PRINTER'S NO. 4267
No. 2752 Session of 2008
INTRODUCED BY MILNE, THOMAS, BENNINGHOFF, CALTAGIRONE, COHEN,
DALLY, ELLIS, J. EVANS, EVERETT, FRANKEL, GEIST, GEORGE,
GINGRICH, HARPER, HERSHEY, HESS, JAMES, M. KELLER, KORTZ,
KOTIK, MANN, MARSHALL, McILVAINE SMITH, R. MILLER, MOYER,
MURT, PICKETT, QUIGLEY, READSHAW, REICHLEY, ROCK, ROSS,
RUBLEY, SAYLOR, SIPTROTH, STERN, VEREB AND VULAKOVICH,
AUGUST 28, 2008
REFERRED TO COMMITTEE ON FINANCE, AUGUST 28, 2008
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," providing for a land conservation tax credit.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
14 the Tax Reform Code of 1971, is amended by adding an article to
15 read:
16 ARTICLE XVII-F
17 LAND CONSERVATION TAX CREDIT
18 Section 1701-F. Scope of article.
19 This article relates to land conservation tax credits.
1 Section 1702-F. Definitions.
2 The following words and phrases when used in this article
3 shall have the meanings given to them in this section unless the
4 context clearly indicates otherwise:
5 "Advisory board." The Land Conservation Tax Credit Advisory
6 Board established under this article.
7 "Department." The Department of Revenue of the Commonwealth.
8 "Eligible land." Any of the following:
9 (1) A conservation easement, as defined in the act of
10 June 22, 2001 (P.L.390, No.29), known as the Conservation and
11 Preservation Easements Act, except that the term shall not
12 include real property held solely for purposes of preserving
13 the historical, architectural, archaeological or cultural
14 aspects.
15 (2) An agricultural conservation easement as defined in
16 the act of June 30, 1981 (P.L.128, No.43), known as the
17 Agricultural Area Security Law.
18 "Qualified sponsor." A local government unit, as identified
19 in the act of January 19, 1968 (1967 P.L.992, No.442), entitled
20 "An act authorizing the Commonwealth of Pennsylvania and the
21 local government units thereof to preserve, acquire or hold land
22 for open space uses," a governmental entity authorized to hold
23 interests in real property or a private not-for-profit
24 charitable organization organized for land conservation purposes
25 that:
26 (1) Is authorized to do business in this Commonwealth
27 and has a tax-exempt status as a charitable organization
28 under section 501(c)(3) of the Internal Revenue Code 1986
29 (Public Law 99-514, 26 U.S.C. § 501(c)(3)).
30 (2) Has the power to acquire, hold or maintain land or
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1 interests in land.
2 (3) Has adopted, by resolution or ordinance of the
3 organization's board of directors, the land trust alliance's
4 standards and practices as guidelines for the organization's
5 operation and be committed to making continual progress
6 toward implementation of these standards and practices.
7 (4) Has been operating in good standing as a not-for-
8 profit corporation under Pennsylvania law for a period of not
9 less than two years.
10 (5) Has registered with the Land Conservation Tax Credit
11 Advisory Board.
12 "Tax credit." The land conservation tax credit provided for
13 under this article.
14 "Taxpayer." An individual subject to tax under Article III.
15 "Voluntary conservation donation." The conveyance of
16 eligible land which satisfies the requirements of section 170(h)
17 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
18 U.S.C. § 170(h)), except that the conveyance may be for a term
19 less than in perpetuity but greater than 30 years, and which
20 reserves to the landowner the right to continue agricultural or
21 forestry uses on all or part of the eligible lands. The term
22 includes the value of the charitable contribution made when the
23 taxpayer sells the eligible land to a qualified sponsor for less
24 than its market value, as established by the taxpayer's
25 qualified appraisal, where such contribution value is claimed in
26 compliance with sections 170 and 1011(b) of the Internal Revenue
27 Code of 1986.
28 Section 1703-F. Credit for land conservation.
29 (a) General rule.--Subject to the limitations of this
30 article, a taxpayer who makes a voluntary conservation donation
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1 to a qualified sponsor shall be allowed a nonrefundable credit
2 on the taxpayer's annual return against taxes imposed under
3 Article III in the amount of 50% of the fair market value of
4 such voluntary conservation donation.
5 (b) Substantiation.--The fair market value of the voluntary
6 conservation donation made under this article shall be
7 substantiated by a "qualified appraisal" prepared by a
8 "qualified appraiser" as those terms are defined under
9 applicable Federal law and regulations governing income tax
10 deductions for charitable contributions, provided that the
11 valuation of voluntary conservation donations for a term of less
12 than in perpetuity shall comply with any guidelines for
13 valuation of such donations adopted by the advisory board. The
14 qualified appraisal shall be prepared in conformance with the
15 uniform standards of professional appraisal practice. A copy of
16 the appraisal must be provided to the department with the
17 taxpayer's return for the year in which the credit is claimed.
18 (c) Requirements.--To qualify for the tax credit established
19 by this article, a voluntary conservation donation must further
20 at least one of the following:
21 (1) Protect lands important to fish, wildlife and
22 plants, including, but not limited to, game, riparian areas,
23 wetlands, migration corridors and other important habitats.
24 (2) Assist in agreements and plans with local
25 governments or governmental entities for the conservation of
26 endangered, threatened, rare or declining species.
27 (3) Meet any additional criteria adopted by the advisory
28 board.
29 (d) Limitation.--No tax credit shall be allowed under this
30 article unless the taxpayer files with the taxpayer's annual
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1 return a certification that the advisory board has approved its
2 application for use of the tax credit.
3 (e) Applications.--Applications for a tax credit shall be
4 made to the advisory board. If a tax credit is approved and
5 certified, it shall be awarded by the department.
6 Section 1704-F. Carryover, carryback, refund and assignment of
7 credit.
8 (a) General rule.--If the taxpayer cannot use the entire
9 amount of the tax credit for the taxable year in which the tax
10 credit is first approved, then the excess may be carried over to
11 succeeding taxable years and used as a credit against the
12 qualified tax liability of the taxpayer for those taxable years.
13 Each time that the tax credit is carried over to a succeeding
14 taxable year, it is to be reduced by the amount that was used as
15 a credit during the immediately preceding taxable year. The tax
16 credit may be carried over and applied to succeeding taxable
17 years for not more than 15 taxable years following the first
18 taxable year for which the taxpayer was entitled to claim the
19 credit.
20 (b) Application of credit.--A tax credit approved by the
21 department in a taxable year first shall be applied against the
22 taxpayer's qualified tax liability for the current taxable year
23 as of the date on which the credit was approved before the tax
24 credit is applied against any tax liability under subsection
25 (a).
26 (c) Limitations.--A taxpayer is not entitled to sell,
27 assign, carry back or obtain a refund of an unused tax credit.
28 Section 1705-F. Limitation on credits.
29 The total amount of tax credits approved by the department
30 shall not exceed $25,000,000 in any fiscal year.
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1 Section 1706-F. Land Conservation Tax Credit Advisory Board.
2 (a) Establishment.--There is hereby established the Land
3 Conservation Tax Credit Advisory Board that will assist the
4 department in the implementation of this article.
5 (b) Composition.--The advisory board shall consist of the
6 following members appointed by and serving at the pleasure of
7 the Governor:
8 (1) A representative of farming interests.
9 (2) A representative of private forestry interests.
10 (3) Two members representing the interests of hunting,
11 fishing or fish and wildlife conservation.
12 (4) A representative of the Department of Conservation
13 and Natural Resources.
14 (5) A representative of the Department of Agriculture.
15 (6) A representative of the Department of Environmental
16 Protection.
17 (c) Chair.--The Governor shall appoint the chair of the
18 advisory board from among its members.
19 (d) Powers and duties.--The advisory board shall have the
20 following powers and duties:
21 (1) To establish, by rule, criteria for the review,
22 approval or rejection of tax credit applications.
23 (2) To establish procedures for administration of the
24 tax credit, including, but not limited to, submission and
25 review of applications for proposed use of the tax credit and
26 guidelines for valuations of voluntary conservation donations
27 that are for a term less than in perpetuity.
28 (3) To approve or reject tax credit applications based
29 on consideration of the objectives of this article, the
30 duration of the voluntary conservation donation, any
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1 procedures and criteria established by the advisory board and
2 the public interest.
3 (4) To reject in whole or in part any tax credit
4 application that would represent an inefficient or abusive
5 use of the tax credit or that contains an improper valuation
6 of the voluntary conservation donation.
7 (5) To register not-for-profit charitable organizations
8 as qualified sponsors.
9 (6) To complete an annual report describing the use of
10 the tax credit, the location and acreage of lands subject to
11 voluntary conservation donations, the conservation benefits
12 of donations, the fiscal impact of the tax credit and any
13 proposed modifications in the tax credit program.
14 (7) To coordinate the use of the tax credit with the
15 ongoing conservation priorities and programs of this
16 Commonwealth and its political subdivisions.
17 (8) To certify awarded tax credits and provide
18 certification of such to a taxpayer.
19 (e) Compensation.--Members of the advisory board shall serve
20 without compensation except for reimbursement of actual and
21 necessary expenses.
22 (f) Staff.--The Department of Conservation and Natural
23 Resources and the Department of Environmental Protection shall
24 provide staff services to the advisory board as necessary to
25 carry out the provisions of this article.
26 (g) Application.--Each application to the advisory board for
27 a proposed use of the tax credit shall contain all of the
28 following:
29 (1) Identification of the donor and qualified sponsor
30 serving as donee.
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1 (2) The eligible land upon which the voluntary
2 conservation donation is based and any other documentation of
3 how such lands meet the purposes for voluntary conservation
4 donations and the criteria established by the advisory board.
5 (3) A statement of the estimated fair market value of
6 the proposed voluntary conservation donation.
7 (4) A certification from the donor that the voluntary
8 conservation donation was not, and is not, required to
9 satisfy a requirement or condition imposed upon the donor by
10 any subdivision or building approval, lease, permit, license,
11 certificate or other entitlement for use issued by Federal,
12 State or local government entities.
13 (5) A certification from the qualified sponsor serving
14 as donee that it has reviewed and approves the application.
15 (6) Such other contents as may be prescribed by the
16 commission or the advisory board.
17 (7) The fair market value appraisal of the voluntary
18 conservation donation as required by this article.
19 (h) Procedure.--A taxpayer shall apply to the advisory board
20 for a tax credit pursuant to this article. The advisory board
21 shall award or deny an application for a tax credit within 30
22 days of a taxpayer's completion and submission of an
23 application.
24 Section 1707-F. Report to General Assembly.
25 The advisory board shall submit an annual report to the
26 General Assembly indicating the effectiveness of the credit
27 provided by this article no later than May 15 following the year
28 in which the credits were approved. The report shall include the
29 names of all taxpayers utilizing the credit as of the date of
30 the report and the amount of credits approved and utilized by
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1 each taxpayer. Notwithstanding any law providing for the
2 confidentiality of tax records, the information contained in the
3 report shall be public information. The report may also include
4 any recommendations for changes in the calculation or
5 administration of the credit.
6 Section 1708-F. Regulations.
7 The Secretary of Revenue shall promulgate regulations
8 necessary for the implementation and administration of this
9 article.
10 Section 2. This act shall take effect January 1, 2009.
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