1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," in sales tax, further providing for definitions, 
11for credit against tax and for local receivers of use tax; in 
12personal income tax, further providing for definitions, for 
13classes of income and for taxability of partners; providing 
14for tax treatment determined at partnership level and for tax 
15imposed at partnership level; further providing for income of 
16a Pennsylvania S corporation, for income taxes imposed by 
17other states, for general rule, for return of Pennsylvania S 
18corporation and for requirements concerning returns, notices, 
19records and statements; in corporate net income tax, further 
20providing for definitions, for imposition of tax and for 
21reports and payment of tax; and, in realty transfer tax, 
22further providing for definitions, for imposition and for 
23acquired company; further providing for coal waste removal 
24and ultraclean fuels tax credit; and, in inheritance tax, 
25further providing for exemption for poverty.

1The General Assembly of the Commonwealth of Pennsylvania
2hereby enacts as follows:

3Section 1. Sections 201(ddd) and 206 of the act of March 4,
41971 (P.L.6, No.2), known as the Tax Reform Code of 1971,
5amended or added December 23, 2003 (P.L.250, No.46), are amended
6to read:

7Section 201. Definitions.--The following words, terms and
8phrases when used in this Article II shall have the meaning
9ascribed to them in this section, except where the context
10clearly indicates a different meaning:

11* * *

12[(ddd) "Call center." The physical location in this
13Commonwealth:

14(1) where at least one hundred and fifty employes are
15employed to initiate or answer telephone calls;

16(2) where there are at least two hundred telephone lines;
17and

18(3) which utilizes an automated call distribution system for
19customer telephone calls in one or more of the following
20activities:

21(A) customer service and support;

22(B) technical assistance;

23(C) help desk service;

24(D) providing information;

25(E) conducting surveys;

26(F) revenue collections; or

27(G) receiving orders or reservations.

28For purposes of this clause, a physical location may include
29multiple buildings utilized by a taxpayer located within this
30Commonwealth.]

1Section 206. Credit Against Tax.--(a) A credit against the
2tax imposed by section 202 shall be granted with respect to
3tangible personal property or services purchased for use outside
4the Commonwealth equal to the tax paid to another state by
5reason of the imposition by such other state of a tax similar to
6the tax imposed by this article: Provided, however, That no such
7credit shall be granted unless such other state grants
8substantially similar tax relief by reason of the payment of tax
9under this article or under the Tax Act of 1963 for Education.

10[(b) A credit against the tax imposed by section 202 on
11telecommunications services shall be granted to a call center
12for gross receipts tax paid by a telephone company on the
13receipts derived from the sale of incoming and outgoing
14interstate telecommunications services to the call center under
15section 1101(a)(2). The following apply:

16(1) A telephone company, upon request, shall notify a call
17center of the amount of gross receipts tax paid by the telephone
18company on the receipts derived from the sale of incoming and
19outgoing interstate telecommunications services to the call
20center.

21(2) A call center that is eligible for the credit in this
22subsection may apply for a tax credit as set forth in this
23subsection.

24(3) By February 15, a taxpayer must submit an application to
25the department for gross receipts tax paid on the receipts
26derived from the sale of incoming and outgoing interstate
27telecommunications services incurred in the prior calendar year.

28(4) By April 15 of the calendar year following the close of
29the calendar year during which the gross receipts tax was
30incurred, the department shall notify the applicant of the

1amount of the applicant's tax credit approved by the department.

2(5) The total amount of tax credits provided for in this
3subsection and approved by the department shall not exceed
4thirty million dollars ($30,000,000) in any fiscal year. If the
5total amount of tax credits applied for by all applicants
6exceeds the amount allocated for those credits, then the credit
7to be received by each applicant shall be determined as follows:

8(i) Divide:

9(A) the tax credit applied for by the applicant; by

10(B) the total of all tax credits applied for by all
11applicants.

12(ii) Multiply:

13(A) the quotient under subparagraph (i); by

14(B) the amount allocated for all tax credits.]

15Section 1.1. Section 226 of the act is repealed:

16[Section 226. Local Receivers of Use Tax.--Beginning on and 
17after the effective date of this article, in every county, 
18except in counties of the first class, the county treasurer is 
19hereby authorized to receive use tax due and payable under the 
20provisions of this article from any person other than a 
21licensee. The receiving of such taxes shall be pursuant to rules 
22and regulations promulgated by the department and upon forms 
23furnished by the department. Each county treasurer shall remit 
24to the department all use taxes received under the authority of 
25this section minus the costs of administering this provision not 
26to exceed one per cent of the amount of use taxes received, 
27which amount shall be retained in lieu of any commission 
28otherwise allowable by law for the collection of such tax.]

29Section 2. Section 301(t) of the act, added August 31, 1971 
30(P.L.362, No.93), is amended and the section is amended by
 

1adding subsections to read:

2Section 301. Definitions.--Any reference in this article to
3the Internal Revenue Code of 1986 shall mean the Internal
4Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.),
5as amended to January 1, 1997, unless the reference contains the
6phrase "as amended" and refers to no other date, in which case
7the reference shall be to the Internal Revenue Code of 1986 as
8it exists as of the time of application of this article. The
9following words, terms and phrases when used in this article
10shall have the meaning ascribed to them in this section except
11where the context clearly indicates a different meaning:

12* * *

13(d.2) "Corporate item" means an item, including income, gain
14or loss, deduction or credit determined at the Pennsylvania S
15corporation level, which is required to be taken into account
16for a Pennsylvania S corporation's taxable year.

17* * *

18(n.2) "Partnership item" means an item, including income,
19gain or loss, deduction or credit determined at the partnership
20level, which is required to be taken into account for a
21partnership's taxable year.

22* * *

23(o.4) "Publicly traded partnership" means an entity defined
24under section 7704 of the Internal Revenue Code of 1986 (Public
25Law 99-514, 26 U.S.C. § 7704) with equity securities registered
26with the Securities and Exchange Commission under section 12 of
27the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. §
2878a).

29* * *

30(t) "State" means, except as provided under section 314(a),

1any state or commonwealth of the United States, the District of
2Columbia, the Commonwealth of Puerto Rico, any territory or
3possession of the United States and any foreign country.

4* * *

5Section 2.1. Section 303(a)(2) of the act, added August 31,
61971 (P.L.362, No.93), is amended and subsection (a)(3) is
7amended by adding a subparagraph to read:

8Section 303. Classes of Income.--(a) The classes of income
9referred to above are as follows:

10* * *

11(2) Net profits. The net income from the operation of a
12business, profession, or other activity, after provision for all
13costs and expenses incurred in the conduct thereof, determined
14either on a cash or accrual basis in accordance with accepted
15accounting principles and practices but without deduction of
16taxes based on income. For purposes of calculating net income 
17under this paragraph, to the extent a taxpayer properly deducts 
18an amount under section 195(b)(1)(A) of the Internal Revenue 
19Code of 1986 (26 U.S.C. § 195(b)(1)(A)), as amended, and the 
20regulations promulgated under section 195(b)(1)(A) of the 
21Internal Revenue Code of 1986, the taxpayer shall be permitted a 
22deduction in equal amount in the same taxable year.

23(3) Net gains or income from disposition of property. Net
24gains or net income, less net losses, derived from the sale,
25exchange or other disposition of property, including real
26property, tangible personal property, intangible personal
27property or obligations issued on or after the effective date of
28this amendatory act by the Commonwealth; any public authority,
29commission, board or other agency created by the Commonwealth;
30any political subdivision of the Commonwealth or any public

1authority created by any such political subdivision; or by the
2Federal Government as determined in accordance with accepted
3accounting principles and practices. For the purpose of this
4article:

5* * *

6(viii) The term "net gains or net income, less net losses"
7shall not include gain or loss from the exchange of property
8which is not recognized for Federal income tax purposes under
9section 1031 of the Internal Revenue Code of 1986 (26 U.S.C. §
101031), as amended, and the regulations promulgated under section
111031 of the Internal Revenue Code of 1986. For purposes of
12determining basis under subparagraph (i), section 1031(d) of the
13Internal Revenue Code of 1986 (26 U.S.C. § 1031(d)), as amended,
14and the regulations promulgated under section 1031 of the
15Internal Revenue Code of 1986 shall apply.

16* * *

17Section 3. Section 306 of the act, amended June 22, 2001
18(P.L.353, No.23), is amended to read:

19Section 306. Taxability of Partners.--[A] Except as provided 
20under section 306.2, a partnership as an entity shall not be
21subject to the tax imposed by this article, but the income or
22gain of a member of a partnership in respect of said partnership
23shall be subject to the tax and the tax shall be imposed on his
24share, whether or not distributed, of the income or gain
25received by the partnership for its taxable year ending within
26or with the member's taxable year.

27Section 4. The act is amended by adding sections to read:

28Section 306.1. Tax Treatment Determined at Partnership
29Level.--The classification or character of a partnership item
30shall be determined at the partnership level. This section shall

1not prohibit the department from adjusting a partner's return.

2Section 306.2. Tax Imposed at Partnership Level.--(a) A
3partnership underreporting reportable income by more than one
4million dollars ($1,000,000) shall be jointly liable with each
5partner for any part of a deficiency resulting from the
6treatment of a partnership item by a partner on that partner's
7return in a manner that is consistent with the treatment of that
8partnership item on the partnership return. If the tax is paid
9by the partner, the department may not collect the tax from the
10partnership. If the tax is paid by the partnership, the
11department may not collect the tax from a partner.

12(b) Subsection (a) shall apply to the following
13partnerships:

14(1) A partnership which has eleven or more individual
15partners.

16(2) A partnership which has at least one partner which is a
17corporation, limited liability company, partnership or trust.

18(3) A partnership which has only individual partners and
19which elects to be subject to this subsection. The election must
20be included on the partnership return to be filed with the
21department.

22(c) This section shall not apply to a publicly traded
23partnership.

24(d) Nothing under this section shall require one partner to
25be liable for the payment of a tax liability of another partner.

26(e) Appeals involving a deficiency assessed under this
27section may only be pursued by the partnership and a
28reassessment or settlement of tax liability shall be binding on
29the partners.

30Section 5. Section 307.8(a) of the act, amended May 7, 1997

1(P.L.85, No.7), is amended and the section is amended by adding
2a subsection to read:

3Section 307.8. Income of a Pennsylvania S Corporation.--(a)
4A Pennsylvania S corporation shall not be subject to the tax
5imposed by this article, except as provided under subsection 
6(f), but the shareholders of the Pennsylvania S corporation
7shall be subject to the tax imposed under this article as
8provided in this article.

9* * *

10(f) (1) A Pennsylvania S corporation underreporting
11reportable income by more than one million dollars ($1,000,000)
12shall be jointly liable with each shareholder for any part of a
13deficiency resulting from the treatment of a corporate item by
14any shareholder on the shareholder's return in a manner that is
15consistent with the treatment of the corporate item on the
16return of the Pennsylvania S corporation. If the tax is paid by
17the shareholder, it may not be be collected from the
18corporation.

19(2) Paragraph (1) shall apply to the following Pennsylvania
20S corporations:

21(i) A Pennsylvania S corporation which has eleven or more
22shareholders.

23(ii) A Pennsylvania S corporation which elects to be subject
24to this subsection. The election must be included on the
25Pennsylvania S corporation return to be filed with the
26department.

27(3) Nothing under this section shall require one shareholder
28to be liable for the payment of a tax liability of another
29shareholder.

30(4) Appeals involving the deficiency assessed under this

1section may be filed only by the Pennsylvania S corporation and
2a reassessment or settlement of tax liability shall be binding
3on the shareholders.

4Section 6. Section 314(a) of the act, amended December 23,
51983 (P.L.370, No.90), is amended to read:

6Section 314. Income Taxes Imposed by Other States.--(a) A
7resident taxpayer before allowance of any credit under section
8312 shall be allowed a credit against the tax otherwise due
9under this article for the amount of any income tax, wage tax or
10tax on or measured by gross or net earned or unearned income
11imposed on him or on a Pennsylvania S corporation in which he is
12a shareholder, to the extent of his pro rata share thereof
13determined in accordance with section 307.9, by another state
14with respect to income which is also subject to tax under this
15article. For purposes of this subsection and notwithstanding 
16section 301(t), the term "state" shall only include a state of 
17the United States, the District of Columbia, the Commonwealth of 
18Puerto Rico and any territory or possession of the United 
19States.

20* * *

21Section 7. Section 324 of the act, amended June 22, 2001
22(P.L.353, No.23), is amended to read:

23Section 324. General Rule.--(a) When a partnership, estate, 
24trust or Pennsylvania S corporation receives income from sources
25within this Commonwealth for any taxable year and any portion of
26the income is allocable to a nonresident partner, beneficiary,
27member or shareholder thereof, the partnership, estate, trust or
28Pennsylvania S corporation shall pay a withholding tax under
29this section at the time and in the manner prescribed by the
30department; however, notwithstanding any other provision of this

1article, all such withholding tax shall be paid over on or
2before the fifteenth day of the fourth month following the end
3of the taxable year.

4(b) This section shall not apply to any publicly traded
5partnership as defined under section 7704 of the Internal
6Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 7704) with
7equity securities registered with the Securities and Exchange
8Commission under section 12 of the Securities Exchange Act of
91934 (48 Stat. 881, 15 U.S.C. § 78a).

10Section 8. Section 330.1 of the act, amended or added
11December 23, 1983 (P.L.370, No.90) and July 13, 1987 (P.L.325,
12No.59), is amended to read:

13Section 330.1. Return of Pennsylvania S Corporation.--(a)
14Every Pennsylvania S corporation shall make a return for each
15taxable year, stating specifically all items of gross income and
16deductions, the names and addresses of all persons owning stock
17in the corporation at any time during the taxable year, the
18number of shares of stock owned by each shareholder at all times
19during the taxable year, the amount of money and other property
20distributed by the corporation during the taxable year to each
21shareholder, the date of each distribution, each shareholder's
22pro rata share of each item of the corporation for the taxable
23year and such other information as the department may require.

24(b) The return shall be filed on or before thirty days after
25the date when the corporation's Federal income tax return is
26due.

27(c) Every Pennsylvania S corporation shall also submit to
28the department a true copy of the income tax return filed with
29the Federal Government at the time the return required under
30subsection (a) is filed.

1(d) Each Pennsylvania S corporation required to file a
2return under subsection (a) for a taxable year shall, on or
3before the day on which the return for the taxable year was
4filed, furnish to each person who is a shareholder at any time
5during the taxable year a copy of one or both of the following
6showing their share of income and any other information as may
7be required by the department:

8(1) The Resident Schedule of Shareholder/Partner/Beneficiary
9Pass Through Income, Loss and Credits (Schedule RK-1) form.

10(2) The Nonresident Schedule of
11Shareholder/Partner/Beneficiary Pass Through Income, Loss and
12Credits (Schedule NRK-1) form.

13Section 9. Section 335 of the act, amended or added August 
1431, 1971 (P.L.362, No.93), December 23, 2003 (P.L.250, No.46)
15and July 2, 2012 (P.L.751, No.85), is amended to read:

16Section 335. Requirements Concerning Returns, Notices,
17Records and Statements.--(a) The department may prescribe by
18regulation for the keeping of records, the content and form of
19returns, declarations, statements and other documents and the
20filing of copies of Federal income tax returns and
21determinations. The department may require any person, by
22regulation or notice served upon such person, to make such
23returns, render such statements, or keep such records, as the
24department may deem sufficient to show whether or not such
25person is liable for tax under this article.

26(b) (1) When required by regulations prescribed by the
27department:

28(i) Any person required under the authority of this article
29to make a return, declaration, statement, or other document
30shall include in such return, declaration, statement or other

1document such identifying number as may be prescribed for
2securing proper identification of such person.

3(ii) Any person with respect to whom a return, declaration,
4statement, or other document is required under the authority of
5this article to make a return, declaration, statement, or other
6document with respect to another person, shall request from such
7other person, and shall include in any such return, declaration,
8statement, or other document, such identifying number as may be
9prescribed for securing proper identification of such other
10person.

11(2) For purposes of this section, the department is
12authorized to require such information as may be necessary to
13assign an identifying number to any person.

14(c) (1) Every partnership, estate or trust having a
15resident partner or a resident beneficiary or every partnership, 
16estate or trust having any income derived from sources within
17this Commonwealth shall make a return for the taxable year
18setting forth all items of income, loss and deduction, and such
19other pertinent information as the department may by regulations
20prescribe. Such return shall be filed on or before the fifteenth
21day of the fourth month following the close of each taxable
22year. For purposes of this subsection, "taxable year" means year
23or period which would be a taxable year of the partnership if it
24were subject to tax under this article.

25(2) Every partnership, estate or trust required to file a
26return under paragraph (1) shall also file with the department a
27true copy of the income tax return filed with the Federal
28Government at the time the return required under paragraph (1)
29is filed.

30(3) Every partnership, estate or trust required to file a

1return under paragraph (1) for any taxable year shall, on or
2before the day the return is filed, furnish to each partner or
3nominee for another person or to each beneficiary to whom the
4income or gains of the estate or trust is taxable, a copy of one
5or both of the following showing their share of income and any
6other information as may be required by the department:

7(i) The Resident Schedule of Shareholder/Partner/Beneficiary
8Pass Through Income, Loss and Credits (Schedule RK-1) form.

9(ii) The Nonresident Schedule of
10Shareholder/Partner/Beneficiary Pass Through Income, Loss and
11Credits (Schedule NRK-1) form.

12(4) Failure to file a timely return as required under
13paragraph (2) and failure to furnish a copy of the returns
14required under paragraph (3) shall result in a penalty of fifty
15dollars ($50) for each individual return or individual copy
16required.

17(d) The department may prescribe regulations requiring
18returns of information to be made and filed on or before
19February 28 of each year as to the payment or crediting in any
20calendar year of amounts of ten dollars ($10) or more to any
21taxpayer. Such returns may be required of any person, including
22lessees or mortgagors of real or personal property, fiduciaries,
23employers and all officers and employes of this Commonwealth, or
24of any municipal corporation or political subdivision of this
25Commonwealth having the control, receipt, custody, disposal or
26payment of interest, rents, salaries, wages, premiums,
27annuities, compensations, remunerations, emoluments or other
28fixed or determinable gains, profits or income, except interest
29coupons payable to bearer. A duplicate of the statement as to
30tax withheld on compensation required to be furnished by an

1employer to an employe, shall constitute the return of
2information required to be made under this section with respect
3to such compensation.

4(e) Any person who is required to make a form W-2G return to
5the Secretary of the Treasury of the United States in regard to
6taxable gambling or lottery winnings from sources within this
7Commonwealth shall file a copy of the form with the department
8by March 1 of each year or, if filed electronically, by March 31
9of each year.

10(f) The following apply:

11(1) Any person who:

12(i) makes payments of income from sources within this
13Commonwealth;

14(ii) makes payments of nonemploye compensation or payments
15under an oil and gas lease under subparagraph (i) to a resident
16or nonresident individual, an entity treated as a partnership
17for tax purposes or a single member limited liability company;
18and

19(iii) is required to make a form 1099-MISC return to the
20Secretary of the Treasury of the United States with respect to
21the payments shall file a copy of form 1099-MISC with the
22department and send a copy of form 1099-MISC to the payee by the
23Federal filing deadline each year.

24(2) If the payor is required to perform electronic filing
25for Pennsylvania employer withholding purposes, the form 1099-
26MISC shall be filed electronically with the department.

27(g) (1) Every estate, trust, Pennsylvania S Corporation or
28partnership, other than a publicly traded partnership, shall
29maintain at the end of the entity's taxable year an accurate
30list of partners, members, beneficiaries or shareholders. The

1list shall include the name, current address and tax
2identification number of all existing partners, members,
3beneficiaries or shareholders and of all partners, members,
4beneficiaries or shareholders, who were admitted or who withdrew
5during the taxable year, including the date of withdrawal and
6admittance.

7(2) If the entity under paragraph (1) does not maintain an
8accurate list as required, the tax, penalty and interest with
9respect to the entity shall be considered the tax, penalty and
10interest of the partnership, estate, trust or Pennsylvania S
11Corporation and of the general partner, tax matters partner,
12corporate officer or trustee.

13Section 10. Section 401(3)1 and 2(a)(17) of the act, amended
14September 9, 1971 (P.L.437, No.105), are amended, clause (3)1 is
15amended by adding a phrase, subclause 2(a) is amended by adding
16a paragraph, paragraphs (3)4(c)(1)(A) and 2(B) are amended by
17adding subparagraphs and the section is amended by adding
18clauses to read:

19Section 401. Definitions.--The following words, terms, and
20phrases, when used in this article, shall have the meaning
21ascribed to them in this section, except where the context
22clearly indicates a different meaning:

23* * *

24(3) "Taxable income." 1. * * *

25(t) (1) Except as provided in paragraph (2), (3) or (4) for
26taxable years beginning after December 31, 2014, and in addition
27to any authority the department has on the effective date of
28this paragraph to deny a deduction related to a fraudulent or
29sham transaction, no deduction shall be allowed for an
30intangible expense or cost, or an interest expense or cost,

1paid, accrued or incurred directly or indirectly in connection
2with one or more transactions with an affiliated entity. In
3calculating taxable income under this paragraph, when the
4taxpayer is engaged in one or more transactions with an
5affiliated entity that was subject to tax in this Commonwealth
6or another state or possession of the United States on a tax
7base that included the intangible expense or cost, or the
8interest expense or cost, paid, accrued or incurred by the
9taxpayer, the taxpayer shall receive a credit against tax due in
10this Commonwealth in an amount equal to the apportionment factor
11of the taxpayer in this Commonwealth multiplied by the greater
12of the following:

13(A) the tax liability of the affiliated entity with respect
14to the portion of its income representing the intangible expense
15or cost, or the interest expense or cost, paid, accrued or
16incurred by the taxpayer; or

17(B) the tax liability that would have been paid by the
18affiliated entity under subparagraph (A) if that tax liability
19had not been offset by a credit.

20The credit issued under this paragraph shall not exceed the
21taxpayer's liability in this Commonwealth attributable to the
22net income taxed as a result of the adjustment required by this
23paragraph.

24(2) The adjustment required by paragraph (1) shall not apply
25to a transaction that was directly related to a valid business
26purpose.

27(3) The adjustment required by paragraph (1) shall not apply
28to a transaction between a taxpayer and an affiliated entity
29domiciled in a foreign nation which has in force a comprehensive
30income tax treaty with the United States providing for the

1allocation of all categories of income subject to taxation, or
2the withholding of tax, on royalties, licenses, fees and
3interest for the prevention of double taxation of the respective
4nations' residents and the sharing of information.

5(4) The adjustment required by paragraph (1) shall not apply 
6to a transaction where an affiliated entity directly or 
7indirectly paid, accrued or incurred a payment to a person who 
8is not an affiliated entity, if the payment is paid, accrued or 
9incurred on the intangible expense or cost, or interest expense 
10or cost, and is equal to or less than the taxpayer's 
11proportional share of the transaction. The taxpayer's 
12proportional share shall be based on relative sales, assets, 
13liabilities or another reasonable method.

142. In case the entire business of any corporation, other
15than a corporation engaged in doing business as a regulated
16investment company as defined by the Internal Revenue Code of
171986, is not transacted within this Commonwealth, the tax
18imposed by this article shall be based upon such portion of the
19taxable income of such corporation for the fiscal or calendar
20year, as defined in subclause 1 hereof, and may be determined as
21follows:

22(a) Division of Income.

23* * *

24(16.1) Sales, other than sales under paragraphs (16) and
25(17), are in this State as follows:

26(A) The sale, lease, rental or other use of real property,
27if the real property is located in this State. If real property
28is located both in and outside this State, the sale is in this
29State based upon the percentage of total assessed value of the
30real property located in this State.

1(B) (I) The rental, lease or licensing of tangible personal
2property, if the customer first obtained possession of the
3tangible personal property in this State.

4(II) If the tangible personal property is subsequently taken
5out of this State, the taxpayer may use a reasonably determined
6estimate of usage in this State to determine the extent of sale
7in this State.

8(C) (I) The sale of service, if the service is delivered to
9a location in this State. If the service is delivered both to a
10location in and outside this State, the sale is in this State
11based upon the percentage of total value of the service
12delivered to a location in this State.

13(II) If the state or states of assignment under subparagraph
14(I) cannot be determined for a customer who is an individual
15that is not a sole proprietor, a service is deemed to be
16delivered at the customer's billing address.

17(III) If the state or states of assignment under
18subparagraph (I) cannot be determined for a customer, except for
19a customer under subparagraph (II), a service is deemed to be
20delivered at the location from which the services were ordered
21in the customer's regular course of operations. If the location
22from which the services were ordered in the customer's regular
23course of operations cannot be determined, a service is deemed
24to be delivered at the customer's billing address.

25(17) Sales, other than sales [of tangible personal property] 
26under paragraphs (16) and (16.1), are in this State if:

27(A) The income-producing activity is performed in this
28State; or

29(B) The income-producing activity is performed both in and
30outside this State and a greater proportion of the income-

1producing activity is performed in this State than in any other
2state, based on costs of performance.

3* * *

44. * * *

5(c) (1) The net loss deduction shall be the lesser of:

6(A) * * *

7(V) For taxable years beginning after December 31, 2013, the
8greater of twenty-five per cent of taxable income as determined
9under subclause 1 or, if applicable, subclause 2 or four million
10dollars ($4,000,000);

11(VI) For taxable years beginning after December 31, 2014,
12the greater of thirty per cent of taxable income as determined
13under subclause 1 or, if applicable, subclause 2 or five million
14dollars ($5,000,000); or

15* * *

16(2) * * *

17(B) The earliest net loss shall be carried over to the
18earliest taxable year to which it may be carried under this
19schedule. The total net loss deduction allowed in any taxable
20year shall not exceed:

21* * *

22(V) The greater of twenty-five per cent of taxable income as
23determined under subclause 1 or, if applicable, subclause 2 or
24four million dollars ($4,000,000) for taxable years beginning
25after December 31, 2013.

26(VI) The greater of thirty per cent of taxable income as
27determined under subclause 1 or, if applicable, subclause 2 or
28five million dollars ($5,000,000) for taxable years beginning
29after December 31, 2014.

30* * *

1(8) "Intangible expense or cost." Royalties, licenses or
2fees paid for the acquisition, use, maintenance, management,
3ownership, sale, exchange or other disposition of patents,
4patent applications, trade names, trademarks, service marks,
5copyrights, mask works or other similar expenses or costs.

6(9) "Interest expense or cost." A deduction allowed under
7section 163 of the Internal Revenue Code of 1986 (26 U.S.C. §
8163) to the extent that such deduction is directly related to an
9intangible expense or cost.

10(10) "Affiliated entity." A person with a relationship to 
11the taxpayer during all or any portion of the taxable year that 
12is any of the following:

13(i) a stockholder who is an individual, or a member of the 
14stockholder's family as set forth in section 318 of the Internal 
15Revenue Code of 1986 (26 U.S.C. § 318), if the stockholder and 
16the members of the stockholder's family own, directly, 
17indirectly, beneficially or constructively, in the aggregate, 
18more than fifty per cent of the value of the taxpayer's 
19outstanding stock;

20(ii) a stockholder, or a stockholder's partnership, limited 
21liability company, estate, trust or corporation, if the 
22stockholder and the stockholder's partnerships, limited 
23liability companies, estates, trusts and corporations own 
24directly, indirectly, beneficially or constructively, in the 
25aggregate, more than fifty per cent of the value of the 
26taxpayer's outstanding stock;

27(iii) a corporation, or a party related to the corporation 
28in a manner that would require an attribution of stock from the 
29corporation to the party or from the party to the corporation 
30under the attribution rules of the Internal Revenue Code of
 

11986, if the taxpayer owns, directly, indirectly, beneficially 
2or constructively, more than fifty per cent of the value of the 
3corporation's outstanding stock. The attribution rules of 
4section 318 of the Internal Revenue Code of 1986 shall apply for 
5purposes of determining whether the ownership requirements of 
6this definition have been met;

7(iv) a component member as defined in section 1563(b) of the
8Internal Revenue Code of 1986 (26 U.S.C. § 1563(b)); or

9(v) a person to or from whom there is attribution of stock
10ownership in accordance with section 1563(e) of the Internal
11Revenue Code of 1986.

12(11) "Valid business purpose." A purpose, other than the
13avoidance or reduction of taxation, which alone or in
14combination with other purposes constitute the primary
15motivation for a business activity or transaction. A transaction
16done at arm's length terms shall be presumed to be directly
17related to a valid business purpose.

18Section 11. Section 402(b) of the act, amended June 29, 2002
19(P.L.559, No.89), is amended to read:

20Section 402. Imposition of Tax.--* * *

21(b) The annual rate of tax on corporate net income imposed
22by subsection (a) for taxable years beginning for the calendar
23year or fiscal year on or after the dates set forth shall be as
24follows:

25Taxable Year	Tax Rate
26January 1, 1995[, and 27each taxable year 28thereafter] to  29December 31, 2014	9.99%
30January 1, 2015, to 20130HB0440PN1716 -22-     1December 31, 2015	9.89%
2January 1, 2016, to 3December 31, 2016	9.69%
4January 1, 2017, to 5December 31, 2017	9.49%
6January 1, 2018, to 7December 31, 2018	9.29%
8January 1, 2019, to 9December 31, 2019	8.96%
10January 1, 2020, to 11December 31, 2020	8.63%
12January 1, 2021, to 13December 31, 2021	8.3%
14January 1, 2022, to 15December 31, 2022	7.97%
16January 1, 2023, to 17December 31, 2023	7.64%
18January 1, 2024, to 19December 31, 2024	7.31%
20January 1, 2025, and 21each taxable year 22thereafter	6.99%

23* * *

24Section 12. Section 403(d) of the act, amended October 18,
252006 (P.L.1149, No.119), is amended to read:

26Section 403. Reports and Payment of Tax.--* * *

27(d) If the officers of any corporation shall neglect, or
28refuse to make any report as herein required, or shall knowingly
29make any false report, [the following percentages of the amount
30of the tax shall be added by the department to the tax

1determined to be due on the first one thousand dollars ($1,000)
2of tax ten per cent, on the next four thousand dollars ($4,000)
3five per cent, and on everything in excess of five thousand
4dollars ($5,000) one per cent, no such] a penalty of five 
5hundred dollars ($500) plus an additional one per cent for every 
6dollar of tax determined to be due in excess of twenty-five 
7thousand dollars ($25,000) shall be added to the tax determined 
8to be due. No amounts added to the tax shall bear any interest
9whatsoever.

10* * *

11Section 12.1. The definitions of "document," "real estate"
12and "real estate company" in section 1101-C of the act, amended
13July 2, 1986 (P.L.318, No.77), are amended to read:

14Section 1101-C. Definitions.--The following words when used
15in this article shall have the meanings ascribed to them in this
16section:

17* * *

18"Document." Any deed, instrument or writing which conveys,
19transfers, devises, vests, confirms or evidences any transfer or
20devise of title to real estate in this Commonwealth, but does
21not include wills, mortgages, deeds of trust or other
22instruments of like character given as security for a debt and
23deeds of release thereof to the debtor, land contracts whereby
24the legal title does not pass to the grantee until the total
25consideration specified in the contract has been paid or any
26cancellation thereof unless the consideration is payable over a
27period of time exceeding thirty years or instruments which
28solely grant, vest or confirm a public utility easement.
29"Document" shall also include a declaration of acquisition
30required to be presented for recording under section 1102-C.5 of

1this article.

2* * *

3"Real estate."

4(1) Any lands, tenements or hereditaments [within this
5Commonwealth], including, without limitation, buildings,
6structures, fixtures, mines, minerals, oil, gas, quarries,
7spaces with or without upper or lower boundaries, trees and
8other improvements, immovables or interests which by custom,
9usage or law pass with a conveyance of land, but excluding
10permanently attached machinery and equipment in an industrial
11plant.

12(2) A condominium unit.

13(3) A tenant-stockholder's interest in a cooperative housing
14corporation, trust or association under a proprietary lease or
15occupancy agreement.

16"Real estate company." A corporation or association which
17[is] meets any of the following:

18(1) Is  primarily engaged in the business of holding,
19selling or leasing real estate ninety per cent or more of the
20ownership interest in which is held by thirty-five or fewer
21persons and which:

22[(1)] (i) derives sixty per cent or more of its annual gross
23receipts from the ownership or disposition of real estate; or

24[(2)] (ii) holds real estate, the value of which comprises
25[ninety] fifty per cent or more of the value of its entire
26tangible asset holdings exclusive of tangible assets which are
27freely transferable and actively traded on an established
28market.

29(2) Owns a direct or indirect interest in a real estate
30company. An indirect ownership interest is an interest in a

1corporation or association whose purpose is the ownership of a
2real estate company either by itself or as part of a tiered
3structure of corporations or associations.

4* * *

5Section 12.2. Section 1102-C of the act, amended July 2,
61986 (P.L.318, No.77), is amended to read:

7Section 1102-C. Imposition of Tax.--Every person who makes,
8executes, delivers, accepts or presents for recording any
9document or in whose behalf any document is made, executed,
10delivered, accepted or presented for recording, shall be subject
11to pay for and in respect to the transaction or any part
12thereof, or for or in respect of the vellum parchment or paper
13upon which such document is written or printed, a State tax at
14the rate of one per cent of the value of the real estate within 
15this Commonwealth represented by such document, which State tax
16shall be payable at the earlier of the time the document is
17presented for recording or within thirty days of acceptance of
18such document or within thirty days of becoming an acquired
19company.

20Section 12.3. Section 1102-C.5(a) of the act, amended July
212, 2012 (P.L.751, No.85), is amended to read:

22Section 1102-C.5. Acquired Company.--(a) A real estate
23company is an acquired company upon a change in the ownership
24interest in the company, however effected, if the change:

25(1) does not affect the continuity of the company; and

26(2) of itself or together with prior changes has the effect
27of transferring, directly or indirectly, ninety per cent or more
28of the total ownership interest in the company within a period
29of three years.

30(3) For the purposes of paragraph (2), a transfer occurs

1within a period of three years of another transfer or transfers
2if, during the period[:

3(i) the transferring party provides a legally binding
4commitment, enforceable at a future date, to execute the
5transfer;

6(ii) the terms of the transfer are fixed and not subject to
7negotiation; and

8(iii) the transferring party receives full consideration, in
9any form, in exchange for the transfer.], the transferring party 
10provides the transferee a legally binding commitment or option, 
11enforceable at a future date, to execute the transfer.

12* * *

13Section 12.4. Article XVIII-A of the act, added May 12, 1999
14(P.L.26, No.4), is repealed:

15[ARTICLE XVIII-A

16COAL WASTE REMOVAL AND ULTRACLEAN FUELS

17TAX CREDIT

18Section 1801-A. Short Title.--This article shall be known
19and may be cited as the "Coal Waste Removal and Ultraclean Fuels
20Act."

21Section 1802-A. Definitions.--The following words, terms and
22phrases, when used in this article, shall have the meanings
23ascribed to them in this section, except where the context
24clearly indicates a different meaning:

25"Department" means the Department of Revenue of the
26Commonwealth.

27"Developer" means the owner-operator of a facility, as
28defined in this section, or the operator of the facility that
29has sold the facility in new condition to a third party from
30whom that operator has simultaneously leased back the facility

1for a minimum period of twelve years.

2"Facility" includes all plant and equipment purchased or
3constructed by or on behalf of the developer which is used
4within this Commonwealth by the developer to produce one or more
5qualified fuels.

6"Internal Revenue Code" means the Internal Revenue Code of
71986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

8"Qualified fuels" means those fuels produced from
9nontraditional coal culm and silt feedstocks as defined in
10section 29(c) of the Internal Revenue Code of 1986 (Public Law
1199-514, 26 U.S.C. § 29(c)).

12"Qualifying property" means tangible personal property and
13other forms of tangible property which qualify for investment
14tax credit treatment and which meet all of the following
15requirements:

16(1) Be acquired through a purchase, as defined under section
17179(d)(2) of the Internal Revenue Code (26 U.S.C. § 179(d)(2)),
18or constructed by the developer for its own use.

19(2) Be depreciable under section 167 of the Internal Revenue
20Code (26 U.S.C. § 167).

21(3) Have a useful life of greater than or equal to four
22years.

23(4) Be located within this Commonwealth.

24(5) Be used by the developer in the production of qualified
25fuels.

26(6) Be acquired by purchase or constructed on or after
27January 1, 2000, and before January 1, 2013.

28(7) Not be the subject of any tax credit otherwise available
29to the developer under this act.

30"Tax credit base" means only the cost or other basis of

1qualifying property that is properly transferred to the
2facility's basis for depreciation for Federal income tax
3purposes between January 1, 2000, and December 31, 2012.

4Section 1803-A. Investment Tax Credits Program.--(a) A
5developer of a new facility for the production of one or more
6qualified fuels shall be allowed an investment tax credit
7against the taxes imposed under Articles II, IV and VI of this
8act. The amount of the credit shall be computed as a percentage
9applied to the cost or other basis for Federal income tax
10purposes of qualifying property.

11(b) (1) The investment tax credit shall be computed as
12fifteen per cent of the tax credit base.

13(2) The maximum investment tax credit available for
14application, whether claimed by one or more taxpayers, shall not
15exceed fifteen per cent of the capital cost of the facility.

16(3) Any amount of allowable investment tax credit not used
17in the tax year for which the credit was claimed can be carried
18forward by the claiming taxpayer to succeeding years until the
19full amount of allowable credit has been used.

20(c) (1) The developer, upon notice to the department as
21specified by the department, may sell or assign, in whole or in
22part, any investment tax credit afforded under this section to
23one or more taxpayers if no claim for allowance of such credit
24has been filed.

25(2) A taxpayer recipient by purchase or assignment of any
26portion of the developer's investment tax credit under paragraph
27(1) shall initially claim such credit, upon notice to the
28department of the derivative basis of the credit in compliance
29with procedures specified by the department, for the tax year in
30which the purchase or assignment is made, but in no event

1subsequent to the filing of an income tax return for the year
22012.

3(3) Any taxpayer who acquires any portion of the developer's
4investment tax credit by sale or assignment for value and
5without notice by the developer of any irregularity or
6invalidity shall not suffer any disallowance of the credit or
7the imposition of any adjustment or fraud penalty attributable
8to conduct by the developer.

9(d) (1) If prior to the expiration of any qualifying
10property's useful life, as used to calculate depreciation for
11Federal income tax purposes, the developer, upon mandatory
12notice to the department in compliance with procedures specified
13by the department, disposes of any qualifying property, in a
14transaction other than a sale-leaseback transaction, upon which
15the department has previously allowed an investment tax credit
16claimed by any taxpayer, a portion of all such credit shall be
17recaptured and added to the developer's tax liability for the
18tax year in which the qualifying property is disposed.

19(2) The portion of the investment tax credit previously
20allowed, which is subject to recapture from the developer, shall
21be equal to a fraction whose numerator is the number of years
22remaining to fully depreciate for Federal income tax purposes
23the qualifying property disposed and whose denominator is the
24total number of years over which the property otherwise would
25have been subject to depreciation by the developer.

26(3) In calculating the recapture percentage, the year of
27disposition of the qualifying property is considered a year of
28remaining depreciation.

29(e) The department shall verify the validity of any claim
30for allowance of any investment tax credit afforded under this

1section and, in the case of a fraudulent claim, may assess
2against the developer a penalty of one hundred and twenty-five
3per cent of the credit improperly claimed.

4(f) The tax credits authorized by this section shall not
5exceed eighteen million dollars ($18,000,000) in the aggregate
6during any year.

7Section 1804-A. Contract Required.--(a) In order for a
8developer to claim investment tax credits under this article,
9the developer must enter into a contract with the Commonwealth
10that provides as follows:

11(1) The term of the contract shall be twenty-five years,
12beginning with the first tax year in which the investment tax
13credits are claimed.

14(2) The developer shall make periodic payments to the
15Commonwealth, which payments may not exceed in the aggregate
16forty-six million eight hundred thousand dollars ($46,800,000)
17over the term of the contract.

18(3) The periodic payments shall occur every five years and
19each payment shall be nine million three hundred sixty thousand
20dollars ($9,360,000), except as provided in paragraphs (4), (5)
21and (6).

22(4) For the first five-year period, the amount specified in
23paragraph (3) shall be reduced by:

24(i) An amount equal to the business losses of the developer,
25if any, relating to the facility that are sustained in the first
26and second years of the contract, provided such amount does not
27exceed three million seven hundred forty-four thousand dollars
28($3,744,000) for both years.

29(ii) Allowable offsets identified in subsection (b),
30provided that such offsets do not exceed nine million three

1hundred sixty thousand dollars ($9,360,000).

2(5) For the remaining five-year periods, the amount
3specified in paragraph (3) shall be reduced by the amount of
4allowable offsets identified in subsection (b), provided that
5such offsets do not exceed nine million three hundred sixty
6thousand dollars ($9,360,000) during any five-year period.

7(6) To the extent the amount of allowable offsets during any
8five-year period exceeds nine million three hundred sixty
9thousand dollars ($9,360,000), the excess may be carried over
10and added to the allowable offsets taken in the following five-
11year period, provided that the excess is applied first.

12(b) For purposes of this section, "allowable offset"
13includes all of the following:

14(1) An amount equal to the corporate net income tax, capital
15stock and franchise tax and personal income tax related to the
16construction, ownership and operation of the facility.

17(2) An amount equal to all personal income tax withheld from
18the developer's employes.

19(3) An amount equal to all sales and use tax related to the
20operation and construction of the facility.

21(4) The amount paid by the developer of any new tax enacted
22by the Commonwealth following the effective date of this
23article.

24Section 1805-A. Requirements.--Tax credits authorized by
25this article shall not be granted unless the developer has
26obtained an investment tax credit from the Federal Government or
27an investment by a person other than an agency or
28instrumentality of the Commonwealth, or any combination thereof,
29in an amount equal to or greater than the tax credit granted by
30this article.]

1Section 13. Section 2112 of the act, amended or added August
24, 1991 (P.L.97, No.22), June 16, 1994 (P.L.279, No.48) and June
330, 1995 (P.L.139, No.21), is repealed:

4[Section 2112. Exemption for Poverty.--(a) The General
5Assembly, in recognition of the powers contained in section 2(b)
6(ii) of Article VIII of the Constitution of Pennsylvania which
7provides therein for the establishing as a class or classes of
8subjects of taxation the property or privileges of persons who
9because of poverty are determined to be in need of special tax
10provisions or tax exemptions, hereby declares as its legislative
11intent and purpose to implement such powers under such
12Constitutional provision by establishing a tax exemption as
13hereinafter provided in this section.

14(b) The General Assembly, having determined that there are
15persons within this Commonwealth the value of whose incomes and
16estates are such that the imposition of an inheritance tax under
17this article would cause them hardship and economic burden and
18having further determined that poverty is a relative concept
19inextricably joined with the ability to maintain assets
20inherited upon the death of a spouse, deems it to be a matter of
21public policy to provide an exemption from taxation for
22transfers of property to or for the use of that class of persons
23hereinafter designated in order to relieve their hardship and
24economic burden.

25(c) Any claim for a tax exemption hereunder shall be
26determined in accordance with the following:

27(1) The transferee is the spouse of the decedent at the date
28of death of the decedent.

29(2) The value of the estate of the decedent does not exceed
30two hundred thousand dollars ($200,000) after reduction for

1actual liabilities of the decedent as evidenced by a written
2agreement.

3(3) The average of the joint exemption income of the
4decedent and the transferee for the three taxable years, as
5defined in Article III, immediately preceding the date of death
6of the decedent does not exceed forty thousand dollars
7($40,000).

8(d) Notwithstanding any other provision of this article,
9transfers of property to or for the use of any eligible
10transferee who meets the standards of eligibility established by
11this section as the test for poverty shall be deemed a separate
12class subject to taxation and, as such, shall be entitled to the
13benefit of the following exemptions from taxation on transfers
14of property as a credit against the tax imposed by this article:

15(1) For decedents dying on or after January 1, 1992, and
16before January 1, 1993, the lesser of:

17(i) Two per cent of the taxable value of the property of the
18decedent transferred to or for the use of the transferee.

19(ii) Two per cent of one hundred thousand dollars ($100,000)
20of the taxable value of the property of the decedent transferred
21to or for the use of the transferee.

22(2) For decedents dying on or after January 1, 1993, and
23before January 1, 1994, the lesser of:

24(i) Four per cent of the taxable value of the property of
25the decedent transferred to or for the use of the transferee.

26(ii) Four per cent of one hundred thousand dollars
27($100,000) of the taxable value of the property of the decedent
28transferred to or for the use of the transferee.

29(3) For decedents dying on or after January 1, 1994, and
30before January 1, 1995, the lesser of:

1(i) Six per cent of the taxable value of the property of the
2decedent transferred to or for the use of the transferee.

3(ii) Six per cent of one hundred thousand dollars ($100,000)
4of the taxable value of the property of the decedent transferred
5to or for the use of the transferee.

6(e) For nonresident decedents, the credit provided in this
7section shall bear the same ratio as that of the decedent's
8estate in this Commonwealth bears to the decedent's total estate
9without regard to situs.

10(f) The credit provided in this section shall not be greater
11than the tax imposed.

12(g) This section shall not apply to the estates of decedents
13dying on or after January 1, 1995.]

14Section 14. The following shall apply:

15(1) A tax credit may not be granted under section 206(b)
16of the act after June 30, 2013.

17(2) The amendment or addition of the following
18provisions of the act shall apply to tax years beginning
19after December 31, 2013:

20(i) Section 301(d.2), (n.2), (o.4) and (t).

21(ii) Section 303(a)(2).

22(iii) Section 306.

23(iv) Section 306.1.

24(v) Section 306.2.

25(vi) Section 307.8(a) and (f).

26(vii) Section 314(a).

27(viii) Section 324.

28(ix) Section 330.1.

29(x) Section 335.

<-30(xi) Section 401(3)1(t), 2(a)(16.1) and (17) and

1(8), (9), (10) and (11) and 4(c)(1)(A)(V) and (VI) and
22(B)(V) and (VI).

3(xii) Section 402(b).

4(xiii) <-(xi) Section 401(3)2(a)(16.1) and (17).

5(xii) Section 403(d).

6(3) The addition of section 303(a)(3)(viii) shall apply
7to tax years beginning after December 31, 2015.

8Section 15. This act shall take effect as follows:

9(1) The following shall take effect January 1, 2014, or
10immediately, whichever is later:

11(i) The amendment of the definitions of "document," 
12"real estate" and "real estate company" in section 1101-C 
13of the act.

14(ii) The amendment of sections 1102-C and 
151102-C.5(a) of the act.

<-16(2) The addition of section 401(8), (9), (10) and (11)
17of the act shall take effect January 1, 2015.

<-18(2) <-(3) The remainder of this act shall take effect
19immediately.