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," providing for a natural gas farm equipment
11conversion tax credit.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15the Tax Reform Code of 1971, is amended by adding an article to
16read:

17ARTICLE XVII-J

18NATURAL GAS FARM EQUIPMENT CONVERSION TAX CREDIT

19Section 1701-J. Scope of the article.

20This article relates to the natural gas farm equipment

1conversion tax credit.

2Section 1702-J Definitions.

3The following words and phrases when used in this article
4shall have the meanings given to them in this section unless the
5context clearly indicates otherwise:

6"Applicant." An individual who meets the eligibility
7requirements for the tax credit issued under this article.

8"Application." A natural gas farm equipment conversion tax
9credit application.

10"Dedicated liquefied natural gas equipment." A piece of
11equipment that is produced by an original equipment manufacturer
12or a small volume manufacturer that operates on 90% or more
13compressed natural gas fuel and 10% or less on gasoline or
14diesel fuel.

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

16"Farm equipment." Equipment that is considered tangible
17personal property, including vehicles, which is directly used in
18farming, dairying or agriculture when engaged in as a business
19enterprise.

20"Incremental cost." The excess cost of a new natural gas
21farm equipment over the price for gasoline or diesel fuel farm
22equipment of the same model. The term includes the cost to
23retrofit farm equipment to operate on natural gas.

24"Natural gas conversion plan." A taxpayer's plan to convert
25existing gasoline or diesel farm equipment to compressed or
26liquefied natural gas-fueled farm equipment.

27"Owner." A person, other than a lienholder, having the
28property right in or title to farm equipment. The term includes
29a person entitled to the use and possession of farm equipment
30subject to a security interest in another person. The term does

1not include a lessee under a lease not intended as security.

2"Pass-through entity." A partnership as defined in section
3301(n.0) or a Pennsylvania S corporation as defined in section
4301(n.1).

5"Qualified tax liability." The liability for taxes imposed
6under Article III, IV, VI, VII or IX. The term shall not include
7tax withheld by an employer from an employee under Article III.

8"Qualified taxpayer." A natural person, corporation,
9business trust, limited liability company, partnership, limited
10liability partnership, association or other form of legal
11business entity that:

12(1) Is subject to a tax imposed under Article III, IV,
13VI, VII, VIII, IX, XI or XV, except for tax withheld by an
14employer under Article III.

15(2) Meets the definition of owner.

16"Start date." The date on which a farm equipment owner may
17begin the process of converting a gasoline or diesel-fueled farm
18equipment to natural gas powered farm equipment.

19"Tax credit." The natural gas farm equipment conversion tax
20credit provided under this article.

21Section 1703-J. Qualified natural gas conversion plan.

22In order for a natural gas conversion plan to be qualified,
23the conversion plan shall do all of the following:

24(1) Provide detailed information on the equipment to be
25converted.

26(2) Provide the time frame for the conversion.

27(3) Provide detailed information on the financial
28viability of the conversion plan.

29(4) Include other information required by the Department
30of Community and Economic Development.

1Section 1704-J. Application for tax credit certificate.

2(a) Application.--A qualified taxpayer may apply to the
3Department of Community and Economic Development for a tax
4credit certificate under this section. The application must be
5on a form required by the Department of Community and Economic
6Development and shall include all of the following information:

7(1) The name and address of the applicant.

8(2) A certified copy of the natural gas conversion plan.

9(3) Documentation that all equipment included in the
10natural gas conversion plan is farm equipment.

11(4) Any information required by the Department of
12Community and Economic Development.

13(b) Review and approval.--

14(1) The Department of Community and Economic Development
15shall review and approve applications according to the order
16applications are received and the availability of natural gas
17farm equipment conversion tax credits.

18(2) The Department of Community and Economic Development
19shall notify the applicant within 30 days of receipt of the
20application of its determination.

21(3) If an application is approved, the Department of
22Community and Economic Development shall issue the qualified
23taxpayer a tax credit certificate within 15 days of the
24approval.

25(4) A tax credit certificate issued under this section
26may not exceed 75% of the incremental cost established in the
27qualified natural gas conversion plan.

28(5) In granting tax credits under this article, the
29Department of Community and Economic Development may not
30grant more than:

1(i) $25,000,000 in tax credit certificates in a
2fiscal year; and

3(ii) $75,000 in tax credit certificates to a single
4qualified taxpayer in a fiscal year.

5Section 1705-J. Carryover, application of tax credit,
6carryback, refund and assignment.

7(a) Carryover.--If a taxpayer cannot use the entire amount
8of the tax credit for the taxable year in which the tax credit
9is first approved, the excess may be carried over to succeeding
10taxable years and used as a credit against the qualified tax
11liability of the taxpayer for those taxable years. Each time
12that the tax credit is carried over to a succeeding taxable
13year, it shall be reduced by the amount that was used as a
14credit during the immediately preceding taxable year. The tax
15credit may be carried over and applied to succeeding taxable
16years for no more than seven taxable years following the first
17taxable year for which the taxpayer was entitled to claim the
18tax credit.

19(b) Application of tax credit.--A tax credit approved by the
20department for a qualified investment in a taxable year shall
21first be applied against the taxpayer's qualified tax liability
22for the current taxable year as of the date on which the tax
23credit was approved before the tax credit is applied against any
24tax liability under subsection (a).

25(c) Carryback or refund.--A taxpayer shall not be entitled
26to carry back or obtain a refund of an unused tax credit.

27(d) Sale or assignment.--A taxpayer, upon application to and
28approval by the Department of Community and Economic
29Development, in consultation with the department, may sell or
30assign, in whole or in part, a tax credit granted to the

1taxpayer under this chapter if the taxpayer does not have a
2qualified tax liability against which the tax credit may be
3applied in the current taxable year. The Department of Community
4and Economic Development shall establish guidelines, in
5consultation with the department, for the approval of
6applications under this subsection. Prior to approval of an
7application, the department shall make a finding that the
8taxpayer and its assignee have filed all required State tax
9reports and returns for all taxable years and paid any balance
10of State tax due as determined by the department.

11(e) Purchasers and assignees.--

12(1) The purchaser or assignee of all or a portion of a
13tax credit under subsection (d) shall immediately claim the
14credit in the taxable year in which the purchase or
15assignment is made, except that the purchaser or assignee may
16carry over unused tax credits to the succeeding taxable year
17for up to two years.

18(2) The amount of the tax credit that a purchaser or
19assignee may use against any one qualified tax liability may
20not exceed 75% of the qualified tax liability for the taxable
21year. The purchaser or assignee may not carry back or obtain
22a refund of or sell or assign the tax credit.

23(3) The purchaser or assignee shall notify the
24Department of Community and Economic Development, and the
25Department of Community and Economic Development shall notify
26the department of the seller or assignor of the tax credit in
27compliance with procedures specified by the Department of
28Community and Economic Development, in consultation with the
29department.

30Section 1706-J. Shareholder, owner or member pass-through.

1(a) Shareholder entitlement.--If a Pennsylvania S
2corporation does not have an eligible tax liability against
3which the tax credit may be applied, a shareholder of the
4Pennsylvania S corporation shall be entitled to a tax credit
5equal to the tax credit determined for the Pennsylvania S
6corporation for the taxable year multiplied by the percentage of
7the Pennsylvania S corporation's distributive income to which
8the shareholder is entitled.

9(b) Pass-through entity entitlement.--If a pass-through
10entity other than a Pennsylvania S corporation does not have tax
11liability against which the tax credit may be applied, an owner
12or member of the pass-through entity shall be entitled to a tax
13credit equal to the tax credit determined for the pass-through
14entity for the taxable year multiplied by the percentage of the
15pass-through entities' distributive income to which the owner or
16member is entitled.

17(c) Additional credit.--

18(1) Except as provided under paragraph (2), the tax
19credit provided under subsections (a) or (b) shall be in
20addition to any other tax credit to which a shareholder,
21owner or member of a pass-through entity is otherwise
22entitled under this chapter.

23(2) A pass-through entity and a shareholder, owner or
24member of a pass-through entity may not claim a tax credit
25under this chapter for the same qualified investment.

26Section 1707-J. Penalties.

27(a) Failure to maintain operations.--A qualified taxpayer
28that receives a tax credit and fails to maintain or operate 80%
29of the natural gas farm equipment for which they received the
30tax credits in this Commonwealth for a period of five years from

1the start date shall refund to the Commonwealth the total amount
2of credits granted.

3(b) Failure to complete the qualified natural gas conversion
4plan.--A qualified taxpayer which receives a tax credit and
5fails to complete the qualified natural gas conversion plan
6within four years shall refund to the Commonwealth the total
7amount of credits granted.

8(c) Waiver.--The department may waive the penalties under
9subsections (a) and (b) if it is determined that the failure to
10maintain or operate farm equipment in this Commonwealth or the
11noncompletion of a qualified natural gas conversion plan was due
12to circumstances beyond the qualified taxpayer's control.
13Circumstances shall include natural disasters, unforeseen
14industry trends or a loss of a major supplier or market. The
15qualified taxpayer must promptly notify the department of
16circumstances beyond their control which would delay completion
17of the plan.

18Section 1708-J. Time limitations.

19A qualified taxpayer shall not be entitled to a natural gas
20farm equipment tax credit for taxable years ending after
21December 31, 2020.

22Section 1709-J. Guidelines.

23The Department of Community and Economic Development, in
24conjunction with the department, shall develop written
25guidelines for the implementation and administration of this
26article. The guidelines shall be posted on the Department of
27Community and Economic Development's publicly accessible
28website.

29Section 2. The addition of Article XVII-J of the act shall
30apply to taxable years beginning after December 31, 2013.

1Section 3. This act shall take effect immediately.