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," in sales tax, further providing for local 
11receivers of use tax; in personal income tax, further 
12providing for definitions and for taxability of partners; 
13providing for tax treatment determined at partnership level 
14and for tax imposed at partnership level; further providing 
15for income of a Pennsylvania S corporation, for income taxes 
16imposed by other states, for general rule, for return of 
17Pennsylvania S corporation and for requirements concerning 
18returns, notices, records and statements; in corporate net 
19income tax, further providing for definitions, for imposition 
20of tax and for reports and payment of tax; and, in 
21inheritance tax, further providing for exemption for poverty.

22The General Assembly of the Commonwealth of Pennsylvania
23hereby enacts as follows:

24Section 1. Section 226 of the act of March 4, 1971 (P.L.6,
25No.2), known as the Tax Reform Code of 1971, is repealed:

26[Section 226. Local Receivers of Use Tax.--Beginning on and 

1after the effective date of this article, in every county, 
2except in counties of the first class, the county treasurer is 
3hereby authorized to receive use tax due and payable under the 
4provisions of this article from any person other than a 
5licensee. The receiving of such taxes shall be pursuant to rules 
6and regulations promulgated by the department and upon forms 
7furnished by the department. Each county treasurer shall remit 
8to the department all use taxes received under the authority of 
9this section minus the costs of administering this provision not 
10to exceed one per cent of the amount of use taxes received, 
11which amount shall be retained in lieu of any commission 
12otherwise allowable by law for the collection of such tax.]

13Section 2. Section 301(n.1) and (o.3) of the act, amended
14July 6, 2006 (P.L.319, No.67), are amended and the section is
15amended by adding subsections to read:

16Section 301. Definitions.--Any reference in this article to
17the Internal Revenue Code of 1986 shall mean the Internal
18Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.),
19as amended to January 1, 1997, unless the reference contains the
20phrase "as amended" and refers to no other date, in which case
21the reference shall be to the Internal Revenue Code of 1986 as
22it exists as of the time of application of this article. The
23following words, terms and phrases when used in this article
24shall have the meaning ascribed to them in this section except
25where the context clearly indicates a different meaning:

26* * *

27(d.2) "Corporate item" means an item, including income, gain
28or loss, deduction or credit determined at the Pennsylvania S
29corporation level, which is required to be taken into account
30for a Pennsylvania S corporation's taxable year.

1* * *

2(n.2) "Partnership item" means an item, including income,
3gain or loss, deduction or credit determined at the partnership
4level, which is required to be taken into account for a
5partnership's taxable year.

6[(n.1)] (n.3) "Pennsylvania S corporation" means any small
7corporation as defined in section 301(s.2) which does not have a
8valid election under section 307 in effect. A qualified
9Subchapter S subsidiary owned by a Pennsylvania S corporation
10shall be treated as a Pennsylvania S corporation without regard
11to whether an election under section 307 has been made with
12respect to the subsidiary.

13* * *

14(o.3) "Publicly traded partnership" means an entity defined
15under section 7704 of the Internal Revenue Code of 1986 (Public
16Law 99-514, 26 U.S.C. § 7704) with equity securities registered
17with the Securities and Exchange Commission under section 12 of
18the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. §
1978a).

20[(o.3)] (o.4) "Qualified Subchapter S subsidiary" means a
21domestic or foreign corporation which for Federal income tax
22purposes is treated as a qualified Subchapter S subsidiary, as
23defined in section 1361(b)(3)(B) of the Internal Revenue Code of
241986 (Public Law 99-514, 26 U.S.C. § 1361), as amended to
25January 1, 2005.

26Section 3. Section 306 of the act, amended June 22, 2001
27(P.L.353, No.23), is amended to read:

28Section 306. Taxability of Partners.--[A] Except as provided 
29under section 306.2, a partnership as an entity shall not be
30subject to the tax imposed by this article, but the income or

1gain of a member of a partnership in respect of said partnership
2shall be subject to the tax and the tax shall be imposed on his
3share, whether or not distributed, of the income or gain
4received by the partnership for its taxable year ending within
5or with the member's taxable year.

6Section 4. The act is amended by adding sections to read:

7Section 306.1. Tax Treatment Determined at Partnership
8Level.--The classification or character of a partnership item
9shall be determined at the partnership level. This section shall
10not prohibit the department from adjusting a partner's return.

11Section 306.2. Tax Imposed at Partnership Level.--(a) A
12partnership underreporting reportable income by more than one
13million dollars ($1,000,000) shall be jointly liable with each
14partner for any part of a deficiency resulting from the
15treatment of a partnership item by a partner on that partner's
16return in a manner that is consistent with the treatment of that
17partnership item on the partnership return. If the tax is paid
18by the partner, the department may not collect the tax from the
19partnership. If the tax is paid by the partnership, the
20department may not collect the tax from a partner.

21(b) Subsection (a) shall apply to the following
22partnerships:

23(1) A partnership which has eleven or more individual
24partners.

25(2) A partnership which has at least one partner which is a
26corporation, limited liability company, partnership or trust.

27(3) A partnership which has only individual partners and
28which elects to be subject to this subsection. The election must
29be included on the partnership return to be filed with the
30department.

1(c) This section shall not apply to a publicly traded
2partnership.

3(d) Nothing under this section shall require one partner to
4be liable for the payment of a tax liability of another partner.

5(e) Appeals involving a deficiency assessed under this
6section may only be pursued by the partnership and a
7reassessment or settlement of tax liability shall be binding on
8the partners.

9Section 5. Section 307.8(a) of the act, amended May 7, 1997
10(P.L.85, No.7), is amended and the section is amended by adding
11a subsection to read:

12Section 307.8. Income of a Pennsylvania S Corporation.--(a)
13A Pennsylvania S corporation shall not be subject to the tax
14imposed by this article, except as provided under subsection 
15(f), but the shareholders of the Pennsylvania S corporation
16shall be subject to the tax imposed under this article as
17provided in this article.

18* * *

19(f) (1) A Pennsylvania S corporation underreporting
20reportable income by more than one million dollars ($1,000,000)
21shall be jointly liable with each shareholder for any part of a
22deficiency resulting from the treatment of a corporate item by
23any shareholder on the shareholder's return in a manner that is
24consistent with the treatment of the corporate item on the
25return of the Pennsylvania S corporation. If the tax is paid by
26the shareholder, it may not be be collected from the
27corporation.

28(2) Paragraph (1) shall apply to the following Pennsylvania
29S corporations:

30(i) A Pennsylvania S corporation which has eleven or more

1shareholders.

2(ii) A Pennsylvania S corporation which elects to be subject
3to this subsection. The election must be included on the
4Pennsylvania S corporation return to be filed with the
5department.

6(3) Nothing under this section shall require one shareholder
7to be liable for the payment of a tax liability of another
8shareholder.

9(4) Appeals involving the deficiency assessed under this
10section may be filed only by the Pennsylvania S corporation and
11a reassessment or settlement of tax liability shall be binding
12on the shareholders.

13Section 6. Section 314(a) of the act, amended December 23,
141983 (P.L.370, No.90), is amended to read:

15Section 314. Income Taxes Imposed by Other States.--(a) A
16resident taxpayer before allowance of any credit under section
17312 shall be allowed a credit against the tax otherwise due
18under this article for the amount of any income tax, wage tax or
19tax on or measured by gross or net earned or unearned income
20imposed on him or on a Pennsylvania S corporation in which he is
21a shareholder, to the extent of his pro rata share thereof
22determined in accordance with section 307.9, by another state
23with respect to income which is also subject to tax under this
24article. For purposes of this subsection, the term "state" shall 
25only include a state of the United States and the District of 
26Columbia.

27* * *

28Section 7. Section 324 of the act, amended June 22, 2001
29(P.L.353, No.23), is amended to read:

30Section 324. General Rule.--(a) When a partnership, estate, 

1trust or Pennsylvania S corporation receives income from sources
2within this Commonwealth for any taxable year and any portion of
3the income is allocable to a nonresident partner, beneficiary,
4member or shareholder thereof, the partnership, estate, trust or
5Pennsylvania S corporation shall pay a withholding tax under
6this section at the time and in the manner prescribed by the
7department; however, notwithstanding any other provision of this
8article, all such withholding tax shall be paid over on or
9before the fifteenth day of the fourth month following the end
10of the taxable year.

11(b) This section shall not apply to any publicly traded
12partnership as defined under section 7704 of the Internal
13Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 7704) with
14equity securities registered with the Securities and Exchange
15Commission under section 12 of the Securities Exchange Act of
161934 (48 Stat. 881, 15 U.S.C. § 78a).

17Section 8. Section 330.1 of the act, amended or added
18December 23, 1983 (P.L.370, No.90) and July 13, 1987 (P.L.325,
19No.59), is amended to read:

20Section 330.1. Return of Pennsylvania S Corporation.--(a)
21Every Pennsylvania S corporation shall make a return for each
22taxable year, stating specifically all items of gross income and
23deductions, the names and addresses of all persons owning stock
24in the corporation at any time during the taxable year, the
25number of shares of stock owned by each shareholder at all times
26during the taxable year, the amount of money and other property
27distributed by the corporation during the taxable year to each
28shareholder, the date of each distribution, each shareholder's
29pro rata share of each item of the corporation for the taxable
30year and such other information as the department may require.

1(b) The return shall be filed on or before thirty days after
2the date when the corporation's Federal income tax return is
3due.

4(c) Every Pennsylvania S corporation shall also submit to
5the department a true copy of the income tax return filed with
6the Federal Government at the time the return required under
7subsection (a) is filed.

8(d) Each Pennsylvania S corporation required to file a
9return under subsection (a) for a taxable year shall, on or
10before the day on which the return for the taxable year was
11filed, furnish to each person who is a shareholder at any time
12during the taxable year a copy of one or both of the following
13showing their share of income and any other information as may
14be required by the department:

15(1) The Resident Schedule of Shareholder/Partner/Beneficiary
16Pass Through Income, Loss and Credits (Schedule RK-1) form.

17(2) The Nonresident Schedule of
18Shareholder/Partner/Beneficiary Pass Through Income, Loss and
19Credits (Schedule NRK-1) form.

20Section 9. Section 335 of the act, amended or added August 
2131, 1971 (P.L.362, No.93), December 23, 2003 (P.L.250, No.46)
22and July 2, 2012 (P.L.751, No.85), is amended to read:

23Section 335. Requirements Concerning Returns, Notices,
24Records and Statements.--(a) The department may prescribe by
25regulation for the keeping of records, the content and form of
26returns, declarations, statements and other documents and the
27filing of copies of Federal income tax returns and
28determinations. The department may require any person, by
29regulation or notice served upon such person, to make such
30returns, render such statements, or keep such records, as the

1department may deem sufficient to show whether or not such
2person is liable for tax under this article.

3(b) (1) When required by regulations prescribed by the
4department:

5(i) Any person required under the authority of this article
6to make a return, declaration, statement, or other document
7shall include in such return, declaration, statement or other
8document such identifying number as may be prescribed for
9securing proper identification of such person.

10(ii) Any person with respect to whom a return, declaration,
11statement, or other document is required under the authority of
12this article to make a return, declaration, statement, or other
13document with respect to another person, shall request from such
14other person, and shall include in any such return, declaration,
15statement, or other document, such identifying number as may be
16prescribed for securing proper identification of such other
17person.

18(2) For purposes of this section, the department is
19authorized to require such information as may be necessary to
20assign an identifying number to any person.

21(c) (1) Every partnership, estate or trust having a
22resident partner or a resident beneficiary or every partnership, 
23estate or trust having any income derived from sources within
24this Commonwealth shall make a return for the taxable year
25setting forth all items of income, loss and deduction, and such
26other pertinent information as the department may by regulations
27prescribe. Such return shall be filed on or before the fifteenth
28day of the fourth month following the close of each taxable
29year. For purposes of this subsection, "taxable year" means year
30or period which would be a taxable year of the partnership if it

1were subject to tax under this article.

2(2) Every partnership, estate or trust required to file a
3return under paragraph (1) shall also file with the department a
4true copy of the income tax return filed with the Federal
5Government at the time the return required under paragraph (1)
6is filed.

7(3) Every partnership, estate or trust required to file a
8return under paragraph (1) for any taxable year shall, on or
9before the day the return is filed, furnish to each partner or
10nominee for another person or to each beneficiary to whom the
11income or gains of the estate or trust is taxable, a copy of one
12or both of the following showing their share of income and any
13other information as may be required by the department:

14(i) The Resident Schedule of Shareholder/Partner/Beneficiary
15Pass Through Income, Loss and Credits (Schedule RK-1) form.

16(ii) The Nonresident Schedule of
17Shareholder/Partner/Beneficiary Pass Through Income, Loss and
18Credits (Schedule NRK-1) form.

19(4) Failure to file a timely return as required under
20paragraph (2) and failure to furnish a copy of the returns
21required under paragraph (3) shall result in a penalty of fifty
22dollars ($50) for each individual return or individual copy
23required.

24(d) The department may prescribe regulations requiring
25returns of information to be made and filed on or before
26February 28 of each year as to the payment or crediting in any
27calendar year of amounts of ten dollars ($10) or more to any
28taxpayer. Such returns may be required of any person, including
29lessees or mortgagors of real or personal property, fiduciaries,
30employers and all officers and employes of this Commonwealth, or

1of any municipal corporation or political subdivision of this
2Commonwealth having the control, receipt, custody, disposal or
3payment of interest, rents, salaries, wages, premiums,
4annuities, compensations, remunerations, emoluments or other
5fixed or determinable gains, profits or income, except interest
6coupons payable to bearer. A duplicate of the statement as to
7tax withheld on compensation required to be furnished by an
8employer to an employe, shall constitute the return of
9information required to be made under this section with respect
10to such compensation.

11(e) Any person who is required to make a form W-2G return to
12the Secretary of the Treasury of the United States in regard to
13taxable gambling or lottery winnings from sources within this
14Commonwealth shall file a copy of the form with the department
15by March 1 of each year or, if filed electronically, by March 31
16of each year.

17(f) The following apply:

18(1) Any person who:

19(i) makes payments of income from sources within this
20Commonwealth;

21(ii) makes payments of nonemploye compensation or payments
22under an oil and gas lease under subparagraph (i) to a resident
23or nonresident individual, an entity treated as a partnership
24for tax purposes or a single member limited liability company;
25and

26(iii) is required to make a form 1099-MISC return to the
27Secretary of the Treasury of the United States with respect to
28the payments shall file a copy of form 1099-MISC with the
29department and send a copy of form 1099-MISC to the payee by the
30Federal filing deadline each year.

1(2) If the payor is required to perform electronic filing
2for Pennsylvania employer withholding purposes, the form 1099-
3MISC shall be filed electronically with the department.

4(g) (1) Every estate, trust, Pennsylvania S Corporation or
5partnership, other than a publicly traded partnership, shall
6maintain at the end of the entity's taxable year an accurate
7list of partners, members, beneficiaries or shareholders. The
8list shall include the name, current address and tax
9identification number of all existing partners, members,
10beneficiaries or shareholders and of all partners, members,
11beneficiaries or shareholders, who were admitted or who withdrew
12during the taxable year, including the date of withdrawal and
13admittance.

14(2) If the entity under paragraph (1) does not maintain an
15accurate list as required, the tax, penalty and interest with
16respect to the entity shall be considered the tax, penalty and
17interest of the partnership, estate, trust or Pennsylvania S
18Corporation and of the general partner, tax matters partner,
19corporate officer or trustee.

20Section 10. Section 401(3)2(a)(17) of the act, amended
21September 9, 1971 (P.L.437, No.105), is amended and subclause
222(a) of the act is amended by adding a paragraph to read:

23Section 401. Definitions.--The following words, terms, and
24phrases, when used in this article, shall have the meaning
25ascribed to them in this section, except where the context
26clearly indicates a different meaning:

27* * *

28(3) "Taxable income." * * *

292. In case the entire business of any corporation, other
30than a corporation engaged in doing business as a regulated

1investment company as defined by the Internal Revenue Code of
21986, is not transacted within this Commonwealth, the tax
3imposed by this article shall be based upon such portion of the
4taxable income of such corporation for the fiscal or calendar
5year, as defined in subclause 1 hereof, and may be determined as
6follows:

7(a) Division of Income.

8* * *

9(16.1) Sales, other than sales under paragraphs (16) and
10(17), are in this State as follows:

11(A) The sale, lease, rental or other use of real property,
12if the real property is located in this State. If real property
13is located both in and outside this State, the sale is in this
14State based upon the percentage of total assessed value of the
15real property located in this State.

16(B) The rental, lease or licensing of tangible personal
17property, if the customer first obtained possession of the
18tangible personal property in this State.

19(C) (I) The sale of service, if the service is delivered to
20a location in this State. If the service is delivered both to a
21location in and outside this State, the sale is in this State
22based upon the percentage of total value of the service
23delivered to a location in this State.

24(II) If the state or states of assignment under subparagraph
25(I) cannot be determined, a service is deemed to be delivered at
26a customer's billing address in the case of an individual or, in
27the case of a business, the office of the customer from which
28the services were ordered in the regular course of the
29customer's trade or business.

30(III) If the state or states of assignment under

1subparagraph (I) or (II) cannot be determined for a customer
2that is a business, a service is deemed to be delivered to a
3customer's office billing address.

4(17) Sales, other than sales [of tangible personal property] 
5under paragraphs (16) and (16.1), are in this State if:

6(A) The income-producing activity is performed in this
7State; or

8(B) The income-producing activity is performed both in and
9outside this State and a greater proportion of the income-
10producing activity is performed in this State than in any other
11state, based on costs of performance.

12* * *

13Section 11. Section 402(b) of the act, amended June 29, 2002
14(P.L.559, No.89), is amended to read:

15Section 402. Imposition of Tax.--* * *

16(b) The annual rate of tax on corporate net income imposed
17by subsection (a) for taxable years beginning for the calendar
18year or fiscal year on or after the dates set forth shall be as
19follows:

20Taxable Year	Tax Rate
21January 1, 1995[, and 22each taxable year 23thereafter] to  24December 31, 2014	9.99%
25January 1, 2015, to 26December 31, 2015	9.89%
27January 1, 2016, to 28December 31, 2016	9.69%
29January 1, 2017, to 30December 31, 2017	9.49%
20130HB0883PN1540 -14-
1January 1, 2018, to 2December 31, 2018	9.29%
3January 1, 2019, to 4December 31, 2019	8.96%
5January 1, 2020, to 6December 31, 2020	8.63%
7January 1, 2021, to 8December 31, 2021	8.3%
9January 1, 2022, to 10December 31, 2022	7.97%
11January 1, 2023, to 12December 31, 2023	7.64%
13January 1, 2024, to 14December 31, 2024	7.31%
15January 1, 2025, and 16each taxable year 17thereafter	6.99%

18* * *

19Section 12. Section 403(d) of the act, amended October 18,
202006 (P.L.1149, No.119), is amended to read:

21Section 403. Reports and Payment of Tax.--* * *

22(d) If the officers of any corporation shall neglect, or
23refuse to make any report as herein required, or shall knowingly
24make any false report, [the following percentages of the amount
25of the tax shall be added by the department to the tax
26determined to be due on the first one thousand dollars ($1,000)
27of tax ten per cent, on the next four thousand dollars ($4,000)
28five per cent, and on everything in excess of five thousand
29dollars ($5,000) one per cent, no such] a penalty of five 
30hundred dollars ($500) plus an additional one per cent for every 

1dollar of tax determined to be due in excess of twenty-five 
2thousand dollars ($25,000) shall be added to the tax determined 
3to be due. No amounts added to the tax shall bear any interest
4whatsoever.

5* * *

6Section 13. Section 2112 of the act, amended or added August
74, 1991 (P.L.97, No.22), June 16, 1994 (P.L.279, No.48) and June
830, 1995 (P.L.139, No.21), is repealed:

9[Section 2112. Exemption for Poverty.--(a) The General
10Assembly, in recognition of the powers contained in section 2(b)
11(ii) of Article VIII of the Constitution of Pennsylvania which
12provides therein for the establishing as a class or classes of
13subjects of taxation the property or privileges of persons who
14because of poverty are determined to be in need of special tax
15provisions or tax exemptions, hereby declares as its legislative
16intent and purpose to implement such powers under such
17Constitutional provision by establishing a tax exemption as
18hereinafter provided in this section.

19(b) The General Assembly, having determined that there are
20persons within this Commonwealth the value of whose incomes and
21estates are such that the imposition of an inheritance tax under
22this article would cause them hardship and economic burden and
23having further determined that poverty is a relative concept
24inextricably joined with the ability to maintain assets
25inherited upon the death of a spouse, deems it to be a matter of
26public policy to provide an exemption from taxation for
27transfers of property to or for the use of that class of persons
28hereinafter designated in order to relieve their hardship and
29economic burden.

30(c) Any claim for a tax exemption hereunder shall be

1determined in accordance with the following:

2(1) The transferee is the spouse of the decedent at the date
3of death of the decedent.

4(2) The value of the estate of the decedent does not exceed
5two hundred thousand dollars ($200,000) after reduction for
6actual liabilities of the decedent as evidenced by a written
7agreement.

8(3) The average of the joint exemption income of the
9decedent and the transferee for the three taxable years, as
10defined in Article III, immediately preceding the date of death
11of the decedent does not exceed forty thousand dollars
12($40,000).

13(d) Notwithstanding any other provision of this article,
14transfers of property to or for the use of any eligible
15transferee who meets the standards of eligibility established by
16this section as the test for poverty shall be deemed a separate
17class subject to taxation and, as such, shall be entitled to the
18benefit of the following exemptions from taxation on transfers
19of property as a credit against the tax imposed by this article:

20(1) For decedents dying on or after January 1, 1992, and
21before January 1, 1993, the lesser of:

22(i) Two per cent of the taxable value of the property of the
23decedent transferred to or for the use of the transferee.

24(ii) Two per cent of one hundred thousand dollars ($100,000)
25of the taxable value of the property of the decedent transferred
26to or for the use of the transferee.

27(2) For decedents dying on or after January 1, 1993, and
28before January 1, 1994, the lesser of:

29(i) Four per cent of the taxable value of the property of
30the decedent transferred to or for the use of the transferee.

1(ii) Four per cent of one hundred thousand dollars
2($100,000) of the taxable value of the property of the decedent
3transferred to or for the use of the transferee.

4(3) For decedents dying on or after January 1, 1994, and
5before January 1, 1995, the lesser of:

6(i) Six per cent of the taxable value of the property of the
7decedent transferred to or for the use of the transferee.

8(ii) Six per cent of one hundred thousand dollars ($100,000)
9of the taxable value of the property of the decedent transferred
10to or for the use of the transferee.

11(e) For nonresident decedents, the credit provided in this
12section shall bear the same ratio as that of the decedent's
13estate in this Commonwealth bears to the decedent's total estate
14without regard to situs.

15(f) The credit provided in this section shall not be greater
16than the tax imposed.

17(g) This section shall not apply to the estates of decedents
18dying on or after January 1, 1995.]

19Section 14. The amendment or addition of sections 301, 306,
20306.1, 306.2, 307.8, 314, 324, 330.1, 335, 401, 402 and 403 of
21the act shall apply to tax years beginning after December 31,
222013.

23Section 15. This act shall take effect immediately.