SENATE AMENDED
        PRIOR PRINTER'S NOS. 210, 445                  PRINTER'S NO. 480

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

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 SECOND CONSIDERATION, IN SENATE, FEBRUARY 18, 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
    19710H0190B0480                  - 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 of manufacturing,
    20  fabricating, compounding, processing or other operations,
    21  engaged in as a business, which place any personal property in a
    22  form, composition or character different from that in which it
    23  is acquired whether for sale or use by the manufacturer, and
    24  shall include, but not limited to--
    25     (1)  Every operation commencing with the first production
    26  stage and ending with the completion of personal property having
    27  the physical qualities (including packaging, if any, passing to
    28  the ultimate consumer) which it has when transferred by the
    29  manufacturer to another;
    30     (2) The publishing of books, newspapers, magazines and other
    19710H0190B0480                  - 3 -

     1  periodicals and printing;
     2     (3)  Refining, exploring, mining and quarrying for, or
     3  otherwise extracting from the earth any natural resources,
     4  minerals and mineral aggregates;
     5     (4)  Building, rebuilding, repairing and making additions to,
     6  or replacements in or upon vessels designed for commercial use
     7  of registered tonnage of fifty tons or more when produced upon
     8  special order of the purchaser, or when rebuilt, repaired or
     9  enlarged, or when replacements are made upon order of, or for
    10  the account of the owner;
    11     (5)  Research having as its objective the production of a new
    12  or an improved (i) product or utility service, or (ii) method of
    13  producing a product or utility service, but in either case not
    14  including market research or research having as its objective
    15  the improvement of administrative efficiency.
    16     The term "manufacture," shall not include constructing,
    17  altering, servicing, repairing or improving real estate or
    18  repairing, servicing or installing personal property.
    19     (d)  "Processing." The performance of the following
    20  activities when engaged in as a business enterprise:
    21     (1)  The cooking or freezing of fruits, vegetables,
    22  mushrooms, fish, seafood, meats or poultry, when the person
    23  engaged in such business packages such property in sealed
    24  containers for wholesale distribution.
    25     (2)  The scouring, carbonizing, cording, combing, throwing,
    26  twisting or winding of natural or synthetic fibers, or the
    27  spinning, bleaching, dyeing, printing or finishing of yarns or
    28  fabrics, when such activities are performed prior to sale to the
    29  ultimate consumer.
    30     (3)  The electroplating, galvanizing, enameling, anodizing,
    19710H0190B0480                  - 4 -

     1  coloring, finishing, impregnating or heat treating of metals or
     2  plastics for sale or in the process of manufacturing.
     3     (4)  The rolling, drawing or extruding of ferrous and non-
     4  ferrous metals.
     5     (5)  The fabrication for sale of ornamental or structural
     6  metal or of metal stairs, staircases, gratings, fire escapes or
     7  railings (not including fabrication work done at the
     8  construction site).
     9     (6)  The preparation of animal feed or poultry feed for sale.
    10     (7)  The production, processing and bottling of non-alcoholic
    11  beverages for wholesale distribution.
    12     (8)  The operation of a saw mill or planing mill for the
    13  production of lumber or lumber products for sale.
    14     (9)  The milling for sale of flour or meal from grains.
    15     (10)  The slaughtering and dressing of animals for meat to be
    16  sold or to be used in preparing meat products for sale, and the
    17  preparation of meat products including lard, tallow, grease,
    18  cooking and inedible oils for wholesale distribution.
    19     (11)  The processing of used lubricating oils.
    20     (12)  The broadcasting of radio and television programs of
    21  licensed commercial or educational stations.
    22     (e)  "Person."  Any natural person, association, fiduciary,
    23  partnership, corporation or other entity, including the
    24  Commonwealth of Pennsylvania, its political subdivisions and
    25  instrumentalities and public authorities. Whenever used in any
    26  clause prescribing and imposing a penalty or imposing a fine or
    27  imprisonment, or both, the term "person," as applied to an
    28  association, shall include the members thereof and, as applied
    29  to a corporation, the officers thereof.
    30     (f)  "Purchase at retail."
    19710H0190B0480                  - 5 -

     1     (1)  The acquisition for a consideration of the ownership,
     2  custody or possession of tangible personal property other than
     3  for resale by the person acquiring the same when such
     4  acquisition is made for the purpose of consumption or use,
     5  whether such acquisition shall be absolute or conditional, and
     6  by whatsoever means the same shall have been effected.
     7     (2)  The acquisition of a license to use or consume, and the
     8  rental or lease of tangible personal property, other than for
     9  resale regardless of the period of time the lessee has
    10  possession or custody of the property.
    11     (3)  The obtaining for a consideration of those services
    12  described in subclauses (2), (3) and (4) of clause (k) of this
    13  section other than for resale.
    14     (4)  A retention after March 7, 1956, of possession, custody
    15  or a license to use or consume pursuant to a rental contract or
    16  other lease arrangement (other than as security), other than for
    17  resale.
    18     The term "purchase at retail" with respect to "liquor" and
    19  "malt or brewed beverages" shall include the purchase of
    20  "liquor" from any "Pennsylvania Liquor Store" by any person for
    21  any purpose, and the purchase of "malt or brewed beverages" from
    22  a "manufacturer of malt or brewed beverages," "distributor" or
    23  "importing distributor" by any person for any purpose, except
    24  purchases from a "manufacturer of malt or brewed beverages" by a
    25  "distributor" or "importing distributor" or purchases from an
    26  "importing distributor" by a "distributor" within the meaning of
    27  the "Liquor Code." The term "purchase at retail" shall not
    28  include any purchase of "malt or brewed beverages" from a
    29  "retail dispenser" or any purchase of "liquor" or "malt or
    30  brewed beverages" from a person holding a "retail liquor
    19710H0190B0480                  - 6 -

     1  license" within the meaning of and pursuant to the provisions of
     2  the "Liquor Code," but shall include any purchase or acquisition
     3  of "liquor" or "malt or brewed beverages" other than pursuant to
     4  the provisions of the "Liquor Code."
     5     (g)  "Purchase price."
     6     (1)  The total value of anything paid or delivered, or
     7  promised to be paid or delivered, whether it be money or
     8  otherwise, in complete performance of a sale at retail or
     9  purchase at retail, as herein defined, without any deduction on
    10  account of the cost or value of the property sold, cost or value
    11  of transportation, cost or value of labor or service, interest
    12  or discount paid or allowed after the sale is consummated, any
    13  other taxes imposed by the Commonwealth of Pennsylvania or any
    14  other expense except that there shall be excluded any separately
    15  stated deposit charge for returnable containers.
    16     (2)  There shall be deducted from the purchase price the
    17  value of any personal property actually taken in trade or
    18  exchange within this Commonwealth in lieu of the whole or any
    19  part of the purchase price. For the purpose of this subsection,
    20  the amount allowed by reason of personal property actually taken
    21  in trade or exchange shall be considered the value of such
    22  property.
    23     (3)  In determining the purchase price on the sale or use of
    24  taxable tangible personal property where, because of affiliation
    25  of interests between the vendor and purchaser, or irrespective
    26  of any such affiliation, if for any other reason the purchase
    27  price declared by the vendor or taxpayer on the taxable sale or
    28  use of such tangible personal property is, in the opinion of the
    29  department, not indicative of the true value of the article or
    30  the fair price thereof, the department shall, pursuant to
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     1  uniform and equitable rules, determine the amount of
     2  constructive purchase price upon the basis of which the tax
     3  shall be computed and levied. Such rules shall provide for a
     4  constructive amount of purchase price for each such sale or use
     5  which would naturally and fairly be charged in an arms-length
     6  transaction in which the element of common interest between the
     7  vendor or purchaser is absent or if no common interest exists,
     8  any other element causing a distortion of the price or value is
     9  likewise absent. For the purpose of this clause where a taxable
    10  sale or purchase at retail transaction occurs between a parent
    11  and a subsidiary, affiliate or controlled corporation of such
    12  parent corporation, there shall be a rebuttable presumption,
    13  that because of such common interest such transaction was not at
    14  arms-length.
    15     (4)  Where there is a transfer or retention of possession or
    16  custody, whether it be termed a rental, lease, service or
    17  otherwise, of tangible personal property including, but not
    18  limited to linens, aprons, motor vehicles, trailers, tires,
    19  industrial office and construction equipment, and business
    20  machines the full consideration paid or delivered to the vendor
    21  or lessor shall be considered the purchase price, even though
    22  such consideration be separately stated and be designated as
    23  payment for processing, laundering, service, maintenance,
    24  insurance, repairs, depreciation or otherwise. Where the vendor
    25  or lessor supplies or provides an employe to operate such
    26  tangible personal property, the value of the labor thus supplied
    27  may be excluded and shall not be considered as part of the
    28  purchase price if separately stated. There shall also be
    29  included as part of the purchase price the value of anything
    30  paid or delivered, or promised to be paid or delivered by a
    19710H0190B0480                  - 8 -

     1  lessee, whether it be money or otherwise, to any person other
     2  than the vendor or lessor by reason of the maintenance,
     3  insurance or repair of the tangible personal property which a
     4  lessee has the possession or custody of under a rental contract
     5  or lease arrangement.
     6     (5)  With respect to the tax imposed by subsection (b) of
     7  section 202 upon any tangible personal property originally
     8  purchased by the user of such property six months or longer
     9  prior to the first taxable use of such property within the
    10  Commonwealth, such user may elect to pay tax on a substituted
    11  base determined by considering the purchase price of such
    12  property for tax purposes to be equal to the prevailing market
    13  price of similar personal property at the time and place of such
    14  first use within the Commonwealth. Such election must be made by
    15  filing a notice thereof in the form specified by the department
    16  and reporting such tax liability and paying the proper tax due
    17  plus all accrued penalties and interest, if there be any, within
    18  one year of the due date of such report and payment, as provided
    19  for by subsections (a) and (c) of section 217 of this article.
    20     (h)  "Purchaser."  Any person who acquires, for a
    21  consideration, the ownership, custody or possession by sale,
    22  lease or otherwise, of tangible personal property, or who
    23  obtains services in exchange for a purchase price but not
    24  including an employer who obtains services from his employes in
    25  exchange for wages or salaries when such services are rendered
    26  in the ordinary scope of their employment.
    27     (i) "Resale."
    28     (1)  Any transfer of ownership, custody or possession of
    29  tangible personal property for a consideration, including the
    30  grant of a license to use or consume and transactions where the
    19710H0190B0480                  - 9 -

     1  possession of such property is transferred but where the
     2  transferor retains title only as security for payment of the
     3  selling price whether such transaction be designated as bailment
     4  lease, conditional sale or otherwise.
     5     (2)  The physical incorporation of personal property as an
     6  ingredient or constituent into other personal property, which is
     7  to be sold in the regular course of business or the performance
     8  of those services described in subclauses (2), (3) and (4) of
     9  clause (k) of this section upon personal property which is to be
    10  sold in the regular course of business.
    11     The term "resale" shall not include any sale of "malt or
    12  brewed beverages" by a "retail dispenser," or any sale of
    13  "liquor" or "malt or brewed beverages" by a person holding a
    14  "retail liquor license" within the meaning of the "Liquor Code."
    15     (j) "Resident."
    16     (1)  Any natural person (i) who is domiciled in the
    17  Commonwealth, or (ii) who maintains a permanent place of abode
    18  within the Commonwealth and spends in the aggregate more than
    19  sixty days of the year within the Commonwealth.
    20     (2)  Any corporation (i) incorporated under the laws of this
    21  Commonwealth, or (ii) authorized to do business or doing
    22  business within this Commonwealth, or (iii) maintaining a place
    23  of business within this Commonwealth.
    24     (3)  Any association, fiduciary, partnership or other entity
    25  (i) domiciled in this Commonwealth, or (ii) authorized to do
    26  business or doing business within this Commonwealth, or (iii)
    27  maintaining a place of business within this Commonwealth.
    28     (k)  "Sale at retail."
    29     (1)  Any transfer, for a consideration, of the ownership,
    30  custody or possession of tangible personal property, including
    19710H0190B0480                 - 10 -

     1  the grant of a license to use or consume whether such transfer
     2  be absolute or conditional and by whatsoever means the same
     3  shall have been effected.
     4     (2)  The rendition of the service of printing or imprinting
     5  of tangible personal property for a consideration for persons
     6  who furnish, either directly or indirectly the materials used in
     7  the printing or imprinting.
     8     (3)  The rendition for a consideration of the service of--
     9     (i)  Washing, cleaning, waxing, polishing or lubricating of
    10  motor vehicles of another, whether or not any tangible personal
    11  property is transferred in conjunction therewith; and
    12     (ii)  Inspecting motor vehicles pursuant to the mandatory
    13  requirements of "The Vehicle Code."
    14     (4)  The rendition for a consideration of the service of
    15  repairing, altering, mending, pressing, fitting, dyeing,
    16  laundering, drycleaning or cleaning tangible personal property
    17  other than wearing apparel or shoes, or applying or installing
    18  tangible personal property as a repair or replacement part of
    19  other personal property except wearing apparel or shoes for a
    20  consideration, whether or not the services are performed
    21  directly or by any means other than by coin-operated equipment
    22  and whether or not any tangible personal property is transferred
    23  in conjunction therewith, except such services as are rendered
    24  in the construction, reconstruction, remodeling, repair or
    25  maintenance of real estate: Provided, however, That this
    26  subclause shall not be deemed to impose tax upon such services
    27  in the preparation for sale of new items which are excluded from
    28  the tax under clause (26) of section 204, or upon diaper
    29  service.
    30     (5)  Any retention after March 7, 1956, of possession,
    19710H0190B0480                 - 11 -

     1  custody or a license to use or consume pursuant to a rental
     2  contract or other lease arrangement (other than as security).
     3     (6)  Any retention of possession, custody or a license to use
     4  or consume tangible personal property or any further obtaining
     5  of services described in subclauses (2), (3) and (4) of this
     6  clause after April 15, 1959, pursuant to a rental or service
     7  contract or other arrangement (other than as security).
     8     (7)  Any retention of possession, custody or a license to use
     9  or consume tangible personal property or any further obtaining
    10  of services described in subclauses (2), (3) and (4) of this
    11  clause after August 20, 1959, pursuant to a rental or service
    12  contract or other arrangement (other than as security).
    13     (8)  Any retention of possession, custody or a license to use
    14  or consume tangible personal property or any further obtaining
    15  of services described in subclauses (2), (3) and (4) of this
    16  clause pursuant to a rental or service contract or other
    17  arrangement (other than as security).
    18     The term "sale at retail" shall not include (i) any such
    19  transfer of tangible personal property or rendition of services
    20  for the purpose of resale, or (ii) such rendition of services or
    21  the transfer of tangible personal property including, but not
    22  limited to, machinery and equipment and parts therefor and
    23  supplies to be used or consumed by the purchaser directly in any
    24  of the operations of--
    25     (A)  The manufacture of personal property;
    26     (B)  Farming, dairying, agriculture, horticulture or
    27  floriculture when engaged in as a business enterprise. The term
    28  "farming" shall include the propagation and raising of ranch
    29  raised fur-bearing animals.
    30     (C)  The producing, delivering or rendering of a public
    19710H0190B0480                 - 12 -

     1  utility service, or in constructing, reconstructing, remodeling,
     2  repairing or maintaining the facilities used in such service,
     3  whether or not such facilities constitute real estate: Provided,
     4  however, "real estate" shall not include buildings;
     5     (D)  The processing of personal property as defined in clause
     6  (d) of this section.
     7     The exclusions provided in paragraphs (A), (B), (C) and (D)
     8  shall not apply to any vehicle required to be registered under
     9  The Vehicle Code, except those vehicles used directly by a
    10  public utility engaged in business as a common carrier, or to
    11  maintenance facilities or to materials or supplies to be used or
    12  consumed in any construction, reconstruction, remodeling, repair
    13  or maintenance of real estate.
    14     The exclusions provided in paragraphs (A), (B), (C) and (D)
    15  shall not apply to tangible personal property or services to be
    16  used or consumed in managerial sales or other nonoperational
    17  activities, nor to the purchase or use of tangible personal
    18  property or services by any person other than the person
    19  directly using the same in the operations described in
    20  paragraphs (A), (B), (C) and (D) herein.
    21     The exclusion provided in paragraph (C) shall not apply to
    22  (i) construction materials used to construct, reconstruct,
    23  remodel, repair or maintain facilities not used directly by the
    24  purchaser in the production, delivering or rendition of public
    25  utility service, or (ii) tools and equipment used but not
    26  installed in the maintenance of facilities used in the
    27  production, delivering or rendition of a public utility service.
    28     (9)  Where tangible personal property or services are
    29  utilized for purposes constituting a "sale at retail" and for
    30  purposes excluded from the definition of "sale at retail," it
    19710H0190B0480                 - 13 -

     1  shall be presumed that said property is subject to tax, unless
     2  the user prove that the purposes which constitute a "sale at
     3  retail" are minimal.
     4     (10)  The term "sale at retail" with respect to "liquor" and
     5  "malt or brewed beverages" shall include the sale of "liquor" by
     6  any "Pennsylvania liquor store" to any person for any purpose,
     7  and the sale of "malt or brewed beverages" by a "manufacturer of
     8  malt or brewed beverages," "distributor" or "importing
     9  distributor" to any person for any purpose, except sales by a
    10  "manufacturer of malt or brewed beverages" to a "distributor" or
    11  "importing distributor" or sales by an "importing distributor"
    12  to a "distributor" within the meaning of the "Liquor Code." The
    13  term "sale at retail" shall not include any sale of "malt or
    14  brewed beverages" by a "retail dispenser" or any sale of
    15  "liquor" or "malt or brewed beverages" by a person holding a
    16  "retail liquor license"  within the meaning of and pursuant to
    17  the provisions of the "Liquor Code," but shall include any sale
    18  of "liquor" or "malt or brewed beverages" other than pursuant to
    19  the provisions of the "Liquor Code."
    20     (l)  "Storage."  Any keeping or retention of tangible
    21  personal property within this Commonwealth for any purpose
    22  including the interim keeping, retaining or exercising any right
    23  or power over such tangible personal property.
    24     (m)  "Tangible personal property."  Corporeal personal
    25  property including, but not limited to, goods, wares,
    26  merchandise, steam and natural and manufactured and bottled gas
    27  for non-residential use, electricity for non-residential use,
    28  intrastate telephone and telegraph service for non-residential
    29  use, spirituous or vinous liquor and malt or brewed beverages
    30  and soft drinks; but the term shall not include household
    19710H0190B0480                 - 14 -

     1  supplies purchased at retail establishments for residential
     2  consumption, including but not limited to, soaps, detergents,
     3  cleaning and polishing preparations, paper goods, household
     4  wrapping supplies and items of similar nature, or sanitary
     5  napkins, tampons or similar items used for feminine hygiene. Nor
     6  shall said term include steam, natural and manufactured and
     7  bottled gas, fuel oil, electricity or intrastate telephone or
     8  telegraph service when purchased solely for residential use.
     9     (n)  "Taxpayer."  Any person required to pay or collect the
    10  tax imposed by this article.
    11     (o) "Use."
    12     (1)  The exercise of any right or power incidental to the
    13  ownership, custody or possession of tangible personal property
    14  and shall include, but not be limited to transportation, storage
    15  or consumption.
    16     (2)  The obtaining by a purchaser of the service of printing
    17  or imprinting of tangible personal property when such purchaser
    18  furnishes, either directly or indirectly, the articles used in
    19  the printing or imprinting.
    20     (3)  The obtaining by a purchaser of the services of (i)
    21  washing, cleaning, waxing, polishing or lubricating of motor
    22  vehicles whether or not any tangible personal property is
    23  transferred to the purchaser in conjunction with such services,
    24  and (ii) inspecting motor vehicles pursuant to the mandatory
    25  requirements of "The Vehicle Code."
    26     (4)  The obtaining by a purchaser of the service of
    27  repairing, altering, mending, pressing, fitting, dyeing,
    28  laundering, drycleaning or cleaning tangible personal property
    29  other than wearing apparel or shoes or applying or installing
    30  tangible personal property as a repair or replacement part of
    19710H0190B0480                 - 15 -

     1  other personal property other than wearing apparel or shoes,
     2  whether or not the services are performed directly or by any
     3  means other than by means of coin-operated equipment, and
     4  whether or not any tangible personal property is transferred to
     5  the purchaser in conjunction therewith, except such services as
     6  are obtained in the construction, reconstruction, remodeling,
     7  repair or maintenance of real estate: Provided, however, That
     8  this subclause shall not be deemed to impose tax upon such
     9  services in the preparation for sale of new items which are
    10  excluded from the tax under clause (26) of section 204, or upon
    11  diaper service: And provided further, That the term "use" shall
    12  not include--
    13     (A)  Any tangible personal property acquired and kept,
    14  retained or over which power is exercised within this
    15  Commonwealth on which the taxing of the storage, use or other
    16  consumption thereof is expressly prohibited by the Constitution
    17  of the United States or which is excluded from tax under other
    18  provisions of this article.
    19     (B)  The use or consumption of tangible personal property,
    20  including but not limited to machinery and equipment and parts
    21  therefor, and supplies or the obtaining of the services
    22  described in subclauses (2), (3) and (4) of this clause directly
    23  in any of the operations of--
    24     (i)  The manufacture of personal property;
    25     (ii)  Farming, dairying, agriculture, horticulture or
    26  floriculture when engaged in as a business enterprise;
    27     (iii)  The producing, delivering or rendering of a public
    28  utility service, or in constructing, reconstructing, remodeling,
    29  repairing or maintaining the facilities used in such service,
    30  whether or not such facilities constitute real estate: Provided,
    19710H0190B0480                 - 16 -

     1  however, "real estate" shall not include buildings;
     2     (iv)  The processing of personal property as defined in
     3  subclause (d) of this section.
     4     The exclusions provided in subparagraphs (i), (ii), (iii) and
     5  (iv) shall not apply to any vehicle required to be registered
     6  under The Vehicle Code except vehicles directly used by a public
     7  utility engaged in the business as a common carrier or
     8  maintenance facilities, or to materials or supplies to be used
     9  or consumed in any construction, reconstruction, remodeling,
    10  repair or maintenance of real estate. The exclusions provided in
    11  subparagraphs (i), (ii), (iii) and (iv) shall not apply to
    12  tangible personal property or services to be used or consumed in
    13  managerial sales or other nonoperational activities, nor to the
    14  purchase or use of tangible personal property by any person
    15  other than the person directly using the same in the aforesaid
    16  operations.
    17     The exclusion provided in subparagraph (iii) shall not apply
    18  to (A) construction materials used to construct, reconstruct,
    19  remodel, repair or maintain facilities not used directly in the
    20  production, delivering or rendition of public utility service,
    21  or (B) tools and equipment used but not installed in the
    22  maintenance of facilities used directly in the production,
    23  delivering or rendition of a public utility service.
    24     (5)  Where tangible personal property or services are
    25  utilized for purposes constituting a "use," as herein defined,
    26  and for purposes excluded from the definition of "use," it shall
    27  be presumed that said property is subject to tax unless the user
    28  prove that the purposes which constitute a "use" as herein
    29  defined are minimal.
    30     (6)  The term "use" with respect to "liquor" and "malt or
    19710H0190B0480                 - 17 -

     1  brewed beverages" shall include the purchase of "liquor" from
     2  any "Pennsylvania liquor store" by any person for any purpose
     3  and the purchase of "malt or brewed beverages" from a
     4  "manufacturer of malt or brewed beverages," "distributor" or
     5  "importing distributor" by any person for any purpose, except
     6  purchases from a "manufacturer of malt or brewed beverages" by a
     7  "distributor" or "importing distributor," or purchases from an
     8  "importing distributor" by a "distributor" within the meaning of
     9  the "Liquor Code." The term "use" shall not include any purchase
    10  of "malt or brewed beverages" from a "retail dispenser" or any
    11  purchase of "liquor" or "malt or brewed beverages" from a person
    12  holding a "retail liquor license" within the meaning of and
    13  pursuant to the provisions of the "Liquor Code," but shall
    14  include the exercise of any right or power incidental to the
    15  ownership, custody or possession of "liquor" or "malt or brewed
    16  beverages" obtained by the person exercising such right or power
    17  in any manner other than pursuant to the provisions of the
    18  "Liquor Code."
    19     (7)  The use of tangible personal property purchased at
    20  retail upon which the services described in subclauses (2), (3)
    21  and (4) of this clause have been performed shall be deemed to be
    22  a use of said services by the person using said property.
    23     (p)  "Vendor."  Any person maintaining a place of business in
    24  this Commonwealth, selling or leasing tangible personal
    25  property, or rendering services, the sale or use of which is
    26  subject to the tax imposed by this article.
    27     (q)  "Department."  The Department of Revenue of the
    28  Commonwealth of Pennsylvania.
    29                              PART II
    30                         IMPOSITION OF TAX
    19710H0190B0480                 - 18 -

     1     Section 202.  Imposition of Tax.--(a) There is hereby imposed
     2  upon each separate sale at retail of tangible personal property
     3  or services, as defined herein, within this Commonwealth a tax
     4  of six THREE per cent of the purchase price, which tax shall be   <--
     5  collected by the vendor from the purchaser, and shall be paid
     6  over to the Commonwealth as herein provided.
     7     (b)  There is hereby imposed upon the use, on and after the
     8  effective date of this act, within this Commonwealth of tangible
     9  personal property purchased at retail on or after March 7, 1956,
    10  and on those services described herein purchased at retail on
    11  and after April 15, 1959, a tax of six THREE per cent of the      <--
    12  purchase price, which tax shall be paid to the Commonwealth by
    13  the person who makes such use as herein provided, except that
    14  such tax shall not be paid to the Commonwealth by such person
    15  where he has paid the tax imposed by subsection (a) of this
    16  section or has paid the tax imposed by this subsection (b) to
    17  the vendor with respect to such use. The tax at the rate of six   <--
    18  THREE per cent imposed by this subsection shall not be deemed     <--
    19  applicable where the tax has been incurred at the rate of three
    20  per cent or three and one-half per cent or four per cent or five
    21  per cent under the provisions of "The Tax Act of 1963 for
    22  Education."
    23     (c)  Notwithstanding any other provisions of this article,
    24  the tax with respect to non-residential intrastate telephone
    25  service and intrastate telegraph service within the meaning of
    26  clause (m) of section 201 of this article shall, except for
    27  telegrams paid for in cash at telegraph offices, be computed at
    28  the rate of six THREE per cent upon the total amount billed to    <--
    29  customers periodically for such services, irrespective of
    30  whether such billing is based upon a flat rate or upon a message
    19710H0190B0480                 - 19 -

     1  unit charge.
     2     Section 203.  Computation of Tax.--The amount of tax imposed
     3  by section 202 of this article shall be computed as follows:
     4     (a)  If the purchase price is ten cents (10¢) or less, no tax
     5  shall be collected.
     6     (b)  If the purchase price is eleven cents (11¢) or more but
     7  less than eighteen cents (18¢) FORTY-ONE CENTS (41¢), one cent    <--
     8  (1¢) shall be collected.
     9     (c)  If the purchase price is eighteen cents (18¢) FORTY-ONE   <--
    10  CENTS (41¢) or more but less than thirty-five cents (35¢)         <--
    11  SEVENTY-ONE CENTS (71¢), two cents (2¢) shall be collected.       <--
    12     (d)  If the purchase price is thirty-five cents (35¢)          <--
    13  SEVENTY-ONE CENTS (71¢) or more but less than fifty-one cents     <--
    14  (51¢), three cents (3¢) shall be collected.
    15     (e)  If the purchase price is fifty-one cents (51¢) or more
    16  but less than sixty-eight cents (68¢), four cents (4¢) shall be
    17  collected.
    18     (f)  If the purchase price is sixty-eight cents (68¢) or more
    19  but less than eighty-five cents (85¢), five cents (5¢) shall be
    20  collected.
    21     (g)  If the purchase price is eighty-five cents (85¢) or more
    22  but less than one dollar and one cent ($1.01), six cents (6¢)     <--
    23  THREE CENTS (3¢) shall be collected.                              <--
    24     (h) (E)  If the purchase price is more than one dollar         <--
    25  ($1.00), six THREE per centum of each dollar of purchase price    <--
    26  plus the above bracket charges upon any fractional part of a
    27  dollar in excess of even dollars shall be collected.
    28                              PART III
    29                        EXCLUSIONS FROM TAX
    30     Section 204.  Exclusions from Tax.--The tax imposed by
    19710H0190B0480                 - 20 -

     1  section 202 shall not be imposed upon
     2     (1)  The sale at retail or use of tangible personal property
     3  (other than motor vehicles, trailers, semi-trailers, motor
     4  boats, aircraft or other similar tangible personal property
     5  required under either Federal law or laws of this Commonwealth
     6  to be registered or licensed) or services sold by or purchased
     7  from a person not a vendor in an isolated transaction or sold by
     8  or purchased from a person who is a vendor but is not a vendor
     9  with respect to the tangible personal property or services sold
    10  or purchased in such transaction: Provided, That inventory and
    11  stock in trade so sold or purchased, shall not be excluded from
    12  the tax by the provisions of this subsection.
    13     (2)  The use of tangible personal property purchased by a
    14  nonresident person outside of, and brought into this
    15  Commonwealth for use therein for a period not to exceed seven
    16  days, or for any period of time when such nonresident is a
    17  tourist or vacationer and, in either case not consumed within
    18  the Commonwealth.
    19     (3)  The use of tangible personal property purchased outside
    20  this Commonwealth for use outside this Commonwealth by a then
    21  nonresident natural person or a business entity not actually
    22  doing business within this Commonwealth, who later brings such
    23  tangible personal property into this Commonwealth in connection
    24  with his establishment of a permanent business or residence in
    25  this Commonwealth: Provided, That such property was purchased
    26  more than six months prior to the date it was first brought into
    27  this Commonwealth or prior to the establishment of such business
    28  or residence, whichever first occurs. This exclusion shall not
    29  apply to tangible personal property temporarily brought into
    30  Pennsylvania for the performance of contracts for the
    19710H0190B0480                 - 21 -

     1  construction, reconstruction, remodeling, repairing and
     2  maintenance of real estate.
     3     (4)  The sale at retail or use of supplies and materials to
     4  be used in the fulfillment of contracts for the construction,
     5  reconstruction, remodeling, repairing, maintenance or sale of
     6  real estate when such contract was entered into
     7     (i)  Prior to March 7, 1956, and is at a fixed price not
     8  subject to change or modification by reason of the tax imposed
     9  by this act; or
    10     (ii)  Pursuant to the obligation of a bid or bids submitted
    11  prior to March 7, 1956, which bid or bids could not be altered
    12  or withdrawn on or after that date and which bid or bids and
    13  contract entered into pursuant thereto are at a fixed price not
    14  subject to change or modification by reason of the tax imposed
    15  by the act in effect prior to this article.
    16     Provided, however, That notice of such contract or bid by
    17  reason of which an exclusion is claimed under this subsection
    18  (4) must be given by the taxpayer to the department on or before
    19  June 15, 1956.
    20     (5)  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 March 7, 1956, but prior to April 15, 1959, shall be
    29  exempt from the additional one-half of one per cent of tax
    30  imposed by section 201 of the Tax Act of 1963 for Education as
    19710H0190B0480                 - 22 -

     1  amended April 15, 1959 (P.L.20), and from the additional one-
     2  half of one per cent of tax imposed by section 201 of the Tax
     3  Act of 1963 for Education as amended August 20, 1959 (P.L.729),
     4  and from the additional one per cent of tax imposed by section
     5  201 of the Tax Act of 1963 for Education as amended May 29, 1963
     6  (P.L.49) and from the additional one per cent of tax imposed by
     7  section 201 of the Tax Act of 1963 for Education as amended
     8  January 1, 1968 (P.L.918): Provided, however, That the exemption
     9  granted by this clause shall not be claimed by the purchaser
    10  from any vendor but shall be claimed only by the filing of a
    11  refund petition with the department.
    12     (6)  The sale at retail or use of materials to be
    13  incorporated into and made a part of real estate pursuant to a
    14  contract for the construction, reconstruction, remodeling,
    15  repairing, maintenance or sale of such real estate when the
    16  contract is, either at a fixed price not subject to change or
    17  modification, or entered into pursuant to the obligation of a
    18  formal written bid which cannot be altered or withdrawn, and, in
    19  either case, such contract was entered into or such bid made on
    20  or after April 15, 1959, but prior to August 20, 1959, shall be
    21  exempt from the additional one-half of one per cent of tax
    22  imposed by section 201 of the Tax Act of 1963 for Education as
    23  amended August 20, 1959 (P.L.729), and from the additional one
    24  per cent of tax imposed by section 201 of the Tax Act of 1963
    25  for Education as amended May 29, 1963 (P.L.49) and 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
    19710H0190B0480                 - 23 -

     1  department.
     2     (7)  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, maintenance or sale of such real estate when the
     6  contract is, either at a fixed price not subject to change or
     7  modification, or entered into pursuant to the obligation of a
     8  formal written bid which cannot be altered or withdrawn, and, in
     9  either case, such contract was entered into or such bid made on
    10  or after August 20, 1959, but prior to June 1, 1963 shall be
    11  exempt from the additional one per cent of tax imposed by
    12  section 201 of the Tax Act of 1963 for Education as amended May
    13  29, 1963 (P.L.49) and from the additional one per cent of the
    14  tax imposed by section 201 of the Tax Act of 1963 for Education
    15  as amended January 1, 1968 (P.L.918): Provided, however, That
    16  the exemption granted by this clause shall not be claimed by the
    17  purchaser, from any vendor but shall be claimed only by the
    18  filing of a refund petition with the department.
    19     (8)  The sale at retail or use of materials to be
    20  incorporated into and made a part of real estate pursuant to a
    21  contract for the construction, reconstruction, remodeling,
    22  repairing, maintenance or sale of such real estate when the
    23  contract is, either at a fixed price not subject to change or
    24  modification, or entered into pursuant to the obligation of a
    25  formal written bid which cannot be altered or withdrawn, and, in
    26  either case, such contract was entered into or such bid made on
    27  or after June 1, 1963, but prior to January 1, 1968, shall be
    28  exempt from the additional one per cent of tax imposed by
    29  section 201 of the Tax Act of 1963 for Education as amended
    30  January 1, 1968 (P.L.918): Provided, however, That the exemption
    19710H0190B0480                 - 24 -

     1  granted by this clause shall not be claimed by the purchaser
     2  from any vendor but shall be claimed only by the filing of a
     3  refund petition with the department.
     4     (9)  The sale at retail or use of tangible personal property
     5  or services subject to tax under this article, but which prior
     6  to the effective date of this article were excluded from tax
     7  under the provisions of the "Tax Act of 1963 for Education"
     8  shall be excluded from the tax imposed by this article, provided
     9  such sale at retail or use occurred pursuant to and in
    10  fulfillment of a written fixed price sales or construction
    11  contract or formal bid entered into on or after January 1, 1968,
    12  but prior to the effective date of this article by the person
    13  who otherwise would be subject to tax under this article and
    14  another, and which contract or bid cannot be altered, modified
    15  or withdrawn by the parties. The exclusion from tax provided
    16  herein shall not be claimed by any person from a vendor but
    17  shall be claimed only by the filing of a refund petition with
    18  the department as provided in this article.
    19     (10)  The sale at retail to or use by (i) any charitable
    20  organization, volunteer firemen's organization or nonprofit
    21  educational institution, or (ii) a religious organization for
    22  religious purposes of tangible personal property or services:
    23  Provided, however, That the exclusion of this clause shall not
    24  apply with respect to any tangible personal property or services
    25  used in any unrelated trade or business carried on by such
    26  organization or institution or with respect to any materials,
    27  supplies and equipment used in the construction, reconstruction,
    28  remodeling, repairs and maintenance of any real estate, except
    29  materials and supplies when purchased by such organizations or
    30  institutions for routine maintenance and repairs.
    19710H0190B0480                 - 25 -

     1     (11)  The sale at retail, or use of gasoline and other motor
     2  fuels, the sales of which are otherwise subject to excise taxes
     3  under the act of May 21, 1931 (P.L.194), known as the "Liquid
     4  Fuels Tax Act," and the act of January 14, 1952 (P.L.1965),
     5  known as the "Fuel Use Tax Act."
     6     (12)  The sale at retail to, or use by the United States,
     7  this Commonwealth or its instrumentalities or political
     8  subdivisions of tangible personal property or services.
     9     (13)  The sale at retail, or use of wrapping paper, wrapping
    10  twine, bags, cartons, tape, rope, labels, nonreturnable
    11  containers and all other wrapping supplies, when such use is
    12  incidental to the delivery of any personal property, except that
    13  any charge for wrapping or packaging shall be subject to tax at
    14  the rate imposed by section 202.
    15     (14)  Sale at retail or use of vessels designed for
    16  commercial use of registered tonnage of fifty tons or more when
    17  produced by the builders thereof upon special order of the
    18  purchaser;
    19     (15)  Sale at retail of tangible personal property or
    20  services used or consumed in building, rebuilding, repairing and
    21  making additions to or replacements in and upon vessels designed
    22  for commercial use of registered tonnage of fifty tons or more
    23  upon special order of the purchaser, or when rebuilt, repaired
    24  or enlarged, or when replacements are made upon order of or for
    25  the account of the owner.
    26     (16)  The sale at retail or use of tangible personal property
    27  or services to be used or consumed for ship cleaning or
    28  maintenance or as fuel, supplies, ships' equipment, ships'
    29  stores or sea stores on vessels to be operated principally
    30  outside the limits of the Commonwealth.
    19710H0190B0480                 - 26 -

     1     (17)  The sale at retail or use of prescription or non-
     2  prescription medicines, drugs or medical supplies, crutches and
     3  wheelchairs for the use of cripples and invalids, artificial
     4  limbs, artificial eyes and artificial hearing devices when
     5  designed to be worn on the person of the purchaser or user,
     6  false teeth and materials used by a dentist in dental treatment,
     7  eyeglasses when especially designed or prescribed by an
     8  ophthalmologist, oculist or optometrist for the personal use of
     9  the owner or purchaser and artificial braces and supports
    10  designed solely for the use of crippled persons.
    11     (18)  The sale at retail or use of coal.
    12     (19)  The sale at retail or use of supplies and materials to
    13  be used exclusively in the fulfillment of a contract for the
    14  construction, reconstruction, remodeling, repairing or
    15  maintenance of real estate, when such contract was entered into
    16  prior to March 7, 1956, between the person who would otherwise
    17  be subject to the tax and a municipal authority, incorporated
    18  under the "Municipality Authorities Act of 1945": Provided, That
    19  notice of a claim of exemption under this clause is received by
    20  the department within fifteen days after the effective date of
    21  this clause.
    22     (20)  The sale at retail or use of materials to be
    23  incorporated into and made a part of real estate pursuant to a
    24  contract for the construction, reconstruction, remodeling,
    25  repairing or maintenance of such real estate, when the contract
    26  was entered into on or after March 7, 1956, but prior to April
    27  15, 1959, between the person who would otherwise be subject to
    28  the tax and a municipal authority, incorporated under the
    29  "Municipality Authorities Act of 1945," shall be exempt from the
    30  additional one-half of one per cent of tax imposed by section
    19710H0190B0480                 - 27 -

     1  201 of the Tax Act of 1963 for Education as amended April 15,
     2  1959 (P.L.20), and from the additional one-half of one per cent
     3  of tax imposed by section 201 of the Tax Act of 1963 for
     4  Education as amended August 20, 1959 (P.L.729), and from the
     5  additional one per cent of tax imposed by section 201 of the Tax
     6  Act of 1963 for Education, as amended May 29, 1963 (P.L.49) and
     7  from the additional one per cent of tax imposed by section 201
     8  of the Tax Act of 1963 for Education as amended January 1, 1968
     9  (P.L.918): Provided, however, That the exemption granted by this
    10  clause shall not be claimed by the purchaser from any vendor but
    11  shall be claimed only by the filing of a refund petition with
    12  the department.
    13     (21)  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 or maintenance of such real estate, when the contract
    17  was entered into on or after April 15, 1959, but prior to August
    18  20, 1959, between the person who would otherwise be subject to
    19  the tax and a municipal authority, incorporated under the
    20  "Municipality Authorities Act of 1945," shall be exempt from the
    21  additional one-half of one per cent of tax imposed by section
    22  201 of the Tax Act of 1963 for Education as amended August 20,
    23  1959 (P.L.729), and from the additional one per cent of tax
    24  imposed by section 201 of the Tax Act of 1963 for Education, as
    25  amended May 29, 1963 (P.L.49) and from the additional one per
    26  cent of tax imposed by section 201 of the Tax Act of 1963 for
    27  Education as amended January 1, 1968 (P.L.918): Provided,
    28  however, That the exemption granted by this clause shall not be
    29  claimed by the purchaser from any vendor but shall be claimed
    30  only by the filing of a refund petition with the department.
    19710H0190B0480                 - 28 -

     1     (22)  The sale at retail or use of materials to be
     2  incorporated into and made a part of real estate pursuant to a
     3  contract for the construction, reconstruction, remodeling,
     4  repairing or maintenance of such real estate when the contract
     5  was entered into on or after August 20, 1959, but prior to June
     6  1, 1963, between the person who would otherwise be subject to
     7  the tax and a municipal authority, incorporated under the
     8  "Municipality Authorities Act of 1945," shall be exempt from the
     9  additional one per cent of tax imposed by section 201 of the Tax
    10  Act of 1963 for Education as amended May 29, 1963 (P.L.49) and
    11  from the additional one per cent of the tax imposed by section
    12  201 of the Tax Act of 1963 for Education, as amended January 1,
    13  1968 (P.L.918): Provided, however, That the exemption granted by
    14  this clause shall not be claimed by the purchaser from any
    15  vendor but shall be claimed only by the filing of a refund
    16  petition with the department.
    17     (23)  The sale at retail or use of materials to be
    18  incorporated into and made a part of real estate pursuant to a
    19  contract for the construction, reconstruction, remodeling,
    20  repairing or maintenance of such real estate, when the contract
    21  was entered into on or after June 1, 1963, but prior to January
    22  1, 1968, between the person who would otherwise be subject to
    23  the tax and a municipal authority incorporated under the
    24  "Municipality Authorities Act of 1945," shall be exempt from the
    25  additional one per cent of tax imposed by section 201 of the Tax
    26  Act of 1963 for Education, as amended January 1, 1968 (P.L.918):
    27  Provided, however, That the exemption granted by this clause
    28  shall not be claimed by the purchaser from any vendor but shall
    29  be claimed only by the filing of a refund petition with the
    30  department.
    19710H0190B0480                 - 29 -

     1     (24)  The sale at retail or use of motor vehicles, trailers
     2  and semi-trailers, or bodies attached to the chassis thereof,
     3  sold to a nonresident of Pennsylvania to be used outside of
     4  Pennsylvania and which are registered in a state other than
     5  Pennsylvania within twenty days after delivery to the vendee.
     6     (25)  The sale at retail or use of water.
     7     (26)  The sale at retail or use of all vesture, wearing
     8  apparel, raiments, garments, footwear and other articles of
     9  clothing worn or carried on or about the human body but all
    10  accessories, ornamental wear, formal day or evening apparel, and
    11  articles made of fur on the hide or pelt or any material
    12  imitative of fur and articles of which such fur, real, imitation
    13  or synthetic, is the component material of chief value, but only
    14  if such value is more than three times the value of the next
    15  most valuable component material, and sporting goods and
    16  clothing not normally used or worn when not engaged in sports
    17  shall not be excluded from the tax.
    18     (27)  The sale at retail or use of cigarettes.
    19     (28)  The sale at retail or use of religious publications
    20  sold by religious groups and Bibles and religious articles.
    21     (29)  The sale at retail or use of food and beverages for
    22  human consumption including candy, gum and similar confections,
    23  except that this exclusion shall not apply with respect to--
    24     (i)  Soft drinks;
    25     (ii)  Malt and brewed beverages and spirituous and vinous
    26  liquors;
    27     (iii)  Food and beverages (except when purchased at, or from
    28  a school or church in the ordinary course of activities of such
    29  organization) when the purchase price of the total transaction
    30  is more than fifty cents (50¢), when purchased (i) from persons
    19710H0190B0480                 - 30 -

     1  engaged in the business of catering, or (ii) from persons
     2  engaged in the business of operating restaurants, cafes, lunch
     3  counters, private and social clubs, taverns, dining cars, hotels
     4  and other eating places. For the purpose of this subclause
     5  (iii), beverages shall not include malt and brewed beverages and
     6  spirituous and vinous liquors, but shall include soft drinks,
     7  and the price of such soft drinks shall be considered together
     8  with the price of other beverages and food in determining
     9  whether the purchase price of the total transaction is more than
    10  fifty cents (50¢).
    11     (30)  The sale at retail or use of periodicals and
    12  publications which are published at regular intervals not
    13  exceeding three months, circulated among the general public and
    14  containing matters of general interest and reports of current
    15  events.
    16     (31)  The sale at retail or use of caskets and burial vaults
    17  for human remains and markers and tombstones for human graves.
    18     (32)  The sale at retail or use of flags of the United States
    19  of America and the Commonwealth of Pennsylvania.
    20     (33)  The sale at retail or use of textbooks for use in
    21  schools, colleges and universities, either public or private
    22  when purchased in behalf of or through such schools, colleges or
    23  universities provided such institutions of learning are
    24  recognized by the Department of Education.
    25     Section 205.  Alternate Imposition of Tax; Credits.--If any
    26  person actively and principally engaged in the business of
    27  selling new or used motor vehicles, trailers or semi-trailers,
    28  and registered with the department in the "dealer's class,"
    29  acquires a motor vehicle, trailer or semi-trailer for the
    30  purpose of resale, and prior to such resale, uses the motor
    19710H0190B0480                 - 31 -

     1  vehicle, trailer or semi-trailer for a taxable use under this
     2  act during a period not exceeding one year from the date of
     3  acquisition to the date of resale, such person may, upon notice
     4  to the department within ten days of the commencement of such
     5  use, elect to pay a tax equal to six per cent of the fair rental
     6  value of the motor vehicle, trailer or semi-trailer during such
     7  use. Should such motor vehicle, trailer or semi-trailer be used
     8  for a taxable use after a period of one year, the taxpayer shall
     9  be liable for a tax on the fair market value of such motor
    10  vehicle, trailer or semi-trailer at the time of acquisition, but
    11  shall be allowed a credit equal to the tax paid pursuant to the
    12  election provided for in this section. This section shall not
    13  apply to the use of a vehicle as a wrecker, parts truck,
    14  delivery truck or courtesy car.
    15     Section 206.  Credit Against Tax.--A credit against the tax
    16  imposed by this act shall be granted with respect to tangible
    17  personal property or services purchased for use outside the
    18  Commonwealth equal to the tax paid to another state by reason of
    19  the imposition by such other state of a tax similar to the tax
    20  imposed by this article: Provided, however, That no such credit
    21  shall be granted unless such other state grants substantially
    22  similar tax relief by reason of the payment of tax under this
    23  act.
    24                              PART IV
    25                              LICENSES
    26     Section 208.  Licenses.--(a) Every person maintaining a place
    27  of business in this Commonwealth, selling or leasing services or
    28  tangible personal property, the sale or use of which is subject
    29  to tax and who has not hitherto obtained a license from the
    30  department, shall, prior to the beginning of business
    19710H0190B0480                 - 32 -

     1  thereafter, make application to the department, on a form
     2  prescribed by the department, for a license. If such person
     3  maintains more than one place of business in this Commonwealth,
     4  the license shall be issued for the principal place of business
     5  in this Commonwealth.
     6     (b)  The department shall, after the receipt of an
     7  application, issue the license applied for under subsection (a)
     8  of this section. The license shall be nonassignable and of
     9  permanent duration.
    10     (c)  Any person who, upon the expiration of sixty days after
    11  the effective date of this act, shall maintain a place of
    12  business in this Commonwealth for the purpose of selling or
    13  leasing services or tangible personal property, the sale or use
    14  of which is subject to tax, without having first been licensed
    15  by the department pursuant to the provisions of this section,
    16  shall be guilty of a summary offense, and upon conviction
    17  thereof in a summary proceeding, shall be sentenced to pay a
    18  fine of not less than one hundred dollars ($100) nor more than
    19  three hundred dollars ($300), and in default thereof, to undergo
    20  imprisonment of not less than five days nor more than thirty
    21  days. The penalties imposed by this section shall be in addition
    22  to any other penalties imposed by this article.
    23     (d)  Failure of any person to obtain a license shall not
    24  relieve him of liability to pay the tax imposed by this article.
    25                               PART V
    26                        HOTEL OCCUPANCY TAX
    27     Section 209.  Definitions.--(a) For the purposes of this part
    28  V only, the following words, terms and phrases shall have the
    29  meaning ascribed to them in this subsection, except where the
    30  context clearly indicates a different meaning:
    19710H0190B0480                 - 33 -

     1     (1)  "Hotel."  A building or buildings in which the public
     2  may, for a consideration, obtain sleeping accommodations. The
     3  term "hotel" shall not include any charitable, educational or
     4  religious institution summer camp for children, hospital or
     5  nursing home.
     6     (2)  "Occupant."  A person (other than a "permanent
     7  resident," as defined herein,) who, for a consideration, uses,
     8  possesses or has a right to use or possess any room or rooms in
     9  a hotel under any lease, concession, permit, right of access,
    10  license or agreement.
    11     (3)  "Occupancy."  The use or possession or the right to the
    12  use or possession by any person (other than a "permanent
    13  resident,") of any room or rooms in a hotel for any purpose or
    14  the right to the use or possession of the furnishings or to the
    15  services and accommodations accompanying the use and possession
    16  of the room or rooms.
    17     (4)  "Operator."  Any person operating a hotel.
    18     (5)  "Permanent resident."  Any occupant who has occupied or
    19  has the right to occupancy of any room or rooms in a hotel for
    20  at least thirty consecutive days.
    21     (6)  "Rent."  The consideration received for occupancy valued
    22  in money, whether received in money or otherwise, including all
    23  receipts, cash, credits and property or services of any kind or
    24  nature, and also any amount for which the occupant is liable for
    25  the occupancy without any deduction therefrom whatsoever.
    26     (b)  The following words, terms and phrases and words, terms
    27  and phrases of similar import, when used in parts IV and VI of
    28  this article for the purposes of those parts only, shall, in
    29  addition to the meaning ascribed to them by section 201 of this
    30  article, have the meaning ascribed to them in this subsection,
    19710H0190B0480                 - 34 -

     1  except where the context clearly indicates a different meaning:
     2     (1)  "Maintaining a place of business in this Commonwealth,"
     3  being the operator of a hotel in this Commonwealth.
     4     (2)  "Purchase at retail," occupancy.
     5     (3)  "Purchase price," rent.
     6     (4)  "Purchaser," occupant.
     7     (5)  "Sale at retail," the providing of occupancy to an
     8  occupant by an operator.
     9     (6)  "Tangible personal property," occupancy.
    10     (7)  "Vendor," operator.
    11     (8)  "Services," occupancy.
    12     (9)  "Use," occupancy.
    13     Section 210.  Imposition of Tax.--There is hereby imposed an
    14  excise tax of six per cent of the rent upon every occupancy of a
    15  room or rooms in a hotel in this Commonwealth, which tax shall
    16  be collected by the operator from the occupant and paid over to
    17  the Commonwealth as herein provided.
    18     Section 211.  Seasonal Tax Returns.--Notwithstanding any
    19  other provisions in this act, the department may, by regulation,
    20  waive the requirement for the filing of quarterly returns in the
    21  case of any operator whose hotel is operated only during certain
    22  seasons of the year, and may provide for the filing of returns
    23  by such persons at times other than those provided by section
    24  221.
    25                              PART VI
    26                    PROCEDURE AND ADMINISTRATION
    27                             CHAPTER I
    28                              RETURNS
    29     Section 215.  Persons Required to Make Returns.--Every person
    30  required to pay tax to the department or collect and remit tax
    19710H0190B0480                 - 35 -

     1  to the department shall file returns with respect to such tax.
     2     Section 216.  Form of Returns.--The returns required by
     3  section 215 shall be on forms prescribed by the department, and
     4  shall show such information with respect to the taxes imposed by
     5  this article as the department may reasonably require.
     6                             CHAPTER II
     7                 TIME AND PLACE FOR FILING RETURNS
     8     Section 217.  Time for Filing Returns.--(a) Monthly,
     9  Bimonthly and Quarterly Returns:
    10     (1)  For the year in which this article becomes effective and
    11  in each year thereafter a return shall be filed quarterly by
    12  every licensee on or before the last day of April, July, October
    13  and January for the three months ending the last day of March,
    14  June, September and December, except as hereinafter provided.
    15     (2)  For the year in which this article becomes effective,
    16  and in each year thereafter, a return shall be filed monthly
    17  with respect to each month by every licensee whose total tax
    18  reported, or in the event no report is filed, the total tax
    19  which should have been reported, for the third calendar quarter
    20  of the preceding year equals or exceeds six hundred dollars
    21  ($600). Such returns shall be filed on or before the fifteenth
    22  day of the second month succeeding the month with respect to
    23  which the return is made, except that the return due for the
    24  month of April, of each year, shall be filed on or before the
    25  twentieth day of May next following and the return due for the
    26  month of May of each year shall be filed on or before the
    27  twentieth day of June next following. Any licensee required to
    28  file monthly returns hereunder shall be relieved from filing
    29  quarterly returns.
    30     (3)  For the year in which this article becomes effective,
    19710H0190B0480                 - 36 -

     1  and for each year thereafter, every licensee required to file a
     2  quarterly return for the second calendar quarter shall file a
     3  single return for the months of April and May on or before the
     4  fifteenth day of June next following. The filing of such return
     5  shall not relieve the licensee of the duty to file a return on
     6  or before the last day of July next following and to remit
     7  therewith tax for the month of June.
     8     (b)  Annual Returns.  For the calendar year 1971, and for
     9  each year thereafter, no annual return shall be filed, except as
    10  may be required by rules and regulations of the department
    11  promulgated and published at least sixty days prior to the end
    12  of the year with respect to which the returns are made. Where
    13  such annual returns are required licensees shall not be required
    14  to file such returns prior to the sixty-first day of the year
    15  succeeding the year with respect to which the returns are made.
    16     (c)  Other Returns. Any person, other than a licensee, liable
    17  to pay to the department any tax under this article, shall file
    18  a return on or before the last day of the month succeeding the
    19  month in which such person becomes liable for the tax.
    20     (d)  Small Taxpayers. The department, by regulation, may
    21  waive the requirement for the filing of quarterly return in the
    22  case of any licensee whose individual tax collections do not
    23  exceed seventy-five dollars ($75) per calendar quarter and may
    24  provide for reporting on a less frequent basis in such cases.
    25     Section 218.  Extension of Time for Filing Returns.--The
    26  department may, on written application and for good cause shown,
    27  grant a reasonable extension of time for filing any return
    28  required under this part. However, the time for making a return
    29  shall not be extended for more than three months.
    30     Section 219.  Place for Filing Returns.--Returns shall be
    19710H0190B0480                 - 37 -

     1  filed with the department at its main office or at any branch
     2  office which it may designate for filing returns.
     3                            CHAPTER III
     4                           PAYMENT OF TAX
     5     Section 221.  Payment.--When a return of tax is required
     6  under this part, the person required to make the return shall
     7  pay the tax to the department.
     8     Section 222.  Time of Payment.--(a) Monthly, Bimonthly and
     9  Quarterly Payments. The tax imposed by this article and incurred
    10  or collected by a licensee shall be due and payable by the
    11  licensee on the day the return is required to be filed under the
    12  provisions of section 217 and such payment must accompany the
    13  return for such preceding period,
    14     (b)  Annual Payments. If the amount of tax due for the
    15  preceding year as shown by the annual return of any taxpayer is
    16  greater than the amount already paid by him in connection with
    17  his monthly or quarterly returns he shall send with such annual
    18  return a remittance for the unpaid amount of tax for the year.
    19     (c)  Other Payments. Any person other than a licensee liable
    20  to pay any tax under this article shall remit the tax at the
    21  time of filing the return required by this article.
    22     Section 223.  Other Times for Payment.--In the event that the
    23  department authorizes a taxpayer to file a return at other times
    24  than those specified in section 217, the tax due shall be paid
    25  at the time such return is filed.
    26     Section 224.  Place for Payment.--The tax imposed by this
    27  article shall be paid to the department at the place fixed for
    28  filing the return.
    29     Section 225.  Tax Held in Trust for the Commonwealth.--All
    30  taxes collected by any person from purchasers in accordance with
    19710H0190B0480                 - 38 -

     1  this article and all taxes collected by any person from
     2  purchasers under color of this article which have not been
     3  properly refunded by such person to the purchaser shall
     4  constitute a trust fund for the Commonwealth, and such trust
     5  shall be enforceable against such person, his representatives
     6  and any person (other than a purchaser to whom a refund has been
     7  made properly) receiving any part of such fund without
     8  consideration, or knowing that the taxpayer is committing a
     9  breach of trust: Provided, however, That any person receiving
    10  payment of a lawful obligation of the taxpayer from such fund
    11  shall be presumed to have received the same in good faith and
    12  without any knowledge of the breach of trust. Any person, other
    13  than a taxpayer, against whom the department makes any claim
    14  under this section shall have the same right to petition and
    15  appeal as is given taxpayers by any provisions of this part.
    16     Section 226.  Local Receivers of Use Tax.--Beginning on and
    17  after the effective date of this article, in every county,
    18  except in counties of the first class, the county treasurer is
    19  hereby authorized to receive use tax due and payable under the
    20  provisions of this article from any person other than a
    21  licensee. The receiving of such taxes shall be pursuant to rules
    22  and regulations promulgated by the department and upon forms
    23  furnished by the department. Each county treasurer shall remit
    24  to the department all use taxes received under the authority of
    25  this section minus the costs of administering this provision not
    26  to exceed one per cent of the amount of use taxes received,
    27  which amount shall be retained in lieu of any commission
    28  otherwise allowable by law for the collection of such tax.
    29     Section 227.  Discount.--If a return is filed by a licensee
    30  and the tax shown to be due thereon less any discount is paid
    19710H0190B0480                 - 39 -

     1  all within the time prescribed, the licensee shall be entitled
     2  to credit and apply against the tax payable by him a discount of
     3  one per cent of the amount of the tax collected by him on and
     4  after the effective date of this article, as compensation for
     5  the expense of collecting and remitting the same and as a
     6  consideration of the prompt payment thereof.
     7                             CHAPTER IV
     8                  ASSESSMENT AND COLLECTION OF TAX
     9     Section 230.  Assessment.--The department is authorized and
    10  required to make the inquiries, determinations and assessments
    11  of the tax (including interest, additions and penalties) imposed
    12  by this article.
    13     Section 231.  Mode and Time of Assessment.--(a) Underpayment
    14  of Tax. Within a reasonable time after any return is filed, the
    15  department shall examine it and, if the return shows a greater
    16  tax due or collected than the amount of tax remitted with the
    17  return, the department shall issue an assessment for the
    18  difference, together with an addition of three per cent of such
    19  difference, which shall be paid to the department within ten
    20  days after a notice of the assessment has been mailed to the
    21  taxpayer. If such assessment is not paid within ten days, there
    22  shall be added thereto and paid to the department an additional
    23  three per cent of such difference for each month thereof during
    24  which the assessment remains unpaid, but the total of all
    25  additions shall not exceed eighteen per cent of the difference
    26  shown on the assessment.
    27     (b)  Understatement of Tax. If the department determines that
    28  any return or returns of any taxpayer understates the amount of
    29  tax due, it shall determine the proper amount and shall
    30  ascertain the difference between the amount of tax shown in the
    19710H0190B0480                 - 40 -

     1  return and the amount determined, such difference being
     2  hereafter sometimes referred to as the "deficiency." A notice of
     3  assessment for the deficiency and the reasons therefor shall
     4  then be sent to the taxpayer. The deficiency shall be paid to
     5  the department within thirty days after a notice of the
     6  assessment thereof has been mailed to the taxpayer.
     7     (c)  Failure to File Return. In the event that any taxpayer
     8  fails to file a return required by this article, the department
     9  may make an estimated assessment (based on information
    10  available) of the proper amount of tax owing by the taxpayer. A
    11  notice of assessment in the estimated amount shall be sent to
    12  the taxpayer. The tax shall be paid within thirty days after a
    13  notice of such estimated assessment has been mailed to the
    14  taxpayer.
    15     (d)  Authority to Establish Effective Rates by Business
    16  Classification. The department is authorized to make the studies
    17  necessary to compute effective rates by business classification,
    18  based upon the ratio between the tax required to be collected
    19  and taxable sales and to use such rates in arriving at the
    20  apparent tax liability of a taxpayer.
    21     Any assessment based upon such rates shall be prima facie
    22  correct, except that such rate shall not be considered where a
    23  taxpayer establishes that such rate is based on a sample
    24  inapplicable to him.
    25     Section 232.  Reassessment.--Any taxpayer against whom an
    26  assessment is made may petition the department for a
    27  reassessment. Notice of an intention to file such a petition
    28  shall be given to the department within thirty days of the date
    29  the notice of assessment was mailed to the taxpayer, except that
    30  the department for due cause may accept such notice within
    19710H0190B0480                 - 41 -

     1  ninety days of the date the notice of assessment was mailed. The
     2  department by registered mail shall supply the taxpayer with a
     3  statement setting forth in reasonable detail the basis of the
     4  assessment within thirty days after receipt of the taxpayer's
     5  notice of intention to file a petition for reassessment. A
     6  petition for reassessment shall thereafter be filed within
     7  thirty days after such basis of assessment has been mailed to
     8  the taxpayer. Such petition shall set forth in reasonable detail
     9  the grounds upon which the taxpayer claims that the assessment
    10  is erroneous or unlawful, in whole or in part, and shall be
    11  accompanied by an affidavit or affirmation that the facts
    12  contained therein are true and correct and that the petition is
    13  not interposed for delay. An extension of time for filing the
    14  petition may be allowed for cause but in no case shall such
    15  extension exceed one hundred twenty days. The department shall
    16  hold such hearings as may be necessary for the purpose, at such
    17  times and places as it may determine, and each taxpayer who has
    18  duly filed such petition for reassessment shall be notified by
    19  the department of the time when, and the place where, such
    20  hearing in his case will be held.
    21     It shall be the duty of the department, within six months
    22  after receiving a filed petition for reassessment, to dispose of
    23  the issue raised by such petition and mail notice of the
    24  department's decision to the petitioner: Provided, however, That
    25  the taxpayer and the department may, by stipulation, extend such
    26  disposal time by not more than six additional months.
    27     Section 233.  Assessment to Recover Erroneous Refunds.--The
    28  department may, within two years of the granting of any refund
    29  or credit, or within the period in which an assessment could
    30  have been filed by the department with respect to the
    19710H0190B0480                 - 42 -

     1  transaction pertaining to which the refund was granted,
     2  whichever period shall last occur, file an assessment to recover
     3  any refund or part thereof or credit or part thereof which was
     4  erroneously made or allowed.
     5     Section 234.  Review by Board of Finance and Revenue.--Within
     6  sixty days after the date of mailing of notice by the department
     7  of the decision on any petition for reassessment filed with it,
     8  the person against whom such assessment was made may, by
     9  petition, request the Board of Finance and Revenue to review
    10  such decision. The failure of the department to notify the
    11  petitioner of a decision within the time provided for by section
    12  232 shall act as a denial of such petition, and a petition for
    13  review may be filed with the Board of Finance and Revenue within
    14  one hundred twenty days of the date prior to which the
    15  department should have mailed to the petitioner its notice of
    16  decision. Every petition for review filed hereunder shall state
    17  specifically the reasons on which the petitioner relies, or
    18  shall incorporate by reference the petition for reassessment in
    19  which the reasons are stated. The petition shall be supported by
    20  affidavit that it is not made for the purpose of delay and that
    21  the facts set forth therein are true. The Board of Finance and
    22  Revenue shall act finally in disposing of petitions filed with
    23  it within six months after they have been received. In the event
    24  of the failure of the board to dispose of any petition within
    25  six months, the action taken by the department, upon the
    26  petition for reassessment, shall be sustained. The Board of
    27  Finance and Revenue may sustain the action taken by the
    28  department on the petition for reassessment, or it may reassess
    29  the tax due on such basis as it deems according to law. The
    30  board shall give notice of its action to the department and to
    19710H0190B0480                 - 43 -

     1  the petitioner.
     2     Section 235.  Appeal to Commonwealth Court.--Any person
     3  aggrieved by the decision of the Board of Finance and Revenue or
     4  by the board's failure to act upon a petition for review within
     5  six months may, within thirty days, appeal to the Commonwealth
     6  Court from the decision of the board or of the department, as
     7  the case may be, in the manner now or hereafter provided by law
     8  for appeals in the case of tax settlements.
     9     Section 236.  Burden of Proof.--In all cases of petitions for
    10  reassessment, review or appeal, the burden of proof shall be
    11  upon the petitioner or appellant, as the case may be.
    12     Section 237.  Collection of Tax.--(a) Collection by
    13  Department. The department shall collect the tax in the manner
    14  provided by law for the collection of taxes imposed by the laws
    15  of this Commonwealth.
    16     (b)  Collection by Persons Maintaining a Place of Business in
    17  the Commonwealth. (1) Every person maintaining a place of
    18  business in this Commonwealth and selling or leasing tangible
    19  personal property or services, the sale or use of which is
    20  subject to tax shall collect the tax from the purchaser or
    21  lessee at the time of making the sale or lease, and shall remit
    22  the tax to the department.
    23     (2)  Any person required under this article to collect tax
    24  from another person, who shall fail to collect the proper amount
    25  of such tax, shall be liable for the full amount of the tax
    26  which he should have collected.
    27     (c)  Exemption Certificates. If the tax does not apply to the
    28  sale or lease of tangible personal property or services, the
    29  purchaser or lessee shall furnish to the vendor a certificate
    30  indicating that the sale is not legally subject to the tax. The
    19710H0190B0480                 - 44 -

     1  certificate shall be in substantially such form as the
     2  department may, by regulation, prescribe. Where the tangible
     3  personal property or service is of a type which is never subject
     4  to the tax imposed or where the sale or lease is in interstate
     5  commerce, such certificate need not be furnished. Where a series
     6  of transactions are not subject to tax, a purchaser or user may
     7  furnish the vendor with a single exemption certificate in
     8  substantially such form and valid for such period of time as the
     9  department may, by regulation, prescribe. An exemption
    10  certificate, which is complete and regular and on its face
    11  discloses a valid basis of exemption if taken in good faith,
    12  shall relieve the vendor from the liability imposed by this
    13  section. An exemption certificate accepted by a vendor from a
    14  natural person domiciled within this Commonwealth or any
    15  association, fiduciary, partnership, corporation or other
    16  entity, either authorized to do business within this
    17  Commonwealth or having an established place of business within
    18  this Commonwealth, in the ordinary course of the vendor's
    19  business, which on its face discloses a valid basis of exemption
    20  consistent with the activity of the purchaser and character of
    21  the property or service being purchased, shall be presumed to be
    22  taken in good faith and the burden of proving otherwise shall be
    23  on the Department of Revenue.
    24     (d)  Direct Payment Permits. The department may authorize a
    25  purchaser or lessee who acquires tangible personal property or
    26  services under circumstances which make it impossible at the
    27  time of acquisition to determine the manner in which the
    28  tangible personal property or service will be used, to pay the
    29  tax directly to the department, and waive the collection of the
    30  tax by the vendor. No such authority shall be granted or
    19710H0190B0480                 - 45 -

     1  exercised, except upon application to the department, and the
     2  issuance by the department, in its discretion, of a direct
     3  payment permit. If a direct payment permit is granted, its use
     4  shall be subject to conditions specified by the department, and
     5  the payment of tax on all acquisitions pursuant to the permit
     6  shall be made directly to the department by the permit holder.
     7     Section 238.  Collection of Tax on Motor Vehicles, Trailers
     8  and Semi-Trailers.--Notwithstanding the provisions of clause (1)
     9  of subsection (b) of section 237 of this article, tax due on the
    10  sale at retail or use of a motor vehicle, trailer or semi-
    11  trailer required by law to be registered with the department
    12  under the provisions of "The Vehicle Code" shall be paid by the
    13  purchaser or user directly to the department upon application to
    14  the department for an issuance of a certificate of title upon
    15  such motor vehicle, trailer or semi-trailer. The department
    16  shall not issue a certificate of title until the tax has been
    17  paid, or evidence satisfactory to the department has been given
    18  to establish that tax is not due. The department may cancel or
    19  suspend any record of certificate of title or registration of a
    20  motor vehicle, trailer or semi-trailer when the check received
    21  in payment of the tax on such vehicle is not paid upon demand.
    22  Such tax shall be considered as a first encumbrance against such
    23  vehicle and the vehicle may not be transferred without first
    24  payment in full of such tax and any interest additions or
    25  penalties which shall accrue thereon in accordance with this
    26  article.
    27     Section 239.  Precollection of Tax.--The department may, by
    28  regulation, authorize or require particular categories of
    29  vendors selling tangible personal property for resale to
    30  precollect from the purchaser the tax which such purchaser will
    19710H0190B0480                 - 46 -

     1  collect upon making a sale at retail of such tangible personal
     2  property: Provided, however, That the department, pursuant to
     3  this section, may not require a vendor to precollect tax from a
     4  purchaser who purchases for resale more than one thousand
     5  dollars ($1,000) worth of tangible personal property from such
     6  vendor per year. In any case in which a vendor has been
     7  authorized to prepay the tax to the person from whom he
     8  purchased the tangible personal property for resale such vendor
     9  so authorized to prepay the tax may, under the regulations of
    10  the department, be relieved from his duty to secure a license if
    11  such duty shall arise only by reason of his sale of the tangible
    12  personal property with respect to which he is, under
    13  authorization of the department, to prepay the tax. The vendor,
    14  on making a sale at retail of tangible personal property with
    15  respect to which he has prepaid the tax, must separately state
    16  at the time of resale the proper amount of tax on the
    17  transaction, and reimburse himself on account of the taxes which
    18  he has previously prepaid. Should such vendor collect a greater
    19  amount of tax in any reporting period than he had previously
    20  prepaid upon purchase of the goods with respect to which he
    21  prepaid the tax, he must file a return and remit the balance to
    22  the Commonwealth at the time at which a return would otherwise
    23  be due with respect to such sales.
    24     Section 240.  Bulk and Auction Sales.--Every person who shall
    25  sell or cause to be sold at auction, or who shall sell or
    26  transfer in bulk, fifty-one per centum or more of any stock of
    27  goods, wares or merchandise of any kind, fixtures, machinery,
    28  equipment, buildings or real estate, involved in a business for
    29  which such person is licensed or required to be licensed under
    30  the provisions of this article, or is liable for filing use tax
    19710H0190B0480                 - 47 -

     1  returns in accordance with the provisions of this article, shall
     2  give the department ten days' written notice of the sale or
     3  transfer prior to the completion of the transfer of such
     4  property. Whenever the seller or transferor shall fail to give
     5  such notice to the department, or whenever the department shall
     6  upon written notice inform the purchaser or transferee that a
     7  possible claim for tax imposed by this act exists, any sums of
     8  money, property or choses in action or other consideration,
     9  which the purchaser or transferee is thereafter required to
    10  transfer over to the seller or transferor, shall be subject to a
    11  first priority right and lien for any such taxes theretofore or
    12  thereafter determined to be due from the seller or transferor,
    13  and the purchaser or transferee is forbidden to transfer to the
    14  seller or transferor any such sums of money, property or choses
    15  in action to the extent of the amount of the Commonwealth's
    16  claim. For failure to comply with the provisions of this
    17  section, the purchaser or transferee shall be liable for the
    18  payment to the Commonwealth of any such taxes theretofore or
    19  thereafter determined to be due from the seller or transferor,
    20  and such liability may be assessed and enforced in the same
    21  manner as the liability for tax under this article: Provided,
    22  That nothing contained in this provision shall apply to sales or
    23  transfers made under any order of court: And provided further,
    24  That the written notice required to be filed with the department
    25  by this provision shall be deemed to satisfy the requirements of
    26  section 1403 of "The Fiscal Code" as to taxes imposed by this
    27  article.
    28     Section 241.  Collection upon Failure to Request
    29  Reassessment, Review or Appeal.--The department may collect any
    30  tax:
    19710H0190B0480                 - 48 -

     1     (1)  If an assessment of tax is not paid within ten days or
     2  thirty days as the case may be after notice thereof to the
     3  taxpayer, and no petition for reassessment has been filed;
     4     (2)  Within sixty days from the date of reassessment, if no
     5  petition for review has been filed;
     6     (3)  Within thirty days from the date of the decision of the
     7  Board of Finance and Revenue upon a petition for review, or of
     8  the expiration of the board's time for acting upon such
     9  petition, if no appeal has been made; and
    10     (4)  In all cases of judicial sales, receiverships,
    11  assignments or bankruptcies.
    12     In any such case in a proceeding for the collection of such
    13  taxes, the person against whom they were assessed shall not be
    14  permitted to set up any ground of defense that might have been
    15  determined by the department, the Board of Finance and Revenue
    16  or the courts: Provided, That the defense of failure of the
    17  department to mail notice of assessment or reassessment to the
    18  taxpayer and the defense of payment of assessment or
    19  reassessment may be raised in proceedings for collection by a
    20  motion to stay the proceedings.
    21     Section 242.  Lien for Taxes.--(a) Lien Imposed. If any
    22  person liable to pay any tax neglects or refuses to pay the same
    23  after demand, the amount (including any interest, addition or
    24  penalty, together with any costs that may accrue in addition
    25  thereto) shall be a lien in favor of the Commonwealth upon the
    26  property, both real and personal, of such person but only after
    27  same has been entered and docketed of record by the prothonotary
    28  of the county where such property is situated. The department
    29  may, at any time, transmit, to the prothonotaries of the
    30  respective counties, certified copies of all liens for taxes
    19710H0190B0480                 - 49 -

     1  imposed by this act and penalties and interest. It shall be the
     2  duty of each prothonotary receiving the lien to enter and docket
     3  the same of record in his office, which lien shall be indexed as
     4  judgments are now indexed. No prothonotary shall require, as a
     5  condition precedent to the entry of such liens, the payment of
     6  the costs incident thereto.
     7     (b)  Priority of Lien and Effect on Judicial Sale; No
     8  Discharge by Sale on Junior Lien. The lien imposed hereunder
     9  shall have priority from the date of its recording as aforesaid,
    10  and shall be fully paid and satisfied out of the proceeds of any
    11  judicial sale of property subject thereto before any other
    12  obligation, judgment, claim, lien or estate to which said
    13  property may subsequently become subject, except costs of the
    14  sale and of the writ upon which the sale was made, and real
    15  estate taxes and municipal claims against such property, but
    16  shall be subordinate to mortgages and other liens existing and
    17  duly recorded or entered of record prior to the recording of the
    18  tax lien. In the case of a judicial sale of property, subject to
    19  a lien imposed hereunder, upon a lien or claim over which the
    20  lien imposed hereunder has priority as aforesaid, such sale
    21  shall discharge the lien imposed hereunder to the extent only
    22  that the proceeds are applied to its payment, and such lien
    23  shall continue in full force and effect as to the balance
    24  remaining unpaid. There shall be no inquisition or condemnation
    25  upon any judicial sale of real estate made by the Commonwealth
    26  pursuant to the provisions hereof. The lien of the taxes,
    27  interest and penalties, shall continue for five years from the
    28  date of entry, and may be revived and continued in the manner
    29  now or hereafter provided for renewal of judgments, or as may be
    30  provided in "The Fiscal Code," and a writ of execution may
    19710H0190B0480                 - 50 -

     1  directly issue upon such lien without the issuance and
     2  prosecution to judgment of a writ of scire facias: Provided,
     3  That not less than ten days before issuance of any execution on
     4  the lien, notice of the filing and the effect of the lien shall
     5  be sent by registered mail to the taxpayer at his last known
     6  post office address: And provided further, That the said lien
     7  shall have no effect upon any stock of goods, wares or
     8  merchandise regularly sold or leased in the ordinary course of
     9  business by the person against whom said lien has been entered,
    10  unless and until a writ of execution has been issued and a levy
    11  made upon said stock of goods, wares and merchandise.
    12     (c)  Duty of Prothonotary. Any wilful failure of any
    13  prothonotary to carry out any duty imposed upon him by this
    14  section shall be a misdemeanor, and, upon conviction, he shall
    15  be sentenced to pay a fine not exceeding one thousand dollars
    16  ($1,000) and costs of prosecution, or to undergo imprisonment
    17  not exceeding one year, or both.
    18     (d)  Priority of Tax. Except as hereinbefore provided in the
    19  distribution, voluntary or compulsory, in receivership,
    20  bankruptcy or otherwise, of the property or estate of any
    21  person, all taxes imposed by this article which are due and
    22  unpaid and are not collectible under the provisions of section
    23  225 hereof, shall be paid from the first money available for
    24  distribution in priority to all other claims and liens, except
    25  in so far as the laws of the United States may give a prior
    26  claim to the Federal government. Any person charged with the
    27  administration or distribution of any such property or estate,
    28  who shall violate the provisions of this section, shall be
    29  personally liable for any taxes imposed by this article, which
    30  are accrued and unpaid and are chargeable against the person
    19710H0190B0480                 - 51 -

     1  whose property or estate is being administered or distributed.
     2     (e)  Other Remedies. Subject to the limitations contained in
     3  this article as to the assessment of taxes, nothing contained in
     4  this section shall be construed to restrict, prohibit or limit
     5  the use by the department in collecting taxes finally due and
     6  payable of any other remedy or procedure available at law or
     7  equity for the collection of debts.
     8     Section 243.  Suit for Taxes.--(a) Commencement. At any time
     9  within three years after any tax or any amount of tax shall be
    10  finally due and payable, the department may commence an action
    11  in the courts of this Commonwealth, of any state or of the
    12  United States, in the name of the Commonwealth of Pennsylvania,
    13  to collect the amount of tax due together with additions,
    14  interest, penalties and costs in the manner provided at law or
    15  in equity for the collection of ordinary debts.
    16     (b)  Procedure. The Attorney General shall prosecute the
    17  action and, except as provided herein, the provisions of the
    18  Rules of Civil Procedure and the provisions of the laws of this
    19  Commonwealth relating to civil procedures and remedies shall, to
    20  the extent that they are applicable, be available in such
    21  proceedings.
    22     (c)  Other Remedies. The provisions of this section are in
    23  addition to any process, remedy or procedure for the collection
    24  of taxes provided by this article or by the laws of this
    25  Commonwealth, and this section is neither limited by nor
    26  intended to limit any such process, remedy or procedure.
    27     Section 244.  Tax Suit Comity.--The courts of this
    28  Commonwealth shall recognize and enforce liabilities for sales
    29  and use taxes, lawfully imposed by any other state: Provided,
    30  That such other state extends a like comity to this
    19710H0190B0480                 - 52 -

     1  Commonwealth.
     2     Section 245.  Service.--Any person maintaining a place of
     3  business within this Commonwealth is deemed to have appointed
     4  the Secretary of the Commonwealth his agent for the acceptance
     5  of service of process or notice in any proceedings for the
     6  enforcement of the civil provisions of this article, and any
     7  service made upon the Secretary of the Commonwealth as such
     8  agent shall be of the same legal force and validity as if such
     9  service had been personally made upon such person. Where service
    10  cannot be made upon such person in the manner provided by other
    11  laws of this Commonwealth relating to service of process,
    12  service may be made upon the Secretary of the Commonwealth and,
    13  in such case, a copy of the process or notice shall also be
    14  personally served upon any agent or representative of such
    15  person who may be found within this Commonwealth, or where no
    16  such agent or representative may be found a copy of the process
    17  or notice shall forthwith be sent by registered mail to such
    18  person at the last known address of his principal place of
    19  business, home office or residence.
    20     Section 246.  Collection of Tax on Credit Sales.--If any sale
    21  subject to tax hereunder is wholly or partly on credit, the
    22  taxpayer shall require the purchaser to pay in cash at the time
    23  the sale is made, or within thirty days thereafter, the full tax
    24  due on the basis of the entire purchase price.
    25     Section 247.  Prepayment of Tax.--Whenever a vendor is
    26  forbidden by law or governmental regulation to charge and
    27  collect the purchase price in advance of or at the time of
    28  delivery, the vendor shall prepay the tax as required by section
    29  222 of this article, but in such case if the purchaser shall
    30  fail to pay to the vendor the total amount of the purchase price
    19710H0190B0480                 - 53 -

     1  and the tax, and such amount is written off as uncollectible by
     2  the vendor, the vendor shall not be liable for such tax and
     3  shall be entitled to a credit or refund of such tax paid. If the
     4  purchase price is thereafter collected, in whole or in part, the
     5  amount collected shall be first applied to the payment of the
     6  entire tax portion of the bill, and shall be remitted to the
     7  department by the vendor with the first return filed after such
     8  collection. For any tax prepaid prior to the effective date of
     9  this article, credit may be claimed on any returns filed for the
    10  periods prior to the effective date of this article. Tax prepaid
    11  after the effective date of this article shall be subject to
    12  refund upon petition to the department under the provisions of
    13  section 252 of this article, filed within one hundred five days
    14  of the close of the fiscal year in which such accounts are
    15  written off.
    16                             CHAPTER V
    17                        REFUNDS AND CREDITS
    18     Section 250.  Refund or Credit for Overpayment.--With respect
    19  to all taxes paid to a vendor or to the Commonwealth prior to
    20  April 5, 1957, in the case of any overpayment, the department,
    21  within the applicable period of limitations, may credit the
    22  amount of such overpayment against any liability in respect of
    23  the tax imposed by this act on the part of the person who made
    24  the overpayment, and shall refund any balance to such person.
    25     Section 251.  Restriction on Refunds.--No refund shall be
    26  made under section 250 without the approval of the Board of
    27  Finance and Revenue.
    28     Section 252.  Refunds.--The department shall, pursuant to the
    29  provisions of sections 253 and 254, refund all taxes, interest
    30  and penalties paid to the Commonwealth under the provisions of
    19710H0190B0480                 - 54 -

     1  this article and to which the Commonwealth is not rightfully
     2  entitled. Such refunds shall be made to the person, his heirs,
     3  successors, assigns or other personal representatives, who
     4  actually paid the tax: Provided, That no refund shall be made
     5  under this section with respect to any payment made by reason of
     6  an assessment with respect to which a taxpayer has filed a
     7  petition for reassessment pursuant to section 232 of this
     8  article to the extent that said petition has been determined
     9  adversely to the taxpayer by a decision which is no longer
    10  subject to further review or appeal: Provided further, That
    11  nothing contained herein shall be deemed to prohibit a taxpayer
    12  who has filed a timely petition for reassessment from amending
    13  it to a petition for refund where the petitioner has paid the
    14  tax assessed.
    15     Section 253.  Refund Petition.--(a) Except as provided for in
    16  section 256 and in subsection (b) and (d) of this section, the
    17  refund or credit of tax, interest or penalty provided for by
    18  section 252 shall be made only where the person who has actually
    19  paid the tax files a petition for refund with the department
    20  within three years of the actual payment of the tax to the
    21  Commonwealth. Such petition for refund must set forth in
    22  reasonable detail the grounds upon which the taxpayer claims
    23  that the Commonwealth is not rightfully entitled to such tax,
    24  interest or penalty, in whole or in part, and shall be
    25  accompanied by an affidavit affirming that the facts contained
    26  therein are true and correct. The department may hold such
    27  hearings as may be necessary for the purpose at such times and
    28  places as it may determine, and each person who has duly filed a
    29  refund petition shall be notified by the department of the time
    30  when, and the place where, such hearing in his case will be
    19710H0190B0480                 - 55 -

     1  held.
     2     (b)  A refund or credit of tax, interest or penalty, paid as
     3  a result of an assessment made by the department under section
     4  232, shall be made only where the person who has actually paid
     5  the tax files with the department a petition for a refund with
     6  the department within six months after the date the notice of
     7  assessment was mailed. The filing of a petition for refund,
     8  under the provisions of this subsection, shall not affect the
     9  abatement of interest, additions or penalties to which the
    10  person may be entitled by reason of his payment of the
    11  assessment.
    12     (c)  It shall be the duty of the department, within six
    13  months after receiving a petition for refund, to dispose of the
    14  issue raised by such petition, and mail notice of the
    15  department's decision to the petitioner: Provided, however, That
    16  the taxpayer and the department may, by stipulation, extend such
    17  disposal time by not more than six additional months.
    18     (d)  Notwithstanding any other provision of this section
    19  where any tax, interest or penalty has been paid under a
    20  provision of this article subsequently held by final judgment of
    21  a court of competent jurisdiction to be unconstitutional, or
    22  under an interpretation of such provision subsequently held by
    23  such court to be erroneous, a petition for refund may be filed
    24  either before or subsequent to final judgment, but such petition
    25  must be filed within five years of the date of the payment of
    26  which a refund is requested. The department shall have
    27  jurisdiction to hear and determine any such petition filed prior
    28  to such final judgment only if, at the time of filing of the
    29  petition, proceedings are pending in a court of competent
    30  jurisdiction wherein the claim of unconstitutionality or of
    19710H0190B0480                 - 56 -

     1  erroneous interpretation, made in the petition for refund may be
     2  established, and in such case, the department shall not take
     3  final action upon the petition for refund until the judgment
     4  determining the question involved in such petition has become
     5  final.
     6     Section 254.  Review by Board of Finance and Revenue.--Within
     7  sixty days after the date of mailing of notice by the department
     8  of the decision upon a petition for refund filed with it,
     9  pursuant to section 253, the petitioner may further petition the
    10  Board of Finance and Revenue to review the decision of the
    11  department. The failure of the department to notify the
    12  petitioner of its decision within the time provided for by
    13  section 253 shall act as a denial of such petition, and a
    14  petition for review may be filed with the Board of Finance and
    15  Revenue within one hundred twenty days of the date prior to
    16  which the department should have mailed to the petitioner its
    17  notice of decision. Every petition for review filed with the
    18  Board of Finance and Revenue under the provisions of this
    19  section shall incorporate by reference the petition for refund.
    20  The petitioner may, in his petition for review, elect to
    21  withdraw one or more grounds as set out in the original refund
    22  petition. The Board of Finance and Revenue shall act finally in
    23  disposing of such petitions filed with it within six months
    24  after they have been received. In the event of the failure of
    25  the board to dispose of any petition within six months, the
    26  action taken by the department upon the petition for refund
    27  shall be sustained. The Board of Finance and Revenue may sustain
    28  the action taken by the department on a petition for refund, or
    29  it may redetermine whether a lessor or greater amount of refund
    30  is proper. Under no circumstances may the Board of Finance and
    19710H0190B0480                 - 57 -

     1  Revenue authorize a refund greater than that originally applied
     2  for by the petitioner. The board shall give notice of its action
     3  to the department and to the petitioner.
     4     Section 255.  Appeal to the Commonwealth Court.--Any person
     5  aggrieved by the decision of the Board of Finance and Revenue
     6  under section 254, or by the board's failure to act upon a
     7  petition for review within six months may, within thirty days,
     8  appeal to the Commonwealth Court from the decision of the board
     9  or of the department, as the case may be, in the manner now or
    10  hereafter provided for by law for appeals in the case of tax
    11  settlements.
    12     Section 256.  Extended Time for Filing Special Petition for
    13  Refund.--Any party to a transaction who has paid tax by reason
    14  of a transaction with respect to which the department is
    15  assessing tax against another person may, within six months
    16  after the filing by the department of the assessment against
    17  such other person, file a special petition for refund,
    18  notwithstanding his failure to file a regular petition within
    19  three years of the payment. The provisions of sections 253, 254
    20  and 255 shall be applicable to such special petition for refund,
    21  except that the department need not act on such petition until
    22  there is a final determination as to the propriety of the
    23  assessment filed against the other party to the transaction.
    24  Where a petition is filed under this provision in order to take
    25  advantage of the extended period of limitations, overpayments by
    26  the petitioner shall be refunded but only to the extent of the
    27  actual tax (without consideration of interest and penalties)
    28  paid by the other party to the transaction. The purpose of this
    29  section is to avoid duplicate payment of tax where a
    30  determination is made by the department that one party to a
    19710H0190B0480                 - 58 -

     1  transaction is subject to tax, and another party to the
     2  transaction has previously paid tax with respect to such
     3  transaction and, as such, this section shall be construed as
     4  extending right beyond that provided for by section 253, and not
     5  to limit such other section.
     6                             CHAPTER VI
     7                            LIMITATIONS
     8     Section 258.  Limitation on Assessment and Collection.--The
     9  amount of the tax imposed by this act shall be assessed within
    10  three years after the date when the return provided for by
    11  subsection (a) or (c) or under subsection (e) of section 217 is
    12  filed or the end of the year in which the tax liability arises
    13  whichever shall last occur. Any such assessment may be made at
    14  any time during such period notwithstanding that the department
    15  may have made one or more previous assessments against the
    16  taxpayer for the year in question, or for any part of such year.
    17  In any such case, no credit shall be given for any penalty
    18  previously assessed or paid.
    19     Section 259.  Failure to File Return.--Where no return is
    20  filed, the amount of the tax due may be assessed and collected
    21  at any time as to taxable transactions not reported.
    22     Section 260.  False or Fraudulent Return.--Where the taxpayer
    23  wilfully files a false or fraudulent return with intent to evade
    24  the tax imposed by this article, the amount of tax due may be
    25  assessed and collected at any time.
    26     Section 261.  Extension of Limitation Period.--
    27  Notwithstanding any of the foregoing provisions of this part,
    28  where, before the expiration of the period prescribed therein
    29  for the assessment of a tax, a taxpayer has consented, in
    30  writing, that such period be extended, the amount of tax due may
    19710H0190B0480                 - 59 -

     1  be assessed at any time within such extended period. The period
     2  so extended may be extended further by subsequent consents, in
     3  writing, made before the expiration of the extended period.
     4                            CHAPTER VII
     5             INTEREST, ADDITIONS, PENALTIES AND CRIMES
     6     Section 265.  Interest.--If any amount of tax imposed by this
     7  article is not paid to the department on or before the last date
     8  prescribed for payment, interest on such amount at the rate of
     9  one-half of one per cent per month for each month, or fraction
    10  thereof, from such date, shall be paid for the period from such
    11  last date to the date paid. The last date prescribed for payment
    12  shall be determined under subsection (a) or (c) of section 222
    13  without regard to any extension of time for payment. In the case
    14  of any amount assessed as a deficiency or as an estimated
    15  assessment, the date prescribed for payment shall be thirty days
    16  after notice of such assessment.
    17     Section 266.  Additions to Tax.--(a) Failure to File Return.
    18  In the case of failure to file any return required by section
    19  215 on the date prescribed therefor (determined with regard to
    20  any extension of time for filing), and in the case in which a
    21  return filed understates the true amount due by more than fifty
    22  per cent, there shall be added to the amount of tax actually due
    23  five per cent of the amount of such tax if the failure to file a
    24  proper return is for not more than one month, with an additional
    25  five per cent for each additional month, or fraction thereof,
    26  during which such failure continues, not exceeding twenty-five
    27  per cent in the aggregate. In every such case at least two
    28  dollars ($2) shall be added.
    29     (b)  Addition for Understatement. There shall be added to
    30  every assessment under subsection (b) of section 231 an addition
    19710H0190B0480                 - 60 -

     1  equal to five per cent of the amount of the understatement and
     2  no addition to the tax shall be paid under subsection (a) of
     3  section 231.
     4     (c)  Interest. If the department assesses a tax according to
     5  subsection (a) or (c) of section 231, there shall be added to
     6  the amount of the deficiency interest at the rate of one-half of
     7  one per cent per month for each month, or fraction thereof, from
     8  the date prescribed by subsection (a) or (c) of section 222 of
     9  this article for the payment of the tax to the date of notice of
    10  the assessment.
    11     (d)  Uncollectible Checks. Whenever any check issued in
    12  payment of any tax or for any other purpose shall be returned to
    13  the department as uncollectible, the secretary shall charge a
    14  fee of ten per cent of the face amount thereof plus all protest
    15  fees, to the person presenting such check to him to cover the
    16  cost of its collection in addition to the interest and penalties
    17  otherwise provided for by this article: Provided, however, That
    18  the additions imposed hereby shall not exceed two hundred
    19  dollars ($200) nor be less than ten dollars ($10).
    20     Section 267.  Penalties.--(a) Penalty Assessed as Tax. The
    21  penalties, additions, interest and liabilities provided by this
    22  article shall be paid upon notice and demand by the department,
    23  and shall be assessed and collected in the same manner as taxes.
    24  Except as otherwise provided, any reference in this article to
    25  "tax" imposed by this article shall be deemed also to refer to
    26  the penalties, additions, interest and liabilities provided by
    27  this part.
    28     (b)  Attempt to Evade or Defeat Tax.  Any person who wilfully
    29  attempts, in any manner, to evade or defeat the tax imposed by
    30  this article, or the payment thereof, or to assist any other
    19710H0190B0480                 - 61 -

     1  person to evade or defeat the tax imposed by this article, or
     2  the payment thereof, or to receive a refund improperly, shall,
     3  in addition to other penalties provided by law, be liable for a
     4  penalty equal to one-half of the total amount of the tax evaded.
     5     In any direct proceeding arising out of a petition for
     6  reassessment or refund as provided in this article, in which an
     7  issue of fact is raised with respect to whether a return is
     8  fraudulent or with respect to the propriety of the imposition by
     9  the department of the penalty prescribed in this subsection (b),
    10  the burden of proof with respect to such issue shall be upon the
    11  department.
    12     Section 268.  Crimes.--(a) Fraudulent Return. Any person who
    13  with intent to defraud the Commonwealth shall wilfully make, or
    14  cause to be made, any return required by this article, which is
    15  false, shall be guilty of a misdemeanor, and, upon conviction
    16  thereof, shall be sentenced to pay a fine not exceeding two
    17  thousand dollars ($2000), or undergo imprisonment not exceeding
    18  three years, or both.
    19     (b)  Other Crimes. Except as otherwise provided by subsection
    20  (a) of this section, any person maintaining a place of business
    21  in this Commonwealth, who advertises or holds out or states to
    22  the public or to any purchaser or user, directly or indirectly,
    23  that the tax or any part thereof imposed by this article will be
    24  absorbed by such person, or that it will not be added to the
    25  purchase price of the tangible personal property or services
    26  described in subclauses (2), (3) and (4) of clause (k) of
    27  section 201 of this article sold or, if added, that the tax or
    28  any part thereof will be refunded, other than when such person
    29  refunds the purchase price because of such property being
    30  returned to the vendor, and any person maintaining a place of
    19710H0190B0480                 - 62 -

     1  business in this Commonwealth and selling or leasing tangible
     2  personal property or said services the sale or use of which by
     3  the purchaser is subject to tax hereunder, who shall wilfully
     4  fail or refuse to collect the tax from the purchaser and remit
     5  the same to the department, and any person who shall wilfully
     6  fail, neglect or refuse to file any return or report required by
     7  this article or any taxpayer who shall refuse to pay any tax,
     8  penalty or interest imposed or provided for by this article, or
     9  who shall wilfully fail to preserve his books, papers and
    10  records as directed by the department, or any person who shall
    11  refuse to permit the department or any of its authorized agents
    12  to examine his books, records or papers, or who shall knowingly
    13  make any incomplete, false or fraudulent return or report, or
    14  who shall do, or attempt to do, anything whatever to prevent the
    15  full disclosure of the amount or character of taxable sales
    16  purchases or use made by himself or any other person, or shall
    17  provide any person with a false statement as to the payment of
    18  tax with respect to particular tangible personal property or
    19  said services, or shall make, utter or issue a false or
    20  fraudulent exemption certificate, shall be guilty of a
    21  misdemeanor, and, upon conviction thereof, shall be sentenced to
    22  pay a fine not exceeding one thousand dollars ($1000) and costs
    23  of prosecution, or undergo imprisonment not exceeding one year,
    24  or both: Provided, however, That any person maintaining a place
    25  of business outside this Commonwealth may absorb the tax with
    26  respect to taxable sales made in the normal course of business
    27  to customers present at such place of business without being
    28  subject to the above penalty and fines. The penalties imposed by
    29  this section shall be in addition to any other penalties imposed
    30  by any provision of this article.
    19710H0190B0480                 - 63 -

     1     Section 269.  Abatement of Additions or Penalties.--Upon the
     2  filing of a petition for reassessment or a petition for refund
     3  as provided under this article by a taxpayer, additions or
     4  penalties imposed upon such taxpayer by this act may be waived
     5  or abated, in whole or in part, where the petitioner has
     6  established that he has acted in good faith, without negligence
     7  and with no intent to defraud.
     8                            CHAPTER VIII
     9                    ENFORCEMENT AND EXAMINATIONS
    10     Section 270.  Rules and Regulations.--(a) General Provision.
    11  The department is hereby charged with the enforcement of the
    12  provisions of this article, and is hereby authorized and
    13  empowered to prescribe, adopt, promulgate and enforce, rules and
    14  regulations not inconsistent with the provisions of this
    15  article, relating to any matter or thing pertaining to the
    16  administration and enforcement of the provisions of this
    17  article, and the collection of taxes, penalties and interest
    18  imposed by this article. The department may prescribe the
    19  extent, if any, to which any of such rules and regulations shall
    20  be applied without retroactive effect.
    21     (b)  Sales between Affiliated Interests. In determining the
    22  purchase price of taxable sales where, because of affiliation of
    23  interests between the vendor and the purchaser or irrespective
    24  of any such affiliation, if for any other reason, the purchase
    25  price of such sale is in the opinion of the department not
    26  indicative of the true value of the article or the fair price
    27  thereof, the department shall, pursuant to uniform and equitable
    28  rules, determine the amount of constructive purchase price upon
    29  the basis of which the tax shall be computed and levied. Such
    30  rules shall provide for a constructive amount of a purchase
    19710H0190B0480                 - 64 -

     1  price for each such sale, which price shall equal a price for
     2  such article which would naturally and fairly be charged in an
     3  arm's-length transaction in which the element of common
     4  interests between vendor and purchaser, or, if no common
     5  interest exists, any other element causing a distortion of the
     6  price or value is absent. For the purpose of this article where
     7  a taxable sale occurs between a parent corporation and a
     8  subsidiary affiliate or controlled corporation of such parent,
     9  there shall be a rebuttable presumption that because of such
    10  common interest such transaction was not at arm's-length.
    11     Section 271.  Keeping of Records.--(a) General Provision.
    12  Every person liable for any tax imposed by this article, or for
    13  the collection thereof, shall keep the records, render such
    14  statements, make the returns and comply with such rules and
    15  regulations as the department may, from time to time, prescribe
    16  regarding matters pertinent to his business. Whenever in the
    17  judgment of the department it is necessary, it may require any
    18  person, by notice served upon such person, or by regulations, to
    19  make such returns, render such statements or keep such records
    20  as the department deems sufficient to show whether or not such
    21  person is liable to pay or collect tax under this article.
    22     (b)  Persons Collecting Tax from Others. Any person liable to
    23  collect tax from another person under the provisions of this
    24  article shall file reports, keep records, make payments and be
    25  subject to interest and penalties as provided for under this
    26  article, in the same manner as if he were directly subject to
    27  the tax.
    28     (c)  Records of Non-Residents. A non-resident who does
    29  business in this Commonwealth as a retail dealer shall keep
    30  adequate records of such business or businesses and of the tax
    19710H0190B0480                 - 65 -

     1  due with respect thereto, which records shall at all times be
     2  retained within this Commonwealth unless retention outside the
     3  Commonwealth is authorized by the department. No taxes collected
     4  from purchasers shall be sent outside the Commonwealth without
     5  the written consent of, and in accordance with conditions
     6  prescribed by the department. The department may require a
     7  taxpayer who desires to retain records or tax collections
     8  outside the Commonwealth to assume reasonable out-of-state audit
     9  expenses.
    10     (d)  Keeping of Separate Records. Any person doing business
    11  as a retail dealer who at the same time is engaged in another
    12  business or businesses which do not involve the making of sales
    13  taxable under this article, shall keep separate books and
    14  records of his businesses so as to show the sales taxable under
    15  this article separately from his sales not taxable hereunder. If
    16  any such person fails to keep such separate books and records,
    17  he shall be liable for tax at the rate designated in section 202
    18  of this article upon the entire purchase price of sales from
    19  both or all of his businesses.
    20     (e)  Other Methods. In those instances where a vendor gives
    21  no sales memoranda or uses registers showing only total sales,
    22  the vendor must adopt some method of segregating tax from sales
    23  receipts and keep records showing such segregation, all in
    24  accordance with proper accounting and business practices.
    25     A vendor may apply to the department for permission to use a
    26  collection and recording procedure which will show such
    27  information as the law requires with reasonable accuracy and
    28  simplicity. Such application must contain a detailed description
    29  of the procedure to be adopted. Permission to use the proposed
    30  procedure is not to be construed as relieving the vendor from
    19710H0190B0480                 - 66 -

     1  remitting the full amount of tax collected. The department may
     2  revoke such permission upon thirty days' notice to the vendor.
     3  Refusal of the department to grant permission in advance to use
     4  such procedure shall not be construed to invalidate a procedure
     5  which upon examination shows such information as the law
     6  requires.
     7     Section 272.  Examinations.--The department or any of its
     8  authorized agents is hereby authorized to examine the books,
     9  papers and records of any taxpayer in order to verify the
    10  accuracy and completeness of any return made or, if no return
    11  was made, to ascertain and assess the tax imposed by this
    12  article. The department may require the preservation of all such
    13  books, papers and records for any period deemed proper by it but
    14  not to exceed three years from the end of the calendar year to
    15  which the records relate. Every such taxpayer is hereby required
    16  to give to the department, or its agent, the means, facilities
    17  and opportunity for such examinations and investigation. The
    18  department is further authorized to examine any person, under
    19  oath, concerning taxable sales or use by any taxpayer or
    20  concerning any other matter relating to the enforcement or
    21  administration of this article, and to this end may compel the
    22  production of books, papers and records and the attendance of
    23  all persons whether as parties or witnesses whom it believes to
    24  have knowledge of such matters. The procedure for such hearings
    25  or examinations shall be the same as that provided by The Fiscal
    26  Code relating to inquisitorial powers of fiscal officers.
    27     Section 273.  Records and Examinations of Delivery Agents.--
    28  Every agent for the purpose of delivery of goods shipped into
    29  the Commonwealth by a nonresident including, but not limited to,
    30  common carriers shall maintain adequate records of such
    19710H0190B0480                 - 67 -

     1  deliveries pursuant to rules and regulations adopted by the
     2  department and shall make such records available to the
     3  department upon request after due notice.
     4     Section 274.  Unauthorized Disclosure.--Any information
     5  gained by the department as a result of any return, examination,
     6  investigation, hearing or verification, required or authorized
     7  by this article, shall be confidential, except for official
     8  purposes and except in accordance with proper judicial order or
     9  as otherwise provided by law, and any person unlawfully
    10  divulging such information shall be guilty of a misdemeanor,
    11  and, upon conviction thereof, shall be sentenced to pay a fine
    12  not in excess of one thousand dollars ($1000) and costs of
    13  prosecution, or to undergo imprisonment for not more than one
    14  year, or both.
    15     Section 275.  Cooperation with Other Governments.--
    16  Notwithstanding the provisions of section 274, the department
    17  may permit the Commissioner of Internal Revenue of the United
    18  States, or the proper officer of any state, or the authorized
    19  representative of either such officer, to inspect the tax
    20  returns of any taxpayer, or may furnish to such officer or to
    21  his authorized representative an abstract of the return of any
    22  taxpayer, or supply him with information concerning any item
    23  contained in any return or disclosed by the report of any
    24  examination or investigation of the return of any taxpayer. This
    25  permission shall be granted only if the statutes of the United
    26  States or of such other state, as the case may be, grant
    27  substantially similar privileges to the proper officer of the
    28  Commonwealth charged with the administration of this article.
    29     Section 276.  Interstate Compacts.--The Governor, or his
    30  authorized representative, is hereby vested with authority to
    19710H0190B0480                 - 68 -

     1  confer with the Governor and the authorized representatives of
     2  other states with respect to reciprocal use tax collection
     3  between Pennsylvania and such other states.
     4     The Governor, or his representative, is authorized to join
     5  with such authorities of other states to conduct joint
     6  investigations, to exchange information, hold joint hearings and
     7  enter into compacts or interstate agreements with such other
     8  states to accomplish uniform reciprocal use tax collections
     9  between those states who are parties to any compact or
    10  interstate agreement and the Commonwealth of Pennsylvania.
    11     Section 277.  Bonds.--(a) Taxpayer to File Bond.  Whenever
    12  the department in its discretion, deems it necessary to protect
    13  the revenues to be obtained under the provisions of this
    14  article, it may require any nonresident natural person or any
    15  foreign corporation, association, fiduciary, partnership or
    16  other entity, not authorized to do business within this
    17  Commonwealth or not having an established place of business
    18  therein and subject to the tax imposed by section 202 of this
    19  article, to file a bond issued by a surety company authorized to
    20  do business in this Commonwealth and approved by the Insurance
    21  Commissioner as to solvency and responsibility, in such amounts
    22  as it may fix, to secure the payment of any tax or penalties
    23  due, or which may become due, from such natural person or
    24  corporation. In order to protect the revenues to be obtained
    25  under the provisions of this article, the department shall
    26  require any nonresident natural person or any foreign
    27  corporation, association, fiduciary, partnership or entity, who
    28  or which is a building contractor, or who or which is a supplier
    29  delivering building materials for work in this Commonwealth and
    30  is not authorized to do business within this Commonwealth or
    19710H0190B0480                 - 69 -

     1  does not have an established place of business therein and is
     2  subject to the tax imposed by section 202 of this article, to
     3  file a bond issued by a surety company authorized to do business
     4  in this Commonwealth and approved by the Insurance Commissioner
     5  as to solvency and responsibility, in such amounts as it may
     6  fix, to secure the payments of any tax or penalties due, or
     7  which may become due, from such natural person, corporation or
     8  other entity. The department may also require such a bond of any
     9  person petitioning the department for reassessment, in the case
    10  of any assessment over five hundred dollars ($500) or where it
    11  is of the opinion that the ultimate collection is in jeopardy.
    12  The department may, for a period of three years, require such a
    13  bond of any person who has on three or more occasions within a
    14  twelve month period either filed a return or made payment to the
    15  department more than thirty days late. In the event that the
    16  department determines that a taxpayer is to file such a bond, it
    17  shall give notice to such taxpayer to that effect, specifying
    18  the amount of the bond required. The taxpayer shall file such
    19  bond within five days after the giving of such notice by the
    20  department unless, within such five days, the taxpayer shall
    21  request, in writing, a hearing before the Secretary of Revenue
    22  or his representative at which hearing the necessity, propriety
    23  and amount of the bond shall be determined by the secretary or
    24  such representative. Such determination shall be final and shall
    25  be complied with within fifteen days after notice thereof is
    26  mailed to the taxpayer.
    27     (b)  Securities in Lieu of Bond.  In lieu of the bond
    28  required by this section, securities approved by the department,
    29  or cash in such amount as it may prescribe, may be deposited.
    30  Such securities or cash shall be kept in the custody of the
    19710H0190B0480                 - 70 -

     1  department, who may, at any time, without notice to the
     2  depositor, apply them to any tax and/or interest or penalties
     3  due, and for that purpose the securities may be sold by the
     4  department, at public or private sale, upon five days written
     5  notice to the depositor.
     6     (c)  Failure to File Bond.  The department may file a lien
     7  pursuant to section 242 against any taxpayer who fails to file a
     8  bond when required to do so under this section. All funds
     9  received upon execution of the judgment on such lien shall be
    10  refunded to the taxpayer with three per cent interest should a
    11  final determination be made that he does not owe any payment to
    12  the department.
    13                              PART VII
    14              REPEALER; APPROPRIATION; EFFECTIVE DATE
    15     Section 280.  Repeal.--The act of March 6, 1956 (P.L.1228),
    16  known as the "Tax Act of 1963 for Education," is repealed
    17  concurrently with the effective date of the various provisions
    18  of this article.
    19     Section 281.  Appropriation for Refunds, etc.--So much of the
    20  proceeds of the tax imposed by this article as shall be
    21  necessary for the payment of refunds, enforcement, or
    22  administration, under this article, is hereby appropriated for
    23  such purposes.
    24     Section 282.  Effective Date.--The provisions of this article
    25  shall take effect March 1, 1971, or upon the date this article
    26  is enacted into law whichever is the last to occur, except that
    27  clauses (k) (4), (m) and (o) (4) of section 201, clause (c) of
    28  section 202, clause (17) of section 204 and clause (30) (iii) of
    29  section 204 in so far as it relates to the fifty cent (50¢)
    30  exclusion from purchase price on restaurant meals, shall take
    19710H0190B0480                 - 71 -

     1  effect July 1, 1971.
     2                            ARTICLE III
     3                        PERSONAL INCOME TAX
     4                               PART I
     5                DECLARATION OF POLICY:  DEFINITIONS
     6     Section 301.  Declaration of Intent and Policy.--The
     7  Legislature, in imposing a flat rate tax on income defined in
     8  this article, hereby declares its legislative intent and policy
     9  to provide a fair and practical method of taxation and to
    10  effectuate an income tax which shall constitutionally conform to
    11  the uniformity provisions of section 1, of Article VIII, of the
    12  Constitution, by utilizing and uniformly applying in this
    13  article those terms, definitions, classifications and other
    14  provisions of the Federal Internal Revenue Code of 1954, as
    15  amended, as they relate to the Federal Income Tax on
    16  individuals, being the same code which the General Assembly has
    17  heretofore employed in the Pennsylvania "Corporate Net Income
    18  Tax" and "Corporation Income Tax" acts relating to the
    19  imposition of income taxes on corporations.
    20     Section 302.  Definitions.--Any term used in this article
    21  shall have the same meaning as when used in comparable context
    22  in the laws of the United States relating to Federal income
    23  taxes unless a different meaning is clearly required. Any
    24  reference in this article to the Internal Revenue Code shall
    25  include the Internal Revenue Code of 1954 and other provisions
    26  of the laws of the United States relating to Federal income
    27  taxes, all as amended and effective on the date such reference
    28  is required by this article:
    29     (a)  "Compensation" means any form of remuneration as defined
    30  in section 3401 (a) of the Internal Revenue Code.
    19710H0190B0480                 - 72 -

     1     (b)  "Department" means the Department of Revenue of the
     2  Commonwealth of Pennsylvania.
     3     (c)  "Employe" means any employe as defined in section 3401
     4  (c) of the Internal Revenue Code. Any person from whose
     5  compensation an employer is required to withhold Federal income
     6  tax shall prima facie be deemed an employe.
     7     (d)  "Employer" means an employer as defined in section 3401
     8  (d) of the Internal Revenue Code. Any person required to
     9  withhold Federal income tax from compensation paid shall prima
    10  facie be deemed an employer.
    11     (e)  "Fiduciary" means a guardian, trustee, executor,
    12  administrator, receiver, conservator or any person acting in any
    13  fiduciary capacity, whether domiciliary or ancillary.
    14     (f)  "Individual" means a natural person.
    15     (g)  "Nonresident individual" means any individual who is not
    16  a resident of the Commonwealth.
    17     (h)  "Nonresident estate or trust" means any estate or trust
    18  which is not a resident estate or trust.
    19     (i)  "Person" means any individual, employer, association,
    20  fiduciary, partnership, corporation or other entity, estate or
    21  trust, resident or nonresident, and the plural as well as the
    22  singular number.
    23     (j)  "Resident individual" means an individual who is
    24  domiciled in this Commonwealth unless he maintains no permanent
    25  place of abode in this Commonwealth and does maintain a
    26  permanent place of abode elsewhere and spends in the aggregate
    27  not more than thirty days of the taxable year in this
    28  Commonwealth; or who is not domiciled in this Commonwealth but
    29  maintains a permanent place of abode in this Commonwealth and
    30  spends in the aggregate more than one hundred eighty-three days
    19710H0190B0480                 - 73 -

     1  of the taxable year in this Commonwealth.
     2     (k)  "Resident estate" means the estate of a decedent who at
     3  his death was a resident individual.
     4     (l)  "Resident trust" means a trust created by the will of a
     5  decedent who at his death was a resident individual and any
     6  trust created by, or consisting of property transferred to such
     7  trust by a person who was a resident individual.
     8     (m)  "State" means any state or commonwealth of the United
     9  States, the District of Columbia, the Commonwealth of Puerto
    10  Rico, any territory or possession of the United States, any
    11  foreign country, or any political subdivision of any of the
    12  foregoing.
    13     (n)  "Tax" includes interest, penalties and additions to tax,
    14  and further includes the tax required to be withheld by an
    15  employer on compensation paid, unless a more limited meaning is
    16  disclosed by the context.
    17     (o)  "Taxable year" means the taxable period on the basis of
    18  which a taxpayer is required to file his Federal income tax
    19  return pursuant to the Internal Revenue Code.
    20     (p)  "Taxpayer" means any person subject to the tax imposed
    21  by this article or any employer required to withhold tax on
    22  compensation paid.
    23     (q)  "Taxable income."  Except as otherwise provided herein,
    24  "taxable income" means the same as "taxable income" as defined
    25  in the Internal Revenue Code and which is required to be
    26  returned to and ascertained by the Federal Government pursuant
    27  to said code, subject to the following adjustments:
    28     (1)  Subtraction of interest income derived from obligations
    29  of the United States Government to the extent included in
    30  adjusted gross income.
    19710H0190B0480                 - 74 -

     1     (2)  Addition of interest income derived from obligations of
     2  states, political subdivisions, instrumentalities and public
     3  authorities thereof other than Pennsylvania or its political
     4  subdivisions, instrumentalities or public authorities to the
     5  extent not included in adjusted gross income.
     6     (3)  In the case of a nonresident individual, estate or trust
     7  estate or trust "taxable income" and the adjustments required by
     8  subsections (a) and (b) above shall include only income derived
     9  from sources within this Commonwealth.
    10     (4)  The respective shares of an estate or trust and its
    11  beneficiaries in the additions and subtractions to taxable
    12  income shall be in proportion to their respective shares of
    13  distributable net income of the estate or trust as defined in
    14  the Internal Revenue Code. If the estate or trust has no
    15  distributable net income for the taxable year, the share of each
    16  beneficiary in the additions and subtractions shall be in
    17  proportion to his share of the estate or trust income for such
    18  year, under local law or the terms of the instrument, which is
    19  required to be distributed currently and any other amounts of
    20  such income distributed in such year. Any balance of the
    21  additions and subtractions shall be allocated to the estate or
    22  trust.
    23     (5)  In the case of a nonresident estate or trust, the
    24  respective shares of the estate or trust and of its
    25  beneficiaries shall be determined in the manner set forth by
    26  this subsection (q); however, in determining the taxable income
    27  of a nonresident estate or trust or of any nonresident
    28  beneficiary thereof, there shall be taken into account only the
    29  income of the estate or trust, or the beneficiary's share
    30  thereof, derived from sources within this Commonwealth.
    19710H0190B0480                 - 75 -

     1     (r)  (1)  "Income from sources within this Commonwealth"
     2  means all taxable income to the extent that it is earned,
     3  received or acquired from sources within this Commonwealth:
     4     (i)  by reason of ownership or disposition of any interest in
     5  real or tangible personal property in this Commonwealth; or
     6     (ii)  in connection with a trade, profession, occupation
     7  carried on in this Commonwealth or for the rendition or personal
     8  services performed in this Commonwealth; or
     9     (iii)  as a distributive share of the income of an
    10  unincorporated business, profession, enterprise, undertaking or
    11  other activity as the result of work done, services rendered or
    12  other business activities conducted in this Commonwealth, except
    13  as allocated to another state pursuant to regulations
    14  promulgated by the department under this article.
    15     (2)  Income from tangible personal property shall constitute
    16  income from sources within this Commonwealth only to the extent
    17  that such income is from property employed in a trade,
    18  profession, occupation or business carried on in this
    19  Commonwealth.
    20                              PART II
    21                         IMPOSITION OF TAX
    22     Section 305.  Incidence and Rate.--For the privilege of
    23  receiving, earning or otherwise acquiring income from any source
    24  whatsoever, in the case of a resident individual, estate or
    25  trust of this Commonwealth, or from sources within this
    26  Commonwealth, in the case of a nonresident individual, estate or
    27  trust of this Commonwealth, there is levied and imposed an
    28  annual tax of five per cent of the taxable income of the
    29  taxpayer.
    30     Section 306.  Beneficiary of Grantor Trust.--The taxable
    19710H0190B0480                 - 76 -

     1  income of a person who is required to include income from a
     2  trust in his Federal income tax return under the provisions of
     3  subpart E of subchapter J of the Internal Revenue Code shall be
     4  computed with reference to the income of the trust as if such
     5  income were the income of the taxpayer rather than the trust.
     6                              PART III
     7                      NONRESIDENT INDIVIDUALS
     8     Section 308.  Nonresident Individuals; Taxable Income.--The
     9  taxable income of a nonresident individual shall be that part of
    10  his Federal taxable income derived from sources within this
    11  Commonwealth as defined in subsection (r) of section 302 of this
    12  article.
    13     Section 309.  Husband and Wife.--(a) Separate Federal Return.
    14  If the Federal taxable income of husband or wife who are both
    15  nonresidents of this Commonwealth is determined on a separate
    16  Federal return, their taxable incomes from sources within this
    17  Commonwealth shall be separately determined.
    18     (b)  Joint Federal Return.  If the Federal taxable income of
    19  husband and wife who are both nonresidents is determined on a
    20  joint Federal return, their tax shall be determined in this
    21  State on their joint taxable income.
    22     (c)  One Spouse a Nonresident.  If either husband or wife is
    23  a nonresident and the other a resident, separate taxes shall be
    24  determined on their separate taxable incomes from sources within
    25  this Commonwealth on such forms as the department shall
    26  prescribe, unless both elect to determine their joint taxable
    27  income in this Commonwealth as if both were residents. If a
    28  husband and wife file a joint Federal income tax return, but
    29  determine their taxable income from sources within this
    30  Commonwealth separately, they shall compute their taxable
    19710H0190B0480                 - 77 -

     1  incomes from sources within this Commonwealth as if their
     2  Federal taxable incomes had been determined separately.
     3     Section 310.  Allocation of Income of Nonresident.--Where a
     4  nonresident taxpayer engages in a business, trade, profession or
     5  occupation partly within and partly without this Commonwealth,
     6  and, as a result thereof or for other reasons that portion of
     7  the income derived from or connected with sources within this
     8  Commonwealth cannot readily or accurately be ascertained, the
     9  department shall by regulation prescribe uniform rules for
    10  apportionment or allocation of so much of such taxpayer's income
    11  as fairly and equitably represents income derived from sources
    12  within this Commonwealth.
    13                              PART IV
    14                        CREDITS AGAINST TAX
    15     Section 315.  Tax Withheld.--(a) The amount withheld under
    16  section 322 shall be allowed to the recipient of the
    17  compensation as a credit against the tax imposed on him by this
    18  article.
    19     Section 316.  Income Taxes Imposed by Other States.--(a) A
    20  resident taxpayer shall be allowed a credit against the tax
    21  otherwise due under this act for the amount of any income tax,
    22  wage tax or tax on or measured by gross or net earned or
    23  unearned income imposed on him by another state with respect to
    24  income which is also subject to tax under this article.
    25     (b)  The credit provided under this section shall not exceed
    26  the proportion of the tax otherwise due under this article that
    27  the amount of the taxpayer's taxable income subject to tax by
    28  the other jurisdiction bears to his entire taxable income.
    29     Section 317.  Taxes Imposed by Political Subdivisions of This
    30  Commonwealth.--(a) Every resident or nonresident individual,
    19710H0190B0480                 - 78 -

     1  estate or trust subject to tax under this article shall be
     2  allowed a credit against the tax otherwise due under this
     3  article equal to thirty per cent of the amount of any local
     4  taxes imposed on and paid by such individual, estate or trust to
     5  any political subdivision of this Commonwealth during the
     6  calendar year 1971, except that such credit shall not apply to
     7  local taxes imposed on real estate, realty transfers or
     8  amusements.
     9     (b)  For local taxes described in subsection (a) imposed and
    10  paid in the taxable years beginning after December 31, 1971, the
    11  amount of credit base provided in this section shall not exceed
    12  thirty per cent of the total amount of the local taxes which
    13  were imposed upon and paid by such individual, estate or trust
    14  during the calendar year 1971 to political subdivisions of this
    15  Commonwealth, except that in the case where no such local taxes
    16  were imposed upon and paid by such individual, estate or trust
    17  during the calendar year 1971, then the percentage rate shall be
    18  applied to the total amount of such local taxes which were
    19  imposed upon and paid by such individual, estate or trust during
    20  the calendar year in which such taxes were first imposed and
    21  paid and the amount so determined shall each year thereafter
    22  constitute the base on which the tax credit rate shall be
    23  applied.
    24     Section 318.  Tax Paid by Trust on Accumulated Income.--A
    25  beneficiary of a trust whose taxable income includes all or part
    26  of an accumulation distribution or a capital gain distribution
    27  by a trust, as defined in section 665 of the Internal Revenue
    28  Code, shall be allowed a credit against the tax otherwise due
    29  under this article equal to all or a proportionate part of any
    30  tax paid by the trust under this article for any preceding
    19710H0190B0480                 - 79 -

     1  taxable year which would not have been payable if the trust had
     2  in fact made distribution to its beneficiaries at the times and
     3  in the amounts specified in sections 666 and 669 of the Internal
     4  Revenue Code. The credit shall not reduce the tax otherwise due
     5  from the beneficiary to an amount less than would have been due
     6  if the accumulation distribution or capital gain distribution
     7  were excluded from taxable income.
     8     Section 319.  Tax Credit for Taxpayer Class.--(a) Declaration
     9  of Legislative Purpose.  The General Assembly, in recognition of
    10  section 2 (b) (ii) of Article VIII of the Constitution of
    11  Pennsylvania which provides for the establishing as a class or
    12  classes of subjects of taxation, the property or privileges of
    13  persons who, because of age, disability, infirmity or poverty
    14  are determined to be in need of tax exemption or of special tax
    15  provisions, hereby declares as its legislative intent and
    16  purpose to execute its power under such constitutional provision
    17  by establishing a special tax credit provision, as hereinafter
    18  provided in subsections (b) and (c) of this section.
    19     (b)  Establishing of Class; Tax Credit.--Pursuant to the
    20  provisions of said section of the Constitution of Pennsylvania
    21  there is hereby legislatively determined and established in the
    22  schedule provided in subsection (c) of this section, a class of
    23  taxpayers who by reason of poverty, age, disability or infirmity
    24  are in need of special tax relief and the members of such class,
    25  on and after the effective date of this article, shall be
    26  entitled to claim a credit against the amount of tax which would
    27  otherwise be due under this article. The class of taxpayers and
    28  the members thereof who qualify for such tax credit and the
    29  amount thereof shall be determined solely by reference to the
    30  taxable income and exemption schedule set forth in subsection
    19710H0190B0480                 - 80 -

     1  (c) of this section.
     2     (c)  Tax credit schedule for taxpayer class.
     3                              SCHEDULE
     4                        VANISHING TAX CREDIT
     5    Net     Tax               Number of Federal Exemptions
     6  Taxable    at
     7   Income    5%     1       2       3        4        5        6
     8
     9    $ 100   $ 5  $ 5.00  $ 5.00  $ 5.00   $ 5.00   $ 5.00   $ 5.00
    10      200    10   10.00   10.00   10.00    10.00    10.00    10.00
    11      300    15   15.00   15.00   15.00    15.00    15.00    15.00
    12      400    20   20.00   20.00   20.00    20.00    20.00    20.00
    13      500    25   25.00   25.00   25.00    25.00    25.00    25.00
    14      600    30   30.00   30.00   30.00    30.00    30.00    30.00
    15      700    35   31.25   35.00   35.00    35.00    35.00    35.00
    16      800    40   30.00   40.00   40.00    40.00    40.00    40.00
    17      900    45   28.75   45.00   45.00    45.00    45.00    45.00
    18     1000    50   27.50   50.00   50.00    50.00    50.00    50.00
    19     1100    55   26.25   55.00   55.00    55.00    55.00    55.00
    20     1200    60   25.00   60.00   60.00    60.00    60.00    60.00
    21     1300    65   23.75   62.50   65.00    65.00    65.00    65.00
    22     1400    70   22.50   60.00   70.00    70.00    70.00    70.00
    23     1500    75   21.25   57.50   75.00    75.00    75.00    75.00
    24     1600    80   20.00   55.00   80.00    80.00    80.00    80.00
    25     1700    85   18.75   52.50   85.00    85.00    85.00    85.00
    26     1800    90   17.50   50.00   90.00    90.00    90.00    90.00
    27     1900    95   16.25   47.50   93.75    95.00    95.00    95.00
    28     2000   100   15.00   45.00   90.00   100.00   100.00   100.00
    29     2100   105   13.75   42.50   86.25   105.00   105.00   105.00
    30     2200   110   12.50   40.00   82.50   110.00   110.00   110.00
    19710H0190B0480                 - 81 -

     1     2300   115   11.25   37.50   78.75   115.00   115.00   115.00
     2     2400   120   10.00   35.00   75.00   120.00   120.00   120.00
     3     2500   125    8.75   32.50   71.25   125.00   125.00   125.00
     4     2600   130    7.50   30.00   67.50   120.00   130.00   130.00
     5     2700   135    6.25   27.50   63.75   115.00   135.00   135.00
     6     2800   140    5.00   25.00   60.00   110.00   140.00   140.00
     7     2900   145    3.75   22.50   56.25   105.00   145.00   145.00
     8     3000   150    2.50   20.00   52.50   100.00   150.00   150.00
     9     3100   155    1.25   17.50   48.75    95.00   155.00   155.00
    10     3200   160     .00   15.00   45.00    90.00   156.25   160.00
    11     3300   165     .00   12.50   41.25    85.00   150.00   165.00
    12     3400   170     .00   10.00   37.50    80.00   143.75   170.00
    13     3500   175     .00    7.50   33.75    75.00   137.50   175.00
    14     3600   180     .00    5.00   30.00    70.00   131.25   180.00
    15     3700   185     .00    2.50   26.25    65.00   125.00   185.00
    16     3800   190     .00     .00   22.50    60.00   118.75   187.50
    17     3900   195     .00     .00   18.75    55.00   112.50   180.00
    18     4000   200     .00     .00   15.00    50.00   106.25   172.50
    19     4100   205     .00     .00   11.25    45.00   100.00   165.00
    20     4200   210     .00     .00    7.50    40.00    93.75   157.50
    21     4300   215     .00     .00    3.75    35.00    87.50   150.00
    22     4400   220     .00     .00     .00    30.00    81.25   142.50
    23     4500   225     .00     .00     .00    25.00    75.00   135.00
    24     4600   230     .00     .00     .00    20.00    68.75   127.50
    25     4700   235     .00     .00     .00    15.00    62.50   120.00
    26     4800   240     .00     .00     .00    10.00    56.25   112.50
    27     4900   245     .00     .00     .00     5.00    50.00   105.00
    28     5000   250     .00     .00     .00      .00    43.75    97.50
    29     5100   255     .00     .00     .00      .00    37.50    90.00
    30     5200   260     .00     .00     .00      .00    31.25    82.50
    19710H0190B0480                 - 82 -

     1     5300   265     .00     .00     .00      .00    25.00    75.00
     2     5400   270     .00     .00     .00      .00    18.75    67.50
     3     5500   275     .00     .00     .00      .00    12.50    60.00
     4     5600   280     .00     .00     .00      .00     6.25    52.50
     5     5700   285     .00     .00     .00      .00      .00    45.00
     6     5800   290     .00     .00     .00      .00      .00    37.50
     7     5900   295     .00     .00     .00      .00      .00    30.00
     8     6000   300     .00     .00     .00      .00      .00    22.50
     9     6100   305     .00     .00     .00      .00      .00    15.00
    10     6200   310     .00     .00     .00      .00      .00     7.50
    11     6300   315     .00     .00     .00      .00      .00      .00
    12     6400   320     .00     .00     .00      .00      .00      .00
    13     6500   325     .00     .00     .00      .00      .00      .00
    14     6600   330     .00     .00     .00      .00      .00      .00
    15     6700   335     .00     .00     .00      .00      .00      .00
    16     6800   340     .00     .00     .00      .00      .00      .00
    17     6900   345     .00     .00     .00      .00      .00      .00
    18     7000   350     .00     .00     .00      .00      .00      .00
    19     7100   355     .00     .00     .00      .00      .00      .00
    20     7200   360     .00     .00     .00      .00      .00      .00
    21     7300   365     .00     .00     .00      .00      .00      .00
    22     7400   370     .00     .00     .00      .00      .00      .00
    23     7500   375     .00     .00     .00      .00      .00      .00
    24     7600   380     .00     .00     .00      .00      .00      .00
    25     7700   385     .00     .00     .00      .00      .00      .00
    26     7800   390     .00     .00     .00      .00      .00      .00
    27     7900   395     .00     .00     .00      .00      .00      .00
    28     8000   400     .00     .00     .00      .00      .00      .00
    29     8100   405     .00     .00     .00      .00      .00      .00
    30     8200   410     .00     .00     .00      .00      .00      .00
    19710H0190B0480                 - 83 -

     1     8300   415     .00     .00     .00      .00      .00      .00
     2     8400   420     .00     .00     .00      .00      .00      .00
     3     8500   425     .00     .00     .00      .00      .00      .00
     4     8600   430     .00     .00     .00      .00      .00      .00
     5     8700   435     .00     .00     .00      .00      .00      .00
     6     8800   440     .00     .00     .00      .00      .00      .00
     7     8900   445     .00     .00     .00      .00      .00      .00
     8     9000   450     .00     .00     .00      .00      .00      .00
     9     9100   455     .00     .00     .00      .00      .00      .00
    10     9200   460     .00     .00     .00      .00      .00      .00
    11     9300   465     .00     .00     .00      .00      .00      .00
    12     9400   470     .00     .00     .00      .00      .00      .00
    13     9500   475     .00     .00     .00      .00      .00      .00
    14     9600   480     .00     .00     .00      .00      .00      .00
    15     9700   485     .00     .00     .00      .00      .00      .00
    16     9800   490     .00     .00     .00      .00      .00      .00
    17     9900   495     .00     .00     .00      .00      .00      .00
    18   10,000   500     .00     .00     .00      .00      .00      .00
    19    Net     Tax               Number of Federal Exemptions
    20  Taxable    at
    21   Income    5%     7       8       9       10       11       12
    22
    23    $ 100   $ 5  $ 5.00  $ 5.00  $ 5.00   $ 5.00   $ 5.00   $ 5.00
    24      200    10   10.00   10.00   10.00    10.00    10.00    10.00
    25      300    15   15.00   15.00   15.00    15.00    15.00    15.00
    26      400    20   20.00   20.00   20.00    20.00    20.00    20.00
    27      500    25   25.00   25.00   25.00    25.00    25.00    25.00
    28      600    30   30.00   30.00   30.00    30.00    30.00    30.00
    29      700    35   35.00   35.00   35.00    35.00    35.00    35.00
    30      800    40   40.00   40.00   40.00    40.00    40.00    40.00
    19710H0190B0480                 - 84 -

     1      900    45   45.00   45.00   45.00    45.00    45.00    45.00
     2     1000    50   50.00   50.00   50.00    50.00    50.00    50.00
     3     1100    55   55.00   55.00   55.00    55.00    55.00    55.00
     4     1200    60   60.00   60.00   60.00    60.00    60.00    60.00
     5     1300    65   65.00   65.00   65.00    65.00    65.00    65.00
     6     1400    70   70.00   70.00   70.00    70.00    70.00    70.00
     7     1500    75   75.00   75.00   75.00    75.00    75.00    75.00
     8     1600    80   80.00   80.00   80.00    80.00    80.00    80.00
     9     1700    85   85.00   85.00   85.00    85.00    85.00    85.00
    10     1800    90   90.00   90.00   90.00    90.00    90.00    90.00
    11     1900    95   95.00   95.00   95.00    95.00    95.00    95.00
    12     2000   100  100.00  100.00  100.00   100.00   100.00   100.00
    13     2100   105  105.00  105.00  105.00   105.00   105.00   105.00
    14     2200   110  110.00  110.00  110.00   110.00   110.00   110.00
    15     2300   115  115.00  115.00  115.00   115.00   115.00   115.00
    16     2400   120  120.00  120.00  120.00   120.00   120.00   120.00
    17     2500   125  125.00  125.00  125.00   125.00   125.00   125.00
    18     2600   130  130.00  130.00  130.00   130.00   130.00   130.00
    19     2700   135  135.00  135.00  135.00   135.00   135.00   135.00
    20     2800   140  140.00  140.00  140.00   140.00   140.00   140.00
    21     2900   145  145.00  145.00  145.00   145.00   145.00   145.00
    22     3000   150  150.00  150.00  150.00   150.00   150.00   150.00
    23     3100   155  155.00  155.00  155.00   155.00   155.00   155.00
    24     3200   160  160.00  160.00  160.00   160.00   160.00   160.00
    25     3300   165  165.00  165.00  165.00   165.00   165.00   165.00
    26     3400   170  170.00  170.00  170.00   170.00   170.00   170.00
    27     3500   175  175.00  175.00  175.00   175.00   175.00   175.00
    28     3600   180  180.00  180.00  180.00   180.00   180.00   180.00
    29     3700   185  185.00  185.00  185.00   185.00   185.00   185.00
    30     3800   190  190.00  190.00  190.00   190.00   190.00   190.00
    19710H0190B0480                 - 85 -

     1     3900   195  195.00  195.00  195.00   195.00   195.00   195.00
     2     4000   200  200.00  200.00  200.00   200.00   200.00   200.00
     3     4100   205  205.00  205.00  205.00   205.00   205.00   205.00
     4     4200   210  210.00  210.00  210.00   210.00   210.00   210.00
     5     4300   215  215.00  215.00  215.00   215.00   215.00   215.00
     6     4400   220  218.75  220.00  220.00   220.00   220.00   220.00
     7     4500   225  210.00  225.00  225.00   225.00   225.00   225.00
     8     4600   230  201.25  230.00  230.00   230.00   230.00   230.00
     9     4700   235  192.50  235.00  235.00   235.00   235.00   235.00
    10     4800   240  183.75  240.00  240.00   240.00   240.00   240.00
    11     4900   245  175.00  245.00  245.00   245.00   245.00   245.00
    12     5000   250  166.25  250.00  250.00   250.00   250.00   250.00
    13     5100   255  157.50  240.00  255.00   255.00   255.00   255.00
    14     5200   260  148.75  230.00  260.00   260.00   260.00   260.00
    15     5300   265  140.00  220.00  265.00   265.00   265.00   265.00
    16     5400   270  131.25  210.00  270.00   270.00   270.00   270.00
    17     5500   275  122.50  200.00  275.00   275.00   275.00   275.00
    18     5600   280  113.75  190.00  280.00   280.00   280.00   280.00
    19     5700   285  105.00  180.00  281.25   285.00   285.00   285.00
    20     5800   290   96.25  170.00  270.00   290.00   290.00   290.00
    21     5900   295   87.50  160.00  258.75   295.00   295.00   295.00
    22     6000   300   78.75  150.00  247.50   300.00   300.00   300.00
    23     6100   305   70.00  140.00  236.25   305.00   305.00   305.00
    24     6200   310   61.25  130.00  225.00   310.00   310.00   310.00
    25     6300   315   52.50  120.00  213.75   312.50   315.00   315.00
    26     6400   320   43.75  110.00  202.50   300.00   320.00   320.00
    27     6500   325   35.00  100.00  191.25   287.50   325.00   325.00
    28     6600   330   26.25   90.00  180.00   275.00   330.00   330.00
    29     6700   335   17.50   80.00  168.75   262.50   335.00   335.00
    30     6800   340    8.75   70.00  157.50   250.00   340.00   340.00
    19710H0190B0480                 - 86 -

     1     6900   345     .00   60.00  146.25   237.50   343.75   345.00
     2     7000   350     .00   50.00  135.00   225.00   330.00   350.00
     3     7100   355     .00   40.00  123.75   212.50   316.25   355.00
     4     7200   360     .00   30.00  112.50   200.00   302.50   360.00
     5     7300   365     .00   20.00  101.25   187.50   288.75   365.00
     6     7400   370     .00   10.00   90.00   175.00   275.00   370.00
     7     7500   375     .00     .00   78.75   162.50   261.25   375.00
     8     7600   380     .00     .00   67.50   150.00   247.50   360.00
     9     7700   385     .00     .00   56.25   137.50   233.75   345.00
    10     7800   390     .00     .00   45.00   125.00   220.00   330.00
    11     7900   395     .00     .00   33.75   112.50   206.25   315.00
    12     8000   400     .00     .00   22.50   100.00   192.50   300.00
    13     8100   405     .00     .00   11.25    87.50   178.75   285.00
    14     8200   410     .00     .00     .00    75.00   165.00   270.00
    15     8300   415     .00     .00     .00    62.50   151.25   255.00
    16     8400   420     .00     .00     .00    50.00   137.50   240.00
    17     8500   425     .00     .00     .00    37.50   123.75   225.00
    18     8600   430     .00     .00     .00    25.00   110.00   210.00
    19     8700   435     .00     .00     .00    12.50    96.25   195.00
    20     8800   440     .00     .00     .00      .00    82.50   180.00
    21     8900   445     .00     .00     .00      .00    68.75   165.00
    22     9000   450     .00     .00     .00      .00    55.00   150.00
    23     9100   455     .00     .00     .00      .00    41.25   135.00
    24     9200   460     .00     .00     .00      .00    27.50   120.00
    25     9300   465     .00     .00     .00      .00    13.75   105.00
    26     9400   470     .00     .00     .00      .00      .00    90.00
    27     9500   475     .00     .00     .00      .00      .00    75.00
    28     9600   480     .00     .00     .00      .00      .00    60.00
    29     9700   485     .00     .00     .00      .00      .00    45.00
    30     9800   490     .00     .00     .00      .00      .00    30.00
    19710H0190B0480                 - 87 -

     1     9900   495     .00     .00     .00      .00      .00    15.00
     2   10,000   500     .00     .00     .00      .00      .00      .00
     3  Line indicates point at which there is no tax liability.
     4                               PART V
     5                         WITHHOLDING OF TAX
     6     Section 322.  Requirement of Withholding Tax.--Every employer
     7  maintaining an office or transacting business within this
     8  Commonwealth and making payment of taxable compensation (i) to a
     9  resident individual, or (ii) to a nonresident individual
    10  taxpayer performing services on behalf of such employer within
    11  this Commonwealth, shall deduct and withhold from such
    12  compensation for each payroll period a tax computed in such
    13  manner as to result, so far as practicable, in withholding from
    14  the employe's compensation during each calendar year an amount
    15  substantially equivalent to the tax reasonably estimated to be
    16  due for such year with respect to such compensation. The method
    17  of determining the amount to be withheld shall be prescribed by
    18  regulations of the department, with due regard to any credits
    19  allowable against his tax under this article.
    20     Section 323.  Information Statement.--Every employer required
    21  to deduct and withhold tax under this article shall furnish to
    22  each such employe to whom the employer has paid compensation
    23  during the calendar year, on or before January 31 of the
    24  succeeding year, or, if his employment is terminated before the
    25  close of such calendar year, within thirty days from the date on
    26  which the last payment of compensation is made, a written
    27  statement in such manner and in such form as may be prescribed
    28  by the department showing the amount of compensation paid by the
    29  employer to the employe, the amount deducted and withheld as
    30  tax, and such other information as the department shall
    19710H0190B0480                 - 88 -

     1  prescribe.
     2     Section 324.  Time for Filing Employers' Returns.--Every
     3  employer required to deduct and withhold tax under this article
     4  shall file a quarterly withholding return on or before the last
     5  day of April, July, October and January for the three months
     6  ending the last day of March, June, September and December. Such
     7  quarterly returns shall be filed with the department at its main
     8  office or at any branch office which it may designate for filing
     9  returns.
    10     Section 324.1.  Monthly, Semi-monthly and Quarterly Payment
    11  of Taxes Withheld.--Every employer withholding tax under this
    12  article shall pay over to the department or to a depository
    13  designated by it the tax required to be deducted and withheld
    14  under this article.
    15     (1)  Where the aggregate amount required to be deducted and
    16  withheld by any employer for each quarterly period can
    17  reasonably be expected to be less than three hundred dollars
    18  ($300), such employer shall file a return and pay the tax on or
    19  before the last day for filing a quarterly return under section
    20  324, except that commencing with the year 1971, and each year
    21  thereafter every employer required to file a quarterly return
    22  for the second calendar quarter shall with respect to the tax
    23  deducted and withheld for the months of April and May pay such
    24  tax over to the department on or before June 15 next following.
    25  The payment of the April and May tax withholdings shall not
    26  relieve the employer of the duty to file a quarterly return on
    27  or before the last day of July next following and remit
    28  therewith the tax deducted and withheld for the month of June.
    29     (2)  Where the aggregate amount required to be deducted and
    30  withheld by any employer for each quarterly period can
    19710H0190B0480                 - 89 -

     1  reasonably be expected to be three hundred dollars ($300) or
     2  more but less than one thousand dollars ($1,000), such employer
     3  shall pay the tax monthly, on or before the fifteenth day of the
     4  month succeeding the months of January to November, inclusive,
     5  and on or before the last day of January following the month of
     6  December.
     7     (3)  Where the aggregate amount required to be deducted and
     8  withheld by any employer for each quarterly period can
     9  reasonably be expected to be one thousand dollars ($1,000) or
    10  more, such employer shall pay the tax semi-monthly, within three
    11  banking days after the close of the semi-monthly period.
    12     Notwithstanding anything in this section to the contrary,
    13  whenever any employer fails to deduct or truthfully account for
    14  or pay over the tax withheld or file returns as prescribed by
    15  this article, the department may serve a notice on such employer
    16  requiring him to withhold taxes which are required to be
    17  deducted under this article and deposit such taxes in a bank
    18  approved by the department in a separate account in trust for
    19  and payable to the department, and to keep the amount of such
    20  tax in such account until payment over to the department. Such
    21  notice shall remain in effect until a notice of cancellation is
    22  served on the employer by the department.
    23     Section 325.  Employer's Liability for Withheld Taxes.--Every
    24  employer required to deduct and withhold tax under this article
    25  is hereby made liable for such tax. For purposes of assessment
    26  and collection, any amount required to be withheld and paid over
    27  to the department and any additions to tax penalties and
    28  interest with respect thereto, shall be considered the tax of
    29  the employer. All taxes deducted and withheld from employes
    30  pursuant to this article or under color of this article shall
    19710H0190B0480                 - 90 -

     1  constitute a trust fund for the Commonwealth and shall be
     2  enforceable against such employer, his representative or any
     3  other person receiving any part of such fund.
     4     Section 326.  Employer's Failure to Withhold.--If an employer
     5  fails to deduct and withhold tax as prescribed herein and
     6  thereafter the tax against which such tax may be credited is
     7  paid, the tax which was required to be deducted and withheld
     8  shall not be collected from the employer, but the employer shall
     9  not be relieved of the liability for any penalty, interest, or
    10  additions to the tax imposed with respect to such failure to
    11  deduct and withhold.
    12     Section 327.  Designation of Third Parties to Perform Acts
    13  Required of Employers.--In case a fiduciary, agent or other
    14  person has the control, receipt, custody or disposal of, or pays
    15  the compensation of an employe or a group of employes, employed
    16  by one or more employers, the department is authorized to
    17  designate such fiduciary, agent, or other person to perform such
    18  acts as are required of employers under this article as the
    19  department may by regulation prescribe. Except as may be
    20  otherwise prescribed by the department, all provisions of this
    21  article which are applicable to an employer shall be applicable
    22  to a fiduciary, agent or other person so designated.
    23                              PART VI
    24                           ESTIMATED TAX
    25     Section 330.  Declarations of Estimated Tax.--(a) Every
    26  resident and nonresident individual shall at the time
    27  hereinafter prescribed make a declaration of his estimated tax
    28  for the taxable year, containing such information as the
    29  department may prescribe by regulations, if his taxable income,
    30  other than from compensation on which tax is withheld under this
    19710H0190B0480                 - 91 -

     1  article, can reasonably be expected to exceed one thousand
     2  dollars ($1,000).
     3         (b)  For the purposes of this article, the term
     4  "estimated tax" means the amount which an individual estimates
     5  to be his tax due under this article for the taxable year, less
     6  the amount which he estimates to be the sum of any credits
     7  allowable against the tax under this article.
     8     (c)  A husband and wife entitled to make a joint declaration
     9  of Federal estimated tax may make a joint declaration of
    10  estimated tax hereunder as if they were one taxpayer, in which
    11  case the liability with respect to the estimated tax shall be
    12  joint and several. If a joint declaration is made but husband
    13  and wife elect to determine their taxes separately, the
    14  estimated tax for such year may be treated as the estimated tax
    15  of either husband or wife, or may be divided between them, as
    16  they may elect.
    17     (d)  Except as hereinafter provided, the date for filing a
    18  declaration of estimated tax shall depend upon when the resident
    19  or nonresident individual determines that his taxable income on
    20  which no tax has been withheld under this article can reasonably
    21  be expected to exceed one thousand dollars ($1,000) in the
    22  taxable year, as follows:
    23     (1)  If the determination is made on or before April 1 of the
    24  taxable year, a declaration of estimated tax shall be filed no
    25  later than April 15 of the taxable year.
    26     (2)  If the determination is made after April 1 but before
    27  June 2 of the taxable year, the declaration shall be filed no
    28  later than June 15 of such year.
    29     (3)  If the determination is made after June 1 but before
    30  September 2 of the taxable year, the declaration shall be filed
    19710H0190B0480                 - 92 -

     1  no later than September 15 of such year.
     2     (4)  If the determination is made after September 1 of the
     3  taxable year, the declaration shall be filed no later than
     4  January 15 of the year succeeding the taxable year.
     5     (e)  Notwithstanding subsection (d), of this section, a
     6  declaration of estimated tax of an individual having an
     7  estimated taxable income from farming for the taxable year which
     8  is at least two-thirds of his total estimated taxable income for
     9  the taxable year may be filed at any time on or before January
    10  15 of the succeeding year.
    11     (f)  A declaration of estimated tax of an individual having a
    12  total estimated tax for the taxable year of fifty dollars ($50)
    13  or less may be filed at any time on or before January 15 of the
    14  succeeding year under regulations of the department.
    15     (g)  An individual may amend a declaration under regulations
    16  of the department.
    17     (h)  If on or before January 31 of the year succeeding a
    18  taxable year, an individual files his return for the entire
    19  taxable year for which a declaration was required to be filed
    20  within the time prescribed by subsection (d) (4) of this section
    21  and pays therewith the full amount of the tax shown to be due on
    22  the return:
    23     (1)  Such return shall be considered as his declaration which
    24  was required to be filed no later than January 15.
    25     (2)  Such return shall be considered as the amendment
    26  permitted by subsection (g) to be filed on or before January 15
    27  provided the amount of the tax shown on the return is greater
    28  than the amount of the estimated tax shown in a declaration
    29  previously made.
    30     (i)  This article shall apply to a taxable year other than a
    19710H0190B0480                 - 93 -

     1  calendar year by the substitution of the months of such fiscal
     2  year for the corresponding months specified in this section.
     3     (j)  This article shall apply to an individual having a
     4  taxable year of less than twelve months in accordance with
     5  procedures prescribed in regulations of the department.
     6     Section 331.  Payments of Estimated Tax.--(a) The estimated
     7  tax with respect to which a declaration is required shall be
     8  paid as follows:
     9     (1)  If the declaration is filed on or before April 15 of the
    10  taxable year, the estimated tax shall be paid in four equal
    11  installments. The first installment shall be paid at the time of
    12  the filing of the declaration, and the second, third and fourth
    13  installments shall be paid on or before the succeeding June 15,
    14  September 15, and January 15, respectively.
    15     (2)  If the declaration is not required to be filed on or
    16  before April 15 of the taxable year and is filed after April 15,
    17  but before June 16 of the taxable year, the estimated tax shall
    18  be paid in three equal installments. The first installment shall
    19  be paid at the time of the filing of the declaration, and the
    20  second and third installments shall be paid on the succeeding
    21  September 15 and January 15, respectively.
    22     (3)  If the declaration is not required to be filed on or
    23  before June 15 of the taxable year and is filed after June 15
    24  but before September 16 of the taxable year, the estimated tax
    25  shall be paid in two equal installments. The first installment
    26  shall be paid at the time of the filing of the declaration, and
    27  the second shall be paid on the succeeding January 15.
    28     (4)  If the declaration is not required to be filed on or
    29  before September 15 of the taxable year and is filed after
    30  September 15 of the taxable year, the estimated tax shall be
    19710H0190B0480                 - 94 -

     1  paid in full at the time of the filing of the declaration.
     2     (5)  If the declaration is not filed within the time
     3  prescribed therefor, or after the expiration of any extension of
     4  time therefor, clauses (2), (3) and (4) of this subsection shall
     5  not apply, and there shall be paid at the time of such filing
     6  the amount of all installments of estimated tax which were due
     7  and payable on or before the date the declaration was filed, and
     8  the remaining installments shall be paid at such times and in
     9  such amounts as they would have been payable if the declaration
    10  had been filed when due.
    11     (b)  If an individual described in subsection (e) of section
    12     (relating to farmers) makes a declaration of estimated tax
    13  after September 15 of the taxable year, but before the following
    14  January 15, the estimated tax shall be paid in full at the time
    15  of the filing of the declaration.
    16     (c)  If any amendment of a declaration is filed, the
    17  remaining unpaid installments, if any, shall be ratably
    18  increased or decreased, as the case may be, to reflect any
    19  increase or decrease in the estimated tax by reason of such
    20  amendment, and if any amendment is made after September 15 of
    21  the taxable year, any increase in the estimated tax by reason
    22  thereof shall be paid at the time of making such amendment.
    23                              PART VII
    24                     RETURNS AND PAYMENT OF TAX
    25     Section 335.  Returns and Liability.--On or before the date
    26  when the taxpayer's Federal income tax return is due or would be
    27  due if the taxpayer were required to file a Federal income tax
    28  return, a tax return under this article shall be made and filed
    29  by or for every taxpayer having taxable income for the taxable
    30  year.
    19710H0190B0480                 - 95 -

     1     Section 336.  Returns of Married Individuals, Deceased or
     2  Disabled Individuals and Fiduciaries.--(a) If the Federal income
     3  tax liability of husband or wife is determined on a separate
     4  Federal return, their income tax liabilities and returns under
     5  this article shall be separate.
     6     (b)  If the Federal income tax liabilities of husband and
     7  wife (other than a husband and wife described in subsection (c))
     8  are determined on a joint Federal return, or if neither files a
     9  Federal return:
    10     (1)  they shall file a joint tax return under this article
    11  and their tax liabilities shall be joint and several; or
    12     (2)  they may elect to file separate returns under this
    13  article on a single form if they comply with the requirements of
    14  the department in setting forth information, in which event
    15  their tax liabilities shall be separate, except as provided in
    16  subsection (d).
    17     (c)  If either husband or wife is a resident and the other is
    18  a nonresident, they shall file separate tax returns under this
    19  article on such single or separate forms as may be required by
    20  the department, in which event their tax liabilities shall be
    21  separate except as provided in subsection (d) unless both elect
    22  to determine their joint taxable income as if both were
    23  residents, in which event their tax liabilities shall be joint
    24  and several.
    25     (d)  If husband and wife file separate tax returns under this
    26  article on a single form pursuant to subsections (b) or (c) and:
    27     (1)  If the sum of the payments by either spouse, including
    28  withheld and estimated taxes, exceeds the amount of the tax for
    29  which such spouse is separately liable, the excess may be
    30  applied by the department to the credit of the other spouse if
    19710H0190B0480                 - 96 -

     1  the sum of the payments by such other spouse, including withheld
     2  and estimated taxes, is less than the amount of the tax for
     3  which such other spouse is separately liable.
     4     (2)  If the sum of the payments made by both spouses with
     5  respect to the taxes for which they are separately liable,
     6  including withheld and estimated taxes, exceeds the total of the
     7  taxes due, refund of the excess may be made payable to both
     8  spouses, or if either is deceased, to the survivor.
     9     Provided, however, That the provisions of this subsection (d)
    10  shall not apply if the return of either spouse includes a demand
    11  that any overpayment made by him or her shall be applied only on
    12  account of his or her separate liability.
    13     (e)  The return for any deceased individual shall be made and
    14  filed by his executor, administrator, or other person charged
    15  with his property.
    16     (f)  The return for an individual who is unable to make a
    17  return by reason of minority or other disability shall be made
    18  and filed by his guardian, committee, fiduciary or other person
    19  charged with the care of his person or property, or by his duly
    20  authorized agent.
    21     (g)  The return for an estate or trust shall be made and
    22  filed by the fiduciary. If two or more fiduciaries are acting
    23  jointly, the return may be made by any one of them.
    24     Section 337.  Time and Place for Filing Returns and Paying
    25  Tax.--A person required to make and file a return under this
    26  article shall, without assessment, notice or demand, pay any tax
    27  due thereon to the department on or before the date fixed for
    28  filing such return (determined without regard to any extension
    29  of time for filing the return). The department shall prescribe
    30  by regulation the place for filing any return, declaration,
    19710H0190B0480                 - 97 -

     1  statement, or other document required pursuant to this article
     2  and for payment of any tax.
     3     Section 338.  Signing of Returns and Other Documents.--(a)
     4  Any return, declaration, statement or other document required to
     5  be made pursuant to this article shall be signed in accordance
     6  with regulations or instructions prescribed by the department.
     7     (b)  Any return, statement, or other document required of a
     8  partnership shall be signed by one or more partners. The fact
     9  that a partner's name is signed to a return, statement, or other
    10  document, shall be prima facie evidence for all purposes that
    11  such partner is authorized to sign on behalf of the partnership.
    12     (c)  The making or filing of any return, declaration,
    13  statement or other document or copy thereof required to be made
    14  or filed pursuant to this article shall constitute a
    15  certification by the person making or filing such return,
    16  declaration, statement or other document or copy thereof that
    17  the statements contained therein are true and that any copy
    18  filed is a true copy.
    19     Section 339.  Extensions of Time.--(a) A taxpayer who is
    20  granted a Federal extension of time by the Commissioner of
    21  Internal Revenue for filing any return, declaration, statement
    22  or other document shall be automatically entitled to a similar
    23  extension of the time for filing any corresponding return,
    24  declaration, statement or other document required pursuant to
    25  this article. No application for such extension need be made,
    26  provided that evidence of the granting of the Federal extension
    27  accompany the return, declaration, statement or other document
    28  filed pursuant to this article.
    29     (b)  In all other cases the department may, upon application,
    30  grant a reasonable extension of time for filing any return,
    19710H0190B0480                 - 98 -

     1  declaration, statement, or other document required pursuant to
     2  this article, on such terms and conditions as it may require.
     3  Except for a taxpayer who is outside the United States, no such
     4  extension for filing any return, declaration, statement or other
     5  document, shall exceed six months.
     6     Section 340.  Requirements Concerning Returns, Notices,
     7  Records and Statements.--(a) The department may prescribe by
     8  regulation for the keeping of records, the content and form of
     9  returns, declarations, statements and other documents and the
    10  filing of copies of Federal income tax returns and
    11  determinations. The department may require any person, by
    12  regulation or notice served upon such person, to make such
    13  returns, render such statements, or keep such records, as the
    14  department may deem sufficient to show whether or not such
    15  person is liable for tax under this article.
    16     (b)  (1)  When required by regulations prescribed by the
    17  department:
    18     (i)  Any person required under the authority of this article
    19  to make a return, declaration, statement, or other document
    20  shall include in such return, declaration, statement or other
    21  document such identifying number as may be prescribed for
    22  securing proper identification of such person.
    23     (ii)  Any person with respect to whom a return, declaration,
    24  statement, or other document is required under the authority of
    25  this article to make a return, declaration, statement, or other
    26  document with respect to another person, shall request from such
    27  other person, and shall include in any such return, declaration,
    28  statement, or other document, such identifying number as may be
    29  prescribed for securing proper identification of such other
    30  person.
    19710H0190B0480                 - 99 -

     1     (2)  For purposes of this section, the department is
     2  authorized to require such information as may be necessary to
     3  assign an identifying number to any person.
     4     (c)  Every partnership having a resident partner or having
     5  any income derived from sources within this Commonwealth shall
     6  make a return for the taxable year setting forth all items of
     7  income, gain, loss and deduction, and such other pertinent
     8  information as the department may by regulations prescribe. Such
     9  return shall be filed on or before the fifteenth day of the
    10  fourth month following the close of each taxable year. For
    11  purposes of this subsection, "taxable year" means year or period
    12  which would be a taxable year of the partnership if it were
    13  subject to tax under this article.
    14     (d)  The department may prescribe regulations requiring
    15  returns of information to be made and filed on or before
    16  February 28 of each year as to the payment or crediting in any
    17  calendar year of amounts of one thousand dollars ($1,000) or
    18  more to any taxpayer. Such returns may be required of any
    19  person, including lessees or mortgagors of real or personal
    20  property, fiduciaries, employers and all officers and employes
    21  of this Commonwealth, or of any municipal corporation or
    22  political subdivision of this Commonwealth having the control,
    23  receipt, custody, disposal or payment of interest, rents,
    24  salaries, wages, premiums, annuities, compensations,
    25  remunerations, emoluments or other fixed or determinable gains,
    26  profits or income, except interest coupons payable to bearer. A
    27  duplicate of the statement as to tax withheld on compensation
    28  required to be furnished by an employer to an employe, shall
    29  constitute the return of information required to be made under
    30  this section with respect to such compensation.
    19710H0190B0480                 - 100 -

     1     Section 341.  Report of Change in Federal Taxable Income.--If
     2  the amount of a taxpayer's Federal taxable income reported on
     3  his Federal income tax return for any taxable year is changed or
     4  corrected by the United States Internal Revenue Service or other
     5  competent authority of the United States, the taxpayer shall
     6  report to the department such change or correction in Federal
     7  taxable income within ninety days after the final determination
     8  of such change or correction, or as otherwise required by the
     9  department, and shall either concede the accuracy of such
    10  determination or state wherein he claims it is erroneous. Any
    11  taxpayer filing an amended Federal income tax return shall also
    12  file within ninety days thereafter an amended return under this
    13  article, and shall give such information as the department may
    14  require. The department may by regulation prescribe such
    15  exceptions to the requirements of this section as it deems
    16  appropriate.
    17                             PART VIII
    18                    PROCEDURE AND ADMINISTRATION
    19     Section 345.  Payment on Notice and Demand.--Upon receipt of
    20  notice and demand from the department, there shall be paid the
    21  amount of any tax due under the provisions of this article
    22  stated in such notice and demand.
    23     Section 346.  Assessment.--(a) The department is authorized
    24  and required to make the inquiries, determinations and
    25  assessments of all taxes imposed by this article.
    26     (b)  If the mode or time for the assessment of any tax is not
    27  otherwise provided for, the department may establish the same by
    28  regulations.
    29     Section 347.  Procedure for Reassessment.--Promptly after the
    30  date of an assessment by the department, the department shall
    19710H0190B0480                 - 101 -

     1  send by mail a copy thereof to the person against whom it was
     2  made. Within ninety days after the date upon which the copy of
     3  any such assessment was mailed, such person may file with the
     4  department a petition for reassessment of such tax. Every
     5  petition for reassessment shall state specifically the reasons
     6  which the petitioner believes entitled him to such reassessment,
     7  and it shall be supported by affidavit that it is not made for
     8  the purpose of delay and that the facts set forth therein are
     9  true. It shall be the duty of the department, within six months
    10  after receiving a petition for reassessment, to dispose of such
    11  petition for reassessment. Notice of the action taken upon any
    12  petition for reassessment shall be given to the petitioner
    13  promptly thereafter.
    14     Section 348.  Review by Board of Finance and Revenue.--Within
    15  ninety days after the date of mailing of notice by the
    16  department of the action taken on any petition for reassessment
    17  filed with it, the person against whom the assessment was made
    18  may by petition request the Board of Finance and Revenue to
    19  review such action. Every petition for review filed hereunder
    20  shall state specifically the reasons upon which the petitioner
    21  relies, or shall incorporate by reference the petition for
    22  reassessment in which such reasons shall have been stated. The
    23  petition shall be supported by affidavit that it is not made for
    24  the purpose of delay and that the facts therein set forth are
    25  true. The Board of Finance and Revenue shall act in disposition
    26  of such petitions filed with it within six months after they
    27  have been received, and in the event of failure of said board to
    28  dispose of any such petition within six months, the action taken
    29  by the department upon the petition for reassessment shall be
    30  deemed sustained. The Board of Finance and Revenue may sustain
    19710H0190B0480                 - 102 -

     1  the action taken on the petition for reassessment, or it may
     2  reassess the tax due upon such basis as it shall deem according
     3  to law. Notice of the action of the Board of Finance and Revenue
     4  shall be given by mail to the department and to the petitioner.
     5     Section 349.  Appeal to the Commonwealth Court.--Any person,
     6  or the Commonwealth, aggrieved by the decision of the Board of
     7  Finance and Revenue may, within sixty days, appeal to the
     8  Commonwealth Court from the decision of the Board of Finance and
     9  Revenue in the manner now or hereafter provided by law for
    10  appeals from decisions of said board in tax cases.
    11     Section 350.  Collection of Tax.--The department shall
    12  collect the taxes imposed by this article in the manner provided
    13  by law for the collection of taxes imposed by the laws of this
    14  Commonwealth.
    15     Section 351.  Collection upon Failure to Request
    16  Reassessment, Review or Appeal.--(a) The department may collect
    17  any tax:
    18     (1)  After ninety days from the date of mailing of a copy of
    19  the notice of assessment, if no petition for reassessment has
    20  been filed;
    21     (2)  After ninety days from the date of mailing of notice of
    22  the department's action thereon, if no petition for review has
    23  been filed;
    24     (3)  Within sixty days from the date of mailing of notice of
    25  the decision of the Board of Finance and Revenue upon a petition
    26  for review or from the expiration of the board's time for acting
    27  upon such petition, if no decision has been made; or
    28     (4)  Immediately, in all cases of judicial sales,
    29  receiverships, assignments or bankruptcies.
    30     In any such proceeding for the collection of the tax imposed
    19710H0190B0480                 - 103 -

     1  by this article, the person against whom the assessment was made
     2  shall not be permitted to set up any ground of defense that
     3  might have been presented to the department, the Board of
     4  Finance and Revenue or the Commonwealth Court if such person had
     5  properly pursued his administrative remedies under this article.
     6     Section 352.  Lien for Tax.--(a) If any person liable to pay
     7  any tax neglects or refuses to pay the same on the date the tax
     8  becomes collectible, the amount of such tax, together with any
     9  costs that may accrue in addition thereto, shall be a lien in
    10  favor of the Commonwealth against all real estate within the
    11  Commonwealth of such person from and after such date.
    12     (b)  The department may, at any time, transmit to the
    13  prothonotaries of the respective counties certified copies of
    14  all liens for taxes imposed by this article. It shall be the
    15  duty of each prothonotary receiving such lien to enter and
    16  docket the same of record in his office, which lien shall be
    17  indexed as judgments are now indexed. All such liens shall have
    18  priority to, and be fully before, any other obligation,
    19  judgment, claim, lien or estate paid and satisfied out of the
    20  judicial sale of said real estate with which said real estate
    21  may subsequently become charged, or for which it may
    22  subsequently become liable, subject, however, to mortgage or
    23  other liens existing and duly recorded at the time such tax lien
    24  is recorded, save and except the cost of sale and of the writ
    25  upon which it is made and real estate taxes imposed or assessed
    26  upon said property. The lien of said taxes shall continue for
    27  five years from the date of entry and may be revived and
    28  continued, in the manner now or hereafter provided for renewal
    29  of judgments, and it shall be lawful for a writ of scire facias
    30  to issue and be prosecuted to judgment in the manner in which
    19710H0190B0480                 - 104 -

     1  such writs are ordinarily employed.
     2     (c)  Any wilful failure of any prothonotary to carry out any
     3  duty imposed upon him by this section shall be a misdemeanor
     4  and, upon conviction, he shall be sentenced to pay a fine not
     5  exceeding one thousand dollars ($1,000) and cost of prosecution,
     6  or to undergo imprisonment not exceeding one year, or both.
     7     Section 353.  Refund or Credit of Overpayment.--(a) In the
     8  case of any overpayment, the department may credit the amount of
     9  such overpayment against any liability in respect of the tax
    10  imposed by this article on the part of the person who made the
    11  overpayment and shall refund any balance to such person.
    12     (b)  The department is authorized to prescribe regulations
    13  providing for the crediting against the estimated tax for any
    14  taxable year of the amount determined to be an overpayment of
    15  the tax for a preceding taxable year.
    16     (c)  If the taxpayer has paid as an installment of estimated
    17  tax more than the correct amount of such installment, the
    18  overpayment shall be credited against the unpaid installments,
    19  if any. If the amount paid, whether or not on the basis of
    20  installments, exceeds the amount determined to be the correct
    21  amount of the tax, the overpayment shall be credited or refunded
    22  as provided in subsection (a) or (b).
    23     Section 354.  Restrictions on Refunds.--No credit or refund
    24  shall be made under section 353 without the approval of the
    25  Board of Finance and Revenue, except such credits or refunds as
    26  arise:
    27     (1)  By reason of the overpayment of an installment of
    28  estimated tax;
    29     (2)  Upon the filing of a final return showing less tax due
    30  after the application of the allowable credits than the amount
    19710H0190B0480                 - 105 -

     1  of tax withheld from the taxpayer's compensation or the amount
     2  of tax paid by him as estimated tax; or
     3     (3)  Upon the filing of an amended return or a report of
     4  change in Federal taxable income disclosing less tax due than
     5  the taxpayer has theretofore paid.
     6     Section 355.  Limitations on Assessment and Collection.--(a)
     7  The amount of any tax imposed by this article shall be assessed
     8  within three years after the return or any report of change in
     9  Federal taxable income, whichever is later, is filed. For the
    10  purposes of this subsection and subsection (b), a return filed
    11  before the last day prescribed for the filing thereof, or before
    12  the last day of any extension of time for the filing thereof,
    13  shall be considered as filed on such last day.
    14     (b)  If the taxpayer omits from taxable income an amount
    15  properly includable therein which is in excess of twenty-five
    16  per cent of the amount of taxable income stated in the return,
    17  the tax may be assessed at any time within six years after the
    18  return was filed.
    19     (c)  Where no return is filed, or if a taxpayer shall fail to
    20  report a change in Federal taxable income or, when required, to
    21  file an amended return, the amount of the tax due may be
    22  assessed at any time.
    23     (d)  Where the taxpayer files a false or fraudulent return
    24  with intent to evade the tax imposed by this article, the amount
    25  of tax due may be assessed at any time.
    26     Section 356.  Extension of Limitation Period.--
    27  Notwithstanding section 355, where, before the expiration of the
    28  period prescribed therein a taxpayer has consented in writing
    29  that such period be extended, the amount of tax due may be
    30  assessed at any time within such extended period. The period so
    19710H0190B0480                 - 106 -

     1  extended may be further extended by subsequent consents in
     2  writing made before the expiration of the extended period.
     3     Section 357.  Limitations on Refund or Credit.--Any
     4  application for refund must be filed with the Board of Finance
     5  and Review within three years from the time the return, amended
     6  return, or report of change in Federal taxable income is
     7  required to be filed, determined without regard to any extension
     8  of time or within two years from the time the tax was paid,
     9  whichever is later.
    10     Section 358.  Interest.--If any amount of tax imposed by this
    11  article is not paid on or before the last date prescribed for
    12  payment, interest on such amount at the rate of one-half of one
    13  per cent per month, for each month or fraction thereof from such
    14  date, shall be paid for the period from such last date to the
    15  date paid. The last date prescribed for payment shall be
    16  determined without regard to any extension of time for filing
    17  the return. This section shall not apply to any failure to pay
    18  estimated tax.
    19     Section 359.  Additions.--(a) In case of failure to file any
    20  return required under section 335 on the date prescribed
    21  therefor, determined with regard to any extension of time for
    22  filing, unless it is shown that such failure is due to
    23  reasonable cause and not due to wilful neglect, there shall be
    24  added to the amount required to be shown as tax on such return
    25  five per cent of the amount of such tax if the failure is for
    26  not more than one month, with an additional five per cent for
    27  each additional month or fraction thereof during which such
    28  failure continues, not exceeding twenty-five per cent, in the
    29  aggregate, but in no case shall the amount added be less than
    30  five dollars ($5).
    19710H0190B0480                 - 107 -

     1     (b)  If any part of any underpayment of any tax imposed by
     2  this article is due to negligence or intentional disregard of
     3  rules and regulations, but without intent to defraud, there
     4  shall be added to the tax an amount equal to five per cent of
     5  the underpayment.
     6     (c)  If any part of any underpayment of tax required to be
     7  shown on a return is due to fraud, there shall be added to the
     8  tax an amount equal to fifty per cent of the underpayment. This
     9  amount shall be in lieu of any amount determined under
    10  subsection (b).
    11     (d)  (1)  If any taxpayer fails to file a declaration of
    12  estimated tax or fails to pay all of any part of an installment
    13  of estimated tax, he shall be deemed to have made an
    14  underpayment of estimated tax. There shall be added to the tax
    15  for the taxable year an amount at the rate of six per cent per
    16  annum upon the amount of the underpayment for the period of the
    17  underpayment but not beyond the fifteenth day of the fourth
    18  month following the close of the taxable year. The amount of the
    19  underpayment shall be the excess of the amount of the
    20  installment which would be required to be paid if the estimated
    21  tax were equal to eighty per cent of the tax (two-thirds in the
    22  case of an individual described in subsection (e) of section
    23  330) shown on the return for the taxable year (or if no return
    24  was filed, of the tax for such year) over the amount, if any, of
    25  the installments paid on or before the last day prescribed for
    26  such payment. No underpayment shall be deemed to exist with
    27  respect to a declaration or installment otherwise due on or
    28  after the taxpayer's death.
    29     (2)  No addition to tax shall be imposed if the total amount
    30  of all payments of estimated tax made on or before the last date
    19710H0190B0480                 - 108 -

     1  prescribed for the payment of such installment equals or exceeds
     2  the lesser of:
     3     (A)  The amount which would have been required to be paid on
     4  or before such date if the estimated tax were:
     5     (i)  the tax shown on the return of the individual for the
     6  preceding taxable year, if a return showing a liability for tax
     7  was filed by the individual for the preceding taxable year and
     8  such preceding year was a taxable year of twelve months, or
     9     (ii)  an amount equal to the tax computed, at the rates
    10  applicable to the taxable year, on the basis of the taxpayer's
    11  status with respect to personal exemptions for the taxable year,
    12  but otherwise on the basis of the facts shown on his return for,
    13  and the law applicable to, the preceding taxable year; or
    14     (B)  An amount equal to ninety per cent of the tax computed,
    15  at the rates applicable to the taxable year, on the basis of the
    16  actual taxable income for the months in the taxable year ending
    17  before the month in which the installment is required to be
    18  paid.
    19     (e)  Any person required to collect, account for and pay over
    20  any tax imposed by this article who wilfully fails to collect
    21  such tax or truthfully account for and pay over such tax, or
    22  wilfully attempts in any manner to evade or defeat any such tax
    23  or the payment thereof, shall, in addition to other penalties
    24  provided by law, be liable to a penalty equal to the total
    25  amount of the tax evaded or not collected or not accounted for
    26  and paid over. No penalty shall be imposed under subsection (b)
    27  or (c) of section 359 for any offense to which this section is
    28  applicable.
    29     (f)  Any person required under the provisions of section 323
    30  to furnish a statement to an employe who wilfully furnishes a
    19710H0190B0480                 - 109 -

     1  false or fraudulent statement, or who wilfully fails to furnish
     2  a statement in the manner, at the time, and showing the
     3  information required under section 323 and the regulations
     4  prescribed thereunder, shall, for each such failure, be subject
     5  to a penalty of fifty dollars ($50) for each employe.
     6     (g)  Whenever any check issued in payment of any tax, or for
     7  any other purpose required by this article, shall be returned to
     8  the department as uncollectible, the department shall charge a
     9  fee of ten per cent of the face amount thereof, plus all protest
    10  fees, to the person presenting such check to the department, to
    11  cover the cost of its collection in addition to the interest and
    12  penalties otherwise provided for in this article:  Provided,
    13  That the additions imposed hereby shall not exceed two hundred
    14  dollars ($200) nor be less than ten dollars ($10).
    15     Section 360.  Crimes.--(a) Any person who wilfully attempts
    16  in any manner to evade or defeat any tax imposed by this article
    17  or the payment thereof shall, in addition to other penalties
    18  provided by law, be guilty of a misdemeanor and shall, upon
    19  conviction, be sentenced to pay a fine not exceeding twenty-five
    20  thousand dollars ($25,000) or to undergo imprisonment not
    21  exceeding two years, or both.
    22     (b)  Any person required under this article to collect,
    23  account for and pay over any tax imposed by this article who
    24  wilfully fails to collect or truthfully account for and pay over
    25  such tax, shall, in addition to other penalties provided by law,
    26  be guilty of a misdemeanor, and shall, upon conviction, be
    27  sentenced to pay a fine not exceeding twenty-five thousand
    28  dollars ($25,000) or to undergo imprisonment not exceeding two
    29  years, or both.
    30     (c)  Any person required under this article to pay any tax or
    19710H0190B0480                 - 110 -

     1  to make a return, keep any records or supply any information,
     2  who wilfully fails to pay such tax or make such return, keep
     3  such records or supply such information at the time or times
     4  required by law or regulations, shall, in addition to other
     5  penalties provided by law, be guilty of a misdemeanor and shall,
     6  upon conviction, be sentenced to pay a fine not exceeding five
     7  thousand dollars ($5,000) or to undergo imprisonment not
     8  exceeding two years, or both.
     9     (d)  Any person who wilfully makes and subscribes any return,
    10  statement or other document which contains or is verified by a
    11  written declaration that it is made under the penalties of
    12  perjury and which he does not believe to be true and correct as
    13  to every material matter, or wilfully aids or assists in, or
    14  procures, counsels or advises the preparation or presentation,
    15  in connection with any matter arising under this article, of a
    16  return, affidavit, claim or other document which is fraudulent
    17  or is false as to any material matter, whether or not such
    18  falsity or fraud is with the knowledge or consent of the person
    19  authorized or required to present such return, affidavit, claim
    20  or document, shall be guilty of a misdemeanor and shall, upon
    21  conviction, be sentenced to pay a fine not exceeding five
    22  thousand dollars ($5,000) or to undergo imprisonment not
    23  exceeding two years, or both.
    24     (e)  Any person who wilfully delivers or discloses to the
    25  department any list, return, account, statement or other
    26  document known by him to be fraudulent or to be false as to any
    27  material matter shall be guilty of a misdemeanor and shall, upon
    28  conviction, be sentenced to pay a fine not exceeding five
    29  thousand dollars ($5,000) or to undergo imprisonment not
    30  exceeding two years, or both.
    19710H0190B0480                 - 111 -

     1     (f)  It shall be unlawful for any officer or employe of the
     2  Commonwealth to divulge or to make known in any manner whatever,
     3  not provided by law, except for official purposes, to any
     4  person, the amount or source of income, profits, losses,
     5  expenditures or any particular thereof set forth or disclosed in
     6  any return, or to permit any return or copy thereof or any book
     7  containing any abstract or particulars thereof, to be seen or
     8  examined by any person except as provided by law, and it shall
     9  be unlawful for any person to print or publish in any manner
    10  whatsoever not provided by law, any return or any part thereof
    11  or source of income, profits, losses or expenditures appearing
    12  in any return, and any person committing an offense against the
    13  foregoing provisions shall be guilty of a misdemeanor and, upon
    14  conviction thereof, shall be fined not more than one thousand
    15  dollars ($1,000), or imprisoned for not more than one year, or
    16  both, together with the costs of prosecution; and, if the
    17  offender be an officer or employe of the Commonwealth, he shall
    18  be dismissed from office or discharged from employment.
    19     (g)  Notwithstanding subsection (f), it shall be lawful for
    20  any officer or employe of the Commonwealth having custody of
    21  returns to produce them or evidence of anything contained in
    22  them in any action or proceeding in any court on behalf of the
    23  department under the provisions of this article to which it is a
    24  party, or on behalf of any party to any action or proceeding
    25  under the provisions of this article, when the returns or facts
    26  shown thereby are directly involved in such action or
    27  proceeding, in either of which events the court may require the
    28  production of and may admit in evidence so much of said returns
    29  or the facts shown thereby as are pertinent to the action or
    30  proceeding and no more. Nothing herein shall be construed to
    19710H0190B0480                 - 112 -

     1  prohibit the delivery to a taxpayer or his duly authorized
     2  representative of a certified copy of any return filed in
     3  connection with his tax, nor to prohibit the publication of
     4  statistics so classified as to prevent the identification of
     5  particular returns and the items thereof or the inspection by
     6  the Attorney General or other legal representatives of the
     7  Commonwealth of the return of any taxpayer who shall bring
     8  action to review the tax based thereon or against whom an action
     9  or proceeding has been instituted for the collection or recovery
    10  of the tax imposed by this article.
    11     Section 361.  Rules and Regulations.--The department is
    12  hereby charged with the enforcement of the provisions of this
    13  article, and is hereby authorized and empowered to prescribe,
    14  adopt, promulgate and enforce rules and regulations relating to
    15  any matter or thing pertaining to the administration and
    16  enforcement of the provisions of this article and the collection
    17  of taxes imposed by this article.
    18     Section 362.  Examination.--The department, or any agent
    19  authorized in writing by it, is hereby authorized to examine the
    20  books, papers and records of any taxpayer or supposed taxpayer,
    21  and to require the production of a copy of his return as made to
    22  and filed with the Federal Government, if one was so made and
    23  filed, in order to verify the accuracy of any return made, or if
    24  no return was made, to ascertain and assess the tax imposed by
    25  this article. Every such taxpayer or supposed taxpayer is hereby
    26  directed and required to give to the department or its duly
    27  authorized agent the means, facilities and opportunity for such
    28  examinations and investigations as are hereby provided and
    29  authorized. The department is hereby authorized to examine any
    30  person under oath concerning any taxable income which was or
    19710H0190B0480                 - 113 -

     1  should have been returned for taxation, and to this end may
     2  compel the production of books, papers and records and the
     3  attendance of all persons, whether as parties or witnesses, whom
     4  it believes have knowledge of such taxable income. The procedure
     5  for such hearing or examination shall be the same as that
     6  provided by "The Fiscal Code" relating to inquisitorial powers
     7  of fiscal officers.
     8     Section 363.  Cooperation with Other Governmental Agencies.--
     9  Notwithstanding the provisions of subsection (f) of section 359,
    10  the department may permit the Commissioner of Internal Revenue
    11  of the United States, or the proper officer of any political
    12  subdivision of this Commonwealth or of any other state imposing
    13  tax based upon the incomes of individuals, or the authorized
    14  representative of such officer, to inspect the tax returns of
    15  any taxpayer, or may furnish to such officer or his authorized
    16  representative an abstract of the return of income of any
    17  taxpayer, or supply him with information concerning any item of
    18  income contained in any return of any taxpayer. Such permission
    19  shall be granted or such information furnished to such officer
    20  or his representative only if the statutes of the United States
    21  or of such other state, as the case may be, grant substantially
    22  similar privileges to the proper officer of this Commonwealth
    23  charged with the administration of the personal income tax law
    24  thereof.
    25     Section 364.  Appropriation for Refunds.--So much of the
    26  proceeds of the tax imposed by this article as shall be
    27  necessary for the payment of refunds, enforcement, or
    28  administration, under this article, is hereby appropriated for
    29  such purposes.
    30                              PART IX
    19710H0190B0480                 - 114 -

     1                      MISCELLANEOUS PROVISIONS
     2     Section 370.  Effective Date.-- Except as hereinafter
     3  provided this article shall take effect on March 1, 1971, and
     4  the tax imposed hereby shall apply to taxable years ending after
     5  December 31, 1970:  Provided, however, That a taxpayer who filed
     6  returns on the basis of a fiscal year or who is the beneficiary
     7  of an estate or trust or member of a partnership which files its
     8  returns under this article or with the Federal Government on the
     9  basis of a fiscal year, shall be subject to tax for his first
    10  taxable period on an apportioned basis reflecting the portion of
    11  his fiscal year or of the fiscal year of the estate, trust or
    12  partnership which postdates December 31, 1970, as prescribed by
    13  the department by regulations. Section 359 which provides for
    14  additions or penalties to the tax shall not take effect until
    15  thirty days after the date on which the department has
    16  promulgated and issued regulations relating to the duties and
    17  liabilities imposed on taxpayers under this article.
    18                             ARTICLE IV
    19                      CORPORATE NET INCOME TAX
    20                               PART I
    21                            DEFINITIONS
    22     Section 401.  Definitions.--The following words, terms, and
    23  phrases, when used in this article, shall have the meaning
    24  ascribed to them in this section, except where the context
    25  clearly indicates a different meaning:
    26     (1)  "Corporation."  A corporation having capital stock,
    27  joint-stock association, or limited partnership either organized
    28  under the laws of this Commonwealth, the United States, or any
    29  other state, territory, or foreign country, or dependency, and
    30  doing business in this Commonwealth, or having capital or
    19710H0190B0480                 - 115 -

     1  property employed or used in this Commonwealth by or in the name
     2  of itself, or any person, partnership, association, limited
     3  partnership, joint-stock association or corporation. The word
     4  "corporation" shall not include building and loan associations,
     5  banks, bank and trust companies, national banks, savings
     6  institutions, trust companies, insurance and surety companies.
     7     (2)  "Department."  The Department of Revenue of this
     8  Commonwealth.
     9     (3)  "Net income."  1.  In case the entire business of the
    10  corporation is transacted within this Commonwealth, for any
    11  taxable year which begins on or after January 1, 1971, net
    12  income for the calendar year or fiscal year as returned to and
    13  ascertained by the Federal Government, or in the case of a
    14  corporation participating in the filing of consolidated returns
    15  to the Federal Government, the net income which would have been
    16  returned to and ascertained by the Federal Government if
    17  separate returns had been made to the Federal Government for the
    18  current and prior taxable years, subject, however, to any
    19  correction thereof, for fraud, evasion, or error as finally
    20  ascertained by the Federal Government: Provided, That additional
    21  deductions shall be allowed from net income on account of any
    22  dividends received from any other corporation but only to the
    23  extent that such dividends are included in taxable income as
    24  returned to and ascertained by the Federal Government. No
    25  deduction shall be allowed for net operating losses sustained by
    26  the corporation during any other fiscal or calendar year. In the
    27  case of regulated investment companies as defined by the
    28  Internal Revenue Code of 1954, as amended, "net income" shall be
    29  investment company taxable income as defined in the aforesaid
    30  Internal Revenue Code of 1954, as amended. In arriving at "net
    19710H0190B0480                 - 116 -

     1  income" for Federal tax purposes for any taxable year beginning
     2  on or after January 1, 1971, any corporate net income tax paid
     3  to the Commonwealth pursuant to the provisions of this article
     4  shall not be allowed as a deduction however, the amount of
     5  corporate net income tax so paid and excluded from net income
     6  shall not be apportioned but shall be subject to tax at the rate
     7  imposed under this article.
     8     2.  In case the entire business of any corporation, other
     9  than a corporation engaged in doing business as a regulated
    10  investment company as defined by the Internal Revenue Code of
    11  1954, as amended, is not transacted within this Commonwealth,
    12  the tax imposed by this article shall be based upon such portion
    13  of the net income of such corporation for the fiscal or calendar
    14  year, as defined in subclause 1 hereof, and may be determined as
    15  follows:
    16     (a)  Division of Income.
    17     (1)  As used in this definition, unless the context otherwise
    18  requires:
    19     (A)  "Business income" means income arising from transactions
    20  and activity in the regular course of the taxpayer's trade or
    21  business and includes income from tangible and intangible
    22  property if the acquisition, management, and disposition of the
    23  property constitute integral parts of the taxpayer's regular
    24  trade or business operations.
    25     (B)  "Commercial domicile"  means the principal place from
    26  which the trade or business of the taxpayer is directed or
    27  managed.
    28     (C)  "Compensation" means wages, salaries, commissions and
    29  any other form of remuneration paid to employes for personal
    30  services.
    19710H0190B0480                 - 117 -

     1     (D)  "Financial organization" means any safe deposit company,
     2  credit union, small loan company, sales finance company, or
     3  investment company.
     4     (E)  "Nonbusiness income" means all income other than
     5  business income.
     6     (F)  "Public utility" means any business entity which owns or
     7  operates any plant, equipment, property, franchise, or license
     8  for the transmission of communications, transportation of goods
     9  or persons, except by pipeline, or the production, transmission,
    10  sale, delivery, or furnishing of electricity, water or steam;
    11  and whose rates of charges for goods or services have been
    12  established or approved by a Federal, State or local government
    13  or governmental agency.
    14     (G)  "Sales" means all gross receipts of the taxpayer not
    15  allocated under this definition.
    16     (H)  "State" means any state of the United States, the
    17  District of Columbia, the Commonwealth of Puerto Rico, any
    18  territory or possession of the United States, and any foreign
    19  country or political subdivision thereof.
    20     (I)  "This state" means the state in which the relevant tax
    21  return is filed or, in the case of application of this
    22  definition to the apportionment and allocation of income for
    23  local tax purposes, the subdivision or local taxing district in
    24  which the relevant tax return is filed.
    25     (2)  Any taxpayer having income from business activity which
    26  is taxable both within and without this State, other than
    27  activity as a financial organization or public utility or the
    28  rendering of purely personal services by an individual, shall
    29  allocate and apportion his net income as provided in this
    30  definition.
    19710H0190B0480                 - 118 -

     1     (3)  For purposes of allocation and apportionment of income
     2  under this definition, a taxpayer is taxable in another state if
     3  in that state he is subject to a net income tax, a franchise tax
     4  measured by net income, a franchise tax for the privilege of
     5  doing business, or a corporate stock tax, or that state has
     6  jurisdiction to subject the taxpayer to a net income tax
     7  regardless of whether, in fact, the state does or does not.
     8     (4)  Rents and royalties from real or tangible personal
     9  property, capital gains, interest, dividends or patent or
    10  copyright royalties, to the extent that they constitute
    11  nonbusiness income, shall be allocated as provided in paragraphs
    12  (5) through (8).
    13     (5)  (A)  Net rents and royalties from real property located
    14  in this State are allocable to this State.
    15     (B)  Net rents and royalties from tangible personal property
    16  are allocable to this State if and to the extent that the
    17  property is utilized in this State, or in their entirety if the
    18  taxpayer's commercial domicile is in this State and the taxpayer
    19  is not organized under the laws of or taxable in the state in
    20  which the property is utilized.
    21     (C)  The extent of utilization of tangible personal property
    22  in a state is determined by multiplying the rents and royalties
    23  by a fraction, the numerator of which is the number of days of
    24  physical location of the property in the state during the rental
    25  or royalty period in the taxable year and the denominator of
    26  which is the number of days of physical location of the property
    27  everywhere during all rental or royalty periods in the taxable
    28  year. If the physical location of the property during the rental
    29  or royalty period is unknown or unascertainable by the taxpayer,
    30  tangible personal property is utilized in the state in which the
    19710H0190B0480                 - 119 -

     1  property was located at the time the rental or royalty payer
     2  obtained possession.
     3     (6)  (A)  Capital gains and losses from sales of real
     4  property located in this State are allocable to this State.
     5     (B)  Capital gains and losses from sales of tangible personal
     6  property are allocable to this State if the property had a situs
     7  in this State at the time of the sale, or the taxpayer's
     8  commercial domicile is in this State and the taxpayer is not
     9  taxable in the state in which the property had a situs.
    10     (C)  Capital gains and losses from sales of intangible
    11  personal property are allocable to this State if the taxpayer's
    12  commercial domicile is in this State.
    13     (7)  Interest and dividends are allocable to this State if
    14  the taxpayer's commercial domicile is in this State.
    15     (8)  (A)  Patent and copyright royalties are allocable to
    16  this State if and to the extent that the patent or copyright is
    17  utilized by the payer in this State, or if and to the extent
    18  that the patent copyright is utilized by the payer in a state in
    19  which the taxpayer is not taxable and the taxpayer's commercial
    20  domicile is in this State.
    21     (B)  A patent is utilized in a state to the extent that it is
    22  employed in production, fabrication, manufacturing, or other
    23  processing in the state or to the extent that a patented product
    24  is produced in the state. If the basis of receipts from patent
    25  royalties does not permit allocation to states or if the
    26  accounting procedures do not reflect states of utilization, the
    27  patent is utilized in the state in which the taxpayer's
    28  commercial domicile is located.
    29     (C)  A copyright is utilized in a state to the extent that
    30  printing or other publication originates in the state. If the
    19710H0190B0480                 - 120 -

     1  basis of receipts from copyright royalties does not permit
     2  allocation to states or if the accounting procedures do not
     3  reflect states of utilization, the copyright is utilized in the
     4  state in which the taxpayer's commercial domicile is located.
     5     (9)  All business income shall be apportioned to this State
     6  by multiplying the income by a fraction, the numerator of which
     7  is the property factor plus the payroll factor plus the sales
     8  factor, and the denominator of which is three.
     9     (10)  The property factor is a fraction, the numerator of
    10  which is the average value of the taxpayer's real and tangible
    11  personal property owned or rented and used in this State during
    12  the tax period and the denominator of which is the average value
    13  of all the taxpayer's real and tangible personal property owned
    14  or rented and used during the tax period.
    15     (11)  Property owned by the taxpayer is valued at its
    16  original cost. Property rented by the taxpayer is valued at
    17  eight times the net annual rental rate. Net annual rental rate
    18  is the annual rental rate paid by the taxpayer less any annual
    19  rental rate received by the taxpayer from subrentals.
    20     (12)  The average value of property shall be determined by
    21  averaging the values at the beginning and ending of the tax
    22  period but the tax administrator may require the averaging of
    23  monthly values during the tax period if reasonably required to
    24  reflect properly the average value of the taxpayer's property.
    25     (13)  The payroll factor is a fraction, the numerator of
    26  which is the total amount paid in this State during the tax
    27  period by the taxpayer for compensation and the denominator of
    28  which is the total compensation paid everywhere during the tax
    29  period.
    30     (14)  Compensation is paid in this State if:
    19710H0190B0480                 - 121 -

     1     (A)  The individual's service is performed entirely within
     2  the State;
     3     (B)  The individual's service is performed both within and
     4  without the State, but the service performed without the State
     5  is incidental to the individual's service within the State; or
     6     (C)  Some of the service is performed in the State and the
     7  base of operations or if there is no base of operations, the
     8  place from which the service is directed or controlled is in the
     9  State, or the base of operations or the place from which the
    10  service is directed or controlled is not in any state in which
    11  some part of the service is performed, but the individual's
    12  residence is in this State.
    13     (15)  The sales factor is a fraction, the numerator of which
    14  is the total sales of the taxpayer in this State during the tax
    15  period, and the denominator of which is the total sales of the
    16  taxpayer everywhere during the tax period.
    17     (16)  Sales of tangible personal property are in this State
    18  if the property is delivered or shipped to a purchaser, other
    19  than the United States Government, within this State regardless
    20  of 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
    19710H0190B0480                 - 122 -

     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)
    19710H0190B0480                 - 123 -

     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
    19710H0190B0480                 - 124 -

     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
    19710H0190B0480                 - 125 -

     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
    19710H0190B0480                 - 126 -

     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 ten per cent upon each dollar of the net income of
    17  such corporation received by, and accruing to, such corporation
    18  during the calendar year 1972, and each year thereafter, except
    19  where a corporation reports to the Federal Government on the
    20  basis of a fiscal year, and has certified such fact to the
    21  department as required by section 403 of this article, in which
    22  case, such tax, at the rate of ten per cent, shall be levied,
    23  collected and paid upon all net income received by, and accruing
    24  to, such corporation during the fiscal year commencing in the
    25  calendar year 1972 and ending in the calendar year 1973 and each
    26  year thereafter.
    27                              PART III
    28                     REPORTS AND PAYMENT OF TAX
    29     Section 403.  Reports and Payment of Tax.--(a) For the
    30  purpose of ascertaining the amount of tax payable under this
    19710H0190B0480                 - 127 -

     1  article, it shall be the duty of every corporation, liable to
     2  pay tax under this article, on or before April 15, 1972, and
     3  each year thereafter, to transmit to the department, upon a form
     4  prescribed, prepared and furnished by the department, an annual
     5  report under oath or affirmation of its president, vice-
     6  president or other principal officer, and of its treasurer or
     7  assistant treasurer of net income taxable under the provisions
     8  of this article. Such report shall set forth:
     9     (1)  A true copy of its return to the Federal Government of
    10  the annual net income arising or accruing in the calendar or
    11  fiscal year next preceding, or such part or portions of said
    12  return, as the department may designate;
    13     (2)  If no return was filed with the Federal Government the
    14  report made to the department shall show such information as
    15  would have been contained in a return to the Federal Government
    16  had one been made; and
    17     (3)  Such other information as the department may require.
    18     (b)  For the purpose of ascertaining the amount of tax
    19  payable under this article for the taxable year 1971, and each
    20  taxable year thereafter, it shall be the duty of every
    21  corporation liable to pay tax under this article, on or before
    22  April 30, 1971, and on or before the end of the fourth month
    23  after the close of its previous fiscal year for fiscal year
    24  taxpayers, and each year thereafter, to transmit in like form
    25  and manner an additional tentative report and make payment
    26  pursuant to the provisions of the act of March 16, 1970 (Act No.
    27  69).
    28     (c)  The amount of all taxes, imposed under the provisions of
    29  this article, not paid on or before the times as above provided,
    30  shall bear interest at the rate of six per cent per annum from
    19710H0190B0480                 - 128 -

     1  the date they are due and payable until paid, except that if the
     2  taxable income has been, or is increased by the Commissioner of
     3  Internal Revenue, or by any other agency or court of the United
     4  States, interest shall be computed on the additional tax due
     5  from thirty days after the corporation receives notice of the
     6  change of income until paid: Provided, however, That any
     7  corporation may pay the full amount of such tax, or any part
     8  thereof, together with interest due to the date of payment,
     9  without prejudice to its right to present and prosecute a
    10  petition for resettlement, a petition for review, or an appeal
    11  to court. If it be thereafter determined that such taxes were
    12  overpaid, the department shall enter a credit to the account of
    13  such corporation, which may be used by it in the manner
    14  prescribed by law.
    15     (d)  If the officers of any corporation shall neglect, or
    16  refuse to make any report as herein required, or shall knowingly
    17  make any false report, the following percentages of the amount
    18  of the tax shall be added by the department to the tax
    19  determined to be due on the first one thousand dollars ($1,000)
    20  of tax ten per cent, on the next four thousand dollars ($4,000)
    21  five per cent, and on everything in excess of five thousand
    22  dollars ($5,000) one per cent, no such amounts added to the tax
    23  shall bear any interest whatsoever.
    24     (e)  If any corporation closes its fiscal year not upon
    25  December 31, but upon some other date, and reports to the
    26  Federal Government as of such other date, or would so report
    27  were it to make a return to the Federal Government, such
    28  corporation shall certify such fact to the department, and shall
    29  make the annual report, herein required, within thirty days
    30  after the return to the Federal Government is due, or would be
    19710H0190B0480                 - 129 -

     1  due were it to be required of such corporation, subject in all
     2  other respects to the provisions of this article. The tentative
     3  report required of such corporation shall be due not later than
     4  four months after the end of the next preceding fiscal year.
     5     (f)  If the corporation shall claim in its report that the
     6  return made to the Federal Government was inaccurate, the amount
     7  claimed by it to be the net income, taxable under this article,
     8  and the basis of such claim of inaccuracy, shall be fully
     9  specified.
    10     Section 404.  Consolidated Reports.--The department shall not
    11  permit any corporation owning or controlling, directly or
    12  indirectly, any of the voting capital stock of another
    13  corporation or of other corporations, subject to the provisions
    14  of this article, to make a consolidated report, showing the
    15  combined net income.
    16     Section 405.  Extension of Time to File Reports.--The
    17  department may, upon application made to it, in such form as it
    18  shall prescribe, on or prior to the last day for filing any
    19  annual report, and upon proper cause shown, grant to the
    20  corporation, required to file such report, an extension of not
    21  more than sixty days within which such report may be filed, and
    22  in case the Federal income tax authorities at any time grant a
    23  longer extension of time for filing such reports with the
    24  Federal Government, the department may grant an additional
    25  extension of time for filing the annual report under this
    26  article of not more than thirty days after the termination of
    27  the Federal extension, but the amount of tax due shall, in such
    28  cases, nevertheless, be subject to interest from the due dates
    29  and at the rates fixed by this article.
    30     Section 406.  Changes Made by Federal Government.--(a) If the
    19710H0190B0480                 - 130 -

     1  amount of the net income, as returned by any corporation to the
     2  Federal Government, is finally changed or corrected by the
     3  Commission of Internal Revenue or by any other agency or court
     4  of the United States, such corporation, within thirty days after
     5  the receipt of such final change or correction, shall make a
     6  corrected report, under oath or affirmation, to the department
     7  showing such finally changed or corrected net income, upon which
     8  the tax is required to be paid to the United States. In case a
     9  corporation fails to file a report of such correction, which
    10  results in an increase in net income within the time prescribed,
    11  there shall be added to the tax, a penalty of five dollars ($5)
    12  for every day during which such corporation is in default, but
    13  the department may abate any such penalty in whole or in part.
    14     (b)  If, as a result of such final change or correction,
    15  there should be any change made in the amount of the net income
    16  of any corporation upon which tax is imposed by this article,
    17  the department shall have the power, and its duty shall be to
    18  resettle such taxes. Whenever a resettlement shall have been
    19  made hereunder, the department shall resettle the account
    20  according to law, and shall credit or charge, as the case may
    21  be, the amount resulting from such resettlement upon the current
    22  accounts of the corporation with which it is made. The
    23  resettlement shall be subject to audit and approval by the
    24  Department of the Auditor General, as in the case of original
    25  settlements, and in case of the failure of the two departments
    26  to agree, the resettlement shall be submitted to the Board of
    27  Finance and Revenue, as in the case of original settlements.
    28     (c)  Where a report of change, correction, or redetermination
    29  of Federal income, or Federal tax, has been filed after a
    30  petition for review, or an appeal has been taken, such report
    19710H0190B0480                 - 131 -

     1  shall be deemed a part of the original annual report upon
     2  petition of the taxpayer at any subsequent proceeding as though
     3  it had been filed with such original report, and no separate
     4  petition for review or appeal from the resettlement resulting
     5  from such report of change, correction, or redetermination shall
     6  be necessary.
     7     (d)  The provisions of this section shall not be construed so
     8  as to permit a resettlement based upon the allowance of any
     9  deduction on account of net operating losses, sustained in other
    10  fiscal or calendar years, that are not allowed as deductions
    11  under the definition of "net income" as contained in this
    12  article.
    13     (e)  The provisions of this section shall apply to every
    14  corporation which was doing business in Pennsylvania in the year
    15  for which the Federal income has been changed, irrespective of
    16  whether or not such corporation has thereafter merged,
    17  consolidated, withdrawn or dissolved. Any clearance certificate
    18  issued by the department shall be conditioned upon the
    19  requirement that in the event of a change in Federal income for
    20  any year for which taxes have been paid to the Commonwealth, the
    21  corporation or its successor or its officers or its directors
    22  shall file with the department a report of change and pay any
    23  additional State tax resulting therefrom.
    24                              PART IV
    25                    SETTLEMENT AND RESETTLEMENT
    26     Section 407.  Settlement and Resettlement.--(a) All taxes due
    27  under this article shall be settled by the department, and such
    28  settlement shall be subject to audit and approval by the
    29  Department of the Auditor General, and shall, so far as
    30  possible, be made so that notice thereof may reach the taxpayer
    19710H0190B0480                 - 132 -

     1  before the end of two years after the tax report was required to
     2  be made.
     3     (b)  Promptly after the date of any such settlement, the
     4  department shall send, by mail or otherwise, a copy thereof to
     5  such corporation. The tax imposed by this article shall be
     6  settled, resettled, and otherwise imposed and adjusted in the
     7  same manner, within the same periods of time, and right of
     8  resettlement, review, appeal, and refund, as provided by law in
     9  the case of capital stock and franchise taxes imposed upon
    10  corporations.
    11     (c)  If, within a period of one year after the date of any
    12  settlement, the department is not satisfied with such
    13  settlement, or if at any time the net income as returned by any
    14  corporation to the Federal Government is finally changed or
    15  corrected by the Commissioner of Internal Revenue or by any
    16  other agency or court of the United States with the result that
    17  tax, in addition to the amount paid, is due under this article,
    18  the department is hereby authorized and empowered to make a
    19  resettlement of the tax due by such corporation, based upon the
    20  facts contained in the report, or upon any information within
    21  its possession or that shall come into its possession.
    22     Whenever a resettlement shall have been made hereunder, the
    23  department shall resettle the account according to law and shall
    24  credit or charge, as the case may be, the amount resulting from
    25  such resettlement upon the current accounts of the corporation
    26  with which it is made.
    27     The resettlement shall be subject to audit and approval by
    28  the Department of the Auditor General as in the case of original
    29  settlement, and in case of the failure of the two departments to
    30  agree, the resettlement shall be submitted to the Board of
    19710H0190B0480                 - 133 -

     1  Finance and Revenue as in the case of original settlements.
     2     (d)  If any corporation shall neglect or refuse to make any
     3  report and payment of tax required by this article, the
     4  department shall estimate the tax due by such corporation and
     5  subject to audit and approval by the Department of the Auditor
     6  General, settle the amount due by it for taxes, penalties, and
     7  interest thereon as prescribed herein, from which settlement
     8  there shall be no right of review or appeal, but the department,
     9  with the approval of the Department of the Auditor General, may
    10  require a report to be filed, and thereupon make a settlement
    11  based upon such report and cancel the estimated settlement.
    12                               PART V
    13                 ENFORCEMENT: RULES AND REGULATIONS
    14               INQUISITORIAL POWERS OF THE DEPARTMENT
    15     Section 408.  Enforcement; Rules and Regulations;
    16  Inquisitorial Powers of the Department.--(a) The department is
    17  hereby charged with the enforcement of the provisions of this
    18  article, and is hereby authorized and empowered to prescribe,
    19  adopt, promulgate, and enforce rules and regulations, not
    20  inconsistent with this article, relating to any matter or thing
    21  pertaining to the administration and enforcement of the
    22  provisions of this article, and the collection of taxes,
    23  penalties, and interest imposed by this article. The department
    24  is hereby required to have such rules and regulations,
    25  promulgated and adopted, printed and shall distribute the same
    26  to any person upon request.
    27     (b)  The department, or any agent authorized in writing by
    28  it, is hereby authorized to examine the books, papers, and
    29  records, and to investigate the character of the business of any
    30  corporation in order to verify the accuracy of any report made,
    19710H0190B0480                 - 134 -

     1  or if no report was made by such corporation, to ascertain and
     2  settle the tax imposed by this article. Every such corporation
     3  is hereby directed and required to give to the department, or
     4  its duly authorized agent, the means, facilities, and
     5  opportunity for such examinations and investigations, as are
     6  hereby provided and authorized. Any information gained by the
     7  department, as a result of any returns, investigations, or
     8  verifications required to be made by this article, shall be
     9  confidential, except for official purposes, and any person
    10  divulging such information shall be guilty of a misdemeanor,
    11  and, upon conviction thereof, shall be sentenced to pay a fine
    12  of not less than one hundred dollars ($100) or more than one
    13  thousand dollars ($1,000) and costs of prosecution, or to
    14  undergo imprisonment for not more than six months, or both.
    15     (c)  Whenever any person, acting for or on behalf of the
    16  department, shall in good faith institute legal proceedings for
    17  any violations of the provisions of this article, and for any
    18  reason shall fail to recover costs of record, such costs shall
    19  be a charge upon the proper county, as shall such costs in the
    20  event defendant is imprisoned for failure to pay fine or costs,
    21  or both, and shall be audited and paid as are costs of like
    22  character in said county.
    23     (d)  The powers, conferred by this article upon the
    24  department, relating to the administration or enforcement of
    25  this article, shall be in addition to, but not exclusive of, any
    26  other powers heretofore or hereafter conferred upon the
    27  department by law.
    28                              PART VI
    29                RETENTION OF RECORDS BY CORPORATION
    30     Section 409.  Retention of Records.--Each corporation shall
    19710H0190B0480                 - 135 -

     1  maintain and keep for a period of three years after any report
     2  is filed under this article, such record or records of its
     3  business within this Commonwealth for the period covered by such
     4  report and other pertinent papers, as may be required by the
     5  department.
     6                              PART VII
     7                             PENALTIES
     8     Section 410.  Penalties.--(a) Any person violating any of the
     9  provisions of section 409 shall be guilty of a misdemeanor, and
    10  shall, upon conviction thereof, be sentenced to pay a fine not
    11  exceeding one thousand dollars ($1,000) and costs of
    12  prosecution, or to undergo imprisonment for not more than six
    13  months, or both.
    14     (b)  Any person who shall wilfully make a false and
    15  fraudulent return of net income made taxable by this article,
    16  shall be guilty of wilful and corrupt perjury, and, upon
    17  conviction thereof, shall be subject to punishment as provided
    18  by law. Such penalty shall be in addition to any other penalties
    19  imposed by this article.
    20     (c)  Any person, who wilfully fails, neglects, or refuses to
    21  make a report or to pay the tax as herein prescribed, or who
    22  shall refuse to permit the department to examine the books,
    23  papers, and records of any corporation liable to pay tax under
    24  this article, shall be guilty of a misdemeanor, and, upon
    25  conviction thereof, shall be sentenced to pay a fine not
    26  exceeding one thousand dollars ($1,000) and costs of
    27  prosecution, or to undergo imprisonment not exceeding six
    28  months, or both. Such penalty shall be in addition to any other
    29  penalties imposed by this article.
    30                             PART VIII
    19710H0190B0480                 - 136 -

     1                      REPEALER; EFFECTIVE DATE
     2     Section 411.  Repeal.--The act of May 16, 1935 (P.L.208),
     3  known as the "Corporate Net Income Tax Act," is repealed.
     4     Section 412.  Effective Date.--This article shall take effect
     5  January 1, 1971.
     6                             ARTICLE V
     7                       CORPORATION INCOME TAX
     8                               PART I
     9                            DEFINITIONS
    10     Section 501.  Definitions.--The following words, terms and
    11  phrases when used in this article shall have the meaning
    12  ascribed to them in this section, except where the context
    13  clearly indicates a different meaning:
    14     (1)  "Corporation."  A corporation having capital stock,
    15  joint-stock association or limited partnership, either organized
    16  under the laws of this Commonwealth, the United States, or any
    17  other state, territory or foreign country or dependency, and
    18  carrying on activities in this Commonwealth, or owning property
    19  in this Commonwealth by or in the name of itself or any person,
    20  partnership, association, limited partnership, joint-stock
    21  association, or corporation. The word "corporation" shall not
    22  include nonprofit corporations, building and loan associations,
    23  banks, bank and trust companies, national banks, savings
    24  institutions, trust companies, insurance and surety companies.
    25     (2)  "Department."  The Department of Revenue of this
    26  Commonwealth.
    27     (3)  "Net income."
    28     1.  Net income shall be defined as set forth in Article III.
    29     2.  In the case of corporations owning property or carrying
    30  on activities within and without this Commonwealth, the net
    19710H0190B0480                 - 137 -

     1  income of such corporations derived from sources within this
     2  Commonwealth for the fiscal or calendar year shall be determined
     3  by allocations and apportionments of net income as set forth in
     4  Article III.
     5     (4)  "Sources within this Commonwealth" includes tangible or
     6  intangible property located or having a situs in this
     7  Commonwealth and any activities carried on in this Commonwealth,
     8  regardless of whether carried on in intrastate, interstate or
     9  foreign commerce.
    10     (5)  "Carrying on activities" shall include every act, power
    11  or privilege exercised or enjoyed in this Commonwealth as an
    12  incident to, or by virtue of, the powers and privileges acquired
    13  by the nature of the corporate organization.
    14                              PART II
    15                         IMPOSITION OF TAX
    16     Section 502.  Imposition of Tax.--Every corporation carrying
    17  on activities in this Commonwealth or owning property in this
    18  Commonwealth by or in the name of itself or any person,
    19  partnership, joint-stock association or corporation shall be
    20  subject to and shall pay a State property tax on net income
    21  derived from sources within this Commonwealth at the rate of
    22  twelve per cent per annum upon each dollar of such net income
    23  received by and accruing to such corporation during the calendar
    24  year 1971, except where a corporation reports to the Federal
    25  Government on the basis of a fiscal year and has certified such
    26  fact to the department as required by section 403 of Article IV,
    27  in which case such tax at the rate of twelve per cent shall be
    28  levied, collected and paid upon each dollar of such net income
    29  received by and accruing to such corporation during the fiscal
    30  year commencing in the calendar year 1971, and a similar tax at
    19710H0190B0480                 - 138 -

     1  the rate of nine and one-half per cent per annum upon each
     2  dollar of such net income received by and accruing to such
     3  corporation during the calendar year 1972, except where a
     4  corporation reports to the Federal Government on the basis of a
     5  fiscal year and has certified such fact to the department as
     6  required by section 403 of Article IV, in which case such tax at
     7  the rate of nine and one-half per cent per annum shall be
     8  levied, collected and paid upon each dollar of such net income
     9  received by and accruing to such corporation during the fiscal
    10  years commencing in the calendar year 1972, and each year
    11  thereafter: Provided, however, That such net income shall not
    12  include income for any period for which the corporation is
    13  subject to taxation under Article IV.
    14                              PART III
    15                 PROCEDURE; ENFORCEMENT; PENALTIES
    16     Section 503.  Procedure; Enforcement; Penalties.--Parts III,
    17  IV, V, VI and VII of Article IV are incorporated by reference
    18  into this article in so far as they are applicable to the tax
    19  imposed hereunder.
    20                              PART IV
    21                      REPEALER; EFFECTIVE DATE
    22     Section 505.  Repeal.--The act of August 24, 1951 (P.L.1417),
    23  known as the "Corporation Income Tax Law," is repealed.
    24     Section 506.  Effective Date.--This article shall take effect
    25  January 1, 1971.
    26                             ARTICLE VI
    27                    CAPITAL STOCK--FRANCHISE TAX
    28                               PART I
    29                     VALUATION OF CAPITAL STOCK
    30     Section 601.  Valuation of Capital Stock.--Hereafter, except
    19710H0190B0480                 - 139 -

     1  in the case of corporations of the first class, nonprofit
     2  corporations, and cooperative agricultural associations not
     3  having capital stock and not conducted for profit, banks,
     4  savings institutions, title insurance, or trust companies,
     5  building and loan associations, and insurance companies, it
     6  shall be the duty of every corporation having capital stock,
     7  every joint-stock association, limited partnership, and every
     8  company whatsoever, now or hereafter organized or incorporated
     9  by or under any laws of this Commonwealth, and of every
    10  corporation, joint-stock association, limited partnership, and
    11  company whatsoever, now or hereafter incorporated or organized
    12  by or under the law of any other state or territory of the
    13  United States, or by the United States, or by any foreign
    14  government, and doing business in and liable to taxation within
    15  this Commonwealth or having capital or property employed or used
    16  in this Commonwealth by or in the name of any limited
    17  partnership or joint-stock association, company, or corporation
    18  whatsoever, association or associations, copartnership or
    19  copartnerships, person or persons, or in any other manner, to
    20  make annually a report in writing to the Department of Revenue
    21  on a form or forms to be prescribed and furnished by it setting
    22  forth in addition to any other information required by the
    23  Department of Revenue:
    24     First.  The amount of its capital stock at the close of the
    25  year for which report is made, together with the highest selling
    26  price per share, and the average selling price thereof during
    27  said year.
    28     Second.  Its debt account.
    29     Third.  Its income account, together with the disposition of
    30  any net income, and its profit and loss statement.
    19710H0190B0480                 - 140 -

     1     Fourth.  Its general balance sheet.
     2     Fifth.  Its real estate and tangible personal property, if
     3  any, owned and permanently located outside of the Commonwealth,
     4  and value of the same; and the value of the property, if any,
     5  exempt from taxation.
     6     Sixth.  A valuation and appraisal, in the manner hereinafter
     7  provided, of the capital stock of the said corporation, company,
     8  joint-stock association, or limited partnership, at its actual
     9  value in cash as it existed at the close of the year for which
    10  the report is made.
    11     The affidavit of two of the officers of such corporation,
    12  limited partnership, joint-stock association or company, shall
    13  be attached to said report. Such affidavit shall be in the form
    14  required by the Department of Revenue, but shall state, in
    15  addition to any other averments required by the department,
    16  that, with fidelity and according to the best of their knowledge
    17  and belief, the affiants have estimated, valued and appraised,
    18  as shown in said report, the capital stock of the said
    19  corporation at its actual value in cash as it existed at the
    20  close of the year for which report is made; taking into
    21  consideration, first, the average which said stock sold for
    22  during the year; and second, the price or value indicated or
    23  measured by net earnings or by the amount of profit made and
    24  either declared in dividends, expended in betterments, or
    25  carried into the surplus or sinking fund; and third, the actual
    26  value indicated or measured by consideration of the intrinsic
    27  value of its tangible property and assets, and of the value of
    28  its good will and franchises and privileges, as indicated by the
    29  material results of their exercise, taking also into
    30  consideration the amount of its indebtedness.
    19710H0190B0480                 - 141 -

     1     The time for filing annual reports may be extended; taxpayers
     2  may be permitted to file their annual and tentative reports on a
     3  fiscal year basis; the procedure in case the Department of
     4  Revenue is not satisfied with the appraisement made by the
     5  officers of the taxpayer, and the penalties for failing to file
     6  reports and pay taxes shall be as prescribed by law.
     7                              PART II
     8                         IMPOSITION OF TAX
     9     Section 602.  Imposition of Tax.--(a) That every domestic
    10  corporation other than corporations of the first class,
    11  nonprofit corporations, and cooperative agricultural
    12  associations not having capital stock and not conducted for
    13  profit, and every joint-stock association, limited partnership,
    14  and company whatsoever, from which a report is required under
    15  section 601 hereof, shall be subject to, and pay into the
    16  treasury of the Commonwealth annually, through the Department of
    17  Revenue, a tax at the rate of nine mills, upon each dollar of
    18  the actual value of its whole capital stock of all kinds,
    19  including common, special, and preferred, as ascertained in the
    20  manner prescribed in section 601, for the calendar year 1971 and
    21  the fiscal year beginning in 1971 and each year thereafter,
    22  except that any domestic corporation, limited partnership,
    23  joint-stock association or company subject to the tax prescribed
    24  herein may elect to compute and pay its tax under and in
    25  accordance with the provisions of subsection (b) of this section
    26  602: Provided, That the provisions of this section shall not
    27  apply to the taxation of the capital stock of corporations,
    28  limited partnerships and joint-stock associations organized for
    29  manufacturing, processing, research or development purposes,
    30  which is invested in and actually and exclusively employed in
    19710H0190B0480                 - 142 -

     1  carrying on manufacturing, processing, research or development
     2  within the State, but every corporation, limited partnership or
     3  joint-stock association organized for the purpose of
     4  manufacturing, processing, research or development shall pay the
     5  State tax of nine mills herein provided, upon such proportion of
     6  its capital stock, if any, as may be invested in any property or
     7  business not strictly incident or appurtenant to the
     8  manufacturing, processing, research or development business, in
     9  addition to the local taxes assessed upon its property in the
    10  district where located, it being the object of this proviso to
    11  relieve from State taxation only so much of the capital stock as
    12  is invested purely in the manufacturing, processing, research or
    13  development plant and business.
    14     (b)  Every foreign corporation, joint-stock association,
    15  limited partnership, and company whatsoever, from which a report
    16  is required under section 601 hereof, shall be subject to and
    17  pay into the treasury of the Commonwealth annually, through the
    18  Department of Revenue, a franchise tax at the rate of nine mills
    19  for the calendar year 1971 and the fiscal year beginning in 1971
    20  and each year thereafter, upon a taxable value to be determined
    21  in the following manner. The actual value of its whole capital
    22  stock of all kinds, including common, special, and preferred,
    23  shall be ascertained in the manner prescribed in section 601 of
    24  this article. The taxable value shall then be determined by
    25  employing the relevant apportionment factors set forth in
    26  Article IV.
    27     (c)  The term processing, as used in this section, shall mean
    28  and be limited to the following activities when engaged in as a
    29  business enterprise:
    30     (1)  The cooking or freezing of fruits, vegetables,
    19710H0190B0480                 - 143 -

     1  mushrooms, fish, seafood, meats or poultry, when the person
     2  engaged in such business packages such property in sealed
     3  containers for wholesale distribution.
     4     (2)  The scouring, carbonizing, cording, combing, throwing,
     5  twisting or winding of natural or synthetic fibers, or the
     6  spinning, bleaching, dyeing, printing or finishing of yarns or
     7  fabrics, when such activities are performed prior to sale to the
     8  ultimate consumer.
     9     (3)  The electroplating, galvanizing, enameling, anodizing,
    10  coloring, finishing, impregnating or heat treating of metals or
    11  plastics for sale or in the process of manufacturing.
    12     (4)  The rolling, drawing or extruding of ferrous and
    13  nonferrous metals.
    14     (5)  The fabrication for sale of ornamental or structural
    15  metal or metal stairs, staircases, gratings, fire escapes or
    16  railings, (not including fabrication work done at the
    17  construction site).
    18     (6)  The preparation of animal feed or poultry feed for sale.
    19     (7)  The production, processing and bottling of nonalcoholic
    20  beverages for wholesale distribution.
    21     (8)  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     (9)  The operation of a saw mill or planing mill for the
    26  production of lumber or lumber products for sale.
    27     (10)  The milling for sale of flour or meal from grains.
    28     (11)  The publishing of books, newspapers, magazines or other
    29  periodicals, printing and broadcasting radio and television
    30  programs by licensed commercial or educational stations.
    19710H0190B0480                 - 144 -

     1     (12)  The processing of used lubricating oils.
     2     (13)  The blending, rectification or production by
     3  distillation or otherwise of alcohol or alcoholic liquors,
     4  except the distillation of alcohol from by-products of wine-
     5  making for the sole purpose of fortifying wine.
     6     (d)  "Research and development" shall mean activities
     7  relating to the discovery of new and the refinement of known
     8  substances, products, processes, theories and ideas, but shall
     9  not include activities directed primarily to the accumulation or
    10  analysis of commercial, financial or mercantile data.
    11     (e)  It shall be the duty of the treasurer or other officers
    12  having charge of any such corporation, joint-stock association,
    13  or limited partnership, upon which a tax is imposed by this
    14  section, to transmit the amount of said tax to the Department of
    15  Revenue within the time prescribed by law: Provided, That for
    16  the purposes of this act interest in limited partnerships or
    17  joint-stock associations shall be deemed to be capital stock,
    18  and taxable accordingly: Provided, further, That corporations,
    19  limited partnerships, and joint-stock associations, liable to a
    20  tax under this section, shall not be required to pay any further
    21  tax on the mortgages, bonds, and other securities owned by them
    22  and in which the whole body of stockholders or members, as such,
    23  have the entire equitable interest in remainder; but
    24  corporations, limited partnerships, and joint-stock
    25  associations, owning or holding such securities as trustees,
    26  executors, administrators, guardians, or in any other manner
    27  than for the whole body of stockholders or members thereof as
    28  sole equitable owners in remainder, shall return and pay the tax
    29  imposed by this act upon all securities so owned or held by
    30  them, as in the case of individuals.
    19710H0190B0480                 - 145 -

     1     (f)  Any holding company subject to the capital stock tax or
     2  the franchise tax imposed by this section may elect to compute
     3  said tax by applying the rate of tax of nine mills, upon each
     4  dollar to ten per cent of the actual value of its whole capital
     5  stock. If exercised, this election shall be in lieu of any other
     6  apportionment or allocation to which such company would
     7  otherwise be entitled.
     8     The term "holding company" shall mean any corporation (i) at
     9  least ninety per cent of the gross income of which for the
    10  taxable year is derived from dividends, interest, gains from the
    11  sale or other disposition of stock or securities and the
    12  rendition of management and administrative services to
    13  subsidiary corporations, and (ii) at least sixty per cent of the
    14  actual value of the total assets of which consists of stock
    15  securities or indebtedness of subsidiary corporations.
    16     The term "subsidiary corporation" shall mean any corporation,
    17  a majority of the total issued and outstanding shares of voting
    18  stock of which are owned by the taxpayer corporation directly or
    19  through one or more intervening subsidiary corporations.
    20     (g)  Notwithstanding any other provisions contained in this
    21  section 602, relating to the appraisal, allocation or
    22  apportionment of the value of the capital stock of a corporation
    23  subject to tax in the Commonwealth of Pennsylvania, every
    24  domestic corporation and every foreign corporation registered to
    25  do business in Pennsylvania and (i) which maintains an office in
    26  Pennsylvania and (ii) which has filed a timely election to be
    27  taxed as a regulated investment company with the Federal
    28  Government and (iii) which duly qualifies to be taxed as a
    29  regulated investment company under the provisions of the
    30  Internal Revenue Code of 1954 as amended, shall be taxed as a
    19710H0190B0480                 - 146 -

     1  regulated investment company and shall be subject to the capital
     2  stock or franchise tax imposed by section 602, which tax shall
     3  be computed in the following manner:
     4     (1)  The value of its capital stock shall be determined by
     5  adding its net asset values as of the last day of each month
     6  during the taxable period or year and dividing the total sum by
     7  the number of months involved, for which purpose net asset value
     8  means the actual market value of all assets owned by such
     9  corporation without any exemptions or exclusions less all of its
    10  liabilities, debts and other obligations.
    11     (2)  The proportion of such value taxable in this
    12  Commonwealth at the rate of nine mills, shall be determined by
    13  applying to such value a fraction, the numerator of which is the
    14  sum of the corporation's gross receipts from (i) sales of its
    15  own shares to Pennsylvania investors and (ii) sales of its
    16  portfolio securities where the orders for such sales are placed
    17  with or credited to Pennsylvania offices of registered
    18  securities dealers and the denominator of which fraction is the
    19  corporation's total gross receipts from (i) sales of its own
    20  shares and (ii) sales of its portfolio securities. Pennsylvania
    21  investors shall mean individuals residing in Pennsylvania at the
    22  time of the sale or corporations or other entities having their
    23  principal place of business located in Pennsylvania at such
    24  time.
    25     (3)  Any regulated investment company shall have the right
    26  annually, to elect to compute its capital stock or franchise tax
    27  by applying the rate of tax of nine mills, upon each dollar to
    28  ten per cent of the capital stock value of such corporation. If
    29  exercised this election shall be in lieu of any other
    30  apportionment or allocation to which such corporation would
    19710H0190B0480                 - 147 -

     1  otherwise be entitled.
     2                              PART III
     3                 PROCEDURE; ENFORCEMENT; PENALTIES
     4     Section 603.  Procedure; Enforcement; Penalties.--Parts III,
     5  IV, V, VI, and VII of Article IV are incorporated by reference
     6  into this article in so far as they are applicable to the tax
     7  imposed hereunder, except that the taxable proportion in the
     8  capital stock tax shall not include any property actually and
     9  exclusively used in manufacturing, processing, research and
    10  development situated within the Commonwealth and the three
    11  fraction formula in the capital stock and franchise taxes shall
    12  not include any property, payroll or sales factors attributable
    13  to manufacturing, processing, research or development activities
    14  in the Commonwealth.
    15                              PART IV
    16                       REPEAL; EFFECTIVE DATE
    17     Section 605.  Repeal.--Sections 20 and 21, act of June 1,
    18  1889 (P.L.420), entitled "A further supplement to an act
    19  entitled 'An act to provide revenue by taxation,' approved the
    20  seventh day of June, Anno Domini one thousand eight hundred and
    21  seventy-nine," are repealed.
    22     Section 606.  Effective Date.--This article shall take effect
    23  January 1, 1971.
    24                            ARTICLE VII
    25                          BANK SHARES TAX
    26                               PART I
    27                         IMPOSITION OF tax
    28     Section 701.  Imposition of Tax.--Every bank or savings
    29  institution having capital stock, incorporated by or under any
    30  law of this Commonwealth or under any law of the United States,
    19710H0190B0480                 - 148 -

     1  and located within this Commonwealth, shall, on or before April
     2  15 in each and every year, make to the Department of Revenue a
     3  report in writing, verified as required by law, setting forth
     4  the full number of shares of the capital stock subscribed for or
     5  issued, as of the preceding January 1, by such bank or savings
     6  institution having capital stock, and the actual value thereof
     7  as of the preceding January 1, which actual value shall be
     8  ascertained as hereinafter provided. It shall be the duty of the
     9  Department of Revenue to assess such shares for the calendar
    10  year beginning January 1, 1971, and each year thereafter, at the
    11  rate of fifteen mills upon each dollar of actual value thereof,
    12  the actual value of each share of stock to be ascertained and
    13  fixed by adding together the amount of capital stock paid in,
    14  the surplus, and undivided profits, and dividing this amount by
    15  the number of shares. It shall be the duty of every bank or
    16  savings institution having capital stock, at the time of making
    17  every report required by this section, to compute the tax and to
    18  pay the amount of said tax to the State Treasurer, through the
    19  Department of Revenue either from its general fund, or from the
    20  amount of said tax collected from its shareholders: Provided,
    21  That for the calendar year beginning January 1, 1971, and each
    22  year thereafter, such bank or savings institution having capital
    23  stock, upon the date its report, herein required is made for
    24  such calendar year beginning January 1, 1971, and each year
    25  thereafter, shall pay to the Department of Revenue not less than
    26  eighty per cent of the tax due to the Commonwealth by it for
    27  such calendar year, and the remaining tax due shall be paid at
    28  the time when the report herein required for the year next
    29  succeeding is made: Provided, That in case any bank or savings
    30  institution having capital stock, incorporated under the law of
    19710H0190B0480                 - 149 -

     1  this State or of the United States, shall collect, annually,
     2  from the shareholders thereof said tax of fifteen mills, on the
     3  dollar upon the actual value of all the shares of stock of said
     4  bank or savings institution, according to the provisions of this
     5  article, that have been subscribed for or issued, and pay the
     6  same into the State Treasury, through the Department of Revenue,
     7  the shares, and so much of the capital and profits of such bank
     8  or savings institution having capital stock as shall not be
     9  invested in real estate, shall be exempt from local taxation
    10  under the laws of this Commonwealth; and such bank or savings
    11  institution having capital stock shall not be required to make
    12  any report to the local assessor or county commissioners of its
    13  personal property owned by it in its own right for purposes of
    14  taxation and shall not be required to pay any tax thereon.
    15                              PART II
    16                 PROCEDURE; ENFORCEMENT; PENALTIES
    17     Section 702.  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 III
    22                      REPEALER; EFFECTIVE DATE
    23     Section 705.  Repeal.--Clause 1 of section 1, act of July 15,
    24  1897 (P.L.292), entitled "An act to provide revenue by
    25  taxation," is repealed.
    26     Section 706.  Effective Date.--This article shall take effect
    27  January 1, 1971.
    28                            ARTICLE VIII
    29           TITLE INSURANCE AND TRUST COMPANIES SHARES TAX
    30                               PART I
    19710H0190B0480                 - 150 -

     1                         IMPOSITION OF TAX
     2     Section 801.  Imposition of Tax.--Every company incorporated
     3  under the provisions of section 29 of an act, entitled "An act
     4  to provide for the incorporation and regulation of certain
     5  corporations," approved April 29, 1874, and its supplements, or
     6  any other act of Assembly heretofore or hereafter approved, for
     7  the insurance of owners of real estate, mortgages, and others
     8  interested in real estate, from loss by reason of defective
     9  titles, liens, and encumbrances, and every company entitled to
    10  benefits of, and every company having any of the powers of,
    11  companies entitled to the benefits of an act, entitled "An act
    12  conferring upon certain fidelity, insurance, safety deposit,
    13  trust, and savings companies, the powers and privileges of
    14  companies incorporated under the provisions of section 29 of an
    15  act, entitled 'An act to provide for the incorporation and
    16  regulation of certain corporations,' approved April 29, 1874,
    17  and of the supplements thereto," approved June 27, 1895,
    18  commonly known as title insurance or trust companies, and every
    19  company organized as a bank and trust company or as a trust
    20  company under any act of Assembly heretofore or hereafter
    21  approved, except any such companies, all of the shares of
    22  capital stock of which (other than shares necessary to qualify
    23  directors) are owned by a company which is liable to pay to the
    24  Commonwealth a tax on shares, shall, on or before April 15 in
    25  each and every year, make to the Department of Revenue a report
    26  in writing, setting forth the full number of shares of the
    27  capital stock subscribed for or issued by such company, and the
    28  actual value thereof as of January 1 preceding, which shall be
    29  ascertained as hereinafter provided. It shall be the duty of the
    30  Department of Revenue, to assess such shares for taxation at the
    19710H0190B0480                 - 151 -

     1  rate of fifteen mills upon each dollar of the actual value
     2  thereof, the actual value of each share of stock to be
     3  ascertained and fixed by adding together the amount of capital
     4  stock paid in, the surplus, and undivided profits, and dividing
     5  this amount by the number of shares.
     6     It shall be the duty of every such company, at the time of
     7  making every report required by this section, to compute the tax
     8  and to pay the amount of said tax to the State Treasurer,
     9  through the Department of Revenue, either from its general fund,
    10  or from the amount of said tax collected from its shareholders:
    11  Provided, That for the calendar year beginning January 1, 1971,
    12  and each year thereafter, every such company shall, at the time
    13  of making its report for the calendar year beginning January 1,
    14  1971, and each year thereafter, compute the tax and pay to the
    15  State Treasurer, through the Department of Revenue, either from
    16  its general fund, or from the amount of said tax collected from
    17  its shareholders, not less than eighty per cent of the tax due
    18  to the Commonwealth by it for such calendar year and the
    19  remaining tax due shall be paid at the time when the report
    20  herein required for the year next succeeding is made:  Provided,
    21  That upon the payment of the tax fixed by this act into the
    22  State Treasury, through the Department of Revenue, the shares
    23  and so much of the capital stock, surplus, profits, and deposits
    24  of such company as shall not be invested in real estate, shall
    25  be exempt from all other taxation under the laws of this
    26  Commonwealth. The procedure, in case the Department of Revenue
    27  be not satisfied with the report made by any title insurance or
    28  trust company, and the penalties for failing to make such report
    29  and pay the tax, shall be as provided by law.
    30                              PART II
    19710H0190B0480                 - 152 -

     1                 PROCEDURE; ENFORCEMENT; PENALTIES
     2     Section 802.  Procedure; Enforcement; Penalties.--Parts III,
     3  IV, V, VI and VII of Article IV are incorporated by reference
     4  into this article insofar as they are applicable to the tax
     5  imposed hereunder.
     6                              PART III
     7                      REPEALER; EFFECTIVE DATE
     8     Section 805.  Repeal.--Section 1, act of June 13, 1907
     9  (P.L.640), entitled "An act to provide revenue by levying a tax
    10  upon the shares of stock of companies incorporated under the
    11  provisions of section twenty-nine of an act, entitled 'An act to
    12  provide for the incorporation and regulation of certain
    13  corporations,' approved April twenty-ninth, one thousand eight
    14  hundred and seventy-four, and the supplements thereto; for the
    15  insurance of owners of real estate, mortgages, and others
    16  interested in real estate, from loss by reason of defective
    17  titles, liens, and encumbrances; and of companies entitled to
    18  the benefits of, and of companies having any of the powers of,
    19  companies entitled to the benefits of an act, entitled 'An act
    20  conferring upon certain fidelity, insurance, safety deposit,
    21  trust, and savings companies the powers and privileges of
    22  companies incorporated under the provisions of section twenty-
    23  nine of an act, entitled "An act to provide for the
    24  incorporation and regulation of certain corporations," approved
    25  April twenty-ninth, Anno Domini one thousand eight hundred and
    26  seventy-four, and of the supplements thereto,' approved June
    27  twenty-seventh, one thousand eight hundred and ninety-five,
    28  commonly known as title insurance or trust companies," is
    29  repealed.
    30     Section 806.  Effective Date.--This article shall take effect
    19710H0190B0480                 - 153 -

     1  January 1, 1971.
     2                             ARTICLE IX
     3                       INSURANCE PREMIUMS TAX
     4                               PART I
     5                            DEFINITIONS
     6     Section 901.  Definitions.--The following terms, when used in
     7  this act, shall have the meaning ascribed to them in this
     8  section:
     9     (1)  "Insurance company" means every insurance company,
    10  association or exchange, incorporated or organized by or under
    11  the laws of this Commonwealth, the United States, territories,
    12  dependencies, other states, or foreign governments, and engaged
    13  in transacting insurance business of any kind or classification
    14  within this Commonwealth, except purely mutual beneficial
    15  associations whose funds for the benefit of members and families
    16  or heirs are made up entirely of the weekly, monthly, quarterly,
    17  semi-annual or annual contributions to their members and the
    18  accumulated interest thereon and corporations organized under
    19  the act of June 21, 1937 (P.L.1948), known as the "Nonprofit
    20  Hospital Plan Act," and the act of June 27, 1939 (P.L.1125),
    21  known as the "Nonprofit Medical, Osteopathic, Dental and
    22  Podiatry Service Corporation Act."
    23     (2)  "Gross premiums" means premiums, premium deposits or
    24  assessments received by any insurance company, whether received
    25  in money or in the form of notes, credits, or any other
    26  substitutes for money, and whether collected in this
    27  Commonwealth or elsewhere. Gross premiums shall not include: (i)
    28  amounts returned on policies canceled or not taken; (ii)
    29  premiums received for reinsurance; (iii) in the case of mutual
    30  insurance companies, associations, exchanges, and stock
    19710H0190B0480                 - 154 -

     1  companies with participating features, that portion of the
     2  advanced premiums, premium deposits or assessments returned in
     3  cash or credited to members or policyholders, whether as
     4  dividends, earnings, savings, or return deposits, upon the
     5  expiration or termination of their contracts; and (iv) notes or
     6  other obligations received by mutual insurance companies to
     7  secure contingent premium liabilities to the extent that no
     8  assessment has been made and collected against said notes or
     9  obligations.
    10                              PART II
    11                         IMPOSITION OF TAX
    12     Section 902.  Imposition of Tax.--Every insurance company, as
    13  herein defined, transacting business in the Commonwealth of
    14  Pennsylvania, shall pay to the department, a tax at the rate of
    15  two per cent of the gross premiums received from business done
    16  within this Commonwealth during each calendar year, except that
    17  any insurance company which was not subject to this tax prior to
    18  1971 shall be taxed at the rate of one per cent for the year
    19  1971 and thereafter at the rate of two per cent.
    20                              PART III
    21                           ANNUAL REPORT
    22     Section 903.  Annual Report.--Every insurance company shall
    23  make a report to the department on a form prescribed by it on or
    24  before April 15 of each year, showing the gross premiums
    25  received from business transacted in the Commonwealth during the
    26  year ending December 31 preceding. When making such report, the
    27  insurance company shall compute and pay to the Commonwealth the
    28  tax upon the gross premiums received from business transacted
    29  within this Commonwealth during such preceding year.
    30                              PART IV
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     1                 PROCEDURE; ENFORCEMENT; PENALTIES
     2     Section 904.  Procedure; Enforcement; Penalties.--Parts III,
     3  IV, V, VI and VII of Article IV are incorporated by reference
     4  into this article in so far as they are applicable to the tax
     5  imposed hereunder.
     6                               PART V
     7     Section 905.  Repeal.--The act of February 21, 1961 (P.L.33),
     8  entitled "An act imposing a State tax on gross premiums, premium
     9  deposits, and assessments received from business transacted
    10  within this Commonwealth by certain insurance companies,
    11  associations, and exchanges; requiring the filing of annual and
    12  tentative reports and the computation and payment of tax;
    13  providing for the rights, powers and duties of the Department of
    14  Revenue, the taxpayers and officers thereof; and providing
    15  penalties," is repealed.
    16     Section 906.  Effective Date.--This article shall take effect
    17  January 1, 1971.
    18                             ARTICLE X
    19             CAPITAL STOCK TAX ON FOREIGN CORPORATIONS
    20                               PART I
    21                            DEFINITIONS
    22     Section 1001.  Definitions.--The following terms when used in
    23  this article shall have the meanings ascribed to them in this
    24  section:
    25     (1)  "Foreign corporation" means any corporation, limited
    26  partnership or joint-stock association chartered or created by
    27  or under the laws of any other state or of the United States or
    28  of any foreign country, which has been issued a certificate of
    29  authority by the Department of State to do business within this
    30  Commonwealth and which either (i) has its principal office or
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     1  chief place of business located within this Commonwealth, or
     2  (ii) has any part of its capital actually employed within this
     3  Commonwealth. The term "foreign corporation" shall not include
     4  foreign insurance companies and foreign nonprofit corporations
     5  which do not have capital stock.
     6     (2)  "Increase of capital" means, (i) as to foreign
     7  corporations doing business in this Commonwealth, any increase
     8  of capital in excess of the amount actually employed in this
     9  Commonwealth at any time prior to January 1, 1971 by such
    10  corporations reporting on a calendar year basis, or at any time
    11  prior to the first day of any fiscal year, beginning in the
    12  calendar year 1971, by such corporations reporting on a fiscal
    13  year basis; (ii) as to corporations admitted to do business in
    14  this Commonwealth after the effective date of this article,
    15  capital actually employed within this Commonwealth at the time
    16  of or after receiving a certificate of authority to do business
    17  from the Department of State and any increase thereof.
    18                              PART II
    19                         IMPOSITION OF TAX
    20     Section 1002.  Imposition of Tax.--From and after the
    21  effective date of this article, every foreign corporation, in
    22  addition to complying with all the laws of the Commonwealth now
    23  or hereafter in effect, shall, for the privilege of exercising
    24  its franchises in Pennsylvania, pay to the department an excise
    25  tax of one-third of one per cent upon the amount of any increase
    26  of capital actually employed within this Commonwealth: Provided,
    27  That credit shall be allowed for said excise tax in the
    28  following cases:
    29     (1)  Merger of domestic corporation or corporations and/or
    30  foreign corporation or corporations with a foreign corporation
    19710H0190B0480                 - 157 -

     1  and the surviving foreign corporation in the merger is then
     2  authorized, or will immediately thereafter be authorized, by a
     3  certificate of authority to transact business in this
     4  Commonwealth;
     5     (2)  Consolidation of two or more foreign corporations or of
     6  domestic and foreign corporations (one or more of each), and the
     7  corporation formed by the consolidation is a foreign corporation
     8  which is then authorized, or will immediately thereafter be
     9  authorized, by a certificate of authority to transact business
    10  in this Commonwealth.
    11     In such cases, the surviving or consolidated foreign
    12  corporation shall be entitled to credit upon any excise tax due
    13  and payable hereunder equal to the excise tax computed at the
    14  rate of one-third of one per cent on the value of the assets of
    15  the merging or consolidating foreign corporation or corporations
    16  actually employed by such surviving or consolidated foreign
    17  corporation within this Commonwealth within the provisions and
    18  intent of this article, and such proportion of the total excise
    19  tax of the merging or consolidating domestic corporation or
    20  corporations paid or relieved from payment on its authorized or
    21  issued and outstanding capital stock, determined by the ratio
    22  that the value of the assets of such domestic corporation or
    23  corporations actually employed by such surviving or consolidated
    24  foreign corporation within this Commonwealth within the
    25  provisions and intent of this article bears to the value of the
    26  total assets of such domestic corporation.
    27     (3)  In arriving at the amount of tax due under this article,
    28  a taxpayer shall apportion the increase in capital by the use of
    29  the formula applicable to the operations of the corporation as
    30  set forth in section 401.
    19710H0190B0480                 - 158 -

     1                              PART III
     2                              REPORTS
     3     Section 1003.  Initial and Annual Report.--Every foreign
     4  corporation shall annually file a report with the department for
     5  information purposes on a form prescribed by the department
     6  stating (i) the state or country in which incorporated or
     7  created, (ii) the date of incorporation or organization, (iii)
     8  location of its chief office in this Commonwealth, (iv) the name
     9  and address of its president and treasurer, (v) the greatest
    10  amount of capital actually employed within this Commonwealth
    11  during the preceding calendar or fiscal year, (vi) the greatest
    12  amount of capital actually employed within this Commonwealth at
    13  any time prior to the preceding calendar or fiscal year, and
    14  (vii) such other information as the department shall require for
    15  the purpose of this article.
    16                              PART IV
    17                 PROCEDURE; ENFORCEMENT; PENALTIES
    18     Section 1004.  Procedure; Enforcement; Penalties.--Parts III,
    19  IV, V, VI and VII of Article IV are incorporated by reference
    20  into this article in so far as they are applicable to the tax
    21  imposed hereunder.
    22                               PART V
    23                      REPEALER; EFFECTIVE DATE
    24     Section 1005.  Repeal.--The act of July 25, 1953 (P.L.560),
    25  entitled "An act to provide revenue for State purposes by
    26  imposing an excise tax upon any increase in capital, as defined,
    27  actually employed in Pennsylvania, by any foreign corporation,
    28  limited partnership or joint-stock association; requiring the
    29  filing of reports; providing for rights, powers and duties of
    30  the Department of Revenue, the taxpayers and officers thereof;
    19710H0190B0480                 - 159 -

     1  imposing interest and penalties; and repealing a certain act
     2  relating to foreign corporations, limited partnerships and
     3  joint-stock associations," is repealed.
     4     Section 1006.  Effective Date.--This article shall take
     5  effect January 1, 1971.
     6                             ARTICLE XI
     7                         GENERAL PROVISIONS
     8     Section 1101.  Saving Clause.--(a) Notwithstanding anything
     9  contained in any law to the contrary, the validity of any
    10  ordinance or part of any ordinance or any resolution or part of
    11  any resolution, and any amendments or supplements thereto now or
    12  hereinafter enacted or adopted by any political subdivision of
    13  this Commonwealth for or relating to the imposition, levy or
    14  collection of any tax, shall not be affected or impaired by
    15  anything contained in this code.
    16     (b)  Nothing contained in this code shall be construed to
    17  relieve any person, corporation or other entity from the filing
    18  returns or from any taxes, penalties or interest imposed by the
    19  provisions of any laws which were in effect prior to being
    20  repealed by this code, or effect or terminate any petitions,
    21  investigations, prosecutions, legal or otherwise, or other
    22  proceedings pending under the provisions of any such laws or
    23  prevent the commencement or further prosecution of any
    24  proceedings by the proper authorities of the Commonwealth for
    25  violation of any such laws or for the assessment, settlement,
    26  collection or recovery of taxes, penalties or interest due to
    27  the Commonwealth under any of the laws which were in effect
    28  prior to being repealed by this code.
    29     Section 1102.  Constitutional Construction.--If any word,
    30  phrase, clause, sentence, section or provision of this code is
    19710H0190B0480                 - 160 -

     1  for any reason held to be unconstitutional, the decision of the
     2  court shall not affect or impair any of the remaining provisions
     3  of this code. It is hereby declared as the legislative intent
     4  that this code would have been adopted had such unconstitutional
     5  word, phrase, clause, sentence, section or provision thereof not
     6  been included herein.
     7     Section 1103.  Effective Date.--The provisions of this code,
     8  except as otherwise specified, shall take effect immediately.















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