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 waste coal energy and reclamation
11tax credit; and imposing duties on the Department of Revenue
12and the Department of Community and Economic Development.

13The General Assembly of the Commonwealth of Pennsylvania
14hereby enacts as follows:

15Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
16the Tax Reform Code of 1971, is amended by adding an article to
17read:

18ARTICLE XVII-J

19WASTE COAL ENERGY AND RECLAMATION TAX CREDIT

20Section 1701-J. Scope of article.

21This article establishes a waste coal energy and reclamation
22tax credit.

1Section 1702-J. Definitions.

2The following words and phrases when used in this article
3shall have the meanings given to them in this section unless the
4context clearly indicates otherwise:

5"Company." Any corporation, partnership, limited liability
6company, limited liability partnership, business trust,
7affiliate, unincorporated joint venture or other business entity
8doing business within this Commonwealth.

9"Department." The Department of Revenue of the Commonwealth,
10except as otherwise specifically indicated.

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

12(1) A partnership as defined in section 301(n.0).

13(2) A Pennsylvania S corporation as defined in section
14301(n.1).

15(3) An unincorporated entity subject to section 307.21.

16"Qualified fuel." Waste coal, which shall include the
17combustion of waste coal in facilities in which the waste coal
18was disposed of or abandoned prior to July 31, 1982, or disposed
19of thereafter in a permitted coal refuse disposal site
20regardless of when disposed of, and used to generate
21electricity, or such other waste coal combustion meeting
22alternate eligibility requirements established by regulation.
23Facilities combusting waste coal shall use, at a minimum, a
24combined fluidized bed boiler and be outfitted with a limestone
25injection system and a fabric filter particulate removal system.

26"Qualified tax liability." The liability for taxes imposed
27under Articles III, IV, VI, VII, VIII, IX, XI and XV. The term
28does not include tax withheld under section 316.

29"Qualified taxpayer." A company that satisfies all of the
30following:

1(1) Is an electric energy generator using qualified fuel
2for the generation of electric energy.

3(2) The qualified fuel is utilized for generation of
4electricity at a facility in this Commonwealth which has been
5placed in service before the effective date of this section.

6(3) Uses or facilitates the use of ash resulting from
7the combustion of qualified fuel to generate electricity at a
8reclamation project approved by the Department of
9Environmental Protection under the act of May 31, 1945
10(P.L.1198, No.418), known as the Surface Mining Conservation
11and Reclamation Act.

12"Tax credit." The waste coal energy and reclamation tax
13credit provided under this article.

14"Ton." Two thousand pounds as defined in section 4121(d) of
15the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
16§ 4121(d)).

17Section 1703-J. Application and approval of tax credit.

18(a) Rate.--The tax credit shall be equal to $3.50 per ton of
19qualified fuel used to generate electricity in this Commonwealth
20by a qualified taxpayer.

21(b) Application.--

22(1) A qualified taxpayer may apply to the department for
23a tax credit under this section.

24(2) The application must be submitted to the department
25by August 1, 2014, and by March 1 of each year thereafter for
26the tax credit claimed for qualified fuel used by the
27qualified taxpayer during the prior calendar year. The
28application must be on the form required by the department.

29(3) The department may require information necessary to
30document the amount of qualified fuel used.

1(c) Review and approval.--

2(1) The department shall review and approve applications
3meeting the requirements of this article by August 20, 2014,
4and by March 20 of each year thereafter.

5(2) Upon approval, the department shall issue a
6certificate stating the amount of tax credit granted for
7qualified fuel used in the prior calendar year.

8Section 1704-J. Use of tax credits.

9(a) Application.--The tax credit shall be applied against
10the qualified taxpayer's liability only after all other
11statutory tax credits and deductions available to the qualified
12taxpayer have been used.

13(b) Limitation.--A qualified taxpayer that has been granted
14a tax credit under this article shall be ineligible for any
15other tax credit provided under this act.

16Section 1705-J. Carryover and carryback.

17A tax credit cannot be carried back. A tax credit can be
18carried forward up to three tax years following the tax year in
19which the tax credit is earned.

20Section 1706-J. Limitation on tax credits.

21(a) Amount.--The total amount of tax credits approved by the
22department shall not exceed $40,000,000 in any fiscal year.

23(b) Proration.--If the total amount of tax credits applied
24for by all qualified taxpayers exceeds the amount allocated for
25those tax credits, then the tax credit to be received by each
26applicant shall be the product of the allocated amount
27multiplied by the quotient of the tax credits approved for the
28applicant divided by the total of all tax credits approved for
29all applicants.

30(c) Restriction.--Notwithstanding subsection (b), the

1department may not grant more than $10,000,000 in tax credits to
2a single qualified taxpayer in any fiscal year.

3Section 1707-J. Pass-through entity.

4(a) Election.--If a pass-through entity has an unused tax
5credit, it may elect in writing, according to procedures
6established by the department, to transfer all or a portion of
7the credit to shareholders, members or partners in proportion to
8the share of the entity's distributive income to which the
9shareholders, members or partners are entitled.

10(b) Limitation.--The same unused tax credit under subsection
11(a) may not be claimed by:

12(1) the pass-through entity; and

13(2) a shareholder, member or partner of the pass-through
14entity.

15(c) Time.--A transferee under subsection (a) must claim the
16tax credit in the calendar year in which the transfer is made.

17Section 1708-J. Use of credits by affiliates.

18In addition to reducing or eliminating the qualified tax
19liability of a qualified taxpayer, a tax credit shall be applied
20to reduce or eliminate the qualified tax liability of any
21"related party," as that term is defined in section 267 of the
22Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
23267), to a qualified taxpayer.

24Section 1709-J. Sale or assignment.

25(a) Authorization.--Except as authorized in subsection (d),
26if a qualified taxpayer holds a tax credit through the end of
27the third calendar year following the year in which the tax
28credit was granted, the qualified taxpayer may sell or assign a
29tax credit, in whole or in part.

30(b) Initial use.--Except as provided in subsection (e),

1prior to sale of assignment of a tax credit a qualified taxpayer
2must first use a tax credit against the qualified tax liability
3incurred in the taxable year for which the tax credit was
4approved.

5(c) Application.--

6(1) Except as authorized in subsection (d), to sell or
7assign a tax credit, a qualified taxpayer must file an
8application for the sale or assignment of the tax credit with
9the Department of Community and Economic Development. The
10application must be on a form required by the Department of
11Community and Economic Development.

12(2) To approve an application, the Department of
13Community and Economic Development must receive a finding
14from the department that the applicant has:

15(i) filed all required State tax reports and returns
16for all applicable taxable years; and

17(ii) paid any balance of State tax due as determined
18by assessment or determination by the department and not
19under timely appeal.

20(d) Approval.--Upon approval by the Department of Community
21and Economic Development, a qualified taxpayer may sell or
22assign, in whole or in part, a tax credit.

23(e) Expedited sale or assignment.--

24(1) Notwithstanding subsections (a) and (b), a qualified
25taxpayer may immediately sell or assign, in whole or in part,
26a tax credit approved for a taxable year beginning in 2013.

27(2) Nothing in this subsection shall be construed to
28mean that the tax credits sold or assigned under this
29subsection are not subject to the provisions of section 1711-
30J.

1Section 1710-J. Purchasers and assignees.

2(a) Time.--The purchaser or assignee under section 1709-J
3must claim the tax credit no later than the last day of the
4third calendar year following in the calendar year in which the
5purchase or assignment is made.

6(b) Amount.--The amount of the tax credit that a purchaser
7or assignee under section 1709-J may use against any one
8qualified tax liability may not exceed 75% of any of the
9qualified tax liabilities for the taxable year.

10(c) Resale and reassignment.--A purchaser and an assignee
11under section 1709-J may not sell or assign the purchased tax
12credit.

13(d) Notice.--The purchaser or assignee under section 1709-J
14shall notify the department of the seller or assignor of the tax
15credit in compliance with procedures specified by the
16department.

17Section 1711-J. Administration.

18(a) Audits and assessments.--The department has the
19following powers:

20(1) To audit a qualified taxpayer claiming a tax credit
21to ascertain the validity of the amount claimed.

22(2) To issue an assessment against a qualified taxpayer
23for an improperly issued tax credit. The procedures,
24collection, enforcement and appeals of any assessment made
25under this section shall be governed by Article II.

26(b) Guidelines.--The department shall develop written
27guidelines for the implementation of this article.

28Section 1712-J. Annual report to General Assembly.

29By October 1, 2015, and October 1 of each year thereafter,
30the department shall submit a report on the tax credit to the

1chairman and minority chairman of the Appropriations Committee
2of the Senate, the chairman and minority chairman of the Finance
3Committee of the Senate, the chairman and minority chairman of
4the Appropriations Committee of the House of Representatives and
5the chairman and minority chairman of the Finance Committee of
6the House of Representatives. The report shall include the names
7of the qualified taxpayers utilizing the tax credit as of the
8date of the report and the amount of tax credits approved for,
9utilized by or sold or assigned by a qualified taxpayer.

10Section 1713-J. Expiration.

11This article shall expire December 31, 2022.

12Section 1714-J. Applicability.

13The tax credit shall be effective for taxable years beginning
14on or after January 1, 2013.

15Section 2. This act shall take effect immediately.