THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY SMUCKER, ERICKSON, ARGALL, RAFFERTY, COSTA, ALLOWAY, FONTANA, WASHINGTON, BOSCOLA, YUDICHAK, WAUGH, YAW, SCHWANK, FERLO, PICCOLA, BROWNE AND BLAKE, JUNE 26, 2011

SENATOR BRUBAKER, FINANCE, AS AMENDED, OCTOBER 26, 2011   

AN ACT

Providing tax incentives and credits for rehabilitation of

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blighted historic structures.

Providing tax credits for the rehabilitation of historic

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structures.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

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

Rehabilitation Investment Incentive Act.

Section 2.  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:

"Commission."  The Pennsylvania Historical and Museum

Commission.

"DCED."  The Department of Community and Economic Development

of the Commonwealth.

"Department."  The Department of Revenue of the Commonwealth.

"Part 2."  Part 2 of the application for a tax credit

provided for under section 47 of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 47), or any future similar

application requirement provided for under Federal law.

"Qualified expenditures."  The costs and expenses incurred by

a qualified taxpayer in the restoration of a qualified historic

structure pursuant to a qualified rehabilitation plan which are

defined as qualified rehabilitation expenditures under section

47(c)(2) of the Internal Revenue Code of 1986 (Public Law

99-514, 26 U.S.C. § 47(c)(2)).

"Qualified historic structure."  A commercial building

located in Pennsylvania that is defined as a certified historic

structure under section 47(c)(3) of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 47(c)(3)).

"Qualified rehabilitation plan."  A project that is approved

by the Pennsylvania Historical and Museum Commission as being

consistent with the standards for rehabilitation and guidelines

for rehabilitation of historic buildings as adopted by the

United States Secretary of the Interior.

"Qualified tax liability."  Tax liability imposed on a

taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV of

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

Code of 1971, excluding any tax withheld by an employer under

Article III of the Tax Reform Code of 1971.

"Qualified taxpayer."  The owner of a qualified historic

structure or any other person who may qualify for the Federal

rehabilitation tax credit allowable under section 47 of the

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §

47).

Section 3.  Credit allowed.

For all taxable years commencing after December 31, 2011,

there shall be allowed a tax credit against qualified tax

liability in an amount equal to 25% of qualified expenditures

incurred by a qualified taxpayer pursuant to a qualified

rehabilitation plan.

Section 4.  Limitations on credits.

(a)  Aggregation of credits.--Credits may not exceed an

aggregate of $10,000,000 in any fiscal year in which tax credits

are allowed.

(b)  Qualified historic structure.--Credits allowed to any

qualified historic structure owner shall not exceed $500,000 in

any fiscal year in which tax credits shall be allowed.

Section 5.  Excess of credits.

(a)  Seven-year carryover.--If the amount of the credits

exceeds the total of a qualified taxpayer's qualified tax

liability, the excess amount shall be carried over for offset

against such taxes in the next succeeding year or years until

the seventh taxable year succeeding the taxable year in which

the qualified rehabilitation plan was placed in service.

(b)  Application.--A tax credit certificate issued by the

department shall first be applied against the applicant's

qualified tax liability for the current taxable year as of the

date on which the tax credit certificate was issued before the

tax credit can be applied against any tax liability under

subsection (a).

(c)  No carryback or refund.--An applicant is not entitled to

carry back or obtain a refund of all or any portion of an unused

tax credit allowed to the taxpayer under this chapter.

Section 6.  Pass-through entities.

If a qualified taxpayer is a corporation having an election

in effect under Subchapter S of the Federal Internal Revenue

Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), a

partnership or a limited liability company, the credit provided

under this act shall be claimed by the shareholders of such

corporation, the partners of such partnership or the members of

such limited liability company, pro rata, in the same manner as

the shareholders, partners or members account for the

proportionate share of the income and loss of the corporation,

partnership or limited liability company, or as the

shareholders, partners or members may agree pursuant to an

executed agreement among the shareholders, partners or members

documenting an alternative distribution method, a copy of which

shall be furnished to the department.

Section 7.  Transfer of credits.

(a)  General rule.--Any person, hereafter designated the

assignor, may sell, assign, convey or otherwise transfer tax

credits allowed or earned under section 3. The taxpayer or

taxpayers acquiring credits, hereafter designated the assignee,

may use the amount of the acquired credits to offset 100% of its

qualified tax liability for either the taxable year in which the

qualified rehabilitation plan was first placed in service or for

the taxable year in which the credit was acquired.

(b)  Carryover of seven years.--Unused credits may be carried

forward for seven years following the taxable year in which the

acquisition was made.

(c)  Written agreement.--The assignor shall enter into a

written agreement with the assignee establishing the terms and

conditions of the agreement and shall perfect such transfer by

notifying the department and the commission within 90 days of

the effective date of the transfer and shall provide such

information as may be required by the department or the

commission to administer and carry out the provisions of this

section.

Section 8.  Applications; allocation of credits.

(a)  Joint approval by department and commission required.--

Applications for credits shall be made jointly to DCED and the

commission, in such form as DCED and the commission shall

jointly approve. The commission shall be responsible for

reviewing the applications to determine whether the project

proposed qualifies for a credit under section 3. In the event

that the aggregate amount proposed to be claimed in any tax year

and tentatively approved by the commission exceeds the

limitation set forth in section 4, DCED shall be responsible for

allocating the credits among the applicants. In making such

allocation, DCED shall give priority to applications for

qualified historic structures so as to achieve equitable

geographic distribution of the credits throughout this

Commonwealth.

(b)  Application deadline.--Applications shall be filed on or

before February 1 of each year for which tax credits are

allowed.

(c)  Action on application.--The commission shall complete

its review of the application no later than April 1 or 30 days

following receipt of a complete Part 2 application, whichever

shall occur later, and shall promptly notify the applicant

whether the application has been tentatively approved or the

application has been disapproved and, if disapproved, the

reasons for disapproval. In the event the aggregate amount of

credits claimed on applications timely received by the

commission does not exceed the limitations set forth in section

4, approval by the commission shall be deemed final, and the

commission shall issue a certificate to the applicant to that

effect. If the aggregate amount of credits reflected in

applications tentatively approved by the commission exceeds the

limitations set forth in section 4, any approval by the

commission shall be deemed tentative, and final approval may be

granted only by DCED. Upon final approval by DCED, DCED shall

issue a certificate to the applicant to that effect.

(d)  Finding.--Before an application is approved, the

department must make a finding that the applicant has filed all

required State tax reports and returns for all applicable

taxable years and paid any balance of State tax due as

determined by assessment or final determination by the

department or court of law upon appeal from a determination of

the department.

Section 9.  Fees.

DCED and the commission shall agree upon a schedule of fees

for applications which shall not exceed $5,000 for an

application. The proceeds of fees shall be applied to offset the

costs of administration of the program in such manner as DCED

and the commission agree.

Section 10.  Certificates.

The developer of a project for which a certificate has been

issued shall notify the commission when the project has been

placed in service. Upon verifying that the project has been

placed in service and was allowed a Federal credit, the

commission shall endorse the certificate. The certificate shall

state the amount of the credit claimed. The developer or an

assignee of the credit shall attach a copy of the certificate,

as so endorsed, together with any other documentation specified

by the department to any tax return on which the credit or

portion thereof is claimed.

Section 11.  Repeals.

(1)  The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate the provisions of

this act.

(2)  Section 6104(d.2)(2) of the act of July 13, 2005

(P.L.213, No.45), entitled "An act amending Title 27

(Environmental Resources) of the Pennsylvania Consolidated

Statutes, further providing for definitions, for allocation

of Environmental Stewardship Fund and for administrative

expenses; deleting provisions relating to environmental

infrastructure grants; providing for fee deposits;

authorizing indebtedness for environmental initiatives;

authorizing sale of bonds, temporary financing and debt

retirement; further providing for disposal fee for municipal

waste landfills and deposit of disposal fee; deleting certain

sunset provisions; and making a repeal relating to the

Hazardous Sites Cleanup Fund," is repealed.

Section 21.  Effective date.

This act shall take effect immediately.

Section 1.  Short title.

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

Preservation Incentive Act.

Section 2.  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:

"Commission."  The Pennsylvania Historical and Museum

Commission.

"Department."  The Department of Revenue of the Commonwealth.

"Qualified expenditures."  The costs and expenses incurred by

a qualified taxpayer in the restoration of a qualified historic

structure pursuant to a qualified rehabilitation plan and which

are defined as qualified rehabilitation expenditures under

section 47(c)(2) of the Internal Revenue Code of 1986 (Public

Law 99-514, 26 U.S.C. § 47(c)(2)).

"Qualified historic structure."  A commercial building that

qualifies as a certified historic structure under section 47(c)

(3) of the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 47(c)(3)).

"Qualified rehabilitation plan."  A project that is approved

by the Pennsylvania Historical and Museum Commission as being

consistent with the standards for rehabilitation and guidelines

for rehabilitation of historic buildings as adopted by the

United States Secretary of the Interior.

"Qualified tax liability."  Tax liability imposed on a

taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV of

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

Code of 1971, excluding any tax withheld by an employer under

Article III of the Tax Reform Code of 1971.

"Qualified taxpayer."  Any natural person, corporation,

business trust, limited liability company, partnership, limited

liability partnership, association or any other form of legal

business entity that:

(1)  Is subject to a tax imposed under Article III, IV,

VI, VII, VIII, IX, XI or XV of the act of March 4, 1971

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

excluding any tax withheld by an employer under Article III

of the Tax Reform Code of 1971.

(2)  Owns a qualified historic structure.

Section 3.  Tax credit certificates.

(a)  Application.--

(1)  A qualified taxpayer may apply to the Department of

Community and Economic Development for a tax credit

certificate under this section.

(2)  The application shall be on the form required by the

Department of Community and Economic Development.

(3)  The application shall be filed on or before February

1 for qualified expenditures incurred in the prior calendar

year.

(b)  Review, recommendation and approval.--

(1)  The Department of Community and Economic Development

shall forward applications received under this section to the

commission for review.

(2)  The commission shall determine the amount of the

qualified expenditures incurred by the taxpayer in the prior

calendar year.

(3)  If the commission determines that the qualified

taxpayer has incurred qualified expenditures, the commission

may recommend approval of the application and shall notify

the Department of Community and Economic Development of its

recommendation within 30 days following receipt of the

completed application by the commission.

(4)  Upon receipt of the commission's recommendation for

approval, the Department of Community and Economic

Development:

(i)  may approve the application; and

(ii)  by April 1, shall notify the applicant and the

commission of its action.

(5)  If the Department of Community and Economic

Development approves the application, it shall issue the

qualified taxpayer a tax credit certificate by April 1. A tax

credit certificate issued under this section shall not exceed

25% of qualified expenditures determined by the commission to

have been incurred by the qualified taxpayer in the prior

calendar year.

(6)  In granting tax credit certificates under this act,

the Department of Community and Economic Development:

(i)  Shall not grant more than $10,000,000 in tax

credit certificates in any fiscal year.

(ii)  Shall not grant more than $500,000 in tax

credit certificates to a single qualified taxpayer in any

fiscal year in which the approval of all recommendations

received from the commission would cause the limit in

subparagraph (i) to be exceeded.

(iii)  Shall take into account the geographical

distribution of tax credit certificates when taking

action to implement the limit in subparagraph (i).

Section 4.  Claiming the credit.

Upon presenting a tax credit certificate to the department,

the qualified taxpayer may claim a tax credit against the

qualified tax liability of the qualified taxpayer.

Section 5.  Carryover, carryback and assignment of credit.

(a)  General rule.--If a qualified taxpayer cannot use the

entire amount of the tax credit for the taxable year in which

the tax credit is first approved, then the excess may be carried

over to succeeding taxable years and used as a credit against

the qualified tax liability of the qualified taxpayer for those

taxable years. Each time the tax credit is carried over to a

succeeding taxable year, it shall be reduced by the amount that

was used as a credit during the immediately preceding taxable

year. The tax credit provided by this act may be carried over

and applied to succeeding taxable years for not more than seven

taxable years following the first taxable year for which the

qualified taxpayer was entitled to claim the credit.

(b)  Application.--A tax credit certificate received by the

department in a taxable year first shall be applied against the

qualified taxpayer's qualified tax liability for the current

taxable year as of the date on which the credit was issued

before the tax credit can be applied against any qualified tax

liability under subsection (a).

(c)  No carryback or refund.--A qualified taxpayer may not

carry back or obtain a refund of all or any portion of an unused

tax credit granted to the qualified taxpayer under this act.

(d)  Sale or assignment.--The following shall apply:

(1)  A qualified taxpayer, upon application to and

approval by the Department of Community and Economic

Development, may sell or assign, in whole or in part, a tax

credit granted to the qualified taxpayer under this act.

(2)  Before an application is approved, the department

must find that the applicant has filed all required State tax

reports and returns for all applicable taxable years and paid

any balance of State tax due as determined at settlement,

assessment or determination by the department.

(3)  Notwithstanding any other provision of law, the

department shall settle, assess or determine the tax of an

applicant under this subsection 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.

(e)  Purchasers and assignees.--The purchaser or assignee of

all or a portion of a tax credit obtained under section 3 shall

immediately claim the credit in the taxable year in which the

purchase or assignment is made. The purchaser or assignee may

not carry forward, carry back or obtain a refund of or sell or

assign the tax credit. The purchaser or assignee shall notify

the department of the seller or assignor of the tax credit in

compliance with procedures specified by the department.

Section 6.  Pass-through entity.

(a)  General rule.--If a pass-through entity has any unused

tax credit under section 5, 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 shareholder, member or partner is entitled.

(b)  Limitation.--A pass-through entity and a shareholder,

member or partner of a pass-through entity shall not claim the

credit under subsection (a) for the same qualified expenditures.

(c)  Application.--A shareholder, member or partner of a

pass-through entity to whom a credit is transferred under

subsection (a) shall immediately claim the credit in the taxable

year in which the transfer is made. The shareholder, member or

partner may not carry forward, carry back, obtain a refund of or

sell or assign the credit.

Section 7.  Administration.

The Department of Community and Economic Development, the

commission and the department shall jointly develop written

guidelines for the implementation of the provisions of this act.

Section 8.  Report to General Assembly.

(a)  General rule.--Not later than September 1 of each year

after the first year in which tax credit certificates are issued

by the Department of Community and Economic Development, the

Secretary of Community and Economic Development and the

Secretary of Revenue shall submit a report to the General

Assembly summarizing the tax credit certificates awarded and the

tax credits claimed under this act. The report shall be

submitted to the chairman and minority chairman of the

Appropriations and Finance Committees of the Senate and the

chairman and minority chairman of the Appropriations and Finance

Committees of the House of Representatives. The report shall

include all awards of tax credit certificates, claims for tax

credits, sale or assignment of credits and tax credit

utilization that have occurred since the conclusion of the

period covered by the prior year's report through the June 30

immediately preceding the date of the report. The report shall

include:

(1)  The name of each qualified taxpayer that has been

awarded a tax credit certificate.

(2)  The name of each qualified taxpayer that has claimed

a credit and the amount of the credit claimed by the

qualified taxpayer.

(3)  The name of each qualified taxpayer that has

received approval to sell or assign a credit and the amount

of the credit sold or assigned by the qualified taxpayer.

(4)  The name of each taxpayer who has acquired a credit

by sale or assignment, the amount of the credit acquired by

sale or assignment by the taxpayer, the amount of the credit

acquired by sale or assignment that has been utilized by the

taxpayer and the taxes and tax years against which the

taxpayer utilized the credit.

(b)  Public information.--Notwithstanding any law 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 publicly accessible Internet

website.

Section 9.  Repeal.

(a)  Declaration.--The General Assembly declares that the

repeal under subsection (b) is necessary to effectuate the

provisions of this act.

(b)  Specific law repealed.--The provisions of 27 Pa.C.S. §

6104(d.2)(2) are repealed.

Section 10.  Effective date.

This act shall take effect July 1, 2012, or immediately,

whichever is later.