THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY HACKETT, ADOLPH, BENNINGHOFF, BRENNAN, BURNS, DALEY, DONATUCCI, FARRY, HAHN, HARHART, KAMPF, KILLION, MICCARELLI, MURT, M. O'BRIEN, QUINN, RAPP, REED, ROCK, CULVER, K. SMITH, VULAKOVICH, WATSON AND YOUNGBLOOD, JANUARY 17, 2012

REFERRED TO COMMITTEE ON COMMERCE, JANUARY 17, 2012  

AN ACT

Amending Title 12 (Commerce and Trade) of the Pennsylvania

Consolidated Statutes, providing for business finder's fee

tax credit.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 12 of the Pennsylvania Consolidated

Statutes is amended by adding a chapter to read:

CHAPTER 38

BUSINESS FINDER'S FEE TAX CREDIT PROGRAM

Sec.

3801.  Scope of chapter.

3802.  Definitions.

3803.  Establishment.

3804.  Certification.

3805.  Credit for sponsor and new business firm.

3806.  Carryover, application of tax credit, carryback, refund

and assignment.

3807.  Time limitation.

3808.  Limitation on tax credits.

3809.  Shareholder, owner or member pass-through.

3810.  Reports.

3811.  Termination.

3812.  Guidelines.

§ 3801.  Scope of chapter.

This chapter relates to the Business Finder's Fee Tax Credit

Program.

§ 3802.  Definitions.

The following words and phrases when used in this chapter

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

context clearly indicates otherwise:

"Affiliate."  A person that directly or indirectly, through

one or more intermediaries, controls, is controlled by or is

under common control with a specified person.

"Bank."  Any of the following:

(1)  A State-chartered bank, bank and trust company,

savings bank or private bank.

(2)  A national bank.

(3)  A federally chartered or State-chartered savings

association.

(4)  A subsidiary of any of the entities listed under

this definition.

"Certification date."  The date the Department of Community

and Economic Development issues the certification to the sponsor

firm and new business firm.

"Department."  The Department of Community and Economic

Development of the Commonwealth.

"Full-time employee."  An employee of a new business firm

whose compensation is based on a work week of at least 35 hours

and who spends at least 90% of the employee's working hours in

this Commonwealth.

"New business firm."  A business that meets all of the

following criteria:

(1)  Is a validly organized and existing corporation,

limited liability company, limited partnership, general

partnership, limited liability partnership, statutory trust

or sole proprietorship.

(2)  Has been operating for at least three years at the

time it applies for certification.

(3)  Has a place of business outside this Commonwealth.

(4)  Does not have a place of business within this

Commonwealth and has not had a place of business within this

Commonwealth for at least three years prior to the time it

applies for certification.

(5)  Is not a tenant of the sponsor firm.

(6)  Has not entered into a rental agreement for a

commercial rental unit with the sponsor firm.

(7)  Is not an affiliate of the sponsor firm.

"Pass-through entity."  A partnership as defined in section

301(n.0) of the act of March 4, 1971 (P.L.6, No.2), known as the

Tax Reform Code of 1971, or a Pennsylvania S corporation as

defined in section 301(n.1) of the Tax Reform Code of 1971.

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV or VI of the act of March 4, 1971 (P.L.6,

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

include the liability for taxes imposed under Article III of the

Tax Reform Code of 1971 on an owner of a pass-through entity.

"Secretary."  The Secretary of Community and Economic

Development of the Commonwealth.

"Sponsor firm."  A business that meets all of the following

criteria:

(1)  Is a validly organized and existing corporation,

limited liability company, limited partnership, general

partnership, limited liability partnership, statutory trust

or sole proprietorship.

(2)  Has been conducting operations for at least three

years at the time it applies for certification.

(3)  Has a place of business in this Commonwealth.

(4)  Has not entered into a rental agreement for a

commercial rental unit with the new business firm.

(5)  Is not a provider of real estate services to the new

business firm.

(6)  Is not a landlord, as defined in the act of April 6,

1951 (P.L.69, No.20), known as The Landlord and Tenant Act of

1951, for the new business firm.

(7)  Is not a bank who provides financing for the new

business firm to establish a location within this

Commonwealth.

(8)  Is not an affiliate of the new business firm.

"Tax credit."  The tax credit established by the Business

Finder's Fee Tax Credit Program.

"Taxpayer."  A person subject to tax under Article III, IV or

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

Reform Code of 1971. The term shall include the shareholder,

owner or member of a pass-through entity which receives the tax

credit.

§ 3803.  Establishment.

There is established a tax credit program to be known as the

Business Finder's Fee Tax Credit Program. The program shall

create incentives for businesses located within this

Commonwealth to encourage their suppliers as well as other

businesses to relocate to this Commonwealth.

§ 3804.  Certification.

(a)  Application.--The sponsor firm and a new business firm

may submit a joint application to become certified by the

department. The application must be on a form required by the

department and shall include all of the following:

(1)  The names and addresses of both businesses

completing the joint application.

(2)  Documentation that one applicant meets the

requirements to be a sponsor firm.

(3)  Documentation that one applicant meets the

requirements to be a new business firm.

(4)  Evidence that the new business firm intends:

(i)  To relocate to this Commonwealth as a result of

recruitment efforts by the sponsor firm.

(ii)  To employ three or more full-time employees

within this Commonwealth within eight months of the date

of application for certification.

(5)  Any other information required by the department.

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

application to determine if all certification requirements have

been met. If the department determines all requirements have

been met, the department shall approve the application and issue

certifications to both applicants. Certification by the

department does not guarantee approval of tax credits under this

chapter.

§ 3805.  Credit for sponsor firm and new business firm.

(a)  Application.--A sponsor firm and a new business firm

certified under section 3804 (relating to certification) shall

be eligible to submit a joint application for the tax credit on

or after the first anniversary of the certification date. The

joint application must be on a form required by the Department

of Revenue and shall include all of the following:

(1)  The name and address of the sponsor firm.

(2)  The name and address of the new business firm.

(3)  Copies of the certifications issued by the

department.

(4)  The number of full-time employees located in this

Commonwealth that have been continuously employed by the new

business firm for a period of at least three months prior to

the date of application under this section.

(5)  Any other information required by the Department of

Revenue.

(b)  Review.--The Department of Revenue shall review the

application and determine if all of the requirements established

under this chapter have been met.

(c)  Approval.--

(1)  Except as provided under paragraph (2), upon being

satisfied under subsection (b), the Department of Revenue

shall approve the application and shall award the sponsor

firm and the new business firm a tax credit for the taxable

year in an amount equal to $500 times the total number of

full-time employees employed during the taxable year for

which the application was made.

(2)  The Department of Revenue shall not award tax

credits to new business firms who receive a tax credit under

Article XVII-D of the act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971.

(d)  Notification.--The Department of Revenue shall notify

the sponsor firm and new business firm of the amount of the tax

credit awarded within 30 days after approval by the Department

of Revenue.

§ 3806.  Carryover, application of tax credit, carryback, refund

and assignment.

(a)  Carryover.--If the taxpayer cannot use the entire amount

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

is first approved, 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

that 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 may be carried over and applied to succeeding taxable

years for no more than seven taxable years following the first

taxable year for which the taxpayer was entitled to claim the

tax credit.

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

Department of Revenue shall first be applied against the

taxpayer's qualified tax liability for the current taxable year

as of the date on which the tax credit was approved before the

tax credit is applied against any tax liability under subsection

(a).

(c)  Carryback or refund.--A taxpayer is not entitled to

carry back or obtain a refund of an unused tax credit.

(d)  Sale or assignment.--A taxpayer, upon application to and

approval by the Department of Revenue, may sell or assign, in

whole or in part, a tax credit granted to the taxpayer under

this chapter if the taxpayer does not have a qualified tax

liability against which the tax credit may be applied in the

current taxable year. The Department of Revenue shall establish

guidelines for the approval of applications under this

subsection. Before an application is approved, the Department of

Revenue shall make a finding that the applicant has filed all

required State tax reports and returns for all taxable years and

paid any balance of State tax due as determined by the

Department of Revenue.

(e)  Purchasers and assignees.--The purchaser or assignee of

all or a portion of a tax credit under subsection (d) shall

immediately claim the credit in the taxable year in which the

purchase or assignment is made, although the purchaser or

assignee may carry over unused tax credits to the succeeding

taxable year for up to two years. The amount of the tax credit

that a purchaser or assignee may use against any qualified tax

liability may not exceed 75% of the qualified tax liability for

the taxable year. The purchaser or assignee may not carry back

or obtain a refund of or sell or assign the tax credit. The

purchaser or assignee shall notify the Department of Revenue of

the seller or assignor of the tax credit in compliance with

procedures specified by the Department of Revenue.

§ 3807.  Time limitation.

A sponsor firm and a new business firm are eligible for a tax

credit for the taxable year following the anniversary of the

certification date and are not eligible for the tax credit

thereafter.

§ 3808.  Limitation on tax credits.

(a)  Total amount.--The total amount of tax credits approved

by the Department of Revenue shall not exceed $5,000,000 in any

fiscal year.

(b)  Allocation.--Tax credits shall be allocated by the

Department of Revenue on a first-come, first-served basis.

§ 3809.  Shareholder, owner or member pass-through.

(a)  Shareholder entitlement.--If a Pennsylvania S

corporation does not have an eligible tax liability against

which the tax credit may be applied, a shareholder of the

Pennsylvania S corporation shall be entitled to a tax credit

equal to the tax credit determined for the Pennsylvania S

corporation for the taxable year multiplied by the percentage of

the Pennsylvania S corporation's distributive income to which

the shareholder is entitled.

(b)  Pass-through entity entitlement.--If a pass-through

entity other than a Pennsylvania S corporation does not have a

tax liability against which the tax credit may be applied, an

owner or member of the pass-through entity shall be entitled to

a tax credit equal to the tax credit determined for the pass-

through entity for the taxable year multiplied by the percentage

of the pass-through entities' distributive income to which the

owner or member is entitled.

(c)  Additional credit.--The tax credit provided under

subsection (a) or (b) shall be in addition to any tax credit to

which a shareholder, owner or member of a pass-through entity is

otherwise entitled under this chapter.

§ 3810.  Reports.

The secretary shall submit an annual report to the chairmen

and minority chairmen of the standing committees in the Senate

and the chairmen and minority chairmen of the standing

committees in the House of Representatives with jurisdiction

over the department and the Department of Revenue indicating the

effectiveness of the tax credit provided under this chapter no

later than March 15 following the fiscal year in which the tax

credits were approved. Notwithstanding any law providing for the

confidentiality of tax records, the report shall include the

names of all taxpayers awarded the tax credits, all taxpayers

utilizing the tax credits, the amount of tax credits approved

and utilized by each taxpayer and the names and locations of the

qualified business ventures for which the tax credits were

awarded. The report may also include any recommendations for

changes in the calculation or administration of the tax credit.

The report and the information contained in it shall be

considered a public record under section 102 of the act of

February 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law.

§ 3811.  Termination.

The Department of Revenue shall not approve a tax credit for

taxable years ending after December 31, 2021.

§ 3812.  Guidelines.

The department, in conjunction with the Department of

Revenue, shall establish written guidelines for the

implementation and administration of this chapter. The

guidelines shall be published on each of the department's

publicly accessible Internet websites.

Section 2.  The provisions of this act shall apply to tax

years beginning after December 31, 2011.

Section 3.  This act shall be retroactive to December 31,

2011.

Section 4.  This act shall take effect in 60 days.