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PRINTER'S NO. 54
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
42
Session of
2019
INTRODUCED BY SNYDER, RYAN, JAMES, OBERLANDER, McCLINTON AND
MATZIE, JANUARY 28, 2019
REFERRED TO COMMITTEE ON FINANCE, JANUARY 28, 2019
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 depressed area 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 XIX-G
DEPRESSED AREA TAX CREDIT
Section 1901-G. 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:
"Business firm." A business entity authorized to do business
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in this Commonwealth and subject to taxes imposed by Article
III, IV, VI, VII, VIII, IX or XV. The term shall include a pass-
through entity.
"Depressed area." Any area in this Commonwealth which is
certified as such by the Department of Community and Economic
Development and the certification is approved by the Governor.
Such certification shall be made on the basis of Federal census
studies and current indices of social and economic conditions.
"Pass-through entity." A partnership as defined in section
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1).
"Qualified tax liability." Tax liability imposed on a
business firm under Article III, IV, VI, VII, VIII, IX or XV.
"Secretary." The Secretary of Community and Economic
Development of the Commonwealth.
Section 1902-G. Tax credit.
(a) Contribution.--A business firm which contributes to a
program engaging in the activities of providing a program for
school students for an educational purpose and outside of the
school setting in a depressed area shall receive a depressed
area tax credit if the secretary annually approves the proposal
of the business firm. The proposal shall set forth the program
to be conducted, the depressed area selected, the estimated
amount to be invested in the program and the plans for
implementing the program.
(b) Limitation.--The total amount of the depressed area tax
credit granted for programs approved under this article shall
not exceed $5,000,000 in any fiscal year.
Section 1903-G. Claiming the credit.
Upon being approved for a depressed area tax credit by the
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secretary, the business firm may claim a tax credit against the
qualified tax liability of the business firm.
Section 1904-G. Carryover, carryback and assignment of credit.
(a) Carryover.--If a business firm cannot use the entire
amount of the depressed area tax credit for the taxable year in
which the 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 business firm for
those taxable years. Each time the depressed area 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 depressed area tax credit may be
carried over and applied to succeeding taxable years for not
more than seven taxable years following the first taxable year
for which the business firm was entitled to claim the credit.
(b) Application.--A depressed area tax credit shall first be
applied against the business firm's qualified tax liability for
the current taxable year as of the date on which the credit was
issued before the credit can be applied against any tax
liability under subsection (a).
(c) No carryback or refund.--A business firm may not carry
back or obtain a refund of all or any portion of an unused
depressed area tax credit granted to the business firm.
(d) Sale or assignment.--The following shall apply:
(1) A business firm, upon application to and approval by
the Department of Community and Economic Development, may
sell or assign, in whole or in part, a depressed area tax
credit granted to the business firm.
(2) Before an application is approved, the Department of
Revenue must find that the applicant has filed all required
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State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined at
settlement, assessment or determination by the Department of
Revenue.
(e) Purchasers and assignees.--The purchaser or assignee of
all or a portion of a depressed area tax credit obtained under
subsection (d) shall immediately claim the credit in the taxable
year in which the purchase or assignment is made. The purchaser
or assignee may not carry forward, carry back or obtain a refund
of or sell or assign the depressed area tax credit. The
purchaser or assignee shall notify the Department of Revenue of
the seller or assignor of the depressed area tax credit in
compliance with procedures specified by the department.
Section 1905-G. Pass-through entities.
(a) Transfers.--If a pass-through entity has any unused
depressed area tax credit, the pass-through entity may elect, in
writing, according to procedures established by the Department
of Revenue, 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 shareholder,
member or partner is entitled.
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity shall not claim the
depressed area tax credit under subsection (a) for the same
qualified expenditures.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a depressed area tax credit is
transferred under subsection (a) shall immediately claim the
credit in the taxable year in which the transfer is made. The
shareholder, member or partner may not carry forward, carry
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back, obtain a refund of or sell or assign the credit.
Section 1906-G. Administration.
The Department of Community and Economic Development and the
Department of Revenue shall jointly develop written guidelines
for the implementation of the provisions of this article.
Section 2. This act shall take effect in 60 days.
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