PRINTER'S NO. 3453
No. 2498 Session of 2000
INTRODUCED BY GLADECK, ARGALL, GRUITZA, ADOLPH, ALLEN, BARRAR,
BELFANTI, CALTAGIRONE, CHADWICK, CLYMER, L. I. COHEN,
M. COHEN, DAILEY, DALEY, DEMPSEY, FICHTER, GEIST, GODSHALL,
HARHAI, HASAY, HENNESSEY, HERMAN, HERSHEY, MAHER, MAJOR,
McGILL, McILHATTAN, PESCI, ROBERTS, RUBLEY, SAYLOR, SEYFERT,
STEELMAN, E. Z. TAYLOR, TRELLO, TRUE, WILT, WOJNAROSKI,
YOUNGBLOOD, PIPPY AND HORSEY, MAY 2, 2000
REFERRED TO COMMITTEE ON URBAN AFFAIRS, MAY 2, 2000
AN ACT
1 Amending the act of October 6, 1998 (P.L.705, No.92), entitled
2 "An act providing for the creation of keystone opportunity
3 zones to foster economic opportunities in this Commonwealth,
4 to facilitate economic development, stimulate industrial,
5 commercial and residential improvements and prevent physical
6 and infrastructure deterioration of geographic areas within
7 this Commonwealth; authorizing expenditures; providing tax
8 exemptions, tax deductions, tax abatements and tax credits;
9 creating additional obligations of the Commonwealth and local
10 governmental units; and prescribing powers and duties of
11 certain State and local departments, agencies and officials,"
12 further providing for applications, for residency, for
13 personal income tax, for residency considerations, for
14 employer information, for corporate net income tax, for
15 capital stock franchise tax, for real property tax, for local
16 earned income and net profits taxes and business privilege
17 taxes, for transferability, for recapture, for delinquent
18 taxes and for code compliance; providing for notice and for
19 application time; and further providing for compliance.
20 The General Assembly of the Commonwealth of Pennsylvania
21 hereby enacts as follows:
22 Section 1. Sections 301, 306, 512, 513, 514, 515(d), 516,
23 702, 703, 901, 902, 903 and 904 of the act of October 6, 1998
24 (P.L.705, No.92), known as the Pennsylvania Keystone Opportunity
1 Zone Act, are amended to read:
2 Section 301. Keystone opportunity zones.
3 (a) Establishment.--There is hereby established within the
4 department a program providing for the designation of portions
5 of this Commonwealth as keystone opportunity zones. A keystone
6 opportunity zone shall be comprised of deteriorated property and
7 shall not exceed a total of 5,000 acres.
8 (b) Designation.--The department shall designate not more
9 than 12 keystone opportunity zones in this Commonwealth. Persons
10 and businesses within a designated keystone opportunity zone
11 that are qualified under this act shall be entitled to all tax
12 exemptions, deductions, abatements or credits set forth in this
13 act for a period not to exceed 12 years beginning January 1,
14 1999, and ending on or before December 31, 2010.
15 (c) Subzones.--A keystone opportunity zone may be comprised
16 of up to 12 clearly defined subzones containing a minimum of 20
17 contiguous acres each. The subzones may or may not be contiguous
18 to each other. The total number of subzones shall not exceed
19 5,000 acres in the aggregate. The department may approve the use
20 of a subzone containing a minimum of ten acres in an area that
21 is not included in a metropolitan statistical area.
22 (d) Authorization for local tax exemption.--Every political
23 subdivision within which a proposed keystone opportunity zone is
24 located, whether in whole or in part, is hereby authorized to
25 provide tax exemptions, deductions, abatements or credits to
26 persons and businesses qualified under this act. The political
27 subdivision shall agree to provide exemptions, deductions,
28 abatements or credits from all local taxes set forth in this act
29 in order to qualify to be designated a keystone opportunity zone
30 within that political subdivision. Except as provided in section
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1 303(e), the exemptions, deductions, abatements or credits shall
2 be effective January 1, 1999, if designation of a keystone
3 opportunity zone within the political subdivision is granted by
4 the department. The exemptions, deductions, abatements or
5 credits shall be binding upon the political subdivision for the
6 duration of the keystone opportunity zone designation.
7 (e) Authorization to extend State and local tax
8 exemptions.--A keystone opportunity zone which does not provide
9 for the exemptions, deductions, abatements or credits set forth
10 in this act for a period of 12 years, ending on December 31,
11 2010, may receive departmental designation to extend such State
12 and local tax relief to the period ending December 31, 2010. A
13 qualified political subdivision having an approved keystone
14 opportunity subzone within its jurisdiction shall pass the
15 required ordinances, resolutions or other required action of the
16 qualified political subdivision for the necessary exemptions,
17 deductions, abatements or credits pursuant to this act for the
18 period after December 31, 2008, and before January 1, 2011, and
19 shall submit copies to the department by December 31, 2000. The
20 department shall approve or deny the extension of the duration
21 of the keystone opportunity zone authorized under this
22 subsection by February 28, 2001, and shall provide written
23 notice, irrespective of whether approved or denied, to each
24 qualified political subdivision, resident and qualified business
25 affected. Upon approval of the extension of the duration of the
26 keystone opportunity zone under this subsection, the exemptions,
27 deductions, abatements or credits shall be binding upon the
28 qualified political subdivision as provided in subsection (d)
29 and shall be nonrevocable.
30 Section 306. Residency.
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1 In order to qualify each year for a tax exemption, deduction,
2 abatement or credit under this act, a person shall be domiciled
3 and shall reside in the keystone opportunity zone for a period
4 of 184 consecutive days during each taxable year, which may
5 begin on the date of designation by the department or on the
6 date the person first resides within the zone.
7 Section 512. Personal income tax.
8 (a) General rule.--For the 1999 taxable year and each tax
9 year after 1999 and to the extent and for the duration provided
10 in this act a person shall be allowed an exemption for:
11 (1) Compensation received during the time period when
12 the person was a resident of a keystone opportunity zone.
13 (2) Net income from the operation of a qualified
14 business received by a resident or nonresident of a keystone
15 opportunity zone attributable to business activity conducted
16 within a keystone opportunity zone [after provision for all
17 costs and expenses incurred in the conduct thereof],
18 determined [either on a cash or accrual basis] in accordance
19 with [accepted accounting principles and practices but
20 without deduction of taxes based on income.] section 515 of
21 this act, provided that any business that operates both
22 within and outside this Commonwealth, before computing its
23 keystone opportunity zone exemption, shall first determine
24 its Pennsylvania activity over its activity everywhere by
25 applying the three-factor apportionment formula as set forth
26 in Department of Revenue personal income tax regulations
27 applicable to income apportionment in connection with a
28 business, trade or profession carried on both within and
29 without this Commonwealth.
30 (3) All of the following:
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1 (i) Net gains or income, less net losses, derived by
2 a resident or nonresident of a keystone opportunity zone
3 from the sale, exchange or disposition of real or
4 tangible personal property located in a keystone
5 opportunity zone as determined in accordance with
6 accepted accounting principles and practices. The
7 exemption provided in this subparagraph shall not apply
8 to the sale, exchange or disposition of any stock of
9 goods, merchandise or inventory, or any operational
10 assets unless the transfer is in connection with the
11 sale, exchange or disposition of all of the assets in
12 complete liquidation of a qualified business located in a
13 keystone opportunity zone. This subparagraph shall apply
14 to intangible personal property employed in a trade,
15 profession or business in a keystone opportunity zone by
16 a qualified business, but only when transferred in
17 connection with a sale, exchange or other disposition of
18 all of the assets in complete liquidation of the
19 qualified business in the keystone opportunity zone.
20 (ii) Net gains, less net losses, realized by a
21 resident of a keystone opportunity zone from the sale,
22 exchange or disposition of intangible personal property
23 or obligations issued on or after February 1, 1994, by
24 the Commonwealth, a public authority, commission, board
25 or other Commonwealth agency, political subdivision or
26 authority created by a political subdivision or by the
27 Federal Government as determined in accordance with
28 accepted accounting principles and practices.
29 (iii) The exemption from income for gain or loss
30 provided for in this subparagraph shall be prorated based
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1 on [either] the following:
2 (A) In the case of gains, less net losses, in
3 subparagraph (i), the percentage of time, based on
4 calendar days, the property located in a keystone
5 opportunity zone was held by [the taxpayer while] a
6 resident or nonresident of a keystone opportunity
7 zone during the time period the keystone opportunity
8 zone was in effect in relation to the total time the
9 property was held [by the taxpayer; or].
10 (B) In the case of gains, less net losses, in
11 subparagraph (ii), the percentage of time, based on
12 calendar days, the [real or tangible personal]
13 property [located in the keystone opportunity zone]
14 was held by the taxpayer while a [nonresident]
15 resident of a keystone opportunity zone [during the
16 time period the keystone opportunity zone was in
17 effect] in relation to the total time the [real or
18 tangible personal] property was held [by a
19 nonresident].
20 (4) Net gains or income derived from or in the form of
21 rents received by a person, whether a resident or nonresident
22 of a keystone opportunity zone, to the extent that income or
23 loss from the rental of real or tangible personal property is
24 allocable to a keystone opportunity zone. For purposes of
25 calculating this exemption:
26 (i) Net rents derived from real or tangible personal
27 property located in a keystone opportunity zone are
28 allocable to a keystone opportunity zone.
29 (ii) If the tangible personal property was used both
30 within and without the keystone opportunity zone during
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1 the taxable year, only the net income attributable to use
2 in the keystone opportunity zone is exempt. The net
3 rental income shall be multiplied by a fraction, the
4 numerator of which is the number of days the property was
5 used in the keystone opportunity zone and the denominator
6 which is the total days of use.
7 (5) Dividends received during the time the person was a
8 resident of a keystone opportunity zone.
9 (6) Interest received during the time period the person
10 was a resident of a keystone opportunity zone.
11 (7) [Net gains or income derived through estates or
12 trusts received by a resident of a keystone opportunity zone
13 at the time of such receipt.] For a resident-beneficiary of
14 an estate or trust, the part of the income or gains received
15 by the estate or trust for its taxable year ending within or
16 with the resident-beneficiary's taxable year, which, under
17 the governing instrument and applicable State law, is
18 required to be distributed currently or is in fact paid or
19 credited to the resident-beneficiary and which would have
20 been exempt under this act if received by a resident-
21 beneficiary directly.
22 (a.1) Pass through entities.--The exemptions provided for in
23 this section shall apply to all of the following:
24 (1) The income or gain of a partnership or association.
25 The partner or member shall be entitled to the exemptions
26 under this section for the partner's or member's share,
27 whether or not distributed, of the income or gain received by
28 the partnership or association for its taxable year ending
29 within or with the partner's or member's taxable year.
30 (2) The income or gain of a Pennsylvania S Corporation.
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1 The shareholder shall be entitled to the exemptions under
2 this section for the shareholder's pro rata share, whether or
3 not distributed, of the income or gain received by the
4 corporation for its taxable year ending within or with the
5 shareholder's taxable year.
6 (b) Limitation.--A partnership, association, Subchapter S
7 corporation, resident or nonresident may not apply an exemption
8 from income under this act for any class of income against any
9 other classes of income or gain. A partnership, association,
10 Subchapter S corporation, resident or nonresident may not carry
11 back or carry forward any exemption under this act from year to
12 year.
13 (c) Section not applicable to certain entities.--Any portion
14 of net income or gain which is attributable to operation of a
15 railroad, truck, bus or airline company, pipeline or natural gas
16 company, water transportation company, an entity which would
17 qualify as a regulated investment company under Article IV of
18 the Tax Reform Code of 1971 or would qualify as a holding
19 company under Article VI of the Tax Reform Code of 1971 and any
20 entity activity which is associated or affiliated with any of
21 these operations shall not be used to calculate an exemption
22 under this section. This subsection shall not apply to the
23 exemption from tax provided in subsection (a)(5).
24 Section 513. Residency considerations.
25 If a person completes the residency requirements under
26 section 306 or if a nonresident realizes income attributable to
27 business activity or property within a keystone opportunity zone
28 on or before the end of the tax year, the person may claim the
29 exemptions from income for the items set forth in section 512
30 for that portion of the tax year that the person was a resident
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1 or for that portion of the tax year during which the area is
2 designated as a keystone opportunity zone. [If the person meets
3 the residency requirements under section 306 in a tax year
4 subsequent to the tax year in which the person first resided in
5 the keystone opportunity zone, the person may file an amended
6 tax return within the applicable statute of limitations to claim
7 an exemption from income for the period of residency within the
8 keystone opportunity zone.
9 Section 514. Information for employer.
10 (a) Duty of employee.--Every person who is an employee that
11 qualifies as a resident of a keystone opportunity zone shall
12 furnish to his or her employer information, as prescribed by the
13 Department of Revenue, necessary for the employer to withhold
14 the correct amount of tax. An employee shall furnish
15 notification to his or her employer of any changes to the
16 information within 20 days after the change. An employee shall
17 notify his or her employer that the employee has completed the
18 residency requirements under section 306.
19 (b) Duty of employer.--Within 20 days after an employer
20 receives information from an employee pursuant to subsection
21 (a), the employer shall forward a copy of that information to
22 the Department of Revenue. The information shall not be given
23 retroactive effect for withholding purposes. The employer shall
24 not be required to withhold tax from the compensation paid to a
25 resident of a keystone opportunity zone, if reasonable under the
26 circumstances, unless directed by the Department of Revenue to
27 withhold tax from the compensation on some other basis. If an
28 employee fails or refuses to furnish the information or
29 furnishes information that the employer reasonably and in good
30 faith believes to be inaccurate, the employer shall withhold the
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1 full rate of tax from the employee's total compensation.]
2 Section 515. Corporate net income tax.
3 * * *
4 (d) Income apportionment.--All taxable income of a qualified
5 business shall be apportioned to the keystone opportunity zone
6 by multiplying the Pennsylvania taxable income by a fraction,
7 the numerator of which is the property factor plus the payroll
8 factor plus the sales factor and the denominator of which is
9 three[.] in accordance with the following:
10 (1) The property factor is a fraction, the numerator of
11 which is the average value of the taxpayer's real and
12 tangible personal property owned or rented and used in the
13 keystone opportunity zone during the tax period and the
14 denominator of which is the average value of all the
15 taxpayer's real and tangible personal property owned or
16 rented and used in this Commonwealth during the tax period
17 but shall not include the security interest of any
18 corporation as seller or lessor in personal property sold or
19 leased under a conditional sale, bailment lease, chattel
20 mortgage or other contract providing for the retention of a
21 lien or title as security for the sales price of the
22 property.
23 (2) (i) The payroll factor is a fraction, the numerator
24 of which is the total amount paid in the keystone
25 opportunity zone during the tax period by the taxpayer
26 for compensation and the denominator of which is the
27 total compensation paid in this Commonwealth during the
28 tax period.
29 (ii) Compensation is paid in the keystone
30 opportunity zone if:
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1 (A) the person's service is performed entirely
2 within the keystone opportunity zone;
3 (B) the person's service is performed both
4 within and without the keystone opportunity zone, but
5 the service performed without the keystone
6 opportunity zone is incidental to the person's
7 service within the keystone opportunity zone; or
8 (C) some of the service is performed in the
9 keystone opportunity zone and the base of operations
10 or, if there is no base of operations, the place from
11 which the service is directed or controlled is in the
12 keystone opportunity zone, or the base of operations
13 or the place from which the service is directed or
14 controlled is not in any location in which some part
15 of the service is performed, but the person's
16 residence is in the keystone opportunity zone.
17 (3) The sales factor is a fraction, the numerator of
18 which is the total sales of the taxpayer in the keystone
19 opportunity zone during the tax period and the denominator of
20 which is the total sales of the taxpayer in this Commonwealth
21 during the tax period.
22 (i) Sales of tangible personal property are in the
23 keystone opportunity zone if the property is delivered or
24 shipped to a purchaser within the keystone opportunity
25 zone regardless of the F.O.B. point or other conditions
26 of the sale.
27 (ii) Sales other than sales of tangible personal
28 property are in the keystone opportunity zone if:
29 (A) the income-producing activity is performed
30 in the keystone opportunity zone; or
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1 (B) the income-producing activity is performed
2 both within and without the keystone opportunity zone
3 and a greater proportion of the income-producing
4 activity is performed in the keystone opportunity
5 zone than in any other location, based on costs of
6 performance.
7 * * *
8 Section 516. Capital stock franchise tax.
9 (a) Credits.--For tax years that begin on or after January
10 1, 1999, a corporation that is a qualified business under
11 section 307(a) may claim a credit against the tax imposed by
12 Article VI of the Tax Reform Code of 1971 for the taxable year
13 to the extent of the tax liability attributable to the capital
14 employed within a keystone opportunity zone in the taxable year.
15 (b) Tax liability.--The corporation's tax liability
16 attributable to capital employed within a keystone opportunity
17 zone shall be determined by multiplying the corporation's
18 taxable value attributable to capital employed within the
19 keystone opportunity zone by the rate of tax imposed under
20 Article VI of the Tax Reform Code of 1971 for the taxable year.
21 The corporation shall compute its Pennsylvania taxable value in
22 conformity with Article VI of the Tax Reform Code of 1971 with
23 no adjustments or subtractions for the capital employed in the
24 keystone opportunity zone.
25 (c) Determination of attributable tax liability.--The
26 determination of the corporation's taxable value attributable to
27 the capital employed within a keystone opportunity zone shall be
28 determined with specific reference to the following:
29 (1) If the entire business of the corporation in this
30 Commonwealth is transacted wholly within a keystone
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1 opportunity zone, the taxable value attributable to the
2 capital employed within a keystone opportunity zone shall
3 consist of the Pennsylvania taxable value as determined under
4 Article VI of the Tax Reform Code of 1971.
5 (2) If the entire business of the corporation in this
6 Commonwealth is not wholly transacted within a keystone
7 opportunity zone, the taxable value of a corporation in a
8 keystone opportunity zone shall be determined upon such
9 portion of the Pennsylvania taxable value attributable to the
10 capital employed within the keystone opportunity zone by
11 employing the apportionment factors set forth in [subsection
12 (d)] section 515(d).
13 [(d) Capital stock and franchise tax apportionment.--For
14 purposes of apportionment of the capital stock and franchise
15 tax, the apportionment fraction shall be the property factor
16 plus the payroll factor plus the sales factor as the numerator,
17 and the denominator shall be three. In determining the relevant
18 apportionment factors, the numerator of the property, payroll
19 and sales factors shall not include any property, payroll and
20 sales attributable to manufacturing, processing, research and
21 development activities conducted within a keystone opportunity
22 zone, and the denominator of the property, payroll and sales
23 factors shall not include any property, payroll and sales
24 attributable to manufacturing, processing and research and
25 development activities conducted within this Commonwealth but
26 without a keystone opportunity zone.]
27 (e) Limitation on amount of credit.--The credit allowed
28 under this section shall not exceed the capital stock franchise
29 tax liability of the taxpayer for the tax year.
30 (f) Credit not available.--Any portion of the taxpayer's tax
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1 liability that is attributable to the capital employed in the
2 operation of a railroad, truck, bus or airline company, pipeline
3 or natural gas company, water transportation company, a
4 corporation that qualifies[,] as a regulated investment company
5 under Article IV of the Tax Reform Code of 1971 or holding
6 company as defined in Article VI of the Tax Reform Code of 1971
7 and any capital employed in a business activity that is
8 associated or affiliated with the operation of these business
9 activities shall not be used to calculate a credit under this
10 section.
11 Section 702. Real property tax.
12 (a) General rule.--Notwithstanding the act of May 22, 1933
13 (P.L.853, No.155), known as The General County Assessment Law,
14 and the act of May 21, 1943 (P.L.571, No.254), known as The
15 Fourth to Eighth Class County Assessment Law, each qualified
16 political subdivision for taxable years beginning on or after
17 January 1, 1999, shall by ordinance or resolution abate 100% of
18 the real property taxation on the assessed valuation of
19 deteriorated property in an area designated as a keystone
20 opportunity zone within this Commonwealth. The real property tax
21 abatement provided for by this section shall apply to all real
22 property located in a keystone opportunity zone, irrespective of
23 the business activity, if any, made of the realty by its owner,
24 when this act is in effect.
25 (b) Investment in lieu of tax payment.--
26 (1) A qualified political subdivision may require a
27 resident of deteriorated real property to invest up to 25% of
28 all real property taxes which would have been due if the real
29 property was not located in a keystone opportunity zone in
30 improvements to the real property in order for the residents
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1 to be qualified for exemptions, credits and abatements under
2 this act.
3 (2) A qualified political subdivision may require a
4 nonresident owner of deteriorated real property who leases
5 the real property to a person for residential use [shall] to
6 invest 50% of all real property taxes which would have been
7 due if the real property was not located in a keystone
8 opportunity zone in improvements to the real property.
9 [(c) Application for tax abatement.--Any person requesting
10 real property tax abatement pursuant to ordinances or
11 resolutions adopted pursuant to this act shall notify each
12 county or other designated assessment office granting such
13 abatement in writing on a form provided by that assessment
14 office within 30 days of the designation as a keystone
15 opportunity zone or within 30 days of the transfer of ownership
16 of the real property subject to abatement. A copy of the
17 abatement request shall be forwarded by the county or other
18 designated assessment office to the political subdivision.]
19 (d) Annual real property report.--Every keystone opportunity
20 zone shall submit to the department an annual report by January
21 31 of each calendar year of all real property, and the owners
22 and addresses of that real property at any time during the
23 preceding year, which is located in a designated keystone
24 opportunity zone.
25 (e) Interest and penalties.--If the department or a
26 political subdivision finds that a person claimed an abatement
27 of real property tax to which the person was not entitled under
28 this act, the person shall be liable for the abated taxes and
29 subject to the applicable interest and penalty provisions
30 provided by law.
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1 (f) Calculations for education subsidy for school
2 districts.--In determining the market value of real property in
3 each school district, the State Tax Equalization Board shall
4 exclude any increase in value above the base value prior to the
5 effect of the abatement of local taxes to the extent and during
6 the period of time that real estate tax revenues attributable to
7 such increased value are not available to the school district
8 for general school district purposes.
9 Section 703. Local earned income and net profits taxes;
10 business privilege taxes.
11 (a) General exemption.--To the extent that a qualified
12 political subdivision has enacted any tax on the privilege of
13 engaging in any business or profession, measured by gross
14 receipts or on a flat rate basis, earned income or net profits,
15 as defined in the act of December 31, 1965 (P.L.1257, No.511),
16 known as The Local Tax Enabling Act, imposed within the
17 boundaries of a keystone opportunity zone, such qualified
18 political subdivision shall exempt from the imposition or
19 operation of such local tax ordinances, statutes, regulations or
20 otherwise:
21 (1) The business gross receipts for operations conducted
22 by a qualified business within a keystone opportunity zone.
23 (2) The earned income received by a resident of a
24 keystone opportunity zone.
25 (3) The net profits of a qualified business [received by
26 a resident or nonresident of a keystone opportunity zone]
27 attributable to business activity conducted within a keystone
28 opportunity zone when imposed by the qualified political
29 subdivision where that qualified business is located.
30 (b) Additional exemptions.--To the extent that a qualified
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1 political subdivision has:
2 (1) Pursuant to the act of August 5, 1932 (Sp.Sess.
3 P.L.45, No.45), referred to as the Sterling Act, the act of
4 March 10, 1949 (P.L.30, No.14), known as the Public School
5 Code of 1949, the act of August 24, 1961 (P.L.1135, No.508),
6 referred to as the First Class A School District Earned
7 Income Tax Act, the act of August 9, 1963 (P.L.640, No.338),
8 entitled "An act empowering cities of the first class,
9 coterminous with school districts of the first class, to
10 authorize the boards of public education of such school
11 districts to impose certain additional taxes for school
12 district purposes, and providing for the levy, assessment and
13 collection of such taxes," the act of May 30, 1984 (P.L.345,
14 No.69), known as the First Class City Business Tax Reform
15 Act, or the act of June 5, 1991 (P.L.9, No.6), known as the
16 Pennsylvania Intergovernmental Cooperation Authority Act for
17 Cities of the First Class, enacted a tax on:
18 (i) the privilege of engaging in a profession or
19 business;
20 (ii) wages or compensation;
21 (iii) net profits from the operation of a business,
22 profession or other activity; or
23 (iv) the occupancy or use of real property.
24 (2) The qualified political subdivision shall provide an
25 exemption, deduction, abatement or credit from the imposition
26 and operation of such local tax ordinance or resolution all
27 of the following:
28 (i) A person or qualified business, whether a
29 resident or a nonresident of a keystone opportunity zone,
30 for the privilege of engaging in a business or profession
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1 within a keystone opportunity zone.
2 (ii) Salaries, wages, commissions, compensation or
3 other income received for services rendered or work
4 performed by a resident of a keystone opportunity zone.
5 (iii) The gross or net income or gross or net
6 profits realized from the operation of a qualified
7 business to the extent attributable to business activity
8 conducted within a keystone opportunity zone.
9 (iv) The occupancy or use of real property located
10 within the keystone opportunity zone.
11 [(c) Limitation on withholding.--Every employer required to
12 withhold any local tax on the earned income, wages or
13 compensation of one or more persons within the particular
14 political subdivision shall not withhold such tax on earned
15 income, wages or compensation paid to any person or his personal
16 representative during any period when the qualified political
17 subdivision has by ordinance or resolution provided for the
18 exemption from tax as provided in section 701 and the person is
19 a resident of a keystone opportunity zone.
20 (d) Information for employer.--Every person who is an
21 employee that qualifies as a resident of a keystone opportunity
22 zone shall furnish to his or her employer information, as
23 prescribed by the political subdivision, necessary for the
24 employer to withhold the correct amount of tax. An employee
25 shall furnish notification to his or her employer of any changes
26 to the information within 20 days after the change. An employee
27 shall notify his or her employer that the employee has completed
28 the residency requirements under section 306.
29 (e) Duty of employer.--Within 20 days after an employer
30 receives information from an employee pursuant to subsection
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1 (d), the employer shall forward a copy of that information to
2 the political subdivision or other agency designated by the
3 political subdivision. The information shall not be given
4 retroactive effect for withholding purposes. The employer shall
5 not be required to withhold tax from the wages, earned income or
6 compensation paid to a resident of a keystone opportunity zone,
7 if reasonable under the circumstances, unless directed by the
8 political subdivision to withhold tax from the wages, earned
9 income or compensation on some other basis. If an employee fails
10 or refuses to furnish the information or furnishes information
11 that the employer reasonably and in good faith believes to be
12 inaccurate, the employer shall withhold the full rate of tax
13 from the employee's total wages, earned income or compensation.]
14 (f) Calculation for education subsidy for school district.--
15 In determining the personal income valuation of a school
16 district, the Secretary of Revenue shall exclude any increase in
17 the valuation as defined in section 2501(9.1) of the act of
18 March 10, 1949 (P.L.30, No.14), known as the Public School Code
19 of 1949, above the base value prior to the abatement of local
20 taxes in a keystone opportunity zone located within the school
21 district to the extent and during the period of time that
22 personal income revenues attributable to the increase in the
23 personal income valuation are not available to the school
24 district for general school district purposes.
25 Section 901. Transferability.
26 Any exemption, deduction, abatement or credit provided to any
27 person or qualified business under Chapter 5 or 7 is
28 nontransferable and cannot be applied, used or assigned to any
29 other person, business or tax account.
30 Section 902. Recapture.
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1 (a) General rule.--If any qualified business located within
2 a keystone opportunity zone has received an exemption,
3 deduction, abatement or credit under this act and subsequently
4 relocates outside of the zone within the first five years of
5 locating in a keystone opportunity zone, that business shall
6 refund to the State and political subdivision which granted the
7 exemption, deduction, abatement or credit received in accordance
8 with the following:
9 (1) If a qualified business relocates within three years
10 from the date of [any claim] first locating in a keystone
11 opportunity zone, 66% of all the exemptions, deductions,
12 abatements or credits [previously received due] attributed to
13 that qualified business's participation in the keystone
14 opportunity zone shall be refunded to the Commonwealth and
15 the political subdivision.
16 (2) If a qualified business relocates within three to
17 five years from the date of [any claim] first locating in a
18 keystone opportunity zone, 33% of all exemptions, deductions,
19 abatements or credits [previously received from] attributed
20 to participation in the keystone opportunity zone shall be
21 refunded to the Commonwealth and the political subdivision.
22 (3) If the qualified business was located within a
23 facility operated by a nonprofit organization to assist in
24 the creation and development of a start-up business, no
25 exemption, deduction, abatement or credit shall be refunded.
26 (b) Waiver.--The department, in consultation with the
27 Department of Revenue and the political subdivision, may waive
28 or modify recapture requirements under this section if the
29 department determines that the business relocation was due to
30 circumstances beyond the control of the business, including, but
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1 not limited to:
2 (1) natural disaster;
3 (2) unforeseen industry trends; or
4 (3) loss of a major supplier or market.
5 [(c) Determination of claim date.--For purposes of this
6 section, an exemption, deduction, abatement or credit is deemed
7 to be claimed on the later of:
8 (1) the date the return or other report for the tax or
9 fee is due;
10 (2) the date the return is filed; or
11 (3) the date the tax or fee would be paid.]
12 Section 903. Delinquent or deficient State or local taxes.
13 (a) Persons.--No person may claim or receive an exemption,
14 deduction, abatement or credit under this act unless that person
15 is in full compliance with all State and local tax laws [and
16 related], ordinances and resolutions.
17 (b) Qualified business.--
18 (1) No qualified business may claim or receive an
19 exemption, deduction, abatement or credit under this act
20 unless that qualified business is in full compliance with all
21 State and local tax laws, ordinances and resolutions.
22 (2) No qualified business may claim or receive an
23 exemption, deduction, abatement or credit under this act if
24 any person or business with a 20% or greater interest in that
25 qualified business is not in full compliance with all State
26 and local tax laws, ordinances and resolutions.
27 (c) Later compliance and eligibility.--Any person or
28 qualified business that is not eligible to claim an exemption,
29 deduction, abatement or credit due to noncompliance with any
30 State or local tax law may become eligible if that person or
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1 qualified business subsequently comes into full compliance with
2 all State and local tax laws to the satisfaction of the
3 Department of Revenue or the political subdivision within the
4 calendar year in which the noncompliance first occurred. If full
5 compliance is not attained by [December 31 of the calendar year
6 in which] February 5 of the calendar year following the calendar
7 year during which noncompliance first occurred, then that person
8 or qualified business is precluded from claiming any exemption,
9 deduction, abatement or credit for that calendar year, whether
10 or not full compliance is achieved [in subsequent calendar
11 years] subsequently.
12 Section 904. Code compliance.
13 (a) General rule.--A person or qualified business shall be
14 precluded from claiming any exemption, deduction, abatement or
15 credit provided for in this act if that person or qualified
16 business owns real property in a keystone opportunity zone and
17 the real property is not in compliance with all applicable State
18 and local zoning, building and housing laws, ordinances or codes
19 [and the real property owner has not filed an affidavit with the
20 political subdivision attesting to compliance for that calendar
21 year before December 31 with the political subdivision in which
22 the real property is located].
23 (b) Opportunity to achieve compliance.--The person or
24 qualified business who is not in compliance under subsection (a)
25 shall have until December 31 of the calendar year following
26 designation of the real property as part of a keystone
27 opportunity zone to be in compliance in order to claim any State
28 exemptions, deductions, abatements or credits for that year. If
29 full compliance is not attained by December 31 of that calendar
30 year, the person or qualified business is precluded from
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1 claiming any exemption, deduction or credit for that calendar
2 year, whether or not compliance is achieved in a subsequent
3 calendar year. The political subdivision may extend the time
4 period in which a person or qualified business must come into
5 compliance with a local ordinance or building code for a period
6 not to exceed one year if the political subdivision determines
7 that the person or qualified business has made and shall
8 continue to make a good faith effort to come into compliance and
9 that an extension will enable the person or qualified business
10 to achieve full compliance. Qualified political subdivisions are
11 required to notify the Department of Revenue in writing of all
12 persons or qualified businesses not in compliance with this
13 subsection within 30 days following the end of each calendar
14 year.
15 Section 2. The act is amended by adding sections to read:
16 Section 906. Notice requirements; State and local authorities.
17 (a) Requirement.--After compliance reviews have been
18 conducted by appropriate Commonwealth and local authorities the
19 department shall notify each keystone opportunity zone applicant
20 by regular mail each year of the department approval or denial
21 of the applicant's keystone opportunity zone application. No
22 keystone opportunity zone applicant is entitled to any tax
23 benefits unless they receive approval from the department.
24 (b) Notice.--In a form and manner prescribed by the
25 department, the department shall provide a one-time notification
26 to every current keystone opportunity zone real property owner
27 within 90 days of the effective date of this section. No
28 benefits or rights shall accrue to any real property owner if
29 notification is not received.
30 (c) Transmittal.--The department, or its designated
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1 official, shall within 15 business days of receipt of a keystone
2 opportunity zone application made under this act, forward a copy
3 of the application to appropriate Commonwealth and local
4 authorities for review and processing.
5 Section 907. Application time.
6 Any keystone opportunity zone applicant shall file a keystone
7 opportunity zone application in a manner prescribed by the
8 department by December 31 of each calendar year for which the
9 applicant claims any exemption, deduction, abatement or credit
10 under this act. No exemption, deduction, abatement or credit may
11 be claimed or received for that calendar year until approval has
12 been granted by the department.
13 Section 3. Section 1303 of the act is amended to read:
14 Section 1303. Compliance.
15 Any person or qualified business eligible for an exemption,
16 deduction or credit under this act shall comply with all
17 reporting, filing and compliance requirements pursuant to the
18 Tax Reform Code of 1971 unless otherwise provided for in this
19 act.
20 Section 4. This act shall apply as follows:
21 (1) The amendment of sections 512 and 703 of the act
22 shall apply to taxable years beginning on or after January 1,
23 1999.
24 (2) The amendment of section 516 of the act shall apply
25 to taxable years beginning on or after January 1, 2000.
26 Section 5. This act shall take effect immediately.
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