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.

23Section 1702-J. 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"Bilateral contract." An agreement provided for under
5section 210 of the Public Utility Regulatory Policies Act of
61978 (Public Law 95-617, 16 U.S.C. § 824a-3), reached by two
7parties, each acting in its own independent self-interest, as a
8result of negotiations free of undue influence, duress or
9favoritism, in which the qualified taxpayer agrees to sell and
10the electric distribution company agrees to buy a quantity of
11electric energy at a specified price for a specified period of
12time under terms agreed to by both parties.

13"Company." Any corporation, partnership, limited liability
14company, limited liability partnership, business trust,
15affiliate, unincorporated joint venture or other business
16entity, doing business within this Commonwealth.

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

18"Electric distribution company." The public utility
19providing facilities for the jurisdictional transmission and
20distribution of electricity to retail customers, except building
21or facility owners or operators that manage the internal
22distribution system serving such building or facility and that
23supply electric power and other related electric power services
24to occupants of the building or facility.

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

26(1) A partnership as defined in section 301(n.0).

27(2) A Pennsylvania S corporation as defined in section
28301(n.1).

29(3) An unincorporated entity subject to section 307.21.

30"Qualified fuel." Waste coal as that term is used in the

1definition of "alternative energy sources" in section 2 of the
2act of November 30, 2004 (P.L.1672, No.213), known as the
3Alternative Energy Portfolio Standards Act.

4"Qualified tax liability." The liability for taxes imposed
5under Articles III, IV, VI, VII, VIII, IX, XI and XV. The term
6does not include tax withheld under section 316.

7"Qualified taxpayer." A company that satisfies all of the
8following:

9(1) Is an electric energy supplier.

10(2) Utilizes qualified fuel for the generation of
11electricity at a facility in this Commonwealth which has been
12placed in service before the effective date of this article.

13(3) Has in place a bilateral contract with an electric
14distribution company that is in effect before the effective
15date of this article.

16(4) Uses or facilitates the use of ash resulting from
17the combustion of qualified fuel to generate electricity at a
18reclamation project approved by the Department of
19Environmental Protection under the act of May 31, 1945
20(P.L.1198, No.418), known as the Surface Mining Conservation
21and Reclamation Act.

22"Tax credit." The waste coal energy and reclamation tax
23credit provided under this article.

24"Ton." Two thousand pounds as defined in section 4121(d) of
25the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
26§ 4121(d)).

27Section 1703-J. Application and approval of tax credit.

28(a) Rate.--The tax credit shall be equal to $20 per ton of
29qualified fuel used to generate electricity in this Commonwealth
30by a qualified taxpayer.

1(b) Application.--

2(1) A qualified taxpayer may apply to the department for
3a tax credit under this section.

4(2) The application must be submitted to the department
5by August 1, 2013, and by March 1 of each year thereafter,
6for the tax credit claimed for qualified fuel used by the
7qualified taxpayer during the prior calendar year. The
8application must be on the form required by the department.

9(3) The department may require information necessary to
10document the amount of qualified fuel used.

11(c) Review and approval.--

12(1) The department shall review and approve or
13disapprove the applications by August 20, 2013, and by March
1420 of each year thereafter.

15(2) Upon approval, the department shall issue a
16certificate stating the amount of tax credit granted for
17qualified fuel used in the prior calendar year.

18Section 1704-J. Use of tax credits.

19(a) Initial use.--Except as provided in section 1706-J(d),
20prior to sale or assignment of a tax credit under section 1706-
21J, a qualified taxpayer must first use a tax credit against the
22qualified tax liability incurred in the taxable year for which
23the tax credit was approved.

24(b) Application.--The tax credit shall be applied against
25the qualified taxpayer's liability only after all other
26statutory tax credits and deductions available to the qualified
27taxpayer have been used.

28(c) Limit.--A qualified taxpayer that has been granted a tax
29credit under this article shall be ineligible for any other tax
30credit provided under this act.

1Section 1705-J. Carryover, carryback and refund.

2A tax credit cannot be carried back, carried forward or be
3used to obtain a refund.

4Section 1706-J. Sale or assignment.

5(a) Authorization.--Except as authorized in subsection (d),
6if a qualified taxpayer holds a tax credit through the end of
7the calendar year in which the tax credit was granted, the
8qualified taxpayer may sell or assign a tax credit, in whole or
9in part.

10(b) Application.--

11(1) Except as authorized in subsection (d), to sell or
12assign a tax credit, a qualified taxpayer must file an
13application for the sale or assignment of the tax credit with
14the Department of Community and Economic Development. The
15application must be on a form required by the Department of
16Community and Economic Development.

17(2) To approve an application, the Department of
18Community and Economic Development must receive a finding
19from the department that the applicant has:

20(i) filed all required State tax reports and returns
21for all applicable taxable years; and

22(ii) paid any balance of State tax due as determined
23by assessment or determination by the department and not
24under timely appeal.

25(c) Approval.--Upon approval by the Department of Community
26and Economic Development, a qualified taxpayer may sell or
27assign, in whole or in part, a tax credit.

28(d) Expedition.--Notwithstanding subsections (a) and (b), a
29qualified taxpayer may immediately sell or assign, in whole or
30in part, a tax credit approved for a taxable year beginning in

12012. Nothing in this subsection shall be construed to mean that
2the tax credits sold or assigned under this subsection are not
3subject to the provisions of section 1710-J.

4Section 1707-J. Purchasers and assignees.

5(a) Time.--The purchaser or assignee under section 1706-J
6must claim the tax credit in the calendar year in which the
7purchase or assignment is made.

8(b) Amount.--The amount of the tax credit that a purchaser
9or assignee under section 1706-J may use against any one
10qualified tax liability may not exceed 50% of any of the
11qualified tax liabilities for the taxable year.

12(c) Resale and reassignment.--

13(1) A purchaser under section 1706-J may not sell or
14assign the purchased tax credit.

15(2) An assignee under section 1706-J may not sell or
16assign the assigned tax credit.

17(d) Notice.--The purchaser or assignee under section 1706-J
18shall notify the department of the seller or assignor of the tax
19credit in compliance with procedures specified by the
20department.

21Section 1708-J. Limitation on tax credits.

22(a) Amount.--The total amount of tax credits approved by the
23department shall not exceed $30,000,000 in any fiscal year.

24(b) Proration.--If the total amount of tax credits applied
25for by all qualified taxpayers exceeds the amount allocated for
26those tax credits, then the tax credit to be received by each
27applicant shall be the product of the allocated amount
28multiplied by the quotient of the tax credits approved for the
29applicant divided by the total of all tax credits approved for
30all applicants.

1(c) Restriction.--Notwithstanding subsection (b), the
2department shall not grant more than $10,000,000 in tax credits
3to a single qualified taxpayer in any fiscal year.

4Section 1709-J. Pass-through entity.

5(a) Election.--If a pass-through entity has an unused tax
6credit, it may elect in writing, according to procedures
7established by the department, to transfer all or a portion of
8the credit to shareholders, members or partners in proportion to
9the share of the entity's distributive income to which the
10shareholders, members or partners are entitled.

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

13(1) the pass-through entity; and

14(2) a shareholder, member or partner of the pass-through
15entity.

16(c) Amount.--The amount of the tax credit that a transferee
17under subsection (a) may use against any one qualified tax
18liability may not exceed 20% of any qualified tax liabilities
19for the taxable year.

20(d) Time.--A transferee under subsection (a) must claim the
21tax credit in the calendar year in which the transfer is made.

22(e) Sale and assignment.--A transferee under subsection (a)
23may not sell or assign the tax credit.

24Section 1710-J. Administration.

25(a) Audits and assessments.--The department has the
26following powers:

27(1) To audit a qualified taxpayer claiming a tax credit
28to ascertain the validity of the amount claimed.

29(2) To issue an assessment against a qualified taxpayer
30for an improperly issued tax credit. The procedures,

1collection, enforcement and appeals of any assessment made
2under this section shall be governed by Article II.

3(b) Guidelines.--The department shall develop written
4guidelines for the implementation of this article.

5Section 1711-J. Annual report to General Assembly.

6By October 1, 2014, and October 1 of each year thereafter,
7the department shall submit a report on the tax credit provided
8by this article to the chairman and minority chairman of the
9Appropriations Committee of the Senate, the chairman and
10minority chairman of the Finance Committee of the Senate, the
11chairman and minority chairman of the Appropriations Committee
12of the House of Representatives and the chairman and minority
13chairman of the Finance Committee of the House of
14Representatives. The report must include the names of the
15qualified taxpayers utilizing the tax credit as of the date of
16the report and the amount of tax credits approved for, utilized
17by or sold or assigned by a qualified taxpayer.

18Section 1712-J. Expiration.

19This article shall expire December 31, 2020.

20Section 1713-J. Applicability.

21The tax credit established under this article shall be
22effective for taxable years beginning on or after January 1,
232012.

24Section 2. This act shall take effect immediately.