1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," providing for a natural gas vehicle tax credit.

11The General Assembly of the Commonwealth of Pennsylvania
12hereby enacts as follows:

13Section 1. The act of March 4, 1971 (P.L.6, No.2), known as 
14the Tax Reform Code of 1971, is amended by adding an article to
15read:

16ARTICLE XIX-B

17NATURAL GAS VEHICLE TAX CREDIT

18Section 1901-B. Scope of article.

19This article provides for a natural gas vehicle tax credit.

20Section 1902-B. Definitions.

1The following words and phrases when used in this article
2shall have the meanings given to them in this section unless the
3context clearly indicates otherwise:

4"Department." The Department of <-Revenue Community and
5Economic Development of the Commonwealth.

6"Incremental cost." The difference between the cost of a
7natural gas vehicle and the cost of the same or similar motor
8vehicle, manufactured to operate exclusively on gasoline or
9diesel fuel.

<-10"Internal Revenue Code." The Internal Revenue Code of 1986
11(Public Law 99-514, 26 U.S.C. § 1 et seq.).

12"Natural gas vehicle." A motor vehicle that has a gross
13vehicle weight of at least 33,000 pounds, is produced by an
14original equipment manufacturer and operates:

15(1) on 100% compressed natural gas fuel; or

16(2) on 90% or more liquefied natural gas fuel and 10% or
17less on gasoline or diesel fuel.

18"Original equipment manufacturer." An entity which
19originally manufactures a natural gas vehicle for sale.

20"Pass-through entity." A partnership as defined in section
21301(n.0) or a Pennsylvania S corporation as defined in section
22301(n.1).

23"Qualified expense." The expense paid by a taxpayer for a
24natural gas vehicle.

25"Qualified tax liability." The liability for taxes imposed
26under Article III, IV or VI. The term shall not include any tax
27withheld by an employer from an employee under Article III.

<-28"Secretary." The Secretary of Revenue of the Commonwealth.

29"Tax credit." The natural gas vehicle tax credit established
30by this article.

1"Taxpayer." An entity subject to tax under Article III, IV
2or VI. The term shall include the shareholder of a Pennsylvania
3S corporation that receives a research and development tax
4credit.

<-5Section 1903-B. Credit for purchase of natural gas vehicle.

6(a) General rule.--A taxpayer who incurs a qualified expense
7in a taxable year may apply for a tax credit as provided in this
8article. By September 15, a taxpayer must submit an application
9to the department for a qualified expense incurred in the
10taxable year that ended in the prior calendar year.

11(b) Amount.--A taxpayer that is qualified under subsection
12(a) shall receive a tax credit for the taxable year in the
13amount of, for each qualified expense, the lesser of 50% of the
14incremental cost of the natural gas vehicle or $12,500.

15(c) Notification from department.--By December 15 of the
16calendar year following the close of the taxable year during
17which the qualified expense was incurred, the department shall
18notify the taxpayer of the amount of the taxpayer's tax credit
19approved by the department.

<-20Section 1903-B. Eligibility for and amount of tax credit.

21A taxpayer who incurs a qualified expense in a taxable year
22may apply to the department for a tax credit as provided in this
23article. The amount of the tax credit may not exceed the lesser
24of 50% of the incremental cost of the natural gas vehicle or
25$12,500.

26Section 1904-B. Application and approval of tax credit.

27(a) Application.--By September 15, a taxpayer must submit an
28application to the department for each qualified expense
29incurred in the taxable year that ended in the prior calendar
30year. The application must be on a form required by the

1department and shall include all of the following information:

2(1) The name and address of the applicant.

3(2) Documentation that the taxpayer is subject to tax
4under Article III, IV or VI for the taxable year the
5applicant is claiming the tax credit.

6(3) Documentation of the qualified expense.

7(4) Any other information required by the department.

8(b)  Review and approval.--

9(1) The department shall review and approve or
10disapprove the applications received under subsection (a) by
11December 15 of the same calendar year as the application.

12(2) If the application is approved, the department shall
13notify the taxpayer of the amount of the tax credit approved
14and issue the qualified taxpayer a tax credit certificate
15within 15 days of the approval.

16Section <-1904-B 1905-B. Carryover, carryback, refund and
17assignment of credit.

18(a) The following shall apply to tax credits:

19(1) If the taxpayer cannot use the entire amount of the
20tax credit for the taxable year in which the tax credit is
21first approved, then the excess may be carried over to
22succeeding taxable years and used as a credit against the
23qualified tax liability of the taxpayer for those taxable
24years.

25(2) Each time that the tax credit is carried over to a
26succeeding taxable year, it is to be reduced by the amount
27that was used as a credit during the immediately preceding
28taxable year.

29(3) The tax credit may be carried over and applied to
30succeeding taxable years for no more than five taxable years

1following the first taxable year for which the taxpayer was
2entitled to claim the credit.

3(4) A tax credit approved by the department for a
4qualified expense in a taxable year first shall be applied
5against the taxpayer's qualified tax liability for the
6current taxable year as of the date on which the tax credit
7was approved before the tax credit is applied against any tax
8liability under paragraph (1).

9(5) A taxpayer may not carry back or obtain a refund of
10an unused tax credit.

11(6) A taxpayer, upon application to and approval by the
<-12Department of Community and Economic Development department,
13may sell or assign, in whole or in part, a tax credit granted
14to the taxpayer. The <-Department of Community and Economic
15Development <-department shall establish guidelines for the
16approval of applications under this paragraph.

17(7) The purchaser or assignee of a portion of a tax
18credit under paragraph (6) shall immediately claim the credit
19in the taxable year in which the purchase or assignment is
20made. The amount of the tax credit that a purchaser or
21assignee may use against any one qualified tax liability may
22not exceed <-100% 75% of the qualified tax liability for the
23taxable year. The purchaser or assignee may not carry over,
24carry back, obtain a refund of or assign the tax credit. The
25purchaser or assignee shall notify the department of the
26seller or assignor of the tax credit in compliance with
27procedures specified by the department.

28Section 1905-B. Application of Internal Revenue Co<-de.

29The provisions of section 41 of the Internal Revenue Code and
30the regulations promulgated regarding those provisions shall

1apply to the department's interpretation and administration of
2the credit provided by this article. References to the Internal
3Revenue Code shall mean the sections of the Internal Revenue
4Code as existing on any date of interpretation of this article.
5However, if those sections of the Internal Revenue Code
6referenced in this article are repealed or terminated,
7references to the Internal Revenue Code shall mean those
8sections last having full force and effect. If, after repeal or
9termination, the Internal Revenue Code sections are revised or
10reenacted, references in this article to Internal Revenue Code
11sections shall mean those revised or reenacted sections.

12Section 1906-B 1905-B. (Reserved).

13Section 1907-B 1906-B. Time limitations.

14A taxpayer is not entitled to a tax credit for qualified
15expenses incurred in taxable years ending after December 31,
162020. The termination date in section 41(h) of the Internal
17Revenue Code does not apply to a taxpayer who is eligible for
18the tax credit under this article for the taxable year in which
19the qualified expense is incurred.

<-20Section 1906-B. Shareholder, owner or member pass-through.

21(a) Shareholder entitlement.--If a Pennsylvania S
22corporation does not have an eligible tax liability against
23which the tax credit may be applied, a shareholder of the
24Pennsylvania S corporation shall be entitled to a tax credit
25equal to the tax credit determined for the Pennsylvania S
26corporation for the taxable year multiplied by the percentage of
27the Pennsylvania S corporation's distributive income to which
28the shareholder is entitled.

29(b)  Pass-through entity entitlement.--If a pass-through
30entity other than a Pennsylvania S corporation does not have tax

1liability against which the tax credit may be applied, an owner
2or member of the pass-through entity shall be entitled to a tax
3credit equal to the tax credit determined for the pass-through
4entity for the taxable year multiplied by the percentage of the
5pass-through entity's distributive income to which the owner or
6member is entitled.

7(c)  Additional credit.--

8(1)  Except as provided under paragraph (2), the tax
9credit provided under subsection (a) or (b) shall be in
10addition to any other tax credit to which a shareholder,
11owner or member of a pass-through entity is otherwise
12entitled under this article.

13(2)  A pass-through entity and a shareholder, owner or
14member of a pass-through entity shall not claim a tax credit
15under this article for the same qualified investment.

16Section 1908-B 1907-B. Limitation on <-tax credits.

17(a) General rule.--<-The total amount of credits approved by
18the department shall not exceed:

19(1) In fiscal year 2013-2014, $30,000,000.

20(2) In fiscal year 2014-2015, $30,000,000.

21(3) In fiscal year 2015-2016, $30,000,000. <-In granting
22tax credit certificates under this article, the department
23shall not grant more than:

24(1) Thirty million dollars in tax credit certificates in
25any fiscal year.

26(2) One million dollars in tax credit certificates to a
27single taxpayer in any fiscal year.

28(b) Prorata distribution.--If the total amount of tax
29credits applied for by all taxpayers, exceeds the amount
30allocated for those tax credits, then the tax credit to be

1received by each applicant shall be the product of the allocated
2amount multiplied by the quotient of the tax credit applied for
3by the applicant divided by the total of all tax credits applied
4for by all applicants, the algebraic equivalent of which is:

5taxpayer's tax credit = amount allocated for those
6credits X (tax credit applied for by the applicant/total
7of all tax credits applied for by all applicants).

<-8(c) Applicability.--A taxpayer shall not be entitled to a
9tax credit under this article for taxable years ending after
10December 31, 2016, unless the tax credit is permitted under
11section 1905-B. The termination date in section 41(h) of the
12Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
1341(h)) does not apply to a taxpayer who is eligible for the tax
14credit under this article for the taxable year in which the
15qualified expense is incurred.

16Section 1908-B. Repayment and penalties.

17(a) Repayment.--The total amount of tax credit shall be
18repaid if a taxpayer does any of the following:

19(1) Claims one or more tax credits and fails to meet any
20of the criteria required under section 1904-B.

21(2) Sells the vehicle within five years from the date of
22issuance of the tax credit certificate.

23(b) Penalty.--If it is determined that the failure or error
24under subsection (a) occurred as a result of fraud perpetrated
25by the taxpayer, the taxpayer, in addition to being required to
26repay the amount of all tax credits claimed, shall be subject to
27other appropriate penalties and remedies as may be provided in
28this act or in other applicable law.

29Section 1909-B.  Report.

30No later than June 1, 2014, and each June 1 thereafter, the

1department shall submit a report on the natural gas vehicle tax
2credits granted under this article. The report shall include the
3names of taxpayers who utilized the credit as of the date of the
4report and the amount of credits approved. The report may
5include recommendations for changes in the calculation or
6administration of the natural gas vehicle tax credit and other
7information as the department deems appropriate. The report
8shall be submitted to all of the following:

9(1) The chairman and minority chairman of the
10Appropriations Committee of the Senate.

11(2) The chairman and minority chairman of the
12Appropriations Committee of the House of Representatives.

13(3) The chairman and minority chairman of the Finance
14Committee of the Senate.

15(4) The chairman and the minority chairman of the
16Finance Committee of the House of Representatives.

17Section 1910-B. Guidelines.

18The department, in conjunction with the Department of
19Revenue, shall promulgate guidelines necessary for the
20implementation and administration of this article.

21Section 2. This act shall take effect in 60 days.