SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY CUTLER, MIRABITO, BAKER, BOYD, CLYMER, COX, DENLINGER, FLECK, FREEMAN, GILLEN, GINGRICH, GODSHALL, GRELL, HARHART, HENNESSEY, HICKERNELL, HUTCHINSON, KAUFFMAN, KORTZ, LAWRENCE, LONGIETTI, MARSHALL, METZGAR, MILLER, MOUL, PICKETT, PYLE, REICHLEY, ROAE, ROSS, STERN, SWANGER, TOEPEL, VULAKOVICH, WATSON, QUINN, FARRY, BEAR, ROCK, CALTAGIRONE, SAINATO, MILLARD, M. K. KELLER AND GIBBONS, FEBRUARY 23, 2011

SENATOR CORMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS AMENDED, JUNE 29, 2012   

AN ACT

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

act relating to tax reform and State taxation by codifying and

enumerating certain subjects of taxation and imposing taxes

thereon; providing procedures for the payment, collection,

administration and enforcement thereof; providing for tax

credits in certain cases; conferring powers and imposing duties

upon the Department of Revenue, certain employers, fiduciaries,

individuals, persons, corporations and other entities;

prescribing crimes, offenses and penalties," in personal income

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tax, further providing for classes of income and for income tax

returns; in realty transfer tax, further providing for

definitions, for excluded transactions and for acquired company, 

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for documents relating to associations or corporations and

members, partners, stockholders or shareholders thereof and for

acquired company; and, in inheritance tax, further providing for

transfers not subject to tax. in sales and use tax, further

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providing for definitions, for exclusions from tax, for time for

filing returns, for time of payment, for assessment and for

collection of tax; in personal income tax, further providing for

returns of married individuals, deceased or disabled individuals

and fiduciaries, for requirements concerning returns, notices,

records and statements, for assessment and for additions,

penalties and fees; in corporate net income tax, further

providing for definitions, for extension of time to file

reports, for changes made by Federal Government and for

assessments; in insurance premiums tax, further providing for

definitions and for imposition of tax; in realty transfer tax,

further providing for definitions, for excluded transactions,

for documents relating to associations or corporations and

members, partners, stockholders or shareholders thereof, for

acquired company and for assessment and notice of tax and

review; in cigarette tax, further providing for definitions; in

research and development tax credit, further providing for

limitation on credits and for termination; in film production

tax credit, further providing for definitions, for credit for

qualified film production expenses, for carrying and assigning

credits and for limitations; repealing the educational

improvement tax credit; providing for a resource manufacturing

tax credit, for a rehabilitation of historic structures tax

credit and a community-based services tax credit; in tax credit

for new jobs, further providing for definitions, for application

process and for tax credit; in neighborhood assistance tax

credit, further providing for definitions and for tax credit; in

malt beverage tax, further providing for assessment by

department; in inheritance tax, further providing for

definitions and for transfers not subject to tax; in procedure

and administration, further providing for petition for

reassessment and for petition procedure and providing for

compromise by secretary; in general provisions, further

providing for petitions for refunds and providing for

administrative bank attachment for accounts of obligors to the

Commonwealth; making related repeals; abrogating a regulation;

and providing for applicability.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definitions of "association," "corporation,"

<--

"family farm corporation" and "family farm partnership" in

section 1101-C of the act of March 4, 1971 (P.L.6, No.2), known

as the Tax Reform Code of 1971, amended July 2, 1986 (P.L.318,

No.77) and April 23, 1998 (P.L.239, No.45), are amended to read:

Section 1101-C.  Definitions.--The following words when used

in this article shall have the meanings ascribed to them in this

section:

"Association."  A partnership, limited partnership, limited

liability partnership or any other form of unincorporated

enterprise, owned or conducted by two or more persons other than

a private trust or decedent's estate.

"Corporation."  A corporation, limited liability company, 

joint-stock association, business trust or banking institution

which is organized under the laws of this Commonwealth, the

United States, or any other state, territory, or foreign

country, or dependency.

* * *

"Family farm [corporation.] business."  A corporation or

association of which at least seventy-five per cent of its

assets are devoted to the business of agriculture and at least

seventy-five per cent of each class of stock of the corporation 

or interest in the association is continuously owned by members

of the same family.  The business of agriculture shall include

the leasing to members of the same family or the leasing to a

corporation or association owned by members of the same family 

of property which is directly and principally used for

agricultural purposes. The business of agriculture shall not be

deemed to include:

(1)  Recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  The raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  Fur farming;

(4)  Stockyard and slaughterhouse operations; or

(5)  Manufacturing or processing operations of any kind.

["Family farm partnership."  A partnership of which at least

seventy-five per cent of its assets are devoted to the business

of agriculture and at least seventy-five per cent of the

interests in the partnership are continuously owned by members

of the same family. The business of agriculture shall include

the leasing to members of the same family of property which is

directly and principally used for agricultural purposes. The

business of agriculture shall not be deemed to include:

(1)  recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  the raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  fur farming;

(4)  stockyard and slaughterhouse operations; or

(5)  manufacturing or processing operations of any kind.]

* * *

Section 2.   sections 1102-C.3(19), (19.1) and (20) and 1102-

c.5 of the act, amended or added July 2, 1986 (P.L.318, No.77)

and June 16, 1994 (P.L.279, No.48), are amended to read:

Section 1102-C.3.  Excluded Transactions.--The tax imposed by

section 1102-C shall not be imposed upon:

* * *

(19)  A transfer of real estate devoted to the business of

agriculture to a family farm [corporation] business by a member

of the same family which directly owns at least seventy-five per

cent of each class of the stock thereof or interest therein.

[(19.1)  A transfer of real estate devoted to the business of

agriculture to a family farm partnership by a member of the same

family, which family directly owns at least seventy-five per

cent of the interests in the partnership.]

(20)  A transfer between members of the same family of an

ownership interest in a real estate company[,] or family farm

[corporation or family farm partnership which] business that 

owns real estate.

* * *

Section 1102-C.5.  Acquired Company.--(a)  A real estate

company is an acquired company upon a change in the ownership

interest in the company, however effected, if the change:

(1)  does not affect the continuity of the company; and

(2)  of itself or together with prior changes has the effect

of transferring, directly or indirectly, ninety per cent or more

of the total ownership interest in the company within a period

of three years.

(b)  [With respect to real estate acquired after February 16,

1986, a family farm corporation is an acquired company when,

because of voluntary or involuntary dissolution, it ceases to be

a family farm corporation or when, because of issuance or

transfer of stock or because of acquisition or transfer of

assets that are devoted to the business of agriculture, it fails

to meet the minimum requirements of a family farm corporation

under this act.

(b.1)  A family farm partnership is an acquired company when,

because of voluntary or involuntary dissolution, it ceases to be

a family farm partnership or when, because of transfer of

partnership interests or because of acquisition or transfer of

assets that are devoted to the business of agriculture, it fails

to meet the minimum requirements of a family farm partnership 

under this act.] A family farm business is an acquired company

when, because of voluntary or involuntary dissolution, it ceases

to be a family farm business, or when, because of the issuance

or transfer of stock in the corporation or transfer of interests

in the association or because of an acquisition or transfer of

assets that are devoted to the business of agriculture, it fails

to meet the minimum requirements of a family farm business under

this act.

(c)  Within thirty days after becoming an acquired company,

the company shall present a declaration of acquisition with the

recorder of each county in which it holds real estate for the

affixation of documentary stamps and recording. Such declaration

shall set forth the value of real estate holdings of the

acquired company in such county.

Section 3.  This act shall apply retroactively to

transactions occurring after December 31, 2008.

Section 4.  The provisions of 61 Pa. Code 91.222 (relating to

family farm corporation) are abrogated.

Section 5.  This act shall take effect immediately.

Section 1.  The definitions of "association," "family farm

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corporation" and "family farm partnership" in section 1101-C of

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

Code of 1971, amended July 2, 1986 (P.L.318, No.77) and April

23, 1998 (P.L.239, No.45), are amended and the section is

amended by adding a definition to read:

Section 1.  Section 303(a.7) of the act of March 4, 1971

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

6, 2006 (P.L.319, No.67), is amended to read:

Section 303.  Classes of Income.--* * *

(a.7)  The following shall apply:

(1)  An amount paid as a contribution into a qualified

tuition program under Chapter 3 of the act of April 3, 1992

(P.L.28, No.11), known as the "Tuition Account Programs and

College Savings Bond Act," shall be deductible from taxable

income on the annual personal income tax return. The amount paid

as a contribution to a qualified tuition program allowable as a

deduction under this subsection shall be subject to an annual

limitation not to exceed the threshold for exclusion from gifts

as provided in section 2503(b) of the Internal Revenue Code of

1986, as amended, per designated beneficiary. The deduction

shall not result in taxable income being less than zero.

(2)  (i)  The following shall not be subject to tax under

this article:

(A)  Any amount distributed from a qualified tuition program

that is excludable from tax under section 529(c)(3)(B) of the

Internal Revenue Code of 1986, as amended.

(B)  Any rollover that is excludable from tax under section

529(c)(3)(C) of the Internal Revenue Code of 1986, as amended.

The exception under this clause does not apply to a rollover

from a qualified tuition program under Chapter 3 of the "Tuition

Account Programs and College Savings Bond Act."

(C)  Undistributed earnings on a qualified tuition program.

(ii)  A change in designated beneficiaries under section

529(c)(3)(C) of the Internal Revenue Code of 1986, as amended,

shall not constitute a taxable event under this article.

(3)  Any amount distributed from a qualified tuition program 

that is not described under paragraph (2) shall be taxable under

this article.

(4)  For purposes of this subsection:

(i)  The term "designated beneficiary" shall have the same

meaning as provided in section 529(e)(1) of the Internal Revenue

Code of 1986, as amended.

(ii)  The term "qualified tuition program" shall have the

same meaning as provided in section 529(b)(1) of the Internal

Revenue Code of 1986, as amended.

* * *

Section 1.1.  Section 331(e) of the act, repealed and added

August 31, 1971 (P.L.362, No.93), is amended and the section is

amended by adding subsections to read:

Section 331.  Returns of Married Individuals, Deceased or

Disabled Individuals and Fiduciaries.--* * *

(e)  [The] Except as provided under subsections (e.1) and

(e.2), the final return for any deceased individual shall be

made and filed by his executor, administrator, or other [person] 

personal representative charged with his property.

(e.1)  (1)  A surviving spouse may file a joint return for

the year in which his or her spouse died if the joint return

could have been filed if both spouses were living for the entire

taxable year.

(2)  If a personal representative, executor or administrator

is appointed on behalf of the deceased spouse before the tax

return is filed, the surviving spouse may not file a joint

return without the consent of the fiduciary. Both the fiduciary

and the surviving spouse must sign the joint return. The

surviving spouse may file a joint return with the deceased

spouse if the deceased spouse did not previously file a return

for that taxable year and if a personal representative, executor

or administrator has not been appointed by the time the joint

return is made or before the due date for filing the return of

the surviving spouse, including extensions. If the surviving

spouse properly files a joint return under this paragraph, the

fiduciary may supersede the surviving spouse by filing a

separate return for the decedent within one year after the due

date, including extensions. Any joint return improperly filed by

the surviving spouse or disaffirmed by the fiduciary shall be

treated as a separate return of the survivor. The surviving

spouse shall be required to file an amended return.

(e.2)  If both taxpayers die during the same tax year, a

joint final return may be filed if a joint return could have

been filed had both spouses lived for the entire taxable year

and with the consent of the personal representatives, executors

or administrators of both deceased spouses under subsection

(e.1) by the due date, including extensions, of the joint tax

return. Both fiduciaries must sign the joint return.

* * *

Section 1.2.  The definitions of "association," "family farm

corporation" and "family farm partnership" in section 1101-C of

the act, amended July 2, 1986 (P.L.318, No.77) and April 23,

1998 (P.L.239, No.45), are amended and the section is amended by

adding a definition to read:

Section 1101-C.  Definitions.--The following words when used

in this article shall have the meanings ascribed to them in this

section:

"Association."  A general partnership, limited partnership,

limited liability partnership or any other form of

unincorporated enterprise, owned or conducted by two or more

persons other than a private trust or decedent's estate.

* * *

["Family farm corporation."  A corporation of which at least

seventy-five per cent of its assets are devoted to the business

of agriculture and at least seventy-five per cent of each class

of stock of the corporation is continuously owned by members of

the same family. The business of agriculture shall include the

leasing to members of the same family of property which is

directly and principally used for agricultural purposes. The

business of agriculture shall not be deemed to include:

(1)  Recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  The raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  Fur farming;

(4)  Stockyard and slaughterhouse operations; or

(5)  Manufacturing or processing operations of any kind.

"Family farm partnership."  A partnership of which at least

seventy-five per cent of its assets are devoted to the business

of agriculture and at least seventy-five per cent of the

interests in the partnership are continuously owned by members

of the same family. The business of agriculture shall include

the leasing to members of the same family of property which is

directly and principally used for agricultural purposes. The

business of agriculture shall not be deemed to include:

(1)  recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  the raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  fur farming;

(4)  stockyard and slaughterhouse operations; or

(5)  manufacturing or processing operations of any kind.]

"Family farm business."  A corporation or association of

which at least seventy-five per cent of its assets are devoted

to the business of agriculture and at least seventy-five per

cent of each class of stock of the corporation or the interests

in the association is continuously owned by members of the same

family. The business of agriculture shall include the leasing to

members of the same family or the leasing to a corporation or

association owned by members of the same family of property

which is directly and principally used for agricultural

purposes. The business of agriculture shall not be deemed to

include:

(1)  recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  the raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  fur farming;

(4)  stockyard and slaughterhouse operations; or

(5)  manufacturing or processing operations of any kind.

* * *

Section 2.  Section 1102-C.3(19), (19.1) and (20) of the act,

amended or added July 2, 1986 (P.L.318, No.77) and June 16, 1994

(P.L.279, No.48), are amended to read:

Section 1102-C.3.  Excluded Transactions.--The tax imposed by

section 1102-C shall not be imposed upon:

* * *

(19)  A transfer of real estate devoted to the business of

agriculture to a family farm [corporation] business by:

(i)  a member of the same family which directly owns at least

seventy-five per cent of [each class of the stock thereof] the

interests in that family farm business; or

(ii)  a family farm business, which family directly owns at

least seventy-five per cent of the interests in that family farm

business.

[(19.1)  A transfer of real estate devoted to the business of

agriculture to a family farm partnership by a member of the same

family, which family directly owns at least seventy-five per

cent of the interests in the partnership.]

(20)  A transfer between members of the same family of an

ownership interest in a real estate company[,] or family farm

[corporation or family farm partnership which] business that 

owns real estate.

* * *

Section 3.  Section 1102-C.4 of the act, added July 2, 1986

(P.L.318, No.77), is amended to read:

Section 1102-C.4.  Documents Relating to Associations or

Corporations and Members, Partners, Stockholders or Shareholders

Thereof.--Except as otherwise provided in [section] sections 

1102-C.3 and 1102-C.5, documents which make, confirm or evidence

any transfer or devise of title to real estate between

associations or corporations and the members, partners,

shareholders or stockholders thereof are fully taxable. For the

purposes of this article, corporations and associations are

entities separate from their members, partners, stockholders or

shareholders.

Section 4.  Section 1102-C.5 of the act, amended or added

July 2, 1986 (P.L.318, No.77) and June 16, 1994 (P.L.279,

No.48), is amended to read:

Section 1102-C.5.  Acquired Company.--(a)  A real estate

company is an acquired company upon a change in the ownership

interest in the company, however effected, if the change:

(1)  does not affect the continuity of the company; and

(2)  of itself or together with prior changes has the effect

of transferring, directly or indirectly, ninety per cent or more

of the total ownership interest in the company within a period

of three years.

[(b)  With respect to real estate acquired after February 16,

1986, a family farm corporation is an acquired company when,

because of voluntary or involuntary dissolution, it ceases to be

a family farm corporation or when, because of issuance or

transfer of stock or because of acquisition or transfer of

assets that are devoted to the business of agriculture, it fails

to meet the minimum requirements of a family farm corporation

under this act.

(b.1)  A family farm partnership is an acquired company when,

because of voluntary or involuntary dissolution, it ceases to be

a family farm partnership or when, because of transfer of

partnership interests or because of acquisition or transfer of

assets that are devoted to the business of agriculture, it fails

to meet the minimum requirements of a family farm partnership 

under this act.]

(b.2)  A family farm business is an acquired company when,

because of voluntary or involuntary dissolution, it ceases to be

a family farm business or when, because of the issuance or

transfer of stock in the corporation or transfer of interests in

the association or because of acquisition or transfer of assets

that are devoted to the business of agriculture, it fails to

meet the minimum requirements of a family farm business under

this article.

(b.3)  The conveyance of assets held by one family farm

business to another family farm business shall not be considered

a transfer of assets under this article if the same individuals

hold at least fifty per cent of the ownership interest in each

family farm business.

(c)  Within thirty days after becoming an acquired company,

the company shall present a declaration of acquisition with the

recorder of each county in which it holds real estate for the

affixation of documentary stamps and recording. Such declaration

shall set forth the value of real estate holdings of the

acquired company in such county.

Section 5.  Section 2102 of the act is amended by adding

definitions to read:

Section 2102.  Definitions.--The following words, terms and

phrases, when used in this article, shall have the meanings

ascribed to them in this section, except where the context

clearly indicates a different meaning:

* * *

"Business of agriculture."  The term shall include the

leasing to members of the same family or the leasing to a

corporation or association owned by members of the same family

of property which is directly and principally used for

agricultural purposes. The business of agriculture shall not be

deemed to include:

(1)  recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  the raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  fur farming;

(4)  stockyard and slaughterhouse operations; or

(5)  manufacturing or processing operations of any kind.

* * *

"Members of the same family."  Any individual, such

individual's brothers and sisters, the brothers and sisters of

such individual's parents and grandparents, the ancestors and

lineal descendents of any of the foregoing, a spouse of any of

the foregoing and the estate of any of the foregoing.

Individuals related by the half blood or legal adoption shall be

treated as if they were related by the whole blood.

* * *

Section 6.  Section 2111 of the act is amended by adding a

subsection to read:

Section 2111.  Transfers Not Subject to Tax.--* * *

(s)  A transfer of real estate devoted to the business of

agriculture between members of the same family, provided that

after the transfer the real estate continues to be devoted to

the business of agriculture for a period of seven years beyond

the transferor's date of death and the real estate derives a

yearly gross income of at least two thousand dollars ($2,000),

provided that:

(1)  Any tract of land under this article which is no longer

devoted to the business of agriculture within seven years beyond

the transferor's date of death shall be subject to inheritance

tax due the Commonwealth under section 2107, in the amount that

would have been paid or payable on the basis of valuation

authorized under section 2121 for nonexempt transfers of

property, plus interest thereon accruing as of the transferor's

date of death, at the rate established in section 2143.

(2)  Any tax imposed under section 2107 shall be a lien in

favor of the Commonwealth upon the property no longer being

devoted to agricultural use, collectible in the manner provided

for by law for the collection of delinquent real estate taxes,

as well as the personal obligation of the owner of the property

at the time of the change of use.

(3)  Every owner of real estate exempt under this subsection

shall certify to the department on an annual basis that the land

qualifies for this exemption and shall notify the department

within thirty days of any transaction or occurrence causing the

real estate to fail to qualify for the exemption. Each year the

department shall inform all owners of their obligation to

provide an annual certification under this subclause. This

certification and notification shall be completed in the form

and manner as provided by the department.

Section 7.  A reference in any law to the former definition

of "family farm corporation" or "family farm partnership" in

section 1101-C of the act shall be deemed to be references to a

"family farm business" under section 1101-C of the act.

Section 7.1.  The amendment of section 303(a.7) of the act

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shall not apply to contributions or rollovers made prior to

January 1, 2013.

Section 7.2.  The amendment of section 331(e) of the act

shall apply to taxable years beginning after December 31, 2011.

Section 8.  The amendment of Article XXI of the act shall

apply to the estates of decedents dying after December 31, 2011.

Section 9.  The amendment of Article XI-C of the act shall be

retroactive to any document made, executed, delivered, accepted

or presented for recording on or after July 1, 2010.

Section 10.  The provisions of 61 Pa. Code § 91.222 (relating

to acquired family farm partnership) are abrogated.

Section 11.  This act shall take effect immediately.

Section 1.  Section 201(d) of the act of March 4, 1971

<--

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

7, 1997 (P.L.85, No.7), April 23, 1998 (P.L.239, No.45), May 12,

1999 (P.L.26, No.4), May 24, 2000 (P.L.106, No.23), June 22,

2001 (P.L.353, No.23) and December 23, 2003 (P.L.250, No.46), is

amended to read:

Section 201.  Definitions.--The following words, terms and

phrases when used in this Article II shall have the meaning

ascribed to them in this section, except where the context

clearly indicates a different meaning:

* * *

(d)  "Processing."  The performance of the following

activities when engaged in as a business enterprise:

(1)  The filtering or heating of honey, the cooking, baking

or freezing of fruits, vegetables, mushrooms, fish, seafood,

meats, poultry or bakery products, when the person engaged in

such business packages such property in sealed containers for

wholesale distribution.

(1.1)  The processing of fruits or vegetables by cleaning,

cutting, coring, peeling or chopping and treating to preserve,

sterilize or purify and substantially extend the useful shelf

life of the fruits or vegetables, when the person engaged in

such activity packages such property in sealed containers for

wholesale distribution.

(2)  The scouring, carbonizing, cording, combing, throwing,

twisting or winding of natural or synthetic fibers, or the

spinning, bleaching, dyeing, printing or finishing of yarns or

fabrics, when such activities are performed prior to sale to the

ultimate consumer.

(3)  The electroplating, galvanizing, enameling, anodizing,

coloring, finishing, impregnating or heat treating of metals or

plastics for sale or in the process of manufacturing.

(3.1)  The blanking, shearing, leveling, slitting or burning

of metals for sale to or use by a manufacturer or processor.

(4)  The rolling, drawing or extruding of ferrous and non-

ferrous metals.

(5)  The fabrication for sale of ornamental or structural

metal or of metal stairs, staircases, gratings, fire escapes or

railings (not including fabrication work done at the

construction site).

(6)  The preparation of animal feed or poultry feed for sale.

(7)  The production, processing and bottling of non-alcoholic

beverages for wholesale distribution.

(8)  The operation of a saw mill or planing mill for the

production of lumber or lumber products for sale. The operation

of a saw mill or planing mill begins with the unloading by the

operator of the saw mill or planing mill of logs, timber,

pulpwood or other forms of wood material to be used in the saw

mill or planing mill.

(9)  The milling for sale of flour or meal from grains.

(9.1)  The aging, stripping, conditioning, crushing and

blending of tobacco leaves for use as cigar filler or as

components of smokeless tobacco products for sale to

manufacturers of tobacco products.

(10)  The slaughtering and dressing of animals for meat to be

sold or to be used in preparing meat products for sale, and the

preparation of meat products including lard, tallow, grease,

cooking and inedible oils for wholesale distribution.

(11)  The processing of used lubricating oils.

(12)  The broadcasting of radio and television programs of

licensed commercial or educational stations.

(13)  The cooking or baking of bread, pastries, cakes,

cookies, muffins and donuts when the person engaged in such

activity sells such items at retail at locations that do not

constitute an establishment from which ready-to-eat food and

beverages are sold. For purposes of this clause, a bakery, a

pastry shop and a donut shop shall not be considered an

establishment from which ready-to-eat food and beverages are

sold.

(14)  The cleaning and roasting and the blending, grinding or

packaging for sale of coffee from green coffee beans or the

production of coffee extract. 

(15)  The preparation of dry or liquid fertilizer for sale.  

(16)  The production, processing and packaging of ice for

wholesale distribution.

(17)  The producing of mobile telecommunications services.

(18)  The collection, washing, sorting, inspecting and

packaging of eggs.

* * *

Section 1.1.  Section 204(10), (13) and (57) of the act,

amended April 23, 1998 (P.L.239, No.45), May 12, 1999 (P.L.26,

No.4) and June 29, 2002 (P.L.559, No.89) and repealed in part

December 20, 2000 (P.L.841, No.119), are amended to read:

Section 204.  Exclusions from Tax.--The tax imposed by

section 202 shall not be imposed upon any of the following:

* * *

(10)  The sale at retail to or use by (i) any charitable

organization, volunteer firemen's organization, volunteer

firefighters' relief association as defined in 35 Pa.C.S. § 7412

(relating to definitions) or nonprofit educational institution,

or (ii) a religious organization for religious purposes of

tangible personal property or services other than pursuant to a

construction contract: Provided, however, That the exclusion of

this clause shall not apply with respect to any tangible

personal property or services used in any unrelated trade or

business carried on by such organization or institution or with

respect to any materials, supplies and equipment used and

transferred to such organization or institution in the

construction, reconstruction, remodeling, renovation, repairs

and maintenance of any real estate structure, other than

building machinery and equipment, except materials and supplies

when purchased by such organizations or institutions for routine

maintenance and repairs. If the department has issued sales tax

exempt status to a volunteer firefighters' organization or a

volunteer firefighters' relief association, the sales tax exempt

status may not expire unless the activities of the organization

or association change so that the organization or association

does not qualify as an institution of purely public charity in

which case the organization or association shall immediately

notify the department of the change. If the department

ascertains that an organization or association no longer

qualifies as an institution of purely public charity, the

department may revoke the sales tax exempt status of the

organization or association.

* * *

(13)  The sale at retail, or use of wrapping paper, wrapping

twine, bags, cartons, tape, rope, labels, nonreturnable

containers and all other wrapping supplies, when such use is

incidental to the delivery of any personal property, except that

any charge for wrapping or packaging shall be subject to tax at

the rate imposed by section 202, unless the property wrapped or

packaged will be resold by the purchaser of the wrapping or

packaging service.

* * *

(57)  The sale at retail to or use by a construction

contractor of building machinery and equipment and services

thereto that are:

(i)  transferred pursuant to a construction contract for any

charitable organization, volunteer firemen's organization,

volunteer firefighters' relief association, nonprofit

educational institution or religious organization for religious

purposes, provided that the building machinery and equipment and

services thereto are not used in any unrelated trade or

business; or

(ii)  transferred to the United States or the Commonwealth or

its instrumentalities or political subdivisions[; or].

* * *

Section 1.2.  Sections 217 and 222 of the act, amended

October 9, 2009 (P.L.451, No.48), are amended to read:

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

Monthly [and Semi-monthly] Returns:

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

in each year thereafter a return shall be filed quarterly by

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

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

March, June, September and December.

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

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

with respect to each month by every licensee whose [total]

actual tax [reported, or in the event no report is filed, the

total tax which should have been reported,] liability for the

third calendar quarter of the preceding year equals or exceeds

six hundred dollars ($600) and is less than twenty-five thousand

dollars ($25,000). Such returns shall be filed on or before the

twentieth day of the next succeeding month with respect to which

the return is made. Any licensee required to file monthly

returns hereunder shall be relieved from filing quarterly

returns.

(3)  [After May 31, 2011, a return shall be filed semi-

monthly with respect to each month by every licensee whose total

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

which should have been reported, for the third calendar quarter

of the preceding year equals or exceeds twenty-five thousand

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

month to the fifteenth day of the month, the returns shall be

filed on or before the twenty-fifth day of the month. For the

period from the sixteenth day of the month to the last day of

the month, the returns shall be filed on or before the tenth day

of the next succeeding month with respect to which the return is

made. Any licensee required to file semi-monthly returns under

this section shall be relieved from filing monthly or quarterly

returns.] With respect to every licensee whose actual tax

liability for the third calendar quarter of the preceding year

equals or exceeds twenty-five thousand dollars ($25,000) and is

less than one hundred thousand dollars ($100,000), the licensee

shall, on or before the twentieth day of each month, file a

single return consisting of all of the following:

(i)  Either of the following:

(A)  An amount equal to fifty per centum of the licensee's

actual tax liability for the same month in the preceding

calendar year if the licensee was a monthly filer or, if the

licensee was a quarterly or semi-annual filer, fifty per centum

of the licensee's average actual tax liability for that tax

period in the preceding calendar year. The average actual tax

liability shall be the actual tax liability for the tax period

divided by the number of months in that tax period. For

licensees that were not in business during the same month in the

preceding calendar year or were in business for only a portion

of that month, fifty per centum of the average actual tax

liability for each tax period the licensee has been in business.

If the licensee is filing a tax liability for the first time

with no preceding tax periods, the amount shall be zero.

(B)  An amount equal to or greater than fifty per centum of

the licensee's actual tax liability for the same month.

(ii)  An amount equal to the taxes due for the preceding

month, less any amounts paid in the preceding month as required

by subclause (i).

(4)  With respect to each month by every licensee whose

actual tax liability for the third calendar quarter of the

preceding year equals or exceeds one hundred thousand dollars

($100,000), the licensee shall, on or before the twentieth day

of each month, file a single return consisting of the amounts

under clause (3)(i)(A) and (ii).

(5)  The amount due under clause (3)(i) or (4) shall be due

the same day as the remainder of the preceding month's tax.

(6)  The department shall determine whether the amounts

reported under clause (3) or (4) shall be remitted as one

combined payment or as two separate payments.

(7)  The department may require the filing of the returns and

the payments for these types of filers by electronic means

approved by the department.

(8)  Any licensee filing returns under clause (3) or (4)

shall be relieved of filing quarterly returns.

(9)  If a licensee required to remit payments under clause

(3) or (4) fails to make a timely payment or makes a payment

which is less than the required amount, the department may, in

addition to any applicable penalties, impose an additional

penalty equal to five per centum of the amount due under clause

(3) or (4) which was not timely paid. The penalty under this

clause shall be determined when the tax return is filed for the

tax period.

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

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

be required by rules and regulations of the department

promulgated and published at least sixty days prior to the end

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

such annual returns are required licensees shall not be required

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

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

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

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

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

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

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

waive the requirement for the filing of quarterly return in the

case of any licensee whose individual tax collections do not

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

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

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

and Quarterly Payments. The tax imposed by this article and

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

the licensee on the day the return is required to be filed under

the provisions of section 217 and such payment must accompany

the return [for such preceding period].

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

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

greater than the amount already paid by him in connection with

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

with such annual return a remittance for the unpaid amount of

tax for the year.

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

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

time of filing the return required by this article.

Section 1.3.  Section 230 of the act, amended July 25, 2007

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

Section 230.  Assessment.--(a)  The department is authorized

and required to make the inquiries, determinations and

assessments of the tax (including interest, additions and

penalties) imposed by this article. A notice of assessment and

demand for payment shall be mailed to the taxpayer. The notice

shall set forth the basis of the assessment.

[(b)  The notice required by subsection (a) shall be mailed

by certified mail if the assessment is for $300 or more.]

Section 1.4.  Section 237(c) of the act, amended July 1, 1985

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

Section 237.  Collection of Tax.--* * *

(c)  Exemption Certificates. If the tax does not apply to the

sale or lease of tangible personal property or services, the

purchaser or lessee shall furnish to the vendor a certificate

indicating that the sale is not legally subject to the tax. The

certificate shall be in substantially such form as the

department may, by regulation, prescribe. Where the tangible

personal property or service is of a type which is never subject

to the tax imposed or where the sale or lease is in interstate

commerce, such certificate need not be furnished. Where a series

of transactions are not subject to tax, a purchaser or user may

furnish the vendor with a single exemption certificate in

substantially such form and valid for such period of time as the

department may, by regulation, prescribe. The department shall

provide all school districts and intermediate units with a

permanent tax exemption number. An exemption certificate, which

is complete and regular and on its face discloses a valid basis

of exemption if taken in good faith, shall relieve the vendor

from the liability imposed by this section. An exemption

certificate accepted by a vendor from a natural person domiciled

within this Commonwealth or any association, fiduciary,

partnership, corporation or other entity, either authorized to

do business within this Commonwealth or having an established

place of business within this Commonwealth, in the ordinary

course of the vendor's business, which on its face discloses a

valid basis of exemption consistent with the activity of the

purchaser and character of the property or service being

purchased or which is provided to the vendor by a charitable,

religious, educational, volunteer firefighters' relief

association or volunteer firemen's organization and contains the

organization's charitable exemption number and which, in the

case of any purchase costing two hundred dollars ($200) or more,

is accompanied by a sworn declaration on a form to be provided

by the department of an intended usage of the property or

service which would render it nontaxable, shall be presumed to

be taken in good faith and the burden of proving otherwise shall

be on the Department of Revenue.

Section 2.  Section 331(e) of the act, repealed and added

August 31, 1971 (P.L.362, No.93), is amended and the section is

amended by adding subsections to read:

Section 331.  Returns of Married Individuals, Deceased or

Disabled Individuals and Fiduciaries.--* * *

(e)  [The] Except as provided under subsections (e.1) and

(e.2), the final return for any deceased individual shall be

made, signed and filed by his executor, administrator, or other

[person] personal representative charged with his property.

(e.1)  (1)  During the year in which a spouse dies, a

surviving spouse may file his or her return for the year jointly

with the final return of his or her deceased spouse if the joint

return could have been filed if both spouses were living for the

entire taxable year. If a personal representative, executor or

administrator or other fiduciary is appointed on behalf of the

deceased spouse before the deceased spouse's tax return is

filed, the surviving spouse may not file a joint return without

the consent of the fiduciary. If a joint return is filed, both

the fiduciary of the deceased spouse's estate and the surviving

spouse must sign the joint return.

(2)  A surviving spouse may make, sign and file the final tax

return of his or her deceased spouse if the deceased spouse did

not previously file a return for that taxable year and if a

personal representative, executor or administrator has not been

appointed by the time the return is made, signed and filed. If

the surviving spouse properly files a final return for the

deceased spouse under this paragraph, a fiduciary who is later

appointed for the deceased spouse may supersede the final return

filed by the surviving spouse by filing a separate return for

the deceased spouse. Any joint return improperly filed by the

surviving spouse or superseded by the fiduciary shall be treated

as void. If the surviving spouse files his or her own tax return

jointly with the deceased spouse's return under this paragraph

and the return is superseded by the filing of a return by the

deceased spouse's fiduciary, the surviving spouse shall be

required to file separate return within 90 days of the filing of

the fiduciary's return. The surviving spouse's separate return

shall be deemed to be filed:

(i)  on the day the joint return was filed if it is filed

within such time; or

(ii)  the date the department receives it.

(e.2)  If both taxpayers die during the same tax year, a

final return for each deceased spouse may be jointly filed if a

joint return could have been filed had both spouses lived for

the entire taxable year and with the consent of the personal

representatives, executors or administrators of both deceased

spouses under subsection (e.1) by the due date, including

extensions, of the joint tax return. Both fiduciaries must sign

the joint return.

* * *

Section 2.1.  Section 335 of the act is amended by adding a

subsection to read:

Section 335.  Requirements Concerning Returns, Notices,

Records and Statements.--* * *

(f)  The following apply:

(1)  Any person who:

(i)  makes payments of income from sources within this

Commonwealth;

(ii)  makes payments of nonemploye compensation or payments

under an oil and gas lease under subparagraph (i) to a resident

or nonresident individual, an entity treated as a partnership

for tax purposes or a single member limited liability company;

and

(iii)  is required to make a form 1099-MISC return to the

Secretary of the Treasury of the United States with respect to

the payments, shall file a copy of form 1099-MISC with the

department and send a copy of form 1099-MISC to the payee by the

Federal filing deadline each year.

(2)  If the payor is required to perform electronic filing

for Pennsylvania employer withholding purposes, the form 1099-

MISC shall be filed electronically with the department.

Section 3.  Section 338 of the act, amended July 25, 2007

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

Section 338.  Assessment.--(a)  The department is authorized

and required to make the inquiries, determinations and

assessments of all taxes imposed by this article.

(b)  If the mode or time for the assessment of any tax is not

otherwise provided for, the department may establish the same by

regulations.

(c)  In the event that any taxpayer fails to file a return

required by this article, the department may make an estimated

assessment (based on information available) of the proper amount

of tax owing by the taxpayer. A notice of assessment in the

estimated amount shall be sent to the taxpayer. The tax shall be

paid within ninety days after a notice of such estimated

assessment has been mailed to the taxpayer, unless within such

period the taxpayer has filed a petition for reassessment in the

manner prescribed by Article XXVII.

(d)  A notice of assessment issued by the department pursuant

to this article shall be mailed to the taxpayer. The notice

shall set forth the basis of the assessment.

[(e)  The notice required by subsection (d) shall be mailed

by certified mail if the assessment is for $300 or more.]

Section 4.  Section 352(d)(2) and (f) of the act, amended

August 4, 1991 (P.L.97, No.22) and July 7, 2005 (P.L.149,

No.40), are amended to read:

Section 352.  Additions, Penalties and Fees.--* * *

(d)  * * *

(2)  No addition to tax shall be imposed if the total amount

of all payments of estimated tax made on or before the last date

prescribed for the payment of such installment equals or exceeds

the lesser of:

(A)  The amount which would have been required to be paid on

or before such date if the estimated tax were an amount equal to

the tax computed after consideration of the special tax

provisions for poverty, at the rates applicable to the taxable

year, but otherwise on the basis of the facts shown on his

return for, and the law applicable to, the preceding taxable

year; or

(B)  An amount equal to ninety per cent of the tax computed,

at the rates applicable to the taxable year, on the basis of the

actual income for the months in the taxable year ending before

the month in which the installment is required to be paid, or,

in the case of a trust or estate, an amount equal to ninety per

cent of the applicable percentage of the tax for the taxable

year as determined pursuant to section 6654(d)(2)(C)(ii) of the

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §

6654), as amended, at rates applicable to the taxable year,

computed on an annualized basis in accordance with United States

Treasury regulations, based upon the actual income for the

months of the taxable year ending with the last day of the

second preceding month prior to the month in which the

installment is required to be paid.

* * *

(f)  (1)  Any person required under the provisions of section

317 to furnish a statement to an employe who wilfully furnishes

a false or fraudulent statement, or who wilfully fails to

furnish a statement in the manner, at the time, and showing the

information required under section 317 and the regulations

prescribed thereunder, shall, for each such failure, be subject

to a penalty of fifty dollars ($50) for each employe.

(2)  Any person required by regulation to furnish an

information return who furnishes a false or fraudulent return

shall for each failure be subject to a penalty of two hundred

fifty dollars ($250).

(3)  Every Pennsylvania S corporation required to file a

return with the department under the provisions of section 330.1

who furnishes a false or fraudulent return or who fails to file

the return in the manner and at the time required under section

330.1 shall be subject to a penalty of $250 for each failure.

(4)  Any person required to file a copy of form 1099-MISC

with the department under the provisions of section 335(f) who

wilfully furnishes a false or fraudulent form or who wilfully

fails to file the form in the manner, at the time and showing

the information required under section 335(f) shall, for each

such failure, be subject to a penalty of fifty dollars ($50).

(5)  Any person required under the provisions of section

335(f) to furnish a copy of form 1099-MISC to a payee who

wilfully furnishes a false or fraudulent form or who wilfully

fails to furnish a form in the manner, at the time and showing

the information required by section 335(f) shall, for each such

failure, be subject to a penalty of fifty dollars ($50).

* * *

Section 4.1.  Section 401(3)2(a)(9) of the act, amended

October 9, 2009 (P.L.451, No.48), is amended to read:

Section 401.  Definitions.--The following words, terms, and

phrases, when used in this article, shall have the meaning

ascribed to them in this section, except where the context

clearly indicates a different meaning:

* * *

(3)  "Taxable income."  * * *

2.  In case the entire business of any corporation, other

than a corporation engaged in doing business as a regulated

investment company as defined by the Internal Revenue Code of

1986, is not transacted within this Commonwealth, the tax

imposed by this article shall be based upon such portion of the

taxable income of such corporation for the fiscal or calendar

year, as defined in subclause 1 hereof, and may be determined as

follows:

(a)  Division of Income.

* * *

(9)  (A)  Except as provided in subparagraph (B):

(i)  For taxable years beginning before January 1, 2007, all

business income shall be apportioned to this State by

multiplying the income by a fraction, the numerator of which is

the property factor plus the payroll factor plus three times the

sales factor and the denominator of which is five.

(ii)  For taxable years beginning after December 31, 2006,

all business income shall be apportioned to this State by

multiplying the income by a fraction, the numerator of which is

the sum of fifteen times the property factor, fifteen times the

payroll factor and seventy times the sales factor and the

denominator of which is one hundred.

(iii)  For taxable years beginning after December 31, 2008,

all business income shall be apportioned to this State by

multiplying the income by a fraction, the numerator of which is

the sum of eight and a half times the property factor, eight and

a half times the payroll factor and eighty-three times the sales

factor and the denominator of which is one hundred.

(iv)  For taxable years beginning after December 31, 2009,

all business income shall be apportioned to this State by

multiplying the income by a fraction, the numerator of which is

the sum of five times the property factor, five times the

payroll factor and ninety times the sales factor and the

denominator of which is one hundred.

(v)  For taxable years beginning after December 31, 2012, all

business income shall be apportioned to this State by

multiplying the income by the sales factor.

* * *

Section 5.  Section 405 of the act is amended to read:

Section 405.  Extension of Time to File Reports.--The

department may, upon application made to it, in such form as it

shall prescribe, on or prior to the last day for filing any

annual report, and upon proper cause shown, grant to the

corporation, required to file such report, an extension of not

more than sixty days within which such report may be filed[, and

in case the Federal income tax authorities at any time grant a

longer extension of time for filing such reports with the

Federal Government, the department may grant an additional

extension of time for filing the annual report under this

article of not more than]. If the Federal income tax authorities

grant an extension of time for filing the reports with the

Federal Government, the department shall automatically grant an

extension of time for filing the annual report under this

article of thirty days after the termination of the Federal

extension, but the amount of tax due shall, in such cases,

nevertheless, be subject to interest from the due dates and at

the rates fixed by this article.