PRINTER'S NO. 922
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
840
Session of
2017
INTRODUCED BY MURT, BOBACK, V. BROWN, D. COSTA, DAVIDSON,
DRISCOLL, GABLER, GAINEY, GOODMAN, IRVIN, KINSEY, MACKENZIE,
MARSHALL, MILLARD, MILNE, PICKETT, READSHAW AND SCHWEYER,
MARCH 13, 2017
REFERRED TO COMMITTEE ON COMMERCE, MARCH 13, 2017
AN ACT
Amending Title 12 (Commerce and Trade) of the Pennsylvania
Consolidated Statutes, providing for equipment donation tax
credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 12 of the Pennsylvania Consolidated
Statutes is amended by adding a chapter to read:
CHAPTER 43
EQUIPMENT DONATION TAX CREDIT
Sec.
4301. Scope of chapter.
4302. Definitions.
4303. Establishment.
4304. Credit for qualified equipment donation.
4305. Carryover, application of tax credit, carryback, refund
and assignment.
4306. Time limitation.
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4307. Limitation on tax credits.
4308. Shareholder, owner or member pass through.
4309. Repayment.
4310. Reports.
4311. Termination.
4312. Guidelines.
§ 4301. Scope of chapter.
This chapter relates to equipment donation tax credits.
§ 4302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of Revenue of the Commonwealth.
"Pass-through entity." A partnership as defined in section
301(n.0) of the act of March 4, 1971 (P.L.6, No.2), known as the
Tax Reform Code of 1971, or a Pennsylvania S corporation as
defined in section 301(n.1) of the Tax Reform Code of 1971.
"Qualified equipment donation." Equipment donated by a
taxpayer to an area vocational-technical school that is used to
train individuals in a specified vocation.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV or VI of the Tax Reform Code of 1971. The
term shall include the liability for taxes imposed under Article
III of the Tax Reform Code of 1971 on an owner of a pass-through
entity.
"Secretary." The Secretary of Revenue of the Commonwealth.
"Tax credit." The equipment donation tax credit authorized
under this chapter.
"Taxpayer." A person subject to tax under Article III, IV or
VI of the Tax Reform Code of 1971. The term shall include the
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shareholder, owner or member of a pass-through entity that
receives an equipment donation tax credit.
§ 4303. Establishment.
There is established a tax credit program to be known as the
Equipment Donation Tax Credit.
§ 4304. Credit for qualified equipment donation.
(a) Application.--A taxpayer that made a qualified equipment
donation to an area vocational-technical school, as defined in
section 1841 of the act of March 10, 1949 (P.L.30, No.14), known
as the Public School Code of 1949, in a taxable year may apply
for a tax credit. The application must be on a form required by
the department and shall include all of the following:
(1) The name and address of the taxpayer.
(2) The name and address of the area vocational-
technical school to which the taxpayer donated equipment.
(3) Documentation establishing the current value of the
qualified equipment donation.
(4) Documentation that the qualified equipment donation
has been made by the applicant.
(5) Any other information required by the department.
(b) Review.--The department shall review the application and
determine if:
(1) All requirements established under this chapter have
been met.
(2) The applicant has filed all required State tax
reports and returns for all taxable years and paid any
balance of State tax due.
(c) Approval.--Upon being satisfied with the requirements
under subsection (b), the department shall approve the
application and award the taxpayer a tax credit for the taxable
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year in the amount equal to the current value of the qualified
equipment donation. The total amount of tax credits awarded to a
taxpayer under this chapter shall not exceed $10,000 each fiscal
year.
(d) Notification.--The department shall notify the taxpayer
of the amount of the taxpayer's tax credit within 30 days after
approval by the department.
(e) Purchasers and assignees.--The purchaser or assignee of
all or a portion of a tax credit under subsection (d) shall
immediately claim the tax credit in the taxable year in which
the purchase or assignment is made, although the purchaser or
assignee may carry over unused tax credits to the succeeding
taxable year for up to two years. The amount of the tax credit
that a purchaser or assignee may use against any one qualified
tax liability may not exceed 75% of the qualified tax liability
for the taxable year. The purchaser or assignee may not 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.
§ 4305. Carryover, application of tax credit, carryback, refund
and assignment.
(a) Carryover.--If the taxpayer cannot use the entire amount
of the tax credit for the taxable year in which the tax credit
is first approved, the excess may be carried over to succeeding
taxable years and used as a credit against the qualified tax
liability of the taxpayer for those taxable years. Each time
that 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
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credit may be carried over and applied to succeeding taxable
years for no more than seven taxable years following the first
taxable year for which the taxpayer was entitled to claim the
tax credit.
(b) Application of tax credit.--A tax credit approved by the
department for a qualified equipment donation in a taxable year
shall first be applied against the taxpayer's qualified tax
liability for the current taxable year as of the date on which
the tax credit was approved before the tax credit is applied
against any tax liability under subsection (a).
(c) Carryback or refund.--A taxpayer is not entitled to
carry back or obtain a refund of an unused tax credit.
(d) Sale or assignment.--A taxpayer, upon application to and
approval by the department, may sell or assign, in whole or in
part, a tax credit granted to the taxpayer under this chapter if
the taxpayer does not have a qualified tax liability against
which the tax credit may be applied in the current taxable year.
The department shall establish guidelines for the approval of
applications under this subsection. Before an application is
approved, the department shall make a finding that the taxpayer
and its assignee have filed all required State tax reports and
returns for all taxable years and paid any balance of State tax
due as determined by the department.
(e) Purchasers and assignees.--The purchaser or assignee of
all or a portion of a tax credit under subsection (d) shall
immediately claim the credit in the taxable year in which the
purchase or assignment is made, although the purchaser or
assignee may carry over unused tax credits to the succeeding
taxable year for up to two years. The amount of the tax credit
that a purchaser or assignee may use against any one qualified
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tax liability may not exceed 75% of the qualified tax liability
for the taxable year. The purchaser or assignee may not 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.
§ 4306. Time limitation.
A taxpayer shall not be entitled to a tax credit for
qualified equipment donations made in taxable years ending after
December 31, 2027.
§ 4307. Limitation on tax credits.
(a) Total amount.--The total amount of tax credits approved
by the department in any calendar year shall not exceed
$5,000,000.
(b) Allocation.--Tax credits shall be allocated by the
department on a first-come, first-served basis.
§ 4308. Shareholder, owner or member pass through.
(a) Shareholder entitlement.--If a Pennsylvania S
corporation does not have an eligible tax liability against
which the tax credit may be applied, a shareholder of the
Pennsylvania S corporation shall be entitled to a tax credit
equal to the tax credit determined for the Pennsylvania S
corporation for the taxable year multiplied by the percentage of
the Pennsylvania S corporation's distributive income to which
the shareholder is entitled.
(b) Pass-through entity entitlement.--If a pass-through
entity other than a Pennsylvania S corporation does not have tax
liability against which the tax credit may be applied, an owner
or member of the pass-through entity shall be entitled to a tax
credit equal to the tax credit determined for the pass-through
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entity for the taxable year multiplied by the percentage of the
pass-through entity's distributive income to which the owner or
member is entitled.
(c) Additional credit.--
(1) Except as provided under paragraph (2), the tax
credit provided under subsection (a) or (b) shall be in
addition to any other tax credit to which a shareholder,
owner or member of a pass-through entity is otherwise
entitled under this chapter.
(2) A pass-through entity and a shareholder, owner or
member of a pass-through entity shall not claim a tax credit
under this chapter for the same qualified equipment donation.
§ 4309. Repayment.
The department shall require the taxpayer to repay any tax
credit received under this chapter that is in excess of the
current value of the qualified equipment donation where the
department determines that any of the following conditions
exists:
(1) the area vocational-technical school is no longer in
operation;
(2) the area vocational-technical school returns any or
all donated equipment to the taxpayer; or
(3) the taxpayer received the tax credit as a result of
fraud.
§ 4310. Reports.
(a) Annual report.--The secretary shall submit an annual
report to the chairpersons and minority chairpersons of the
standing committees in the Senate and the chairpersons and
minority chairpersons of the standing committees in the House of
Representatives with jurisdiction over the department as
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follows:
(1) The report shall indicate the effectiveness of the
tax credit provided under this chapter.
(2) The report shall be submitted no later than March 15
following the fiscal year in which the tax credits were
approved.
(3) Notwithstanding any law providing for the
confidentiality of tax records, the report shall include the
following:
(i) The names of all taxpayers awarded the tax
credits.
(ii) The names of all taxpayers utilizing the tax
credits.
(iii) The amount of tax credits approved and
utilized by each taxpayer.
(iv) The names and locations of the qualified
business ventures for which the tax credits were awarded.
(4) The report may also include any recommendations for
changes in the calculation or administration of the tax
credit.
(b) Public record.--The report and the information contained
in it shall be considered a public record under section 102 of
the act of February 14, 2008 (P.L.6, No.3), known as the Right-
to-Know Law.
§ 4311. Termination.
The department shall not approve a tax credit for qualified
equipment donations incurred in taxable years ending after
December 31, 2027.
§ 4312. Guidelines.
The department shall develop written guidelines for the
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implementation and administration of this chapter. The
guidelines shall be posted on the department's publicly
accessible Internet website.
Section 2. The addition of 12 Pa.C.S. Ch. 43 shall apply to
qualified equipment donations made in taxable years beginning
after December 31, 2017.
Section 3. This act shall take effect immediately.
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