PRINTER'S NO. 630
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
568
Session of
2019
INTRODUCED BY HUTCHINSON, ARGALL, BAKER, BARTOLOTTA, BLAKE,
FOLMER, MARTIN, MENSCH, REGAN, STEFANO AND J. WARD,
APRIL 18, 2019
REFERRED TO FINANCE, APRIL 18, 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," in sales and use tax, further providing for
definitions and for exclusions from tax; and providing for
refund of taxes collected on fees for information retrieval
services.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 201 and 204 of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, are amended
by adding clauses to read:
Section 201. Definitions.--The following words, terms and
phrases when used in this Article II shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
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(ddd) "Financial institution." An institution or licensee
as defined by the act of May 15, 1933 (P.L.565, No.111), known
as the Department of Banking and Securities Code, or a similar
institution or licensee doing business in Pennsylvania subject
to supervision by a regulatory authority of the Federal
Government, another state or a foreign country.
(eee) "Canned software." Computer software that is:
(1) available for sale to the general public or a
substantial and indefinite class of similarly situated persons;
and
(2) can be used as-is without the purchase of professional
services, including programming, systems design, facilities
management, information retrieval, data preparation or
processing, communication, data or computer processing,
accounting, appraisal, legal, engineering, architectural or
other services from the vendor that supplies the software.
(fff) "Custom software." Computer software that is not
canned software, including modifications made to canned software
to facilitate use of the canned software by a purchaser if there
is a separately stated purchase price for the modifications.
(ggg) "Information retrieval services." Furnishing content
or data of any kind which has been collected, compiled or
analyzed by a seller and which content or data may be accessed
or provided through any means or method, including through the
use of a remote server. The term includes furnishing of general
or specialized news or other current information, including
financial information, electronic data retrieval or research,
online database information retrieval services or remote
database information retrieval services.
Section 204. Exclusions from Tax.--The tax imposed by
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section 202 shall not be imposed upon any of the following:
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(71) The sale at retail or use of custom software.
(72) The sale at retail or use of computer programming,
computer integrated systems design, data preparation or
processing, computer facilities management, information
retrieval, custom software and other computer or data processing
services acquired in conjunction with or in support of the sale
or use of canned software or the installation, maintenance or
updating of canned software utilized in the operation of a
business or non-profit association, including a business engaged
in providing electronic fund transfers, electronic financial
transactions or services, banking or trust services or
management or administrative services or transfer agency,
shareholder, custodial and portfolio accounting services,
provided that:
(i) there is a separately stated purchase price for the
canned software and installation, maintenance or updating of the
canned software; or
(ii) the purchaser can reasonably demonstrate the cost or
value of the canned software and installation, maintenance and
updating of the canned software independent of the cost or value
of the computer programming or other related services, based on
information provided by the supplier of the canned software or
services, or any other credible source.
Nothing in this clause shall be construed to exclude from tax
under this article the separately stated purchase price or the
cost or value of canned software delivered to or used by a
purchaser and the installation, maintenance and updating of
canned software, as provided by subclauses (i) and (ii). Nothing
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in this article shall be construed to impose tax upon computer
or data processing services provided by a vendor to a purchaser
through the use of canned or custom software by the vendor.
(73) The sale at retail or use of systems, devices and
equipment, and their components, installed in a building and
utilized by a financial institution for protection or
convenience of the financial institution in conducting financial
transactions, provided that the following are satisfied:
(i) The systems, devices, equipment or components:
(A) are installed by a contractor or the contractor's
designee;
(B) after installation are repaired, altered or maintained
on-site by a contractor; or
(C) are removed from the installation site by a contractor
for repair or maintenance and returned to the installation site
by the contractor.
(ii) The systems, devices, equipment or components are
attached or affixed to real estate by means of:
(A) a hook, bolt, screw, nail or other similar method;
(B) insertion through a building wall or floor, or mounting
upon a specially prepared foundation, the removal of which may
result in damage to the real estate; or
(C) wire that is integrated into an electrical system.
A contractor engaged in the installation, alteration, repair or
maintenance of systems, devices, equipment or components subject
to the exclusion under this clause shall be deemed to be a
construction contractor pursuant to a construction contract
engaged in the use of tangible personal property or services
under section 201(o)(17) regardless of the method or permanence
of attachment of the systems, devices, equipment or components
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to real property.
(74) Fees charged by a financial institution for a financial
service, regardless of whether tangible personal property is
provided to a customer incidental to the provision of the
financial service, unless the predominant purpose of the
financial service is to purchase or use tangible personal
property.
(75) Fees charged by a business entity for information
retrieval services, notwithstanding whether tangible personal
property is provided to a customer incidental to the provision
of the information retrieval services, unless the predominant
purpose of the information retrieval services is to purchase or
use tangible personal property.
Section 2. The addition of sections 201(ddd), (eee) and
(fff) and 204(71), (72), (73) and (74) of the act shall apply
to:
(1) The sale at retail or use of tangible personal
property or services occurring on or after the effective date
of this section.
(2) The sale at retail or use of property or services
occurring prior to the effective date of this section if a
petition for reassessment or refund of taxes due on the
transaction:
(i) is pending before the Board of Appeals or the
Board of Finance and Revenue or is subject to review by a
court upon the effective date of this section; or
(ii) is filed after the effective date of this
section in response to an assessment of tax on the
transaction issued on or after the effective date of this
section or issued with a mailing date of up to 60 days
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prior to the effective date of this section.
Section 3. The following shall apply:
(1) The addition of sections 201(ggg) and 204(75) of the
act shall apply to the sale at retail or use of tangible
personal property or services occurring after December 31,
2016.
(2) Notwithstanding any other provision of law, tax
collected by a business entity under Article II of the act
after December 31, 2016, and paid to the Department of
Revenue on fees charged by the business entity for
information retrieval services, notwithstanding whether
tangible personal property is provided to a customer
incidental to the provision of the information retrieval
services, unless the predominant purpose of the information
retrieval services is to purchase or use tangible personal
property, shall be refunded by the Department of Revenue.
(3) Except as provided by section 3003.1(b) of the act,
a business entity shall have one year from the effective date
of this paragraph to petition the Department of Revenue for a
refund under paragraph (2) of tax paid after December 31,
2016, and prior to the effective date of this section.
Section 4. This act shall take effect immediately.
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