Regular Session 2017-2018 House Bill 2556 P.N. 4212

CORRECTIVE REPRINT

PRIOR PRINTER'S NOS. 3862, 4193

PRINTER'S NO. 4212

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2556

Session of

2018

INTRODUCED BY SANKEY, C. QUINN, BENNINGHOFF, CAUSER, CUTLER,

DIAMOND, DUNBAR, GREINER, GROVE, IRVIN, JAMES, LAWRENCE,

McGINNIS, OBERLANDER, PICKETT, RADER, ROTHMAN, RYAN, SAYLOR,

TOPPER, TURZAI, WARD AND ZIMMERMAN, JULY 10, 2018

AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,

AS AMENDED, OCTOBER 9, 2018

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," in sales and use tax, further providing for

definitions and for exclusions from tax.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 201 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 201. Definitions.--The following words, terms and

phrases when used in this Article II shall have the meaning

ascribed to them in this section, except where the context

clearly indicates a different meaning:

* * *

(ddd) "Financial institution." A bank, bank and trust

company, trust company, savings bank, mutual banking

association, savings and loan association, finance company,

credit union or other similar institution.

(eee) "Canned software." Computer software that is not

custom software.

(fff) "Custom software." Computer software that is:

(1) designed, created or developed for and to the

specifications of an original purchaser, or substantially

modified for and to the specifications of the original or a

subsequent purchaser; or

(2) designed, created or developed for sale to the general

public and substantially modified for and to the specifications

of a particular purchaser.

(DDD) "FINANCIAL INSTITUTION." AN INSTITUTION OR LICENSEE

AS DEFINED BY THE ACT OF MAY 15, 1933 (P.L.565, NO.111), KNOWN

AS THE DEPARTMENT OF BANKING AND SECURITIES CODE , OR A SIMILAR

INSTITUTION OR LICENSEE DOING BUSINESS IN PENNSYLVANIA SUBJECT

TO SUPERVISION BY A REGULATORY AUTHORITY OF THE FEDERAL

GOVERNMENT, ANOTHER STATE OR A FOREIGN COUNTRY.

(EEE) "CANNED SOFTWARE." COMPUTER SOFTWARE THAT IS

AVAILABLE FOR SALE TO THE GENERAL PUBLIC, OR A SUBSTANTIAL AND

INDEFINITE CLASS OF SIMILARLY SITUATED PERSONS, THAT CAN BE USED

AS-IS WITHOUT THE PURCHASE OF PROFESSIONAL SERVICES, INCLUDING

BUT NOT LIMITED TO PROGRAMMING, SYSTEMS DESIGN, FACILITIES

MANAGEMENT, INFORMATION RETRIEVAL, DATA PREPARATION OR

PROCESSING, COMMUNICATION, DATA OR COMPUTER PROCESSING,

ACCOUNTING, APPRAISAL, LEGAL, ENGINEERING, ARCHITECTURAL OR

OTHER SERVICES FROM THE VENDOR THAT SUPPLIES THE SOFTWARE.

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(FFF) "CUSTOM SOFTWARE." COMPUTER SOFTWARE THAT IS NOT

CANNED SOFTWARE, INCLUDING MODIFICATIONS MADE TO CANNED SOFTWARE

TO FACILITATE ITS USE BY A PURCHASER IF THERE IS A SEPARATELY

STATED PURCHASE PRICE FOR THE MODIFICATIONS.

Section 2. Section 204 of the act is amended by adding

clauses to read:

Section 204. Exclusions from Tax.--The tax imposed by

section 202 shall not be imposed upon any of the following:

* * *

(71) The sale at retail or use of canned software, or the

maintenance, support or updating of canned software, WHICH IS

acquired incident INCIDENTAL to the purchase at retail of

computer programming, computer integrated systems design, data

preparation or processing, computer facilities management,

information retrieval and other computer or data processing

services, including computer services that are part of

electronic fund transfers, electronic financial transactions or

services, banking or trust services or management or

administrative services, including transfer agency, shareholder,

custodial and portfolio accounting services, unless the

predominant purpose of a transaction is to purchase or use

canned software.

(72) As follows:

(i) The sale at retail or use of systems, devices and

equipment, and their components, installed in a building and

utilized by a financial institution for its protection or

convenience in conducting financial transactions, provided the

systems, devices, equipment or components:

(A) are installed by a contractor or the contractor's

designee;

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(B) after installation are repaired, altered or maintained

on-site by a contractor; or

for repair or maintenance and returned to the installation site

by the contractor.

(ii) A contractor engaged in the installation, repair or

maintenance of systems, devices, equipment or components that is

subject to the exclusion under this paragraph shall be deemed to

be a construction contractor pursuant to a construction contract

engaged in the use of tangible personal property or services

under section 201(o)(17) regardless of the method, or

permanence, of attachment of the systems, devices, equipment or

components, to real property.

(72) THE SALE AT RETAIL OR USE OF SYSTEMS, DEVICES AND

EQUIPMENT, AND THEIR COMPONENTS, INSTALLED IN A BUILDING AND

UTILIZED BY A FINANCIAL INSTITUTION FOR ITS PROTECTION OR

CONVENIENCE IN CONDUCTING FINANCIAL TRANSACTIONS, PROVIDED THAT

BOTH OF THE FOLLOWING ARE SATISFIED:

(I) THE SYSTEMS, DEVICES, EQUIPMENT OR COMPONENTS:

(A) ARE INSTALLED BY A CONTRACTOR OR THE CONTRACTOR'S

DESIGNEE; OR

(B) AFTER INSTALLATION ARE REPAIRED, ALTERED OR MAINTAINED

ON-SITE BY A CONTRACTOR; OR

FOR REPAIR OR MAINTENANCE AND RETURNED TO THE INSTALLATION SITE

BY THE CONTRACTOR.

(II) THE SYSTEMS, DEVICES, EQUIPMENT OR COMPONENTS ARE

ATTACHED OR AFFIXED TO REAL ESTATE BY MEANS OF:

(A) A HOOK, BOLT, SCREW, NAIL OR OTHER SIMILAR METHOD; OR

(B) INSERTION THROUGH A BUILDING WALL OR FLOOR, OR MOUNTING

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IT UPON A SPECIALLY PREPARED FOUNDATION, THE REMOVAL OF WHICH

MAY RESULT IN DAMAGE TO THE REAL ESTATE; OR

A CONTRACTOR ENGAGED IN THE INSTALLATION, REPAIR OR MAINTENANCE

OF SYSTEMS, DEVICES, EQUIPMENT OR COMPONENTS THAT IS SUBJECT TO

THE EXCLUSION UNDER THIS PARAGRAPH SHALL BE DEEMED TO BE A

CONSTRUCTION CONTRACTOR PURSUANT TO A CONSTRUCTION CONTRACT

ENGAGED IN THE USE OF TANGIBLE PERSONAL PROPERTY OR SERVICES

UNDER SECTION 201(O)(17) REGARDLESS OF THE METHOD, OR

PERMANENCE, OF ATTACHMENT OF THE SYSTEMS, DEVICES, EQUIPMENT OR

COMPONENTS, TO REAL PROPERTY.

(73) Fees charged by a financial institution for a financial

service, regardless of whether tangible personal property is

provided to a customer incidental to the provision of the

financial service, unless the predominant purpose of a

transaction is to purchase or use tangible personal property.

SECTION 3. THE ADDITION OF SECTION 204(72) OF THE ACT SHALL

BE CONSTRUED AND READ IN PARI MATERIA WITH 61 PA. CODE § 46.9.

SECTION 4. THE ADDITION OF SECTION 204(71), (72) AND (73)

SHALL APPLY TO TRANSACTIONS THAT OCCUR ON OR AFTER THE EFFECTIVE

DATE OF THIS ACT.

Section 3 5. This act shall take effect immediately.

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