THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY PERRY, BOYD, COX, CREIGHTON, CUTLER, GILLEN, SCHRODER, SWANGER AND TALLMAN, MARCH 14, 2011

REFERRED TO COMMITTEE ON FINANCE, MARCH 14, 2011  

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 tax, further providing for

definitions.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 301(d) of the act of March 4, 1971

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

July 7, 2005 (P.L.149, No.40), is amended to read:

Section 301.  Definitions.--Any reference in this article to

the Internal Revenue Code of 1986 shall mean the Internal

Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.§ 1 et seq.),

as amended to January 1, 1997, unless the reference contains the

phrase "as amended" and refers to no other date, in which case

the reference shall be to the Internal Revenue Code of 1986 as

it exists as of the time of application of this article. 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:

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(d)  "Compensation" means and shall include salaries, wages,

commissions, bonuses and incentive payments whether based on

profits or otherwise, fees, tips and similar remuneration

received for services rendered, whether directly or through an

agent, and whether in cash or in property. The term

"compensation" shall include any part of a distribution under a

plan described in section 409A(d)(1) of the Internal Revenue

Code of 1986 (Public Law 99-514, 26 U.S.C. § 409A(d)(1)), as

amended, attributable to an elective deferral of income or the

income on any elective deferral of income, whether paid or

payable during employment or to a retired person upon or after

retirement from service.

The term "compensation" shall not mean or include: (i)

periodic payments for sickness and disability other than regular

wages received during a period of sickness or disability; or

(ii) disability, retirement or other payments arising under

workmen's compensation acts, occupational disease acts and

similar legislation by any government; or (iii) payments

commonly recognized as old age or retirement benefits paid to

persons retired from service after reaching a specific age or

after a stated period of employment; or (iv) payments commonly

known as public assistance, or unemployment compensation

payments by any governmental agency; or (v) payments to

reimburse actual expenses, and for the purposes of this

paragraph, actual expenses shall not include union dues; or (vi)

payments made by employers or labor unions, including payments

made pursuant to a cafeteria plan qualifying under section 125

of the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 125), for employe benefit programs covering

hospitalization, sickness, disability or death, supplemental

unemployment benefits or strike benefits: Provided, That the

program does not discriminate in favor of highly compensated

individuals as to eligibility to participate, payments or

program benefits; or (vii) any compensation received by United

States servicemen serving in a combat zone; or (viii) payments

received by a foster parent for in-home care of foster children

from an agency of the Commonwealth or a political subdivision

thereof or an organization exempt from Federal tax under section

501(c)(3) of the Internal Revenue Code of 1954 which is licensed

by the Commonwealth or a political subdivision thereof as a

placement agency; or (ix) payments made by employers or labor

unions for employe benefit programs covering social security or

retirement; or (x) personal use of an employer's owned or leased

property or of employer-provided services.

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Section 2.  This act shall take effect in 60 days.