HOUSE AMENDED
PRIOR PRINTER'S NO. 917
PRINTER'S NO. 1271
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
815
Session of
2023
INTRODUCED BY BAKER, PHILLIPS-HILL, STEFANO, DUSH, BREWSTER AND
COSTA, JUNE 19, 2023
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
DECEMBER 11, 2023
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 personal income tax, further providing for
imposition of tax and for taxability of estates, trusts and
their beneficiaries.; AND, IN CORPORATE NET INCOME TAX,
FURTHER PROVIDING FOR MANUFACTURING INNOVATION AND
REINVESTMENT DEDUCTION.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 302 and 305 of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, are amended
to read:
SECTION 1. SECTIONS 302, 305 AND 407.7 OF THE ACT OF MARCH
4, 1971 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, ARE
AMENDED TO READ:
Section 302. Imposition of Tax.--(a) [Every] Except as
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provided in subsection (c), every resident individual, estate or
trust shall be subject to, and shall pay for the privilege of
receiving each of the classes of income hereinafter enumerated
in section 303, a tax upon each dollar of income received by
that resident during that resident's taxable year at the rate of
three and seven hundredths per cent.
(b) [Every] Except as provided in subsection (c), every
nonresident individual, estate or trust shall be subject to, and
shall pay for the privilege of receiving each of the classes of
income hereinafter enumerated in section 303 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 three and seven hundredths per cent.
(c) The classes of income under section 303 received by a
resident trust, and the classes of income received by a
nonresident trust from sources within this Commonwealth, shall
be taxable to the grantor of the trust or another person to the
extent the grantor or other person is treated as the owner of
the trust under sections 671, 672, 673, 674, 675, 676, 677, 678
and 679 of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.) , as amended, whether or not such income
is distributed or distributable to the beneficiaries of the
trust or accumulated.
Section 305. Taxability of Estates, Trusts and Their
Beneficiaries.--[The] (a) Except as provided in subsection (b),
the income of a beneficiary of an estate or trust in respect of
such estate or trust shall consist of that part of the income or
gains received by the estate or trust for its taxable year
ending within or with the beneficiary's taxable year which,
under the governing instrument and applicable State law, is
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required to be distributed currently or is in fact paid or
credited to said beneficiary. The income or gains of the estate
or trust, if any, taxable to such estate or trust shall consist
of the income or gains received by it which has not been
distributed or credited to its beneficiaries.
(b) Subsection (a) shall not apply to the extent the grantor
or another person is taxable on the income of the trust under
section 302(c).
Section 2. The amendment of sections 302 and 305 of the act
shall apply to tax years beginning on or after January 1
following the effective date of this section.
Section 3. This act shall take effect in 60 days.
SECTION 407.7. MANUFACTURING INNOVATION AND REINVESTMENT
DEDUCTION.--(A) IN ORDER TO BE ELIGIBLE TO RECEIVE A
MANUFACTURING INNOVATION AND REINVESTMENT DEDUCTION, A TAXPAYER
MUST DEMONSTRATE TO THE DEPARTMENT A PRIVATE CAPITAL INVESTMENT
IN EXCESS OF [SIXTY MILLION DOLLARS ($60,000,000)] FIFTY MILLION
DOLLARS ($50,000,000) FOR THE CREATION OF NEW OR REFURBISHED
MANUFACTURING CAPACITY WITHIN [THREE YEARS OF A DESIGNATED START
DATE.] THE APPLICABLE TIME PERIOD SPECIFIED IN SUBSECTION (B).
THE DEPARTMENT'S CALCULATION OF ELIGIBLE EXPENSES FOR A
QUALIFIED MANUFACTURING INNOVATION AND REINVESTMENT DEDUCTION
SHALL INCLUDE PAYMENTS MADE IN ADVANCE OF THE START DATE OF A
PROJECT IF THE PAYMENTS ARE MADE FOR THE PURCHASE OF, OR PARTIAL
PAYMENT FOR, NEW EQUIPMENT FOR THE PROJECT THAT EXCEEDS ONE
MILLION DOLLARS ($1,000,000) IN VALUE.
(B) (1) A TAXPAYER MUST ADVISE THE DEPARTMENT IN ADVANCE OF
THE START DATE OF ANY PROJECT FOR WHICH THE TAXPAYER MAY SEEK A
QUALIFIED MANUFACTURING INNOVATION AND REINVESTMENT DEDUCTION. A
TAXPAYER MUST ATTEST THE TAXPAYER'S INTENT TO MEET THE
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ELIGIBILITY CRITERIA AND PROVIDE RELEVANT INFORMATION PERTINENT
TO THE PROJECT'S SIZE AND SCOPE IN A MANNER AS DETERMINED BY THE
DEPARTMENT.
(2) FOR A PRIVATE CAPITAL INVESTMENT OF LESS THAN OR EQUAL
TO ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000), THE
FOLLOWING SHALL APPLY:
(I) THE PROJECT MUST BE COMPLETED WITHIN THREE YEARS OF THE
PROJECT'S START DATE.
(II) WITHIN FIVE YEARS OF [A] THE PROJECT'S START DATE, [A]
THE TAXPAYER MUST COMPLETE TO THE DEPARTMENT'S SATISFACTION AN
APPLICATION ON A FORM AND IN A MANNER AS DETERMINED BY THE
DEPARTMENT TO ATTEST THAT THE PROJECT HAS BEEN COMPLETED AND THE
ELIGIBILITY CRITERIA HAS BEEN SATISFIED.
(3) FOR A PRIVATE CAPITAL INVESTMENT OF MORE THAN ONE
HUNDRED FIFTY MILLION ONE DOLLARS ($150,000,001) AND LESS THAN
TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000), THE FOLLOWING
SHALL APPLY:
(I) THE PROJECT MUST BE COMPLETED WITHIN FIVE YEARS OF THE
PROJECT'S START DATE.
(II) WITHIN SEVEN YEARS OF THE PROJECT'S START DATE, THE
TAXPAYER MUST COMPLETE TO THE DEPARTMENT'S SATISFACTION AN
APPLICATION ON A FORM AND IN A MANNER AS DETERMINED BY THE
DEPARTMENT TO ATTEST THAT THE PROJECT HAS BEEN COMPLETED AND THE
ELIGIBILITY CRITERIA HAS BEEN SATISFIED.
(4) FOR A PRIVATE CAPITAL INVESTMENT OF MORE THAN TWO
HUNDRED FIFTY MILLION ONE DOLLARS ($250,000,001) AND LESS THAN
THREE HUNDRED FIFTY MILLION DOLLARS ($350,000,000), THE
FOLLOWING SHALL APPLY:
(I) THE PROJECT MUST BE COMPLETED WITHIN SEVEN YEARS OF THE
PROJECT'S START DATE.
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(II) WITHIN NINE YEARS OF THE PROJECT'S START DATE, THE
TAXPAYER MUST COMPLETE TO THE DEPARTMENT'S SATISFACTION AN
APPLICATION ON A FORM AND IN A MANNER AS DETERMINED BY THE
DEPARTMENT TO ATTEST THAT THE PROJECT HAS BEEN COMPLETED AND THE
ELIGIBILITY CRITERIA HAS BEEN SATISFIED.
(5) FOR A PRIVATE CAPITAL INVESTMENT OF MORE THAN THREE
HUNDRED FIFTY MILLION ONE DOLLARS ($350,000,001), THE DEPARTMENT
SHALL ESTABLISH THE TIME PERIOD FROM THE PROJECT'S START DATE IN
WHICH THE PROJECT MUST BE COMPLETED AND THE TIME PERIOD IN WHICH
THE APPLICATION AS DESCRIBED IN PARAGRAPH (4) MUST BE COMPLETED.
(C) UPON THE RECEIPT OF THE TAXPAYER'S APPLICATION, THE
DEPARTMENT OF REVENUE [MUST] SHALL MAKE A FINDING [THAT] WHETHER
THE APPLICANT HAS FILED ALL REQUIRED STATE TAX REPORTS AND
RETURNS FOR ALL APPLICABLE TAX YEARS AND PAID ANY BALANCE OF
STATE TAX DUE AS DETERMINED AT SETTLEMENT, ASSESSMENT OR
DETERMINATION, AND THE DEPARTMENT, THEN IN CONJUNCTION WITH THE
DEPARTMENT OF REVENUE, SHALL MAKE AN ELIGIBILITY OR SATISFACTION
DETERMINATION WITHIN NINETY DAYS OF SUBMISSION. IF THE
DEPARTMENT MAKES A SATISFACTION DETERMINATION, THE DEPARTMENT
AND THE TAXPAYER SHALL EXECUTE A SATISFACTION COMMITMENT LETTER
CONTAINING THE FOLLOWING:
(1) THE NUMBER OF NEW JOBS CREATED AND THEIR CORRESPONDING
DESCRIPTION.
(2) THE NUMBER OF NEW JOBS CREATED DURING CONSTRUCTION OF
THE PROJECT.
(3) THE AMOUNT OF PRIVATE CAPITAL INVESTMENT IN THE CREATION
OF NEW JOBS.
(4) THE INCREASE IN THE ANNUAL TAXABLE PAYROLL ATTRIBUTABLE
TO NEW MANUFACTURING JOBS.
(5) A DETERMINATION OF THE MAXIMUM ALLOWABLE DEDUCTION
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AGAINST A TAXPAYER'S QUALIFIED TAX LIABILITY UNDER THIS ARTICLE.
(6) ANY OTHER INFORMATION AS THE DEPARTMENT DEEMS
APPROPRIATE.
(D) (1.1) IF THE PRIVATE CAPITAL INVESTMENT IS IN EXCESS OF
SIXTY MILLION DOLLARS ($60,000,000), BUT NOT MORE THAN ONE
HUNDRED MILLION DOLLARS ($100,000,000), THE MAXIMUM ALLOWABLE
DEDUCTION SHALL BE EQUAL TO THIRTY-SEVEN AND ONE-HALF PER CENT
OF THE PRIVATE CAPITAL INVESTMENT UTILIZED IN THE CREATION OF
NEW OR REFURBISHED MANUFACTURING CAPACITY. A TAXPAYER MAY
UTILIZE THE DEDUCTION IN AN AMOUNT NOT TO EXCEED SEVEN AND ONE-
HALF PER CENT OF THE PRIVATE CAPITAL INVESTMENT UTILIZED IN THE
CREATION OF NEW OR REFURBISHED MANUFACTURING CAPACITY IN ANY ONE
YEAR OF THE SUCCEEDING TEN TAX YEARS IMMEDIATELY FOLLOWING THE
DEPARTMENT'S SATISFACTION DETERMINATION AND THE EXECUTION OF A
SATISFACTION COMMITMENT LETTER, UP TO THE MAXIMUM ALLOWABLE
DEDUCTION. THIS PARAGRAPH SHALL ONLY APPLY TO APPLICATIONS MADE
PRIOR TO JANUARY 1, 2024.
(1.2) IF [THE] A TAXPAYER'S PRIVATE CAPITAL INVESTMENT FOR A
PROJECT EXCEEDS [ONE HUNDRED MILLION DOLLARS ($100,000,000)]
FIFTY MILLION DOLLARS ($50,000,000), THE MAXIMUM ALLOWABLE
DEDUCTION SHALL BE EQUAL TO TWENTY-FIVE PER CENT OF THE PRIVATE
CAPITAL INVESTMENT UTILIZED IN THE CREATION OF NEW OR
REFURBISHED MANUFACTURING CAPACITY. A TAXPAYER MAY UTILIZE THE
DEDUCTION IN AN AMOUNT NOT TO EXCEED FIVE PER CENT OF THE
PRIVATE CAPITAL INVESTMENT UTILIZED IN THE CREATION OF NEW OR
REFURBISHED MANUFACTURING CAPACITY IN ANY ONE YEAR [OF THE
SUCCEEDING TEN TAX YEARS] DURING A TIME PERIOD EQUAL TO THE TIME
PERIOD SPECIFIED IN SECTION 401(3)4(C)(2)(A) FOR THE YEAR
IMMEDIATELY FOLLOWING THE DEPARTMENT'S SATISFACTION
DETERMINATION AND THE EXECUTION OF A SATISFACTION COMMITMENT
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LETTER, UP TO THE MAXIMUM ALLOWABLE DEDUCTION.
(3) A TAXPAYER CANNOT USE THE DEDUCTION TO REDUCE [ITS] THE
TAXPAYER'S TAX LIABILITY BY MORE THAN FIFTY PER CENT OF THE TAX
LIABILITY UNDER THIS ARTICLE FOR THE TAXABLE YEAR. THE DEDUCTION
IS NONTRANSFERABLE AND ANY UNUSED PORTION IN A TAX YEAR SHALL
EXPIRE AT THE END OF THE CORRESPONDING TAX YEAR.
SECTION 2. THIS ACT SHALL APPLY AS FOLLOWS:
(1) THE AMENDMENT OF SECTIONS 302 AND 305 OF THE ACT
SHALL APPLY TO TAX YEARS BEGINNING ON OR AFTER JANUARY 1
FOLLOWING THE EFFECTIVE DATE OF THIS SECTION.
(2) THE AMENDMENT OF SECTION 407.7 OF THE ACT SHALL
APPLY TO TAX YEARS BEGINNING AFTER DECEMBER 31, 2023.
SECTION 3. THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
(1) THE AMENDMENT OF SECTIONS 302 AND 305 OF THE ACT
SHALL TAKE EFFECT IN 60 DAYS.
(2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT
IMMEDIATELY.
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