Regular Session 2023-2024 House Bill 0724 P.N. 0669

PRINTER'S NO. 669

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

724

Session of

2023

INTRODUCED BY CIRESI, JAMES, SANCHEZ, MADDEN, PROBST, SAPPEY,

FREEMAN, HILL-EVANS, N. NELSON, GUENST, BURGOS, NEILSON,

HADDOCK, CEPEDA-FREYTIZ, CERRATO, BRENNAN, MALAGARI,

SCHLOSSBERG AND HOHENSTEIN, MARCH 28, 2023

REFERRED TO COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT,

MARCH 28, 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," providing for historic homeownership preservation

incentive tax credit; imposing duties on the Department of

Community and Economic Development and the Pennsylvania

Historical and Museum Commission; and establishing the

Historic Homeowner Preservation Tax Credit Administration

Fund.

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-H.1

HISTORIC HOMEOWNERSHIP PRESERVATION INCENTIVE TAX CREDIT

Section 1701-H.1. Scope of article.

This article relates to the historic homeownership

preservation incentive tax credit.

Section 1702-H.1. 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:

"Certified historic property." A property located within

this Commonwealth that is:

(1) l isted in the National Register of Historic Places;

(2) located in a historic district listed in the

National Register of Historic Places and certified by the

United States Secretary of the Interior as contributing to

the historic significance of the historic district;

(3) individually designated as a historic property by

local ordinance and certified by the commission as meeting

the criteria for inclusion in the National Register of

Historic Places; or

(4) located in a historic district set apart or

registered by a local government and:

(i) the historic district is certified by the

commission as meeting the criteria for inclusion in the

National Register of Historical Places; and

(ii) the property contributes to the historic

significance of the historic district.

"Commission." The Pennsylvania Historical and Museum

Commission.

"Completed project." The completion of the rehabilitation of

a qualified historic home in accordance with a qualified

rehabilitation plan and the receipt of an occupancy certificate

for the structure.

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"Department." The Department of Community and Economic

Development of the Commonwealth.

"Internal Revenue Code." 26 U.S.C. § 1 et seq. (Internal

Revenue Code of 1986), as amended.

"Qualified census tract." A federally qualified census tract

or area of chronic economic distress that is identified by the

department and is:

(1) at 100% or below the State family median income

level; or

(2) designated as a qualified opportunity zone under 26

U.S.C. § 1400Z-1 (relating to designation).

"Qualified expenditures." As follows:

(1) The costs and expenses that:

(i) are properly chargeable to a capital account;

(ii) are incurred by a qualified taxpayer in the

rehabilitation of a qualified historic home pursuant to a

qualified rehabilitation plan; and

(iii) adhere to the guidelines for eligible

rehabilitation expenditures developed under section 1706-

H.1.

(2) The term does not include:

(i) The cost of acquiring a building or interest in

a building.

(ii) An expenditure attributable to the enlargement

of an existing building.

(3) The commission may develop guidelines on the types

of costs and expenses that are appropriately determined to be

qualified expenditures.

"Qualified historic home." As follows:

(1) A certified historic property or portion of the

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property of an applicant that is:

(i) located in a qualified census tract;

(ii) owned by the applicant; and

(iii) being used, or within a reasonable period will

be used, by the applicant as the applicant's principal

residence.

(2) The following apply to the property described under

paragraph (1):

(i) The property may consist of part of a multiple

dwelling or multiple purpose building or series of

buildings, including a cooperative or condominium.

(ii) If only a portion of a building is used as the

principal residence, only those qualified expenditures

that are properly allocable to that portion shall be

eligible under this article to apply for tax credits

calculated at the percentage available to owner-

occupants.

"Qualified rehabilitation plan." A plan to substantially

rehabilitate a qualified historic home that is approved by the

commission as being consistent with the standards for

rehabilitation and guidelines for rehabilitation of historic

buildings as adopted by the United States Secretary of the

Interior. A plan shall be treated as substantially rehabilitated

if qualified expenditures total $5,000 or more.

"Qualified tax liability." Tax liability imposed on a

taxpayer under Article III.

"Qualified taxpayer." An individual who:

(1) is subject to a tax imposed under Article III; and

(2) owns a qualified historic home.

Section 1703-H.1. Tax credit certificates.

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(a) Application.--

(1) A qualified taxpayer may apply to the department for

a tax credit certificate under this section.

(2) The application shall be on the form required by the

department and shall include a qualified rehabilitation plan.

(3) The department shall establish an application

processing fee. The following apply:

(i) The fee structure shall be tiered based on the

amount of tax credits requested.

(ii) In no case shall the fee exceed $100.

(4) The proceeds of the fee under paragraph (3) shall be

deposited into the Historic Homeowner Preservation Tax Credit

Administration Fund, which is established as a nonlapsing

fund in the State Treasury. The money in the Historic

Homeowner Preservation Tax Credit Administration Fund shall

be appropriated on a continuing basis to the department and

used by the commission and the department to offset the costs

of the review of tax credit applications and awarding of tax

credit certificates.

(5) The department shall begin accepting applications

for credit certificates on June 1 and close the initial

application period on June 30.

(b) Review, recommendation and approval.--

(1) The department shall forward applications received

under this section to the commission for review.

(2) The commission shall:

(i) Review the proposed rehabilitation plan in each

application.

(ii) Verify that the building is a qualified

historic home.

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(iii) By December 1, provide the department with a

list of eligible projects.

(3) The department shall allocate the credits and

release a list of allocated projects within 15 days of the

development of the list under paragraph (2)(iii). Applicants

with approved allocations shall be provided with an award

letter.

(4) Any amount of tax credit certificates up to the

annual program limit of $3,000,000 not awarded within the

initial application period shall be available on a first-

come, first-served basis through a process determined by the

department.

(5) The commission shall notify the department of

verification of a completed project and notify the department

of the amount of qualified expenditures incurred by the

taxpayer in connection with the completed project.

(6) If the department has approved the application and

received notification of a completed project, it shall issue

the qualified taxpayer a tax credit certificate within 45

days of the receipt of an approved, completed project. A tax

credit certificate issued under this section shall not exceed

20% of qualified expenditures determined by the commission to

have been incurred by the qualified taxpayer in connection

with the completed project.

(7) In granting tax credit certificates under this

article, the department may not grant more than $50,000 in

tax credit certificates to a single qualified taxpayer in any

fiscal year.

Section 1704-H.1. Claiming tax credit.

Upon presenting a tax credit certificate to the Department of

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Revenue, a qualified taxpayer may claim a tax credit against the

qualified tax liability of the qualified taxpayer.

Section 1705-H.1. Carryover, carryback and assignment of tax

credit.

(a) Carryover.--If a qualified taxpayer cannot use the

entire amount of the tax credit under this article for the

taxable year in which the tax credit is first approved, the

excess may be carried over to succeeding taxable years and used

as a credit against the qualified tax liability of the qualified

taxpayer for those taxable years. The following apply:

(1) Each time the tax credit is carried over to a

succeeding taxable year, the tax credit shall be reduced by

the amount that was used as a credit during the immediately

preceding taxable year.

(2) The tax credit may be carried over and applied to

succeeding taxable years for not more than seven taxable

years following the first taxable year for which the

qualified taxpayer was entitled to claim the credit.

(b) Application.--A tax credit certificate received by the

Department of Revenue in a taxable year first shall be applied

against the qualified taxpayer's qualified tax liability for the

current taxable year as of the date on which the credit was

issued before the tax credit can be applied against any

qualified tax liability under subsection (a).

household income of less than $60,000 may carry back or obtain a

refund of all or any portion of an unused tax credit granted to

the qualified taxpayer under this article.

(d) Purchasers and assignees.--

(1) If a purchaser or assignee of all or a portion of a

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tax credit obtained under section 1703-H.1 cannot use the

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

the tax credit was purchased or assigned, the excess may be

carried over to succeeding taxable years and used as a credit

against the qualified tax liability of the purchaser or

assignee for those taxable years.

(2) Each time a tax credit is carried over to a

succeeding taxable year, the tax credit shall be reduced by

the amount that was used as a credit during the immediately

preceding taxable year.

(3) The tax credit may be carried over and applied to

succeeding taxable years for not more than seven taxable

years following the first taxable year for which the

qualified taxpayer was entitled to claim the credit.

(4) The purchaser or assignee may not carry back the

credit or obtain a refund.

Section 1706-H.1. Administration.

The department, the commission and the Department of Revenue

shall jointly develop written guidelines for the implementation

of the provisions of this article.

Section 1707-H.1. Annual report to General Assembly.

(a) Submittal.--By October 1, 2024, and October 1 of each

year thereafter, the department shall submit a report on the tax

credit under this article to:

(1) The chairperson and minority chairperson of the

Appropriations Committee of the Senate.

(2) The chairperson and minority chairperson of the

Appropriations Committee of the House of Representatives.

(3) The chairperson and minority chairperson of the

Finance Committee of the Senate.

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(4) The chairperson and minority chairperson of the

Finance Committee of the House of Representatives.

(b) Contents.--The report under this section shall include:

(1) The list of completed projects that have been

awarded tax credits under this article.

(2) The amount of tax credits under this article

received by each completed project.

(3) Total project costs and the amount of private

investment in each completed project.

(4) The total number of completed projects placed into

service in the past year that were vacant for at least 12

months prior to commencement of rehabilitation work.

(5) The total number of completed projects placed into

service in the past year that had not paid property taxes for

at least 12 months prior to the commencement of

rehabilitation work.

for the confidentiality of tax records, the information in the

report under this section shall be public information and shall

be posted on the publicly accessible Internet website of the

department.

(d) Review of tax credit program.--The department, in

cooperation with the commission, shall undertake a review of the

tax credit program under this article to determine the

effectiveness of the program in preserving and rehabilitating

the Commonwealth's historic homes and the impact these efforts

have had on the stimulation of investment in this Commonwealth.

The results of the review shall be included in the annual report

due October 1, 2024.

Section 1708-H.1. Application of Internal Revenue Code.

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The provisions of 26 U.S.C. § 47 (relating to rehabilitation

credit) and the regulations promulgated regarding those

provisions shall apply to the Department of Revenue's

interpretation and administration of the credit provided under

this article without regard to ratably allocating the credit

over a five-year period as required by 26 U.S.C. § 47(a).

References to the Internal Revenue Code shall mean the sections

of the Internal Revenue Code as existing on any date of

interpretation of this article, except that if those sections of

the Internal Revenue Code referenced in this article are

repealed or terminated, references to the Internal Revenue Code

shall mean those sections last having full force and effect

without regard to ratably allocating the credit over a five-year

period as required by 26 U.S.C. § 47(a). If after repeal or

termination the Internal Revenue Code sections are revised or

reenacted, references in this article to Internal Revenue Code

sections shall mean those revised or reenacted sections.

Section 1709-H.1. Limitation.

Taxpayers shall not be entitled to apply for tax credits

under this article after February 1, 2032.

Section 1710-H.1. Recapture.

If a tax credit or a portion of a tax credit under this

article is subject to recapture, the Commonwealth shall pursue

its recapture remedies and rights against the qualified taxpayer

that applied for the credit. No redress shall be sought against

an assignee, purchaser or transferee of the tax credit if the

assignee, purchaser or transferee acquired the tax credit by way

of an arm's-length transaction, for value and without notice of

violation, fraud or misrepresentation.

Section 1711-H.1. Administrative costs.

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The commission may use no more than 5% of money allocated for

the tax credit program under this article for administrative

costs associated with the tax credit program.

Section 2. This act shall take effect in 60 days.

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