THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY HUGHES, BREWSTER, STACK, FONTANA, TARTAGLIONE, FARNESE, COSTA, SOLOBAY, BOSCOLA, KITCHEN, YUDICHAK AND ERICKSON, MAY 3, 2011

REFERRED TO FINANCE, MAY 3, 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," providing for definitions; further providing for

public policy and for tax credit; providing for neighborhood

assistance contribution; further providing for grant of tax

credit and for decision in writing; and providing for

limitations.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 1902-A of the act of March 4, 1971

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

by adding definitions to read:

Section 1902-A.  Definitions.--The following words, terms and

phrases, when used in this article, shall have the meanings

ascribed to them in this section, except where the context

clearly indicates a different meaning:

* * *

"Neighborhood assistance contribution."  An amount equal to

100% of withholding tax related to each new job created by the

nonprofit entity after the effective date of this definition.

"New job."  A full-time job, the average hourly rate,

excluding benefits, of which must be at least 150% of the

Federal minimum wage, created within a municipality located in

this Commonwealth by a nonprofit entity.

"Nonprofit entity."  An entity with fewer than 300 employees

which is incorporated as a not-for-profit entity under the laws

of this Commonwealth and which is tax exempt under section

501(c)(3) of the Internal Revenue Code of 1986 (Public Law

99-514, 26 U.S.C. § 501(c)(3).

* * *

"Withholding tax."  The amount a nonprofit entity is required

to withhold from employee compensation under Part VII of Article

III.

Section 2.  Section 1903-A of the act, added June 16, 1994

(P.L.279, No.48), is amended to read:

Section 1903-A.  Public Policy.--It is hereby declared to be

public policy of this Commonwealth to encourage investment by

business firms and nonprofit entities in offering neighborhood

assistance and providing job training, education, crime

prevention and community services, to encourage contributions by

business firms and nonprofit entities to neighborhood

organizations which offer and provide such assistance and

services and to promote qualified investments made by private

companies and nonprofit entities to rehabilitate, expand or

improve buildings or land which promote community economic

development and which occur in impoverished areas or portions of

impoverished areas which have been designated as enterprise

zones.

Section 3.  Section 1904-A of the act, amended July 25, 2007

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

Section 1904-A.  Tax Credit.--(a)  Any business firm which

engages or contributes to a neighborhood organization which

engages in the activities of providing neighborhood assistance,

comprehensive service projects, job training or education for

individuals, community services or crime prevention in an

impoverished area or private company which makes qualified

investment to rehabilitate, expand or improve buildings or land

located within portions of impoverished areas which have been

designated as enterprise zones shall receive a tax credit as

provided in section 1905-A if the secretary annually approves

the proposal of such business firm or private company. The

proposal shall set forth the program to be conducted, the

impoverished area selected, the estimated amount to be invested

in the program and the plans for implementing the program.

(b)  The secretary is hereby authorized to promulgate rules

and regulations for the approval or disapproval of such

proposals by business firms or private companies. The secretary

shall provide a report listing of all applications received and

their disposition in each fiscal year to the General Assembly by

October 1 of the following fiscal year. The secretary's report

shall include all taxpayers utilizing the credit and the amount

of credits approved, sold or assigned. Notwithstanding any law

providing for the confidentiality of tax records, the

information in the report shall be public information, and all

report information shall be posted on the secretary's Internet

website.

(b.1)  The secretary shall take into special consideration,

when approving applications for neighborhood assistance tax

credits, applications which involve multiple projects in various

markets throughout this Commonwealth.

(c)  [The total amount of tax credit granted for programs

approved under this act shall not exceed eighteen million

dollars ($18,000,000) of tax credit in any fiscal year.]

(Reserved).

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

Department of Community and Economic Development, may

immediately sell or assign, in whole or in part, a neighborhood

assistance tax credit granted to the business firm 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

of Revenue under section 1905-A]. The Department of Community

and Economic Development and the Department of Revenue shall

jointly promulgate guidelines for the approval of applications

under this subsection.

(e)  The purchaser or assignee of a neighborhood assistance

tax credit under subsection (d) shall immediately claim the

credit in the taxable year in which the purchase or assignment

is made. The purchaser or assignee may not carry over, carry

back, obtain a refund of or sell or assign the neighborhood

assistance tax credit. The purchaser or assignee shall notify

the Department of Revenue of the seller or assignor of the

neighborhood assistance tax credit in compliance with procedures

specified by the Department of Revenue.

(f)  The neighborhood assistance tax credit approved by the

Department of Community and Economic Development shall be

applied against the business firm's tax liability for the taxes

under section 1905-A for the current taxable year as of the date

on which the credit was approved before the neighborhood

assistance tax credit may be carried over, sold or assigned.

Section 4.  The act is amended by adding a section to read:

Section 1904.1-A.  Neighborhood Assistance Contribution.--(a)

(1)  A nonprofit entity may make a neighborhood assistance

contribution to a neighborhood organization which engages in the

activities of providing neighborhood assistance, comprehensive

service projects, job training or education for individuals,

community services or crime prevention in an impoverished area

or may make a qualified investment to rehabilitate, expand or

improve buildings or land located in an impoverished area if the

secretary annually approves the proposal of the nonprofit

entity.

(2)  The proposal under paragraph (1) shall set forth the

program in which the contribution will be made, the impoverished

area selected, the estimated amount to be contributed to the

program and the plans for implementing the program.

(b)  The secretary is authorized to promulgate rules and

regulations for the approval or disapproval of neighborhood

assistance contributions by nonprofit entities under this

section. The secretary shall provide a report listing of all

applications received and their disposition in each fiscal year

to the General Assembly by October 1 of the following fiscal

year. The secretary's report shall include all nonprofit

entities making neighborhood assistance contributions and the

amount of contributions made. Notwithstanding any law providing

for the confidentiality of tax records, the information in the

report shall be public information and all report information

shall be posted on the Department of Community and Economic

Development's Internet website.

(c)  The secretary shall take into special consideration,

when approving applications for neighborhood assistance

contributions, applications which involve multiple projects in

various markets throughout this Commonwealth.

(d)  A nonprofit entity may make a neighborhood assistance

contribution for each new job created, as approved by the

department, for a three-year period beginning in the year in

which the new job is created. Upon completion of the three-year

period, the nonprofit entity shall remit the tax contribution to

the Commonwealth as required under Part VII of Article III.

(e)  A nonprofit entity may not claim more than two hundred

fifty thousand dollars ($250,000) in neighborhood assistance

contributions in any taxable year.

Section 5.  Section 1905-A of the act, amended July 25, 2007

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

Section 1905-A.  Grant of Tax Credit.--The Department of

Revenue shall grant a tax credit against any tax due under

Article III, IV, VI, VII, VIII, IX or XV of this act, or any tax

substituted in lieu thereof in an amount which shall not exceed

fifty-five per cent of the total amount contributed during the

taxable year by a business firm or twenty-five per cent of

qualified investments by a private company in programs approved

pursuant to section 1904-A of this act: Provided, That a tax

credit of up to seventy-five per cent of the total amount

contributed during the taxable year by a business firm or up to

thirty-five per cent of the amount of qualified investments by a

private company may be allowed for investment in programs where

activities fall within the scope of special program priorities

as defined with the approval of the Governor in regulations

promulgated by the secretary, and Provided further, That a tax

credit of up to seventy-five per cent of the total amount

contributed during the taxable year by a business firm in

comprehensive service projects with five-year commitments and up

to eighty per cent of the total amount contributed during the

taxable year by a business firm in comprehensive service

projects with six-year or longer commitments shall be granted.

Such credit shall not exceed five hundred thousand dollars

($500,000) annually for contributions or investments to fewer

than four projects or one million two hundred fifty thousand

dollars ($1,250,000) annually for contributions or investments

to four or more projects. No tax credit shall be granted to any

bank, bank and trust company, insurance company, trust company,

national bank, savings association, mutual savings bank or

building and loan association for activities that are a part of

its normal course of business. Any tax credit not used in the

period the contribution or investment was made may be carried

over for the next five succeeding calendar or fiscal years until

the full credit has been allowed. A business firm shall not be

entitled to carry back or obtain a refund of an unused tax

credit. [The total amount of all tax credits allowed pursuant to

this act shall not exceed eighteen million dollars ($18,000,000)

in any one fiscal year. Of that amount, two million dollars

($2,000,000) shall be allocated exclusively for pass-through

entities. However, if the total amounts allocated to either the

group of applicants, exclusive of pass-through entities, or the

group of pass-through entity applicants is not approved in any

fiscal year, the unused portion shall become available for use

by the other group of qualifying taxpayers.]

Section 6.  Section 1906-A of the act, amended May 7, 1997

(P.L.85, No.7), is amended to read:

Section 1906-A.  Decision in Writing.--The decision of the

secretary to approve or disapprove a proposal pursuant to

section 1904-A [of this act] or 1904.1-A shall be in writing,

and, if it approves the proposal, it shall state the maximum

credit allowable to the business firm or contribution allowable

by the nonprofit entity. A copy of the decision of the secretary

shall be transmitted to the Governor and to the Secretary of

Revenue.

Section 7.  The act is amended by adding a section to read:

Section 1908-A.  Limitations.--The total amount of all tax

credits and neighborhood assistance contributions allowed

pursuant to this act shall not exceed eighteen million dollars

($18,000,000) in any one fiscal year. Of that amount, two

million dollars ($2,000,000) shall be allocated exclusively for

pass-through entities, except that if the total amounts

allocated to either the group of applicants, exclusive of pass-

through entities, or the group of pass-through entity applicants

are not approved in any fiscal year, the unused portion shall

become available for use by the other group of qualifying

taxpayers.

Section 8.  This act shall take effect in 60 days.