PRIOR PRINTER'S NO. 3449 PRINTER'S NO. 3491
No. 2479 Session of 1986
INTRODUCED BY WILSON AND TRELLO, MAY 6, 1986
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, MAY 27, 1986
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," reducing the rate of taxation imposed on personal <--
11 income and on corporate net income; further defining "capital
12 stock value" in relation to the capital stock franchise tax;
13 and further providing for the phaseout of the prepayment
14 schedule for capital stock taxes to a quarterly payment
15 schedule.
16 The General Assembly of the Commonwealth of Pennsylvania
17 hereby enacts as follows:
18 Section 1. Section 302 of the act of March 4, 1971 (P.L.6, <--
19 No.2), known as the Tax Reform Code of 1971, amended July 1,
20 1985 (P.L.78, No.29), is amended to read:
21 Section 302. Imposition of Tax.--(a) There is hereby
22 imposed a tax to be paid by resident individuals, estates or
23 trusts at the annual rate of two and two-tenths per cent for
1 taxable years up to and including the taxable year commencing on
2 or after January 1, 1982, and at the annual rate of two and
3 forty-five hundredths per cent for the taxable year commencing
4 on or after January 1, 1983, and for the first six months of the
5 taxable year commencing on or after January 1, 1984, and at the
6 annual rate of two and thirty-five hundredths per cent for the
7 second six months of the taxable year commencing on or after
8 January 1, 1984, and for the taxable year commencing on or after
9 January 1, 1985, and at the annual rate of two and two-tenths
10 per cent for the first six months of the taxable year commencing
11 on or after January 1, 1986, and at the annual rate of two and
12 one tenth per cent for the second six months of the taxable year
13 commencing on or after January 1, 1986, and for each taxable
14 year thereafter on the privilege of receiving each of the
15 classes of income hereinafter enumerated in section 303.
16 (b) There is hereby imposed a tax to be paid by nonresident
17 individuals, estates or trusts at the annual rate of two and
18 two-tenths per cent for taxable years up to and including the
19 taxable year commencing on or after January 1, 1982, and at the
20 annual rate of two and forty-five hundredths per cent for the
21 taxable year commencing on or after January 1, 1983, and for the
22 first six months of the taxable year commencing on or after
23 January 1, 1984, and at the annual rate of two and thirty-five
24 hundredths per cent for the second six months of the taxable
25 year commencing on or after January 1, 1984, and for the taxable
26 year commencing on or after January 1, 1985, and at the annual
27 rate of two and two-tenths per cent for the first six months of
28 the taxable year commencing on or after January 1, 1986, and at
29 the annual rate of two and one tenth per cent for the second six
30 months of the taxable year commencing on or after January 1,
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1 1986, and for each taxable year thereafter on the privilege of
2 receiving each of the classes of income enumerated in section
3 303 from sources within this Commonwealth.
4 Section 2 1. Section 402 of the act OF MARCH 4, 1971 (P.L.6, <--
5 NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, amended June 29,
6 1984 (P.L.445, No.94), is amended to read:
7 Section 402. Imposition of Tax.--Every corporation shall be
8 subject to, and shall pay for the privilege of (i) doing
9 business in this Commonwealth; or (ii) carrying on activities in
10 this Commonwealth; (iii) having capital or property employed or
11 used in this Commonwealth; or (iv) owning property in this
12 Commonwealth, by or in the name of itself, or any person,
13 partnership, association, limited partnership, joint-stock
14 association, or corporation, a State excise tax at the rate of
15 twelve per cent per annum upon each dollar of taxable income of
16 such corporation received by, and accruing to, such corporation
17 during the calendar year 1971 and the first six months of 1972
18 and at the rate of eleven per cent per annum upon each dollar of
19 taxable income of such corporation received by, and accruing to,
20 such corporation during the second six months of calendar year
21 1972 through the calendar year 1973 and at the rate of nine and
22 one-half per cent per annum upon each dollar of taxable income
23 of such corporation received by, and accruing to, such
24 corporation during the calendar years 1974, 1975 and 1976 and at
25 the rate of ten and one-half per cent per annum upon each dollar
26 of taxable income of such corporation received by, and accruing
27 to, such corporation during the calendar year 1977 through the
28 calendar year 1984 and at the rate of nine and one-half per cent
29 per annum upon each dollar of taxable income of such corporation
30 received by and accruing to such corporation during the calendar
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1 year 1985 and the first six months of the calendar year 1986 and
2 at the rate of eight and five-tenths per cent per annum upon
3 each dollar of taxable income of such corporation received by,
4 and accruing to, such corporation during the second six months
5 of the calendar year 1986 and each calendar year thereafter,
6 except where a corporation reports to the Federal Government on
7 the basis of a fiscal year, and has certified such fact to the
8 department as required by section 403 of this article, in which
9 case, such tax, at the rate of twelve per cent, shall be levied,
10 collected, and paid upon all taxable income received by, and
11 accruing to, such corporation during the first six months of the
12 fiscal year commencing in the calendar year 1972 and at the rate
13 of eleven per cent, shall be levied, collected, and paid upon
14 all taxable income received by, and accruing to, such
15 corporation during the second six months of the fiscal year
16 commencing in the calendar year 1972 and during the fiscal year
17 commencing in the calendar year 1973 and at the rate of nine and
18 one-half per cent, shall be levied, collected, and paid upon all
19 taxable income received by, and accruing to, such corporation
20 during the fiscal year commencing in the calendar years 1974,
21 1975 and 1976 and at the rate of ten and one-half per cent,
22 shall be levied, collected, and paid upon all taxable income
23 received by, and accruing to, such corporation during the fiscal
24 year commencing in the calendar year 1977 through the fiscal
25 year commencing in 1984 and at the rate of nine and one-half per
26 cent, shall be levied, collected, and paid upon all taxable
27 income received by and accruing to such corporation during the
28 fiscal year commencing in 1985 and the first six months of the
29 fiscal year commencing in the calendar year 1986 and at the rate
30 of eight and five-tenths per cent, shall be levied, collected,
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1 and paid upon all taxable income received by, and accruing to,
2 such corporation during the second six months of the fiscal year
3 commencing in the calendar year 1986 and during each fiscal year
4 thereafter. No penalty prescribed by subsection (e) of section
5 3003 shall be assessed against a corporation for the additional
6 tax which may be due as a result of the increase in tax rate
7 from nine and one-half per cent to ten and one-half per cent
8 imposed retroactively by this section for the calendar year 1977
9 or for the fiscal year commencing in 1977.
10 Section 3 2. The definition of "capital stock value" in <--
11 section 601(a) of the act, amended December 23, 1983 (P.L.360,
12 No.89), is amended to read:
13 Section 601. Definitions and Reports.--(a) The following
14 words, terms and phrases when used in this Article VI shall have
15 the meaning ascribed to them in this section, except where the
16 context clearly indicates a different meaning:
17 * * *
18 "Capital stock value." The amount computed pursuant to the
19 following [formula:] formulas for the tax years indicated:
20 (1) For the tax year January 1 to December 31, 1987 one-half
21 times the sum of the average net income capitalized at the rate
22 of nine and one-half per cent plus seventy-five per cent of net
23 worth, minus fifty thousand dollars ($50,000), the algebraic
24 equivalent of which is
25 .5 X (average net income/.095 + (.75) (net worth)) - $50,000
26 (2) For the tax year January 1 to December 31, 1988 one-half
27 times the sum of the average net income capitalized at the rate
28 of nine and one-half per cent plus seventy-five per cent of net
29 worth, minus seventy-five thousand dollars ($75,000), the
30 algebraic equivalent of which is
19860H2479B3491 - 5 -
1 .5 X (average net income/.095 + (.75) (net worth)) - $75,000
2 (3) For the tax year January 1 to December 31, 1989 AND EACH <--
3 TAX YEAR THEREAFTER one-half times the sum of the average net
4 income capitalized at the rate of nine and one-half per cent
5 plus seventy-five per cent of net worth, minus one hundred
6 thousand dollars ($100,000), the algebraic equivalent of which
7 is
8 .5 X (average net income/.095 + (.75) (net worth)) - $100,000
9 * * *
10 Section 4 3. Section 3003 of the act is amended by adding a <--
11 subsection to read:
12 Section 3003. Prepayment of Tax.--* * *
13 (d.1) A corporation with respect to the capital stock
14 franchise tax imposed by Article VI of this act may, at its
15 election, report and pay in installments on account of the tax
16 due for the current taxable year an amount computed by applying
17 the current tax rate to eighty-five per cent of the tax base as
18 determined in either subsection (a) or (b) of this section. The
19 installments shall be paid in accordance with the following
20 schedules:
21 First Second Third Fourth
22 Year In Due on the 15th day of the following months
23 Which Tax after close of the previous tax year:
24 Year Begins 4th Month 6th Month 9th Month 12th Month
25 1987 80% 0% 10% 10%
26 1988 60% 15% 15% 10%
27 1989 40% 30% 20% 10%
28 1990 and
29 thereafter 25% 25% 25% 25%
30 Any taxpayer which has elected to compute its tentative tax
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1 liability on the aforesaid estimated basis and which has elected
2 to report and pay the estimated tax in installments may, when
3 reporting and paying its third or fourth installment, base the
4 installment on an amended tentative tax report reflecting the
5 taxpayer's new estimate of its tax liability for the tax year:
6 Provided, That the new estimate reflects a lower tax liability
7 than was previously reported in its original or, if applicable,
8 amended tentative tax report. If an amended tentative tax report
9 is filed, each remaining installment payment due, if any, shall
10 be such as to bring the total installment payments made on
11 account of the tax due for the current taxable year up to an
12 amount determined by multiplying the tentative tax due for the
13 year as reported in the amended report by the sum of the
14 percentages set forth in the above schedule for the applicable
15 elapsed installments.
16 The remaining portion of the tax due, if any, shall be paid
17 upon the date the taxpayer's annual report is required to be
18 filed under the applicable tax statute, determined without
19 reference to any extension of time for filing such report.
20 * * *
21 Section 5 4. Section 4 3 of this act applies to the tax year <--
22 beginning January 1, 1987, and each tax year thereafter.
23 Section 6 5. This act shall take effect immediately. <--
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