PRINTER'S NO. 4232
No. 2750 Session of 2004
INTRODUCED BY SCAVELLO, WILT, ROHRER, LEH, R. STEVENSON,
DENLINGER, ARMSTRONG, BENNINGHOFF, BAKER, BALDWIN, BARRAR,
BASTIAN, BIRMELIN, CAPPELLI, CLYMER, COLEMAN, CREIGHTON,
DAILEY, EGOLF, FORCIER, GABIG, GILLESPIE, HERMAN, HERSHEY,
HORSEY, LEWIS, MACKERETH, MARSICO, McILHATTAN, MILLARD,
R. MILLER, S. MILLER, MUSTIO, PICKETT, ROBERTS, SATHER,
SOLOBAY, THOMAS AND YEWCIC, JUNE 30, 2004
REFERRED TO COMMITTEE ON FINANCE, JUNE 30, 2004
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," imposing a business receipts education tax;
11 eliminating sales taxes; designating certain tax revenue for
12 transfer to the Education Operating Fund; and further
13 providing for the imposition and rate of the State Real
14 Estate Transfer Tax and for the disposition of certain moneys
15 raised by the Local Real Estate Transfer Tax.
16 The General Assembly of the Commonwealth of Pennsylvania
17 hereby enacts as follows:
18 Section 1. Article II of the act of March 4, 1971 (P.L.6,
19 No.2), known as the Tax Reform Code of 1971, is repealed.
20 Section 2. The act is amended by adding an article to read:
21 ARTICLE II-B
22 BUSINESS RECEIPTS EDUCATION TAX.
1 Section 201-B. Scope.
2 This article deals with the business receipts education tax.
3 Section 202-B. Definitions.
4 The following words and phrases when used in this article
5 shall have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Consideration." The total amount received by a vendor from
8 other persons in exchange for goods or services. The term does
9 not include wages.
10 "Department." The Department of Revenue of the Commonwealth.
11 "Goods." Any type of tangible or intangible personal
12 property provided to another person in return for consideration.
13 "Person." A natural person, association, fiduciary,
14 partnership, corporation or any other entity, including the
15 Commonwealth, its political subdivisions, instrumentalities and
16 public authorities.
17 "Services." Activities engaged in for other persons in
18 return for consideration.
19 "Taxpayer." A person required to remit the tax imposed by
20 this article.
21 "Vendor." A person maintaining a place of business in this
22 Commonwealth, selling or leasing tangible personal property, or
23 rendering services, the sale or use of which is subject to the
24 tax imposed by this article but not including any employee who
25 in the ordinary scope of employment renders services to the
26 employer in exchange for wages and salaries.
27 "Wages." The total compensation received by a person other
28 than an independent contractor in exchange for services.
29 Section 203-B. Imposition of tax.
30 (a) General rule.--There is hereby imposed upon the receipt
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1 by a person in this Commonwealth of consideration in exchange
2 for goods or services, other than those specifically excluded
3 pursuant to section 204-B, a tax of 4.5% of the amount received,
4 which tax shall be payable on a quarterly basis by the recipient
5 of the consideration.
6 (b) Use of tangible personal property.--There is hereby
7 imposed upon the use, on and after the effective date of this
8 article, within this Commonwealth of tangible personal property
9 purchased at retail on or after the effective date of this
10 article, and on those services described herein purchased at
11 retail on and after the effective date of this article, a tax of
12 4.5% of the purchase price, which tax shall be paid to the
13 Commonwealth by the person who makes such use as provided in
14 this article except that such tax shall not be paid to the
15 Commonwealth by such person where the person has paid the tax
16 imposed by subsection (a) or has paid the tax imposed by this
17 subsection to the vendor with respect to such use.
18 Section 204-B. Exclusions from tax.
19 The tax imposed by this article shall not be imposed on any
20 of the following:
21 (1) (i) The receipt of consideration in exchange for
22 services or tangible personal property, other than motor
23 vehicles, trailers, semitrailers, motorboats, aircraft or
24 other similar tangible personal property required under
25 either Federal law or laws of this Commonwealth to be
26 registered or licensed, by a person who is not a vendor
27 in an isolated transaction.
28 (ii) The receipt of consideration in exchange for
29 services or tangible personal property, other than motor
30 vehicles, trailers, semitrailers, motorboats, aircraft or
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1 other similar tangible personal property required under
2 either Federal law or laws of this Commonwealth to be
3 registered or licensed, by a person who is a vendor but
4 is not a vendor with respect to the tangible personal
5 property or services sold or purchased in such
6 transaction, except that inventory and stock in trade
7 shall not be excluded from the tax by the provisions of
8 this subsection.
9 (2) (i) The receipt of consideration by any charitable
10 organization, volunteer firemen's organization, nonprofit
11 educational institution or religious organization in
12 exchange for tangible personal property or services other
13 than pursuant to a construction contract, except that the
14 exclusion shall not apply with respect to consideration
15 received in exchange for any tangible personal property
16 or services in any unrelated trade or business carried on
17 by such organization or institution.
18 (ii) The receipt by a nonprofit association, in
19 exchange for food or beverages, of consideration which is
20 used to pay the expenses of a sport program. For purposes
21 of this paragraph, "nonprofit association" means an
22 entity which is organized as a nonprofit corporation or
23 nonprofit unincorporated association under the laws of
24 this Commonwealth or the United States or any entity
25 which is authorized to do business in this Commonwealth
26 as a nonprofit corporation or unincorporated association
27 under the laws of this Commonwealth, including, but not
28 limited to, youth or athletic associations, volunteer
29 fire, ambulance, religious, charitable, fraternal,
30 veterans, civic or any separately chartered auxiliary of
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1 the foregoing, if organized and operated on a nonprofit
2 basis; and "sports program" means baseball, including
3 softball, football, basketball, soccer and any other
4 competitive sport formally recognized as a sport by the
5 United States Olympic Committee, the Amateur Athletic
6 Union or the National Collegiate Athletic Association,
7 but limited to programs or portions of programs organized
8 for recreational purposes which are primarily for
9 participants who are 18 years of age or younger or whose
10 19th birthday occurs during the year of participation or
11 the competitive season, whichever is longer, except that
12 there shall be no age limitation for programs operated
13 for persons with physical handicaps or persons with
14 mental retardation.
15 (3) The receipt of consideration in exchange for
16 gasoline or other motor fuels.
17 (4) The receipt of consideration by the United States,
18 this Commonwealth or its instrumentalities or political
19 subdivisions in exchange for goods or services.
20 (5) The receipt of consideration in exchange for
21 prescription drugs.
22 (6) The receipt of consideration by a hospital in
23 exchange for medical goods or services.
24 (7) The receipt, in exchange for goods or services, of
25 food stamps in accordance with the provisions of the Food
26 Stamp Act of 1977 (Public Law 88-525, 7 U.S.C. §§ 2011-2029).
27 (8) (i) A transfer of tangible personal property or
28 rendition of services for the purpose of resale or such
29 rendition of services or the transfer of tangible
30 personal property including, but not limited to,
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1 machinery and equipment and parts therefor and supplies
2 to be used or consumed by the purchaser directly in the
3 operations of:
4 (A) The manufacture of tangible personal
5 property.
6 (B) Farming, dairying, agriculture, horticulture
7 or floriculture when engaged in as a business
8 enterprise. The term "farming" shall include the
9 propagation and raising of ranch raised fur-bearing
10 animals and the propagation of game birds for
11 commercial purposes by holders of propagation permits
12 issued under 34 Pa.C.S. (relating to game).
13 (C) The producing of a public utility service,
14 including, but not limited to, electricity, natural
15 gas and cable television or in constructing,
16 reconstructing, remodeling, repairing or maintaining
17 the facilities which are directly used in producing
18 such service.
19 (ii) The exclusions provided in subparagraph (i)
20 shall not apply to any vehicle required to be registered
21 under 75 Pa.C.S. (relating to vehicles), except those
22 vehicles used directly by a public utility engaged in
23 business as a common carrier; to maintenance facilities;
24 or to materials, supplies or equipment to be used or
25 consumed in the construction, reconstruction, remodeling,
26 repair or maintenance of real estate other than directly
27 used machinery, equipment, parts or foundations therefor
28 that may be affixed to such real estate.
29 (iii) The exclusions provided in subparagraph (i)
30 shall not apply to tangible personal property or services
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1 to be used or consumed in managerial sales or other
2 nonoperational activities, nor to the purchase or use of
3 tangible personal property or services by any person
4 other than the person directly using the same in the
5 operations described in subparagraph (i). The exclusion
6 provided in subparagraph (i)(C) shall not apply to
7 construction materials, supplies or equipment used to
8 construct, reconstruct, remodel, repair or maintain
9 facilities not used directly by the purchaser in the
10 production, delivering or rendition of public utility
11 service; construction materials, supplies or equipment
12 used to construct, reconstruct, remodel, repair or
13 maintain a building, road or similar structure; or tools
14 and equipment used but not installed in the maintenance
15 of facilities used directly in the production, delivering
16 or rendition of a public utility service.
17 (9) The receipt of consideration for advertising by a
18 vendor engaged in the business of advertising.
19 (10) The receipt of consideration in exchange for goods
20 or services involving Medicare Part B transactions.
21 (11) The receipt of consideration in exchange for
22 transportation provided or funded by the Federal, State or
23 local government.
24 (12) The receipt of consideration in exchange for
25 cigarettes.
26 (13) The receipt of consideration in exchange for
27 insurance premiums.
28 (14) The receipt of consideration in exchange for
29 mortgages.
30 (15) The receipt of consideration in exchange for bank
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1 deposits.
2 (16) The receipt of consideration in exchange for rents.
3 (17) Investments, including, but not limited to, stocks
4 and bonds.
5 Section 205-B. Credit against tax.
6 A credit against the tax imposed by this article shall be
7 granted equal to the amount of any tax imposed by Article III or
8 IV for the same period of time.
9 Section 206-B. Quarterly returns.
10 (a) General rule.--Every taxpayer shall file quarterly
11 returns with respect to the tax imposed by this article.
12 (b) Forms.--Returns shall be on forms prescribed by the
13 department and shall show such information as may be reasonably
14 required.
15 (c) Extension of time.--On written application showing good
16 cause, the department may grant an extension of time of up to
17 three months for filing a return.
18 (d) Mailing.--Notwithstanding any other law, a return shall
19 be deemed to have been timely filed for purposes of this article
20 if it is postmarked by the United States Postal Service on or
21 prior to the final day on which the return is due.
22 Section 207-B. Payment and disposition of tax.
23 (a) Payment.--The tax due under this article shall be due
24 and payable along with the quarterly return.
25 (b) No extension of time.--The due date for payment of the
26 tax shall not be extended for any reason.
27 (c) Disposition.--All revenues received from the tax imposed
28 by this article shall be transferred to the Education Operating
29 Fund.
30 Section 208-B. Assessment.
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1 The department may make inquiries, determinations and
2 assessments concerning the tax, interest and penalties imposed
3 by this article.
4 Section 209-B. Mode and time of assessment.
5 (a) Underpayment of tax.--Within a reasonable time after any
6 return is filed, the department shall examine it and, if the
7 return shows a greater tax due or collected than the amount of
8 tax remitted with the return, the department shall issue an
9 assessment for the difference, together with an addition of 3%
10 of such difference, which shall be paid to the department within
11 ten days after a notice of the assessment has been mailed to the
12 taxpayer. If such assessment is not paid within ten days, there
13 shall be added thereto and paid to the department an additional
14 3% of such difference for each month thereof during which the
15 assessment remains unpaid, but the total of all additions shall
16 not exceed 18% of the difference shown on the assessment.
17 (b) Understatement of tax.--If the department determines
18 that any return or returns of any taxpayer understates the
19 amount of tax due, it shall determine the proper amount and
20 shall ascertain the difference between the amount of tax shown
21 in the return and the amount determined. A notice of assessment
22 for the deficiency and the reasons therefore shall then be sent
23 to the taxpayer. The deficiency shall be paid to the department
24 within 30 days after a notice of the assessment thereof has been
25 mailed to the taxpayer.
26 (c) Failure to file return.--In the event that any taxpayer
27 fails to file a return required by this article, the department
28 may make an estimated assessment, based on information
29 available, of the proper amount of tax owing by the taxpayer. A
30 notice of assessment in the estimated amount shall be sent to
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1 the taxpayer. The tax shall be paid within 30 days after a
2 notice of such estimated assessment has been mailed to the
3 taxpayer.
4 Section 210-B. Reassessment.
5 Any taxpayer against whom an assessment is made may petition
6 the department for a reassessment. Notice of an intention to
7 file such a petition shall be given to the department within 30
8 days of the date the notice of assessment was mailed to the
9 taxpayer, except that the department for due cause may accept
10 such notice within 90 days of the date the notice of assessment
11 was mailed. The department by registered mail shall supply the
12 taxpayer with a statement setting forth in reasonable detail the
13 basis of the assessment within 30 days after receipt of the
14 taxpayer's notice of intention to file a petition for
15 reassessment. A petition for reassessment shall thereafter be
16 filed within 30 days after such basis of assessment has been
17 mailed to the taxpayer. Such petition shall set forth in
18 reasonable detail the grounds upon which the taxpayer claims
19 that the assessment is erroneous or unlawful, in whole or in
20 part, and shall be accompanied by an affidavit or affirmation
21 that the facts contained therein are true and correct and that
22 the petition is not interposed for delay. An extension of time
23 for filing the petition may be allowed for cause but in no case
24 shall such extension exceed one 120 days. The department shall
25 hold such hearings as may be necessary for the purpose, at such
26 times and places as it may determine, and each taxpayer who has
27 duly filed such petition for reassessment shall be notified by
28 the department of the time when, and the place where, such
29 hearing in his case will be held. It shall be the duty of the
30 department, within six months after receiving a filed petition
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1 for reassessment, to dispose of the issue raised by such
2 petition and mail notice of the department's decision to the
3 petitioner, except that the taxpayer and the department may, by
4 stipulation, extend such disposal time by not more than six
5 additional months.
6 Section 211-B. Assessment to recover erroneous refunds.
7 The department may, within two years of the granting of any
8 refund or credit, or within the period in which an assessment
9 could have been filed by the department with respect to the
10 transaction pertaining to which the refund was granted,
11 whichever period shall last occur, file an assessment to recover
12 any refund or part thereof or credit or part thereof which was
13 erroneously made or allowed.
14 Section 212-B. Review by board of finance and revenue.
15 Within 60 days after the date of mailing of notice by the
16 department of the decision on any petition for reassessment
17 filed with it, the person against whom such assessment was made
18 may, by petition, request the Board of Finance and Revenue to
19 review such decision. The failure of the department to notify
20 the petitioner of a decision within the time provided for by
21 section 210-B shall act as a denial of such petition, and a
22 petition for review may be filed with the Board of Finance and
23 Revenue within 120 days of the date prior to which the
24 department should have mailed to the petitioner its notice of
25 decision. Every petition for review shall state specifically the
26 reasons on which the petitioner relies, or shall incorporate by
27 reference the petition for reassessment in which the reasons are
28 stated. The petition shall be supported by affidavit that it is
29 not made for the purpose of delay and that the facts set forth
30 therein are true. The Board of Finance and Revenue shall act
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1 finally in disposing of petitions filed with it within six
2 months after they have been received. In the event of the
3 failure of the board to dispose of any petition within six
4 months, the action taken by the department, upon the petition
5 for reassessment, shall be sustained. The Board of Finance and
6 Revenue may sustain the action taken by the department on the
7 petition for reassessment, or it may reassess the tax due. The
8 board shall give notice of its action to the department and to
9 the petitioner.
10 Section 213-B. Appeal to Commonwealth Court.
11 Any person aggrieved by the decision of the Board of Finance
12 and Revenue or by the board's failure to act upon a petition for
13 review within six months may appeal in the manner provided by
14 law for appeals in the case of tax settlements.
15 Section 214-B. Burden of proof.
16 In all cases of petitions for reassessment, review or appeal,
17 the burden of proof shall be upon the petitioner or appellant,
18 as the case may be.
19 Section 215-B. Collection upon failure to request reassessment,
20 review or appeal.
21 (a) General rule.--The department may collect any tax:
22 (1) If an assessment of tax is not paid within ten days
23 or 30 days as the case may be after notice thereof to the
24 taxpayer, and no petition for reassessment has been filed.
25 (2) Within 60 days from the date of reassessment, if no
26 petition for review has been filed.
27 (3) Within 30 days from the date of the decision of the
28 Board of Finance and Revenue upon a petition for review, or
29 of the expiration of the board's time for acting upon such
30 petition, if no appeal has been made.
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1 (4) In all cases of judicial sales, receiverships,
2 assignments or bankruptcies.
3 (b) Grounds of defense.--In any such case in a proceeding
4 for the collection of such taxes, the person against whom they
5 were assessed shall not be permitted to set up any ground of
6 defense that might have been determined by the department, the
7 Board of Finance and Revenue or the courts, except the defense
8 of failure of the department to mail notice of assessment or
9 reassessment to the taxpayer and the defense of payment of
10 assessment or reassessment may be raised in proceedings for
11 collection by a motion to stay the proceedings.
12 Section 216-B. Lien for taxes.
13 (a) Lien imposed.--If any person liable to pay any tax
14 neglects or refuses to pay the same after demand, the amount,
15 including any interest, addition or penalty, together with any
16 costs, shall be a lien in favor of the Commonwealth upon the
17 property, both real and personal, of such person but only after
18 same has been entered and docketed of record by the prothonotary
19 of the county where such property is situated. The department
20 may, at any time, transmit, to the prothonotaries of the
21 respective counties, certified copies of all liens for taxes
22 imposed by this act and penalties and interest. It shall be the
23 duty of each prothonotary receiving the lien to enter and docket
24 the same of record in his office, which lien shall be indexed as
25 judgments are now indexed. No prothonotary shall require, as a
26 condition precedent to the entry of such liens, the payment of
27 the costs incident thereto.
28 (b) Priority of lien and effect on judicial sale; no
29 discharge by sale on junior lien.--The lien shall have priority
30 from the date of its recording and shall be fully paid and
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1 satisfied out of the proceeds of any judicial sale of property
2 subject thereto before any other obligation, judgment, claim,
3 lien or estate to which the property may subsequently become
4 subject, except costs of the sale and of the writ upon which the
5 sale was made, and real estate taxes and municipal claims
6 against such property, but shall be subordinate to mortgages and
7 other liens existing and duly recorded or entered of record
8 prior to the recording of the tax lien. In the case of a
9 judicial sale of property, subject to a lien imposed, hereunder
10 upon a lien or claim over which the lien imposed hereunder has
11 priority, the sale shall discharge the lien to the extent only
12 that the proceeds are applied to its payment, and the lien shall
13 continue in full force and effect as to the balance remaining
14 unpaid. There shall be no inquisition or condemnation upon any
15 judicial sale of real estate made by the Commonwealth pursuant
16 to the provisions of this section. The lien of the taxes,
17 interest and penalties, shall continue for five years from the
18 date of entry, and may be revived and continued in the manner
19 now or hereafter provided for renewal of judgments, or as may be
20 provided in the act of April 9, 1929 (P.L.343, No.176), known as
21 The Fiscal Code, and a writ of execution may directly issue upon
22 the lien without the issuance and prosecution to judgment of a
23 writ of scire facias, except that not less than ten days before
24 issuance of any execution on the lien, notice of the filing and
25 the effect of the lien shall be sent by registered mail to the
26 taxpayer at his last known post office address, and the lien
27 shall have no effect upon any stock of goods, wares or
28 merchandise regularly sold or leased in the ordinary course of
29 business by the person against whom said lien has been entered,
30 unless and until a writ of execution has been issued and a levy
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1 made upon said stock of goods, wares and merchandise.
2 (c) Duty of prothonotary.--Willful failure of a prothonotary
3 to carry out any duty imposed by this section shall be a
4 misdemeanor, and, upon conviction, the prothonotary shall be
5 sentenced to pay a fine not exceeding $1,000 and costs of
6 prosecution, or to undergo imprisonment not exceeding one year,
7 or both.
8 (d) Priority of tax.--Except as otherwise provided in this
9 section, in the distribution, voluntary or compulsory, in
10 receivership, bankruptcy or otherwise, of the property or estate
11 of any person, all taxes imposed by this article which are due
12 and unpaid shall be paid from the first money available for
13 distribution in priority to all other claims and liens, except
14 insofar as the laws of the United States may give a prior claim
15 to the Federal Government. Any person charged with the
16 administration or distribution of any such property or estate,
17 who violates the provisions of this section shall be personally
18 liable for any taxes imposed by this article which are accrued
19 and unpaid and are chargeable against the person whose property
20 or estate is being administered or distributed.
21 (e) Other remedies.--Subject to the limitations contained in
22 this article as to the assessment of taxes, nothing contained in
23 this section shall be construed to restrict, prohibit or limit
24 the use by the department in collecting taxes finally due and
25 payable of any other remedy or procedure available at law or
26 equity for the collection of debts.
27 Section 217-B. Suit for taxes.
28 (a) Commencement.--At any time within three years after any
29 tax or any amount of tax is finally due and payable, the
30 department may commence an action in the courts of this
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1 Commonwealth, of any state or of the United States, in the name
2 of the Commonwealth of Pennsylvania, to collect the amount of
3 tax due together with additions, interest, penalties and costs
4 in the manner provided at law or in equity for the collection of
5 ordinary debts.
6 (b) Procedure.--The Attorney General shall prosecute the
7 action and, except as provided herein, the provisions of the
8 Rules of Civil Procedure and the provisions of the laws of this
9 Commonwealth relating to civil procedures and remedies shall, to
10 the extent that they are applicable, be available in such
11 proceedings.
12 (c) Other remedies.--The provisions of this section are in
13 addition to any process, remedy or procedure for the collection
14 of taxes provided by this article or by the laws of this
15 Commonwealth, and this section is neither limited by nor
16 intended to limit any such process, remedy or procedure.
17 Section 218-B. Service.
18 Any person maintaining a place of business within this
19 Commonwealth is deemed to have appointed the Secretary of the
20 Commonwealth as his agent for the acceptance of service of
21 process or notice in any proceedings for the enforcement of the
22 civil provisions of this article, and any service made upon the
23 Secretary of the Commonwealth as such agent shall be of the same
24 legal force and validity as if such service had been personally
25 made upon such person. Where service cannot be made upon such
26 person in the manner provided by other laws of this Commonwealth
27 relating to service of process, service may be made upon the
28 Secretary of the Commonwealth and, in such case, a copy of the
29 process or notice shall also be personally served upon any agent
30 or representative of such person who may be found within this
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1 Commonwealth, or where no such agent or representative may be
2 found a copy of the process or notice shall forthwith be sent by
3 registered mail to such person at the last known address of his
4 principal place of business, home office or residence.
5 Section 219-B. Limitations.
6 (a) Limitation on assessment and collection.--The amount of
7 the tax imposed by this act shall be assessed within three years
8 after the date when the return is filed or the end of the year
9 in which the tax liability arises, whichever shall last occur.
10 An assessment may be made at any time during such period
11 notwithstanding that the department may have made one or more
12 previous assessments against the taxpayer for the year in
13 question, or for any part of such year. In any such case, no
14 credit shall be given for any penalty previously assessed or
15 paid.
16 (b) Failure to file return.--Where no return is filed, the
17 amount of the tax due may be assessed and collected at any time
18 as to taxable transactions not reported.
19 (c) False or fraudulent return.--Where the taxpayer
20 willfully files a false or fraudulent return with intent to
21 evade the tax imposed by this article, the amount of tax due may
22 be assessed and collected at any time.
23 (d) Extension of limitation period.--Notwithstanding the
24 foregoing provisions of this section, where, before the
25 expiration of the period prescribed therein for the assessment
26 of a tax, a taxpayer has consented in writing that such period
27 be extended, the amount of tax due may be assessed at any time
28 within such extended period. The period so extended may be
29 extended further by subsequent consents, in writing, made before
30 the expiration of the extended period.
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1 Section 220-B. Interest.
2 If any amount of tax imposed by this article is not paid to
3 the department on or before the last date prescribed for
4 payment, interest on such amount at the rate of 0.75% per month
5 for each month or fraction thereof from such date shall be paid
6 for the period from such last date to the date paid.
7 Section 221-B. Additions to tax.
8 (a) Failure to file return.--In the case of failure to file
9 any return on the date prescribed, determined with regard to any
10 extension of time for filing, and in the case in which a return
11 filed understates the true amount due by more than 50%, there
12 shall be added to the amount of tax actually due 5% of the
13 amount of such tax if the failure to file a proper return is for
14 not more than one month, with an additional 5% for each
15 additional month or fraction thereof during which such failure
16 continues, not exceeding 25% in the aggregate. In every such
17 case, at least $2 shall be added.
18 (b) Addition for understatement.--There shall be added to
19 every assessment under section 209-B(b) an addition equal to 5%
20 of the amount of the understatement and no addition to the tax
21 shall be paid under section 209-B(a).
22 (c) Interest.--If the department assesses a tax according to
23 section 209-B(a), (b) or (c), there shall be added to the amount
24 of the deficiency interest at the rate of 0.75% per month for
25 each month or fraction thereof from the due date prescribed by
26 this article to the date of notice of the assessment.
27 Section 222-B. Penalties.
28 (a) Penalty assessed as tax.--The penalties, additions,
29 interest and liabilities provided by this article shall be paid
30 upon notice and demand by the department, and shall be assessed
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1 and collected in the same manner as taxes. Except as otherwise
2 provided, any reference in this article to "tax" imposed by this
3 article shall be deemed also to refer to the penalties,
4 additions, interest and liabilities provided by this article.
5 (b) Attempt to evade or defeat tax.--Any person who
6 willfully attempts to evade or defeat the tax imposed by this
7 article or payment thereof, or to assist any other person to
8 evade or defeat the tax imposed by this article or the payment
9 thereof, or to receive a refund improperly, shall, in addition
10 to other penalties provided by law, be liable for a penalty
11 equal to one-half of the total amount of the tax evaded. In any
12 direct proceeding arising out of a petition for reassessment or
13 refund as provided in this article, in which an issue of fact is
14 raised with respect to whether a return is fraudulent or with
15 respect to the propriety of the imposition by the department of
16 the penalty prescribed in this subsection, the burden of proof
17 with respect to such issue shall be upon the department.
18 Section 223-B. Fraudulent return.
19 Any person who with intent to defraud the Commonwealth shall
20 willfully make, or cause to be made, any false return required
21 by this article shall be guilty of a misdemeanor and, upon
22 conviction, shall be sentenced to pay a fine not more than
23 $2,000 or to undergo imprisonment not exceeding three years, or
24 both.
25 Section 224-B. Abatement of additions or penalties.
26 Upon the filing of a petition for reassessment or a petition
27 for refund by a taxpayer, additions or penalties imposed upon
28 such taxpayer by this act may be waived or abated, in whole or
29 in part, where the petitioner has established that he has acted
30 in good faith, without negligence and with no intent to defraud.
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1 Section 225-B. Rules and regulations.
2 The department is charged with enforcement of this article
3 and shall prescribe, adopt, promulgate and enforce, rules and
4 regulations not inconsistent with the provisions of this
5 article, relating to any matter or thing pertaining to the
6 administration and enforcement of the provisions of this
7 article, and the collection of taxes, penalties and interest
8 imposed by this article. The department may prescribe the
9 extent, if any, to which any of such rules and regulations shall
10 be applied without retroactive effect.
11 Section 226-B. Recordkeeping.
12 (a) General rule.--Every person liable for the tax imposed
13 by this article shall keep records, render statements, make
14 returns and comply with such rules and regulations as the
15 department may prescribe. The department may require any
16 person, by notice served upon such person, or by regulations, to
17 make such returns, render such statements or keep such records
18 as the department deems sufficient to show whether or not such
19 person is liable for the tax.
20 (b) Records of nonresidents.--A nonresident who does
21 business in this Commonwealth shall keep adequate records of
22 such business or businesses and of the tax due with respect
23 thereto, which records shall at all times be retained within
24 this Commonwealth unless retention outside the Commonwealth is
25 authorized by the department. The department may require a
26 taxpayer who desires to retain records or tax collections
27 outside the Commonwealth to assume reasonable out-of-State audit
28 expenses.
29 Section 227-B. Examinations.
30 The department or any of its authorized agents is hereby
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1 authorized to examine the books, papers and records of any
2 taxpayer in order to verify the accuracy and completeness of any
3 return made or, if no return was made, to ascertain and assess
4 the tax imposed by this article. The department may require the
5 preservation of all such books, papers and records for any
6 period deemed proper by it but not to exceed three years from
7 the end of the calendar year to which the records relate.
8 Taxpayers shall give to the department or its agent the means,
9 facilities and opportunity for such examinations and
10 investigation. The department may examine any person under oath
11 concerning the tax imposed by this article and it may compel the
12 production of books, papers and records and the attendance of
13 all persons whether as parties or witnesses whom it believes to
14 have pertinent knowledge. The procedure for such hearings or
15 examinations shall be the same as that provided by the act of
16 April 9, 1929 (P.L.343, No.176), known as The Fiscal Code,
17 relating to inquisitorial powers of fiscal officers.
18 Section 228-B. Unauthorized disclosure.
19 Any information gained by the department as a result of any
20 return, examination, investigation, hearing or verification,
21 required or authorized by this article, shall be confidential,
22 except for official purposes and except in accordance with
23 proper judicial order or as otherwise provided by law. Any
24 person unlawfully divulging such information commits a
25 misdemeanor and, upon conviction, shall be sentenced to pay a
26 fine not more than $1,000 and costs of prosecution or to undergo
27 imprisonment for not more than one year, or both.
28 Section 229-B. Cooperation with other governments.
29 Notwithstanding the provisions of section 228-B, the
30 department may permit the Commissioner of Internal Revenue of
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1 the United States, or the proper officer of any state, or the
2 authorized representative of either such officer, to inspect the
3 tax returns of any taxpayer, or may furnish to such officer or
4 to his authorized representative an abstract of the return of
5 any taxpayer, or supply him with information concerning any item
6 contained in any return or disclosed by the report of any
7 examination or investigation of the return of any taxpayer. This
8 permission shall be granted only if the statutes of the United
9 States or of such other state, as the case may be, grant
10 substantially similar privileges to the proper officer of the
11 Commonwealth charged with the administration of this article.
12 Section 230-B. Interstate compacts.
13 The Governor may confer with the Governor and authorized
14 representatives of other states with respect to reciprocal tax
15 collection between Pennsylvania and other states, if necessary.
16 Section 231-B. Bonds.
17 (a) Taxpayer to file bond.--Whenever the department in its
18 discretion deems it necessary to protect the revenues to be
19 obtained under the provisions of this article, it may require
20 any nonresident natural person or any foreign corporation,
21 association, fiduciary, partnership or other entity, not
22 authorized to do business within this Commonwealth or not having
23 an established place of business in this Commonwealth and
24 subject to the tax imposed by this article, to file a bond
25 issued by a surety company authorized to do business in this
26 Commonwealth and approved by the Insurance Commissioner as to
27 solvency and responsibility, in such amounts as it may fix, to
28 secure the payment of any tax or penalties due, or which may
29 become due, from such natural person or corporation. The
30 department may also require such a bond of any person
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1 petitioning the department for reassessment, in the case of any
2 assessment over $500 or where it is of the opinion that the
3 ultimate collection is in jeopardy. The department may, for a
4 period of three years, require such a bond of any person who has
5 on three or more occasions within a 12-month period either filed
6 a return or made payment to the department more than 30 days
7 late. In the event that the department determines that a
8 taxpayer is to file such a bond, it shall give notice to such
9 taxpayer to that effect, specifying the amount of the bond
10 required. The taxpayer shall file such bond within five days
11 after the giving of such notice by the department unless, within
12 such five days, the taxpayer shall request, in writing, a
13 hearing before the Secretary of Revenue or his representative at
14 which hearing the necessity, propriety and amount of the bond
15 shall be determined by the secretary or such representative.
16 Such determination shall be final and shall be complied with
17 within 15 days after notice is mailed to the taxpayer.
18 (b) Securities in lieu of bond.--In lieu of the bond
19 required by this section, securities approved by the department,
20 or cash in such amount as it may prescribe, may be deposited.
21 Such securities or cash shall be kept in the custody of the
22 department, who may, at any time, without notice to the
23 depositor, apply them to any tax and/or interest or penalties
24 due, and for that purpose the securities may be sold by the
25 department, at public or private sale, upon five days written
26 notice to the depositor.
27 (c) Failure to file bond.--The department may file a lien
28 against any taxpayer who fails to file a bond when required to
29 do so under this section. All funds received upon execution of
30 the judgment on such lien shall be refunded to the taxpayer with
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1 3% interest should a final determination be made that he does
2 not owe any payment to the department.
3 Section 3. Section 1102-C of the act, amended July 2, 1986
4 (P.L.318, No.77), is amended to read:
5 Section 1102-C. Imposition of Tax.--Every person who makes,
6 executes, delivers, accepts or presents for recording any
7 document or in whose behalf any document is made, executed,
8 delivered, accepted or presented for recording, shall be subject
9 to pay for and in respect to the transaction or any part
10 thereof, or for or in respect of the vellum parchment or paper
11 upon which such document is written or printed, a State tax [at
12 the rate of one per cent of] based on the value of the real
13 estate represented by such document, which State tax shall be
14 payable at the earlier of the time the document is presented for
15 recording or within thirty days of acceptance of such document
16 or within thirty days of becoming an acquired company. The rate
17 of the State tax shall be as follows:
18 (1) One per cent on all transactions under this section.
19 (2) After June 30, 2005, an additional two per cent on all
20 transactions under this section.
21 Section 4. Section 1106-C(c) of the act, amended June 29,
22 2002 (P.L.559, No.89), is amended to read:
23 Section 1106-C. Stamps, Commissions, Payments and
24 Transfers.--* * *
25 (c) [All] (1) Except as provided in clause (2), all moneys
26 paid in accordance with this article shall be credited to the
27 General Fund.
28 (2) All moneys paid in accordance with section 1102-C(2)
29 shall be credited to and deposited into the Education Operating
30 Fund.
20040H2750B4232 - 24 -
1 * * *
2 Section 5. The act is amended by adding a section to read:
3 Section 1103-D. Disposition of Revenue Raised by School
4 Districts.--Notwithstanding any law to the contrary, all moneys
5 paid under this article to school districts imposing the Local
6 Real Estate Transfer Tax after June 30, 2005, shall be forwarded
7 to the Department of Revenue and shall be credited to and
8 deposited into the Education Operating Fund.
9 Section 6. The addition of Article II-B of the act shall
10 apply to taxable years beginning after December 31, 2005.
11 Section 7. This act shall take effect as follows:
12 (1) The repeal of Article II of the act shall take
13 effect January 1, 2006.
14 (2) The remainder of this act shall take effect
15 immediately.
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