THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY MUSTIO, BARRAR, BEYER, BRENNAN, CIVERA, DENLINGER, EVERETT, GEIST, GINGRICH, KILLION, KOTIK, MURT, O'NEILL, PYLE, RAPP, READSHAW, REICHLEY, ROSS, SIPTROTH, J. TAYLOR, VULAKOVICH AND YOUNGBLOOD, JULY 10, 2009

REFERRED TO COMMITTEE ON FINANCE, JULY 10, 2009  

AN ACT

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

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," authorizing the Neighborhood Energy Assistance

Tax Credit.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971, is amended by adding an article to

read:

ARTICLE XIX-B

NEIGHBORHOOD ENERGY ASSISTANCE TAX CREDIT

Section 1901-B.  Scope.

This article authorizes the Neighborhood Energy Assistance

Tax Credit.

Section 1902-B.  Definitions.

The following words and phrases when used in this article

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

context clearly indicates otherwise:

"Business firm."  Any business entity authorized to do

business in this Commonwealth and subject to taxes imposed by

Article III, IV, VI, VII or VIII. This term includes an electric

generation or distribution company or natural gas supplier or

distribution company as defined in 66 Pa.C.S. § 2803 (relating

to definitions).

"Commission."  The Pennsylvania Public Utility Commission.

"Comprehensive energy services plan."  A strategy developed

jointly by a neighborhood energy organization and a sponsoring

business firm for the provision of energy assistance services

within an urban neighborhood, suburban community or rural

community.

"Comprehensive energy services project."  Any activity

conducted jointly by a neighborhood or community-based

organization and a sponsoring business firm that implements a

comprehensive energy service plan.

"Energy assistance services."  Any type of counseling and

advice or the provision of direct services to reduce the energy

usage and costs to individuals or groups throughout a

geographical area, which counseling, advice or services are in

addition to those services or programs required by Federal or

State statute or regulation or by an ordinance or regulation of

a local government. This term includes, but is not limited to,

the following activities: energy conservation education; home

weatherization services that include the provision of measures

that affect either heating or cooling costs or both in an

individual residence or within a building owned or operated by a

nonprofit organization providing a community service; and

administration of the Low Income Bill Payment Assistance

Program. An individual residence includes either a premises

owned and occupied by an individual or a premises rented by an

individual.

"Neighborhood energy assistance."  Financial assistance,

labor, material and technical advice to aid in the physical

improvement of any part or all of an individual residence that

will result in the more efficient use of energy and a reduction

in the energy costs within the individual residence.

"Neighborhood energy organization."  A private, nonprofit

organization that provides energy assistance services to

residents in an urban neighborhood, suburban community or rural

community and that has obtained a ruling from the Internal

Revenue Service that the organization is exempt from income

taxation under the provisions of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.) and approved by

the Department of Community and Economic Development. This term

includes the sustainable energy funds established under the

restructuring plans required under 66 Pa.C.S. Ch. 28 (relating

to restructuring of electric utility industry) and pursuant to

Pennsylvania Public Utility Commission Docket Nos. R-00973981,

R-00974008, R-00974009, R-00973953 and R-00973954.

"Qualified investment."  Any investment made by a business

firm that promotes the efficient use of energy and a reduction

in energy costs pursuant to a plan that has been developed in

cooperation with and approved by a neighborhood or community-

based energy organization operating pursuant to a plan for the

administration of tax credits approved by the Department of

Community and Economic Development and the Pennsylvania Public

Utility Commission.

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV, VI, VII or VIII. The term does not

include any tax withheld by an employer from an employee under

Article III.

"Secretary."  The Secretary of Community and Economic

Development of the Commonwealth.

Section 1903-B.  Tax credit.

(a)  General rule.--A business firm that engages in or

contributes to a neighborhood energy organization that engages

in the activities of providing neighborhood energy assistance to

low-income and moderate-income individuals or to nonprofit

organizations in an urban neighborhood, suburban community or

rural community shall receive a tax credit as provided in

section 1904-B if the secretary and the commission annually

approve the proposal of the business firm or private company.

The proposal shall set forth the program to be conducted, the

urban neighborhood, suburban community or rural community

selected, the estimated amount to be invested in the program and

the plan for implementing the program.

(b)  Regulations.--The secretary, in cooperation with the

commission, shall promulgate rules and regulations for the

approval or disapproval of the proposals by business firms or

private companies and provide a listing of all applications

received and their disposition in each fiscal year to the

General Assembly by October 1 of the following fiscal year.

Section 1904-B.  Grant of tax credit.

(a)  Authorization.--The Department of Revenue shall grant a

tax credit against any tax due under Article III, IV, VI, VII or

VIII. The total amount of tax credit granted for programs

approved under this article shall not exceed $20,000,000 of tax

credit in any fiscal year, subject to the following:

(1)  A business firm that incurs a Pennsylvania qualified

neighborhood energy assistance expense in a taxable year may

apply for a neighborhood energy assistance tax credit as

provided in this article. By September 15, a business firm

must submit an application to the Department of Revenue for

Pennsylvania neighborhood energy assistance expenses incurred

in the taxable year that ended in the prior calendar year.

(2)  A business firm that is qualified under section

1903-B and incurs an expense that supports a program of

energy education, counseling or advice or that does not show

a direct energy savings or cost reduction shall receive a

neighborhood energy assistance tax credit for the taxable

year in the amount of 50% of the excess of the business

firm's total Pennsylvania qualified neighborhood energy

assistance expense for the taxable year.

(3)  A business firm that is qualified under section

1903-B and incurs an expense that supports a program

providing direct energy services that include the

installation of actual energy efficiency measures, including

solar water heating and solar photovoltaic systems, that

demonstrate a direct energy savings or cost reduction, or

that administer low income bill payment assistance programs

shall receive a neighborhood assistance tax credit for the

taxable year in the amount of 70% of the excess of the

business firm's total Pennsylvania qualified neighborhood or

community-based energy assistance expense for the taxable

year.

(b)  Notification of approved tax credits.--By December 15 of

the calendar year following the close of the taxable year during

which the Pennsylvania qualified neighborhood energy assistance

expense was incurred, the Department of Revenue shall notify the

business firm of the amount of the business firm's neighborhood

energy assistance tax credit approved by the Department of

Revenue.

(c)  Carryover, carryback, refund and assignment of credit.--

(1)  If the business firm cannot use the entire amount of

the tax credit for the taxable year in which the tax credit

is first approved, then the excess may be carried over to

succeeding taxable years and used as a credit against the

qualified tax liability of the business firm for those

taxable years. Each time that the tax credit is carried over

to a succeeding taxable year, it shall be reduced by the

amount that was used as a credit during the immediately

preceding taxable year. The tax credit provided by this

article may be carried over and applied to succeeding taxable

years for no more than 15 taxable years following the first

taxable year for which the business firm was entitled to

claim the credit.

(2)  A tax credit approved by the Department of Revenue

for a neighborhood energy assistance tax credit expense in a

calendar year first shall be applied against the business

firm's qualified tax liability for the current taxable year

as of the date on which the credit was approved before the

tax credit is applied against any tax liability under section

1903-B.

(3)  A business firm may not carry back or obtain a

refund of an unused tax credit.

(4)  Tax credits under this article shall be provided on

a first-come-first-served basis until all annual available

credits have been allocated.

(d)  Pass-through entity.--

(1)  If a pass-through entity has any unused tax credit

under section 1903-B, the entity may elect, in writing,

according to the Department of Revenue's procedures, to

transfer all or a portion of the credit to shareholders,

members or partners in proportion to the shares of the

entity's distributive income to which the shareholder, member

or partner is entitled.

(2)  The tax credit provided under section 1903-B is in

addition to any tax credit to which a shareholder, member or

partner of a pass-through entity is otherwise entitled under

this article. However, a pass-through entity and a

shareholder, member or partner of a pass-through entity may

not claim a credit under this article for the same qualified

expense.

(3)  A shareholder, member or partner of a pass-through

entity to whom credit is transferred under section 1903-B

must immediately claim the credit in the taxable year in

which the transfer is made. The shareholder, member or

partner may not carry forward, carry back, obtain a refund or

sell or assign the credit.

Section 1905-B.  Report.

The Department of Revenue shall annually make a report to the

Environmental Resources and Energy Committee of the Senate and

Environmental Resources and Energy Committee of the House of

Representatives on the activities undertaken pursuant to this

article, including, but not limited to:

(1)  The number and amount of tax credits provided.

(2)  The number and description of the neighborhood or

community-based energy organizations receiving the tax

credits.

(3)  The type of programs receiving support and the

amount of investment on which the tax credits were provided

against.

Section 1906-B.  Regulations.

The Department of Revenue, the Department of Community and

Economic Development and the commission shall promulgate

regulations necessary for the implementation and administration

of this article.

Section 1907-B.  Decision in writing.

The decision of the secretary to approve or disapprove a

proposal pursuant to section 1903-B shall be in writing and, if

it approves the proposal, it shall state the maximum credit

allowable to the business firm. A copy of the decision of the

secretary shall be transmitted to the Governor and to the

Secretary of Revenue.

Section 2.  This act shall take effect in 60 days.