PRINTER'S NO. 1206
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
901
Session of
2017
INTRODUCED BY FOLMER, MENSCH, VULAKOVICH, MARTIN, DiSANTO,
STEFANO AND BROWNE, SEPTEMBER 26, 2017
REFERRED TO FINANCE, SEPTEMBER 26, 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 small business health savings
account 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
SMALL BUSINESS HEALTH SAVINGS ACCOUNT TAX CREDIT
Section 1701-L. Scope.
This article relates to small business health savings account
tax credit.
Section 1702-L. Definitions.
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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:
" Department. " The Department of Revenue of the Commonwealth.
" Employee " or " employees. " An individual or group of
individuals employed by a small business. The term shall also
include a sole proprietor.
" Health insurance policy. " An individual or group health,
sickness or accident policy or subscriber contract or
certificate issued by an entity subject to any one of the
following:
(1) The act of May 17, 1921 (P.L.682, No.284) , known as
The Insurance Company Law of 1921.
(2) The act of December 29, 1972 (P.L.1701, No.364) ,
known as the Health Maintenance Organization Act.
(3) The act of May 18, 1976 (P.L.123, No.54) , known as
the Individual Accident and Sickness Insurance Minimum
Standards Act.
(4) 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations) or 63 (relating to professional health services
plan corporations).
" Health Savings Account. " As defined in section 223(d) of
the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
§ 223 (d)).
" Qualified high deductible health plan. " A health insurance
policy that would qualify as a high deductible health plan under
section 223(c)(2) of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 223 (c)(2)).
" Qualified tax liability. " The liability for taxes imposed
under Article III, IV or VI. The term shall include the
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liability for taxes imposed under Article III on an owner of a
pass-through entity.
" 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.
" Secretary. " The Secretary of Revenue of the Commonwealth.
" Small business. " An employer who, on at least 50% of its
working days during the taxable year, employed fewer than 100
employees.
" Tax credit. " The small business health savings account tax
credit authorized under this article.
" Taxpayer. " A small business subject to tax under Article
III, IV or VI. The term includes:
(1) the partner, shareholder, owner or member of a pass-
through entity; or
(2) a sole proprietor.
Section 1703-L. Credit for Health Savings Account
contributions.
(a) Application.--A taxpayer who purchases and provides a
qualified high deductible health plan to employees and makes a
contribution to a health savings account on behalf of employees
in a taxable year may apply for a tax credit as provided in this
article. By September 15, a taxpayer must submit an application
to the department for the aggregate contribution made by the
taxpayer to employee health savings accounts in the taxable year
that ended in the prior calendar year.
(b) Computation.--A taxpayer who qualifies under subsection
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(a) shall receive a tax credit for the taxable year in
accordance with the following:
(1) Fifty percent of the aggregate contribution made by
the taxpayer to employee health savings accounts when the
contribution is provided for the benefit of employees,
spouses and dependents for the taxable year.
(2) Twenty-five percent of the aggregate contribution
made by the taxpayer to employee health savings accounts when
the contribution is provided solely for the benefit of an
employee.
(c) Notification.--By December 15 of the calendar year
following the close of the taxable year during which the
contribution to employee health savings accounts was made, the
department shall notify the taxpayer of the amount of the
taxpayer's tax credit approved by the department.
Section 1704-L. Limitation on credits.
(a) Limit.--The total amount of credits approved by the
department shall not exceed $30,000,000 in any fiscal year.
(b) Calculation.--If the total amount of small business
health savings account tax credits applied for by all taxpayers
exceeds the amount allocated for those credits, then the small
business health savings account tax credit to be received by
each applicant shall be the product of the allocated amount
multiplied by the quotient of the small business health savings
account tax credit applied for by the applicant divided by the
total of all small business health savings account credits
applied for by all applicants, the algebraic equivalent of which
is:
taxpayer's small business health savings account tax
credit=amount allocated for those credits X (small business
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health savings account tax credit applied for by the
applicant/total of all small business health savings account tax
credits applied for by all applicants).
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, then 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 is to 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 of credit.--A tax credit approved by the
department for monetary contributions made to employee health
savings accounts 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) Prohibition.--A taxpayer is not entitled to assign,
carry back or obtain a refund of an unused tax credit.
Section 1706-L. Shareholder, owner or member pass-through.
(a) Shareholder's calculation.--If a Pennsylvania S
corporation does not have an eligible tax liability against
which the tax credit may be applied, a shareholder of the
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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) Owner or member calculation.--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) Application and restrictions.--The credit provided under
subsection (a) or (b) is in addition to any tax credit to which
a shareholder, owner or member of a pass-through entity is
otherwise entitled under this article. However, 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
contributions made to employee health savings accounts.
Section 1707-L. Report to General Assembly.
The secretary shall submit an annual report to the General
Assembly indicating the effectiveness of the credit provided by
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 also include
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any recommendations for changes in the calculation or
administration of the credit.
Section 1708-L. Regulations.
The secretary shall promulgate regulations necessary for the
implementation and administration of this article.
Section 2. This act shall apply to all tax years beginning
after December 31, 2017.
Section 3. This act shall take effect immediately.
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