SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GEORGE, MELIO, ADOLPH, BELFANTI, BOBACK, BRADFORD, BRENNAN, BRIGGS, BROWN, CALTAGIRONE, CARROLL, CASORIO, COHEN, CONKLIN, D. COSTA, CREIGHTON, DONATUCCI, EVERETT, FAIRCHILD, FRANKEL, GIBBONS, GOODMAN, GRUCELA, HALUSKA, HARHAI, HARPER, HORNAMAN, JOHNSON, JOSEPHS, W. KELLER, KOTIK, KULA, LONGIETTI, McGEEHAN, McILVAINE SMITH, MICOZZIE, MILLARD, MUNDY, MURPHY, MURT, PAYNE, PHILLIPS, READSHAW, REICHLEY, SCAVELLO, SEIP, SIPTROTH, STABACK, STURLA, SWANGER, J. TAYLOR, TRUE, VULAKOVICH, WATERS, YOUNGBLOOD, YUDICHAK, EACHUS, BEYER, KORTZ, GINGRICH, HOUGHTON, MENSCH, BURNS AND MIRABITO, MAY 26, 2009

SENATOR CORMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS AMENDED, SEPTEMBER 24, 2009   

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," further providing for time for filing returns,

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for time of payment, for continuation of the Military Family

Relief Assistance Program and for payment of taxes withheld;

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and providing for an educational improvement tax credit and

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for a limited tax amnesty program; and making a related

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repeal.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 315.9 of the act of March 4, 1971 (P.L.6,

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No.2), known as the Tax Reform Code of 1971, amended July 25,

2007 (P.L.373, No.55), is amended to read:

Section 315.9.  Operational Provisions.--(a)  Except for the

checkoff established under sections 315.2, 315.6 and 315.7 and

except as otherwise provided under subsection (b), the checkoffs

established under this part shall apply through taxable years

ending December 31, 2007.

(b)  [Any] Except as provided under subsection (d), any 

checkoff established under this part and applicable for the

first time in a taxable year beginning after December 31, 2003,

shall expire four years after the beginning of such first

taxable year.

(c)  Sections 315.3 and 315.4 shall expire January 1, 2010.

(d)  Any checkoff established under section 315.8 shall apply

through taxable years ending December 31, 2015.

Section 2.  The act is amended by adding an article to read:

Section 1.  Section 217 of the act of March 4, 1971 (P.L.6,

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No.2), known as the Tax Reform Code of 1971, amended July 1,

1985 (P.L.78, No.29), is amended to read:

Section 217.  Time for Filing Returns.--(a)  Quarterly [and], 

Monthly and Semi-monthly Returns:

(1)  For the year in which this article becomes effective and

in each year thereafter a return shall be filed quarterly by

every licensee on or before the twentieth day of April, July,

October and January for the three months ending the last day of

March, June, September and December.

(2)  For the year in which this article becomes effective,

and in each year thereafter, a return shall be filed monthly

with respect to each month by every licensee whose total tax

reported, or in the event no report is filed, the total tax

which should have been reported, for the third calendar quarter

of the preceding year equals or exceeds six hundred dollars

($600) and is less than twenty-five thousand dollars ($25,000).

Such returns shall be filed on or before the twentieth day of

the next succeeding month with respect to which the return is

made. Any licensee required to file monthly returns hereunder

shall be relieved from filing quarterly returns.

(3)  After May 31, 2010, a return shall be filed semi-monthly

with respect to each month by every licensee whose total tax

reported or, if no report is filed, the total tax which should

have been reported, for the third calendar quarter of the

preceding year equals or exceeds twenty-five thousand dollars

($25,000). For the period from the first day of the month to the

fifteenth day of the month, the returns shall be filed on or

before the twenty-fifth day of the month. For the period from

the sixteenth day of the month to the last day of the month, the

returns shall be filed on or before the tenth day of the next

succeeding month with respect to which the return is made. Any

licensee required to file semi-monthly returns under this

section shall be relieved from filing monthly or quarterly

returns.

(b)  Annual Returns. For the calendar year 1971, and for each

year thereafter, no annual return shall be filed, except as may

be required by rules and regulations of the department

promulgated and published at least sixty days prior to the end

of the year with respect to which the returns are made. Where

such annual returns are required licensees shall not be required

to file such returns prior to the twentieth day of the year

succeeding the year with respect to which the returns are made.

(c)  Other Returns. Any person, other than a licensee, liable

to pay to the department any tax under this article, shall file

a return on or before the twentieth day of the month succeeding

the month in which such person becomes liable for the tax.

(d)  Small Taxpayers. The department, by regulation, may

waive the requirement for the filing of quarterly return in the

case of any licensee whose individual tax collections do not

exceed seventy-five dollars ($75) per calendar quarter and may

provide for reporting on a less frequent basis in such cases.

Section 1.1.  Section 222 of the act is amended to read:

Section 222.  Time of Payment.--(a)  Monthly, [Bimonthly] 

Semi-monthly and Quarterly Payments. The tax imposed by this

article and incurred or collected by a licensee shall be due and

payable by the licensee on the day the return is required to be

filed under the provisions of section 217 and such payment must

accompany the return for such preceding period,

(b)  Annual Payments. If the amount of tax due for the

preceding year as shown by the annual return of any taxpayer is

greater than the amount already paid by him in connection with

his monthly, semi-monthly or quarterly returns he shall send

with such annual return a remittance for the unpaid amount of

tax for the year.

(c)  Other Payments. Any person other than a licensee liable

to pay any tax under this article shall remit the tax at the

time of filing the return required by this article.

Section 2.  Section 315.9 of the act, amended July 25, 2007

(P.L.373, No.55), is amended to read:

Section 315.9.  Operational Provisions.--(a)  Except for the

checkoff established under sections 315.2, 315.6 and 315.7 and

except as otherwise provided [under subsection (b)] in this

section, the checkoffs established under this part shall apply

through taxable years ending December 31, 2007.

(b)  [Any] Except as set forth in subsection (c), any 

checkoff established under this part and applicable for the

first time in a taxable year beginning after December 31, 2003,

shall expire four years after the beginning of such first

taxable year.

(c)  Sections [315.3 and 315.4 shall expire January 1, 2010]

315.3, 315.4 and 315.8 shall expire January 1, 2014.

Section 3.  Section 319 of the act, repealed and added August

31, 1971 (P.L.362, No.93), is amended to read:

Section 319.  [Monthly, Semi-monthly and Quarterly] Payment

of Taxes Withheld.--Every employer withholding tax under this

article shall pay over to the department or to a depository

designated by it the tax required to be deducted and withheld

under this article.

(1)  Where the aggregate amount required to be deducted and

withheld by any employer for [each quarterly period] a calendar

year can reasonably be expected to be less than [three hundred

dollars ($300)] twelve hundred dollars ($1,200), such employer

shall file a return and pay the tax on or before the last day

for filing a quarterly return under section 318.

(2)  Where the aggregate amount required to be deducted and

withheld by any employer for [each quarterly period] a calendar

year can reasonably be expected to be [three hundred dollars

($300) or more but less than one thousand dollars ($1,000)]

twelve hundred dollars ($1,200) or more but less than four

thousand dollars ($4,000), such employer shall pay the tax

monthly, on or before the fifteenth day of the month succeeding

the months of January to November, inclusive, and on or before

the last day of January following the month of December.

(3)  Where the aggregate amount required to be deducted and

withheld by any employer for [each quarterly period] a calendar

year can reasonably be expected to be [one thousand dollars

($1,000) or more] four thousand dollars ($4,000) or more but

less than twenty thousand dollars ($20,000), such employer shall

pay the tax semi-monthly, within three banking days after the

close of the semi-monthly period.

(4)  Where the aggregate amount required to be deducted and

withheld by any employer for a calendar year can reasonably be

expected to be twenty thousand dollars ($20,000) or more, such

employer shall pay the tax on the Wednesday after payday if the

payday falls on a Wednesday, Thursday or Friday and on the

Friday after payday if the payday falls on a Saturday, Sunday,

Monday or Tuesday.

Notwithstanding anything in this section to the contrary,

whenever any employer fails to deduct or truthfully account for

or pay over the tax withheld or file returns as prescribed by

this article, the department may serve a notice on such employer

requiring him to withhold taxes which are required to be

deducted under this article and deposit such taxes in a bank

approved by the department in a separate account in trust for

and payable to the department, and to keep the amount of such

tax in such account until payment over to the department. Such

notice shall remain in effect until a notice of cancellation is

served on the employer by the department.

Section 4.  The act is amended by adding articles to read:

ARTICLE XVII-F

EDUCATIONAL IMPROVEMENT TAX CREDIT

Section 1701-F.  Scope.

This article establishes the educational improvement tax

credit.

Section 1702-F.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Business firm."  An entity authorized to do business in this

Commonwealth and subject to taxes imposed under Article III, IV,

VI, VII, VIII, IX or XV. The term includes a pass-through

entity.

"Contribution."  A donation of cash, personal property or

services the value of which is the net cost of the donation to

the donor or the pro rata hourly wage, including benefits, of

the individual performing the services.

"Department."  The Department of Community and Economic

Development of the Commonwealth.

"Educational improvement organization."  A nonprofit entity

which:

(1)  is exempt from Federal taxation under section 501(c)

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

26 U.S.C. § 1 et seq.); and

(2)  contributes at least 80% of its annual receipts as

grants to a public school for innovative educational

programs.

For purposes of this definition, a nonprofit entity

"contributes" its annual cash receipts when it expends or

otherwise irrevocably encumbers those funds for expenditure

during the then current fiscal year of the nonprofit entity or

during the next succeeding fiscal year of the nonprofit entity.

"Eligible pre-kindergarten student."  A student, including an

eligible student with a disability, who is enrolled in a pre-

kindergarten program and is a member of a household with a

maximum annual household income as increased by the applicable

income allowance.

"Eligible student."  A school-age student, including an

eligible student with a disability, who is enrolled in a school

and is a member of a household with a maximum annual household

income as increased by the applicable income allowance.

"Eligible student with a disability."  A pre-kindergarten

student or a school-age student who meets all of the following:

(1)  Is either enrolled in a special education school or

has otherwise been identified, in accordance with 22 Pa. Code

Ch. 14 (relating to special education services and programs),

as a "child with a disability," as defined in 34 CFR § 300.8

(relating to child with disability).

(2)  Needs special education and related services.

(3)  Is enrolled in a pre-kindergarten program or in a

school.

(4)  Is a member of a household with an annual household

income of not more than the maximum allowable household

income for students with a disability.

"Household."  An individual living alone or with the

following: a spouse, parent and their unemancipated minor

children; and other unemancipated minor children who are related

by blood or marriage; or other adults or unemancipated minor

children living in the household who are dependent upon the

individual.

"Household income."  All moneys or property received of

whatever nature and from whatever source derived. The term does

not include the following:

(1)  Periodic payments for sickness and disability other

than regular wages received during a period of sickness or

disability.

(2)  Disability, retirement or other payments arising

under workers' compensation acts, occupational disease acts

and similar legislation by any government.

(3)  Payments commonly recognized as old-age or

retirement benefits paid to persons retired from service

after reaching a specific age or after a stated period of

employment.

(4)  Payments commonly known as public assistance or

unemployment compensation payments by a governmental agency.

(5)  Payments to reimburse actual expenses.

(6)  Payments made by employers or labor unions for

programs covering hospitalization, sickness, disability or

death, supplemental unemployment benefits, strike benefits,

Social Security and retirement.

(7)  Compensation received by United States servicemen

serving in a combat zone.

"Income allowance."

(1)  As follows:

(i)  Before July 1, 2011, $10,000 for each eligible

student, eligible pre-kindergarten student and dependent

member of the household.

(ii)  After June 30, 2011, $12,000 for each eligible

student, eligible pre-kindergarten student and dependent

member of the household.

(2)  Beginning July 12, 2012, the Department of Community

and Economic Development shall adjust the income allowance

amounts under paragraph (1) to reflect any upward changes in

the Consumer Price Index for All Urban Consumers for the

Pennsylvania, New Jersey, Delaware and Maryland area in the

preceding 12 months and shall immediately submit the adjusted

amounts to the Legislative Reference Bureau for publication

as a notice in the Pennsylvania Bulletin.

"Innovative educational program."  An advanced academic or

similar program that is not part of the regular academic program

of a public school but that enhances the curriculum or academic

program of the public school or provides pre-kindergarten

programs to public school students.

"Maximum allowable household income for students with a

disability."

(1)  Except as set forth in paragraph (2), as follows:

(i)  Before July 1, 2011, not more than $50,000.

(ii)  After June 30, 2011, not more than $60,000.

(2)  With respect to an eligible student with a

disability, as calculated by multiplying:

(i)  the sum of:

(A)  the applicable amount under paragraph (1);

and

(B)  the applicable income allowance; by

(ii) the applicable support level factor according to

the following table:

(3)  Beginning on July 12, 2012, the Department of

Community and Economic Development shall adjust the income

amounts under paragraph (1) and (2) to reflect any upward

changes in the Consumer Price Index for All Urban Consumers

for the Pennsylvania, New Jersey, Delaware and Maryland area

in the preceding 12 months and shall immediately submit the

adjusted amounts to the Legislative Reference Bureau for

publication as a notice in the Pennsylvania Bulletin.

"Pass-through entity."  A partnership as defined in section

301(n.0), a single-member limited liability company treated as a

disregarded entity for Federal income tax purposes or a

Pennsylvania S corporation as defined in section 301(n.1). 

"Pre-kindergarten program."  A program of instruction for

three-year-old or four-year-old students that utilizes a

curriculum aligned with the curriculum of the school with which

it is affiliated and which provides one of the following:

(1)  A minimum of two hours of instructional and

developmental activities per day at least 60 days per school

year.

(2)  A minimum of two hours of instructional and

developmental activities per day at least 20 days over the

summer recess.

"Pre-kindergarten scholarship organization."  A nonprofit

entity which:

(1)  either is exempt from Federal taxation under section

501(c)(3) of the Internal Revenue Code of 1986 (Public Law

99-514, 26 U.S.C. § 1 et seq.) or is operated as a separate

segregated fund by a scholarship organization that has been

qualified under section 1703-F; and

(2)  contributes at least 80% of its annual cash receipts

to a pre-kindergarten scholarship program by expending or

otherwise irrevocably encumbering those funds for

distribution during the then current fiscal year of the

organization or during the next succeeding fiscal year of the

organization.

"Pre-kindergarten scholarship program."  A program to provide

tuition to eligible pre-kindergarten students to attend a pre-

kindergarten program operated by or in conjunction with a school

located in this Commonwealth and that includes an application

and review process for the purpose of making awards to eligible

pre-kindergarten students and awards scholarships to eligible

pre-kindergarten students without limiting availability to only

students of one school.

"Public school."  A public pre-kindergarten where compulsory

attendance requirements do not apply or a public kindergarten,

elementary school or secondary school at which the compulsory

attendance requirements of this Commonwealth may be met and

which meets the applicable requirements of Title VI of the Civil

Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

"Scholarship organization."  A nonprofit entity which:

(1)  is exempt from Federal taxation under section 501(c)

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

26 U.S.C. § 1 et seq.); and

(2)  contributes at least 80% of its annual cash receipts

to a scholarship program.

For purposes of this definition, a nonprofit entity

"contributes" its annual cash receipts to a scholarship program

when it expends or otherwise irrevocably encumbers those funds

for distribution during the then current fiscal year of the

nonprofit entity or during the next succeeding fiscal year of

the nonprofit entity.

"Scholarship program."  A program to provide tuition to

eligible students to attend a school located in this

Commonwealth. A scholarship program must include an application

and review process for the purpose of making awards to eligible

students. The award of scholarships to eligible students shall

be made without limiting availability to only students of one

school.

"School."  A public or nonpublic pre-kindergarten,

kindergarten, elementary school or secondary school at which the

compulsory attendance requirements of the Commonwealth may be

met and which meets the applicable requirements of Title VI of

the Civil Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

"School age."  Children from the earliest admission age to a

school's pre-kindergarten or kindergarten program or, when no

pre-kindergarten or kindergarten program is provided, the

school's earliest admission age for beginners, until the end of

the school year the student attains 21 years of age or

graduation from high school, whichever occurs first.

"Special education school."  A school or program within a

school that is designated specifically and exclusively for

students with any of the disabilities listed in 34 CFR § 300.8

(relating to child with disability) and meets one of the

following:

(1)  Is licensed under the act of January 28, 1988

(P.L.24, No.11), known as the Private Academic Schools Act.

(2)  Is accredited by an accrediting association approved

by the State Board of Education.

(3)  Is a school for the blind or deaf receiving

Commonwealth appropriations.

(4)  Is operated by or under the authority of a bona fide

religious institution or by the Commonwealth or any political

subdivision thereof.

"Support level."  The level of support needed by an eligible

student with a disability, as set forth in the following matrix:

Support Level 1 - The student is not enrolled in a

special education school.

Support Level 2 - The student is enrolled as a student in

a special education school.

Section 1703-F.  Qualification and application.

(a)  Establishment.--In accordance with section 14 of Article

III of the Constitution of Pennsylvania, an educational

improvement tax credit program is hereby established to enhance

the educational opportunities available to all students in this

Commonwealth.

(b)  Information.--In order to qualify under this article, a

scholarship organization, a pre-kindergarten scholarship

organization or an educational improvement organization must

submit information to the department that enables the department

to confirm that the organization is exempt from taxation under

section 501(c)(3) of the Internal Revenue Code of 1986 (Public

Law 99-514, 26 U.S.C. § 1 et seq.).

(c)  Scholarship organizations and pre-kindergarten

scholarship organizations.--A scholarship organization or pre-

kindergarten scholarship organization must certify to the

department that the organization is eligible to participate in

the program established under this article and must agree to

annually report the following information to the department by

December 1, 2005, and September 1 of each year thereafter:

(1)  (i)  The number of scholarships awarded during the

immediately preceding school year to eligible pre-

kindergarten students.

(ii)  The total and average amounts of the

scholarships awarded during the immediately preceding

school year to eligible pre-kindergarten students.

(iii)  The number of scholarships awarded during the

immediately preceding school year to eligible students in

grades kindergarten through 8.

(iv)  The total and average amounts of the

scholarships awarded during the immediately preceding

school year to eligible students in grades K through 8.

(v)  The number of scholarships awarded during the

immediately preceding school year to eligible students in

grades 9 through 12.

(vi)  The total and average amounts of the

scholarships awarded during the immediately preceding

school year to eligible students in grades 9 through 12.

(vii)  Where the scholarship organization or pre-

kindergarten scholarship organization collects

information on a county-by-county basis, the total number

and the total amount of scholarships awarded during the

immediately preceding school year to residents of each

county in which the scholarship organization or pre-

kindergarten scholarship organization awarded

scholarships.

(2)  The information required under paragraph (1) shall

be submitted on a form provided by the department. No later

than September 1, 2005, and May 1 of each year thereafter,

the department shall annually distribute such sample forms,

together with the forms on which the reports are required to

be made, to each listed scholarship organization and pre-

kindergarten scholarship organization.

(3)  The department may not require any other information

to be provided by scholarship organizations or pre-

kindergarten scholarship organizations, except as expressly

authorized in this article.

(d)  Educational improvement organization.--

(1)  An application submitted by an educational

improvement organization must describe its proposed

innovative educational program or programs in a form

prescribed by the department. The department shall consult

with the Department of Education as necessary. The department

shall review and approve or disapprove the application. In

order to be eligible to participate in the program

established under this article, an educational improvement

organization must agree to annually report the following

information to the department by December 1, 2005, and

September 1 of each year thereafter:

(i)  The name of the innovative educational program

or programs and the total amount of the grant or grants

made to those programs during the immediately preceding

school year.

(ii)  A description of how each grant was utilized

during the immediately preceding school year and a

description of any demonstrated or expected innovative

educational improvements.

(iii)  The names of the public schools and school

districts where innovative educational programs that

received grants during the immediately preceding school

year were implemented.

(iv)  Where the educational improvement organization

collects information on a county-by-county basis, the

total number and the total amount of grants made during

the immediately preceding school year for programs at

public schools in each county in which the educational

improvement organization made grants.

(2)  The information required under paragraph (1) shall

be submitted on a form provided by the department. No later

than September 1, 2005, and May 1 of each year thereafter,

the department shall annually distribute such sample forms,

together with the forms on which the reports are required to

be made, to each listed educational improvement organization.

(3)  The department may not require any other information

to be provided by educational improvement organizations,

except as expressly authorized in this article.

(e)  Notification.--The department shall notify the

scholarship organization, pre-kindergarten scholarship

organization or educational improvement organization that the

organization meets the requirements of this article for that

fiscal year no later than 60 days after the organization has

submitted the information required under this section.

(f)  Publication.--The department shall annually publish a

list of each scholarship organization, pre-kindergarten

scholarship organization or educational improvement organization

qualified under this section in the Pennsylvania Bulletin. The

list shall also be posted and updated as necessary on the

publicly accessible Internet website of the department.

Section 1704-F.  Application.

(a)  Scholarship organization or pre-kindergarten scholarship

organizations.--A business firm shall apply to the department

for a tax credit under section 1705-F. A business firm shall

receive a tax credit under this article if the scholarship

organization or pre-kindergarten scholarship organization that

receives the contribution appears on the list established under

section 1703-F(f).

(b)  Educational improvement organization.--A business firm

must apply to the department for a credit under section 1705-F.

A business firm shall receive a tax credit under this article if

the department has approved the program provided by the

educational improvement organization that receives the

contribution.

(c)  Availability of tax credits.--Tax credits under this

article shall be made available by the department on a first-

come, first-served basis within the limitation established under

section 1706-F(a).

(d)  Contributions.--A contribution by a business firm to a

scholarship organization, pre-kindergarten scholarship

organization or educational improvement organization shall be

made no later than 60 days following the approval of an

application under subsection (a) or (b).

Section 1705-F.  Tax credit.

(a)  Scholarship or educational improvement organizations.--

In accordance with section 1706-F(a), the Department of Revenue

shall grant a tax credit against any tax due under Article III,

IV, VI, VII, VIII, IX or XV to a business firm providing proof

of a contribution to a scholarship organization or educational

improvement organization in the taxable year in which the

contribution is made which shall not exceed 75% of the total

amount contributed during the taxable year by the business firm.

Such credit shall not exceed $300,000 annually per business firm

for contributions made to scholarship organizations or

educational improvement organizations.

(b)  Additional amount.--The Department of Revenue shall

grant a tax credit of up to 90% of the total amount contributed

during the taxable year if the business firm provides a written

commitment to provide the scholarship organization or

educational improvement organization with the same amount of

contribution for two consecutive tax years. The business firm

must provide the written commitment under this subsection to the

department at the time of application.

(c)  Pre-kindergarten scholarship organizations.--In

accordance with section 1706-F(a), the Department of Revenue

shall grant a tax credit against any tax due under Article III,

IV, VI, VII, VIII, IX or XV to a business firm providing proof

of a contribution to a pre-kindergarten scholarship organization

in the taxable year in which the contribution is made which

shall be equal to 100% of the first $10,000 contributed during

the taxable year by the business firm, and which shall not

exceed 90% of the remaining amount contributed during the

taxable year by the business firm. Such credit shall not exceed

$150,000 annually per business firm for contributions made to

pre-kindergarten scholarship organizations.

(d)  Combination of tax credits.--A business firm may receive

tax credits from the Department of Revenue in any tax year for

any combination of contributions under subsection (a) or (b) or

(c). In no case may a business firm receive tax credits in any

tax year in excess of $300,000 for contributions under

subsections (a) and (b). In no case shall a business firm

receive tax credits in any tax year in excess of $150,000 for

contributions under subsection (c).

(e)  Pass-through entity.--

(1)  If a pass-through entity does not intend to use all

approved tax credits under this section, it may elect in

writing to transfer all or a portion of the credit to

shareholders, members or partners in proportion to the share

of the entity's distributive income to which the shareholder,

member or partner is entitled for use in the taxable year in

which the contribution is made or in the taxable year

immediately following the year in which the contribution is

made. The election shall designate the year in which the

transferred credits are to be used and shall be made

according to procedures established by the Department of

Revenue.

(2)  A pass-through entity and a shareholder, member or

partner of a pass-through entity shall not claim the credit

under this section for the same contribution.

(3)  The shareholder, member or partner may not carry

forward, carry back, obtain a refund of or sell or assign the

credit.

(f)  Restriction on applicability of credits.--No credits

granted under this section shall be applied against any tax

withheld by an employer from an employee under Article III.

(g)  Time of application for credits.--

(1)  Except as provided in paragraphs (2) and (3), the

department may accept applications for tax credits available

during a fiscal year no earlier than July 1 of each fiscal

year.

(2)  The application of any business firm for tax credits

available during a fiscal year as part of the second year of

a two-year commitment may be accepted no earlier than May 15

preceding the fiscal year.

(3)  The application under subsection (a) of any pass-

through entity for approval of single-year tax credits

available during a fiscal year against the taxes imposed

under Article III or under subsection (b) for approval of

credits against such taxes for the first year of a two-year

commitment may be accepted by the department no earlier than

the first business day following July 7 of the fiscal year.

Section 1706-F.  Limitations.

(a)  Amount.--

(1)  The total aggregate amount of all tax credits

approved shall not exceed $67,000,000 in a fiscal year. No

less than $44,666,667 of the total aggregate amount shall be

used to provide tax credits for contributions from business

firms to scholarship organizations. No less than $22,333,333

of the total aggregate amount shall be used to provide tax

credits for contributions from business firms to educational

improvement organizations.

(2)  (i)  For the fiscal years 2004-2005, 2005-2006 and

2006-2007, the total aggregate amount of all tax credits

approved for contributions from business firms to pre-

kindergarten scholarship programs shall not exceed

$5,000,000 in a fiscal year.

(ii)  For the fiscal year 2007-2008 and each fiscal

year thereafter, the total aggregate amount of all tax

credits approved for contributions from business firms to

pre-kindergarten scholarship programs shall not exceed

$8,000,000 in a fiscal year.

(b)  Activities.--No tax credit shall be approved for

activities that are a part of a business firm's normal course of

business.

(c)  Tax liability.--

(1)  Except as provided in paragraph (2), a tax credit

granted for any one taxable year may not exceed the tax

liability of a business firm.

(2)  In the case of a credit granted to a pass-through

entity which elects to transfer the credit according to

section 1705-F(e), a tax credit granted for any one taxable

year and transferred to a shareholder, member or partner may

not exceed the tax liability of the shareholder, member or

partner.

(d)  Use.--A tax credit not used by the applicant in the

taxable year the contribution was made or in the year designated

by the shareholder, member or partner to whom the credit was

transferred under section 1705-F(e) may not be carried forward

or carried back and is not refundable or transferable.

(e)  Nontaxable income.--A scholarship received by an

eligible student or eligible pre-kindergarten student shall not

be considered to be taxable income for the purposes of Article

III.

Section 1707-F.  Lists.

The Department of Revenue shall provide a list of all

scholarship organizations, pre-kindergarten scholarship

organizations and educational improvement organizations

receiving contributions from business firms granted a tax credit

under this article to the General Assembly by June 30 of each

year.

Section 1708-F.  Guidelines.

The department in consultation with the Department of

Education shall develop guidelines to determine the eligibility

of an innovative educational program.

ARTICLE XXIX-D

TAX AMNESTY PROGRAM FOR FISCAL YEAR 2009-2010

Section 2901-D.  Definitions.

The following words, terms and phrases, when used in this

article, shall have the meanings ascribed to them in this

section, except where the context clearly indicates a different

meaning:

"Amnesty period."  The time period of 90 consecutive days

established by the Governor during the fiscal year beginning

July 1, 2009, and ending June 30, 2010.

"Department."  The Department of Revenue of the Commonwealth.

"Eligible tax."  Any tax imposed by the Commonwealth for

deposit in the General Fund, the Motor License Fund or the

Liquid Fuels Tax Fund for taxes delinquent as of December 31,

2006. The term includes any interest or penalty on an eligible

tax. The term excludes any tax imposed by a political

subdivision.

"Program."  The tax amnesty program as provided for in this

article.

"Taxpayer."  Any person, association, fiduciary, partnership,

corporation or other entity required to pay or collect any of

the eligible taxes. The term shall not include a taxpayer who,

prior to the amnesty period, has received notice that the

taxpayer is the subject of a criminal investigation for an

alleged violation of any law imposing an eligible tax or who,

prior to the amnesty period, has been named as a defendant in a

criminal complaint alleging a violation of any law imposing an

eligible tax or is a defendant in a pending criminal action for

an alleged violation of any law imposing an eligible tax.

Section 2902-D.  Establishment of program.

(a)  Program established.--There is established a tax amnesty

program which shall be administered by the department.

(b)  Applicability.--The program shall apply to a taxpayer

who is delinquent on payment of a liability for an eligible tax

as of June 1, 2009, including a liability for returns not filed,

liabilities according to records of the department as of June 1,

2009, liabilities not reported, underreported or not

established, but delinquent as of June 1, 2009.

(c)  Prior amnesty program participation.--The program shall

not apply to taxpayers who participated in the tax amnesty

program outlined in Article XXIX-A.

(d)  Future amnesty program participation.--A taxpayer who

participates in the program shall not be eligible to participate

in a future tax amnesty program.

Section 2903-D.  Required payment.

(a)  Taxpayer requirements.--Subject to section 2904-D, all

taxpayers who participate in the program shall comply with all

of the following:

(1)  During the amnesty period, file a tax amnesty return

in such form and containing such information as the

department shall require. A tax amnesty return shall be

considered to be timely filed if it is postmarked during the

amnesty period.

(2)  During the amnesty period, make payment of all taxes

and 50% of all interest due to the Commonwealth in accordance

with the tax amnesty return that is filed.

(3)  File complete tax returns for all years for which

the taxpayer previously has not filed a tax return and file

complete amended returns for all years for which the taxpayer

underreported eligible tax liability.

(b)  Prohibitions.--The department shall not collect 50% of

all interest due to the Commonwealth or the penalties owed by a

taxpayer who participates in the program under subsection (a).

The department shall not pursue any administrative or judicial

proceeding against a taxpayer with respect to any eligible tax

that is disclosed on a tax amnesty return.

Section 2904-D.  Amnesty contingent on continued.

Notwithstanding any other provision of this article, the

department may assess and collect from a taxpayer all penalties

and interest forgone through the tax amnesty program established

in this article if, within two years after the end of the

program, either of the following occurs:

(1)  the taxpayer granted amnesty under this article

becomes delinquent for three consecutive periods in payment

of taxes due or filing of returns required on a semimonthly,

monthly, quarterly or other basis and the taxpayer has not

contested the tax liability through a timely valid

administrative or judicial appeal; or

(2)  the taxpayer granted amnesty under this article

becomes delinquent and is eight or more months late in

payment of taxes due or filing of returns on an annual basis

and the taxpayer has not contested the liability through a

timely valid administrative or judicial appeal.

Section 2905-D.  Limitation of deficiency assessment.

If, subsequent to the amnesty period, the department issues a

deficiency assessment with respect to a tax amnesty return, the

department shall have the authority to impose penalties and

interest and to pursue a criminal action only with respect to

the difference between the amount shown on that tax amnesty

return and the current amount of tax.

Section 2906-D.  Overpayment of tax.

Notwithstanding any other provisions of this article or any

other act, if an overpayment of eligible tax is refunded or

credited within 180 days after the tax amnesty return is filed,

no interest shall be allowed on the overpayment.

Section 2907-D.  Previously paid interest and penalties.

No refund or credit shall be allowed for any interest or

penalty on eligible taxes paid to the department prior to the

amnesty period.

Section 2908-D.  Proceedings relating to tax amnesty return

barred.

Participation in the program is conditioned upon the

taxpayer's agreement that the right to protest or pursue an

administrative or judicial proceeding with regard to tax amnesty

returns filed under the program or to claim any refund of money

paid under the program is barred.

Section 2909-D.  Undisclosed liabilities.

Nothing in this article shall be construed to prohibit the

department from instituting civil or criminal proceedings

against any taxpayer with respect to any amount of tax that is

not disclosed on the tax amnesty return.

Section 2910-D.  Duties of department.

(a)  Regulations.--The department shall develop regulations

to implement the provisions of this article. The regulations

must be published in the Pennsylvania Bulletin within 90 days of

the effective date of this article and shall contain, but not be

limited to, the following information:

(1)  An explanation of the program and the requirements

for eligibility for the program.

(2)  The dates during which a tax amnesty return may be

filed.

(3)  A specimen copy of the tax amnesty return.

(b)  Publicity.--The department shall publicize the program

to maximize public awareness of and participation in the

program. The department shall coordinate to the highest degree

possible its publicity efforts and other actions taken to

implement this article.

(c)  Report.--The department shall issue a report to the

General Assembly within 180 days after the end of the amnesty

period detailing the implementation of the program. The report

shall contain, but not be limited to, the following information:

(1)  A detailed breakdown of the department's

administrative costs in implementing the program.

(2)  The number of tax amnesty returns filed and a

breakdown of the number and dollar amount of revenue raised

for each tax by calendar year during which the tax period

ended. In addition, the gross revenues shall be broken down

into the following categories:

(i)  Amounts represented by assessments receivable

established by the department on or before the first day

of the amnesty period.

(ii)  All other amounts.

(3)  The total dollar amount of revenue collected by the

program.

(4)  The total dollar amount of penalties forgiven under

the program.

(5)  The demographic characteristics of tax amnesty

participants, including North American Industry

Classification System codes of participants, type of

taxpayer, consisting of individual, partnership, corporation

or other entity, size of tax liability and geographical

location.

(d)  Notification.--The department shall notify in writing

all known tax delinquents at the taxpayers' last known address

of the existence of the tax amnesty program. The sole purpose of

the letter sent by the department to taxpayers must be

notification of the program.

Section 2911-D.  Method of payment.

All tax payments under the program shall be made by certified

check, money order, cash or its equivalent.

Section 2912-D.  Exemption from review process.

Notwithstanding any law to the contrary, the regulations

issued by the department for the program shall be exempt from

the regulatory review process provided in the act of June 25,

1982 (P.L.633, No.181), known as the Regulatory Review Act.

Section 2913-D.  Use of revenue.

All revenue generated by this article shall be deposited into

a restricted revenue account in the General Fund. Revenue from

the restricted revenue account shall be distributed as follows:

(1)  All money from General Fund sources shall be

deposited in the General Fund no later than June 30, 2010,

less repayment of any costs for administration of the program

to the department.

(2)  All revenue from Motor License Fund sources shall be

deposited in the Motor License Fund no later than June 30,

2010.

(3)  All revenue from Liquid Fuels Tax Fund sources shall

be deposited in the Liquid Fuels Tax Fund no later than June

30, 2010.

Section 2914-D.  Penalties for certain corporate officers.

If an officer or officers of a corporation or association

intentionally neglect or refuse to make reports to the Auditor

General, or to the department, or successively to the Auditor

General and to the department, as required by law, for any two

successive tax years, the officer or officers commit a

misdemeanor and shall, upon conviction, be sentenced to pay a

fine of not less than $2,500 nor more than $5,000. This fine

shall be in addition to any fine or prison sentence under

section 1704 of the act of April 9, 1929 (P.L.343, No.176),

known as The Fiscal Code.

Section 2915-D.  Further examination of books and records.

(a)  Authority.--The department or any of its authorized

agents is authorized to examine the books, papers and records of

any taxpayer or other persons in order to verify the accuracy

and completeness of any return or report made or, if no return

or report was made, to ascertain and assess any tax or other

liability owed to the Commonwealth.

(b)  Audit.--The department may determine, by desk, field or

other audit, the amount of tax or other liability required to be

paid to the Commonwealth. The department may determine the

liability based upon the facts contained in the return or report

being audited or other information in the department's

possession. The department may determine the liability based

upon a reasonable statistical sample or test audit performed in

accordance with the regulations of the department when the

individual being audited does not have complete records of

transactions or when the review of each transaction or invoice

would place an undue burden on the department to conduct an

audit in a timely and efficient manner.

(c)  Challenge by taxpayer.--The taxpayer may challenge the

accuracy of a statistical sample or test audit by providing

clear and convincing evidence that the method used for a

statistical sample or test audit is erroneous, lacks a rational

basis or produces a different result when the complete records

are considered.

Section 2916-D.  Additional penalty.

(a)  Penalty.--Subject to the limitations provided under

subsection (b), a penalty of 5% of the unpaid tax liability and

penalties and interest shall be levied against a taxpayer

subject to an eligible tax if the taxpayer had failed to remit

an eligible tax due or had an unreported or underreported

liability for an eligible tax on or after the first day

following the end of the amnesty period.

(b)  Nonapplicability.--The penalty provided in this section

shall not apply to a taxpayer who:

(1)  has paid the liability in full or entered into a

duly approved and executed deferred payment plan on or before

the last day of the amnesty period; or

(2)  has filed a timely and valid administrative or

judicial appeal contesting the liability on or before the

last day of the amnesty period.

(c)  Penalty in addition.--The penalty provided by this

section shall be in addition to all other penalties provided by

law.

Section 2917-D.  Application of penalty and powers.

Sections 2914-D and 2915-D shall apply to all taxes collected

by the department.

Section 2918-D.  Construction.

Except as expressly provided in this article, this article

shall not:

(1)  be construed to relieve any person, corporation or

other entity from the filing of returns or from any taxes,

penalties or interest imposed by the provisions of any laws;

(2)  affect or terminate any petitions, investigations,

prosecutions, legal or otherwise, or other proceedings

pending under the provisions of any such laws; or

(3)  prevent the commencement or further prosecution of

any proceedings by the proper authorities of the Commonwealth

for violation of any such laws or for the assessment,

settlement, collection or recovery of taxes, penalties or

interest due to the Commonwealth under any such laws.

Section 2919-D.  Suspension of inconsistent acts.

All acts or parts of acts inconsistent with the provisions of

this article are suspended to the extent necessary to carry out

the provisions of this article.

Section 5.  Repeals are as follows:

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(1)  The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate the addition of

Article XVII-F of the act.

(2)  Article XX-B of the act of March 10, 1949 (P.L.30,

No.14), known as the Public School Code of 1949, is repealed.

Section 6.  The addition of Article XVII-F of the act is a

continuation of the act of March 10, 1949 (P.L.30, No.14), known

as the Public School Code of 1949. Except as otherwise provided

in Article XVII-F of the act, all activities initiated under

Article XX-B of the Public School Code of 1949 shall continue

and remain in full force and effect and may be completed under

Article XVII-F of the act. Orders, regulations, rules and

decisions which were made under Article XX-B of the Public

School Code of 1949 and which are in effect on the effective

date of section 5(2) of this act shall remain in full force and

effect until revoked, vacated or modified under Article XVII-F

of the act.

Section 7.  The amendment of section 319 of the act shall

apply to tax returns due after May 31, 2011.

Section 3 8.  This act shall take effect immediately.

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