PRINTER'S NO. 595
No. 571 Session of 1999
INTRODUCED BY STRITTMATTER, COLAFELLA, NAILOR, MELIO, FARGO,
RAMOS, ZUG, WILLIAMS, EGOLF, McCALL, SEMMEL, SAINATO,
ARMSTRONG, BAKER, BROWNE, CAWLEY, CLYMER, L. I. COHEN,
DeLUCA, FAIRCHILD, GODSHALL, HERSHEY, HUTCHINSON, JADLOWIEC,
KENNEY, LAUGHLIN, LEH, MAITLAND, McILHINNEY, McNAUGHTON,
ORIE, READSHAW, SAYLOR, SCHRODER, STAIRS, STERN,
E. Z. TAYLOR, WILT, WRIGHT AND ZIMMERMAN, FEBRUARY 10, 1999
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 10, 1999
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 a charity tax credit.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
14 the Tax Reform Code of 1971, is amended by adding an article to
15 read:
16 ARTICLE XIX-B
17 CHARITY TAX CREDIT
18 Section 1901-B. Short Title.--This article shall be known
19 and may be cited as the Charity Tax Credit Act.
1 Section 1902-B. Definitions.--The following words, terms and
2 phrases, when used in this article, shall have the meanings
3 ascribed to them in this section, except where the context
4 clearly indicates a different meaning:
5 "Direct assistance." The term includes, but is not limited
6 to, material support, financial assistance, vocational or life
7 skills instruction or other benefits or services provided to
8 individuals and intended to prevent or alleviate poverty. The
9 term does not include any management expense or fees,
10 fundraising expenses or payments to affiliates of the
11 organization.
12 "Governmental sources." The term includes:
13 (1) Direct or indirect grants or transfers from the Federal
14 or State government or a political subdivision.
15 (2) Revenues received pursuant to a contract with the
16 Federal or State government or a political subdivision.
17 The term does not include contributions made by individuals
18 pursuant to this article, nor does it include government
19 benefits which follow an individual and are used by the
20 individual to pay user fees to charitable organizations.
21 "Individual." A natural person.
22 "Low-income individual." An individual who resides in a
23 household in which aggregate annual income of all household
24 members does not exceed one hundred eighty-five per cent of the
25 Federal poverty level.
26 "Qualified charitable organization." A nonprofit entity
27 which:
28 (1) Has an approved application with the Department of State
29 containing such information as the Department of State
30 determines necessary in order to administer the provisions of
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1 this section.
2 (2) Is qualified under section 501(c)(3) of the Internal
3 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 501(c)(3)).
4 (3) Is organized to provide direct assistance to low-income
5 individuals or is organized to provide material or in-kind
6 assistance to organizations which provide direct assistance to
7 low-income individuals.
8 (4) Applies at least seventy-five per cent of its annual
9 revenues, including contributions, to direct assistance to low-
10 income individuals or to other qualified charitable
11 organizations: Provided, That contributions to other qualified
12 charitable organizations are limited to in-kind or material
13 assistance.
14 (5) Applies no more than five per cent of its annual
15 revenues, including contributions, to lobbying, legal
16 assistance, public policy advocacy or research, voter
17 registration, political organization, carrying on propaganda or
18 influencing legislation.
19 (6) Does not participate in or intervene in, including the
20 publishing or distributing of statements, any political campaign
21 on behalf of, or in opposition to, any candidate for public
22 office.
23 (7) Receives no more than fifty per cent of its annual
24 revenues, including contributions, from governmental sources.
25 (8) Has filed all reports and met all obligations required
26 under the act of December 19, 1990 (P.L.1200, No.202), known as
27 the "Solicitation of Funds for Charitable Purposes Act," to the
28 extent that the entity is subject to that act.
29 Section 1903-B. Legislative Intent.--The General Assembly of
30 the Commonwealth of Pennsylvania hereby declares its intent:
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1 (1) To grant tax incentives to increase charitable giving
2 and volunteerism by taxpayers and aid organizations which
3 directly assist individuals in need.
4 (2) To evaluate the effectiveness of the charity tax credit
5 program and vote to reauthorize, amend or terminate the credit
6 before the end of the sixth year of the credit.
7 Section 1904-B. Eligibility for Tax Credit.--An individual
8 who makes a monetary donation to a qualified charitable
9 organization shall be entitled to a credit against the tax
10 imposed by Article III as provided in this article.
11 Section 1905-B. Amount of Tax Credit.--(a) The credit
12 authorized by this article shall be the sum of:
13 (1) fifty per cent of the monetary amount the individual
14 donated to the qualified charitable organization; and
15 (2) fifty per cent of the monetary amount donated and
16 designated by the taxpayer for the use of a qualified charitable
17 organization through an umbrella fundraising organization.
18 (b) In any tax year, the credit shall not exceed twenty-five
19 per cent of the individual's tax liability calculated under this
20 article after reduction for any tax forgiven pursuant to section
21 304 of this act, reduction for the credit for income taxes
22 imposed by other states pursuant to section 314 of this act and
23 reduction for the employment incentive payment credit allowed by
24 section 491 of the act of June 13, 1967 (P.L.31, No.21), known
25 as the "Public Welfare Code."
26 Section 1906-B. Administration.--(a) The Department of
27 Revenue, in cooperation with the Department of State, shall
28 administer the provisions of this article, promulgate
29 appropriate rules, regulations and forms for that purpose and
30 make such determinations as may be required. Determinations made
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1 with respect to the tax credit provided in this article may be
2 reviewed and appealed in the manner provided by law for other
3 corporate or personal tax credits.
4 (b) (1) The Department of State shall, by regulation,
5 establish application and appeal deadlines and procedures and
6 shall approve or deny an application within sixty days of
7 receiving the completed application. The application shall be
8 deemed approved if the Department of State fails to act within
9 sixty days of receiving the completed application.
10 (2) The procedures established by the Department of State
11 under this subsection shall include the requirement that the
12 president, chairman or principal officer of an entity which no
13 longer meets the criteria for a qualified charitable
14 organization notify the Department of State within ninety days
15 of the date the entity no longer meets the criteria.
16 (c) The Department of State shall maintain a list of the
17 entities for which applications have been approved. The list of
18 eligible entities shall be effective for contributions made in
19 the calendar year beginning on the January 1 after the filing
20 deadline established by the Department of State.
21 (d) The Department of State and the Department of Revenue
22 may randomly and periodically review the applications submitted
23 and audit the entities holding approved applications to ensure
24 that those entities meet the criteria to be qualified charitable
25 organizations. An entity which the Department of State or
26 Department of Revenue determines does not meet the criteria for
27 a qualified charitable organization shall be removed from the
28 list of entities to which contributions qualify for a tax
29 credit.
30 (e) The Department of State shall, upon request, provide an
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1 individual with a copy of the list of qualified charitable
2 organizations and shall make reasonable efforts to widely
3 disseminate the names and addresses of entities to which
4 contributions would qualify for the charity tax credit.
5 Section 1907-B. Penalties.--(a) Any person who wilfully
6 files an application with the Department of State under this
7 article which he knows to be fraudulent shall be guilty of a
8 misdemeanor and shall, upon conviction, be sentenced to pay a
9 fine not exceeding five thousand dollars ($5,000) plus the
10 amount of all contributions to the entity received pursuant to
11 the fraudulent application.
12 (b) If the president, chairman or principal officer of an
13 entity fails to notify the Department of State within the
14 specified time period that the entity does not meet the criteria
15 for a qualified charitable organization, the Department of State
16 may levy a fine not to exceed one thousand dollars ($1,000) per
17 occurrence.
18 Section 1908-B. Applicability.--This article shall apply to
19 tax years beginning on or after January 1, 1999.
20 Section 2. This act shall take effect immediately.
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