THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY MILNE, CALTAGIRONE, GIBBONS, GROVE, HARHART, HARPER, MILLER, PICKETT, ROCK, TAYLOR AND VULAKOVICH, MAY 7, 2012

REFERRED TO COMMITTEE ON FINANCE, MAY 7, 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," further providing for extension of time to file

reports, for changes made by Federal Government, for petition

for reassessment, for petition procedure and for petitions

for refunds.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 405 of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971, is amended to read:

Section 405.  Extension of Time to File Reports.--The

department may, upon application made to it, in such form as it

shall prescribe, on or prior to the last day for filing any

annual report, and upon proper cause shown, grant to the

corporation, required to file such report, an extension of not

more than sixty days within which such report may be filed[, and

in case the Federal income tax authorities at any time grant a

longer extension of time for filing such reports with the

Federal Government, the department may grant an additional

extension of time for filing the annual report under this

article of not more than]. If the Federal income tax authorities

grant an extension of time for filing the reports with the

Federal Government, the department shall automatically grant an

extension of time for filing the annual report under this

article of thirty days after the termination of the Federal

extension, but the amount of tax due shall, in such cases,

nevertheless, be subject to interest from the due dates and at

the rates fixed by this article.

Section 2.  Section 406 of the act, amended October 18, 2006

(P.L.1149, No.119), is amended to read:

Section 406.  Changes Made by Federal Government.--(a)  If

the amount of the taxable income, as returned by any corporation

to the Federal Government, is finally changed or corrected by

the Commission of Internal Revenue or by any other agency or

court of the United States, such corporation, within [thirty

days] six months after the receipt of such final change or

correction, shall make a report of change, under oath or

affirmation, to the department showing such finally changed or

corrected taxable income, upon which the tax is required to be

paid to the United States. In case a corporation fails to file a

report of change, which results in an increase in taxable income

within the time prescribed, there shall be added to the tax, a

penalty of five dollars ($5) for every day during which such

corporation is in default, but the department may abate any such

penalty in whole or in part.

(b)  If, as a result of such final change or correction, a

corporation should report any change in the amount of the

taxable income of any corporation upon which tax is imposed by

this article, the department shall adjust the corporation's tax

on the department's records to conform to the revised tax as

reported and shall credit the taxpayer's account to the extent

of any overpayment resulting from the adjustment. The department

shall then have the power, and its duty shall be, to determine

and assess the taxpayer's unpaid and unreported liability for

tax, interest or penalty due the Commonwealth, or to credit the

taxpayer's account.

(c)  Where a report of change, of Federal income, or Federal

tax, has been filed after an administrative or judicial appeal

has been taken, the report shall be deemed a part of the

original annual report upon petition of the taxpayer at any

subsequent proceeding as though it had been filed with the

original report, and no separate appeal from an assessment

resulting from the report of change, correction, or

redetermination shall be necessary to the extent the identical

issues for the taxable year have been raised in the appeal.

(d)  The provisions of this section shall not be construed so

as to permit an assessment based upon the allowance of any

deduction on account of net operating losses, sustained in other

fiscal or calendar years, that are not allowed as deductions

under the definition of "taxable income" as contained in this

article.

(e)  The provisions of this section shall apply to every

corporation which was doing business in Pennsylvania in the year

for which the Federal income has been changed, irrespective of

whether or not such corporation has thereafter merged,

consolidated, withdrawn or dissolved. Any clearance certificate

issued by the department shall be conditioned upon the

requirement that in the event of a change in Federal income for

any year for which taxes have been paid to the Commonwealth, the

corporation or its successor or its officers or its directors

shall file with the department a report of change and pay any

additional State tax resulting therefrom.

Section 3.  Sections 2702 and 2703 of the act are amended by

adding subsections to read:

Section 2702.  Petition for reassessment.

* * *

(a.1)  Petition requesting a review.--

(1)  A petition for reassessment under subsection (a)

shall include a petition requesting a review of the

department's adjustment of a tax item reported by the

taxpayer if the adjustment did not result in a tax increase

in the current year because the taxpayer's determined tax

liability was zero, but may increase the tax due in a

subsequent tax year. A petition under this paragraph may

include any of the following:

(i)  A petition requesting recalculation of the

taxpayer's corporate net income tax net loss under

Article IV as adjusted by the department.

(ii)  A petition requesting recalculation of the

taxpayer's capital stock franchise tax average net income

under Article VI as adjusted by the department.

(iii)  A petition requesting recalculation of the

personal income tax basis of an asset under Article III

as adjusted by the department.

(2)  A petition for reassessment made under this

subsection shall be filed within 90 days of the mailing date

of the department's notice of adjustment. A taxpayer's

failure to file a petition for reassessment under this

subsection shall not prejudice the taxpayer's right to file a

petition in a subsequent tax year if the adjustment results

in a tax increase.

* * *

Section 2703.  Petition procedure.

* * *

(a.1)  Bifurcation of petition.--If a petition for

reassessment raises issues outside of the assessment, the

department, upon notification to the taxpayer, shall divide the

issues into a separate petition for reassessment addressing

issues raised by the assessment and a separate petition for

refund. The petition for refund must include all issues not

properly before the department in a petition for reassessment as

permitted under this section. The petition for refund must

satisfy the statute of limitations for refunds to be considered

timely.

* * *

Section 4.  Section 3003.1 of the act, amended May 7, 1997

(P.L.85, No.7) and repealed in part June 29, 2002 (P.L.559,

No.89), is amended to read:

Section 3003.1.  Petitions for Refunds.--(a)  For a tax

collected by the Department of Revenue, a taxpayer who has

actually paid tax, interest or penalty to the Commonwealth or to

an agent or licensee of the Commonwealth authorized to collect

taxes may petition the Department of Revenue for refund or

credit of the tax, interest or penalty. Except as otherwise

provided by statute, a petition for refund must be made to the

department within three years of actual payment of the tax,

interest or penalty.

(b)  The department may grant a refund or credit to a

taxpayer for all tax periods covered by a departmental audit. If

a credit is not granted by the department in the audit report,

the taxpayer must file a petition for refund for taxes paid with

respect to the audit period within six months of the mailing

date of the notice of assessment, determination or settlement or

within three years of actual payment of the tax, whichever is

later.

(d)  In the case of amounts paid as a result of an

assessment, determination, settlement or appraisement, a

petition for refund must be filed with the department within six

months of the [mailing date of the notice of assessment,

determination, settlement or appraisement] actual payment of the

tax.

(e)  A taxpayer may petition the Board of Finance and Revenue

to review the decision and order of the department on a petition

for refund. The petition for review must be filed with the board

within ninety days of the mailing date of a decision and order

of the department upon a petition for refund.

Section 5.  This act shall take effect immediately.