PRIOR PRINTER'S NO. 357

PRINTER'S NO. 3034

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

385

Session of

2021

INTRODUCED BY DUNBAR, ROTHMAN, BROOKS, CIRESI, SCHLEGEL CULVER,

GLEIM, GREINER, GROVE, HILL-EVANS, KNOWLES, MIHALEK, MILLARD,

E. NELSON, PICKETT, PISCIOTTANO, ROWE, RYAN, SMITH, STAATS,

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

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

by adding a paragraph to read:

SECTION 1. SECTION 303(A.7) OF THE ACT OF MARCH 4, 1971

(P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED

BY ADDING PARAGRAPHS AND THE SECTION IS AMENDED BY ADDING A

SUBSECTION TO READ:

Section 303. Classes of Income.--* * *

(a.7) The following apply:

Economic Security Act (Public Law 116-136, 134 Stat. 281).

(B) Section 9, DIVISION N, TITLE II, Subtitle B, section 276

of the Consolidated Appropriation Act, 2021 (Public Law 116-

of covered loans).

(C) Section 9, DIVISION N, TITLE III (relating to CONTINUING

THE PAYCHECK PROTECTION PROGRAM AND OTHER SMALL BUSINESS

SUPPORT) of the Consolidated Appropriation Act, 2021 (Public Law

116-260).

(ii) The exclusion provided under this paragraph shall apply

to a forgiveness of indebtedness for an amount of a covered loan

UNDER SECTIONS 276 AND 278(A) OF THE COVID-RELATED TAX RELIEF

ACT OF 2020, ENACTED AS SUBTITLE B OF TITLE II OF DIVISION N OF

THE CONSOLIDATED APPROPRIATIONS ACT, 2021 (PUBLIC LAW 116-260,

134 STAT. 1182).

(II) NO DEDUCTION MAY BE DISALLOWED FOR AN EXPENSE THAT IS

OTHERWISE DEDUCTIBLE IF THE PAYMENT OF THE EXPENSE RESULTS IN

FORGIVENESS OF A COVERED LOAN UNDER SUBPARAGRAPH (I).

* * *

(A.11) THE REQUIREMENTS OF SECTION 1031 OF THE INTERNAL

REVENUE CODE OF 1986 (26 U.S.C. § 1031) IN EFFECT ON THE

EFFECTIVE DATE OF THIS SUBSECTION SHALL BE APPLICABLE.

* * *

SECTION 2. THIS ACT SHALL APPLY AS FOLLOWS:

(1) THE ADDITION OF SECTION 303(A.7)(5) OF THE ACT SHALL

APPLY TO THE TAXABLE YEAR IN WHICH A LOAN UNDER SECTION

303(A.7)(5)(I) OF THE ACT WAS FORGIVEN.

(2) THE ADDITION OF SECTION 303(A.7)(6) OF THE ACT SHALL

APPLY TO A TAXABLE YEAR IN WHICH A PAYMENT UNDER SECTION

APPLY TO TRANSACTIONS OCCURRING IN TAX YEARS BEGINNING AFTER

DECEMBER 31, 2021.

SECTION 3. REPEALS ARE AS FOLLOWS:

(1) THE GENERAL ASSEMBLY DECLARES THAT THE REPEAL UNDER

PARAGRAPH (2) IS NECESSARY TO EFFECTUATE THE ADDITION OF

SECTION 4. THE ADDITION OF SECTION 303(A.7)(5) AND (6) OF

ALL ACTIVITIES INITIATED UNDER SECTION 104-A OF THE FISCAL CODE

SHALL CONTINUE AND REMAIN IN FULL FORCE AND EFFECT AND MAY BE

COMPLETED UNDER SECTION 303(A.7)(5) AND (6) OF THE ACT. ORDERS,

REGULATIONS, RULES AND DECISIONS WHICH WERE MADE UNDER SECTION

104-A OF THE FISCAL CODE AND WHICH ARE IN EFFECT ON THE

EFFECTIVE DATE OF SECTION 3(2) OF THIS ACT SHALL REMAIN IN FULL

FORCE AND EFFECT UNTIL REVOKED, VACATED OR MODIFIED UNDER

SECTION 303(A.7)(5) AND (6) OF THE ACT. CONTRACTS, OBLIGATIONS

AND COLLECTIVE BARGAINING AGREEMENTS ENTERED INTO UNDER THE

SECTION 104-A OF THE FISCAL CODE ARE NOT AFFECTED NOR IMPAIRED