PRINTER'S NO. 1937
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1709
Session of
2021
INTRODUCED BY WHITE, JUNE 28, 2021
REFERRED TO COMMITTEE ON FINANCE, JUNE 28, 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," in personal income tax, further providing for tax
imposed at partnership level, for income of a Pennsylvania S
corporation, for income taxes imposed by other states and for
general rule; and, in general provisions, further providing
for estimated tax.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 306.2 of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, is amended by
adding a subsection to read:
Section 306.2. Tax Imposed at Partnership Level.--* * *
(f) A partnership, other than a publicly traded partnership,
may elect to have subsection (a) apply to all of its income
allocable to the resident partners or members and the portion of
its income from sources within this Commonwealth allocable to
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
the nonresident partners or members, regardless of amount. The
election may be made for any taxable year at any time during the
preceding taxable year or at any time on or before the due date
or extended due date of the partnership's tax return under
section 335, and the election shall be reflected in the
statement to each partner required under section 335(c)(3).
Section 2. Section 307.8(f) of the act is amended by adding
a paragraph to read:
Section 307.8. Income of a Pennsylvania S Corporation.--* *
*
(f) A Pennsylvania S corporation with underreported income
shall be subject to the following:
* * *
(5) A Pennsylvania S corporation may elect to have paragraph
(1) apply to all of its income allocable to the resident
shareholders and the portion of its income from sources within
this Commonwealth allocable to the nonresident shareholders,
regardless of amount. The election may be made for any taxable
year at any time during the preceding taxable year or at any
time on or before the due date or extended due date of the
Pennsylvania S corporation tax return under section 330.1, and
the election shall be reflected in the statement to each
shareholder required under section 330.1(d).
Section 3. Section 314(a) of the act is amended and the
section is amended by adding a subsection to read:
Section 314. Income Taxes Imposed by Other States.--(a) A
resident taxpayer before allowance of any credit under section
312 shall be allowed a credit against the tax otherwise due
under this article for the amount of any income tax, wage tax or
tax on or measured by gross or net earned or unearned income
20210HB1709PN1937 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
imposed on him or on a Pennsylvania S corporation in which he is
a shareholder, to the extent of his pro rata share thereof
determined in accordance with section 307.9, or on a partnership
in which he is a partner or member, to the extent of his
distributive share thereof determined in accordance with section
306, by another state with respect to income which is also
subject to tax under this article. For purposes of this
subsection, the term "state" shall only include a state of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico and any territory or possession of the United
States.
* * *
(c) No credit shall be allowed under this section to the
shareholders of a Pennsylvania S corporation for a tax described
under this section on its income taxed at the entity level
pursuant to an election under section 307.8(f)(5) or to the
partners or members of a partnership for above-described tax on
its income taxed at the entity level pursuant to an election
under section 306.2(f). Each electing Pennsylvania S corporation
shall be entitled to a credit under this section for the tax,
whether imposed on the Pennsylvania S corporation or on its
shareholders, and the credit shall not reduce the credit allowed
to the shareholders under section 307.8(f)(1.1). Each electing
partnership shall be entitled to a credit under this subsection
for the tax, whether imposed on the partnership or on its
partners or members, and the credit shall not reduce the credit
allowed to the partners or members under section 306.2(a.1).
Section 4. Section 324 of the act is amended by adding a
subsection to read:
Section 324. General Rule.--* * *
20210HB1709PN1937 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(c) This section shall not apply to a partnership taxed at
the entity level pursuant to an election under section 306.2(f)
or to any Pennsylvania S corporation taxed at the entity level
pursuant to an election under section 307.8(f)(5).
Section 5. Section 3003.2(a)(1) of the act is amended to
read:
Section 3003.2. Estimated Tax.--(a) The following taxpayers
are required to pay estimated tax:
(1) Every corporation subject to the corporate net income
tax imposed by Article IV of this act, commencing with the
calendar year 1986 and fiscal years beginning during the
calendar year 1986 and each taxable year thereafter, shall make
payments of estimated corporate net income tax. For purposes of
this section and section 3003.3, a partnership taxed at the
entity level pursuant to an election under section 306.2(f) and
a Pennsylvania S corporation taxed at the entity level pursuant
to an election under section 307.8(f)(5) shall be treated as a
corporation, the tax imposed on the entity under section s
306.2(f) and 307.8(f)(5), respectively, shall be deemed to be
the corporate net income tax imposed under Article IV, except
that this provision shall not apply to the first taxable year of
the partnership or Pennsylvania S corporation for which either
is applicable.
* * *
Section 6. This act shall take effect in 60 days.
20210HB1709PN1937 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25