PRINTER'S NO. 4949
No. 3087 Session of 2006
INTRODUCED BY KENNEY, NOVEMBER 22, 2006
REFERRED TO COMMITTEE ON COMMERCE, NOVEMBER 22, 2006
AN ACT
1 Amending the act of October 6, 1998 (P.L.705, No.92), entitled,
2 as amended, "An act providing for the creation of keystone
3 opportunity zones and keystone opportunity expansion zones to
4 foster economic opportunities in this Commonwealth, to
5 facilitate economic development, stimulate industrial,
6 commercial and residential improvements and prevent physical
7 and infrastructure deterioration of geographic areas within
8 this Commonwealth; authorizing expenditures; providing tax
9 exemptions, tax deductions, tax abatements and tax credits;
10 creating additional obligations of the Commonwealth and local
11 governmental units; and prescribing powers and duties of
12 certain State and local departments, agencies and officials,"
13 further providing for State taxes in general, for corporate
14 net income tax and for local taxes in general.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. Section 501 of the act of October 6, 1998
18 (P.L.705, No.92), known as the Keystone Opportunity Zone,
19 Keystone Opportunity Expansion Zone and Keystone Opportunity
20 Improvement Zone Act, amended December 9, 2002 (P.L.1727,
21 No.217), is amended to read:
22 Section 501. State taxes.
23 (a) General rule.--A person who is a resident of a subzone,
1 improvement subzone or expansion subzone, a qualified business
2 or a nonresident under section 513 shall receive the exemptions,
3 deductions, abatements or credits as provided in this chapter
4 and Chapter 7 for the duration of the subzone, improvement
5 subzone or expansion subzone designation. Exemptions,
6 deductions, abatements or credits shall expire on the date of
7 expiration of the subzone, improvement subzone or expansion
8 subzone designation.
9 (b) Construction.--The Department of Revenue shall
10 administer, construe and enforce the provisions of this chapter
11 in conjunction with Articles II, III, IV, VI, VII, IX and XV of
12 the Tax Reform Code of 1971.
13 (c) Exemptions, deductions, abatements and credits.--For
14 purposes of determining the extent to which a taxpayer is
15 entitled to any exemption, deduction, abatement or credit under
16 this chapter, the situs of sales of tangible personal property
17 and gross receipts of a business from sales of tangible personal
18 property shall be the subzone, improvement zone or expansion
19 zone under section 504(a) of the act of June 5, 1991 (P.L.9,
20 No.6), known as the Pennsylvania Intergovernmental Cooperation
21 Authority Act for Cities of the First Class, regardless of:
22 (1) whether the sales or gross receipts are:
23 (i) part of the tax base; or
24 (ii) reflected in an apportionment of the tax base;
25 and
26 (2) whether the sales are:
27 (i) at retail;
28 (ii) at wholesale; or
29 (iii) in some other form.
30 Section 2. Section 515(d) of the act, amended December 23,
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1 2003 (P.L.360, No.51), is amended to read:
2 Section 515. Corporate net income tax.
3 * * *
4 (d) Income apportionment.--The taxable income of a
5 corporation that is a qualified business shall be apportioned to
6 the subzone, improvement subzone or expansion subzone by
7 multiplying the Pennsylvania taxable income by a fraction, the
8 numerator of which is the property factor plus the payroll
9 factor plus the sales factor and the denominator of which is
10 three, in accordance with the following:
11 (1) The property factor is a fraction, the numerator of
12 which is the average value of the taxpayer's real and
13 tangible personal property owned or rented and used in the
14 subzone, improvement subzone or expansion subzone during the
15 tax period and the denominator of which is the average value
16 of all the taxpayer's real and tangible personal property
17 owned or rented and used in this Commonwealth during the tax
18 period but shall not include the security interest of any
19 corporation as seller or lessor in personal property sold or
20 leased under a conditional sale, bailment lease, chattel
21 mortgage or other contract providing for the retention of a
22 lien or title as security for the sales price of the
23 property.
24 (2) (i) The payroll factor is a fraction, the numerator
25 of which is the total amount paid in the subzone,
26 improvement subzone or expansion subzone during the tax
27 period by the taxpayer for compensation and the
28 denominator of which is the total compensation paid in
29 this Commonwealth during the tax period.
30 (ii) Compensation is paid in the subzone,
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1 improvement subzone or expansion subzone if:
2 (A) the person's service is performed entirely
3 within the subzone, improvement subzone or expansion
4 subzone;
5 (B) the person's service is performed both
6 within and without the subzone, improvement subzone
7 or expansion subzone, but the service performed
8 without the subzone, improvement subzone or expansion
9 subzone is incidental to the person's service within
10 the subzone, improvement subzone or expansion
11 subzone; or
12 (C) some of the service is performed in the
13 subzone, improvement subzone or expansion subzone and
14 the base of operations or, if there is no base of
15 operations, the place from which the service is
16 directed or controlled is in the subzone, improvement
17 subzone or expansion subzone, or the base of
18 operations or the place from which the service is
19 directed or controlled is not in any location in
20 which some part of the service is performed, but the
21 person's residence is in the subzone, improvement
22 subzone or expansion subzone.
23 (3) The sales factor is a fraction, the numerator of
24 which is the total sales of the taxpayer in the subzone,
25 improvement subzone or expansion subzone during the tax
26 period and the denominator of which is the total sales of the
27 taxpayer in this Commonwealth during the tax period.
28 (i) Sales of tangible personal property are in the
29 subzone, improvement subzone or expansion subzone [if the
30 property is delivered or shipped to a purchaser that
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1 takes possession within the subzone, improvement subzone
2 or expansion subzone regardless of the F.O.B. point or
3 other conditions of the sale] in accordance with section
4 501(c).
5 (ii) Sales other than sales of tangible personal
6 property are in the subzone, improvement subzone or
7 expansion subzone if:
8 (A) the income-producing activity is performed
9 in the subzone, improvement subzone or expansion
10 subzone; or
11 (B) the income-producing activity is performed
12 both within and without the subzone, improvement
13 subzone or expansion subzone and a greater proportion
14 of the income-producing activity is performed in the
15 subzone, improvement subzone or expansion subzone
16 than in any other location, based on costs of
17 performance.
18 * * *
19 Section 3. Section 701 of the act, amended December 9, 2002
20 (P.L.1727, No.217), is amended to read:
21 Section 701. Local taxes.
22 (a) General rule.--Every political subdivision in which a
23 designated subzone is located shall exempt, deduct, abate or
24 credit local taxes in accordance with ordinances and resolutions
25 adopted under section 301(d) or (f), as is applicable. Failure
26 to exempt, deduct, abate or credit local taxes shall result in
27 the revocation of the subzone designation.
28 (b) Expansion rule.--Every political subdivision in which a
29 designated expansion subzone is located shall exempt, deduct,
30 abate or credit local taxes in accordance with ordinances and
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1 resolutions adopted under section 301.1(d) or (e), as is
2 applicable. Failure to exempt, deduct, abate or credit local
3 taxes shall result in the revocation of the expansion subzone
4 designation.
5 (c) Improvement rule.--Every political subdivision in which
6 a designated improvement subzone is located shall exempt,
7 deduct, abate or credit local taxes in accordance with
8 ordinances and resolutions adopted under section 301.2(d).
9 Failure to exempt, deduct, abate or credit local taxes shall
10 result in the revocation of the improvement subzone designation.
11 (d) Exemptions, deductions, abatements and credits.--For
12 purposes of determining the extent to which a taxpayer is
13 entitled to any exemption, deduction, abatement or credit under
14 this chapter, the situs of sales of tangible personal property
15 and gross receipts of a business from sales of tangible personal
16 property shall be the subzone, improvement zone or expansion
17 zone under section 504(a) of the act of June 5, 1991 (P.L.9,
18 No.6), known as the Pennsylvania Intergovernmental Cooperation
19 Authority Act for Cities of the First Class, regardless of:
20 (1) whether the sales or gross receipts are:
21 (i) part of the tax base; or
22 (ii) reflected in an apportionment of the tax base;
23 and
24 (2) whether the sales are:
25 (i) at retail;
26 (ii) at wholesale; or
27 (iii) in some other form.
28 Section 4. This act shall apply retroactively to taxable
29 years beginning after December 31, 2002.
30 Section 5. This act shall take effect immediately.
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