PRINTER'S NO. 4165
No. 2884 Session of 1986
INTRODUCED BY CAPPABIANCA, VAN HORNE, CAWLEY, D. W. SNYDER,
MICHLOVIC, E. Z. TAYLOR, JOHNSON AND LASHINGER, NOVEMBER 18,
1986
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE,
NOVEMBER 18, 1986
AN ACT
1 Requiring nonprofit corporations to supply information as to
2 affiliation, activities and tax status to the Commonwealth;
3 providing for powers and duties of the Department of State
4 and the Department of Revenue with respect thereto; and
5 making an appropriation.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the Nonprofit
10 Corporation Activities Review Act.
11 Section 2. Definitions.
12 The following words and phrases when used in this act shall
13 have the meanings given to them in this section unless the
14 context clearly indicates otherwise:
15 "Corporation for profit." A corporation for profit as
16 defined in 15 Pa.C.S. § 102 (relating to definitions).
17 "Division." The Nonprofit Rulings Enforcement and
18 Accountability Division of the Bureau of Corporation Taxes in
1 the Department of Revenue.
2 "Nonprofit corporation." A nonprofit corporation as defined
3 in 15 Pa.C.S. Part III (relating to corporations not-for-
4 profit). The term includes a domestic nonprofit corporation and
5 a qualified foreign corporation as defined in 15 Pa.C.S. Part
6 III.
7 "Secretary." The Secretary of Revenue of the Commonwealth.
8 Section 3. Establishment.
9 There is hereby established within the Department of Revenue,
10 Bureau of Corporation Taxes, a division to be known as the
11 Nonprofit Rulings Enforcement and Accountability Division.
12 Section 4. Purpose.
13 The general purpose of the division shall be to determine if
14 nonprofit corporations are engaging in activities beyond the
15 realm of the purposes for which they were incorporated and, by
16 virtue thereof, may be unfairly competing with private
17 enterprise.
18 Section 5. Registration.
19 Each nonprofit corporation doing business in this
20 Commonwealth on the effective date of this act, shall within 90
21 days after the effective date of this act, in such form and
22 manner as prescribed by the secretary, submit to the division
23 the following information:
24 (1) Its Internal Revenue tax exemption code number
25 issued under the provisions of the Internal Revenue Code of
26 1954 (68A Stat. 3, 26 U.S.C. § 1 et seq.) and the tax-exempt
27 purposes as established with the Internal Revenue Service in
28 obtaining the tax-exempt status, together with a copy of its
29 most recent Federal income tax returns.
30 (2) If a current tax exemption code number does not
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1 exist it shall so state, and submit a copy of its most recent
2 Federal income tax return.
3 (3) Its affiliation with any national nonprofit
4 corporation or association.
5 (4) Its affiliation with any other nonprofit corporation
6 doing business in this Commonwealth and its status in the
7 organizational structure.
8 (5) Its affiliation with any corporation for profit
9 doing business in this Commonwealth and its status in the
10 organizational structure.
11 (6) Any additional information the secretary may
12 reasonably require in clarification or furtherance of
13 paragraphs (1) through (5).
14 Section 6. Change in purpose or organizational structure.
15 Any change in the tax status of a nonprofit corporation with
16 the Internal Revenue Service or any change by a nonprofit
17 corporation of affiliation in organizational structure shall,
18 within 30 days of the change, be reported to the division in
19 such form and manner as the secretary shall prescribe.
20 Section 7. Assignment of code numbers.
21 The division shall assign a code number to the registering
22 nonprofit corporation and to each nonprofit corporation and for
23 profit corporation with which it is in any manner affiliated.
24 Section 8. Audit authorized.
25 The secretary or his designee may conduct an audit of the
26 income-producing activities of a nonprofit corporation if it
27 appears to the secretary that the affairs of the nonprofit
28 corporation are not being conducted in accordance with 15
29 Pa.C.S. § 7546 (relating to income from corporate activities) or
30 other laws of this Commonwealth, or are being conducted in such
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1 a manner as to unfairly compete with commercial enterprise.
2 Section 9. Sanctions.
3 A nonprofit corporation which fails to comply with the
4 provisions of section 5 of this act or which is determined to be
5 doing business in violation of 15 Pa.C.S. § 7546 (relating to
6 income from corporate activities) shall be subject to having its
7 privilege of doing business as a nonprofit corporation in this
8 Commonwealth terminated by the Department of State. Any such
9 action taken by the Department of State shall be subject to the
10 right of notice, hearing, adjudication and appeal therefrom in
11 accordance with the provisions of Title 2 of the Pennsylvania
12 Consolidated Statutes (relating to administrative law and
13 procedure).
14 Section 10. Duties of Department of State.
15 In addition to the other duties imposed upon it by this act,
16 it shall be the duty of the Department of State, as to each
17 nonprofit corporation which registers to do business in this
18 Commonwealth after the effective date of this act to inform the
19 nonprofit corporation of the requirements of section 5 of this
20 act and make the necessary forms available.
21 Section 11. Annual report.
22 Within 90 days after the end of each calendar year the
23 secretary shall submit to the General Assembly a report of the
24 registrations filed under this act during the prior year and any
25 action taken by reason of information contained therein,
26 together with his recommendations for legislation he may deem
27 appropriate.
28 Section 12. Appropriation.
29 The sum of $250,000, or as much thereof as may be necessary,
30 is hereby appropriated to the Department of Revenue to carry out
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1 the purposes of this act.
2 Section 13. Effective date.
3 This act shall take effect January 1, 1987.
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