THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY BENNINGHOFF, AUMENT, BAKER, BOBACK, BRADFORD, CALTAGIRONE, CUTLER, DENLINGER, FLECK, GABLER, GILLEN, GINGRICH, GODSHALL, GROVE, HELM, HENNESSEY, HICKERNELL, KAMPF, KORTZ, MICOZZIE, MILLER, MILNE, QUINN, ROCK, SAYLOR, SCAVELLO, SWANGER, TALLMAN, WATSON AND FABRIZIO, SEPTEMBER 5, 2012

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, OCTOBER 2, 2012   

AN ACT

Establishing the Promoting Employment Across Pennsylvania

Program; and providing for tax benefits to qualified

companies in the form of withholding tax relief.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

TABLE OF CONTENTS

Chapter 1.  Preliminary Provisions

Section 101.  Short title.

Section 102.  Scope of act.

Section 103.  Definitions.

Chapter 3.  Promoting Employment Across Pennsylvania

Section 301.  Qualification.

Section 302.  Benefits.

Section 303.  Application and review.

Section 304.  Agreement.

Section 305.  Recapture of withholding taxes.

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Section 306.  Annual form.

Section 307.  Prohibitions.

Section 308.  Administration and regulation.

Section 309.  Review.

Section 310.  Report to General Assembly.

Section 305.  Optional remittance.

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Section 306.  Recapture of withholding taxes.

Section 307.  Quarterly report.

Section 308.  Annual form.

Section 309.  Prohibitions.

Section 310.  New employee credit.

Section 311.  Administration and regulation.

Section 312.  Review.

Section 313.  Report to General Assembly.

Chapter 51.  Miscellaneous Provisions

Section 5101.  Effective date.

CHAPTER 1

PRELIMINARY PROVISIONS

Section 101.  Short title.

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

Employment Across Pennsylvania Act.

Section 102.  Scope of act.

This act relates to fostering economic development, creating

new jobs and opportunities for the citizens of this Commonwealth

and providing incentives to locate business facilities, other

operations and jobs in this Commonwealth.

Section 103.  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:

"Agreement."  An agreement entered into under section 304.

"County average wage."  The average annual wage paid to

employees, in the same occupation, located in the county where

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the qualified company intends to employ new employees, as

reported by the Center for Workforce Information and Analysis.

"Department."  The Department of Community and Economic

Development of the Commonwealth.

"High-impact project."  A business development project in

which a qualified company agrees to hire at least 100 new

employees within five years from the date the agreement is

entered into under section 304.

"New employee."  Any of the following:

(1)  An employee who meets all of the following:

(i)  Has never been employed by the qualified company

in the qualified company's business operating in this

Commonwealth during the taxable year for which benefits

are sought under section 301.

(ii)  Performs duties in this Commonwealth in

connection with the business operating in this

Commonwealth on:

(A)  a regular, full-time basis; or

(B)  a part-time basis if the individual is

customarily performing the duties at least 20 hours

per week throughout the taxable year.

(2)  An individual who is acquired or relocated to this

Commonwealth from another state through an expansion or

relocation of a business operation, notwithstanding if the

individual was previously employed by the qualified company.

"Qualified company."  As follows:

(1)  A for-profit corporation, partnership or other

entity that makes available to its full-time employees health

insurance coverage, pays at least 50% of the premium for the

health insurance and meets the requirements of section 301.

The term includes a company whose headquarters or

administrative offices, located in this Commonwealth, serve

an international or multistate territory and the company

meets the requirements of section 301.

(2)  The term shall not include any corporation,

partnership or other entity which meets any of the following: 

(i)  Is identified by any of the following North

American Industry Classification System code groups,

sectors or subsectors:

(A)  Industry group 7132 or 8131.

(B)  Sectors 44, 45, 61, 92 or 221, including

water and sewer services.

(C)  Subsector 722.

(ii)  Is delinquent in the payment of any taxes or

any other amounts to the Federal Government, the

Commonwealth or any political subdivision.

(iii)  Has filed for or has publicly announced its

intention to file for bankruptcy protection.

"Third party."  A third party as described under section 301. 

"Withholding tax."  The tax required to be withheld under

section 316 of the act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971.

CHAPTER 3

PROMOTING EMPLOYMENT ACROSS PENNSYLVANIA

Section 301.  Qualification.

In order to qualify for benefits under this act a qualified

company must relocate an existing business facility, office,

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department or other operation located outside this Commonwealth

and the jobs from the business facility, office, department or

other operation to this Commonwealth be located in this

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Commonwealth and meet the requirements under section 302(a). A

qualified company may meet the requirements of this section by

contracting with an unrelated third party to perform services as

follows:

(1)  the third party serves as the legal employer of the

new employees providing services to the qualified company;

(2)  the services are performed in this Commonwealth; and

(3)  the third party and the new employees are subject to

withholding tax.

Section 302.  Benefits.

(a)  Requirement.--A qualified company that enters into an

agreement must meet one of the following:

(1)  The business operations of the qualified company

must be located in a first, second or second class A county

and at least 15 new employees must be hired within two years

of the date the qualified company enters into the agreement.

(2)  The business operations of the qualified company

must be located in a third, fourth or fifth class county and

at least ten new employees must be hired within two years

from the date the qualified company enters into the

agreement.

(3)  The business operations of the qualified company

must be located in a sixth, seventh or eighth class county

and at least five new employees must be hired within two

years from the date the qualified company enters into the

agreement.

(b)  Normal retention.--A qualified company that meets the

requirements of subsection (a) shall be eligible to retain 95%

of the qualified company's withholding taxes for the new

employees for one of the following periods:

(1)  Five years, if the new employees are compensated at

a rate equal to at least 100% of the county average wage.

(2)  Six years, if the new employees are compensated at a

rate equal to at least 110% of the county average wage.

(3)  Seven years, if the new employees are compensated at

a rate equal to at least 120% of the county average wage.

(c)  High-impact project retention.--A qualified company that

meets the requirements of subsection (a) and engages in a high-

impact project shall be eligible to retain 95% of the qualified

company's withholding taxes for new employees for one of the

following periods:

(1)  Seven years, if the new employees are compensated at

a rate equal to at least 100% of the county average wage.

(2)  Eight years, if the new employees are compensated at

a rate equal to at least 110% of the county average wage.

(3)  Nine years, if the new employees are compensated at

a rate equal to at least 120% of the county average wage.

(4)  Ten years, if the new employees are compensated at a

rate equal to at least 140% of the county average wage.

(d)  Third party.--If a qualified company contracts with a

third party, the third party shall remit payments equal to the

amount of withholding taxes the qualified company is eligible to

retain under this section to the qualified company and shall

report the amount to the Department of Revenue as required under

section 304.

(e)  Employee Notification.--A qualified company or third

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party contracted by the qualified company shall provide a notice

to each employee that the qualified company is receiving

benefits under this act that explains the benefits received by

the qualified company under section 302 in the same time frame

and manner by which the employee receives his paycheck or pay

period deductions. The information provided to the employees

must be easily understandable and at the minimum explain that

the employee's withholding tax or taxes are being retained by

the qualified company pursuant to this act.

Section 303.  Application and review.

(a)  Application.--A qualified company that meets the

requirements of section 301 may apply to the department for

benefits under this act. The application shall be on a form

required by the department and shall include all of the

following:

(1)  The name and address of the applicant.

(2)  Documentation that the applicant is a qualified

company.

(3)  Documentation that the applicant meets the

requirements of section 301.

(4)  Documentation that the applicant does not owe any

delinquent taxes or any other amounts to the Federal

Government, this Commonwealth or any political subdivision.

(5)  An affidavit that the applicant has not filed for or

publicly announced its intention to file for bankruptcy

protection.

(6)  Any other information required by the department.

(b)  Review.--Within 30 days of receipt of the application,

the department, in conjunction with the Department of Revenue,

shall review the application and determine if the applicant is a

qualified company and that the requirements of section 301 have

been met.

(c)  Approval.--Upon approval of an application, the

department shall notify the applicant in writing and, under

section 304, enter into an agreement with the qualified company

for benefits under this act. The department may enter into an

agreement with a third party, or the third party may be a party

to the agreement between the qualified company and the

department.

(d)  Additional benefits.--A qualified company that is

receiving benefits under this act may apply to the department

for additional benefits if the qualified company meets the

requirements of section 301.

Section 304.  Agreement.

The agreement between the qualified company and the

department shall be entered into before any benefits may be

provided under this act. The agreement shall do all of the

following:

(1)  Specify the terms and conditions the qualified

company must comply with in order to receive benefits under

this act.

(2)  State that the department must certify all of the

following to the Department of Revenue every taxable year:

(i)  That the qualified company is eligible to

receive benefits under this act.

(ii)  The number of new employees hired by the

company during the taxable year.

(iii)  The amount of gross wages being paid to each

new employee.

(3)  Include any other information deemed necessary by

the department.

Section 305.  Optional remittance.

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(a)  Remittance.--The Department of Revenue may allow

qualified companies who are approved to receive benefits under

this act to remit 100% of employee withholding tax to the

Commonwealth and receive a rebate equivalent to the amount

authorized to be retained under section 302(b) and (c).

(b)  Fee.--The Department of Revenue may assess a fee of not

more than $15 per new employee of the qualified company whose

withholding tax is subject to this act.

(c)  Election.--A qualified company must elect the option

under subsection (a), if offered by the Department of Revenue,

prior to entering into the agreement established under section

304.

Section 305 306.  Recapture of withholding taxes.

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(a)  Compliance with terms and conditions.--If the qualified

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company fails to comply with the terms and conditions set forth

in the agreement or fails to comply with this act, the

department shall immediately terminate the agreement. The

qualified company shall not be entitled to any further benefits

provided for under this act and shall be required to remit to

the Commonwealth an amount equal to the aggregate withholding

taxes retained by the qualified company or remitted to the

qualified company by a third party under this act as of the date

the agreement is terminated.

(b)  Relocation.--If a qualified company relocates outside of

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this Commonwealth within the five-year period immediately

following the last year the company received benefits under this

act, the following apply:

(1)  If a qualified company relocates within three years

from the last year the company received benefits under this

act, an amount equal to 66% of the aggregate withholding

taxes retained by the qualified company or remitted to the

qualifying company by a third party under this act shall be

refunded to the Commonwealth.

(2)  If a qualified company relocates within three to

five years from the last year the company received benefits

under this act, an amount equal to 33% of the aggregate

withholding taxes retained by the qualified company or

remitted to the qualifying company by a third party under

this act shall be refunded to the Commonwealth.

(c)  Waiver.--The department may waive or modify recapture

requirements under subsection (b) if the department determines

that the qualified company's relocation was due to circumstances

beyond the control of the company, including, but not limited

to:

(1)  natural disaster; or

(2)  loss of a major supplier or market.

Section 307.  Quarterly report.

(a)  Filing.--Within 30 days from the end of each calendar

quarter for the duration of the agreement, a qualified company

shall file a quarterly report with the Department of Revenue on

a form prescribed by the Department of Revenue, in conjunction

with the department.

(b)  Contents.--The form under subsection (a) shall request

the following information:

(1)  The name and Employer Identification Number of the

qualified company.

(2)  The effective date of the agreement.

(3)  The reporting period end date.

(4)  All information relating to each new employee of the

qualified company, including:

(i)  The name of the new employee.

(ii)  The last four digits of the new employee's

Social Security number.

(iii)  The employee's start or hire date.

(iv)  The employee's termination date.

(v)  The wages paid for the quarter and the total

withholding taxes for each new employee.

(5)  The amount retained by the qualified company.

(6)  The amount remitted to the Department of Revenue.

(7)  Any other information required by the department.

Section 306 308.  Annual form.

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(a)  Development.--The Department of Revenue, in conjunction

with the department, shall develop a form which must be

completed annually by any qualified company or third party that

is subject to an agreement under section 304.

(b)  Contents.--The form shall request:

(1)  The amount of withholding tax being retained by the

qualified company or remitted by a third party to the

qualified company.

(2)  The number of new employees hired.

(3)  The wages of the new employees.

(4)  Any other information as required by the Department

of Revenue and the department.

(c)  Filing.--The qualified company or third party completing

the form shall file the form with the Department of Revenue as

prescribed by the Department of Revenue.

(d)  Confidentiality.--The contents of the completed form

shall be confidential except as provided under the act of March

4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, and

the act of February 14, 2008 (P.L.6, No.3), known as the Right-

to-Know Law.

Section 307 309.  Prohibitions.

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A qualified company claiming benefits under this act may not

do any of the following:

(1)  Participate in any program in which any portion of

the qualified company's new employees withholding taxes have

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been pledged to finance indebtedness or transferred to or for

the benefit of the qualified company.

(2)  Claim any payments grants or credits authorized by

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the General Assembly or any other program established by the

Commonwealth, if the payments or credits would be earned for

the hiring of new employees.

Section 310.  New employee credit.

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A new employee whose withholding tax is subject to this act

shall be credited 100% of the withholding tax withheld from the

new employee's paycheck as if the qualified company remitted

100% of the withholding tax to the Commonwealth.

Section 308 311.  Administration and regulation.

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The department, in conjunction with the Department of

Revenue, shall adopt guidelines necessary to implement and

administer this act.

Section 309 312.  Review.

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(a)  Duty.--The department shall conduct an annual review of

the activities undertaken by a qualified company under this act

to ensure that the qualified company is in compliance with this

act, any guidelines adopted under section 308 311 and any

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agreement.

(b)  Inspection.--The books and records concerning employment

and wages of any employees for which the qualified company or

third party has retained any withholding taxes shall be

available for inspection by the department at all times during

business hours. The department may request the Department of

Revenue to audit the qualified company or third party for

compliance with this act.

Section 310 313.  Report to General Assembly.

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(a)  Duty.--The department shall submit an annual report to

the General Assembly indicating the effectiveness of the tax

benefits provided by this act no later than March 15 following

the year in which the benefits were approved. The report shall

include the following information:

(1)  The names of all qualified companies and taxpayers

utilizing the benefit as of the date of the report.

(2)  The types of qualified companies utilizing this act.

(3)  The location of the qualified companies and the

location of the qualified companies' business operations in

this Commonwealth.

(4)  The number of new employees hired.

(5)  The wages paid for the new employees.

(6)  The annual amount of benefits provided under this

act.

(7)  The estimated net Commonwealth fiscal impact,

including the direct and indirect new Commonwealth taxes

derived from the new employees hired.

(8)  An estimate of the multiplier effect on the

Commonwealth's economy of the benefits received under this

act.

(b)  Confidentiality.--Notwithstanding any law providing for

the confidentiality of tax records, the information contained in

the report shall be public information. The report shall include

any recommendations for changes in the calculation or

administration of the benefit.

CHAPTER 51

MISCELLANEOUS PROVISIONS

Section 5101.  Effective date.

This act shall take effect in 60 days.