SENATE AMENDED PRIOR PRINTER'S NOS. 210, 445 PRINTER'S NO. 480
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 19710H0190B0480 - 7 -
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 19710H0190B0480 - 155 -
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 19710H0190B0480 - 156 -
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. A30L57RLC/19710H0190B0480 - 161 -