THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY TRUITT, CREIGHTON, FARRY, GEIST, GILLEN, HEFFLEY, HELM, MILNE, MURT, WATSON AND YOUNGBLOOD, FEBRUARY 22, 2012

REFERRED TO COMMITTEE ON TRANSPORTATION, FEBRUARY 22, 2012  

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," providing for a tax credit for telecommuters.

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 XVIII-E

TELECOMMUTE PA TAX CREDIT

Section 1801-E.  Scope of article.

This article relates to telecommute PA tax credits.

Section 1802-E.  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:

"Department."  The Department of Community and Economic

Development of the Commonwealth.

"Full-time employee."  An employee whose compensation is

based on a work week of at least 35 hours.

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

301(n.o) or a Pennsylvania S corporation as defined in section

301(n.1).

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV or VI. The term shall include the

liability for taxes imposed under Article III on an owner of a

pass-through entity.

"Secretary."  The Secretary of Community and Economic

Development of the Commonwealth.

"Tax credit."  The telecommute PA tax credit authorized under

this article.

"Taxpayer."  A person subject to tax under Article III, IV or

VI. The term shall include the shareholder, owner or member of a

pass-through entity which receives a telecommuting PA tax

credit.

"Telecommuting."  The practice by which an employee uses an

electronic linkup with a central office to work from home.

Section 1803-E.  Credit for telecommuting full-time employees.

(a)  Application.--A taxpayer that allows full-time employees

to engage in the practice of telecommuting may apply for a tax

credit. The application must be on a form required by the

department.

(b)  Review.--The department, in conjunction with the

Department of Revenue, shall review the application and shall

determine if all of the following apply:

(1)  All of the requirements established under this

article have been met.

(2)  The applicant has filed all required State tax

reports and returns for all taxable years and paid any

balance of State tax due as determined by the Department of

Revenue.

(c)  Approval.--Upon satisfactory review under subsection

(b), the department shall approve the application and shall

award the taxpayer a tax credit for the taxable year for which

the application was made in an amount calculated under

subsection (d). The total amount of tax credits awarded to a

taxpayer under this article may not exceed $50,000 in each

fiscal year.

(d)  Calculation of tax credit.--The tax credit awarded to

the taxpayer under subsection (c) shall be calculated as

follows:

(1)  For the first year an employee telecommutes, a

taxpayer shall be eligible for a tax credit up to $3,000. The

tax credit shall be based on actual expenses incurred as

evidenced by the application submitted under subsection (a)

and shall be prorated based on the employee's telecommuting

start date.

(2)  For each subsequent year an employee telecommutes, a

taxpayer shall be eligible for a tax credit up to $1,500. The

tax credit shall be based on actual expenses incurred as

evidenced by the application submitted under subsection (a).

If an employee terminates telecommuting prior to the end of

the fiscal year, the tax credit shall be prorated based on

the actual amount of days the employee telecommuted.

(e)  Limitation.--Upon completing the calculation under

subsection (d), the department shall base the actual amount

awarded to the taxpayer upon the actual time the full-time

employee spends telecommuting per week, which shall be

calculated by the department as follows:

(1)  One hundred percent of the tax credit shall be

awarded if the full-time employee averages four or more days

per week telecommuting.

(2)  Seventy-five percent of the tax credit shall be

awarded if the full-time employee averages three days per

week telecommuting.

(3)  Fifty percent of the tax credit shall be awarded if

the full-time employee averages two days per week

telecommuting.

(4)  Twenty-five percent of the tax credit shall be

awarded if the full-time employee averages one day per week

telecommuting.

(f)  Notification.--The department shall notify the taxpayer

of the amount of the tax credit awarded within 30 days after

approval by the department.

Section 1804-E.  Carryover, application of tax credit, carryback

and refund.

(a)  Carryover.--If the taxpayer cannot use the entire amount

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

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

taxable years and used as a credit against the qualified tax

liability of the taxpayer 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 may be carried over and applied to succeeding taxable

years for no more than seven taxable years following the first

taxable year for which the taxpayer was entitled to claim the

tax credit.

(b)  Application of tax credit.--A tax credit approved by the

department for full-time employees engaged in telecommuting in a

taxable year shall first be applied against the taxpayer's

qualified tax liability for the current taxable year as of the

date on which the tax credit was approved before the tax credit

is applied against any tax liability under subsection (a).

(c)  Carryback or refund.--A taxpayer shall not be entitled

to carry back or obtain a refund of an unused tax credit.

Section 1805-E.  Limitation on tax credits.

(a)  Total amount.--The total amount of tax credits approved

by the department in a fiscal year may not exceed $5,000,000.

(b)  Allocation.--Tax credits shall be allocated by the

department on a first-come-first-served basis.

Section 1806-E.  Shareholder, owner or member pass-through.

(a)  Shareholder entitlement.--If a Pennsylvania S

corporation does not have an eligible tax liability against

which the tax credit may be applied, a shareholder of the

Pennsylvania S corporation shall be entitled to a tax credit

equal to the tax credit determined for the Pennsylvania S

corporation for the taxable year multiplied by the percentage of

the Pennsylvania S corporation's distributive income to which

the shareholder is entitled.

(b)  Pass-through entity entitlement.--If a pass-through

entity other than a Pennsylvania S corporation does not have tax

liability against which the tax credit may be applied, an owner

or member of the pass-through entity shall be entitled to a tax

credit equal to the tax credit determined for the pass-through

entity for the taxable year multiplied by the percentage of the

pass-through entities' distributive income to which the owner or

member is entitled.

(c)  Additional credit.--

(1)  Except as provided under paragraph (2), the tax

credit provided under subsection (a) or (b) shall be in

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

member of a pass-through entity is otherwise entitled under

this article.

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

member of a pass-through entity may not claim a tax credit

under this article for the same full-time employees engaged

in telecommuting.

Section 1807-E.  Guidelines.

The department, in consultation with the Department of

Revenue, shall establish written guidelines for the

implementation and administration of this article. The

guidelines shall be published on each of the department's

publicly accessible Internet websites.

Section 2.  This act shall take effect immediately.