THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY STERN, BEAR, BOYD, CLYMER, D. COSTA, COX, CUTLER, FLECK, GEIST, GEORGE, GIBBONS, GILLESPIE, GINGRICH, GODSHALL, GOODMAN, GRELL, GROVE, HANNA, HESS, HUTCHINSON, KAUFFMAN, M. K. KELLER, KIRKLAND, MARSHALL, MILLARD, MILLER, MOUL, MURT, PICKETT, REICHLEY, ROCK, SCHRODER, STURLA AND SWANGER, APRIL 26, 2011

REFERRED TO COMMITTEE ON FINANCE, APRIL 26, 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," further providing, in resource enhancement and

protection tax credit, for resource enhancement and

protection tax credit program and for annual tax credits.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Sections 1703-E and 1709-E of the act of March 4,

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

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

Section 1703-E.  Resource Enhancement and Protection Tax Credit

Program.

(a)  Establishment.--The Resource Enhancement and Protection

Tax Credit Program is established to encourage private

investment in the implementation of best management practices on

agricultural operations, the planting of riparian forest buffers

and the remediation of legacy sediment.

(b)  Limits.--The following limits shall apply:

(1)  Except as set forth in paragraph (5), an eligible

applicant may be granted a maximum of $150,000 in tax credits

under this program.

(2)  No more than $150,000 in tax credits shall be

granted toward projects for an agricultural operation.

(3)  An eligible applicant may submit an application for

a single project or multiple applications for multiple

projects within the limits of this section.

(4)  There shall be no limit on the amount of tax credits

that may be purchased from or be assigned from an eligible

applicant.

(5)  Notwithstanding paragraph (1), there shall be no

limit on the amount of tax credits granted to a sponsor under

subsection (e).

(6)  The credits for legacy sediment shall not be issued

prior to July 1, 2008. Applications for legacy sediment

remediation will not be accepted prior to July 1, 2008.

(c)  Carryover.--

(1)  If the eligible applicant cannot use the entire

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

tax credit is first granted, then the excess may be carried

over to succeeding taxable years and used as a credit against

the qualified tax liability of the eligible applicant for

those taxable years. Each time that the tax credit is carried

over to a succeeding taxable year, it is to 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 15 taxable years following the first

taxable year for which the eligible applicant was entitled to

claim the credit.

(2)  A tax credit granted by the department shall be

applied against the taxpayer's qualified tax liability for

the current taxable year as of the date on which the credit

was granted before the tax credit is applied against any tax

liability under paragraph (1).

(3)  A tax credit granted under this article shall not be

carried back or refunded.

(d)  Sale or assignment of credit.--

(1)  An eligible applicant, upon application to and

approval by the commission, may sell or assign, in whole or

in part, a tax credit granted to the eligible applicant under

this article [if no claim for allowance of the credit is

filed within one year from the date the credit is granted by

the department under section 1708-E]. The commission, in

consultation with the department, shall establish guidelines

for the approval of applications under this subsection.

(2)  The purchaser or assignee of a portion of a tax

credit under this subsection shall immediately claim the

credit in the taxable year in which the purchase or

assignment is made. The amount of the credit that a purchaser

or assignee may use against a qualified tax liability may not

exceed 75% of the qualified tax liability for the taxable

year. The purchaser or assignee may not carry over, carry

back, obtain a refund of or sell or assign the tax credit.

The purchaser or assignee shall notify the department of the

seller or assignor of the tax credit in compliance with

procedures specified by the department.

(3)  Before an application is approved, the department

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.

(4)  Notwithstanding any other provision of law, the

department 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.

(e)  Sponsorship.--An eligible applicant may be a sponsor by

applying for a tax credit for a project authorized under section

1707-E if a written [agreement] contract between the eligible

applicant and the owner of property on which the project will be

completed is submitted to the commission, certifying that the

property owner will comply with all the provisions of this

article.

(f)  Tax credits for pass-through entities.--

(1)  If a pass-through entity has any unused tax credit

under section 1704-E, it may elect in writing, according to

procedures established by the department, to transfer all or

a portion of the credit to shareholders, members or partners

in proportion to the share of the entity's distributive

income to which the shareholder, member or partner is

entitled.

(2)  The credit provided under paragraph (1) is in

addition to any tax credit to which the shareholder, member

or partner is otherwise entitled under this article. However,

a pass-through entity and its shareholders, members or

partners shall not claim a tax credit under this article for

the same project authorized under section 1707-E.

(3)  A shareholder, member or partner of a pass-through

entity to whom credit is transferred under paragraph (1)

shall immediately claim the credit in the taxable year in

which the transfer is made. The shareholder, member or

partner may not carry forward, carry back, obtain a refund of

or sell or assign the credit.

Section 1709-E.  Annual tax credits.

The total amount of tax credits authorized by the commission

shall not exceed [$10,000,000] $20,000,000 in any fiscal year.

Section 2.  The amendment of section 1703-E(d) of the act

shall apply retroactively to July 1, 2009.

Section 3.  This act shall take effect immediately.