PRINTER'S NO. 2267
No. 1700 Session of 2001
INTRODUCED BY MAHER, JUNE 19, 2001
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, JUNE 19, 2001
AN ACT 1 Amending the act of December 31, 1965 (P.L.1257, No.511), 2 entitled "An act empowering cities of the second class, 3 cities of the second class A, cities of the third class, 4 boroughs, towns, townships of the first class, townships of 5 the second class, school districts of the second class, 6 school districts of the third class and school districts of 7 the fourth class including independent school districts, to 8 levy, assess, collect or to provide for the levying, 9 assessment and collection of certain taxes subject to maximum 10 limitations for general revenue purposes; authorizing the 11 establishment of bureaus and the appointment and compensation 12 of officers, agencies and employes to assess and collect such 13 taxes; providing for joint collection of certain taxes, 14 prescribing certain definitions and other provisions for 15 taxes levied and assessed upon earned income, providing for 16 annual audits and for collection of delinquent taxes, and 17 permitting and requiring penalties to be imposed and 18 enforced, including penalties for disclosure of confidential 19 information, providing an appeal from the ordinance or 20 resolution levying such taxes to the court of quarter 21 sessions and to the Supreme Court and Superior Court," 22 further providing for definitions. 23 The General Assembly of the Commonwealth of Pennsylvania 24 hereby enacts as follows: 25 Section 1. The definitions of "earned income" and "net 26 profits" in section 13 I of the act of December 31, 1965 27 (P.L.1257, No.511), known as The Local Tax Enabling Act, amended
1 December 20, 2000 (P.L.781, No.110), are amended to read: 2 Section 13. Earned Income Taxes.--On and after the effective 3 date of this act the remaining provisions of this section shall 4 be included in or construed to be a part of each tax levied and 5 assessed upon earned income by any political subdivision levying 6 and assessing such tax pursuant to this act. The definitions 7 contained in this section shall be exclusive for any tax upon 8 earned income and net profits levied and assessed pursuant to 9 this act, and shall not be altered or changed by any political 10 subdivision levying and assessing such tax. 11 I. Definitions 12 * * * 13 "Earned income." [Salaries, wages, commissions, bonuses, 14 incentive payments, fees, tips and other compensation received 15 by a person or his personal representative for services 16 rendered, whether directly or through an agent, and whether in 17 cash or in property; not including, however, wages or 18 compensation paid to persons on active military service, 19 periodic payments for sickness and disability other than regular 20 wages received during a period of sickness, disability or 21 retirement or payments arising under workmen's compensation 22 acts, occupational disease acts and similar legislation, or 23 payments commonly recognized as old age benefits, retirement pay 24 or pensions paid to persons retired from service after reaching 25 a specific age or after a stated period of employment or 26 payments commonly known as public assistance, or unemployment 27 compensation payments made by any governmental agency or 28 payments to reimburse expenses or payments made by employers or 29 labor unions for wage and salary supplemental programs, 30 including, but not limited to, programs covering 20010H1700B2267 - 2 -
1 hospitalization, sickness, disability or death, supplemental 2 unemployment benefits, strike benefits, social security and 3 retirement.] As determined by the Department of Revenue under 4 section 303 of the act of March 4, 1971 (P.L.6, No.2), known as 5 the "Tax Reform Code of 1971," and regulations in 61 Pa. Code 6 Pt. I Art. V (relating to personal income tax). Employe business 7 expenses are allowable deductions as determined under section 8 303 of the "Tax Reform Code of 1971" and 61 Pa. Code Pt. I 9 Subpt. B Art. V (relating to personal income tax). 10 * * * 11 "Net profits." The net income from the operation of a 12 business, profession, or other activity, except corporations, 13 [after provision for all costs and expenses incurred in the 14 conduct thereof, determined either on a cash or accrual basis in 15 accordance with the accounting system used in such business, 16 profession, or other activity, but without deduction of taxes 17 based on income.] determined under Article III of the act of 18 March 4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of 19 1971," and regulations of the Department of Revenue promulgated 20 under that article. The term does not include income which is 21 not paid for services provided and which is in the nature of 22 earnings from an investment. For taxpayers engaged in the 23 business, profession or activity of farming, the term shall not 24 include: 25 (1) any interest earnings generated from any monetary 26 accounts or investment instruments of the farming business; 27 (2) any gain on the sale of farm machinery; 28 (3) any gain on the sale of livestock held twelve months or 29 more for draft, breeding or dairy purposes; and 30 (4) any gain on the sale of other capital assets of the 20010H1700B2267 - 3 -
1 farm. 2 * * * 3 Section 2. This act shall take effect in 60 days. B20L53VDL/20010H1700B2267 - 4 -