THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY REICHLEY, PETRI, THOMAS, CALTAGIRONE, CLYMER, GEIST, HARHART, HESS, KILLION, MILNE, M. O'BRIEN, READSHAW, ROSS, SWANGER, WAGNER AND WATSON, FEBRUARY 14, 2011

REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 14, 2011  

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," providing for a biotechnology services tax

credit.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971, is amended by adding an article to

read:

ARTICLE XVII-G

BIOTECHNOLOGY SERVICES TAX CREDIT

Section 1701-G.  Scope of article.

This article relates to biotechnology services tax credits.

Section 1702-G.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Biotechnology services."  The use or utilization of

biological systems, living organisms or derivatives thereof in a

technological application to make or modify products or

processes for specific use.

"Department."  The Department of Revenue of the Commonwealth.

"Pass-through entity."  Any of the following:

(1)  A partnership, limited partnership, limited

liability company, business trust or other unincorporated

entity that for Federal income tax purposes is taxable as a

partnership.

(2)  A Pennsylvania S corporation.

"Qualified biotechnology services expense."  Costs or

expenses incurred by an entity in the biotechnology services

industry to relocate in this Commonwealth or to establish a

presence in this Commonwealth.

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV or VI. The term shall include the

liability for taxes imposed under Article III on an owner of a

pass-through entity.

"Secretary."  The Secretary of Revenue of the Commonwealth.

"Tax credit."  The biotechnology services tax credit

authorized under this article.

"Taxpayer."  An entity subject to tax under Article III, IV

or VI that is eligible for a tax credit under this article. The

term shall include the shareholder, owner or member of a pass-

through entity that receives a tax credit.

Section 1703-G.  Credit for biotechnology services.

(a)  Application.--A taxpayer who incurs a qualified

biotechnology services expense in a taxable year may claim a tax

credit as provided in this article. By September 15, a taxpayer

must submit an application to the department for biotechnology

services incurred in the taxable year that ended in the prior

calendar year.

(b)  Amount.--A taxpayer that is qualified under subsection

(a) shall receive a tax credit for the taxable year in the

amount of 30% of the qualified biotechnology services expense.

(c)  Notification.--By December 15 of the calendar year

following the close of the taxable year during which the

qualified biotechnology services expense was incurred, the

department shall notify the taxpayer of the amount of the

taxpayer's tax credit approved by the department.

Section 1704-G.  Carryover, carryback, refund and assignment of

credit.

(a)  General rule.--If the taxpayer cannot use the entire

amount of the tax credit for the taxable year in which the tax

credit is first approved, then the excess may be carried over to

succeeding taxable years and used as a credit against the

qualified tax liability of the taxpayer for those taxable years.

Each time that the tax credit is carried over to a succeeding

taxable year, it is to be reduced by the amount that was used as

a credit during the immediately preceding taxable year. The tax

credit may be carried over and applied to succeeding taxable

years for no more than 15 taxable years following the first

taxable year for which the taxpayer was entitled to claim the

credit.

(b)  Application.--A tax credit approved by the department

for a qualified biotechnology services expense in taxable year

first shall be applied against the taxpayer's qualified tax

liability for the current taxable year as of the date on which

the credit was approved before the tax credit is applied against

any tax liability under subsection (a).

(c)  Unused credit.--A taxpayer may not assign, carry back or

obtain a refund of an unused tax credit.

Section 1705-G.  Time limitations.

A taxpayer is not entitled to a tax credit for qualified

biotechnology services expenses incurred in taxable years ending

after December 31, 2013. The department shall not approve a tax

credit under this article for taxable years ending after

December 31, 2013.

Section 1706-G.  Limitation on credits.

(a)  Total credit limitation.--The total amount of tax

credits approved by the department shall not exceed $40,000,000

in any fiscal year.

(b)  Proration.--If the total amount of tax credits applied

for by all taxpayers exceeds the amount allocated for those

credits, the tax credit to be received by each applicant shall

be prorated by the department among all applicants who have

qualified for the credit.

Section 1707-G.  Shareholder, owner or member pass-through.

(a)  Pennsylvania S corporation.--If a Pennsylvania S

corporation does not have an eligible tax liability against

which the tax credit may be applied, a shareholder of the

Pennsylvania S corporation is entitled to a tax credit equal to

the tax credit determined for the Pennsylvania S corporation for

the taxable year multiplied by the percentage of the

Pennsylvania S corporation's distributive income to which the

shareholder is entitled.

(b)  Non-Pennsylvania S corporation.--If a pass-through

entity other than a Pennsylvania S corporation does not have an

eligible tax liability against which the tax credit may be

applied, an owner or member of that pass-through entity is

entitled to a tax credit equal to the tax credit determined for

the pass-through entity for the taxable year multiplied by the

percentage of the pass-through entity's distributive income to

which the owner or member is entitled.

(c)  Additional credit.--The credit provided under subsection

(a) or (b) is in addition to any tax credit to which a

shareholder, owner or member of a pass-through entity is

otherwise entitled under this article. A pass-through entity and

a shareholder, owner or member of a pass-through entity may not

claim a credit under this article for the same qualified

biotechnology services expense.

Section 1708-G.  Report.

The secretary shall annually report to the General Assembly

indicating the effectiveness of the credit provided by this

article no later than March 15 following the year in which the

credits were approved. The report shall include the names of all

taxpayers utilizing the credit as of the date of the report and

the amount of credits approved and utilized by each taxpayer.

Notwithstanding any law providing for the confidentiality of tax

records, the information contained in the report shall be public

information. The report may also include recommendations for

changes in the calculation or administration of the credit.

Section 1709-G.  Regulations.

The secretary shall promulgate regulations necessary for the

implementation and administration of this article.

Section 2.  This act shall take effect immediately.