PRINTER'S NO. 1073
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
818
Session of
2017
INTRODUCED BY HUGHES, JULY 6, 2017
REFERRED TO FINANCE, JULY 6, 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," in personal income tax, further providing for
definitions and for classes of income.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 301 and 303 of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, are amended
by adding subsections 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
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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:
* * *
(l.3) (1) "KOZ investment company" means any entity, no
matter how organized, that is:
(i) defined in section 3(a)(1) of the Investment Company Act
of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1 et seq.), including any
entity, no matter how organized, that issues securities,
including without limitation interests in private investment
funds, limited partnerships and limited liability companies; and
(ii) is certified by the Department of Community and
Economic Development to be a "qualified business" under section
307 of 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," as amended.
(2) For purposes of this definition, section 3(a)(2)(C) and
the exemptions set forth in section 3(b) or (c) of the
Investment Company Act of 1940 shall not be applicable, and
ownership interests in any subsidiaries shall be treated as
"investment securities" as defined in section 3(a)(1) of the
Investment Company Act of 1940.
(l.4) "KOZ investment company affiliate" means an entity
that is owned directly or indirectly to the extent of sixty-five
per cent or more by one or more KOZ investment companies.
(l.5) "KOZ investment company general partner" means a
general partner, managing member or similar owner of a KOZ
investment company, to the extent that the income of said owner
is:
(1) based in whole or in part on the financial performance
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of the KOZ investment company or KOZ investment company
affiliate; or
(2) on services performed for or on behalf of the KOZ
investment company or KOZ investment company affiliate by the
general partner, managing member or similar owner.
* * *
Section 303. Classes of Income.--* * *
(a.10) The income of an entity that is a KOZ investment
company, KOZ investment company affiliate or KOZ investment
company general partner shall be entitled to the exemption under
section 512(a)(2) of 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," for each year with respect to which the entity has
been certified by the Department of Community and Economic
Development under section 307 of the "Keystone Opportunity Zone,
Keystone Opportunity Expansion Zone and Keystone Opportunity
Improvement Zone Act," to the extent that the income derives
from activity conducted in the subzone, improvement subzone or
expansion subzone either directly by the entity or by another
entity for the benefit of the entity, regardless of how such
income is classified for other purposes, including, but not
limited to, the activities of raising capital through
investments in or loans to a KOZ investment company or a
subsidiary of a KOZ investment company, making investments,
whether directly or indirectly, in other entities, operating,
managing and supervising investments, disposing of investments,
and other related activities. The income of a KOZ investment
company, KOZ investment company affiliate or KOZ investment
company general partner that is distributed or distributable to
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any direct or indirect owner thereof shall retain its character
as income exempt under section 512(a)(2) of the "Keystone
Opportunity Zone, Keystone Opportunity Expansion Zone and
Keystone Opportunity Improvement Zone Act" in the hands of each
direct or indirect owner.
Section 2. This act shall take effect in 60 days.
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