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| PRIOR PRINTER'S NO. 3475 | PRINTER'S NO. 3844 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY MILNE, CALTAGIRONE, GIBBONS, GROVE, HARHART, HARPER, MILLER, PICKETT, ROCK, TAYLOR AND VULAKOVICH, MAY 7, 2012 |
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| AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 26, 2012 |
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| AN ACT |
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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 extension of time to file |
11 | reports, for changes made by Federal Government, for petition |
12 | for reassessment, and for petition procedure; providing for | <-- |
13 | compromise by secretary; and further providing for petitions | <-- |
14 | for refunds. |
15 | The General Assembly of the Commonwealth of Pennsylvania |
16 | hereby enacts as follows: |
17 | Section 1. Section 405 of the act of March 4, 1971 (P.L.6, |
18 | No.2), known as the Tax Reform Code of 1971, is amended to read: |
19 | Section 405. Extension of Time to File Reports.--The |
20 | department may, upon application made to it, in such form as it |
21 | shall prescribe, on or prior to the last day for filing any |
22 | annual report, and upon proper cause shown, grant to the |
23 | corporation, required to file such report, an extension of not |
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1 | more than sixty days within which such report may be filed[, and |
2 | in case the Federal income tax authorities at any time grant a |
3 | longer extension of time for filing such reports with the |
4 | Federal Government, the department may grant an additional |
5 | extension of time for filing the annual report under this |
6 | article of not more than]. If the Federal income tax authorities |
7 | grant an extension of time for filing the reports with the |
8 | Federal Government, the department shall automatically grant an |
9 | extension of time for filing the annual report under this |
10 | article of thirty days after the termination of the Federal |
11 | extension, but the amount of tax due shall, in such cases, |
12 | nevertheless, be subject to interest from the due dates and at |
13 | the rates fixed by this article. |
14 | Section 2. Section 406 of the act, amended October 18, 2006 |
15 | (P.L.1149, No.119), is amended to read: |
16 | Section 406. Changes Made by Federal Government.--(a) If |
17 | the amount of the taxable income, as returned by any corporation |
18 | to the Federal Government, is finally changed or corrected by |
19 | the Commission of Internal Revenue or by any other agency or |
20 | court of the United States, such corporation, within [thirty |
21 | days] six months after the receipt of such final change or |
22 | correction, shall make a report of change, under oath or |
23 | affirmation, to the department showing such finally changed or |
24 | corrected taxable income, upon which the tax is required to be |
25 | paid to the United States. In case a corporation fails to file a |
26 | report of change, which results in an increase in taxable income |
27 | within the time prescribed, there shall be added to the tax, a |
28 | penalty of five dollars ($5) for every day during which such |
29 | corporation is in default, but the department may abate any such |
30 | penalty in whole or in part. |
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1 | (b) If, as a result of such final change or correction, a |
2 | corporation should report any change in the amount of the |
3 | taxable income of any corporation upon which tax is imposed by |
4 | this article, the department shall adjust the corporation's tax |
5 | on the department's records to conform to the revised tax as |
6 | reported and shall credit the taxpayer's account to the extent |
7 | of any overpayment resulting from the adjustment. The department |
8 | shall then have the power, and its duty shall be, to determine |
9 | and assess the taxpayer's unpaid and unreported liability for |
10 | tax, interest or penalty due the Commonwealth, or to credit the |
11 | taxpayer's account. |
12 | (c) Where a report of change, of Federal income, or Federal |
13 | tax, has been filed after an administrative or judicial appeal |
14 | has been taken, the report shall be deemed a part of the |
15 | original annual report upon petition of the taxpayer at any |
16 | subsequent proceeding as though it had been filed with the |
17 | original report, and no separate appeal from an assessment |
18 | resulting from the report of change, correction, or |
19 | redetermination shall be necessary to the extent the identical |
20 | issues for the taxable year have been raised in the appeal. |
21 | (d) The provisions of this section shall not be construed so |
22 | as to permit an assessment based upon the allowance of any |
23 | deduction on account of net operating losses, sustained in other |
24 | fiscal or calendar years, that are not allowed as deductions |
25 | under the definition of "taxable income" as contained in this |
26 | article. |
27 | (e) The provisions of this section shall apply to every |
28 | corporation which was doing business in Pennsylvania in the year |
29 | for which the Federal income has been changed, irrespective of |
30 | whether or not such corporation has thereafter merged, |
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1 | consolidated, withdrawn or dissolved. Any clearance certificate |
2 | issued by the department shall be conditioned upon the |
3 | requirement that in the event of a change in Federal income for |
4 | any year for which taxes have been paid to the Commonwealth, the |
5 | corporation or its successor or its officers or its directors |
6 | shall file with the department a report of change and pay any |
7 | additional State tax resulting therefrom. |
8 | Section 3. Sections 2702 and 2703 of the act are amended by | <-- |
9 | adding subsections to read: |
10 | Section 2702. Petition for reassessment. |
11 | * * * |
12 | (a.1) Petition requesting a review.-- |
13 | (1) A petition for reassessment under subsection (a) |
14 | shall include a petition requesting a review of the |
15 | department's adjustment of a tax item reported by the |
16 | taxpayer if the adjustment did not result in a tax increase |
17 | in the current year because the taxpayer's determined tax |
18 | liability was zero, but may increase the tax due in a |
19 | subsequent tax year. A petition under this paragraph may |
20 | include any of the following: |
21 | (i) A petition requesting recalculation of the |
22 | taxpayer's corporate net income tax net loss under |
23 | Article IV as adjusted by the department. |
24 | (ii) A petition requesting recalculation of the |
25 | taxpayer's capital stock franchise tax average net income |
26 | under Article VI as adjusted by the department. |
27 | (iii) A petition requesting recalculation of the |
28 | personal income tax basis of an asset under Article III |
29 | as adjusted by the department. |
30 | (2) A petition for reassessment made under this |
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1 | subsection shall be filed within 90 days of the mailing date |
2 | of the department's notice of adjustment. A taxpayer's |
3 | failure to file a petition for reassessment under this |
4 | subsection shall not prejudice the taxpayer's right to file a |
5 | petition in a subsequent tax year if the adjustment results |
6 | in a tax increase. |
7 | * * * |
8 | Section 2703. Petition procedure. |
9 | * * * |
10 | (a.1) Bifurcation of petition.--If a petition for |
11 | reassessment raises issues outside of the assessment, the |
12 | department, upon notification to the taxpayer, shall divide the |
13 | issues into a separate petition for reassessment addressing |
14 | issues raised by the assessment and a separate petition for |
15 | refund. The petition for refund must include all issues not |
16 | properly before the department in a petition for reassessment as |
17 | permitted under this section. The petition for refund must |
18 | satisfy the statute of limitations for refunds to be considered |
19 | timely. |
20 | * * * |
21 | Section 3. Section 2702 of the act is amended by adding a | <-- |
22 | subsection to read: |
23 | Section 2702. Petition for reassessment. |
24 | * * * |
25 | (a.1) Petition for review of tax adjustment not resulting in |
26 | an increase in liability.-- |
27 | (1) A petition for reassessment under subsection (a) may |
28 | include a request for review of the department's adjustment |
29 | of a tax item if the adjustment did not result in a tax |
30 | increase in the year of adjustment, but may increase the tax |
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1 | due in a subsequent year. A request for review may include: |
2 | (i) Recalculation of the taxpayer's corporate net |
3 | income tax net loss under Article IV as adjusted by the |
4 | department. |
5 | (ii) Recalculation of the taxpayer's capital stock |
6 | franchise tax average net income under Article VI as |
7 | adjusted by the department. |
8 | (iii) Recalculation of the personal income tax basis |
9 | of an asset under Article III as adjusted by the |
10 | department. |
11 | (2) A taxpayer must file a petition for review under |
12 | this subsection within 90 days of the mailing date of the |
13 | department's notice of adjustment. A taxpayer's failure to |
14 | file a petition under this subsection shall not prejudice the |
15 | taxpayer's right to file a petition in a subsequent tax year. |
16 | * * * |
17 | Section 3.1. Section 2703 of the act, added October 18, 2006 |
18 | (P.L.1149, No.119), is amended to read: |
19 | Section 2703. Petition procedure. |
20 | (a) Content of petition.-- |
21 | (1) A petition for reassessment shall state: |
22 | (i) The tax type and tax periods included within the |
23 | petition. |
24 | (ii) The amount of the tax that the taxpayer claims |
25 | to have been erroneously assessed. |
26 | (iii) The basis upon which the taxpayer claims that |
27 | the assessment is erroneous. |
28 | (iv) The basis upon which the taxpayer claims that |
29 | the adjustment of a tax item is erroneous. |
30 | (2) A petition for refund shall state: |
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1 | (i) The tax type and tax periods included within the |
2 | petition. |
3 | (ii) The amount of the tax that the taxpayer claims |
4 | to have been overpaid. |
5 | (iii) The basis of the taxpayer's claim for refund. |
6 | (3) The petition shall be supported by an affidavit by |
7 | the petitioner or the petitioner's authorized representative |
8 | that the petition is not made for the purpose of delay and |
9 | that the facts set forth in the petition are true. |
10 | (b) Request for hearing.--Upon written request of the |
11 | petitioner or when deemed necessary by the department, the |
12 | department shall schedule a hearing to review a petition. The |
13 | petitioner shall be notified by the department of the date, time |
14 | and place where the hearing will be held. |
15 | (c) Decision and order.--The department shall issue a |
16 | decision and order disposing of a petition on such basis as it |
17 | deems to be in accordance with law. The department shall provide |
18 | a written explanation of the basis for any denial of relief. |
19 | (d) Time limit for decision and order.--The department shall |
20 | issue a decision and order disposing of a petition within six |
21 | months after receipt of the petition. The petitioner and the |
22 | department may agree to extend the time period for the |
23 | department to dispose of the petition for one additional six- |
24 | month period. Notice of the department's decision and order |
25 | disposing of the petition shall be issued to the petitioner. |
26 | (e) Exception to time limit for decision and order.--If at |
27 | the time of the filing of a petition proceedings are pending in |
28 | a court of competent jurisdiction wherein any claim made in the |
29 | petition may be established, the department, upon the written |
30 | request of the petitioner, may defer consideration of the |
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1 | petition until the final judgment determining the question or |
2 | questions involved in the petition has been decided. If |
3 | consideration of the petition is deferred, the department shall |
4 | issue a decision and order disposing of the petition within six |
5 | months after the final judgment. |
6 | (f) Failure of department to take action.--The failure of |
7 | the department to dispose of the petition within the time period |
8 | provided for by subsection (d) or (e) shall act as a denial of |
9 | the petition. Notice of the department's failure to take action |
10 | and the denial of the petition shall be mailed to the |
11 | petitioner. |
12 | Section 3.2. The act is amended by adding a section to read: |
13 | Section 2707. Compromise by secretary. |
14 | The secretary may compromise on any civil tax matter within |
15 | the jurisdiction of the department arising under the laws of |
16 | this Commonwealth. The department shall promulgate guidelines |
17 | for the approval of compromises in Commonwealth tax matters. |
18 | Section 4. Section 3003.1 of the act, amended May 7, 1997 |
19 | (P.L.85, No.7) and repealed in part June 29, 2002 (P.L.559, |
20 | No.89), is amended to read: |
21 | Section 3003.1. Petitions for Refunds.--(a) For a tax |
22 | collected by the Department of Revenue, a taxpayer who has |
23 | actually paid tax, interest or penalty to the Commonwealth or to |
24 | an agent or licensee of the Commonwealth authorized to collect |
25 | taxes may petition the Department of Revenue for refund or |
26 | credit of the tax, interest or penalty. Except as otherwise |
27 | provided by statute, a petition for refund must be made to the |
28 | department within three years of actual payment of the tax, |
29 | interest or penalty. |
30 | (b) The department may grant a refund or credit to a |
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1 | taxpayer for all tax periods covered by a departmental audit. If |
2 | a credit is not granted by the department in the audit report, |
3 | the taxpayer must file a petition for refund for taxes paid with |
4 | respect to the audit period within six months of the mailing |
5 | date of the notice of assessment, determination or settlement or |
6 | within three years of actual payment of the tax, whichever is |
7 | later. |
8 | (d) In the case of amounts paid as a result of an |
9 | assessment, determination, settlement or appraisement, a |
10 | petition for refund must be filed with the department within six |
11 | months of the [mailing date of the notice of assessment, |
12 | determination, settlement or appraisement] actual payment of the |
13 | tax. |
14 | (e) A taxpayer may petition the Board of Finance and Revenue |
15 | to review the decision and order of the department on a petition |
16 | for refund. The petition for review must be filed with the board |
17 | within ninety days of the mailing date of a decision and order |
18 | of the department upon a petition for refund. |
19 | Section 5. The following provisions shall apply to tax | <-- |
20 | periods which, on the effective date of this section, are open |
21 | under the act; to administrative appeals pending on the |
22 | effective date of this section; and to judicial appeals pending |
23 | on the effective date of this section: |
24 | (1) The addition of section 2702(a.1) of the act. |
25 | (2) The addition of section 2703(a)(1)(iv) of the act. |
26 | (3) The amendment of section 3003.1(b) of the act. |
27 | Section 5 6. This act shall take effect immediately. | <-- |
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