THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY MURT, BAKER, BOBACK, CALTAGIRONE, CLYMER, D. COSTA, CREIGHTON, DAVIS, ELLIS, EVANKOVICH, FARRY, GEORGE, GIBBONS, GINGRICH, GOODMAN, HALUSKA, HESS, HORNAMAN, KAUFFMAN, M. K. KELLER, KILLION, KULA, LAWRENCE, LONGIETTI, MAHONEY, MAJOR, MANN, MILLARD, MULLERY, PASHINSKI, PICKETT, QUINN, RAPP, SANTARSIERO, SONNEY, STERN, TALLMAN, TAYLOR, TRUITT, VULAKOVICH AND WATSON, JUNE 5, 2012

REFERRED TO COMMITTEE ON COMMERCE, JUNE 5, 2012  

AN ACT

Amending Title 12 (Commerce and Trade) of the Pennsylvania

Consolidated Statutes, providing for equipment donation 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 43

EQUIPMENT DONATION TAX CREDIT

Sec.

4301.  Scope of chapter.

4302.  Definitions.

4303.  Establishment.

4304.  Credit for qualified equipment donation.

4305.  Carryover, application of tax credit, carryback, refund

and assignment.

4306.  Time limitation.

4307.  Limitation on tax credits.

4308.  Shareholder, owner or member pass through.

4309.  Repayment.

4310.  Reports.

4311.  Termination.

4312.  Guidelines.

§ 4301.  Scope of chapter.

This chapter relates to equipment donation tax credits.

§ 4302.  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:

"Department."  The Department of Revenue of the Commonwealth.

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

301(n.o) 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 equipment donation."  Equipment donated by a

taxpayer to an area vocational-technical school that is used to

train individuals in a specified vocation.

"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 Revenue of the Commonwealth.

"Tax credit."  The equipment donation tax credit authorized

under this chapter.

"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 that receives an

equipment donation tax credit.

§ 4303.  Establishment.

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

Equipment Donation Tax Credit.

§ 4304.  Credit for qualified equipment donation.

(a)  Application.--A taxpayer that made a qualified equipment

donation to an area vocational-technical school, as defined in

section 1841 of the act of March 10, 1949 (P.L.30, No.14), known

as the Public School Code of 1949, in a taxable year may apply

for a tax credit. The application must be on a form required by

the department and shall include all of the following:

(1)  The name and address of the taxpayer.

(2)  The name and address of the area vocational-

technical school to which the taxpayer donated equipment.

(3)  Documentation establishing the current value of the

qualified equipment donation.

(4)  Documentation that the qualified equipment donation

has been made by the applicant.

(5)  Any other information required by the department.

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

determine if:

(1)  All requirements established under this chapter have

been met.

(2)  The applicant has filed all required State tax

reports and returns for all taxable years and paid any

balance of State tax due.

(c)  Approval.--Upon being satisfied with the requirements

under subsection (b), the department shall approve the

application and award the taxpayer a tax credit for the taxable

year in the amount equal to the current value of the qualified

equipment donation. The total amount of tax credits awarded to a

taxpayer under this chapter shall not exceed $10,000 each fiscal

year.

(d)  Notification.--The department shall notify the taxpayer

of the amount of the taxpayer's tax credit within 30 days after

approval by the department.

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

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

immediately claim the tax 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 one 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 the seller

or assignor of the tax credit in compliance with procedures

specified by the department.

§ 4305.  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 for a qualified equipment donation in a taxable year

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, 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 shall establish guidelines for the approval of

applications under this subsection. Before an application is

approved, the department shall make a finding that the taxpayer

and its assignee have 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.

(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 one 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 the seller

or assignor of the tax credit in compliance with procedures

specified by the department.

§ 4306.  Time limitation.

A taxpayer shall not be entitled to a tax credit for

qualified equipment donations made in taxable years ending after

December 31, 2021.

§ 4307.  Limitation on tax credits.

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

by the department in any calendar year shall not exceed

$5,000,000.

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

department on a first-come-first-served basis.

§ 4308.  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 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.--

(1)  Except as provided under paragraph (2), the tax

credit provided under subsection (a) or (b) shall be in

addition to any other tax credit to which a shareholder,

owner or member of a pass-through entity is otherwise

entitled under this chapter.

(2)  A pass-through entity and a shareholder, owner or

member of a pass-through entity shall not claim a tax credit

under this chapter for the same qualified equipment donation.

§ 4309.  Repayment.

The department shall require the taxpayer to repay any tax

credit received under this chapter that is in excess of the

current value of the qualified equipment donation where the

department determines that any of the following conditions

exists:

(1)  the area vocational-technical school is no longer in

operation;

(2)  the area vocational-technical school returns any or

all donated equipment to the taxpayer; or

(3)  the taxpayer received the tax credit as a result of

fraud.

§ 4310.  Reports.

The secretary shall submit an annual report to the chair and

minority chair of the standing committees in the Senate and the

chair and minority chair of the standing committees in the House

of Representatives with jurisdiction over the department

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.

§ 4311.  Termination.

The department shall not approve a tax credit for qualified

equipment donations incurred in taxable years ending after

December 31, 2021.

§ 4312.  Guidelines.

The department shall develop written guidelines for the

implementation and administration of this chapter. The

guidelines shall be posted on the department's publicly

accessible Internet website.

Section 2.  The addition of 12 Pa.C.S. Ch. 43 shall apply to

qualified equipment donations made in taxable years beginning

after December 31, 2011.

Section 3.  This act shall take effect immediately.