PRINTER'S NO. 980
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
779
Session of
2021
INTRODUCED BY FONTANA, HUGHES, COLLETT, COSTA, STREET AND
KEARNEY, JULY 6, 2021
REFERRED TO FINANCE, JULY 6, 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 small business tax reinvestment.
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 XX-A
SMALL BUSINESS TAX REINVESTMENT
Section 2001-A. Short title.
This article shall be known and may be cited as the Small
Business Tax Reinvestment Savings Account Act.
Section 2002-A. Definitions.
The following words and phrases when used in this article
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shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Qualifying purpose." A small business expenditure that
results in the creation or retention of full-time jobs and
working capital for other business activities, deemed
appropriate by the department, which improve the competitiveness
and productivity of a small business. The term shall include,
but not be limited to, new construction, renovation or leasehold
improvements, and the acquisition of land, buildings, machinery
and equipment.
"Small business." A business which is independently owned
and:
(1) Employs 100 or fewer employees.
(2) Had annual revenues of less than $10 million in each
of the last three tax years.
(3) Is not dominant in its field.
Section 2003-A. Small business tax reinvestment savings
account.
(a) General rule.--A small business may establish and
deposit profits into a small business tax reinvestment savings
account.
(b) Deposits and withdrawals.--Money in a small business tax
reinvestment savings account may be deposited or withdrawn tax
free when the money is expended for the expansion of the small
business for a qualifying purpose.
(c) Limitation.--Money deposited into a small business tax
reinvestment savings account may not exceed more than $5,000 in
a taxable year.
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(d) Report.--On or before April 1, 2022, and annually
thereafter, the department, in consultation with the Department
of Revenue, shall report on the number of small businesses
utilizing a small business tax reinvestment savings account, the
average aggregate amount on deposit, the qualifying purposes
claimed, any qualifying purposes deemed inappropriate and any
other data deemed necessary by the department.
Section 2004-A. Taxes deferred.
For a taxable year beginning on or after January 1, 2021, a
small business shall be exempt from all income taxes imposed
under this act for any deposit or withdrawal from a small
business tax reinvestment savings account established under this
article and used for a qualifying purpose. If a small business
files for and receives an exemption from income taxes imposed
under this act and the funds deposited or withdrawn, or any
portion thereof, are not expended for a qualifying purpose, then
the amount of the exemption claimed by the small business shall
be added back to the amount of income tax liability in the next
succeeding taxable year or in the year in which the exemption is
disallowed.
Section 2. This act shall take effect in 60 days.
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