PRIOR PRINTER'S NOS. 1524, 2207, 2321 PRINTER'S NO. 2849
No. 1321 Session of 1991
INTRODUCED BY EVANS, MAY 7, 1991
AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES,
DECEMBER 9, 1991
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 the imposition of sales and <--
11 use tax on certain services and for the reissuance of sales
12 and use tax licenses; providing for the increase of personal
13 income tax, for poverty exemptions to the tax, for notice of
14 certain sales and transfers and for the withholding of
15 certain tax on shares; further providing for the imposition,
16 rate and collection of corporate net income tax and capital
17 stock and franchise tax; further providing for the collection
18 of bank shares tax and title insurance and trust companies
19 tax; extending the utilities gross receipts tax; further
20 providing for the collection of the public utility realty
21 tax; increasing the rate of the cigarette tax, imposing a
22 cigarette floor tax; further providing for commissions for
23 cigarette tax agents, and dedicating a portion of the
24 revenues for agricultural farmland preservation and
25 children's health care; further providing for imposition,
26 collection, and administration of tax on property passing
27 upon death; further providing for the reports and payments of
28 certain estimated taxes; and making repeals. FURTHER <--
29 PROVIDING FOR THE SCOPE OF SALES AND USE TAX, FOR THE
30 DEFINITIONS OF "CLAIMANT," "DEPENDENT," "HOUSEHOLD INCOME,"
31 "TOTAL HOUSEHOLD INCOME" AND "POVERTY INCOME" AND FOR SPECIAL
32 TAX PROVISIONS FOR POVERTY, FOR TRANSFERS TO THE HAZARDOUS
1 SITES CLEANUP FUND AND THE PUBLIC TRANSPORTATION ASSISTANCE
2 FUND; FURTHER PROVIDING FOR REPORTS BY MUTUAL THRIFT
3 INSTITUTIONS; AND MAKING REPEALS.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Section 201(b), (c), (d), (f), (g), (i), (k), <--
7 (l), (m), (o) and (t) of the act of March 4, 1971 (P.L.6, No.2),
8 known as the Tax Reform Code of 1971, amended August 31, 1971
9 (P.L.362, No.93), September 9, 1971 (P.L.437, No.105), May 2,
10 1974 (P.L.269, No.75), July 20, 1974 (P.L.563, No.192), November
11 26, 1978 (P.L.1287, No.306), December 9, 1980 (P.L.1136,
12 No.202), May 2, 1985 (P.L.28, No.13) and July 2, 1986 (P.L.318,
13 No.77), are amended and the section is amended by adding clauses
14 to read:
15 Section 201. Definitions.--The following words, terms and
16 phrases when used in this Article II shall have the meaning
17 ascribed to them in this section, except where the context
18 clearly indicates a different meaning:
19 * * *
20 (b) "Maintaining a place of business in this Commonwealth."
21 (1) Having or maintaining within this Commonwealth, directly
22 or by a subsidiary, an office, distribution house, sales house,
23 warehouse, service enterprise or other place of business, or any
24 agent of general or restricted authority irrespective of whether
25 the place of business or agent is located here permanently or
26 temporarily or whether the person or subsidiary maintaining such
27 place of business or agent is authorized to do business within
28 this Commonwealth; or
29 (2) The engaging in any activity as a business within this
30 Commonwealth by any person, directly or by a subsidiary, in
31 connection with the lease, sale or delivery of tangible personal
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1 property or the performance of services thereon for use, storage
2 or consumption or in connection with the sale or delivery for
3 use of the services described in subclauses (11) through (23) of
4 clause (k) of this section including, but not limited to,
5 having, maintaining or using any office, distribution house,
6 sales house, warehouse or other place of business, any stock of
7 goods or any solicitor, salesman, agent or representative under
8 its authority, at its direction or with its permission,
9 regardless of whether the person or subsidiary is authorized to
10 do business in this Commonwealth.
11 (3) Regularly or substantially soliciting orders within this
12 Commonwealth in connection with the lease, sale or delivery of
13 tangible personal property to or the performance thereon of
14 services or in connection with the sale or delivery of the
15 services described in subclauses (11) through (23) of clause (k)
16 of this section for residents of this Commonwealth by means of
17 catalogues or other advertising, whether such orders are
18 accepted within or without this Commonwealth.
19 (c) "Manufacture." The performance of manufacturing,
20 fabricating, compounding, processing or other operations,
21 engaged in as a business, which place any tangible personal
22 property in a form, composition or character different from that
23 in which it is acquired whether for sale or use by the
24 manufacturer, and shall include, but not limited to--
25 (1) Every operation commencing with the first production
26 stage and ending with the completion of tangible personal
27 property having the physical qualities (including packaging, if
28 any, passing to the ultimate consumer) which it has when
29 transferred by the manufacturer to another;
30 (2) The publishing of books, newspapers, magazines and other
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1 periodicals and printing;
2 (3) Refining, blasting, exploring, mining and quarrying for,
3 or otherwise extracting from the earth or from waste or stock
4 piles or from pits or banks any natural resources, minerals and
5 mineral aggregates including blast furnace slag;
6 (4) Building, rebuilding, repairing and making additions to,
7 or replacements in or upon vessels designed for commercial use
8 of registered tonnage of fifty tons or more when produced upon
9 special order of the purchaser, or when rebuilt, repaired or
10 enlarged, or when replacements are made upon order of, or for
11 the account of the owner;
12 (5) Research having as its objective the production of a new
13 or an improved (i) product or utility service, or (ii) method of
14 producing a product or utility service, but in either case not
15 including market research or research having as its objective
16 the improvement of administrative efficiency.
17 The term "manufacture," shall not include constructing,
18 altering, servicing, repairing or improving real estate or
19 repairing, servicing or installing tangible personal property,
20 nor the cooking, freezing or baking of fruits, vegetables,
21 mushrooms, fish, seafood, meats, poultry or bakery products.
22 * * *
23 (d) "Processing." The performance of the following
24 activities when engaged in as a business enterprise:
25 (1) The cooking, baking or freezing of fruits, vegetables,
26 mushrooms, fish, seafood, meats [or], poultry or bakery
27 products, when the person engaged in such business packages such
28 property in sealed containers for wholesale distribution.
29 (2) The scouring, carbonizing, cording, combing, throwing,
30 twisting or winding of natural or synthetic fibers, or the
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1 spinning, bleaching, dyeing, printing or finishing of yarns or
2 fabrics, when such activities are performed prior to sale to the
3 ultimate consumer.
4 (3) The electroplating, galvanizing, enameling, anodizing,
5 coloring, finishing, impregnating or heat treating of metals or
6 plastics for sale or in the process of manufacturing.
7 (4) The rolling, drawing or extruding of ferrous and non-
8 ferrous metals.
9 (5) The fabrication for sale of ornamental or structural
10 metal or of metal stairs, staircases, gratings, fire escapes or
11 railings (not including fabrication work done at the
12 construction site).
13 (6) The preparation of animal feed or poultry feed for sale.
14 (7) The production, processing and bottling of non-alcoholic
15 beverages for wholesale distribution.
16 (8) The operation of a saw mill or planing mill for the
17 production of lumber or lumber products for sale.
18 (9) The milling for sale of flour or meal from grains.
19 (10) The slaughtering and dressing of animals for meat to be
20 sold or to be used in preparing meat products for sale, and the
21 preparation of meat products including lard, tallow, grease,
22 cooking and inedible oils for wholesale distribution.
23 (11) The processing of used lubricating oils.
24 (12) The broadcasting of radio and television programs of
25 licensed commercial or educational stations.
26 * * *
27 (f) "Purchase at retail."
28 (1) The acquisition for a consideration of the ownership,
29 custody or possession of tangible personal property other than
30 for resale by the person acquiring the same when such
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1 acquisition is made for the purpose of consumption or use,
2 whether such acquisition shall be absolute or conditional, and
3 by whatsoever means the same shall have been effected.
4 (2) The acquisition of a license to use or consume, and the
5 rental or lease of tangible personal property, other than for
6 resale regardless of the period of time the lessee has
7 possession or custody of the property.
8 (3) The obtaining for a consideration of those services
9 described in subclauses (2), (3) and (4) of clause (k) of this
10 section other than for resale.
11 (4) A retention after March 7, 1956, of possession, custody
12 or a license to use or consume pursuant to a rental contract or
13 other lease arrangement (other than as security), other than for
14 resale.
15 (5) The obtaining for a consideration of those services
16 described in subclauses (11) through (23) of clause (k) of this
17 section.
18 The term "purchase at retail" with respect to "liquor" and
19 "malt or brewed beverages" shall include the purchase of
20 "liquor" from any "Pennsylvania Liquor Store" by any person for
21 any purpose, and the purchase of "malt or brewed beverages" from
22 a "manufacturer of malt or brewed beverages," "distributor" or
23 "importing distributor" by any person for any purpose, except
24 purchases from a "manufacturer of malt or brewed beverages" by a
25 "distributor" or "importing distributor" or purchases from an
26 "importing distributor" by a "distributor" within the meaning of
27 the "Liquor Code." The term "purchase at retail" shall not
28 include any purchase of "malt or brewed beverages" from a
29 "retail dispenser" or any purchase of "liquor" or "malt or
30 brewed beverages" from a person holding a "retail liquor
19910H1321B2849 - 6 -
1 license" within the meaning of and pursuant to the provisions of
2 the "Liquor Code," but shall include any purchase or acquisition
3 of "liquor" or "malt or brewed beverages" other than pursuant to
4 the provisions of the "Liquor Code."
5 (g) "Purchase price."
6 (1) The total value of anything paid or delivered, or
7 promised to be paid or delivered, whether it be money or
8 otherwise, in complete performance of a sale at retail or
9 purchase at retail, as herein defined, without any deduction on
10 account of the cost or value of the property sold, cost or value
11 of transportation, cost or value of labor or service, interest
12 or discount paid or allowed after the sale is consummated, any
13 other taxes imposed by the Commonwealth of Pennsylvania or any
14 other expense except that there shall be excluded any gratuity
15 or separately stated deposit charge for returnable containers.
16 (2) There shall be deducted from the purchase price the
17 value of any tangible personal property actually taken in trade
18 or exchange in lieu of the whole or any part of the purchase
19 price. For the purpose of this clause, the amount allowed by
20 reason of tangible personal property actually taken in trade or
21 exchange shall be considered the value of such property.
22 (3) In determining the purchase price on the sale or use of
23 taxable tangible personal property or a service where, because
24 of affiliation of interests between the vendor and purchaser, or
25 irrespective of any such affiliation, if for any other reason
26 the purchase price declared by the vendor or taxpayer on the
27 taxable sale or use of such tangible personal property or
28 service is, in the opinion of the department, not indicative of
29 the true value of the article or service or the fair price
30 thereof, the department shall, pursuant to uniform and equitable
19910H1321B2849 - 7 -
1 rules, determine the amount of constructive purchase price upon
2 the basis of which the tax shall be computed and levied. Such
3 rules shall provide for a constructive amount of purchase price
4 for each such sale or use which would naturally and fairly be
5 charged in an arms-length transaction in which the element of
6 common interest between the vendor or purchaser is absent or if
7 no common interest exists, any other element causing a
8 distortion of the price or value is likewise absent. For the
9 purpose of this clause where a taxable sale or purchase at
10 retail transaction occurs between a parent and a subsidiary,
11 affiliate or controlled corporation of such parent corporation,
12 there shall be a rebuttable presumption, that because of such
13 common interest such transaction was not at arms-length.
14 (4) Where there is a transfer or retention of possession or
15 custody, whether it be termed a rental, lease, service or
16 otherwise, of tangible personal property including, but not
17 limited to linens, aprons, motor vehicles, trailers, tires,
18 industrial office and construction equipment, and business
19 machines the full consideration paid or delivered to the vendor
20 or lessor shall be considered the purchase price, even though
21 such consideration be separately stated and be designated as
22 payment for processing, laundering, service, maintenance,
23 insurance, repairs, depreciation or otherwise. The preceding
24 sentence shall not apply to the extent that the separately
25 stated payment is designated for a taxable service described in
26 subclauses (11) through (23) of clause (k) of this section.
27 Where the vendor or lessor supplies or provides an employe to
28 operate such tangible personal property, the value of the labor
29 thus supplied may be excluded and shall not be considered as
30 part of the purchase price if separately stated. There shall
19910H1321B2849 - 8 -
1 also be included as part of the purchase price the value of
2 anything paid or delivered, or promised to be paid or delivered
3 by a lessee, whether it be money or otherwise, to any person
4 other than the vendor or lessor by reason of the maintenance,
5 insurance or repair of the tangible personal property which a
6 lessee has the possession or custody of under a rental contract
7 or lease arrangement.
8 (5) With respect to the tax imposed by subsection (b) of
9 section 202 upon any tangible personal property originally
10 purchased by the user of such property six months or longer
11 prior to the first taxable use of such property within the
12 Commonwealth, such user may elect to pay tax on a substituted
13 base determined by considering the purchase price of such
14 property for tax purposes to be equal to the prevailing market
15 price of similar tangible personal property at the time and
16 place of such first use within the Commonwealth. Such election
17 must be made [by filing a notice thereof in the form specified
18 by] at the time of filing a tax return with the department and
19 reporting such tax liability and paying the proper tax due plus
20 all accrued penalties and interest, if there be any, within [one
21 year] six months of the due date of such report and payment, as
22 provided for by subsections (a) and (c) of section 217 of this
23 article.
24 * * *
25 (i) "Resale."
26 (1) Any transfer of ownership, custody or possession of
27 tangible personal property for a consideration, including the
28 grant of a license to use or consume and transactions where the
29 possession of such property is transferred but where the
30 transferor retains title only as security for payment of the
19910H1321B2849 - 9 -
1 selling price whether such transaction be designated as bailment
2 lease, conditional sale or otherwise.
3 (2) The physical incorporation of tangible personal property
4 as an ingredient or constituent into other tangible personal
5 property, which is to be sold in the regular course of business
6 or the performance of those services described in subclauses
7 (2), (3) and (4) of clause (k) of this section upon tangible
8 personal property which is to be sold in the regular course of
9 business or where the person incorporating such property has
10 undertaken at the time of purchase to cause it to be transported
11 in interstate commerce to a destination outside this
12 Commonwealth.
13 (3) The term "resale" shall also include tangible personal
14 property purchased or having a situs within this Commonwealth
15 solely for the purpose of being processed, fabricated or
16 manufactured into, attached to or incorporated into tangible
17 personal property and thereafter transported outside this
18 Commonwealth for use exclusively outside this Commonwealth.
19 (4) The term "resale" shall not include any sale of "malt or
20 brewed beverages" by a "retail dispenser," or any sale of
21 "liquor" or "malt or brewed beverages" by a person holding a
22 "retail liquor license" within the meaning of the "Liquor Code."
23 (5) The physical incorporation of tangible personal property
24 as an ingredient or constituent in the construction of
25 foundations for machinery or equipment the sale or use of which
26 is excluded from tax under the provisions of paragraphs (A),
27 (B), (C) and (D) of subclause (8) of clause (k) and
28 subparagraphs (i), (ii), (iii) and (iv) of paragraph (B) of
29 subclause (4) of clause (o) of this section, whether such
30 foundations at the time of construction or transfer constitute
19910H1321B2849 - 10 -
1 tangible personal property or real estate.
2 * * *
3 (k) "Sale at retail."
4 (1) Any transfer, for a consideration, of the ownership,
5 custody or possession of tangible personal property, including
6 the grant of a license to use or consume whether such transfer
7 be absolute or conditional and by whatsoever means the same
8 shall have been effected.
9 (2) The rendition of the service of printing or imprinting
10 of tangible personal property for a consideration for persons
11 who furnish, either directly or indirectly the materials used in
12 the printing or imprinting.
13 (3) The rendition for a consideration of the service of--
14 (i) Washing, cleaning, waxing, polishing or lubricating of
15 motor vehicles of another, whether or not any tangible personal
16 property is transferred in conjunction therewith; and
17 (ii) Inspecting motor vehicles pursuant to the mandatory
18 requirements of "The Vehicle Code."
19 (4) The rendition for a consideration of the service of
20 repairing, altering, mending, pressing, fitting, dyeing,
21 laundering, drycleaning or cleaning tangible personal property
22 other than wearing apparel or shoes, or applying or installing
23 tangible personal property as a repair or replacement part of
24 other tangible personal property except wearing apparel or shoes
25 for a consideration, whether or not the services are performed
26 directly or by any means other than by coin-operated self-
27 service laundry equipment for wearing apparel or household goods
28 and whether or not any tangible personal property is transferred
29 in conjunction therewith, except such services as are rendered
30 in the construction, reconstruction, remodeling, repair or
19910H1321B2849 - 11 -
1 maintenance of real estate: Provided, however, That this
2 subclause shall not be deemed to impose tax upon such services
3 in the preparation for sale of new items which are excluded from
4 the tax under clause (26) of section 204, or upon diaper
5 service.
6 [(5) Any retention after March 7, 1956, of possession,
7 custody or a license to use or consume pursuant to a rental
8 contract or other lease arrangement (other than as security).
9 (6) Any retention of possession, custody or a license to use
10 or consume tangible personal property or any further obtaining
11 of services described in subclauses (2), (3) and (4) of this
12 clause after April 15, 1959, pursuant to a rental or service
13 contract or other arrangement (other than as security).
14 (7) Any retention of possession, custody or a license to use
15 or consume tangible personal property or any further obtaining
16 of services described in subclauses (2), (3) and (4) of this
17 clause after August 20, 1959, pursuant to a rental or service
18 contract or other arrangement (other than as security).]
19 (8) Any retention of possession, custody or a license to use
20 or consume tangible personal property or any further obtaining
21 of services described in subclauses (2), (3) and (4) of this
22 clause pursuant to a rental or service contract or other
23 arrangement (other than as security).
24 The term "sale at retail" shall not include (i) any such
25 transfer of tangible personal property or rendition of services
26 described in subclauses (2), (3) and (4) of this clause for the
27 purpose of resale, or (ii) such rendition of services described
28 in subclauses (2), (3) and (4) of this clause or the transfer of
29 tangible personal property including, but not limited to,
30 machinery and equipment and parts therefor and supplies to be
19910H1321B2849 - 12 -
1 used or consumed by the purchaser directly in [any of] the
2 operations of--
3 (A) The manufacture of tangible personal property;
4 (B) Farming, dairying, agriculture, horticulture or
5 floriculture when engaged in as a business enterprise. The term
6 "farming" shall include the propagation and raising of ranch
7 raised fur-bearing animals and the propagation of game birds for
8 commercial purposes by holders of propagation permits issued
9 under [the act of June 3, 1937 (P.L.1225), known as "The Game
10 Law"] 34 Pa.C.S. (relating to game);
11 (C) The producing, delivering or rendering of a public
12 utility service, or in constructing, reconstructing, remodeling,
13 repairing or maintaining the facilities which are directly used
14 in producing, delivering or rendering such service[;]. This
15 exclusion shall not include any tangible personal property or
16 services used or installed in the constructing, reconstructing,
17 remodeling, repairing or maintaining of roads, sidewalks,
18 buildings or any similar structures notwithstanding their use;
19 (D) [The processing of personal property] Processing as
20 defined in clause (d) of this section[.];
21 (E) The exclusions provided in paragraphs (A), (B), (C) and
22 (D) shall be available only to persons actually engaged in the
23 activities enumerated in paragraphs (A), (B), (C) and (D). The
24 exclusions enumerated in paragraphs (A), (B), (C) and (D) shall
25 not be available to persons performing activities on behalf of
26 those engaged in the activities enumerated in paragraphs (A),
27 (B), (C) and (D).
28 The exclusions provided in paragraphs (A), (B), (C) and (D)
29 shall not apply to any vehicle required to be registered under
30 The Vehicle Code, except those vehicles used directly by a
19910H1321B2849 - 13 -
1 public utility engaged in business as a common carrier; to
2 maintenance facilities; or to materials, supplies or equipment
3 to be used or consumed in the construction, reconstruction,
4 remodeling, repair or maintenance of real estate other than
5 directly used machinery, equipment, parts or foundations
6 therefor that may be affixed to such real estate.
7 The exclusions provided in paragraphs (A), (B), (C) and (D)
8 shall not apply to tangible personal property or services to be
9 used or consumed in managerial sales or other nonoperational
10 activities, nor to the purchase or use of tangible personal
11 property or services by any person other than the person
12 directly using the same in the operations described in
13 paragraphs (A), (B), (C) and (D) herein.
14 The exclusion provided in paragraph (C) shall not apply to
15 (i) construction materials, supplies or equipment used [to
16 construct, reconstruct, remodel, repair or maintain] or
17 installed in the construction, reconstruction, remodeling,
18 repair or maintenance of facilities not used directly by the
19 purchaser in the production, delivering or rendition of public
20 utility service[,] or (ii) [construction materials, supplies or
21 equipment used to construct, reconstruct, remodel, repair or
22 maintain a building, road or similar structure, or (iii)] tools
23 and equipment used but not installed in the maintenance of
24 facilities used directly in the production, delivering or
25 rendition of a public utility service.
26 The exclusions provided in paragraphs (A), (B), (C) and (D)
27 shall not apply to the services enumerated in clauses (k)(11)
28 through (23), (w) through (vv) of this section.
29 (9) Where tangible personal property or services are
30 utilized for purposes constituting a "sale at retail" and for
19910H1321B2849 - 14 -
1 purposes excluded from the definition of "sale at retail," it
2 shall be presumed that such tangible personal property or
3 services are utilized for purposes constituting a "sale at
4 retail" and subject to tax unless the user thereof proves to the
5 department that the predominant purposes for which such tangible
6 personal property or services are utilized do not constitute a
7 "sale at retail."
8 (10) The term "sale at retail" with respect to "liquor" and
9 "malt or brewed beverages" shall include the sale of "liquor" by
10 any "Pennsylvania liquor store" to any person for any purpose,
11 and the sale of "malt or brewed beverages" by a "manufacturer of
12 malt or brewed beverages," "distributor" or "importing
13 distributor" to any person for any purpose, except sales by a
14 "manufacturer of malt or brewed beverages" to a "distributor" or
15 "importing distributor" or sales by an "importing distributor"
16 to a "distributor" within the meaning of the "Liquor Code." The
17 term "sale at retail" shall not include any sale of "malt or
18 brewed beverages" by a "retail dispenser" or any sale of
19 "liquor" or "malt or brewed beverages" by a person holding a
20 "retail liquor license" within the meaning of and pursuant to
21 the provisions of the "Liquor Code," but shall include any sale
22 of "liquor" or "malt or brewed beverages" other than pursuant to
23 the provisions of the "Liquor Code."
24 (11) The rendition for a consideration of the service of
25 research, other than research as defined in clause (c)(5) of
26 this section.
27 (12) The rendition for a consideration of management
28 services, management consulting services, public relations
29 services and other business consulting services.
30 (13) The rendition for a consideration of adjustment and
19910H1321B2849 - 15 -
1 collection services and credit reporting services.
2 (14) The rendition for a consideration of secretarial and
3 editing services.
4 (15) The rendition for a consideration of disinfecting and
5 pest control services, and of building maintenance and cleaning
6 services.
7 (16) The rendition for a consideration of employment agency
8 services, help supply services or other personnel supply
9 services.
10 (17) The rendition for a consideration of computer
11 programming and other computer-related services, including
12 providing computer integrated systems design, computer
13 processing and data preparation and processing, information
14 retrieval services, computer facilities management services,
15 computer maintenance and repair.
16 (18) The rendition for a consideration of detective and
17 other protective services.
18 (19) The rendition for a consideration of legal services.
19 (20) The rendition for a consideration of accounting,
20 auditing and bookkeeping services.
21 (21) The rendition for a consideration of professional
22 engineering, architectural and surveying services.
23 (22) The rendition for a consideration of lawn care
24 services.
25 (23) The rendition for a consideration of providing storage
26 space.
27 (l) "Storage." Any keeping or retention of tangible
28 personal property within this Commonwealth for any purpose
29 including the interim keeping, retaining or exercising any right
30 or power over such tangible personal property. The term excludes
19910H1321B2849 - 16 -
1 storage space.
2 (m) "Tangible personal property." Corporeal personal
3 property including, but not limited to, goods, wares,
4 merchandise, steam and natural and manufactured and bottled gas
5 for non-residential use, electricity for non-residential use,
6 [intrastate telephone and telegraph service for non-residential
7 use, spirituous or vinous liquor and malt or brewed beverages
8 and soft drinks; but the term shall not include household
9 supplies purchased at retail establishments for residential
10 consumption, including but not limited to, soaps, detergents,
11 cleaning and polishing preparations, paper goods, household
12 wrapping supplies and items of similar nature, or sanitary
13 napkins, tampons or similar items used for feminine hygiene. Nor
14 shall said term include steam, natural and manufactured and
15 bottled gas, fuel oil, electricity or intrastate telephone or
16 telegraph service when purchased directly by the user thereof
17 solely for his own residential use.] spirituous or vinous liquor
18 and malt or brewed beverages and soft drinks, interstate
19 telephone, telegraph and telecommunications service originating
20 or terminating in the Commonwealth and charged to a service
21 address in this Commonwealth, intrastate telephone, telegraph
22 and telecommunications service with the exception of subscriber
23 line charges and basic local telephone service for residential
24 use, provided further, the service address of any intrastate
25 telephone, telegraph, or telecommunications is deemed to be
26 within this State, regardless of how or where billed or paid. In
27 the case of any such interstate or intrastate telephone,
28 telegraph and telecommunications service, any charge paid
29 through a credit or payment mechanism which does not relate to a
30 service address, such as a bank, travel, credit or debit card,
19910H1321B2849 - 17 -
1 is deemed attributable to the address of origination of the
2 telephone, telegraph, or telecommunications.
3 * * *
4 (o) "Use."
5 (1) The exercise of any right or power incidental to the
6 ownership, custody or possession of tangible personal property
7 and shall include, but not be limited to transportation, storage
8 or consumption.
9 (2) The obtaining by a purchaser of the service of printing
10 or imprinting of tangible personal property when such purchaser
11 furnishes, either directly or indirectly, the articles used in
12 the printing or imprinting.
13 (3) The obtaining by a purchaser of the services of (i)
14 washing, cleaning, waxing, polishing or lubricating of motor
15 vehicles whether or not any tangible personal property is
16 transferred to the purchaser in conjunction with such services,
17 and (ii) inspecting motor vehicles pursuant to the mandatory
18 requirements of "The Vehicle Code."
19 (4) The obtaining by a purchaser of the service of
20 repairing, altering, mending, pressing, fitting, dyeing,
21 laundering, drycleaning or cleaning tangible personal property
22 other than wearing apparel or shoes or applying or installing
23 tangible personal property as a repair or replacement part of
24 other tangible personal property other than wearing apparel or
25 shoes, whether or not the services are performed directly or by
26 any means other than by means of coin-operated self-service
27 laundry equipment for wearing apparel or household goods, and
28 whether or not any tangible personal property is transferred to
29 the purchaser in conjunction therewith, except such services as
30 are obtained in the construction, reconstruction, remodeling,
19910H1321B2849 - 18 -
1 repair or maintenance of real estate: Provided, however, That
2 this subclause shall not be deemed to impose tax upon such
3 services in the preparation for sale of new items which are
4 excluded from the tax under clause (26) of section 204, or upon
5 diaper service: And provided further, That the term "use" shall
6 not include--
7 (A) Any tangible personal property acquired and kept,
8 retained or over which power is exercised within this
9 Commonwealth on which the taxing of the storage, use or other
10 consumption thereof is expressly prohibited by the Constitution
11 of the United States or which is excluded from tax under other
12 provisions of this article.
13 (B) The use or consumption of tangible personal property,
14 including but not limited to machinery and equipment and parts
15 therefor, and supplies or the obtaining of the services
16 described in subclauses (2), (3) and (4) of this clause directly
17 in [any of] the operations of--
18 (i) The manufacture of tangible personal property;
19 (ii) Farming, dairying, agriculture, horticulture or
20 floriculture when engaged in as a business enterprise[;]. The
21 term "farming" shall include the propagation and raising of
22 ranch raised furbearing animals and the propagation of game
23 birds for commercial purposes by holders of propagation permits
24 issued under 34 Pa.C.S. (relating to game);
25 (iii) The producing, delivering or rendering of a public
26 utility service, or in constructing, reconstructing, remodeling,
27 repairing or maintaining the facilities which are directly used
28 in producing, delivering or rendering such service[;]. This
29 exclusion shall not include any tangible personal property or
30 services used or installed in the constructing, reconstructing,
19910H1321B2849 - 19 -
1 remodeling, repairing or maintaining of roads, sidewalks,
2 buildings or any similar structures notwithstanding their use;
3 (iv) [The processing of personal property] Processing as
4 defined in subclause (d) of this section.
5 (v) The exclusions provided in subparagraphs (i), (ii),
6 (iii) and (iv) shall be available only to persons actually
7 engaged in the activities enumerated in subparagraphs (i) (ii),
8 (iii) and (iv). The exclusions enumerated in subparagraphs (i),
9 (ii), (iii) and (iv) shall not be available to persons
10 performing activities on behalf of those engaged in the
11 activities enumerated in subparagraphs (i), (ii), (iii) and
12 (iv).
13 The exclusions provided in subparagraphs (i), (ii), (iii) and
14 (iv) shall not apply to any vehicle required to be registered
15 under The Vehicle Code except those vehicles directly used by a
16 public utility engaged in the business as a common carrier; to
17 maintenance facilities; or to materials, supplies or equipment
18 to be used or consumed in the construction, reconstruction,
19 remodeling, repair or maintenance of real estate other than
20 directly used machinery, equipment, parts or foundations
21 therefor that may be affixed to such real estate. The exclusions
22 provided in subparagraphs (i), (ii), (iii) and (iv) shall not
23 apply to tangible personal property or services to be used or
24 consumed in managerial sales or other nonoperational activities,
25 nor to the purchase or use of tangible personal property or
26 services by any person other than the person directly using the
27 same in the operations described in subparagraphs (i), (ii),
28 (iii) and (iv).
29 The exclusion provided in subparagraph (iii) shall not apply
30 to (A) construction materials, supplies or equipment used [to
19910H1321B2849 - 20 -
1 construct, reconstruct, remodel, repair or maintain] or
2 installed in the construction, reconstruction, remodeling,
3 repair or maintenance of facilities not used directly by the
4 purchaser in the production, delivering or rendition of public
5 utility service[,] or (B) [construction materials, supplies or
6 equipment used to construct, reconstruct, remodel, repair or
7 maintain a building, road or similar structure, or (C)] tools
8 and equipment used but not installed in the maintenance of
9 facilities used directly in the production, delivering or
10 rendition of a public utility service.
11 The exclusion provided in subparagraphs (i), (ii), (iii) and
12 (iv) shall not apply to the services enumerated in clauses
13 (o)(9) through (20), (w) through (uu) of this section.
14 (5) Where tangible personal property or services are
15 utilized for purposes constituting a "use," as herein defined,
16 and for purposes excluded from the definition of "use," it shall
17 be presumed that such property or services are utilized for
18 purposes constituting a "sale at retail" and subject to tax
19 unless the user thereof proves to the department that the
20 predominant purposes for which such property or services are
21 utilized do not constitute a "sale at retail."
22 (6) The term "use" with respect to "liquor" and "malt or
23 brewed beverages" shall include the purchase of "liquor" from
24 any "Pennsylvania liquor store" by any person for any purpose
25 and the purchase of "malt or brewed beverages" from a
26 "manufacturer of malt or brewed beverages," "distributor" or
27 "importing distributor" by any person for any purpose, except
28 purchases from a "manufacturer of malt or brewed beverages" by a
29 "distributor" or "importing distributor," or purchases from an
30 "importing distributor" by a "distributor" within the meaning of
19910H1321B2849 - 21 -
1 the "Liquor Code." The term "use" shall not include any purchase
2 of "malt or brewed beverages" from a "retail dispenser" or any
3 purchase of "liquor" or "malt or brewed beverages" from a person
4 holding a "retail liquor license" within the meaning of and
5 pursuant to the provisions of the "Liquor Code," but shall
6 include the exercise of any right or power incidental to the
7 ownership, custody or possession of "liquor" or "malt or brewed
8 beverages" obtained by the person exercising such right or power
9 in any manner other than pursuant to the provisions of the
10 "Liquor Code."
11 (7) The use of tangible personal property purchased at
12 retail upon which the services described in subclauses (2), (3)
13 and (4) of this clause have been performed shall be deemed to be
14 a use of said services by the person using said property.
15 (8) The term "use" shall not include the providing of a
16 motor vehicle to a nonprofit private or public school to be used
17 by such a school for the sole purpose of driver education.
18 (9) The obtaining by the purchaser of the service of
19 research, other than research as defined in clause (c)(5) of
20 this section.
21 (10) The obtaining by the purchaser of management services,
22 management consulting services, public relations services and
23 other business consulting services.
24 (11) The obtaining by the purchaser of adjustment and
25 collection services and credit reporting services.
26 (12) The obtaining by the purchaser of secretarial and
27 editing services.
28 (13) The obtaining by the purchaser of disinfecting and pest
29 control services, and of building maintenance and cleaning
30 services.
19910H1321B2849 - 22 -
1 (14) The obtaining by the purchaser of employment agency
2 services, help supply services or other personnel supply
3 services.
4 (15) The obtaining by the purchaser of computer programming
5 and other computer related services, including providing
6 computer integrated systems design, computer processing and data
7 preparation and processing, information retrieval services,
8 computer facilities management services, computer maintenance
9 and repair.
10 (16) The obtaining by the purchaser of detective and other
11 protective services.
12 (17) The obtaining by the purchaser of legal services.
13 (18) The obtaining by the purchaser of accounting, auditing
14 and bookkeeping services.
15 (19) The obtaining by the purchaser of professional
16 engineering, architectural and surveying services.
17 (20) The obtaining by the purchaser of lawn service.
18 * * *
19 (t) "Transient vendor."
20 (1) Any person who--
21 (i) Brings into the Commonwealth, by automobile, truck or
22 other means of transportation, or purchases in the Commonwealth
23 tangible personal property the sale or use of which is subject
24 to the tax imposed by this article or comes into the
25 Commonwealth to perform services the sale or use of which is
26 subject to the tax imposed by this article;
27 (ii) Offers or intends to offer such tangible personal
28 property or services for sale at retail within the Commonwealth;
29 and
30 (iii) Does not maintain an established office, distribution
19910H1321B2849 - 23 -
1 house, saleshouse, warehouse, service enterprise, residence from
2 which business is conducted or other place of business within
3 the Commonwealth.
4 (2) The term shall not include a person who delivers
5 tangible personal property within the Commonwealth pursuant to
6 orders for such property which were solicited or placed by mail
7 or other means.
8 (3) The term shall not include a person who handcrafts items
9 for sale at special events, including, but not limited to,
10 fairs, carnivals, art and craft shows and other festivals and
11 celebrations within this Commonwealth.
12 * * *
13 (w) "Management services." General or specialized
14 management services on a day to day basis on a contract, fee or
15 other basis, including, but not limited to, administrative
16 management services, business management services, construction
17 management, motel management services and office management
18 services.
19 (x) "Management consulting services." The furnishing of
20 advice, analysis or assistance in the management of entities,
21 including, but not limited to, strategic and organizational
22 planning, financial planning and budgeting, marketing objectives
23 and policies, computer and information systems planning,
24 evaluation and selection, human resources policies and practices
25 planning, production scheduling and control planning.
26 (y) "Public relations services." The preparation or
27 dissemination of materials, written or spoken and any other
28 activities including lobbying which are designed to influence
29 the general public or other groups in promoting the interests of
30 their clients. The term shall not include the purchase of
19910H1321B2849 - 24 -
1 advertising space or time for presentation of a promotional
2 message.
3 (z) "Adjustment and collection services." Collecting or
4 adjusting accounts receivable including, but not limited to,
5 services of the type provided by adjustment bureaus or
6 collection agencies. Such services do not include collecting
7 insurance receivables, or providing credit card service with
8 collection by a central agency, or providing debt counseling or
9 adjustment services to individuals.
10 (aa) "Credit reporting services." Providing mercantile and
11 consumer credit reporting services including, but not limited
12 to, services of the type provided by consumer and mercantile
13 credit reporting bureaus, credit bureaus and agencies, credit
14 clearinghouses and credit investigation services.
15 (bb) "Secretarial and editing services." Providing services
16 which include, but are not limited to, editing, letter writing,
17 proofreading, resume writing, secretarial services, typing and
18 word processing. Such services shall not include court reporting
19 and stenographic services.
20 (cc) "Disinfecting and pest control services." Disinfecting
21 dwellings and other buildings, and controlling termites,
22 insects, rodents and other pests, generally, in dwellings and
23 other buildings. Such services include, but are not limited to,
24 deodorant servicing of rest rooms, washroom sanitation service,
25 rest room cleaning service, disinfecting service, bird proofing,
26 extermination service, fumigating services, termite control and
27 pest control in structures.
28 (dd) "Building maintenance and cleaning services."
29 Providing services which include, but are not limited to,
30 janitorial, maid or housekeeping service on a contract or fee
19910H1321B2849 - 25 -
1 basis, office or interior building cleaning and maintenance
2 service, window cleaning service, floor waxing service, lighting
3 maintenance service such as bulb replacement and cleaning,
4 chimney cleaning service, acoustical tile cleaning service,
5 venetian blind cleaning, including work done on owner's
6 premises, cleaning and maintenance of telephone booths, and
7 cleaning and degreasing of service stations. This term shall not
8 include repairs on buildings and other structures.
9 (ee) "Employment agency services." Providing employment
10 services to a prospective employer or employe other than
11 employment services provided by theatrical employment agencies
12 and motion picture casting bureaus. Such services shall include,
13 but are not limited to, services of the type provided by
14 employment agencies, executive placing services, labor
15 contractor employment agencies other than farm labor, maid,
16 teacher, chauffeur, ship crew and model registries, and
17 executive placing services.
18 (ff) "Help supply services." Supplying temporary or
19 continuing help on a contract, fee or similar basis. The help
20 supplied is on the payroll of the supplying person or entity,
21 but is under the supervision of the business to which help is
22 furnished. Such services include, but are not limited to,
23 service of a type provided by labor and manpower pools, employe
24 leasing services, office help supply services, temporary help
25 services, help supply services, usher services, modeling
26 services and fashion show model supply services. Such services
27 shall not include providing farm labor services.
28 (gg) "Computer programming services." Providing computer
29 programming services on a contract or fee basis, and providing
30 computer software design and analysis, modifying custom software
19910H1321B2849 - 26 -
1 and training in the use of custom software. Such services
2 include, but are not limited to, services of the type provided
3 by or through computer programming services, customer computer
4 programming services, custom software programming, custom
5 computer programs or system software development, custom
6 computer software systems analysis and design, custom
7 applications software programming, computer code authors and
8 free-lance computer software writers.
9 (hh) "Computer integrated systems design." Developing or
10 modifying computer software and packaging or bundling the
11 software with purchased computer hardware (computers and
12 computer peripheral equipment) to create and market an
13 integrated system for specific application. A business is
14 providing such services under this subparagraph only if it
15 provides each of the following services:
16 (1) the development or modification of the computer
17 software;
18 (2) the marketing of purchased computer hardware; and
19 (3) involvement in all phases of systems development from
20 design through installation.
21 Such services under this clause include, but are not limited to,
22 computer systems integration, computer network systems
23 integration, local area network (LAN) systems integration,
24 office automation, computer systems value-added resellers,
25 computer systems turnkey vendors, CAD/CAM systems services,
26 computer-aided design (CAD) systems services, computer-aided
27 engineering (CAE) systems services and computer-aided
28 manufacturing (CAM) systems services.
29 (ii) "Computer processing and data preparation and
30 processing services." Such services include, but are not
19910H1321B2849 - 27 -
1 limited to, providing complete processing and preparation of
2 reports from data supplied by the customer or a specialized
3 service, such as data entry or making data processing equipment
4 available on an hourly or time-sharing basis; computer time-
5 sharing and leasing or rental of computer time; computer
6 tabulating and calculating services; computer service bureaus;
7 data entry, processing and/or verification services; key-punch
8 services and optical scanning data services.
9 (jj) "Information retrieval services." Providing computer
10 on-line information retrieval services. Such information is
11 generally taken from other primary sources and may be
12 reformatted or edited for distribution. Such services include,
13 but are not limited to, data base information retrieval
14 services, on-line information retrieval services, on-line data
15 base information retrieval services and remote data base
16 information retrieval services.
17 (kk) "Computer facilities management services." Providing
18 on-site management and operation of computer and data processing
19 facilities on a contract or fee basis.
20 (ll) "Computer maintenance and repair." Providing
21 maintenance and repair services for computers and computer
22 peripheral equipment.
23 (mm) "Other computer-related services." Supplying computer-
24 related services not described elsewhere in clause (gg) through
25 (ll). Such services include, but are not limited to, services
26 provided by computer consultants, data base developers and data
27 processing consultants, disk and diskette conversion services,
28 disk and diskette recertification services, tape recertification
29 services and computer hardware and software requirements
30 analysis, preparing software documentation for the user,
19910H1321B2849 - 28 -
1 installing software for the user, training the user in the use
2 of software, reformatting or editing for distribution
3 information taken from other primary sources.
4 (nn) "Engineering services." Providing professional
5 engineering services. Such services include, but are not limited
6 to, industrial, civil, electrical, mechanical, petroleum, marine
7 and design engineering services; ship, boat and machine
8 engineering services; machine tool design and machine tool
9 alignment, and providing supervising engineering staff on
10 temporary contract to other firms.
11 (oo) "Architectural services." Providing professional
12 architectural services. Such services include, but are not
13 limited to, architectural services, architectural engineering
14 services, and services provided by house designers.
15 (pp) "Surveying services." Providing professional land,
16 water and aerial surveying services. Such services include, but
17 are not limited to, land, water and aerial surveying services
18 and photogrammetric engineering services.
19 (qq) "Legal services." Supplying legal services from
20 establishments which are headed by members of the bar and are
21 primarily engaged in offering legal advice or services. Such
22 term shall include, but is not limited to, attorneys, counselors
23 at law, law offices, legal services, paralegal services, patent
24 solicitors' offices and referees in bankruptcy.
25 (rr) "Accounting, auditing and bookkeeping services." Such
26 services include, but are not limited to, accounting services,
27 auditing services, bookkeeping and billing services, payroll
28 accounting and tax return preparation services.
29 (ss) "Detective and other protective services." Such
30 services include, but are not limited to, providing detective
19910H1321B2849 - 29 -
1 and armored car services, rental of dogs for protective
2 services, fingerprint services, guard services, private
3 investigator services, lie detection services, polygraph
4 services and protective guard or security guard services.
5 (tt) "Lawn care services." Providing services for lawn
6 upkeep including, but not limited to, fertilizing services, lawn
7 mowing services and shrubbery trimming services.
8 (uu) "Storage space." A building or portion of a building
9 or similar structure for purposes of storing corporeal personal
10 property, including, but not limited to, goods, wares or
11 merchandise, spiritous or vinous liquor and malt or brewed
12 beverages, furniture and household goods, automobiles, furs,
13 textiles, perishable goods under refrigeration, farm products,
14 cotton compresses and tobacco. The term excludes storage.
15 (vv) "Research." Includes, but is not limited to, economic
16 research and forecasting, educational research, market research,
17 opinion research and sociological research.
18 Section 2. Section 202(c) of the act is amended to read:
19 Section 202. Imposition of Tax.--* * *
20 (c) Notwithstanding any other provisions of this article,
21 the tax with respect to [non-residential intrastate telephone
22 service and intrastate] telephone, telegraph and
23 telecommunications service within the meaning of clause (m) of
24 section 201 of this article shall, except for telegrams paid for
25 in cash at telegraph offices, be computed at the rate of six per
26 cent upon the total amount [billed] charged to customers
27 [periodically] for such services, irrespective of whether such
28 [billing] charge is based upon a flat rate or upon a message
29 unit charge. To prevent actual multi-state taxation of
30 interstate telephone, telegraph or telecommunications service,
19910H1321B2849 - 30 -
1 any taxpayer, upon proof that the taxpayer has paid a similar
2 tax to another state on the same interstate telephone, telegraph
3 or telecommunications service, shall be allowed a credit against
4 the tax imposed by this section on the same interstate
5 telephone, telegraph or telecommunications service to the extent
6 of the amount of such tax properly due and paid to such other
7 state.
8 * * *
9 Section 3. Section 204(4), (5), (6), (7), (8), (9), (16),
10 (19), (20), (21), (22), (23) and (29) of the act, amended
11 September 9, 1971 (P.L.437, No.105), are amended to read:
12 Section 204. Exclusions from Tax.--The tax imposed by
13 section 202 shall not be imposed upon
14 * * *
15 (4) [The sale at retail or use of supplies and materials to
16 be used in the fulfillment of contracts for the construction,
17 reconstruction, remodeling, repairing, maintenance or sale of
18 real estate when such contract was entered into
19 (i) Prior to March 7, 1956, and is at a fixed price not
20 subject to change or modification by reason of the tax imposed
21 by the Tax Act of 1963 for Education; or
22 (ii) Pursuant to the obligation of a bid or bids submitted
23 prior to March 7, 1956, which bid or bids could not be altered
24 or withdrawn on or after that date and which bid or bids and
25 contract entered into pursuant thereto are at a fixed price not
26 subject to change or modification by reason of the tax imposed
27 by the act in effect prior to this article.
28 Provided, however, That notice of such contract or bid by
29 reason of which an exclusion is claimed under this clause (4)
30 must be given by the taxpayer to the department on or before
19910H1321B2849 - 31 -
1 June 15, 1956.] The sale at retail or use of toilet paper,
2 sanitary napkins, tampons or similar items used for feminine
3 hygiene.
4 (5) [The sale at retail or use of materials to be
5 incorporated into and made a part of real estate pursuant to a
6 contract for the construction, reconstruction, remodeling,
7 repairing, maintenance or sale of such real estate, when the
8 contract is, either at a fixed price not subject to change or
9 modification, or entered into pursuant to the obligation of a
10 formal written bid which cannot be altered or withdrawn, and, in
11 either case, such contract was entered into or such bid made on
12 or after March 7, 1956, but prior to April 15, 1959, shall be
13 exempt from the additional one-half of one per cent of tax
14 imposed by section 201 of the Tax Act of 1963 for Education as
15 amended April 15, 1959 (P.L.20), and from the additional one-
16 half of one per cent of tax imposed by section 201 of the Tax
17 Act of 1963 for Education as amended August 20, 1959 (P.L.729),
18 and from the additional one per cent of tax imposed by section
19 201 of the Tax Act of 1963 for Education as amended May 29, 1963
20 (P.L.49) and from the additional one per cent of tax imposed by
21 section 201 of the Tax Act of 1963 for Education as amended
22 January 1, 1968 (P.L.918): Provided, however, That the exemption
23 granted by this clause shall not be claimed by the purchaser
24 from any vendor but shall be claimed only by the filing of a
25 refund petition with the department.] The sale at retail or use
26 of steam, natural and manufactured and bottled gas, fuel oil,
27 electricity or intrastate subscriber line charges and basic
28 local telephone service or telegraph service when purchased
29 directly by the user thereof solely for his own residential use.
30 [(6) The sale at retail or use of materials to be
19910H1321B2849 - 32 -
1 incorporated into and made a part of real estate pursuant to a
2 contract for the construction, reconstruction, remodeling,
3 repairing, maintenance or sale of such real estate when the
4 contract is, either at a fixed price not subject to change or
5 modification, or entered into pursuant to the obligation of a
6 formal written bid which cannot be altered or withdrawn, and, in
7 either case, such contract was entered into or such bid made on
8 or after April 15, 1959, but prior to August 20, 1959, shall be
9 exempt from the additional one-half of one per cent of tax
10 imposed by section 201 of the Tax Act of 1963 for Education as
11 amended August 20, 1959 (P.L.729), and from the additional one
12 per cent of tax imposed by section 201 of the Tax Act of 1963
13 for Education as amended May 29, 1963 (P.L.49) and from the
14 additional one per cent of tax imposed by section 201 of the Tax
15 Act of 1963 for Education as amended January 1, 1968 (P.L.918):
16 Provided, however, That the exemption granted by this clause
17 shall not be claimed by the purchaser from any vendor but shall
18 be claimed only by the filing of a refund petition with the
19 department.
20 (7) The sale at retail or use of materials to be
21 incorporated into and made a part of real estate pursuant to a
22 contract for the construction, reconstruction, remodeling,
23 repairing, maintenance or sale of such real estate when the
24 contract is, either at a fixed price not subject to change or
25 modification, or entered into pursuant to the obligation of a
26 formal written bid which cannot be altered or withdrawn, and, in
27 either case, such contract was entered into or such bid made on
28 or after August 20, 1959, but prior to June 1, 1963 shall be
29 exempt from the additional one per cent of tax imposed by
30 section 201 of the Tax Act of 1963 for Education as amended May
19910H1321B2849 - 33 -
1 29, 1963 (P.L.49) and from the additional one per cent of the
2 tax imposed by section 201 of the Tax Act of 1963 for Education
3 as amended January 1, 1968 (P.L.918): Provided, however, That
4 the exemption granted by this clause shall not be claimed by the
5 purchaser from any vendor but shall be claimed only by the
6 filing of a refund petition with the department.
7 (8) The sale at retail or use of materials to be
8 incorporated into and made a part of real estate pursuant to a
9 contract for the construction, reconstruction, remodeling,
10 repairing, maintenance or sale of such real estate when the
11 contract is, either at a fixed price not subject to change or
12 modification, or entered into pursuant to the obligation of a
13 formal written bid which cannot be altered or withdrawn, and, in
14 either case, such contract was entered into or such bid made on
15 or after June 1, 1963, but prior to January 1, 1968, shall be
16 exempt from the additional one per cent of tax imposed by
17 section 201 of the Tax Act of 1963 for Education as amended
18 January 1, 1968 (P.L.918): Provided, however, That the exemption
19 granted by this clause shall not be claimed by the purchaser
20 from any vendor but shall be claimed only by the filing of a
21 refund petition with the department.
22 (9) The sale at retail or use of tangible personal property
23 or services subject to tax under this article, but which prior
24 to the effective date of this article were excluded from tax
25 under the provisions of the "Tax Act of 1963 for Education"
26 shall be excluded from the tax imposed by this article, provided
27 such sale at retail or use occurred pursuant to and in
28 fulfillment of a written fixed price sales or construction
29 contract or formal bid entered into prior to the effective date
30 of this article by the person who otherwise would be subject to
19910H1321B2849 - 34 -
1 tax under this article and another, and which contract or bid
2 cannot be altered, modified or withdrawn by the parties. The
3 exclusion from tax provided herein shall not be claimed by any
4 person from a vendor but shall be claimed only by the filing of
5 a refund petition with the department as provided in this
6 article.]
7 * * *
8 (16) The sale at retail or use of tangible personal property
9 or services to be used or consumed for ship cleaning or
10 maintenance or as fuel, supplies, ships' equipment, ships'
11 stores or sea stores on vessels designed for commercial use of
12 registered tonnage of fifty tons or more to be operated
13 principally outside the limits of the Commonwealth.
14 * * *
15 [(19) The sale at retail or use of supplies and materials to
16 be used exclusively in the fulfillment of a contract for the
17 construction, reconstruction, remodeling, repairing or
18 maintenance of real estate, when such contract was entered into
19 prior to March 7, 1956, between the person who would otherwise
20 be subject to the tax and a municipal authority, incorporated
21 under the "Municipality Authorities Act of 1945": Provided, That
22 notice of a claim of exemption under this clause is received by
23 the department within fifteen days after the effective date of
24 this clause under the Tax Act of 1963 for Education.
25 (20) The sale at retail or use of materials to be
26 incorporated into and made a part of real estate pursuant to a
27 contract for the construction, reconstruction, remodeling,
28 repairing or maintenance of such real estate, when the contract
29 was entered into on or after March 7, 1956, but prior to April
30 15, 1959, between the person who would otherwise be subject to
19910H1321B2849 - 35 -
1 the tax and a municipal authority, incorporated under the
2 "Municipality Authorities Act of 1945," shall be exempt from the
3 additional one-half of one per cent of tax imposed by section
4 201 of the Tax Act of 1963 for Education as amended April 15,
5 1959 (P.L.20), and from the additional one-half of one per cent
6 of tax imposed by section 201 of the Tax Act of 1963 for
7 Education as amended August 20, 1959 (P.L.729), and from the
8 additional one per cent of tax imposed by section 201 of the Tax
9 Act of 1963 for Education, as amended May 29, 1963 (P.L.49) and
10 from the additional one per cent of tax imposed by section 201
11 of the Tax Act of 1963 for Education as amended January 1, 1968
12 (P.L.918): Provided, however, That the exemption granted by this
13 clause shall not be claimed by the purchaser from any vendor but
14 shall be claimed only by the filing of a refund petition with
15 the department.
16 (21) The sale at retail or use of materials to be
17 incorporated into and made a part of real estate pursuant to a
18 contract for the construction, reconstruction, remodeling,
19 repairing or maintenance of such real estate, when the contract
20 was entered into on or after April 15, 1959, but prior to August
21 20, 1959, between the person who would otherwise be subject to
22 the tax and a municipal authority, incorporated under the
23 "Municipality Authorities Act of 1945," shall be exempt from the
24 additional one-half of one per cent of tax imposed by section
25 201 of the Tax Act of 1963 for Education as amended August 20,
26 1959 (P.L.729), and from the additional one per cent of tax
27 imposed by section 201 of the Tax Act of 1963 for Education, as
28 amended May 29, 1963 (P.L.49) and from the additional one per
29 cent of tax imposed by section 201 of the Tax Act of 1963 for
30 Education as amended January 1, 1968 (P.L.918): Provided,
19910H1321B2849 - 36 -
1 however, That the exemption granted by this clause shall not be
2 claimed by the purchaser from any vendor but shall be claimed
3 only by the filing of a refund petition with the department.
4 (22) The sale at retail or use of materials to be
5 incorporated into and made a part of real estate pursuant to a
6 contract for the construction, reconstruction, remodeling,
7 repairing or maintenance of such real estate when the contract
8 was entered into on or after August 20, 1959, but prior to June
9 1, 1963, between the person who would otherwise be subject to
10 the tax and a municipal authority, incorporated under the
11 "Municipality Authorities Act of 1945," shall be exempt from the
12 additional one per cent of tax imposed by section 201 of the Tax
13 Act of 1963 for Education as amended May 29, 1963 (P.L.49) and
14 from the additional one per cent of the tax imposed by section
15 201 of the Tax Act of 1963 for Education, as amended January 1,
16 1968 (P.L.918): Provided, however, That the exemption granted by
17 this clause shall not be claimed by the purchaser from any
18 vendor but shall be claimed only by the filing of a refund
19 petition with the department.
20 (23) The sale at retail or use of materials to be
21 incorporated into and made a part of real estate pursuant to a
22 contract for the construction, reconstruction, remodeling,
23 repairing or maintenance of such real estate, when the contract
24 was entered into on or after June 1, 1963, but prior to January
25 1, 1968, between the person who would otherwise be subject to
26 the tax and a municipal authority incorporated under the
27 "Municipality Authorities Act of 1945," shall be exempt from the
28 additional one per cent of tax imposed by section 201 of the Tax
29 Act of 1963 for Education, as amended January 1, 1968 (P.L.918):
30 Provided, however, That the exemption granted by this clause
19910H1321B2849 - 37 -
1 shall not be claimed by the purchaser from any vendor but shall
2 be claimed only by the filing of a refund petition with the
3 department.]
4 * * *
5 (29) The sale at retail or use of food and beverages for
6 human consumption including candy[, gum and similar confections]
7 and gum, except that this exclusion shall not apply with respect
8 to--
9 (i) Soft drinks;
10 (ii) Malt and brewed beverages and spirituous and vinous
11 liquors;
12 (iii) Food [and beverages (except when purchased at, or from
13 a school or church in the ordinary course of activities of such
14 organization) when the purchase price of the total transaction
15 is more than ten cents (10¢)] or beverages ready to eat and
16 intended for immediate consumption, whether sold for consumption
17 on or off the premises or on a "take-out" or "to go" basis or
18 delivered to the purchaser or consumer, when purchased (i) from
19 persons engaged in the business of catering, or (ii) from
20 persons engaged in the business of operating establishments,
21 including, but not limited to restaurants, cafes, lunch
22 counters, private and social clubs, taverns, dining cars, hotels
23 [and other eating places. For the purpose of this subclause
24 (iii), beverages shall not include malt and brewed beverages and
25 spirituous and vinous liquors, but shall include soft drinks,
26 and the price of such soft drinks shall be considered together
27 with the price of other beverages and food in determining
28 whether the purchase price of the total transaction is more than
29 ten cents (10¢).], night clubs, fast food operations, pizzerias,
30 fairs, carnivals, lunch carts, ice cream stands, vending
19910H1321B2849 - 38 -
1 machines, snack bars, cafeterias, employe cafeterias, theaters,
2 stadiums, arenas, amusement parks, carryout shops, coffee shops,
3 bakery, pastry and donut shops and other establishments whether
4 mobile or immobile from which food or beverages ready to eat and
5 intended for immediate consumption are sold. For purposes of
6 this clause, a delicatessen, grocery store, supermarket or a
7 convenience store shall not be considered an establishment from
8 which food or beverages ready to eat and intended for immediate
9 consumption are sold except for the sale of meals, cooked
10 chicken, sandwiches, prepared salads, salad bars, prepared
11 desserts, hot soup, hot pizza and other hot food items, brewed
12 coffee and hot or cold beverages. The sale at retail of food and
13 beverages at or from a school or church in the ordinary course
14 of the activities of such organization is not subject to tax.
15 * * *
16 Section 4. Section 205(a) of the act, amended June 9, 1978
17 (P.L.463, No.62), is amended to read:
18 Section 205. Alternate Imposition of Tax; Credits.--(a) If
19 any person actively and principally engaged in the business of
20 selling new or used motor vehicles, trailers or semi-trailers,
21 and registered with the department in the "dealer's class,"
22 acquires a motor vehicle, trailer or semi-trailer for the
23 purpose of resale, and prior to such resale, uses the motor
24 vehicle, trailer or semi-trailer for a taxable use under this
25 act during a period not exceeding one year from the date of
26 acquisition to the date of resale, such person may[, upon notice
27 to the department] within ten days of the commencement of such
28 use, elect to pay a tax equal to six per cent of the fair rental
29 value of the motor vehicle, trailer or semi-trailer during such
30 use. Should such motor vehicle, trailer or semi-trailer be used
19910H1321B2849 - 39 -
1 for a taxable use after a period of one year, the taxpayer shall
2 be liable for a tax on the fair market value of such motor
3 vehicle, trailer or semi-trailer at the time of acquisition, but
4 shall be allowed a credit equal to the tax paid pursuant to the
5 election provided for in this section. This section shall not
6 apply to the use of a vehicle as a wrecker, parts truck,
7 delivery truck or courtesy car.
8 * * *
9 Section 5. Section 208 of the act, amended September 9, 1971
10 (P.L.437, No.105), is amended to read:
11 Section 208. Licenses.--(a) Every person maintaining a
12 place of business in this Commonwealth, selling or leasing
13 services or tangible personal property, the sale or use of which
14 is subject to tax and who has not hitherto obtained a license
15 from the department, shall, prior to the beginning of business
16 thereafter, make application to the department, on a form
17 prescribed by the department, for a license. If such person
18 maintains more than one place of business in this Commonwealth,
19 the license shall be issued for the principal place of business
20 in this Commonwealth.
21 (b) The department shall, after the receipt of an
22 application, issue the license applied for under subsection (a)
23 of this section[. The license shall be nonassignable and of
24 permanent duration.], provided said applicant shall have filed
25 all required State tax reports and paid any State taxes not
26 subject to a timely perfected administrative or judicial appeal
27 or subject to a duly authorized deferred payment plan. Such
28 license shall be nonassignable. All licensees as of the
29 effective date of this subsection shall be required to file for
30 renewal of said license on or before January 31, 1992. Licenses
19910H1321B2849 - 40 -
1 issued through April 30, 1992, shall be based on a staggered
2 renewal system established by the department. Thereafter, any
3 license issued shall be valid for a period of five years.
4 (b.1) If the department has any reason to believe that an
5 applicant for a license or any person holding a license has not
6 filed all required State tax reports and paid any State taxes
7 not subject to a timely perfected administrative or judicial
8 appeal or subject to a duly authorized deferred payment plan,
9 the department may refuse to issue, may suspend or may revoke
10 said license. The department shall notify the applicant or
11 licensee of any refusal, suspension or revocation. An applicant
12 or licensee aggrieved by the determination of the department may
13 file an appeal pursuant to the provisions for administrative
14 appeals in this article.
15 (c) Any person who, upon the expiration of sixty days after
16 the effective date of this article, shall maintain a place of
17 business in this Commonwealth for the purpose of selling or
18 leasing services or tangible personal property, the sale or use
19 of which is subject to tax, without having first been licensed
20 by the department, shall be guilty of a summary offense, and
21 upon conviction thereof in a summary proceeding, shall be
22 sentenced to pay a fine of not less than one hundred dollars
23 ($100) nor more than [three hundred dollars ($300)] one thousand
24 dollars ($1,000), and in default thereof, to undergo
25 imprisonment of not less than five days nor more than thirty
26 days. The penalties imposed by this section shall be in addition
27 to any other penalties imposed by this article.
28 (d) Failure of any person to obtain a license shall not
29 relieve him of liability to pay the tax imposed by this article.
30 Section 6. Sections 252 and 268 of the act are amended to
19910H1321B2849 - 41 -
1 read:
2 Section 252. Refunds.--The department shall, pursuant to the
3 provisions of sections 253 and 254, refund all taxes, interest
4 and penalties paid to the Commonwealth under the provisions of
5 this article and to which the Commonwealth is not rightfully
6 entitled. Such refunds shall be made to the person, his heirs,
7 successors, assigns or other personal representatives, who
8 actually paid the tax, except a refund granted for tax paid in
9 conjunction with a contract with a charitable organization,
10 volunteer firemen's organization, nonprofit educational
11 institution, religious organization, the United States, this
12 Commonwealth or its instrumentalities or political subdivisions
13 shall be made to the aforementioned entities: Provided, That no
14 refund shall be made under this section with respect to any
15 payment made by reason of an assessment with respect to which a
16 taxpayer has filed a petition for reassessment pursuant to
17 section 232 of this article to the extent that said petition has
18 been determined adversely to the taxpayer by a decision which is
19 no longer subject to further review or appeal: Provided further,
20 That nothing contained herein shall be deemed to prohibit a
21 taxpayer who has filed a timely petition for reassessment from
22 amending it to a petition for refund where the petitioner has
23 paid the tax assessed.
24 Section 268. Crimes.--(a) Fraudulent Return. Any person who
25 with intent to defraud the Commonwealth shall wilfully make, or
26 cause to be made, any return required by this article, which is
27 false, shall be guilty of a misdemeanor, and, upon conviction
28 thereof, shall be sentenced to pay a fine not exceeding two
29 thousand dollars ($2000), or undergo imprisonment not exceeding
30 three years, or both.
19910H1321B2849 - 42 -
1 (b) Other Crimes. Except as otherwise provided by subsection
2 (a) of this section, any person [maintaining a place of business
3 in this Commonwealth,] who advertises or holds out or states to
4 the public or to any purchaser or user, directly or indirectly,
5 that the tax or any part thereof imposed by this article will be
6 absorbed by such person, or that it will not be added to the
7 purchase price of the tangible personal property or services
8 described in subclauses (2), (3) [and], (4), (11) through (23)
9 of clause (k) of section 201 of this article sold or, if added,
10 that the tax or any part thereof will be refunded, other than
11 when such person refunds the purchase price because of such
12 property being returned to the vendor, and any person
13 [maintaining a place of business in this Commonwealth and]
14 selling or leasing tangible personal property or said services
15 the sale or use of which by the purchaser is subject to tax
16 hereunder, who shall wilfully fail [or refuse] to collect the
17 tax from the purchaser and timely remit the same to the
18 department, and any person who shall wilfully fail[,] or neglect
19 [or refuse] to timely file any return or report required by this
20 article or any taxpayer who shall refuse to timely pay any tax,
21 penalty or interest imposed or provided for by this article, or
22 who shall wilfully fail to preserve his books, papers and
23 records as directed by the department, or any person who shall
24 refuse to permit the department or any of its authorized agents
25 to examine his books, records or papers, or who shall knowingly
26 make any incomplete, false or fraudulent return or report, or
27 who shall do, or attempt to do, anything whatever to prevent the
28 full disclosure of the amount or character of taxable sales
29 purchases or use made by himself or any other person, or shall
30 provide any person with a false statement as to the payment of
19910H1321B2849 - 43 -
1 tax with respect to particular tangible personal property or
2 said services, or shall make, utter or issue a false or
3 fraudulent exemption certificate, shall be guilty of a
4 misdemeanor, and, upon conviction thereof, shall be sentenced to
5 pay a fine not exceeding one thousand dollars ($1000) and costs
6 of prosecution, or undergo imprisonment not exceeding one year,
7 or both: Provided, however, That any person maintaining a place
8 of business outside this Commonwealth may absorb the tax with
9 respect to taxable sales made in the normal course of business
10 to customers present at such place of business without being
11 subject to the above penalty and fines. The penalties imposed by
12 this section shall be in addition to any other penalties imposed
13 by any provision of this article.
14 Section 7. The definitions of "claimant," "dependent,"
15 "poverty income" and "small corporation" in section 301 of the
16 act, added March 13, 1974 (P.L.179, No.32), are amended and the
17 section is amended by adding definitions to read:
18 Section 301. Definitions.--The following words, terms and
19 phrases when used in this article shall have the meaning
20 ascribed to them in this section except where the context
21 clearly indicates a different meaning. Any reference in this
22 article to the Internal Revenue Code shall include the Internal
23 Revenue Code of 1954, as amended to the date on which this
24 article is effective:
25 * * *
26 (c.2) "Claimant" means a person who:
27 (1) is subject to the tax imposed under this article, [is
28 not a dependent of another person,] but is entitled to claim
29 against such tax the poverty tax provisions as provided by this
30 act;
19910H1321B2849 - 44 -
1 (2) has a taxable year of not less than twelve months; and
2 (3) with respect to whom no deduction under section 151 of
3 the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
4 § 1 et seq.), as amended, is allowable to any nonhousehold
5 member for a taxable year beginning in the calendar year in
6 which the person's taxable year begins.
7 * * *
8 (e.1) "Dependent" means [a spouse or child who derives more
9 than one-half of his total support during the entire taxable
10 year from a claimant entitled to claim the poverty exemption.
11 Any person who is a dependent pursuant to the provisions of the
12 Internal Revenue Code during a taxable year shall prima facie be
13 deemed a dependent for purposes of this act] any nonhousehold
14 member with respect to whom a deduction under section 151 of the
15 Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1
16 et seq.), as amended, is allowable to the claimant for the
17 claimant's taxable year or to a household member for the
18 claimant's taxable year.
19 * * *
20 (i.1) "Total household income" means all poverty income
21 received by a claimant and every other household member for the
22 taxable year of the claimant.
23 (i.2) "Household member" means any individual who, for more
24 than one-half of the taxable year of the claimant, has as his
25 principal place of abode the same home as the claimant and is a
26 member of the same household as the claimant.
27 * * *
28 (o.2) "Poverty income" means for the purpose of determining
29 eligibility for special tax provisions [all moneys or property
30 (including interest, gains or income derived from obligations
19910H1321B2849 - 45 -
1 which are statutorily free from State or local taxation under
2 any other act of the General Assembly of the Commonwealth of
3 Pennsylvania or under the laws of the United States) received of
4 whatever nature and from whatever source derived but not
5 including (i) periodic payments for sickness and disability
6 other than regular wages received during a period of sickness or
7 disability; or (ii) disability, retirement or other payments
8 arising under workmen's compensation acts, occupational disease
9 acts and similar legislation by any government; or (iii)
10 payments commonly recognized as old age or retirement benefits
11 paid to persons retired from service after reaching a specific
12 age or after a stated period of employment; or (iv) payments
13 commonly known as public assistance, or unemployment
14 compensation payments by any governmental agency; or (v)
15 payments to reimburse actual expenses; or (vi) payments made by
16 employers or labor unions for programs covering hospitalization,
17 sickness, disability or death, supplemental unemployment
18 benefits, strike benefits, social security and retirement; or
19 (vii) any compensation received by United States servicemen
20 serving in a combat zone.] all taxable and nontaxable income
21 from whatever source derived, including, but not limited to,
22 salaries, wages, bonuses, commissions, income from self-
23 employment, alimony, support money, cash public assistance and
24 relief, the gross amount of any pensions or annuities including
25 railroad retirement benefits, all benefits received under the
26 Federal Social Security Act (Public Law 74-271, 42 U.S.C. § 301
27 et seq.), except Medicare benefits, all benefits received under
28 State unemployment insurance laws and veterans' disability
29 payments, all interest received from the Federal or any State
30 government, or any instrumentality or political subdivision
19910H1321B2849 - 46 -
1 thereof, realized capital gains rentals, workmen's compensation
2 and the gross amount of loss of time insurance benefits, life
3 insurance benefits and proceeds, except the first five thousand
4 dollars ($5,000) of the total of death benefit payments, and
5 gifts of cash or property, other than transfers by gift between
6 members of a household, in excess of a total value of three
7 hundred dollars ($300), but shall not include surplus food or
8 other relief in kind supplied by a governmental agency or
9 property tax or rent rebate or inflation dividend.
10 * * *
11 (s.2) "Small corporation" means any corporation which has a
12 valid election in effect under subchapter S of Chapter 1 of the
13 Internal Revenue Code of 1954, as amended as of January 1, 1983,
14 and which does not have passive investment income in excess of
15 twenty-five per cent of its gross receipts and the net worth of
16 which is less than five hundred thousand dollars ($500,000). For
17 purposes of this clause, "passive investment income" means gross
18 receipts derived from royalties, rents, dividends, interest,
19 annuities and sales or exchanges of stock or securities (gross
20 receipts from such sales or exchanges being taken into account
21 only to the extent of gains therefrom). For purposes of this
22 clause, the "net worth" of the corporation shall be equal to the
23 aggregate net worth of the corporation and all affiliated
24 corporations which are or, but for the net worth limitation of
25 this clause, would be "small corporations" within the meaning of
26 this clause. For purposes of this clause "affiliated
27 corporations" shall include all corporations which would be
28 included in a "controlled group of corporations" with the
29 corporation under the rules of section 1563(a) of the Internal
30 Revenue Code of 1986, substituting fifty per cent for eighty per
19910H1321B2849 - 47 -
1 cent each time it appears in that section.
2 (1) The "net worth" of a corporation shall be the sum of the
3 corporation's issued and outstanding capital stock, surplus and
4 undivided profits as per books set forth for the close of such
5 tax year on the income tax return filed by the corporation with
6 the Federal Government for its immediately preceding tax year
7 or, if no such return is made, as would have been set forth had
8 such return been made, subject, however, in either case, to any
9 correction for fraud, evasion or error, increased by the gross
10 salaries paid to ten per cent or greater shareholders and family
11 members of such shareholders with respect to the current tax
12 year. Net worth shall in no case be less than zero. For purposes
13 of this subclause, the gross salary shall be the salary as
14 reported by the corporation on the Form W-2 filed with the
15 Federal Government for such shareholder or family member for
16 such taxable year or, if no such form is filed, as would have
17 been reported had such form been filed, subject, however, in
18 either case to any correction thereof, for fraud, evasion or
19 error. For purposes of this subclause, "family members" shall
20 include the shareholder's spouse, and ancestors and lineal
21 descendants and spouses of ancestors and lineal descendants.
22 (2) If net worth as arrived at under subclause (1) for the
23 preceding tax year is greater than twice or less than one-half
24 of the net worth which would have been calculated under
25 subclause (1) as of the first day of such tax year, then net
26 worth for the preceding year shall be the average of these two
27 amounts.
28 * * *
29 Section 8. The act is amended by adding a section to read:
30 Section 302. Imposition of Tax.--(a) Every resident
19910H1321B2849 - 48 -
1 individual, estate or trust shall be subject to, and shall pay
2 for the privilege of receiving each of the classes of income
3 hereinafter enumerated in section 303, a tax at the rate of two
4 and one-tenth per cent upon each dollar of income received by
5 that resident during that resident's taxable year commencing
6 with or within calendar year 1987 through the sixth month of the
7 taxable year commencing with or within calendar year 1991 and at
8 the rate of three and one-tenths per cent upon each dollar of
9 income received by that resident during that resident's taxable
10 year commencing with the seventh month of the taxable year
11 commencing with or within calendar year 1991, and at the rate of
12 two and sixty-five hundredths per cent upon each dollar of
13 income received by that resident during that resident's taxable
14 year commencing with or within calendar year 1992 and each
15 calendar year thereafter.
16 (b) Every nonresident individual estate or trust shall be
17 subject to and shall pay for the privilege of receiving each of
18 the classes of income hereinafter enumerated in section 303 from
19 sources within this Commonwealth, a tax at the rate of two and
20 one-tenth per cent upon each dollar of income from sources
21 within this Commonwealth received by that nonresident during
22 that nonresident's taxable year commencing with or within
23 calendar year 1987 through the sixth month of the taxable year
24 commencing with or within calendar year 1991 and at the rate of
25 three and one-tenths per cent upon each dollar of income from
26 sources within this Commonwealth received by that nonresident
27 during that nonresident's taxable year commencing with the
28 seventh month of the taxable year commencing with or within
29 calendar year 1991, and at the rate of two and sixty-five
30 hundredths per cent upon each dollar of income received by that
19910H1321B2849 - 49 -
1 nonresident during that nonresident's taxable year commencing
2 with or within calendar year 1992 and each calendar year
3 thereafter.
4 (c) It is the intent of the General Assembly that during the
5 last half of taxable years beginning in 1991, the additional
6 forty-five hundredths per cent above the 1992 rate of two and
7 sixty-five hundredths per cent shall be used to offset the
8 General Fund deficit occurring at the close of the
9 Commonwealth's fiscal year ending in 1991.
10 Section 9. Section 302.2 of the act is repealed.
11 Section 10. Section 304 of the act, amended or added March
12 13, 1974 (P.L.179, No.32) and October 14, 1988 (P.L.737,
13 No.106), is amended to read:
14 Section 304. Special Tax Provisions for Poverty.--(a) The
15 General Assembly, in recognition of the powers contained in
16 section 2(b)(ii) of Article VIII of the Constitution of the
17 Commonwealth of Pennsylvania which provides therein for the
18 establishing as a class or classes of subjects of taxation the
19 property or privileges of persons who, because of poverty are
20 determined to be in need of special tax provisions hereby
21 declares as its legislative intent and purpose to implement such
22 power under such constitutional provision by establishing
23 special tax provisions as hereinafter provided in this act.
24 (b) The General Assembly having determined that there are
25 persons within this Commonwealth whose incomes are such that
26 imposition of a tax thereon would deprive them and their
27 dependents of the bare necessities of life and having further
28 determined that poverty is a relative concept inextricably
29 joined with actual income and the number of people dependent
30 upon such income deems it to be a matter of public policy to
19910H1321B2849 - 50 -
1 provide special tax provisions for that class of persons
2 hereinafter designated to relieve their economic burden.
3 (c) For the taxable year [1974] 1991 and each year
4 thereafter any claimant who meets the following standards of
5 eligibility established by this act as the test for poverty
6 shall be deemed a separate class of subject of taxation, and, as
7 such, shall be entitled to the benefit of the special provisions
8 of this act.
9 (d) Any claim for special tax provisions hereunder shall be
10 determined in accordance with the following:
11 (1) If [the poverty] total household income [of the claimant
12 during an entire taxable year] is [six thousand three hundred
13 dollars ($6,300)] seven thousand dollars ($7,000) or less, the
14 claimant shall be entitled to a refund or forgiveness of any
15 moneys which have been paid over to (or would except for the
16 provisions of this act be payable to) the Commonwealth under the
17 provisions of this article, with an additional income allowance
18 of [one thousand five hundred dollars ($1,500) for the first
19 additional dependent and an additional income allowance of one
20 thousand dollars ($1,000) for each additional dependent of the
21 claimant] two thousand dollars ($2,000) for each dependent and
22 household member.
23 (2) If [the poverty] total household income [of the claimant
24 during an entire taxable year] does not exceed the [poverty
25 income] limitations prescribed by clause (1) by more than the
26 dollar category contained in subclauses (i), (ii), (iii), (iv),
27 (v), (vi), (vii), (viii) or (ix) of this clause, the claimant
28 shall be entitled to a refund or forgiveness based on the per
29 centage prescribed in such subclauses of any moneys which have
30 been paid over to (or would except for the provisions herein be
19910H1321B2849 - 51 -
1 payable to) the Commonwealth under this article:
2 (i) Ninety per cent if not in excess of one hundred dollars
3 ($100).
4 (ii) Eighty per cent if not in excess of two hundred dollars
5 ($200).
6 (iii) Seventy per cent if not in excess of three hundred
7 dollars ($300).
8 (iv) Sixty per cent if not in excess of four hundred dollars
9 ($400).
10 (v) Fifty per cent if not in excess of five hundred dollars
11 ($500).
12 (vi) Forty per cent if not in excess of six hundred dollars
13 ($600).
14 (vii) Thirty per cent if not in excess of seven hundred
15 dollars ($700).
16 (viii) Twenty per cent if not in excess of eight hundred
17 dollars ($800).
18 (ix) Ten per cent if not in excess of nine hundred dollars
19 ($900).
20 Section 11. The act is amended by adding a section and a
21 part to read:
22 Section 321.1. Bulk and Auction Sales and Transfers,
23 Notice.--(a) Every employer, who is liable for filing returns
24 in accordance with the provisions of this part and who shall
25 sell or cause to be sold at auction, or who shall sell or
26 transfer in bulk, fifty-one per cent or more of any stock of
27 goods, wares or merchandise of any kind, fixtures, machinery,
28 equipment, buildings or real estate held by or on behalf of such
29 person, shall give the department ten days' written notice of
30 the sale or transfer prior to the completion of the transfer of
19910H1321B2849 - 52 -
1 such property in the manner prescribed by 13 Pa.C.S. § 6107
2 (relating to the notice).
3 (b) Whenever the seller or transferor shall fail to give
4 such notice to the department, or whenever the department shall
5 upon written notice inform the purchaser or transferee that a
6 possible claim for tax imposed by this act exists, any sums of
7 money, property or choses in action or other consideration,
8 which the purchaser or transferee is thereafter required to
9 transfer over to the seller or transferor, shall be subject to a
10 first priority right and lien for any such taxes theretofore or
11 thereafter determined to be due from the seller or transferor,
12 and the purchaser or transferee is forbidden to transfer to the
13 seller or transferor any such sums of money, property or choses
14 in action or other consideration to the extent of the amount of
15 the Commonwealth's claim. For failure to comply with the
16 provisions of this section, the purchaser or transferee shall be
17 liable for the payment to the Commonwealth of any such taxes
18 theretofore or thereafter determined to be due from the seller
19 or transferor, and such liability may be assessed and enforced
20 in the same manner as the liability for tax under this article:
21 Provided, That nothing contained in this provision shall apply
22 to sales or transfers made under any order of court: And
23 provided further, That the written notice required to be filed
24 with the department by this provision shall be deemed to be
25 satisfied when the requirements of 15 Pa.C.S. § 139 (relating to
26 tax clearance of certain fundamental transactions) as to taxes
27 imposed by this article are met.
28 PART VII-A
29 WITHHOLDING TAX ON SHARES ON INCOME FROM SOURCES
30 WITHIN THIS COMMONWEALTH
19910H1321B2849 - 53 -
1 Section 324. General Rule.--When a partnership, association
2 or Pennsylvania S corporation receives income from sources
3 within this Commonwealth for any taxable year, and any portion
4 of such income is allocable to a nonresident partner, member or
5 shareholder thereof; such partnership, association or
6 Pennsylvania S corporation shall pay a withholding tax under
7 this section at such time and in such manner as the department
8 shall prescribe; however, notwithstanding any other provision of
9 this article, all such withholding tax shall be paid over within
10 thirty days following the end of the taxable year.
11 Section 324.1. Amount of Withholding Tax.--(a) The amount
12 of tax withheld from nonresidents and the amount of the
13 withholding tax payable under section 324 shall be equal to the
14 income from sources within this Commonwealth of the partnership,
15 association or Pennsylvania S corporation which is allocable to
16 nonresident partners, members or shareholders multiplied by the
17 tax rate specified in section 302(b).
18 (b) There shall not be taken into account any item of
19 income, gain, loss or deduction to the extent allocable to any
20 partner, member or shareholder who is not a nonresident.
21 Section 324.2. Treatment of Nonresident Partners, Members or
22 Shareholders.--Each nonresident partner, member or shareholder
23 shall be allowed a credit for such partner's, member's or
24 shareholder's share of the withholding tax paid by the
25 partnership, association or Pennsylvania S corporation. Such
26 credit shall be allowed for the partner's, member's or
27 shareholder's taxable year in which, or with which, the
28 partnership, association or Pennsylvania S corporation taxable
29 year (for which such tax was paid) ends.
30 Section 324.3. Liability for Tax, Interest, Penalties and
19910H1321B2849 - 54 -
1 Additions.--If a partnership, association or Pennsylvania S
2 corporation fails to pay withholding tax as prescribed herein
3 and thereafter such tax is paid, the partnership, association or
4 Pennsylvania S corporation shall not be relieved of the
5 liability for any penalty, interest or addition as a result of
6 failure to properly withhold such tax.
7 Section 12. Section 325 of the act, amended or added August
8 31, 1971 (P.L.362, No.93), July 2, 1986 (P.L.318, No.77) and
9 December 22, 1989 (P.L.775, No.110), is amended to read:
10 Section 325. Declarations of Estimated Tax.--(a) Every
11 resident and nonresident individual, trust and estate shall at
12 the time hereinafter prescribed make a declaration of his or its
13 estimated tax for the taxable year, containing such information
14 as the department may prescribe by regulations, if his or its
15 income, other than from compensation on which tax is withheld
16 under this article, can reasonably be expected to exceed two
17 thousand five hundred dollars ($2,500).
18 (b) For the purposes of this article, the term "estimated
19 tax" means the amount which an individual, trust or estate
20 estimates to be his or its tax due under this article for the
21 taxable year, less the amount which he or it estimates to be the
22 sum of any credits allowable against the tax under this article.
23 (c) A husband and wife may make a joint declaration of
24 estimated tax hereunder as if they were one taxpayer, in which
25 case the liability with respect to the estimated tax shall be
26 joint and several. If a joint declaration is made but husband
27 and wife elect to determine their taxes separately, the
28 estimated tax for such year may be treated as the estimated tax
29 of either husband or wife, or may be divided between them, as
30 they may elect.
19910H1321B2849 - 55 -
1 (d) Except as hereinafter provided, the date for filing a
2 declaration of estimated tax shall depend upon when the resident
3 or nonresident individual, trust or estate determines that his
4 or its income on which no tax has been withheld under this
5 article can reasonably be expected to exceed two thousand five
6 hundred dollars ($2,500) in the taxable year, as follows:
7 (1) If the determination is made on or before April 1 of the
8 taxable year, a declaration of estimated tax shall be filed no
9 later than April 15 of the taxable year.
10 (2) If the determination is made after April 1 but before
11 June 2 of the taxable year, the declaration shall be filed no
12 later than June 15 of such year.
13 (3) If the determination is made after June 1 but before
14 September 2 of the taxable year, the declaration shall be filed
15 no later than September 15 of such year.
16 (4) If the determination is made after September 1 of the
17 taxable year, the declaration shall be filed no later than
18 January 15 of the year succeeding the taxable year.
19 (e) Notwithstanding subsection (d) of this section, a
20 declaration of estimated tax of an individual having an
21 estimated gross income from farming for the taxable year which
22 is at least two-thirds of his total estimated gross income for
23 the taxable year may be filed at any time on or before January
24 15 of the succeeding year, but if the farmer files a final
25 return and pays the entire tax by March 1, the return may be
26 considered as his declaration due on or before January 15.
27 (f) A declaration of estimated tax of an individual, trust
28 or estate having a total estimated tax for the taxable year of
29 one hundred dollars ($100) or less may be filed at any time on
30 or before January 15 of the succeeding year under regulations of
19910H1321B2849 - 56 -
1 the department.
2 (g) An individual, trust or estate may amend a declaration
3 under regulations of the department.
4 (h) If on or before January 31 of the year succeeding a
5 taxable year, an individual [files his], trust or estate files
6 his or its return for the entire taxable year for which a
7 declaration was required to be filed within the time prescribed
8 by subsection (d)(4) of this section and pays therewith the full
9 amount of the tax shown to be due on the return:
10 (1) Such return shall be considered as his or its
11 declaration which was required to be filed no later than January
12 15.
13 (2) Such return shall be considered as the amendment
14 permitted by subsection (g) to be filed on or before January 15
15 provided the amount of the tax shown on the return is greater
16 than the amount of the estimated tax shown in a declaration
17 previously made.
18 (i) This article shall apply to a taxable year other than a
19 calendar year by the substitution of the months of such fiscal
20 year for the corresponding months specified in this section.
21 (j) This article shall apply to an individual, trust or
22 estate having a taxable year of less than twelve months in
23 accordance with procedures prescribed in regulations of the
24 department.
25 Section 13. Section 345(b) of the act, amended July 1, 1978
26 (P.L.594, No.114), is amended to read:
27 Section 345. Lien for Tax.--* * *
28 (b) The department may, at any time, transmit to the
29 prothonotaries of the respective counties certified copies of
30 all liens for taxes imposed by this article. It shall be the
19910H1321B2849 - 57 -
1 duty of each prothonotary receiving such lien to enter and
2 docket the same of record in his office, which lien shall be
3 indexed as judgments are now indexed. All such liens shall have
4 priority to, and be fully paid before, any other obligation,
5 judgment, claim, lien or estate paid and satisfied out of the
6 judicial sale of said real [estate] and personal property with
7 which said [real estate] property may subsequently become
8 charged, or for which it may subsequently become liable,
9 subject, however, to mortgage or other liens existing and duly
10 recorded at the time such tax lien is recorded, save and except
11 the cost of sale and of the writ upon which it is made and real
12 estate taxes imposed or assessed upon said property. [The lien
13 of said taxes shall continue for five years from the date of
14 entry and may be revived and continued, in the manner now or
15 hereafter provided for renewal of judgments, and a] A writ of
16 execution may directly issue upon such lien without the issuance
17 and prosecution to judgment of a writ of scire facias: Provided,
18 That not less than ten days before issuance of any execution on
19 the lien, notice of the filing and effect of the lien shall be
20 sent by certified mail to the taxpayer at his last known post
21 office address: And provided further, That the said lien shall
22 have no effect upon any stock of goods, ware or merchandise
23 regularly sold or leased in the ordinary course of business by
24 the person against whom said lien had been entered, unless and
25 until a writ of execution has been issued and a levy made upon
26 said stock of goods, wares and merchandise.
27 * * *
28 Section 14. Section 352(b), (d) and (f) of the act, amended
29 June 29, 1984 (P.L.445, No.94), are amended and the section is
30 amended by adding a subsection to read:
19910H1321B2849 - 58 -
1 Section 352. Additions, Penalties and Fees.--* * *
2 (b) (1) If any part of any underpayment of any tax imposed
3 by Part II of this article is due to negligence or intentional
4 disregard of rules and regulations, but without intent to
5 defraud, there shall be added to the tax an amount equal to five
6 per cent of the underpayment.
7 (2) If any part of any underpayment of any tax imposed by
8 Part II of this article is due to negligence or intentional
9 disregard of rules and regulations, but without intent to
10 defraud, and the under payment is from a taxpayer omitting from
11 income an amount properly includable therein which is in excess
12 of twenty-five per cent of the amount of income stated on the
13 taxpayer's return, there shall be added to the tax an amount
14 equal to twenty-five per cent of the underpayment.
15 * * *
16 (d) (1) If any taxpayer fails [to file a declaration of
17 estimated tax or fails] to pay all or any part of an installment
18 of estimated tax, he shall be deemed to have made an
19 underpayment of estimated tax. There shall be added to the tax
20 for the taxable year an amount at the rate established pursuant
21 to section 806 of the act of April 9, 1929 (P.L.343, No.176),
22 known as "The Fiscal Code," upon the amount of the underpayment
23 for the period of the underpayment but not beyond the fifteenth
24 day of the fourth month following the close of the taxable year.
25 The amount of the underpayment shall be the excess of the amount
26 of the installment which would be required to be paid if the
27 estimated tax were equal to [eighty] ninety per cent of the tax
28 (two-thirds in the case of an individual described in subsection
29 (e) of section 325) shown on the return for the taxable year (or
30 if no return was filed, of the tax for such year) over the
19910H1321B2849 - 59 -
1 amount, if any, of the installments paid on or before the last
2 day prescribed for such payment. No underpayment shall be deemed
3 to exist with respect to [a declaration or] an installment
4 otherwise due on or after the taxpayer's death.
5 (2) No addition to tax shall be imposed if the total amount
6 of all payments of estimated tax made on or before the last date
7 prescribed for the payment of such installment equals or exceeds
8 the lesser of:
9 (A) The amount which would have been required to be paid on
10 or before such date if the estimated tax were[:
11 (i) the tax shown on the return of the individual for the
12 preceding taxable year, if a return showing a liability for tax
13 was filed by the individual for the preceding taxable year and
14 such preceding year was a taxable year of twelve months, or
15 (ii)] an amount equal to the tax computed, at the rates
16 applicable to the taxable year, but otherwise on the basis of
17 the facts shown on his return for, and the law applicable to,
18 the preceding taxable year; or
19 (B) An amount equal to ninety per cent of the tax computed,
20 at the rates applicable to the taxable year, on the basis of the
21 actual income for the months in the taxable year ending before
22 the month in which the installment is required to be paid.
23 * * *
24 (f) (1) Any person required under the provisions of section
25 317 to furnish a statement to an employe who wilfully furnishes
26 a false or fraudulent statement, or who wilfully fails to
27 furnish a statement in the manner, at the time, and showing the
28 information required under section 317 and the regulations
29 prescribed thereunder, shall, for each such failure, be subject
30 to a penalty of fifty dollars ($50) for each employe.
19910H1321B2849 - 60 -
1 (2) Any person required by regulation to furnish an
2 information return who furnishes a false or fraudulent return
3 shall for each failure be subject to a penalty of fifty dollars
4 ($50).
5 (3) Every Pennsylvania S corporation required to file a
6 return with the department under the provisions of section 330.1
7 who furnishes a false or fraudulent return or who fails to file
8 the return in the manner and at the time required under section
9 330.1 shall be subject to a penalty of $250 for each failure.
10 * * *
11 (i) If any individual, estate or trust files what purports
12 to be a return required under section 330 but which does not
13 contain information on which the substantial correctness of the
14 self-assessment may be judged, or contains information that on
15 its face indicates that the self-assessment is substantially
16 incorrect; and the self-assessment is due to a position which is
17 frivolous, or due to a desire (which appears on the purported
18 return) to delay or impede the administration of Pennsylvania
19 Income Tax laws, then such individual, estate or trust shall pay
20 a penalty of five hundred dollars ($500). The penalty imposed by
21 this subsection shall be in addition to any other penalty
22 provided by law.
23 Section 15. Section 401(3)1(b) and 2(a)(18) of the act,
24 amended September 9, 1971 (P.L.437, No.105) and December 23,
25 1983 (P.L.370, No.90), are amended and a subclause is added to
26 read:
27 Section 401. Definitions.--The following words, terms, and
28 phrases, when used in this article, shall have the meaning
29 ascribed to them in this section, except where the context
30 clearly indicates a different meaning:
19910H1321B2849 - 61 -
1 * * *
2 (3) "Taxable income." 1. * * *
3 (b) Additional deductions shall be allowed from taxable
4 income on account of any dividends received from any other
5 corporation but only to the extent that such dividends are
6 included in taxable income as returned to and ascertained by the
7 Federal Government. For tax years beginning on or after January
8 1, 1991, no additional deduction shall be allowed for dividends
9 received from any other corporation.
10 (b.1) An additional deduction shall be allowed from taxable
11 income in the amount of any interest income from securities
12 issued by the United States or agencies or instrumentalities
13 thereof, to the extent included in Federal taxable income but
14 exempt from the tax imposed by this article under the laws of
15 the United States, but reduced by any interest on indebtedness
16 incurred to carry the securities, any expenses incurred in the
17 production of such interest income, and any other expenses
18 deducted on the Federal income tax return that would not have
19 been allowed under section 265 of the Internal Revenue Code if
20 the interest were exempt from Federal income tax.
21 * * *
22 2. In case the entire business of any corporation, other
23 than a corporation engaged in doing business as a regulated
24 investment company as defined by the Internal Revenue Code of
25 1954, as amended, is not transacted within this Commonwealth,
26 the tax imposed by this article shall be based upon such portion
27 of the taxable income of such corporation for the fiscal or
28 calendar year, as defined in subclause 1 hereof, and may be
29 determined as follows:
30 (a) Division of Income.
19910H1321B2849 - 62 -
1 * * *
2 (18) If the allocation and apportionment provisions of this
3 definition do not fairly represent the extent of the taxpayer's
4 business activity in this State, the taxpayer may petition the
5 Secretary of Revenue or the Secretary of Revenue may require, in
6 respect to all or any part of the taxpayer's business activity:
7 (A) Separate accounting;
8 (B) The exclusion of any one or more of the factors;
9 (C) The inclusion of one or more additional factors which
10 will fairly represent the taxpayer's business activity in this
11 State; or
12 (D) The employment of any other method to effectuate an
13 equitable allocation and apportionment of the taxpayer's income.
14 In determining the fairness of any allocation or apportionment,
15 the Secretary of Revenue may give consideration to the
16 taxpayer's previous reporting and its consistency with the
17 requested relief.
18 * * *
19 Section 16. Section 402 of the act, amended July 2, 1986
20 (P.L.318, No.77), is amended to read:
21 Section 402. Imposition of Tax.--Every corporation shall be
22 subject to, and shall pay for the privilege of (i) doing
23 business in this Commonwealth; or (ii) carrying on activities in
24 this Commonwealth; (iii) having capital or property employed or
25 used in this Commonwealth; or (iv) owning property in this
26 Commonwealth, by or in the name of itself, or any person,
27 partnership, association, limited partnership, joint-stock
28 association, or corporation, a State excise tax at the rate of
29 twelve per cent per annum upon each dollar of taxable income of
30 such corporation received by, and accruing to, such corporation
19910H1321B2849 - 63 -
1 during the calendar year 1971 and the first six months of 1972
2 and at the rate of eleven per cent per annum upon each dollar of
3 taxable income of such corporation received by, and accruing to,
4 such corporation during the second six months of calendar year
5 1972 through the calendar year 1973 and at the rate of nine and
6 one-half per cent per annum upon each dollar of taxable income
7 of such corporation received by, and accruing to, such
8 corporation during the calendar years 1974, 1975 and 1976 and at
9 the rate of ten and one-half per cent per annum upon each dollar
10 of taxable income of such corporation received by, and accruing
11 to, such corporation during the calendar year 1977 through the
12 calendar year 1984 and at the rate of nine and one-half per cent
13 per annum upon each dollar of taxable income of such corporation
14 received by and accruing to such corporation during the calendar
15 year 1985 through calendar year 1986 and at the rate of eight
16 and one-half per cent per annum upon each dollar of taxable
17 income of such corporation received by and accruing to such
18 corporation during the calendar year 1987 through the calendar
19 year 1990 and at the rate of ten and one-half per cent per annum
20 upon each dollar of taxable income of such corporation received
21 by and accruing to such corporation during calendar year 1991
22 and during each calendar year thereafter, except where a
23 corporation reports to the Federal Government on the basis of a
24 fiscal year, and has certified such fact to the department as
25 required by section 403 of this article, in which case, such
26 tax, at the rate of twelve per cent, shall be levied, collected,
27 and paid upon all taxable income received by, and accruing to,
28 such corporation during the first six months of the fiscal year
29 commencing in the calendar year 1972 and at the rate of eleven
30 per cent, shall be levied, collected, and paid upon all taxable
19910H1321B2849 - 64 -
1 income received by, and accruing to, such corporation during the
2 second six months of the fiscal year commencing in the calendar
3 year 1972 and during the fiscal year commencing in the calendar
4 year 1973 and at the rate of nine and one-half per cent, shall
5 be levied, collected, and paid upon all taxable income received
6 by, and accruing to, such corporation during the fiscal year
7 commencing in the calendar years 1974, 1975 and 1976 and at the
8 rate of ten and one-half per cent, shall be levied, collected,
9 and paid upon all taxable income received by, and accruing to,
10 such corporation during the fiscal year commencing in the
11 calendar year 1977 through the fiscal year commencing in 1984
12 and at the rate of nine and one-half per cent, shall be levied,
13 collected, and paid upon all taxable income received by and
14 accruing to such corporation during the fiscal year commencing
15 in 1985 through the fiscal year commencing in 1986 and at the
16 rate of eight and one-half per cent per annum upon each dollar
17 of taxable income of such corporation received by and accruing
18 to such corporation during the fiscal year commencing in 1987
19 through the fiscal year commencing in 1990 and at the rate of
20 ten and one-half per cent per annum upon each dollar of taxable
21 income of such corporation received by and accruing to such
22 corporation during the fiscal year commencing in 1991 and during
23 each fiscal year thereafter. No penalty prescribed by subsection
24 (e) of section 3003 shall be assessed against a corporation for
25 the additional tax which may be due as a result of the increase
26 in tax rate from nine and one-half per cent to ten and one-half
27 per cent imposed retroactively by this section for the calendar
28 year 1977 or for the fiscal year commencing in 1977.
29 Section 17. The act is amended by adding a section to read:
30 Section 402.1. Allocation of Tax.--For the fiscal year
19910H1321B2849 - 65 -
1 beginning July 1, 1991, and for each fiscal year through and
2 including the fiscal year beginning July 1, 1994, the Secretary
3 of the Budget shall transfer seventy million dollars
4 ($70,000,000) from revenues received under this article to the
5 Industrial Development Fund. Such transfer shall be initiated
6 prior to May 1 of each fiscal year.
7 Section 18. Section 407 of the act, amended September 9,
8 1971 (P.L.437, No.105), December 3, 1975 (P.L.476, No.140) and
9 December 21, 1977 (P.L.330, No.98) and repealed in part April
10 28, 1978 (P.L.202, No.53), is amended to read:
11 Section 407. Settlement and Resettlement.--(a) All taxes
12 due under this article shall be settled by the department, and
13 such settlement shall be subject to audit and approval by the
14 Department of the Auditor General, and shall, so far as
15 possible, be made so that notice thereof may reach the taxpayer
16 within eighteen months after the tax report was required to be
17 made. The Secretary of Revenue, after consultation with the
18 Auditor General, may develop and implement procedures for the
19 settlement of taxes employing, among other means, automatic data
20 processing, statistical analysis, computer analysis, mechanical
21 handling and issuance of settlement documents, including
22 omission of original signatures, such that will facilitate what
23 he determines to be the most efficient and productive use of the
24 resources within his control required to adequately and
25 reasonably ensure the proper collection of taxes.
26 (b) If, within a period of [one year] three years after the
27 date of any settlement, the department is not satisfied with
28 such settlement, or if at any time the net income as returned by
29 any corporation to the Federal Government is finally changed or
30 corrected by the Commissioner of Internal Revenue or by any
19910H1321B2849 - 66 -
1 other agency or court of the United States with the result that
2 tax, in addition to the amount paid, is due under this article,
3 the department is hereby authorized and empowered to make a
4 resettlement of the tax due by such corporation, based upon the
5 facts contained in the report, or upon any information within
6 its possession or that shall come into its possession.
7 Whenever a resettlement shall have been made hereunder, the
8 department shall resettle the account according to law and shall
9 credit or charge, as the case may be, the amount resulting from
10 such resettlement upon the current accounts of the corporation
11 with which it is made.
12 The resettlement shall be subject to audit and approval by
13 the Department of the Auditor General as in the case of original
14 settlement, and in case of the failure of the two departments to
15 agree, the resettlement shall be submitted to the Board of
16 Finance and Revenue as in the case of original settlements.
17 (c) Promptly after the date of any such settlement, the
18 department shall send, by mail or otherwise, a copy thereof to
19 such corporation. The tax, interest, and penalty imposed by this
20 article shall be subject to the right of resettlement, review,
21 and refund within the time and in the manner now or hereafter
22 provided for by law for petitions for resettlement, review and
23 refund and to the right of appeal in the manner now or hereafter
24 provided for by law for appeals in the case of tax settlements.
25 (d) If any corporation shall neglect or refuse to make any
26 report and payment of tax required by this article, the
27 department shall estimate the tax due by such corporation and
28 subject to audit and approval by the Department of the Auditor
29 General, settle the amount due by it for taxes, penalties, and
30 interest thereon as prescribed herein, from which settlement
19910H1321B2849 - 67 -
1 there shall be no right of review or appeal, but the department,
2 with the approval of the Department of the Auditor General, may
3 require a report to be filed, and thereupon make a settlement
4 based upon such report and cancel the estimated settlement.
5 (e) If any taxpayer, pursuant to petition or appeal, is
6 granted a resettlement or issued an order of court or a judgment
7 basing the taxpayer's tax for any taxable year upon the
8 principles of multiformity or unrelated assets resulting from a
9 final decision upon the taxpayer's petition or appeal, or any
10 stipulation for judgment in settlement of litigation thereon,
11 then any taxable year of the taxpayer within a three-year period
12 prior to the taxable year in issue or any taxable year
13 thereafter may be resettled consistent with such principles
14 within one year of such resettlement, order of court or
15 judgment.
16 Section 19. The definition of "capital stock value" and
17 "processing" in section 601(a) of the act, amended or added July
18 1, 1985 (P.L.78, No.29) and July 13, 1987 (P.L.317, No.58), are
19 amended and a definition is added to read:
20 Section 601. Definitions and Reports.--(a) The following
21 words, terms and phrases when used in this Article VI shall have
22 the meaning ascribed to them in this section, except where the
23 context clearly indicates a different meaning:
24 * * *
25 "Capital stock value." The amount computed pursuant to the
26 following formula: the product of one-half times the sum of the
27 average net income capitalized at the rate of nine and one-half
28 per cent plus seventy-five per cent of net worth, from which
29 product shall be subtracted [one hundred thousand dollars
30 ($100,000)] fifty thousand dollars ($50,000), the algebraic
19910H1321B2849 - 68 -
1 equivalent of which is
2 (.5 X (average net income/.095 + (.75)
3 (net worth))) - [$100,000] $50,000
4 * * *
5 "Directly used." The term shall mean that the tangible
6 personal property actively contributes to the changing of raw
7 materials into a new, different, and useful article of commerce.
8 The term includes, but is not limited to, manufacturing machines
9 and equipment, raw materials sufficient for one year of
10 operation, real property directly associated with the conduct of
11 manufacturing, processing, or research and development. The term
12 does not include real or tangible personal property used for
13 administrative purposes, storage of finished products or raw
14 materials in excess of those required for one year, sales and
15 delivery activities. Intangible personal property, cash, and
16 tangible personal property which has been fully depreciated
17 shall not be considered to be directly used in any
18 manufacturing, processing, or research or development.
19 * * *
20 "Processing." The following activities when engaged in as a
21 business enterprise:
22 (1) The cooking or freezing of fruits, vegetables,
23 mushrooms, fish, seafood, meats or poultry, when the person
24 engaged in such business packages such property in sealed
25 containers for wholesale distribution.
26 (2) The scouring, carbonizing, cording, combing, throwing,
27 twisting or winding of natural or synthetic fibers, or the
28 spinning, bleaching, dyeing, printing or finishing of yarns or
29 fabrics, when such activities are performed prior to sale to the
30 ultimate consumer.
19910H1321B2849 - 69 -
1 (3) The electroplating, galvanizing, enameling, anodizing,
2 coloring, finishing, impregnating or heat treating of metals or
3 plastics for sale or in the process of manufacturing.
4 (4) The rolling, drawing or extruding of ferrous and
5 nonferrous metals.
6 (5) The fabrication for sale of ornamental or structural
7 metal or metal stairs, staircases, gratings, fire escapes or
8 railings (not including fabrication work done at the
9 construction site).
10 (6) The preparation of animal feed or poultry feed for sale.
11 (7) The production, processing and bottling of nonalcoholic
12 beverages for wholesale distribution.
13 (8) The slaughtering and dressing of animals for meat to be
14 sold or to be used in preparing meat products for sale, and the
15 preparation of meat products, including lard, tallow, grease,
16 cooking and inedible oils for wholesale distribution.
17 (9) The operation of a sawmill or planing mill for the
18 production of lumber or lumber products for sale.
19 (10) The milling for sale of flour or meal from grains.
20 (11) The publishing of books, newspapers, magazines or other
21 periodicals, printing and broadcasting radio and television
22 programs by licensed commercial or educational stations.
23 (12) The processing of used lubricating oils.
24 (13) The blending, rectification or production by
25 distillation or otherwise of alcohol or alcoholic liquors,
26 except the distillation of alcohol from byproducts of winemaking
27 for the sole purpose of fortifying wine.
28 (14) The salvaging, recycling or reclaiming of used
29 materials to be recycled into a manufacturing process.
30 (15) The development or substantial modification of computer
19910H1321B2849 - 70 -
1 programs or software for sale to unrelated persons for their
2 direct and independent use.
3 * * *
4 Section 20. Section 602 of the act, amended December 23,
5 1983 (P.L.360, No.89), December 23, 1983 (P.L.370, No.90), July
6 1, 1985 (P.L.78, No.29), December 19, 1985 (P.L.356, No.102),
7 July 13, 1987 (P.L.317, No.58) and repealed in part October 18,
8 1988 (P.L.756, No.108), is amended to read:
9 Section 602. Imposition of Tax.--(a) That every domestic
10 entity from which a report is required under section 601 hereof,
11 shall be subject to, and pay to the department annually, a tax
12 which is the greater of (i) [seventy-five dollars ($75)] three
13 hundred dollars ($300) or (ii) the amount computed at the rate
14 of ten mills upon each dollar of the capital stock value as
15 defined in section 601(a) for the calendar year 1971 and the
16 fiscal year beginning in 1971 through calendar year 1986 and
17 fiscal years beginning in 1986, at the rate of nine mills upon
18 each dollar of the capital stock value as defined in section
19 601(a) for the calendar year 1987 and fiscal years beginning in
20 1987 [and], at the rate of nine and one-half mills upon each
21 dollar of the capital stock value as defined in section 601(a)
22 for the calendar year 1988 and fiscal years beginning in 1988
23 through calendar year 1990 and fiscal years beginning in 1990
24 and at the rate of ten and one-half mills upon each dollar of
25 the capital stock value as defined in section 601(a) for the
26 calendar year 1991 and fiscal years beginning in 1991 and each
27 year thereafter, except that any domestic entity or company
28 subject to the tax prescribed herein may elect to compute and
29 pay its tax under and in accordance with the provisions of
30 subsection (b) of this section 602: Provided, That, except for
19910H1321B2849 - 71 -
1 the imposition of the [seventy-five dollar ($75)] three hundred
2 ($300) minimum tax, the provisions of this section shall not
3 apply to the taxation of the capital stock of entities organized
4 for manufacturing, processing, research or development purposes,
5 which is invested in [and actually and exclusively employed in
6 carrying on] real and tangible personal property actually,
7 exclusively and directly used in manufacturing, processing,
8 research or development within the State, except such entities
9 as enjoy and exercise the right of eminent domain, but every
10 entity organized for the purpose of manufacturing, processing,
11 research or development except such entities as enjoy and
12 exercise the right of eminent domain shall pay the State tax of
13 the greater of (i) [seventy-five dollars ($75)] three hundred
14 ($300) or (ii) the amount computed at the rate of ten mills upon
15 each dollar of the capital stock value as defined in section
16 601(a) for the calendar year 1971 and the fiscal year beginning
17 in 1971 through calendar year 1986 and fiscal years beginning in
18 1986, at the rate of nine mills upon each dollar of the capital
19 stock value as defined in section 601(a) for the calendar year
20 1987 and fiscal years beginning in 1987 and at the rate of nine
21 and one-half mills upon each dollar of the capital stock value
22 as defined in section 601(a) for the calendar year 1988 and
23 fiscal years beginning in 1988 through calendar year 1990 and
24 fiscal years beginning in 1990 and at the rate of ten and one-
25 half mills upon each dollar of the capital stock value as
26 defined in section 601(a) for the calendar year 1991 and fiscal
27 years beginning in 1991 and each year thereafter, upon such
28 proportion of its capital stock, if any, as may be invested in
29 any property or business not [strictly incident or appurtenant
30 to the] directly used in manufacturing, processing, research or
19910H1321B2849 - 72 -
1 development [business], in addition to the local taxes assessed
2 upon its property in the district where located, it being the
3 object of this provision to relieve from State taxation, except
4 for imposition of the [seventy-five dollar ($75)] three hundred
5 dollar ($300) minimum tax under this section, only so much of
6 the capital stock as is invested purely in [the] real and
7 tangible personal property directly used in manufacturing,
8 processing, research or development [plant and business].
9 (b) (1) Every foreign entity from which a report is
10 required under section 601 hereof, shall be subject to and pay
11 to the department annually, a franchise tax which is the greater
12 of (i) [seventy-five dollars ($75)] three hundred dollars ($300)
13 or (ii) the amount computed at the rate of ten mills for the
14 calendar year 1971 and the fiscal years beginning in 1971
15 through calendar year 1986 and fiscal years beginning in 1986,
16 at the rate of nine mills for the calendar year 1987 and for
17 fiscal years beginning in 1987 [and], at the rate of nine and
18 one-half mills for calendar year 1988 and fiscal years beginning
19 in 1988 through calendar year 1990 and fiscal years beginning in
20 1990 and at the rate of ten and one-half mills upon each dollar
21 of the capital stock value as defined in section 601(a) for the
22 calendar year 1991 and fiscal years beginning in 1991 and each
23 year thereafter, upon a taxable value to be determined in the
24 following manner. The capital stock value shall be ascertained
25 in the manner prescribed in section 601(a) of this article. The
26 taxable value shall then be determined by employing the relevant
27 apportionment factors set forth in Article IV: Provided, That
28 the manufacturing, processing, research and development
29 exemptions contained under section 602(a) shall also apply to
30 foreign corporations and in determining the relevant
19910H1321B2849 - 73 -
1 apportionment factors the numerator of the property[, payroll,
2 or sales factors] factor shall not include any property[,
3 payroll or sales attributable to] directly used in
4 manufacturing, processing, research or development activities in
5 the Commonwealth. Any foreign corporation, joint-stock
6 association, limited partnership or company subject to the tax
7 prescribed herein may elect to compute and pay its tax under
8 section 602(a): Provided, That any foreign corporation, joint-
9 stock association, limited partnership or company electing to
10 compute and pay its tax under section 602(a) shall be treated as
11 if it were a domestic corporation for the purpose of determining
12 which of its assets are exempt from taxation and for the purpose
13 of determining the proportion of the value of its capital stock
14 which is subject to taxation.
15 (2) The provisions of this article shall apply to the
16 taxation of entities organized for manufacturing, processing,
17 research or development purposes, but shall not apply to such
18 entities as enjoy and exercise the right of eminent domain.
19 [(c) Any entity subject to a tax imposed by this article
20 shall be permitted to elect an alternative capital stock value,
21 which shall be used in lieu of the capital stock value defined
22 in section 601(a) for purposes of subsections (a) and (b)
23 hereof, for calendar years 1984, 1985 and 1986, and for fiscal
24 years beginning in 1984, 1985 and 1986. The election shall be
25 available to all entities, subject to the limitations of this
26 subsection and shall be available for each such year without
27 regard to whether the alternative capital stock value was
28 elected in any other year. For the calendar year 1984 and fiscal
29 years beginning in 1984, the alternative capital stock value
30 shall be one hundred and thirty per cent of the value of such
19910H1321B2849 - 74 -
1 entity's capital stock as was settled by the department prior to
2 any apportionment or exemption for the calendar year 1982 or the
3 fiscal year beginning in 1982. For the calendar year 1985 and
4 fiscal years beginning in 1985, the alternative capital stock
5 value shall be one hundred and thirty per cent of the value of
6 such entity's capital stock as was settled by the department
7 prior to any apportionment or exemption for the calendar year
8 1983 or the fiscal year beginning in 1983. For the calendar year
9 1986 and fiscal years beginning in 1986, the alternative capital
10 stock value shall be one hundred and thirty per cent of such
11 entity's capital stock value as was settled by the department
12 prior to any apportionment or exemption for the calendar year
13 1984 or the fiscal year beginning in 1984: Provided, That in no
14 case shall the tax due using the alternative capital stock value
15 be reduced more than five hundred dollars ($500) from that
16 obtained by using the formula set forth in section 601(a), and
17 in no case shall the tax due be less than seventy-five dollars
18 ($75). The election to use the alternative capital stock value
19 for the calendar year 1984 and fiscal years beginning in 1984
20 shall be limited to those entities which were subject to a tax
21 imposed by this article for the calendar year 1982 or fiscal
22 years beginning in 1982, the election of the alternative capital
23 stock value for the calendar year 1985 and fiscal years
24 beginning in 1985 shall be limited to entities which were
25 subject to a tax imposed by this article for the calendar year
26 1983 or fiscal years beginning in 1983 and the election to use
27 the alternative capital stock value for the calendar year 1986
28 and fiscal years beginning in 1986 shall be limited to those
29 entities which were subject to a tax imposed by this article for
30 the calendar year 1984 or fiscal years beginning in 1984. The
19910H1321B2849 - 75 -
1 Secretary of Revenue is hereby directed to undertake a study of
2 the incidence of the fixed-formula tax on various sizes and
3 types of businesses which incur significantly greater tax
4 liability under the fixed formula. The findings and conclusions
5 of the secretary shall be submitted to the General Assembly not
6 later than September 15, 1986.]
7 (d) It shall be the duty of the treasurer or other officers
8 having charge of any domestic or foreign entity, upon which a
9 tax is imposed by this section, to transmit the amount of tax to
10 the department within the time prescribed by law: Provided, That
11 for the purposes of this act interest in limited partnerships or
12 joint-stock associations shall be deemed to be capital stock,
13 and taxable accordingly: Provided, further, That entities liable
14 to a tax under this section, shall not be required to pay any
15 further tax on the mortgages, bonds, and other securities owned
16 by them and in which the whole body of stockholders or members,
17 as such, have the entire equitable interest in remainder; but
18 entities owning or holding such securities as trustees,
19 executors, administrators, guardians, or in any other manner
20 than for the whole body of stockholders or members thereof as
21 sole equitable owners in remainder, shall return and pay the tax
22 imposed by this act upon all securities so owned or held by
23 them, as in the case of individuals.
24 (e) Any holding company subject to the capital stock tax or
25 the franchise tax imposed by this section may elect to compute
26 the capital stock or franchise tax by applying the rate of tax
27 of ten mills for the calendar year 1971 and the fiscal year
28 beginning in 1971 through the calendar year 1986 and fiscal
29 years beginning in 1986, at the rate of nine mills for the
30 calendar year 1987 and fiscal years beginning in 1987, at the
19910H1321B2849 - 76 -
1 rate of nine and one-half mills for calendar year 1988 and
2 fiscal years beginning in 1988 through calendar year 1990 and
3 fiscal years beginning in 1990 and at the rate of ten and one-
4 half mills for calendar year 1991 and fiscal years beginning in
5 1991 and each year thereafter, upon each dollar to ten per cent
6 of the capital stock value, but in no case shall the tax so
7 computed be less than [seventy-five dollars ($75)] three hundred
8 dollars ($300). If exercised, this election shall be in lieu of
9 any other apportionment or allocation to which such company
10 would otherwise be entitled.
11 (f) Every domestic corporation and every foreign corporation
12 (i) registered to do business in Pennsylvania; (ii) which
13 maintains an office in Pennsylvania; (iii) which has filed a
14 timely election to be taxed as a regulated investment company
15 with the Federal Government; and (iv) which duly qualifies to be
16 taxed as a regulated investment company under the provisions of
17 the Internal Revenue Code of 1954 as amended, shall be taxed as
18 a regulated investment company and shall be subject to the
19 capital stock or franchise tax imposed by section 602, in either
20 case for the privilege of having an office in Pennsylvania,
21 which tax shall be computed pursuant to the provisions of this
22 subsection in lieu of all other provisions of this section 602.
23 The tax shall be in an amount which is the greater of three
24 hundred dollars ($300) or the sum of the amounts determined
25 pursuant to clauses (1) and (2):
26 (1) The amount determined pursuant to this clause shall be
27 seventy-five dollars ($75) times that number which is the result
28 of dividing the net asset value of the regulated investment
29 company by one million, rounded to the nearest multiple of
30 seventy-five dollars ($75). Net asset value shall be determined
19910H1321B2849 - 77 -
1 by adding the monthly net asset values as of the last day of
2 each month during the taxable period and dividing the total sum
3 by the number of months involved. Each such monthly net asset
4 value shall be the actual market value of all assets owned
5 without any exemptions or exclusions, less all liabilities,
6 debts and other obligations.
7 (2) The amount determined pursuant to this clause shall be
8 the amount which is the result of multiplying the rate of
9 taxation applicable for purposes of the personal income tax
10 during the same taxable year times the apportioned undistributed
11 personal income tax income of the regulated investment company.
12 For the purposes of this clause:
13 (A) Personal income tax income shall mean income to the
14 extent enumerated and classified in section 303.
15 (B) Undistributed personal income tax income shall mean all
16 personal income tax income other than personal income tax income
17 undistributed on account of the capital stock or foreign
18 franchise tax, less all personal income tax income distributed
19 to shareholders. At the election of the company, income
20 distributed after the close of a taxable year, but deemed
21 distributed during the taxable year for Federal income tax
22 purposes, shall be deemed distributed during that year for
23 purposes of this clause. If a company in a taxable year has both
24 current income and income accumulated from a prior year,
25 distributions during the year shall be deemed to have been made
26 first from current income.
27 (C) Undistributed personal income tax income shall be
28 apportioned to Pennsylvania by a fraction, the numerator of
29 which is all income distributed during the taxable period to
30 shareholders who are resident individuals, estates or trusts and
19910H1321B2849 - 78 -
1 the denominator of which is all income distributed during the
2 taxable period. Resident trusts shall not include charitable,
3 pension or profit-sharing, or retirement trusts.
4 (D) Personal income tax income and other income of a company
5 shall each be deemed to be either distributed to shareholders or
6 undistributed in the proportion each category bears to all
7 income received by the company during the taxable year.
8 (g) In the event that a domestic or foreign entity is
9 required to file a report pursuant to section 601(b) on other
10 than an annual basis, the tax imposed by this section, including
11 the [seventy-five dollars ($75)] three hundred dollars ($300)
12 minimum tax, shall be prorated to reflect the portion of a
13 taxable year for which the report is filed by multiplying the
14 tax liability by a fraction equal to the number of days in the
15 taxable year divided by three hundred sixty-five days.
16 Section 21. Section 602.1 of the act, added August 31, 1971
17 (P.L.362, No.93), is amended to read:
18 Section 602.1. Pollution Control Devices.--Notwithstanding
19 the foregoing provisions of section 602, to the contrary,
20 equipment, machinery[, facilities] and other [assets] tangible
21 property, other than a building and its structural components,
22 unless the building is exclusively used in pollution control,
23 employed or utilized within the Commonwealth of Pennsylvania for
24 water and air pollution control or abatement [devices which are
25 being employed or utilized] for the benefit of the general
26 public shall be exempt from the tax imposed under this Article
27 VI. In order to qualify for such exemption the equipment,
28 machinery and tangible property shall be installed and completed
29 and operating in place. However, if installed solely for the
30 safety, health, protection or benefit, or any combination
19910H1321B2849 - 79 -
1 thereof, of personnel, or if installed solely for the abatement
2 or control of pollution upon an entity's own premises, such
3 exemption shall not apply. The Department of Revenue shall have
4 the power, by regulation, to prescribe the manner and method by
5 which such exemption shall be [claimed.] granted and claimed,
6 except that any equipment, machinery and other tangible
7 property, the cost of which will be recovered over its actual
8 useful life from earnings derived through the recovery of wastes
9 or otherwise in the operation of such property, shall not be
10 exempt.
11 Section 22. Section 602.3 of the act, added July 13, 1987
12 (P.L.317, No.58), is amended to read:
13 Section 602.3. Deposit of Proceeds; Appropriation.--(a) The
14 proceeds resulting from [the increase in the tax rate from nine
15 mills to nine and one-half mills, effective for calendar year
16 1988 and fiscal years beginning in 1988 through calendar year
17 1991 and fiscal years beginning in 1991,] one-half mill of the
18 tax imposed pursuant to this article as determined by the
19 Secretary of Revenue using the provisions of this article as it
20 existed on January 1, 1990 shall be transferred to the Hazardous
21 Sites Cleanup Fund which is hereby created.
22 (b) The proceeds resulting from one-half mill of the tax
23 imposed pursuant to this article as determined by the Secretary
24 of Revenue using the provisions of this article as it existed on
25 January 1, 1990 shall be transferred to the Tax Stabilization
26 Reserve Fund established by Chapter II of the act of July 1,
27 1985 (P.L.120, No.32), known as the Tax Stabilization Reserve
28 Fund Act.
29 [(b)] (c) The funds deposited in the Hazardous Sites Cleanup
30 Fund are hereby appropriated out of this account upon
19910H1321B2849 - 80 -
1 authorization by the Governor.
2 Section 23. Sections 701 and 801 of the act, amended July 1,
3 1989 (P.L.95, No.21), are amended to read:
4 Section 701. Imposition of Tax.--Every bank having capital
5 stock, incorporated by or under any law of this Commonwealth or
6 under any law of the United States, and located within this
7 Commonwealth, shall, on or before April 15 in each and every
8 year, make to the Department of Revenue a report in writing,
9 verified as required by law, setting forth the full number of
10 shares of the capital stock subscribed for or issued, as of the
11 preceding January 1, by such bank having capital stock, and the
12 taxable amount of such shares of capital stock determined
13 pursuant to section 701.1. It shall be the duty of the
14 Department of Revenue to assess such shares for the calendar
15 years beginning January 1, 1971 through January 1, 1983, at the
16 rate of fifteen mills and for the calendar years beginning
17 January 1, 1984 through January 1, 1988, at the rate of one and
18 seventy-five one thousandths per cent and for the calendar year
19 beginning January 1, 1989, at the rate of 10.77 per cent and for
20 the calendar year beginning January 1, 1990, and each calendar
21 year thereafter at the rate of 1.25 per cent upon each dollar of
22 taxable amount thereof, the taxable amount of each share of
23 stock to be ascertained and fixed pursuant to section 701.1, and
24 dividing this amount by the number of shares. It shall be the
25 duty of every bank having capital stock, at the time of making
26 every report required by this section, to compute the tax and to
27 pay the amount of said tax to the State Treasurer, through the
28 Department of Revenue either from its general fund, or from the
29 amount of said tax collected from its shareholders: Provided,
30 That for the calendar [year] years beginning January 1, 1971[,
19910H1321B2849 - 81 -
1 and each year thereafter] through January 1, 1991, such bank
2 having capital stock, upon the date its report, herein required
3 is made for such calendar [year] years beginning January 1,
4 1971[, and each year thereafter] through January 1, 1991, shall
5 pay to the Department of Revenue not less than eighty per cent
6 of the tax due to the Commonwealth by it for such calendar year,
7 and the remaining tax due shall be paid at the time when the
8 report herein required for the year next succeeding is made:
9 Provided, That in case any bank having capital stock,
10 incorporated under the law of this State or of the United
11 States, shall collect, annually, from the shareholders thereof
12 said tax, according to the provisions of this article, that have
13 been subscribed for or issued, and pay the same into the State
14 Treasury, through the Department of Revenue, the shares, and so
15 much of the capital and profits of such bank having capital
16 stock as shall not be invested in real estate, shall be exempt
17 from local taxation under the laws of this Commonwealth; and
18 such bank having capital stock shall not be required to make any
19 report to the local assessor or county commissioners of its
20 personal property owned by it in its own right for purposes of
21 taxation and shall not be required to pay any tax thereon.
22 Section 801. Imposition of Tax.--Every company incorporated
23 under the provisions of section 29 of an act, entitled "An act
24 to provide for the incorporation and regulation of certain
25 corporations," approved April 29, 1874, and its supplements, or
26 any other act of Assembly heretofore or hereafter approved, for
27 the insurance of owners of real estate, mortgages, and others
28 interested in real estate, from loss by reason of defective
29 titles, liens, and encumbrances, and every company entitled to
30 benefits of, and every company having any of the powers of,
19910H1321B2849 - 82 -
1 companies entitled to the benefits of an act, entitled "An act
2 conferring upon certain fidelity, insurance, safety deposit,
3 trust, and savings companies, the powers and privileges of
4 companies incorporated under the provisions of section 29 of an
5 act, entitled 'An act to provide for the incorporation and
6 regulation of certain corporations,' approved April 29, 1874,
7 and of the supplements thereto," approved June 27, 1895,
8 commonly known as title insurance or trust companies, and every
9 company organized as a bank and trust company or as a trust
10 company under any act of Assembly heretofore or hereafter
11 approved, except any such companies, all of the shares of
12 capital stock of which (other than shares necessary to qualify
13 directors) are owned by a company which is liable to pay to the
14 Commonwealth a tax on shares, shall, on or before April 15 in
15 each and every year, make to the Department of Revenue a report
16 in writing, setting forth the full number of shares of the
17 capital stock subscribed for or issued by such company, and the
18 taxable amount of such shares of capital stock determined
19 pursuant to section 801.1. It shall be the duty of the
20 Department of Revenue, to assess such shares for taxation for
21 calendar years beginning January 1, 1971 through January 1,
22 1983, at the rate of fifteen mills and for the calendar years
23 beginning January 1, 1984, through January 1, 1988, at the rate
24 of one and seventy-five one thousandths per cent and for the
25 calendar year beginning January 1, 1989, at the rate of 10.77
26 per cent and for the calendar year beginning January 1, 1990,
27 and each calendar year thereafter at the rate of 1.25 per cent
28 upon each dollar of the taxable amount thereof, the taxable
29 amount of each share of stock to be ascertained and fixed
30 pursuant to section 801.1, and dividing this amount by the
19910H1321B2849 - 83 -
1 number of shares.
2 It shall be the duty of every such company, at the time of
3 making every report required by this section, to compute the tax
4 and to pay the amount of said tax to the State Treasurer,
5 through the Department of Revenue, either from its general fund,
6 or from the amount of said tax collected from its shareholders:
7 Provided, That for the calendar [year] years beginning January
8 1, 1971[, and each year thereafter] through January 1, 1991,
9 every such company shall, at the time of making its report for
10 the calendar [year] years beginning January 1, 1971[, and each
11 year thereafter] through January 1, 1991, compute the tax and
12 pay to the State Treasurer, through the Department of Revenue,
13 either from its general fund, or from the amount of said tax
14 collected from its shareholders, not less than eighty per cent
15 of the tax due to the Commonwealth by it for such calendar year
16 and the remaining tax due shall be paid at the time when the
17 report herein required for the year next succeeding is made:
18 Provided, That upon the payment of the tax fixed by this act
19 into the State Treasury, through the Department of Revenue, the
20 shares and so much of the capital stock, surplus, profits, and
21 deposits of such company as shall not be invested in real
22 estate, shall be exempt from all other taxation under the laws
23 of this Commonwealth. The procedure, in case the Department of
24 Revenue be not satisfied with the report made by any title
25 insurance or trust company, and the penalties for failing to
26 make such report and pay the tax, shall be as provided by law.
27 Section 24. Section 1101(a) of the act, amended July 13,
28 1987 (P.L.317, No.58), is amended to read:
29 Section 1101. Imposition of Tax.--(a) General Rule.--Every
30 railroad company, pipeline company, conduit company, steamboat
19910H1321B2849 - 84 -
1 company, canal company, slack water navigation company,
2 transportation company, and every other company, association,
3 joint-stock association, or limited partnership, now or
4 hereafter incorporated or organized by or under any law of this
5 Commonwealth, or now or hereafter organized or incorporated by
6 any other state or by the United States or any foreign
7 government, and doing business in this Commonwealth, and every
8 copartnership, person or persons owning, operating or leasing to
9 or from another corporation, company, association, joint-stock
10 association, limited partnership, copartnership, person or
11 persons, any railroad, pipeline, conduit, steamboat, canal,
12 slack water navigation, or other device for the transportation
13 of freight, passengers, baggage, or oil, except taxicabs, motor
14 buses and motor omnibuses, and every limited partnership,
15 association, joint-stock association, corporation or company
16 engaged in, or hereafter engaged in, the transportation of
17 freight or oil within this State, and every telephone company,
18 telegraph company, express company, gas company, palace car
19 company and sleeping car company, now or hereafter incorporated
20 or organized by or under any law of this Commonwealth, or now or
21 hereafter organized or incorporated by any other state or by the
22 United States or any foreign government and doing business in
23 this Commonwealth, and every limited partnership, association,
24 joint-stock association, copartnership, person or persons,
25 engaged in telephone, telegraph, express, gas, palace car or
26 sleeping car business in this Commonwealth, shall pay to the
27 State Treasurer, through the Department of Revenue, a tax of
28 forty-four mills upon each dollar of the gross receipts of the
29 corporation, company or association, limited partnership, joint-
30 stock association, copartnership, person or persons, received
19910H1321B2849 - 85 -
1 from passengers, baggage, and freight transported wholly within
2 this State, from telegraph or telephone messages transmitted
3 wholly within this State, from express, palace car or sleeping
4 car business done wholly within this State, or from the sales of
5 gas, except gross receipts derived from sales to any
6 municipality owned or operated public utility and except gross
7 receipts derived from the sales for resale, to persons,
8 partnerships, associations, corporations or political
9 subdivisions subject to the tax imposed by this act upon gross
10 receipts derived from such resale and from the transportation of
11 oil done wholly within this State. The gross receipts of gas
12 companies shall include the gross receipts from the sale of
13 artificial and natural gas, but shall not include gross receipts
14 from the sale of liquefied petroleum gas. The gross receipts of
15 telephone companies shall also include receipts attributable to
16 carrier access charges received by a telephone company from
17 another telephone company or from a provider of
18 telecommunications service for the use of the telephone
19 company's facilities to originate or terminate telephone calls
20 or telecommunications service.
21 * * *
22 Section 25. Section 1102-A(a) of the act, amended July 21,
23 1983 (P.L.63, No.29), is amended to read:
24 Section 1102-A. Imposition of Tax; Report; Interest and
25 Penalties.--(a) On or before the first day of June of 1970 and
26 of each year thereafter until and including June 1, 1983, every
27 public utility shall pay to the State Treasurer, through the
28 Department of Revenue, a tax at the rate of thirty mills upon
29 each dollar of the State taxable value of its utility realty at
30 the end of the preceding calendar year.
19910H1321B2849 - 86 -
1 (1) On or before April 15, 1984, for tax year 1983, every
2 public utility shall report tax liability at the rate of thirty
3 mills upon each dollar of the State taxable value of its utility
4 realty at the end of calendar year 1983 and shall pay such tax
5 on or before June 1, 1984.
6 (2) On or before April 15, 1984, and each year thereafter,
7 every public utility shall report tentative tax liability for
8 the current tax year equal to ninety per cent of the tax
9 liability of the immediate prior year, and until December 31,
10 1991, pay twenty-five per cent of such amount on April 15, June
11 15, September 15 and December 15 of each year. For tax years
12 beginning with 1992 and each year thereafter, said tentative tax
13 shall be paid on April 15 of each year.
14 (3) On or before April 15, 1985, and every year thereafter,
15 every public utility shall pay the remaining portion, if any, of
16 the thirty mills tax due upon each dollar of the State taxable
17 value of its utility realty at the end of the preceding calendar
18 year, after accounting for any tentative tax payments made
19 pursuant to this act.
20 * * *
21 Section 26. Section 1206 of the act, added December 21, 1981
22 (P.L.482, No.141), is amended to read:
23 Section 1206. Incidence and Rate of Tax.--An excise tax is
24 hereby imposed and assessed upon the sale or possession of
25 cigarettes within this Commonwealth at the rate of [nine-tenths]
26 one and seven-tenths of a cent per cigarette.
27 Section 27. The act is amended by adding a section to read:
28 Section 1206.1. Floor Tax.--Any person who possesses
29 cigarettes on which the tax imposed by section 1206 of this
30 article has been paid as of the effective date of this section
19910H1321B2849 - 87 -
1 shall pay an additional tax at a rate of eighty hundredth cents
2 per cigarette. The tax shall be reported and paid on a form
3 prescribed by the department. In addition to the interest and
4 penalties provided in section 1278 of this article, failure to
5 file said report and pay said tax within thirty days of the
6 effective date of this section may result in a penalty of two
7 hundred fifty dollars ($250). This penalty shall be added to the
8 tax and assessed and collected at the same time in the same
9 manner and as a part of the tax.
10 Section 28. Section 1216 of the act, added December 21, 1981
11 (P.L.482, No.141), is amended to read:
12 Section 1216. Commissions on Sales.--Cigarette stamping
13 agencies shall be entitled to a commission of [three] two per
14 cent of the value of all Pennsylvania cigarette tax stamps
15 purchased by them from the department or its authorized agents
16 to be used by them in the stamping of packages of cigarettes for
17 sale within the Commonwealth of Pennsylvania, said commission to
18 be paid to the cigarette stamping agent as compensation for his
19 or her services and expenses as agent in affixing such stamps.
20 Said cigarette stamping agencies shall be entitled to deduct
21 from the moneys to be paid by them for such stamps an amount,
22 equal to three per cent of the value of said stamps purchased by
23 them when such cigarette stamping agencies have purchased said
24 Pennsylvania cigarette tax stamps directly from the department
25 or its authorized agents. This section shall not apply to
26 purchases of stamps by a cigarette stamping agency in an amount
27 less than one hundred dollars ($100).
28 Section 29. Section 1221 of the act is amended by adding a
29 subsection to read:
30 Section 1221. Licensing of Cigarette Dealers.--* * *
19910H1321B2849 - 88 -
1 (c) Any person who is a "wholesaler" pursuant to section
2 1201 of this article shall be required to obtain a wholesale
3 license.
4 Section 30. Sections 1222(a), 1223, 1224, 1278(c), 1285(c)
5 and 1296 of the act, added December 21, 1981 (P.L.482, No.141),
6 are amended to read:
7 Section 1222. Licensing of Cigarette Stamping Agents.--(a)
8 The department may license as its agent for a one year period
9 (and may renew said license for further periods of one year) any
10 person of good moral character who shall meet the requirements
11 imposed by the following provisions for the privilege of
12 operating as a cigarette stamping agency:
13 (1) Said applicant shall be a wholesale cigarette dealer
14 licensed by the Commonwealth of Pennsylvania.
15 (2) The premises in which said applicant proposes to conduct
16 his or her business are adequate to protect the revenue.
17 (3) The said applicant is a person of good moral character,
18 of reasonable financial stability and reasonably experienced in
19 the wholesale cigarette business.
20 (4) The applicant, or any shareholder controlling more than
21 ten per cent of the stock if said applicant is a corporation or
22 any officer or director if said applicant is a corporation,
23 shall not have been convicted of any crime involving moral
24 turpitude.
25 (5) The applicant shall have filed all required State tax
26 reports and paid any State taxes not subject to a timely
27 perfected administrative or judicial appeal or subject to a duly
28 authorized deferred payment plan.
29 * * *
30 Section 1223. Licensing of Wholesalers.--Applicants for a
19910H1321B2849 - 89 -
1 wholesale license or renewal thereof shall meet the following
2 requirements:
3 (1) The premises on which said applicant proposes to conduct
4 his or her business are adequate to protect the revenue.
5 (2) Said applicant is a person of reasonable financial
6 stability and reasonable business experience. The applicant or
7 any shareholder controlling more than ten per cent of the stock,
8 if the applicant is a corporation or any officer or director if
9 said applicant is a corporation, shall not have been convicted
10 of any crime involving moral turpitude.
11 (3) Said applicant shall not have failed to disclose any
12 material information required by the department.
13 (4) Said applicant shall not have made any material false
14 statement in his application.
15 (5) Said applicant shall not have violated any provision of
16 this article.
17 (6) The wholesale dealer's license shall be valid for one
18 specific location only.
19 (7) Said applicant shall have filed all required State tax
20 reports and paid any State taxes not subject to a timely
21 perfected administrative or judicial appeal or subject to a duly
22 authorized deferred payment plan.
23 Section 1224. Licensing of Retailers.--Applicant for retail
24 license or renewal thereof shall meet the following
25 requirements:
26 (1) The premises in which said applicant proposes to conduct
27 his business are adequate to protect the revenues.
28 (2) Said applicant shall not have failed to disclose any
29 material information required by the department.
30 (3) Said applicant shall not have any material false
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1 statement in his application.
2 (4) Said applicant shall not have violated any provision of
3 this article.
4 (5) Said applicant shall have filed all required State tax
5 reports and paid any State taxes not subject to a timely
6 perfected administrative or judicial appeal or subject to a duly
7 authorized deferred payment plan.
8 Section 1278. Other Violations.--* * *
9 (c) Any person who fails to pay tax at the time prescribed
10 shall, in addition to any other penalty provided in this
11 article, be liable to a penalty of five per cent of the tax due
12 but unpaid, for each month or fraction thereof the tax remains
13 unpaid together with the interest at the rate [of six per cent
14 per annum] established pursuant to section 806 of the act of
15 April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code" on
16 such tax from the time the tax became due, but no interest for a
17 fraction of a month shall be demanded. The penalties provided in
18 this subsection shall be added to the tax and assessed and
19 collected at the same time in the same manner and as a part of
20 the tax.
21 Section 1285. Property Rights.--* * *
22 (c) No property rights shall exist in any packages of
23 cigarettes which have been taken from any person who has been
24 found in violation of the provisions of section 1273, or any
25 cigarettes sold or offered for sale by any person without a
26 proper license, or any cigarettes sold or offered for sale by
27 any person not possessing proper documentation showing legal
28 purchase of said cigarettes and all such packages of cigarettes
29 shall be deemed contraband, shall be confiscated and shall be
30 forfeited to the Commonwealth without further proceedings and
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1 shall be delivered to the agents of the department at the time
2 of conviction by the judge, justice of the peace, magistrate or
3 alderman.
4 * * *
5 Section 1296. Disposition of Certain Funds.--All cigarette
6 tax revenues collected by the Department of Revenue under this
7 article and heretofore paid into the Parent Reimbursement Fund
8 in accordance with the act of August 27, 1971 (P.L.358, No.92),
9 known as the "Parent Reimbursement Act for Nonpublic Education,"
10 shall be transferred into the General Fund[, and]. Of all such
11 revenues hereinafter collected, one-tenth of a cent per
12 cigarette shall be paid into a restricted account for
13 agricultural farmland preservation, one-tenth of a cent per
14 cigarette shall be paid into a restricted account to be known as
15 the Children's Health Fund for health care for indigent children
16 and the remainder shall be paid into the General Fund. Moneys in
17 the Children's Health Fund shall not be expended until the
18 enactment of legislation to implement a program of expanded
19 access to health care for children.
20 Section 31. The act is amended by adding an article to read:
21 ARTICLE XXI
22 INHERITANCE TAX
23 PART I
24 PRELIMINARY PROVISIONS
25 Section 2101. Short Title.--This article shall be known and
26 may be cited as the "Inheritance and Estate Tax Act."
27 Section 2102. Definitions.--The following words, terms and
28 phrases, when used in this article, shall have the meanings
29 ascribed to them in this section, except where the context
30 clearly indicates a different meaning:
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1 "Adverse interest." A substantial beneficial interest in the
2 property transferred which might be adversely affected by the
3 exercise or nonexercise of the power or right reserved or
4 possessed by the transferor.
5 "Children." Includes adopted children, stepchildren, all
6 children of the natural parents and the children of the natural
7 parent who are adopted by his spouse. Except as otherwise
8 specifically provided in this definition, children does not
9 include adopted children in the natural family.
10 "Clerk." The clerk of the orphans' court division of the
11 court of common pleas having jurisdiction.
12 "Court." The orphans' court division of the court of common
13 pleas of:
14 (1) The county in which the decedent resided at the time of
15 his death.
16 (2) The county in which letters, if any, are granted if the
17 decedent was a nonresident of this Commonwealth.
18 (3) Dauphin County in all other cases.
19 "Date of death." The date of actual death or, in the case of
20 a presumed decedent, the date found by the final decree to be
21 the date of the absentee's presumed death. For the purpose of
22 determining interest and discount, date of death means the date
23 upon which the court enters its final decree of presumptive
24 death.
25 "Death taxes." Includes inheritance, succession, transfer
26 and estate taxes and any other taxes levied against the estate
27 of a decedent by reason of his death.
28 "Decedent" or "transferor." Any person by or from whom a
29 transfer is made and includes any testator, intestate, grantor,
30 settlor, bargainor, vendor, assignor, donor, joint tenant and
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1 insured.
2 "Department." The Department of Revenue of the Commonwealth.
3 "Exemption income." All moneys or property, including,
4 without limitation, interest, gains or income derived from
5 obligations which are statutorily free from State or local
6 taxation under any other Federal or State laws, received of
7 whatever nature and from whatever source derived.
8 "Financial institution." A bank, a bank and trust company, a
9 trust company, a savings and loan association, a building and
10 loan association, a credit union, a savings bank and a national
11 bank.
12 "Future interest." Includes a successive life interest and a
13 successive interest for a term certain.
14 "Lineal descendants." All children of the natural parents
15 and their descendants, adopted descendants and their
16 descendants, stepchildren and their descendants and children and
17 their descendants of the natural parent who are adopted by his
18 spouse. Except as otherwise specifically provided in this
19 definition, lineal descendants do not include descendants of
20 stepchildren or adopted children and their descendants in the
21 natural family.
22 "Notice." Written notice.
23 "Presumed decedent." A person found to be presumptively dead
24 under the provisions of 20 Pa.C.S. Ch. 57 (relating to absentees
25 and presumed decedents) or, if a nonresident of this
26 Commonwealth, under the laws of his domicile.
27 "Property" or "estate." Includes the following:
28 (1) All real property and all tangible personal property of
29 a resident decedent or transferor having its situs in this
30 Commonwealth.
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1 (2) All intangible personal property of a resident decedent
2 or transferor.
3 (3) All real property and all tangible personal property of
4 a resident decedent having its situs outside this Commonwealth,
5 which the decedent had contracted to sell, provided the
6 jurisdiction in which the property has its situs does not
7 subject it to death tax.
8 (4) All real property and all tangible personal property of
9 a nonresident decedent or transferor having its situs in this
10 Commonwealth, including property held in trust.
11 (5) A liquor license issued by the Commonwealth.
12 "Register." The register of wills having jurisdiction to
13 grant letters testamentary or of administration in the estate of
14 the decedent or transferor.
15 "Safe deposit box of a decedent." A safe deposit box in a
16 financial institution located within this Commonwealth in the
17 name of the decedent alone or in the names of the decedent and
18 one or more persons other than the spouse of the decedent.
19 "Secretary." The Secretary of Revenue of the Commonwealth.
20 "Territory." Includes the District of Columbia and all
21 possessions of the United States.
22 "Transfer." Includes the passage of ownership of property,
23 or interest in property or income from property, in possession
24 or enjoyment, present or future, in trust or otherwise.
25 "Transferee." Any person to whom a transfer is made and
26 includes any legatee, devisee, heir, next of kin, grantee,
27 beneficiary, vendee, assignee, donee, surviving joint tenant and
28 insurance beneficiary.
29 "Value." The price at which the property would be sold by a
30 willing seller, not compelled to sell, to a willing buyer, not
19910H1321B2849 - 95 -
1 compelled to buy, both of whom have reasonable knowledge of the
2 relevant facts. In determining the value of property, no
3 reduction shall be made on account of income, excise or other
4 taxes which may become payable subsequent to the valuation date
5 by the transferee or out of the property. Value as to land in
6 agricultural use, agricultural reserve or forest reserve means
7 the value which the land has for its particular use according to
8 the standards provided in section 2122.
9 Section 2103. Powers of Department.--(a) The department may
10 adopt and enforce rules and regulations for the just
11 administration of this article.
12 (b) The department shall have complete supervision of the
13 making of appraisements, the allowance of deductions and the
14 assessment of tax including, but not limited to, the power to
15 regulate the actions of registers in the allowance and
16 disallowance of deductions and assessment of tax. The
17 department's supervision of the making of appraisements includes
18 the employment and compensation of investigators, appraisers and
19 expert appraisers. The compensation of investigators, appraisers
20 and expert appraisers shall be paid from the inheritance tax
21 collections in the respective counties.
22 (c) The department shall, in the event that the register
23 fails to take the necessary proceedings in connection with the
24 appraisement, allowance of deductions, assessment of tax or
25 collection of tax, have all the powers vested in the register in
26 this article and, at its option, may take the necessary action
27 and shall charge to the register and deduct from any commissions
28 or fees otherwise due him all costs and expenses incurred by the
29 department in connection with the proceedings.
30 PART II
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1 TRANSFERS SUBJECT TO TAX
2 Section 2106. Imposition of Tax.--An inheritance tax for the
3 use of the Commonwealth is imposed upon every transfer subject
4 to tax under this article at the rates specified in section
5 2116.
6 Section 2107. Transfers Subject to Tax.--(a) The transfers
7 enumerated in this section are subject to the tax imposed by
8 section 2106.
9 (b) All transfers of property by will, by the intestate laws
10 of this Commonwealth or, in the case of a transfer from a
11 nonresident, by the laws of succession of another jurisdiction
12 are subject to tax. The transfer of property of a person
13 determined by decree of a court of competent jurisdiction to be
14 a presumed decedent is subject to tax within the meaning of this
15 section and section 2108.
16 (c) (1) All transfers of property specified in subclauses
17 (3) through (7) which are made by a resident or a nonresident
18 during his lifetime are subject to tax to the extent that they
19 are made without valuable and adequate consideration in money or
20 money's worth at the time of transfer.
21 (2) When the decedent retained or reserved an interest or
22 power with respect to only a part of the property transferred,
23 in consequence of which a tax is imposed under subclauses (4)
24 through (7), the amount of the taxable transfer is only the
25 value of that portion of the property transferred which is
26 subject to the retained or reserved interest or power.
27 (3) A transfer conforming to subclause (1) and made within
28 one year of the death of the transferor is subject to tax only
29 to the extent that the value at the time of the transfer or
30 transfers in the aggregate to or for the benefit of the
19910H1321B2849 - 97 -
1 transferee exceeds three thousand dollars ($3,000) during any
2 calendar year.
3 (4) A transfer conforming to subclause (1) which takes
4 effect in possession or enjoyment at or after the death of the
5 transferor and under which the transferor has retained a
6 reversionary interest in the property, the value of which
7 interest immediately before the death of the transferor exceeds
8 five per cent of the value of the property transferred, is
9 subject to tax. The term "reversionary interest" includes a
10 possibility that property transferred may return to the
11 transferor or his estate, or may be subject to a power of
12 disposition by him, but the term does not include a possibility
13 that the income alone from the property may return to him or
14 become subject to a power of disposition by him.
15 (5) A transfer conforming to subclause (1), and under which
16 the transferor expressly or impliedly reserves for his life or
17 any period which does not in fact end before his death, the
18 possession or enjoyment of, or the right to the income from, the
19 property transferred, or the right, either alone or in
20 conjunction with any person not having an adverse interest, to
21 designate the persons who shall possess or enjoy the property
22 transferred or the income from the property, is subject to tax.
23 (6) A transfer conforming to subclause (1), and under which
24 the transferee promises to make payments to, or for the benefit
25 of, the transferor or to care for the transferor during the
26 remainder of the transferor's life, is subject to tax.
27 (7) A transfer conforming to subclause (1), and under which
28 the transferor has at his death, either in himself alone or in
29 conjunction with any person not having an adverse interest, a
30 power to alter, amend or revoke the interest of the beneficiary,
19910H1321B2849 - 98 -
1 is subject to tax. Similarly, the relinquishment of such a power
2 is a transfer subject to tax except as otherwise provided in
3 subclause (3).
4 Section 2108. Joint Tenancy.--(a) When any property is held
5 in the names of two or more persons, or is deposited in a
6 financial institution in the names of two or more persons, so
7 that, upon the death of one of them, the survivor or survivors
8 have a right to the immediate ownership or possession and
9 enjoyment of the whole property, the accrual of such right, upon
10 the death of one of them, shall be deemed a transfer subject to
11 tax, of a fractional portion of such property to be determined
12 by dividing the value of the whole property by the number of
13 joint tenants in existence immediately preceding the death of
14 the deceased joint tenant.
15 (b) Except as provided in subsection (c), this section shall
16 not apply to property and interests in property passing by right
17 of survivorship to the survivor of husband and wife.
18 (c) If the co-ownership was created within one year prior to
19 the death of the co-tenant, the entire interest transferred
20 shall be subject to tax only under, and to the extent stated in,
21 subsection (c)(3) of section 2107 as though a part of the estate
22 of the person who created the co-ownership.
23 PART III
24 TRANSFERS NOT SUBJECT TO TAX
25 Section 2111. Transfers Not Subject to Tax.--(a) The
26 transfers enumerated in this section are not subject to the tax
27 imposed by this article.
28 (b) Transfers of property to or for the use of any of the
29 following are exempt from inheritance tax:
30 (1) The United States of America.
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1 (2) The Commonwealth of Pennsylvania.
2 (3) A political subdivision of the Commonwealth of
3 Pennsylvania.
4 (c) Transfers of property to or for the use of any of the
5 following are exempt from inheritance tax:
6 (1) Any corporation, unincorporated association or society
7 organized and operated exclusively for religious, charitable,
8 scientific, literary or educational purposes, including the
9 encouragement of art and the prevention of cruelty to children
10 or animals, no part of the net earnings of which inures to the
11 benefit of any private stockholder or individual and no
12 substantial part of the activities of which is carrying on
13 propaganda or otherwise attempting to influence legislation.
14 (2) Any trustee or trustees, or any fraternal society, order
15 or association operating under the lodge system, but only if the
16 property transferred is to be used by the trustee or trustees,
17 or by the fraternal society, order or association, exclusively
18 for religious, charitable, scientific, literary or educational
19 purposes, or for the prevention of cruelty to children or
20 animals, and no substantial part of the activities of the
21 trustee or trustees, or of the fraternal society, order or
22 association, is carrying on propaganda or otherwise attempting
23 to influence legislation.
24 (3) Any veterans' organization incorporated by act of
25 Congress, or its departments or local chapters or posts, no part
26 of the net earnings of which inures to the benefit of any
27 private shareholder or individual.
28 (d) All proceeds of insurance on the life of the decedent
29 are exempt from inheritance tax. Refunds of unearned premiums
30 for the current policy period and post mortem dividends shall be
19910H1321B2849 - 100 -
1 considered exempt proceeds.
2 (e) All proceeds of any Federal War Risk Insurance, National
3 Service Life Insurance or similar governmental insurance are
4 exempt from inheritance tax. Refunds of unearned premiums for
5 the current policy period and post mortem dividends shall be
6 considered exempt proceeds.
7 (f) The pay and allowances determined by the United States
8 to be due a member of its armed forces for service in the
9 Vietnam conflict after August 5, 1964, for the period between
10 the date declared by it as the beginning of his missing in
11 action status to the date determined by it to be the date of his
12 death, are exempt from inheritance tax.
13 (g) Inter vivos transfers as defined in subsection (c) of
14 section 2107 which might otherwise be subject to inheritance tax
15 are exempt where the transferee is a governmental body as
16 provided in subsection (b) or a charity as provided in
17 subsection (c).
18 (h) Intangible personal property held by, for or for the
19 benefit of a decedent who, at the time of his death, was a
20 nonresident is exempt from inheritance tax.
21 (i) A transfer made as an advancement of or on account of an
22 intestate share or in satisfaction or partial satisfaction of a
23 gift by will, but not within the meaning of subsection (c)(3) of
24 section 2107, is exempt from inheritance tax.
25 (j) Adjusted service certificates issued under the act of
26 Congress of May 19, 1924, and adjusted service bonds issued
27 under the act of Congress of January 27, 1936, are exempt from
28 inheritance tax.
29 (k) Property subject to a power of appointment, whether or
30 not the power is exercised, and notwithstanding any blending of
19910H1321B2849 - 101 -
1 such property with the property of the donee, is exempt from
2 inheritance tax in the estate of the donee of the power of
3 appointment.
4 (l) Property awarded to the Commonwealth as statutory heir
5 by escheat or without escheat, otherwise than as custodian for a
6 known distributee, is exempt from inheritance tax. Inheritance
7 tax shall be deducted at the applicable rate without interest
8 from any such exempt funds thereafter distributed by the
9 Commonwealth.
10 (m) Property owned by husband and wife with right of
11 survivorship is exempt from inheritance tax. If the ownership
12 was created within the meaning of section 2107(c)(3) the entire
13 interest transferred shall be subject to tax under section
14 2107(c)(3) as though a part of the estate of the spouse who
15 created the co-ownership.
16 (n) Property held in the name of a decedent who had no
17 beneficial interest in the property is exempt from inheritance
18 tax.
19 (o) Obligations owing to the decedent which are worthless
20 immediately before death are exempt from inheritance tax
21 although collectible from the obligor's distributive share of
22 the estate.
23 (p) The lump-sum death payment from the United States Social
24 Security Administration or any payment made in lieu of the
25 Social Security Administration payment by another agency of the
26 United States, whether or not paid to the decedent's estate, is
27 exempt from inheritance tax.
28 (q) The lump-sum burial benefit from the United States
29 Railroad Retirement Board, whether or not paid to the decedent's
30 estate, is exempt from inheritance tax.
19910H1321B2849 - 102 -
1 (r) Payments under pension, stock bonus, profit-sharing and
2 other retirement plans including, but not limited to, H.R.10
3 plans, individual retirement accounts, individual retirement
4 annuities and individual retirement bonds to distributees
5 designated by decedent or designated in accordance with the
6 terms of the plan, are exempt from inheritance tax to the extent
7 that decedent before his death did not otherwise have the right
8 to possess (including proprietary rights at termination of
9 employment), enjoy, assign or anticipate the payment made. In
10 addition to this exemption, whether or not the decedent
11 possessed any of these rights, the payments are exempt from
12 inheritance tax to the same extent that they are exempt from
13 Federal estate tax under the provisions of the Internal Revenue
14 Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as
15 amended, any supplement to the code, or any similar provision in
16 effect from time to time for Federal estate tax purposes, except
17 that a payment, which would otherwise be exempt for Federal
18 estate tax purposes if it had not been made in a lump-sum or
19 other nonexempt form of payment, shall be exempt from
20 inheritance tax even though paid in a lump-sum or other form of
21 payment. The proceeds of life insurance otherwise exempt under
22 subsection (d) shall not be subject to inheritance tax because
23 they are paid under a pension, stock bonus, profit-sharing,
24 H.R.10 or other retirement plan.
25 Section 2112. Exemption for Poverty.--(a) The General
26 Assembly, in recognition of the powers contained in section
27 2(b)(ii) of Article VIII of the Constitution of Pennsylvania
28 which provides therein for the establishing as a class or
29 classes of subjects of taxation the property or privileges of
30 persons who because of poverty are determined to be in need of
19910H1321B2849 - 103 -
1 special tax provisions or tax exemptions, hereby declares as its
2 legislative intent and purpose to implement such powers under
3 such Constitutional provision by establishing a tax exemption as
4 hereinafter provided in this section.
5 (b) The General Assembly, having determined that there are
6 persons within this Commonwealth the value of whose incomes and
7 estates are such that the imposition of an inheritance tax under
8 this article would cause them hardship and economic burden and
9 having further determined that poverty is a relative concept
10 inextricably joined with the ability to maintain assets
11 inherited upon the death of a spouse, deems it to be a matter of
12 public policy to provide an exemption from taxation for
13 transfers of property to or for the use of that class of persons
14 hereinafter designated in order to relieve their hardship and
15 economic burden.
16 (c) Any claim for a tax exemption hereunder shall be
17 determined in accordance with the following:
18 (1) The transferee is the spouse of the decedent at the date
19 of death of the decedent.
20 (2) The value of the estate of the decedent does not exceed
21 two hundred thousand dollars ($200,000) after reduction for
22 actual liabilities of the decedent as evidenced by a written
23 agreement.
24 (3) The average of the joint exemption income of the
25 decedent and the transferee for the three taxable years, as
26 defined in Article III, immediately preceding the date of death
27 of the decedent does not exceed forty thousand dollars
28 ($40,000).
29 (d) Notwithstanding any other provision of this article,
30 transfers of property to or for the use of any eligible
19910H1321B2849 - 104 -
1 transferee who meets the standards of eligibility established by
2 this section as the test for poverty shall be deemed a separate
3 class of subject of taxation, and, as such, shall be entitled to
4 the benefit of the following exemptions from taxation on
5 transfers of property as a credit against the tax imposed by
6 this article:
7 (1) For decedents dying on or after January 1, 1992, and
8 before January 1, 1993, the lesser of:
9 (i) Two per cent of the taxable value of the property of the
10 decedent transferred to or for the use of the transferee.
11 (ii) Two per cent of one hundred thousand dollars ($100,000)
12 of the taxable value of the property of the decedent transferred
13 to or for the use of the transferee.
14 (2) For decedents dying on or after January 1, 1993, and
15 before January 1, 1994, the lesser of:
16 (i) Four per cent of the taxable value of the property of
17 the decedent transferred to or for the use of the transferee.
18 (ii) Four per cent of one hundred thousand dollars
19 ($100,000) of the taxable value of the property of the decedent
20 transferred to or for the use of the transferee.
21 (3) For decedents dying on or after January 1, 1994, the
22 lesser of:
23 (i) Six per cent of the taxable value of the property of the
24 decedent transferred to or for the use of the transferee.
25 (ii) Six per cent of one hundred thousand dollars ($100,000)
26 of the taxable value of the property of the decedent transferred
27 to or for the use of the transferee.
28 (e) For nonresident decedents, the credit provided in this
29 section shall bear the same ratio as that of the decedent's
30 estate in this Commonwealth bears to the decedent's total estate
19910H1321B2849 - 105 -
1 without regard to situs.
2 PART IV
3 RATE OF TAX
4 Section 2116. Inheritance Tax.--(a) (1) Inheritance tax
5 upon the transfer of property passing to or for the use of any
6 of the following shall be at the rate of six per cent:
7 (i) grandfather, grandmother, father, mother, husband, wife
8 and lineal descendants; or
9 (ii) wife or widow and husband or widower of a child.
10 (2) Inheritance tax upon the transfer of property passing to
11 or for the use of all persons other than those designated in
12 subclause (1) shall be at the rate of fifteen per cent.
13 (3) When property passes to or for the use of a husband and
14 wife with right of survivorship, one of whom is taxable at a
15 rate lower than the other, the lower rate of tax shall be
16 applied to the entire interest.
17 (b) (1) When the decedent was a resident, the tax shall be
18 computed upon the value of the property, in excess of the
19 deductions specified in Part VI, at the rates in effect at the
20 transferor's death.
21 (2) When the decedent was a nonresident, the tax shall be
22 computed upon the value of real property and tangible personal
23 property having its situs in this Commonwealth, in excess of
24 unpaid property taxes assessed on the property and any
25 indebtedness for which it is liened, mortgaged or pledged, at
26 the rates in effect at the transferor's death. The person liable
27 to make the return under section 2136 may elect to have the tax
28 computed as if the decedent was a resident and his entire estate
29 was property having its situs in this Commonwealth and the tax
30 due shall be the amount which bears the same ratio to the tax
19910H1321B2849 - 106 -
1 thus computed as the real property and tangible personal
2 property located in this Commonwealth bears to the entire estate
3 of the decedent.
4 (c) When any person entitled to a distributive share of an
5 estate, whether under an inter vivos trust, a will or the
6 intestate law, renounces his right to receive the distributive
7 share receiving therefor no consideration, or exercises his
8 elective rights under 20 Pa.C.S. Ch. 22 (relating to elective
9 share of surviving spouse) receiving therefor no consideration
10 other than the interest in assets passing to him as the electing
11 spouse, the tax shall be computed as though the persons who
12 benefit by such renunciation or election were originally
13 designated to be the distributees, conditioned upon an
14 adjudication or decree of distribution expressly confirming
15 distribution to such distributees. The renunciation shall be
16 made within nine months after the death of the decedent or, in
17 the case of a surviving spouse, within the time for election and
18 any extension thereof under 20 Pa.C.S. § 2210(b) (relating to
19 procedure for election; time limit). Notice of the filing of the
20 account and of its call for audit or confirmation shall include
21 notice of the renunciation or election to the department. When
22 an unconditional vesting of a future interest does not occur at
23 the decedent's death, the renunciation specified in this
24 subsection of the future interest may be made within three
25 months after the occurrence of the event or contingency which
26 resolves the vesting of the interest in possession and
27 enjoyment.
28 (d) In case of a compromise of a dispute regarding rights
29 and interests of transferees, made in good faith, the tax shall
30 be computed as though the persons so receiving distribution were
19910H1321B2849 - 107 -
1 originally entitled to it as transferees of the property
2 received in the compromise, conditioned upon an adjudication or
3 decree of distribution expressly confirming distribution to such
4 distributees. Notice of the filing of the account and of its
5 call for audit or confirmation shall include notice to the
6 department.
7 (e) If the rate of tax which will be applicable when a
8 future interest vests in possession and enjoyment cannot be
9 established with certainty, the department, after consideration
10 of relevant actuarial factors, valuations and other pertinent
11 circumstances, may enter into an agreement with the person
12 responsible for payment to establish a specified amount of tax
13 which, when paid within sixty days after the agreement, shall
14 constitute full payment of all tax otherwise due upon such
15 transfer.
16 (f) Property subject to a power of appointment, whether or
17 not the power is exercised and notwithstanding any blending of
18 the property with the property of the donee, shall be taxed only
19 as part of the estate of the donor.
20 Section 2117. Estate Tax.--(a) In the event that a Federal
21 estate tax is payable to the United States on the estate of a
22 decedent who was a resident of this Commonwealth at the time of
23 his death and the inheritance tax, if any, paid to the
24 Commonwealth (disregarding interest or the amount of any
25 discount allowed under section 2142), plus the death taxes (not
26 including any death tax expressly imposed to receive the benefit
27 of the credit for State death taxes allowed by the Federal
28 estate tax law) paid to other states or territories in respect
29 to the property of the decedent, is less than the maximum credit
30 for State taxes allowed by the Federal estate tax law, a tax
19910H1321B2849 - 108 -
1 equal to the difference is imposed.
2 (b) In the event that a Federal estate tax is payable to the
3 United States on the estate of a decedent who was not a resident
4 of the United States or its territories at the time of his death
5 and the inheritance tax, if any, paid to the Commonwealth
6 (disregarding interest or the amount of any discount allowed
7 under section 2142) is less than the maximum credit for State
8 taxes allowed by the Federal estate tax law, a tax is hereby
9 imposed, to be computed by deducting the Pennsylvania
10 inheritance tax, if any, paid from an amount which bears the
11 same ratio to the maximum credit for State taxes allowed by the
12 Federal estate tax law, as the transfer of property subject to
13 inheritance tax and included in the decedent's gross estate for
14 Federal estate tax purposes bears to the decedent's gross estate
15 located within the United States and its territories for Federal
16 estate tax purposes.
17 (c) When an inheritance tax is imposed after an estate tax
18 imposed under subsection (a) or (b) has been paid, the estate
19 tax paid shall be credited against any inheritance tax later
20 imposed.
21 PART V
22 VALUATION
23 Section 2121. Valuation.--(a) Except as otherwise provided
24 in this part, the valuation date shall be the date of the
25 transferor's death. When the transfer was made during lifetime
26 and was not in trust, the property transferred shall be valued
27 at the transferor's death. When the transfer was to an inter
28 vivos trust, the property to be valued shall be that comprising
29 the portion of the trust, if any, which exists at the
30 transferor's death and which portion is traceable from property
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1 the transfer of which is subject to tax under this article.
2 (b) The value of a life interest shall be determined in
3 accordance with rules and regulations promulgated by the
4 department. Until the promulgation of rules and regulations to
5 the contrary, the regulations in effect for Federal estate tax
6 purposes shall apply.
7 (c) The value of an interest for a term certain shall be
8 determined in accordance with rules and regulations promulgated
9 by the department. Until the promulgation of rules and
10 regulations to the contrary, the regulations in effect for
11 Federal estate tax purposes shall apply.
12 (d) If an annuity or a life estate is terminated by the
13 death of the annuitant or life tenant or by the happening of a
14 contingency within nine months after the death of the
15 transferor, the value of the annuity or estate shall be the
16 value, at the date of the transferor's death, of the amount of
17 the annuity or income actually paid or payable to the annuitant
18 or life tenant during the period he was entitled to the annuity
19 or was in possession of the estate. If an appraisement of an
20 annuity or life estate has been filed before the termination,
21 the appraisement and any assessment based on the appraisement
22 shall be revised in accordance with this section upon request of
23 any party in interest, including the Commonwealth and the
24 personal representative, insofar as the appraisement and any
25 assessment based on the appraisement relates to the valuation of
26 the terminated annuity or life estate, without the necessity of
27 the party in interest following any procedure described in Part
28 XI.
29 (e) The value of a future interest shall be determined in
30 accordance with rules and regulations promulgated by the
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1 department. Until the promulgation of rules and regulations to
2 the contrary, the regulations in effect for Federal estate tax
3 purposes shall apply.
4 (f) When a decedent's property is subject, during his
5 lifetime and at the time of his death, to a binding option or
6 agreement to sell, the appraised value of the property shall not
7 exceed the amount of the established price payable for it
8 provided the option or agreement is a bona fide arrangement and
9 not a device to transfer the property for less than an adequate
10 and full consideration in money or money's worth. If the option
11 or agreement is not exercised and consummated, the value at
12 which the property is appraised shall not be limited to the
13 established price payable for the property and it shall not
14 exceed the value of the property on the date of the transferor's
15 death. When tax has been assessed on the basis of an established
16 price and the option or agreement is not exercised and
17 consummated or an amount greater than the established price is
18 received for the property, the fiduciary or transferee shall
19 file a supplemental return reporting the facts.
20 Section 2122. Valuation of Certain Farmland.--(a) The
21 following words and phrases when used in this section, shall
22 have the meaning ascribed to them in this section, except where
23 the context clearly indicates a different meaning:
24 "Agricultural commodity." Any and all plant and animal
25 products including Christmas trees produced in this Commonwealth
26 for commercial purposes.
27 "Agricultural reserve." Noncommercial open space lands used
28 for outdoor recreation or the enjoyment of scenic or natural
29 beauty and open to the public for such use, without charge or
30 fee, on a nondiscriminatory basis.
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1 "Agricultural use." Use of the land for the purpose of
2 producing an agricultural commodity or when devoted to and
3 meeting the requirements and qualifications for payments or
4 other compensation pursuant to a soil conservation program under
5 an agreement with an agency of the Federal Government.
6 "Forest reserve." Land, ten acres or more, stocked by forest
7 trees of any size and capable of producing timber or other wood
8 products.
9 "Separation." A division, by conveyance or other action of
10 the owner, of lands devoted to agricultural use, agricultural
11 reserve or forest reserve and preferentially assessed under the
12 provisions of this section into two or more tracts of land which
13 continue to be agricultural use, agricultural reserve or forest
14 reserve and all tracts so formed meet the requirements of
15 section 3 of the act of December 19, 1974 (P.L.973, No.319),
16 known as the "Pennsylvania Farmland and Forest Land Assessment
17 Act of 1974."
18 "Split-off." A division, by conveyance or other action of
19 the owner, of lands devoted to agricultural use, agricultural
20 reserve or forest reserve and preferentially assessed under the
21 provisions of this section into two or more tracts of land, the
22 use of which on one or more of such tracts does not meet the
23 requirements of section 3 of the "Pennsylvania Farmland and
24 Forest Land Assessment Act of 1974."
25 (b) (1) The value for transfer inheritance tax purposes of
26 land or an interest in land which is owned by a decedent and
27 devoted to agricultural use, agricultural reserve or forest
28 reserve shall be that value which such land has for its
29 particular use if it also meets the following conditions:
30 (i) in the case of land devoted to agricultural use, the
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1 land was devoted to such agricultural use for the three years
2 preceding the death of such decedent and is not less than ten
3 contiguous acres in area or has an anticipated yearly gross
4 income derived from agricultural use of two thousand dollars
5 ($2,000);
6 (ii) in the case of land devoted to agricultural reserve,
7 the land is not less than ten contiguous acres in area;
8 (iii) in the case of land presently devoted to forest
9 reserve, the land is not less than ten contiguous acres in area;
10 or
11 (iv) the contiguous tract of land for which application is
12 made is not less than the entire contiguous area of the owner
13 used for agricultural use, agricultural reserve or forest
14 reserve purposes.
15 (2) In determining the value of land in agricultural use,
16 agricultural reserve or forest reserve for its particular use,
17 consideration shall be given to available evidence of such
18 land's capability for its particular use as derived from the
19 soil survey at The Pennsylvania State University, the National
20 Cooperative Soil Survey, the United States Census of
21 Agricultural Categories of land use classes and other evidence
22 of the capability of the land devoted to such use and also, if
23 the land is assessed under the provisions of the "Pennsylvania
24 Farmland and Forest Land Assessment Act of 1974," to the
25 valuation determined by the local county assessor thereunder.
26 (c) (1) If any tract of land in agricultural use,
27 agricultural reserve or forest reserve, which is valued for
28 inheritance tax purposes under the provisions of this part, is
29 applied to a use other than agricultural use, agricultural
30 reserve or forest reserve or for any other reason, except
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1 condemnation thereof, is removed from the category of land
2 preferentially valued under this part within seven years
3 following the death of such decedent, the owner at such time the
4 land is so removed shall be subject and liable to tax due the
5 Commonwealth in an amount equal to the difference, if any,
6 between the taxes paid or payable on the basis of the valuation
7 authorized under this section and the taxes that would have been
8 paid or payable had that land been valued and taxed on the basis
9 of its market value at the death of the decedent, plus interest
10 thereon for the period from the date of death to the change of
11 use at the rate established in section 2143.
12 (2) The tax shall be a lien upon the property in favor of
13 the Commonwealth, collectible in the manner provided by law for
14 the collection of delinquent real estate taxes, as well as the
15 personal obligation of the owner at the time of such change of
16 use. The tax shall become due on the date of change of use.
17 (3) Every owner of land preferentially valued under this
18 section shall notify the register of wills of the county or
19 counties in which the land is located of any change or proposed
20 change in the use of the land. Any owner failing to make
21 notification commits a misdemeanor of the third degree.
22 (d) (1) The split-off of a part of the land which has been
23 valued, assessed and taxed under this article for a use other
24 than agricultural use, agricultural reserve or forest reserve
25 within the seven-year period provided for by subsection (c)
26 shall, except when the split-off occurs through condemnation,
27 subject the land divided and the entire parcel from which the
28 land was divided to liability for taxes as otherwise set forth
29 in this article except as provided in subclause (2).
30 (2) The owner of property subject to a preferential tax
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1 assessment may split-off land covered by the preferential tax
2 assessment within the seven-year period. The tract of land so
3 split-off shall not exceed two acres annually and may only be
4 used for residential use, agricultural use, agricultural reserve
5 or forest reserve and the construction of a residential dwelling
6 to be occupied by the person to whom the land is transferred.
7 The total parcel or parcels of land split-off under the
8 provisions of this subsection shall not exceed ten per cent or
9 ten acres, whichever is less, of the entire tract subject to the
10 preferential tax assessment. The split-off of a parcel of land
11 which meets the requirements of this subsection shall not
12 invalidate the preferential tax assessment if it continues to
13 meet the requirements of subsection (b).
14 (3) The owner of property subject to a preferential use
15 assessment may separate land covered by the preferential use
16 assessment. The separation shall not invalidate the preferential
17 tax assessment unless a subsequent abandonment of preferential
18 use occurs within seven years of the separation. The abandonment
19 shall subject the entire tract of land separated to liability
20 for taxes, which are to be paid by the person changing the use,
21 as set forth in this article.
22 (4) When property subject to preferential tax assessment is
23 separated among the beneficiaries taxed under subsection (a)(1)
24 of section 2116, a subsequent change within the seven-year
25 period provided for in subsection (b) in the use of one
26 beneficiary's portion of the property shall subject only that
27 tract held by the beneficiary who changes the use to liability
28 under this article.
29 PART VI
30 DEDUCTIONS
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1 Section 2126. Deductions Generally.--The only deductions
2 from the value of the property transferred shall be those set
3 forth in this part. Except as otherwise provided in this
4 article, they shall be deductible regardless of whether or not
5 assets comprising the decedent's taxable estate are employed in
6 the payment or discharge of the deductible items. When a tax is
7 imposed upon a transfer described in subsection (c) of section
8 2107 and section 2108, the deductions shall be allowed to the
9 transferee only to the extent that the transferee has actually
10 paid the deductible items and either the transferee was legally
11 obligated to pay the deductible items or the estate subject to
12 administration by a personal representative is insufficient to
13 pay the deductible items.
14 Section 2127. Expenses.--(a) The following expenses may be
15 deducted from the value of the property transferred.
16 (b) Administration expenses. All reasonable expenses of
17 administration of the decedent's estate and of the assets
18 includable in the decedent's taxable estate are deductible.
19 (c) Bequest to fiduciary or attorney in lieu of fees. A
20 transfer to an executor, trustee or attorney in lieu of
21 compensation for services is deductible to the extent it does
22 not exceed reasonable compensation for the services to be
23 performed.
24 (d) Family exemption. The family exemption is deductible.
25 (e) Funeral and burial expenses. Reasonable and customary
26 funeral expenses, including the cost of a family burial lot or
27 other resting place, are deductible.
28 (f) Tombstones and gravemarkers. Reasonable and customary
29 expenses for the purchase and erection of a monument, gravestone
30 or marker on decedent's burial lot or final resting place are
19910H1321B2849 - 116 -
1 deductible.
2 (g) Burial trusts or contracts. Bequests or devises in
3 trust, or funds placed in trust after decedent's death, or funds
4 paid under a contract after decedent's death, in reasonable
5 amounts, to the extent that the funds or income from the funds
6 is to be applied to the care and preservation of the family
7 burial lot or other final resting place in which the decedent is
8 buried or the remains of the decedent repose and the structure
9 on the burial lot or other final resting place, are deductible.
10 (h) Bequests for religious services. Bequests in reasonable
11 amounts for the performance or celebration of religious rites,
12 rituals, services or ceremonies, in consequence of the death of
13 the decedent, shall be deductible.
14 Section 2128. Taxes.--(a) The following taxes may be
15 deducted from the value of the property transferred:
16 (b) Property taxes. Taxes imposed against the decedent or
17 against any property constituting a part of decedent's gross
18 taxable estate, and which are owing prior to decedent's death,
19 are deductible. However, taxes for which decedent is not
20 personally liable shall not be deductible in an amount exceeding
21 the value of the property against which the taxes are liened.
22 (c) State and foreign death taxes. Death taxes other than
23 the Federal estate tax, disregarding interest and penalty, paid
24 to other states and territories of the United States and to
25 taxing jurisdictions outside the United States and its
26 territories on assets, the transfer of which is subject to tax
27 under this article, if the taxes are required to be paid to
28 bring the assets into this Commonwealth, or to transfer them to
29 the new owner, are deductible.
30 Section 2129. Liabilities.--(a) All liabilities of the
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1 decedent shall be deductible subject to the limitations set
2 forth in this section.
3 (b) Except as otherwise provided in subsections (h) and (i),
4 the deductions for indebtedness of the decedent, when founded
5 upon a promise or agreement, shall be limited to the extent that
6 it was contracted bona fide and for an adequate and full
7 consideration in money or money's worth.
8 (c) Except as provided by subsection (4) of section 2130,
9 indebtedness owing by the decedent upon a secured loan is
10 deductible whether or not the security is a part of the gross
11 taxable estate.
12 (d) Except as provided by subsection (4) of section 2130,
13 the decedent's liability (net of all collectible contribution)
14 on a joint obligation is deductible whether or not payment of
15 the obligation is secured by entireties property or property
16 which passes to another under the right of survivorship.
17 (e) Indebtedness arising from a contract for the support of
18 the decedent is deductible.
19 (f) Decedent's obligation is deductible whether or not
20 discharged by testamentary gift.
21 (g) Decedent's debt, which is unenforceable because of any
22 statute of limitations, is deductible if paid by the estate.
23 (h) A pledge to a transferee exempt under the provisions of
24 subsection (c) of section 2111 is deductible if paid by the
25 estate, whether or not it is legally enforceable.
26 (i) Liabilities arising from the decedent's tort or from
27 decedent's status as an accommodation endorser, guarantor or
28 surety are deductible, except to the extent that it can be
29 reasonably anticipated that decedent's estate will be exonerated
30 or reimbursed by others primarily liable or subject to
19910H1321B2849 - 118 -
1 contribution.
2 (j) The fact that a surviving spouse is legally liable and
3 financially able to pay any item which, if the deceased spouse
4 were unmarried, would qualify as a deduction under this part
5 shall not result in the disallowance of such item as a
6 deduction.
7 (k) Obligations for decedent's medical expenses are not
8 deductible to the extent decedent's estate will be exonerated or
9 reimbursed for such expenses from other sources.
10 Section 2130. Deductions Not Allowed.--The following are not
11 deductible:
12 (1) The value of assets claimed for the spouse's allowance
13 under 20 Pa.C.S. § 2102 (relating to share of surviving spouse).
14 (2) Claims of a former or surviving spouse, or others, under
15 an agreement between the former or surviving spouse and the
16 decedent, insofar as they arise in consideration of a
17 relinquishment or promised relinquishment of marital or support
18 rights.
19 (3) Litigation expenses of beneficiaries.
20 (4) Indebtedness secured by real property, or tangible
21 personal property, all of which has its situs outside of this
22 Commonwealth, except to the extent the indebtedness exceeds the
23 value of the property.
24 PART VII
25 PAYMENT OF TAX
26 Section 2136. Returns.--(a) The following persons shall
27 make a return:
28 (1) The personal representative of the estate of the
29 decedent as to property of the decedent administered by him and
30 additional property which is or may be subject to inheritance
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1 tax of which he shall have or acquire knowledge.
2 (2) The transferee of property upon the transfer of which
3 inheritance tax is or may be imposed by this article including a
4 trustee of property transferred in trust. No separate return
5 need be made by the transferee of property included in the
6 return of a personal representative.
7 (b) The inclusion of property in the return shall not
8 constitute an admission that its transfer is taxable.
9 (c) Any person required to file a return under subsection
10 (a) shall promptly file a supplemental return with respect to
11 additional assets and transfers which come to his knowledge
12 after the original return has been filed.
13 (d) The returns required by subsection (a) shall be filed
14 within nine months after the death of the decedent. At any time
15 prior to the expiration of the nine-month period, the
16 department, in its discretion, may grant an extension of the
17 time for filing a return for an additional period of six months.
18 (e) The returns required by subsections (a) and (c) shall be
19 made in the form prescribed by the department.
20 (f) When the decedent was a resident, the returns shall be
21 filed with the register. When the decedent was a nonresident,
22 the returns shall be filed with the register who issued letters,
23 if any, in this Commonwealth; otherwise, the returns shall be
24 filed with the department.
25 Section 2137. Appraisement.--The department shall have
26 supervision over, and make or cause to be made, fair and
27 conscionable appraisements of property the transfer of which is
28 subject to tax under this article. The appraisement, unless
29 suspended until audit, shall be made within six months after the
30 return has been filed and, if not so made, shall be made within
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1 an additional period as the court, upon application of any party
2 in interest, including the personal representative, shall fix.
3 Section 2138. Deductions.--The official with whom the return
4 is required by subsection (f) of section 2136 to be filed shall
5 determine the allowance or disallowance of all deductions
6 claimed. The determination, unless suspended until audit, shall
7 be made within six months after the claim for allowance has been
8 filed and, if not so made, shall be made within such further
9 period as the court, upon application by any party in interest,
10 including the personal representative, shall fix. However, the
11 court, at the request of the fiduciary at the audit of his
12 account, may determine and allow, as deductions, all properly
13 deductible credits claimed in the account or allowed at the
14 audit without requiring the filing of a separate claim for them
15 and the court may then fix the amount of the tax and decree
16 payment of the tax. Deductions exceeding one hundred dollars
17 ($100) in the aggregate shall not be allowed by the court unless
18 the Commonwealth is represented at the audit by counsel or
19 unless there is proof that the register has had at least thirty
20 days notice of the claim.
21 Section 2139. Assessment of Tax.--After the appraisement has
22 been made and the allowance or disallowance of deductions
23 determined, the inheritance tax, as affected by the court's
24 determination of the allowance or disallowance of deductions as
25 provided in section 2138, shall be assessed by the official with
26 whom the return is required to be filed under subsection (f) of
27 section 2136. The assessment, unless suspended until audit,
28 shall be made within one month after the filing of the
29 appraisement or determination of deductions, whichever occurs
30 later, and, if not so made, shall be made within an additional
19910H1321B2849 - 121 -
1 period as the court, upon application by any party in interest,
2 including the personal representative, shall fix.
3 Section 2140. Notice.--The department shall give, or cause
4 to be given, notice of the filing of the appraisement, the
5 determination of the allowance or disallowance of deductions and
6 the amount of tax assessed, and all supplements, to the personal
7 representative and to any transferee who filed a tax return or
8 to their respective attorneys.
9 Section 2141. Failure to File Returns Not a Bar to
10 Assessment of Tax.--Failure to file a return of a taxable
11 transfer shall not bar the making of an appraisement or
12 supplemental appraisement or assessment of tax or supplemental
13 assessment of tax based upon taxable transfers not returned
14 under the provisions of this article.
15 Section 2142. Payment Date and Discount.--Inheritance tax is
16 due at the date of the decedent's death and shall become
17 delinquent at the expiration of nine months after the decedent's
18 death. To the extent that the inheritance tax is paid within
19 three months after the death of the decedent, a discount of five
20 per cent shall be allowed.
21 Section 2143. Interest.--If the inheritance tax is not paid
22 before the date it becomes delinquent, interest on the unpaid
23 tax shall be charged after the date of delinquency at the rate
24 established pursuant to section 806 of the act of April 9, 1929
25 (P.L.343, No.176), known as "The Fiscal Code." When payment of
26 inheritance tax is not made because of litigation or other
27 unavoidable cause of delay, and the property on which the tax
28 has been calculated has remained in the hands of a fiduciary and
29 has not produced a net income equal to the rate of interest
30 provided in this section annually, interest for such period
19910H1321B2849 - 122 -
1 shall be calculated at the rate of the net income produced by
2 the property. Any payment on delinquent inheritance tax shall be
3 applied, first, to any interest due on the tax at the date of
4 payment, and then, if there is any balance, to the tax itself.
5 Section 2144. Source of Payment.--(a) In the absence of a
6 contrary intent appearing in the will, the inheritance tax,
7 including interest, on the transfer of property which passes by
8 will absolutely and in fee, and which is not part of the
9 residuary estate, shall be paid out of the residuary estate and
10 charged in the same manner as a general administration expense
11 of the estate. The payments shall be made by the personal
12 representative and, if not so paid, shall be made by the
13 transferee of the residuary estate.
14 (b) In the absence of a contrary intent appearing in the
15 inter vivos trust, the inheritance tax, including interest, on
16 the transfer of property which passes absolutely and in fee by
17 inter vivos trust, and which is not part of the residue of the
18 inter vivos trust, shall be paid out of the residue of the trust
19 and charged in the same manner as a general administration
20 expense of the trust. The payment shall be made by the trustee
21 and, if not so paid, shall be made by the transferee of the
22 residue of the trust.
23 (c) In the absence of a contrary intent appearing in the
24 will, the inheritance tax, including interest, on the transfer
25 of property which passes by will other than absolutely and in
26 fee, and which is not part of the residuary estate, shall be
27 paid out of the residuary estate and charged in the same manner
28 as a general administration expense of the estate. The payment
29 shall be made by the personal representative and, if not so
30 paid, shall be made by the transferee of the residuary estate.
19910H1321B2849 - 123 -
1 (d) In the absence of a contrary intent appearing in the
2 inter vivos trust, the inheritance tax, including interest, on
3 the transfer of property which passes other than absolutely and
4 in fee by inter vivos trust, and which is not part of the
5 residue of the inter vivos trust, shall be paid out of the
6 residue of the trust and charged in the same manner as a general
7 administration expense of the trust. The payment shall be made
8 by the trustee and, if not so paid, shall be made by the
9 transferee of the residue of the trust.
10 (e) In the absence of a contrary intent appearing in the
11 will or other instrument of transfer, the inheritance tax, in
12 the case of a transfer of any estate, income or interest for a
13 term of years, for life or for other limited period, shall be
14 paid out of the principal of the property by which the estate,
15 income or interest is supported, except as otherwise provided in
16 subsection (c) or (d). The payment shall be made by the personal
17 representative or trustee and, if not so paid, shall be made by
18 the transferee of such principal.
19 (f) In the absence of a contrary intent appearing in the
20 will or other instrument of transfer and except as otherwise
21 provided in this section, the ultimate liability for the
22 inheritance tax, including interest, shall be upon each
23 transferee.
24 Section 2145. Estate Tax.--(a) The person or persons
25 required by section 2136 to make the inheritance tax return
26 shall be initially liable for payment of the estate tax.
27 (b) The personal representative of every decedent or, if
28 there is no personal representative, any other fiduciary charged
29 by law with the duty of filing a Federal estate tax return,
30 within one month of the filing or receipt of the return shall
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1 file with the register or, if the decedent was a nonresident,
2 with the register who issued letters, if any, in this
3 Commonwealth, or otherwise with the department, a copy of his
4 Federal estate tax return and of any communication from the
5 Federal Government making any final change in the return or of
6 the tax due. The assessment of estate tax shall be made by the
7 register or department within three months after the filing of
8 the documents required to be filed and, if not so made, shall be
9 made within an additional period as the court, upon application
10 of any party in interest, including the personal representative,
11 shall fix.
12 (c) The estate tax is due at the date of the decedent's
13 death but shall not become delinquent until the expiration of
14 eighteen months after decedent's death. Any estate tax
15 occasioned by a final change in the Federal return or of the tax
16 due shall not become delinquent until the expiration of one
17 month after the person or persons liable to pay the tax have
18 received final notice of the increase in the Federal estate tax.
19 (d) No discount shall be allowed in paying the estate tax.
20 (e) If the estate tax is not paid before the date it becomes
21 delinquent under subsection (c), interest on the unpaid tax
22 shall be charged after the date of delinquency at the rate
23 established in section 2143.
24 (f) The estate tax shall be apportioned and ultimately borne
25 in accordance with the provisions of 20 Pa.C.S. Ch. 37 (relating
26 to apportionment of death taxes) unless otherwise provided by
27 this article or in the instrument of transfer.
28 (g) When the decedent was a resident, the estate tax shall
29 be paid to the register. When the decedent was a nonresident,
30 the estate tax shall be paid to the register who issued letters,
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1 if any, in this Commonwealth; otherwise it shall be paid to the
2 department.
3 Section 2146. Deduction and Collection of Tax by Personal
4 Representative or Other Fiduciary.--Subject to the provisions of
5 sections 2144 and 2154, every personal representative or other
6 fiduciary (other than a trustee of a pension, stock-bonus,
7 profit-sharing, retirement annuity, deferred compensation,
8 disability, death benefit, or other employe benefit plan) in
9 charge of or in possession of any property, or instrument
10 evidencing ownership of property, the transfer of which is
11 subject to a tax imposed by this article other than a tax on a
12 future interest not yet delinquent, shall deduct the tax from
13 the property, if money, or shall collect the tax from the
14 transferee. Any delivery of property or instrument by the
15 fiduciary to a transferee, except in accordance with a decree of
16 distribution of the court, or pursuant to a duly executed notice
17 of election filed under section 2154, shall not relieve him of
18 personal liability for a tax imposed by this article. No
19 personal representative or other fiduciary in charge of or in
20 possession of any property subject to this article shall be
21 compelled to pay or deliver it to the transferee except upon
22 payment to him of the tax due other than tax on a future
23 interest not yet delinquent. If the transferee neglects or
24 refuses to pay the tax, the personal representative or other
25 fiduciary may sell the property subject to the tax, or so much
26 of the property as is necessary, under direction of the court.
27 All money retained by the personal representative or other
28 fiduciary, or paid to him on account of the taxes imposed by
29 this article, shall be remitted by him before the tax becomes
30 delinquent or, if received after the tax becomes delinquent,
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1 shall be remitted by him promptly upon its receipt.
2 Section 2147. Duties of Depositories.--When money is
3 deposited or invested in a financial institution located in this
4 Commonwealth in the names of two or more persons, other than
5 husband and wife, or in the name of a person or persons in trust
6 for another or others, and one of the parties to the deposit or
7 investment dies, it shall be the duty of the financial
8 institution, within ten days after knowledge of the death, to
9 notify the department, giving the name of the deceased person,
10 the date of the creation of the joint or trust deposit or
11 investment, the amount invested or on deposit at the date of
12 death with the financial institution and the name and address of
13 the survivor or survivors to the account. No notification shall
14 be required in regard to the account when the deposit at the
15 time of death does not exceed three hundred dollars ($300).
16 Section 2148. Compromise by Department.--The department,
17 with the approval of the Attorney General, may compromise in
18 writing, with the person liable, the tax, including interest on
19 the tax, payable on any transfer of property included in the
20 estate of any decedent who it is alleged was a nonresident at
21 the time of his death. A copy of the compromise agreement shall
22 be filed with the register who issued letters, if any, in this
23 Commonwealth; otherwise it shall be filed with the department.
24 The compromise agreement shall constitute a final determination
25 of the matters covered by it and the payment of the tax, as
26 fixed by the agreement, shall discharge all persons and property
27 from liability with respect to the tax.
28 Section 2149. Interstate Compromise and Arbitration of
29 Inheritance Taxes.--When the register or the department alleges
30 that a decedent was a resident of this Commonwealth at the time
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1 of his death, and the taxing authorities of another state or
2 territory make a like claim on behalf of their state or
3 territory, a written agreement of compromise or a written
4 agreement to submit the controversy to a board of arbitrators
5 may be made under Part VIII.
6 Section 2150. Extension of Time for Payment.--The department
7 may, for reasonable cause, extend the time for payment of any
8 part of the inheritance tax and may, if deemed necessary for the
9 protection of the interest of this Commonwealth, require the
10 transferee in present possession or, if a trust is involved, the
11 trustee, to file a bond in the name of the Commonwealth with
12 sufficient surety, in an amount not exceeding twice the tax
13 computed when the bond is given at the highest rate possible in
14 the specific contingencies involved (reduced by the amount of
15 any partial payment made) and conditioned for the payment of the
16 tax at such postponed due date, together with interest from the
17 due date to the payment date. No bond shall be required under
18 this section if the trustee or one of the trustees is a bank and
19 trust company or a trust company incorporated in this
20 Commonwealth or a national banking association having its
21 principal office in this Commonwealth. The bond required shall
22 be filed in the office of the register.
23 Section 2151. Bond for Delinquent Tax.--The court, in its
24 discretion, at any time after a tax imposed by this article
25 becomes delinquent, upon application of the department, may
26 require any person liable for a tax imposed by this article to
27 give a bond for its payment. The bond shall be in the name of
28 the Commonwealth, in such amount and with such surety as the
29 court approves and conditioned for the payment of the tax, plus
30 interest at the same rate as the interest rate on deficiencies
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1 provided for in section 2143, commencing on the date the tax
2 became delinquent, within a time certain to be fixed by the
3 court and specified in the bond. The bond required shall be
4 filed in the office of the register.
5 Section 2152. Evidence of Payment of Tax for Real Estate in
6 Another County.--When any tax is imposed and paid under this
7 article on real estate located in a county other than that of
8 the register who received payment, the register shall
9 immediately forward to the register of the county where the real
10 estate is located a certificate of the payment of the tax on the
11 real estate which shall be entered of record in his office. The
12 register of the county where the real estate is located shall be
13 entitled to a fee of two dollars ($2) for entering the record of
14 payment to be paid as a part of the administration expenses of
15 the decedent's estate.
16 Section 2153. Penalties.--(a) Any person who willfully
17 fails to file a return or other report required of him under the
18 provisions of sections 2136 and 2145 shall be personally liable,
19 in addition to any liability imposed elsewhere in this article,
20 to a penalty of twenty-five per cent of the tax ultimately found
21 to be due or one thousand dollars ($1,000), whichever is less,
22 to be recovered by the department as debts of like amount are
23 recoverable by law.
24 (b) Any financial institution which fails to give the notice
25 required by section 2147 shall be liable to a penalty of one
26 hundred dollars ($100) to be recovered by the department as
27 debts of like amount are recoverable by law.
28 (c) Any person who willfully makes a false return or report
29 required of him under the provisions of this article, in
30 addition to any liability imposed elsewhere in this article,
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1 commits a misdemeanor of the third degree.
2 Section 2154. Payment of Tax for Small Business Transfers.--
3 (a) Notwithstanding the provisions of section 2142, the
4 inheritance tax due under this article on the transfer of a
5 small business interest may be paid by the qualified transferee
6 in consecutive quarterly installments beginning immediately
7 following the expiration of nine months after the decedent's
8 death, the tax may be paid in twenty consecutive quarterly
9 installments.
10 (b) The tax shall be paid in consecutive quarterly
11 installments due on March 31, June 30, September 30 and December
12 31 of each year, provided the return required by section 2136 is
13 timely filed, along with a notice of election executed by the
14 qualified transferee and joined in by the personal
15 representative which shall relieve the personal representative
16 or other fiduciary of liability for the collection and payment
17 of tax under section 2146. The notice of election shall be
18 completed on a form prescribed by the department containing at
19 least the following information:
20 (1) The name of the decedent and date of death.
21 (2) The name or names of the personal representative or
22 other fiduciary.
23 (3) The name or names of the qualified transferees filing
24 the election.
25 (4) A description and estimated valuation of the business
26 interest on which tax is due.
27 (5) A statement that the qualified transferees assume full
28 personal responsibility for the tax. Each notice of election
29 shall be affirmed before an officer empowered to administer
30 oaths. The installment payment of tax shall bear interest at the
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1 rate of nine per cent per annum.
2 (c) In the event any portion of a small business interest on
3 which the installment payment of tax has been elected is sold,
4 exchanged or otherwise disposed of prior to the expiration of
5 five years following the date of death and that portion equals
6 or exceeds fifty per cent of the total value of the small
7 business interest received by the qualified transferee, the
8 transferee shall immediately provide written notice of the sale,
9 exchange or disposition to the department and the full amount of
10 the tax then outstanding on that portion shall become due and
11 payable at the expiration of sixty days following the date of
12 sale, exchange or other disposition.
13 (d) For purposes of this section, the term "small business
14 interest" means an interest in an operating trade or business
15 entity the principal purpose of which is not the management of
16 investments or income producing assets owned by the entity which
17 has employed an average of less than fifty full-time employes
18 during the twelve months immediately preceding the date of death
19 and which meets one of the following criteria:
20 (1) An interest as a proprietor in a trade or business
21 carried on as a proprietorship.
22 (2) An interest as a partner in a partnership carrying on a
23 trade or business if:
24 (i) twenty per cent or more of the total capital interest in
25 the partnership is included in determining the gross estate of
26 the decedent; or
27 (ii) the partnership had ten or less partners.
28 (3) Stock in a corporation carrying on a trade or business
29 if:
30 (i) twenty per cent or more in value of the voting stock of
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1 the corporation is included in determining the gross estate of
2 the decedent; or
3 (ii) the corporation had ten or less shareholders.
4 (e) Qualified transferee defined.--For purposes of this
5 section, the term "qualified transferee" means a legatee or
6 other transferee receiving:
7 (1) ten per cent or more of the value of a proprietorship
8 qualifying as a small business interest as defined in subsection
9 (d);
10 (2) ten per cent or more of the total capital interest in a
11 partnership qualifying as a small business interest as defined
12 in subsection (d); or
13 (3) ten per cent or more in value of the voting stock of a
14 corporation qualifying as a small business interest as defined
15 in subsection (d).
16 PART VIII
17 UNIFORM ACT ON INTERSTATE COMPROMISE AND
18 ARBITRATION OF INHERITANCE TAXES
19 Section 2156. Short Title.--This part shall be known and may
20 be cited as the "Uniform Act on Interstate Compromise and
21 Arbitration of Inheritance Taxes."
22 Section 2157. Compromise Agreement and Filing, Interest or
23 Penalty for Nonpayment of Taxes.--When the department or the
24 register claims a decedent was domiciled in this Commonwealth at
25 the time of his death and the taxing authority of another state
26 makes a like claim on behalf of its state, the department may,
27 with the approval of the Attorney General, make a written
28 agreement of compromise with the other taxing authority and the
29 executor or administrator of the decedent that a certain sum
30 shall be accepted in full satisfaction of any and all
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1 inheritance taxes imposed by this Commonwealth, including any
2 interest or penalties to the date of signing the agreement. The
3 agreement shall also fix the amount to be accepted by the other
4 state in full satisfaction of inheritance taxes. The executor or
5 administrator of the decedent is authorized to make the
6 agreement. The agreement shall conclusively fix the amount of
7 tax payable to the Commonwealth without regard to any other
8 provision of the laws of this Commonwealth. Unless the tax
9 agreed upon is paid within sixty days after the signing of the
10 agreement, interest or penalties shall accrue upon the amount
11 fixed in the agreement but the time between the decedent's death
12 and the signing of the agreement shall not be included in
13 computing the interest or penalties. In the event the aggregate
14 amount payable under the agreement to the states involved is
15 less than the maximum credit allowable to the estate against the
16 Federal estate tax imposed with respect to the estate, the
17 personal representatives shall also pay to the department so
18 much of the difference between the aggregate amount and the
19 amount of such credit as the amount payable to the department
20 under the agreement bears to the aggregate amount. A copy of the
21 agreement shall be filed in the office of the proper register
22 and any existing appraisement shall be deemed modified according
23 to the agreement. In the event no appraisement has been made and
24 filed prior to the agreement, the department shall direct an
25 appraisement to be made and filed in the office of the proper
26 register in accordance with the agreement.
27 Section 2158. Arbitration Agreement.--When the department or
28 the register claims that a decedent was domiciled in this
29 Commonwealth at the time of his death and the taxing authority
30 of another state makes a like claim on behalf of its state, the
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1 department may, with the approval of the Attorney General, make
2 a written agreement with the other taxing authority and with the
3 executor or administrator of the decedent to submit the
4 controversy to the decision of a board consisting of one or any
5 uneven number of arbitrators. The executor or administrator of
6 the decedent is authorized to make the agreement. The parties to
7 the agreement shall select the arbitrator or arbitrators.
8 Section 2159. Arbitration Board.--(a) The board shall have
9 the power to administer oaths, take testimony, subpoena and
10 require the attendance of witnesses and the production of books,
11 papers and documents, and issue commissions to take testimony.
12 Subpoenas may be signed by any member of the board. In case of
13 failure to obey a subpoena, any judge of a court of record of
14 this Commonwealth, upon application by the board, may make an
15 order requiring compliance with the subpoena and the court may
16 punish failure to obey the order as a contempt.
17 (b) The board shall hold hearings at a time and place it may
18 determine, upon reasonable notice to the parties to the
19 agreement, all of whom shall be entitled to be heard, to present
20 evidence and to examine and cross-examine witnesses.
21 (c) Except as provided in subsection (a) in respect to the
22 issuance of subpoenas, all questions arising in the course of
23 the proceedings shall be determined by a majority vote of the
24 board.
25 (d) The board shall, by a majority vote, determine the
26 domicile of the decedent at the time of his death. This
27 determination shall be final for the purpose of imposing and
28 collecting inheritance taxes but for no other purpose.
29 (e) The compensation and expenses of the members of the
30 board and its employes may be agreed upon among the members and
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1 the executor or administrator and if they cannot agree shall be
2 fixed by any court having jurisdiction over probate matters of
3 the State determined by the board to be the domicile of the
4 decedent. The amounts so agreed upon or fixed shall be deemed an
5 administration expense and shall be payable by the executor or
6 administrator.
7 Section 2160. Filing of Determination of Domicile and Other
8 Documents.--The department, register or board, or the executor
9 or administrator of the decedent, shall file the determination
10 of the board as to domicile, the record of the board's
11 proceedings and the agreement, or a duplicate, made pursuant to
12 section 2158 with the authority having jurisdiction to assess or
13 determine the inheritance taxes in the State determined by the
14 board to be the domicile of the decedent and shall file copies
15 of the documents with the authorities that would have been
16 empowered to assess or determine the inheritance taxes in each
17 of the other states involved.
18 Section 2161. Interest or Penalties for Nonpayment of
19 Taxes.--In any case where it is determined by the board that the
20 decedent died domiciled in this Commonwealth, interest or
21 penalties, if otherwise imposed by law, for nonpayment of
22 inheritance taxes between the date of the agreement and of
23 filing of the determination of the board as to domicile, shall
24 not exceed the rate provided for in section 2143.
25 Section 2162. Compromise by Parties to Arbitration
26 Agreement.--The provisions of this part shall not prevent at any
27 time a written compromise, if otherwise lawful, by all parties
28 to the agreement made pursuant to section 2157, fixing the
29 amounts to be accepted by this Commonwealth and any other state
30 involved, in full satisfaction of inheritance taxes.
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1 Section 2163. Reciprocal Application.--The provisions of
2 this part relative to arbitration shall apply only to cases in
3 which and so far as each of the states involved has a law
4 identical or substantially similar to this part.
5 PART IX
6 COLLECTION OF TAX
7 Section 2166. Timely Mailing Treated as Timely Filing and
8 Payment.--Notwithstanding the provisions of any State tax law to
9 the contrary, whenever a report or payment of all or any portion
10 of a State tax is required by law to be received by the
11 department or other agency of the Commonwealth on or before a
12 day certain, the taxpayer shall be deemed to have complied with
13 the law if the letter transmitting the report or payment of the
14 tax which has been received by the department is postmarked by
15 the United States Postal Service on or prior to the final day on
16 which the payment is to be received. For the purposes of this
17 article, presentation of a receipt indicating that the report or
18 payment was mailed by registered or certified mail on or before
19 the due date shall be evidence of timely filing and payment.
20 Section 2167. Lien and Duration of Lien.--The taxes imposed
21 by this article, together with any interest on the taxes, shall
22 be a lien upon the real property included in the transfer on
23 which the taxes are imposed. Except as otherwise provided in
24 this part, the lien shall remain until the taxes and interest
25 are paid in full.
26 Section 2168. Limited and Future Interests.--In the case of
27 a transfer of any estate, income or interest for a term of
28 years, for life or for other limited period, or constituting a
29 future interest, the taxes imposed by this article, together
30 with any interest on the tax, shall remain a lien until paid
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1 upon the entire real property by which the estate, income or
2 interest is supported, or of which it is a part, and the lien
3 shall be limited to the real property so transferred.
4 Section 2169. Purchaser, Mortgagee or Lessee.--Unless suit
5 for collection of the taxes imposed by this article is
6 instituted within twenty years after any tax becomes delinquent,
7 the lien shall cease as to any purchaser, mortgagee or lessee of
8 a devisee or heir of, or a beneficiary under a deed of trust of,
9 the real property subject to the lien. Any time within the
10 twenty-year period, if any tax on the real property is not paid,
11 the department shall have power to file a certificate, under its
12 seal, certifying to nonpayment which, when filed in the office
13 of the clerk of the county where the real property is situated,
14 shall continue the lien against decedent's real property for an
15 additional period of five years from the date of the filing and
16 the lien shall be indexed in the office of the clerk. If the
17 taxes on the real property are not paid within the additional
18 period of five years, the department shall have power to extend
19 the lien for additional periods of five years by filing a
20 certificate in the manner provided in this section.
21 Section 2170. Sale by Fiduciary.--If real property subject
22 to the lien of taxes imposed by this article is sold or
23 exchanged by a fiduciary who is subject to the jurisdiction of
24 the court and who has given bond as required by 20 Pa.C.S.
25 (relating to decedents, estates and fiduciaries), or is a
26 corporate fiduciary which need not file bond under Title 20, the
27 lien on the property sold shall cease.
28 Section 2171. Sale by Heir, Devisee or Fiduciary.--If real
29 property subject to the lien of taxes imposed by this article is
30 sold or exchanged or otherwise disposed of by an heir, devisee
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1 or fiduciary, and if the inheritance tax, together with
2 interest, is paid on all property reported in the tax return,
3 including the property sold, which property has been appraised
4 and tax assessed, the lien of any unpaid tax imposed by this
5 article shall cease as to the property sold.
6 Section 2172. Sale of Property Transferred Inter Vivos.--
7 When real property or any income or interest in the real
8 property or income has been transferred within the meaning of
9 subsection (c) of section 2107 and the transferee has sold,
10 mortgaged or leased the property, or any income or interest in
11 the property, the interest of a bona fide purchaser, mortgagee
12 or lessee in the property shall not be subject to any lien for
13 the taxes imposed by this article.
14 Section 2173. Subordination of Lien.--If real property
15 subject to the lien is mortgaged or leased by a fiduciary who is
16 subject to the jurisdiction of the court and who has given a
17 bond as required by 20 Pa.C.S. (relating to decedents, estates
18 and fiduciaries), or is a corporate fiduciary which need not
19 file bond under Title 20, the lien shall become subject and
20 subordinate to the rights and interests of the mortgagee, lessee
21 or other person so secured.
22 Section 2174. Cessation Upon Approval of Bond.--Upon
23 approval of a bond for the payment of taxes imposed upon a
24 transfer, the lien upon the real property shall cease. The
25 amount of the bond shall not exceed the value of the real
26 property transferred.
27 Section 2175. Release of Lien.--(a) In case of a transfer,
28 other than by will or intestacy, the department, upon
29 satisfactory proof that no taxes are due which would be a lien
30 on the real property transferred by reason of the death of the
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1 transferor, may release all or any portion of the property from
2 any lien imposed by this article to which the property otherwise
3 might be subject.
4 (b) The department may, at any time, release all or any
5 portion of the real property subject to any lien imposed by this
6 article from such lien, or subordinate such lien to other liens
7 and encumbrances, if it determines that the taxes are
8 sufficiently secured by a lien on other property of the decedent
9 or that the release or subordination of the lien will not
10 endanger or jeopardize the collection of the taxes.
11 (c) When inheritance tax in respect to the transfer of
12 particular real property is paid on the value of the property
13 without diminution for any deductions authorized by this
14 article, other than a mortgage on the property existing at the
15 date of the decedent's death, the department, upon request of a
16 party in interest, shall issue a certificate evidencing the
17 release of the property from the lien of tax.
18 (d) A certificate by the department to the effect that any
19 real property or interest in real property subject to any lien
20 imposed by this article has been released from the lien, or that
21 the lien has been subordinated to other liens and encumbrances,
22 shall be conclusive evidence as to any bona fide purchaser,
23 encumbrancer or lessee that the lien has been released or
24 subordinated.
25 Section 2176. Enforcement Procedure.--(a) The court, at the
26 request of the register, department or Office of Attorney
27 General, shall issue a citation, directed to those liable for
28 the payment of the taxes or subject to any other duty imposed by
29 this article, commanding the person or persons to appear and
30 show cause why the requirements of this article should not be
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1 met.
2 (b) The court may issue any decree warranted by the facts,
3 according to equity.
4 (c) A citation to enforce payment of taxes due under this
5 article or compliance with the duties required by this article
6 shall be issued by the court upon application of the register,
7 department or Office of Attorney General whenever any of the
8 following occurs:
9 (1) A tax return is not filed within the time required by
10 this article.
11 (2) Any tax due under this article remains delinquent.
12 (3) A Federal estate tax return has been filed but a copy of
13 the return, or a communication making a final change on the
14 return, has not been filed as required by section 2145.
15 (4) Any other duty imposed by this article remains
16 unperformed.
17 (d) The register or department may issue subpoenas to compel
18 the production of documents and the attendance of witnesses
19 necessary for the administration of this article.
20 (e) Execution may be issued by the court against any real
21 property in the decedent's estate on which a lien for the
22 payment of the taxes imposed by this article exists or against
23 any property belonging to a transferee liable for the tax.
24 (f) The department may bring suits in the courts of other
25 states to collect death taxes (including interest and penalties
26 on the taxes) imposed by this article. An official of another
27 state which extends a like comity to the Commonwealth may sue
28 for the collection of death taxes (including interest and
29 penalties on the taxes) in the courts of this Commonwealth. A
30 certificate by the Secretary of State of another state, under
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1 the seal of that state, that an official has authority to
2 collect its death taxes shall be conclusive evidence of the
3 authority of the official in any suit for the collection of the
4 taxes in any court of this Commonwealth.
5 PART X
6 REFUND OF TAX
7 Section 2181. Refund of Tax.--(a) A refund shall be made of
8 any tax to which the Commonwealth is not rightfully or equitably
9 entitled provided the Commonwealth determines the refund is due
10 or application for refund is made within the appropriate time
11 limit as set forth in subsection (d).
12 (b) Interest shall be paid on refundable tax at the same
13 rate as the interest rate on deficiencies provided for in
14 section 2143.
15 (c) Refund shall be made in cash to the party who paid the
16 tax or to his assignee or as directed by the court.
17 (d) Application for refund of tax shall be made within two
18 years after:
19 (1) the court has rescinded its order and adjudication of
20 presumed death when the refund is claimed for tax paid on the
21 transfer of the estate of a presumed decedent who is later
22 determined to be alive;
23 (2) termination of litigation establishing a right to a
24 refund, No application for refund shall be necessary when the
25 litigation has been with the Commonwealth over liability for the
26 tax or the amount of tax due;
27 (3) it has been finally determined that the whole or any
28 part of an alleged deficiency tax, asserted by the Federal
29 Government beyond that admitted to be payable, and in
30 consequence of which an estate tax was paid under section 2117
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1 was not payable;
2 (4) a final judgment holding that a provision of this
3 article under which tax has been paid is unconstitutional or
4 that the interpretation of a provision of this article under
5 which tax has been paid was erroneous; or
6 (5) the date of payment, or the date of the notice of the
7 assessment of the tax, or the date the tax becomes delinquent,
8 whichever occurs later, in all other cases.
9 (e) An application for refund of tax shall be made to the
10 Board of Finance and Revenue.
11 (f) The action of the Board of Finance and Revenue on all
12 applications for refund of tax may be appealed as provided for
13 in 42 Pa.C.S. § 933 (relating to appeals from government
14 agencies).
15 (g) As much of the moneys received as payment of tax under
16 this article as shall be necessary for the payment of the
17 refunds provided for in this article with interest is
18 appropriated for the payment of such refunds.
19 PART XI
20 DISPUTED TAX
21 Section 2186. Protest, Notice and Appeal.--(a) Any party in
22 interest, including the Commonwealth and the personal
23 representative, not satisfied with the appraisement, the
24 allowance or disallowance of deductions, the assessment of tax,
25 or supplements or any other matter relating to any tax imposed
26 by this article, within sixty days after receipt of notice of
27 the action complained of may:
28 (1) file with the department a written protest, sending a
29 copy thereof to the Office of Attorney General;
30 (2) notify the register in writing that he elects to have
19910H1321B2849 - 142 -
1 the correctness of the action complained of determined at the
2 audit of the account of the personal representative; or
3 (3) appeal to the court to have the correctness of the
4 action complained of determined at the audit of the account of
5 the personal representative, or at a time the court shall fix.
6 The protest, notification or appeal shall specify all the
7 objections to the action complained of. When the protest,
8 notification or appeal is filed by the Commonwealth, a copy
9 shall also be sent to the personal representative and to all
10 other persons who filed a tax return.
11 (b) If a notification or appeal has been filed from an
12 assessment of tax where it is contended that the rate of tax
13 which will be applicable when a future interest vests in
14 possession and enjoyment cannot presently be established with
15 certainty, and no compromise has been entered into pursuant to
16 subsection (e) of section 2116, the court, after consideration
17 of relevant actuarial factors, valuations and other pertinent
18 circumstances, shall determine what portion of the transfer is
19 to become taxed at each of the rates which might be applicable.
20 (c) Whenever any appeal or protest is brought pursuant to
21 this part and the subject matter of the appeal concerns the
22 valuation of certain farmland as set forth in section 2122 the
23 forum designated by the department to hear the appeal or protest
24 shall include at least two farmers and the Secretary of
25 Agriculture. The farmers and the Secretary of Agriculture shall
26 be accorded full powers within the forum with full voting
27 rights.
28 Section 2187. Bond.--No bond shall be required of any party
29 in interest who files a protest or notification against, or
30 appeals from, an appraisement, allowance or disallowance of a
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1 deduction, assessment of tax, or supplements, or other matter
2 relating to the tax, or from the decision of the department
3 following a protest, or who petitions for removal of the record
4 to the court.
5 Section 2188. Appeal and Removal from Department.--(a) Any
6 party in interest, including the Commonwealth and the personal
7 representative, not satisfied with the decision of the
8 department upon a protest may appeal from the department to the
9 court within sixty days after receipt of notice of the entry of
10 the decision of the department. When no decision has been
11 rendered by the department within thirty days after the protest
12 has been filed with the department, the court upon petition of
13 any party in interest may direct the department to transmit the
14 entire record to the court. When an appeal is taken from the
15 decision of the department, or the court directs the department
16 to transmit the entire record to the court, the court shall
17 either proceed to a determination of the issues protested to the
18 department or suspend the determination until the audit of the
19 account of the personal representative.
20 (b) If the appeal or removal arises from an assessment of
21 tax where it is contended that the rate of tax which will be
22 applicable when a future interest vests in possession and
23 enjoyment cannot presently be established with certainty, and no
24 compromise has been entered into pursuant to subsection (e) of
25 section 2116, the court after consideration of relevant
26 actuarial factors, valuations and other pertinent circumstances
27 shall determine what portion of the transfer is to become taxed
28 at each of the rates which might be applicable.
29 PART XII
30 ENTRY INTO SAFE DEPOSIT BOX
19910H1321B2849 - 144 -
1 Section 2191. Entry Prohibited.--Unless provided otherwise
2 in this part, no person having actual knowledge of the death of
3 a decedent shall enter a safe deposit box of the decedent. This
4 part shall not be construed to confer upon any person any right
5 of entry into a safe deposit box of a decedent which he does not
6 otherwise have.
7 Section 2192. Entry Without Notice to Department.--(a) A
8 safe deposit box of a decedent may be entered, and any or all of
9 the contents removed in the presence of an employe of the
10 financial institution in which the box is located. The employe
11 shall make, or cause to be made, a record of the contents of the
12 box, which record he shall attest under penalty of perjury to be
13 correct and complete. The financial institution may make a
14 reasonable charge for the attendance of its employe at the entry
15 of the box and the listing of the contents, which charge shall
16 be deductible as an administration expense under subsection (b)
17 of section 2117.
18 (b) A safe deposit box of a decedent may be entered, and any
19 or all of the contents removed, in the presence of a
20 representative of the department authorized by the secretary.
21 The department shall authorize at least one such representative
22 in and for each county of this Commonwealth. The representative
23 present at the time of entry into the box shall make or cause to
24 be made a record of the contents of the box.
25 (c) The court for cause shown may order that a designated
26 person or persons be permitted to enter a safe deposit box of a
27 decedent and remove the contents described in the order, under
28 supervision as the court may direct. The order may also require
29 that a record be made of the contents of the box.
30 (d) Notwithstanding any of the provisions of this part, the
19910H1321B2849 - 145 -
1 department, at any time and without relation to the death of a
2 specific decedent, by a certificate issued to a firm whose
3 business requires ready access to safe deposit boxes, may issue
4 a general authorization for the entry into, and removal of the
5 contents of, a safe deposit box of a decedent, under terms and
6 conditions as it may prescribe. A financial institution may
7 permit such entry and removal upon presentation to it of such
8 certificates issued by the department.
9 (e) Nothing in this part shall prohibit a financial
10 institution from permitting entry into a safe deposit box of a
11 decedent for the sole purpose of removing the decedent's will
12 and evidence of ownership of the burial lot in which the
13 decedent is to be interred. An employe of the financial
14 institution must be present at the opening of the box and make
15 or cause to be made a record of the documents removed from the
16 safe deposit box during the entry and attest the record to be
17 correct and complete under penalty of perjury.
18 Section 2193. Entry Upon Notice to Department.--(a) When
19 entry into a safe deposit box of a decedent is not, or cannot be
20 made under the provisions of subsection (a), (b), (c) or (d) of
21 section 2192, a safe deposit box of a decedent may be entered at
22 the time fixed in a notice mailed to the Department of Revenue,
23 Harrisburg, Pennsylvania, and to the financial institution in
24 which the box is located, in the manner specified in this
25 section. The date fixed for entry and contained in the notice
26 shall not be less than seven days after the date of notice is
27 mailed. A representative of the department may be present at the
28 time fixed for entry and may make or cause to be made a record
29 of the contents of the box.
30 (b) The notice required under subsection (a) shall be
19910H1321B2849 - 146 -
1 delivered to the United States Postal Service for mailing in a
2 manner that will provide for a record of the mailing being made
3 by the United States Postal Service and a receipt being
4 furnished to the sender. An exact copy of the notice shall be
5 transmitted to the financial institution in which the box is
6 located.
7 (c) At the time fixed in the notice required by subsection
8 (a), although no representative of the department is present, it
9 shall be lawful for a financial institution in which a safe
10 deposit box of a decedent is located to permit, and it shall
11 permit, entry into the box and removal of its contents by a
12 person who furnishes a signed statement under penalty of perjury
13 that he or someone in his behalf has given such notice.
14 Section 2194. Subsequent Entries.--Nothing in this part
15 shall be construed to impose any restriction upon reentry into a
16 safe deposit box of a decedent at any time subsequent to an
17 entry made in accordance with any of the provisions of this part
18 other than subsection (e) of section 2192.
19 Section 2195. Confidential Nature of Contents.--Any
20 information gained from the contents of a safe deposit box of a
21 decedent by a person whose attendance at the entry into the box
22 was required by this part shall be confidential and shall not be
23 disclosed for other than official purposes to collect the taxes
24 imposed by this article.
25 Section 2196. Penalties.--(a) Any employe of a financial
26 institution in which the safe deposit box of a decedent is
27 located who, having actual knowledge of the death of the
28 decedent, enters or permits the entry by any person into a safe
29 deposit box of the decedent in violation of the provisions of
30 this part commits a misdemeanor of the third degree.
19910H1321B2849 - 147 -
1 (b) Any person, other than an employe of a financial
2 institution in which the safe deposit box of a decedent is
3 located, who, having actual knowledge of the death of a
4 decedent, enters a safe deposit box of the decedent in violation
5 of the provisions of this part commits a misdemeanor of the
6 third degree.
7 (c) Any person who violates the provisions of section 2195
8 commits a misdemeanor of the third degree.
9 Section 32. Section 3003.3(d) of the act, amended October
10 14, 1988 (P.L.737, No.106), is amended and the section is
11 amended by adding a subsection to read:
12 Section 3003.3. Underpayment of Estimated Tax.--* * *
13 (d) Notwithstanding the provisions of the preceding
14 subsections, the addition to the tax with respect to any
15 underpayment of any installment of estimated tax shall not be
16 imposed if the total amount of all payments of estimated tax
17 made on or before the last date prescribed for the payment of
18 such installment equals or exceeds the amount which would have
19 been required to be paid on or before such date if the estimated
20 tax were an amount equal to the tax computed at the rates
21 applicable to the taxable year, including any minimum tax
22 imposed, but otherwise on the basis of the facts shown on the
23 report of the taxpayer for, and the law applicable to, the
24 second preceding taxable year, adjusted for any changes to
25 sections 401, 601 and 602 enacted for tax years beginning on or
26 after January 1, 1991, if a report showing a liability for tax
27 was filed by the taxpayer for the second preceding taxable year
28 and such second preceding year was a taxable year of twelve
29 months. If the total amount of all payments of estimated tax
30 made on or before the last date prescribed for the payment of
19910H1321B2849 - 148 -
1 such installment does not equal or exceed the amount required to
2 be paid per the preceding sentence, but such amount is paid
3 after the date the installment was required to be paid, then the
4 period of underpayment shall run from the date the installment
5 was required to be paid to the date the amount required to be
6 paid per the preceding sentence was paid. For taxpayers that
7 have filed only one or two previous returns, if the second
8 preceding taxable year is less then twelve months, then the
9 first preceding taxable year shall be used; or if there is no
10 second preceding taxable year then the first preceding taxable
11 year shall be used. If the first preceding taxable year is less
12 than twelve months, then the annualized first preceding taxable
13 year shall be used. Provided, however, that if the settled tax
14 for the second preceding year exceeds the tax shown on such
15 report by ten per cent or more, the settled tax adjusted to
16 reflect the current tax rate shall be used for purposes of this
17 subsection, except that, if the settled tax is subsequently
18 resettled, the amount of tax as resettled shall be utilized in
19 the application of this subsection without the necessity of the
20 filing of any petition by the department or by the taxpayer. In
21 the event that the settled or resettled tax for the second
22 preceding year exceeds the tax shown on the report by ten per
23 cent or more, an addition to the tax resulting from the
24 utilization of such settled or resettled tax in the application
25 of the provisions of this subsection shall not be imposed if,
26 within forty-five days of the mailing date of such settlement or
27 resettlement, payments are made such that the total amount of
28 all payments of estimated tax equals or exceeds the amount which
29 would have been required to be paid on or before such date if
30 the estimated tax were an amount equal to such settled or
19910H1321B2849 - 149 -
1 resettled tax adjusted to reflect the current tax rate. In any
2 case in which the taxable year for which an underpayment of
3 estimated tax may exist is a short taxable year, in determining
4 the tax shown on the report or the settled or resettled tax for
5 the second preceding taxable year, the tax will be reduced by
6 multiplying it by the number of days in the short taxable year
7 and dividing the resulting amount by three hundred sixty-five.
8 (e) (1) When the amendments to sections 401, 601, 602 and
9 3003.3(d) result in an increase of a taxpayer's estimated taxes
10 for 1991 and 1992 or the required safe harbor amount, the
11 additional required installment payments of estimated tax as
12 well as the additional amount of the required installment
13 payments to meet the "safe harbor" shall be treated as provided
14 by this subsection for additional estimated payments, safe
15 harbor payments and the recomputation and preservation of the
16 safe harbor.
17 (2) (i) For purposes of computing the estimated tax "safe
18 harbor" pursuant to section 3003.3(d) for tax years 1991 and
19 1992, the second preceding taxable year (base year), for
20 estimated capital stock and franchise tax purposes, shall be
21 recomputed with the amended manufacturing, processing or
22 research and development exemptions, and with the amended
23 definition of "capital stock value" in section 601, and with the
24 amended minimum tax; and, for estimated corporate net income tax
25 purposes, without the additional deductions for dividends.
26 (ii) Any taxpayer whose "safe harbor" is affected by this
27 section must file a recomputation of its safe harbor year,
28 within sixty days of the effective date of this act for calendar
29 year 1991 or taxable years beginning in 1991, and within one
30 hundred five days of the beginning of its year for calendar year
19910H1321B2849 - 150 -
1 1992 or taxable years beginning in 1992. The recomputation shall
2 be on forms as prescribed by the Department of Revenue. Any
3 taxpayer failing to file a recomputation as required shall be
4 denied the use of the "safe harbor" provisions of section
5 3003.3(d).
6 (3) To the extent the amendments to sections 401, 601, 602
7 and 3003.3(d) result in an increase in the corporation's
8 estimated tax or the safe harbor amount, installments due after
9 the effective date of this act shall be made pursuant to
10 sections 3003.2 and 3003.3 except:
11 (i) Additional amounts associated with installment payment
12 of estimated tax due prior to the effective date of this act
13 under section 3003.2 or 3003.3(d) shall be considered timely
14 paid if paid within sixty days of the effective date of this act
15 or on the due date of the next installment.
16 (ii) Additional amounts associated with installment payment
17 of estimated tax due within sixty days of the effective date of
18 this act under section 3003.2 or 3003.3(d) shall be considered
19 timely paid if paid within sixty days of the effective date of
20 this act or on the due date of the next installment.
21 Section 33. The following acts and parts of acts are
22 repealed:
23 The act of May 20, 1949 (P.L.1584, No.478), known as the
24 Unfair Cigarette Sales Act.
25 72 Pa.C.S. Ch. 17.
26 Section 34. This act shall apply as follows:
27 (1) The amendment of sections 401(3)1(b) and (b.1), 402,
28 602, 602.1, 602.3 and 3003.3(d) of the act shall apply
29 retroactively to the taxable years beginning on or after
30 January 1, 1991.
19910H1321B2849 - 151 -
1 (2) The amendment of section 1101(a) of the act shall
2 apply to gross receipts realized on or after July 1, 1991.
3 (3) The addition of Article XXI shall apply to the
4 estate of decedents dying on or after the effective date of
5 Article XXI and to inter vivos transfers made by decedents
6 dying on or after the effective date of Article XXI
7 regardless of the date of transfer.
8 Section 35. (a) The amendment, addition or repeal of
9 sections 301 and 304 shall be retroactive to January 1, 1991.
10 (b) The amendment, addition or repeal of sections 302, 302.2
11 and 402.1 shall be retroactive to July 1, 1991.
12 Section 36. This act shall take effect as follows:
13 (1) The amendment or addition of sections 324, 324.1,
14 324.2, 324.3, 325 and 352(b), (d) and (f) of the act shall
15 take effect January 1, 1992.
16 (2) The addition of Article XXI and the repeal of 72
17 Pa.C.S. Ch. 17 shall take effect in 60 days.
18 (3) The amendment or addition of sections 1206, 1206.1,
19 1221, 1222(a), 1223, 1224, 1278(c) and 1285(c) of the act
20 shall take effect in 15 days.
21 (4) The remainder of this act shall take effect
22 immediately.
23 SECTION 1. SECTION 201(G), (K)(8), (15), (16) AND (18), (L), <--
24 (M), (O)(4), (13) AND (14), (Z), (AA), (CC), (II), (KK), (LL)
25 AND (MM) OF THE ACT OF MARCH 4, 1971 (P.L.6, NO.2), KNOWN AS THE
26 TAX REFORM CODE OF 1971, AMENDED OR ADDED AUGUST 4, 1991
27 (P.L.97, NO.22), ARE AMENDED AND THE SECTION IS AMENDED BY
28 ADDING SUBCLAUSES TO READ:
29 SECTION 201. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND
30 PHRASES WHEN USED IN THIS ARTICLE II SHALL HAVE THE MEANING
19910H1321B2849 - 152 -
1 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
2 CLEARLY INDICATES A DIFFERENT MEANING:
3 * * *
4 (G) "PURCHASE PRICE."
5 (1) THE TOTAL VALUE OF ANYTHING PAID OR DELIVERED, OR
6 PROMISED TO BE PAID OR DELIVERED, WHETHER IT BE MONEY OR
7 OTHERWISE, IN COMPLETE PERFORMANCE OF A SALE AT RETAIL OR
8 PURCHASE AT RETAIL, AS HEREIN DEFINED, WITHOUT ANY DEDUCTION ON
9 ACCOUNT OF THE COST OR VALUE OF THE PROPERTY SOLD, COST OR VALUE
10 OF TRANSPORTATION, COST OR VALUE OF LABOR OR SERVICE, INTEREST
11 OR DISCOUNT PAID OR ALLOWED AFTER THE SALE IS CONSUMMATED, ANY
12 OTHER TAXES IMPOSED BY THE COMMONWEALTH OF PENNSYLVANIA OR ANY
13 OTHER EXPENSE EXCEPT THAT THERE SHALL BE EXCLUDED ANY GRATUITY
14 OR SEPARATELY STATED DEPOSIT CHARGE FOR RETURNABLE CONTAINERS.
15 (2) THERE SHALL BE DEDUCTED FROM THE PURCHASE PRICE THE
16 VALUE OF ANY TANGIBLE PERSONAL PROPERTY ACTUALLY TAKEN IN TRADE
17 OR EXCHANGE IN LIEU OF THE WHOLE OR ANY PART OF THE PURCHASE
18 PRICE. FOR THE PURPOSE OF THIS CLAUSE, THE AMOUNT ALLOWED BY
19 REASON OF TANGIBLE PERSONAL PROPERTY ACTUALLY TAKEN IN TRADE OR
20 EXCHANGE SHALL BE CONSIDERED THE VALUE OF SUCH PROPERTY.
21 (3) IN DETERMINING THE PURCHASE PRICE ON THE SALE OR USE OF
22 TAXABLE TANGIBLE PERSONAL PROPERTY OR A SERVICE WHERE, BECAUSE
23 OF AFFILIATION OF INTERESTS BETWEEN THE VENDOR AND PURCHASER, OR
24 IRRESPECTIVE OF ANY SUCH AFFILIATION, IF FOR ANY OTHER REASON
25 THE PURCHASE PRICE DECLARED BY THE VENDOR OR TAXPAYER ON THE
26 TAXABLE SALE OR USE OF SUCH TANGIBLE PERSONAL PROPERTY OR
27 SERVICE IS, IN THE OPINION OF THE DEPARTMENT, NOT INDICATIVE OF
28 THE TRUE VALUE OF THE ARTICLE OR SERVICE OR THE FAIR PRICE
29 THEREOF, THE DEPARTMENT SHALL, PURSUANT TO UNIFORM AND EQUITABLE
30 RULES, DETERMINE THE AMOUNT OF CONSTRUCTIVE PURCHASE PRICE UPON
19910H1321B2849 - 153 -
1 THE BASIS OF WHICH THE TAX SHALL BE COMPUTED AND LEVIED. SUCH
2 RULES SHALL PROVIDE FOR A CONSTRUCTIVE AMOUNT OF PURCHASE PRICE
3 FOR EACH SUCH SALE OR USE WHICH WOULD NATURALLY AND FAIRLY BE
4 CHARGED IN AN ARMS-LENGTH TRANSACTION IN WHICH THE ELEMENT OF
5 COMMON INTEREST BETWEEN THE VENDOR OR PURCHASER IS ABSENT OR IF
6 NO COMMON INTEREST EXISTS, ANY OTHER ELEMENT CAUSING A
7 DISTORTION OF THE PRICE OR VALUE IS LIKEWISE ABSENT. FOR THE
8 PURPOSE OF THIS CLAUSE WHERE A TAXABLE SALE OR PURCHASE AT
9 RETAIL TRANSACTION OCCURS BETWEEN A PARENT AND A SUBSIDIARY,
10 AFFILIATE OR CONTROLLED CORPORATION OF SUCH PARENT CORPORATION,
11 THERE SHALL BE A REBUTTABLE PRESUMPTION, THAT BECAUSE OF SUCH
12 COMMON INTEREST SUCH TRANSACTION WAS NOT AT ARMS-LENGTH.
13 (4) WHERE THERE IS A TRANSFER OR RETENTION OF POSSESSION OR
14 CUSTODY, WHETHER IT BE TERMED A RENTAL, LEASE, SERVICE OR
15 OTHERWISE, OF TANGIBLE PERSONAL PROPERTY INCLUDING, BUT NOT
16 LIMITED TO LINENS, APRONS, MOTOR VEHICLES, TRAILERS, TIRES,
17 INDUSTRIAL OFFICE AND CONSTRUCTION EQUIPMENT, AND BUSINESS
18 MACHINES THE FULL CONSIDERATION PAID OR DELIVERED TO THE VENDOR
19 OR LESSOR SHALL BE CONSIDERED THE PURCHASE PRICE, EVEN THOUGH
20 SUCH CONSIDERATION BE SEPARATELY STATED AND BE DESIGNATED AS
21 PAYMENT FOR PROCESSING, LAUNDERING, SERVICE, MAINTENANCE,
22 INSURANCE, REPAIRS, DEPRECIATION OR OTHERWISE. WHERE THE VENDOR
23 OR LESSOR SUPPLIES OR PROVIDES AN EMPLOYE TO OPERATE SUCH
24 TANGIBLE PERSONAL PROPERTY, THE VALUE OF THE LABOR THUS SUPPLIED
25 MAY BE EXCLUDED AND SHALL NOT BE CONSIDERED AS PART OF THE
26 PURCHASE PRICE IF SEPARATELY STATED. THERE SHALL ALSO BE
27 INCLUDED AS PART OF THE PURCHASE PRICE THE VALUE OF ANYTHING
28 PAID OR DELIVERED, OR PROMISED TO BE PAID OR DELIVERED BY A
29 LESSEE, WHETHER IT BE MONEY OR OTHERWISE, TO ANY PERSON OTHER
30 THAN THE VENDOR OR LESSOR BY REASON OF THE MAINTENANCE,
19910H1321B2849 - 154 -
1 INSURANCE OR REPAIR OF THE TANGIBLE PERSONAL PROPERTY WHICH A
2 LESSEE HAS THE POSSESSION OR CUSTODY OF UNDER A RENTAL CONTRACT
3 OR LEASE ARRANGEMENT.
4 (5) WITH RESPECT TO THE TAX IMPOSED BY SUBSECTION (B) OF
5 SECTION 202 UPON ANY TANGIBLE PERSONAL PROPERTY ORIGINALLY
6 PURCHASED BY THE USER OF SUCH PROPERTY SIX MONTHS OR LONGER
7 PRIOR TO THE FIRST TAXABLE USE OF SUCH PROPERTY WITHIN THE
8 COMMONWEALTH, SUCH USER MAY ELECT TO PAY TAX ON A SUBSTITUTED
9 BASE DETERMINED BY CONSIDERING THE PURCHASE PRICE OF SUCH
10 PROPERTY FOR TAX PURPOSES TO BE EQUAL TO THE PREVAILING MARKET
11 PRICE OF SIMILAR TANGIBLE PERSONAL PROPERTY AT THE TIME AND
12 PLACE OF SUCH FIRST USE WITHIN THE COMMONWEALTH. SUCH ELECTION
13 MUST BE MADE AT THE TIME OF FILING A TAX RETURN WITH THE
14 DEPARTMENT AND REPORTING SUCH TAX LIABILITY AND PAYING THE
15 PROPER TAX DUE PLUS ALL ACCRUED PENALTIES AND INTEREST, IF THERE
16 BE ANY, WITHIN SIX MONTHS OF THE DUE DATE OF SUCH REPORT AND
17 PAYMENT, AS PROVIDED FOR BY SUBSECTIONS (A) AND (C) OF SECTION
18 217 OF THIS ARTICLE.
19 (6) THE PURCHASE PRICE OF EMPLOYMENT AGENCY SERVICES AND
20 HELP SUPPLY SERVICES SHALL BE THE SERVICE FEE PAID BY THE
21 PURCHASER TO THE VENDOR OR SUPPLYING ENTITY. THE TERM "SERVICE
22 FEE" AS USED IN THIS SUBCLAUSE SHALL BE THE TOTAL CHARGE OR FEE
23 OF THE VENDOR OR SUPPLYING ENTITY MINUS THE COSTS OF THE
24 SUPPLIED EMPLOYE WHICH COSTS ARE WAGES, SALARIES, BONUSES AND
25 COMMISSIONS, EMPLOYMENT BENEFITS, EXPENSE REIMBURSEMENTS AND
26 PAYROLL AND WITHHOLDING TAXES, TO THE EXTENT THAT THESE COSTS
27 ARE SPECIFICALLY ITEMIZED OR THAT THESE COSTS IN AGGREGATE ARE
28 STATED IN BILLINGS FROM THE VENDOR OR SUPPLYING ENTITY. TO THE
29 EXTENT THAT THESE COSTS ARE NOT ITEMIZED OR STATED ON THE
30 BILLINGS, THEN THE SERVICE FEE SHALL BE THE TOTAL CHARGE OR FEE
19910H1321B2849 - 155 -
1 OF THE VENDOR OR SUPPLYING ENTITY.
2 (7) UNLESS THE VENDOR SEPARATELY STATES THAT PORTION OF THE
3 BILLING WHICH APPLIES TO PREMIUM CABLE SERVICE AS DEFINED IN
4 SUBSECTION (LL), THE TOTAL BILL FOR THE PROVISION OF ALL CABLE
5 SERVICES SHALL BE THE PURCHASE PRICE.
6 * * *
7 (K) "SALE AT RETAIL."
8 * * *
9 (8) ANY RETENTION OF POSSESSION, CUSTODY OR A LICENSE TO USE
10 OR CONSUME TANGIBLE PERSONAL PROPERTY OR ANY FURTHER OBTAINING
11 OF SERVICES DESCRIBED IN SUBCLAUSES (2), (3) AND (4) OF THIS
12 CLAUSE PURSUANT TO A RENTAL OR SERVICE CONTRACT OR OTHER
13 ARRANGEMENT (OTHER THAN AS SECURITY).
14 THE TERM "SALE AT RETAIL" SHALL NOT INCLUDE (I) ANY SUCH
15 TRANSFER OF TANGIBLE PERSONAL PROPERTY OR RENDITION OF SERVICES
16 FOR THE PURPOSE OF RESALE, OR (II) SUCH RENDITION OF SERVICES OR
17 THE TRANSFER OF TANGIBLE PERSONAL PROPERTY INCLUDING, BUT NOT
18 LIMITED TO, MACHINERY AND EQUIPMENT AND PARTS THEREFOR AND
19 SUPPLIES TO BE USED OR CONSUMED BY THE PURCHASER DIRECTLY IN THE
20 OPERATIONS OF--
21 (A) THE MANUFACTURE OF TANGIBLE PERSONAL PROPERTY;
22 (B) FARMING, DAIRYING, AGRICULTURE, HORTICULTURE OR
23 FLORICULTURE WHEN ENGAGED IN AS A BUSINESS ENTERPRISE. THE TERM
24 "FARMING" SHALL INCLUDE THE PROPAGATION AND RAISING OF RANCH
25 RAISED FUR-BEARING ANIMALS AND THE PROPAGATION OF GAME BIRDS FOR
26 COMMERCIAL PURPOSES BY HOLDERS OF PROPAGATION PERMITS ISSUED
27 UNDER 34 PA.C.S. (RELATING TO GAME);
28 (C) THE PRODUCING, DELIVERING OR RENDERING OF A PUBLIC
29 UTILITY SERVICE, OR IN CONSTRUCTING, RECONSTRUCTING, REMODELING,
30 REPAIRING OR MAINTAINING THE FACILITIES WHICH ARE DIRECTLY USED
19910H1321B2849 - 156 -
1 IN PRODUCING, DELIVERING OR RENDERING SUCH SERVICE;
2 (D) PROCESSING AS DEFINED IN CLAUSE (D) OF THIS SECTION.
3 THE EXCLUSIONS PROVIDED IN PARAGRAPHS (A), (B), (C) AND (D)
4 SHALL NOT APPLY TO ANY VEHICLE REQUIRED TO BE REGISTERED UNDER
5 THE VEHICLE CODE, EXCEPT THOSE VEHICLES USED DIRECTLY BY A
6 PUBLIC UTILITY ENGAGED IN BUSINESS AS A COMMON CARRIER; TO
7 MAINTENANCE FACILITIES; OR TO MATERIALS, SUPPLIES OR EQUIPMENT
8 TO BE USED OR CONSUMED IN THE CONSTRUCTION, RECONSTRUCTION,
9 REMODELING, REPAIR OR MAINTENANCE OF REAL ESTATE OTHER THAN
10 DIRECTLY USED MACHINERY, EQUIPMENT, PARTS OR FOUNDATIONS
11 THEREFOR THAT MAY BE AFFIXED TO SUCH REAL ESTATE.
12 THE EXCLUSIONS PROVIDED IN PARAGRAPHS (A), (B), (C) AND (D)
13 SHALL NOT APPLY TO TANGIBLE PERSONAL PROPERTY OR SERVICES TO BE
14 USED OR CONSUMED IN MANAGERIAL SALES OR OTHER NONOPERATIONAL
15 ACTIVITIES, NOR TO THE PURCHASE OR USE OF TANGIBLE PERSONAL
16 PROPERTY OR SERVICES BY ANY PERSON OTHER THAN THE PERSON
17 DIRECTLY USING THE SAME IN THE OPERATIONS DESCRIBED IN
18 PARAGRAPHS (A), (B), (C) AND (D) HEREIN.
19 THE EXCLUSION PROVIDED IN PARAGRAPH (C) SHALL NOT APPLY TO
20 (I) CONSTRUCTION MATERIALS, SUPPLIES OR EQUIPMENT USED TO
21 CONSTRUCT, RECONSTRUCT, REMODEL, REPAIR OR MAINTAIN FACILITIES
22 NOT USED DIRECTLY BY THE PURCHASER IN THE PRODUCTION, DELIVERING
23 OR RENDITION OF PUBLIC UTILITY SERVICE, (II) CONSTRUCTION
24 MATERIALS, SUPPLIES OR EQUIPMENT USED TO CONSTRUCT, RECONSTRUCT,
25 REMODEL, REPAIR OR MAINTAIN A BUILDING, ROAD OR SIMILAR
26 STRUCTURE, OR (III) TOOLS AND EQUIPMENT USED BUT NOT INSTALLED
27 IN THE MAINTENANCE OF FACILITIES USED DIRECTLY IN THE
28 PRODUCTION, DELIVERING OR RENDITION OF A PUBLIC UTILITY SERVICE.
29 THE EXCLUSIONS PROVIDED IN PARAGRAPHS (A), (B), (C) AND (D)
30 SHALL NOT APPLY TO THE SERVICES ENUMERATED IN CLAUSES (K)(11)
19910H1321B2849 - 157 -
1 THROUGH (18) AND (W) THROUGH (KK) EXCEPT THAT THE EXCLUSION
2 PROVIDED IN THIS SUBCLAUSE, FOR FARMING, DAIRYING AND
3 AGRICULTURE SHALL APPLY TO THE SERVICE ENUMERATED IN CLAUSE (Z).
4 * * *
5 (15) THE RENDITION FOR A CONSIDERATION OF EMPLOYMENT AGENCY
6 SERVICES[,] OR HELP SUPPLY SERVICES [OR OTHER PERSONNEL SUPPLY
7 SERVICES].
8 (16) THE RENDITION FOR A CONSIDERATION OF COMPUTER
9 PROGRAMMING SERVICES [OR OTHER COMPUTER-RELATED SERVICES,
10 INCLUDING, BUT NOT LIMITED TO], PROVIDING COMPUTER INTEGRATED
11 SYSTEMS DESIGN, COMPUTER PROCESSING, DATA PREPARATION OR
12 PROCESSING SERVICES, INFORMATION RETRIEVAL SERVICES [OR],
13 COMPUTER FACILITIES MANAGEMENT SERVICES OR OTHER COMPUTER-
14 RELATED SERVICES.
15 * * *
16 (18) THE RENDITION FOR A CONSIDERATION OF [STORAGE] SELF-
17 STORAGE SERVICE.
18 (L) "STORAGE." ANY KEEPING OR RETENTION OF TANGIBLE
19 PERSONAL PROPERTY WITHIN THIS COMMONWEALTH FOR ANY PURPOSE
20 INCLUDING THE INTERIM KEEPING, RETAINING OR EXERCISING ANY RIGHT
21 OR POWER OVER SUCH TANGIBLE PERSONAL PROPERTY. THIS TERM IS IN
22 NO WAY LIMITED TO THE PROVISION OF [STORAGE] SELF-STORAGE
23 SERVICE.
24 (M) "TANGIBLE PERSONAL PROPERTY." CORPOREAL PERSONAL
25 PROPERTY INCLUDING, BUT NOT LIMITED TO, GOODS, WARES,
26 MERCHANDISE, STEAM AND NATURAL AND MANUFACTURED AND BOTTLED GAS
27 FOR NON-RESIDENTIAL USE, ELECTRICITY FOR NON-RESIDENTIAL USE,
28 [PAY TELEVISION, EXCEPT FOR MINIMUM PAY TELEVISION] PREMIUM
29 CABLE SERVICE, SPIRITUOUS OR VINOUS LIQUOR AND MALT OR BREWED
30 BEVERAGES AND SOFT DRINKS, INTERSTATE TELEPHONE, TELEGRAPH AND
19910H1321B2849 - 158 -
1 TELECOMMUNICATIONS SERVICE ORIGINATING OR TERMINATING IN THE
2 COMMONWEALTH AND CHARGED TO A SERVICE ADDRESS IN THIS
3 COMMONWEALTH, INTRASTATE TELEPHONE, TELEGRAPH AND
4 TELECOMMUNICATIONS SERVICE WITH THE EXCEPTION OF SUBSCRIBER LINE
5 CHARGES AND BASIC LOCAL TELEPHONE SERVICE FOR RESIDENTIAL USE,
6 PROVIDED FURTHER, THE SERVICE ADDRESS OF ANY INTRASTATE
7 TELEPHONE, TELEGRAPH OR TELECOMMUNICATIONS SERVICE IS DEEMED TO
8 BE WITHIN THIS COMMONWEALTH OR WITHIN A POLITICAL SUBDIVISION,
9 REGARDLESS OF HOW OR WHERE BILLED OR PAID. IN THE CASE OF ANY
10 SUCH INTERSTATE OR INTRASTATE TELEPHONE, TELEGRAPH AND
11 TELECOMMUNICATIONS SERVICE, ANY CHARGE PAID THROUGH A CREDIT OR
12 PAYMENT MECHANISM WHICH DOES NOT RELATE TO A SERVICE ADDRESS,
13 SUCH AS A BANK, TRAVEL, CREDIT OR DEBIT CARD, IS DEEMED
14 ATTRIBUTABLE TO THE ADDRESS OF ORIGINATION OF THE TELEPHONE,
15 TELEGRAPH OR TELECOMMUNICATIONS SERVICE.
16 * * *
17 (O) "USE."
18 * * *
19 (4) THE OBTAINING BY A PURCHASER OF THE SERVICE OF
20 REPAIRING, ALTERING, MENDING, PRESSING, FITTING, DYEING,
21 LAUNDERING, DRYCLEANING OR CLEANING TANGIBLE PERSONAL PROPERTY
22 OTHER THAN WEARING APPAREL OR SHOES OR APPLYING OR INSTALLING
23 TANGIBLE PERSONAL PROPERTY AS A REPAIR OR REPLACEMENT PART OF
24 OTHER TANGIBLE PERSONAL PROPERTY OTHER THAN WEARING APPAREL OR
25 SHOES, WHETHER OR NOT THE SERVICES ARE PERFORMED DIRECTLY OR BY
26 ANY MEANS OTHER THAN BY MEANS OF COIN-OPERATED SELF-SERVICE
27 LAUNDRY EQUIPMENT FOR WEARING APPAREL OR HOUSEHOLD GOODS, AND
28 WHETHER OR NOT ANY TANGIBLE PERSONAL PROPERTY IS TRANSFERRED TO
29 THE PURCHASER IN CONJUNCTION THEREWITH, EXCEPT SUCH SERVICES AS
30 ARE OBTAINED IN THE CONSTRUCTION, RECONSTRUCTION, REMODELING,
19910H1321B2849 - 159 -
1 REPAIR OR MAINTENANCE OF REAL ESTATE: PROVIDED, HOWEVER, THAT
2 THIS SUBCLAUSE SHALL NOT BE DEEMED TO IMPOSE TAX UPON SUCH
3 SERVICES IN THE PREPARATION FOR SALE OF NEW ITEMS WHICH ARE
4 EXCLUDED FROM THE TAX UNDER CLAUSE (26) OF SECTION 204, OR UPON
5 DIAPER SERVICE: AND PROVIDED FURTHER, THAT THE TERM "USE" SHALL
6 NOT INCLUDE--
7 (A) ANY TANGIBLE PERSONAL PROPERTY ACQUIRED AND KEPT,
8 RETAINED OR OVER WHICH POWER IS EXERCISED WITHIN THIS
9 COMMONWEALTH ON WHICH THE TAXING OF THE STORAGE, USE OR OTHER
10 CONSUMPTION THEREOF IS EXPRESSLY PROHIBITED BY THE CONSTITUTION
11 OF THE UNITED STATES OR WHICH IS EXCLUDED FROM TAX UNDER OTHER
12 PROVISIONS OF THIS ARTICLE.
13 (B) THE USE OR CONSUMPTION OF TANGIBLE PERSONAL PROPERTY,
14 INCLUDING BUT NOT LIMITED TO MACHINERY AND EQUIPMENT AND PARTS
15 THEREFOR, AND SUPPLIES OR THE OBTAINING OF THE SERVICES
16 DESCRIBED IN SUBCLAUSES (2), (3) AND (4) OF THIS CLAUSE DIRECTLY
17 IN THE OPERATIONS OF--
18 (I) THE MANUFACTURE OF TANGIBLE PERSONAL PROPERTY;
19 (II) FARMING, DAIRYING, AGRICULTURE, HORTICULTURE OR
20 FLORICULTURE WHEN ENGAGED IN AS A BUSINESS ENTERPRISE. THE TERM
21 "FARMING" SHALL INCLUDE THE PROPAGATION AND RAISING OF RANCH-
22 RAISED FURBEARING ANIMALS AND THE PROPAGATION OF GAME BIRDS FOR
23 COMMERCIAL PURPOSES BY HOLDERS OF PROPAGATION PERMITS ISSUED
24 UNDER 34 PA.C.S. (RELATING TO GAME);
25 (III) THE PRODUCING, DELIVERING OR RENDERING OF A PUBLIC
26 UTILITY SERVICE, OR IN CONSTRUCTING, RECONSTRUCTING, REMODELING,
27 REPAIRING OR MAINTAINING THE FACILITIES WHICH ARE DIRECTLY USED
28 IN PRODUCING, DELIVERING OR RENDERING SUCH SERVICE;
29 (IV) PROCESSING AS DEFINED IN SUBCLAUSE (D) OF THIS SECTION.
30 THE EXCLUSIONS PROVIDED IN SUBPARAGRAPHS (I), (II), (III) AND
19910H1321B2849 - 160 -
1 (IV) SHALL NOT APPLY TO ANY VEHICLE REQUIRED TO BE REGISTERED
2 UNDER THE VEHICLE CODE EXCEPT THOSE VEHICLES DIRECTLY USED BY A
3 PUBLIC UTILITY ENGAGED IN THE BUSINESS AS A COMMON CARRIER; TO
4 MAINTENANCE FACILITIES; OR TO MATERIALS, SUPPLIES OR EQUIPMENT
5 TO BE USED OR CONSUMED IN THE CONSTRUCTION, RECONSTRUCTION,
6 REMODELING, REPAIR OR MAINTENANCE OF REAL ESTATE OTHER THAN
7 DIRECTLY USED MACHINERY, EQUIPMENT, PARTS OR FOUNDATIONS
8 THEREFOR THAT MAY BE AFFIXED TO SUCH REAL ESTATE. THE EXCLUSIONS
9 PROVIDED IN SUBPARAGRAPHS (I), (II), (III) AND (IV) SHALL NOT
10 APPLY TO TANGIBLE PERSONAL PROPERTY OR SERVICES TO BE USED OR
11 CONSUMED IN MANAGERIAL SALES OR OTHER NONOPERATIONAL ACTIVITIES,
12 NOR TO THE PURCHASE OR USE OF TANGIBLE PERSONAL PROPERTY OR
13 SERVICES BY ANY PERSON OTHER THAN THE PERSON DIRECTLY USING THE
14 SAME IN THE OPERATIONS DESCRIBED IN SUBPARAGRAPHS (I), (II),
15 (III) AND (IV).
16 THE EXCLUSION PROVIDED IN SUBPARAGRAPH (III) SHALL NOT APPLY
17 TO (A) CONSTRUCTION MATERIALS, SUPPLIES OR EQUIPMENT USED TO
18 CONSTRUCT, RECONSTRUCT, REMODEL, REPAIR OR MAINTAIN FACILITIES
19 NOT USED DIRECTLY BY THE PURCHASER IN THE PRODUCTION, DELIVERING
20 OR RENDITION OF PUBLIC UTILITY SERVICE OR (B) TOOLS AND
21 EQUIPMENT USED BUT NOT INSTALLED IN THE MAINTENANCE OF
22 FACILITIES USED DIRECTLY IN THE PRODUCTION, DELIVERING OR
23 RENDITION OF A PUBLIC UTILITY SERVICE.
24 THE EXCLUSION PROVIDED IN SUBPARAGRAPHS (I), (II), (III) AND
25 (IV) SHALL NOT APPLY TO THE SERVICES ENUMERATED IN CLAUSES
26 (O)(9) THROUGH [(15)] (16) AND (W) THROUGH (KK), EXCEPT THAT THE
27 EXCLUSION PROVIDED IN SUBPARAGRAPH (II) FOR FARMING, DAIRYING
28 AND AGRICULTURE SHALL APPLY TO THE SERVICE ENUMERATED IN CLAUSE
29 (Z).
30 * * *
19910H1321B2849 - 161 -
1 (13) THE OBTAINING BY THE PURCHASER OF EMPLOYMENT AGENCY
2 SERVICES[,] OR HELP SUPPLY SERVICES [OR OTHER PERSONNEL SUPPLY
3 SERVICES].
4 (14) THE OBTAINING BY THE PURCHASER OF COMPUTER PROGRAMMING
5 SERVICES [OR OTHER COMPUTER-RELATED SERVICES, INCLUDING, BUT NOT
6 LIMITED TO], PROVIDING COMPUTER INTEGRATED SYSTEMS DESIGN,
7 COMPUTER PROCESSING, DATA PREPARATION OR PROCESSING SERVICES,
8 INFORMATION RETRIEVAL SERVICES [OR], COMPUTER FACILITIES
9 MANAGEMENT SERVICES OR OTHER COMPUTER-RELATED SERVICES.
10 * * *
11 (16) THE OBTAINING BY THE PURCHASER OF SELF-STORAGE SERVICE.
12 * * *
13 (Z) "DISINFECTING OR PEST CONTROL SERVICES." PROVIDING
14 DISINFECTING, TERMITE CONTROL, INSECT CONTROL, RODENT CONTROL OR
15 OTHER PEST CONTROL SERVICES. SUCH SERVICES INCLUDE, BUT ARE NOT
16 LIMITED TO, DEODORANT SERVICING OF REST ROOMS, WASHROOM
17 SANITATION SERVICE, REST ROOM CLEANING SERVICE, EXTERMINATION
18 SERVICE OR FUMIGATING SERVICE. AS USED IN THIS CLAUSE, THE TERM
19 "FUMIGATING SERVICE" SHALL NOT INCLUDE THE FUMIGATION OF
20 AGRICULTURAL COMMODITIES OR CONTAINERS USED FOR AGRICULTURAL
21 COMMODITIES. AS USED IN THIS CLAUSE, THE TERM "INSECT CONTROL"
22 SHALL NOT INCLUDE THE SPRAYING OF TREES WHICH ARE HARVESTED FOR
23 COMMERCIAL PURPOSES FOR GYPSY MOTH CONTROL.
24 (AA) "BUILDING MAINTENANCE OR CLEANING SERVICES." PROVIDING
25 SERVICES WHICH INCLUDE, BUT ARE NOT LIMITED TO, JANITORIAL, MAID
26 OR HOUSEKEEPING SERVICE, OFFICE OR INTERIOR BUILDING CLEANING OR
27 MAINTENANCE SERVICE, WINDOW CLEANING SERVICE, FLOOR WAXING
28 SERVICE, LIGHTING MAINTENANCE SERVICE SUCH AS BULB REPLACEMENT,
29 CLEANING, CHIMNEY CLEANING SERVICE, ACOUSTICAL TILE CLEANING
30 SERVICE, VENETIAN BLIND CLEANING, CLEANING AND MAINTENANCE OF
19910H1321B2849 - 162 -
1 TELEPHONE BOOTHS OR CLEANING AND DEGREASING OF SERVICE STATIONS.
2 THIS TERM SHALL NOT INCLUDE REPAIRS ON BUILDINGS AND OTHER
3 STRUCTURES; NOR SHALL THIS TERM INCLUDE THE MAINTENANCE OR
4 REPAIR OF BOILERS, FURNACES OR PARTS THEREOF; THE PAINTING,
5 WALLPAPERING OR APPLYING OTHER LIKE COVERINGS TO INTERIOR WALLS,
6 CEILINGS OR FLOORS; OR THE EXTERIOR PAINTING OF BUILDINGS.
7 * * *
8 (CC) "HELP SUPPLY SERVICES." PROVIDING TEMPORARY OR
9 CONTINUING HELP WHERE THE HELP SUPPLIED IS ON THE PAYROLL OF THE
10 SUPPLYING PERSON OR ENTITY, BUT IS UNDER THE SUPERVISION OF THE
11 INDIVIDUAL OR BUSINESS TO WHICH HELP IS FURNISHED. SUCH SERVICES
12 INCLUDE, BUT ARE NOT LIMITED TO, SERVICE OF A TYPE PROVIDED BY
13 LABOR AND MANPOWER POOLS, EMPLOYE LEASING SERVICES, OFFICE HELP
14 SUPPLY SERVICES, TEMPORARY HELP SERVICES, USHER SERVICES,
15 MODELING SERVICES OR FASHION SHOW MODEL SUPPLY SERVICES. SUCH
16 SERVICES SHALL NOT INCLUDE PROVIDING FARM LABOR SERVICES. THE
17 TERM SHALL NOT INCLUDE HUMAN HEALTH-RELATED SERVICES, INCLUDING
18 NURSING, HOME HEALTH CARE AND PERSONAL CARE. AS USED IN THIS
19 CLAUSE, "PERSONAL CARE" SHALL INCLUDE PROVIDING AT LEAST ONE OF
20 THE FOLLOWING TYPES OF ASSISTANCE TO PERSONS WITH LIMITED
21 ABILITY FOR SELF-CARE:
22 (1) DRESSING, BATHING OR FEEDING;
23 (2) SUPERVISING SELF-ADMINISTERED MEDICATION;
24 (3) TRANSFERRING A PERSON TO OR FROM A BED OR WHEELCHAIR; OR
25 (4) ROUTINE HOUSEKEEPING CHORES WHEN PROVIDED IN CONJUNCTION
26 WITH AND SUPPLIED BY THE SAME PROVIDER OF THE ASSISTANCE LISTED
27 IN SUBCLAUSE (1), (2) OR (3).
28 * * *
29 (II) "OTHER COMPUTER-RELATED SERVICES." SUPPLYING COMPUTER-
30 RELATED SERVICES NOT DESCRIBED ELSEWHERE IN CLAUSES (DD) THROUGH
19910H1321B2849 - 163 -
1 (HH). SUCH SERVICES INCLUDE, BUT ARE NOT LIMITED TO, COMPUTER
2 CONSULTING SERVICES; DATA BASE DEVELOPMENT AND DATA PROCESSING
3 CONSULTING SERVICES; DISK, DISKETTE OR TAPE CONVERSION SERVICES;
4 DISK, DISKETTE OR TAPE RECERTIFICATION SERVICES; COMPUTER
5 HARDWARE AND SOFTWARE REQUIREMENT ANALYSIS SERVICES; SOFTWARE
6 DOCUMENTATION SERVICES; SOFTWARE INSTALLATION SERVICES; SOFTWARE
7 TRAINING SERVICES IF PROVIDED IN CONJUNCTION WITH THE PURCHASE
8 OF SOFTWARE; OR REFORMATTING OR EDITING SERVICES.
9 * * *
10 (KK) "[STORAGE] SELF-STORAGE SERVICE." [A] PROVIDING A
11 BUILDING [OR PORTION OF], A ROOM IN A BUILDING OR [SIMILAR
12 STRUCTURE FOR PURPOSES] A SECURED AREA WITHIN A BUILDING WITH
13 SEPARATE ACCESS PROVIDED FOR EACH PURCHASER OF SELF-STORAGE
14 SERVICE, PRIMARILY FOR THE PURPOSE OF STORING [CORPOREAL]
15 PERSONAL PROPERTY[, INCLUDING, BUT NOT LIMITED TO, GOODS, WARES
16 OR MERCHANDISE, SPIRITOUS OR VINOUS LIQUOR AND MALT OR BREWED
17 BEVERAGES, FURNITURE AND HOUSEHOLD GOODS, AUTOMOBILES, FURS,
18 TEXTILES, PERISHABLE GOODS UNDER REFRIGERATION, FARM PRODUCTS,
19 COTTON COMPRESSES OR TOBACCO]. THE TERM EXCLUDES PROVIDING:
20 (1) SAFE DEPOSIT BOXES BY FINANCIAL INSTITUTIONS;
21 (2) STORAGE [OF SUCH PROPERTY WHICH IS UNLOADED FROM
22 MARITIME VESSELS AND THEN LATER STORED OR WHICH IS STORED AND
23 THEN LATER LOADED ON MARITIME VESSELS WHEN SUCH STORAGE OR
24 LOADING TAKES PLACE WITHIN TWENTY-FIVE MILES OF A "PORT
25 DISTRICT," AS DEFINED BY THE ACT OF JULY 10, 1989 (P.L.291,
26 NO.50), KNOWN AS THE "PHILADELPHIA REGIONAL PORT AUTHORITY
27 ACT."] IN REFRIGERATOR OR FREEZER UNITS;
28 (3) STORAGE IN COMMERCIAL WAREHOUSES;
29 (4) FACILITIES FOR GOODS DISTRIBUTION; AND
30 (5) LOCKERS IN AIRPORTS, BUS STATIONS, MUSEUMS AND OTHER
19910H1321B2849 - 164 -
1 PUBLIC PLACES.
2 [(LL) "PAY TELEVISION." CABLE TELEVISION; COMMUNITY ANTENNA
3 TELEVISION; OR ANY OTHER DISTRIBUTION OF TELEVISION, VIDEO OR
4 RADIO SERVICES, WITH OR WITHOUT THE USE OF WIRES, TO SUBSCRIBERS
5 OR PAYING CUSTOMERS OR USERS, INCLUDING, BUT NOT LIMITED TO,
6 INSTALLATION AND REPAIR SERVICES, SINGLE-EVENT VIDEO SERVICE OR
7 ANY SERVICE HAVING ANY CONNECTION WITH SUCH SERVICES.]
8 (LL) "PREMIUM CABLE SERVICE." THAT PORTION OF CABLE
9 TELEVISION SERVICES; COMMUNITY ANTENNA TELEVISION SERVICES; OR
10 ANY OTHER DISTRIBUTION OF TELEVISION, VIDEO, AUDIO OR RADIO
11 SERVICES WHICH MEETS ALL OF THE FOLLOWING CRITERIA:
12 (1) IS TRANSMITTED WITH OR WITHOUT THE USE OF WIRES TO
13 PURCHASERS; AND
14 (2) WHICH CONSISTS SUBSTANTIALLY OF PROGRAMMING
15 UNINTERRUPTED BY PAID COMMERCIAL ADVERTISING WHICH INCLUDES, BUT
16 IT IS NOT LIMITED TO, PROGRAMMING PRIMARILY COMPOSED OF
17 UNINTERRUPTED FULL-LENGTH MOTION PICTURES OR SPORTING EVENTS,
18 PAY-PER-VIEW, PAID PROGRAMMING OR LIKE AUDIO OR RADIO
19 BROADCASTING.
20 IF A PURCHASER RECEIVES OR AGREES TO RECEIVE PREMIUM CABLE
21 SERVICE, THEN THE FOLLOWING CHARGES ARE INCLUDED IN THE PURCHASE
22 PRICE: CHARGES FOR INSTALLATION OR REPAIR OF ANY PREMIUM CABLE
23 SERVICE; UPGRADE TO INCLUDE ADDITIONAL PREMIUM CABLE SERVICE;
24 DOWNGRADE TO EXCLUDE ALL OR SOME PREMIUM CABLE SERVICE;
25 ADDITIONAL PREMIUM CABLE OUTLETS IN EXCESS OF TEN; OR ANY OTHER
26 CHARGE OR FEE RELATED TO PREMIUM CABLE SERVICES. THE TERM SHALL
27 NOT APPLY TO TRANSMISSIONS BY PUBLIC TELEVISION, PUBLIC RADIO
28 SERVICES OR OFFICIAL FEDERAL, STATE OR LOCAL GOVERNMENT CABLE
29 SERVICES. NOR, SHALL THE TERM APPLY TO LOCAL ORIGINATION
30 PROGRAMMING WHICH PROVIDES A VARIETY OF PUBLIC SERVICE PROGRAMS
19910H1321B2849 - 165 -
1 UNIQUE TO THE COMMUNITY; PROGRAMMING WHICH PROVIDES COVERAGE OF
2 PUBLIC AFFAIRS ISSUES WHICH ARE PRESENTED WITHOUT COMMENTARY OR
3 ANALYSIS, INCLUDING UNITED STATES CONGRESSIONAL PROCEEDINGS; OR
4 PROGRAMMING WHICH IS SUBSTANTIALLY RELATED TO RELIGIOUS
5 SUBJECTS.
6 [(MM) "MINIMUM PAY TELEVISION." THAT PORTION OF PAY
7 TELEVISION FOR WHICH A PERIODIC MINIMUM FEE IS PAID TO RECEIVE
8 PAY TELEVISION ON AN ONGOING BASIS.]
9 SECTION 2. SECTION 204(4), (29) AND (30) OF THE ACT, AMENDED
10 AUGUST 4, 1991 (P.L.97, NO.22), ARE AMENDED TO READ:
11 SECTION 204. EXCLUSIONS FROM TAX.--THE TAX IMPOSED BY
12 SECTION 202 SHALL NOT BE IMPOSED UPON
13 * * *
14 (4) THE SALE AT RETAIL OR USE OF DISPOSABLE DIAPERS, PRE-
15 MOISTENED WIPES; INCONTINENCE PRODUCTS[,]; COLOSTOMY DEODORANTS;
16 TOILET PAPER[,]; SANITARY NAPKINS, TAMPONS OR SIMILAR ITEMS USED
17 FOR FEMININE HYGIENE; OR TOOTHPASTE, TOOTHBRUSHES OR DENTAL
18 FLOSS.
19 * * *
20 (29) THE SALE AT RETAIL OR USE OF FOOD AND BEVERAGES FOR
21 HUMAN CONSUMPTION INCLUDING CANDY AND GUM, EXCEPT THAT THIS
22 EXCLUSION SHALL NOT APPLY WITH RESPECT TO--
23 (I) SOFT DRINKS;
24 (II) MALT AND BREWED BEVERAGES AND SPIRITUOUS AND VINOUS
25 LIQUORS;
26 (III) FOOD OR BEVERAGES [READY TO EAT], WHETHER SOLD FOR
27 CONSUMPTION ON OR OFF THE PREMISES OR ON A "TAKE-OUT" OR "TO GO"
28 BASIS OR DELIVERED TO THE PURCHASER OR CONSUMER, WHEN PURCHASED
29 [(I)] (A) FROM PERSONS ENGAGED IN THE BUSINESS OF CATERING[, OR
30 (II)]; OR (B) FROM PERSONS ENGAGED IN THE BUSINESS OF OPERATING
19910H1321B2849 - 166 -
1 ESTABLISHMENTS FROM WHICH READY TO EAT FOOD AND BEVERAGES ARE
2 SOLD, INCLUDING, BUT NOT LIMITED TO, RESTAURANTS, CAFES, LUNCH
3 COUNTERS, PRIVATE AND SOCIAL CLUBS, TAVERNS, DINING CARS,
4 HOTELS, NIGHT CLUBS, FAST FOOD OPERATIONS, PIZZERIAS, FAIRS,
5 CARNIVALS, LUNCH CARTS, ICE CREAM STANDS, [VENDING MACHINES,]
6 SNACK BARS, CAFETERIAS, EMPLOYE CAFETERIAS, THEATERS, STADIUMS,
7 ARENAS, AMUSEMENT PARKS, CARRYOUT SHOPS, COFFEE SHOPS[, BAKERY,
8 PASTRY AND DONUT SHOPS] AND OTHER ESTABLISHMENTS WHETHER MOBILE
9 OR IMMOBILE [FROM WHICH FOOD OR BEVERAGES READY TO EAT ARE
10 SOLD]. FOR PURPOSES OF THIS CLAUSE, A BAKERY, A PASTRY SHOP, A
11 DONUT SHOP, A DELICATESSEN, GROCERY STORE, SUPERMARKET, FARMER'S
12 MARKET OR A CONVENIENCE STORE SHALL NOT BE CONSIDERED AN
13 ESTABLISHMENT FROM WHICH FOOD OR BEVERAGES READY TO EAT ARE SOLD
14 EXCEPT FOR THE SALE OF MEALS, [COOKED CHICKEN,] SANDWICHES,
15 [PREPARED SALADS,] FOOD FROM SALAD BARS, [PREPARED DESSERTS,]
16 HAND-DIPPED OR HAND-SERVED ICED BASED PRODUCTS INCLUDING ICE
17 CREAM AND YOGURT, HOT SOUP, HOT PIZZA AND OTHER HOT FOOD ITEMS,
18 BREWED COFFEE AND HOT BEVERAGES. FOR PURPOSES OF THIS SUBCLAUSE,
19 BEVERAGES SHALL NOT INCLUDE MALT AND BREWED BEVERAGES AND
20 SPIRITUOUS AND VINOUS LIQUORS BUT SHALL INCLUDE SOFT DRINKS. THE
21 SALE AT RETAIL OF FOOD AND BEVERAGES AT OR FROM A SCHOOL OR
22 CHURCH IN THE ORDINARY COURSE OF THE ACTIVITIES OF SUCH
23 ORGANIZATION IS NOT SUBJECT TO TAX.
24 (30) [THE SALE AT RETAIL OR USE OF PERIODICALS AND
25 PUBLICATIONS WHICH ARE PUBLISHED AT REGULAR INTERVALS NOT
26 EXCEEDING THREE MONTHS, AND WHICH ARE CIRCULATED AMONG THE
27 GENERAL PUBLIC AND CONTAINING MATTERS OF GENERAL INTEREST AND
28 REPORTS OF CURRENT EVENTS PUBLISHED FOR THE PURPOSE OF
29 DISSEMINATING INFORMATION OF A PUBLIC CHARACTER OR DEVOTED TO
30 LITERATURE, THE SCIENCES, ART OR SOME SPECIAL INDUSTRY. THIS
19910H1321B2849 - 167 -
1 EXCLUSION SHALL ALSO INCLUDE ANY PRINTED ADVERTISING MATERIAL
2 CIRCULATED WITH SUCH PERIODICAL OR PUBLICATION REGARDLESS OF
3 WHERE OR BY WHOM SUCH PRINTED ADVERTISING MATERIAL WAS
4 PRODUCED.] THE SALE AT RETAIL OR USE OF NEWSPAPERS. FOR PURPOSES
5 OF THIS SECTION THE TERM "NEWSPAPER" SHALL MEAN A "LEGAL
6 NEWSPAPER" OR A PUBLICATION CONTAINING MATTERS OF GENERAL
7 INTEREST AND REPORTS OF CURRENT EVENTS WHICH QUALIFIES AS A
8 "NEWSPAPER OF GENERAL CIRCULATION" QUALIFIED TO CARRY A "LEGAL
9 ADVERTISEMENT" AS THOSE TERMS ARE DEFINED IN 45 PA.C.S. § 101
10 (RELATING TO DEFINITIONS) NOT INCLUDING MAGAZINES. THIS
11 EXCLUSION SHALL ALSO INCLUDE ANY PRINTED ADVERTISING MATERIALS
12 CIRCULATED WITH SUCH NEWSPAPER REGARDLESS OF WHERE OR BY WHOM
13 SUCH PRINTED ADVERTISING MATERIAL WAS PRODUCED.
14 * * *
15 SECTION 3. THE ACT IS AMENDED BY ADDING A SECTION TO READ:
16 SECTION 281.2. TRANSFERS TO PUBLIC TRANSPORTATION ASSISTANCE
17 FUND.--(A) ALL REVENUES RECEIVED ON OR AFTER JULY 1, 1992, FROM
18 THE IMPOSITION OF THE TAX ON PERIODICALS SHALL BE TRANSFERRED TO
19 THE PUBLIC TRANSPORTATION ASSISTANCE FUND ACCORDING TO THE
20 FORMULA SET FORTH IN SUBSECTION (B).
21 (B) WITHIN 30 DAYS OF THE CLOSE OF ANY CALENDAR MONTH, .44
22 PER CENT (.0044) OF THE TAXES RECEIVED IN THE PREVIOUS MONTH
23 UNDER THIS ARTICLE, LESS ANY AMOUNTS COLLECTED IN THAT PREVIOUS
24 CALENDAR MONTH UNDER FORMER 74 PA.C.S. § 1314(D) (RELATING TO
25 PUBLIC ASSISTANCE TRANSPORTATION FUND), SHALL BE TRANSFERRED TO
26 THE PUBLIC ASSISTANCE TRANSPORTATION FUND ESTABLISHED UNDER 74
27 PA.C.S. § 1314(A).
28 (C) IN FISCAL YEAR 1991-1992, THE SECRETARY OF REVENUE WILL
29 ENSURE THAT TEN MILLION DOLLARS ($10,000,000) IS DEPOSITED IN
30 THE PUBLIC ASSISTANCE TRANSPORTATION FUND FROM THE COMBINATION
19910H1321B2849 - 168 -
1 OF REVENUES RECEIVED UNDER FORMER 74 PA.C.S. § 1314(D) AND
2 TRANSFERS OF PERIODICAL TAXES RECEIVED UNDER THIS ARTICLE.
3 SECTION 4. SECTIONS 301(C.2), (E.1), (I.1), (I.2) AND (O.2)
4 AND 304 OF THE ACT, AMENDED OR ADDED AUGUST 4, 1991 (P.L.97,
5 NO.22), ARE AMENDED TO READ:
6 SECTION 301. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND
7 PHRASES WHEN USED IN THIS ARTICLE SHALL HAVE THE MEANING
8 ASCRIBED TO THEM IN THIS SECTION EXCEPT WHERE THE CONTEXT
9 CLEARLY INDICATES A DIFFERENT MEANING. ANY REFERENCE IN THIS
10 ARTICLE TO THE INTERNAL REVENUE CODE SHALL INCLUDE THE INTERNAL
11 REVENUE CODE OF 1954, AS AMENDED TO THE DATE ON WHICH THIS
12 ARTICLE IS EFFECTIVE:
13 * * *
14 (C.2) "CLAIMANT" MEANS A PERSON[:
15 (1)] WHO IS SUBJECT TO THE TAX IMPOSED UNDER THIS ARTICLE,
16 IS NOT A DEPENDENT OF ANOTHER PERSON, BUT IS ENTITLED TO CLAIM
17 AGAINST SUCH TAX THE POVERTY TAX PROVISIONS AS PROVIDED BY THIS
18 ACT[;
19 (2) WHO HAS A TAXABLE YEAR OF NOT LESS THAN TWELVE MONTHS;
20 AND
21 (3) WITH RESPECT TO WHOM NO DEDUCTION UNDER SECTION 151 OF
22 THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C.
23 § 1 ET SEQ.), AS AMENDED, IS ALLOWABLE TO ANY NONHOUSEHOLD
24 MEMBER FOR A TAXABLE YEAR BEGINNING IN THE CALENDAR YEAR IN
25 WHICH THE CLAIMANT'S TAXABLE YEAR BEGINS].
26 * * *
27 (E.1) "DEPENDENT" MEANS [ANY NONHOUSEHOLD MEMBER WITH
28 RESPECT TO WHOM A DEDUCTION UNDER SECTION 151 OF THE INTERNAL
29 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.),
30 AS AMENDED, IS ALLOWABLE TO THE CLAIMANT FOR THE CLAIMANT'S
19910H1321B2849 - 169 -
1 TAXABLE YEAR OR TO A HOUSEHOLD MEMBER FOR THE CLAIMANT'S TAXABLE
2 YEAR] A SPOUSE OR CHILD WHO DERIVES MORE THAN ONE-HALF OF HIS
3 TOTAL SUPPORT DURING THE ENTIRE TAXABLE YEAR FROM A CLAIMANT
4 ENTITLED TO CLAIM THE POVERTY EXEMPTION. ANY PERSON WHO IS A
5 DEPENDENT PURSUANT TO THE PROVISIONS OF THE INTERNAL REVENUE
6 CODE DURING A TAXABLE YEAR SHALL PRIMA FACIE BE DEEMED A
7 DEPENDENT FOR PURPOSES OF THIS ACT.
8 * * *
9 [(I.1) "TOTAL HOUSEHOLD INCOME" MEANS ALL POVERTY INCOME
10 RECEIVED BY A CLAIMANT AND EVERY OTHER HOUSEHOLD MEMBER FOR THE
11 TAXABLE YEAR OF THE CLAIMANT.
12 (I.2) "HOUSEHOLD MEMBER" MEANS ANY INDIVIDUAL WHO, FOR MORE
13 THAN ONE-HALF OF THE TAXABLE YEAR OF THE CLAIMANT, HAS AS HIS
14 PRINCIPAL PLACE OF ABODE THE SAME HOME AS THE CLAIMANT AND IS A
15 MEMBER OF THE SAME HOUSEHOLD AS THE CLAIMANT.]
16 * * *
17 (O.2) "POVERTY INCOME" MEANS FOR THE PURPOSE OF DETERMINING
18 ELIGIBILITY FOR SPECIAL TAX PROVISIONS [ALL TAXABLE AND
19 NONTAXABLE INCOME FROM WHATEVER SOURCE DERIVED, INCLUDING, BUT
20 NOT LIMITED TO, SALARIES, WAGES, BONUSES, COMMISSIONS, INCOME
21 FROM SELF-EMPLOYMENT, ALIMONY, SUPPORT MONEY, CASH PUBLIC
22 ASSISTANCE AND RELIEF, THE GROSS AMOUNT OF ANY PENSIONS OR
23 ANNUITIES INCLUDING RAILROAD RETIREMENT BENEFITS, ALL BENEFITS
24 RECEIVED UNDER THE SOCIAL SECURITY ACT (PUBLIC LAW 74-271, 42
25 U.S.C. § 301 ET SEQ.) EXCEPT MEDICARE BENEFITS, ALL BENEFITS
26 RECEIVED UNDER STATE UNEMPLOYMENT INSURANCE LAWS AND VETERANS'
27 DISABILITY PAYMENTS, ALL INTEREST RECEIVED FROM THE FEDERAL OR
28 ANY STATE GOVERNMENT, OR ANY INSTRUMENTALITY OR POLITICAL
29 SUBDIVISION THEREOF, REALIZED CAPITAL GAINS, RENTALS, WORKMEN'S
30 COMPENSATION AND THE GROSS AMOUNT OF LOSS OF TIME INSURANCE
19910H1321B2849 - 170 -
1 BENEFITS, LIFE INSURANCE BENEFITS AND PROCEEDS, EXCEPT THE FIRST
2 FIVE THOUSAND DOLLARS ($5,000) OF THE TOTAL OF DEATH BENEFIT
3 PAYMENTS, AND GIFTS OF CASH OR PROPERTY, OTHER THAN TRANSFERS BY
4 GIFT BETWEEN MEMBERS OF A HOUSEHOLD, IN EXCESS OF A TOTAL VALUE
5 OF THREE HUNDRED DOLLARS ($300), BUT SHALL NOT INCLUDE SURPLUS
6 FOOD OR OTHER RELIEF IN KIND SUPPLIED BY A GOVERNMENTAL AGENCY
7 OR PROPERTY TAX OR RENT REBATE OR INFLATION DIVIDEND] ALL MONEYS
8 OR PROPERTY (INCLUDING INTEREST, GAINS OR INCOME DERIVED FROM
9 OBLIGATIONS WHICH ARE STATUTORILY FREE FROM STATE OR LOCAL
10 TAXATION UNDER ANY OTHER ACT OF THE GENERAL ASSEMBLY OF THE
11 COMMONWEALTH OF PENNSYLVANIA OR UNDER THE LAWS OF THE UNITED
12 STATES) RECEIVED OF WHATEVER NATURE AND FROM WHATEVER SOURCE
13 DERIVED BUT NOT INCLUDING (I) PERIODIC PAYMENTS FOR SICKNESS AND
14 DISABILITY OTHER THAN REGULAR WAGES RECEIVED DURING A PERIOD OF
15 SICKNESS OR DISABILITY; OR (II) DISABILITY, RETIREMENT OR OTHER
16 PAYMENTS ARISING UNDER WORKMEN'S COMPENSATION ACTS, OCCUPATIONAL
17 DISEASE ACTS AND SIMILAR LEGISLATION BY ANY GOVERNMENT; OR (III)
18 PAYMENTS COMMONLY RECOGNIZED AS OLD AGE OR RETIREMENT BENEFITS
19 PAID TO PERSONS RETIRED FROM SERVICE AFTER REACHING A SPECIFIC
20 AGE OR AFTER A STATED PERIOD OF EMPLOYMENT; OR (IV) PAYMENTS
21 COMMONLY KNOWN AS PUBLIC ASSISTANCE, OR UNEMPLOYMENT
22 COMPENSATION PAYMENTS BY ANY GOVERNMENTAL AGENCY; OR (V)
23 PAYMENTS TO REIMBURSE ACTUAL EXPENSES; OR (VI) PAYMENTS MADE BY
24 EMPLOYERS OR LABOR UNIONS FOR PROGRAMS COVERING HOSPITALIZATION,
25 SICKNESS, DISABILITY OR DEATH, SUPPLEMENTAL UNEMPLOYMENT
26 BENEFITS, STRIKE BENEFITS, SOCIAL SECURITY AND RETIREMENT; OR
27 (VII) ANY COMPENSATION RECEIVED BY UNITED STATES SERVICEMEN
28 SERVING IN A COMBAT ZONE.
29 * * *
30 SECTION 304. SPECIAL TAX PROVISIONS FOR POVERTY.--(A) THE
19910H1321B2849 - 171 -
1 GENERAL ASSEMBLY, IN RECOGNITION OF THE POWERS CONTAINED IN
2 SECTION 2(B)(II) OF ARTICLE VIII OF THE CONSTITUTION OF THE
3 COMMONWEALTH OF PENNSYLVANIA WHICH PROVIDES THEREIN FOR THE
4 ESTABLISHING AS A CLASS OR CLASSES OF SUBJECTS OF TAXATION THE
5 PROPERTY OR PRIVILEGES OF PERSONS WHO, BECAUSE OF POVERTY ARE
6 DETERMINED TO BE IN NEED OF SPECIAL TAX PROVISIONS HEREBY
7 DECLARES AS ITS LEGISLATIVE INTENT AND PURPOSE TO IMPLEMENT SUCH
8 POWER UNDER SUCH CONSTITUTIONAL PROVISION BY ESTABLISHING
9 SPECIAL TAX PROVISIONS AS HEREINAFTER PROVIDED IN THIS ACT.
10 (B) THE GENERAL ASSEMBLY HAVING DETERMINED THAT THERE ARE
11 PERSONS WITHIN THIS COMMONWEALTH WHOSE INCOMES ARE SUCH THAT
12 IMPOSITION OF A TAX THEREON WOULD DEPRIVE THEM AND THEIR
13 DEPENDENTS OF THE BARE NECESSITIES OF LIFE AND HAVING FURTHER
14 DETERMINED THAT POVERTY IS A RELATIVE CONCEPT INEXTRICABLY
15 JOINED WITH ACTUAL INCOME AND THE NUMBER OF PEOPLE DEPENDENT
16 UPON SUCH INCOME DEEMS IT TO BE A MATTER OF PUBLIC POLICY TO
17 PROVIDE SPECIAL TAX PROVISIONS FOR THAT CLASS OF PERSONS
18 HEREINAFTER DESIGNATED TO RELIEVE THEIR ECONOMIC BURDEN.
19 (C) FOR THE TAXABLE YEAR [1991] 1974 AND EACH YEAR
20 THEREAFTER ANY CLAIMANT WHO MEETS THE FOLLOWING STANDARDS OF
21 ELIGIBILITY ESTABLISHED BY THIS ACT AS THE TEST FOR POVERTY
22 SHALL BE DEEMED A SEPARATE CLASS OF SUBJECT OF TAXATION, AND, AS
23 SUCH, SHALL BE ENTITLED TO THE BENEFIT OF THE SPECIAL PROVISIONS
24 OF THIS ACT.
25 (D) ANY CLAIM FOR SPECIAL TAX PROVISIONS HEREUNDER SHALL BE
26 DETERMINED IN ACCORDANCE WITH THE FOLLOWING:
27 (1) IF [TOTAL HOUSEHOLD INCOME IS SEVEN THOUSAND DOLLARS
28 ($7,000)] THE POVERTY INCOME OF THE CLAIMANT DURING AN ENTIRE
29 TAXABLE YEAR IS SIX THOUSAND THREE HUNDRED DOLLARS ($6,300) OR
30 LESS, THE CLAIMANT SHALL BE ENTITLED TO A REFUND OR FORGIVENESS
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1 OF ANY MONEYS WHICH HAVE BEEN PAID OVER TO (OR WOULD EXCEPT FOR
2 THE PROVISIONS OF THIS ACT BE PAYABLE TO) THE COMMONWEALTH UNDER
3 THE PROVISIONS OF THIS ARTICLE, WITH AN ADDITIONAL INCOME
4 ALLOWANCE OF [TWO THOUSAND DOLLARS ($2,000) FOR EACH DEPENDENT
5 AND HOUSEHOLD MEMBER] ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500)
6 FOR THE FIRST ADDITIONAL DEPENDENT AND AN ADDITIONAL INCOME
7 ALLOWANCE OF ONE THOUSAND DOLLARS ($1,000) FOR EACH ADDITIONAL
8 DEPENDENT OF THE CLAIMANT.
9 (2) IF [TOTAL HOUSEHOLD INCOME DOES NOT EXCEED THE] THE
10 POVERTY INCOME OF THE CLAIMANT DURING AN ENTIRE TAXABLE YEAR
11 DOES NOT EXCEED THE POVERTY INCOME LIMITATIONS PRESCRIBED BY
12 CLAUSE (1) BY MORE THAN THE DOLLAR CATEGORY CONTAINED IN
13 SUBCLAUSES (I), (II), (III), (IV), (V), (VI), (VII), (VIII) OR
14 (IX) OF THIS CLAUSE, THE CLAIMANT SHALL BE ENTITLED TO A REFUND
15 OR FORGIVENESS BASED ON THE PER CENTAGE PRESCRIBED IN SUCH
16 SUBCLAUSES OF ANY MONEYS WHICH HAVE BEEN PAID OVER TO (OR WOULD
17 EXCEPT FOR THE PROVISIONS HEREIN BE PAYABLE TO) THE COMMONWEALTH
18 UNDER THIS ARTICLE:
19 (I) NINETY PER CENT IF NOT IN EXCESS OF ONE HUNDRED DOLLARS
20 ($100).
21 (II) EIGHTY PER CENT IF NOT IN EXCESS OF TWO HUNDRED DOLLARS
22 ($200).
23 (III) SEVENTY PER CENT IF NOT IN EXCESS OF THREE HUNDRED
24 DOLLARS ($300).
25 (IV) SIXTY PER CENT IF NOT IN EXCESS OF FOUR HUNDRED DOLLARS
26 ($400).
27 (V) FIFTY PER CENT IF NOT IN EXCESS OF FIVE HUNDRED DOLLARS
28 ($500).
29 (VI) FORTY PER CENT IF NOT IN EXCESS OF SIX HUNDRED DOLLARS
30 ($600).
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1 (VII) THIRTY PER CENT IF NOT IN EXCESS OF SEVEN HUNDRED
2 DOLLARS ($700).
3 (VIII) TWENTY PER CENT IF NOT IN EXCESS OF EIGHT HUNDRED
4 DOLLARS ($800).
5 (IX) TEN PER CENT IF NOT IN EXCESS OF NINE HUNDRED DOLLARS
6 ($900).
7 SECTION 5. SECTION 602.3 OF THE ACT IS AMENDED BY ADDING A
8 SUBSECTION TO READ:
9 SECTION 602.3. DEPOSIT OF PROCEEDS; APPROPRIATION.--* * *
10 (C) THE TRANSFER OF ANY PROCEEDS RESULTING FROM THE ONE-HALF
11 MILL TAX IMPOSED PURSUANT TO THIS ARTICLE TO THE HAZARDOUS SITE
12 CLEANUP FUND AS AUTHORIZED IN SUBSECTION (A) SHALL NOT BE
13 APPLICABLE TO FISCAL YEAR 1991-1992. IN LIEU OF THE 1991-1992
14 FISCAL YEAR TRANSFER, THE GOVERNOR SHALL AUTHORIZE THE TRANSFER
15 OF PROCEEDS IN EXCESS OF SEVENTEEN MILLION DOLLARS ($17,000,000)
16 FROM THE REVENUE RESULTING FROM THE ONE-HALF MILL TAX IMPOSED
17 PURSUANT TO THIS ARTICLE TO THE HAZARDOUS SITE CLEANUP FUND
18 PURSUANT TO THE TRANSFER SCHEDULE SET FORTH IN SUBSECTION (A).
19 THE GOVERNOR MAY TRANSFER ANY UNEXPENDED PORTION OF THE
20 SEVENTEEN MILLION DOLLARS ($17,000,000) TO THE HAZARDOUS SITE
21 CLEANUP FUND.
22 SECTION 6. SECTION 1502.5 OF THE ACT, ADDED OCTOBER 14, 1988
23 (P.L.737, NO.106), IS AMENDED TO READ:
24 [SECTION 1502.5. SUNSET.--THE PROVISIONS REGARDING
25 APPORTIONMENT, CREDITS AND ADDITIONAL FILING REQUIREMENTS IN
26 ACCORDANCE WITH SECTIONS 1502.1, 1502.2 AND 1502.3 OF THIS
27 ARTICLE SHALL NOT BE APPLICABLE FOR CALENDAR YEAR 1992 AND EACH
28 CALENDAR YEAR THEREAFTER AND FISCAL YEARS BEGINNING IN 1992 AND
29 EACH FISCAL YEAR THEREAFTER.]
30 SECTION 7. THE PROVISIONS OF 74 PA.C.S. § 1314(D) ARE
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1 REPEALED.
2 SECTION 8. THE SECRETARY OF REVENUE SHALL FACILITATE THE
3 TRANSFER OF FUNDS UNDER SECTION 281.2 OF THE ACT.
4 SECTION 9. IT IS THE INTENT OF THE GENERAL ASSEMBLY THAT THE
5 DEPARTMENT OF REVENUE LEVY, ASSESS AND COLLECT THE TAX IMPOSED
6 BY SECTION 202 OF THIS ACT ON RETAIL SALES FROM VENDING MACHINES
7 IN THE SAME MANNER AND ON THE SAME TAXABLE ITEM AS WAS IN EFFECT
8 PRIOR TO AUGUST 4, 1991.
9 SECTION 10. THE AMENDMENT OF SECTIONS 301 AND 304 OF THE ACT
10 SHALL BE RETROACTIVE TO JANUARY 1, 1991.
11 SECTION 11. THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
12 (1) THE AMENDMENT OR ADDITION OF SECTIONS 201(G),
13 (K)(8), (15), (16) AND (18), (L), (M), (O)(4), (13), (14) AND
14 (16), (Z), (AA), (CC), (II), (KK), (LL) AND (MM), 204(4),
15 (29) AND (30) AND 281.2 OF THE ACT SHALL TAKE EFFECT JANUARY
16 1, 1992.
17 (2) SECTIONS 7 AND 8 OF THIS ACT SHALL TAKE EFFECT
18 JANUARY 1, 1992.
19 (3) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT
20 IMMEDIATELY.
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