H0377B2849A05358 SFL:JMM 01/15/08 #90 A05358
AMENDMENTS TO HOUSE BILL NO. 377
Sponsor: REPRESENTATIVE BOYD
Printer's No. 2849
1 Amend Title, page 1, line 11, by removing the period after
2 "poverty" and inserting
3 and for a small business health savings account tax
4 credit.
5 Amend Bill, page 2, line 27, by striking out all of said line
6 and inserting
7 Section 2. The act is amended by adding an article to read:
8 ARTICLE XVII-F
9 SMALL BUSINESS HEALTH SAVINGS ACCOUNT TAX CREDIT
10 Section 1701-F. Scope.
11 This article relates to small business health savings account
12 tax credit.
13 Section 1702-F. Definitions.
14 The following words and phrases when used in this article
15 shall have the meanings given to them in this section unless the
16 context clearly indicates otherwise:
17 "Department." The Department of Revenue of the Commonwealth.
18 "Employee" or "employees." An individual or group of
19 individuals employed by a small business. The term shall also
20 include a sole proprietor.
21 "Health insurance policy." An individual or group health,
22 sickness or accident policy or subscriber contract or
23 certificate issued by an entity subject to any one of the
24 following:
25 (1) The act of May 17, 1921 (P.L.682, No.284), known as
26 The Insurance Company Law of 1921.
27 (2) The act of December 29, 1972 (P.L.1701, No.364),
28 known as the Health Maintenance Organization Act.
29 (3) The act of May 18, 1976 (P.L.123, No.54), known as
30 the Individual Accident and Sickness Insurance Minimum
31 Standards Act.
32 (4) 40 Pa.C.S. Ch. 61 (relating to hospital plan
33 corporations) or 63 (relating to professional health services
34 plan corporations).
35 "Health Savings Account." As defined in section 223(d) of
36 the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
37 § 223(d)).
38 "Qualified high deductible health plan." A health insurance
39 policy that would qualify as a high deductible health plan under
1 section 223(c)(2) of the Internal Revenue Code of 1986 (Public
2 Law 99-514, 26 U.S.C. § 223(c)(2)).
3 "Qualified tax liability." The liability for taxes imposed
4 under Article III, IV or VI. The term shall include the
5 liability for taxes imposed under Article III on an owner of a
6 pass-through entity.
7 "Pass-through entity." Any of the following:
8 (1) A partnership, limited partnership, limited
9 liability company, business trust or other unincorporated
10 entity that for Federal income tax purposes is taxable as a
11 partnership.
12 (2) A Pennsylvania S corporation.
13 "Secretary." The Secretary of Revenue of the Commonwealth.
14 "Small business." An employer who, on at least 50% of its
15 working days during the taxable year, employed fewer than 100
16 employees.
17 "Tax credit." The small business health savings account tax
18 credit authorized under this article.
19 "Taxpayer." A small business subject to tax under Article
20 III, IV or VI. The term includes:
21 (1) the partner, shareholder, owner or member of a pass-
22 through entity; or
23 (2) a sole proprietor.
24 Section 1703-F. Credit for Health Savings Account
25 contributions.
26 (a) Application.--A taxpayer who purchases and provides a
27 qualified high deductible health insurance policy to employees
28 and makes a contribution to a health savings account on behalf
29 of employees in a taxable year may apply for a tax credit as
30 provided in this article. By September 15, a taxpayer must
31 submit an application to the department for the aggregate
32 contribution made by the taxpayer to employee health savings
33 accounts in the taxable year that ended in the prior calendar
34 year.
35 (b) Computation.--A taxpayer who qualifies under subsection
36 (a) shall receive a tax credit for the taxable year in
37 accordance with the following:
38 (1) Fifty percent of the aggregate contribution made by
39 the taxpayer to employee health savings accounts when the
40 contribution is provided for the benefit of employees,
41 spouses and dependents for the taxable year.
42 (2) Twenty-five percent of the aggregate contribution
43 made by the taxpayer to employee health savings accounts when
44 the contribution is provided solely for the benefit of an
45 employee.
46 (c) Notification.--By December 15 of the calendar year
47 following the close of the taxable year during which the
48 contribution to employee health savings accounts was made, the
49 department shall notify the taxpayer of the amount of the
50 taxpayer's tax credit approved by the department.
51 Section 1704-F. Limitation on credits.
52 (a) Limit.--The total amount of credits approved by the
53 department shall not exceed $30,000,000 in any fiscal year.
54 (b) Calculation.--If the total amount of small business
55 health savings account tax credits applied for by all taxpayers
56 exceeds the amount allocated for those credits, then the small
57 business health savings account tax credit to be received by
58 each applicant shall be the product of the allocated amount
59 multiplied by the quotient of the small business health savings
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1 account tax credit applied for by the applicant divided by the
2 total of all small business health savings account credits
3 applied for by all applicants, the algebraic equivalent of which
4 is:
5 taxpayer's small business health savings account tax
6 credit=amount allocated for those credits X (small
7 business health savings account tax credit applied for by
8 the applicant/total of all small business health savings
9 account tax credits applied for by all applicants).
10 Section 1705-F. Carryover, carryback, refund and assignment of
11 credit.
12 (a) Carryover.--If the taxpayer cannot use the entire amount
13 of the tax credit for the taxable year in which the tax credit
14 is first approved, then the excess may be carried over to
15 succeeding taxable years and used as a credit against the
16 qualified tax liability of the taxpayer for those taxable years.
17 Each time that the tax credit is carried over to a succeeding
18 taxable year, it is to be reduced by the amount that was used as
19 a credit during the immediately preceding taxable year. The tax
20 credit may be carried over and applied to succeeding taxable
21 years for no more than 15 taxable years following the first
22 taxable year for which the taxpayer was entitled to claim the
23 credit.
24 (b) Application of credit.--A tax credit approved by the
25 department for monetary contributions made to employee health
26 savings accounts in a taxable year first shall be applied
27 against the taxpayer's qualified tax liability for the current
28 taxable year as of the date on which the credit was approved
29 before the tax credit is applied against any tax liability under
30 subsection (a).
31 (c) Prohibition.--A taxpayer is not entitled to assign,
32 carry back or obtain a refund of an unused tax credit.
33 Section 1706-F. Shareholder, owner or member pass-through.
34 (a) Shareholder's calculation.--If a Pennsylvania S
35 corporation does not have an eligible tax liability against
36 which the tax credit may be applied, a shareholder of the
37 Pennsylvania S corporation is entitled to a tax credit equal to
38 the tax credit determined for the Pennsylvania S corporation for
39 the taxable year multiplied by the percentage of the
40 Pennsylvania S corporation's distributive income to which the
41 shareholder is entitled.
42 (b) Owner or member calculation.--If a pass-through entity
43 other than a Pennsylvania S corporation does not have an
44 eligible tax liability against which the tax credit may be
45 applied, an owner or member of the pass-through entity is
46 entitled to a tax credit equal to the tax credit determined for
47 the pass-through entity for the taxable year multiplied by the
48 percentage of the pass-through entity's distributive income to
49 which the owner or member is entitled.
50 (c) Application; restrictions.--The credit provided under
51 subsection (a) or (b) is in addition to any tax credit to which
52 a shareholder, owner or member of a pass-through entity is
53 otherwise entitled under this article. However, a pass-through
54 entity and a shareholder, owner or member of a pass-through
55 entity may not claim a credit under this article for the same
56 contributions made to employee health savings accounts.
57 Section 1707-F. Report to General Assembly.
58 The secretary shall submit an annual report to the General
59 Assembly indicating the effectiveness of the credit provided by
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1 this article no later than March 15 following the year in which
2 the credits were approved. The report shall include the names of
3 all taxpayers utilizing the credit as of the date of the report
4 and the amount of credits approved and utilized by each
5 taxpayer. Notwithstanding any law providing for the
6 confidentiality of tax records, the information contained in the
7 report shall be public information. The report may also include
8 any recommendations for changes in the calculation or
9 administration of the credit.
10 Section 1708-F. Regulations.
11 The secretary shall promulgate regulations necessary for the
12 implementation and administration of this article.
13 Section 3. The addition of Article XVII-F of the act shall
14 apply to tax years beginning after December 31, 2007.
15 Section 4. This act shall take effect July 1, 2008.
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