profits tax authorized
under section 315(c) shall be subject to the provisions of
the Local Tax Enabling Act and may adopt procedures for the
processing of claims for credits and exemptions under
sections 319 and 320; or
(2) a personal income tax under section 315(b) shall be
subject to all regulations adopted by the department in
administering the tax due to the Commonwealth under Article
III of the Tax Reform Code of 1971.
CHAPTER 5
PROCEDURE AND EXCLUSION
Section 501. Administration and procedure.
(a) Application and determinations.--Each owner of real
property seeking to have property approved as homestead property
shall file an application with the assessor on a form developed
by the department. Determinations with respect to the
qualification of all or a part of a parcel of real property as
homestead property shall be made by the assessor.
(b) Filing deadlines and renewal of application.--
20180SB1137PN1681 - 12 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Applications shall be filed with the assessor not later than
March 1 of each year, provided that, in a city of the first
class, the application shall be filed with the assessor not
later than a date set by the governing body of the county, which
date shall be no later than December 1 of the year prior to the
year in which prohibition under section 502(a) shall first
apply. The governing body of a county may adopt a schedule for
review or reapplication for real property previously approved as
homestead property.
(c) Notice of applications and deadlines.--The assessor
shall provide sufficient notice to the public regarding the
availability of applications to designate real property as
homestead property and all filing deadlines. The assessor shall
make applications available at least 75 days before the filing
deadline, provided that, in a city of the first class, the
application shall be available at least 60 days before the
filing deadline.
(d) Denial of application.--The assessor shall provide to
each property owner whose application for approval as homestead
property is being denied in whole or in part a written notice of
denial by first class mail not later than 120 days after the
filing deadline. The notice shall include all reasons for
denial. Failure by the assessor to provide notice under this
subsection shall be deemed to be approval of the application.
(e) Appeals of assessor's decision.--An owner aggrieved by
the decision of the assessor may appeal to the board, as defined
under 53 Pa.C.S. § 8582 (relating to definitions), for a review
of the decision in a manner consistent with the provisions for
appeal of assessments under the applicable assessment law.
Appeals under this subsection shall be limited to whether the
20180SB1137PN1681 - 13 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
application meets the requirements of subsections (a) and (b) or
whether the parcel for which the appeal is made meets the
definition of "homestead property."
(f) Other appeals.--Appeals regarding the assessed value of
real property under the applicable assessment law shall be based
on the assessed value of the real property before application of
the prohibition under section 502(a) for homestead property. The
issue of qualification as homestead property shall not be raised
in an appeal except as provided in subsection (e).
(g) False or fraudulent applications.--The assessor may
select, randomly or otherwise, applications filed under
subsection (a) to review for false or fraudulent information.
(h) Penalties.--Any person who files an application under
subsection (a) which is false as to any material matter shall:
(1) pay any taxes which would have been due but for the
false application, plus simple interest computed at the rate
provided in section 806 of the act of April 9, 1929 (P.L.343,
No.176), known as The Fiscal Code;
(2) pay a penalty equal to 10% of the unpaid taxes
computed under paragraph (1); and
(3) upon conviction for filing an application under
subsection (a) which a person knows to be fraudulent, be
guilty of a misdemeanor of the third degree and be sentenced
to pay a fine not exceeding $2,500.
(i) Reports.--
(1) At the same time as the assessor certifies the tax
duplicate, the assessor shall provide to each school district
at no charge a certified report listing at least all of the
following information:
(i) The parcel number of each parcel which is
20180SB1137PN1681 - 14 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
approved, in whole or in part, as homestead property.
(ii) The assessed value of each parcel which is
approved, in whole or in part, as homestead property.
(iii) The portion of the assessed value of each
parcel listed under paragraph (ii) which is approved as
homestead property.
(2) The governing body of the county may set reasonable
fees for providing customized reports or services not
otherwise required under 53 Pa.C.S. Ch. 85 (relating to
assessments of persons and property) or other applicable law
to political subdivisions.
(j) Notification on change of use.--
(1) A property owner whose property is approved as
homestead property and which property no longer qualifies as
homestead property shall notify the assessor within 45 days
of the date the property no longer qualifies as homestead
property. Failure to notify the assessor as required by this
subsection shall be treated in the same manner as a false
application under subsection (g).
(2) The recorder of deeds shall periodically provide to
the assessor a list of real property conveyance documents
which have been presented for recording. The list shall
include the name of the grantor and the address of the
property. For the purposes of this paragraph, the word
"document" shall have the meaning ascribed to it in section
1101-C of the Tax Reform Code of 1971.
Section 502. Exclusion of school property taxes.
(a) General rule.--A school district may exclude up to 100%
of the assessed value of each homestead property within the
jurisdiction of the school district.
20180SB1137PN1681 - 15 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(b) Prohibition.--A school district may not increase the
millage rate of the school district's tax on real property to
pay for an exclusion under subsection (a).
CHAPTER 7
FUNDING PROVISIONS
Section 701. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Base revenue." The money a school district receives from
homestead property taxes during the 2018-2019 school year and
the amount of outstanding delinquent school property taxes owed
to the school district for the 2018-2019 school year.
"Cost of living factor." The lesser of:
(1) the percentage increase in the Statewide average
weekly wage, as defined in 53 Pa.C.S. § 8401 (relating to
definitions), from the previous calendar year; or
(2) the percentage change in the tax collected under
section 301(b)(1) from the previous calendar year.
Section 702. School District Funding Reserve Account.
(a) Establishment.--The School District Funding Reserve
Account is established as a separate account in the State
Treasury.
(b) Use.--The Department of Education shall use the account
to make disbursements under section 704.
(c) Continuing appropriation.--The money of the account is
continuously appropriated to the Department of Education as
provided in this act. This appropriation shall not lapse at the
end of a fiscal year.
Section 703. Sources and transfers.
20180SB1137PN1681 - 16 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(a) Deposit.--The following shall be deposited into the
account:
(1) Money collected by the department under section 301.
(2) Appropriations.
(3) Return on money in the account.
(b) Transfer.--The Secretary of the Budget, in consultation
with the secretary, shall compute the amount of tax refund
payments that result from the imposition of the tax increase
from 3.07% to 5.05% and that are payable from the General Fund.
The Secretary of the Budget may transfer that amount of funding
to the General Fund no later than June 5 of each year. The
Secretary of the Budget shall provide 10 days' prior
notification of the amount to be transferred to the chairperson
and minority chairperson of the Appropriations Committee of the
Senate and the chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
Section 704. Standard disbursements to school districts.
(a) General rule.--In fiscal year 2019-2020, the Department
of Education shall disburse to each school district that
provides an exclusion or reduction under section 502(a) an
amount equal to the sum of the following:
(1) the school district's base revenues, plus
(2) the school district's base revenue multiplied by the
cost-of-living factor.
(b) Annual adjustment.--In fiscal year 2019-2020 and each
fiscal year thereafter, the Department of Education shall
disburse to a school district an amount equal to the sum of the
following:
(1) The amount received by the school district in the
prior fiscal year under this section.
20180SB1137PN1681 - 17 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(2) The amount received by the school district in the
prior fiscal year under this section multiplied by the cost-
of-living factor.
(c) Distributions.--Distributions under subsections (a) and
(b) shall be made during each school year as follows:
(1) Twenty-five percent of the amount to be distributed
shall be paid on the fourth Thursday in July.
(2) The balance of the amount to be distributed shall be
paid in nine equal installments on the fourth Thursday of
August, September, October, November, December, January,
February, March and April.
(d) Use.--Disbursements under subsection (c) shall be used
by the school district for the elimination of school property
taxes.
CHAPTER 9
MISCELLANEOUS PROVISIONS
Section 901. Regulations.
(a) Department.--Except as provided under subsection (b),
the department shall have jurisdiction over and shall promulgate
regulations as necessary for the proper administration of this
act.
(b) Department of Education.--The Department of Education
shall have jurisdiction over and shall promulgate regulations as
necessary for the proper administration of Chapter 7.
Section 902. Severability.
The provisions of this act are severable as follows:
(1) If any provision of this act is held invalid, the
invalidity shall not affect other provisions or applications
of this act which can be given effect without the invalid
provision or application.
20180SB1137PN1681 - 18 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(2) Under no circumstances shall the invalidity of any
provision or application of this act affect the validity of
any provision in this act that abolishes the power of the
governing body and any school district and city of the first
class or any other political subdivision to levy, assess or
collect a tax on any interest in real property for school
purposes.
Section 903. Repeals.
(a) Intent.--The General Assembly declares that the repeals
under subsection (b) are necessary to effectuate this act.
(b) Provisions.--All acts and parts of acts that are
inconsistent with this act are repealed to the extent of such
inconsistency.
Section 904. Effective date.
This act shall take effect January 1, 2019.
20180SB1137PN1681 - 19 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15