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A05954
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2017
Session of
2018
INTRODUCED BY RYAN, BLOOM, CORBIN, CORR, COX, CUTLER, DIAMOND,
DUNBAR, DUSH, EVERETT, GREINER, GROVE, A. HARRIS, PHILLIPS-
HILL, JAMES, JOZWIAK, KAUFER, KLUNK, KNOWLES, MAHER,
METCALFE, B. MILLER, MUSTIO, NELSON, PICKETT, QUIGLEY, RADER,
ROTHMAN, SCHEMEL, SIMMONS, TOPPER, WALSH, WARD, TURZAI,
BERNSTINE, GILLESPIE, HELM, LAWRENCE, STAATS, GILLEN,
WHEELAND, TOOHIL, FRITZ, FARRY AND MOUL, JANUARY 22, 2018
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, FEBRUARY 6, 2018
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 corporate net income tax, further providing
for definitions, imposition of tax, reports and payment of
tax and consolidated reports; and, in general provisions,
further providing for underpayment of estimated tax.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 401(3)1(r) and (s) 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. Section 401(3)1(a), (b), (r), (s), (t), 4(c) and
(5) of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
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Reform Code of 1971, amended or added October 30, 2017 (P.L.672,
No.43), are amended and (3)2(a)(9)(A) is amended by adding a
unit, (3)2(a)(16.1) is amended by adding a subclause, (3)1 and
(3)2 are amended by adding clauses and the section is amended by
adding paragraphs to read:
Section 401. Definitions.--The following words, terms, and
phrases, when used in this article, shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
* * *
(3) "Taxable income." 1. * * *
(3) "Taxable income." 1. (a) In case the entire business
of the corporation is transacted within this Commonwealth, for
any taxable year which begins on or after January 1, 1971,
taxable income for the calendar year or fiscal year as returned
to and ascertained by the Federal Government, or in the case of
a corporation participating in the filing of consolidated
returns to the Federal Government or that is not required to
file a return with the Federal Government, the taxable income
which would have been returned to and ascertained by the Federal
Government if separate returns had been made to the Federal
Government for the current and prior taxable years, subject,
however, to any correction thereof, for fraud, evasion, or error
as finally ascertained by the Federal Government.
(b) Additional deductions shall be allowed from taxable
income on account of any dividends received from any other
corporation but only to the extent that such dividends are
included in taxable income as returned to and ascertained by the
Federal Government. For tax years beginning on or after January
1, 1991, additional deductions shall only be allowed for amounts
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included, under section 78 of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 78), in taxable income returned
to and ascertained by the Federal Government and for the amount
of any dividends received from a foreign corporation included in
taxable income to the extent such dividends would be deductible
in arriving at Federal taxable income if received from a
domestic corporation. For tax years beginning after December 31,
2018, the additional deduction with respect to dividends are not
permissible for dividends between members of a unitary group.
* * *
(p.1) For taxable years after December 31, 2018, in the case
of a corporation that is a member of a unitary business, the
term "taxable income" shall mean the combined unitary income of
the unitary business, as determined on a water's edge basis.
* * *
(r) [Notwithstanding] (1) For assets PROPERTY placed in
service prior to September 28, 2017, notwithstanding paragraph
(a), if a deduction for depreciation of qualified property was
included in taxable income in accordance with paragraph (q), an
additional deduction for depreciation of the qualified property
shall be allowed from taxable income until the total amount
included as taxable income under paragraph (q) has been claimed.
The additional deduction shall be equal to the product of taking
three sevenths of the amount of the deduction for depreciation
of the qualified property allowable under section 167 of the
Internal Revenue Code of 1986 (26 U.S.C. § 167), not including
the amount of the deduction for depreciation of the qualified
property claimed and allowable under section 168(k) of the
Internal Revenue Code of 1986 (26 U.S.C. § 168(k)), for the tax
year.
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(2) For assets PROPERTY placed in service on or after
September 28, 2017, notwithstanding paragraph (a), if a
deduction for depreciation of qualified property was included in
taxable income in accordance with paragraph (q), an additional
deduction for depreciation of the qualified property shall be
allowed from taxable income until the total amount included as
taxable income under paragraph (q) has been claimed. The
additional deduction shall be equal to the depreciation on the
qualified property for the taxable year as determined in
accordance with sections 167 and 168 of the Internal Revenue
Code of 1986 (26 U.S.C. §§ 167 and 168) without regard to ,
EXCEPT THAT section 168(k) of the Internal Revenue Code of 1986
(26 U.S.C. § 168(k)) SHALL NOT APPLY .
(s) [With] (1) For assets PROPERTY placed in service prior
to September 28, 2017, an additional deduction shall be allowed
from taxable income in the earlier of the taxable year in which
qualified property is fully depreciated for Federal income tax
purposes, or is sold or otherwise disposed of by a taxpayer to
the extent the amount of depreciation claimed under section
168(k) of the Internal Revenue Code of 1986 (26 U.S.C. §
168(k)), on the qualified property and included in taxable
income under paragraph (q) has not been recovered through the
additional deductions provided under paragraph (r)(1).
(2) For assets PROPERTY placed in service ON OR after
September 28, 2017, with respect to qualified property which is
sold or otherwise disposed of during a taxable year by a
taxpayer and for which depreciation was included as taxable
income under paragraph (q), an additional deduction shall be
allowed from taxable income to the extent the amount of
depreciation claimed under section 168(k) of the Internal
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Revenue Code of 1986 (26 U.S.C. § 168(k)) on the qualified
property has not been recovered through the additional
deductions provided by paragraph [(r)] (r)(2).
* * *
Section 2. The amendment of section 401(3)1(r) and (s) of
the act shall apply to tax years beginning on or after January
1, 2017.
Section 3. This act shall take effect immediately.
(t) (1) Except as provided in paragraph (2), (3) or (4) for
taxable years beginning after December 31, 2014, and in addition
to any authority the department has on the effective date of
this paragraph to deny a deduction related to a fraudulent or
sham transaction, no deduction shall be allowed for an
intangible expense or cost, or an interest expense or cost,
paid, accrued or incurred directly or indirectly in connection
with one or more transactions with an affiliated entity. In
calculating taxable income under this paragraph, when the
taxpayer is engaged in one or more transactions with an
affiliated entity that was subject to tax in this Commonwealth
or another state or possession of the United States on a tax
base that included the intangible expense or cost, or the
interest expense or cost, paid, accrued or incurred by the
taxpayer, the taxpayer shall receive a credit against tax due in
this Commonwealth in an amount equal to the apportionment factor
of the taxpayer in this Commonwealth multiplied by the greater
of the following:
(A) the tax liability of the affiliated entity with respect
to the portion of its income representing the intangible expense
or cost, or the interest expense or cost, paid, accrued or
incurred by the taxpayer; or
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(B) the tax liability that would have been paid by the
affiliated entity under subparagraph (A) if that tax liability
had not been offset by a credit.
The credit issued under this paragraph shall not exceed the
taxpayer's liability in this Commonwealth attributable to the
net income taxed as a result of the adjustment required by this
paragraph.
(2) The adjustment required by paragraph (1) shall not apply
to a transaction that did not have as the principal purpose the
avoidance of tax due under this article and was done at arm's
length rates and terms.
(3) The adjustment required by paragraph (1) shall not apply
to a transaction between a taxpayer and an affiliated entity
domiciled in a foreign nation which has in force a comprehensive
income tax treaty with the United States providing for the
allocation of all categories of income subject to taxation, or
the withholding of tax, on royalties, licenses, fees and
interest for the prevention of double taxation of the respective
nations' residents and the sharing of information.
(4) The adjustment required by paragraph (1) shall not apply
to a transaction where an affiliated entity directly or
indirectly paid, accrued or incurred a payment to a person who
is not an affiliated entity, if the payment is paid, accrued or
incurred on the intangible expense or cost, or interest expense
or cost, and is equal to or less than the taxpayer's
proportional share of the transaction. The taxpayer's
proportional share shall be based on relative sales, assets,
liabilities or another reasonable method.
(5) The adjustment required by paragraph (1) shall not apply
to a transaction between the taxpayer and an affiliated entity,
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where all the following conditions are met:
(i) the taxpayer and the affiliated entity file a combined
report in this State;
(ii) the taxpayer's deduction with respect to an intangible
expense or cost, or interest expense or cost, is subject to
paragraph (1); and
(iii) the corresponding income recognized by the affiliated
entity with respect to such intangible expense or cost, or
interest expense or cost are eliminated pursuant to the
definition of combined unitary income set forth in section
401(15).
2. In case the entire business of any corporation, other
than a corporation engaged in doing business as a regulated
investment company as defined by the Internal Revenue Code of
1986, is not transacted within this Commonwealth, the tax
imposed by this article shall be based upon such portion of the
taxable income of such corporation for the fiscal or calendar
year, as defined in subclause 1 hereof, and may be determined as
follows:
(a) Division of Income.
* * *
(9) (A) Except as provided in subparagraph (B):
* * *
(vi) (a) For taxable years beginning after December 31,
2018, all business income of a unitary business shall be
apportioned to this State by multiplying the income by the
member's sales factor, the numerator of which shall be the
member's sales attributable to this State, and the denominator
of which shall be the combined sales of all members of the
unitary business. In computing the sales of each member for
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purposes of apportionment, the following sales are excluded from
the numerator and denominator:
(I) receipts from transactions between or among members of
the unitary business that are deferred under 26 CFR 1.1502-13
(relating to intercompany transactions); and
(II) the taxable income of each member that is excluded from
the unitary business pursuant to the definition of water's edge
basis.
(b) Nonbusiness income of each member of a unitary business
shall be allocated as provided in paragraphs (5) through (8) of
phrase (a) of subclause 2 of the definition of "taxable income."
A member of the unitary business is subject to tax on its
apportioned share of all business income of the unitary
business, plus its nonbusiness income or loss allocated to this
Commonwealth, minus the member's net loss deduction.
(c) The Secretary of Revenue has the authority and
responsibility to make adjustments to ensure that a corporation
does not incur an unfair penalty nor realize an unfair benefit
because it is required to compute its combined business income
as provided herein. Fairness shall be measured by whether the
corporation's income allocated and apportioned to this
Commonwealth fairly reflects the corporation's share of the
unitary business conducted in this Commonwealth in the taxable
year.
* * *
(16.1) * * *
(D) Sales from the licensing of intangible property are in
this State if a licensee utilized the property in this State. If
the property was used both inside and outside this State, the
sale is in this State in proportion to the utilization of the
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intangible property in this State to the utilization of the
intangible property everywhere.
* * *
(f) For taxable years beginning after December 31, 2018, any
member of a unitary group that would otherwise apportion its
business income under section 401(3)2(b), (c), (d) or (e) shall
determine its apportionment formula using a single sales
fraction, as prescribed by the department.
* * *
4. * * *
(c) (1) The net loss deduction shall be the lesser of:
(A) (I) For taxable years beginning before January 1, 2007,
two million dollars ($2,000,000);
(II) For taxable years beginning after December 31, 2006,
the greater of twelve and one-half per cent of taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
three million dollars ($3,000,000);
(III) For taxable years beginning after December 31, 2008,
the greater of fifteen per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or three
million dollars ($3,000,000);
(IV) For taxable years beginning after December 31, 2009,
the greater of twenty per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or three
million dollars ($3,000,000);
(V) For taxable years beginning after December 31, 2013, the
greater of twenty-five per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or four million
dollars ($4,000,000);
(VI) For taxable years beginning after December 31, 2014,
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the greater of thirty per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or five million
dollars ($5,000,000);
(VII) For taxable years beginning after December 31, 2017,
thirty-five per cent of taxable income as determined under
subclause 1 or, if applicable, subclause 2;
(VIII) For taxable years beginning after December 31, 2018,
forty per cent of taxable income as determined under subclause 1
or, if applicable, subclause 2; or
(B) The amount of the net loss or losses which may be
carried over to the taxable year or taxable income as determined
under subclause 1 or, if applicable, subclause 2.
(1.1) In no event shall the net loss deduction include more
than five hundred thousand dollars ($500,000), in the aggregate,
of net losses from taxable years 1988 through 1994.
(2) (A) A net loss for a taxable year may only be carried
over pursuant to the following schedule:
Taxable Year Carryover
1981 1 taxable year
1982 2 taxable years
1983-1987 3 taxable years
1988 2 taxable years plus
1 taxable year
starting with the
1995 taxable year
1989 1 taxable year plus
2 taxable years
starting with the
1995 taxable year
1990-1993 3 taxable years
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starting with the
1995 taxable year
1994 1 taxable year
1995-1997 10 taxable years
1998 and thereafter 20 taxable years
(B) The earliest net loss shall be carried over to the
earliest taxable year to which it may be carried under this
schedule. The total net loss deduction allowed in any taxable
year shall not exceed:
(I) Two million dollars ($2,000,000) for taxable years
beginning before January 1, 2007.
(II) The greater of twelve and one-half per cent of the
taxable income as determined under subclause 1 or, if
applicable, subclause 2 or three million dollars ($3,000,000)
for taxable years beginning after December 31, 2006.
(III) The greater of fifteen per cent of the taxable income
as determined under subclause 1 or, if applicable, subclause 2
or three million dollars ($3,000,000) for taxable years
beginning after December 31, 2008.
(IV) The greater of twenty per cent of the taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
three million dollars ($3,000,000) for taxable years beginning
after December 31, 2009.
(V) The greater of twenty-five per cent of taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
four million dollars ($4,000,000) for taxable years beginning
after December 31, 2013.
(VI) The greater of thirty per cent of taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
five million dollars ($5,000,000) for taxable years beginning
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after December 31, 2014.
(VII) Thirty-five per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 for taxable
years beginning after December 31, 2017.
(VIII) Forty per cent of taxable income as determined under
subclause 1 or, if applicable, subclause 2 for taxable years
beginning after December 31, 2018.
(3) Any member of a unitary business that has unused net
loss from taxable years that began prior to January 1, 2019, or
that generate net losses while a member of a unitary business
may only use the net loss for taxable years beginning after
December 31, 2018, and only to the extent of the member's
apportionable share of combined business income and may not be
used by other members of the same unitary business.
(4) Any net loss realized for a taxable year that begins
after December 31, 2018, unused by a corporation which
subsequently becomes a member of another unitary business, may
only be used by that corporation.
* * *
(5) "Taxable year." [The] 1. Except as set forth in
subclause 2, the taxable year which the corporation, or any
consolidated group with which the corporation participates in
the filing of consolidated returns, actually uses in reporting
taxable income to the Federal Government[.], or which the
corporation would have used in reporting taxable income to the
Federal Government had it been required to report its taxable
income to the Federal Government. With regard to the tax imposed
by Article IV of this act (relating to the Corporate Net Income
Tax), the terms "annual year," "fiscal year," "annual or fiscal
year," "tax year" and "tax period" shall be the same as the
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corporation's taxable year, as defined in this [paragraph]
subclause or subclause 2.
2. All members of a unitary business shall have a common
taxable year for purposes of computing tax due under this
article. The taxable year for such purposes is the common
taxable year adopted, in a manner prescribed by the department,
by all members of a unitary business. The common taxable year
must be used by all members of the unitary business in the year
of adoption and all future years unless otherwise permitted by
the department.
* * *
(11) "Tax haven." Means any of the following:
(A) A jurisdiction that at the beginning of a taxable year
is a tax haven as identified by the Organization for Economic
Co-operation and Development.
(B) Bermuda.
(C) The Cayman Islands.
(D) The Bailiwick of Jersey.
(E) The Grand Duchy of Luxembourg.
(12) "Unitary business." A single economic enterprise that
is made up of separate parts of a single corporation, of a
commonly controlled group of corporations, or both, that are
sufficiently interdependent, integrated and interrelated through
their activities so as to provide a synergy and mutual benefit
that produces a sharing or exchange of value among them and a
significant flow of value to the separate parts. A unitary
business includes all those parts and corporations that are
included in a unitary business under the Constitution of the
United States.
(13) "Water's-edge basis." A system of reporting that
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includes the business income and apportionment factors of
certain entities of a unitary business, described as follows:
(i) Any member incorporated in the United States or formed
under the laws of any state of the United States, the District
of Columbia, any territory or possession of the United States or
the Commonwealth of Puerto Rico.
(ii) Any member, regardless of the place incorporated or
formed, if at least twenty per cent of the member's sales factor
is within the United States.
(iii) Any member which is one of the following:
(A) Domestic international sales corporation as described in
sections 991, 992, 993 and 994 of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. §§ 991, 992, 993 and 994).
(B) Export trade corporation, as described in sections 970
and 971 of the Internal Revenue Code of 1986.
(iv) Any member not described in subparagraphs (i), (ii) and
(iii) shall include the portion of the member's business income
derived from or attributable to sources within the United
States, as determined under the Internal Revenue Code of 1986
without regard to Federal treaties and its apportionment factors
related thereto.
(v) Any member that is a "controlled foreign corporation" as
defined in section 957 of the Internal Revenue Code of 1986, to
the extent the business income of that member is income defined
in section 952 of the Internal Revenue Code of 1986, Subpart F
income, not excluding lower-tier subsidiaries' distributions of
such income which were previously taxed, determined without
regard to Federal treaties and the apportionment factors related
to that income; any item of income received by a controlled
foreign corporation and the apportionment factors related to
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such income shall be excluded if the corporation establishes to
the satisfaction of the Secretary of Revenue that such income
was subject to an effective rate of income tax imposed by a
foreign country greater than ninety per cent of the maximum rate
of tax specified in section 11 of the Internal Revenue Code of
1986. The effective rate of income tax determination shall be
based upon the methodology set forth under 26 CFR 1.954-1
(relating to foreign base company income).
(vi) Any member that is not described in subparagraph (i),
(ii), (iii), (iv) or (v) and that is doing business in a tax
haven. The business income of the combined unitary income and
apportionment factors of a corporation doing business in a tax
haven shall be excluded if the corporation establishes to the
satisfaction of the Secretary of Revenue that the member's
income was subject to an effective rate of income tax imposed by
a country greater than ninety per cent of the maximum rate of
tax specified in section 11 of the Internal Revenue Code of
1986.
(14) "Commonly controlled group." For a corporation, the
corporation is a member of a group of two or more corporations
and more than fifty per cent of the voting stock or controlling
interest of each member of the group is directly or indirectly
owned by a common owner or by common owners, either corporate or
noncorporate, or by one or more of the member corporations of
the group.
(15) "Combined unitary income." The aggregate taxable
income or loss of all members of a unitary business, subject to
apportionment, except:
(i) Income from an intercompany transaction between members
of a unitary business shall be deferred in a manner similar to
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26 CFR 1.1502-13 (relating to intercompany transactions).
(ii) Dividends paid by one member of a unitary business to
another to the extent those dividends are included in business
income of the payee corporation.
(iii) Income of the following corporations is not included
in the determination of combined business income:
(A) any entity subject to taxation under Article VII, VIII,
IX or XV;
(B) any entity specified in the definition of "institution"
in section 701.5 that would be subject to taxation under Article
VII, were it doing business in this State, as defined in section
701.5;
(C) any entity commonly known as a title insurance company
that would be subject to taxation under Article VIII, were it
incorporated in this State;
(D) any entity specified as an insurance company,
association or exchange in Article IX that would be subject to
taxation under Article IX, were it transacting insurance
business in this State;
(E) any entity specified in the definition of "institution"
in section 1501 that would be subject to taxation under Article
XV, were it located, as defined in section 1501, in this State;
or
(F) any entity that is a small corporation as defined in
section 301(s.2).
(16) "Member." A corporation that is a member of a unitary
business. The term does not include a corporation listed in
paragraph (15)(C).
Section 2. Section 402 of the act is amended to read:
Section 402. Imposition of Tax.--(a) A corporation shall be
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subject to and shall pay an excise tax for exercising, whether
in its own name or through any person, association, business
trust, corporation, joint venture, limited liability company,
limited partnership, partnership or other entity, any of the
following privileges:
(1) Doing business in this Commonwealth.
(2) Carrying on activities in this Commonwealth, including
solicitation which is not protected activity under the act of
September 14, 1959 (Public Law 86-272, 15 U.S.C. § 381 et seq.).
(3) Having capital or property employed or used in this
Commonwealth.
(4) Owning property in this Commonwealth.
(b) The annual rate of tax on corporate net income imposed
by subsection (a) for taxable years beginning for the calendar
year or fiscal year on or after the dates set forth shall be as
follows:
Taxable Year Tax Rate
January 1, 1995, [and
each taxable year
thereafter] through
December 31, 2019 9.99%
January 1, 2020,
through December
31, 2020 .....9.49%
January 1, 2021,
through December
31, 2021 .....8.99%
January 1, 2022,
through December
31, 2022 .....8.49%
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January 1, 2023, and
each taxable year
thereafter .....7.99%
(c) An entity subject to taxation under Article VII, VIII,
IX or XV shall not be subject to the tax imposed by this
article.
Section 3. Section 403 of the act is amended by adding
subsections to read:
Section 403. Reports and Payment of Tax.--* * *
(a.1) (1) Each corporation that is a member of a unitary
business that consists of two or more corporations, unless
excluded by the provisions of this article, shall file as part
of a combined annual report. The corporations of the unitary
business shall designate one member that is subject to tax under
this article to file the combined annual report and to act as
agent on behalf of all other members of the unitary business.
Each corporation that is a member of a unitary business is
liable for its tax liability under this article. The agent is
also liable for the aggregate amount of the unitary business'
tax liability pursuant to this article.
(2) The oath or affirmation of the designated member's
president, vice president or other principal officer and of the
member's treasurer or assistant treasurer shall constitute the
oath or affirmation of each corporation that is a member of that
unitary business.
(3) The designated member shall transmit to the department
upon a form prescribed by the department an annual combined
report under oath or affirmation of the member's president, vice
president or other principal officer and of the member's
treasurer or assistant treasurer.
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(4) In addition to the information required in subsection
(a), the report shall set forth:
(i) All corporations included in the unitary business.
(ii) All necessary data, both in the aggregate and for each
corporation of the unitary business, that sets forth the
determination of tax liability for each corporation of the
unitary business.
(iii) Any other information that the department may require.
(a.2) A corporation that is a member of a unitary business
of two or more corporations must determine the corporation's
business income and apportionment factors on a water's-edge
basis.
* * *
Section 4. Section 404 of the act is amended to read:
Section 404. Consolidated Reports.--The department shall not
permit any corporation owning or controlling, directly or
indirectly, any of the voting capital stock of another
corporation or of other corporations, subject to the provisions
of this article, to make a consolidated report[, showing the
combined net income].
Section 5. Section 3003.3(d) of the act is amended and the
section is amended by adding a subsection to read:
Section 3003.3. Underpayment of Estimated Tax.--* * *
(d) Notwithstanding the provisions of [the preceding
subsections,] this section, other than as set forth in
subsection (d.1), interest with respect to any underpayment of
any installment of estimated tax shall not be imposed if the
total amount of all payments of estimated tax made on or before
the last date prescribed for the payment of such installment
equals or exceeds the amount which would have been required to
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be paid on or before such date if the estimated tax were an
amount equal to the tax computed at the rates applicable to the
taxable year, including any minimum tax imposed, but otherwise
on the basis of the facts shown on the report of the taxpayer
for, and the law applicable to, the safe harbor base year,
adjusted for any changes to sections 401, 601, 602 and 1101
enacted for the taxable year, if a report showing a liability
for tax was filed by the taxpayer for the safe harbor base year.
If the total amount of all payments of estimated tax made on or
before the last date prescribed for the payment of such
installment does not equal or exceed the amount required to be
paid per the preceding sentence, but such amount is paid after
the date the installment was required to be paid, then the
period of underpayment shall run from the date the installment
was required to be paid to the date the amount required to be
paid per the preceding sentence is paid. Provided, that if the
total tax for the safe harbor base year exceeds the tax shown on
such report by ten per cent or more, the total tax adjusted to
reflect the current tax rate shall be used for purposes of this
subsection. In the event that the total tax for the safe harbor
base year exceeds the tax shown on the report by ten per cent or
more, interest resulting from the utilization of such total tax
in the application of the provisions of this subsection shall
not be imposed if, within forty-five days of the mailing date of
each assessment, payments are made such that the total amount of
all payments of estimated tax equals or exceeds the amount which
would have been required to be paid on or before such date if
the estimated tax were an amount equal to the total tax adjusted
to reflect the current tax rate. In any case in which the
taxable year for which an underpayment of estimated tax may
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exist is a short taxable year, in determining the tax shown on
the report or the total tax for the safe harbor base year, the
tax will be reduced by multiplying it by the ratio of the number
of installment payments made in the short taxable year to the
number of installment payments required to be made for the full
taxable year.
(d.1) With respect to any underpayment of an installment of
estimated corporate net income tax for any tax year that begins
in taxable year 2019 or 2020 by a corporation required to file a
combined report pursuant to section 403(a.1)(1), interest shall
not be imposed if the total amount of all payments of estimated
corporate net income tax made on or before the last date
prescribed for the payment of such installment equals or exceeds
the amount which would have been required to be paid on or
before such date if the estimated tax were an amount equal to
the combined tax shown on the reports of all the members of the
unitary business for the safe harbor base year computed at the
rate applicable to the taxable year.
Section 6. The following shall apply:
(a) Except as provided in subsection (b), the amendment of
sections 401, 402, 403, 404 and 3003.3 of the act shall apply to
taxable years beginning after December 31, 2018.
(b) The amendments of section 401(3)1(r) and (s) and 4 of
the act shall apply to taxable years beginning after December
31, 2017.
Section 7. This act shall take effect July 1, 2018, or
immediately, whichever is later.
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