THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY STURLA, BRENNAN, BUXTON, CALTAGIRONE, CARROLL, DALEY, HORNAMAN, MAHONEY, MIRABITO, MUNDY, MURPHY, SANTONI, SCAVELLO, THOMAS, WATERS AND YOUNGBLOOD, DECEMBER 1, 2011

REFERRED TO COMMITTEE ON APPROPRIATIONS, DECEMBER 1, 2011  

AN ACT

Authorizing counties to impose sales, use and occupancy taxes;

providing for the levying, assessment and collection of taxes

and for the powers and duties of the Department of Community

and Economic Development, the Department of Revenue and the

State Treasurer; and establishing the County Sales, Use and

Occupancy Tax Fund.

TABLE OF CONTENTS

Chapter 1.  General Provisions

Section 101.  Short title.

Section 102.  Definitions.

Section 103.  Scope.

Section 104.  Preemption.

Section 105.  Rates of taxation in home rule counties.

Chapter 3.  Subjects of Taxation

Subchapter A.  Tax Authorization

Section 301.  General tax authorization.

Section 302.  Continuity of tax.

Section 303.  Election to participate under act.

Section 304.  (Reserved).

Section 305.  Municipal qualification and initiative.

Subchapter B.  County Sales, Use and Occupancy Tax

Section 311.  Construction.

Section 312.  Imposition of tax.

Section 313.  Situs.

Section 314.  Licenses.

Section 315.  Rules and regulations; collection costs.

Section 316.  Procedure.

Section 317.  County sales, use and occupancy tax funds.

Section 318.  Disbursements.

Section 319.  (Reserved).

Section 320.  Allocations.

Chapter 5.  Disposition of Tax Revenues

Section 501.  Sales, use and occupancy tax revenues.

Chapter 21.  Miscellaneous Provisions

Section 2101.  Effective date.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

GENERAL PROVISIONS

Section 101.  Short title.

This act shall be known and may be cited as the Optional

Sales Tax for School Property Tax Relief and County and

Municipal Assistance Act.

Section 102.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Board of county commissioners."  Includes the successor in

function to the board of county commissioners in a county which

has adopted a home rule charter under the provisions 53 Pa.C.S.

Pt. III Subpt. E (relating to home rule and optional plan

government), but does not include the city council of a city of

the first class or the county council of a county of the second

class.

"County."  A county-level municipality within this

Commonwealth. The term includes a county which has adopted a

home rule charter or optional plan of government under the

provisions of 53 Pa.C.S. Pt. III Subpt. E (relating to home rule

and optional plan government). The term does not include a

county of the first class or a county of the second class.

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

"Fund."  The County Sales, Use and Occupancy Tax Fund.

"Homestead."  As defined in 53 Pa.C.S. § 8401 (relating to

definitions).

"Local Tax Enabling Act."  The act of December 31, 1965

(P.L.1257, No.511), known as The Local Tax Enabling Act.

"Municipality."  A city of the second class A, city of the

third class, borough, incorporated town, township of the first

class, township of the second class, home rule municipality,

optional plan municipality, optional form municipality or

similar general purpose unit of government which may after the

effective date of this section be established by statute. Unless

the context clearly indicates otherwise, for the purposes of

this act, a municipality located in a county shall include

municipalities that are located entirely or partially in the

county. The term shall not include a city of the first class, a

city of the second class or a municipality located in a county

of the second class.

"Nonqualified municipality."  A municipality that is not

qualified under section 305 to receive disbursements under

section 318.

"PICAA."  The act of June 5, 1991 (P.L.9, No.6), known as the

Pennsylvania Intergovernmental Cooperation Authority Act for

Cities of the First Class.

"Population."  The number of individuals residing in an area

as determined in the most recent Federal decennial census.

"Qualified municipality."  A municipality that is qualified

under section 305 to receive disbursements under section 318.

"Tax Reform Code."  The act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971.

Section 103.  Scope.

It is the intent of this act to confer upon each county the

power to levy, assess and collect taxes upon the subjects of

taxation specified in this act.

Section 104.  Preemption.

No act of the General Assembly in effect prior to or after

the effective date of this section shall be deemed to vacate or

preempt any ordinance passed or adopted under the authority of

this act or any other act providing authority for the imposition

of a tax by a county, unless the act of the General Assembly

expressly vacates or preempts the authority to pass or adopt the

ordinance.

Section 105.  Rates of taxation in home rule counties.

A county which has adopted a home rule charter or optional

plan of government under the provisions of 53 Pa.C.S. Pt. III

Subpt. E (relating to home rule and optional plan government)

may not fix the rate of taxation for the subjects of taxation

authorized under Chapter 3 in excess of the rates fixed in

Chapter 3.

CHAPTER 3

SUBJECTS OF TAXATION

SUBCHAPTER A

TAX AUTHORIZATION

Section 301.  General tax authorization.

A county shall have the power and may by ordinance levy and

assess or provide for the levying and assessment of taxes on the

sale or use of tangible personal property and services and the

occupancy of a hotel room at a rate of 1% within the

geographical limits of the county, subject to the provisions of

this act.

Section 302.  Continuity of tax.

A tax levied under the provisions of this act shall continue

in force on a fiscal year basis without annual reenactment until

the tax is subsequently repealed.

Section 303.  Election to participate under act.

A board of county commissioners may elect to participate

under this act by adopting an ordinance imposing the tax under

the procedures set forth in section 316.

Section 304.  (Reserved).

Section 305.  Municipal qualification and initiative.

(a)  Initial year of implementation.--

(1)  The governing body of a municipality desiring to

qualify for disbursements under section 318 beginning in the

first fiscal year following the effective date of this

section shall, on or before November 30, 2012, do all of the

following:

(i)  Adopt a resolution containing the following

statement:

We strongly urge the county to enact a county sales,

use and occupancy tax and intend to accept

disbursements of the sales, use and occupancy tax

collected.

(ii)  Deliver a certified copy of the resolution to

the board of county commissioners for the county in which

the municipality is located. If the municipality is

located in more than one county, the governing body shall

deliver a certified copy to the board of county

commissioners for each county where the municipality is

located.

(2)  Within 30 days following receipt of certified

resolutions from municipalities whose combined population

represents more than 60% of the population of the county, the

board of county commissioners of the county shall commence

the procedures under section 316 for imposing the tax under

section 312; however, the written notice to municipalities

under section 316(a) must be made 15 days prior to adoption

of the ordinance. The population of a municipality that is

located in more than one county shall be determined

separately for each county where the municipality is located

on the basis of the municipality's population within each

county.

(3)  The tax shall be imposed as of the date occurring 90

days following the adoption of the ordinance.

(4)  A municipality located in a county where the tax is

imposed during the first fiscal year following the effective

date of this section whose governing body does not adopt and

deliver to the board of county commissioners a resolution

under paragraph (1) shall not be qualified to receive

disbursements under section 318 for the first three fiscal

years following the effective date of this section.

(b)  Implementation in subsequent years.--

(1)  A municipality located in a county where the tax is

not imposed in the first fiscal year following the effective

date of this section desiring to qualify for disbursements

under section 318 shall follow the procedures under

subsection (a), except with respect to adoption by November

30, 2012, prior to the enactment by the county of an

ordinance under section 316 in any subsequent fiscal year. In

that event, the municipality shall be qualified to receive

disbursements under section 318 for all subsequent fiscal

years that the tax is in effect. The requirements of

subsection (a)(1) must be met by June 30 for the imposition

of the tax by the county for the subsequent fiscal year.

(2)  A municipality located in a county where the tax has

been imposed and that has not followed the procedures under

subsection (a)(1) or (b)(1) may only qualify for

disbursements under section 318 in the fourth or any

subsequent fiscal year following imposition of the tax, and

for all fiscal years thereafter, if it does all of the

following by September 1 of the fiscal year prior to the

first fiscal year in which the municipality will be qualified

to receive disbursement:

(i)  Adopts a resolution containing the following

statement:

We support the enactment by the county of the county

sales, use and occupancy tax, strongly urge its

continuation and intend to accept disbursements of

the sales, use and occupancy tax collected.

(ii)  Delivers a certified copy of the resolution to

the board of county commissioners for the county in which

the municipality is located. If the municipality is

located in more than one county, the governing body shall

deliver a certified copy to the board of county

commissioners for each county where the municipality is

located.

(c)  No limitation on counties.--Nothing in this section

shall prohibit the board of commissioners of a county from

electing to participate under this act under the procedures set

forth in section 316 without having received certified

resolutions from municipalities under subsection (a) or (b).

SUBCHAPTER B

COUNTY SALES, USE AND OCCUPANCY TAX

Section 311.  Construction.

The tax imposed by the board of county commissioners under

this subchapter shall be in addition to any tax imposed by the

Commonwealth under Article II of the Tax Reform Code. Except for

the differing situs provisions under section 313, the provisions

of Article II of the Tax Reform Code shall apply to the tax.

Section 312.  Imposition of tax.

(a)  Sales.--

(1)  The board of county commissioners may levy and

assess upon each separate sale at retail of tangible personal

property or services, as defined in Article II of the Tax

Reform Code, within the boundaries of the county, a tax on

the purchase price.

(2)  The tax shall be collected by the vendor from the

purchaser and shall be paid over to the Commonwealth as

provided in this subchapter.

(b)  Use.--

(1)  In any county within which the tax authorized in

subsection (a) is imposed, there shall be levied, assessed

and collected upon the use, within the county, of tangible

personal property purchased at retail and on services

purchased at retail, as defined in Article II of the Tax

Reform Code, a tax on the purchase price.

(2)  The tax shall be paid over to the Commonwealth by

the person who makes the use.

(3)  The use tax imposed under this subchapter shall not

be paid over to the Commonwealth by any person who has paid

the tax imposed by subsection (a) or has paid the tax imposed

by this subsection to the vendor with respect to the use.

(c)  Occupancy.--

(1)  In any county within which a tax authorized by

subsection (a) is imposed, there shall be levied, assessed

and collected an excise tax on the rent upon every occupancy

of a room or rooms in a hotel in the county.

(2)  The tax shall be collected by the operator or owner

from the occupant and paid over to the Commonwealth.

(d)  Rate and uniformity.--The tax authorized by subsections

(a), (b) and (c) shall be imposed at a rate of 1% and shall be

uniform.

(e)  Computation.--The tax imposed under this section shall

be computed in the manner set forth in section 503(e)(2) of

PICAA.

Section 313.  Situs.

The situs of sales at retail or uses shall be determined in

the manner specified by section 504 of PICAA and by Article II-A

of the Tax Reform Code.

Section 314.  Licenses.

The license issued pursuant to Article II of the Tax Reform

Code or a separate license for the collection of the tax imposed

by this subchapter may be issued by the department in the same

manner as is provided for in section 505 of PICAA. Licensees

shall be entitled to the same discount as provided in section

227 of the Tax Reform Code.

Section 315.  Rules and regulations; collection costs.

(a)  Regulations.--The rules and regulations promulgated

under section 270 of the Tax Reform Code shall be applicable to

the taxes imposed under section 312 insofar as such rules and

regulations are consistent with section 312.

(b)  Administration and costs.--

(1)  The department shall administer and enforce the

provisions of this subchapter. The department may promulgate

and enforce regulations consistent with the provisions of

this subchapter relating to anything pertaining to the

administration and enforcement of this subchapter. The

department may prescribe the extent to which a regulation

shall be applied without retroactive effect.

(2)  To cover their respective costs of administration,

the department and the Treasury Department shall be entitled

to retain a sum equal to costs of collection, but no more

than 1% and 0.5%, respectively, of the revenues collected

under this subchapter. The department shall inform the

counties participating under this act in writing monthly of

the sum retained and the costs of collection reimbursed. When

the annual operating budgets for the department and the

Treasury Department are submitted to the General Assembly,

each agency shall also submit to the chairman and minority

chairman of the Appropriations Committee of the Senate and to

the chairman and minority chairman of the Appropriations

Committee of the House of Representatives the actual sums

retained for costs of collection in the preceding fiscal

year, together with all supporting details.

Section 316.  Procedure.

(a)  Ordinance.--

(1)  A county desiring to impose the tax authorized by

section 312 shall give at least 45 days' written notice to

each municipality in the county of its intent to impose the

tax. The notice and ordinance shall state the tax rate and

refer to this subchapter. The ordinance shall authorize the

imposition of the tax on all subjects provided for in section

312.

(2)  Prior to adopting an ordinance imposing the tax

under section 312, the board of county commissioners shall

give public notice of its intent to adopt the ordinance in

the manner provided by section 306 of the Local Tax Enabling

Act and shall conduct at least one public hearing regarding

the proposed adoption of the ordinance.

(3)  The board of county commissioners may waive the

requirement for a public hearing if the ordinance will be

adopted pursuant to the provisions of section 305.

(4)  Except as provided in paragraph (5), an ordinance

adopted under this section shall be adopted by September 1

and the tax shall be imposed as of January 1 of the following

fiscal year.

(5)  Notwithstanding paragraph (4), a county desiring to

impose the tax in the first fiscal year following the

effective date of this section may adopt an ordinance under

this section by November 30, 2012. If this paragraph applies,

the tax shall be imposed as of the date occurring 90 days

following the adoption of the ordinance.

(b)  Notification to department.--Certified copies of the

county ordinance shall be delivered to the department and the

municipalities within 15 days following adoption of the

ordinance.

(c)  Repeal.--

(1)  No earlier than the end of the fifth fiscal year

following imposition of the tax authorized by section 312, a

county may repeal the tax. In that event, the county shall

give at least 30 days' written notice to every municipality

located in the county of its intent to repeal the tax. The

ordinance shall authorize the repeal of the tax on all

subjects provided for in section 312.

(2)  Prior to adopting an ordinance repealing the tax

imposed under section 312, the board of county commissioners

shall give public notice of its intent to repeal the

ordinance in the manner provided by section 306 of the Local

Tax Enabling Act for the adoption of ordinances and shall

conduct at least one public hearing regarding the proposed

repeal of the ordinance.

(d)  Delivery of repeal ordinance.--The board of county

commissioners shall deliver certified copies of a repeal

ordinance to the department and the municipalities within the

county by September 1 of the year prior to the effective date of

the repeal.

Section 317.  County Sales, Use and Occupancy Tax Fund.

(a)  Fund established in State Treasury.--There is hereby

established in the State Treasury a County Sales, Use and

Occupancy Tax Fund. The State Treasurer shall be custodian of

the fund which shall be subject to the provisions of law

applicable to funds listed in section 302 of the act of April 9,

1929 (P.L.343, No.176), known as The Fiscal Code. Subaccounts

shall be established within the fund for each county

participating under this act.

(b)  Deposits into fund.--

(1)  The tax imposed under section 312 shall be received

by the department and paid to the State Treasurer and, along

with interest and penalties, less any collection costs

allowed under this subchapter and any refunds and credits

paid, shall be credited to the respective counties'

subaccounts not less frequently than every two weeks.

(2)  During any period prior to the credit of money to

each such subaccount, interest earned on money received by

the department and paid to the State Treasurer under this

subchapter shall be credited to the respective subaccount. 

(c)  Lapsing and interfund transfers prohibited.--All money

in the fund and credited to the subaccounts, including, but not

limited to, money credited to the subaccounts under this

section, prior year encumbrances and the interest earned

thereon, shall not lapse or be transferred to any other fund or

subaccount, but shall remain in the fund and credited to the

respective subaccounts as provided in this chapter.

(d)  Investment.--Pending their disbursement, money received

on behalf of or deposited into the fund shall be invested or

reinvested as are other money in the custody of the State

Treasurer in the manner provided by law. All earnings received

from the investment or reinvestment of the money shall be

credited to the fund.

Section 318.  Disbursements.

(a)  General rule.--On or before the tenth business day

following receipt from the department of the necessary

calculations, the State Treasurer shall make disbursements as

provided in this section.

(b)  Disbursement to counties.--

(1)  The State Treasurer shall disburse to a county

imposing the tax under section 312 an amount of money equal

to 25% of the tax deposited in the fund credited to the

county's subaccount. The money shall be deposited into the

county general fund for disposition as provided under section

501(a).

(2)  The State Treasurer shall disburse to a county, in

addition to its share under paragraph (1), an amount of money

equal to the amount allocated under section 320 to all of the

nonqualified municipalities. The money shall be deposited

into the county general fund for disposition as provided

under section 501(a).

(c)  Disbursement to municipalities.--Twenty-five percent of

the tax deposited into the fund shall be disbursed to each

qualified municipality in the amounts allocated under section

320(a). The money disbursed shall be deposited into the

municipal general fund for disposition as provided in section

501(b).

(d)  Disbursement to school districts.--The remaining 50% of

the tax deposited into the fund shall be disbursed to each

school district in the amounts allocated under section 320(c).

The money disbursed shall be deposited into the school district

general fund for disposition as provided in section 501(c).

Section 319.  (Reserved).

Section 320.  Allocations.

(a)  Allocations to municipalities.--The department shall

compute allocations of the sums to be disbursed to

municipalities under section 318(c) in the following manner:

(1)  Fifty percent shall be allocated pro rata based on

the weighted tax revenues for each municipality located in

the county as a percentage of the total weighted tax revenues

of all municipalities located in the county. For

municipalities located in more than one county, the weighted

tax revenues for the county shall be prorated based upon the

population of the municipality in each county divided by the

total population of the municipality.

(2)  Fifty percent shall be allocated pro rata based on

the population of each municipality located in the county as

a percentage of the sum of the population of all

municipalities located in the county. For municipalities

located in more than one county, the population of the county

shall be determined separately for each county where the

municipality is located on the basis of the municipality's

population within each county.

(b)  Calculation of weighted tax revenues.--Calculations of

weighted tax revenues shall be made by the Department of

Community and Economic Development and certified to the

department based upon information reported to the Department of

Community and Economic Development, subject to review,

verification and approval by the Department of Community and

Economic Development.

(c)  Allocations to school districts.--The department shall

compute allocations of the sums to be disbursed to school

districts under section 318(d) by a pro rata allocation based on

the average daily membership for each school district located in

the county as a percentage of the total average daily membership

of all school districts located in the county. For school

districts located in more than one county, the average daily

memberships for the county shall be prorated based upon the

population of the school district in each county divided by the

total population of the school district.

(d)  Calculation of average daily memberships.--Calculations

of average daily memberships shall be made by the Department of

Education and certified to the department based upon information

reported to the Department of Education, subject to review,

verification and approval by the Department of Education.

(e)  Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection:

"Average daily membership."  As defined in the act of March

10, 1949 (P.L.30, No.14), known as the Public School Code of

1949.

"Per capita market value."  The total market value of all

real property divided by population as determined by the most

recent decennial census.

"Total tax revenues."  Real property tax revenues, revenues

received by levy of a tax under the Local Tax Enabling Act,

revenues received by levy of a tax under this act and revenues

received by levy of a tax under the act of June 23, 1931

(P.L.932, No.317), known as The Third Class City Code, the act

of February 1, 1966 (1965 P.L.1656, No.581), known as The

Borough Code, the act of June 24, 1931 (P.L.1206, No.331), known

as The First Class Township Code, and the act of May 1, 1933

(P.L.103, No.69), known as The Second Class Township Code, as

applicable to the municipality.

"Weighted tax revenues."  Total tax revenues of a

municipality from all sources divided by the per capita market

value of the municipality.

CHAPTER 5

DISPOSITION OF TAX REVENUES

Section 501.  Sales, use and occupancy tax revenues.

(a)  Counties.--All of the revenues estimated to be received

by a county from the tax in a fiscal year shall be expended by

the county to maintain core services.

(b)  Municipalities.--All of the revenues estimated to be

received by a qualified municipality from the tax in a fiscal

year must be expended by the municipality as follows:

(1)  When a municipality's pension plan is a moderately

or severely distressed municipal pension system pursuant to

the act of December 18, 1984 (P.L.1005, No.205), known as the

Municipal Pension Plan Funding Standard and Recovery Act,

revenues received in a fiscal year shall first be used to pay

in full the municipality's minimum municipal obligation

pursuant to the Municipal Pension Plan Funding Standard and

Recovery Act. Any remaining revenues received shall be used

to maintain core services.

(2)  When a qualified municipality's pension plan is a

minimally distressed municipal pension system pursuant to the

Municipal Pension Plan Funding Standard and Recovery Act,

revenues received in a fiscal year shall be used to maintain

core services.

(3)  When a municipality does not have a minimally,

moderately or severely distressed pension system pursuant to

the Municipal Pension Plan Funding Standard and Recovery Act,

revenues received by a qualified municipality shall be used

to maintain core services.

(c)  School districts.--All of the revenues estimated to be

received by a school district from the tax in a fiscal year

shall be used to reduce, or maintain the reduction of, the

school district real property tax, first by means of a homestead

exclusion and then, if the maximum homestead exclusion has been

attained, by means of reduction in the property tax millage

rate.

(d)  Definition.--As used in this section, the term "core

services" includes:

(1)  Police services.

(2)  Fire services.

(3)  Public works.

(4)  Public health and welfare services, including

county-owned or county-operated nursing homes.

(5)  Administrative and clerical services.

(6)  Judicial administration and justice-related

services.

(7)  Corrections services.

(8)  Election services.

CHAPTER 21

MISCELLANEOUS PROVISIONS

Section 2101.  Effective date.

This act shall take effect immediately.