HOUSE AMENDED

 

PRIOR PRINTER'S NOS. 1532, 1922

PRINTER'S NO.  2221

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

SENATE BILL

 

No.

1155

Session of

2009

  

  

INTRODUCED BY EICHELBERGER, ROBBINS, ERICKSON, STOUT AND WOZNIAK, DECEMBER 14, 2009

  

  

AS REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, AS AMENDED, SEPTEMBER 27, 2010   

  

  

  

AN ACT

  

1

Amending Title 16 (Counties) of the Pennsylvania Consolidated

2

Statutes, adding provisions for required fiscal security

3

through bonding, blanket bonding and insuring of elected and

4

appointed county officers and employees; providing for

5

determining the form, amount and payment of premiums for and

6

the filing and recording of the required security and, for

<--

7

the subsequent issuance of official commissions, for the

<--

8

effects of natural gas drilling and for a Marcellus Shale Job

9

Creation Tax Credit; and making related repeals.

10

TABLE OF CONTENTS

11

TITLE 16

12

COUNTIES

13

PART I.  PRELIMINARY PROVISIONS (Reserved)

14

PART II.  CREATION, ALTERATION AND FUNCTIONS (Reserved)

15

PART III.  GOVERNMENT AND ADMINISTRATION

16

Subpart A.  General Provisions

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17

SUBPART A.  GENERAL PROVISIONS

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18

Chapter 11.  General Provisions

19

Subchapter A.  (Reserved)

20

Subchapter B.  Required Fiscal Security for Officers and

 


1

Employees

2

§ 1121.  Short title and scope of subchapter.

3

§ 1122.  Definitions.

4

§ 1123.  Required security.

5

§ 1124.  Official security and officers.

6

§ 1125.  Other county officers and employees, deputies and other

7

appointees of county officers.

8

§ 1126.  County officers and employees acting as agents.

9

§ 1127.  Bonds or blanket bond as security coverage.

10

§ 1128.  Insurance as security coverage.

11

§ 1129.  Form of required security.

12

§ 1130.  Amount of coverage.

13

§ 1131.  Custody and filing of required security documents.

14

§ 1132.  Payment of premiums and commissions on collections.

15

§ 1133.  Other requirements, references and approvals.

16

PART IV.  (Reserved)

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17

PART V.  REVENUE

18

Chapter 15.  Effects of Natural Gas Drilling

19

§ 1501.  Short title and scope of chapter.

20

§ 1502.  Definitions.

21

§ 1503.  Imposition of tax.

22

§ 1503.1.  Tax rate adjustment.

23

§ 1504.  Return and payment.

24

§ 1505.  Natural gas severance tax registration.

25

§ 1505.1.  Meters.

26

§ 1506.  Assessments.

27

§ 1507.  Time for assessment.

28

§ 1508.  Extension of assessment period.

29

§ 1509.  Reassessments.

30

§ 1510.  Interest.

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1

§ 1511.  Penalties.

2

§ 1512.  Criminal acts.

3

§ 1513.  Abatement of additions or penalties.

4

§ 1514.  Bulk and auction sales.

5

§ 1515.  Collection upon failure to request reassessment, review

6

or appeal.

7

§ 1516.  Tax liens.

8

§ 1517.  Tax suit reciprocity.

9

§ 1518.  Service.

10

§ 1519.  Refunds.

11

§ 1520.  Refund petition.

12

§ 1521.  Rules and regulations.

13

§ 1522.  Recordkeeping.

14

§ 1523.  Examinations.

15

§ 1524.  Unauthorized disclosure.

16

§ 1525.  Cooperation with other governments.

17

§ 1526.  Bonds.

18

§ 1527.  Accounts established.

19

§ 1528.  Transfers and distributions.

20

§ 1529.  Appropriation.

21

Chapter 17.  Marcellus Shale Job Creation Tax Credit

22

§ 1701.  Definitions.

23

§ 1702.  Eligibility.

24

§ 1703.  Application process.

25

§ 1704.  Tax credits.

26

§ 1705.  Prohibitions.

27

§ 1706.  Penalties.

28

§ 1707.  Annual reports.

29

§ 1708.  Notice of availability of tax credits.

30

The General Assembly of the Commonwealth of Pennsylvania

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1

hereby enacts as follows:

2

Section 1.  Title 16 of the Pennsylvania Consolidated

3

Statutes is amended by adding parts to read:

4

Part

<--

5

I.  Preliminary Provisions (Reserved)

6

II.  Creation, Alteration and Functions (Reserved)

7

III.  Government and Administration

8

IV.  (Reserved)

9

V.  Revenue

10

PART I

11

PRELIMINARY PROVISIONS (Reserved)

12

PART II

13

CREATION, ALTERATION AND FUNCTIONS (Reserved)

14

PART III

15

GOVERNMENT AND ADMINISTRATION

16

Subpart

17

A.  General Provisions

18

SUBPART A

<--

19

PRELIMINARY PROVISIONS

20

Chapter

21

11.  General Provisions

22

CHAPTER 11

23

GENERAL PROVISIONS

24

Subchapter

25

A.  (Reserved)

26

B.  Required Fiscal Security for Officers and Employees

27

SUBCHAPTER A

<--

28

(Reserved)

29

SUBCHAPTER B

30

REQUIRED FISCAL SECURITY

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1

FOR OFFICERS AND EMPLOYEES

2

Sec.

3

1121.  Short title and scope of subchapter.

4

1122.  Definitions.

5

1123.  Required security.

6

1124.  Official security and officers.

7

1125.  Other county officers and employees, deputies and other

8

appointees of county officers.

9

1126.  County officers and employees acting as agents.

10

1127.  Bonds or blanket bond as security coverage.

11

1128.  Insurance as security coverage.

12

1129.  Form of required security.

13

1130.  Amount of coverage.

14

1131.  Custody and filing of required security documents.

15

1132.  Payment of premiums and commissions on collections.

16

1133.  Other requirements, references and approvals.

17

§ 1121.  Short title and scope of subchapter.

18

(a)  Short title of subchapter.--This subchapter shall be

19

known and may be cited as the County Officer and Employee Fiscal

20

Security Act.

21

(b)  Scope of subchapter.--This subchapter applies to

22

security coverage and additional coverage in the form of bonds,

23

blanket bonds or insurance, protecting against events of loss of

24

money or property as a result of misconduct by officers and

25

employees in counties of the second class, second class A, third

26

class, fourth class, fifth class, sixth class, seventh class or

27

eighth class, including counties of these classes which have

28

adopted a home rule charter or an optional plan.

29

(c)  Inapplicability.--This subchapter shall not apply to

30

bonds of county treasurers acting as tax collectors as provided

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1

in section 4 of the act of May 25, 1945 (P.L.1050, No.394),

2

known as the Local Tax Collection Law.

3

§ 1122.  Definitions.

4

The following words and phrases when used in this subchapter

5

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

6

context clearly indicates otherwise:

7

"Additional coverage."  Insurance that covers each county

8

officer or employee who is required to receive, account for or

9

hold any money or property by virtue of his or her office or

10

employment and which, at a minimum, indemnifies the county

11

against the loss of money and property through robbery, burglary

12

and larceny.

13

"Blanket bond."  Security coverage in the form of a bond for

14

county officers and employees as follows:

15

(1)  for county officers and employees as a comprehensive

16

group;

17

(2)  for a group of named county officers and employees;

18

or

19

(3)  for county officers and employees in scheduled

20

positions.

21

"Bond."  Security coverage under which a surety guarantees

22

the performance of a duty by a county officer or employee in

23

compliance with this subchapter.

24

"County."  A county of the second class, second class A,

25

third class, fourth class, fifth class, sixth class, seventh

26

class or eighth class, including counties of these classes which

27

have adopted or may adopt a home rule charter or an optional

28

plan.

29

"County officers and employees."  Elected and appointed

30

county officials, the deputies and other appointees of county

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1

elected and appointed officials and county employees, whether

2

acting on behalf of the county or as agents of a Commonwealth

3

agency or a governing authority, who are required to receive,

4

account for or hold any money or property by virtue of their

5

office or employment.

6

"Crime-fidelity insurance."  Insurance that is endorsed with

7

faithful performance of duty coverage and which insures, at a

8

minimum, against events of loss of money or other property,

9

resulting from one or more fraudulent or dishonest acts,

10

including, but not limited to, embezzlement, theft, forgery,

11

similar acts of dishonesty or fraud by a county officer or

12

employee acting alone or in collusion with others, or from a

13

breach of fiduciary duty or a failure of a county officer or

14

employee to perform faithfully the officer's or employee's 

15

duties or to account properly for all money and property

16

received, held or required to be accounted for, by virtue of  

17

the officer's or employee's office or employment.

18

"Governing authority."  Includes:

19

(1)  The Supreme Court.

20

(2)  Any agency or unit of the unified judicial system

21

exercising a power or performing a duty under 42 Pa.C.S. §

22

1721 (relating to delegation of powers).

23

"Governing body."  The county board of commissioners or the

24

body vested with the legislative authority of the county in

25

counties which have adopted a home rule charter or an optional

26

plan.

27

"Home rule charter."  A charter adopted under 53 Pa.C.S. Pt.

28

III Subpt. E (relating to home rule and optional plan

29

government) or its predecessor, the former act of April 13, 1972

30

(P.L.184, No.62), known as the Home Rule Charter and Optional

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1

Plans Law, or Article XXXI-C of the act of July 28, 1953

2

(P.L.723, No.230), known as the Second Class County Code.

3

"Money."  Coin or currency of the United States or of any

4

other country, travelers checks, personal checks, bank checks

5

and bank notes in current use and having a face value, money

6

orders and securities.

7

"Official security."  Security on behalf of a county officer

8

to provide protection from events of loss or misconduct when the

9

officer fails to faithfully perform the duties of the office.

10

"Optional plan."  An optional plan adopted under 53 Pa.C.S.

11

Pt. III Subpt. E (relating to home rule and optional plan

12

government) or its predecessor, the former act of April 13, 1972

13

(P.L.184, No.62), known as the Home Rule Charter and Optional

14

Plans Law.

15

"Required security."  Security coverage and additional

16

coverage provided in compliance with this subchapter.

17

"Securities."  All negotiable and nonnegotiable instruments

18

or contracts representing either money or other property,

19

including revenue and other stamps in current use, tokens and

20

tickets and evidences of debt issued in connection with credit

21

or charge cards, which cards are not issued by the county.

22

"Security coverage."  A bond, a blanket bond or a crime-

23

fidelity insurance policy, which is endorsed with faithful

24

performance of duty coverage, provided in compliance with this

25

subchapter for the purpose of protecting against the loss of

26

money and other property sustained as a result of one or more

27

fraudulent or dishonest acts, including, but not limited to,

28

embezzlement, theft, forgery, similar acts of dishonesty or

29

fraud by a county officer or employee acting alone or in

30

collusion with others or from a breach of fiduciary duty or a

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1

failure of a county officer or employee to perform faithfully  

2

the officer's or employee's duties or to account properly for

3

all money and property received by virtue of the officer's or

4

employee's position or employment.

5

§ 1123.  Required security.

6

(a)  In general.--A county shall obtain security coverage and

7

additional coverage for county officers and employees in

8

accordance with this subchapter.

9

(b)  Security coverage.--Security coverage shall be provided

10

in accordance with the following:

11

(1)  Section 1124 (relating to official security and

12

officers).

13

(2)  Section 1125 (relating to other county officers and

14

employees; deputies and other appointees of county officers).

15

(3)  Section 1126 (relating to county officers and

16

employees acting as agents).

17

(c)  Additional coverage.--Supplemental to or as part of the

18

security coverage to be provided in accordance with this

19

subchapter, additional coverage in the form of adequate

20

insurance indemnifying against the loss of money and property

21

through robbery, burglary and larceny, shall be provided for

22

each county officer or employee who is required to receive,

23

account for or hold any money and other property by virtue of  

24

the officer's or employee's office or employment.

25

(d)  Primary liability.--

26

(1)  Except as provided in paragraph (2), the county

27

shall be primarily liable for a claim for the loss of money

28

and property which a county officer or employee is required

29

to receive, account for or hold by virtue of the officer's or

30

employee's office or employment, to the extent that the loss

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1

is or could have been the subject of required security under

2

this subchapter.

3

(2)  The county shall not be primarily liable for a claim

4

for the loss of money and property under paragraph (1) to the

5

extent that recovery of the loss can be obtained from other

6

insurance or bond protection provided by the Commonwealth

7

agency or any other person or entity asserting a claim.

8

(3)  With regard to the loss of money or property,

9

nothing in this subchapter shall be deemed to restrict or

10

diminish a county's right to reimbursement or subrogation or

11

to limit any right the county may have to be indemnified or

12

receive restitution for the loss.

13

§ 1124.  Official security and officers.

14

(a)  Official security.--Each county shall obtain official

15

security in the form of bonds, a blanket bond or a crime-

16

fidelity insurance policy, which is endorsed with faithful

17

performance of duty coverage, on behalf of the officers set

18

forth in subsection (b) or the equivalent officers in home rule

19

or optional plans counties, whether elected, appointed or

20

appointed to fill a vacancy, before those officers begin their

21

official duties.

22

(b)  Officers.--The following are the officers or equivalent

23

officers in home rule or optional plans counties upon whose

24

behalf official security shall be obtained in accordance with

25

subsection (a):

26

(1)  Each county commissioner.

27

(2)  The chief clerk of the county commissioners.

28

(3)  The controller.

29

(4)  The county treasurer.

30

(5)  The prothonotary of the court of common pleas.

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1

(6)  The sheriff.

2

(7)  The coroner.

3

(8)  The clerk of the courts of the court of common

4

pleas.

5

(9)  The clerk of the orphans' court division of the

6

court of common pleas.

7

(10)  The recorder of deeds.

8

(11)  The register of wills.

9

(12)  Probation and parole officers, if required by order

10

of court to obtain official security.

11

(13)  The fire marshal and deputy fire marshals, if

12

required by law to obtain official security.

13

(14)  The secretary of the board of health and the health

14

officer in a county in which the secretary is required by law

15

to obtain official security.

16

§ 1125.  Other county officers and employees.

17

 A county shall obtain security coverage with faithful

18

performance of duty coverage for all county officers and

19

employees who are not subject to section 1124 (relating to

20

official security and officers), including deputies and other

21

appointees in each county office, who are required to receive,

22

account for or hold any money and other property by virtue of

23

their office or employment.

24

§ 1126.  County officers and employees acting as agents.

25

Each county shall obtain security coverage for county

26

officers and employees acting as agents of a Commonwealth agency

27

or governing authority in accordance with this subchapter or any

28

other law, regulation or rule requiring the posting of security

29

in the form of a bond or otherwise.

30

§ 1127.  Bonds or blanket bond as security coverage.

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1

(a)  In general.--A county may comply with section 1123(b)

2

(relating to required security) by providing bonds or a blanket

3

bond in accordance with the following:

4

(1)  The bond or blanket bond shall be joint and several,

5

with one or more surety companies authorized to do business

6

in this Commonwealth and licensed by the Insurance

7

Commissioner.

8

(2)  The bond or blanket bond shall be conditioned upon

9

each of the following:

10

(i)  The faithful performance of all duties required

11

of the person holding the office or position.

12

(ii)  The just and faithful use, accounting or

13

payment over, according to law, of all moneys and

14

balances and other property, which is required to be

15

received, accounted for or held by the officer or

16

employee by virtue of the officer's or employee's office

17

or employment whether on behalf of the county, the

18

Commonwealth, a political subdivision or any other

19

person.

20

(iii)  The delivery to the successor in office of all

21

books, papers, documents or other official things, whole,

22

safe and undefaced, held in right of the office.

23

(3)  A bond or blanket bond shall be taken in the name of

24

the county and, in case of a breach of any of the conditions

25

thereof by the acts or neglect of a principal on the bond,

26

shall be for the use of the county, the Commonwealth, a 

27

political subdivision or any other person as that person's

28

interest shall otherwise appear.

29

(4)  The county, the Commonwealth, a political

30

subdivision or other interested persons may sue upon the bond

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1

in its name or for its own use. Acts of the General Assembly

2

pertaining to actions and limitations of actions upon

3

official bonds given to the Commonwealth shall apply to the

4

bonds provided for in this subchapter just as if they were

5

given to the Commonwealth, except as otherwise specifically

6

provided in this subchapter.

7

(b)  Combined offices.--In counties in which one or more of

8

the county offices set forth in section 1123(b) are combined, if

9

officers are covered by individual bonds, a single bond covering

10

the combined offices shall suffice for the officer holding the

11

combined offices.

12

§ 1128.  Insurance as security coverage.

13

A county may comply with section 1123(b) (relating to

14

required security) by providing crime-fidelity insurance for

15

county officers or employees in accordance with this subchapter.

16

§ 1129.  Form of required security.

17

The form and contents of a bond, a blanket bond or insurance

18

obtained in compliance with this subchapter shall be approved by

19

the governing body of the county, after review by the county

20

solicitor and consultation with the county risk manager, if any.

21

In cases in which required security is being provided for a

22

county officer or employee who is acting as an agent for a

23

Commonwealth agency or the governing authority, the Commonwealth

24

agency or the governing authority may review and comment on the

25

form of the required security. The governing body may refer to

26

sample forms that may be made available by the Department of

27

State in the approval process.

28

§ 1130.  Amount of coverage.

29

(a)  Governing body.--The governing body shall establish a

30

procedure pursuant to which the governing body shall annually

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1

determine the form and amount of required security that will be

2

reasonably sufficient to protect against the risks of loss in

3

compliance with this subchapter.

4

(b)  Risk manager.--The governing body may appoint a risk

5

manager who, at the request of the governing body, shall compile

6

and submit information relevant to the determination of an

7

amount of required security under subsection (a).

8

(c)  Consultation.--To determine the amount of security for a

9

county officer or employee who is acting as an agent for a

10

Commonwealth agency or governing authority, the governing body

11

may, or the risk manager shall, if directed by the governing

12

body, provide written notice to the secretary or head of the  

13

Commonwealth agency or the governing authority. The Commonwealth

14

agency or governing authority may provide input concerning the

15

amount of security it believes is reasonably sufficient to

16

protect against the risks of loss required to comply with this

17

subchapter. Nothing in this subchapter shall impair the right of

18

a Commonwealth agency or governing authority from approving the

19

amount of required security, if it is explicitly authorized by

20

law to approve the amount of a bond or other security of a

21

county officer or employee acting as its agent.

22

§ 1131.  Custody and filing of required security documents.

23

(a)  Custody.--The governing body shall direct the chief

24

clerk or equivalent officer in a home rule or optional plan

25

county to present the documents evidencing required security

26

obtained in accordance with this subchapter to the recorder of

27

deeds or equivalent officer in a home rule or optional plan

28

county for recording. No tax, fee or other charge shall be

29

imposed for the recording of documents in compliance with this

30

section. Following the recording, the documents shall be

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1

returned to the chief clerk or equivalent officer in a home rule

2

or optional plan county, who shall maintain the custody of these

3

documents on behalf of the governing body.

4

(b)  Department of State filing.--

5

(1)  In compliance with section 809 of the act of April

6

9, 1929 (P.L.177, No.175), known as The Administrative Code

7

of 1929, it shall be sufficient for a copy of the recorded

8

documents evidencing the required security for county

9

officers to be filed with the Department of State in

10

accordance with deadlines established by the department.

11

(2)  No other filing or approvals, except as provided in

12

section 1133(c)(2) (relating to other requirements,

13

references and approvals) of documents evidencing the

14

required security for county officers, except that required

15

in accordance with paragraph (1), shall be required as a

16

condition for the issuance of commissions to elected county

17

officials by the Department of State.

18

(3)  Notwithstanding the provision of any other law, no

19

tax, fee or other charge shall be imposed as a result of the

20

issuance of commissions to elected county officials, and no

21

fee may be imposed for the recording of required security

22

documents or commissions.

23

(c)  Copies.--If requested by the Commonwealth agency or

24

governing authority on whose behalf a county officer or employee

25

is acting as an agent, a copy of recorded documents evidencing

26

the required security shall be provided by the chief clerk or

27

the equivalent officer in a home rule or optional plans county

28

to the Commonwealth agency or governing authority. No charge or

29

fee shall be imposed for any copy provided in accordance with

30

this subsection.

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1

(d)  Filing by governing body.--The governing body shall have

2

the duty to file documents as required by this section.

3

(e)  Retention of documents.--Documents evidencing required

4

security shall be held by the custodian thereof for the longer

5

of the following periods:

6

(1)  For at least one year after the officer's term of

7

office or employee's period of employment and, in the case of

8

a county officer or employee who is acting as an agent for a

9

Commonwealth agency or governing authority, for at least one

10

year after the settlement of accounts with the Commonwealth

11

agency or the governing authority.

12

(2)  For the period of time required by the act of August

13

14, 1963 (P.L.839, No.407), entitled "An act creating a

14

county records committee; imposing powers and duties upon it;

15

authorizing the Pennsylvania Historical and Museum Commission

16

to assist and cooperate with it; defining county records; and

17

authorizing the disposition of certain county records by

18

county officers in counties of the second to eighth class,"

19

or the rules and regulations adopted pursuant thereto.

20

(f)  Evidence.--A copy of original documents evidencing

21

required security, certified as true and correct by the

22

custodian thereof, or a copy of the recorded documents

23

evidencing required security, certified as true and correct by

24

the recorder of deeds, shall be competent evidence thereof in

25

any judicial proceeding, in the same manner as the original

26

would be if produced and offered in evidence.

27

(g)  Sufficiency of filing and recording.--Notwithstanding

28

any other provision of law, it shall be sufficient to file and

29

record documents evidencing required security in accordance with

30

this subchapter without further acknowledgment, filing or

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1

recording of these documents with any other county officer or

2

with any other Commonwealth agency, except as required by this

3

subchapter.

4

§ 1132.  Payment of premiums and commissions on collections.

5

(a)  Premiums and costs.--The premiums and costs for all

6

forms of required security for county officials and employees

7

shall be paid by the county. The requirement of this subchapter

8

that a county acquire and pay the premiums and costs for

9

required security shall not relieve a Commonwealth agency on

10

whose behalf a county officer or employee is acting as an agent

11

from an obligation, imposed by law, to procure insurance or

12

bonding protection.

13

(b)  Commissions on collections.--Nothing in this subchapter

14

shall affect the right, provided for in any other law, of a

15

county officer or employee to retain a commission, for use of

16

the county, on amounts collected or transmitted as agent for a

17

Commonwealth agency. Notwithstanding the right to retain

18

commissions in accordance with this paragraph, no county officer

19

or employee shall be entitled to retain any additional sums from

20

amounts collected for or to be transmitted to the Commonwealth

21

agency for the purpose of paying premiums or costs related to

22

the acquisition of required security.

23

§ 1133.  Other requirements, references and approvals.

24

(a)  Compliance.--A requirement in another law, regulation or

25

rule that a bond be provided by a county officer or employee to

26

secure the faithful performance of duty or to act as the agent

27

of a Commonwealth agency or governing authority may be satisfied

28

by including this obligation within the coverage of required

29

security supplied in accordance with this subchapter.

30

(b)  Reference to bonds.--Reference to bonds of county

- 17 -

 


1

officers and employees in any other law shall be construed and

2

read together with this subchapter, and if a conflict exists

3

between this subchapter and the reference to bonds of county

4

officers and employees in any other law, the provisions of this

5

subchapter shall prevail.

6

(c)  Other approvals.--Notwithstanding any other provision of

7

law, the following shall apply to required security in the form

8

of a bond, a blanket bond or insurance:

9

(1)  Except as provided in paragraph (2), when required

10

security is obtained in compliance with this subchapter, it

11

shall not require the approval of any Commonwealth agency or

12

the Governor as to form, content or amount.

13

(2)  If any other law explicitly authorizes a

14

Commonwealth agency or the Governor to approve the amount of

15

a bond or other security of a county officer or employee, the

16

amount of required security under this subchapter shall be

17

subject to approval by the Commonwealth agency or the

18

Governor, which approval shall not be unreasonably withheld.

19

PART IV

<--

20

(Reserved)

21

PART V

22

REVENUE

23

Chapter

24

15.  Effects of Natural Gas Drilling

25

17.  Marcellus Shale Job Creation Tax Credit

26

CHAPTER 15

27

EFFECTS OF NATURAL GAS DRILLING

28

Sec.

29

1501.  Short title and scope of chapter.

30

1502.  Definitions.

- 18 -

 


1

1503.  Imposition of tax.

2

1503.1.  Tax rate adjustment.

3

1504.  Return and payment.

4

1505.  Natural gas severance tax registration.

5

1505.1.  Meters.

6

1506.  Assessments.

7

1507.  Time for assessment.

8

1508.  Extension of assessment period.

9

1509.  Reassessments.

10

1510.  Interest.

11

1511.  Penalties.

12

1512.  Criminal acts.

13

1513.  Abatement of additions or penalties.

14

1514.  Bulk and auction sales.

15

1515.  Collection upon failure to request reassessment, review

16

or appeal.

17

1516.  Tax liens.

18

1517.  Tax suit reciprocity.

19

1518.  Service.

20

1519.  Refunds.

21

1520.  Refund petition.

22

1521.  Rules and regulations.

23

1522.  Recordkeeping.

24

1523.  Examinations.

25

1524.  Unauthorized disclosure.

26

1525.  Cooperation with other governments.

27

1526.  Bonds.

28

1527.  Accounts established.

29

1528.  Transfers and distributions.

30

1529.  Appropriation.

- 19 -

 


1

§ 1501.  Short title and scope of chapter.

2

(a)  Short title.--This chapter shall be known and may be

3

cited as the Natural Gas Severance Tax Act.

4

(b)  Scope of chapter.--This chapter shall relate to the

5

ability of all counties within this Commonwealth to ameliorate

6

the effects of natural gas drilling that occurs within their

7

borders.

8

§ 1502.  Definitions.

9

The following words and phrases when used in this chapter

10

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

11

context clearly indicates otherwise:

12

"Accredited laboratory."  A facility engaged in the testing

13

and calibration of scientific measurement devices and certified

14

by the Department of Environmental Protection as having met the

15

department's standards for accreditation.

16

"Association."  A partnership, limited partnership or any

17

other form of unincorporated enterprise owned or conducted by

18

two or more persons.

19

"Base rate."  The rate under section 1503(a) (relating to

20

imposition of tax).

21

"Coal bed methane."  Gas which can be produced from coal

22

beds, coal seams, mined-out areas or gob wells.

23

"Corporation."  A corporation, joint stock association,

24

limited liability company, business trust or any other

25

incorporated enterprise organized under the laws of this

26

Commonwealth, the United States or any other state, territory or

27

foreign country or dependency.

28

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

29

"Fund."  The Natural Gas Severance Tax Fund established under

30

section 1527 (relating to accounts established).

- 20 -

 


1

"Meter."  A device to measure the passage of volumes of gases

2

or liquids past a certain point.

3

"Municipality."  A city, borough, incorporated town or

4

township.

5

"Natural gas."  A fossil fuel consisting of a mixture of

6

hydrocarbon gases, primarily methane, possibly including ethane,

7

propane, butane, pentane, carbon dioxide, oxygen, nitrogen and

8

hydrogen sulfide and other gas species. The term includes

9

natural gas from oil fields known as associated gas or casing

10

head gas, natural gas fields known as nonassociated gas, coal

11

beds, shale beds and other formations. The term does not include

12

coal bed methane.

13

"Nonproducing site."  A point of severance that is not

14

capable of producing natural gas in paying quantities.

15

"Paying quantities."  Profit to the producer, however small,

16

over the producer's current operating expenses.

17

"Person."  A natural person or a corporation, fiduciary,

18

association or other entity, including the Commonwealth, its

19

political subdivisions, instrumentalities and authorities. When

20

the term is used in a clause prescribing and imposing a penalty

21

or imposing a fine or imprisonment, or both, the term shall

22

include the members, as applied to an association, and the

23

officers, as applied to a corporation.

24

"Producer."  A person who engages or continues within this

25

Commonwealth in the business of severing natural gas for sale,

26

profit or commercial use. The term does not include a person who

27

severs natural gas from a storage field.

28

"Producing site."  A point of severance capable of producing

29

natural gas in paying quantities.

30

"Reporting period."  A calendar month in which natural gas is

- 21 -

 


1

severed.

2

"Secretary."  The Secretary of Revenue of the Commonwealth.

3

"Sever."  To extract or otherwise remove natural gas from the

4

soil or water of this Commonwealth.

5

"Severance."  The extraction or other removal of natural gas

6

from the soil or water of this Commonwealth.

7

"Severing."  Extracting or otherwise removing natural gas

8

from the soil or water of this Commonwealth.

9

"Storage field."  A natural formation or other site that is

10

used to store natural gas that did not originate from and has

11

been injected into the formation or site.

12

"Stripper well."  A producing site or a nonproducing site

13

that is not capable of producing and does not produce more than

14

60,000 cubic feet of natural gas per day.

15

"Tax."  The tax imposed under this chapter.

16

"Tax rate adjustment index."  The amount calculated under

17

section 1503(b) (relating to imposition of tax) by which the

18

rate of the tax imposed under section 1503(a) is adjusted

19

annually.

20

"Taxpayer."  A person subject to the tax imposed by this

21

chapter.

22

"Unit."  A thousand cubic feet of natural gas measured at the

23

wellhead at a temperature of 60 degrees Fahrenheit and an

24

absolute pressure of 14.73 pounds per square inch in accordance

25

with American Gas Association Standards and according to Boyle's

26

Law for the measurement of gas under varying pressures with

27

deviations as follows:

28

(1)  The average absolute atmospheric pressure shall be

29

assumed to be 14.4 pounds to the square inch, regardless of

30

elevation or location of point of delivery above sea level or

- 22 -

 


1

variations in atmospheric pressure from time to time.

2

(2)  The temperature of the gas passing the meters shall

3

be determined by the continuous use of a recording

4

thermometer installed to properly record the temperature of

5

gas flowing through the meters. The arithmetic average of the

6

temperature recorded each 24-hour day shall be used in

7

computing gas volumes. If a recording thermometer is not

8

installed, or is installed and not operating properly, an

9

average flowing temperature of 60 degrees Fahrenheit shall be

10

used in computing gas volume.

11

(3)  The specific gravity of the gas shall be determined

12

annually by tests made by the use of an Edwards or Acme

13

gravity balance, or at intervals as found necessary in

14

practice. Specific gravity determinations shall be used in

15

computing gas volumes.

16

(4)  The deviation of the natural gas from Boyle's Law

17

shall be determined by annual tests or at other shorter

18

intervals as found necessary in practice. The apparatus and

19

method used in making the test shall be in accordance with

20

recommendations of the National Bureau of Standards or Report

21

No. 3 of the Gas Measurement Committee of the American Gas

22

Association, or amendments thereto. The results of the tests

23

shall be used in computing the volume of gas delivered under

24

this chapter.

25

"Wellhead meter."  A meter placed at a producing or

26

nonproducing site to measure the volume of natural gas severed 

27

for which a wellhead meter certification has been issued.

28

"Wellhead meter certification."  A report issued by an

29

accredited laboratory certifying the accuracy of a wellhead

30

meter.

- 23 -

 


1

§ 1503.  Imposition of tax.

2

(a)  Establishment.--Beginning January 1, 2011, there shall

3

be levied a natural gas severance tax on every producer. The tax

4

shall not be imposed on units severed from a stripper well

5

unless the following are true:

6

(1)  The stripper well is one of multiple producing sites

7

or nonproducing sites, the combined volumes of gas produced

8

by all of which sites are measured by a single wellhead meter

9

as provided in section 1505.1 (relating to meters).

10

(2)  The combined volumes of gas produced by all the

11

producing sites or nonproducing sites described in paragraph

12

(1) is more than 60,000 cubic feet of natural gas per day.

13

(a.1)  Exemptions.--The tax shall not be imposed on the

14

following:

15

(1)  Units severed by a producer and sold and delivered

16

to a manufacturer of tangible personal property, as defined

17

in section 201(m) of the act of March 4, 1971 (P.L.6, No.2),

18

known as the Tax Reform Code of 1971, for the manufacturer's

19

use within this Commonwealth if the units have been severed

20

from one or more producing sites or nonproducing sites on

21

property owned by the manufacturer.

22

(2)  Units provided free of charge to the owner of the

23

surface under which the gas is severed if the surface owner

24

is the end user of the gas.

25

(b)  Rate.--Subject to the provisions of section 1503.1

26

(relating to natural gas base rate adjustment), the rate shall

27

be 39ยข per unit severed at the wellhead.

28

§ 1503.1.  Tax rate adjustment.

29

(a)  Annual adjustment.--The tax rate shall be adjusted

30

annually by the amount of the tax rate adjustment index as

- 24 -

 


1

calculated under subsection (c), provided that the tax rate

2

shall never be less than the base rate. The adjusted tax rate

3

shall be effective for the next year.

4

(b)  Determination of adjustment.--On or before April 30 of

5

each year following the effective date of this section, the

6

secretary shall calculate and determine the amount of the tax

7

rate adjustment index.

8

(c)  Calculation of adjustment.--The base rate adjustment

9

index shall be determined as follows:

10

(1)  If 7% of the average of New York Mercantile Exchange

11

(NYMEX) Henry Hub settled price on the last trading day of

12

the month, as reported by the Wall Street Journal for the

13

previous 12-month period ending March 31, is less than the

14

base rate, the tax rate adjustment index shall be zero and

15

the adjusted tax rate shall be the base rate.

16

(2)  If 7% of the average of the NYMEX Henry Hub settled

17

price on the last trading day of the month, as reported by

18

the Wall Street Journal for the previous 12-month period

19

ending March 31, is greater than the base rate, the tax rate

20

adjustment index shall be 50% of the difference between 7% of

21

the average of the NYMEX Henry Hub settled price on the last

22

trading day of the month, as reported in the Wall Street

23

Journal for the previous 12-month period ending March 31, and

24

the base rate. The adjusted tax rate shall be the resulting

25

tax rate adjustment index plus the base rate.

26

(d)  Publication of adjustment.--The secretary shall forward

27

the amount of the tax rate adjustment index and the adjusted tax

28

rate, as determined under subsection (c), to the Legislative

29

Reference Bureau for publication in the Pennsylvania Bulletin by

30

May 1 of each year and shall simultaneously provide the

- 25 -

 


1

information to producers by written notice. Failure of the

2

amount of the tax rate adjustment index and the adjusted tax

3

rate to be published or provided to producers as required by

4

this subsection shall not affect the effectiveness of the

5

adjusted tax rate under subsection (b).

6

(e)  Discontinuance of data.--If publication of the NYMEX

7

Henry Hub average monthly gas price data is discontinued, the

8

tax rate then in effect shall not be adjusted until a comparable

9

method for determining the tax rate adjustment index is adopted

10

by the General Assembly in legislation.

11

(f)  Other adjustments.--If the base data of the NYMEX Henry

12

Hub average monthly gas price is substantially revised, the

13

secretary shall, when determining the amount of the tax rate

14

adjustment index under subsection (c), make appropriate changes

15

to ensure that the tax rate adjustment index is reasonably

16

consistent with the result which would have been attained had

17

the substantial revision not been made. If the secretary is

18

unable to make reasonable changes sufficient to ensure a

19

consistent result, the tax rate then in effect shall not be

20

adjusted until a comparable method for determining the tax rate

21

adjustment index is adopted by the General Assembly in

22

legislation.

23

(g)  Application of rate determinations.--The provisions of

24

this section shall affect only the determination of the rate of

25

the tax on the severance units of natural gas imposed in section

26

1503 (relating to imposition of tax). The provisions of this

27

section are not intended, nor shall they be construed, to affect

28

any other determination whatsoever, including, but not limited

29

to, the determination of royalty due under mineral leases.

30

Notwithstanding any other provision of law, the tax imposed by

- 26 -

 


1

this chapter shall not reduce any royalty payments due under

2

mineral leases and the producer may not recover any portion of

3

the tax paid from the royalty owner through other means of

4

deduction or reallocation, notwithstanding any provision in the

5

lease, contract or agreement.

6

§ 1504.  Return and payment.

7

(a)  Requirement.--Every producer is required to file a

8

return with the department, on a form prescribed by the

9

department, which shall include all of the following:

10

(1)  The number of natural gas units severed by the

11

producer for the reporting period.

12

(2)  The number of producing sites used by the producer

13

for the severance of natural gas in each county and

14

municipality.

15

(3)  The amount of tax due under section 1503 (relating

16

to imposition of tax).

17

(b)  Filing.--The return required by subsection (a) shall be

18

filed with the department within 15 days following the end of a

19

reporting period.

20

(c)  Deadline.--The tax imposed under section 1503 is due on

21

the day the return is required to be filed and becomes

22

delinquent if not remitted to the department by that date.

23

§ 1505.  Natural gas severance tax registration.

24

(a)  Application.--Before a producer severs natural gas in

25

this Commonwealth, the producer shall apply to the department

26

for a natural gas severance tax registration certificate.

27

(a.1)  Application fee.--The department may charge an

28

application fee to cover the administrative costs associated

29

with the application and registration process. If the department

30

charges an application fee, the department shall not issue a

- 27 -

 


1

registration certificate until the producer has paid the

2

application fee.

3

(a.2)  Declaration.--The producer shall include in its

4

application a declaration of all producing sites and

5

nonproducing sites used by the producer for the severance of

6

natural gas. The declaration shall include copies of wellhead

7

meter certifications for each site. The producer is required to

8

update the declaration when the producer adds or removes a

9

producing site or nonproducing site in this Commonwealth or when

10

there is a change in the status of a producing site or

11

nonproducing site or when the producer uses a different

12

accredited laboratory to issue a wellhead meter certification.

13

The producer shall update the declaration within 30 days after a

14

calendar month in which a change to the declaration occurs.

15

(b)  Issuance.--Except as provided in subsection (c), after

16

the receipt of an application, the department shall issue a

17

registration certificate under subsection (a). The registration

18

certificate shall be nonassignable. All registrants shall be

19

required to renew their registration certificates and wellhead

20

meter certifications on a staggered renewal system established

21

by the department. After the initial staggered renewal period, a

22

registration certificate or a wellhead meter certification 

23

issued shall be valid for a period of five years.

24

(c)  Refusal, suspension or revocation.--The department may

25

refuse to issue, suspend or revoke a registration certificate if

26

the applicant or registrant has not filed required State tax

27

reports and paid State taxes not subject to a timely perfected

28

administrative or judicial appeal or subject to a duly

29

authorized deferred payment plan. The department shall notify

30

the applicant or registrant of any refusal, suspension or

- 28 -

 


1

revocation. The notice shall contain a statement that the

2

refusal, suspension or revocation may be made public. The notice

3

shall be made by first class mail. An applicant or registrant

4

aggrieved by the determination of the department may file an

5

appeal under the provisions for administrative appeals in the

6

act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code

7

of 1971. In the case of a suspension or revocation which is

8

appealed, the registration certificate shall remain valid

9

pending a final outcome of the appeals process. Notwithstanding

10

sections 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 of the

11

Tax Reform Code of 1971 or any other provision of law, if no

12

appeal is taken or if an appeal is taken and denied at the

13

conclusion of the appeal process the department may disclose, by

14

publication or otherwise, the identity of a producer and the

15

fact that the producer's registration certificate has been

16

refused, suspended or revoked under this subsection. Disclosure

17

may include the basis for refusal, suspension or revocation.

18

(d)  Violation.--A person severing natural gas in this

19

Commonwealth without holding a valid registration certificate

20

under subsection (b) shall be guilty of a summary offense and

21

shall, upon conviction, be sentenced to pay a fine of not less

22

than $300 nor more than $1,500. In the event the person

23

convicted defaults in the payment of the fine, he shall be

24

sentenced to imprisonment for not less than five days nor more

25

than 30 days. The penalties imposed by this subsection shall be

26

in addition to any other penalties imposed by this chapter. For

27

purposes of this subsection, the severing of natural gas during

28

any calendar day shall constitute a separate violation. The

29

secretary may designate employees of the department to enforce

30

the provisions of this subsection. The employees shall exhibit

- 29 -

 


1

proof of and be within the scope of the designation when

2

instituting proceedings as provided by the Pennsylvania Rules of

3

Criminal Procedure.

4

(e)  Failure to obtain registration certificate.--Failure to

5

obtain or hold a valid registration certificate does not relieve

6

a person from liability for the tax imposed by this chapter.

7

§ 1505.1.  Meters.

8

(a)  General rule.--Except as provided in subsection (b), a 

9

producer shall provide for and maintain a discrete wellhead 

10

meter where natural gas is severed. A producer shall ensure that

11

the meters are maintained according to industry standards. Any

12

wellhead meter installed after the effective date of this

13

section shall be a digital meter.

14

(b)  Exception.--If a producer has multiple producing sites

15

or nonproducing sites, the combined volumes of gas produced by

16

all of which sites are measured by a single wellhead meter, the

17

producer shall not be required to provide for a discrete

18

wellhead meter at any of those producing sites or nonproducing

19

sites that is also a stripper well.

20

§ 1506.  Assessments.

21

(a)  Authorization and requirement.--The department is

22

authorized and shall make the inquiries, determinations and

23

assessments of the tax imposed under this chapter, including

24

interest, additions and penalties imposed under this chapter.

25

(b)  Notice.--The notice of assessment and demand for payment

26

shall be mailed to the taxpayer. The notice shall set forth the

27

basis of the assessment. The department shall send the notice of

28

assessment to the taxpayer at its registered address via

29

certified mail if the assessment increases the taxpayer's tax

30

liability by $300. Otherwise, the notice of assessment may be

- 30 -

 


1

sent via regular mail.

2

§ 1507.  Time for assessment.

3

(a)  Requirement.--An assessment as provided under section

4

1506 (relating to assessments) shall be made within three years

5

after the date when the return provided for by section 1504

6

(relating to return and payment) is filed or the end of the year

7

in which the tax liability arises, whichever shall occur last.

8

For the purposes of this subsection and subsection (b), a return

9

filed before the last day prescribed for the filing period shall

10

be considered as filed on the last day.

11

(b)  Exception.--If the taxpayer underpays the correct amount

12

of the tax due by 25% or more, the tax may be assessed within

13

six years after the date the return was filed.

14

(c)  Intent to evade.--Where no return is filed or where the

15

taxpayer files a false or fraudulent return with intent to evade

16

the tax imposed by this chapter, the assessment may be made at

17

any time.

18

(d)  Erroneous credit or refund.--Within three years of the

19

granting of a refund or credit or within the period in which an

20

assessment or reassessment may have been issued by the

21

department for the taxable period for which the refund was

22

granted, whichever period shall last occur, the department may

23

issue an assessment to recover a refund or credit made or

24

allowed erroneously.

25

§ 1508.  Extension of assessment period.

26

Notwithstanding the provisions of this chapter, the

27

assessment period may be extended in the event a taxpayer has

28

provided written consent before the expiration of the period

29

provided in section 1507 (relating to time for assessment) for a

30

tax assessment. The amount of tax due may be assessed at any

- 31 -

 


1

time within the extended period. The period may be extended

2

further by subsequent written consents made before the

3

expiration of the extended period.

4

§ 1509.  Reassessments.

5

A taxpayer against whom an assessment is made may petition

6

the department for a reassessment under Article XXVII of the act

7

of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of

8

1971.

9

§ 1510.  Interest.

10

The department shall assess interest on any delinquent tax at

11

the rate prescribed under section 806 of the act of April 9,

12

1929 (P.L.343, No.176), known as The Fiscal Code.

13

§ 1511.  Penalties.

14

The department shall enforce the following penalties:

15

(1)  A penalty against a producer without a natural gas

16

severance tax registration certificate. The penalty shall be

17

$1 for every unit severed without a valid registration 

18

certificate. The department may assess this penalty

19

separately from or in conjunction with any assessment of the

20

natural gas severance tax.

21

(2)  A penalty against a producer for failure to timely

22

file a return as required under section 1504 (relating to

23

return and payment). The penalty shall be 5% of the tax

24

liability to be reported on the return for each day beyond

25

the due date that the return is not filed.

26

(3)  In addition to the penalty under paragraph (2), a

27

penalty against the producer for a willful failure to timely

28

file a return. The penalty shall be 200% of the tax liability

29

required to be reported on the return.

30

(4)  A penalty against a producer for failure to timely

- 32 -

 


1

pay the tax as required by section 1504(c). The penalty shall

2

be 5% of the amount of tax due for each day beyond the

3

payment date that the tax is not paid.

4

§ 1512.  Criminal acts.

5

(a)  Fraudulent return.--Any person with intent to defraud

6

the Commonwealth, who willfully makes or causes to be made a

7

return required by this chapter which is false, is guilty of a

8

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

9

fine of not more than $2,000 or to imprisonment for not more

10

than three years, or both.

11

(b)  Other crimes.--

12

(1)  Except as otherwise provided by subsection (a), a

13

person is guilty of a misdemeanor and shall, upon conviction,

14

be sentenced to pay a fine of not more than $1,000 and costs

15

of prosecution or to imprisonment for not more than one year,

16

or both, for any of the following:

17

(i)  Willfully failing to timely remit the tax to the

18

department.

19

(ii)  Willfully failing or neglecting to timely file

20

a return or report required by this chapter.

21

(iii)  Refusing to timely pay a tax, penalty or

22

interest imposed or provided for by this chapter.

23

(iv)  Willfully failing to preserve its books, papers

24

and records as directed by the department.

25

(v)  Refusing to permit the department or its

26

authorized agents to examine its books, records or

27

papers.

28

(vi)  Knowingly making any incomplete, false or

29

fraudulent return or report.

30

(vii)  Preventing or attempting to prevent the full

- 33 -

 


1

disclosure of the amount of natural gas severance tax

2

due.

3

(viii)  Providing any person with a false statement

4

as to the payment of the tax imposed under this chapter

5

with respect to any pertinent facts.

6

(ix)  Making, uttering or issuing a false or

7

fraudulent statement.

8

(2)  The penalties imposed by this section shall be in

9

addition to other penalties imposed by this chapter.

10

§ 1513.  Abatement of additions or penalties.

11

Upon the filing of a petition for reassessment or a petition

12

for refund by a taxpayer as provided under this chapter,

13

additions or penalties imposed upon the taxpayer by this chapter

14

may be waived or abated in whole or in part where the petitioner

15

establishes that he acted in good faith, without negligence and

16

with no intent to defraud.

17

§ 1514.  Bulk and auction sales.

18

A person that sells or causes to be sold at auction, or that

19

sells or transfers in bulk, 51% or more of a stock of goods,

20

wares or merchandise of any kind, fixtures, machinery,

21

equipment, buildings or real estate involved in a business for

22

which the person holds a registration certificate or is required

23

to obtain a registration certificate under the provisions of

24

this chapter shall be subject to the provisions of section 1403

25

of the act of April 9, 1929 (P.L.343, No.176), known as The

26

Fiscal Code.

27

§ 1515.  Collection upon failure to request reassessment, review

28

or appeal.

29

(a)  Power of department.--The department may collect the tax 

30

imposed under this chapter:

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1

(1)  If an assessment of the tax is not paid within 30

2

days after notice to the taxpayer when no petition for

3

reassessment has been filed.

4

(2)  Within 60 days of the reassessment, if no petition

5

for review has been filed.

6

(3)  If no appeal has been made, within 30 days of:

7

(i)  the Board of Finance and Revenue's decision of a

8

petition for review; or

9

(ii)  the expiration of the board's time for acting

10

upon the petition.

11

(4)  In all cases of judicial sales, receiverships,

12

assignments or bankruptcies.

13

(b)  Prohibition.--In a case for the collection of taxes

14

under subsection (a), the taxpayer against whom they were

15

assessed shall not be permitted to set up a ground of defense

16

that might have been determined by the department, the Board of

17

Finance and Revenue or the courts, provided that the defense of

18

failure of the department to mail notice of assessment or

19

reassessment to the taxpayer and the defense of payment of

20

assessment or reassessment may be raised in proceedings for

21

collection by a motion to stay the proceedings.

22

§ 1516.  Tax liens.

23

(a)  Lien imposed.--If any taxpayer neglects or refuses to

24

pay the tax imposed under this chapter for which the taxpayer is

25

liable under this chapter after demand, the amount, including

26

interest, addition or penalty, together with additional costs

27

that may accrue, shall be a lien in favor of the Commonwealth

28

upon the real and personal property of the taxpayer but only

29

after the same has been entered and docketed of record by the

30

prothonotary of the county where the property is situated. The

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1

department may, at any time, transmit to the prothonotaries of

2

the respective counties certified copies of all liens imposed by

3

this section. It shall be the duty of the prothonotary receiving

4

the lien to enter and docket the same of record to the office of

5

the prothonotary. The lien shall be indexed as judgments are now

6

indexed. No prothonotary shall require as a condition precedent

7

to the entry of the lien the payment of costs incidental to its

8

entry.

9

(b)  Priority of lien and effect on judicial sale.--Except

10

for the costs of the sale and the writ upon which the sale was

11

made and real estate taxes and municipal claims against the

12

property, a lien imposed under this section shall have priority

13

from the date of its recording and shall be fully paid and

14

satisfied out of the proceeds of any judicial sale of property

15

subject to the lien, before any other obligation, judgment,

16

claim, lien or estate to which the property may subsequently

17

become subject, but shall be subordinate to mortgages and other

18

liens existing and duly recorded or entered of record prior to

19

the recording of the lien.

20

(c)  No discharge by sale on junior lien.--In the case of a

21

judicial sale of property subject to a lien imposed under this

22

section, upon a lien or claim over which the lien imposed under

23

this section has priority, the sale shall discharge the lien

24

imposed under this section to the extent only that the proceeds

25

are applied to its payment, and the lien shall continue in full

26

force and effect as to the balance remaining unpaid. There shall

27

be no inquisition or condemnation upon any judicial sale of real

28

estate made by the Commonwealth under the provisions of this

29

chapter. The lien shall continue as provided in the act of April

30

9, 1929 (P.L.343, No.176), known as The Fiscal Code, and a writ

- 36 -

 


1

of execution may directly issue upon the lien without the

2

issuance and prosecution to judgment of a writ of scire facias,

3

provided that not less than ten days before issuance of any

4

execution on the lien, notice of the filing and the effect of

5

the lien shall be sent by registered mail to the taxpayer at its

6

last known post office address, provided further that the lien

7

shall have no effect upon any stock of goods, wares or

8

merchandise regularly sold or leased in the ordinary course of

9

business by the taxpayer against whom the lien has been entered,

10

unless and until a writ of execution has been issued and a levy

11

made upon the stock of goods, wares and merchandise.

12

(d)  Duty of prothonotary.--Any willful failure of any

13

prothonotary to carry out any duty imposed upon him by this

14

section shall be a misdemeanor. Upon conviction, he shall be

15

sentenced to pay a fine of not more than $1,000 and costs of

16

prosecution or to imprisonment for not more than one year, or

17

both.

18

(e)  Priority.--Except as provided in this chapter, the

19

distribution, voluntary or compulsory, in receivership,

20

bankruptcy or otherwise of the property or estate of any person,

21

all taxes imposed by this chapter which are due and unpaid and

22

are not collectible under the provisions of section 225 of the

23

act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code

24

of 1971, shall be paid from the first money available for

25

distribution in priority to all other claims and liens, except

26

as the laws of the United States may give priority to a claim to

27

the Federal Government. A person charged with the administration

28

or distribution of the property or estate who violates the

29

provisions of this section shall be personally liable for the

30

taxes imposed by this chapter which are accrued and unpaid and

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1

chargeable against the person whose property or estate is being

2

administered or distributed.

3

(f)  Other remedies.--Subject to the limitations contained in

4

this chapter as to the assessment of taxes, nothing contained in

5

this section shall be construed to restrict, prohibit or limit

6

the use by the department in collecting taxes due and payable of

7

another remedy or procedure available at law or equity for the

8

collection of debts.

9

§ 1517.  Tax suit reciprocity.

10

The courts of this Commonwealth shall recognize and enforce

11

liabilities for natural gas severance or extraction taxes

12

lawfully imposed by any other state, provided that the other

13

state recognizes and enforces the tax imposed under this

14

chapter.

15

§ 1518.  Service.

16

A producer is deemed to have appointed the Secretary of the

17

Commonwealth its agent for the acceptance of service of process

18

or notice in a proceeding for the enforcement of the civil

19

provisions of this chapter and service made upon the Secretary

20

of the Commonwealth as agent shall be of the same legal force

21

and validity as if the service had been personally made upon the

22

producer. Where service cannot be made upon the producer in the

23

manner provided by other laws of this Commonwealth relating to

24

service of process, service may be made upon the Secretary of

25

the Commonwealth. In that case, a copy of the process or notice

26

shall be personally served upon any agent or representative of

27

the producer who may be found within this Commonwealth or, where

28

no agent or representative may be found, a copy of the process

29

or notice shall be sent via registered mail to the producer at

30

the last known address of its principal place of business, home

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1

office or residence.

2

§ 1519.  Refunds.

3

Under Article XXVII of the act of March 4, 1971 (P.L.6,

4

No.2), known as the Tax Reform Code of 1971, the department

5

shall refund all taxes, interest and penalties paid to the

6

Commonwealth under the provisions of this chapter to which the

7

Commonwealth is not rightfully entitled. The refunds shall be

8

made to the person or the person's heirs, successors, assigns or

9

other personal representatives who paid the tax, provided that

10

no refund shall be made under this section regarding a payment

11

made by reason of an assessment where a taxpayer has filed a

12

petition for reassessment under section 2702 of the Tax Reform

13

Code of 1971 to the extent the petition is adverse to the

14

taxpayer by a decision which is no longer subject to further

15

review or appeal. Nothing in this chapter shall prohibit a

16

taxpayer who has filed a timely petition for reassessment from

17

amending it to a petition for refund where the petitioner paid

18

the tax assessed.

19

§ 1520.  Refund petition.

20

(a)  General rule.--Except as provided for in subsection (b),

21

the refund or credit of tax, interest or penalty provided for by

22

section 1519 (relating to refunds) shall be made only where the

23

person who has paid the tax files a petition for refund with the

24

department under Article XXVII of the act of March 4, 1971

25

(P.L.6, No.2), known as the Tax Reform Code of 1971, within the

26

time limits of section 3003.1 of the Tax Reform Code of 1971.

27

(b)  Natural gas severance tax.--A refund or credit of tax,

28

interest or penalty paid as a result of an assessment made by

29

the department under section 1505 (relating to natural gas 

30

severance tax registration) shall be made only where the person

- 39 -

 


1

who has paid the tax files with the department a petition for a

2

refund with the department under Article XXVII of the Tax Reform

3

Code of 1971 within the time limits of section 3003.1 of the Tax

4

Reform Code of 1971. The filing of a petition for refund, under

5

the provisions of this subsection, shall not affect the

6

abatement of interest, additions or penalties to which the

7

person may be entitled by reason of his payment of the

8

assessment.

9

§ 1521.  Rules and regulations.

10

The department is charged with the enforcement of the

11

provisions of this chapter and is authorized and empowered to

12

prescribe, adopt, promulgate and enforce rules and regulations

13

not inconsistent with the provisions of this chapter relating to

14

any matter or thing pertaining to the administration and

15

enforcement of the provisions of this chapter and the collection

16

of taxes, penalties and interest imposed by this chapter. The

17

department may prescribe the extent, if any, to which any of the

18

rules and regulations shall be applied without retroactive

19

effect.

20

§ 1522.  Recordkeeping.

21

(a)  General rule.--Every person liable for any tax imposed

22

by this chapter, or for the collection of the tax, shall keep

23

records, including those enumerated in subsection (b), render

24

statements, make returns and comply with the rules and

25

regulations as the department may prescribe regarding matters

26

pertinent to the person's business. Whenever it is necessary,

27

the department may require a person, by notice served upon the

28

person or by regulations, to make returns, render statements or

29

keep records as the department deems sufficient to show whether

30

or not a person is liable to pay tax under this chapter.

- 40 -

 


1

(a.1)  Records.--Records to be maintained are:

2

(1)  Wellhead meter charts for each reporting period and

3

the meter calibration and maintenance records. If turbine

4

meters are in use, the maintenance records will be made

5

available to the department upon request.

6

(2)  Records, statements and other instruments furnished

7

to a producer by a person to whom the producer delivers for

8

sale, transport or delivery of natural gas.

9

(3)  Records, statements and other instruments as the

10

department may prescribe by regulation.

11

(b)  Records of nonresidents.--A nonresident who does

12

business in this Commonwealth as a producer shall keep adequate

13

records of the business and of the tax due as a result. The

14

records shall be retained within this Commonwealth unless

15

retention outside this Commonwealth is authorized by the

16

department. The department may require a taxpayer who desires to

17

retain records outside this Commonwealth to assume reasonable

18

out-of-State audit expenses.

19

(c)  Keeping of separate records.--A producer who is engaged

20

in another business or businesses which do not involve the

21

severing of natural gas taxable under this chapter shall keep

22

separate books and records of the businesses so as to show the

23

taxable severing of natural gas under this chapter separately

24

from other business activities not taxable hereunder. If any

25

person fails to keep separate books and records, the person

26

shall be liable for a penalty equaling 100% of tax due under

27

this chapter for the period where separate records were not

28

maintained.

29

§ 1523.  Examinations.

30

The department or any of its authorized agents are authorized

- 41 -

 


1

to examine the books, papers and records of any taxpayer in

2

order to verify the accuracy and completeness of any return made

3

or, if no return was made, to ascertain and assess the tax

4

imposed by this chapter. The department may require the

5

preservation of all books, papers and records for any period

6

deemed proper by it but not to exceed three years from the end

7

of the calendar year to which the records relate. Every taxpayer

8

is required to give to the department or its agent the means,

9

facilities and opportunity for examinations and investigation

10

under this section. The department is further authorized to

11

examine any person, under oath, concerning the taxable severing

12

of natural gas by any taxpayer or concerning any other matter

13

relating to the enforcement or administration of this chapter,

14

and to this end may compel the production of books, papers and

15

records and the attendance of all persons whether as parties or

16

witnesses whom it believes to have knowledge of relevant

17

matters. The procedure for the hearings or examinations shall be

18

the same as that provided by the act of April 9, 1929 (P.L.343,

19

No. 176), known as The Fiscal Code.

20

§ 1524.  Unauthorized disclosure.

21

Any information gained by the department as a result of any

22

return, examination, investigation, hearing or verification

23

required or authorized by this chapter shall be confidential

24

except for official purposes and except in accordance with

25

proper judicial order or as otherwise provided by law, and any

26

person unlawfully divulging the information shall be guilty of a

27

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

28

fine of not more than $1,000 and costs of prosecution or to

29

imprisonment for not more than one year, or both.

30

§ 1525.  Cooperation with other governments.

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1

Notwithstanding the provisions of section 1517 (relating to

2

tax suit reciprocity), the department may permit the

3

Commissioner of the Internal Revenue Service of the United

4

States, the proper officer of any state or the authorized

5

representative of either of them to inspect the tax returns of

6

any taxpayer, or may furnish to the commissioner or officer or

7

to either of their authorized representative an abstract of the

8

return of any taxpayer, or supply him with information

9

concerning any item contained in any return or disclosed by the

10

report of any examination or investigation of the return of any

11

taxpayer. This permission shall be granted only if the laws of

12

the United States or another state grant substantially similar

13

privileges to the proper officer of the Commonwealth charged

14

with the administration of this chapter.

15

§ 1526.  Bonds.

16

(a)  Taxpayer to file bond.--The department may require a

17

nonresident natural person or any foreign corporation,

18

association, fiduciary or other entity, not authorized to do

19

business within this Commonwealth or not having an established

20

place of business in this Commonwealth and subject to the tax

21

imposed by section 1503 (relating to imposition of tax), to file

22

a bond issued by a surety company authorized to do business in

23

this Commonwealth and approved by the Insurance Commissioner as

24

to solvency and responsibility, in amounts as it may fix, to

25

secure the payment of any tax or penalties due or which may

26

become due from a nonresident natural person, corporation,

27

association, fiduciary or other entity whenever it deems it

28

necessary to protect the revenues obtained under this chapter. 

29

The department may also require a bond of a person petitioning

30

the department for reassessment in the case of any assessment

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1

over $500 or where, in its opinion, the ultimate collection is

2

in jeopardy. For a period of three years, the department may

3

require a bond of any person who has, on three or more occasions

4

within a 12-month period, either filed a return or made payment

5

to the department more than 30 days late. In the event the

6

department determines a taxpayer is required to file a bond, it

7

shall give notice to the taxpayer specifying the amount of the

8

bond required. The taxpayer shall file the bond within five days

9

after notice is given by the department unless, within five

10

days, the taxpayer shall request in writing a hearing before the

11

secretary or his representative. At the hearing, the necessity,

12

propriety and amount of the bond shall be determined by the

13

secretary or the secretary's representative. The determination

14

shall be final and the taxpayer shall comply with it within 15

15

days after notice is mailed to the taxpayer.

16

(b)  Securities in lieu of bond.--In lieu of the bond

17

required by this section securities approved by the department

18

or cash in a prescribed amount may be deposited. The securities

19

or cash shall be kept in the custody of the department. The

20

department may apply the securities or cash to the tax imposed

21

by this chapter and interest or penalties due without notice to

22

the depositor. The securities may be sold by the department to

23

pay the tax and/or interest or penalties due at public or

24

private sale upon five days' written notice to the depositor.

25

(c)  Failure to file bond.--The department may file a lien

26

under section 1516 (relating to tax liens) against any taxpayer

27

who fails to file a bond when required to do so under this

28

section. All funds received upon execution of the judgment on

29

the lien shall be refunded to the taxpayer with 3% interest,

30

should a final determination be made that it does not owe any

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1

payment to the department.

2

§ 1527.  Accounts established.

3

(a)  Natural Gas Severance Tax Account.--

4

(1)  The Natural Gas Severance Tax Account is established

5

as a restricted account within the General Fund.

6

(2)  The proceeds of the tax imposed under section 1503

7

(relating to imposition of tax) and penalties and interest

8

imposed under this chapter, less the amounts appropriated

9

under section 1529 (relating to appropriation), shall be

10

deposited into the account.

11

(3)  The money in the account shall only be used in

12

accordance with section 1528 (relating to transfers and

13

distributions).

14

(b)  Local Government Services Account.--

15

(1)  The Local Government Services Account is established

16

as a restricted account within the General Fund.

17

(2)  The allocation under section 1528(b)(3) shall be

18

deposited into the Local Government Services Account and

19

shall be distributed as provided in section 1528(c).

20

(c)  Oil and Gas Environmental Disaster Recovery Account.--

21

(1)  The Oil and Gas Environmental Disaster Recovery

22

Account is established as a restricted account within the

23

General Fund.

24

(2)  The money in the account shall only be used to

25

provide money to fund recovery costs associated with an

26

environmental disaster occurring as a result of oil and gas

27

drilling within this Commonwealth and shall only be expended

28

upon appropriation by the General Assembly.

29

§ 1528.  Transfers and distributions.

30

(a)  Initial transfers.--

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1

(1)  During fiscal years 2010-2011, 2011-2012 and

2

2012-2013, the State Treasurer shall transfer the first

3

$75,000,000 of revenue deposited into the Natural Gas

4

Severance Tax Account as follows:

5

(i)  Five million dollars to the General Fund, which

6

is hereby appropriated to the Department of Labor and

7

Industry on a continuing basis for job training for

8

skills identified by the Department of Labor and Industry

9

with the natural gas producing industry. The Department

10

of Labor and Industry shall contract with existing public

11

institutions of higher education, including community

12

colleges, in regions where natural gas drilling occurs

13

for these job training programs.

14

(ii)  Seventy million dollars to the General Fund.

15

(2)  After the transfers under paragraph (1) are made,

16

the money remaining in the account shall be transferred and

17

distributed under subsections (b) and (c).

18

(b)  Monthly transfers and distributions.--Following the

19

transfers under subsection (a), on the last business day of each

20

calendar month, the State Treasurer shall make the following

21

transfers and distributions of the money in the Natural Gas

22

Severance Tax Account:

23

(1)  Sixty percent to the General Fund.

24

(2)  Twelve percent to the Environmental Stewardship

25

Fund.

26

(3)  Sixteen percent to the Local Government Services

27

Account, to be further distributed by the State Treasurer

28

under subsection (c).

29

(4)  One and six-tenths percent to the Hazardous Sites

30

Cleanup Fund.

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1

(5)  Two and four-tenths percent to the Conservation

2

District Fund for distribution to county conservation

3

districts pursuant to guidelines established by the State

4

Conservation Commission.

5

(6)  One and six-tenths percent to the Pennsylvania Game

6

Commission.

7

(7)  Two and four-tenths percent to the Pennsylvania Fish

8

and Boat Commission.

9

(8)  One and six-tenths percent to the Department of

10

Public Welfare to provide cash and crisis grants to low-

11

income households under the Low Income Home Energy Assistance

12

Program.

13

(9)  One and six-tenths percent to the Oil and Gas

14

Environmental Disaster Recovery Account.

15

(10)  Eight-tenths of one percent to the Department of

16

Environmental Protection for State dam removal, restoration

17

and repair projects.

18

(c)  Quarterly distributions.--Following the transfers under

19

subsection (a), on the last business day of each period of three

20

calendar months, the State Treasurer shall make the following

21

distributions from the money in the Local Government Services

22

Account:

23

(1)  Thirty percent to counties with producing sites to

24

be used as provided in subsection (d). The money under this

25

subparagraph shall be distributed to each eligible county

26

based on the following formula:

27

(i)  Divide:

28

(A)  the number of producing sites in the county;

29

by

30

(B)  the total number of producing sites in all

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1

the counties in this Commonwealth.

2

(ii)  Multiply:

3

(A)  the quotient under subparagraph (i); by

4

(B)  the amount of money available for

5

distribution under this paragraph.

6

(2)  Forty-five percent to municipalities with producing

7

sites. Subject to paragraph (3), the money under this

8

subparagraph shall be distributed to each eligible

9

municipality based on the following formula:

10

(i)  Divide:

11

(A)  the number of producing sites in the

12

municipality; by

13

(B)  the total number of producing sites in all

14

municipalities in this Commonwealth.

15

(ii)  Multiply:

16

(A)  the quotient under subparagraph (i); by

17

(B)  the amount of money available for

18

distribution under this paragraph.

19

(3)  All of the following apply to the distribution under

20

paragraph (2):

21

(i)  The amount distributed to a municipality shall

22

not exceed 50% of the municipality's total budget for

23

fiscal year 2010-2011, adjusted for inflation in

24

subsequent years by an amount not to exceed an annual

25

cost-of-living adjustment calculated by applying the

26

Annual Percent Change in the Consumer Price Index for all

27

Urban Consumers immediately prior to the date the

28

adjustment is due to take effect. The amount distributed

29

under this subparagraph shall be used for the following

30

purposes:

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1

(A)  Reconstruction, maintenance and repair of

2

municipal roadways and bridges, which the

3

municipality has determined have been or are being

4

used extensively to transport natural gas or

5

equipment related to the production of natural gas.

6

(B)  Preservation and improvement of municipal

7

water supplies.

8

(C)  Maintenance and capital improvements to

9

municipal waste and sewage systems.

10

(D)  Preservation and reclamation of the surface

11

waters of the municipality.

12

(E)  Other lawful purposes reasonably related to

13

the health, welfare and safety consequences of

14

severing natural gas in the municipality.

15

(ii)  Any funds not distributed to the municipalities

16

in a county because of the budgetary limitations under

17

subparagraph (i) shall be distributed to the county to be

18

used solely for grants to municipalities to defer the

19

cost of regional cooperation endeavors undertaken by the

20

municipalities within the county.

21

(4)  Fifteen percent to municipalities with no producing

22

sites located in a county with producing sites. Subject to

23

paragraph (5), the money under this subparagraph shall be

24

distributed to each eligible municipality based on the

25

following formula:

26

(i)  Divide:

27

(A)  the number of producing sites in the county;

28

by

29

(B)  the total number of producing sites in all

30

counties in this Commonwealth.

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1

(ii)  Multiply:

2

(A)  the quotient under subparagraph (i); by

3

(B)  the amount of money available for

4

distribution under this paragraph.

5

(5)  All of the following apply to the distribution under

6

paragraph (4):

7

(i)  Subject to the limitation in subparagraph (ii),

8

the State Treasurer shall distribute an equal share to

9

each eligible municipality within the same county.

10

(ii)  The amount distributed to a municipality shall

11

not exceed 50% of the municipality's total budget for

12

fiscal year 2010-2011, adjusted for inflation in

13

subsequent years by an amount not to exceed an annual

14

cost-of-living adjustment calculated by applying the

15

Annual Percent Change in the Consumer Price Index for all

16

Urban Consumers immediately prior to the date the

17

adjustment is due to take effect. The amount distributed

18

under this subparagraph shall be used for the following

19

purposes:

20

(A)  Reconstruction, maintenance and repair of

21

municipal roadways and bridges, which the

22

municipality has determined have been, or are being,

23

used extensively to transport natural gas or

24

equipment related to the production of natural gas.

25

(B)  Preservation and improvement of municipal

26

water supplies.

27

(C)  Maintenance and capital improvements to

28

municipal waste and sewage systems.

29

(D)  Preservation and reclamation of surface

30

waters of the municipality.

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1

(E)  Other lawful purposes reasonably related to

2

the health, welfare and safety consequences of

3

severing natural gas in municipalities within the

4

county.

5

(iii)  Any funds not distributed to the

6

municipalities in a county because of the budgetary

7

limitations under subparagraph (ii) shall be distributed

8

to the county to be used solely for grants to

9

municipalities to defer the cost of regional cooperation

10

endeavors undertaken by the municipalities within the

11

county.

12

(6)  Ten percent to the Pennsylvania Emergency Management

13

Agency to be distributed to fire and ambulance services in

14

counties with producing sites in accordance with the

15

procedures established in the act of July 31, 2003 (P.L.73,

16

No.17), known as the Volunteer Fire Company and Volunteer

17

Ambulance Service Grant Act.

18

(7)  Only producing sites and nonproducing sites on which

19

the tax is levied under section 1503(a) (relating to

20

imposition of tax) during the three-month period for which

21

transfers and distributions are made shall be included in any

22

of the calculations made under paragraphs (1), (2) and (4)

23

for that three-month period.

24

(d)  Distributions to counties.--

25

(1)  The governing body of counties receiving

26

distributions under subsection (c)(1) shall administer the

27

funds received. The governing body shall give priority to the

28

reconstruction, repair and maintenance of county roadways and

29

bridges, which the governing body has determined have been or

30

are being used to transport natural gas or equipment related

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1

to the production of natural gas. The governing body shall

2

allocate the remainder to the county or its municipalities

3

for any of the purposes enumerated in subsection (c)(3) or

4

(5). A simple majority vote of all of the members of the

5

governing body shall be required for any action under this

6

paragraph.

7

(2)  Commencing in 2012, before February 1, each county

8

receiving distributions under subsection (c)(1) shall prepare

9

and deliver a report to the Governor, the Secretary of the

10

Senate and the Chief Clerk of the House of Representatives

11

detailing the expenditure of funds. The Department of

12

Community and Economic Development shall have the authority

13

to audit a county's use of such funds and each county

14

receiving funds shall make their financial records and other

15

documents relating to its use of funds available to the

16

department.

17

(e)  Distributions to municipalities.--

18

(1)  Commencing in 2012, before February 1, each

19

municipality receiving distributions under subsection (c)(2)

20

or (4) shall prepare and deliver a report to the Governor,

21

the Secretary of the Senate and the Chief Clerk of the House

22

of Representatives detailing the expenditure of funds.

23

(2)  The Department of Community and Economic Development

24

shall have the authority to audit a municipality's use of the

25

funds. Each municipality receiving funds shall make financial

26

records and other documents relating to its use of the funds

27

available to to the Department of Community and Economic

28

Development.

29

(f)  Administration.--The department shall make the

30

calculations required for the transfers and distributions under

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1

this section and shall submit the calculations to the State

2

Treasurer in sufficient time for the State Treasurer to make the

3

transfers and distributions as required by this section.

4

§ 1529.  Appropriation.

5

The amount of the proceeds from the tax imposed by this

6

chapter as shall be necessary for the payment of refunds,

7

enforcement or administration under this chapter is hereby

8

appropriated to the department for those purposes.

9

CHAPTER 17

10

MARCELLUS SHALE JOB CREATION TAX CREDIT

11

Sec.

12

1701.  Definitions.

13

1702.  Eligibility.

14

1703.  Application process.

15

1704.  Tax credits.

16

1705.  Prohibitions.

17

1706.  Penalties.

18

1707.  Annual reports.

19

1708.  Notice of availability of tax credits.

20

§ 1701.  Definitions.

21

The following words and phrases when used in this chapter

22

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

23

context clearly indicates otherwise:

24

"Base period."  As follows:

25

(1)  Except as set forth in paragraph (2), the three

26

years immediately preceding the date on which a company may

27

begin creating new jobs which may be eligible for job

28

creation tax credits.

29

(2)  If a company has been in business in this

30

Commonwealth for less than three years, the period which it

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1

has been in business in this Commonwealth.

2

"Department."  The Department of Community and Economic

3

Development of the Commonwealth.

4

"Job creation tax credits."  Tax credits for job creation for

5

which the department has issued a certificate under this

6

chapter.

7

"New job."  A full-time job, the average hourly rate,

8

excluding benefits, for which must be at least 350% of the

9

Federal minimum wage, created within a municipality located in

10

this Commonwealth by a company within three years from the start

11

date. The term includes a job which was previously held by a

12

nonresident and is filled by a resident. The term does not

13

include a temporary or seasonal job.

14

"Nonresident."  An individual who does not reside in this

15

Commonwealth.

16

"Qualified apprenticeship training program."  A program

17

registered with the Apprenticeship and Training Council within

18

the Department of Labor and Industry that is in compliance with

19

applicable Federal and State laws and regulations and which

20

requires at least 2,000 but not more than 10,000 hours of on-

21

the-job apprenticeship training.

22

"Resident."  Any natural person who is considered a resident

23

of this Commonwealth under the act of March 4, 1971 (P.L.6,

24

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

25

"Start date."  The date on which a company may begin creating

26

new jobs which may be eligible for job creation tax credits.

27

"Year one."  A one-year period immediately following the

28

start date.

29

"Year three."  A one-year period immediately following the

30

end of year two.

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1

"Year two."  A one-year period immediately following the end

2

of year one.

3

§ 1702.  Eligibility.

4

In order to be eligible to receive job creation tax credits

5

under this chapter, a company must demonstrate to the department

6

the following:

7

(1)  The company's financial stability and the project's

8

financial viability.

9

(2)  The company's express intent to maintain operations

10

in this Commonwealth for a period of five years from the date

11

the company submits its tax credit certificate to the

12

Department of Revenue.

13

(3)  The company is in conformity with industry laws and

14

regulations overseen and enforced by the Department of

15

Environmental Protection.

16

§ 1703.  Application process.

17

(a)  Application.--A company must complete and submit to the

18

department a job creation tax credit application along with a

19

copy of the permit issued by the Department of Environmental

20

Protection providing that the company has obtained the necessary

21

permit allowing the company to drill in this Commonwealth or a

22

statement from the Department of Environmental Protection

23

stating the same. The Department of Environmental Protection

24

shall notify the Department of Labor and Industry, the

25

Department of Revenue and the department upon suspension or

26

revocation of drilling permits or other changes that affect the

27

company's ability to continuously drill in this Commonwealth.

28

(b)  Applicant priority.--The department shall give priority

29

to eligible applicants that will place the following workers in

30

new jobs:

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1

(1)  Workers who have completed a qualified

2

apprenticeship training program or a job training program

3

approved by the Department of Labor and Industry.

4

(2)  Dislocated workers under the act of December 18,

5

2001 (P.L.949, No.114), known as the Workforce Development

6

Act, who meet any one of the following conditions:

7

(i)  Have been terminated or laid off or have

8

received notice of termination or layoff, and are

9

eligible for or have exhausted unemployment compensation

10

benefits.

11

(ii)  Are unlikely to return to the industry or

12

occupation in which the individuals were employed.

13

(iii)  Have been terminated or received notice of

14

termination as a result of the permanent closure or

15

relocation of a plant, facility or plant operation in

16

which the individuals were employed.

17

(iv)  Are chronically unemployed.

18

(v)  Have limited opportunities of employment in the

19

geographic area in which the individuals reside.

20

(vi)  Are individuals who may face substantial

21

barriers to employment because of age or disability.

22

(3)  Workers who have been unemployed for at least six

23

months.

24

(4)  Underemployed workers who require skill training to

25

meet industry demands or increase employment opportunities.

26

(c)  Approval.--If the department approves the company's

27

application, the department and the company shall execute a

28

commitment letter containing the following:

29

(1)  A description of the project.

30

(2)  The number of new jobs to be created.

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1

(3)  The amount of private capital investment in the

2

project.

3

(4)  The maximum job creation tax credit amount the

4

company may claim.

5

(5)  A signed statement that the company intends to

6

maintain its operation in this Commonwealth for five years

7

from the start date.

8

(6)  A signed statement from the company that the company

9

will provide to the department a list of workers which

10

satisfies the requirements of subsection (b) for which the

11

company will claim tax credit, including documentation of

12

each worker's status as a resident of this Commonwealth.

13

(7)  Other information as the department deems

14

appropriate.

15

(d)  Commitment letter.--After a commitment letter has been

16

signed by both the Commonwealth and the company, the company

17

shall receive a job creation tax credit certificate and filing

18

information.

19

§ 1704.  Tax credits.

20

(a)  Maximum amount.--A company may claim a tax credit of

21

$1,000 per new job created and up to the maximum job creation

22

tax credit amount specified in the commitment letter.

23

(b)  Determination of new jobs created.--

24

(1)  New jobs shall be deemed created in year one to the

25

extent that the company's average employment by quarter

26

during year one exceeds the company's average employment

27

level during the company's base period, as adjusted for any

28

job held by a nonresident during the period which is no

29

longer held by a nonresident.

30

(2)  New jobs shall be deemed created in year two to the

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1

extent that the company's average employment by quarter

2

during year two exceeds the company's average employment by

3

quarter during year one.

4

(3)  New jobs shall be deemed created in year three to

5

the extent that the company's average employment by quarter

6

during year three exceeds the company's average employment by

7

quarter during year two.

8

(c)  Applicable taxes.--A company may apply the tax credit to

9

100% of the company's corporate net income tax, capital stock

10

and franchise tax or the capital stock and franchise tax of a

11

shareholder of the company if the company is a Pennsylvania S

12

corporation, personal income tax or the personal income tax of

13

shareholders of a Pennsylvania S corporation or any combination

14

thereof.

15

(d)  Tax credit term.--A company may claim the job creation

16

tax credit for each new job created, as approved by the

17

department, for a period determined by the department but not to

18

exceed five years from the date the company first submits a job

19

creation tax credit certificate.

20

(e)  Availability of tax credits.--Each fiscal year,

21

$10,000,000 in tax credits shall be made available to the

22

department and may be awarded by the department in accordance

23

with this chapter.

24

§ 1705.  Prohibitions.

25

The following actions with regard to job creation tax credits

26

are prohibited:

27

(1)  Approval of jobs that have been created prior to the

28

start date, unless the job was held by a nonresident who has

29

been replaced by a resident.

30

(2)  The assignment, transfer or use of credits by any

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1

other company, provided, however, that tax credits may be

2

assigned in whole or in part to an affiliated entity. As used

3

in this paragraph, the term "affiliated entity" means an

4

entity which is part of the same "affiliated group," as

5

defined by section 1504(a)(1) of the Internal Revenue Code of

6

1986 (Public Law 99-514, 26 U.S.C. § 1504(a)(1)), as the

7

company awarded the credit.

8

§ 1706.  Penalties.

9

(a)  Failure to create jobs.--A company which receives job

10

creation tax credits and fails to create the approved number of

11

new jobs within three years of the start date will be required

12

to refund to the Commonwealth the total amount of credit or

13

credits granted.

14

(b)  Waiver.--The department may waive the penalties outlined

15

in subsection (a) if it is determined that a company's

16

operations were not maintained or the new jobs were not created

17

because of circumstances beyond the company's control.

18

Circumstances include natural disasters or unforeseen industry

19

trends.

20

§ 1707.  Annual reports.

21

(a)  Contents.--The department shall provide an annual report

22

on job creation tax credits which at a minimum shall include:

23

(1)  A list of all job creation tax credit certificates

24

provided during the previous fiscal year.

25

(2)  The name and location of each company receiving job

26

creation tax credit certificates.

27

(3)  An analysis of the job creation tax credits' ability

28

to create jobs in this Commonwealth.

29

(4)  Any other information that may be deemed relevant by

30

the department.

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1

(b)  Submission.--The annual report shall be submitted to the

2

Governor, the Majority Leader of the Senate, the Minority Leader

3

of the Senate, the Majority Leader of the House of

4

Representatives and the Minority Leader of the House of

5

Representatives by March 1 of the first full year following the

6

effective date of this section and March 1 of each year

7

thereafter.

8

§ 1708.  Notice of availability of tax credits.

9

The department shall publish notice of the availability of

10

the job creation tax credit on its publicly accessible Internet

11

website and make information available annually to the

12

Department of Labor and Industry Workforce Investment Board for

13

distribution to local boards.

14

Section 2.  Repeals are as follows:

15

(1)  The General Assembly declares that the repeals under

16

paragraph (2) are necessary to effectuate the amendment or

17

addition of 16 Pa.C.S. Ch. 11 Subch. B.

18

(2)  The following acts and parts of acts are repealed:

19

(i)  Sections 420, 421, 422, 423, 424, 425, 426, 427,

20

428, 429, 430, 431, 432, 433, 434, 435, 436, 437, 802,

21

803, 804 of the act of August 9, 1955 (P.L.323, No.130),

22

known as The County Code.

23

(ii)  Sections 420, 421, 422, 423, 424, 425, 426,

24

427, 428, 429, 430, 431, 802, 803, 804, 1261 and 1262 of

25

the act of July 28, 1953 (P.L.723, No.230), known as the

26

Second Class County Code.

27

(iii)  As much of section 3103 of the Second Class

28

County Code, as reads as follows: "The bond of the fire

29

marshal shall be in the sum of ten thousand dollars

30

($10,000) and the bonds of the deputy fire marshals shall

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1

be in the sum of five thousand dollars ($5000)."

2

(3)  All acts and parts of acts are repealed insofar as

3

they are inconsistent with this act.

4

Section 3.  A county may, at any time after the effective

5

date of this section, obtain required security in accordance

6

with 16 Pa.C.S. Ch.11 Subch. B. A county shall have in place

7

required security in accordance with 16 Pa.C.S. Ch.11 Subch. B

8

prior to the time that any elected county official takes office

9

after the municipal election next following the effective date

10

of this section. Bonds and insurance, which, on the effective

11

date of this section, cover county officers and employees, shall

12

remain in force and effect until required security is purchased. 

13

Section 4.  This act shall take effect immediately.

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