Regular Session 2019-2020 House Bill 2559 P.N. 3872

PRINTER'S NO. 3872

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2559

Session of

2020

INTRODUCED BY NEILSON, DERMODY, SNYDER, BERNSTINE, MULLERY,

GAYDOS, WILLIAMS, A. DAVIS, ULLMAN, BRIGGS, FREEMAN, MURT,

McCLINTON, O'MARA, SCHLOSSBERG, BRADFORD, HOHENSTEIN,

ROEBUCK, CEPHAS, MALAGARI, GALLOWAY, KOSIEROWSKI, HANBIDGE,

RAVENSTAHL, WEBSTER, BIZZARRO, KORTZ, GOODMAN, MADDEN,

CIRESI, DELLOSO, YOUNGBLOOD, D. MILLER, ZABEL, SANCHEZ,

BOYLE, McNEILL, LONGIETTI, HILL-EVANS, READSHAW, KINSEY,

MARKOSEK, ROZZI, TOMLINSON, WARREN, SCHWEYER, DeLUCA,

DRISCOLL, FRANKEL, NELSON, HARKINS AND MERSKI, MAY 28, 2020

REFERRED TO COMMITTEE ON FINANCE, MAY 28, 2020

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 construction job tax credit and

for compliance with prevailing wage for tax credits.

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

CONSTRUCTION JOB TAX CREDIT

Section 1701- L. Scope of article.

This article establishes a construction job tax credit.

Section 1702-L. 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:

"Company." A corporation, partnership, limited liability

company, limited liability partnership, business trust,

affiliate, unincorporated joint venture or other business entity

doing business within this Commonwealth.

"Completion date." The date on which the completion of the

construction of the project facility occurs, evidenced by an

occupancy permit or certificate of completion by project

engineer.

"Construction period." The period, not to exceed five years

unless approved by the department, during which the project

facility is constructed beginning with the start date and ending

with the completion date.

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

"Full-time equivalent construction job." A total of at least

2,080 hours worked, on a full-time or part-time basis, over a

consecutive 12-month period to construct a project facility

during the construction period, including paid leave, by at

least one employee or independent contractor of the qualified

taxpayer.

"Job tax credit." The construction job tax credit

established under this article.

"Manufacturing or processing." The performance of

manufacturing, fabricating, compounding, processing or other

operations, engaged in as a business, which places tangible

personal property in a form, composition or character different

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from that in which the tangible personal property is acquired,

whether for sale or use by the manufacturer.

"New job." A full-time equivalent construction job created

by the construction of a project facility during the

construction period and paying the prevailing minimum wage rate

for each craft or classification as determined by the Department

of Labor and Industry under the Prevailing Wage Act.

"Pass-through entity." Any of the following:

(1) A partnership as defined under section 301(n.0).

(2) A Pennsylvania S corporation as defined under

section 301(n.1).

(3) An unincorporated entity subject to section 307.21.

"Prevailing Wage Act." The act of August 15, 1961 (P.L.987,

No.442), known as the Pennsylvania Prevailing Wage Act.

"Project facility." A manufacturing or processing facility

located in this Commonwealth requiring a private capital

investment of at least $450,000,000 to construct.

"Qualified tax liability." The liability for taxes imposed

under Articles III, IV, VII, VIII, IX, XI and XV. The term does

not include tax withheld under section 316.1.

"Qualified taxpayer." A qualified taxpayer that satisfies

all of the following:

(1) Has constructed a project facility during the

construction period and operates the project facility in this

Commonwealth.

(2) Has created at least 200 new jobs during the

construction period at the project facility.

(3) Has made good faith efforts to recruit and employ,

and to encourage any contractors or subcontractors to recruit

and employ, workers from the local labor market for

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employment at the project facility during the construction

period.

(4) Has sourced, from this Commonwealth, at least 50% of

the raw materials used for the construction of the project

facility during the construction period.

(5) For all aspects of construction, demolition,

alteration and modification of the project facility, has

utilized only contractors that participate in an approved

apprenticeship and training program that is registered with

the United States Department of Labor or the Department of

Labor and Industry of the Commonwealth that has graduated

registered apprentices to journeyperson status in at least

three of the previous five years immediately preceding

commencement of construction on the project facility.

"Start date." As determined by the department, the date on

which a qualified taxpayer may begin creating new jobs which may

be eligible for a job tax credit.

Section 1703-L. Eligibility.

In order to be eligible to receive a job tax credit, a

company shall comply with the Prevailing Wage Act for each new

job and shall demonstrate the following to the department:

(1) The company meets the requirements of a qualified

taxpayer.

(2) The company's financial stability and the project

facility's financial viability.

(3) The intent to substantially maintain the project

facility operations in this Commonwealth for a period of at

least 10 years from the completion date.

(4) An affirmation that the decision to expand or locate

in this Commonwealth was due in large part to the

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availability of the job tax credit.

(5) An affirmation that neither the company, nor any of

its principal owners, proprietors, partners, officers, parent

or subsidiary organizations, directors or agents, has been

charged with a violation of, has entered a guilty plea

regarding, has been adjudicated guilty or is subject to a

consent decree or administrative or judicial order regarding

any of the following within the past five years immediately

preceding the date of its bid submission:

(i) the National Labor Relations Act (49 Stat. 449,

29 U.S.C. §§ 151-169);

(ii) the Equal Employment Opportunities Act (42

U.S.C. § 2000e et seq.);

(iii) the Americans with Disabilities Act of 1990

(Public Law 101-336, 104 Stat. 327, 42 U.S.C. § 12101 et

seq.);

(iv) the Occupational Safety and Health Act of 1970

(Public Law 91-596, 29 U.S.C. § 651 et seq.);

(v) the National Apprenticeship Act (29 U.S.C. §

50), also known as the Fitzgerald Act;

(vi) the act of June 2, 1915 (P.L.736, No.338),

known as the Workers' Compensation Act;

(vii) the act of December 5, 1936 (2nd Sp.Sess.,

1937 P.L.2897, No.1), known as the Unemployment

Compensation Law;

(viii) the act of June 1, 1937 (P.L.1168, No.294),

known as the Pennsylvania Labor Relations Act;

(ix) the act of October 27, 1955 (P.L.744, No.222),

known as the Pennsylvania Human Relations Act;

(x) the act of July 14, 1961 (P.L.604, No.304),

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known as The Apprenticeship and Training Act;

(xi) the act of August 15, 1961 (P.L.987, No.442),

known as the Pennsylvania Prevailing Wage Act; or

(xii) the act of January 17, 1968 (P.L.11, No.5),

known as The Minimum Wage Act of 1968.

Section 1704-L. Application process.

(a) Application.--A company shall complete and submit to the

department a job tax credit application on a form prescribed by

the department. The application must contain the following:

(1) A description of the project.

(2) The estimated number of new jobs to be created.

(3) The estimated number of permanent direct full-time

jobs to be created after the completion date at the project

facility and maintained by the company.

(4) The amount of private capital investment in the

project facility.

(5) A signed statement that the company intends to

substantially maintain its operation at the project facility

for a period of 10 years from the completion date.

(6) A signed statement that at least 50% of the raw

materials used by the company for the construction of the

project facility during the construction period are sourced

from this Commonwealth.

(7) Any other information the department deems

appropriate.

(b) Approval.--If the department approves the company's

application, the department shall reserve job tax credits not to

exceed the estimated number of new jobs specified in the

application of the qualified taxpayer.

Section 1705-L. Job tax credits.

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(a) Maximum amount.--A qualified taxpayer may claim a job

tax credit of $20,000 per new job created against its qualified

tax liability.

(b) Determination of new jobs created.--

(1) The qualified taxpayer shall provide the department

with the following information for each new job created:

(i) identification of the employer of record,

including name, address and Federal employer

identification number;

(ii) job titles;

(iii) employee or independent contractor

identification, including name, address and Social

Security number;

(iv) hours worked during the construction period;

(v) classification, craft and hourly rate of wage

paid to each employee or independent contractor; and

(vi) any other information deemed necessary by the

department.

job tax credit for each new job created, as awarded and

authorized by the department, except that a job tax credit may

not be claimed for more than five years from the date the job

tax credit is awarded.

(d) Availability of job tax credits.--Each fiscal year,

$20,000,000 in job tax credits shall be made available to the

department and may be awarded by the department in accordance

with this article.

(e) Limit.--A qualified taxpayer that has been granted a job

tax credit under this article shall be ineligible for any other

tax credit provided under this act.

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Section 1706-L. Prohibitions.

The department shall determine the start date. The start date

may not precede the effective date of this section. A company

may not receive a job tax credit for a new job created prior to

the start date or after the completion date.

Section 1707-L. Penalties.

(a) Failure to maintain operations.--A qualified taxpayer

that receives job tax credits and fails to substantially

maintain the project facility operations as determined by the

department for a period of at least 10 years from the completion

date shall be required to refund to the Commonwealth the total

amount of credits granted.

(b) Failure to comply with the Prevailing Wage Act.--If the

Department of Labor and Industry determines that a qualified

taxpayer that received a job tax credit failed to comply with

the Prevailing Wage Act, the qualified taxpayer must refund to

the Commonwealth the total amount of credits granted.

in subsection (a) if the department determines that a qualified

taxpayer's operations were not substantially maintained for 10

years from the completion date because of circumstances beyond

the qualified taxpayer's control.

Section 1708-L. Use of credits.

(a) Utilization.--A qualified taxpayer shall first use a job

tax credit against the qualified tax liability incurred in the

taxable year for which the job tax credit was awarded.

(b) Authorization.--If a qualified taxpayer holds a job tax

credit through the end of the calendar year in which the job tax

credit was granted, the qualified taxpayer may sell or assign

the remaining job tax credits.

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(1) To sell or assign a job tax credit, a qualified

taxpayer shall file an application for the sale or assignment

of the job tax credit with the department. The application

must be on a form required by the department.

(2) To approve an application, the department must

confirm that the proposed purchaser or assignee has filed all

required State tax reports and returns for all applicable

taxable years and paid any balance of State tax due as

determined at settlement or assessment by the department,

unless the tax due is currently under appeal.

(d) Approval.--Upon approval by the department, a qualified

taxpayer may sell or assign, in whole or in part, a job tax

credit.

Section 1709-L. Purchasers and assignees.

(a) Time.--The purchaser or assignee approved under section

1708-L shall claim the job tax credit in the calendar year in

which the purchase or assignment is made.

(b) Amount.--An approved purchaser or assignee under section

1708-L may apply the job tax credit against 100% of the

purchaser's or assignee's qualified tax liabilities for the

taxable year.

(1) An approved purchaser under section 1708-L may not

sell or assign the purchased job tax credit.

(2) An approved assignee under section 1708-L may not

sell or assign the assigned job tax credit.

(d) Notice.--The purchaser or assignee under section 1708-L

shall notify the department of the seller or assignor of the job

tax credit in compliance with procedures specified by the

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department.

Section 1710-L. Pass-through entity.

(a) Election.--If a pass-through entity has an unused job

tax credit, the pass-through entity may elect in writing,

according to procedures established by the department, 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 shareholders, members or

partners are entitled.

(b) Limitation.--The same unused job tax credit under

subsection (a) may not be claimed by:

(1) the pass-through entity; and

(2) a shareholder, member or partner of the pass-through

entity.

the job tax credit against 100% of the transferee's qualified

tax liabilities for the taxable year.

(d) Time.--A transferee under subsection (a) shall claim the

job tax credit in the calendar year in which the transfer is

made.

(e) Sale and assignment.--A transferee under subsection (a)

may not sell or assign the job tax credit.

Section 1711-L. Administration.

(a) Audits and assessments.--The department shall have the

following powers:

(1) To audit a qualified taxpayer claiming a job tax

credit to ascertain the validity of the amount claimed.

(2) To issue an assessment against a qualified taxpayer

for an improperly awarded job tax credit. The procedures,

collection, enforcement and appeals of any assessment made

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under this section shall be governed by Article IV.

(b) Guidelines.--The department shall develop written

guidelines for the implementation of this article.

Section 1712-L. Reports to General Assembly.

(a) Annual report.--No later than one year after the job tax

credits are first awarded under this article, and October 1 of

each year thereafter, the department shall submit a report on

the job tax credit provided by this article to the chairperson

and minority chairperson of the Appropriations Committee of the

Senate, the chairperson and minority chairperson of the Finance

Committee of the Senate, the chairperson and minority

chairperson of the Appropriations Committee of the House of

Representatives and the chairperson and minority chairperson of

the Finance Committee of the House of Representatives. The

report must include the names of the qualified taxpayers that

were awarded the credit, the amount of the credit awarded to

each qualified taxpayer and the amount of credit sold or

assigned by a qualified taxpayer.

(b) Reconciliation report.--On May 1, 2023, the department

shall submit to the Secretary of the Senate and the Chief Clerk

of the House of Representatives a reconciliation report on the

effectiveness of this article. The report shall include, at a

minimum, the following information for the preceding five years:

(1) The name and business address of all qualified

taxpayers who have been awarded job tax credits under this

article.

(2) The amount of job tax credits awarded to each

qualified taxpayer.

(3) The total number of new jobs created by the

qualified taxpayer, including the average annual salary and

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hourly wage information.

(4) The amount of qualified taxes paid by qualified

taxpayers.

(5) The amount of taxes under Article III withheld from

employees or paid by members, partners or shareholders of the

pass-through entities of the qualified taxpayer.

shall be public records and shall be available electronically on

the department's publicly accessible Internet website. The

reports required under this section shall not contain

"confidential proprietary information" as defined in section 102

of the act of February 14, 2008 (P.L.6, No.3), known as the

Right-to-Know Law.

Section 1713-L. Prevailing wage.

(a) Public funds.--A tax credit awarded after the effective

date of this section shall constitute public funds as

contemplated by the Prevailing Wage Act and a taxpayer awarded

tax credits after the effective date of this section must comply

with all provisions of the Prevailing Wage Act for all aspects

of construction, demolition, alteration and modification of the

project facility for which tax credits are sought.

(b) Definition.--As used in this section, the term "tax

credit" means a tax incentive program in existence on the

effective date of this section allowing a taxpayer to reduce its

tax liability by meeting certain program requirements or a

similar program created on or after the effective date of this

section.

Section 2. This act shall take effect immediately.

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