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PRINTER'S NO. 77
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
103
Session of
2017
INTRODUCED BY BOSCOLA, COSTA, HUGHES, FARNESE, SCHWANK,
BREWSTER, HAYWOOD, SABATINA, TARTAGLIONE, YUDICHAK, AUMENT,
MENSCH AND RAFFERTY, JANUARY 13, 2017
REFERRED TO FINANCE, JANUARY 13, 2017
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 work-based learning tax credit.
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-L
WORK-BASED LEARNING TAX CREDIT
Section 1701-L. Scope of article.
This article relates to work-based learning tax credits.
Section 1702-L. Purpose.
The purpose of this article is to provide a tax credit to
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businesses that participate in a work-based learning program,
which combines a school district's ability to provide students
with out-of-school programs and part-time employment with a
school district's ability to enter concurrent enrollment
agreements with a postsecondary institution for courses
necessary for certain licenses and certifications.
Section 1703-L. 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:
"Concurrent enrollment." The enrollment of a student in a
course that is included in a school district's concurrent
enrollment program under a concurrent enrollment agreement with
a postsecondary institution.
"Concurrent enrollment agreement." A written agreement
established under Article XVI-B of the act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949,
between a school district and each postsecondary institution
detailing a concurrent enrollment program administered and
developed by the school district and the institution that allows
students to concurrently enroll in postsecondary courses and to
receive both secondary and postsecondary credit for that
coursework.
"Department." The Department of Revenue of the Commonwealth.
"Eligible business program." A program established by a
taxpayer that:
(1) is offered at a worksite that has been approved by a
school district;
(2) has a certified employee that supervises and
provides training to a student participant in the student's
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chosen field of study;
(3) is arranged with a school district as an integral
part of its school curricula as an out-of-school work-based
program;
(4) provides student participants with training in a
chosen field of study that includes, at a minimum,
performance of technical components of a job that are job-
specific and provides an in-depth understanding of the tools,
processes and procedures used by individuals employed in that
occupation, not including soft skills; and
(5) provides a taxpayer with an opportunity to
participate in a tax credit program and to partner with
schools to help shape the future of the business community so
that graduates can enter the work force with the confidence
and skills necessary to perform their work at a high level.
"Out-of-school work-based program." A program through a
school district that qualifies as an out-of-school program and
part-time employment regulated under 22 Pa. Code ยง 11.28
(relating to out-of-school programs and part-time employment).
"Pass-through entity." Any of the following:
(1) A partnership, limited partnership, limited
liability company, business trust or other unincorporated
entity that for Federal income tax purposes is taxable as a
partnership.
(2) A Pennsylvania S corporation.
"Postsecondary institution." The term includes any of the
following:
(1) A community college operating under Article XIX-A of
the Public School Code of 1949.
(2) A public postsecondary vocational education
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institution located in this Commonwealth accredited by the
State Board of Vocational Education as established under
Article XVIII of the Public School Code of 1949.
(3) An accredited postsecondary business, career and
technical institute, trade or vocational school located in
this Commonwealth with courses necessary for obtaining
licensure, industry skill certification or a Pennsylvania
skills certificate in the student participant's chosen field
of study.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV or VI. The term includes the liability for
taxes imposed under Article III on an owner of a pass-through
entity.
"Secretary." The Secretary of Revenue of the Commonwealth.
"Small business." An employer who employs 50 or fewer
individuals.
"Soft skills." The workplace interpersonal and professional
skills that are necessary for an employee to adhere to generally
accepted workplace behaviors. The term includes work ethic,
promptness, integrity and respect for others.
"Student participant." An individual who is:
(1) enrolled in grade 12 and in good standing at a high
school located in this Commonwealth;
(2) enrolled in a postsecondary institution through the
school district's articulation agreement with the institution
for concurrent enrollment under Article XVI-B of the Public
School Code of 1949 or dual enrollment or other strategies
that promote acquisition of postsecondary credit while still
in high school to earn credits in a course necessary for
obtainment of licensure or industry skill certification or
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Pennsylvania Skills Certificate in the individual's chosen
field of study;
(3) engaged and supervised by a qualified taxpayer of
the community in an out-of-school work-based program in a
position that provides training and experience to the
individual in the chosen field of study; and
(4) receives reimbursement from the taxpayer for the
amount the individual paid to the postsecondary institution
for courses successfully completed by the individual at the
institution in the student's chosen field of study pursuant
to the concurrent enrollment agreement that the institution
has with the school district.
"Tax credit." The work-based learning tax credit authorized
under this article.
"Taxpayer." A business subject to tax under Article III, IV
or VI. The term shall include the shareholder, owner or member
of a pass-through entity that receives a tax credit.
Section 1704-L. Employer credit for student participant in its
eligible business program.
(a) Application.--A taxpayer who partners with a school
district to provide a student participant an opportunity to
participate in an eligible business program established by the
taxpayer in a taxable year may apply for a tax credit as
provided under this article. By September 15 of each year, a
taxpayer must submit an application for the tax credit to the
department, which shall include the following certifications by
the taxpayer:
(1) the student participant was provided the
opportunity, engaged in and was supervised in this
Commonwealth in a position in an eligible business program
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established by the taxpayer that provides training and
experience to the individual in the chosen field of study;
(2) the student participant was supervised in the
taxpayer's eligible business program for a term that lasted
at least 12 weeks and includes a minimum of 14 hours of
service per week;
(3) the total hours and weeks worked by the student
participant under the eligible business program for the
taxable year;
(4) the amount the taxpayer reimbursed the student
participant for charges by the postsecondary institution
pursuant to its concurrent enrollment agreement with the
school district for courses that were successfully completed
by the student participant in the student's chosen field of
study; and
(5) the total compensation paid to the student
participant for the taxable year, if any additional
compensation was paid by the taxpayer to the student
participant above the payment of the related coursework taken
at the postsecondary institution.
(b) Amount.--A taxpayer that is qualified under subsection
(a) shall receive a tax credit for the taxable year in the
amount of 50% of the value of the salaries, wages, tuition
reimbursement or other remuneration, including, but not limited
to, the payment of the related coursework to the postsecondary
institution, for services paid to a student participant, or
$1,000, whichever is less.
(c) Notification.--By December 15 of the calendar year
following the close of the taxable year during which the
taxpayer reimbursed the student participant for courses taken at
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the postsecondary institution or paid the student participant a
salary or wage for hours engaged in the eligible business
program in addition to the reimbursement, if any, the department
shall notify the taxpayer of the amount of the taxpayer's tax
credit approved by the department.
Section 1705-L. Carryover, carryback, refund and assignment of
credit.
(a) Carryover.--If the taxpayer cannot use the entire amount
of the tax credit for the taxable year in which the 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 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 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
credit.
(b) Application.--A tax credit approved by the department
for partnering with a school district to provide a student
participant an opportunity to participate in an eligible
business program established by the taxpayer 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 credit was approved before the tax credit is applied against
any tax liability under subsection (a).
(c) Unused credit.--A taxpayer shall not be entitled to
assign, carry back or obtain a refund of an unused tax credit.
Section 1706-L. Limitation on credits.
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(a) Total amount.--The total amount of tax credits approved
by the department shall not exceed $10,000,000 in any fiscal
year, except that the sum of $2,500,000 shall be used
exclusively for credits for small business.
(b) Proration among applicants.--If the total amount of tax
credits applied for by all taxpayers exceeds the amount
allocated for those credits, the tax credit to be received by
each applicant shall be prorated by the department among all
applicants who have qualified for the credit.
Section 1707-L. Shareholder, owner or member pass-through
entity.
(a) Shareholder credit.--If a Pennsylvania S corporation
does not have an eligible tax liability against which the tax
credit may be applied, a shareholder of the Pennsylvania S
corporation is entitled to a tax credit equal to the tax credit
determined for the Pennsylvania S corporation for the taxable
year multiplied by the percentage of the Pennsylvania S
corporation's distributive income to which the shareholder is
entitled.
(b) Pass-through entity credit.--If a pass-through entity
other than a Pennsylvania S corporation does not have an
eligible tax liability against which the tax credit may be
applied, an owner or member of the pass-through entity is
entitled to a tax credit equal to the tax credit determined for
the pass-through entity for the taxable year multiplied by the
percentage of the pass-through entity's distributive income to
which the owner or member is entitled.
(c) Credit cumulation.--The credit provided under subsection
(a) or (b) shall be in addition to any tax credit to which a
shareholder, owner or member of a pass-through entity is
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otherwise entitled under this article, except that a pass-
through entity and a shareholder, owner or member of a pass-
through entity may not claim a credit under this article for the
same expense.
Section 1708-L. Report to General Assembly.
The secretary shall submit an annual report to the General
Assembly indicating the effectiveness of the credit provided
under this article no later than March 15 following the year in
which the credits were approved. The report shall include the
names of all taxpayers utilizing the credit as of the date of
the report and the amount of 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 include any
recommendations for changes in the calculation or administration
of the credit.
Section 1709-L. Regulations.
The secretary shall promulgate regulations necessary for the
implementation and administration of this article.
Section 2. The addition of Article XVII-L of the act shall
apply to taxable years beginning after December 31, 2017.
Section 3. This act shall take effect in 60 days.
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