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PRINTER'S NO. 2555
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1848
Session of
2019
INTRODUCED BY LEWIS, STEPHENS, ZIMMERMAN, CALTAGIRONE, READSHAW
AND NEILSON, SEPTEMBER 23, 2019
REFERRED TO COMMITTEE ON FINANCE, SEPTEMBER 23, 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 a long-term care insurance 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
LONG-TERM CARE INSURANCE TAX CREDIT
Section 1701-L. Scope of article.
This article relates to long-term care insurance tax credits.
Section 1702-L. Definitions.
The following words and phrases when used in this article
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shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
" Department. " The Department of Revenue of the Commonwealth.
" Long-term care insurance. " An insurance policy, offered to
an employee by an employer, to provide coverage when long-term
care is needed, including chronic illness or disability and
expenses for a nursing home, an assisted living facility, home
care, a visiting nurse, a home health aide, a friendly visitor
program, home-delivered meals, chore services, adult day-care
centers or respite services.
" Long-term care insurance expenses. " Expenses associated
with providing long-term care insurance or the cost of long-term
care insurance premiums.
" 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.
" Qualified tax liability. " The liability for taxes imposed
under Article III or IV. The term shall include 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 employed an average of
fewer than 50 full-time equivalent employees during the
immediately preceding taxable year.
" Tax credit. " The long-term care insurance tax credit
authorized under this article.
" Taxpayer. " A person subject to tax under Article III or IV.
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The term includes the shareholder, owner or member of a pass-
through entity that receives a tax credit.
Section 1703-L. Tax credit for long-term care insurance.
(a) Application.--A taxpayer who purchases long-term care
insurance in a taxable year may apply for a tax credit as
provided under this article. By September 15, 2021, and each
September 15 thereafter, a taxpayer must submit an application
to the department for long-term care insurance expenses incurred
in the taxable year that ended in the prior calendar year.
(b) Amount.--A taxpayer that is qualified under subsection
(a) shall receive a tax credit for the taxable year in the
amount of 30% of the long-term care insurance expenses incurred
by the taxpayer during the taxable year.
(c) Notification.--By December 15, 2021, and each December
15 thereafter, following the close of the taxable year during
which the long-term care insurance expense was incurred, the
department shall notify the taxpayer of the amount of the
taxpayer's tax credit approved by the department.
Section 1704-L. Carryover, carryback, refund and assignment of
tax credit.
(a) Tax credit.--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 tax credit against the
qualified tax liability of the taxpayer for those taxable years.
Each time the tax credit is carried over to a succeeding taxable
year, it is to be reduced by the amount that was used as a tax
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
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taxable year for which the taxpayer was entitled to claim the
tax credit.
(b) Application.--A tax credit approved by the department
for long-term care insurance expenses 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 tax
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 1705-L. Limitation on tax credits.
(a) Total.--The total amount of tax credits approved by the
department may not exceed $20,000,000 in any fiscal year. Of
that amount, $5,000,000 shall be allocated exclusively for small
businesses. If the total amount allocated to either the group of
applicants, exclusive of small businesses, or the group of small
business applicants is not approved in any fiscal year, the
unused portion shall become available for use by the remaining
qualifying taxpayers.
(b) Proration among all applicants.--If the total amount of
tax credits applied for by all applicants, exclusive of small
businesses, exceeds the amount allocated for those tax credits,
then the tax credit to be received by each applicant shall be
prorated by the department among all applicants, exclusive of
small businesses, who have qualified for the tax credit.
(c) Proration among small business applicants.--If the total
amount of tax credits applied for by all small businesses
exceeds the amount allocated for those tax credits, then the tax
credit to be received by each small business applicant shall be
prorated by the department among all small business applicants
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who have qualified for the tax credit.
Section 1706-L. Shareholder, owner or member pass-through.
(a) Pennsylvania S corporation shareholder.--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 shall be 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 owner or member.--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) Additional tax credit.--The tax 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
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 tax credit under this article for
the same long-term care insurance expense.
Section 1707-L. Report to General Assembly.
The secretary shall submit an annual report to the General
Assembly indicating the effectiveness of the tax credit provided
by this article no later than March 15 following the year in
which the tax credits were approved. The report shall include
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the names of all taxpayers utilizing the tax credit as of the
date of the report and the amount of tax 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 any recommendations for changes in the calculation or
administration of the tax credit.
Section 1708-L. Termination.
The department may not approve a tax credit under this
article for taxable years ending after December 31, 2029.
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, 2018.
Section 3. This act shall take effect in 60 days.
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