PRINTER'S NO. 564
No. 515 Session of 2005
INTRODUCED BY REED, TURZAI, HUTCHINSON, BOYD, BAKER, BASTIAN, BENNINGHOFF, CAPPELLI, CAUSER, CLYMER, CREIGHTON, DALLY, FAIRCHILD, GEIST, GERGELY, GINGRICH, GOOD, GOODMAN, HARRIS, HERSHEY, KILLION, MACKERETH, MANN, McILHATTAN, METCALFE, S. MILLER, MUNDY, MUSTIO, NICKOL, PICKETT, REICHLEY, SAMUELSON, SCAVELLO, SEMMEL, STEIL, STERN, R. STEVENSON, E. Z. TAYLOR, THOMAS, TIGUE AND ZUG, FEBRUARY 15, 2005
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 15, 2005
AN ACT 1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An 2 act relating to tax reform and State taxation by codifying 3 and enumerating certain subjects of taxation and imposing 4 taxes thereon; providing procedures for the payment, 5 collection, administration and enforcement thereof; providing 6 for tax credits in certain cases; conferring powers and 7 imposing duties upon the Department of Revenue, certain 8 employers, fiduciaries, individuals, persons, corporations 9 and other entities; prescribing crimes, offenses and 10 penalties," further providing for the apportionment of 11 business income for corporate net income tax purposes. 12 The General Assembly of the Commonwealth of Pennsylvania 13 hereby enacts as follows: 14 Section 1. Section 401(3)2(a)(9) of the act of March 4, 1971 15 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended May 16 12, 1999 (P.L.26, No.4), is amended to read: 17 Section 401. Definitions.--The following words, terms, and 18 phrases, when used in this article, shall have the meaning 19 ascribed to them in this section, except where the context 20 clearly indicates a different meaning:
1 * * * 2 (3) "Taxable income." * * * 3 2. In case the entire business of any corporation, other 4 than a corporation engaged in doing business as a regulated 5 investment company as defined by the Internal Revenue Code of 6 1954, as amended, is not transacted within this Commonwealth, 7 the tax imposed by this article shall be based upon such portion 8 of the taxable income of such corporation for the fiscal or 9 calendar year, as defined in subclause 1 hereof, and may be 10 determined as follows: 11 (a) Division of Income. 12 * * * 13 (9) (A) Except as provided in subparagraph (B): 14 (i) For the tax years beginning January 1, 2005, all 15 business income shall be apportioned to this State by 16 multiplying the income by a fraction, the numerator of which is 17 the property factor plus the payroll factor three times the 18 sales factor, and the denominator of which is five. 19 (ii) For tax years beginning after December 31, 2004, all 20 business income shall be apportioned to this State by 21 multiplying the income by the sales factor. 22 (B) For purposes of apportionment of the capital stock - 23 franchise tax as provided in section 602 of Article VI of this 24 act, the apportionment fraction shall be the property factor 25 plus the payroll factor plus the sales factor as the numerator, 26 and the denominator shall be three. 27 * * * 28 Section 2. This act shall take effect in 60 days. B8L72MSP/20050H0515B0564 - 2 -