PRIOR PRINTER'S NO. 3475

PRINTER'S NO.  3844

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2348

Session of

2012

  

  

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

  

  

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 26, 2012   

  

  

  

AN ACT

  

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

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act relating to tax reform and State taxation by codifying

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and enumerating certain subjects of taxation and imposing

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taxes thereon; providing procedures for the payment,

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collection, administration and enforcement thereof; providing

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for tax credits in certain cases; conferring powers and

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imposing duties upon the Department of Revenue, certain

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employers, fiduciaries, individuals, persons, corporations

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and other entities; prescribing crimes, offenses and

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penalties," further providing for extension of time to file

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reports, for changes made by Federal Government, for petition

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for reassessment, and for petition procedure; providing for

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compromise by secretary; and further providing for petitions

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for refunds.

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The General Assembly of the Commonwealth of Pennsylvania

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hereby enacts as follows:

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

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

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

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

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

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

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

 


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

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

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longer extension of time for filing such reports with the

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Federal Government, the department may grant an additional

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extension of time for filing the annual report under this

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

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grant an extension of time for filing the reports with the

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Federal Government, the department shall automatically grant an

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extension of time for filing the annual report under this

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article of thirty days after the termination of the Federal

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

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

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the rates fixed by this article.

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

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

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

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

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to the Federal Government, is finally changed or corrected by

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the Commission of Internal Revenue or by any other agency or

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

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

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

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affirmation, to the department showing such finally changed or

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

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

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

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

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

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

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penalty in whole or in part.

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

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corporation should report any change in the amount of the

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taxable income of any corporation upon which tax is imposed by

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

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

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

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of any overpayment resulting from the adjustment. The department

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

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and assess the taxpayer's unpaid and unreported liability for

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

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taxpayer's account.

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

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tax, has been filed after an administrative or judicial appeal

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

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original annual report upon petition of the taxpayer at any

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subsequent proceeding as though it had been filed with the

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original report, and no separate appeal from an assessment

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resulting from the report of change, correction, or

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redetermination shall be necessary to the extent the identical

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

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

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as to permit an assessment based upon the allowance of any

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deduction on account of net operating losses, sustained in other

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fiscal or calendar years, that are not allowed as deductions

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

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article.

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

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corporation which was doing business in Pennsylvania in the year

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for which the Federal income has been changed, irrespective of

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whether or not such corporation has thereafter merged,

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consolidated, withdrawn or dissolved. Any clearance certificate

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issued by the department shall be conditioned upon the

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

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

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corporation or its successor or its officers or its directors

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

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additional State tax resulting therefrom.

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

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adding subsections to read:

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Section 2702.  Petition for reassessment.

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* * *

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

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

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shall include a petition requesting a review of the

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department's adjustment of a tax item reported by the

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taxpayer if the adjustment did not result in a tax increase

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in the current year because the taxpayer's determined tax

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

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subsequent tax year. A petition under this paragraph may

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include any of the following:

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(i)  A petition requesting recalculation of the

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taxpayer's corporate net income tax net loss under

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Article IV as adjusted by the department.

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(ii)  A petition requesting recalculation of the

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taxpayer's capital stock franchise tax average net income

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under Article VI as adjusted by the department.

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(iii)  A petition requesting recalculation of the

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personal income tax basis of an asset under Article III

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as adjusted by the department.

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(2)  A petition for reassessment made under this

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subsection shall be filed within 90 days of the mailing date

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

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failure to file a petition for reassessment under this

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

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petition in a subsequent tax year if the adjustment results

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in a tax increase.

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* * *

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Section 2703.  Petition procedure.

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* * *

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

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reassessment raises issues outside of the assessment, the

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department, upon notification to the taxpayer, shall divide the

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issues into a separate petition for reassessment addressing

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issues raised by the assessment and a separate petition for

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refund. The petition for refund must include all issues not

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properly before the department in a petition for reassessment as

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permitted under this section. The petition for refund must

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satisfy the statute of limitations for refunds to be considered

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timely.

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* * *

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Section 3.  Section 2702 of the act is amended by adding a

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subsection to read:

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Section 2702.  Petition for reassessment.

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* * *

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(a.1)  Petition for review of tax adjustment not resulting in

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an increase in liability.--

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

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include a request for review of the department's adjustment

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of a tax item if the adjustment did not result in a tax

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increase in the year of adjustment, but may increase the tax

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due in a subsequent year. A request for review may include:

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(i)  Recalculation of the taxpayer's corporate net

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income tax net loss under Article IV as adjusted by the

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department.

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(ii)  Recalculation of the taxpayer's capital stock

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franchise tax average net income under Article VI as

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adjusted by the department.

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(iii)  Recalculation of the personal income tax basis

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of an asset under Article III as adjusted by the

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department.

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(2)  A taxpayer must file a petition for review under

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this subsection within 90 days of the mailing date of the

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department's notice of adjustment. A taxpayer's failure to

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file a petition under this subsection shall not prejudice the

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taxpayer's right to file a petition in a subsequent tax year.

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* * *

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Section 3.1.  Section 2703 of the act, added October 18, 2006

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

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Section 2703.  Petition procedure.

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(a)  Content of petition.--

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(1)  A petition for reassessment shall state:

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(i)  The tax type and tax periods included within the

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petition.

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(ii)  The amount of the tax that the taxpayer claims

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to have been erroneously assessed.

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(iii)  The basis upon which the taxpayer claims that

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the assessment is erroneous.

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(iv)  The basis upon which the taxpayer claims that

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the adjustment of a tax item is erroneous.

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(2)  A petition for refund shall state:

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(i)  The tax type and tax periods included within the

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petition.

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(ii)  The amount of the tax that the taxpayer claims

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to have been overpaid.

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(iii)  The basis of the taxpayer's claim for refund.

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(3)  The petition shall be supported by an affidavit by

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the petitioner or the petitioner's authorized representative

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that the petition is not made for the purpose of delay and

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that the facts set forth in the petition are true.

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(b)  Request for hearing.--Upon written request of the

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petitioner or when deemed necessary by the department, the

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department shall schedule a hearing to review a petition. The

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petitioner shall be notified by the department of the date, time

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and place where the hearing will be held.

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(c)  Decision and order.--The department shall issue a

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decision and order disposing of a petition on such basis as it

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deems to be in accordance with law. The department shall provide

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a written explanation of the basis for any denial of relief.

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(d)  Time limit for decision and order.--The department shall

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issue a decision and order disposing of a petition within six

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months after receipt of the petition. The petitioner and the

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department may agree to extend the time period for the

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department to dispose of the petition for one additional six-

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month period. Notice of the department's decision and order

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disposing of the petition shall be issued to the petitioner.

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(e)  Exception to time limit for decision and order.--If at

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the time of the filing of a petition proceedings are pending in

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a court of competent jurisdiction wherein any claim made in the

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petition may be established, the department, upon the written

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request of the petitioner, may defer consideration of the

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petition until the final judgment determining the question or

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questions involved in the petition has been decided. If

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consideration of the petition is deferred, the department shall

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issue a decision and order disposing of the petition within six

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months after the final judgment.

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(f)  Failure of department to take action.--The failure of

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the department to dispose of the petition within the time period

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provided for by subsection (d) or (e) shall act as a denial of

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the petition. Notice of the department's failure to take action

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and the denial of the petition shall be mailed to the

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petitioner.

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Section 3.2.  The act is amended by adding a section to read:

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Section 2707.  Compromise by secretary.

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The secretary may compromise on any civil tax matter within

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the jurisdiction of the department arising under the laws of

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this Commonwealth. The department shall promulgate guidelines

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for the approval of compromises in Commonwealth tax matters.

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

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

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No.89), is amended to read:

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

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collected by the Department of Revenue, a taxpayer who has

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

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an agent or licensee of the Commonwealth authorized to collect

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taxes may petition the Department of Revenue for refund or

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

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

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department within three years of actual payment of the tax,

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interest or penalty.

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

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

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

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

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respect to the audit period within six months of the mailing

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date of the notice of assessment, determination or settlement or

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

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later.

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

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assessment, determination, settlement or appraisement, a

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petition for refund must be filed with the department within six

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

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determination, settlement or appraisement] actual payment of the

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tax.

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

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

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

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

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of the department upon a petition for refund.

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Section 5.  The following provisions shall apply to tax

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periods which, on the effective date of this section, are open

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under the act; to administrative appeals pending on the

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effective date of this section; and to judicial appeals pending

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on the effective date of this section:

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(1)  The addition of section 2702(a.1) of the act.

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(2)  The addition of section 2703(a)(1)(iv) of the act.

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(3)  The amendment of section 3003.1(b) of the act.

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Section 5 6.  This act shall take effect immediately.

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