PRINTER'S NO. 1986

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

1185

Session of

2018

INTRODUCED BY KILLION, McGARRIGLE, ARGALL, BLAKE, BROWNE,

FONTANA, GORDNER, HUGHES, LEACH, VOGEL, VULAKOVICH AND

YUDICHAK, SEPTEMBER 19, 2018

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 Pennsylvania Housing 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

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:

"Agency." The Pennsylvania Housing Finance Agency.

"Credit period." A 5-year period that begins with the

taxable year in which the qualified low-income housing project

is eligible to claim the credit under section 1907-G or, at the

irrevocable election of the eligible applicant, the next

succeeding taxable year.

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

allocation of Federal housing tax credits developed under 26

C.F.R. § 1.42-17 (relating to qualified allocation plan).

"Qualified low-income housing project." The term shall have

the same meaning as provided under section 42(g)(1) of the

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §

42(g)(1)).

"Qualified tax liability." The tax liability imposed on a

taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV,

excluding any tax withheld by an employer under Article III.

"Qualified taxpayer." Any individual, business firm,

1

2

3

4

5

6

7

8

9

employer under Article III; and

(2) meets the criteria set forth in guidelines adopted

and promulgated by the agency in accordance with section

1904-G.

"Tax credit." An amount made available to qualified

taxpayers to offset against qualified tax liability as

authorized and allocated under this article.

"Tax credit certificates." The document provided by the

agency evidencing the allocation of tax credits under section

Section 1903-G. Pennsylvania Housing Tax Credit.

(a) Tax credit authority.--The agency may allocate tax

credits in an amount not to exceed the sum of:

(1) $10 million per fiscal year;

(2) unused and unallocated tax credits for the preceding

fiscal years ; and

(3) tax credits returned to the agency for the preceding

fiscal years.

(b) Application.--An eligible applicant may apply to the

agency for tax credits for a qualified low-income housing

agency shall, as much as practical and unless otherwise

1

2

3

4

5

6

7

8

9

indicated in this article, administer the tax credit using the

same guidelines, procedures and priorities that the agency uses

to administer the Federal housing tax credit.

(e) Income targeting.--The agency shall allocate tax credits

in a manner that the agency, at the time of allocation,

reasonably believes will result in at least 10% of the tax

credits being used to provide housing units targeting households

with incomes at or below 30% of area median income.

Section 1904-G. Guidelines and procedures.

The agency shall adopt guidelines and procedures for the tax

credit in conjunction with the qualified allocation plan and

administrative guidelines.

Section 1905-G. Reporting.

The agency shall annually publish a report on the tax credit

allocations on the agency's publicly accessible Internet

website. The report shall include:

(1) Tax credits awarded.

(a) General rule.--On presentation to the department, a

qualified taxpayer may claim a dollar for dollar tax credit

against the qualified tax liability of the qualified taxpayer if

a tax credit certificate, issued by the agency after a

determination by the agency that the qualified low-income

housing project for which the tax credit was allocated, has

fully certified its costs and is in compliance with agency

1

2

3

4

5

6

7

8

9

requirements.

(b) Exception.--The agency shall only issue the

certification under subsection (a) for the first year that the

qualified taxpayer claims the tax credit.

(c) Time period.--Presentation under subsection (a) shall be

made within the time specified by the guidelines issued by the

agency in consultation with the department.

Section 1908-G. Carryover, sale and assignment.

(a) General rule.--The department, in consultation with the

agency, shall establish guidelines that include procedures for

the carryover, sale and assignment of credits.

(b) Application.--A tax credit certification presented to

the department in accordance with section 1907-G shall first be

applied against the qualified taxpayer's qualified tax liability

for the current taxable year as of the date on which the tax

credit certification was presented and before any carryover is

applied against the qualified tax liability.

(c) Carryover.--If a qualified taxpayer cannot use the

entire amount of the tax credit for the taxable year in which it

is first claimed, the excess may be carried over to subsequent

taxable years. Each time a tax credit is carried-over to a

succeeding taxable year, the tax credit shall be reduced by the

amount that was used as a credit during the immediately

carry back or obtain a refund of all or any portion of an unused

1

2

3

4

5

6

7

8

9

tax credit granted to the qualified taxpayer under this article.

(e) Sale or assignment.--A qualified taxpayer, on

application and approval by the department, in consultation with

the agency and in conformance with department and agency

guidelines, may sell or assign, in whole or in part, a tax

credit granted to the qualified taxpayer under this article. No

relation to the eligible applicant is required of a purchaser or

assignee of tax credits under this article.

(f) Purchasers and assignees.--The purchaser or assignee of

The purchaser or assignee shall notify the department and the

agency of the purchase or assignment of the tax credit in

compliance with procedures specified by the department.

(g) Pass-through entity distributions.--The department shall

establish guidelines that include procedures and limitations for

pass-through entity distributions of tax credits. Subject to the

provisions of section 1909-G, the guidelines shall include, but

not be limited to, provisions allowing the allocation of the tax

credit to the following in order to assign the tax credit to a

qualified taxpayer who wishes to claim the tax credit:

1

2

3

4

5

6

7

8

9

partnership agreement or other agreement governing the

operations of eligible applicant. Tax credits allocated under

this subsection may, in accordance with subsection (e) and

agency guidelines, be sold or assigned.

Section 1909-G. Recapture.

recapture of tax credits during the credit period that are

similar in structure and effect to events of noncompliance under

section 42 of the Internal Revenue Code of 1986 (Public Law 99-

514, 26 U.S.C. § 42). The guidelines shall provide for:

(1) An affirmative duty to notify the agency and the

department of any recapture of Federal housing tax credits

within sixty days of the Federal recapture during the five-

year credit period.

(2) The mechanism and formula that the tax credit may be

recaptured over the remaining credit period.

(b) Failure to notify agency and department of Federal

recapture.--Any qualified taxpayer receiving tax credits under

this section who fails to give timely notice to the agency and

the department of Federal housing tax credit recapture shall be

subject to debarment of future tax credits and Federal housing

tax credits.

1

2

3

4

5

8

9

fraud or intentional misrepresentation of information required

to be provided to the agency or the department under this

article or the agency's guidelines, the department may:

(1) Recapture all or a portion of the tax credit.

(2) Debar the applicant or qualified taxpayer from

future tax credits and Federal housing tax credit

opportunities.

(3) Impose other penalties as specified in the agency's

guidelines.

Section 2. This act shall take effect in 60 days.

1

2

3

4

5

6

7

8

9