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

AS RE-REPORTED FROM COMMITTEE ON RULES, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 30, 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 sales and use tax, further 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

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credit; in educational improvement tax credit, further

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providing for definitions, for qualification and application,

for tax credit and for limitations; providing for a resource

manufacturing tax credit, for an educational opportunity

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scholarship program, 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.  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.

Section 6.  Section 406 of the act, amended October 18, 2006

(P.L.1149, No.119), is amended to read:

Section 406.  Changes Made by Federal Government.--(a)  If

the amount of the taxable income, as returned by any corporation

to the Federal Government, is finally changed or corrected by

the Commission of Internal Revenue or by any other agency or

court of the United States, such corporation, within [thirty

days] six months after the receipt of such final change or

correction, shall make a report of change, under oath or

affirmation, to the department showing such finally changed or

corrected taxable income, upon which the tax is required to be

paid to the United States. In case a corporation fails to file a

report of change, which results in an increase in taxable income

within the time prescribed, there shall be added to the tax, a

penalty of five dollars ($5) for every day during which such

corporation is in default, but the department may abate any such

penalty in whole or in part.

(b)  If, as a result of such final change or correction, a

corporation should report any change in the amount of the

taxable income of any corporation upon which tax is imposed by

this article, the department shall adjust the corporation's tax

on the department's records to conform to the revised tax as

reported and shall credit the taxpayer's account to the extent

of any overpayment resulting from the adjustment. The department

shall then have the power, and its duty shall be, to determine

and assess the taxpayer's unpaid and unreported liability for

tax, interest or penalty due the Commonwealth, or to credit the

taxpayer's account.

(c)  Where a report of change, of Federal income, or Federal

tax, has been filed after an administrative or judicial appeal

has been taken, the report shall be deemed a part of the

original annual report upon petition of the taxpayer at any

subsequent proceeding as though it had been filed with the

original report, and no separate appeal from an assessment

resulting from the report of change, correction, or

redetermination shall be necessary to the extent the identical

issues for the taxable year have been raised in the appeal.

(d)  The provisions of this section shall not be construed so

as to permit an assessment based upon the allowance of any

deduction on account of net operating losses, sustained in other

fiscal or calendar years, that are not allowed as deductions

under the definition of "taxable income" as contained in this

article.

(e)  The provisions of this section shall apply to every

corporation which was doing business in Pennsylvania in the year

for which the Federal income has been changed, irrespective of

whether or not such corporation has thereafter merged,

consolidated, withdrawn or dissolved. Any clearance certificate

issued by the department shall be conditioned upon the

requirement that in the event of a change in Federal income for

any year for which taxes have been paid to the Commonwealth, the

corporation or its successor or its officers or its directors

shall file with the department a report of change and pay any

additional State tax resulting therefrom.

Section 6.1.  Section 407.1 of the act, amended July 25, 2007

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

Section 407.1.  Assessments.--(a)  If the department

determines that unpaid or unreported tax is due the

Commonwealth, the department shall issue an assessment under

this section and sections 407.2, 407.3, 407.4 and 407.5. Such an

assessment is not subject to the settlement procedure in the act

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

(b)  A notice of assessment and demand for payment shall be

mailed to the taxpayer. The notice shall set forth the basis of

the assessment. The assessment shall be paid to the department

upon receipt of the notice of assessment. Payment of the

assessment shall be without prejudice to the right of the

taxpayer to file a petition for reassessment in the manner

prescribed by Article XXVII.

(c)  In the event that a taxpayer fails to file a report for

a tax governed by this article, the department may issue an

estimated assessment based upon the records and information

available or that may come into the department's possession. If

prior to the filing of a report the department estimates that

additional unpaid or unreported tax is due the Commonwealth, the

department may issue additional estimated assessments.

(d)  A notice of estimated assessment and demand for payment

shall be mailed to the taxpayer. The assessment shall be paid to

the department upon receipt of the notice of assessment. Payment

of the estimated assessment does not eliminate the taxpayer's

obligation to file a report.

(e)  A taxpayer shall have no right to petition for

reassessment, petition for refund or otherwise appeal a notice

of estimated assessment except as provided in subsection (f).

(f)  The department shall remove an estimated assessment

within ninety days of the filing of a report and other

information required to determine the tax due the Commonwealth,

whereupon the department may issue an assessment as provided in

subsection (a). Any tax due the Commonwealth that is included in

an estimated assessment shall retain its lien priority as of the

date of the estimated assessment to the extent such amount is

included with an assessment issued upon the review of the filed

report.

[(g)  The notice required by subsections (b) and (d) shall be

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

Section 7.  Section 901 introductory paragraph of the act,

amended December 1, 1983 (P.L.228, No.66), is amended to read:

Section 901.  Definitions.--The following terms, when used in

this [act] article, shall have the meaning ascribed to them in

this section:

* * *

Section 8.  Section 902(b) and (c) of the act, amended June

30, 1995 (P.L.139, No.21), are amended to read:

Section 902.  * * *

(b)  Disposition of Taxes.--The taxes paid by foreign fire

insurance companies under this [act] article shall continue to

be distributed and used for firemen's relief pension or

retirement purposes, as provided by section two of the act,

approved the twenty-eighth day of June, one thousand eight

hundred ninety-five (Pamphlet Laws 408), as amended; and the

taxes paid by foreign casualty insurance companies under this

[act] article shall continue to be distributed and used for

police pension, retirement or disability purposes as provided by

the act, approved the twelfth day of May, one thousand nine

hundred forty-three (Pamphlet Laws 259), as amended.

(c)  Other Taxes.--All other taxes received under this [act] 

article shall be credited to the General Fund for general

revenue purposes.

Section 9.  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 10.  Section 1102-C.3(6), (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:

* * *

(6)  A transfer between husband and wife, between persons who

were previously husband and wife who have since been divorced,

provided the property or interest therein subject to such

transfer was acquired by the husband and wife or husband or wife

prior to the granting of the final decree in divorce, between

parent and child or the spouse of such child, between a

stepparent and a stepchild or the spouse of the stepchild, 

between brother or sister or spouse of a brother or sister and

brother or sister or the spouse of a brother or sister and

between a grandparent and grandchild or the spouse of such

grandchild, except that a subsequent transfer by the grantee

within one year shall be subject to tax as if the grantor were

making such transfer.

* * *

(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 or the

interests in that family farm business; or

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

least seventy-five per cent of each class of stock thereof or

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 11.  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 12.  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.

(3)  For the purposes of paragraph (2), a transfer occurs

within a period of three years of another transfer or transfers

if, during the period:

(i)  the transferring party provides a legally binding

commitment, enforceable at a future date, to execute the

transfer;

(ii)  the terms of the transfer are fixed and not subject to

negotiation; and

(iii)  the transferring party receives full consideration, in

any form, in exchange for the transfer.

[(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 12.1.  Section 1111-C of the act, amended July 25,

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

Section 1111-C.  Assessment and Notice of Tax; Review.--(a)

If any person shall fail to pay any tax imposed by this article

for which he is liable, the department is hereby authorized and

empowered to make an assessment of additional tax and interest

due by such person based upon any information within its

possession or that shall come into its possession. All of such

assessments shall be made within three years after the date of

the recording of the document, subject to the following:

(1)  If the taxpayer underpays the correct amount of the tax

by twenty-five per cent or more, the tax may be assessed at any

time within six years after the date of the recording of the

document.

(2)  If any part of an underpayment of tax is due to fraud or

an undisclosed, intentional disregard of rules and regulations,

the full amount of the tax may be assessed at any time.

(b)  Promptly after the date of such assessment, the

department shall send a copy thereof, including the basis of the

assessment, to the person against whom it was made. Any taxpayer

against whom an assessment is made may petition the department

for a reassessment pursuant to Article XXVII.

[(d)  The notice required by subsection (b) shall be sent by

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

Section 12.2.  The definition of "wholesaler" in section 1201

of the act, added October 9, 2009 (P.L.451, No.48), is amended

to read:

Section 1201.  Definitions.--As used in this article:

* * *

"Wholesaler."  Any of the following:

(1)  Any person that meets all of the following:

(i)  In the usual course of business, purchases cigarettes

from a cigarette stamping agent or other wholesaler and

receives, stores, sells and distributes within this Commonwealth

at least seventy-five per cent of the cigarettes purchased by

him or her to retail dealers or wholesale dealers or any

combination who buys the cigarettes from him or her for the

purpose of resale to the ultimate consumer.

(ii)  Maintains an established place of business for the

receiving, storage and distribution of cigarettes.

(2)  Any person that meets all of the following:

(i)  Is engaged in the business of distributing cigarettes

through vending machines to the ultimate consumer by means of

placing the cigarette vending machines, owned or leased by him,

in various outlets within this Commonwealth.

(ii)  Pays to the owner or lessee of the premises a

commission or rental for the use of the premises.

(iii)  Operates at least ten vending machines.

(iv)  Meets all the other requirements for licensing of

wholesalers under Article II-A of the act of April 9, 1929

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

maintaining an established place of business for the receiving,

storage and distribution of cigarettes.

(3)  Any person, including a franchisee, that meets all of

the following:

(i)  Owns and operates no fewer than [five] three retail

outlets in this Commonwealth, having one hundred per cent common

ownership.

(ii)  Purchases cigarettes from a cigarette stamping agency

or another wholesaler for resale to the ultimate consumer.

(iii)  Maintains complete and accurate records of all

purchases and sales in his or her main office and also in the

retail outlet.

Section 13.  Section 1709-B(a) of the act, amended July 12,

2006 (P.L.1137, No.116), is amended to read:

Section 1709-B.  Limitation on Credits.--(a)  The total

amount of credits approved by the department shall not exceed

[forty million dollars ($40,000,000)] fifty-five million dollars

($55,000,000) in any fiscal year. Of that amount, [eight million

dollars ($8,000,000)] eleven million dollars ($11,000,000) shall

be allocated exclusively for small businesses. However, if the

total amounts allocated to either the group of applicants

exclusive of small businesses or the group of small business

applicants is not approved in any fiscal year, the unused

portion will become available for use by the other group of

qualifying taxpayers.

* * *

Section 14.  Section 1712-B of the act, amended July 12, 2006

(P.L.1137, No.116), is repealed:

[Section 1712-B.  Termination.--The department shall not

approve a research and development tax credit under this article

for taxable years ending after December 31, 2015.]

Section 15.  The definition of "qualified tax liability" in

section 1702-D of the act, added July 25, 2007 (P.L.373, No.55),

is amended and the section is amended by adding definitions to

read:

Section 1702-D.  Definitions.

The following words and phrases when used in this article

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

context clearly indicates otherwise:

* * *

"Minimum stage filming requirements."  Include:

(1)  Taxpayers with a Pennsylvania production expense of

less than $30,000,000 per production must:

(i)  build at least one set at a qualified production

facility;

(ii)  shoot for a minimum of ten days at a qualified

production facility; and

(iii)  spend or incur a minimum of $1,500,000 in

direct expenditures relating to the use or rental of

tangible property or for performance of services provided

by a qualified production facility.

(2)  Taxpayers with a Pennsylvania production expense of

at least $30,000,000 per production must:

(i)  build at least two sets at a qualified

production facility;

(ii)  shoot for a minimum of 15 days at a qualified

production facility; and

(iii)  spend or incur a minimum of $5,000,000 in

direct expenditures relating to the use or rental of

tangible property at or for performance of services

provided by a qualified production facility.

* * *

"Qualified production facility."  A film production facility

located within this Commonwealth that contains at least one

sound stage with a column-free, unobstructed floor space and

meets either of the following criteria:

(1)  Has had a minimum of $10,000,000 invested in the

film production facility in land or a structure purchased or

ground-up, purpose-built new construction or renovation of

existing improvement.

(2)  Meets at least three of the following criteria:

(i)  A sound stage having an industry standard noise

criteria rating of 25 or better.

(ii)  A permanent grid with a minimum point load

capacity of no less than 1,000 pounds at a minimum of 25

points.

(iii)  Built-in power supply available at a minimum

of 4,000 amps per sound stage without the need for

supplemental generators.

(iv)  A height from sound stage floor to permanent

grid of a minimum of 20 feet.

(v)  A sound stage with a sliding or roll-up access

door with a minimum height of 14 feet.

(vi)  A built-in HVAC capacity during shoot days with

a minimum of 50 tons of cooling capacity available per

sound stage.

(vii)  Perimeter security that includes a 24-hour,

seven-days-a-week security presence and use of access

control identification badges.

(viii)  On-site lighting and grip department with an

available inventory stored at the film production

facility with a minimum cost of investment of $500,000.

(ix)  A sound stage with contiguous production

offices with a minimum of 5,000 square feet per sound

stage.

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV [or], VI, VII or IX. The term shall not

include any tax withheld by an employer from an employee under

Article III.

* * *

Section 15.1.  Section 1703-D(b) of the act, added July 25,

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

Section 1703-D.  Credit for qualified film production expenses.

* * *

(b)  Review and approval.--[The department shall review and

approve or disapprove the applications in the order in which

they are received.] The department shall establish application

periods not to exceed 90 days each. All applications received

during the application period shall be reviewed and evaluated by

the department based on the following criteria:

(1)  The anticipated number of production days in a

qualified production facility.

(2)  The anticipated number of Pennsylvania employees.

(3)  The number of preproduction days through

postproduction days in Pennsylvania.

(4)  The anticipated number of days spent in Pennsylvania

hotels.

(5)  The Pennsylvania production expenses in comparison

to the production budget.

(6)  The use of studio resources.

Upon determining the taxpayer has incurred or will incur

qualified film production expenses, the department may approve

the taxpayer for a tax credit. Applications not approved may be

reviewed and considered in subsequent application periods. The

department may approve a taxpayer for a tax credit based on its

evaluation of the criteria under this subsection.

* * *

Section 16.  Sections 1705-D and 1707-D of the act, added

July 25, 2007 (P.L.373, No.55), are amended to read:

Section 1705-D.  Carryover, carryback and assignment of credit.

(a)  General rule.--If the taxpayer cannot use the entire

amount of the tax credit for the taxable year in which the tax

credit is first approved, then the excess may be carried over to

succeeding taxable years and used as a credit against the

qualified tax liability of the taxpayer for those taxable years.

Each time the tax credit is carried over to a succeeding taxable

year, it shall be reduced by the amount that was used as a

credit during the immediately preceding taxable year. The tax

credit provided by this article may be carried over and applied

to succeeding taxable years for no more than three taxable years

following the first taxable year for which the taxpayer was

entitled to claim the credit.

(b)  Application.--A tax credit approved by the department in

a taxable year first shall be applied against the taxpayer's

qualified tax liability for the current taxable year as of the

date on which the credit was approved before the tax credit can

be applied against any tax liability under subsection (a).

(c)  No carryback or refund.--A taxpayer is not entitled to

carry back or obtain a refund of all or any portion of an unused

tax credit granted to the taxpayer under this article.

(d)  (Reserved).

(e)  Sale or assignment.--The following shall apply:

(1)  A taxpayer, upon application to and approval by the

department, may sell or assign, in whole or in part, a tax

credit granted to the taxpayer under this article.

(2)  The department and the Department of Revenue shall

jointly promulgate regulations for the approval of

applications under this subsection.

(3)  Before an application is approved, the Department of

Revenue must make a finding that the applicant has filed all

required State tax reports and returns for all applicable

taxable years and paid any balance of State tax due as

determined at settlement, assessment or determination by the

Department of Revenue.

(4)  Notwithstanding any other provision of law, the

Department of Revenue shall settle, assess or determine the

tax of an applicant under this subsection within 90 days of

the filing of all required final returns or reports in

accordance with section 806.1(a)(5) of the act of April 9,

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

(f)  Purchasers and assignees.--Except as set forth in

subsection (g), the following apply:

(1)  The purchaser or assignee of all or a portion of a

tax credit under subsection (e) shall immediately claim the

credit in the taxable year in which the purchase or

assignment is made.

(2)  The amount of the tax credit that a purchaser or

assignee may use against any one qualified tax liability may

not exceed 50% of such qualified tax liability for the

taxable year.

(3)  The purchaser or assignee may not carry forward,

carry back or obtain a refund of or sell or assign the tax

credit.