HOUSE AMENDED
PRIOR PRINTER'S NOS. 2048, 2221 PRINTER'S NO. 2476
No. 1486 Session of 1986
INTRODUCED BY HOWARD, STAUFFER, FISHER, LEMMOND, JUBELIRER,
GREENLEAF, TILGHMAN, HOPPER, HELFRICK, WENGER, LOEPER,
SHUMAKER, RHOADES, MOORE, PECORA, HOLL AND SHAFFER,
APRIL 17, 1986
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, SEPTEMBER 30, 1986
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An <--
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further providing for a change in the personal
11 income tax and corporate net income tax rates and a change in
12 the estimated tax limit; adding to the capital stock-
13 franchise tax definitions; and further providing for
14 prepayment of tax.
15 AMENDING THE ACT OF MAY 21, 1943 (P.L.349, NO.162), ENTITLED, AS <--
16 AMENDED, "AN ACT REQUIRING POLITICAL SUBDIVISIONS TO REFUND
17 CERTAIN TAXES, LICENSE FEES, PENALTIES, FINES OR MONEYS PAID
18 THERETO, AND PROVIDING PROCEDURE FOR OBTAINING SUCH REFUNDS,"
19 REQUIRING INTEREST TO BE PAID ON CERTAIN OVERPAYMENTS OF TAX.
20 The General Assembly of the Commonwealth of Pennsylvania
21 hereby enacts as follows:
22 Section 1. Section 302 of the act of March 4, 1971 (P.L.6, <--
23 No.2), known as the Tax Reform Code of 1971, amended July 1,
24 1985 (P.L.78, No.29), is amended to read:
1 Section 302. Imposition of Tax.--(a) There is hereby
2 imposed a tax to be paid by resident individuals, estates or
3 trusts at the annual rate of two and two-tenths per cent for
4 taxable years up to and including the taxable year commencing on
5 or after January 1, 1982, and at the annual rate of two and
6 forty-five hundredths per cent for the taxable year commencing
7 on or after January 1, 1983, and for the first six months of the
8 taxable year commencing on or after January 1, 1984, and at the
9 annual rate of two and thirty-five hundredths per cent for the
10 second six months of the taxable year commencing on or after
11 January 1, 1984, and for the taxable year commencing on or after
12 January 1, 1985, and at the annual rate of two and two-tenths
13 per cent for the first six months of the taxable year commencing
14 on or after January 1, 1986, and at a rate of two and one-tenth
15 per cent for the second six months of the taxable year
16 commencing on or after January 1, 1986, and for each taxable
17 year thereafter on the privilege of receiving each of the
18 classes of income hereinafter enumerated in section 303.
19 (b) There is hereby imposed a tax to be paid by nonresident
20 individuals, estates or trusts at the annual rate of two and
21 two-tenths per cent for taxable years up to and including the
22 taxable year commencing on or after January 1, 1982, and at the
23 annual rate of two and forty-five hundredths per cent for the
24 taxable year commencing on or after January 1, 1983, and for the
25 first six months of the taxable year commencing on or after
26 January 1, 1984, and at the annual rate of two and thirty-five
27 hundredths per cent for the second six months of the taxable
28 year commencing on or after January 1, 1984, and for the taxable
29 year commencing on or after January 1, 1985, and at the annual
30 rate of two and two-tenth per cent for the first six months of
19860S1486B2476 - 2 -
1 the taxable year commencing on or after January 1, 1986, and at
2 a rate of two and one-tenth per cent of the second six months of
3 the taxable year commencing on or after January 1, 1986, and for
4 each taxable year thereafter on the privilege of receiving each
5 of the classes of income enumerated in section 303 from sources
6 within this Commonwealth.
7 Section 2. Section 325(a), (d) and (f) of the act, added
8 August 31, 1971 (P.L.362, No.93), are amended to read:
9 Section 325. Declarations of Estimated Tax.--(a) Every
10 resident and nonresident individual shall at the time
11 hereinafter prescribed make a declaration of his estimated tax
12 for the taxable year, containing such information as the
13 department may prescribe by regulations, if his income, other
14 than from compensation on which tax is withheld under this
15 article, can reasonably be expected to exceed [one thousand
16 dollars ($1,000)] two thousand five hundred dollars ($2,500).
17 * * *
18 (d) Except as hereinafter provided, the date for filing a
19 declaration of estimated tax shall depend upon when the resident
20 or nonresident individual determines that his income on which no
21 tax has been withheld under this article can reasonably be
22 expected to exceed [one thousand dollars ($1,000)] two thousand
23 five hundred dollars ($2,500) in the taxable year, as follows:
24 (1) If the determination is made on or before April 1 of the
25 taxable year, a declaration of estimated tax shall be filed no
26 later than April 15 of the taxable year.
27 (2) If the determination is made after April 1 but before
28 June 2 of the taxable year, the declaration shall be filed no
29 later than June 15 of such year.
30 (3) If the determination is made after June 1 but before
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1 September 2 of the taxable year, the declaration shall be filed
2 no later than September 15 of such year.
3 (4) If the determination is made after September 1 of the
4 taxable year, the declaration shall be filed no later than
5 January 15 of the year succeeding the taxable year.
6 * * *
7 (f) A declaration of estimated tax of an individual having a
8 total estimated tax for the taxable year of [fifty dollars
9 ($50)] one hundred dollars ($100) or less may be filed at any
10 time on or before January 15 of the succeeding year under
11 regulations of the department.
12 * * *
13 Section 3. Section 402 of the act, amended June 29, 1984
14 (P.L.445, No.94), is amended to read:
15 Section 402. Imposition of Tax.--Every corporation shall be
16 subject to, and shall pay for the privilege of (i) doing
17 business in this Commonwealth; or (ii) carrying on activities in
18 this Commonwealth; (iii) having capital or property employed or
19 used in this Commonwealth; or (iv) owning property in this
20 Commonwealth, by or in the name of itself, or any person,
21 partnership, association, limited partnership, joint-stock
22 association, or corporation, a State excise tax at the rate of
23 twelve per cent per annum upon each dollar of taxable income of
24 such corporation received by, and accruing to, such corporation
25 during the calendar year 1971 and the first six months of 1972
26 and at the rate of eleven per cent per annum upon each dollar of
27 taxable income of such corporation received by, and accruing to,
28 such corporation during the second six months of calendar year
29 1972 through the calendar year 1973 and at the rate of nine and
30 one-half per cent per annum upon each dollar of taxable income
19860S1486B2476 - 4 -
1 of such corporation received by, and accruing to, such
2 corporation during the calendar years 1974, 1975 and 1976 and at
3 the rate of ten and one-half per cent per annum upon each dollar
4 of taxable income of such corporation received by, and accruing
5 to, such corporation during the calendar year 1977 through the
6 calendar year 1984 and at the rate of nine and one-half per cent
7 per annum upon each dollar of taxable income of such corporation
8 received by and accruing to such corporation during the calendar
9 year 1985 through calendar year 1986 and at the rate of eight
10 and one-half per cent per annum upon each dollar of taxable
11 income of such corporation received by and accruing to such
12 corporation during the calendar year 1987 and each calendar year
13 thereafter, except where a corporation reports to the Federal
14 Government on the basis of a fiscal year, and has certified such
15 fact to the department as required by section 403 of this
16 article, in which case, such tax, at the rate of twelve per
17 cent, shall be levied, collected, and paid upon all taxable
18 income received by, and accruing to, such corporation during the
19 first six months of the fiscal year commencing in the calendar
20 year 1972 and at the rate of eleven per cent, shall be levied,
21 collected, and paid upon all taxable income received by, and
22 accruing to, such corporation during the second six months of
23 the fiscal year commencing in the calendar year 1972 and during
24 the fiscal year commencing in the calendar year 1973 and at the
25 rate of nine and one-half per cent, shall be levied, collected,
26 and paid upon all taxable income received by, and accruing to,
27 such corporation during the fiscal year commencing in the
28 calendar years 1974, 1975 and 1976 and at the rate of ten and
29 one-half per cent, shall be levied, collected, and paid upon all
30 taxable income received by, and accruing to, such corporation
19860S1486B2476 - 5 -
1 during the fiscal year commencing in the calendar year 1977
2 through the fiscal year commencing in 1984 and at the rate of
3 nine and one-half per cent, shall be levied, collected, and paid
4 upon all taxable income received by and accruing to such
5 corporation during the fiscal year commencing in 1985 through
6 fiscal year 1986 and at the rate of eight and one-half per cent
7 per annum upon each dollar of taxable income of such corporation
8 received by and accruing to such corporation during the fiscal
9 year 1987 and during each fiscal year thereafter. No penalty
10 prescribed by subsection (e) of section 3003 shall be assessed
11 against a corporation for the additional tax which may be due as
12 a result of the increase in tax rate from nine and one-half per
13 cent to ten and one-half per cent imposed retroactively by this
14 section for the calendar year 1977 or for the fiscal year
15 commencing in 1977.
16 Section 4. The definitions of "capital stock value,"
17 "foreign entity" and "net worth" in section 601(a) of the act,
18 amended December 23, 1983 (P.L.360, No.89), are amended to read:
19 Section 601. Definitions and Reports.--(a) The following
20 words, terms and phrases when used in this Article VI shall have
21 the meaning ascribed to them in this section, except where the
22 context clearly indicates a different meaning:
23 * * *
24 "Capital stock value." The amount computed pursuant to the
25 following formula: the product of one-half times the sum of the
26 average net income capitalized at the rate of nine and one-half
27 per cent plus seventy-five per cent of net worth, from which
28 product shall be subtracted fifty thousand dollars ($50,000),
29 the algebraic equivalent of which is
30 (.5 X (average net income/.095 + (.75)
19860S1486B2476 - 6 -
1 (net worth))) - $50,000
2 * * *
3 "Foreign entity." Every corporation, joint-stock
4 association, limited partnership and company whatsoever, now or
5 hereafter incorporated or organized by or under the law of any
6 other state or territory of the United States, or by the United
7 States, or by or under the law of any foreign government, and
8 doing business in and liable to taxation within the Commonwealth
9 or carrying on activities in the Commonwealth, including
10 solicitation or either owning or having capital or property
11 employed or used in the Commonwealth by or in the name of any
12 limited partnership or joint-stock association, copartnership or
13 copartnerships, person or persons, or in any other manner doing
14 business within and liable to taxation within the Commonwealth
15 other than nonprofit corporations, banks, savings institutions,
16 title insurance or trust companies, building and loan
17 associations and insurance companies is a foreign entity.
18 * * *
19 "Net worth." (1) Net worth shall be the sum of the entity's
20 issued and outstanding capital stock, surplus and undivided
21 profits as per books set forth for the close of such tax year on
22 the income tax return filed by the entity with the Federal
23 Government, or if no such return is made, as would have been set
24 forth had such return been made, subject, however, in either
25 case to any correction thereof for fraud, evasion or error. In
26 the case of any entity which has investments in the common stock
27 of other corporations, the net worth shall be the consolidated
28 net worth of such entity computed in accordance with generally
29 accepted accounting principles. Net worth shall in no case be
30 less than zero.
19860S1486B2476 - 7 -
1 (2) If net worth as arrived at under clause (1) for the
2 current tax year is greater than twice or less than one-half of
3 the net worth which would have been calculated under clause (1)
4 as of the first day of the current tax year, then net worth for
5 the current tax year shall be the average of these two amounts.
6 * * *
7 Section 5. Section 3003(b.1) of the act, added July 1, 1985
8 (P.L.78, No.29), is amended to read:
9 Section 3003. Prepayment of Tax.--* * *
10 (b.1) Notwithstanding the provisions of subsections (a) and
11 (b), the tentative tax due with respect to the capital stock and
12 franchise tax [for taxable years commencing with calendar year
13 1986 and for each taxable year thereafter] shall be computed by
14 applying the current tax rate to [eighty-five] eighty per cent
15 of such tax base from the year preceding the immediate prior
16 year.
17 * * *
18 Section 6. If the amendment to the definition of "capital
19 stock value" as provided by section 4, or the application
20 thereof to any person or circumstances is held invalid, it is
21 the intent of the General Assembly that such amendment shall be
22 severable and "capital stock value" shall be defined as if this
23 amendment had never been enacted.
24 Section 7. Except as provided in section 8, this act shall
25 apply to taxable years beginning on or after January 1, 1986.
26 Section 8. The amendment to section 601 to the definition of
27 "foreign entity" shall apply retroactively to January 1, 1985.
28 Nothing contained in the amendment to section 601 to the
29 definition of "foreign entity" shall affect or impair litigation
30 relating to tax years prior to 1985. It is the intent of the
19860S1486B2476 - 8 -
1 General Assembly that the amendment to section 601 to the
2 definition of "foreign entity" is to clarify existing law. The
3 amendment to section 601 to the definition of "foreign entity"
4 shall not be construed to indicate a presumption that it is the
5 intent of the General Assembly to change the existing law.
6 Section 9. Sections 2 (section 325(a), (d) and (f)) and 5
7 (section 3003(b.1)) shall take effect January 1, 1987.
8 (b) The remainder of this act shall take effect immediately.
9 SECTION 1. SECTIONS 1 AND 2 OF THE ACT OF MAY 21, 1943 <--
10 (P.L.349, NO.162), ENTITLED, AS AMENDED, "AN ACT REQUIRING
11 POLITICAL SUBDIVISIONS TO REFUND CERTAIN TAXES, LICENSE FEES,
12 PENALTIES, FINES OR MONEYS PAID THERETO, AND PROVIDING PROCEDURE
13 FOR OBTAINING SUCH REFUNDS," AMENDED JUNE 21, 1957 (P.L.381,
14 NO.204), ARE AMENDED TO READ:
15 SECTION 1. (A) WHENEVER ANY PERSON OR CORPORATION OF THIS
16 COMMONWEALTH HAS PAID OR CAUSED TO BE PAID, OR HEREAFTER PAYS OR
17 CAUSES TO BE PAID, INTO THE TREASURY OF ANY POLITICAL
18 SUBDIVISION, DIRECTLY OR INDIRECTLY, VOLUNTARILY OR UNDER
19 PROTEST, ANY TAXES OF ANY SORT, LICENSE FEES, PENALTIES, FINES
20 OR ANY OTHER MONEYS TO WHICH THE POLITICAL SUBDIVISION IS NOT
21 LEGALLY ENTITLED; THEN, IN SUCH CASES, THE PROPER AUTHORITIES OF
22 THE POLITICAL SUBDIVISION, UPON THE FILING WITH THEM OF A
23 WRITTEN AND VERIFIED CLAIM FOR THE REFUND OF THE PAYMENT, ARE
24 HEREBY DIRECTED TO MAKE, OUT OF BUDGET APPROPRIATIONS OF PUBLIC
25 FUNDS, REFUND OF SUCH TAXES, LICENSE FEES, PENALTIES, FINES OR
26 OTHER MONEYS TO WHICH THE POLITICAL SUBDIVISION IS NOT LEGALLY
27 ENTITLED. REFUNDS OF SAID MONEYS SHALL NOT BE MADE, UNLESS A
28 WRITTEN CLAIM THEREFOR IS FILED, WITH THE POLITICAL SUBDIVISION
29 INVOLVED, WITHIN [TWO] THREE YEARS OF PAYMENT THEREOF.
30 (B) THE RIGHT TO A REFUND AFFORDED BY THIS ACT MAY NOT BE
19860S1486B2476 - 9 -
1 RESORTED TO IN ANY CASE IN WHICH THE TAXPAYER INVOLVED HAD OR
2 HAS AVAILABLE UNDER ANY OTHER STATUTE, ORDINANCE OR RESOLUTION,
3 A SPECIFIC REMEDY BY WAY OF REVIEW, APPEAL, REFUND OR OTHERWISE,
4 FOR RECOVERY OF MONEYS PAID AS AFORESAID, UNLESS THE CLAIM FOR
5 REFUND IS FOR THE RECOVERY OF MONEYS PAID UNDER A PROVISION OF A
6 STATUTE, ORDINANCE OR RESOLUTION SUBSEQUENTLY HELD, BY FINAL
7 JUDGMENT OF A COURT OF COMPETENT JURISDICTION, TO BE
8 UNCONSTITUTIONAL, OR UNDER AN INTERPRETATION OF SUCH PROVISION
9 SUBSEQUENTLY HELD BY SUCH COURT, TO BE ERRONEOUS.
10 (C) (1) ANY TAXPAYER WHO HAS PAID ANY TAX MONEY TO WHICH
11 THE POLITICAL SUBDIVISION IS NOT LEGALLY ENTITLED SHALL RECEIVE
12 INTEREST ON SUCH SUM OF MONEY. THE POLITICAL SUBDIVISION SHALL
13 PAY INTEREST ON SUCH SUMS AT THE SAME RATE AND IN THE SAME
14 MANNER AS THE COMMONWEALTH IS REQUIRED TO PAY PURSUANT TO
15 SECTION 806.1 OF THE ACT OF APRIL 9, 1929 (P.L.343, NO.176),
16 KNOWN AS "THE FISCAL CODE."
17 (2) FOR PURPOSES OF THIS SUBSECTION, THE TERM "POLITICAL
18 SUBDIVISION" MEANS A COUNTY, CITY, BOROUGH, INCORPORATED TOWN,
19 TOWNSHIP, HOME RULE MUNICIPALITY, SCHOOL DISTRICT, VOCATIONAL
20 SCHOOL DISTRICT AND COUNTY INSTITUTION DISTRICT.
21 SECTION 2. IN THE EVENT OF REFUSAL OR FAILURE ON THE PART OF
22 AUTHORITIES OF THE POLITICAL SUBDIVISION INVOLVED TO MAKE ANY
23 SUCH REFUND OF TAXES, LICENSE FEES, PENALTIES, FINES OR OTHER
24 MONEYS TO WHICH THE POLITICAL SUBDIVISION IS NOT LEGALLY
25 ENTITLED, OR REFUSAL OR FAILURE TO PAY INTEREST AS REQUIRED BY
26 SECTION 1, THEN THE AGGRIEVED PERSON OR CORPORATION SHALL HAVE
27 THE RIGHT TO BRING SUIT FOR AND RECOVER ANY SUCH TAXES,
28 INTEREST, LICENSE FEES, PENALTIES, FINES OR OTHER MONEYS TO
29 WHICH THE POLITICAL SUBDIVISION IS NOT LEGALLY ENTITLED, SUBJECT
30 TO THE LIMITATION HEREIN PROVIDED, BY INSTITUTING AN ACTION IN
19860S1486B2476 - 10 -
1 ASSUMPSIT IN THE COURT OF COMMON PLEAS OF THE COUNTY WHEREIN
2 SUCH POLITICAL SUBDIVISION IS LOCATED.
3 SECTION 2. THIS ACT SHALL TAKE EFFECT IN 60 DAYS.
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