PRIOR PRINTER'S NOS. 1101, 1231, 1429 PRINTER'S NO. 2207
No. 854 Session of 2005
INTRODUCED BY ARMSTRONG, LEMMOND, C. WILLIAMS, COSTA, PIPPY,
ORIE, MUSTO, GORDNER, ERICKSON, M. WHITE, WENGER, PILEGGI,
MADIGAN, RAFFERTY, WAUGH, GREENLEAF, D. WHITE, ROBBINS,
BRIGHTBILL, WONDERLING AND RHOADES, SEPTEMBER 14, 2005
SENATE AMENDMENTS TO HOUSE AMENDMENTS, OCTOBER 23, 2006
AN ACT
1 Amending Titles 53 (Municipalities Generally) and 72 (Taxation <--
2 and Fiscal Affairs) of the Pennsylvania Consolidated
3 Statutes, further providing for taxation and assessment
4 definitions and applicability; consolidating the sales and
5 use tax provisions of the Tax Reform Code of 1971 and further
6 providing for definitions, for imposition, for exclusions,
7 for credit, for crimes, for transfers to Public
8 Transportation Assistance Fund and for transfers to Property
9 Tax Relief Fund; consolidating the special situs for local
10 sales tax provisions of the Tax Reform Code of 1971;
11 consolidating the personal income tax provisions of the Tax
12 Reform Code of 1971 and further providing for imposition and
13 for classes of income; consolidating and extensively revising
14 the Homeowner Tax Relief Act; consolidating the Senior
15 Citizens Rebate and Assistance Act and further providing for
16 property tax, rent rebate and inflation costs and for funds
17 for payment of claims; and making related repeals.
18 AMENDING THE ACT OF MARCH 4, 1971 (P.L.6, NO.2), ENTITLED "AN <--
19 ACT RELATING TO TAX REFORM AND STATE TAXATION BY CODIFYING
20 AND ENUMERATING CERTAIN SUBJECTS OF TAXATION AND IMPOSING
21 TAXES THEREON; PROVIDING PROCEDURES FOR THE PAYMENT,
22 COLLECTION, ADMINISTRATION AND ENFORCEMENT THEREOF; PROVIDING
23 FOR TAX CREDITS IN CERTAIN CASES; CONFERRING POWERS AND
24 IMPOSING DUTIES UPON THE DEPARTMENT OF REVENUE, CERTAIN
25 EMPLOYERS, FIDUCIARIES, INDIVIDUALS, PERSONS, CORPORATIONS
26 AND OTHER ENTITIES; PRESCRIBING CRIMES, OFFENSES AND
27 PENALTIES," FURTHER PROVIDING, IN PERSONAL INCOME TAX, FOR
28 DEFINITIONS; AND PROVIDING FOR STRATEGIC DEVELOPMENT AREAS.
29 The General Assembly of the Commonwealth of Pennsylvania
30 hereby enacts as follows:
1 Section 1. The definition of "governing body" and "school <--
2 district" in section 8401 of Title 53 of the Pennsylvania
3 Consolidated Statutes are amended to read:
4 § 8401. Definitions.
5 The following words and phrases when used in this subpart
6 shall have the meanings given to them in this section unless the
7 context clearly indicates otherwise:
8 * * *
9 "Governing body." A board of school directors of a school
10 district or the governing body of a city of the first class.
11 * * *
12 "School district." A school district of the first class,
13 first class A, second class, third class or fourth class,
14 including any independent school district.
15 * * *
16 Section 1.1. Section 8405 of Title 53 is amended to read:
17 [§ 8405. Applicability.
18 It is the intent of the General Assembly that no provision of
19 this subpart shall apply to any city of the first class, a
20 county of the first class coterminous with a city of the first
21 class and any school district of the first class located within
22 a city of the first class.]
23 Section 1.2. The definitions of "assessor" and "board" in
24 section 8582 of Title 53 are amended to read:
25 § 8582. Definitions.
26 The following words and phrases when used in this subchapter
27 shall have the meanings given to them in this section unless the
28 context clearly indicates otherwise:
29 "Assessor." The chief assessor of the county[,] or the
30 equivalent [position] officer in a home rule county [or the
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1 equivalent position in], a city of the third class [that] or a
2 city of the first class which performs its own assessments of
3 real property.
4 "Board." Any of the following:
5 (1) ["Board." As] A board as defined in the act of June
6 26, 1931, (P.L.1379, No.348), referred to as the Third Class
7 County Assessment Board Law.
8 (2) ["Board." As] A board as defined in the act of May
9 21, 1943 (P.L.571, No.254), known as The Fourth to Eighth
10 Class County Assessment Law.
11 (3) ["Board of Property Assessment, Appeals and
12 Review."] The Board of Property Assessment, Appeals and
13 Review in a county of the second class under the act of June
14 21, 1939 (P.L.626, No.294), referred to as the Second Class
15 County Assessment Law.
16 (4) ["Board of Revision of Tax and Appeals."] The board
17 of revision of taxes and appeals in cities of the third
18 class.
19 (5) The board or office responsible for revision of
20 taxes and appeals in cities of the first class.
21 * * *
22 Section 1.3. Title 72 is amended by adding parts to read:
23 PART I
24 PRELIMINARY PROVISIONS
25 (RESERVED)
26 PART II
27 TAXES
28 Chapter
29 12. Sales and Use Tax.
30 13. Special Situs for Local Sales Tax.
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1 15. Personal Income Tax.
2 CHAPTER 12
3 SALES AND USE TAX
4 Subchapter
5 A. General Provisions
6 B. Imposition of Tax
7 C. Exclusions from Tax
8 D. Licenses
9 E. Hotel Occupancy Tax
10 F. Returns
11 G. Payment
12 H. Assessment and Reassessment
13 I. Collection
14 J. Nonpayment
15 K. Miscellaneous Provisions
16 L. Refunds and Credits
17 M. Limitations
18 N. Interest, Additions, Penalties and Crimes
19 O. Enforcement and Examinations
20 P. Appropriation; Effective Date
21 SUBCHAPTER A
22 GENERAL PROVISIONS
23 Sec.
24 1201. Definitions.
25 § 1201. Definitions.
26 The following words and phrases when used in this chapter
27 shall have the meanings given to them in this section unless the
28 context clearly indicates otherwise:
29 "Adjustment services, collection services or credit reporting
30 services." Providing collection or adjustments of accounts
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1 receivable or mercantile or consumer credit reporting,
2 including, but not limited to, services of the type provided by
3 adjustment bureaus or collection agencies, consumer or
4 mercantile credit reporting bureaus, credit bureaus or agencies,
5 credit clearinghouses or credit investigation services. Such
6 services do not include providing credit card service with
7 collection by a central agency, providing debt counseling or
8 adjustment services to individuals or billing or collection
9 services provided by local exchange telephone companies.
10 "Advertising services." Publishing, broadcasting or
11 disseminating promotional information or notices via newspaper,
12 television, radio or any other medium.
13 "Blasting." The use of any combustible or explosive
14 composition in the removal of material resources, minerals and
15 mineral aggregates from the earth and the separation of the
16 dirt, waste and refuse in which the resources, minerals and
17 mineral aggregates are found.
18 "Building machinery and equipment." Includes, without
19 limitation, boilers, chillers, air cleaners, humidifiers, fans,
20 switchgear, pumps, telephones, speakers, horns, motion
21 detectors, dampers, actuators, grills, registers, traffic
22 signals, sensors, card access devices, guardrails, medial
23 devices, floor troughs and grates and laundry equipment,
24 together with integral coverings and enclosures, whether or not
25 the item constitutes a fixture or is otherwise affixed to the
26 real estate, whether or not damage would be done to the item or
27 its surroundings upon removal or whether or not the item is
28 physically located within a real estate structure. The term also
29 includes generation equipment, storage equipment, conditioning
30 equipment, distribution equipment and termination equipment,
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1 which shall be limited to the following:
2 (1) air conditioning, limited to heating, cooling,
3 purification, humidification, dehumidification and
4 ventilation;
5 (2) electrical;
6 (3) plumbing;
7 (4) communications limited to voice, video, data, sound,
8 master clock and noise abatement;
9 (5) alarms limited to fire, security and detection;
10 (6) control system limited to energy management, traffic
11 and parking lot and building access;
12 (7) medical system limited to diagnosis and treatment
13 equipment, medical gas, nurse call and doctor paging;
14 (8) laboratory system;
15 (9) cathodic protection system; or
16 (10) furniture, cabinetry and kitchen equipment.
17 The term shall not include guardrail posts, pipes, fittings,
18 pipe supports and hangers, valves, underground tanks, wire,
19 conduit, receptacle and junction boxes, insulation, ductwork and
20 coverings thereof.
21 "Building maintenance or cleaning services." Providing
22 services which include, but are not limited to, janitorial, maid
23 or housekeeping service, office or interior building cleaning or
24 maintenance service, window cleaning service, floor waxing
25 service, lighting maintenance service such as bulb replacement,
26 cleaning, chimney cleaning service, acoustical tile cleaning
27 service, venetian blind cleaning, cleaning and maintenance of
28 telephone booths or cleaning and degreasing of service stations.
29 The term shall not include repairs on buildings and other
30 structures; nor shall this term include the maintenance or
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1 repair of boilers, furnaces and residential air conditioning
2 equipment or parts thereof; the painting, wallpapering or
3 applying other like coverings to interior walls, ceilings or
4 floors; or the exterior painting of buildings.
5 "Call center." The physical location in this Commonwealth:
6 (1) where at least 150 employees are employed to
7 initiate or answer telephone calls;
8 (2) where there are at least two hundred telephone
9 lines; and
10 (3) which utilizes an automated call distribution system
11 for customer telephone calls in one or more of the following
12 activities:
13 (i) customer service and support;
14 (ii) technical assistance;
15 (iii) help desk service;
16 (iv) providing information;
17 (v) conducting surveys;
18 (vi) revenue collections; or
19 (vii) receiving orders or reservations.
20 For purposes of this clause, a physical location may include
21 multiple buildings utilized by a taxpayer located within this
22 Commonwealth.
23 "Commercial aircraft operator." A person, excluding
24 scheduled airlines, that engages in any or all of the following:
25 charter of aircraft, leasing of aircraft, aircraft sales,
26 aircraft rental, flight instruction, air freight or any other
27 flight activities for compensation.
28 "Commercial racing activities." Any of the following:
29 (1) Thoroughbred and harness racing at which pari-mutuel
30 wagering is conducted under the act of December 17, 1981
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1 (P.L.435, No.135), known as the Race Horse Industry Reform
2 Act.
3 (2) Fair racing sanctioned by the State Harness Racing
4 Commission.
5 "Computer software." A set of coded instructions designed to
6 cause a computer or automatic data processing equipment to
7 perform a task.
8 "Construction contract." A written or oral contract or
9 agreement for the construction, reconstruction, remodeling,
10 renovation or repair of real estate or a real estate structure.
11 The term shall not apply to services which are taxable under
12 paragraphs (14) and (17) of the definition of "sale at retail"
13 and paragraphs (12) and (15) of the definition of "use."
14 "Construction contractor." A person who performs an activity
15 pursuant to a construction contract, including a subcontractor.
16 "Delivered electronically." Delivered to the purchaser by
17 means other than tangible storage media.
18 "Department." The Department of Revenue of the Commonwealth.
19 "Detective services." Providing investigation and detective
20 services.
21 "Disinfecting or pest control services." Providing
22 disinfecting, termite control, insect control, rodent control or
23 other pest control services, including, but not limited to,
24 deodorant servicing of restrooms, washroom sanitation service,
25 restroom cleaning service, extermination service or fumigating
26 service. The term "fumigating service" shall not include the
27 fumigation of agricultural commodities or containers used for
28 agricultural commodities, and the term "insect control" shall
29 not include the spraying of trees which are harvested for
30 commercial purposes for gypsy moth control.
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1 "Employment agency services." Providing employment services
2 to a prospective employer or employee other than employment
3 services provided by theatrical employment agencies and motion
4 picture casting bureaus. These services shall include, but not
5 be limited to, services of the type provided by employment
6 agencies, executive placing services and labor contractor
7 employment agencies other than farm labor.
8 "Fiscal Code." The act of April 9, 1929 (P.L.343, No.176),
9 known as The Fiscal Code.
10 "Gratuity." Any amount paid or remitted for services
11 performed in conjunction with any sale of food or beverages, or
12 hotel or motel accommodations which amount is in excess of the
13 charges and the tax thereon for such food, beverages or
14 accommodations regardless of the method of billing or payment.
15 "Help supply services." Providing temporary or continuing
16 help where the help supplied is on the payroll of the supplying
17 person or entity, but is under the supervision of the individual
18 or business to which help is furnished. These services shall
19 include, but not be limited to, service of a type provided by
20 labor and manpower pools, employee leasing services, office help
21 supply services, temporary help services, usher services,
22 modeling services or fashion show model supply services. Such
23 services shall not include providing farm labor services. The
24 term shall not include nursing, home health care and personal
25 care services and other human health-related services. As used
26 in this definition, "personal care" shall include providing at
27 least one of the following types of assistance to persons with
28 limited ability for self-care:
29 (1) dressing, bathing or feeding;
30 (2) supervising self-administered medication;
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1 (3) transferring a person to or from a bed or
2 wheelchair; or
3 (4) routine housekeeping chores when provided in
4 conjunction with and supplied by the same provider of the
5 assistance listed in paragraph (1), (2) or (3).
6 "Internet." The international nonproprietary computer
7 network of both Federal and non-Federal interoperable packet
8 switched data networks.
9 "Lawn care service." Providing services for lawn upkeep,
10 including, but not limited to, fertilizing, lawn mowing,
11 shrubbery trimming or other lawn treatment services.
12 "Lobbying services." Providing the services of a lobbyist,
13 as defined in the definition of "lobbyist" in 65 Pa.C.S. § 1303
14 (relating to definitions).
15 "Lodging service." Providing services including rentals,
16 hookups and rental grounds services at campgrounds, vacation
17 camps, youth hostels, trailer parks and recreational vehicle
18 parks.
19 "Maintaining a place of business in this Commonwealth." As
20 follows:
21 (1) Having, maintaining or using within this
22 Commonwealth, either directly or through a subsidiary,
23 representative or an agent, an office, distribution house,
24 sales house, warehouse, service enterprise or other place of
25 business; or any agent of general or restricted authority, or
26 representative, irrespective of whether the place of
27 business, representative or agent is located in this
28 Commonwealth, permanently or temporarily, or whether the
29 person or subsidiary maintaining the place of business,
30 representative or agent is authorized to do business within
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1 this Commonwealth.
2 (2) Engagement in any activity as a business within this
3 Commonwealth by any person, either directly or through a
4 subsidiary, representative or an agent, in connection with
5 the lease, sale or delivery of tangible personal property or
6 the performance of services thereon for use, storage or
7 consumption or in connection with the sale or delivery for
8 use of the services described in paragraphs (11) through (27)
9 of the definition of sale at retail, including, but not
10 limited to, having, maintaining or using any office,
11 distribution house, sales house, warehouse or other place of
12 business, any stock of goods or any solicitor, canvasser,
13 salesman, representative or agent under its authority, at its
14 direction or with its permission, regardless of whether the
15 person or subsidiary is authorized to do business in this
16 Commonwealth.
17 (3) Regularly or substantially soliciting orders within
18 this Commonwealth in connection with the lease, sale or
19 delivery of tangible personal property to or the performance
20 thereon of services or in connection with the sale or
21 delivery of the services described in paragraphs (11) through
22 (27) of the definition of sale at retail for residents of
23 this Commonwealth by means of catalogs or other advertising,
24 whether the orders are accepted within or without this
25 Commonwealth.
26 (3.1) The entering of this Commonwealth by any person to
27 provide assembly, service or repair of tangible personal
28 property, either directly or through a subsidiary,
29 representative or an agent.
30 (3.2) Delivering tangible personal property to locations
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1 within this Commonwealth if the delivery includes the
2 unpacking, positioning, placing or assembling of the tangible
3 personal property.
4 (3.3) Having any contact within this Commonwealth which
5 would allow the Commonwealth to require a person to collect
6 and remit tax under the Constitution of the United States.
7 (3.4) Providing a customer's mobile telecommunications
8 service deemed to be provided by the customer's home service
9 provider under the Mobile Telecommunications Sourcing Act
10 (Public Law 106-252, 114 Stat. 626). For purposes of this
11 paragraph, words and phrases used in this paragraph shall
12 have the meanings given to them in the Mobile
13 Telecommunications Sourcing Act.
14 (4) The term shall not include:
15 (i) Owning or leasing of tangible or intangible
16 property by a person who has contracted with an
17 unaffiliated commercial printer for printing, provided
18 that:
19 (A) the property is for use by the commercial
20 printer; and
21 (B) the property is located at the Pennsylvania
22 premises of the commercial printer.
23 (ii) Visits by a person's employees or agents to the
24 premises in this Commonwealth of an unaffiliated
25 commercial printer with whom the person has contracted
26 for printing in connection with the contract.
27 "Management consulting service." Providing advice and
28 assistance to businesses and other organizations in any of the
29 following areas:
30 (1) Management and operating advice, such as strategic
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1 and organizational planning, financial planning and
2 budgeting, equity and asset management, office planning, site
3 selection, new business startup and business process
4 improvement.
5 (2) Developing and conducting marketing research or
6 public opinion polling.
7 (3) Developing and implementing public relations plans.
8 (4) Human resources and executive search consulting
9 services, including human resource and personnel policies,
10 practices and procedures; employee benefits planning,
11 communication and administration; compensation systems
12 planning; wage and salary administration; and executive
13 search and recruitment.
14 (5) Environmental advice and assistance, including the
15 control of environmental contamination from pollutants, toxic
16 substances and hazardous materials; and sanitation or site
17 remediation consulting services.
18 (6) Scientific and technical advice and assistance,
19 including biological, energy, chemical, security and safety
20 consulting services.
21 "Manufacture." The performance of manufacturing,
22 fabricating, compounding, processing or other operations,
23 engaged in as a business, which place any tangible personal
24 property in a form, composition or character different from that
25 in which it is acquired whether for sale or use by the
26 manufacturer, and shall include, but not be limited to:
27 (1) Every operation commencing with the first production
28 stage and ending with the completion of tangible personal
29 property having the physical qualities, including packaging,
30 if any, passing to the ultimate consumer, which it has when
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1 transferred by the manufacturer to another.
2 (2) The publishing of books, newspapers, magazines and
3 other periodicals and printing.
4 (3) Refining, blasting, exploring, mining and quarrying
5 for, or otherwise extracting from the earth or from waste or
6 stockpiles or from pits or banks any natural resources,
7 minerals and mineral aggregates including blast furnace slag.
8 (4) Building, rebuilding, repairing and making additions
9 to, or replacements in or upon vessels designed for
10 commercial use of registered tonnage of 50 tons or more when
11 produced upon special order of the purchaser, or when
12 rebuilt, repaired or enlarged, or when replacements are made
13 upon order of, or for the account of the owner.
14 (5) Research having as its objective the production of a
15 new or an improved:
16 (i) product or utility service; or
17 (ii) method of producing a product or utility
18 service.
19 The term does not include market research or research having
20 as its objective the improvement of administrative
21 efficiency.
22 (6) Remanufacture for wholesale distribution by a
23 remanufacturer of motor vehicle parts from used parts
24 acquired in bulk by the remanufacturer using an assembly line
25 process which involves the complete disassembly of such parts
26 and integration of the components of such parts with other
27 used or new components of parts, including the salvaging,
28 recycling or reclaiming of used parts by the remanufacturer.
29 (7) Remanufacture or retrofit by a manufacturer or
30 remanufacturer of aircraft, armored vehicles, other defense-
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1 related vehicles having a finished value of at least $50,000.
2 Remanufacture or retrofit involves the disassembly of such
3 aircraft, vehicles, parts or components, including electric
4 or electronic components, the integration of those parts and
5 components with other used or new parts or components,
6 including the salvaging, recycling or reclaiming of the used
7 parts or components and the assembly of the new or used
8 aircraft, vehicles, parts or components. For purposes of this
9 definition, the following terms or phrases have the following
10 meanings:
11 (i) "aircraft" means fixed-wing aircraft,
12 helicopters, powered aircraft, tilt-rotor or tilt-wing
13 aircraft, unmanned aircraft and gliders;
14 (ii) "armored vehicles" means tanks, armed personnel
15 carriers and all other armed track or semitrack vehicles;
16 or
17 (iii) "other defense-related vehicles" means trucks,
18 truck-tractors, trailers, jeeps and other utility
19 vehicles, including any unmanned vehicles.
20 (8) The term does not include constructing, altering,
21 servicing, repairing or improving real estate or repairing,
22 servicing or installing tangible personal property, nor the
23 cooking, freezing or baking of fruits, vegetables, mushrooms,
24 fish, seafood, meats, poultry or bakery products.
25 "Mobile telecommunications service." Mobile
26 telecommunications service as that term is defined in the Mobile
27 Telecommunications Sourcing Act (Public Law 106-252, 114 Stat.
28 626).
29 "Person." A natural person, association, fiduciary,
30 partnership, corporation or other entity, including the
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1 Commonwealth of Pennsylvania, its political subdivisions and
2 instrumentalities and public authorities. Whenever used in any
3 provision prescribing and imposing a penalty or imposing a fine
4 or imprisonment, or both, the term, as applied to an
5 association, shall include the members of these listed classes
6 and, as applied to a corporation, the officers of the
7 corporation.
8 "Personal service." Providing services for all of the
9 following:
10 (1) Providing coin-operated or similar self-service
11 laundry and dry-cleaning equipment for customer use on the
12 premises or supplying and servicing coin-operated or similar
13 self-service laundry and drycleaning equipment for customer
14 use in places of business operated by others, such as
15 apartments and dormitories.
16 (2) Dry cleaning and laundry services, including:
17 (i) Linen and uniform supply and cleaning services.
18 (ii) Drop-off and pickup services for laundries or
19 dry cleaners.
20 (iii) Specialty cleaning services for specific types
21 of garments and other textile items such as fur garments,
22 leather garments, suede garments, wedding gowns, hats,
23 draperies and pillows. This subparagraph does not include
24 coin-operated dry-cleaning services, linen and uniform
25 supply, coin-operated linen and uniform services or
26 specialty cleaning services for specific carpets or
27 upholstery.
28 "Prebuilt housing." Either of the following:
29 (1) Manufactured housing, including mobile homes, which
30 bears a label as required by and referred to in the act of
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1 November 17, 1982 (P.L.676, No.192), known as the
2 Manufactured Housing Construction and Safety Standards
3 Authorization Act.
4 (2) Industrialized housing as defined in the act of May
5 11, 1972 (P.L.286, No.70), known as the Industrialized
6 Housing Act.
7 "Prebuilt housing builder." A person who makes a prebuilt
8 housing sale to a prebuilt housing purchaser.
9 "Prebuilt housing purchaser." A person who purchases
10 prebuilt housing in a transaction and who intends to occupy the
11 unit for residential purposes in this Commonwealth.
12 "Prebuilt housing sale." A sale of prebuilt housing to a
13 prebuilt housing purchaser, including a sale to a landlord,
14 without regard to whether the person making the sale is
15 responsible for installing the prebuilt housing or whether the
16 prebuilt housing becomes a real estate structure upon
17 installation. Temporary installation by a prebuilt housing
18 builder for display purposes of a unit held for resale shall not
19 be considered occupancy for residential purposes.
20 "Premium cable or premium video programming service."
21 (1) That portion of cable television services, video
22 programming services, community antenna television services
23 or any other distribution of television, video, audio or
24 radio services which meets all of the following criteria:
25 (i) Is transmitted with or without the use of wires
26 to purchasers.
27 (ii) Consists substantially of programming
28 uninterrupted by paid commercial advertising which
29 includes programming primarily composed of uninterrupted
30 full-length motion pictures or sporting events, pay-per-
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1 view, paid programming or like audio or radio
2 broadcasting.
3 (iii) Does not constitute a component of a basic
4 service tier provided by a cable television system or a
5 cable programming service tier provided by a cable
6 television system.
7 (A) A basic service tier shall include:
8 (I) all signals of domestic television
9 broadcast stations;
10 (II) any public, educational, governmental
11 or religious programming; and
12 (III) any additional video programming
13 signals or service added to the basic service
14 tier by the cable operator.
15 (B) The basic service tier shall include a
16 single additional lower-priced package of broadcast
17 channels and access information channels which is a
18 subset of the basic service tier as set forth in this
19 paragraph.
20 (C) A cable programming service tier includes
21 any video programming other than:
22 (I) the basic service tier;
23 (II) video programming offered on a pay-per-
24 channel or pay-per-view basis; or
25 (III) a combination of multiple channels of
26 pay-per-channel or pay-per-view programming
27 offered as a package.
28 (2) If a purchaser receives or agrees to receive premium
29 cable or premium video programming service, then the
30 following charges are included in the purchase price:
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1 (i) Charges for installation or repair of any
2 premium cable or premium video programming service.
3 (ii) Upgrade to include additional premium cable or
4 premium video programming service.
5 (iii) Downgrade to exclude all or some premium cable
6 or premium video programming service.
7 (iv) Additional premium cable outlets in excess of
8 ten.
9 (v) Any other charge or fee related to premium cable
10 or premium video programming services.
11 (3) The term shall not apply to any of the following:
12 (i) Transmissions by public television.
13 (ii) Public radio services.
14 (iii) Official Federal, State or local government
15 cable services.
16 (iv) Local origination programming which provides a
17 variety of public service programs unique to the
18 community.
19 (v) Programming which provides coverage of public
20 affairs issues which are presented without commentary or
21 analysis. This subparagraph includes United States
22 Congressional proceedings.
23 (vi) Programming which is substantially related to
24 religious subjects.
25 (vii) Subscriber charges for access to a video dial
26 tone system or charges by a common carrier to a video
27 programmer for the transport of video programming.
28 "Prepaid mobile telecommunications service." Mobile
29 telecommunications service which is paid for in advance and
30 which enables the origination of calls using an access number,
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1 authorization code or both, whether manually or electronically
2 dialed, if the remaining amount of units of the prepaid mobile
3 telecommunications service is known by the service provider of
4 the prepaid mobile telecommunications service on a continuous
5 basis. The term does not include the advance purchase of mobile
6 telecommunications service if the purchase is pursuant to a
7 service contract between the service provider and customer and
8 if the service contract requires the customer to make periodic
9 payments to maintain the mobile telecommunications service.
10 "Prepaid telecommunications." A tangible item containing a
11 prepaid authorization number that can be used solely to obtain
12 telecommunications service, including any renewal or increases
13 in the prepaid amount.
14 "Prewritten computer software." The term shall have the same
15 meaning as the term "computer software," including prewritten
16 upgrades, which is not designed and developed by the author or
17 other creator to the specifications of a specific purchaser. The
18 combining of two or more prewritten computer software programs
19 or prewritten portions of those programs shall not cause the
20 combination to be considered to be other than prewritten
21 computer software. The term includes software designed and
22 developed by the author or other creator to the specifications
23 of a specific purchaser when it is sold to a person other than
24 the specific purchaser. Where a person modifies or enhances
25 computer software of which the person is not the author or
26 creator, the person shall be deemed to be the author or creator
27 only of the person's modifications or enhancements. Prewritten
28 computer software or a prewritten portion of the software that
29 is modified or enhanced to any degree, where the modification or
30 enhancement is designed and developed to the specifications of a
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1 specific purchaser, shall be considered to be prewritten
2 computer software except that where there is a reasonable,
3 separately stated charge or an invoice or other statement of the
4 price given to the purchaser for the modification or
5 enhancement, the modification or enhancement shall not
6 constitute prewritten computer software.
7 "Processing." The performance of the following activities
8 when engaged in as a business enterprise:
9 (1) The filtering or heating of honey, the cooking,
10 baking or freezing of fruits, vegetables, mushrooms, fish,
11 seafood, meats, poultry or bakery products, when the person
12 engaged in such business packages such property in sealed
13 containers for wholesale distribution.
14 (1.1) The processing of fruits or vegetables by
15 cleaning, cutting, coring, peeling or chopping and treating
16 to preserve, sterilize or purify and substantially extend the
17 useful shelf life of the fruits or vegetables, when the
18 person engaged in such activity packages such property in
19 sealed containers for wholesale distribution.
20 (2) The scouring, carbonizing, cording, combing,
21 throwing, twisting or winding of natural or synthetic fibers,
22 or the spinning, bleaching, dyeing, printing or finishing of
23 yarns or fabrics, when such activities are performed prior to
24 sale to the ultimate consumer.
25 (3) The electroplating, galvanizing, enameling,
26 anodizing, coloring, finishing, impregnating or heat treating
27 of metals or plastics for sale or in the process of
28 manufacturing.
29 (3.1) The blanking, shearing, leveling, slitting or
30 burning of metals for sale to or use by a manufacturer or
20050S0854B2207 - 21 -
1 processor.
2 (4) The rolling, drawing or extruding of ferrous and
3 nonferrous metals.
4 (5) The fabrication for sale of ornamental or structural
5 metal or of metal stairs, staircases, gratings, fire escapes
6 or railings, not including fabrication work done at the
7 construction site.
8 (6) The preparation of animal feed or poultry feed for
9 sale.
10 (7) The production, processing and bottling of
11 nonalcoholic beverages for wholesale distribution.
12 (8) The operation of a saw mill or planing mill for the
13 production of lumber or lumber products for sale. The
14 operation of a saw mill or planing mill begins with the
15 unloading by the operator of the saw mill or planing mill of
16 logs, timber, pulpwood or other forms of wood material to be
17 used in the saw mill or planing mill.
18 (9) The milling for sale of flour or meal from grains.
19 (9.1) The aging, stripping, conditioning, crushing and
20 blending of tobacco leaves for use as cigar filler or as
21 components of smokeless tobacco products for sale to
22 manufacturers of tobacco products.
23 (10) The slaughtering and dressing of animals for meat
24 to be sold or to be used in preparing meat products for sale,
25 and the preparation of meat products including lard, tallow,
26 grease, cooking and inedible oils for wholesale distribution.
27 (11) The processing of used lubricating oils.
28 (12) The broadcasting of radio and television programs
29 of licensed commercial or educational stations.
30 (13) The cooking or baking of bread, pastries, cakes,
20050S0854B2207 - 22 -
1 cookies, muffins and donuts when the person engaged in such
2 activity sells such items at retail at locations that do not
3 constitute an establishment from which ready-to-eat food and
4 beverages are sold. For purposes of this paragraph, a bakery,
5 a pastry shop and a donut shop shall not be considered an
6 establishment from which ready-to-eat food and beverages are
7 sold.
8 (14) The cleaning and roasting and the blending,
9 grinding or packaging for sale of coffee from green coffee
10 beans or the production of coffee extract.
11 (15) The preparation of dry or liquid fertilizer for
12 sale.
13 (16) The production, processing and packaging of ice for
14 wholesale distribution.
15 (17) The producing of mobile telecommunications
16 services.
17 "Promoter." A person who either, directly or indirectly,
18 rents, leases or otherwise operates or grants permission to any
19 person to use space at a show for the display for sale or for
20 the sale of tangible personal property or services subject to
21 tax under section 1202 (relating to imposition of tax).
22 "Purchase at retail." Any of the following:
23 (1) The acquisition for a consideration of the
24 ownership, custody or possession of tangible personal
25 property other than for resale by the person acquiring the
26 same when such acquisition is made for the purpose of
27 consumption or use, whether such acquisition shall be
28 absolute or conditional, and by whatsoever means the same
29 shall have been effected.
30 (2) The acquisition of a license to use or consume, and
20050S0854B2207 - 23 -
1 the rental or lease of tangible personal property, other than
2 for resale regardless of the period of time the lessee has
3 possession or custody of the property.
4 (3) The obtaining for a consideration any of those
5 services set forth under paragraphs (2), (3) and (4) of the
6 definition of sale at retail other than for resale.
7 (4) A retention after March 7, 1956, of possession,
8 custody or a license to use or consume pursuant to a rental
9 contract or other lease arrangement, other than as security,
10 other than for resale.
11 (5) The obtaining for a consideration any of those
12 services set forth under paragraphs (11) through (27) of the
13 definition of sale at retail.
14 (6) With respect to liquor and malt or brewed beverages,
15 the term includes purchase of liquor from a Pennsylvania
16 Liquor Store by a person for any purpose, and purchase of
17 malt or brewed beverages from a manufacturer of malt or
18 brewed beverages, distributor or importing distributor by a
19 person for any purpose, except purchases from a manufacturer
20 of malt or brewed beverages by a distributor or importing
21 distributor or purchases from an importing distributor by a
22 distributor within the meaning of the act of April 12, 1951
23 (P.L.90, No.21), known as the Liquor Code. The term does not
24 include purchase of malt or brewed beverages from a retail
25 dispenser or purchase of liquor or malt or brewed beverages
26 from a person holding a retail liquor license within the
27 meaning of and pursuant to the provisions of the Liquor Code,
28 but shall include purchase or acquisition of liquor or malt
29 or brewed beverages other than pursuant to the provisions of
30 the Liquor Code.
20050S0854B2207 - 24 -
1 "Purchase price." As follows:
2 (1) The total value of anything paid or delivered, or
3 promised to be paid or delivered, whether it be money or
4 otherwise, in complete performance of a sale at retail or
5 purchase at retail, without any deduction on account of the
6 cost or value of the property sold, cost or value of
7 transportation, cost or value of labor or service, interest
8 or discount paid or allowed after the sale is consummated,
9 any other taxes imposed by the Commonwealth or any other
10 expense except that there shall be excluded any gratuity or
11 separately stated deposit charge for returnable containers.
12 (2) (Reserved).
13 (3) In determining the purchase price on the sale or use
14 of taxable tangible personal property or a service where,
15 because of affiliation of interests between the vendor and
16 purchaser, or irrespective of any such affiliation, if for
17 any other reason the purchase price declared by the vendor or
18 taxpayer on the taxable sale or use of such tangible personal
19 property or service is, in the opinion of the Department of
20 Revenue, not indicative of the true value of the article or
21 service or the fair price thereof, the department shall,
22 pursuant to uniform and equitable rules, determine the amount
23 of constructive purchase price upon the basis of which the
24 tax shall be computed and levied. Such rules shall provide
25 for a constructive amount of purchase price for each sale or
26 use which would naturally and fairly be charged in an arms-
27 length transaction in which the element of common interest
28 between the vendor or purchaser is absent or if no common
29 interest exists, any other element causing a distortion of
30 the price or value is likewise absent. For the purpose of
20050S0854B2207 - 25 -
1 this paragraph where a taxable sale or purchase at retail
2 transaction occurs between a parent and a subsidiary,
3 affiliate or controlled corporation of such parent
4 corporation, there shall be a rebuttable presumption, that
5 because of such common interest such transaction was not at
6 arms-length.
7 (4) Where there is a transfer or retention of possession
8 or custody, whether it be termed a rental, lease, service or
9 otherwise, of tangible personal property including, but not
10 limited to, linens, aprons, motor vehicles, trailers, tires,
11 industrial office and construction equipment, and business
12 machines the full consideration paid or delivered to the
13 vendor or lessor shall be considered the purchase price, even
14 though such consideration be separately stated and be
15 designated as payment for processing, laundering, service,
16 maintenance, insurance, repairs, depreciation or otherwise.
17 There shall also be included as part of the purchase price
18 the value of anything paid or delivered, or promised to be
19 paid or delivered by a lessee, whether it be money or
20 otherwise, to any person other than the vendor or lessor by
21 reason of the maintenance, insurance or repair of the
22 tangible personal property which a lessee has the possession
23 or custody of under a rental contract or lease arrangement.
24 (5) With respect to the tax imposed by section 1202(b)
25 (relating to imposition of tax) upon any tangible personal
26 property originally purchased by the user of the property six
27 months or longer prior to the first taxable use of the
28 property within this Commonwealth. The user may elect to pay
29 tax on a substituted base determined by considering the
30 purchase price of the property for tax purposes to be equal
20050S0854B2207 - 26 -
1 to the prevailing market price of similar tangible personal
2 property at the time and place of the first use within this
3 Commonwealth. The election must be made at the time of filing
4 a tax return with the department and reporting the tax
5 liability and paying the tax due plus accrued penalties and
6 interest within six months of the due date of the report and
7 payment under section 1217(a) and (c) (relating to time for
8 filing returns).
9 (6) The purchase price of employment agency services and
10 help supply services shall be the service fee paid by the
11 purchaser to the vendor or supplying entity. The term
12 "service fee," as used in this paragraph, shall be the total
13 charge or fee of the vendor or supplying entity minus the
14 costs of the supplied employee which costs are wages,
15 salaries, bonuses and commissions, employment benefits,
16 expense reimbursements and payroll and withholding taxes, to
17 the extent that these costs are specifically itemized or that
18 these costs in aggregate are stated in billings from the
19 vendor or supplying entity. To the extent that these costs
20 are not itemized or stated on the billings, then the service
21 fee shall be the total charge or fee of the vendor or
22 supplying entity.
23 (7) Unless the vendor separately states which portion of
24 the billing applies to premium cable services, the total bill
25 for the provision of all cable services shall be the purchase
26 price.
27 (8) The purchase price of prebuilt housing shall be 60%
28 of the manufacturer's selling price, but a manufacturer of
29 prebuilt housing who precollects tax from a prebuilt housing
30 builder at the time of the sale to the prebuilt housing
20050S0854B2207 - 27 -
1 builder shall have the option to collect tax on 60% of the
2 selling price or on 100% of the actual cost of the supplies
3 and materials used in the manufacture of the prebuilt
4 housing.
5 "Purchaser." A person who acquires, for a consideration, the
6 ownership, custody or possession by sale, lease or otherwise, of
7 tangible personal property, or who obtains services in exchange
8 for a purchase price, but not including an employer who obtains
9 services from employees of the employer in exchange for wages or
10 salaries when the services are rendered in the ordinary scope of
11 their employment.
12 "Real estate structure." A structure or item purchased by a
13 construction contractor pursuant to a construction contract
14 with:
15 (1) a charitable organization, a volunteer firemen's
16 organization, a nonprofit educational institution or a
17 religious organization for religious purposes and which
18 qualifies as an institution of purely public charity under
19 the act of November 26, 1997 (P.L.508, No.55), known as the
20 Institutions of Purely Public Charity Act;
21 (2) the United States; or
22 (3) the Commonwealth, its instrumentalities or political
23 subdivisions.
24 The term includes building machinery and equipment; developed or
25 undeveloped land; streets; roads; highways; parking lots;
26 stadiums and stadium seating; recreational courts; sidewalks;
27 foundations; structural supports; walls; floors; ceilings;
28 roofs; doors; canopies; millwork; elevators; windows and
29 external window coverings; outdoor advertising boards or signs;
30 airport runways; bridges; dams; dikes; traffic control devices,
20050S0854B2207 - 28 -
1 including traffic signs; satellite dishes; antennas; guardrail
2 posts; pipes; fittings; pipe supports and hangers; valves;
3 underground tanks; wire; conduit; receptacle and junction boxes;
4 insulation; ductwork and coverings thereof; and any structure or
5 item similar to any of the foregoing, whether or not the
6 structure or item constitutes a fixture or is affixed to the
7 real estate, or whether or not damage would be done to the
8 structure or item or its surroundings upon removal.
9 "Recreation service." Providing services which provide or
10 allow for an activity that diverts, amuses, stimulates and
11 renews individual health and spirits, including all of the
12 following:
13 (1) Admission to commercial sports, whether live or
14 broadcasted.
15 (2) Admission to live presentations involving the
16 performances of actors and actresses, singers, dancers,
17 musical groups and artists and other performing artists.
18 (3) Physical fitness facility services. Services
19 provided by health clubs, spas, fitness or recreational
20 sports facilities. The term includes exercise and other
21 active physical fitness conditioning or recreational sports
22 activities, such as swimming, skating, or racquet sports,
23 whether or not on a membership basis.
24 (4) Bicycle rental services. The rental or lease of
25 bicycles.
26 (5) Golf course and country club membership fees.
27 (6) Other memberships and admissions.
28 "Resale." As follows:
29 (1) Any transfer of ownership, custody or possession of
30 tangible personal property for a consideration, including the
20050S0854B2207 - 29 -
1 grant of a license to use or consume and transactions where
2 the possession of the property is transferred but where the
3 transferor retains title only as security for payment of the
4 selling price whether the transaction be designated as
5 bailment lease, conditional sale or otherwise.
6 (2) The physical incorporation of tangible personal
7 property as an ingredient or constituent into other tangible
8 personal property, which is to be sold in the regular course
9 of business or the performance of those services described in
10 paragraphs (2), (3) and (4) of the definition of sale at
11 retail upon tangible personal property which is to be sold in
12 the regular course of business or where the person
13 incorporating such property has undertaken at the time of
14 purchase to cause it to be transported in interstate commerce
15 to a destination outside this Commonwealth. The term shall
16 include telecommunications services purchased by a cable
17 operator or video programmer that are used to transport or
18 deliver cable or video programming services which are sold in
19 the regular course of business.
20 (3) The term shall also include tangible personal
21 property purchased or having a situs within this Commonwealth
22 solely for the purpose of being processed, fabricated or
23 manufactured into, attached to or incorporated into tangible
24 personal property and thereafter transported outside this
25 Commonwealth for use exclusively outside this Commonwealth.
26 (4) The term "resale" does not include a sale of malt or
27 brewed beverages by a retail dispenser, or a sale of liquor
28 or malt or brewed beverages by a person holding a retail
29 liquor license within the meaning of the act of April 12,
30 1951 (P.L.90, No.21), known as the Liquor Code.
20050S0854B2207 - 30 -
1 (5) The physical incorporation of tangible personal
2 property as an ingredient or constituent in the construction
3 of foundations for machinery or equipment the sale or use of
4 which is excluded from tax under the provisions of paragraph
5 (8)(ii)(A), (B) and (D) of the definition of sale at retail
6 and paragraph (4)(ii)(B)(I), (II) and (IV) of the definition
7 of use, whether the foundations at the time of construction
8 or transfer constitute tangible personal property or real
9 estate.
10 "Resident." As follows:
11 (1) Any natural person:
12 (i) who is domiciled in this Commonwealth; or
13 (ii) who maintains a permanent place of abode within
14 this Commonwealth and spends in the aggregate more than
15 60 days of the year within this Commonwealth.
16 (2) Any corporation:
17 (i) incorporated under the laws of this
18 Commonwealth;
19 (ii) authorized to do business or doing business
20 within this Commonwealth; or
21 (iii) maintaining a place of business within this
22 Commonwealth.
23 (3) Any association, fiduciary, partnership or other
24 entity:
25 (i) domiciled in this Commonwealth;
26 (ii) authorized to do business or doing business
27 within this Commonwealth; or
28 (iii) maintaining a place of business within this
29 Commonwealth.
30 "Sale at retail." As follows:
20050S0854B2207 - 31 -
1 (1) Any transfer, for a consideration, of the ownership,
2 custody or possession of tangible personal property,
3 including the grant of a license to use or consume whether
4 the transfer be absolute or conditional and by whatsoever
5 means the same shall have been effected.
6 (2) The rendition of the service of printing or
7 imprinting of tangible personal property for a consideration
8 for persons who furnish, either directly or indirectly, the
9 materials used in the printing or imprinting.
10 (3) The rendition for a consideration of the service of:
11 (i) Washing, cleaning, waxing, polishing or
12 lubricating of motor vehicles of another, whether or not
13 any tangible personal property is transferred in
14 conjunction therewith.
15 (ii) Inspecting motor vehicles pursuant to the
16 mandatory requirements of 75 Pa.C.S. (relating to
17 vehicles).
18 (4) The rendition for a consideration of the service of
19 repairing, altering, mending, pressing, fitting, dyeing,
20 laundering, drycleaning or cleaning tangible personal
21 property including wearing apparel or shoes, or applying or
22 installing tangible personal property as a repair or
23 replacement part of other tangible personal property
24 including wearing apparel or shoes for a consideration,
25 whether or not the services are performed directly or by any
26 means including by coin-operated self-service laundry
27 equipment and whether or not any tangible personal property
28 is transferred in conjunction therewith, except such services
29 as are rendered in the construction, reconstruction,
30 remodeling, repair or maintenance of real estate, except that
20050S0854B2207 - 32 -
1 this paragraph shall not be deemed to impose tax upon such
2 services in the preparation for sale of new items which are
3 excluded from the tax under section 1204(26) (relating to
4 exclusions from tax) or on diaper service.
5 (5) (Reserved).
6 (6) (Reserved).
7 (7) (Reserved).
8 (8) (i) Any retention of possession, custody or a
9 license to use or consume tangible personal property or
10 any further obtaining of services described in paragraphs
11 (2), (3) and (4) pursuant to a rental or service contract
12 or other arrangement, other than as security.
13 (ii) The term does not include any such transfer of
14 tangible personal property or rendition of services for
15 the purpose of resale or such rendition of services or
16 the transfer of tangible personal property, including,
17 but not limited to, machinery and equipment and parts
18 therefor and supplies to be used or consumed by the
19 purchaser directly in the operations of:
20 (A) The manufacture of tangible personal
21 property.
22 (B) Farming, dairying, agriculture, horticulture
23 or floriculture when engaged in as a business
24 enterprise. The term "farming" shall include the
25 propagation and raising of ranch raised furbearing
26 animals and the propagation of game birds for
27 commercial purposes by holders of propagation permits
28 issued under 34 Pa.C.S. (relating to game) and the
29 propagation and raising of horses to be used
30 exclusively for commercial racing activities.
20050S0854B2207 - 33 -
1 (C) The producing, delivering or rendering of a
2 public utility service, or in constructing,
3 reconstructing, remodeling, repairing or maintaining
4 the facilities which are directly used in producing,
5 delivering or rendering such service.
6 (D) Processing as defined in this section.
7 (iii) The exclusions provided in subparagraph
8 (ii)(A), (B), (C) and (D) shall not apply to any vehicle
9 required to be registered under 75 Pa.C.S., except those
10 vehicles used directly by a public utility engaged in
11 business as a common carrier; to maintenance facilities;
12 or to materials, supplies or equipment to be used or
13 consumed in the construction, reconstruction, remodeling,
14 repair or maintenance of real estate other than directly
15 used machinery, equipment, parts or foundations therefor
16 that may be fixed to the real estate.
17 (iv) The exclusions provided in subparagraph
18 (ii)(A), (B), (C) and (D) shall not apply to tangible
19 personal property or services to be used or consumed in
20 managerial sales or other nonoperational activities, nor
21 to the purchase or use of tangible personal property or
22 services by any person other than the person directly
23 using the same in the operations described in
24 subparagraph (ii)(A), (B), (C) and (D).
25 (v) The exclusion provided in subparagraph(ii)(C)
26 shall not apply to:
27 (A) construction materials, supplies or
28 equipment used to construct, reconstruct, remodel,
29 repair or maintain facilities not used directly by
30 the purchaser in the production, delivering or
20050S0854B2207 - 34 -
1 rendition of public utility service;
2 (B) construction materials, supplies or
3 equipment used to construct, reconstruct, remodel,
4 repair or maintain a building, road or similar
5 structure; or
6 (C) tools and equipment used but not installed
7 in the maintenance of facilities used directly in the
8 production, delivering or rendition of a public
9 utility service.
10 (vi) The exclusions provided in subparagraph
11 (ii)(A), (B), (C) and (D) shall not apply to the services
12 enumerated in paragraphs (11) through (27) nor to
13 lobbying services, adjustment services, collection
14 services or credit reporting services, secretarial or
15 editing services, disinfecting or pest control services,
16 building maintenance or cleaning services, employment
17 agency services, help supply services, lawn care service
18 or self-storage service, except that the exclusion
19 provided in subparagraph (ii)(B) for farming, dairying
20 and agriculture shall apply to the service enumerated in
21 the definition of disinfecting or pest control services.
22 (9) Where tangible personal property or services are
23 utilized for purposes constituting a sale at retail and for
24 purposes excluded from the definition of sale at retail, it
25 shall be presumed that the tangible personal property or
26 services are utilized for purposes constituting a sale at
27 retail and subject to tax unless the user thereof proves to
28 the Department of Revenue that the predominant purposes for
29 which the tangible personal property or services are utilized
30 do not constitute a sale at retail.
20050S0854B2207 - 35 -
1 (10) With respect to liquor and malt or brewed
2 beverages, the term includes sale of liquor by a Pennsylvania
3 liquor store to a person for any purpose, and sale of malt or
4 brewed beverages by a manufacturer of malt or brewed
5 beverages, distributor or importing distributor to a person
6 for any purpose, except sales by a manufacturer of malt or
7 brewed beverages to a distributor or importing distributor or
8 sales by an importing distributor to a distributor within the
9 meaning of the act of April 12, 1951 (P.L.90, No.21), known
10 as the Liquor Code. The term does not include sale of malt or
11 brewed beverages by a retail dispenser or sale of liquor or
12 malt or brewed beverages by a person holding a retail liquor
13 license within the meaning of and pursuant to the provisions
14 of the Liquor Code, but shall include sale of liquor or malt
15 or brewed beverages other than pursuant to the provisions of
16 the Liquor Code.
17 (11) The rendition for a consideration of lobbying
18 services.
19 (12) The rendition for a consideration of adjustment
20 services, collection services or credit reporting services.
21 (13) The rendition for a consideration of secretarial or
22 editing services.
23 (14) The rendition for a consideration of disinfecting
24 or pest control services, building maintenance or cleaning
25 services.
26 (15) The rendition for a consideration of employment
27 agency services or help supply services.
28 (16) (Reserved).
29 (17) The rendition for a consideration of lawn care
30 service.
20050S0854B2207 - 36 -
1 (18) The rendition for a consideration of storage and
2 self-storage service.
3 (19) The rendition for a consideration of a mobile
4 telecommunications service.
5 (20) The rendition for a consideration of lodging
6 services.
7 (21) The rendition for a consideration of personal
8 services.
9 (22) (Reserved).
10 (23) The rendition for a consideration of recreational
11 services.
12 (24) (Reserved).
13 (25) (Reserved).
14 (26) (Reserved).
15 (27) (Reserved).
16 (28) (Reserved).
17 (29) The rendition for a consideration of advertising
18 services.
19 (30) The rendition for a consideration of detective
20 services.
21 (31) The rendition for a consideration of management
22 consulting services.
23 "Secretarial or editing services." Providing services which
24 include, but are not limited to, editing, letter writing,
25 proofreading, resume writing, typing or word processing. Such
26 services shall not include court reporting and stenographic
27 services.
28 "Self-storage service." Providing a building, a room in a
29 building or a secured area within a building with separate
30 access provided for each purchaser of self-storage service,
20050S0854B2207 - 37 -
1 primarily for the purpose of storing personal property.
2 "Show." An event, the primary purpose of which involves the
3 display or exhibition of any tangible personal property or
4 services for sale, including, but not limited to, a flea market,
5 antique show, coin show, stamp show, comic book show, hobby
6 show, automobile show, fair or any similar show, whether held
7 regularly or of a temporary nature, at which more than one
8 vendor displays for sale or sells tangible personal property or
9 services subject to tax under section 1202 (relating to
10 imposition of tax).
11 "Soft drinks." All nonalcoholic beverages, whether
12 carbonated or not, such as soda water, ginger ale, Coca Cola,
13 lime cola, Pepsi Cola, Dr Pepper, fruit juice when plain or
14 carbonated water, flavoring or syrup is added, carbonated water,
15 orangeade, lemonade, root beer or any and all preparations,
16 commonly referred to as soft drinks, of whatsoever kind, and are
17 further described as including any and all beverages, commonly
18 referred to as soft drinks, which are made with or without the
19 use of any syrup. The term shall not include natural fruit or
20 vegetable juices or their concentrates, or noncarbonated fruit
21 juice drinks containing not less than 25% by volume of natural
22 fruit juices or of fruit juice which has been reconstituted to
23 its original state, or natural concentrated fruit or vegetable
24 juices reconstituted to their original state, whether any of the
25 foregoing natural juices are frozen or unfrozen, sweetened or
26 unsweetened, seasoned with salt or spice or unseasoned, nor
27 shall the term include coffee, coffee substitutes, tea, cocoa,
28 natural fluid milk or noncarbonated drinks made from milk
29 derivatives.
30 "Storage." Any keeping or retention of tangible personal
20050S0854B2207 - 38 -
1 property within this Commonwealth for any purpose including the
2 interim keeping, retaining or exercising any right or power over
3 such tangible personal property. This term is in no way limited
4 to the provision of self-storage service.
5 "Tangible personal property." Corporeal personal property
6 including, but not limited to, goods, wares, merchandise, steam
7 and natural and manufactured and bottled gas, electricity,
8 prepaid telecommunications, premium cable or premium video
9 programming service, spirituous or vinous liquor and malt or
10 brewed beverages and soft drinks, interstate telecommunications
11 service originating or terminating in this Commonwealth and
12 charged to a service address in this Commonwealth, intrastate
13 telecommunications service. The service address of any
14 intrastate telecommunications service is deemed to be within
15 this Commonwealth or within a political subdivision, regardless
16 of how or where billed or paid. In the case of any such
17 interstate or intrastate telecommunications service, any charge
18 paid through a credit or payment mechanism which does not relate
19 to a service address, such as a bank, travel, credit or debit
20 card, but not including prepaid telecommunications, is deemed
21 attributable to the address of origination of the
22 telecommunications service. The term shall not include:
23 (1) Computer software, other than prewritten computer
24 software, delivered to the purchaser by tangible storage
25 media.
26 (2) Digital products delivered electronically, including
27 software, music, video, reading materials or ring tones.
28 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
29 known as the Tax Reform Code of 1971.
30 "Taxpayer." Any person required to pay or collect the tax
20050S0854B2207 - 39 -
1 imposed by this chapter.
2 "Telecommunications service." Any one-way transmission or
3 any two-way, interactive transmission of sounds, signals or
4 other intelligence converted to like form which effects or is
5 intended to effect meaningful communications by electronic or
6 electromagnetic means via wire, cable, satellite, light waves,
7 microwaves, radio waves or other transmission media. The term
8 includes all types of telecommunication transmissions, such as
9 local, toll, wide-area or any other type of telephone service;
10 private line service; telegraph service; radio repeater service;
11 wireless communication service; personal communications system
12 service; cellular telecommunication service; specialized mobile
13 radio service; stationary two-way radio service; and paging
14 service. The term does not include any of the following:
15 (1) Subscriber charges for access to a video dial tone
16 system.
17 (2) Charges to video programmers for the transport of
18 video programming.
19 (3) Charges for access to the Internet. Access to the
20 Internet does not include any of the following:
21 (i) The transport over the Internet or any
22 proprietary network using the Internet protocol of
23 telephone calls, facsimile transmissions or other
24 telecommunications traffic to or from end users on the
25 public switched telephone network if the signal sent from
26 or received by an end user is not in an Internet
27 protocol.
28 (ii) Telecommunications services purchased by an
29 Internet service provider to deliver access to the
30 Internet to its customers.
20050S0854B2207 - 40 -
1 (4) Mobile telecommunications services.
2 "Transient vendor." As follows:
3 (1) Any person who:
4 (i) brings into this Commonwealth, by automobile,
5 truck or other means of transportation, or purchases in
6 this Commonwealth tangible personal property the sale or
7 use of which is subject to the tax imposed by this
8 chapter or comes into this Commonwealth to perform
9 services the sale or use of which is subject to the tax
10 imposed by this chapter;
11 (ii) offers or intends to offer such tangible
12 personal property or services for sale at retail within
13 this Commonwealth; and
14 (iii) does not maintain an established office,
15 distribution house, sales house, warehouse, service
16 enterprise, residence from which business is conducted or
17 other place of business within this Commonwealth.
18 (2) The term shall not include a person who delivers
19 tangible personal property within this Commonwealth pursuant
20 to orders for the property which were solicited or placed by
21 mail or other means.
22 (3) The term shall not include a person who handcrafts
23 items for sale at special events, including, but not limited
24 to, fairs, carnivals, art and craft shows and other festivals
25 and celebrations within this Commonwealth.
26 "Use." As follows:
27 (1) The exercise of any right or power incidental to the
28 ownership, custody or possession of tangible personal
29 property and shall include, but not be limited to,
30 transportation, storage or consumption.
20050S0854B2207 - 41 -
1 (2) The obtaining by a purchaser of the service of
2 printing or imprinting of tangible personal property when
3 such purchaser furnishes, either directly or indirectly, the
4 articles used in the printing or imprinting.
5 (3) The obtaining by a purchaser of the services of:
6 (i) Washing, cleaning, waxing, polishing or
7 lubricating of motor vehicles whether or not any tangible
8 personal property is transferred to the purchaser in
9 conjunction with such services.
10 (ii) Inspecting motor vehicles pursuant to the
11 mandatory requirements of 75 Pa.C.S. (relating to
12 vehicles).
13 (4) (i) The obtaining by a purchaser of the service of
14 repairing, altering, mending, pressing, fitting, dyeing,
15 laundering, drycleaning or cleaning tangible personal
16 property including wearing apparel or shoes or applying
17 or installing tangible personal property as a repair or
18 replacement part of other tangible personal property
19 including wearing apparel or shoes, whether or not the
20 services are performed directly or by any means including
21 by coin-operated self-service laundry equipment for
22 wearing apparel or household goods, and whether or not
23 any tangible personal property is transferred to the
24 purchaser in conjunction therewith, except such services
25 as are obtained in the construction, reconstruction,
26 remodeling, repair or maintenance of real estate, except
27 that this paragraph shall not be deemed to impose tax
28 upon such services in the preparation for sale of new
29 items which are excluded from the tax under section
30 1204(26) (relating to exclusions from tax) or on diaper
20050S0854B2207 - 42 -
1 service.
2 (ii) The term shall not include:
3 (A) Any tangible personal property acquired and
4 kept, retained or over which power is exercised
5 within this Commonwealth on which the taxing of the
6 storage, use or other consumption thereof is
7 expressly prohibited by the Constitution of the
8 United States or which is excluded from tax under
9 other provisions of this chapter.
10 (B) The use or consumption of tangible personal
11 property, including, but not limited to, machinery
12 and equipment and parts therefor, and supplies or the
13 obtaining of the services described in this paragraph
14 and paragraphs (2) and (3) directly in the operations
15 of:
16 (I) The manufacture of tangible personal
17 property.
18 (II) Farming, dairying, agriculture,
19 horticulture or floriculture when engaged in as a
20 business enterprise. The term "farming" shall
21 include the propagation and raising of ranch-
22 raised furbearing animals and the propagation of
23 game birds for commercial purposes by holders of
24 propagation permits issued under 34 Pa.C.S.
25 (relating to game) and the propagation and
26 raising of horses to be used exclusively for
27 commercial racing activities.
28 (III) The producing, delivering or rendering
29 of a public utility service, or the constructing,
30 reconstructing, remodeling, repairing or
20050S0854B2207 - 43 -
1 maintaining the facilities which are directly
2 used in producing, delivering or rendering a
3 public utility service.
4 (IV) Processing as defined in this section.
5 (iii) The exclusions provided in subparagraph
6 (ii)(B)(I), (II), (III) and (IV) shall not apply to any
7 vehicle required to be registered under 75 Pa.C.S. except
8 those vehicles directly used by a public utility engaged
9 in the business as a common carrier; to maintenance
10 facilities; or to materials, supplies or equipment to be
11 used or consumed in the construction, reconstruction,
12 remodeling, repair or maintenance of real estate other
13 than directly used machinery, equipment, parts or
14 foundations therefor that may be affixed to such real
15 estate.
16 (iv) The exclusions provided in subparagraph
17 (ii)(B)(I), (II), (III) and (IV) shall not apply to
18 tangible personal property or services to be used or
19 consumed in managerial sales or other nonoperational
20 activities, nor to the purchase or use of tangible
21 personal property or services by any person other than
22 the person directly using the same in the operations
23 described in subparagraph (ii)(B)(I), (II), (III) and
24 (IV).
25 (v) The exclusion provided in subparagraph (iii)
26 shall not apply to:
27 (A) construction materials, supplies or equipment
28 used to construct, reconstruct, remodel, repair or
29 maintain facilities not used directly by the
30 purchaser in the production, delivering or rendition
20050S0854B2207 - 44 -
1 of public utility service; or
2 (B) tools and equipment used but not installed
3 in the maintenance of facilities used directly in the
4 production, delivering or rendition of a public
5 utility service.
6 (vi) The exclusion provided in subparagraph
7 (ii)(B)(I), (II), (III) and (IV) shall not apply to the
8 services enumerated in paragraphs (9) through (26) nor to
9 lobbying services, adjustment services, collection
10 services or credit reporting services, secretarial or
11 editing services, disinfecting or pest control services,
12 building maintenance or cleaning services, employment
13 agency services, help supply services, lawn care service
14 or self-storage service, except that the exclusion
15 provided in subparagraph (ii)(B)(II) for farming,
16 dairying and agriculture shall apply to the service
17 enumerated in the definition of "disinfecting or pest
18 control services."
19 (5) Where tangible personal property or services are
20 utilized for purposes constituting a use, and for purposes
21 excluded from this definition, it shall be presumed that the
22 property or services are utilized for purposes constituting a
23 sale at retail and subject to tax unless the user thereof
24 proves to the Department of Revenue that the predominant
25 purposes for which the property or services are utilized do
26 not constitute a sale at retail.
27 (6) The term "use" with respect to "liquor" and "malt or
28 brewed beverages" shall include the purchase of "liquor" from
29 any "Pennsylvania liquor store" by any person for any purpose
30 and the purchase of "malt or brewed beverages" from a
20050S0854B2207 - 45 -
1 "manufacturer of malt or brewed beverages," "distributor" or
2 "importing distributor" by any person for any purpose, except
3 purchases from a "manufacturer of malt or brewed beverages"
4 by a "distributor" or "importing distributor," or purchases
5 from an "importing distributor" by a "distributor" within the
6 meaning of the Liquor Code. The term "use" shall not include
7 any purchase of "malt or brewed beverages" from a "retail
8 dispenser" or any purchase of "liquor" or "malt or brewed
9 beverages" from a person holding a "retail liquor license"
10 within the meaning of and pursuant to the provisions of the
11 Liquor Code, but shall include the exercise of any right or
12 power incidental to the ownership, custody or possession of
13 "liquor" or "malt or brewed beverages" obtained by the person
14 exercising such right or power in any manner other than
15 pursuant to the provisions of the Liquor Code.
16 (7) The use of tangible personal property purchased at
17 retail upon which the services described in paragraphs (2),
18 (3) and (4) have been performed shall be deemed to be a use
19 of the services by the person using the property.
20 (8) The term shall not include the providing of a motor
21 vehicle to a nonprofit private or public school to be used by
22 the school for the sole purpose of driver education.
23 (9) The obtaining by the purchaser of lobbying services.
24 (10) The obtaining by the purchaser of adjustment
25 services, collection services or credit reporting services.
26 (11) The obtaining by the purchaser of secretarial or
27 editing services.
28 (12) The obtaining by the purchaser of disinfecting or
29 pest control services, building maintenance or cleaning
30 services.
20050S0854B2207 - 46 -
1 (13) The obtaining by the purchaser of employment agency
2 services or help supply services.
3 (14) (Reserved).
4 (15) The obtaining by the purchaser of lawn care
5 service.
6 (16) The obtaining by the purchaser of storage and self-
7 storage service.
8 (17) The obtaining by a construction contractor of
9 tangible personal property or services provided to tangible
10 personal property which will be used pursuant to a
11 construction contract whether or not the tangible personal
12 property or services are transferred.
13 (18) The obtaining of mobile telecommunications service
14 by a customer.
15 (19) The obtaining by the purchaser of lodging services.
16 (20) The obtaining by the purchaser of personal
17 services.
18 (21) (Reserved).
19 (22) The obtaining by the purchaser of recreation
20 services.
21 (23) (Reserved).
22 (24) (Reserved).
23 (25) (Reserved).
24 (26) (Reserved).
25 (27) (Reserved).
26 (28) The obtaining by the purchaser of advertising
27 services.
28 (29) The obtaining by the purchaser of detective
29 services.
30 (30) The obtaining by the purchaser of management
20050S0854B2207 - 47 -
1 consulting services.
2 "Used prebuilt housing." Prebuilt housing that was
3 previously subject to a sale to a prebuilt housing purchaser.
4 "Vendor." Any person maintaining a place of business in this
5 Commonwealth, selling or leasing tangible personal property, or
6 rendering services, the sale or use of which is subject to the
7 tax imposed by this chapter, but not including any employee who
8 in the ordinary scope of employment renders services to the
9 employer of the employee in exchange for wages and salaries.
10 SUBCHAPTER B
11 IMPOSITION OF TAX
12 Sec.
13 1202. Imposition of tax.
14 1203. Computation of tax.
15 § 1202. Imposition of tax.
16 (a) Sales tax.--There is hereby imposed upon each separate
17 sale at retail of tangible personal property or services within
18 this Commonwealth a tax of 6% of the purchase price. The tax
19 shall be collected by the vendor from the purchaser and shall be
20 paid over to this Commonwealth as provided in this chapter.
21 (b) Use tax.--There is hereby imposed upon the use within
22 this Commonwealth of tangible personal property purchased at
23 retail and on those services purchased at retail a tax of 6% of
24 the purchase price. The tax shall be paid to the Commonwealth by
25 the person who makes such use, except that such tax shall not be
26 paid to the Commonwealth by that person where that person has
27 paid the tax imposed by subsection (a) or has paid the tax
28 imposed by this subsection to the vendor with respect to such
29 use.
30 (c) Telecommunications services.--
20050S0854B2207 - 48 -
1 (1) Notwithstanding any other provision of this chapter,
2 the tax with respect to telecommunications service shall be
3 computed at the rate of 6% upon the total amount charged to
4 customers for such services, irrespective of whether that
5 charge is based upon a flat rate or upon a message unit
6 charge.
7 (2) A telecommunications service provider shall have no
8 responsibility or liability to the Commonwealth for billing,
9 collecting or remitting taxes that apply to services,
10 products or other commerce sold over telecommunications lines
11 by third-party vendors.
12 (3) To prevent actual multistate taxation of interstate
13 telecommunications service, a taxpayer, upon proof that the
14 taxpayer has paid a similar tax to another state on the same
15 interstate telecommunications service, shall be allowed a
16 credit against the tax imposed by this section on the same
17 interstate telecommunications service to the extent of the
18 amount of the tax properly due and paid to the other state.
19 (d) Vending machine sales of food and beverages.--
20 Notwithstanding any other provisions of this chapter, the sale
21 or use of food and beverages dispensed by means of coin operated
22 vending machines shall be taxed at the rate of 6% of the
23 receipts collected from the machine.
24 (e) Prepaid telecommunications.--
25 (1) Notwithstanding any provisions of this chapter, the
26 sale or use of prepaid telecommunications evidenced by the
27 transfer of tangible personal property shall be subject to
28 the tax imposed by subsections (a) and (b).
29 (2) The sale or use of prepaid telecommunications not
30 evidenced by the transfer of tangible personal property shall
20050S0854B2207 - 49 -
1 be subject to the tax imposed by subsections (a) and (b) and
2 shall be deemed to occur at the purchaser's billing address.
3 (3) (i) Notwithstanding paragraph (2), the sale or use
4 of prepaid telecommunications service not evidenced by
5 the transfer of tangible personal property shall be taxed
6 at the rate of 6% of the receipts collected on each sale
7 if the service provider elects to collect the tax imposed
8 by this chapter on receipts of each sale.
9 (ii) The service provider shall notify the
10 department of its election and shall collect the tax on
11 receipts of each sale until the service provider notifies
12 the department otherwise.
13 (e.1) Prepaid mobile telecommunications services.--
14 (1) Notwithstanding any other provision of this chapter,
15 the sale or use of prepaid mobile telecommunications service
16 evidenced by the transfer of tangible personal property shall
17 be subject to the tax imposed by subsections (a) and (b).
18 (2) The sale or use of prepaid mobile telecommunications
19 service not evidenced by the transfer of tangible personal
20 property shall be subject to the tax imposed by subsections
21 (a) and (b) and shall be deemed to occur at the purchaser's
22 billing address or the location associated with the mobile
23 telephone number or the point of sale, whichever is
24 applicable.
25 (3) (i) Notwithstanding paragraph (2), the sale or use
26 of prepaid mobile telecommunications service not
27 evidenced by the transfer of tangible personal property
28 shall be taxed at the rate of 6% of the receipts
29 collected on each sale if the service provider elects to
30 collect the tax imposed by this chapter on receipts of
20050S0854B2207 - 50 -
1 each sale.
2 (ii) The service provider shall notify the
3 department of its election and shall collect the tax on
4 receipts of each sale until the service provider notifies
5 the department otherwise.
6 (f) Prebuilt housing.--
7 (1) Notwithstanding any other provision of this chapter,
8 tax with respect to sales of prebuilt housing shall be
9 imposed, subject to the provisions of paragraph (2), on the
10 prebuilt housing builder at the time of the prebuilt housing
11 sale within this Commonwealth and shall be paid and reported
12 by the prebuilt housing builder to the department in the time
13 and manner provided in this chapter.
14 (2) A manufacturer of prebuilt housing may, at its
15 option, precollect the tax from the prebuilt housing builder
16 at the time of sale to the prebuilt housing builder.
17 (3) In any case where prebuilt housing is purchased and
18 the tax is not paid by the prebuilt housing builder or
19 precollected by the manufacturer, the prebuilt housing
20 purchaser shall remit tax directly to the department if the
21 prebuilt housing is used in this Commonwealth without regard
22 to whether the prebuilt housing becomes a real estate
23 structure.
24 (g) Mobile telecommunications services provided by home
25 service provider.--Notwithstanding any other provisions of this
26 chapter and in accordance with the Mobile Telecommunications
27 Sourcing Act (Public Law 106-252, 4 U.S.C. § 116), the sale or
28 use of mobile telecommunications services which are deemed to be
29 provided to a customer by a home service provider under section
30 4 U.S.C. § 117(a) and (b) shall be subject to the tax of 6% of
20050S0854B2207 - 51 -
1 the purchase price. The tax shall be collected by the home
2 service provider from the customer and shall be paid over to the
3 Commonwealth as provided in this chapter if the customer's place
4 of primary use is located within this Commonwealth, regardless
5 of where the mobile telecommunications services originate,
6 terminate or pass through. The words and phrases used in this
7 subsection shall have the same meanings given to them in the
8 Mobile Telecommunications Sourcing Act.
9 § 1203. Computation of tax.
10 The amount of tax imposed by section 1202 (relating to
11 imposition of tax) shall be computed as follows:
12 (1) If the purchase price is 10¢ or less, no tax shall
13 be collected.
14 (2) If the purchase price is 11¢ or more but less than
15 18¢, 1¢ shall be collected.
16 (3) If the purchase price is 18¢ or more but less than
17 35¢, 2¢ shall be collected.
18 (4) If the purchase price is 35¢ or more but less than
19 51¢, 3¢ shall be collected.
20 (5) If the purchase price is 51¢ or more but less than
21 68¢ cents, 4¢ shall be collected.
22 (6) If the purchase price is 68¢ or more but less than
23 85¢, 5¢ shall be collected.
24 (7) If the purchase price is 85¢ or more but less than
25 $1.01, 6¢ shall be collected.
26 (8) If the purchase price is more than $1.00, 6% of each
27 dollar of purchase price plus the charges set forth in this
28 section upon any fractional part of a dollar in excess of
29 even dollars shall be collected.
30 SUBCHAPTER C
20050S0854B2207 - 52 -
1 EXCLUSIONS FROM TAX
2 Sec.
3 1204. Exclusions from tax.
4 1205. Alternate imposition of tax.
5 1206. Credit against tax.
6 § 1204. Exclusions from tax.
7 The tax imposed by section 1202 (relating to imposition of
8 tax) shall not be imposed upon any of the following:
9 (1) The sale at retail or use of tangible personal
10 property or services sold by or purchased from a person that
11 is not a vendor in an isolated transaction or sold by or
12 purchased from a person that is a vendor but is not a vendor
13 with respect to the tangible personal property or services
14 sold or purchased in the transaction. Inventory and stock in
15 trade sold at retail or used shall not be excluded from the
16 tax by this paragraph.
17 (2) The use of tangible personal property purchased by a
18 nonresident person outside of, and brought into, this
19 Commonwealth for use in this Commonwealth for a period not to
20 exceed seven days or for a period of time when the
21 nonresident is a tourist or vacationer, as long as the
22 tangible personal property is not consumed within this
23 Commonwealth.
24 (3) The use of tangible personal property in accordance
25 with the following:
26 (i) The property is purchased outside this
27 Commonwealth for use outside this Commonwealth by an
28 individual or business entity that, at the time of
29 purchase, is not:
30 (A) a resident of this Commonwealth; nor
20050S0854B2207 - 53 -
1 (B) actually doing business within this
2 Commonwealth.
3 (ii) The purchaser later brings the tangible
4 personal property into this Commonwealth in connection
5 with the establishment of a permanent business or
6 residence in this Commonwealth.
7 (iii) The property has been purchased more than six
8 months prior to the earlier of:
9 (A) the date it was first brought into this
10 Commonwealth; or
11 (B) the establishment of a business or residence
12 under subparagraph (ii).
13 (iv) This paragraph does not apply to tangible
14 personal property temporarily brought into this
15 Commonwealth for the performance of contracts for the
16 construction, reconstruction, remodeling, repairing and
17 maintenance of real estate.
18 (4) (Reserved).
19 (5) The sale at retail or use of steam, natural and
20 manufactured and bottled gas, fuel oil, electricity or
21 intrastate subscriber line charges, basic local telephone
22 service or telegraph service when purchased directly by the
23 user thereof solely for his own residential use and charges
24 for telephone calls paid for by inserting money into a
25 telephone accepting direct deposits of money to operate.
26 (6) (Reserved).
27 (7) (Reserved).
28 (8) (Reserved).
29 (9) (Reserved).
30 (10) (i) The sale at retail to or use by:
20050S0854B2207 - 54 -
1 (A) any charitable organization, volunteer
2 firemen's organization or nonprofit educational
3 institution; or
4 (B) a religious organization for religious
5 purposes of tangible personal property or services
6 other than pursuant to a construction contract.
7 (ii) The exclusion under this paragraph shall not
8 apply with respect to any tangible personal property or
9 services used in any unrelated trade or business carried
10 on by such organization or institution or with respect to
11 any materials, supplies and equipment used and
12 transferred to the organization or institution in the
13 construction, reconstruction, remodeling, renovation,
14 repairs and maintenance of any real estate structure,
15 other than building machinery and equipment, except
16 materials and supplies when purchased by such
17 organizations or institutions for routine maintenance and
18 repairs.
19 (11) The sale at retail or use of gasoline and other
20 motor fuels, the sales of which are otherwise subject to
21 excise taxes under 75 Pa.C.S. Ch. 90 (relating to liquid
22 fuels and fuels tax).
23 (12) The sale at retail to, or use by the United States,
24 this Commonwealth or its instrumentalities or political
25 subdivisions of tangible personal property or services.
26 (13) The sale at retail or use of wrapping paper,
27 wrapping twine, bags, cartons, tape, rope, labels,
28 nonreturnable containers and all other wrapping supplies, if
29 the use is incidental to the delivery of personal property.
30 This paragraph does not apply to a charge for wrapping or
20050S0854B2207 - 55 -
1 packaging.
2 (14) Sale at retail or use of vessels designed for
3 commercial use of registered tonnage of 50 tons or more when
4 produced by the builders thereof upon special order of the
5 purchaser.
6 (15) Sale at retail of tangible personal property or
7 services used or consumed in building, rebuilding, repairing
8 and making additions to or replacements in and upon vessels
9 designed for commercial use of registered tonnage of 50 tons
10 or more upon special order of the purchaser, or when rebuilt,
11 repaired or enlarged, or when replacements are made upon
12 order of or for the account of the owner.
13 (16) The sale at retail or use of tangible personal
14 property or services to be used or consumed for ship cleaning
15 or maintenance or as fuel, supplies, ships' equipment, ships'
16 stores or sea stores on vessels designed for commercial use
17 of registered tonnage of 50 tons or more to be operated
18 principally outside the limits of this Commonwealth.
19 (17) The sale at retail or use of any of the following:
20 (i) Prescription or nonprescription medicines, drugs
21 or medical supplies.
22 (ii) Crutches and wheelchairs for the use of persons
23 who are walking impaired.
24 (iii) Artificial limbs, artificial eyes and
25 artificial hearing devices when designed to be worn on
26 the person of the purchaser or user.
27 (iv) False teeth and materials used by a dentist in
28 dental treatment.
29 (v) Eyeglasses when especially designed or
30 prescribed by an ophthalmologist, oculist or optometrist
20050S0854B2207 - 56 -
1 for the personal use of the owner or purchaser.
2 (vi) Artificial braces and supports designed solely
3 for the use of persons who are walking impaired or any
4 other therapeutic, prosthetic or artificial device
5 designed for the use of a particular individual to
6 correct or alleviate a physical incapacity, including,
7 but not limited to, hospital beds, iron lungs and kidney
8 machines.
9 (18) The sale at retail or use of coal.
10 (19) (Reserved).
11 (20) (Reserved).
12 (21) (Reserved).
13 (22) (Reserved).
14 (23) (Reserved).
15 (24) The sale at retail or use of motor vehicles,
16 trailers and semi-trailers, or bodies attached to the chassis
17 of motor vehicles, trailers or semi-trailers which are:
18 (i) sold to a nonresident;
19 (ii) to be used outside of this Commonwealth; and
20 (iii) registered in another state within 20 days
21 after delivery to the vendee.
22 (25) The sale at retail or use of water.
23 (26) (i) The sale at retail or use of all vesture,
24 wearing apparel, raiments, garments, footwear and other
25 articles of clothing, including clothing patterns and
26 items that are to be a component part of clothing, worn
27 or carried on or about the human body.
28 (ii) This paragraph does not include accessories,
29 ornamental wear, formal day or evening apparel, and
30 articles made of fur on the hide or pelt or any material
20050S0854B2207 - 57 -
1 imitative of fur and articles of which such fur, real,
2 imitation or synthetic, is the component material of
3 chief value, but only if such value is more than three
4 times the value of the next most valuable component
5 material, and sporting goods and clothing not normally
6 used or worn when not engaged in sports.
7 (27) (Reserved).
8 (28) (Reserved).
9 (29) (i) The sale at retail or use of food and
10 beverages for human consumption.
11 (ii) This paragraph shall not apply to any of the
12 following:
13 (A) Soft drinks.
14 (B) Malt and brewed beverages and spirituous and
15 vinous liquors.
16 (iii) Food or beverages, whether sold for
17 consumption on or off the premises or on a "take-out" or
18 "to go" basis or delivered to the purchaser or consumer,
19 when purchased from persons engaged in the business of
20 catering; or from persons engaged in the business of
21 operating establishments from which ready-to-eat food and
22 beverages are sold.
23 (iv) (A) For purposes of this paragraph the term
24 "establishments" includes, but is not limited to,
25 restaurants, cafes, lunch counters, private and
26 social clubs, taverns, dining cars, hotels, night
27 clubs, fast food operations, pizzerias, fairs,
28 carnivals, lunch carts, ice cream stands, snack bars,
29 cafeterias, employee cafeterias, theaters, stadiums,
30 arenas, amusement parks, carryout shops, coffee shops
20050S0854B2207 - 58 -
1 and other establishments whether mobile or immobile.
2 (B) The term does not include bakeries, pastry
3 shops, donut shops, delicatessens, grocery stores,
4 supermarkets, farmer's markets, convenience stores or
5 vending machines from which food or beverages ready
6 to eat are sold except for the sale of meals,
7 sandwiches, food from salad bars, hand-dipped or
8 hand-served ice-based products, including ice cream
9 and yogurt, hot soup, hot pizza and other hot food
10 items, brewed coffee and hot beverages.
11 (C) The term "beverages" does not include malt
12 and brewed beverages and spirituous and vinous
13 liquors, but shall include soft drinks.
14 (v) This paragraph does not apply to the sale at
15 retail of food and beverages at or from a school or
16 church in the ordinary course of the activities of such
17 organization.
18 (30) (i) The sale at retail or use of newspapers.
19 (ii) For purposes of this paragraph, the term
20 "newspaper" shall mean a legal newspaper or publication
21 containing matters of general interest and reports of
22 current events which qualifies as a newspaper of general
23 circulation qualified to carry a legal advertisement as
24 those terms are defined in 45 Pa.C.S. § 101 (relating to
25 definitions), not including magazines.
26 (iii) This paragraph includes any printed
27 advertising materials circulated with such newspaper
28 regardless of where or by whom the advertising material
29 was produced.
30 (31) The sale at retail or use of caskets and burial
20050S0854B2207 - 59 -
1 vaults for human remains and markers and tombstones for human
2 graves.
3 (32) The sale at retail or use of flags of the United
4 States of America and the Commonwealth.
5 (33) The sale at retail or use of textbooks for use in
6 schools, colleges and universities, either public or private,
7 that are recognized by the Department of Education, when the
8 textbooks are purchased on behalf of or through such schools,
9 colleges or universities.
10 (34) The sale at retail, or use of motion picture film
11 rented or licensed from a distributor for the purpose of
12 commercial exhibition.
13 (35) (Reserved).
14 (36) The sale at retail or use of rail transportation
15 equipment used in the movement of personalty.
16 (37) (Reserved).
17 (38) The sale at retail of horses, if at the time of
18 purchase, the seller is directed to ship or deliver the horse
19 to an out-of-State location, whether or not the charges for
20 shipment are paid for by the seller or the purchaser. The
21 seller must obtain a bill of lading, either from the carrier
22 or from the purchaser, who, in turn has obtained the bill of
23 lading from the carrier, reflecting delivery to the out-of-
24 State address to which the horse has been shipped. The seller
25 must execute a "Certificate of Delivery to Destination
26 Outside of the Commonwealth" for each bill of lading
27 reflecting out-of-State delivery. The seller shall retain the
28 certificate of delivery form to justify the noncollection of
29 sales tax with respect to the transaction to which the form
30 relates. In transactions where a horse is sold by the seller
20050S0854B2207 - 60 -
1 and delivered to a domiciled person, agent or corporation
2 prior to its being delivered to an out-of-State location, the
3 "Certificate of Delivery to Destination Outside of the
4 Commonwealth" form must have attached to it bills of lading
5 both for the transfer to the domiciled person, agent or
6 corporation and from the aforementioned to the out-of-State
7 location.
8 (39) The sale at retail or use of fish feed purchased by
9 or on behalf of sportsmen's clubs, fish cooperatives or
10 nurseries approved by the Pennsylvania Fish Commission.
11 (40) (Reserved).
12 (41) The sale at retail of supplies and materials to
13 tourist promotion agencies which receive grants from the
14 Commonwealth for distribution to the public as promotional
15 material and the use of supplies and materials by the
16 agencies for the purposes set forth in this paragraph.
17 (42) The sale or use of brook trout (salvelinus
18 fontinalis), brown trout (Salmo trutta) or rainbow trout
19 (Salmo gairdneri).
20 (43) The sale at retail or use of buses to be used
21 exclusively for the transportation of children for school
22 purposes.
23 (44) The sale at retail or use of firewood. For the
24 purpose of this paragraph, "firewood" means the product of
25 trees when severed from the land and cut into proper lengths
26 for burning and pellets made from pure wood sawdust if used
27 for fuel for cooking, hot water production or to heat
28 residential dwellings.
29 (45) The sale at retail or use of materials used in the
30 construction and erection of objects purchased by not-for-
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1 profit organizations for purposes of commemoration and
2 memorialization of historical events, provided that the
3 object is erected upon publicly owned property or property to
4 be conveyed to a public entity upon the commemoration or
5 memorialization of the historical event.
6 (46) The sale at retail or use of tangible personal
7 property purchased in accordance with the Food Stamp Act of
8 1977 (Public Law 95-113, 7 U.S.C. §§ 2011-2029).
9 (47) (Reserved).
10 (48) (Reserved).
11 (49) The sale at retail or use of food and beverages by
12 nonprofit associations which support sports programs. For
13 purposes of this paragraph, the words and phrases shall have
14 the following meanings:
15 "Nonprofit association." An entity which is organized as
16 a nonprofit corporation or nonprofit unincorporated
17 association under the laws of this Commonwealth or the United
18 States or any entity which is authorized to do business in
19 this Commonwealth as a nonprofit corporation or
20 unincorporated association under the laws of this
21 Commonwealth, including youth or athletic, volunteer fire,
22 ambulance, religious, charitable, fraternal, veterans or
23 civic, or any separately chartered auxiliary of the
24 association, if organized and operated on a nonprofit basis.
25 "Sports program." Baseball (including softball),
26 football, basketball, soccer and any other competitive sport
27 formally recognized as a sport by the United States Olympic
28 Committee as specified by and under the jurisdiction of the
29 Amateur Sports Act of 1978 (Public Law 95-606, 36 U.S.C. §
30 371 et seq.), the Amateur Athletic Union or the National
20050S0854B2207 - 62 -
1 Collegiate Athletic Association. The term shall be limited to
2 a program or that portion of a program that is organized for
3 recreational purposes. The term shall be limited to a program
4 or that portion of a program which is organized for
5 recreational purposes and the activities of which are
6 substantially for such purposes and which is primarily for
7 participants who are 18 years of age or younger or whose 19th
8 birthdays occur during the year of participation or the
9 competitive season, whichever is longer. There shall,
10 however, be no age limitation for programs operated for
11 persons with physical disabilities or persons with mental
12 retardation.
13 "Support." The funds raised from sales are used to pay
14 the expenses of a sports program or the nonprofit association
15 sells the food and beverages at a location where a sports
16 program is being conducted under this act.
17 (50) The sale at retail or use of subscriptions for
18 magazines. The term "magazine" refers to a periodical
19 published at regular intervals not exceeding three months and
20 which are circulated among the general public, containing
21 matters of general interest and reports of current events
22 published for the purpose of disseminating information of a
23 public character or devoted to literature, the sciences, art
24 or some special industry. This paragraph includes any printed
25 advertising material circulated with the periodical or
26 publication, regardless of where or by whom the printed
27 advertising material was produced.
28 (51) (Reserved).
29 (52) (Reserved).
30 (53) (Reserved).
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1 (54) The sale at retail to or use by a producer of
2 commercial motion pictures of any tangible personal property
3 directly used in the production of a feature-length
4 commercial motion picture distributed to a national audience
5 as long as:
6 (i) the production of any motion picture for which
7 the property will be used does not violate any Federal or
8 State law; and
9 (ii) the purchaser furnishes to the vendor a
10 certificate substantially in the form as the Department
11 of Community and Economic Development may, by regulation,
12 prescribe, stating that the sale is exempt from tax under
13 this paragraph.
14 (55) The sale at retail or use of horses to be used
15 exclusively for commercial racing activities and the sale at
16 retail and use of feed, bedding, grooming supplies, riding
17 tack, farrier services, portable stalls and sulkies for
18 horses used exclusively for commercial racing activities.
19 (56) The sale at retail or use of tangible personal
20 property or services used, transferred or consumed in
21 installing or repairing equipment or devices designed to
22 assist persons in ascending or descending a stairway when:
23 (i) The equipment or devices are used by a person
24 who, by virtue of a physical disability, is unable to
25 ascend or descend stairs without the aid of such
26 equipment or device.
27 (ii) The equipment or device is installed or used in
28 the person's place of residence.
29 (iii) A physician has certified the physical
30 disability of the person in whose residence the equipment
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1 or device is installed or used.
2 (57) The sale at retail to or use by a construction
3 contractor of building machinery and equipment and services
4 thereto that are:
5 (i) Transferred pursuant to a construction contract
6 for any charitable organization, volunteer firemen's
7 organization, nonprofit educational institution or
8 religious organization for religious purposes, if:
9 (A) The building machinery and equipment and
10 services thereto are not used in any unrelated trade
11 or business.
12 (B) Transferred to the United States or the
13 Commonwealth or its instrumentalities or political
14 subdivisions.
15 (58) (Reserved).
16 (59) The sale at retail or use of molds and related mold
17 equipment used directly and predominantly in the manufacture
18 of products, regardless of whether the person that holds
19 title to the equipment manufactures a product.
20 (60) The sale or use of used prebuilt housing.
21 (61) (Reserved).
22 (62) The sale at retail or use of tangible personal
23 property or services which are directly used in farming,
24 dairying or agriculture when engaged in as a business
25 enterprise whether or not the sale is made to the person
26 directly engaged in the business enterprise or to a person
27 contracting with the person directly engaged in the business
28 enterprise for the production of food.
29 (63) The sale at retail or use of separately stated fees
30 paid pursuant to 13 Pa.C.S. § 9525 (relating to fees).
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1 (64) The sale at retail to or use by a construction
2 contractor, employed by a public school district pursuant to
3 a construction contract, of any materials and building
4 supplies which, during construction or reconstruction, are
5 made part of any public school building utilized for
6 instructional classroom education within this Commonwealth,
7 if the construction or reconstruction:
8 (i) Is necessitated by a disaster emergency, as
9 defined in 35 Pa.C.S. § 7102 (relating to definitions);
10 and
11 (ii) takes place during the period when there is a
12 declaration of disaster emergency under 35 Pa.C.S. §
13 7301(c) (relating to general authority of Governor).
14 (65) The sale at retail of college tuition.
15 § 1205. Alternate imposition of tax.
16 (a) Dealers of motor vehicles.--A person actively and
17 principally engaged in the business of selling new or used motor
18 vehicles, trailers or semitrailers, and registered with the
19 department in the dealer's class who:
20 (1) acquires a motor vehicle, trailer or semitrailer for
21 the purpose of resale; and
22 (2) prior to the resale, uses the motor vehicle, trailer
23 or semitrailer for a taxable use under this chapter
24 may pay a tax equal to 6% of the fair rental value of the motor
25 vehicle, trailer or semitrailer during that use.
26 (b) Commercial aircraft operators.--A commercial aircraft
27 operator who:
28 (1) acquires an aircraft for the purpose of resale, or
29 lease, or is entitled to claim another valid exemption at the
30 time of purchase; and
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1 (2) subsequent to the purchase, periodically uses the
2 same aircraft for a taxable use under this chapter
3 may elect to pay a tax equal to 6% of the fair rental value of
4 the aircraft during that use.
5 (c) Nonapplicability.--This section shall not apply to the
6 use of a vehicle as a wrecker, parts truck, delivery truck or
7 courtesy car.
8 § 1206. Credit against tax.
9 (a) Prerequisites.--
10 (1) Subject to the provisions of paragraph (2), a credit
11 against the tax imposed by section 1202 (relating to
12 imposition of tax) shall be granted with respect to tangible
13 personal property or services purchased for use outside this
14 Commonwealth equal to the tax paid to another state by reason
15 of the imposition by the other state of a tax similar to the
16 tax imposed by this chapter.
17 (2) No credit shall be granted under this section unless
18 the other state grants substantially similar tax relief by
19 reason of the payment of tax under this chapter.
20 (b) Call center credit.--A credit against the tax imposed by
21 section 1202 (relating to imposition of tax) on
22 telecommunications services shall be granted to a call center
23 for gross receipts tax paid by a telephone company on the
24 receipts derived from the sale of incoming and outgoing
25 interstate telecommunications services to the call center under
26 section 1101(a)(2) of the Tax Reform Code of 1971. The following
27 apply:
28 (1) A telephone company, upon request, shall notify a
29 call center of the amount of gross receipts tax paid by the
30 telephone company on the receipts derived from the sale of
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1 incoming and outgoing interstate telecommunications services
2 to the call center.
3 (2) A call center that is eligible for the credit in
4 this subsection may apply for a tax credit as set forth in
5 this subsection.
6 (3) By February 15, a taxpayer must submit an
7 application to the department for gross receipts tax paid on
8 the receipts derived from the sale of incoming and outgoing
9 interstate telecommunications services incurred in the prior
10 calendar year.
11 (4) By April 15 of the calendar year following the close
12 of the calendar year during which the gross receipts tax was
13 incurred, the department shall notify the applicant of the
14 amount of the applicant's tax credit approved by the
15 department.
16 (5) The total amount of tax credits provided for in this
17 subsection and approved by the department shall not exceed
18 $30,000,000 in any fiscal year. If the total amount of tax
19 credits applied for by all applicants exceeds the amount
20 allocated for those credits, then the credit to be received
21 by each applicant shall be determined as follows:
22 (i) Divide:
23 (A) the tax credit applied for by the applicant;
24 by
25 (B) the total of all tax credits applied for by
26 all applicants.
27 (ii) Multiply:
28 (A) the quotient under subparagraph (i); by
29 (B) the amount allocated for all tax credits.
30 SUBCHAPTER D
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1 LICENSES
2 Sec.
3 1208. Licenses.
4 § 1208. Licenses.
5 (a) General rule.--Every person maintaining a place of
6 business in this Commonwealth, selling or leasing services or
7 tangible personal property, the sale or use of which is subject
8 to tax and who has not obtained a license from the department,
9 shall, prior to the beginning of business, make application to
10 the department, on a form prescribed by the department, for a
11 license. If the person maintains more than one place of business
12 in this Commonwealth, the license shall be issued for the
13 principal place of business in this Commonwealth.
14 (b) Conditions of licensure.--The department shall, after
15 the receipt of an application, issue the license applied for
16 under subsection (a), if the applicant has filed all required
17 State tax reports and paid any State taxes not subject to a
18 timely perfected administrative or judicial appeal or subject to
19 a duly authorized deferred payment plan. The license shall be
20 nonassignable and valid for a period of five years.
21 (b.1) Grounds for refusal to issue license.--
22 (1) If an applicant for a license or any person holding
23 a license has not filed all required State tax reports and
24 paid any State taxes not subject to a timely perfected
25 administrative or judicial appeal or subject to a duly
26 authorized deferred payment plan, the department may refuse
27 to issue, may suspend or may revoke said license.
28 (2) The department shall notify the applicant or
29 licensee of any refusal, suspension or revocation. The notice
30 shall contain a statement that the refusal, suspension or
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1 revocation may be made public and shall be sent by first
2 class mail.
3 (3) An applicant or licensee aggrieved by the
4 determination of the department may file an appeal pursuant
5 to the provisions for administrative appeals in this chapter.
6 (4) In the case of a suspension or revocation which is
7 appealed, the license shall remain valid pending a final
8 outcome of the appeals process. Notwithstanding sections 274,
9 353(f), 408(b), 603, 702, 802, 904 and 1102 of the Tax Reform
10 Code or any other provision of law to the contrary, if no
11 appeal is taken or if an appeal is taken and denied at the
12 conclusion of the appeal process, the department may
13 disclose, by publication or otherwise, the identity of a
14 person and the fact that the person's license has been
15 refused, suspended or revoked under this subsection. The
16 department may include the basis for refusal, suspension or
17 revocation in the disclosure.
18 (c) Penalties.--
19 (1) A person who maintains a place of business in this
20 Commonwealth for the purpose of selling or leasing services
21 or tangible personal property, the sale or use of which is
22 subject to tax, without having first been licensed by the
23 department shall be guilty of a summary offense and, upon
24 conviction thereof, be sentenced to pay a fine of not less
25 than $300 nor more than $1,500 and, in default thereof, to
26 undergo imprisonment of not less than five days nor more than
27 30 days.
28 (2) The penalties imposed under this subsection shall be
29 in addition to any other penalties imposed by this chapter.
30 (3) For purposes of this subsection, the offering for
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1 sale or lease of any service or tangible personal property,
2 the sale or use of which is subject to tax, during any
3 calendar day shall constitute a separate violation.
4 (4) The Secretary of Revenue may designate employees of
5 the department to enforce the provisions of this subsection.
6 Those employees shall exhibit proof of and be within the
7 scope of the designation when instituting proceedings as
8 provided by the Pennsylvania Rules of Criminal Procedure.
9 (d) Liability to pay tax remains.--The failure of any person
10 to obtain a license shall not relieve that person of liability
11 to pay the tax imposed by this chapter.
12 SUBCHAPTER E
13 HOTEL OCCUPANCY TAX
14 Sec.
15 1209. Definitions.
16 1210. Imposition of tax.
17 1211. Seasonal tax returns.
18 § 1209. Definitions.
19 (a) General rule.--For the purposes of this subchapter, the
20 following words, terms and phrases shall have the meaning given
21 to them in this subsection, unless the context clearly indicates
22 otherwise:
23 "Hotel." A building or buildings in which the public may,
24 for a consideration, obtain sleeping accommodations. The term
25 shall not include any charitable, educational or religious
26 institution summer camp for children, hospital or nursing home.
27 "Occupancy." The use or possession or the right to the use
28 or possession by any person of any room or rooms in a hotel for
29 any purpose or the right to the use or possession of the
30 furnishings or to the services and accommodations accompanying
20050S0854B2207 - 71 -
1 the use and possession of the room or rooms.
2 "Occupant." A person who for a consideration, uses,
3 possesses or has a right to use or possess any room or rooms in
4 a hotel under a lease, concession, permit, right of access,
5 license or agreement.
6 "Operator." A person who operates a hotel.
7 "Rent." The consideration received for occupancy valued in
8 money, whether received in money or otherwise, including all
9 receipts, cash, credits and property or services of any kind or
10 nature, and also any amount for which the occupant is liable for
11 the occupancy without any deduction therefrom whatsoever. The
12 term shall not include a gratuity.
13 (b) Special definitions.--The following words and phrases,
14 when used in Subchapters D (relating to licenses) and F
15 (relating to returns), for the purposes of those subchapters
16 only, shall, in addition to the meaning ascribed to them in
17 section 1201 (relating to definitions), have the meaning
18 ascribed to them in this subsection, except where the context
19 clearly indicates a different meaning:
20 "Maintaining a place of business in this Commonwealth."
21 Being the operator of a hotel in this Commonwealth.
22 "Purchase at retail." Occupancy.
23 "Purchase price." Rent.
24 "Purchaser." An occupant.
25 "Sale at retail." The providing of occupancy to an occupant
26 by an operator.
27 "Services." Occupancy.
28 "Tangible personal property." Occupancy.
29 "Use." Occupancy.
30 "Vendor." Operator.
20050S0854B2207 - 72 -
1 § 1210. Imposition of tax.
2 There is hereby imposed an excise tax of 6% of the rent upon
3 every occupancy of a room or rooms in a hotel in this
4 Commonwealth, which tax shall be collected by the operator from
5 the occupant and paid to the Commonwealth as provided by this
6 chapter and the Tax Reform Code.
7 § 1211. Seasonal tax returns.
8 Notwithstanding any other provision of this chapter or the
9 Tax Reform Code, the department may, by regulation, waive the
10 requirement for the filing of quarterly returns in the case of
11 an operator whose hotel is operated only during certain seasons
12 of the year, and may provide for the filing of returns by such
13 persons at times other than those provided by section 1221 of
14 the Tax Reform Code.
15 SUBCHAPTER F
16 RETURNS
17 Sec.
18 1215. Persons required to make returns.
19 1216. Form of returns.
20 1217. Time for filing returns.
21 1218. Extension of time for filing returns.
22 1219. Place for filing returns.
23 1220. Timely mailing treated as timely filing and payment.
24 § 1215. Persons required to make returns.
25 A person required to pay tax to the department or collect and
26 remit tax to the department shall file returns with respect to
27 such tax.
28 § 1216. Form of returns.
29 The returns required by section 1215 (relating to persons
30 required to make returns) shall be on forms prescribed by the
20050S0854B2207 - 73 -
1 department and shall show such information with respect to the
2 taxes imposed by this chapter as the department may reasonably
3 require.
4 § 1217. Time for filing returns.
5 (a) Quarterly and monthly returns.--
6 (1) A return shall be filed quarterly by every licensee
7 on or before the 20th day of April, July, October and January
8 for the three months ending the last day of March, June,
9 September and December.
10 (2) A return shall be filed monthly with respect to each
11 month by every licensee whose total tax reported, or in the
12 event no report is filed, the total tax which should have
13 been reported, for the third calendar quarter of the
14 preceding year equals or exceeds $600. The returns shall be
15 filed on or before the 20th day of the next succeeding month
16 with respect to which the return is made. Any licensee
17 required to file monthly returns under this section shall be
18 relieved from filing quarterly returns.
19 (b) Annual returns.--For the calendar year 1971 and for each
20 year thereafter no annual return shall be filed except as may be
21 required by rules and regulations of the department promulgated
22 and published at least 60 days prior to the end of the year with
23 respect to which the returns are made. Where annual returns are
24 required, licensees shall not be required to file the returns
25 prior to the 20th day of the year succeeding the year with
26 respect to which the returns are made.
27 (c) Other returns.--A person, other than a licensee, who is
28 liable to pay to the department any tax under this chapter,
29 shall file a return on or before the 20th day of the month
30 succeeding the month in which the person becomes liable for the
20050S0854B2207 - 74 -
1 tax.
2 (d) Small taxpayers.--The department, by regulation, may
3 waive the requirement for the filing of a quarterly return in
4 the case of any licensee whose individual tax collections do not
5 exceed $75 per calendar quarter and may provide for reporting on
6 a less frequent basis in such cases.
7 § 1218. Extension of time for filing returns.
8 The department may on written application and for good cause
9 shown grant a reasonable extension of time for filing any return
10 required under this chapter. The time for making a return shall
11 not be extended for more than three months.
12 § 1219. Place for filing returns.
13 Returns shall be filed with the department at its main office
14 or at any branch office which it may designate for filing
15 returns.
16 § 1220. Timely mailing treated as timely filing and payment.
17 (a) General rule.--Notwithstanding the provisions of any
18 State tax law to the contrary, when a report or payment of all
19 or any portion of a State tax is required by law to be received
20 by the department or other agency of this Commonwealth on or
21 before a day certain, the taxpayer shall be deemed to have
22 complied with that law if the letter transmitting the report or
23 payment of the tax which has been received by the department is
24 postmarked by the United States Postal Service on or prior to
25 the final day on which the payment is to be received.
26 (b) Presentation of receipt.--For the purposes of this
27 chapter, presentation of a receipt indicating that the report or
28 payment was mailed by registered or certified mail on or before
29 the due date shall be evidence of timely filing and payment.
30 SUBCHAPTER G
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1 PAYMENT
2 Sec.
3 1221. Payment.
4 1222. Time of payment.
5 1223. Other times for payment.
6 1224. Place for payment.
7 1225. Tax held in trust for Commonwealth.
8 1226. Local receivers of use tax.
9 1227. Discount.
10 § 1221. Payment.
11 When a return of tax is required under this subchapter, the
12 person required to make the return shall pay the tax to the
13 department.
14 § 1222. Time of payment.
15 (a) Monthly, bimonthly and quarterly payments.--The tax
16 imposed by this chapter and incurred or collected by a licensee
17 shall be due and payable by the licensee on the day the return
18 is required to be filed under the provisions of section 1217
19 (relating to time for filing returns) and the payment must
20 accompany the return for the preceding period.
21 (b) Annual payments.--If the amount of tax due for the
22 preceding year as shown by the annual return of any taxpayer is
23 greater than the amount already paid by the taxpayer in
24 connection with the taxpayer's monthly or quarterly returns, the
25 taxpayer shall send with such annual return a remittance for the
26 unpaid amount of tax for the year.
27 (c) Other payments.--A person other than a licensee liable
28 to pay any tax under this chapter shall remit the tax at the
29 time of filing the return required by this chapter.
30 § 1223. Other times for payment.
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1 In the event that the department authorizes a taxpayer to
2 file a return at other times than those specified in section
3 1217 (relating to time for filing returns), the tax due shall be
4 paid at the time the return is filed.
5 § 1224. Place for payment.
6 The tax imposed by this chapter shall be paid to the
7 department at the place fixed for filing the return.
8 § 1225. Tax held in trust for Commonwealth.
9 (a) General rule.--All taxes collected by any person from
10 purchasers in accordance with this chapter and all taxes
11 collected by any person from purchasers under color of this
12 chapter which have not been properly refunded by the person to
13 the purchaser shall constitute a trust fund for the
14 Commonwealth. The trust shall be enforceable against that
15 person, his representatives and any person, other than a
16 purchaser to whom a refund has been made properly, receiving any
17 part of the fund without consideration, or knowing that the
18 taxpayer is committing a breach of trust.
19 (b) Presumption.--A person who receives payment of a lawful
20 obligation of the taxpayer from the fund shall be presumed to
21 have received the same in good faith and without any knowledge
22 of the breach of trust.
23 (c) Appeal.--A person, other than a taxpayer, against whom
24 the department makes any claim under this section shall have the
25 same right to petition and appeal as is given taxpayers by any
26 provisions of this subchapter.
27 § 1226. Local receivers of use tax.
28 (a) County treasurers.--
29 (1) A county treasurer may receive use tax due and
30 payable under the provisions of this chapter from any person
20050S0854B2207 - 77 -
1 other than a licensee. The receiving of the taxes shall be
2 pursuant to rules and regulations promulgated by the
3 department and upon forms furnished by the department.
4 (2) Each county treasurer shall remit to the department
5 all use taxes received under the authority of this section
6 minus the costs of administering this provision not to exceed
7 1% of the amount of use taxes received, which amount shall be
8 retained in lieu of any commission otherwise allowable by law
9 for the collection of the tax.
10 (b) Nonapplicability.--This section shall not apply to
11 counties of the first class.
12 § 1227. Discount.
13 If a return is filed by a licensee and the tax shown to be
14 due thereon less any discount is paid all within the time
15 prescribed, the licensee shall be entitled to credit and apply
16 against the tax payable by the licensee a discount of 1% of the
17 amount of the tax collected by the licensee as compensation for
18 the expense of collecting and remitting the same and as a
19 consideration of the prompt payment thereof.
20 SUBCHAPTER H
21 ASSESSMENT AND REASSESSMENT
22 Sec.
23 1230. Assessment.
24 1231. Mode and time of assessment.
25 1232. Reassessment.
26 1233. Assessment to recover erroneous refunds.
27 1234. Review by Board of Finance and Revenue.
28 1235. Appeal to Commonwealth Court.
29 1236. Burden of proof.
30 § 1230. Assessment.
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1 The department is authorized and required to make the
2 inquiries, determinations and assessments of the tax, including
3 interest, additions and penalties, imposed by this chapter.
4 § 1231. 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 to the assessment and paid to the department an
14 additional 3% of the difference for each month 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, the difference being
22 hereafter sometimes referred to as the "deficiency." A notice of
23 assessment for the deficiency and the reasons for the deficiency
24 shall then be sent to the taxpayer. The deficiency shall be paid
25 to the department within 30 days after a notice of the
26 assessment has been mailed to the taxpayer.
27 (c) Failure to file return.--In the event that any taxpayer
28 fails to file a return required by this chapter, the department
29 may make an estimated assessment, based on information
30 available, of the proper amount of tax owing by the taxpayer. A
20050S0854B2207 - 79 -
1 notice of assessment in the estimated amount shall be sent to
2 the taxpayer. The tax shall be paid within 30 days after a
3 notice of the estimated assessment has been mailed to the
4 taxpayer.
5 (d) Authority to establish effective rates by business
6 classification.--The department is authorized to make the
7 studies necessary to compute effective rates by business
8 classification, based upon the ratio between the tax required to
9 be collected and taxable sales and to use the rates in arriving
10 at the apparent tax liability of a taxpayer. Any assessment
11 based upon such rates shall be prima facie correct, except that
12 the rate shall not be considered where a taxpayer establishes
13 that the rate is based on a sample inapplicable to the taxpayer.
14 § 1232. Reassessment.
15 (a) Notice of intention to file petition.--Any taxpayer
16 against whom an assessment is made may petition the department
17 for a reassessment. Notice of an intention to file such a
18 petition shall be given to the department within 30 days of the
19 date the notice of assessment was mailed to the taxpayer, except
20 that the department for due cause may accept the notice within
21 90 days of the date the notice of assessment was mailed. The
22 department by registered mail shall supply the taxpayer with a
23 statement setting forth in reasonable detail the basis of the
24 assessment within 30 days after receipt of the taxpayer's notice
25 of intention to file a petition for reassessment.
26 (b) Petition for reassessment.--A petition for reassessment
27 shall be filed within 30 days after the basis of assessment has
28 been mailed to the taxpayer. Such petition shall set forth in
29 reasonable detail the grounds upon which the taxpayer claims
30 that the assessment is erroneous or unlawful, in whole or in
20050S0854B2207 - 80 -
1 part, and shall be accompanied by an affidavit or affirmation
2 that the facts contained in the petition are true and correct
3 and that the petition is not interposed for delay. An extension
4 of time for filing the petition may be allowed for cause but in
5 no case shall the extension exceed 120 days.
6 (c) Hearing.--The department shall hold such hearings as may
7 be necessary for the purpose, at such times and places as it may
8 determine. Each taxpayer who has duly filed a petition for
9 reassessment shall be notified by the department of the time
10 when, and the place where, the hearing in the taxpayer's case
11 will be held.
12 (d) Decision by department.--It shall be the duty of the
13 department, within six months after receiving a filed petition
14 for reassessment, to dispose of the issue raised by the petition
15 and mail notice of the department's decision to the petitioner.
16 The taxpayer and the department may, however, by stipulation,
17 extend such disposal time by not more than six additional
18 months.
19 § 1233. Assessment to recover erroneous refunds.
20 The department may, within two years of the granting of any
21 refund or credit, or within the period in which an assessment
22 could have been filed by the department with respect to the
23 transaction pertaining to which the refund was granted,
24 whichever period occurs last, file an assessment to recover any
25 refund or part thereof or credit or part thereof which was
26 erroneously made or allowed.
27 § 1234. Review by Board of Finance and Revenue.
28 (a) Time limit.--Within 60 days after the date of mailing of
29 notice by the department of the decision on any petition for
30 reassessment filed with it, the person against whom such
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1 assessment was made may, by petition, request the Board of
2 Finance and Revenue to review such decision. The failure of the
3 department to notify the petitioner of a decision within the
4 time provided for by section 1232 (relating to reassessment)
5 shall act as a denial of such petition, and a petition for
6 review may be filed with the Board of Finance and Revenue within
7 120 days of the date prior to which the department should have
8 mailed to the petitioner its notice of decision.
9 (b) Petition for review.--Every petition for review filed
10 hereunder shall state specifically the reasons on which the
11 petitioner relies, or shall incorporate by reference the
12 petition for reassessment in which the reasons are stated. The
13 petition shall be supported by affidavit that it is not made for
14 the purpose of delay and that the facts set forth therein are
15 true.
16 (c) Decision by Board of Finance and Revenue.--The Board of
17 Finance and Revenue shall act finally in disposing of petitions
18 filed with it within six months after they have been received.
19 In the event of the failure of the board to dispose of any
20 petition within six months, the action taken by the department,
21 upon the petition for reassessment, shall be sustained. The
22 Board of Finance and Revenue may sustain the action taken by the
23 department on the petition for reassessment, or it may reassess
24 the tax due on such basis as it deems according to law. The
25 board shall give notice of its action to the department and to
26 the petitioner.
27 § 1235. Appeal to Commonwealth Court.
28 Any person aggrieved by the decision of the Board of Finance
29 and Revenue or by the board's failure to act upon a petition for
30 review within six months may appeal in the manner now or
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1 hereafter provided by law for appeals in the case of tax
2 settlements.
3 § 1236. Burden of proof.
4 In all cases of petitions for reassessment, review or appeal,
5 the burden of proof shall be upon the petitioner or appellant,
6 as the case may be.
7 SUBCHAPTER I
8 COLLECTION
9 Sec.
10 1237. Collection of tax.
11 1238. Collection of tax on motor vehicles, trailers and
12 semitrailers.
13 1239. Precollection of tax.
14 1240. Bulk and auction sales.
15 1241. Collection upon failure to request reassessment, review
16 or appeal.
17 § 1237. Collection of tax.
18 (a) Collection by department.--The department shall collect
19 the tax in the manner provided by law for the collection of
20 taxes imposed by the laws of this Commonwealth.
21 (b) Collection by persons maintaining a place of business in
22 this Commonwealth.--Every person maintaining a place of business
23 in this Commonwealth and selling or leasing tangible personal
24 property or services, the sale or use of which is subject to tax
25 shall collect the tax from the purchaser or lessee at the time
26 of making the sale or lease, and shall remit the tax to the
27 department, unless such collection and remittance is otherwise
28 provided for in this chapter.
29 (c) Collection by persons delivering property in this
30 Commonwealth.--Every person not otherwise required to collect
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1 tax that delivers tangible personal property to a location
2 within this Commonwealth and that unpacks, positions, places or
3 assembles the tangible personal property shall collect the tax
4 from the purchaser at the time of delivery and shall remit the
5 tax to the department if the person delivering the tangible
6 personal property is responsible for collecting any portion of
7 the purchase price of the tangible personal property delivered
8 and the purchaser has not provided the person with proof that
9 the tax imposed by this chapter has been or will be collected by
10 the seller or that the purchaser provided the seller with a
11 valid exemption certificate. Every person required to collect
12 tax under this paragraph shall be deemed to be selling or
13 leasing tangible personal property or services, the sale or use
14 of which is subject to the tax imposed under section 1202
15 (relating to imposition of tax).
16 (d) Failure to collect tax.--Any person required under this
17 chapter to collect tax from another person, who shall fail to
18 collect the proper amount of such tax, shall be liable for the
19 full amount of the tax which the person should have collected.
20 (e) Exemption certificates.--If the tax does not apply to
21 the sale or lease of tangible personal property or services, the
22 purchaser or lessee shall furnish to the vendor a certificate
23 indicating that the sale is not legally subject to the tax. The
24 certificate shall be in substantially the form as the department
25 may, by regulation, prescribe. Where the tangible personal
26 property or service is of a type that is never subject to the
27 tax imposed or where the sale or lease is in interstate
28 commerce, a certificate need not be furnished. Where a series of
29 transactions are not subject to tax, a purchaser or user may
30 furnish the vendor with a single exemption certificate in
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1 substantially such form and valid for such period of time as the
2 department may, by regulation, prescribe. The department shall
3 provide all school districts and intermediate units with a
4 permanent tax exemption number.
5 (f) Good faith reliance on exemption certificate.--An
6 exemption certificate, which is complete and regular and on its
7 face discloses a valid basis of exemption if taken in good
8 faith, shall relieve the vendor from the liability imposed by
9 this section. An exemption certificate accepted by a vendor from
10 a natural person domiciled within this Commonwealth or any
11 association, fiduciary, partnership, corporation or other
12 entity, either authorized to do business within this
13 Commonwealth or having an established place of business within
14 this Commonwealth, in the ordinary course of the vendor's
15 business, which on its face discloses a valid basis of exemption
16 consistent with the activity of the purchaser and character of
17 the property or service being purchased or which is provided to
18 the vendor by a charitable, religious, educational or volunteer
19 firemen's organization and contains the organization's
20 charitable exemption number and which, in the case of any
21 purchase costing $200 or more, is accompanied by a sworn
22 declaration on a form to be provided by the department of an
23 intended usage of the property or service which would render it
24 nontaxable, shall be presumed to be taken in good faith and the
25 burden of proving otherwise shall be on the department.
26 (g) Direct payment permits.--The department may authorize a
27 purchaser or lessee who acquires tangible personal property or
28 services under circumstances that make it impossible at the time
29 of acquisition to determine the manner in which the tangible
30 personal property or service will be used, to pay the tax
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1 directly to the department, and waive the collection of the tax
2 by the vendor. No such authority shall be granted or exercised,
3 except upon application to the department and the issuance by
4 the department, in its discretion, of a direct payment permit.
5 If a direct payment permit is granted, its use shall be subject
6 to conditions specified by the department, and the payment of
7 tax on all acquisitions pursuant to the permit shall be made
8 directly to the department by the permit holder.
9 § 1238. Collection of tax on motor vehicles, trailers and
10 semitrailers.
11 (a) Direct payment of tax.--Notwithstanding the provisions
12 of section 1237(b)(relating to collection of tax), tax due on
13 the sale at retail or use of a motor vehicle, trailer or
14 semitrailer, except mobile homes as defined in 75 Pa.C.S. § 102
15 (relating to definitions) required by law to be registered with
16 the department, shall be paid by the purchaser or user directly
17 to the department upon application to the department for an
18 issuance of a certificate of title upon such motor vehicle,
19 trailer or semitrailer. The department shall not issue a
20 certificate of title until the tax has been paid, or evidence
21 satisfactory to the department has been given to establish that
22 tax is not due.
23 (b) Failure to pay tax.--The department may cancel or
24 suspend any record of certificate of title or registration of a
25 motor vehicle, trailer or semitrailer when the check received in
26 payment of the tax on such vehicle is not paid upon demand. Such
27 tax shall be considered as a first encumbrance against such
28 vehicle and the vehicle may not be transferred without first
29 payment in full of such tax and any interest additions or
30 penalties which shall accrue thereon in accordance with this
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1 chapter.
2 § 1239. Precollection of tax.
3 (a) General rule.--The department may, by regulation,
4 authorize or require particular categories of vendors selling
5 tangible personal property for resale to precollect from the
6 purchaser the tax which the purchaser will collect upon making a
7 sale at retail of such tangible personal property. The
8 department, however, may not pursuant to this section require a
9 vendor to precollect tax from a purchaser who purchases for
10 resale more than $1,000 worth of tangible personal property from
11 such vendor per year.
12 (b) License exception.--In any case in which a vendor has
13 been authorized to prepay the tax to the person from whom the
14 vendor purchased the tangible personal property for resale, the
15 vendor so authorized to prepay the tax may, under the
16 regulations of the department, be relieved from his duty to
17 secure a license if the duty shall arise only by reason of the
18 vendor's sale of the tangible personal property with respect to
19 which the vendor is, under authorization of the department, to
20 prepay the tax.
21 (c) Sale at retail.--The vendor, on making a sale at retail
22 of tangible personal property with respect to which the vendor
23 has prepaid the tax, must separately state at the time of resale
24 the proper amount of tax on the transaction, and reimburse
25 himself on account of the taxes which he has previously prepaid.
26 Should such vendor collect a greater amount of tax in any
27 reporting period than the vendor had previously prepaid upon
28 purchase of the goods with respect to which he prepaid the tax,
29 the vendor must file a return and remit the balance to the
30 Commonwealth at the time at which a return would otherwise be
20050S0854B2207 - 87 -
1 due with respect to such sales.
2 § 1240. Bulk and auction sales.
3 A person that sells or causes to be sold at auction, or that
4 sells or transfers in bulk, 51% or more of any stock of goods,
5 wares or merchandise of any kind, fixtures, machinery,
6 equipment, buildings or real estate, involved in a business for
7 which the person is licensed or required to be licensed under
8 the provisions of this chapter, or is liable for filing use tax
9 returns in accordance with the provisions of this chapter, shall
10 be subject to the provisions of section 1403 of the Fiscal Code.
11 § 1241. Collection upon failure to request reassessment, review
12 or appeal.
13 (a) General rule.--The department may collect any tax:
14 (1) If an assessment of tax is not paid within ten days
15 or 30 days as the case may be after notice thereof to the
16 taxpayer, and no petition for reassessment has been filed.
17 (2) Within 60 days from the date of reassessment, if no
18 petition for review has been filed.
19 (3) Within 30 days from the date of the decision of the
20 Board of Finance and Revenue upon a petition for review, or
21 of the expiration of the board's time for acting upon such
22 petition, if no appeal has been made.
23 (4) In all cases of judicial sales, receiverships,
24 assignments or bankruptcies.
25 (b) Defenses.--In any such case in a proceeding for the
26 collection of such taxes, the person against whom they were
27 assessed shall not be permitted to set up any ground of defense
28 that might have been determined by the department, the Board of
29 Finance and Revenue or the courts. The defense of failure of the
30 department to mail notice of assessment or reassessment to the
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1 taxpayer and the defense of payment of assessment or
2 reassessment, however, may be raised in proceedings for
3 collection by a motion to stay the proceedings.
4 SUBCHAPTER J
5 NONPAYMENT
6 Sec.
7 1242. Lien for taxes.
8 1243. Suit for taxes.
9 1244. Tax suit comity.
10 1245. Service.
11 § 1242. Lien for taxes.
12 (a) Lien imposed.--If any person liable to pay any tax
13 neglects or refuses to pay the tax after demand, the amount,
14 including any interest, addition or penalty, together with any
15 costs that may accrue in addition thereto, shall be a lien in
16 favor of the Commonwealth upon the property, both real and
17 personal, of the person but only after the lien has been entered
18 and docketed of record by the prothonotary of the county where
19 the property is situated. The department may, at any time,
20 transmit, to the prothonotaries of the respective counties,
21 certified copies of all liens for taxes imposed by this chapter
22 and penalties and interest. It shall be the duty of each
23 prothonotary receiving the lien to enter and docket the lien of
24 record in the prothonotary's office, which lien shall be indexed
25 as judgments are indexed. No prothonotary shall require, as a
26 condition precedent to the entry of the liens, the payment of
27 the costs incident to the liens.
28 (b) Priority of lien and effect on judicial date; no
29 discharge by sale on junior lien.--The lien imposed under this
30 section shall have priority from the date of its recording under
20050S0854B2207 - 89 -
1 subsection (a), and shall be fully paid and satisfied out of the
2 proceeds of any judicial sale of property subject to the lien
3 before any other obligation, judgment, claim, lien or estate to
4 which the property may subsequently become subject, except costs
5 of the sale and of the writ upon which the sale was made, and
6 real estate taxes and municipal claims against the property, but
7 shall be subordinate to mortgages and other liens existing and
8 duly recorded or entered of record prior to the recording of the
9 tax lien. In the case of a judicial sale of property, subject to
10 a lien imposed under this section, upon a lien or claim over
11 which the lien imposed under this section has priority, the sale
12 shall discharge the lien imposed under this section to the
13 extent only that the proceeds are applied to its payment, and
14 the lien shall continue in full force and effect as to the
15 balance remaining unpaid. There shall be no inquisition or
16 condemnation upon any judicial sale of real estate made by the
17 Commonwealth pursuant to the provisions hereof. The lien of the
18 taxes, interest and penalties shall continue for five years from
19 the date of entry, and may be revived and continued in the
20 manner now or hereafter provided for renewal of judgments, or as
21 may be provided in the Fiscal Code, and a writ of execution may
22 directly issue upon the lien without the issuance and
23 prosecution to judgment of a writ of scire facias. Not less than
24 ten days before issuance of any execution on the lien, however,
25 notice of the filing and the effect of the lien shall be sent by
26 registered mail to the taxpayer at his last known post office
27 address. The lien shall have no effect upon any stock of goods,
28 wares or merchandise regularly sold or leased in the ordinary
29 course of business by the person against whom the lien has been
30 entered, unless a writ of execution has been issued and a levy
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1 made upon the stock of goods, wares and merchandise.
2 (c) Duty of prothonotary.--Any willful failure of any
3 prothonotary to carry out any duty imposed upon the prothonotary
4 by this section shall be a misdemeanor and, upon conviction, the
5 prothonotary shall be sentenced to pay a fine not exceeding
6 $1,000 and costs of prosecution, or to imprisonment for not more
7 than one year, 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 chapter which are due
12 and unpaid and are not collectible under the provisions of
13 section 1225 (relating to tax held in trust for Commonwealth)
14 shall be paid from the first money available for distribution in
15 priority to all other claims and liens, except insofar as the
16 laws of the United States may give a prior claim to the Federal
17 Government. Any person charged with the administration or
18 distribution of any such property or estate, who shall violate
19 the provisions of this section, shall be personally liable for
20 any taxes imposed by this chapter, which are accrued and unpaid
21 and are chargeable against the person whose property or estate
22 is being administered or distributed.
23 (e) Other remedies.--Subject to the limitations contained in
24 this chapter as to the assessment of taxes, nothing contained in
25 this section shall be construed to restrict, prohibit or limit
26 the use by the department in collecting taxes finally due and
27 payable of any other remedy or procedure available at law or
28 equity for the collection of debts.
29 § 1243. Suit for taxes.
30 (a) Commencement.--At any time within three years after any
20050S0854B2207 - 91 -
1 tax or any amount of tax shall be finally due and payable, the
2 department may commence an action in the courts of this
3 Commonwealth, of any state or of the United States, in the name
4 of the Commonwealth of Pennsylvania, to collect the amount of
5 tax due together with additions, interest, penalties and costs
6 in the manner provided at law or in equity for the collection of
7 ordinary debts.
8 (b) Procedure.--The Attorney General shall prosecute the
9 action and, except as provided in this chapter, the provisions
10 of the Rules of Civil Procedure and the provisions of the laws
11 of this Commonwealth relating to civil procedures and remedies
12 shall, to the extent that they are applicable, be available in
13 such proceedings.
14 (c) Other remedies.--The provisions of this section are in
15 addition to any process, remedy or procedure for the collection
16 of taxes provided by this chapter or by the laws of this
17 Commonwealth, and this section is neither limited by nor
18 intended to limit any such process, remedy or procedure.
19 § 1244. Tax suit comity.
20 The courts of this Commonwealth shall recognize and enforce
21 liabilities for sales and use taxes, lawfully imposed by any
22 other state, provided that the other state extends a like comity
23 to this Commonwealth.
24 § 1245. Service.
25 Any person maintaining a place of business within this
26 Commonwealth is deemed to have appointed the Secretary of the
27 Commonwealth his agent for the acceptance of service of process
28 or notice in any proceedings for the enforcement of the civil
29 provisions of this chapter, and any service made upon the
30 Secretary of the Commonwealth as such agent shall be of the same
20050S0854B2207 - 92 -
1 legal force and validity as if such service had been personally
2 made upon such person. Where service cannot be made upon such
3 person in the manner provided by other laws of this Commonwealth
4 relating to service of process, service may be made upon the
5 Secretary of the Commonwealth and, in such case, a copy of the
6 process or notice shall also be personally served upon any agent
7 or representative of such person who may be found within this
8 Commonwealth, or where no such agent or representative may be
9 found a copy of the process or notice shall be sent by
10 registered mail to such person at the last known address of his
11 principal place of business, home office or residence.
12 SUBCHAPTER K
13 MISCELLANEOUS PROVISIONS
14 Sec.
15 1246. Collection and payment of tax on credit sales.
16 1247. Prepayment of tax.
17 1247.1. Refund of sales tax attributed to bad debt.
18 1248. Registration of transient vendors.
19 1248.1. Bond.
20 1248.2. Notification to department; inspection of records.
21 1248.3. Seizure of property.
22 1248.4. Fines.
23 1248.5. Transient vendors subject to chapter.
24 1248.6. Promoters.
25 § 1246. Collection and payment of tax on credit sales.
26 If any sale subject to tax under this chapter is wholly or
27 partly on credit, the vendor shall require the purchaser to pay
28 in cash at the time the sale is made, or within 30 days
29 thereafter, the total amount of tax due upon the entire purchase
30 price. The vendor shall remit the tax to the department,
20050S0854B2207 - 93 -
1 regardless of whether payment was made by the purchaser to the
2 vendor, with the next return required to be filed under section
3 1217 (relating to time for filing returns).
4 § 1247. Prepayment of tax.
5 (a) General rule.--Whenever a vendor is forbidden by law or
6 governmental regulation to charge and collect the purchase price
7 in advance of or at the time of delivery, the vendor shall
8 prepay the tax as required by section 1222 (relating to time of
9 payment), but in such case if the purchaser fails to pay to the
10 vendor the total amount of the purchase price and the tax, and
11 such amount is written off as uncollectible by the vendor, the
12 vendor shall not be liable for the tax and shall be entitled to
13 a credit or refund of the tax paid. If the purchase price is
14 thereafter collected, in whole or in part, the amount collected
15 shall be applied first to the payment of the entire tax portion
16 of the bill, and shall be remitted to the department by the
17 vendor with the first return filed after the collection.
18 (b) Petition for refund.--Tax prepaid shall be subject to
19 refund upon petition to the department under the provisions of
20 section 1252 (relating to refunds) filed within 105 days of the
21 close of the fiscal year in which the accounts are written off.
22 § 1247.1. Refund of sales tax attributed to bad debt.
23 (a) Petition for refund.--A vendor may file a petition for
24 refund of sales tax paid to the department that is attributed to
25 a bad debt if all of the following apply:
26 (1) The purchaser fails to pay the vendor the total
27 purchase price.
28 (2) The purchase price is written off, either in whole
29 or in part, as a bad debt on the vendor's books and records.
30 (3) The bad debt has been deducted for Federal income
20050S0854B2207 - 94 -
1 tax purposes under section 166 of the Internal Revenue Code
2 of 1986 (Public Law 99-514, 26 U.S.C. § 166). The petition
3 shall be filed with the department within the time
4 limitations prescribed by section 3003.1 of the Tax Reform
5 Code.
6 (b) Amount of refund.--The refund authorized by this section
7 shall be limited to the sales tax paid to the department that is
8 attributed to the bad debt, less any discount under section 1227
9 (relating to discount). Partial payments by the purchaser to the
10 vendor shall be prorated between the original purchase price and
11 the sales tax due on the sale. Payments made to a vendor on any
12 transaction that includes both taxable and nontaxable components
13 shall be allocated proportionally between the taxable and
14 nontaxable components.
15 (c) Assignment of right to petition.--A vendor may assign
16 its right to petition and receive a refund of sales tax
17 attributed to a bad debt to an affiliated entity. A vendor may
18 not assign its right to petition and receive a refund of sales
19 tax attributed to a bad debt to any other person.
20 (d) Exclusions.--No refund shall be granted under this
21 section for any of the following:
22 (1) Interest.
23 (2) Finance charges.
24 (3) Expenses incurred in attempting to collect any
25 amount receivable.
26 (e) Refund procedure.--The documentation, procedures and
27 methods for claiming and calculating the refund allowed under
28 this section shall be in such form as the department may
29 prescribe.
30 (f) Return of refund.--If the purchase price that is
20050S0854B2207 - 95 -
1 attributed to a prior bad debt refund is thereafter collected,
2 in whole or in part, the vendor or affiliated entity shall remit
3 the proportional tax to the department with the first return
4 filed after the collection.
5 (g) Interest.--Notwithstanding the provisions of section
6 806.1 of the Fiscal Code, no interest shall be paid by the
7 Commonwealth on refunds of sales tax attributed to bad debt
8 under this section.
9 (h) Exclusive remedy.--No refund or credit of sales tax
10 shall be made for any uncollected purchase price or bad debt
11 except as authorized by this section. No deduction or credit for
12 bad debt may be taken on any return filed with the department.
13 This section shall provide the exclusive procedure for claiming
14 a refund or credit of sales tax attributed to uncollected
15 purchase price or bad debt.
16 (i) Definitions.--As used in this section, the following
17 words and phrases shall have the meanings given to them in this
18 subsection:
19 "Affiliated entity." Any corporation that is part of the
20 same affiliated group as the vendor as defined by section
21 1504(a)(1) of the Internal Revenue Code of 1986.
22 § 1248. Registration of transient vendors.
23 (a) General rule.--Prior to conducting business or otherwise
24 commencing operations within this Commonwealth, a transient
25 vendor shall register with the department. The application for
26 registration shall be in such form and contain such information
27 as the department, by regulation, shall prescribe and shall set
28 forth truthfully and accurately the information desired by the
29 department. This registration shall be renewed and updated
30 annually.
20050S0854B2207 - 96 -
1 (b) Issuance of certificate.--Upon registration and the
2 posting of the bond required by section 1248.1 (relating to
3 bond), the department shall issue to the transient vendor a
4 certificate, valid for one year. Upon renewal of registration,
5 the department shall issue a new certificate, valid for one
6 year, providing the department is satisfied that the transient
7 vendor has complied with the provisions of this chapter.
8 (c) Possession of certificate.--The transient vendor shall
9 possess the certificate at all times when conducting business
10 within this Commonwealth and shall exhibit the certificate upon
11 demand by authorized employees of the department or any law
12 enforcement officer.
13 (d) Notice on certificate.--The certificate issued by the
14 department shall state that the transient vendor named therein
15 has registered with the department and shall provide notice to
16 the transient vendor that:
17 (1) The transient vendor must notify the department in
18 writing before it enters this Commonwealth to conduct
19 business, of the location or locations where it intends to
20 conduct business and the date or dates on which it intends to
21 conduct business.
22 (2) Failure to notify or giving false information to the
23 department may result in suspension or revocation of the
24 transient vendor's certificate.
25 (3) Conducting business within this Commonwealth after a
26 certificate has been suspended or revoked may result in
27 criminal conviction and the imposition of fines or other
28 penalties.
29 § 1248.1. Bond.
30 (a) Bond required.--Upon registration with the department, a
20050S0854B2207 - 97 -
1 transient vendor shall also post a bond with the department in
2 the amount of $500 as surety for compliance with the provisions
3 of this chapter. After a period of demonstrated compliance with
4 these provisions, or, if the transient vendor provides the
5 license number of a promoter who has notified the department of
6 a show, in accordance with the provisions of section 1248.6(a)
7 (relating to promoters), the department may reduce the amount of
8 bond required of a transient vendor or may eliminate the bond
9 entirely.
10 (b) Request for voluntary suspension of certificate.--A
11 transient vendor may file a request for voluntary suspension of
12 certificate with the department. If the department is satisfied
13 that the provisions of this chapter have been complied with and
14 has possession of the transient vendor's certificate, it shall
15 return the bond posted to the transient vendor.
16 § 1248.2. Notification to department; inspection of records.
17 (a) Notification to department.--Prior to entering this
18 Commonwealth to conduct business, a transient vendor shall
19 notify the department in writing of the location or locations
20 where it intends to conduct business and the date or dates on
21 which it intends to conduct business.
22 (b) Inspection of records.--While conducting business within
23 this Commonwealth, the transient vendor shall permit authorized
24 employees of the department to inspect its sales records,
25 including, but not limited to, sales receipts and inventory or
26 price lists and to permit inspection of the tangible personal
27 property offered for sale at retail.
28 (c) Suspension or revocation of certificate.--The department
29 may suspend or revoke a certificate issued to a transient vendor
30 if the transient vendor:
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1 (1) fails to notify the department as required by
2 subsection (a);
3 (2) provides the department with false information
4 regarding the conduct of business within this Commonwealth;
5 (3) fails to collect sales tax on all tangible personal
6 property or services sold subject to the sales tax; or
7 (4) fails to file with the department a tax return as
8 required by section 1217 (relating to time for filing
9 returns).
10 (d) Rules and regulations.--The department shall promulgate
11 the rules and regulations necessary to implement this section.
12 § 1248.3. Seizure of property.
13 (a) General rule.--If a transient vendor conducting business
14 within this Commonwealth fails to exhibit a valid certificate
15 upon demand by authorized employees of the department, those
16 authorized employees shall have the authority to seize, without
17 warrant, the tangible personal property and the automobile,
18 truck or other means of transportation used to transport or
19 carry that property. All property seized shall be deemed
20 contraband and shall be subject to immediate forfeiture
21 proceedings instituted by the department pursuant to procedures
22 adopted by regulation, except as otherwise provided by this
23 section.
24 (b) Release of seized property.--Property seized pursuant to
25 subsection (a) shall be released upon:
26 (1) presentation of a valid certificate to authorized
27 employees of the department; or
28 (2) registration by the transient vendor with the
29 department and the posting of a bond in the amount of $500,
30 either immediately or within 15 days after the property is
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1 seized.
2 § 1248.4. Fines.
3 Any transient vendor conducting business within this
4 Commonwealth while its certificate is suspended or revoked, as
5 provided by sections 1248.1(b) (relating to bond) and 1248.2(c)
6 (relating to notification to department; inspection of records),
7 commits a misdemeanor of the third degree and shall, upon
8 conviction, be sentenced to pay a fine of not more than $2,500
9 for each offense.
10 § 1248.5. Transient vendors subject to chapter.
11 Except as otherwise provided, a transient vendor shall be
12 subject to the provisions of this chapter in the same manner as
13 a vendor who maintains a place of business within this
14 Commonwealth.
15 § 1248.6. Promoters.
16 (a) License application.--A promoter of a show or shows
17 within this Commonwealth may annually file with the department
18 an application for a promoter's license stating the location and
19 dates of such show or shows. The application shall be filed at
20 least 30 days prior to the opening of the first show and shall
21 be in such form as the department may prescribe.
22 (b) Issuance of license.--Except as provided in this
23 section, the department shall, within 15 days after receipt of
24 an application for a license, issue to the promoter without
25 charge a license to operate such shows. If application for a
26 license under this section has been timely filed and if the
27 license has not been received by the promoter prior to the
28 opening of the show, the authorization contained in this section
29 with respect to the obtaining of a promoter's license shall be
30 deemed to have been complied with, unless or until the promoter
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1 receives notice from the department denying the application for
2 a promoter's license.
3 (c) Compliance with vendor provisions.--Any promoter who is
4 a vendor under the provisions of section 1201 (relating to
5 definitions) shall comply with all the provisions of this
6 chapter applicable to vendors and with the provisions of this
7 section applicable to promoters.
8 (d) Duty of promoters at show.--No licensed promoter shall
9 permit any person to display for sale or to sell tangible
10 personal property or services subject to tax under section 1202
11 (relating to imposition of tax) at a show unless such person is
12 licensed under section 1208 (relating to licenses) and provides
13 to the promoter the information required under section 1271.1
14 (relating to reports and records of promoters).
15 (e) Denial or revocation of license.--Any licensed promoter
16 who permits any person to display for sale or to sell tangible
17 personal property or service without first having been licensed
18 under section 1208 fails to maintain records of a show under
19 section 1271.1, knowingly maintains false records or fails to
20 comply with any provision contained in this section or any
21 regulation promulgated by the department pertaining to shows
22 shall be subject to denial of a license or the revocation of any
23 existing license issued pursuant to this section. In addition,
24 the department may deny such promoter a license certificate to
25 operate a show for a period of not more than six months from the
26 date of such denial. Such penalty shall be in addition to any
27 other penalty imposed by this chapter. Within 20 days of notice
28 of denial or revocation of a license by the department, the
29 promoter may petition the department for a hearing, pursuant to
30 2 Pa.C.S. (relating to administrative law and procedure).
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1 SUBCHAPTER L
2 REFUNDS AND CREDITS
3 Sec.
4 1250. Refund or credit for overpayment.
5 1251. Restriction on refunds.
6 1252. Refunds.
7 1253. Refund petition.
8 1254. Review by Board of Finance and Revenue.
9 1255. Appeal to Commonwealth Court.
10 1256. Extended time for filing special petition for refund.
11 § 1250. Refund or credit for overpayment.
12 With respect to all taxes paid to a vendor or to the
13 Commonwealth prior to April 5, 1957, in the case of any
14 overpayment, the department, within the applicable period of
15 limitations, may credit the amount of such overpayment against
16 any liability in respect of the tax imposed by this chapter on
17 the part of the person who made the overpayment, and shall
18 refund any balance to such person.
19 § 1251. Restriction on refunds.
20 No refund shall be made under section 1250 (relating to
21 refund or credit for overpayment) without the approval of the
22 Board of Finance and Revenue.
23 § 1252. Refunds.
24 The department shall, pursuant to the provisions of sections
25 1253 (relating to refund petition) and 1254 (relating to review
26 by Board of Finance and Revenue), refund all taxes, interest and
27 penalties paid to the Commonwealth under the provisions of this
28 chapter and to which the Commonwealth is not rightfully
29 entitled. Refunds shall be made to the person, his heirs,
30 successors, assigns or other personal representatives, who
20050S0854B2207 - 102 -
1 actually paid the tax. No refund shall be made under this
2 section with respect to any payment made by reason of an
3 assessment with respect to which a taxpayer has filed a petition
4 for reassessment pursuant to section 1232 (relating to
5 reassessment) to the extent that the petition has been
6 determined adversely to the taxpayer by a decision which is no
7 longer subject to further review or appeal. Nothing contained
8 herein shall be deemed to prohibit a taxpayer who has filed a
9 timely petition for reassessment from amending it to a petition
10 for refund where the petitioner has paid the tax assessed.
11 § 1253. Refund petition.
12 (a) Petition requirements and hearing.--Except as provided
13 for in section 1256 (relating to extended time for filing
14 special petition for refund) and in subsections (b) and (d), the
15 refund or credit of tax, interest or penalty provided for by
16 section 1252 (relating to refunds) shall be made only where the
17 person who has actually paid the tax files a petition for refund
18 with the department under section 3003.1 of the Tax Reform Code.
19 The petition for refund must set forth in reasonable detail the
20 grounds upon which the taxpayer claims that the Commonwealth is
21 not rightfully entitled to such tax, interest or penalty, in
22 whole or in part, and shall be accompanied by an affidavit
23 affirming that the facts contained in the petition are true and
24 correct. The department may hold hearings as necessary for the
25 purpose at the times and places as it may determine, and each
26 person who has filed a refund petition shall be notified by the
27 department of the time when, and the place where, the hearing
28 will be held.
29 (b) Refund upon assessment.--A refund or credit of tax,
30 interest or penalty, paid as a result of an assessment made by
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1 the department under section 1231 (relating to mode and time of
2 assessment), shall be made only where the person who has
3 actually paid the tax files with the department a petition for a
4 refund with the department under section 3003.1(d) of the Tax
5 Reform Code. The filing of a petition for refund, under the
6 provisions of this subsection, shall not affect the abatement of
7 interest, additions or penalties to which the person may be
8 entitled by reason of his payment of the assessment.
9 (c) Decision by department.--It shall be the duty of the
10 department, within six months after receiving a petition for
11 refund, to dispose of the issue raised by the petition, and mail
12 notice of the department's decision to the petitioner. The
13 taxpayer and the department may, however, by stipulation, extend
14 such disposal time by not more than six additional months.
15 (d) Unconstitutional tax provision or erroneous
16 interpretation of provision.--Notwithstanding any other
17 provision of this section, where any tax, interest or penalty
18 has been paid under a provision of this chapter subsequently
19 held by final judgment of a court of competent jurisdiction to
20 be unconstitutional, or under an interpretation of such
21 provision subsequently held by such court to be erroneous, a
22 petition for refund may be filed either before or subsequent to
23 final judgment, but such petition must be filed under section
24 3003.1 of the Tax Reform Code. The department shall have
25 jurisdiction to hear and determine any such petition filed prior
26 to such final judgment only if, at the time of filing of the
27 petition, proceedings are pending in a court of competent
28 jurisdiction wherein the claim of unconstitutionality or of
29 erroneous interpretation, made in the petition for refund may be
30 established, and in such case, the department shall not take
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1 final action upon the petition for refund until the judgment
2 determining the question involved in such petition has become
3 final.
4 § 1254. Review by Board of Finance and Revenue.
5 Within 90 days after the date of mailing of notice by the
6 department of the decision upon a petition for refund filed with
7 it, pursuant to section 1253 (relating to refund petition), the
8 petitioner may further petition the Board of Finance and Revenue
9 to review the decision of the department. The failure of the
10 department to notify the petitioner of its decision within the
11 time provided for by section 1253 shall act as a denial of the
12 petition, and a petition for review may be filed with the Board
13 of Finance and Revenue within 120 days of the date prior to
14 which the department should have mailed to the petitioner its
15 notice of decision. Every petition for review filed with the
16 Board of Finance and Revenue under the provisions of this
17 section shall incorporate by reference the petition for refund.
18 The petitioner may, in his petition for review, elect to
19 withdraw one or more grounds as set out in the original refund
20 petition. The Board of Finance and Revenue shall act finally in
21 disposing of such petitions filed with it within six months
22 after they have been received. In the event of the failure of
23 the board to dispose of any petition within six months, the
24 action taken by the department upon the petition for refund
25 shall be sustained. The Board of Finance and Revenue may sustain
26 the action taken by the department on a petition for refund, or
27 it may redetermine whether a lesser or greater amount of refund
28 is proper. Under no circumstances may the Board of Finance and
29 Revenue authorize a refund greater than that originally applied
30 for by the petitioner. The Board of Finance and Revenue shall
20050S0854B2207 - 105 -
1 give notice of its action to the department and to the
2 petitioner.
3 § 1255. Appeal to Commonwealth Court.
4 Any person aggrieved by the decision of the Board of Finance
5 and Revenue under section 1254 (relating to review by Board of
6 Finance and Revenue) or by the board's failure to act upon a
7 petition for review within six months may appeal in the manner
8 now or hereafter provided for by law for appeals in the case of
9 tax settlements.
10 § 1256. Extended time for filing special petition for refund.
11 Any party to a transaction who has paid tax by reason of a
12 transaction with respect to which the department is assessing
13 tax against another person may, within six months after the
14 filing by the department of the assessment against such other
15 person, file a special petition for refund, notwithstanding his
16 failure to file a regular petition within three years of the
17 payment. The provisions of sections 1253 (relating to refund
18 petition), 1254 (relating to review by Board of Finance and
19 Revenue) and 1255 (relating to appeal to Commonwealth Court)
20 shall be applicable to such special petition for refund, except
21 that the department need not act on such petition until there is
22 a final determination as to the propriety of the assessment
23 filed against the other party to the transaction. Where a
24 petition is filed under this provision in order to take
25 advantage of the extended period of limitations, overpayments by
26 the petitioner shall be refunded but only to the extent of the
27 actual tax, without consideration of interest and penalties,
28 paid by the other party to the transaction. The purpose of this
29 section is to avoid duplicate payment of tax where a
30 determination is made by the department that one party to a
20050S0854B2207 - 106 -
1 transaction is subject to tax, and another party to the
2 transaction has previously paid tax with respect to such
3 transaction; and this section shall be construed as extending
4 right beyond that provided for by section 1253, and not to limit
5 such other section.
6 SUBCHAPTER M
7 LIMITATIONS
8 Sec.
9 1258. Limitation on assessment and collection.
10 1259. Failure to file return.
11 1260. False or fraudulent return.
12 1261. Extension of limitation period.
13 § 1258. Limitation on assessment and collection.
14 The amount of the tax imposed by this chapter shall be
15 assessed within three years after the date when the return
16 provided for by section 1217(a) or (c) (relating to time for
17 filing returns) is filed or the end of the year in which the tax
18 liability arises, whichever occurs last. The assessment may be
19 made at any time during such period notwithstanding that the
20 department may have made one or more previous assessments
21 against the taxpayer for the year in question, or for any part
22 of such year. In any such case, no credit shall be given for any
23 penalty previously assessed or paid.
24 § 1259. Failure to file return.
25 Where no return is filed, the amount of the tax due may be
26 assessed and collected at any time as to taxable transactions
27 not reported.
28 § 1260. False or fraudulent return.
29 Where the taxpayer willfully files a false or fraudulent
30 return with intent to evade the tax imposed by this chapter, the
20050S0854B2207 - 107 -
1 amount of tax due may be assessed and collected at any time.
2 § 1261. Extension of limitation period.
3 Notwithstanding any of the foregoing provisions of this
4 chapter, where, before the expiration of the period prescribed
5 therein for the assessment of a tax, a taxpayer has consented in
6 writing that the period be extended, the amount of tax due may
7 be assessed at any time within the extended period. The period
8 so extended may be extended further by subsequent consents in
9 writing made before the expiration of the extended period.
10 SUBCHAPTER N
11 INTEREST, ADDITIONS, PENALTIES AND CRIMES
12 Sec.
13 1265. Interest.
14 1266. Additions to tax.
15 1267. Penalties.
16 1268. Crimes.
17 1269. Abatement of additions or penalties.
18 § 1265. Interest.
19 If any amount of tax imposed by this chapter is not paid to
20 the department on or before the last date prescribed for
21 payment, interest on the amount at the rate of .75% per month
22 for each month, or fraction thereof, from such date, shall be
23 paid for the period from the last date to the date paid. The
24 last date prescribed for payment shall be determined under
25 section 1222(a) or (c) (relating to time of payment) without
26 regard to any extension of time for payment. In the case of any
27 amount assessed as a deficiency or as an estimated assessment,
28 the date prescribed for payment shall be 30 days after notice of
29 the assessment.
30 § 1266. Additions to tax.
20050S0854B2207 - 108 -
1 (a) Failure to file return.--In the case of failure to file
2 any return required by section 1215 (relating to persons
3 required to make returns) on the date prescribed for filing,
4 determined with regard to any extension of time for filing, and
5 in the case in which a return filed understates the true amount
6 due by more than 50%, there shall be added to the amount of tax
7 actually due 5% of the amount of such tax if the failure to file
8 a proper return is for not more than one month, with an
9 additional 5% for each additional month, or fraction thereof,
10 during which the failure continues, not exceeding 25% in the
11 aggregate. In every such case at least $2 shall be added.
12 (b) Addition for understatement.--There shall be added to
13 every assessment under section 1231(b) (relating to mode and
14 time of assessment) an addition equal to 5% of the amount of the
15 understatement and no addition to the tax shall be paid under
16 section 1231(a).
17 (c) Interest.--If the department assesses a tax according to
18 section 1231(a), (b) or (c), there shall be added to the amount
19 of the deficiency interest at the rate of .75% per month for
20 each month, or fraction thereof, from the date prescribed by
21 section 1222(a) or (c) (relating to time of payment) for the
22 payment of the tax to the date of notice of the assessment.
23 § 1267. Penalties.
24 (a) Penalty assessed as tax.--The penalties, additions,
25 interest and liabilities provided by this chapter shall be paid
26 upon notice and demand by the department, and shall be assessed
27 and collected in the same manner as taxes. Except as otherwise
28 provided, any reference in this chapter to "tax" imposed by this
29 chapter shall be deemed also to refer to the penalties,
30 additions, interest and liabilities provided by this chapter.
20050S0854B2207 - 109 -
1 (b) Attempt to evade or defeat tax.--Any person who
2 willfully attempts, in any manner, to evade or defeat the tax
3 imposed by this chapter, or the payment thereof, or to assist
4 any other person to evade or defeat the tax imposed by this
5 chapter, or the payment thereof, or to receive a refund
6 improperly, shall, in addition to other penalties provided by
7 law, be liable for a penalty equal to one-half of the total
8 amount of the tax evaded.
9 (c) Burden of proof.--In any direct proceeding arising out
10 of a petition for reassessment or refund as provided in this
11 chapter, in which an issue of fact is raised with respect to
12 whether a return is fraudulent or with respect to the propriety
13 of the imposition by the department of the penalty prescribed in
14 subsection (b), the burden of proof with respect to such issue
15 shall be upon the department.
16 § 1268. Crimes.
17 (a) Fraudulent return.--Any person who with intent to
18 defraud the Commonwealth shall willfully make, or cause to be
19 made, any return required by this chapter, which is false,
20 commits a misdemeanor and shall, upon conviction, be sentenced
21 to pay a fine not exceeding $2,000 or to imprisonment for not
22 more than three years, or both.
23 (b) Other crimes.--Except as otherwise provided by
24 subsection (a), the following persons commit a misdemeanor and
25 shall, upon conviction, be sentenced to pay a fine not exceeding
26 $1,000 and costs of prosecution, or to imprisonment for not more
27 than one year, or both:
28 (1) Any person who advertises or holds out or states to
29 the public or to any purchaser or user, directly or
30 indirectly, that the tax or any part thereof imposed by this
20050S0854B2207 - 110 -
1 chapter will be absorbed by such person, or that it will not
2 be added to the purchase price of the tangible personal
3 property or services described in paragraphs (2), (3), (4)
4 and (11) through (27) under the definition of "sale at
5 retail" in section 1201 (relating to definitions) sold or, if
6 added, that the tax or any part thereof will be refunded,
7 other than when the person refunds the purchase price because
8 of the property being returned to the vendor.
9 (2) Any person selling or leasing tangible personal
10 property or services the sale or use of which by the
11 purchaser is subject to tax under this chapter, who shall
12 willfully fail to collect the tax from the purchaser and
13 timely remit the same to the department.
14 (3) Any person who shall willfully fail or neglect to
15 timely file any return or report required by this chapter or
16 any taxpayer who shall refuse to timely pay any tax, penalty
17 or interest imposed or provided for by this chapter, or who
18 shall willfully fail to preserve his books, papers and
19 records as directed by the department.
20 (4) Any person who shall refuse to permit the department
21 or any of its authorized agents to examine his books, records
22 or papers, or who shall knowingly make any incomplete, false
23 or fraudulent return or report, or who shall do, or attempt
24 to do, anything whatever to prevent the full disclosure of
25 the amount or character of taxable sales purchases or use
26 made by himself or any other person, or shall provide any
27 person with a false statement as to the payment of tax with
28 respect to particular tangible personal property or services,
29 or shall make, utter or issue a false or fraudulent exemption
30 certificate.
20050S0854B2207 - 111 -
1 (c) Place of business outside Commonwealth.--Any person
2 maintaining a place of business outside this Commonwealth may
3 absorb the tax with respect to taxable sales made in the normal
4 course of business to customers present at the place of business
5 without being subject to the penalty and fines under subsection
6 (b).
7 (d) Prepaid mobile telecommunications services.--Advertising
8 tax-included prices shall be permissible, if the prepaid
9 services are sold by the service provider, for prepaid
10 telecommunications services not evidenced by the transfer of
11 tangible personal property or for prepaid mobile
12 telecommunications services.
13 (e) Other penalties.--The penalties imposed by this section
14 shall be in addition to any other penalties imposed by any
15 provision of this chapter.
16 § 1269. Abatement of additions or penalties.
17 Upon the filing of a petition for reassessment or a petition
18 for refund as provided under this chapter by a taxpayer,
19 additions or penalties imposed upon such taxpayer by this
20 chapter may be waived or abated, in whole or in part, where the
21 petitioner has established that he has acted in good faith,
22 without negligence and with no intent to defraud.
23 SUBCHAPTER O
24 ENFORCEMENT AND EXAMINATIONS
25 Sec.
26 1270. Rules and regulations.
27 1271. Keeping of records.
28 1271.1. Reports and records of promoters.
29 1272. Examinations.
30 1273. Records and examinations of delivery agents.
20050S0854B2207 - 112 -
1 1274. Unauthorized disclosure.
2 1275. Cooperation with other governments.
3 1276. Interstate compacts.
4 1277. Bonds.
5 § 1270. Rules and regulations.
6 (a) General rule.--The department is charged with the
7 enforcement of this chapter, and is authorized and empowered to
8 prescribe, adopt, promulgate and enforce rules and regulations
9 not inconsistent with the provisions of this chapter, relating
10 to any matter or thing pertaining to the administration and
11 enforcement of this chapter, and the collection of taxes,
12 penalties and interest imposed by this chapter. The department
13 may prescribe the extent, if any, to which its rules and
14 regulations shall be applied without retroactive effect.
15 (b) Sales between affiliated interests.--In determining the
16 purchase price of taxable sales where, because of affiliation of
17 interests between the vendor and the purchaser or irrespective
18 of any affiliation, if for any other reason, the purchase price
19 of the sale is in the opinion of the department not indicative
20 of the true value of the article or the fair price thereof, the
21 department shall, pursuant to uniform and equitable rules,
22 determine the amount of constructive purchase price upon the
23 basis of which the tax shall be computed and levied. The rules
24 shall provide for a constructive amount of a purchase price for
25 each sale, which price shall equal a price for the article which
26 would naturally and fairly be charged in an arm's-length
27 transaction in which the element of common interests between
28 vendor and purchaser, or, if no common interest exists, any
29 other element causing a distortion of the price or value is
30 absent. For the purpose of this chapter where a taxable sale
20050S0854B2207 - 113 -
1 occurs between a parent corporation and a subsidiary affiliate
2 or controlled corporation of the parent, there shall be a
3 rebuttable presumption that because of the common interest the
4 transaction was not at arm's-length.
5 § 1271. Keeping of records.
6 (a) General rule.--Each person liable for any tax imposed by
7 this chapter, or for the collection of any tax imposed by this
8 chapter, shall keep the records, render the statements, make the
9 returns and comply with the rules and regulations that the
10 department may, from time to time, prescribe regarding matters
11 pertinent to the persons business. Whenever in the judgment of
12 the department it is necessary, it may require any person, by
13 notice served upon the person, or by regulations, to make
14 returns, render statements or keep records as the department
15 deems sufficient to show whether or not the person is liable to
16 pay or collect tax under this chapter.
17 (b) Persons collecting tax from others.--Any person liable
18 to collect tax from another person under this chapter shall file
19 reports, keep records, make payments and be subject to interest
20 and penalties as provided for under this chapter, in the same
21 manner as if the person were directly subject to the tax.
22 (c) Records of nonresidents.--A nonresident who does
23 business in this Commonwealth as a retail dealer shall keep
24 adequate records of the business or businesses and of the tax
25 due with respect to the business or businesses, which records
26 shall at all times be retained within this Commonwealth unless
27 retention outside this Commonwealth is authorized by the
28 department. No taxes collected from purchasers shall be sent
29 outside this Commonwealth without the written consent of and in
30 accordance with conditions prescribed by the department. The
20050S0854B2207 - 114 -
1 department may require a taxpayer who desires to retain records
2 or tax collections outside this Commonwealth to assume
3 reasonable out-of-State audit expenses.
4 (d) Keeping of separate records.--Any person doing business
5 as a retail dealer who at the same time is engaged in another
6 business or businesses which do not involve the making of sales
7 taxable under this chapter shall keep separate books and records
8 of the person's businesses so as to show the sales taxable under
9 this chapter separately from the person's sales not taxable
10 under this chapter. If the person fails to keep separate books
11 and records, the person shall be liable for tax at the rate
12 designated in section 1202 (relating to imposition of tax) upon
13 the entire purchase price of sales from both or all of the
14 person's businesses.
15 (e) Other methods.--
16 (1) In those instances where a vendor gives no sales
17 memoranda or uses registers showing only total sales, the
18 vendor must adopt some method of segregating tax from sales
19 receipts and keep records showing the segregation, all in
20 accordance with proper accounting and business practices.
21 (2) A vendor may apply to the department for permission
22 to use a collection and recording procedure which will show
23 the information as the law requires with reasonable accuracy
24 and simplicity. A vendor's application must contain a
25 detailed description of the procedure to be adopted.
26 Permission to use the proposed procedure is not to be
27 construed as relieving the vendor from remitting the full
28 amount of tax collected. The department may revoke permission
29 upon 30 days' notice to the vendor. Refusal of the department
30 to grant permission in advance to use the procedure shall not
20050S0854B2207 - 115 -
1 be construed to invalidate a procedure which upon examination
2 shows the information as the law requires.
3 § 1271.1. Reports and records of promoters.
4 Each licensed promoter shall keep a record of the date and
5 place of each show and the name, address, sales, use and hotel
6 occupancy license number of each person whom the licensed
7 promoter permits to display for sale or to sell tangible
8 personal property or services subject to tax under section 1202
9 (relating to imposition of tax) at the show. The records shall
10 be open for inspection and examination at any reasonable time by
11 the department or its authorized representative, and the records
12 shall, unless the department consents in writing to an earlier
13 destruction, be preserved for three years after the date the
14 report was filed or the date it was due, whichever occurs later,
15 except that the department may by regulation require that they
16 be kept for a longer period of time.
17 § 1272. Examinations.
18 The department or any of its authorized agents are authorized
19 to examine the books, papers and records of any taxpayer in
20 order to verify the accuracy and completeness of any return made
21 or, if no return was made, to ascertain and assess the tax
22 imposed by this chapter. The department may require the
23 preservation of any books, papers and records for any period
24 deemed proper by it but not to exceed three years from the end
25 of the calendar year to which the records relate. Each taxpayer
26 is required to give to the department, or its agent, the means,
27 facilities and opportunity for examinations and investigation.
28 The department is further authorized to examine any person,
29 under oath, concerning taxable sales or use by any taxpayer or
30 concerning any other matter relating to the enforcement or
20050S0854B2207 - 116 -
1 administration of this chapter, and to this end may compel the
2 production of books, papers and records and the attendance of
3 all persons whether as parties or witnesses whom it believes to
4 have knowledge of such matters. The procedure for hearings or
5 examinations shall be the same as that provided by the Fiscal
6 Code, relating to inquisitorial powers of fiscal officers.
7 § 1273. Records and examinations of delivery agents.
8 Each agent for the purpose of delivery of goods shipped into
9 this Commonwealth by a nonresident including, but not limited
10 to, common carriers, shall maintain adequate records of the
11 deliveries pursuant to rules and regulations adopted by the
12 department and shall make the records available to the
13 department upon request after due notice.
14 § 1274. Unauthorized disclosure.
15 Any information gained by the department as a result of any
16 return, examination, investigation, hearing or verification,
17 required or authorized by this chapter, shall be confidential,
18 except for official purposes and except in accordance with
19 proper judicial order or as otherwise provided by law, and any
20 person unlawfully divulging the information commits a
21 misdemeanor and shall, upon conviction, be sentenced to pay a
22 fine of not more than $1,000 and costs of prosecution, or to
23 imprisonment for not more than one year, or both.
24 § 1275. Cooperation with other governments.
25 Notwithstanding the provisions of section 1274 (relating to
26 unauthorized disclosure), the department may permit the
27 Commissioner of Internal Revenue of the United States, or the
28 proper officer of any state, or the authorized representative of
29 either, to inspect the tax returns of any taxpayer, or may
30 furnish to such officer or to an authorized representative an
20050S0854B2207 - 117 -
1 abstract of the return of any taxpayer, or supply the officer
2 with information concerning any item contained in any return or
3 disclosed by the report of any examination or investigation of
4 the return of any taxpayer. This permission shall be granted
5 only if the statutes of the United States or of the other state,
6 as the case may be, grant substantially similar privileges to
7 the proper officer of the Commonwealth charged with the
8 administration of this chapter.
9 § 1276. Interstate compacts.
10 The Governor, or an authorized representative, has the
11 authority to confer with the governors and the authorized
12 representatives of other states with respect to reciprocal use
13 tax collection between Pennsylvania and the other states. The
14 Governor, or a representative, is authorized to join with the
15 authorities of other states to conduct joint investigations, to
16 exchange information, to hold joint hearings and to enter into
17 compacts or interstate agreements with the other states to
18 accomplish uniform reciprocal use tax collections between those
19 states who are parties to any compact or interstate agreement
20 and the Commonwealth of Pennsylvania.
21 § 1277. Bonds.
22 (a) Taxpayer to file bond.--
23 (1) Whenever the department, in its discretion, deems it
24 necessary to protect the revenues to be obtained under this
25 chapter, it may require any nonresident natural person or any
26 foreign corporation, association, fiduciary, partnership or
27 other entity not authorized to do business within this
28 Commonwealth or not having an established place of business
29 in this Commonwealth and subject to the tax imposed by
30 section 1202 (relating to imposition of tax) to file a bond
20050S0854B2207 - 118 -
1 issued by a surety company authorized to do business in this
2 Commonwealth and approved by the Insurance Commissioner as to
3 solvency and responsibility, in an amount as the department
4 may fix, to secure the payment of any tax or penalties due,
5 or which may become due, from the natural person or
6 corporation.
7 (2) In order to protect the revenues to be obtained
8 under this chapter, the department shall require any
9 nonresident natural person or any foreign corporation,
10 association, fiduciary, partnership or entity, who or which
11 is a building contractor, or who or which is a supplier
12 delivering building materials for work in this Commonwealth
13 and is not authorized to do business within this Commonwealth
14 or does not have an established place of business in this
15 Commonwealth and is subject to the tax imposed by section
16 1202 to file a bond issued by a surety company authorized to
17 do business in this Commonwealth and approved by the
18 Insurance Commissioner as to solvency and responsibility, in
19 an amount as the department may fix, to secure the payments
20 of any tax or penalties due, or which may become due, from
21 the natural person, corporation or other entity.
22 (3) The department may also require a bond of any person
23 petitioning the department for reassessment, in the case of
24 any assessment over $500 or where it is of the opinion that
25 the ultimate collection is in jeopardy. The department may,
26 for a period of three years, require a bond of any person who
27 has on three or more occasions within a 12-month period
28 either filed a return or made payment to the department more
29 than 30 days late.
30 (4) In the event that the department determines that a
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1 taxpayer is to file a bond, it shall give notice to the
2 taxpayer to that effect, specifying the amount of the bond
3 required. The taxpayer shall file the bond within five days
4 after the giving of notice by the department unless, within
5 the five days, the taxpayer shall request, in writing, a
6 hearing before the Secretary of Revenue or a representative
7 at which hearing the necessity, propriety and amount of the
8 bond shall be determined by the secretary or representative.
9 The determination shall be final and shall be complied with
10 within 15 days after notice of the determination is mailed to
11 the taxpayer.
12 (b) Securities in lieu of bond.--In lieu of the bond
13 required by this section, securities approved by the department,
14 or cash in an amount as prescribed by the department, may be
15 deposited. The securities or cash shall be kept in the custody
16 of the department, which may, at any time, without notice to the
17 depositor, apply them to any tax, interest or penalties due, and
18 for that purpose the securities may be sold by the department,
19 at public or private sale, upon five days' written notice to the
20 depositor.
21 (c) Failure to file bond.--The department may file a lien
22 pursuant to section 1242 (relating to lien for taxes) against
23 any taxpayer who fails to file a bond when required to do so
24 under this section. All funds received upon execution of the
25 judgment on a lien shall be refunded to the taxpayer with 3%
26 interest should a final determination be made that the taxpayer
27 does not owe any payment to the department.
28 SUBCHAPTER P
29 APPROPRIATION; EFFECTIVE DATE
30 Sec.
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1 1281. Appropriation for refunds.
2 1281.1. Construction of chapter.
3 1281.2. Transfers to Public Transportation Assistance Fund.
4 1281.3. Transfer to Property Tax Relief Fund.
5 § 1281. Appropriation for refunds.
6 So much of the proceeds of the tax imposed by this chapter as
7 shall be necessary for the payment of refunds, enforcement or
8 administration under this chapter is hereby appropriated for
9 such purposes.
10 § 1281.1. Construction of chapter.
11 To the extent that the language of this chapter is identical
12 to that of equivalent provisions in the act of March 6, 1956
13 (P.L.1228, No.381), known as the Tax Act of 1963 for Education,
14 the language shall be deemed a reenactment of the identical
15 provisions.
16 § 1281.2. Transfers to Public Transportation Assistance Fund.
17 (a) Transfer from imposition of tax on periodicals.--All
18 revenues received on or after July 1, 1992, from the imposition
19 of the tax on periodicals shall be transferred to the Public
20 Transportation Assistance Fund according to the formula set
21 forth in subsection (b).
22 (b) Transfer to Public Transportation Assistance Fund.--
23 Within 30 days of the close of any calendar month, 0.44% of the
24 taxes received in the previous month under this chapter, less
25 any amounts collected in that previous calendar month under
26 former 74 Pa.C.S. § 1314(d) (relating to Public Transportation
27 Assistance Fund), shall be transferred to the Public
28 Transportation Assistance Fund established under Article XXIII
29 of the Tax Reform Code.
30 (c) Other transfer.--Within 30 days of the close of any
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1 calendar month, 0.09% of the taxes received in the previous
2 month under this chapter shall be transferred to the Public
3 Transportation Assistance Fund established under Article XXIII
4 of the Tax Reform Code.
5 (d) Transfer after June 30, 2003.--Within 30 days of the
6 close of a calendar month, 0.417% of the taxes received in the
7 previous month under this chapter shall be transferred to the
8 Public Transportation Assistance Fund established under Article
9 XXIII of the Tax Reform Code. This subsection applies to
10 deposits into the Public Transportation Assistance Fund made
11 after June 30, 2003.
12 § 1281.3. Transfer to Property Tax Relief Fund.
13 Within 30 days of the close of any calendar month, 17.5% of
14 the taxes received in the previous month under this chapter
15 shall be transferred to the Property Tax Relief Fund.
16 CHAPTER 13
17 SPECIAL SITUS FOR LOCAL SALES TAX
18 Sec.
19 1301. Definitions.
20 1302. Leased or rental vehicles or crafts.
21 1303. Construction materials.
22 1304. Mobile telecommunications services.
23 § 1301. Definitions.
24 The following words and phrases when used in this chapter
25 shall have the meanings given to them in this section unless the
26 context clearly indicates otherwise:
27 "Lease." A contract for the use of a motor vehicle or other
28 tangible personal property referred to in section 1302(a)
29 (relating to leased or rental vehicles or crafts) for a period
30 of 30 days or more.
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1 "Rental." A contract for the use of a motor vehicle or other
2 tangible personal property referred to in section 1302(b)
3 (relating to leased or rental vehicles or crafts) for a period
4 of less than 30 days.
5 § 1302. Leased or rental vehicles or crafts.
6 (a) Lease.--For purposes of this chapter, the lease of a
7 motor vehicle, trailer, semitrailer or mobile home, as defined
8 in 75 Pa.C.S. (relating to vehicles), or of a motorboat,
9 aircraft or other similar tangible personal property required
10 under either Federal or State laws to be registered or licensed
11 shall be deemed to have been completed or used at the address of
12 the lessee. In the case of a lease, the tax shall be paid by the
13 lessee to the lessor.
14 (b) Rental.--For purposes of this chapter, the rental of a
15 motor vehicle, trailer, semitrailer or mobile home, as defined
16 in 75 Pa.C.S., or of a motorboat, aircraft or other similar
17 tangible personal property required under either Federal or
18 State laws to be registered or licensed shall be deemed to be
19 consummated at the place of business of the retailer. In the
20 case of a rental, the tax due shall be paid by the renter to the
21 retailer.
22 (c) Applicability.--This chapter shall only apply to any
23 sales tax imposed under Article XXXI-B of the act of July 28,
24 1953 (P.L.723, No.230), known as the Second Class County Code,
25 and under the act of June 5, 1991 (P.L.9, No.6), known as the
26 Pennsylvania Intergovernmental Cooperation Authority Act for
27 Cities of the First Class.
28 § 1303. Construction materials.
29 (a) Final destination.--Notwithstanding the provisions of
30 section 504 of the act of June 5, 1991 (P.L.9, No.6), known as
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1 the Pennsylvania Intergovernmental Cooperation Authority Act for
2 Cities of the First Class, the sale or use of road construction
3 material, including recycled asphalt, recycled concrete,
4 asphalt, concrete and road aggregates, shall be deemed to have
5 been consummated at the location of its final destination. Final
6 destination will be determined by reference to delivery or
7 shipping documents relating to such sales.
8 (b) Applicability.--This section shall apply to taxes levied
9 under Chapter 5 of the Pennsylvania Intergovernmental
10 Cooperation Authority Act for Cities of the First Class. This
11 section shall not apply to taxes levied under Article XXXI-B of
12 the act of July 28, 1953 (P.L.723, No.230), known as the Second
13 Class County Code.
14 § 1304. Mobile telecommunications services.
15 (a) Primary use.--For purposes of this chapter, the situs of
16 the sales or use of mobile telecommunications services which are
17 deemed to be provided to a customer by a home service provider
18 under section 117(a) and (b) of the Mobile Telecommunications
19 Sourcing Act (4 U.S.C. § 116) shall be the customer's place of
20 primary use regardless of where the mobile telecommunications
21 services originate, terminate or pass through.
22 (b) Definitions.--For purposes of this section, words and
23 phrases used in this section shall have the meanings given to
24 them in the Mobile Telecommunications Sourcing Act.
25 CHAPTER 15
26 PERSONAL INCOME TAX
27 Subchapter
28 A. Preliminary Provisions
29 B. Imposition of Tax
30 C. Estates and Trusts
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1 D. Partnerships
2 E. Pennsylvania S Corporations
3 F. Other Entities
4 G. Nonresident Individuals
5 H. Credits Against Tax
6 I. Contributions of Refunds by Checkoff
7 J. Withholding of Tax
8 K. Withholding Tax on Shares on Income from Sources
9 within this Commonwealth
10 L. Estimated Tax
11 M. Returns and Payment of Tax
12 N. Procedure and Administration
13 O. Miscellaneous Provisions
14 SUBCHAPTER A
15 PRELIMINARY PROVISIONS
16 Sec.
17 1501. Definitions.
18 § 1501. Definitions.
19 The following words and phrases when used in this chapter
20 shall have the meanings given to them in this section unless the
21 context clearly indicates otherwise:
22 "Accepted accounting principles and practices." Unless
23 otherwise explicitly provided for in this chapter, those
24 accounting principles, systems or practices, including the
25 installment sales method of reporting, which are acceptable by
26 standards of the accounting profession and which are not
27 inconsistent with the regulations of the department setting
28 forth such principles and practices.
29 "Association." Any form of unincorporated enterprise which:
30 (1) is subject to the tax imposed under Article IV of
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1 the act of March 4, 1971 (P.L.6, No.2), known as the Tax
2 Reform Code of 1971; or
3 (2) is required to make a return under section 6042 of
4 the Internal Revenue Code of 1986 (Public Law 99-514, 26
5 U.S.C. § 6042).
6 The term shall not include a partnership or investment company.
7 "Business." An enterprise, activity, profession, vocation,
8 trade, joint venture, commerce or any other undertaking of any
9 nature when engaged in as commercial enterprise and conducted
10 for profit or ordinarily conducted for profit, whether by an
11 individual, partnership, Pennsylvania S corporation, association
12 or other unincorporated entity.
13 "Charitable trust." A trust operated exclusively for
14 religious, charitable, scientific, literary or educational
15 purposes.
16 "Claimant." A person who is subject to the tax imposed under
17 this chapter, is not a dependent of another taxpayer for
18 purposes of section 151 of the Internal Revenue Code of 1986
19 (Public Law 99-514, 26 U.S.C. § 151), but is entitled to claim
20 against such tax the poverty tax provisions as provided by the
21 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
22 of 1971.
23 "Compensation."
24 (1) The term shall include salaries, wages, commissions,
25 bonuses and incentive payments whether based on profits or
26 otherwise, fees, tips and similar remuneration received for
27 services rendered, whether directly or through an agent, and
28 whether in cash or in property. The term shall also include
29 any part of a distribution under a plan described in section
30 409A(d)(1) of the Internal Revenue Code of 1986 (Public Law
20050S0854B2207 - 126 -
1 99-514, 26 U.S.C. § 409A(d)(1)), as amended, attributable to
2 an elective deferral of income or the income on any elective
3 deferral of income, whether paid or payable during employment
4 or to a retired person upon or after retirement from service.
5 (2) The term shall not include:
6 (i) periodic payments for sickness and disability
7 other than regular wages received during a period of
8 sickness or disability;
9 (ii) disability, retirement or other payments
10 arising under worker's compensation acts, occupational
11 disease acts and similar legislation by any government;
12 (iii) payments commonly recognized as old age or
13 retirement benefits paid to persons retired from service
14 after reaching a specific age or after a stated period of
15 employment;
16 (iv) payments commonly known as public assistance,
17 or unemployment compensation payments by any governmental
18 agency;
19 (v) payments to reimburse actual expenses;
20 (vi) payments made by employers or labor unions,
21 including payments made pursuant to a cafeteria plan
22 qualifying under section 125 of the Internal Revenue Code
23 of 1986 (Public Law 99-514, 26 U.S.C. § 125), for
24 employee benefit programs covering hospitalization,
25 sickness, disability or death, supplemental unemployment
26 benefits or strike benefits if the program does not
27 discriminate in favor of highly compensated individuals
28 as to eligibility to participate, payments or program
29 benefits;
30 (vii) any compensation received by United States
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1 servicemen serving in a combat zone;
2 (viii) payments received by a foster parent for in-
3 home care of foster children from an agency of the
4 Commonwealth or a political subdivision thereof or an
5 organization exempt from Federal tax under section
6 501(c)(3) of the Internal Revenue Code of 1986 which is
7 licensed by the Commonwealth or a political subdivision
8 of the Commonwealth as a placement agency;
9 (ix) payments made by employers or labor unions for
10 employee benefit programs covering Social Security or
11 retirement; or
12 (x) personal use of an employer's owned or leased
13 property or of employer-provided services.
14 "Corporation." For purposes of applying the provisions of
15 section 1503(a) (relating to classes of income) with respect to
16 a "reorganization" as defined in that section, the term shall
17 include a business trust to which 15 Pa.C.S. Ch. 95 (relating to
18 business trusts) applies, a common law business trust or a
19 limited liability company that for Federal income tax purposes
20 is taxable as a corporation or an investment company.
21 "Department." The Department of Revenue of the Commonwealth.
22 "Dependent." A child who is the dependent of a claimant for
23 purposes of section 151 of the Internal Revenue Code of 1986
24 (Public Law 99-514, 26 U.S.C. § 151).
25 "Dividends." Any distribution in cash or property made by a
26 corporation, association, business trust or investment company
27 with respect to its stock out of accumulated earnings and
28 profits or out of earnings and profits of the year in which such
29 dividend is paid. The term shall not include:
30 (1) a distribution of the stock of a corporation made by
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1 the corporation originally issuing the stock to its own
2 stockholders if such distribution is not treated as personal
3 income for Federal individual income tax purposes; or
4 (2) for taxable years beginning on or after January 1,
5 1993, a distribution made by an investment company out of
6 earnings and profits derived from interest that is
7 statutorily free from State and local taxation under Article
8 XXIX of the act of March 4, 1971 (P.L.6, No.2), known as the
9 Tax Reform Code of 1971, or the act of August 31, 1971
10 (P.L.395, No.94), entitled "An act exempting from taxation
11 for State and local purposes within the Commonwealth certain
12 obligations, their transfer and the income therefrom
13 (including any profits made on the sale thereof), issued by
14 the Commonwealth, any public authority, commission, board or
15 other agency created by the Commonwealth, any political
16 subdivision of the Commonwealth or any public authority
17 created by any such political subdivision," or the laws of
18 the United States.
19 "Employee." Any individual from whose wages an employer is
20 required under the Internal Revenue Code of 1986 (P.L.99-514, 26
21 U.S.C. § 1 et seq.) to withhold Federal income tax.
22 "Employer." An individual, partnership, association,
23 corporation, governmental body or unit or agency, or any other
24 entity who or that is required under the Internal Revenue Code
25 of 1986 (P.L.99-514, 26 U.S.C. § 1 et seq.) to withhold Federal
26 income tax from wages paid to an employee.
27 "Fiduciary." A guardian, trustee, executor, administrator,
28 receiver, conservator or any person acting in any trust or
29 similar capacity, whether domiciliary or ancillary.
30 "Income." For a resident individual, estate or trust the
20050S0854B2207 - 129 -
1 term means the same as compensation, net profits, gains,
2 dividends, interest or income enumerated and classified under
3 section 1503 (relating to classes of income).
4 "Income from sources within this Commonwealth."
5 (1) For a nonresident individual, estate or trust the
6 term means the same as compensation, net profits, gains,
7 dividends, interest or income enumerated and classified under
8 section 1503 (relating to classes of income) to the extent
9 that it is earned, received or acquired from sources within
10 this Commonwealth:
11 (i) by reason of ownership or disposition of any
12 interest in real or tangible personal property in this
13 Commonwealth;
14 (ii) in connection with a trade, profession,
15 occupation carried on in this Commonwealth or for the
16 rendition of personal services performed in this
17 Commonwealth;
18 (iii) as a distributive share of the income of an
19 unincorporated business, Pennsylvania S corporation,
20 profession, enterprise, undertaking or other activity as
21 the result of work done, services rendered or other
22 business activities conducted in this Commonwealth,
23 except as allocated to another state pursuant to
24 regulations promulgated by the Department of Revenue
25 under this chapter; or
26 (iv) from intangible personal property employed in a
27 trade, profession, occupation or business carried on in
28 this Commonwealth; or
29 (v) as gambling and lottery winnings by reason of a
30 wager placed in this Commonwealth, the conduct of a game
20050S0854B2207 - 130 -
1 of chance or other gambling activity located in this
2 Commonwealth or the redemption of a lottery prize from a
3 lottery conducted in this Commonwealth, other than prizes
4 of the Pennsylvania State Lottery.
5 (2) The term shall not include any items of income
6 enumerated in paragraph (1) received or acquired from an
7 investment company registered with the Federal Securities and
8 Exchange Commission under the Investment Company Act of 1940
9 (54 Stat. 789, 15 U.S.C. § 80a-1 et seq.).
10 "Individual." A natural person including the members of a
11 partnership or association and the shareholders of a
12 Pennsylvania S corporation.
13 "Installment sales method of reporting." The method by which
14 a taxpayer reports the gain upon the sale of tangible personal
15 property or real property when at least one payment is to be
16 received in any taxable year following the taxable year of sale,
17 whether the property is sold or otherwise disposed of in an
18 isolated transaction or from the inventory of a dealer or
19 broker. Taxpayers may elect to allocate the gain upon the
20 transactions in equal proportion to each payment to be received.
21 Taxpayers who do not elect to allocate the gain upon the
22 transactions in equal proportion to each payment received shall
23 report all gains upon the sale in the taxable year in which the
24 transaction occurred. For the purposes of this definition, the
25 gain upon the transaction shall be the difference between the
26 sales price and the seller's basis in the property, and the
27 sales price shall be the face amount of the evidence of
28 indebtedness given in exchange for the property sold or
29 otherwise disposed of together with the value of any other
30 consideration received by the seller. Where the evidence of
20050S0854B2207 - 131 -
1 indebtedness fails to state a price, the evidence of
2 indebtedness will be valued at the fair market value of the
3 property sold, less the value of other property or cash received
4 in the same transaction. The installment sales method of
5 reporting shall not be used for transactions the object of which
6 is the lending of money or the rendering of services.
7 "Internal Revenue Code." The Internal Revenue Code of 1986
8 (P.L.99-514, 26 U.S.C. § 1 et seq.), as amended to January 1,
9 1997, unless the reference contains the phrase "as amended" and
10 refers to no other date, in which case the reference shall be to
11 the Internal Revenue Code of 1986 as it exists as of the time of
12 application of this chapter.
13 "Investment company." Any incorporated or unincorporated
14 enterprise registered with the Federal Securities and Exchange
15 Commission under the Investment Company Act of 1940 (54 Stat.
16 789, 15 U.S.C. § 80a-1 et seq.).
17 "Nonresident individual." Any individual who is not a
18 resident of this Commonwealth.
19 "Nonresident estate or trust." Any estate or trust which is
20 not a resident estate or trust. The term shall not include
21 charitable trusts or pension or profit sharing trusts.
22 "Partnership." A domestic or foreign general partnership,
23 joint venture, limited partnership, limited liability company,
24 business trust or other unincorporated entity that for Federal
25 income tax purposes is classified as a partnership.
26 "Pennsylvania S corporation." Any small corporation as
27 defined in this section which has a valid election under section
28 1507 (relating to election by small corporation) in effect.
29 "Person." Any individual employer, association, fiduciary,
30 partnership, corporation or other entity, estate or trust,
20050S0854B2207 - 132 -
1 resident or nonresident, and the plural as well as the singular
2 number. For the purpose of determining eligibility for special
3 tax provisions, the term means a natural individual.
4 "Poverty." An economic condition wherein the total amount of
5 poverty income is insufficient to adequately provide the
6 claimant, his spouse and dependent children with the necessities
7 of life.
8 "Poverty income." For the purpose of determining eligibility
9 for special tax provisions all moneys or property, including
10 interest, gains or income derived from obligations which are
11 statutorily free from State or local taxation under any other
12 act of the General Assembly of the Commonwealth of Pennsylvania
13 or under the laws of the United States, received of whatever
14 nature and from whatever source derived, but not including:
15 (1) periodic payments for sickness and disability other
16 than regular wages received during a period of sickness or
17 disability;
18 (2) disability, retirement or other payments arising
19 under workers' compensation acts, occupational disease acts
20 and similar legislation by any government;
21 (3) payments commonly recognized as old age or
22 retirement benefits paid to persons retired from service
23 after reaching a specific age or after a stated period of
24 employment;
25 (4) payments commonly known as public assistance or
26 unemployment compensation payments by any governmental
27 agency;
28 (5) payments to reimburse actual expenses;
29 (6) payments made by employers or labor unions for
30 programs covering hospitalization, sickness, disability or
20050S0854B2207 - 133 -
1 death, supplemental unemployment benefits, strike benefits,
2 Social Security and retirement; or
3 (7) any compensation received by United States
4 servicemen serving in a combat zone.
5 "Qualified Subchapter S subsidiary." A domestic or foreign
6 corporation which for Federal income tax purposes is treated as
7 a qualified Subchapter S subsidiary, as defined in section
8 1361(b)(3)(B) of the Internal Revenue Code of 1986 (Public Law
9 99-514, 26 U.S.C. § 1361), as amended to January 1, 1997.
10 "Resident individual." An individual who is domiciled in
11 this Commonwealth unless he maintains no permanent place of
12 abode in this Commonwealth and does maintain a permanent place
13 of abode elsewhere and spends in the aggregate not more than 30
14 days of the taxable year in this Commonwealth; or who is not
15 domiciled in this Commonwealth but maintains a permanent place
16 of abode in this Commonwealth and spends in the aggregate more
17 than 183 days of the taxable year in this Commonwealth.
18 "Received." For the purpose of computation of income subject
19 to tax under this chapter the term means "received, earned or
20 acquired" and the phrase "received, earned or acquired" shall be
21 construed according to the method of accounting required by the
22 Department of Revenue under this article for computing and
23 reporting income subject to the tax.
24 "Resident estate." The estate of a decedent who at the time
25 of his death was a resident individual.
26 "Resident trust." The term shall include any of the
27 following:
28 (1) A trust created by the will of a decedent who at the
29 time of his death was a resident individual.
30 (2) Any trust created by, or consisting in whole or in
20050S0854B2207 - 134 -
1 part of property transferred to a trust by a person who at
2 the time of such creation or transfer was a resident. The
3 term under this paragraph shall not include charitable trusts
4 or pension or profit-sharing trusts.
5 "Special tax provisions." A refund or forgiveness of all or
6 part of the claimant's liability under the provisions of this
7 chapter.
8 "Small corporation." Any corporation which has a valid
9 election in effect under Subchapter S of Chapter 1 of the
10 Internal Revenue Code of 1986 (P.L.99-514, 26 U.S.C. § 1 et
11 seq.), as amended to January 1, 1997.
12 "State." Any state or commonwealth of the United States, the
13 District of Columbia, the Commonwealth of Puerto Rico, any
14 territory or possession of the United States and any foreign
15 country.
16 "Tax." The term includes interest, penalties and additions
17 to tax, and the tax required to be withheld by an employer on
18 compensation paid, unless a more limited meaning is disclosed by
19 the context.
20 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
21 known as the Tax Reform Code of 1971.
22 "Taxable year." As follows:
23 (1) Either the:
24 (i) taxable period on the basis of which a taxpayer
25 or a claimant is required to file a Federal income tax
26 return pursuant to the Internal Revenue Code of 1986
27 (P.L.99-514, 26 U.S.C. § 1 et seq.); or
28 (ii) if a taxpayer or claimant is not required to or
29 does not file a Federal income tax return, the calendar
30 year.
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1 (2) For the initial period during which the tax is
2 imposed, the period beginning June 1, 1971, and ending on:
3 (i) the last day of the taxable period on the basis
4 of which a taxpayer or claimant is required to file a
5 Federal income tax return pursuant to the Internal
6 Revenue Code of 1986; or
7 (ii) if a taxpayer or claimant is not required to or
8 does not file a Federal income tax return, December 31,
9 1971.
10 "Taxpayer." Any individual, estate or trust subject to the
11 tax imposed by this chapter, any partnership having a partner
12 who is a taxpayer under the act of March 4, 1971 (P.L.6, No.2),
13 known as the Tax Reform Code of 1971, any Pennsylvania S
14 corporation having a shareholder who is a taxpayer under the
15 Tax Reform Code of 1971 and any employer required to withhold
16 tax on compensation paid.
17 SUBCHAPTER B
18 IMPOSITION OF TAX
19 Sec.
20 1502. Imposition of tax.
21 1502.1. Rate changes occurring during the taxable year.
22 1502.2. (Reserved).
23 1503. Classes of income.
24 1504. Special tax provisions for poverty.
25 § 1502. Imposition of tax.
26 (a) Resident tax.--Every resident individual, estate or
27 trust shall be subject to, and shall pay for the privilege of
28 receiving each of the classes of income enumerated in section
29 1503 (relating to classes of income), a tax upon each dollar of
30 income received by that resident during that resident's taxable
20050S0854B2207 - 136 -
1 year at the rate of 3.29%.
2 (b) Nonresident tax.--Every nonresident individual, estate
3 or trust shall be subject to, and shall pay for the privilege of
4 receiving each of the classes of income enumerated in section
5 1503 from sources within this Commonwealth, a tax upon each
6 dollar of income received by that nonresident during that
7 nonresident's taxable year at the rate of 3.29%.
8 § 1502.1. Rate changes occurring during the taxable year.
9 Notwithstanding the provisions of section 1502 (relating to
10 imposition of tax), the tax rate to be used for the computation
11 of tax for any taxable year where the rate changes during the
12 taxable year shall be the monthly weighted average of the rates
13 applicable during the taxable year, regardless of when during
14 the taxable year the income is received.
15 § 1502.2. (Reserved).
16 § 1503. Classes of income.
17 (a) Classes.--The classes of income referred to in section
18 1502(b) (relating to imposition of tax) are as follows:
19 (1) Compensation, which shall include all of the
20 following:
21 (i) All salaries, wages, commissions, bonuses and
22 incentive payments whether based on profits or otherwise,
23 fees, tips and similar remuneration received for services
24 rendered whether directly or through an agent and whether
25 in cash or in property except income derived from the
26 United States Government for active duty outside this
27 Commonwealth as a member of the armed forces.
28 (ii) Compensation of a cash-basis taxpayer shall be
29 considered as received if the compensation is actually or
30 constructively received for Federal income tax purposes
20050S0854B2207 - 137 -
1 as determined consistent with the United States Treasury
2 regulations and rulings under the Internal Revenue Code
3 of 1986, as amended, except that, for purposes of
4 computing tax under this chapter:
5 (A) Amounts lawfully deducted, not deferred, and
6 withheld from the compensation of employees shall be
7 considered to have been received by the employee as
8 compensation at the time the deduction is made.
9 (B) Contributions to an employees' trust, pooled
10 fund or other arrangement which is not subject to the
11 claims of creditors of the employer made by an
12 employer on behalf of an employee or self-employed
13 individual at the election of the employee or self-
14 employed individual pursuant to a cash or deferred
15 arrangement or salary reduction agreement shall be
16 deemed to have been received by the employee or
17 individual as compensation at the time the
18 contribution is made, regardless of when the election
19 is made or a payment is received.
20 (C) Any contribution to a plan by, on behalf of
21 or attributable to a self-employed person shall be
22 deemed to have been received at the time the
23 contribution is made.
24 (D) Employer contributions to a Roth IRA
25 custodial account or employee annuity shall be deemed
26 received, earned or acquired only when distributed,
27 when the plan fails to meet the requirements of
28 section 408A of the Internal Revenue Code of 1986 (26
29 U.S.C. § 408A), as amended, or when the plan is not
30 operated in accordance with such requirements.
20050S0854B2207 - 138 -
1 (E) Employee contributions to an employees'
2 trust or pooled fund or custodial account or contract
3 or employee annuity shall not be deducted or excluded
4 from compensation.
5 (iii) For purposes of determining when deferred
6 compensation of employees other than employees of exempt
7 organizations and State and local governments is required
8 to be included in income, the following shall apply:
9 (A) The rules of sections 83 and 451 of the
10 Internal Revenue Code of 1986 (26 U.S.C. §§ 83 and
11 451), as amended, shall apply.
12 (B) The rules of section 409A of the Internal
13 Revenue Code of 1986 (26 U.S.C. § 409A), as amended.
14 (iv) For purposes of determining when deferred
15 compensation of employees of exempt organizations and
16 State and local governments is required to be included in
17 income, the following shall apply:
18 (A) The rules of sections 83, 451 and 457 of the
19 Internal Revenue Code of 1986, as amended.
20 (B) The rules of section 409A of the Internal
21 Revenue Code of 1986, as amended.
22 (2) Net profits, which shall include the net income from
23 the operation of a business, profession, or other activity,
24 after provision for all costs and expenses incurred in the
25 conduct of the operation or activity, determined either on a
26 cash or accrual basis in accordance with accepted accounting
27 principles and practices but without deduction of taxes based
28 on income.
29 (3) Net gains or income from disposition of property,
30 which shall include net gains or net income, less net losses,
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1 derived from the sale, exchange or other disposition of
2 property, including real property, tangible personal
3 property, intangible personal property or obligations issued
4 on or after February 1, 1994; any public authority,
5 commission, board or other agency created by the
6 Commonwealth; any political subdivision of the Commonwealth
7 or any public authority created by any such political
8 subdivision; or by the Federal Government as determined in
9 accordance with accepted accounting principles and practices.
10 For the purpose of this chapter the following shall apply:
11 (i) For the determination of the basis of any
12 property, real and personal, if acquired prior to June 1,
13 1971, the date of acquisition shall be adjusted to June
14 1, 1971, as if the property had been acquired on that
15 date. If the property was acquired after June 1, 1971,
16 the actual date of acquisition shall be used in
17 determination of the basis.
18 (ii) (Reserved).
19 (iii) The term "net gains or income" and "net
20 losses" shall not include gains or income or loss derived
21 from obligations which are statutorily free from State or
22 local taxation under the act of August 31, 1971 (P.L.395,
23 No.94), entitled "An act exempting from taxation for
24 State and local purposes within the Commonwealth certain
25 obligations, their transfer and the income therefrom
26 (including any profits made on the sale thereof), issued
27 by the Commonwealth, any public authority, commission,
28 board or other agency created by the Commonwealth, any
29 political subdivision of the Commonwealth or any public
30 authority created by any such political subdivision," or
20050S0854B2207 - 140 -
1 under the laws of the United States.
2 (iv) The term "sale, exchange or other disposition"
3 shall not include the exchange of stock or securities in
4 a corporation a party to a reorganization in pursuance of
5 a plan of reorganization, solely for stock or securities
6 in the corporation or in another corporation a party to
7 the reorganization and the transfer of property to a
8 corporation by one or more persons solely in exchange for
9 stock or securities in the corporation if immediately
10 after the exchange the person or persons are in control
11 of the corporation. The following shall apply:
12 (A) For purposes of this subparagraph, stock or
13 securities issued for services shall not be
14 considered as issued in return for property.
15 (B) For purposes of this subparagraph, the term
16 "reorganization" shall mean any of the following:
17 (I) A statutory merger or consolidation.
18 (II) The acquisition by one corporation, in
19 exchange solely for all or a part of its voting
20 stock, or in exchange solely for all or a part of
21 the voting stock of a corporation which is in
22 control of the acquiring corporation, of stock of
23 another corporation if, immediately after the
24 acquisition, the acquiring corporation has
25 control of the other corporation, whether or not
26 the acquiring corporation had control immediately
27 before the acquisition.
28 (III) The acquisition by one corporation, in
29 exchange solely for all or a part of its voting
30 stock, or in exchange solely for all or a part of
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1 the voting stock of a corporation which is in
2 control of the acquiring corporation, of
3 substantially all of the properties of another
4 corporation. In determining whether the exchange
5 is solely for stock the assumption by the
6 acquiring corporation of a liability of the
7 other, or the fact that property acquired is
8 subject to a liability, shall be disregarded.
9 (IV) A transfer by a corporation of all or a
10 part of its assets to another corporation if
11 immediately after the transfer the transferor, or
12 one or more of its shareholders, including
13 persons who were shareholders immediately before
14 the transfer, or any combination of transferor or
15 shareholders, is in control of the corporation to
16 which the assets are transferred.
17 (V) A recapitalization.
18 (VI) A mere change in identity, form or
19 place of organization however effected.
20 (C) The acquisition by one corporation, in
21 exchange for the stock of a controlling corporation
22 which is in control of the acquiring corporation, of
23 substantially all of the properties of another
24 corporation which in the transaction is merged into
25 the acquiring corporation shall not disqualify a
26 transaction under subclause (B)(I) if the transaction
27 would have qualified under subclause (B)(I) if the
28 merger had been into the controlling corporation and
29 no stock of the acquiring corporation is used in the
30 transaction.
20050S0854B2207 - 142 -
1 (D) A transaction otherwise qualifying under
2 subclause (B)(I) shall not be disqualified by reason
3 of the fact that the stock of the controlling
4 corporation which before the merger was in control of
5 the merged corporation, is used in the transaction,
6 if:
7 (I) after the transaction, the corporation
8 surviving the merger holds substantially all of
9 its properties and the properties of the merged
10 corporation, other than stock of the controlling
11 corporation distributed in the transaction; and
12 (II) in the transaction, former shareholders
13 of the surviving corporation exchanged, for an
14 amount of voting stock of the controlling
15 corporation, an amount of stock in the surviving
16 corporation which constitutes control of such
17 corporation.
18 (E) For purposes of this subparagraph:
19 (I) The term "control" means the ownership
20 of stock possessing at least 80% of the total
21 combined voting power of all classes of stock
22 entitled to vote and at least 80% of the total
23 number of shares of all other classes of stock of
24 the corporation.
25 (II) The term "a party to a reorganization"
26 includes a corporation resulting from a
27 reorganization, and both corporations, in the
28 case of a reorganization resulting from the
29 acquisition by one corporation of stock or
30 properties of another. In the case of a
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1 reorganization qualifying under clause (B)(I) by
2 reason of clause (C) the term "a party to a
3 reorganization" includes the controlling
4 corporation referred to in clause (C).
5 (F) Notwithstanding any other provision of this
6 section, upon every exchange or conversion, the
7 taxpayer's base for the stock or securities received
8 shall be the same as the taxpayer's actual or
9 attributed base for the stock, securities or property
10 surrendered in exchange.
11 (v) The term "sale, exchange or other disposition"
12 shall not include a transfer by a common trust fund
13 described in section 584 of the Internal Revenue Code of
14 all or substantially all of its assets to one or more
15 companies described in section 851 of the Internal
16 Revenue Code in exchange for stock or units of beneficial
17 interest in the company or companies to which the assets
18 are transferred and the distribution of the stock or
19 units by the fund to its participants in exchange for
20 their interest in the fund, if no gain or loss is
21 recognized on the transfer or distribution for Federal
22 income tax purposes. Upon every such exchange, the
23 taxpayer's base for the stock or units or assets received
24 shall be the same as the taxpayer's actual or attributed
25 base for the assets, stock, units or interest surrendered
26 in exchange.
27 (vi) The term "sale, exchange or other disposition"
28 shall not include a transfer of an interest in an
29 enterprise treated as a partnership for purposes of this
30 chapter in exchange for an interest in any other
20050S0854B2207 - 144 -
1 enterprise treated as a partnership for purposes of this
2 chapter, a liquidation made in connection therewith or an
3 exchange made pursuant to a statutory merger,
4 consolidation or division of enterprises so treated
5 unless taxable income or gain is recognized for Federal
6 income tax purposes. Upon every such exchange, the
7 taxpayer's base for the interest received shall be the
8 same as the taxpayer's actual or attributed base for the
9 interest surrendered in exchange.
10 (vii) The term "net gains or net income, less net
11 losses," shall not include any gain or loss from the
12 sale, exchange or other disposition of the taxpayer's
13 principal residence.
14 (A) For purposes of this subparagraph, the term
15 "principal residence" shall mean the property that
16 has been owned and used by the taxpayer as the
17 taxpayer's principal residence for periods
18 aggregating two years or more during the five-year
19 period ending on the date of the sale, exchange or
20 disposition, except that the following shall apply:
21 (I) In the case of property only a portion
22 of which, during the five-year period ending on
23 the date of the sale, exchange or disposition,
24 has been owned or used by the taxpayer as the
25 taxpayer's principal residence for periods
26 aggregating two years or more, this subparagraph
27 shall apply with respect to so much of the gain
28 from the sale, exchange or disposition of the
29 property as is determined under regulations
30 prescribed by the department to be attributable
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1 to that portion.
2 (II) In the case of a principal residence
3 only a portion of which has never been subject to
4 the allowance for depreciation, this subparagraph
5 shall apply with respect to so much of the gain
6 from the sale, exchange or disposition of the
7 property as is determined under regulations
8 prescribed by the department to be attributable
9 to that portion.
10 (B) The provisions of this subparagraph shall
11 not apply to a sale, exchange or disposition if,
12 during the two-year period ending upon the date of
13 the sale, exchange or disposition, there was a prior
14 sale, exchange or disposition by the taxpayer of a
15 principal residence, unless the sale, exchange or
16 disposition is by reason of a change in employment,
17 health or, to the extent provided in regulations,
18 unforeseen circumstances.
19 (C) The provisions of this subparagraph shall
20 not apply to any sale, exchange or disposition made
21 prior to January 1, 1998.
22 (4) Net gains or income derived from or in the form of
23 rents, royalties, patents and copyrights.
24 (5) Dividends.
25 (6) Interest derived from obligations which are not
26 statutorily free from State or local taxation under any other
27 act of the General Assembly of the Commonwealth of
28 Pennsylvania or under the laws of the United States and any
29 amount paid under contract of life insurance or endowment or
30 annuity contract, which is includable in gross income for
20050S0854B2207 - 146 -
1 Federal income tax purposes and any amount paid out of the
2 archer medical savings account or health savings account that
3 is includable in the gross income of an account beneficiary
4 for Federal income tax purposes.
5 (7) Gambling and lottery winnings other than prizes of
6 the Pennsylvania State Lottery.
7 (8) Net gains or income derived through estates or
8 trusts. To the extent that income or gain is subject to tax
9 under one of the classes of income enumerated in this section
10 the income or gain shall not be subject to tax under another
11 of the enumerated classes.
12 (a.1) Compensation.--Income shall be computed under the
13 method of accounting on the basis of which the taxpayer
14 regularly computes income in keeping the taxpayer's books. If
15 the department determines that no method has been regularly used
16 or the method used does not clearly reflect income, the
17 computation of income shall be made under a method which, in the
18 opinion of the department, clearly reflects income.
19 (a.2) Depreciation.--In computing income, a depreciation
20 deduction shall be allowed for the exhaustion, wear and tear and
21 obsolescence of property being employed in the operation of a
22 business or held for the production of income. The deduction
23 must be reasonable and shall be computed in accordance with the
24 property's adjusted basis at the time placed in service,
25 reasonably estimated useful life and net salvage value at the
26 end of its reasonably estimated useful economic life under the
27 straight-line method or other method prescribed by the
28 department, except that a taxpayer may use any depreciation
29 method, recovery method or convention that is also used by the
30 taxpayer in determining Federal net taxable income if, when
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1 placed in service, the property has the same adjusted basis for
2 Federal income tax purposes and the method or convention is
3 allowable for Federal income tax purposes at the time the
4 property is placed in service or under the Internal Revenue
5 Code, whichever is earlier. The basis of property shall be
6 reduced, but not below zero, for depreciation by the greater of:
7 (1) the amount deducted on a return and not disallowed,
8 but only to the extent the deduction results in a reduction
9 of income; and
10 (2) the amount allowable using the straight-line method
11 of depreciation computed on the basis of the property's
12 adjusted basis at the time placed in service, reasonably
13 estimated useful life and net salvage value at the end of its
14 reasonably estimated useful economic life, regardless of
15 whether the deduction results in a reduction of income.
16 (a.3) Section 179 Property.--The cost of property commonly
17 referred to as Section 179 Property may be treated as a
18 deductible expense only to the extent allowable under the
19 version of section 179 of the Internal Revenue Code in effect at
20 the time the property is placed in service or under section 179
21 of the Internal Revenue Code of 1986 (26 U.S.C. § 179),
22 whichever is earlier. The basis of Section 179 Property shall be
23 reduced, but not below zero, for costs treated as a deductible
24 expense. The amount of the reduction shall be the amount
25 deducted on a return and not disallowed, regardless of whether
26 the deduction results in a reduction of income.
27 (a.4) Federal limitation applicability.--This chapter shall
28 be subject to applicable Federal limitations on state income
29 taxation.
30 (a.5) Section 1035 applicability.--The requirements of
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1 section 1035 of the Internal Revenue Code of 1986 (26 U.S.C. §
2 1035), as amended, shall be applicable.
3 (a.6) Applicability.--Except as provided in this chapter and
4 without regard to sections 220(f)(4) and 223(f)(4) of the
5 Internal Revenue Code, the requirements of sections 106(b) and
6 (d), 220 and 223 of the Internal Revenue Code of 1986, as
7 amended to January 1, 2005, shall be applicable.
8 (b) Intent.--It is hereby declared to be the intent of the
9 General Assembly that if one or more or part of one or more of
10 the classes of income enumerated in subsection (a) are, for any
11 reason, held to be unconstitutional by a final decision of a
12 court of last resort, the unconstitutional class or classes or
13 part of a class or classes of income shall be deemed severable,
14 and the tax imposed by this chapter shall apply with respect to
15 all the remaining classes of income or parts of classes of
16 income enumerated in subsection (a) as if the unconstitutional
17 class or classes of income or part or parts of classes of income
18 had not been included.
19 § 1504. Special tax provisions for poverty.
20 (a) Declaration of intent.-- The General Assembly, in
21 recognition of the powers contained in section 2(b)(ii) of
22 Article III of the Constitution of Pennsylvania which provides
23 for the establishing as a class or classes of subjects of
24 taxation the property or privileges of persons who, because of
25 poverty are determined to be in need of special tax provisions
26 declares as its legislative intent and purpose to implement such
27 power under such constitutional provision by establishing
28 special tax provisions as provided in this chapter.
29 (b) Public policy.--The General Assembly having determined
30 that there are persons within this Commonwealth whose incomes
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1 are such that imposition of a tax thereon would deprive them and
2 their dependents of the bare necessities of life and having
3 further determined that poverty is a relative concept
4 inextricably joined with actual income and the number of people
5 dependent upon such income deems it to be a matter of public
6 policy to provide special tax provisions for that class of
7 persons designated in this section to relieve their economic
8 burden.
9 (c) Standards of eligibility.--For the taxable year 1974 and
10 each year thereafter any claimant who meets the following
11 standards of eligibility established by this chapter as the test
12 for poverty shall be deemed a separate class of subject of
13 taxation, and, as such, shall be entitled to the benefit of the
14 special provisions of this chapter.
15 (d) Specific standards.--Any claim for special tax
16 provisions under this section shall be determined in accordance
17 with the following:
18 (1) (i) If the poverty income of the claimant during an
19 entire taxable year is $6,500 or less, or, in the case of
20 a married claimant, if the joint poverty income of the
21 claimant and the claimant's spouse during an entire
22 taxable year is $13,000 or less, the claimant shall be
23 entitled to a refund or forgiveness of all moneys which
24 have been paid over to, or would except for the
25 provisions of this chapter be payable to, the
26 Commonwealth under the provisions of this chapter, with
27 an additional income allowance of $9,500 for each
28 dependent of the claimant.
29 (ii) For purposes of this subsection, a claimant
30 shall not be considered to be married if:
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1 (A) The claimant and the claimant's spouse file
2 separate returns.
3 (B) The claimant and the claimant's spouse live
4 apart at all times during the last six months of the
5 taxable year or are separated pursuant to a written
6 separation agreement.
7 (2) If the poverty income of the claimant during an
8 entire taxable year does not exceed the poverty income
9 limitations prescribed by paragraph (1) by more than the
10 dollar category contained in subparagraphs (i), (ii), (iii),
11 (iv), (v), (vi), (vii), (viii) or (ix), the claimant shall be
12 entitled to a refund or forgiveness based on the percentage
13 prescribed in those subparagraphs of any moneys which have
14 been paid over to, or would have been except for the
15 provisions in this subsection be payable to, the Commonwealth
16 under this chapter:
17 (i) 90% if not in excess of $250.
18 (ii) 80% if not in excess of $500.
19 (iii) 70% if not in excess of $750.
20 (iv) 60% if not in excess of $1,000.
21 (v) 50% if not in excess of $1,250.
22 (vi) 40% if not in excess of $1,500.
23 (vii) 30% if not in excess of $1,750.
24 (viii) 20% if not in excess of $2,000.
25 (ix) 10% if not in excess of $2,250.
26 (3) If an individual has a taxable year of less than 12
27 months, the poverty income thereof shall be annualized in the
28 manner as the department may prescribe.
29 SUBCHAPTER C
30 ESTATES AND TRUSTS
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1 Sec.
2 1505. Taxability of estates, trusts and their beneficiaries.
3 § 1505. Taxability of estates, trusts and their beneficiaries.
4 The income of a beneficiary of an estate or trust in respect
5 of the estate or trust shall consist of that part of the income
6 or gains received by the estate or trust for its taxable year
7 ending within or with the beneficiary's taxable year which,
8 under the governing instrument and applicable State law, is
9 required to be distributed currently or is in fact paid or
10 credited to the beneficiary. The income or gains of the estate
11 or trust, if any, taxable to the estate or trust shall consist
12 of the income or gains received by it which has not been
13 distributed or credited to its beneficiaries.
14 SUBCHAPTER D
15 PARTNERSHIPS
16 Sec.
17 1506. Taxability of partners.
18 § 1506. Taxability of partners.
19 A partnership as an entity shall not be subject to the tax
20 imposed by this chapter but the income or gain of a member of a
21 partnership in respect of the partnership shall be subject to
22 the tax and the tax shall be imposed on the member's share,
23 whether or not distributed, of the income or gain received by
24 the partnership for its taxable year ending within or with the
25 member's taxable year.
26 SUBCHAPTER E
27 PENNSYLVANIA S CORPORATIONS
28 Sec.
29 1507. Election by small corporation.
30 1507.1. Manner of making election.
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1 1507.2. Effective years of election.
2 1507.3. Revocation of election.
3 1507.4. Termination by corporation ceasing to be a small
4 corporation.
5 1507.5. Revocation or termination year.
6 1507.6. Election after revocation or termination.
7 1507.7. Taxable year of a Pennsylvania S corporation.
8 1507.8. Income of a Pennsylvania S corporation.
9 1507.9. Income of Pennsylvania S corporations taxed to
10 shareholders.
11 1507.10. Limitation on pass-thru of losses to shareholders.
12 1507.11. Adjustments to basis of stock of shareholders.
13 1507.12. Distributions.
14 § 1507. Election by small corporation.
15 Except as provided in section 1507.6 (relating to election
16 after revocation or termination), any small corporation that is
17 subject to the tax imposed under Article IV of the Tax Reform
18 Code or owns a qualified S corporation subsidiary that is
19 subject to the tax imposed under Article IV of the Tax Reform
20 Code may elect to be taxed as a Pennsylvania S corporation. The
21 election shall be valid only if all the shareholders of the
22 corporation on the day on which the election is made consent to
23 the election. A qualified Subchapter S subsidiary owned by a
24 Pennsylvania S corporation shall be treated as a Pennsylvania S
25 corporation whether or not an election has been made with
26 respect to the subsidiary.
27 § 1507.1. Manner of making election.
28 (a) General rule.--An election made pursuant to section 1507
29 (relating to election by small corporation) shall be made in the
30 manner prescribed by the department.
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1 (b) Time of making election.--An election under section 1507
2 may be made for any taxable year at any time during the
3 preceding taxable year or at any time on or before the 15th day
4 of the third month of the current taxable year.
5 § 1507.2. Effective years of election.
6 An election made pursuant to section 1507 (relating to
7 election by small corporation) shall be effective for the
8 taxable year for which the election is made and for each
9 succeeding taxable year unless revoked or terminated.
10 § 1507.3. Revocation of election.
11 (a) General rule.--An election under section 1507 (relating
12 to election by small corporation) may be revoked if shareholders
13 holding more than one-half of the shares of stock of the
14 corporation on the day on which the revocation is made consent
15 to the revocation.
16 (b) Effective date of revocation.--Except as provided in
17 subsection (c), a revocation under subsection (a) shall be
18 effective:
19 (1) on the first day of the taxable year, if made on or
20 before the 15th day of the third month of that taxable year;
21 or
22 (2) if the revocation is made after that date, it shall
23 be effective for the following taxable year.
24 (c) Special rule.--If the revocation specifies a date for
25 revocation which is on or after the day on which the revocation
26 is made, the revocation shall be effective on and after that
27 date.
28 § 1507.4. Termination by corporation ceasing to be a small
29 corporation.
30 (a) General rule.--If a corporation ceases to be a small
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1 corporation, the election under section 1507 (relating to
2 election by small corporation) shall terminate.
3 (b) Effective date of termination.--A termination under
4 subsection (a) shall be effective on the date on which the
5 corporation ceases to be a small corporation.
6 § 1507.5. Revocation or termination year.
7 (a) General rule.--The portion of the revocation or
8 termination year of a Pennsylvania S corporation ending before
9 the first day for which the revocation or termination is
10 effective shall be treated as a short taxable year for which the
11 corporation is a Pennsylvania S corporation.
12 (b) Short taxable year.--The portion of the year beginning
13 on the first day for which the revocation or termination is
14 effective shall be treated as a short taxable year for which the
15 corporation is subject to the tax imposed by Article IV of the
16 Tax Reform Code.
17 (c) Allocation of income and expense items.--The allocation
18 of income and expense items to be taken into consideration in
19 each short year shall be made in accordance with such
20 regulations as may be issued by the department.
21 § 1507.6. Election after revocation or termination.
22 If a corporation has made an election under section 1507
23 (relating to election by small corporation) and if the election
24 has been revoked pursuant to section 1507.3 (relating to
25 revocation of election) or terminated, the corporation and any
26 successor corporation shall not be eligible to make an election
27 under section 1507 for any taxable year prior to its fifth
28 taxable year which begins after the first taxable year for which
29 such revocation or termination is effective.
30 § 1507.7. Taxable year of a Pennsylvania S corporation.
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1 The taxable year of a Pennsylvania S corporation shall be the
2 same taxable year which the corporation uses for Federal income
3 tax purposes.
4 § 1507.8. Income of a Pennsylvania S corporation.
5 (a) General rule.--A Pennsylvania S corporation shall not be
6 subject to the tax imposed by this chapter, but the shareholders
7 of the Pennsylvania S corporation shall be subject to the tax
8 imposed under this chapter as provided in this chapter.
9 (b) Treatment of losses.--If any tax is imposed on a
10 Pennsylvania S corporation or any qualified subsidiary owned by
11 the Pennsylvania S corporation, pursuant to section 1374 of the
12 Internal Revenue Code, as amended to January 1, 1997, or
13 pursuant to Article IV or Article VI of the Tax Reform Code for
14 any taxable year, then, for purposes of section 1507.9 (relating
15 to income of Pennsylvania S corporations taxed to shareholders),
16 the amount of tax so imposed shall be treated as a loss
17 sustained by the Pennsylvania S corporation during those years.
18 In the case of taxes imposed pursuant to section 1374 of the
19 Internal Revenue Code, as amended to January 1, 1997, or Article
20 IV of the Tax Reform Code, the character of the loss shall be
21 determined by allocating the loss proportionately among the
22 recognized built-in gains giving rise to the tax.
23 (c) Recognition of gain.--If a Pennsylvania S corporation
24 makes a distribution of property, other than an obligation of
25 the corporation, with respect to its stock and the fair market
26 value of the property exceeds its adjusted basis in the hands of
27 the corporation, then gain shall be recognized on the
28 distribution as if the property had been sold to the distributee
29 at its fair market value.
30 (d) Election affecting computation.--An election which may
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1 affect the computation of items derived from a Pennsylvania S
2 corporation shall be made by the corporation.
3 (e) Disallowed deductions.--A deduction, except a net loss
4 deduction, which was disallowed when a corporation was subject
5 to the tax imposed under Article IV of the Tax Reform Code shall
6 be allowed in years in which the corporation is a Pennsylvania S
7 corporation to the same extent and in the same manner that the
8 deduction would have been allowed if the corporation had
9 remained subject to the tax imposed under Article IV of the Tax
10 Reform Code.
11 § 1507.9. Income of Pennsylvania S corporations taxed to
12 shareholders.
13 (a) General rule.--Each shareholder of a Pennsylvania S
14 corporation shall take into income the shareholder's pro rata
15 share of the income or loss in each applicable class of income
16 received by the corporation for its taxable year ending within
17 or with the shareholder's taxable year.
18 (b) Pro rata shares.--Each shareholder's pro rata share of
19 any item for a taxable year shall be the sum of the amounts
20 determined with respect to the shareholder by assigning an equal
21 portion of all items to each day of the taxable year and then by
22 dividing that portion pro rata among the shares outstanding on
23 that day.
24 (c) Determination of the character of items.--The character
25 of any item included in the shareholder's pro rata share shall
26 be determined as if the item was realized directly by the
27 shareholder from the source from which it was realized by the
28 corporation or incurred in the same manner as incurred by the
29 corporation.
30 (d) Deduction allowance.--With respect to any deduction
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1 allowed pursuant to section 1507.8(e) (relating to income of a
2 Pennsylvania S corporation), any nonresident shareholder shall
3 be allowed the deduction only to the extent that the previously
4 disallowed deduction would have been considered a deduction
5 related to income from sources within this Commonwealth during
6 the taxable year when the deduction was disallowed.
7 (e) Treatment of subsidiaries.--For all purposes of this
8 chapter, a qualified Subchapter S subsidiary owned by a
9 Pennsylvania S corporation shall not be treated as a separate
10 corporation and all assets, liabilities and items of income,
11 deduction and credit of the qualified Subchapter S subsidiary
12 shall be treated as assets, liabilities and items of income,
13 deduction and credit of the parent Pennsylvania S corporation.
14 § 1507.10. Limitation on pass-thru of losses to shareholders.
15 (a) General rule.--The aggregate amount of losses taken into
16 account by a shareholder of a Pennsylvania S corporation under
17 section 1507.9 (relating to income of Pennsylvania S
18 corporations taxed to shareholders) shall not exceed the sum of
19 the adjusted basis of the shareholder's stock in the
20 Pennsylvania S corporation, determined after applying section
21 1507.11(a) (relating to adjustments to the basis of the stock of
22 shareholders) for the taxable year and the shareholder's
23 adjusted basis of any indebtedness of the Pennsylvania S
24 corporation to the shareholder, determined before applying
25 section 1507.11(d) for the taxable year.
26 (b) Carryover of losses prohibited.--There shall be no
27 carryover of losses by the shareholders of the Pennsylvania S
28 corporation.
29 § 1507.11. Adjustments to basis of stock of shareholders.
30 (a) Increases to basis.--The basis of a shareholder's stock
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1 in Pennsylvania S corporation shall be decreased for any period,
2 but not below zero, by any distribution by the corporation to
3 the shareholder which was not included in the income of the
4 shareholder pursuant to section 1507.12 (relating to
5 distributions) and by the shareholder's share of the
6 corporation's losses as determined under section 1507.9
7 (relating to income of Pennsylvania S corporations taxed to
8 shareholders) the extent that the loss reduced the shareholder's
9 share of the corporation's income, including nontaxable income,
10 as determined under section 1507.9.
11 (b) Decreases to basis.--The basis of a shareholder's stock
12 in a Pennsylvania S corporation shall be decreased for any
13 period, but not below zero, by any distribution by the
14 corporation to the shareholder which was not included in the
15 income of the shareholder pursuant to section 1507.12 (relating
16 to distributions) and by the shareholder's share of the
17 corporation's losses as determined under section 1507.9 to the
18 extent that the loss reduced the shareholder's income subject to
19 the tax imposed under this chapter or a tax measured by net
20 income, imposed on the shareholder by any other state.
21 (c) Reduction to zero basis.--If for any taxable year a
22 shareholder's basis in the stock of a Pennsylvania S corporation
23 is reduced to zero, any excess losses shall reduce the
24 shareholder's basis, but not below zero, in any indebtedness of
25 the Pennsylvania S corporation to the shareholder.
26 (d) Restoration of reduction.--If a shareholder's basis in
27 any indebtedness is reduced under subsection (c), then this
28 reduction shall be restored before the shareholder's basis in
29 the Pennsylvania S corporation's stock is increased.
30 § 1507.12. Distributions.
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1 (a) General rule.--A distribution of property by a
2 Pennsylvania S corporation which has no accumulated earnings and
3 profits to a shareholder of the corporation shall not be
4 included in the shareholder's income to the extent that it does
5 not exceed the shareholder's adjusted basis in the stock. Any
6 amount of the distribution in excess of the adjusted basis in
7 the stock shall be treated as a gain from the sale, exchange or
8 other disposition of property.
9 (b) Distribution with accumulated earnings and profits.--A
10 distribution of property by a Pennsylvania S corporation which
11 has accumulated earnings and profits shall be treated in the
12 same manner as a distribution by a Pennsylvania S corporation
13 without earnings and profits to the extent of the corporation's
14 accumulated adjustment account. That portion of the distribution
15 in excess of the accumulated adjustment account shall be treated
16 as a dividend to the extent of the accumulated earnings and
17 profits of the corporation. Any portion of the distribution in
18 excess of the accumulated earnings and profits of the
19 corporation shall be treated in the same manner as a
20 distribution from a Pennsylvania S corporation without
21 accumulated earnings and profits.
22 (c) Non-pro-rata distributions.--In the case of a non-pro
23 rata distribution of property, the adjustment shall be limited
24 to an amount which bears the same ratio to the balance in such
25 account as the number of shares sold, exchanged or otherwise
26 disposed of bears to the number of shares in the corporation
27 outstanding immediately before such sale, exchange or
28 disposition.
29 (d) Definition.--For purposes of this section, "accumulated
30 adjustment account" means the account of a Pennsylvania S
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1 corporation which is cumulatively adjusted for the most recent
2 continuous period during which the corporation has been a
3 Pennsylvania S corporation by increasing the account for
4 corporate income and decreasing the account for corporate losses
5 and all distributions of property by the corporation to the
6 shareholders which were not included in the income of the
7 shareholders; provided, that no adjustment shall be made for any
8 income or loss not in any of the classes of income enumerated in
9 section 1503 (relating to classes of income) or for any
10 nondeductible expense.
11 SUBCHAPTER F
12 OTHER ENTITIES
13 Sec.
14 1507.21. Treatment of unincorporated entities with
15 single owners.
16 § 1507.21. Treatment of unincorporated entities with single
17 owners.
18 Unless subject to tax under Article IV of the Tax Reform
19 Code, an unincorporated entity that has a single owner shall be
20 disregarded as an entity separate from its owner.
21 SUBCHAPTER G
22 NONRESIDENT INDIVIDUALS
23 Sec.
24 1508. Nonresident individuals and taxable income.
25 1509. Husband and wife.
26 1510. Allocation of income of nonresident.
27 § 1508. Nonresident individuals and taxable income.
28 The income of a nonresident individual shall be that part of
29 the individual's income derived from sources within this
30 Commonwealth.
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1 § 1509. Husband and wife.
2 (a) Separate return.--If the income of husband or wife, who
3 are both nonresidents of this Commonwealth and are subject to
4 tax under this chapter, is determined on a separately filed
5 return, their incomes from sources within this Commonwealth
6 shall be separately determined.
7 (b) One spouse a nonresident.--If either husband or wife is
8 a nonresident and the other is a resident, separate taxes shall
9 be determined on their separate incomes on such forms as the
10 department shall prescribe, unless both spouses elect to
11 determine their joint income as if they were residents, in which
12 event their tax liabilities shall be joint and several.
13 § 1510. Allocation of income of nonresident.
14 Where a nonresident taxpayer:
15 (1) earns, receives or acquires income from sources
16 partly within and partly without this Commonwealth; or
17 engages in a business, trade, profession or occupation partly
18 within and partly without this Commonwealth; and
19 (2) as a result thereof or for other reasons that
20 portion of the income derived from or connected with sources
21 within this Commonwealth cannot readily or accurately be
22 ascertained,
23 the department shall by regulation prescribe uniform rules for
24 apportionment or allocation of so much of the taxpayer's income
25 as fairly and equitably represents income, derived from sources
26 within this Commonwealth and subject to tax under this chapter.
27 SUBCHAPTER H
28 CREDITS AGAINST TAX
29 Sec.
30 1512. Tax withheld.
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1 1513. Tax paid under former act.
2 1514. Income taxes imposed by other states.
3 1515. (Reserved).
4 § 1512. Tax withheld.
5 The amount withheld under section 1516 (relating to
6 requirement of withholding tax) shall be allowed to the
7 recipient of the compensation as a credit against the tax
8 imposed on him by this chapter.
9 § 1513. Tax paid under former act.
10 The amount of tax withheld from an employee and paid over to
11 the Commonwealth or paid over by a taxpayer as an estimated
12 payment pursuant to former Article III of the Tax Reform Code,
13 shall be held as a credit against the tax imposed by this
14 chapter.
15 § 1514. Income taxes imposed by other states.
16 (a) General rule.--A resident taxpayer before allowance of
17 any credit under section 1512 (relating to tax withheld) shall
18 be allowed a credit against the tax otherwise due under this
19 chapter for the amount of any income tax, wage tax or tax on or
20 measured by gross or net earned or unearned income imposed on
21 the taxpayer or on a Pennsylvania S corporation in which the
22 taxpayer is a shareholder, to the extent of the taxpayer's pro
23 rata share thereof determined in accordance with section 1507.9
24 (relating to income of Pennsylvania S corporations taxed to
25 shareholders), by another state with respect to income which is
26 also subject to tax under this chapter.
27 (b) Limitation.--The credit provided under this section
28 shall not exceed the proportion of the tax otherwise due under
29 this chapter that the amount of the taxpayer's income subject to
30 tax by the other jurisdiction bears to the taxpayer's entire
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1 taxable income.
2 § 1515. (Reserved).
3 SUBCHAPTER I
4 CONTRIBUTIONS OF REFUNDS BY CHECKOFF
5 Sec.
6 1515.1. Definitions.
7 1515.2. Contributions to breast and cervical cancer research.
8 1515.3. Contributions for wild resource conservation.
9 1515.4. Contributions for organ and tissue donation awareness.
10 1515.5. (Reserved).
11 1515.6. (Reserved).
12 1515.7. Contributions for juvenile diabetes cure research.
13 1515.8. Contributions for military family relief assistance.
14 1515.9. Operational provisions.
15 § 1515.1. Definitions.
16 The following words and phrases when used in this subchapter
17 shall have the meanings given to them in this section unless the
18 context clearly indicates otherwise:
19 "Individual income tax." The tax imposed under this chapter.
20 § 1515.2. Contributions to breast and cervical cancer research.
21 (a) General rule.--The department shall provide a space on
22 the Pennsylvania individual income tax return form to allow an
23 individual to voluntarily designate a contribution of any amount
24 desired to be utilized for breast and cervical cancer research
25 in the Department of Health.
26 (b) Deduction from tax refunds.--The amount so designated on
27 the individual income tax return form shall be deducted from the
28 tax refund to which the individual is entitled and shall not
29 constitute a charge against the income tax revenues due to the
30 Commonwealth.
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1 (c) Transfer of funds.--The department shall determine
2 annually the total amount designated under this section, less
3 reasonable administrative costs, and shall report the amount to
4 the State Treasurer who shall transfer the amount from the
5 General Fund to the Pennsylvania Cancer Control, Prevention and
6 Research Advisory Board within the Department of Health.
7 (d) Information to be provided.--
8 (1) The department shall provide adequate information
9 concerning the checkoff for breast and cervical cancer
10 research in its instructions which accompany State income tax
11 return forms. The information concerning the checkoff shall
12 include the listing of an address furnished by the Department
13 of Health to which contributions may be sent by taxpayers
14 wishing to contribute to this effort but who do not receive
15 refunds.
16 (2) The Department of Health shall conduct a public
17 information campaign on the availability of this opportunity
18 to Pennsylvania taxpayers.
19 (e) Annual report to General Assembly.--The Department of
20 Health shall report annually to the respective committees of the
21 Senate and the House of Representatives which have jurisdiction
22 over health matters on the amount received via the checkoff plan
23 and how the funds were utilized.
24 (f) Appropriations.--The General Assembly may, from time to
25 time, appropriate funds for breast and cervical cancer research
26 within the Department of Health.
27 § 1515.3. Contributions for wild resource conservation.
28 (a) General rule.--The department shall provide a space on
29 the Pennsylvania individual income tax return form to allow an
30 individual to voluntarily designate a contribution of any amount
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1 desired to the Wild Resource Conservation Fund established under
2 section 5 of the act of June 23, 1982 (P.L.597, No.170), known
3 as the Wild Resource Conservation Act.
4 (b) Deduction from refund.--The amount so designated by an
5 individual on the income tax return form shall be deducted from
6 the tax refund to which the individual is entitled and shall not
7 constitute a charge against the income tax revenues due the
8 Commonwealth.
9 (c) Transfer of funds.--The department shall determine
10 annually the total amount designated pursuant to this section
11 and shall report the amount to the State Treasurer who shall
12 transfer the amount from the General Fund to the Wild Resource
13 Conservation Fund for use as provided in the Wild Resource
14 Conservation Act. The department shall be reimbursed from the
15 fund for any administrative costs incurred above and beyond the
16 cost savings it realizes as a result of individual total refund
17 designations.
18 (d) Information to be provided.--The department shall
19 provide adequate information concerning the Wild Resource
20 Conservation Fund in its instructions which accompany State
21 income tax return forms, which shall include the listing of an
22 address furnished to it by the Wild Resource Conservation Board
23 to which contributions may be sent by those taxpayers wishing to
24 contribute to the fund but who do not receive refunds.
25 (e) Applicability.--This section shall apply to taxable
26 years beginning on or after January 1, 1997.
27 § 1515.4. Contributions for organ and tissue donation
28 awareness.
29 (a) General rule.--The department shall provide a space on
30 the Pennsylvania individual income tax return form whereby an
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1 individual may voluntarily designate a contribution of any
2 amount desired to the Governor Robert P. Casey Memorial Organ
3 and Tissue Donation Awareness Trust Fund established under 20
4 Pa.C.S. § 8622 (relating to the Governor Robert P. Casey
5 Memorial Organ and Tissue Donation Awareness Trust Fund).
6 (b) Deduction from refund.--The amount so designated by an
7 individual on the Pennsylvania individual income tax return form
8 shall be deducted from the tax refund to which the individual is
9 entitled and shall not constitute a charge against the income
10 tax revenues due the Commonwealth.
11 (c) Transfer of funds.--The department shall annually
12 determine the total amount designated pursuant to this section
13 and shall report that amount to the State Treasurer who shall
14 transfer that amount to the Governor Robert P. Casey Memorial
15 Organ and Tissue Donation Awareness Trust Fund.
16 (d) Information to be provided.--The department shall, in
17 all taxable years following the effective date of this section,
18 provide on its forms or in its instructions which accompany
19 Pennsylvania individual income tax return forms adequate
20 information concerning the Governor Robert P. Casey Memorial
21 Organ and Tissue Donation Awareness Trust Fund which shall
22 include the listing of an address furnished to it by the Organ
23 Donation Advisory Committee to which contributions may be sent
24 by those taxpayers wishing to contribute to the fund but who do
25 not receive refunds.
26 (e) Applicability.--This section shall apply to taxable
27 years beginning on or after January 1, 1997.
28 § 1515.5. (Reserved).
29 § 1515.6. (Reserved).
30 § 1515.7. Contributions for juvenile diabetes cure research.
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1 (a) General rule.--The department shall provide a space on
2 the Pennsylvania individual income tax return form to allow an
3 individual to voluntarily designate a contribution of any amount
4 desired to be utilized for juvenile diabetes cure research
5 related to:
6 (1) restoring normal blood sugar levels;
7 (2) preventing and reversing complications; or
8 (3) preventing juvenile diabetes.
9 (b) Deduction from refund.--The amount so designated on the
10 Pennsylvania individual income tax return form shall be deducted
11 from the tax refund to which the individual is entitled and
12 shall not constitute a charge against the income tax revenues
13 due to the Commonwealth.
14 (c) Transfer of funds and expenditure.--
15 (1) The department shall determine annually the total
16 amount designated under this section, less reasonable
17 administrative costs, and shall report the amount to the
18 State Treasurer, who shall transfer the amount to a
19 restricted revenue account within the General Fund to be used
20 by the Department of Health for aiding juvenile diabetes cure
21 research.
22 (2) The Department of Health shall distribute the
23 amounts to institutions of higher education and independent
24 research institutes of this Commonwealth to support projects
25 that have been subject to an established peer and scientific
26 review process identical or similar to the National
27 Institutes of Health review system.
28 (d) Information to be provided.--The department shall
29 provide adequate information concerning the checkoff for
30 juvenile diabetes cure research in its instructions which
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1 accompany the Pennsylvania income tax return forms. The
2 information concerning the checkoff shall include the listing of
3 an address furnished by the Department of Health to which
4 contributions may be sent by taxpayers wishing to contribute to
5 this effort but who do not receive refunds.
6 (e) Annual report to General Assembly.--The Department of
7 Health shall report annually to the respective committees of the
8 Senate and the House of Representatives which have jurisdiction
9 over health matters on the amount received via the checkoff plan
10 and how the funds were utilized.
11 (f) Applicability.--This section shall apply to tax years
12 beginning after December 31, 2004.
13 § 1515.8. Contributions for military family relief assistance.
14 (a) General rule.--Beginning with taxable years ending after
15 December 31, 2004, the department shall provide a space on the
16 Pennsylvania individual income tax return form to allow an
17 individual to contribute to a fund for military family relief
18 assistance. Persons may do so by stating the amount of the
19 contribution, not less than $1, on the return and that the
20 contribution will reduce the taxpayer's refund.
21 (b) Transfer of funds.--The department shall determine
22 annually the total amount designated under this section, less
23 reasonable administrative costs, and shall report the amount to
24 the State Treasurer who shall transfer the amount to a
25 restricted revenue account within the General Fund to be used by
26 the Department of Military and Veterans Affairs for
27 contributions to military family relief assistance as provided
28 by statute.
29 (c) Information to be provided.--The department shall
30 provide adequate information concerning the checkoff for
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1 military family relief assistance in its instructions which
2 accompany the Pennsylvania income tax return forms. The
3 information concerning the checkoff shall include the listing of
4 an address furnished by the Department of Military and Veterans
5 Affairs to which contributions may be sent by taxpayers wishing
6 to contribute to this effort but who do not receive refunds.
7 (d) Annual report to General Assembly.--The Department of
8 Military and Veterans Affairs shall report annually to the
9 respective committees of the Senate and the House of
10 Representatives which have jurisdiction over military and
11 veterans affairs on the amount received via the checkoff plan
12 and how the funds were utilized.
13 (e) Applicability.--This section shall apply to taxable
14 years beginning after December 31, 2004.
15 § 1515.9. Operational provisions.
16 (a) General rule.--Except for the checkoff established under
17 sections 1515.6 (relating to contributions for Korea/Vietnam
18 Memorial National Education Center) and 1515.7 (relating to
19 contributions for juvenile diabetes cure research) and as
20 otherwise provided under subsection (b), the checkoffs
21 established under this subchapter shall apply through taxable
22 years ending December 31, 2007.
23 (b) Termination of checkoffs.--Any checkoff established
24 under this subchapter and applicable for the first time in a
25 taxable year beginning after December 31, 2003, shall expire
26 four years after the beginning of such first taxable year.
27 (c) Alternative termination of checkoffs.--Sections 1515.2
28 (relating to contributions to breast and cervical cancer
29 research), 1515.3 (relating to contributions for wild resources
30 conservation) and 1515.4 (relating to contributions for organ
20050S0854B2207 - 170 -
1 and tissue donation) shall expire January 1, 2008.
2 SUBCHAPTER J
3 WITHHOLDING OF TAX
4 Sec.
5 1516. Requirement of withholding tax.
6 1517. Information statement.
7 1518. Time for filing employer's returns.
8 1519. Monthly, semi-monthly and quarterly payment of taxes
9 withheld.
10 1520. Employer's liability for withheld taxes.
11 1521. Employer's failure to withhold.
12 1521.1. Bulk and auction sales, transfers and notice.
13 1522. Designation of third parties to perform acts required
14 of employers.
15 1523. When withholding not required.
16 § 1516. Requirement of withholding tax.
17 Every employer maintaining an office or transacting business
18 within this Commonwealth and making payment of compensation to:
19 (1) a resident individual; or
20 (2) a nonresident individual taxpayer performing
21 services on behalf of such employer within this Commonwealth,
22 shall deduct and withhold from the compensation for each payroll
23 period a tax computed in such manner as to result, so far as
24 practicable, in withholding from the employee's compensation
25 during each calendar year an amount substantially equivalent to
26 the tax reasonably estimated to be due for such year with
27 respect to the compensation. The method of determining the
28 amount to be withheld shall be prescribed by regulations of the
29 department.
30 § 1517. Information statement.
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1 (a) Duty of employers.--Every employer required to deduct
2 and withhold tax under this chapter shall furnish to each
3 employee to whom the employer has paid compensation during the
4 calendar year a written statement in such manner and in such
5 form as may be prescribed by the department showing:
6 (1) the amount of compensation paid by the employer to
7 the employee;
8 (2) the amount deducted and withheld as tax, pursuant to
9 this chapter; and
10 (3) such other information as the department shall
11 prescribe.
12 (b) Deadline for providing.--
13 (1) Each statement required by this section for a
14 calendar year shall be furnished to the employee on or before
15 January 31 of the year succeeding the calendar year.
16 (2) If the employee's employment is terminated before
17 the close of a calendar year, the employer, at its option,
18 shall furnish the statement to the employee at any time after
19 the termination but no later than January 31 of the year
20 succeeding the calendar year.
21 (3) If an employee whose employment is terminated before
22 the close of a calendar year requests the employer in writing
23 to furnish the employee with the statement at an earlier
24 time, and, if there is no reasonable expectation on the part
25 of both employer and employee of further employment during
26 the calendar year, then the employer shall furnish the
27 statement to the employee on or before the later of the 30th
28 day after the day of the request or the 30th day after the
29 day on which the last payment of wages is made.
30 § 1518. Time for filing employers' returns.
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1 Every employer required to deduct and withhold tax under this
2 chapter shall file a quarterly withholding return on or before
3 the last day of April, July, October and January for the three
4 months ending the last day of March, June, September and
5 December. The quarterly returns shall be filed with the
6 department at its main office or at any branch office which it
7 may designate for filing returns.
8 § 1519. Monthly, semi-monthly and quarterly payment of taxes
9 withheld.
10 (a) General rule.-Every employer withholding tax under this
11 chapter shall pay over to the department or to a depository
12 designated by it the tax required to be deducted and withheld
13 under this chapter as follows:
14 (1) Where the aggregate amount required to be deducted
15 and withheld by any employer for each quarterly period can
16 reasonably be expected to be less than $300, the employer
17 shall file a return and pay the tax on or before the last day
18 for filing a quarterly return under section 1518 (relating to
19 time for filing employers' returns).
20 (2) Where the aggregate amount required to be deducted
21 and withheld by any employer for each quarterly period can
22 reasonably be expected to be $300 or more but less than
23 $1,000, the employer shall pay the tax monthly, on or before
24 the 15th day of the month succeeding the months of January to
25 November, inclusive, and on or before the last day of January
26 following the month of December.
27 (3) Where the aggregate amount required to be deducted
28 and withheld by any employer for each quarterly period can
29 reasonably be expected to be $1,000 or more, the employer
30 shall pay the tax semimonthly, within three banking days
20050S0854B2207 - 173 -
1 after the close of the semimonthly period.
2 (b) Notice to defaulting employers.--Notwithstanding
3 anything in this section to the contrary, whenever any employer
4 fails to deduct or truthfully account for or pay over the tax
5 withheld or file returns as prescribed by this chapter, the
6 department may serve a notice on such employer requiring the
7 employer to withhold taxes which are required to be deducted
8 under this chapter and deposit such taxes in a bank approved by
9 the department in a separate account in trust for and payable to
10 the department and to keep the amount of the tax in the account
11 until payment over to the department. The notice shall remain in
12 effect until a notice of cancellation is served on the employer
13 by the department.
14 § 1520. Employer's liability for withheld taxes.
15 Every employer required to deduct and withhold tax under this
16 chapter shall be liable for the tax. For purposes of assessment
17 and collection, any amount required to be withheld and paid over
18 to the department and any additions to tax penalties and
19 interest with respect thereto shall be considered the tax of the
20 employer. All taxes deducted and withheld from employees
21 pursuant to this chapter or under color of this chapter shall
22 constitute a trust fund for the Commonwealth and shall be
23 enforceable against the employer, the employer's representative
24 or any other person receiving any part of the fund.
25 § 1521. Employer's failure to withhold.
26 If an employer fails to deduct and withhold tax as prescribed
27 in this act and thereafter the tax against which the tax may be
28 credited is paid, the tax which was required to be deducted and
29 withheld shall not be collected from the employer, but the
30 employer shall not be relieved of the liability for any penalty,
20050S0854B2207 - 174 -
1 interest or additions to the tax imposed with respect to the
2 failure to deduct and withhold.
3 § 1521.1. Bulk and auction sales, transfers and notice.
4 An employer who is liable for filing returns in accordance
5 with the provisions of this subchapter and either sells or
6 causes to be sold at auction or sells or transfers in bulk 51%
7 or more of any stock of goods, wares or merchandise of any kind,
8 fixtures, machinery, equipment, buildings or real estate held by
9 or on behalf of the employer shall be subject to the provisions
10 of section 1403 of act of April 9, 1929 (P.L.343, No.176), known
11 as The Fiscal Code.
12 § 1522. Designation of third parties to perform acts required
13 of employers.
14 In case a fiduciary, agent or other person has the control,
15 receipt, custody or disposal of, or pays the compensation of an
16 employee or a group of employees, employed by one or more
17 employers, the department may designate the fiduciary, agent, or
18 other person to perform such acts as are required of employers
19 under this chapter as the department may by regulation
20 prescribe. Except as may be otherwise prescribed by the
21 department, all provisions of this chapter which are applicable
22 to an employer shall be applicable to a fiduciary, agent or
23 other person.
24 § 1523. When withholding not required.
25 Notwithstanding any provision of this part to the contrary,
26 an employer on and after January 1, 1975, shall not be required
27 to withhold any tax upon payment of wages to an employee if such
28 employee can certify that:
29 (1) The employee incurred no personal income tax
30 liability for the preceding tax year.
20050S0854B2207 - 175 -
1 (2) The employee anticipates no liability for personal
2 income tax for the current taxable year.
3 SUBCHAPTER K
4 WITHHOLDING TAX ON SHARES ON INCOME FROM SOURCES
5 WITHIN THIS COMMONWEALTH
6 Sec.
7 1524. Nonresidents.
8 1524.1. Amount of withholding tax.
9 1524.2. Treatment of nonresident partners, members or
10 shareholders.
11 1524.3. Liability for tax, interest, penalties and additions.
12 § 1524. Nonresidents.
13 (a) General rule.--When a partnership or Pennsylvania S
14 corporation receives income from sources within this
15 Commonwealth for any taxable year and any portion of the income
16 is allocable to a nonresident partner, member or shareholder
17 thereof, the partnership or Pennsylvania S corporation shall pay
18 a withholding tax under this section at the time and in the
19 manner prescribed by the department. Notwithstanding any other
20 provision of this chapter, all such withholding tax shall be
21 paid over on or before the 15th day of the fourth month
22 following the end of the taxable year.
23 (b) Applicability.--This section shall not apply to any
24 publicly traded partnership as defined under section 7704 of the
25 Internal Revenue Code with equity securities registered with the
26 Securities and Exchange Commission under section 12 of the
27 Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a).
28 § 1524.1. Amount of withholding tax.
29 (a) General rule.--The amount of tax withheld from
30 nonresidents and the amount of the withholding tax payable under
20050S0854B2207 - 176 -
1 section 1524 (relating to nonresidents) shall be equal to the
2 income from sources within this Commonwealth of the partnership,
3 association or Pennsylvania S corporation which is allocable to
4 nonresident partners, members or shareholders multiplied by the
5 tax rate specified in section 1502(b) (relating to imposition of
6 tax).
7 (b) Exception.--There shall not be taken into account any
8 item of income, gain, loss or deduction to the extent allocable
9 to any partner, member or shareholder who is not a nonresident.
10 § 1524.2. Treatment of nonresident partners, members or
11 shareholders.
12 Each nonresident partner, member, shareholder or holder of a
13 beneficial interest shall be allowed a credit for the partner's,
14 member's, shareholder's or holder's share of the withholding tax
15 paid by the partnership, association or Pennsylvania S
16 corporation. The credit shall be allowed for the partner's,
17 member's, shareholder's or holder's taxable year in which or
18 with which the partnership, association or Pennsylvania S
19 corporation taxable year, for which the tax was paid, ends.
20 § 1524.3. Liability for tax, interest, penalties and additions.
21 If a partnership, association or Pennsylvania S corporation
22 fails to pay withholding tax as prescribed in this chapter and
23 thereafter the tax is paid, the partnership, association or
24 Pennsylvania S corporation shall not be relieved of the
25 liability for any penalty, interest or addition as a result of
26 failure to properly withhold the tax.
27 SUBCHAPTER L
28 ESTIMATED TAX
29 Sec.
30 1525. Declarations of estimated tax.
20050S0854B2207 - 177 -
1 1526. Payments of estimated tax.
2 § 1525. Declarations of estimated tax.
3 (a) General rule.--Every resident and nonresident
4 individual, trust and estate shall at the time prescribed make a
5 declaration of the individual's estimated tax for the taxable
6 year, containing such information as the department may
7 prescribe by regulations, if the individual's income, other than
8 from compensation on which tax is withheld under this chapter,
9 can reasonably be expected to exceed $8,000.
10 (b) (Reserved).
11 (c) Spouses.--A husband and wife may make a joint
12 declaration of estimated tax under this chapter as if they were
13 one taxpayer, in which case the liability with respect to the
14 estimated tax shall be joint and several. If a joint declaration
15 is made but the spouses elect to determine their taxes
16 separately, the estimated tax for such year may be treated as
17 the estimated tax of either spouse, or may be divided between
18 them, as they may elect.
19 (d) Filing deadline.--Except as otherwise provided in this
20 chapter, the date for filing a declaration of estimated tax
21 shall depend upon when the resident or nonresident individual,
22 trust or estate determines that the individual's income on which
23 no tax has been withheld under this chapter can reasonably be
24 expected to exceed $8,000 in the taxable year, as follows:
25 (1) If the determination is made on or before April 1 of
26 the taxable year, a declaration of estimated tax shall be
27 filed no later than April 15 of the taxable year.
28 (2) If the determination is made after April 1 but
29 before June 2 of the taxable year, the declaration shall be
30 filed no later than June 15 of the year.
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1 (3) If the determination is made after June 1 but before
2 September 2 of the taxable year, the declaration shall be
3 filed no later than September 15 of the year.
4 (4) If the determination is made after September 1 of
5 the taxable year, the declaration shall be filed no later
6 than January 15 of the year succeeding the taxable year.
7 (e) Farming exception.--Notwithstanding the provisions of
8 subsection (d), a declaration of estimated tax of an individual
9 having an estimated gross income from farming for the taxable
10 year which is at least two-thirds of the individual's total
11 estimated gross income for the taxable year may be filed at any
12 time on or before January 15 of the succeeding year, but if the
13 farmer files a final return and pays the entire tax by March 1,
14 the return may be considered as the individual's declaration due
15 on or before January 15.
16 (f) Estimated tax under $100.--A declaration of estimated
17 tax of an individual, trust or estate having a total estimated
18 tax for the taxable year of $100 or less may be filed at any
19 time on or before January 15 of the succeeding year under
20 regulations of the department.
21 (g) Amendment of declarations.--An individual, trust or
22 estate may amend a declaration under regulations of the
23 department.
24 (h) Special circumstances.--If on or before January 31 of
25 the year succeeding a taxable year, an individual, trust or
26 estate files the individual's return for the entire taxable year
27 for which a declaration was required to be filed within the time
28 prescribed by subsection (d)(4) and pays with the declaration
29 the full amount of the tax shown to be due on the return:
30 (1) The return shall be considered as the individual's
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1 declaration which was required to be filed no later than
2 January 15.
3 (2) The return shall be considered as the amendment
4 permitted by subsection (g) to be filed on or before January
5 15 provided the amount of the tax shown on the return is
6 greater than the amount of the estimated tax shown in a
7 declaration previously made.
8 (i) Applicability.--This chapter shall apply to:
9 (1) A taxable year other than a calendar year by the
10 substitution of the months of such fiscal year for the
11 corresponding months specified in this section.
12 (2) An individual, trust or estate having a taxable year
13 of less than twelve months in accordance with procedures
14 prescribed in regulations of the department.
15 (j) (Reserved).
16 (k) Definition.--For the purposes of this chapter, the term
17 "estimated tax" means the amount which an individual, trust or
18 estate estimates to be the individual's tax due under this
19 chapter for the taxable year, less the amount which he or it
20 estimates to be the sum of any credits allowable against the tax
21 under this chapter.
22 § 1526. Payments of estimated tax.
23 (a) General rule.--Subject to the provisions of section
24 1525(i)(2) (relating to declarations of estimated tax), the
25 estimated tax with respect to which a declaration is required
26 shall be paid as follows:
27 (1) If the declaration is filed on or before April 15 of
28 the taxable year, the estimated tax shall be paid in four
29 equal installments. The first installment shall be paid at
30 the time of the filing of the declaration, and the second,
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1 third and fourth installments shall be paid on or before the
2 succeeding June 15, September 15, and January 15,
3 respectively.
4 (2) If the declaration is not required to be filed on or
5 before April 15 of the taxable year and is filed after April
6 15, but before June 16 of the taxable year, the estimated tax
7 shall be paid in three equal installments. The first
8 installment shall be paid at the time of the filing of the
9 declaration, and the second and third installments shall be
10 paid on the succeeding September 15 and January 15,
11 respectively.
12 (3) If the declaration is not required to be filed on or
13 before June 15 of the taxable year and is filed after June 15
14 but before September 16 of the taxable year, the estimated
15 tax shall be paid in two equal installments. The first
16 installment shall be paid at the time of the filing of the
17 declaration, and the second shall be paid on the succeeding
18 January 15.
19 (4) If the declaration is not required to be filed on or
20 before September 15 of the taxable year and is filed after
21 September 15 of the taxable year, the estimated tax shall be
22 paid in full at the time of the filing of the declaration.
23 (5) If the declaration is not filed within the time
24 prescribed therefor, or after the expiration of any extension
25 of time therefor, paragraphs (2), (3) and (4) shall not
26 apply, and there shall be paid at the time of such filing the
27 amount of all installments of estimated tax which were due
28 and payable on or before the date the declaration was filed
29 and the remaining installments shall be paid at such times
30 and in such amounts as they would have been payable if the
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1 declaration had been filed when due.
2 (b) Farmers.--If an individual described in section 1525(e)
3 makes a declaration of estimated tax after September 15 of the
4 taxable year, but before the following March 1, the estimated
5 tax shall be paid in full at the time of the filing of the
6 declaration.
7 (c) Amended declaration.--
8 (1) If any amendment of a declaration is filed, the
9 remaining unpaid installments, if any, shall be ratably
10 increased or decreased, as the case may be, to reflect any
11 increase or decrease in the estimated tax by reason of the
12 amendment.
13 (2) If an amendment is made after September 15 of the
14 taxable year, any increase in the estimated tax by reason
15 thereof shall be paid at the time of making the amendment.
16 SUBCHAPTER M
17 RETURNS AND PAYMENT OF TAX
18 Sec.
19 1530. Returns and liability.
20 1530.1. Return of Pennsylvania S corporation.
21 1531. Returns of married individuals, deceased or disabled
22 individuals and fiduciaries.
23 1532. Time and place for filing returns and paying tax.
24 1533. Signing of returns and other documents.
25 1534. Extension of time.
26 1535. Requirements concerning returns, notices, records and
27 statements.
28 1536. Timely mailing treated as timely filing and payment.
29 1536.1. Procedure for claiming special tax provisions.
30 1536.2. Proof of eligibility.
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1 § 1530. Returns and liability.
2 (a) General rule.--On or before the date when a taxpayer's
3 Federal income tax return is due or would be due if the taxpayer
4 were required to file a Federal income tax return, under the
5 Internal Revenue Code, a tax return under this chapter shall be
6 made and filed by or for every taxpayer having income for the
7 taxable year.
8 (b) Members of the armed forces.--
9 (1) In the case of an individual serving in the armed
10 forces of the United States in an area designated by the
11 President of the United States by Executive order as a
12 "combat zone," as described in section 7508 of the Internal
13 Revenue Code, as amended, at any time during the period
14 designated by the President by Executive order as the period
15 of combatant activities in the combat zone or hospitalized as
16 a result of injury received while serving in the combat zone
17 during such time, or an individual serving in a military
18 capacity as a result of a Federal call-up to active duty or
19 civilian capacity outside the boundary of this Commonwealth
20 in support of the armed forces, the period of service in the
21 area, plus the period of qualified continuous hospitalization
22 attributable to the injury, and the next 180 days thereafter
23 shall be disregarded in determining, under this chapter, in
24 respect of any tax liability, including any interest,
25 penalty, additional amount or addition to the tax of such
26 individual:
27 (i) Whether any of the following acts were performed
28 within the time prescribed therefor:
29 (A) Filing any return of income tax, except
30 income tax withheld at source.
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1 (B) Payment of any income tax, except income tax
2 withheld at source or any installment thereof or of
3 any other liability to the Commonwealth in respect
4 thereof.
5 (C) Filing a petition for redetermination of a
6 deficiency or for review of a decision rendered by
7 the department.
8 (D) Allowance of a credit or refund of any tax.
9 (E) Filing a claim for credit or refund of any
10 tax.
11 (F) Bringing suit upon any such claim for
12 credit.
13 (G) Assessment of any tax.
14 (H) Giving or making any notice or demand for
15 the payment of any tax or with respect to any
16 liability to the Commonwealth in respect of any tax.
17 (I) Collection by the department, by levy or
18 otherwise, of the amount of any liability in respect
19 of any tax.
20 (J) Bringing suit by the Commonwealth, or any
21 officer on its behalf, in respect of any liability in
22 respect of any tax.
23 (K) Any other act required or permitted under
24 this chapter specified in regulations prescribed by
25 the department.
26 (ii) The amount of any credit or refund, including
27 interest.
28 (2) (i) The provisions of this subsection shall apply
29 to the spouse of an individual entitled to the benefits
30 of paragraph (1).
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1 (ii) This paragraph shall not be construed as
2 applying this subsection to a spouse for any taxable year
3 beginning more than one year after the date of
4 termination of combatant activities in a combat zone.
5 (3) The period of service in the area referred to in
6 this subsection shall include the period during which an
7 individual entitled to benefits under this subsection is in a
8 missing status.
9 (4) In the event that any qualified individual under
10 paragraph (1) is killed while serving in the combat zone, the
11 tax liability of that decedent for both the year of death and
12 the immediate prior year shall be waived by the Commonwealth.
13 (5) For purposes of paragraph (1), the phrase "period of
14 qualified continuous hospitalization" shall mean:
15 (i) Any hospitalization outside the United States.
16 (ii) Any hospitalization inside the United States.
17 § 1530.1. Return of Pennsylvania S corporation.
18 (a) General rule.--Every Pennsylvania S corporation shall
19 make a return for each taxable year, stating specifically:
20 (1) All items of gross income and deductions.
21 (2) The names and addresses of all persons owning stock
22 in the corporation at any time during the taxable year.
23 (3) The number of shares of stock owned by each
24 shareholder at all times during the taxable year.
25 (4) The amount of money and other property distributed
26 by the corporation during the taxable year to each
27 shareholder.
28 (5) The date of each distribution.
29 (6) Each shareholder's pro rata share of each item of
30 the corporation for the taxable year.
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1 (7) Such other information as the department may
2 require.
3 (b) Deadline for filing.--The return shall be filed on or
4 before 30 days after the date when the corporation's Federal
5 income tax return is due.
6 (c) Copy of Federal return to be included.--Every
7 Pennsylvania S corporation shall also submit to the department a
8 true copy of the income tax return filed with the Federal
9 Government at the time the return required under subsection (a)
10 is filed.
11 § 1531. Returns of married individuals, deceased or disabled
12 individuals and fiduciaries.
13 (a) General rule.--If the income tax liability of husband or
14 wife is determined on a separate return, their income tax
15 liabilities under this chapter shall be separate.
16 (b) Joint and several tax liability.--If the income tax
17 liabilities of husband and wife are determined on a joint
18 return, their tax liabilities shall be joint and several.
19 (c) When separate returns to be filed.--If either husband or
20 wife is a resident and the other is a nonresident, they shall
21 file separate tax returns under this chapter on such single or
22 separate forms as may be required by the department, in which
23 event their tax liabilities shall be separate, except as
24 provided in subsection (d), unless both elect to determine their
25 joint taxable income as if both were residents, in which event
26 their tax liabilities shall be joint and several.
27 (d) When credits permitted.--
28 (1) Subject to the provisions of paragraph (2), if
29 husband and wife file separate tax returns under this chapter
30 on a single form pursuant to subsection (b) or (c) and:
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1 (i) The sum of the payments by either spouse,
2 including withheld and estimated taxes, exceeds the
3 amount of the tax for which the spouse is separately
4 liable, then the excess may be applied by the department
5 to the credit of the other spouse if the sum of the
6 payments by the other spouse, including withheld and
7 estimated taxes, is less than the amount of the tax for
8 which the other spouse is separately liable.
9 (ii) The sum of the payments made by both spouses
10 with respect to the taxes for which they are separately
11 liable, including withheld and estimated taxes, exceeds
12 the total of the taxes due, then a refund of the excess
13 may be made payable to both spouses or, if either is
14 deceased, to the survivor.
15 (2) The provisions of this subsection shall not apply if
16 the return of either spouse includes a demand that any
17 overpayment made by that spouse shall be applied only on
18 account of that spouse's separate liability.
19 (e) Deceased individuals.--The return for any deceased
20 individual shall be made and filed by his executor,
21 administrator or other person charged with the individual's
22 property.
23 (f) Minors and individuals with disabilities.--The return
24 for an individual who is unable to make a return by reason of
25 minority or other disability shall be made and filed by the
26 individual's guardian, committee, fiduciary or other person
27 charged with the care of the individual's person or property, or
28 by the individual's duly authorized agent.
29 (g) Estates and trusts.--The return for an estate or trust
30 shall be made and filed by the fiduciary. If two or more
20050S0854B2207 - 187 -
1 fiduciaries are acting jointly, the return may be made by any
2 one of them.
3 § 1532. Time and place for filing returns and paying tax.
4 (a) General rule.--A person required to make and file a
5 return under this chapter shall, without assessment, notice or
6 demand, pay any tax due thereon to the department on or before
7 the date fixed for filing such return, determined without regard
8 to any extension of time for filing the return.
9 (b) Regulations.--The department shall prescribe by
10 regulation the place for filing and return, declaration,
11 statement, or other document required pursuant to this chapter
12 and for payment of any tax.
13 § 1533. Signing of returns and other documents.
14 (a) General rule.--Any return other than an estimated return
15 under section 1525 (relating to declaration of estimated tax),
16 statement or other document required to be made pursuant to this
17 chapter shall be signed in accordance with regulations or
18 instructions prescribed by the department.
19 (b) Partners to sign documents.--
20 (1) Any return, statement, or other document required of
21 a partnership shall be signed by one or more partners.
22 (2) The fact that a partner's name is signed to a
23 return, statement, or other document, shall be prima facie
24 evidence for all purposes that such partner is authorized to
25 sign on behalf of the partnership.
26 (c) Certification of veracity.--The making or filing of any
27 return, declaration, statement or other document or copy thereof
28 required to be made or filed pursuant to this chapter shall
29 constitute a certification by the person making or filing the
30 return, declaration, statement or other document or copy thereof
20050S0854B2207 - 188 -
1 that the statements contained therein are true and that any copy
2 filed is a true copy.
3 § 1534. Extension of time.
4 The department may, upon application, grant a reasonable
5 extension of time for filing a return, declaration, statement or
6 other document required pursuant to this chapter, on such terms
7 and conditions as it may require. Except for a taxpayer who is
8 outside the United States, no such extension for filing a
9 return, declaration, statement or other document, shall exceed
10 six months.
11 § 1535. Requirements concerning returns, notices, records and
12 statements.
13 (a) General rule.--The department may prescribe by
14 regulation for the keeping of records, the content and form of
15 returns, declarations, statements and other documents and the
16 filing of copies of Federal income tax returns and
17 determinations. The department may require any person, by
18 regulation or notice served upon such person, to make such
19 returns, render such statements, or keep such records, as the
20 department may deem sufficient to show whether or not the person
21 is liable for tax under this chapter.
22 (b) Identifying numbers required.--
23 (1) When required by regulations prescribed by the
24 department:
25 (i) Any person required under the authority of this
26 chapter to make a return, declaration, statement or other
27 document shall include in such return, declaration,
28 statement or other document such identifying number as
29 may be prescribed for securing proper identification of
30 such person.
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1 (ii) Any person with respect to whom a return,
2 declaration, statement or other document is required
3 under the authority of this chapter to make a return,
4 declaration, statement or other document with respect to
5 another person, shall request from the other person, and
6 shall include in any a return, declaration, statement or
7 other document, such identifying number as may be
8 prescribed for securing proper identification of the
9 other person.
10 (2) For purposes of this section, the department is
11 authorized to require such information as may be necessary to
12 assign an identifying number to a person.
13 (c) Partnership income.--
14 (1) Every partnership having a resident partner or
15 having any income derived from sources within this
16 Commonwealth shall make a return for the taxable year setting
17 forth all items of income, loss and deduction, and such other
18 pertinent information as the department may by regulations
19 prescribe. The return shall be filed on or before the 15th
20 day of the fourth month following the close of each taxable
21 year.
22 (2) For purposes of this subsection, "taxable year"
23 means year or period which would be a taxable year of the
24 partnership if it were subject to tax under this chapter.
25 (d) Regulations.--
26 (1) The department may prescribe regulations requiring
27 returns of information to be made and filed on or before
28 February 28 of each year as to the payment or crediting in
29 any calendar year of amounts of $10 or more to any taxpayer.
30 (2) The returns may be required of a person, including a
20050S0854B2207 - 190 -
1 lessee or mortgagor of real or personal property, fiduciary,
2 employer and any other officer and employee of this
3 Commonwealth or of any municipal corporation or political
4 subdivision of this Commonwealth, having the control,
5 receipt, custody, disposal or payment of interest, rents,
6 salaries, wages, premiums, annuities, compensations,
7 remunerations, emoluments or other fixed or determinable
8 gains, profits or income, except interest coupons payable to
9 bearer.
10 (3) A duplicate of the statement as to tax withheld on
11 compensation required to be furnished by an employer to an
12 employee shall constitute the return of information required
13 to be made under this section with respect to the
14 compensation.
15 (e) Gambling and lottery winnings.--
16 (1) Any person who is required to make a form W-2G
17 return to the Secretary of the Treasury of the United States
18 in regard to taxable gambling or lottery winnings from
19 sources within this Commonwealth shall file a copy of the
20 form with the department by March 1 of each year or, if filed
21 electronically, by March 31 of each year.
22 (2) This subsection shall apply to taxable years
23 beginning after December 31, 2003.
24 § 1536. Timely mailing treated as timely filing and payment.
25 (a) General rule.--Notwithstanding the provisions of any
26 State tax law to the contrary, whenever a report or payment of
27 all or any portion of a State tax is required by law to be
28 received by the department or other agency of the Commonwealth
29 on or before a day certain, the taxpayer shall be deemed to have
30 complied with the law if the letter transmitting the report or
20050S0854B2207 - 191 -
1 payment of such tax which has been received by the department is
2 postmarked by the United States Postal Service on or prior to
3 the final day on which the payment is to be received.
4 (b) Evidence.--For the purposes of this chapter,
5 presentation of a receipt indicating that the report or payment
6 was mailed by registered or certified mail on or before the due
7 date shall be evidence of timely filing and payment.
8 § 1536.1. Procedure for claiming special tax provisions.
9 The following procedures shall be employed for claiming the
10 special tax provisions:
11 (1) The claimant may claim the special tax provisions
12 upon the expiration of the claimant's taxable year in
13 connection with the claimant's filing of an annual return
14 under the provisions of this chapter. Notwithstanding any
15 other provisions of this chapter to the contrary, the
16 department may promulgate such rules or regulations as it may
17 deem necessary to fairly and reasonably implement the
18 provisions of this section.
19 (2) If a claimant receives income, other than
20 compensation from an employer, the claimant may claim the
21 special tax provisions in connection with the claimant's
22 filing of estimated tax returns.
23 § 1536.2. Proof of eligibility.
24 The department shall establish such rules, regulations,
25 schedules or other procedures as may be necessary for the
26 submission and establishment of proof of the eligibility of
27 persons for the special tax provisions or other matters relating
28 to the provisions of this chapter. Such procedures may include,
29 but not be limited to, the submission of requisite information
30 and certifications upon forms provided by the department,
20050S0854B2207 - 192 -
1 including such special tax return or report forms as may be
2 necessary.
3 SUBCHAPTER N
4 PROCEDURE AND ADMINISTRATION
5 Sec.
6 1537. Payment on notice and demand.
7 1538. Assessment.
8 1539. Jeopardy assessments.
9 1540. Procedure for reassessment.
10 1541. Review by Board of Finance and Revenue.
11 1542. Appeal to Commonwealth Court.
12 1543. Collection of tax.
13 1544. Collection upon failure to request reassessment,
14 review or appeal.
15 1545. Lien for tax.
16 1546. Refund or credit of overpayment.
17 1547. Restrictions on refunds.
18 1548. Limitations on assessment and collection.
19 1549. Extension of limitation period.
20 1550. Limitations on refund or credit.
21 1551. Interest.
22 1552. Additions, penalties and fees.
23 1552.1. Abatement of additions or penalties.
24 1553. Crimes.
25 1554. Rules and regulations.
26 1555. Examination.
27 1556. Cooperation with other governmental agencies.
28 1557. Appropriation for refunds.
29 § 1537. Payment on notice and demand.
30 Upon receipt of notice and demand from the department, there
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1 shall be paid the amount of any tax due under this chapter
2 stated in the notice and demand.
3 § 1538. Assessment.
4 (a) Department authority.--The department is authorized and
5 required to make the inquiries, determinations and assessments
6 of all taxes imposed by this chapter.
7 (b) Mode or time.--If the mode or time for the assessment of
8 any tax is not otherwise provided for, the department may
9 establish the same by regulations.
10 (c) Estimated assessment.--In the event that any taxpayer
11 fails to file a return required by this chapter, the department
12 may make an estimated assessment based on information available
13 of the proper amount of tax owing by the taxpayer. A notice of
14 assessment in the estimated amount shall be sent to the
15 taxpayer. The tax shall be paid within 90 days after a notice of
16 the estimated assessment has been mailed to the taxpayer, unless
17 within that period the taxpayer has filed a petition for
18 reassessment in the manner prescribed by section 1540 (relating
19 to procedure for reassessment).
20 § 1539. Jeopardy assessments.
21 (a) Jeopardy assessments, filing and notice.--If the
22 department believes that the assessment or the collection of a
23 deficiency will be jeopardized in whole or in part by delay, it
24 may mail or issue notice of its finding to the taxpayer,
25 together with a demand for immediate payment of the tax or the
26 deficiency declared to be in jeopardy including interest and
27 penalties and additions thereto, if any.
28 (b) Closing of taxable year.--If the department believes
29 that a taxpayer designs quickly to depart from this Commonwealth
30 or to remove the taxpayer's property from this Commonwealth or
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1 to conceal himself or property, or to do any other act tending
2 to prejudice or to render wholly or partly ineffectual
3 proceedings to collect the tax for the taxable year then last
4 past or the taxable year then current unless the proceedings are
5 brought without delay, the department shall declare the taxable
6 period for the taxpayer immediately terminated and shall cause
7 notice of the finding and declaration to be given the taxpayer,
8 together with a demand for immediate payment of the tax for the
9 taxable period so declared terminated and of the tax for the
10 preceding taxable year or so much of such tax as is unpaid,
11 whether or not the time otherwise allowed by law for filing
12 return and paying the tax has expired, and such taxes shall
13 thereupon become immediately due and payable.
14 (c) Jeopardy assessments and collection.--A jeopardy
15 assessment is immediately due and payable, and proceedings for
16 collection may be commenced at once. The taxpayer, however, may
17 stay collection and prevent the jeopardy assessment from
18 becoming final by filing, within ten days after the date of the
19 notice of jeopardy assessment, a petition for reassessment,
20 notwithstanding the provisions of section 1540 (relating to
21 procedure for reassessment) to the contrary, accompanied by a
22 bond or other security in such amounts as the department may
23 deem necessary, not exceeding double the amount, including
24 interest and penalties and additions thereto, as to which the
25 stay is desired.
26 (d) Jeopardy assessment, when final.--If a petition for
27 reassessment, accompanied by bond or other security is not filed
28 within the ten-day period, the assessment becomes final.
29 (e) Jeopardy assessments and hearing.--If the taxpayer has
30 so requested in the petition of the taxpayer, the department
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1 shall grant the taxpayer or the taxpayer's authorized
2 representative an oral hearing.
3 (f) Jeopardy assessments, action on petition for
4 reassessment.--The department shall consider the petition for
5 reassessment and notify the taxpayer of its decision on the
6 petition. The department's decision as to the validity of the
7 jeopardy assessment shall be final, unless the taxpayer within
8 90 days after notification of the department's decision files a
9 petition for review authorized under section 1541 (relating to
10 review by Board of Finance and Revenue).
11 (g) Jeopardy assessments and presumptive evidence of
12 jeopardy.--In any proceeding brought to enforce payment of taxes
13 made due and payable by this section, the belief of the
14 department under subsection (a) whether made after notice to the
15 taxpayer or not, is for all purposes presumptive evidence that
16 the assessment or collection of the tax or the deficiency was in
17 jeopardy. A certificate of the department of the mailing or
18 issuing of the notices specified in this section is presumptive
19 evidence that the notices were mailed or issued.
20 § 1540. Procedure for reassessment.
21 Promptly after the date of an assessment by the department,
22 the department shall send by mail a copy of the assessment to
23 the person against whom it was made. Within 90 days after the
24 date upon which the copy of the assessment was mailed, the
25 person may file with the department a petition for reassessment
26 of the tax. Each petition for reassessment shall state
27 specifically the reasons which the petitioner believes entitled
28 the petitioner to such reassessment, and it shall be supported
29 by affidavit that it is not made for the purpose of delay and
30 that the facts set forth in the petition are true. It shall be
20050S0854B2207 - 196 -
1 the duty of the department, within six months after receiving a
2 petition for reassessment, to dispose of the petition for
3 reassessment. Notice of the action taken upon any petition for
4 reassessment shall be given to the petitioner promptly
5 thereafter.
6 § 1541. Review by Board of Finance and Revenue.
7 Within 90 days after the date of mailing of notice by the
8 department of the action taken on any petition for reassessment
9 filed with it, the person against whom the assessment was made
10 may by petition request the Board of Finance and Revenue to
11 review the action. The failure of the department to notify the
12 petitioner of a decision within the six-month period provided
13 for by section 1540 (relating to procedure for reassessment)
14 shall act as a denial of such petition, and a petition for
15 review may be filed with the Board of Finance and Revenue within
16 120 days after written notice is mailed to petitioner that the
17 department has failed to dispose of the petition within the six-
18 month period prescribed by section 1540. Each petition for
19 review filed under this section shall state specifically the
20 reasons upon which the petitioner relies, or shall incorporate
21 by reference the petition for reassessment in which the reasons
22 must be stated. The petition shall be supported by affidavit
23 that it is not made for the purpose of delay and that the facts
24 in the petition as set forth are true. The Board of Finance and
25 Revenue shall act in disposition of petitions filed with it
26 within six months after they have been received, and in the
27 event of failure of the board to dispose of any petition within
28 six months, the action taken by the department upon the petition
29 for reassessment shall be deemed sustained. The Board of Finance
30 and Revenue may sustain the action taken on the petition for
20050S0854B2207 - 197 -
1 reassessment, or it may reassess the tax due upon any basis as
2 it shall deem according to law. Notice of the action of the
3 Board of Finance and Revenue shall be given by mail to the
4 department and to the petitioner.
5 § 1542. Appeal to Commonwealth Court.
6 Any person, or the Commonwealth, aggrieved by the decision of
7 the Board of Finance and Revenue may appeal in the manner now or
8 hereafter provided by law for appeals from decisions of the
9 board in tax cases.
10 § 1543. Collection of tax.
11 The department shall collect the taxes imposed by this
12 chapter in the manner provided by law for the collection of
13 taxes imposed by the laws of this Commonwealth.
14 § 1544. Collection upon failure to request reassessment, review
15 or appeal.
16 (a) Collection.--The department may collect any tax:
17 (1) After 90 days from the date of mailing of a copy of
18 the notice of assessment, if no petition for reassessment has
19 been filed.
20 (2) After 90 days from the date of mailing of notice of
21 the department's action thereon, if no petition for review
22 has been filed;
23 (3) Within 30 days from the date of mailing of notice of
24 the decision of the Board of Finance and Revenue upon a
25 petition for review or from the expiration of the board's
26 time for acting upon the petition, if no decision has been
27 made.
28 (4) Immediately, in all cases of judicial sales,
29 receiverships, assignments or bankruptcies.
30 (b) Defenses prescribed.--In any proceeding for the
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1 collection of the tax imposed by this chapter, the person
2 against whom the assessment was made shall not be permitted to
3 set up any ground of defense that might have been presented to
4 the department, the Board of Finance and Revenue or the
5 Commonwealth Court if the person had properly pursued his
6 administrative remedies under this chapter.
7 § 1545. Lien for tax.
8 (a) Amount and filing.--If any person liable to pay any tax
9 neglects or refuses to pay the same on the date the tax becomes
10 collectible, the amount of the tax, together with any costs that
11 may accrue in addition to the amount of the tax, shall be a lien
12 in favor of the Commonwealth against the real and personal
13 property of the person but only after the lien has been duly
14 entered and docketed of record by the prothonotary of the county
15 where the property is situated. No prothonotary shall require,
16 as a condition precedent to the entry of a lien, the payment of
17 costs incident to the entry of the lien.
18 (b) Transmittal to prothonotaries.--The department may, at
19 any time, transmit to the prothonotaries of the respective
20 counties certified copies of all liens for taxes imposed by this
21 chapter. It shall be the duty of each prothonotary receiving a
22 lien to enter and docket the same of record in the office of the
23 prothonotary, which lien shall be indexed as judgments are now
24 indexed. All such liens shall have priority to, and be fully
25 paid before, any other obligation, judgment, claim, lien or
26 estate paid and satisfied out of the judicial sale of the real
27 and personal property with which the property may subsequently
28 become charged, or for which it may subsequently become liable,
29 subject, however, to mortgage or other liens existing and duly
30 recorded at the time the tax lien is recorded, except the cost
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1 of sale and of the writ upon which it is made and real estate
2 taxes imposed or assessed upon the property. A writ of execution
3 may directly issue upon such lien; however, not less than ten
4 days before issuance of any execution on the lien, notice of the
5 filing and effect of the lien shall be sent by certified mail to
6 the taxpayer at the taxpayer's last known post office address.
7 The lien shall have no effect upon any stock of goods, ware or
8 merchandise regularly sold or leased in the ordinary course of
9 business by the person against whom the lien had been entered,
10 unless and until a writ of execution has been issued and a levy
11 made upon the stock of goods, wares and merchandise.
12 (c) Prothonotary.--Any willful failure of any prothonotary
13 to carry out any duty imposed upon the prothonotary by this
14 section shall be a misdemeanor and, upon conviction, the
15 offender shall be sentenced to pay a fine of not more than
16 $1,000 and cost of prosecution, or to imprisonment for not more
17 than one year, or both.
18 § 1546. Refund or credit of overpayment.
19 (a) Credit and refund.--In the case of any payment of tax
20 not due under this chapter, the department may credit the amount
21 of the overpayment against any liability in respect of the tax
22 imposed by this chapter on the part of the person who made the
23 overpayment and shall refund any balance to the person.
24 (b) Regulations.--The department is authorized to prescribe
25 regulations providing for the crediting against the estimated
26 tax for any taxable year of the amount determined to be an
27 overpayment of the tax for a preceding taxable year.
28 (c) Credit against installment.--If the taxpayer has paid as
29 an installment of estimated tax more than the correct amount of
30 the installment, the overpayment shall be credited against the
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1 unpaid installments, if any. If the amount paid, whether or not
2 on the basis of installments, exceeds the amount determined to
3 be the correct amount of the tax, the overpayment shall be
4 credited or refunded as provided in subsection (a) or (b).
5 § 1547. Restrictions on refunds.
6 No credit or refund shall be made under section 1546
7 (relating to refund or credit of overpayment) without the
8 approval of the Board of Finance and Revenue, except credits or
9 refunds as arise:
10 (1) By reason of the overpayment of an installment of
11 estimated tax.
12 (2) Upon reassessment or upon the filing of a final
13 return or amended final return showing any overpayment of
14 tax.
15 § 1548. Limitations on assessment and collection.
16 (a) Time.--The amount of any tax imposed by this chapter
17 shall be assessed within three years after the return is filed.
18 For the purposes of this subsection and subsection (b), a return
19 filed before the last day prescribed for the filing thereof, or
20 before the last day of any extension of time for the filing
21 thereof, shall be considered as filed on the last day.
22 (b) Omission.--If the taxpayer omits from income an amount
23 properly includable in income which is in excess of 25% of the
24 amount of income stated in the return, the tax may be assessed
25 at any time within six years after the return was filed.
26 (c) Return not filed.--Where no return is filed, or if a
27 taxpayer shall fail, when required, to file an amended return,
28 the amount of the tax due may be assessed at any time.
29 (d) False or fraudulent return.--Where the taxpayer files a
30 false or fraudulent return with intent to evade the tax imposed
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1 by this chapter, the amount of tax due may be assessed at any
2 time.
3 (e) Assessment.--The department may, within three years of
4 the granting of any refund or credit or within the period in
5 which an assessment or reassessment could have been filed by the
6 department with respect to the taxable period for which the
7 refund was granted, whichever period shall last occur, file an
8 assessment to recover any refund or part thereof or credit or
9 part thereof which was erroneously made or allowed.
10 § 1549. Extension of limitation period.
11 Notwithstanding section 1548 (relating to limitations on
12 assessment and collection), where, before the expiration of the
13 period prescribed in section 1548 a taxpayer has consented in
14 writing that the period be extended, the amount of tax due may
15 be assessed at any time within the extended period. The period
16 so extended may be further extended by subsequent consents in
17 writing made before the expiration of the extended period.
18 § 1550. Limitations on refund or credit.
19 Any application for refund must be filed with the department
20 under section 3003.1 of the Tax Reform Code.
21 § 1551. Interest.
22 (a) Interest due.--If any amount of tax imposed by
23 Subchapter B (relating to imposition of tax) is not paid on or
24 before the last date prescribed for payment, interest on the
25 amount at the rate established pursuant to section 806 of the
26 act of April 9, 1929 (P.L.343, No.176), known as The Fiscal
27 Code, shall be paid for the period from the last date to the
28 date paid. The last date prescribed for payment shall be
29 determined without regard to any extension of time for filing
30 the return. This section shall not apply to any failure to pay
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1 estimated tax.
2 (b) Underpayment.--If any amount of tax required to be
3 withheld by an employer and paid to the department is not paid
4 by the due date prescribed under section 1519 (relating to
5 monthly, semimonthly and quarterly payment of taxes withheld),
6 interest on the amount at the rate established under section 806
7 of The Fiscal Code shall be paid from that date for the period
8 of underpayment.
9 § 1552. Additions, penalties and fees.
10 (a) Failure to file.--In case of failure to file any return
11 required under this chapter on the date prescribed for filing,
12 determined with regard to any extension of time for filing,
13 unless it is shown that the failure is due to reasonable cause
14 and not due to willful neglect, there shall be added to the
15 amount required to be shown as tax on the return 5% of the
16 amount of the tax if the failure is for not more than one month,
17 with an additional 5% for each additional month or fraction of a
18 month during which the failure continues, not exceeding 5%, in
19 the aggregate, but in no case shall the amount added be less
20 than $5. The amount of tax required to be shown on the return
21 shall, for purposes of computing the additions for the first
22 month, be reduced by the amount of any part of the tax which is
23 paid on or before the date prescribed for payment of the tax and
24 by the amount of any credit against the tax which may be claimed
25 on the return. The amount of tax required to be shown on the
26 return shall, for purposes of computing the addition for any
27 subsequent month, be reduced by the amount of any part of the
28 tax which is paid by the beginning of the subsequent month and
29 by the amount of any credit against the tax which may be claimed
30 on the return.
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1 (b) Subchapter C taxes.--
2 (1) If any part of any underpayment of any tax imposed
3 by Subchapter C (relating to estates and trusts) is due to
4 negligence or intentional disregard of rules and regulations,
5 but without intent to defraud, there shall be added to the
6 tax an amount equal to 5% of the underpayment.
7 (2) If any part of any underpayment of any tax imposed
8 by Subchapter C is due to negligence or intentional disregard
9 of rules and regulations, but without intent to defraud, and
10 the underpayment is from a taxpayer omitting from income an
11 amount properly includable in income which is in excess of
12 25% of the amount of income stated on the taxpayer's return,
13 there shall be added to the tax an amount equal to 25% of the
14 underpayment.
15 (c) Fraud.--If any part of any underpayment of tax required
16 under this chapter to be shown on a return is due to fraud,
17 there shall be added to the tax an amount equal to 50% of the
18 underpayment. This amount shall be in lieu of any amount
19 determined under subsection (b) or (h).
20 (d) Underpayment of estimated tax.--
21 (1) If any taxpayer fails to pay all or any part of an
22 installment of estimated tax, the taxpayer shall be deemed to
23 have made an underpayment of estimated tax. There shall be
24 added to the tax for the taxable year an amount at the rate
25 established pursuant to section 806 of the act of April 9,
26 1929 (P.L.343, No.176), known as The Fiscal Code, upon the
27 amount of the underpayment for the period of the underpayment
28 but not beyond the 15th day of the fourth month following the
29 close of the taxable year. The amount of the underpayment
30 shall be the excess of the amount of the installment which
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1 would be required to be paid if the estimated tax were equal
2 to 90% of the tax or two-thirds in the case of an individual
3 described in section 1525(e) (relating to declarations of
4 estimated tax), shown on the return for the taxable year or,
5 if no return was filed, of the tax for the year, over the
6 amount, if any, of the installments paid on or before the
7 last day prescribed for payment. No underpayment shall be
8 deemed to exist with respect to an installment otherwise due
9 on or after the taxpayer's death or, in the case of a
10 decedent's estate or a trust created by the decedent to
11 receive the residue of the decedent's estate, for a period of
12 two years after the decedent's death.
13 (2) No addition to tax shall be imposed if the total
14 amount of all payments of estimated tax made on or before the
15 last date prescribed for the payment of the installment
16 equals or exceeds the lesser of:
17 (i) the amount which would have been required to be
18 paid on or before the date if the estimated tax were an
19 amount equal to the tax computed, at the rates applicable
20 to the taxable year, but otherwise on the basis of the
21 facts shown on the taxpayer's return for, and the law
22 applicable to, the preceding taxable year; or
23 (ii) an amount equal to 90% of the tax computed, at
24 the rates applicable to the taxable year, on the basis of
25 the actual income for the months in the taxable year
26 ending before the month in which the installment is
27 required to be paid, or, in the case of a trust or
28 estate, an amount equal to 90% of the applicable
29 percentage of the tax for the taxable year as determined
30 pursuant to section 6654(d)(2)(C)(ii) of the Internal
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1 Revenue Code, as amended, at rates applicable to the
2 taxable year, computed on an annualized basis in
3 accordance with United States Treasury regulations, based
4 upon the actual income for the months of the taxable year
5 ending with the last day of the second preceding month
6 prior to the month in which the installment is required
7 to be paid.
8 (e) Failure to collect or account for tax.--Any person
9 required to collect, account for and pay over any tax imposed by
10 this chapter who willfully fails to collect the tax or
11 truthfully account for and pay over the tax, or willfully
12 attempts in any manner to evade or defeat any the tax or the
13 payment thereof, shall, in addition to other penalties provided
14 by law, be liable to a penalty equal to the total amount of the
15 tax evaded or not collected or not accounted for and paid over.
16 No penalty shall be imposed under subsection (b), (c) or (h) for
17 any offense to which this subsection is applicable. The term
18 "person" as used in this subsection includes an officer or
19 employee of a corporation, or a member or employe of a
20 partnership, who as such officer, employe or member is under a
21 duty to perform the act in respect of which the violation
22 occurs.
23 (f) Failure to furnish statement; false or fraudulent
24 statement.--
25 (1) Any person required under the provisions of section
26 1517 (relating to information statement) to furnish a
27 statement to an employee who willfully furnishes a false or
28 fraudulent statement, or who willfully fails to furnish a
29 statement in the manner, at the time, and showing the
30 information required under section 1517 and the regulations
20050S0854B2207 - 206 -
1 prescribed under section 1517, shall, for each failure, be
2 subject to a penalty of $50 for each employee.
3 (2) Any person required by regulation to furnish an
4 information return who furnishes a false or fraudulent return
5 shall for each failure be subject to a penalty of $250.
6 (3) Every Pennsylvania S corporation required to file a
7 return with the department under the provisions of section
8 1530.1 (relating to return of Pennsylvania S corporation) who
9 furnishes a false or fraudulent return or who fails to file
10 the return in the manner and at the time required under
11 section 1530.1 shall be subject to a penalty of $250 for each
12 failure.
13 (h) Underpayment by employer.--If any amount of tax required
14 to be withheld by an employer and paid over to the department
15 under section 1519 (relating to monthly, semimonthly and
16 quarterly payment of taxes withheld) is not paid on or before
17 the due date prescribed for filing the quarterly return under
18 section 1518 (relating to time for filing employers' returns),
19 determined without regard to an extension of time for filing,
20 there shall be added to the tax and paid to the department each
21 month 5% of the underpayment for each month or fraction of the
22 month from the due date, for the period from the due date to the
23 date paid, but the underpayment shall, for purposes of computing
24 the addition for any month, be reduced by the amount of any part
25 of the tax which is paid by the beginning of that month. The
26 total of the additions shall not exceed 50% of the amount of tax
27 required to be shown on the return reduced by the amount of any
28 part of the tax which is paid by the return due date and by the
29 amount of any credit against the tax which may be claimed on the
30 return.
20050S0854B2207 - 207 -
1 (i) Incorrect information.--If any individual, estate or
2 trust files what purports to be a return required under section
3 1530 (relating to returns and liability) but which does not
4 contain information on which the substantial correctness of the
5 self-assessment may be judged, or contains information that on
6 its face indicates that the self-assessment is substantially
7 incorrect and the self-assessment is due to a position which is
8 frivolous or due to a desire, which appears on the purported
9 return, to delay or impede the administration of Pennsylvania
10 income tax laws, then the individual, estate or trust shall pay
11 a penalty of $500. The penalty imposed by this subsection shall
12 be in addition to any other penalty provided by law.
13 (j) Underpayment by partnership, association or Pennsylvania
14 S corporation.--If any amount of tax required to be withheld by
15 a partnership, association or Pennsylvania S corporation and
16 paid over to the department under section 1524 (relating to
17 nonresidents) is not paid on or before the date prescribed for
18 payment, there shall be added to the tax and paid to the
19 department each month 5% of the underpayment for each month or
20 fraction of the month from the due date, for the period from the
21 due date to the date paid, but the underpayment shall, for
22 purposes of computing the addition for any month, be reduced by
23 the amount of any part of the tax which is paid by the beginning
24 of that month. The total of such additions shall not exceed 50%
25 of the amount of the tax.
26 § 1552.1. Abatement of additions or penalties.
27 Upon the filing of a petition for reassessment or petition
28 for review by a taxpayer other than an employer, as provided by
29 this chapter, the department may waive or abate, in whole or in
30 part, additions or penalties of $300 or less imposed upon the
20050S0854B2207 - 208 -
1 taxpayer for a taxable year, where the taxpayer has established
2 that he acted in good faith with no negligence or intent to
3 defraud.
4 § 1553. Crimes.
5 (a) Tax evasion.--Any person who willfully attempts in any
6 manner to evade or defeat any tax imposed by this chapter or the
7 payment of the tax shall, in addition to other penalties
8 provided by law, commits a misdemeanor and shall, upon
9 conviction, be sentenced to pay a fine of not more than $25,000,
10 or to imprisonment for not more than two years, or both.
11 (b) Collections.--Any person required under this chapter to
12 collect, account for and pay over any tax imposed by this
13 chapter who willfully fails to collect or truthfully account for
14 and pay over such tax, shall, in addition to other penalties
15 provided by law, commits a misdemeanor, and shall, upon
16 conviction, be sentenced to pay a fine of not more than $25,000
17 or to imprisonment for not more than two years, or both.
18 (c) Payments, returns, records and information.--Any person
19 required under this chapter to pay any tax or to make a return,
20 keep any records or supply any information, who willfully fails
21 to pay the tax or make the return, keep the records or supply
22 the information at the time or times required by law or
23 regulations, shall, in addition to other penalties provided by
24 law, commits a misdemeanor and shall, upon conviction, be
25 sentenced to pay a fine of not more than $5,000, or to
26 imprisonment for not more than two years, or both.
27 (d) Fraud.--Any person who willfully makes and subscribes
28 any return, statement or other document which contains or is
29 verified by a written declaration that it is made under the
30 penalties of perjury and which the person does not believe to be
20050S0854B2207 - 209 -
1 true and correct as to every material matter, or willfully aids
2 or assists in, or procures, counsels or advises the preparation
3 or presentation, in connection with any matter arising under
4 this chapter, of a return, affidavit, claim or other document
5 which is fraudulent or is false as to any material matter,
6 whether or not the falsity or fraud is with the knowledge or
7 consent of the person authorized or required to present the
8 return, affidavit, claim or document, commits a misdemeanor and
9 shall, upon conviction, be sentenced to pay a fine of not more
10 than $5,000 or to imprisonment for not more than two years, or
11 both.
12 (e) Additional fraud.--Any person who willfully delivers or
13 discloses to the department any list, return, account, statement
14 or other document known by the person to be fraudulent or to be
15 false as to any material matter commits a misdemeanor and shall,
16 upon conviction, be sentenced to pay a fine of not more than
17 $5,000 or to imprisonment for not more than two years, or both.
18 (f) Confidential information.--It shall be unlawful for any
19 officer, agent or employee of the Commonwealth to divulge or to
20 make known in any manner whatever, not provided by law, except
21 for official purposes, to any person, the amount or source of
22 income, profits, losses, expenditures or any particular thereof
23 set forth or disclosed in any return, or to permit any return or
24 copy thereof or any book containing any abstract or particulars
25 thereof, to be seen or examined by any person except as provided
26 by law, and it shall be unlawful for any person to print or
27 publish in any manner whatsoever not provided by law, any return
28 or any part thereof or source of income, profits, losses or
29 expenditures appearing in any return, and any person committing
30 an offense under this subsection commits a misdemeanor and
20050S0854B2207 - 210 -
1 shall, upon conviction, be sentenced to pay a fine of not more
2 than $1,000, or to imprisonment for not more than one year, or
3 both, together with the costs of prosecution; and, if the
4 offender be an officer or employee of the Commonwealth, the
5 offender shall be dismissed from office or discharged from
6 employment.
7 (g) Production of documents.--Notwithstanding subsection
8 (f), it shall be lawful for any officer or employee of the
9 Commonwealth having custody of returns to produce them or
10 evidence of anything contained in them in any action or
11 proceeding in any court on behalf of the department under the
12 provisions of this chapter to which it is a party, or on behalf
13 of any party to any action or proceeding under the provisions of
14 this chapter, when the returns or facts shown thereby are
15 directly involved in the action or proceeding, in either of
16 which events the court may require the production of and may
17 admit in evidence so much of the returns or the facts shown
18 thereby as are pertinent to the action or proceeding and no
19 more. Nothing in this subsection shall be construed to prohibit
20 the delivery to a taxpayer or the taxpayer's authorized
21 representative of a certified copy of any return filed in
22 connection with his tax, nor to prohibit the publication of
23 statistics so classified as to prevent the identification of
24 particular returns and the items thereof or the inspection by
25 the Attorney General or other legal representatives of the
26 Commonwealth of the return of any taxpayer who shall bring
27 action to review the tax based thereon or against whom an action
28 or proceeding has been instituted for the collection or recovery
29 of the tax imposed by this chapter. Nothing in this chapter
30 shall be construed to prohibit the delivery to the Pennsylvania
20050S0854B2207 - 211 -
1 Higher Education Assistance Agency of a certified copy or
2 extract of any State income tax return requested by the agency
3 for use in determining the eligibility of applicants for State
4 grants, when the executive director of the agency certifies that
5 the agency has in its possession a statement signed by the
6 applicant and the applicant's parent, parents, guardian or
7 guardians, as the case may be, authorizing the agency to obtain
8 a certified copy or extract of any State income tax return from
9 the department.
10 § 1554. Rules and regulations.
11 The department is hereby charged with the enforcement of the
12 provisions of this chapter, and is hereby authorized and
13 empowered to prescribe, adopt, promulgate and enforce rules and
14 regulations relating to any matter or thing pertaining to the
15 administration and enforcement of the provisions of this chapter
16 and the collection of taxes imposed by this chapter.
17 § 1555. Examination.
18 The department, or any agent authorized in writing by it, is
19 hereby authorized to examine the books, papers and records of
20 any taxpayer or supposed taxpayer, and to require the production
21 of a copy of his return as made to and filed with the Federal
22 Government, if one was so made and filed in order to verify the
23 accuracy of any return made, or if no return was made, to
24 ascertain and assess the tax imposed by this chapter. The
25 taxpayer or supposed taxpayer is hereby directed and required to
26 give to the department or its duly authorized agent the means,
27 facilities and opportunity for the examinations and
28 investigations as are hereby provided and authorized. The
29 department is hereby authorized to examine any person under oath
30 concerning any income which was or should have been returned for
20050S0854B2207 - 212 -
1 taxation, and to this end may compel the production of books,
2 papers and records and the attendance of all persons, whether as
3 parties or witnesses, whom it believes have knowledge of such
4 income. The procedure for such hearing or examination shall be
5 the same as that provided by the act of April 9 1929 (P.L.343,
6 No.176), known as The Fiscal Code, relating to inquisitorial
7 powers of fiscal officers.
8 § 1556. Cooperation with other governmental agencies.
9 (a) Cooperation.--Notwithstanding the provisions of section
10 1553(f) (relating to crimes), the department may permit the
11 Commissioner of Internal Revenue Service of the United States,
12 or the proper officer of any political subdivision of this
13 Commonwealth or of any other state imposing tax based upon the
14 incomes of individuals, or the authorized representative of the
15 officer, to inspect the tax returns of any taxpayer, or may
16 furnish to the officer or the officer's authorized
17 representative an abstract of the return of income of any
18 taxpayer, or supply the officer with information concerning any
19 item of income contained in any return of any taxpayer. The
20 permission shall be granted or the information furnished to the
21 officer or the officer's representative only if the statutes of
22 the United States or of such other state, as the case may be,
23 grant substantially similar privileges to the proper officer of
24 the Commonwealth charged with the administration of the personal
25 income tax law of this Commonwealth. An officer or authorized
26 agent of any county imposing a personal property tax shall be
27 furnished the following information from the returns upon
28 payment to the department of the cost of collecting and
29 reproducing the requested information:
30 (1) Name, address and Social Security number of the
20050S0854B2207 - 213 -
1 taxpayer.
2 (2) If the taxpayer has reported dividends or interest.
3 (b) Agreement.--The department may enter into an agreement
4 with the taxing authorities of any state which imposes a tax on
5 or measured by income to provide that compensation paid in the
6 state to residents of this Commonwealth shall be exempt from the
7 tax. In that case any compensation paid in this Commonwealth to
8 residents of the other state shall be exempt from Pennsylvania
9 personal income tax. The department, in such agreements, may
10 provide for reciprocal withholding, employer liability, exchange
11 of information and all other matters relating to cooperation
12 between the states.
13 § 1557. Appropriation for refunds.
14 So much of the proceeds of the tax imposed by this chapter as
15 shall be necessary for the payment of refunds, enforcement or
16 administration under this chapter is hereby appropriated for
17 such purposes.
18 SUBCHAPTER O
19 MISCELLANEOUS PROVISIONS
20 Sec.
21 1558. Constitutional construction.
22 1559. Saving clause and limitations.
23 1560. Transfer to Property Tax Relief Fund.
24 § 1558. Constitutional construction.
25 In addition to the provisions relating to legislative intent
26 contained in section 1503(b) (relating to classes of income), if
27 any word, phrase, clause, sentence, sections or provision of
28 this chapter is for any reason held to be unconstitutional, the
29 decision of the court shall not affect or impair any of the
30 remaining provisions of this chapter. It is hereby declared as
20050S0854B2207 - 214 -
1 the legislative intent that this chapter would have been adopted
2 had the unconstitutional word, phrase, clause, sentence, section
3 or provision thereof not been included.
4 § 1559. Saving clause and limitations.
5 (a) General rule.--Notwithstanding anything contained in any
6 law to the contrary, including but not limited to the provisions
7 of the act of August 5, 1932 (Sp.Sess., P.L.45, No.45), referred
8 to as the Sterling Act, the validity of any ordinance or part of
9 any ordinance or any resolution or part of any resolution, and
10 any amendments or supplements thereto now or hereafter enacted
11 or adopted by any political subdivision of this Commonwealth for
12 or relating to the imposition, levy or collection of any tax,
13 shall not be affected or impaired by anything contained in this
14 chapter, except as hereinafter provided in subsection (b).
15 (b) Cities of the first class.--
16 (1) Notwithstanding the provisions subsection (a) to the
17 contrary, any rate of tax imposed by ordinance of a city of
18 the first class pursuant to the Sterling Act on salaries,
19 wages, commissions, compensation or other income received or
20 to be received for work done or services performed within a
21 city of the first class by persons who are not legal
22 residents of the city, shall not, except as provided, in this
23 section exceed the tax imposition rate of 4.3125% for the tax
24 year 1977 or for any tax year thereafter.
25 (2) In the event such city by ordinance imposes a tax
26 rate on residents or nonresidents in excess of the tax rate
27 under paragraph (1) on the income categories enumerated in
28 this chapter, the provisions of the ordinance imposing the
29 tax rate increase on income of persons who are legal
30 residents of the city of the first class, shall be deemed
20050S0854B2207 - 215 -
1 valid and legally effective within the meaning and
2 application of subsection (a). However, the provisions of the
3 ordinance imposing a tax rate in excess of 4.3125% with
4 respect to persons who are not legal residents of the city
5 shall be deemed suspended and without any validity to the
6 extent that the tax rate exceeds the tax rate of 4.3125% on
7 income of nonresidents. The excess tax rate provisions shall
8 remain suspended and without any validity until such date as
9 the city of the first class, by ordinance, imposes a rate of
10 tax on income of both legal residents or nonresidents of the
11 city in excess of the tax rate imposition of 5.75% per year.
12 In such case the General Assembly hereby declares such
13 suspension to be removed and the tax rate valid as to
14 nonresidents, provided, however, that such suspension is
15 removed and the rate deemed valid only to the extent the tax
16 rate imposed on income of the nonresidents does not exceed
17 75% of the tax rate imposed by ordinance per year on the
18 income of legal residents of such city. It is the intention
19 of the General Assembly by this subsection to impose certain
20 terms and conditions with respect to the validity and legal
21 effectiveness of the Sterling Act or of any ordinance of the
22 city of the first class enacted pursuant thereto which
23 imposes a tax on the income of nonresidents of the city.
24 (3) Notwithstanding the suspension provisions set forth
25 in this section, each city of the first class which imposes a
26 tax pursuant to the Sterling Act shall, by ordinance direct
27 every employer maintaining an office or transacting business
28 within the city and making payment of compensation to a
29 resident individual or to a nonresident individual taxpayer
30 performing services on behalf of such employer within such
20050S0854B2207 - 216 -
1 city, shall deduct and withhold from such compensation for
2 each payroll period a tax computed in such manner as to
3 result, so far as practicable, in withholding from the
4 employee's compensation during each calendar year an amount
5 substantially equivalent to the tax reasonably estimated to
6 be due for such year with respect to the compensation. The
7 method of determining the amount to be withheld shall be to
8 withhold the highest amount of tax imposed with provision in
9 the ordinance to provide refunds of the excess tax withheld
10 to qualified nonresident taxpayers within four months of the
11 end of each calendar year.
12 (4) In the event that all or any part of the provisions
13 of subsection (b) are declared by a court to be
14 unconstitutional, it shall be the duty of the court to
15 construe the remaining provisions of this chapter in
16 accordance with section 1558 (relating to constitutional
17 construction).
18 (c) Employer duties.--
19 (1) Every employer having a place of business within
20 this Commonwealth who employs one or more persons who are
21 residents of a city of the first class shall, within 30 days
22 after becoming such an employer, register with the revenue
23 commissioner of a city of the first class the employer's name
24 and address and other information as the revenue commissioner
25 may require.
26 (2) Every employer having a place of business within
27 this Commonwealth who employs one or more persons who are
28 residents of a city of the first class shall deduct from the
29 salary, wages, commissions or compensation due that person,
30 at the time of payment thereof, the tax imposed by the city
20050S0854B2207 - 217 -
1 of the first class on any salary, wage, commission or other
2 compensation due that employee.
3 (3) Employers required to withhold taxes under this
4 subsection shall calculate the amount of salary, wages,
5 commissions and compensation of employees as determined under
6 the classes of income set forth in section 1503 (relating to
7 classes of income).
8 (4) Every employer employing one or more persons who are
9 residents of a city of the first class who pay any tax
10 imposed under this chapter shall file a return and pay to the
11 revenue commissioner the amount of taxes deducted as provided
12 under paragraph (3). The return shall be on a form or forms
13 furnished by the revenue commissioner and shall set forth the
14 names and residences of each employee of that employer during
15 all or any part of the period covered by the return, the
16 amounts of salaries, wages, commissions or other compensation
17 earned during such period by each employee, together with
18 such other information as the revenue commissioner may
19 require.
20 (5) The employer shall remit the return and the total
21 tax deducted in accordance with time frames established by
22 section 1519 (relating to monthly, semi-monthly and quarterly
23 payment of taxes withheld).
24 (6) Annually, on or before February 28, every employer
25 who has filed returns of tax withheld and remitted the tax
26 through the year shall be required to file an Employer's
27 Annual Reconciliation of Wage Tax Withheld, along with a copy
28 of Form W-2 of the Internal Revenue Service for each
29 employee, other listings or electronic data processing tapes,
30 setting forth the following information:
20050S0854B2207 - 218 -
1 (i) name and address of employer;
2 (ii) employer's Federal identification number;
3 (iii) full name and residence address of each
4 employee;
5 (iv) employee's Social Security number;
6 (v) total wages paid during the year before any
7 deductions; and
8 (vi) employer's city account number.
9 (7) Employers or their designated agents required to
10 file with the revenue commissioner under this subsection
11 shall not be required by the revenue commissioner to be
12 bonded. Employer liability for taxes withheld under this
13 subsection shall be the same as provided in sections 1520
14 (relating to employer's liability for withheld taxes) and
15 1521 (relating to employer's failure to withhold).
16 (8) If an employer fails to deduct and withhold tax as
17 prescribed in this subsection, it shall not relieve the
18 employee from payment of such tax where payment cannot, for
19 any reason, be obtained from the employer.
20 § 1560. Transfer to Property Tax Relief Fund.
21 Within 30 days of the close of any calendar month, 6.687% of
22 the taxes received in the previous month under this chapter
23 shall be transferred to the Property Tax Relief Fund.
24 PART II-A
25 TAX RELIEF
26 Chapter
27 21. Homeowner Property Tax Relief
28 CHAPTER 21
29 HOMEOWNER PROPERTY TAX RELIEF
30 Subchapter
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1 A. General Provisions
2 B. Formula
3 C. School District Homestead and Farmstead Exclusion
4 D. Debt
5 SUBCHAPTER A
6 GENERAL PROVISIONS
7 Sec.
8 2101. Scope.
9 2102. Definitions.
10 § 2101. Scope.
11 This chapter relates to the allocation of State funds for
12 homestead and farmstead property tax reductions.
13 § 2102. Definitions.
14 The following words and phrases when used in this chapter
15 shall have the meanings given to them in this section unless the
16 context clearly indicates otherwise:
17 "Allocation maximum." The greater of the following:
18 (1) A numerical value of 0.50.
19 (2) Upon certification by the secretary under section
20 2111(b) (relating to certification) that the amount to be
21 transferred to the fund under 4 Pa.C.S. § 1408(e) (relating
22 to transfers from State Gaming Fund) is equal to or greater
23 than $800,000,000, a numerical value of 0.60.
24 "Allocation minimum." The greater of the following:
25 (1) A numerical value of 0.40.
26 (2) Upon certification by the secretary under section
27 2111(b) (relating to certification) that the amount to be
28 transferred to the fund under 4 Pa.C.S. § 1408(e) (relating
29 to transfers from State Gaming Fund) is equal to or greater
30 than $800,000,000, a numerical value of 0.45.
20050S0854B2207 - 220 -
1 "Assessor." The chief assessor of a county or the equivalent
2 officer in a home rule county, a city of the third class or a
3 city of the first class, which performs its own assessments of
4 real property.
5 "Average daily membership." As used in the act of March 10,
6 1949 (P.L.30, No.14), known as the Public School Code of 1949.
7 "Department." The Department of Education of the
8 Commonwealth.
9 "Equalized millage." The term shall have the same usage as
10 defined in section 2501(9.2) of the act of March 10, 1949
11 (P.L.30, No.14), known as the Public School Code of 1949.
12 "Farmstead." As defined in 53 Pa.C.S. § 8582 (relating to
13 definitions).
14 "Farmstead property." As defined in 53 Pa.C.S. § 8582
15 (relating to definitions).
16 "Fund." The Property Tax Relief Fund.
17 "Homestead." As defined in 53 Pa.C.S. § 8401 (relating to
18 definitions).
19 "Homestead property." As defined in 53 Pa.C.S. § 8401
20 (relating to definitions).
21 "Real property tax." The total dollar value of real property
22 taxes paid by property owners in a school district determined by
23 adding the real property taxes collected by, or on behalf of,
24 the school district plus all State allocations received pursuant
25 to this chapter.
26 "Real property tax liability." The assessed value of the
27 real property of the taxpayer multiplied by the millage rate of
28 the school district.
29 "Residential property tax." The dollar value of real
30 property taxes paid by residential property owners in a school
20050S0854B2207 - 221 -
1 district, determined by multiplying:
2 (1) the real property taxes collected by the school
3 district; by
4 (2) the percentage of the total property value in the
5 school district classified as residential by the State Tax
6 Equalization Board.
7 "School district." A school district of the first class,
8 first class A, second class, third class or fourth class.
9 "School district of the first class." Includes the governing
10 body of a city of the first class.
11 "Secretary." The Secretary of the Budget of the
12 Commonwealth.
13 "Taxpayer." A person required to pay a real property tax.
14 SUBCHAPTER B
15 FORMULA
16 Sec.
17 2111. Certification.
18 2112. Notification.
19 2113. State allocation.
20 § 2111. Certification.
21 (a) Initial.--By April 15, 2006, the secretary shall certify
22 the total amount of revenue that is reasonably projected to be
23 deposited into the fund for the period through June 30, 2007.
24 (b) Annual.--Beginning by April 15, 2007, and each April 15
25 thereafter, the secretary shall certify the total amount of
26 revenue that is reasonably expected to be deposited into the
27 fund during the immediately following fiscal year.
28 (c) Excess.--If the actual revenue deposited into the fund
29 in any one fiscal year exceeds the amount certified in this
30 section, any revenue in excess of projections shall remain in
20050S0854B2207 - 222 -
1 the fund and shall be included in the certification for the
2 subsequent fiscal year.
3 (d) Shortage.--If the actual revenue deposited into the fund
4 in any one fiscal year is less than the amount certified in this
5 section, the amount certified for the subsequent fiscal year
6 shall be reduced by the difference between the amount certified
7 and the actual revenue deposited.
8 § 2112. Notification.
9 By April 20, 2006, and each April 20 thereafter, the
10 secretary shall notify the department of the amount certified
11 pursuant to section 2111 (relating to certification) for
12 calculation of the allocation for each school district under
13 section 2113 (relating to State allocation).
14 § 2113. State allocation.
15 (a) Calculation.--The department shall calculate the State
16 allocation for each school district as follows:
17 (1) For the 2006-2007 fiscal year:
18 (i) Multiply the school district's 2003-2004 average
19 daily membership by the school district's 2003-2004
20 equalized millage.
21 (ii) Multiply the product under subparagraph (i) by
22 the dollar amount necessary to allocate all of the money
23 in the fund as certified under section 2111 (relating to
24 certification).
25 (iii) If the allocation under this paragraph is less
26 than the product of the residential property taxes
27 collected during the 2003-2004 fiscal year and the
28 allocation minimum for a school district, the school
29 district shall receive an additional amount so that the
30 total allocation under this paragraph is equal to the
20050S0854B2207 - 223 -
1 product of the residential property taxes collected
2 during the 2003-2004 fiscal year and the allocation
3 minimum.
4 (iv) If the allocation under this paragraph is
5 greater than the product of the residential property
6 taxes collected during the 2003-2004 fiscal year and the
7 allocation maximum for a school district, the school
8 district shall receive a total allocation equal to the
9 product of the residential property taxes collected
10 during the 2003-2004 fiscal year and the allocation
11 maximum.
12 (2) For subsequent fiscal years:
13 (i) Multiply the school district's average daily
14 membership for the third fiscal year immediately
15 preceding the fiscal year for which the allocation is
16 being made by the school district's equalized millage for
17 the third fiscal year immediately preceding the fiscal
18 year for which the allocation is being made.
19 (ii) Multiply the product under subparagraph (i) by
20 the dollar amount necessary to allocate all of the money
21 in the fund as certified under section 2111.
22 (iii) If the allocation under this paragraph is less
23 than the product of the residential property taxes
24 collected during the third fiscal year immediately
25 preceding the fiscal year for which the allocation is
26 being made and the allocation minimum for a school
27 district, the school district shall receive an additional
28 amount so that the total allocation under this paragraph
29 is equal to the product of the residential property taxes
30 collected during the third fiscal year immediately
20050S0854B2207 - 224 -
1 preceding the fiscal year for which the allocation is
2 being made and the allocation minimum.
3 (iv) If the allocation under this paragraph is
4 greater than the product of the residential property
5 taxes collected during the third fiscal year immediately
6 preceding the fiscal year for which the allocation is
7 being made and the allocation maximum for a school
8 district, the school district shall receive a total
9 allocation equal to the product of the residential
10 property taxes collected during the third fiscal year
11 immediately preceding the fiscal year for which the
12 allocation is being made and the allocation maximum.
13 (b) Notice.--By May 15, 2006, and each May 15 thereafter,
14 the department shall notify each school district of the amount
15 of the State allocation it is eligible to receive.
16 (c) Payment.--For each fiscal year commencing after June 30,
17 2005, the department shall pay from the fund to each school
18 district a State allocation, which shall be divided into two
19 payments. The first payment, which shall be equal to 80% of the
20 district's State allocation, shall be made on the last Thursday
21 of August. The second payment, which shall equal the remainder
22 of the State allocation, shall be made on the last Thursday of
23 October.
24 (d) Cities of the first class.--In accordance with 53
25 Pa.C.S. § 8584 (relating to administration and procedure), the
26 State allocation for a school district of the first class shall
27 be paid by the department to a city of the first class for use
28 by the city for homestead and farmstead exclusions.
29 SUBCHAPTER C
30 SCHOOL DISTRICT HOMESTEAD AND FARMSTEAD EXCLUSION
20050S0854B2207 - 225 -
1 Sec.
2 2121. Homestead and farmstead applications.
3 2122. Homestead and farmstead exclusion process.
4 2123. School district tax notices.
5 § 2121. Homestead and farmstead applications.
6 (a) Initial notification and application.--By October 18,
7 2004, a board of school directors shall notify by first class
8 mail the owner of each parcel of residential property within the
9 district that the owner must submit a completed application in
10 accordance with 53 Pa.C.S. § 8584(a) (relating to administration
11 and procedure). The board shall provide a second notice by first
12 class mail no later than 60 days prior to the application
13 deadline in subsection (c). Each notice shall include an
14 application to be filed with the assessor of the county where
15 the property is located, instructions for completing the
16 application and the deadline to apply. A school district may
17 limit the second notice to those owners of residential property
18 that have not responded to the initial notification.
19 (b) Annual notification.--No later than 60 days prior to the
20 application deadline in subsection (c), a board of school
21 directors shall notify by first class mail the owner of each
22 parcel of residential property within the district of the
23 existence of the school district's homestead and farmstead
24 exclusion program, the need to file an application in accordance
25 with 53 Pa.C.S. § 8584(a) in order to qualify for the program
26 and the application deadline. The annual notice shall include
27 all information required under subsection (a). A school district
28 may limit the annual notification to those owners of residential
29 property:
30 (1) who are not currently approved; or
20050S0854B2207 - 226 -
1 (2) whose approval is due to expire.
2 (c) Application deadline.--In accordance with 53 Pa.C.S. §
3 8584(b), the deadline for filing an application with the
4 assessor shall be March 1.
5 (d) Action on application.--Real property for which an
6 application has been filed by the application deadline shall be
7 deemed to be a homestead or farmstead property which is eligible
8 for a homestead or farmstead exclusion unless the assessor
9 denies the application. Denials of application by the assessor
10 and the right to appeal that decision shall be in accordance
11 with 53 Pa.C.S. § 8584(d) and (e).
12 (e) Application review and submission.--Except as set forth
13 in 53 Pa.C.S. § 8584(j), an assessor shall not require the owner
14 of a previously approved property to resubmit an application
15 more than one time every three years.
16 (f) Applicability.--The provisions of 53 Pa.C.S. § 8584(f),
17 (g), (h) and (j) shall apply to any application filed under this
18 section.
19 (g) Duties of assessors.--
20 (1) The assessor shall mail to the owner of property for
21 which an application has been submitted and approved or
22 denied under this section notice of such fact no later than
23 30 days after receipt of the application.
24 (2) The assessor shall notify the owner of any homestead
25 or farmstead property designated as such under any other
26 statute of the need, if any, to resubmit an application to
27 maintain the property's eligibility as a homestead or
28 farmstead property. Nothing in this paragraph shall prohibit
29 a county assessor from designating property previously
30 determined to be homestead or farmstead property under any
20050S0854B2207 - 227 -
1 other statute as homestead or farmstead property for purposes
2 of this section.
3 (3) The assessor shall provide each school district with
4 a certified report, as provided in 53 Pa.C.S. § 8584(i), no
5 later than May 1 of each year.
6 (h) Uniform application and instructions.--The application
7 to designate property as homestead or farmstead property shall
8 be uniform and shall include instructions for completing the
9 application. The Department of Community and Economic
10 Development shall develop the uniform application and
11 instructions to be used by county assessors and shall publish
12 the uniform application and instructions by September 20, 2004.
13 (i) Prohibitions.--A county shall not require an application
14 fee for the filing or review of an application submitted under
15 this section or under 53 Pa.C.S. § 8584(a).
16 § 2122. Homestead and farmstead exclusion process.
17 (a) Calculation.--Each year in which a school district
18 receives a local property tax reduction allocation, the school
19 district shall calculate a homestead and farmstead exclusion
20 which is equal to the lesser of:
21 (1) the maximum amount of homestead or farmstead
22 exclusion authorized by 53 Pa.C.S. § 8586 (relating to
23 limitations); or
24 (2) the amount of State allocation the district is
25 eligible to receive.
26 (b) Resolution.--The school district shall adopt a
27 resolution implementing the homestead and farmstead exclusion
28 calculated under subsection (a). The resolution shall state the
29 maximum amount of homestead or farmstead exclusion an owner of a
30 homestead or farmstead may receive. A resolution may not
20050S0854B2207 - 228 -
1 authorize a homestead or farmstead exclusion which exceeds the
2 amount authorized by 53 Pa.C.S. § 8586.
3 § 2123. School district tax notices.
4 (a) Tax notice.--School districts shall itemize the
5 homestead and farmstead exclusion on tax bills sent to homestead
6 and farmstead owners, indicating the original amount of tax
7 liability, the amount of the exclusion and the net amount of tax
8 due after the exclusion is applied. The tax bill shall be easily
9 understandable and include a notice pursuant to subsection (b).
10 (b) Notice of property tax relief.--School districts shall
11 include with the homestead or farmstead owner's tax bill a
12 notice that the tax bill includes a homestead or farmstead
13 exclusion. The notice shall at a minimum take the following
14 form:
15 NOTICE OF PROPERTY TAX RELIEF
16 Your enclosed tax bill includes a tax reduction for your
17 homestead and/or farmstead property. As an eligible homestead
18 and/or farmstead property owner, you have received tax relief
19 through a homestead and/or farmstead exclusion under a law
20 passed by the Pennsylvania General Assembly designed to
21 reduce your property taxes.
22 SUBCHAPTER D
23 DEBT
24 Sec.
25 2131. Borrowing.
26 § 2131. Borrowing.
27 Tax anticipation notes may be issued under Article XVI-A of
28 the act of April 9, 1929 (P.L.343, No.176), known as The Fiscal
29 Code, in anticipation of revenue under Chapter 12 (relating to
30 sales and use tax) which is authorized to be transferred to the
20050S0854B2207 - 229 -
1 fund under section 1281.3 (relating to transfer to Property Tax
2 Relief Fund).
3 PART III
4 POLITICAL SUBDIVISION FINANCING
5 Chapter
6 31. Public School Financing
7 CHAPTER 31
8 PUBLIC SCHOOL FINANCING
9 Subchapter
10 A. Preliminary Provisions
11 B. Taxation
12 C. Limitations
13 D. School District Budgets
14 E. Reimbursements
15 SUBCHAPTER A
16 PRELIMINARY PROVISIONS
17 Sec.
18 3101. Scope.
19 3102. Definitions.
20 § 3101. Scope.
21 This chapter relates to public school financing.
22 § 3102. Definitions.
23 The following words and phrases when used in this chapter
24 shall have the meanings given to them in this section unless the
25 context clearly indicates otherwise:
26 "Actual instruction expense." The term shall have the same
27 usage as in the act of March 10, 1949 (P.L.30, No.14), known as
28 the Public School Code of 1949.
29 "Average daily membership." The term shall have the same
30 usage as in the act of March 10, 1949 (P.L.30, No.14), known as
20050S0854B2207 - 230 -
1 the Public School Code of 1949.
2 "Board of school directors." A board of school directors of
3 a school district of the first class, first class A, second
4 class, third class or fourth class. The term shall include the
5 city council of a city of the first class for the purpose of the
6 levying and collecting of any tax in a school district of the
7 first class.
8 "Construction cost average on a square-foot basis." An
9 amount equal to $128 per square foot for an elementary school
10 building and $133 per square foot for a secondary school
11 building, as adjusted annually by the percentage increase in the
12 average of the Statewide average weekly wage and the employment
13 cost index.
14 "Department." The Department of Education of the
15 Commonwealth.
16 "Domicile." As defined in section 13 of the act of December
17 31, 1965 (P.L.1257, No.511), known as The Local Tax Enabling
18 Act.
19 "Earned income." As defined in section 13 of the act of
20 December 31, 1965 (P.L.1257, No.511), known as The Local Tax
21 Enabling Act.
22 "Election officials." The board of elections of a county.
23 "Employer." As defined in section 301 of the act of March 4,
24 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
25 "Employment Cost Index." The most recent official figures
26 for the previous 12-month period beginning July 1 and ending
27 June 30 for the Employment Cost Index Series for Elementary and
28 Secondary Schools, reported by the Bureau of Labor Statistics of
29 the Federal Department of Labor.
30 "Fund." The Property Tax Relief Fund established in the
20050S0854B2207 - 231 -
1 State Treasury.
2 "Income tax." A tax on earned income and net profits or a
3 tax on personal income imposed pursuant to this chapter.
4 "Index." As follows:
5 (1) Except as set forth in paragraph (2), the average of
6 the percentage increase in the Statewide average weekly wage
7 and the Employment Cost Index.
8 (2) For a school district with a market value/income aid
9 ratio greater than 0.400 for the school year prior to the
10 school year for which the index is calculated, the value
11 under paragraph (1) multiplied by the sum of:
12 (i) 0.75; and
13 (ii) the school district's market value/income aid
14 ratio for the school year prior to the school year for
15 which the index is calculated.
16 "Local Tax Enabling Act." The act of December 31, 1965
17 (P.L.1257, No.511), known as The Local Tax Enabling Act.
18 "Local tax revenue." The revenue from taxes actually levied
19 and assessed by a school district, including delinquent taxes.
20 The term does not include interest or dividend earnings, Federal
21 or State grants, contracts or appropriations, income generated
22 from operations or any other source which is not derived from
23 taxes levied and assessed by a school district.
24 "Market value/income aid ratio." As defined in section
25 2501(14.1) of the act of March 10, 1949 (P.L.30, No.14), known
26 as the Public School Code of 1949.
27 "Net profits." As defined in section 13 of the act of
28 December 31, 1965 (P.L.1257, No.511), known as The Local Tax
29 Enabling Act.
30 "Personal income." Income enumerated in section 303 of the
20050S0854B2207 - 232 -
1 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
2 of 1971, as determined by the Department of Revenue, subject to
3 any correction thereof for fraud, evasion or error as finally
4 determined by the Commonwealth.
5 "Personal income valuation." As defined in section 2501(9.1)
6 of the act of March 10, 1949 (P.L.30, No.14), known as the
7 Public School Code of 1949.
8 "Resident individual." An individual who is domiciled in a
9 school district.
10 "School district." A school district of the first class,
11 first class A, second class, third class or fourth class. The
12 term shall include the city council of a city of the first class
13 for the purpose of the levying and collecting of any tax in a
14 school district of the first class.
15 "Statewide average weekly wage." That amount determined by
16 the Department of Labor and Industry in the same manner that it
17 determines the average weekly wage under section 404(e)(2) of
18 the act of December 5, 1936 (2nd Sp.Sess., 1937 P.L.2897, No.1),
19 known as the Unemployment Compensation Law, except that it shall
20 be calculated for the preceding calendar year.
21 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
22 known as the Tax Reform Code of 1971.
23 "Taxpayer." An individual required under this chapter to pay
24 a tax.
25 SUBCHAPTER B
26 TAXATION
27 Sec.
28 3111. Limitations.
29 3112. Personal income tax.
30 3113. Certain rates of taxation limited.
20050S0854B2207 - 233 -
1 3114. Collections.
2 § 3111. Limitations.
3 This chapter shall not be construed to affect the power of a
4 school district to do any of the following:
5 (1) To eliminate its occupation tax pursuant to the act
6 of June 22, 2001 (P.L.374, No.24), known as the Optional
7 Occupation Tax Elimination Act.
8 (2) To levy, assess or collect a tax on earned income
9 and net profits under the Local Tax Enabling Act.
10 (3) To impose special purpose tax levies approved by the
11 electorate.
12 § 3112. Personal income tax.
13 (a) Imposition.--
14 (1) A board of school directors may levy, assess and
15 collect a tax on the personal income of resident individuals
16 at a rate determined by the board of school directors.
17 (2) A school district which seeks to levy the tax
18 authorized under paragraph (1) must comply with section 3121
19 (relating to public referendum requirements for levying and
20 increasing certain taxes) and the following:
21 (i) The school district shall convert, in a revenue-
22 neutral manner, any existing earned income and net
23 profits tax rates levied to a personal income tax rate.
24 (ii) If a school district is not, on the effective
25 date of this subparagraph, levying an earned income and
26 net profits tax, the school district shall levy a
27 personal income tax at a rate which will generate an
28 amount not more than the amount a 1% earned income and
29 net profits tax would have generated if it had been
30 levied.
20050S0854B2207 - 234 -
1 (iii) (Reserved).
2 (iv) The board of school directors shall round the
3 rate of the personal income tax levied pursuant to this
4 subparagraph to the nearest 0.1%.
5 (3) (Reserved).
6 (4) If a board of school directors seeks to impose a
7 personal income tax under this subsection and the referendum
8 under section 3121 is approved by the electorate, the board
9 of school directors shall have no authority to impose an
10 earned income and net profits tax under any other act.
11 (5) A personal income tax imposed under the authority of
12 this section shall be levied by the school district on each
13 of the classes of income specified in section 303 of the Tax
14 Reform Code and regulations under that section, the
15 provisions of which are incorporated by reference into this
16 chapter.
17 (i) Notwithstanding the provisions of section 353(f)
18 of the Tax Reform Code, the Department of Revenue may
19 permit the proper officer or an authorized agent of a
20 school district imposing a personal income tax pursuant
21 to this chapter to inspect the tax returns of any
22 taxpayer of the school district or may furnish to the
23 officer or an authorized agent an abstract of the return
24 of income of any current or former resident of the school
25 district, or supply information concerning any item of
26 income contained in any tax return. The officer or
27 authorized agent of the school district imposing a tax
28 under this chapter shall be furnished the requested
29 information upon payment to the Department of Revenue of
30 the actual cost of providing the requested information.
20050S0854B2207 - 235 -
1 (ii) (A) Except for official purposes or as
2 provided by law, it shall be unlawful for any officer
3 or authorized agent of a school district to do any of
4 the following:
5 (I) Disclose to any other individual or
6 entity the amount or source of income, profits,
7 losses, expenditures or any particular
8 information concerning income, profits, losses or
9 expenditures contained in any return.
10 (II) Permit any other individual or entity
11 to view or examine any return or copy of a return
12 or any book containing any abstract or
13 particulars.
14 (III) Print, publish or publicize in any
15 manner any return; any particular information
16 contained in or concerning the return; any amount
17 or source of income, profits, losses or
18 expenditures in or concerning the return; or any
19 particular information concerning income,
20 profits, losses or expenditures contained in or
21 relating to any return.
22 (B) Any officer or authorized agent of a school
23 district that violates clause (A):
24 (I) May be fined not more than $1,000 or
25 imprisoned for not more than one year, or both.
26 (II) May be removed from office or
27 discharged from employment.
28 (6) (Reserved).
29 (b) Execution of tax rate.--A tax authorized under section
30 3121 shall be self-executing and shall be effective beginning on
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1 the first day of the fiscal year which begins after the tax is
2 authorized. A tax rate under this subsection shall continue in
3 force on a fiscal year basis without annual reenactment except
4 in a year in which the rate of the tax is changed or the tax is
5 repealed.
6 § 3113. Certain rates of taxation limited.
7 (a) Municipal rates.--If a municipality and school district
8 both impose an earned income and net profits tax on the same
9 individual under the Local Tax Enabling Act and are limited to
10 or have agreed upon a division of the tax rate in accordance
11 with section 8 of the Local Tax Enabling Act, the municipality
12 shall remain subject to that limitation or agreement in the
13 event that the school district opts to impose a personal income
14 tax authorized under section 3112 (relating to personal income
15 tax). Nothing in this chapter shall be construed to authorize a
16 municipality to raise the rate of earned income and net profits
17 tax above the rate it levied under the previously agreed upon
18 division if a school district imposes a personal income tax
19 under this subchapter.
20 (b) School districts.--A school district which imposes a tax
21 under this chapter is subject to section 688 of the act of March
22 10, 1949 (P.L.30, No.14), known as the Public School Code of
23 1949.
24 § 3114. Collections.
25 (a) Designation of tax collector.--A board of school
26 directors imposing an income tax under this chapter shall
27 designate a tax officer under section 10 of the Local Tax
28 Enabling Act, or otherwise by law, as the collector of the tax.
29 In the performance of the tax collection duties under this
30 subchapter, the designated tax officer shall have all the same
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1 powers, rights, responsibilities and duties for the collection
2 of the taxes which may be imposed under the Local Tax Enabling
3 Act, 53 Pa.C.S. Ch. 84 Subch. C (relating to local taxpayers
4 bill of rights) or as otherwise provided by law.
5 (b) Conflict.--In any situation where there is a conflict
6 involving the authority conferred on a local tax collector by
7 the provisions of the Local Tax Enabling Act and the Tax Reform
8 Code, the provisions of the Local Tax Enabling Act shall
9 control.
10 SUBCHAPTER C
11 LIMITATIONS
12 Sec.
13 3121. Public referendum requirements for levying and
14 increasing certain taxes.
15 3122. Property tax limits on reassessment.
16 § 3121. Public referendum requirements for levying and
17 increasing certain taxes.
18 (a) Applicability.--This section shall apply to fiscal years
19 beginning with the 2006-2007 fiscal year.
20 (b) Prohibitions.--Except as set forth in subsection (f),
21 unless there is compliance with subsection (c), a board of
22 school directors may not do any of the following:
23 (1) Increase the rate of a tax levied for the support of
24 the public schools by more than the index. For purposes of
25 compliance with this paragraph, a school district which is
26 situated in more than one county and which levies real estate
27 taxes under section 672.1 of the act of March 10, 1949
28 (P.L.30, No.14), known as the Public School Code of 1949,
29 shall apply the index to each separate rate of real estate
30 taxes levied.
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1 (2) Levy a tax which was not levied in a prior fiscal
2 year for the support of the public schools.
3 (3) Raise the rate of the earned income and net profits
4 tax if already imposed under the authority of the Local Tax
5 Enabling Act.
6 (4) (Reserved).
7 (c) Referendum.--
8 (1) In order to take an action prohibited under
9 subsection (b)(1), at the election immediately preceding the
10 start of the school district fiscal year in which the
11 proposed tax increase would take effect, a referendum stating
12 the specific rate or rates of the tax increase must be
13 submitted to the electors of the school district, and a
14 majority of the electors voting on the question must approve
15 the increase.
16 (2) In order to take an action under subsection (b)(2),
17 at the election immediately preceding the start of the school
18 district fiscal year in which the proposed tax would take
19 effect, a referendum stating the proposed tax and the rate at
20 which it will be levied must be submitted to the electors of
21 the school district, and a majority of the electors voting on
22 the question must approve the tax.
23 (3) Except as set forth in subsections (i) and (j), a
24 school district acting pursuant to this subsection shall
25 submit the referendum question required under this section to
26 the election officials of each county in which it is situate
27 no later than 60 days prior to the election immediately
28 preceding the fiscal year in which the tax increase would
29 take effect.
30 (4) The election officials of each county shall, in
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1 consultation with the board of school directors, draft a
2 nonlegal interpretative statement which shall accompany the
3 referendum question in accordance with section 201.1 of the
4 act of June 3, 1937 (P.L.1333, No.320), known as the
5 Pennsylvania Election Code. The nonlegal interpretative
6 statement shall include information that references the items
7 of expenditure for which the tax increase is sought and the
8 consequence of the referendum being disapproved by the
9 electorate.
10 (d) Failure to approve referendum.--
11 (1) If a referendum question submitted under subsection
12 (c)(1) is not approved, the board of school directors may
13 approve an increase in the tax rate of not more than the
14 index.
15 (2) If a referendum question submitted under subsection
16 (c)(2) is not approved, the board of school directors may not
17 levy the tax.
18 (e) Tax rate submissions.--A school district that has
19 adopted a preliminary budget proposal under section 3211
20 (relating to adoption of preliminary budget proposals) that
21 includes an increase in the rate of any tax levied for the
22 support of public schools shall submit information on the
23 increase to the department on a uniform form prepared by the
24 department. The school district shall submit such information no
25 later than 85 days prior to the date of the election immediately
26 preceding the beginning of the school district's fiscal year.
27 The department shall compare the proposed percentage increase in
28 the rate of any tax with the index. Within ten days of the
29 receipt of the information required under this subsection but no
30 later than 75 days prior to the date of the election immediately
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1 preceding the beginning of the school district's fiscal year,
2 the department shall inform the school district whether the
3 proposed tax rate increase is less than or equal to the index.
4 If the department determines that the proposed percentage
5 increase in the rate of the tax exceeds the index, the
6 department shall notify the school district that:
7 (1) the proposed tax increase must be reduced to an
8 amount less than or equal to the index;
9 (2) the proposed tax increase must be approved by the
10 electorate under subsection (c)(1); or
11 (3) an exception must be sought under subsection (f).
12 (f) Referendum exceptions.--A school district may, without
13 seeking voter approval under subsection (c), increase the rate
14 of a tax levied for the support of the public schools by more
15 than the index if all of the following apply:
16 (1) The revenue raised by the allowable increase under
17 the index is insufficient to balance the proposed budget due
18 to one or more of the expenditures listed in paragraph (2).
19 (2) The revenue generated by increasing the rate of a
20 tax by more than the index will be used to pay for any of the
21 following:
22 (i) Costs incurred in responding to or recovering
23 from an emergency or disaster declared pursuant to 35
24 Pa.C.S. § 7301 (relating to general authority of
25 Governor) or 75 Pa.C.S. § 6108 (relating to power of
26 Governor during emergency).
27 (ii) Costs to implement a court order or an
28 administrative order from a Federal or State agency as
29 long as the tax increase is rescinded following
30 fulfillment of the court order or administrative order.
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1 (iii) Costs associated with the following:
2 (A) To pay interest and principal on any
3 indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.
4 B (relating to indebtedness and borrowing) prior to
5 the effective date of this section. In no case may
6 the school district incur additional debt under this
7 clause except for the refinancing of expenses related
8 to such refinancing and the establishment of funding
9 of appropriate debt services reserves. An increase
10 under this clause shall be rescinded following the
11 final payment of interest and principal.
12 (B) To pay interest and principal on any
13 electoral debt incurred under 53 Pa.C.S. Pt. VII
14 Subpt. B.
15 (iv) Costs incurred in providing special education
16 programs and services to students with disabilities if
17 the increase in expenditures on special education
18 programs and services was greater than the index. The
19 dollar amount of this exception shall be equal to the
20 portion of the increase that exceeds the index. Eligible
21 costs for special education programs and services
22 include, but are not limited to, transportation,
23 psychological testing, legal services, early intervention
24 programs and any related services required by an
25 individualized education plan.
26 (v) Costs which:
27 (A) Were incurred in the implementation of a
28 school improvement plan required under section
29 1116(b) of the Elementary and Secondary Education Act
30 of 1965 (Public Law 89-10, 20 U.S.C. § 6316(b)).
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1 (B) Were not offset by a specific State
2 allocation.
3 (vi) Costs necessary to maintain the total actual
4 instructional expense. The dollar amount of this
5 exception shall be equal to the portion of the increase
6 in the total actual instructional expense that exceeds
7 the index. The total actual instructional expense is
8 calculated as follows:
9 (A) Divide the existing average daily membership
10 into the total school district actual instructional
11 expense for the current school year to determine the
12 existing actual instructional expense per student.
13 (B) Multiply the existing actual instructional
14 expense per student by the index to determine the
15 adjusted instructional expense per student.
16 (C) Multiply the adjusted instructional expense
17 per student by the projected enrollment for the
18 immediately succeeding fiscal year to determine the
19 total actual instructional expense.
20 (vii) Costs necessary to maintain actual
21 instructional expense per average daily membership,
22 adjusted by the index, if the increase in actual
23 instructional expense per average daily membership
24 between the school year determined under subsection
25 (j)(4) and the school year preceding the school year
26 determined under subsection (j)(4) is less than the
27 index.
28 (viii) Maintenance of revenues derived from real
29 property taxes, earned income and net profits taxes,
30 personal income taxes, basic education funding
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1 allocations and special education funding allocations,
2 adjusted by the index, for a school district where the
3 percentage increase in revenues derived from real
4 property taxes, earned income and net profits taxes,
5 personal income taxes, basic education funding
6 allocations and special education funding allocations
7 between the school year determined under subsection
8 (j)(4) and the school year preceding the school year
9 determined under subsection (j)(4) is less than the
10 index.
11 (ix) Costs incurred for providing health care-
12 related benefits if the anticipated increase in the cost
13 of health care-related benefits between the current year
14 and the upcoming year is greater than the index. The
15 dollar amount of this exception shall be equal to the
16 portion of the increase which exceeds the index.
17 (x) Building costs associated with the following:
18 (A) Costs associated with school construction
19 projects up to the cost of building, repairing or
20 renovating an academic area up to the Statewide
21 academic square feet per student average. Such costs
22 shall be determined on a construction cost average on
23 a square foot basis. Prior to September 30 of each
24 fiscal year, the department shall calculate the
25 Statewide academic square feet per student average as
26 follows:
27 (I) The department shall calculate the
28 Statewide total number of students as determined
29 by the average daily membership as the term is
30 used and applied in this act.
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1 (II) The department shall calculate the
2 Statewide academic area of all public schools.
3 (III) The sum of subclause (I) shall be
4 divided into subclause (II) to determine the
5 Statewide academic square foot per student
6 average of that school year.
7 (B) For purposes of this subsection, the term
8 "academic area" shall not include natatorium, stadium
9 bleachers, team locker room, athletic field, fitness
10 center, gymnasium not otherwise used for academic
11 purposes, field house, indoor track, artificial turf
12 or other areas used to conduct interscholastic
13 athletics.
14 (C) Costs related to this subsection shall be
15 subject to the provisions of 22 Pa. Code Ch. 21
16 (relating to school buildings) and section 731.
17 (xi) Costs incurred for providing a school
18 district's share of payments to the Public School
19 Employees' Retirement System as required under 24 Pa.C.S.
20 § 8327 (relating to payments by employers) if the actual
21 dollar amount between the current year and the upcoming
22 year is greater than the index. The dollar amount to
23 which this subsection applies shall equal that portion of
24 the increase which exceeds the index of the actual dollar
25 value of payment between the current year and the
26 upcoming year.
27 (g) Revenue derived from increase.--Any revenue derived from
28 an increase in the rate of any tax allowed pursuant to
29 subsection (f)(2)(iii) shall not exceed the anticipated dollar
30 amount of the expenditure.
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1 (h) Limitation on tax rate.--The increase in the rate of any
2 tax allowed pursuant to an exception under subsection (f)(2)(i),
3 (ii), (iv), (v), (vi), (vii), (viii) or (ix) or (n) shall not
4 exceed the rate increase required as determined by a court of
5 common pleas or the department pursuant to subsection (i) or
6 (j).
7 (i) Court action.--
8 (1) Prior to the imposition of a tax increase under
9 subsection (f)(2)(i), (ii) and (iv) and no later than 75 days
10 prior to the election immediately preceding the beginning of
11 the school district's fiscal year, approval by the court of
12 common pleas in the judicial district in which the
13 administrative office of the school district is located must
14 be sought. The board of school directors shall publish in a
15 newspaper of general circulation and on the district's
16 publicly accessible Internet website, if one is maintained,
17 notice of its intent to file a petition under this subsection
18 at least one week prior to the filing of the petition. The
19 board of school directors shall also publish in a newspaper
20 of general circulation and on the district's publicly
21 accessible Internet website, if one is maintained, notice, as
22 soon as possible following notification from the court that a
23 hearing has been scheduled, stating the date, time and place
24 of the hearing on the petition. The following shall apply to
25 any proceedings instituted under this subsection:
26 (i) The school district must prove by clear and
27 convincing evidence that it qualifies for each exception
28 sought.
29 (ii) The school district must prove by clear and
30 convincing evidence the anticipated dollar amount of the
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1 expenditure for each exception sought.
2 (2) The court shall rule on the school district's
3 petition and inform the school district of its decision no
4 later than 55 days prior to the date of the election
5 immediately preceding the beginning of the school district's
6 fiscal year. If the court approves the petition, the court
7 shall also determine the dollar amount of the expenditure for
8 which an exception is granted, the tax rate increase required
9 to fund the exception and the appropriate duration of the
10 increase. If the court denies the petition, the school
11 district may submit a referendum question under subsection
12 (c)(1). The question must be submitted to the election
13 officials no later than 50 days prior to the date of the
14 election immediately preceding the beginning of the school
15 district's fiscal year.
16 (j) Department approval.--
17 (1) A school district that seeks to increase the rate of
18 tax due to an expenditure under subsection (f)(2)(iii), (v),
19 (vi), (vii), (viii) or (ix) or (n) shall obtain the approval
20 of the department before imposing the tax increase. The
21 department shall establish procedures for administering the
22 provisions of this subsection, which may include an
23 administrative hearing on the school district's submission.
24 (2) A school district proceeding under the provisions of
25 this subsection shall publish in a newspaper of general
26 circulation and on the district's publicly accessible
27 Internet website, if one is maintained, notice of its intent
28 to seek department approval at least one week prior to
29 submitting its request for approval to the department. If the
30 department schedules a hearing on the school district's
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1 request, the school district shall publish notice of the
2 hearing in a newspaper of general circulation and on the
3 district's publicly accessible Internet website, if one is
4 maintained, immediately upon receiving the information from
5 the department. The notice shall include the date, time and
6 place of the hearing.
7 (3) The department shall approve a school district's
8 request under this subsection if a review of the data under
9 paragraph (4) demonstrates that:
10 (i) the school district qualifies for one or more
11 exceptions under subsection (f)(2)(iii), (v), (vi),
12 (vii), (viii) or (ix) or (n); and
13 (ii) the sum of the dollar amounts of the exceptions
14 for which the school district qualifies makes the school
15 district eligible under subsection (f)(1).
16 (4) For the purpose of determining the eligibility of a
17 school district for an exception under subsection (f)(2)(v),
18 (vi), (vii) or (viii), the department shall utilize data from
19 the most recent school years for which annual financial
20 report data required under section 2553 of the Public School
21 Code of 1949 has been received for all school districts. The
22 department shall inform school districts of the school years
23 determined under this subsection no later than 30 days prior
24 to the date on which public inspection of proposed school
25 budgets is required under section 3131(c).
26 (5) The department shall rule on the school district's
27 request and shall inform the school district of its decision
28 no later than 55 days prior to the date of the election
29 immediately preceding the beginning of the school district's
30 fiscal year. If the department approves the request, the
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1 department shall determine the dollar amount of the
2 expenditure for which the exception is sought and the tax
3 rate increase required to fund the exception. If the
4 department denies the request, the school district may submit
5 a referendum question under subsection (c)(1). The question
6 must be submitted to the election officials no later than 50
7 days prior to the date of the election immediately preceding
8 the beginning of the school district's fiscal year.
9 (6) Within 30 days of the deadline under paragraph (5),
10 the department shall submit a report to the President pro
11 tempore of the Senate, the Minority Leader of the Senate, the
12 Speaker of the House of Representatives and the Minority
13 Leader of the House of Representatives enumerating the school
14 districts which sought an exception under this subsection.
15 The department shall also publish the report on its publicly
16 accessible Internet website. The report shall include:
17 (i) The name of each school district making a
18 request under this subsection.
19 (ii) The specific exceptions requested by each
20 school district and the dollar amount of the expenditure
21 for each exception.
22 (iii) The department's ruling on the request for the
23 exception.
24 (iv) If the exception was approved, the dollar
25 amount of the expenditure for which the exception was
26 sought and the tax rate increase required to fund the
27 exception.
28 (v) A statistical summary of the information in
29 subparagraphs (ii), (iii) and (iv).
30 (k) Objections.--Any person that resides within or pays real
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1 property taxes to the school district filing a petition under
2 subsection (i) may file with the court written objections to any
3 petition filed under this section.
4 (l) Index calculation.--No later than August 15, 2005, and
5 each August 15 thereafter, the department shall calculate the
6 index. The department shall publish the index by September 1,
7 2005, and each September 1 thereafter, in the Pennsylvania
8 Bulletin.
9 (m) Election interference prohibited.--
10 (1) No public funds may be used to urge any elector to
11 vote for or against a referendum or be appropriated for
12 political or campaign purposes.
13 (2) This subsection shall not prohibit the use of public
14 funds for dissemination of factual information relative to a
15 referendum appearing on an election ballot.
16 (3) As used in this subsection, the term "public funds"
17 means any funds appropriated by the General Assembly or by a
18 political subdivision.
19 (n) (Reserved).
20 (o) Expiration.--The provisions of this section shall expire
21 September 1, 2011, unless otherwise extended by an act of the
22 General Assembly.
23 § 3122. Property tax limits on reassessment.
24 Notwithstanding any other provision of law, including this
25 subpart, after any county makes a countywide revision of
26 assessment of real property at values based upon an established
27 predetermined ratio as required by law or after any county
28 changes its established predetermined ratio, a board of school
29 directors in a school district located within that county that,
30 after September 3, 2004, for the first time levies its real
20050S0854B2207 - 250 -
1 estate taxes on that revised assessment or valuation shall for
2 the first year reduce its tax rate, if necessary, for the
3 purpose of having the percentage increase in taxes levied for
4 that year against the real properties contained in the duplicate
5 for the preceding year be less than or equal to the index for
6 the preceding year notwithstanding the increased valuations of
7 such properties under the revised assessment. For the purpose of
8 determining the total amount of taxes to be levied for the first
9 year, the amount to be levied on newly constructed buildings or
10 structures or on increased valuations based on new improvements
11 made to existing houses need not be considered. The tax rate
12 shall be fixed for that year at a figure which will accomplish
13 this purpose. The provisions of section 3121 (relating to public
14 referendum requirements for levying and increasing certain
15 taxes) shall apply to increases in the tax rate above the limits
16 provided in this section.
17 SUBCHAPTER D
18 SCHOOL DISTRICT BUDGETS
19 Sec.
20 3131. Adoption of preliminary budget proposals.
21 3132. Adoption of annual budgets.
22 3133. Information to school districts.
23 § 3131. Adoption of preliminary budget proposals.
24 (a) Adoption.--Beginning January 1, 2006, each board of
25 school directors shall adopt a preliminary budget proposal for
26 the following fiscal year no later than 90 days prior to the
27 date of the election immediately preceding the fiscal year in
28 which the preliminary budget will take effect.
29 (b) Contents.--The preliminary budget proposal shall include
30 estimated revenues and expenditures and any proposed tax rates
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1 and shall be prepared on a uniform form furnished by the
2 department.
3 (c) Public inspection.--The board of school directors shall
4 print the preliminary budget proposal and make it available for
5 public inspection at least 20 days prior to its adoption. The
6 board of school directors shall give public notice of its intent
7 to adopt the preliminary budget at least ten days prior to
8 adoption and may hold a public hearing prior to its adoption.
9 § 3132. Adoption of annual budgets.
10 (a) Adoption.--Beginning January 1, 2006, each board of
11 school directors shall adopt its annual budget for the following
12 fiscal year no later than the last day of the fiscal year before
13 the fiscal year in which the budget takes effect.
14 (b) Contents.--The annual budget shall include estimated
15 revenues and expenditures and any proposed tax rates and be
16 prepared on a uniform form furnished by the department.
17 (c) Public inspection.--The board of school directors shall
18 print the annual budget and make it available for public
19 inspection at least 20 days prior to its adoption. The board of
20 school directors shall give public notice of its intent to adopt
21 the annual budget at least ten days prior to adoption and may
22 hold a public hearing prior to its adoption.
23 § 3133. Information to school districts.
24 No later than September 30 of the year in which a State
25 allocation is made under Chapter 21 (relating to homeowner
26 property tax relief) and September 30 of each year thereafter,
27 the department shall provide each school district with the
28 following information:
29 (1) The dates by which actions required under this
30 chapter shall take place.
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1 (2) The index for the applicable fiscal year.
2 SUBCHAPTER E
3 REIMBURSEMENTS
4 Sec.
5 3141. Procedure.
6 § 3141. Procedure.
7 Notwithstanding any other provisions of law to the contrary,
8 the following apply:
9 (1) This section only applies to a taxpayer who is a
10 resident of this Commonwealth and not a resident of a city of
11 the first class but who is subject to the tax on salaries,
12 wages, commissions or other compensation imposed by a city of
13 the first class under the authority of the act of August 5,
14 1932 (Sp.Sess., P.L.45, No.45), referred to as the Sterling
15 Act.
16 (2) For tax years beginning after the effective date of
17 this section, and each tax year thereafter, payment of a tax
18 on salaries, wages, commissions or other compensation as set
19 forth in paragraph (1) shall be credited to the school
20 district of the taxpayer's residence at an amount no greater
21 than the tax on salaries, wages, commissions or other
22 compensation as set forth in paragraph (1) imposed by the
23 school district in which the taxpayer resides.
24 (3) An amount equal to the aggregate amount of the tax
25 credited under paragraph (2) shall be paid from the fund to
26 the school district of residence of each taxpayer under
27 paragraph (1) for the purpose of funding property tax rate
28 reduction. The department shall prescribe procedures to
29 calculate the amount due to each school district qualifying
30 under this paragraph and shall publish the procedures in the
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1 Pennsylvania Bulletin.
2 (4) (Reserved).
3 PART V
4 SENIOR CITIZENS
5 Chapter
6 51. Senior Citizens Rebate and Assistance
7 CHAPTER 51
8 SENIOR CITIZENS REBATE AND ASSISTANCE
9 Sec.
10 5101. Scope.
11 5102. Declaration of policy.
12 5103. Definitions.
13 5104. Property tax, rent rebate and inflation cost.
14 5105. Filing of claim.
15 5106. Proof of claim.
16 5107. Incorrect claim.
17 5108. Funds for payment of claims.
18 5109. Claim forms and rules and regulations.
19 5110. Fraudulent claim and conveyance to obtain benefits.
20 5111. Petition for redetermination.
21 5112. Review by Board of Finance and Revenue.
22 5113. Appeal.
23 5114. Grants to area agencies on aging for services to
24 older persons.
25 5115. Applicability.
26 § 5101. Scope.
27 This chapter relates to senior citizens rebate and
28 assistance.
29 § 5102. Declaration of policy.
30 In recognition of the severe economic plight of certain
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1 senior citizens, widows, widowers and permanently disabled
2 persons who are real property owners or renters with fixed and
3 limited incomes who are faced with rising living costs and
4 constantly increasing tax and inflation cost burdens which
5 threaten their homesteads and self-sufficiency, the General
6 Assembly, pursuant to the mandates of the Constitutional
7 Convention of 1968, considers it to be a matter of sound public
8 policy to make special provisions for property tax rebates or
9 rent rebates in lieu of property taxes and inflation dividends
10 to that class of senior citizens, widows, widowers and
11 permanently disabled persons who are real property taxpayers or
12 renters who are without adequate means of support to enable them
13 to remain in peaceable possession of their homes and relieving
14 their economic burden and to provide transportation assistance
15 grants and to provide grants to area agencies on aging for
16 services to older persons.
17 § 5103. Definitions.
18 The following words and phrases, when used in this chapter,
19 shall have the meanings given to them in this section, unless
20 the context clearly indicates otherwise:
21 "Board." The Board of Finance and Revenue.
22 "Claimant." A person who files a claim for property tax
23 rebate or rent rebate in lieu of property taxes and inflation
24 dividend and was any of the following during all or a part of a
25 calendar year in which real property taxes, rent and inflation
26 costs were due and payable:
27 (1) A person 65 years of age or older or whose spouse,
28 if a member of the household, was 65 years of age or older.
29 (2) A widow or widower, 50 years of age or older.
30 (3) A permanently disabled person 18 years of age or
20050S0854B2207 - 255 -
1 older.
2 "Department." The Department of Revenue of the Commonwealth.
3 "Homestead." As follows:
4 (1) The term includes any of the following:
5 (i) A dwelling, whether owned or rented, and so much
6 of the land surrounding it as is reasonably necessary for
7 use of the dwelling as a home, occupied by a claimant.
8 (ii) Premises occupied by reason of ownership or
9 lease in a cooperative housing corporation, mobile homes
10 which are assessed as realty for local property tax
11 purposes and the land, if owned or rented by the
12 claimant, upon which the mobile home is situated, and
13 other similar living accommodations, as well as a part of
14 a multidwelling or multipurpose building and a part of
15 the land upon which it is built.
16 (iii) Premises occupied by reason of the claimant's
17 ownership or rental of a dwelling located on land owned
18 by a nonprofit incorporated association, of which the
19 claimant is a member, if the claimant is required to pay
20 a pro rata share of the property taxes levied against the
21 association's land.
22 (iv) Premises occupied by a claimant if the claimant
23 is required by law to pay a property tax by reason of the
24 claimant's ownership or rental, including a possessory
25 interest, in the dwelling, the land or both.
26 (2) For purposes of this definition, an owner includes a
27 person in possession under a contract of sale, deed of trust,
28 life estate, joint tenancy or tenancy in common or by reason
29 of statutes of descent and distribution.
30 "Household income." All income received by the claimant and
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1 the claimant's spouse while residing in the homestead during the
2 calendar year for which a rebate and dividend are claimed.
3 "Income." As follows:
4 (1) Except as provided in paragraph (2), all income from
5 whatever source derived, including the following:
6 (i) Salaries, wages, bonuses, commissions and income
7 from self-employment.
8 (ii) Alimony and support money.
9 (iii) Cash public assistance and relief.
10 (iv) The gross amount of any pensions or annuities
11 including railroad retirement benefits for calendar years
12 prior to 1999 and 50% of railroad retirement benefits for
13 calendar years 1999 and thereafter.
14 (v) Except for Medicare benefits, all benefits
15 received under the Social Security Act (49 Stat. 620, 42
16 U.S.C. § 301 et seq.) for calendar years beginning prior
17 to January 1, 2000, and 50% of all benefits received
18 under the Social Security Act for calendar years
19 beginning after December 31, 1999.
20 (vi) All benefits received under State unemployment
21 insurance laws and veterans' disability payments.
22 (vii) All interest received from the Federal or any
23 state government, a Federal or state instrumentality or
24 political subdivision.
25 (viii) Realized capital gains and rentals.
26 (ix) Workers' compensation and the gross amount of
27 loss of time insurance benefits.
28 (x) Life insurance benefits and proceeds, except the
29 first $5,000 of the total of death benefit payments.
30 (xi) Gifts of cash or property, other than transfers
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1 by gift between members of a household, in excess of a
2 total value of $300.
3 (2) The term does not include:
4 (i) Surplus food or other relief in kind supplied by
5 a governmental agency.
6 (ii) Property tax or rent rebate or inflation
7 dividend.
8 "Inflation dividend." An additional amount calculated by the
9 Department of Revenue in accordance with section 5104(b)
10 (relating to property tax, rent rebate and inflation cost).
11 "Inflation expenses." The additional costs of those
12 essential consumer needs of senior citizens in this
13 Commonwealth. The term includes the additional cost of medical
14 prescriptions, energy needs, transportation and food and
15 clothing essentials.
16 "Permanently disabled person." Except as provided in section
17 5104(e), (f) and (g) (relating to property tax, rent rebate and
18 inflation cost), a person who is unable to engage in any
19 substantial gainful activity by reason of any medically
20 determinable physical or mental impairment which can be expected
21 to continue indefinitely.
22 "Real property taxes." Except for municipal assessments,
23 delinquent charges and interest, all taxes on a homestead due
24 and payable during a calendar year.
25 "Rent rebate in lieu of property taxes." Twenty percent of
26 the gross amount actually paid in cash or its equivalent in any
27 calendar year to a landlord in connection with the occupancy of
28 a homestead by a claimant, regardless of whether the amount
29 constitutes payment solely for the right of occupancy or
30 otherwise.
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1 "Social Security Act." The Social Security Act (49 Stat.
2 620, 42 U.S.C. § 301 et seq.).
3 "Widow." The surviving wife of a deceased individual who has
4 not remarried, except as provided in section 5104(e), (f) and
5 (g) (relating to property tax, rent rebate and inflation cost).
6 "Widower." The surviving husband of a deceased individual
7 who has not remarried, except as provided in section 5104(e),
8 (f) and (g) (relating to property tax, rent rebate and inflation
9 cost).
10 § 5104. Property tax, rent rebate and inflation cost.
11 (a) Amount.--The following shall apply to claim amounts:
12 (1) The amount of any claim for property tax rebate or
13 rent rebate in lieu of property taxes for real property taxes
14 or rent due and payable during calendar years 1981, 1982,
15 1983 and 1984 shall be determined in accordance with the
16 following schedule:
17 (i) If a claimant's household income is $0 to and
18 including $4,999, 100% of real property taxes or rent
19 rebate in lieu of property taxes shall be allowed as a
20 rebate.
21 (ii) If a claimant's household income is $5,000 to
22 and including $5,999, 80% of real property taxes or rent
23 rebate in lieu of property taxes shall be allowed as a
24 rebate.
25 (iii) If a claimant's household income is $6,000 to
26 and including $6,999, 60% of real property taxes or rent
27 rebate in lieu of property taxes shall be allowed as a
28 rebate.
29 (iv) If a claimant's household income is $7,000 to
30 and including $7,999, 40% of real property taxes or rent
20050S0854B2207 - 259 -
1 rebate in lieu of property taxes shall be allowed as a
2 rebate.
3 (v) If a claimant's household income is $8,000 to
4 and including $8,999, 20% of real property taxes or rent
5 rebate in lieu of property taxes shall be allowed as a
6 rebate.
7 (vi) If a claimant's household income is $9,000 to
8 and including $11,999, 10% of real property taxes or rent
9 rebate in lieu of property taxes shall be allowed as a
10 rebate.
11 (2) The amount of any claim for property tax rebate or
12 rent rebate in lieu of property taxes for real property taxes
13 or rent due and payable during calendar year 1985 through
14 calendar year 2006 shall be determined in accordance with the
15 following schedule:
16 (i) If a claimant's household income is $0 to and
17 including $5,499, 100% of real property taxes or rent
18 rebate in lieu of property taxes shall be allowed as a
19 rebate.
20 (ii) If a claimant's household income is $5,555 to
21 and including $5,999, 90% of real property taxes or rent
22 rebate in lieu of property taxes shall be allowed as a
23 rebate.
24 (iii) If a claimant's household income is $6,000 to
25 and including $6,499, 80% of real property taxes or rent
26 rebate in lieu of property taxes shall be allowed as a
27 rebate.
28 (iv) If a claimant's household income is $6,500 to
29 and including $6,999, 70% of real property taxes or rent
30 rebate in lieu of property taxes shall be allowed as a
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1 rebate.
2 (v) If a claimant's household income is $7,000 to
3 and including $7,499, 60% of real property taxes or rent
4 rebate in lieu of property taxes shall be allowed as a
5 rebate.
6 (vi) If a claimant's household income is $7,500 to
7 and including $7,999, 50% of real property taxes or rent
8 rebate in lieu of property taxes shall be allowed as a
9 rebate.
10 (vii) If a claimant's household income is $8,000 to
11 and including $8,499, 40% of real property taxes or rent
12 rebate in lieu of property taxes shall be allowed as a
13 rebate.
14 (viii) If a claimant's household income is $8,500 to
15 and including $8,999, 35% of real property taxes or rent
16 rebate in lieu of property taxes shall be allowed as a
17 rebate.
18 (ix) If a claimant's household income is $9,000 to
19 and including $9,999, 25% of real property taxes or rent
20 rebate in lieu of property taxes shall be allowed as a
21 rebate.
22 (x) If a claimant's household income is $10,000 to
23 and including $11,999, 20% of real property taxes or rent
24 rebate in lieu of property taxes shall be allowed as a
25 rebate.
26 (xi) If a claimant's household income is $12,000 to
27 and including $12,999, 15% of real property taxes or rent
28 rebate in lieu of property taxes shall be allowed as a
29 rebate.
30 (xii) If a claimant's household income is $13,000 to
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1 and including $15,000, 10% of real property taxes or rent
2 rebate in lieu of property taxes shall be allowed as a
3 rebate.
4 (3) The amount of any claim for property tax rebate or
5 rent rebate in lieu of property taxes for real property taxes
6 or rent due and payable during calendar year 2007 and
7 thereafter shall be determined in accordance with the
8 following schedule:
9 (i) If a claimant's household income is $0 to and
10 including $7,999, 100% of real property taxes or rent
11 rebate in lieu of property taxes shall be allowed as a
12 rebate.
13 (ii) If a claimant's household income is $8,000 to
14 and including $8,999, 90% of real property taxes or rent
15 rebate in lieu of property taxes shall be allowed as a
16 rebate.
17 (iii) If a claimant's household income is $9,000 to
18 and including $9,999, 80% of real property taxes or rent
19 rebate in lieu of property taxes shall be allowed as a
20 rebate.
21 (iv) If a claimant's household income is $10,000 to
22 and including $10,999, 70% of real property taxes or rent
23 rebate in lieu of property taxes shall be allowed as a
24 rebate.
25 (v) If a claimant's household income is $11,000 to
26 and including $11,999, 60% of real property taxes or rent
27 rebate in lieu of property taxes shall be allowed as a
28 rebate.
29 (vi) If a claimant's household income is $12,000 to
30 and including $12,999, 50% of real property taxes or rent
20050S0854B2207 - 262 -
1 rebate in lieu of property taxes shall be allowed as a
2 rebate.
3 (vii) If a claimant's household income is $13,000 to
4 and including $13,999, 40% of real property taxes or rent
5 rebate in lieu of property taxes shall be allowed as a
6 rebate.
7 (viii) If a claimant's household income is $14,000
8 to and including $15,999, 35% of real property taxes or
9 rent rebate in lieu of property taxes shall be allowed as
10 a rebate.
11 (ix) If a claimant's household income is $16,000 to
12 and including $17,999, 25% of real property taxes or rent
13 rebate in lieu of property taxes shall be allowed as a
14 rebate.
15 (x) If a claimant's household income is $18,000 to
16 and including $19,999, 20% of real property taxes or rent
17 rebate in lieu of property taxes shall be allowed as a
18 rebate.
19 (xi) If a claimant's household income is $20,000 to
20 and including $21,999, 15% of real property taxes or rent
21 rebate in lieu of property taxes shall be allowed as a
22 rebate.
23 (xii) If a claimant's household income is $22,000 to
24 and including $25,000, 10% of real property taxes or rent
25 rebate in lieu of property taxes shall be allowed as a
26 rebate.
27 (b) Inflation dividend.--The following shall apply to
28 inflation dividend amounts:
29 (1) To all claimants eligible for a property tax or rent
30 rebate pursuant to subsection (a)(1) there shall be paid an
20050S0854B2207 - 263 -
1 inflation dividend determined in accordance with the
2 following schedule:
3 (i) If a claimant's household income is $0 to and
4 including $4,999, the dividend shall be $125.
5 (ii) If a claimant's household income is $5,000 to
6 and including $5,999, the dividend shall be $100.
7 (iii) If a claimant's household income is $6,000 to
8 and including $6,999, the dividend shall be $75.
9 (iv) If a claimant's household income is $7,000 to
10 and including $7,999, the dividend shall be $60.
11 (v) If a claimant's household income is $8,000 to
12 and including $8,999, the dividend shall be $45.
13 (vi) If a claimant's household income is $9,000 to
14 and including $11,999, the dividend shall be $30.
15 (2) To all claimants eligible for a property tax or rent
16 rebate pursuant to subsection (a)(2) there shall be paid an
17 inflation dividend determined in accordance with the
18 following schedule:
19 (i) If a claimant's household income is $0 to and
20 including $4,999, the dividend shall be $125.
21 (ii) If a claimant's household income is $5,000 to
22 and including $5,999, the dividend shall be $100.
23 (iii) If a claimant's household income is $6,000 to
24 and including $6,999, the dividend shall be $75.
25 (iv) If a claimant's household income is $7,000 to
26 and including $7,999, the dividend shall be $60.
27 (v) If a claimant's household income is $8,000 to
28 and including $8,999, the dividend shall be $45.
29 (vi) If a claimant's household income is $9,000 to
30 and including $12,999, the dividend shall be $30.
20050S0854B2207 - 264 -
1 (vii) If a claimant's household income is $13,000 to
2 and including $15,000, the dividend shall be $20.
3 (c) Additional inflation dividend for 1980.--To all
4 claimants eligible for a property tax or rent rebate for real
5 property taxes or rent due and payable during calendar year 1980
6 there shall be paid $100 as an additional inflation dividend.
7 The additional inflation dividend payment shall be mailed no
8 later than the mailing of the application form for claiming a
9 1981 property tax or rent rebate.
10 (d) Limits.--
11 (1) No claim shall be allowed if the amount of property
12 tax or rent rebate computed in accordance with this section
13 is less than $10, and the maximum amount of property tax or
14 rent rebate payable shall not exceed $500 for claims for
15 calendar years up to and including calendar year 2006.
16 (2) For calendar years 2007 and thereafter the maximum
17 amount of property tax or rent rebate payable shall not
18 exceed $750.
19 (e) Prohibition.--No claim shall be allowed if the claimant
20 is a tenant of an owner of real property exempt from real
21 property taxes.
22 (f) Apportionment.--The department shall apportion the real
23 property taxes or rent in accordance with the period or degree
24 of ownership or leasehold or eligibility of the claimant in
25 determining the amount of rebate for which a claimant is
26 eligible if any of the following apply:
27 (1) A homestead is owned or rented and occupied for only
28 a portion of a year or is owned or rented in part by a person
29 who does not meet the qualifications for a claimant,
30 exclusive of any interest owned or leased by a claimant's
20050S0854B2207 - 265 -
1 spouse.
2 (2) The claimant is a widow or widower who remarries.
3 (3) The claimant is a permanently disabled person who is
4 no longer disabled.
5 (g) Public assistance.--A claimant who receives public
6 assistance from the Department of Public Welfare shall not be
7 eligible for rent rebate in lieu of property taxes or an
8 inflation dividend during those months within which the claimant
9 receives public assistance.
10 (h) Subsidies.--Rent shall not include subsidies provided by
11 or through a governmental agency.
12 § 5105. Filing of claim.
13 (a) Time.--
14 (1) Except as set forth in paragraph (2), a claim for
15 property tax or rent rebate and inflation dividend must be
16 filed with the department by June 30 of the year next
17 succeeding the end of the calendar year in which real
18 property taxes or rent were due and payable.
19 (2) Claims filed after the deadline under paragraph (1)
20 but by December 31 of the year next succeeding the end of the
21 calendar year in which real property taxes or rent were due
22 and payable shall be accepted by the Secretary of Revenue as
23 long as funds are available to pay the benefits to the late-
24 filing claimants.
25 (b) Reimbursement.--No reimbursement on a claim shall be
26 made from the State Lottery Fund earlier than the day following
27 the June 30 provided in this chapter on which that claim may be
28 filed with the department.
29 (c) Calendar year 1977.--Rebate claims for taxes or rent
30 paid during calendar year 1977 shall be accepted by the
20050S0854B2207 - 266 -
1 Secretary of Revenue if filed with the department by April 30,
2 1979.
3 (d) Entitlement.--Only one claimant from a homestead each
4 year shall be entitled to the property tax or rent rebate and
5 inflation dividend. If two or more persons are able to meet the
6 qualifications for a claimant, they may determine who the
7 claimant shall be. If they are unable to agree, the department
8 shall determine to whom the rebate and dividend is to be paid.
9 § 5106. Proof of claim.
10 (a) Contents.--Each claim shall include reasonable proof of
11 household income, the size and nature of the property claimed as
12 a homestead and the rent or tax receipt or other proof that the
13 real property taxes on the homestead or rent in connection with
14 the occupancy of a homestead has been paid.
15 (b) Declaration of status.--If the claimant is a widow or
16 widower, a declaration of that status in the manner prescribed
17 by the Secretary of Revenue shall be included.
18 (c) Eligibility.--Proof that a claimant is eligible to
19 receive disability benefits under the Social Security Act shall
20 constitute proof of disability under this chapter.
21 (d) Disability.--No person who has been found not to be
22 disabled by the Social Security Administration shall be granted
23 a rebate or dividend under this chapter. A claimant not covered
24 under the Social Security Act shall be examined by a physician
25 designated by the department and the claimant's status shall be
26 determined using the same standards used by the Social Security
27 Administration.
28 (e) Payment.--It shall not be necessary that the taxes or
29 rent were paid directly by the claimant if the rent or taxes
30 have been paid when the claim is filed.
20050S0854B2207 - 267 -
1 (f) Initial claim.--The first claim filed shall include
2 proof that the claimant or the claimant's spouse was age 65 or
3 older or 50 years or older in the case of a widow or widower,
4 during the calendar year in which real property taxes or rent
5 were due and payable.
6 § 5107. Incorrect claim.
7 If, on audit of a claim, the department finds the claim to
8 have been incorrectly determined, it shall redetermine the
9 correct amount of the claim and notify the claimant of the
10 reason of the redetermination and the amount of the corrected
11 claim.
12 § 5108. Funds for payment of claims.
13 (a) Payment.--Approved claims shall be paid from the State
14 Lottery Fund.
15 (b) Additional funds.--In the event sufficient funds are not
16 available from lottery receipts to meet the expansion of this
17 chapter as provided in section 5104(a)(3) (relating to property
18 tax, rent rebate and inflation cost), additional funds of up to
19 $150,000,000 to fulfill these obligations shall be transferred
20 from the Property Tax Relief Fund for this purpose.
21 § 5109. Claim forms and rules and regulations.
22 (a) Duties of department.--The department shall receive all
23 applications, determine the eligibility of claimants, hear
24 appeals, disburse payments and make available suitable forms for
25 the filing of claims.
26 (b) Regulations.--Necessary regulations shall be prescribed
27 by a committee consisting of the Secretary of Aging, the
28 Secretary of Community and Economic Development and the
29 Secretary of Revenue. The Secretary of Aging shall serve as the
30 chairman of the committee.
20050S0854B2207 - 268 -
1 § 5110. Fraudulent claim and conveyance to obtain benefits.
2 (a) Penalty.--In any case in which a claim is excessive and
3 was filed with fraudulent intent, the claim shall be disallowed
4 in full and a penalty of 25% of the amount claimed shall be
5 imposed. The penalty and the amount of the disallowed claim, if
6 the claim has been paid, shall bear interest at the rate of 0.5%
7 per month from the date of the claim until repaid. The claimant
8 and any person who assisted in the preparation or filing of a
9 fraudulent claim commits a misdemeanor and, upon conviction
10 thereof, shall be sentenced to pay a fine not exceeding $1,000
11 or undergo imprisonment not exceeding one year, or both.
12 (b) Conveyance.--A claim shall be disallowed if the claimant
13 received title to the homestead primarily for the purpose of
14 receiving a property tax rebate.
15 § 5111. Petition for redetermination.
16 (a) Filing.--Any claimant whose claim is denied, corrected
17 or otherwise adversely affected by the department may file with
18 the department a petition for redetermination on forms supplied
19 by the department within 90 days after the date of mailing of
20 written notice by the department of the action.
21 (b) Contents.--A petition filed under subsection (a) shall
22 set forth the grounds upon which the claimant alleges that the
23 departmental action is erroneous or unlawful, in whole or part,
24 and shall contain an affidavit or affirmation that the facts
25 contained in the petition are true and correct.
26 (c) Extension of time.--An extension of time for filing the
27 petition may be allowed for cause but shall not exceed 120 days.
28 (d) Hearings.--The department shall hold hearings as may be
29 necessary for the purpose of redetermination and each claimant
30 who has duly filed a petition for redetermination shall be
20050S0854B2207 - 269 -
1 notified by the department of the time when, and the place
2 where, the hearing will be held.
3 (e) Disposition.--It shall be the duty of the department,
4 within six months after receiving a filed petition for
5 redetermination, to dispose of the matters raised by the
6 petition and mail notice of the department's decision to the
7 claimant.
8 § 5112. Review by Board of Finance and Revenue.
9 (a) Review.--Within 90 days after the date of official
10 receipt by the claimant of the notice mailed by the department
11 of its decision on any petition for redetermination filed with
12 it, the claimant who is adversely affected by the decision may
13 by petition request the board to review the action.
14 (b) Automatic denial.--The failure of the department to
15 officially notify the claimant of a decision within the six-
16 month period provided for by section 5111(e) (relating to
17 petition for redetermination) shall act as a denial of the
18 petition. A petition for review must be filed with the board
19 within 120 days after written notice is officially received by
20 the claimant that the department has failed to dispose of the
21 petition within the six-month period prescribed by section
22 5111(e).
23 (c) Contents.--Every petition for redetermination filed
24 under this section must state the reasons upon which the
25 claimant relies or must incorporate by reference the petition
26 for redetermination in which the reasons are stated. The
27 petition must be supported by affidavit that the facts set forth
28 in the petition are correct and true.
29 (d) Disposition.--The board shall act in disposition of such
30 petitions filed with it within six months after they have been
20050S0854B2207 - 270 -
1 received. If the board fails to dispose of a petition within six
2 months, the action taken by the department upon the petition for
3 redetermination shall be deemed sustained.
4 (e) Action.--The board may sustain the action taken by the
5 department on the petition for redetermination, or it may take
6 such other action as it deems necessary and consistent with
7 provisions of this chapter.
8 (f) Notice.--Notice of the action of the board shall be
9 given by mail to the department and to the claimant.
10 § 5113. Appeal.
11 A claimant aggrieved by the decision of the board may appeal
12 from that decision in the manner provided by law for appeals
13 from decisions of the board in tax cases.
14 § 5114. Grants to area agencies on aging for services to older
15 persons.
16 For fiscal year 1981-1982, $6,200,000 is hereby appropriated
17 from the Lottery Fund to the Department of Aging for service
18 grants to area agencies on aging. The Department of Aging shall
19 allocate these funds to area agencies on aging on the basis of
20 each agency's proportionate share of all Federal and State funds
21 currently available. Such funds shall not be used for costs of
22 administration.
23 § 5115. Applicability.
24 This chapter shall apply to tax years beginning after
25 December 31, 1970.
26 Section 2. Repeals are as follows:
27 (1) The General Assembly declares as follows:
28 (i) The repeal under paragraph (2)(i) is necessary
29 to effectuate the addition of 72 Pa.C.S. Ch. 12.
30 (ii) The repeal under paragraph (2)(ii) is necessary
20050S0854B2207 - 271 -
1 to effectuate the addition of 72 Pa.C.S. Ch. 13.
2 (iii) The repeal under paragraph (2)(iii) is
3 necessary to effectuate the addition of 72 Pa.C.S. Ch.
4 15.
5 (iv) The repeals under paragraph (2)(v) and (vii)
6 are necessary to effectuate the addition of 72 Pa.C.S. §
7 1503.
8 (v) The repeal under paragraph (2)(vi) is necessary
9 to effectuate the addition of 72 Pa.C.S. Ch. 21.
10 (vi) The repeal under paragraph (2)(iv) is necessary
11 to effectuate the addition of 72 Pa.C.S. Ch. 51.
12 (2) The following acts and parts of acts are repealed:
13 (i) Article II of the act of March 4, 1971 (P.L.6,
14 No.2), known as the Tax Reform Code of 1971.
15 (ii) Article II-A of the Tax Reform Code of 1971.
16 (iii) Article III of the Tax Reform Code of 1971.
17 (iv) The act of March 11, 1971 (P.L.104, No.3),
18 known as the Senior Citizens Rebate and Assistance Act.
19 (v) Sections 2 and 3 of the act of December 19, 1996
20 (P.L.1335, No.179), known as the Medical Care Savings
21 Account Act.
22 (vi) The act of July 5, 2004 (P.L.654, No.72), known
23 as the Homeowner Tax Relief Act.
24 (vii) Section 4 of the act of July 14, 2005
25 (P.L.278, No.48), known as the Health Savings Account
26 Act.
27 Section 2.1. A city of the first class shall use 17.5% of
28 the tax authorized and collected pursuant to Chapter 5 of the
29 act of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
30 Intergovernmental Cooperation Authority Act for Cities of the
20050S0854B2207 - 272 -
1 First Class, for reduction of the tax imposed pursuant to the
2 act of August 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as
3 the Sterling Act. A city of the first class shall use no more
4 than 50% of this amount to reduce the rate of the tax imposed on
5 residents and no less than 50% of this amount to reduce the rate
6 of the tax imposed on nonresidents.
7 Section 3. The addition of 72 Pa.C.S. Ch. 12 is a
8 continuation of Article II of the act of March 4, 1971 (P.L.6,
9 No.2), known as the Tax Reform Code of 1971. The following
10 apply:
11 (1) Except as otherwise provided in 72 Pa.C.S. Ch. 12,
12 all activities initiated under Article II of the Tax Reform
13 Code of 1971 shall continue and remain in full force and
14 effect and may be completed under 72 Pa.C.S. Ch. 12. Orders,
15 regulations, rules and decisions which were made under
16 Article II of the Tax Reform Code of 1971 and which are in
17 effect on the effective date of section 2(1) of this act
18 shall remain in full force and effect until revoked, vacated
19 or modified under 72 Pa.C.S. Ch. 12.
20 (2) Except as set forth in paragraph (3), any difference
21 in language between 72 Pa.C.S. Ch. 12 and Article II of the
22 Tax Reform Code of 1971 is intended only to conform to the
23 style of the Pennsylvania Consolidated Statutes and is not
24 intended to change or affect the legislative intent, judicial
25 construction or administration and implementation of Article
26 II of the Tax Reform Code of 1971.
27 (3) Paragraph (2) does not apply to the addition of any
28 of the following provisions of Title 72:
29 (i) The definitions of "advertising services,"
30 "computer software," "delivered electronically,"
20050S0854B2207 - 273 -
1 "detective services," "lodging service," "management
2 consulting service," "personal service," "prewritten
3 computer software," "purchase at retail," "recreation
4 service," "sale at retail," "self-storage," "tangible
5 personal property" and "use" in section 1201.
6 (ii) Paragraphs (2) and (3) of the definition of
7 "maintaining a place of business in this Commonwealth" in
8 section 1201.
9 (iii) Paragraphs (2), (4) and (7) of the definition
10 of "purchase price" in section 1201.
11 (iv) Paragraphs (4) and (5) of the definition of
12 "resale" in section 1201.
13 (v) Paragraphs (4), (8)(ii)(C), (iii), (iv), (v) and
14 (vi), (10), (18), (20), (21), (22), (23), (24), (25),
15 (26), (27), (28), (29), (30) and (31) of the definition
16 of "sale at retail" in section 1201.
17 (vi) Paragraphs (4)(i) and (ii)(B)(III), (iii),
18 (iv), (v) and (vi), (6), (16), (19), (20), (21), (22),
19 (23), (24), (25), (26), (27), (28), (29) and (30) of the
20 definition of "use" in section 1201.
21 (vii) Section 1202(b) and (c).
22 (viii) Section 1204(1), (4), (11), (28), (30), (37),
23 (47), (48), (51), (53), (58), (61) and (65).
24 (ix) The definitions of "occupancy," "occupant" and
25 "permanent resident" in section 1209.
26 (x) Section 1268(b)(1).
27 (xi) Section 1281.2.
28 (xii) Section 1281.3.
29 Section 4. The addition of 72 Pa.C.S. Ch. 13 is a
30 continuation of Article II-A of the act of March 4, 1971 (P.L.6,
20050S0854B2207 - 274 -
1 No.2), known as the Tax Reform Code of 1971. Except as otherwise
2 provided in 72 Pa.C.S. Ch. 13, all activities initiated under
3 Article II-A of the Tax Reform Code of 1971 shall continue and
4 remain in full force and effect and may be completed under 72
5 Pa.C.S. Ch. 13. Orders, regulations, rules and decisions which
6 were made under Article II-A of the Tax Reform Code of 1971 and
7 which are in effect on the effective date of section 2(2) of
8 this act shall remain in full force and effect until revoked,
9 vacated or modified under 72 Pa.C.S. Ch. 13.
10 Section 4.1. The addition of 72 Pa.C.S. Ch. 15 is a
11 continuation of Article III of the act of March 4, 1971 (P.L.6,
12 No.2), known as the Tax Reform Code of 1971. The following
13 apply:
14 (1) Except as otherwise provided in 72 Pa.C.S. Ch. 15,
15 all activities initiated under Article III of the Tax Reform
16 Code of 1971 shall continue and remain in full force and
17 effect and may be completed under 72 Pa.C.S. Ch. 15. Orders,
18 regulations, rules and decisions which were made under
19 Article III of the Tax Reform Code of 1971 and which are in
20 effect on the effective date of section 2(2)(iii) of this act
21 shall remain in full force and effect until revoked, vacated
22 or modified under 72 Pa.C.S. Ch. 15.
23 (2) Except as set forth in paragraph (3), any difference
24 in language between 72 Pa.C.S. Ch. 15 and Article III of the
25 Tax Reform Code of 1971 is intended only to conform to the
26 style of the Pennsylvania Consolidated Statutes and is not
27 intended to change or affect the legislative intent, judicial
28 construction or administration and implementation of Article
29 III of the Tax Reform Code of 1971.
30 (3) Paragraph (2) does not apply to the addition of any
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1 of the following provisions of Title 72:
2 (i) Section 1502.
3 (ii) Section 1503(a)(6) and (a.6).
4 Section 5. The addition of 72 Pa.C.S. § 2121 is a
5 continuation of section 341 of the act of July 5, 2004 (P.L.654,
6 No.72), known as the Homeowner Tax Relief Act. The following
7 apply:
8 (1) Except as otherwise provided in 72 Pa.C.S. Ch. 21,
9 all activities initiated under section 341 of the Homeowner
10 Tax Relief Act shall continue and remain in full force and
11 effect and may be completed under 72 Pa.C.S. Ch. 21. Orders,
12 regulations, rules and decisions which were made under
13 section 341 of the Homeowner Tax Relief Act and which are in
14 effect on the effective date of section 2(3) of this act
15 shall remain in full force and effect until revoked, vacated
16 or modified under 72 Pa.C.S. Ch. 21.
17 (2) Any difference in language between 72 Pa.C.S. § 2121
18 and section 341 of the Homeowner Tax Relief Act is intended
19 only to conform to the style of the Pennsylvania Consolidated
20 Statutes and is not intended to change or affect the
21 legislative intent, judicial construction or administration
22 and implementation of the Homeowner Tax Relief Act.
23 Section 6. The addition of 72 Pa.C.S. Ch. 51 is a
24 continuation of the act of March 11, 1971 (P.L.104, No.3), known
25 as the Senior Citizens Rebate and Assistance Act. The following
26 apply:
27 (1) Except as otherwise provided in 72 Pa.C.S. Ch. 51,
28 all activities initiated under the Senior Citizens Rebate and
29 Assistance Act shall continue and remain in full force and
30 effect and may be completed under 72 Pa.C.S. Ch. 51. Orders,
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1 regulations, rules and decisions which were made under the
2 Senior Citizens Rebate and Assistance Act and which are in
3 effect on the effective date of section 2(4) of this act
4 shall remain in full force and effect until revoked, vacated
5 or modified under 72 Pa.C.S. Ch. 51.
6 (2) Except as set forth in paragraph (3), any difference
7 in language between 72 Pa.C.S. Ch. 51 and the Senior Citizens
8 Rebate and Assistance Act is intended only to conform to the
9 style of the Pennsylvania Consolidated Statutes and is not
10 intended to change or affect the legislative intent, judicial
11 construction or administration and implementation of the
12 Senior Citizens Rebate and Assistance Act.
13 (3) Paragraph (2) does not apply to the addition of any
14 of the following provisions of Title 72:
15 (i) Section 5104(a)(2) and (3) and (d).
16 (ii) Section 5108.
17 Section 6.1. The addition of section 72 Pa.C.S. § 1503(a.6)
18 shall apply to taxable years beginning after December 31, 2005.
19 Section 7. This act shall take effect as follows:
20 (1) Except as provided in paragraph (2), the following
21 provisions shall take effect April 1, 2006:
22 (i) The addition of 72 Pa.C.S. Ch. 12.
23 (ii) The addition of 72 Pa.C.S. Ch. 13.
24 (iii) Except for the addition of 72 Pa.C.S. §
25 1503(a.6), the addition of 72 Pa.C.S. Ch. 15.
26 (iv) Section 2(2)(i), (ii) and (iii) of this act.
27 (2) The addition of 72 Pa.C.S. § 1281.3 and 1560 shall
28 take effect May 1, 2006.
29 (3) The remainder of this act shall take effect
30 immediately.
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1 SECTION 1. SECTION 301 OF THE ACT OF MARCH 4, 1971 (P.L.6, <--
2 NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED BY
3 ADDING A CLAUSE TO READ:
4 SECTION 301. DEFINITIONS.--ANY REFERENCE IN THIS ARTICLE TO
5 THE INTERNAL REVENUE CODE OF 1986 SHALL MEAN THE INTERNAL
6 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.),
7 AS AMENDED TO JANUARY 1, 1997, UNLESS THE REFERENCE CONTAINS THE
8 PHRASE "AS AMENDED" AND REFERS TO NO OTHER DATE, IN WHICH CASE
9 THE REFERENCE SHALL BE TO THE INTERNAL REVENUE CODE OF 1986 AS
10 IT EXISTS AS OF THE TIME OF APPLICATION OF THIS ARTICLE. THE
11 FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN THIS ARTICLE
12 SHALL HAVE THE MEANING ASCRIBED TO THEM IN THIS SECTION EXCEPT
13 WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:
14 * * *
15 (I.1) "HEALTH SAVINGS ACCOUNT" HAS THE MEANING GIVEN IN
16 SECTION 223(D) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
17 (PUBLIC LAW 99-514, 26 U.S.C. 223(D)).
18 * * *
19 SECTION 2. THE ACT IS AMENDED BY ADDING AN ARTICLE TO READ:
20 ARTICLE XXIX-C
21 STRATEGIC DEVELOPMENT AREAS
22 PART 1
23 PRELIMINARY PROVISIONS
24 SECTION 2901-C. SCOPE.
25 THIS ARTICLE RELATES TO STRATEGIC DEVELOPMENT AREAS.
26 SECTION 2902-C. LEGISLATIVE FINDINGS.
27 (1) THERE EXIST IN THIS COMMONWEALTH AREAS OF ECONOMIC
28 DISTRESS CHARACTERIZED BY HIGH UNEMPLOYMENT, LOW INVESTMENT
29 OF NEW CAPITAL, INADEQUATE DWELLING CONDITIONS, BLIGHTED
30 CONDITIONS, UNDERUTILIZED, OBSOLETE OR ABANDONED INDUSTRIAL,
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1 COMMERCIAL AND RESIDENTIAL STRUCTURES AND DETERIORATING TAX
2 BASES.
3 (2) THESE AREAS REQUIRE COORDINATED EFFORTS BY PRIVATE
4 AND PUBLIC ENTITIES TO RESTORE PROSPERITY AND ENABLE THE
5 AREAS TO MAKE SIGNIFICANT CONTRIBUTIONS TO THE ECONOMIC AND
6 SOCIAL LIFE OF THIS COMMONWEALTH.
7 (3) LONG-TERM ECONOMIC VIABILITY OF THESE AREAS REQUIRES
8 THE COOPERATIVE INVOLVEMENT OF RESIDENTS, BUSINESSES, STATE
9 AND LOCAL ELECTED OFFICIALS AND COMMUNITY ORGANIZATIONS. IT
10 IS IN THE BEST INTEREST OF THE COMMONWEALTH TO ASSIST AND
11 ENCOURAGE THE CREATION OF STRATEGIC DEVELOPMENT AREAS AND TO
12 PROVIDE TEMPORARY RELIEF FROM CERTAIN TAXES WITHIN THE
13 STRATEGIC DEVELOPMENT AREAS TO ACCOMPLISH THE PURPOSES OF
14 THIS ARTICLE.
15 SECTION 2903-C. DEFINITIONS.
16 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
17 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
18 CONTEXT CLEARLY INDICATES OTHERWISE:
19 "BUSINESS." AN ASSOCIATION, PARTNERSHIP, CORPORATION, SOLE
20 PROPRIETORSHIP, LIMITED LIABILITY COMPANY OR EMPLOYER.
21 "DEPARTMENT." THE DEPARTMENT OF COMMUNITY AND ECONOMIC
22 DEVELOPMENT OF THE COMMONWEALTH.
23 "DOMICILE." THE PLACE WHERE A PERSON HAS A TRUE AND FIXED
24 HOME AND PRINCIPAL ESTABLISHMENT FOR AN INDEFINITE TIME AND TO
25 WHICH, WHENEVER ABSENT, THAT PERSON INTENDS TO RETURN. DOMICILE
26 CONTINUES UNTIL ANOTHER PLACE OF DOMICILE IS ESTABLISHED.
27 "PERSON." ANY NATURAL PERSON.
28 "POLITICAL SUBDIVISION." A COUNTY, CITY, BOROUGH, TOWNSHIP,
29 TOWN OR SCHOOL DISTRICT WITH TAXING JURISDICTION IN A DEFINED
30 GEOGRAPHIC AREA WITHIN THIS COMMONWEALTH.
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1 "QUALIFIED BUSINESS." A BUSINESS AUTHORIZED TO DO BUSINESS
2 IN THIS COMMONWEALTH WHICH IS LOCATED OR PARTIALLY LOCATED
3 WITHIN A STRATEGIC DEVELOPMENT AREA AND IS ENGAGED IN THE ACTIVE
4 CONDUCT OF A TRADE OR BUSINESS IN ACCORDANCE WITH THE
5 REQUIREMENTS OF SECTION 2911-C FOR THE TAXABLE YEAR. AN AGENT,
6 BROKER OR REPRESENTATIVE OF A BUSINESS IS NOT ENGAGED IN THE
7 ACTIVE CONDUCT OF TRADE OR BUSINESS FOR THE BUSINESS.
8 "RESIDENT." A PERSON WHO IS DOMICILED AND RESIDES IN A
9 STRATEGIC DEVELOPMENT AREA FOR A PERIOD OF 184 CONSECUTIVE DAYS,
10 WHICH MAY BEGIN ON THE DATE OF DESIGNATION BY THE DEPARTMENT OR
11 ON THE DATE THE PERSON FIRST RESIDES WITHIN THE STRATEGIC
12 DEVELOPMENT AREA.
13 "STRATEGIC DEVELOPMENT AREA." A DEFINED GEOGRAPHIC AREA
14 COMPRISED OF ONE OR MORE POLITICAL SUBDIVISIONS OR PORTIONS OF
15 POLITICAL SUBDIVISIONS DESIGNATED BY THE DEPARTMENT OF COMMUNITY
16 AND ECONOMIC DEVELOPMENT UNDER PART 3.
17 PART 3
18 STRATEGIC DEVELOPMENT AREAS
19 SECTION 2911-C. STRATEGIC DEVELOPMENT AREAS.
20 (A) ESTABLISHMENT.--THERE IS HEREBY ESTABLISHED WITHIN THE
21 DEPARTMENT A PROGRAM PROVIDING FOR STRATEGIC DEVELOPMENT AREAS.
22 (B) STRATEGIC DEVELOPMENT AREA DESIGNATION.--
23 (1) THE GOVERNOR MAY, ON OR BEFORE SEPTEMBER 30, 2007,
24 BY EXECUTIVE ORDER, DESIGNATE NOT MORE THAN FOUR STRATEGIC
25 DEVELOPMENT AREAS IN THIS COMMONWEALTH, EACH OF WHICH SHALL
26 NOT BE LESS THAN 10 ACRES OF LAND AND NOT MORE THAN 1,500
27 ACRES, AND THE STRATEGIC DEVELOPMENT AREAS IN THE AGGREGATE
28 SHALL NOT EXCEED 5,000 ACRES.
29 (2) NO PORTION OF A DESIGNATED STRATEGIC DEVELOPMENT
30 AREA SHALL BE USED AS A LICENSED FACILITY, AS DEFINED IN 4
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1 PA.C.S. § 1103 (RELATING TO DEFINITIONS), OR ANY OTHER
2 SIMILAR TYPE OF FACILITY AUTHORIZED UNDER THE LAWS OF THIS
3 COMMONWEALTH.
4 (C) TERM OF DESIGNATION.--PERSONS AND BUSINESSES WITHIN A
5 DESIGNATED AND APPROVED STRATEGIC DEVELOPMENT AREA THAT ARE
6 QUALIFIED UNDER THIS ARTICLE SHALL BE ENTITLED TO ALL TAX
7 EXEMPTIONS, DEDUCTIONS, ABATEMENTS OR CREDITS SET FORTH IN THIS
8 ARTICLE FOR A 15-YEAR PERIOD BEGINNING ON THE DATE OF APPROVAL
9 BY ALL POLITICAL SUBDIVISIONS AS REQUIRED IN SECTION 2913-C OR
10 JANUARY 1, 2007, WHICHEVER OCCURS LAST.
11 (D) APPROVAL BY POLITICAL SUBDIVISIONS.--THE DESIGNATION OF
12 A STRATEGIC DEVELOPMENT AREA AND ENTITLEMENT TO THE BENEFITS
13 PROVIDED IN THIS ARTICLE SHALL NOT BE EFFECTIVE UNLESS A
14 STRATEGIC DEVELOPMENT AREA IS APPROVED BY ALL POLITICAL
15 SUBDIVISIONS IN WHICH IT IS LOCATED, IN WHOLE OR IN PART, IN
16 ACCORDANCE WITH SECTION 2913-C, ON OR BEFORE DECEMBER 31, 2007.
17 SECTION 2912-C. QUALIFIED BUSINESSES.
18 IN ORDER TO QUALIFY FOR TAX EXEMPTIONS, DEDUCTIONS,
19 ABATEMENTS OR CREDITS UNDER THIS ARTICLE, A BUSINESS MUST OWN OR
20 LEASE REAL PROPERTY IN A STRATEGIC DEVELOPMENT AREA ON WHICH THE
21 BUSINESS ACTIVELY CONDUCTS A TRADE, PROFESSION OR BUSINESS
22 INVOLVING ENERGY, BIOSCIENCE OR MANUFACTURING, OR A RELATED
23 ACTIVITY, AND MEET ONE OF THE FOLLOWING CRITERIA:
24 (1) CREATE OR MAINTAIN A MINIMUM OF 500 JOBS WITHIN THE
25 FIRST THREE YEARS OF FULL OPERATION WITHIN THE STRATEGIC
26 DEVELOPMENT AREA.
27 (2) INVEST A MINIMUM OF $45,000,000 IN CAPITAL
28 INVESTMENT IN THE PROPERTY LOCATED IN THE STRATEGIC
29 DEVELOPMENT AREA WITHIN THE FIRST THREE YEARS OF FULL
30 OPERATION.
20050S0854B2207 - 281 -
1 SECTION 2913-C. PROCEDURE FOR APPROVAL BY POLITICAL
2 SUBDIVISIONS.
3 (A) NOTICE TO POLITICAL SUBDIVISIONS.--THE DEPARTMENT SHALL
4 PROMPTLY NOTIFY POLITICAL SUBDIVISIONS IN WHICH A DESIGNATED
5 STRATEGIC DEVELOPMENT AREA IS LOCATED.
6 (B) APPROVAL BY POLITICAL SUBDIVISIONS.--A POLITICAL
7 SUBDIVISION MAY APPROVE THE DESIGNATION OF A STRATEGIC
8 DEVELOPMENT AREA AND GRANT THE EXEMPTIONS, DEDUCTIONS,
9 ABATEMENTS OR CREDITS FOR A STRATEGIC DEVELOPMENT AREA AS
10 PROVIDED IN PART 7 BY ENACTING AN ORDINANCE, RESOLUTION OR OTHER
11 REQUIRED ACTION BY THE GOVERNING BODY OF THE POLITICAL
12 SUBDIVISION APPROVING THE DESIGNATION AS A STRATEGIC DEVELOPMENT
13 AREA AND EXEMPTING OR PROVIDING THE DEDUCTIONS, ABATEMENT OR
14 CREDITS PROVIDED IN PART 7 TO QUALIFIED PERSONS AND QUALIFIED
15 BUSINESSES THEREIN. ALL APPROPRIATE ORDINANCES AND RESOLUTIONS
16 MUST BE EFFECTIVE FOR THE PERIOD SPECIFIED IN SECTION 2911-C(C)
17 AND MUST BE BINDING AND NONREVOCABLE AS TO THE POLITICAL
18 SUBDIVISION. SUCH POLITICAL SUBDIVISION SHALL NOTIFY THE
19 DEPARTMENT UPON ITS ELECTION TO APPROVE THE DESIGNATION OF A
20 STRATEGIC DEVELOPMENT AREA AND TO GRANT THE BENEFITS PROVIDED IN
21 PART 7.
22 SECTION 2914-C. DECERTIFICATION.
23 (A) APPLICATION.--ONE OR MORE POLITICAL SUBDIVISIONS, OR A
24 DESIGNEE OF ONE OR MORE POLITICAL SUBDIVISIONS, MAY APPLY TO THE
25 DEPARTMENT TO DECERTIFY AND REMOVE THE DESIGNATION AS A
26 STRATEGIC DEVELOPMENT AREA. THE APPLICATION MUST CONTAIN ALL OF
27 THE FOLLOWING:
28 (1) AN IDENTIFICATION OF THE PROPERTY TO BE REMOVED.
29 (2) A COPY OF AN AGREEMENT WHICH WAS SUPPORTED BY
30 CONSIDERATION IN WHICH EACH ENTITY WHICH POSSESSES AN
20050S0854B2207 - 282 -
1 INTEREST IN THE REAL PROPERTY TO BE REMOVED, INCLUDING ANY
2 HOLDER OF AN OPTION EITHER TO PURCHASE THE REAL ESTATE OR TO
3 ENTER INTO A GROUND LEASE OF THE REAL ESTATE OR ANY OTHER
4 LEASEHOLD INTEREST IN THE REAL ESTATE, WAIVES THE PARTY'S
5 RIGHT TO ANY EXEMPTIONS, DEDUCTIONS, ABATEMENTS OR CREDITS
6 GRANTED BY THIS ARTICLE.
7 (3) A COPY OF A BINDING ORDINANCE, RESOLUTION OR OTHER
8 GOVERNING DOCUMENT PASSED BY THE POLITICAL SUBDIVISION
9 REMOVING ANY EXEMPTIONS, DEDUCTIONS, ABATEMENTS OR CREDITS
10 GRANTED BY THIS ARTICLE EFFECTIVE UPON DECERTIFICATION BY THE
11 DEPARTMENT.
12 (B) PROCESS.--THE DEPARTMENT MAY GRANT THE REQUEST TO
13 DECERTIFY AND REMOVE THE PROPERTY PROVIDED THAT COMPLETED
14 APPLICATIONS HAVE BEEN SUBMITTED BY ALL QUALIFIED POLITICAL
15 SUBDIVISIONS IN WHICH THE PROPERTY IS LOCATED.
16 PART 5
17 STATE TAXES
18 SUBPART A
19 GENERAL PROVISIONS
20 SECTION 2921-C. STATE TAXES.
21 (A) GENERAL RULE.--A QUALIFIED BUSINESS OR A NONRESIDENT
22 UNDER SECTION 2933-C SHALL RECEIVE THE EXEMPTIONS, DEDUCTIONS,
23 ABATEMENTS OR CREDITS AS PROVIDED IN THIS PART FOR THE DURATION
24 OF THE STRATEGIC DEVELOPMENT AREA DESIGNATION. EXEMPTIONS,
25 DEDUCTIONS, ABATEMENTS OR CREDITS SHALL EXPIRE ON THE DATE OF
26 EXPIRATION OF THE STRATEGIC DEVELOPMENT AREA DESIGNATION.
27 (B) CONSTRUCTION.--THE DEPARTMENT OF REVENUE SHALL
28 ADMINISTER, CONSTRUE AND ENFORCE THE PROVISIONS OF THIS PART IN
29 CONJUNCTION WITH ARTICLES II, III, IV, VI AND IX.
30 SUBPART B
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1 PARTICULAR STATE TAXES
2 SECTION 2931-C. SALES AND USE TAX.
3 (A) EXEMPTION.--SALES AT RETAIL OF SERVICES OR TANGIBLE
4 PERSONAL PROPERTY, OTHER THAN MOTOR VEHICLES, TO A QUALIFIED
5 BUSINESS FOR THE EXCLUSIVE USE, CONSUMPTION AND UTILIZATION OF
6 THE TANGIBLE PERSONAL PROPERTY OR SERVICE BY THE QUALIFIED
7 BUSINESS AT ITS FACILITY LOCATED WITHIN A STRATEGIC DEVELOPMENT
8 AREA ARE EXEMPT FROM THE SALES AND USE TAX IMPOSED UNDER ARTICLE
9 II. NO PERSON SHALL BE ALLOWED AN EXEMPTION FOR SALES CONDUCTED
10 PRIOR TO DESIGNATION OF THE STRATEGIC DEVELOPMENT AREA.
11 (B) CONSTRUCTION CONTRACTS.--FOR ANY CONSTRUCTION CONTRACT
12 PERFORMED IN A STRATEGIC DEVELOPMENT AREA, THE EXEMPTION
13 PROVIDED IN SUBSECTION (A) SHALL ONLY APPLY TO THE SALE AT
14 RETAIL OR USE OF BUILDING MACHINERY AND EQUIPMENT TO A QUALIFIED
15 BUSINESS, OR TO A CONSTRUCTION CONTRACTOR PURSUANT TO A
16 CONSTRUCTION CONTRACT WITH A QUALIFIED BUSINESS, FOR THE
17 EXCLUSIVE USE, CONSUMPTION AND UTILIZATION BY THE QUALIFIED
18 BUSINESS AT ITS FACILITY IN A STRATEGIC DEVELOPMENT AREA.
19 SECTION 2932-C. PERSONAL INCOME TAX.
20 (A) GENERAL RULE.--A PERSON SHALL BE ALLOWED AN EXEMPTION
21 FOR:
22 (1) NET INCOME FROM THE OPERATION OF A QUALIFIED
23 BUSINESS RECEIVED BY A RESIDENT OR NONRESIDENT OF A STRATEGIC
24 DEVELOPMENT AREA ATTRIBUTABLE TO BUSINESS ACTIVITY CONDUCTED
25 WITHIN A STRATEGIC DEVELOPMENT AREA, DETERMINED IN ACCORDANCE
26 WITH SECTION 2935-C, EXCEPT THAT ANY BUSINESS THAT OPERATES
27 BOTH WITHIN AND OUTSIDE THIS COMMONWEALTH, BEFORE COMPUTING
28 ITS STRATEGIC DEVELOPMENT AREA EXEMPTION, SHALL FIRST
29 DETERMINE ITS PENNSYLVANIA ACTIVITY OVER ITS ACTIVITY
30 EVERYWHERE BY APPLYING THE THREE-FACTOR APPORTIONMENT FORMULA
20050S0854B2207 - 284 -
1 AS SET FORTH IN DEPARTMENT OF REVENUE PERSONAL INCOME TAX
2 REGULATIONS APPLICABLE TO INCOME APPORTIONMENT IN CONNECTION
3 WITH A BUSINESS, TRADE OR PROFESSION CARRIED ON BOTH WITHIN
4 AND OUTSIDE THIS COMMONWEALTH.
5 (2) ALL OF THE FOLLOWING:
6 (I) NET GAINS OR INCOME, LESS NET LOSSES, DERIVED BY
7 A RESIDENT OR NONRESIDENT OF A STRATEGIC DEVELOPMENT AREA
8 FROM THE SALE, EXCHANGE OR OTHER DISPOSITION OF REAL OR
9 TANGIBLE PERSONAL PROPERTY LOCATED IN A STRATEGIC
10 DEVELOPMENT AREA AS DETERMINED IN ACCORDANCE WITH
11 ACCEPTED ACCOUNTING PRINCIPLES AND PRACTICES. THE
12 EXEMPTION PROVIDED IN THIS SUBPARAGRAPH SHALL NOT APPLY
13 TO THE SALE, EXCHANGE OR OTHER DISPOSITION OF ANY STOCK
14 OF GOODS, MERCHANDISE OR INVENTORY OR ANY OPERATIONAL
15 ASSETS UNLESS THE TRANSFER IS IN CONNECTION WITH THE
16 SALE, EXCHANGE OR OTHER DISPOSITION OF ALL OF THE ASSETS
17 IN COMPLETE LIQUIDATION OF A QUALIFIED BUSINESS LOCATED
18 IN A STRATEGIC DEVELOPMENT AREA. THIS SUBPARAGRAPH SHALL
19 APPLY TO INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A
20 TRADE, PROFESSION OR BUSINESS IN A STRATEGIC DEVELOPMENT
21 AREA BY A QUALIFIED BUSINESS BUT ONLY WHEN TRANSFERRED IN
22 CONNECTION WITH A SALE, EXCHANGE OR OTHER DISPOSITION OF
23 ALL OF THE ASSETS IN COMPLETE LIQUIDATION OF THE
24 QUALIFIED BUSINESS IN THE STRATEGIC DEVELOPMENT AREA.
25 (II) NET GAINS, LESS NET LOSSES, REALIZED BY A
26 RESIDENT OF A STRATEGIC DEVELOPMENT AREA FROM THE SALE,
27 EXCHANGE OR DISPOSITION OF INTANGIBLE PERSONAL PROPERTY
28 OR OBLIGATIONS ISSUED ON OR AFTER FEBRUARY 1, 1994, BY
29 THE COMMONWEALTH, A PUBLIC AUTHORITY, COMMISSION, BOARD
30 OR OTHER COMMONWEALTH AGENCY, POLITICAL SUBDIVISION OR
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1 AUTHORITY CREATED BY A POLITICAL SUBDIVISION OR BY THE
2 FEDERAL GOVERNMENT AS DETERMINED IN ACCORDANCE WITH
3 ACCEPTED ACCOUNTING PRINCIPLES AND PRACTICES.
4 (III) THE EXEMPTION FROM INCOME FOR GAIN OR LOSS
5 PROVIDED FOR IN SUBPARAGRAPHS (I) AND (II) SHALL BE
6 PRORATED BASED ON THE FOLLOWING:
7 (A) IN THE CASE OF GAINS, LESS NET LOSSES, IN
8 SUBPARAGRAPH (I), THE PERCENTAGE OF TIME, BASED ON
9 CALENDAR DAYS, THE PROPERTY LOCATED IN A STRATEGIC
10 DEVELOPMENT AREA WAS HELD BY A RESIDENT OR
11 NONRESIDENT OF THE STRATEGIC DEVELOPMENT AREA DURING
12 THE TIME PERIOD THE STRATEGIC DEVELOPMENT AREA WAS IN
13 EFFECT IN RELATION TO THE TOTAL TIME THE PROPERTY WAS
14 HELD.
15 (B) IN THE CASE OF GAINS, LESS NET LOSSES, IN
16 SUBPARAGRAPH (II), THE PERCENTAGE OF TIME, BASED ON
17 CALENDAR DAYS, THE PROPERTY WAS HELD BY THE TAXPAYER
18 WHILE A RESIDENT OF A STRATEGIC DEVELOPMENT AREA IN
19 RELATION TO THE TOTAL TIME THE PROPERTY WAS HELD.
20 (3) NET GAINS OR INCOME DERIVED FROM OR IN THE FORM OF
21 RENTS RECEIVED BY A PERSON, WHETHER A RESIDENT OR NONRESIDENT
22 OF A STRATEGIC DEVELOPMENT AREA, TO THE EXTENT THAT INCOME OR
23 LOSS FROM THE RENTAL OF REAL OR TANGIBLE PERSONAL PROPERTY IS
24 ALLOCABLE TO A STRATEGIC DEVELOPMENT AREA. FOR PURPOSES OF
25 CALCULATING THIS EXEMPTION:
26 (I) NET RENTS DERIVED FROM REAL OR TANGIBLE PERSONAL
27 PROPERTY LOCATED IN A STRATEGIC DEVELOPMENT AREA ARE
28 ALLOCABLE TO A STRATEGIC DEVELOPMENT AREA.
29 (II) IF THE TANGIBLE PERSONAL PROPERTY WAS USED BOTH
30 WITHIN AND WITHOUT THE STRATEGIC DEVELOPMENT AREA DURING
20050S0854B2207 - 286 -
1 THE TAXABLE YEAR, ONLY THE NET INCOME ATTRIBUTABLE TO USE
2 IN THE STRATEGIC DEVELOPMENT AREA IS EXEMPT. THE NET
3 RENTAL INCOME SHALL BE MULTIPLIED BY A FRACTION, THE
4 NUMERATOR OF WHICH IS THE NUMBER OF DAYS THE PROPERTY WAS
5 USED IN THE STRATEGIC DEVELOPMENT AREA AND THE
6 DENOMINATOR OF WHICH IS THE TOTAL DAYS OF USE.
7 (4) DIVIDENDS RECEIVED DURING THE TIME THE PERSON WAS A
8 RESIDENT OF A STRATEGIC DEVELOPMENT AREA.
9 (5) INTEREST RECEIVED DURING THE TIME PERIOD THE PERSON
10 WAS A RESIDENT OF A STRATEGIC DEVELOPMENT AREA.
11 (6) THE PART OF THE INCOME OR GAINS RECEIVED BY AN
12 ESTATE OR TRUST FOR ITS TAXABLE YEAR ENDING WITHIN OR WITH
13 THE RESIDENT-BENEFICIARY'S TAXABLE YEAR WHICH, UNDER THE
14 GOVERNING INSTRUMENT AND APPLICABLE STATE LAW, IS REQUIRED TO
15 BE DISTRIBUTED CURRENTLY OR IS IN FACT PAID OR CREDITED TO
16 THE RESIDENT-BENEFICIARY AND WHICH WOULD HAVE BEEN EXEMPT
17 UNDER THIS ARTICLE IF RECEIVED BY A RESIDENT-BENEFICIARY
18 DIRECTLY.
19 (B) PASS-THROUGH ENTITIES.--THE EXEMPTIONS PROVIDED FOR IN
20 SUBSECTION (A)(1), (2)(I) AND (3) SHALL APPLY TO ALL OF THE
21 FOLLOWING:
22 (1) THE INCOME OR GAIN OF A PARTNERSHIP OR ASSOCIATION.
23 THE PARTNER OR MEMBER SHALL BE ENTITLED TO THE EXEMPTIONS
24 UNDER THIS SECTION FOR THE PARTNER'S OR MEMBER'S SHARE,
25 WHETHER OR NOT DISTRIBUTED, OF THE INCOME OR GAIN RECEIVED BY
26 THE PARTNERSHIP OR ASSOCIATION FOR ITS TAXABLE YEAR.
27 (2) THE INCOME OR GAIN OF A PENNSYLVANIA S CORPORATION.
28 THE SHAREHOLDER SHALL BE ENTITLED TO THE EXEMPTIONS UNDER
29 THIS SECTION FOR THE SHAREHOLDER'S PRO RATA SHARE, WHETHER OR
30 NOT DISTRIBUTED, OF THE INCOME OR GAIN RECEIVED BY THE
20050S0854B2207 - 287 -
1 CORPORATION FOR ITS TAXABLE YEAR ENDING WITHIN OR WITH THE
2 SHAREHOLDER'S TAXABLE YEAR.
3 (C) LIMITATION.--A PARTNERSHIP, ASSOCIATION, SUBCHAPTER S
4 CORPORATION, RESIDENT OR NONRESIDENT MAY NOT APPLY AN EXEMPTION
5 FROM INCOME UNDER THIS ARTICLE FOR ANY CLASS OF INCOME AGAINST
6 ANY OTHER CLASSES OF INCOME OR GAIN. A PARTNERSHIP, ASSOCIATION,
7 SUBCHAPTER S CORPORATION, RESIDENT OR NONRESIDENT MAY NOT CARRY
8 BACK OR CARRY FORWARD ANY EXEMPTION UNDER THIS ARTICLE FROM YEAR
9 TO YEAR. THE CREDIT ALLOWED UNDER THIS SECTION SHALL NOT EXCEED
10 THE TAX LIABILITY OF THE TAXPAYER UNDER ARTICLE III FOR THE TAX
11 YEAR.
12 (D) SECTION NOT APPLICABLE TO CERTAIN ENTITIES.--ANY PORTION
13 OF NET INCOME OR GAIN THAT IS ATTRIBUTABLE TO OPERATION OF A
14 RAILROAD, TRUCK, BUS OR AIRLINE COMPANY, PIPELINE OR NATURAL GAS
15 COMPANY, WATER TRANSPORTATION COMPANY OR ENTITY WHICH WOULD
16 QUALIFY AS A REGULATED INVESTMENT COMPANY UNDER ARTICLE IV OR
17 WOULD QUALIFY AS A HOLDING COMPANY UNDER ARTICLE VI SHALL NOT BE
18 USED TO CALCULATE AN EXEMPTION UNDER THIS SECTION. THIS
19 SUBSECTION SHALL NOT APPLY TO THE EXEMPTION FROM TAX PROVIDED IN
20 SUBSECTION (A)(4).
21 SECTION 2933-C. NONRESIDENCY CONSIDERATIONS.
22 IF A NONRESIDENT REALIZES INCOME ATTRIBUTABLE TO BUSINESS
23 ACTIVITY OR PROPERTY WITHIN A STRATEGIC DEVELOPMENT AREA ON OR
24 BEFORE THE END OF THE TAX YEAR, THE PERSON MAY CLAIM THE
25 EXEMPTIONS FROM INCOME FOR THE ITEMS SET FORTH IN SECTION 2932-C
26 FOR THAT PORTION OF THE TAX YEAR THAT THE PERSON WAS A RESIDENT
27 OR FOR THAT PORTION OF THE TAX YEAR DURING WHICH THE AREA IS
28 DESIGNATED AS A STRATEGIC DEVELOPMENT AREA.
29 SECTION 2934-C. (RESERVED).
30 SECTION 2935-C. CORPORATE NET INCOME TAX.
20050S0854B2207 - 288 -
1 (A) CREDITS.--FOR THE TAX YEARS THAT BEGIN ON OR AFTER
2 JANUARY 1, 2008, A CORPORATION THAT IS A QUALIFIED BUSINESS
3 UNDER THIS ARTICLE MAY CLAIM A CREDIT AGAINST THE TAX IMPOSED BY
4 ARTICLE IV FOR TAX LIABILITY ATTRIBUTABLE TO BUSINESS ACTIVITY
5 CONDUCTED WITHIN THE STRATEGIC DEVELOPMENT AREA IN THE TAXABLE
6 YEAR. NO CREDIT MAY BE CLAIMED FOR ACTIVITIES CONDUCTED PRIOR TO
7 DESIGNATION OF THE STRATEGIC DEVELOPMENT AREA. THE BUSINESS
8 ACTIVITY MUST BE CONDUCTED DIRECTLY BY A CORPORATION IN THE
9 STRATEGIC DEVELOPMENT AREA IN ORDER FOR THE CORPORATION TO CLAIM
10 THE TAX CREDIT.
11 (B) TAX LIABILITY DETERMINATIONS.--THE CORPORATE TAX
12 LIABILITY ATTRIBUTABLE TO BUSINESS ACTIVITY CONDUCTED WITHIN A
13 STRATEGIC DEVELOPMENT AREA SHALL BE DETERMINED BY MULTIPLYING
14 THE CORPORATION'S TAXABLE INCOME THAT IS ATTRIBUTABLE TO
15 BUSINESS ACTIVITY CONDUCTED WITHIN THE STRATEGIC DEVELOPMENT
16 AREA BY THE RATE OF TAX IMPOSED UNDER ARTICLE IV FOR THE TAXABLE
17 YEAR.
18 (C) DETERMINATIONS OF ATTRIBUTABLE TAX LIABILITY.--TAX
19 LIABILITY ATTRIBUTABLE TO BUSINESS ACTIVITY CONDUCTED WITHIN A
20 STRATEGIC DEVELOPMENT AREA SHALL BE COMPUTED, CONSTRUED,
21 ADMINISTERED AND ENFORCED IN CONFORMITY WITH ARTICLE IV AND WITH
22 SPECIFIC REFERENCE TO THE FOLLOWING:
23 (1) IF THE ENTIRE BUSINESS OF THE CORPORATION IN THIS
24 COMMONWEALTH IS TRANSACTED WHOLLY WITHIN THE STRATEGIC
25 DEVELOPMENT AREA, THE TAXABLE INCOME ATTRIBUTABLE TO BUSINESS
26 ACTIVITY WITHIN A STRATEGIC DEVELOPMENT AREA SHALL CONSIST OF
27 THE PENNSYLVANIA TAXABLE INCOME AS DETERMINED UNDER ARTICLE
28 IV.
29 (2) IF THE ENTIRE BUSINESS OF THE CORPORATION IN THIS
30 COMMONWEALTH IS NOT TRANSACTED WHOLLY WITHIN THE STRATEGIC
20050S0854B2207 - 289 -
1 DEVELOPMENT AREA, THE TAXABLE INCOME OF A CORPORATION IN A
2 STRATEGIC DEVELOPMENT AREA SHALL BE DETERMINED UPON SUCH
3 PORTION OF THE PENNSYLVANIA TAXABLE INCOME OF SUCH
4 CORPORATION ATTRIBUTABLE TO BUSINESS ACTIVITY CONDUCTED
5 WITHIN THE STRATEGIC DEVELOPMENT AREA AND APPORTIONED IN
6 ACCORDANCE WITH SUBSECTION (D).
7 (D) INCOME APPORTIONMENT.--THE TAXABLE INCOME OF A
8 CORPORATION THAT IS A QUALIFIED BUSINESS SHALL BE APPORTIONED TO
9 THE STRATEGIC DEVELOPMENT AREA BY MULTIPLYING THE PENNSYLVANIA
10 TAXABLE INCOME BY A FRACTION, THE NUMERATOR OF WHICH IS THE
11 PROPERTY FACTOR PLUS THE PAYROLL FACTOR PLUS THE SALES FACTOR
12 AND THE DENOMINATOR OF WHICH IS THREE, IN ACCORDANCE WITH THE
13 FOLLOWING:
14 (1) THE PROPERTY FACTOR IS A FRACTION, THE NUMERATOR OF
15 WHICH IS THE AVERAGE VALUE OF THE TAXPAYER'S REAL AND
16 TANGIBLE PERSONAL PROPERTY OWNED OR RENTED AND USED IN THE
17 STRATEGIC DEVELOPMENT AREA DURING THE TAX PERIOD AND THE
18 DENOMINATOR OF WHICH IS THE AVERAGE VALUE OF ALL THE
19 TAXPAYER'S REAL AND TANGIBLE PERSONAL PROPERTY OWNED OR
20 RENTED AND USED IN THIS COMMONWEALTH DURING THE TAX PERIOD
21 BUT SHALL NOT INCLUDE THE SECURITY INTEREST OF ANY
22 CORPORATION AS SELLER OR LESSOR IN PERSONAL PROPERTY SOLD OR
23 LEASED UNDER A CONDITIONAL SALE, BAILMENT LEASE, CHATTEL
24 MORTGAGE OR OTHER CONTRACT PROVIDING FOR THE RETENTION OF A
25 LIEN OR TITLE AS SECURITY FOR THE SALES PRICE OF THE
26 PROPERTY.
27 (2) (I) THE PAYROLL FACTOR IS A FRACTION, THE NUMERATOR
28 OF WHICH IS THE TOTAL AMOUNT PAID IN THE STRATEGIC
29 DEVELOPMENT AREA DURING THE TAX PERIOD BY THE TAXPAYER
30 FOR COMPENSATION AND THE DENOMINATOR OF WHICH IS THE
20050S0854B2207 - 290 -
1 TOTAL COMPENSATION PAID IN THIS COMMONWEALTH DURING THE
2 TAX PERIOD.
3 (II) COMPENSATION IS PAID IN THE STRATEGIC
4 DEVELOPMENT AREA IF:
5 (A) THE PERSON'S SERVICE IS PERFORMED ENTIRELY
6 WITHIN THE STRATEGIC DEVELOPMENT AREA;
7 (B) THE PERSON'S SERVICE IS PERFORMED BOTH
8 WITHIN AND WITHOUT THE STRATEGIC DEVELOPMENT AREA,
9 BUT THE SERVICE PERFORMED WITHOUT THE STRATEGIC
10 DEVELOPMENT AREA IS INCIDENTAL TO THE PERSON'S
11 SERVICE WITHIN THE STRATEGIC DEVELOPMENT AREA; OR
12 (C) SOME OF THE SERVICE IS PERFORMED IN THE
13 STRATEGIC DEVELOPMENT AREA AND THE BASE OF OPERATIONS
14 OR, IF THERE IS NO BASE OF OPERATIONS, THE PLACE FROM
15 WHICH THE SERVICE IS DIRECTED OR CONTROLLED IS IN THE
16 STRATEGIC DEVELOPMENT AREA, OR THE BASE OF OPERATIONS
17 OR THE PLACE FROM WHICH THE SERVICE IS DIRECTED OR
18 CONTROLLED IS NOT IN ANY LOCATION IN WHICH SOME PART
19 OF THE SERVICE IS PERFORMED, BUT THE PERSON'S
20 RESIDENCE IS IN THE STRATEGIC DEVELOPMENT AREA.
21 (3) THE SALES FACTOR IS A FRACTION, THE NUMERATOR OF
22 WHICH IS THE TOTAL SALES OF THE TAXPAYER IN THE STRATEGIC
23 DEVELOPMENT AREA DURING THE TAX PERIOD AND THE DENOMINATOR OF
24 WHICH IS THE TOTAL SALES OF THE TAXPAYER IN THIS COMMONWEALTH
25 DURING THE TAX PERIOD.
26 (I) SALES OF TANGIBLE PERSONAL PROPERTY ARE IN THE
27 STRATEGIC DEVELOPMENT AREA IF THE PROPERTY IS DELIVERED
28 OR SHIPPED TO A PURCHASER THAT TAKES POSSESSION WITHIN
29 THE STRATEGIC DEVELOPMENT AREA REGARDLESS OF THE F.O.B.
30 POINT OR OTHER CONDITIONS OF THE SALE.
20050S0854B2207 - 291 -
1 (II) SALES OTHER THAN SALES OF TANGIBLE PERSONAL
2 PROPERTY ARE IN THE STRATEGIC DEVELOPMENT AREA IF:
3 (A) THE INCOME-PRODUCING ACTIVITY IS PERFORMED
4 IN THE STRATEGIC DEVELOPMENT AREA; OR
5 (B) THE INCOME-PRODUCING ACTIVITY IS PERFORMED
6 BOTH WITHIN AND WITHOUT THE STRATEGIC DEVELOPMENT
7 AREA AND A GREATER PROPORTION OF THE INCOME-PRODUCING
8 ACTIVITY IS PERFORMED IN THE STRATEGIC DEVELOPMENT
9 AREA THAN IN ANY OTHER LOCATION, BASED ON COSTS OF
10 PERFORMANCE.
11 (E) COMPUTATION.--A CORPORATION SHALL COMPUTE ITS
12 COMMONWEALTH TAXABLE INCOME IN CONFORMITY WITH ARTICLE IV WITH
13 NO ADJUSTMENTS OR SUBTRACTIONS FOR STRATEGIC DEVELOPMENT AREA
14 TAXABLE INCOME.
15 (F) LIMITATION ON AMOUNT OF CREDIT.--THE CREDIT ALLOWED
16 UNDER THIS SECTION SHALL NOT EXCEED THE TAX LIABILITY OF THE
17 TAXPAYER UNDER ARTICLE IV FOR THE TAX YEAR.
18 (G) SECTION NOT APPLICABLE TO CERTAIN BUSINESSES.--ANY
19 PORTION OF THE TAXPAYER'S TAXABLE INCOME THAT IS ATTRIBUTABLE TO
20 THE OPERATION OF A RAILROAD, TRUCK, BUS OR AIRLINE COMPANY,
21 PIPELINE OR NATURAL GAS COMPANY, WATER TRANSPORTATION COMPANY, A
22 CORPORATION THAT QUALIFIES AS A REGULATED INVESTMENT COMPANY
23 UNDER ARTICLE IV OR HOLDING COMPANY AS DEFINED IN ARTICLE VI
24 SHALL NOT BE USED TO CALCULATE A CREDIT UNDER THIS SECTION.
25 SECTION 2936-C. CAPITAL STOCK FRANCHISE TAX.
26 (A) CREDITS.--FOR TAX YEARS THAT BEGIN ON OR AFTER JANUARY
27 1, 2008, A CORPORATION THAT IS A QUALIFIED BUSINESS UNDER THIS
28 ARTICLE MAY CLAIM A CREDIT AGAINST THE TAX IMPOSED BY ARTICLE VI
29 FOR TAX LIABILITY ATTRIBUTABLE TO THE CAPITAL EMPLOYED WITHIN
30 THE STRATEGIC DEVELOPMENT AREA IN THE TAXABLE YEAR. NO CREDIT
20050S0854B2207 - 292 -
1 MAY BE CLAIMED FOR CAPITAL EMPLOYED PRIOR TO DESIGNATION OF THE
2 REAL PROPERTY AS PART OF A STRATEGIC DEVELOPMENT AREA. THE
3 BUSINESS ACTIVITY MUST BE CONDUCTED DIRECTLY BY A CORPORATION IN
4 THE STRATEGIC DEVELOPMENT AREA IN ORDER FOR THE CORPORATION TO
5 CLAIM THE TAX CREDIT.
6 (B) TAX LIABILITY.--THE CORPORATION'S TAX LIABILITY
7 ATTRIBUTABLE TO CAPITAL EMPLOYED WITHIN A STRATEGIC DEVELOPMENT
8 AREA SHALL BE DETERMINED BY MULTIPLYING THE CORPORATION'S
9 TAXABLE VALUE ATTRIBUTABLE TO CAPITAL EMPLOYED WITHIN THE
10 STRATEGIC DEVELOPMENT AREA BY THE RATE OF TAX IMPOSED UNDER
11 ARTICLE VI FOR THE TAXABLE YEAR. THE CORPORATION SHALL COMPUTE
12 ITS PENNSYLVANIA TAXABLE VALUE IN CONFORMITY WITH ARTICLE VI
13 WITH NO ADJUSTMENTS OR SUBTRACTIONS FOR THE CAPITAL EMPLOYED IN
14 THE STRATEGIC DEVELOPMENT AREA.
15 (C) DETERMINATION OF ATTRIBUTABLE TAX LIABILITY.--THE
16 DETERMINATION OF THE CORPORATION'S TAXABLE VALUE ATTRIBUTABLE TO
17 THE CAPITAL EMPLOYED WITHIN A STRATEGIC DEVELOPMENT AREA SHALL
18 BE DETERMINED WITH SPECIFIC REFERENCE TO THE FOLLOWING:
19 (1) IF THE ENTIRE BUSINESS OF THE CORPORATION IN THIS
20 COMMONWEALTH IS TRANSACTED WHOLLY WITHIN A STRATEGIC
21 DEVELOPMENT AREA, THE TAXABLE VALUE ATTRIBUTABLE TO THE
22 CAPITAL EMPLOYED WITHIN A STRATEGIC DEVELOPMENT AREA SHALL
23 CONSIST OF THE PENNSYLVANIA TAXABLE VALUE AS DETERMINED UNDER
24 ARTICLE VI.
25 (2) IF THE ENTIRE BUSINESS OF THE CORPORATION IN THIS
26 COMMONWEALTH IS NOT WHOLLY TRANSACTED WITHIN A STRATEGIC
27 DEVELOPMENT AREA, THE TAXABLE VALUE OF A CORPORATION IN A
28 STRATEGIC DEVELOPMENT AREA SHALL BE DETERMINED UPON SUCH
29 PORTION OF THE PENNSYLVANIA TAXABLE VALUE ATTRIBUTABLE TO THE
30 CAPITAL EMPLOYED WITHIN THE STRATEGIC DEVELOPMENT AREA BY
20050S0854B2207 - 293 -
1 EMPLOYING THE APPORTIONMENT FACTORS SET FORTH IN SECTION
2 2935-C(D).
3 (D) LIMITATION ON AMOUNT OF CREDIT.--THE CREDIT ALLOWED
4 UNDER THIS SECTION SHALL NOT EXCEED THE TAX LIABILITY OF THE
5 TAXPAYER UNDER ARTICLE VI FOR THE TAX YEAR.
6 (E) CREDIT NOT AVAILABLE.--ANY PORTION OF THE TAXPAYER'S TAX
7 LIABILITY THAT IS ATTRIBUTABLE TO THE CAPITAL EMPLOYED IN THE
8 OPERATION OF A RAILROAD, TRUCK, BUS OR AIRLINE COMPANY, PIPELINE
9 OR NATURAL GAS COMPANY, WATER TRANSPORTATION COMPANY, A
10 CORPORATION THAT QUALIFIES AS A REGULATED INVESTMENT COMPANY
11 UNDER ARTICLE IV OR HOLDING COMPANY AS DEFINED IN ARTICLE VI
12 SHALL NOT BE USED TO CALCULATE A CREDIT UNDER THIS SECTION.
13 SECTION 2937-C. (RESERVED).
14 SECTION 2938-C. STRATEGIC DEVELOPMENT AREA JOB TAX CREDIT.
15 (A) CREDITS.--FOR TAX YEARS THAT BEGIN ON OR AFTER JANUARY
16 1, 2008, AN INSURANCE COMPANY THAT IS A QUALIFIED BUSINESS UNDER
17 THIS ARTICLE MAY APPLY TO THE DEPARTMENT OF REVENUE FOR A JOB
18 TAX CREDIT AGAINST THE TAX IMPOSED BY ARTICLE IX FOR ALL FULL-
19 TIME JOBS WITHIN A STRATEGIC DEVELOPMENT AREA IN THE TAXABLE
20 YEAR. THE JOB MUST BE HELD DIRECTLY WITH AN INSURANCE COMPANY IN
21 THE STRATEGIC DEVELOPMENT AREA IN ORDER FOR THE INSURANCE
22 COMPANY TO APPLY FOR THE TAX CREDIT. THE DEPARTMENT OF REVENUE
23 WILL PRESCRIBE THE FORM AND MANNER TO OBTAIN THE CREDIT.
24 (B) SECTION NOT APPLICABLE TO CERTAIN INSURANCE COMPANIES.--
25 (1) AN INSURANCE COMPANY THAT RELOCATES FROM A LOCATION
26 IN A POLITICAL SUBDIVISION IN THIS COMMONWEALTH THAT IS NOT
27 IN A STRATEGIC DEVELOPMENT AREA TO A LOCATION IN A STRATEGIC
28 DEVELOPMENT AREA MAY NOT APPLY FOR A CREDIT FOR AN EXISTING
29 JOB THAT IS TRANSFERRED, DISCONTINUED OR LOST IN THIS
30 COMMONWEALTH WHICH IS ATTRIBUTABLE TO THE RELOCATION.
20050S0854B2207 - 294 -
1 (2) AN INSURANCE COMPANY THAT HAS RELOCATED PURSUANT TO
2 PARAGRAPH (1) MAY APPLY FOR A STRATEGIC DEVELOPMENT AREA JOB
3 TAX CREDIT, FOR A NEW FULL-TIME JOB THAT IS CREATED IN THE
4 STRATEGIC DEVELOPMENT AREA. A NEW FULL-TIME JOB IS CREATED
5 WITH AN INSURANCE COMPANY IF THE AVERAGE MONTHLY EMPLOYMENT
6 FOR THAT INSURANCE COMPANY HAS INCREASED FROM THE PRIOR 12-
7 MONTH CALENDAR YEAR IN THE STRATEGIC DEVELOPMENT AREA.
8 (C) APPLICATION OF CREDIT.--AN INSURANCE COMPANY SHALL APPLY
9 FOR A CREDIT BY JANUARY 15 FOR THE PREVIOUS CALENDAR YEAR.
10 (D) APPORTIONMENT.--THE DEPARTMENT OF REVENUE SHALL
11 APPORTION A STRATEGIC DEVELOPMENT AREA TAX CREDIT FOR AN
12 INSURANCE COMPANY THAT IS A QUALIFIED BUSINESS THAT HAS NOT
13 OPERATED IN A STRATEGIC DEVELOPMENT AREA FOR A FULL FISCAL YEAR.
14 (E) CREDIT DETERMINATIONS.--THE STRATEGIC DEVELOPMENT AREA
15 JOB TAX CREDIT SHALL BE DETERMINED BY MULTIPLYING THE MONTHLY
16 AVERAGE OF ALL FULL-TIME JOBS BY THE ALLOWANCE. THE ALLOWANCE
17 FOR PURPOSES OF THE STRATEGIC DEVELOPMENT AREA JOB TAX CREDIT
18 FOR TAXABLE YEARS BEGINNING WITHIN THE DATES SET FORTH SHALL BE
19 AS FOLLOWS:
20 JANUARY 1, 2001, TO
21 DECEMBER 31, 2001 $500 PER JOB
22 JANUARY 1, 2002, TO
23 DECEMBER 31, 2002 $750 PER JOB
24 JANUARY 1, 2003, TO
25 DECEMBER 31, 2003 $1,000 PER JOB
26 JANUARY 1, 2004, TO
27 DECEMBER 31, 2004 $1,250 PER JOB
28 JANUARY 1, 2005, TO
29 DECEMBER 31, 2005 $1,250 PER JOB
30 JANUARY 1, 2006, TO
20050S0854B2207 - 295 -
1 DECEMBER 31, 2006 $1,250 PER JOB
2 JANUARY 1, 2007, TO
3 DECEMBER 31, 2007 $1,250 PER JOB
4 JANUARY 1, 2008, TO
5 DECEMBER 31, 2008 $1,250 PER JOB
6 JANUARY 1, 2009, TO
7 DECEMBER 31, 2009 $1,250 PER JOB
8 JANUARY 1, 2010, TO
9 DECEMBER 31, 2010 $1,250 PER JOB
10 JANUARY 1, 2011, TO
11 DECEMBER 31, 2011 $1,250 PER JOB
12 JANUARY 1, 2012, TO
13 DECEMBER 31, 2012 $1,250 PER JOB
14 JANUARY 1, 2013, TO
15 DECEMBER 31, 2013 $1,250 PER JOB
16 JANUARY 1, 2014, TO
17 DECEMBER 31, 2014 $1,250 PER JOB
18 JANUARY 1, 2015, TO
19 DECEMBER 31, 2015 $1,250 PER JOB
20 JANUARY 1, 2016, TO
21 DECEMBER 31, 2016 $1,250 PER JOB
22 JANUARY 1, 2017, TO
23 DECEMBER 31, 2017 $1,250 PER JOB
24 JANUARY 1, 2018, TO
25 DECEMBER 31, 2018 $1,250 PER JOB
26 JANUARY 1, 2019, TO
27 DECEMBER 31, 2019 $1,250 PER JOB
28 JANUARY 1, 2020, TO
29 DECEMBER 31, 2020 $1,250 PER JOB
30 JANUARY 1, 2021, TO
20050S0854B2207 - 296 -
1 DECEMBER 31, 2021 $1,250 PER JOB
2 JANUARY 1, 2022, TO
3 DECEMBER 31, 2022 $1,250 PER JOB
4 (F) NOTIFICATION OF CREDIT.--BY MARCH 15, THE DEPARTMENT OF
5 REVENUE SHALL NOTIFY AN INSURANCE COMPANY OF THE AMOUNT OF THE
6 INSURANCE COMPANY'S TAX CREDIT APPROVED.
7 (G) LIMITATION ON AMOUNT OF CREDIT.--THE TAX CREDIT ALLOWED
8 UNDER THIS SECTION SHALL NOT EXCEED 50% OF THE TAX LIABILITY OF
9 THE INSURANCE COMPANY UNDER ARTICLE IX FOR THE TAX YEAR. AN
10 INSURANCE COMPANY MAY NOT CARRY BACK OR FORWARD ANY CREDIT
11 RECEIVED UNDER THIS SECTION.
12 (H) ALLOCATION.--THE TOTAL AMOUNT OF CREDITS APPROVED BY THE
13 DEPARTMENT OF REVENUE UNDER THIS SECTION SHALL NOT EXCEED
14 $1,000,000 ANNUALLY. IF THE CREDITS EXCEED THE $1,000,000 CAP IN
15 A GIVEN YEAR, THE CREDITS WILL BE ALLOCATED ON A PRO RATA BASIS.
16 (I) CALCULATION OF ALLOCATION.--IF THE TOTAL AMOUNT OF
17 STRATEGIC DEVELOPMENT AREA JOB TAX CREDITS APPLIED FOR BY ALL
18 INSURANCE COMPANIES UNDER THIS SECTION EXCEEDS $1,000,000, THEN
19 THE CREDIT TO BE RECEIVED BY EACH INSURANCE COMPANY SHALL BE THE
20 PRODUCT OF $1,000,000 MULTIPLIED BY THE QUOTIENT OF THE CREDIT
21 APPLIED FOR BY THE INSURANCE COMPANY DIVIDED BY THE TOTAL OF ALL
22 CREDITS APPLIED FOR BY ALL INSURANCE COMPANIES, THE ALGEBRAIC
23 EQUIVALENT OF WHICH IS:
24 INSURANCE COMPANY'S STRATEGIC DEVELOPMENT AREA JOB TAX
25 CREDIT = $1,000,000 X (THE AMOUNT OF STRATEGIC
26 DEVELOPMENT AREA JOB TAX CREDIT APPLIED FOR BY THE
27 INSURANCE COMPANY/THE SUM OF ALL STRATEGIC DEVELOPMENT
28 AREA JOB TAX CREDITS APPLIED FOR BY ALL INSURANCE
29 COMPANIES).
30 (J) PARTNERSHIP ARRANGEMENTS.--THE JOBS TAX CREDIT PROVIDED
20050S0854B2207 - 297 -
1 FOR UNDER THIS SECTION MAY BE ALLOCATED TO AN INSURANCE COMPANY
2 THAT IS A PARTNER IN SUCH PARTNERSHIP THAT IS ALSO A QUALIFIED
3 BUSINESS IN PROPORTION TO THE FULL-TIME JOBS WITHIN A STRATEGIC
4 DEVELOPMENT AREA THAT ARE PROVIDED TO SUCH INSURANCE COMPANY BY
5 THE PARTNERSHIP. HOWEVER, A PARTNERSHIP AND A PARTNER OF THAT
6 PARTNERSHIP MAY NOT CLAIM ANY OTHER TAX BENEFIT, EXPENSE OR
7 CREDIT FOR THE SAME STRATEGIC DEVELOPMENT AREA JOB TAX CREDIT.
8 (K) RELIEF FROM ADDITIONAL RETALIATORY TAX.--THE TAX CREDIT
9 TAKEN BY AN INSURANCE COMPANY UNDER THIS SECTION SHALL NOT BE
10 INCLUDED IN DETERMINING LIABILITY FOR RETALIATORY TAXES IMPOSED
11 UNDER SECTION 212 OF THE ACT OF MAY 17, 1921 (P.L.789, NO.285),
12 KNOWN AS THE INSURANCE DEPARTMENT ACT OF 1921.
13 (L) HOLD-HARMLESS CLAUSE.--THE TAX CREDITS ALLOWED BY THIS
14 SECTION SHALL NOT REDUCE THE AMOUNTS WHICH WOULD OTHERWISE BE
15 PAYABLE FOR FIREMEN'S RELIEF PENSION OR RETIREMENT PURPOSES OR
16 FOR POLICE PENSION RETIREMENT OR DISABILITY PURPOSES. THE
17 DEPARTMENT OF REVENUE SHALL TRANSFER BY JUNE 30 OF EACH FISCAL
18 YEAR AN AMOUNT EQUAL TO THE TAX CREDITS TAKEN UNDER THIS SECTION
19 BY FOREIGN FIRE AND CASUALTY INSURANCE COMPANIES FROM THE
20 GENERAL FUND TO THE MUNICIPAL PENSION AID FUND AND THE FIRE
21 INSURANCE TAX FUND, AS APPROPRIATE.
22 SECTION 2939-C. STRATEGIC DEVELOPMENT AREA JOB CREATION TAX
23 CREDIT.
24 (A) CREDITS.--FOR TAX YEARS THAT BEGIN ON OR AFTER JANUARY
25 1, 2008, A RAILROAD, TRUCK, BUS OR AIRLINE COMPANY, PIPELINE OR
26 NATURAL GAS COMPANY OR WATER TRANSPORTATION COMPANY THAT IS
27 REQUIRED TO APPORTION INCOME IN ACCORDANCE WITH SECTION
28 401(3)2(B), (C) OR (D) AND IS A QUALIFIED BUSINESS UNDER THIS
29 ARTICLE MAY APPLY TO THE DEPARTMENT OF REVENUE FOR A STRATEGIC
30 DEVELOPMENT AREA JOB CREATION TAX CREDIT AGAINST THE TAX IMPOSED
20050S0854B2207 - 298 -
1 BY ARTICLE III, IV OR VI. THE CREDIT SHALL BE FOR ALL FULL-TIME
2 JOBS CREATED WITHIN A STRATEGIC DEVELOPMENT AREA IN THE TAXABLE
3 YEAR. THE JOB MUST BE HELD DIRECTLY WITH THE QUALIFIED BUSINESS
4 IN THE STRATEGIC DEVELOPMENT AREA IN ORDER FOR THE QUALIFIED
5 BUSINESS TO APPLY FOR THE TAX CREDIT. THE DEPARTMENT OF REVENUE
6 SHALL PRESCRIBE THE FORM AND MANNER TO OBTAIN THE CREDIT.
7 (B) SECTION NOT APPLICABLE TO CERTAIN BUSINESSES OR
8 QUALIFIED BUSINESSES.--
9 (1) A BUSINESS THAT RELOCATES FROM A LOCATION IN A
10 POLITICAL SUBDIVISION IN THIS COMMONWEALTH THAT IS NOT IN A
11 STRATEGIC DEVELOPMENT AREA TO A LOCATION IN A STRATEGIC
12 DEVELOPMENT AREA MAY NOT APPLY FOR A CREDIT FOR AN EXISTING
13 JOB THAT IS TRANSFERRED, DISCONTINUED OR LOST IN THIS
14 COMMONWEALTH WHICH IS ATTRIBUTABLE TO THE RELOCATION.
15 (2) A BUSINESS THAT HAS RELOCATED PURSUANT TO PARAGRAPH
16 (1) AND BECOMES A QUALIFIED BUSINESS MAY APPLY FOR A
17 STRATEGIC DEVELOPMENT AREA JOB CREATION TAX CREDIT FOR A NEW
18 FULL-TIME JOB THAT IS CREATED IN THE STRATEGIC DEVELOPMENT
19 AREA. A NEW FULL-TIME JOB IS CREATED WITH A QUALIFIED
20 BUSINESS IF THE AVERAGE MONTHLY EMPLOYMENT FOR THAT QUALIFIED
21 BUSINESS HAS INCREASED FROM THE PRIOR 12-MONTH CALENDAR YEAR
22 IN THE STRATEGIC DEVELOPMENT AREA.
23 (C) APPLICATION OF CREDIT.--A QUALIFIED BUSINESS SHALL APPLY
24 FOR A CREDIT UNDER THIS SECTION BY JANUARY 15 FOR THE PREVIOUS
25 CALENDAR YEAR.
26 (D) APPORTIONMENT.--THE DEPARTMENT OF REVENUE SHALL
27 APPORTION A STRATEGIC DEVELOPMENT AREA JOB CREATION TAX CREDIT
28 FOR A BUSINESS THAT IS A QUALIFIED BUSINESS THAT HAS NOT
29 OPERATED IN A STRATEGIC DEVELOPMENT AREA FOR A FULL FISCAL YEAR.
30 (E) CREDIT DETERMINATIONS.--THE STRATEGIC DEVELOPMENT AREA
20050S0854B2207 - 299 -
1 JOB CREATION TAX CREDIT SHALL BE DETERMINED BY MULTIPLYING THE
2 MONTHLY AVERAGE OF ALL FULL-TIME JOBS BY THE ALLOWANCE. THE
3 ALLOWANCE FOR PURPOSES OF THE STRATEGIC DEVELOPMENT AREA JOB
4 CREATION TAX CREDIT FOR TAXABLE YEARS BEGINNING WITHIN THE DATES
5 SET FORTH SHALL BE AS FOLLOWS:
6 JANUARY 1, 2001, TO
7 DECEMBER 31, 2001 $500 PER JOB
8 JANUARY 1, 2002, TO
9 DECEMBER 31, 2002 $750 PER JOB
10 JANUARY 1, 2003, TO
11 DECEMBER 31, 2003 $1,000 PER JOB
12 JANUARY 1, 2004, TO
13 DECEMBER 31, 2004 $1,250 PER JOB
14 JANUARY 1, 2005, TO
15 DECEMBER 31, 2005 $1,250 PER JOB
16 JANUARY 1, 2006, TO
17 DECEMBER 31, 2006 $1,250 PER JOB
18 JANUARY 1, 2007, TO
19 DECEMBER 31, 2007 $1,250 PER JOB
20 JANUARY 1, 2008, TO
21 DECEMBER 31, 2008 $1,250 PER JOB
22 JANUARY 1, 2009, TO
23 DECEMBER 31, 2009 $1,250 PER JOB
24 JANUARY 1, 2010, TO
25 DECEMBER 31, 2010 $1,250 PER JOB
26 JANUARY 1, 2011, TO
27 DECEMBER 31, 2011 $1,250 PER JOB
28 JANUARY 1, 2012, TO
29 DECEMBER 31, 2012 $1,250 PER JOB
30 JANUARY 1, 2013, TO
20050S0854B2207 - 300 -
1 DECEMBER 31, 2013 $1,250 PER JOB
2 JANUARY 1, 2014, TO
3 DECEMBER 31, 2014 $1,250 PER JOB
4 JANUARY 1, 2015, TO
5 DECEMBER 31, 2015 $1,250 PER JOB
6 JANUARY 1, 2016, TO
7 DECEMBER 31, 2016 $1,250 PER JOB
8 JANUARY 1, 2017, TO
9 DECEMBER 31, 2017 $1,250 PER JOB
10 JANUARY 1, 2018, TO
11 DECEMBER 31, 2018 $1,250 PER JOB
12 JANUARY 1, 2019, TO
13 DECEMBER 31, 2019 $1,250 PER JOB
14 JANUARY 1, 2020, TO
15 DECEMBER 31, 2020 $1,250 PER JOB
16 JANUARY 1, 2021, TO
17 DECEMBER 31, 2021 $1,250 PER JOB
18 JANUARY 1, 2022, TO
19 DECEMBER 31, 2022 $1,250 PER JOB
20 (F) NOTIFICATION OF CREDIT.--BY MARCH 15, THE DEPARTMENT OF
21 REVENUE SHALL NOTIFY THE QUALIFIED BUSINESS OF THE AMOUNT OF THE
22 QUALIFIED BUSINESS'S JOB CREATION TAX CREDIT APPROVED.
23 (G) LIMITATION ON AMOUNT OF CREDIT.--THE TAX CREDIT ALLOWED
24 UNDER THIS SECTION SHALL ONLY BE USED TO OFFSET A TAX LIABILITY
25 INCURRED FROM STRATEGIC DEVELOPMENT AREA ACTIVITIES AND SHALL
26 NOT EXCEED 50% OF THE TAX LIABILITY OF A QUALIFIED BUSINESS OR
27 PERSON UNDER ARTICLE III, IV OR VI FOR THE TAX YEAR. THE JOB
28 CREATION TAX CREDIT MAY NOT CARRY BACK OR FORWARD TO ANY OTHER
29 YEAR.
30 (H) ALLOCATION.--THE TOTAL AMOUNT OF CREDITS APPROVED BY THE
20050S0854B2207 - 301 -
1 DEPARTMENT OF REVENUE UNDER THIS SECTION SHALL NOT EXCEED
2 $1,000,000 ANNUALLY. IF THE CREDITS EXCEED THE $1,000,000 CAP IN
3 A GIVEN YEAR, THE CREDITS WILL BE ALLOCATED ON A PRO RATA BASIS.
4 (I) CALCULATION OF ALLOCATION.--IF THE TOTAL AMOUNT OF
5 STRATEGIC DEVELOPMENT AREA JOB CREATION TAX CREDITS APPLIED FOR
6 BY ALL QUALIFIED BUSINESSES UNDER THIS SECTION EXCEEDS
7 $1,000,000, THEN THE CREDIT TO BE RECEIVED BY EACH QUALIFIED
8 BUSINESS SHALL BE THE PRODUCT OF $1,000,000 MULTIPLIED BY THE
9 QUOTIENT OF THE CREDIT APPLIED FOR BY THE QUALIFIED BUSINESS
10 DIVIDED BY THE TOTAL OF ALL CREDITS APPLIED FOR BY ALL QUALIFIED
11 BUSINESSES, THE ALGEBRAIC EQUIVALENT OF WHICH IS:
12 QUALIFIED BUSINESS STRATEGIC DEVELOPMENT AREA JOB
13 CREATION TAX CREDIT = $1,000,000 X (THE AMOUNT OF
14 STRATEGIC DEVELOPMENT AREA JOB CREATION TAX CREDIT
15 APPLIED FOR BY THE QUALIFIED BUSINESS/THE SUM OF ALL
16 STRATEGIC DEVELOPMENT AREA JOB CREATION TAX CREDITS
17 APPLIED FOR BY ALL QUALIFIED BUSINESSES).
18 (J) PASS-THROUGH ENTITIES.--THE STRATEGIC DEVELOPMENT AREA
19 JOB CREATION TAX CREDIT SHALL APPLY TO THE FOLLOWING:
20 (1) A PARTNER OR MEMBER OF A PARTNERSHIP OR ASSOCIATION
21 THAT QUALIFIES UNDER THIS SECTION SHALL BE ENTITLED TO A JOB
22 CREATION TAX CREDIT IN PROPORTION TO THE PARTNER'S OR
23 MEMBER'S SHARE, WHETHER OR NOT DISTRIBUTED, OF THE INCOME OR
24 GAIN RECEIVED BY THE PARTNERSHIP OR ASSOCIATION FOR ITS
25 TAXABLE YEAR.
26 (2) A SHAREHOLDER OF A PENNSYLVANIA S CORPORATION THAT
27 QUALIFIES UNDER THIS SECTION SHALL BE ENTITLED TO A JOB
28 CREATION TAX CREDIT IN PROPORTION TO THE SHAREHOLDER'S PRO
29 RATA SHARE, WHETHER OR NOT DISTRIBUTED, OF THE INCOME OR GAIN
30 RECEIVED BY THE CORPORATION FOR ITS TAXABLE YEAR ENDING
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1 WITHIN OR WITH THE SHAREHOLDER'S TAXABLE YEAR.
2 (3) NO PARTNERSHIP, ASSOCIATION OR PENNSYLVANIA S
3 CORPORATION, OR PARTNER, MEMBER OR SHAREHOLDER, MAY CLAIM ANY
4 OTHER TAX BENEFIT, EXPENSE OR CREDIT FOR THE SAME STRATEGIC
5 DEVELOPMENT AREA JOB CREATION TAX CREDIT.
6 PART 7
7 LOCAL TAXES
8 SECTION 2941-C. LOCAL TAXES.
9 EVERY POLITICAL SUBDIVISION IN WHICH A DESIGNATED STRATEGIC
10 DEVELOPMENT AREA IS LOCATED SHALL EXEMPT, DEDUCT, ABATE OR
11 CREDIT LOCAL TAXES IN ACCORDANCE WITH ORDINANCES AND RESOLUTIONS
12 ADOPTED UNDER SECTION 2911-C(C). FAILURE TO EXEMPT, DEDUCT,
13 ABATE OR CREDIT LOCAL TAXES SHALL RESULT IN THE REVOCATION OF
14 THE STRATEGIC DEVELOPMENT AREA DESIGNATION.
15 SECTION 2942-C. REAL PROPERTY TAX.
16 (A) GENERAL RULE.--NOTWITHSTANDING THE ACT OF MAY 22, 1933
17 (P.L.853, NO.155), KNOWN AS THE GENERAL COUNTY ASSESSMENT LAW,
18 AND THE ACT OF MAY 21, 1943 (P.L.571, NO.254), KNOWN AS THE
19 FOURTH TO EIGHTH CLASS COUNTY ASSESSMENT LAW, EACH QUALIFIED
20 POLITICAL SUBDIVISION FOR TAXABLE YEARS BEGINNING AFTER DECEMBER
21 31, 2006, SHALL BY ORDINANCE OR RESOLUTION ABATE 100% OF THE
22 REAL PROPERTY TAXATION ON THE ASSESSED VALUATION OF DETERIORATED
23 PROPERTY IN AN AREA DESIGNATED AS A STRATEGIC DEVELOPMENT AREA
24 WITHIN THIS COMMONWEALTH.
25 (B) APPLICATION FOR TAX ABATEMENT.--ANY PERSON REQUESTING
26 REAL PROPERTY TAX ABATEMENT PURSUANT TO ORDINANCES OR
27 RESOLUTIONS ADOPTED PURSUANT TO THIS ARTICLE SHALL NOTIFY EACH
28 COUNTY OR OTHER DESIGNATED ASSESSMENT OFFICE GRANTING SUCH
29 ABATEMENT IN WRITING ON A FORM PROVIDED BY THAT ASSESSMENT
30 OFFICE WITHIN 30 DAYS OF THE DESIGNATION AS A STRATEGIC
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1 DEVELOPMENT AREA OR WITHIN 30 DAYS OF THE TRANSFER OF OWNERSHIP
2 OF THE REAL PROPERTY SUBJECT TO ABATEMENT. A COPY OF THE
3 ABATEMENT REQUEST SHALL BE FORWARDED BY THE COUNTY OR OTHER
4 DESIGNATED ASSESSMENT OFFICE TO THE POLITICAL SUBDIVISION.
5 (C) ANNUAL REAL PROPERTY REPORT.--EVERY STRATEGIC
6 DEVELOPMENT AREA SHALL SUBMIT TO THE DEPARTMENT AN ANNUAL REPORT
7 BY JANUARY 31 OF EACH CALENDAR YEAR OF ALL REAL PROPERTY LOCATED
8 IN A DESIGNATED STRATEGIC DEVELOPMENT AREA AND THE OWNERS AND
9 ADDRESSES OF THAT REAL PROPERTY AT ANY TIME DURING THE PRECEDING
10 YEAR.
11 (D) INTEREST AND PENALTIES.--IF THE DEPARTMENT OR A
12 POLITICAL SUBDIVISION FINDS THAT A PERSON CLAIMED AN ABATEMENT
13 OF REAL PROPERTY TAX TO WHICH THE PERSON WAS NOT ENTITLED UNDER
14 THIS ARTICLE, THE PERSON SHALL BE LIABLE FOR THE ABATED TAXES
15 AND SUBJECT TO THE APPLICABLE INTEREST AND PENALTY PROVISIONS
16 PROVIDED BY LAW.
17 (E) CALCULATIONS FOR EDUCATION SUBSIDY FOR SCHOOL
18 DISTRICTS.--IN DETERMINING THE MARKET VALUE OF REAL PROPERTY IN
19 EACH SCHOOL DISTRICT, THE STATE TAX EQUALIZATION BOARD SHALL
20 EXCLUDE ANY INCREASE IN VALUE ABOVE THE BASE VALUE PRIOR TO THE
21 EFFECT OF THE ABATEMENT OF LOCAL TAXES TO THE EXTENT AND DURING
22 THE PERIOD OF TIME THAT REAL ESTATE TAX REVENUES ATTRIBUTABLE TO
23 SUCH INCREASED VALUE ARE NOT AVAILABLE TO THE SCHOOL DISTRICT
24 FOR GENERAL SCHOOL DISTRICT PURPOSES.
25 SECTION 2943-C. LOCAL EARNED INCOME AND NET PROFITS TAXES;
26 BUSINESS PRIVILEGE TAXES.
27 (A) GENERAL EXEMPTION.--TO THE EXTENT THAT A QUALIFIED
28 POLITICAL SUBDIVISION HAS ENACTED ANY TAX ON THE PRIVILEGE OF
29 ENGAGING IN ANY BUSINESS OR PROFESSION, MEASURED BY GROSS
30 RECEIPTS OR ON A FLAT RATE BASIS, EARNED INCOME OR NET PROFITS,
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1 AS DEFINED IN THE ACT OF DECEMBER 31, 1965 (P.L.1257, NO.511),
2 KNOWN AS THE LOCAL TAX ENABLING ACT, IMPOSED WITHIN THE
3 BOUNDARIES OF A STRATEGIC DEVELOPMENT AREA, SUCH QUALIFIED
4 POLITICAL SUBDIVISION SHALL BE EXEMPT FROM THE IMPOSITION OR
5 OPERATION OF SUCH LOCAL TAX ORDINANCES, STATUTES, REGULATIONS OR
6 OTHERWISE:
7 (1) THE BUSINESS GROSS RECEIPTS FOR OPERATIONS CONDUCTED
8 BY A QUALIFIED BUSINESS WITHIN A STRATEGIC DEVELOPMENT AREA.
9 (2) THE EARNED INCOME RECEIVED BY A RESIDENT OF A
10 STRATEGIC DEVELOPMENT AREA.
11 (3) THE NET PROFITS OF A QUALIFIED BUSINESS RECEIVED BY
12 A RESIDENT OR NONRESIDENT OF A STRATEGIC DEVELOPMENT AREA
13 ATTRIBUTABLE TO BUSINESS ACTIVITY CONDUCTED WITHIN A
14 STRATEGIC DEVELOPMENT AREA.
15 (B) ADDITIONAL EXEMPTIONS.--TO THE EXTENT THAT A QUALIFIED
16 POLITICAL SUBDIVISION HAS:
17 (1) PURSUANT TO THE ACT OF AUGUST 5, 1932, (SP.SESS.
18 P.L.45, NO.45), REFERRED TO AS THE STERLING ACT, THE ACT OF
19 MARCH 10, 1949 (P.L.30, NO.14), KNOWN AS THE PUBLIC SCHOOL
20 CODE OF 1949, THE ACT OF AUGUST 24, 1961 (P.L.1135, NO.508),
21 REFERRED TO AS THE FIRST CLASS A SCHOOL DISTRICT EARNED
22 INCOME TAX ACT, THE ACT OF AUGUST 9, 1963 (P.L.640, NO.338)
23 ENTITLED, "AN ACT EMPOWERING CITIES OF THE FIRST CLASS,
24 COTERMINOUS WITH SCHOOL DISTRICTS OF THE FIRST CLASS, TO
25 AUTHORIZE THE BOARDS OF PUBLIC EDUCATION OF SUCH SCHOOL
26 DISTRICTS TO IMPOSE CERTAIN ADDITIONAL TAXES FOR SCHOOL
27 DISTRICT PURPOSES, AND PROVIDING FOR THE LEVY, ASSESSMENT AND
28 COLLECTION OF SUCH TAXES," THE ACT OF MAY 30, 1984 (P.L.345,
29 NO.69), KNOWN AS THE FIRST CLASS CITY BUSINESS TAX REFORM
30 ACT, OR THE ACT OF JUNE 5, 1991 (P.L.9, NO.6), KNOWN AS THE
20050S0854B2207 - 305 -
1 PENNSYLVANIA INTERGOVERNMENTAL COOPERATION AUTHORITY ACT FOR
2 CITIES OF THE FIRST CLASS, ENACTED A TAX ON:
3 (I) THE PRIVILEGE OF ENGAGING IN A PROFESSION OR
4 BUSINESS;
5 (II) WAGES OR COMPENSATION;
6 (III) NET PROFITS FROM THE OPERATION OF A BUSINESS,
7 PROFESSION OR OTHER ACTIVITY; OR
8 (IV) THE OCCUPANCY OR USE OF REAL PROPERTY.
9 (2) THE QUALIFIED POLITICAL SUBDIVISION SHALL PROVIDE AN
10 EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT FROM THE IMPOSITION
11 AND OPERATION OF SUCH LOCAL TAX ORDINANCE OR RESOLUTION TO
12 ALL OF THE FOLLOWING:
13 (I) A PERSON OR QUALIFIED BUSINESS, WHETHER A
14 RESIDENT OR A NONRESIDENT OF A STRATEGIC DEVELOPMENT
15 AREA, FOR THE PRIVILEGE OF ENGAGING IN A BUSINESS OR
16 PROFESSION WITHIN A STRATEGIC DEVELOPMENT AREA.
17 (II) SALARIES, WAGES, COMMISSIONS, COMPENSATION OR
18 OTHER INCOME RECEIVED FOR SERVICES RENDERED OR WORK
19 PERFORMED BY A RESIDENT OF A STRATEGIC DEVELOPMENT AREA.
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 STRATEGIC DEVELOPMENT AREA.
24 (IV) THE OCCUPANCY OR USE OF REAL PROPERTY LOCATED
25 WITHIN THE STRATEGIC DEVELOPMENT AREA.
26 (C) LIMITATION ON WITHHOLDING.--EVERY EMPLOYER REQUIRED TO
27 WITHHOLD ANY LOCAL TAX ON THE EARNED INCOME, WAGES OR
28 COMPENSATION OF ONE OR MORE PERSONS WITHIN THE PARTICULAR
29 POLITICAL SUBDIVISION SHALL NOT WITHHOLD SUCH TAX ON EARNED
30 INCOME, WAGES OR COMPENSATION PAID TO ANY PERSON OR HIS PERSONAL
20050S0854B2207 - 306 -
1 REPRESENTATIVE DURING ANY PERIOD WHEN THE QUALIFIED POLITICAL
2 SUBDIVISION HAS BY ORDINANCE OR RESOLUTION PROVIDED FOR THE
3 EXEMPTION FROM TAX AS PROVIDED IN SECTION 2941-C AND THE PERSON
4 IS A RESIDENT OF A STRATEGIC DEVELOPMENT AREA.
5 (D) INFORMATION FOR EMPLOYER.--EVERY PERSON WHO IS AN
6 EMPLOYEE THAT QUALIFIES AS A RESIDENT OF A STRATEGIC DEVELOPMENT
7 AREA SHALL FURNISH TO HIS OR HER EMPLOYER INFORMATION, AS
8 PRESCRIBED BY THE POLITICAL SUBDIVISION, NECESSARY FOR THE
9 EMPLOYER TO WITHHOLD THE CORRECT AMOUNT OF TAX. AN EMPLOYEE
10 SHALL FURNISH NOTIFICATION TO HIS OR HER EMPLOYER OF ANY CHANGES
11 TO THE INFORMATION WITHIN 20 DAYS AFTER THE CHANGE. AN EMPLOYEE
12 SHALL NOTIFY HIS OR HER EMPLOYER THAT THE EMPLOYEE HAS COMPLETED
13 THE RESIDENCY REQUIREMENTS UNDER THIS ARTICLE.
14 (E) DUTY OF EMPLOYER.--WITHIN 20 DAYS AFTER AN EMPLOYER
15 RECEIVES INFORMATION FROM AN EMPLOYEE PURSUANT TO SUBSECTION
16 (D), THE EMPLOYER SHALL FORWARD A COPY OF THAT INFORMATION TO
17 THE POLITICAL SUBDIVISION OR OTHER AGENCY DESIGNATED BY THE
18 POLITICAL SUBDIVISION. THE INFORMATION SHALL NOT BE GIVEN
19 RETROACTIVE EFFECT FOR WITHHOLDING PURPOSES. THE EMPLOYER SHALL
20 NOT BE REQUIRED TO WITHHOLD TAX FROM THE WAGES, EARNED INCOME OR
21 COMPENSATION PAID TO A RESIDENT OF A STRATEGIC DEVELOPMENT AREA,
22 IF REASONABLE UNDER THE CIRCUMSTANCES, UNLESS DIRECTED BY THE
23 POLITICAL SUBDIVISION TO WITHHOLD TAX FROM THE WAGES, EARNED
24 INCOME OR COMPENSATION ON SOME OTHER BASIS. IF AN EMPLOYEE FAILS
25 OR REFUSES TO FURNISH THE INFORMATION, OR FURNISHES INFORMATION
26 THAT THE EMPLOYER REASONABLY AND IN GOOD FAITH BELIEVES TO BE
27 INACCURATE, THE EMPLOYER SHALL WITHHOLD THE FULL RATE OF TAX
28 FROM THE EMPLOYEE'S TOTAL WAGES, EARNED INCOME OR COMPENSATION.
29 (F) CALCULATION FOR EDUCATION SUBSIDY FOR SCHOOL DISTRICT.--
30 IN DETERMINING THE PERSONAL INCOME VALUATION OF A SCHOOL
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1 DISTRICT, THE SECRETARY OF REVENUE SHALL EXCLUDE ANY INCREASE IN
2 THE VALUATION AS DEFINED IN SECTION 22921-C(9.1) OF THE ACT OF
3 MARCH 10, 1949 (P.L.30, NO.14), KNOWN AS THE PUBLIC SCHOOL CODE
4 OF 1949, ABOVE THE BASE VALUE PRIOR TO THE ABATEMENT OF LOCAL
5 TAXES IN A STRATEGIC DEVELOPMENT AREA LOCATED WITHIN THE SCHOOL
6 DISTRICT TO THE EXTENT AND DURING THE PERIOD OF TIME THAT
7 PERSONAL INCOME REVENUES ATTRIBUTABLE TO THE INCREASE IN THE
8 PERSONAL INCOME VALUATION ARE NOT AVAILABLE TO THE SCHOOL
9 DISTRICT FOR GENERAL SCHOOL DISTRICT PURPOSES.
10 SECTION 2944-C. MERCANTILE LICENSE TAX.
11 NO PERSON OR QUALIFIED BUSINESS IN A STRATEGIC DEVELOPMENT
12 AREA SHALL BE REQUIRED TO PAY ANY FEE AUTHORIZED PURSUANT TO A
13 MERCANTILE LICENSE TAX IMPOSED UNDER THE ACT OF JUNE 20, 1947
14 (P.L.745, NO.320), ENTITLED, AS AMENDED, "AN ACT TO PROVIDE
15 REVENUE FOR SCHOOL DISTRICTS OF THE FIRST CLASS A BY IMPOSING A
16 TEMPORARY MERCANTILE LICENSE TAX ON PERSONS ENGAGING IN CERTAIN
17 OCCUPATIONS AND BUSINESSES THEREIN; PROVIDING FOR ITS LEVY AND
18 COLLECTION; FOR THE ISSUANCE OF MERCANTILE LICENSES UPON THE
19 PAYMENT OF FEES THEREFOR; CONFERRING AND IMPOSING POWERS AND
20 DUTIES ON BOARDS OF PUBLIC EDUCATION, RECEIVERS OF SCHOOL TAXES
21 AND SCHOOL TREASURERS IN SUCH DISTRICTS; SAVING CERTAIN
22 ORDINANCES OF COUNCIL OF CERTAIN CITIES, AND PROVIDING
23 COMPENSATION FOR CERTAIN OFFICERS, AND EMPLOYES AND IMPOSING
24 PENALTIES."
25 SECTION 2945-C. LOCAL SALES AND USE TAX.
26 (A) GENERAL RULE.--THE POLITICAL SUBDIVISION SHALL EXEMPT
27 SALES AT RETAIL OF SERVICES OR TANGIBLE PERSONAL PROPERTY,
28 EXCEPT MOTOR VEHICLES, TO A QUALIFIED BUSINESS FOR THE EXCLUSIVE
29 USE, CONSUMPTION AND UTILIZATION OF THE TANGIBLE PERSONAL
30 PROPERTY OR SERVICE, BY THE QUALIFIED BUSINESS AT ITS FACILITY
20050S0854B2207 - 308 -
1 LOCATED WITHIN A STRATEGIC DEVELOPMENT AREA FROM A CITY OR
2 COUNTY TAX ON PURCHASE PRICE AUTHORIZED UNDER ARTICLE XXXI-B OF
3 THE ACT OF JULY 28, 1953 (P.L.723, NO.230), KNOWN AS THE SECOND
4 CLASS COUNTY CODE, AND THE ACT OF JUNE 5, 1991 (P.L.9, NO.6),
5 KNOWN AS THE PENNSYLVANIA INTERGOVERNMENTAL COOPERATION
6 AUTHORITY ACT FOR CITIES OF THE FIRST CLASS.
7 (B) REAL PROPERTY.--THE EXEMPTION PROVIDED IN SUBSECTION (A)
8 SHALL APPLY TO THE SALE AT RETAIL OF BUILDING MACHINERY AND
9 EQUIPMENT TO A QUALIFIED BUSINESS, OR TO A CONSTRUCTION
10 CONTRACTOR PURSUANT TO A CONSTRUCTION CONTRACT WITH A QUALIFIED
11 BUSINESS FOR THE EXCLUSIVE USE, CONSUMPTION AND UTILIZATION BY
12 THE QUALIFIED BUSINESS AT ITS FACILITY IN A STRATEGIC
13 DEVELOPMENT AREA.
14 (C) DEFINITION.--SALES AT RETAIL OF TANGIBLE PERSONAL
15 PROPERTY AND SERVICES SHALL BE DEFINED IN ACCORDANCE WITH
16 ARTICLE II.
17 PART 9
18 ADMINISTRATION OF TAX PROVISIONS
19 SECTION 2951-C. TRANSFERABILITY.
20 ANY EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT PROVIDED TO ANY
21 PERSON OR QUALIFIED BUSINESS UNDER PARTS 5 AND 7 IS
22 NONTRANSFERABLE AND CANNOT BE APPLIED, USED OR ASSIGNED TO ANY
23 OTHER PERSON, BUSINESS OR TAX ACCOUNT.
24 SECTION 2952-C. RECAPTURE.
25 (A) GENERAL RULE.--IF ANY QUALIFIED BUSINESS LOCATED WITHIN
26 A STRATEGIC DEVELOPMENT AREA HAS RECEIVED AN EXEMPTION,
27 DEDUCTION, ABATEMENT OR CREDIT UNDER THIS ARTICLE AND
28 SUBSEQUENTLY RELOCATES OUTSIDE OF THE STRATEGIC DEVELOPMENT AREA
29 WITHIN THE FIRST FIVE YEARS OF LOCATING IN A STRATEGIC
30 DEVELOPMENT AREA, THAT BUSINESS SHALL REFUND TO THE STATE, WHICH
20050S0854B2207 - 309 -
1 GRANTED THE EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT RECEIVED
2 IN ACCORDANCE WITH THE FOLLOWING:
3 (1) IF A QUALIFIED BUSINESS RELOCATES WITHIN THREE YEARS
4 FROM THE DATE OF FIRST LOCATING IN A STRATEGIC DEVELOPMENT
5 AREA, 66% OF ALL THE EXEMPTIONS, DEDUCTIONS, ABATEMENTS OR
6 CREDITS ATTRIBUTED TO THAT QUALIFIED BUSINESS'S PARTICIPATION
7 IN THE STRATEGIC DEVELOPMENT AREA SHALL BE REFUNDED TO THE
8 COMMONWEALTH.
9 (2) IF A QUALIFIED BUSINESS RELOCATES WITHIN THREE TO
10 FIVE YEARS FROM THE DATE OF FIRST LOCATING IN A STRATEGIC
11 DEVELOPMENT AREA, 33% OF ALL EXEMPTIONS, DEDUCTIONS,
12 ABATEMENTS OR CREDITS ATTRIBUTED TO THAT QUALIFIED BUSINESS'S
13 PARTICIPATION IN THE STRATEGIC DEVELOPMENT AREA SHALL BE
14 REFUNDED TO THE COMMONWEALTH.
15 (3) IF THE QUALIFIED BUSINESS WAS LOCATED WITHIN A
16 FACILITY OPERATED BY A NONPROFIT ORGANIZATION TO ASSIST IN
17 THE CREATION AND DEVELOPMENT OF A START-UP BUSINESS, NO
18 EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT SHALL BE REFUNDED.
19 (B) WAIVER.--THE DEPARTMENT MAY WAIVE OR MODIFY RECAPTURE
20 REQUIREMENTS UNDER THIS SECTION IF THE DEPARTMENT DETERMINES
21 THAT THE BUSINESS RELOCATION WAS DUE TO CIRCUMSTANCES BEYOND THE
22 CONTROL OF THE BUSINESS, INCLUDING, BUT NOT LIMITED TO:
23 (1) NATURAL DISASTER;
24 (2) UNFORESEEN INDUSTRY TRENDS; OR
25 (3) LOSS OF A MAJOR SUPPLIER OR MARKET.
26 SECTION 2953-C. DELINQUENT OR DEFICIENT STATE OR LOCAL TAXES.
27 (A) PERSONS.--NO PERSON MAY CLAIM OR RECEIVE AN EXEMPTION,
28 DEDUCTION, ABATEMENT OR CREDIT UNDER THIS ARTICLE UNLESS THAT
29 PERSON IS IN FULL COMPLIANCE WITH ALL STATE AND LOCAL TAX LAWS,
30 ORDINANCES AND RESOLUTIONS.
20050S0854B2207 - 310 -
1 (B) QUALIFIED BUSINESS.--
2 (1) NO QUALIFIED BUSINESS MAY CLAIM OR RECEIVE AN
3 EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT UNDER THIS ARTICLE
4 UNLESS THAT QUALIFIED BUSINESS IS IN FULL COMPLIANCE WITH ALL
5 STATE AND LOCAL TAX LAWS, ORDINANCES AND RESOLUTIONS.
6 (2) NO QUALIFIED BUSINESS MAY CLAIM OR RECEIVE AN
7 EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT UNDER THIS ARTICLE
8 IF ANY PERSON OR BUSINESS WITH A 20% OR GREATER INTEREST IN
9 THAT QUALIFIED BUSINESS IS NOT IN FULL COMPLIANCE WITH ALL
10 STATE AND LOCAL TAX LAWS, ORDINANCES AND RESOLUTIONS.
11 (C) LATER COMPLIANCE AND ELIGIBILITY.--ANY PERSON OR
12 QUALIFIED BUSINESS THAT IS NOT ELIGIBLE TO CLAIM AN EXEMPTION,
13 DEDUCTION, ABATEMENT OR CREDIT DUE TO NONCOMPLIANCE WITH ANY
14 STATE OR LOCAL TAX LAW MAY BECOME ELIGIBLE IF THAT PERSON OR
15 QUALIFIED BUSINESS SUBSEQUENTLY COMES INTO FULL COMPLIANCE WITH
16 ALL STATE AND LOCAL TAX LAWS TO THE SATISFACTION OF THE
17 DEPARTMENT OF REVENUE OR THE POLITICAL SUBDIVISION WITHIN THE
18 CALENDAR YEAR IN WHICH THE NONCOMPLIANCE FIRST OCCURRED. IF FULL
19 COMPLIANCE IS NOT ATTAINED BY FEBRUARY 5 OF THE CALENDAR YEAR
20 FOLLOWING THE CALENDAR YEAR DURING WHICH NONCOMPLIANCE FIRST
21 OCCURRED, THEN THAT PERSON OR QUALIFIED BUSINESS IS PRECLUDED
22 FROM CLAIMING ANY EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT FOR
23 THAT CALENDAR YEAR, WHETHER OR NOT FULL COMPLIANCE IS ACHIEVED
24 SUBSEQUENTLY.
25 SECTION 2954-C. CODE COMPLIANCE.
26 (A) GENERAL RULE.--A PERSON OR QUALIFIED BUSINESS SHALL BE
27 PRECLUDED FROM CLAIMING ANY EXEMPTION, DEDUCTION, ABATEMENT OR
28 CREDIT PROVIDED FOR IN THIS ARTICLE IF THAT PERSON OR QUALIFIED
29 BUSINESS OWNS REAL PROPERTY IN A STRATEGIC DEVELOPMENT AREA AND
30 THE REAL PROPERTY IS NOT IN COMPLIANCE WITH ALL APPLICABLE STATE
20050S0854B2207 - 311 -
1 AND LOCAL ZONING, BUILDING AND HOUSING LAWS, ORDINANCES OR
2 CODES.
3 (B) OPPORTUNITY TO ACHIEVE COMPLIANCE.--THE PERSON OR
4 QUALIFIED BUSINESS WHO IS NOT IN COMPLIANCE UNDER SUBSECTION (A)
5 SHALL HAVE UNTIL DECEMBER 31 OF THE CALENDAR YEAR FOLLOWING
6 DESIGNATION OF THE REAL PROPERTY AS PART OF A STRATEGIC
7 DEVELOPMENT AREA TO BE IN COMPLIANCE IN ORDER TO CLAIM ANY STATE
8 EXEMPTIONS, DEDUCTIONS, ABATEMENTS OR CREDITS FOR THAT YEAR. IF
9 FULL COMPLIANCE IS NOT ATTAINED BY DECEMBER 31 OF THAT CALENDAR
10 YEAR, THE PERSON OR QUALIFIED BUSINESS IS PRECLUDED FROM
11 CLAIMING ANY EXEMPTION, DEDUCTION OR CREDIT FOR THAT CALENDAR
12 YEAR, WHETHER OR NOT COMPLIANCE IS ACHIEVED IN A SUBSEQUENT
13 CALENDAR YEAR. THE POLITICAL SUBDIVISION MAY EXTEND THE TIME
14 PERIOD IN WHICH A PERSON OR QUALIFIED BUSINESS MUST COME INTO
15 COMPLIANCE WITH A LOCAL ORDINANCE OR BUILDING CODE FOR A PERIOD
16 NOT TO EXCEED ONE YEAR IF THE POLITICAL SUBDIVISION DETERMINES
17 THAT THE PERSON OR QUALIFIED BUSINESS HAS MADE AND SHALL
18 CONTINUE TO MAKE A GOOD FAITH EFFORT TO COME INTO COMPLIANCE AND
19 THAT AN EXTENSION WILL ENABLE THE PERSON OR QUALIFIED BUSINESS
20 TO ACHIEVE FULL COMPLIANCE. QUALIFIED POLITICAL SUBDIVISIONS ARE
21 REQUIRED TO NOTIFY THE DEPARTMENT OF REVENUE IN WRITING OF ALL
22 PERSONS OR QUALIFIED BUSINESSES NOT IN COMPLIANCE WITH THIS
23 SUBSECTION WITHIN 30 DAYS FOLLOWING THE END OF EACH CALENDAR
24 YEAR.
25 SECTION 2955-C. APPEALS.
26 A PERSON OR QUALIFIED BUSINESS SHALL BE DEEMED TO BE IN
27 COMPLIANCE WITH ANY STATE OR LOCAL TAX FOR PURPOSES OF THIS
28 SECTION IF THAT PERSON OR QUALIFIED BUSINESS HAD MADE A TIMELY
29 ADMINISTRATIVE OR JUDICIAL APPEAL FOR THAT PARTICULAR TAX OR HAS
30 ENTERED INTO AND IS IN COMPLIANCE WITH A DULY AUTHORIZED
20050S0854B2207 - 312 -
1 DEFERRED PAYMENT PLAN WITH THE DEPARTMENT OF REVENUE OR
2 POLITICAL SUBDIVISION FOR THAT PARTICULAR TAX.
3 SECTION 2956-C. NOTICE REQUIREMENTS; STATE AND LOCAL
4 AUTHORITIES.
5 (A) REQUIREMENT.--AFTER COMPLIANCE REVIEWS HAVE BEEN
6 CONDUCTED BY APPROPRIATE COMMONWEALTH AND LOCAL AUTHORITIES, THE
7 DEPARTMENT SHALL NOTIFY EACH STRATEGIC DEVELOPMENT AREA
8 APPLICANT BY REGULAR MAIL EACH YEAR OF THE DEPARTMENT'S APPROVAL
9 OR DENIAL OF THE STRATEGIC DEVELOPMENT AREA APPLICATION. NO
10 STRATEGIC DEVELOPMENT AREA APPLICANT IS ENTITLED TO ANY TAX
11 BENEFITS UNLESS IT RECEIVES APPROVAL FROM THE DEPARTMENT.
12 (B) NOTICE.--THE DEPARTMENT SHALL PROVIDE A ONE-TIME
13 NOTIFICATION TO EVERY CURRENT STRATEGIC DEVELOPMENT AREA
14 PROPERTY OWNER WITHIN 15 DAYS OF DESIGNATION BY THE GOVERNOR.
15 FAILURE TO RECEIVE DEPARTMENTAL NOTIFICATION UNDER THIS SECTION
16 SHALL NOT EXTEND OR RESTRICT ANY BENEFITS OR RIGHTS REAL
17 PROPERTY OWNERS POSSESS UNDER THIS ARTICLE.
18 (C) TRANSMITTAL.--THE DEPARTMENT OR ITS DESIGNATED OFFICIAL
19 SHALL, WITHIN 15 BUSINESS DAYS OF RECEIPT OF A STRATEGIC
20 DEVELOPMENT AREA APPLICATION MADE UNDER THIS ARTICLE, FORWARD A
21 COPY OF THE APPLICATION TO APPROPRIATE COMMONWEALTH AND LOCAL
22 AUTHORITIES FOR REVIEW AND PROCESSING.
23 SECTION 2957-C. APPLICATION TIME.
24 AN APPLICANT MUST FILE AN APPLICATION IN A MANNER PRESCRIBED
25 BY THE DEPARTMENT BY DECEMBER 31 OF EACH CALENDAR YEAR FOR WHICH
26 THE APPLICANT CLAIMS ANY EXEMPTION, DEDUCTION, ABATEMENT OR
27 CREDIT UNDER THIS ARTICLE. NO EXEMPTION, DEDUCTION, ABATEMENT OR
28 CREDIT MAY BE CLAIMED OR RECEIVED FOR THAT CALENDAR YEAR UNTIL
29 APPROVAL HAS BEEN GRANTED BY THE DEPARTMENT.
30 PART 11
20050S0854B2207 - 313 -
1 (RESERVED)
2 PART 13
3 MISCELLANEOUS PROVISIONS
4 SECTION 2971-C. ILLEGAL ACTIVITY.
5 ANY FUNDS OR OTHER FORMS OF CONSIDERATION RECEIVED BY A
6 PERSON OR BUSINESS CONDUCTING ANY TYPE OF ILLEGAL ACTIVITY SHALL
7 NOT BE ELIGIBLE FOR ANY OF THE EXEMPTIONS, DEDUCTIONS,
8 ABATEMENTS AND CREDITS OR ANY OTHER BENEFITS THAT ARE CREATED
9 UNDER THIS ARTICLE.
10 SECTION 2972-C. RULES AND REGULATIONS.
11 THE DEPARTMENT MAY PROMULGATE REGULATIONS NECESSARY TO
12 EFFECTUATE THE PROVISIONS OF THIS ARTICLE.
13 SECTION 2973-C. COMPLIANCE.
14 ANY PERSON OR QUALIFIED BUSINESS ELIGIBLE FOR AN EXEMPTION,
15 DEDUCTION OR CREDIT UNDER THIS ARTICLE SHALL COMPLY WITH ALL
16 REPORTING, FILING AND COMPLIANCE REQUIREMENTS PURSUANT TO THIS
17 ACT UNLESS OTHERWISE PROVIDED FOR IN THIS ARTICLE.
18 SECTION 2974-C. PENALTIES.
19 (A) CIVIL PENALTY.--
20 (1) IN ADDITION TO ANY PENALTIES AUTHORIZED BY THIS ACT,
21 THE DEPARTMENT OF REVENUE MAY IMPOSE AN ADDITIONAL
22 ADMINISTRATIVE PENALTY NOT TO EXCEED $10,000 FOR ANY ACT OR
23 VIOLATION OF THIS ARTICLE RELATING TO STATE AND LOCAL TAXES,
24 INCLUDING THE FILING OF ANY FALSE STATEMENT, RETURN OR
25 DOCUMENT.
26 (2) THE DEPARTMENT MAY IMPOSE A CIVIL PENALTY NOT TO
27 EXCEED $10,000 FOR A VIOLATION OF THIS ARTICLE, INCLUDING THE
28 FILING OF ANY FALSE STATEMENT, RETURN OR DOCUMENT.
29 (B) CRIMINAL PENALTY.--IN ADDITION TO ANY CRIMINAL PENALTY
30 UNDER THIS ACT, ANY PERSON OR BUSINESS WHO KNOWINGLY VIOLATES
20050S0854B2207 - 314 -
1 ANY OF THE PROVISIONS OF THIS ARTICLE COMMITS A MISDEMEANOR OF
2 THE THIRD DEGREE.
3 SECTION 2975-C. CONSTRUCTION.
4 THIS ARTICLE SHALL BE INTERPRETED TO ENSURE THAT ALL
5 PROVISIONS RELATING TO STATE TAX EXEMPTIONS, DEDUCTIONS,
6 ABATEMENTS AND CREDITS ARE STRICTLY CONSTRUED IN FAVOR OF THE
7 COMMONWEALTH.
8 SECTION 2976-C. APPLICABILITY.
9 THE PROVISIONS OF THIS ARTICLE SHALL BE APPLIED
10 PROSPECTIVELY. NO PERSON OR BUSINESS MAY CLAIM ANY EXEMPTION,
11 DEDUCTION, ABATEMENT OR CREDIT UNTIL THAT PERSON OR BUSINESS
12 BECOMES QUALIFIED UNDER THIS ARTICLE AND, IN THE CASE OF A
13 BUSINESS, RECEIVES CERTIFICATION FROM THE DEPARTMENT THAT THE
14 BUSINESS IS QUALIFIED.
15 SECTION 2977-C. SEVERABILITY.
16 THE PROVISIONS OF THIS ARTICLE ARE SEVERABLE. IF ANY
17 PROVISION OF THIS ARTICLE OR ITS APPLICATION TO ANY PERSON OR
18 CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY SHALL NOT AFFECT
19 OTHER PROVISIONS OR APPLICATIONS OF THIS ARTICLE WHICH CAN BE
20 GIVEN EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION.
21 SECTION 2978-C. REPEALS.
22 ALL ACTS AND PARTS OF ACTS ARE REPEALED INSOFAR AS THEY ARE
23 INCONSISTENT WITH THIS ARTICLE.
24 SECTION 2979-C. EXPIRATION.
25 THIS ARTICLE AND ALL BENEFITS ASSOCIATED WITH THIS ARTICLE
26 SHALL TERMINATE DECEMBER 31, 2022.
27 SECTION 3. THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
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