SENATE AMENDED
PRIOR PRINTER'S NOS. 3453, 3910, 4000, PRINTER'S NO. 4208
4117, 4175
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
SENATOR TILGHMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS
AMENDED, NOVEMBER 20, 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:
1 AN ACT
2 Providing for the creation of keystone opportunity zones and
3 keystone opportunity expansion zones to foster economic
4 opportunities in this Commonwealth, to facilitate economic
5 development, stimulate industrial, commercial and residential
6 improvements and prevent physical and infrastructure
7 deterioration of geographic areas within this Commonwealth;
8 authorizing expenditures; providing tax exemptions, tax
9 deductions, tax abatements and tax credits; creating
10 additional obligations of the Commonwealth and local
11 governmental units; and prescribing powers and duties of
12 certain State and local departments, agencies and officials.
13 Section 2. Sections 101, 102, 103 and 301 of the act are
14 amended to read:
15 Section 101. Short title.
16 This act shall be known and may be cited as the
17 [Pennsylvania] Keystone Opportunity Zone and Keystone
18 Opportunity Expansion Zone Act.
19 Section 102. Legislative findings.
20 (1) There exist in this Commonwealth areas of economic
21 distress characterized by high unemployment, low investment
22 of new capital, inadequate dwelling conditions, blighted
23 conditions, underutilized, obsolete or abandoned industrial,
24 commercial and residential structures and deteriorating tax
25 bases.
26 (2) These areas require coordinated efforts by private
27 and public entities to restore prosperity and enable the
28 areas to make significant contributions to the economic and
29 social life of this Commonwealth.
30 (3) Long-term economic viability of these areas requires
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1 the cooperative involvement of residents, businesses, State
2 and local elected officials and community organizations. It
3 is in the best interest of the Commonwealth to assist and
4 encourage the creation of keystone opportunity zones and
5 keystone opportunity expansion zones and to provide temporary
6 relief from certain taxes within the [keystone opportunity]
7 zones to accomplish the purposes of this act.
8 Section 103. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Business." An association, partnership, corporation, sole
13 proprietorship, limited liability [corporation] company or
14 employer.
15 "Department." The Department of Community and Economic
16 Development of the Commonwealth.
17 "Deteriorated property." Any blighted, impoverished area
18 containing residential, industrial, commercial or other real
19 property that is abandoned, unsafe, vacant, undervalued,
20 underutilized, overgrown, defective, condemned, demolished or
21 which contains economically undesirable land use. The term
22 includes property adjacent to deteriorated property that is
23 significantly undervalued and underutilized due to the proximity
24 of the deteriorated property.
25 "Domicile." The place where a person has a true and fixed
26 home and principal establishment for an indefinite time and to
27 which, whenever absent, that person intends to return. Domicile
28 continues until another place of domicile is established.
29 "EXPANSION SUBZONE." A CLEARLY DEFINED GEOGRAPHIC AREA <--
30 CONTAINING A MINIMUM OF 15 CONTIGUOUS ACRES OR A MINIMUM OF FIVE
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1 CONTIGUOUS ACRES IN A RURAL AREA.
2 "Institution."
3 (1) Every bank operating as such and having capital
4 stock which is incorporated under any law of this
5 Commonwealth, under the law of the United States or under the
6 law of any other jurisdiction and is located within this
7 Commonwealth.
8 (2) Every operating company having capital stock located
9 within this Commonwealth having any of the powers of
10 companies entitled to the benefits of section 29 of the act
11 of April 29, 1874 (P.L.73, No.32), entitled "An act to
12 provide for the incorporation and regulation of certain
13 corporations," and any supplements thereto and under the act
14 of June 27, 1895 (P.L.399, No.286), entitled "An act
15 conferring upon certain fidelity, insurance, safety deposit,
16 trust and savings companies the powers and privileges of
17 companies incorporated under the provisions of section
18 twenty-nine of an act, entitled 'An act to provide for the
19 incorporation and regulation of certain corporations,'
20 approved April twenty-ninth, Anno Domini one thousand eight
21 hundred and seventy-four, and of the supplements thereto."
22 (3) Every company organized and operating as a bank and
23 trust company or as a trust company having capital stock
24 located in this Commonwealth, whether the institution is
25 incorporated under any law of this Commonwealth, the law of
26 the United States or any law of any jurisdiction. The term
27 shall not include any of such companies, all of the shares of
28 capital stock of which, other than shares necessary to
29 qualify directors, are owned by a company which is liable to
30 pay to the Commonwealth a tax pursuant to Article VII of the
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1 Tax Reform Code of 1971.
2 (4) A mutual thrift institution.
3 "Insurance company." Every insurance company, association or
4 exchange, incorporated or organized by or under the laws of this
5 Commonwealth, the United States, territories, dependencies,
6 other states or foreign governments, and engaged in transacting
7 insurance business of any kind or classification within this
8 Commonwealth, except title insurance companies subject to tax
9 under Article VIII or XVI of the Tax Reform Code of 1971, as the
10 case may be, except purely mutual beneficial associations whose
11 funds for the benefit of members and families or heirs are made
12 up entirely of the weekly, monthly, quarterly, semiannual or
13 annual contributions to their members and the accumulated
14 interest thereon and corporations organized under the former act
15 of June 21, 1937 (P.L.1948, No.378), known as the Nonprofit
16 Hospital Plan Act, and under the former act of June 27, 1939
17 (P.L.1125, No.399), known as the Nonprofit Medical, Osteopathic,
18 Dental and Podiatry Service Corporation Act.
19 "Keystone opportunity expansion zone." A defined geographic
20 area comprised of one or more political subdivisions or portions
21 of political subdivisions designated by the Department of
22 Community and Economic Development under Chapter 3. A keystone
23 opportunity expansion zone may be comprised of not more than
24 eight EXPANSION subzones. <--
25 "Keystone opportunity zone." A defined geographic area
26 comprised of one or more political subdivisions or portions of
27 political subdivisions designated by the Department of Community
28 and Economic Development under Chapter 3. A keystone opportunity
29 zone may be comprised of not more than 12 subzones.
30 "Metropolitan statistical area." A core area containing a
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1 city with a population of 50,000 or more or a Bureau of Census
2 defined urbanized area of 50,000 with a total metropolitan
3 population of at least 100,000.
4 "Mutual thrift institution." Every:
5 (1) Savings bank without capital stock.
6 (2) Building and loan association.
7 (3) Savings and loan association.
8 (4) Savings institution having capital stock.
9 whether the mutual thrift institution is incorporated under any
10 law of this Commonwealth or under the law of the United States,
11 or is incorporated under the law of any other jurisdiction and
12 is located within this Commonwealth.
13 "Opportunity plan." A written plan that addresses the
14 criteria and meets the requirements in section 302(a).
15 "Person." Any natural person.
16 "Political subdivision." A county, city, borough, township,
17 town or school district with taxing jurisdiction in a defined
18 geographic area within this Commonwealth.
19 "Qualified business." [Any business] A business authorized
20 to do business in this Commonwealth that is located or partially
21 located within a keystone opportunity zone or keystone <--
22 opportunity expansion zone [KEYSTONE OPPORTUNITY ZONE] SUBZONE <--
23 OR EXPANSION SUBZONE and is engaged in the active conduct of a
24 trade or business in accordance with the requirements of section <--
25 307. SECTION 307[.] FOR THE TAXABLE YEAR. An agent, broker or <--
26 representative of a business is not engaged in the active
27 conduct of trade or business for the business.
28 "Qualified political subdivision." A political subdivision
29 [that has been designated as] that has real property within its
30 jurisdiction which has been designated by the department as a
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1 keystone opportunity zone or keystone opportunity expansion <--
2 zone. [KEYSTONE OPPORTUNITY ZONE.] SUBZONE OR EXPANSION SUBZONE. <--
3 "Resident." A person who is domiciled and resides in an area
4 that is designated a keystone opportunity zone or keystone <--
5 opportunity expansion zone [KEYSTONE OPPORTUNITY ZONE] SUBZONE <--
6 OR EXPANSION SUBZONE and who meets the requirements of section
7 306.
8 "Subzone." A clearly defined geographic area containing a
9 minimum of 20 contiguous acres or a minimum of ten contiguous
10 acres in a rural area.
11 "Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
12 No.2), known as the Tax Reform Code of 1971, and any subsequent
13 amendments thereto.
14 Section 301. Keystone opportunity 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 zones. A keystone <--
18 opportunity zone shall be comprised of deteriorated property and
19 shall not exceed a total of 5,000 acres.
20 (b) [Designation] Zone designation AUTHORIZATION.--The <--
21 department shall [designate] AUTHORIZE not more than 12 keystone <--
22 opportunity zones in this Commonwealth. Persons and businesses
23 within [a designated] AN AUTHORIZED keystone opportunity zone <--
24 that are qualified under this act shall be entitled to all tax
25 exemptions, deductions, abatements or credits set forth in this
26 act for a period not to exceed [12] 15 years beginning January
27 1, 1999, and ending on or before December 31, [2010] 2013.
28 (c) [Subzones] Subzone designation.--[A keystone opportunity <--
29 zone may be comprised of up to 12 clearly defined subzones
30 [containing a minimum of 20 contiguous acres each. The subzones <--
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1 may or may not be contiguous to each other]. OTHER.] THE <--
2 DEPARTMENT MAY DESIGNATE NOT MORE THAN 12 SUBZONES IN EACH
3 KEYSTONE OPPORTUNITY ZONE. The total number of [subzones]
4 subzone acres in a keystone opportunity zone shall not exceed
5 5,000 acres in the aggregate. [The department may approve the
6 use of a subzone containing a minimum of ten acres in an area
7 that is not included in a metropolitan statistical area.]
8 (d) Authorization for local tax exemption.--Every political
9 subdivision within which a proposed [keystone opportunity zone] <--
10 SUBZONE is located, whether in whole or in part, is hereby <--
11 authorized to provide tax exemptions, deductions, abatements or
12 credits to persons and businesses qualified under this act. The
13 political subdivision shall agree to provide exemptions,
14 deductions, abatements or credits from all local taxes set forth
15 in this act in order to qualify to be designated a [keystone <--
16 opportunity zone within that political subdivision] SUBZONE. <--
17 Except as provided in section 303(e), the exemptions,
18 deductions, abatements or credits shall be effective January 1,
19 1999, if designation of a [keystone opportunity zone] SUBZONE <--
20 within the political subdivision is granted by the department.
21 The exemptions, deductions, abatements or credits shall be
22 binding upon the political subdivision for the duration of the
23 [keystone opportunity zone] SUBZONE designation. <--
24 (e) Authorization to extend State and local tax exemption.-- <--
25 A qualified political subdivision which does not provide for the
26 exemptions, deductions, abatements or credits set forth in this
27 act for a period of 15 years, ending December 31, 2013, may
28 receive departmental approval to extend the State and local tax
29 relief provided by this act for the period ending December 31,
30 2013, provided all qualified political subdivisions within the
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1 keystone opportunity zone SUBZONE agree to extend the State and <--
2 local tax relief provided by this act for the period ending
3 December 31, 2013. A qualified political subdivision having an
4 approved keystone opportunity subzone within its jurisdiction
5 shall pass the required ordinance, resolutions or other required
6 action of the qualified political subdivision for the necessary
7 exemptions, deductions, abatements or credits pursuant to this
8 act for the period beginning after December 31, 2008, and ending
9 on December 31, 2013, and shall submit copies to the department
10 of the ordinance, resolutions or other action by June 30, 2001.
11 (E) AUTHORIZATION TO EXTEND THE DURATION OF A KEYSTONE <--
12 OPPORTUNITY ZONE OR SUBZONE.--A SUBZONE OF A KEYSTONE
13 OPPORTUNITY ZONE MAY REQUEST TO EXTEND ITS DESIGNATION AS A
14 SUBZONE FOR A PERIOD OF THREE YEARS. A SUBZONE THAT IS PART OF A
15 KEYSTONE OPPORTUNITY ZONE THAT WILL EXPIRE ON DECEMBER 31, 2008,
16 MAY EXTEND ITS DESIGNATION AS A SUBZONE TO DECEMBER 31, 2010, OR
17 TO DECEMBER 31, 2013. THE REQUEST TO EXTEND A SUBZONE
18 DESIGNATION SHALL BE MADE ON A SUBZONE-BY-SUBZONE BASIS. A
19 QUALIFIED POLITICAL SUBDIVISION HAVING AN APPROVED SUBZONE
20 WITHIN ITS JURISDICTION AND SEEKING TO EXTEND THE SUBZONE
21 DESIGNATION SHALL PASS THE REQUIRED ORDINANCES, RESOLUTIONS OR
22 OTHER REQUIRED ACTION OF THE QUALIFIED POLITICAL SUBDIVISION FOR
23 THE NECESSARY EXEMPTIONS, DEDUCTIONS, ABATEMENTS OR CREDITS
24 PURSUANT TO THIS ACT FOR THE PERIOD BEGINNING AFTER DECEMBER 31,
25 2008, OR DECEMBER 31, 2010, AS THE CASE MAY BE AND SHALL SUBMIT
26 COPIES OF THE ORDINANCE, RESOLUTION OR OTHER ACTION TO THE
27 DEPARTMENT BY JUNE 30, 2001. THE DEPARTMENT MAY GRANT THE
28 REQUEST TO EXTEND PROVIDED ALL THE PROPER BINDING ORDINANCES,
29 RESOLUTIONS OR OTHER GOVERNING DOCUMENTS ARE PASSED BY ALL
30 QUALIFIED POLITICAL SUBDIVISIONS WITHIN THE SUBZONE EXTENDING
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1 THE NECESSARY EXEMPTIONS, DEDUCTIONS, ABATEMENTS AND CREDITS TO
2 THE ENTIRE SUBZONE TO DECEMBER 31, 2010, OR DECEMBER 31, 2013.
3 The department shall approve or deny the request for extension
4 of duration of a keystone opportunity zone SUBZONE by July 31, <--
5 2001, and shall provide written notice, irrespective of whether
6 approved or denied, to each qualified political subdivision,
7 resident and qualified business affected. Upon approval of a
8 request for extension of duration of a keystone opportunity zone <--
9 SUBZONE, the exemptions, deductions, abatements or credits shall <--
10 be binding upon the qualified political subdivision as provided
11 in subsection (d) and shall be nonrevocable. <--
12 Section 3. The act is amended by adding a section to read:
13 Section 301.1. Keystone opportunity expansion zones.
14 (a) Establishment.--There is hereby established within the
15 department a program providing for the designation of portions <--
16 of this Commonwealth as keystone opportunity expansion zones. A
17 keystone opportunity expansion zone shall be comprised of
18 deteriorated property and shall not exceed a total of 1,500
19 acres.
20 (b) Designation AUTHORIZATION.--The department shall <--
21 designate AUTHORIZE not more than 12 keystone opportunity <--
22 expansion zones in this Commonwealth. Persons and businesses
23 within a designated AN AUTHORIZED keystone opportunity expansion <--
24 zone that are qualified under this act shall be entitled to all
25 tax exemptions, deductions, abatements or credits set forth in
26 this act for a period of TEN OR 13 years beginning January 1, <--
27 2001, and ending on December 31, 2010, OR DECEMBER 31, 2013. <--
28 (c) Subzones.--A keystone opportunity expansion zone may be <--
29 comprised of up to eight clearly defined subzones. The total
30 (C) EXPANSION SUBZONE DESIGNATION.--THE DEPARTMENT MAY <--
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1 DESIGNATE NOT MORE THAN EIGHT EXPANSION SUBZONES IN A KEYSTONE
2 OPPORTUNITY EXPANSION ZONE. THE TOTAL number of EXPANSION <--
3 subzone acres in a keystone opportunity expansion zone shall not
4 exceed 1,500 acres in the aggregate.
5 (d) Authorization for local tax exemption.--Every political
6 subdivision within which a proposed keystone opportunity <--
7 expansion zone EXPANSION SUBZONE is located, whether in whole or <--
8 in part, is hereby authorized to provide tax exemptions,
9 deductions, abatements or credits to persons and businesses
10 qualified under this act FOR A PERIOD ENDING DECEMBER 31, 2010, <--
11 OR DECEMBER 31, 2013. THE EXEMPTION PERIOD SHALL BE UNIFORM
12 WITHIN EACH EXPANSION SUBZONE. The political subdivision shall
13 agree to provide exemptions, deductions, abatements or credits
14 from all local taxes set forth in this act in order to qualify
15 to be designated a keystone opportunity expansion zone within <--
16 that political subdivision AN EXPANSION SUBZONE. The exemptions, <--
17 deductions, abatements or credits shall be effective January 1,
18 2001, if designation of a keystone opportunity expansion zone AN <--
19 EXPANSION SUBZONE within the political subdivision is granted by
20 the department. The exemptions, deductions, abatements or
21 credits shall be binding upon the political subdivision for the
22 duration of the keystone opportunity expansion zone EXPANSION <--
23 SUBZONE designation.
24 Section 4. Sections 302, 303, 304, 305, 306, 307, 308, 501,
25 511, 512, 513, 514, 515 and 516 of the act are amended to read:
26 Section 302. Application.
27 (a) Initial application.--One or more political
28 subdivisions, or a designee of one or more political
29 subdivisions, may apply to the department to designate [a
30 keystone opportunity zone] deteriorated property within the
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1 political subdivision or portions thereof a keystone opportunity <--
2 zone or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
3 SUBZONE. The application shall contain the following:
4 (1) The geographic area of the proposed keystone
5 opportunity zone or proposed keystone opportunity expansion
6 zone. The geographic area shall be located within the
7 boundaries of the participating political subdivision and
8 shall not contain more than 5,000 acres in the case of a
9 keystone opportunity zone or 1,500 acres in the case of a
10 keystone opportunity expansion zone.
11 (2) An opportunity plan that shall include the
12 following:
13 (i) A detailed map of the proposed keystone
14 opportunity zone [and subzones] or proposed keystone
15 opportunity expansion zone, including geographic
16 boundaries, total area and present use and conditions of
17 the land and structures of the proposed keystone
18 opportunity zone or proposed keystone opportunity
19 expansion zone.
20 (ii) Evidence of support from and participation of
21 local government, school districts and other educational
22 institutions, business groups, community organizations
23 and the public.
24 (iii) A proposal to increase economic opportunity,
25 reduce crime, improve education, facilitate
26 infrastructure improvement, reduce the local regulating
27 burden and identify potential jobs and job training
28 opportunities and which states whether or not the zone is
29 located in an area which has tax revenue dedicated to the
30 payment of debt.
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1 (iv) A description of the current social, economic
2 and demographic characteristics of the proposed keystone
3 opportunity zone or proposed keystone opportunity
4 expansion zone and anticipated improvements in education,
5 health, human services, public safety and employment that
6 will result from keystone opportunity zone or keystone
7 opportunity expansion zone designation.
8 (v) A description of anticipated activity in the
9 proposed keystone opportunity zone [and each subzone] or
10 proposed keystone opportunity expansion zone, including,
11 but not limited to, industrial use, industrial site
12 reuse, commercial or retail use and residential use.
13 (vi) Evidence of potential private and public
14 investment in the proposed keystone opportunity zone or
15 proposed keystone opportunity expansion zone.
16 (vii) The role of the proposed keystone opportunity
17 zone or proposed keystone opportunity expansion zone in
18 regional economic and community development.
19 (viii) Plans to utilize existing resources for the
20 administration of the proposed keystone opportunity zone
21 or proposed keystone opportunity expansion zone.
22 (ix) Any other information deemed appropriate by the
23 department.
24 (3) A report on youth at risk to include issues relating
25 to health, welfare and education.
26 (4) The [proposed] duration of the proposed [keystone <--
27 opportunity zone [and all] PROPOSED subzones] or proposed <--
28 keystone opportunity expansion zone EXPANSION SUBZONES. The <--
29 duration of a keystone opportunity zone SUBZONE may not <--
30 exceed [12] 15 years. The duration of a keystone opportunity <--
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1 expansion zone is AN EXPANSION SUBZONE MAY NOT EXCEED 13 <--
2 years.
3 (5) A formal, binding ordinance or resolution passed by
4 every political subdivision in which the proposed [keystone <--
5 opportunity zone] or proposed keystone opportunity expansion <--
6 zone SUBZONE OR PROPOSED EXPANSION SUBZONE is located that <--
7 specifically provides for all local tax exemptions,
8 deductions, abatements or credits for persons and businesses
9 set forth in this act [if designation is received by the
10 department, to be effective January 1, 1999].
11 (6) Evidence that the proposed keystone opportunity zone
12 or proposed keystone opportunity expansion zone meets the
13 required criteria under section 304.
14 (b) Participation limitation.--A [qualified] political
15 subdivision shall not be a part of more than one proposed
16 keystone opportunity zone[.] or proposed keystone opportunity <--
17 expansion zone. A PROPOSED EXPANSION SUBZONE MAY NOT OVERLAP THE <--
18 BOUNDARIES OF A SUBZONE.
19 (c) Application limitation.--A [qualified] political
20 subdivision may submit only one application to the department
21 for [designation] AUTHORIZATION as a keystone opportunity zone. <--
22 A political subdivision may submit only one application to the
23 department for designation AUTHORIZATION as a keystone <--
24 opportunity expansion zone.
25 Section 303. Review.
26 (a) Action of department.--The department, in consultation
27 with the Department of Revenue, shall review all completed
28 applications submitted under this act. An application for
29 designation as a keystone opportunity zone [DESIGNATION] <--
30 AUTHORIZATION AS A KEYSTONE OPPORTUNITY ZONE AND DESIGNATION OF
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1 SUBZONES shall be received by the department on or before
2 September 30, 1998, in order to be considered by the department.
3 An application for designation as a keystone opportunity <--
4 expansion zone shall be received by the department on or before
5 December 31, 2000, in order to be AUTHORIZATION AS A KEYSTONE <--
6 OPPORTUNITY EXPANSION ZONE AND DESIGNATION OF EXPANSION SUBZONES
7 SHALL BE RECEIVED BY THE DEPARTMENT ON OR BEFORE FEBRUARY 28,
8 2001, IN ORDER TO BE considered by the department.
9 (b) Process.--The department shall [designate] AUTHORIZE up <--
10 to 12 keystone opportunity zones from applications meeting the
11 criteria in section 304 based upon need and likelihood of
12 success. The department shall designate AUTHORIZE up to 12 <--
13 keystone opportunity expansion zones from applications meeting
14 the criteria in section 304 based upon need and likelihood of
15 success. Additionally, the department shall not alter the
16 geographic boundaries of a keystone opportunity zone or keystone <--
17 opportunity expansion zone or the duration of a keystone
18 opportunity zone or keystone opportunity expansion zone
19 described in [the] an application.
20 (c) Award of designations.--The department shall designate
21 all keystone opportunity zones by November 30, 1998. The
22 department shall designate all keystone opportunity expansion
23 zones by February 28, 2001.
24 (d) Effective date of designation.--The designation of a
25 keystone opportunity zone under this act shall take effect on
26 January 1, 1999. The designation of a keystone opportunity
27 expansion zone under this act shall take effect on January 1,
28 2001.
29 (e) Extension.--The department may extend the deadline for
30 the receipt of applications [under subsection (a)] for keystone
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1 opportunity zones until December 31, 1998, if all 12 zones have
2 not been designated and the extension is necessary to allow
3 eligible political subdivisions to apply. The department shall
4 designate additional keystone opportunity zones under this
5 subsection by February 28, 1999. The designation shall take
6 effect January 1, 1999, or if the designation occurs after
7 January 1, 1999, that subsequent designation shall for all
8 purposes be retroactive to January 1, 1999. The keystone
9 opportunity zone designation shall end as provided in section
10 301(b).
11 Section 304. Criteria for designation of keystone opportunity
12 zone.
13 (a) Specific criteria.--In order to qualify for designation
14 GEOGRAPHIC BOUNDARIES OF A [KEYSTONE OPPORTUNITY ZONE] SUBZONE <--
15 OR EXPANSION SUBZONE OR THE DURATION OF A [KEYSTONE OPPORTUNITY
16 ZONE] SUBZONE OR EXPANSION SUBZONE DESCRIBED IN [THE] AN
17 APPLICATION.
18 (C) [AWARD OF DESIGNATIONS] AUTHORIZATIONS.--THE DEPARTMENT
19 SHALL [DESIGNATE] AUTHORIZE ALL KEYSTONE OPPORTUNITY ZONES BY
20 NOVEMBER 30, 1998. THE DEPARTMENT SHALL AUTHORIZE ALL KEYSTONE
21 OPPORTUNITY EXPANSION ZONES BY MARCH 30, 2001.
22 (D) EFFECTIVE DATE OF DESIGNATION.--THE DESIGNATION OF A
23 [KEYSTONE OPPORTUNITY ZONE] SUBZONE UNDER THIS ACT SHALL TAKE
24 EFFECT ON JANUARY 1, 1999. THE DESIGNATION OF AN EXPANSION
25 SUBZONE UNDER THIS ACT SHALL TAKE EFFECT ON JANUARY 1, 2001.
26 (E) EXTENSION.--THE DEPARTMENT MAY EXTEND THE DEADLINE FOR
27 THE RECEIPT OF APPLICATIONS [UNDER SUBSECTION (A)] FOR KEYSTONE
28 OPPORTUNITY ZONES UNTIL DECEMBER 31, 1998, IF ALL 12 ZONES HAVE
29 NOT BEEN [DESIGNATED] AUTHORIZED AND THE EXTENSION IS NECESSARY
30 TO ALLOW ELIGIBLE POLITICAL SUBDIVISIONS TO APPLY. THE
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1 DEPARTMENT SHALL [DESIGNATE] AUTHORIZE ADDITIONAL KEYSTONE
2 OPPORTUNITY ZONES UNDER THIS SUBSECTION BY FEBRUARY 28, 1999.
3 THE [DESIGNATION] AUTHORIZATION SHALL TAKE EFFECT JANUARY 1,
4 1999, OR IF THE [DESIGNATION] AUTHORIZATION OCCURS AFTER JANUARY
5 1, 1999, THAT SUBSEQUENT [DESIGNATION] AUTHORIZATION SHALL FOR
6 ALL PURPOSES BE RETROACTIVE TO JANUARY 1, 1999. THE
7 [DESIGNATION] KEYSTONE OPPORTUNITY ZONE AUTHORIZATION SHALL END
8 AS PROVIDED IN SECTION 301(B).
9 SECTION 304. CRITERIA FOR [DESIGNATION] AUTHORIZATION OF
10 KEYSTONE OPPORTUNITY ZONE.
11 (A) SPECIFIC CRITERIA.--IN ORDER TO QUALIFY FOR
12 [DESIGNATION] AUTHORIZATION under this act, the proposed
13 keystone opportunity zone or proposed keystone opportunity
14 expansion zone shall meet at least two of the following
15 criteria:
16 (1) At least 20% of the population is below the poverty
17 level.
18 (2) The unemployment rate is 1.25 times the Statewide
19 average.
20 (3) At least 20% of all real property within a five-mile
21 radius of the proposed keystone opportunity zone, proposed <--
22 keystone opportunity expansion zone or subzone [OR SUBZONE], <--
23 PROPOSED KEYSTONE OPPORTUNITY EXPANSION ZONE, PROPOSED
24 SUBZONE OR PROPOSED EXPANSION SUBZONE in a nonurban area is
25 deteriorated or underutilized.
26 (4) At least 20% of all real property within a one-mile
27 radius of the proposed keystone opportunity zone, proposed <--
28 keystone opportunity expansion zone or subzone [OR SUBZONE], <--
29 PROPOSED KEYSTONE OPPORTUNITY EXPANSION ZONE, PROPOSED
30 SUBZONE OR PROPOSED EXPANSION SUBZONE in an urban area is
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1 deteriorated or underutilized.
2 (5) At least 20% of all occupied housing within a two-
3 mile radius of the proposed keystone opportunity zone, <--
4 proposed keystone opportunity expansion zone or subzone [OR <--
5 SUBZONE], PROPOSED KEYSTONE OPPORTUNITY EXPANSION ZONE,
6 PROPOSED SUBZONE OR PROPOSED EXPANSION SUBZONE in a nonurban
7 area is deteriorated.
8 (6) At least 20% of all occupied housing within a one-
9 mile radius of the proposed keystone opportunity zone, <--
10 proposed keystone opportunity expansion zone or subzone [OR <--
11 SUBZONE], PROPOSED KEYSTONE OPPORTUNITY EXPANSION ZONE,
12 PROPOSED SUBZONE OR PROPOSED EXPANSION SUBZONE in an urban
13 area is deteriorated.
14 (7) In an urban area, the median family income is 80% or
15 less of the urban median family income for that metropolitan
16 statistical area.
17 (8) In an area other than an urban area, the median
18 family income is 80% or less of the Statewide nonurban median
19 family income.
20 (9) The population loss exceeds 10% in an area that
21 includes the proposed keystone opportunity zone or proposed
22 keystone opportunity expansion zone and its surrounding area
23 but is not larger than the county or counties in which the
24 proposed keystone opportunity zone or proposed keystone
25 opportunity expansion zone is located, based on census data
26 for the period between 1980 and 1990 or census estimates
27 since 1990 establishing a pattern of population loss.
28 (10) The political subdivision in which the proposed
29 keystone opportunity zone or proposed keystone opportunity
30 expansion zone is located has experienced a sudden and/or
20000H2498B4208 - 18 -
1 severe job loss.
2 (11) At least 33% of the real property in a proposed
3 keystone opportunity zone or proposed keystone opportunity
4 expansion zone in a nonurban area would otherwise remain
5 underdeveloped or nonperforming due to physical
6 characteristics of the real property.
7 (12) The area has substantial real property with
8 adequate infrastructure and energy to support new or expanded
9 development.
10 (b) Additional criteria.--In addition to the required
11 criteria under subsection (a), the department shall consider the
12 following criteria:
13 (1) Evidence of distress, including, but not limited to,
14 unemployment, percentage of population below 80% of the State
15 median income, poverty rate, deteriorated property and
16 adverse economic and socioeconomic conditions in the proposed
17 keystone opportunity zone or proposed keystone opportunity
18 expansion zone.
19 (2) The strength and viability of the proposed goals,
20 objectives and strategies in the opportunity plan.
21 (3) Whether the opportunity plan is creative and
22 innovative in comparison to other applications.
23 (4) Local public and private commitment to the
24 development of the proposed keystone opportunity zone or
25 proposed keystone opportunity expansion zone and the
26 potential cooperation of surrounding communities.
27 (5) Existing resources available to the proposed
28 keystone opportunity zone or proposed keystone opportunity
29 expansion zone.
30 (6) How keystone opportunity zone or keystone <--
20000H2498B4208 - 19 -
1 opportunity expansion zone [designation] OR KEYSTONE <--
2 OPPORTUNITY EXPANSION ZONE AUTHORIZATION or economic
3 redevelopment relates to other current economic and community
4 development projects and to regional initiatives or programs.
5 (7) How the local regulatory burden will be eased for
6 businesses operating in the proposed keystone opportunity
7 zone or proposed keystone opportunity expansion zone.
8 (8) Proposals to implement educational opportunities and
9 improvements.
10 (9) Crime statistics and proposals to implement local
11 crime reduction measures.
12 (10) Proposals to establish and link job creation and
13 job training.
14 (c) Tax exemption ordinances.--An area shall not be
15 [designated] AUTHORIZED as a keystone opportunity zone or a <--
16 keystone opportunity expansion zone unless, as a part of the
17 application, each political subdivision in which the proposed
18 keystone opportunity zone or proposed keystone opportunity <--
19 expansion zone [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR PROPOSED <--
20 EXPANSION SUBZONE is to be located adopts and provides a copy of
21 an ordinance, resolution or other required action from the
22 governing body of each political subdivision that exempts or
23 provides deductions, abatements or credits to qualified persons
24 and qualified businesses from local taxes upon designation of
25 the area as a keystone opportunity zone or keystone opportunity <--
26 expansion zone. All appropriate ordinances and resolutions shall
27 be effective on or before January 1, 1999, if designation as a
28 keystone opportunity zone is granted. All appropriate ordinances
29 and resolutions shall be effective on January 1, 2001, if
30 designation as a keystone opportunity expansion zone is granted.
20000H2498B4208 - 20 -
1 The resolution, ordinance or other required action shall be
2 binding and nonrevocable on the qualified political subdivisions
3 for the duration of the opportunity plan.
4 (d) Urban areas.--The department shall promulgate guidelines
5 [which] that include the definition of "urban area" for the
6 purposes of receiving applications for designation as a keystone
7 opportunity zone or keystone opportunity expansion zone.
8 Section 305. Zone limitations.
9 The department shall not designate more than 12 keystone
10 opportunity zones within this Commonwealth. No keystone
11 opportunity zone shall encompass an entire political
12 subdivision. The department shall not designate more than 12
13 keystone opportunity expansion zones within this Commonwealth.
14 No keystone opportunity expansion zone shall encompass an entire
15 political subdivision.
16 Section 306. Residency.
17 In order to qualify each year for a tax exemption, deduction,
18 abatement or credit under this act, a person shall be domiciled
19 and shall reside in the keystone opportunity zone or keystone
20 opportunity expansion zone for a period of 184 consecutive days
21 during each taxable year, which may begin on the date of
22 designation by the department or on the date the person first
23 resides within the zone.
24 Section 307. Qualified businesses.
25 (a) Qualifications.--In order to qualify each year for a tax
26 exemption, deduction, abatement or credit under this act, a
27 business shall own or lease real property in the keystone
28 opportunity zone or keystone opportunity expansion zone from
29 which the business actively conducts a trade, profession or
30 business. The qualified business shall receive certification
20000H2498B4208 - 21 -
1 from the department that the business is located, and is in the
2 active conduct of a trade, profession or business, within the
3 keystone opportunity zone or keystone opportunity expansion
4 zone. The business shall obtain annual renewal of the
5 certification from the department to continue to qualify under
6 this section.
7 (b) Relocation.--Any business that relocates from outside a
8 keystone opportunity zone or keystone opportunity expansion zone
9 into a keystone opportunity zone or keystone opportunity
10 expansion zone shall not receive any of the exemptions,
11 deductions, abatements or credits set forth in this act unless
12 that business either:
13 (1) increases full-time employment by at least 20% in
14 the first full year of operation within the keystone
15 opportunity zone or keystone opportunity expansion zone; or
16 (2) makes a capital investment in the property located
17 within a keystone opportunity zone or keystone opportunity
18 expansion zone equivalent to 10% of the gross revenues of
19 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE. ALL <--
20 APPROPRIATE ORDINANCES AND RESOLUTIONS SHALL BE EFFECTIVE ON
21 OR BEFORE JANUARY 1, 1999, IF DESIGNATION AS A [KEYSTONE
22 OPPORTUNITY] SUBZONE IS GRANTED. ALL APPROPRIATE ORDINANCES
23 AND RESOLUTIONS SHALL BE EFFECTIVE ON JANUARY 1, 2001, IF
24 DESIGNATION AS AN EXPANSION SUBZONE IS GRANTED. THE
25 RESOLUTION, ORDINANCE OR OTHER REQUIRED ACTION SHALL BE
26 BINDING AND NONREVOCABLE ON THE QUALIFIED POLITICAL
27 SUBDIVISIONS FOR THE DURATION OF THE OPPORTUNITY PLAN.
28 (D) URBAN AREAS.--THE DEPARTMENT SHALL PROMULGATE GUIDELINES
29 [WHICH] THAT INCLUDE THE DEFINITION OF "URBAN AREA" FOR THE
30 PURPOSES OF RECEIVING APPLICATIONS FOR [DESIGNATION]
20000H2498B4208 - 22 -
1 AUTHORIZATION AS A KEYSTONE OPPORTUNITY ZONE OR KEYSTONE
2 OPPORTUNITY EXPANSION ZONE.
3 SECTION 305. ZONE LIMITATIONS.
4 THE DEPARTMENT SHALL NOT [DESIGNATE] AUTHORIZE MORE THAN 12
5 KEYSTONE OPPORTUNITY ZONES WITHIN THIS COMMONWEALTH. NO
6 [KEYSTONE OPPORTUNITY ZONE] SUBZONE SHALL ENCOMPASS AN ENTIRE
7 POLITICAL SUBDIVISION. THE DEPARTMENT SHALL NOT AUTHORIZE MORE
8 THAN 12 KEYSTONE OPPORTUNITY EXPANSION ZONES WITHIN THIS
9 COMMONWEALTH. NO EXPANSION SUBZONES SHALL ENCOMPASS AN ENTIRE
10 POLITICAL SUBDIVISION.
11 SECTION 306. RESIDENCY.
12 IN ORDER TO QUALIFY EACH YEAR FOR A TAX EXEMPTION, DEDUCTION,
13 ABATEMENT OR CREDIT UNDER THIS ACT, A PERSON SHALL BE DOMICILED
14 AND SHALL RESIDE IN [THE KEYSTONE OPPORTUNITY ZONE] A SUBZONE OR
15 EXPANSION SUBZONE FOR A PERIOD OF 184 CONSECUTIVE DAYS DURING
16 EACH TAXABLE YEAR, WHICH MAY BEGIN ON THE DATE OF DESIGNATION BY
17 THE DEPARTMENT OR ON THE DATE THE PERSON FIRST RESIDES WITHIN
18 THE [ZONE] SUBZONE OR EXPANSION SUBZONE.
19 SECTION 307. QUALIFIED BUSINESSES.
20 (A) QUALIFICATIONS.--IN ORDER TO QUALIFY EACH YEAR FOR A TAX
21 EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT UNDER THIS ACT, A
22 BUSINESS SHALL OWN OR LEASE REAL PROPERTY IN [THE KEYSTONE
23 OPPORTUNITY ZONE] A SUBZONE OR EXPANSION SUBZONE FROM WHICH THE
24 BUSINESS ACTIVELY CONDUCTS A TRADE, PROFESSION OR BUSINESS. THE
25 QUALIFIED BUSINESS SHALL RECEIVE CERTIFICATION FROM THE
26 DEPARTMENT THAT THE BUSINESS IS LOCATED, AND IS IN THE ACTIVE
27 CONDUCT OF A TRADE, PROFESSION OR BUSINESS, WITHIN THE [KEYSTONE
28 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE. THE BUSINESS
29 SHALL OBTAIN ANNUAL RENEWAL OF THE CERTIFICATION FROM THE
30 DEPARTMENT TO CONTINUE TO QUALIFY UNDER THIS SECTION.
20000H2498B4208 - 23 -
1 (B) RELOCATION.--ANY BUSINESS THAT RELOCATES FROM OUTSIDE A
2 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE INTO A
3 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE SHALL
4 NOT RECEIVE ANY OF THE EXEMPTIONS, DEDUCTIONS, ABATEMENTS OR
5 CREDITS SET FORTH IN THIS ACT UNLESS THAT BUSINESS EITHER:
6 (1) INCREASES FULL-TIME EMPLOYMENT BY AT LEAST 20% IN
7 THE FIRST FULL YEAR OF OPERATION WITHIN THE [KEYSTONE
8 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE; OR
9 (2) MAKES A CAPITAL INVESTMENT IN THE PROPERTY LOCATED
10 WITHIN A [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION
11 SUBZONE EQUIVALENT TO 10% OF THE GROSS REVENUES OF that
12 business in the immediately preceding calendar or fiscal
13 year.
14 The department, in consultation with the Department of Revenue,
15 may waive or modify the requirements of this subsection, as
16 appropriate.
17 Section 308. Forms.
18 (a) Application forms.--Applications for [designation] <--
19 AUTHORIZATION as a keystone opportunity zone or keystone <--
20 opportunity expansion zone shall be on forms prescribed by the
21 department.
22 (b) Department assistance.--The department shall assist
23 political subdivisions in using the Internet as a tool for
24 encouraging new business development, including assisting
25 political subdivisions in making available via the Internet
26 information, applications and other forms necessary under this
27 act.
28 Section 501. State taxes.
29 (a) General rule.--A person who is a resident of a keystone <--
30 opportunity zone or a keystone opportunity expansion zone, a
20000H2498B4208 - 24 -
1 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE, A <--
2 qualified business or a nonresident under section 513 shall
3 receive the exemptions, deductions, abatements or credits as
4 provided in this chapter and Chapter 7 for the duration of the
5 keystone opportunity zone or keystone opportunity expansion zone <--
6 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE <--
7 designation. Exemptions, deductions, abatements or credits shall
8 expire on the date of expiration of the keystone opportunity <--
9 zone or keystone opportunity expansion zone designation.
10 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE <--
11 DESIGNATION.
12 (b) Construction.--The Department of Revenue shall
13 administer, construe and enforce the provisions of this chapter
14 in conjunction with Articles II, III, IV [and], VI, VII, VII-A,
15 IX and XV of the Tax Reform Code of 1971.
16 Section 511. Sales and use tax.
17 (a) Exemption.--Sales at retail of services or tangible
18 personal property, other than motor vehicles, to a qualified
19 business for the exclusive use, consumption and utilization of
20 the tangible personal property or service by the qualified
21 business at its facility located within a [keystone opportunity <--
22 zone or a keystone opportunity expansion zone are exempt from <--
23 ZONE] SUBZONE OR EXPANSION SUBZONE ARE EXEMPT FROM the sales and <--
24 use tax imposed under Article II of the Tax Reform Code of 1971.
25 [(b) Limitation.--Sales at retail or use of tangible
26 personal property or services to the tangible personal property
27 that will become a permanent part of real property in accordance
28 with Department of Revenue regulations shall not be eligible for
29 sales or use tax exemption under this section.]
30 (b) Construction contracts.--For any construction contract
20000H2498B4208 - 25 -
1 performed in a keystone opportunity zone or keystone opportunity <--
2 expansion zone SUBZONE OR EXPANSION SUBZONE, the exemption <--
3 provided in subsection (a) shall only apply to the sale at
4 retail or use of building machinery and equipment to a qualified
5 business, or to a construction contractor pursuant to a
6 construction contract with a qualified business, for the
7 exclusive use, consumption and utilization by the qualified <--
8 business at its facility in a keystone opportunity zone or
9 keystone opportunity expansion zone. For the purposes of the
10 keystone opportunity zone and keystone opportunity expansion
11 zone exemption, building machinery and equipment shall include
12 distribution equipment purchased for the exclusive use,
13 consumption and utilization in a keystone opportunity zone or
14 keystone opportunity expansion zone facility. THE QUALIFIED <--
15 BUSINESS AT ITS FACILITY IN A SUBZONE OR EXPANSION SUBZONE. FOR
16 THE PURPOSES OF THE SUBZONE OR EXPANSION SUBZONE EXEMPTION,
17 BUILDING MACHINERY AND EQUIPMENT SHALL INCLUDE DISTRIBUTION
18 EQUIPMENT PURCHASED FOR THE EXCLUSIVE USE, CONSUMPTION AND
19 UTILIZATION IN A SUBZONE OR EXPANSION SUBZONE FACILITY.
20 Section 512. Personal income tax.
21 (a) General rule.--[For the 1999 taxable year and each tax
22 year after 1999 and to the extent and for the duration provided
23 in this act a] A person shall be allowed an exemption for:
24 (1) Compensation received during the time period when
25 the person was a resident of a keystone opportunity zone or <--
26 keystone opportunity expansion zone. THE PERSON WAS A <--
27 RESIDENT OF A [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
28 EXPANSION SUBZONE.
29 (2) Net income from the operation of a qualified
30 business received by a resident or nonresident of a keystone <--
20000H2498B4208 - 26 -
1 opportunity zone or keystone opportunity expansion zone
2 attributable to business activity conducted within a keystone
3 opportunity zone [after provision for all costs and expenses
4 incurred in the conduct thereof] or keystone opportunity
5 expansion zone, determined [either on a cash or accrual
6 basis] in accordance with [accepted accounting principles and
7 practices but without deduction of taxes based on income.]
8 section 515 of this act, except that any business that
9 operates both within and outside this Commonwealth, before
10 computing its keystone opportunity zone or keystone
11 opportunity expansion zone exemption, shall first determine
12 BUSINESS RECEIVED BY A RESIDENT OR NONRESIDENT OF A [KEYSTONE <--
13 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE ATTRIBUTABLE
14 TO BUSINESS ACTIVITY CONDUCTED WITHIN A [KEYSTONE OPPORTUNITY
15 ZONE AFTER PROVISION FOR ALL COSTS AND EXPENSES INCURRED IN
16 THE CONDUCT THEREOF] SUBZONE OR EXPANSION SUBZONE, DETERMINED
17 [EITHER ON A CASH OR ACCRUAL BASIS] IN ACCORDANCE WITH
18 [ACCEPTED ACCOUNTING PRINCIPLES AND PRACTICES BUT WITHOUT
19 DEDUCTION OF TAXES BASED ON INCOME.] SECTION 515, EXCEPT THAT
20 ANY BUSINESS THAT OPERATES BOTH WITHIN AND OUTSIDE THIS
21 COMMONWEALTH, BEFORE COMPUTING ITS SUBZONE OR EXPANSION
22 SUBZONE EXEMPTION, SHALL FIRST DETERMINE its Pennsylvania
23 activity over its activity everywhere by applying the three-
24 factor apportionment formula as set forth in Department of
25 Revenue personal income tax regulations applicable to income
26 apportionment in connection with a business, trade or
27 profession carried on both within and outside this
28 Commonwealth.
29 (3) All of the following:
30 (i) Net gains or income, less net losses, derived by
20000H2498B4208 - 27 -
1 a resident or nonresident of a keystone opportunity zone <--
2 or keystone opportunity expansion zone [KEYSTONE <--
3 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE from the
4 sale, exchange or other disposition of real or tangible
5 personal property located in a keystone opportunity zone <--
6 or keystone opportunity expansion zone [KEYSTONE <--
7 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE as
8 determined in accordance with accepted accounting
9 principles and practices. The exemption provided in this
10 subparagraph shall not apply to the sale, exchange or
11 other disposition of any stock of goods, merchandise or
12 inventory, or any operational assets unless the transfer
13 is in connection with the sale, exchange or other
14 disposition of all of the assets in complete liquidation
15 of a qualified business located in a keystone opportunity <--
16 zone or keystone opportunity expansion zone. This
17 subparagraph shall apply to intangible personal property
18 employed in a trade, profession or business in a keystone
19 opportunity zone or keystone opportunity expansion zone
20 by a qualified business, but only when transferred in
21 connection with a sale, exchange or other disposition of
22 all of the assets in complete liquidation of the
23 qualified business in the keystone opportunity zone or
24 keystone opportunity expansion zone.
25 (ii) Net gains, less net losses, realized by a
26 resident of a keystone opportunity zone or keystone
27 opportunity expansion zone from the sale, exchange or OF <--
28 A QUALIFIED BUSINESS LOCATED IN A SUBZONE OR EXPANSION
29 SUBZONE. THIS SUBPARAGRAPH SHALL APPLY TO INTANGIBLE
30 PERSONAL PROPERTY EMPLOYED IN A TRADE, PROFESSION OR
20000H2498B4208 - 28 -
1 BUSINESS IN A SUBZONE OR EXPANSION SUBZONE BY A QUALIFIED
2 BUSINESS, BUT ONLY WHEN TRANSFERRED IN CONNECTION WITH A
3 SALE, EXCHANGE OR OTHER DISPOSITION OF ALL OF THE ASSETS
4 IN COMPLETE LIQUIDATION OF THE QUALIFIED BUSINESS IN THE
5 SUBZONE OR EXPANSION SUBZONE.
6 (II) NET GAINS, LESS NET LOSSES, REALIZED BY A
7 RESIDENT OF A [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
8 EXPANSION SUBZONE FROM THE SALE, EXCHANGE OR disposition
9 of intangible personal property or obligations issued on
10 or after February 1, 1994, by the Commonwealth, a public
11 authority, commission, board or other Commonwealth
12 agency, political subdivision or authority created by a
13 political subdivision or by the Federal Government as
14 determined in accordance with accepted accounting
15 principles and practices.
16 (iii) The exemption from income for gain or loss
17 provided for in [this subparagraph] subparagraphs (i) and
18 (ii) shall be prorated based on [either] the following:
19 (A) In the case of gains, less net losses, in
20 subparagraph (i), the percentage of time, based on
21 calendar days, the property located in a keystone <--
22 opportunity zone or keystone opportunity expansion
23 zone SUBZONE OR EXPANSION SUBZONE was held by [the <--
24 taxpayer while] a resident or nonresident of [a
25 keystone opportunity] the zone during the time period
26 the zone was in effect in relation to the total time
27 the property was held [by the taxpayer; or].
28 (B) In the case of gains, less net losses, in
29 subparagraph (ii), the percentage of time, based on
30 calendar days, the [real or tangible personal]
20000H2498B4208 - 29 -
1 property [located in the keystone opportunity zone]
2 was held by the taxpayer while a [nonresident]
3 resident of a keystone opportunity zone [during the <--
4 time period the keystone opportunity zone was in
5 effect] or keystone opportunity expansion zone in
6 relation to the total time the [real or tangible
7 personal] property was held [by a nonresident].
8 (4) Net gains or income derived from or in the form of
9 rents received by a person, whether a resident or nonresident
10 of a keystone opportunity zone or keystone opportunity
11 expansion zone, to the extent that income or loss from the
12 rental of real or tangible personal property is allocable to
13 a keystone opportunity zone or keystone opportunity expansion
14 zone. For purposes of calculating this exemption:
15 (i) Net rents derived from real or tangible personal
16 property located in a keystone opportunity zone or
17 keystone opportunity expansion zone are allocable to a
18 keystone opportunity zone or keystone opportunity
19 expansion zone.
20 (ii) If the tangible personal property was used both
21 within and without the keystone opportunity zone or
22 keystone opportunity expansion zone during the taxable
23 year, only the net income attributable to use in the
24 keystone opportunity zone or keystone opportunity
25 expansion zone is exempt. The net rental income shall be
26 multiplied by a fraction, the numerator of which is the
27 number of days the property was used in the keystone
28 opportunity zone or keystone opportunity expansion zone
29 and the denominator which is the total days of use.
30 (5) Dividends received during the time the person was a
20000H2498B4208 - 30 -
1 resident of a keystone opportunity zone or keystone
2 opportunity expansion zone.
3 (6) Interest received during the time period the person
4 was a resident of a keystone opportunity zone or keystone
5 opportunity expansion zone. RESIDENT OF A [KEYSTONE <--
6 OPPORTUNITY ZONE DURING THE TIME PERIOD THE KEYSTONE
7 OPPORTUNITY ZONE WAS IN EFFECT] SUBZONE OR EXPANSION SUBZONE
8 IN RELATION TO THE TOTAL TIME THE [REAL OR TANGIBLE PERSONAL]
9 PROPERTY WAS HELD [BY A NONRESIDENT].
10 (4) NET GAINS OR INCOME DERIVED FROM OR IN THE FORM OF
11 RENTS [RECEIVED BY A PERSON, WHETHER A RESIDENT OR
12 NONRESIDENT OF A KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
13 EXPANSION SUBZONE, TO THE EXTENT THAT INCOME OR LOSS FROM THE
14 RENTAL OF REAL OR TANGIBLE PERSONAL PROPERTY IS ALLOCABLE TO
15 A [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE.
16 FOR PURPOSES OF CALCULATING THIS EXEMPTION:
17 (I) NET RENTS DERIVED FROM REAL OR TANGIBLE PERSONAL
18 PROPERTY LOCATED IN A [KEYSTONE OPPORTUNITY ZONE] SUBZONE
19 OR EXPANSION SUBZONE ARE ALLOCABLE TO A [KEYSTONE
20 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE.
21 (II) IF THE TANGIBLE PERSONAL PROPERTY WAS USED BOTH
22 WITHIN AND WITHOUT THE [KEYSTONE OPPORTUNITY ZONE]
23 SUBZONE OR EXPANSION SUBZONE DURING THE TAXABLE YEAR,
24 ONLY THE NET INCOME ATTRIBUTABLE TO USE IN THE [KEYSTONE
25 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE IS EXEMPT.
26 THE NET RENTAL INCOME SHALL BE MULTIPLIED BY A FRACTION,
27 THE NUMERATOR OF WHICH IS THE NUMBER OF DAYS THE PROPERTY
28 WAS USED IN THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
29 EXPANSION SUBZONE AND THE DENOMINATOR WHICH IS THE TOTAL
30 DAYS OF USE.
20000H2498B4208 - 31 -
1 (5) DIVIDENDS RECEIVED DURING THE TIME THE PERSON WAS A
2 RESIDENT OF A [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
3 EXPANSION SUBZONE.
4 (6) INTEREST RECEIVED DURING THE TIME PERIOD THE PERSON
5 WAS A RESIDENT OF A [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
6 EXPANSION SUBZONE.
7 (7) [Net gains or income derived through estates or
8 trusts received by a resident of a keystone opportunity zone
9 at the time of such receipt.] The part of the income or gains
10 received by an estate or trust for its taxable year ending
11 within or with the resident-beneficiary's taxable year,
12 which, under the governing instrument and applicable State
13 law, is required to be distributed currently or is in fact
14 paid or credited to the resident-beneficiary and which would
15 have been exempt under this act if received by a resident-
16 beneficiary directly.
17 (a.1) Exemption.--Beginning in taxable year 1999, a person
18 located in a designated keystone opportunity zone SUBZONE shall <--
19 be allowed an exemption under subsection (a) from the tax
20 imposed by Article III of the Tax Reform Code of 1971 for the
21 classes of income set forth in subsection (a). Beginning in
22 taxable year 2001, a person located in a designated keystone <--
23 opportunity expansion zone EXPANSION SUBZONE shall be allowed an <--
24 exemption under subsection (a) from the tax imposed by Article
25 III of the Tax Reform Code of 1971 for the classes of income set
26 forth in subsection (a).
27 (a.2) Pass-through entities.--The exemptions provided for in
28 this section SUBSECTION (A)(2), (3)(I) AND (4) shall apply to <--
29 all of the following:
30 (1) The income or gain of a partnership or association.
20000H2498B4208 - 32 -
1 The partner or member shall be entitled to the exemptions
2 under this section for the partner's or member's share,
3 whether or not distributed, of the income or gain received by
4 the partnership or association for its taxable year.
5 (2) The income or gain of a Pennsylvania S corporation.
6 The shareholder shall be entitled to the exemptions under
7 this section for the shareholder's pro rata share, whether or
8 not distributed, of the income or gain received by the
9 corporation for its taxable year ending within or with the
10 shareholder's taxable year.
11 (b) Limitation.--A partnership, association, Subchapter S
12 corporation, resident or nonresident may not apply an exemption
13 from income under this act for any class of income against any
14 other classes of income or gain. A partnership, association,
15 Subchapter S corporation, resident or nonresident may not carry
16 back or carry forward any exemption under this act from year to
17 year. The credit allowed under this section shall not exceed the
18 tax liability of the taxpayer under Article III of the Tax
19 Reform Code of 1971 for the tax year.
20 (c) Section not applicable to certain entities.--Any portion
21 of net income or gain that is attributable to operation of a
22 railroad, truck, bus or airline company, pipeline or natural gas
23 company, water transportation company, an entity which would
24 qualify as a regulated investment company under Article IV of
25 the Tax Reform Code of 1971 or would qualify as a holding
26 company under Article VI of the Tax Reform Code of 1971 and any <--
27 entity activity which is associated or affiliated with any of
28 these operations shall not be used to calculate an exemption
29 under this section. This subsection shall not apply to the
30 exemption from tax provided in subsection (a)(5).
20000H2498B4208 - 33 -
1 Section 513. Residency considerations.
2 If a person completes the residency requirements under
3 section 306 or if a nonresident realizes income attributable to
4 business activity or property within a keystone opportunity zone <--
5 or keystone opportunity expansion zone [KEYSTONE OPPORTUNITY <--
6 ZONE] SUBZONE OR EXPANSION SUBZONE on or before the end of the
7 tax year, the person may claim the exemptions from income for
8 the items set forth in section 512 for that portion of the tax
9 year that the person was a resident or for that portion of the
10 tax year during which the area is designated as a keystone <--
11 opportunity zone or keystone opportunity expansion zone. [If the
12 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE. [IF <--
13 THE person meets the residency requirements under section 306 in
14 a tax year subsequent to the tax year in which the person first
15 resided in the keystone opportunity zone, the person may file an
16 amended tax return within the applicable statute of limitations
17 to claim an exemption from income for the period of residency
18 within the keystone opportunity zone.
19 Section 514. Information for employer.
20 (a) Duty of employee.--Every person who is an employee that
21 qualifies as a resident of a keystone opportunity zone shall
22 furnish to his or her employer information, as prescribed by the
23 Department of Revenue, necessary for the employer to withhold
24 the correct amount of tax. An employee shall furnish
25 notification to his or her employer of any changes to the
26 information within 20 days after the change. An employee shall
27 notify his or her employer that the employee has completed the
28 residency requirements under section 306.
29 (b) Duty of employer.--Within 20 days after an employer
30 receives information from an employee pursuant to subsection
20000H2498B4208 - 34 -
1 (a), the employer shall forward a copy of that information to
2 the Department of Revenue. The information shall not be given
3 retroactive effect for withholding purposes. The employer shall
4 not be required to withhold tax from the compensation paid to a
5 resident of a keystone opportunity zone, if reasonable under the
6 circumstances, unless directed by the Department of Revenue to
7 withhold tax from the compensation on some other basis. If an
8 employee fails or refuses to furnish the information or
9 furnishes information that the employer reasonably and in good
10 faith believes to be inaccurate, the employer shall withhold the
11 full rate of tax from the employee's total compensation.]
12 Section 515. Corporate net income tax.
13 (a) Credits.--For the tax years that begin on or after
14 January 1, 1999, a corporation that [qualifies as] is a
15 qualified business under this act may claim a credit against the
16 tax imposed by Article IV of the Tax Reform Code of 1971 for
17 [the taxable year to the extent of the] tax liability
18 attributable to business activity conducted within [a] the <--
19 keystone opportunity zone [A KEYSTONE OPPORTUNITY ZONE] THE <--
20 SUBZONE in the taxable year. For the tax years that begin on or
21 after January 1, 2001, a corporation that is a qualified
22 business under this act may claim a credit against the tax
23 imposed by Article IV of the Tax Reform Code of 1971 for tax
24 liability attributable to business activity conducted within the
25 keystone opportunity expansion zone EXPANSION SUBZONE in the <--
26 taxable year. The business activity must be conducted directly
27 by a corporation in the keystone opportunity zone or keystone <--
28 opportunity expansion zone THE [KEYSTONE OPPORTUNITY ZONE] <--
29 SUBZONE OR EXPANSION SUBZONE in order for the corporation to
30 claim the tax credit.
20000H2498B4208 - 35 -
1 (b) Tax liability determinations.--The corporate tax
2 liability attributable to business activity conducted within a
3 keystone opportunity zone or keystone opportunity expansion zone <--
4 shall be determined by multiplying the corporation's taxable
5 income that is attributable to business activity conducted
6 within the keystone opportunity zone or keystone opportunity
7 expansion zone by the rate of tax imposed under Article IV of
8 the Tax Reform Code of 1971 for the taxable year.
9 (c) Determinations of attributable tax liability.--Tax
10 liability attributable to business activity conducted within a
11 keystone opportunity zone or keystone opportunity expansion zone
12 shall be computed, construed, administered and enforced in
13 conformity with Article IV of the Tax Reform Code of 1971 and
14 with specific reference to the following:
15 (1) If the entire business of the corporation in this
16 Commonwealth is transacted wholly within the keystone
17 opportunity zone or keystone opportunity expansion zone, the
18 taxable income attributable to business activity within a
19 keystone opportunity zone or keystone opportunity expansion
20 zone shall consist of the Pennsylvania taxable income as
21 determined under Article IV of the Tax Reform Code of 1971.
22 (2) If the entire business of the corporation in this
23 Commonwealth is not transacted wholly within the keystone
24 opportunity zone or keystone opportunity expansion zone, the
25 taxable income of a corporation in a keystone opportunity
26 zone or keystone opportunity expansion zone shall be
27 determined upon such portion of the Pennsylvania taxable
28 income of such corporation attributable to business activity
29 conducted within the keystone opportunity zone or keystone
30 opportunity expansion zone and apportioned in accordance with
20000H2498B4208 - 36 -
1 subsection (d). [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR <--
2 EXPANSION SUBZONE SHALL BE DETERMINED BY MULTIPLYING THE
3 CORPORATION'S TAXABLE INCOME THAT IS ATTRIBUTABLE TO BUSINESS
4 ACTIVITY CONDUCTED WITHIN THE [KEYSTONE OPPORTUNITY ZONE]
5 SUBZONE OR EXPANSION SUBZONE BY THE RATE OF TAX IMPOSED UNDER
6 ARTICLE IV OF THE TAX REFORM CODE OF 1971 FOR THE TAXABLE
7 YEAR.
8 (C) DETERMINATIONS OF ATTRIBUTABLE TAX LIABILITY.--TAX
9 LIABILITY ATTRIBUTABLE TO BUSINESS ACTIVITY CONDUCTED WITHIN A
10 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE SHALL
11 BE COMPUTED, CONSTRUED, ADMINISTERED AND ENFORCED IN CONFORMITY
12 WITH ARTICLE IV OF THE TAX REFORM CODE OF 1971 AND WITH SPECIFIC
13 REFERENCE TO THE FOLLOWING:
14 (1) IF THE ENTIRE BUSINESS OF THE CORPORATION IN THIS
15 COMMONWEALTH IS TRANSACTED WHOLLY WITHIN THE [KEYSTONE
16 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE, THE TAXABLE
17 INCOME ATTRIBUTABLE TO BUSINESS ACTIVITY WITHIN A [KEYSTONE
18 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE SHALL CONSIST
19 OF THE PENNSYLVANIA TAXABLE INCOME AS DETERMINED UNDER
20 ARTICLE IV OF THE TAX REFORM CODE OF 1971.
21 (2) IF THE ENTIRE BUSINESS OF THE CORPORATION IN THIS
22 COMMONWEALTH IS NOT TRANSACTED WHOLLY WITHIN THE [KEYSTONE
23 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE, THE TAXABLE
24 INCOME OF A CORPORATION IN A [KEYSTONE OPPORTUNITY ZONE]
25 SUBZONE OR EXPANSION SUBZONE SHALL BE DETERMINED UPON SUCH
26 PORTION OF THE PENNSYLVANIA TAXABLE INCOME OF SUCH
27 CORPORATION ATTRIBUTABLE TO BUSINESS ACTIVITY CONDUCTED
28 WITHIN THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION
29 SUBZONE AND APPORTIONED IN ACCORDANCE WITH SUBSECTION (D).
30 (d) Income apportionment.--[All taxable income of] The
20000H2498B4208 - 37 -
1 taxable income of a corporation that is a qualified business
2 shall be apportioned to the keystone opportunity zone or <--
3 keystone opportunity expansion zone by multiplying the SHALL BE <--
4 APPORTIONED TO THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
5 EXPANSION SUBZONE BY MULTIPLYING THE Pennsylvania taxable income
6 by a fraction, the numerator of which is the property factor
7 plus the payroll factor plus the sales factor and the
8 denominator of which is three[.], in accordance with the
9 following:
10 (1) The property factor is a fraction, the numerator of
11 which is the average value of the taxpayer's real and
12 tangible personal property owned or rented and used in the
13 keystone opportunity zone or keystone opportunity expansion <--
14 zone [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE <--
15 during the tax period and the denominator of which is the
16 average value of all the taxpayer's real and tangible
17 personal property owned or rented and used in this
18 Commonwealth during the tax period but shall not include the
19 security interest of any corporation as seller or lessor in
20 personal property sold or leased under a conditional sale,
21 bailment lease, chattel mortgage or other contract providing
22 for the retention of a lien or title as security for the
23 sales price of the property.
24 (2) (i) The payroll factor is a fraction, the numerator
25 of which is the total amount paid in the keystone <--
26 opportunity zone or keystone opportunity expansion zone
27 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE <--
28 during the tax period by the taxpayer for compensation
29 and the denominator of which is the total compensation
30 paid in this Commonwealth during the tax period.
20000H2498B4208 - 38 -
1 (ii) Compensation is paid in the keystone <--
2 opportunity zone or keystone opportunity expansion zone
3 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE <--
4 if:
5 (A) the person's service is performed entirely
6 within the keystone opportunity zone or keystone <--
7 opportunity expansion zone;
8 (B) the person's service is performed both
9 within and without the keystone opportunity zone or
10 keystone opportunity expansion zone, but the service
11 performed without the keystone opportunity zone or
12 keystone opportunity expansion zone is incidental to
13 the person's service within the keystone opportunity
14 zone or keystone opportunity expansion zone; or
15 (C) some of the service is performed in the
16 keystone opportunity zone or keystone opportunity
17 expansion zone and the base of operations or, if
18 there is no base of operations, the place from which
19 the service is directed or controlled is in the
20 keystone opportunity zone or keystone opportunity
21 expansion zone, or the base of operations or the
22 place from which the service is directed or
23 controlled is not in any location in which some part
24 of the service is performed, but the person's
25 residence is in the keystone opportunity zone or
26 keystone opportunity expansion zone.
27 (3) The sales factor is a fraction, the numerator of
28 which is the total sales of the taxpayer in the keystone
29 opportunity zone or keystone opportunity expansion zone
30 during the tax period and the denominator of which is the
20000H2498B4208 - 39 -
1 total sales of the taxpayer in this Commonwealth during the
2 tax period.
3 (i) Sales of tangible personal property are in the
4 keystone opportunity zone or keystone opportunity
5 expansion zone if the property is delivered or shipped to
6 a purchaser within the keystone opportunity zone or
7 keystone opportunity expansion zone regardless of the
8 F.O.B. point or other conditions of the sale.
9 (ii) Sales other than sales of tangible personal
10 property are in the keystone opportunity zone or keystone
11 opportunity expansion zone if:
12 (A) the income-producing activity is performed
13 in the keystone opportunity zone or keystone
14 opportunity expansion zone; or
15 (B) the income-producing activity is performed
16 both within and without the keystone opportunity zone
17 or keystone opportunity expansion zone and a greater
18 proportion of the income-producing activity is
19 performed in the keystone opportunity zone or
20 keystone opportunity expansion zone than in any other
21 location, based on costs of performance.
22 (e) Computation.--A corporation shall compute its
23 Commonwealth taxable income in conformity with Article IV of the
24 Tax Reform Code of 1971 with no adjustments or subtractions for
25 keystone opportunity zone or keystone opportunity expansion zone
26 taxable income.
27 WITHIN THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR <--
28 EXPANSION SUBZONE;
29 (B) THE PERSON'S SERVICE IS PERFORMED BOTH
30 WITHIN AND WITHOUT THE [KEYSTONE OPPORTUNITY ZONE]
20000H2498B4208 - 40 -
1 SUBZONE OR EXPANSION SUBZONE, BUT THE SERVICE
2 PERFORMED WITHOUT THE [KEYSTONE OPPORTUNITY ZONE]
3 SUBZONE OR EXPANSION SUBZONE IS INCIDENTAL TO THE
4 PERSON'S SERVICE WITHIN THE [KEYSTONE OPPORTUNITY
5 ZONE] SUBZONE OR EXPANSION SUBZONE; OR
6 (C) SOME OF THE SERVICE IS PERFORMED IN THE
7 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION
8 SUBZONE AND THE BASE OF OPERATIONS OR, IF THERE IS NO
9 BASE OF OPERATIONS, THE PLACE FROM WHICH THE SERVICE
10 IS DIRECTED OR CONTROLLED IS IN THE [KEYSTONE
11 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE, OR
12 THE BASE OF OPERATIONS OR THE PLACE FROM WHICH THE
13 SERVICE IS DIRECTED OR CONTROLLED IS NOT IN ANY
14 LOCATION IN WHICH SOME PART OF THE SERVICE IS
15 PERFORMED, BUT THE PERSON'S RESIDENCE IS IN THE
16 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION
17 SUBZONE.
18 (3) THE SALES FACTOR IS A FRACTION, THE NUMERATOR OF
19 WHICH IS THE TOTAL SALES OF THE TAXPAYER IN THE [KEYSTONE
20 OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE DURING THE TAX
21 PERIOD AND THE DENOMINATOR OF WHICH IS THE TOTAL SALES OF THE
22 TAXPAYER IN THIS COMMONWEALTH DURING THE TAX PERIOD.
23 (I) SALES OF TANGIBLE PERSONAL PROPERTY ARE IN THE
24 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE
25 IF THE PROPERTY IS DELIVERED OR SHIPPED TO A PURCHASER
26 WITHIN THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
27 EXPANSION SUBZONE REGARDLESS OF THE F.O.B. POINT OR OTHER
28 CONDITIONS OF THE SALE.
29 (II) SALES OTHER THAN SALES OF TANGIBLE PERSONAL
30 PROPERTY ARE IN THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE
20000H2498B4208 - 41 -
1 OR EXPANSION SUBZONE IF:
2 (A) THE INCOME-PRODUCING ACTIVITY IS PERFORMED
3 IN THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR
4 EXPANSION SUBZONE; OR
5 (B) THE INCOME-PRODUCING ACTIVITY IS PERFORMED
6 BOTH WITHIN AND WITHOUT THE [KEYSTONE OPPORTUNITY
7 ZONE] SUBZONE OR EXPANSION SUBZONE AND A GREATER
8 PROPORTION OF THE INCOME-PRODUCING ACTIVITY IS
9 PERFORMED IN THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE
10 OR EXPANSION SUBZONE THAN IN ANY OTHER LOCATION,
11 BASED ON COSTS OF PERFORMANCE.
12 (E) COMPUTATION.--A CORPORATION SHALL COMPUTE ITS
13 COMMONWEALTH TAXABLE INCOME IN CONFORMITY WITH ARTICLE IV OF THE
14 TAX REFORM CODE OF 1971 WITH NO ADJUSTMENTS OR SUBTRACTIONS FOR
15 [KEYSTONE OPPORTUNITY ZONE] SUBZONE OR EXPANSION SUBZONE TAXABLE
16 INCOME.
17 (f) [Credit] Limitation on amount of credit.--The credit
18 allowed under this section shall not exceed the [corporate net
19 income] tax liability of the taxpayer under Article IV of the
20 Tax Reform Code of 1971 for the tax year.
21 (g) Section not applicable to certain businesses.--Any
22 portion of the taxpayer's taxable income that is attributable to
23 the operation of a railroad, truck, bus or airline company,
24 pipeline or natural gas company, water transportation company, a
25 corporation that qualifies as a regulated investment company
26 under Article IV of the Tax Reform Code of 1971 or holding
27 company as defined in Article VI of the Tax Reform Code of 1971
28 [and any business activity that is associated or affiliated with <--
29 the operation of these business activities] shall not be used to <--
30 calculate a credit under this section.
20000H2498B4208 - 42 -
1 Section 516. Capital stock franchise tax.
2 (a) Credits.--For tax years that begin on or after January
3 1, 1999, a corporation that is a qualified business under
4 [section 307(a)] this act may claim a credit against the tax
5 imposed by Article VI of the Tax Reform Code of 1971 for [the
6 taxable year to the extent of the] tax liability attributable to
7 the capital employed within [a] the keystone opportunity zone] <--
8 THE SUBZONE in the taxable year. For tax years that begin on or <--
9 after January 1, 2001, a corporation that is a qualified
10 business under this act may claim a credit against the tax
11 imposed by Article VI of the Tax Reform Code of 1971 for tax
12 liability attributable to the capital employed within the
13 keystone opportunity expansion zone EXPANSION SUBZONE in the <--
14 taxable year. The business activity must be conducted directly
15 by a corporation in the keystone opportunity zone or keystone <--
16 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE in order <--
17 for the corporation to claim the tax credit.
18 (b) Tax liability.--The corporation's tax liability
19 attributable to capital employed within a keystone opportunity <--
20 zone or keystone opportunity expansion zone shall be determined
21 by multiplying the corporation's taxable value attributable to
22 capital employed within the keystone opportunity zone or
23 keystone opportunity expansion zone by the rate of tax imposed
24 ATTRIBUTABLE TO CAPITAL EMPLOYED WITHIN A [KEYSTONE OPPORTUNITY <--
25 ZONE] SUBZONE OR EXPANSION SUBZONE SHALL BE DETERMINED BY
26 MULTIPLYING THE CORPORATION'S TAXABLE VALUE ATTRIBUTABLE TO
27 CAPITAL EMPLOYED WITHIN THE [KEYSTONE OPPORTUNITY ZONE] SUBZONE
28 OR EXPANSION SUBZONE BY THE RATE OF TAX IMPOSED under Article VI
29 of the Tax Reform Code of 1971 for the taxable year. The
30 corporation shall compute its Pennsylvania taxable value in
20000H2498B4208 - 43 -
1 conformity with Article VI of the Tax Reform Code of 1971 with
2 no adjustments or subtractions for the capital employed in the
3 [keystone opportunity zone] or keystone opportunity expansion <--
4 zone SUBZONE OR EXPANSION SUBZONE. <--
5 (c) Determination of attributable tax liability.--The
6 determination of the corporation's taxable value attributable to
7 the capital employed within a [keystone opportunity zone] or <--
8 keystone opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
9 shall be determined with specific reference to the following:
10 (1) If the entire business of the corporation in this
11 Commonwealth is transacted wholly within a [keystone <--
12 opportunity zone] or keystone opportunity expansion zone <--
13 SUBZONE OR EXPANSION SUBZONE, the taxable value attributable <--
14 to the capital employed within [a keystone opportunity zone] <--
15 or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
16 SUBZONE shall consist of the Pennsylvania taxable value as
17 determined under Article VI of the Tax Reform Code of 1971.
18 (2) If the entire business of the corporation in this
19 Commonwealth is not wholly transacted within a [keystone <--
20 opportunity zone] or keystone opportunity expansion zone <--
21 SUBZONE OR EXPANSION SUBZONE, the taxable value of a <--
22 corporation in a [keystone opportunity zone] or keystone <--
23 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE shall <--
24 be determined upon such portion of the Pennsylvania taxable
25 value attributable to the capital employed within the
26 [keystone opportunity zone] or keystone opportunity expansion <--
27 zone SUBZONE OR EXPANSION SUBZONE by employing the <--
28 apportionment factors set forth in [subsection (d)] section
29 515(d).
30 [(d) Capital stock and franchise tax apportionment.--For
20000H2498B4208 - 44 -
1 purposes of apportionment of the capital stock and franchise
2 tax, the apportionment fraction shall be the property factor
3 plus the payroll factor plus the sales factor as the numerator,
4 and the denominator shall be three. In determining the relevant
5 apportionment factors, the numerator of the property, payroll
6 and sales factors shall not include any property, payroll and
7 sales attributable to manufacturing, processing, research and
8 development activities conducted within a keystone opportunity
9 zone, and the denominator of the property, payroll and sales
10 factors shall not include any property, payroll and sales
11 attributable to manufacturing, processing and research and
12 development activities conducted within this Commonwealth but
13 without a keystone opportunity zone.]
14 (e) Limitation on amount of credit.--The credit allowed
15 under this section shall not exceed the [capital stock
16 franchise] tax liability of the taxpayer under Article VI of the
17 Tax Reform Code of 1971 for the tax year.
18 (f) Credit not available.--Any portion of the taxpayer's tax
19 liability that is attributable to the capital employed in the
20 operation of a railroad, truck, bus or airline company, pipeline
21 or natural gas company, water transportation company, a
22 corporation that qualifies[,] as a regulated investment company
23 under Article IV of the Tax Reform Code of 1971 or holding
24 company as defined in Article VI of the Tax Reform Code of 1971
25 [and any capital employed in a business activity that is <--
26 associated or affiliated with the operation of these business
27 activities] shall not be used to calculate a credit under this <--
28 section.
29 Section 5. The act is amended by adding sections to read:
30 Section 517. Bank and trust company shares tax, alternative
20000H2498B4208 - 45 -
1 bank and trust company shares tax and mutual
2 thrift institutions tax.
3 (a) Credits.--For tax years that begin on or after January
4 1, 2001, an institution that is a qualified business under this
5 act may claim a credit against the tax imposed by Article VII,
6 VII-A or XV of the Tax Reform Code of 1971, for tax liability
7 attributable to business activity conducted within the keystone <--
8 opportunity zone or keystone opportunity expansion zone SUBZONE <--
9 OR EXPANSION SUBZONE in the taxable year. The business activity
10 must be conducted directly by an institution in the keystone <--
11 opportunity zone or keystone opportunity expansion zone SUBZONE <--
12 OR EXPANSION SUBZONE in order for the institution to claim the
13 tax credit.
14 (b) Tax liability.--The institution's tax liability
15 attributable to business activity conducted within a keystone <--
16 opportunity zone or keystone opportunity expansion zone SUBZONE <--
17 OR EXPANSION SUBZONE shall be determined by multiplying the
18 taxable amount of its shares or net income that is attributable
19 to business activity conducted within the keystone opportunity <--
20 zone or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
21 SUBZONE by the rate of tax imposed under Article VII, VII-A or
22 XV of the Tax Reform Code of 1971 for the taxable year. The
23 institution shall compute the Pennsylvania taxable amount of its
24 shares or net income in conformity with Article VII, VII-A or XV
25 of the Tax Reform Code of 1971.
26 (c) Determination of attributable taxable liability.--The
27 taxable shares or the income of an institution that is a
28 qualified business shall be apportioned to the keystone <--
29 opportunity zone or keystone opportunity expansion zone SUBZONE <--
30 OR EXPANSION SUBZONE by multiplying the Pennsylvania taxable
20000H2498B4208 - 46 -
1 shares or income by a fraction, the numerator of which is the
2 payroll factor plus the receipts factor plus the deposits factor
3 and the denominator of which is three.
4 (1) The payroll factor is a fraction, the numerator of
5 which is the total wages paid in a keystone opportunity zone <--
6 or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
7 SUBZONE during the tax period by the taxpayer and the
8 denominator of which is the total wages paid in this
9 Commonwealth during the period. Wages are paid in a keystone <--
10 opportunity zone or keystone opportunity expansion zone
11 SUBZONE OR EXPANSION SUBZONE if they are paid to an employee <--
12 having a regular presence in the keystone opportunity zone or <--
13 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
14 SUBZONE.
15 (2) The receipts factor is a fraction, the numerator of
16 which is total receipts of the taxpayer in a keystone <--
17 opportunity zone or keystone opportunity expansion zone
18 SUBZONE OR EXPANSION SUBZONE during the tax period and the <--
19 denominator of which is the total receipts located in this
20 Commonwealth. Receipts do not include principal repayments on
21 loans or credit, travel and entertainment cards. Receipts
22 from the sale or disposition of intangible and tangible
23 property include only the net gain received from the sale or
24 disposition. The location of receipts shall be determined as
25 follows:
26 (i) Receipts from loans primarily secured by real
27 property are located in a keystone opportunity zone or <--
28 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
29 SUBZONE if the predominant portion of the real property
30 is located in the keystone opportunity zone or the <--
20000H2498B4208 - 47 -
1 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
2 SUBZONE and the application and negotiation, or
3 administrative responsibility occurs at a qualified
4 business.
5 (ii) Receipts from loans not primarily secured by
6 real property are located in a keystone opportunity zone <--
7 or keystone opportunity expansion zone SUBZONE OR <--
8 EXPANSION SUBZONE if the obligor, in the case of an
9 individual, resides in a keystone opportunity zone or <--
10 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
11 SUBZONE or, in the case of a corporation, if the
12 corporation's commercial domicile is located in a
13 keystone opportunity zone or keystone opportunity <--
14 expansion zone SUBZONE OR EXPANSION SUBZONE, and the <--
15 application and negotiation, or administrative
16 responsibility occurs at a qualified business.
17 (iii) Receipts from performance of services are
18 located in a keystone opportunity zone or keystone <--
19 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
20 if the services are performed in the keystone opportunity <--
21 zone or keystone opportunity expansion zone SUBZONE OR <--
22 EXPANSION SUBZONE. If services are performed partly
23 within the keystone opportunity zone or keystone <--
24 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
25 and partly outside the keystone opportunity zone or <--
26 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
27 SUBZONE, the keystone opportunity zone or keystone <--
28 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
29 receipts shall be the ratio that the time spent in
30 performing the services in the keystone opportunity zone <--
20000H2498B4208 - 48 -
1 or keystone opportunity expansion zone SUBZONE OR <--
2 EXPANSION SUBZONE 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 keystone opportunity expansion zone SUBZONE OR <--
6 EXPANSION SUBZONE is the time spent by employees having a
7 regular presence in the keystone opportunity zone or <--
8 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
9 SUBZONE in performing the services.
10 (iv) Receipts from lease transactions are located in
11 a keystone opportunity zone or keystone opportunity <--
12 expansion zone SUBZONE OR EXPANSION SUBZONE if the leased <--
13 property is located in the keystone opportunity zone or <--
14 keystone opportunity expansion zone. SUBZONE OR EXPANSION <--
15 SUBZONE.
16 (v) Receipts from interest or service charges,
17 excluding merchant discounts, from credit, travel and
18 entertainment card receivables and credit card holders'
19 fees are located in a keystone opportunity zone or <--
20 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
21 SUBZONE if the credit card holder, in the case of an
22 individual, resides in a keystone opportunity zone or <--
23 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
24 SUBZONE or, in the case of a corporation, if the
25 corporation's commercial domicile is located in a
26 keystone opportunity zone or keystone opportunity <--
27 expansion zone. SUBZONE OR EXPANSION SUBZONE. <--
28 (vi) Receipts from interest, dividends and net gains
29 from the sale or disposition of intangibles, exclusive of
30 those receipts described elsewhere in this paragraph, are
20000H2498B4208 - 49 -
1 located in a keystone opportunity zone or keystone <--
2 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
3 if the institution maintains a qualified business that
4 treats such intangibles as assets on its books or
5 records.
6 (vii) Receipts from fees or charges from the
7 issuance of traveler's checks and money orders are
8 located in a keystone opportunity zone or keystone <--
9 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
10 if the traveler's checks or money orders are issued in
11 the keystone opportunity zone or keystone opportunity <--
12 expansion zone. SUBZONE OR EXPANSION SUBZONE. <--
13 (viii) Receipts from sales of tangible property are
14 located in a keystone opportunity zone or keystone <--
15 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
16 if the property is delivered or shipped to a purchaser
17 located in a keystone opportunity zone or keystone <--
18 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE, <--
19 regardless of the free on board point or other conditions
20 of the sale.
21 (ix) Receipts not specifically treated under this
22 paragraph are located in a keystone opportunity zone or <--
23 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
24 SUBZONE if the greatest portion of the income-producing
25 activities are performed in the keystone opportunity zone <--
26 or keystone opportunity expansion zone SUBZONE OR <--
27 EXPANSION SUBZONE, based on costs of performance.
28 (3) The deposits factor is a fraction, the numerator of
29 which is the average value of deposits located in a keystone <--
30 opportunity zone or keystone opportunity expansion zone
20000H2498B4208 - 50 -
1 SUBZONE OR EXPANSION SUBZONE during the taxable year and the <--
2 denominator of which is the average value of the total
3 deposits in this Commonwealth during the taxable year. The
4 average value of deposits is to be computed on a quarterly
5 basis. Deposits are located in the keystone opportunity zone <--
6 or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
7 SUBZONE if the institution maintains a qualified business
8 that properly treats the deposits as a liability on its books
9 or records. A deposit is considered to be properly treated as
10 a liability on the books or records of a qualified business
11 if:
12 (i) the deposit account was opened or transferred to
13 the qualified business by or at the direction of the
14 depositor, regardless of where subsequent deposits or
15 withdrawals are made;
16 (ii) the employees regularly connected with the
17 qualified business are primarily responsible for
18 servicing the depositor's general banking and other
19 financial needs; and
20 (iii) at least one of the following factors occurs
21 at the qualified business:
22 (A) The deposit was solicited by an employee
23 regularly connected with the qualified business,
24 regardless of where the deposit was actually
25 solicited.
26 (B) The terms governing the deposit were
27 negotiated by employees regularly connected with the
28 qualified business, regardless of where the
29 negotiations were actually conducted.
30 (C) The essential records relating to the
20000H2498B4208 - 51 -
1 deposit are physically located at the qualified
2 business and the deposit is serviced at the qualified
3 business.
4 (d) Limitation on amount of credit.--The credit allowed
5 under this section shall not exceed 50% of the tax liability of
6 the taxpayer under Article VII, VII-A or XV of the Tax Reform
7 Code of 1971 for the tax year.
8 Section 518. Keystone opportunity zone job tax credit or
9 keystone opportunity expansion zone job tax
10 credit.
11 (a) Credits.--For tax years that begin on or after January
12 1, 2001, an insurance company that is a qualified business under
13 this act may apply to the Department of Revenue for a job tax
14 credit against the tax imposed by Article IX of the Tax Reform
15 Code of 1971 for all full-time jobs within a keystone <--
16 opportunity zone or keystone opportunity expansion zone SUBZONE <--
17 OR EXPANSION SUBZONE in the taxable year. The job must be held
18 directly with an insurance company in the keystone opportunity <--
19 zone or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
20 SUBZONE in order for the insurance company to apply for the tax
21 credit. The Department of Revenue will prescribe the form and
22 manner to obtain the credit.
23 (b) Section not applicable to certain insurance companies.--
24 (1) An insurance company that relocates from a location
25 in a political subdivision in this Commonwealth that is not
26 in a keystone opportunity zone or keystone opportunity <--
27 expansion zone SUBZONE OR EXPANSION SUBZONE to a location in <--
28 a keystone opportunity zone or keystone opportunity expansion
29 zone may not apply for a credit for an existing job that is
30 transferred, discontinued or lost in this Commonwealth which
20000H2498B4208 - 52 -
1 is attributable to the relocation.
2 (2) An insurance company that has relocated pursuant to
3 subsection (b)(1) may apply for a keystone opportunity zone
4 job tax credit or keystone opportunity expansion zone job tax
5 credit for a new full-time job that is created in the
6 keystone opportunity zone or keystone opportunity expansion <--
7 zone SUBZONE OR EXPANSION SUBZONE. A new full-time job is <--
8 created with an insurance company if the average monthly
9 employment for that insurance company has increased from the
10 prior 12-month calendar year in the zone SUBZONE OR EXPANSION <--
11 SUBZONE.
12 (c) Application of credit.--An insurance company shall apply
13 for a credit by January 15 for the previous calendar year.
14 (d) Apportionment.--The Department of Revenue shall
15 apportion a keystone opportunity zone job tax credit or a
16 keystone opportunity expansion zone job tax credit for an
17 insurance company that is a qualified business that has not
18 operated in a keystone opportunity zone or keystone opportunity <--
19 expansion zone SUBZONE OR EXPANSION SUBZONE for a full fiscal <--
20 year.
21 (e) Credit determinations.--The keystone opportunity zone
22 job tax credit or keystone opportunity expansion zone job tax
23 credit shall be determined by multiplying the monthly average of
24 all full-time jobs by the allowance. The allowance for purposes
25 of the keystone opportunity zone job tax credit or keystone
26 opportunity expansion zone job tax credit for taxable years
27 beginning within the dates set forth shall be as follows:
28 January 1, 2001, to
29 December 31, 2001 $500 per job
30 January 1, 2002, to
20000H2498B4208 - 53 -
1 December 31, 2002 $750 per job
2 January 1, 2003, to
3 December 31, 2003 $1,000 per job
4 January 1, 2004, to
5 December 31, 2004 $1,250 per job
6 January 1, 2005, to
7 December 31, 2005 $1,250 per job
8 January 1, 2006, to
9 December 31, 2006 $1,250 per job
10 January 1, 2007, to
11 December 31, 2007 $1,250 per job
12 January 1, 2008, to
13 December 31, 2008 $1,250 per job
14 January 1, 2009, to
15 December 31, 2009 $1,250 per job
16 January 1, 2010, to
17 December 31, 2010 $1,250 per job
18 January 1, 2011, to
19 December 31, 2011 $1,250 per job
20 January 1, 2012, to
21 December 31, 2012 $1,250 per job
22 January 1, 2013, to
23 December 31, 2013 $1,250 per job
24 (f) Notification of credit.--By February MARCH 15, the <--
25 Department of Revenue shall notify an insurance company of the
26 amount of the insurance company's tax credit approved.
27 (g) Limitation on amount of credit.--The tax credit allowed
28 under this section shall not exceed 50% of the tax liability of
29 the insurance company under Article IX of the Tax Reform Code of
30 1971 for the tax year. An insurance company may not carry back
20000H2498B4208 - 54 -
1 or forward any credit received under this section.
2 (h) Allocation.--The total amount of credits approved by the
3 Department of Revenue under this section shall not exceed
4 $1,000,000 annually. If the credits exceed the $1,000,000 cap in
5 a given year, the credits will be allocated on a pro-rata basis.
6 (i) Calculation of allocation.--If the total amount of
7 keystone opportunity zone job tax credits and keystone
8 opportunity expansion zone job tax credits applied for by all
9 insurance companies under this section exceeds $1,000,000 then
10 the credit to be received by each insurance company shall be the
11 product of $1,000,000 multiplied by the quotient of the credit
12 applied for by the insurance company divided by the total of all
13 credits applied for by all insurance companies, the algebraic
14 equivalent of which is:
15 insurance company's keystone opportunity zone job tax
16 credit or keystone opportunity expansion zone job tax
17 credit = $1,000,000 X (the amount of keystone opportunity
18 zone job tax credit or keystone opportunity expansion
19 zone job tax credit applied for by the insurance
20 company/the sum of all keystone opportunity zone job tax
21 credits and keystone opportunity expansion zone job tax
22 credits applied for by all insurance companies).
23 (J) PARTNERSHIP ARRANGEMENTS.--THE JOBS TAX CREDIT PROVIDED <--
24 FOR UNDER THIS SECTION MAY BE ALLOCATED TO AN INSURANCE COMPANY
25 THAT IS A PARTNER IN SUCH PARTNERSHIP THAT IS ALSO A QUALIFIED
26 BUSINESS IN PROPORTION TO THE FULL-TIME JOBS WITHIN A SUBZONE OR
27 EXPANSION SUBZONE THAT ARE PROVIDED TO SUCH INSURANCE COMPANY BY
28 THE PARTNERSHIP. HOWEVER, A PARTNERSHIP AND A PARTNER OF THAT
29 PARTNERSHIP MAY NOT CLAIM ANY OTHER TAX BENEFIT, EXPENSE OR
30 CREDIT FOR THE SAME KEYSTONE OPPORTUNITY ZONE JOB TAX CREDIT OR
20000H2498B4208 - 55 -
1 KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX CREDIT.
2 (j) (K) Relief from additional retaliatory tax.--The tax <--
3 credit taken by an insurance company under this section shall
4 not be included in determining liability for retaliatory taxes
5 imposed under section 212 of the act of May 17, 1921 (P.L.789,
6 No.285), known as The Insurance Department Act of 1921.
7 (k) (L) Hold-harmless clause.--The tax credits allowed by <--
8 this section shall not reduce the amounts which would otherwise
9 be payable for firemen's relief pension or retirement purposes
10 or for police pension retirement or disability purposes. The
11 Department of Revenue shall transfer by June 30 of each fiscal
12 year an amount equal to the tax credits taken under this section
13 by foreign fire and casualty insurance companies from the
14 General Fund to the Municipal Pension Aid Fund and the Fire
15 Insurance Tax Fund, as appropriate.
16 SECTION 519. KEYSTONE OPPORTUNITY ZONE JOB CREATION TAX CREDIT <--
17 OR KEYSTONE OPPORTUNITY EXPANSION ZONE JOB
18 CREATION TAX CREDIT.
19 (A) CREDITS.--FOR TAX YEARS THAT BEGIN ON OR AFTER JANUARY
20 1, 2001, A RAILROAD, TRUCK, BUS OR AIRLINE COMPANY, PIPELINE OR
21 NATURAL GAS COMPANY, OR WATER TRANSPORTATION COMPANY, THAT IS
22 REQUIRED TO APPORTION INCOME IN ACCORDANCE WITH SECTION 401(B),
23 (C) OR (D) OF THE TAX REFORM CODE OF 1971 AND IS A QUALIFIED
24 BUSINESS UNDER THIS ACT MAY APPLY TO THE DEPARTMENT OF REVENUE
25 FOR A KEYSTONE OPPORTUNITY ZONE JOB CREATION TAX CREDIT OR
26 KEYSTONE OPPORTUNITY EXPANSION ZONE JOB CREATION TAX CREDIT
27 AGAINST THE TAX IMPOSED BY ARTICLE III, IV OR VI OF THE TAX
28 REFORM CODE OF 1971. THE CREDIT SHALL BE FOR ALL FULL-TIME JOBS
29 CREATED WITHIN A SUBZONE OR EXPANSION SUBZONE IN THE TAXABLE
30 YEAR. THE JOB MUST BE HELD DIRECTLY WITH THE QUALIFIED BUSINESS
20000H2498B4208 - 56 -
1 IN THE SUBZONE OR EXPANSION SUBZONE IN ORDER FOR THE QUALIFIED
2 BUSINESS TO APPLY FOR THE TAX CREDIT. THE DEPARTMENT OF REVENUE
3 SHALL PRESCRIBE THE FORM AND MANNER TO OBTAIN THE CREDIT.
4 (B) SECTION NOT APPLICABLE TO CERTAIN BUSINESS OR QUALIFIED
5 BUSINESSES.--
6 (1) A BUSINESS THAT RELOCATES FROM A LOCATION IN A
7 POLITICAL SUBDIVISION IN THIS COMMONWEALTH THAT IS NOT IN A
8 SUBZONE OR EXPANSION SUBZONE TO A LOCATION IN A SUBZONE OR
9 EXPANSION SUBZONE MAY NOT APPLY FOR A CREDIT FOR AN EXISTING
10 JOB THAT IS TRANSFERRED, DISCONTINUED OR LOST IN THIS
11 COMMONWEALTH WHICH IS ATTRIBUTABLE TO THE RELOCATION.
12 (2) A BUSINESS THAT HAS RELOCATED PURSUANT TO SUBSECTION
13 (B)(1) AND BECOMES A QUALIFIED BUSINESS MAY APPLY FOR A
14 KEYSTONE OPPORTUNITY ZONE JOB TAX CREDIT OR KEYSTONE
15 OPPORTUNITY EXPANSION ZONE JOB TAX CREDIT FOR A NEW FULL-TIME
16 JOB THAT IS CREATED IN THE SUBZONE OR EXPANSION SUBZONE. A
17 NEW FULL-TIME JOB IS CREATED WITH A QUALIFIED BUSINESS IF THE
18 AVERAGE MONTHLY EMPLOYMENT FOR THAT QUALIFIED BUSINESS HAS
19 INCREASED FROM THE PRIOR 12-MONTH CALENDAR YEAR IN THE ZONE.
20 (C) APPLICATION OF CREDIT.--A QUALIFIED BUSINESS SHALL APPLY
21 FOR A CREDIT UNDER THIS SECTION BY JANUARY 15 FOR THE PREVIOUS
22 CALENDAR YEAR.
23 (D) APPORTIONMENT.--THE DEPARTMENT OF REVENUE SHALL
24 APPORTION A KEYSTONE OPPORTUNITY ZONE JOB TAX CREDIT OR A
25 KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX CREDIT FOR A
26 BUSINESS THAT IS A QUALIFIED BUSINESS THAT HAS NOT OPERATED IN A
27 SUBZONE OR EXPANSION SUBZONE FOR A FULL FISCAL YEAR.
28 (E) CREDIT DETERMINATIONS.--THE KEYSTONE OPPORTUNITY ZONE
29 JOB TAX CREDIT OR KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX
30 CREDIT SHALL BE DETERMINED BY MULTIPLYING THE MONTHLY AVERAGE OF
20000H2498B4208 - 57 -
1 ALL FULL-TIME JOBS BY THE ALLOWANCE. THE ALLOWANCE FOR PURPOSES
2 OF THE KEYSTONE OPPORTUNITY ZONE JOB TAX CREDIT OR KEYSTONE
3 OPPORTUNITY EXPANSION ZONE JOB TAX CREDIT FOR TAXABLE YEARS
4 BEGINNING WITHIN THE DATES SET FORTH SHALL BE AS FOLLOWS:
5 JANUARY 1, 2001, TO
6 DECEMBER 31, 2001 $500 PER JOB
7 JANUARY 1, 2002, TO
8 DECEMBER 31, 2002 $750 PER JOB
9 JANUARY 1, 2003, TO
10 DECEMBER 31, 2003 $1,000 PER JOB
11 JANUARY 1, 2004, TO
12 DECEMBER 31, 2004 $1,250 PER JOB
13 JANUARY 1, 2005, TO
14 DECEMBER 31, 2005 $1,250 PER JOB
15 JANUARY 1, 2006, TO
16 DECEMBER 31, 2006 $1,250 PER JOB
17 JANUARY 1, 2007, TO
18 DECEMBER 31, 2007 $1,250 PER JOB
19 JANUARY 1, 2008, TO
20 DECEMBER 31, 2008 $1,250 PER JOB
21 JANUARY 1, 2009, TO
22 DECEMBER 31, 2009 $1,250 PER JOB
23 JANUARY 1, 2010, TO
24 DECEMBER 31, 2010 $1,250 PER JOB
25 JANUARY 1, 2011, TO
26 DECEMBER 31, 2011 $1,250 PER JOB
27 JANUARY 1, 2012, TO
28 DECEMBER 31, 2012 $1,250 PER JOB
29 JANUARY 1, 2013, TO
30 DECEMBER 31, 2013 $1,250 PER JOB
20000H2498B4208 - 58 -
1 (F) NOTIFICATION OF CREDIT.--BY MARCH 15, THE DEPARTMENT OF
2 REVENUE SHALL NOTIFY THE QUALIFIED BUSINESS OF THE AMOUNT OF THE
3 QUALIFIED BUSINESS'S JOB CREATION TAX CREDIT APPROVED.
4 (G) LIMITATION ON AMOUNT OF CREDIT.--THE TAX CREDIT ALLOWED
5 UNDER THIS SECTION SHALL ONLY BE USED TO OFFSET A TAX LIABILITY
6 INCURRED FROM SUBZONE OR EXPANSION SUBZONE ACTIVITIES AND SHALL
7 NOT EXCEED 50% OF THE TAX LIABILITY OF A QUALIFIED BUSINESS OR
8 PERSON UNDER ARTICLE III, IV OR VI OF THE TAX REFORM CODE OF
9 1971 FOR THE TAX YEAR. THE JOB CREATION TAX CREDIT MAY NOT CARRY
10 BACK OR FORWARD TO ANY OTHER YEAR.
11 (H) ALLOCATION.--THE TOTAL AMOUNT OF CREDITS APPROVED BY THE
12 DEPARTMENT OF REVENUE UNDER THIS SECTION SHALL NOT EXCEED
13 $1,000,000 ANNUALLY. IF THE CREDITS EXCEED THE $1,000,000 CAP IN
14 A GIVEN YEAR, THE CREDITS WILL BE ALLOCATED ON A PRO RATA BASIS.
15 (I) CALCULATION OF ALLOCATION.--IF THE TOTAL AMOUNT OF
16 KEYSTONE OPPORTUNITY ZONE JOB TAX CREDITS AND KEYSTONE
17 OPPORTUNITY EXPANSION ZONE JOB TAX CREDITS APPLIED FOR BY ALL
18 QUALIFIED BUSINESS UNDER THIS SECTION EXCEEDS $1,000,000 THEN
19 THE CREDIT TO BE RECEIVED BY EACH QUALIFIED BUSINESSES SHALL BE
20 THE PRODUCT OF $1,000,000, MULTIPLIED BY THE QUOTIENT OF THE
21 CREDIT APPLIED FOR BY THE QUALIFIED BUSINESS DIVIDED BY THE
22 TOTAL OF ALL CREDITS APPLIED FOR BY ALL QUALIFIED BUSINESSES,
23 THE ALGEBRAIC EQUIVALENT OF WHICH IS:
24 QUALIFIED BUSINESS KEYSTONE OPPORTUNITY ZONE JOB CREATION
25 TAX CREDIT OR KEYSTONE OPPORTUNITY EXPANSION ZONE JOB
26 CREATION TAX CREDIT = $1,000,000 X (THE AMOUNT OF
27 KEYSTONE OPPORTUNITY ZONE JOB CREATION TAX CREDIT OR
28 KEYSTONE OPPORTUNITY EXPANSION ZONE JOB CREATION TAX
29 CREDIT APPLIED FOR BY THE QUALIFIED BUSINESS/THE SUM OF
30 ALL KEYSTONE OPPORTUNITY ZONE JOB CREATION TAX CREDITS
20000H2498B4208 - 59 -
1 AND KEYSTONE OPPORTUNITY EXPANSION ZONE JOB TAX CREDITS
2 APPLIED FOR BY ALL QUALIFIED BUSINESSES).
3 (J) PASS-THROUGH ENTITIES.--THE KEYSTONE OPPORTUNITY ZONE
4 JOB CREATION TAX CREDIT AND KEYSTONE OPPORTUNITY EXPANSION ZONE
5 JOB CREATION TAX CREDIT PROVIDED FOR IN THIS SECTION SHALL APPLY
6 TO THE FOLLOWING:
7 (1) A PARTNER OR MEMBER OF A PARTNERSHIP OR ASSOCIATION
8 THAT QUALIFIES UNDER THIS SECTION SHALL BE ENTITLED TO A JOB
9 CREATION TAX CREDIT IN PROPORTION TO THE PARTNER'S OR
10 MEMBER'S SHARE, WHETHER OR NOT DISTRIBUTED, OF THE INCOME OR
11 GAIN RECEIVED BY THE PARTNERSHIP OR ASSOCIATION FOR ITS
12 TAXABLE YEAR.
13 (2) A SHAREHOLDER OF A PENNSYLVANIA S CORPORATION THAT
14 QUALIFIES UNDER THIS SECTION SHALL BE ENTITLED TO A JOB
15 CREATION TAX CREDIT IN PROPORTION TO THE SHAREHOLDER'S PRO
16 RATA SHARE, WHETHER OR NOT DISTRIBUTED, OF THE INCOME OR GAIN
17 RECEIVED BY THE CORPORATION FOR ITS TAXABLE YEAR ENDING
18 WITHIN OR WITH THE SHAREHOLDER'S TAXABLE YEAR.
19 (3) NO PARTNERSHIP, ASSOCIATION OR PENNSYLVANIA S
20 CORPORATION, OR PARTNER, MEMBER OR SHAREHOLDER, MAY CLAIM ANY
21 OTHER TAX BENEFIT, EXPENSE OR CREDIT, FOR THE SAME KEYSTONE
22 OPPORTUNITY ZONE JOB CREATION TAX CREDIT OR KEYSTONE
23 OPPORTUNITY EXPANSION ZONE JOB CREATION TAX CREDIT.
24 Section 6. Sections 701, 702, 703, 704, 705, 901, 902, 903,
25 904 and 905 of the act are amended to read:
26 Section 701. Local taxes.
27 (a) General rule.--Every political subdivision in which a
28 designated [keystone opportunity zone] SUBZONE is located shall <--
29 exempt, deduct, abate or credit local taxes in accordance with
30 ordinances and resolutions adopted under section 301(d). Failure
20000H2498B4208 - 60 -
1 to exempt, deduct, abate or credit local taxes shall result in
2 the revocation of the [keystone opportunity zone] SUBZONE <--
3 designation.
4 (b) Expansion rule.--Every political subdivision in which a
5 designated keystone opportunity expansion zone SUBZONE is <--
6 located shall exempt, deduct, abate or credit local taxes in
7 accordance with ordinances and resolutions adopted under section
8 301.1(d). Failure to exempt, deduct, abate or credit local taxes
9 shall result in the revocation of the keystone opportunity <--
10 expansion zone SUBZONE designation. <--
11 Section 702. Real property tax.
12 (a) General rule.--Notwithstanding the act of May 22, 1933
13 (P.L.853, No.155), known as The General County Assessment Law,
14 and the act of May 21, 1943 (P.L.571, No.254), known as The
15 Fourth to Eighth Class County Assessment Law, each qualified
16 political subdivision for taxable years beginning on or after
17 January 1, 1999, shall by ordinance or resolution abate 100% of
18 the real property taxation on the assessed valuation of
19 deteriorated property in an area designated as a [keystone <--
20 opportunity zone] SUBZONE within this Commonwealth. The real <--
21 property tax abatement provided for in this section shall apply
22 to all real property located in a keystone opportunity zone <--
23 SUBZONE, irrespective of the business activity, if any, made of <--
24 the realty by its owner, when this act is in effect.
25 (a.1) Expansion rule.--Notwithstanding the act of May 22,
26 1933 (P.L.853, No.155), known as The General County Assessment
27 Law, and the act of May 21, 1943 (P.L.571, No.254), known as The
28 Fourth to Eighth Class County Assessment Law, each political
29 subdivision for taxable years beginning on or after January 1,
30 2001, shall by ordinance or resolution abate 100% of the real
20000H2498B4208 - 61 -
1 property taxation on the assessed valuation of deteriorated
2 property in an area designated as a keystone opportunity <--
3 expansion zone AN EXPANSION SUBZONE within this Commonwealth. <--
4 The real property tax abatement provided for in this section
5 shall apply to all real property located in a keystone <--
6 opportunity expansion zone AN EXPANSION SUBZONE, irrespective of <--
7 the business activity, if any, made of the realty by its owner,
8 when this act is in effect.
9 (b) Investment in lieu of tax payment.--
10 (1) A qualified political subdivision may require a
11 resident of deteriorated real property to invest up to 25% of
12 all real property taxes which would have been due if the real
13 property was not located in a [keystone opportunity zone] or <--
14 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
15 SUBZONE in improvements to the real property in order for the
16 residents to be qualified for exemptions, credits and
17 abatements under this act.
18 (2) A qualified political subdivision may require a
19 nonresident owner of deteriorated real property who leases
20 the real property to a person for residential use [shall] to
21 invest 50% of all real property taxes which would have been
22 due if the real property was not located in a [keystone <--
23 opportunity zone] or keystone opportunity expansion zone, <--
24 SUBZONE OR EXPANSION SUBZONE in improvements to the real <--
25 property.
26 [(c) Application for tax abatement.--Any person requesting
27 real property tax abatement pursuant to ordinances or
28 resolutions adopted pursuant to this act shall notify each
29 county or other designated assessment office granting such
30 abatement in writing on a form provided by that assessment
20000H2498B4208 - 62 -
1 office within 30 days of the designation as a keystone
2 opportunity zone or within 30 days of the transfer of ownership
3 of the real property subject to abatement. A copy of the
4 abatement request shall be forwarded by the county or other
5 designated assessment office to the political subdivision.]
6 (d) Annual real property report.--[Every keystone
7 opportunity zone] By January 31 of each calendar year a
8 political subdivision in which a keystone opportunity zone or <--
9 keystone opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
10 is located shall submit to the department [an annual] a report
11 [by January 31 of each calendar year of all] listing the address
12 of each real property[, and the owners and addresses of that
13 real property at any time during the preceding year, which is
14 located in a] designated a [keystone opportunity zone] or <--
15 keystone opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
16 and its owner of record.
17 (e) Interest and penalties.--If the department or a
18 political subdivision finds that a person claimed an abatement
19 of real property tax to which the person was not entitled under
20 this act, the person shall be liable for the abated taxes and
21 subject to the applicable interest and penalty provisions
22 provided by law.
23 (f) Calculations for education subsidy for school
24 districts.--In determining the market value of real property in
25 each school district, the State Tax Equalization Board shall
26 exclude any increase in value above the base value prior to the
27 effect of the abatement of local taxes to the extent and during
28 the period of time that real estate tax revenues attributable to
29 such increased value are not available to the school district
30 for general school district purposes.
20000H2498B4208 - 63 -
1 Section 703. Local earned income and net profits taxes;
2 business privilege taxes.
3 (a) General exemption.--[To the extent that a qualified] If
4 a political subdivision has enacted any tax on the privilege of
5 engaging in any business or profession, measured by gross
6 receipts or on a flat rate basis, earned income or net profits,
7 as defined in the act of December 31, 1965 (P.L.1257, No.511),
8 known as The Local Tax Enabling Act, imposed within the
9 boundaries of a [keystone opportunity zone[, such] or keystone <--
10 opportunity expansion zone, SUCH] SUBZONE OR EXPANSION SUBZONE, <--
11 the qualified political subdivision shall exempt from the
12 imposition or operation of [such] the local tax ordinances,
13 statutes, regulations or otherwise:
14 (1) The business gross receipts for operations conducted
15 by a qualified business within a [keystone opportunity zone] <--
16 or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
17 SUBZONE.
18 (2) The earned income received by a resident of a
19 [keystone opportunity zone] or keystone opportunity expansion <--
20 zone SUBZONE OR EXPANSION SUBZONE. <--
21 (3) The net profits of a qualified business [received by
22 a resident or nonresident of a keystone opportunity zone]
23 attributable to business activity conducted within a
24 [keystone opportunity zone] or keystone opportunity expansion <--
25 zone SUBZONE OR EXPANSION SUBZONE when imposed by the <--
26 qualified political subdivision where that qualified business
27 is located.
28 (b) Additional exemptions.--[To the extent that]
29 (1) Paragraph (2) shall apply if a qualified political
30 subdivision has enacted a tax on the privilege of engaging in
20000H2498B4208 - 64 -
1 a profession or business, on wages or compensation, on net
2 profits from the operation of a business or profession or
3 other activity or on the occupancy or use of real property
4 pursuant to any of the following:
5 [(1) Pursuant to the]
6 (i) The act of August 5, 1932 (Sp.Sess. P.L.45,
7 No.45), referred to as the Sterling Act[, the].
8 (ii) The act of March 10, 1949 (P.L.30, No.14),
9 known as the Public School Code of 1949[, the].
10 (iii) The act of August 24, 1961 (P.L.1135, No.508),
11 referred to as the First Class A School District Earned
12 Income Tax Act[, the].
13 (iv) The act of August 9, 1963 (P.L.640, No.338),
14 entitled "An act empowering cities of the first class,
15 coterminous with school districts of the first class, to
16 authorize the boards of public education of such school
17 districts to impose certain additional taxes for school
18 district purposes, and providing for the levy, assessment
19 and collection of such taxes[," the]."
20 (v) The act of May 30, 1984 (P.L.345, No.69), known
21 as the First Class City Business Tax Reform Act[, or
22 the].
23 (vi) The act of June 5, 1991 (P.L.9, No.6), known as
24 the Pennsylvania Intergovernmental Cooperation Authority
25 Act for Cities of the First Class[, enacted a tax on:
26 (i) the privilege of engaging in a profession or
27 business;
28 (ii) wages or compensation;
29 (iii) net profits from the operation of a business,
30 profession or other activity; or
20000H2498B4208 - 65 -
1 (iv) the occupancy or use of real property].
2 (2) [The] If there is an enactment under paragraph (1),
3 the qualified political subdivision shall provide an
4 exemption, deduction, abatement or credit from the imposition
5 and operation of such local tax ordinance or resolution for
6 all of the following:
7 (i) [A person or qualified business, whether a
8 resident or a nonresident of a keystone opportunity zone,
9 for the] The privilege of engaging in a business or
10 profession within a [keystone opportunity zone] or <--
11 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
12 SUBZONE by a person or qualified business, whether a
13 resident or nonresident of the zone SUBZONE OR EXPANSION <--
14 SUBZONE.
15 (ii) Salaries, wages, commissions, compensation or
16 other income received for services rendered or work
17 performed by a resident of a [keystone opportunity zone] <--
18 or keystone opportunity expansion zone SUBZONE OR <--
19 EXPANSION SUBZONE.
20 (iii) The gross or net income or gross or net
21 profits realized from the operation of a qualified
22 business to the extent attributable to business activity
23 conducted within a [keystone opportunity zone] or <--
24 keystone opportunity expansion zone SUBZONE OR EXPANSION <--
25 SUBZONE.
26 (iv) The occupancy or use of real property located
27 within the [keystone opportunity zone] or keystone <--
28 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE. <--
29 [(c) Limitation on withholding.--Every employer required to
30 withhold any local tax on the earned income, wages or
20000H2498B4208 - 66 -
1 compensation of one or more persons within the particular
2 political subdivision shall not withhold such tax on earned
3 income, wages or compensation paid to any person or his personal
4 representative during any period when the qualified political
5 subdivision has by ordinance or resolution provided for the
6 exemption from tax as provided in section 701 and the person is
7 a resident of a keystone opportunity zone.
8 (d) Information for employer.--Every person who is an
9 employee that qualifies as a resident of a keystone opportunity
10 zone shall furnish to his or her employer information, as
11 prescribed by the political subdivision, necessary for the
12 employer to withhold the correct amount of tax. An employee
13 shall furnish notification to his or her employer of any changes
14 to the information within 20 days after the change. An employee
15 shall notify his or her employer that the employee has completed
16 the residency requirements under section 306.
17 (e) Duty of employer.--Within 20 days after an employer
18 receives information from an employee pursuant to subsection
19 (d), the employer shall forward a copy of that information to
20 the political subdivision or other agency designated by the
21 political subdivision. The information shall not be given
22 retroactive effect for withholding purposes. The employer shall
23 not be required to withhold tax from the wages, earned income or
24 compensation paid to a resident of a keystone opportunity zone,
25 if reasonable under the circumstances, unless directed by the
26 political subdivision to withhold tax from the wages, earned
27 income or compensation on some other basis. If an employee fails
28 or refuses to furnish the information or furnishes information
29 that the employer reasonably and in good faith believes to be
30 inaccurate, the employer shall withhold the full rate of tax
20000H2498B4208 - 67 -
1 from the employee's total wages, earned income or compensation.]
2 (f) Calculation for education subsidy for school district.--
3 In determining the personal income valuation of a school
4 district, the Secretary of Revenue shall exclude any increase in
5 the valuation as defined in section 2501(9.1) of the act of
6 March 10, 1949 (P.L.30, No.14), known as the Public School Code
7 of 1949, above the base value prior to the abatement of local
8 taxes in a [keystone opportunity zone] or keystone opportunity <--
9 expansion zone SUBZONE OR EXPANSION SUBZONE located within the <--
10 school district to the extent and during the period of time that
11 personal income revenues attributable to the increase in the
12 personal income valuation are not available to the school
13 district for general school district purposes.
14 Section 704. Mercantile license tax.
15 No person or qualified business in a [keystone opportunity <--
16 zone] or keystone opportunity expansion zone SUBZONE OR <--
17 EXPANSION SUBZONE shall be required to pay any fee authorized
18 pursuant to a mercantile license tax imposed under the act of
19 June 20, 1947 (P.L.745, No.320), entitled, as amended, "An act
20 to provide revenue for school districts of the first class A by
21 imposing a temporary mercantile license tax on persons engaging
22 in certain occupations and businesses therein; providing for its
23 levy and collection; for the issuance of mercantile licenses
24 upon the payment of fees therefor; conferring and imposing
25 powers and duties on boards of public education, receivers of
26 school taxes and school treasurers in such districts; saving
27 certain ordinances of council of certain cities, and providing
28 compensation for certain officers, and employes and imposing
29 penalties."
30 Section 705. Local sales and use tax.
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1 (a) General rule.--The political subdivision shall exempt
2 sales at retail of services or tangible personal property,
3 except motor vehicles, to a qualified business for the exclusive
4 use, consumption and utilization of the tangible personal
5 property or service by the qualified business at its facility
6 located within a [keystone opportunity zone] or keystone <--
7 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE from a <--
8 city or county tax on purchase price authorized under Article
9 XXXI-B of the act of July 28, 1953 (P.L.723, No.230), known as
10 the Second Class County Code, as amended, and the act of June 5,
11 1991 (P.L.9, No.6), known as the Pennsylvania Intergovernmental
12 Cooperation Authority Act for Cities of the First Class, as
13 amended.
14 (b) [Real property] Construction contracts.--[The] For any
15 construction contract performed in a keystone opportunity zone <--
16 or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
17 SUBZONE, the exemption provided in subsection (a) shall only
18 apply to the sale at retail or use of building machinery and
19 equipment to a qualified business, or to a construction
20 contractor pursuant to a construction contract with a qualified
21 business, for the exclusive use, consumption and utilization by
22 the qualified business at its facility in a keystone opportunity <--
23 zone[.] or keystone opportunity expansion zone. For the purposes
24 of the keystone opportunity zone and keystone opportunity
25 expansion zone exemption, building [KEYSTONE OPPORTUNITY ZONE.] <--
26 SUBZONE OR EXPANSION SUBZONE. FOR THE PURPOSES OF THE SUBZONE OR
27 EXPANSION SUBZONE EXEMPTION, BUILDING machinery and equipment
28 shall include distribution equipment purchased for the exclusive
29 use, consumption and utilization in a keystone opportunity zone <--
30 or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
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1 SUBZONE facility.
2 (c) Definition.--Sales at retail of tangible personal
3 property and services shall be defined in accordance with
4 Article II of the Tax Reform Code of 1971.
5 Section 901. Transferability.
6 Any exemption, deduction, abatement or credit provided to any
7 person or qualified business under Chapter 5 or 7 is
8 nontransferable and cannot be applied, used or assigned to any
9 other person, business or tax account.
10 Section 902. Recapture.
11 (a) General rule.--If any qualified business located within
12 a [keystone opportunity zone] or keystone opportunity expansion <--
13 zone SUBZONE OR EXPANSION SUBZONE has received an exemption, <--
14 deduction, abatement or credit under this act and subsequently
15 relocates outside of the zone within the first five years of
16 locating in a keystone opportunity zone or keystone opportunity <--
17 expansion zone SUBZONE OR EXPANSION SUBZONE, that business shall <--
18 refund to the State and political subdivision which granted the
19 exemption, deduction, abatement or credit received in accordance
20 with the following:
21 (1) If a qualified business relocates within three years
22 from the date of [any claim] first locating in a keystone <--
23 opportunity zone or keystone opportunity expansion zone
24 SUBZONE OR EXPANSION SUBZONE, 66% of all the exemptions, <--
25 deductions, abatements or credits [previously received due]
26 attributed to that qualified business's participation in the
27 [keystone opportunity zone] or keystone opportunity expansion <--
28 zone SUBZONE OR EXPANSION SUBZONE shall be refunded to the <--
29 Commonwealth and the political subdivision.
30 (2) If a qualified business relocates within three to
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1 five years from the date of [any claim] first locating in a
2 keystone opportunity zone or keystone opportunity expansion <--
3 zone SUBZONE OR EXPANSION SUBZONE, 33% of all exemptions, <--
4 deductions, abatements or credits [previously received from]
5 attributed to that qualified business's participation in the
6 [keystone opportunity zone] or keystone opportunity expansion <--
7 zone SUBZONE OR EXPANSION SUBZONE shall be refunded to the <--
8 Commonwealth and the political subdivision.
9 (3) If the qualified business was located within a
10 facility operated by a nonprofit organization to assist in
11 the creation and development of a start-up business, no
12 exemption, deduction, abatement or credit shall be refunded.
13 (b) Waiver.--The department, in consultation with the
14 Department of Revenue and the political subdivision, may waive
15 or modify recapture requirements under this section if the
16 department determines that the business relocation was due to
17 circumstances beyond the control of the business, including, but
18 not limited to:
19 (1) natural disaster;
20 (2) unforeseen industry trends; or
21 (3) loss of a major supplier or market.
22 [(c) Determination of claim date.--For purposes of this
23 section, an exemption, deduction, abatement or credit is deemed
24 to be claimed on the later of:
25 (1) the date the return or other report for the tax or
26 fee is due;
27 (2) the date the return is filed; or
28 (3) the date the tax or fee would be paid.]
29 Section 903. Delinquent or deficient State or local taxes.
30 (a) Persons.--No person may claim or receive an exemption,
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1 deduction, abatement or credit under this act unless that person
2 is in full compliance with all State and local tax laws [and
3 related], ordinances and resolutions.
4 (b) Qualified business.--
5 (1) No qualified business may claim or receive an
6 exemption, deduction, abatement or credit under this act
7 unless that qualified business is in full compliance with all
8 State and local tax laws, ordinances and resolutions.
9 (2) No qualified business may claim or receive an
10 exemption, deduction, abatement or credit under this act if
11 any person or business with a 20% or greater interest in that
12 qualified business is not in full compliance with all State
13 and local tax laws, ordinances and resolutions.
14 (c) Later compliance and eligibility.--Any person or
15 qualified business that is not eligible to claim an exemption,
16 deduction, abatement or credit due to noncompliance with any
17 State or local tax law may become eligible if that person or
18 qualified business subsequently comes into full compliance with
19 all State and local tax laws to the satisfaction of the
20 Department of Revenue or the political subdivision within the
21 calendar year in which the noncompliance first occurred. If full
22 compliance is not attained by [December 31 of the calendar year
23 in which] February 5 of the calendar year following the calendar
24 year during which noncompliance first occurred, then that person
25 or qualified business is precluded from claiming any exemption,
26 deduction, abatement or credit for that calendar year, whether
27 or not full compliance is achieved [in subsequent calendar
28 years] subsequently.
29 Section 904. Code compliance.
30 (a) General rule.--A person or qualified business shall be
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1 precluded from claiming any exemption, deduction, abatement or
2 credit provided for in this act if that person or qualified
3 business owns real property in a [keystone opportunity zone] or <--
4 keystone opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
5 and the real property is not in compliance with all applicable
6 State and local zoning, building and housing laws, ordinances or
7 codes [and the real property owner has not filed an affidavit
8 with the political subdivision attesting to compliance for that
9 calendar year before December 31 with the political subdivision
10 in which the real property is located].
11 (b) Opportunity to achieve compliance.--The person or
12 qualified business who is not in compliance under subsection (a)
13 shall have until December 31 of the calendar year following
14 designation of the real property as part of a [keystone <--
15 opportunity zone] or keystone opportunity expansion zone SUBZONE <--
16 OR EXPANSION SUBZONE to be in compliance in order to claim any
17 State exemptions, deductions, abatements or credits for that
18 year. If full compliance is not attained by December 31 of that
19 calendar year, the person or qualified business is precluded
20 from claiming any exemption, deduction or credit for that
21 calendar year, whether or not compliance is achieved in a
22 subsequent calendar year. The political subdivision may extend
23 the time period in which a person or qualified business must
24 come into compliance with a local ordinance or building code for
25 a period not to exceed one year if the political subdivision
26 determines that the person or qualified business has made and
27 shall continue to make a good faith effort to come into
28 compliance and that an extension will enable the person or
29 qualified business to achieve full compliance. Qualified
30 political subdivisions are required to notify the Department of
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1 Revenue in writing of all persons or qualified businesses not in
2 compliance with this subsection within 30 days following the end
3 of each calendar year.
4 Section 905. Appeals.
5 A person or qualified business shall be deemed to be in
6 compliance with any State or local tax for purposes of this
7 section if that person or qualified business had made a timely
8 administrative or judicial appeal for that particular tax or has
9 entered into and is in compliance with a duly authorized
10 deferred payment plan with the Department of Revenue or
11 political subdivision for that particular tax.
12 Section 7. The act is amended by adding sections to read:
13 Section 906. Notice requirements; State and local authorities.
14 (a) Requirement.--After compliance reviews have been
15 conducted by appropriate Commonwealth and local authorities, the
16 department shall notify each keystone opportunity zone or
17 keystone opportunity expansion zone applicant by regular mail
18 each year of the department's approval or denial of the
19 applicant's keystone opportunity zone or keystone opportunity
20 expansion zone application. No keystone opportunity zone or
21 keystone opportunity expansion zone applicant is entitled to any
22 tax benefits unless it receives approval from the department.
23 (b) Notice.--The department shall provide a one-time
24 notification to every current keystone opportunity zone and <--
25 keystone opportunity expansion zone SUBZONE OR EXPANSION SUBZONE <--
26 real property owner by June 1, 2001. Failure to receive
27 departmental notification under this section shall not extend or
28 restrict any benefits or rights real property owners possess
29 under this act.
30 (c) Transmittal.--The department, or its designated
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1 official, shall within 15 business days of receipt of a keystone
2 opportunity zone or keystone opportunity expansion zone
3 application made under this act, forward a copy of the
4 application to appropriate Commonwealth and local authorities
5 for review and processing.
6 Section 907. Application time.
7 A keystone opportunity zone or keystone opportunity expansion
8 zone applicant must file a keystone opportunity zone or keystone
9 opportunity expansion zone application in a manner prescribed by
10 the department by December 31 of each calendar year for which
11 the applicant claims any exemption, deduction, abatement or
12 credit under this act. No exemption, deduction, abatement or
13 credit may be claimed or received for that calendar year until
14 approval has been granted by the department.
15 Section 8. Sections 1101, 1102, 1103, 1302, 1303 and 1304 of
16 the act are amended to read:
17 Section 1101. Community benefits.
18 (a) Implementation grant.--The department may provide a one-
19 time $250,000 grant to [the] a keystone opportunity zone or a
20 one-time $200,000 grant to a keystone opportunity expansion zone
21 to implement the opportunity plan and to provide an annual
22 update of real property ownership and other information to the
23 Department of Revenue. The annual update shall describe progress
24 on all proposals required as part of the opportunity plan and
25 other information as required by the department. A separate
26 application must be submitted to the department outlining a
27 budget and implementation narrative. The grant shall be drawn
28 down as needed over a period not to exceed the first five years
29 of [designation] AUTHORIZATION as a keystone opportunity zone or <--
30 keystone opportunity expansion zone. Grant funds shall be
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1 provided from the housing and redevelopment appropriations.
2 [Keystone opportunity zones] Grant recipients shall comply with
3 the provisions of the appropriation.
4 (b) Reduced interest.--Projects in [designated] keystone <--
5 opportunity zones or keystone opportunity expansion zones that
6 are approved for Pennsylvania Industrial Development Authority
7 (PIDA) or Small Business First financing shall receive the
8 lowest interest rate extended to borrowers.
9 (c) Priority consideration.--Projects in keystone
10 opportunity zones or keystone opportunity expansion zones shall
11 receive priority consideration for State assistance under State
12 economic, community and economic development programs and
13 community building initiatives.
14 (d) Marketing.--The department shall develop and implement a
15 consolidated marketing strategy for the keystone opportunity
16 zones or keystone opportunity expansion zones for use in job
17 retention and attraction activities.
18 (e) Education.--The Department of Education shall provide
19 technical assistance to school districts located in or school
20 districts having parts of their districts located in [keystone <--
21 opportunity zones] or keystone opportunity expansion zones <--
22 SUBZONES OR EXPANSION SUBZONES. <--
23 (f) Local governments.--The Center for Local Government
24 Services in the department shall provide technical assistance to
25 political subdivisions relating to taxation, implementation of
26 the opportunity plan, establishing annual benchmarks and annual
27 reporting requirements to the departments. Additionally, the
28 Center for Local Government Services shall provide political
29 subdivisions [in] with property designated a keystone <--
30 opportunity [zones] zone or keystone opportunity expansion zone
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1 SUBDIVISIONS [IN KEYSTONE OPPORTUNITY ZONES] WITH PROPERTY <--
2 DESIGNATED A SUBZONE OR EXPANSION SUBZONE with technical
3 assistance to encourage the implementation of best practices in
4 achieving efficient and effective local government
5 administration and shall coordinate activities with other
6 departments and agencies providing various assistance to
7 communities.
8 (g) Community-based organizations.--The department shall
9 provide technical assistance for capacity building of existing
10 community-based organizations dealing with socioeconomic needs,
11 housing assistance and job training in the keystone opportunity
12 [zones] zone or keystone opportunity expansion zone.
13 Section 1102. Reporting.
14 The department shall report to the General Assembly on the
15 economic effects of this act in each keystone opportunity zone
16 or keystone opportunity expansion zone every four years.
17 Section 1103. Other Commonwealth tax credits.
18 A person or qualified business that is entitled to claim an
19 exemption, deduction, abatement or credit in accordance with the
20 provisions of this act shall not be entitled to claim or
21 accumulate any of the following exemptions, deductions,
22 abatements or credits that it may otherwise have qualified for
23 due to activity within a [keystone opportunity zone] or keystone <--
24 opportunity expansion zone SUBZONE OR EXPANSION SUBZONE: <--
25 (1) Tax Reform Code of 1971:
26 (i) Article XVII relating to economic revitalization
27 tax credits;
28 (ii) Article XVII-A relating to employment incentive
29 payments;
30 (iii) Article XVII-B relating to research and
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1 development tax credits; or
2 (iv) Article XIX-A relating to neighborhood
3 assistance and enterprise zone tax credits;
4 (2) tax credits under section 109 of the act of December
5 19, 1996 (P.L.1478, No.190), known as the Waste Tire
6 Recycling Act;
7 (3) homeowners mortgage credits;
8 (4) insurance premiums tax credits; and
9 (5) job creation tax credit under the act of June 29,
10 1996 (P.L.434, No.67), known as the Job Enhancement Act.
11 The person or qualified business may apply the exemptions,
12 deductions, abatements or credits to income realized from
13 activity or transactions outside the [keystone opportunity zone] <--
14 or keystone opportunity expansion zone SUBZONE OR EXPANSION <--
15 SUBZONE, but only for the taxable year to which the exemptions,
16 deductions, abatements or credits apply. The provisions of this
17 section shall apply only to the taxes set forth in Chapters 5
18 and 7.
19 Section 1302. Rules and regulations.
20 The Department of Revenue [shall] may promulgate [such rules
21 and] regulations [as may be] necessary to effectuate the
22 provisions of this act. The department [shall] may promulgate
23 [such rules and] regulations [as may be] necessary to effectuate
24 the provisions of this act.
25 Section 1303. Compliance.
26 Any person or qualified business eligible for an exemption,
27 deduction or credit under this act shall comply with all
28 reporting, filing and compliance requirements pursuant to the
29 Tax Reform Code of 1971 unless otherwise provided for in this
30 act.
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1 Section 1304. Penalties.
2 (a) Civil penalty.--
3 (1) In addition to any penalties authorized by the Tax
4 Reform Code of 1971 for violations of that act, the
5 Department of Revenue may impose an additional administrative
6 penalty not to exceed $10,000 for any act or violation of
7 this act relating to State and local taxes, including the
8 filing of any false statement, return or document.
9 (2) The department may impose a civil penalty not to
10 exceed $10,000 for a violation of this act, including the
11 filing of any false statement, return or document.
12 (b) Criminal penalty.--In addition to any criminal penalty
13 under the Tax Reform Code of 1971, any person or business who
14 knowingly violates any of the provisions of this act commits a
15 misdemeanor of the third degree.
16 Section 9. Section 1309 of the act is amended to read:
17 Section 1309. Expiration.
18 This act and all benefits associated with this act shall
19 terminate [December 21, 2010.] December 31, 2013.
20 Section 10. Section 204(57)(iii) of the act of March 4, 1971
21 (P.L.6, No.2), known as the Tax Reform Code of 1971, is
22 repealed.
23 Section 11. This act shall apply as follows:
24 (1) The amendment of sections 512 and 703 of the act
25 shall apply to taxable years beginning after December 31,
26 1998.
27 (2) The amendment of section 516 of the act shall apply
28 to taxable years beginning after December 31, 1999.
29 Section 12. This act shall take effect immediately.
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