SENATE AMENDED
PRIOR PRINTER'S NOS. 143, 269, 1484 PRINTER'S NO. 1706
No. 134 Session of 1997
INTRODUCED BY TRUE, SCHULER, PETTIT, THOMAS, VANCE, MANDERINO,
BARLEY, RUBLEY, JOSEPHS, BROWN, MILLER, EGOLF, HERSHEY,
ARMSTRONG, MASLAND, BEBKO-JONES, MUNDY, LAUGHLIN, YOUNGBLOOD,
MAITLAND, BOYES, STRITTMATTER, GEORGE, HENNESSEY, MARSICO,
WOJNAROSKI, WALKO, READSHAW, NAILOR, DALEY, GIGLIOTTI,
CHADWICK, FLEAGLE, HALUSKA, ZUG, CAPPABIANCA, MELIO, FICHTER,
SANTONI, KELLER, SAINATO, FARGO, MARKOSEK, FAIRCHILD, PESCI,
JAROLIN, LAWLESS, PLATTS, RYAN, PERZEL, E. Z. TAYLOR, STERN,
ROONEY, SHANER, OLASZ, BAKER, CURRY, BATTISTO, COY, McCALL,
LaGROTTA, STURLA, TRAVAGLIO, TANGRETTI, ADOLPH, JAMES, LEH,
HERMAN, LEVDANSKY, J. TAYLOR, COLAFELLA, CORNELL, STEELMAN,
BARD, FEESE, LUCYK, TRELLO, LEDERER, BROWNE, PETRARCA, WAUGH,
DeLUCA, D. W. SNYDER, C. WILLIAMS, CIVERA, ALLEN, DiGIROLAMO,
DENT, HUTCHINSON, WILT, RAMOS, L. I. COHEN, PHILLIPS, BARRAR,
WASHINGTON, ROHRER, FLICK, EACHUS, SCHRODER, SEYFERT,
BELARDI, AND ROSS, JANUARY 29, 1997
SENATOR TILGHMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS
AMENDED, MAY 5, 1997
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 sales and use tax <--
11 definitions, for personal income tax definitions and for
12 special tax provisions on poverty; providing for income tax
13 refund checkoffs for breast and cervical cancer research;
14 further providing for realty transfer tax definitions, for
15 exclusions, FOR NEIGHBORHOOD ASSISTANCE TAX CREDITS AND FOR <--
16 INHERITANCE TAX; EXCLUDING CERTAIN COMPUTER SERVICES FROM
17 SALES AND USE TAX; FURTHER DEFINING "CLAIMANT" AND
18 "DEPENDENT"; FURTHER PROVIDING FOR SPECIAL TAX PROVISIONS FOR
1 POVERTY, FOR THE DETERMINATION OF CAPITAL STOCK VALUE AND FOR
2 ALLOCATION OF CIGARETTE TAX RECEIPTS TO THE CHILDREN'S HEALTH
3 FUND; FURTHER DEFINING "COMPENSATION" FOR PERSONAL INCOME TAX
4 PURPOSES TO EXCLUDE CAFETERIA PLANS AND CERTAIN OTHER
5 BENEFITS; EXTENDING THE NEIGHBORHOOD ASSISTANCE TAX CREDIT TO
6 PERSONAL INCOME TAXES IMPOSED UNDER ARTICLE III; and making
7 repeals. PENALTIES," MAKING AMENDMENTS RELATING TO THE SALES <--
8 AND USE TAX, THE PERSONAL INCOME TAX, THE CORPORATE NET
9 INCOME TAX, THE CAPITAL STOCK FRANCHISE TAX, THE REALTY
10 TRANSFER TAX, THE NEIGHBORHOOD ASSISTANCE TAX CREDIT, THE
11 MALT BEVERAGE TAX AND THE INHERITANCE TAX; ADDING PROVISIONS
12 RELATING TO A RESEARCH AND DEVELOPMENT TAX CREDIT; AND MAKING
13 REPEALS.
14 The General Assembly of the Commonwealth of Pennsylvania
15 hereby enacts as follows:
16 Section 1. Section 201(b), (c), (d), (f), (g), (k), (o) and <--
17 (jj) SECTION 201(C), (D), (K), (O), (DD), (EE), (FF), (GG), <--
18 (HH), (II) AND (LL) of the act of March 4, 1971 (P.L.6, No.2),
19 known as the Tax Reform Code of 1971, amended or added August 4,
20 1991 (P.L.97, No.22), December 13, 1991 (P.L.373, No.40), June
21 16, 1994 (P.L.279, No.48) and June 30, 1995 (P.L.139, No.21),
22 are amended to read:
23 Section 201. Definitions.--The following words, terms and
24 phrases when used in this Article II shall have the meaning
25 ascribed to them in this section, except where the context
26 clearly indicates a different meaning:
27 * * *
28 (b) "Maintaining a place of business in this Commonwealth." <--
29 (1) Having or maintaining within this Commonwealth, directly
30 or by a subsidiary, an office, distribution house, sales house,
31 warehouse, service enterprise or other place of business, or any
32 agent of general or restricted authority irrespective of whether
33 the place of business or agent is located here permanently or
34 temporarily or whether the person or subsidiary maintaining such
35 place of business or agent is authorized to do business within
36 this Commonwealth; or
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1 (2) The engaging in any activity as a business within this
2 Commonwealth by any person, directly or by a subsidiary, in
3 connection with the lease, sale or delivery of tangible personal
4 property or the performance of services thereon for use, storage
5 or consumption or in connection with the sale or delivery for
6 use of the services described in subclauses (11) through (16)
7 and (18) of clause (k) of this section, including, but not
8 limited to, having, maintaining or using any office,
9 distribution house, sales house, warehouse or other place of
10 business, any stock of goods or any solicitor, salesman, agent
11 or representative under its authority, at its direction or with
12 its permission, regardless of whether the person or subsidiary
13 is authorized to do business in this Commonwealth.
14 (3) Regularly or substantially soliciting orders within this
15 Commonwealth in connection with the lease, sale or delivery of
16 tangible personal property to or the performance thereon of
17 services or in connection with the sale or delivery of the
18 services described in subclauses (11) through (16) and (18) of
19 clause (k) of this section for residents of this Commonwealth by
20 means of catalogues or other advertising, whether such orders
21 are accepted within or without this Commonwealth.
22 (c) "Manufacture." The performance of manufacturing,
23 fabricating, compounding, processing or other operations,
24 engaged in as a business, which place any tangible personal
25 property in a form, composition or character different from that
26 in which it is acquired whether for sale or use by the
27 manufacturer, and shall include, but not be limited to--
28 (1) Every operation commencing with the first production
29 stage and ending with the completion of tangible personal
30 property having the physical qualities (including packaging, if
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1 any, passing to the ultimate consumer) which it has when
2 transferred by the manufacturer to another;
3 (2) The publishing of books, newspapers, magazines and other
4 periodicals and printing;
5 (3) Refining, blasting, exploring, mining and quarrying for,
6 or otherwise extracting from the earth or from waste or stock
7 piles or from pits or banks any natural resources, minerals and
8 mineral aggregates including blast furnace slag;
9 (4) Building, rebuilding, repairing and making additions to,
10 or replacements in or upon vessels designed for commercial use
11 of registered tonnage of fifty tons or more when produced upon
12 special order of the purchaser, or when rebuilt, repaired or
13 enlarged, or when replacements are made upon order of, or for
14 the account of the owner;
15 (5) Research having as its objective the production of a new
16 or an improved (i) product or utility service, or (ii) method of
17 producing a product or utility service, but in either case not
18 including market research or research having as its objective
19 the improvement of administrative efficiency.
20 (6) Remanufacture for wholesale distribution by a
21 remanufacturer of motor vehicle parts from used parts acquired
22 in bulk by the remanufacturer using an assembly line process
23 which involves the complete disassembly of such parts and
24 integration of the components of such parts with other used or
25 new components of parts, including the salvaging, recycling or
26 reclaiming of used parts by the remanufacturer.
27 (7) Remanufacture or retrofit by a manufacturer or
28 remanufacturer of aircraft, armored vehicles, other defense-
29 related vehicles having a finished value of at least fifty
30 thousand dollars ($50,000). Remanufacture or retrofit involves
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1 the disassembly of such aircraft, vehicles, parts or components,
2 including electric or electronic components, the integration of
3 those parts and components with other used or new parts or
4 components, including the salvaging, recycling or reclaiming of
5 the used parts or components and the assembly of the new or used
6 aircraft, vehicles, parts or components. For purposes of this
7 clause, the following terms or phrases have the following
8 meanings:
9 (i) "aircraft" means fixed-wing aircraft, helicopters,
10 powered aircraft, tilt-rotor or tilt-wing aircraft, unmanned
11 aircraft and gliders;
12 (ii) "armored vehicles" means tanks, armed personnel
13 carriers and all other armed track or semitrack vehicles; or
14 (iii) "other defense-related vehicles" means trucks, truck-
15 tractors, trailers, jeeps and other utility vehicles, including
16 any unmanned vehicles.
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[,] or freezing [or baking], FREEZING OR BAKING <--
21 of fruits, vegetables, mushrooms, fish, seafood, meats[,] or <--
22 poultry [or bakery products]., POULTRY OR BAKERY PRODUCTS. <--
23 * * *
24 (d) "Processing." The performance of the following
25 activities when engaged in as a business enterprise:
26 (1) The filtering or heating of honey, the cooking[, baking] <--
27 or freezing of fruits, vegetables, mushrooms, fish, seafood,
28 meats[,] or poultry [or bakery products], POULTRY OR BAKERY <--
29 PRODUCTS, when the person engaged in such business packages such
30 property in sealed containers for wholesale distribution.
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1 (1.1) The processing of vegetables by cleaning, cutting,
2 coring or chopping and treating to preserve, sterilize or purify
3 and substantially extend the useful shelf life of the
4 vegetables, when the person engaged in such activity packages
5 such property in sealed containers for wholesale distribution.
6 (2) The scouring, carbonizing, cording, combing, throwing,
7 twisting or winding of natural or synthetic fibers, or the
8 spinning, bleaching, dyeing, printing or finishing of yarns or
9 fabrics, when such activities are performed prior to sale to the
10 ultimate consumer.
11 (3) The electroplating, galvanizing, enameling, anodizing,
12 coloring, finishing, impregnating or heat treating of metals or
13 plastics for sale or in the process of manufacturing.
14 (3.1) THE BLANKING, SHEARING, LEVELING, SLITTING OR BURNING <--
15 OF METALS FOR SALE TO OR USE BY A MANUFACTURER OR PROCESSOR.
16 (4) The rolling, drawing or extruding of ferrous and non-
17 ferrous metals.
18 (5) The fabrication for sale of ornamental or structural
19 metal or of metal stairs, staircases, gratings, fire escapes or
20 railings (not including fabrication work done at the
21 construction site).
22 (6) The preparation of animal feed or poultry feed for sale.
23 (7) The production, processing and bottling of non-alcoholic
24 beverages for wholesale distribution.
25 (8) The operation of a saw mill or planing mill for the
26 production of lumber or lumber products for sale.
27 (9) The milling for sale of flour or meal from grains.
28 (9.1) THE AGING, STRIPPING, CONDITIONING, CRUSHING AND <--
29 BLENDING OF TOBACCO LEAVES FOR USE AS CIGAR FILLER OR AS
30 COMPONENTS OF SMOKELESS TOBACCO PRODUCTS FOR SALE TO
19970H0134B1706 - 6 -
1 MANUFACTURERS OF TOBACCO PRODUCTS.
2 (10) The slaughtering and dressing of animals for meat to be
3 sold or to be used in preparing meat products for sale, and the
4 preparation of meat products including lard, tallow, grease,
5 cooking and inedible oils for wholesale distribution.
6 (11) The processing of used lubricating oils.
7 (12) The broadcasting of radio and television programs of
8 licensed commercial or educational stations.
9 (13) THE COOKING OR BAKING OF BREAD, PASTRIES, CAKES, <--
10 COOKIES, MUFFINS AND DONUTS, WHEN THE PERSON ENGAGED IN SUCH
11 ACTIVITY SELLS SUCH ITEMS AT RETAIL AT LOCATIONS THAT DO NOT
12 CONSTITUTE AN ESTABLISHMENT FROM WHICH READY-TO-EAT FOOD AND
13 BEVERAGES ARE SOLD. FOR PURPOSES OF THIS CLAUSE, A BAKERY, A
14 PASTRY SHOP AND A DONUT SHOP SHALL NOT BE CONSIDERED AN
15 ESTABLISHMENT FROM WHICH READY-TO-EAT FOOD AND BEVERAGES ARE
16 SOLD.
17 * * *
18 (f) "Purchase at retail." <--
19 (1) The acquisition for a consideration of the ownership,
20 custody or possession of tangible personal property other than
21 for resale by the person acquiring the same when such
22 acquisition is made for the purpose of consumption or use,
23 whether such acquisition shall be absolute or conditional, and
24 by whatsoever means the same shall have been effected.
25 (2) The acquisition of a license to use or consume, and the
26 rental or lease of tangible personal property, other than for
27 resale regardless of the period of time the lessee has
28 possession or custody of the property.
29 (3) The obtaining for a consideration of those services
30 described in subclauses (2), (3) and (4) of clause (k) of this
19970H0134B1706 - 7 -
1 section other than for resale.
2 (4) A retention after March 7, 1956, of possession, custody
3 or a license to use or consume pursuant to a rental contract or
4 other lease arrangement (other than as security), other than for
5 resale.
6 (5) The obtaining for a consideration of those services
7 described in subclauses (11) through (16) and (18) of clause (k)
8 of this section.
9 The term "purchase at retail" with respect to "liquor" and
10 "malt or brewed beverages" shall include the purchase of
11 "liquor" from any "Pennsylvania Liquor Store" by any person for
12 any purpose, and the purchase of "malt or brewed beverages" from
13 a "manufacturer of malt or brewed beverages," "distributor" or
14 "importing distributor" by any person for any purpose, except
15 purchases from a "manufacturer of malt or brewed beverages" by a
16 "distributor" or "importing distributor" or purchases from an
17 "importing distributor" by a "distributor" within the meaning of
18 the "Liquor Code." The term "purchase at retail" shall not
19 include any purchase of "malt or brewed beverages" from a
20 "retail dispenser" or any purchase of "liquor" or "malt or
21 brewed beverages" from a person holding a "retail liquor
22 license" within the meaning of and pursuant to the provisions of
23 the "Liquor Code," but shall include any purchase or acquisition
24 of "liquor" or "malt or brewed beverages" other than pursuant to
25 the provisions of the "Liquor Code."
26 (g) "Purchase price."
27 (1) The total value of anything paid or delivered, or
28 promised to be paid or delivered, whether it be money or
29 otherwise, in complete performance of a sale at retail or
30 purchase at retail, as herein defined, without any deduction on
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1 account of the cost or value of the property sold, cost or value
2 of transportation, cost or value of labor or service, interest
3 or discount paid or allowed after the sale is consummated, any
4 other taxes imposed by the Commonwealth of Pennsylvania or any
5 other expense except that there shall be excluded any gratuity
6 or separately stated deposit charge for returnable containers.
7 (2) There shall be deducted from the purchase price the
8 value of any tangible personal property actually taken in trade
9 or exchange in lieu of the whole or any part of the purchase
10 price. For the purpose of this clause, the amount allowed by
11 reason of tangible personal property actually taken in trade or
12 exchange shall be considered the value of such property.
13 (3) In determining the purchase price on the sale or use of
14 taxable tangible personal property or a service described in
15 subclauses (11) through (16) and (18) of clause (k) of this
16 section where, because of affiliation of interests between the
17 vendor and purchaser, or irrespective of any such affiliation,
18 if for any other reason the purchase price declared by the
19 vendor or taxpayer on the taxable sale or use of such tangible
20 personal property or service is, in the opinion of the
21 department, not indicative of the true value of the article or
22 service or the fair price thereof, the department shall,
23 pursuant to uniform and equitable rules, determine the amount of
24 constructive purchase price upon the basis of which the tax
25 shall be computed and levied. Such rules shall provide for a
26 constructive amount of purchase price for each such sale or use
27 which would naturally and fairly be charged in an arms-length
28 transaction in which the element of common interest between the
29 vendor or purchaser is absent or if no common interest exists,
30 any other element causing a distortion of the price or value is
19970H0134B1706 - 9 -
1 likewise absent. For the purpose of this clause where a taxable
2 sale or purchase at retail transaction occurs between a parent
3 and a subsidiary, affiliate or controlled corporation of such
4 parent corporation, there shall be a rebuttable presumption,
5 that because of such common interest such transaction was not at
6 arms-length.
7 (4) Where there is a transfer or retention of possession or
8 custody, whether it be termed a rental, lease, service or
9 otherwise, of tangible personal property including, but not
10 limited to linens, aprons, motor vehicles, trailers, tires,
11 industrial office and construction equipment, and business
12 machines the full consideration paid or delivered to the vendor
13 or lessor shall be considered the purchase price, even though
14 such consideration be separately stated and be designated as
15 payment for processing, laundering, service, maintenance,
16 insurance, repairs, depreciation or otherwise. Where the vendor
17 or lessor supplies or provides an employe to operate such
18 tangible personal property, the value of the labor thus supplied
19 may be excluded and shall not be considered as part of the
20 purchase price if separately stated. There shall also be
21 included as part of the purchase price the value of anything
22 paid or delivered, or promised to be paid or delivered by a
23 lessee, whether it be money or otherwise, to any person other
24 than the vendor or lessor by reason of the maintenance,
25 insurance or repair of the tangible personal property which a
26 lessee has the possession or custody of under a rental contract
27 or lease arrangement.
28 (5) With respect to the tax imposed by subsection (b) of
29 section 202 upon any tangible personal property originally
30 purchased by the user of such property six months or longer
19970H0134B1706 - 10 -
1 prior to the first taxable use of such property within the
2 Commonwealth, such user may elect to pay tax on a substituted
3 base determined by considering the purchase price of such
4 property for tax purposes to be equal to the prevailing market
5 price of similar tangible personal property at the time and
6 place of such first use within the Commonwealth. Such election
7 must be made at the time of filing a tax return with the
8 department and reporting such tax liability and paying the
9 proper tax due plus all accrued penalties and interest, if there
10 be any, within six months of the due date of such report and
11 payment, as provided for by subsections (a) and (c) of section
12 217 of this article.
13 (6) The purchase price of employment agency services and
14 help supply services shall be the service fee paid by the
15 purchaser to the vendor or supplying entity. The term "service
16 fee," as used in this subclause, shall be the total charge or
17 fee of the vendor or supplying entity minus the costs of the
18 supplied employe which costs are wages, salaries, bonuses and
19 commissions, employment benefits, expense reimbursements and
20 payroll and withholding taxes, to the extent that these costs
21 are specifically itemized or that these costs in aggregate are
22 stated in billings from the vendor or supplying entity. To the
23 extent that these costs are not itemized or stated on the
24 billings, then the service fee shall be the total charge or fee
25 of the vendor or supplying entity.
26 (7) Unless the vendor separately states that portion of the
27 billing which applies to premium cable service as defined in
28 clause (ll) of this section, the total bill for the provision of
29 all cable services shall be the purchase price.
30 * * *
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1 (k) "Sale at retail."
2 (1) Any transfer, for a consideration, of the ownership,
3 custody or possession of tangible personal property, including
4 the grant of a license to use or consume whether such transfer
5 be absolute or conditional and by whatsoever means the same
6 shall have been effected.
7 (2) The rendition of the service of printing or imprinting
8 of tangible personal property for a consideration for persons
9 who furnish, either directly or indirectly the materials used in
10 the printing or imprinting.
11 (3) The rendition for a consideration of the service of--
12 (i) Washing, cleaning, waxing, polishing or lubricating of
13 motor vehicles of another, whether or not any tangible personal
14 property is transferred in conjunction therewith; and
15 (ii) Inspecting motor vehicles pursuant to the mandatory
16 requirements of "The Vehicle Code."
17 (4) The rendition for a consideration of the service of
18 repairing, altering, mending, pressing, fitting, dyeing,
19 laundering, drycleaning or cleaning tangible personal property
20 other than wearing apparel or shoes, or applying or installing
21 tangible personal property as a repair or replacement part of
22 other tangible personal property except wearing apparel or shoes
23 for a consideration, whether or not the services are performed
24 directly or by any means other than by coin-operated self-
25 service laundry equipment for wearing apparel or household goods
26 and whether or not any tangible personal property is transferred
27 in conjunction therewith, except such services as are rendered
28 in the construction, reconstruction, remodeling, repair or
29 maintenance of real estate: Provided, however, That this
30 subclause shall not be deemed to impose tax upon such services
19970H0134B1706 - 12 -
1 in the preparation for sale of new items which are excluded from
2 the tax under clause (26) of section 204, or upon diaper
3 service.
4 (8) Any retention of possession, custody or a license to use
5 or consume tangible personal property or any further obtaining
6 of services described in subclauses (2), (3) and (4) of this
7 clause pursuant to a rental or service contract or other
8 arrangement (other than as security).
9 The term "sale at retail" shall not include (i) any such
10 transfer of tangible personal property or rendition of services
11 for the purpose of resale, or (ii) such rendition of services or
12 the transfer of tangible personal property including, but not
13 limited to, machinery and equipment and parts therefor and
14 supplies to be used or consumed by the purchaser directly in the
15 operations of--
16 (A) The manufacture of tangible personal property;
17 (B) Farming, dairying, agriculture, horticulture or
18 floriculture when engaged in as a business enterprise. The term
19 "farming" shall include the propagation and raising of ranch
20 raised fur-bearing animals and the propagation of game birds for
21 commercial purposes by holders of propagation permits issued
22 under 34 Pa.C.S. (relating to game);
23 (C) The producing, delivering or rendering of a public
24 utility service, or in constructing, reconstructing, remodeling,
25 repairing or maintaining the facilities which are directly used
26 in producing, delivering or rendering such service;
27 (D) Processing as defined in clause (d) of this section.
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
19970H0134B1706 - 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 facilities
17 not used directly by the purchaser in the production, delivering
18 or rendition of public utility service, (ii) construction
19 materials, supplies or equipment used to construct, reconstruct,
20 remodel, repair or maintain a building, road or similar
21 structure, or (iii) tools and equipment used but not installed
22 in the maintenance of facilities used directly in the
23 production, delivering or rendition of a public utility service.
24 The exclusions provided in paragraphs (A), (B), (C) and (D)
25 shall not apply to the services enumerated in clauses (k)(11)
26 through (16) and (18) and (w) through (ii) and (kk), except that <--
27 the exclusion provided in this subclause for farming, dairying
28 and agriculture shall apply to the service enumerated in clause
29 (z).
30 (9) Where tangible personal property or services are
19970H0134B1706 - 14 -
1 utilized for purposes constituting a "sale at retail" and for
2 purposes excluded from the definition of "sale at retail," it
3 shall be presumed that such tangible personal property or
4 services are utilized for purposes constituting a "sale at
5 retail" and subject to tax unless the user thereof proves to the
6 department that the predominant purposes for which such tangible
7 personal property or services are utilized do not constitute a
8 "sale at retail."
9 (10) The term "sale at retail" with respect to "liquor" and
10 "malt or brewed beverages" shall include the sale of "liquor" by
11 any "Pennsylvania liquor store" to any person for any purpose,
12 and the sale of "malt or brewed beverages" by a "manufacturer of
13 malt or brewed beverages," "distributor" or "importing
14 distributor" to any person for any purpose, except sales by a
15 "manufacturer of malt or brewed beverages" to a "distributor" or
16 "importing distributor" or sales by an "importing distributor"
17 to a "distributor" within the meaning of the "Liquor Code." The
18 term "sale at retail" shall not include any sale of "malt or
19 brewed beverages" by a "retail dispenser" or any sale of
20 "liquor" or "malt or brewed beverages" by a person holding a
21 "retail liquor license" within the meaning of and pursuant to
22 the provisions of the "Liquor Code," but shall include any sale
23 of "liquor" or "malt or brewed beverages" other than pursuant to
24 the provisions of the "Liquor Code."
25 (11) The rendition for a consideration of lobbying services.
26 (12) The rendition for a consideration of adjustment
27 services, collection services or credit reporting services.
28 (13) The rendition for a consideration of secretarial or
29 editing services.
30 (14) The rendition for a consideration of disinfecting or
19970H0134B1706 - 15 -
1 pest control services, building maintenance or cleaning
2 services.
3 (15) The rendition for a consideration of employment agency
4 services or help supply services.
5 [(16) The rendition for a consideration of computer <--
6 programming services; computer-integrated systems design
7 services; computer processing, data preparation or processing
8 services; information retrieval services; computer facilities
9 management services; or other computer-related services. At a
10 minimum, such services shall not include services that are part
11 of electronic fund transfers, electronic financial transactions
12 or services, banking or trust services, or management or
13 administrative services, including transfer agency, shareholder,
14 custodial and portfolio accounting services, provided directly
15 to any entity that duly qualifies to be taxed as a regulated
16 investment company or a real estate investment trust under the
17 provisions of the Internal Revenue Code of 1986 (Public Law 99-
18 514, 26 U.S.C. § 1 et seq.) or to an entity that provides such
19 services to an entity so qualifying.] <--
20 [(17) The rendition for a consideration of lawn care <--
21 service.] <--
22 (18) The rendition for a consideration of self-storage
23 service.
24 * * *
25 (o) "Use."
26 (1) The exercise of any right or power incidental to the
27 ownership, custody or possession of tangible personal property
28 and shall include, but not be limited to transportation, storage
29 or consumption.
30 (2) The obtaining by a purchaser of the service of printing
19970H0134B1706 - 16 -
1 or imprinting of tangible personal property when such purchaser
2 furnishes, either directly or indirectly, the articles used in
3 the printing or imprinting.
4 (3) The obtaining by a purchaser of the services of (i)
5 washing, cleaning, waxing, polishing or lubricating of motor
6 vehicles whether or not any tangible personal property is
7 transferred to the purchaser in conjunction with such services,
8 and (ii) inspecting motor vehicles pursuant to the mandatory
9 requirements of "The Vehicle Code."
10 (4) The obtaining by a purchaser of the service of
11 repairing, altering, mending, pressing, fitting, dyeing,
12 laundering, drycleaning or cleaning tangible personal property
13 other than wearing apparel or shoes or applying or installing
14 tangible personal property as a repair or replacement part of
15 other tangible personal property other than wearing apparel or
16 shoes, whether or not the services are performed directly or by
17 any means other than by means of coin-operated self-service
18 laundry equipment for wearing apparel or household goods, and
19 whether or not any tangible personal property is transferred to
20 the purchaser in conjunction therewith, except such services as
21 are obtained in the construction, reconstruction, remodeling,
22 repair or maintenance of real estate: Provided, however, That
23 this subclause shall not be deemed to impose tax upon such
24 services in the preparation for sale of new items which are
25 excluded from the tax under clause (26) of section 204, or upon
26 diaper service: And provided further, That the term "use" shall
27 not include--
28 (A) Any tangible personal property acquired and kept,
29 retained or over which power is exercised within this
30 Commonwealth on which the taxing of the storage, use or other
19970H0134B1706 - 17 -
1 consumption thereof is expressly prohibited by the Constitution
2 of the United States or which is excluded from tax under other
3 provisions of this article.
4 (B) The use or consumption of tangible personal property,
5 including but not limited to machinery and equipment and parts
6 therefor, and supplies or the obtaining of the services
7 described in subclauses (2), (3) and (4) of this clause directly
8 in the operations of--
9 (i) The manufacture of tangible personal property;
10 (ii) Farming, dairying, agriculture, horticulture or
11 floriculture when engaged in as a business enterprise. The term
12 "farming" shall include the propagation and raising of ranch-
13 raised furbearing animals and the propagation of game birds for
14 commercial purposes by holders of propagation permits issued
15 under 34 Pa.C.S. (relating to game);
16 (iii) The producing, delivering or rendering of a public
17 utility service, or in constructing, reconstructing, remodeling,
18 repairing or maintaining the facilities which are directly used
19 in producing, delivering or rendering such service;
20 (iv) Processing as defined in subclause (d) of this section.
21 The exclusions provided in subparagraphs (i), (ii), (iii) and
22 (iv) shall not apply to any vehicle required to be registered
23 under The Vehicle Code except those vehicles directly used by a
24 public utility engaged in the business as a common carrier; to
25 maintenance facilities; or to materials, supplies or equipment
26 to be used or consumed in the construction, reconstruction,
27 remodeling, repair or maintenance of real estate other than
28 directly used machinery, equipment, parts or foundations
29 therefor that may be affixed to such real estate. The exclusions
30 provided in subparagraphs (i), (ii), (iii) and (iv) shall not
19970H0134B1706 - 18 -
1 apply to tangible personal property or services to be used or
2 consumed in managerial sales or other nonoperational activities,
3 nor to the purchase or use of tangible personal property or
4 services by any person other than the person directly using the
5 same in the operations described in subparagraphs (i), (ii),
6 (iii) and (iv).
7 The exclusion provided in subparagraph (iii) shall not apply
8 to (A) construction materials, supplies or equipment used to
9 construct, reconstruct, remodel, repair or maintain facilities
10 not used directly by the purchaser in the production, delivering
11 or rendition of public utility service or (B) tools and
12 equipment used but not installed in the maintenance of
13 facilities used directly in the production, delivering or
14 rendition of a public utility service.
15 The exclusion provided in subparagraphs (i), (ii), (iii) and
16 (iv) shall not apply to the services enumerated in clauses
17 (o)(9) through (14) and (16) and (w) through (ii) and (kk), <--
18 except that the exclusion provided in subparagraph (ii) for
19 farming, dairying and agriculture shall apply to the service
20 enumerated in clause (z).
21 (5) Where tangible personal property or services are
22 utilized for purposes constituting a "use," as herein defined,
23 and for purposes excluded from the definition of "use," it shall
24 be presumed that such property or services are utilized for
25 purposes constituting a "sale at retail" and subject to tax
26 unless the user thereof proves to the department that the
27 predominant purposes for which such property or services are
28 utilized do not constitute a "sale at retail."
29 (6) The term "use" with respect to "liquor" and "malt or
30 brewed beverages" shall include the purchase of "liquor" from
19970H0134B1706 - 19 -
1 any "Pennsylvania liquor store" by any person for any purpose
2 and the purchase of "malt or brewed beverages" from a
3 "manufacturer of malt or brewed beverages," "distributor" or
4 "importing distributor" by any person for any purpose, except
5 purchases from a "manufacturer of malt or brewed beverages" by a
6 "distributor" or "importing distributor," or purchases from an
7 "importing distributor" by a "distributor" within the meaning of
8 the "Liquor Code." The term "use" shall not include any purchase
9 of "malt or brewed beverages" from a "retail dispenser" or any
10 purchase of "liquor" or "malt or brewed beverages" from a person
11 holding a "retail liquor license" within the meaning of and
12 pursuant to the provisions of the "Liquor Code," but shall
13 include the exercise of any right or power incidental to the
14 ownership, custody or possession of "liquor" or "malt or brewed
15 beverages" obtained by the person exercising such right or power
16 in any manner other than pursuant to the provisions of the
17 "Liquor Code."
18 (7) The use of tangible personal property purchased at
19 retail upon which the services described in subclauses (2), (3)
20 and (4) of this clause have been performed shall be deemed to be
21 a use of said services by the person using said property.
22 (8) The term "use" shall not include the providing of a
23 motor vehicle to a nonprofit private or public school to be used
24 by such a school for the sole purpose of driver education.
25 (9) The obtaining by the purchaser of lobbying services.
26 (10) The obtaining by the purchaser of adjustment services,
27 collection services or credit reporting services.
28 (11) The obtaining by the purchaser of secretarial or
29 editing services.
30 (12) The obtaining by the purchaser of disinfecting or pest
19970H0134B1706 - 20 -
1 control services, building maintenance or cleaning services.
2 (13) The obtaining by the purchaser of employment agency
3 services or help supply services.
4 [(14) The obtaining by the purchaser of computer programming <--
5 services; computer-integrated systems design services; computer
6 processing, data preparation or processing services; information
7 retrieval services; computer facilities management services; or
8 other computer-related services. At a minimum, such services
9 shall not include services that are part of electronic fund
10 transfers, electronic financial transactions or services,
11 banking or trust services, or management or administrative
12 services, including transfer agency, shareholder, custodial and
13 portfolio accounting services, provided directly to any entity
14 that duly qualifies to be taxed as a regulated investment
15 company or a real estate investment trust under the provisions
16 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
17 U.S.C. § 1 et seq.) or to an entity that provides such services
18 to an entity so qualifying.] <--
19 [(15) The obtaining by the purchaser of lawn care service.] <--
20 (16) The obtaining by the purchaser of self-storage service.
21 * * *
22 [(jj) "Lawn care service." Providing services for lawn <--
23 upkeep, including, but not limited to, fertilizing, lawn mowing,
24 shrubbery trimming or other lawn treatment services.]
25 [(DD) "COMPUTER PROGRAMMING SERVICES." PROVIDING COMPUTER <--
26 PROGRAMMING OR COMPUTER SOFTWARE DESIGN AND ANALYSIS. SUCH
27 SERVICES INCLUDE, BUT ARE NOT LIMITED TO, SERVICES OF THE TYPE
28 PROVIDED BY OR THROUGH COMPUTER PROGRAMMING SERVICES, CUSTOMER
29 COMPUTER PROGRAMMING SERVICES, COMPUTER CODE AUTHORS AND FREE-
30 LANCE COMPUTER SOFTWARE WRITERS, SOFTWARE MODIFICATION, CUSTOM
19970H0134B1706 - 21 -
1 SOFTWARE PROGRAMMING, CUSTOM COMPUTER PROGRAMS OR SYSTEM
2 SOFTWARE DEVELOPMENT, CUSTOM COMPUTER SOFTWARE SYSTEMS ANALYSIS
3 AND DESIGN, CUSTOM APPLICATIONS SOFTWARE PROGRAMMING, COMPUTER
4 CODE AUTHORS OR FREE-LANCE COMPUTER SOFTWARE WRITERS.
5 (EE) "COMPUTER INTEGRATED SYSTEMS DESIGN." DEVELOPING OR
6 MODIFYING COMPUTER SOFTWARE AND PACKAGING OR BUNDLING THE
7 SOFTWARE WITH COMPUTER HARDWARE (COMPUTERS AND COMPUTER
8 PERIPHERAL EQUIPMENT) TO CREATE AND MARKET AN INTEGRATED SYSTEM
9 FOR SPECIFIC APPLICATION. A BUSINESS IS PROVIDING SUCH SERVICES
10 UNDER THIS CLAUSE ONLY IF IT PROVIDES EACH OF THE FOLLOWING
11 SERVICES:
12 (1) THE DEVELOPMENT OR MODIFICATION OF THE COMPUTER
13 SOFTWARE;
14 (2) THE MARKETING OF COMPUTER HARDWARE; AND
15 (3) INVOLVEMENT IN ALL PHASES OF SYSTEMS DEVELOPMENT FROM
16 DESIGN THROUGH INSTALLATION.
17 SUCH SERVICES UNDER THIS CLAUSE INCLUDE, BUT ARE NOT LIMITED TO,
18 COMPUTER SYSTEMS INTEGRATION, COMPUTER NETWORK SYSTEMS
19 INTEGRATION, LOCAL AREA NETWORK (LAN) SYSTEMS INTEGRATION,
20 OFFICE AUTOMATION, COMPUTER SYSTEMS VALUE-ADDED RESELLERS,
21 COMPUTER SYSTEMS TURNKEY VENDORS, COMPUTER-AIDED DESIGN (CAD)
22 SYSTEMS SERVICES, COMPUTER-AIDED ENGINEERING (CAE) SYSTEMS
23 SERVICES OR COMPUTER-AIDED MANUFACTURING (CAM) SYSTEMS SERVICES.
24 (FF) "COMPUTER PROCESSING, DATA PREPARATION OR PROCESSING
25 SERVICES." SUCH SERVICES INCLUDE, BUT ARE NOT LIMITED TO,
26 PROVIDING PROCESSING AND PREPARATION OF REPORTS FROM DATA
27 SUPPLIED BY THE CUSTOMER OR A SPECIALIZED SERVICE, SUCH AS DATA
28 ENTRY; MAKING DATA PROCESSING EQUIPMENT AVAILABLE ON AN HOURLY,
29 TIME-SHARING OR OTHER BASIS; COMPUTER TIMESHARING AND LEASING OR
30 RENTAL OF COMPUTER TIME; COMPUTER TABULATING AND CALCULATING
19970H0134B1706 - 22 -
1 SERVICES; DATA ENTRY, PROCESSING OR VERIFICATION SERVICES;
2 KEYPUNCH SERVICES; OR OPTICAL SCANNING DATA SERVICES.
3 (GG) "INFORMATION RETRIEVAL SERVICES." PROVIDING COMPUTER
4 ON-LINE INFORMATION RETRIEVAL SERVICES. SUCH SERVICES INCLUDE,
5 BUT ARE NOT LIMITED TO, DATA BASE INFORMATION RETRIEVAL
6 SERVICES, ON-LINE INFORMATION RETRIEVAL SERVICES, ON-LINE DATA
7 BASE INFORMATION RETRIEVAL SERVICES OR REMOTE DATA BASE
8 INFORMATION RETRIEVAL SERVICES.
9 (HH) "COMPUTER FACILITIES MANAGEMENT SERVICES." PROVIDING
10 ONSITE MANAGEMENT OR CONTROLLING THE OPERATION OF DATA
11 PROCESSING FACILITIES OR SIMILAR SERVICES.
12 (II) "OTHER COMPUTER-RELATED SERVICES." SUPPLYING COMPUTER-
13 RELATED SERVICES NOT DESCRIBED ELSEWHERE IN CLAUSES (DD) THROUGH
14 (HH). SUCH SERVICES INCLUDE, BUT ARE NOT LIMITED TO, COMPUTER
15 CONSULTING SERVICES; DATA BASE DEVELOPMENT AND DATA PROCESSING
16 CONSULTING SERVICES; DISK, DISKETTE OR TAPE CONVERSION SERVICES;
17 DISK, DISKETTE OR TAPE RECERTIFICATION SERVICES; COMPUTER
18 HARDWARE AND SOFTWARE REQUIREMENT ANALYSIS SERVICES; SOFTWARE
19 DOCUMENTATION SERVICES; SOFTWARE INSTALLATION SERVICES; SOFTWARE
20 TRAINING SERVICES IF PROVIDED IN CONJUNCTION WITH THE PURCHASE
21 OF SOFTWARE; OR REFORMATTING OR EDITING SERVICES.]
22 * * *
23 (LL) "PREMIUM CABLE OR PREMIUM VIDEO PROGRAMMING SERVICE." <--
24 THAT PORTION OF CABLE TELEVISION SERVICES, VIDEO PROGRAMMING
25 SERVICES, COMMUNITY ANTENNA TELEVISION SERVICES OR ANY OTHER
26 DISTRIBUTION OF TELEVISION, VIDEO, AUDIO OR RADIO SERVICES WHICH
27 MEETS ALL OF THE FOLLOWING CRITERIA:
28 (1) IS TRANSMITTED WITH OR WITHOUT THE USE OF WIRES TO
29 PURCHASERS; [AND]
30 (2) WHICH CONSISTS SUBSTANTIALLY OF PROGRAMMING
19970H0134B1706 - 23 -
1 UNINTERRUPTED BY PAID COMMERCIAL ADVERTISING WHICH INCLUDES, BUT
2 IS NOT LIMITED TO, PROGRAMMING PRIMARILY COMPOSED OF
3 UNINTERRUPTED FULL-LENGTH MOTION PICTURES OR SPORTING EVENTS,
4 PAY-PER-VIEW, PAID PROGRAMMING OR LIKE AUDIO OR RADIO
5 BROADCASTING[.]; AND
6 (3) DOES NOT CONSTITUTE A COMPONENT OF A BASIC SERVICE TIER
7 PROVIDED BY A CABLE TELEVISION SYSTEM OR A CABLE PROGRAMMING
8 SERVICE TIER PROVIDED BY A CABLE TELEVISION SYSTEM. A BASIC
9 SERVICE TIER SHALL INCLUDE ALL SIGNALS OF DOMESTIC TELEVISION
10 BROADCAST STATIONS, ANY PUBLIC, EDUCATIONAL, GOVERNMENTAL OR
11 RELIGIOUS PROGRAMMING AND ANY ADDITIONAL VIDEO PROGRAMMING
12 SIGNALS OR SERVICE ADDED TO THE BASIC SERVICE TIER BY THE CABLE
13 OPERATOR. THE BASIC SERVICE TIER SHALL ALSO INCLUDE A SINGLE
14 ADDITIONAL LOWER-PRICED PACKAGE OF BROADCAST CHANNELS AND ACCESS
15 INFORMATION CHANNELS WHICH IS A SUBSET OF THE BASIC SERVICE TIER
16 AS SET FORTH ABOVE. A CABLE PROGRAMMING SERVICE TIER INCLUDES
17 ANY VIDEO PROGRAMMING OTHER THAN: (I) THE BASIC SERVICE TIER;
18 (II) VIDEO PROGRAMMING OFFERED ON A PAY-PER-CHANNEL OR PAY-PER-
19 VIEW BASIS; OR (III) A COMBINATION OF MULTIPLE CHANNELS OF PAY-
20 PER-CHANNEL OR PAY-PER-VIEW PROGRAMMING OFFERED AS A PACKAGE.
21 IF A PURCHASER RECEIVES OR AGREES TO RECEIVE PREMIUM CABLE OR
22 PREMIUM VIDEO PROGRAMMING SERVICE, THEN THE FOLLOWING CHARGES
23 ARE INCLUDED IN THE PURCHASE PRICE: CHARGES FOR INSTALLATION OR
24 REPAIR OF ANY PREMIUM CABLE OR PREMIUM VIDEO PROGRAMMING
25 SERVICE, UPGRADE TO INCLUDE ADDITIONAL PREMIUM CABLE OR PREMIUM
26 VIDEO PROGRAMMING SERVICE, DOWNGRADE TO EXCLUDE ALL OR SOME
27 PREMIUM CABLE OR PREMIUM VIDEO PROGRAMMING SERVICE, ADDITIONAL
28 PREMIUM CABLE OUTLETS IN EXCESS OF TEN OR ANY OTHER CHARGE OR
29 FEE RELATED TO PREMIUM CABLE OR PREMIUM VIDEO PROGRAMMING
30 SERVICES. THE TERM SHALL NOT APPLY TO TRANSMISSIONS BY PUBLIC
19970H0134B1706 - 24 -
1 TELEVISION, PUBLIC RADIO SERVICES OR OFFICIAL FEDERAL, STATE OR
2 LOCAL GOVERNMENT CABLE SERVICES. NOR SHALL THE TERM APPLY TO
3 LOCAL ORIGINATION PROGRAMMING WHICH PROVIDES A VARIETY OF PUBLIC
4 SERVICE PROGRAMS UNIQUE TO THE COMMUNITY, PROGRAMMING WHICH
5 PROVIDES COVERAGE OF PUBLIC AFFAIRS ISSUES WHICH ARE PRESENTED
6 WITHOUT COMMENTARY OR ANALYSIS, INCLUDING UNITED STATES
7 CONGRESSIONAL PROCEEDINGS, OR PROGRAMMING WHICH IS SUBSTANTIALLY
8 RELATED TO RELIGIOUS SUBJECTS. NOR SHALL THE TERM "PREMIUM CABLE
9 OR PREMIUM VIDEO PROGRAMMING SERVICE" APPLY TO SUBSCRIBER
10 CHARGES FOR ACCESS TO A VIDEO DIAL TONE SYSTEM OR CHARGES BY A
11 COMMON CARRIER TO A VIDEO PROGRAMMER FOR THE TRANSPORT OF VIDEO
12 PROGRAMMING.
13 Section 2. Section 301 introductory paragraph and (s.2) of <--
14 the act, amended or added August 31, 1971 (P.L.362, No.93) and
15 December 23, 1983 (P.L.370, No.90), are amended to read:
16 SECTION 2. SECTION 204 OF THE ACT IS AMENDED BY ADDING A <--
17 CLAUSE TO READ:
18 SECTION 2. SECTION 204(29) AND (52) OF THE ACT, AMENDED OR <--
19 ADDED AUGUST 4, 1991 (P.L.97, NO.22), DECEMBER 13, 1991
20 (P.L.373, NO.40) AND JUNE 30, 1995 (P.L.139, NO.21), ARE AMENDED
21 AND THE SECTION IS AMENDED BY ADDING CLAUSES TO READ:
22 SECTION 204. EXCLUSIONS FROM TAX.--THE TAX IMPOSED BY
23 SECTION 202 SHALL NOT BE IMPOSED UPON
24 * * *
25 (53) THE SALE AT RETAIL TO OR USE BY A HOTEL, AS THE WORD IS <--
26 DEFINED UNDER SECTION 209 OF THIS ARTICLE, OF COMPUTER
27 PROGRAMMING SERVICES, COMPUTER-INTEGRATED SYSTEMS DESIGN,
28 COMPUTER PROCESSING, DATA PREPARATION OR PROCESSING SERVICES,
29 INFORMATION RETRIEVAL SERVICES, COMPUTER FACILITIES MANAGEMENT
30 SERVICES, OR OTHER COMPUTER-RELATED SERVICES THAT WILL BE USED
19970H0134B1706 - 25 -
1 TO MAKE ROOM RESERVATIONS.
2 (29) THE SALE AT RETAIL OR USE OF FOOD AND BEVERAGES FOR <--
3 HUMAN CONSUMPTION, [INCLUDING CANDY AND GUM,] EXCEPT THAT THIS
4 EXCLUSION SHALL NOT APPLY WITH RESPECT TO--
5 (I) SOFT DRINKS;
6 (II) MALT AND BREWED BEVERAGES AND SPIRITUOUS AND VINOUS
7 LIQUORS;
8 (III) FOOD OR BEVERAGES, WHETHER SOLD FOR CONSUMPTION ON OR
9 OFF THE PREMISES OR ON A "TAKE-OUT" OR "TO GO" BASIS OR
10 DELIVERED TO THE PURCHASER OR CONSUMER, WHEN PURCHASED (A) FROM
11 PERSONS ENGAGED IN THE BUSINESS OF CATERING; OR (B) FROM PERSONS
12 ENGAGED IN THE BUSINESS OF OPERATING ESTABLISHMENTS FROM WHICH
13 READY-TO-EAT FOOD AND BEVERAGES ARE SOLD, INCLUDING, BUT NOT
14 LIMITED TO, RESTAURANTS, CAFES, LUNCH COUNTERS, PRIVATE AND
15 SOCIAL CLUBS, TAVERNS, DINING CARS, HOTELS, NIGHT CLUBS, FAST
16 FOOD OPERATIONS, PIZZERIAS, FAIRS, CARNIVALS, LUNCH CARTS, ICE
17 CREAM STANDS, SNACK BARS, CAFETERIAS, EMPLOYE CAFETERIAS,
18 THEATERS, STADIUMS, ARENAS, AMUSEMENT PARKS, CARRYOUT SHOPS,
19 COFFEE SHOPS AND OTHER ESTABLISHMENTS WHETHER MOBILE OR
20 IMMOBILE. FOR PURPOSES OF THIS CLAUSE, A BAKERY, A PASTRY SHOP,
21 A DONUT SHOP, A DELICATESSEN, GROCERY STORE, SUPERMARKET,
22 FARMER'S MARKET OR A CONVENIENCE STORE SHALL NOT BE CONSIDERED
23 AN ESTABLISHMENT FROM WHICH FOOD OR BEVERAGES READY TO EAT ARE
24 SOLD EXCEPT FOR THE SALE OF MEALS, SANDWICHES, FOOD FROM SALAD
25 BARS, HAND-DIPPED OR HAND-SERVED ICED BASED PRODUCTS INCLUDING
26 ICE CREAM AND YOGURT, HOT SOUP, HOT PIZZA AND OTHER HOT FOOD
27 ITEMS, BREWED COFFEE AND HOT BEVERAGES. FOR PURPOSES OF THIS
28 SUBCLAUSE, BEVERAGES SHALL NOT INCLUDE MALT AND BREWED BEVERAGES
29 AND SPIRITUOUS AND VINOUS LIQUORS BUT SHALL INCLUDE SOFT DRINKS.
30 THE SALE AT RETAIL OF FOOD AND BEVERAGES AT OR FROM A SCHOOL OR
19970H0134B1706 - 26 -
1 CHURCH IN THE ORDINARY COURSE OF THE ACTIVITIES OF SUCH
2 ORGANIZATION IS NOT SUBJECT TO TAX.
3 * * *
4 [(52) THE SALE AT RETAIL OR USE OF COMPUTER SERVICES TO
5 KEYPUNCH, COUNT, SORT, TABULATE OR OTHERWISE PREPARE FOR PAYMENT
6 PROMOTIONAL PRICE REDUCTION OFFERS SUCH AS DISCOUNT COUPONS,
7 "CENTS-OFF" COUPONS AND REBATE OFFERS.]
8 (53) THE SALE AT RETAIL OR USE OF CANDY OR GUM REGARDLESS OF
9 THE LOCATION FROM WHICH THE CANDY OR GUM IS SOLD.
10 (54) THE SALE AT RETAIL TO OR USE BY A PRODUCER OF
11 COMMERCIAL MOTION PICTURES OF ANY TANGIBLE PERSONAL PROPERTY
12 DIRECTLY USED IN THE PRODUCTION OF A FEATURE-LENGTH COMMERCIAL
13 MOTION PICTURE DISTRIBUTED TO A NATIONAL AUDIENCE: PROVIDED,
14 HOWEVER, THAT THE PRODUCTION OF ANY MOTION PICTURE FOR WHICH THE
15 PROPERTY WILL BE USED DOES NOT VIOLATE ANY FEDERAL OR STATE LAW;
16 AND, PROVIDED FURTHER, THAT THE PURCHASER SHALL FURNISH TO THE
17 VENDOR A CERTIFICATE SUBSTANTIALLY IN THE FORM AS THE DEPARTMENT
18 OF COMMUNITY AND ECONOMIC DEVELOPMENT MAY, BY REGULATION,
19 PRESCRIBE, STATING THAT THE SALE IS EXEMPT FROM TAX PURSUANT TO
20 THIS CLAUSE.
21 SECTION 3. SECTION 253 OF THE ACT, AMENDED APRIL 8, 1976
22 (P.L.92, NO.38) AND JULY 1, 1985 (P.L.78, NO.29), IS AMENDED TO
23 READ:
24 SECTION 253. REFUND PETITION.--(A) EXCEPT AS PROVIDED FOR
25 IN SECTION 256 AND IN SUBSECTION (B) AND (D) OF THIS SECTION,
26 THE REFUND OR CREDIT OF TAX, INTEREST OR PENALTY PROVIDED FOR BY
27 SECTION 252 SHALL BE MADE ONLY WHERE THE PERSON WHO HAS ACTUALLY
28 PAID THE TAX FILES A PETITION FOR REFUND WITH THE DEPARTMENT
29 [WITHIN THREE YEARS OF THE ACTUAL PAYMENT OF THE TAX TO THE
30 COMMONWEALTH] UNDER SECTION 3003.1. SUCH PETITION FOR REFUND
19970H0134B1706 - 27 -
1 MUST SET FORTH IN REASONABLE DETAIL THE GROUNDS UPON WHICH THE
2 TAXPAYER CLAIMS THAT THE COMMONWEALTH IS NOT RIGHTFULLY ENTITLED
3 TO SUCH TAX, INTEREST OR PENALTY, IN WHOLE OR IN PART, AND SHALL
4 BE ACCOMPANIED BY AN AFFIDAVIT AFFIRMING THAT THE FACTS
5 CONTAINED THEREIN ARE TRUE AND CORRECT. THE DEPARTMENT MAY HOLD
6 SUCH HEARINGS AS MAY BE NECESSARY FOR THE PURPOSE AT SUCH TIMES
7 AND PLACES AS IT MAY DETERMINE, AND EACH PERSON WHO HAS DULY
8 FILED A REFUND PETITION SHALL BE NOTIFIED BY THE DEPARTMENT OF
9 THE TIME WHEN, AND THE PLACE WHERE, SUCH HEARING IN HIS CASE
10 WILL BE HELD.
11 (B) A REFUND OR CREDIT OF TAX, INTEREST OR PENALTY, PAID AS
12 A RESULT OF AN ASSESSMENT MADE BY THE DEPARTMENT UNDER SECTION
13 231, SHALL BE MADE ONLY WHERE THE PERSON WHO HAS ACTUALLY PAID
14 THE TAX FILES WITH THE DEPARTMENT A PETITION FOR A REFUND WITH
15 THE DEPARTMENT [WITHIN SIX MONTHS AFTER THE DATE THE NOTICE OF
16 ASSESSMENT WAS MAILED] UNDER SECTION 3003.1(D). THE FILING OF A
17 PETITION FOR REFUND, UNDER THE PROVISIONS OF THIS SUBSECTION,
18 SHALL NOT AFFECT THE ABATEMENT OF INTEREST, ADDITIONS OR
19 PENALTIES TO WHICH THE PERSON MAY BE ENTITLED BY REASON OF HIS
20 PAYMENT OF THE ASSESSMENT.
21 (C) IT SHALL BE THE DUTY OF THE DEPARTMENT, WITHIN SIX
22 MONTHS AFTER RECEIVING A PETITION FOR REFUND, TO DISPOSE OF THE
23 ISSUE RAISED BY SUCH PETITION, AND MAIL NOTICE OF THE
24 DEPARTMENT'S DECISION TO THE PETITIONER: PROVIDED, HOWEVER, THAT
25 THE TAXPAYER AND THE DEPARTMENT MAY, BY STIPULATION, EXTEND SUCH
26 DISPOSAL TIME BY NOT MORE THAN SIX ADDITIONAL MONTHS.
27 (D) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION
28 WHERE ANY TAX, INTEREST OR PENALTY HAS BEEN PAID UNDER A
29 PROVISION OF THIS ARTICLE SUBSEQUENTLY HELD BY FINAL JUDGMENT OF
30 A COURT OF COMPETENT JURISDICTION TO BE UNCONSTITUTIONAL, OR
19970H0134B1706 - 28 -
1 UNDER AN INTERPRETATION OF SUCH PROVISION SUBSEQUENTLY HELD BY
2 SUCH COURT TO BE ERRONEOUS, A PETITION FOR REFUND MAY BE FILED
3 EITHER BEFORE OR SUBSEQUENT TO FINAL JUDGMENT, BUT SUCH PETITION
4 MUST BE FILED [WITHIN THREE YEARS OF THE DATE OF THE PAYMENT OF
5 WHICH A REFUND IS REQUESTED] UNDER SECTION 3003.1. THE
6 DEPARTMENT SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY
7 SUCH PETITION FILED PRIOR TO SUCH FINAL JUDGMENT ONLY IF, AT THE
8 TIME OF FILING OF THE PETITION, PROCEEDINGS ARE PENDING IN A
9 COURT OF COMPETENT JURISDICTION WHEREIN THE CLAIM OF
10 UNCONSTITUTIONALITY OR OF ERRONEOUS INTERPRETATION, MADE IN THE
11 PETITION FOR REFUND MAY BE ESTABLISHED, AND IN SUCH CASE, THE
12 DEPARTMENT SHALL NOT TAKE FINAL ACTION UPON THE PETITION FOR
13 REFUND UNTIL THE JUDGMENT DETERMINING THE QUESTION INVOLVED IN
14 SUCH PETITION HAS BECOME FINAL.
15 SECTION 4. SECTION 266(D) OF THE ACT IS AMENDED TO READ:
16 SECTION 266. ADDITIONS TO TAX.--* * *
17 [(D) UNCOLLECTIBLE CHECKS. WHENEVER ANY CHECK ISSUED IN
18 PAYMENT OF ANY TAX OR FOR ANY OTHER PURPOSE SHALL BE RETURNED TO
19 THE DEPARTMENT AS UNCOLLECTIBLE, THE SECRETARY SHALL CHARGE A
20 FEE OF TEN PER CENT OF THE FACE AMOUNT THEREOF PLUS ALL PROTEST
21 FEES, TO THE PERSON PRESENTING SUCH CHECK TO HIM TO COVER THE
22 COST OF ITS COLLECTION IN ADDITION TO THE INTEREST AND PENALTIES
23 OTHERWISE PROVIDED FOR BY THIS ARTICLE: PROVIDED, HOWEVER, THAT
24 THE ADDITIONS IMPOSED HEREBY SHALL NOT EXCEED TWO HUNDRED
25 DOLLARS ($200) NOR BE LESS THAN TEN DOLLARS ($10).]
26 SECTION 3 5. SECTION 301 INTRODUCTORY PARAGRAPH, (C.2), (D), <--
27 (D.1), (E.1) AND (S.2) OF THE ACT, AMENDED OR ADDED AUGUST 31,
28 1971 (P.L.362, NO.93), DECEMBER 23, 1983 (P.L.370, NO.90),
29 DECEMBER 13, 1991 (P.L.373, NO.40) AND JUNE 30, 1995 (P.L.139,
30 NO.21), ARE AMENDED AND THE SECTION IS AMENDED BY ADDING CLAUSES
19970H0134B1706 - 29 -
1 TO READ:
2 Section 301. Definitions.--The following words, terms and
3 phrases when used in this article shall have the meaning
4 ascribed to them in this section except where the context
5 clearly indicates a different meaning. [Any] Unless specifically
6 provided otherwise, any reference in this article to the
7 Internal Revenue Code shall include the Internal Revenue Code of
8 [1954] 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.), as <--
9 amended to [the date on which this article is effective] JANUARY <--
10 1, 1997:
11 * * *
12 (C.2) "CLAIMANT" MEANS A PERSON WHO IS SUBJECT TO THE TAX <--
13 IMPOSED UNDER THIS ARTICLE, IS NOT A DEPENDENT OF ANOTHER
14 [PERSON] TAXPAYER FOR PURPOSES OF SECTION 151 OF THE INTERNAL
15 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 151), BUT
16 IS ENTITLED TO CLAIM AGAINST SUCH TAX THE POVERTY TAX PROVISIONS
17 AS PROVIDED BY THIS ACT.
18 (D) "COMPENSATION" MEANS AND SHALL INCLUDE SALARIES, WAGES,
19 COMMISSIONS, BONUSES AND INCENTIVE PAYMENTS WHETHER BASED ON
20 PROFITS OR OTHERWISE, FEES, TIPS AND SIMILAR REMUNERATION
21 RECEIVED FOR SERVICES RENDERED, WHETHER DIRECTLY OR THROUGH AN
22 AGENT, AND WHETHER IN CASH OR IN PROPERTY.
23 THE TERM "COMPENSATION" SHALL NOT MEAN OR INCLUDE: (I)
24 PERIODIC PAYMENTS FOR SICKNESS AND DISABILITY OTHER THAN REGULAR
25 WAGES RECEIVED DURING A PERIOD OF SICKNESS OR DISABILITY; OR
26 (II) DISABILITY, RETIREMENT OR OTHER PAYMENTS ARISING UNDER
27 WORKMEN'S COMPENSATION ACTS, OCCUPATIONAL DISEASE ACTS AND
28 SIMILAR LEGISLATION BY ANY GOVERNMENT; OR (III) PAYMENTS
29 COMMONLY RECOGNIZED AS OLD AGE OR RETIREMENT BENEFITS PAID TO
30 PERSONS RETIRED FROM SERVICE AFTER REACHING A SPECIFIC AGE OR
19970H0134B1706 - 30 -
1 AFTER A STATED PERIOD OF EMPLOYMENT; OR (IV) PAYMENTS COMMONLY
2 KNOWN AS PUBLIC ASSISTANCE, OR UNEMPLOYMENT COMPENSATION
3 PAYMENTS BY ANY GOVERNMENTAL AGENCY; OR (V) PAYMENTS TO
4 REIMBURSE ACTUAL EXPENSES; OR (VI) PAYMENTS MADE BY EMPLOYERS OR
5 LABOR UNIONS [FOR], INCLUDING PAYMENTS MADE PURSUANT TO A
6 CAFETERIA PLAN QUALIFYING UNDER SECTION 125 OF THE INTERNAL
7 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 125 ET
8 SEQ.), FOR EMPLOYE BENEFIT PROGRAMS COVERING HOSPITALIZATION,
9 SICKNESS, DISABILITY OR DEATH, SUPPLEMENTAL UNEMPLOYMENT
10 BENEFITS[,] OR STRIKE BENEFITS[, SOCIAL SECURITY AND
11 RETIREMENT]: PROVIDED, THAT THE PROGRAM DOES NOT DISCRIMINATE IN
12 FAVOR OF HIGHLY COMPENSATED INDIVIDUALS AS TO ELIGIBILITY TO
13 PARTICIPATE, PAYMENTS OR PROGRAM BENEFITS; OR (VII) ANY
14 COMPENSATION RECEIVED BY UNITED STATES SERVICEMEN SERVING IN A
15 COMBAT ZONE; OR (VIII) PAYMENTS RECEIVED BY A FOSTER PARENT FOR
16 IN-HOME CARE OF FOSTER CHILDREN FROM AN AGENCY OF THE
17 COMMONWEALTH OR A POLITICAL SUBDIVISION THEREOF OR AN
18 ORGANIZATION EXEMPT FROM FEDERAL TAX UNDER SECTION 501(C)(3) OF
19 THE INTERNAL REVENUE CODE OF 1954 WHICH IS LICENSED BY THE
20 COMMONWEALTH OR A POLITICAL SUBDIVISION THEREOF AS A PLACEMENT
21 AGENCY[.]; OR (IX) PAYMENTS MADE BY EMPLOYERS OR LABOR UNIONS
22 FOR EMPLOYE BENEFIT PROGRAMS COVERING SOCIAL SECURITY OR
23 RETIREMENT.
24 (D.1) "CORPORATION," [AS USED IN THE DEFINITION OF A "SMALL <--
25 CORPORATION" IN THIS SECTION AND] FOR PURPOSES OF APPLYING THE
26 PROVISIONS OF SECTION 303(A) WITH RESPECT TO A "REORGANIZATION"
27 AS DEFINED IN THAT SECTION, THE TERM "CORPORATION" SHALL INCLUDE
28 A BUSINESS TRUST TO WHICH 15 PA.C.S. CH. 95 (RELATING TO
29 BUSINESS TRUSTS) APPLIES [AND], A COMMON LAW BUSINESS TRUST OR A
30 LIMITED LIABILITY COMPANY, THAT FOR FEDERAL INCOME TAX PURPOSES
19970H0134B1706 - 31 -
1 IS TAXABLE AS A CORPORATION OR AN INVESTMENT COMPANY. [THE TERM
2 DOES NOT INCLUDE:
3 (1) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS
4 A REAL ESTATE INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL
5 REVENUE CODE OR A QUALIFIED REAL ESTATE INVESTMENT TRUST
6 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OR
7 ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES
8 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE,
9 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND
10 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL
11 ESTATE INVESTMENT TRUST SUBSIDIARIES. A QUALIFIED REAL ESTATE
12 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL
13 REVENUE CODE SHALL BE TREATED AS PART OF THE REAL ESTATE
14 INVESTMENT TRUST THAT OWNS ALL OF THE STOCK OF THE QUALIFIED
15 REAL ESTATE INVESTMENT TRUST SUBSIDIARY.
16 (2) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS
17 A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL
18 REVENUE CODE AND IS REGISTERED WITH THE UNITED STATES SECURITIES
19 AND EXCHANGE COMMISSION UNDER THE INVESTMENT COMPANY ACT OF 1940
20 OR ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES
21 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE,
22 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS OF
23 REGULATED INVESTMENT COMPANIES.]
24 * * *
25 (E.1) "DEPENDENT" MEANS A [SPOUSE OR CHILD WHO DERIVES MORE
26 THAN ONE-HALF OF HIS TOTAL SUPPORT DURING THE ENTIRE TAXABLE
27 YEAR FROM A CLAIMANT ENTITLED TO CLAIM THE POVERTY EXEMPTION.
28 ANY PERSON WHO IS A DEPENDENT PURSUANT TO THE PROVISIONS OF THE
29 INTERNAL REVENUE CODE DURING A TAXABLE YEAR SHALL PRIMA FACIE BE
30 DEEMED A DEPENDENT FOR PURPOSES OF THIS ACT.] CHILD WHO IS THE
19970H0134B1706 - 32 -
1 DEPENDENT OF A CLAIMANT FOR PURPOSES OF SECTION 151 OF THE
2 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. §
3 151).
4 * * *
5 (N.0) "PARTNERSHIP" MEANS A DOMESTIC OR FOREIGN GENERAL <--
6 PARTNERSHIP, JOINT VENTURE, LIMITED PARTNERSHIP, LIMITED
7 LIABILITY COMPANY, BUSINESS TRUST OR OTHER UNINCORPORATED ENTITY
8 THAT FOR FEDERAL INCOME TAX PURPOSES IS TAXABLE AS A
9 PARTNERSHIP.
10 * * *
11 (O.3) "QUALIFIED SUBCHAPTER S SUBSIDIARY" MEANS A DOMESTIC
12 OR FOREIGN CORPORATION WHICH, FOR FEDERAL INCOME TAX PURPOSES,
13 IS TREATED AS A QUALIFIED SUBCHAPTER S SUBSIDIARY, AS DEFINED IN
14 SECTION 1361(B)(3)(B) OF THE INTERNAL REVENUE CODE OF 1986
15 (PUBLIC LAW 99-514, 26 U.S.C. § 1361), AS AMENDED TO JANUARY 1,
16 1997.
17 * * *
18 (s.2) "Small corporation" means any corporation which has a
19 valid election in effect under subchapter S of Chapter 1 of the
20 [Internal Revenue Code of 1954, as amended as of January 1,
21 1983] Internal Revenue Code of 1986, as amended by the act of <--
22 August 20, 1996, (Public Law 104-188) TO JANUARY 1, 1997, and <--
23 which does not have passive investment income in excess of
24 twenty-five per cent of its gross receipts. For purposes of this
25 clause, "passive investment income" means gross receipts derived
26 from royalties, rents, dividends, interest, annuities and sales
27 or exchanges of stock or securities (gross receipts from such
28 sales or exchanges being taken into account only to the extent
29 of gains therefrom). FOR PURPOSES OF DETERMINING WHETHER A <--
30 CORPORATION QUALIFIES AS A SMALL CORPORATION FOR PURPOSES OF
19970H0134B1706 - 33 -
1 THIS ARTICLE, (I) A QUALIFIED SUBCHAPTER S SUBSIDIARY OWNED BY A
2 SMALL CORPORATION SHALL NOT BE TREATED AS A SEPARATE
3 CORPORATION, AND ALL GROSS RECEIPTS AND PASSIVE INVESTMENT
4 INCOME OF SUCH QUALIFIED SUBCHAPTER S SUBSIDIARY SHALL BE
5 TREATED AS EARNED BY THE PARENT CORPORATION AND (II) ALL INTER-
6 CORPORATE PAYMENTS OR DISTRIBUTIONS BETWEEN THE PARENT
7 CORPORATION AND ANY QUALIFIED SUBCHAPTER S SUBSIDIARY OWNED BY
8 SUCH CORPORATION SHALL BE ELIMINATED.
9 * * *
10 SECTION 6. SECTION 303(A)(3) OF THE ACT, AMENDED JULY 13, <--
11 1987 (P.L.325, NO.59) AND DECEMBER 3, 1993 (P.L.473, NO.68), IS
12 AMENDED TO READ:
13 SECTION 303. CLASSES OF INCOME.--(A) THE CLASSES OF INCOME
14 REFERRED TO ABOVE ARE AS FOLLOWS:
15 * * *
16 (3) NET GAINS OR INCOME FROM DISPOSITION OF PROPERTY. NET
17 GAINS OR NET INCOME, LESS NET LOSSES, DERIVED FROM THE SALE,
18 EXCHANGE OR OTHER DISPOSITION OF PROPERTY, INCLUDING REAL
19 PROPERTY, TANGIBLE PERSONAL PROPERTY, INTANGIBLE PERSONAL
20 PROPERTY OR OBLIGATIONS ISSUED ON OR AFTER THE EFFECTIVE DATE OF
21 THIS AMENDATORY ACT BY THE COMMONWEALTH; ANY PUBLIC AUTHORITY,
22 COMMISSION, BOARD OR OTHER AGENCY CREATED BY THE COMMONWEALTH;
23 ANY POLITICAL SUBDIVISION OF THE COMMONWEALTH OR ANY PUBLIC
24 AUTHORITY CREATED BY ANY SUCH POLITICAL SUBDIVISION; OR BY THE
25 FEDERAL GOVERNMENT AS DETERMINED IN ACCORDANCE WITH ACCEPTED
26 ACCOUNTING PRINCIPLES AND PRACTICES. FOR THE PURPOSE OF THIS
27 [ACT, FOR] ARTICLE:
28 (I) FOR THE DETERMINATION OF THE BASIS OF ANY PROPERTY, REAL
29 AND PERSONAL, IF ACQUIRED PRIOR TO JUNE 1, 1971, THE DATE OF
30 ACQUISITION SHALL BE ADJUSTED TO JUNE 1, 1971, AS IF THE
19970H0134B1706 - 34 -
1 PROPERTY HAD BEEN ACQUIRED ON THAT DATE. IF THE PROPERTY WAS
2 ACQUIRED AFTER JUNE 1, 1971, THE ACTUAL DATE OF ACQUISITION
3 SHALL BE USED IN DETERMINATION OF THE BASIS.
4 (II) AT THE ELECTION OF THE TAXPAYER, THE TERM "NET GAINS OR
5 INCOME" SHALL NOT INCLUDE NET GAIN IN AN AMOUNT NOT TO EXCEED
6 ONE HUNDRED THOUSAND DOLLARS ($100,000), OR A PRO RATA PART OF
7 ONE HUNDRED THOUSAND DOLLARS ($100,000) IF THE PROPERTY IS OWNED
8 BY MORE THAN ONE TAXPAYER, FROM THE SALE OR EXCHANGE OF THE
9 TAXPAYER'S PRINCIPAL RESIDENCE IF THE TAXPAYER HAS ATTAINED
10 FIFTY-FIVE YEARS OF AGE BEFORE THE DATE OF THE SALE OR EXCHANGE.
11 IF THE PROPERTY IS HELD BY A HUSBAND AND WIFE AND THEY MAKE A
12 JOINT RETURN FOR THE TAXABLE YEAR OF THE SALE OR EXCHANGE AND
13 ONE SPOUSE SATISFIES THE AGE, OWNERSHIP AND USE REQUIREMENTS OF
14 THIS [CLAUSE] SUBPARAGRAPH (II) WITH RESPECT TO THE PROPERTY,
15 THEN BOTH HUSBAND AND WIFE SHALL BE TREATED AS SATISFYING THE
16 AGE, OWNERSHIP AND USE REQUIREMENTS OF THIS [CLAUSE]
17 SUBPARAGRAPH (II).
18 (A) FOR PURPOSES OF THIS [CLAUSE, IN] SUBPARAGRAPH(II):
19 (I) IN THE CASE OF AN UNREMARRIED INDIVIDUAL WHOSE SPOUSE IS
20 DECEASED ON THE DATE OF SALE OR EXCHANGE OF THE PROPERTY, IF THE
21 DECEASED SPOUSE, DURING THE FIVE-YEAR PERIOD ENDING ON THE DATE
22 OF SALE OR EXCHANGE SATISFIED THE HOLDING AND USE REQUIREMENTS
23 WITH RESPECT TO SUCH PROPERTY, THEN SUCH INDIVIDUAL SHALL BE
24 TREATED AS SATISFYING HOLDING AND USE REQUIREMENTS WITH RESPECT
25 TO SUCH PROPERTY. [FOR THE PURPOSES OF THIS CLAUSE, THE]
26 (II) THE TERM "SALE OR EXCHANGE" SHALL INCLUDE INVOLUNTARY
27 CONVERSIONS SUCH AS THE DESTRUCTION, THEFT, SEIZURE, REQUISITION
28 OR CONDEMNATION OF THE PROPERTY. [FOR THE PURPOSES OF THIS
29 CLAUSE, THE]
30 (III) THE TERM "PRINCIPAL RESIDENCE" SHALL MEAN THE PROPERTY
19970H0134B1706 - 35 -
1 THAT HAS BEEN OWNED AND USED BY THE TAXPAYER AS HIS PRINCIPAL
2 RESIDENCE FOR PERIODS AGGREGATING THREE YEARS OR MORE DURING THE
3 FIVE-YEAR PERIOD ENDING ON THE DATE OF THE SALE OR EXCHANGE. IN
4 THE CASE OF PROPERTY ONLY A PORTION OF WHICH, DURING THE FIVE-
5 YEAR PERIOD ENDING ON THE DATE OF THE SALE OR EXCHANGE, HAS BEEN
6 OWNED OR USED BY THE TAXPAYER AS THE TAXPAYER'S PRINCIPAL
7 RESIDENCE FOR PERIODS AGGREGATING THREE YEARS OR MORE, THIS
8 [SECTION] SUBPARAGRAPH (II) SHALL APPLY WITH RESPECT TO SO MUCH
9 OF THE GAIN FROM THE SALE OR EXCHANGE OF SUCH PROPERTY AS IS
10 DETERMINED UNDER REGULATIONS PRESCRIBED BY THE DEPARTMENT TO BE
11 ATTRIBUTABLE TO THE PORTION OF THE PROPERTY SO OWNED AND USED BY
12 THE TAXPAYER.
13 (IV) THE TERM "USED" SHALL INCLUDE TIME THE PROPERTY WAS NOT
14 USED FOR RENTAL PURPOSES AND WAS UNOCCUPIED BY THE TAXPAYER DUE
15 TO THE TAXPAYER BEING IN A HOSPITAL, NURSING HOME OR PERSONAL
16 CARE FACILITY, OR FOR A PERIOD OF LESS THAN NINETY CONSECUTIVE
17 DAYS.
18 (B) THE PROVISIONS OF THIS [CLAUSE] SUBPARAGRAPH (II) SHALL
19 NOT APPLY TO ANY SALE OR EXCHANGE MADE PRIOR TO JULY 1, 1987.
20 (C) AN ELECTION UNDER THIS [CLAUSE] SUBPARAGRAPH (II) MAY BE
21 MADE OR REVOKED AT ANY TIME BEFORE THE EXPIRATION OF THE PERIOD
22 FOR MAKING A CLAIM FOR A REFUND OF THE TAX IMPOSED BY THIS
23 ARTICLE FOR THE TAXABLE YEAR IN WHICH THE SALE OR EXCHANGE
24 OCCURRED.
25 (D) THE PROVISIONS OF THIS [CLAUSE] SUBPARAGRAPH (II) SHALL
26 BE USED ONLY ONCE DURING THE LIFETIME OF THE TAXPAYER.
27 (III) THE TERM "NET GAINS OR INCOME" AND "NET LOSSES" SHALL
28 NOT INCLUDE GAINS OR INCOME OR LOSS DERIVED FROM OBLIGATIONS
29 WHICH ARE STATUTORILY FREE FROM STATE OR LOCAL TAXATION UNDER
30 THE ACT OF AUGUST 31, 1971 (P.L.395, NO.94), ENTITLED "AN ACT
19970H0134B1706 - 36 -
1 EXEMPTING FROM TAXATION FOR STATE AND LOCAL PURPOSES WITHIN THE
2 COMMONWEALTH CERTAIN OBLIGATIONS, THEIR TRANSFER AND THE INCOME
3 THEREFROM (INCLUDING ANY PROFITS MADE ON THE SALE THEREOF),
4 ISSUED BY THE COMMONWEALTH, ANY PUBLIC AUTHORITY, COMMISSION,
5 BOARD OR OTHER AGENCY CREATED BY THE COMMONWEALTH, ANY POLITICAL
6 SUBDIVISION OF THE COMMONWEALTH OR ANY PUBLIC AUTHORITY CREATED
7 BY ANY SUCH POLITICAL SUBDIVISION," OR UNDER THE LAWS OF THE
8 UNITED STATES.
9 (IV) THE TERM "SALE, EXCHANGE OR OTHER DISPOSITION" SHALL
10 NOT INCLUDE THE EXCHANGE OF STOCK OR SECURITIES IN A CORPORATION
11 A PARTY TO A REORGANIZATION IN PURSUANCE OF A PLAN OF
12 REORGANIZATION, SOLELY FOR STOCK OR SECURITIES IN SUCH
13 CORPORATION OR IN ANOTHER CORPORATION A PARTY TO THE
14 REORGANIZATION AND THE TRANSFER OF PROPERTY TO A CORPORATION BY
15 ONE OR MORE PERSONS SOLELY IN EXCHANGE FOR STOCK OR SECURITIES
16 IN SUCH CORPORATION IF IMMEDIATELY AFTER THE EXCHANGE SUCH
17 PERSON OR PERSONS ARE IN CONTROL OF THE CORPORATION. THE
18 FOLLOWING SHALL APPLY:
19 (A) FOR PURPOSES OF THIS [CLAUSE] SUBPARAGRAPH (IV), STOCK
20 OR SECURITIES ISSUED FOR SERVICES SHALL NOT BE CONSIDERED AS
21 ISSUED IN RETURN FOR PROPERTY.
22 (B) FOR PURPOSES OF THIS [CLAUSE] SUBPARAGRAPH (IV), THE
23 TERM "REORGANIZATION" MEANS[--
24 (I) A] ANY OF THE FOLLOWING:
25 (I) A STATUTORY MERGER OR CONSOLIDATION[; THE
26 (II)].
27 (II) THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE SOLELY
28 FOR ALL OR A PART OF ITS VOTING STOCK (OR IN EXCHANGE SOLELY FOR
29 ALL OR A PART OF THE VOTING STOCK OF A CORPORATION WHICH IS IN
30 CONTROL OF THE ACQUIRING CORPORATION) OF STOCK OF ANOTHER
19970H0134B1706 - 37 -
1 CORPORATION IF, IMMEDIATELY AFTER THE ACQUISITION, THE ACQUIRING
2 CORPORATION HAS CONTROL OF SUCH OTHER CORPORATION (WHETHER OR
3 NOT SUCH ACQUIRING CORPORATION HAD CONTROL IMMEDIATELY BEFORE
4 THE ACQUISITION)[;
5 (III) THE].
6 (III) THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE SOLELY
7 FOR ALL OR A PART OF ITS VOTING STOCK (OR IN EXCHANGE SOLELY FOR
8 ALL OR A PART OF THE VOTING STOCK OF A CORPORATION WHICH IS IN
9 CONTROL OF THE ACQUIRING CORPORATION), OF SUBSTANTIALLY ALL OF
10 THE PROPERTIES OF ANOTHER CORPORATION, BUT IN DETERMINING
11 WHETHER THE EXCHANGE IS SOLELY FOR STOCK THE ASSUMPTION BY THE
12 ACQUIRING CORPORATION OF A LIABILITY OF THE OTHER, OR THE FACT
13 THAT PROPERTY ACQUIRED IS SUBJECT TO A LIABILITY, SHALL BE
14 DISREGARDED[;
15 (IV) A].
16 (IV) A TRANSFER BY A CORPORATION OF ALL OR A PART OF ITS
17 ASSETS TO ANOTHER CORPORATION IF IMMEDIATELY AFTER THE TRANSFER
18 THE TRANSFEROR, OR ONE OR MORE OF ITS SHAREHOLDERS (INCLUDING
19 PERSONS WHO WERE SHAREHOLDERS IMMEDIATELY BEFORE THE TRANSFER),
20 OR ANY COMBINATION THEREOF, IS IN CONTROL OF THE CORPORATION TO
21 WHICH THE ASSETS ARE TRANSFERRED[;
22 (V) A].
23 (V) A RECAPITALIZATION[;
24 (VI) A].
25 (VI) A MERE CHANGE IN IDENTITY, FORM, OR PLACE OF
26 ORGANIZATION HOWEVER EFFECTED[; OR
27 (VII) THE].
28 (C) THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE FOR
29 STOCK OF A CORPORATION (REFERRED TO IN THIS [SUBCLAUSE] CLAUSE
30 (C) AS "CONTROLLING CORPORATION") WHICH IS IN CONTROL OF THE
19970H0134B1706 - 38 -
1 ACQUIRING CORPORATION, OF SUBSTANTIALLY ALL OF THE PROPERTIES OF
2 ANOTHER CORPORATION WHICH IN THE TRANSACTION IS MERGED INTO THE
3 ACQUIRING CORPORATION SHALL NOT DISQUALIFY A TRANSACTION UNDER
4 [SUBCLAUSE (I)] CLAUSE (B)(I) IF SUCH TRANSACTION WOULD HAVE
5 QUALIFIED UNDER [SUBCLAUSE (I)] CLAUSE(B)(I) IF THE MERGER HAD
6 BEEN INTO THE CONTROLLING CORPORATION, AND NO STOCK OF THE
7 ACQUIRING CORPORATION IS USED IN THE TRANSACTION[;
8 (VIII) A].
9 (D) A TRANSACTION OTHERWISE QUALIFYING UNDER [SUBCLAUSE (I)]
10 CLAUSE (B)(I) SHALL NOT BE DISQUALIFIED BY REASON OF THE FACT
11 THAT STOCK OF A CORPORATION (REFERRED TO IN THIS [SUBCLAUSE]
12 CLAUSE (D) AS THE "CONTROLLING CORPORATION") WHICH BEFORE THE
13 MERGER WAS IN CONTROL OF THE MERGED CORPORATION IS USED IN THE
14 TRANSACTION, IF AFTER THE TRANSACTION, THE CORPORATION SURVIVING
15 THE MERGER HOLDS SUBSTANTIALLY ALL OF ITS PROPERTIES AND OF THE
16 PROPERTIES OF THE MERGED CORPORATION (OTHER THAN STOCK OF THE
17 CONTROLLING CORPORATION DISTRIBUTED IN THE TRANSACTION); AND IN
18 THE TRANSACTION, FORMER SHAREHOLDERS OF THE SURVIVING
19 CORPORATION EXCHANGED, FOR AN AMOUNT OF VOTING STOCK OF THE
20 CONTROLLING CORPORATION, AN AMOUNT OF STOCK IN THE SURVIVING
21 CORPORATION WHICH CONSTITUTES CONTROL OF SUCH CORPORATION.
22 (E) FOR PURPOSES OF THIS [CLAUSE, THE] SUBPARAGRAPH (IV):
23 (I) THE TERM "CONTROL" MEANS THE OWNERSHIP OF STOCK
24 POSSESSING AT LEAST EIGHTY PER CENT OF THE TOTAL COMBINED VOTING
25 POWER OF ALL CLASSES OF STOCK ENTITLED TO VOTE AND AT LEAST
26 EIGHTY PER CENT OF THE TOTAL NUMBER OF SHARES OF ALL OTHER
27 CLASSES OF STOCK OF THE CORPORATION.
28 [FOR PURPOSES OF THIS CLAUSE, THE] (II) THE TERM "A PARTY TO
29 A REORGANIZATION" INCLUDES A CORPORATION RESULTING FROM A
30 REORGANIZATION, AND BOTH CORPORATIONS, IN THE CASE OF A
19970H0134B1706 - 39 -
1 REORGANIZATION RESULTING FROM THE ACQUISITION BY ONE CORPORATION
2 OF STOCK OR PROPERTIES OF ANOTHER. IN THE CASE OF A
3 REORGANIZATION QUALIFYING UNDER [SUBCLAUSE (I)] CLAUSE (B)(I) BY
4 REASON OF [SUBCLAUSE (VII)] CLAUSE (C) THE TERM "A PARTY TO A
5 REORGANIZATION" INCLUDES THE CONTROLLING CORPORATION REFERRED TO
6 IN [SUCH SUBCLAUSE (VII)] CLAUSE (C).
7 (F) NOTWITHSTANDING ANY PROVISIONS HEREOF, UPON EVERY SUCH
8 EXCHANGE OR CONVERSION, THE TAXPAYER'S BASE FOR THE STOCK OR
9 SECURITIES RECEIVED SHALL BE THE SAME AS THE TAXPAYER'S ACTUAL
10 OR ATTRIBUTED BASE FOR THE STOCK, SECURITIES OR PROPERTY
11 SURRENDERED IN EXCHANGE THEREFOR.
12 (V) THE TERM "SALE, EXCHANGE OR OTHER DISPOSITION" SHALL NOT
13 INCLUDE A TRANSFER BY A COMMON TRUST FUND DESCRIBED IN SECTION
14 584 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26
15 U.S.C. § 584), OF ALL OR SUBSTANTIALLY ALL OF ITS ASSETS TO ONE
16 OR MORE COMPANIES DESCRIBED IN SECTION 851 OF THE INTERNAL
17 REVENUE CODE OF 1986 (26 U.S.C. § 851) IN EXCHANGE FOR STOCK OR
18 UNITS OF BENEFICIAL INTEREST IN THE COMPANY OR COMPANIES TO
19 WHICH SUCH ASSETS ARE TRANSFERRED AND THE DISTRIBUTION OF SUCH
20 STOCK OR UNITS BY THE FUND TO ITS PARTICIPANTS IN EXCHANGE FOR
21 THEIR INTEREST IN THE FUND, IF NO GAIN OR LOSS IS RECOGNIZED ON
22 THE TRANSFER OR DISTRIBUTION FOR FEDERAL INCOME TAX PURPOSES.
23 UPON EVERY SUCH EXCHANGE, THE TAXPAYER'S BASE FOR THE STOCK OR
24 UNITS OR ASSETS RECEIVED SHALL BE THE SAME AS THE TAXPAYER'S
25 ACTUAL OR ATTRIBUTED BASE FOR THE ASSETS, STOCK, UNITS OR
26 INTEREST SURRENDERED IN EXCHANGE THEREFOR.
27 (VI) THE TERM "SALE, EXCHANGE OR OTHER DISPOSITION" SHALL
28 NOT INCLUDE A TRANSFER OF AN INTEREST IN AN ENTERPRISE TREATED
29 AS A PARTNERSHIP FOR PURPOSES OF THIS ARTICLE IN EXCHANGE FOR AN
30 INTEREST IN ANY OTHER ENTERPRISE TREATED AS A PARTNERSHIP FOR
19970H0134B1706 - 40 -
1 PURPOSES OF THIS ARTICLE, A LIQUIDATION MADE IN CONNECTION
2 THEREWITH, OR AN EXCHANGE MADE PURSUANT TO A STATUTORY MERGER,
3 CONSOLIDATION, OR DIVISION OF ENTERPRISES SO TREATED, UNLESS
4 TAXABLE INCOME OR GAIN IS RECOGNIZED FOR FEDERAL INCOME TAX
5 PURPOSES. UPON EVERY SUCH EXCHANGE, THE TAXPAYER'S BASE FOR THE
6 INTEREST RECEIVED SHALL BE THE SAME AS THE TAXPAYER'S ACTUAL OR
7 ATTRIBUTED BASE FOR THE INTEREST SURRENDERED IN EXCHANGE
8 THEREFOR.
9 * * *
10 Section 3. Section 304(d)(1) of the act, amended June 16, <--
11 1994 (P.L.279, No.48), is amended to read:
12 SECTION 4 7. SECTION 304(D) OF THE ACT, AMENDED DECEMBER 13, <--
13 1991 (P.L.373, NO.40) AND JUNE 16, 1994 (P.L.279, NO.48), IS
14 AMENDED TO READ:
15 Section 304. Special Tax Provisions for Poverty.--* * *
16 (d) Any claim for special tax provisions hereunder shall be
17 determined in accordance with the following:
18 (1) If the poverty income of the claimant during an entire
19 taxable year is [six thousand three hundred dollars ($6,300)] <--
20 seven thousand three hundred dollars ($7,300) or less, OR, IN <--
21 THE CASE OF A MARRIED CLAIMANT, IF THE JOINT POVERTY INCOME OF
22 THE CLAIMANT AND THE CLAIMANT'S SPOUSE DURING AN ENTIRE TAXABLE
23 YEAR IS FOURTEEN THOUSAND SIX HUNDRED DOLLARS ($14,600) TWELVE <--
24 THOUSAND SIX HUNDRED DOLLARS ($12,600) OR LESS, the claimant
25 shall be entitled to a refund or forgiveness of any moneys which
26 have been paid over to (or would except for the provisions of
27 this act be payable to) the Commonwealth under the provisions of
28 this article, with an additional income allowance of [three
29 thousand dollars ($3,000)] four thousand dollars ($4,000) for
30 the first additional dependent and an additional income
19970H0134B1706 - 41 -
1 allowance of [three thousand dollars ($3,000)] four thousand
2 dollars ($4,000) for each additional dependent of the claimant.
3 FOR PURPOSES OF THIS SUBSECTION, A CLAIMANT SHALL NOT BE <--
4 CONSIDERED TO BE MARRIED IF:
5 (I) THE CLAIMANT AND THE CLAIMANT'S SPOUSE FILE SEPARATE
6 RETURNS; AND
7 (II) THE CLAIMANT AND THE CLAIMANT'S SPOUSE LIVE APART AT
8 ALL TIMES DURING THE LAST SIX MONTHS OF THE TAXABLE YEAR OR ARE
9 SEPARATED PURSUANT TO A WRITTEN SEPARATION AGREEMENT.
10 (2) IF THE POVERTY INCOME OF THE CLAIMANT DURING AN ENTIRE
11 TAXABLE YEAR DOES NOT EXCEED THE POVERTY INCOME LIMITATIONS
12 PRESCRIBED BY CLAUSE (1) BY MORE THAN THE DOLLAR CATEGORY
13 CONTAINED IN SUBCLAUSES (I), (II), (III), (IV), (V), (VI),
14 (VII), (VIII) OR (IX) OF THIS CLAUSE, THE CLAIMANT SHALL BE
15 ENTITLED TO A REFUND OR FORGIVENESS BASED ON THE PER CENTAGE
16 PRESCRIBED IN SUCH SUBCLAUSES OF ANY MONEYS WHICH HAVE BEEN PAID
17 OVER TO (OR WOULD EXCEPT FOR THE PROVISIONS HEREIN BE PAYABLE
18 TO) THE COMMONWEALTH 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).
19970H0134B1706 - 42 -
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 (3) IF AN INDIVIDUAL HAS A TAXABLE YEAR OF LESS THAN TWELVE
8 MONTHS, THE POVERTY INCOME THEREOF SHALL BE ANNUALIZED IN SUCH
9 MANNER AS THE DEPARTMENT MAY PRESCRIBE.
10 * * * <--
11 SECTION 8. SECTIONS 307, 307.6, 307.8 AND 307.9 OF THE ACT, <--
12 AMENDED OR ADDED DECEMBER 23, 1983 (P.L.370, NO.90), ARE AMENDED
13 TO READ:
14 SECTION 307. ELECTION BY SMALL CORPORATION.--EXCEPT AS
15 PROVIDED IN SECTION 307.6, ANY SMALL CORPORATION THAT IS SUBJECT
16 TO THE TAX IMPOSED UNDER ARTICLE IV OR OWNS A QUALIFIED S
17 CORPORATION SUBSIDIARY THAT IS SUBJECT TO THE TAX IMPOSED UNDER
18 ARTICLE IV MAY ELECT [NOT TO BE SUBJECT TO THE TAX IMPOSED UNDER
19 ARTICLE IV.] TO BE TAXED AS A PENNSYLVANIA S CORPORATION. SUCH
20 ELECTION SHALL BE VALID ONLY IF ALL THE SHAREHOLDERS OF THE
21 CORPORATION ON THE DAY ON WHICH THE ELECTION IS MADE CONSENT TO
22 THE ELECTION. A QUALIFIED SUBCHAPTER S SUBSIDIARY OWNED BY A
23 PENNSYLVANIA S CORPORATION SHALL BE TREATED AS A PENNSYLVANIA S
24 CORPORATION WHETHER OR NOT AN ELECTION HAS BEEN MADE WITH
25 RESPECT TO SUCH SUBSIDIARY.
26 SECTION 307.6. ELECTION AFTER REVOCATION OR TERMINATION.--IF
27 A CORPORATION HAS MADE AN ELECTION UNDER SECTION 307 AND IF SUCH
28 ELECTION HAS BEEN REVOKED PURSUANT TO SECTION 307.3 OR
29 TERMINATED FOR EXCEEDING THE PASSIVE INVESTMENT INCOME
30 LIMITATION IN SECTION 301(S.2), SUCH CORPORATION, AND ANY
19970H0134B1706 - 43 -
1 SUCCESSOR CORPORATION, SHALL NOT BE ELIGIBLE TO MAKE AN ELECTION
2 UNDER SECTION 307 FOR ANY TAXABLE YEAR PRIOR TO ITS FIFTH
3 TAXABLE YEAR WHICH BEGINS AFTER THE FIRST TAXABLE YEAR FOR WHICH
4 SUCH REVOCATION OR TERMINATION IS EFFECTIVE.
5 SECTION 307.8. INCOME OF A PENNSYLVANIA S CORPORATION.--(A)
6 A PENNSYLVANIA S CORPORATION [AS SUCH] SHALL NOT BE SUBJECT TO
7 THE TAX IMPOSED BY THIS ARTICLE, BUT THE SHAREHOLDERS OF THE
8 PENNSYLVANIA S CORPORATION SHALL BE SUBJECT TO THE TAX IMPOSED
9 UNDER THIS ARTICLE AS PROVIDED IN THIS ARTICLE.
10 [(B) NO DEDUCTION SHALL BE ALLOWED FOR TAXES BASED ON INCOME
11 OR TAXES PAID BY THE PENNSYLVANIA S CORPORATION PURSUANT TO
12 SUBCHAPTER S OF CHAPTER 1 OR SECTION 58(D) OF THE INTERNAL
13 REVENUE CODE OF 1954, AS AMENDED AS OF JANUARY 1, 1983.]
14 (B) IF ANY TAX IS IMPOSED ON A PENNSYLVANIA S CORPORATION
15 (OR ANY QUALIFIED SUBCHAPTER S SUBSIDIARY OWNED BY SUCH
16 PENNSYLVANIA S CORPORATION) PURSUANT TO SECTION 1374 OF THE
17 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. §
18 1374), AS AMENDED TO JANUARY 1, 1997 OR PURSUANT TO ARTICLE IV
19 OR ARTICLE VI FOR ANY TAXABLE YEAR, THEN, FOR PURPOSES OF
20 SECTION 307.9, THE AMOUNT OF TAX SO IMPOSED SHALL BE TREATED AS
21 A LOSS SUSTAINED BY SUCH PENNSYLVANIA S CORPORATION DURING SUCH
22 YEARS. IN THE CASE OF TAXES IMPOSED PURSUANT TO SECTION 1374 OF
23 THE INTERNAL REVENUE CODE OF 1986, AS AMENDED TO JANUARY 1, 1997
24 OR ARTICLE IV, THE CHARACTER OF SUCH LOSS SHALL BE DETERMINED BY
25 ALLOCATING THE LOSS PROPORTIONATELY AMONG THE RECOGNIZED BUILT-
26 IN GAINS GIVING RISE TO SUCH TAX.
27 (C) IF A PENNSYLVANIA S CORPORATION MAKES A DISTRIBUTION OF
28 PROPERTY, OTHER THAN AN OBLIGATION OF SUCH CORPORATION, WITH
29 RESPECT TO ITS STOCK AND THE FAIR MARKET VALUE OF SUCH PROPERTY
30 EXCEEDS ITS ADJUSTED BASIS IN THE HANDS OF THE CORPORATION, THEN
19970H0134B1706 - 44 -
1 GAIN SHALL BE RECOGNIZED ON THE DISTRIBUTION AS IF THE PROPERTY
2 HAD BEEN SOLD TO THE DISTRIBUTEE AT ITS FAIR MARKET VALUE.
3 (D) ANY ELECTION WHICH MAY AFFECT THE COMPUTATION OF ITEMS
4 DERIVED FROM A PENNSYLVANIA S CORPORATION SHALL BE MADE BY THE
5 CORPORATION.
6 (E) ANY DEDUCTION, EXCEPT A NET LOSS DEDUCTION, WHICH WAS
7 DISALLOWED WHEN A CORPORATION WAS SUBJECT TO THE TAX IMPOSED
8 UNDER ARTICLE IV SHALL BE ALLOWED IN YEARS IN WHICH THE
9 CORPORATION IS A PENNSYLVANIA S CORPORATION TO THE SAME EXTENT
10 AND IN THE SAME MANNER THAT THE DEDUCTION WOULD HAVE BEEN
11 ALLOWED IF THE CORPORATION HAD REMAINED SUBJECT TO THE TAX
12 IMPOSED UNDER ARTICLE IV.
13 SECTION 307.9. INCOME OF PENNSYLVANIA S CORPORATIONS TAXED
14 TO SHAREHOLDERS.--(A) EACH SHAREHOLDER OF A PENNSYLVANIA S
15 CORPORATION SHALL TAKE INTO INCOME SUCH SHAREHOLDER'S PRO RATA
16 SHARE OF THE INCOME OR LOSS IN EACH APPLICABLE CLASS OF INCOME
17 RECEIVED BY THE CORPORATION FOR ITS TAXABLE YEAR ENDING WITHIN
18 OR WITH THE SHAREHOLDER'S TAXABLE YEAR.
19 (B) EACH SHAREHOLDER'S PRO RATA SHARE OF ANY ITEM FOR ANY
20 TAXABLE YEAR SHALL BE THE SUM OF THE AMOUNTS DETERMINED WITH
21 RESPECT TO THE SHAREHOLDER BY ASSIGNING AN EQUAL PORTION OF ALL
22 ITEMS TO EACH DAY OF THE TAXABLE YEAR AND THEN BY DIVIDING THAT
23 PORTION PRO RATA AMONG THE SHARES OUTSTANDING ON SUCH DAY.
24 (C) THE CHARACTER OF ANY ITEM INCLUDED IN THE SHAREHOLDER'S
25 PRO RATA SHARE SHALL BE DETERMINED AS IF SUCH ITEM WERE REALIZED
26 DIRECTLY BY THE SHAREHOLDER FROM THE SOURCE FROM WHICH IT WAS
27 REALIZED BY THE CORPORATION OR INCURRED IN THE SAME MANNER AS
28 INCURRED BY THE CORPORATION.
29 (D) WITH RESPECT TO ANY DEDUCTION ALLOWED PURSUANT TO
30 SECTION 307.8(E), ANY NONRESIDENT SHAREHOLDER SHALL BE ALLOWED
19970H0134B1706 - 45 -
1 SUCH DEDUCTION ONLY TO THE EXTENT THAT THE PREVIOUSLY DISALLOWED
2 DEDUCTION WOULD HAVE BEEN CONSIDERED A DEDUCTION RELATED TO
3 INCOME FROM SOURCES WITHIN THIS COMMONWEALTH, WITHIN THE MEANING
4 OF SECTION 301(K), DURING THE TAXABLE YEAR WHEN THE DEDUCTION
5 WAS DISALLOWED.
6 (E) FOR ALL PURPOSES OF THIS ARTICLE, A QUALIFIED SUBCHAPTER
7 S SUBSIDIARY OWNED BY A PENNSYLVANIA S CORPORATION SHALL NOT BE
8 TREATED AS A SEPARATE CORPORATION, AND ALL ASSETS, LIABILITIES
9 AND ITEMS OF INCOME, DEDUCTION AND CREDIT OF SUCH QUALIFIED
10 SUBCHAPTER S SUBSIDIARY SHALL BE TREATED AS ASSETS, LIABILITIES
11 AND ITEMS OF INCOME, DEDUCTION AND CREDIT OF THE PARENT
12 PENNSYLVANIA S CORPORATION.
13 Section 4 5 9. Article III of the act is amended by adding a <--
14 part to read:
15 PART VI-A
16 CONTRIBUTIONS OF REFUNDS BY CHECKOFF
17 Section 315.1. Definitions.--The following words, terms and
18 phrases, when used in this part, shall have the meanings
19 ascribed to them in this section, except where the context
20 clearly indicates a different meaning:
21 "Department." The Department of Revenue of the Commonwealth.
22 "Individual income tax." The tax imposed under this article.
23 Section 315.2. Contributions to Breast and Cervical Cancer
24 Research.--(a) The department shall provide a space on the face <--
25 of the Pennsylvania individual income tax return form whereby an
26 individual may voluntarily designate a contribution of any
27 amount desired to be utilized for breast and cervical cancer
28 research in the Department of Health.
29 (b) The amount so designated on the individual income tax
30 return form shall be deducted from the tax refund to which the
19970H0134B1706 - 46 -
1 individual is entitled and shall not constitute a charge against
2 the income tax revenues due to the Commonwealth.
3 (c) The department shall determine annually the total amount
4 designated under this section, less reasonable administrative
5 costs, and shall report the amount to the State Treasurer, who
6 shall transfer the amount from the General Fund to the
7 Pennsylvania Cancer Control, Prevention and Research Advisory
8 Board within the Department of Health.
9 (d) The department shall provide adequate information
10 concerning the checkoff for breast and cervical cancer research
11 in its instructions which accompany State income tax return
12 forms. The information concerning the checkoff shall include the
13 listing of an address furnished by the Department of Health, to
14 which contributions may be sent by taxpayers wishing to
15 contribute to this effort, but who do not receive refunds.
16 Additionally, the Department of Health shall be charged with the
17 duty to conduct a public information campaign on the
18 availability of this opportunity to Pennsylvania taxpayers.
19 (e) The Department of Health shall report annually to the
20 respective committees of the Senate and the House of
21 Representatives which have jurisdiction over health matters on
22 the amount received via the checkoff plan and how the funds were
23 utilized.
24 (f) The General Assembly may, from time to time, appropriate
25 funds for breast and cervical cancer research within the
26 Department of Health.
27 Section 315.3. Contributions for Wild Resource
28 Conservation.--(a) The department shall provide a space on the <--
29 face of the Pennsylvania individual income tax return form
30 whereby an individual may voluntarily designate a contribution
19970H0134B1706 - 47 -
1 of any amount desired, to the Wild Resource Conservation Fund
2 established under section 5 of the act of June 23, 1982
3 (P.L.597, No.170), known as the "Wild Resource Conservation
4 Act."
5 (b) The amount so designated by an individual on the income
6 tax return form shall be deducted from the tax refund to which
7 such individual is entitled and shall not constitute a charge
8 against the income tax revenues due the Commonwealth.
9 (c) The department shall determine annually the total amount
10 designated pursuant to this section and shall report such amount
11 to the State Treasurer, who shall transfer such amount from the
12 General Fund to the Wild Resource Conservation Fund for use as
13 provided in the "Wild Resource Conservation Act." The department
14 shall be reimbursed from the fund for any administrative costs
15 incurred above and beyond the cost savings it realizes as a
16 result of individual total refund designations.
17 (d) The department shall provide adequate information
18 concerning the Wild Resource Conservation Fund in its
19 instructions which accompany State income tax return forms,
20 which shall include the listing of an address, furnished to it
21 by the Wild Resource Conservation Board, to which contributions
22 may be sent by those taxpayers wishing to contribute to said
23 fund but who do not receive refunds.
24 (e) This section shall apply to taxable years beginning on
25 or after January 1, 1997.
26 Section 315.4. Contributions for Organ Donation Awareness.--
27 (a) The department shall provide a space on the face of the <--
28 Pennsylvania individual income tax return form for the 1997 tax <--
29 year and the 2000 tax year whereby an individual may voluntarily
30 designate a contribution of any amount desired to the Organ
19970H0134B1706 - 48 -
1 Donation Awareness Trust Fund established under 20 Pa.C.S. §
2 8622 (relating to Organ Donation Awareness Trust Fund).
3 (b) The amount so designated by an individual on the
4 Pennsylvania individual income tax return form shall be deducted
5 from the tax refund to which the individual is entitled and
6 shall not constitute a charge against the income tax revenues
7 due the Commonwealth.
8 (c) The department shall annually determine the total amount
9 designated pursuant to this section and shall report that amount
10 to the State Treasurer who shall transfer that amount to the
11 Organ Donation Awareness Trust Fund.
12 (d) The department shall, in all taxable years following the
13 effective date of this section, provide on its forms or in its
14 instructions which accompany Pennsylvania individual income tax
15 return forms adequate information concerning the Organ Donation
16 Awareness Trust Fund which shall include the listing of an
17 address, furnished to it by the Organ Donation Advisory
18 Committee, to which contributions may be sent by those taxpayers
19 wishing to contribute to the fund but who do not receive
20 refunds.
21 (e) This section shall apply to taxable years beginning on
22 or after January 1, 1997.
23 Section 315.5. Contributions for Olympics.--(a) The
24 department shall provide a space on the face of the Pennsylvania <--
25 individual income tax return form whereby an individual may
26 voluntarily designate a contribution of any amount desired to
27 the United States Olympic Committee, Pennsylvania Division.
28 (b) The amount so designated by an individual on the income
29 tax return form shall be deducted from the tax refund to which
30 such individual is entitled and shall not constitute a charge
19970H0134B1706 - 49 -
1 against the income tax revenues due the Commonwealth.
2 (c) The department shall determine annually the total amount
3 designated pursuant to this section, less reasonable
4 administrative costs, and shall report such amount to the State
5 Treasurer, who shall transfer such amount from the General Fund
6 to the United States Olympic Committee, Pennsylvania Division.
7 Section 315.6. Contributions to Korea/Vietnam Memorial <--
8 National Education Center.--(a) For tax years 1997, 1998, 1999
9 and 2000, the department shall provide a space on the face of
10 the Pennsylvania individual income tax return form whereby an
11 individual may voluntarily designate a contribution of any
12 amount from the individual's tax refund to KVM.
13 (b) The amount designated by an individual on the
14 Pennsylvania individual income tax return form shall be deducted
15 from the tax refund to which such individual is entitled and
16 shall not constitute a charge against the income tax revenues
17 due the Commonwealth.
18 (c) The department shall determine annually the total amount
19 designated by individual taxpayers under this section and shall
20 report the amount to the State Treasurer who shall prepare the
21 appropriate documentation and transfer the designated amount
22 from the General Fund to KVM for use as provided in section
23 2507(b) of the act of April 9, 1929 (P.L.177, No.175), known as
24 "The Administrative Code of 1929."
25 (d) The department shall provide adequate information
26 regarding the center and its purposes in its instructions for
27 tax years 1997, 1998, 1999 and 2000 which accompany Pennsylvania
28 individual income tax return forms to include the address of KVM
29 to which contributions may be sent by taxpayers who wish to make
30 additional contributions to the center.
19970H0134B1706 - 50 -
1 (e) This subsection shall apply solely to taxable years
2 1997, 1998, 1999 and 2000.
3 SECTION 6. THE DEFINITION OF "CAPITAL STOCK VALUE" IN <--
4 SECTION 601 OF THE ACT, AMENDED JUNE 30, 1995 (P.L.139, NO.21),
5 IS AMENDED TO READ:
6 SECTION 10. SECTION 324 OF THE ACT, AMENDED JUNE 16, 1994 <--
7 (P.L.270, NO.48), IS AMENDED TO READ:
8 SECTION 324. GENERAL RULE.--(A) WHEN A PARTNERSHIP,
9 ASSOCIATION OR PENNSYLVANIA S CORPORATION RECEIVES INCOME FROM
10 SOURCES WITHIN THIS COMMONWEALTH FOR ANY TAXABLE YEAR AND ANY
11 PORTION OF SUCH INCOME IS ALLOCABLE TO A NONRESIDENT PARTNER,
12 MEMBER OR SHAREHOLDER THEREOF, SUCH PARTNERSHIP, ASSOCIATION OR
13 PENNSYLVANIA S CORPORATION SHALL PAY A WITHHOLDING TAX UNDER
14 THIS SECTION AT SUCH TIME AND IN SUCH MANNER AS THE DEPARTMENT
15 SHALL PRESCRIBE; HOWEVER, NOTWITHSTANDING ANY OTHER PROVISION OF
16 THIS ARTICLE, ALL SUCH WITHHOLDING TAX SHALL BE PAID OVER ON OR
17 BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE END
18 OF THE TAXABLE YEAR.
19 (B) THIS SECTION SHALL NOT APPLY TO ANY PUBLICLY TRADED
20 PARTNERSHIP, AS DEFINED UNDER SECTION 7704 OF THE INTERNAL
21 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.)
22 WITH EQUITY SECURITIES REGISTERED WITH THE SECURITIES AND
23 EXCHANGE COMMISSION UNDER SECTION 12 OF THE SECURITIES EXCHANGE
24 ACT OF 1934 (48 STAT. 881, 15 U.S.C. § 78A ET SEQ.).
25 SECTION 11. SECTION 324.2 OF THE ACT, ADDED AUGUST 4, 1991
26 (P.L.97, NO.22), IS AMENDED TO READ:
27 SECTION 324.2. TREATMENT OF NONRESIDENT PARTNERS, MEMBERS OR
28 SHAREHOLDERS.--EACH NONRESIDENT PARTNER, MEMBER [OR],
29 SHAREHOLDER OR HOLDER OF A BENEFICIAL INTEREST SHALL BE ALLOWED
30 A CREDIT FOR SUCH PARTNER'S, MEMBER'S [OR], SHAREHOLDER'S OR
19970H0134B1706 - 51 -
1 HOLDER OF A BENEFICIAL INTEREST'S SHARE OF THE WITHHOLDING TAX
2 PAID BY THE PARTNERSHIP, ASSOCIATION OR PENNSYLVANIA S
3 CORPORATION. SUCH CREDIT SHALL BE ALLOWED FOR THE PARTNER'S,
4 MEMBER'S [OR], SHAREHOLDER'S OR HOLDER OF A BENEFICIAL
5 INTEREST'S TAXABLE YEAR IN WHICH, OR WITH WHICH, THE
6 PARTNERSHIP, ASSOCIATION OR PENNSYLVANIA S CORPORATION TAXABLE
7 YEAR (FOR WHICH SUCH TAX WAS PAID) ENDS.
8 SECTION 12. SECTION 350 OF THE ACT, ADDED AUGUST 31, 1971
9 (P.L.362, NO.93), IS AMENDED TO READ:
10 SECTION 350. LIMITATIONS ON REFUND OR CREDIT.--ANY
11 APPLICATION FOR REFUND MUST BE FILED WITH THE [BOARD OF FINANCE
12 AND REVENUE WITHIN THREE YEARS FROM THE TIME THE RETURN IS
13 REQUIRED TO BE FILED] DEPARTMENT UNDER SECTION 3003.1.
14 SECTION 13. SECTION 352(G) OF THE ACT, AMENDED JUNE 29, 1984
15 (P.L.445, NO.94), IS AMENDED AND THE SECTION IS AMENDED BY
16 ADDING A SUBSECTION TO READ:
17 SECTION 352. ADDITIONS, PENALTIES AND FEES.--* * *
18 [(G) WHENEVER ANY CHECK ISSUED IN PAYMENT OF ANY TAX, OR FOR
19 ANY OTHER PURPOSE REQUIRED BY THIS ARTICLE, SHALL BE RETURNED TO
20 THE DEPARTMENT AS UNCOLLECTIBLE, THE DEPARTMENT SHALL CHARGE A
21 FEE OF TEN PER CENT OF THE FACE AMOUNT THEREOF, PLUS ALL PROTEST
22 FEES, TO THE PERSON PRESENTING SUCH CHECK TO THE DEPARTMENT, TO
23 COVER THE COST OF ITS COLLECTION IN ADDITION TO THE INTEREST AND
24 PENALTIES OTHERWISE PROVIDED FOR IN THIS ARTICLE: PROVIDED,
25 THAT THE ADDITIONS IMPOSED BY THIS SUBSECTION SHALL NOT EXCEED
26 TWO HUNDRED DOLLARS ($200) NOR BE LESS THAN TEN DOLLARS ($10).]
27 * * *
28 (J) IF ANY AMOUNT OF TAX REQUIRED TO BE WITHHELD BY A
29 PARTNERSHIP, ASSOCIATION OR PENNSYLVANIA S CORPORATION AND PAID
30 OVER TO THE DEPARTMENT UNDER SECTION 324 IS NOT PAID ON OR
19970H0134B1706 - 52 -
1 BEFORE THE DATE PRESCRIBED THEREFOR, THERE SHALL BE ADDED TO THE
2 TAX AND PAID TO THE DEPARTMENT EACH MONTH FIVE PER CENT OF SUCH
3 UNDERPAYMENT FOR EACH MONTH OR FRACTION THEREOF FROM THE DUE
4 DATE, FOR THE PERIOD FROM THE DUE DATE TO THE DATE PAID; BUT THE
5 UNDERPAYMENT SHALL, FOR PURPOSES OF COMPUTING THE ADDITION FOR
6 ANY MONTH, BE REDUCED BY THE AMOUNT OF ANY PART OF THE TAX WHICH
7 IS PAID BY THE BEGINNING OF THAT MONTH. THE TOTAL OF SUCH
8 ADDITIONS SHALL NOT EXCEED FIFTY PER CENT OF THE AMOUNT OF SUCH
9 TAX.
10 SECTION 14. SECTION 401(1) OF THE ACT, AMENDED JUNE 16, 1994
11 (P.L.279, NO.48), IS AMENDED AND CLAUSE (3)1 IS AMENDED BY
12 ADDING A PHRASE TO READ:
13 SECTION 401. DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND
14 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING
15 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
16 CLEARLY INDICATES A DIFFERENT MEANING:
17 (1) "CORPORATION." A CORPORATION [HAVING CAPITAL STOCK],
18 JOINT-STOCK ASSOCIATION, [OR LIMITED PARTNERSHIP EITHER
19 ORGANIZED UNDER THE LAWS OF THIS COMMONWEALTH, THE UNITED
20 STATES, OR ANY OTHER STATE, TERRITORY, OR FOREIGN COUNTRY, OR
21 DEPENDENCY,] OR A BUSINESS TRUST TO WHICH 15 PA.C.S. CH. 95
22 (RELATING TO BUSINESS TRUSTS) APPLIES [AND], A COMMON LAW
23 BUSINESS TRUST OR A LIMITED LIABILITY COMPANY, THAT FOR FEDERAL
24 INCOME TAX PURPOSES IS TAXABLE AS A CORPORATION, AND (I) IS
25 DOING BUSINESS IN THIS COMMONWEALTH; OR (II) IS CARRYING ON
26 ACTIVITIES IN THIS COMMONWEALTH; (III) [HAVING] HAS CAPITAL OR
27 PROPERTY EMPLOYED OR USED IN THIS COMMONWEALTH; OR (IV) [OWNING]
28 OWNS PROPERTY IN THIS COMMONWEALTH, BY OR IN THE NAME OF ITSELF,
29 OR ANY PERSON, PARTNERSHIP, ASSOCIATION, LIMITED PARTNERSHIP,
30 JOINT-STOCK ASSOCIATION OR CORPORATION. THE WORD "CORPORATION"
19970H0134B1706 - 53 -
1 SHALL NOT INCLUDE BUILDING AND LOAN ASSOCIATIONS, BANKS, BANK
2 AND TRUST COMPANIES, NATIONAL BANKS, SAVINGS INSTITUTIONS, TRUST
3 COMPANIES, INSURANCE AND SURETY COMPANIES AND PENNSYLVANIA S
4 CORPORATIONS. THE WORD SHALL NOT INCLUDE:
5 1. ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS
6 A REAL ESTATE INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL
7 REVENUE CODE OR A QUALIFIED REAL ESTATE INVESTMENT TRUST
8 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OR
9 ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES
10 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE,
11 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND
12 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL
13 ESTATE INVESTMENT TRUST SUBSIDIARIES. A QUALIFIED REAL ESTATE
14 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL
15 REVENUE CODE SHALL BE TREATED AS PART OF THE REAL ESTATE
16 INVESTMENT TRUST THAT OWNS ALL OF THE STOCK OF THE QUALIFIED
17 REAL ESTATE INVESTMENT TRUST SUBSIDIARY.
18 2. ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS
19 A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL
20 REVENUE CODE AND IS REGISTERED WITH THE UNITED STATES SECURITIES
21 AND EXCHANGE COMMISSION UNDER THE INVESTMENT COMPANY ACT OF 1940
22 OR ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES
23 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE,
24 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND
25 ACTIVITIES OF REGULATED INVESTMENT COMPANIES.
26 3. ANY NONPROFIT CORPORATION, TRUST, OR OTHER ENTITY THAT IS
27 AN EXEMPT ORGANIZATION AS DEFINED BY SECTION 501 OF THE INTERNAL
28 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 501).
29 4. ANY CORPORATION ORGANIZED AS A NOT-FOR-PROFIT UNDER THE
30 LAWS OF THIS COMMONWEALTH OR THE LAWS OF ANY OTHER STATE.
19970H0134B1706 - 54 -
1 * * *
2 (3) "TAXABLE INCOME." 1. * * *
3 (P) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY 1, 1998,
4 IN THE CASE OF A CORPORATION THAT IS A PENNSYLVANIA S
5 CORPORATION, AS DEFINED IN SECTION 301(N.1), THE TERM "TAXABLE
6 INCOME" SHALL MEAN SUCH CORPORATION'S NET RECOGNIZED BUILT-IN
7 GAIN TO THE EXTENT OF AND AS DETERMINED FOR FEDERAL INCOME TAX
8 PURPOSES UNDER SECTION 1374(D)(2) OF THE INTERNAL REVENUE CODE
9 OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1374). FOR PURPOSES OF
10 THIS ARTICLE, A PENNSYLVANIA S CORPORATION AND EACH QUALIFIED
11 SUBCHAPTER S SUBSIDIARY, AS DEFINED IN SECTION 301(O.3), SHALL
12 BE TREATED AS SEPARATE CORPORATIONS.
13 SECTION 15. THE DEFINITIONS OF "AVERAGE NET INCOME,"
14 "CAPITAL STOCK," "CAPITAL STOCK VALUE," "DOMESTIC ENTITY,"
15 "FOREIGN ENTITY," "NET WORTH" AND "PROCESSING" IN SECTION 601 OF
16 THE ACT, AMENDED OR ADDED JULY 1, 1985 (P.L.78, NO.29), JULY 2,
17 1986 (P.L.318, NO.77), JUNE 16, 1994 (P.L.279, NO.48) AND JUNE
18 30, 1995 (P.L.139, NO.21), ARE AMENDED TO READ:
19 SECTION 601. DEFINITIONS AND REPORTS.--(A) THE FOLLOWING
20 WORDS, TERMS AND PHRASES WHEN USED IN THIS ARTICLE VI SHALL HAVE
21 THE MEANING ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE
22 CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:
23 * * * <--
24 "AVERAGE NET INCOME." THE SUM OF THE NET INCOME OR LOSS FOR <--
25 EACH OF THE CURRENT AND IMMEDIATELY PRECEDING FOUR YEARS,
26 DIVIDED BY FIVE. IF THE ENTITY HAS NOT BEEN IN EXISTENCE FOR A
27 PERIOD OF FIVE YEARS, THE AVERAGE NET INCOME SHALL BE THE
28 AVERAGE NET INCOME FOR THE NUMBER OF YEARS THAT THE ENTITY HAS
29 ACTUALLY BEEN IN EXISTENCE. IN COMPUTING AVERAGE NET INCOME,
30 LOSSES SHALL BE ENTERED AS COMPUTED, BUT IN NO CASE SHALL
19970H0134B1706 - 55 -
1 AVERAGE NET INCOME BE LESS THAN ZERO. THE NET INCOME OR LOSS OF
2 THE ENTITY FOR ANY TAXABLE YEAR SHALL BE THE AMOUNT SET FORTH AS
3 INCOME PER BOOKS ON THE INCOME TAX RETURN FILED BY THE ENTITY
4 WITH THE FEDERAL GOVERNMENT FOR SUCH TAXABLE YEAR, OR IF NO SUCH
5 RETURN IS MADE, AS WOULD HAVE BEEN SET FORTH HAD SUCH A RETURN
6 BEEN MADE, SUBJECT, HOWEVER, IN EITHER CASE TO ANY CORRECTION
7 THEREOF, FOR FRAUD, EVASION OR ERROR. IN THE CASE OF ANY ENTITY
8 WHICH HAS AN INVESTMENT IN ANOTHER CORPORATION, THE NET INCOME
9 OR LOSS SHALL BE COMPUTED ON AN UNCONSOLIDATED BASIS EXCLUSIVE
10 OF THE NET INCOME OR LOSS OF SUCH OTHER CORPORATION. IN THE CASE
11 OF A LIMITED LIABILITY COMPANY OR BUSINESS TRUST TAXABLE AS A
12 PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES, THE NET INCOME OR
13 LOSS OF THE LIMITED LIABILITY COMPANY OR BUSINESS TRUST FOR ANY
14 GIVEN YEAR SHALL BE REDUCED BY THE AMOUNT OF DISTRIBUTIONS MADE
15 BY SUCH LIMITED LIABILITY COMPANY OR BUSINESS TRUST TO ANY
16 MEMBER OF SUCH LIMITED LIABILITY COMPANY OR BUSINESS TRUST WHO
17 IS DEEMED TO BE MATERIALLY PARTICIPATING IN THE ACTIVITIES
18 CONDUCTED BY SUCH LIMITED LIABILITY COMPANY OR BUSINESS TRUST
19 FOR PURPOSES OF SECTION 469 OF THE INTERNAL REVENUE CODE OF 1986
20 (PUBLIC LAW 99-514, 26 U.S.C. § 469). FOR THIS PURPOSE,
21 DISTRIBUTIONS WHICH ARE MADE TO A MEMBER OF A LIMITED LIABILITY
22 COMPANY OR BUSINESS TRUST WITHIN THIRTY (30) DAYS OF THE END OF
23 A GIVEN YEAR MAY BE TREATED AS HAVING BEEN MADE IN THE PRECEDING
24 YEAR, AND NOT IN THE YEAR IN WHICH SUCH DISTRIBUTION IS ACTUALLY
25 MADE.
26 "CAPITAL STOCK." THE CAPITAL STOCK [OF AN ENTITY],
27 CERTIFICATES, MEMBERSHIPS AND ALL OTHER INTERESTS IN A DOMESTIC
28 OR FOREIGN [CORPORATION] ENTITY.
29 "CAPITAL STOCK VALUE." THE AMOUNT COMPUTED PURSUANT TO THE
30 FOLLOWING FORMULA: THE PRODUCT OF ONE-HALF TIMES THE SUM OF THE
19970H0134B1706 - 56 -
1 AVERAGE NET INCOME CAPITALIZED AT THE RATE OF NINE AND ONE-HALF
2 PER CENT PLUS SEVENTY-FIVE PER CENT OF NET WORTH, FROM WHICH
3 PRODUCT SHALL BE SUBTRACTED SEVENTY-FIVE PER CENT OF NET WORTH,
4 FROM WHICH PRODUCT SHALL BE SUBTRACTED [ONE HUNDRED THOUSAND
5 DOLLARS ($100,000)] ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS
6 ($125,000), THE ALGEBRAIC EQUIVALENT OF WHICH IS
7 (.5 X (AVERAGE NET INCOME/.095 + (.75)
8 (NET WORTH))) - [$100,000] $125,000
9 "DOMESTIC ENTITY." EVERY CORPORATION [HAVING CAPITAL STOCK], <--
10 EVERY JOINT-STOCK ASSOCIATION, [LIMITED PARTNERSHIP AND EVERY
11 COMPANY WHATSOEVER, NOW OR HEREAFTER ORGANIZED OR INCORPORATED
12 BY OR UNDER ANY LAWS OF THE COMMONWEALTH,] OR EVERY BUSINESS
13 TRUST TO WHICH 15 PA.C.S. CH. 95 (RELATING TO BUSINESS TRUSTS)
14 APPLIES [AND THAT FOR FEDERAL INCOME TAX PURPOSES IS TAXABLE AS
15 A CORPORATION], EVERY COMMON LAW BUSINESS TRUST OR EVERY LIMITED
16 LIABILITY COMPANY OTHER THAN A RESTRICTED PROFESSIONAL
17 CORPORATION SUBJECT TO 15 PA.C.S. CH. 89 (RELATING TO LIMITED
18 LIABILITY COMPANIES) ORGANIZED OR INCORPORATED BY OR UNDER ANY
19 LAWS OF THE COMMONWEALTH, OTHER THAN CORPORATIONS OF THE FIRST
20 CLASS, NONPROFIT CORPORATIONS, TRUSTS OR OTHER ENTITIES THAT ARE
21 EXEMPT ORGANIZATIONS AS DEFINED IN SECTION 501 OF THE INTERNAL
22 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 501),
23 CORPORATIONS ORGANIZED AS NOT-FOR-PROFIT UNDER THE LAWS OF THE
24 COMMONWEALTH OR THE LAWS OF ANY OTHER STATE AND COOPERATIVE
25 AGRICULTURAL ASSOCIATIONS NOT HAVING CAPITAL STOCK AND NOT
26 CONDUCTED FOR PROFIT, BANKS, SAVINGS INSTITUTIONS, TITLE
27 INSURANCE OR TRUST COMPANIES, BUILDING AND LOAN ASSOCIATIONS AND
28 INSURANCE COMPANIES IS A DOMESTIC ENTITY. THE TERM "DOMESTIC
29 ENTITY" SHALL NOT INCLUDE:
30 (1) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS
19970H0134B1706 - 57 -
1 A REAL ESTATE INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL
2 REVENUE CODE OR A QUALIFIED REAL ESTATE INVESTMENT TRUST
3 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OR
4 ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES
5 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE,
6 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND
7 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL
8 ESTATE INVESTMENT TRUST SUBSIDIARIES. A QUALIFIED REAL ESTATE
9 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL
10 REVENUE CODE SHALL BE TREATED AS PART OF THE REAL ESTATE
11 INVESTMENT TRUST THAT OWNS ALL OF THE STOCK OF THE QUALIFIED
12 REAL ESTATE INVESTMENT TRUST SUBSIDIARY.
13 (2) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS
14 A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL
15 REVENUE CODE AND IS REGISTERED WITH THE UNITED STATES SECURITIES
16 AND EXCHANGE COMMISSION UNDER THE INVESTMENT COMPANY ACT OF 1940
17 OR ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES
18 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE,
19 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND
20 ACTIVITIES OF REGULATED INVESTMENT COMPANIES.
21 * * *
22 "FOREIGN ENTITY." EVERY CORPORATION, JOINT-STOCK
23 ASSOCIATION, [LIMITED PARTNERSHIP AND COMPANY WHATSOEVER, NOW OR
24 HEREAFTER INCORPORATED OR ORGANIZED BY OR UNDER THE LAW OF ANY
25 OTHER STATE OR TERRITORY OF THE UNITED STATES, OR BY THE UNITED
26 STATES, OR BY OR UNDER THE LAW OF ANY FOREIGN GOVERNMENT,] OR
27 EVERY BUSINESS TRUST TO WHICH 15 PA.C.S. CH. 95 (RELATING TO
28 BUSINESS TRUSTS) APPLIES [AND THAT FOR FEDERAL INCOME TAX
29 PURPOSES IS TAXABLE AS A CORPORATION], COMMON LAW BUSINESS
30 TRUST, OR EVERY LIMITED LIABILITY COMPANY OTHER THAN A
19970H0134B1706 - 58 -
1 RESTRICTED PROFESSIONAL CORPORATION SUBJECT TO 15 PA.C.S. CH. 89
2 (RELATING TO LIMITED LIABILITY COMPANIES) INCORPORATED OR
3 ORGANIZED BY OR UNDER THE LAWS OF ANY JURISDICTION OTHER THAN
4 THE COMMONWEALTH, AND DOING BUSINESS IN AND LIABLE TO TAXATION
5 WITHIN THE COMMONWEALTH OR CARRYING ON ACTIVITIES IN THE
6 COMMONWEALTH, INCLUDING SOLICITATION OR EITHER OWNING OR HAVING
7 CAPITAL OR PROPERTY EMPLOYED OR USED IN THE COMMONWEALTH BY OR
8 IN THE NAME OF ANY LIMITED PARTNERSHIP OR JOINT-STOCK
9 ASSOCIATION, COPARTNERSHIP OR COPARTNERSHIPS, PERSON OR PERSONS,
10 OR IN ANY OTHER MANNER DOING BUSINESS WITHIN AND LIABLE TO
11 TAXATION WITHIN THE COMMONWEALTH OTHER THAN NONPROFIT
12 CORPORATIONS, TRUSTS OR OTHER ENTITIES THAT ARE EXEMPT
13 ORGANIZATIONS AS DEFINED IN SECTION 501 OF THE INTERNAL REVENUE
14 CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 501), CORPORATIONS
15 ORGANIZED AS NOT-FOR-PROFIT UNDER THE LAWS OF A JURISDICTION
16 OTHER THAN THE COMMONWEALTH, BANKS, SAVINGS INSTITUTIONS, TITLE
17 INSURANCE OR TRUST COMPANIES, BUILDING AND LOAN ASSOCIATIONS AND
18 INSURANCE COMPANIES IS A FOREIGN ENTITY. THE TERM "FOREIGN
19 ENTITY" SHALL NOT INCLUDE:
20 (1) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS
21 A REAL ESTATE INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL
22 REVENUE CODE OR A QUALIFIED REAL ESTATE INVESTMENT TRUST
23 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OR
24 ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES
25 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE,
26 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND
27 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL
28 ESTATE INVESTMENT TRUST SUBSIDIARIES. A QUALIFIED REAL ESTATE
29 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL
30 REVENUE CODE SHALL BE TREATED AS PART OF THE REAL ESTATE
19970H0134B1706 - 59 -
1 INVESTMENT TRUST THAT OWNS ALL OF THE STOCK OF THE QUALIFIED
2 REAL ESTATE INVESTMENT TRUST SUBSIDIARY.
3 (2) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS
4 A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL
5 REVENUE CODE AND IS REGISTERED WITH THE UNITED STATES SECURITIES
6 AND EXCHANGE COMMISSION UNDER THE INVESTMENT COMPANY ACT OF 1940
7 OR ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES
8 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE,
9 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND
10 ACTIVITIES OF REGULATED INVESTMENT COMPANIES.
11 "NET WORTH."
12 (1) NET WORTH SHALL BE THE SUM OF THE ENTITY'S ISSUED AND
13 OUTSTANDING CAPITAL STOCK, SURPLUS AND UNDIVIDED PROFITS AS PER
14 BOOKS SET FORTH FOR THE CLOSE OF SUCH TAX YEAR ON THE INCOME TAX
15 RETURN FILED BY THE ENTITY WITH THE FEDERAL GOVERNMENT, OR IF NO
16 SUCH RETURN IS MADE, AS WOULD HAVE BEEN SET FORTH HAD SUCH
17 RETURN BEEN MADE, SUBJECT, HOWEVER, IN EITHER CASE TO ANY
18 CORRECTION THEREOF FOR FRAUD, EVASION OR ERROR. IN THE CASE OF
19 ANY ENTITY WHICH HAS INVESTMENTS IN [THE COMMON STOCK OF] OTHER
20 CORPORATIONS, THE NET WORTH SHALL BE THE CONSOLIDATED NET WORTH
21 OF SUCH ENTITY COMPUTED IN ACCORDANCE WITH GENERALLY ACCEPTED
22 ACCOUNTING PRINCIPLES. IN THE CASE OF A LIMITED LIABILITY
23 COMPANY OR A BUSINESS TRUST, NET WORTH FOR ANY TAX YEAR SHALL BE
24 THE ENTITY'S ASSETS MINUS ITS LIABILITIES AS OF THE CLOSE OF
25 SUCH TAX YEAR. NET WORTH SHALL IN NO CASE BE LESS THAN ZERO.
26 (2) IF NET WORTH AS ARRIVED AT UNDER CLAUSE (1) FOR THE
27 CURRENT TAX YEAR IS GREATER THAN TWICE OR LESS THAN ONE-HALF OF
28 THE NET WORTH WHICH WOULD HAVE BEEN CALCULATED UNDER CLAUSE (1)
29 AS OF THE FIRST DAY OF THE CURRENT TAX YEAR, THEN NET WORTH FOR
30 THE CURRENT TAX YEAR SHALL BE THE AVERAGE OF THESE TWO AMOUNTS.
19970H0134B1706 - 60 -
1 "PROCESSING." THE FOLLOWING ACTIVITIES WHEN ENGAGED IN AS A
2 BUSINESS ENTERPRISE:
3 (1) THE FILTERING OR HEATING OF HONEY, THE COOKING OR
4 FREEZING OF FRUITS, VEGETABLES, MUSHROOMS, FISH, SEAFOOD, MEATS
5 OR POULTRY, WHEN THE PERSON ENGAGED IN SUCH BUSINESS PACKAGES
6 SUCH PROPERTY IN SEALED CONTAINERS FOR WHOLESALE DISTRIBUTION.
7 (1.1) THE PROCESSING OF VEGETABLES BY CLEANING, CUTTING,
8 CORING OR CHOPPING AND TREATING TO PRESERVE, STERILIZE OR PURIFY
9 AND SUBSTANTIALLY EXTEND THE USEFUL SHELF LIFE OF THE
10 VEGETABLES, WHEN THE PERSON ENGAGED IN SUCH ACTIVITY PACKAGES
11 SUCH PROPERTY IN SEALED CONTAINERS FOR WHOLESALE DISTRIBUTION.
12 (2) THE SCOURING, CARBONIZING, CORDING, COMBING, THROWING,
13 TWISTING OR WINDING OF NATURAL OR SYNTHETIC FIBERS, OR THE
14 SPINNING, BLEACHING, DYEING, PRINTING OR FINISHING OF YARNS OR
15 FABRICS, WHEN SUCH ACTIVITIES ARE PERFORMED PRIOR TO SALE TO THE
16 ULTIMATE CONSUMER.
17 (3) THE ELECTROPLATING, GALVANIZING, ENAMELING, ANODIZING,
18 COLORING, FINISHING, IMPREGNATING OR HEAT TREATING OF METALS OR
19 PLASTICS FOR SALE OR IN THE PROCESS OF MANUFACTURING.
20 (3.1) THE BLANKING, SHEARING, LEVELING, SLITTING OR BURNING
21 OF METALS FOR SALE TO OR USE BY A MANUFACTURER OR PROCESSOR.
22 (4) THE ROLLING, DRAWING OR EXTRUDING OF FERROUS AND
23 NONFERROUS METALS.
24 (5) THE FABRICATION FOR SALE OF ORNAMENTAL OR STRUCTURAL
25 METAL OR METAL STAIRS, STAIRCASES, GRATINGS, FIRE ESCAPES OR
26 RAILINGS (NOT INCLUDING FABRICATION WORK DONE AT THE
27 CONSTRUCTION SITE).
28 (6) THE PREPARATION OF ANIMAL FEED OR POULTRY FEED FOR SALE.
29 (7) THE PRODUCTION, PROCESSING AND BOTTLING OF NONALCOHOLIC
30 BEVERAGES FOR WHOLESALE DISTRIBUTION.
19970H0134B1706 - 61 -
1 (8) THE SLAUGHTERING AND DRESSING OF ANIMALS FOR MEAT TO BE
2 SOLD OR TO BE USED IN PREPARING MEAT PRODUCTS FOR SALE, AND THE
3 PREPARATION OF MEAT PRODUCTS, INCLUDING LARD, TALLOW, GREASE,
4 COOKING AND INEDIBLE OILS FOR WHOLESALE DISTRIBUTION.
5 (9) THE OPERATION OF A SAWMILL OR PLANING MILL FOR THE
6 PRODUCTION OF LUMBER OR LUMBER PRODUCTS FOR SALE.
7 (10) THE MILLING FOR SALE OF FLOUR OR MEAL FROM GRAINS.
8 (10.1) THE AGING, STRIPPING, CONDITIONING, CRUSHING AND
9 BLENDING OF TOBACCO LEAVES FOR USE AS CIGAR FILLER OR AS
10 COMPONENTS OF SMOKELESS TOBACCO PRODUCTS FOR SALE TO
11 MANUFACTURERS OF TOBACCO PRODUCTS.
12 (11) THE PUBLISHING OF BOOKS, NEWSPAPERS, MAGAZINES OR OTHER
13 PERIODICALS, PRINTING AND BROADCASTING RADIO AND TELEVISION
14 PROGRAMS BY LICENSED COMMERCIAL OR EDUCATIONAL STATIONS.
15 (12) THE PROCESSING OF USED LUBRICATING OILS.
16 (13) THE BLENDING, RECTIFICATION OR PRODUCTION BY
17 DISTILLATION OR OTHERWISE OF ALCOHOL OR ALCOHOLIC LIQUORS,
18 EXCEPT THE DISTILLATION OF ALCOHOL FROM BYPRODUCTS OF WINEMAKING
19 FOR THE SOLE PURPOSE OF FORTIFYING WINE.
20 (14) THE SALVAGING, RECYCLING OR RECLAIMING OF USED
21 MATERIALS TO BE RECYCLED INTO A MANUFACTURING PROCESS.
22 (15) THE DEVELOPMENT OR SUBSTANTIAL MODIFICATION OF COMPUTER
23 PROGRAMS OR SOFTWARE FOR SALE TO UNRELATED PERSONS FOR THEIR
24 DIRECT AND INDEPENDENT USE.
25 * * *
26 SECTION 16. THE ACT IS AMENDED BY ADDING SECTIONS TO READ:
27 SECTION 602.4. SEPARATE ENTITIES.--FOR PURPOSES OF THIS
28 ARTICLE, EACH PENNSYLVANIA S CORPORATION AND EACH QUALIFIED
29 SUBCHAPTER S SUBSIDIARY, AS DEFINED IN SECTION 301(O.3), SHALL
30 BE TREATED AS SEPARATE CORPORATIONS.
19970H0134B1706 - 62 -
1 SECTION 602.5. SHOWS AND FLEA MARKETS.--A CORPORATION THAT
2 CONFINES ITS ACTIVITIES IN THIS COMMONWEALTH DURING THE COURSE
3 OF A CALENDAR YEAR TO ATTENDANCE AT AN ORGANIZED "SHOW" OR "FLEA
4 MARKET" FOR THE PURPOSE OF EXHIBITING ITS GOODS AND MAKING SALES
5 THEREFROM SHALL NOT BE SUBJECT TO THE MINIMUM TAX IMPOSED UNDER
6 ARTICLE VI BASED SOLELY UPON SUCH ATTENDANCE IF LIMITED TO NO
7 MORE THAN TWENTY DAYS DURING THE YEAR, WITH NO MORE THAN FIVE
8 DAYS BEING CONSECUTIVE.
9 Section 5 7 17. Section 1101-C of the act is amended by <--
10 adding definitions to read:
11 Section 1101-C. Definitions.--The following words when used
12 in this article shall have the meanings ascribed to them in this
13 section:
14 * * *
15 "Living trust." Any trust, other than a business trust,
16 intended as a will substitute by the settlor which becomes
17 effective during the lifetime of the settlor, but from which
18 trust distributions cannot be made to any beneficiaries other
19 than the settlor prior to the death of the settlor.
20 * * *
21 "Ordinary trust." Any trust, other than a business trust or
22 a living trust, which takes effect during the lifetime of the
23 settlor and for which the trustees of the trust take title to
24 property primarily for the purpose of protecting, managing or
25 conserving it until distribution to the named beneficiaries of
26 the trust. An ordinary trust does not include a trust that has
27 an objective to carry on business and divide gains nor does it
28 either expressly or impliedly have any of the following
29 features: the treatment of beneficiaries as associates, the
30 treatment of the interests in the trust as personal property,
19970H0134B1706 - 63 -
1 the free transferability of beneficial interests in the trust,
2 centralized management by the trustee or the beneficiaries, or
3 continuity of life.
4 * * *
5 Section 6 8. Section 1102-C.3(8) and (9) of the act, added <--
6 July 2, 1986 (P.L.318, No.77), are amended and the section is
7 amended by adding clauses to read:
8 SECTION 18. SECTION 1102-C.3(8), (9) AND (18) OF THE ACT, <--
9 AMENDED OR ADDED JULY 2, 1986 (P.L.318, NO.77) AND JULY 1, 1989
10 (P.L.95, NO.21), ARE AMENDED AND THE SECTION IS AMENDED BY
11 ADDING CLAUSES TO READ:
12 Section 1102-C.3. Excluded Transactions.--The tax imposed by
13 section 1102-C shall not be imposed upon:
14 * * *
15 (8) A transfer for no or nominal actual consideration to a
16 trustee of an ordinary trust where the transfer of the same
17 property would be exempt if the transfer was made directly from
18 the grantor to all of the possible beneficiaries that are
19 entitled to receive the property or proceeds from the sale of
20 the property under the trust, whether or not such beneficiaries
21 are contingent or specifically named. A trust clause which
22 identifies the contingent beneficiaries by reference to the
23 heirs of the trust settlor as determined by the laws of the
24 intestate succession shall not disqualify a transfer from the
25 exclusion provided by this clause. No such exemption shall be
26 granted unless the recorder of deeds is presented with a copy of
27 the trust instrument that clearly identifies the grantor and all
28 possible beneficiaries.
29 (8.1) A transfer for no or nominal actual consideration to a
30 trustee of a living trust from the settlor of the living trust.
19970H0134B1706 - 64 -
1 No such exemption shall be granted unless the recorder of deed
2 is presented with a copy of the living trust instrument.
3 (9) A transfer for no or nominal actual consideration from a
4 trustee [to a beneficiary of an ordinary trust.] of an ordinary
5 trust to a specifically named beneficiary that is entitled to
6 receive the property under the recorded trust instrument or to a
7 contingent beneficiary where the transfer of the same property
8 would be exempt if the transfer was made by the grantor of the
9 property into the trust to that beneficiary. However, any
10 transfer of real estate from a living trust during the settlor's
11 lifetime shall be considered for the purposes of this article as
12 if such transfer were made directly from the settlor to the
13 grantee.
14 (9.1) A transfer for no or nominal actual consideration from
15 a trustee of a living trust after the death of the settlor of
16 the trust or from a trustee of a trust created pursuant to the
17 will of a decedent to a beneficiary to whom the property is
18 devised or bequeathed.
19 (9.2) A transfer for no or nominal actual consideration from
20 the trustee of a living trust to the settlor of the living trust
21 if such property was originally conveyed to the trustee by the
22 settlor.
23 * * *
24 (18) A TRANSFER TO A CONSERVANCY WHICH POSSESSES A TAX- <--
25 EXEMPT STATUS PURSUANT TO SECTION 501(C)(3) OF THE INTERNAL
26 REVENUE CODE OF 1954 (68A STAT. 3, 26 U.S.C. § 501(C)(3)) AND
27 WHICH HAS AS ITS PRIMARY PURPOSE PRESERVATION OF LAND FOR
28 HISTORIC, RECREATIONAL, SCENIC, AGRICULTURAL OR OPEN-SPACE
29 OPPORTUNITIES[,]; OR A TRANSFER FROM SUCH A CONSERVANCY TO THE
30 UNITED STATES, THE COMMONWEALTH OR TO ANY OF THEIR
19970H0134B1706 - 65 -
1 INSTRUMENTALITIES, AGENCIES OR POLITICAL SUBDIVISIONS[.]; OR ANY
2 TRANSFER FROM SUCH A CONSERVANCY WHERE THE REAL ESTATE IS
3 ENCUMBERED BY A PERPETUAL AGRICULTURAL CONSERVATION EASEMENT AS
4 DEFINED BY THE ACT OF JUNE 30, 1981 (P.L.128, NO.43), KNOWN AS
5 THE "AGRICULTURAL AREA SECURITY LAW," AND SUCH CONSERVANCY HAS
6 OWNED THE REAL ESTATE FOR AT LEAST TWO YEARS IMMEDIATELY PRIOR
7 TO THE TRANSFER.
8 * * *
9 SECTION 19. SECTION 1113-C OF THE ACT, ADDED JULY 2, 1986
10 (P.L.318, NO.77), IS AMENDED TO READ:
11 SECTION 1113-C. REFUNDS.--(A) WHENEVER THE AMOUNT DUE UPON
12 DETERMINATION, REDETERMINATION OR REVIEW IS LESS THAN THE AMOUNT
13 PAID TO THE DEPARTMENT ON ACCOUNT THEREOF, THE DEPARTMENT SHALL
14 ENTER A CREDIT IN THE AMOUNT OF SUCH DIFFERENCE TO THE ACCOUNT
15 OF THE PERSON WHO PAID THE TAX.
16 (B) WHERE THERE HAS BEEN NO DETERMINATION OF UNPAID TAX, THE
17 DEPARTMENT SHALL HAVE THE POWER, AND ITS DUTY SHALL BE, TO HEAR
18 AND DECIDE ANY APPLICATION FOR REFUND AND, UPON THE ALLOWANCE OF
19 SUCH APPLICATION, TO ENTER A CREDIT IN THE AMOUNT OF THE
20 OVERPAYMENT TO THE ACCOUNT OF THE PERSON WHO PAID THE TAX. SUCH
21 APPLICATION MUST BE FILED [WITHIN TWO YEARS AFTER THE DATE OF
22 PAYMENT] UNDER SECTION 3003.1.
23 SECTION 20. SECTION 1253 OF THE ACT, ADDED DECEMBER 21, 1981
24 (P.L.482, NO.141), IS AMENDED TO READ:
25 SECTION 1253. LIMITATIONS.--CLAIMS FOR REFUND OR ALLOWANCE
26 OF TAX IMPOSED BY THIS ARTICLE SHALL BE FILED [WITHIN ONE YEAR
27 FROM THE DATE OF PAYMENT OF THE TAX OR FROM THE DATE OF THE
28 OCCURRENCE GIVING RISE TO THE REFUND OR ALLOWANCE] UNDER SECTION
29 3003.1 AND SHALL BE IN SUCH FORM AND CONTAIN SUCH INFORMATION AS
30 THE DEPARTMENT SHALL, BY REGULATION, PRESCRIBE.
19970H0134B1706 - 66 -
1 SECTION 9 21. SECTION 1296 OF THE ACT, AMENDED AUGUST 4, <--
2 1991 (P.L.97, NO.22), IS AMENDED TO READ:
3 SECTION 1296. DISPOSITION OF CERTAIN FUNDS.--ALL CIGARETTE
4 TAX REVENUES COLLECTED BY THE DEPARTMENT OF REVENUE UNDER THIS
5 ARTICLE AND HERETOFORE PAID INTO THE PARENT REIMBURSEMENT FUND
6 IN ACCORDANCE WITH THE ACT OF AUGUST 27, 1971 (P.L.358, NO.92),
7 KNOWN AS THE "PARENT REIMBURSEMENT ACT FOR NONPUBLIC EDUCATION,"
8 SHALL BE TRANSFERRED INTO THE GENERAL FUND. BEGINNING JULY 1,
9 1993, TWO THIRTY-FIRSTS OF CIGARETTE TAX RECEIPTS SHALL BE
10 TRANSFERRED INTO THE AGRICULTURAL CONSERVATION EASEMENT PURCHASE
11 FUND, AND BEGINNING [JULY 1, 1992, TWO THIRTY-FIRSTS] JANUARY 1,
12 1997, THREE THIRTY-FIRSTS OF CIGARETTE TAX RECEIPTS SHALL BE
13 PAID INTO A RESTRICTED ACCOUNT TO BE KNOWN AS THE CHILDREN'S
14 HEALTH FUND FOR HEALTH CARE FOR INDIGENT CHILDREN, AND THE
15 REMAINDER SHALL BE PAID INTO THE GENERAL FUND. MONEYS IN THE
16 CHILDREN'S HEALTH FUND SHALL NOT BE EXPENDED UNTIL THE ENACTMENT
17 OF LEGISLATION TO IMPLEMENT A PROGRAM OF EXPANDED ACCESS TO
18 HEALTH CARE FOR CHILDREN. THE TRANSFERS REQUIRED BY THIS SECTION
19 SHALL BE MADE BY JULY 15 FOR THE PRECEDING SIX MONTHS AND BY
20 JANUARY 15 FOR THE PRECEDING SIX MONTHS.
21 SECTION 10. THE DEFINITION OF "BUSINESS FIRM" IN SECTION <--
22 1902-A OF THE ACT, AMENDED JULY 1, 1994 (P.L.413, NO.67), IS
23 AMENDED TO READ:
24 SECTION 1902-A. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND
25 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS
26 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
27 CLEARLY INDICATES A DIFFERENT MEANING:
28 "BUSINESS FIRM." ANY BUSINESS ENTITY AUTHORIZED TO DO
29 BUSINESS IN THIS COMMONWEALTH AND SUBJECT TO TAXES IMPOSED BY
30 ARTICLE IV, VI, VII, VII-A, VIII, VIII-A, IX, X OR XV OF THIS
19970H0134B1706 - 67 -
1 ACT. THE TERM ALSO INCLUDES BUSINESSES OPERATING AS S
2 CORPORATIONS, SOLE PROPRIETORSHIPS OR PARTNERSHIPS WHICH ARE
3 SUBJECT TO TAXES IMPOSED UNDER ARTICLE III OF THIS ACT.
4 * * *
5 SECTION 22. THE HEADING OF ARTICLE XVI-A OF THE ACT IS <--
6 AMENDED TO READ:
7 ARTICLE XVI-A
8 [PASSENGER CAR] VEHICLE RENTAL TAX
9 SECTION 23. SECTIONS 1601-A, 1602-A, 1603-A AND 1604-A OF
10 THE ACT, ADDED JUNE 16, 1994 (P.L.279, NO.48), ARE AMENDED TO
11 READ:
12 SECTION 1601-A. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND
13 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS
14 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
15 CLEARLY INDICATES A DIFFERENT MEANING:
16 "[MOTOR] RENTAL VEHICLE." A PRIVATE PASSENGER MOTOR VEHICLE
17 DESIGNED TO TRANSPORT FIFTEEN OR FEWER PASSENGERS OR A TRUCK,
18 TRAILER OR SEMITRAILER USED IN THE TRANSPORTATION OF PROPERTY
19 OTHER THAN COMMERCIAL FREIGHT, THAT IS RENTED WITHOUT A DRIVER
20 AND IS PART OF A FLEET OF FIVE OR MORE [PASSENGER] RENTAL
21 VEHICLES USED FOR THAT PURPOSE, OWNED OR LEASED BY THE SAME
22 PERSON OR ENTITY.
23 "VEHICLE RENTAL COMPANY." ANY BUSINESS ENTITY ENGAGED IN THE
24 BUSINESS OF RENTING MOTOR VEHICLES IN THIS COMMONWEALTH.
25 SECTION 1602-A. [PASSENGER CAR] VEHICLE RENTAL TAX.--(A)
26 EACH VEHICLE RENTAL COMPANY SHALL COLLECT, AT THE TIME THE
27 [MOTOR] RENTAL VEHICLE IS RENTED IN THIS COMMONWEALTH, ON EACH
28 RENTAL CONTRACT FOR A PERIOD OF TWENTY-NINE OR FEWER CONSECUTIVE
29 DAYS, A TAX EQUAL TO TWO PER CENT OF THE PURCHASE PRICE OF THE
30 RENTAL.
19970H0134B1706 - 68 -
1 SECTION 1603-A. REPORTING AND REMITTANCE OF TAX.--(A) THE
2 TAX SHALL BE REPORTED AND REMITTED IN THE SAME MANNER AS THE TAX
3 IMPOSED BY ARTICLE XXIII OF THIS ACT, EXCEPT THAT, NO LATER THAN
4 FEBRUARY 15 OF EACH CALENDAR YEAR, EACH VEHICLE RENTAL COMPANY
5 SHALL FILE A REPORT WITH THE DEPARTMENT OF REVENUE ON A FORM
6 PRESCRIBED BY THE DEPARTMENT. THE REPORT SHALL INCLUDE THE
7 AMOUNT OF TAX REMITTED DURING THE PREVIOUS CALENDAR YEAR AND THE
8 TOTAL AMOUNT OF [MOTOR] RENTAL VEHICLE LICENSING AND TITLE FEES
9 IMPOSED BY THE COMMONWEALTH UNDER 75 PA.C.S. (RELATING TO
10 VEHICLES) ON THE VEHICLE RENTAL COMPANY'S [MOTOR] RENTAL
11 VEHICLES AND PAID TO THE COMMONWEALTH BY THE VEHICLE RENTAL
12 COMPANY IN THE PREVIOUS CALENDAR YEAR.
13 (B) WHEN RECONCILING THE REPORTS AND REMITTANCES FILED
14 DURING THE PREVIOUS CALENDAR YEAR WITH THE ANNUAL REPORT, THE
15 DEPARTMENT SHALL ALLOW AGAINST THE TAX IMPOSED BY SUBSECTION (A)
16 A CREDIT EQUAL TO THE TOTAL AMOUNT OF LICENSING AND TITLE FEES
17 IMPOSED BY THE COMMONWEALTH UNDER 75 PA.C.S. ON THE VEHICLE
18 RENTAL COMPANY'S [MOTOR] RENTAL VEHICLES AND PAID TO THE
19 COMMONWEALTH BY THE VEHICLE RENTAL COMPANY IN THE PREVIOUS
20 CALENDAR YEAR. THE DEPARTMENT SHALL REFUND TO THE TAXPAYER THE
21 CREDIT VERIFIED FROM THE ANNUAL REPORT. THE AMOUNT OF SUCH
22 VERIFIED CREDIT SHALL NOT EXCEED THE AMOUNT OF TAX COLLECTED AND
23 REMITTED BY THE TAXPAYER FOR THE CALENDAR YEAR FOR WHICH THE
24 CLAIM IS MADE. IF THE AMOUNT OF THE TAX COLLECTED EXCEEDS THE
25 AMOUNT OF LICENSING FEES AND TITLE FEES PAID THE COMMONWEALTH,
26 THE EXCESS COLLECTION SHALL BE DEPOSITED BY THE DEPARTMENT INTO
27 THE GENERAL FUND.
28 (C) UNLESS OTHERWISE NOTED, THE PROVISIONS OF ARTICLE II OF
29 THIS ACT SHALL APPLY TO THE TAX REQUIRED UNDER THIS ARTICLE.
30 SECTION 1604-A. APPLICATION.--THIS ARTICLE SHALL APPLY TO
19970H0134B1706 - 69 -
1 ALL RENTAL CONTRACTS ENTERED INTO ON OR AFTER JULY 1, [1994]
2 1997.
3 SECTION 24. THE ACT IS AMENDED BY ADDING AN ARTICLE TO READ:
4 ARTICLE XVII-B
5 RESEARCH AND DEVELOPMENT TAX CREDIT
6 SECTION 1701-B. SHORT TITLE.--THIS ARTICLE SHALL BE KNOWN
7 AND MAY BE CITED AS THE RESEARCH AND DEVELOPMENT TAX CREDIT LAW.
8 SECTION 1702-B. DEFINITIONS.--THE FOLLOWING WORDS AND
9 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS
10 GIVEN TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT CLEARLY
11 INDICATES A DIFFERENT MEANING:
12 "DEPARTMENT." THE DEPARTMENT OF REVENUE OF THE COMMONWEALTH.
13 "GROSS RECEIPTS." GROSS RECEIPTS FOR ANY TAXABLE YEAR SHALL
14 CONSIST ONLY OF GROSS RECEIPTS WHICH ARE EFFECTIVELY CONNECTED
15 WITH THE CONDUCT OF A TRADE OR BUSINESS WITHIN THIS
16 COMMONWEALTH. THE DETERMINATION OF WHETHER GROSS RECEIPTS ARE
17 EFFECTIVELY CONNECTED WITH THE CONDUCT OF A TRADE OR BUSINESS
18 WITHIN THIS COMMONWEALTH SHALL BE MADE BY REFERENCE TO THE
19 STANDARD ESTABLISHED IN SECTION 401(3)2.(A)(16) AND (17) OF THIS
20 ACT.
21 "INTERNAL REVENUE CODE." THE INTERNAL REVENUE CODE OF 1986
22 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.).
23 "PENNSYLVANIA BASE AMOUNT." BASE AMOUNT AS DEFINED IN
24 SECTION 41(C) OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW
25 99-514, 26 U.S.C. § 41(C)), EXCEPT THAT REFERENCES TO "QUALIFIED
26 RESEARCH EXPENSE" SHALL MEAN "PENNSYLVANIA QUALIFIED RESEARCH
27 AND DEVELOPMENT EXPENSE" AND REFERENCES TO "QUALIFIED RESEARCH"
28 SHALL MEAN "PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT."
29 REFERENCES TO "FIXED BASE PERCENTAGE" SHALL MEAN THE PERCENTAGE
30 WHICH THE PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT
19970H0134B1706 - 70 -
1 EXPENSE FOR THE FOUR TAXABLE YEARS IMMEDIATELY PRECEDING THE
2 TAXABLE YEAR IN WHICH THE EXPENSE IS INCURRED IS TO THE GROSS
3 RECEIPTS FOR SUCH YEARS. THE FIXED BASE PERCENTAGE FOR A
4 TAXPAYER WHO HAS FEWER THAN FOUR BUT AT LEAST ONE TAXABLE YEAR
5 SHALL BE DETERMINED IN THE SAME MANNER USING THE NUMBER OF
6 IMMEDIATELY PRECEDING TAXABLE YEARS TO ARRIVE AT THE PERCENTAGE.
7 "PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT." QUALIFIED
8 RESEARCH AND DEVELOPMENT AS DEFINED IN SECTION 41(D) OF THE
9 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. §
10 41(D)), THAT IS CONDUCTED IN THIS COMMONWEALTH.
11 "PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE."
12 QUALIFIED RESEARCH EXPENSE AS DEFINED IN SECTION 41(B) OF THE
13 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.C.S. §
14 41(B)) INCURRED FOR PENNSYLVANIA QUALIFIED RESEARCH AND
15 DEVELOPMENT.
16 "QUALIFIED TAX LIABILITY." THE LIABILITY FOR TAXES IMPOSED
17 UNDER ARTICLE III, IV OR VI OF THIS ACT. THE TERM SHALL INCLUDE
18 THE LIABILITY FOR TAXES IMPOSED UNDER ARTICLE III ON A
19 SHAREHOLDER OF A PENNSYLVANIA S CORPORATION.
20 "RESEARCH AND DEVELOPMENT TAX CREDIT." THE CREDIT PROVIDED
21 UNDER THIS ARTICLE.
22 "SECRETARY." THE SECRETARY OF REVENUE OF THE COMMONWEALTH.
23 "SMALL BUSINESS." A FOR-PROFIT CORPORATION, LIMITED
24 LIABILITY COMPANY, PARTNERSHIP OR PROPRIETORSHIP WITH NET BOOK
25 VALUE OF ASSETS TOTALING, AT THE BEGINNING OR END OF THE TAXABLE
26 YEAR FOR WHICH PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT
27 EXPENSE IS INCURRED, AS REPORTED ON THE BALANCE SHEET, LESS THAN
28 FIVE MILLION DOLLARS ($5,000,000).
29 "TAXPAYER." AN ENTITY SUBJECT TO TAX UNDER ARTICLE III, IV
30 OR VI OF THIS ACT. THE TERM SHALL INCLUDE THE SHAREHOLDER OF A
19970H0134B1706 - 71 -
1 PENNSYLVANIA S CORPORATION THAT RECEIVES A RESEARCH AND
2 DEVELOPMENT TAX CREDIT.
3 SECTION 1703-B. CREDIT FOR RESEARCH AND DEVELOPMENT
4 EXPENSES.--(A) A TAXPAYER WHO INCURS PENNSYLVANIA QUALIFIED
5 RESEARCH AND DEVELOPMENT EXPENSE IN A TAXABLE YEAR MAY APPLY FOR
6 A RESEARCH AND DEVELOPMENT TAX CREDIT AS PROVIDED IN THIS
7 ARTICLE. BY SEPTEMBER 15, A TAXPAYER MUST SUBMIT AN APPLICATION
8 TO THE DEPARTMENT FOR PENNSYLVANIA QUALIFIED RESEARCH AND
9 DEVELOPMENT EXPENSE INCURRED IN THE TAXABLE YEAR THAT ENDED IN
10 THE PRIOR CALENDAR YEAR.
11 (B) A TAXPAYER THAT IS QUALIFIED UNDER SUBSECTION (A) SHALL
12 RECEIVE A RESEARCH AND DEVELOPMENT TAX CREDIT FOR THE TAXABLE
13 YEAR IN THE AMOUNT OF TEN PER CENT OF THE EXCESS OF THE
14 TAXPAYER'S TOTAL PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT
15 EXPENSE FOR THE TAXABLE YEAR OVER THE TAXPAYER'S PENNSYLVANIA
16 BASE AMOUNT.
17 (C) BY DECEMBER 15 OF THE CALENDAR YEAR FOLLOWING THE CLOSE
18 OF THE TAXABLE YEAR DURING WHICH THE PENNSYLVANIA QUALIFIED
19 RESEARCH AND DEVELOPMENT EXPENSE WAS INCURRED, THE DEPARTMENT
20 SHALL NOTIFY THE TAXPAYER OF THE AMOUNT OF THE TAXPAYER'S
21 RESEARCH AND DEVELOPMENT TAX CREDIT APPROVED BY THE DEPARTMENT.
22 SECTION 1704-B. CARRYOVER, CARRYBACK, REFUND AND ASSIGNMENT
23 OF CREDIT.--(A) THE AMOUNT OF THE RESEARCH AND DEVELOPMENT TAX
24 CREDIT THAT A TAXPAYER MAY USE AGAINST ANY ONE QUALIFIED TAX
25 LIABILITY DURING ANY YEAR MAY NOT EXCEED FIFTY PER CENT OF SUCH
26 QUALIFIED TAX LIABILITY FOR THAT TAXABLE YEAR. IF THE TAXPAYER
27 CANNOT USE THE ENTIRE AMOUNT OF THE RESEARCH AND DEVELOPMENT TAX
28 CREDIT FOR THE TAXABLE YEAR IN WHICH THE RESEARCH AND
29 DEVELOPMENT TAX CREDIT IS FIRST APPROVED, THEN THE EXCESS MAY BE
30 CARRIED OVER TO SUCCEEDING TAXABLE YEARS AND USED AS A CREDIT
19970H0134B1706 - 72 -
1 AGAINST THE QUALIFIED TAX LIABILITY OF THE TAXPAYER FOR THOSE
2 TAXABLE YEARS. EACH TIME THAT THE RESEARCH AND DEVELOPMENT TAX
3 CREDIT IS CARRIED OVER TO A SUCCEEDING TAXABLE YEAR, IT IS TO BE
4 REDUCED BY THE AMOUNT THAT WAS USED AS A CREDIT DURING THE
5 IMMEDIATELY PRECEDING TAXABLE YEAR. THE RESEARCH AND DEVELOPMENT
6 TAX CREDIT PROVIDED BY THIS ARTICLE MAY BE CARRIED OVER AND
7 APPLIED TO SUCCEEDING TAXABLE YEARS FOR NO MORE THAN FIFTEEN
8 TAXABLE YEARS FOLLOWING THE FIRST TAXABLE YEAR FOR WHICH THE
9 TAXPAYER WAS ENTITLED TO CLAIM THE CREDIT.
10 (B) A RESEARCH AND DEVELOPMENT TAX CREDIT APPROVED BY THE
11 DEPARTMENT FOR PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT
12 EXPENSE IN A TAXABLE YEAR FIRST SHALL BE APPLIED AGAINST THE
13 TAXPAYER'S QUALIFIED TAX LIABILITY FOR THE CURRENT TAXABLE YEAR
14 AS OF THE DATE ON WHICH THE CREDIT WAS APPROVED BEFORE THE
15 RESEARCH AND DEVELOPMENT TAX CREDIT IS APPLIED AGAINST ANY TAX
16 LIABILITY UNDER SUBSECTION (A).
17 (C) A TAXPAYER IS NOT ENTITLED TO CARRYBACK, OBTAIN A REFUND
18 OF, OR ASSIGN AN UNUSED RESEARCH AND DEVELOPMENT TAX CREDIT.
19 SECTION 1705-B. APPLICATION OF INTERNAL REVENUE CODE.--THE
20 PROVISIONS OF SECTION 41 OF THE INTERNAL REVENUE CODE AND THE
21 REGULATIONS PROMULGATED REGARDING THOSE PROVISIONS SHALL APPLY
22 TO THE DEPARTMENT'S INTERPRETATION AND ADMINISTRATION OF THE
23 CREDIT PROVIDED BY THIS ARTICLE. REFERENCES TO THE INTERNAL
24 REVENUE CODE SHALL MEAN THE SECTIONS OF THE INTERNAL REVENUE
25 CODE AS EXISTING ON ANY DATE OF INTERPRETATION OF THIS ARTICLE.
26 HOWEVER, IF THOSE SECTIONS OF THE INTERNAL REVENUE CODE
27 REFERENCED IN THIS ARTICLE ARE REPEALED OR TERMINATED,
28 REFERENCES TO THE INTERNAL REVENUE CODE SHALL MEAN THOSE
29 SECTIONS LAST HAVING FULL FORCE AND EFFECT. IF, AFTER REPEAL OR
30 TERMINATION, THE INTERNAL REVENUE CODE SECTIONS ARE REVISED OR
19970H0134B1706 - 73 -
1 REENACTED, REFERENCES HEREIN TO INTERNAL REVENUE CODE SECTIONS
2 SHALL MEAN THOSE REVISED OR REENACTED SECTIONS.
3 SECTION 1706-B. DETERMINATION OF QUALIFIED RESEARCH AND
4 DEVELOPMENT EXPENSES.--IN PRESCRIBING STANDARDS FOR DETERMINING
5 WHICH QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE ARE CONSIDERED
6 PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE FOR
7 PURPOSES OF COMPUTING THE CREDIT PROVIDED BY THIS ARTICLE, THE
8 DEPARTMENT MAY CONSIDER:
9 (1) THE LOCATION WHERE THE SERVICES ARE PERFORMED.
10 (2) THE RESIDENCE OR BUSINESS LOCATION OF THE PERSON OR
11 PERSONS PERFORMING THE SERVICE.
12 (3) THE LOCATION WHERE QUALIFIED RESEARCH AND DEVELOPMENT
13 SUPPLIES ARE CONSUMED.
14 (4) OTHER FACTORS THAT THE DEPARTMENT DETERMINES ARE
15 RELEVANT FOR THE DETERMINATION.
16 SECTION 1707-B. TIME LIMITATIONS.--A TAXPAYER IS NOT
17 ENTITLED TO A RESEARCH AND DEVELOPMENT TAX CREDIT FOR
18 PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT EXPENSES
19 INCURRED IN TAXABLE YEARS ENDING AFTER DECEMBER 31, 2004. THE
20 TERMINATION DATE IN SECTION 41(H) OF THE INTERNAL REVENUE CODE
21 DOES NOT APPLY TO A TAXPAYER WHO IS ELIGIBLE FOR THE RESEARCH
22 AND DEVELOPMENT TAX CREDIT UNDER THIS ARTICLE FOR THE TAXABLE
23 YEAR IN WHICH THE PENNSYLVANIA QUALIFIED RESEARCH AND
24 DEVELOPMENT EXPENSE IS INCURRED.
25 SECTION 1708-B. TRANSITIONAL RULE.--FOR THE PURPOSE OF
26 CALCULATING PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT
27 EXPENSE USED IN CALCULATING THE PENNSYLVANIA BASE AMOUNT FOR
28 TAXABLE YEARS ENDING AFTER 1991 AND BEFORE 1997, IF THE TAXPAYER
29 HAS INCURRED QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE BOTH
30 INSIDE AND OUTSIDE THIS COMMONWEALTH AND IS UNABLE TO DETERMINE
19970H0134B1706 - 74 -
1 THE AMOUNT OF PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT
2 EXPENSE, THE TAXPAYER MAY CALCULATE PENNSYLVANIA QUALIFIED
3 RESEARCH AND DEVELOPMENT EXPENSE BY MULTIPLYING QUALIFIED
4 RESEARCH AND DEVELOPMENT EXPENSE EVERYWHERE BY THE AVERAGE OF
5 THE PAYROLL AND PROPERTY FACTORS CALCULATED IN ACCORDANCE WITH
6 ARTICLE IV OF THIS ACT FOR THE CORRESPONDING TAXABLE YEARS IN
7 QUESTION.
8 SECTION 1709-B. LIMITATION ON CREDITS.--(A) THE TOTAL
9 AMOUNT OF CREDITS APPROVED BY THE DEPARTMENT SHALL NOT EXCEED
10 FIFTEEN MILLION DOLLARS ($15,000,000) IN ANY FISCAL YEAR. OF
11 THAT AMOUNT, THREE MILLION DOLLARS ($3,000,000) SHALL BE
12 ALLOCATED EXCLUSIVELY FOR SMALL BUSINESSES. HOWEVER, IF THE
13 TOTAL AMOUNTS ALLOCATED TO EITHER THE GROUP OF APPLICANTS
14 EXCLUSIVE OF SMALL BUSINESSES OR THE GROUP OF SMALL BUSINESS
15 APPLICANTS IS NOT APPROVED IN ANY FISCAL YEAR, THE UNUSED
16 PORTION WILL BECOME AVAILABLE FOR USE BY THE OTHER GROUP OF
17 QUALIFYING TAXPAYERS.
18 (B) IF THE TOTAL AMOUNT OF RESEARCH AND DEVELOPMENT TAX
19 CREDITS APPLIED FOR BY ALL TAXPAYERS, EXCLUSIVE OF SMALL
20 BUSINESSES, EXCEEDS THE AMOUNT ALLOCATED FOR THOSE CREDITS, THEN
21 THE RESEARCH AND DEVELOPMENT TAX CREDIT TO BE RECEIVED BY EACH
22 APPLICANT SHALL BE THE PRODUCT OF THE ALLOCATED AMOUNT
23 MULTIPLIED BY THE QUOTIENT OF THE RESEARCH AND DEVELOPMENT TAX
24 CREDIT APPLIED FOR BY THE APPLICANT DIVIDED BY THE TOTAL OF ALL
25 RESEARCH AND DEVELOPMENT CREDITS APPLIED FOR BY ALL APPLICANTS,
26 THE ALGEBRAIC EQUIVALENT OF WHICH IS:
27 TAXPAYER'S RESEARCH AND DEVELOPMENT TAX CREDIT=AMOUNT
28 ALLOCATED FOR THOSE CREDITS X (RESEARCH AND DEVELOPMENT
29 TAX CREDIT APPLIED FOR BY THE APPLICANT/TOTAL OF ALL
30 RESEARCH AND DEVELOPMENT TAX CREDITS APPLIED FOR BY ALL
19970H0134B1706 - 75 -
1 APPLICANTS).
2 (C) IF THE TOTAL AMOUNT OF RESEARCH AND DEVELOPMENT TAX
3 CREDITS APPLIED FOR BY ALL SMALL BUSINESS TAXPAYERS EXCEEDS THE
4 AMOUNT ALLOCATED FOR THOSE CREDITS, THEN THE RESEARCH AND
5 DEVELOPMENT TAX CREDIT TO BE RECEIVED BY EACH SMALL BUSINESS
6 APPLICANT SHALL BE THE PRODUCT OF THE ALLOCATED AMOUNT
7 MULTIPLIED BY THE QUOTIENT OF THE RESEARCH AND DEVELOPMENT TAX
8 CREDIT APPLIED FOR BY THE SMALL BUSINESS APPLICANT DIVIDED BY
9 THE TOTAL OF ALL RESEARCH AND DEVELOPMENT CREDITS APPLIED FOR BY
10 ALL SMALL BUSINESS APPLICANTS, THE ALGEBRAIC EQUIVALENT OF WHICH
11 IS:
12 TAXPAYER'S RESEARCH AND DEVELOPMENT TAX CREDIT=AMOUNT
13 ALLOCATED FOR THOSE CREDITS X (RESEARCH AND DEVELOPMENT
14 TAX CREDIT APPLIED FOR BY THE SMALL BUSINESS/TOTAL OF ALL
15 RESEARCH AND DEVELOPMENT TAX CREDITS APPLIED FOR BY ALL
16 SMALL BUSINESS APPLICANTS).
17 SECTION 1710-B. PENNSYLVANIA S CORPORATION SHAREHOLDER PASS-
18 THROUGH.--(A) IF A PENNSYLVANIA S CORPORATION DOES NOT HAVE AN
19 ELIGIBLE TAX LIABILITY AGAINST WHICH THE RESEARCH AND
20 DEVELOPMENT TAX CREDIT MAY BE APPLIED, A SHAREHOLDER OF THE
21 PENNSYLVANIA S CORPORATION IS ENTITLED TO A RESEARCH AND
22 DEVELOPMENT TAX CREDIT EQUAL TO THE RESEARCH AND DEVELOPMENT TAX
23 CREDIT DETERMINED FOR THE PENNSYLVANIA S CORPORATION FOR THE
24 TAXABLE YEAR MULTIPLIED BY THE PERCENTAGE OF THE PENNSYLVANIA S
25 CORPORATION'S DISTRIBUTIVE INCOME TO WHICH THE SHAREHOLDER IS
26 ENTITLED.
27 (B) THE CREDIT PROVIDED UNDER SUBSECTION (A) IS IN ADDITION
28 TO ANY RESEARCH AND DEVELOPMENT TAX CREDIT TO WHICH A
29 SHAREHOLDER OF A PENNSYLVANIA S CORPORATION IS OTHERWISE
30 ENTITLED UNDER THIS ARTICLE. HOWEVER, A PENNSYLVANIA S
19970H0134B1706 - 76 -
1 CORPORATION AND A SHAREHOLDER OF A PENNSYLVANIA S CORPORATION
2 MAY NOT CLAIM A CREDIT UNDER THIS ARTICLE FOR THE SAME QUALIFIED
3 RESEARCH AND DEVELOPMENT EXPENSE.
4 SECTION 1711-B. REPORT TO GENERAL ASSEMBLY.--THE SECRETARY
5 SHALL SUBMIT AN ANNUAL REPORT TO THE GENERAL ASSEMBLY INDICATING
6 THE EFFECTIVENESS OF THE CREDIT PROVIDED BY THIS ARTICLE NO
7 LATER THAN MARCH 15, FOLLOWING THE YEAR IN WHICH THE CREDITS
8 WERE APPROVED. THE REPORT SHALL INCLUDE THE NUMBER OF TAXPAYERS
9 UTILIZING THE CREDIT AS OF THE DATE OF THE REPORT AND THE AMOUNT
10 OF CREDITS APPROVED AND UTILIZED. THE REPORT MAY ALSO INCLUDE
11 ANY RECOMMENDATIONS FOR CHANGES IN THE CALCULATION OR
12 ADMINISTRATION OF THE CREDIT.
13 SECTION 1712-B. TERMINATION.--THE DEPARTMENT SHALL NOT
14 APPROVE A RESEARCH AND DEVELOPMENT TAX CREDIT UNDER THIS ARTICLE
15 FOR TAXABLE YEARS ENDING AFTER DECEMBER 31, 2004.
16 SECTION 1713-B. REGULATIONS.--THE SECRETARY SHALL PROMULGATE
17 REGULATIONS NECESSARY FOR THE IMPLEMENTATION AND ADMINISTRATION
18 OF THIS ARTICLE.
19 SECTION 11 25. SECTION 1902-A OF THE ACT, AMENDED OR ADDED <--
20 JUNE 16, 1994 (P.L.279, NO.48) AND JULY 1, 1994 (P.L.413,
21 NO.67), IS AMENDED TO READ:
22 SECTION 1902-A. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND
23 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS
24 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
25 CLEARLY INDICATES A DIFFERENT MEANING:
26 "BUSINESS FIRM." ANY BUSINESS ENTITY AUTHORIZED TO DO
27 BUSINESS IN THIS COMMONWEALTH AND SUBJECT TO TAXES IMPOSED BY
28 ARTICLE III, IV, VI, VII, VII-A, VIII, VIII-A, IX, X OR XV OF <--
29 THIS ACT.
30 "COMMUNITY SERVICES." ANY TYPE OF COUNSELING AND ADVICE,
19970H0134B1706 - 77 -
1 EMERGENCY ASSISTANCE, ENERGY ASSISTANCE OR MEDICAL CARE <--
2 FURNISHED TO INDIVIDUALS OR GROUPS IN AN IMPOVERISHED AREA. THE <--
3 TERM INCLUDES FOOD ASSISTANCE AND NUTRITION SERVICES OFFERED BY
4 ORGANIZATIONS SUCH AS FOOD BANKS.
5 "COMPREHENSIVE SERVICE PLAN." A STRATEGY DEVELOPED JOINTLY
6 BY A NEIGHBORHOOD ORGANIZATION AND A SPONSORING BUSINESS FIRM OR
7 PRIVATE COMPANY FOR THE STABILIZATION AND IMPROVEMENT OF AN
8 IMPOVERISHED AREA WITHIN AN URBAN NEIGHBORHOOD OR RURAL
9 COMMUNITY.
10 "COMPREHENSIVE SERVICE PROJECT." ANY ACTIVITY CONDUCTED
11 JOINTLY BY A NEIGHBORHOOD ORGANIZATION AND A SPONSORING BUSINESS
12 FIRM WHICH IMPLEMENTS A COMPREHENSIVE SERVICE PLAN.
13 "CRIME PREVENTION." ANY ACTIVITY WHICH AIDS IN THE REDUCTION
14 OF CRIME IN AN IMPOVERISHED AREA.
15 "EDUCATION." ANY TYPE OF SCHOLASTIC INSTRUCTION OR
16 SCHOLARSHIP ASSISTANCE TO AN INDIVIDUAL WHO RESIDES IN AN
17 IMPOVERISHED AREA THAT ENABLES [HIM TO PREPARE HIMSELF] THAT
18 INDIVIDUAL TO PREPARE FOR BETTER LIFE OPPORTUNITIES.
19 "ENTERPRISE ZONES." SPECIFIC LOCATIONS WITH IDENTIFIABLE
20 BOUNDARIES WITHIN IMPOVERISHED AREAS WHICH ARE DESIGNATED AS
21 ENTERPRISE ZONES BY THE [SECRETARY OF COMMUNITY AFFAIRS]
22 SECRETARY OF COMMUNITY AND ECONOMIC DEVELOPMENT.
23 "IMPOVERISHED AREA." ANY AREA IN THIS COMMONWEALTH WHICH IS
24 CERTIFIED AS SUCH BY THE [DEPARTMENT OF COMMUNITY AFFAIRS]
25 DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT AND THE
26 CERTIFICATION IS APPROVED BY THE GOVERNOR. SUCH CERTIFICATION
27 SHALL BE MADE ON THE BASIS OF FEDERAL CENSUS STUDIES AND CURRENT
28 INDICES OF SOCIAL AND ECONOMIC CONDITIONS.
29 "JOB TRAINING." ANY TYPE OF INSTRUCTION TO AN INDIVIDUAL WHO
30 RESIDES IN AN IMPOVERISHED AREA THAT ENABLES [HIM] THAT
19970H0134B1706 - 78 -
1 INDIVIDUAL TO ACQUIRE VOCATIONAL SKILLS SO THAT [HE] THE
2 INDIVIDUAL CAN BECOME EMPLOYABLE OR BE ABLE TO SEEK A HIGHER
3 GRADE OF EMPLOYMENT.
4 "NEIGHBORHOOD ASSISTANCE." FURNISHING FINANCIAL ASSISTANCE,
5 LABOR, MATERIAL AND TECHNICAL ADVICE TO AID IN THE PHYSICAL
6 IMPROVEMENT OF ANY PART OR ALL OF AN IMPOVERISHED AREA.
7 "NEIGHBORHOOD ORGANIZATION." ANY ORGANIZATION PERFORMING
8 COMMUNITY SERVICES, OFFERING NEIGHBORHOOD ASSISTANCE OR
9 PROVIDING JOB TRAINING, EDUCATION OR CRIME PREVENTION IN AN
10 IMPOVERISHED AREA, HOLDING A RULING FROM THE INTERNAL REVENUE
11 SERVICE OF THE UNITED STATES DEPARTMENT OF THE TREASURY THAT THE
12 ORGANIZATION IS EXEMPT FROM INCOME TAXATION UNDER THE PROVISIONS
13 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26
14 U.S.C. § 1 ET SEQ.) AND APPROVED BY THE DEPARTMENT OF COMMUNITY
15 AFFAIRS.
16 "PRIVATE COMPANY." ANY AGRICULTURAL, INDUSTRIAL,
17 MANUFACTURING OR RESEARCH AND DEVELOPMENT ENTERPRISE AS DEFINED
18 IN SECTION 3 OF THE ACT OF MAY 17, 1956 (1955 P.L.1609, NO.537),
19 KNOWN AS THE "PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY
20 ACT," OR ANY COMMERCIAL ENTERPRISE AS DEFINED IN SECTION 3 OF
21 THE ACT OF AUGUST 23, 1967 (P.L.251, NO.102), KNOWN AS THE
22 "ECONOMIC DEVELOPMENT FINANCING LAW."
23 "QUALIFIED INVESTMENTS." ANY INVESTMENTS MADE BY A PRIVATE
24 COMPANY WHICH PROMOTE COMMUNITY ECONOMIC DEVELOPMENT PURSUANT TO
25 A PLAN WHICH HAS BEEN DEVELOPED IN COOPERATION WITH AND APPROVED
26 BY A NEIGHBORHOOD ORGANIZATION OPERATING PURSUANT TO A PLAN FOR
27 THE ADMINISTRATION OF TAX CREDITS APPROVED BY THE [DEPARTMENT OF
28 COMMUNITY AFFAIRS] DEPARTMENT OF COMMUNITY AND ECONOMIC
29 DEVELOPMENT.
30 "SECRETARY." THE SECRETARY OF COMMUNITY AND ECONOMIC
19970H0134B1706 - 79 -
1 DEVELOPMENT OF THE COMMONWEALTH.
2 SECTION 12 26. SECTIONS 1904-A AND 1905-A OF THE ACT, <--
3 AMENDED JUNE 30, 1995 (P.L.139, NO.21), ARE AMENDED TO READ:
4 SECTION 1904-A. TAX CREDIT.--(A) ANY BUSINESS FIRM WHICH
5 ENGAGES OR CONTRIBUTES TO A NEIGHBORHOOD ORGANIZATION WHICH
6 ENGAGES IN THE ACTIVITIES OF PROVIDING NEIGHBORHOOD ASSISTANCE,
7 JOB TRAINING OR EDUCATION FOR INDIVIDUALS, COMMUNITY SERVICES OR
8 CRIME PREVENTION IN AN IMPOVERISHED AREA OR PRIVATE COMPANY
9 WHICH MAKES QUALIFIED INVESTMENT TO REHABILITATE, EXPAND OR
10 IMPROVE BUILDINGS OR LAND LOCATED WITHIN PORTIONS OF
11 IMPOVERISHED AREAS WHICH HAVE BEEN DESIGNATED AS ENTERPRISE
12 ZONES SHALL RECEIVE A TAX CREDIT AS PROVIDED IN SECTION 1905-A
13 IF THE [SECRETARY OF COMMUNITY AFFAIRS] SECRETARY ANNUALLY
14 APPROVES THE PROPOSAL OF SUCH BUSINESS FIRM OR PRIVATE COMPANY.
15 THE PROPOSAL SHALL SET FORTH THE PROGRAM TO BE CONDUCTED, THE
16 IMPOVERISHED AREA SELECTED, THE ESTIMATED AMOUNT TO BE INVESTED
17 IN THE PROGRAM AND THE PLANS FOR IMPLEMENTING THE PROGRAM.
18 (B) THE [SECRETARY OF COMMUNITY AFFAIRS] SECRETARY IS HEREBY
19 AUTHORIZED TO PROMULGATE RULES AND REGULATIONS FOR THE APPROVAL
20 OR DISAPPROVAL OF SUCH PROPOSALS BY BUSINESS FIRMS OR PRIVATE
21 COMPANIES AND PROVIDE A LISTING OF ALL APPLICATIONS RECEIVED AND
22 THEIR DISPOSITION IN EACH FISCAL YEAR TO THE GENERAL ASSEMBLY BY
23 OCTOBER 1 OF THE FOLLOWING FISCAL YEAR.
24 (C) THE TOTAL AMOUNT OF TAX CREDIT GRANTED FOR PROGRAMS
25 APPROVED UNDER THIS ACT SHALL NOT EXCEED [SIXTEEN MILLION SEVEN
26 HUNDRED FIFTY THOUSAND DOLLARS ($16,750,000)] TWENTY MILLION <--
27 SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($20,750,000) EIGHTEEN <--
28 MILLION DOLLARS ($18,000,000) OF TAX CREDIT IN ANY FISCAL YEAR,
29 SUBJECT TO THE FOLLOWING:
30 (1) [TWO MILLION DOLLARS ($2,000,000)] FIVE MILLION DOLLARS <--
19970H0134B1706 - 80 -
1 ($5,000,000) THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS <--
2 ($3,250,000) OF THE TOTAL AMOUNT OF TAX CREDIT SHALL BE
3 ALLOCATED FOR COMPREHENSIVE SERVICE PROJECTS, BUT THE [SECRETARY <--
4 OF COMMUNITY AFFAIRS] SECRETARY MAY REALLOCATE ANY UNUSED <--
5 PORTION OF THE [TWO MILLION DOLLARS ($2,000,000)] FIVE MILLION <--
6 DOLLARS ($5,000,000) THREE MILLION TWO HUNDRED FIFTY THOUSAND <--
7 DOLLARS ($3,250,000) FOR ANY OTHER PROGRAM AUTHORIZED BY THIS
8 ACT IF INSUFFICIENT APPLICATIONS ARE MADE FOR COMPREHENSIVE
9 SERVICE PROJECTS; AND
10 (2) [FOUR MILLION DOLLARS ($4,000,000)] SEVEN MILLION <--
11 DOLLARS ($7,000,000) OF THE TOTAL AMOUNT OF TAX CREDIT SHALL BE
12 SET ASIDE EXCLUSIVELY FOR PRIVATE COMPANIES WHICH MAKE QUALIFIED
13 INVESTMENTS TO REHABILITATE, EXPAND OR IMPROVE BUILDINGS OR LAND
14 WHICH PROMOTE COMMUNITY ECONOMIC DEVELOPMENT AND WHICH OCCUR IN
15 PORTIONS OF IMPOVERISHED AREAS WHICH HAVE BEEN DESIGNATED AS
16 ENTERPRISE ZONES.
17 SECTION 1905-A. GRANT OF TAX CREDIT.--THE DEPARTMENT OF
18 REVENUE SHALL GRANT A TAX CREDIT AGAINST ANY TAX DUE UNDER
19 ARTICLE III, IV, VI, VII, VII-A, VIII, VIII-A, IX, X OR XV OF <--
20 THIS ACT, OR ANY TAX SUBSTITUTED IN LIEU THEREOF IN AN AMOUNT
21 WHICH SHALL NOT EXCEED FIFTY PER CENT OF THE TOTAL AMOUNT
22 INVESTED DURING THE TAXABLE YEAR BY THE BUSINESS FIRM OR TWENTY
23 PER CENT OF QUALIFIED INVESTMENTS BY A PRIVATE COMPANY IN
24 PROGRAMS APPROVED PURSUANT TO SECTION 1904-A OF THIS ACT:
25 PROVIDED, THAT A TAX CREDIT OF UP TO SEVENTY PER CENT OF THE
26 TOTAL AMOUNT INVESTED DURING THE TAXABLE YEAR BY A BUSINESS FIRM
27 OR UP TO THIRTY PER CENT OF THE AMOUNT OF QUALIFIED INVESTMENTS
28 BY A PRIVATE COMPANY MAY BE ALLOWED FOR INVESTMENT IN PROGRAMS
29 WHERE ACTIVITIES FALL WITHIN THE SCOPE OF SPECIAL PROGRAM
30 PRIORITIES AS DEFINED WITH THE APPROVAL OF THE GOVERNOR IN
19970H0134B1706 - 81 -
1 REGULATIONS PROMULGATED BY THE [SECRETARY OF THE DEPARTMENT OF
2 COMMUNITY AFFAIRS] SECRETARY. REGULATIONS ESTABLISHING SPECIAL
3 PROGRAM PRIORITIES ARE TO BE PROMULGATED DURING THE FIRST MONTH
4 OF EACH FISCAL YEAR AND AT SUCH TIMES DURING THE YEAR AS THE
5 PUBLIC INTEREST DICTATES. SUCH CREDIT SHALL NOT EXCEED [TWO <--
6 HUNDRED FIFTY THOUSAND DOLLARS ($250,000)] FIVE HUNDRED THOUSAND <--
7 DOLLARS ($500,000) ANNUALLY, EXCEPT IN THE CASE OF COMPREHENSIVE
8 SERVICE PROJECTS WHICH SHALL BE ALLOWED AN ADDITIONAL CREDIT
9 EQUAL TO SEVENTY PER CENT OF THE QUALIFYING INVESTMENTS MADE IN
10 COMPREHENSIVE SERVICE PROJECTS; HOWEVER, SUCH ADDITIONAL CREDIT
11 SHALL NOT EXCEED [ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS <--
12 ($175,000)] THREE HUNDRED FIFTY THOUSAND DOLLARS ($350,000) <--
13 ANNUALLY. NO TAX CREDIT SHALL BE GRANTED TO ANY BANK, BANK AND
14 TRUST COMPANY, INSURANCE COMPANY, TRUST COMPANY, NATIONAL BANK,
15 SAVINGS ASSOCIATION, MUTUAL SAVINGS BANK OR BUILDING AND LOAN
16 ASSOCIATION FOR ACTIVITIES THAT ARE A PART OF ITS NORMAL COURSE
17 OF BUSINESS. ANY TAX CREDIT NOT USED IN THE PERIOD THE
18 INVESTMENT WAS MADE MAY BE CARRIED OVER FOR THE NEXT [FIVE] TEN <--
19 SUCCEEDING CALENDAR OR FISCAL YEARS UNTIL THE FULL CREDIT HAS
20 BEEN ALLOWED. THE TOTAL AMOUNT OF ALL TAX CREDITS ALLOWED
21 PURSUANT TO THIS ACT SHALL NOT EXCEED [SIXTEEN MILLION SEVEN
22 HUNDRED FIFTY THOUSAND DOLLARS ($16,750,000)] TWENTY MILLION <--
23 SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($20,750,000) EIGHTEEN <--
24 MILLION DOLLARS ($18,000,000) IN ANY ONE FISCAL YEAR.
25 SECTION 13 27. SECTION 1906-A OF THE ACT, ADDED JUNE 16, <--
26 1994 (P.L.279, NO.48), IS AMENDED TO READ:
27 SECTION 1906-A. DECISION IN WRITING.--THE DECISION OF THE
28 [SECRETARY OF COMMUNITY AFFAIRS] SECRETARY TO APPROVE OR
29 DISAPPROVE A PROPOSAL PURSUANT TO SECTION 1904-A OF THIS ACT
30 SHALL BE IN WRITING, AND, IF IT APPROVES THE PROPOSAL, IT SHALL
19970H0134B1706 - 82 -
1 STATE THE MAXIMUM CREDIT ALLOWABLE TO THE BUSINESS FIRM. A COPY
2 OF THE DECISION OF THE [SECRETARY OF COMMUNITY AFFAIRS]
3 SECRETARY SHALL BE TRANSMITTED TO THE GOVERNOR AND TO THE
4 SECRETARY OF REVENUE.
5 SECTION 14. SECTION 2116 OF THE ACT, AMENDED OR ADDED AUGUST <--
6 4, 1991 (P.L.97, NO.22), JUNE 16, 1994 (P.L.279, NO.48) AND JUNE
7 30, 1995 (P.L.139, NO.21), IS AMENDED TO READ:
8 SECTION 2116. INHERITANCE TAX.--(A) (1) [INHERITANCE]
9 EXCEPT AS PROVIDED IN SUBSECTION (G), INHERITANCE TAX UPON THE
10 TRANSFER OF PROPERTY PASSING TO OR FOR THE USE OF ANY OF THE
11 FOLLOWING SHALL BE AT THE RATE OF SIX PER CENT:
12 (I) GRANDFATHER, GRANDMOTHER, FATHER, MOTHER AND LINEAL
13 DESCENDANTS; OR
14 (II) WIFE OR WIDOW AND HUSBAND OR WIDOWER OF A CHILD.
15 (1.1) [INHERITANCE] EXCEPT AS PROVIDED IN SUBSECTION (G),
16 INHERITANCE TAX UPON THE TRANSFER OF PROPERTY PASSING TO OR FOR
17 THE USE OF A HUSBAND OR WIFE SHALL BE:
18 (I) AT THE RATE OF THREE PER CENT FOR ESTATES OF DECEDENTS
19 DYING ON OR AFTER JULY 1, 1994, AND BEFORE JANUARY 1, 1995.
20 (II) AT THE RATE OF ZERO PER CENT FOR ESTATES OF DECEDENTS
21 DYING ON OR AFTER JANUARY 1, 1995.
22 (2) [INHERITANCE] EXCEPT AS PROVIDED IN SUBSECTION (G),
23 INHERITANCE TAX UPON THE TRANSFER OF PROPERTY PASSING TO OR FOR
24 THE USE OF ALL PERSONS OTHER THAN THOSE DESIGNATED IN SUBCLAUSE
25 (1) OR (1.1) OR EXEMPT UNDER SECTION 2111(M) SHALL BE AT THE
26 RATE OF FIFTEEN PER CENT.
27 (3) WHEN PROPERTY PASSES TO OR FOR THE USE OF A HUSBAND AND
28 WIFE WITH RIGHT OF SURVIVORSHIP, ONE OF WHOM IS TAXABLE AT A
29 RATE LOWER THAN THE OTHER, THE LOWER RATE OF TAX SHALL BE
30 APPLIED TO THE ENTIRE INTEREST.
19970H0134B1706 - 83 -
1 (B) (1) WHEN THE DECEDENT WAS A RESIDENT, THE TAX SHALL BE
2 COMPUTED UPON THE VALUE OF THE PROPERTY, IN EXCESS OF THE
3 DEDUCTIONS SPECIFIED IN PART VI, AT THE RATES IN EFFECT AT THE
4 TRANSFEROR'S DEATH.
5 (2) WHEN THE DECEDENT WAS A NONRESIDENT, THE TAX SHALL BE
6 COMPUTED UPON THE VALUE OF REAL PROPERTY AND TANGIBLE PERSONAL
7 PROPERTY HAVING ITS SITUS IN THIS COMMONWEALTH, IN EXCESS OF
8 UNPAID PROPERTY TAXES ASSESSED ON THE PROPERTY AND ANY
9 INDEBTEDNESS FOR WHICH IT IS LIENED, MORTGAGED OR PLEDGED, AT
10 THE RATES IN EFFECT AT THE TRANSFEROR'S DEATH. THE PERSON LIABLE
11 TO MAKE THE RETURN UNDER SECTION 2136 MAY ELECT TO HAVE THE TAX
12 COMPUTED AS IF THE DECEDENT WAS A RESIDENT AND HIS ENTIRE ESTATE
13 WAS PROPERTY HAVING ITS SITUS IN THIS COMMONWEALTH, AND THE TAX
14 DUE SHALL BE THE AMOUNT WHICH BEARS THE SAME RATIO TO THE TAX
15 THUS COMPUTED AS THE REAL PROPERTY AND TANGIBLE PERSONAL
16 PROPERTY LOCATED IN THIS COMMONWEALTH BEARS TO THE ENTIRE ESTATE
17 OF THE DECEDENT.
18 (B.1) THE INHERITANCE TAX DUE UPON THE TRANSFER OF PROPERTY
19 PASSING TO OR FOR THE USE OF A HUSBAND OR WIFE SHALL BE THE
20 LESSER OF THE TAX IMPOSED UNDER SUBSECTION (A)(1.1) OR THE TAX
21 DUE AFTER THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER SECTION
22 2112.
23 (C) WHEN ANY PERSON ENTITLED TO A DISTRIBUTIVE SHARE OF AN
24 ESTATE, WHETHER UNDER AN INTER VIVOS TRUST, A WILL OR THE
25 INTESTATE LAW, RENOUNCES HIS RIGHT TO RECEIVE THE DISTRIBUTIVE
26 SHARE RECEIVING THEREFOR NO CONSIDERATION, OR EXERCISES HIS
27 ELECTIVE RIGHTS UNDER 20 PA.C.S. CH. 22 (RELATING TO ELECTIVE
28 SHARE OF SURVIVING SPOUSE) RECEIVING THEREFOR NO CONSIDERATION
29 OTHER THAN THE INTEREST IN ASSETS PASSING TO HIM AS THE ELECTING
30 SPOUSE, THE TAX SHALL BE COMPUTED AS THOUGH THE PERSONS WHO
19970H0134B1706 - 84 -
1 BENEFIT BY SUCH RENUNCIATION OR ELECTION WERE ORIGINALLY
2 DESIGNATED TO BE THE DISTRIBUTEES, CONDITIONED UPON AN
3 ADJUDICATION OR DECREE OF DISTRIBUTION EXPRESSLY CONFIRMING
4 DISTRIBUTION TO SUCH DISTRIBUTEES. THE RENUNCIATION SHALL BE
5 MADE WITHIN NINE MONTHS AFTER THE DEATH OF THE DECEDENT OR, IN
6 THE CASE OF A SURVIVING SPOUSE, WITHIN THE TIME FOR ELECTION AND
7 ANY EXTENSION THEREOF UNDER 20 PA.C.S. § 2210(B) (RELATING TO
8 PROCEDURE FOR ELECTION; TIME LIMIT). NOTICE OF THE FILING OF THE
9 ACCOUNT AND OF ITS CALL FOR AUDIT OR CONFIRMATION SHALL INCLUDE
10 NOTICE OF THE RENUNCIATION OR ELECTION TO THE DEPARTMENT. WHEN
11 AN UNCONDITIONAL VESTING OF A FUTURE INTEREST DOES NOT OCCUR AT
12 THE DECEDENT'S DEATH, THE RENUNCIATION SPECIFIED IN THIS
13 SUBSECTION OF THE FUTURE INTEREST MAY BE MADE WITHIN THREE
14 MONTHS AFTER THE OCCURRENCE OF THE EVENT OR CONTINGENCY WHICH
15 RESOLVES THE VESTING OF THE INTEREST IN POSSESSION AND
16 ENJOYMENT.
17 (D) IN CASE OF A COMPROMISE OF A DISPUTE REGARDING RIGHTS
18 AND INTERESTS OF TRANSFEREES, MADE IN GOOD FAITH, THE TAX SHALL
19 BE COMPUTED AS THOUGH THE PERSONS SO RECEIVING DISTRIBUTION WERE
20 ORIGINALLY ENTITLED TO IT AS TRANSFEREES OF THE PROPERTY
21 RECEIVED IN THE COMPROMISE, CONDITIONED UPON AN ADJUDICATION OR
22 DECREE OF DISTRIBUTION EXPRESSLY CONFIRMING DISTRIBUTION TO SUCH
23 DISTRIBUTEES. NOTICE OF THE FILING OF THE ACCOUNT AND OF ITS
24 CALL FOR AUDIT OR CONFIRMATION SHALL INCLUDE NOTICE TO THE
25 DEPARTMENT.
26 (E) IF THE RATE OF TAX WHICH WILL BE APPLICABLE WHEN AN
27 INTEREST VESTS IN POSSESSION AND ENJOYMENT CANNOT BE ESTABLISHED
28 WITH CERTAINTY, THE DEPARTMENT, AFTER CONSIDERATION OF RELEVANT
29 ACTUARIAL FACTORS, VALUATIONS AND OTHER PERTINENT CIRCUMSTANCES,
30 MAY ENTER INTO AN AGREEMENT WITH THE PERSON RESPONSIBLE FOR
19970H0134B1706 - 85 -
1 PAYMENT TO ESTABLISH A SPECIFIED AMOUNT OF TAX WHICH, WHEN PAID
2 WITHIN SIXTY DAYS AFTER THE AGREEMENT, SHALL CONSTITUTE FULL
3 PAYMENT OF ALL TAX OTHERWISE DUE UPON SUCH TRANSFER. RIGHTS OF
4 WITHDRAWAL OF A SURVIVING SPOUSE NOT EXERCISED WITHIN NINE
5 MONTHS OF THE TRANSFEROR'S DEATH SHALL BE IGNORED IN MAKING SUCH
6 CALCULATIONS.
7 (F) PROPERTY SUBJECT TO A POWER OF APPOINTMENT, WHETHER OR
8 NOT THE POWER IS EXERCISED AND NOTWITHSTANDING ANY BLENDING OF
9 THE PROPERTY WITH THE PROPERTY OF THE DONEE, SHALL BE TAXED ONLY
10 AS PART OF THE ESTATE OF THE DONOR.
11 (G) THE FIRST ONE HUNDRED THOUSAND DOLLARS ($100,000) OF THE
12 TAXABLE VALUE OF PROPERTY SOLELY OWNED BY THE DECEDENT THAT IS
13 TRANSFERRED IS EXEMPT FROM THE TAX IMPOSED UNDER SUBSECTION
14 (A)(1), (1.1) OR (2).
15 Section 7 15. (a) The following acts and parts of acts are <--
16 repealed:
17 Sections 2506 and 2507(a) of the act of April 9, 1929
18 (P.L.177, No.175), known as The Administrative Code of 1929.
19 Section 4 of the act of June 23, 1982 (P.L.597, No.170),
20 known as the Wild Resource Conservation Act.
21 20 Pa.C.S. § 8618.
22 (b) Section 12 of the act of June 23, 1982 (P.L.597,
23 No.170), known as the Wild Resource Conservation Act, is
24 repealed insofar as it is inconsistent with this act.
25 Section 8 16. This act shall apply as follows: <--
26 (1) The following provisions shall apply to taxable
27 years beginning on or after January 1, 1997:
28 (i) The amendment of section 301 introductory
29 paragraph, (C.2), (E.1) and (s.2) of the act. <--
30 (ii) The amendment of section 304(d)(1) 304(D) of <--
19970H0134B1706 - 86 -
1 the act.
2 (iii) The addition of Part VI-A of Article III of
3 the act.
4 (IV) SECTION 7 OF THIS ACT. <--
5 (IV) THE AMENDMENT OF THE DEFINITION OF "CAPITAL
6 STOCK VALUE" IN SECTION 601 OF THE ACT.
7 (V) SECTION 15 OF THIS ACT.
8 (2) The amendment of section 201(c) and (d) SECTIONS <--
9 201(C), (D), (K)(8) AND (O)(4), 204, 1902-A, 1904-A, 1905-A
10 AND 1906-A of the act shall apply on and after July 1, 1997.
11 (3) THE AMENDMENT OF SECTION 301(D) OF THE ACT SHALL <--
12 APPLY TO TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 1998.
13 (3) (4) The amendment of sections 1101-C and 1102-C.3 of <--
14 the act shall apply to any document made, executed,
15 delivered, accepted or presented for recording after the
16 effective date of this act.
17 Section 9. This act shall take effect immediately. <--
18 SECTION 17. THE AMENDMENT OF SECTIONS 1296, 1902-A AND 1905- <--
19 A OF THE ACT SHALL BE RETROACTIVE TO JANUARY 1, 1997.
20 SECTION 18. THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
21 (1) THE AMENDMENT OR ADDITION OF SECTIONS 201(B), (C),
22 (D), (F), (G), (K), (O) AND (JJ) AND 204(53) OF THE ACT SHALL
23 TAKE EFFECT JULY 1, 1997.
24 (2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT
25 IMMEDIATELY.
26 SECTION 28. SECTION 2009 OF THE ACT, ADDED DECEMBER 22, 1989 <--
27 (P.L.775, NO.110), IS AMENDED TO READ:
28 SECTION 2009. REFUND OF TAX.--(A) IN CASE ANY MALT OR
29 BREWED BEVERAGES UPON WHICH THE TAX HAS BEEN PAID BY A
30 MANUFACTURER HAVE BEEN SOLD OR SHIPPED BY HIM TO A LICENSED OR
19970H0134B1706 - 87 -
1 REGULAR DEALER IN SUCH MALT OR BREWED BEVERAGES IN ANOTHER
2 STATE, SUCH MANUFACTURER IN THIS COMMONWEALTH SHALL BE ENTITLED
3 TO A REFUND OF THE ACTUAL AMOUNT OF TAX PAID BY HIM, UPON
4 CONDITION THAT THE SELLER IN THIS COMMONWEALTH SHALL MAKE
5 AFFIDAVIT THAT THE MALT OR BREWED BEVERAGES WERE SO SOLD AND
6 SHIPPED, AND THAT HE SHALL FURNISH FROM THE PURCHASER AN
7 AFFIDAVIT, OR IN CASES WHERE THE TOTAL PURCHASE PRICE IS FIVE
8 DOLLARS ($5) OR LESS, A WRITTEN CERTIFICATE IN LIEU OF AN
9 AFFIDAVIT FROM THE PURCHASER, OR, UPON SATISFACTORY PROOF THAT
10 SUCH AFFIDAVIT OR CERTIFICATE CANNOT BE OBTAINED, OTHER EVIDENCE
11 SATISFACTORY TO THE DEPARTMENT THAT HE HAS RECEIVED SUCH MALT OR
12 BREWED BEVERAGES FOR SALE OR CONSUMPTION OUTSIDE THIS
13 COMMONWEALTH, TOGETHER WITH THE NAME AND ADDRESS OF THE
14 PURCHASER.
15 (B) IN CASE ANY MALT OR BREWED BEVERAGES UPON WHICH THE TAX
16 HAS BEEN PAID BY A MANUFACTURER HAVE BEEN SOLD TO COMMISSARIES,
17 SHIP'S STORES OR VOLUNTARY UNINCORPORATED ORGANIZATIONS OF THE
18 ARMED FORCES PERSONNEL OPERATING UNDER REGULATIONS PROMULGATED
19 BY THE SECRETARY OF DEFENSE, SUCH MANUFACTURER SHALL BE ENTITLED
20 TO A REFUND OF THE ACTUAL AMOUNT OF TAX PAID BY HIM, UPON
21 CONDITION THAT HE SHALL MAKE AFFIDAVIT AND FURNISH PROOF THAT
22 THE MALT OR BREWED BEVERAGES WERE SO SOLD.
23 (C) IN CASE ANY MALT OR BREWED BEVERAGES UPON WHICH THE TAX
24 HAS BEEN PAID BY AN OUT-OF-STATE MANUFACTURER AND SUBSEQUENTLY
25 SOLD BY AN IMPORTING DISTRIBUTOR TO COMMISSARIES, SHIP'S STORES
26 OR VOLUNTARY UNINCORPORATED ORGANIZATIONS OF THE ARMED FORCES
27 PERSONNEL OPERATING UNDER REGULATIONS PROMULGATED BY THE
28 SECRETARY OF DEFENSE, SUCH MANUFACTURER SHALL BE ENTITLED TO A
29 REFUND OF THE ACTUAL AMOUNT OF TAX PAID BY HIM UPON CONDITION
30 THAT HE SHALL MAKE AFFIDAVIT AND FURNISH PROOF THAT THE MALT OR
19970H0134B1706 - 88 -
1 BREWED BEVERAGES WERE SO SOLD.
2 (D) IN CASE ANY MALT OR BREWED BEVERAGES UPON WHICH THE TAX
3 HAS BEEN PAID BY A MANUFACTURER SHALL BE RENDERED UNSALABLE BY
4 REASON OF DAMAGE OR DESTRUCTION, SUCH MANUFACTURER SHALL BE
5 ENTITLED TO A REFUND OF THE ACTUAL AMOUNT OF TAX PAID BY HIM,
6 UPON CONDITION THAT HE SHALL MAKE AFFIDAVIT AND FURNISH PROOF
7 SATISFACTORY TO THE DEPARTMENT THAT THE MALT BEVERAGES WERE SO
8 DAMAGED OR DESTROYED.
9 (E) IN CASE ANY MALT OR BREWED BEVERAGES UPON WHICH THE TAX
10 HAS BEEN PAID BY A MANUFACTURER HAVE BEEN SOLD AND DELIVERED TO
11 A PUBLIC SERVICE LICENSEE WHO IS OBLIGATED TO PAY THE TAX
12 THEREON, SUCH MANUFACTURER SHALL BE ENTITLED TO A REFUND OF THE
13 ACTUAL AMOUNT OF TAX PAID BY HIM, UPON CONDITION THAT HE SHALL
14 MAKE AFFIDAVIT AND FURNISH PROOF SATISFACTORY TO THE DEPARTMENT
15 OF SUCH FACTS.
16 (F) IN EACH OF THE ABOVE CASES THE DEPARTMENT SHALL[, WITH
17 THE APPROVAL OF THE BOARD OF FINANCE AND REVENUE,] PAY OR ISSUE
18 TO THE MANUFACTURER CREDITS OF SUFFICIENT VALUE TO COVER THE
19 REFUND. SUCH CREDITS MAY BE USED BY THE MANUFACTURER FOR THE
20 PAYMENT OF ANY TAXES DUE BY HIM TO THE COMMONWEALTH. THE
21 PROCEDURE FOR REFUND IN ANY CASE SHALL BE COMPLETED BY THE
22 [DEPARTMENT OF REVENUE AND THE BOARD OF FINANCE AND REVENUE]
23 DEPARTMENT WITHIN SIXTY DAYS AFTER THE PROPER AFFIDAVITS HAVE
24 BEEN FILED WITH THE DEPARTMENT UNDER SECTION 3003.1.
25 SECTION 29. SECTION 2181 OF THE ACT, ADDED AUGUST 4, 1991,
26 (P.L.97, NO.22), IS AMENDED TO READ:
27 SECTION 2181. REFUND OF TAX.--(A) A REFUND SHALL BE MADE OF
28 ANY TAX TO WHICH THE COMMONWEALTH IS NOT RIGHTFULLY OR EQUITABLY
29 ENTITLED PROVIDED THE COMMONWEALTH DETERMINES THE REFUND IS DUE
30 OR APPLICATION FOR REFUND IS MADE WITHIN THE APPROPRIATE TIME
19970H0134B1706 - 89 -
1 LIMIT AS SET FORTH IN SUBSECTION (D).
2 (B) INTEREST SHALL BE PAID ON REFUNDABLE TAX AT THE SAME
3 RATE AS THE INTEREST RATE ON DEFICIENCIES PROVIDED FOR IN
4 SECTION 2143.
5 (C) REFUND SHALL BE MADE IN CASH TO THE PARTY WHO PAID THE
6 TAX OR TO HIS ASSIGNEE OR AS DIRECTED BY THE COURT.
7 (D) APPLICATION FOR REFUND OF TAX SHALL BE MADE WITHIN [TWO]
8 THREE YEARS AFTER:
9 (1) THE COURT HAS RESCINDED ITS ORDER AND ADJUDICATION OF
10 PRESUMED DEATH WHEN THE REFUND IS CLAIMED FOR TAX PAID ON THE
11 TRANSFER OF THE ESTATE OF A PRESUMED DECEDENT WHO IS LATER
12 DETERMINED TO BE ALIVE;
13 (2) TERMINATION OF LITIGATION ESTABLISHING A RIGHT TO A
14 REFUND; NO APPLICATION FOR REFUND SHALL BE NECESSARY WHEN THE
15 LITIGATION HAS BEEN WITH THE COMMONWEALTH OVER LIABILITY FOR THE
16 TAX OR THE AMOUNT OF TAX DUE;
17 (3) IT HAS BEEN FINALLY DETERMINED THAT THE WHOLE OR ANY
18 PART OF AN ALLEGED DEFICIENCY TAX, ASSERTED BY THE FEDERAL
19 GOVERNMENT BEYOND THAT ADMITTED TO BE PAYABLE, AND IN
20 CONSEQUENCE OF WHICH AN ESTATE TAX WAS PAID UNDER SECTION 2117
21 WAS NOT PAYABLE;
22 (4) A FINAL JUDGMENT HOLDING THAT A PROVISION OF THIS
23 ARTICLE UNDER WHICH TAX HAS BEEN PAID IS UNCONSTITUTIONAL OR
24 THAT THE INTERPRETATION OF A PROVISION OF THIS ARTICLE UNDER
25 WHICH TAX HAS BEEN PAID WAS ERRONEOUS; OR
26 (5) THE DATE OF PAYMENT, OR THE DATE OF THE NOTICE OF THE
27 ASSESSMENT OF THE TAX, OR THE DATE THE TAX BECOMES DELINQUENT,
28 WHICHEVER OCCURS LATER, IN ALL OTHER CASES.
29 (E) AN APPLICATION FOR REFUND OF TAX SHALL BE MADE TO THE
30 [BOARD OF FINANCE AND REVENUE.] DEPARTMENT.
19970H0134B1706 - 90 -
1 (E.1) A PETITION TO REVIEW THE DECISION AND ORDER OF THE
2 DEPARTMENT ON A PETITION FOR REFUND MAY BE MADE TO THE BOARD OF
3 FINANCE AND REVENUE UNDER THIS ARTICLE.
4 (F) THE ACTION OF THE BOARD OF FINANCE AND REVENUE ON ALL
5 APPLICATIONS FOR REFUND OF TAX MAY BE APPEALED AS PROVIDED FOR
6 IN 42 PA.C.S. § 933 (RELATING TO APPEALS FROM GOVERNMENT
7 AGENCIES).
8 (G) AS MUCH OF THE MONEYS RECEIVED AS PAYMENT OF TAX UNDER
9 THIS ARTICLE AS SHALL BE NECESSARY FOR THE PAYMENT OF THE
10 REFUNDS PROVIDED FOR IN THIS ARTICLE WITH INTEREST IS
11 APPROPRIATED FOR THE PAYMENT OF SUCH REFUNDS.
12 SECTION 30. SECTION 3003 OF THE ACT, AMENDED DECEMBER 21,
13 1981 (P.L.482, NO.141), JUNE 29, 1984, (P.L.445, NO.94), JULY 1,
14 1985 (P.L.78, NO.29), JULY 2, 1986 (P.L.318, NO.77), JULY 13,
15 1987 (P.L.317, NO.58), OCTOBER 14, 1988 (P.L.737, NO.106) AND
16 JUNE 16, 1994 (P.L.279, NO.48), IS AMENDED TO READ:
17 [SECTION 3003. PREPAYMENT OF TAX.--(A) NOTWITHSTANDING THE
18 PROVISIONS OF THIS ACT, OR ANY OTHER STATE TAX LAW TO THE
19 CONTRARY, WHICH REQUIRED TAXPAYERS TO MAKE PAYMENT OF TENTATIVE
20 TAX, INCLUDING BUT NOT LIMITED TO THE CAPITAL STOCK AND
21 FRANCHISE TAX, CORPORATE NET INCOME AND CORPORATION INCOME TAX,
22 GROSS RECEIPTS TAX ON PUBLIC SERVICE COMPANIES, TRANSPORTATION
23 BY MOTOR VEHICLES AND TRACKLESS TROLLEYS, OTHER THAN MOTOR
24 VEHICLES FOR HIRE, INSURANCE PREMIUMS TAX, MUTUAL THRIFT
25 INSTITUTIONS TAX, NET EARNINGS TAX, OR OTHER SIMILAR TAX LAW
26 REQUIRING PAYMENT OF TENTATIVE TAX, BUT EXCLUDING THE PREPAYMENT
27 BY INSTITUTIONS UNDER ARTICLE VII AND TITLE INSURANCE COMPANIES
28 UNDER ARTICLE VIII, AND PUBLIC UTILITIES UNDER ARTICLE XI-A OF
29 THIS ACT, SUCH TAXPAYERS, COMMENCING WITH THE CALENDAR YEAR 1970
30 AND FISCAL YEARS BEGINNING DURING THE CALENDAR YEAR 1970 AND
19970H0134B1706 - 91 -
1 EACH TAXABLE YEAR THEREAFTER, ON OR BEFORE THE FIFTEENTH DAY OF
2 MARCH FOR CALENDAR YEAR TAXPAYERS, AND ON OR BEFORE THE
3 FIFTEENTH DAY OF THE THIRD MONTH AFTER THE CLOSE OF ITS PREVIOUS
4 FISCAL YEAR FOR FISCAL YEAR TAXPAYERS, SHALL REPORT ANNUALLY AND
5 PAY ON ACCOUNT OF THE TAX DUE FOR THE CURRENT YEAR, AN AMOUNT TO
6 BE COMPUTED BY APPLYING THE CURRENT TAX RATE TO NINETY PER CENT
7 OF SUCH TAX BASE FROM THE IMMEDIATE PRIOR YEAR AS MAY BE
8 APPLICABLE WITH RESPECT TO THE TAX BEING REPORTED.
9 (B) FOR THE TAXABLE YEARS COMMENCING WITH CALENDAR YEAR 1979
10 AND FOR EACH TAXABLE YEAR THEREAFTER, THE TENTATIVE TAX DUE FOR
11 THE CURRENT YEAR SHALL BE COMPUTED BY APPLYING THE CURRENT TAX
12 RATE TO NINETY PER CENT OF SUCH TAX BASE FROM THE YEAR PRECEDING
13 THE IMMEDIATE PRIOR YEAR AS MAY BE APPLICABLE WITH RESPECT TO
14 THE TAX BEING REPORTED; EXCEPT THAT WITH RESPECT TO THE
15 AFORESAID GROSS RECEIPTS TAX ON PUBLIC SERVICE COMPANIES,
16 TRANSPORTATION BY MOTOR VEHICLES AND TRACKLESS TROLLEYS, OTHER
17 THAN MOTOR VEHICLES FOR HIRE, AND THE AFORESAID INSURANCE
18 PREMIUMS TAX, SUCH AMOUNT SHALL CONTINUE TO BE COMPUTED BY
19 APPLYING THE CURRENT TAX RATE TO NINETY PER CENT OF THE TAX BASE
20 FROM THE IMMEDIATE PRIOR YEAR AS MAY BE APPLICABLE WITH RESPECT
21 TO THE TAX BEING REPORTED; EXCEPT THAT CORPORATIONS SHALL NOT BE
22 REQUIRED TO REPORT OR PAY TENTATIVE TAX WITH RESPECT TO THE
23 CORPORATE NET INCOME TAX ON ACCOUNT OF ANY TAXABLE YEAR
24 COMMENCING WITH CALENDAR YEAR 1986 AND EACH TAXABLE YEAR
25 THEREAFTER; EXCEPT THAT CORPORATIONS SHALL NOT BE REQUIRED TO
26 REPORT OR PAY TENTATIVE TAX WITH RESPECT TO THE CAPITAL STOCK
27 AND FRANCHISE TAX ON ACCOUNT OF ANY TAXABLE YEAR COMMENCING WITH
28 CALENDAR YEAR 1988 AND EACH TAXABLE YEAR THEREAFTER; EXCEPT THAT
29 THE TENTATIVE TAX WITH RESPECT TO THE MUTUAL THRIFT
30 INSTITUTION'S TAX FOR CALENDAR YEAR 1988 AND FISCAL YEARS
19970H0134B1706 - 92 -
1 BEGINNING IN 1988 SHALL BE COMPUTED BY APPLYING THE CURRENT TAX
2 RATE TO NINETY PER CENT OF THE TAX BASE FROM THE IMMEDIATE PRIOR
3 YEAR; AND EXCEPT THAT THE MUTUAL THRIFT INSTITUTION SHALL NOT BE
4 REQUIRED TO REPORT OR PAY TENTATIVE TAX WITH RESPECT TO THE
5 MUTUAL THRIFT INSTITUTION'S TAX ON ACCOUNT OF ANY TAXABLE YEAR
6 COMMENCING WITH TAX YEAR 1992 AND ANY TAXABLE YEAR THEREAFTER.
7 THE TAX IMPOSED ON SHARES OF INSTITUTIONS AND TITLE INSURANCE
8 COMPANIES AND THE TAX IMPOSED ON PUBLIC UTILITY REALTY SHALL BE
9 PAID IN THE MANNER AND WITHIN THE TIME PRESCRIBED BY ARTICLE
10 VII, ARTICLE VIII OR ARTICLE XI-A, AS THE CASE MAY BE, BUT
11 SUBJECT TO THE ADDITIONS AND INTEREST PROVIDED IN SUBSECTION (E)
12 OF THIS SECTION.
13 (B.1) NOTWITHSTANDING THE PROVISIONS OF SUBSECTIONS (A) AND
14 (B), THE TENTATIVE TAX DUE WITH RESPECT TO THE CAPITAL STOCK AND
15 FRANCHISE TAX FOR TAXABLE YEARS COMMENCING DURING CALENDAR YEAR
16 1986 SHALL BE COMPUTED BY APPLYING THE CURRENT TAX RATE TO
17 EIGHTY-FIVE PER CENT OF SUCH TAX BASE FROM THE YEAR PRECEDING
18 THE IMMEDIATE PRIOR YEAR.
19 (B.2) NOTWITHSTANDING THE PROVISIONS OF SUBSECTIONS (A), (B)
20 AND (B.1), THE TENTATIVE TAX DUE, WITH RESPECT TO THE CAPITAL
21 STOCK AND FRANCHISE TAX FOR TAXABLE YEARS COMMENCING DURING
22 CALENDAR YEAR 1987 SHALL BE COMPUTED BY APPLYING THE FOLLOWING
23 TAX RATES TO EIGHTY PER CENT OF SUCH TAX BASE FROM THE YEAR
24 PRECEDING THE IMMEDIATE PRIOR YEAR:
25 (1) ANY PAYMENT OF TENTATIVE TAX DUE PRIOR TO THE EFFECTIVE
26 DATE OF THIS PARAGRAPH SHALL BE PAYABLE AT THE TAX RATE
27 APPLICABLE TO CALENDAR YEAR 1986.
28 (2) ANY PAYMENT OF TENTATIVE TAX DUE SUBSEQUENT TO THE
29 EFFECTIVE DATE OF THIS PARAGRAPH SHALL BE PAYABLE AT THE TAX
30 RATE APPLICABLE TO CALENDAR YEAR 1987.
19970H0134B1706 - 93 -
1 (C) PAYMENT OF TAXES IMPOSED BY ARTICLES IV, IX, XI AND XV
2 OF THIS ACT MAY AT THE TAXPAYER'S ELECTION BE AN AMOUNT
3 ESTIMATED BY THE TAXPAYER WHICH ESTIMATED AMOUNT SHALL NOT BE
4 LESS THAN NINETY PER CENT OF THE TAX AS IS FINALLY REPORTED IN
5 THE ANNUAL TAX REPORT FOR THE CURRENT CALENDAR OR FISCAL YEAR.
6 (D) A CORPORATION WITH RESPECT TO THE CORPORATE NET INCOME
7 TAX IMPOSED BY ARTICLE IV OF THIS ACT MAY, AT ITS ELECTION,
8 REPORT AND PAY IN INSTALLMENTS ON ACCOUNT OF THE TAX DUE FOR THE
9 CURRENT TAXABLE YEAR AN AMOUNT COMPUTED EITHER BY APPLYING THE
10 CURRENT TAX RATE TO NINETY PER CENT OF THE TAX BASE AS
11 DETERMINED IN SUBSECTION (A) OR (B) OF THIS SECTION, OR AS
12 COMPUTED ON THE BASIS ESTIMATED BY THE TAXPAYER TO BE DUE FOR
13 THE CURRENT YEAR WHICH ESTIMATED AMOUNT SHALL NOT BE LESS THAN
14 NINETY PER CENT OF THE TAX AS IS FINALLY REPORTED IN THE ANNUAL
15 TAX REPORT FOR THE CURRENT YEAR AS PROVIDED IN SUBSECTION (C) OF
16 THIS SECTION. THE INSTALLMENTS SHALL BE PAID IN ACCORDANCE WITH
17 THE FOLLOWING SCHEDULES:
18 FIRST SECOND THIRD FOURTH
19 YEAR IN DUE ON THE 15TH DAY OF THE FOLLOWING MONTHS
20 WHICH TAX AFTER CLOSE OF THE PREVIOUS TAX YEAR:
21 YEAR BEGINS 4TH MONTH 6TH MONTH 9TH MONTH 12TH MONTH
22 1978 95% 0% 5% 0%
23 1979 95% 0% 5% 0%
24 1980 80% 0% 10% 10%
25 1981 40% 30% 20% 10%
26 1982 30% 30% 25% 15%
27 1983 THROUGH
28 AND INCLUDING
29 1985 25% 25% 25% 25%
30 ANY TAXPAYER WHICH HAS ELECTED TO COMPUTE ITS TENTATIVE TAX
19970H0134B1706 - 94 -
1 LIABILITY ON THE AFORESAID ESTIMATED BASIS AND WHICH HAS ELECTED
2 TO REPORT AND PAY SAID ESTIMATED TAX IN INSTALLMENTS, MAY WHEN
3 REPORTING AND PAYING ITS THIRD OR FOURTH INSTALLMENT, BASE SUCH
4 INSTALLMENT ON AN AMENDED TENTATIVE TAX REPORT REFLECTING THE
5 TAXPAYER'S NEW ESTIMATE OF ITS TAX LIABILITY FOR THE TAX YEAR:
6 PROVIDED, THAT THE NEW ESTIMATE REFLECTS A LOWER TAX LIABILITY
7 THAN WAS PREVIOUSLY REPORTED IN ITS ORIGINAL OR, IF APPLICABLE,
8 AMENDED TENTATIVE TAX REPORT. IF AN AMENDED TENTATIVE TAX REPORT
9 IS FILED, EACH REMAINING INSTALLMENT PAYMENT DUE, IF ANY, SHALL
10 BE SUCH AS TO BRING THE TOTAL INSTALLMENT PAYMENTS MADE ON
11 ACCOUNT OF THE TAX DUE FOR THE CURRENT TAXABLE YEAR UP TO AN
12 AMOUNT DETERMINED BY MULTIPLYING THE TENTATIVE TAX DUE FOR THE
13 YEAR AS REPORTED IN THE AMENDED REPORT BY THE SUM OF THE
14 PERCENTAGES SET FORTH IN THE ABOVE SCHEDULE FOR THE APPLICABLE
15 ELAPSED INSTALLMENTS.
16 THE REMAINING PORTION OF THE TAX DUE, IF ANY, SHALL BE PAID
17 UPON THE DATE THE TAXPAYER'S ANNUAL REPORT IS REQUIRED TO BE
18 FILED UNDER THE APPLICABLE TAX STATUTE, DETERMINED WITHOUT
19 REFERENCE TO ANY EXTENSION OF TIME FOR FILING SUCH REPORT.
20 (E) FOR TAXABLE YEARS BEGINNING PRIOR TO JANUARY 1, 1979,
21 SHOULD IT SUBSEQUENTLY BE DETERMINED THAT THE AMOUNT OF THE
22 ANNUAL OR ANY INSTALLMENT PAYMENT OF TENTATIVE TAX DUE WAS
23 UNDERSTATED BY MORE THAN FIVE PER CENT, THERE SHALL BE ADDED TO
24 THE TAX DETERMINED TO BE DUE AN ADDITIONAL TEN PER CENT OF THE
25 UNDERSTATEMENT AND SAID PERCENTAGE ADDITION TO THE
26 UNDERSTATEMENT SHALL BE DEEMED AN ADDITIONAL TAX AND SHALL BEAR
27 INTEREST FROM THE DATE THE TENTATIVE TAX WAS DUE.
28 FOR TAXABLE YEARS BEGINNING JANUARY 1, 1979 AND THEREAFTER,
29 SHOULD IT SUBSEQUENTLY BE DETERMINED THAT THE AMOUNT OF THE
30 ANNUAL OR ANY INSTALLMENT PAYMENT OF TENTATIVE TAX DUE WAS
19970H0134B1706 - 95 -
1 UNDERPAID, THERE SHALL BE IMPOSED AN ADDITIONAL TAX OF TEN PER
2 CENT OF THE UNDERPAYMENT AND SAID TAX SHALL BEAR INTEREST FROM
3 THE DATE THE ANNUAL OR ANY INSTALLMENT PAYMENT OF TENTATIVE TAX
4 WAS DUE. FAILURE TO REMIT THE ANNUAL OR ANY INSTALLMENT OF
5 TENTATIVE TAX PAYMENTS ON OR BEFORE THE DUE DATES PRESCRIBED IN
6 THIS ACT SHALL RESULT IN THE ASSESSMENT OF INTEREST AND
7 ADDITIONS, IF ANY, IN THE SAME MANNER AS PRESCRIBED BY LAW.
8 (F) WHENEVER THE AMOUNT SHOWN AS DUE ON THE ANNUAL REPORT IS
9 LESS THAN THE AMOUNT PAID TO THE DEPARTMENT ON ACCOUNT OF THAT
10 AMOUNT UNDER THIS ARTICLE, THE DEPARTMENT SHALL ENTER A CREDIT
11 IN THE AMOUNT OF THE DIFFERENCE TO THE ACCOUNT OF THE TAXPAYER,
12 WHICH CREDIT SHALL BE IMMEDIATELY SUBJECT TO APPLICATION,
13 ASSIGNMENT OR REFUND AT THE REQUEST OF THE TAXPAYER UNDER
14 SECTION 1108 OF THE ACT OF APRIL 9, 1929 (P.L.343, NO.176),
15 KNOWN AS "THE FISCAL CODE." NOTIFICATION TO THE TAXPAYER BY THE
16 DEPARTMENT OF THE AVAILABLE CREDIT UNDER THIS SUBSECTION, IF
17 PROVIDED WITHIN 60 DAYS OF FILING THE ANNUAL REPORT, SHALL BE
18 DEEMED A NOTICE OF FINAL DETERMINATION OF THE CREDIT SOLELY FOR
19 THE PURPOSES OF STOPPING THE ACCRUING OF INTEREST UNDER SECTION
20 806.1(C)(2)(I) OF "THE FISCAL CODE." IF THE APPLICATION,
21 ASSIGNMENT OR REFUND OF CREDIT UNDER THIS SUBSECTION RESULTS IN
22 AN UNDERPAYMENT OF THE TAX DUE UPON SETTLEMENT OR RESETTLEMENT,
23 THEN INTEREST SHALL BE CALCULATED ON THE AMOUNT OF THE
24 UNDERPAYMENT FROM THE DATE THE CREDIT WAS APPLIED, ASSIGNED OR
25 REFUNDED.]
26 SECTION 31. SECTION 3003.1 OF THE ACT, ADDED JULY 1, 1985
27 (P.L.78, NO.29), IS AMENDED TO READ:
28 SECTION 3003.1. PETITIONS FOR REFUNDS.--(A) FOR A TAX
29 COLLECTED BY THE DEPARTMENT OF REVENUE, A TAXPAYER WHO HAS
30 ACTUALLY PAID TAX, INTEREST OR PENALTY TO THE COMMONWEALTH OR TO
19970H0134B1706 - 96 -
1 AN AGENT OR LICENSEE OF THE COMMONWEALTH AUTHORIZED TO COLLECT
2 TAXES MAY PETITION THE DEPARTMENT OF REVENUE FOR REFUND OR
3 CREDIT OF THE TAX, INTEREST OR PENALTY. EXCEPT AS OTHERWISE
4 PROVIDED BY STATUTE, A PETITION FOR REFUND MUST BE MADE TO THE
5 DEPARTMENT WITHIN THREE YEARS OF ACTUAL PAYMENT OF THE TAX,
6 INTEREST OR PENALTY.
7 (B) THE DEPARTMENT MAY GRANT A REFUND OR CREDIT TO A
8 TAXPAYER FOR ALL TAX PERIODS COVERED BY A DEPARTMENTAL AUDIT. IF
9 A CREDIT IS NOT GRANTED BY THE DEPARTMENT IN THE AUDIT REPORT,
10 THE TAXPAYER MUST FILE A PETITION FOR REFUND WITHIN SIX MONTHS
11 OF THE MAILING DATE OF THE NOTICE OF ASSESSMENT, DETERMINATION
12 OR SETTLEMENT.
13 (C) WHEN ANY TAX OR OTHER MONEY HAS BEEN PAID TO THE
14 COMMONWEALTH UNDER A PROVISION OF THIS ACT OR ANY OTHER STATUTE
15 SUBSEQUENTLY HELD BY FINAL JUDGMENT OF A COURT OF COMPETENT
16 JURISDICTION TO BE UNCONSTITUTIONAL OR UNDER AN INTERPRETATION
17 OF SUCH PROVISION SUBSEQUENTLY HELD BY SUCH COURT TO BE
18 ERRONEOUS, A PETITION FOR REFUND MAY BE FILED WITH THE [BOARD OF
19 FINANCE AND REVENUE] DEPARTMENT EITHER PRIOR OR SUBSEQUENT TO
20 SUCH FINAL JUDGMENT BUT MUST BE FILED WITHIN THREE YEARS OF THE
21 PAYMENT OF WHICH A REFUND IS REQUESTED, OR WITHIN THREE YEARS OF
22 THE ASSESSMENT, SETTLEMENT OR DETERMINATION OF SUCH TAXES OR
23 OTHER MONEYS DUE THE COMMONWEALTH, WHICHEVER PERIOD LAST
24 EXPIRES. THE [BOARD] DEPARTMENT SHALL HAVE JURISDICTION TO HEAR
25 AND DETERMINE ANY PETITION FOR REFUND FILED PRIOR TO SUCH FINAL
26 JUDGMENT ONLY IF, AT THE TIME OF THE FILING THEREOF, PROCEEDINGS
27 ARE PENDING IN A COURT OF COMPETENT JURISDICTION WHEREIN THE
28 CLAIMS OF UNCONSTITUTIONALITY OR ERRONEOUS INTERPRETATION MADE
29 IN THE PETITION FOR REFUND MAY BE ESTABLISHED[,]; AND, IN SUCH
30 CASE, THE [BOARD] DEPARTMENT SHALL NOT ACT UPON THE PETITION FOR
19970H0134B1706 - 97 -
1 REFUND UNTIL THE FINAL JUDGMENT DETERMINING THE QUESTION OR
2 QUESTIONS INVOLVED IN SUCH PETITION HAS BEEN HANDED DOWN.
3 (D) IN THE CASE OF AMOUNTS PAID AS A RESULT OF AN
4 ASSESSMENT, DETERMINATION, SETTLEMENT OR APPRAISEMENT, A
5 PETITION FOR REFUND MUST BE FILED WITH THE DEPARTMENT WITHIN SIX
6 MONTHS OF THE MAILING DATE OF THE NOTICE OF ASSESSMENT,
7 DETERMINATION, SETTLEMENT OR APPRAISEMENT.
8 (E) A TAXPAYER MAY PETITION THE BOARD OF FINANCE AND REVENUE
9 TO REVIEW THE DECISION AND ORDER OF THE DEPARTMENT ON A PETITION
10 FOR REFUND. THE PETITION FOR REVIEW MUST BE FILED WITH THE BOARD
11 WITHIN NINETY DAYS OF THE MAILING DATE OF A DECISION AND ORDER
12 OF THE DEPARTMENT UPON A PETITION FOR REFUND.
13 SECTION 32. SECTIONS 3003.2 AND 3003.3 OF THE ACT, AMENDED
14 OCTOBER 14, 1988 (P.L.737, NO.106) AND AUGUST 4, 1991 (P.L.97,
15 NO.22), ARE AMENDED TO READ:
16 SECTION 3003.2. ESTIMATED TAX.--(A) THE FOLLOWING TAXPAYERS
17 ARE REQUIRED TO PAY ESTIMATED TAX:
18 (1) EVERY CORPORATION SUBJECT TO THE CORPORATE NET INCOME
19 TAX IMPOSED BY ARTICLE IV OF THIS ACT, COMMENCING WITH THE
20 CALENDAR YEAR 1986 AND FISCAL YEARS BEGINNING DURING THE
21 CALENDAR YEAR 1986 AND EACH TAXABLE YEAR THEREAFTER, SHALL MAKE
22 PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX.
23 (2) EVERY CORPORATION SUBJECT TO THE CAPITAL STOCK AND
24 FRANCHISE TAX IMPOSED BY ARTICLE VI OF THIS ACT, COMMENCING WITH
25 THE CALENDAR YEAR 1988 AND FISCAL YEARS BEGINNING DURING THE
26 CALENDAR YEAR 1988 AND EACH TAXABLE YEAR THEREAFTER, SHALL MAKE
27 PAYMENTS OF ESTIMATED CAPITAL STOCK AND FRANCHISE TAX DURING ITS
28 TAXABLE YEAR AS PROVIDED HEREIN.
29 (3) EVERY "MUTUAL THRIFT INSTITUTION" OR "INSTITUTION"
30 SUBJECT TO THE TAX IMPOSED BY ARTICLE XV OF THIS ACT, COMMENCING
19970H0134B1706 - 98 -
1 WITH THE CALENDAR YEAR 1992 AND FISCAL YEARS BEGINNING DURING
2 THE CALENDAR YEAR 1992 AND EACH TAXABLE YEAR THEREAFTER, SHALL
3 MAKE PAYMENTS OF ESTIMATED MUTUAL THRIFT INSTITUTION TAX DURING
4 ITS TAXABLE YEAR.
5 (4) EVERY "INSURANCE COMPANY" SUBJECT TO THE TAX IMPOSED BY
6 ARTICLE IX OF THIS ACT SHALL MAKE PAYMENTS OF ESTIMATED
7 INSURANCE PREMIUMS TAX DURING ITS TAXABLE YEAR.
8 (5) EVERY PERSON SUBJECT TO THE TAX IMPOSED BY ARTICLE XI OF
9 THIS ACT SHALL MAKE PAYMENTS OF ESTIMATED UTILITIES GROSS
10 RECEIPTS TAX DURING ITS TAXABLE YEAR.
11 (B) THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN
12 [SECTION] SECTIONS 3003.2 THROUGH 3003.4 OF THIS ARTICLE SHALL
13 HAVE THE FOLLOWING MEANINGS ASCRIBED TO THEM:
14 (1) "ESTIMATED TAX." ESTIMATED CORPORATE NET INCOME TAX
15 [OR], ESTIMATED CAPITAL STOCK AND FRANCHISE TAX [OR], ESTIMATED
16 MUTUAL THRIFT INSTITUTION TAX, ESTIMATED INSURANCE PREMIUMS TAX
17 OR ESTIMATED UTILITIES GROSS RECEIPTS TAX.
18 (2) "ESTIMATED CORPORATE NET INCOME TAX." THE AMOUNT WHICH
19 THE CORPORATION ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY
20 SECTION 402 OF ARTICLE IV FOR THE TAXABLE YEAR.
21 (3) "ESTIMATED CAPITAL STOCK AND FRANCHISE TAX." THE AMOUNT
22 WHICH THE CORPORATION ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY
23 SECTION 602 OF ARTICLE VI FOR THE TAXABLE YEAR.
24 (4) "ESTIMATED MUTUAL THRIFT INSTITUTION TAX." THE AMOUNT
25 WHICH THE INSTITUTION ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY
26 SECTION 1502 OF ARTICLE XV FOR THE TAXABLE YEAR.
27 (4.1) "ESTIMATED INSURANCE PREMIUMS TAX." THE AMOUNT WHICH
28 THE INSURANCE COMPANY ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY
29 SECTION 902 OF ARTICLE IX FOR THE TAXABLE YEAR.
30 (4.2) "ESTIMATED UTILITIES GROSS RECEIPTS TAX." THE AMOUNT
19970H0134B1706 - 99 -
1 WHICH THE TAXPAYER ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY
2 SECTION 1101 OF ARTICLE XI FOR THE TAXABLE YEAR.
3 (4.3) "PERSON." ANY NATURAL PERSON, ASSOCIATION, FIDUCIARY,
4 PARTNERSHIP, CORPORATION OR OTHER ENTITY, INCLUDING THE
5 COMMONWEALTH, ITS POLITICAL SUBDIVISIONS AND INSTRUMENTALITIES
6 AND PUBLIC AUTHORITIES. WHENEVER USED IN ANY CLAUSE PRESCRIBING
7 AND IMPOSING A PENALTY OR IMPOSING A FINE OR IMPRISONMENT, OR
8 BOTH, THE TERM "PERSON," AS APPLIED TO AN ASSOCIATION, SHALL
9 INCLUDE THE MEMBERS THEREOF AND, AS APPLIED TO A CORPORATION,
10 THE OFFICERS THEREOF.
11 (4.4) "SAFE HARBOR BASE YEAR." THE TAXPAYER'S SECOND
12 PRECEDING TAXABLE YEAR. IF THE SECOND PRECEDING TAXABLE YEAR IS
13 LESS THAN TWELVE MONTHS, THEN THE "SAFE HARBOR BASE YEAR" SHALL
14 MEAN THE TAXPAYER'S ANNUALIZED SECOND PRECEDING TAXABLE YEAR. IF
15 THE TAXPAYER HAS FILED ONLY ONE PREVIOUS REPORT, THE "SAFE
16 HARBOR BASE YEAR" SHALL MEAN THE FIRST PRECEDING TAXABLE YEAR.
17 IF THE FIRST PRECEDING TAXABLE YEAR IS LESS THAN TWELVE MONTHS,
18 THEN THE "SAFE HARBOR BASE YEAR" SHALL MEAN THE TAXPAYER'S
19 ANNUALIZED FIRST PRECEDING TAXABLE YEAR.
20 (5) "TAXPAYER." [A CORPORATION REQUIRED TO PAY A TAX UNDER
21 ARTICLE IV OR VI OF THIS ACT OR AN INSTITUTION REQUIRED TO PAY A
22 TAX UNDER ARTICLE XV OF THIS ACT.] ANY PERSON REQUIRED TO PAY A
23 TAX IMPOSED BY ARTICLE IV, VI, IX, XI OR XV OF THIS ACT.
24 (C) ESTIMATED TAX SHALL BE PAID AS FOLLOWS:
25 (1) PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX SHALL BE
26 MADE IN EQUAL INSTALLMENTS ON OR BEFORE THE FIFTEENTH DAY OF THE
27 THIRD, SIXTH, NINTH AND TWELFTH MONTHS OF THE TAXABLE YEAR. THE
28 REMAINING PORTION OF THE CORPORATE NET INCOME TAX DUE, IF ANY,
29 SHALL BE PAID UPON THE DATE THE CORPORATION'S ANNUAL REPORT IS
30 REQUIRED TO BE FILED WITHOUT REFERENCE TO ANY EXTENSION OF TIME
19970H0134B1706 - 100 -
1 FOR FILING SUCH REPORT.
2 (2) [PAYMENT OF ESTIMATED CAPITAL STOCK AND FRANCHISE TAX
3 SHALL BE MADE IN INSTALLMENTS IN ACCORDANCE WITH THE FOLLOWING
4 SCHEDULES:
5 FIRST SECOND THIRD FOURTH
6 YEAR IN DUE ON THE 15TH DAY OF THE FOLLOWING MONTHS
7 WHICH TAX AFTER CLOSE OF THE PREVIOUS TAX YEAR:
8 YEAR BEGINS 3RD MONTH 6TH MONTH 9TH MONTH 12TH MONTH
9 1988 44% 44% 6% 6%
10 1989 34% 34% 16% 16%
11 1990 29% 29% 21% 21%
12 1991 AND
13 THEREAFTER 25% 25% 25% 25%]
14 PAYMENT OF ESTIMATED CAPITAL STOCK AND FRANCHISE TAX SHALL BE
15 MADE IN EQUAL INSTALLMENTS ON OR BEFORE THE FIFTEENTH DAY OF THE
16 THIRD, SIXTH, NINTH AND TWELFTH MONTHS OF THE TAXABLE YEAR. THE
17 REMAINING PORTION OF THE CAPITAL STOCK AND FRANCHISE TAX DUE, IF
18 ANY, SHALL BE PAID UPON THE DATE THE CORPORATION'S ANNUAL REPORT
19 IS REQUIRED TO BE FILED WITHOUT REFERENCE TO ANY EXTENSION OF
20 TIME FOR FILING SUCH REPORT.
21 (3) [BEGINNING IN CALENDAR YEAR 1992 AND EACH CALENDAR YEAR
22 THEREAFTER AND FISCAL YEARS BEGINNING IN 1992 AND EACH FISCAL
23 YEAR THEREAFTER, PAYMENT] PAYMENT OF THE ESTIMATED MUTUAL THRIFT
24 INSTITUTION TAX SHALL BE MADE IN EQUAL INSTALLMENTS ON OR BEFORE
25 THE FIFTEENTH DAY OF THE THIRD, SIXTH, NINTH AND TWELFTH MONTHS
26 OF THE TAXABLE YEAR. THE REMAINING PORTION OF THE MUTUAL THRIFT
27 INSTITUTION TAX DUE, IF ANY, SHALL BE PAID UPON THE DATE THE
28 INSTITUTION'S ANNUAL REPORT IS REQUIRED TO BE FILED WITHOUT
29 REFERENCE TO ANY EXTENSION OF TIME FOR FILING SUCH REPORT.
30 (4) PAYMENT OF THE ESTIMATED INSURANCE PREMIUMS TAX SHALL BE
19970H0134B1706 - 101 -
1 MADE IN A SINGLE INSTALLMENT ON OR BEFORE THE FIFTEENTH DAY OF
2 MARCH OF THE TAXABLE YEAR. THE REMAINING PORTION OF THE
3 INSURANCE PREMIUMS TAX DUE, IF ANY, SHALL BE PAID UPON THE DATE
4 THE INSURANCE COMPANY'S ANNUAL REPORT IS REQUIRED TO BE FILED
5 WITHOUT REFERENCE TO ANY EXTENSION OF TIME FOR FILING THE
6 REPORT.
7 (5) PAYMENT OF THE ESTIMATED UTILITIES GROSS RECEIPTS TAX
8 SHALL BE MADE IN A SINGLE INSTALLMENT ON OR BEFORE THE FIFTEENTH
9 DAY OF MARCH OF THE TAXABLE YEAR. THE REMAINING PORTION OF THE
10 UTILITIES GROSS RECEIPTS TAX DUE, IF ANY, SHALL BE PAID UPON THE
11 DATE THE ANNUAL REPORT IS REQUIRED TO BE FILED WITHOUT REFERENCE
12 TO ANY EXTENSION OF TIME FOR FILING THE REPORT.
13 (D) IF, AFTER PAYING ANY INSTALLMENT OF ESTIMATED TAX, THE
14 TAXPAYER MAKES A NEW ESTIMATE, THE AMOUNT OF EACH REMAINING
15 INSTALLMENT DUE, IF ANY, SHALL BE SUCH AS TO BRING THE TOTAL
16 INSTALLMENT PAYMENTS MADE ON ACCOUNT OF THE TAX DUE FOR THE
17 CURRENT YEAR UP TO AN AMOUNT THAT WOULD HAVE BEEN DUE HAD THE
18 NEW ESTIMATE BEEN THE BASIS FOR PAYING ALL PREVIOUS
19 INSTALLMENTS.
20 (E) EVERY TAXPAYER WITH A TAXABLE YEAR OF LESS THAN TWELVE
21 MONTHS SHALL PAY SUCH INSTALLMENTS AS BECOME DUE DURING THE
22 COURSE OF ITS TAXABLE YEAR AND PAY THE REMAINING TAX DUE ON OR
23 BEFORE THE DUE DATE OF THE ANNUAL REPORT (DETERMINED WITHOUT
24 REGARD TO ANY EXTENSION OF TIME FOR FILING).
25 (F) AT THE ELECTION OF THE TAXPAYER, ANY INSTALLMENT OF
26 ESTIMATED TAX MAY BE PAID BEFORE THE DATE PRESCRIBED FOR ITS
27 PAYMENT.
28 (G) FOR ALL PURPOSES OF SECTIONS 3003.2 THROUGH 3003.4 OF
29 THIS ARTICLE, ESTIMATED CORPORATE NET INCOME TAX [AND],
30 ESTIMATED CAPITAL STOCK AND FRANCHISE TAX, ESTIMATED MUTUAL
19970H0134B1706 - 102 -
1 THRIFT INSTITUTIONS TAX, ESTIMATED INSURANCE PREMIUMS TAX AND
2 ESTIMATED UTILITIES GROSS RECEIPTS TAX SHALL BE SEPARATELY
3 REPORTED, DETERMINED AND TREATED.
4 (H) THE TAX IMPOSED ON SHARES OF INSTITUTIONS AND TITLE
5 INSURANCE COMPANIES AND THE TAX IMPOSED ON PUBLIC UTILITY REALTY
6 SHALL BE PAID IN THE MANNER AND WITHIN THE TIME PRESCRIBED BY
7 ARTICLE VII, VIII OR XI-A OF THIS ACT, BUT SUBJECT TO THE
8 INTEREST PROVIDED IN SECTION 3003.3 OF THIS ARTICLE.
9 (I) WHENEVER THE AMOUNT SHOWN AS DUE ON THE ANNUAL REPORT,
10 INCLUDING ANY SETTLEMENT OF THE ANNUAL REPORT, IS LESS THAN THE
11 AMOUNT PAID TO THE DEPARTMENT ON ACCOUNT OF THAT AMOUNT UNDER
12 THIS ARTICLE, THE DEPARTMENT SHALL ENTER A CREDIT IN THE AMOUNT
13 OF THE DIFFERENCE TO THE ACCOUNT OF THE TAXPAYER, WHICH CREDIT
14 SHALL BE IMMEDIATELY SUBJECT TO APPLICATION, ASSIGNMENT OR
15 REFUND, AT THE REQUEST OF THE TAXPAYER UNDER SECTION 1108 OF THE
16 ACT OF APRIL 9, 1929 (P.L.343, NO.176), KNOWN AS "THE FISCAL
17 CODE," OR AT THE INITIATIVE OF THE DEPARTMENT. IF THE
18 APPLICATION, ASSIGNMENT OR REFUND OF CREDIT UNDER THIS
19 SUBSECTION RESULTS IN AN UNDERPAYMENT OF THE TAX DUE UPON
20 SETTLEMENT OR RESETTLEMENT, INTEREST SHALL BE CALCULATED ON THE
21 AMOUNT OF THE UNDERPAYMENT FROM THE DATE CREDIT WAS APPLIED,
22 ASSIGNED OR REFUNDED.
23 SECTION 3003.3. UNDERPAYMENT OF ESTIMATED TAX.--(A) IN CASE
24 OF ANY UNDERPAYMENT OF AN INSTALLMENT OF ESTIMATED TAX BY A
25 TAXPAYER, THERE SHALL BE IMPOSED [AN ADDITION TO THE TAX]
26 INTEREST FOR THE TAXABLE YEAR IN AN AMOUNT DETERMINED AT THE
27 ANNUAL RATE AS PROVIDED BY LAW [FOR THE PAYMENT OF INTEREST]
28 UPON THE AMOUNT OF THE UNDERPAYMENT FOR THE PERIOD OF THE
29 UNDERPAYMENT, EXCEPT THAT, IN CASE OF ANY SUBSTANTIAL
30 UNDERPAYMENT OF ESTIMATED TAX BY A TAXPAYER, SUCH [ADDITION TO
19970H0134B1706 - 103 -
1 THE TAX] INTEREST FOR THE TAXABLE YEAR SHALL BE IMPOSED IN AN
2 AMOUNT DETERMINED AT ONE HUNDRED TWENTY PER CENT OF THE ANNUAL
3 RATE AS PROVIDED BY LAW [FOR THE PAYMENT OF INTEREST] UPON THE
4 ENTIRE UNDERPAYMENT FOR THE PERIOD OF THE SUBSTANTIAL
5 UNDERPAYMENT. FOR THE PURPOSE OF THIS SUBSECTION, A SUBSTANTIAL
6 UNDERPAYMENT SHALL BE DEEMED TO EXIST FOR ANY PERIOD DURING
7 WHICH THE AMOUNT OF THE UNDERPAYMENT EQUALS OR EXCEEDS TWENTY-
8 FIVE PER CENT OF THE CUMULATIVE AMOUNT OF INSTALLMENTS OF
9 ESTIMATED TAX WHICH WOULD BE REQUIRED TO BE PAID IF THE
10 ESTIMATED TAX WERE EQUAL TO THE AMOUNT AS DETERMINED IN
11 SUBSECTION (B)(1).
12 (B) (1) FOR PURPOSES OF THIS SECTION, THE AMOUNT OF THE
13 UNDERPAYMENT, IF ANY, SHALL BE THE EXCESS OF:
14 (I) THE CUMULATIVE AMOUNT OF INSTALLMENTS WHICH WOULD BE
15 REQUIRED TO BE PAID AS OF EACH INSTALLMENT DATE AS DEFINED IN
16 SECTION 3003.2(C) IF THE ESTIMATED TAX WERE EQUAL TO NINETY PER
17 CENT OF THE TAX SHOWN ON THE REPORT FOR THE TAXABLE YEAR, EXCEPT
18 THAT, IF THE SETTLED TAX OR, IF THE TAX IS RESETTLED, THE
19 RESETTLED TAX EXCEEDS THE TAX SHOWN ON THE REPORT BY TEN PER
20 CENT OR MORE, THE AMOUNT OF THE UNDERPAYMENT SHALL BE BASED ON
21 NINETY PER CENT OF THE AMOUNT OF SUCH SETTLED OR RESETTLED TAX;
22 OVER
23 (II) THE CUMULATIVE AMOUNT OF INSTALLMENTS PAID ON OR BEFORE
24 THE LAST DATE PRESCRIBED FOR PAYMENT.
25 (2) IF THE SETTLED OR RESETTLED TAX IS USED IN CALCULATING
26 THE AMOUNT OF UNDERPAYMENT, THE AMOUNT OF TAX AS SETTLED OR
27 RESETTLED SHALL BE UTILIZED IN DETERMINING THE AMOUNT OF
28 UNDERPAYMENT WITHOUT THE NECESSITY OF THE FILING OF ANY PETITION
29 BY THE DEPARTMENT OR BY THE TAXPAYER.
30 (C) THE PERIOD OF THE UNDERPAYMENT SHALL RUN FROM THE DATE
19970H0134B1706 - 104 -
1 THE INSTALLMENT WAS REQUIRED TO BE PAID TO WHICHEVER OF THE
2 FOLLOWING DATES IS THE EARLIER:
3 (1) THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE
4 CLOSE OF THE TAXABLE YEAR.
5 (2) WITH RESPECT TO ANY PORTION OF THE UNDERPAYMENT, THE
6 DATE ON WHICH SUCH PORTION IS PAID.
7 (D) NOTWITHSTANDING THE PROVISIONS OF THE PRECEDING
8 SUBSECTIONS, [THE ADDITION TO THE TAX] INTEREST WITH RESPECT TO
9 ANY UNDERPAYMENT OF ANY INSTALLMENT OF ESTIMATED TAX SHALL NOT
10 BE IMPOSED IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX
11 MADE ON OR BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF
12 SUCH INSTALLMENT EQUALS OR EXCEEDS THE AMOUNT WHICH WOULD HAVE
13 BEEN REQUIRED TO BE PAID ON OR BEFORE SUCH DATE IF THE ESTIMATED
14 TAX WERE AN AMOUNT EQUAL TO THE TAX COMPUTED AT THE RATES
15 APPLICABLE TO THE TAXABLE YEAR, INCLUDING ANY MINIMUM TAX
16 IMPOSED, BUT OTHERWISE ON THE BASIS OF THE FACTS SHOWN ON THE
17 REPORT OF THE TAXPAYER FOR, AND THE LAW APPLICABLE TO, THE
18 [SECOND PRECEDING TAXABLE YEAR] SAFE HARBOR BASE YEAR, ADJUSTED
19 FOR ANY CHANGES TO SECTIONS 401, 601 AND 602 ENACTED FOR [TAX
20 YEARS BEGINNING ON OR AFTER JANUARY 1, 1991] THE TAXABLE YEAR,
21 IF A REPORT SHOWING A LIABILITY FOR TAX WAS FILED BY THE
22 TAXPAYER FOR THE [SECOND PRECEDING TAXABLE YEAR AND SUCH SECOND
23 PRECEDING YEAR WAS A TAXABLE YEAR OF TWELVE MONTHS] SAFE HARBOR
24 BASE YEAR. IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX
25 MADE ON OR BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF
26 SUCH INSTALLMENT DOES NOT EQUAL OR EXCEED THE AMOUNT REQUIRED TO
27 BE PAID PER THE PRECEDING SENTENCE, BUT SUCH AMOUNT IS PAID
28 AFTER THE DATE THE INSTALLMENT WAS REQUIRED TO BE PAID, THEN THE
29 PERIOD OF UNDERPAYMENT SHALL RUN FROM THE DATE THE INSTALLMENT
30 WAS REQUIRED TO BE PAID TO THE DATE THE AMOUNT REQUIRED TO BE
19970H0134B1706 - 105 -
1 PAID PER THE PRECEDING SENTENCE IS PAID. [FOR TAXPAYERS THAT
2 HAVE FILED ONLY ONE OR TWO PREVIOUS RETURNS, IF THE SECOND
3 PRECEDING TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THEN THE
4 FIRST PRECEDING TAXABLE YEAR SHALL BE USED; OR, IF THERE IS NO
5 SECOND PRECEDING TAXABLE YEAR, THEN THE FIRST PRECEDING TAXABLE
6 YEAR SHALL BE USED. IF THE FIRST PRECEDING TAXABLE YEAR IS LESS
7 THAN TWELVE MONTHS, THEN THE ANNUALIZED FIRST PRECEDING TAXABLE
8 YEAR SHALL BE USED.] PROVIDED, [HOWEVER,] THAT IF THE SETTLED
9 TAX FOR THE [SECOND PRECEDING YEAR] SAFE HARBOR BASE YEAR
10 EXCEEDS THE TAX SHOWN ON SUCH REPORT BY TEN PER CENT OR MORE,
11 THE SETTLED TAX ADJUSTED TO REFLECT THE CURRENT TAX RATE SHALL
12 BE USED FOR PURPOSES OF THIS SUBSECTION, EXCEPT THAT, IF THE
13 SETTLED TAX IS SUBSEQUENTLY RESETTLED, THE AMOUNT OF TAX AS
14 RESETTLED SHALL BE UTILIZED IN THE APPLICATION OF THIS
15 SUBSECTION WITHOUT THE NECESSITY OF THE FILING OF ANY PETITION
16 BY THE DEPARTMENT OR BY THE TAXPAYER. IN THE EVENT THAT THE
17 SETTLED OR RESETTLED TAX FOR THE [SECOND PRECEDING YEAR] SAFE
18 HARBOR BASE YEAR EXCEEDS THE TAX SHOWN ON THE REPORT BY TEN PER
19 CENT OR MORE, [AN ADDITION TO THE TAX] INTEREST RESULTING FROM
20 THE UTILIZATION OF SUCH SETTLED OR RESETTLED TAX IN THE
21 APPLICATION OF THE PROVISIONS OF THIS SUBSECTION SHALL NOT BE
22 IMPOSED IF, WITHIN FORTY-FIVE DAYS OF THE MAILING DATE OF SUCH
23 SETTLEMENT OR RESETTLEMENT, PAYMENTS ARE MADE SUCH THAT THE
24 TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX EQUALS OR EXCEEDS
25 THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO BE PAID ON OR
26 BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO
27 SUCH SETTLED OR RESETTLED TAX ADJUSTED TO REFLECT THE CURRENT
28 TAX RATE. IN ANY CASE IN WHICH THE TAXABLE YEAR FOR WHICH AN
29 UNDERPAYMENT OF ESTIMATED TAX MAY EXIST IS A SHORT TAXABLE YEAR,
30 IN DETERMINING THE TAX SHOWN ON THE REPORT OR THE SETTLED OR
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1 RESETTLED TAX FOR THE [SECOND PRECEDING TAXABLE] SAFE HARBOR
2 BASE YEAR, THE TAX WILL BE REDUCED BY MULTIPLYING IT BY THE
3 [NUMBER OF DAYS IN THE SHORT TAXABLE YEAR AND DIVIDING THE
4 RESULTING AMOUNT BY THREE HUNDRED SIXTY-FIVE] RATIO OF THE
5 NUMBER OF INSTALLMENT PAYMENTS MADE IN THE SHORT TAXABLE YEAR TO
6 THE NUMBER OF INSTALLMENT PAYMENTS REQUIRED TO BE MADE FOR THE
7 FULL TAXABLE YEAR.
8 [(E) (1) WHEN THE AMENDMENTS TO SECTIONS 401, 601 AND 602
9 AND SUBSECTION (D) RESULT IN AN INCREASE OF A TAXPAYER'S
10 ESTIMATED TAXES FOR 1991 AND 1992 OR THE REQUIRED SAFE HARBOR
11 AMOUNT, THE ADDITIONAL REQUIRED INSTALLMENT PAYMENTS OF
12 ESTIMATED TAX AS WELL AS THE ADDITIONAL AMOUNT OF THE REQUIRED
13 INSTALLMENT PAYMENTS TO MEET THE "SAFE HARBOR" SHALL BE TREATED
14 AS PROVIDED BY THIS SUBSECTION FOR ADDITIONAL ESTIMATED
15 PAYMENTS, SAFE HARBOR PAYMENTS AND THE RECOMPUTATION AND
16 PRESERVATION OF THE "SAFE HARBOR."
17 (2) (I) FOR PURPOSES OF COMPUTING THE ESTIMATED TAX "SAFE
18 HARBOR" PURSUANT TO SUBSECTION (D) FOR TAX YEARS 1991 AND 1992,
19 THE SECOND PRECEDING TAXABLE YEAR (BASE YEAR) SHALL BE
20 RECOMPUTED WITH THE AMENDED SECTIONS 401, 601 AND 602.
21 (II) ANY TAXPAYER WHOSE "SAFE HARBOR" IS AFFECTED BY THIS
22 SECTION MUST FILE A RECOMPUTATION OF ITS SAFE HARBOR YEAR WITHIN
23 SIXTY DAYS OF THE EFFECTIVE DATE OF THIS ACT FOR CALENDAR YEAR
24 1991 OR TAXABLE YEARS BEGINNING IN 1991 AND WITHIN SEVENTY-FIVE
25 DAYS OF THE BEGINNING OF ITS TAXABLE YEAR FOR CALENDAR YEAR 1992
26 OR TAXABLE YEARS BEGINNING IN 1992. THE RECOMPUTATION SHALL BE
27 ON FORMS AS PRESCRIBED BY THE DEPARTMENT OF REVENUE. ANY
28 TAXPAYER FAILING TO FILE A RECOMPUTATION AS REQUIRED SHALL BE
29 DENIED THE USE OF THE "SAFE HARBOR" PROVISIONS OF SUBSECTION
30 (D).
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1 (3) TO THE EXTENT THE AMENDMENTS TO SECTIONS 401, 601 AND
2 602 AND SUBSECTION (D) RESULT IN AN INCREASE IN THE
3 CORPORATION'S ESTIMATED TAX OR THE SAFE HARBOR AMOUNT,
4 INSTALLMENTS DUE AFTER THE EFFECTIVE DATE OF THIS ACT SHALL BE
5 MADE PURSUANT TO SECTION 3003.2 AND THIS SECTION EXCEPT:
6 (I) ADDITIONAL AMOUNTS ASSOCIATED WITH INSTALLMENT PAYMENT
7 OF ESTIMATED TAX DUE PRIOR TO THE EFFECTIVE DATE OF THIS ACT
8 UNDER SECTION 3003.2 OR SUBSECTION (D) SHALL BE CONSIDERED
9 TIMELY PAID IF PAID WITHIN SIXTY DAYS OF THE EFFECTIVE DATE OF
10 THIS ACT OR ON THE DUE DATE OF THE NEXT INSTALLMENT.
11 (II) ADDITIONAL AMOUNTS ASSOCIATED WITH INSTALLMENT PAYMENT
12 OF ESTIMATED TAX DUE WITHIN SIXTY DAYS OF THE EFFECTIVE DATE OF
13 THIS ACT UNDER SECTION 3003.2 OR SUBSECTION (D) SHALL BE
14 CONSIDERED TIMELY PAID IF PAID WITHIN SIXTY DAYS OF THE
15 EFFECTIVE DATE OF THIS ACT OR ON THE DUE DATE OF THE NEXT
16 INSTALLMENT.]
17 SECTION 33. SECTION 3003.4 OF THE ACT, ADDED JULY 1, 1985
18 (P.L.78, NO.29), IS AMENDED TO READ:
19 [SECTION 3003.4. INTEREST.--(A) INTEREST ON UNDERPAYMENTS
20 OF ESTIMATED TAX. UNDERPAYMENTS OF INSTALLMENTS OF ESTIMATED TAX
21 SHALL NOT BEAR INTEREST DURING THE PERIOD OF SUCH UNDERPAYMENT.
22 HOWEVER, ANY AMOUNT OF TAX FINALLY DETERMINED TO BE DUE, WHICH
23 IS NOT PAID BY THE DATE THE ANNUAL REPORT IS DUE (DETERMINED
24 WITHOUT REGARD TO ANY EXTENSION OF TIME FOR FILING), SHALL BEAR
25 INTEREST FROM SUCH DATE UNTIL PAID.
26 (B) INTEREST ON ADDITIONS TO THE TAX. ADDITIONS TO THE TAX
27 SHALL BEAR INTEREST FROM THE DATE THE ANNUAL REPORT IS DUE UNTIL
28 THE DATE PAID.]
29 SECTION 34. SECTION 3003.9 OF THE ACT, ADDED JUNE 16, 1994
30 (P.L.279, NO.48), IS AMENDED TO READ:
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1 SECTION 3003.9. BAD CHECKS; ADDITIONS TO TAX.--[IF ANY CHECK
2 IN PAYMENT OF ANY AMOUNT RECEIVABLE UNDER ARTICLE IV, VI, VII,
3 IX, XI OR XXX IS NOT PAID UPON PRESENTMENT, IN ADDITION TO ANY
4 OTHER PENALTIES PROVIDED BY LAW, THE DEPARTMENT OF REVENUE SHALL
5 CHARGE THE PERSON WHO TENDERED SUCH CHECK A FEE EQUAL TO TEN
6 PERCENT OF THE FACE AMOUNT THEREOF, PLUS ANY PROTEST FEES,
7 PROVIDED THAT THE ADDITION IMPOSED HEREBY SHALL NOT EXCEED FIVE
8 HUNDRED DOLLARS ($500) NOR BE LESS THAN TEN DOLLARS ($10).]
9 (A) IF ANY CHECK IN PAYMENT OF ANY AMOUNT RECEIVABLE UNDER
10 THE LAWS OF THIS COMMONWEALTH ADMINISTERED BY THE DEPARTMENT IS
11 NOT PAID UPON PRESENTMENT, IN ADDITION TO ANY INTEREST OR
12 PENALTIES PROVIDED BY LAW, THE DEPARTMENT SHALL CHARGE THE
13 PERSON WHO TENDERED THE CHECK AN ADDITION TO TAX EQUAL TO TEN
14 PER CENT OF THE FACE AMOUNT OF THE CHECK, PLUS INTEREST AND
15 PROTEST FEES, PROVIDED THAT THE ADDITION IMPOSED BY THIS SECTION
16 SHALL NOT EXCEED FIVE HUNDRED DOLLARS ($500) NOR BE LESS THAN
17 TWENTY-FIVE DOLLARS ($25).
18 (B) THIS SECTION SHALL APPLY TO ALL CHECKS PRESENTED FOR
19 PAYMENT AFTER DECEMBER 31, 1997.
20 SECTION 35. IT IS THE INTENT OF THE GENERAL ASSEMBLY THAT
21 THE AMENDMENT OF SECTION 303(A)(3)(V) OF THE ACT IS TO CLARIFY
22 EXISTING LAW. THE AMENDMENT OF SECTION 303(A)(3)(V) OF THE ACT
23 SHALL NOT BE CONSTRUED TO CHANGE EXISTING LAW.
24 SECTION 35.1. (A) THE FOLLOWING ACTS AND PARTS OF ACTS ARE
25 REPEALED:
26 SECTION 2506 OF THE ACT OF APRIL 9, 1929 (P.L.177, NO.175),
27 KNOWN AS THE ADMINISTRATIVE CODE OF 1929.
28 SECTION 4 OF THE ACT OF JUNE 23, 1982 (P.L.597, NO.170),
29 KNOWN AS THE WILD RESOURCE CONSERVATION ACT.
30 20 PA.C.S. § 8618.
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1 (B) THE FOLLOWING ACTS AND PARTS OF ACTS ARE REPEALED
2 INSOFAR AS THEY ARE INCONSISTENT WITH THIS ACT:
3 SECTION 503(A), (B) AND (C) OF THE ACT OF APRIL 9, 1929
4 (P.L.343, NO.176), KNOWN AS THE FISCAL CODE.
5 SECTION 217(A) OF THE ACT OF DECEMBER 17, 1981 (P.L.435,
6 NO.135), KNOWN AS THE RACE HORSE INDUSTRY REFORM ACT.
7 SECTION 12 OF THE ACT OF JUNE 23, 1982 (P.L.597, NO.170),
8 KNOWN AS THE WILD RESOURCE CONSERVATION ACT.
9 15 PA.C.S. §§ 8925 AND 8997.
10 (C) 75 PA.C.S. § 9017 IS REPEALED INSOFAR AS IT RELATES TO
11 REFUNDS.
12 SECTION 36. (A) THE FOLLOWING PROVISIONS SHALL APPLY
13 RETROACTIVELY TO JANUARY 1, 1997:
14 (1) THE AMENDMENT OF SECTION 301(D.1)(1) AND (2) OF THE
15 ACT.
16 (2) THE AMENDMENT OF SECTION 303(A)(3)(V) OF THE ACT.
17 (3) THE AMENDMENT OF SECTION 1296 OF THE ACT.
18 (4) SECTION 35 OF THIS ACT.
19 (B) THE FOLLOWING PROVISIONS SHALL APPLY RETROACTIVELY TO
20 TAXABLE YEARS BEGINNING ON OR AFTER JANUARY 1, 1997:
21 (1) THE AMENDMENT OR ADDITION OF THE INTRODUCTORY
22 PARAGRAPH AND CLAUSES (C.2), (D), (E.1), (O.3) AND (S.2) OF
23 SECTION 301 OF THE ACT.
24 (2) THE AMENDMENT OF SECTION 304(D) OF THE ACT.
25 (3) THE AMENDMENT OF SECTIONS 307, 307.6, 307.8 AND
26 307.9 OF THE ACT.
27 (4) THE ADDITION OF PART VI-A OF ARTICLE III OF THE ACT.
28 (5) THE AMENDMENT OF THE DEFINITIONS OF "CAPITAL STOCK
29 VALUE" AND "PROCESSING" IN SECTION 601 OF THE ACT.
30 (6) THE ADDITION OF SECTIONS 602.4 AND 602.5 OF THE ACT.
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1 (C) THE FOLLOWING PROVISIONS SHALL APPLY TO TAXABLE YEARS
2 BEGINNING ON OR AFTER JANUARY 1, 1998:
3 (1) THE AMENDMENT OR ADDITION OF SECTION 301(D.1) AND
4 (N.0) OF THE ACT.
5 (2) THE AMENDMENT OF SECTION 303(A)(3)(VI) OF THE ACT.
6 (3) THE AMENDMENT OF SECTION 324.2 OF THE ACT.
7 (4) THE AMENDMENT OR ADDITION OF SECTION 401(1) AND
8 (3)1(P) OF THE ACT.
9 (5) THE AMENDMENT OF THE DEFINITIONS OF "AVERAGE NET
10 INCOME," "CAPITAL STOCK," "DOMESTIC ENTITY," "FOREIGN ENTITY"
11 AND "NET WORTH" IN SECTION 601 OF THE ACT.
12 (6) THE AMENDMENT OF SECTIONS 3003, 3003.2, 3003.3 AND
13 3003.4 OF THE ACT.
14 (D) THE FOLLOWING PROVISIONS SHALL APPLY TO PAYMENTS MADE ON
15 OR AFTER JANUARY 1, 1998:
16 (1) THE AMENDMENT OF SECTION 253 OF THE ACT.
17 (2) THE AMENDMENT OF SECTION 350 OF THE ACT.
18 (3) THE AMENDMENT OF SECTION 1113-C OF THE ACT.
19 (4) THE AMENDMENT OF SECTION 2009 OF THE ACT.
20 (5) THE AMENDMENT OF SECTION 2181 OF THE ACT.
21 (6) THE AMENDMENT OF SECTION 3003.1 AND 3003.9 OF THE
22 ACT.
23 (7) SECTION 35.1(C) OF THIS ACT.
24 SECTION 37. THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
25 (1) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT
26 IMMEDIATELY:
27 (I) THE AMENDMENT OR ADDITION OF THE INTRODUCTORY
28 PARAGRAPH AND CLAUSES (C.2), (D), (D.1)(1) AND (2),
29 (E.1), (O.3) AND (S.2) OF SECTION 301 OF THE ACT.
30 (II) THE AMENDMENT OF SECTIONS 303(A)(3)(V) AND
19970H0134B1706 - 111 -
1 304(D) OF THE ACT.
2 (III) THE AMENDMENT OF SECTIONS 307, 307.6, 307.8
3 AND 307.9 OF THE ACT.
4 (IV) THE ADDITION OF PART VI-A OF ARTICLE III OF THE
5 ACT.
6 (V) THE AMENDMENT OF THE DEFINITIONS OF "CAPITAL
7 STOCK VALUE" AND "PROCESSING" IN SECTION 601 OF THE ACT.
8 (VI) THE ADDITION OF SECTIONS 602.4 AND 602.5 OF THE
9 ACT.
10 (VII) THE AMENDMENT OF SECTION 1296 OF THE ACT.
11 (VIII) SECTION 35 OF THIS ACT.
12 (IX) SECTION 35.1(A) OF THIS ACT.
13 (X) SECTION 36 OF THIS ACT.
14 (XI) THIS SECTION.
15 (2) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT JANUARY
16 1, 1998:
17 (I) THE AMENDMENT OF SECTION 266 OF THE ACT.
18 (II) THE AMENDMENT OF SECTION 303(A)(3)(VI) OF THE
19 ACT.
20 (III) THE AMENDMENT OF SECTION 352 OF THE ACT.
21 (IV) SECTION 35.1(B) AND (C) OF THIS ACT.
22 (3) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT JULY 1,
23 1997, OR IMMEDIATELY, WHICHEVER IS LATER.
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