PRINTER'S NO. 3625
No. 2596 Session of 1986
INTRODUCED BY MANDERINO, PIEVSKY, TRELLO, IRVIS, O'DONNELL,
ITKIN, D. R. WRIGHT, DOMBROWSKI AND FEE, JUNE 10, 1986
REFERRED TO COMMITTEE ON APPROPRIATIONS, JUNE 10, 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," providing for an unemployment compensation tax
11 credit.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15 the Tax Reform Code of 1971, is amended by adding an article to
16 read:
17 ARTICLE XVIII
18 UNEMPLOYMENT COMPENSATION TAX CREDIT
19 Section 1801. Short Title.--This article shall be known and
20 may be cited as the Unemployment Compensation Tax Credit Law.
21 Section 1802. Statement of Public Policy.--It is hereby
22 declared to be the public policy of the Commonwealth of
1 Pennsylvania to encourage the expansion of employment within
2 this Commonwealth. Cognizant of the fact that employers must pay
3 a Federal Unemployment Compensation Tax on the wages paid to
4 their employes and that, until the Commonwealth's debt to the
5 Federal Unemployment Trust Fund is repaid, Federal tax will
6 increase each year, and cognizant of the relative burden this
7 places upon employers to expand or locate employment in
8 Pennsylvania rather than in another state where such employment
9 would not be subject to additional Federal taxes, the General
10 Assembly has determined that the stated public policy can best
11 be achieved by providing a tax credit for employers equal to the
12 additional amount of Federal Unemployment Compensation Tax they
13 incur when expanding employment within this Commonwealth for the
14 duration of the period of the Commonwealth's indebtedness to the
15 Federal Unemployment Compensation Trust Fund. Additionally,
16 being cognizant of the burden placed upon a new employer to pay
17 unemployment compensation costs while the business is getting on
18 its feet, the General Assembly has further determined that the
19 stated public policy can best be achieved by providing a tax
20 credit for new employers equal to the amount of their State
21 unemployment compensation contribution for the duration of the
22 period during which they are ineligible for an experience-based
23 rate and the Commonwealth indebtedness to the Federal
24 Unemployment Compensation Trust Fund remains unpaid.
25 Section 1803. Authorization of Credit.--Every employer who
26 provides new employment shall be eligible to receive a tax
27 credit, as provided in this article, against any tax due from
28 him under Articles II, IV or VI of this act, and against any
29 payment of estimated tax or payment of tentative tax due from
30 him on account of said taxes.
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1 Section 1804. Calculation of Tax Credit.--(a) The amount of
2 the tax credit available to an employer who provides new
3 employment shall be equal to the sum of:
4 (1) the amount by which the employer's excise tax liability
5 for the calendar year pursuant to section 523(a) and (b) of the
6 Federal Unemployment Tax Act (26 U.S.C. §§ 3301 and 3302)
7 increases as a result of wages paid by him during the calendar
8 year with respect to new employment as defined in this article;
9 and
10 (2) the amount by which the employer's contribution, if any,
11 at the rate specified in the first sentence of paragraph (4) of
12 section 301(a) of the act of December 5, 1936 (2nd Sp.Sess.,
13 1937 P.L.2897, No.1), known as the "Unemployment Compensation
14 Law," increases as a result of wages paid by him during the
15 calendar year with respect to new employment as defined in this
16 article.
17 (b) For purposes of this article, new employment shall mean
18 full-time employes added to the payroll on or after July 1,
19 1986, whose employment causes the employer's average employment
20 covered by the "Unemployment Compensation Law" during the
21 calendar year to exceed the highest quarterly level of such
22 employment during calendar year 1985. Where an employer
23 maintains more than one place of employment in the same line of
24 business within this Commonwealth, all of the employes at the
25 several places of employment shall be combined in determining
26 the highest level of covered employment. Where an employer
27 maintains more than one place of employment within this
28 Commonwealth, and the several places of employment operate
29 separate and distinct lines of business, the Secretary of Labor
30 and Industry may authorize the determination of new employment
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1 to be made by separately combining employment at those places
2 operating each of the employer's separate lines of business. In
3 all cases, the Secretary of Labor and Industry shall verify for
4 the Secretary of Revenue the employment figures used in the
5 determination of new employment.
6 Section 1805. Time to Take Tax Credit.--During the calendar
7 year succeeding any calendar year in which an employer provides
8 new employment as described in this article, the employer may
9 use any tax credit to which he becomes entitled as a result of
10 new employment provided during the previous calendar year. For
11 purposes of this section, tax credits shall be deemed used if
12 applied by the employer in payment of any qualifying tax,
13 tentative tax, or estimated tax which becomes due during the
14 calendar year succeeding the year in which new employment was
15 provided. For purposes of this article, a liability for
16 estimated tax or tentative tax shall be deemed to exist to the
17 extent of the tax finally determined to be due. Tax credits not
18 used before the close of the calendar year succeeding the year
19 in which the new employment was provided shall lapse.
20 Section 1806. Powers and Duties of the Secretary of
21 Revenue.--In addition to those created by any other act of the
22 General Assembly, the Secretary of Revenue shall have the power
23 and it shall be his duty to:
24 (1) Publish, no later than September 30, 1986, rules and
25 regulations as required to implement this act.
26 (2) Publish and disseminate, no later than October 30, 1986,
27 forms upon which taxpayers may apply for the tax credit
28 authorized by this article.
29 (3) Within ninety days after receipt of any application for
30 tax credit pursuant to this article, verify, in consultation
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1 with the Secretary of Labor and Industry, the calculation of any
2 tax credit for which application has been made, apply the tax
3 credit as requested by the taxpayer, and mail notification of
4 the amount of the credit and its disposition to the taxpayer.
5 (4) Within five months after the close of any calendar year
6 during which tax credits granted pursuant to this article were
7 used, furnish to the members of the General Assembly an annual
8 report providing, as to each employer who used credits during
9 the preceding calendar year pursuant to this article, the
10 employer's name and address, the amount of new employment and
11 the total amount of tax credits granted.
12 Section 1807. Expiration of Tax Credit.--Any tax credit
13 granted pursuant to this article must be used before the end of
14 the calendar year succeeding the calendar year during which the
15 Commonwealth's indebtedness to the Federal Unemployment
16 Compensation Trust Fund is repaid. No employer shall be eligible
17 for a tax credit in respect of new employment provided during
18 the calendar year succeeding the year during which the
19 Commonwealth's indebtedness to the Federal Unemployment
20 Compensation Trust Fund is repaid, or for any year thereafter.
21 Section 1808. Sunset.--This article shall expire thirty-six
22 months after the close of the calendar year during which the
23 Commonwealth's indebtedness to the Federal Unemployment
24 Compensation Trust Fund is repaid.
25 Section 2. This act shall take effect July 1, 1986.
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