PRINTER'S NO. 282
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
368
Session of
2015
INTRODUCED BY WHITE, YAW, GREENLEAF, GORDNER, YUDICHAK,
HUTCHINSON, VULAKOVICH, ALLOWAY, WOZNIAK, STEFANO, VOGEL AND
BROWNE, JANUARY 30, 2015
REFERRED TO FINANCE, JANUARY 30, 2015
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 a waste coal energy and reclamation
tax credit; and imposing duties on the Department of Revenue
and the Department of Community and Economic Development.
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-J
WASTE COAL ENERGY AND RECLAMATION TAX CREDIT
Section 1701-J. Scope of article.
This article establishes a waste coal energy and reclamation
tax credit.
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Section 1702-J. 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:
"Company." A corporation, partnership, limited liability
company, limited liability partnership, business trust,
affiliate, unincorporated joint venture or other business entity
doing business within this Commonwealth.
"Department." The Department of Revenue of the Commonwealth,
except as otherwise specifically indicated.
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified fuel." Waste coal, which shall include the
combustion of waste coal in facilities in which the waste coal
was disposed of or abandoned prior to July 31, 1982, or disposed
of thereafter in a permitted coal refuse disposal site
regardless of when disposed of, and used to generate
electricity, or such other waste coal combustion meeting
alternate eligibility requirements established by regulation.
Facilities combusting waste coal shall use, at a minimum, a
combined fluidized bed boiler and be outfitted with a limestone
injection system and a fabric filter particulate removal system.
"Qualified tax liability." The liability for taxes imposed
under Articles III, IV, VI, VII, VIII, IX, XI and XV. The term
does not include tax withheld under section 316.
"Qualified taxpayer." A company that satisfies all of the
following:
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(1) Is an electric energy generator using qualified fuel
for the generation of electric energy.
(2) The qualified fuel is utilized for generation of
electricity at a facility in this Commonwealth which has been
placed in service before the effective date of this section.
(3) Uses or facilitates the use of ash resulting from
the combustion of qualified fuel to generate electricity at a
reclamation project approved by the Department of
Environmental Protection under the act of May 31, 1945
(P.L.1198, No.418), known as the Surface Mining Conservation
and Reclamation Act.
"Tax credit." The waste coal energy and reclamation tax
credit provided under this article.
"Ton." Two thousand pounds as defined in section 4121(d) of
the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
§ 4121(d)).
Section 1703-J. Application and approval of tax credit.
(a) Application.--
(1) A qualified taxpayer may apply to the department for
a tax credit under this section.
(2) The application must be submitted to the department
by August 1, 2015, and by March 1 of each year thereafter for
the tax credit claimed for qualified fuel used by the
qualified taxpayer during the prior calendar year. The
application must be on the form required by the department.
(3) The department may require information necessary to
document the amount of qualified fuel used.
(b) Rate.--The tax credit shall be equal to $3.50 per ton of
qualified fuel used to generate electricity in this Commonwealth
by a qualified taxpayer.
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(c) Review and approval.--
(1) The department shall review and approve applications
meeting the requirements of this article by August 20, 2015,
and by March 20 of each year thereafter.
(2) Upon approval, the department shall issue a
certificate stating the amount of tax credit granted for
qualified fuel used in the prior calendar year.
Section 1704-J. Use of tax credits.
(a) Application.--The tax credit shall be applied against
the qualified taxpayer's liability only after all other
statutory tax credits and deductions available to the qualified
taxpayer have been used.
(b) Limitation.--A qualified taxpayer that has been granted
a tax credit under this article shall be ineligible for any
other tax credit provided under this act.
Section 1705-J. Carryover and carryback.
A tax credit cannot be carried back. A tax credit can be
carried forward up to three tax years following the tax year in
which the tax credit is earned.
Section 1706-J. Limitation on tax credits.
(a) Amount.--The total amount of tax credits approved by the
department shall not exceed $40,000,000 in any fiscal year.
(b) Proration.--If the total amount of tax credits applied
for by all qualified taxpayers exceeds the amount allocated for
those tax credits, then the tax credit to be received by each
applicant shall be the product of the allocated amount
multiplied by the quotient of the tax credits approved for the
applicant divided by the total of all tax credits approved for
all applicants.
(c) Restriction.--Notwithstanding subsection (b), the
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department may not grant more than $10,000,000 in tax credits to
a single qualified taxpayer in any fiscal year.
Section 1707-J. Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, it may elect in writing, according to procedures
established by the department, to transfer all or a portion of
the credit to shareholders, members or partners in proportion to
the share of the entity's distributive income to which the
shareholders, members or partners are entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Time.--A transferee under subsection (a) must claim the
tax credit in the calendar year in which the transfer is made.
Section 1708-J. Use of credits by affiliates.
In addition to reducing or eliminating the qualified tax
liability of a qualified taxpayer, a tax credit shall be applied
to reduce or eliminate the qualified tax liability of any
"related party," as that term is defined in section 267 of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
267), to a qualified taxpayer.
Section 1709-J. Sale or assignment.
(a) Authorization.--Except as authorized in subsection (d),
if a qualified taxpayer holds a tax credit through the end of
the third calendar year following the year in which the tax
credit was granted, the qualified taxpayer may sell or assign a
tax credit, in whole or in part.
(b) Initial use.--Except as provided in subsection (e),
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prior to sale of assignment of a tax credit a qualified taxpayer
must first use a tax credit against the qualified tax liability
incurred in the taxable year for which the tax credit was
approved.
(c) Application.--
(1) Except as authorized in subsection (d), to sell or
assign a tax credit, a qualified taxpayer must file an
application for the sale or assignment of the tax credit with
the Department of Community and Economic Development. The
application must be on a form required by the Department of
Community and Economic Development.
(2) To approve an application, the Department of
Community and Economic Development must receive a finding
from the department that the applicant has:
(i) filed all required State tax reports and returns
for all applicable taxable years; and
(ii) paid any balance of State tax due as determined
by assessment or determination by the department and not
under timely appeal.
(d) Approval.--Upon approval by the Department of Community
and Economic Development, a qualified taxpayer may sell or
assign, in whole or in part, a tax credit.
(e) Expedited sale or assignment.--
(1) Notwithstanding subsections (a) and (b), a qualified
taxpayer may immediately sell or assign, in whole or in part,
a tax credit approved for a taxable year beginning in 2014.
(2) Nothing in this subsection may be construed to mean
that the tax credits sold or assigned under this subsection
are not subject to the provisions of section 1711-J.
Section 1710-J. Purchasers and assignees.
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(a) Time.--The purchaser or assignee under section 1709-J
must claim the tax credit no later than the last day of the
third calendar year following in the calendar year in which the
purchase or assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1709-J may use against any one
qualified tax liability may not exceed 75% of any of the
qualified tax liabilities for the taxable year.
(c) Resale and reassignment.--
(1) A purchaser under section 1709-J may not sell or
assign the purchased tax credit.
(2) An assignee under section 1709-J may not sell or
assign the assigned tax credit.
(d) Notice.--The purchaser or assignee under section 1709-J
shall notify the department of the seller or assignor of the tax
credit in compliance with procedures specified by the
department.
Section 1711-J. Administration.
(a) Audits and assessments.--The department has the
following powers:
(1) To audit a qualified taxpayer claiming a tax credit
to ascertain the validity of the amount claimed.
(2) To issue an assessment against a qualified taxpayer
for an improperly issued tax credit. The procedures,
collection, enforcement and appeals of any assessment made
under this section shall be governed by Article II.
(b) Guidelines.--The department shall develop written
guidelines for the implementation of this article.
Section 1712-J. Annual report to General Assembly.
By October 1, 2016, and October 1 of each year thereafter,
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the department shall submit a report on the tax credit to the
chairman and minority chairman of the Appropriations Committee
of the Senate, the chairman and minority chairman of the Finance
Committee of the Senate, the chairman and minority chairman of
the Appropriations Committee of the House of Representatives and
the chairman and minority chairman of the Finance Committee of
the House of Representatives. The report shall include the names
of the qualified taxpayers utilizing the tax credit as of the
date of the report and the amount of tax credits approved for,
utilized by or sold or assigned by a qualified taxpayer.
Section 1713-J. Expiration.
This article shall expire December 31, 2023.
Section 1714-J. Applicability.
The tax credit shall be effective for taxable years beginning
on or after January 1, 2014.
Section 2. This act shall take effect immediately.
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