PRINTER'S NO. 4685
No. 2962 Session of 2006
INTRODUCED BY STETLER, NICKOL, BENNINGHOFF, CALTAGIRONE, DIVEN,
GRUCELA, HERSHEY, KOTIK, MARKOSEK, MUNDY, SATHER, SCAVELLO,
SOLOBAY, SONNEY, E. Z. TAYLOR, DeLUCA, GOODMAN, SAYLOR,
PRESTON, FABRIZIO, BOYD AND DeWEESE, OCTOBER 3, 2006
REFERRED TO COMMITTEE ON FINANCE, OCTOBER 3, 2006
AN ACT
1 Amending the act of June 27, 2006 (1st Sp.Sess., P.L. , No.1),
2 entitled "An act providing for taxation by school districts,
3 for the State funds formula, for tax relief in first class
4 cities, for school district choice and voter participation,
5 for other school district options and for a task force on
6 school cost reduction; making an appropriation; prohibiting
7 prior authorized taxation; providing for installment payment
8 of taxes; restricting the power of certain school districts
9 to levy, assess and collect taxes; and making related
10 repeals," authorizing counties to impose sales and use and
11 personal income taxes; and providing for the levying,
12 assessment and collection of taxes and for the powers and
13 duties of the Department of Revenue and the State Treasurer.
14 The General Assembly of the Commonwealth of Pennsylvania
15 hereby enacts as follows:
16 Section 1. The act of June 27, 2006 (1st Sp.Sess., P.L. ,
17 No.1), known as the Taxpayer Relief Act, is amended by adding a
18 chapter to read:
19 CHAPTER 4
20 OPTIONAL COUNTY TAX IMPOSITION
21 Section 401. Scope.
22 This chapter relates to optional county tax imposition.
1 Section 402. Definitions.
2 The following words and phrases when used in this chapter
3 shall have the meanings given to them in this section unless the
4 context clearly indicates otherwise:
5 "Board of county commissioners." Includes the successor in
6 function to the board of county commissioners in a county which
7 has adopted a home rule charter under the provisions 53 Pa.C.S.
8 Pt. III Subpt. E (relating to home rule and optional plan
9 government) and a city council of a city of the first class.
10 "Classes of income." The classes of income set forth in
11 section 303 of the act of March 4, 1971 (P.L.6, No.2), known as
12 the Tax Reform Code of 1971.
13 "Compensation." As defined in section 301 of the act of
14 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
15 1971.
16 "County." A county-level municipality within this
17 Commonwealth, regardless of classification. The term includes a
18 county which has adopted a home rule charter or optional plan of
19 government under the provisions of 53 Pa.C.S. Pt. III Subpt. E
20 (relating to home rule and optional plan government).
21 "Current year." The calendar year or fiscal year for which
22 the tax is levied.
23 "Department." The Department of Revenue of the Commonwealth.
24 "Domicile." As defined in section 13 of the act of December
25 31, 1965 (P.L.1257, No.511), known as The Local Tax Enabling
26 Act.
27 "Employer." As defined in section 301 of the act of March 4,
28 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
29 "Governing body." The board of county commissioners,
30 including the successor in function to the board of county
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1 commissioners in a county which has adopted a home rule charter
2 under the provisions of 53 Pa. C. S. Pt. III Subpt. E (relating
3 to home rule and optional plan government).
4 "Individual." As defined in section 301 of the act of March
5 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
6 "Local Tax Enabling Act." The act of December 31, 1965
7 (P.L.1257, No.511), known as The Local Tax Enabling Act.
8 "Municipality." A city of the first class, city of the
9 second class, city of the second class A, city of the third
10 class, borough, incorporated town, township of the first class,
11 township of the second class, home rule municipality, optional
12 plan municipality, optional form municipality or similar general
13 purpose unit of government which may after the effective date of
14 this act be established by statute.
15 "Nonresident." An individual domiciled outside the
16 municipality.
17 "Ordinance." Includes a resolution.
18 "Personal income." The classes of income enumerated in
19 section 303 of the act of March 4, 1971 (P.L.6, No.2), known as
20 the Tax Reform Code of 1971, and upon which is imposed a
21 personal income tax by the Commonwealth.
22 "Preceding year." The calendar year or fiscal year before
23 the current year.
24 "School district." A school district of the first class,
25 first class A, second class, third class or fourth class,
26 including any independent school district.
27 "Succeeding year." The calendar year or fiscal year
28 following the current year.
29 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
30 known as the Tax Reform Code of 1971.
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1 "Taxpayer." An individual required under this act to file a
2 tax return or to pay a tax.
3 Section 403. Preemption.
4 No act of the General Assembly in effect prior to or after
5 the effective date of this section shall vacate or preempt any
6 ordinance passed or adopted under the authority of this chapter
7 or any other act providing authority for the imposition of a tax
8 by a county, unless the act of the General Assembly expressly
9 vacates or preempts the authority to pass or adopt such
10 ordinances.
11 Section 404. Rates of taxation in home rule counties.
12 A home rule county may not fix the rate of taxation for the
13 subjects of taxation authorized under this chapter in excess of
14 the rates fixed in this chapter.
15 Section 405. General tax authorization.
16 Subject to section 407, a county shall have the power and may
17 by ordinance levy, assess and collect or provide for the
18 levying, assessment and collection of taxes on the sale or use
19 of tangible personal property and services at a rate of 1% and
20 on the personal income of resident taxpayers up to a maximum
21 rate of 1% for property tax reduction purposes as it shall
22 determine on any or all of the subjects of taxation set forth in
23 this chapter within the geographical limits of the county.
24 Section 406. Continuity of tax.
25 A tax levied under the provisions of this chapter shall
26 continue in force on a calendar year basis, as the case may be,
27 without annual reenactment.
28 Section 407. Election to participate.
29 (a) General rule.--
30 (1) Except as provided in paragraph (2), a governing
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1 body which does not within one year of the effective date of
2 this section participate under the provisions of this act
3 shall be subject to the provisions set forth in subsection
4 (b).
5 (2) This section shall not apply to a city of the first
6 class or a city of the second class.
7 (b) Public referendum.--Subject to the notice and public
8 hearing requirements of section 413(a) or 421(a), whichever is
9 applicable, a governing body which does not elect to participate
10 under this act within one year of the effective date of this
11 section, shall obtain the approval of the electorate of the
12 affected county in a public referendum at the November election
13 preceding the calendar year when the taxes will be initially
14 imposed. A separate referendum question shall be used for the
15 proposed sales and use tax and proposed personal income tax and
16 shall state the initial rate of the proposed tax and that it
17 will be used to fund property tax reduction.
18 Section 408. Construction.
19 The tax imposed by the governing body under this chapter
20 shall be in addition to any tax imposed by the Commonwealth
21 under Article II of the Tax Reform Code. Except for the
22 differing situs provisions under section 410, the provisions of
23 Article II of the Tax Reform Code shall apply to the tax.
24 Section 409. Imposition.
25 (a) Sales.--The governing body may levy and assess upon each
26 separate sale at retail of tangible personal property or
27 services, as defined in Article II of the Tax Reform Code,
28 within the boundaries of the county, a tax on the purchase
29 price. The tax shall be collected by the vendor from the
30 purchaser and shall be paid over to the Commonwealth as provided
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1 in this chapter.
2 (b) Use.--In any county within which the tax authorized in
3 subsection (a) is imposed, there shall be levied, assessed and
4 collected upon the use, within the county, of tangible personal
5 property purchased at retail, and on services purchased at
6 retail, as defined in Article II of the Tax Reform Code, a tax
7 on the purchase price. The tax shall be paid over to the
8 Commonwealth by the person who makes the use. The use tax
9 imposed under this chapter shall not be paid over to the
10 Commonwealth by any person who has paid the tax imposed by
11 subsection (a) or has paid the tax imposed by this subsection to
12 the vendor with respect to the use.
13 (c) Rate and uniformity.--
14 (1) The tax authorized by subsections (a) and (b) shall
15 be imposed at a rate of 1%.
16 (2) The tax imposed by subsections (a) and (b) shall be
17 uniform.
18 (d) Computation.--The tax imposed under this section shall
19 be computed in the manner set forth in section 503(e)(2) of the
20 act of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
21 Intergovernmental Cooperation Authority Act for Cities of the
22 First Class.
23 Section 410. Situs.
24 The situs of sales at retail or uses, including leases, of
25 motor vehicles, aircraft, motorcraft and utility services shall
26 be determined in the manner specified by section 504 of the act
27 of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
28 Intergovernmental Cooperation Authority Act for Cities of the
29 First Class.
30 Section 411. Licenses.
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1 A license for the collection of the tax imposed by this
2 chapter shall be issued in the same manner as is provided for in
3 section 505 of the act of June 5, 1991 (P.L.9, No.6), known as
4 the Pennsylvania Intergovernmental Cooperation Authority Act for
5 Cities of the First Class. Licensees shall be entitled to the
6 same discount as provided in section 227 of the Tax Reform Code.
7 Section 412. Rules and regulations; collection costs.
8 (a) Regulations.--Rules and regulations shall be applicable
9 to the taxes imposed under section 409 in the same manner as is
10 provided for in section 506(1) and (2) of 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.
13 (b) Administrative costs.--The department, to cover its
14 costs of administration, shall be entitled to retain a sum equal
15 to 1% of the revenues collected under this chapter for its
16 administrative costs. Any retained sum that is unused by the
17 department by the end of the fiscal year shall be remitted to
18 the State Treasurer. When the annual operating budget for the
19 department is submitted to the General Assembly, the department
20 shall also submit to the chairman and minority chairman of the
21 Appropriations Committee of the Senate and to the chairman and
22 minority chairman of the Appropriations Committee of the House
23 of Representatives the actual sums retained for costs of
24 collection in the preceding fiscal year, together with all
25 supporting details.
26 Section 413. Procedure and administration.
27 (a) Ordinance.--A county desiring to impose the tax
28 authorized by section 409 shall give at least 60 days' written
29 notice to every municipality and school district located in the
30 county of its intent to impose the tax and shall adopt an
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1 ordinance after the expiration of 60 days after the date of the
2 notice. The notice and an ordinance shall state the tax rate and
3 refer to this chapter. The ordinance shall authorize the
4 imposition of all taxes provided for in section 409. Prior to
5 adopting an ordinance imposing the tax authorized by section
6 409, the governing body shall give public notice of its intent
7 to adopt the ordinance in the manner provided by section 4 of
8 the Local Tax Enabling Act and shall conduct at least one public
9 hearing regarding the proposed adoption of the ordinance.
10 (b) Notification to department.--A certified copy of the
11 county ordinance shall be delivered to the department by
12 September 1 of the year prior to the effective date of the
13 ordinance. The county ordinance shall become effective on the
14 January 1 following at least four months after the date of
15 enactment of the county ordinance.
16 Section 414. County sales and use tax funds.
17 There is hereby established for each county levying the tax
18 under section 409 the (proper name) County Sales and Use Tax
19 Fund. The State Treasurer shall be custodian of each fund which
20 shall be subject to the provisions of law applicable to funds
21 listed in section 302 of the act of April 9, 1929 (P.L.343,
22 No.176), known as The Fiscal Code. Taxes imposed under section
23 409 shall be received by the department and paid to the State
24 Treasurer and, along with interest and penalties, less any
25 collection costs allowed under this chapter and any refunds and
26 credits paid, shall be credited to the respective fund not less
27 frequently than every two weeks. During any period prior to the
28 credit of moneys to each fund, interest earned on moneys
29 received by the department and paid to the State Treasurer under
30 this chapter shall be deposited into the respective fund. All
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1 moneys in each fund, including moneys credited to that fund
2 under this section, prior year encumbrances and the interest
3 earned on the fund, shall not lapse or be transferred to any
4 other fund, but shall remain in that fund. Pending their
5 disbursement, moneys received on behalf of or deposited into
6 each fund shall be invested or reinvested as are other moneys in
7 the custody of the State Treasurer in the manner provided by
8 law. All earnings received from the investment or reinvestment
9 of the moneys shall be credited to the respective funds.
10 Section 415. Disbursements.
11 (a) General rule.--On or before the tenth day of every
12 month, the State Treasurer shall make the disbursements on
13 behalf of the county imposing the tax out of the moneys which
14 are, as of the last day of the previous month, contained in the
15 respective county sales and use tax fund.
16 (b) Disbursement to counties.--The State Treasurer shall
17 disburse to a county imposing the tax authorized under section
18 409 an amount of money equal to 100% of the tax collected in
19 that county and remitted to the department and deposited in the
20 respective county sales and use tax fund minus any costs
21 retained under section 412(b).
22 (c) Penalty.--If disbursements are not made on or before the
23 tenth day of each month, a 5% penalty shall be added to the
24 disbursement plus an additional 1% late charge per month
25 delayed.
26 Section 416. Allocations.
27 (a) Allocations to counties.--Each county shall retain 5% of
28 the disbursement it receives under this chapter.
29 (b) Allocations to school districts.--
30 (1) Except as provided in paragraph (2), each school
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1 district in a county shall be allocated a portion of 95% of
2 the total allocation by a county of all sales and use and
3 personal income tax funds collected under this chapter to
4 school districts in that county which is equal to the total
5 allocation to school districts in that county multiplied by
6 the ratio of average daily membership of the school district
7 divided by the sum of the average daily membership of all
8 school districts in the county.
9 (2) If a school district is located in more than one
10 county, it shall not receive an allocation under paragraph
11 (1) unless all of the counties in which it is located have
12 imposed a sales and use tax, a personal income tax, or both,
13 under this chapter.
14 (c) Definition.--As used in this section, the following
15 words and phrases shall have the meanings given to them in this
16 subsection:
17 "Average daily membership." As defined by the act of March
18 10, 1949 (P.L.30, No.14), known as the Public School Code of
19 1949.
20 Section 417. Construction.
21 The tax imposed by the governing body under this chapter
22 shall be in addition to any tax imposed by the Commonwealth
23 under Article III of the Tax Reform Code. Except for the
24 differing provisions under sections 424, 425 and 426, the
25 provisions of Article III of the Tax Reform Code shall apply to
26 the tax.
27 Section 418. Personal income tax.
28 In lieu of or in addition to imposing the tax under section
29 409, each county shall have the power and may levy, assess and
30 collect a tax on the personal income of resident taxpayers of
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1 the county up to a maximum rate of 1.0%.
2 Section 419. Collections.
3 A county may either collect the tax imposed under section 418
4 or may enter into an agreement with the department for
5 collection of the tax.
6 Section 420. Rules and regulations; collection costs.
7 (a) Regulations.--Rules and regulations shall be applicable
8 to the taxes imposed under section 418 in the same manner as is
9 provided for in Article III of the Tax Reform Code.
10 (b) Administrative costs.--The county or the department, to
11 cover its costs of administration under this chapter, may retain
12 a sum equal to 1% of the revenues collected under this
13 subchapter for those administrative costs. When the annual
14 operating budget for the department is submitted to the General
15 Assembly, the department shall also submit to the chairman and
16 minority chairman of the Appropriations Committee of the Senate
17 and to the chairman and minority chairman of the Appropriations
18 Committee of the House of Representatives the actual sums
19 retained for costs of collection under this chapter in the
20 preceding fiscal year, together with all supporting details.
21 Section 421. Procedure and administration.
22 (a) Ordinance.--The governing body, in order to impose the
23 tax authorized by section 418, shall adopt an ordinance which
24 shall refer to this chapter. Prior to adopting an ordinance
25 imposing the tax authorized by section 418, the respective
26 governing body shall give public notice of its intent to adopt
27 the ordinance in the manner provided by section 4 of the Local
28 Tax Enabling Act and shall conduct at least one public hearing
29 regarding the proposed adoption of the ordinance.
30 (b) Delivery.--A certified copy of the ordinance imposing
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1 the tax shall be delivered to the department no later than 90
2 days prior to the effective date of the ordinance.
3 Section 422. Local personal income tax funds.
4 There is hereby established for each county levying the tax
5 under section 418 the (proper name) Personal Income Tax Fund.
6 The State Treasurer shall be custodian of each fund which shall
7 be subject to the provisions of law applicable to funds listed
8 in section 302 of the act of April 9, 1929 (P.L.343, No.176),
9 known as The Fiscal Code. Taxes imposed under section 418 shall
10 be received by the department and paid to the State Treasurer
11 and, along with interest and penalties, less any collection
12 costs allowed under this chapter and any refunds and credits
13 paid, shall be credited to the respective funds not less
14 frequently than every two weeks. During any period prior to the
15 credit of moneys to each fund, interest earned on moneys
16 received by the department and paid to the State Treasurer under
17 this chapter shall be deposited into that fund. All moneys in
18 each fund, including moneys credited to that fund under this
19 section, prior year encumbrances and the interest earned
20 thereon, shall not lapse or be transferred to any other fund,
21 but shall remain in that fund. Pending their disbursement,
22 moneys received on behalf of or deposited into each fund shall
23 be invested or reinvested as are other moneys in the custody of
24 the State Treasurer in the manner provided by law. All earnings
25 received from the investment or reinvestment of the moneys shall
26 be credited to the respective funds.
27 Section 423. Disbursements.
28 On or before the April 10, July 10, October 10 and the next
29 succeeding January 10, the State Treasurer shall make the
30 disbursements to each county imposing the tax out of the moneys
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1 which are, as of the last day of the previous month, contained
2 in the respective personal income tax funds. If disbursements
3 are not made on or before the dates listed in this section, a 5%
4 penalty shall be added to the disbursement, plus a 1% late
5 charge per month delayed. This section shall only apply to a
6 county which imposes a tax under section 418.
7 Section 424. Credits.
8 The provisions of section 14 of the Local Tax Enabling Act
9 shall be used to determine any credits under the provisions of
10 this act for any tax imposed under section 418.
11 Section 425. Low-income tax provisions.
12 The provisions of section 304 of the Tax Reform Code shall be
13 applied by any county which levies a tax under section 418 to
14 any qualified individual.
15 Section 426. Regulations.
16 Each county may adopt regulations for the processing of
17 claims under sections 424 and 425.
18 Section 427. Property tax reduction.
19 (a) County tax reduction.--One hundred percent of the
20 disbursement that the county retains under section 416(a) shall
21 be used to reduce the county's real property tax rate by
22 lowering the millage on a dollar-for-dollar basis.
23 (b) School district or city tax reduction.--
24 (1) Except as provided in paragraph (2), 100% of the
25 disbursement that a school district receives under this
26 chapter shall be used to reduce the school district's real
27 property tax rate by lowering the millage on a dollar-for-
28 dollar basis.
29 (2) A city council of a city of the first class shall
30 reduce any tax imposed on the wages of residents and
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1 nonresidents under the authority of the act of August 5, 1932
2 (Sp.Sess., P.L.45, No.45), referred to as the Sterling Act,
3 in a manner consistent with paragraph (1).
4 (3) Upon the lowering of the millage rate of local
5 school property taxes under paragraph (2), a school district
6 may only increase its millage rate in a subsequent year in
7 accordance with section 333.
8 Section 2. This act shall take effect immediately.
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