H2297B3347A06858 RLE:SRA 05/02/08 #90 A06858
AMENDMENTS TO HOUSE BILL NO. 2297
Sponsor: REPRESENTATIVE DALEY
Printer's No. 3347
1 Amend Title, page 1, lines 1 through 16, by striking out all
2 of said lines and inserting
3 Amending the act of October 6, 1998 (P.L.705, No.92), entitled,
4 as amended, "An act providing for the creation of keystone
5 opportunity zones and keystone opportunity expansion zones to
6 foster economic opportunities in this Commonwealth, to
7 facilitate economic development, stimulate industrial,
8 commercial and residential improvements and prevent physical
9 and infrastructure deterioration of geographic areas within
10 this Commonwealth; authorizing expenditures; providing tax
11 exemptions, tax deductions, tax abatements and tax credits;
12 creating additional obligations of the Commonwealth and local
13 governmental units; and prescribing powers and duties of
14 certain State and local departments, agencies and officials,"
15 providing for extension for unoccupied parcels, for
16 additional subzones authorized and for substitution of
17 parcels; and further providing for sales and use tax, for
18 corporate net income tax, for local earned income, net
19 profits and business privilege taxes and for local sales and
20 use tax.
21 Amend Bill, page 1, lines 9 through 24; pages 2 through 6,
22 lines 1 through 30; page 7, lines 1 through 12, by striking out
23 all of said lines on said pages and inserting
24 Section 1. The act of October 6, 1998 (P.L.705, No.92),
25 known as the Keystone Opportunity Zone, Keystone Opportunity
26 Expansion Zone and Keystone Opportunity Improvement Zone Act, is
27 amended by adding sections to read:
28 Section 301.3. Extension for unoccupied parcels.
29 (a) Requests.--Notwithstanding any other provisions of this
30 act, the department may, as provided in this section, grant
31 requests for the extension of all deductions, abatements or
32 credits for any subzones or keystone opportunity improvement
33 zones previously certified under this act.
34 (b) Requirements.--Extensions of deductions, abatements or
35 credits under this section shall apply only to properties which
36 are unoccupied and which qualify as deteriorated on a basis
37 other than being underutilized.
38 (c) Applications.--Applications under this section shall be
1 made to the department no later than May 31, 2009. Applications
2 must include all ordinances, resolutions or other required
3 action of all affected political subdivisions approving the
4 extension of deductions, abatements or credits set forth under
5 this act. The department shall certify the extensions by June
6 30, 2009.
7 (d) Expiration.--For subzones or keystone opportunity
8 improvement zones that expire December 31, 2008, an application
9 may be submitted to the department to temporarily delay the
10 expiration of the deductions, abatements and credits under the
11 existing subzone until June 30, 2009. The application shall
12 include all ordinances, resolutions or other required action of
13 all affected political subdivisions approving the requested
14 delay in the expiration of the subzone or keystone opportunity
15 improvement zone and shall be submitted to the department by
16 November 30, 2008. The department shall certify the delay in the
17 expiration by December 31, 2008. Subzones or keystone
18 opportunity improvement zones whose expiration is delayed under
19 this subsection may apply for an extension under subsection (c)
20 and an extension granted under this section shall be deemed to
21 have begun January 1, 2009.
22 (e) Duration of extension.--The department may approve an
23 application for extension of the deductions, abatements and
24 credits under subsection (c) for:
25 (1) seven years, provided that the deductions,
26 abatements and credits, for the extended period shall
27 commence only upon occupancy and terminate seven years from
28 the termination date of the existing subzone or keystone
29 opportunity improvement zone; or
30 (2) ten years, provided that the deductions, abatements
31 and credits, for the extended period, shall commence only
32 upon occupancy and terminate ten years from the date of
33 occupancy if the property is occupied within seven years
34 following the termination date of the existing subzone or
35 keystone opportunity improvement zone.
36 Section 301.4. Additional subzones authorized.
37 (a) Designation.--Notwithstanding any provision of this act,
38 the department may designate additional subzones in any county.
39 (b) Requirements.--Subzones designated under this
40 subsection:
41 (1) may not be less than ten acres in size, unless
42 contiguous to an existing subzone, in which case no minimum
43 acreage shall be required;
44 (2) may not, in the aggregate, exceed 350 acres in each
45 county; and
46 (3) shall be comprised only of parcels which:
47 (i) qualify as deteriorated only on a basis other
48 than being underutilized and are unoccupied as of the
49 effective date of this subsection; or
50 (ii) are occupied by a business that:
51 (A) creates or retains at least 1,400 full-time
52 jobs in this Commonwealth within three years of
53 approval of the subzone; and
54 (B) makes a capital investment of at least
55 $750,000,000 in the subzone within three years of
56 approval of the subzone.
57 (c) Application and approval.--Application for a subzone
58 under this section shall be made to the department in accordance
59 with the provisions of section 302(a)(1), (2), (3), (5) and (6)
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1 no later than May 31, 2009, and shall be certified by the
2 department on or before June 30, 2009.
3 (d) Duration of subzones.--Subzones designated under this
4 section shall be entitled to all tax exemptions, deductions,
5 abatements and credits set forth in this act for a period not to
6 exceed ten years, beginning January 1, 2009, and ending December
7 31, 2018.
8 Section 301.5. Substitution of parcels within a subzone.
9 (a) Approval.--In the event of a decertification and removal
10 of the designation of a deteriorated property as part of a
11 subzone under section 309, the department may approve a
12 substitution of other parcels within the zone or subzone
13 containing no more than the aggregate acreage being decertified.
14 (b) Application and approval.--Applications to substitute
15 parcels under this section shall be made to the department no
16 later than May 31, 2009. Applications under this section shall
17 be made to the department in accordance with section 302(a)(1),
18 (2), (3), (5) and (6). The department shall certify the
19 substitutions by June 30, 2009.
20 (c) Subzones set to expire on December 31, 2008.--For
21 subzones that expire December 31, 2008, an application may be
22 submitted to the department to temporarily delay the expiration
23 of the deductions, abatements and credits under the existing
24 subzone until June 30, 2009. The application shall include all
25 ordinances, resolutions or other required action of all affected
26 political subdivisions approving the requested delay in the
27 expiration of the subzone and shall be submitted to the
28 department by November 30, 2008. The department shall certify
29 the delay in the expiration by December 31, 2008. Subzones whose
30 expiration are delayed under this subsection may apply for a
31 substitution of parcels under subsection (a).
32 (d) Extension of substituted parcels.--Upon approval by the
33 department of a substitution of parcels under this section, the
34 department may approve an extension of the substituted parcels
35 under section 301.3.
36 Section 2. Section 511 of the act, amended December 9, 2002
37 (P.L.1727, No.217), is amended to read:
38 Section 511. Sales and use tax.
39 [(a) Exemption.--]Sales at retail of services or tangible
40 personal property, other than motor vehicles, to a qualified
41 business or a construction contractor pursuant to a construction
42 contract with a qualified business, for the exclusive use,
43 consumption and utilization of the tangible personal property or
44 service by the qualified business or the construction contractor
45 at [its] the qualified business's facility located within a
46 subzone, improvement subzone or expansion subzone are exempt
47 from the sales and use tax imposed under Article II of the Tax
48 Reform Code of 1971. No person shall be allowed an exemption for
49 sales conducted prior to designation of the real property as
50 part of a subzone or expansion subzone.
51 [(b) Construction contracts.--For any construction contract
52 performed in a subzone, improvement subzone or expansion
53 subzone, the exemption provided in subsection (a) shall only
54 apply to the sale at retail or use of building machinery and
55 equipment to a qualified business, or to a construction
56 contractor pursuant to a construction contract with a qualified
57 business, for the exclusive use, consumption and utilization by
58 the qualified business at its facility in a subzone, improvement
59 subzone or expansion subzone. For the purposes of the subzone,
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1 improvement subzone or expansion subzone exemption, building
2 machinery and equipment shall include distribution equipment
3 purchased for the exclusive use, consumption and utilization in
4 a subzone, improvement subzone or expansion subzone facility.]
5 Section 3. Section 515(d)(3) of the act, amended December
6 23, 2003 (P.L.360, No.51), is amended to read:
7 Section 515. Corporate net income tax.
8 * * *
9 (d) Income apportionment.--The taxable income of a
10 corporation that is a qualified business shall be apportioned to
11 the subzone, improvement subzone or expansion subzone by
12 multiplying the Pennsylvania taxable income by a fraction, the
13 numerator of which is the property factor plus the payroll
14 factor [plus the sales factor] and the denominator of which is
15 [three] two, in accordance with the following:
16 * * *
17 [(3) The sales factor is a fraction, the numerator of
18 which is the total sales of the taxpayer in the subzone,
19 improvement subzone or expansion subzone during the tax
20 period and the denominator of which is the total sales of the
21 taxpayer in this Commonwealth during the tax period.
22 (i) Sales of tangible personal property are in the
23 subzone, improvement subzone or expansion subzone if the
24 property is delivered or shipped to a purchaser that
25 takes possession within the subzone, improvement subzone
26 or expansion subzone regardless of the F.O.B. point or
27 other conditions of the sale.
28 (ii) Sales other than sales of tangible personal
29 property are in the subzone, improvement subzone or
30 expansion subzone if:
31 (A) the income-producing activity is performed
32 in the subzone, improvement subzone or expansion
33 subzone; or
34 (B) the income-producing activity is performed
35 both within and without the subzone, improvement
36 subzone or expansion subzone and a greater proportion
37 of the income-producing activity is performed in the
38 subzone, improvement subzone or expansion subzone
39 than in any other location, based on costs of
40 performance.]
41 * * *
42 Section 3.1. Section 703 of the act is amended by adding a
43 subsection to read:
44 Section 703. Local earned income and net profits taxes;
45 business privilege taxes.
46 * * *
47 (g) Determination of exemption.--For the purposes of
48 determining an exemption under this section, a tax on or
49 measured by any of the following shall be attributed to business
50 activity conducted within a subzone, improvement zone or
51 expansion zone by applying the apportionment factors under
52 section 515(d):
53 (1) Business gross receipts.
54 (2) Gross or net income.
55 (3) Gross or net profits.
56 Section 4. Section 705 of the act, amended December 9, 2002
57 (P.L.1727, No.217), is amended to read:
58 Section 705. Local sales and use tax.
59 (a) General rule.--The political subdivision shall exempt
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1 sales at retail of services or tangible personal property,
2 except motor vehicles, to a qualified business or a construction
3 contractor pursuant to a construction contract with a qualified
4 business, for the exclusive use, consumption and utilization of
5 the tangible personal property or service by the qualified
6 business or the construction contractor at [its] the qualified
7 business's facility located within a subzone, improvement
8 subzone or expansion subzone from a city or county tax on
9 purchase price authorized under Article XXXI-B of the act of
10 July 28, 1953 (P.L.723, No.230), known as the Second Class
11 County Code, as amended, and the act of June 5, 1991 (P.L.9,
12 No.6), known as the Pennsylvania Intergovernmental Cooperation
13 Authority Act for Cities of the First Class, as amended. No
14 exemption may be granted for sales occurring prior to
15 designation of the real property as part of a subzone or
16 expansion subzone.
17 (b) [Construction contracts.--For any construction contract
18 performed in a subzone, improvement subzone or expansion
19 subzone, the exemption provided in subsection (a) shall only
20 apply to the sale at retail or use of building machinery and
21 equipment to a qualified business, or to a construction
22 contractor pursuant to a construction contract with a qualified
23 business, for the exclusive use, consumption and utilization by
24 the qualified business at its facility in a subzone, improvement
25 subzone or expansion subzone. For the purposes of the subzone,
26 improvement subzone or expansion subzone exemption, building
27 machinery and equipment shall include distribution equipment
28 purchased for the exclusive use, consumption and utilization in
29 a subzone, improvement subzone or expansion subzone facility.]
30 (Reserved).
31 (c) Definition.--Sales at retail of tangible personal
32 property and services shall be defined in accordance with
33 Article II of the Tax Reform Code of 1971.
34 Section 5. The amendment of section 515 of the act shall
35 apply to taxable years beginning after December 31, 2008.
36 Section 6. This act shall take effect immediately.
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