PRIOR PRINTER'S NOS. 3453, 3910 PRINTER'S NO. 4000
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, HORSEY, MARSICO, THOMAS, MANN AND
WASHINGTON, MAY 2, 2000
AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, OCTOBER 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 providing for keystone opportunity expansion zones and
13 related matters AND FOR AUTHORIZED EXPENDITURES; FURTHER <--
14 PROVIDING FOR ADDITIONAL TAX EXEMPTIONS, TAX DEDUCTIONS, TAX
15 ABATEMENTS AND TAX CREDITS; and making a repeal.
16 The General Assembly of the Commonwealth of Pennsylvania
17 hereby enacts as follows:
18 Section 1. The title of the act of October 6, 1998 (P.L.705,
19 No.92), known as the Pennsylvania Keystone Opportunity Zone Act,
20 is amended to read:
21 AN ACT
1 Providing for the creation of keystone opportunity zones and
2 keystone opportunity expansion zones to foster economic
3 opportunities in this Commonwealth, to facilitate economic
4 development, stimulate industrial, commercial and residential
5 improvements and prevent physical and infrastructure
6 deterioration of geographic areas within this Commonwealth;
7 authorizing expenditures; providing tax exemptions, tax
8 deductions, tax abatements and tax credits; creating
9 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 Section 2. Sections 101, 102, 103 and 301 of the act are
13 amended to read:
14 Section 101. Short title.
15 This act shall be known and may be cited as the
16 [Pennsylvania] Keystone Opportunity Zone and Keystone
17 Opportunity Expansion Zone Act.
18 Section 102. Legislative findings.
19 (1) There exist in this Commonwealth areas of economic
20 distress characterized by high unemployment, low investment
21 of new capital, inadequate dwelling conditions, blighted
22 conditions, underutilized, obsolete or abandoned industrial,
23 commercial and residential structures and deteriorating tax
24 bases.
25 (2) These areas require coordinated efforts by private
26 and public entities to restore prosperity and enable the
27 areas to make significant contributions to the economic and
28 social life of this Commonwealth.
29 (3) Long-term economic viability of these areas requires
30 the cooperative involvement of residents, businesses, State
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1 and local elected officials and community organizations. It
2 is in the best interest of the Commonwealth to assist and
3 encourage the creation of keystone opportunity zones and
4 keystone opportunity expansion zones and to provide temporary
5 relief from certain taxes within the [keystone opportunity]
6 zones to accomplish the purposes of this act.
7 Section 103. Definitions.
8 The following words and phrases when used in this act shall
9 have the meanings given to them in this section unless the
10 context clearly indicates otherwise:
11 "Business." An association, partnership, corporation, sole
12 proprietorship, limited liability [corporation] company or
13 employer.
14 "Department." The Department of Community and Economic
15 Development of the Commonwealth.
16 "Deteriorated property." Any blighted, impoverished area
17 containing residential, industrial, commercial or other real
18 property that is abandoned, unsafe, vacant, undervalued,
19 underutilized, overgrown, defective, condemned, demolished or
20 which contains economically undesirable land use. The term
21 includes property adjacent to deteriorated property that is
22 significantly undervalued and underutilized due to the proximity
23 of the deteriorated property.
24 "Domicile." The place where a person has a true and fixed
25 home and principal establishment for an indefinite time and to
26 which, whenever absent, that person intends to return. Domicile
27 continues until another place of domicile is established.
28 "INSTITUTION." <--
29 (1) EVERY BANK OPERATING AS SUCH AND HAVING CAPITAL
30 STOCK WHICH IS INCORPORATED UNDER ANY LAW OF THIS
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1 COMMONWEALTH, UNDER THE LAW OF THE UNITED STATES OR UNDER THE
2 LAW OF ANY OTHER JURISDICTION AND IS LOCATED WITHIN THIS
3 COMMONWEALTH.
4 (2) EVERY OPERATING COMPANY HAVING CAPITAL STOCK LOCATED
5 WITHIN THIS COMMONWEALTH HAVING ANY OF THE POWERS OF
6 COMPANIES ENTITLED TO THE BENEFITS OF SECTION 29 OF THE ACT
7 OF APRIL 29, 1874 (P.L.73, NO.32), ENTITLED "AN ACT TO
8 PROVIDE FOR THE INCORPORATION AND REGULATION OF CERTAIN
9 CORPORATIONS," AND ANY SUPPLEMENTS THERETO AND UNDER THE ACT
10 OF JUNE 27, 1895 (P.L.399, NO.286), ENTITLED "AN ACT
11 CONFERRING UPON CERTAIN FIDELITY, INSURANCE, SAFETY DEPOSIT,
12 TRUST AND SAVINGS COMPANIES THE POWERS AND PRIVILEGES OF
13 COMPANIES INCORPORATED UNDER THE PROVISIONS OF SECTION
14 TWENTY-NINE OF AN ACT, ENTITLED 'AN ACT TO PROVIDE FOR THE
15 INCORPORATION AND REGULATION OF CERTAIN CORPORATIONS,'
16 APPROVED APRIL TWENTY-NINTH, ANNO DOMINI ONE THOUSAND EIGHT
17 HUNDRED AND SEVENTY-FOUR, AND OF THE SUPPLEMENTS THERETO."
18 (3) EVERY COMPANY ORGANIZED AND OPERATING AS A BANK AND
19 TRUST COMPANY OR AS A TRUST COMPANY HAVING CAPITAL STOCK
20 LOCATED IN THIS COMMONWEALTH, WHETHER THE INSTITUTION IS
21 INCORPORATED UNDER ANY LAW OF THIS COMMONWEALTH, THE LAW OF
22 THE UNITED STATES OR ANY LAW OF ANY JURISDICTION. THE TERM
23 SHALL NOT INCLUDE ANY OF SUCH COMPANIES, ALL OF THE SHARES OF
24 CAPITAL STOCK OF WHICH, OTHER THAN SHARES NECESSARY TO
25 QUALIFY DIRECTORS, ARE OWNED BY A COMPANY WHICH IS LIABLE TO
26 PAY TO THE COMMONWEALTH A TAX PURSUANT TO ARTICLE VII OF THE
27 TAX REFORM CODE OF 1971.
28 (4) A MUTUAL THRIFT INSTITUTION.
29 "INSURANCE COMPANY." EVERY INSURANCE COMPANY, ASSOCIATION OR
30 EXCHANGE, INCORPORATED OR ORGANIZED BY OR UNDER THE LAWS OF THIS
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1 COMMONWEALTH, THE UNITED STATES, TERRITORIES, DEPENDENCIES,
2 OTHER STATES OR FOREIGN GOVERNMENTS, AND ENGAGED IN TRANSACTING
3 INSURANCE BUSINESS OF ANY KIND OR CLASSIFICATION WITHIN THIS
4 COMMONWEALTH, EXCEPT TITLE INSURANCE COMPANIES SUBJECT TO TAX
5 UNDER ARTICLE VIII OR XVI OF THE TAX REFORM CODE OF 1971, AS THE
6 CASE MAY BE, EXCEPT PURELY MUTUAL BENEFICIAL ASSOCIATIONS WHOSE
7 FUNDS FOR THE BENEFIT OF MEMBERS AND FAMILIES OR HEIRS ARE MADE
8 UP ENTIRELY OF THE WEEKLY, MONTHLY, QUARTERLY, SEMIANNUAL OR
9 ANNUAL CONTRIBUTIONS TO THEIR MEMBERS AND THE ACCUMULATED
10 INTEREST THEREON AND CORPORATIONS ORGANIZED UNDER THE FORMER ACT
11 OF JUNE 21, 1937 (P.L.1948, NO.378), KNOWN AS THE NONPROFIT
12 HOSPITAL PLAN ACT, AND UNDER THE FORMER ACT OF JUNE 27, 1939
13 (P.L.1125, NO.399), KNOWN AS THE NONPROFIT MEDICAL, OSTEOPATHIC,
14 DENTAL AND PODIATRY SERVICE CORPORATION ACT.
15 "Keystone opportunity expansion zone." A defined geographic
16 area comprised of one or more political subdivisions or portions
17 of political subdivisions designated by the Department of
18 Community and Economic Development under Chapter 3. A keystone
19 opportunity expansion zone may be comprised of not more than
20 eight subzones.
21 "Keystone opportunity zone." A defined geographic area
22 comprised of one or more political subdivisions or portions of
23 political subdivisions designated by the Department of Community
24 and Economic Development under Chapter 3. A keystone opportunity
25 zone may be comprised of not more than 12 subzones.
26 "Metropolitan statistical area." A core area containing a
27 city with a population of 50,000 or more or a Bureau of Census
28 defined urbanized area of 50,000 with a total metropolitan
29 population of at least 100,000.
30 "MUTUAL THRIFT INSTITUTION." EVERY: <--
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1 (1) SAVINGS BANK WITHOUT CAPITAL STOCK.
2 (2) BUILDING AND LOAN ASSOCIATION.
3 (3) SAVINGS AND LOAN ASSOCIATION.
4 (4) SAVINGS INSTITUTION HAVING CAPITAL STOCK.
5 WHETHER THE MUTUAL THRIFT INSTITUTION IS INCORPORATED UNDER ANY
6 LAW OF THIS COMMONWEALTH OR UNDER THE LAW OF THE UNITED STATES,
7 OR IS INCORPORATED UNDER THE LAW OF ANY OTHER JURISDICTION AND
8 IS LOCATED WITHIN THIS COMMONWEALTH.
9 "Opportunity plan." A written plan that addresses the
10 criteria and meets the requirements in section 302(a).
11 "Person." Any natural person.
12 "Political subdivision." A county, city, borough, township,
13 town or school district with taxing jurisdiction in a defined
14 geographic area within this Commonwealth.
15 "Qualified business." [Any business] A business or portion <--
16 thereof authorized to do business in this Commonwealth that is
17 located OR PARTIALLY LOCATED within a keystone opportunity zone <--
18 or keystone opportunity expansion zone and is engaged in the
19 active conduct of a trade or business in accordance with the
20 requirements of section 307. An agent, broker or representative
21 of a business is not engaged in the active conduct of trade or
22 business for the business.
23 "Qualified political subdivision." A political subdivision
24 [that has been designated as] that has real property within its
25 jurisdiction which has been designated by the department AS a <--
26 keystone opportunity zone or keystone opportunity expansion
27 zone.
28 "Resident." A person who is domiciled and resides in an area
29 that is designated a keystone opportunity zone or keystone
30 opportunity expansion zone and who meets the requirements of
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1 section 306.
2 "Subzone." A clearly defined geographic area containing a
3 minimum of 20 contiguous acres or a minimum of ten contiguous
4 acres in a rural area.
5 "Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
6 No.2), known as the Tax Reform Code of 1971, and any subsequent
7 amendments thereto.
8 Section 301. Keystone opportunity zones.
9 (a) Establishment.--There is hereby established within the
10 department a program providing for the designation of portions
11 of this Commonwealth as keystone opportunity zones. A keystone
12 opportunity zone shall be comprised of deteriorated property and
13 shall not exceed a total of 5,000 acres.
14 (b) [Designation] Zone designation.--The department shall
15 designate not more than 12 keystone opportunity zones in this
16 Commonwealth. Persons and businesses within a designated
17 keystone opportunity zone that are qualified under this act
18 shall be entitled to all tax exemptions, deductions, abatements
19 or credits set forth in this act for a period not to exceed [12]
20 15 years beginning January 1, 1999, and ending on or before
21 December 31, [2010] 2013.
22 (c) [Subzones] Subzone designation.--A keystone opportunity
23 zone may be comprised of up to 12 clearly defined subzones
24 [containing a minimum of 20 contiguous acres each. The subzones
25 may or may not be contiguous to each other]. The total number of
26 [subzones] subzone acres in a keystone opportunity zone shall
27 not exceed 5,000 acres in the aggregate. [The department may
28 approve the use of a subzone containing a minimum of ten acres
29 in an area that is not included in a metropolitan statistical
30 area.]
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1 (d) Authorization for local tax exemption.--Every political
2 subdivision within which a proposed keystone opportunity zone is
3 located, whether in whole or in part, is hereby authorized to
4 provide tax exemptions, deductions, abatements or credits to
5 persons and businesses qualified under this act. The political
6 subdivision shall agree to provide exemptions, deductions,
7 abatements or credits from all local taxes set forth in this act
8 in order to qualify to be designated a keystone opportunity zone
9 within that political subdivision. Except as provided in section
10 303(e), the exemptions, deductions, abatements or credits shall
11 be effective January 1, 1999, if designation of a keystone
12 opportunity zone within the political subdivision is granted by
13 the department. The exemptions, deductions, abatements or
14 credits shall be binding upon the political subdivision for the
15 duration of the keystone opportunity zone designation.
16 (e) Authorization to extend State and local tax exemption.--
17 A qualified political subdivision which does not provide for the
18 exemptions, deductions, abatements or credits set forth in this
19 act for a period of 15 years, ending December 31, 2013, may
20 receive departmental approval to extend the State and local tax
21 relief provided by this act for the period ending December 31,
22 2013, PROVIDED ALL QUALIFIED POLITICAL SUBDIVISIONS WITHIN THE <--
23 KEYSTONE OPPORTUNITY ZONE AGREE TO EXTEND THE STATE AND LOCAL
24 TAX RELIEF PROVIDED BY THIS ACT FOR THE PERIOD ENDING DECEMBER
25 31, 2013. A qualified political subdivision having an approved
26 keystone opportunity subzone within its jurisdiction shall pass
27 the required ordinance, resolutions or other required action of
28 the qualified political subdivision for the necessary
29 exemptions, deductions, abatements or credits pursuant to this
30 act for the period beginning after December 31, 2008, and ending
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1 on December 31, 2013, and shall submit copies to the department
2 of the ordinance, resolutions or other action by December 31, <--
3 2000 JUNE 30, 2001. The department shall approve or deny the <--
4 request for extension of duration of a keystone opportunity zone
5 by February 28 JULY 31, 2001, and shall provide written notice, <--
6 irrespective of whether approved or denied, to each qualified
7 political subdivision, resident and qualified business affected.
8 Upon approval of a request for extension of duration of a
9 keystone opportunity zone, the exemptions, deductions,
10 abatements or credits shall be binding upon the qualified
11 political subdivision as provided in subsection (d) and shall be
12 nonrevocable.
13 Section 3. The act is amended by adding a section to read:
14 Section 301.1. Keystone opportunity expansion zones.
15 (a) Establishment.--There is hereby established within the
16 department a program providing for the designation of portions
17 of this Commonwealth as keystone opportunity expansion zones. A
18 keystone opportunity expansion zone shall be comprised of
19 deteriorated property and shall not exceed a total of 150 1,500 <--
20 acres.
21 (b) Designation.--The department shall designate not more
22 than 12 keystone opportunity expansion zones in this
23 Commonwealth. Persons and businesses within a designated
24 keystone opportunity expansion zone that are qualified under
25 this act shall be entitled to all tax exemptions, deductions,
26 abatements or credits set forth in this act for a period of 15 <--
27 13 years beginning January 1, 2001, and ending on December 31, <--
28 2013.
29 (c) Subzones.--A keystone opportunity expansion zone may be
30 comprised of up to eight clearly defined subzones. The total
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1 number of subzone acres in a keystone opportunity expansion zone
2 shall not exceed 150 1,500 acres in the aggregate. <--
3 (d) Authorization for local tax exemption.--Every political
4 subdivision within which a proposed keystone opportunity
5 expansion zone is located, whether in whole or in part, is
6 hereby authorized to provide tax exemptions, deductions,
7 abatements or credits to persons and businesses qualified under
8 this act. The political subdivision shall agree to provide
9 exemptions, deductions, abatements or credits from all local
10 taxes set forth in this act in order to qualify to be designated
11 a keystone opportunity expansion zone within that political
12 subdivision. The exemptions, deductions, abatements or credits
13 shall be effective January 1, 2001, if designation of a keystone
14 opportunity expansion zone within the political subdivision is
15 granted by the department. The exemptions, deductions,
16 abatements or credits shall be binding upon the political
17 subdivision for the duration of the keystone opportunity
18 expansion zone designation.
19 Section 4. Sections 302, 303, 304, 305, 306, 307, 308, 501,
20 511, 512, 513, 514, 515 and 516 of the act are amended to read:
21 Section 302. Application.
22 (a) Initial application.--One or more political
23 subdivisions, or a designee of one or more political
24 subdivisions, may apply to the department to designate [a
25 keystone opportunity zone] deteriorated property within the
26 political subdivision or portions thereof a keystone opportunity
27 zone or keystone opportunity expansion zone. The application
28 shall contain the following:
29 (1) The geographic area of the proposed keystone
30 opportunity zone or proposed keystone opportunity expansion
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1 zone. The geographic area shall be located within the
2 boundaries of the participating political subdivision and
3 shall not contain more than 5,000 acres in the case of a
4 keystone opportunity zone or 150 1,500 acres in the case of a <--
5 keystone opportunity expansion zone.
6 (2) An opportunity plan that shall include the
7 following:
8 (i) A detailed map of the proposed keystone
9 opportunity zone [and subzones] or proposed keystone
10 opportunity expansion zone, including geographic
11 boundaries, total area and present use and conditions of
12 the land and structures of the proposed keystone
13 opportunity zone or proposed keystone opportunity
14 expansion zone.
15 (ii) Evidence of support from and participation of
16 local government, school districts and other educational
17 institutions, business groups, community organizations
18 and the public.
19 (iii) A proposal to increase economic opportunity,
20 reduce crime, improve education, facilitate
21 infrastructure improvement, reduce the local regulating
22 burden and identify potential jobs and job training
23 opportunities and which states whether or not the zone is
24 located in an area which has tax revenue dedicated to the
25 payment of debt.
26 (iv) A description of the current social, economic
27 and demographic characteristics of the proposed keystone
28 opportunity zone or proposed keystone opportunity
29 expansion zone and anticipated improvements in education,
30 health, human services, public safety and employment that
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1 will result from keystone opportunity zone or keystone
2 opportunity expansion zone designation.
3 (v) A description of anticipated activity in the
4 proposed keystone opportunity zone [and each subzone] or
5 proposed keystone opportunity expansion zone, including,
6 but not limited to, industrial use, industrial site
7 reuse, commercial or retail use and residential use.
8 (vi) Evidence of potential private and public
9 investment in the proposed keystone opportunity zone or
10 proposed keystone opportunity expansion zone.
11 (vii) The role of the proposed keystone opportunity
12 zone or proposed keystone opportunity expansion zone in
13 regional economic and community development.
14 (viii) Plans to utilize existing resources for the
15 administration of the proposed keystone opportunity zone
16 or proposed keystone opportunity expansion zone.
17 (ix) Any other information deemed appropriate by the
18 department.
19 (3) A report on youth at risk to include issues relating
20 to health, welfare and education.
21 (4) The [proposed] duration of the proposed keystone
22 opportunity zone [and all subzones] or proposed keystone
23 opportunity expansion zone. The duration of a keystone
24 opportunity zone may not exceed [12] 15 years. The duration
25 of a keystone opportunity expansion zone is 15 13 years. <--
26 (5) A formal, binding ordinance or resolution passed by
27 every political subdivision in which the proposed keystone
28 opportunity zone or proposed keystone opportunity expansion
29 zone is located that specifically provides for all local tax
30 exemptions, deductions, abatements or credits for persons and
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1 businesses set forth in this act [if designation is received
2 by the department, to be effective January 1, 1999].
3 (6) Evidence that the proposed keystone opportunity zone
4 or proposed keystone opportunity expansion zone meets the
5 required criteria under section 304.
6 (b) Participation limitation.--A [qualified] political
7 subdivision shall not be a part of more than one proposed
8 keystone opportunity zone or proposed keystone opportunity
9 expansion zone.
10 (c) Application limitation.--A [qualified] political
11 subdivision may submit only one application to the department
12 for designation as a keystone opportunity zone. A political
13 subdivision may submit only one application to the department
14 for designation as a keystone opportunity expansion zone.
15 Section 303. Review.
16 (a) Action of department.--The department, in consultation
17 with the Department of Revenue, shall review all completed
18 applications submitted under this act. An application for
19 designation as a keystone opportunity zone shall be received by
20 the department on or before September 30, 1998, in order to be
21 considered by the department. An application for designation as
22 a keystone opportunity expansion zone shall be received by the
23 department on or before December 31, 2000, in order to be
24 considered by the department.
25 (b) Process.--The department shall designate up to 12
26 keystone opportunity zones from applications meeting the
27 criteria in section 304 based upon need and likelihood of
28 success. The department shall designate up to 12 keystone
29 opportunity expansion zones from applications meeting the
30 criteria in section 304 based upon need and likelihood of
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1 success. Additionally, the department shall not alter the
2 geographic boundaries of a keystone opportunity zone or keystone
3 opportunity expansion zone or the duration of a keystone
4 opportunity zone or keystone opportunity expansion zone
5 described in [the] an application.
6 (c) Award of designations.--The department shall designate
7 all keystone opportunity zones by November 30, 1998. The
8 department shall designate all keystone opportunity expansion
9 zones by February 28, 2001.
10 (d) Effective date of designation.--The designation of a
11 keystone opportunity zone under this act shall take effect on
12 January 1, 1999. The designation of a keystone opportunity
13 expansion zone under this act shall take effect on January 1,
14 2001.
15 (e) Extension.--The department may extend the deadline for
16 the receipt of applications [under subsection (a)] for keystone
17 opportunity zones until December 31, 1998, if all 12 zones have
18 not been designated and the extension is necessary to allow
19 eligible political subdivisions to apply. The department shall
20 designate additional keystone opportunity zones under this
21 subsection by February 28, 1999. The designation shall take
22 effect January 1, 1999, or if the designation occurs after
23 January 1, 1999, that subsequent designation shall for all
24 purposes be retroactive to January 1, 1999. The keystone
25 opportunity zone designation shall end as provided in section
26 301(b).
27 Section 304. Criteria for designation of keystone opportunity
28 zone.
29 (a) Specific criteria.--In order to qualify for designation
30 under this act, the proposed keystone opportunity zone or
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1 proposed keystone opportunity expansion zone shall meet at least
2 two of the following criteria:
3 (1) At least 20% of the population is below the poverty
4 level.
5 (2) The unemployment rate is 1.25 times the Statewide
6 average.
7 (3) At least 20% of all real property within a five-mile
8 radius of the proposed keystone opportunity zone, proposed
9 keystone opportunity expansion zone or subzone in a nonurban
10 area is deteriorated or underutilized.
11 (4) At least 20% of all real property within a one-mile
12 radius of the proposed keystone opportunity zone, proposed
13 keystone opportunity expansion zone or subzone in an urban
14 area is deteriorated or underutilized.
15 (5) At least 20% of all occupied housing within a two-
16 mile radius of the proposed keystone opportunity zone,
17 proposed keystone opportunity expansion zone or subzone in a
18 nonurban area is deteriorated.
19 (6) At least 20% of all occupied housing within a one-
20 mile radius of the proposed keystone opportunity zone,
21 proposed keystone opportunity expansion zone or subzone in an
22 urban area is deteriorated.
23 (7) In an urban area, the median family income is 80% or
24 less of the urban median family income for that metropolitan
25 statistical area.
26 (8) In an area other than an urban area, the median
27 family income is 80% or less of the Statewide nonurban median
28 family income.
29 (9) The population loss exceeds 10% in an area that
30 includes the proposed keystone opportunity zone or proposed
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1 keystone opportunity expansion zone and its surrounding area
2 but is not larger than the county or counties in which the
3 proposed keystone opportunity zone or proposed keystone
4 opportunity expansion zone is located, based on census data
5 for the period between 1980 and 1990 or census estimates
6 since 1990 establishing a pattern of population loss.
7 (10) The political subdivision in which the proposed
8 keystone opportunity zone or proposed keystone opportunity
9 expansion zone is located has experienced a sudden and/or
10 severe job loss.
11 (11) At least 33% of the real property in a proposed
12 keystone opportunity zone or proposed keystone opportunity
13 expansion zone in a nonurban area would otherwise remain
14 underdeveloped or nonperforming due to physical
15 characteristics of the real property.
16 (12) The area has substantial real property with
17 adequate infrastructure and energy to support new or expanded
18 development.
19 (b) Additional criteria.--In addition to the required
20 criteria under subsection (a), the department shall consider the
21 following criteria:
22 (1) Evidence of distress, including, but not limited to,
23 unemployment, percentage of population below 80% of the State
24 median income, poverty rate, deteriorated property and
25 adverse economic and socioeconomic conditions in the proposed
26 keystone opportunity zone or proposed keystone opportunity
27 expansion zone.
28 (2) The strength and viability of the proposed goals,
29 objectives and strategies in the opportunity plan.
30 (3) Whether the opportunity plan is creative and
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1 innovative in comparison to other applications.
2 (4) Local public and private commitment to the
3 development of the proposed keystone opportunity zone or
4 proposed keystone opportunity expansion zone and the
5 potential cooperation of surrounding communities.
6 (5) Existing resources available to the proposed
7 keystone opportunity zone or proposed keystone opportunity
8 expansion zone.
9 (6) How keystone opportunity zone or keystone
10 opportunity expansion zone designation or economic
11 redevelopment relates to other current economic and community
12 development projects and to regional initiatives or programs.
13 (7) How the local regulatory burden will be eased for
14 businesses operating in the proposed keystone opportunity
15 zone or proposed keystone opportunity expansion zone.
16 (8) Proposals to implement educational opportunities and
17 improvements.
18 (9) Crime statistics and proposals to implement local
19 crime reduction measures.
20 (10) Proposals to establish and link job creation and
21 job training.
22 (c) Tax exemption ordinances.--An area shall not be
23 designated as a keystone opportunity zone or a proposed keystone <--
24 opportunity expansion zone unless, as a part of the application,
25 each political subdivision in which the proposed keystone
26 opportunity zone or proposed keystone opportunity expansion zone
27 is to be located adopts and provides a copy of an ordinance,
28 resolution or other required action from the governing body of
29 each political subdivision that exempts or provides deductions,
30 abatements or credits to qualified persons and qualified
20000H2498B4000 - 17 -
1 businesses from local taxes upon designation of the area as a
2 keystone opportunity zone or proposed keystone opportunity <--
3 expansion zone. All appropriate ordinances and resolutions shall
4 be effective on or before January 1, 1999, if designation as a
5 keystone opportunity zone is granted. All appropriate ordinances
6 and resolutions shall be effective on January 1, 2001, if
7 designation as a keystone opportunity expansion zone is granted.
8 The resolution, ordinance or other required action shall be
9 binding and nonrevocable on the qualified political subdivisions
10 for the duration of the opportunity plan.
11 (d) Urban areas.--The department shall promulgate guidelines
12 [which] that include the definition of "urban area" for the
13 purposes of receiving applications for designation as a keystone
14 opportunity zone or keystone opportunity expansion zone.
15 Section 305. Zone limitations.
16 The department shall not designate more than 12 keystone
17 opportunity zones within this Commonwealth. No keystone
18 opportunity zone shall encompass an entire political
19 subdivision. The department shall not designate more than 12
20 keystone opportunity expansion zones within this Commonwealth.
21 No keystone opportunity expansion zone shall encompass an entire
22 political subdivision.
23 Section 306. Residency.
24 In order to qualify each year for a tax exemption, deduction,
25 abatement or credit under this act, a person shall be domiciled
26 and shall reside in the keystone opportunity zone or keystone
27 opportunity expansion zone for a period of 184 consecutive days
28 during each taxable year, which may begin on the date of
29 designation by the department or on the date the person first
30 resides within the zone.
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1 Section 307. Qualified businesses.
2 (a) Qualifications.--In order to qualify each year for a tax
3 exemption, deduction, abatement or credit under this act, a
4 business shall own or lease real property in the keystone
5 opportunity zone or keystone opportunity expansion zone from
6 which the business actively conducts a trade, profession or
7 business. The qualified business shall receive certification
8 from the department that the business is located, and is in the
9 active conduct of a trade, profession or business, within the
10 keystone opportunity zone or keystone opportunity expansion
11 zone. The business shall obtain annual renewal of the
12 certification from the department to continue to qualify under
13 this section.
14 (b) Relocation.--Any business that relocates from outside a
15 keystone opportunity zone or keystone opportunity expansion zone
16 into a keystone opportunity zone or keystone opportunity
17 expansion zone shall not receive any of the exemptions,
18 deductions, abatements or credits set forth in this act unless
19 that business either:
20 (1) increases full-time employment by at least 20% in
21 the first full year of operation within the keystone
22 opportunity zone or keystone opportunity expansion zone; or
23 (2) makes a capital investment in the property located
24 within a keystone opportunity zone or keystone opportunity
25 expansion zone equivalent to 10% of the gross revenues of
26 that business in the immediately preceding calendar or fiscal
27 year.
28 The department, in consultation with the Department of Revenue,
29 may waive or modify the requirements of this subsection, as
30 appropriate.
20000H2498B4000 - 19 -
1 Section 308. Forms.
2 (a) Application forms.--Applications for designation as a
3 keystone opportunity zone or keystone opportunity expansion zone
4 shall be on forms prescribed by the department.
5 (b) Department assistance.--The department shall assist
6 political subdivisions in using the Internet as a tool for
7 encouraging new business development, including assisting
8 political subdivisions in making available via the Internet
9 information, applications and other forms necessary under this
10 act.
11 Section 501. State taxes.
12 (a) General rule.--A person who is a resident of a keystone
13 opportunity zone or a keystone opportunity expansion zone, a
14 qualified business or a nonresident under section 513 shall
15 receive the exemptions, deductions, abatements or credits as
16 provided in this chapter and Chapter 7 for the duration of the
17 keystone opportunity zone or keystone opportunity expansion zone
18 designation. Exemptions, deductions, abatements or credits shall
19 expire on the date of expiration of the keystone opportunity
20 zone or keystone opportunity expansion zone designation.
21 (b) Construction.--The Department of Revenue shall
22 administer, construe and enforce the provisions of this chapter
23 in conjunction with Articles II, III, IV [and], VI, VII, VII-A,
24 IX and XV of the Tax Reform Code of 1971.
25 Section 511. Sales and use tax.
26 (a) Exemption.--Sales at retail of services or tangible
27 personal property, other than motor vehicles, to a qualified
28 business for the exclusive use, consumption and utilization of
29 the tangible personal property or service by the qualified
30 business at its facility located within a keystone opportunity
20000H2498B4000 - 20 -
1 zone or a keystone opportunity expansion zone are exempt from
2 the sales and use tax imposed under Article II of the Tax Reform
3 Code of 1971.
4 [(b) Limitation.--Sales at retail or use of tangible
5 personal property or services to the tangible personal property
6 that will become a permanent part of real property in accordance
7 with Department of Revenue regulations shall not be eligible for
8 sales or use tax exemption under this section.]
9 (b) Construction contracts.--For any construction contract
10 performed in a keystone opportunity zone or keystone opportunity
11 expansion zone, the exemption provided in subsection (a) shall
12 only apply to the sale at retail or use of building machinery
13 and equipment to a qualified business, or to a construction
14 contractor pursuant to a construction contract with a qualified
15 business, for the exclusive use, consumption and utilization by
16 the qualified business at its facility in a keystone opportunity
17 zone or keystone opportunity expansion zone. For the purposes of
18 the keystone opportunity zone and keystone opportunity expansion
19 zone exemption, building machinery and equipment shall include
20 distribution equipment purchased for the exclusive use,
21 consumption and utilization in a keystone opportunity zone or
22 keystone opportunity expansion zone facility.
23 Section 512. Personal income tax.
24 (a) General rule.--[For the 1999 taxable year and each tax
25 year after 1999 and to the extent and for the duration provided
26 in this act a] A person shall be allowed an exemption for:
27 (1) Compensation received during the time period when
28 the person was a resident of a keystone opportunity zone or
29 keystone opportunity expansion zone.
30 (2) Net income from the operation of a qualified
20000H2498B4000 - 21 -
1 business received by a resident or nonresident of a keystone
2 opportunity zone or keystone opportunity expansion zone
3 attributable to business activity conducted within a keystone
4 opportunity zone [after provision for all costs and expenses
5 incurred in the conduct thereof] or keystone opportunity
6 expansion zone, determined [either on a cash or accrual
7 basis] in accordance with [accepted accounting principles and
8 practices but without deduction of taxes based on income.]
9 section 515 of this act, except that any business that
10 operates both within and outside this Commonwealth, before
11 computing its keystone opportunity zone or keystone
12 opportunity expansion zone exemption, shall first determine
13 its Pennsylvania activity over its activity everywhere by
14 applying the three-factor apportionment formula as set forth
15 in Department of Revenue personal income tax regulations
16 applicable to income apportionment in connection with a
17 business, trade or profession carried on both within and
18 outside this Commonwealth.
19 (3) All of the following:
20 (i) Net gains or income, less net losses, derived by
21 a resident or nonresident of a keystone opportunity zone
22 or keystone opportunity expansion zone from the sale,
23 exchange or other disposition of real or tangible
24 personal property located in a keystone opportunity zone
25 or keystone opportunity expansion zone as determined in
26 accordance with accepted accounting principles and
27 practices. The exemption provided in this subparagraph
28 shall not apply to the sale, exchange or other
29 disposition of any stock of goods, merchandise or
30 inventory, or any operational assets unless the transfer
20000H2498B4000 - 22 -
1 is in connection with the sale, exchange or other
2 disposition of all of the assets in complete liquidation
3 of a qualified business located in a keystone opportunity
4 zone or keystone opportunity expansion zone. This
5 subparagraph shall apply to intangible personal property
6 employed in a trade, profession or business in a keystone
7 opportunity zone or keystone opportunity expansion zone
8 by a qualified business, but only when transferred in
9 connection with a sale, exchange or other disposition of
10 all of the assets in complete liquidation of the
11 qualified business in the keystone opportunity zone or
12 keystone opportunity expansion zone.
13 (ii) Net gains, less net losses, realized by a
14 resident of a keystone opportunity zone or keystone
15 opportunity expansion zone from the sale, exchange or
16 disposition of intangible personal property or
17 obligations issued on or after February 1, 1994, by the
18 Commonwealth, a public authority, commission, board or
19 other Commonwealth agency, political subdivision or
20 authority created by a political subdivision or by the
21 Federal Government as determined in accordance with
22 accepted accounting principles and practices.
23 (iii) The exemption from income for gain or loss
24 provided for in [this subparagraph] subparagraphs (i) and
25 (ii) shall be prorated based on [either] the following:
26 (A) In the case of gains, less net losses, in
27 subparagraph (i), the percentage of time, based on
28 calendar days, the property located in a keystone
29 opportunity zone or keystone opportunity expansion
30 zone was held by [the taxpayer while] a resident or
20000H2498B4000 - 23 -
1 nonresident of [a keystone opportunity] the zone
2 during the time period the zone was in effect in
3 relation to the total time the property was held [by
4 the taxpayer; or].
5 (B) In the case of gains, less net losses, in
6 subparagraph (ii), the percentage of time, based on
7 calendar days, the [real or tangible personal]
8 property [located in the keystone opportunity zone]
9 was held by the taxpayer while a [nonresident]
10 resident of a keystone opportunity zone [during the
11 time period the keystone opportunity zone was in
12 effect] or keystone opportunity expansion zone in
13 relation to the total time the [real or tangible
14 personal] property was held [by a nonresident].
15 (4) Net gains or income derived from or in the form of
16 rents received by a person, whether a resident or nonresident
17 of a keystone opportunity zone or keystone opportunity
18 expansion zone, to the extent that income or loss from the
19 rental of real or tangible personal property is allocable to
20 a keystone opportunity zone or keystone opportunity expansion
21 zone. For purposes of calculating this exemption:
22 (i) Net rents derived from real or tangible personal
23 property located in a keystone opportunity zone or
24 keystone opportunity expansion zone are allocable to a
25 keystone opportunity zone or keystone opportunity
26 expansion zone.
27 (ii) If the tangible personal property was used both
28 within and without the keystone opportunity zone or
29 keystone opportunity expansion zone during the taxable
30 year, only the net income attributable to use in the
20000H2498B4000 - 24 -
1 keystone opportunity zone or keystone opportunity
2 expansion zone is exempt. The net rental income shall be
3 multiplied by a fraction, the numerator of which is the
4 number of days the property was used in the keystone
5 opportunity zone or keystone opportunity expansion zone
6 and the denominator 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 or keystone
9 opportunity expansion zone.
10 (6) Interest received during the time period the person
11 was a resident of a keystone opportunity zone or keystone
12 opportunity expansion zone.
13 (7) [Net gains or income derived through estates or
14 trusts received by a resident of a keystone opportunity zone
15 at the time of such receipt.] The part of the income or gains
16 received by an estate or trust for its taxable year ending
17 within or with the resident-beneficiary's taxable year,
18 which, under the governing instrument and applicable State
19 law, is required to be distributed currently or is in fact
20 paid or credited to the resident-beneficiary and which would
21 have been exempt under this act if received by a resident-
22 beneficiary directly.
23 (a.1) Exemption.--Beginning in taxable year 1999, a person
24 LOCATED IN A DESIGNATED KEYSTONE OPPORTUNITY ZONE shall be <--
25 allowed an exemption under subsection (a) for activities in a <--
26 designated keystone opportunity zone from the tax imposed by
27 Article III of the Tax Reform Code of 1971 for the classes of
28 income set forth in subsection (a). Beginning in taxable year
29 2001, a person LOCATED IN A DESIGNATED KEYSTONE OPPORTUNITY <--
30 EXPANSION ZONE shall be allowed an exemption under subsection
20000H2498B4000 - 25 -
1 (a) for activities in a designated keystone opportunity <--
2 expansion zone from the tax imposed by Article III of the Tax
3 Reform Code of 1971 for the classes of income set forth in
4 subsection (a).
5 (a.2) Pass-through entities.--The exemptions provided for in
6 this section shall apply to all of the following:
7 (1) The income or gain of a partnership or association.
8 The partner or member shall be entitled to the exemptions
9 under this section for the partner's or member's share,
10 whether or not distributed, of the income or gain received by
11 the partnership or association for its taxable year.
12 (2) The income or gain of a Pennsylvania S corporation.
13 The shareholder shall be entitled to the exemptions under
14 this section for the shareholder's pro rata share, whether or
15 not distributed, of the income or gain received by the
16 corporation for its taxable year ending within or with the
17 shareholder's taxable year.
18 (b) Limitation.--A partnership, association, Subchapter S
19 corporation, resident or nonresident may not apply an exemption
20 from income under this act for any class of income against any
21 other classes of income or gain. A partnership, association,
22 Subchapter S corporation, resident or nonresident may not carry
23 back or carry forward any exemption under this act from year to
24 year. The credit allowed under this section shall not exceed the
25 tax liability of the taxpayer under Article III of the Tax
26 Reform Code of 1971 for the tax year.
27 (c) Section not applicable to certain entities.--Any portion
28 of net income or gain that is attributable to operation of a
29 railroad, truck, bus or airline company, pipeline or natural gas
30 company, water transportation company, an entity which would
20000H2498B4000 - 26 -
1 qualify as a regulated investment company under Article IV of
2 the Tax Reform Code of 1971 or would qualify as a holding
3 company under Article VI of the Tax Reform Code of 1971 and any
4 entity activity which is associated or affiliated with any of
5 these operations shall not be used to calculate an exemption
6 under this section. This subsection shall not apply to the
7 exemption from tax provided in subsection (a)(5).
8 Section 513. Residency considerations.
9 If a person completes the residency requirements under
10 section 306 or if a nonresident realizes income attributable to
11 business activity or property within a keystone opportunity zone
12 or keystone opportunity expansion zone on or before the end of
13 the tax year, the person may claim the exemptions from income
14 for the items set forth in section 512 for that portion of the
15 tax year that the person was a resident or for that portion of
16 the tax year during which the area is designated as a keystone
17 opportunity zone or keystone opportunity expansion zone. [If the
18 person meets the residency requirements under section 306 in a
19 tax year subsequent to the tax year in which the person first
20 resided in the keystone opportunity zone, the person may file an
21 amended tax return within the applicable statute of limitations
22 to claim an exemption from income for the period of residency
23 within the keystone opportunity zone.
24 Section 514. Information for employer.
25 (a) Duty of employee.--Every person who is an employee that
26 qualifies as a resident of a keystone opportunity zone shall
27 furnish to his or her employer information, as prescribed by the
28 Department of Revenue, necessary for the employer to withhold
29 the correct amount of tax. An employee shall furnish
30 notification to his or her employer of any changes to the
20000H2498B4000 - 27 -
1 information within 20 days after the change. An employee shall
2 notify his or her employer that the employee has completed the
3 residency requirements under section 306.
4 (b) Duty of employer.--Within 20 days after an employer
5 receives information from an employee pursuant to subsection
6 (a), the employer shall forward a copy of that information to
7 the Department of Revenue. The information shall not be given
8 retroactive effect for withholding purposes. The employer shall
9 not be required to withhold tax from the compensation paid to a
10 resident of a keystone opportunity zone, if reasonable under the
11 circumstances, unless directed by the Department of Revenue to
12 withhold tax from the compensation on some other basis. If an
13 employee fails or refuses to furnish the information or
14 furnishes information that the employer reasonably and in good
15 faith believes to be inaccurate, the employer shall withhold the
16 full rate of tax from the employee's total compensation.]
17 Section 515. Corporate net income tax.
18 (a) Credits.--For the tax years that begin on or after
19 January 1, 1999, a corporation that [qualifies as] IS a <--
20 qualified business or that is an owner, partner or member of a <--
21 pass-through entity that is a qualified business under this act
22 may claim a credit against the tax imposed by Article IV of the
23 Tax Reform Code of 1971 [for [the taxable year to the extent of <--
24 the] tax liability attributable to business activity conducted
25 within [a] the keystone opportunity zone in the taxable year.
26 For the tax years that begin on or after January 1, 2001, a
27 corporation that is a qualified business or that is an owner, <--
28 partner or member of a pass-through entity that is a qualified
29 business under this act may claim a credit against the tax
30 imposed by Article IV of the Tax Reform Code of 1971 for tax
20000H2498B4000 - 28 -
1 liability attributable to business activity conducted within the
2 keystone opportunity expansion zone in the taxable year. The
3 business activity must be conducted directly by a corporation or <--
4 a pass-through entity in the keystone opportunity zone or
5 keystone opportunity expansion zone in order for the corporation
6 to claim the tax credit.
7 (b) Tax liability determinations.--The corporate tax
8 liability attributable to business activity conducted within a
9 keystone opportunity zone or keystone opportunity expansion zone
10 shall be determined by multiplying the corporation's taxable
11 income that is attributable to business activity conducted
12 within the keystone opportunity zone or keystone opportunity
13 expansion zone by the rate of tax imposed under Article IV of
14 the Tax Reform Code of 1971 for the taxable year.
15 (c) Determinations of attributable tax liability.--Tax
16 liability attributable to business activity conducted within a
17 keystone opportunity zone or keystone opportunity expansion zone
18 shall be computed, construed, administered and enforced in
19 conformity with Article IV of the Tax Reform Code of 1971 and
20 with specific reference to the following:
21 (1) If the entire business of the corporation in this
22 Commonwealth is transacted wholly within the keystone
23 opportunity zone or keystone opportunity expansion zone, the
24 taxable income attributable to business activity within a
25 keystone opportunity zone or keystone opportunity expansion
26 zone shall consist of the Pennsylvania taxable income as
27 determined under Article IV of the Tax Reform Code of 1971.
28 (2) If the entire business of the corporation in this
29 Commonwealth is not transacted wholly within the keystone
30 opportunity zone or keystone opportunity expansion zone, the
20000H2498B4000 - 29 -
1 taxable income of a corporation in a keystone opportunity
2 zone or keystone opportunity expansion zone shall be
3 determined upon such portion of the Pennsylvania taxable
4 income of such corporation attributable to business activity
5 conducted within the keystone opportunity zone or keystone
6 opportunity expansion zone and apportioned in accordance with
7 subsection (d).
8 (d) Income apportionment.--[All taxable income of] The
9 taxable income of a corporation that is a qualified business
10 shall be apportioned to the keystone opportunity zone or
11 keystone opportunity expansion zone by multiplying the
12 Pennsylvania taxable income by a fraction, the numerator of
13 which is the property factor plus the payroll factor plus the
14 sales factor and the denominator of which is three[.], in
15 accordance with the following:
16 (1) The property factor is a fraction, the numerator of
17 which is the average value of the taxpayer's real and
18 tangible personal property owned or rented and used in the
19 keystone opportunity zone or keystone opportunity expansion
20 zone during the tax period and the denominator of which is
21 the average value of all the taxpayer's real and tangible
22 personal property owned or rented and used in this
23 Commonwealth during the tax period but shall not include the
24 security interest of any corporation as seller or lessor in
25 personal property sold or leased under a conditional sale,
26 bailment lease, chattel mortgage or other contract providing
27 for the retention of a lien or title as security for the
28 sales price of the property.
29 (2) (i) The payroll factor is a fraction, the numerator
30 of which is the total amount paid in the keystone
20000H2498B4000 - 30 -
1 opportunity zone or keystone opportunity expansion zone
2 during the tax period by the taxpayer for compensation
3 and the denominator of which is the total compensation
4 paid in this Commonwealth during the tax period.
5 (ii) Compensation is paid in the keystone
6 opportunity zone or keystone opportunity expansion zone
7 if:
8 (A) the person's service is performed entirely
9 within the keystone opportunity zone or keystone
10 opportunity expansion zone;
11 (B) the person's service is performed both
12 within and without the keystone opportunity zone or
13 keystone opportunity expansion zone, but the service
14 performed without the keystone opportunity zone or
15 keystone opportunity expansion zone is incidental to
16 the person's service within the keystone opportunity
17 zone or keystone opportunity expansion zone; or
18 (C) some of the service is performed in the
19 keystone opportunity zone or keystone opportunity
20 expansion zone and the base of operations or, if
21 there is no base of operations, the place from which
22 the service is directed or controlled is in the
23 keystone opportunity zone or keystone opportunity
24 expansion zone, or the base of operations or the
25 place from which the service is directed or
26 controlled is not in any location in which some part
27 of the service is performed, but the person's
28 residence is in the keystone opportunity zone or
29 keystone opportunity expansion zone.
30 (3) The sales factor is a fraction, the numerator of
20000H2498B4000 - 31 -
1 which is the total sales of the taxpayer in the keystone
2 opportunity zone or keystone opportunity expansion zone
3 during the tax period and the denominator of which is the
4 total sales of the taxpayer in this Commonwealth during the
5 tax period.
6 (i) Sales of tangible personal property are in the
7 keystone opportunity zone or keystone opportunity
8 expansion zone if the property is delivered or shipped to
9 a purchaser within the keystone opportunity zone or
10 keystone opportunity expansion zone regardless of the
11 F.O.B. point or other conditions of the sale.
12 (ii) Sales other than sales of tangible personal
13 property are in the keystone opportunity zone or keystone
14 opportunity expansion zone if:
15 (A) the income-producing activity is performed
16 in the keystone opportunity zone or keystone
17 opportunity expansion zone; or
18 (B) the income-producing activity is performed
19 both within and without the keystone opportunity zone
20 or keystone opportunity expansion zone and a greater
21 proportion of the income-producing activity is
22 performed in the keystone opportunity zone or
23 keystone opportunity expansion zone than in any other
24 location, based on costs of performance.
25 (e) Computation.--A corporation shall compute its
26 Commonwealth taxable income in conformity with Article IV of the
27 Tax Reform Code of 1971 with no adjustments or subtractions for
28 keystone opportunity zone or keystone opportunity expansion zone
29 taxable income.
30 (f) [Credit] Limitation on amount of credit.--The credit
20000H2498B4000 - 32 -
1 allowed under this section shall not exceed the [corporate net
2 income] tax liability of the taxpayer under Article IV of the
3 Tax Reform Code of 1971 for the tax year.
4 (g) Section not applicable to certain businesses.--Any
5 portion of the taxpayer's taxable income that is attributable to
6 the operation of a railroad, truck, bus or airline company,
7 pipeline or natural gas company, water transportation company, a
8 corporation that qualifies as a regulated investment company
9 under Article IV of the Tax Reform Code of 1971 or holding
10 company as defined in Article VI of the Tax Reform Code of 1971
11 and any business activity that is associated or affiliated with
12 the operation of these business activities shall not be used to
13 calculate a credit under this section.
14 (h) Pass-through entity.--For purposes of this section, <--
15 "pass-through entity" means an association, partnership or
16 limited liability company that for Federal income tax purposes
17 is classified as a partnership.
18 Section 516. Capital stock franchise tax.
19 (a) Credits.--For tax years that begin on or after January
20 1, 1999, a corporation that is a qualified business or that is a <--
21 partner in a partnership that's a qualified business under
22 [section 307(a)] this act may claim a credit against the tax
23 imposed by Article VI of the Tax Reform Code of 1971 for [the
24 taxable year to the extent of the] tax liability attributable to
25 the capital employed within [a] the keystone opportunity zone in
26 the taxable year. For tax years that begin on or after January
27 1, 2001, a corporation that is a qualified business or that is a <--
28 partner in a partnership that is a qualified business under this
29 act may claim a credit against the tax imposed by Article VI of
30 the Tax Reform Code of 1971 for tax liability attributable to
20000H2498B4000 - 33 -
1 the capital employed within the keystone opportunity expansion
2 zone in the taxable year. The business activity must be
3 conducted directly by a corporation or a partnership in the <--
4 keystone opportunity zone or keystone opportunity expansion zone
5 in order for the corporation to claim the tax credit.
6 (b) Tax liability.--The corporation's tax liability
7 attributable to capital employed within a keystone opportunity
8 zone or keystone opportunity expansion zone shall be determined
9 by multiplying the corporation's taxable value attributable to
10 capital employed within the keystone opportunity zone or
11 keystone opportunity expansion zone by the rate of tax imposed
12 under Article VI of the Tax Reform Code of 1971 for the taxable
13 year. The corporation shall compute its Pennsylvania taxable
14 value in conformity with Article VI of the Tax Reform Code of
15 1971 with no adjustments or subtractions for the capital
16 employed in the keystone opportunity zone or keystone
17 opportunity expansion zone.
18 (c) Determination of attributable tax liability.--The
19 determination of the corporation's taxable value attributable to
20 the capital employed within a keystone opportunity zone or
21 keystone opportunity expansion zone shall be determined with
22 specific reference to the following:
23 (1) If the entire business of the corporation in this
24 Commonwealth is transacted wholly within a keystone
25 opportunity zone or keystone opportunity expansion zone, the
26 taxable value attributable to the capital employed within a
27 keystone opportunity zone or keystone opportunity expansion
28 zone shall consist of the Pennsylvania taxable value as
29 determined under Article VI of the Tax Reform Code of 1971.
30 (2) If the entire business of the corporation in this
20000H2498B4000 - 34 -
1 Commonwealth is not wholly transacted within a keystone
2 opportunity zone or keystone opportunity expansion zone, the
3 taxable value of a corporation in a keystone opportunity zone
4 or keystone opportunity expansion zone shall be determined
5 upon such portion of the Pennsylvania taxable value
6 attributable to the capital employed within the keystone
7 opportunity zone or keystone opportunity expansion zone by
8 employing the apportionment factors set forth in [subsection
9 (d)] section 515(d).
10 [(d) Capital stock and franchise tax apportionment.--For
11 purposes of apportionment of the capital stock and franchise
12 tax, the apportionment fraction shall be the property factor
13 plus the payroll factor plus the sales factor as the numerator,
14 and the denominator shall be three. In determining the relevant
15 apportionment factors, the numerator of the property, payroll
16 and sales factors shall not include any property, payroll and
17 sales attributable to manufacturing, processing, research and
18 development activities conducted within a keystone opportunity
19 zone, and the denominator of the property, payroll and sales
20 factors shall not include any property, payroll and sales
21 attributable to manufacturing, processing and research and
22 development activities conducted within this Commonwealth but
23 without a keystone opportunity zone.]
24 (e) Limitation on amount of credit.--The credit allowed
25 under this section shall not exceed the [capital stock
26 franchise] tax liability of the taxpayer under Article VI of the
27 Tax Reform Code of 1971 for the tax year.
28 (f) Credit not available.--Any portion of the taxpayer's tax
29 liability that is attributable to the capital employed in the
30 operation of a railroad, truck, bus or airline company, pipeline
20000H2498B4000 - 35 -
1 or natural gas company, water transportation company, a
2 corporation that qualifies[,] as a regulated investment company
3 under Article IV of the Tax Reform Code of 1971 or holding
4 company as defined in Article VI of the Tax Reform Code of 1971
5 and any capital employed in a business activity that is
6 associated or affiliated with the operation of these business
7 activities shall not be used to calculate a credit under this
8 section.
9 Section 5. The act is amended by adding sections to read:
10 Section 517. Bank and trust company shares tax, alternative
11 bank and trust company shares tax and mutual
12 thrift institutions tax.
13 (a) Credits.--For tax years that begin on or after January
14 1, 2001, an institution that is a qualified business or that is <--
15 an owner, partner or member of a pass-through entity that is a
16 qualified business under this act may claim a credit against the
17 tax imposed by Article VII, VII-A or XV of the Tax Reform Code
18 of 1971, for tax liability attributable to business activity
19 conducted within the keystone opportunity zone or keystone
20 opportunity expansion zone in the taxable year. The business
21 activity must be conducted directly by an institution or a pass- <--
22 through entity in the keystone opportunity zone or keystone
23 opportunity expansion zone in order for the institution to claim
24 the tax credit.
25 (b) Tax liability.--The institution's tax liability
26 attributable to business ACTIVITY conducted within a keystone <--
27 opportunity zone or keystone opportunity expansion zone shall be
28 determined by multiplying the taxable amount of its shares or
29 net income that is attributable to business activity conducted
30 within the keystone opportunity zone or keystone opportunity
20000H2498B4000 - 36 -
1 expansion zone by the rate of tax imposed under Article VII,
2 VII-A or XV of the Tax Reform Code of 1971 for the taxable year.
3 The institution shall compute the Pennsylvania taxable amount of
4 its shares or net income in conformity with Article VII, VII-A
5 or XV of the Tax Reform Code of 1971.
6 (c) Determination of attributable taxable liability.--Tax <--
7 liability attributable to business activity conducted within a
8 keystone opportunity zone or keystone opportunity expansion zone
9 shall be computed, construed, administered and enforced in
10 conformity with Article VII, VII-A or XV of the Tax Reform Code
11 of 1971 and with specific reference to the following:
12 (1) If the entire business of the institution in this
13 Commonwealth is transacted wholly within the keystone
14 opportunity zone or keystone opportunity expansion zone, the
15 taxable amount of its shares or net income that is
16 attributable to business activity within a keystone
17 opportunity zone or keystone opportunity expansion zone shall
18 consist of the Pennsylvania taxable shares or net income as
19 determined under Article VII, VII-A or XV of the Tax Reform
20 Code of 1971.
21 (2) If the entire business of the institution in this
22 Commonwealth is not transacted wholly within the keystone
23 opportunity zone or keystone opportunity expansion zone, the
24 taxable shares or net income of an insurance company in a
25 keystone opportunity zone or keystone opportunity expansion
26 zone shall be determined upon such portion of the
27 Pennsylvania taxable shares or net income of such institution
28 attributable to business activity conducted within the
29 keystone opportunity zone or keystone opportunity expansion
30 zone and apportioned in accordance with subsection (d).
20000H2498B4000 - 37 -
1 (d) Taxable shares or net income apportionment.--The taxable
2 shares or net income of an institution that is a qualified
3 business shall be apportioned to the keystone opportunity zone
4 or keystone opportunity expansion zone by multiplying
5 Pennsylvania taxable shares or net income by a fraction, the
6 numerator of which is the payroll factor plus the receipts
7 factor plus the deposit factor and the denominator of which is
8 three.
9 (1) The payroll factor is a fraction, the numerator of
10 which is the total wages paid in a keystone opportunity zone
11 or keystone opportunity expansion zone during the tax period
12 by the taxpayer and the denominator of which is the total
13 wages paid in this Commonwealth during the tax period. Wages
14 are paid in a keystone opportunity zone or keystone
15 opportunity expansion zone if they are paid to an employee
16 having a regular presence in the keystone opportunity zone or
17 keystone opportunity expansion zone.
18 (2) The receipts factor is a fraction, the numerator of
19 which is the total receipts of the taxpayer in a keystone
20 opportunity zone or the keystone opportunity expansion zone
21 during the tax period and the denominator of which is the
22 total receipts located in this Commonwealth. Receipts do not
23 include principal repayments on loans or credit, travel and
24 entertainment cards. Receipts from the sale or disposition of
25 intangible and tangible property include only the net gain
26 received from the sale or disposition. The location of
27 receipts shall be determined as follows:
28 (i) Receipts from loans primarily secured by real
29 property are located in a keystone opportunity zone or
30 keystone opportunity expansion zone if the predominant
20000H2498B4000 - 38 -
1 part of the security real property is or will be located
2 in the keystone opportunity zone or keystone opportunity
3 expansion zone and if at least one of the following
4 activities occurs at a qualified business:
5 (A) application for the loan;
6 (B) negotiation for the loan;
7 (C) approval of the loan; or
8 (D) administrative responsibility for the loan.
9 (ii) Receipts from loans not primarily secured by
10 real property are located in a keystone opportunity zone
11 or keystone opportunity expansion zone if the borrower
12 resides or is commercially domiciled within a keystone
13 opportunity zone or keystone opportunity expansion zone
14 and if at least one of the following activities occurs at
15 a qualified business:
16 (A) application for the loan;
17 (B) negotiation for the loan;
18 (C) approval of the loan; or
19 (D) administrative responsibility for the loan.
20 (iii) Receipts from performance of services are
21 located in a keystone opportunity zone or keystone
22 opportunity expansion zone to the extent the services are
23 performed in the keystone opportunity zone or keystone
24 opportunity expansion zone. If services are performed
25 partly within the keystone opportunity zone or keystone
26 opportunity expansion zone and partly outside the
27 keystone opportunity zone or keystone opportunity
28 expansion zone, the keystone opportunity zone or keystone
29 opportunity expansion zone receipts shall be the ratio
30 that the time spent in performing the services in the
20000H2498B4000 - 39 -
1 keystone opportunity zone or the keystone opportunity
2 expansion zone bears to the total time spent in
3 performing the services in this Commonwealth. Time spent
4 in performing services in the keystone opportunity zone
5 or the keystone opportunity expansion zone is the time
6 spent by employees having a regular presence in the
7 keystone opportunity zone or keystone opportunity
8 expansion zone in performing the services.
9 (iv) Receipts from lease transactions are located in
10 a keystone opportunity zone or keystone opportunity
11 expansion zone if the leased property is located in the
12 keystone opportunity zone or keystone opportunity
13 expansion zone.
14 (v) Receipts from interest or service charges,
15 excluding merchant discounts, from credit, travel and
16 entertainment card receivables and credit card holders'
17 fees are located in a keystone opportunity zone or
18 keystone opportunity expansion zone if the credit card
19 holder, in the case of an individual, resides in a
20 keystone opportunity zone or keystone opportunity
21 expansion zone or, in the case of a corporation, if the
22 corporation's commercial domicile is located in a
23 keystone opportunity zone or keystone opportunity
24 expansion zone.
25 (vi) Receipts from interest, dividends and net gains
26 from the sale or disposition of intangibles, exclusive of
27 those receipts described elsewhere in this section, are
28 located in a keystone opportunity zone or keystone
29 opportunity expansion zone if the institution maintains a
30 qualified business that treats such intangibles as assets
20000H2498B4000 - 40 -
1 on its books or records.
2 (vii) Receipts from fees or charges from the
3 issuance of traveler's checks and money orders are
4 located in a keystone opportunity zone or keystone
5 opportunity expansion zone if the traveler's checks or
6 money orders are issued in the keystone opportunity zone
7 or keystone opportunity expansion zone.
8 (viii) Receipts from sales of tangible property are
9 located in a keystone opportunity zone or keystone
10 opportunity expansion zone if the property is delivered
11 or shipped to a purchaser located in a keystone
12 opportunity zone or keystone opportunity expansion zone,
13 regardless of the free on-board point or other conditions
14 of the sale.
15 (ix) Receipts not specifically treated under this
16 subsection are located in a keystone opportunity zone or
17 keystone opportunity expansion zone if the greatest
18 portion of the income-producing activities are performed
19 in the keystone opportunity zone or keystone opportunity
20 expansion zone, based on costs of performance.
21 (3) The deposits factor is a fraction, the numerator of
22 which is the average value of deposits located in a keystone
23 opportunity zone or keystone opportunity expansion zone
24 during the taxable year and denominator of which is the
25 average value of the total deposits in this Commonwealth
26 during the taxable year. The average value of deposits is to
27 be computed in a quarterly basis. Deposits are located in the
28 keystone opportunity zone or keystone opportunity expansion
29 zone if the institution maintains a qualified business that
30 properly treats the deposits as a liability on its books or
20000H2498B4000 - 41 -
1 records. A deposit is considered to be properly treated as a
2 liability on the books or records of a qualified business if
3 it has the greater portion of contact. In determining whether
4 a deposit has a greater portion of contact with a qualified
5 business, consideration is given to:
6 (i) Whether the deposit account was opened at or
7 transferred to the qualified business by or at the
8 direction of the depositor, regardless of where
9 subsequent deposits or withdrawals are made.
10 (ii) Whether employees regularly connected with the
11 qualified business are primarily responsible for
12 servicing the depositor's general banking and other
13 financial needs.
14 (iii) Whether the deposit was solicited by an
15 employee regularly connected with the qualified business,
16 regardless of where the deposit was actually solicited.
17 (iv) Whether the terms governing the deposit were
18 negotiated by employees regularly connected with the
19 qualified business, regardless of where the negotiations
20 were actually conducted.
21 (v) Whether essential records relating to the
22 deposit are kept at the qualified business and whether
23 the deposit is serviced at the qualified business.
24 (4) Payroll, receipts and deposits of a pass-through
25 entity shall be allocated in the same manner as income is
26 allocated.
27 (e) Pass-through entity.--For purposes of this section,
28 "pass-through entity" means an association, partnership or
29 limited liability company that for Federal income tax purposes
30 is classified as a partnership.
20000H2498B4000 - 42 -
1 (f) Limitation on amount of credit.--The tax credits allowed
2 under this section shall not exceed the tax liability of the
3 taxpayer under Article VII, VIII-A or XV of the Tax Reform Code
4 of 1971 for the tax year.
5 Section 518. Insurance Premiums Tax.
6 (a) Credits.--For tax years that begin on or after January
7 1, 2001, an insurance company that is a qualified business or
8 that is an owner, partner or member of a pass-through entity
9 that is a qualified business under this act may claim a credit
10 against the tax imposed by Article IX of the Tax Reform Code of
11 1971 as provided by this section. The total amount of credits
12 will not exceed $1,000,000 annually. If credits for qualified
13 insurance companies exceed the $1,000,000 cap in a given year,
14 credits will be allocated on a pro-rata basis to qualifying
15 insurers.
16 (b) Tax credit determinations.--The tax credit shall be
17 calculated on an annual basis as follows:
18 (1) A tax credit of 7 1/2% of the total amount paid in
19 the keystone opportunity zone or keystone opportunity
20 expansion zone during the tax period by the taxpayer for
21 compensation.
22 (2) Compensation is paid in the keystone opportunity
23 zone or keystone opportunity expansion zone under the
24 criteria in section 515(d)(2)(ii).
25 (3) Compensation of a pass-through entity shall be
26 allocated in the same manner as income is allocated.
27 (c) Pass-through entities.--For purposes of this section,
28 "pass-through entity" means an association, partnership or
29 limited liability company that for Federal income tax purposes
30 is classified as a partnership.
20000H2498B4000 - 43 -
1 (d) Limitation on amount of credit.--The tax credits allowed
2 under this section shall not exceed 50% of the tax liability of
3 the taxpayer under Article IX of the Tax Reform Code of 1971 for
4 the tax year.
5 (e) Relief from additional retaliatory tax.--The tax credits
6 taken by an insurance company under this section shall not be
7 included in determining liability for retaliatory taxes imposed
8 under section 212 of the act of May 17, 1921 (P.L.789, No.285),
9 known as The Insurance Department Act of 1921.
10 (f) (C) DETERMINATION OF ATTRIBUTABLE TAXABLE LIABILITY.-- <--
11 THE TAXABLE SHARES OR THE INCOME OF AN INSTITUTION THAT IS A
12 QUALIFIED BUSINESS SHALL BE APPORTIONED TO THE KEYSTONE
13 OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE BY
14 MULTIPLYING THE PENNSYLVANIA TAXABLE SHARES OR INCOME BY A
15 FRACTION, THE NUMERATOR OF WHICH IS THE PAYROLL FACTOR PLUS THE
16 RECEIPTS FACTOR PLUS THE DEPOSITS FACTOR AND THE DENOMINATOR OF
17 WHICH IS THREE.
18 (1) THE PAYROLL FACTOR IS A FRACTION, THE NUMERATOR OF
19 WHICH IS THE TOTAL WAGES PAID IN A KEYSTONE OPPORTUNITY ZONE
20 OR KEYSTONE OPPORTUNITY EXPANSION ZONE DURING THE TAX PERIOD
21 BY THE TAXPAYER AND THE DENOMINATOR OF WHICH IS THE TOTAL
22 WAGES PAID IN THIS COMMONWEALTH DURING THE PERIOD. WAGES ARE
23 PAID IN A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
24 EXPANSION ZONE IF THEY ARE PAID TO AN EMPLOYEE HAVING A
25 REGULAR PRESENCE IN THE KEYSTONE OPPORTUNITY ZONE OR KEYSTONE
26 OPPORTUNITY EXPANSION ZONE.
27 (2) THE RECEIPTS FACTOR IS A FRACTION, THE NUMERATOR OF
28 WHICH IS TOTAL RECEIPTS OF THE TAXPAYER IN A KEYSTONE
29 OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE
30 DURING THE TAX PERIOD AND THE DENOMINATOR OF WHICH IS THE
20000H2498B4000 - 44 -
1 TOTAL RECEIPTS LOCATED IN THIS COMMONWEALTH. RECEIPTS DO NOT
2 INCLUDE PRINCIPAL REPAYMENTS ON LOANS OR CREDIT, TRAVEL AND
3 ENTERTAINMENT CARDS. RECEIPTS FROM THE SALE OR DISPOSITION OF
4 INTANGIBLE AND TANGIBLE PROPERTY INCLUDE ONLY THE NET GAIN
5 RECEIVED FROM THE SALE OR DISPOSITION. THE LOCATION OF
6 RECEIPTS SHALL BE DETERMINED AS FOLLOWS:
7 (I) RECEIPTS FROM LOANS PRIMARILY SECURED BY REAL
8 PROPERTY ARE LOCATED IN A KEYSTONE OPPORTUNITY ZONE OR
9 KEYSTONE OPPORTUNITY EXPANSION ZONE IF THE PREDOMINANT
10 PORTION OF THE REAL PROPERTY IS LOCATED IN THE KEYSTONE
11 OPPORTUNITY ZONE OR THE KEYSTONE OPPORTUNITY EXPANSION
12 ZONE AND THE APPLICATION AND NEGOTIATION, OR
13 ADMINISTRATIVE RESPONSIBILITY OCCURS AT A QUALIFIED
14 BUSINESS.
15 (II) RECEIPTS FROM LOANS NOT PRIMARILY SECURED BY
16 REAL PROPERTY ARE LOCATED IN A KEYSTONE OPPORTUNITY ZONE
17 OR KEYSTONE OPPORTUNITY EXPANSION ZONE IF THE OBLIGOR, IN
18 THE CASE OF AN INDIVIDUAL, RESIDES IN A KEYSTONE
19 OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE
20 OR, IN THE CASE OF A CORPORATION, IF THE CORPORATION'S
21 COMMERCIAL DOMICILE IS LOCATED IN A KEYSTONE OPPORTUNITY
22 ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE, AND THE
23 APPLICATION AND NEGOTIATION, OR ADMINISTRATIVE
24 RESPONSIBILITY OCCURS AT A QUALIFIED BUSINESS.
25 (III) RECEIPTS FROM PERFORMANCE OF SERVICES ARE
26 LOCATED IN A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE
27 OPPORTUNITY EXPANSION ZONE IF THE SERVICES ARE PERFORMED
28 IN THE KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
29 EXPANSION ZONE. IF SERVICES ARE PERFORMED PARTLY WITHIN
30 THE KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
20000H2498B4000 - 45 -
1 EXPANSION ZONE AND PARTLY OUTSIDE THE KEYSTONE
2 OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE,
3 THE KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
4 EXPANSION ZONE RECEIPTS SHALL BE THE RATIO THAT THE TIME
5 SPENT IN PERFORMING THE SERVICES IN THE KEYSTONE
6 OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE
7 BEARS TO THE TOTAL TIME SPENT IN PERFORMING THE SERVICES
8 IN THIS COMMONWEALTH. TIME SPENT IN PERFORMING SERVICES
9 IN THE KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
10 EXPANSION ZONE IS THE TIME SPENT BY EMPLOYEES HAVING A
11 REGULAR PRESENCE IN THE KEYSTONE OPPORTUNITY ZONE OR
12 KEYSTONE OPPORTUNITY EXPANSION ZONE IN PERFORMING THE
13 SERVICES.
14 (IV) RECEIPTS FROM LEASE TRANSACTIONS ARE LOCATED IN
15 A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
16 EXPANSION ZONE IF THE LEASED PROPERTY IS LOCATED IN THE
17 KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
18 EXPANSION ZONE.
19 (V) RECEIPTS FROM INTEREST OR SERVICE CHARGES,
20 EXCLUDING MERCHANT DISCOUNTS, FROM CREDIT, TRAVEL AND
21 ENTERTAINMENT CARD RECEIVABLES AND CREDIT CARD HOLDERS'
22 FEES ARE LOCATED IN A KEYSTONE OPPORTUNITY ZONE OR
23 KEYSTONE OPPORTUNITY EXPANSION ZONE IF THE CREDIT CARD
24 HOLDER, IN THE CASE OF AN INDIVIDUAL, RESIDES IN A
25 KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
26 EXPANSION ZONE OR, IN THE CASE OF A CORPORATION, IF THE
27 CORPORATION'S COMMERCIAL DOMICILE IS LOCATED IN A
28 KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
29 EXPANSION ZONE.
30 (VI) RECEIPTS FROM INTEREST, DIVIDENDS AND NET GAINS
20000H2498B4000 - 46 -
1 FROM THE SALE OR DISPOSITION OF INTANGIBLES, EXCLUSIVE OF
2 THOSE RECEIPTS DESCRIBED ELSEWHERE IN THIS PARAGRAPH, ARE
3 LOCATED IN A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE
4 OPPORTUNITY EXPANSION ZONE IF THE INSTITUTION MAINTAINS A
5 QUALIFIED BUSINESS THAT TREATS SUCH INTANGIBLES AS ASSETS
6 ON ITS BOOKS OR RECORDS.
7 (VII) RECEIPTS FROM FEES OR CHARGES FROM THE
8 ISSUANCE OF TRAVELER'S CHECKS AND MONEY ORDERS ARE
9 LOCATED IN A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE
10 OPPORTUNITY EXPANSION ZONE IF THE TRAVELER'S CHECKS OR
11 MONEY ORDERS ARE ISSUED IN THE KEYSTONE OPPORTUNITY ZONE
12 OR KEYSTONE OPPORTUNITY EXPANSION ZONE.
13 (VIII) RECEIPTS FROM SALES OF TANGIBLE PROPERTY ARE
14 LOCATED IN A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE
15 OPPORTUNITY EXPANSION ZONE IF THE PROPERTY IS DELIVERED
16 OR SHIPPED TO A PURCHASER LOCATED IN A KEYSTONE
17 OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE,
18 REGARDLESS OF THE FREE ON BOARD POINT OR OTHER CONDITIONS
19 OF THE SALE.
20 (IX) RECEIPTS NOT SPECIFICALLY TREATED UNDER THIS
21 PARAGRAPH ARE LOCATED IN A KEYSTONE OPPORTUNITY ZONE OR
22 KEYSTONE OPPORTUNITY EXPANSION ZONE IF THE GREATEST
23 PORTION OF THE INCOME-PRODUCING ACTIVITIES ARE PERFORMED
24 IN THE KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
25 EXPANSION ZONE, BASED ON COSTS OF PERFORMANCE.
26 (3) THE DEPOSITS FACTOR IS A FRACTION, THE NUMERATOR OF
27 WHICH IS THE AVERAGE VALUE OF DEPOSITS LOCATED IN A KEYSTONE
28 OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE
29 DURING THE TAXABLE YEAR AND THE DENOMINATOR OF WHICH IS THE
30 AVERAGE VALUE OF THE TOTAL DEPOSITS IN THIS COMMONWEALTH
20000H2498B4000 - 47 -
1 DURING THE TAXABLE YEAR. THE AVERAGE VALUE OF DEPOSITS IS TO
2 BE COMPUTED ON A QUARTERLY BASIS. DEPOSITS ARE LOCATED IN THE
3 KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION
4 ZONE IF THE INSTITUTION MAINTAINS A QUALIFIED BUSINESS THAT
5 PROPERLY TREATS THE DEPOSITS AS A LIABILITY ON ITS BOOKS OR
6 RECORDS. A DEPOSIT IS CONSIDERED TO BE PROPERLY TREATED AS A
7 LIABILITY ON THE BOOKS OR RECORDS OF A QUALIFIED BUSINESS IF:
8 (I) THE DEPOSIT ACCOUNT WAS OPENED OR TRANSFERRED TO
9 THE QUALIFIED BUSINESS BY OR AT THE DIRECTION OF THE
10 DEPOSITOR, REGARDLESS OF WHERE SUBSEQUENT DEPOSITS OR
11 WITHDRAWALS ARE MADE;
12 (II) THE EMPLOYEES REGULARLY CONNECTED WITH THE
13 QUALIFIED BUSINESS ARE PRIMARILY RESPONSIBLE FOR
14 SERVICING THE DEPOSITOR'S GENERAL BANKING AND OTHER
15 FINANCIAL NEEDS; AND
16 (III) AT LEAST ONE OF THE FOLLOWING FACTORS OCCURS
17 AT THE QUALIFIED BUSINESS:
18 (A) THE DEPOSIT WAS SOLICITED BY AN EMPLOYEE
19 REGULARLY CONNECTED WITH THE QUALIFIED BUSINESS,
20 REGARDLESS OF WHERE THE DEPOSIT WAS ACTUALLY
21 SOLICITED.
22 (B) THE TERMS GOVERNING THE DEPOSIT WERE
23 NEGOTIATED BY EMPLOYEES REGULARLY CONNECTED WITH THE
24 QUALIFIED BUSINESS, REGARDLESS OF WHERE THE
25 NEGOTIATIONS WERE ACTUALLY CONDUCTED.
26 (C) THE ESSENTIAL RECORDS RELATING TO THE
27 DEPOSIT ARE PHYSICALLY LOCATED AT THE QUALIFIED
28 BUSINESS AND THE DEPOSIT IS SERVICED AT THE QUALIFIED
29 BUSINESS.
30 (D) LIMITATION ON AMOUNT OF CREDIT.--THE CREDIT ALLOWED
20000H2498B4000 - 48 -
1 UNDER THIS SECTION SHALL NOT EXCEED 50% OF THE TAX LIABILITY OF
2 THE TAXPAYER UNDER ARTICLE VII, VII-A OR XV OF THE TAX REFORM
3 CODE OF 1971 FOR THE TAX YEAR.
4 SECTION 518. KEYSTONE OPPORTUNITY ZONE JOB TAX CREDIT OR
5 KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX
6 CREDIT.
7 (A) CREDITS.--FOR TAX YEARS THAT BEGIN ON OR AFTER JANUARY
8 1, 2001, AN INSURANCE COMPANY THAT IS A QUALIFIED BUSINESS UNDER
9 THIS ACT MAY APPLY TO THE DEPARTMENT OF REVENUE FOR A JOB TAX
10 CREDIT AGAINST THE TAX IMPOSED BY ARTICLE IX OF THE TAX REFORM
11 CODE OF 1971 FOR ALL FULL-TIME JOBS WITHIN A KEYSTONE
12 OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION ZONE IN THE
13 TAXABLE YEAR. THE JOB MUST BE HELD DIRECTLY WITH AN INSURANCE
14 COMPANY IN THE KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
15 EXPANSION ZONE IN ORDER FOR THE INSURANCE COMPANY TO APPLY FOR
16 THE TAX CREDIT. THE DEPARTMENT OF REVENUE WILL PRESCRIBE THE
17 FORM AND MANNER TO OBTAIN THE CREDIT.
18 (B) SECTION NOT APPLICABLE TO CERTAIN INSURANCE COMPANIES.--
19 (1) AN INSURANCE COMPANY THAT RELOCATES FROM A LOCATION
20 IN A POLITICAL SUBDIVISION IN THIS COMMONWEALTH THAT IS NOT
21 IN A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
22 EXPANSION ZONE TO A LOCATION IN A KEYSTONE OPPORTUNITY ZONE
23 OR KEYSTONE OPPORTUNITY EXPANSION ZONE MAY NOT APPLY FOR A
24 CREDIT FOR AN EXISTING JOB THAT IS TRANSFERRED, DISCONTINUED
25 OR LOST IN THIS COMMONWEALTH WHICH IS ATTRIBUTABLE TO THE
26 RELOCATION.
27 (2) AN INSURANCE COMPANY THAT HAS RELOCATED PURSUANT TO
28 SUBSECTION (B)(1) MAY APPLY FOR A KEYSTONE OPPORTUNITY ZONE
29 JOB TAX CREDIT OR KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX
30 CREDIT FOR A NEW FULL-TIME JOB THAT IS CREATED IN THE
20000H2498B4000 - 49 -
1 KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY EXPANSION
2 ZONE. A NEW FULL-TIME JOB IS CREATED WITH AN INSURANCE
3 COMPANY IF THE AVERAGE MONTHLY EMPLOYMENT FOR THAT INSURANCE
4 COMPANY HAS INCREASED FROM THE PRIOR 12-MONTH CALENDAR YEAR
5 IN THE ZONE.
6 (C) APPLICATION OF CREDIT.--AN INSURANCE COMPANY SHALL APPLY
7 FOR A CREDIT BY JANUARY 15 FOR THE PREVIOUS CALENDAR YEAR.
8 (D) APPORTIONMENT.--THE DEPARTMENT OF REVENUE SHALL
9 APPORTION A KEYSTONE OPPORTUNITY ZONE JOB TAX CREDIT OR A
10 KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX CREDIT FOR AN
11 INSURANCE COMPANY THAT IS A QUALIFIED BUSINESS THAT HAS NOT
12 OPERATED IN A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE OPPORTUNITY
13 EXPANSION ZONE FOR A FULL FISCAL YEAR.
14 (E) CREDIT DETERMINATIONS.--THE KEYSTONE OPPORTUNITY ZONE
15 JOB TAX CREDIT OR KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX
16 CREDIT SHALL BE DETERMINED BY MULTIPLYING THE MONTHLY AVERAGE OF
17 ALL FULL-TIME JOBS BY THE ALLOWANCE. THE ALLOWANCE FOR PURPOSES
18 OF THE KEYSTONE OPPORTUNITY ZONE JOB TAX CREDIT OR KEYSTONE
19 OPPORTUNITY EXPANSION ZONE JOB TAX CREDIT FOR TAXABLE YEARS
20 BEGINNING WITHIN THE DATES SET FORTH SHALL BE AS FOLLOWS:
21 JANUARY 1, 2001, TO
22 DECEMBER 31, 2001 $500 PER JOB
23 JANUARY 1, 2002, TO
24 DECEMBER 31, 2002 $650 PER JOB
25 JANUARY 1, 2003, TO
26 DECEMBER 31, 2003 $800 PER JOB
27 JANUARY 1, 2004, TO
28 DECEMBER 31, 2004 $950 PER JOB
29 JANUARY 1, 2005, TO
30 DECEMBER 31, 2005 $1,100 PER JOB
20000H2498B4000 - 50 -
1 JANUARY 1, 2006, TO
2 DECEMBER 31, 2006 $1,250 PER JOB
3 JANUARY 1, 2007, TO
4 DECEMBER 31, 2007 $1,250 PER JOB
5 JANUARY 1, 2008, TO
6 DECEMBER 31, 2008 $1,250 PER JOB
7 JANUARY 1, 2009, TO
8 DECEMBER 31, 2009 $1,250 PER JOB
9 JANUARY 1, 2010, TO
10 DECEMBER 31, 2010 $1,250 PER JOB
11 JANUARY 1, 2011, TO
12 DECEMBER 31, 2011 $1,250 PER JOB
13 JANUARY 1, 2012, TO
14 DECEMBER 31, 2012 $1,250 PER JOB
15 JANUARY 1, 2013, TO
16 DECEMBER 31, 2013 $1,250 PER JOB
17 (F) NOTIFICATION OF CREDIT.--BY FEBRUARY 15, THE DEPARTMENT
18 OF REVENUE SHALL NOTIFY AN INSURANCE COMPANY OF THE AMOUNT OF
19 THE INSURANCE COMPANY'S TAX CREDIT APPROVED.
20 (G) LIMITATION ON AMOUNT OF CREDIT.--THE TAX CREDIT ALLOWED
21 UNDER THIS SECTION SHALL NOT EXCEED 50% OF THE TAX LIABILITY OF
22 THE INSURANCE COMPANY UNDER ARTICLE IX OF THE TAX REFORM CODE OF
23 1971 FOR THE TAX YEAR. AN INSURANCE COMPANY MAY NOT CARRY BACK
24 OR FORWARD ANY CREDIT RECEIVED UNDER THIS SECTION.
25 (H) ALLOCATION.--THE TOTAL AMOUNT OF CREDITS APPROVED BY THE
26 DEPARTMENT OF REVENUE UNDER THIS SECTION SHALL NOT EXCEED
27 $1,000,000 ANNUALLY. IF THE CREDITS EXCEED THE $1,000,000 CAP IN
28 A GIVEN YEAR, THE CREDITS WILL BE ALLOCATED ON A PRO-RATA BASIS.
29 (I) CALCULATION OF ALLOCATION.--IF THE TOTAL AMOUNT OF
30 KEYSTONE OPPORTUNITY ZONE JOB TAX CREDITS AND KEYSTONE
20000H2498B4000 - 51 -
1 OPPORTUNITY EXPANSION ZONE JOB TAX CREDITS APPLIED FOR BY ALL
2 INSURANCE COMPANIES UNDER THIS SECTION EXCEEDS $1,000,000 THEN
3 THE CREDIT TO BE RECEIVED BY EACH INSURANCE COMPANY SHALL BE THE
4 PRODUCT OF $1,000,000 MULTIPLIED BY THE QUOTIENT OF THE CREDIT
5 APPLIED FOR BY THE INSURANCE COMPANY DIVIDED BY THE TOTAL OF ALL
6 CREDITS APPLIED FOR BY ALL INSURANCE COMPANIES, THE ALGEBRAIC
7 EQUIVALENT OF WHICH IS:
8 INSURANCE COMPANY'S KEYSTONE OPPORTUNITY ZONE JOB TAX
9 CREDIT OR KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX
10 CREDIT = $1,000,000 X (THE AMOUNT OF KEYSTONE OPPORTUNITY
11 ZONE JOB TAX CREDIT OR KEYSTONE OPPORTUNITY EXPANSION
12 ZONE JOB TAX CREDIT APPLIED FOR BY THE INSURANCE
13 COMPANY/THE SUM OF ALL KEYSTONE OPPORTUNITY ZONE JOB TAX
14 CREDITS AND KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX
15 CREDITS APPLIED FOR BY ALL INSURANCE COMPANIES).
16 (J) RELIEF FROM ADDITIONAL RETALIATORY TAX.--THE TAX CREDIT
17 TAKEN BY AN INSURANCE COMPANY UNDER THIS SECTION SHALL NOT BE
18 INCLUDED IN DETERMINING LIABILITY FOR RETALIATORY TAXES IMPOSED
19 UNDER SECTION 212 OF THE ACT OF MAY 17, 1921 (P.L.789, NO.285),
20 KNOWN AS THE INSURANCE DEPARTMENT ACT OF 1921.
21 (K) Hold-harmless clause.--The tax credits allowed by this
22 section shall not reduce the amounts which would otherwise be
23 payable for firemen's relief pension or retirement purposes or
24 for police pension retirement or disability purposes. The
25 Department of Revenue shall transfer by June 30 of each fiscal
26 year an amount equal to the tax credits taken under this section
27 by foreign fire and casualty insurance companies from the
28 General Fund to the Municipal Pension Aid Fund and the Fire
29 Insurance Tax Fund, as appropriate.
30 Section 6. Sections 701, 702, 703, 704, 705, 901, 902, 903,
20000H2498B4000 - 52 -
1 904 and 905 of the act are amended to read:
2 Section 701. Local taxes.
3 (a) General rule.--Every political subdivision in which a
4 designated keystone opportunity zone is located shall exempt,
5 deduct, abate or credit local taxes in accordance with
6 ordinances and resolutions adopted under section 301(d). Failure
7 to exempt, deduct, abate or credit local taxes shall result in
8 the revocation of the keystone opportunity zone designation.
9 (b) Expansion rule.--Every political subdivision in which a
10 designated keystone opportunity expansion zone is located shall
11 exempt, deduct, abate or credit local taxes in accordance with
12 ordinance ORDINANCES and resolutions adopted under section <--
13 301.1(d). Failure to exempt, deduct, abate or credit local taxes
14 shall result in the revocation of the keystone opportunity
15 expansion zone designation.
16 Section 702. Real property tax.
17 (a) General rule.--Notwithstanding the act of May 22, 1933
18 (P.L.853, No.155), known as The General County Assessment Law,
19 and the act of May 21, 1943 (P.L.571, No.254), known as The
20 Fourth to Eighth Class County Assessment Law, each qualified
21 political subdivision for taxable years beginning on or after
22 January 1, 1999, shall by ordinance or resolution abate 100% of
23 the real property taxation on the assessed valuation of
24 deteriorated property in an area designated as a keystone
25 opportunity zone within this Commonwealth. The real property tax
26 abatement provided for in this section shall apply to all real
27 property located in a keystone opportunity zone, irrespective of
28 the business activity, if any, made of the realty by its owner,
29 when this act is in effect.
30 (a.1) Expansion rule.--Notwithstanding the act of May 22,
20000H2498B4000 - 53 -
1 1933 (P.L.853, No.155), known as The General County Assessment
2 Law, and the act of May 21, 1943 (P.L.571, No.254), known as The
3 Fourth to Eighth Class County Assessment Law, each political
4 subdivision for taxable years beginning on or after January 1,
5 2001, shall by ordinance or resolution abate 100% of the real
6 property taxation on the assessed valuation of deteriorated
7 property in an area designated as a keystone opportunity
8 expansion zone within this Commonwealth. The real property tax
9 abatement provided for IN this section shall apply to all real <--
10 property located in a keystone opportunity expansion zone,
11 irrespective of the business activity, if any, made of the
12 realty by its owner, when this act is in effect.
13 (b) Investment in lieu of tax payment.--
14 (1) A qualified political subdivision may require a
15 resident of deteriorated real property to invest up to 25% of
16 all real property taxes which would have been due if the real
17 property was not located in a keystone opportunity zone or
18 keystone opportunity expansion zone in improvements to the
19 real property in order for the residents to be qualified for
20 exemptions, credits and abatements under this act.
21 (2) A qualified political subdivision may require a
22 nonresident owner of deteriorated real property who leases
23 the real property to a person for residential use [shall] to
24 invest 50% of all real property taxes which would have been
25 due if the real property was not located in a keystone
26 opportunity zone or keystone opportunity expansion zone, in
27 improvements to the real property.
28 [(c) Application for tax abatement.--Any person requesting
29 real property tax abatement pursuant to ordinances or
30 resolutions adopted pursuant to this act shall notify each
20000H2498B4000 - 54 -
1 county or other designated assessment office granting such
2 abatement in writing on a form provided by that assessment
3 office within 30 days of the designation as a keystone
4 opportunity zone or within 30 days of the transfer of ownership
5 of the real property subject to abatement. A copy of the
6 abatement request shall be forwarded by the county or other
7 designated assessment office to the political subdivision.]
8 (d) Annual real property report.--[Every keystone
9 opportunity zone] By January 31 of each calendar year a
10 political subdivision in which a keystone opportunity zone or
11 keystone opportunity expansion zone is located shall submit to
12 the department [an annual] a report [by January 31 of each
13 calendar year of all] listing the address of each real property, <--
14 [and PROPERTY[, AND the owners and addresses of that real <--
15 property at any time during the preceding year, which is located
16 in a] designated a keystone opportunity zone or keystone
17 opportunity expansion zone and its owner of record.
18 (e) Interest and penalties.--If the department or a
19 political subdivision finds that a person claimed an abatement
20 of real property tax to which the person was not entitled under
21 this act, the person shall be liable for the abated taxes and
22 subject to the applicable interest and penalty provisions
23 provided by law.
24 (f) Calculations for education subsidy for school
25 districts.--In determining the market value of real property in
26 each school district, the State Tax Equalization Board shall
27 exclude any increase in value above the base value prior to the
28 effect of the abatement of local taxes to the extent and during
29 the period of time that real estate tax revenues attributable to
30 such increased value are not available to the school district
20000H2498B4000 - 55 -
1 for general school district purposes.
2 Section 703. Local earned income and net profits taxes;
3 business privilege taxes.
4 (a) General exemption.--[To the extent that a qualified] If
5 a political subdivision has enacted any tax on the privilege of
6 engaging in any business or profession, measured by gross
7 receipts or on a flat rate basis, earned income or net profits,
8 as defined in the act of December 31, 1965 (P.L.1257, No.511),
9 known as The Local Tax Enabling Act, imposed within the
10 boundaries of a keystone opportunity zone[, such] or keystone
11 opportunity expansion zone, the qualified political subdivision
12 shall exempt from the imposition or operation of [such] the
13 local tax ordinances, statutes, regulations or otherwise:
14 (1) The business gross receipts for operations conducted
15 by a qualified business within a keystone opportunity zone or
16 keystone opportunity expansion zone.
17 (2) The earned income received by a resident of a
18 keystone opportunity zone or keystone opportunity expansion
19 zone.
20 (3) The net profits of a qualified business [received by
21 a resident or nonresident of a keystone opportunity zone]
22 attributable to business activity conducted within a keystone
23 opportunity zone or keystone opportunity expansion zone when
24 imposed by the qualified political subdivision where that
25 qualified business is located.
26 (b) Additional exemptions.--[To the extent that]
27 (1) Paragraph (2) shall apply if a qualified political
28 subdivision has enacted a tax on the privilege of engaging in
29 a profession or business, on wages or compensation, on net
30 profits from the operation of a business or profession or
20000H2498B4000 - 56 -
1 other activity or on the occupancy or use of real property
2 pursuant to any of the following:
3 [(1) Pursuant to the]
4 (i) The act of August 5, 1932 (Sp.Sess. P.L.45,
5 No.45), referred to as the Sterling Act[, the].
6 (ii) The act of March 10, 1949 (P.L.30, No.14),
7 known as the Public School Code of 1949[, the].
8 (iii) The act of August 24, 1961 (P.L.1135, No.508),
9 referred to as the First Class A School District Earned
10 Income Tax Act[, the].
11 (iv) The act of August 9, 1963 (P.L.640, No.338),
12 entitled "An act empowering cities of the first class,
13 coterminous with school districts of the first class, to
14 authorize the boards of public education of such school
15 districts to impose certain additional taxes for school
16 district purposes, and providing for the levy, assessment
17 and collection of such taxes[," the]."
18 (v) The act of May 30, 1984 (P.L.345, No.69), known
19 as the First Class City Business Tax Reform Act[, or
20 the].
21 (vi) The act of June 5, 1991 (P.L.9, No.6), known as
22 the Pennsylvania Intergovernmental Cooperation Authority
23 Act for Cities of the First Class[, enacted a tax on:
24 (i) the privilege of engaging in a profession or
25 business;
26 (ii) wages or compensation;
27 (iii) net profits from the operation of a business,
28 profession or other activity; or
29 (iv) the occupancy or use of real property].
30 (2) [The] If there is an enactment under paragraph (1),
20000H2498B4000 - 57 -
1 the qualified political subdivision shall provide an
2 exemption, deduction, abatement or credit from the imposition
3 and operation of such local tax ordinance or resolution FOR <--
4 all of the following:
5 (i) [A person or qualified business, whether a
6 resident or a nonresident of a keystone opportunity zone,
7 for the] The privilege of engaging in a business or
8 profession within a keystone opportunity zone or keystone
9 opportunity expansion zone by a person or qualified
10 business, whether a resident or nonresident of the zone.
11 (ii) Salaries, wages, commissions, compensation or
12 other income received for services rendered or work
13 performed by a resident of a keystone opportunity zone or
14 keystone opportunity expansion zone.
15 (iii) The gross or net income or gross or net
16 profits realized from the operation of a qualified
17 business to the extent attributable to business activity
18 conducted within a keystone opportunity zone or keystone
19 opportunity expansion zone.
20 (iv) The occupancy or use of real property located
21 within the keystone opportunity zone or keystone
22 opportunity expansion zone.
23 [(c) Limitation on withholding.--Every employer required to
24 withhold any local tax on the earned income, wages or
25 compensation of one or more persons within the particular
26 political subdivision shall not withhold such tax on earned
27 income, wages or compensation paid to any person or his personal
28 representative during any period when the qualified political
29 subdivision has by ordinance or resolution provided for the
30 exemption from tax as provided in section 701 and the person is
20000H2498B4000 - 58 -
1 a resident of a keystone opportunity zone.
2 (d) Information for employer.--Every person who is an
3 employee that qualifies as a resident of a keystone opportunity
4 zone shall furnish to his or her employer information, as
5 prescribed by the political subdivision, necessary for the
6 employer to withhold the correct amount of tax. An employee
7 shall furnish notification to his or her employer of any changes
8 to the information within 20 days after the change. An employee
9 shall notify his or her employer that the employee has completed
10 the residency requirements under section 306.
11 (e) Duty of employer.--Within 20 days after an employer
12 receives information from an employee pursuant to subsection
13 (d), the employer shall forward a copy of that information to
14 the political subdivision or other agency designated by the
15 political subdivision. The information shall not be given
16 retroactive effect for withholding purposes. The employer shall
17 not be required to withhold tax from the wages, earned income or
18 compensation paid to a resident of a keystone opportunity zone,
19 if reasonable under the circumstances, unless directed by the
20 political subdivision to withhold tax from the wages, earned
21 income or compensation on some other basis. If an employee fails
22 or refuses to furnish the information or furnishes information
23 that the employer reasonably and in good faith believes to be
24 inaccurate, the employer shall withhold the full rate of tax
25 from the employee's total wages, earned income or compensation.]
26 (f) Calculation for education subsidy for school district.--
27 In determining the personal income valuation of a school
28 district, the Secretary of Revenue shall exclude any increase in
29 the valuation as defined in section 2501(9.1) of the act of
30 March 10, 1949 (P.L.30, No.14), known as the Public School Code
20000H2498B4000 - 59 -
1 of 1949, above the base value prior to the abatement of local
2 taxes in a keystone opportunity zone or keystone opportunity
3 expansion zone located within the school district to the extent
4 and during the period of time that personal income revenues
5 attributable to the increase in the personal income valuation
6 are not available to the school district for general school
7 district purposes.
8 Section 704. Mercantile license tax.
9 No person or qualified business in a keystone opportunity
10 zone or keystone opportunity expansion zone shall be required to
11 pay any fee authorized pursuant to a mercantile license tax
12 imposed under the act of June 20, 1947 (P.L.745, No.320),
13 entitled, as amended, "An act to provide revenue for school
14 districts of the first class A by imposing a temporary
15 mercantile license tax on persons engaging in certain
16 occupations and businesses therein; providing for its levy and
17 collection; for the issuance of mercantile licenses upon the
18 payment of fees therefor; conferring and imposing powers and
19 duties on boards of public education, receivers of school taxes
20 and school treasurers in such districts; saving certain
21 ordinances of council of certain cities, and providing
22 compensation for certain officers, and employes and imposing
23 penalties."
24 Section 705. Local sales and use tax.
25 (a) General rule.--The political subdivision shall exempt
26 sales at retail of services or tangible personal property,
27 except motor vehicles, to a qualified business for the exclusive
28 use, consumption and utilization of the tangible personal
29 property or service by the qualified business at its facility
30 located within a keystone opportunity zone or keystone
20000H2498B4000 - 60 -
1 opportunity expansion zone from a city or county tax on purchase
2 price authorized under Article XXXI-B of the act of July 28,
3 1953 (P.L.723, No.230), known as the Second Class County Code,
4 as amended, and the act of June 5, 1991 (P.L.9, No.6), known as
5 the Pennsylvania Intergovernmental Cooperation Authority Act for
6 Cities of the First Class, as amended.
7 (b) [Real property] Construction contracts.--[The] For any
8 construction contract performed in a keystone opportunity zone
9 or keystone opportunity expansion zone, the exemption provided
10 in subsection (a) shall only apply to the sale at retail or use
11 of building machinery and equipment to a qualified business, or
12 to a construction contractor pursuant to a construction contract
13 with a qualified business, for the exclusive use, consumption
14 and utilization by the qualified business at its facility in a
15 keystone opportunity zone[.] or keystone opportunity expansion
16 zone. For the purposes of the keystone opportunity zone and
17 keystone opportunity expansion zone exemption, building
18 machinery and equipment shall include distribution equipment
19 purchased for the exclusive use, consumption and utilization in
20 a keystone opportunity zone or keystone opportunity expansion
21 zone facility.
22 (c) Definition.--Sales at retail of tangible personal
23 property and services shall be defined in accordance with
24 Article II of the Tax Reform Code of 1971.
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.
20000H2498B4000 - 61 -
1 (a) General rule.--If any qualified business located within
2 a keystone opportunity zone or keystone opportunity expansion
3 zone has received an exemption, deduction, abatement or credit
4 under this act and subsequently relocates outside of the zone
5 within the first five years of locating in a keystone
6 opportunity zone or keystone opportunity expansion zone, that
7 business shall refund to the State and political subdivision
8 which granted the exemption, deduction, abatement or credit
9 received in accordance with the following:
10 (1) If a qualified business relocates within three years
11 from the date of [any claim] first locating in a keystone
12 opportunity zone or keystone opportunity expansion zone, 66%
13 of all the exemptions, deductions, abatements or credits
14 [previously received due] attributed to that qualified
15 business's participation in the keystone opportunity zone or
16 keystone opportunity expansion zone shall be refunded to the
17 Commonwealth and the political subdivision.
18 (2) If a qualified business relocates within three to
19 five years from the date of [any claim] first locating in a
20 keystone opportunity zone or keystone opportunity expansion
21 zone, 33% of all exemptions, deductions, abatements or
22 credits [previously received from] attributed to that
23 qualified business's participation in the keystone
24 opportunity zone or keystone opportunity expansion zone shall
25 be refunded to the Commonwealth and the political
26 subdivision.
27 (3) If the qualified business was located within a
28 facility operated by a nonprofit organization to assist in
29 the creation and development of a start-up business, no
30 exemption, deduction, abatement or credit shall be refunded.
20000H2498B4000 - 62 -
1 (b) Waiver.--The department, in consultation with the
2 Department of Revenue and the political subdivision, may waive
3 or modify recapture requirements under this section if the
4 department determines that the business relocation was due to
5 circumstances beyond the control of the business, including, but
6 not limited to:
7 (1) natural disaster;
8 (2) unforeseen industry trends; or
9 (3) loss of a major supplier or market.
10 [(c) Determination of claim date.--For purposes of this
11 section, an exemption, deduction, abatement or credit is deemed
12 to be claimed on the later of:
13 (1) the date the return or other report for the tax or
14 fee is due;
15 (2) the date the return is filed; or
16 (3) the date the tax or fee would be paid.]
17 Section 903. Delinquent or deficient State or local taxes.
18 (a) Persons.--No person may claim or receive an exemption,
19 deduction, abatement or credit under this act unless that person
20 is in full compliance with all State and local tax laws [and
21 related], ordinances and resolutions.
22 (b) Qualified business.--
23 (1) No qualified business may claim or receive an
24 exemption, deduction, abatement or credit under this act
25 unless that qualified business is in full compliance with all
26 State and local tax laws, ordinances and resolutions.
27 (2) No qualified business may claim or receive an
28 exemption, deduction, abatement or credit under this act if
29 any person or business with a 20% or greater interest in that
30 qualified business is not in full compliance with all State
20000H2498B4000 - 63 -
1 and local tax laws, ordinances and resolutions.
2 (c) Later compliance and eligibility.--Any person or
3 qualified business that is not eligible to claim an exemption,
4 deduction, abatement or credit due to noncompliance with any
5 State or local tax law may become eligible if that person or
6 qualified business subsequently comes into full compliance with
7 all State and local tax laws to the satisfaction of the
8 Department of Revenue or the political subdivision within the
9 calendar year in which the noncompliance first occurred. If full
10 compliance is not attained by [December 31 of the calendar year
11 in which] February 5 of the calendar year following the calendar
12 YEAR during which noncompliance first occurred, then that person <--
13 or qualified business is precluded from claiming any exemption,
14 deduction, abatement or credit for that calendar year, whether
15 or not full compliance is achieved [in subsequent calendar
16 years] subsequently.
17 Section 904. Code compliance.
18 (a) General rule.--A person or qualified business shall be
19 precluded from claiming any exemption, deduction, abatement or
20 credit provided for in this act if that person or qualified
21 business owns real property in a keystone opportunity zone or
22 keystone opportunity expansion zone and the real property is not
23 in compliance with all applicable State and local zoning,
24 building and housing laws, ordinances or codes [and the real
25 property owner has not filed an affidavit with the political
26 subdivision attesting to compliance for that calendar year
27 before December 31 with the political subdivision in which the
28 real property is located].
29 (b) Opportunity to achieve compliance.--The person or
30 qualified business who is not in compliance under subsection (a)
20000H2498B4000 - 64 -
1 shall have until December 31 of the calendar year following
2 designation of the real property as part of a keystone
3 opportunity zone or keystone opportunity expansion zone to be in
4 compliance in order to claim any State exemptions, deductions,
5 abatements or credits for that year. If full compliance is not
6 attained by December 31 of that calendar year, the person or
7 qualified business is precluded from claiming any exemption,
8 deduction or credit for that calendar year, whether or not
9 compliance is achieved in a subsequent calendar year. The
10 political subdivision may extend the time period in which a
11 person or qualified business must come into compliance with a
12 local ordinance or building code for a period not to exceed one
13 year if the political subdivision determines that the person or
14 qualified business has made and shall continue to make a good
15 faith effort to come into compliance and that an extension will
16 enable the person or qualified business to achieve full
17 compliance. Qualified political subdivisions are required to
18 notify the Department of Revenue in writing of all persons or
19 qualified businesses not in compliance with this subsection
20 within 30 days following the end of each calendar year.
21 Section 905. Appeals.
22 A person or qualified business shall be deemed to be in
23 compliance with any State or local tax for purposes of this
24 section if that person or qualified business had made a timely
25 administrative or judicial appeal for that particular tax or has
26 entered into and is in compliance with a duly authorized
27 deferred payment plan with the Department of Revenue or
28 political subdivision for that particular tax.
29 Section 7. The act is amended by adding sections to read:
30 Section 906. Notice requirements; State and local authorities.
20000H2498B4000 - 65 -
1 (a) Requirement.--After compliance reviews have been
2 conducted by appropriate Commonwealth and local authorities, the
3 department shall notify each keystone opportunity zone or
4 keystone opportunity expansion zone applicant by regular mail
5 each year of the department's approval or denial of the
6 applicant's keystone opportunity zone or keystone opportunity
7 expansion zone application. No keystone opportunity zone or
8 keystone opportunity expansion zone applicant is entitled to any
9 tax benefits unless it receives approval from the department.
10 (b) Notice.--The department shall provide a one-time
11 notification to every current keystone opportunity zone and
12 keystone opportunity expansion zone real property owner by June
13 1, 2001. No benefits or rights shall accrue to any real property <--
14 owner if notification is not received. FAILURE TO RECEIVE <--
15 DEPARTMENTAL NOTIFICATION UNDER THIS SECTION SHALL NOT EXTEND OR
16 RESTRICT ANY BENEFITS OR RIGHTS REAL PROPERTY OWNERS POSSESS
17 UNDER THIS ACT.
18 (c) Transmittal.--The department, or its designated
19 official, shall within 15 business days of receipt of a keystone
20 opportunity zone or keystone opportunity expansion zone
21 application made under this act, forward a copy of the
22 application to appropriate Commonwealth and local authorities
23 for review and processing.
24 Section 907. Application time.
25 A keystone opportunity zone or keystone opportunity expansion
26 zone applicant must file a keystone opportunity zone or keystone
27 opportunity expansion zone application in a manner prescribed by
28 the department by December 31 of each calendar year for which
29 the applicant claims any exemption, deduction, abatement or
30 credit under this act. No exemption, deduction, abatement or
20000H2498B4000 - 66 -
1 credit may be claimed or received for that calendar year until
2 approval has been granted by the department.
3 Section 8. Sections 1101, 1102, 1103, 1302, 1303 and 1304 of
4 the act are amended to read:
5 Section 1101. Community benefits.
6 (a) Implementation grant.--The department may provide a one-
7 time $250,000 grant to [the] a keystone opportunity zone or a
8 one-time $200,000 grant to a keystone opportunity expansion zone
9 to implement the opportunity plan and to provide an annual
10 update of real property ownership and other information to the
11 Department of Revenue. The annual update shall describe progress
12 on all proposals required as part of the opportunity plan and
13 other information as required by the department. A separate
14 application must be submitted to the department outlining a
15 budget and implementation narrative. The grant shall be drawn
16 down as needed over a period not to exceed the first five years
17 of designation as a keystone opportunity zone or keystone
18 opportunity expansion zone. Grant funds shall be provided from
19 the housing and redevelopment appropriations. [Keystone
20 opportunity zones] Grant recipients shall comply with the
21 provisions of the appropriation.
22 (b) Reduced interest.--Projects in designated keystone
23 opportunity zones or keystone opportunity expansion zones that
24 are approved for Pennsylvania Industrial Development Authority
25 (PIDA) or Small Business First financing shall receive the
26 lowest interest rate extended to borrowers.
27 (c) Priority consideration.--Projects in keystone
28 opportunity zones or keystone opportunity expansion zones shall
29 receive priority consideration for State assistance under State
30 economic, community and economic development programs and
20000H2498B4000 - 67 -
1 community building initiatives.
2 (d) Marketing.--The department shall develop and implement a
3 consolidated marketing strategy for the keystone opportunity
4 zones or keystone opportunity expansion zones for use in job
5 retention and attraction activities.
6 (e) Education.--The Department of Education shall provide
7 technical assistance to school districts located in or school
8 districts having parts of their districts located in keystone
9 opportunity zones or keystone opportunity expansion zones.
10 (f) Local governments.--The Center for Local Government
11 Services in the department shall provide technical assistance to
12 political subdivisions relating to taxation, implementation of
13 the opportunity plan, establishing annual benchmarks and annual
14 reporting requirements to the departments. Additionally, the
15 Center for Local Government Services shall provide political
16 subdivisions [in] with property designated a keystone
17 opportunity [zones] zone or keystone opportunity expansion zone
18 with technical assistance to encourage the implementation of
19 best practices in achieving efficient and effective local
20 government administration and shall coordinate activities with
21 other departments and agencies providing various assistance to
22 communities.
23 (g) Community-based organizations.--The department shall
24 provide technical assistance for capacity building of existing
25 community-based organizations dealing with socioeconomic needs,
26 housing assistance and job training in the keystone opportunity
27 [zones] zone or keystone opportunity expansion zone.
28 Section 1102. Reporting.
29 The department shall report to the General Assembly on the
30 economic effects of this act in each keystone opportunity zone
20000H2498B4000 - 68 -
1 or keystone opportunity expansion zone every four years.
2 Section 1103. Other Commonwealth tax credits.
3 A person or qualified business that is entitled to claim an
4 exemption, deduction, abatement or credit in accordance with the
5 provisions of this act shall not be entitled to claim or
6 accumulate any of the following exemptions, deductions,
7 abatements or credits that it may otherwise have qualified for
8 due to activity within a keystone opportunity zone or keystone
9 opportunity expansion zone:
10 (1) Tax Reform Code of 1971:
11 (i) Article XVII relating to economic revitalization
12 tax credits;
13 (ii) Article XVII-A relating to employment incentive
14 payments;
15 (iii) Article XVII-B relating to research and
16 development tax credits; or
17 (iv) Article XIX-A relating to neighborhood
18 assistance and enterprise zone tax credits;
19 (2) tax credits under section 109 of the act of December
20 19, 1996 (P.L.1478, No.190), known as the Waste Tire
21 Recycling Act;
22 (3) homeowners mortgage credits;
23 (4) insurance premiums tax credits; and
24 (5) job creation tax credit under the act of June 29,
25 1996 (P.L.434, No.67), known as the Job Enhancement Act.
26 The person or qualified business may apply the exemptions,
27 deductions, abatements or credits to income realized from
28 activity or transactions outside the keystone opportunity zone
29 OR KEYSTONE OPPORTUNITY EXPANSION ZONE, but only for the taxable <--
30 year to which the exemptions, deductions, abatements or credits
20000H2498B4000 - 69 -
1 apply. The provisions of this section shall apply only to the
2 taxes set forth in Chapters 5 and 7.
3 Section 1302. Rules and regulations.
4 The Department of Revenue [shall] may promulgate [such rules
5 and] regulations [as may be] necessary to effectuate the
6 provisions of this act. The department [shall] may promulgate
7 [such rules and] regulations [as may be] necessary to effectuate
8 the provisions of this act.
9 Section 1303. Compliance.
10 Any person or qualified business eligible for an exemption,
11 deduction or credit under this act shall comply with all
12 reporting, filing and compliance requirements pursuant to the
13 Tax Reform Code of 1971 unless otherwise provided for in this
14 act.
15 Section 1304. Penalties.
16 (a) Civil penalty.--
17 (1) In addition to any penalties authorized by the Tax
18 Reform Code of 1971 for violations of that act, the
19 Department of Revenue may impose an additional administrative
20 penalty not to exceed $10,000 for any act or violation of
21 this act relating to State and local taxes, including the
22 filing of any false statement, return or document.
23 (2) The department may impose a civil penalty not to
24 exceed $10,000 for a violation of this act, including the
25 filing of any false statement, return or document.
26 (b) Criminal penalty.--In addition to any criminal penalty
27 under the Tax Reform Code of 1971, any person or business who
28 knowingly violates any of the provisions of this act commits a
29 misdemeanor of the third degree.
30 Section 9. Section 1309 of the act is amended to read:
20000H2498B4000 - 70 -
1 Section 1309. Expiration.
2 This act and all benefits associated with this act shall
3 terminate [December 21, 2010.] December 31, 2013. , except as <--
4 follows:
5 (1) all benefits associated with keystone opportunity
6 expansion zones established under this act shall terminate
7 December 31, 2015; and
8 (2) sections 517 and 518 shall terminate December 31,
9 2015.
10 Section 10. Section 204(57)(iii) of the act of March 4, 1971
11 (P.L.6, No.2), known as the Tax Reform Code of 1971, is
12 repealed.
13 Section 11. This act shall apply as follows:
14 (1) The amendment of sections 512 and 703 of the act
15 shall apply to taxable years beginning after December 31,
16 1998.
17 (2) The amendment of section 516 of the act shall apply
18 to taxable years beginning after December 31, 1999.
19 Section 12. This act shall take effect immediately.
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