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PRINTER'S NO. 1107
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1071
Session of
2021
INTRODUCED BY MALAGARI, MADDEN, D. WILLIAMS, BROOKS, HILL-EVANS,
SANCHEZ, MERSKI, SCHLOSSBERG, T. DAVIS, SCHWEYER, CIRESI,
FREEMAN, KINSEY, GUENST AND PISCIOTTANO, APRIL 1, 2021
REFERRED TO COMMITTEE ON FINANCE, APRIL 1, 2021
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 Apprentice Education Expense Tax
Credit Program and for powers of the department.
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-M
APPRENTICE EDUCATION EXPENSE TAX CREDIT PROGRAM
Section 1701-M. Scope of article.
This article establishes tax credits for educational expenses
of apprentices.
Section 1702-M. Definitions.
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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:
"Department." The Department of Revenue of the Commonwealth.
"Employer." A Pennsylvania taxpayer who is the employer of
the qualifying apprentice.
"Qualifying apprentice." An individual who:
(1) is a resident of this Commonwealth;
(2) is at least 16 years of age at the close of the
school year for which a credit is sought;
(3) during the school year for which a credit is sought,
was a full-time apprentice enrolled in an apprenticeship
program which is registered with the United States Department
of Labor, Office of Apprenticeship; and
(4) is employed in Pennsylvania by the taxpayer who is
the employer.
"Qualified education expense." The amount incurred on behalf
of a qualifying apprentice, not to exceed $3,500 for tuition,
book fees and lab fees at the school in which the apprentice is
enrolled during the regular school year.
"School." A public or nonpublic postsecondary school in
Pennsylvania that is:
(1) an institution of higher education that provides a
program that leads to an industry-recognized postsecondary
credential or degree;
(2) an entity that carries out programs registered under
the National Apprenticeship Act ( 50 Stat. 664, 29 U.S.C. § 50
et seq. ) ; or
(3) a public or private provider of a program of
training services, which may include a joint labor-management
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organization.
"Underserved area." A geographic area that meets one or more
of the following conditions:
(1) The area has a poverty rate of at least 20%
according to the latest Federal decennial census.
(2) Seventy-five percent or more of the children in the
area participate in the Federal free lunch program according
to reported statistics from the State Board of Education.
(3) At least 20% of the households in the area receive
assistance under the Supplemental Nutrition Assistance
Program (SNAP).
(4) The area has an average unemployment rate as
determined by the Department of Labor and Industry that is
more than 120% of the national unemployment average, as
determined by the United States Department of Labor, for a
period of at least two consecutive calendar years preceding
the date of the application.
Section 1703-M. Apprenticeship Education Expense Tax Credit
Program.
(a) Establishment.--The Apprenticeship Education Expense Tax
Credit Program is established to certify applicants for an
apprenticeship tax credit.
(b) Issuance of tax credit certificate.--Upon the
department's approval, the department shall issue a tax credit
certificate to an employer incurring costs on behalf of a
qualifying apprentice stating the amount of the tax credit to
which the employer is entitled. If the employer is seeking a tax
credit for multiple qualifying apprentices, the department may
issue a single tax credit certificate that encompasses the
aggregate total of tax credits for qualifying apprentices for a
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single employer.
(c) Power and duties.--The department shall have the power
to:
(1) Promulgate regulations necessary for the
administration of this article, including establishing forms
for applications, notifications, contracts or any other
agreements. The department shall accept applications at any
time during the year and require that all applications be
submitted in an electronic form through the department's
publicly accessible Internet website.
(2) Provide guidance and assistance to applicants
pursuant to the provisions of this section and cooperate with
applicants to promote, foster and support job creation within
this Commonwealth.
(3) Enter into agreements and memoranda of understanding
for participation of and engage in cooperation with agencies
of the Federal Government, units of local government,
universities, research foundations or institutions, regional
economic development corporations or other organizations for
the purposes of this article.
(4) Gather information and conduct inquiries, including,
without limitation, gathering information with respect to
applicants for the purpose of making any necessary
designations or certifications or to gather information in
furtherance of the purposes of this article.
(5) Establish, negotiate and effectuate any term,
agreement or other document with any individual necessary to
accomplish the purposes of this article and consent, subject
to the provisions of an agreement with another party, to the
modification or restructuring of any agreement to which the
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department is a party.
(6) Provide for sufficient personnel to permit
administration, staffing, operation and related support
required to adequately discharge the department's duties
under this section from funds made available through charges
to applicants or from funds as may be appropriated by the
General Assembly for the administration of this article.
(7) Require applicants, upon written request, to issue
any necessary authorization to the appropriate Federal, State
or local authority or any other person for the release to the
department of information requested by the department,
including, but not limited to, financial reports, returns or
records relating to the applicant or to the amount of credit
allowable under this section.
(8) Require that an applicant shall, at all times, keep
proper books of record and account in accordance with
generally accepted accounting principles consistently
applied, with the books, records or papers related to the
agreement, in the custody or control of the applicant open
for reasonable department inspection and audits, including,
without limitation, the making of copies of the books,
records or papers.
(9) Take whatever actions are necessary to protect the
Commonwealth's interest in the event of bankruptcy, default,
foreclosure or noncompliance with the terms and conditions of
financial assistance or participation required under this
section or any agreement entered into under this section,
including the power to sell, dispose of, lease or rent, upon
terms and conditions determined by the department to be
appropriate, real or personal property that the department
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may recover as a result of those actions.
Section 1704-M. Tax credit.
(a) Tax credit.--For taxable years beginning on or after
January 1, 2022, and beginning on or before January 1, 2026, the
employer of one or more qualifying apprentices shall be allowed
a credit against the tax imposed under section 302(a) and (b)
for qualified education expenses incurred on behalf of a
qualifying apprentice. The credit shall be equal to 100% of the
qualified education expenses, but in no event may the total
credit amount awarded to a single taxpayer in a single taxable
year exceed $3,500 per qualifying apprentice. A taxpayer shall
be entitled to an additional $1,500 credit against the tax
imposed by section 302(a) and (b) if:
(1) the qualifying apprentice resides in an underserved
area during the school year for which a credit is sought by
an employer; or
(2) the employer's principal place of business is
located in an underserved area.
(b) Limitation on tax credit amount.--In no event shall a
tax credit under this section reduce the taxpayer's liability
under this act to less than zero.
(c) Limited liability companies.--For partners, shareholders
of Subchapter S corporations and owners of limited liability
companies, if the liability company is treated as a partnership
for purposes of Federal and State income taxation, a credit to
be determined by the department shall be allowed in accordance
with the determination of income and distributive share of
income under sections 702 and 704 and Subchapter S of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §§
702 and 704).
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(d) Rules.--The department shall adopt rules to administer
this section. The aggregate amount of the tax credits that may
be claimed under this section shall be limited to $5,000,000 per
calendar year. If applications for a greater amount are
received, credits shall be approved on a first-come, first-
served basis, based on the date on which each properly completed
application for a certificate of eligibility is received by the
department. If more than one certificate is received on the same
day, the credits will be awarded based on the time of submission
for that particular day.
(e) Transfers prohibited.--An employer may not sell or
otherwise transfer a credit awarded under this section to
another person or taxpayer.
(f) Employer information.--An employer shall provide
information as the department may require, including, but not
limited to, the:
(1) name, age and taxpayer identification number of each
qualifying apprentice employed by the taxpayer during the
taxable year;
(2) amount of qualified education expenses incurred with
respect to each qualifying apprentice; and
(3) name of the school at which the qualifying
apprentice is enrolled and the qualified education expenses
are incurred.
Section 1705-M. Reporting.
On or before July 1 of each year, the department shall report
to the Governor and the General Assembly on the tax credit
certificates awarded under this section for the prior calendar
year. The report shall include:
(1) the name of each employer awarded or allocated a
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credit;
(2) the number of qualifying apprentices for whom the
employer has incurred qualified education expenses;
(3) the North American Industry Classification System
code applicable to each employer awarded or allocated a
credit;
(4) the amount of the credit awarded to each employer;
(5) the total number of employers awarded a credit;
(6) the total number of qualifying apprentices for whom
employers receiving credits under this section incurred
qualified education expenses; and
(7) the average cost to the employer of all
apprenticeships receiving credits under this article.
Section 2. This act shall take effect in 60 days.
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