PRINTER'S NO. 3202
No. 2405 Session of 2000
INTRODUCED BY PIPPY, BOYES, TRELLO, BARRAR, FRANKEL, GANNON,
HASAY, ORIE, RAYMOND, ROSS, STETLER AND WILT, MARCH 16, 2000
REFERRED TO COMMITTEE ON FINANCE, MARCH 16, 2000
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further defining "domestic entity" and "foreign
11 entity"; and adding a definition for purposes of capital
12 stock and franchise taxes.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. The definitions of "domestic entity" and "foreign
16 entity" in section 601 of the act of March 4, 1971 (P.L.6,
17 No.2), known as the Tax Reform Code of 1971, amended May 12,
18 1999 (P.L.26, No.4), are amended and the section is amended by
19 adding a definition to read:
20 Section 601. Definitions and Reports.--(a) The following
21 words, terms and phrases when used in this Article VI shall have
22 the meaning ascribed to them in this section, except where the
23 context clearly indicates a different meaning:
1 * * *
2 "Domestic entity." Every corporation organized or
3 incorporated by or under any laws of the Commonwealth, other
4 than corporations of the first class and cooperative
5 agricultural associations not having capital stock and not
6 conducted for profit, banks, savings institutions, title
7 insurance or trust companies, building and loan associations and
8 insurance companies is a domestic entity. The term "domestic
9 entity" shall not include:
10 (1) Any domestic or foreign business trust that qualifies as
11 a real estate investment trust under section 856 of the Internal
12 Revenue Code or a qualified real estate investment trust
13 subsidiary under section 856(i) of the Internal Revenue Code or
14 any related domestic or foreign business trust which confines
15 its activities in this Commonwealth to the maintenance,
16 administration and management of intangible investments and
17 activities of real estate investment trusts or qualified real
18 estate investment trust subsidiaries. A qualified real estate
19 investment trust subsidiary under section 856(i) of the Internal
20 Revenue Code shall be treated as part of the real estate
21 investment trust that owns all of the stock of the qualified
22 real estate investment trust subsidiary.
23 (2) Any domestic or foreign business trust that qualifies as
24 a regulated investment company under section 851 of the Internal
25 Revenue Code and is registered with the United States Securities
26 and Exchange Commission under the Investment Company Act of 1940
27 or any related domestic or foreign business trust which confines
28 its activities in this Commonwealth to the maintenance,
29 administration and management of intangible investments and
30 activities of regulated investment companies.
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1 (3) Any corporation, trust or other entity that is an exempt
2 organization as defined by section 501 of the Internal Revenue
3 Code of 1986 (Public Law 99-514, 26 U.S.C. § 501).
4 (4) Any corporation, trust or other entity organized as a
5 not-for-profit under the laws of this Commonwealth or the laws
6 of any other state that:
7 (i) would qualify as an exempt organization as defined by
8 section 501 of the Internal Revenue Code of 1986;
9 (ii) would qualify as a homeowners association as defined by
10 section 528(c) of the Internal Revenue Code of 1986 (26 U.S.C. §
11 528(c)); or
12 (iii) is a membership organization subject to the Federal
13 limitations on deductions from taxable income under section 277
14 of the Internal Revenue Code of 1986 (26 U.S.C. § 277) but only
15 if no pecuniary gain or profit inures to any member or related
16 entity from the membership organization.
17 (5) Any investment trust.
18 * * *
19 "Foreign entity." Every corporation incorporated or
20 organized by or under the laws of any jurisdiction other than
21 the Commonwealth, and doing business in and liable to taxation
22 within the Commonwealth or carrying on activities in the
23 Commonwealth, including solicitation or either owning or having
24 capital or property employed or used in the Commonwealth by or
25 in the name of any limited partnership or joint-stock
26 association, copartnership or copartnerships, person or persons,
27 or in any other manner doing business within and liable to
28 taxation within the Commonwealth other than banks, savings
29 institutions, title insurance or trust companies, building and
30 loan associations and insurance companies is a foreign entity.
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1 The term "foreign entity" shall not include:
2 (1) Any domestic or foreign business trust that qualifies as
3 a real estate investment trust under section 856 of the Internal
4 Revenue Code or a qualified real estate investment trust
5 subsidiary under section 856(i) of the Internal Revenue Code or
6 any related domestic or foreign business trust which confines
7 its activities in this Commonwealth to the maintenance,
8 administration and management of intangible investments and
9 activities of real estate investment trusts or qualified real
10 estate investment trust subsidiaries. A qualified real estate
11 investment trust subsidiary under section 856(i) of the Internal
12 Revenue Code shall be treated as part of the real estate
13 investment trust that owns all of the stock of the qualified
14 real estate investment trust subsidiary.
15 (2) Any domestic or foreign business trust that qualifies as
16 a regulated investment company under section 851 of the Internal
17 Revenue Code and is registered with the United States Securities
18 and Exchange Commission under the Investment Company Act of 1940
19 or any related domestic or foreign business trust which confines
20 its activities in this Commonwealth to the maintenance,
21 administration and management of intangible investments and
22 activities of regulated investment companies.
23 (3) Any corporation, trust or other entity that is an exempt
24 organization as defined by section 501 of the Internal Revenue
25 Code of 1986.
26 (4) Any corporation, trust or other entity organized as a
27 not-for-profit under the laws of this Commonwealth or the laws
28 of any other state that:
29 (i) would qualify as an exempt organization as defined by
30 section 501 of the Internal Revenue Code of 1986;
20000H2405B3202 - 4 -
1 (ii) would qualify as a homeowners association as defined by
2 section 528(c) of the Internal Revenue Code of 1986; or
3 (iii) is a membership organization subject to the Federal
4 limitations on deductions from taxable income under section 277
5 of the Internal Revenue Code of 1986 but only if no pecuniary
6 gain or profit inures to any member or related entity from the
7 membership organization.
8 (5) Any investment trust.
9 * * *
10 "Investment trust." A trust created for the purpose of
11 protecting and conserving a fixed portfolio of assets and which
12 is taxed as a partnership for Federal income tax purposes as
13 described under Treasury regulation section 301.7701-4(c) and
14 any successor thereto.
15 Section 2. This act shall take effect in 60 days.
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