PRINTER'S NO. 778
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
628
Session of
2019
INTRODUCED BY SCAVELLO, LANGERHOLC, ARGALL, BOSCOLA, FOLMER,
J. WARD, STEFANO, K. WARD, WHITE, SCHWANK, KEARNEY, YUDICHAK,
KILLION, BLAKE, FARNESE, MENSCH, YAW AND BROOKS, MAY 13, 2019
REFERRED TO FINANCE, MAY 13, 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 airport land development zones.
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
AIRPORT LAND DEVELOPMENT ZONES
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:
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"Affiliate." As follows:
(1) an entity which is part of the same affiliated group
as defined in section 1504(a) of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 1504(a)), as an airport
land development zone employer; or
(2) an entity that would be part of the same affiliated
group except that the entity or the airport land development
zone employer is not a corporation.
"Airport." A publicly owned commercial service airport or an
airport that is owned by the same entity that owns the publicly
owned commercial service airport.
"Airport land development zone." As follows:
(1) An area of no more than 300 acres, consisting of
parcels of real property that are owned by an airport or
leased as provided under paragraph (2), that as of July 1,
2019, had no permanent vertical structures affixed or the
buildings are vacant with no business located in the
structure.
(2) A parcel of real property in the zone may be leased
or ground leased to a third party, except that the airport
must maintain ownership of the parcel for the life of the
program in order to qualify.
"Airport land development zone employer." A person or entity
subject to the taxes imposed under Article III, IV, VI, VII,
VIII or XV who employs at least one employee in an airport land
development zone. The term shall include a pass-through entity.
The term shall not include an employer engaged in construction
improvements in an airport land development zone.
"Airport land development zone plan." The document submitted
to the department that details the parcels included in the
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airport land development zone by an airport. The plan shall
include the following:
(1) A legal description, identification number and
acreage of each parcel included in the zone.
(2) Certification that demonstrates that any building on
a parcel included in the zone was vacant or the parcel had no
permanent, vertical structures affixed to the parcel before
July 1, 2019.
(3) A map and pictures of each parcel included in the
plan.
(4) A written description of planned and potential uses
for parcels in the zone.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Employee." An individual who meets all of the following:
(1) Is employed in this Commonwealth by an airport land
development zone employer or its predecessor after the
effective date of this section.
(2) Is employed for at least 35 hours per week by an
airport land development zone employer.
(3) Spends at least 90% of the individual's working time
for the airport land development zone employer at the airport
land development zone location.
"Full-time equivalent employee." As follows:
(1) The whole number of employees, rounded down, that
equals the sum of:
(i) the total paid hours, including paid time off
and family leave under the Family and Medical Leave Act
of 1993 (Public Law 103-3, 29 U.S.C. § 2601 et seq.), of
all of a airport land development zone employer's
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employees classified as nonexempt during the airport land
development zone employer's tax year divided by 2,000;
and
(ii) a total number arrived at by adding, for each
airport land development zone employer's employee
classified as exempt scheduled to work at least 35 hours
per week, the fraction equal to the portion of the year
the exempt employee was paid by the airport land
development zone employer. Whether an employee shall be
classified as exempt or nonexempt shall be determined
under the Fair Labor Standards Act of 1938 (52 Stat.
1060, 29 U.S.C. § 201 et seq.).
(2) The calculation under paragraph (1) shall exclude
employees previously employed by an affiliate and employees
previously employed by the airport land development zone
employer outside of an airport land development zone.
"Pass-through entity." A partnership as defined in section
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1).
"Plan." An airport land development zone plan.
"Program." The Airport Land Development Zone Program
established under section 1902-G.
"Qualified tax liability." A tax owed by an airport land
development zone employer attributable to a business activity
conducted within a airport land development zone for a tax year
under Article III, IV, VI, VII, VIII or XV.
"Zone." An airport land development zone.
Section 1902-G. Airport Land Development Zone Program.
The Airport Land Development Zone Program is established to
encourage and promote the creation of new jobs on land and
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buildings owned by airports within this Commonwealth. The
program shall accelerate economic activity at and around
airports on undeveloped land or vacant buildings owned by
Pennsylvania airports.
Section 1903-G. Application and plan.
(a) Application.--Within four months of the effective date
of this section, the department shall publish guidelines and an
application for the program.
(b) Time for filing plan.--Each airport shall have up to 12
months from the date the guidelines and application are
published by the department to develop and file a plan. If an
airport fails to file a plan within the time period, the airport
shall be ineligible for the program.
(c) Approval of plan.--Upon receipt of an airport land
development zone plan submitted by an airport under subsection
(b), the department shall have 60 calendar days to review the
plan for appropriateness and conformity with this article and
approve or deny the plan.
(d) Notification.--If an airport land development zone plan
submitted by an airport under subsection (b) is approved, the
department shall notify the Department of Revenue of parcels
included in the zone.
(e) Change.--An airport may change the airport land
development plan by subdividing a parcel, changing the legal
description of a parcel, moving the zone designation to another
qualifying parcel or making physical changes to a vacant
building in the zone by adding to the building's size or
reducing the building's size after the plan has been approved.
If an airport chooses to make the changes, the airport shall
notify the department and the Department of Revenue of the
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change. The department shall issue a document confirming the
parcel changes and provide a new list of parcels.
Section 1904-G. Airport land development zone tax credit.
(a) Tax credit.--An airport land development zone employer
may claim a tax credit against a qualified tax liability as
provided under this article.
(b) Process.--
(1) An airport land development zone employer shall
notify the department of the airport land development zone
employer's qualification for a tax credit under this section
by February 1 for tax credits earned during a taxable year
ending in the prior calendar year.
(2) The notification under paragraph (1) shall contain
the following:
(i) The name, address and taxpayer identification
number of the airport land development zone employer.
(ii) Verification that the airport land development
zone employer is an airport land development zone
employer located in an airport land development zone.
(iii) The names, addresses and Social Security
numbers of each employee for which the credit is claimed.
(iv) Verification that each employee identified in
subparagraph (iii) spent at least 90% of the employee's
working time for the airport land development zone
employer at the employer's airport land development zone
location.
(v) Any other information required by the
department.
(3) To qualify for the credit, the Department of Revenue
must certify that the airport land development zone employer
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is current with all tax liabilities.
(4) By March 1 of each year, the department shall send
the airport land development zone employer who submitted the
notification a certificate of the airport land development
zone employer's qualification for the credit. The airport
land development zone employer shall present the certificate
to the Department of Revenue when filing the airport land
development zone employer's return claiming the credit.
(c) Amount.--The amount of the tax credit an airport land
development zone employer may earn in any tax year shall be
equal to $2,100 for each full-time equivalent employee in excess
of the number of full-time equivalent employees employed by the
airport land development zone employer prior to January 1, 2020.
(d) Application of tax credits.--An airport land development
zone employer must first use the airport land development zone
employer's airport land development zone tax credit against the
airport land development zone employer's qualified tax
liability.
(d.1) Sale or assignment of tax credit.--
(1) If the airport land development zone employer is
entitled to a credit in any year that exceeds the airport
land development zone employer's qualified tax liability for
that year, upon application to and approval by the
department, an airport land development zone employer that
has been awarded a tax credit may sell or assign, in whole or
in part, the tax credit granted to the airport land
development zone employer. The application must be on the
form required by the department and must include or
demonstrate all of the following:
(i) The applicant's name and address.
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(ii) A copy of the tax credit certificate previously
issued by the department.
(iii) A statement as to whether any part of the tax
credit has been applied to tax liability of the applicant
and the amount so applied.
(iv) Any other information required by the
department.
(2) The department shall review the application and, if
all requirements have been met, approve the application and
notify the Department of Revenue.
(3) The purchaser or assignee of all or a portion of an
airport land development zone tax credit under this section
shall claim the credit in the taxable year in which the
purchase or assignment is made. The purchaser or assignee of
a tax credit may use the tax credit against any tax liability
of the purchaser or assignee under Article III, IV, VI, VII,
VIII or XV. The amount of the tax credit used may not exceed
75% of the purchaser's or assignee's tax liability for the
taxable year. The purchaser or assignee may not carry over,
carry back, obtain a refund of or assign the airport land
development zone credit. The purchaser or assignee shall
notify the department and the Department of Revenue of the
seller or assignor of the airport land development zone tax
credit in compliance with procedures specified by the
department.
(e) Use and carryforward.--
(1) An airport land development zone employer may earn
the tax credit allowed under this article in any tax year
beginning in 2020 and for a period of up to 10 tax years
during the 20-year period beginning July 1, 2019, and ending
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June 30, 2039.
(2) An airport land development zone employer may carry
forward for up to 10 years a tax credit earned under this
article:
(i) which the airport land development zone employer
is unable to use; or
(ii) which the airport land development zone
employer does not sell or assign.
(3) Tax credits carried forward under paragraph (2)
shall be used on a first-in, first-out basis.
(f) Dual-use prohibited.--Each year, an airport land
development zone employer may only earn tax credits under
subsection (c) or (d) or under the act of October 6, 1998
(P.L.705, No.92), known as the Keystone Opportunity Zone,
Keystone Opportunity Expansion Zone and Keystone Opportunity
Improvement Zone Act. An airport land development zone employer
may not claim a credit under both this section and Article
XVIII-B.
(g) Pass-through entities.--
(1) If an airport land development zone employer is a
pass-through entity and has an unused tax credit under
subsection (c), (d) or (e), the airport land development zone
employer 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.
(2) An airport land development zone employer that is a
pass-through entity and a shareholder, member or partner of
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that airport land development zone employer may not both
claim the airport land development zone tax credit earned by
the airport land development zone employer for any tax year.
(3) A shareholder, member or partner of an airport land
development zone employer that is a pass-through entity to
whom a credit is transferred under this subsection shall
immediately claim the credit in the taxable year in which the
transfer is made.
(h) Transfer.--A tax credit or tax credit carryforward that
an airport land development zone employer is entitled to use may
be transferred to a successor entity of the airport land
development zone employer.
(i) Penalties.--The following apply:
(1) A company which receives airport land development
zone tax credits and fails to substantially maintain the
operations related to the airport land development zone tax
credits in this Commonwealth for a period of five years from
the date the company first submits an airport land
development zone tax credit certificate to the Department of
Revenue shall be required to refund to the Commonwealth the
total amount of credits granted.
(2) The department may waive the penalties under
subsection (1) if it is determined that a company's
operations were not maintained or the new jobs were not
created because of circumstances beyond the company's
control. Circumstances shall include natural disasters,
unforeseen industry trends or a loss of a major supplier or
market.
Section 2. This act shall take effect in 60 days.
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