THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY BRUBAKER, ERICKSON, ALLOWAY, GREENLEAF, HUGHES, YUDICHAK, SOLOBAY, WAUGH, COSTA, FERLO, KASUNIC, BROWNE, TARTAGLIONE, LEACH, MENSCH, FARNESE, BOSCOLA AND BLAKE, MARCH 23, 2012

REFERRED TO FINANCE, MARCH 23, 2012  

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 industry partnership tax credits.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971, is amended by adding an article to

read:

ARTICLE XVII-G

INDUSTRY PARTNERSHIP TAX CREDIT

Section 1701-G.  Scope of article.

This article relates to industry partnership tax credits.

Section 1702-G.  Definitions.

The following words and phrases when used in this article

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

context clearly indicates otherwise:

"Department."  The Department of Labor and Industry of the

Commonwealth.

"Industry partnership tax credit."  The credit provided under

this article.

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

301(n.0) or a Pennsylvania S corporation as defined in section

301(n.1).

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV or VI. The term shall not include any tax

withheld by an employer from an employee under Article III.

"Taxpayer."  An entity subject to tax under Article III, IV

or VI. The term shall include the shareholder of a Pennsylvania

S corporation that receives an industry partnership tax credit.

Section 1703-G.  Industry partnership tax credit for cash

contributions to industry partnerships.

(a)  Claim.--A taxpayer may claim an industry partnership tax

credit against any qualified tax liability in an amount equal to

75% of any cash contribution to an industry partnership.

(b)  Application.--By September 15, a taxpayer must submit an

application to the department for an industry partnership tax

credit incurred in the taxable year that ended in the prior

calendar year.

(c)  Notification.--By December 15 of the calendar year

following the close of the taxable year during which the

contribution was made, the department shall notify the taxpayer

of the amount of the taxpayer's industry partnership tax credit

approved by the department.

(d)  Claim prohibited.--A taxpayer may not claim an industry

partnership tax credit for any portion of a cash contribution

provided to satisfy the private sector matching funding

requirement for State grant funding under section 1304 of the

act of December 18, 2001 (P.L.949, No.114), known as the

Workforce Development Act.

Section 1704-G.  Carryover, carryback, refund and assignment.

(a)  General rule.--If the taxpayer cannot use the entire

amount of the industry partnership tax credit for the taxable

year in which the industry partnership 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

industry partnership 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

industry partnership tax credit 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 taxpayer was

entitled to claim the industry partnership tax credit.

(b)  Application.--An industry partnership tax credit

approved by the department in a taxable year first shall be

applied against the taxpayer's qualified tax liability for the

current taxable year as of the date on which the industry

partnership tax credit was approved before the industry

partnership tax credit is applied against any tax liability

under subsection (a).

(c)  Prohibition.--A taxpayer shall not be entitled to carry

back or obtain a refund of an unused industry partnership tax

credit.

Section 1705-G.  Guidelines for industry partnership tax

credits.

The department, in consultation with the Department of

Revenue, shall prescribe guidelines for determining whether

contributions qualify for industry partnership tax credits. The

department may deem contributions that fund any activity of an

industry partnership authorized under section 1303(b) of the act

of December 18, 2001 (P.L.949, No.114), known as the Workforce

Development Act, as qualifying for an industry partnership tax

credit.

Section 1706-G.  Time limitations.

A taxpayer shall not be entitled to an industry partnership

tax credit for contribution made in taxable years ending after

December 31, 2016.

Section 1707-G.  Limitations.

(a)  Total.--The total amount of industry partnership tax

credits approved by the department may not exceed $7,500,000 in

any taxable year.

(b)  Individual taxpayer.--No taxpayer may receive more than

$37,500 in industry partnership tax credits for any taxable

year.

(c)  Industry partnership.--The total amount of industry

partnership tax credits resulting from contributions to certain

industry partnerships shall be limited to $375,000 per industry

partnership in any taxable year.

(d)  Allocation.--If the total amount of industry partnership

tax credits applied for by all taxpayers exceeds the amount

allocated for those credits, the industry partnership tax credit

to be received by each applicant shall be the product of the

allocated amount multiplied by the quotient of the industry

partnership tax credit applied for by the applicant divided by

the total of all industry partnership tax credits applied for by

all applicants, the algebraic equivalent of which is:

taxpayer's industry partnership tax credit=amount allocated

for those credits X (industry partnership tax credit applied

for by the applicant/total of all industry partnership tax

credits applied for by all applicants).

Section 1708-G.  Pass-through entity.

(a)  Transfer.--If a pass-through entity has any unused

industry partnership tax credit under section 1704-G, the entity

may elect, in writing, according to the department's procedures,

to transfer all or a portion of the industry partnership tax

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.

(b)  Additional credit.--The industry partnership tax credit

provided under subsection (a) shall be in addition to any

industry partnership tax credit to which a shareholder, member

or partner of a pass-through entity is otherwise entitled under

this article.

(c)  Claim.--A shareholder, member or partner of a pass-

through entity to whom an industry partnership tax credit is

transferred under subsection (a) must immediately claim the

industry partnership tax 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 industry partnership tax credit.

Section 1709-G.  Report to General Assembly.

The Secretary of Labor and Industry shall submit an annual

report to the General Assembly indicating the effectiveness of

the industry partnership tax credit no later than March 15

following the year in which the industry partnership tax credits

were approved. The report shall include the names of all

taxpayers utilizing the industry partnership tax credit as of

the date of the report and the amount of industry partnership

tax credits approved and utilized by each taxpayer.

Notwithstanding any law providing for the confidentiality of tax

records, the information contained in the report shall be public

information. The report may also include any recommendations for

changes in the calculation or administration of the industry

partnership tax credit.

Section 1710-G.  Termination.

The department shall not approve an industry partnership tax

credit under this article for taxable years ending after

December 31, 2016.

Section 2.  This act shall take effect immediately.