THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY CHRISTIANA, MARSHALL, MATZIE AND GIBBONS, JUNE 18, 2012

REFERRED TO COMMITTEE ON FINANCE, JUNE 18, 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 resource manufacturing tax

credit.

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 XVII-G

RESOURCE MANUFACTURING TAX CREDIT

Section 1701-G.  Scope.

This article establishes a resource manufacturing tax credit.

Section 1702-G.  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 Revenue of the Commonwealth.

"Ethane."  A colorless, odorless gaseous alkane, C2H6, which

occurs as a constituent of natural gas and is used as the raw

material in the manufacturing of ethylene.

"Gallon."  A United States liquid gallon equal to a volume of

231 cubic inches and equal to 3.785411784 liters or 0.13368

cubic feet, where volumetric measurements made at ambient

flowing conditions are typically adjusted for composition and to

standard conditions using established industry standard

practices.

"Pass-through entity."  Any of the following:

(1)  A partnership as defined in section 301(n.0).

(2)  A Pennsylvania S corporation as defined in section

301(n.2).

(3)  An unincorporated entity subject to section 307.21.

"Qualified tax liability."  The liability for taxes imposed

under Articles III, IV, VI, VII, VIII, IX and XV. The term does

not include tax withheld under section 316.

"Qualified taxpayer."  An entity purchasing ethane for use in

manufacturing ethylene at a facility in this Commonwealth which

has been placed in service on or after the effective date of

this article. The term does not include a contractor or

subcontractor of a manufacturer of ethylene.

"Tax credit."  The resource manufacturing tax credit provided

under this article.

Section 1703-G.  Application and approval of tax credit.

(a)  Rate.--The tax credit shall be equal to $0.05 per gallon

of ethane purchased and used in manufacturing ethylene in this

Commonwealth by a qualified taxpayer.

(b)  Application.--

(1)  A qualified taxpayer may apply to the department for

a tax credit under this section.

(2)  The application must be submitted to the department

by March 1 for the tax credit claimed for ethane purchased

and used by the qualified taxpayer during the prior calendar

year. The application must be on the form required by the

department.

(3)  The department may require information necessary to

document the amount of ethane purchased and used.

(c)  Review and approval.--

(1)  The department shall review and approve or

disapprove the applications by March 20. Failure to meet the

deadline under this paragraph shall be deemed an approval.

(2)  Upon approval, the department shall issue a

certificate stating the amount of tax credit granted for

ethane purchased in the prior calendar year.

(d)  Limitation.--The total amount of tax credits authorized

by this article shall not exceed $66,000,000 in a fiscal year.

(e)  Apportionment.--If the total amount of tax credits

approved for all qualified taxpayers exceeds the amount

allocated for those credits, the tax credit to be received by

each applicant shall be determined as follows:

(1)  Divide:

(i)  the tax credit approved for the applicant; by

(ii)  the total tax credits approved for all

applicants.

(2)  Multiply:

(i)  the quotient under paragraph (1); by

(ii)  the maximum amount allocated under subsection

(d).

Section 1704-G.  Use of tax credits.

(a)  Priority.--Prior to sale or assignment of a tax credit

under section 1706-G, a qualified taxpayer must first use a tax

credit against the qualified tax liability incurred in the

taxable year for which the tax credit was approved.

(b)  Limit.--The credit shall be limited to 20% of the

qualified taxpayer's qualified tax liabilities incurred in the

taxable year for which the credit was approved.

Section 1705-G.  Carryover, carryback and refund.

A tax credit cannot be carried back, carried forward or be

used to obtain a refund.

Section 1706-G.  Sale or assignment.

(a)  Authorization.--If a qualified taxpayer holds a tax

credit through the calendar year in which the tax credit was

awarded, the qualified taxpayer may sell or assign a tax credit,

in whole or in part.

(b)  Application.--

(1)  To sell or assign a tax credit, a qualified taxpayer

must file an application for the sale or assignment of the

tax credit with the Department of Community and Economic

Development. The application must be on a form required by

the Department of Community and Economic Development.

(2)  To approve an application, the Department of

Community and Economic Development must receive a finding

from the department that the applicant has:

(i)  filed all required State tax reports and returns

for all applicable taxable years; and

(ii)  paid any balance of State tax due as determined

by assessment or determination by the department.

(c)  Approval.--Upon approval by the Department of Community

and Economic Development, a qualified taxpayer may sell or

assign, in whole or in part, a tax credit.

(d)  Time limit.--Notwithstanding any other provision of law,

the department shall assess or determine the tax of an applicant

under this section within 90 days of the filing of all required

final returns or reports in accordance with section 806.1(a)(5)

of the act of April 9, 1929 (P.L.343, No.176), known as The

Fiscal Code.

Section 1707-G.  Purchasers and assignees.

(a)  Time.--The purchaser or assignee under section 1706-G

must claim the tax credit in the calendar year in which the

purchase or assignment is made.

(b)  Amount.--The amount of the tax credit that a purchaser

or assignee under section 1706-G may use against any one

qualified tax liability may not exceed 50% of any of the

qualified tax liabilities for the taxable year.

(c)  Resale and reassignment.--

(1)  A purchaser under section 1706-G may not sell or

assign the purchased tax credit.

(2)  An assignee under section 1706-G may not sell or

assign the assigned tax credit.

(d)  Notice.--The purchaser or assignee under section 1706-G

shall notify the department of the seller or assignor of the tax

credit in compliance with procedures specified by the

department.

Section 1708-G.  Pass-through entity.

(a)  Election.--If a pass-through entity has an unused tax

credit, it may elect in writing, according to procedures

established by the department, to transfer all or a portion of

the credit to shareholders, members or partners in proportion to

the share of the entity's distributive income to which the

shareholders, members or partners are entitled.

(b)  Limitation.--The same tax credit under subsection (a)

may not be claimed by:

(1)  the pass-through entity; and

(2)  a shareholder, member or partner of the pass-through

entity.

(c)  Amount.--The amount of the tax credit that a transferee

under subsection (a) may use against any one qualified tax

liability may not exceed 20% of any qualified tax liabilities

for the taxable year.

(d)  Time.--A transferee under subsection (a) must claim the

tax credit in the calendar year in which the transfer is made.

(e)  Sale and assignment.--A transferee under subsection (a)

may not sell or assign the tax credit.

Section 1709-G.  Administration.

(a)  Audits and assessments.--The department has the

following powers:

(1)  To audit a qualified taxpayer claiming a tax credit

to ascertain the validity of the amount claimed.

(2)  To issue an assessment against a qualified taxpayer

for an improperly issued tax credit. The procedures,

collection, enforcement and appeals of any assessment made

under this section shall be governed by Article II.

(b)  Guidelines and regulations.--The department shall

develop written guidelines for the implementation of this

article. The guidelines shall be in effect until the department

promulgates regulations for the implementation of the provisions

of this article.

Section 1710-G.  Reports to General Assembly.

(a)  Department.--

(1)  By June 1, 2018, and June 1 of each year thereafter,

the department shall submit a report on the tax credit

provided by this article to the chairman and minority

chairman of the Appropriations Committee of the Senate, the

chairman and minority chairman of the Finance Committee of

the Senate, the chairman and minority chairman of the

Appropriations Committee of the House of Representatives and

the chairman and minority chairman of the Finance Committee

of the House of Representatives.

(2)  The report shall include the names of all qualified

taxpayers utilizing the tax credit as of the date of the

report and the amount of tax credits approved for, utilized

by or sold or assigned by each qualified taxpayer. The report

shall not disclose sensitive competitive information on the

qualified taxpayer's production.

(3)  Notwithstanding any statute providing for the

confidentiality of tax records, the information in the report

shall be public information, and all report information shall

be posted on the department's Internet website.

(4)  If the report is filed in a calendar year, the tax

credit shall remain in effect at the same rate for the next

calendar year.

(b)  Department of Community and Economic Development.--By

December 31, 2042, the Department of Community and Economic

Development shall submit to the Secretary of the Senate and the

Chief Clerk of the House of Representatives a report on the

effectiveness of the tax credit, including recommendations on

changes and continuation.

Section 1711-G.  Reduction or extension.

To the extent a qualified taxpayer may claim a tax credit,

the tax credit shall not be reduced or abolished prior to

December 31, 2042.

Section 2.  The addition of Article XVII-G of the act shall

apply to the purchase of ethane for the period from January 1,

2017, through December 31, 2042.

Section 3.  This act shall take effect immediately.