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PRINTER'S NO. 844
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
771
Session of
2019
INTRODUCED BY DeLUCA, MURT, McNEILL, ULLMAN, HILL-EVANS,
MILLARD, WARNER AND NEILSON, MARCH 11, 2019
REFERRED TO COMMITTEE ON STATE GOVERNMENT, MARCH 11, 2019
AN ACT
Amending the act of November 26, 1997 (P.L.508, No.55), entitled
"An act providing for the tax exemption of institutions of
purely public charity; exempting real property owned by
State-related universities or Federal Government
instrumentalities from taxation; providing for unfair
competition; imposing penalties; and making repeals," further
providing for prohibited act.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 11 of the act of November 26, 1997
(P.L.508, No.55), known as the Institutions of Purely Public
Charity Act, is amended to read:
Section 11. Prohibited act.
(a) Exemption.--No institution may claim an exemption from
sales and use tax as an institution of purely public charity
unless the institution has received an order from the Department
of Revenue approving and authorizing the exemption. The
Department of Revenue may not issue an order to an institution
approving and authorizing an exemption from sales and use tax if
it receives a report from the Department of State under
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subsection (b)(4) that lists the institution as subject to a
disqualification order.
(b) Disqualification.--The following shall apply:
(1) The Department of State may issue an order
disqualifying an institution from claiming an exemption from
sales and use tax as an institution of purely public charity
if the Department of State finds that the institution has
failed to expend at least 60% of the institution's total
annual functional expenses on program services when those
expenses are averaged over the most recent three fiscal years
for which the Department of State has reports containing
expense information. The calculation of program services
expenses and total functional expenses shall be based on the
amounts of program services expenses and total functional
expenses identified by the institution in the institution's
Internal Revenue Service Form 990 return. If the institution
does not file a full Internal Revenue Service Form 990
return, the Department of State may require an institution to
file the amounts spent on program services expenses and total
functional expenses identified by the institution on a form
prescribed by the Department of State. All actions taken by
the Department of State shall be taken subject to the right
of notice, hearing and adjudication and the right of appeal,
in accordance with 2 Pa.C.S. (relating to administrative law
and procedure).
(2) A disqualification order shall remain in effect
until such time as the institution submits sufficient
information to the Department of State to demonstrate that
the institution's program services expenses meet the minimum
percentage provided under paragraph (1). An institution may
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submit information under this paragraph no earlier than one
year after the disqualification order becomes final and may
not submit information under this paragraph more than once
each year after the initial submission is made. The
information submitted under this paragraph must include all
Internal Revenue Service Form 990 returns or other forms
prescribed by the Department of State filed by the
institution after the disqualification order became final.
(3) When a disqualification order becomes effective, the
Department of State shall publish on the Department of
State's publicly accessible Internet website and otherwise
make publicly available information identifying the
institution named in the order, the date that the order
became effective and the date that the information was
published on the Department of State's publicly accessible
Internet website.
(4) At least once every year, the Department of State
shall file a written report with the Department of Revenue
that identifies:
(i) All institutions that are subject to
disqualification orders during the period covered by the
report.
(ii) The date the disqualification orders became
effective.
(iii) The date that information required under
paragraph (3) was published on the Department of State's
publicly accessible Internet website for each order.
(iv) The methods by which the public can obtain a
listing of institutions that are subject to
disqualification orders.
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(5) The Department of State may promulgate regulations
deemed necessary to carry out the Department of State's
duties under this section.
Section 2. This act shall take effect in 60 days.
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