Regular Session 2023-2024 House Bill 1994 P.N. 3691

PRIOR PRINTER'S NO. 2528

PRINTER'S NO. 3691

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1994

Session of

2024

INTRODUCED BY BRIGGS, MADDEN, GREINER, McNEILL, KINSEY,

BIZZARRO, KAZEEM, SANCHEZ, CEPEDA-FREYTIZ, HILL-EVANS,

WARREN, D. WILLIAMS, GREEN, MAYES, BOROWSKI, MUNROE, D'ORSIE,

WATRO, DIAMOND, JOZWIAK, MERCURI, ROWE, FRITZ, GROVE,

PICKETT, RADER AND WEBSTER, JANUARY 31, 2024

AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,

AS AMENDED, OCTOBER 1, 2024

AN ACT

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

penalties," in procedure and administration, further

providing for definitions and for review by board and

providing for settlement conference process.

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

PENALTIES," IN CORPORATE NET INCOME TAX, FURTHER PROVIDING

FOR DEFINITIONS; IN PROCEDURE AND ADMINISTRATION, FURTHER

PROVIDING FOR PETITION FOR REASSESSMENT AND FOR REVIEW BY

BOARD AND PROVIDING FOR SETTLEMENT CONFERENCE PROCESS, FOR

CLOSING AGREEMENTS AND FOR REPORT TO GENERAL ASSEMBLY; AND,

IN GENERAL PROVISIONS, FURTHER PROVIDING FOR TIMELY FILING.

The General Assembly of the Commonwealth of Pennsylvania

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hereby enacts as follows:

Section 1. Section 2701 of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971, is amended by

adding a definition to read:

Section 2701. Definitions.

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:

* * *

"Treasurer." The State Treasurer of the Commonwealth.

Section 2. Section 2704(d.7) of the act is amended and the

section is amended by adding a subsection to read:

Section 2704. Review by board.

* * *

(a.1) Extension for filing petition.--Notwithstanding any

provision to the contrary, the date for filing a petition

required under this article with the board may be extended by

the board upon:

(1) written application for good cause shown; and

(2) a finding that granting the application will not

prejudice the other party.

* * *

[(d.7) Compromise settlement.--The board shall establish

procedures to facilitate the compromise settlement of issues on

appeal. A compromise settlement shall be ordered by the board

only with the agreement of both the petitioner and the

department. The provisions of section 2707(c) shall be

applicable to compromise settlements under this section.]

* * *

Section 3. The act is amended by adding a section to read:

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Section 2704.1. Settlement conference process.

(a) Settlement officer.-- The board shall appoint one or more

individuals to serve as a settlement officer for a settlement

conference initiated under subsection (b), to whom the following

shall apply:

(1) A settlement officer may be either an employee of

the board or a third-party contractor retained by the board.

(2) A settlement officer:

(i) must be a citizen of the United States;

(ii) must be an attorney in good standing before the

Supreme Court of Pennsylvania or a certified public

accountant in good standing before the State Board of

Accountancy;

(iii) must have significant experience in a position

requiring substantial knowledge of Pennsylvania tax law;

and

(iv) may not be employed by the department, board or

the treasurer, other than in the capacity as a settlement

officer.

(3) A settlement officer shall:

(i) be fair and impartial and is not permitted to

preside over a settlement conference if the settlement

officer cannot conduct it in an impartial manner; and

(ii) disclose, as soon as practicable, all actual

and potential conflicts of interest that are reasonably

known to the settlement officer and could reasonably be

seen as raising a question about the officer's interest

in the outcome unless the petitioner and the department

consent in writing.

(4) The board may remove a settlement officer at its

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sole discretion.

(5) The treasurer shall set the compensation for a

settlement officer.

(b) Request for settlement conference.--Notwithstanding

section 2704(f)(1), either party may submit a request for, or

the board may direct, a settlement conference to settle a

petition for review of a decision and order under the board's

jurisdiction. The request for a settlement conference shall be

submitted to the board, unless the settlement conference is

directed by the board, by filing a written request with the

petition or within 30 days of the petition being filed. The

board may allow settlement conferences after the deadline in the

exercise of discretion or upon application for good cause. The

following shall apply:

(1) The board may defer consideration of the petition

until after either party declines to participate in a

settlement conference or the settlement conference is deemed

terminated under subsection (e). If the board defers

consideration of the petition, the board shall issue a

decision and order disposing of the petition within six

months of the party's refusal to participate in a settlement

conference or termination.

(2) The party requesting a settlement conference shall

simultaneously notify the other party or parties and the

board of the request, unless the board initiated the

settlement conference.

(3) A request for settlement must provide a brief

description of the dispute and the relief requested. The

nonrequesting party or parties must file a written response

with the board and provide a copy to the requesting party in

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support of or opposition to the settlement conference within

10 business days of the requestor's submission.

(4) The board, within five business days of receipt of

the response in support of or opposition to the settlement

conference, shall notify the parties in writing whether the

board will refer an appeal to a settlement conference.

(5) A petitioner may decline to participate in a

settlement conference upon providing the board with written

notice of its intent not to participate within five business

days of receipt of notice of the referral.

settlement conference requested under subsection (b):

(1) A settlement conference shall be held no later than

60 days from the date the board refers a case for settlement

conference.

(2) The settlement officer shall set the date, time and

place for each conference. The parties shall respond to

requests for conference dates in a timely manner, be

cooperative in scheduling the earliest practicable date and

adhere to the established conference schedule. The settlement

officer, in the exercise of discretion or upon application

for good cause, may reschedule a conference. The settlement

officer shall provide notice of the conference to the parties

in advance of the conference date.

(3) A settlement conference and related settlement

conference communications are private proceedings. A

representative of each party must attend each settlement

conference. A party is not required to attend each settlement

conference unless the party does not have representation.

Other individuals may attend a settlement conference only

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with the permission of the parties and with the consent of

the settlement officer.

(4) A settlement conference may be conducted virtually

or in person.

(5) A settlement conference may not be recorded

electronically or in any other manner, regardless of the

consent of the parties.

(6) The following shall apply to representation at a

settlement conference:

(i) A party is not required to retain representation

for a settlement conference.

(ii) If a party retains representation, the party

may be represented at a settlement conference by any

individual of the party's choosing.

(iii) Each party must have a representative attend a

settlement conference who has the authority to consummate

a settlement, which shall include each party who has not

retained representation.

(7) The settlement officer shall conduct the settlement

conference in an informal manner with the purpose of

facilitating a settlement between the petitioner and the

department. The settlement officer is authorized to conduct

separate or ex parte meetings and other communications with

the parties, and any representatives of the parties, before,

during and after any scheduled settlement conference.

(8) Prior to and during the scheduled settlement

conference the parties and their representatives shall, as

appropriate to each party's circumstances, exercise best

efforts to prepare for and engage in a meaningful and

productive settlement conference.

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(9) The parties are encouraged to exchange all documents

pertinent to the relief requested. The settlement officer may

request the exchange of memoranda on issues, including the

underlying interests and the history of the parties'

negotiations. Information that a party wishes to keep

confidential may be sent to the settlement officer, as

necessary, in a separate communication with the settlement

officer.

(10) Confidential information disclosed to a settlement

officer by a party in the course of a settlement conference

shall not be divulged by the settlement officer. The

settlement officer shall maintain the confidentiality of all

information obtained in the settlement conference, and all

records, reports or other documents received by the

settlement officer while serving in that capacity shall be

confidential. The settlement officer shall be subject to the

provisions and penalties of section 731 of the act of April

9, 1929 (P.L.343, No.176), known as The Fiscal Code.

(11) The settlement officer must return to each

respective party all documents containing confidential

information presented at the settlement conference within 30

days after the earlier of the date that the board accepts a

settlement, or the board mails its order deciding the case.

(12) A party must submit to the board any documents

intended to be used in support of the party's appeal. The

documents must be submitted in accordance with the rules and

procedures of the board for submitting additional evidence.

(13) The settlement officer shall not be compelled to

divulge confidential records or to testify in regard to the

settlement conference in any administrative, judicial or

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other proceeding.

(14) No confidential or privileged document or other

record presented or included in a settlement conference shall

be subject to the act of February 14, 2008 (P.L.6, No.3),

known as the Right-to-Know-Law.

(15) Each party to a settlement conference shall

maintain the confidentiality of the settlement conference and

shall not rely on or introduce as evidence in any

administrative, judicial or other proceeding the following,

unless agreed to by the parties or required by applicable

law:

(i) Views expressed or suggestions made by a party

or other participant with respect to a possible

settlement of the dispute.

(ii) Admissions made by a party or other participant

in the course of the settlement conference.

(iii) Proposals made or views expressed by the

settlement officer.

(iv) The fact that a party had or had not indicated

willingness to accept a proposal for settlement made by

the settlement officer.

(16) A settlement officer is not a legal representative

of any party and has no fiduciary duty to any party.

(d) Post-settlement conference procedures.--

(1) The settlement officer shall evaluate the merits of

a dispute during the settlement conference. The evaluations

shall be communicated to each party privately or, if the

parties agree, to all parties jointly. Unless parties agree

otherwise, evaluations shall be communicated orally.

(2) The settlement officer does not have the authority

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to impose a settlement on the parties. Subject to the

discretion of the settlement officer, the officer may make

oral or written recommendations for settlement to a party

privately or, if the parties agree, to all parties jointly.

(3) In the event a settlement of all or some of the

issues in dispute is not achieved within the scheduled

settlement conference, the settlement officer may continue to

communicate with the parties for a period of time not to

exceed 30 days from the date of the settlement conference,

during which time the parties agree to negotiate in earnest

in an ongoing effort to facilitate a complete settlement.

(4) If the parties to a settlement conference come to an

agreement, the parties shall present the terms of the

settlement to the board for approval in writing signed by all

parties within 10 business days after reaching the

settlement. The settlement agreement shall be approved by the

board if the board determines the agreement is not contrary

to law.

(5) If the parties to a settlement conference cannot

reach a settlement of any or all of the issues, the board

shall proceed in accordance with the procedure specified in

this act and regulations.

(6) A settlement agreement shall not be considered as

precedent and cannot be appealed.

(e) Termination of a settlement conference.--The settlement

conference shall be terminated:

(1) by the board approving a settlement agreement by the

parties;

(2) by a written declaration by the settlement officer

that further efforts at a settlement conference would not

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contribute to a resolution of the parties' dispute;

(3) by a written declaration of all parties that the

settlement conference is terminated; or

(4) when the settlement officer has represented in

writing to the board that there has been no communication

between the settlement officer and any party or party's

representative for 21 days following the conclusion of the

settlement conference.

(f) Exclusion of liability.--A settlement officer is not a

necessary or proper party in administrative, judicial or other

proceedings relating to the settlement conference.

Notwithstanding any provision of law to the contrary, parties to

a settlement conference under this section shall be deemed to

have consented that the settlement officer shall not be liable

to any party for any error, act or omission in connection with

any settlement conference conducted under this section. Parties

to a settlement conference under this section may not call a

settlement officer as a witness in litigation or any other

proceeding relating to the settlement conference. The settlement

officer is not competent to testify as a witness in any

proceeding related to the settlement conference.

(g) Rules and regulations.--The board may adopt rules and

regulations necessary to effectuate this section.

(h) Laws not applicable.--The provisions of 2 Pa.C.S.

(relating to administrative law and procedure) shall not apply

to a settlement conference conducted under this section.

Section 4. This act shall take effect in 60 days.

SECTION 1. SECTION 401(3)1(B.2) OF THE ACT OF MARCH 4, 1971

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

11, 2024 (P.L.674, NO.56), IS AMENDED TO READ:

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SECTION 401. DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND

PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING

ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT

CLEARLY INDICATES A DIFFERENT MEANING:

* * *

(3) "TAXABLE INCOME." 1. * * *

(B.2) AN ADDITIONAL DEDUCTION SHALL BE ALLOWED FROM THE

TAXABLE INCOME OF A MEDICAL CANNABIS BUSINESS IN THE AMOUNT OF

THE ORDINARY AND NECESSARY EXPENSES THAT WERE PAID OR INCURRED

BY THE MEDICAL CANNABIS BUSINESS DURING THE TAXABLE YEAR THAT

ARE ORDINARILY DEDUCTIBLE FOR FEDERAL INCOME TAX PURPOSES UNDER

SECTION 162 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-

514, 26 U.S.C. § 162) IF NO DEDUCTION FOR ORDINARY AND NECESSARY

EXPENSES PAID OR INCURRED BY THE MEDICAL CANNABIS BUSINESS WAS

TAKEN FOR FEDERAL INCOME TAX PURPOSES FOR THE TAXABLE YEAR. AS

USED IN THIS PHRASE, THE TERM "MEDICAL CANNABIS BUSINESS" SHALL

MEAN A MEDICAL MARIJUANA ORGANIZATION AS DEFINED IN SECTION 103

OF THE ACT OF APRIL 17, 2016 (P.L.84, NO.16), KNOWN AS THE

"MEDICAL MARIJUANA ACT," THAT HAS AN ACTIVE GROWER/PROCESSOR

PERMIT OR DISPENSARY PERMIT DURING THE TAXABLE YEAR FOR WHICH

THE DEDUCTION IS SOUGHT.

* * *

SECTION 2. SECTIONS 2702(A) AND 2704(A) OF THE ACT ARE

AMENDED TO READ:

SECTION 2702. PETITION FOR REASSESSMENT.

(A) GENERAL RULE.--[A]

(1) EXCEPT AS PROVIDED UNDER PARAGRAPH (2), A TAXPAYER

MAY FILE A PETITION FOR REASSESSMENT WITH THE DEPARTMENT

WITHIN 60 DAYS AFTER THE MAILING DATE OF THE NOTICE OF

ASSESSMENT.

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(2) FOR AN ASSESSMENT OF TAX IMPOSED UNDER ARTICLE III,

A TAXPAYER MAY FILE A PETITION FOR REASSESSMENT WITH THE

DEPARTMENT WITHIN 90 DAYS AFTER THE MAILING DATE OF THE

NOTICE OF ASSESSMENT. AN EXTENSION OF TIME FOR FILING THE

PETITION MAY BE ALLOWED FOR CAUSE BUT MAY NOT EXCEED AN

ADDITIONAL 30 DAYS.

* * *

SECTION 2704. REVIEW BY BOARD.

(A) PETITION FOR REVIEW OF A DECISION AND ORDER.--[WITHIN]

(1) EXCEPT AS PROVIDED UNDER PARAGRAPH (2), WITHIN 60

DAYS AFTER THE MAILING DATE OF THE DEPARTMENT'S NOTICE OF

DECISION AND ORDER ON A PETITION FILED WITH IT, A TAXPAYER

MAY PETITION THE BOARD TO REVIEW THE DECISION AND ORDER OF

THE DEPARTMENT.

(2) FOR AN ASSESSMENT OF TAX IMPOSED UNDER ARTICLE III,

A TAXPAYER MAY FILE A PETITION FOR REVIEW WITH THE BOARD

WITHIN 90 DAYS AFTER THE MAILING DATE OF THE DECISION AND

ORDER OF THE DEPARTMENT. AN EXTENSION OF TIME FOR FILING THE

PETITION MAY BE ALLOWED FOR CAUSE BUT MAY NOT EXCEED AN

ADDITIONAL 30 DAYS.

* * *

SECTION 3. THE ACT IS AMENDED BY ADDING SECTIONS TO READ:

SECTION 2704.1. SETTLEMENT CONFERENCE PROCESS.

(A) SETTLEMENT OFFICER.--THE BOARD SHALL APPOINT ONE OR MORE

INDIVIDUALS TO SERVE AS A SETTLEMENT OFFICER FOR A SETTLEMENT

CONFERENCE INITIATED UNDER SUBSECTION (B), AND THE FOLLOWING

SHALL APPLY:

(1) A SETTLEMENT OFFICER MUST BE A THIRD-PARTY

CONTRACTOR RETAINED BY THE BOARD.

(2) A SETTLEMENT OFFICER:

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(I) MUST BE A CITIZEN OF THE UNITED STATES;

(II) MUST BE AN ATTORNEY IN GOOD STANDING BEFORE THE

SUPREME COURT OF PENNSYLVANIA OR A CERTIFIED PUBLIC

ACCOUNTANT IN GOOD STANDING BEFORE THE STATE BOARD OF

ACCOUNTANCY;

(III) MUST HAVE SIGNIFICANT EXPERIENCE IN A POSITION

REQUIRING SUBSTANTIAL KNOWLEDGE OF PENNSYLVANIA TAX LAW;

AND

(IV) MAY NOT BE EMPLOYED BY THE DEPARTMENT, BOARD OR

THE STATE TREASURER, OTHER THAN IN THE CAPACITY AS A

SETTLEMENT OFFICER.

(3) A SETTLEMENT OFFICER:

(I) SHALL BE FAIR AND IMPARTIAL AND IS NOT PERMITTED

TO PRESIDE OVER A SETTLEMENT CONFERENCE IF THE SETTLEMENT

OFFICER CANNOT CONDUCT IT IN AN IMPARTIAL MANNER; AND

(II) SHALL DISCLOSE, AS SOON AS PRACTICABLE, ALL

ACTUAL AND POTENTIAL CONFLICTS OF INTEREST THAT ARE

REASONABLY KNOWN TO THE SETTLEMENT OFFICER AND COULD

REASONABLY BE SEEN AS RAISING A QUESTION ABOUT THE

OFFICER'S INTEREST IN THE OUTCOME UNLESS THE PETITIONER

AND THE DEPARTMENT CONSENT IN WRITING.

(4) THE BOARD MAY REMOVE A SETTLEMENT OFFICER AT ITS

SOLE DISCRETION.

(5) THE STATE TREASURER SHALL SET THE COMPENSATION FOR A

SETTLEMENT OFFICER.

(B) REQUEST FOR SETTLEMENT CONFERENCE.--NOTWITHSTANDING

SECTION 2704(F)(1), EITHER PARTY MAY SUBMIT A REQUEST FOR, OR

THE BOARD MAY DIRECT, A SETTLEMENT CONFERENCE TO SETTLE A

PETITION FOR REVIEW OF A DECISION AND ORDER UNDER THE BOARD'S

JURISDICTION. THE REQUEST FOR A SETTLEMENT CONFERENCE SHALL BE

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SUBMITTED TO THE BOARD, UNLESS THE SETTLEMENT CONFERENCE IS

DIRECTED BY THE BOARD, BY FILING A WRITTEN REQUEST WITH THE

PETITION OR WITHIN 30 DAYS OF THE PETITION BEING FILED. THE

BOARD MAY ALLOW SETTLEMENT CONFERENCES AFTER THE DEADLINE IN THE

EXERCISE OF DISCRETION OR UPON APPLICATION FOR GOOD CAUSE. THE

FOLLOWING SHALL APPLY:

(1) THE BOARD MAY DEFER CONSIDERATION OF THE PETITION

UNTIL AFTER THE PARTIES TERMINATE A SETTLEMENT CONFERENCE OR

THE SETTLEMENT CONFERENCE IS DEEMED TERMINATED UNDER

SUBSECTION (E). IF THE BOARD DEFERS CONSIDERATION OF THE

PETITION, THE BOARD SHALL ISSUE A DECISION AND ORDER

DISPOSING OF THE PETITION WITHIN SIX MONTHS OF THE PARTY'S

REFUSAL TO PARTICIPATE IN A SETTLEMENT CONFERENCE OR

TERMINATION.

(2) THE PARTY REQUESTING A SETTLEMENT CONFERENCE SHALL

SIMULTANEOUSLY NOTIFY THE OTHER PARTY OR PARTIES AND THE

BOARD OF THE REQUEST, UNLESS THE BOARD INITIATED THE

SETTLEMENT CONFERENCE.

(3) A REQUEST FOR SETTLEMENT MUST PROVIDE A BRIEF

DESCRIPTION OF THE DISPUTE AND THE RELIEF REQUESTED. THE

NONREQUESTING PARTY OR PARTIES MUST FILE A WRITTEN RESPONSE

WITH THE BOARD AND PROVIDE A COPY TO THE REQUESTING PARTY IN

SUPPORT OF OR OPPOSITION TO THE SETTLEMENT CONFERENCE WITHIN

10 BUSINESS DAYS OF THE REQUESTER'S SUBMISSION.

(4) THE BOARD, WITHIN FIVE BUSINESS DAYS OF RECEIPT OF

THE RESPONSE IN SUPPORT OF OR OPPOSITION TO THE SETTLEMENT

CONFERENCE, SHALL NOTIFY THE PARTIES IN WRITING WHETHER THE

BOARD WILL REFER AN APPEAL TO A SETTLEMENT CONFERENCE.

(5) A PETITIONER MAY DECLINE TO PARTICIPATE IN A

SETTLEMENT CONFERENCE UPON PROVIDING THE BOARD WITH WRITTEN

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NOTICE OF ITS INTENT NOT TO PARTICIPATE WITHIN FIVE BUSINESS

DAYS OF RECEIPT OF NOTICE OF THE REFERRAL.

SETTLEMENT CONFERENCE REQUESTED UNDER SUBSECTION (B):

(1) A SETTLEMENT CONFERENCE SHALL BE HELD NO LATER THAN

60 DAYS FROM THE DATE THE BOARD REFERS A CASE FOR SETTLEMENT

CONFERENCE.

(2) THE SETTLEMENT OFFICER SHALL SET THE DATE, TIME AND

PLACE FOR EACH CONFERENCE. THE PARTIES SHALL RESPOND TO

REQUESTS FOR CONFERENCE DATES IN A TIMELY MANNER, BE

COOPERATIVE IN SCHEDULING THE EARLIEST PRACTICABLE DATE AND

ADHERE TO THE ESTABLISHED CONFERENCE SCHEDULE. THE SETTLEMENT

OFFICER, IN THE EXERCISE OF DISCRETION OR UPON APPLICATION

FOR GOOD CAUSE, MAY RESCHEDULE A CONFERENCE. THE SETTLEMENT

OFFICER SHALL PROVIDE NOTICE OF THE CONFERENCE TO THE PARTIES

IN ADVANCE OF THE CONFERENCE DATE.

(3) A SETTLEMENT CONFERENCE AND RELATED SETTLEMENT

CONFERENCE COMMUNICATIONS ARE PRIVATE PROCEEDINGS. A

REPRESENTATIVE OF EACH PARTY MUST ATTEND EACH SETTLEMENT

CONFERENCE. A PARTY IS NOT REQUIRED TO ATTEND EACH SETTLEMENT

CONFERENCE UNLESS THE PARTY DOES NOT HAVE REPRESENTATION.

OTHER INDIVIDUALS MAY ATTEND A SETTLEMENT CONFERENCE ONLY

WITH THE PERMISSION OF THE PARTIES AND WITH THE CONSENT OF

THE SETTLEMENT OFFICER.

(4) A SETTLEMENT CONFERENCE MAY BE CONDUCTED VIRTUALLY

OR IN PERSON.

(5) A SETTLEMENT CONFERENCE MAY NOT BE RECORDED

ELECTRONICALLY OR IN ANY OTHER MANNER, REGARDLESS OF THE

CONSENT OF THE PARTIES.

(6) THE FOLLOWING SHALL APPLY TO REPRESENTATION AT A

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SETTLEMENT CONFERENCE:

(I) A PARTY IS NOT REQUIRED TO RETAIN REPRESENTATION

FOR A SETTLEMENT CONFERENCE.

(II) IF A PARTY RETAINS REPRESENTATION, THE PARTY

MAY BE REPRESENTED AT A SETTLEMENT CONFERENCE BY ANY

INDIVIDUAL OF THE PARTY'S CHOOSING.

(III) EACH PARTY MUST HAVE A REPRESENTATIVE ATTEND A

SETTLEMENT CONFERENCE WHO HAS THE AUTHORITY TO NEGOTIATE

A SETTLEMENT, WHICH SHALL INCLUDE EACH PARTY WHO HAS NOT

RETAINED REPRESENTATION.

(7) THE SETTLEMENT OFFICER SHALL CONDUCT THE SETTLEMENT

CONFERENCE IN AN INFORMAL MANNER WITH THE PURPOSE OF

FACILITATING A SETTLEMENT BETWEEN THE PETITIONER AND THE

DEPARTMENT. THE SETTLEMENT OFFICER IS AUTHORIZED TO CONDUCT

SEPARATE OR EX PARTE MEETINGS AND OTHER COMMUNICATIONS WITH

THE PARTIES, AND ANY REPRESENTATIVES OF THE PARTIES, BEFORE,

DURING AND AFTER ANY SCHEDULED SETTLEMENT CONFERENCE.

(8) PRIOR TO AND DURING THE SCHEDULED SETTLEMENT

CONFERENCE, THE PARTIES AND THEIR REPRESENTATIVES SHALL, AS

APPROPRIATE TO EACH PARTY'S CIRCUMSTANCES, EXERCISE BEST

EFFORTS TO PREPARE FOR AND ENGAGE IN A MEANINGFUL AND

PRODUCTIVE SETTLEMENT CONFERENCE.

(9) THE PARTIES ARE ENCOURAGED TO EXCHANGE ALL DOCUMENTS

PERTINENT TO THE RELIEF REQUESTED. THE SETTLEMENT OFFICER MAY

REQUEST THE EXCHANGE OF MEMORANDA ON ISSUES, INCLUDING THE

UNDERLYING INTERESTS AND THE HISTORY OF THE PARTIES'

NEGOTIATIONS. INFORMATION THAT A PARTY WISHES TO KEEP

CONFIDENTIAL MAY BE SENT TO THE SETTLEMENT OFFICER, AS

NECESSARY, IN A SEPARATE COMMUNICATION WITH THE SETTLEMENT

OFFICER.

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(10) CONFIDENTIAL INFORMATION DISCLOSED TO A SETTLEMENT

OFFICER BY A PARTY IN THE COURSE OF A SETTLEMENT CONFERENCE

SHALL NOT BE DIVULGED BY THE SETTLEMENT OFFICER. THE

SETTLEMENT OFFICER SHALL MAINTAIN THE CONFIDENTIALITY OF ALL

INFORMATION OBTAINED IN THE SETTLEMENT CONFERENCE, AND ALL

RECORDS, REPORTS OR OTHER DOCUMENTS RECEIVED BY THE

SETTLEMENT OFFICER WHILE SERVING IN THAT CAPACITY SHALL BE

CONFIDENTIAL. THE SETTLEMENT OFFICER SHALL BE SUBJECT TO THE

PROVISIONS AND PENALTIES OF SECTION 731 OF THE ACT OF APRIL

9, 1929 (P.L.343, NO.176), KNOWN AS THE FISCAL CODE.

(11) THE SETTLEMENT OFFICER MUST RETURN TO EACH

RESPECTIVE PARTY ALL DOCUMENTS CONTAINING CONFIDENTIAL

INFORMATION PRESENTED AT THE SETTLEMENT CONFERENCE WITHIN 30

DAYS AFTER THE EARLIER OF THE DATE THAT THE BOARD ACCEPTS A

SETTLEMENT OR THE BOARD MAILS ITS ORDER DECIDING THE CASE.

(12) A PARTY MUST SUBMIT TO THE BOARD ANY DOCUMENTS

INTENDED TO BE USED IN SUPPORT OF THE PARTY'S APPEAL. THE

DOCUMENTS MUST BE SUBMITTED IN ACCORDANCE WITH THE RULES AND

PROCEDURES OF THE BOARD FOR SUBMITTING ADDITIONAL EVIDENCE.

(13) THE SETTLEMENT OFFICER SHALL NOT BE COMPELLED TO

DIVULGE CONFIDENTIAL RECORDS OR TO TESTIFY IN REGARD TO THE

SETTLEMENT CONFERENCE IN ANY ADMINISTRATIVE, JUDICIAL OR

OTHER PROCEEDING.

(14) NO CONFIDENTIAL OR PRIVILEGED DOCUMENT OR OTHER

RECORD PRESENTED OR INCLUDED IN A SETTLEMENT CONFERENCE SHALL

BE SUBJECT TO ACCESS UNDER THE ACT OF FEBRUARY 14, 2008

(P.L.6, NO.3), KNOWN AS THE RIGHT-TO-KNOW LAW.

(15) EACH PARTY TO A SETTLEMENT CONFERENCE SHALL

MAINTAIN THE CONFIDENTIALITY OF THE SETTLEMENT CONFERENCE AND

SHALL NOT RELY ON OR INTRODUCE AS EVIDENCE IN ANY

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ADMINISTRATIVE, JUDICIAL OR OTHER PROCEEDING THE FOLLOWING,

UNLESS AGREED TO BY THE PARTIES OR REQUIRED BY APPLICABLE

LAW:

(I) VIEWS EXPRESSED OR SUGGESTIONS MADE BY A PARTY

OR OTHER PARTICIPANT WITH RESPECT TO A POSSIBLE

SETTLEMENT OF THE DISPUTE.

(II) ADMISSIONS MADE BY A PARTY OR OTHER PARTICIPANT

IN THE COURSE OF THE SETTLEMENT CONFERENCE.

(III) PROPOSALS MADE OR VIEWS EXPRESSED BY THE

SETTLEMENT OFFICER.

(IV) THE FACT THAT A PARTY HAD OR HAD NOT INDICATED

WILLINGNESS TO ACCEPT A PROPOSAL FOR SETTLEMENT MADE BY

THE SETTLEMENT OFFICER.

(16) A SETTLEMENT OFFICER IS NOT A LEGAL REPRESENTATIVE

OF ANY PARTY AND HAS NO FIDUCIARY DUTY TO ANY PARTY.

(D) POSTSETTLEMENT CONFERENCE PROCEDURES.--

(1) THE SETTLEMENT OFFICER SHALL EVALUATE THE MERITS OF

A DISPUTE DURING THE SETTLEMENT CONFERENCE. THE EVALUATIONS

SHALL BE COMMUNICATED TO EACH PARTY PRIVATELY OR, IF THE

PARTIES AGREE, TO ALL PARTIES JOINTLY. UNLESS PARTIES AGREE

OTHERWISE, EVALUATIONS SHALL BE COMMUNICATED ORALLY.

(2) THE SETTLEMENT OFFICER DOES NOT HAVE THE AUTHORITY

TO IMPOSE A SETTLEMENT ON THE PARTIES. SUBJECT TO THE

DISCRETION OF THE SETTLEMENT OFFICER, THE OFFICER MAY MAKE

ORAL OR WRITTEN RECOMMENDATIONS FOR SETTLEMENT TO A PARTY

PRIVATELY OR, IF THE PARTIES AGREE, TO ALL PARTIES JOINTLY.

(3) IN THE EVENT A SETTLEMENT OF ALL OR SOME OF THE

ISSUES IN DISPUTE IS NOT ACHIEVED WITHIN THE SCHEDULED

SETTLEMENT CONFERENCE, THE SETTLEMENT OFFICER MAY CONTINUE TO

COMMUNICATE WITH THE PARTIES FOR A PERIOD OF TIME NOT TO

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EXCEED 30 DAYS FROM THE DATE OF THE SETTLEMENT CONFERENCE,

DURING WHICH TIME THE PARTIES AGREE TO NEGOTIATE IN EARNEST

IN AN ONGOING EFFORT TO FACILITATE A COMPLETE SETTLEMENT.

(4) IF THE PARTIES TO A SETTLEMENT CONFERENCE COME TO AN

AGREEMENT, THE PARTIES SHALL PRESENT THE TERMS OF THE

SETTLEMENT TO THE BOARD FOR APPROVAL IN WRITING SIGNED BY ALL

PARTIES WITHIN 10 BUSINESS DAYS AFTER REACHING THE

SETTLEMENT. THE SETTLEMENT AGREEMENT SHALL BE APPROVED BY THE

BOARD IF THE BOARD DETERMINES THE AGREEMENT IS NOT CONTRARY

TO LAW.

(5) IF THE PARTIES TO A SETTLEMENT CONFERENCE CANNOT

REACH A SETTLEMENT OF ANY OR ALL OF THE ISSUES, THE BOARD

SHALL PROCEED IN ACCORDANCE WITH THE PROCEDURE SPECIFIED IN

THIS ACT AND REGULATIONS.

(6) A SETTLEMENT AGREEMENT SHALL NOT BE CONSIDERED AS

PRECEDENT AND CANNOT BE APPEALED.

(E) TERMINATION OF A SETTLEMENT CONFERENCE.--THE SETTLEMENT

CONFERENCE SHALL BE TERMINATED:

(1) BY THE BOARD APPROVING A SETTLEMENT AGREEMENT BY THE

PARTIES;

(2) BY A WRITTEN DECLARATION BY THE SETTLEMENT OFFICER

THAT FURTHER EFFORTS AT A SETTLEMENT CONFERENCE WOULD NOT

CONTRIBUTE TO A RESOLUTION OF THE PARTIES' DISPUTE;

(3) BY A WRITTEN DECLARATION OF ALL PARTIES THAT THE

SETTLEMENT CONFERENCE IS TERMINATED; OR

(4) WHEN THE SETTLEMENT OFFICER HAS REPRESENTED IN

WRITING TO THE BOARD THAT THERE HAS BEEN NO COMMUNICATION

BETWEEN THE SETTLEMENT OFFICER AND ANY PARTY OR PARTY'S

REPRESENTATIVE FOR 21 DAYS FOLLOWING THE CONCLUSION OF THE

SETTLEMENT CONFERENCE.

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(F) EXCLUSION OF LIABILITY.--A SETTLEMENT OFFICER IS NOT A

NECESSARY OR PROPER PARTY IN ADMINISTRATIVE, JUDICIAL OR OTHER

PROCEEDINGS RELATING TO THE SETTLEMENT CONFERENCE.

NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, PARTIES TO

A SETTLEMENT CONFERENCE UNDER THIS SECTION SHALL BE DEEMED TO

HAVE CONSENTED THAT THE SETTLEMENT OFFICER SHALL NOT BE LIABLE

TO ANY PARTY FOR ANY ERROR, ACT OR OMISSION IN CONNECTION WITH

ANY SETTLEMENT CONFERENCE CONDUCTED UNDER THIS SECTION. PARTIES

TO A SETTLEMENT CONFERENCE UNDER THIS SECTION MAY NOT CALL A

SETTLEMENT OFFICER AS A WITNESS IN LITIGATION OR ANY OTHER

PROCEEDING RELATING TO THE SETTLEMENT CONFERENCE. THE SETTLEMENT

OFFICER IS NOT COMPETENT TO TESTIFY AS A WITNESS IN ANY

PROCEEDING RELATED TO THE SETTLEMENT CONFERENCE.

(G) RULES AND REGULATIONS.--THE BOARD MAY ADOPT RULES AND

PROMULGATE REGULATIONS NECESSARY TO EFFECTUATE THIS SECTION.

(H) LAWS NOT APPLICABLE.--THE PROVISIONS OF 2 PA.C.S.

(RELATING TO ADMINISTRATIVE LAW AND PROCEDURE) SHALL NOT APPLY

TO A SETTLEMENT CONFERENCE CONDUCTED UNDER THIS SECTION.

SECTION 2708. CLOSING AGREEMENTS.

(A) AUTHORIZATION.--THE DEPARTMENT IS AUTHORIZED TO ENTER

INTO AN AGREEMENT IN WRITING WITH ANY PERSON RELATING TO THE

LIABILITY OF THE PERSON, OR OF THE PERSON OR ESTATE FOR WHOM THE

PERSON ACTS, IN RESPECT OF ANY TAX ADMINISTERED BY THE

DEPARTMENT FOR ANY TAXABLE PERIOD.

(B) FINALITY.--IF THE AGREEMENT IS APPROVED BY THE

DEPARTMENT, WITHIN A TIME AS MAY BE STATED IN THE AGREEMENT OR

LATER AGREED TO, THE AGREEMENT SHALL BE FINAL AND CONCLUSIVE,

AND, EXCEPT UPON A SHOWING OF FRAUD, MALFEASANCE OR

MISREPRESENTATION OF A MATERIAL FACT:

(1) THE CASE SHALL NOT BE REOPENED AS TO THE MATTERS

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AGREED UPON OR THE AGREEMENT MODIFIED BY ANY OFFICER,

EMPLOYEE OR AGENT OF THE DEPARTMENT.

(2) IN A SUIT, ACTION OR PROCEEDING, THE AGREEMENT, OR

ANY DETERMINATION, ASSESSMENT, COLLECTION, PAYMENT,

ABATEMENT, REFUND OR CREDIT MADE IN ACCORDANCE WITH THE

AGREEMENT, SHALL NOT BE ANNULLED, MODIFIED, SET ASIDE OR

DISREGARDED.

AUTHORIZED BY SUBSECTION (A), THE DEPARTMENT AGREES TO SUSPEND

THE COLLECTION OF ANY AMOUNTS OF TAX, PENALTIES, INTEREST OR

OTHER ADDITIONS TO TAX, THE DEPARTMENT MAY REIMPOSE ANY OF THE

SUSPENDED AMOUNTS IF THE PERSON WHO ENTERED INTO THE AGREEMENT

FAILS TO COMPLY WITH THE TERMS OF THE AGREEMENT.

SECTION 2709. REPORT TO GENERAL ASSEMBLY.

NO LATER THAN JUNE 1 OF THE SECOND YEAR AFTER THE EFFECTIVE

DATE OF THIS SECTION, AND EACH YEAR THEREAFTER, THE STATE

TREASURER SHALL SUBMIT A REPORT TO THE GENERAL ASSEMBLY

SUMMARIZING THE EFFECTIVENESS OF THE SETTLEMENT CONFERENCE

PROCESS IMPLEMENTED UNDER SECTION 2704.1. A COPY OF THE REPORT

SHALL BE DELIVERED TO THE CHAIRMAN AND MINORITY CHAIRMAN OF THE

FINANCE COMMITTEE OF THE SENATE AND THE CHAIRMAN AND MINORITY

CHAIRMAN OF THE FINANCE C OMMITTEE OF THE HOUSE OF

REPRESENTATIVES. THE REPORT SHALL, AT A MINIMUM, INCLUDE:

(1) THE NUMBER OF APPEALS OF TAX LIABILITY RESOLVED

THROUGH THE SETTLEMENT CONFERENCE PROCESS.

(2) THE NUMBER OF APPEALS OF TAX LIABILITY THAT WERE NOT

RESOLVED THROUGH THE SETTLEMENT CONFERENCE PROCESS.

(3) OF THE TAXPAYERS WHOSE APPEALS WERE RESOLVED THROUGH

THE SETTLEMENT CONFERENCE PROCESS, HOW MANY WERE INDIVIDUAL

TAXPAYERS AND HOW MANY WERE PASS-THROUGH ENTITIES.

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(4) THE AVERAGE AMOUNT OF TAX LIABILITY CONTESTED IN

CASES THAT WERE RESOLVED THROUGH THE SETTLEMENT CONFERENCE

PROCESS.

(5) THE AVERAGE NUMBER OF DAYS IT TOOK FOR APPEALS OF

TAX LIABILITY TO BE RESOLVED THROUGH THE SETTLEMENT

CONFERENCE PROCESS.

(6) RECOMMENDATIONS TO IMPROVE THE EFFECTIVENESS OF THE

SETTLEMENT CONFERENCE PROCESS, WHICH MAY BE IMPLEMENTED

THROUGH ADMINISTRATIVE PROCEDURE, GUIDELINES, RULES,

REGULATIONS OR LEGISLATION.

(7) ANY OTHER INFORMATION DEEMED NECESSARY BY THE STATE

TREASURER.

SECTION 4. SECTION 3003.6 OF THE ACT IS AMENDED TO READ:

SECTION 3003.6. TIMELY FILING.--(A) A TAXPAYER SHALL BE

DEEMED TO HAVE TIMELY FILED A PETITION FOR A REFUND, A PETITION

FOR REASSESSMENT OR ANY OTHER PROTEST RELATING TO THE ASSESSMENT

OF TAX OR ANY OTHER MATTER RELATING TO ANY TAX IMPOSED BY THIS

ACT IF THE LETTER TRANSMITTING THE PETITION IS RECEIVED BY THE

DEPARTMENT OF REVENUE OR IS POSTMARKED BY THE UNITED STATES

POSTAL SERVICE ON OR PRIOR TO THE FINAL DAY ON WHICH THE

PETITION IS REQUIRED TO BE FILED.

(B) FOR PURPOSES OF FILING A PETITION FOR REFUND, A PETITION

FOR REASSESSMENT OR A PETITION FOR REDETERMINATION WITH THE

DEPARTMENT OF REVENUE OR THE BOARD OF FINANCE AND REVENUE, THE

REFERENCE IN SUBSECTION (A) TO A POSTMARK BY THE UNITED STATES

POSTAL SERVICE SHALL INCLUDE ANY DATE RECORDED OR MARKED AS

DESCRIBED UNDER 26 U.S.C. § 7502(F)(2)(C) (RELATING TO TIMELY

MAILING TREATED AS TIMELY FILING AND PAYING) BY ANY DELIVERY

SERVICE DESIGNATED BY THE SECRETARY OF THE TREASURY OF THE

UNITED STATES UNDER 26 U.S.C. § 7502(F)(2).

20240HB1994PN3691 - 22 -

SECTION 5. THE AMENDMENT OF SECTION 401(3)1(B.2) OF THE ACT

SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2023.

SECTION 6. THIS ACT SHALL TAKE EFFECT AS FOLLOWS:

(1) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT

IMMEDIATELY:

(I) THE AMENDMENT OF SECTION 401(3)1(B.2) OF THE

ACT.

(II) THIS SECTION AND SECTION 5 OF THIS ACT.

(2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT IN 90

DAYS.

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