PRINTER'S NO. 637

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

579

Session of

2019

INTRODUCED BY MENSCH, BROWNE, AUMENT, K. WARD, STEFANO, J. WARD

AND PHILLIPS-HILL, APRIL 22, 2019

REFERRED TO FINANCE, APRIL 22, 2019

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," establishing a career development tax credit.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971, is amended by adding an article to

read:

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

" Career development tax credit " or " tax credit. " The credit

provided under this article.

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

" Nonqualified individual. "

(1) An individual who is one of the following:

(i) an officer of a business entity;

(ii) a member or shareholder owning more than 5% of

the voting power or value of all classes of stock of a

inflation, set forth in section 414(q)(1)(B) of the

Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 414 (q)(1)(B)); or

(B) is in the group consisting of the top 20% of

all full-time employees of the employer with at least

three years of service when ranked on the basis of

compensation paid during the taxable year.

(2) A partner or self-employed individual.

(3) A physician.

(4) A veterinarian.

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reimbursement through any Federal or State training program.

(2) Federal, State or local grants or other payments to

provide training or retraining.

(3) Capital expenses.

(4) Equipment, materials and software used beyond the

training program.

(5) Expenses for out-of-State travel.

(6) Convention or conference expenses, unless directly

related to a qualified career development training program.

" Qualified career development training program. " A training

(1) Any program in which 50% or more of the employee's

time is spent on activities other than those directly related

to the training program.

(2) An executive training program.

(3) A personal enrichment program.

(4) A general health program.

(5) A seminar or conference unless directly related to

the employee's job requirements.

" Qualified employee. " A Commonwealth resident who is

employed in this Commonwealth by a taxpayer and who averages at

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" Qualified tax liability. " The liability for taxes imposed

under Article III, IV or VI. The term includes the liability for

taxes imposed under Article III on a shareholder of a

Pennsylvania S corporation.

" Qualified training expense. " Wages paid to a qualified

employee during normal working hours while participating in a

qualified career development training program. The term includes

preskill and postskill assessment, direct costs of instructors,

instructional materials, instructional supplies, instructional

media, necessary training equipment, tuition reimbursement,

corporation that receives a career development tax credit or the

member of a limited liability company that receives a career

development tax credit.

Section 1703-G.2. Tax credit for qualified training expenses.

(a) General rule.--A taxpayer who incurs qualified training

expenses in a taxable year may apply for a career development

tax credit as provided in this article. By September 15, a

taxpayer must submit an application to the department for

qualified training expense incurred in the taxable year that

ended in the prior calendar year.

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year.

(c) Notification of approved tax credit.--By December 15 of

the calendar year following the close of the taxable year during

which the qualified training expense was incurred, the

department shall notify the taxpayer of the amount of the

taxpayer's career development tax credit approved by the

department.

Section 1704-G.2. Carryover, carryback, refund and assignment

of tax credit.

(a) General rule.--If the taxpayer cannot use the entire

year, it is to be reduced by the amount that was used as a

credit during the immediately preceding taxable year. The career

development tax credit provided by this article may be carried

over and applied to succeeding taxable years for no more than 15

taxable years following the first taxable year for which the

taxpayer was entitled to claim the credit.

(b) Taxable year in which tax credit applied.--A career

development tax credit approved by the department for qualified

training expenses in a taxable year first shall be applied

against the taxpayer's qualified tax liability for the current

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obtain a refund of an unused career development tax credit.

Section 1705-G.2. Time limitations.

A taxpayer is not entitled to a career development tax credit

for qualified training expenses incurred in taxable years ending

after December 31, 2019.

Section 1706-G.2. Limitation on tax credits.

(a) General rule.--The total amount of career development

tax credits approved by the department shall not exceed

$20,000,000 in any fiscal year.

(b) Proration required.--If the total amount of career

through.

(a) General rule.--If a Pennsylvania S corporation does not

have an eligible tax liability against which the career

development tax credit may be applied, a shareholder of the

Pennsylvania S corporation is 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) Operation of tax credit.--The career development tax

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of a Pennsylvania S corporation may not claim a tax credit for

the same qualified training expense.

Section 1708-G.2. Pennsylvania limited liability company member

pass-through.

(a) General rule.--If a limited liability company does not

have an eligible tax liability against which the career

development tax credit may be applied, a member of the limited

liability company is entitled to a tax credit equal to the tax

credit determined for the limited liability company for the

taxable year multiplied by the percentage of the limited

liability company and a member of a limited liability company

may not claim a tax credit for the same qualified training

expense.

Section 1709-G.2. Recapture of credit.

(a) General rule.--If an employee for whom a credit has been

awarded does not maintain continuous employment with the

taxpayer for a period of 12 months following the completion of

the qualified career development training program, the

department shall recapture any credit awarded to the taxpayer

for the qualified training expense of that employee.

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(3) voluntarily leaves employment; or

(4) is discharged for cause as certified by the

Department of Labor and Industry.

Section 1710-G.2. Report to General Assembly.

The secretary shall submit an annual report to the General

Assembly indicating the effectiveness of the career development

tax credit no later than March 15 following the year in which

the tax credits were approved. The report shall include the

names of all taxpayers utilizing the tax credit as of the date

of the report and the amount of tax credits approved and

The department shall not approve a career development tax

credit for taxable years ending after December 31, 2019.

Section 1712-G.2. Regulations.

The secretary shall promulgate regulations necessary for the

implementation and administration of this article.

Section 2. This act shall apply to taxable years commencing

after December 31, 2016.

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