PRIOR PRINTER'S NOS. 1898, 2675, 2704

PRINTER'S NO. 2737

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

1531

Session of

2009

  

  

INTRODUCED BY GEORGE, MELIO, ADOLPH, BELFANTI, BOBACK, BRADFORD, BRENNAN, BRIGGS, BROWN, CALTAGIRONE, CARROLL, CASORIO, COHEN, CONKLIN, D. COSTA, CREIGHTON, DONATUCCI, EVERETT, FAIRCHILD, FRANKEL, GIBBONS, GOODMAN, GRUCELA, HALUSKA, HARHAI, HARPER, HORNAMAN, JOHNSON, JOSEPHS, W. KELLER, KOTIK, KULA, LONGIETTI, McGEEHAN, McILVAINE SMITH, MICOZZIE, MILLARD, MUNDY, MURPHY, MURT, PAYNE, PHILLIPS, READSHAW, REICHLEY, SCAVELLO, SEIP, SIPTROTH, STABACK, STURLA, SWANGER, J. TAYLOR, TRUE, VULAKOVICH, WATERS, YOUNGBLOOD, YUDICHAK, EACHUS, BEYER, KORTZ, GINGRICH, HOUGHTON, MENSCH, BURNS AND MIRABITO, MAY 26, 2009

  

  

AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES, OCTOBER 1, 2009   

  

  

  

AN ACT

  

1

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

<--

2

act relating to tax reform and State taxation by codifying

3

and enumerating certain subjects of taxation and imposing

4

taxes thereon; providing procedures for the payment,

5

collection, administration and enforcement thereof; providing

6

for tax credits in certain cases; conferring powers and

7

imposing duties upon the Department of Revenue, certain

8

employers, fiduciaries, individuals, persons, corporations

9

and other entities; prescribing crimes, offenses and

10

penalties," further providing for time for filing returns,

11

for time of payment, for continuation of the Military Family

12

Relief Assistance Program and for payment of taxes withheld;  

13

providing for an educational improvement tax credit and for a

14

limited tax amnesty program; and making a related repeal.

15

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

<--

16

act relating to tax reform and State taxation by codifying

17

and enumerating certain subjects of taxation and imposing

18

taxes thereon; providing procedures for the payment,

19

collection, administration and enforcement thereof; providing

20

for tax credits in certain cases; conferring powers and

21

imposing duties upon the Department of Revenue, certain

22

employers, fiduciaries, individuals, persons, corporations

23

and other entities; prescribing crimes, offenses and

 


1

penalties," in sales and use tax, further providing for

2

exclusions, for time for filing returns and for time of

3

payment; in personal income tax, further providing for

4

classes of income, for operational provisions and for payment

5

of withheld taxes; in corporate net income tax, further

6

providing for definitions; in capital stock franchise tax,

7

further providing for definitions and reports, for imposition

8

and for expiration; in gross receipts tax, further providing

9

for imposition; in cigarette tax, further providing for

10

incidence and rate, for floor tax, for the Health Care

11

Provider Retention Account and for commissions on sales;

12

further providing for other violations; providing for tobacco

13

products tax and for severance tax; in research and

14

development tax credit, further providing for carrying of

15

credit; providing for educational improvement tax credit;

16

repealing tax amnesty provisions; providing for reduction of

17

tax credits; providing for tax amnesty for fiscal year

18

2009-2010; providing for penalties for corporate officers,

19

for examination of books and records and for table games; and

20

making related repeals.

21

The General Assembly of the Commonwealth of Pennsylvania

22

hereby enacts as follows:

23

Section 1.  Section 217 of the act of March 4, 1971 (P.L.6,

<--

24

No.2), known as the Tax Reform Code of 1971, amended July 1,

25

1985 (P.L.78, No.29), is amended to read:

26

Section 217.  Time for Filing Returns.--(a)  Quarterly [and], 

27

Monthly and Semi-monthly Returns:

28

(1)  For the year in which this article becomes effective and

29

in each year thereafter a return shall be filed quarterly by

30

every licensee on or before the twentieth day of April, July,

31

October and January for the three months ending the last day of

32

March, June, September and December.

33

(2)  For the year in which this article becomes effective,

34

and in each year thereafter, a return shall be filed monthly

35

with respect to each month by every licensee whose total tax

36

reported, or in the event no report is filed, the total tax

37

which should have been reported, for the third calendar quarter

38

of the preceding year equals or exceeds six hundred dollars

39

($600) and is less than twenty-five thousand dollars ($25,000).

40

Such returns shall be filed on or before the twentieth day of

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1

the next succeeding month with respect to which the return is

2

made. Any licensee required to file monthly returns hereunder

3

shall be relieved from filing quarterly returns.

4

(3)  After May 31, 2010, a return shall be filed semi-monthly

5

with respect to each month by every licensee whose total tax

6

reported or, if no report is filed, the total tax which should

7

have been reported, for the third calendar quarter of the

8

preceding year equals or exceeds twenty-five thousand dollars

9

($25,000). For the period from the first day of the month to the

10

fifteenth day of the month, the returns shall be filed on or

11

before the twenty-fifth day of the month. For the period from

12

the sixteenth day of the month to the last day of the month, the

13

returns shall be filed on or before the tenth day of the next

14

succeeding month with respect to which the return is made. Any

15

licensee required to file semi-monthly returns under this

16

section shall be relieved from filing monthly or quarterly

17

returns.

18

(b)  Annual Returns. For the calendar year 1971, and for each

19

year thereafter, no annual return shall be filed, except as may

20

be required by rules and regulations of the department

21

promulgated and published at least sixty days prior to the end

22

of the year with respect to which the returns are made. Where

23

such annual returns are required licensees shall not be required

24

to file such returns prior to the twentieth day of the year

25

succeeding the year with respect to which the returns are made.

26

(c)  Other Returns. Any person, other than a licensee, liable

27

to pay to the department any tax under this article, shall file

28

a return on or before the twentieth day of the month succeeding

29

the month in which such person becomes liable for the tax.

30

(d)  Small Taxpayers. The department, by regulation, may

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1

waive the requirement for the filing of quarterly return in the

2

case of any licensee whose individual tax collections do not

3

exceed seventy-five dollars ($75) per calendar quarter and may

4

provide for reporting on a less frequent basis in such cases.

5

Section 1.1.  Section 222 of the act is amended to read:

6

Section 222.  Time of Payment.--(a)  Monthly, [Bimonthly] 

7

Semi-monthly and Quarterly Payments. The tax imposed by this

8

article and incurred or collected by a licensee shall be due and

9

payable by the licensee on the day the return is required to be

10

filed under the provisions of section 217 and such payment must

11

accompany the return for such preceding period,

12

(b)  Annual Payments. If the amount of tax due for the

13

preceding year as shown by the annual return of any taxpayer is

14

greater than the amount already paid by him in connection with

15

his monthly, semi-monthly or quarterly returns he shall send

16

with such annual return a remittance for the unpaid amount of

17

tax for the year.

18

(c)  Other Payments. Any person other than a licensee liable

19

to pay any tax under this article shall remit the tax at the

20

time of filing the return required by this article.

21

Section 2.  Section 315.9 of the act, amended July 25, 2007

22

(P.L.373, No.55), is amended to read:

23

Section 315.9.  Operational Provisions.--(a)  Except for the

24

checkoff established under sections 315.2, 315.6 and 315.7 and

25

except as otherwise provided [under subsection (b)] in this

26

section, the checkoffs established under this part shall apply

27

through taxable years ending December 31, 2007.

28

(b)  [Any] Except as set forth in subsection (c), any 

29

checkoff established under this part and applicable for the

30

first time in a taxable year beginning after December 31, 2003,

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1

shall expire four years after the beginning of such first

2

taxable year.

3

(c)  Sections [315.3 and 315.4 shall expire January 1, 2010] 

4

315.3, 315.4 and 315.8 shall expire January 1, 2014.

5

Section 3.  Section 319 of the act, repealed and added August

6

31, 1971 (P.L.362, No.93), is amended to read:

7

Section 319.  [Monthly, Semi-monthly and Quarterly] Payment

8

of Taxes Withheld.--Every employer withholding tax under this

9

article shall pay over to the department or to a depository

10

designated by it the tax required to be deducted and withheld

11

under this article.

12

(1)  Where the aggregate amount required to be deducted and

13

withheld by any employer for [each quarterly period] a calendar

14

year can reasonably be expected to be less than [three hundred

15

dollars ($300)] twelve hundred dollars ($1,200), such employer

16

shall file a return and pay the tax on or before the last day

17

for filing a quarterly return under section 318.

18

(2)  Where the aggregate amount required to be deducted and

19

withheld by any employer for [each quarterly period] a calendar

20

year can reasonably be expected to be [three hundred dollars

21

($300) or more but less than one thousand dollars ($1,000)] 

22

twelve hundred dollars ($1,200) or more but less than four

23

thousand dollars ($4,000), such employer shall pay the tax

24

monthly, on or before the fifteenth day of the month succeeding

25

the months of January to November, inclusive, and on or before

26

the last day of January following the month of December.

27

(3)  Where the aggregate amount required to be deducted and

28

withheld by any employer for [each quarterly period] a calendar

29

year can reasonably be expected to be [one thousand dollars

30

($1,000) or more] four thousand dollars ($4,000) or more but

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1

less than twenty thousand dollars ($20,000), such employer shall

2

pay the tax semi-monthly, within three banking days after the

3

close of the semi-monthly period.

4

(4)  Where the aggregate amount required to be deducted and

5

withheld by any employer for a calendar year can reasonably be

6

expected to be twenty thousand dollars ($20,000) or more, such

7

employer shall pay the tax on the Wednesday after payday if the

8

payday falls on a Wednesday, Thursday or Friday and on the

9

Friday after payday if the payday falls on a Saturday, Sunday,

10

Monday or Tuesday.

11

Notwithstanding anything in this section to the contrary,

12

whenever any employer fails to deduct or truthfully account for

13

or pay over the tax withheld or file returns as prescribed by

14

this article, the department may serve a notice on such employer

15

requiring him to withhold taxes which are required to be

16

deducted under this article and deposit such taxes in a bank

17

approved by the department in a separate account in trust for

18

and payable to the department, and to keep the amount of such

19

tax in such account until payment over to the department. Such

20

notice shall remain in effect until a notice of cancellation is

21

served on the employer by the department.

22

Section 4.  The act is amended by adding articles to read:

23

ARTICLE XVII-F

24

EDUCATIONAL IMPROVEMENT TAX CREDIT

25

Section 1701-F.  Scope.

26

This article establishes the educational improvement tax

27

credit.

28

Section 1702-F.  Definitions.

29

The following words and phrases when used in this article

30

shall have the meanings given to them in this section unless the

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1

context clearly indicates otherwise:

2

"Business firm."  An entity authorized to do business in this

3

Commonwealth and subject to taxes imposed under Article III, IV,

4

VI, VII, VIII, IX or XV. The term includes a pass-through

5

entity.

6

"Contribution."  A donation of cash, personal property or

7

services the value of which is the net cost of the donation to

8

the donor or the pro rata hourly wage, including benefits, of

9

the individual performing the services.

10

"Department."  The Department of Community and Economic

11

Development of the Commonwealth.

12

"Educational improvement organization."  A nonprofit entity

13

which:

14

(1)  is exempt from Federal taxation under section 501(c)

15

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

16

26 U.S.C. § 1 et seq.); and

17

(2)  contributes at least 80% of its annual receipts as

18

grants to a public school for innovative educational

19

programs.

20

For purposes of this definition, a nonprofit entity

21

"contributes" its annual cash receipts when it expends or

22

otherwise irrevocably encumbers those funds for expenditure

23

during the then current fiscal year of the nonprofit entity or

24

during the next succeeding fiscal year of the nonprofit entity.

25

"Eligible pre-kindergarten student."  A student, including an

26

eligible student with a disability, who is enrolled in a pre-

27

kindergarten program and is a member of a household with a

28

maximum annual household income as increased by the applicable

29

income allowance.

30

"Eligible student."  A school-age student, including an

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1

eligible student with a disability, who is enrolled in a school

2

and is a member of a household with a maximum annual household

3

income as increased by the applicable income allowance.

4

"Eligible student with a disability."  A pre-kindergarten

5

student or a school-age student who meets all of the following:

6

(1)  Is either enrolled in a special education school or

7

has otherwise been identified, in accordance with 22 Pa. Code

8

Ch. 14 (relating to special education services and programs),

9

as a "child with a disability," as defined in 34 CFR § 300.8

10

(relating to child with disability).

11

(2)  Needs special education and related services.

12

(3)  Is enrolled in a pre-kindergarten program or in a

13

school.

14

(4)  Is a member of a household with an annual household

15

income of not more than the maximum allowable household

16

income for students with a disability.

17

"Household."  An individual living alone or with the

18

following: a spouse, parent and their unemancipated minor

19

children; and other unemancipated minor children who are related

20

by blood or marriage; or other adults or unemancipated minor

21

children living in the household who are dependent upon the

22

individual.

23

"Household income."  All moneys or property received of

24

whatever nature and from whatever source derived. The term does

25

not include the following:

26

(1)  Periodic payments for sickness and disability other

27

than regular wages received during a period of sickness or

28

disability.

29

(2)  Disability, retirement or other payments arising

30

under workers' compensation acts, occupational disease acts

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1

and similar legislation by any government.

2

(3)  Payments commonly recognized as old-age or

3

retirement benefits paid to persons retired from service

4

after reaching a specific age or after a stated period of

5

employment.

6

(4)  Payments commonly known as public assistance or

7

unemployment compensation payments by a governmental agency.

8

(5)  Payments to reimburse actual expenses.

9

(6)  Payments made by employers or labor unions for

10

programs covering hospitalization, sickness, disability or

11

death, supplemental unemployment benefits, strike benefits,

12

Social Security and retirement.

13

(7)  Compensation received by United States servicemen

14

serving in a combat zone.

15

"Income allowance."

16

(1)  As follows:

17

(i)  Before July 1, 2011, $10,000 for each eligible

18

student, eligible pre-kindergarten student and dependent

19

member of the household.

20

(ii)  After June 30, 2011, $12,000 for each eligible

21

student, eligible pre-kindergarten student and dependent

22

member of the household.

23

(2)  Beginning July 12, 2012, the Department of Community

24

and Economic Development shall adjust the income allowance

25

amounts under paragraph (1) to reflect any upward changes in

26

the Consumer Price Index for All Urban Consumers for the

27

Pennsylvania, New Jersey, Delaware and Maryland area in the

28

preceding 12 months and shall immediately submit the adjusted

29

amounts to the Legislative Reference Bureau for publication

30

as a notice in the Pennsylvania Bulletin.

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1

"Innovative educational program."  An advanced academic or

2

similar program that is not part of the regular academic program

3

of a public school but that enhances the curriculum or academic

4

program of the public school or provides pre-kindergarten

5

programs to public school students.

6

"Maximum allowable household income for students with a

7

disability."

8

(1)  Except as set forth in paragraph (2), as follows:

9

(i)  Before July 1, 2011, not more than $50,000.

10

(ii)  After June 30, 2011, not more than $60,000.

11

(2)  With respect to an eligible student with a

12

disability, as calculated by multiplying:

13

(i)  the sum of:

14

(A)  the applicable amount under paragraph (1);

15

and

16

(B)  the applicable income allowance; by

17

(ii) the applicable support level factor according to

18

the following table:

19

Support Level

Support Level Factor

20

1

1.50

21

2

2.993

22

(3)  Beginning on July 12, 2012, the Department of

23

Community and Economic Development shall adjust the income

24

amounts under paragraph (1) and (2) to reflect any upward

25

changes in the Consumer Price Index for All Urban Consumers

26

for the Pennsylvania, New Jersey, Delaware and Maryland area

27

in the preceding 12 months and shall immediately submit the

28

adjusted amounts to the Legislative Reference Bureau for

29

publication as a notice in the Pennsylvania Bulletin.

30

"Pass-through entity."  A partnership as defined in section

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1

301(n.0), a single-member limited liability company treated as a

2

disregarded entity for Federal income tax purposes or a

3

Pennsylvania S corporation as defined in section 301(n.1). 

4

"Pre-kindergarten program."  A program of instruction for

5

three-year-old or four-year-old students that utilizes a

6

curriculum aligned with the curriculum of the school with which

7

it is affiliated and which provides one of the following:

8

(1)  A minimum of two hours of instructional and

9

developmental activities per day at least 60 days per school

10

year.

11

(2)  A minimum of two hours of instructional and

12

developmental activities per day at least 20 days over the

13

summer recess.

14

"Pre-kindergarten scholarship organization."  A nonprofit

15

entity which:

16

(1)  either is exempt from Federal taxation under section

17

501(c)(3) of the Internal Revenue Code of 1986 (Public Law

18

99-514, 26 U.S.C. § 1 et seq.) or is operated as a separate

19

segregated fund by a scholarship organization that has been

20

qualified under section 1703-F; and

21

(2)  contributes at least 80% of its annual cash receipts

22

to a pre-kindergarten scholarship program by expending or

23

otherwise irrevocably encumbering those funds for

24

distribution during the then current fiscal year of the

25

organization or during the next succeeding fiscal year of the

26

organization.

27

"Pre-kindergarten scholarship program."  A program to provide

28

tuition to eligible pre-kindergarten students to attend a pre-

29

kindergarten program operated by or in conjunction with a school

30

located in this Commonwealth and that includes an application

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1

and review process for the purpose of making awards to eligible

2

pre-kindergarten students and awards scholarships to eligible

3

pre-kindergarten students without limiting availability to only

4

students of one school.

5

"Public school."  A public pre-kindergarten where compulsory

6

attendance requirements do not apply or a public kindergarten,

7

elementary school or secondary school at which the compulsory

8

attendance requirements of this Commonwealth may be met and

9

which meets the applicable requirements of Title VI of the Civil

10

Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

11

"Scholarship organization."  A nonprofit entity which:

12

(1)  is exempt from Federal taxation under section 501(c)

13

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

14

26 U.S.C. § 1 et seq.); and

15

(2)  contributes at least 80% of its annual cash receipts

16

to a scholarship program.

17

For purposes of this definition, a nonprofit entity

18

"contributes" its annual cash receipts to a scholarship program

19

when it expends or otherwise irrevocably encumbers those funds

20

for distribution during the then current fiscal year of the

21

nonprofit entity or during the next succeeding fiscal year of

22

the nonprofit entity.

23

"Scholarship program."  A program to provide tuition to

24

eligible students to attend a school located in this

25

Commonwealth. A scholarship program must include an application

26

and review process for the purpose of making awards to eligible

27

students. The award of scholarships to eligible students shall

28

be made without limiting availability to only students of one

29

school.

30

"School."  A public or nonpublic pre-kindergarten,

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1

kindergarten, elementary school or secondary school at which the

2

compulsory attendance requirements of the Commonwealth may be

3

met and which meets the applicable requirements of Title VI of

4

the Civil Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

5

"School age."  Children from the earliest admission age to a

6

school's pre-kindergarten or kindergarten program or, when no

7

pre-kindergarten or kindergarten program is provided, the

8

school's earliest admission age for beginners, until the end of

9

the school year the student attains 21 years of age or

10

graduation from high school, whichever occurs first.

11

"Special education school."  A school or program within a

12

school that is designated specifically and exclusively for

13

students with any of the disabilities listed in 34 CFR § 300.8

14

(relating to child with disability) and meets one of the

15

following:

16

(1)  Is licensed under the act of January 28, 1988

17

(P.L.24, No.11), known as the Private Academic Schools Act.

18

(2)  Is accredited by an accrediting association approved

19

by the State Board of Education.

20

(3)  Is a school for the blind or deaf receiving

21

Commonwealth appropriations.

22

(4)  Is operated by or under the authority of a bona fide

23

religious institution or by the Commonwealth or any political

24

subdivision thereof.

25

"Support level."  The level of support needed by an eligible

26

student with a disability, as set forth in the following matrix:

27

Support Level 1 - The student is not enrolled in a

28

special education school.

29

Support Level 2 - The student is enrolled as a student in

30

a special education school.

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1

Section 1703-F.  Qualification and application.

2

(a)  Establishment.--In accordance with section 14 of Article

3

III of the Constitution of Pennsylvania, an educational

4

improvement tax credit program is hereby established to enhance

5

the educational opportunities available to all students in this

6

Commonwealth.

7

(b)  Information.--In order to qualify under this article, a

8

scholarship organization, a pre-kindergarten scholarship

9

organization or an educational improvement organization must

10

submit information to the department that enables the department

11

to confirm that the organization is exempt from taxation under

12

section 501(c)(3) of the Internal Revenue Code of 1986 (Public

13

Law 99-514, 26 U.S.C. § 1 et seq.).

14

(c)  Scholarship organizations and pre-kindergarten

15

scholarship organizations.--A scholarship organization or pre-

16

kindergarten scholarship organization must certify to the

17

department that the organization is eligible to participate in

18

the program established under this article and must agree to

19

annually report the following information to the department by

20

December 1, 2005, and September 1 of each year thereafter:

21

(1)  (i)  The number of scholarships awarded during the

22

immediately preceding school year to eligible pre-

23

kindergarten students.

24

(ii)  The total and average amounts of the

25

scholarships awarded during the immediately preceding

26

school year to eligible pre-kindergarten students.

27

(iii)  The number of scholarships awarded during the

28

immediately preceding school year to eligible students in

29

grades kindergarten through 8.

30

(iv)  The total and average amounts of the

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1

scholarships awarded during the immediately preceding

2

school year to eligible students in grades K through 8.

3

(v)  The number of scholarships awarded during the

4

immediately preceding school year to eligible students in

5

grades 9 through 12.

6

(vi)  The total and average amounts of the

7

scholarships awarded during the immediately preceding

8

school year to eligible students in grades 9 through 12.

9

(vii)  Where the scholarship organization or pre-

10

kindergarten scholarship organization collects

11

information on a county-by-county basis, the total number

12

and the total amount of scholarships awarded during the

13

immediately preceding school year to residents of each

14

county in which the scholarship organization or pre-

15

kindergarten scholarship organization awarded

16

scholarships.

17

(2)  The information required under paragraph (1) shall

18

be submitted on a form provided by the department. No later

19

than September 1, 2005, and May 1 of each year thereafter,

20

the department shall annually distribute such sample forms,

21

together with the forms on which the reports are required to

22

be made, to each listed scholarship organization and pre-

23

kindergarten scholarship organization.

24

(3)  The department may not require any other information

25

to be provided by scholarship organizations or pre-

26

kindergarten scholarship organizations, except as expressly

27

authorized in this article.

28

(d)  Educational improvement organization.--

29

(1)  An application submitted by an educational

30

improvement organization must describe its proposed

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1

innovative educational program or programs in a form

2

prescribed by the department. The department shall consult

3

with the Department of Education as necessary. The department

4

shall review and approve or disapprove the application. In

5

order to be eligible to participate in the program

6

established under this article, an educational improvement

7

organization must agree to annually report the following

8

information to the department by December 1, 2005, and

9

September 1 of each year thereafter:

10

(i)  The name of the innovative educational program

11

or programs and the total amount of the grant or grants

12

made to those programs during the immediately preceding

13

school year.

14

(ii)  A description of how each grant was utilized

15

during the immediately preceding school year and a

16

description of any demonstrated or expected innovative

17

educational improvements.

18

(iii)  The names of the public schools and school

19

districts where innovative educational programs that

20

received grants during the immediately preceding school

21

year were implemented.

22

(iv)  Where the educational improvement organization

23

collects information on a county-by-county basis, the

24

total number and the total amount of grants made during

25

the immediately preceding school year for programs at

26

public schools in each county in which the educational

27

improvement organization made grants.

28

(2)  The information required under paragraph (1) shall

29

be submitted on a form provided by the department. No later

30

than September 1, 2005, and May 1 of each year thereafter,

- 16 -

 


1

the department shall annually distribute such sample forms,

2

together with the forms on which the reports are required to

3

be made, to each listed educational improvement organization.

4

(3)  The department may not require any other information

5

to be provided by educational improvement organizations,

6

except as expressly authorized in this article.

7

(e)  Notification.--The department shall notify the

8

scholarship organization, pre-kindergarten scholarship

9

organization or educational improvement organization that the

10

organization meets the requirements of this article for that

11

fiscal year no later than 60 days after the organization has

12

submitted the information required under this section.

13

(f)  Publication.--The department shall annually publish a

14

list of each scholarship organization, pre-kindergarten

15

scholarship organization or educational improvement organization

16

qualified under this section in the Pennsylvania Bulletin. The

17

list shall also be posted and updated as necessary on the

18

publicly accessible Internet website of the department.

19

Section 1704-F.  Application.

20

(a)  Scholarship organization or pre-kindergarten scholarship

21

organizations.--A business firm shall apply to the department

22

for a tax credit under section 1705-F. A business firm shall

23

receive a tax credit under this article if the scholarship

24

organization or pre-kindergarten scholarship organization that

25

receives the contribution appears on the list established under

26

section 1703-F(f).

27

(b)  Educational improvement organization.--A business firm

28

must apply to the department for a credit under section 1705-F.

29

A business firm shall receive a tax credit under this article if

30

the department has approved the program provided by the

- 17 -

 


1

educational improvement organization that receives the

2

contribution.

3

(c)  Availability of tax credits.--Tax credits under this

4

article shall be made available by the department on a first-

5

come, first-served basis within the limitation established under

6

section 1706-F(a).

7

(d)  Contributions.--A contribution by a business firm to a

8

scholarship organization, pre-kindergarten scholarship

9

organization or educational improvement organization shall be

10

made no later than 60 days following the approval of an

11

application under subsection (a) or (b).

12

Section 1705-F.  Tax credit.

13

(a)  Scholarship or educational improvement organizations.--

14

In accordance with section 1706-F(a), the Department of Revenue

15

shall grant a tax credit against any tax due under Article III,

16

IV, VI, VII, VIII, IX or XV to a business firm providing proof

17

of a contribution to a scholarship organization or educational

18

improvement organization in the taxable year in which the

19

contribution is made which shall not exceed 75% of the total

20

amount contributed during the taxable year by the business firm.

21

Such credit shall not exceed $300,000 annually per business firm

22

for contributions made to scholarship organizations or

23

educational improvement organizations.

24

(b)  Additional amount.--The Department of Revenue shall

25

grant a tax credit of up to 90% of the total amount contributed

26

during the taxable year if the business firm provides a written

27

commitment to provide the scholarship organization or

28

educational improvement organization with the same amount of

29

contribution for two consecutive tax years. The business firm

30

must provide the written commitment under this subsection to the

- 18 -

 


1

department at the time of application.

2

(c)  Pre-kindergarten scholarship organizations.--In

3

accordance with section 1706-F(a), the Department of Revenue

4

shall grant a tax credit against any tax due under Article III,

5

IV, VI, VII, VIII, IX or XV to a business firm providing proof

6

of a contribution to a pre-kindergarten scholarship organization

7

in the taxable year in which the contribution is made which

8

shall be equal to 100% of the first $10,000 contributed during

9

the taxable year by the business firm, and which shall not

10

exceed 90% of the remaining amount contributed during the

11

taxable year by the business firm. Such credit shall not exceed

12

$150,000 annually per business firm for contributions made to

13

pre-kindergarten scholarship organizations.

14

(d)  Combination of tax credits.--A business firm may receive

15

tax credits from the Department of Revenue in any tax year for

16

any combination of contributions under subsection (a) or (b) or

17

(c). In no case may a business firm receive tax credits in any

18

tax year in excess of $300,000 for contributions under

19

subsections (a) and (b). In no case shall a business firm

20

receive tax credits in any tax year in excess of $150,000 for

21

contributions under subsection (c).

22

(e)  Pass-through entity.--

23

(1)  If a pass-through entity does not intend to use all

24

approved tax credits under this section, it may elect in

25

writing to transfer all or a portion of the credit to

26

shareholders, members or partners in proportion to the share

27

of the entity's distributive income to which the shareholder,

28

member or partner is entitled for use in the taxable year in

29

which the contribution is made or in the taxable year

30

immediately following the year in which the contribution is

- 19 -

 


1

made. The election shall designate the year in which the

2

transferred credits are to be used and shall be made

3

according to procedures established by the Department of

4

Revenue.

5

(2)  A pass-through entity and a shareholder, member or

6

partner of a pass-through entity shall not claim the credit

7

under this section for the same contribution.

8

(3)  The shareholder, member or partner may not carry

9

forward, carry back, obtain a refund of or sell or assign the

10

credit.

11

(f)  Restriction on applicability of credits.--No credits

12

granted under this section shall be applied against any tax

13

withheld by an employer from an employee under Article III.

14

(g)  Time of application for credits.--

15

(1)  Except as provided in paragraphs (2) and (3), the

16

department may accept applications for tax credits available

17

during a fiscal year no earlier than July 1 of each fiscal

18

year.

19

(2)  The application of any business firm for tax credits

20

available during a fiscal year as part of the second year of

21

a two-year commitment may be accepted no earlier than May 15

22

preceding the fiscal year.

23

(3)  The application under subsection (a) of any pass-

24

through entity for approval of single-year tax credits

25

available during a fiscal year against the taxes imposed

26

under Article III or under subsection (b) for approval of

27

credits against such taxes for the first year of a two-year

28

commitment may be accepted by the department no earlier than

29

the first business day following July 7 of the fiscal year.

30

Section 1706-F.  Limitations.

- 20 -

 


1

(a)  Amount.--

2

(1)  The total aggregate amount of all tax credits

3

approved shall not exceed $67,000,000 in a fiscal year. No

4

less than $44,666,667 of the total aggregate amount shall be

5

used to provide tax credits for contributions from business

6

firms to scholarship organizations. No less than $22,333,333

7

of the total aggregate amount shall be used to provide tax

8

credits for contributions from business firms to educational

9

improvement organizations.

10

(2)  (i)  For the fiscal years 2004-2005, 2005-2006 and

11

2006-2007, the total aggregate amount of all tax credits

12

approved for contributions from business firms to pre-

13

kindergarten scholarship programs shall not exceed

14

$5,000,000 in a fiscal year.

15

(ii)  For the fiscal year 2007-2008 and each fiscal

16

year thereafter, the total aggregate amount of all tax

17

credits approved for contributions from business firms to

18

pre-kindergarten scholarship programs shall not exceed

19

$8,000,000 in a fiscal year.

20

(b)  Activities.--No tax credit shall be approved for

21

activities that are a part of a business firm's normal course of

22

business.

23

(c)  Tax liability.--

24

(1)  Except as provided in paragraph (2), a tax credit

25

granted for any one taxable year may not exceed the tax

26

liability of a business firm.

27

(2)  In the case of a credit granted to a pass-through

28

entity which elects to transfer the credit according to

29

section 1705-F(e), a tax credit granted for any one taxable

30

year and transferred to a shareholder, member or partner may

- 21 -

 


1

not exceed the tax liability of the shareholder, member or

2

partner.

3

(d)  Use.--A tax credit not used by the applicant in the

4

taxable year the contribution was made or in the year designated

5

by the shareholder, member or partner to whom the credit was

6

transferred under section 1705-F(e) may not be carried forward

7

or carried back and is not refundable or transferable.

8

(e)  Nontaxable income.--A scholarship received by an

9

eligible student or eligible pre-kindergarten student shall not

10

be considered to be taxable income for the purposes of Article

11

III.

12

Section 1707-F.  Lists.

13

The Department of Revenue shall provide a list of all

14

scholarship organizations, pre-kindergarten scholarship

15

organizations and educational improvement organizations

16

receiving contributions from business firms granted a tax credit

17

under this article to the General Assembly by June 30 of each

18

year.

19

Section 1708-F.  Guidelines.

20

The department in consultation with the Department of

21

Education shall develop guidelines to determine the eligibility

22

of an innovative educational program.

23

ARTICLE XXIX-D

24

TAX AMNESTY PROGRAM FOR FISCAL YEAR 2009-2010

25

Section 2901-D.  Definitions.

26

The following words, terms and phrases, when used in this

27

article, shall have the meanings ascribed to them in this

28

section, except where the context clearly indicates a different

29

meaning:

30

"Amnesty period."  The time period of 90 consecutive days

- 22 -

 


1

established by the Governor during the fiscal year beginning

2

July 1, 2009, and ending June 30, 2010.

3

"Department."  The Department of Revenue of the Commonwealth.

4

"Eligible tax."  Any tax imposed by the Commonwealth for

5

deposit in the General Fund, the Motor License Fund or the

6

Liquid Fuels Tax Fund for taxes delinquent as of December 31,

7

2006. The term includes any interest or penalty on an eligible

8

tax. The term excludes any tax imposed by a political

9

subdivision.

10

"Program."  The tax amnesty program as provided for in this

11

article.

12

"Taxpayer."  Any person, association, fiduciary, partnership,

13

corporation or other entity required to pay or collect any of

14

the eligible taxes. The term shall not include a taxpayer who,

15

prior to the amnesty period, has received notice that the

16

taxpayer is the subject of a criminal investigation for an

17

alleged violation of any law imposing an eligible tax or who,

18

prior to the amnesty period, has been named as a defendant in a

19

criminal complaint alleging a violation of any law imposing an

20

eligible tax or is a defendant in a pending criminal action for

21

an alleged violation of any law imposing an eligible tax.

22

Section 2902-D.  Establishment of program.

23

(a)  Program established.--There is established a tax amnesty

24

program which shall be administered by the department.

25

(b)  Applicability.--The program shall apply to a taxpayer

26

who is delinquent on payment of a liability for an eligible tax

27

as of June 1, 2009, including a liability for returns not filed,

28

liabilities according to records of the department as of June 1,

29

2009, liabilities not reported, underreported or not

30

established, but delinquent as of June 1, 2009.

- 23 -

 


1

(c)  Prior amnesty program participation.--The program shall

2

not apply to taxpayers who participated in the tax amnesty

3

program outlined in Article XXIX-A.

4

(d)  Future amnesty program participation.--A taxpayer who

5

participates in the program shall not be eligible to participate

6

in a future tax amnesty program.

7

Section 2903-D.  Required payment.

8

(a)  Taxpayer requirements.--Subject to section 2904-D, all

9

taxpayers who participate in the program shall comply with all

10

of the following:

11

(1)  During the amnesty period, file a tax amnesty return

12

in such form and containing such information as the

13

department shall require. A tax amnesty return shall be

14

considered to be timely filed if it is postmarked during the

15

amnesty period.

16

(2)  During the amnesty period, make payment of all taxes

17

and 50% of all interest due to the Commonwealth in accordance

18

with the tax amnesty return that is filed.

19

(3)  File complete tax returns for all years for which

20

the taxpayer previously has not filed a tax return and file

21

complete amended returns for all years for which the taxpayer

22

underreported eligible tax liability.

23

(b)  Prohibitions.--The department shall not collect 50% of

24

all interest due to the Commonwealth or the penalties owed by a

25

taxpayer who participates in the program under subsection (a).

26

The department shall not pursue any administrative or judicial

27

proceeding against a taxpayer with respect to any eligible tax

28

that is disclosed on a tax amnesty return.

29

Section 2904-D.  Amnesty contingent on continued.

30

Notwithstanding any other provision of this article, the

- 24 -

 


1

department may assess and collect from a taxpayer all penalties

2

and interest forgone through the tax amnesty program established

3

in this article if, within two years after the end of the

4

program, either of the following occurs:

5

(1)  the taxpayer granted amnesty under this article

6

becomes delinquent for three consecutive periods in payment

7

of taxes due or filing of returns required on a semimonthly,

8

monthly, quarterly or other basis and the taxpayer has not

9

contested the tax liability through a timely valid

10

administrative or judicial appeal; or

11

(2)  the taxpayer granted amnesty under this article

12

becomes delinquent and is eight or more months late in

13

payment of taxes due or filing of returns on an annual basis

14

and the taxpayer has not contested the liability through a

15

timely valid administrative or judicial appeal.

16

Section 2905-D.  Limitation of deficiency assessment.

17

If, subsequent to the amnesty period, the department issues a

18

deficiency assessment with respect to a tax amnesty return, the

19

department shall have the authority to impose penalties and

20

interest and to pursue a criminal action only with respect to

21

the difference between the amount shown on that tax amnesty

22

return and the current amount of tax.

23

Section 2906-D.  Overpayment of tax.

24

Notwithstanding any other provisions of this article or any

25

other act, if an overpayment of eligible tax is refunded or

26

credited within 180 days after the tax amnesty return is filed,

27

no interest shall be allowed on the overpayment.

28

Section 2907-D.  Previously paid interest and penalties.

29

No refund or credit shall be allowed for any interest or

30

penalty on eligible taxes paid to the department prior to the

- 25 -

 


1

amnesty period.

2

Section 2908-D.  Proceedings relating to tax amnesty return

3

barred.

4

Participation in the program is conditioned upon the

5

taxpayer's agreement that the right to protest or pursue an

6

administrative or judicial proceeding with regard to tax amnesty

7

returns filed under the program or to claim any refund of money

8

paid under the program is barred.

9

Section 2909-D.  Undisclosed liabilities.

10

Nothing in this article shall be construed to prohibit the

11

department from instituting civil or criminal proceedings

12

against any taxpayer with respect to any amount of tax that is

13

not disclosed on the tax amnesty return.

14

Section 2910-D.  Duties of department.

15

(a)  Regulations.--The department shall develop regulations

16

to implement the provisions of this article. The regulations

17

must be published in the Pennsylvania Bulletin within 90 days of

18

the effective date of this article and shall contain, but not be

19

limited to, the following information:

20

(1)  An explanation of the program and the requirements

21

for eligibility for the program.

22

(2)  The dates during which a tax amnesty return may be

23

filed.

24

(3)  A specimen copy of the tax amnesty return.

25

(b)  Publicity.--The department shall publicize the program

26

to maximize public awareness of and participation in the

27

program. The department shall coordinate to the highest degree

28

possible its publicity efforts and other actions taken to

29

implement this article.

30

(c)  Report.--The department shall issue a report to the

- 26 -

 


1

General Assembly within 180 days after the end of the amnesty

2

period detailing the implementation of the program. The report

3

shall contain, but not be limited to, the following information:

4

(1)  A detailed breakdown of the department's

5

administrative costs in implementing the program.

6

(2)  The number of tax amnesty returns filed and a

7

breakdown of the number and dollar amount of revenue raised

8

for each tax by calendar year during which the tax period

9

ended. In addition, the gross revenues shall be broken down

10

into the following categories:

11

(i)  Amounts represented by assessments receivable

12

established by the department on or before the first day

13

of the amnesty period.

14

(ii)  All other amounts.

15

(3)  The total dollar amount of revenue collected by the

16

program.

17

(4)  The total dollar amount of penalties forgiven under

18

the program.

19

(5)  The demographic characteristics of tax amnesty

20

participants, including North American Industry

21

Classification System codes of participants, type of

22

taxpayer, consisting of individual, partnership, corporation

23

or other entity, size of tax liability and geographical

24

location.

25

(d)  Notification.--The department shall notify in writing

26

all known tax delinquents at the taxpayers' last known address

27

of the existence of the tax amnesty program. The sole purpose of

28

the letter sent by the department to taxpayers must be

29

notification of the program.

30

Section 2911-D.  Method of payment.

- 27 -

 


1

All tax payments under the program shall be made by certified

2

check, money order, cash or its equivalent.

3

Section 2912-D.  Exemption from review process.

4

Notwithstanding any law to the contrary, the regulations

5

issued by the department for the program shall be exempt from

6

the regulatory review process provided in the act of June 25,

7

1982 (P.L.633, No.181), known as the Regulatory Review Act.

8

Section 2913-D.  Use of revenue.

9

All revenue generated by this article shall be deposited into

10

a restricted revenue account in the General Fund. Revenue from

11

the restricted revenue account shall be distributed as follows:

12

(1)  All money from General Fund sources shall be

13

deposited in the General Fund no later than June 30, 2010,

14

less repayment of any costs for administration of the program

15

to the department.

16

(2)  All revenue from Motor License Fund sources shall be

17

deposited in the Motor License Fund no later than June 30,

18

2010.

19

(3)  All revenue from Liquid Fuels Tax Fund sources shall

20

be deposited in the Liquid Fuels Tax Fund no later than June

21

30, 2010.

22

Section 2914-D.  Penalties for certain corporate officers.

23

If an officer or officers of a corporation or association

24

intentionally neglect or refuse to make reports to the Auditor

25

General, or to the department, or successively to the Auditor

26

General and to the department, as required by law, for any two

27

successive tax years, the officer or officers commit a

28

misdemeanor and shall, upon conviction, be sentenced to pay a

29

fine of not less than $2,500 nor more than $5,000. This fine

30

shall be in addition to any fine or prison sentence under

- 28 -

 


1

section 1704 of the act of April 9, 1929 (P.L.343, No.176),

2

known as The Fiscal Code.

3

Section 2915-D.  Further examination of books and records.

4

(a)  Authority.--The department or any of its authorized

5

agents is authorized to examine the books, papers and records of

6

any taxpayer or other persons in order to verify the accuracy

7

and completeness of any return or report made or, if no return

8

or report was made, to ascertain and assess any tax or other

9

liability owed to the Commonwealth.

10

(b)  Audit.--The department may determine, by desk, field or

11

other audit, the amount of tax or other liability required to be

12

paid to the Commonwealth. The department may determine the

13

liability based upon the facts contained in the return or report

14

being audited or other information in the department's

15

possession. The department may determine the liability based

16

upon a reasonable statistical sample or test audit performed in

17

accordance with the regulations of the department when the

18

individual being audited does not have complete records of

19

transactions or when the review of each transaction or invoice

20

would place an undue burden on the department to conduct an

21

audit in a timely and efficient manner.

22

(c)  Challenge by taxpayer.--The taxpayer may challenge the

23

accuracy of a statistical sample or test audit by providing

24

clear and convincing evidence that the method used for a

25

statistical sample or test audit is erroneous, lacks a rational

26

basis or produces a different result when the complete records

27

are considered.

28

Section 2916-D.  Additional penalty.

29

(a)  Penalty.--Subject to the limitations provided under

30

subsection (b), a penalty of 5% of the unpaid tax liability and

- 29 -

 


1

penalties and interest shall be levied against a taxpayer

2

subject to an eligible tax if the taxpayer had failed to remit

3

an eligible tax due or had an unreported or underreported

4

liability for an eligible tax on or after the first day

5

following the end of the amnesty period.

6

(b)  Nonapplicability.--The penalty provided in this section

7

shall not apply to a taxpayer who:

8

(1)  has paid the liability in full or entered into a

9

duly approved and executed deferred payment plan on or before

10

the last day of the amnesty period; or

11

(2)  has filed a timely and valid administrative or

12

judicial appeal contesting the liability on or before the

13

last day of the amnesty period.

14

(c)  Penalty in addition.--The penalty provided by this

15

section shall be in addition to all other penalties provided by

16

law.

17

Section 2917-D.  Application of penalty and powers.

18

Sections 2914-D and 2915-D shall apply to all taxes collected

19

by the department.

20

Section 2918-D.  Construction.

21

Except as expressly provided in this article, this article

22

shall not:

23

(1)  be construed to relieve any person, corporation or

24

other entity from the filing of returns or from any taxes,

25

penalties or interest imposed by the provisions of any laws;

26

(2)  affect or terminate any petitions, investigations,

27

prosecutions, legal or otherwise, or other proceedings

28

pending under the provisions of any such laws; or

29

(3)  prevent the commencement or further prosecution of

30

any proceedings by the proper authorities of the Commonwealth

- 30 -

 


1

for violation of any such laws or for the assessment,

2

settlement, collection or recovery of taxes, penalties or

3

interest due to the Commonwealth under any such laws.

4

Section 2919-D.  Suspension of inconsistent acts.

5

All acts or parts of acts inconsistent with the provisions of

6

this article are suspended to the extent necessary to carry out

7

the provisions of this article.

8

Section 5.  Repeals are as follows:

9

(1)  The General Assembly declares that the repeal under

10

paragraph (2) is necessary to effectuate the addition of

11

Article XVII-F of the act.

12

(2)  Article XX-B of the act of March 10, 1949 (P.L.30,

13

No.14), known as the Public School Code of 1949, is repealed.

14

Section 6.  The addition of Article XVII-F of the act is a

15

continuation of the act of March 10, 1949 (P.L.30, No.14), known

16

as the Public School Code of 1949. Except as otherwise provided

17

in Article XVII-F of the act, all activities initiated under

18

Article XX-B of the Public School Code of 1949 shall continue

19

and remain in full force and effect and may be completed under

20

Article XVII-F of the act. Orders, regulations, rules and

21

decisions which were made under Article XX-B of the Public

22

School Code of 1949 and which are in effect on the effective

23

date of section 5(2) of this act shall remain in full force and

24

effect until revoked, vacated or modified under Article XVII-F

25

of the act.

26

Section 7.  The amendment of section 319 of the act shall

27

apply to tax returns due after May 31, 2011.

28

Section  8.  This act shall take effect immediately.

29

Section 1.  Section 204 of the act of March 4, 1971 (P.L.6,

<--

30

No.2), known as the Tax Reform Code of 1971, is amended by

- 31 -

 


1

adding clauses to read:

2

Section 204.  Exclusions from Tax.--The tax imposed by

3

section 202 shall not be imposed upon any of the following:

4

* * *

5

(67)  The sale at retail of repair or replacement parts,

6

including the installation of those parts, exclusively for use

7

in helicopters and similar rotorcraft or in overhauling or

8

rebuilding of helicopters and similar rotorcraft or helicopter

9

and similar rotorcraft components.

10

(68)  The sale at retail of helicopters and similar

11

rotorcraft.

12

Section 2.  Section 217 of the act, amended July 1, 1985

13

(P.L.78, No.29), is amended to read:

14

Section 217.  Time for Filing Returns.--(a)  Quarterly [and], 

15

Monthly and Semi-monthly Returns:

16

(1)  For the year in which this article becomes effective and

17

in each year thereafter a return shall be filed quarterly by

18

every licensee on or before the twentieth day of April, July,

19

October and January for the three months ending the last day of

20

March, June, September and December.

21

(2)  For the year in which this article becomes effective,

22

and in each year thereafter, a return shall be filed monthly

23

with respect to each month by every licensee whose total tax

24

reported, or in the event no report is filed, the total tax

25

which should have been reported, for the third calendar quarter

26

of the preceding year equals or exceeds six hundred dollars

27

($600) and is less than twenty-five thousand dollars ($25,000).

28

Such returns shall be filed on or before the twentieth day of

29

the next succeeding month with respect to which the return is

30

made. Any licensee required to file monthly returns hereunder

- 32 -

 


1

shall be relieved from filing quarterly returns.

2

(3)  After May 31, 2010, a return shall be filed semi-monthly

3

with respect to each month by every licensee whose total tax

4

reported, or in the event no report is filed, the total tax

5

which should have been reported, for the third calendar quarter

6

of the preceding year equals or exceeds twenty-five thousand

7

dollars ($25,000). For the period from the first day of the

8

month to the fifteenth day of the month, the returns shall be

9

filed on or before the twenty-fifth day of the month. For the

10

period from the sixteenth day of the month to the last day of

11

the month, the returns shall be filed on or before the tenth day

12

of the next succeeding month with respect to which the return is

13

made. Any licensee required to file semi-monthly returns under

14

this section shall be relieved from filing monthly or quarterly

15

returns.

16

(b)  Annual Returns. For the calendar year 1971, and for each

17

year thereafter, no annual return shall be filed, except as may

18

be required by rules and regulations of the department

19

promulgated and published at least sixty days prior to the end

20

of the year with respect to which the returns are made. Where

21

such annual returns are required licensees shall not be required

22

to file such returns prior to the twentieth day of the year

23

succeeding the year with respect to which the returns are made.

24

(c)  Other Returns. Any person, other than a licensee, liable

25

to pay to the department any tax under this article, shall file

26

a return on or before the twentieth day of the month succeeding

27

the month in which such person becomes liable for the tax.

28

(d)  Small Taxpayers. The department, by regulation, may

29

waive the requirement for the filing of quarterly return in the

30

case of any licensee whose individual tax collections do not

- 33 -

 


1

exceed seventy-five dollars ($75) per calendar quarter and may

2

provide for reporting on a less frequent basis in such cases.

3

Section 3.  Section 222 of the act is amended to read:

4

Section 222.  Time of Payment.--(a)  Monthly, [Bimonthly] 

5

Semi-monthly and Quarterly Payments. The tax imposed by this

6

article and incurred or collected by a licensee shall be due and

7

payable by the licensee on the day the return is required to be

8

filed under the provisions of section 217 and such payment must

9

accompany the return for such preceding period,

10

(b)  Annual Payments. If the amount of tax due for the

11

preceding year as shown by the annual return of any taxpayer is

12

greater than the amount already paid by him in connection with

13

his monthly, semi-monthly or quarterly returns he shall send

14

with such annual return a remittance for the unpaid amount of

15

tax for the year.

16

(c)  Other Payments. Any person other than a licensee liable

17

to pay any tax under this article shall remit the tax at the

18

time of filing the return required by this article.

19

Section 4.  Section 303(a.6) of the act, added July 6, 2006

20

(P.L.319, No.67), is amended to read:

21

Section 303.  Classes of Income.--* * *

22

(a.6)  Except as provided in this article and without regard

23

to sections 220(f)(4) and 223(f)(4) of the Internal Revenue Code

24

of 1986, the requirements of sections 106(b) and (d), 220 and

25

223 of the Internal Revenue Code of 1986[, as amended to January

26

1, 2005,] shall be applicable.

27

* * *

28

Section 5.  Section 315.9 of the act, amended July 25, 2007

29

(P.L.373, No.55), is amended to read:

30

Section 315.9.  Operational Provisions.--(a)  Except for the

- 34 -

 


1

checkoff established under sections 315.2, 315.6 and 315.7 and

2

except as otherwise provided [under subsection (b)] in this

3

section, the checkoffs established under this part shall apply

4

through taxable years ending December 31, 2007.

5

(b)  [Any] Except as set forth in subsection (c), any 

6

checkoff established under this part and applicable for the

7

first time in a taxable year beginning after December 31, 2003,

8

shall expire four years after the beginning of such first

9

taxable year.

10

(c)  Sections [315.3 and 315.4 shall expire January 1, 2010]

11

315.3, 315.4, 315.7 and 315.8 shall expire January 1, 2014.

12

Section 6.  Section 319 of the act, repealed and added August

13

31, 1971 (P.L.362, No.93), is amended to read:

14

Section 319.  [Monthly, Semi-monthly and Quarterly] Payment

15

of Taxes Withheld.--Every employer withholding tax under this

16

article shall pay over to the department or to a depository

17

designated by it the tax required to be deducted and withheld

18

under this article.

19

(1)  Where the aggregate amount required to be deducted and

20

withheld by any employer for [each quarterly period] a calendar

21

year can reasonably be expected to be less than [three hundred

22

dollars ($300)] twelve hundred dollars ($1,200), such employer

23

shall file a return and pay the tax on or before the last day

24

for filing a quarterly return under section 318.

25

(2)  Where the aggregate amount required to be deducted and

26

withheld by any employer for [each quarterly period] a calendar

27

year can reasonably be expected to be [three hundred dollars

28

($300) or more but less than one thousand dollars ($1,000)]

29

twelve hundred dollars ($1,200) or more but less than four

30

thousand dollars ($4,000), such employer shall pay the tax

- 35 -

 


1

monthly, on or before the fifteenth day of the month succeeding

2

the months of January to November, inclusive, and on or before

3

the last day of January following the month of December.

4

(3)  Where the aggregate amount required to be deducted and

5

withheld by any employer for [each quarterly period] a calendar

6

year can reasonably be expected to be [one thousand dollars

7

($1,000) or more] four thousand dollars ($4,000) or more but

8

less than twenty thousand dollars ($20,000), such employer shall

9

pay the tax semi-monthly, within three banking days after the

10

close of the semi-monthly period.

11

(4)  Where the aggregate amount required to be deducted and

12

withheld by any employer for a calendar year can reasonably be

13

expected to be twenty thousand dollars ($20,000) or more, such

14

employer shall pay the tax on the Wednesday after payday if the

15

payday falls on a Wednesday, Thursday or Friday and on the

16

Friday after payday if the payday falls on a Saturday, Sunday,

17

Monday or Tuesday.

18

Notwithstanding anything in this section to the contrary,

19

whenever any employer fails to deduct or truthfully account for

20

or pay over the tax withheld or file returns as prescribed by

21

this article, the department may serve a notice on such employer

22

requiring him to withhold taxes which are required to be

23

deducted under this article and deposit such taxes in a bank

24

approved by the department in a separate account in trust for

25

and payable to the department, and to keep the amount of such

26

tax in such account until payment over to the department. Such

27

notice shall remain in effect until a notice of cancellation is

28

served on the employer by the department.

29

Section 7.  Section 401(3)2(a)(9) and 4(c) of the act,

30

amended July 12, 2006 (P.L.1137, No.116), are amended to read:

- 36 -

 


1

Section 401.  Definitions.--The following words, terms, and

2

phrases, when used in this article, shall have the meaning

3

ascribed to them in this section, except where the context

4

clearly indicates a different meaning:

5

* * *

6

(3)  "Taxable income."  * * *

7

2.  In case the entire business of any corporation, other

8

than a corporation engaged in doing business as a regulated

9

investment company as defined by the Internal Revenue Code of

10

1986, is not transacted within this Commonwealth, the tax

11

imposed by this article shall be based upon such portion of the

12

taxable income of such corporation for the fiscal or calendar

13

year, as defined in subclause 1 hereof, and may be determined as

14

follows:

15

(a)  Division of Income.

16

* * *

17

(9)  (A)  Except as provided in subparagraph (B):

18

(i)  For taxable years beginning before January 1, 2007, all

19

business income shall be apportioned to this State by

20

multiplying the income by a fraction, the numerator of which is

21

the property factor plus the payroll factor plus three times the

22

sales factor and the denominator of which is five.

23

(ii)  For taxable years beginning after December 31, 2006,

24

all business income shall be apportioned to this State by

25

multiplying the income by a fraction, the numerator of which is

26

the sum of fifteen times the property factor, fifteen times the

27

payroll factor and seventy times the sales factor and the

28

denominator of which is one hundred.

29

(iii)  For taxable years beginning after December 31, 2008,

30

all business income shall be apportioned to this State by

- 37 -

 


1

multiplying the income by a fraction: the numerator of which is

2

the sum of eight and a half times the property factor, eight and

3

a half times the payroll factor and eighty-three times the sales

4

factor; and the denominator of which is one hundred.

5

(iv)  For taxable years beginning after December 31, 2009,

6

all business income shall be apportioned to this State by

7

multiplying the income by a fraction: the numerator of which is

8

the sum of five times the property factor, five times the

9

payroll factor and ninety times the sales factor; and the

10

denominator of which is one hundred.

11

(B)  For purposes of apportionment of the capital stock -

12

franchise tax as provided in section 602 of Article VI of this

13

act, the apportionment fraction shall be the property factor

14

plus the payroll factor plus the sales factor as the numerator,

15

and the denominator shall be three.

16

* * *

17

4.  * * *

18

(c)  (1)  The net loss deduction shall be the lesser of:

19

(A)  (I)  For taxable years beginning before January 1, 2007,

20

two million dollars ($2,000,000);

21

(II)  For taxable years beginning after December 31, 2006,

22

the greater of twelve and one-half per cent of taxable income as

23

determined under subclause 1 or, if applicable, subclause 2 or

24

three million dollars ($3,000,000); [or]

25

(III)  For taxable years beginning after December 31, 2008,

26

the greater of fifteen per cent of taxable income as determined

27

under subclause 1 or, if applicable, subclause 2 or three

28

million dollars ($3,000,000);

29

(IV)  For taxable years beginning after December 31, 2009,

30

the greater of twenty per cent of taxable income as determined

- 38 -

 


1

under subclause 1 or, if applicable, subclause 2 or three

2

million dollars ($3,000,000); or

3

(B)  The amount of the net loss or losses which may be

4

carried over to the taxable year or taxable income as determined

5

under subclause 1 or, if applicable, subclause 2.

6

(1.1)  In no event shall the net loss deduction include more

7

than five hundred thousand dollars ($500,000), in the aggregate,

8

of net losses from taxable years 1988 through 1994.

9

(2)  (A)  A net loss for a taxable year may only be carried

10

over pursuant to the following schedule:

11

Taxable Year

Carryover

12

1981

1 taxable year

13

1982

2 taxable years

14

1983-1987

3 taxable years

15

16

17

18

1988

  

  

  

2 taxable years plus 1 taxable year starting with the 1995 taxable year

19

20

21

22

1989

  

  

  

1 taxable year plus 2 taxable years starting with the 1995 taxable year

23

24

25

1990-1993

  

  

3 taxable years starting with the 1995 taxable year

26

1994

1 taxable year

27

1995-1997

10 taxable years

28

1998 and thereafter

20 taxable years

29

(B)  The earliest net loss shall be carried over to the

30

earliest taxable year to which it may be carried under this

- 39 -

 


1

schedule. The total net loss deduction allowed in any taxable

2

year shall not exceed:

3

(I)  Two million dollars ($2,000,000) for taxable years

4

beginning before January 1, 2007.

5

(II)  The greater of twelve and one-half per cent of the

6

taxable income as determined under subclause 1 or, if

7

applicable, subclause 2 or three million dollars ($3,000,000)

8

for taxable years beginning after December 31, 2006.

9

(III)  The greater of fifteen per cent of the taxable income

10

as determined under subclause 1 or, if applicable, subclause 2

11

or three million dollars ($3,000,000) for taxable years

12

beginning after December 31, 2008.

13

(IV)  The greater of twenty per cent of the taxable income as

14

determined under subclause 1 or, if applicable, subclause 2 or

15

three million dollars ($3,000,000) for taxable years beginning

16

after December 31, 2009.

17

* * *

18

Section 7.1.  The definition of "capital stock value" in

19

section 601 of the act, amended July 6, 2006 (P.L.319, No.67),

20

is amended to read:

21

Section 601.  Definitions and Reports.--(a)  The following

22

words, terms and phrases when used in this Article VI shall have

23

the meaning ascribed to them in this section, except where the

24

context clearly indicates a different meaning:

25

* * *

26

"Capital stock value."  The amount computed pursuant to the

27

following formula: the product of one-half times the sum of the

28

average net income capitalized at the rate of nine and one-half

29

per cent plus seventy-five per cent of net worth, from which

30

product shall be subtracted [one hundred fifty thousand dollars

- 40 -

 


1

($150,000)] one hundred sixty thousand dollars ($160,000), the

2

algebraic equivalent of which is

3

(.5 X (average net income/.095 + (.75)

4

(net worth))) - [$150,000] $160,000

5

* * *

6

Section 8.  Section 602(h) of the act, amended July 6, 2006

7

(P.L.319, No.67), is amended to read:

8

Section 602.  Imposition of Tax.--* * *

9

(h)  The rate of tax for purposes of the capital stock and

10

franchise tax for taxable years beginning within the dates set

11

forth shall be as follows:

12

Taxable Year

Regular Rate

Surtax

Total Rate

13

14

January 1, 1971, to

December 31, 1986

  

10 mills  

  

0

  

10 mills   

15

16

January 1, 1987, to

December 31, 1990

  

9 mills   

  

0

  

9 mills    

17

18

January 1, 1988, to

December 31, 1990

  

9.5 mills 

  

0

  

9.5 mills  

19

20

January 1, 1991, to

December 31, 1991

  

11 mills  

  

2 mills

  

13 mills   

21

22

January 1, 1992, to

December 31, 1997

  

11 mills  

  

1.75 mills

  

12.75 mills

23

24

January 1, 1998, to

December 31, 1998

  

11 mills  

  

 .99 mills

  

11.99 mills

25

26

January 1, 1999, to

December 31, 1999

  

10.99 mills

  

0

  

10.99 mills

27

28

January 1, 2000, to

December 31, 2000

  

8.99 mills

  

0

  

8.99 mills 

29

30

January 1, 2001, to

December 31, 2001

  

7.49 mills

  

0

  

7.49 mills 

- 41 -

 


1

2

January 1, 2002, to

December 31, 2003

  

7.24 mills

  

0

  

7.24 mills 

3

4

January 1, 2004, to

December 31, 2004

  

6.99 mills

  

0

  

6.99 mills 

5

6

January 1, 2005, to

December 31, 2005

  

5.99 mills

  

0

  

5.99 mills 

7

8

January 1, 2006, to

December 31, 2006

  

4.89 mills

  

0

  

4.89 mills 

9

10

January 1, 2007, to

December 31, 2007

  

3.89 mills

  

0

  

3.89 mills 

11

12

[January 1, 2008, to

December 31, 2008

  

2.89 mills

  

0

  

2.89 mills 

13

14

January 1, 2009, to

December 31, 2009

  

1.89 mills

  

0

  

1.89 mills 

15

16

January 1, 2010, to

December 31, 2010

  

 .89 mills

  

0

  

 .89 mills]

17

18

January 1, 2008, to

December 31, 2011

  

2.89 mills

  

0

  

2.89 mills

19

20

January 1, 2012, to

December 31, 2012

  

1.89 mills

  

0

  

1.89 mills

21

22

January 1, 2013, to

December 31, 2013

  

 .89 mills

  

0

  

 .89 mills

23

* * *

24

Section 9.  Section 607 of the act, amended December 23, 2003

25

(P.L.250, No.46), is amended to read:

26

Section 607.  Expiration.--This article shall expire for

27

taxable years beginning after December 31, [2010] 2013.

28

Section 9.1.  Section 1101(c), (c.1), (e) and (j) of the act,

29

amended or added August 4, 1991 (P.L.97, No.22), December 23,

30

2003 (P.L.250, No.46) and October 18, 2006 (P.L.1149, No.119),

- 42 -

 


1

are amended and the section is amended by adding a subsection to

2

read:

3

Section 1101.  Imposition of Tax.--* * *

4

(b.1)  Managed Care Organizations.--Every managed care

5

organization now or hereafter incorporated or organized by or

6

under any law of the Commonwealth or a political subdivision

7

thereof, or now or hereafter organized or incorporated by any

8

other state or by the United States or any foreign government

9

and doing business in this Commonwealth that is a party to a

10

Medicaid managed care contract with the Department of Public

11

Welfare, shall pay to the State Treasurer, through the

12

Department of Revenue, a tax of 59 mills upon each dollar of the

13

gross receipts received from payments pursuant to a Medicaid

14

managed care contract with the Department of Public Welfare

15

through its Medical Assistance Program under Subchapter XIX of

16

the Social Security Act (49 Stat. 620, 42 U.S.C. § 1396 et

17

seq.). This subsection shall also apply to a Medicaid managed

18

care organization, as defined in section 1903(m)(1)(A) of the

19

Social Security Act (42 U.S.C. § 1396b(m)(1)(A)); to a county

20

Medicaid managed care organization; and to a permitted assignee

21

of a Medicaid managed care contract. This subsection shall not

22

apply to an assignor of a Medicaid managed care contract. The

23

revenue collected under this subsection shall be placed in a

24

restricted receipts account in the General Fund and is

25

appropriated as an augmentation to the capitation appropriation

26

of the Department of Public Welfare.

27

(1)  If the Centers for Medicare and Medicaid Services of the

28

Department of Health and Human Services issues a written

29

determination of a deferral, disallowance or disapproval of

30

Federal financial participation on the grounds that the tax

- 43 -

 


1

imposed under this subsection constitutes an impermissible

2

health care-related tax under Subchapter XIX of the Social

3

Security Act, the Secretary of Public Welfare shall notify the

4

Secretary of Revenue of that determination. If notification is

5

made under this paragraph, the tax under this subsection shall

6

cease to be imposed after the last day of the month in which

7

notification is made.

8

(2)  If, within sixty days after issuance of the notice under

9

paragraph (1), legislation is not enacted to provide a

10

substitute for the funds lost due to the cessation of the tax

11

under paragraph (1), the Department of Public Welfare may

12

exercise any rights under its Medicaid managed care contract to

13

cease payments under or terminate the contract for services with

14

a managed care organization.

15

(c)  Payment of Tax; Reports.--The said taxes imposed under

16

subsections (a) [and], (b) and (b.1) shall be paid within the

17

time prescribed by law, and for the purpose of ascertaining the

18

amount of the same, it shall be the duty of the treasurer or

19

other proper officer of the said company, copartnership, limited

20

partnership, association, joint-stock association or

21

corporation, or person or persons, to transmit to the Department

22

of Revenue on or before March 15 of each year an annual report,

23

and under oath or affirmation, of the amount of gross receipts

24

of the said companies, copartnerships, corporations,

25

associations, joint-stock associations, limited partnerships,

26

person or persons, derived from all sources, and of gross

27

receipts from business done wholly within this State and in the

28

case of electric energy producers that transmit energy to other

29

states referred to in clause (2) of subsection (b), a

30

compilation of the relevant information regarding operating and

- 44 -

 


1

maintenance expenses and depreciation, during the period of

2

twelve months immediately preceding January 1 of each year. [It

3

shall be the further duty of the treasurer or other proper

4

officer of every such corporation or association and every

5

individual liable by law to report or pay said taxes imposed

6

under subsections (a) and (b) except municipalities to transmit

7

to the Department of Revenue on or before April 30 of each year,

8

a tentative report in like form and manner for each twelve-month

9

period beginning January 1, of each year. The tentative report

10

shall set forth (i) the amount of gross receipts received in the

11

period of twelve months next preceding and reported in the

12

annual report; or (ii) the gross receipts received in the first

13

three months of the current period of twelve months; and (iii)

14

such other information as the Department of Revenue may

15

require.]

16

(c.1)  Safe Harbor Base Year.--For purposes of the estimated

17

tax requirements under sections 3003.2 and 3003.3, the "safe

18

harbor base year" tax amount for providers of mobile

19

telecommunications services and for a Medicaid managed care

20

organization subject to the provisions of subsection (b.1) shall

21

be the amount that would have been required to be paid by the

22

taxpayer if the taxpayer had been subject to this article.

23

* * *

24

(e)  Time to File Reports.--The time for filing annual

25

reports may be extended, estimated assessments may be made by

26

the Department of Revenue if reports are not filed, and the

27

penalties for failing to file reports and pay the taxes imposed

28

under subsections (a) [and], (b) and (b.1) shall be as

29

prescribed by the laws defining the powers and duties of the

30

Department of Revenue. In any case where the works of any

- 45 -

 


1

corporation, company, copartnership, association, joint-stock

2

association, limited partnership, person or persons are operated

3

by another corporation, company, copartnership, association,

4

joint-stock association, limited partnership, person or persons,

5

the taxes imposed under subsections (a) [and], (b) and (b.1) 

6

shall be apportioned between the corporations, companies,

7

copartnerships, associations, joint-stock associations, limited

8

partnerships, person or persons in accordance with the terms of

9

their respective leases or agreements, but for the payment of

10

the said taxes the Commonwealth shall first look to the

11

corporation, company, copartnership, association, joint-stock

12

association, limited partnership, person or persons operating

13

the works, and upon payment by the said company, corporation,

14

copartnership, association, joint-stock association, limited

15

partnership, person or persons of a tax upon the receipts, as

16

herein provided, derived from the operation thereof, no other

17

corporation, company, copartnership, association, joint-stock

18

association, limited partnership, person or persons shall be

19

held liable for any tax imposed under subsections (a) [and], (b)

20

and (b.1) upon the proportion of said receipts received by said

21

corporation, company, copartnership, association, joint-stock

22

association, limited partnership, person or persons for the use

23

of said works.

24

* * *

25

(j)  Schedule for Estimated Payments.--

26

(1)  For calendar year 2004, the following schedule applies

27

to the payment of the tax under subsection(a)(3):

28

(i)  Forty per cent of the estimated tax shall be due on

29

March 15, 2004.

30

(ii)  Forty per cent of the estimated tax shall be due on

- 46 -

 


1

June 15, 2004.

2

(iii)  Twenty per cent of the estimated tax shall be due on

3

September 15, 2004.

4

(2)  For calendar years after 2004, the payment of the

5

estimated tax under subsection (a)(3) shall be due in accordance

6

with section 3003.2.

7

(3)  For calendar year 2009, the tax applicable to the

8

payment of the tax under subsection (b.1) shall be due on March

9

15, 2010.

10

(4)  For calendar year 2010, payments of the estimated tax

11

under subsection (b.1) shall be due on May 15, 2010. For

12

calendar year 2011 and each calendar year thereafter, the

13

payment of the estimated tax under subsection (b.1) shall be due

14

in accordance with section 3003.2.

15

* * *

16

Section 9.2.  Sections 1206 and 1206.1 of the act, amended

17

December 23, 2003 (P.L.250, No.46), are amended to read:

18

Section 1206.  Incidence and Rate of Tax.--An excise tax is

19

hereby imposed and assessed upon the sale or possession of

20

cigarettes within this Commonwealth at the rate of [six and

21

seventy-five hundredths] eight cents per cigarette.

22

Section 1206.1.  Floor Tax.--(a)  A person who possesses

23

cigarettes on which the tax imposed by section 1206 has been

24

paid as of the effective date of this section shall pay an

25

additional tax at a rate of [one and seventy-five] one and

26

twenty-five hundredths cents per cigarette. The tax shall be

27

paid and reported on a form prescribed by the department within

28

ninety days of the effective date of this section.

29

(b)  If a cigarette dealer fails to file the report required

30

by subsection (a) or fails to pay the tax imposed by subsection

- 47 -

 


1

(a), the department may, in addition to the interest and

2

penalties provided in section 1278, do any of the following:

3

(1)  Impose an administrative penalty equal to the amount of

4

tax evaded or not paid. The penalty shall be added to the tax

5

evaded or not paid and assessed and collected at the same time

6

and in the same manner as the tax.

7

(2)  Suspend or revoke a cigarette dealer's license.

8

(c)  In addition to any penalty imposed under subsection (b),

9

a person who wilfully omits, neglects or refuses to comply with

10

a duty imposed under subsection (a) commits a misdemeanor and

11

shall, upon conviction, be sentenced to pay a fine of not less

12

than two thousand five hundred dollars ($2,500) nor more than

13

five thousand dollars ($5,000), to serve a term of imprisonment

14

not to exceed thirty days or both.

15

Section 9.3.  Sections 1211 and 1216 of the act, amended or

16

added December 23, 2003 (P.L.250, No.46), are amended to read:

17

[Section 1211.  Health Care Provider Retention Account.--

18

There is established in the General Fund a special account to be

19

known as the Health Care Provider Retention Account. Eighteen

20

and fifty-two hundredths per cent of the proceeds of the tax

21

imposed by section 1206 shall be deposited in the account. Funds

22

in the account shall be subject to an annual appropriation and

23

shall be administered as provided by law.]

24

Section 1216.  Commissions on Sales.--A cigarette stamping

25

agent shall be entitled to a commission for the agent's services

26

and expenses in affixing cigarette tax stamps. The commission

27

shall be equal to [ninety-eight] eighty-five hundredths per cent

28

of the total value of Pennsylvania cigarette tax stamps

29

purchased by the agent from the department or its authorized

30

agents to be used in the stamping of packages of cigarettes for

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1

sale within this Commonwealth. The cigarette stamping agent may

2

deduct from the moneys to be paid to the department or its

3

authorized agents for the stamps an amount equal to [ninety-

4

eight] eighty-five hundredths per cent of the value of the

5

stamps purchased. This section shall not apply to purchases of

6

stamps by a cigarette stamping agent in an amount less than one

7

hundred dollars ($100).

8

Section 9.4.  Section 1278 of the act, amended or added

9

December 21, 1981 (P.L.482, No.141) and June 22, 2001 (P.L.353,

10

No.23), is amended to read:

11

Section 1278.  Other Violations.--(a)  Any person who

12

wilfully omits, neglects, or refuses to comply with any duty

13

imposed upon him by this article or does anything prohibited by

14

this article for which no specific penalty is otherwise

15

provided, shall upon conviction in a summary proceeding be

16

sentenced to pay a fine not to exceed five hundred dollars

17

($500) and costs of prosecution, and, in default of payment

18

thereof, to undergo imprisonment for not more than thirty days.

19

(b)  Any person who wilfully omits or neglects to file any

20

return required or pay any tax imposed by this article, or

21

attempts in any manner to evade or defeat the tax or payment

22

thereof, shall, in addition to any other penalty provided in

23

this article, be liable to a penalty equal to the amount of tax

24

evaded or not paid, which penalty shall be added to the tax and

25

assessed and collected at the same time in the same manner as a

26

part of the tax.

27

(c)  Any person who fails to file any return required or pay

28

tax at the time prescribed shall, in addition to any other

29

penalty provided in this article, be liable to a penalty of five

30

per cent of the tax due but unpaid for each month or fraction

- 49 -

 


1

thereof the tax remains unpaid together with the interest at the

2

rate established pursuant to section 806 of the act of April 9,

3

1929 (P.L.343, No.176), known as "The Fiscal Code," on such tax

4

from the time the tax became due. The penalties provided in this

5

subsection shall be added to the tax and assessed and collected

6

at the same time in the same manner and as a part of the tax.

7

Section 9.5.  The act is amended by adding articles to read:

8

ARTICLE XII-A

9

TOBACCO PRODUCTS TAX

10

Section 1201-A.  Definitions.

11

The following words and phrases when used in this article

12

shall have the meanings given to them in this section unless the

13

context clearly indicates otherwise:

14

"Cigar."  Any roll of tobacco wrapped in tobacco.

15

"Cigarette."  Includes any roll for smoking made wholly or in

16

part of tobacco, irrespective of size or shape, and whether or

17

not such tobacco is flavored, adulterated or mixed with any

18

other ingredient, the wrapper or cover of which is made of paper

19

or any other substance or material, excepting tobacco, and shall

20

not include cigars or roll your own tobacco.

21

"Cigarillo."  A short, narrow cigar, wrapped in whole-leaf

22

tobacco. The term includes filtered cigarillos, which are

23

sometimes called little cigars.

24

"Consumer."  An individual who purchases tobacco products for

25

personal use and not for resale.

26

"Contraband."  Any tobacco product for which the tax imposed

27

by this article has not been paid.

28

"Dealer."  A wholesaler or retailer. Nothing in this article

29

shall preclude any person from being a wholesaler or retailer,

30

provided the person meets the requirements for a license in each

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1

category of dealer.

2

"Department."  The Department of Revenue of the Commonwealth.

3

"Manufacturer."  A person that produces tobacco products.

4

"Person."  An individual, unincorporated association,

5

company, corporation, joint stock company, group, agency,

6

syndicate, trust or trustee, receiver, fiduciary, partnership,

7

conservator, any political subdivision of the Commonwealth or

8

any other state. Whenever used in any of the provisions of this

9

article prescribing or imposing penalties, the word "person" as

10

applied to a partnership, unincorporated association or other

11

joint venture, means the partners or members thereof, and as

12

applied to a corporation, means all the officers and directors

13

thereof.

14

"Purchase price."  The total value of anything paid or

15

delivered, or promised to be paid or delivered, whether it be

16

money or otherwise, in complete performance of a sale or

17

purchase, without any deduction on account of the cost or value

18

of the property sold, cost or value of transportation, cost or

19

value of labor or service, interest or discount paid or allowed

20

after the sale is consummated, any other taxes imposed by the

21

Commonwealth or any other expense.

22

"Retailer."  A person that purchases or receives tobacco

23

products from any source for the purpose of sale to a consumer,

24

or who owns, leases or otherwise operates one or more vending

25

machines for the purpose of sale of tobacco products to the

26

ultimate consumer. The term includes a vending machine operator

27

or a person that buys, sells, transfers or deals in tobacco

28

products and is not licensed as a tobacco products wholesaler

29

under this article.

30

"Roll-your-own tobacco."  Any tobacco which, because of its

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1

appearance, type, packaging or labeling, is suitable for use and

2

is likely to be offered to, or purchased by, consumers as

3

tobacco for making cigarettes. For purposes of reporting sales

4

of this product under the act of June 22, 2000 (P.L.394, No.54),

5

known as the Tobacco Settlement Agreement Act, 0.09 ounces of

6

tobacco shall constitute one individual unit sold.

7

"Sale."  Any transfer of ownership, custody or possession of

8

tobacco products for consideration; any exchange, barter or

9

gift; or any offer to sell or transfer the ownership, custody or

10

possession of tobacco products for consideration.

11

"Taxpayer."  Any person subject to tax under this article.

12

"Tobacco products."  Cigars, cigarillos, cheroots, stogies,

13

periques, granulated, plug cut, crimp cut, ready rubbed and

14

other smoking tobacco, roll-your-own tobacco, snuff, dry snuff,

15

snuff flour, cavendish, plug and twist tobacco, fine-cut and

16

other chewing tobaccos, shorts, refuse scraps, clippings,

17

cuttings and sweepings of tobacco and other kinds and forms of

18

tobacco, prepared in such manner as to be suitable for chewing

19

or ingesting or for smoking in a pipe or otherwise, or both for

20

chewing and smoking. The term does not include cigarettes.

21

"Unclassified importer."  A person in this Commonwealth that

22

acquires a tobacco product from any source on which the tax

23

imposed by this article was not paid and that is not a person

24

otherwise required to be licensed under the provisions of this

25

article. The term includes, but is not limited to, consumers who

26

purchase tobacco products using the Internet or mail order

27

catalogs for personal possession or use in this Commonwealth.

28

"Vending machine operator."  A person who places or services

29

one or more tobacco product vending machines whether owned,

30

leased or otherwise operated by the person at locations from

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1

which tobacco products are sold to the consumer. The owner or

2

tenant of the premises upon which a vending machine is placed

3

shall not be considered a vending machine operator if the

4

owner's or tenant's sole remuneration therefrom is a flat rental

5

fee or commission based upon the number or value of tobacco

6

products sold from the machine, unless the owner or tenant

7

actually owns the vending machine or leases the vending machine

8

under an agreement whereby any profits from the sale of the

9

tobacco products directly inure to the owner's or tenant's

10

benefit.

11

"Wholesaler."  A person engaged in the business of selling

12

tobacco products that receives, stores, sells, exchanges or

13

distributes tobacco products to retailers or other wholesalers

14

in this Commonwealth or retailers who purchase from a

15

manufacturer or from another wholesaler who has not paid the tax

16

imposed by this article.

17

Section 1202-A.  Incidence and rate of tax.

18

(a)  Imposition.--A tobacco products tax is hereby imposed on

19

the dealer, manufacturer or any person at the time the tobacco

20

product is first sold to a retailer in this Commonwealth at the

21

rate of 30% on the purchase price charged to the retailer for

22

the purchase of any tobacco product. The tax shall be collected

23

from the retailer by whomever sells the tobacco product to the

24

retailer and remitted to the department. Any person required to

25

collect this tax shall separately state the amount of tax on an

26

invoice or other sales document.

27

(b)  Retailer.--If the tax is not collected by the seller

28

from the retailer, the tax is imposed on the retailer at the

29

time of purchase at the same rate as in subsection (a) based on

30

the retailer's purchase price of the tobacco products. The

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1

retailer shall remit the tax to the department.

2

(c)  Unclassified importer.--The tax is imposed on an

3

unclassified importer at the time of purchase at the same rate

4

as in subsection (a) based on the unclassified importer's

5

purchase price of the tobacco products. The unclassified

6

importer shall remit the tax to the department.

7

(d)  Exceptions.--The tax shall not be imposed on any tobacco

8

products that:

9

(1)  are exported for sale outside this Commonwealth; or

10

(2)  are not subject to taxation by the Commonwealth

11

pursuant to any laws of the United States.

12

Section 1203-A.  Floor tax.

13

(a)  Payment.--Any retailer that, as of the effective date of

14

this article, possesses tobacco products subject to the tax

15

imposed by section 1202-A, shall pay the tax on the tobacco

16

products in accordance with the rates specified in section 1202-

17

A. The tax shall be paid and reported on a form prescribed by

18

the department within 90 days of the effective date of this

19

section.

20

(b)  Administrative penalty; license.--If a retailer fails to

21

file the report required by subsection (a) or fails to pay the

22

tax imposed by subsection (a), the department may, in addition

23

to the interest and penalties provided in section 1215-A, do any

24

of the following:

25

(1)  Impose an administrative penalty equal to the amount

26

of tax evaded or not paid. The penalty shall be added to the

27

tax evaded or not paid and assessed and collected at the same

28

time and in the same manner as the tax.

29

(2)  Suspend, revoke or refuse to issue the retailer's

30

license.

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1

(c)  Criminal penalty.--In addition to any penalty imposed

2

under subsection (b), a person that willfully omits, neglects or

3

refuses to comply with a duty imposed under subsection (a)

4

commits a misdemeanor and shall, if convicted, be sentenced to

5

pay a fine of not less than $2,500 nor more than $5,000, to

6

serve a term of imprisonment not to exceed 30 days, or both.

7

Section 1204-A.  Remittance of tax to department.

8

Wholesalers, retailers, unclassified importers and

9

manufacturers shall file monthly reports on a form prescribed by

10

the department by the 20th day of the month following the sale

11

or purchase of tobacco products from any other source on which

12

the tax levied by this article has not been paid. The tax is due

13

at the time the report is due. The department may required the

14

filing of reports and payment of tax on a less frequent basis at

15

its discretion.

16

Section 1205-A.  (Reserved).

17

Section 1206-A.  Procedures for claiming refund.

18

A claim for a refund of tax imposed by this article under

19

section 3003.1 and Article XXVII shall be in the form and

20

contain the information prescribed by the department by

21

regulation.

22

Section 1207-A.  Sales or possession of tobacco product when tax

23

not paid.

24

(a)  Sales or possession.--Any person who sells or possesses 

25

any tobacco product for which the proper tax has not been paid

26

commits a summary offense and shall, upon conviction, be

27

sentenced to pay costs of prosecution and a fine of not less

28

than $100 not more than $1,000 or to imprisonment for not more

29

than 60 days, or both, at the discretion of the court. Any

30

tobacco products purchased from a wholesaler properly licensed

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1

under this article shall be presumed to have the proper taxes

2

paid.

3

(b)  Tax evasion.--Any person that shall falsely or

4

fraudulently, maliciously, intentionally or willfully with

5

intent to evade the payment of the tax imposed by this article

6

sells or possesses any tobacco product for which the proper tax

7

has not been paid commits a felony and shall, upon conviction,

8

be sentenced to pay costs of prosecution and a fine of not more

9

than $15,000 or to imprisonment for not more than five years, or

10

both, at the discretion of the court.

11

Section 1208-A.  Assessment.

12

The department is authorized to make the inquiries,

13

determinations and assessments of the tax, including interest,

14

additions and penalties, imposed by this article.

15

Section 1209-A.  (Reserved).

16

Section 1210-A.  (Reserved).

17

Section 1211-A.  Failure to file return.

18

Where no return is filed, the amount of the tax due may be

19

assessed and collected at any time as to taxable transactions

20

not reported.

21

Section 1212-A.  False or fraudulent return.

22

Where the taxpayer willfully files a false or fraudulent

23

return with intent to evade the tax imposed by this article, the

24

amount of tax due may be assessed and collected at any time.

25

Section 1213-A.  Extension of limitation period.

26

Notwithstanding any other provision of this article, where,

27

before the expiration of the period prescribed for the

28

assessment of a tax, a taxpayer has consented, in writing, that

29

the period be extended, the amount of tax due may be assessed at

30

any time within the extended period. The period so extended may

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1

be extended further by subsequent consents, in writing, made

2

before the expiration of the extended period.

3

Section 1214-A.  Failure to furnish information, returning false

4

information or failure to permit inspection.

5

(a)  Penalty.--Any taxpayer who fails to keep or make any

6

record, return, report, inventory or statement, or keeps or

7

makes any false or fraudulent record, return, report, inventory

8

or statement required by this article commits a misdemeanor and

9

shall, upon conviction, be sentenced to pay costs of prosecution

10

and a fine of $500 and to imprisonment for not more than one

11

year, or both, at the discretion of the court.

12

(b)  Examination.--The department is authorized to examine

13

the books and records, the stock of tobacco products and the

14

premises and equipment of any taxpayer in order to verify the

15

accuracy of the payment of the tax imposed by this article. The

16

person subject to an examination shall give to the department or

17

its duly authorized representative, the means, facilities and

18

opportunity for the examination. Willful refusal to cooperate

19

with or permit an examination to the satisfaction of the

20

department shall be sufficient grounds for the suspension or

21

revocation of a taxpayer's license. In addition, a person who

22

willfully refuses to cooperate with or permit an examination to

23

the satisfaction of the department commits a misdemeanor and

24

shall, upon conviction, be sentenced to pay costs of prosecution

25

and a fine of $500 or to imprisonment for not more than one

26

year, or both, at the discretion of the court.

27

(c)  Records; dealer or manufacturer.--A dealer or

28

manufacturer shall keep and maintain for a period of four years

29

records in the form prescribed by the department. The records

30

shall be maintained at the location for which the license is

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1

issued.

2

(d)  Reports.--A dealer or manufacturer shall file reports at

3

times and in the form prescribed by the department.

4

(e)  Records; manufacturer or wholesaler.--A manufacturer or

5

wholesaler located or doing business in this Commonwealth who

6

sells tobacco products to a wholesale license holder in this

7

Commonwealth shall keep records showing:

8

(1)  The number and kind of tobacco products sold.

9

(2)  The date the tobacco products were sold.

10

(3)  The name and license number of the dealer the

11

tobacco products were sold to.

12

(4)  The total weight of each of the tobacco products

13

sold to the license holder.

14

(5)  The place where the tobacco products were shipped.

15

(6)  The name of the common carrier.

16

(f)  Manufacturer or wholesaler.--A manufacturer or

17

wholesaler shall file with the department, on or before the 20th

18

of each month, a report showing the information listed in

19

subsection (e) for the previous month.

20

Section 1215-A.  Other violations; peace officers; fines.

21

Sections 1278, 1279, 1280 and 1291 are incorporated by

22

reference into and shall apply to the tax imposed by this

23

article.

24

Section 1216-A.  (Reserved).

25

Section 1217-A.  (Reserved).

26

Section 1218-A.  (Reserved).

27

Section 1219-A.  Records of shipments and receipts of tobacco

28

products required.

29

The department may, in its discretion, require reports from

30

any common or contract carrier who transports tobacco products

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1

to any point or points within this Commonwealth, and from any

2

bonded warehouseman or bailee who has in the possession of the

3

warehouseman or bailee any tobacco products. The reports shall

4

contain the information concerning shipments of tobacco products

5

that the department determines to be necessary for the

6

administration of this article. All common and contract

7

carriers, bailees and warehousemen shall permit the examination

8

by the department or its authorized agents of any records

9

relating to the shipment or receipt of tobacco products.

10

Section 1220-A.  Licensing of dealers and manufacturers.

11

(a)  Prohibition.--No person, unless all sales of tobacco

12

products are exempt from Pennsylvania tobacco products tax,

13

shall sell, transfer or deliver any tobacco products in this

14

Commonwealth without first obtaining the proper license provided

15

for in this article.

16

(b)  Application.--An applicant for a dealer's or

17

manufacturer's license shall complete and file an application

18

with the department. The application shall be in the form and

19

contain information prescribed by the department and shall set

20

forth truthfully and accurately the information desired by the

21

department. If the application is approved, the department shall

22

license the dealer or manufacturer for a period of one year and

23

the license may be renewed annually thereafter.

24

Section 1221-A.  Licensing of manufacturers.

25

Any manufacturer doing business within this Commonwealth

26

shall first obtain a license to sell tobacco products by

27

submitting an application to the department containing the

28

information requested by the department and designating a

29

process agent. If a manufacturer designates no process agent,

30

the manufacturer shall be deemed to have made the Secretary of

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1

State its agent for the service of process in this Commonwealth.

2

Section 1222-A.  Licensing of wholesalers.

3

(a)  Requirements.--Applicants for a wholesale license or

4

renewal of that license shall meet the following requirements:

5

(1)  The premises on which the applicant proposes to

6

conduct business are adequate to protect the revenue.

7

(2)  The applicant is a person of reasonable financial

8

stability and reasonable business experience.

9

(3)  The applicant, or any shareholder controlling more

10

than 10% of the stock if the applicant is a corporation or

11

any officer or director if the applicant is a corporation,

12

shall not have been convicted of any crime involving moral

13

turpitude.

14

(4)  The applicant shall not have failed to disclose any

15

material information required by the department, including

16

information that the applicant has complied with this article

17

by providing a signed statement under penalty of perjury.

18

(5)  The applicant shall not have made any material false

19

statement in the application.

20

(6)  The applicant shall not have violated any provision

21

of this article.

22

(7)  The applicant shall have filed all required State

23

tax reports and paid any State taxes not subject to a timely

24

perfected administrative or judicial appeal or subject to a

25

duly authorized deferred payment plan.

26

(b)  Multiple locations.--The wholesale license shall be

27

valid for one specific location only. Wholesalers with more than

28

one location shall obtain a license for each location.

29

Section 1223-A.  Licensing of retailers.

30

Applicants for retail license or renewal of that license

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1

shall meet the following requirements:

2

(1)  The premises in which the applicant proposes to

3

conduct business are adequate to protect the revenues.

4

(2)  The applicant shall not have failed to disclose any

5

material information required by the department.

6

(3)  The applicant shall not have any material false

7

statement in the application.

8

(4)  The applicant shall not have violated any provision

9

of this article.

10

(5)  The applicant shall have filed all required State

11

tax reports and paid any State taxes not subject to a timely

12

perfected administrative or judicial appeal or subject to a

13

duly authorized deferred payment plan.

14

Section 1224-A.  License for tobacco products vending machines.

15

Each tobacco products vending machine shall have a current

16

retail license which shall be conspicuously and visibly placed

17

on the machine. There shall be conspicuously and visibly placed

18

on every tobacco products vending machine the name and address

19

of the owner and the name and address of the operator.

20

Section 1225-A.  License fees and issuance and display of

21

license.

22

(a)  Requirements.--At the time of making any application or

23

license renewal application:

24

(1)  An applicant for a tobacco products manufacturers

25

license shall pay the department a license fee of $1,500.

26

(2)  An applicant for a wholesale tobacco products

27

dealer's license shall pay to the department a license fee of

28

$1,500.

29

(3)  An applicant for a retail tobacco products dealer's

30

license shall pay to the department a license fee of $25.

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1

(4)  An applicant for a vending machine tobacco products

2

dealer's license shall pay to the department a license fee of

3

$25.

4

(b)  Proration.--Fees shall not be prorated.

5

(c)  Issuance and display.--On approval of the application

6

and payment of the fees, the department shall issue the proper

7

license which must be conspicuously displayed at the location

8

for which it has been issued.

9

Section 1226-A.  Electronic filing.

10

The department may at its discretion require that any or all

11

returns, reports or registrations that are required to be filed

12

under this article be filed electronically. Failure to

13

electronically file any return, report, registration or other

14

information the department may direct to be filed electronically

15

shall subject the taxpayer to a penalty of 5% of the tax due on

16

the return, up to a maximum of $1,000, but not less than $10.

17

This penalty shall be assessed at any time and collected in the

18

manner provided in this article. This penalty shall be in

19

addition to any civil penalty imposed in this article for

20

failure to furnish information or file a return. The criminal

21

penalty for failure to file a return electronically shall be the

22

same as the criminal penalty for failure to furnish information

23

or file a return under this article.

24

Section 1227-A.  Expiration of license.

25

(a)  Expiration.--A license shall expire on the last day of

26

June next succeeding the date upon which it was issued unless

27

the department at an earlier date suspends, surrenders or

28

revokes the license.

29

(b)  Violation.--After the expiration date of the license or

30

sooner if the license is suspended, surrendered or revoked, it

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1

shall be illegal for any dealer to engage directly or indirectly

2

in the business heretofore conducted by the dealer for which the

3

license was issued. Any licensee who shall, after the expiration

4

date of the license, engage in the business theretofore

5

conducted by the licensee either by way of purchase, sale,

6

distribution or in any other manner directly or indirectly

7

engaged in the business of dealing with tobacco products for

8

profit shall be in violation of this article and be subject to

9

the penalties provided in this article.

10

Section 1228-A.  Administration powers and duties.

11

(a)  Department.--The administration of this article is

12

hereby vested in the department. The department shall adopt

13

rules and regulations for the enforcement of this article. The

14

department may impose fees as may be necessary to cover the

15

costs incurred in administering this section.

16

(b)  Joint administration.--The department is authorized to

17

jointly administer this article with other provisions of this

18

act, including joint reporting of information, forms, returns,

19

statements, documents or other information submitted to the

20

department.

21

Section 1229-A.  Sales without license.

22

(a)  Penalty.--Any person who shall, without being the holder

23

of a proper unexpired dealer's license, engage in purchasing,

24

selling, distributing or in any other manner directly or

25

indirectly engaging in the business of dealing with tobacco

26

products for profit commits a summary offense and shall, upon

27

conviction, be sentenced to pay costs of prosecution and a fine

28

of not less than $250 nor more than $1,000, or to imprisonment

29

for not more than 30 days, or both, at the discretion of the

30

court.

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1

(b)  Prima facie evidence.--Open display of tobacco products

2

in any manner shall be prima facie evidence that the person

3

displaying such tobacco products is directly or indirectly

4

engaging in the business of dealing with tobacco products for

5

profit.

6

Section 1230-A.  Violations and penalties.

7

(a)  Suspension.--The license of any person who violates this

8

article may be suspended after due notice and opportunity for a

9

hearing for a period of not less than five days or more than 30

10

days for a first violation and shall be revoked or suspended for

11

any subsequent violation.

12

(b)  Fine.--In addition to the provisions of subsection (a),

13

upon adjudication of a first violation, the person shall be

14

fined not less than $2,500 nor more than $5,000. For subsequent

15

violations, the person shall, upon adjudication thereof, be

16

fined not less than $5,000 nor more than $15,000.

17

(c)  Civil penalty.--A person who violates section 1214-A

18

(b), (c), or (d), or 1225-A(c), shall be subject to a civil

19

penalty not to exceed $300 per violation but shall not be

20

subject to subsections (a) and (b).

21

Section 1231-A.  Property rights.

22

(a)  Incorporation.--Subject to subsection (b), section 1285

23

is incorporated by reference into and shall apply to this

24

article.

25

(b)  Alterations.--

26

(1)  References in section 1285 to cigarettes shall apply

27

to tobacco products in this article.

28

(2)  References in section 1285 to 2,000 or more

29

unstamped cigarettes shall apply to tobacco products worth at

30

least $500 in this article.

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1

(3)  References in section 1285 to more than 200

2

unstamped cigarettes shall apply to tobacco products worth at

3

least $50 in this article.

4

Section 1232-A.  Sample of tobacco products.

5

(a)  Samples.--The department shall, by regulation, govern

6

the receipt, distribution of and payment of tax on sample

7

tobacco products issued for free distribution.

8

(b)  Construction.--Nothing in this article or the

9

regulations promulgated under this article shall prohibit the

10

bringing into this Commonwealth by a manufacturer samples of

11

tobacco products to be delivered and distributed only through

12

licensed dealers or the manufacturers or their sales

13

representatives. The tax shall be paid by the manufacturer

14

provided all such packs bear the legend "all applicable State

15

taxes have been paid." Under no circumstances shall any untaxed

16

tobacco products be sold within this Commonwealth.

17

Section 1233-A.  Labeling and packaging.

18

It shall be unlawful to knowingly possess, sell, give,

19

transfer or deliver to any person, any tobacco product where the

20

packaging of which has been modified or altered by a person

21

other than the original manufacturer. Modification or alteration

22

shall include the placement of a sticker, writing or mark to

23

cover information on the packages. For purposes of this section,

24

a tobacco product package shall not be construed to have been

25

modified or altered by a person other than the manufacturer if

26

the most recent modification or alteration was made by the

27

manufacturer or person authorized by the manufacturer and

28

approved by the department.

29

Section 1234-A.  Information exchange.

30

The department is authorized to exchange information with any

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1

other Federal, State or local enforcement agency for purposes of

2

enforcing this article.

3

ARTICLE XVI

4

SEVERANCE TAX

5

Section 1601.  Scope.

6

This article relates to the taxation of natural gas

7

severance.

8

Section 1602.  Definitions.

9

The following words and phrases when used in this article

10

shall have the meanings given to them in this section unless the

11

context clearly indicates otherwise:

12

"Accredited laboratory."  A facility engaged in the testing

13

and calibration of scientific measurement devices and certified

14

by the Department of Environmental Protection as having met the

15

department's standards for accreditation.

16

"Association."  A partnership, limited partnership or any

17

other form of unincorporated enterprise owned or conducted by

18

two or more persons.

19

"Corporation."  A corporation, joint stock association,

20

limited liability company, business trust or any other

21

incorporated enterprise organized under the laws of this

22

Commonwealth, the United States or any other state, territory or

23

foreign country or dependency.

24

"Department."  The Department of Revenue of the Commonwealth.

25

"Fund."  The Natural Gas Severance Tax Fund established under

26

section 1627.

27

"Gross value."  The volume-weighted average market price for

28

all arms-length transactions that a producer receives at the

29

sales meter for natural gas during a reporting period.

30

"Meter."  A device to measure the passage of volumes of gases

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1

or liquids past a certain point.

2

"Municipality."  A city, borough, incorporated town or a

3

township.

4

"Natural gas."  A fossil fuel consisting of a mixture of

5

hydrocarbon gases, primarily methane, possibly including ethane,

6

propane, butane, pentane, carbon dioxide, oxygen, nitrogen and

7

hydrogen sulfide and other gas species. The term includes

8

natural gas from oil fields known as associated gas or casing

9

head gas, natural gas fields known as nonassociated gas, coal

10

beds, shale beds and other formations.

11

"Nonproducing site."  A point of severance that is not

12

capable of producing natural gas in paying quantities.

13

"Paying quantities."  Profit to the producer, however small,

14

over the producer's current operating expenses.

15

"Person."  A natural person or a corporation, fiduciary,

16

association or other entity, including the Commonwealth, its

17

political subdivisions, instrumentalities and authorities. When

18

the term is used in a clause prescribing and imposing a penalty

19

or imposing a fine or imprisonment, or both, the term shall

20

include the members, as applied to an association, and the

21

officers, as applied to a corporation.

22

"Producer."  A person who engages or continues within this

23

Commonwealth in the business of severing natural gas for sale,

24

profit or commercial use. The term does not include a person who

25

severs natural gas from a storage field.

26

"Producing site."  A point of severance capable of producing

27

natural gas in paying quantities.

28

"Reporting period."  A calendar month in which natural gas is

29

severed.

30

"Sales meter."  A meter at the point where natural gas is

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1

sold or transported to a purchaser or market.

2

"Sever," "severing" or "severance."  The extraction or other

3

removal of natural gas from the soil or water of this

4

Commonwealth.

5

"Storage field."  A natural formation or other site that is

6

used to store natural gas that did not originate from and has

7

been injected into the formation or site.

8

"Stripper well."  A producing site or a nonproducing site

9

that is not capable of producing and does not produce more than

10

60,000 cubic feet of natural gas per day.

11

"Tax."  The tax imposed under this article.

12

"Taxpayer."  A person subject to the tax imposed by this

13

article.

14

"Unit."  A thousand cubic feet of natural gas measured at the

15

wellhead at a temperature of 60 degrees Fahrenheit and an

16

absolute pressure of 14.73 pounds per square inch in accordance

17

with American Gas Association Standards and according to Boyle's

18

law for the measurement of gas under varying pressures with

19

deviations as follows:

20

(1)  The average absolute atmospheric pressure shall be

21

assumed to be 14.4 pounds to the square inch, regardless of

22

elevation or location of point of delivery above sea level or

23

variations in atmospheric pressure from time to time.

24

(2)  The temperature of the gas passing the meters shall

25

be determined by the continuous use of a recording

26

thermometer installed to properly record the temperature of

27

gas flowing through the meters. The arithmetic average of the

28

temperature recorded each 24-hour day shall be used in

29

computing gas volumes. If a recording thermometer is not

30

installed, or if installed and not operating properly, an

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1

average flowing temperature of 60 degrees Fahrenheit shall be

2

used in computing gas volume.

3

(3)  The specific gravity of the gas shall be determined

4

annually by tests made by the use of an Edwards or Acme

5

gravity balance, or at intervals as found necessary in

6

practice. Specific gravity determinations shall be used in

7

computing gas volumes.

8

(4)  The deviation of the natural gas from Boyle's Law

9

shall be determined by annual tests or at other shorter

10

intervals as found necessary in practice. The apparatus and

11

method used in making the test shall be in accordance with

12

recommendations of the National Bureau of Standards or Report

13

No. 3 of the Gas Measurement Committee of the American Gas

14

Association, or amendments to the Standards or Report. The

15

results of the tests shall be used in computing the volume of

16

gas delivered under this article.

17

"Wellhead meter."  A meter placed at a producing or

18

nonproducing site to measure the volume of natural gas severed 

19

for which a wellhead meter certification has been issued.

20

"Wellhead meter certification."  A report issued by an

21

accredited laboratory certifying the accuracy of a wellhead

22

meter.

23

Section 1603.  Imposition of tax.

24

(a)  Establishment.--There is levied a natural gas severance 

25

tax on every producer.

26

(b)  Rate.--The tax imposed in subsection (a) shall be 5% of

27

the gross value of units severed at the wellhead during a

28

reporting period, plus 4.7 cents per unit severed, but shall not

29

be imposed on units severed from a stripper well.

30

Section 1604.  Return and payment.

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1

(a)  Requirement.--Every producer is required to file a

2

return with the department, on a form to be prescribed by the

3

department, reporting all severed natural gas per reporting

4

period and the tax due under section 1603.

5

(b)  Filing.--The return required by subsection (a) shall be

6

filed with the department within 15 days following the end of

7

the second calendar month after a reporting period.

8

(c)  Deadline.--The tax imposed under section 1603 is due on

9

the day the return is required to be filed and becomes

10

delinquent if not remitted to the department by that date.

11

Section 1605. Natural gas severance tax registration.

12

(a)  Application.--Before a producer severs natural gas in

13

this Commonwealth, the producer shall apply to the department

14

for a natural gas severance tax registration certificate.

15

(a.1)  Application fee.--The department may charge an

16

application fee to cover the administrative costs associated

17

with the application and registration process. If the department

18

charges an application fee, the department shall not issue a

19

registration certificate until the producer has paid the

20

application fee.

21

(a.2)  Declaration.-- The producer shall include in its

22

application a declaration of all sites in this Commonwealth used

23

by the producer for the severance of natural gas. The

24

declaration is to include all producing sites and nonproducing

25

sites as well as wellhead meter certification for each. The

26

producer is required to update the declaration when the producer

27

adds or removes a producing site or nonproducing site in this

28

Commonwealth or when there is a change in the status of a

29

producing site or nonproducing site or when the producer uses a

30

different accredited laboratory to certify the accuracy of the

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1

producer's wellhead meters. The producer shall update the

2

declaration within 30 days after a calendar month in which a

3

change to the declaration occurs.

4

(b)  Issuance.-- Except as provided in subsection (c), after

5

the receipt of an application, the department shall issue a

6

registration certificate under subsection (a). The registration

7

certificate shall be nonassignable. All registrants shall be

8

required to renew their registration certificates and wellhead

9

meter certifications on a staggered renewal system established

10

by the department. After the initial staggered renewal period, a

11

registration certificate or a wellhead meter certification 

12

issued shall be valid for a period of five years.

13

(c)  Refusal, suspension or revocation.--The department may

14

refuse to issue, suspend or revoke a registration certificate if

15

the applicant or registrant has not filed required State tax

16

reports and paid State taxes not subject to a timely perfected

17

administrative or judicial appeal or subject to a duly

18

authorized deferred payment plan. The department shall notify

19

the applicant or registrant of any refusal, suspension or

20

revocation. The notice shall contain a statement that the

21

refusal, suspension or revocation may be made public. The notice

22

shall be made by first class mail. An applicant or registrant

23

aggrieved by the determination of the department may file an

24

appeal under the provisions for administrative appeals in this

25

act. In the case of a suspension or revocation which is

26

appealed, the registration certificate shall remain valid

27

pending a final outcome of the appeals process. Notwithstanding

28

sections 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 or any

29

other provision of law, if no appeal is taken or if an appeal is

30

taken and denied at the conclusion of the appeal process the

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1

department may disclose, by publication or otherwise, the

2

identity of a producer and the fact that the producer's

3

registration certificate has been refused, suspended or revoked

4

under this subsection. Disclosure may include the basis for

5

refusal, suspension or revocation.

6

(d)  Violation.--A person severing natural gas in this

7

Commonwealth without holding a valid registration certificate

8

under subsection (b) shall be guilty of a summary offense and

9

shall, upon conviction, be sentenced to pay a fine of not less

10

than $300 nor more than $1,500. In the event the person

11

convicted defaults, he shall be sentenced to imprisonment for

12

not less than five days nor more than 30 days. The penalties

13

imposed by this subsection shall be in addition to any other

14

penalties imposed by this article. For purposes of this

15

subsection, the severing of natural gas during any calendar day

16

shall constitute a separate violation. The Secretary of Revenue

17

may designate employees of the department to enforce the

18

provisions of this subsection. The employees shall exhibit proof

19

of and be within the scope of the designation when instituting

20

proceedings as provided by the Pennsylvania Rules of Criminal

21

Procedure.

22

(e)  Failure to obtain registration certificate.--Failure to

23

obtain or hold a valid registration certificate does not relieve

24

a person from liability for the tax imposed by this article.

25

Section 1605.1.  Meters.

26

A producer shall provide for and maintain a discrete wellhead 

27

meter and a discrete sales meter. A producer shall ensure that

28

the meters are maintained according to industry standards. Any

29

wellhead meter installed after the effective date of this

30

section shall be a digital meter.

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1

Section 1606.  Assessments.

2

(a)  Authorization and requirement.--The department is

3

authorized and shall make the inquiries, determinations and

4

assessments of the natural gas severance tax, including

5

interest, additions and penalties imposed under this article.

6

(b)  Notice.--The notice of assessment and demand for payment

7

shall be mailed to the taxpayer. The notice shall set forth the

8

basis of the assessment. The department shall send the notice of

9

assessment to the taxpayer at its registered address via

10

certified mail if the assessment increases the taxpayer's tax

11

liability by $300. Otherwise, the notice of assessment may be

12

sent via regular mail.

13

Section 1607.  Time for assessment.

14

(a)  Requirement.--An assessment as provided under section

15

1606 shall be made within three years after the date when the

16

return provided for by section 1604 is filed or the end of the

17

year in which the tax liability arises, whichever shall occur

18

last. For the purposes of this subsection and subsection (b), a

19

return filed before the last day prescribed for the filing

20

period shall be considered as filed on the last day.

21

(b)  Exception.--If the taxpayer underpays the correct amount

22

of the tax due by 25% or more, the tax may be assessed within

23

six years after the date the return was filed.

24

(c)  Intent to evade.--Where no return is filed or where the

25

taxpayer files a false or fraudulent return with intent to evade

26

the tax imposed by this article, the assessment may be made at

27

any time.

28

(d)  Erroneous credit or refund.--Within three years of the

29

granting of a refund or credit or within the period in which an

30

assessment or reassessment may have been issued by the

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1

department for the taxable period for which the refund was

2

granted, whichever period shall last occur, the department may

3

issue an assessment to recover a refund or credit made or

4

allowed erroneously.

5

Section 1608.  Extension of limitation period.

6

Notwithstanding the provisions of this article, the

7

assessment period may be extended in the event a taxpayer has

8

provided written consent before the expiration of the period

9

provided in section 1607 for a tax assessment. The amount of tax

10

due may be assessed at any time within the extended period. The

11

period may be extended further by subsequent written consents

12

made before the expiration of the extended period.

13

Section 1609.  Reassessments.

14

A taxpayer against whom an assessment is made may petition

15

the department for a reassessment under Article XXVII.

16

Section 1610.  Interest.

17

The department shall assess interest on any delinquent tax at

18

the rate prescribed under section 806 of the act of April 9,

19

1929 (P.L.343, No. 176), known as The Fiscal Code.

20

Section 1611.  Penalties.

21

The department shall enforce the following penalties:

22

(1)  A penalty against a valid producer without a natural

23

gas severance tax registration certificate. The penalty shall

24

be $1 for every unit severed without a valid registration

25

certificate. The department may assess this penalty

26

separately from or in conjunction with any assessment of the

27

natural gas severance tax.

28

(2)  A penalty against a producer for failure to timely

29

file a return as required under section 1604. The penalty

30

shall be 5% of the tax liability to be reported on the return

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1

for each day beyond the due date that the return is not

2

filed.

3

(3)  In addition to the penalty under paragraph (2), a

4

penalty against the producer for a willful failure to timely

5

file a return. The penalty shall be 200% of the tax liability

6

required to be reported on the return.

7

(4)  A penalty against a producer for failure to timely

8

pay the tax as required by section 1604(c). The penalty shall

9

be 5% of the amount of tax due for each day beyond the

10

payment date that the tax is not paid.

11

Section 1612.  Criminal acts.

12

(a)  Fraudulent return.--Any person with intent to defraud

13

the Commonwealth, who willfully makes or causes to be made a

14

return required by this article which is false, is guilty of a

15

misdemeanor and shall, upon conviction, be sentenced to pay a

16

fine of not more than $2,000 or to imprisonment for not more

17

than three years, or both.

18

(b)  Other crimes.--

19

(1)  Except as otherwise provided by subsection (a), a

20

person is guilty of a misdemeanor and shall, upon conviction,

21

be sentenced to pay a fine of not more than $1,000 and costs

22

of prosecution or to imprisonment for not more than one year,

23

or both, for any of the following:

24

(i)  Willfully failing to timely remit the tax to the

25

department.

26

(ii)  Willfully failing or neglecting to timely file

27

a return or report required by this article.

28

(iii)  Refusing to timely pay a tax, penalty or

29

interest imposed or provided for by this article.

30

(iv)  Willfully failing to preserve its books, papers

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1

and records as directed by the department.

2

(v)  Refusing to permit the department or its

3

authorized agents to examine its books, records or

4

papers.

5

(vi)  Knowingly make any incomplete, false or

6

fraudulent return or report.

7

(vii)  Preventing or attempting to prevent the full

8

disclosure of the amount of natural gas severance tax

9

due.

10

(viii)  Providing any person with a false statement

11

as to the payment of natural gas severance tax with

12

respect to any pertinent facts.

13

(ix)  Making, uttering or issuing a false or

14

fraudulent statement.

15

(2)  The penalties imposed by this section shall be in

16

addition to other penalties imposed by this article.

17

Section 1613.  Abatement of additions or penalties.

18

Upon the filing of a petition for reassessment or a petition

19

for refund by a taxpayer as provided under this article,

20

additions or penalties imposed upon the taxpayer by this article

21

may be waived or abated in whole or in part where the petitioner

22

establishes that he acted in good faith, without negligence and

23

with no intent to defraud.

24

Section 1614.  Bulk and auction sales.

25

A person that sells or causes to be sold at auction, or that

26

sells or transfers in bulk, 51% or more of a stock of goods,

27

wares or merchandise of any kind, fixtures, machinery,

28

equipment, buildings or real estate involved in a business for

29

which the person holds a registration certificate or is required

30

to obtain a registration certificate under the provisions of

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1

this article shall be subject to the provisions of section 1403

2

of the act of April 9, 1929 (P.L.343, No.176), known as The

3

Fiscal Code.

4

Section 1615.  Collection upon failure to request reassessment,

5

review or appeal.

6

(a)  Power of department.--The department may collect the

7

natural gas severance tax:

8

(1)  If an assessment of the tax is not paid within 30

9

days after notice to the taxpayer when no petition for

10

reassessment has been filed.

11

(2)  Within 60 days of the reassessment, if no petition

12

for review has been filed.

13

(3)  If no appeal has been made, within 30 days of:

14

(i)  the Board of Finance and Revenue's decision of a

15

petition for review; or

16

(ii)  the expiration of the board's time for acting

17

upon the petition.

18

(4)  In all cases of judicial sales, receiverships,

19

assignments or bankruptcies.

20

(b)  Prohibition.--In a case for the collection of taxes

21

under subsection (a), the taxpayer against whom they were

22

assessed shall not be permitted to set up a ground of defense

23

that might have been determined by the department, the Board of

24

Finance and Revenue or the courts, provided that the defense of

25

failure of the department to mail notice of assessment or

26

reassessment to the taxpayer and the defense of payment of

27

assessment or reassessment may be raised in proceedings for

28

collection by a motion to stay the proceedings.

29

Section 1616.  Tax liens.

30

(a)  Lien imposed.--If any taxpayer neglects or refuses to

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1

pay the natural gas severance tax for which the taxpayer is

2

liable under this article after demand, the amount, including

3

interest, addition or penalty, together with additional costs

4

that may accrue, shall be a lien in favor of the Commonwealth

5

upon the real and personal property of the taxpayer but only

6

after the same has been entered and docketed of record by the

7

prothonotary of the county where the property is situated. The

8

department may, at any time, transmit to the prothonotaries of

9

the respective counties certified copies of all liens imposed by

10

this section. It shall be the duty of the prothonotary receiving

11

the lien to enter and docket the same of record to the office of

12

the prothonotary. The lien shall be indexed as judgments are now

13

indexed. No prothonotary shall require as a condition precedent

14

to the entry of the lien the payment of costs incidental to its

15

entry.

16

(b)  Priority of lien and effect on judicial sale.--Except

17

for the costs of the sale and the writ upon which the sale was

18

made and real estate taxes and municipal claims against the

19

property, a lien imposed under this section shall have priority

20

from the date of its recording and shall be fully paid and

21

satisfied out of the proceeds of any judicial sale of property

22

subject to the lien, before any other obligation, judgment,

23

claim, lien or estate to which the property may subsequently

24

become subject, but shall be subordinate to mortgages and other

25

liens existing and duly recorded or entered of record prior to

26

the recording of the lien.

27

(c)  No discharge by sale on junior lien.--In the case of a

28

judicial sale of property subject to a lien imposed under this

29

section, upon a lien or claim over which the lien imposed under

30

this section has priority, the sale shall discharge the lien

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1

imposed under this section to the extent only that the proceeds

2

are applied to its payment, and the lien shall continue in full

3

force and effect as to the balance remaining unpaid. There shall

4

be no inquisition or condemnation upon any judicial sale of real

5

estate made by the Commonwealth under the provisions of this

6

article. The lien shall continue as provided in the act of April

7

9, 1929 (P.L.343, No.176), known as The Fiscal Code, and a writ

8

of execution may directly issue upon the lien without the

9

issuance and prosecution to judgment of a writ of scire facias,

10

provided that not less than ten days before issuance of any

11

execution on the lien, notice of the filing and the effect of

12

the lien shall be sent by registered mail to the taxpayer at its

13

last known post office address, provided further that the lien

14

shall have no effect upon any stock of goods, wares or

15

merchandise regularly sold or leased in the ordinary course of

16

business by the taxpayer against whom the lien has been entered,

17

unless and until a writ of execution has been issued and a levy

18

made upon said stock of goods, wares and merchandise.

19

(d)  Duty of prothonotary.--Any willful failure of any

20

prothonotary to carry out any duty imposed upon him by this

21

section shall be a misdemeanor. Upon conviction, he shall be

22

sentenced to pay a fine of not more than $1,000 and costs of

23

prosecution or to imprisonment for not more than one year, or

24

both.

25

(e)  Priority.--Except as provided in this article, the

26

distribution, voluntary or compulsory, in receivership,

27

bankruptcy or otherwise of the property or estate of any person,

28

all taxes imposed by this article which are due and unpaid and

29

are not collectible under the provisions of section 225, shall

30

be paid from the first money available for distribution in

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1

priority to all other claims and liens, except as the laws of

2

the United States may give priority to a claim to the Federal

3

Government. A person charged with the administration or

4

distribution of the property or estate who violates the

5

provisions of this section shall be personally liable for the

6

taxes imposed by this article which are accrued and unpaid and

7

chargeable against the person whose property or estate is being

8

administered or distributed.

9

(f)  Other remedies.--Subject to the limitations contained in

10

this article as to the assessment of taxes, nothing contained in

11

this section shall be construed to restrict, prohibit or limit

12

the use by the department in collecting taxes due and payable of

13

another remedy or procedure available at law or equity for the

14

collection of debts.

15

Section 1617.  Tax suit reciprocity.

16

The courts of this Commonwealth shall recognize and enforce

17

liabilities for natural gas severance taxes lawfully imposed by

18

any other state, provided that the other state recognizes and

19

enforces the tax set forth in this article.

20

Section 1618.  Service.

21

A producer is deemed to have appointed the Secretary of the

22

Commonwealth its agent for the acceptance of service of process

23

or notice in a proceeding for the enforcement of the civil

24

provisions of this article and service made upon the Secretary

25

of the Commonwealth as agent shall be of the same legal force

26

and validity as if the service had been personally made upon the

27

producer. Where service cannot be made upon the producer in the

28

manner provided by other laws of this Commonwealth relating to

29

service of process, service may be made upon the Secretary of

30

the Commonwealth. In that case, a copy of the process or notice

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1

shall be personally served upon any agent or representative of

2

the producer who may be found within this Commonwealth or, where

3

no agent or representative may be found, a copy of the process

4

or notice shall be sent via registered mail to the producer at

5

the last known address of its principal place of business, home

6

office or residence.

7

Section 1619.  Refunds.

8

Under Article XXVII, the department shall refund all taxes,

9

interest and penalties paid to the Commonwealth under the

10

provisions of this article to which the Commonwealth is not

11

rightfully entitled. The refunds shall be made to the person or

12

the person's heirs, successors, assigns or other personal

13

representatives who paid the tax, provided that no refund shall

14

be made under this section regarding a payment made by reason of

15

an assessment where a taxpayer has filed a petition for

16

reassessment under section 2702 to the extent the petition is

17

adverse to the taxpayer by a decision which is no longer subject

18

to further review or appeal. Nothing in this article shall

19

prohibit a taxpayer who has filed a timely petition for

20

reassessment from amending it to a petition for refund where the

21

petitioner paid the tax assessed.

22

Section 1620.  Refund petition.

23

(a)  General rule.--Except as provided for in subsection (b),

24

the refund or credit of tax, interest or penalty provided for by

25

section 1619 shall be made only where the person who has paid

26

the tax files a petition for refund with the department under

27

Article XXVII, within the time limits of section 3003.1.

28

(b)   Natural gas severance tax.--A refund or credit of tax,

29

interest or penalty paid as a result of an assessment made by

30

the department under section 1605, shall be made only where the

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1

person who has paid the tax files with the department a petition

2

for a refund with the department under Article XXVII within the

3

time limits of section 3003.1. The filing of a petition for

4

refund, under the provisions of this subsection, shall not

5

affect the abatement of interest, additions or penalties to

6

which the person may be entitled by reason of his payment of the

7

assessment.

8

Section 1621.  Rules and regulations.

9

The department is charged with the enforcement of the

10

provisions of this article and is authorized and empowered to

11

prescribe, adopt, promulgate and enforce rules and regulations

12

not inconsistent with the provisions of this article relating to

13

any matter or thing pertaining to the administration and

14

enforcement of the provisions of this article and the collection

15

of taxes, penalties and interest imposed by this article. The

16

department may prescribe the extent, if any, to which any of the

17

rules and regulations shall be applied without retroactive

18

effect.

19

Section 1622.  Recordkeeping.

20

(a)  General rule.--Every person liable for any tax imposed

21

by this article, or for the collection of such tax, shall keep

22

records, including those enumerated in subsection (b), render

23

statements, make returns and comply with the rules and

24

regulations as the department may prescribe regarding matters

25

pertinent to the person's business. Whenever it is necessary,

26

the department may require a person, by notice served upon the

27

person or by regulations, to make returns, render statements or

28

keep records as the department deems sufficient to show whether

29

or not a person is liable to pay tax under this article.

30

(a.1)  Records.--Records to be maintained are:

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1

(1)  Wellhead meter and sales meter charts for each

2

reporting period and the meter calibration and maintenance

3

records. If turbine meters are in use, the maintenance

4

records will be made available to the department upon

5

request.

6

(2)  Records, statements and other instruments furnished

7

to a producer by a person to whom the producer delivers for

8

sale, transport or delivery of natural gas.

9

(3)  Records, statements and other instruments as the

10

department may prescribe by regulation.

11

(b)  Records of nonresidents.--A nonresident who does

12

business in this Commonwealth as a producer shall keep adequate

13

records of the business and of the tax due as a result. The

14

records shall be retained within this Commonwealth unless

15

retention outside this Commonwealth is authorized by the

16

department. The department may require a taxpayer who desires to

17

retain records outside this Commonwealth to assume reasonable

18

out-of-State audit expenses.

19

(c)  Keeping of separate records.--A producer who is engaged

20

in another business or businesses which do not involve the

21

severing of natural gas taxable under this article, shall keep

22

separate books and records of the businesses so as to show the

23

taxable severing of natural gas under this article separately

24

from other business activities not taxable under this article.

25

If any person fails to keep separate books and records, the

26

person shall be liable for a penalty equaling 100% of tax due

27

under this article for the period where separate records were

28

not maintained.

29

Section 1623.  Examinations.

30

The department or any of its authorized agents are authorized

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1

to examine the books, papers and records of any taxpayer in

2

order to verify the accuracy and completeness of any return made

3

or, if no return was made, to ascertain and assess the tax

4

imposed by this article. The department may require the

5

preservation of all books, papers and records for any period

6

deemed proper by it but not to exceed three years from the end

7

of the calendar year to which the records relate. Every taxpayer

8

is required to give to the department or its agent the means,

9

facilities and opportunity for examinations and investigation

10

under this section. The department is further authorized to

11

examine any person, under oath, concerning the taxable severing

12

of natural gas by any taxpayer or concerning any other matter

13

relating to the enforcement or administration of this article,

14

and to this end may compel the production of books, papers and

15

records and the attendance of all persons whether as parties or

16

witnesses whom it believes to have knowledge of relevant

17

matters. The procedure for the hearings or examinations shall be

18

the same as that provided by the act of April 9, 1929 (P.L.343,

19

No. 176), known as The Fiscal Code.

20

Section 1624.  Unauthorized disclosure.

21

Any information gained by the department as a result of any

22

return, examination, investigation, hearing or verification

23

required or authorized by this article shall be confidential

24

except for official purposes and except in accordance with

25

proper judicial order or as otherwise provided by law, and any

26

person unlawfully divulging the information shall be guilty of a

27

misdemeanor and shall, upon conviction, be sentenced to pay a

28

fine of not more than $1000 and costs of prosecution or to

29

imprisonment for not more than one year, or both.

30

Section 1625.  Cooperation with other governments.

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1

Notwithstanding the provisions of section 1617, the

2

department may permit the Commissioner of the Internal Revenue

3

Service of the United States, the proper officer of any state or

4

the authorized representative of either of them to inspect the

5

tax returns of any taxpayer, or may furnish to the commissioner

6

or officer or to either of their authorized representative an

7

abstract of the return of any taxpayer, or supply him with

8

information concerning any item contained in any return or

9

disclosed by the report of any examination or investigation of

10

the return of any taxpayer. This permission shall be granted

11

only if the laws of the United States or another state grant

12

substantially similar privileges to the proper officer of the

13

Commonwealth charged with the administration of this article.

14

Section 1626.  Bonds.

15

(a)  Taxpayer to file bond.--The department may require a

16

nonresident natural person or any foreign corporation,

17

association, fiduciary or other entity, not authorized to do

18

business within this Commonwealth or not having an established

19

place of business in this Commonwealth and subject to the tax

20

imposed by section 1603, to file a bond issued by a surety

21

company authorized to do business in this Commonwealth and

22

approved by the Insurance Commissioner as to solvency and

23

responsibility, in amounts as it may fix, to secure the payment

24

of any tax or penalties due or which may become due from

25

anonresident natural person, corporation, association, fiduciary

26

or other entity whenever it deems it necessary to protect the

27

revenues obtained under this article. The department may also

28

require a bond of a person petitioning the department for

29

reassessment in the case of any assessment over $500 or where,

30

in its opinion, the ultimate collection is in jeopardy. For a

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1

period of three years, the department may require a bond of any

2

person who has, on three or more occasions within a 12-month

3

period, either filed a return or made payment to the department

4

more than 30 days late. In the event the department determines a

5

taxpayer is required to file a bond, it shall give notice to the

6

taxpayer specifying the amount of the bond required. The

7

taxpayer shall file the bond within five days after notice is

8

given by the department unless, within five days, the taxpayer

9

shall request in writing a hearing before the Secretary of

10

Revenue or his representative. At the hearing, the necessity,

11

propriety and amount of the bond shall be determined by the

12

secretary or the secretary's representative. The determination

13

shall be final and the taxpayer shall comply with it within 15

14

days after notice is mailed to the taxpayer.

15

(b)  Securities in lieu of bond.--In lieu of the bond

16

required by this section securities approved by the department

17

or cash in a prescribed amount may be deposited. The securities

18

or cash shall be kept in the custody of the department. The

19

department may apply the securities or cash to the tax imposed

20

by this article and interest or penalties due without notice to

21

the depositor. The securities may be sold by the department to

22

pay the tax, and/or interest or penalties due at public or

23

private sale upon five days' written notice to the depositor.

24

(c)  Failure to file bond.--The department may file a lien

25

under section 1616 against any taxpayer who fails to file a bond

26

when required to do so under this section. All funds received

27

upon execution of the judgment on the lien shall be refunded to

28

the taxpayer with 3% interest, should a final determination be

29

made that it does not owe any payment to the department.

30

Section 1627.  Natural Gas Severance Tax Fund.

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1

(a)  Establishment.--The Natural Gas Severance Tax Fund is

2

established as a separate fund in the State Treasury.

3

(b)  Deposit.--The proceeds of the natural gas severance tax,

4

penalties and interest imposed by this article, less the amounts

5

appropriated under section 1629, shall be deposited into the

6

fund.

7

(c)  Restriction.--The money in the fund shall only be used

8

in accordance with section 1628.

9

Section 1628.  Administration of fund.

10

(a)  Transfers.--The State Treasurer shall make the following

11

transfers from the fund on a quarterly basis commencing on the

12

first business day of January 2012:

13

(1)  Sixty percent to the General Fund.

14

(2)  Three percent to the Department of Public Welfare to

15

provide cash and crisis grants to low-income households under

16

the Low Income Home Energy Assistance Program.

17

(3)  Fifteen percent to the Environmental Stewardship

18

Fund.

19

(4)  Four percent to the Hazardous Sites Cleanup Fund.

20

(5)  Five percent to the Liquid Fuels Tax Fund for the

21

reconstruction, maintenance and repair of State roadways and

22

bridges. The funds under this paragraph shall be:

23

(i)  allocated in addition to and not in lieu of any

24

funds normally and customarily allocated to the

25

reconstruction, maintenance and repair of roadways and

26

bridges by the Department of Transportation; and

27

(ii)  distributed equally among all the 67 counties

28

of this Commonwealth.

29

(b)  Distributions.--

30

(1)  The State Treasurer shall distribute from the fund,

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1

on a quarterly basis commencing on the first business day of

2

January 2010, 4.5% to municipalities where natural gas has

3

been severed and taxed under this article in the previous

4

quarter. The amount distributed shall be determined on a pro

5

rata basis as follows: The total amount to be distributed

6

under this paragraph is divided by the total number of

7

taxable gas units severed in the Commonwealth during the

8

preceding quarter; this quotient is then multiplied by the

9

total number of taxable gas units severed in the municipality

10

during the preceding quarter. The result equals the amount of

11

money to be distributed to the municipality, which shall be

12

used solely for any of the following:

13

(i)  Reconstruction, maintenance and repair of

14

municipal roadways and bridges which the municipality has

15

determined have been or are being used extensively to

16

transport natural gas or equipment related to the

17

production of of natural gas.

18

(ii)  Parks and recreation.

19

(iii)  Industrial and commercial development.

20

(iv)  Preservation and improvement of municipal water

21

supplies.

22

(v)  Maintenance and capital improvements to the

23

municipal waste and sewage systems.

24

(vi)  Preservation and reclamation of the surface

25

waters of the municipality.

26

(vii)  Other lawful purposes reasonably related to

27

the consequences of severing natural gas in the

28

municipality.

29

(2)  The State Treasurer shall distribute from the fund,

30

on a quarterly basis commencing on the first business day of

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1

January 2010, 4.5% to counties where natural gas has been

2

severed and taxed under this article in the previous quarter.

3

The amount distributed to a county shall be determined on a

4

pro rata basis as follows: The total amount to be distributed

5

under this paragraph is divided by the total number of

6

taxable gas units severed in the Commonwealth during the

7

preceding quarter; this quotient is then multiplied by the

8

total number of taxable gas units severed in the county

9

during the preceding quarter. The result equals the amount of

10

money to be distributed to the county, which shall be

11

administered by a board comprised of the chairperson of the

12

board of county commissioners, a representative from the

13

natural gas producing municipalities within the county and a

14

county commissioner selected by the representative of the

15

natural gas producing municipalities. The board shall give

16

priority to the reconstruction, repair and maintenance of

17

county roadways and bridges determined by the board to have

18

been and are used to transport natural gas or equipment

19

related to the production of natural gas and may allocate the

20

remainder to the county or its municipalities for any of the

21

purposes enumerated in subsection (b)(1). A simple majority

22

vote of all the members of the board shall be required for

23

any action under this paragraph.

24

(3)  The State Treasurer shall distribute from the fund,

25

on a quarterly basis commencing on the first day of January

26

2012, 2% to the Pennsylvania Game Commission, which shall be

27

used for the commission's operational, administrative and

28

enforcement costs.

29

(4)  The State Treasurer shall distribute from the fund,

30

on a quarterly basis commencing on the first day of January

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1

2012, 2% to the Pennsylvania Fish and Boat Commission, which

2

shall be used for the commission's operational,

3

administrative and enforcement costs.

4

(c)  Annual reports.--Counties and municipalities receiving

5

money from the fund under this section shall submit to the

6

Department of Transportation, on a form to be provided by the

7

Department of Transportation on its Internet website, within 30

8

days following the end of each fiscal year a report that

9

accounts for the use of the money distributed to them under

10

section 1628 in the fiscal year preceding the date of the

11

report. The Department of Transportation shall submit to the

12

Governor, to the chair and minority chair of the Transportation

13

Committee of the Senate and the chair and minority chair of the

14

Transportation Committee of the House of Representatives within

15

45 days following the end of each fiscal year a report that

16

accounts for the use of the money distributed to the Department

17

of Transportation under section 1628 in the fiscal year

18

preceding the date of the report and that includes copies of the

19

reports submitted to the Department of Transportation by the

20

counties and municipalities receiving money from the fund.

21

Section 1629.  Appropriation.

22

The amount of the proceeds from the tax imposed by this

23

article as shall be necessary for the payment of refunds,

24

enforcement or administration under this article, is hereby

25

appropriated for such purposes.

26

Section 9.6.  Section 1704-B of the act, amended or added

27

December 23, 2003 (P.L.250, No.46), is amended to read:

28

Section 1704-B.  Carryover, Carryback, Refund and Assignment

29

of Credit.--(a)  If the taxpayer cannot use the entire amount of

30

the research and development tax credit for the taxable year in

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1

which the research and development tax credit is first approved,

2

then the excess may be carried over to succeeding taxable years

3

and used as a credit against the qualified tax liability of the

4

taxpayer for those taxable years. Each time that the research

5

and development tax credit is carried over to a succeeding

6

taxable year, it is to be reduced by the amount that was used as

7

a credit during the immediately preceding taxable year. The

8

research and development tax credit provided by this article may

9

be carried over and applied to succeeding taxable years for no

10

more than fifteen taxable years following the first taxable year

11

for which the taxpayer was entitled to claim the credit.

12

(b)  A research and development tax credit approved by the

13

department for Pennsylvania qualified research and development

14

expense in a taxable year first shall be applied against the

15

taxpayer's qualified tax liability for the current taxable year

16

as of the date on which the credit was approved before the

17

research and development tax credit is applied against any tax

18

liability under subsection (a).

19

(c)  A taxpayer is not entitled to carry back or obtain a

20

refund of an unused research and development tax credit.

21

(d)  A taxpayer, upon application to and approval by the

22

Department of Community and Economic Development, may sell or

23

assign, in whole or in part, a research and development tax

24

credit granted to the taxpayer under this article [if no claim

25

for allowance of the credit is filed within one year from the

26

date the credit is approved by the department under section

27

1703-B]. The Department of Community and Economic Development

28

shall establish guidelines for the approval of applications

29

under this subsection.

30

(e)  The purchaser or assignee of a portion of a research and

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1

development tax credit under subsection (d) shall immediately

2

claim the credit in the taxable year in which the purchase or

3

assignment is made. The amount of the research and development

4

credit that a purchaser or assignee may use against any one

5

qualified tax liability may not exceed seventy-five per cent of

6

such qualified tax liability for the taxable year. The purchaser

7

or assignee may not carry over, carry back, obtain a refund of

8

or assign the research and development tax credit. The purchaser

9

or assignee shall notify the department of the seller or

10

assignor of the research and development tax credit in

11

compliance with procedures specified by the department.

12

Section 9.7.  The act is amended by adding an article to

13

read:

14

ARTICLE XVII-F

15

EDUCATIONAL IMPROVEMENT TAX CREDIT

16

Section 1701-F.  Scope.

17

This article establishes the educational improvement tax

18

credit.

19

Section 1702-F.  Definitions.

20

The following words and phrases when used in this article

21

shall have the meanings given to them in this section unless the

22

context clearly indicates otherwise:

23

"Business firm."  An entity authorized to do business in this

24

Commonwealth and subject to taxes imposed under Article III, IV,

25

VI, VII, VIII, IX or XV. The term includes a pass-through

26

entity.

27

"Contribution."  A donation of cash, personal property or

28

services the value of which is the net cost of the donation to

29

the donor or the pro rata hourly wage, including benefits, of

30

the individual performing the services.

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1

"Department."  The Department of Community and Economic

2

Development of the Commonwealth.

3

"Educational improvement organization."  A nonprofit entity

4

which:

5

(1)  is exempt from Federal taxation under section 501(c)

6

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

7

26 U.S.C. § 1 et seq.); and

8

(2)  contributes at least 80% of its annual receipts as

9

grants to a public school for innovative educational

10

programs.

11

For purposes of this definition, a nonprofit entity

12

"contributes" its annual cash receipts when it expends or

13

otherwise irrevocably encumbers those funds for expenditure

14

during the then current fiscal year of the nonprofit entity or

15

during the next succeeding fiscal year of the nonprofit entity.

16

"Eligible pre-kindergarten student."  A student, including an

17

eligible student with a disability, who is enrolled in a pre-

18

kindergarten program and is a member of a household with a

19

maximum annual household income as increased by the applicable

20

income allowance.

21

"Eligible student."  A school-age student, including an

22

eligible student with a disability, who is enrolled in a school

23

and is a member of a household with a maximum annual household

24

income as increased by the applicable income allowance.

25

"Eligible student with a disability."  A pre-kindergarten

26

student or a school-age student who meets all of the following:

27

(1)  Is either enrolled in a special education school or

28

has otherwise been identified, in accordance with 22 Pa. Code

29

Ch. 14 (relating to special education services and programs),

30

as a "child with a disability," as defined in 34 CFR § 300.8

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1

(relating to child with disability).

2

(2)  Needs special education and related services.

3

(3)  Is enrolled in a pre-kindergarten program or in a

4

school.

5

(4)  Is a member of a household with a household income

6

of not more than the maximum annual household income.

7

"Household."  An individual living alone or with the

8

following: a spouse, parent and their unemancipated minor

9

children; and other unemancipated minor children who are related

10

by blood or marriage; or other adults or unemancipated minor

11

children living in the household who are dependent upon the

12

individual.

13

"Household income."  All moneys or property received of

14

whatever nature and from whatever source derived. The term does

15