PRIOR PRINTER'S NO. 210 PRINTER'S NO. 445
No. 190 Session of 1971
INTRODUCED BY MESSRS. FINEMAN, IRVIS, ENGLEHART, PRENDERGAST, MRS. ANDERSON, MESSRS. E. B. DAVIS AND KAUFMAN, FEBRUARY 2, 1971
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES, FEBRUARY 12, 1971
AN ACT 1 Relating to tax reform and State taxation by codifying and 2 enumerating certain subjects of taxation and imposing taxes 3 thereon; providing procedures for the payment, collection, 4 administration and enforcement thereof; providing for tax 5 credits in certain cases; conferring powers and imposing 6 duties upon the Department of Revenue, certain employers, 7 fiduciaries, individuals, persons, corporations and other 8 entities; prescribing crimes, offenses and penalties. 9 The General Assembly of the Commonwealth of Pennsylvania 10 hereby enacts as follows: 11 ARTICLE I 12 SHORT TITLE 13 Section 101. Short Title.--This act shall be known and may 14 be cited as the "Tax Reform Code of 1971." 15 ARTICLE II 16 TAX FOR EDUCATION 17 PART I 18 DEFINITIONS 19 Section 201. Definitions.--The following words, terms and 20 phrases when used in this Article II shall have the meaning
1 ascribed to them in this section, except where the context 2 clearly indicates a different meaning: 3 (a) "Soft drinks." All nonalcoholic beverages, whether 4 carbonated or not, such as soda water, ginger ale, coca cola, 5 lime cola, pepsi cola, Dr. Pepper, fruit juice when plain or 6 carbonated water, flavoring or syrup is added, carbonated water, 7 orangeade, lemonade, root beer or any and all preparations, 8 commonly referred to as "soft drinks," of whatsoever kind, and 9 are further described as including any and all beverages, 10 commonly referred to as "soft drinks," which are made with or 11 without the use of any syrup. The term "soft drinks" shall not 12 include natural fruit or vegetable juices or their concentrates, 13 or non-carbonated fruit juice drinks containing not less than 14 twenty-five per cent by volume of natural fruit juices or of 15 fruit juice which has been reconstituted to its original state, 16 or natural concentrated fruit or vegetable juices reconstituted 17 to their original state, whether any of the foregoing natural 18 juices are frozen or unfrozen, sweetened or unsweetened, 19 seasoned with salt or spice or unseasoned, nor shall the term 20 "soft drinks" include coffee, coffee substitutes, tea, cocoa, 21 natural fluid milk or non-carbonated drinks made from milk 22 derivatives. 23 (b) "Maintaining a place of business in this Commonwealth." 24 (1) Having or maintaining within this Commonwealth, directly 25 or by a subsidiary, an office, distribution house, sales house, 26 warehouse, service enterprise or other place of business, or any 27 agent of general or restricted authority irrespective of whether 28 the place of business or agent is located here permanently or 29 temporarily or whether the person or subsidiary maintaining such 30 place of business or agent is authorized to do business within 19710H0190B0445 - 2 -
1 this Commonwealth; or 2 (2) The engaging in any activity as a business within this 3 Commonwealth by any person, directly or by a subsidiary, in 4 connection with the lease, sale or delivery of tangible personal 5 property or the performance of services thereon for use, storage 6 or consumption including, but not limited to, having, 7 maintaining or using any office, distribution house, sales 8 house, warehouse or other place of business, any stock of goods 9 or any solicitor, salesman, agent or representative under its 10 authority, at its direction or with its permission, regardless 11 of whether the person or subsidiary is authorized to do business 12 in this Commonwealth. 13 (3) Regularly or substantially soliciting orders within this 14 Commonwealth in connection with the lease, sale or delivery of 15 tangible personal property to or the performance thereon of 16 services for residents of this Commonwealth by means of 17 catalogues or other advertising, whether such orders are 18 accepted within or without this Commonwealth. 19 (c) "Manufacture." The performance as a business of those <-- 20 operations which transform personal property into a form, 21 composition and character substantially different from that in 22 which it was acquired whether for sale or use by the 23 manufacturer. For the purposes of this act, the term 24 "manufacture" shall include: 25 (C) "MANUFACTURE." THE PERFORMANCE OF MANUFACTURING, <-- 26 FABRICATING, COMPOUNDING, PROCESSING OR OTHER OPERATIONS, 27 ENGAGED IN AS A BUSINESS, WHICH PLACE ANY PERSONAL PROPERTY IN A 28 FORM, COMPOSITION OR CHARACTER DIFFERENT FROM THAT IN WHICH IT 29 IS ACQUIRED WHETHER FOR SALE OR USE BY THE MANUFACTURER, AND 30 SHALL INCLUDE, BUT NOT LIMITED TO-- 19710H0190B0445 - 3 -
1 (1) EVERY OPERATION COMMENCING WITH THE FIRST PRODUCTION 2 STAGE AND ENDING WITH THE COMPLETION OF PERSONAL PROPERTY HAVING 3 THE PHYSICAL QUALITIES (INCLUDING PACKAGING, IF ANY, PASSING TO 4 THE ULTIMATE CONSUMER) WHICH IT HAS WHEN TRANSFERRED BY THE 5 MANUFACTURER TO ANOTHER; 6 (1) (2) Printing; THE PUBLISHING OF BOOKS, NEWSPAPERS, <-- 7 MAGAZINES AND OTHER PERIODICALS AND PRINTING; 8 (2) (3) Refining, exploring, mining and quarrying for, or <-- 9 otherwise extracting from the earth any natural resources, 10 minerals and mineral aggregates; 11 (3) (4) Building, rebuilding, repairing and making additions <-- 12 to, or replacements in or upon vessels designed for commercial 13 use of registered tonnage of fifty tons or more when produced 14 upon special order of the purchaser, or when rebuilt, repaired 15 or enlarged, or when replacements are made upon order of, or for 16 the account of the owner; 17 (4) (5) Research having as its objective the production of a <-- 18 new or an improved (i) product or utility service, or (ii) 19 method of producing a product or utility service, but in either 20 case not including market research or research having as its 21 objective the improvement of administrative efficiency. 22 The term "manufacture," shall not include constructing, 23 altering, servicing, repairing or improving real estate or 24 repairing, servicing or installing personal property. 25 (d) "Processing." The performance of the following 26 activities when engaged in as a business enterprise: 27 (1) The cooking or freezing of fruits, vegetables, 28 mushrooms, fish, seafood, meats or poultry, when the person 29 engaged in such business packages such property in sealed 30 containers for wholesale distribution. 19710H0190B0445 - 4 -
1 (2) The scouring, carbonizing, cording, combing, throwing, 2 twisting or winding of natural or synthetic fibers, or the 3 spinning, bleaching, dyeing, printing or finishing of yarns or 4 fabrics, when such activities are performed prior to sale to the 5 ultimate consumer. 6 (3) The electroplating, galvanizing, enameling, anodizing, 7 coloring, finishing, impregnating or heat treating of metals or 8 plastics for sale or in the process of manufacturing. 9 (4) The rolling, drawing or extruding of ferrous and non- 10 ferrous metals. 11 (5) The fabrication for sale of ornamental or structural 12 metal or of metal stairs, staircases, gratings, fire escapes or 13 railings (not including fabrication work done at the 14 construction site). 15 (6) The preparation of animal feed or poultry feed for sale. 16 (7) The production, processing and bottling of non-alcoholic 17 beverages for wholesale distribution. 18 (8) The operation of a saw mill or planing mill for the 19 production of lumber or lumber products for sale. 20 (9) The milling for sale of flour or meal from grains. 21 (10) The slaughtering and dressing of animals for meat to be 22 sold or to be used in preparing meat products for sale, and the 23 preparation of meat products including lard, tallow, grease, 24 cooking and inedible oils for wholesale distribution. 25 (11) The processing of used lubricating oils. 26 (12) THE BROADCASTING OF RADIO AND TELEVISION PROGRAMS OF <-- 27 LICENSED COMMERCIAL OR EDUCATIONAL STATIONS. 28 (e) "Person." Any natural person, association, fiduciary, 29 partnership, corporation or other entity, including the 30 Commonwealth of Pennsylvania, its political subdivisions and 19710H0190B0445 - 5 -
1 instrumentalities and public authorities. Whenever used in any 2 clause prescribing and imposing a penalty or imposing a fine or 3 imprisonment, or both, the term "person," as applied to an 4 association, shall include the members thereof and, as applied 5 to a corporation, the officers thereof. 6 (f) "Purchase at retail." 7 (1) The acquisition for a consideration of the ownership, 8 custody or possession of tangible personal property other than 9 for resale by the person acquiring the same when such 10 acquisition is made for the purpose of consumption or use, 11 whether such acquisition shall be absolute or conditional, and 12 by whatsoever means the same shall have been effected. 13 (2) The acquisition of a license to use or consume, and the 14 rental or lease of tangible personal property, other than for 15 resale regardless of the period of time the lessee has 16 possession or custody of the property. 17 (3) The obtaining for a consideration of those services 18 described in subclauses (2), (3) and (4) of clause (k) of this 19 section other than for resale. 20 (4) A retention after March 7, 1956, of possession, custody 21 or a license to use or consume pursuant to a rental contract or 22 other lease arrangement (other than as security), other than for 23 resale. 24 The term "purchase at retail" with respect to "liquor" and 25 "malt or brewed beverages" shall include the purchase of 26 "liquor" from any "Pennsylvania Liquor Store" by any person for 27 any purpose, and the purchase of "malt or brewed beverages" from 28 a "manufacturer of malt or brewed beverages," "distributor" or 29 "importing distributor" by any person for any purpose, except 30 purchases from a "manufacturer of malt or brewed beverages" by a 19710H0190B0445 - 6 -
1 "distributor" or "importing distributor" or purchases from an 2 "importing distributor" by a "distributor" within the meaning of 3 the "Liquor Code." The term "purchase at retail" shall not 4 include any purchase of "malt or brewed beverages" from a 5 "retail dispenser" or any purchase of "liquor" or "malt or 6 brewed beverages" from a person holding a "retail liquor 7 license" within the meaning of and pursuant to the provisions of 8 the "Liquor Code," but shall include any purchase or acquisition 9 of "liquor" or "malt or brewed beverages" other than pursuant to 10 the provisions of the "Liquor Code." 11 (g) "Purchase price." 12 (1) The total value of anything paid or delivered, or 13 promised to be paid or delivered, whether it be money or 14 otherwise, in complete performance of a sale at retail or 15 purchase at retail, as herein defined, without any deduction on 16 account of the cost or value of the property sold, cost or value 17 of transportation, cost or value of labor or service, interest 18 or discount paid or allowed after the sale is consummated, any 19 other taxes imposed by the Commonwealth of Pennsylvania or any 20 other expense EXCEPT THAT THERE SHALL BE EXCLUDED ANY SEPARATELY <-- 21 STATED DEPOSIT CHARGE FOR RETURNABLE CONTAINERS. 22 (2) There shall be deducted from the purchase price the 23 value of any personal property actually taken in trade or 24 exchange within this Commonwealth in lieu of the whole or any 25 part of the purchase price. For the purpose of this subsection, 26 the amount allowed by reason of personal property actually taken 27 in trade or exchange shall be considered the value of such 28 property. 29 (3) In determining the purchase price on the sale or use of 30 taxable tangible personal property where, because of affiliation 19710H0190B0445 - 7 -
1 of interests between the vendor and purchaser, or irrespective 2 of any such affiliation, if for any other reason the purchase 3 price declared by the vendor or taxpayer on the taxable sale or 4 use of such tangible personal property is, in the opinion of the 5 department, not indicative of the true value of the article or 6 the fair price thereof, the department shall, pursuant to 7 uniform and equitable rules, determine the amount of 8 constructive purchase price upon the basis of which the tax 9 shall be computed and levied. Such rules shall provide for a 10 constructive amount of purchase price for each such sale or use 11 which would naturally and fairly be charged in an arms-length 12 transaction in which the element of common interest between the 13 vendor or purchaser is absent or if no common interest exists, 14 any other element causing a distortion of the price or value is 15 likewise absent. For the purpose of this clause where a taxable 16 sale or purchase at retail transaction occurs between a parent 17 and a subsidiary, affiliate or controlled corporation of such 18 parent corporation, there shall be a rebuttable presumption, 19 that because of such common interest such transaction was not at 20 arms-length. 21 (4) Where there is a transfer or retention of possession or 22 custody, whether it be termed a rental, lease, service or 23 otherwise, of tangible personal property including, but not 24 limited to linens, aprons, motor vehicles, trailers, tires, 25 industrial office and construction equipment, and business 26 machines the full consideration paid or delivered to the vendor 27 or lessor shall be considered the purchase price, even though 28 such consideration be separately stated and be designated as 29 payment for processing, laundering, service, maintenance, 30 insurance, repairs, depreciation or otherwise. Where the vendor 19710H0190B0445 - 8 -
1 or lessor supplies or provides an employe to operate such 2 tangible personal property, the value of the labor thus supplied 3 may be excluded and shall not be considered as part of the 4 purchase price if separately stated. There shall also be 5 included as part of the purchase price the value of anything 6 paid or delivered, or promised to be paid or delivered by a 7 lessee, whether it be money or otherwise, to any person other 8 than the vendor or lessor by reason of the maintenance, 9 insurance or repair of the tangible personal property which a 10 lessee has the possession or custody of under a rental contract 11 or lease arrangement. 12 (5) With respect to the tax imposed by subsection (b) of 13 section 202 upon any tangible personal property originally 14 purchased by the user of such property six months or longer 15 prior to the first taxable use of such property within the 16 Commonwealth, such user may elect to pay tax on a substituted 17 base determined by considering the purchase price of such 18 property for tax purposes to be equal to the prevailing market 19 price of similar personal property at the time and place of such 20 first use within the Commonwealth. Such election must be made by 21 filing a notice thereof in the form specified by the department 22 and reporting such tax liability and paying the proper tax due 23 plus all accrued penalties and interest, if there be any, within 24 one year of the due date of such report and payment, as provided 25 for by subsections (a) and (c) of section 217 of this article. 26 (6) The purchase price of "liquor" purchased from a <-- 27 "Pennsylvania Liquor Store" by a "retail liquor licensee," and 28 the purchase price of "malt or brewed beverages" purchased from 29 any person by a "retail dispenser" shall, for the purpose of 30 this article, be a constructive average retail price for such 19710H0190B0445 - 9 -
1 liquor or malt or brewed beverage, as shall be determined by the 2 Pennsylvania Liquor Control Board, and the tax thereon shall be 3 computed and paid upon said constructive average retail price, 4 rather than upon the price actually paid by the "retail liquor 5 licensee" or "retail dispenser". 6 (h) "Purchaser." Any person who acquires, for a 7 consideration, the ownership, custody or possession by sale, 8 lease or otherwise, of tangible personal property, or who 9 obtains services in exchange for a purchase price but not 10 including an employer who obtains services from his employes in 11 exchange for wages or salaries when such services are rendered 12 in the ordinary scope of their employment. 13 (i) "Resale." 14 (1) Any transfer of ownership, custody or possession of 15 tangible personal property for a consideration, including the 16 grant of a license to use or consume and transactions where the 17 possession of such property is transferred but where the 18 transferor retains title only as security for payment of the 19 selling price whether such transaction be designated as bailment 20 lease, conditional sale or otherwise. 21 (2) The physical incorporation of personal property as an 22 ingredient or constituent into other personal property, which is 23 to be sold in the regular course of business or the performance 24 of those services described in subclauses (2), (3) and (4) of 25 clause (k) of this section upon personal property which is to be 26 sold in the regular course of business. 27 The term "resale" shall not include any sale of "malt or 28 brewed beverages" by a "retail dispenser," or any sale of 29 "liquor" or "malt or brewed beverages" by a person holding a 30 "retail liquor license" within the meaning of the "Liquor Code." 19710H0190B0445 - 10 -
1 (j) "Resident." 2 (1) Any natural person (i) who is domiciled in the 3 Commonwealth, or (ii) who maintains a permanent place of abode 4 within the Commonwealth and spends in the aggregate more than 5 sixty days of the year within the Commonwealth. 6 (2) Any corporation (i) incorporated under the laws of this 7 Commonwealth, or (ii) authorized to do business or doing 8 business within this Commonwealth, or (iii) maintaining a place 9 of business within this Commonwealth. 10 (3) Any association, fiduciary, partnership or other entity 11 (i) domiciled in this Commonwealth, or (ii) authorized to do 12 business or doing business within this Commonwealth, or (iii) 13 maintaining a place of business within this Commonwealth. 14 (k) "Sale at retail." 15 (1) Any transfer, for a consideration, of the ownership, 16 custody or possession of tangible personal property, including 17 the grant of a license to use or consume whether such transfer 18 be absolute or conditional and by whatsoever means the same 19 shall have been effected. 20 (2) The rendition of the service of printing or imprinting 21 of tangible personal property for a consideration for persons 22 who furnish, either directly or indirectly the materials used in 23 the printing or imprinting. 24 (3) The rendition for a consideration of the service of-- 25 (i) Washing, cleaning, waxing, polishing or lubricating of 26 motor vehicles of another, whether or not any tangible personal 27 property is transferred in conjunction therewith; and 28 (ii) Inspecting motor vehicles pursuant to the mandatory 29 requirements of "The Vehicle Code." 30 (4) The rendition for a consideration of the service of 19710H0190B0445 - 11 -
1 repairing, altering, mending, pressing, fitting, dyeing, 2 laundering, drycleaning or cleaning tangible personal property 3 other than wearing apparel or shoes, or applying or installing 4 tangible personal property as a repair or replacement part of 5 other personal property except wearing apparel or shoes for a 6 consideration, whether or not the services are performed 7 directly or by any means other than by coin-operated equipment 8 and whether or not any tangible personal property is transferred 9 in conjunction therewith, except such services as are rendered 10 in the construction, reconstruction, remodeling, repair or 11 maintenance of real estate: Provided, however, That this 12 subclause shall not be deemed to impose tax upon such services 13 in the preparation for sale of new items which are excluded from 14 the tax under clause (26) of section 204, or upon diaper 15 service. 16 (5) Any retention after March 7, 1956, of possession, 17 custody or a license to use or consume pursuant to a rental 18 contract or other lease arrangement (other than as security). 19 (6) Any retention of possession, custody or a license to use 20 or consume tangible personal property or any further obtaining 21 of services described in subclauses (2), (3) and (4) of this 22 clause after April 15, 1959, pursuant to a rental or service 23 contract or other arrangement (other than as security). 24 (7) Any retention of possession, custody or a license to use 25 or consume tangible personal property or any further obtaining 26 of services described in subclauses (2), (3) and (4) of this 27 clause after August 20, 1959, pursuant to a rental or service 28 contract or other arrangement (other than as security). 29 (8) Any retention of possession, custody or a license to use 30 or consume tangible personal property or any further obtaining 19710H0190B0445 - 12 -
1 of services described in subclauses (2), (3) and (4) of this 2 clause pursuant to a rental or service contract or other 3 arrangement (other than as security). 4 The term "sale at retail" shall not include (i) any such 5 transfer of tangible personal property or rendition of services 6 for the purpose of resale, or (ii) such rendition of services or 7 the transfer of tangible personal property which under authority <-- 8 of Federal law may be expensed by the purchaser thereof for 9 Federal tax purposes, and are to be used or consumed by such THE <-- 10 TRANSFER OF TANGIBLE PERSONAL PROPERTY INCLUDING, BUT NOT 11 LIMITED TO, MACHINERY AND EQUIPMENT AND PARTS THEREFOR AND 12 SUPPLIES TO BE USED OR CONSUMED BY THE purchaser directly in any 13 of the operations of-- 14 (A) The manufacture of personal property; 15 (B) Farming, dairying, agriculture, horticulture or 16 floriculture when engaged in as a business enterprise. The term 17 "farming" shall include the propagation and raising of ranch 18 raised fur-bearing animals. 19 (C) The producing, delivering or rendering of a public 20 utility service, or in constructing, reconstructing, remodeling, 21 repairing or maintaining the facilities used in such service, 22 whether or not such facilities constitute real estate: Provided, 23 however, "real estate" shall not include buildings; 24 (D) The processing of personal property as defined in clause 25 (d) of this section. 26 The exclusions provided in paragraphs (A), (B), (C) and (D) 27 shall not apply to any vehicle required to be registered under 28 The Vehicle Code, except those vehicles used directly by a 29 public utility engaged in business as a common carrier, or to 30 maintenance facilities or to materials or supplies to be used or 19710H0190B0445 - 13 -
1 consumed in any construction, reconstruction, remodeling, repair 2 or maintenance of real estate. 3 The exclusions provided in paragraphs (A), (B), (C) and (D) 4 shall not apply to tangible personal property or services to be 5 used or consumed in managerial sales or other nonoperational 6 activities, nor to the purchase or use of tangible personal 7 property or services by any person other than the person 8 directly using the same in the operations described in 9 paragraphs (A), (B), (C) and (D) herein. 10 The exclusion provided in paragraph (C) shall not apply to 11 (i) construction materials used to construct, reconstruct, 12 remodel, repair or maintain facilities not used directly by the 13 purchaser in the production, delivering or rendition of public 14 utility service, even though such materials may be expensed for <-- 15 Federal tax purposes or (ii) tools and equipment used but not 16 installed in the maintenance of facilities used in the 17 production, delivering or rendition of a public utility service. 18 even though such tools and equipment may be expensed for Federal <-- 19 tax purposes. 20 (9) Where tangible personal property or services are 21 utilized for purposes constituting a "sale at retail" and for 22 purposes excluded from the definition of "sale at retail," it 23 shall be presumed that said property is subject to tax, unless 24 the user prove that the purposes which constitute a "sale at 25 retail" are minimal. 26 (10) The term "sale at retail" with respect to "liquor" and 27 "malt or brewed beverages" shall include the sale of "liquor" by 28 any "Pennsylvania liquor store" to any person for any purpose, 29 and the sale of "malt or brewed beverages" by a "manufacturer of 30 malt or brewed beverages," "distributor" or "importing 19710H0190B0445 - 14 -
1 distributor" to any person for any purpose, except sales by a 2 "manufacturer of malt or brewed beverages" to a "distributor" or 3 "importing distributor" or sales by an "importing distributor" 4 to a "distributor" within the meaning of the "Liquor Code." The 5 term "sale at retail" shall not include any sale of "malt or 6 brewed beverages" by a "retail dispenser" or any sale of 7 "liquor" or "malt or brewed beverages" by a person holding a 8 "retail liquor license" within the meaning of and pursuant to 9 the provisions of the "Liquor Code," but shall include any sale 10 of "liquor" or "malt or brewed beverages" other than pursuant to 11 the provisions of the "Liquor Code." 12 (l) "Storage." Any keeping or retention of tangible 13 personal property within this Commonwealth for any purpose 14 including the interim keeping, retaining or exercising any right 15 or power over such tangible personal property. 16 (m) "Tangible personal property." Corporeal personal 17 property including, but not limited to, goods, wares, 18 merchandise, steam and natural and manufactured and bottled gas 19 for non-residential use, electricity for non-residential use, 20 intrastate telephone and telegraph service for non-residential 21 use, spirituous or vinous liquor and malt or brewed beverages 22 and soft drinks; but the term shall not include household 23 supplies purchased at retail establishments for residential 24 consumption, including but not limited to, soaps, detergents, 25 cleaning and polishing preparations, paper goods, household 26 wrapping supplies and items of similar nature, or sanitary 27 napkins, tampons or similar items used for feminine hygiene. Nor 28 shall said term include steam, natural and manufactured and 29 bottled gas, fuel oil, electricity or intrastate telephone or 30 telegraph service when purchased solely for residential use. 19710H0190B0445 - 15 -
1 (n) "Taxpayer." Any person required to pay or collect the 2 tax imposed by this article. 3 (o) "Use." 4 (1) The exercise of any right or power incidental to the 5 ownership, custody or possession of tangible personal property 6 and shall include, but not be limited to transportation, storage 7 or consumption. 8 (2) The obtaining by a purchaser of the service of printing 9 or imprinting of tangible personal property when such purchaser 10 furnishes, either directly or indirectly, the articles used in 11 the printing or imprinting. 12 (3) The obtaining by a purchaser of the services of (i) 13 washing, cleaning, waxing, polishing or lubricating of motor 14 vehicles whether or not any tangible personal property is 15 transferred to the purchaser in conjunction with such services, 16 and (ii) inspecting motor vehicles pursuant to the mandatory 17 requirements of "The Vehicle Code." 18 (4) The obtaining by a purchaser of the service of 19 repairing, altering, mending, pressing, fitting, dyeing, 20 laundering, drycleaning or cleaning tangible personal property 21 other than wearing apparel or shoes or applying or installing 22 tangible personal property as a repair or replacement part of 23 other personal property other than wearing apparel or shoes, 24 whether or not the services are performed directly or by any 25 means other than by means of coin-operated equipment, and 26 whether or not any tangible personal property is transferred to 27 the purchaser in conjunction therewith, except such services as 28 are obtained in the construction, reconstruction, remodeling, 29 repair or maintenance of real estate: Provided, however, That 30 this subclause shall not be deemed to impose tax upon such 19710H0190B0445 - 16 -
1 services in the preparation for sale of new items which are 2 excluded from the tax under clause (26) of section 204, or upon 3 diaper service: And provided further, That the term "use" shall 4 not include-- 5 (A) Any tangible personal property acquired and kept, 6 retained or over which power is exercised within this 7 Commonwealth on which the taxing of the storage, use or other 8 consumption thereof is expressly prohibited by the Constitution 9 of the United States or which is excluded from tax under other 10 provisions of this article. 11 (B) Tangible personal property, supplies or the obtaining of <-- 12 the services described in subclauses (2), (3) and (4) of this 13 clause, which property, supplies and services under authority of 14 Federal law may be expensed by the user thereof for Federal tax 15 purposes and which are used or consumed by the purchaser 16 directly in any of the operations of-- 17 (B) THE USE OR CONSUMPTION OF TANGIBLE PERSONAL PROPERTY, <-- 18 INCLUDING BUT NOT LIMITED TO MACHINERY AND EQUIPMENT AND PARTS 19 THEREFOR, AND SUPPLIES OR THE OBTAINING OF THE SERVICES 20 DESCRIBED IN SUBCLAUSES (2), (3) AND (4) OF THIS CLAUSE DIRECTLY 21 IN ANY OF THE OPERATIONS OF-- 22 (i) The manufacture of personal property; 23 (ii) Farming, dairying, agriculture, horticulture or 24 floriculture when engaged in as a business enterprise; 25 (iii) The producing, delivering or rendering of a public 26 utility service, or in constructing, reconstructing, remodeling, 27 repairing or maintaining the facilities used in such service, 28 whether or not such facilities constitute real estate: Provided, 29 however, "real estate" shall not include buildings; 30 (iv) The processing of personal property as defined in 19710H0190B0445 - 17 -
1 subclause (d) of this section. 2 The exclusions provided in subparagraphs (i), (ii), (iii) and 3 (iv) shall not apply to any vehicle required to be registered 4 under The Vehicle Code except vehicles directly used by a public 5 utility engaged in the business as a common carrier or 6 maintenance facilities, or to materials or supplies to be used 7 or consumed in any construction, reconstruction, remodeling, 8 repair or maintenance of real estate. The exclusions provided in 9 subparagraphs (i), (ii), (iii) and (iv) shall not apply to 10 tangible personal property or services to be used or consumed in 11 managerial sales or other nonoperational activities, nor to the 12 purchase or use of tangible personal property by any person 13 other than the person directly using the same in the aforesaid 14 operations. 15 The exclusion provided in subparagraph (iii) shall not apply 16 to (A) construction materials used to construct, reconstruct, 17 remodel, repair or maintain facilities not used directly in the 18 production, delivering or rendition of public utility service, 19 even though under Federal law such materials may be expensed for <-- 20 Federal tax purposes, or (B) tools and equipment used but not 21 installed in the maintenance of facilities used directly in the 22 production, delivering or rendition of a public utility service. 23 even though under Federal law such items may be expensed for <-- 24 Federal tax purposes. 25 (5) Where tangible personal property or services are 26 utilized for purposes constituting a "use," as herein defined, 27 and for purposes excluded from the definition of "use," it shall 28 be presumed that said property is subject to tax unless the user 29 prove that the purposes which constitute a "use" as herein 30 defined are minimal. 19710H0190B0445 - 18 -
1 (6) The term "use" with respect to "liquor" and "malt or 2 brewed beverages" shall include the purchase of "liquor" from 3 any "Pennsylvania liquor store" by any person for any purpose 4 and the purchase of "malt or brewed beverages" from a 5 "manufacturer of malt or brewed beverages," "distributor" or 6 "importing distributor" by any person for any purpose, except 7 purchases from a "manufacturer of malt or brewed beverages" by a 8 "distributor" or "importing distributor," or purchases from an 9 "importing distributor" by a "distributor" within the meaning of 10 the "Liquor Code." The term "use" shall not include any purchase 11 of "malt or brewed beverages" from a "retail dispenser" or any 12 purchase of "liquor" or "malt or brewed beverages" from a person 13 holding a "retail liquor license" within the meaning of and 14 pursuant to the provisions of the "Liquor Code," but shall 15 include the exercise of any right or power incidental to the 16 ownership, custody or possession of "liquor" or "malt or brewed 17 beverages" obtained by the person exercising such right or power 18 in any manner other than pursuant to the provisions of the 19 "Liquor Code." 20 (7) The use of tangible personal property purchased at 21 retail upon which the services described in subclauses (2), (3) 22 and (4) of this clause have been performed shall be deemed to be 23 a use of said services by the person using said property. 24 (p) "Vendor." Any person maintaining a place of business in 25 this Commonwealth, selling or leasing tangible personal 26 property, or rendering services, the sale or use of which is 27 subject to the tax imposed by this article. 28 (q) "Department." The Department of Revenue of the 29 Commonwealth of Pennsylvania. 30 PART II 19710H0190B0445 - 19 -
1 IMPOSITION OF TAX
2 Section 202. Imposition of Tax.--(a) There is hereby imposed
3 upon each separate sale at retail of tangible personal property
4 or services, as defined herein, within this Commonwealth a tax
5 of six per cent of the purchase price, which tax shall be
6 collected by the vendor from the purchaser, and shall be paid
7 over to the Commonwealth as herein provided.
8 (b) There is hereby imposed upon the use, on and after the
9 effective date of this act, within this Commonwealth of tangible
10 personal property purchased at retail on or after March 7, 1956,
11 and on those services described herein purchased at retail on
12 and after April 15, 1959, a tax of six per cent of the purchase
13 price, which tax shall be paid to the Commonwealth by the person
14 who makes such use as herein provided, except that such tax
15 shall not be paid to the Commonwealth by such person where he
16 has paid the tax imposed by subsection (a) of this section or
17 has paid the tax imposed by this subsection (b) to the vendor
18 with respect to such use. The tax at the rate of six per cent
19 imposed by this subsection shall not be deemed applicable where
20 the tax has been incurred at the rate of three per cent or three
21 and one-half per cent or four per cent or five per cent under
22 this subsection prior to this amendment. THE PROVISIONS OF "THE <--
23 TAX ACT OF 1963 FOR EDUCATION."
24 (c) Notwithstanding any other provisions of this article,
25 the tax with respect to non-residential intrastate telephone
26 service and intrastate telegraph service within the meaning of
27 clause (m) of section 201 of this article shall, except for
28 telegrams paid for in cash at telegraph offices, be computed at
29 the rate of six per cent upon the total amount billed to
30 customers periodically for such services, irrespective of
19710H0190B0445 - 20 -
1 whether such billing is based upon a flat rate or upon a message 2 unit charge. 3 Section 203. Computation of Tax.--The amount of tax imposed 4 by section 202 of this article shall be computed as follows: 5 (a) If the purchase price is ten cents (10¢) or less, no tax 6 shall be collected. 7 (b) If the purchase price is eleven cents (11¢) or more but 8 less than eighteen cents (18¢), one cent (1¢) shall be 9 collected. 10 (c) If the purchase price is eighteen cents (18¢) or more 11 but less than thirty-five cents (35¢), two cents (2¢) shall be 12 collected. 13 (d) If the purchase price is thirty-five cents (35¢) or more 14 but less than fifty-one cents (51¢), three cents (3¢) shall be 15 collected. 16 (e) If the purchase price is fifty-one cents (51¢) or more 17 but less than sixty-eight cents (68¢), four cents (4¢) shall be 18 collected. 19 (f) If the purchase price is sixty-eight cents (68¢) or more 20 but less than eighty-five cents (85¢), five cents (5¢) shall be 21 collected. 22 (g) If the purchase price is eighty-five cents (85¢) or more 23 but less than one dollar and one cent ($1.01), six cents (6¢) 24 shall be collected. 25 (h) If the purchase price is more than one dollar ($1.00), 26 six per centum of each dollar of purchase price plus the above 27 bracket charges upon any fractional part of a dollar in excess 28 of even dollars shall be collected. 29 PART III 30 EXCLUSIONS FROM TAX 19710H0190B0445 - 21 -
1 Section 204. Exclusions from Tax.--The tax imposed by 2 section 202 shall not be imposed upon 3 (1) The sale at retail or use of tangible personal property 4 (other than motor vehicles, trailers, semi-trailers, motor 5 boats, aircraft or other similar tangible personal property 6 required under either Federal law or laws of this Commonwealth 7 to be registered or licensed) or services sold by or purchased 8 from a person not a vendor in an isolated transaction or sold by 9 or purchased from a person who is a vendor but is not a vendor 10 with respect to the tangible personal property or services sold 11 or purchased in such transaction: Provided, That inventory and 12 stock in trade so sold or purchased, shall not be excluded from 13 the tax by the provisions of this subsection. 14 (2) The use of tangible personal property purchased by a 15 nonresident person outside of, and brought into this 16 Commonwealth for use therein for a period not to exceed seven 17 days, or for any period of time when such nonresident is a 18 tourist or vacationer and, in either case not consumed within 19 the Commonwealth. 20 (3) The use of tangible personal property purchased outside 21 this Commonwealth for use outside this Commonwealth by a then 22 nonresident natural person or a business entity not actually 23 doing business within this Commonwealth, who later brings such 24 tangible personal property into this Commonwealth in connection 25 with his establishment of a permanent business or residence in 26 this Commonwealth: Provided, That such property was purchased 27 more than six months prior to the date it was first brought into 28 this Commonwealth or prior to the establishment of such business 29 or residence, whichever first occurs. This exclusion shall not 30 apply to tangible personal property temporarily brought into 19710H0190B0445 - 22 -
1 Pennsylvania for the performance of contracts for the 2 construction, reconstruction, remodeling, repairing and 3 maintenance of real estate. 4 (4) The sale at retail or use of supplies and materials to 5 be used in the fulfillment of contracts for the construction, 6 reconstruction, remodeling, repairing, maintenance or sale of 7 real estate when such contract was entered into 8 (i) Prior to March 7, 1956, and is at a fixed price not 9 subject to change or modification by reason of the tax imposed 10 by this act; or 11 (ii) Pursuant to the obligation of a bid or bids submitted 12 prior to March 7, 1956, which bid or bids could not be altered 13 or withdrawn on or after that date and which bid or bids and 14 contract entered into pursuant thereto are at a fixed price not 15 subject to change or modification by reason of the tax imposed 16 by the act in effect prior to this article. 17 Provided, however, That notice of such contract or bid by 18 reason of which an exclusion is claimed under this subsection 19 (4) must be given by the taxpayer to the department on or before 20 June 15, 1956. 21 (5) The sale at retail or use of materials to be 22 incorporated into and made a part of real estate pursuant to a 23 contract for the construction, reconstruction, remodeling, 24 repairing, maintenance or sale of such real estate, when the 25 contract is, either at a fixed price not subject to change or 26 modification, or entered into pursuant to the obligation of a 27 formal written bid which cannot be altered or withdrawn, and, in 28 either case, such contract was entered into or such bid made on 29 or after March 7, 1956, but prior to April 15, 1959, shall be 30 exempt from the additional one-half of one per cent of tax 19710H0190B0445 - 23 -
1 imposed by section 201 of the Tax Act of 1963 for Education as 2 amended April 15, 1959 (P.L.20), and from the additional one- 3 half of one per cent of tax imposed by section 201 of the Tax 4 Act of 1963 for Education as amended August 20, 1959 (P.L.729), 5 and from the additional one per cent of tax imposed by section 6 201 of the Tax Act of 1963 for Education as amended May 29, 1963 7 (P.L.49) and from the additional one per cent of tax imposed by 8 section 201 of the Tax Act of 1963 for Education as amended 9 January 1, 1968 (P.L.918): Provided, however, That the exemption 10 granted by this clause shall not be claimed by the purchaser 11 from any vendor but shall be claimed only by the filing of a 12 refund petition with the department. 13 (6) The sale at retail or use of materials to be 14 incorporated into and made a part of real estate pursuant to a 15 contract for the construction, reconstruction, remodeling, 16 repairing, maintenance or sale of such real estate when the 17 contract is, either at a fixed price not subject to change or 18 modification, or entered into pursuant to the obligation of a 19 formal written bid which cannot be altered or withdrawn, and, in 20 either case, such contract was entered into or such bid made on 21 or after April 15, 1959, but prior to August 20, 1959, shall be 22 exempt from the additional one-half of one per cent of tax 23 imposed by section 201 of the Tax Act of 1963 for Education as 24 amended August 20, 1959 (P.L.729), and from the additional one 25 per cent of tax imposed by section 201 of the Tax Act of 1963 26 for Education as amended May 29, 1963 (P.L.49) and from the 27 additional one per cent of tax imposed by section 201 of the Tax 28 Act of 1963 for Education as amended January 1, 1968 (P.L.918): 29 Provided, however, That the exemption granted by this clause 30 shall not be claimed by the purchaser from any vendor but shall 19710H0190B0445 - 24 -
1 be claimed only by the filing of a refund petition with the 2 department. 3 (7) The sale at retail or use of materials to be 4 incorporated into and made a part of real estate pursuant to a 5 contract for the construction, reconstruction, remodeling, 6 repairing, maintenance or sale of such real estate when the 7 contract is, either at a fixed price not subject to change or 8 modification, or entered into pursuant to the obligation of a 9 formal written bid which cannot be altered or withdrawn, and, in 10 either case, such contract was entered into or such bid made on 11 or after August 20, 1959, but prior to June 1, 1963 shall be 12 exempt from the additional one per cent of tax imposed by 13 section 201 of the Tax Act of 1963 for Education as amended May 14 29, 1963 (P.L.49) and from the additional one per cent of the 15 tax imposed by section 201 of the Tax Act of 1963 for Education 16 as amended January 1, 1968 (P.L.918): Provided, however, That 17 the exemption granted by this clause shall not be claimed by the 18 purchaser, from any vendor but shall be claimed only by the 19 filing of a refund petition with the department. 20 (8) The sale at retail or use of materials to be 21 incorporated into and made a part of real estate pursuant to a 22 contract for the construction, reconstruction, remodeling, 23 repairing, maintenance or sale of such real estate when the 24 contract is, either at a fixed price not subject to change or 25 modification, or entered into pursuant to the obligation of a 26 formal written bid which cannot be altered or withdrawn, and, in 27 either case, such contract was entered into or such bid made on 28 or after June 1, 1963, but prior to January 1, 1968, shall be 29 exempt from the additional one per cent of tax imposed by 30 section 201 of the Tax Act of 1963 for Education as amended 19710H0190B0445 - 25 -
1 January 1, 1968 (P.L.918): Provided, however, That the exemption 2 granted by this clause shall not be claimed by the purchaser 3 from any vendor but shall be claimed only by the filing of a 4 refund petition with the department. 5 (9) The sale at retail or use of tangible personal property 6 or services subject to tax under this article, but which prior 7 to the effective date of this article were excluded from tax 8 under the provisions of the "Tax Act of 1963 for Education" 9 shall be excluded from the tax imposed by this article, provided 10 such sale at retail or use occurred pursuant to and in 11 fulfillment of a written fixed price sales or construction 12 contract or formal bid entered into on or after January 1, 1968, 13 but prior to the effective date of this article by the person 14 who otherwise would be subject to tax under this article and 15 another, and which contract or bid cannot be altered, modified 16 or withdrawn by the parties. The exclusion from tax provided 17 herein shall not be claimed by any person from a vendor but 18 shall be claimed only by the filing of a refund petition with 19 the department as provided in this article. 20 (10) The sale at retail to or use by (i) any charitable 21 organization, volunteer firemen's organization or nonprofit 22 educational institution, or (ii) a religious organization for 23 religious purposes of tangible personal property or services: 24 Provided, however, That the exclusion of this clause shall not 25 apply with respect to any tangible personal property or services 26 used in any unrelated trade or business carried on by such 27 organization or institution or with respect to any materials, 28 supplies and equipment used in the construction, reconstruction, 29 remodeling, repairs and maintenance of any real estate, except 30 materials and supplies when purchased by such organizations or 19710H0190B0445 - 26 -
1 institutions for routine maintenance and repairs. 2 (11) The sale at retail, or use of gasoline and other motor 3 fuels, the sales of which are otherwise subject to excise taxes 4 under the act of May 21, 1931 (P.L.194), known as the "Liquid 5 Fuels Tax Act," and the act of January 14, 1952 (P.L.1965), 6 known as the "Fuel Use Tax Act." 7 (12) The sale at retail to, or use by the United States, 8 this Commonwealth or its instrumentalities or political 9 subdivisions of tangible personal property or services. 10 (13) The sale at retail, or use of wrapping paper, wrapping 11 twine, bags, cartons, tape, rope, labels, nonreturnable 12 containers and all other wrapping supplies, when such use is 13 incidental to the delivery of any personal property, except that 14 any charge for wrapping or packaging shall be subject to tax at 15 the rate imposed by section 202. 16 (14) Sale at retail or use of vessels designed for 17 commercial use of registered tonnage of fifty tons or more when 18 produced by the builders thereof upon special order of the 19 purchaser; 20 (15) Sale at retail of tangible personal property or 21 services used or consumed in building, rebuilding, repairing and 22 making additions to or replacements in and upon vessels designed 23 for commercial use of registered tonnage of fifty tons or more 24 upon special order of the purchaser, or when rebuilt, repaired 25 or enlarged, or when replacements are made upon order of or for 26 the account of the owner. 27 (16) The sale at retail or use of tangible personal property 28 or services to be used or consumed for ship cleaning or 29 maintenance or as fuel, supplies, ships' equipment, ships' 30 stores or sea stores on vessels to be operated principally 19710H0190B0445 - 27 -
1 outside the limits of the Commonwealth. 2 (17) The sale at retail or use of prescription or non- 3 prescription medicines, drugs or medical supplies, crutches and 4 wheelchairs for the use of cripples and invalids, artificial 5 limbs, artificial eyes and artificial hearing devices when 6 designed to be worn on the person of the purchaser or user, 7 false teeth and materials used by a dentist in dental treatment, 8 eyeglasses when especially designed or prescribed by an 9 ophthalmologist, oculist or optometrist for the personal use of 10 the owner or purchaser and artificial braces and supports 11 designed solely for the use of crippled persons. 12 (18) The sale at retail or use of coal. 13 (19) The sale at retail or use of supplies and materials to 14 be used exclusively in the fulfillment of a contract for the 15 construction, reconstruction, remodeling, repairing or 16 maintenance of real estate, when such contract was entered into 17 prior to March 7, 1956, between the person who would otherwise 18 be subject to the tax and a municipal authority, incorporated 19 under the "Municipality Authorities Act of 1945": Provided, That 20 notice of a claim of exemption under this clause is received by 21 the department within fifteen days after the effective date of 22 this clause. 23 (20) The sale at retail or use of materials to be 24 incorporated into and made a part of real estate pursuant to a 25 contract for the construction, reconstruction, remodeling, 26 repairing or maintenance of such real estate, when the contract 27 was entered into on or after March 7, 1956, but prior to April 28 15, 1959, between the person who would otherwise be subject to 29 the tax and a municipal authority, incorporated under the 30 "Municipality Authorities Act of 1945," shall be exempt from the 19710H0190B0445 - 28 -
1 additional one-half of one per cent of tax imposed by section 2 201 of the Tax Act of 1963 for Education as amended April 15, 3 1959 (P.L.20), and from the additional one-half of one per cent 4 of tax imposed by section 201 of the Tax Act of 1963 for 5 Education as amended August 20, 1959 (P.L.729), and from the 6 additional one per cent of tax imposed by section 201 of the Tax 7 Act of 1963 for Education, as amended May 29, 1963 (P.L.49) and 8 from the additional one per cent of tax imposed by section 201 9 of the Tax Act of 1963 for Education as amended January 1, 1968 10 (P.L.918): Provided, however, That the exemption granted by this 11 clause shall not be claimed by the purchaser from any vendor but 12 shall be claimed only by the filing of a refund petition with 13 the department. 14 (21) The sale at retail or use of materials to be 15 incorporated into and made a part of real estate pursuant to a 16 contract for the construction, reconstruction, remodeling, 17 repairing or maintenance of such real estate, when the contract 18 was entered into on or after April 15, 1959, but prior to August 19 20, 1959, between the person who would otherwise be subject to 20 the tax and a municipal authority, incorporated under the 21 "Municipality Authorities Act of 1945," shall be exempt from the 22 additional one-half of one per cent of tax imposed by section 23 201 of the Tax Act of 1963 for Education as amended August 20, 24 1959 (P.L.729), and from the additional one per cent of tax 25 imposed by section 201 of the Tax Act of 1963 for Education, as 26 amended May 29, 1963 (P.L.49) and from the additional one per 27 cent of tax imposed by section 201 of the Tax Act of 1963 for 28 Education as amended January 1, 1968 (P.L.918): Provided, 29 however, That the exemption granted by this clause shall not be 30 claimed by the purchaser from any vendor but shall be claimed 19710H0190B0445 - 29 -
1 only by the filing of a refund petition with the department. 2 (22) The sale at retail or use of materials to be 3 incorporated into and made a part of real estate pursuant to a 4 contract for the construction, reconstruction, remodeling, 5 repairing or maintenance of such real estate when the contract 6 was entered into on or after August 20, 1959, but prior to June 7 1, 1963, between the person who would otherwise be subject to 8 the tax and a municipal authority, incorporated under the 9 "Municipality Authorities Act of 1945," shall be exempt from the 10 additional one per cent of tax imposed by section 201 of the Tax 11 Act of 1963 for Education as amended May 29, 1963 (P.L.49) and 12 from the additional one per cent of the tax imposed by section 13 201 of the Tax Act of 1963 for Education, as amended January 1, 14 1968 (P.L.918): Provided, however, That the exemption granted by 15 this clause shall not be claimed by the purchaser from any 16 vendor but shall be claimed only by the filing of a refund 17 petition with the department. 18 (23) The sale at retail or use of materials to be 19 incorporated into and made a part of real estate pursuant to a 20 contract for the construction, reconstruction, remodeling, 21 repairing or maintenance of such real estate, when the contract 22 was entered into on or after June 1, 1963, but prior to January 23 1, 1968, between the person who would otherwise be subject to 24 the tax and a municipal authority incorporated under the 25 "Municipality Authorities Act of 1945," shall be exempt from the 26 additional one per cent of tax imposed by section 201 of the Tax 27 Act of 1963 for Education, as amended January 1, 1968 (P.L.918): 28 Provided, however, That the exemption granted by this clause 29 shall not be claimed by the purchaser from any vendor but shall 30 be claimed only by the filing of a refund petition with the 19710H0190B0445 - 30 -
1 department. 2 (24) The sale at retail or use of motor vehicles, trailers 3 and semi-trailers, or bodies attached to the chassis thereof, 4 sold to a nonresident of Pennsylvania to be used outside of 5 Pennsylvania and which are registered in a state other than 6 Pennsylvania within twenty days after delivery to the vendee. 7 (25) The sale at retail or use of water. 8 (26) The sale at retail or use of all vesture, wearing 9 apparel, raiments, garments, footwear and other articles of 10 clothing worn or carried on or about the human body but all 11 accessories, ornamental wear, formal day or evening apparel, and 12 articles made of fur on the hide or pelt or any material 13 imitative of fur and articles of which such fur, real, imitation 14 or synthetic, is the component material of chief value, but only 15 if such value is more than three times the value of the next 16 most valuable component material, and sporting goods and 17 clothing not normally used or worn when not engaged in sports 18 shall not be excluded from the tax. 19 (27) The sale at retail or use or the rendition of or the <-- 20 obtaining by a purchaser of the service of printing or 21 imprinting of mail order catalogs and direct mail advertising 22 materials. 23 (28) (27) The sale at retail or use of cigarettes. <-- 24 (29) (28) The sale at retail or use of religious <-- 25 publications sold by religious groups and Bibles and religious 26 articles. 27 (30) (29) The sale at retail or use of food and beverages <-- 28 for human consumption including candy, gum and similar 29 confections, except that this exclusion shall not apply with 30 respect to-- 19710H0190B0445 - 31 -
1 (i) Soft drinks; 2 (ii) Malt and brewed beverages and spirituous and vinous 3 liquors; 4 (iii) Food and beverages (except when purchased at, or from 5 a school or church in the ordinary course of activities of such 6 organization) when the purchase price of the total transaction 7 is more than fifty cents (50¢), when purchased (i) from persons 8 engaged in the business of catering, or (ii) from persons 9 engaged in the business of operating restaurants, cafes, lunch 10 counters, private and social clubs, taverns, dining cars, hotels 11 and other eating places. For the purpose of this subclause 12 (iii), beverages shall not include malt and brewed beverages and 13 spirituous and vinous liquors, but shall include soft drinks, 14 and the price of such soft drinks shall be considered together 15 with the price of other beverages and food in determining 16 whether the purchase price of the total transaction is more than 17 fifty cents (50¢). 18 (31) (30) The sale at retail or use of periodicals and <-- 19 publications which are published at regular intervals not 20 exceeding three months, circulated among the general public and 21 containing matters of general interest and reports of current 22 events. 23 (32) (31) The sale at retail or use of caskets and burial <-- 24 vaults for human remains and markers and tombstones for human 25 graves. 26 (33) (32) The sale at retail or use of flags of the United <-- 27 States of America and the Commonwealth of Pennsylvania. 28 (34) (33) The sale at retail or use of textbooks for use in <-- 29 schools, colleges and universities, either public or private 30 when purchased in behalf of or through such schools, colleges or 19710H0190B0445 - 32 -
1 universities provided such institutions of learning are 2 recognized by the Department of Education. 3 Section 205. Alternate Imposition of Tax; Credits.--If any 4 person actively and principally engaged in the business of 5 selling new or used motor vehicles, trailers or semi-trailers, 6 and registered with the department in the "dealer's class," 7 acquires a motor vehicle, trailer or semi-trailer for the 8 purpose of resale, and prior to such resale, uses the motor 9 vehicle, trailer or semi-trailer for a taxable use under this 10 act during a period not exceeding one year from the date of 11 acquisition to the date of resale, such person may, upon notice 12 to the department within ten days of the commencement of such 13 use, elect to pay a tax equal to six per cent of the fair rental 14 value of the motor vehicle, trailer or semi-trailer during such 15 use. Should such motor vehicle, trailer or semi-trailer be used 16 for a taxable use after a period of one year, the taxpayer shall 17 be liable for a tax on the fair market value of such motor 18 vehicle, trailer or semi-trailer at the time of acquisition, but 19 shall be allowed a credit equal to the tax paid pursuant to the 20 election provided for in this section. This section shall not 21 apply to the use of a vehicle as a wrecker, parts truck, 22 delivery truck or courtesy car. 23 Section 206. Credit Against Tax.--A credit against the tax 24 imposed by this act shall be granted with respect to tangible 25 personal property or services purchased for use outside the 26 Commonwealth equal to the tax paid to another state by reason of 27 the imposition by such other state of a tax similar to the tax 28 imposed by this article: Provided, however, That no such credit 29 shall be granted unless such other state grants substantially 30 similar tax relief by reason of the payment of tax under this 19710H0190B0445 - 33 -
1 act. 2 PART IV 3 LICENSES 4 Section 208. Licenses.--(a) Every person maintaining a place 5 of business in this Commonwealth, selling or leasing services or 6 tangible personal property, the sale or use of which is subject 7 to tax and who has not hitherto obtained a license from the 8 department, shall, prior to the beginning of business 9 thereafter, make application to the department, on a form 10 prescribed by the department, for a license. If such person 11 maintains more than one place of business in this Commonwealth, 12 the license shall be issued for the principal place of business 13 in this Commonwealth. 14 (b) The department shall, after the receipt of an 15 application, issue the license applied for under subsection (a) 16 of this section. The license shall be nonassignable and of 17 permanent duration. 18 (c) Any person who, upon the expiration of sixty days after 19 the effective date of this act, shall maintain a place of 20 business in this Commonwealth for the purpose of selling or 21 leasing services or tangible personal property, the sale or use 22 of which is subject to tax, without having first been licensed 23 by the department pursuant to the provisions of this section, 24 shall be guilty of a summary offense, and upon conviction 25 thereof in a summary proceeding, shall be sentenced to pay a 26 fine of not less than one hundred dollars ($100) nor more than 27 three hundred dollars ($300), and in default thereof, to undergo 28 imprisonment of not less than five days nor more than thirty 29 days. The penalties imposed by this section shall be in addition 30 to any other penalties imposed by this article. 19710H0190B0445 - 34 -
1 (d) Failure of any person to obtain a license shall not 2 relieve him of liability to pay the tax imposed by this article. 3 PART V 4 HOTEL OCCUPANCY TAX 5 Section 209. Definitions.--(a) For the purposes of this part 6 V only, the following words, terms and phrases shall have the 7 meaning ascribed to them in this subsection, except where the 8 context clearly indicates a different meaning: 9 (1) "Hotel." A building or buildings in which the public 10 may, for a consideration, obtain sleeping accommodations. The 11 term "hotel" shall not include any charitable, educational or 12 religious institution summer camp for children, hospital or 13 nursing home. 14 (2) "Occupant." A person (other than a "permanent 15 resident," as defined herein,) who, for a consideration, uses, 16 possesses or has a right to use or possess any room or rooms in 17 a hotel under any lease, concession, permit, right of access, 18 license or agreement. 19 (3) "Occupancy." The use or possession or the right to the 20 use or possession by any person (other than a "permanent 21 resident,") of any room or rooms in a hotel for any purpose or 22 the right to the use or possession of the furnishings or to the 23 services and accommodations accompanying the use and possession 24 of the room or rooms. 25 (4) "Operator." Any person operating a hotel. 26 (5) "Permanent resident." Any occupant who has occupied or 27 has the right to occupancy of any room or rooms in a hotel for 28 at least thirty consecutive days. 29 (6) "Rent." The consideration received for occupancy valued 30 in money, whether received in money or otherwise, including all 19710H0190B0445 - 35 -
1 receipts, cash, credits and property or services of any kind or 2 nature, and also any amount for which the occupant is liable for 3 the occupancy without any deduction therefrom whatsoever. 4 (b) The following words, terms and phrases and words, terms 5 and phrases of similar import, when used in parts IV and VI of 6 this article for the purposes of those parts only, shall, in 7 addition to the meaning ascribed to them by section 201 of this 8 article, have the meaning ascribed to them in this subsection, 9 except where the context clearly indicates a different meaning: 10 (1) "Maintaining a place of business in this Commonwealth," 11 being the operator of a hotel in this Commonwealth. 12 (2) "Purchase at retail," occupancy. 13 (3) "Purchase price," rent. 14 (4) "Purchaser," occupant. 15 (5) "Sale at retail," the providing of occupancy to an 16 occupant by an operator. 17 (6) "Tangible personal property," occupancy. 18 (7) "Vendor," operator. 19 (8) "Services," occupancy. 20 (9) "Use," occupancy. 21 Section 210. Imposition of Tax.--There is hereby imposed an 22 excise tax of six per cent of the rent upon every occupancy of a 23 room or rooms in a hotel in this Commonwealth, which tax shall 24 be collected by the operator from the occupant and paid over to 25 the Commonwealth as herein provided. 26 Section 211. Seasonal Tax Returns.--Notwithstanding any 27 other provisions in this act, the department may, by regulation, 28 waive the requirement for the filing of quarterly returns in the 29 case of any operator whose hotel is operated only during certain 30 seasons of the year, and may provide for the filing of returns 19710H0190B0445 - 36 -
1 by such persons at times other than those provided by section 2 221. 3 PART VI 4 PROCEDURE AND ADMINISTRATION 5 CHAPTER I 6 RETURNS 7 Section 215. Persons Required to Make Returns.--Every person 8 required to pay tax to the department or collect and remit tax 9 to the department shall file returns with respect to such tax. 10 Section 216. Form of Returns.--The returns required by 11 section 215 shall be on forms prescribed by the department, and 12 shall show such information with respect to the taxes imposed by 13 this article as the department may reasonably require. 14 CHAPTER II 15 TIME AND PLACE FOR FILING RETURNS 16 Section 217. Time for Filing Returns.--(a) Monthly, 17 Bimonthly and Quarterly Returns: 18 (1) For the year in which this article becomes effective and 19 in each year thereafter a return shall be filed quarterly by 20 every licensee on or before the last day of April, July, October 21 and January for the three months ending the last day of March, 22 June, September and December, except as hereinafter provided. 23 (2) For the year in which this article becomes effective, 24 and in each year thereafter, a return shall be filed monthly 25 with respect to each month by every licensee whose total tax 26 reported, or in the event no report is filed, the total tax 27 which should have been reported, for the third calendar quarter 28 of the preceding year equals or exceeds six hundred dollars 29 ($600). Such returns shall be filed on or before the fifteenth 30 day of the second month succeeding the month with respect to 19710H0190B0445 - 37 -
1 which the return is made, except that the return due for the 2 month of April, of each year, shall be filed on or before the 3 twentieth day of May next following and the return due for the 4 month of May of each year shall be filed on or before the 5 twentieth day of June next following. Any licensee required to 6 file monthly returns hereunder shall be relieved from filing 7 quarterly returns. 8 (3) For the year in which this article becomes effective, 9 and for each year thereafter, every licensee required to file a 10 quarterly return for the second calendar quarter shall file a 11 single return for the months of April and May on or before the 12 fifteenth day of June next following. The filing of such return 13 shall not relieve the licensee of the duty to file a return on 14 or before the last day of July next following and to remit 15 therewith tax for the month of June. 16 (b) Annual Returns. For the calendar year 1971, and for 17 each year thereafter, no annual return shall be filed, except as 18 may be required by rules and regulations of the department 19 promulgated and published at least sixty days prior to the end 20 of the year with respect to which the returns are made. Where 21 such annual returns are required licensees shall not be required 22 to file such returns prior to the sixty-first day of the year 23 succeeding the year with respect to which the returns are made. 24 (c) Other Returns. Any person, other than a licensee, liable 25 to pay to the department any tax under this article, shall file 26 a return on or before the last day of the month succeeding the 27 month in which such person becomes liable for the tax. 28 (d) Small Taxpayers. The department, by regulation, may 29 waive the requirement for the filing of quarterly return in the 30 case of any licensee whose individual tax collections do not 19710H0190B0445 - 38 -
1 exceed seventy-five dollars ($75) per calendar quarter and may 2 provide for reporting on a less frequent basis in such cases. 3 Section 218. Extension of Time for Filing Returns.--The 4 department may, on written application and for good cause shown, 5 grant a reasonable extension of time for filing any return 6 required under this part. However, the time for making a return 7 shall not be extended for more than three months. 8 Section 219. Place for Filing Returns.--Returns shall be 9 filed with the department at its main office or at any branch 10 office which it may designate for filing returns. 11 CHAPTER III 12 PAYMENT OF TAX 13 Section 221. Payment.--When a return of tax is required 14 under this part, the person required to make the return shall 15 pay the tax to the department. 16 Section 222. Time of Payment.--(a) Monthly, Bimonthly and 17 Quarterly Payments. The tax imposed by this article and incurred 18 or collected by a licensee shall be due and payable by the 19 licensee on the day the return is required to be filed under the 20 provisions of section 217 and such payment must accompany the 21 return for such preceding period, 22 (b) Annual Payments. If the amount of tax due for the 23 preceding year as shown by the annual return of any taxpayer is 24 greater than the amount already paid by him in connection with 25 his monthly or quarterly returns he shall send with such annual 26 return a remittance for the unpaid amount of tax for the year. 27 (c) Other Payments. Any person other than a licensee liable 28 to pay any tax under this article shall remit the tax at the 29 time of filing the return required by this article. 30 Section 223. Other Times for Payment.--In the event that the 19710H0190B0445 - 39 -
1 department authorizes a taxpayer to file a return at other times 2 than those specified in section 217, the tax due shall be paid 3 at the time such return is filed. 4 Section 224. Place for Payment.--The tax imposed by this 5 article shall be paid to the department at the place fixed for 6 filing the return. 7 Section 225. Tax Held in Trust for the Commonwealth.--All 8 taxes collected by any person from purchasers in accordance with 9 this article and all taxes collected by any person from 10 purchasers under color of this article which have not been 11 properly refunded by such person to the purchaser shall 12 constitute a trust fund for the Commonwealth, and such trust 13 shall be enforceable against such person, his representatives 14 and any person (other than a purchaser to whom a refund has been 15 made properly) receiving any part of such fund without 16 consideration, or knowing that the taxpayer is committing a 17 breach of trust: Provided, however, That any person receiving 18 payment of a lawful obligation of the taxpayer from such fund 19 shall be presumed to have received the same in good faith and 20 without any knowledge of the breach of trust. Any person, other 21 than a taxpayer, against whom the department makes any claim 22 under this section shall have the same right to petition and 23 appeal as is given taxpayers by any provisions of this part. 24 Section 226. Local Receivers of Use Tax.--Beginning on and 25 after the effective date of this article, in every county, 26 except in counties of the first class, the county treasurer is 27 hereby authorized to receive use tax due and payable under the 28 provisions of this article from any person other than a 29 licensee. The receiving of such taxes shall be pursuant to rules 30 and regulations promulgated by the department and upon forms 19710H0190B0445 - 40 -
1 furnished by the department. Each county treasurer shall remit 2 to the department all use taxes received under the authority of 3 this section minus the costs of administering this provision not 4 to exceed one per cent of the amount of use taxes received, 5 which amount shall be retained in lieu of any commission 6 otherwise allowable by law for the collection of such tax. 7 Section 227. Discount.--If a return is filed by a licensee 8 and the tax shown to be due thereon less any discount is paid 9 all within the time prescribed, the licensee shall be entitled 10 to credit and apply against the tax payable by him a discount of 11 one per cent of the amount of the tax collected by him on and 12 after the effective date of this article, as compensation for 13 the expense of collecting and remitting the same and as a 14 consideration of the prompt payment thereof. 15 CHAPTER IV 16 ASSESSMENT AND COLLECTION OF TAX 17 Section 230. Assessment.--The department is authorized and 18 required to make the inquiries, determinations and assessments 19 of the tax (including interest, additions and penalties) imposed 20 by this article. 21 Section 231. Mode and Time of Assessment.--(a) Underpayment 22 of Tax. Within a reasonable time after any return is filed, the 23 department shall examine it and, if the return shows a greater 24 tax due or collected than the amount of tax remitted with the 25 return, the department shall issue an assessment for the 26 difference, together with an addition of three per cent of such 27 difference, which shall be paid to the department within ten 28 days after a notice of the assessment has been mailed to the 29 taxpayer. If such assessment is not paid within ten days, there 30 shall be added thereto and paid to the department an additional 19710H0190B0445 - 41 -
1 three per cent of such difference for each month thereof during 2 which the assessment remains unpaid, but the total of all 3 additions shall not exceed eighteen per cent of the difference 4 shown on the assessment. 5 (b) Understatement of Tax. If the department determines that 6 any return or returns of any taxpayer understates the amount of 7 tax due, it shall determine the proper amount and shall 8 ascertain the difference between the amount of tax shown in the 9 return and the amount determined, such difference being 10 hereafter sometimes referred to as the "deficiency." A notice of 11 assessment for the deficiency and the reasons therefor shall 12 then be sent to the taxpayer. The deficiency shall be paid to 13 the department within thirty days after a notice of the 14 assessment thereof has been mailed to the taxpayer. 15 (c) Failure to File Return. In the event that any taxpayer 16 fails to file a return required by this article, the department 17 may make an estimated assessment (based on information 18 available) of the proper amount of tax owing by the taxpayer. A 19 notice of assessment in the estimated amount shall be sent to 20 the taxpayer. The tax shall be paid within thirty days after a 21 notice of such estimated assessment has been mailed to the 22 taxpayer. 23 (d) Authority to Establish Effective Rates by Business 24 Classification. The department is authorized to make the studies 25 necessary to compute effective rates by business classification, 26 based upon the ratio between the tax required to be collected 27 and taxable sales and to use such rates in arriving at the 28 apparent tax liability of a taxpayer. 29 Any assessment based upon such rates shall be prima facie 30 correct, except that such rate shall not be considered where a 19710H0190B0445 - 42 -
1 taxpayer establishes that such rate is based on a sample 2 inapplicable to him. 3 Section 232. Reassessment.--Any taxpayer against whom an 4 assessment is made may petition the department for a 5 reassessment. Notice of an intention to file such a petition 6 shall be given to the department within thirty days of the date 7 the notice of assessment was mailed to the taxpayer, except that 8 the department for due cause may accept such notice within 9 ninety days of the date the notice of assessment was mailed. The 10 department by registered mail shall supply the taxpayer with a 11 statement setting forth in reasonable detail the basis of the 12 assessment within thirty days after receipt of the taxpayer's 13 notice of intention to file a petition for reassessment. A 14 petition for reassessment shall thereafter be filed within 15 thirty days after such basis of assessment has been mailed to 16 the taxpayer. Such petition shall set forth in reasonable detail 17 the grounds upon which the taxpayer claims that the assessment 18 is erroneous or unlawful, in whole or in part, and shall be 19 accompanied by an affidavit or affirmation that the facts 20 contained therein are true and correct and that the petition is 21 not interposed for delay. An extension of time for filing the 22 petition may be allowed for cause but in no case shall such 23 extension exceed one hundred twenty days. The department shall 24 hold such hearings as may be necessary for the purpose, at such 25 times and places as it may determine, and each taxpayer who has 26 duly filed such petition for reassessment shall be notified by 27 the department of the time when, and the place where, such 28 hearing in his case will be held. 29 It shall be the duty of the department, within six months 30 after receiving a filed petition for reassessment, to dispose of 19710H0190B0445 - 43 -
1 the issue raised by such petition and mail notice of the 2 department's decision to the petitioner: Provided, however, That 3 the taxpayer and the department may, by stipulation, extend such 4 disposal time by not more than six additional months. 5 Section 233. Assessment to Recover Erroneous Refunds.--The 6 department may, within two years of the granting of any refund 7 or credit, or within the period in which an assessment could 8 have been filed by the department with respect to the 9 transaction pertaining to which the refund was granted, 10 whichever period shall last occur, file an assessment to recover 11 any refund or part thereof or credit or part thereof which was 12 erroneously made or allowed. 13 Section 234. Review by Board of Finance and Revenue.--Within 14 sixty days after the date of mailing of notice by the department 15 of the decision on any petition for reassessment filed with it, 16 the person against whom such assessment was made may, by 17 petition, request the Board of Finance and Revenue to review 18 such decision. The failure of the department to notify the 19 petitioner of a decision within the time provided for by section 20 232 shall act as a denial of such petition, and a petition for 21 review may be filed with the Board of Finance and Revenue within 22 one hundred twenty days of the date prior to which the 23 department should have mailed to the petitioner its notice of 24 decision. Every petition for review filed hereunder shall state 25 specifically the reasons on which the petitioner relies, or 26 shall incorporate by reference the petition for reassessment in 27 which the reasons are stated. The petition shall be supported by 28 affidavit that it is not made for the purpose of delay and that 29 the facts set forth therein are true. The Board of Finance and 30 Revenue shall act finally in disposing of petitions filed with 19710H0190B0445 - 44 -
1 it within six months after they have been received. In the event
2 of the failure of the board to dispose of any petition within
3 six months, the action taken by the department, upon the
4 petition for reassessment, shall be sustained. The Board of
5 Finance and Revenue may sustain the action taken by the
6 department on the petition for reassessment, or it may reassess
7 the tax due on such basis as it deems according to law. The
8 board shall give notice of its action to the department and to
9 the petitioner.
10 Section 235. Appeal to Commonwealth Court.--Any person
11 aggrieved by the decision of the Board of Finance and Revenue or
12 by the board's failure to act upon a petition for review within
13 six months may, within sixty THIRTY days, appeal to the <--
14 Commonwealth Court from the decision of the board or of the
15 department, as the case may be, in the manner now or hereafter
16 provided by law for appeals in the case of tax settlements.
17 Section 236. Burden of Proof.--In all cases of petitions for
18 reassessment, review or appeal, the burden of proof shall be
19 upon the petitioner or appellant, as the case may be.
20 Section 237. Collection of Tax.--(a) Collection by
21 Department. The department shall collect the tax in the manner
22 provided by law for the collection of taxes imposed by the laws
23 of this Commonwealth.
24 (b) Collection by Persons Maintaining a Place of Business in
25 the Commonwealth. (1) Every person maintaining a place of
26 business in this Commonwealth and selling or leasing tangible
27 personal property or services, the sale or use of which is
28 subject to tax shall collect the tax from the purchaser or
29 lessee at the time of making the sale or lease, and shall remit
30 the tax to the department.
19710H0190B0445 - 45 -
1 (2) Any person required under this article to collect tax 2 from another person, who shall fail to collect the proper amount 3 of such tax, shall be liable for the full amount of the tax 4 which he should have collected. 5 (c) Exemption Certificates. If the tax does not apply to the 6 sale or lease of tangible personal property or services, the 7 purchaser or lessee shall furnish to the vendor a certificate 8 indicating that the sale is not legally subject to the tax. The 9 certificate shall be in substantially such form as the 10 department may, by regulation, prescribe. Where the tangible 11 personal property or service is of a type which is never subject 12 to the tax imposed or where the sale or lease is in interstate 13 commerce, such certificate need not be furnished. Where a series 14 of transactions are not subject to tax, a purchaser or user may 15 furnish the vendor with a single exemption certificate in 16 substantially such form and valid for such period of time as the 17 department may, by regulation, prescribe. An exemption 18 certificate, which is complete and regular and on its face 19 discloses a valid basis of exemption if taken in good faith, 20 shall relieve the vendor from the liability imposed by this 21 section. An exemption certificate accepted by a vendor from a 22 natural person domiciled within this Commonwealth or any 23 association, fiduciary, partnership, corporation or other 24 entity, either authorized to do business within this 25 Commonwealth or having an established place of business within 26 this Commonwealth, in the ordinary course of the vendor's 27 business, which on its face discloses a valid basis of exemption 28 consistent with the activity of the purchaser and character of 29 the property or service being purchased, shall be presumed to be 30 taken in good faith and the burden of proving otherwise shall be 19710H0190B0445 - 46 -
1 on the Department of Revenue. 2 (d) Direct Payment Permits. The department may authorize a 3 purchaser or lessee who acquires tangible personal property or 4 services under circumstances which make it impossible at the 5 time of acquisition to determine the manner in which the 6 tangible personal property or service will be used, to pay the 7 tax directly to the department, and waive the collection of the 8 tax by the vendor. No such authority shall be granted or 9 exercised, except upon application to the department, and the 10 issuance by the department, in its discretion, of a direct 11 payment permit. If a direct payment permit is granted, its use 12 shall be subject to conditions specified by the department, and 13 the payment of tax on all acquisitions pursuant to the permit 14 shall be made directly to the department by the permit holder. 15 Section 238. Collection of Tax on Motor Vehicles, Trailers 16 and Semi-Trailers.--Notwithstanding the provisions of clause (1) 17 of subsection (b) of section 237 of this article, tax due on the 18 sale at retail or use of a motor vehicle, trailer or semi- 19 trailer required by law to be registered with the department 20 under the provisions of "The Vehicle Code" shall be paid by the 21 purchaser or user directly to the department upon application to 22 the department for an issuance of a certificate of title upon 23 such motor vehicle, trailer or semi-trailer. The department 24 shall not issue a certificate of title until the tax has been 25 paid, or evidence satisfactory to the department has been given 26 to establish that tax is not due. The department may cancel or 27 suspend any record of certificate of title or registration of a 28 motor vehicle, trailer or semi-trailer when the check received 29 in payment of the tax on such vehicle is not paid upon demand. 30 Such tax shall be considered as a first encumbrance against such 19710H0190B0445 - 47 -
1 vehicle and the vehicle may not be transferred without first 2 payment in full of such tax and any interest additions or 3 penalties which shall accrue thereon in accordance with this 4 article. 5 Section 239. Precollection of Tax.--The department may, by 6 regulation, authorize or require particular categories of 7 vendors selling tangible personal property for resale to 8 precollect from the purchaser the tax which such purchaser will 9 collect upon making a sale at retail of such tangible personal 10 property: Provided, however, That the department, pursuant to 11 this section, may not require a vendor to precollect tax from a 12 purchaser who purchases for resale more than one thousand 13 dollars ($1,000) worth of tangible personal property from such 14 vendor per year. In any case in which a vendor has been 15 authorized to prepay the tax to the person from whom he 16 purchased the tangible personal property for resale such vendor 17 so authorized to prepay the tax may, under the regulations of 18 the department, be relieved from his duty to secure a license if 19 such duty shall arise only by reason of his sale of the tangible 20 personal property with respect to which he is, under 21 authorization of the department, to prepay the tax. The vendor, 22 on making a sale at retail of tangible personal property with 23 respect to which he has prepaid the tax, must separately state 24 at the time of resale the proper amount of tax on the 25 transaction, and reimburse himself on account of the taxes which 26 he has previously prepaid. Should such vendor collect a greater 27 amount of tax in any reporting period than he had previously 28 prepaid upon purchase of the goods with respect to which he 29 prepaid the tax, he must file a return and remit the balance to 30 the Commonwealth at the time at which a return would otherwise 19710H0190B0445 - 48 -
1 be due with respect to such sales. 2 Section 240. Bulk and Auction Sales.--Every person who shall 3 sell or cause to be sold at auction, or who shall sell or 4 transfer in bulk, fifty-one per centum or more of any stock of 5 goods, wares or merchandise of any kind, fixtures, machinery, 6 equipment, buildings or real estate, involved in a business for 7 which such person is licensed or required to be licensed under 8 the provisions of this article, or is liable for filing use tax 9 returns in accordance with the provisions of this article, shall 10 give the department ten days' written notice of the sale or 11 transfer prior to the completion of the transfer of such 12 property. Whenever the seller or transferor shall fail to give 13 such notice to the department, or whenever the department shall 14 upon written notice inform the purchaser or transferee that a 15 possible claim for tax imposed by this act exists, any sums of 16 money, property or choses in action or other consideration, 17 which the purchaser or transferee is thereafter required to 18 transfer over to the seller or transferor, shall be subject to a 19 first priority right and lien for any such taxes theretofore or 20 thereafter determined to be due from the seller or transferor, 21 and the purchaser or transferee is forbidden to transfer to the 22 seller or transferor any such sums of money, property or choses 23 in action to the extent of the amount of the Commonwealth's 24 claim. For failure to comply with the provisions of this 25 section, the purchaser or transferee shall be liable for the 26 payment to the Commonwealth of any such taxes theretofore or 27 thereafter determined to be due from the seller or transferor, 28 and such liability may be assessed and enforced in the same 29 manner as the liability for tax under this article: Provided, 30 That nothing contained in this provision shall apply to sales or 19710H0190B0445 - 49 -
1 transfers made under any order of court: And provided further, 2 That the written notice required to be filed with the department 3 by this provision shall be deemed to satisfy the requirements of 4 section 1403 of "The Fiscal Code" as to taxes imposed by this 5 article. 6 Section 241. Collection of Tax on Liquor.--The tax due on <-- 7 the sale of liquor shall be collected on the purchase price or 8 constructive purchase price, as defined in this article, as the 9 case may be, of each bottle sold and a receipt shall be issued 10 to the purchasers stating that the tax imposed by this article 11 is included in the purchase price or constructive purchase 12 price. The sale of each bottle of liquor shall be construed to 13 be a separate sale. 14 Section 242. 241. Collection upon Failure to Request <-- 15 Reassessment, Review or Appeal.--The department may collect any 16 tax: 17 (1) If an assessment of tax is not paid within ten days or 18 thirty days as the case may be after notice thereof to the 19 taxpayer, and no petition for reassessment has been filed; 20 (2) Within sixty days from the date of reassessment, if no 21 petition for review has been filed; 22 (3) Within sixty THIRTY days from the date of the decision <-- 23 of the Board of Finance and Revenue upon a petition for review, 24 or of the expiration of the board's time for acting upon such 25 petition, if no appeal has been made; and 26 (4) In all cases of judicial sales, receiverships, 27 assignments or bankruptcies. 28 In any such case in a proceeding for the collection of such 29 taxes, the person against whom they were assessed shall not be 30 permitted to set up any ground of defense that might have been 19710H0190B0445 - 50 -
1 determined by the department, the Board of Finance and Revenue
2 or the courts: Provided, That the defense of failure of the
3 department to mail notice of assessment or reassessment to the
4 taxpayer and the defense of payment of assessment or
5 reassessment may be raised in proceedings for collection by a
6 motion to stay the proceedings.
7 Section 243. 242. Lien for Taxes.--(a) Lien Imposed. If any <--
8 person liable to pay any tax neglects or refuses to pay the same
9 after demand, the amount (including any interest, addition or
10 penalty, together with any costs that may accrue in addition
11 thereto) shall be a lien in favor of the Commonwealth upon the
12 property, both real and personal, of such person but only after
13 same has been entered and docketed of record by the prothonotary
14 of the county where such property is situated. The department
15 may, at any time, transmit, to the prothonotaries of the
16 respective counties, certified copies of all liens for taxes
17 imposed by this act and penalties and interest. It shall be the
18 duty of each prothonotary receiving the lien to enter and docket
19 the same of record in his office, which lien shall be indexed as
20 judgments are now indexed. No prothonotary shall require, as a
21 condition precedent to the entry of such liens, the payment of
22 the costs incident thereto.
23 (b) Priority of Lien and Effect on Judicial Sale; No
24 Discharge by Sale on Junior Lien. The lien imposed hereunder
25 shall have priority from the date of its recording as aforesaid,
26 and shall be fully paid and satisfied out of the proceeds of any
27 judicial sale of property subject thereto before any other
28 obligation, judgment, claim, lien or estate to which said
29 property may subsequently become subject, except costs of the
30 sale and of the writ upon which the sale was made, and real
19710H0190B0445 - 51 -
1 estate taxes and municipal claims against such property, but 2 shall be subordinate to mortgages and other liens existing and 3 duly recorded or entered of record prior to the recording of the 4 tax lien. In the case of a judicial sale of property, subject to 5 a lien imposed hereunder, upon a lien or claim over which the 6 lien imposed hereunder has priority as aforesaid, such sale 7 shall discharge the lien imposed hereunder to the extent only 8 that the proceeds are applied to its payment, and such lien 9 shall continue in full force and effect as to the balance 10 remaining unpaid. There shall be no inquisition or condemnation 11 upon any judicial sale of real estate made by the Commonwealth 12 pursuant to the provisions hereof. The lien of the taxes, 13 interest and penalties, shall continue for five years from the 14 date of entry, and may be revived and continued in the manner 15 now or hereafter provided for renewal of judgments, or as may be 16 provided in "The Fiscal Code," and a writ of execution may 17 directly issue upon such lien without the issuance and 18 prosecution to judgment of a writ of scire facias: Provided, 19 That not less than ten days before issuance of any execution on 20 the lien, notice of the filing and the effect of the lien shall 21 be sent by registered mail to the taxpayer at his last known 22 post office address: And provided further, That the said lien 23 shall have no effect upon any stock of goods, wares or 24 merchandise regularly sold or leased in the ordinary course of 25 business by the person against whom said lien has been entered, 26 unless and until a writ of execution has been issued and a levy 27 made upon said stock of goods, wares and merchandise. 28 (c) Duty of Prothonotary. Any wilful failure of any 29 prothonotary to carry out any duty imposed upon him by this 30 section shall be a misdemeanor, and, upon conviction, he shall 19710H0190B0445 - 52 -
1 be sentenced to pay a fine not exceeding one thousand dollars
2 ($1,000) and costs of prosecution, or to undergo imprisonment
3 not exceeding one year, or both.
4 (d) Priority of Tax. Except as hereinbefore provided in the
5 distribution, voluntary or compulsory, in receivership,
6 bankruptcy or otherwise, of the property or estate of any
7 person, all taxes imposed by this article which are due and
8 unpaid and are not collectible under the provisions of section
9 225 hereof, shall be paid from the first money available for
10 distribution in priority to all other claims and liens, except
11 in so far as the laws of the United States may give a prior
12 claim to the Federal government. Any person charged with the
13 administration or distribution of any such property or estate,
14 who shall violate the provisions of this section, shall be
15 personally liable for any taxes imposed by this article, which
16 are accrued and unpaid and are chargeable against the person
17 whose property or estate is being administered or distributed.
18 (e) Other Remedies. Subject to the limitations contained in
19 this article as to the assessment of taxes, nothing contained in
20 this section shall be construed to restrict, prohibit or limit
21 the use by the department in collecting taxes finally due and
22 payable of any other remedy or procedure available at law or
23 equity for the collection of debts.
24 Section 244. 243. Suit for Taxes.--(a) Commencement. At any <--
25 time within three years after any tax or any amount of tax shall
26 be finally due and payable, the department may commence an
27 action in the courts of this Commonwealth, of any state or of
28 the United States, in the name of the Commonwealth of
29 Pennsylvania, to collect the amount of tax due together with
30 additions, interest, penalties and costs in the manner provided
19710H0190B0445 - 53 -
1 at law or in equity for the collection of ordinary debts. 2 (b) Procedure. The Attorney General shall prosecute the 3 action and, except as provided herein, the provisions of the 4 Rules of Civil Procedure and the provisions of the laws of this 5 Commonwealth relating to civil procedures and remedies shall, to 6 the extent that they are applicable, be available in such 7 proceedings. 8 (c) Other Remedies. The provisions of this section are in 9 addition to any process, remedy or procedure for the collection 10 of taxes provided by this article or by the laws of this 11 Commonwealth, and this section is neither limited by nor 12 intended to limit any such process, remedy or procedure. 13 Section 245. 244. Tax Suit Comity.--The courts of this <-- 14 Commonwealth shall recognize and enforce liabilities for sales 15 and use taxes, lawfully imposed by any other state: Provided, 16 That such other state extends a like comity to this 17 Commonwealth. 18 Section 246. 245. Service.--Any person maintaining a place <-- 19 of business within this Commonwealth is deemed to have appointed 20 the Secretary of the Commonwealth his agent for the acceptance 21 of service of process or notice in any proceedings for the 22 enforcement of the civil provisions of this article, and any 23 service made upon the Secretary of the Commonwealth as such 24 agent shall be of the same legal force and validity as if such 25 service had been personally made upon such person. Where service 26 cannot be made upon such person in the manner provided by other 27 laws of this Commonwealth relating to service of process, 28 service may be made upon the Secretary of the Commonwealth and, 29 in such case, a copy of the process or notice shall also be 30 personally served upon any agent or representative of such 19710H0190B0445 - 54 -
1 person who may be found within this Commonwealth, or where no 2 such agent or representative may be found a copy of the process 3 or notice shall forthwith be sent by registered mail to such 4 person at the last known address of his principal place of 5 business, home office or residence. 6 Section 247. 246. Collection of Tax on Credit Sales.--If any <-- 7 sale subject to tax hereunder is wholly or partly on credit, the 8 taxpayer shall require the purchaser to pay in cash at the time 9 the sale is made, or within thirty days thereafter, the full tax 10 due on the basis of the entire purchase price. 11 Section 248. 247. Prepayment of Tax.--Whenever a vendor is <-- 12 forbidden by law or governmental regulation to charge and 13 collect the purchase price in advance of or at the time of 14 delivery, the vendor shall prepay the tax as required by section 15 222 of this article, but in such case if the purchaser shall 16 fail to pay to the vendor the total amount of the purchase price 17 and the tax, and such amount is written off as uncollectible by 18 the vendor, the vendor shall not be liable for such tax and 19 shall be entitled to a credit or refund of such tax paid. If the 20 purchase price is thereafter collected, in whole or in part, the 21 amount collected shall be first applied to the payment of the 22 entire tax portion of the bill, and shall be remitted to the 23 department by the vendor with the first return filed after such 24 collection. For any tax prepaid prior to the effective date of 25 this article, credit may be claimed on any returns filed for the 26 periods prior to the effective date of this article. Tax prepaid 27 after the effective date of this article shall be subject to 28 refund upon petition to the department under the provisions of 29 section 252 of this article, filed within one hundred five days 30 of the close of the fiscal year in which such accounts are 19710H0190B0445 - 55 -
1 written off. 2 CHAPTER V 3 REFUNDS AND CREDITS 4 Section 250. Refund or Credit for Overpayment.--With respect 5 to all taxes paid to a vendor or to the Commonwealth prior to 6 April 5, 1957, in the case of any overpayment, the department, 7 within the applicable period of limitations, may credit the 8 amount of such overpayment against any liability in respect of 9 the tax imposed by this act on the part of the person who made 10 the overpayment, and shall refund any balance to such person. 11 Section 251. Restriction on Refunds.--No refund shall be 12 made under section 250 without the approval of the Board of 13 Finance and Revenue. 14 Section 252. Refunds.--The department shall, pursuant to the 15 provisions of sections 253 and 254, refund all taxes, interest 16 and penalties paid to the Commonwealth under the provisions of 17 this article and to which the Commonwealth is not rightfully 18 entitled. Such refunds shall be made to the person, his heirs, 19 successors, assigns or other personal representatives, who 20 actually paid the tax: Provided, That no refund shall be made 21 under this section with respect to any payment made by reason of 22 an assessment with respect to which a taxpayer has filed a 23 petition for reassessment pursuant to section 232 of this 24 article to the extent that said petition has been determined 25 adversely to the taxpayer by a decision which is no longer 26 subject to further review or appeal: Provided further, That 27 nothing contained herein shall be deemed to prohibit a taxpayer 28 who has filed a timely petition for reassessment from amending 29 it to a petition for refund where the petitioner has paid the 30 tax assessed. 19710H0190B0445 - 56 -
1 Section 253. Refund Petition.--(a) Except as provided for in
2 section 251 256 and in subsection (b) and (d) of this section, <--
3 the refund or credit of tax, interest or penalty provided for by
4 section 252 shall be made only where the person who has actually
5 paid the tax files a petition for refund with the department
6 within three years of the actual payment of the tax to the
7 Commonwealth. Such petition for refund must set forth in
8 reasonable detail the grounds upon which the taxpayer claims
9 that the Commonwealth is not rightfully entitled to such tax,
10 interest or penalty, in whole or in part, and shall be
11 accompanied by an affidavit affirming that the facts contained
12 therein are true and correct. The department may hold such
13 hearings as may be necessary for the purpose at such times and
14 places as it may determine, and each person who has duly filed a
15 refund petition shall be notified by the department of the time
16 when, and the place where, such hearing in his case will be
17 held.
18 (b) A refund or credit of tax, interest or penalty, paid as
19 a result of an assessment made by the department under section
20 232, shall be made only where the person who has actually paid
21 the tax files with the department a petition for a refund with
22 the department within six months after the date the notice of
23 assessment was mailed. The filing of a petition for refund,
24 under the provisions of this subsection, shall not affect the
25 abatement of interest, additions or penalties to which the
26 person may be entitled by reason of his payment of the
27 assessment.
28 (c) It shall be the duty of the department, within six
29 months after receiving a petition for refund, to dispose of the
30 issue raised by such petition, and mail notice of the
19710H0190B0445 - 57 -
1 department's decision to the petitioner: Provided, however, That 2 the taxpayer and the department may, by stipulation, extend such 3 disposal time by not more than six additional months. 4 (d) Notwithstanding any other provision of this section 5 where any tax, interest or penalty has been paid under a 6 provision of this article subsequently held by final judgment of 7 a court of competent jurisdiction to be unconstitutional, or 8 under an interpretation of such provision subsequently held by 9 such court to be erroneous, a petition for refund may be filed 10 either before or subsequent to final judgment, but such petition 11 must be filed within five years of the date of the payment of 12 which a refund is requested. The department shall have 13 jurisdiction to hear and determine any such petition filed prior 14 to such final judgment only if, at the time of filing of the 15 petition, proceedings are pending in a court of competent 16 jurisdiction wherein the claim of unconstitutionality or of 17 erroneous interpretation, made in the petition for refund may be 18 established, and in such case, the department shall not take 19 final action upon the petition for refund until the judgment 20 determining the question involved in such petition has become 21 final. 22 Section 254. Review by Board of Finance and Revenue.--Within 23 sixty days after the date of mailing of notice by the department 24 of the decision upon a petition for refund filed with it, 25 pursuant to section 253, the petitioner may further petition the 26 Board of Finance and Revenue to review the decision of the 27 department. The failure of the department to notify the 28 petitioner of its decision within the time provided for by 29 section 253 shall act as a denial of such petition, and a 30 petition for review may be filed with the Board of Finance and 19710H0190B0445 - 58 -
1 Revenue within one hundred twenty days of the date prior to
2 which the department should have mailed to the petitioner its
3 notice of decision. Every petition for review filed with the
4 Board of Finance and Revenue under the provisions of this
5 section shall incorporate by reference the petition for refund.
6 The petitioner may, in his petition for review, elect to
7 withdraw one or more grounds as set out in the original refund
8 petition. The Board of Finance and Revenue shall act finally in
9 disposing of such petitions filed with it within six months
10 after they have been received. In the event of the failure of
11 the board to dispose of any petition within six months, the
12 action taken by the department upon the petition for refund
13 shall be sustained. The Board of Finance and Revenue may sustain
14 the action taken by the department on a petition for refund, or
15 it may redetermine whether a lessor or greater amount of refund
16 is proper. Under no circumstances may the Board of Finance and
17 Revenue authorize a refund greater than that originally applied
18 for by the petitioner. The board shall give notice of its action
19 to the department and to the petitioner.
20 Section 255. Appeal to the Commonwealth Court.--Any person
21 aggrieved by the decision of the Board of Finance and Revenue
22 under section 254, or by the board's failure to act upon a
23 petition for review within six months may, within sixty THIRTY <--
24 days, appeal to the Commonwealth Court from the decision of the
25 board or of the department, as the case may be, in the manner
26 now or hereafter provided for by law for appeals in the case of
27 tax settlements.
28 Section 256. Extended Time for Filing Special Petition for
29 Refund.--Any party to a transaction who has paid tax by reason
30 of a transaction with respect to which the department is
19710H0190B0445 - 59 -
1 assessing tax against another person may, within six months
2 after the filing by the department of the assessment against
3 such other person, file a special petition for refund,
4 notwithstanding his failure to file a regular petition within
5 eighteen months THREE YEARS of the payment. The provisions of <--
6 sections 253, 254 and 255 shall be applicable to such special
7 petition for refund, except that the department need not act on
8 such petition until there is a final determination as to the
9 propriety of the assessment filed against the other party to the
10 transaction. Where a petition is filed under this provision in
11 order to take advantage of the extended period of limitations,
12 overpayments by the petitioner shall be refunded but only to the
13 extent of the actual tax (without consideration of interest and
14 penalties) paid by the other party to the transaction. The
15 purpose of this section is to avoid duplicate payment of tax
16 where a determination is made by the department that one party
17 to a transaction is subject to tax, and another party to the
18 transaction has previously paid tax with respect to such
19 transaction and, as such, this section shall be construed as
20 extending right beyond that provided for by section 253, and not
21 to limit such other section.
22 CHAPTER VI
23 LIMITATIONS
24 Section 258. Limitation on Assessment and Collection.--The
25 amount of the tax imposed by this act shall be assessed within
26 three years after the date when the return provided for by
27 subsection (a) or (c) or under subsection (e) of section 217 is
28 filed or the end of the year in which the tax liability arises
29 whichever shall last occur. Any such assessment may be made at
30 any time during such period notwithstanding that the department
19710H0190B0445 - 60 -
1 may have made one or more previous assessments against the 2 taxpayer for the year in question, or for any part of such year. 3 In any such case, no credit shall be given for any penalty 4 previously assessed or paid. 5 Section 259. Failure to File Return.--Where no return is 6 filed, the amount of the tax due may be assessed and collected 7 at any time as to taxable transactions not reported. 8 Section 260. False or Fraudulent Return.--Where the taxpayer 9 wilfully files a false or fraudulent return with intent to evade 10 the tax imposed by this article, the amount of tax due may be 11 assessed and collected at any time. 12 Section 261. Extension of Limitation Period.-- 13 Notwithstanding any of the foregoing provisions of this part, 14 where, before the expiration of the period prescribed therein 15 for the assessment of a tax, a taxpayer has consented, in 16 writing, that such period be extended, the amount of tax due may 17 be assessed at any time within such extended period. The period 18 so extended may be extended further by subsequent consents, in 19 writing, made before the expiration of the extended period. 20 CHAPTER VII 21 INTEREST, ADDITIONS, PENALTIES AND CRIMES 22 Section 265. Interest.--If any amount of tax imposed by this 23 article is not paid to the department on or before the last date 24 prescribed for payment, interest on such amount at the rate of 25 one-half of one per cent per month for each month, or fraction 26 thereof, from such date, shall be paid for the period from such 27 last date to the date paid. The last date prescribed for payment 28 shall be determined under subsection (a) or (c) of section 222 29 without regard to any extension of time for payment. In the case 30 of any amount assessed as a deficiency or as an estimated 19710H0190B0445 - 61 -
1 assessment, the date prescribed for payment shall be thirty days 2 after notice of such assessment. 3 Section 266. Additions to Tax.--(a) Failure to File Return. 4 In the case of failure to file any return required by section 5 215 on the date prescribed therefor (determined with regard to 6 any extension of time for filing), and in the case in which a 7 return filed understates the true amount due by more than fifty 8 per cent, there shall be added to the amount of tax actually due 9 five per cent of the amount of such tax if the failure to file a 10 proper return is for not more than one month, with an additional 11 five per cent for each additional month, or fraction thereof, 12 during which such failure continues, not exceeding twenty-five 13 per cent in the aggregate. In every such case at least two 14 dollars ($2) shall be added. 15 (b) Addition for Understatement. There shall be added to 16 every assessment under subsection (b) of section 231 an addition 17 equal to five per cent of the amount of the understatement and 18 no addition to the tax shall be paid under subsection (a) of 19 section 231. 20 (c) Interest. If the department assesses a tax according to 21 subsection (a) or (c) of section 231, there shall be added to 22 the amount of the deficiency interest at the rate of one-half of 23 one per cent per month for each month, or fraction thereof, from 24 the date prescribed by subsection (a) or (c) of section 222 of 25 this article for the payment of the tax to the date of notice of 26 the assessment. 27 (d) Uncollectible Checks. Whenever any check issued in 28 payment of any tax or for any other purpose shall be returned to 29 the department as uncollectible, the secretary shall charge a 30 fee of ten per cent of the face amount thereof plus all protest 19710H0190B0445 - 62 -
1 fees, to the person presenting such check to him to cover the 2 cost of its collection in addition to the interest and penalties 3 otherwise provided for by this article: Provided, however, That 4 the additions imposed hereby shall not exceed two hundred 5 dollars ($200) nor be less than ten dollars ($10). 6 Section 267. Penalties.--(a) Penalty Assessed as Tax. The 7 penalties, additions, interest and liabilities provided by this 8 article shall be paid upon notice and demand by the department, 9 and shall be assessed and collected in the same manner as taxes. 10 Except as otherwise provided, any reference in this article to 11 "tax" imposed by this article shall be deemed also to refer to 12 the penalties, additions, interest and liabilities provided by 13 this part. 14 (b) Attempt to Evade or Defeat Tax. Any person who wilfully 15 attempts, in any manner, to evade or defeat the tax imposed by 16 this article, or the payment thereof, or to assist any other 17 person to evade or defeat the tax imposed by this article, or 18 the payment thereof, or to receive a refund improperly, shall, 19 in addition to other penalties provided by law, be liable for a 20 penalty equal to one-half of the total amount of the tax evaded. 21 In any direct proceeding arising out of a petition for 22 reassessment or refund as provided in this article, in which an 23 issue of fact is raised with respect to whether a return is 24 fraudulent or with respect to the propriety of the imposition by 25 the department of the penalty prescribed in this subsection (b), 26 the burden of proof with respect to such issue shall be upon the 27 department. 28 Section 268. Crimes.--(a) Fraudulent Return. Any person who 29 with intent to defraud the Commonwealth shall wilfully make, or 30 cause to be made, any return required by this article, which is 19710H0190B0445 - 63 -
1 false, shall be guilty of a misdemeanor, and, upon conviction 2 thereof, shall be sentenced to pay a fine not exceeding two 3 thousand dollars ($2000), or undergo imprisonment not exceeding 4 three years, or both. 5 (b) Other Crimes. Except as otherwise provided by subsection 6 (a) of this section, any person maintaining a place of business 7 in this Commonwealth, who advertises or holds out or states to 8 the public or to any purchaser or user, directly or indirectly, 9 that the tax or any part thereof imposed by this article will be 10 absorbed by such person, or that it will not be added to the 11 purchase price of the tangible personal property or services 12 described in subclauses (2), (3) and (4) of clause (k) of 13 section 201 of this article sold or, if added, that the tax or 14 any part thereof will be refunded, other than when such person 15 refunds the purchase price because of such property being 16 returned to the vendor, and any person maintaining a place of 17 business in this Commonwealth and selling or leasing tangible 18 personal property or said services the sale or use of which by 19 the purchaser is subject to tax hereunder, who shall wilfully 20 fail or refuse to collect the tax from the purchaser and remit 21 the same to the department, and any person who shall wilfully 22 fail, neglect or refuse to file any return or report required by 23 this article or any taxpayer who shall refuse to pay any tax, 24 penalty or interest imposed or provided for by this article, or 25 who shall wilfully fail to preserve his books, papers and 26 records as directed by the department, or any person who shall 27 refuse to permit the department or any of its authorized agents 28 to examine his books, records or papers, or who shall knowingly 29 make any incomplete, false or fraudulent return or report, or 30 who shall do, or attempt to do, anything whatever to prevent the 19710H0190B0445 - 64 -
1 full disclosure of the amount or character of taxable sales 2 purchases or use made by himself or any other person, or shall 3 provide any person with a false statement as to the payment of 4 tax with respect to particular tangible personal property or 5 said services, or shall make, utter or issue a false or 6 fraudulent exemption certificate, shall be guilty of a 7 misdemeanor, and, upon conviction thereof, shall be sentenced to 8 pay a fine not exceeding one thousand dollars ($1000) and costs 9 of prosecution, or undergo imprisonment not exceeding one year, 10 or both: Provided, however, That any person maintaining a place 11 of business outside this Commonwealth may absorb the tax with 12 respect to taxable sales made in the normal course of business 13 to customers present at such place of business without being 14 subject to the above penalty and fines. The penalties imposed by 15 this section shall be in addition to any other penalties imposed 16 by any provision of this article. 17 Section 269. Abatement of Additions or Penalties.--Upon the 18 filing of a petition for reassessment or a petition for refund 19 as provided under this article by a taxpayer, additions or 20 penalties imposed upon such taxpayer by this act may be waived 21 or abated, in whole or in part, where the petitioner has 22 established that he has acted in good faith, without negligence 23 and with no intent to defraud. 24 CHAPTER VIII 25 ENFORCEMENT AND EXAMINATIONS 26 Section 270. Rules and Regulations.--(a) General Provision. 27 The department is hereby charged with the enforcement of the 28 provisions of this article, and is hereby authorized and 29 empowered to prescribe, adopt, promulgate and enforce, rules and 30 regulations not inconsistent with the provisions of this 19710H0190B0445 - 65 -
1 article, relating to any matter or thing pertaining to the 2 administration and enforcement of the provisions of this 3 article, and the collection of taxes, penalties and interest 4 imposed by this article. The department may prescribe the 5 extent, if any, to which any of such rules and regulations shall 6 be applied without retroactive effect. 7 (b) Sales between Affiliated Interests. In determining the 8 purchase price of taxable sales where, because of affiliation of 9 interests between the vendor and the purchaser or irrespective 10 of any such affiliation, if for any other reason, the purchase 11 price of such sale is in the opinion of the department not 12 indicative of the true value of the article or the fair price 13 thereof, the department shall, pursuant to uniform and equitable 14 rules, determine the amount of constructive purchase price upon 15 the basis of which the tax shall be computed and levied. Such 16 rules shall provide for a constructive amount of a purchase 17 price for each such sale, which price shall equal a price for 18 such article which would naturally and fairly be charged in an 19 arm's-length transaction in which the element of common 20 interests between vendor and purchaser, or, if no common 21 interest exists, any other element causing a distortion of the 22 price or value is absent. For the purpose of this article where 23 a taxable sale occurs between a parent corporation and a 24 subsidiary affiliate or controlled corporation of such parent, 25 there shall be a rebuttable presumption that because of such 26 common interest such transaction was not at arm's-length. 27 Section 271. Keeping of Records.--(a) General Provision. 28 Every person liable for any tax imposed by this article, or for 29 the collection thereof, shall keep the records, render such 30 statements, make the returns and comply with such rules and 19710H0190B0445 - 66 -
1 regulations as the department may, from time to time, prescribe 2 regarding matters pertinent to his business. Whenever in the 3 judgment of the department it is necessary, it may require any 4 person, by notice served upon such person, or by regulations, to 5 make such returns, render such statements or keep such records 6 as the department deems sufficient to show whether or not such 7 person is liable to pay or collect tax under this article. 8 (b) Persons Collecting Tax from Others. Any person liable to 9 collect tax from another person under the provisions of this 10 article shall file reports, keep records, make payments and be 11 subject to interest and penalties as provided for under this 12 article, in the same manner as if he were directly subject to 13 the tax. 14 (c) Records of Non-Residents. A non-resident who does 15 business in this Commonwealth as a retail dealer shall keep 16 adequate records of such business or businesses and of the tax 17 due with respect thereto, which records shall at all times be 18 retained within this Commonwealth unless retention outside the 19 Commonwealth is authorized by the department. No taxes collected 20 from purchasers shall be sent outside the Commonwealth without 21 the written consent of, and in accordance with conditions 22 prescribed by the department. The department may require a 23 taxpayer who desires to retain records or tax collections 24 outside the Commonwealth to assume reasonable out-of-state audit 25 expenses. 26 (d) Keeping of Separate Records. Any person doing business 27 as a retail dealer who at the same time is engaged in another 28 business or businesses which do not involve the making of sales 29 taxable under this article, shall keep separate books and 30 records of his businesses so as to show the sales taxable under 19710H0190B0445 - 67 -
1 this article separately from his sales not taxable hereunder. If 2 any such person fails to keep such separate books and records, 3 he shall be liable for tax at the rate designated in section 202 4 of this article upon the entire purchase price of sales from 5 both or all of his businesses. 6 (e) Other Methods. In those instances where a vendor gives 7 no sales memoranda or uses registers showing only total sales, 8 the vendor must adopt some method of segregating tax from sales 9 receipts and keep records showing such segregation, all in 10 accordance with proper accounting and business practices. 11 A vendor may apply to the department for permission to use a 12 collection and recording procedure which will show such 13 information as the law requires with reasonable accuracy and 14 simplicity. Such application must contain a detailed description 15 of the procedure to be adopted. Permission to use the proposed 16 procedure is not to be construed as relieving the vendor from 17 remitting the full amount of tax collected. The department may 18 revoke such permission upon thirty days' notice to the vendor. 19 Refusal of the department to grant permission in advance to use 20 such procedure shall not be construed to invalidate a procedure 21 which upon examination shows such information as the law 22 requires. 23 Section 272. Examinations.--The department or any of its 24 authorized agents is hereby authorized to examine the books, 25 papers and records of any taxpayer in order to verify the 26 accuracy and completeness of any return made or, if no return 27 was made, to ascertain and assess the tax imposed by this 28 article. The department may require the preservation of all such 29 books, papers and records for any period deemed proper by it but 30 not to exceed three years from the end of the calendar year to 19710H0190B0445 - 68 -
1 which the records relate. Every such taxpayer is hereby required 2 to give to the department, or its agent, the means, facilities 3 and opportunity for such examinations and investigation. The 4 department is further authorized to examine any person, under 5 oath, concerning taxable sales or use by any taxpayer or 6 concerning any other matter relating to the enforcement or 7 administration of this article, and to this end may compel the 8 production of books, papers and records and the attendance of 9 all persons whether as parties or witnesses whom it believes to 10 have knowledge of such matters. The procedure for such hearings 11 or examinations shall be the same as that provided by The Fiscal 12 Code relating to inquisitorial powers of fiscal officers. 13 Section 273. Records and Examinations of Delivery Agents.-- 14 Every agent for the purpose of delivery of goods shipped into 15 the Commonwealth by a nonresident including, but not limited to, 16 common carriers shall maintain adequate records of such 17 deliveries pursuant to rules and regulations adopted by the 18 department and shall make such records available to the 19 department upon request after due notice. 20 Section 274. Unauthorized Disclosure.--Any information 21 gained by the department as a result of any return, examination, 22 investigation, hearing or verification, required or authorized 23 by this article, shall be confidential, except for official 24 purposes and except in accordance with proper judicial order or 25 as otherwise provided by law, and any person unlawfully 26 divulging such information shall be guilty of a misdemeanor, 27 and, upon conviction thereof, shall be sentenced to pay a fine 28 not in excess of one thousand dollars ($1000) and costs of 29 prosecution, or to undergo imprisonment for not more than one 30 year, or both. 19710H0190B0445 - 69 -
1 Section 275. Cooperation with Other Governments.-- 2 Notwithstanding the provisions of section 274, the department 3 may permit the Commissioner of Internal Revenue of the United 4 States, or the proper officer of any state, or the authorized 5 representative of either such officer, to inspect the tax 6 returns of any taxpayer, or may furnish to such officer or to 7 his authorized representative an abstract of the return of any 8 taxpayer, or supply him with information concerning any item 9 contained in any return or disclosed by the report of any 10 examination or investigation of the return of any taxpayer. This 11 permission shall be granted only if the statutes of the United 12 States or of such other state, as the case may be, grant 13 substantially similar privileges to the proper officer of the 14 Commonwealth charged with the administration of this article. 15 Section 276. Interstate Compacts.--The Governor, or his 16 authorized representative, is hereby vested with authority to 17 confer with the Governor and the authorized representatives of 18 other states with respect to reciprocal use tax collection 19 between Pennsylvania and such other states. 20 The Governor, or his representative, is authorized to join 21 with such authorities of other states to conduct joint 22 investigations, to exchange information, hold joint hearings and 23 enter into compacts or interstate agreements with such other 24 states to accomplish uniform reciprocal use tax collections 25 between those states who are parties to any compact or 26 interstate agreement and the Commonwealth of Pennsylvania. 27 Section 277. Bonds.--(a) Taxpayer to File Bond. Whenever 28 the department in its discretion, deems it necessary to protect 29 the revenues to be obtained under the provisions of this 30 article, it may require any nonresident natural person or any 19710H0190B0445 - 70 -
1 foreign corporation, association, fiduciary, partnership or 2 other entity, not authorized to do business within this 3 Commonwealth or not having an established place of business 4 therein and subject to the tax imposed by section 202 of this 5 article, to file a bond issued by a surety company authorized to 6 do business in this Commonwealth and approved by the Insurance 7 Commissioner as to solvency and responsibility, in such amounts 8 as it may fix, to secure the payment of any tax or penalties 9 due, or which may become due, from such natural person or 10 corporation. In order to protect the revenues to be obtained 11 under the provisions of this article, the department shall 12 require any nonresident natural person or any foreign 13 corporation, association, fiduciary, partnership or entity, who 14 or which is a building contractor, or who or which is a supplier 15 delivering building materials for work in this Commonwealth and 16 is not authorized to do business within this Commonwealth or 17 does not have an established place of business therein and is 18 subject to the tax imposed by section 202 of this article, to 19 file a bond issued by a surety company authorized to do business 20 in this Commonwealth and approved by the Insurance Commissioner 21 as to solvency and responsibility, in such amounts as it may 22 fix, to secure the payments of any tax or penalties due, or 23 which may become due, from such natural person, corporation or 24 other entity. The department may also require such a bond of any 25 person petitioning the department for reassessment, in the case 26 of any assessment over five hundred dollars ($500) or where it 27 is of the opinion that the ultimate collection is in jeopardy. 28 The department may, for a period of three years, require such a 29 bond of any person who has on three or more occasions within a 30 twelve month period either filed a return or made payment to the 19710H0190B0445 - 71 -
1 department more than thirty days late. In the event that the
2 department determines that a taxpayer is to file such a bond, it
3 shall give notice to such taxpayer to that effect, specifying
4 the amount of the bond required. The taxpayer shall file such
5 bond within five days after the giving of such notice by the
6 department unless, within such five days, the taxpayer shall
7 request, in writing, a hearing before the Secretary of Revenue
8 or his representative at which hearing the necessity, propriety
9 and amount of the bond shall be determined by the secretary or
10 such representative. Such determination shall be final and shall
11 be complied with within fifteen days after notice thereof is
12 mailed to the taxpayer.
13 (b) Securities in Lieu of Bond. In lieu of the bond
14 required by this section, securities approved by the department,
15 or cash in such amount as it may prescribe, may be deposited.
16 Such securities or cash shall be kept in the custody of the
17 department, who may, at any time, without notice to the
18 depositor, apply them to any tax and/or interest or penalties
19 due, and for that purpose the securities may be sold by the
20 department, at public or private sale, upon five days written
21 notice to the depositor.
22 (c) Failure to File Bond. The department may file a lien
23 pursuant to section 243 242 against any taxpayer who fails to <--
24 file a bond when required to do so under this section. All funds
25 received upon execution of the judgment on such lien shall be
26 refunded to the taxpayer with three per cent interest should a
27 final determination be made that he does not owe any payment to
28 the department.
29 PART VII
30 REPEALER; APPROPRIATION; EFFECTIVE DATE
19710H0190B0445 - 72 -
1 Section 280. Repeal.--The act of March 6, 1956 (P.L.1228),
2 known as the "Tax Act of 1963 for Education," is repealed
3 concurrently with the effective date of the various provisions
4 of this article.
5 SECTION 281. APPROPRIATION FOR REFUNDS, ETC.--SO MUCH OF THE <--
6 PROCEEDS OF THE TAX IMPOSED BY THIS ARTICLE AS SHALL BE
7 NECESSARY FOR THE PAYMENT OF REFUNDS, ENFORCEMENT, OR
8 ADMINISTRATION, UNDER THIS ARTICLE, IS HEREBY APPROPRIATED FOR
9 SUCH PURPOSES.
10 Section 281. 282. Effective Date.--The provisions of this <--
11 article shall take effect March 1, 1971, or upon the date this
12 article is enacted into law whichever is the last to occur,
13 except that clauses (k) (4), (m) and (o) (4) of section 201,
14 clause (c) of section 202, clause (17) of section 204 and clause
15 (30) (iii) of section 204 in so far as it relates to the fifty
16 cent (50¢) exclusion from purchase price on restaurant meals,
17 shall take effect July 1, 1971.
18 ARTICLE III
19 PERSONAL INCOME TAX
20 PART I
21 DECLARATION OF POLICY: DEFINITIONS
22 Section 301. Declaration of Intent and Policy.--The
23 Legislature, in imposing a flat rate tax on income defined in
24 this article, hereby declares its legislative intent and policy
25 to provide a fair and practical method of taxation and to
26 effectuate an income tax which shall constitutionally conform to
27 the uniformity provisions of section 1, of Article VIII, of the
28 Constitution, by utilizing and uniformly applying in this
29 article those terms, definitions, classifications and other
30 provisions of the Federal Internal Revenue Code of 1954, as
19710H0190B0445 - 73 -
1 amended, as they relate to the Federal Income Tax on 2 individuals, being the same code which the General Assembly has 3 heretofore employed in the Pennsylvania "Corporate Net Income 4 Tax" and "Corporation Income Tax" acts relating to the 5 imposition of income taxes on corporations. 6 Section 302. Definitions.--Any term used in this article 7 shall have the same meaning as when used in comparable context 8 in the laws of the United States relating to Federal income 9 taxes unless a different meaning is clearly required. Any 10 reference in this article to the Internal Revenue Code shall 11 include the Internal Revenue Code of 1954 and other provisions 12 of the laws of the United States relating to Federal income 13 taxes, all as amended and effective on the date such reference 14 is required by this article: 15 (a) "Compensation" means any form of remuneration as defined 16 in section 3401 (a) of the Internal Revenue Code. 17 (b) "Department" means the Department of Revenue of the 18 Commonwealth of Pennsylvania. 19 (c) "Employe" means any employe as defined in section 3401 20 (c) of the Internal Revenue Code. Any person from whose 21 compensation an employer is required to withhold Federal income 22 tax shall prima facie be deemed an employe. 23 (d) "Employer" means an employer as defined in section 3401 24 (d) of the Internal Revenue Code. Any person required to 25 withhold Federal income tax from compensation paid shall prima 26 facie be deemed an employer. 27 (e) "Fiduciary" means a guardian, trustee, executor, 28 administrator, receiver, conservator or any person acting in any 29 fiduciary capacity, whether domiciliary or ancillary. 30 (f) "Individual" means a natural person. 19710H0190B0445 - 74 -
1 (g) "Nonresident individual" means any individual who is not 2 a resident of the Commonwealth. 3 (h) "Nonresident estate or trust" means any estate or trust 4 which is not a resident estate or trust. 5 (i) "Person" means any individual, employer, association, 6 fiduciary, partnership, corporation or other entity, estate or 7 trust, resident or nonresident, and the plural as well as the 8 singular number. 9 (j) "Resident individual" means an individual who is 10 domiciled in this Commonwealth unless he maintains no permanent 11 place of abode in this Commonwealth and does maintain a 12 permanent place of abode elsewhere and spends in the aggregate 13 not more than thirty days of the taxable year in this 14 Commonwealth; or who is not domiciled in this Commonwealth but 15 maintains a permanent place of abode in this Commonwealth and 16 spends in the aggregate more than one hundred eighty-three days 17 of the taxable year in this Commonwealth. 18 (k) "Resident estate" means the estate of a decedent who at 19 his death was a resident individual. 20 (l) "Resident trust" means a trust created by the will of a 21 decedent who at his death was a resident individual and any 22 trust created by, or consisting of property transferred to such 23 trust by a person who was a resident individual. 24 (m) "State" means any state or commonwealth of the United 25 States, the District of Columbia, the Commonwealth of Puerto 26 Rico, any territory or possession of the United States, any 27 foreign country, or any political subdivision of any of the 28 foregoing. 29 (n) "Tax" includes interest, penalties and additions to tax, 30 and further includes the tax required to be withheld by an 19710H0190B0445 - 75 -
1 employer on compensation paid, unless a more limited meaning is 2 disclosed by the context. 3 (o) "Taxable year" means the taxable period on the basis of 4 which a taxpayer is required to file his Federal income tax 5 return pursuant to the Internal Revenue Code. 6 (p) "Taxpayer" means any person subject to the tax imposed 7 by this article or any employer required to withhold tax on 8 compensation paid. 9 (q) "Taxable income." Except as otherwise provided herein, 10 "taxable income" means the same as "taxable income" as defined 11 in the Internal Revenue Code and which is required to be 12 returned to and ascertained by the Federal Government pursuant 13 to said code, subject to the following adjustments: 14 (1) Subtraction of interest income derived from obligations 15 of the United States Government to the extent included in 16 adjusted gross income. 17 (2) Addition of interest income derived from obligations of 18 states, political subdivisions, instrumentalities and public 19 authorities thereof other than Pennsylvania or its political 20 subdivisions, instrumentalities or public authorities to the 21 extent not included in adjusted gross income. 22 (3) In the case of a nonresident individual, estate or trust 23 estate or trust "taxable income" and the adjustments required by 24 subsections (a) and (b) above shall include only income derived 25 from sources within this Commonwealth. 26 (4) The respective shares of an estate or trust and its 27 beneficiaries in the additions and subtractions to taxable 28 income shall be in proportion to their respective shares of 29 distributable net income of the estate or trust as defined in 30 the Internal Revenue Code. If the estate or trust has no 19710H0190B0445 - 76 -
1 distributable net income for the taxable year, the share of each 2 beneficiary in the additions and subtractions shall be in 3 proportion to his share of the estate or trust income for such 4 year, under local law or the terms of the instrument, which is 5 required to be distributed currently and any other amounts of 6 such income distributed in such year. Any balance of the 7 additions and subtractions shall be allocated to the estate or 8 trust. 9 (5) In the case of a nonresident estate or trust, the 10 respective shares of the estate or trust and of its 11 beneficiaries shall be determined in the manner set forth by 12 this subsection (q); however, in determining the taxable income 13 of a nonresident estate or trust or of any nonresident 14 beneficiary thereof, there shall be taken into account only the 15 income of the estate or trust, or the beneficiary's share 16 thereof, derived from sources within this Commonwealth. 17 (r) (1) "Income from sources within this Commonwealth" 18 means all taxable income to the extent that it is earned, 19 received or acquired from sources within this Commonwealth: 20 (i) by reason of ownership or disposition of any interest in 21 real or tangible personal property in this Commonwealth; or 22 (ii) in connection with a trade, profession, occupation 23 carried on in this Commonwealth or for the rendition or personal 24 services performed in this Commonwealth; or 25 (iii) as a distributive share of the income of an 26 unincorporated business, profession, enterprise, undertaking or 27 other activity as the result of work done, services rendered or 28 other business activities conducted in this Commonwealth, except 29 as allocated to another state pursuant to regulations 30 promulgated by the department under this article. 19710H0190B0445 - 77 -
1 (2) Income from tangible personal property shall constitute 2 income from sources within this Commonwealth only to the extent 3 that such income is from property employed in a trade, 4 profession, occupation or business carried on in this 5 Commonwealth. 6 PART II 7 IMPOSITION OF TAX 8 Section 305. Incidence and Rate.--For the privilege of 9 receiving, earning or otherwise acquiring income from any source 10 whatsoever, in the case of a resident individual, estate or 11 trust of this Commonwealth, or from sources within this 12 Commonwealth, in the case of a nonresident individual, estate or 13 trust of this Commonwealth, there is levied and imposed an 14 annual tax of five per cent of the taxable income of the 15 taxpayer. 16 Section 306. Beneficiary of Grantor Trust.--The taxable 17 income of a person who is required to include income from a 18 trust in his Federal income tax return under the provisions of 19 subpart E of subchapter J of the Internal Revenue Code shall be 20 computed with reference to the income of the trust as if such 21 income were the income of the taxpayer rather than the trust. 22 PART III 23 NONRESIDENT INDIVIDUALS 24 Section 308. Nonresident Individuals; Taxable Income.--The 25 taxable income of a nonresident individual shall be that part of 26 his Federal taxable income derived from sources within this 27 Commonwealth as defined in subsection (r) of section 302 of this 28 article. 29 Section 309. Husband and Wife.--(a) Separate Federal Return. 30 If the Federal taxable income of husband or wife who are both 19710H0190B0445 - 78 -
1 nonresidents of this Commonwealth is determined on a separate 2 Federal return, their taxable incomes from sources within this 3 Commonwealth shall be separately determined. 4 (b) Joint Federal Return. If the Federal taxable income of 5 husband and wife who are both nonresidents is determined on a 6 joint Federal return, their tax shall be determined in this 7 State on their joint taxable income. 8 (c) One Spouse a Nonresident. If either husband or wife is 9 a nonresident and the other a resident, separate taxes shall be 10 determined on their separate taxable incomes from sources within 11 this Commonwealth on such forms as the department shall 12 prescribe, unless both elect to determine their joint taxable 13 income in this Commonwealth as if both were residents. If a 14 husband and wife file a joint Federal income tax return, but 15 determine their taxable income from sources within this 16 Commonwealth separately, they shall compute their taxable 17 incomes from sources within this Commonwealth as if their 18 Federal taxable incomes had been determined separately. 19 Section 310. Allocation of Income of Nonresident.--Where a 20 nonresident taxpayer engages in a business, trade, profession or 21 occupation partly within and partly without this Commonwealth, 22 and, as a result thereof or for other reasons that portion of 23 the income derived from or connected with sources within this 24 Commonwealth cannot readily or accurately be ascertained, the 25 department shall by regulation prescribe uniform rules for 26 apportionment or allocation of so much of such taxpayer's income 27 as fairly and equitably represents income derived from sources 28 within this Commonwealth. 29 PART IV 30 CREDITS AGAINST TAX 19710H0190B0445 - 79 -
1 Section 315. Tax Withheld.--(a) The amount withheld under
2 section 322 shall be allowed to the recipient of the
3 compensation as a credit against the tax imposed on him by this
4 article.
5 Section 316. Income Taxes Imposed by Other States.--(a) A
6 resident taxpayer shall be allowed a credit against the tax
7 otherwise due under this act for the amount of any income tax,
8 wage tax or tax on or measured by gross or net earned or
9 unearned income imposed on him by another state with respect to
10 income which is also subject to tax under this article.
11 (b) The credit provided under this section shall not exceed
12 the proportion of the tax otherwise due under this article that
13 the amount of the taxpayer's taxable income subject to tax by
14 the other jurisdiction bears to his entire taxable income.
15 Section 317. Personal Taxes Imposed by Political <--
16 Subdivisions of This Commonwealth.--(a) Every resident or
17 nonresident individual, ESTATE OR TRUST subject to tax under <--
18 this article shall be allowed a credit against the tax otherwise
19 due under this article equal to thirty per cent of the amount of
20 any local taxes imposed on and paid by such individual, ESTATE <--
21 OR TRUST to any political subdivision of this Commonwealth
22 during the calendar year 1971, except that such credit shall not
23 apply to local taxes imposed on real estate, realty transfers or
24 amusements.
25 (b) For local taxes DESCRIBED IN SUBSECTION (A) imposed and <--
26 paid in the taxable years beginning after December 31, 1971, the
27 amount of credit BASE provided in this section shall not exceed <--
28 thirty per cent of the total amount of the local taxes which
29 were imposed upon and paid by such individual, ESTATE OR TRUST <--
30 during the calendar year 1971 to political subdivisions of this
19710H0190B0445 - 80 -
1 Commonwealth, EXCEPT THAT IN THE CASE WHERE NO SUCH LOCAL TAXES <-- 2 WERE IMPOSED UPON AND PAID BY SUCH INDIVIDUAL, ESTATE OR TRUST 3 DURING THE CALENDAR YEAR 1971, THEN THE PERCENTAGE RATE SHALL BE 4 APPLIED TO THE TOTAL AMOUNT OF SUCH LOCAL TAXES WHICH WERE 5 IMPOSED UPON AND PAID BY SUCH INDIVIDUAL, ESTATE OR TRUST DURING 6 THE CALENDAR YEAR IN WHICH SUCH TAXES WERE FIRST IMPOSED AND 7 PAID AND THE AMOUNT SO DETERMINED SHALL EACH YEAR THEREAFTER 8 CONSTITUTE THE BASE ON WHICH THE TAX CREDIT RATE SHALL BE 9 APPLIED. 10 Section 318. Tax Paid by Trust on Accumulated Income.--A 11 beneficiary of a trust whose taxable income includes all or part 12 of an accumulation distribution or a capital gain distribution 13 by a trust, as defined in section 665 of the Internal Revenue 14 Code, shall be allowed a credit against the tax otherwise due 15 under this article equal to all or a proportionate part of any 16 tax paid by the trust under this article for any preceding 17 taxable year which would not have been payable if the trust had 18 in fact made distribution to its beneficiaries at the times and 19 in the amounts specified in sections 666 and 669 of the Internal 20 Revenue Code. The credit shall not reduce the tax otherwise due 21 from the beneficiary to an amount less than would have been due 22 if the accumulation distribution or capital gain distribution 23 were excluded from taxable income. 24 Section 319. Tax Credit for Taxpayer Class.--(a) Declaration 25 of Legislative Purpose. The General Assembly, in recognition of 26 section 2 (b) (ii) of Article VIII of the Constitution of 27 Pennsylvania which provides for the establishing as a class or 28 classes of subjects of taxation, the property or privileges of 29 persons who, because of age, disability, infirmity or poverty 30 are determined to be in need of tax exemption or of special tax 19710H0190B0445 - 81 -
1 provisions, hereby declares as its legislative intent and
2 purpose to execute its power under such constitutional provision
3 by establishing a special tax credit provision, as hereinafter
4 provided in subsections (b) and (c) of this section.
5 (b) Establishing of Class; Tax Credit.--Pursuant to the
6 provisions of said section of the Constitution of Pennsylvania
7 there is hereby legislatively determined and established in the
8 schedule provided in subsection (c) of this section, a class of
9 taxpayers who by reason of poverty, age, disability or infirmity
10 are in need of special tax relief and the members of such class,
11 on and after the effective date of this article, shall be
12 entitled to claim a credit against the amount of tax which would
13 otherwise be due under this article. The class of taxpayers and
14 the members thereof who qualify for such tax credit and the
15 amount thereof shall be determined solely by reference to the
16 taxable income and exemption schedule set forth in subsection
17 (c) of this section.
18 (c) Tax credit schedule for taxpayer class.
19 SCHEDULE
20 VANISHING TAX CREDIT
21 Net Tax Number of FEDERAL Exemptions <--
22 Taxable at
23 Income 5% 1 2 3 4 5 6
24
25 $ 100 $ 5 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00
26 200 10 10.00 10.00 10.00 10.00 10.00 10.00
27 300 15 15.00 15.00 15.00 15.00 15.00 15.00
28 400 20 20.00 20.00 20.00 20.00 20.00 20.00
29 500 25 25.00 25.00 25.00 25.00 25.00 25.00
30 600 30 30.00 30.00 30.00 30.00 30.00 30.00
19710H0190B0445 - 82 -
1 700 35 31.25 35.00 35.00 35.00 35.00 35.00 2 800 40 30.00 40.00 40.00 40.00 40.00 40.00 3 900 45 28.75 45.00 45.00 45.00 45.00 45.00 4 1000 50 27.50 50.00 50.00 50.00 50.00 50.00 5 1100 55 26.25 55.00 55.00 55.00 55.00 55.00 6 1200 60 25.00 60.00 60.00 60.00 60.00 60.00 7 1300 65 23.75 62.50 65.00 65.00 65.00 65.00 8 1400 70 22.50 60.00 70.00 70.00 70.00 70.00 9 1500 75 21.25 57.50 75.00 75.00 75.00 75.00 10 1600 80 20.00 55.00 80.00 80.00 80.00 80.00 11 1700 85 18.75 52.50 85.00 85.00 85.00 85.00 12 1800 90 17.50 50.00 90.00 90.00 90.00 90.00 13 1900 95 16.25 47.50 93.75 95.00 95.00 95.00 14 2000 100 15.00 45.00 90.00 100.00 100.00 100.00 15 2100 105 13.75 42.50 86.25 105.00 105.00 105.00 16 2200 110 12.50 40.00 82.50 110.00 110.00 110.00 17 2300 115 11.25 37.50 78.75 115.00 115.00 115.00 18 2400 120 10.00 35.00 75.00 120.00 120.00 120.00 19 2500 125 8.75 32.50 71.25 125.00 125.00 125.00 20 2600 130 7.50 30.00 67.50 120.00 130.00 130.00 21 2700 135 6.25 27.50 63.75 115.00 135.00 135.00 22 2800 140 5.00 25.00 60.00 110.00 140.00 140.00 23 2900 145 3.75 22.50 56.25 105.00 145.00 145.00 24 3000 150 2.50 20.00 52.50 100.00 150.00 150.00 25 3100 155 1.25 17.50 48.75 95.00 124.00 155.00 <-- 26 155.00 27 3200 160 .00 15.00 45.00 90.00 156.25 160.00 28 3300 165 .00 12.50 41.25 85.00 150.00 165.00 29 3400 170 .00 10.00 37.50 80.00 143.75 170.00 30 3500 175 .00 7.50 33.75 75.00 137.50 175.00 19710H0190B0445 - 83 -
1 3600 180 .00 5.00 30.00 70.00 131.25 180.00
2 3700 185 .00 2.50 26.25 65.00 125.00 185.00
3 3800 190 .00 .00 22.50 60.00 118.75 187.50
4 3900 195 .00 .00 18.75 55.00 112.50 180.00
5 4000 200 .00 .00 15.00 50.00 106.25 172.50
6 4100 205 .00 .00 11.25 45.00 100.00 165.00
7 4200 210 .00 .00 7.50 40.00 93.75 157.50
8 4300 215 .00 .00 3.75 35.00 87.50 150.00
9 4400 220 .00 .00 .00 30.00 81.25 142.50
10 4500 225 .00 .00 .00 25.00 75.00 135.00
11 4600 230 .00 .00 .00 20.00 68.75 127.50
12 4700 235 .00 .00 .00 15.00 62.50 120.00
13 4800 240 .00 .00 .00 10.00 56.25 112.50
14 4900 245 .00 .00 .00 5.00 50.00 105.00
15 5000 250 .00 .00 .00 .00 43.75 97.50
16 5100 255 .00 .00 .00 .00 37.50 90.00
17 5200 260 .00 .00 .00 .00 31.25 82.50
18 5300 265 .00 .00 .00 .00 25.00 75.00
19 5400 270 .00 .00 .00 .00 18.75 67.50
20 5500 275 .00 .00 .00 .00 12.50 60.00
21 5600 280 .00 .00 .00 .00 6.25 52.50
22 5700 285 .00 .00 .00 .00 .00 45.00
23 5800 290 .00 .00 .00 .00 .00 37.50
24 5900 295 .00 .00 .00 .00 .00 30.00
25 6000 300 .00 .00 .00 .00 .00 22.50
26 6100 305 .00 .00 .00 .00 .00 15.00
27 6200 310 .00 .00 .00 .00 .00 7.50
28 6300 315 .00 .00 .00 .00 .00 .00
29 6400 320 .00 .00 .00 .00 .00 .00
30 6500 325 .00 .00 .00 .00 .00 .00
19710H0190B0445 - 84 -
1 6600 330 .00 .00 .00 .00 .00 .00 2 6700 335 .00 .00 .00 .00 .00 .00 3 6800 340 .00 .00 .00 .00 .00 .00 4 6900 345 .00 .00 .00 .00 .00 .00 5 7000 350 .00 .00 .00 .00 .00 .00 6 7100 355 .00 .00 .00 .00 .00 .00 7 7200 360 .00 .00 .00 .00 .00 .00 8 7300 365 .00 .00 .00 .00 .00 .00 9 7400 370 .00 .00 .00 .00 .00 .00 10 7500 375 .00 .00 .00 .00 .00 .00 11 7600 380 .00 .00 .00 .00 .00 .00 12 7700 385 .00 .00 .00 .00 .00 .00 13 7800 390 .00 .00 .00 .00 .00 .00 14 7900 395 .00 .00 .00 .00 .00 .00 15 8000 400 .00 .00 .00 .00 .00 .00 16 8100 405 .00 .00 .00 .00 .00 .00 17 8200 410 .00 .00 .00 .00 .00 .00 18 8300 415 .00 .00 .00 .00 .00 .00 19 8400 420 .00 .00 .00 .00 .00 .00 20 8500 425 .00 .00 .00 .00 .00 .00 21 8600 430 .00 .00 .00 .00 .00 .00 22 8700 435 .00 .00 .00 .00 .00 .00 23 8800 440 .00 .00 .00 .00 .00 .00 24 8900 445 .00 .00 .00 .00 .00 .00 25 9000 450 .00 .00 .00 .00 .00 .00 26 9100 455 .00 .00 .00 .00 .00 .00 27 9200 460 .00 .00 .00 .00 .00 .00 28 9300 465 .00 .00 .00 .00 .00 .00 29 9400 470 .00 .00 .00 .00 .00 .00 30 9500 475 .00 .00 .00 .00 .00 .00 19710H0190B0445 - 85 -
1 9600 480 .00 .00 .00 .00 .00 .00 2 9700 485 .00 .00 .00 .00 .00 .00 3 9800 490 .00 .00 .00 .00 .00 .00 4 9900 495 .00 .00 .00 .00 .00 .00 5 10,000 500 .00 .00 .00 .00 .00 .00 6 Net Tax Number of FEDERAL Exemptions <-- 7 Taxable at 8 Income 5% 7 8 9 10 11 12 9 10 $ 100 $ 5 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 11 200 10 10.00 10.00 10.00 10.00 10.00 10.00 12 300 15 15.00 15.00 15.00 15.00 15.00 15.00 13 400 20 20.00 20.00 20.00 20.00 20.00 20.00 14 500 25 25.00 25.00 25.00 25.00 25.00 25.00 15 600 30 30.00 30.00 30.00 30.00 30.00 30.00 16 700 35 35.00 35.00 35.00 35.00 35.00 35.00 17 800 40 40.00 40.00 40.00 40.00 40.00 40.00 18 900 45 45.00 45.00 45.00 45.00 45.00 45.00 19 1000 50 50.00 50.00 50.00 50.00 50.00 50.00 20 1100 55 55.00 55.00 55.00 55.00 55.00 55.00 21 1200 60 60.00 60.00 60.00 60.00 60.00 60.00 22 1300 65 65.00 65.00 65.00 65.00 65.00 65.00 23 1400 70 70.00 70.00 70.00 70.00 70.00 70.00 24 1500 75 75.00 75.00 75.00 75.00 75.00 75.00 25 1600 80 80.00 80.00 80.00 80.00 80.00 80.00 26 1700 85 85.00 85.00 85.00 85.00 85.00 85.00 27 1800 90 90.00 90.00 90.00 90.00 90.00 90.00 28 1900 95 95.00 95.00 95.00 95.00 95.00 95.00 29 2000 100 100.00 100.00 100.00 100.00 100.00 100.00 30 2100 105 105.00 105.00 105.00 105.00 105.00 105.00 19710H0190B0445 - 86 -
1 2200 110 110.00 110.00 110.00 110.00 110.00 110.00 2 2300 115 115.00 115.00 115.00 115.00 115.00 115.00 3 2400 120 120.00 120.00 120.00 120.00 120.00 120.00 4 2500 125 125.00 125.00 125.00 125.00 125.00 125.00 5 2600 130 130.00 130.00 130.00 130.00 130.00 130.00 6 2700 135 135.00 135.00 135.00 135.00 135.00 135.00 7 2800 140 140.00 140.00 140.00 140.00 140.00 140.00 8 2900 145 145.00 145.00 145.00 145.00 145.00 145.00 9 3000 150 150.00 150.00 150.00 150.00 150.00 150.00 10 3100 155 155.00 155.00 155.00 155.00 155.00 155.00 11 3200 160 160.00 160.00 160.00 160.00 160.00 160.00 12 3300 165 165.00 165.00 165.00 165.00 165.00 165.00 13 3400 170 170.00 170.00 170.00 170.00 170.00 170.00 14 3500 175 175.00 175.00 175.00 175.00 175.00 175.00 15 3600 180 180.00 180.00 180.00 180.00 180.00 180.00 16 3700 185 185.00 185.00 185.00 185.00 185.00 185.00 17 3800 190 190.00 190.00 190.00 190.00 190.00 190.00 18 3900 195 195.00 195.00 195.00 195.00 195.00 195.00 19 4000 200 200.00 200.00 200.00 200.00 200.00 200.00 20 4100 205 205.00 205.00 205.00 205.00 205.00 205.00 21 4200 210 210.00 210.00 210.00 210.00 210.00 210.00 22 4300 215 215.00 215.00 215.00 215.00 215.00 215.00 23 4400 220 218.75 220.00 220.00 220.00 220.00 220.00 24 4500 225 210.00 225.00 225.00 225.00 225.00 225.00 25 4600 230 201.25 230.00 230.00 230.00 230.00 230.00 26 4700 235 192.50 235.00 235.00 235.00 235.00 235.00 27 4800 240 183.75 240.00 240.00 240.00 240.00 240.00 28 4900 245 175.00 245.00 245.00 245.00 245.00 245.00 29 5000 250 166.25 250.00 250.00 250.00 250.00 250.00 30 5100 255 157.50 246.00 255.00 255.00 255.00 255.00 <-- 19710H0190B0445 - 87 -
1 240.00 2 5200 260 148.75 230.00 260.00 260.00 260.00 260.00 3 5300 265 140.00 220.00 265.00 265.00 265.00 265.00 4 5400 270 131.25 210.00 270.00 270.00 270.00 270.00 5 5500 275 122.50 200.00 275.00 275.00 275.00 275.00 6 5600 280 113.75 190.00 280.00 280.00 280.00 280.00 7 5700 285 105.00 180.00 281.25 285.00 285.00 285.00 8 5800 290 96.25 170.00 270.00 290.00 290.00 290.00 9 5900 295 87.50 160.00 258.75 295.00 295.00 295.00 10 6000 300 78.75 150.00 247.50 300.00 300.00 300.00 11 6100 305 70.00 140.00 236.25 305.00 305.00 305.00 12 6200 310 61.25 130.00 225.00 310.00 310.00 310.00 13 6300 315 52.50 120.00 213.75 312.50 315.00 315.00 14 6400 320 43.75 110.00 202.50 300.00 300.00 300.00 <-- 15 320.00 320.00 16 6500 325 35.00 100.00 191.25 287.50 325.00 325.00 17 6600 330 26.25 90.00 180.00 275.00 330.00 330.00 18 6700 335 17.50 80.00 168.75 262.50 335.00 335.00 19 6800 340 8.75 70.00 157.50 250.00 340.00 340.00 20 6900 345 .00 60.00 146.25 237.50 343.75 345.00 21 7000 350 .00 50.00 135.00 225.00 330.00 350.00 22 7100 355 .00 40.00 123.75 212.50 316.25 355.00 23 7200 360 .00 30.00 112.50 206.00 302.50 360.00 <-- 24 200.00 25 7300 365 .00 20.00 101.25 187.50 288.75 365.00 26 7400 370 .00 10.00 90.00 175.00 275.00 370.00 27 7500 375 .00 .00 78.75 162.50 261.25 375.00 28 7600 380 .00 .00 67.50 150.00 247.50 360.00 29 7700 385 .00 .00 56.25 137.50 233.75 345.00 30 7800 390 .00 .00 45.00 125.00 220.00 330.00 19710H0190B0445 - 88 -
1 7900 395 .00 .00 33.75 112.50 206.25 315.00 2 8000 400 .00 .00 22.50 100.00 192.50 300.00 3 8100 405 .00 .00 11.25 87.50 178.75 285.00 4 8200 410 .00 .00 .00 75.00 165.00 270.00 5 8300 415 .00 .00 .00 62.50 151.25 255.00 6 8400 420 .00 .00 .00 50.00 137.50 240.00 7 8500 425 .00 .00 .00 37.50 123.75 225.00 8 8600 430 .00 .00 .00 25.00 110.00 210.00 9 8700 435 .00 .00 .00 12.50 96.25 195.00 10 8800 440 .00 .00 .00 .00 82.50 180.00 11 8900 445 .00 .00 .00 .00 68.75 165.00 12 9000 450 .00 .00 .00 .00 55.00 150.00 13 9100 455 .00 .00 .00 .00 41.25 135.00 14 9200 460 .00 .00 .00 .00 27.50 120.00 15 9300 465 .00 .00 .00 .00 13.75 105.00 16 9400 470 .00 .00 .00 .00 .00 90.00 17 9500 475 .00 .00 .00 .00 .00 75.00 18 9600 480 .00 .00 .00 .00 .00 60.00 19 9700 485 .00 .00 .00 .00 .00 45.00 20 9800 490 .00 .00 .00 .00 .00 30.00 21 9900 495 .00 .00 .00 .00 .00 15.00 22 10,000 500 .00 .00 .00 .00 .00 .00 23 Line indicates point at which there is no tax liability. 24 PART V 25 WITHHOLDING OF TAX 26 Section 322. Requirement of Withholding Tax.--Every employer 27 maintaining an office or transacting business within this 28 Commonwealth and making payment of taxable compensation (i) to a 29 resident individual, or (ii) to a nonresident individual 30 taxpayer performing services on behalf of such employer within 19710H0190B0445 - 89 -
1 this Commonwealth, shall deduct and withhold from such 2 compensation for each payroll period a tax computed in such 3 manner as to result, so far as practicable, in withholding from 4 the employe's compensation during each calendar year an amount 5 substantially equivalent to the tax reasonably estimated to be 6 due for such year with respect to such compensation. The method 7 of determining the amount to be withheld shall be prescribed by 8 regulations of the department, with due regard to any credits 9 allowable against his tax under this article. 10 Section 323. Information Statement.--Every employer required 11 to deduct and withhold tax under this article shall furnish to 12 each such employe to whom the employer has paid compensation 13 during the calendar year, on or before February 15 JANUARY 31 of <-- 14 the succeeding year, or, if his employment is terminated before 15 the close of such calendar year, within thirty days from the 16 date on which the last payment of compensation is made, a 17 written statement in such manner and in such form as may be 18 prescribed by the department showing the amount of compensation 19 paid by the employer to the employe, the amount deducted and 20 withheld as tax, and such other information as the department 21 shall prescribe. 22 Section 324. Time for Filing Employers' Returns.--Every 23 employer required to deduct and withhold tax under this article 24 shall file a quarterly withholding return on or before the last 25 day of April, July, October and December JANUARY for the three <-- 26 months ending the last day of March, June, September and 27 December. Such quarterly returns shall be filed with the 28 department at its main office or at any branch office which it 29 may designate for filing returns. 30 Section 324.1. Monthly, Semi-monthly and Quarterly Payment 19710H0190B0445 - 90 -
1 of Taxes Withheld.--Every employer withholding tax under this 2 article shall pay over to the department or to a depository 3 designated by it the tax required to be deducted and withheld 4 under this article. 5 (1) Where the aggregate amount required to be deducted and 6 withheld by any employer for each quarterly period can 7 reasonably be expected to be less than three hundred dollars 8 ($300), such employer shall file a return and pay the tax on or 9 before the last day for filing a quarterly return under section 10 324, except that commencing with the year 1971, and each year 11 thereafter every employer required to file a quarterly return 12 for the second calendar quarter shall with respect to the tax 13 deducted and withheld for the months of April and May pay such 14 tax over to the department on or before June 15 next following. 15 The payment of the April and May tax withholdings shall not 16 relieve the employer of the duty to file a quarterly return on 17 or before the last day of July next following and remit 18 therewith the tax deducted and withheld for the month of June. 19 (2) Where the aggregate amount required to be deducted and 20 withheld by any employer for each quarterly period can 21 reasonably be expected to be three hundred dollars ($300) or 22 more but less than one thousand dollars ($1,000), such employer 23 shall pay the tax monthly, on or before the fifteenth day of the 24 month succeeding the months of January to November, inclusive, 25 and on or before the last day of January following the month of 26 December. 27 (3) Where the aggregate amount required to be deducted and 28 withheld by any employer for each quarterly period can 29 reasonably be expected to be one thousand dollars ($1,000) or 30 more, such employer shall pay the tax semi-monthly, within three 19710H0190B0445 - 91 -
1 banking days after the close of the semi-monthly period. 2 Notwithstanding anything in this section to the contrary, 3 whenever any employer fails to deduct or truthfully account for 4 or pay over the tax withheld or file returns as prescribed by 5 this article, the department may serve a notice on such employer 6 requiring him to withhold taxes which are required to be 7 deducted under this article and deposit such taxes in a bank 8 approved by the department in a separate account in trust for 9 and payable to the department, and to keep the amount of such 10 tax in such account until payment over to the department. Such 11 notice shall remain in effect until a notice of cancellation is 12 served on the employer by the department. 13 Section 325. Employer's Liability for Withheld Taxes.--Every 14 employer required to deduct and withhold tax under this article 15 is hereby made liable for such tax. For purposes of assessment 16 and collection, any amount required to be withheld and paid over 17 to the department and any additions to tax penalties and 18 interest with respect thereto, shall be considered the tax of 19 the employer. All taxes deducted and withheld from employes 20 pursuant to this article or under color of this article shall 21 constitute a trust fund for the Commonwealth and shall be 22 enforceable against such employer, his representative or any 23 other person receiving any part of such fund. 24 Section 326. Employer's Failure to Withhold.--If an employer 25 fails to deduct and withhold tax as prescribed herein and 26 thereafter the tax against which such tax may be credited is 27 paid, the tax which was required to be deducted and withheld 28 shall not be collected from the employer, but the employer shall 29 not be relieved of the liability for any penalty, interest, or 30 additions to the tax imposed with respect to such failure to 19710H0190B0445 - 92 -
1 deduct and withhold. 2 Section 327. Designation of Third Parties to Perform Acts 3 Required of Employers.--In case a fiduciary, agent or other 4 person has the control, receipt, custody or disposal of, or pays 5 the compensation of an employe or a group of employes, employed 6 by one or more employers, the department is authorized to 7 designate such fiduciary, agent, or other person to perform such 8 acts as are required of employers under this article as the 9 department may by regulation prescribe. Except as may be 10 otherwise prescribed by the department, all provisions of this 11 article which are applicable to an employer shall be applicable 12 to a fiduciary, agent or other person so designated. 13 PART VI 14 ESTIMATED TAX 15 Section 330. Declarations of Estimated Tax.--(a) Every 16 resident and nonresident individual shall at the time 17 hereinafter prescribed make a declaration of his estimated tax 18 for the taxable year, containing such information as the 19 department may prescribe by regulations, if his taxable income, 20 other than from compensation on which tax is withheld under this 21 article, can reasonably be expected to exceed one thousand 22 dollars ($1,000). 23 (b) For the purposes of this article, the term 24 "estimated tax" means the amount which an individual estimates 25 to be his tax due under this article for the taxable year, less 26 the amount which he estimates to be the sum of any credits 27 allowable against the tax under this article. 28 (c) A husband and wife entitled to make a joint declaration 29 of Federal estimated tax may make a joint declaration of 30 estimated tax hereunder as if they were one taxpayer, in which 19710H0190B0445 - 93 -
1 case the liability with respect to the estimated tax shall be 2 joint and several. If a joint declaration is made but husband 3 and wife elect to determine their taxes separately, the 4 estimated tax for such year may be treated as the estimated tax 5 of either husband or wife, or may be divided between them, as 6 they may elect. 7 (d) Except as hereinafter provided, the date for filing a 8 declaration of estimated tax shall depend upon when the resident 9 or nonresident individual determines that his taxable income on 10 which no tax has been withheld under this article can reasonably 11 be expected to exceed one thousand dollars ($1,000) in the 12 taxable year, as follows: 13 (1) If the determination is made on or before April 1 of the 14 taxable year, a declaration of estimated tax shall be filed no 15 later than April 15 of the taxable year. 16 (2) If the determination is made after April 1 but before 17 June 2 of the taxable year, the declaration shall be filed no 18 later than June 15 of such year. 19 (3) If the determination is made after June 1 but before 20 September 2 of the taxable year, the declaration shall be filed 21 no later than September 15 of such year. 22 (4) If the determination is made after September 1 of the 23 taxable year, the declaration shall be filed no later than 24 January 15 of the year succeeding the taxable year. 25 (e) Notwithstanding subsection (d), of this section, a 26 declaration of estimated tax of an individual having an 27 estimated taxable income from farming for the taxable year which 28 is at least two-thirds of his total estimated taxable income for 29 the taxable year may be filed at any time on or before January 30 15 of the succeeding year. 19710H0190B0445 - 94 -
1 (f) A declaration of estimated tax of an individual having a 2 total estimated tax for the taxable year of fifty dollars ($50) 3 or less may be filed at any time on or before January 15 of the 4 succeeding year under regulations of the department. 5 (g) An individual may amend a declaration under regulations 6 of the department. 7 (h) If on or before January 31 of the year succeeding a 8 taxable year, an individual files his return for the entire 9 taxable year for which a declaration was required to be filed 10 within the time prescribed by subsection (d) (4) of this section 11 and pays therewith the full amount of the tax shown to be due on 12 the return: 13 (1) Such return shall be considered as his declaration which 14 was required to be filed no later than January 15. 15 (2) Such return shall be considered as the amendment 16 permitted by subsection (g) to be filed on or before January 15 17 provided the amount of the tax shown on the return is greater 18 than the amount of the estimated tax shown in a declaration 19 previously made. 20 (i) This article shall apply to a taxable year other than a 21 calendar year by the substitution of the months of such fiscal 22 year for the corresponding months specified in this section. 23 (j) This article shall apply to an individual having a 24 taxable year of less than twelve months in accordance with 25 procedures prescribed in regulations of the department. 26 Section 331. Payments of Estimated Tax.--(a) The estimated 27 tax with respect to which a declaration is required shall be 28 paid as follows: 29 (1) If the declaration is filed on or before April 15 of the 30 taxable year, the estimated tax shall be paid in four equal 19710H0190B0445 - 95 -
1 installments. The first installment shall be paid at the time of 2 the filing of the declaration, and the second, third and fourth 3 installments shall be paid on or before the succeeding June 15, 4 September 15, and January 15, respectively. 5 (2) If the declaration is not required to be filed on or 6 before April 15 of the taxable year and is filed after April 15, 7 but before June 16 of the taxable year, the estimated tax shall 8 be paid in three equal installments. The first installment shall 9 be paid at the time of the filing of the declaration, and the 10 second and third installments shall be paid on the succeeding 11 September 15 and January 15, respectively. 12 (3) If the declaration is not required to be filed on or 13 before June 15 of the taxable year and is filed after June 15 14 but before September 16 of the taxable year, the estimated tax 15 shall be paid in two equal installments. The first installment 16 shall be paid at the time of the filing of the declaration, and 17 the second shall be paid on the succeeding January 15. 18 (4) If the declaration is not required to be filed on or 19 before September 15 of the taxable year and is filed after 20 September 15 of the taxable year, the estimated tax shall be 21 paid in full at the time of the filing of the declaration. 22 (5) If the declaration is not filed within the time 23 prescribed therefor, or after the expiration of any extension of 24 time therefor, clauses (2), (3) and (4) of this subsection shall 25 not apply, and there shall be paid at the time of such filing 26 the amount of all installments of estimated tax which were due 27 and payable on or before the date the declaration was filed, and 28 the remaining installments shall be paid at such times and in 29 such amounts as they would have been payable if the declaration 30 had been filed when due. 19710H0190B0445 - 96 -
1 (b) If an individual described in subsection (e) of section 2 (relating to farmers) makes a declaration of estimated tax 3 after September 15 of the taxable year, but before the following 4 January 15, the estimated tax shall be paid in full at the time 5 of the filing of the declaration. 6 (c) If any amendment of a declaration is filed, the 7 remaining unpaid installments, if any, shall be ratably 8 increased or decreased, as the case may be, to reflect any 9 increase or decrease in the estimated tax by reason of such 10 amendment, and if any amendment is made after September 15 of 11 the taxable year, any increase in the estimated tax by reason 12 thereof shall be paid at the time of making such amendment. 13 PART VII 14 RETURNS AND PAYMENT OF TAX 15 Section 335. Returns and Liability.--On or before the date 16 when the taxpayer's Federal income tax return is due or would be 17 due if the taxpayer were required to file a Federal income tax 18 return, a tax return under this article shall be made and filed 19 by or for every taxpayer having taxable income for the taxable 20 year. 21 Section 336. Returns of Married Individuals, Deceased or 22 Disabled Individuals and Fiduciaries.--(a) If the Federal income 23 tax liability of husband or wife is determined on a separate 24 Federal return, their income tax liabilities and returns under 25 this article shall be separate. 26 (b) If the Federal income tax liabilities of husband and 27 wife (other than a husband and wife described in subsection (c)) 28 are determined on a joint Federal return, or if neither files a 29 Federal return: 30 (1) they shall file a joint tax return under this article 19710H0190B0445 - 97 -
1 and their tax liabilities shall be joint and several; or 2 (2) they may elect to file separate returns under this 3 article on a single form if they comply with the requirements of 4 the department in setting forth information, in which event 5 their tax liabilities shall be separate, except as provided in 6 subsection (d). 7 (c) If either husband or wife is a resident and the other is 8 a nonresident, they shall file separate tax returns under this 9 article on such single or separate forms as may be required by 10 the department, in which event their tax liabilities shall be 11 separate except as provided in subsection (d) unless both elect 12 to determine their joint taxable income as if both were 13 residents, in which event their tax liabilities shall be joint 14 and several. 15 (d) If husband and wife file separate tax returns under this 16 article on a single form pursuant to subsections (b) or (c) and: 17 (1) If the sum of the payments by either spouse, including 18 withheld and estimated taxes, exceeds the amount of the tax for 19 which such spouse is separately liable, the excess may be 20 applied by the department to the credit of the other spouse if 21 the sum of the payments by such other spouse, including withheld 22 and estimated taxes, is less than the amount of the tax for 23 which such other spouse is separately liable. 24 (2) If the sum of the payments made by both spouses with 25 respect to the taxes for which they are separately liable, 26 including withheld and estimated taxes, exceeds the total of the 27 taxes due, refund of the excess may be made payable to both 28 spouses, or if either is deceased, to the survivor. 29 Provided, however, That the provisions of this subsection (d) 30 shall not apply if the return of either spouse includes a demand 19710H0190B0445 - 98 -
1 that any overpayment made by him or her shall be applied only on 2 account of his or her separate liability. 3 (e) The return for any deceased individual shall be made and 4 filed by his executor, administrator, or other person charged 5 with his property. 6 (f) The return for an individual who is unable to make a 7 return by reason of minority or other disability shall be made 8 and filed by his guardian, committee, fiduciary or other person 9 charged with the care of his person or property, or by his duly 10 authorized agent. 11 (g) The return for an estate or trust shall be made and 12 filed by the fiduciary. If two or more fiduciaries are acting 13 jointly, the return may be made by any one of them. 14 Section 337. Time and Place for Filing Returns and Paying 15 Tax.--A person required to make and file a return under this 16 article shall, without assessment, notice or demand, pay any tax 17 due thereon to the department on or before the date fixed for 18 filing such return (determined without regard to any extension 19 of time for filing the return). The department shall prescribe 20 by regulation the place for filing any return, declaration, 21 statement, or other document required pursuant to this article 22 and for payment of any tax. 23 Section 338. Signing of Returns and Other Documents.--(a) 24 Any return, declaration, statement or other document required to 25 be made pursuant to this article shall be signed in accordance 26 with regulations or instructions prescribed by the department. 27 (b) Any return, statement, or other document required of a 28 partnership shall be signed by one or more partners. The fact 29 that a partner's name is signed to a return, statement, or other 30 document, shall be prima facie evidence for all purposes that 19710H0190B0445 - 99 -
1 such partner is authorized to sign on behalf of the partnership. 2 (c) The making or filing of any return, declaration, 3 statement or other document or copy thereof required to be made 4 or filed pursuant to this article shall constitute a 5 certification by the person making or filing such return, 6 declaration, statement or other document or copy thereof that 7 the statements contained therein are true and that any copy 8 filed is a true copy. 9 Section 339. Extensions of Time.--(a) A taxpayer who is 10 granted a Federal extension of time by the Commissioner of 11 Internal Revenue for filing any return, declaration, statement 12 or other document shall be automatically entitled to a similar 13 extension of the time for filing any corresponding return, 14 declaration, statement or other document required pursuant to 15 this article. No application for such extension need be made, 16 provided that evidence of the granting of the Federal extension 17 accompany the return, declaration, statement or other document 18 filed pursuant to this article. 19 (b) In all other cases the department may, upon application, 20 grant a reasonable extension of time for filing any return, 21 declaration, statement, or other document required pursuant to 22 this article, on such terms and conditions as it may require. 23 Except for a taxpayer who is outside the United States, no such 24 extension for filing any return, declaration, statement or other 25 document, shall exceed six months. 26 Section 340. Requirements Concerning Returns, Notices, 27 Records and Statements.--(a) The department may prescribe by 28 regulation for the keeping of records, the content and form of 29 returns, declarations, statements and other documents and the 30 filing of copies of Federal income tax returns and 19710H0190B0445 - 100 -
1 determinations. The department may require any person, by 2 regulation or notice served upon such person, to make such 3 returns, render such statements, or keep such records, as the 4 department may deem sufficient to show whether or not such 5 person is liable for tax under this article. 6 (b) (1) When required by regulations prescribed by the 7 department: 8 (i) Any person required under the authority of this article 9 to make a return, declaration, statement, or other document 10 shall include in such return, declaration, statement or other 11 document such identifying number as may be prescribed for 12 securing proper identification of such person. 13 (ii) Any person with respect to whom a return, declaration, 14 statement, or other document is required under the authority of 15 this article to make a return, declaration, statement, or other 16 document with respect to another person, shall request from such 17 other person, and shall include in any such return, declaration, 18 statement, or other document, such identifying number as may be 19 prescribed for securing proper identification of such other 20 person. 21 (2) For purposes of this section, the department is 22 authorized to require such information as may be necessary to 23 assign an identifying number to any person. 24 (c) Every partnership having a resident partner or having 25 any income derived from sources within this Commonwealth shall 26 make a return for the taxable year setting forth all items of 27 income, gain, loss and deduction, and such other pertinent 28 information as the department may by regulations prescribe. Such 29 return shall be filed on or before the fifteenth day of the 30 fourth month following the close of each taxable year. For 19710H0190B0445 - 101 -
1 purposes of this subsection, "taxable year" means year or period 2 which would be a taxable year of the partnership if it were 3 subject to tax under this article. 4 (d) The department may prescribe regulations requiring 5 returns of information to be made and filed on or before 6 February 28 of each year as to the payment or crediting in any 7 calendar year of amounts of one thousand dollars ($1,000) or 8 more to any taxpayer. Such returns may be required of any 9 person, including lessees or mortgagors of real or personal 10 property, fiduciaries, employers and all officers and employes 11 of this Commonwealth, or of any municipal corporation or 12 political subdivision of this Commonwealth having the control, 13 receipt, custody, disposal or payment of interest, rents, 14 salaries, wages, premiums, annuities, compensations, 15 remunerations, emoluments or other fixed or determinable gains, 16 profits or income, except interest coupons payable to bearer. A 17 duplicate of the statement as to tax withheld on compensation 18 required to be furnished by an employer to an employe, shall 19 constitute the return of information required to be made under 20 this section with respect to such compensation. 21 Section 341. Report of Change in Federal Taxable Income.--If 22 the amount of a taxpayer's Federal taxable income reported on 23 his Federal income tax return for any taxable year is changed or 24 corrected by the United States Internal Revenue Service or other 25 competent authority of the United States, the taxpayer shall 26 report to the department such change or correction in Federal 27 taxable income within ninety days after the final determination 28 of such change or correction, or as otherwise required by the 29 department, and shall either concede the accuracy of such 30 determination or state wherein he claims it is erroneous. Any 19710H0190B0445 - 102 -
1 taxpayer filing an amended Federal income tax return shall also 2 file within ninety days thereafter an amended return under this 3 article, and shall give such information as the department may 4 require. The department may by regulation prescribe such 5 exceptions to the requirements of this section as it deems 6 appropriate. 7 PART VIII 8 PROCEDURE AND ADMINISTRATION 9 Section 345. Payment on Notice and Demand.--Upon receipt of 10 notice and demand from the department, there shall be paid the 11 amount of any tax due under the provisions of this article 12 stated in such notice and demand. 13 Section 346. Assessment.--(a) The department is authorized 14 and required to make the inquiries, determinations and 15 assessments of all taxes imposed by this article. 16 (b) If the mode or time for the assessment of any tax is not 17 otherwise provided for, the department may establish the same by 18 regulations. 19 Section 347. Procedure for Reassessment.--Promptly after the 20 date of an assessment by the department, the department shall 21 send by mail a copy thereof to the person against whom it was 22 made. Within ninety days after the date upon which the copy of 23 any such assessment was mailed, such person may file with the 24 department a petition for reassessment of such tax. Every 25 petition for reassessment shall state specifically the reasons 26 which the petitioner believes entitled him to such reassessment, 27 and it shall be supported by affidavit that it is not made for 28 the purpose of delay and that the facts set forth therein are 29 true. It shall be the duty of the department, within six months 30 after receiving a petition for reassessment, to dispose of such 19710H0190B0445 - 103 -
1 petition for reassessment. Notice of the action taken upon any 2 petition for reassessment shall be given to the petitioner 3 promptly thereafter. 4 Section 348. Review by Board of Finance and Revenue.--Within 5 ninety days after the date of mailing of notice by the 6 department of the action taken on any petition for reassessment 7 filed with it, the person against whom the assessment was made 8 may by petition request the Board of Finance and Revenue to 9 review such action. Every petition for review filed hereunder 10 shall state specifically the reasons upon which the petitioner 11 relies, or shall incorporate by reference the petition for 12 reassessment in which such reasons shall have been stated. The 13 petition shall be supported by affidavit that it is not made for 14 the purpose of delay and that the facts therein set forth are 15 true. The Board of Finance and Revenue shall act in disposition 16 of such petitions filed with it within six months after they 17 have been received, and in the event of failure of said board to 18 dispose of any such petition within six months, the action taken 19 by the department upon the petition for reassessment shall be 20 deemed sustained. The Board of Finance and Revenue may sustain 21 the action taken on the petition for reassessment, or it may 22 reassess the tax due upon such basis as it shall deem according 23 to law. Notice of the action of the Board of Finance and Revenue 24 shall be given by mail to the department and to the petitioner. 25 Section 349. Appeal to the Commonwealth Court.--Any person, 26 or the Commonwealth, aggrieved by the decision of the Board of 27 Finance and Revenue may, within sixty days, appeal to the 28 Commonwealth Court from the decision of the Board of Finance and 29 Revenue in the manner now or hereafter provided by law for 30 appeals from decisions of said board in tax cases. 19710H0190B0445 - 104 -
1 Section 350. Collection of Tax.--The department shall 2 collect the taxes imposed by this article in the manner provided 3 by law for the collection of taxes imposed by the laws of this 4 Commonwealth. 5 Section 351. Collection upon Failure to Request 6 Reassessment, Review or Appeal.--(a) The department may collect 7 any tax: 8 (1) After ninety days from the date of mailing of a copy of 9 the notice of assessment, if no petition for reassessment has 10 been filed; 11 (2) After ninety days from the date of mailing of notice of 12 the department's action thereon, if no petition for review has 13 been filed; 14 (3) Within sixty days from the date of mailing of notice of 15 the decision of the Board of Finance and Revenue upon a petition 16 for review or from the expiration of the board's time for acting 17 upon such petition, if no decision has been made; or 18 (4) Immediately, in all cases of judicial sales, 19 receiverships, assignments or bankruptcies. 20 In any such proceeding for the collection of the tax imposed 21 by this article, the person against whom the assessment was made 22 shall not be permitted to set up any ground of defense that 23 might have been presented to the department, the Board of 24 Finance and Revenue or the Commonwealth Court if such person had 25 properly pursued his administrative remedies under this article. 26 Section 352. Lien for Tax.--(a) If any person liable to pay 27 any tax neglects or refuses to pay the same on the date the tax 28 becomes collectible, the amount of such tax, together with any 29 costs that may accrue in addition thereto, shall be a lien in 30 favor of the Commonwealth against all real estate within the 19710H0190B0445 - 105 -
1 Commonwealth of such person from and after such date. 2 (b) The department may, at any time, transmit to the 3 prothonotaries of the respective counties certified copies of 4 all liens for taxes imposed by this article. It shall be the 5 duty of each prothonotary receiving such lien to enter and 6 docket the same of record in his office, which lien shall be 7 indexed as judgments are now indexed. All such liens shall have 8 priority to, and be fully before, any other obligation, 9 judgment, claim, lien or estate paid and satisfied out of the 10 judicial sale of said real estate with which said real estate 11 may subsequently become charged, or for which it may 12 subsequently become liable, subject, however, to mortgage or 13 other liens existing and duly recorded at the time such tax lien 14 is recorded, save and except the cost of sale and of the writ 15 upon which it is made and real estate taxes imposed or assessed 16 upon said property. The lien of said taxes shall continue for 17 five years from the date of entry and may be revived and 18 continued, in the manner now or hereafter provided for renewal 19 of judgments, and it shall be lawful for a writ of scire facias 20 to issue and be prosecuted to judgment in the manner in which 21 such writs are ordinarily employed. 22 (c) Any wilful failure of any prothonotary to carry out any 23 duty imposed upon him by this section shall be a misdemeanor 24 and, upon conviction, he shall be sentenced to pay a fine not 25 exceeding one thousand dollars ($1,000) and cost of prosecution, 26 or to undergo imprisonment not exceeding one year, or both. 27 Section 353. Refund or Credit of Overpayment.--(a) In the 28 case of any overpayment, the department may credit the amount of 29 such overpayment against any liability in respect of the tax 30 imposed by this article on the part of the person who made the 19710H0190B0445 - 106 -
1 overpayment and shall refund any balance to such person. 2 (b) The department is authorized to prescribe regulations 3 providing for the crediting against the estimated tax for any 4 taxable year of the amount determined to be an overpayment of 5 the tax for a preceding taxable year. 6 (c) If the taxpayer has paid as an installment of estimated 7 tax more than the correct amount of such installment, the 8 overpayment shall be credited against the unpaid installments, 9 if any. If the amount paid, whether or not on the basis of 10 installments, exceeds the amount determined to be the correct 11 amount of the tax, the overpayment shall be credited or refunded 12 as provided in subsection (a) or (b). 13 Section 354. Restrictions on Refunds.--No credit or refund 14 shall be made under section 353 without the approval of the 15 Board of Finance and Revenue, except such credits or refunds as 16 arise: 17 (1) By reason of the overpayment of an installment of 18 estimated tax; 19 (2) Upon the filing of a final return showing less tax due 20 after the application of the allowable credits than the amount 21 of tax withheld from the taxpayer's compensation or the amount 22 of tax paid by him as estimated tax; or 23 (3) Upon the filing of an amended return or a report of 24 change in Federal taxable income disclosing less tax due than 25 the taxpayer has theretofore paid. 26 Section 355. Limitations on Assessment and Collection.--(a) 27 The amount of any tax imposed by this article shall be assessed 28 within three years after the return or any report of change in 29 Federal taxable income, whichever is later, is filed. For the 30 purposes of this subsection and subsection (b), a return filed 19710H0190B0445 - 107 -
1 before the last day prescribed for the filing thereof, or before 2 the last day of any extension of time for the filing thereof, 3 shall be considered as filed on such last day. 4 (b) If the taxpayer omits from taxable income an amount 5 properly includable therein which is in excess of twenty-five 6 per cent of the amount of taxable income stated in the return, 7 the tax may be assessed at any time within six years after the 8 return was filed. 9 (c) Where no return is filed, or if a taxpayer shall fail to 10 report a change in Federal taxable income or, when required, to 11 file an amended return, the amount of the tax due may be 12 assessed at any time. 13 (d) Where the taxpayer files a false or fraudulent return 14 with intent to evade the tax imposed by this article, the amount 15 of tax due may be assessed at any time. 16 Section 356. Extension of Limitation Period.-- 17 Notwithstanding section 355, where, before the expiration of the 18 period prescribed therein a taxpayer has consented in writing 19 that such period be extended, the amount of tax due may be 20 assessed at any time within such extended period. The period so 21 extended may be further extended by subsequent consents in 22 writing made before the expiration of the extended period. 23 Section 357. Limitations on Refund or Credit.--Any 24 application for refund must be filed with the Board of Finance 25 and Review within three years from the time the return, amended 26 return, or report of change in Federal taxable income is 27 required to be filed, determined without regard to any extension 28 of time or within two years from the time the tax was paid, 29 whichever is later. 30 Section 358. Interest.--If any amount of tax imposed by this 19710H0190B0445 - 108 -
1 article is not paid on or before the last date prescribed for 2 payment, interest on such amount at the rate of one-half of one 3 per cent per month, for each month or fraction thereof from such 4 date, shall be paid for the period from such last date to the 5 date paid. The last date prescribed for payment shall be 6 determined without regard to any extension of time for filing 7 the return. This section shall not apply to any failure to pay 8 estimated tax. 9 Section 359. Additions.--(a) In case of failure to file any 10 return required under section 335 on the date prescribed 11 therefor, determined with regard to any extension of time for 12 filing, unless it is shown that such failure is due to 13 reasonable cause and not due to wilful neglect, there shall be 14 added to the amount required to be shown as tax on such return 15 five per cent of the amount of such tax if the failure is for 16 not more than one month, with an additional five per cent for 17 each additional month or fraction thereof during which such 18 failure continues, not exceeding twenty-five per cent, in the 19 aggregate, but in no case shall the amount added be less than 20 five dollars ($5). 21 (b) If any part of any underpayment of any tax imposed by 22 this article is due to negligence or intentional disregard of 23 rules and regulations, but without intent to defraud, there 24 shall be added to the tax an amount equal to five per cent of 25 the underpayment. 26 (c) If any part of any underpayment of tax required to be 27 shown on a return is due to fraud, there shall be added to the 28 tax an amount equal to fifty per cent of the underpayment. This 29 amount shall be in lieu of any amount determined under 30 subsection (b). 19710H0190B0445 - 109 -
1 (d) (1) If any taxpayer fails to file a declaration of 2 estimated tax or fails to pay all of any part of an installment 3 of estimated tax, he shall be deemed to have made an 4 underpayment of estimated tax. There shall be added to the tax 5 for the taxable year an amount at the rate of six per cent per 6 annum upon the amount of the underpayment for the period of the 7 underpayment but not beyond the fifteenth day of the fourth 8 month following the close of the taxable year. The amount of the 9 underpayment shall be the excess of the amount of the 10 installment which would be required to be paid if the estimated 11 tax were equal to eighty per cent of the tax (two-thirds in the 12 case of an individual described in subsection (e) of section 13 330) shown on the return for the taxable year (or if no return 14 was filed, of the tax for such year) over the amount, if any, of 15 the installments paid on or before the last day prescribed for 16 such payment. No underpayment shall be deemed to exist with 17 respect to a declaration or installment otherwise due on or 18 after the taxpayer's death. 19 (2) No addition to tax shall be imposed if the total amount 20 of all payments of estimated tax made on or before the last date 21 prescribed for the payment of such installment equals or exceeds 22 the lesser of: 23 (A) The amount which would have been required to be paid on 24 or before such date if the estimated tax were: 25 (i) the tax shown on the return of the individual for the 26 preceding taxable year, if a return showing a liability for tax 27 was filed by the individual for the preceding taxable year and 28 such preceding year was a taxable year of twelve months, or 29 (ii) an amount equal to the tax computed, at the rates 30 applicable to the taxable year, on the basis of the taxpayer's 19710H0190B0445 - 110 -
1 status with respect to personal exemptions for the taxable year, 2 but otherwise on the basis of the facts shown on his return for, 3 and the law applicable to, the preceding taxable year; or 4 (B) An amount equal to ninety per cent of the tax computed, 5 at the rates applicable to the taxable year, on the basis of the 6 actual taxable income for the months in the taxable year ending 7 before the month in which the installment is required to be 8 paid. 9 (e) Any person required to collect, account for and pay over 10 any tax imposed by this article who wilfully fails to collect 11 such tax or truthfully account for and pay over such tax, or 12 wilfully attempts in any manner to evade or defeat any such tax 13 or the payment thereof, shall, in addition to other penalties 14 provided by law, be liable to a penalty equal to the total 15 amount of the tax evaded or not collected or not accounted for 16 and paid over. No penalty shall be imposed under subsection (b) 17 or (c) of section 359 for any offense to which this section is 18 applicable. 19 (f) Any person required under the provisions of section 323 20 to furnish a statement to an employe who wilfully furnishes a 21 false or fraudulent statement, or who wilfully fails to furnish 22 a statement in the manner, at the time, and showing the 23 information required under section 323 and the regulations 24 prescribed thereunder, shall, for each such failure, be subject 25 to a penalty of fifty dollars ($50) for each employe. 26 (G) WHENEVER ANY CHECK ISSUED IN PAYMENT OF ANY TAX, OR FOR <-- 27 ANY OTHER PURPOSE REQUIRED BY THIS ARTICLE, SHALL BE RETURNED TO 28 THE DEPARTMENT AS UNCOLLECTIBLE, THE DEPARTMENT SHALL CHARGE A 29 FEE OF TEN PER CENT OF THE FACE AMOUNT THEREOF, PLUS ALL PROTEST 30 FEES, TO THE PERSON PRESENTING SUCH CHECK TO THE DEPARTMENT, TO 19710H0190B0445 - 111 -
1 COVER THE COST OF ITS COLLECTION IN ADDITION TO THE INTEREST AND 2 PENALTIES OTHERWISE PROVIDED FOR IN THIS ARTICLE: PROVIDED, 3 THAT THE ADDITIONS IMPOSED HEREBY SHALL NOT EXCEED TWO HUNDRED 4 DOLLARS ($200) NOR BE LESS THAN TEN DOLLARS ($10). 5 Section 360. Crimes.--(a) Any person who wilfully attempts 6 in any manner to evade or defeat any tax imposed by this article 7 or the payment thereof shall, in addition to other penalties 8 provided by law, be guilty of a misdemeanor and shall, upon 9 conviction, be sentenced to pay a fine not exceeding twenty-five 10 thousand dollars ($25,000) or to undergo imprisonment not 11 exceeding two years, or both. 12 (b) Any person required under this article to collect, 13 account for and pay over any tax imposed by this article who 14 wilfully fails to collect or truthfully account for and pay over 15 such tax, shall, in addition to other penalties provided by law, 16 be guilty of a misdemeanor, and shall, upon conviction, be 17 sentenced to pay a fine not exceeding twenty-five thousand 18 dollars ($25,000) or to undergo imprisonment not exceeding two 19 years, or both. 20 (c) Any person required under this article to pay any tax or 21 to make a return, keep any records or supply any information, 22 who wilfully fails to pay such tax or make such return, keep 23 such records or supply such information at the time or times 24 required by law or regulations, shall, in addition to other 25 penalties provided by law, be guilty of a misdemeanor and shall, 26 upon conviction, be sentenced to pay a fine not exceeding five 27 thousand dollars ($5,000) or to undergo imprisonment not 28 exceeding two years, or both. 29 (d) Any person who wilfully makes and subscribes any return, 30 statement or other document which contains or is verified by a 19710H0190B0445 - 112 -
1 written declaration that it is made under the penalties of 2 perjury and which he does not believe to be true and correct as 3 to every material matter, or wilfully aids or assists in, or 4 procures, counsels or advises the preparation or presentation, 5 in connection with any matter arising under this article, of a 6 return, affidavit, claim or other document which is fraudulent 7 or is false as to any material matter, whether or not such 8 falsity or fraud is with the knowledge or consent of the person 9 authorized or required to present such return, affidavit, claim 10 or document, shall be guilty of a misdemeanor and shall, upon 11 conviction, be sentenced to pay a fine not exceeding five 12 thousand dollars ($5,000) or to undergo imprisonment not 13 exceeding two years, or both. 14 (e) Any person who wilfully delivers or discloses to the 15 department any list, return, account, statement or other 16 document known by him to be fraudulent or to be false as to any 17 material matter shall be guilty of a misdemeanor and shall, upon 18 conviction, be sentenced to pay a fine not exceeding five 19 thousand dollars ($5,000) or to undergo imprisonment not 20 exceeding two years, or both. 21 (f) It shall be unlawful for any officer or employe of the 22 Commonwealth to divulge or to make known in any manner whatever, 23 not provided by law, except for official purposes, to any 24 person, the amount or source of income, profits, losses, 25 expenditures or any particular thereof set forth or disclosed in 26 any return, or to permit any return or copy thereof or any book 27 containing any abstract or particulars thereof, to be seen or 28 examined by any person except as provided by law, and it shall 29 be unlawful for any person to print or publish in any manner 30 whatsoever not provided by law, any return or any part thereof 19710H0190B0445 - 113 -
1 or source of income, profits, losses or expenditures appearing 2 in any return, and any person committing an offense against the 3 foregoing provisions shall be guilty of a misdemeanor and, upon 4 conviction thereof, shall be fined not more than one thousand 5 dollars ($1,000), or imprisoned for not more than one year, or 6 both, together with the costs of prosecution; and, if the 7 offender be an officer or employe of the Commonwealth, he shall 8 be dismissed from office or discharged from employment. 9 (g) Notwithstanding subsection (f), it shall be lawful for 10 any officer or employe of the Commonwealth having custody of 11 returns to produce them or evidence of anything contained in 12 them in any action or proceeding in any court on behalf of the 13 department under the provisions of this article to which it is a 14 party, or on behalf of any party to any action or proceeding 15 under the provisions of this article, when the returns or facts 16 shown thereby are directly involved in such action or 17 proceeding, in either of which events the court may require the 18 production of and may admit in evidence so much of said returns 19 or the facts shown thereby as are pertinent to the action or 20 proceeding and no more. Nothing herein shall be construed to 21 prohibit the delivery to a taxpayer or his duly authorized 22 representative of a certified copy of any return filed in 23 connection with his tax, nor to prohibit the publication of 24 statistics so classified as to prevent the identification of 25 particular returns and the items thereof or the inspection by 26 the Attorney General or other legal representatives of the 27 Commonwealth of the return of any taxpayer who shall bring 28 action to review the tax based thereon or against whom an action 29 or proceeding has been instituted for the collection or recovery 30 of the tax imposed by this article. 19710H0190B0445 - 114 -
1 Section 361. Rules and Regulations.--The department is 2 hereby charged with the enforcement of the provisions of this 3 article, and is hereby authorized and empowered to prescribe, 4 adopt, promulgate and enforce rules and regulations relating to 5 any matter or thing pertaining to the administration and 6 enforcement of the provisions of this article and the collection 7 of taxes imposed by this article. 8 Section 362. Examination.--The department, or any agent 9 authorized in writing by it, is hereby authorized to examine the 10 books, papers and records of any taxpayer or supposed taxpayer, 11 and to require the production of a copy of his return as made to 12 and filed with the Federal Government, if one was so made and 13 filed, in order to verify the accuracy of any return made, or if 14 no return was made, to ascertain and assess the tax imposed by 15 this article. Every such taxpayer or supposed taxpayer is hereby 16 directed and required to give to the department or its duly 17 authorized agent the means, facilities and opportunity for such 18 examinations and investigations as are hereby provided and 19 authorized. The department is hereby authorized to examine any 20 person under oath concerning any taxable income which was or 21 should have been returned for taxation, and to this end may 22 compel the production of books, papers and records and the 23 attendance of all persons, whether as parties or witnesses, whom 24 it believes have knowledge of such taxable income. The procedure 25 for such hearing or examination shall be the same as that 26 provided by "The Fiscal Code" relating to inquisitorial powers 27 of fiscal officers. 28 Section 363. Cooperation with Other Governmental Agencies.-- 29 Notwithstanding the provisions of subsection (f) of section 359, 30 the department may permit the Commissioner of Internal Revenue 19710H0190B0445 - 115 -
1 of the United States, or the proper officer of any political 2 subdivision of this Commonwealth or of any other state imposing 3 tax based upon the incomes of individuals, or the authorized 4 representative of such officer, to inspect the tax returns of 5 any taxpayer, or may furnish to such officer or his authorized 6 representative an abstract of the return of income of any 7 taxpayer, or supply him with information concerning any item of 8 income contained in any return of any taxpayer. Such permission 9 shall be granted or such information furnished to such officer 10 or his representative only if the statutes of the United States 11 or of such other state, as the case may be, grant substantially 12 similar privileges to the proper officer of this Commonwealth 13 charged with the administration of the personal income tax law 14 thereof. 15 SECTION 364. APPROPRIATION FOR REFUNDS.--SO MUCH OF THE <-- 16 PROCEEDS OF THE TAX IMPOSED BY THIS ARTICLE AS SHALL BE 17 NECESSARY FOR THE PAYMENT OF REFUNDS, ENFORCEMENT, OR 18 ADMINISTRATION, UNDER THIS ARTICLE, IS HEREBY APPROPRIATED FOR 19 SUCH PURPOSES. 20 PART IX 21 MISCELLANEOUS PROVISIONS 22 Section 370. Effective Date.-- Except as hereinafter 23 provided this article shall take effect on March 1, 1971, and 24 the tax imposed hereby shall apply to taxable years ending after 25 December 31, 1970: Provided, however, That a taxpayer who filed 26 returns on the basis of a fiscal year or who is the beneficiary 27 of an estate or trust or member of a partnership which files its 28 returns under this article or with the Federal Government on the 29 basis of a fiscal year, shall be subject to tax for his first 30 taxable period on an apportioned basis reflecting the portion of 19710H0190B0445 - 116 -
1 his fiscal year or of the fiscal year of the estate, trust or 2 partnership which postdates December 31, 1970, as prescribed by 3 the department by regulations. Section 359 which provides for 4 additions or penalties to the tax shall not take effect until 5 thirty days after the date on which the department has 6 promulgated and issued regulations relating to the duties and 7 liabilities imposed on taxpayers under this article. 8 ARTICLE IV 9 CORPORATE NET INCOME TAX 10 PART I 11 DEFINITIONS 12 Section 401. Definitions.--The following words, terms, and 13 phrases, when used in this article, shall have the meaning 14 ascribed to them in this section, except where the context 15 clearly indicates a different meaning: 16 (1) "Corporation." A corporation having capital stock, 17 joint-stock association, or limited partnership either organized 18 under the laws of this Commonwealth, the United States, or any 19 other state, territory, or foreign country, or dependency, and 20 doing business in this Commonwealth, or having capital or 21 property employed or used in this Commonwealth by or in the name 22 of itself, or any person, partnership, association, limited 23 partnership, joint-stock association or corporation. The word 24 "corporation" shall not include building and loan associations, 25 banks, bank and trust companies, national banks, savings 26 institutions, trust companies, insurance and surety companies. 27 (2) "Department." The Department of Revenue of this 28 Commonwealth. 29 (3) "Net income." 1. In case the entire business of the 30 corporation is transacted within this Commonwealth, for any 19710H0190B0445 - 117 -
1 taxable year which begins on or after January 1, 1971, net 2 income for the calendar year or fiscal year as returned to and 3 ascertained by the Federal Government, or in the case of a 4 corporation participating in the filing of consolidated returns 5 to the Federal Government, the net income which would have been 6 returned to and ascertained by the Federal Government if 7 separate returns had been made to the Federal Government for the 8 current and prior taxable years, subject, however, to any 9 correction thereof, for fraud, evasion, or error as finally 10 ascertained by the Federal Government: Except as hereinafter <-- 11 otherwise provided PROVIDED, THAT additional deductions shall be <-- 12 allowed from net income on account of any dividends received 13 from any other corporation which eighty per cent or more of the <-- 14 voting stock is owned by the taxpayer and on account of eighty- 15 five per cent of dividends received from all other corporations. 16 BUT ONLY TO THE EXTENT THAT SUCH DIVIDENDS ARE INCLUDED IN <-- 17 TAXABLE INCOME AS RETURNED TO AND ASCERTAINED BY THE FEDERAL 18 GOVERNMENT. No deduction shall be allowed for net operating 19 losses sustained by the corporation during any other fiscal or 20 calendar year. In the case of regulated investment companies as 21 defined by the Internal Revenue Code of 1954, as amended, "net 22 income" shall be investment company taxable income as defined in 23 the aforesaid Internal Revenue Code of 1954, as amended. In 24 arriving at "net income" for Federal tax purposes for any 25 taxable year beginning on or after January 1, 1971, any 26 corporate net income tax paid to the Commonwealth pursuant to 27 the provisions of this article shall not be allowed as a 28 deduction HOWEVER, THE AMOUNT OF CORPORATE NET INCOME TAX SO <-- 29 PAID AND EXCLUDED FROM NET INCOME SHALL NOT BE APPORTIONED BUT 30 SHALL BE SUBJECT TO TAX AT THE RATE IMPOSED UNDER THIS ARTICLE. 19710H0190B0445 - 118 -
1 2. In case the entire business of any corporation, other 2 than a corporation engaged in doing business as a regulated 3 investment company as defined by the Internal Revenue Code of 4 1954, as amended, is not transacted within this Commonwealth, 5 the tax imposed by this article shall be based upon such portion 6 of the net income of such corporation for the fiscal or calendar 7 year, as defined in subclause 1 hereof, and may be determined as 8 follows: 9 (a) Division of Income. 10 (1) As used in this definition, unless the context otherwise 11 requires: 12 (A) "Business income" means income arising from transactions 13 and activity in the regular course of the taxpayer's trade or 14 business and includes income from tangible and intangible 15 property if the acquisition, management, and disposition of the 16 property constitute integral parts of the taxpayer's regular 17 trade or business operations. 18 (B) "Commercial domicile" means the principal place from 19 which the trade or business of the taxpayer is directed or 20 managed. 21 (C) "Compensation" means wages, salaries, commissions and 22 any other form of remuneration paid to employes for personal 23 services. 24 (D) "Financial organization" means any safe deposit company, 25 credit union, small loan company, sales finance company, or 26 investment company. 27 (E) "Nonbusiness income" means all income other than 28 business income. 29 (F) "Public utility" means any business entity which owns or 30 operates any plant, equipment, property, franchise, or license 19710H0190B0445 - 119 -
1 for the transmission of communications, transportation of goods 2 or persons, except by pipeline, or the production, transmission, 3 sale, delivery, or furnishing of electricity, water or steam; 4 and whose rates of charges for goods or services have been 5 established or approved by a Federal, State or local government 6 or governmental agency. 7 (G) "Sales" means all gross receipts of the taxpayer not 8 allocated under this definition. 9 (H) "State" means any state of the United States, the 10 District of Columbia, the Commonwealth of Puerto Rico, any 11 territory or possession of the United States, and any foreign 12 country or political subdivision thereof. 13 (I) "This state" means the state in which the relevant tax 14 return is filed or, in the case of application of this 15 definition to the apportionment and allocation of income for 16 local tax purposes, the subdivision or local taxing district in 17 which the relevant tax return is filed. 18 (2) Any taxpayer having income from business activity which 19 is taxable both within and without this State, other than 20 activity as a financial organization or public utility or the 21 rendering of purely personal services by an individual, shall 22 allocate and apportion his net income as provided in this 23 definition. 24 (3) For purposes of allocation and apportionment of income 25 under this definition, a taxpayer is taxable in another state if 26 in that state he is subject to a net income tax, a franchise tax 27 measured by net income, a franchise tax for the privilege of 28 doing business, or a corporate stock tax, or that state has 29 jurisdiction to subject the taxpayer to a net income tax 30 regardless of whether, in fact, the state does or does not. 19710H0190B0445 - 120 -
1 (4) Rents and royalties from real or tangible personal 2 property, capital gains, interest, dividends or patent or 3 copyright royalties, to the extent that they constitute 4 nonbusiness income, shall be allocated as provided in paragraphs 5 (5) through (8). 6 (5) (A) Net rents and royalties from real property located 7 in this State are allocable to this State. 8 (B) Net rents and royalties from tangible personal property 9 are allocable to this State if and to the extent that the 10 property is utilized in this State, or in their entirety if the 11 taxpayer's commercial domicile is in this State and the taxpayer 12 is not organized under the laws of or taxable in the state in 13 which the property is utilized. 14 (C) The extent of utilization of tangible personal property 15 in a state is determined by multiplying the rents and royalties 16 by a fraction, the numerator of which is the number of days of 17 physical location of the property in the state during the rental 18 or royalty period in the taxable year and the denominator of 19 which is the number of days of physical location of the property 20 everywhere during all rental or royalty periods in the taxable 21 year. If the physical location of the property during the rental 22 or royalty period is unknown or unascertainable by the taxpayer, 23 tangible personal property is utilized in the state in which the 24 property was located at the time the rental or royalty payer 25 obtained possession. 26 (6) (A) Capital gains and losses from sales of real 27 property located in this State are allocable to this State. 28 (B) Capital gains and losses from sales of tangible personal 29 property are allocable to this State if the property had a situs 30 in this State at the time of the sale, or the taxpayer's 19710H0190B0445 - 121 -
1 commercial domicile is in this State and the taxpayer is not 2 taxable in the state in which the property had a situs. 3 (C) Capital gains and losses from sales of intangible 4 personal property are allocable to this State if the taxpayer's 5 commercial domicile is in this State. 6 (7) Interest and dividends are allocable to this State if 7 the taxpayer's commercial domicile is in this State. 8 (8) (A) Patent and copyright royalties are allocable to 9 this State if and to the extent that the patent or copyright is 10 utilized by the payer in this State, or if and to the extent 11 that the patent copyright is utilized by the payer in a state in 12 which the taxpayer is not taxable and the taxpayer's commercial 13 domicile is in this State. 14 (B) A patent is utilized in a state to the extent that it is 15 employed in production, fabrication, manufacturing, or other 16 processing in the state or to the extent that a patented product 17 is produced in the state. If the basis of receipts from patent 18 royalties does not permit allocation to states or if the 19 accounting procedures do not reflect states of utilization, the 20 patent is utilized in the state in which the taxpayer's 21 commercial domicile is located. 22 (C) A copyright is utilized in a state to the extent that 23 printing or other publication originates in the state. If the 24 basis of receipts from copyright royalties does not permit 25 allocation to states or if the accounting procedures do not 26 reflect states of utilization, the copyright is utilized in the 27 state in which the taxpayer's commercial domicile is located. 28 (9) All business income shall be apportioned to this State 29 by multiplying the income by a fraction, the numerator of which 30 is the property factor plus the payroll factor plus the sales 19710H0190B0445 - 122 -
1 factor, and the denominator of which is three. 2 (10) The property factor is a fraction, the numerator of 3 which is the average value of the taxpayer's real and tangible 4 personal property owned or rented and used in this State during 5 the tax period and the denominator of which is the average value 6 of all the taxpayer's real and tangible personal property owned 7 or rented and used during the tax period. 8 (11) Property owned by the taxpayer is valued at its 9 original cost. Property rented by the taxpayer is valued at 10 eight times the net annual rental rate. Net annual rental rate 11 is the annual rental rate paid by the taxpayer less any annual 12 rental rate received by the taxpayer from subrentals. 13 (12) The average value of property shall be determined by 14 averaging the values at the beginning and ending of the tax 15 period but the tax administrator may require the averaging of 16 monthly values during the tax period if reasonably required to 17 reflect properly the average value of the taxpayer's property. 18 (13) The payroll factor is a fraction, the numerator of 19 which is the total amount paid in this State during the tax 20 period by the taxpayer for compensation and the denominator of 21 which is the total compensation paid everywhere during the tax 22 period. 23 (14) Compensation is paid in this State if: 24 (A) The individual's service is performed entirely within 25 the State; 26 (B) The individual's service is performed both within and 27 without the State, but the service performed without the State 28 is incidental to the individual's service within the State; or 29 (C) Some of the service is performed in the State and the 30 base of operations or if there is no base of operations, the 19710H0190B0445 - 123 -
1 place from which the service is directed or controlled is in the 2 State, or the base of operations or the place from which the 3 service is directed or controlled is not in any state in which 4 some part of the service is performed, but the individual's 5 residence is in this State. 6 (15) The sales factor is a fraction, the numerator of which 7 is the total sales of the taxpayer in this State during the tax 8 period, and the denominator of which is the total sales of the 9 taxpayer everywhere during the tax period. 10 (16) Sales of tangible personal property are in this State 11 if: <-- 12 (A) The property is delivered or shipped to a purchaser, 13 other than the United States Government, within this State 14 regardless of the f.o.b. point or other conditions of the sale; 15 or 16 (B) The property is shipped from an office, store, 17 warehouse, factory, or other place of storage in this State. IF <-- 18 THE PROPERTY IS DELIVERED OR SHIPPED TO A PURCHASER, OTHER THAN 19 THE UNITED STATES GOVERNMENT, WITHIN THIS STATE REGARDLESS OF 20 THE F.O.B. POINT OR OTHER CONDITIONS OF THE SALE. 21 (17) Sales, other than sales of tangible personal property, 22 are in this State if: 23 (A) The income-producing activity is performed in this 24 State; or 25 (B) The income-producing activity is performed both in and 26 outside this State and a greater proportion of the income- 27 producing activity is performed in this State than in any other 28 state, based on costs of performance. 29 (18) If the allocation and apportionment provisions of this 30 definition do not fairly represent the extent of the taxpayer's 19710H0190B0445 - 124 -
1 business activity in this State, the taxpayer may petition the 2 Secretary of Revenue or THE SECRETARY OF REVENUE may require, in <-- 3 respect to all or any part of the taxpayer's business activity: 4 (A) Separate accounting; 5 (B) The exclusion of any one or more of the factors; 6 (C) The inclusion of one or more additional factors which 7 will fairly represent the taxpayer's business activity in this 8 State; or 9 (D) The employment of any other method to effectuate an 10 equitable allocation and apportionment of the taxpayer's income. 11 (b) Railroad, Truck, Bus or Airline Companies. 12 (1) All business income of railroad, truck, bus or airline 13 companies shall be apportioned to this Commonwealth by 14 multiplying the income by a fraction, the numerator of which is 15 the taxpayer's total revenue miles within this Commonwealth 16 during the tax period and the denominator of which is the total 17 revenue miles of the taxpayer everywhere during the tax period. 18 For purposes of this subsection revenue mile shall mean the 19 average receipts derived from the transportation by the taxpayer 20 of persons or property one mile. Where revenue miles are derived 21 from the transportation of both persons and property, the 22 revenue mile fractions attributable to each such class of 23 transportation shall be computed separately, and the average of 24 the two fractions, weighted in accordance with the ratio of 25 total receipts from each such class of transportation everywhere 26 to total receipts from both such classes of transportation 27 everywhere, shall be used in apportioning income to this 28 Commonwealth. 29 (2) Nonbusiness income of railroad, truck, bus or airline 30 companies shall be allocated as provided in paragraphs (5) 19710H0190B0445 - 125 -
1 through (8) of clause (a) of subclause 2 of the definition of 2 net income. 3 (c) Pipeline or Natural Gas Companies. 4 (1) All business income of pipeline companies shall be 5 apportioned to this Commonwealth by multiplying the income by a 6 fraction, the numerator of which is the revenue ton miles, 7 revenue barrel miles or revenue cubic feet miles within this 8 Commonwealth during the tax period and the denominator of which 9 is the total revenue ton miles, revenue barrel miles or the 10 revenue cubic feet miles of the taxpayer everywhere during the 11 tax period. For purposes of this subsection a revenue ton mile, 12 revenue barrel mile or a revenue cubic foot mile shall mean 13 respectively the receipts derived from the transportation by the 14 taxpayer of one ton of solid property, one barrel of liquid 15 property or one cubic foot of gaseous property transported one 16 mile. 17 (2) All business income of natural gas companies subject to 18 regulation by the Federal Power Commission or by the 19 Pennsylvania Public Utility Commission shall be apportioned to 20 this Commonwealth by multiplying the income by a fraction, the 21 numerator of which shall be the cubic foot capacity of the 22 taxpayer's pipelines in this Commonwealth, and the denominator 23 of which shall be the cubic foot capacity of the taxpayer's 24 pipelines everywhere, at the end of the tax period. For the 25 purpose of this subsection, the cubic foot capacity of a 26 pipeline shall be determined by multiplying the square of its 27 radius (in feet) by its length (in feet). 28 (3) Nonbusiness income of pipeline companies or natural gas 29 companies subject to regulation by the Federal Power Commission 30 or by the Pennsylvania Public Utility Commission shall be 19710H0190B0445 - 126 -
1 allocated as provided in paragraphs (5) through (8) of clause 2 (a) of subclause 2 of the definition of net income. 3 (d) Water Transportation Companies. 4 (1) Water Transportation Companies Operating on High Seas. 5 All business income of water transportation companies operating 6 on high seas shall be apportioned to this Commonwealth by 7 multiplying the business income by a fraction, the numerator of 8 which is the number of port days spent inside the Commonwealth 9 and the denominator of which is the total number of port days 10 spent inside and outside of the Commonwealth. The term "port 11 days" does not include periods when the ships are not in use 12 because of strikes or withheld from service for repair or 13 because of seasonal reduction of services. Days in port are 14 computed by dividing the aggregate number of hours in all ports 15 by twenty-four. 16 (2) Water Transportation Companies Operating in Inland 17 Waters. All business income of water transportation companies 18 operating on inland waters shall be apportioned to this 19 Commonwealth by multiplying the business income by a fraction, 20 the numerator of which is the taxpayer's total revenue miles 21 within this Commonwealth during the tax period and the 22 denominator of which is the total revenue miles of the taxpayer 23 everywhere during the tax period. In the determination of 24 revenue miles, one-half of the mileage of all navigable 25 waterways bordering between the Commonwealth and another state 26 shall be considered Commonwealth miles. For purposes of this 27 subclause, revenue miles shall mean the revenue receipts derived 28 from the transportation by the taxpayer of persons or property 29 one mile. 30 (3) Nonbusiness income of water transportation companies 19710H0190B0445 - 127 -
1 shall be allocated as provided in paragraphs (5) through (8) of 2 clause (a) of subclause 2 of the definition of net income. 3 3. In case the entire business of a corporation which has 4 filed a timely election and has qualified to be taxed as a 5 regulated investment company under the provisions of the 6 Internal Revenue Code of 1954, as amended, is not transacted 7 within this Commonwealth, the tax imposed by this article shall 8 be based upon such portion of the net income of such corporation 9 for the fiscal or calendar year as defined in subclause 1 10 hereof, as shall be attributable to business transacted within 11 this Commonwealth by multiplying such net income by a fraction, 12 the numerator of which is the sum of the corporation's gross 13 receipts from (i) sales of its own shares to Pennsylvania 14 investors and (ii) sales of its portfolio securities, where the 15 orders for such sales are placed with or credited to 16 Pennsylvania offices of registered securities dealers and the 17 denominator of which fraction is the corporation's total gross 18 receipts from (i) sales of its own shares and (ii) sales of its 19 portfolio securities. Pennsylvania investors shall mean 20 individuals residing in Pennsylvania at the time of the sale or 21 corporations or other entities having their principal place of 22 business located in Pennsylvania at such time. 23 (4) "Person." Every natural person, association or 24 corporation. Whenever used in any clause prescribing and 25 imposing a fine or imprisonment, or both, the term "person," as 26 applied to associations, shall mean the partners or members 27 thereof, and as applied to corporations the officers thereof. 28 PART II 29 IMPOSITION OF TAX 30 Section 402. Imposition of Tax.--Every corporation shall be 19710H0190B0445 - 128 -
1 subject to, and shall pay for the privilege of doing business in 2 this Commonwealth, or having capital or property employed or 3 used in this Commonwealth, by or in the name of itself, or any 4 person, partnership, association, limited partnership, joint- 5 stock association, or corporation, a State excise tax at the 6 rate of twelve per cent per annum upon each dollar of net income 7 of such corporation received by, and accruing to, such 8 corporation during the calendar year 1971, except where a 9 corporation reports to the Federal Government on the basis of a 10 fiscal year, and has certified such fact to the department as 11 required by section 403 of this article, in which case, such 12 tax, at the rate of twelve per cent, shall be levied, collected, 13 and paid upon all net income received by, and accruing to, such 14 corporation during the fiscal year commencing in the calendar 15 year 1971 and ending in the calendar year 1972, a similar tax at 16 the rate of nine and one-half TEN per cent per annum upon each <-- 17 dollar of the net income of such corporation received by, and 18 accruing to, such corporation during the calendar year 1972, and 19 each year thereafter, except where a corporation reports to the 20 Federal Government on the basis of a fiscal year, and has 21 certified such fact to the department as required by section 403 22 of this article, in which case, such tax, at the rate of nine <-- 23 and one-half TEN per cent, shall be levied, collected and paid <-- 24 upon all net income received by, and accruing to, such 25 corporation during the fiscal year commencing in the calendar 26 year 1972 and ending in the calendar year 1973 and each year 27 thereafter. 28 PART III 29 REPORTS AND PAYMENT OF TAX 30 Section 403. Reports and Payment of Tax.--(a) For the 19710H0190B0445 - 129 -
1 purpose of ascertaining the amount of tax payable under this 2 article, it shall be the duty of every corporation, liable to 3 pay tax under this article, on or before April 15, 1972, and 4 each year thereafter, to transmit to the department, upon a form 5 prescribed, prepared and furnished by the department, an annual 6 report under oath or affirmation of its president, vice- 7 president or other principal officer, and of its treasurer or 8 assistant treasurer of net income taxable under the provisions 9 of this article. Such report shall set forth: 10 (1) A true copy of its return to the Federal Government of 11 the annual net income arising or accruing in the calendar or 12 fiscal year next preceding, or such part or portions of said 13 return, as the department may designate; 14 (2) If no return was filed with the Federal Government the 15 report made to the department shall show such information as 16 would have been contained in a return to the Federal Government 17 had one been made; and 18 (3) Such other information as the department may require. 19 (b) For the purpose of ascertaining the amount of tax 20 payable under this article for the taxable year 1971, and each 21 taxable year thereafter, it shall be the duty of every 22 corporation liable to pay tax under this article, on or before 23 April 30, 1971, and on or before the end of the fourth month 24 after the close of its previous fiscal year for fiscal year 25 taxpayers, and each year thereafter, to transmit in like form 26 and manner an additional tentative report and make payment 27 pursuant to the provisions of the act of March 16, 1970 (Act No. 28 69). 29 (c) The amount of all taxes, imposed under the provisions of 30 this article, not paid on or before the times as above provided, 19710H0190B0445 - 130 -
1 shall bear interest at the rate of six per cent per annum from 2 the date they are due and payable until paid, except that if the 3 taxable income has been, or is increased by the Commissioner of 4 Internal Revenue, or by any other agency or court of the United 5 States, interest shall be computed on the additional tax due 6 from thirty days after the corporation receives notice of the 7 change of income until paid: Provided, however, That any 8 corporation may pay the full amount of such tax, or any part 9 thereof, together with interest due to the date of payment, 10 without prejudice to its right to present and prosecute a 11 petition for resettlement, a petition for review, or an appeal 12 to court. If it be thereafter determined that such taxes were 13 overpaid, the department shall enter a credit to the account of 14 such corporation, which may be used by it in the manner 15 prescribed by law. 16 (d) If the officers of any corporation shall neglect, or 17 refuse to make any report as herein required, or shall knowingly 18 make any false report, the following percentages of the amount 19 of the tax shall be added by the department to the tax 20 determined to be due on the first one thousand dollars ($1,000) 21 of tax ten per cent, on the next four thousand dollars ($4,000) 22 five per cent, and on everything in excess of five thousand 23 dollars ($5,000) one per cent, no such amounts added to the tax 24 shall bear any interest whatsoever. 25 (e) If any corporation closes its fiscal year not upon 26 December 31, but upon some other date, and reports to the 27 Federal Government as of such other date, or would so report 28 were it to make a return to the Federal Government, such 29 corporation shall certify such fact to the department, and shall 30 make the annual report, herein required, within thirty days 19710H0190B0445 - 131 -
1 after the return to the Federal Government is due, or would be 2 due were it to be required of such corporation, subject in all 3 other respects to the provisions of this article. The tentative 4 report required of such corporation shall be due not later than 5 four months after the end of the next preceding fiscal year. 6 (f) If the corporation shall claim in its report that the 7 return made to the Federal Government was inaccurate, the amount 8 claimed by it to be the net income, taxable under this article, 9 and the basis of such claim of inaccuracy, shall be fully 10 specified. 11 Section 404. Consolidated Reports.--The department shall not 12 permit any corporation owning or controlling, directly or 13 indirectly, any of the voting capital stock of another 14 corporation or of other corporations, subject to the provisions 15 of this article, to make a consolidated report, showing the 16 combined net income. 17 Section 405. Extension of Time to File Reports.--The 18 department may, upon application made to it, in such form as it 19 shall prescribe, on or prior to the last day for filing any 20 annual report, and upon proper cause shown, grant to the 21 corporation, required to file such report, an extension of not 22 more than sixty days within which such report may be filed, and 23 in case the Federal income tax authorities at any time grant a 24 longer extension of time for filing such reports with the 25 Federal Government, the department may grant an additional 26 extension of time for filing the annual report under this 27 article of not more than thirty days after the termination of 28 the Federal extension, but the amount of tax due shall, in such 29 cases, nevertheless, be subject to interest from the due dates 30 and at the rates fixed by this article. 19710H0190B0445 - 132 -
1 Section 406. Changes Made by Federal Government.--(a) If the 2 amount of the net income, as returned by any corporation to the 3 Federal Government, is finally changed or corrected by the 4 Commission of Internal Revenue or by any other agency or court 5 of the United States, such corporation, within thirty days after 6 the receipt of such final change or correction, shall make a 7 corrected report, under oath or affirmation, to the department 8 showing such finally changed or corrected net income, upon which 9 the tax is required to be paid to the United States. In case a 10 corporation fails to file a report of such correction, which 11 results in an increase in net income within the time prescribed, 12 there shall be added to the tax, a penalty of five dollars ($5) 13 for every day during which such corporation is in default, but 14 the department may abate any such penalty in whole or in part. 15 (b) If, as a result of such final change or correction, 16 there should be any change made in the amount of the net income 17 of any corporation upon which tax is imposed by this article, 18 the department shall have the power, and its duty shall be to 19 resettle such taxes. Whenever a resettlement shall have been 20 made hereunder, the department shall resettle the account 21 according to law, and shall credit or charge, as the case may 22 be, the amount resulting from such resettlement upon the current 23 accounts of the corporation with which it is made. The 24 resettlement shall be subject to audit and approval by the 25 Department of the Auditor General, as in the case of original 26 settlements, and in case of the failure of the two departments 27 to agree, the resettlement shall be submitted to the Board of 28 Finance and Revenue, as in the case of original settlements. 29 (c) Where a report of change, correction, or redetermination 30 of Federal income, or Federal tax, has been filed after a 19710H0190B0445 - 133 -
1 petition for review, or an appeal has been taken, such report 2 shall be deemed a part of the original annual report upon 3 petition of the taxpayer at any subsequent proceeding as though 4 it had been filed with such original report, and no separate 5 petition for review or appeal from the resettlement resulting 6 from such report of change, correction, or redetermination shall 7 be necessary. 8 (d) The provisions of this section shall not be construed so 9 as to permit a resettlement based upon the allowance of any 10 deduction on account of net operating losses, sustained in other 11 fiscal or calendar years, that are not allowed as deductions 12 under the definition of "net income" as contained in this 13 article. 14 (e) The provisions of this section shall apply to every 15 corporation which was doing business in Pennsylvania in the year 16 for which the Federal income has been changed, irrespective of 17 whether or not such corporation has thereafter merged, 18 consolidated, withdrawn or dissolved. Any clearance certificate 19 issued by the department shall be conditioned upon the 20 requirement that in the event of a change in Federal income for 21 any year for which taxes have been paid to the Commonwealth, the 22 corporation or its successor or its officers or its directors 23 shall file with the department a report of change and pay any 24 additional State tax resulting therefrom. 25 PART IV 26 SETTLEMENT AND RESETTLEMENT 27 Section 407. Settlement and Resettlement.--(a) All taxes due 28 under this article shall be settled by the department, and such 29 settlement shall be subject to audit and approval by the 30 Department of the Auditor General, and shall, so far as 19710H0190B0445 - 134 -
1 possible, be made so that notice thereof may reach the taxpayer 2 before the end of two years after the tax report was required to 3 be made. 4 (b) Promptly after the date of any such settlement, the 5 department shall send, by mail or otherwise, a copy thereof to 6 such corporation. The tax imposed by this article shall be 7 settled, resettled, and otherwise imposed and adjusted in the 8 same manner, within the same periods of time, and right of 9 resettlement, review, appeal, and refund, as provided by law in 10 the case of capital stock and franchise taxes imposed upon 11 corporations. 12 (c) If, within a period of one year after the date of any 13 settlement, the department is not satisfied with such 14 settlement, or if at any time the net income as returned by any 15 corporation to the Federal Government is finally changed or 16 corrected by the Commissioner of Internal Revenue or by any 17 other agency or court of the United States with the result that 18 tax, in addition to the amount paid, is due under this article, 19 the department is hereby authorized and empowered to make a 20 resettlement of the tax due by such corporation, based upon the 21 facts contained in the report, or upon any information within 22 its possession or that shall come into its possession. 23 Whenever a resettlement shall have been made hereunder, the 24 department shall resettle the account according to law and shall 25 credit or charge, as the case may be, the amount resulting from 26 such resettlement upon the current accounts of the corporation 27 with which it is made. 28 The resettlement shall be subject to audit and approval by 29 the Department of the Auditor General as in the case of original 30 settlement, and in case of the failure of the two departments to 19710H0190B0445 - 135 -
1 agree, the resettlement shall be submitted to the Board of 2 Finance and Revenue as in the case of original settlements. 3 (d) If any corporation shall neglect or refuse to make any 4 report and payment of tax required by this article, the 5 department shall estimate the tax due by such corporation and 6 subject to audit and approval by the Department of the Auditor 7 General, settle the amount due by it for taxes, penalties, and 8 interest thereon as prescribed herein, from which settlement 9 there shall be no right of review or appeal, but the department, 10 with the approval of the Department of the Auditor General, may 11 require a report to be filed, and thereupon make a settlement 12 based upon such report and cancel the estimated settlement. 13 PART V 14 ENFORCEMENT: RULES AND REGULATIONS 15 INQUISITORIAL POWERS OF THE DEPARTMENT 16 Section 408. Enforcement; Rules and Regulations; 17 Inquisitorial Powers of the Department.--(a) The department is 18 hereby charged with the enforcement of the provisions of this 19 article, and is hereby authorized and empowered to prescribe, 20 adopt, promulgate, and enforce rules and regulations, not 21 inconsistent with this article, relating to any matter or thing 22 pertaining to the administration and enforcement of the 23 provisions of this article, and the collection of taxes, 24 penalties, and interest imposed by this article. The department 25 is hereby required to have such rules and regulations, 26 promulgated and adopted, printed and shall distribute the same 27 to any person upon request. 28 (b) The department, or any agent authorized in writing by 29 it, is hereby authorized to examine the books, papers, and 30 records, and to investigate the character of the business of any 19710H0190B0445 - 136 -
1 corporation in order to verify the accuracy of any report made, 2 or if no report was made by such corporation, to ascertain and 3 settle the tax imposed by this article. Every such corporation 4 is hereby directed and required to give to the department, or 5 its duly authorized agent, the means, facilities, and 6 opportunity for such examinations and investigations, as are 7 hereby provided and authorized. Any information gained by the 8 department, as a result of any returns, investigations, or 9 verifications required to be made by this article, shall be 10 confidential, except for official purposes, and any person 11 divulging such information shall be guilty of a misdemeanor, 12 and, upon conviction thereof, shall be sentenced to pay a fine 13 of not less than one hundred dollars ($100) or more than one 14 thousand dollars ($1,000) and costs of prosecution, or to 15 undergo imprisonment for not more than six months, or both. 16 (c) Whenever any person, acting for or on behalf of the 17 department, shall in good faith institute legal proceedings for 18 any violations of the provisions of this article, and for any 19 reason shall fail to recover costs of record, such costs shall 20 be a charge upon the proper county, as shall such costs in the 21 event defendant is imprisoned for failure to pay fine or costs, 22 or both, and shall be audited and paid as are costs of like 23 character in said county. 24 (d) The powers, conferred by this article upon the 25 department, relating to the administration or enforcement of 26 this article, shall be in addition to, but not exclusive of, any 27 other powers heretofore or hereafter conferred upon the 28 department by law. 29 PART VI 30 RETENTION OF RECORDS BY CORPORATION 19710H0190B0445 - 137 -
1 Section 409. Retention of Records.--Each corporation shall 2 maintain and keep for a period of three years after any report 3 is filed under this article, such record or records of its 4 business within this Commonwealth for the period covered by such 5 report and other pertinent papers, as may be required by the 6 department. 7 PART VII 8 PENALTIES 9 Section 410. Penalties.--(a) Any person violating any of the 10 provisions of section 409 shall be guilty of a misdemeanor, and 11 shall, upon conviction thereof, be sentenced to pay a fine not 12 exceeding one thousand dollars ($1,000) and costs of 13 prosecution, or to undergo imprisonment for not more than six 14 months, or both. 15 (b) Any person who shall wilfully make a false and 16 fraudulent return of net income made taxable by this article, 17 shall be guilty of wilful and corrupt perjury, and, upon 18 conviction thereof, shall be subject to punishment as provided 19 by law. Such penalty shall be in addition to any other penalties 20 imposed by this article. 21 (c) Any person, who wilfully fails, neglects, or refuses to 22 make a report or to pay the tax as herein prescribed, or who 23 shall refuse to permit the department to examine the books, 24 papers, and records of any corporation liable to pay tax under 25 this article, shall be guilty of a misdemeanor, and, upon 26 conviction thereof, shall be sentenced to pay a fine not 27 exceeding one thousand dollars ($1,000) and costs of 28 prosecution, or to undergo imprisonment not exceeding six 29 months, or both. Such penalty shall be in addition to any other 30 penalties imposed by this article. 19710H0190B0445 - 138 -
1 PART VIII 2 REPEALER; EFFECTIVE DATE 3 Section 411. Repeal.--The act of May 16, 1935 (P.L.208), 4 known as the "Corporate Net Income Tax Act," is repealed. 5 Section 412. Effective Date.--This article shall take effect 6 January 1, 1971. 7 ARTICLE V 8 CORPORATION INCOME TAX 9 PART I 10 DEFINITIONS 11 Section 501. Definitions.--The following words, terms and 12 phrases when used in this article shall have the meaning 13 ascribed to them in this section, except where the context 14 clearly indicates a different meaning: 15 (1) "Corporation." A corporation having capital stock, 16 joint-stock association or limited partnership, either organized 17 under the laws of this Commonwealth, the United States, or any 18 other state, territory or foreign country or dependency, and 19 carrying on activities in this Commonwealth, or owning property 20 in this Commonwealth by or in the name of itself or any person, 21 partnership, association, limited partnership, joint-stock 22 association, or corporation. The word "corporation" shall not 23 include nonprofit corporations, building and loan associations, 24 banks, bank and trust companies, national banks, savings 25 institutions, trust companies, insurance and surety companies. 26 (2) "Department." The Department of Revenue of this 27 Commonwealth. 28 (3) "Net income." 29 1. Net income shall be defined as set forth in Article III. 30 2. In the case of corporations owning property or carrying 19710H0190B0445 - 139 -
1 on activities within and without this Commonwealth, the net 2 income of such corporations derived from sources within this 3 Commonwealth for the fiscal or calendar year shall be determined 4 by allocations and apportionments of net income as set forth in 5 Article III. 6 (4) "Sources within this Commonwealth" includes tangible or 7 intangible property located or having a situs in this 8 Commonwealth and any activities carried on in this Commonwealth, 9 regardless of whether carried on in intrastate, interstate or 10 foreign commerce. 11 (5) "Carrying on activities" shall include every act, power 12 or privilege exercised or enjoyed in this Commonwealth as an 13 incident to, or by virtue of, the powers and privileges acquired 14 by the nature of the corporate organization. 15 PART II 16 IMPOSITION OF TAX 17 Section 502. Imposition of Tax.--Every corporation carrying 18 on activities in this Commonwealth or owning property in this 19 Commonwealth by or in the name of itself or any person, 20 partnership, joint-stock association or corporation shall be 21 subject to and shall pay a State property tax on net income 22 derived from sources within this Commonwealth at the rate of 23 twelve per cent per annum upon each dollar of such net income 24 received by and accruing to such corporation during the calendar 25 year 1971, except where a corporation reports to the Federal 26 Government on the basis of a fiscal year and has certified such 27 fact to the department as required by section 403 of Article IV, 28 in which case such tax at the rate of twelve per cent shall be 29 levied, collected and paid upon each dollar of such net income 30 received by and accruing to such corporation during the fiscal 19710H0190B0445 - 140 -
1 year commencing in the calendar year 1971, and a similar tax at 2 the rate of nine and one-half per cent per annum upon each 3 dollar of such net income received by and accruing to such 4 corporation during the calendar year 1972, except where a 5 corporation reports to the Federal Government on the basis of a 6 fiscal year and has certified such fact to the department as 7 required by section 403 of Article IV, in which case such tax at 8 the rate of nine and one-half per cent per annum shall be 9 levied, collected and paid upon each dollar of such net income 10 received by and accruing to such corporation during the fiscal 11 years commencing in the calendar year 1972, and each year 12 thereafter: Provided, however, That such net income shall not 13 include income for any period for which the corporation is 14 subject to taxation under Article IV. 15 PART III 16 PROCEDURE; ENFORCEMENT; PENALTIES 17 Section 503. Procedure; Enforcement; Penalties.--Parts III, 18 IV, V, VI and VII of Article IV are incorporated by reference 19 into this article in so far as they are applicable to the tax 20 imposed hereunder. 21 PART IV 22 REPEALER; EFFECTIVE DATE 23 Section 505. Repeal.--The act of August 24, 1951 (P.L.1417), 24 known as the "Corporation Income Tax Law," is repealed. 25 Section 506. Effective Date.--This article shall take effect 26 January 1, 1971. 27 ARTICLE VI 28 CAPITAL STOCK--FRANCHISE TAX 29 PART I 30 VALUATION OF CAPITAL STOCK 19710H0190B0445 - 141 -
1 Section 601. Valuation of Capital Stock.--Hereafter, except 2 in the case of corporations of the first class, nonprofit 3 corporations, and cooperative agricultural associations not 4 having capital stock and not conducted for profit, banks, 5 savings institutions, title insurance, or trust companies, 6 building and loan associations, and insurance companies, it 7 shall be the duty of every corporation having capital stock, 8 every joint-stock association, limited partnership, and every 9 company whatsoever, now or hereafter organized or incorporated 10 by or under any laws of this Commonwealth, and of every 11 corporation, joint-stock association, limited partnership, and 12 company whatsoever, now or hereafter incorporated or organized 13 by or under the law of any other state or territory of the 14 United States, or by the United States, or by any foreign 15 government, and doing business in and liable to taxation within 16 this Commonwealth or having capital or property employed or used 17 in this Commonwealth by or in the name of any limited 18 partnership or joint-stock association, company, or corporation 19 whatsoever, association or associations, copartnership or 20 copartnerships, person or persons, or in any other manner, to 21 make annually a report in writing to the Department of Revenue 22 on a form or forms to be prescribed and furnished by it setting 23 forth in addition to any other information required by the 24 Department of Revenue: 25 First. The amount of its capital stock at the close of the 26 year for which report is made, together with the highest selling 27 price per share, and the average selling price thereof during 28 said year. 29 Second. Its debt account. 30 Third. Its income account, together with the disposition of 19710H0190B0445 - 142 -
1 any net income, and its profit and loss statement. 2 Fourth. Its general balance sheet. 3 Fifth. Its real estate and tangible personal property, if 4 any, owned and permanently located outside of the Commonwealth, 5 and value of the same; and the value of the property, if any, 6 exempt from taxation. 7 Sixth. A valuation and appraisal, in the manner hereinafter 8 provided, of the capital stock of the said corporation, company, 9 joint-stock association, or limited partnership, at its actual 10 value in cash as it existed at the close of the year for which 11 the report is made. 12 The affidavit of two of the officers of such corporation, 13 limited partnership, joint-stock association or company, shall 14 be attached to said report. Such affidavit shall be in the form 15 required by the Department of Revenue, but shall state, in 16 addition to any other averments required by the department, 17 that, with fidelity and according to the best of their knowledge 18 and belief, the affiants have estimated, valued and appraised, 19 as shown in said report, the capital stock of the said 20 corporation at its actual value in cash as it existed at the 21 close of the year for which report is made; taking into 22 consideration, first, the average which said stock sold for 23 during the year; and second, the price or value indicated or 24 measured by net earnings or by the amount of profit made and 25 either declared in dividends, expended in betterments, or 26 carried into the surplus or sinking fund; and third, the actual 27 value indicated or measured by consideration of the intrinsic 28 value of its tangible property and assets, and of the value of 29 its good will and franchises and privileges, as indicated by the 30 material results of their exercise, taking also into 19710H0190B0445 - 143 -
1 consideration the amount of its indebtedness.
2 The time for filing annual reports may be extended; taxpayers
3 may be permitted to file their annual and tentative reports on a
4 fiscal year basis; the procedure in case the Department of
5 Revenue is not satisfied with the appraisement made by the
6 officers of the taxpayer, and the penalties for failing to file
7 reports and pay taxes shall be as prescribed by law.
8 PART II
9 IMPOSITION OF TAX
10 Section 602. Imposition of Tax.--(a) That every domestic
11 corporation other than corporations of the first class,
12 nonprofit corporations, and cooperative agricultural
13 associations not having capital stock and not conducted for
14 profit, and every joint-stock association, limited partnership,
15 and company whatsoever, from which a report is required under
16 section 601 hereof, shall be subject to, and pay into the
17 treasury of the Commonwealth annually, through the Department of
18 Revenue, a tax at the rate of eight NINE mills, upon each dollar <--
19 of the actual value of its whole capital stock of all kinds,
20 including common, special, and preferred, as ascertained in the
21 manner prescribed in section 601, for the calendar year 1971 and
22 the fiscal year beginning in 1971 and each year thereafter,
23 except that any domestic corporation, limited partnership,
24 joint-stock association or company subject to the tax prescribed
25 herein may elect to compute and pay its tax under and in
26 accordance with the provisions of subsection (b) of this section
27 602: Provided, That the provisions of this section shall not
28 apply to the taxation of the capital stock of corporations,
29 limited partnerships and joint-stock associations organized for
30 manufacturing, processing, research or development purposes,
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1 which is invested in and actually and exclusively employed in 2 carrying on manufacturing, processing, research or development 3 within the State, but every corporation, limited partnership or 4 joint-stock association organized for the purpose of 5 manufacturing, processing, research or development shall pay the 6 State tax of eight NINE mills herein provided, upon such <-- 7 proportion of its capital stock, if any, as may be invested in 8 any property or business not strictly incident or appurtenant to 9 the manufacturing, processing, research or development business, 10 in addition to the local taxes assessed upon its property in the 11 district where located, it being the object of this proviso to 12 relieve from State taxation only so much of the capital stock as 13 is invested purely in the manufacturing, processing, research or 14 development plant and business. 15 (b) Every foreign corporation, joint-stock association, 16 limited partnership, and company whatsoever, from which a report 17 is required under section 601 hereof, shall be subject to and 18 pay into the treasury of the Commonwealth annually, through the 19 Department of Revenue, a franchise tax at the rate of eight NINE <-- 20 mills for the calendar year 1971 and the fiscal year beginning 21 in 1971 and each year thereafter, upon a taxable value to be 22 determined in the following manner. The actual value of its 23 whole capital stock of all kinds, including common, special, and 24 preferred, shall be ascertained in the manner prescribed in 25 section 601 of this article. The taxable value shall then be 26 determined by employing the relevant apportionment factors set 27 forth in Article IV. 28 The provisions of this subsection shall apply to the taxation <-- 29 of corporations, limited partnerships and joint-stock 30 associations organized for manufacturing, processing, research 19710H0190B0445 - 145 -
1 or development purposes.
2 (c) The term processing, as used in this section, shall mean
3 and be limited to the following activities when engaged in as a
4 business enterprise:
5 (1) The cooking or freezing of fruits, vegetables,
6 mushrooms, fish, seafood, meats or poultry, when the person
7 engaged in such business packages such property in sealed
8 containers for wholesale distribution.
9 (2) The scouring, carbonizing, cording, combing, throwing,
10 twisting or winding of natural or synthetic fibers, or the
11 spinning, bleaching, dyeing, printing or finishing of yarns or
12 fabrics, when such activities are performed prior to sale to the
13 ultimate consumer.
14 (3) The electroplating, galvanizing, enameling, anodizing,
15 coloring, finishing, impregnating or heat treating of metals or
16 plastics for sale or in the process of manufacturing.
17 (4) The rolling, drawing or extruding of ferrous and
18 nonferrous metals.
19 (5) The fabrication for sale of ornamental or structural
20 metal or metal stairs, staircases, gratings, fire escapes or
21 railings, (not including fabrication work done at the
22 construction site).
23 (6) The preparation of animal feed or poultry feed for sale.
24 (7) The production, processing and bottling of nonalcoholic
25 beverages for wholesale distribution.
26 (8) The slaughtering and dressing of animals for meat to be
27 sold or to be used in preparing meat products for sale, and the
28 preparation of meat products, including lard, tallow, grease,
29 cooking and inedible oils for wholesale distribution.
30 (9) The operation of a saw mill or planing mill for the
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1 production of lumber or lumber products for sale. 2 (10) The milling for sale of flour or meal from grains. 3 (11) The publishing of books, newspapers, magazines or other 4 periodicals, printing and broadcasting radio and television 5 programs by licensed commercial or educational stations. 6 (12) The processing of used lubricating oils. 7 (13) The blending, rectification or production by 8 distillation or otherwise of alcohol or alcoholic liquors, 9 except the distillation of alcohol from by-products of wine- 10 making for the sole purpose of fortifying wine. 11 (d) "Research and development" shall mean activities 12 relating to the discovery of new and the refinement of known 13 substances, products, processes, theories and ideas, but shall 14 not include activities directed primarily to the accumulation or 15 analysis of commercial, financial or mercantile data. 16 (e) It shall be the duty of the treasurer or other officers 17 having charge of any such corporation, joint-stock association, 18 or limited partnership, upon which a tax is imposed by this 19 section, to transmit the amount of said tax to the Department of 20 Revenue within the time prescribed by law: Provided, That for 21 the purposes of this act interest in limited partnerships or 22 joint-stock associations shall be deemed to be capital stock, 23 and taxable accordingly: Provided, further, That corporations, 24 limited partnerships, and joint-stock associations, liable to a 25 tax under this section, shall not be required to pay any further 26 tax on the mortgages, bonds, and other securities owned by them 27 and in which the whole body of stockholders or members, as such, 28 have the entire equitable interest in remainder; but 29 corporations, limited partnerships, and joint-stock 30 associations, owning or holding such securities as trustees, 19710H0190B0445 - 147 -
1 executors, administrators, guardians, or in any other manner
2 than for the whole body of stockholders or members thereof as
3 sole equitable owners in remainder, shall return and pay the tax
4 imposed by this act upon all securities so owned or held by
5 them, as in the case of individuals.
6 (f) Any holding company subject to the capital stock tax or
7 the franchise tax imposed by this section may elect to compute
8 said tax by applying the rate of tax of eight NINE mills, upon <--
9 each dollar to ten per cent of the actual value of its whole
10 capital stock. If exercised, this election shall be in lieu of
11 any other apportionment or allocation to which such company
12 would otherwise be entitled.
13 The term "holding company" shall mean any corporation (i) at
14 least ninety per cent of the gross income of which for the
15 taxable year is derived from dividends, interest, gains from the
16 sale or other disposition of stock or securities and the
17 rendition of management and administrative services to
18 subsidiary corporations, and (ii) at least sixty per cent of the
19 actual value of the total assets of which consists of stock
20 securities or indebtedness of subsidiary corporations.
21 The term "subsidiary corporation" shall mean any corporation,
22 a majority of the total issued and outstanding shares of voting
23 stock of which are owned by the taxpayer corporation directly or
24 through one or more intervening subsidiary corporations.
25 (g) Notwithstanding any other provisions contained in this
26 section 602, relating to the appraisal, allocation or
27 apportionment of the value of the capital stock of a corporation
28 subject to tax in the Commonwealth of Pennsylvania, every
29 domestic corporation and every foreign corporation registered to
30 do business in Pennsylvania and (i) which maintains an office in
19710H0190B0445 - 148 -
1 Pennsylvania and (ii) which has filed a timely election to be
2 taxed as a regulated investment company with the Federal
3 Government and (iii) which duly qualifies to be taxed as a
4 regulated investment company under the provisions of the
5 Internal Revenue Code of 1954 as amended, shall be taxed as a
6 regulated investment company and shall be subject to the capital
7 stock or franchise tax imposed by section 602, which tax shall
8 be computed in the following manner:
9 (1) The value of its capital stock shall be determined by
10 adding its net asset values as of the last day of each month
11 during the taxable period or year and dividing the total sum by
12 the number of months involved, for which purpose net asset value
13 means the actual market value of all assets owned by such
14 corporation without any exemptions or exclusions less all of its
15 liabilities, debts and other obligations.
16 (2) The proportion of such value taxable in this
17 Commonwealth at the rate of eight NINE mills, shall be <--
18 determined by applying to such value a fraction, the numerator
19 of which is the sum of the corporation's gross receipts from (i)
20 sales of its own shares to Pennsylvania investors and (ii) sales
21 of its portfolio securities where the orders for such sales are
22 placed with or credited to Pennsylvania offices of registered
23 securities dealers and the denominator of which fraction is the
24 corporation's total gross receipts from (i) sales of its own
25 shares and (ii) sales of its portfolio securities. Pennsylvania
26 investors shall mean individuals residing in Pennsylvania at the
27 time of the sale or corporations or other entities having their
28 principal place of business located in Pennsylvania at such
29 time.
30 (3) Any regulated investment company shall have the right
19710H0190B0445 - 149 -
1 annually, to elect to compute its capital stock or franchise tax
2 by applying the rate of tax of eight NINE mills, upon each <--
3 dollar to ten per cent of the capital stock value of such
4 corporation. If exercised this election shall be in lieu of any
5 other apportionment or allocation to which such corporation
6 would otherwise be entitled.
7 PART III
8 PROCEDURE; ENFORCEMENT; PENALTIES
9 Section 603. Procedure; Enforcement; Penalties.--Parts III,
10 IV, V, VI, and VII of Article IV are incorporated by reference
11 into this article in so far as they are applicable to the tax
12 imposed hereunder, EXCEPT THAT THE TAXABLE PROPORTION IN THE <--
13 CAPITAL STOCK TAX SHALL NOT INCLUDE ANY PROPERTY ACTUALLY AND
14 EXCLUSIVELY USED IN MANUFACTURING, PROCESSING, RESEARCH AND
15 DEVELOPMENT SITUATED WITHIN THE COMMONWEALTH AND THE THREE
16 FRACTION FORMULA IN THE CAPITAL STOCK AND FRANCHISE TAXES SHALL
17 NOT INCLUDE ANY PROPERTY, PAYROLL OR SALES FACTORS ATTRIBUTABLE
18 TO MANUFACTURING, PROCESSING, RESEARCH OR DEVELOPMENT ACTIVITIES
19 IN THE COMMONWEALTH.
20 PART IV
21 REPEAL; EFFECTIVE DATE
22 Section 605. Repeal.--Sections 20 and 21, act of June 1,
23 1889 (P.L.420), entitled "A further supplement to an act
24 entitled 'An act to provide revenue by taxation,' approved the
25 seventh day of June, Anno Domini one thousand eight hundred and
26 seventy-nine," are repealed.
27 Section 606. Effective Date.--This article shall take effect
28 January 1, 1971.
29 ARTICLE VII
30 BANK SHARES TAX
19710H0190B0445 - 150 -
1 PART I 2 IMPOSITION OF tax 3 Section 701. Imposition of Tax.--Every bank or savings 4 institution having capital stock, incorporated by or under any 5 law of this Commonwealth or under any law of the United States, 6 and located within this Commonwealth, shall, on or before April 7 15 in each and every year, make to the Department of Revenue a 8 report in writing, verified as required by law, setting forth 9 the full number of shares of the capital stock subscribed for or 10 issued, as of the preceding January 1, by such bank or savings 11 institution having capital stock, and the actual value thereof 12 as of the preceding January 1, which actual value shall be 13 ascertained as hereinafter provided. It shall be the duty of the 14 Department of Revenue to assess such shares for the calendar 15 year beginning January 1, 1971, and each year thereafter, at the 16 rate of fifteen mills upon each dollar of actual value thereof, 17 the actual value of each share of stock to be ascertained and 18 fixed by adding together the amount of capital stock paid in, 19 the surplus, and undivided profits, and dividing this amount by 20 the number of shares. It shall be the duty of every bank or 21 savings institution having capital stock, at the time of making 22 every report required by this section, to compute the tax and to 23 pay the amount of said tax to the State Treasurer, through the 24 Department of Revenue either from its general fund, or from the 25 amount of said tax collected from its shareholders: Provided, 26 That for the calendar year beginning January 1, 1971, and each 27 year thereafter, such bank or savings institution having capital 28 stock, upon the date its report, herein required is made for 29 such calendar year beginning January 1, 1971, and each year 30 thereafter, shall pay to the Department of Revenue not less than 19710H0190B0445 - 151 -
1 eighty per cent of the tax due to the Commonwealth by it for 2 such calendar year, and the remaining tax due shall be paid at 3 the time when the report herein required for the year next 4 succeeding is made: Provided, That in case any bank or savings 5 institution having capital stock, incorporated under the law of 6 this State or of the United States, shall collect, annually, 7 from the shareholders thereof said tax of fifteen mills, on the 8 dollar upon the actual value of all the shares of stock of said 9 bank or savings institution, according to the provisions of this 10 article, that have been subscribed for or issued, and pay the 11 same into the State Treasury, through the Department of Revenue, 12 the shares, and so much of the capital and profits of such bank 13 or savings institution having capital stock as shall not be 14 invested in real estate, shall be exempt from local taxation 15 under the laws of this Commonwealth; and such bank or savings 16 institution having capital stock shall not be required to make 17 any report to the local assessor or county commissioners of its 18 personal property owned by it in its own right for purposes of 19 taxation and shall not be required to pay any tax thereon. 20 PART II 21 PROCEDURE; ENFORCEMENT; PENALTIES 22 Section 702. Procedure; Enforcement; Penalties.--Parts III, 23 IV, V, VI and VII of Article IV are incorporated by reference 24 into this article in so far as they are applicable to the tax 25 imposed hereunder. 26 PART III 27 REPEALER; EFFECTIVE DATE 28 Section 705. Repeal.--Clause 1 of section 1, act of July 15, 29 1897 (P.L.292), entitled "An act to provide revenue by 30 taxation," is repealed. 19710H0190B0445 - 152 -
1 Section 706. Effective Date.--This article shall take effect 2 January 1, 1971. 3 ARTICLE VIII 4 TITLE INSURANCE AND TRUST COMPANIES SHARES TAX 5 PART I 6 IMPOSITION OF TAX 7 Section 801. Imposition of Tax.--Every company incorporated 8 under the provisions of section 29 of an act, entitled "An act 9 to provide for the incorporation and regulation of certain 10 corporations," approved April 29, 1874, and its supplements, or 11 any other act of Assembly heretofore or hereafter approved, for 12 the insurance of owners of real estate, mortgages, and others 13 interested in real estate, from loss by reason of defective 14 titles, liens, and encumbrances, and every company entitled to 15 benefits of, and every company having any of the powers of, 16 companies entitled to the benefits of an act, entitled "An act 17 conferring upon certain fidelity, insurance, safety deposit, 18 trust, and savings companies, the powers and privileges of 19 companies incorporated under the provisions of section 29 of an 20 act, entitled 'An act to provide for the incorporation and 21 regulation of certain corporations,' approved April 29, 1874, 22 and of the supplements thereto," approved June 27, 1895, 23 commonly known as title insurance or trust companies, and every 24 company organized as a bank and trust company or as a trust 25 company under any act of Assembly heretofore or hereafter 26 approved, except any such companies, all of the shares of 27 capital stock of which (other than shares necessary to qualify 28 directors) are owned by a company which is liable to pay to the 29 Commonwealth a tax on shares, shall, on or before April 15 in 30 each and every year, make to the Department of Revenue a report 19710H0190B0445 - 153 -
1 in writing, setting forth the full number of shares of the 2 capital stock subscribed for or issued by such company, and the 3 actual value thereof as of January 1 preceding, which shall be 4 ascertained as hereinafter provided. It shall be the duty of the 5 Department of Revenue, to assess such shares for taxation at the 6 rate of fifteen mills upon each dollar of the actual value 7 thereof, the actual value of each share of stock to be 8 ascertained and fixed by adding together the amount of capital 9 stock paid in, the surplus, and undivided profits, and dividing 10 this amount by the number of shares. 11 It shall be the duty of every such company, at the time of 12 making every report required by this section, to compute the tax 13 and to pay the amount of said tax to the State Treasurer, 14 through the Department of Revenue, either from its general fund, 15 or from the amount of said tax collected from its shareholders: 16 Provided, That for the calendar year beginning January 1, 1971, 17 and each year thereafter, every such company shall, at the time 18 of making its report for the calendar year beginning January 1, 19 1971, and each year thereafter, compute the tax and pay to the 20 State Treasurer, through the Department of Revenue, either from 21 its general fund, or from the amount of said tax collected from 22 its shareholders, not less than eighty per cent of the tax due 23 to the Commonwealth by it for such calendar year and the 24 remaining tax due shall be paid at the time when the report 25 herein required for the year next succeeding is made: Provided, 26 That upon the payment of the tax fixed by this act into the 27 State Treasury, through the Department of Revenue, the shares 28 and so much of the capital stock, surplus, profits, and deposits 29 of such company as shall not be invested in real estate, shall 30 be exempt from all other taxation under the laws of this 19710H0190B0445 - 154 -
1 Commonwealth. The procedure, in case the Department of Revenue 2 be not satisfied with the report made by any title insurance or 3 trust company, and the penalties for failing to make such report 4 and pay the tax, shall be as provided by law. 5 PART II 6 PROCEDURE; ENFORCEMENT; PENALTIES 7 Section 802. Procedure; Enforcement; Penalties.--Parts III, 8 IV, V, VI and VII of Article IV are incorporated by reference 9 into this article insofar as they are applicable to the tax 10 imposed hereunder. 11 PART III 12 REPEALER; EFFECTIVE DATE 13 Section 805. Repeal.--Section 1, act of June 13, 1907 14 (P.L.640), entitled "An act to provide revenue by levying a tax 15 upon the shares of stock of companies incorporated under the 16 provisions of section twenty-nine of an act, entitled 'An act to 17 provide for the incorporation and regulation of certain 18 corporations,' approved April twenty-ninth, one thousand eight 19 hundred and seventy-four, and the supplements thereto; for the 20 insurance of owners of real estate, mortgages, and others 21 interested in real estate, from loss by reason of defective 22 titles, liens, and encumbrances; and of companies entitled to 23 the benefits of, and of companies having any of the powers of, 24 companies entitled to the benefits of an act, entitled 'An act 25 conferring upon certain fidelity, insurance, safety deposit, 26 trust, and savings companies the powers and privileges of 27 companies incorporated under the provisions of section twenty- 28 nine of an act, entitled "An act to provide for the 29 incorporation and regulation of certain corporations," approved 30 April twenty-ninth, Anno Domini one thousand eight hundred and 19710H0190B0445 - 155 -
1 seventy-four, and of the supplements thereto,' approved June 2 twenty-seventh, one thousand eight hundred and ninety-five, 3 commonly known as title insurance or trust companies," is 4 repealed. 5 Section 806. Effective Date.--This article shall take effect 6 January 1, 1971. 7 ARTICLE IX 8 INSURANCE PREMIUMS TAX 9 PART I 10 DEFINITIONS 11 Section 901. Definitions.--The following terms, when used in 12 this act, shall have the meaning ascribed to them in this 13 section: 14 (1) "Insurance company" means every insurance company, 15 association or exchange, incorporated or organized by or under 16 the laws of this Commonwealth, the United States, territories, 17 dependencies, other states, or foreign governments, and engaged 18 in transacting insurance business of any kind or classification 19 within this Commonwealth, except purely mutual beneficial 20 associations whose funds for the benefit of members and families 21 or heirs are made up entirely of the weekly, monthly, quarterly, 22 semi-annual or annual contributions to their members and the 23 accumulated interest thereon and corporations organized under 24 the act of June 21, 1937 (P.L.1948), known as the "Nonprofit 25 Hospital Plan Act," and the act of June 27, 1939 (P.L.1125), 26 known as the "Nonprofit Medical, Osteopathic, Dental and 27 Podiatry Service Corporation Act." 28 (2) "Gross premiums" means premiums, premium deposits or 29 assessments received by any insurance company, whether received 30 in money or in the form of notes, credits, or any other 19710H0190B0445 - 156 -
1 substitutes for money, and whether collected in this 2 Commonwealth or elsewhere. Gross premiums shall not include: (i) 3 amounts returned on policies canceled or not taken; (ii) 4 premiums received for reinsurance; (iii) in the case of mutual 5 insurance companies, associations, exchanges, and stock 6 companies with participating features, that portion of the 7 advanced premiums, premium deposits or assessments returned in 8 cash or credited to members or policyholders, whether as 9 dividends, earnings, savings, or return deposits, upon the 10 expiration or termination of their contracts; and (iv) notes or 11 other obligations received by mutual insurance companies to 12 secure contingent premium liabilities to the extent that no 13 assessment has been made and collected against said notes or 14 obligations. 15 PART II 16 IMPOSITION OF TAX 17 Section 902. Imposition of Tax.--Every insurance company, as 18 herein defined, transacting business in the Commonwealth of 19 Pennsylvania, shall pay to the department, a tax at the rate of 20 two per cent of the gross premiums received from business done 21 within this Commonwealth during each calendar year, except that 22 any insurance company which was not subject to this tax prior to 23 1971 shall be taxed at the rate of one per cent for the year 24 1971 and thereafter at the rate of two per cent. 25 PART III 26 ANNUAL REPORT 27 Section 903. Annual Report.--Every insurance company shall 28 make a report to the department on a form prescribed by it on or 29 before April 15 of each year, showing the gross premiums 30 received from business transacted in the Commonwealth during the 19710H0190B0445 - 157 -
1 year ending December 31 preceding. When making such report, the 2 insurance company shall compute and pay to the Commonwealth the 3 tax upon the gross premiums received from business transacted 4 within this Commonwealth during such preceding year. 5 PART IV 6 PROCEDURE; ENFORCEMENT; PENALTIES 7 Section 904. Procedure; Enforcement; Penalties.--Parts III, 8 IV, V, VI and VII of Article IV are incorporated by reference 9 into this article in so far as they are applicable to the tax 10 imposed hereunder. 11 PART V 12 Section 905. Repeal.--The act of February 21, 1961 (P.L.33), 13 entitled "An act imposing a State tax on gross premiums, premium 14 deposits, and assessments received from business transacted 15 within this Commonwealth by certain insurance companies, 16 associations, and exchanges; requiring the filing of annual and 17 tentative reports and the computation and payment of tax; 18 providing for the rights, powers and duties of the Department of 19 Revenue, the taxpayers and officers thereof; and providing 20 penalties," is repealed. 21 Section 906. Effective Date.--This article shall take effect 22 January 1, 1971. 23 ARTICLE X 24 CAPITAL STOCK TAX ON FOREIGN CORPORATIONS 25 PART I 26 DEFINITIONS 27 Section 1001. Definitions.--The following terms when used in 28 this article shall have the meanings ascribed to them in this 29 section: 30 (1) "Foreign corporation" means any corporation, limited 19710H0190B0445 - 158 -
1 partnership or joint-stock association chartered or created by 2 or under the laws of any other state or of the United States or 3 of any foreign country, which has been issued a certificate of 4 authority by the Department of State to do business within this 5 Commonwealth and which either (i) has its principal office or 6 chief place of business located within this Commonwealth, or 7 (ii) has any part of its capital actually employed within this 8 Commonwealth. The term "foreign corporation" shall not include 9 foreign insurance companies and foreign nonprofit corporations 10 which do not have capital stock. 11 (2) "Increase of capital" means, (i) as to foreign 12 corporations doing business in this Commonwealth, any increase 13 of capital in excess of the amount actually employed in this 14 Commonwealth at any time prior to January 1, 1971 by such 15 corporations reporting on a calendar year basis, or at any time 16 prior to the first day of any fiscal year, beginning in the 17 calendar year 1971, by such corporations reporting on a fiscal 18 year basis; (ii) as to corporations admitted to do business in 19 this Commonwealth after the effective date of this article, 20 capital actually employed within this Commonwealth at the time 21 of or after receiving a certificate of authority to do business 22 from the Department of State and any increase thereof. 23 PART II 24 IMPOSITION OF TAX 25 Section 1002. Imposition of Tax.--From and after the 26 effective date of this article, every foreign corporation, in 27 addition to complying with all the laws of the Commonwealth now 28 or hereafter in effect, shall, for the privilege of exercising 29 its franchises in Pennsylvania, pay to the department an excise 30 tax of one-third of one per cent upon the amount of any increase 19710H0190B0445 - 159 -
1 of capital actually employed within this Commonwealth: Provided, 2 That credit shall be allowed for said excise tax in the 3 following cases: 4 (1) Merger of domestic corporation or corporations and/or 5 foreign corporation or corporations with a foreign corporation 6 and the surviving foreign corporation in the merger is then 7 authorized, or will immediately thereafter be authorized, by a 8 certificate of authority to transact business in this 9 Commonwealth; 10 (2) Consolidation of two or more foreign corporations or of 11 domestic and foreign corporations (one or more of each), and the 12 corporation formed by the consolidation is a foreign corporation 13 which is then authorized, or will immediately thereafter be 14 authorized, by a certificate of authority to transact business 15 in this Commonwealth. 16 In such cases, the surviving or consolidated foreign 17 corporation shall be entitled to credit upon any excise tax due 18 and payable hereunder equal to the excise tax computed at the 19 rate of one-third of one per cent on the value of the assets of 20 the merging or consolidating foreign corporation or corporations 21 actually employed by such surviving or consolidated foreign 22 corporation within this Commonwealth within the provisions and 23 intent of this article, and such proportion of the total excise 24 tax of the merging or consolidating domestic corporation or 25 corporations paid or relieved from payment on its authorized or 26 issued and outstanding capital stock, determined by the ratio 27 that the value of the assets of such domestic corporation or 28 corporations actually employed by such surviving or consolidated 29 foreign corporation within this Commonwealth within the 30 provisions and intent of this article bears to the value of the 19710H0190B0445 - 160 -
1 total assets of such domestic corporation. 2 (3) IN ARRIVING AT THE AMOUNT OF TAX DUE UNDER THIS ARTICLE, <-- 3 A TAXPAYER SHALL APPORTION THE INCREASE IN CAPITAL BY THE USE OF 4 THE FORMULA APPLICABLE TO THE OPERATIONS OF THE CORPORATION AS 5 SET FORTH IN SECTION 401. 6 PART III 7 REPORTS 8 Section 1003. Initial and Annual Report.--Every foreign 9 corporation shall annually file a report with the department for 10 information purposes on a form prescribed by the department 11 stating (i) the state or country in which incorporated or 12 created, (ii) the date of incorporation or organization, (iii) 13 location of its chief office in this Commonwealth, (iv) the name 14 and address of its president and treasurer, (v) the greatest 15 amount of capital actually employed within this Commonwealth 16 during the preceding calendar or fiscal year, (vi) the greatest 17 amount of capital actually employed within this Commonwealth at 18 any time prior to the preceding calendar or fiscal year, and 19 (vii) such other information as the department shall require for 20 the purpose of this article. 21 PART IV 22 PROCEDURE; ENFORCEMENT; PENALTIES 23 Section 1004. Procedure; Enforcement; Penalties.--Parts III, 24 IV, V, VI and VII of Article IV are incorporated by reference 25 into this article in so far as they are applicable to the tax 26 imposed hereunder. 27 PART V 28 REPEALER; EFFECTIVE DATE 29 Section 1005. Repeal.--The act of July 25, 1953 (P.L.560), 30 entitled "An act to provide revenue for State purposes by 19710H0190B0445 - 161 -
1 imposing an excise tax upon any increase in capital, as defined, 2 actually employed in Pennsylvania, by any foreign corporation, 3 limited partnership or joint-stock association; requiring the 4 filing of reports; providing for rights, powers and duties of 5 the Department of Revenue, the taxpayers and officers thereof; 6 imposing interest and penalties; and repealing a certain act 7 relating to foreign corporations, limited partnerships and 8 joint-stock associations," is repealed. 9 Section 1006. Effective Date.--This article shall take 10 effect January 1, 1971. 11 ARTICLE XI 12 GENERAL PROVISIONS 13 Section 1101. Saving Clause.--(a) Notwithstanding anything 14 contained in any law to the contrary, the validity of any 15 ordinance or part of any ordinance or any resolution or part of 16 any resolution, and any amendments or supplements thereto now or 17 hereinafter enacted or adopted by any political subdivision of 18 this Commonwealth for or relating to the imposition, levy or 19 collection of any tax, shall not be affected or impaired by 20 anything contained in this code. 21 (b) Nothing contained in this code shall be construed to 22 relieve any person, corporation or other entity from the filing 23 returns or from any taxes, penalties or interest imposed by the 24 provisions of any laws which were in effect prior to being 25 repealed by this code, or effect or terminate any petitions, 26 investigations, prosecutions, legal or otherwise, or other 27 proceedings pending under the provisions of any such laws or 28 prevent the commencement or further prosecution of any 29 proceedings by the proper authorities of the Commonwealth for 30 violation of any such laws or for the assessment, settlement, 19710H0190B0445 - 162 -
1 collection or recovery of taxes, penalties or interest due to 2 the Commonwealth under any of the laws which were in effect 3 prior to being repealed by this code. 4 Section 1102. Constitutional Construction.--If any word, 5 phrase, clause, sentence, section or provision of this code is 6 for any reason held to be unconstitutional, the decision of the 7 court shall not affect or impair any of the remaining provisions 8 of this code. It is hereby declared as the legislative intent 9 that this code would have been adopted had such unconstitutional 10 word, phrase, clause, sentence, section or provision thereof not 11 been included herein. 12 Section 1103. Effective Date.--The provisions of this code, 13 except as otherwise specified, shall take effect immediately. A30L57RLC/19710H0190B0445 - 163 -