| A03448 |
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. | 1189 | Session of 2013 |
INTRODUCED BY GROVE, STEPHENS, SAYLOR, GREINER, AUMENT, HELM, GINGRICH, CUTLER, MARSICO, TALLMAN, ROCK, MICOZZIE, METCALFE, REGAN, HICKERNELL, EVANKOVICH, DUNBAR, VEREB, HAHN, WATSON, TOOHIL, GABLER, MENTZER, TURZAI, R. MILLER, SNYDER, CARROLL, HARHART, GERGELY AND SONNEY, APRIL 15, 2013
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES, AS AMENDED, SEPTEMBER 23, 2013
AN ACT
Amending the act of December 31, 1965 (P.L.1257, No.511), entitled "An act empowering cities of the second class, cities of the second class A, cities of the third class, boroughs, towns, townships of the first class, townships of the second class, school districts of the second class, school districts of the third class and school districts of the fourth class including independent school districts, to levy, assess, collect or to provide for the levying, assessment and collection of certain taxes subject to maximum limitations for general revenue purposes; authorizing the establishment of bureaus and the appointment and compensation of officers, agencies and employes to assess and collect such taxes; providing for joint collection of certain taxes, prescribing certain definitions and other provisions for taxes levied and assessed upon earned income, providing for annual audits and for collection of delinquent taxes, and permitting and requiring penalties to be imposed and enforced, including penalties for disclosure of confidential information, providing an appeal from the ordinance or resolution levying such taxes to the court of quarter sessions and to the Supreme Court and Superior Court," providing for optional property tax elimination.
Providing for tax levies and information related to taxes; authorizing the imposition of a personal income tax or an earned income tax by a school district subject to voter approval; providing for imposition of and exclusions from a sales and use tax for the stabilization of education funding, for increase to the personal income tax, for certain licenses, for hotel occupancy tax, for procedure and administration of the tax, for expiration of authority to issue certain debt and for reporting by local government units of debt outstanding; establishing the Education Stabilization Fund; providing for disbursements from this fund; and repealing certain provisions of the Public School Code of 1949 and sales and use tax provisions of the Tax Reform Code of 1971.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. Taxation by School Districts
Section 301. Scope.
Section 302. Definitions.
Section 303. Limitation.
Section 304. Preemption.
Section 305. General tax authorization.
Section 306. Referendum.
Section 307. Continuity of tax.
Section 308. Collections.
Section 309. Credits.
Section 310. Exemption and special provisions.
Section 311. Regulations.
Chapter 4. Education Tax
Section 401. Education tax.
Chapter 7. Sales and Use Tax for the Stabilization of Education Funding
Subchapter A. Preliminary Provisions
Section 701. Scope.
Section 701.1. Definitions.
Subchapter B. Sales and Use Tax
Section 702. Imposition of tax.
Section 703. Computation of tax.
Subchapter C. Exclusions from Sales and Use Tax
Section 704. Exclusions from tax.
Section 705. Alternate imposition of tax.
Section 706. Credit against tax.
Subchapter D. Licenses
Section 708. Licenses.
Subchapter E. Hotel Occupancy Tax
Section 709. Definitions.
Section 710. Imposition of tax.
Section 711. Seasonal tax returns.
Subchapter F. Procedure and Administration
Section 715. Persons required to make returns.
Section 716. Form of returns.
Section 717. Time for filing returns.
Section 718. Extension of time for filing returns.
Section 719. Place for filing returns.
Section 720. Timely mailing treated as timely filing and payment.
Section 721. Payment of tax.
Section 722. Time of payment.
Section 723. Other times for payment.
Section 724. Place for payment.
Section 725. Tax held in trust for Commonwealth.
Section 726. Local receivers of use tax.
Section 727. Discount.
Section 728. (Reserved).
Section 729. (Reserved).
Section 730. Assessment.
Section 731. Mode and time of assessment.
Section 732. Reassessment.
Section 733. (Reserved).
Section 734. Review by Board of Finance and Revenue.
Section 735. (Reserved).
Section 736. Burden of proof.
Section 737. Collection of tax.
Section 738. Collection of tax on motor vehicles, trailers and semitrailers.
Section 739. Precollection of tax.
Section 740. Bulk and auction sales.
Section 741. Collection on failure to request reassessment, review or appeal.
Section 742. Lien for taxes.
Section 743. Suit for taxes.
Section 744. Tax suit comity.
Section 745. Service.
Section 746. Collection and payment of tax on credit sales.
Section 747. Prepayment of tax.
Section 747.1. Refund of sales tax attributed to bad debt.
Section 748. Registration of transient vendors.
Section 748.1. Bond.
Section 748.2. Notification to department.
Section 748.3. Seizure of property.
Section 748.4. Fines.
Section 748.5. Transient vendors subject to chapter.
Section 748.6. Promoters.
Section 749. (Reserved).
Section 750. (Reserved).
Section 751. (Reserved).
Section 752. Refunds.
Section 753. Refund petition.
Section 754. (Reserved).
Section 755. (Reserved).
Section 756. Extended time for filing special petition for refund.
Section 757. (Reserved).
Section 758. Limitation on assessment and collection.
Section 759. Failure to file return.
Section 760. False or fraudulent return.
Section 761. Extension of limitation period.
Section 762. (Reserved).
Section 763. (Reserved).
Section 764. (Reserved).
Section 765. Interest.
Section 766. Additions to tax.
Section 767. Penalties.
Section 768. Criminal offenses.
Section 769. Abatement of additions or penalties.
Section 770. Rules and regulations.
Section 771. Keeping of records.
Section 771.1. Reports and records of promoters.
Section 772. Examinations.
Section 773. Records and examinations of delivery agents.
Section 774. Unauthorized disclosure.
Section 775. Cooperation with other governments.
Section 776. Interstate compacts.
Section 777. Bonds.
Subchapter G. Funding Provisions
Section 780. (Reserved).
Section 781. Appropriation for refunds.
Section 781.1. Construction.
Section 782. Transfers to Education Stabilization Fund.
Chapter 9. (Reserved)
Chapter 11. Limitations on School District Taxation
Section 1101. Authority to levy taxes and effect of future Constitutional amendment.
Section 1102. Transitional taxes.
Section 1103. Consideration of State appropriations or reimbursements.
Section 1104. Taxes for cities and school districts of the first class.
Chapter 12. Indebtedness
Section 1201. Expiration of authority to issue debt.
Section 1202. Notices and reporting by school districts of debt outstanding.
Chapter 13. Funding Provisions
Section 1301. Definitions.
Section 1302. Education Stabilization Fund.
Section 1303. Standard disbursements to school districts from Education Stabilization Fund.
Chapter 15. Miscellaneous Provisions
Section 1501. Transitional provision.
Section 1502. Construction.
Section 1503. Severability.
Section 1504. Repeals.
Section 1505. Applicability.
Section 1506. Effective date.
The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:
Section 1. The act of December 31, 1965 (P.L.1257, No.511), known as The Local Tax Enabling Act, is amended by adding a chapter to read:
OPTIONAL PROPERTY TAX ELIMINATION
Section 601. Scope of chapter.
This chapter shall authorize a school district to levy, assess and collect an elimination tax as a means of reducing or eliminating property taxation.
The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:
"Board of school directors." A board of school directors of a school district of the first class A, second class, third class or fourth class.
"Domicile." The term as defined in section 501.
"Earned income." The term as defined in section 501.
"Elimination tax." Any of the following:
(1) The tax levied by a school district on earned income and net profits under this chapter.
(2) A mercantile tax imposed under section 613.
(3) A business privilege tax imposed under section 613.
"Index." The term as defined in section 302 of the Taxpayer Relief Act.
"Net profits." The term as defined in section 501.
"Resident." The term as defined in section 501.
"School district." A school district of the first class A, second class, third class or fourth class.
"Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
"Taxpayer Relief Act." The act of June 27, 2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act.
No act of the General Assembly may vacate or preempt any resolution passed or adopted under the authority of this chapter, or any other act, providing authority for the imposition of an elimination tax by a school district, unless the act of the General Assembly expressly vacates or preempts the authority to pass or adopt resolutions.
Section 604. Real property tax replacement.
A school district that levies a tax on real property may reduce or eliminate the revenues provided by the real property tax by imposing the elimination tax as provided under this chapter.
Section 605. Resolution required.
The board of school directors may impose or increase the maximum limits of the elimination tax by adopting a resolution. Prior to approving the resolution, the board of school directors shall:
(1) Give public notice of its intent to adopt the resolution in the manner provided under section 306.
(2) Conduct at least one public hearing regarding reducing or eliminating the tax on real property and imposing or increasing the maximum rate of the elimination tax.
All funds generated from an elimination tax shall be used to directly reduce or eliminate school district real property tax millage rates.
Section 607. Elimination tax rate limits.
(a) Limit.--If a school district has reduced property tax millage rates to zero, a board of school directors may not increase the elimination tax for the support of public schools by more than the index unless there is compliance with section 333 of the Taxpayer Relief Act.
(b) Maximum rate.--The maximum rate of the elimination tax calculated under this chapter shall not be subject to the limits on the earned income tax specified under section 311(3).
(c) Limit.--The rate of the mercantile or business privilege tax imposed under section 613 shall not generate revenues in excess of 50% of the total elimination tax revenues generated under this chapter.
A school district that imposes an elimination tax may exempt from the payment of that tax any person whose total income from all sources is less than $12,000.
(a) Earned income and net profits.--An elimination tax on earned income and net profits shall be subject to Chapters 5 and 7.
(b) Mercantile tax or a business privilege tax.--A mercantile tax or a business privilege tax imposed under this chapter shall be subject to section 613.
(a) Credit.--Except as provided under subsection (b), the provisions of section 317 shall be applied by a board of school directors to determine any credits applicable to an elimination tax.
(b) Limitation.--Payment of a tax on earned income and net profits to any state other than Pennsylvania or to any political subdivision located outside the boundaries of this Commonwealth by a resident of a school district located in this Commonwealth shall not be credited to and allowed as a deduction from the liability of the person for an elimination tax imposed by the school district of residence.
Section 611. Real property tax prohibited.
(a) Prohibition.--For the first fiscal year beginning after the adoption of a resolution that eliminates real property tax millage rates and each fiscal year thereafter, a school district shall be prohibited from levying, assessing or collecting a real property tax.
(b) Applicability.--This section shall not apply to the collection of delinquent real property taxes.
Section 612. Applicability of personal income tax.
Nothing under this chapter shall be construed to authorize a school district to levy, assess or collect a personal income tax.
Section 613. Mercantile or business privilege tax.
(a) Wholesale dealers.--Each school district shall have the power and may levy, assess and collect a tax on each dollar of the whole volume of business transacted by wholesale dealers in goods, wares and merchandise.
(b) Retail sales.--Each school district shall have the power and may levy, assess and collect a tax on each dollar of sales by:
(1) Retail dealers in goods, wares and merchandise, including proprietors of restaurants or other places where food, drink and refreshments are served.
(c) Transactions partially free of tax.--No tax shall be levied on the dollar volume of business transacted by wholesale and retail dealers derived from the resale of goods, wares and merchandise, taken by any dealer as a trade-in or as part payment for other goods, wares and merchandise, except to the extent that the resale price exceeds the trade-in allowance.
Section 614. Exclusions from tax.
A tax under section 613 may not be levied, assessed or collected on:
(1) The gross receipts from utility service of any person or company whose rates and services are fixed and regulated by the Pennsylvania Public Utility Commission, on any public utility services rendered by the person or company, on any privilege or transaction involving the rendering of the public utility service or on any Federal Energy Regulation Commission-approved qualifying facility.
(i) Goods and articles manufactured in the school district.
(ii) The by-products of manufacture.
(iii) Minerals, timber, natural resources and farm products produced in the school district.
(iv) The preparation or processing of items under subparagraph (iii) for use or market.
(v) Any privilege, act or transaction related to the business of manufacturing, the production, preparation or processing of minerals, timber and natural resources or farm products, by manufacturers, by producers and by farmers with respect to the goods, articles and products of their own manufacture, production or growth.
(vi) Any privilege, act or transaction relating to the business of processing by-products of manufacture.
(vii) The transportation, loading, unloading or dumping or storage of goods, articles, products or by- products under this paragraph, except that school districts may levy, assess and collect taxes on a person using municipal services and the personal income of natural persons engaged in these activities whether doing business as an individual proprietorship or as members of partnerships or other associations.
(3) Gross receipts or part of gross receipts which are:
(i) Discounts allowed to purchasers as cash discounts for prompt payment of their bills.
(ii) Charges advanced by a seller for freight, delivery or other transportation for the purchaser in accordance with the terms of a contract of sale.
(iii) Received upon the sale of an article of personal property which was acquired by the seller as a trade-in to the extent that the gross receipts in the sale of the article taken in trade does not exceed the amount of trade-in allowance made in acquiring the article.
(iv) Refunds, credits or allowances given to a purchaser on account of defects in goods sold or merchandise returned.
(v) Pennsylvania sales tax and any sales tax, use tax and occupancy tax imposed under law.
(vi) Based on the value of exchanges or transfers between one seller and another seller who transfers property with the understanding that property of an identical description will be returned at a subsequent date, except that if sellers engaged in similar lines of business exchange property and one of them makes payment to the other in addition to the property exchanged, the additional payment received may be included in the gross receipts of the seller receiving such additional cash payments.
(vii) Receipts of sellers from sales to other sellers in the same line where the seller transfers the title or possession at the same price for which the seller acquired the merchandise.
(viii) Transfers between one department, branch or division of a corporation or other business entity of goods, wares and merchandise to another department, branch or division of the same corporation or business entity and which are recorded on the books to reflect such interdepartmental transactions.
(ix) Transfers attributable to activities occurring outside the taxing authority. Gross receipts shall be attributed to the jurisdiction in which the activities generating the receipts occur.
(i) Any bank, bank and trust company, private bank, savings bank or trust company, as defined in the act of November 30, 1965 (P.L.847, No.356), known as the Banking Code of 1965.
(ii) Any other institution or entity subject to the supervision of the Department of Banking under section 201 of the act of May 15, 1933 (P.L.565, No.111), known as the Department of Banking Code.
(iv) Any similar institution or entity established pursuant to Federal law or the law of any state.
(5) The gross receipts of any distributor or importing distributor of malt or brewed beverages subject to licensure under the act of April 12, 1951 (P.L.90, No.21), known as the Liquor Code.
Section 2. This act shall take effect in 60 days.
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Property Tax Independence Act.
Section 102. Definitions.
The following words and phrases when used in this act shall have the meanings given to them in this section unless the context clearly indicates otherwise:
"Department." The Department of Revenue of the Commonwealth.
"Education Stabilization Fund." The Education Stabilization Fund established in section 1302.
"Fiscal year." The fiscal year of the Commonwealth beginning on July 1 and ending on June 30 of the immediately following calendar year.
"Governing body." The board of school directors of a school district, except that the term shall mean the city council of a city of the first class for purposes of the levy and collection of any tax in a school district of the first class.
"Internal Revenue Code of 1986." The Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 166).
"Local Tax Enabling Act." The act of December 31, 1965 (P.L.1257, No.511), known as The Local Tax Enabling Act,
"Public School Code of 1949." The act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949.
"School district." A school district of the first class, first class A, second class, third class or fourth class, including any independent school district. For purposes of the levy, assessment and collection of any tax in a school district of the first class, the term shall include the City Council.
"School per capita tax." The tax authorized pursuant to section 679 of the act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949,
"Secretary." The Secretary of Revenue of the Commonwealth.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
CHAPTER 3
Taxation by School Districts
Section 301. Scope.
This chapter authorizes school districts to levy, assess and collect a tax on personal income or a tax on earned income and net profits as a means of abolishing property taxation by the school district.
Section 302. Definitions.
The words and phrases used in this chapter shall have the same meanings given to them in the Tax Reform Code of 1971 or The Local Tax Enabling Act unless the context clearly indicates otherwise.
Section 303. Limitation.
Any tax imposed under this chapter shall be subject to the limitations set forth in Chapter 11.
Section 304. Preemption.
No act of the General Assembly shall vacate or preempt any resolution passed or adopted under the authority of this chapter, or any other act, providing authority for the imposition of a tax by a school district, unless the act of the General Assembly expressly vacates or preempts the authority to pass or adopt resolutions.
Section 305. General tax authorization.
(a) General rule.--A board of school directors may, by resolution, levy, assess and collect or provide for the levying, assessment and collection of a tax on personal income or a tax on earned income and net profits for general revenue purposes.
(b) Personal income tax.--
(1) A board of school directors may levy, assess and collect a tax on the personal income of resident individuals at a rate determined by the board of school directors.
(2) A school district which seeks to levy the tax authorized under paragraph (1) must comply with section 306.
(3) If a board of school directors seeks to impose a personal income tax under this subsection and the referendum under section 306 is approved by the electorate, the board of school directors shall have no authority to impose an earned income and net profits tax under subsection (c) or any other act.
(4) A personal income tax imposed under the authority of this section shall be levied by the school district on each of the classes of income specified in section 303 of the Tax Reform Code of 1971 and regulations under that section, provisions of which are incorporated by reference into this chapter.
(i) Notwithstanding the provisions of section 353(f) of the Tax Reform Code of 1971, the Department of Revenue may permit the proper officer or an authorized agent of a school district imposing a personal income tax pursuant to this chapter to inspect the tax returns of any taxpayer of the school district or may furnish to the officer or an authorized agent an abstract of the return of income of any current or former resident of the school district or supply information concerning any item of income contained in any tax return. The officer or authorized agent of the school district imposing a tax under this chapter shall be furnished the requested information upon payment to the Department of Revenue of the actual cost of providing the requested information.
(ii) (A) Except for official purposes or as provided by law, it shall be unlawful for any officer or authorized agent of a school district to do any of the following:
(I) Disclose to any other individual or entity the amount or source of income, profits, losses, expenditures or any particular information concerning income, profits, losses or expenditures contained in any return.
(II) Permit any other individual or entity to view or examine any return or copy of a return or any book containing any abstract or particulars.
(III) Print, publish or publicize in any manner any return; any particular information contained in or concerning the return; any amount or source of income, profits, losses or expenditures in or concerning the return; or any particular information concerning income, profits, losses or expenditures contained in or relating to any return.
(B) Any officer or authorized agent of a school district that violates clause (A):
(I) May be fined not more than $1,000 or imprisoned for not more than one year, or both.
(II) May be removed from office or discharged from employment.
(c) Earned income and net profits tax.--
(1) A board of school directors may levy, assess and collect a tax on earned income and net profits of resident individuals at a rate determined by the board of school directors.
(2) A school district which seeks to levy the tax authorized under paragraph (1) must comply with section 306.
(3) If a board of school directors seeks to impose a tax on earned income and net profits under this subsection and the referendum under section 306 is approved by the electorate, the board of school directors shall have no authority to impose a personal income tax under subsection (b) or any other act.
Section 306. Referendum.
(a) General rule.--In order to levy a personal income tax or an earned income and net profits tax under this chapter, a governing body shall use the procedures set forth in subsections (b), (c), (d), (e), (f) and (g).
(b) Approved by electorate.--
(1) Subject to notice and public hearing requirements of subsection (g), a governing body may levy the personal income tax or earned income and net profits tax under this chapter only by obtaining the approval of the electorate of the affected school district in a public referendum at only the primary election preceding the fiscal year when the personal income tax or earned income and net profits tax will be initially imposed or the rate increased.
(2) The referendum question must state the initial rate of the proposed personal income tax or earned income and net profits tax, the purpose of the tax, the duration of the tax and the amount of revenue to be generated by the implementation of the tax.
(3) The question shall be in clear language that is readily understandable by a layperson. For the purpose of illustration, a referendum question may be framed as follows:
Do you favor paying a personal income tax of X% for the purpose of X, for X years, which will generate $X?
Do you favor paying an earned income and net profits tax of X% for the purpose of X, for X years, which will generate $X?
(4) A nonlegal interpretative statement must accompany the question in accordance with section 201.1 of the act of June 3, 1937 (P.L.1333, No.320), known as the Pennsylvania Election Code, that includes the following:
(i) the initial rate of the personal income or earned income and net profits tax imposed under this chapter; and
(ii) the estimated revenues to be derived from the initial rate imposed under this chapter.
(c) School district located in more than one county.--In the event a school district is located in more than one county, petitions under this section shall be filed with the election officials of the county in which the administrative offices of the school district are located.
(d) Review and certification.--The election officials who receive a petition shall perform all administrative functions in reviewing and certifying the validity of the petition and conduct all necessary communications with the school district.
(e) Notification.--
(1) If the election officials of the county who receive the petition certify that it is sufficient under this section and determine that a question should be placed on the ballot, the decision shall be communicated to election officials in any other county in which the school district is also located.
(2) Election officials in the other county or counties shall cooperate with election officials of the county that receives the petition to ensure that an identical question is placed on the ballot at the same election throughout the entire school district.
(f) Certification of results.--Election officials from each county involved shall independently certify the results from their county to the governing body.
(g) Adoption of resolution.--
(1) In order to levy the tax under this section, the governing body shall adopt a resolution which shall refer to this chapter prior to placing a question on the ballot.
(2) Prior to adopting a resolution imposing the tax authorized by this section, the governing body shall give public notice of its intent to adopt the resolution in the manner provided by The Local Tax Enabling Act and shall conduct at least two public hearings regarding the proposed adoption of the resolution. One public hearing shall be conducted during normal business hours and one public hearing shall be conducted during evening hours or on a weekend.
Section 307. Continuity of tax.
Every tax levied under this chapter shall continue in force on a fiscal year basis without annual reenactment unless the rate of the tax is subsequently changed or the duration placed on the referendum has expired.
Section 308. Collections.
Any income tax imposed under this chapter shall be subject to the provisions for collection and delinquency found in The Local Tax Enabling Act.
Section 309. Credits.
(a) Credit.--Except as set forth in subsection (b), the provisions of The Local Tax Enabling Act shall be applied by a board of school directors to determine any credits applicable to a tax imposed under this chapter.
(b) Limitation.--Payment of any tax on income to any state other than Pennsylvania or to any political subdivision located outside the boundaries of this Commonwealth by a resident of a school district located in this Commonwealth shall not be credited to and allowed as a deduction from the liability of such person for any income tax imposed by the school district of residence pursuant to this chapter.
Section 310. Exemption and special provisions.
(a) Earned income and net profits tax.--A school district that imposes an earned income and net profits tax authorized under section 305(c) may exempt from the payment of that tax any person whose total income from all sources is less than $12,000.
(b) Applicability to personal income tax.--Section 304 of the Tax Reform Code of 1971 shall apply to any personal income tax levied by a school district under section 305(b).
Section 311. Regulations.
A school district that imposes:
(1) an earned income and net profits tax authorized under section 305(c) shall be subject to the provisions of The Local Tax Enabling Act and may adopt procedures for the processing of claims for credits and exemptions under section 309 and 310; or
(2) a personal income tax under section 305(b) shall be subject to all regulations adopted by the Department of Revenue in administering the tax due to the Commonwealth under Article III of the Tax Reform Code of 1971.
CHAPTER 4
EDUCATION TAX
Section 401. Education tax.
(a) General rule.--In addition to the tax collected under section 302 of the Tax Reform Code of 1971, the Commonwealth shall impose the tax set forth in subsection (c) in the same manner as the tax under the Tax Reform Code of 1971.
(b) Imposition of tax.--
(1) Every resident individual, estate or trust shall be subject to, and shall pay for the privilege of receiving each of the classes of income enumerated in section 303 of the Tax Reform Code of 1971, a tax upon each dollar of income received by that resident during that resident's taxable year at the rate of 1.27%.
(2) Every nonresident individual, estate or trust shall be subject to, and shall pay for the privilege of receiving each of the classes of income enumerated in section 303 of the Tax Reform Code of 1971 from sources within this Commonwealth, a tax upon each dollar of income received by that nonresident during that nonresident's taxable year at the rate of 1.27%.
(c) Deposit in Education Stabilization Fund.--All moneys collected under this section shall be deposited in the Education Stabilization Fund.
(d) Combination of tax forms.--The department shall incorporate the taxpayer reporting requirement for the implementation of this section into the forms utilized by the department under Article III of the Tax Reform Code of 1971.
(e) Definitions.--The words and phrases used in this section shall have the same meaning given to them in Article III of the Tax Reform Code of 1971.
CHAPTER 7
SALES AND USE TAX FOR THE
STABILIZATION OF EDUCATION FUNDING
SUBCHAPTER A
PRELIMINARY PROVISIONS
Section 701. Scope.
The tax provided for under this chapter shall be known as the Sales and Use Tax for the Stabilization of Education Funding, which shall be a replacement for the sales and use tax authorized under Article II of the Tax Reform Code of 1971 and that is repealed by this act.
Section 701.1. Definitions.
The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:
(a) "Soft drinks."
(1) All nonalcoholic beverages, whether carbonated or not, such as soda water, ginger ale, Coca Cola, lime cola, Pepsi Cola, Dr Pepper, fruit juice when plain or carbonated water, flavoring or syrup is added, carbonated water, orangeade, lemonade, root beer or any and all preparations, commonly referred to as soft drinks, of whatsoever kind, and are further described as including any and all beverages, commonly referred to as soft drinks, which are made with or without the use of any syrup.
(2) The term does not include natural fruit or vegetable juices or their concentrates, or noncarbonated fruit juice drinks containing not less than 25% by volume of natural fruit juices or of fruit juice which has been reconstituted to its original state, or natural concentrated fruit or vegetable juices reconstituted to their original state, whether any of the natural juices are frozen or unfrozen, sweetened or unsweetened, seasoned with salt or spice or unseasoned. The term also does not include coffee, coffee substitutes, tea, cocoa, natural fluid milk or noncarbonated drinks made from milk derivatives.
(b) "Maintaining a place of business in this Commonwealth."
(1) Having, maintaining or using within this Commonwealth, either directly or through a subsidiary, representative or an agent, an office, distribution house, sales house, warehouse, service enterprise or other place of business; or any agent of general or restricted authority, or representative, irrespective of whether the place of business, representative or agent is located in this Commonwealth, permanently or temporarily, or whether the person or subsidiary maintaining the place of business, representative or agent is authorized to do business within this Commonwealth.
(2) Engaging in any activity as a business within this Commonwealth by any person, either directly or through a subsidiary, representative or an agent, in connection with the lease, sale or delivery of tangible personal property or the performance of services thereon for use, storage or consumption or in connection with the sale or delivery for use of the services described in subclauses (11) through (18) of clause (k) of this section, including, but not limited to, having, maintaining or using any office, distribution house, sales house, warehouse or other place of business, any stock of goods or any solicitor, canvasser, salesman, representative or agent under its authority, at its direction or with its permission, regardless of whether the person or subsidiary is authorized to do business in this Commonwealth.
(3) Regularly or substantially soliciting orders within this Commonwealth in connection with the lease, sale or delivery of tangible personal property to or the performance thereon of services or in connection with the sale or delivery of the services described in subclauses (11) through (18) of clause (k) of this section for residents of this Commonwealth by means of catalogs or other advertising, whether the orders are accepted within or without this Commonwealth.
(3.1) Entering this Commonwealth by any person to provide assembly, service or repair of tangible personal property, either directly or through a subsidiary, representative or an agent.
(3.2) Delivering tangible personal property to locations within this Commonwealth if the delivery includes the unpacking, positioning, placing or assembling of the tangible personal property.
(3.3) Having any contact within this Commonwealth which would allow the Commonwealth to require a person to collect and remit tax under the Constitution of the United States.
(3.4) Providing a customer's mobile telecommunications service deemed to be provided by the customer's home service provider under the Mobile Telecommunications Sourcing Act (4 U.S.C. § 116). For purposes of this clause, words and phrases used in this clause shall have the meanings given to them in the Mobile Telecommunications Sourcing Act.
(4) The term does not include:
(i) Owning or leasing of tangible or intangible property by a person who has contracted with an unaffiliated commercial printer for printing, provided that:
(A) the property is for use by the commercial printer; and
(B) the property is located at the Pennsylvania premises of the commercial printer.
(ii) Visits by a person's employees or agents to the premises in this Commonwealth of an unaffiliated commercial printer with whom the person has contracted for printing in connection with said contract.
(b.1) "Service performed in this Commonwealth."
A service performed:
(1) completely in this Commonwealth;
(2) partially in this Commonwealth and partially outside this Commonwealth, when the recipient or user of the service is located in this Commonwealth; or
(3) partially in this Commonwealth and partially outside this Commonwealth, when the recipient or user of the service is not located in this Commonwealth, but only to the extent of those services actually performed in this Commonwealth.
The place of performance need not be determined if the recipient or user of the service is located in this Commonwealth.
A service performed partially in this Commonwealth and partially outside this Commonwealth shall be presumed to have been performed completely in this Commonwealth unless the taxpayer can show the place of performance by clear and convincing evidence. With respect to interstate telecommunications services, only services for interstate telecommunications which originate or are terminated in this Commonwealth and which are billed and charged to a service address in this Commonwealth shall be presumed to have been performed completely in this Commonwealth and shall be subject to tax.
(c) "Manufacture." The performance of manufacturing, fabricating, compounding, processing or other operations, engaged in as a business, which place any tangible personal property in a form, composition or character different from that in which it is acquired whether for sale or use by the manufacturer, and shall include, but not be limited to:
(1) Every operation commencing with the first production stage and ending with the completion of tangible personal property having the physical qualities, including packaging, if any, passing to the ultimate consumer, which it has when transferred by the manufacturer to another. For purposes of this definition, "operation" includes clean rooms and their component systems, including: environmental control systems, antistatic vertical walls and manufacturing platforms and floors which are independent of the real estate; process piping systems; specialized lighting systems; deionized water systems; process vacuum and compressed air systems; process and specialty gases; and alarm or warning devices specifically designed to warn of threats to the integrity of the product or people. For purposes of this definition, a "clean room" is a location with a self-contained, sealed environment with a controlled, closed air system independent from the facility's general environmental control system.
(2) The publishing of books, newspapers, magazines and other periodicals and printing.
(3) Refining, blasting, exploring, mining and quarrying for, or otherwise extracting from the earth or from waste or stock piles or from pits or banks any natural resources, minerals and mineral aggregates including blast furnace slag.
(4) Building, rebuilding, repairing and making additions to, or replacements in or upon vessels designed for commercial use of registered tonnage of 50 tons or more when produced on special order of the purchaser, or when rebuilt, repaired or enlarged, or when replacements are made upon order of or for the account of the owner.
(5) Research having as its objective the production of a new or an improved:
(i) product or utility service; or
(ii) method of producing a product or utility service,
but in either case not including market research or research having as its objective the improvement of administrative efficiency.
(6) Remanufacture for wholesale distribution by a remanufacturer of motor vehicle parts from used parts acquired in bulk by the remanufacturer using an assembly line process which involves the complete disassembly of such parts and integration of the components of such parts with other used or new components of parts, including the salvaging, recycling or reclaiming of used parts by the remanufacturer.
(7) Remanufacture or retrofit by a manufacturer or remanufacturer of aircraft, armored vehicles, other defense-related vehicles having a finished value of at least $50,000. Remanufacture or retrofit involves the disassembly of such aircraft, vehicles, parts or components, including electric or electronic components, the integration of those parts and components with other used or new parts or components, including the salvaging, recycling or reclaiming of the used parts or components and the assembly of the new or used aircraft, vehicles, parts or components. The term does not include constructing, altering, servicing, repairing or improving real estate or repairing, servicing or installing tangible personal property, nor the cooking, freezing or baking of fruits, vegetables, mushrooms, fish, seafood, meats, poultry or bakery products. For purposes of this clause, the following terms or phrases have the following meanings:
(i) "aircraft" means fixed-wing aircraft, helicopters, powered aircraft, tilt-rotor or tilt-wing aircraft, unmanned aircraft and gliders;
(ii) "armored vehicles" means tanks, armed personnel carriers and all other armed track or semitrack vehicles; and
(iii) "other defense-related vehicles" means trucks, truck-tractors, trailers, jeeps and other utility vehicles, including any unmanned vehicles.
(c.1) "Blasting." The use of any combustible or explosive composition in the removal of material resources, minerals and mineral aggregates from the earth including the separation of the dirt, waste and refuse in which they are found.
(d) "Processing." The performance of the following activities when engaged in as a business enterprise:
(1) The filtering or heating of honey, the cooking, baking or freezing of fruits, vegetables, mushrooms, fish, seafood, meats, poultry or bakery products, when the person engaged in the business packages the property in sealed containers for wholesale distribution.
(1.1) The processing of fruits or vegetables by cleaning, cutting, coring, peeling or chopping and treating to preserve, sterilize or purify and substantially extend the useful shelf life of the fruits or vegetables, when the person engaged in the activity packages the property in sealed containers for wholesale distribution.
(2) The scouring, carbonizing, cording, combing, throwing, twisting or winding of natural or synthetic fibers, or the spinning, bleaching, dyeing, printing or finishing of yarns or fabrics, when the activities are performed prior to sale to the ultimate consumer.
(3) The electroplating, galvanizing, enameling, anodizing, coloring, finishing, impregnating or heat treating of metals or plastics for sale or in the process of manufacturing.
(3.1) The blanking, shearing, leveling, slitting or burning of metals for sale to or use by a manufacturer or processor.
(4) The rolling, drawing or extruding of ferrous and nonferrous metals.
(5) The fabrication for sale of ornamental or structural metal or of metal stairs, staircases, gratings, fire escapes or railings, not including fabrication work done at the construction site.
(6) The preparation of animal feed or poultry feed for sale.
(7) The production, processing and bottling of nonalcoholic beverages for wholesale distribution.
(8) The operation of a saw mill or planing mill for the production of lumber or lumber products for sale. The operation of a saw mill or planing mill begins with the unloading by the operator of the saw mill or planing mill of logs, timber, pulpwood or other forms of wood material to be used in the saw mill or planing mill.
(9) The milling for sale of flour or meal from grains.
(9.1) The aging, stripping, conditioning, crushing and blending of tobacco leaves for use as cigar filler or as components of smokeless tobacco products for sale to manufacturers of tobacco products.
(10) The slaughtering and dressing of animals for meat to be sold or to be used in preparing meat products for sale, and the preparation of meat products including lard, tallow, grease, cooking and inedible oils for wholesale distribution.
(11) The processing of used lubricating oils.
(12) The broadcasting of radio and television programs of licensed commercial or educational stations.
(13) The cooking or baking of bread, pastries, cakes, cookies, muffins and donuts when the person engaged in the activity sells the items at retail at locations that do not constitute an establishment from which ready-to-eat food and beverages are sold. For purposes of this clause, a bakery, a pastry shop and a donut shop shall not be considered an establishment from which ready-to-eat food and beverages are sold.
(14) The cleaning and roasting and the blending, grinding or packaging for sale of coffee from green coffee beans or the production of coffee extract.
(15) The preparation of dry or liquid fertilizer for sale.
(16) The production, processing and packaging of ice for wholesale distribution.
(17) The producing of mobile telecommunications services.
(e) "Person." Any natural person, association, fiduciary, partnership, corporation or other entity, including the Commonwealth of Pennsylvania, its political subdivisions and instrumentalities and public authorities. Whenever used in prescribing and imposing a penalty or imposing a fine or imprisonment, or both, the term as applied to an association, includes the members of the association and, as applied to a corporation, the officers of the corporation.
(f) "Purchase at retail."
(1) The acquisition for a consideration of the ownership, custody or possession of tangible personal property other than for resale by the person acquiring the same when the acquisition is made for the purpose of consumption or use, whether the acquisition is absolute or conditional, and by any means it is effected.
(2) The acquisition of a license to use or consume, and the rental or lease of tangible personal property, other than for resale regardless of the period of time the lessee has possession or custody of the property.
(3) The obtaining for a consideration of those services described in subclauses (2), (3) and (4) of clause (k) of this section other than for resale.
(4) A retention after March 7, 1956, of possession, custody or a license to use or consume pursuant to a rental contract or other lease arrangement (other than as security) other than for resale.
(5) The obtaining for a consideration of those services described in subclauses (11) through (18) of clause (k) of this section.
The term, with respect to liquor and malt or brewed beverages, includes the purchase of liquor from any Pennsylvania Liquor Store by any person for any purpose, and the purchase of malt or brewed beverages from a manufacturer of malt or brewed beverages, distributor or importing distributor by any person for any purpose, except purchases from a manufacturer of malt or brewed beverages by a distributor or importing distributor or purchases from an importing distributor by a distributor within the meaning of the Liquor Code. The term does not include any purchase of malt or brewed beverages from a retail dispenser or any purchase of liquor or malt or brewed beverages from a person holding a retail liquor license within the meaning of and pursuant to the provisions of the Liquor Code, but includes any purchase or acquisition of liquor or malt or brewed beverages other than pursuant to the provisions of the Liquor Code.
(g) "Purchase price."
(1) The total value of anything paid or delivered, or promised to be paid or delivered, whether money or otherwise, in complete performance of a sale at retail or purchase at retail, without any deduction on account of the cost or value of the property sold, cost or value of transportation, cost or value of labor or service, interest or discount paid or allowed after the sale is consummated, any other taxes imposed by the Commonwealth or any other expense except that there shall be excluded any gratuity or separately stated deposit charge for returnable containers.
(2) The value of any tangible personal property actually taken in trade or exchange in lieu of the whole or any part of the purchase price shall be deducted from the purchase price. For the purpose of this clause, the amount allowed by reason of tangible personal property actually taken in trade or exchange shall be considered the value of such property.
(3) (i) In determining the purchase price on the sale or use of taxable tangible personal property or a service where, because of affiliation of interests between the vendor and purchaser, or irrespective of any such affiliation, if for any other reason the purchase price declared by the vendor or taxpayer on the taxable sale or use of such tangible personal property or service is, in the opinion of the department, not indicative of the true value of the article or service or the fair price thereof, the department shall, pursuant to uniform and equitable rules, determine the amount of constructive purchase price on the basis of which the tax shall be computed and levied. The rules shall provide for a constructive amount of purchase price for each sale or use which would naturally and fairly be charged in an arms-length transaction in which the element of common interest between the vendor or purchaser is absent or, if no common interest exists, any other element causing a distortion of the price or value is likewise absent.
(ii) For the purpose of this clause where a taxable sale or purchase at retail transaction occurs between a parent and a subsidiary, affiliate or controlled corporation of such parent corporation, there shall be a rebuttable presumption, that because of the common interest, the transaction was not at arms-length.
(4) Where there is a transfer or retention of possession or custody, whether it is termed a rental, lease, service or otherwise, of tangible personal property including, but not limited to, linens, aprons, motor vehicles, trailers, tires, industrial office and construction equipment, and business machines the full consideration paid or delivered to the vendor or lessor shall be considered the purchase price, even though the consideration is separately stated and designated as payment for processing, laundering, service, maintenance, insurance, repairs, depreciation or otherwise. Where the vendor or lessor supplies or provides an employee to operate the tangible personal property, the value of the labor supplied may be excluded and shall not be considered as part of the purchase price if separately stated. There shall also be included as part of the purchase price the value of anything paid or delivered, or promised to be paid or delivered by a lessee, whether money or otherwise, to any person other than the vendor or lessor by reason of the maintenance, insurance or repair of the tangible personal property which a lessee has the possession or custody of under a rental contract or lease arrangement.
(5) (i) With respect to the tax imposed by section 702(a)(2), on any tangible personal property originally purchased by the user of the property six months or longer prior to the first taxable use of the property within this Commonwealth, the user may elect to pay tax on a substituted base determined by considering the purchase price of the property for tax purposes to be equal to the prevailing market price of similar tangible personal property at the time and place of the first use within this Commonwealth.
(ii) The election must be made at the time of filing a tax return with the department and reporting the tax liability and paying the proper tax due plus all accrued penalties and interest, if any, within six months of the due date of such report and payment, as provided for by section 717(a) and (c).
(6) The purchase price of employment agency services and help supply services shall be the service fee paid by the purchaser to the vendor or supplying entity. The term "service fee," as used in this subclause, means the total charge or fee of the vendor or supplying entity minus the costs of the supplied employee which costs are wages, salaries, bonuses and commissions, employment benefits, expense reimbursements and payroll and withholding taxes, to the extent that these costs are specifically itemized or that these costs in aggregate are stated in billings from the vendor or supplying entity. To the extent that these costs are not itemized or stated on the billings, then the service fee shall be the total charge or fee of the vendor or supplying entity.
(7) Unless the vendor separately states that portion of the billing which applies to premium cable service as defined in clause (ll), the total bill for the provision of all cable services shall be the purchase price.
(8) The purchase price of prebuilt housing shall be 60% of the manufacturer's selling price, provided that a manufacturer of prebuilt housing who precollects tax from a prebuilt housing builder at the time of the sale to the prebuilt housing builder shall have the option to collect tax on 60% of the selling price or on 100% of the actual cost of the supplies and materials used in the manufacture of the prebuilt housing.
(h) "Purchaser." Any person who acquires, for a consideration, the ownership, custody or possession by sale, lease or otherwise of tangible personal property, or who obtains services in exchange for a purchase price but not including an employer who obtains services from his employees in exchange for wages or salaries when such services are rendered in the ordinary scope of their employment.
(i) "Resale."
(1) Any transfer of ownership, custody or possession of tangible personal property for a consideration, including the grant of a license to use or consume and transactions where the possession of the property is transferred but where the transferor retains title only as security for payment of the selling price whether the transaction is designated as bailment lease, conditional sale or otherwise.
(2) The physical incorporation of tangible personal property as an ingredient or constituent into other tangible personal property, which is to be sold in the regular course of business or the performance of those services described in subclauses (2), (3) and (4) of clause (k) upon tangible personal property which is to be sold in the regular course of business or where the person incorporating the property has undertaken at the time of purchase to cause it to be transported in interstate commerce to a destination outside this Commonwealth. The term includes telecommunications services purchased by a cable operator or video programmer that are used to transport or deliver cable or video programming services which are sold in the regular course of business.
(3) The term also includes tangible personal property purchased or having a situs within this Commonwealth solely for the purpose of being processed, fabricated or manufactured into, attached to or incorporated into tangible personal property and thereafter transported outside this Commonwealth for use exclusively outside this Commonwealth.
(4) The term does not include any sale of malt or brewed beverages by a retail dispenser, or any sale of liquor or malt or brewed beverages by a person holding a retail liquor license within the meaning of the act of April 12, 1951 (P.L.90, No.21), known as the Liquor Code.
(5) The physical incorporation of tangible personal property as an ingredient or constituent in the construction of foundations for machinery or equipment the sale or use of which is excluded from tax under the provisions of paragraphs (A), (B), (C) and (D) of subclause (8) of clause (k) and subparagraphs (i), (ii), (iii) and (iv) of paragraph (B) of subclause (4) of clause (o), whether the foundations at the time of construction or transfer constitute tangible personal property or real estate.
(j) "Resident."
(1) Any natural person:
(i) who is domiciled in this Commonwealth; or
(ii) who maintains a permanent place of abode within this Commonwealth and spends in the aggregate more than 60 days of the year within this Commonwealth.
(2) Any corporation:
(i) incorporated under the laws of this Commonwealth;
(ii) authorized to do business or doing business within this Commonwealth; or
(iii) maintaining a place of business within this Commonwealth.
(3) Any association, fiduciary, partnership or other entity:
(i) domiciled in this Commonwealth;
(ii) authorized to do business or doing business within this Commonwealth; or
(iii) maintaining a place of business within this Commonwealth.
(k) "Sale at retail."
(1) Any transfer, for a consideration, of the ownership, custody or possession of tangible personal property, including the grant of a license to use or consume whether the transfer is absolute or conditional and by any means the transfer is effected.
(2) The rendition of the service of printing or imprinting of tangible personal property for a consideration for persons who furnish, either directly or indirectly, the materials used in the printing or imprinting.
(3) The rendition for a consideration of the service of:
(i) washing, cleaning, waxing, polishing or lubricating of motor vehicles of another, regardless of whether any tangible personal property is transferred in conjunction with the activity; and
(ii) inspecting motor vehicles pursuant to the mandatory requirements of 75 Pa.C.S. (relating to vehicles).
(4) The rendition for a consideration of the service of repairing, altering, mending, pressing, fitting, dyeing, laundering, drycleaning or cleaning tangible personal property other than wearing apparel or shoes, or applying or installing tangible personal property as a repair or replacement part of other tangible personal property other than wearing apparel or shoes for a consideration, regardless of whether the services are performed directly or by any means other than by coin-operated self-service laundry equipment for wearing apparel or household goods and whether or not any tangible personal property is transferred in conjunction with the activity, except such services as are rendered in the construction, reconstruction, remodeling, repair or maintenance of real estate.
(5) (Reserved).
(6) (Reserved).
(7) (Reserved).
(8) Any retention of possession, custody or a license to use or consume tangible personal property or any further obtaining of services described in subclauses (2), (3) and (4) of this clause pursuant to a rental or service contract or other arrangement (other than as security). The term does not include:
(i) any transfer of tangible personal property or rendition of services for the purpose of resale; or
(ii) the rendition of services or the transfer of tangible personal property, including, but not limited to, machinery and equipment and their parts and supplies to be used or consumed by the purchaser directly in the operations of:
(A) The manufacture of tangible personal property.
(B) Farming, dairying, agriculture, horticulture or floriculture when engaged in as a business enterprise. The term "farming" includes the propagation and raising of ranch raised fur-bearing animals and the propagation of game birds for commercial purposes by holders of propagation permits issued under 34 Pa.C.S. (relating to game) and the propagation and raising of horses to be used exclusively for commercial racing activities.
(C) The producing, delivering or rendering of a public utility service, or in constructing, reconstructing, remodeling, repairing or maintaining the facilities which are directly used in producing, delivering or rendering the service.
(D) Processing as defined in clause (d). The exclusions provided in this paragraph or paragraph (A), (B) or (C) do not apply to any vehicle required registered under 75 Pa.C.S. (relating to vehicles), except those vehicles used directly by a public utility engaged in business as a common carrier; to maintenance facilities; or to materials, supplies or equipment to be used or consumed in the construction, reconstruction, remodeling, repair or maintenance of real estate other than directly used machinery, equipment, parts or foundations that may be affixed to such real estate. The exclusions provided in this paragraph or paragraph (A), (B) or (C) do not apply to tangible personal property or services to be used or consumed in managerial sales or other nonoperational activities, nor to the purchase or use of tangible personal property or services by any person other than the person directly using the same in the operations described in this paragraph or paragraph (A), (B) or (C).
The exclusion provided in paragraph (C) does not apply to:
(i) construction materials, supplies or equipment used to construct, reconstruct, remodel, repair or maintain facilities not used directly by the purchaser in the production, delivering or rendition of public utility service;
(ii) construction materials, supplies or equipment used to construct, reconstruct, remodel, repair or maintain a building, road or similar structure; or
(iii) tools and equipment used but not installed in the maintenance of facilities used directly in the production, delivering or rendition of a public utility service. The exclusions provided in paragraphs (A), (B), (C) and (D) do not apply to the services enumerated in clauses (k)(11) through (18) and (w) through (kk), except that the exclusion provided in this subclause for farming, dairying and agriculture shall apply to the service enumerated in clause (z).
(9) Where tangible personal property or services are utilized for purposes constituting a sale at retail and for purposes excluded from the definition of "sale at retail," it shall be presumed that the tangible personal property or services are utilized for purposes constituting a sale at retail and subject to tax unless the user proves to the department that the predominant purposes for which such tangible personal property or services are utilized do not constitute a sale at retail.
(10) The term, with respect to liquor and malt or brewed beverages, includes the sale of liquor by any Pennsylvania liquor store to any person for any purpose, and the sale of malt or brewed beverages by a manufacturer of malt or brewed beverages, distributor or importing distributor to any person for any purpose, except sales by a manufacturer of malt or brewed beverages to a distributor or importing distributor or sales by an importing distributor to a distributor within the meaning of the act of April 12, 1951 (P.L.90, No.21), known as the Liquor Code. The term does not include any sale of malt or brewed beverages by a retail dispenser or any sale of liquor or malt or brewed beverages by a person holding a retail liquor license within the meaning of and pursuant to the provisions of the Liquor Code, but shall include any sale of liquor or malt or brewed beverages other than pursuant to the provisions of the Liquor Code.
(11) The rendition for a consideration of lobbying services.
(12) The rendition for a consideration of adjustment services, collection services or credit reporting services.
(13) The rendition for a consideration of secretarial or editing services.
(14) The rendition for a consideration of disinfecting or pest control services, building maintenance or cleaning services.
(15) The rendition for a consideration of employment agency services or help supply services.
(16) (Reserved).
(17) The rendition for a consideration of lawn care service.
(18) The rendition for a consideration of self-storage service.
(19) The rendition for a consideration of a mobile telecommunications service.
(20) Except as otherwise provided under section 704, the rendition for a consideration of any service when the primary objective of the purchaser is the receipt of any benefit of the service performed, as distinguished from the receipt of property. The following provisions shall apply:
(i) In determining what is a service, the intended use or stated objective of the contracting parties shall not necessarily be controlling.
(ii) Any service performed in this Commonwealth shall be subject to the tax imposed under this chapter unless specifically exempted in this chapter.
(iii) With respect to services performed in this Commonwealth for a recipient or user of the services located in another state in which the services, had they been performed in that state, would not be subject to a sales or use tax under the laws of that state, then no tax may be imposed under this chapter.
(iv) The tax on the sale or use of services shall become due at the time payment or other consideration is made for the portion of services actually paid.
(l) "Storage." Any keeping or retention of tangible personal property within this Commonwealth for any purpose including the interim keeping, retaining or exercising any right or power over such tangible personal property. This term is in no way limited to the provision of self-storage service.
(m) "Tangible personal property." Corporeal personal property including, but not limited to, goods, wares, merchandise, steam and natural and manufactured and bottled gas for non-residential use, electricity for non-residential use, prepaid telecommunications, premium cable or premium video programming service, spirituous or vinous liquor and malt or brewed beverages and soft drinks, interstate telecommunications service originating or terminating in this Commonwealth and charged to a service address in this Commonwealth, intrastate telecommunications service with the exception of:
(1) Subscriber line charges and basic local telephone service for residential use.
(2) Charges for telephone calls paid for by inserting money into a telephone accepting direct deposits of money to operate, provided further, the service address of any intrastate telecommunications service is deemed to be within this Commonwealth or within a political subdivision, regardless of how or where billed or paid.
In the case of any interstate or intrastate telecommunications service, any charge paid through a credit or payment mechanism which does not relate to a service address, such as a bank, travel, credit or debit card, but not including prepaid telecommunications, is deemed attributable to the address of origination of the telecommunications service.
(n) "Taxpayer." Any person required to pay or collect the tax imposed by this chapter.
(o) "Use."
(1) The exercise of any right or power incidental to the ownership, custody or possession of tangible personal property and includes, but is not limited to, transportation, storage or consumption.
(2) The obtaining by a purchaser of the service of printing or imprinting of tangible personal property when the purchaser furnishes, either directly or indirectly, the articles used in the printing or imprinting.
(3) The obtaining by a purchaser of the services of:
(i) washing, cleaning, waxing, polishing or lubricating of motor vehicles regardless of whether any tangible personal property is transferred to the purchaser in conjunction with the services; and
(ii) inspecting motor vehicles pursuant to the mandatory requirements of 75 Pa.C.S. (relating to vehicles).
(4) The obtaining by a purchaser of the service of repairing, altering, mending, pressing, fitting, dyeing, laundering, drycleaning or cleaning tangible personal property other than wearing apparel or shoes or applying or installing tangible personal property as a repair or replacement part of other tangible personal property, including, but not limited to, wearing apparel or shoes, regardless of whether the services are performed directly or by any means other than by means of coin-operated self-service laundry equipment for wearing apparel or household goods, and regardless of whether any tangible personal property is transferred to the purchaser in conjunction with the activity. The term "use" does not include:
(A) Any tangible personal property acquired and kept, retained or over which power is exercised within this Commonwealth on which the taxing of the storage, use or other consumption thereof is expressly prohibited by the Constitution of the United States or which is excluded from tax under other provisions of this chapter.
(B) The use or consumption of tangible personal property, including, but not limited to, machinery and equipment and parts therefor, and supplies or the obtaining of the services described in subclauses (2), (3) and (4) of this clause directly in the operations of:
(i) The manufacture of tangible personal property.
(ii) Farming, dairying, agriculture, horticulture or floriculture when engaged in as a business enterprise. The term includes the propagation and raising of ranch-raised furbearing animals and the propagation of game birds for commercial purposes by holders of propagation permits issued under 34 Pa.C.S. (relating to game) and the propagation and raising of horses to be used exclusively for commercial racing activities.
(iii) The producing, delivering or rendering of a public utility service, or in constructing, reconstructing, remodeling, repairing or maintaining the facilities which are directly used in producing, delivering or rendering such service.
(iv) Processing as defined in subclause (d).
The exclusions provided in subparagraphs (i), (ii), (iii) and (iv) do not apply to any vehicle required to be registered under 75 Pa.C.S. (relating to vehicles) except those vehicles directly used by a public utility engaged in the business as a common carrier; to maintenance facilities; or to materials, supplies or equipment to be used or consumed in the construction, reconstruction, remodeling, repair or maintenance of real estate other than directly used machinery, equipment, parts or foundations therefor that may be affixed to such real estate. The exclusions provided in subparagraphs (i), (ii), (iii) and this subparagraph do not apply to tangible personal property or services to be used or consumed in managerial sales or other nonoperational activities, nor to the purchase or use of tangible personal property or services by any person other than the person directly using the same in the operations described in subparagraphs (i), (ii), (iii) and this subparagraph. The exclusion provided in subparagraph (iii) does not apply to:
(A) construction materials, supplies or equipment used to construct, reconstruct, remodel, repair or maintain facilities not used directly by the purchaser in the production, delivering or rendition of public utility service; or
(B) tools and equipment used but not installed in the maintenance of facilities used directly in the production, delivering or rendition of a public utility service.
The exclusion provided in subparagraphs (i), (ii), (iii) and this subparagraph does not apply to the services enumerated in clauses (9) through (16) and (w) through (kk), except that the exclusion provided in subparagraph (ii) for farming, dairying and agriculture shall apply to the service enumerated in clause (z).
(5) Where tangible personal property or services are utilized for purposes constituting a use, and for purposes excluded from the definition of "use," it shall be presumed that the property or services are utilized for purposes constituting a sale at retail and subject to tax unless the user proves to the department that the predominant purposes for which the property or services are utilized do not constitute a sale at retail.
(6) The term, with respect to liquor and malt or brewed beverages, includes the purchase of liquor from any Pennsylvania Liquor Store by any person for any purpose and the purchase of malt or brewed beverages from a manufacturer of malt or brewed beverages, distributor or importing distributor by any person for any purpose, except purchases from a manufacturer of malt or brewed beverages by a distributor or importing distributor, or purchases from an importing distributor by a distributor within the meaning of the act of April 12, 1951 (P.L.90, No.21), known as the Liquor Code. The term does not include any purchase of malt or brewed beverages from a retail dispenser or any purchase of liquor or malt or brewed beverages from a person holding a retail liquor license within the meaning of and pursuant to the provisions of the Liquor Code, but includes the exercise of any right or power incidental to the ownership, custody or possession of liquor or malt or brewed beverages obtained by the person exercising the right or power in any manner other than pursuant to the provisions of the Liquor Code.
(7) The use of tangible personal property purchased at retail on which the services described in subclauses (2), (3) and (4) of this clause have been performed shall be deemed to be a use of said services by the person using the property.
(8) (Reserved).
(9) The obtaining by the purchaser of lobbying services.
(10) The obtaining by the purchaser of adjustment services, collection services or credit reporting services.
(11) The obtaining by the purchaser of secretarial or editing services.
(12) The obtaining by the purchaser of disinfecting or pest control services, building maintenance or cleaning services.
(13) The obtaining by the purchaser of employment agency services or help supply services.
(14) (Reserved).
(15) The obtaining by the purchaser of lawn care service.
(16) The obtaining by the purchaser of self-storage service.
(17) The obtaining by a construction contractor of tangible personal property or services provided to tangible personal property which will be used pursuant to a construction contract regardless of whether the tangible personal property or services are transferred.
(18) The obtaining of mobile telecommunications service by a customer.
(19) Except as otherwise provided under section 704, the obtaining by the purchaser of any service, not otherwise set forth in this definition, when the primary objective of the purchaser is the receipt of any benefit of the service performed, as distinguished from the receipt of property. The following provisions shall apply:
(i) In determining what is a service, the intended use or stated objective of the contracting parties shall not necessarily be controlling.
(ii) Any service performed in this Commonwealth shall be subject to the tax imposed under this chapter unless specifically exempted in this chapter.
(iii) With respect to services performed in this Commonwealth for a recipient or user of the services located in another state in which the services, had they been performed in that state, would not be subject to a sales or use tax under the laws of that state, then no tax may be imposed under this chapter.
(iv) The tax on the sale or use of services shall become due at the time payment or other consideration is made for the portion of services actually paid.
(p) "Vendor." Any person maintaining a place of business in this Commonwealth, selling or leasing tangible personal property, or rendering services, the sale or use of which is subject to the tax imposed by this chapter but not including any employee who in the ordinary scope of employment renders services to his employer in exchange for wages and salaries.
(q) (Reserved).
(r) "Gratuity." Any amount paid or remitted for services performed in conjunction with any sale of food or beverages, or hotel or motel accommodations which amount is in excess of the charges and the tax for such food, beverages or accommodations regardless of the method of billing or payment.
(s) "Commercial aircraft operator." A person, excluding a scheduled airline who engages in any or all of the following: charter of aircraft, leasing of aircraft, aircraft sales, aircraft rental, flight instruction, air freight or any other flight activities for compensation.
(t) "Transient vendor."
(1) Any person who:
(i) brings into this Commonwealth, by automobile, truck or other means of transportation, or purchases in this Commonwealth tangible personal property the sale or use of which is subject to the tax imposed by this chapter or comes into this Commonwealth to perform services the sale or use of which is subject to the tax imposed by this chapter;
(ii) offers or intends to offer the tangible personal property or services for sale at retail within this Commonwealth; and
(iii) does not maintain an established office, distribution house, saleshouse, warehouse, service enterprise, residence from which business is conducted or other place of business within this Commonwealth.
(2) The term does not include a person who delivers tangible personal property within this Commonwealth pursuant to orders for the property which were solicited or placed by mail or other means.
(3) The term does not include a person who handcrafts items for sale at special events, including, but not limited to, fairs, carnivals, art and craft shows and other festivals and celebrations within this Commonwealth.
(u) "Promoter." A person who either, directly or indirectly, rents, leases or otherwise operates or grants permission to any person to use space at a show for the display for sale or for the sale of tangible personal property or services subject to tax under section 702.
(v) "Show." An event, the primary purpose of which involves the display or exhibition of any tangible personal property or services for sale, including, but not limited to, a flea market, antique show, coin show, stamp show, comic book show, hobby show, automobile show, fair or any similar show, whether held regularly or of a temporary nature, at which more than one vendor displays for sale or sells tangible personal property or services subject to tax under section 702.
(w) "Lobbying services." Providing the services of a lobbyist, as defined in the definition of "lobbyist" in 65 Pa.C.S. Ch. 13 (relating to lobby regulation and disclosure).
(x) "Adjustment services, collection services or credit reporting services." Providing collection or adjustments of accounts receivable or mercantile or consumer credit reporting, including, but not limited to, services of the type provided by adjustment bureaus or collection agencies, consumer or mercantile credit reporting bureaus, credit bureaus or agencies, credit clearinghouses or credit investigation services. The term does not include providing credit card service with collection by a central agency, providing debt counseling or adjustment services to individuals or billing or collection services provided by local exchange telephone companies.
(y) "Secretarial or editing services." Providing services which include, but are not limited to, editing, letter writing, proofreading, resume writing, typing or word processing. The term does not include court reporting and stenographic services.
(z) "Disinfecting or pest control services." Providing disinfecting, termite control, insect control, rodent control or other pest control services. The term includes, but is not limited to, deodorant servicing of rest rooms, washroom sanitation service, rest room cleaning service, extermination service or fumigating service. As used in this clause, the term "fumigating service" does not include the fumigation of agricultural commodities or containers used for agricultural commodities. As used in this clause, the term "insect control" does not include the gypsy moth control spraying of trees which are harvested for commercial purposes.
(aa) "Building maintenance or cleaning services." Providing services which include, but are not limited to, janitorial, maid or housekeeping service, office or interior building cleaning or maintenance service, window cleaning service, floor waxing service, lighting maintenance service such as bulb replacement, cleaning, chimney cleaning service, acoustical tile cleaning service, venetian blind cleaning, cleaning and maintenance of telephone booths or cleaning and degreasing of service stations. The term does not include: repairs on buildings and other structures; the maintenance or repair of boilers, furnaces and residential air conditioning equipment or their parts; the painting, wallpapering or applying other like coverings to interior walls, ceilings or floors; or the exterior painting of buildings.
(bb) "Employment agency services." Providing employment services to a prospective employer or employee other than employment services provided by theatrical employment agencies and motion picture casting bureaus. The term includes, but is not limited to, services of the type provided by employment agencies, executive placing services and labor contractor employment agencies other than farm labor.
(cc) "Help supply services." Providing temporary or continuing help where the help supplied is on the payroll of the supplying person or entity, but is under the supervision of the individual or business to which help is furnished. The term includes, but is not limited to, service of a type provided by labor and manpower pools, employee leasing services, office help supply services, temporary help services, usher services, modeling services or fashion show model supply services. The term does not include: providing farm labor services or human health-related services, including nursing, home health care and personal care. As used in this clause, "personal care" shall include providing at least one of the following types of assistance to persons with limited ability for self-care:
(1) dressing, bathing or feeding;
(2) supervising self-administered medication;
(3) transferring a person to or from a bed or wheelchair; or
(4) routine housekeeping chores when provided in conjunction with and supplied by the same provider of the assistance listed in subclause (1), (2) or (3).
(dd) (Reserved).
(ee) (Reserved).
(ff) (Reserved).
(gg) (Reserved).
(hh) (Reserved).
(ii) (Reserved).
(jj) "Lawn care service." Providing services for lawn upkeep, including, but not limited to, fertilizing, lawn mowing, shrubbery trimming or other lawn treatment services.
(kk) "Self-storage service." Providing a building, a room in a building or a secured area within a building with separate access provided for each purchaser of self-storage service, primarily for the purpose of storing personal property. The term does not include service involving:
(1) safe deposit boxes by financial institutions;
(2) storage in refrigerator or freezer units;
(3) storage in commercial warehouses;
(4) facilities for goods distribution; and
(5) lockers in airports, bus stations, museums and other public places.
(ll) "Cable or video programming service." Cable television services, video programming services, community antenna television services or any other distribution of television, video, audio or radio services which is transmitted with or without the use of wires to purchasers.
If a purchaser receives or agrees to receive cable or video programming service, then the following charges are included in the purchase price: charges for installation or repair of any cable or video programming service, upgrade to include additional premium cable or premium video programming service, downgrade to exclude all or some premium cable or premium video programming service, additional cable outlets in excess of ten or any other charge or fee related to cable or video programming services. The term does not apply to: transmissions by public television, public radio services or official Federal, State or local government cable services; local origination programming which provides a variety of public service programs unique to the community, programming which provides coverage of public affairs issues which are presented without commentary or analysis, including United States Congressional proceedings, or programming which is substantially related to religious subjects; or subscriber charges for access to a video dial tone system or charges by a common carrier to a video programmer for the transport of video programming.
(mm) (Reserved).
(nn) "Construction contract." A written or oral contract or agreement for the construction, reconstruction, remodeling, renovation or repair of real estate or a real estate structure. The term shall not apply to services which are taxable under clauses (k)(14) and (17) and (o)(12) and (15).
(oo) "Construction contractor." A person who performs an activity pursuant to a construction contract, including a subcontractor.
(pp) "Building machinery and equipment." Generation equipment, storage equipment, conditioning equipment, distribution equipment and termination equipment, limited to the following:
(1) air conditioning limited to heating, cooling, purification, humidification, dehumidification and ventilation;
(2) electrical;
(3) plumbing;
(4) communications limited to voice, video, data, sound, master clock and noise abatement;
(5) alarms limited to fire, security and detection;
(6) control system limited to energy management, traffic and parking lot and building access;
(7) medical system limited to diagnosis and treatment equipment, medical gas, nurse call and doctor paging;
(8) laboratory system;
(9) cathodic protection system; or
(10) furniture, cabinetry and kitchen equipment.
The term includes boilers, chillers, air cleaners, humidifiers, fans, switchgear, pumps, telephones, speakers, horns, motion detectors, dampers, actuators, grills, registers, traffic signals, sensors, card access devices, guardrails, medial devices, floor troughs and grates and laundry equipment, together with integral coverings and enclosures, regardless of whether: the item constitutes a fixture or is otherwise affixed to the real estate; damage would be done to the item or its surroundings on removal; or the item is physically located within a real estate structure. The term does not include guardrail posts, pipes, fittings, pipe supports and hangers, valves, underground tanks, wire, conduit, receptacle and junction boxes, insulation, ductwork and coverings.
(qq) "Real estate structure." A structure or item purchased by a construction contractor pursuant to a construction contract with:
(1) a charitable organization, a volunteer firemen's organization, a nonprofit educational institution or a religious organization for religious purposes and which qualifies as an institution of purely public charity under the act of November 26, 1997 (P.L.508, No.55), known as the Institutions of Purely Public Charity Act;
(2) the United States; or
(3) the Commonwealth, its instrumentalities or political subdivisions.
The term includes building machinery and equipment; developed or undeveloped land; streets; roads; highways; parking lots; stadiums and stadium seating; recreational courts; sidewalks; foundations; structural supports; walls; floors; ceilings; roofs; doors; canopies; millwork; elevators; windows and external window coverings; outdoor advertising boards or signs; airport runways; bridges; dams; dikes; traffic control devices, including traffic signs; satellite dishes; antennas; guardrail posts; pipes; fittings; pipe supports and hangers; valves; underground tanks; wire; conduit; receptacle and junction boxes; insulation; ductwork and coverings; and any structure or item similar to any of the foregoing, regardless of whether the structure or item constitutes a fixture or is affixed to the real estate; or damage would be done to the structure or item or its surroundings on removal.
(rr) "Telecommunications service." Any one-way transmission or any two-way, interactive transmission of sounds, signals or other intelligence converted to like form which effects or is intended to effect meaningful communications by electronic or electromagnetic means via wire, cable, satellite, light waves, microwaves, radio waves or other transmission media. The term includes all types of telecommunication transmissions, local, toll, wide-area or any other type of telephone service; private line service; telegraph service; radio repeater service; wireless communication service; personal communications system service; cellular telecommunication service; specialized mobile radio service; stationary two-way radio service; and paging service. The term does not include any of the following:
(1) Subscriber charges for access to a video dial tone system.
(2) Charges to video programmers for the transport of video programming.
(3) Charges for access to the Internet. Access to the Internet does not include any of the following:
(i) The transport over the Internet or any proprietary network using the Internet protocol of telephone calls, facsimile transmissions or other telecommunications traffic to or from end users on the public switched telephone network if the signal sent from or received by an end user is not in an Internet protocol.
(ii) Telecommunication services purchased by an Internet service provider to deliver access to the Internet to its customers.
(4) Mobile telecommunications services.
(ss) "Internet." The international nonproprietary computer network of both Federal and non-Federal interoperable packet switched data networks.
(tt) "Commercial racing activities." Any of the following:
(1) Thoroughbred and harness racing at which pari-mutuel wagering is conducted under the act of December 17, 1981 (P.L.435, No.135), known as the Race Horse Industry Reform Act.
(2) Fair racing sanctioned by the State Harness Racing Commission.
(uu) "Prepaid telecommunications." A tangible item containing a prepaid authorization number that can be used solely to obtain telecommunications service, including any renewal or increases in the prepaid amount.
(vv) "Prebuilt housing." Either of the following:
(1) Manufactured housing, including mobile homes, which bears a label as required by and referred to in the act of November 17, 1982 (P.L.676, No.192), known as the Manufactured Housing Construction and Safety Standards Authorization Act.
(2) Industrialized housing as defined in the act of May 11, 1972 (P.L.286, No.70), known as the Industrialized Housing Act.
(ww) "Used prebuilt housing." Prebuilt housing that was previously subject to a sale to a prebuilt housing purchaser.
(xx) "Prebuilt housing builder." A person who makes a prebuilt housing sale to a prebuilt housing purchaser.
(yy) "Prebuilt housing sale." A sale of prebuilt housing to a prebuilt housing purchaser, including a sale to a landlord, without regard to whether the person making the sale is responsible for installing the prebuilt housing or whether the prebuilt housing becomes a real estate structure upon installation. Temporary installation by a prebuilt housing builder for display purposes of a unit held for resale shall not be considered occupancy for residential purposes.
(zz) "Prebuilt housing purchaser." A person who purchases prebuilt housing in a transaction and who intends to occupy the unit for residential purposes in this Commonwealth.
(aaa) "Mobile telecommunications service." Mobile telecommunications service as that term is defined in the Mobile Telecommunications Sourcing Act (Public Law 106-252, 4 U.S.C. § 116 et seq.).
(bbb) "Fiscal Code." The act of April 9, 1929 (P.L.343, No.176), known as The Fiscal Code.
(ccc) "Prepaid mobile telecommunications service." Mobile telecommunications service which is paid for in advance and which enables the origination of calls using an access number, authorization code or both, regardless of whether manually or electronically dialed, if the remaining amount of units of the prepaid mobile telecommunications service is known by the service provider of the prepaid mobile telecommunications service on a continuous basis. The term does not include the advance purchase of mobile telecommunications service if the purchase is pursuant to a service contract between the service provider and customer and if the service contract requires the customer to make periodic payments to maintain the mobile telecommunications service.
(ddd) "Call center." The physical location in this Commonwealth:
(1) where at least 150 employees are employed to initiate or answer telephone calls;
(2) where there are at least 200 telephone lines; and
(3) which utilizes an automated call distribution system for customer telephone calls in one or more of the following activities:
(i) customer service and support;
(ii) technical assistance;
(iii) help desk service;
(iv) providing information;
(v) conducting surveys;
(vi) revenue collections; or
(vii) receiving orders or reservations.
For purposes of this clause, a physical location may include multiple buildings utilized by a taxpayer located within this Commonwealth.
(eee) "Dental services." The general and usual services rendered and care administered by doctors of dental medicine or doctors of dental surgery, as defined in the act of May 1, 1933 (P.L.216, No.76), known as The Dental Law.
(fff) "Physician services." The general and usual services rendered and care administered by medical doctors, as defined in the act of December 20, 1985 (P.L.457, No.112), known as the Medical Practice Act of 1985, or doctors of osteopathy, as defined in the act of October 5, 1978 (P.L.1109, No.261), known as the Osteopathic Medical Practice Act.
(ggg) "Clothing." All vesture, wearing apparel, raiments, garments, footwear and other articles of clothing, including clothing patterns and items that are to be a component part of clothing, worn or carried on or about the human body including, but not limited to, all accessories, ornamental wear, formal day or evening apparel and articles made of fur on the hide or pelt or any material imitative of fur and articles of which such fur, real, imitation or synthetic, is the component material of chief value and sporting goods and clothing not normally used or worn when not engaged in sports.
(hhh) "Food and beverages." All food and beverages for human consumption, including, but not limited to:
(1) Soft drinks.
(2) Malt and brewed beverages and spiritous and vinous liquors.
(3) Food or beverages, whether sold for consumption on or off the premises of on a take-out or to go basis or delivered to the purchaser or consumer, when purchased:
(i) from persons engaged in the business of catering; or
(ii) from persons engaged in the business of operating establishments from which ready-to-eat food and beverages are sold, including, but not limited to, restaurants, cafes, lunch counters, private and social clubs, taverns, dining cars, hotels, night clubs, fast food operations, pizzerias, fairs, carnivals, lunch carts, ice cream stands, snack bars, cafeterias, employee cafeterias, theaters, stadiums, arenas, amusement parks, carryout shops, coffee shops and other establishments whether mobile or immobile.
For purposes of this clause, a bakery, a pastry shop, a donut shop, a delicatessen, a grocery store, a supermarket, a farmer's market, a convenience store or a vending machine shall not be considered an establishment from which food or beverages ready to eat are sold except for the sale of meals, sandwiches, food from salad bars, hand-dipped or hand-served ice-based products including ice cream and yogurt, hot soup, hot pizza and other hot food items, brewed coffee and hot beverages. For purposes of this subclause, beverages shall not include malt and brewed beverages and spiritous and vinous liquors but shall include soft drinks.
SUBCHAPTER B
SALES AND USE TAX
Section 702. Imposition of tax.
(a) Tax on certain sales at retail and uses of tangible personal property and services.--
(1) There is hereby imposed on each separate sale at retail of tangible personal property or services in this Commonwealth a tax of 7% of the purchase price, which tax shall be collected by the vendor from the purchaser, and shall be paid over to the Commonwealth as provided in this chapter.
(2) There is hereby imposed on the use in this Commonwealth of tangible personal property purchased at retail and on those services purchased at retail a tax of 7% of the purchase price, which tax shall be paid to the Commonwealth by the person who makes such use as provided under this chapter, except that the tax shall not be paid to the Commonwealth by the person where the person has paid the tax imposed by paragraph (1) or has paid the tax imposed by this subsection to the vendor with respect to the use.
(b) (Reserved).
(c) Telecommunications service.--
(1) Notwithstanding any other provisions of this chapter, the tax with respect to telecommunications service within the meaning of "tangible personal property" in section 701 shall be computed at the rate of 7% on the total amount charged to customers for the services, irrespective of whether such charge is based on a flat rate or on a message unit charge.
(2) A telecommunications service provider shall have no responsibility or liability to the Commonwealth for billing, collecting or remitting taxes that apply to services, products or other commerce sold over telecommunications lines by third-party vendors.
(3) To prevent actual multistate taxation of interstate telecommunications service, any taxpayer, on proof that the taxpayer has paid a similar tax to another state on the same interstate telecommunications service, shall be allowed a credit against the tax imposed by this section on the same interstate telecommunications service to the extent of the amount of the tax properly due and paid to the other state.
(d) Coin-operated vending machines.--Notwithstanding any other provisions of this chapter, the sale or use of food and beverages dispensed by means of coin-operated vending machines shall be taxed at the rate of 7% of the receipts collected from any coin-operated vending machine which dispenses food and beverages that were previously taxable.
(e) Prepaid telecommunications.--
(1) Notwithstanding any provisions of this chapter, the sale or use of prepaid telecommunications evidenced by the transfer of tangible personal property shall be subject to the tax imposed by subsection (a).
(2) The sale or use of prepaid telecommunications not evidenced by the transfer of tangible personal property shall be subject to the tax imposed by subsection (a) and shall be deemed to occur at the purchaser's billing address.
(3) (i) Notwithstanding paragraph (2), the sale or use of prepaid telecommunications service not evidenced by the transfer of tangible personal property shall be taxed at the rate of 7% of the receipts collected on each sale if the service provider elects to collect the tax imposed by this chapter on receipts of each sale.
(ii) The service provider shall notify the department of its election and shall collect the tax on receipts of each sale until the service provider notifies the department otherwise.
(e.1) Prepaid mobile telecommunications service.--
(1) Notwithstanding any other provision of this chapter, the sale or use of prepaid mobile telecommunications service evidenced by the transfer of tangible personal property shall be subject to the tax imposed by subsection (a).
(2) The sale or use of prepaid mobile telecommunications service not evidenced by the transfer of tangible personal property shall be subject to the tax imposed by subsection (a) and shall be deemed to occur at the purchaser's billing address or the location associated with the mobile telephone number or the point of sale, whichever is applicable.
(3) (i) Notwithstanding paragraph (2), the sale or use of prepaid mobile telecommunications service not evidenced by the transfer of tangible personal property shall be taxed at the rate of 7% of the receipts collected on each sale if the service provider elects to collect the tax imposed by this chapter on receipts of each sale.
(ii) The service provider shall notify the department of its election and shall collect the tax on receipts of each sale until the service provider notifies the department otherwise.
(f) Prebuilt housing.--
(1) Notwithstanding any other provision of this chapter, tax with respect to sales of prebuilt housing shall be imposed on the prebuilt housing builder at the time of the prebuilt housing sale within this Commonwealth and shall be paid and reported by the prebuilt housing builder to the department in the time and manner provided in this chapter.
(2) A manufacturer of prebuilt housing may, at its option, precollect the tax from the prebuilt housing builder at the time of sale to the prebuilt housing builder.
(3) In any case where prebuilt housing is purchased and the tax is not paid by the prebuilt housing builder or precollected by the manufacturer, the prebuilt housing purchaser shall remit tax directly to the department if the prebuilt housing is used in this Commonwealth without regard to whether the prebuilt housing becomes a real estate structure.
(g) Home service providers.--
(1) Notwithstanding any other provisions of this chapter and in accordance with the Mobile Telecommunications Sourcing Act (Public Law 106-252, 4 U.S.C. § 116 et seq.), the sale or use of mobile telecommunications services which are deemed to be provided to a customer by a home service provider under 4 U.S.C. § 117 (relating to sourcing rules) shall be subject to the tax of 7% of the purchase price, which tax shall be collected by the home service provider from the customer, and shall be paid over to the Commonwealth as provided in this chapter if the customer's place of primary use is located within this Commonwealth, regardless of where the mobile telecommunications services originate, terminate or pass through.
(2) For purposes of this subsection, words and phrases used in this subsection shall have the same meanings given to them in the Mobile Telecommunications Sourcing Act.
Section 703. Computation of tax.
(a) Table to be published.--Within 60 days of the effective date of this section, the department shall prepare and publish as a notice in the Pennsylvania Bulletin a table setting forth the amount of tax imposed under section 702 for purchase prices that are less than $1.
(b) Deposit into Education Stabilization Fund.--The tax collected under section 702 shall be deposited into the Education Stabilization Fund.
SUBCHAPTER C
EXCLUSIONS FROM SALES AND USE TAX
Section 704. Exclusions from tax.
The tax imposed by section 702 shall not be imposed upon any of the following:
(1) The sale at retail or use of tangible personal property (other than motor vehicles, trailers, semi-trailers, motor boats, aircraft or other similar tangible personal property required under either Federal law or laws of this Commonwealth to be registered or licensed) or services sold by or purchased from a person not a vendor in an isolated transaction or sold by or purchased from a person who is a vendor but is not a vendor with respect to the tangible personal property or services sold or purchased in such transaction, provided that inventory and stock in trade so sold or purchased shall not be excluded from the tax by the provisions of this subsection.
(2) The use of tangible personal property purchased by a nonresident person outside of, and brought into this Commonwealth for use therein for a period not to exceed seven days, or for any period of time when such nonresident is a tourist or vacationer and, in either case not consumed within the Commonwealth.
(3) (i) The use of tangible personal property purchased outside this Commonwealth for use outside this Commonwealth by a then nonresident natural person or a business entity not actually doing business within this Commonwealth, who later brings the tangible personal property into this Commonwealth in connection with the person's or entity's establishment of a permanent business or residence in this Commonwealth, provided that the property was purchased more than six months prior to the date it was first brought into this Commonwealth or prior to the establishment of the business or residence, whichever first occurs.
(ii) This paragraph shall not apply to tangible personal property temporarily brought into this Commonwealth for the performance of contracts for the construction, reconstruction, remodeling, repairing and maintenance of real estate.
(4) (Reserved).
(5) The sale at retail or use of steam, natural and manufactured and bottled gas, fuel oil or electricity when purchased directly by the user solely for the user's own residential use.
(6) (Reserved).
(7) (Reserved).
(8) (Reserved).
(9) (Reserved).
(10) (i) The sale at retail to or use by any charitable organization, volunteer firefighters' organization or nonprofit educational institution or a religious organization for religious purposes of tangible personal property or services other than pursuant to a construction contract.
(ii) This paragraph shall not apply with respect to any tangible personal property or services used in any unrelated trade or business carried on by the organization or institution or with respect to any materials, supplies and equipment used and transferred to the organization or institution in the construction, reconstruction, remodeling, renovation, repairs and maintenance of any real estate structure, other than building machinery and equipment, except materials and supplies when purchased by the organization or institution for routine maintenance and repairs.
(11) The sale at retail, or use of gasoline and other motor fuels, the sales of which are otherwise subject to excise taxes under 75 Pa.C.S. Ch. 90 (relating to liquid fuels and fuels tax).
(12) (i) The sale at retail to, or use by the United States, this Commonwealth or its instrumentalities or political subdivisions, nonpublic schools, charter schools, cyber charter schools or vocational schools of tangible personal property or services.
(ii) This paragraph includes the sale at retail to a supervisor of a home education program of tangible personal property or services used exclusively for the home education program.
(iii) As used in this paragraph, the terms "nonpublic school," "charter school," "cyber charter school," "vocational school," "supervisor" and "home education program" shall have the meanings given to them in the Public School Code of 1949.
(13) The sale at retail, or use of wrapping paper, wrapping twine, bags, cartons, tape, rope, labels, nonreturnable containers and all other wrapping supplies, when such use is incidental to the delivery of any personal property, except that any charge for wrapping or packaging shall be subject to tax at the rate imposed by section 702.
(14) Sale at retail or use of vessels designed for commercial use of registered tonnage of 50 tons or more when produced by the builders thereof upon special order of the purchaser.
(15) Sale at retail of tangible personal property or services used or consumed in building, rebuilding, repairing and making additions to or replacements in and upon vessels designed for commercial use of registered tonnage of 50 tons or more upon special order of the purchaser, or when rebuilt, repaired or enlarged, or when replacements are made upon order of or for the account of the owner.
(16) The sale at retail or use of tangible personal property or services to be used or consumed for ship cleaning or maintenance or as fuel, supplies, ships' equipment, ships' stores or sea stores on vessels designed for commercial use of registered tonnage of 50 tons or more to be operated principally outside the limits of this Commonwealth.
(17) The sale at retail or use of prescription medicines, drugs or medical supplies, crutches and wheelchairs for the use of persons with disabilities and invalids, artificial limbs, artificial eyes and artificial hearing devices when designed to be worn on the person of the purchaser or user, false teeth and materials used by a dentist in dental treatment, eyeglasses when especially designed or prescribed by an ophthalmologist, oculist or optometrist for the personal use of the owner or purchaser and artificial braces and supports designed solely for the use of persons with disabilities or any other therapeutic, prosthetic or artificial device designed for the use of a particular individual to correct or alleviate a physical incapacity, including, but not limited to, hospital beds, iron lungs and kidney machines.
(18) The sale at retail or use of coal.
(19) (Reserved).
(20) (Reserved).
(21) (Reserved).
(22) (Reserved).
(23) (Reserved).
(24) The sale at retail or use of motor vehicles, trailers and semitrailers, or bodies attached to the chassis thereof, sold to a nonresident of this Commonwealth to be used outside this Commonwealth and which are registered in a state other than this Commonwealth within 20 days after delivery to the vendee.
(25) The sale at retail or use of water.
(26) The sale at retail or use of all vesture, wearing apparel, raiments, garments, footwear and other articles of clothing with a purchase price of less than $50, including clothing patterns and items that are to be a component part of clothing, worn or carried on or about the human body but all accessories, ornamental wear, formal day or evening apparel and articles made of fur on the hide or pelt or any material imitative of fur and articles of which such fur, real, imitation or synthetic, is the component material of chief value, but only if such value is more than three times the value of the next most valuable component material, and sporting goods and clothing not normally used or worn when not engaged in sports shall not be excluded from the tax.
(27) (Reserved).
(28) (Reserved).
(29) The sale at retail or use of food and beverages that are federally approved items for the Women, Infants and Children Program under section 17 of the Child Nutrition Act of 1966 (Public Law 89-642, 42 U.S.C. § 1786).
(30) (i) The sale at retail or use of any printed or other form of advertising materials regardless of where or by whom the advertising material was produced.
(ii) This paragraph shall not include the sale at retail or use of mail order catalogs and direct mail advertising literature or materials, including electoral literature or materials, such as envelopes, address labels and a one-time license to use a list of names and mailing addresses for each delivery of direct mail advertising literature or materials, including electoral literature or materials, through the United States Postal Service.
(31) (Reserved).
(32) (Reserved).
(33) (Reserved).
(34) (Reserved).
(35) (Reserved).
(36) The sale at retail or use of rail transportation equipment used in the movement of personalty.
(37) (Reserved).
(38) (Reserved).
(39) The sale at retail or use of fish feed purchased by or on behalf of sportsmen's clubs, fish cooperatives or nurseries approved by the Pennsylvania Fish Commission.
(40) The sale at retail of supplies and materials to tourist promotion agencies, which receive grants from the Commonwealth, for distribution to the public as promotional material or the use of such supplies and materials by said agencies for said purposes.
(41) (Reserved).
(42) The sale or use of brook trout (salvelinus fontinalis), brown trout (Salmo trutta) or rainbow trout (Salmo gairdneri).
(43) The sale at retail or use of buses to be used exclusively for the transportation of children for school purposes.
(44) The sale at retail or use of firewood.
(45) (Reserved).
(46) The sale at retail or use of tangible personal property purchased in accordance with the Food Stamp Act of 1977, as amended (Public Law 95-113, 7 U.S.C. §§ 2011-2029).
(47) (Reserved).
(48) (Reserved).
(49) (i) The sale at retail or use of food and beverages by nonprofit associations which support sports programs.
(ii) The following words and phrases when used in this paragraph shall have the meanings given to them in this subparagraph unless the context clearly indicates otherwise:
"Nonprofit association." An entity which is organized as a nonprofit corporation or nonprofit unincorporated association under the laws of this Commonwealth or the United States or any entity which is authorized to do business in this Commonwealth as a nonprofit corporation or unincorporated association under the laws of this Commonwealth, including, but not limited to, youth or athletic associations, volunteer fire, ambulance, religious, charitable, fraternal, veterans, civic, or any separately chartered auxiliary of the foregoing, if organized and operated on a nonprofit basis.
"Sports program." Baseball, softball, football, basketball, soccer and any other competitive sport formally recognized as a sport by the United States Olympic Committee as specified by and under the jurisdiction of the Amateur Sports Act of 1978 (Public Law 95-606, 36 U.S.C. Ch. 2205), the Amateur Athletic Union or the National Collegiate Athletic Association. The term shall be limited to a program or that portion of a program that is organized for recreational purposes and whose activities are substantially for such purposes and which is primarily for participants who are 18 years of age or younger or whose 19th birthday occurs during the year of participation or the competitive season, whichever is longer. There shall, however, be no age limitation for programs operated for persons with physical handicaps or persons with mental retardation.
"Support." The funds raised from sales are used to pay the expenses of a sports program or the nonprofit association sells the food and beverages at a location where a sports program is being conducted under this chapter or the Tax Reform Code of 1971.
(50) (Reserved).
(51) The sale at retail or use of interior office building cleaning services but only as relates to the costs of the supplied employee, which costs are wages, salaries, bonuses and commissions, employment benefits, expense reimbursements and payroll and withholding taxes, to the extent that these costs are specifically itemized or that these costs in aggregate are stated in billings from the vendor or supplying entity.
(52) (Reserved).
(53) (Reserved).
(54) (Reserved).
(55) (Reserved).
(56) The sale at retail or use of tangible personal property or services used, transferred or consumed in installing or repairing equipment or devices designed to assist persons in ascending or descending a stairway when:
(i) The equipment or devices are used by a person who, by virtue of a physical disability, is unable to ascend or descend stairs without the aid of such equipment or device.
(ii) The equipment or device is installed or used in the person's place of residence.
(iii) A physician has certified the physical disability of the person in whose residence the equipment or device is installed or used.
(57) The sale at retail to or use by a construction contractor of building machinery and equipment and services thereto that are:
(i) transferred pursuant to a construction contract for any charitable organization, volunteer firemen's organization, nonprofit educational institution or religious organization for religious purposes, provided that the building machinery and equipment and services thereto are not used in any unrelated trade or business; or
(ii) transferred to the United States or the Commonwealth or its instrumentalities or political subdivisions.
(58) (Reserved).
(59) The sale at retail or use of molds and related mold equipment used directly and predominantly in the manufacture of products, regardless of whether the person that holds title to the equipment manufactures a product.
(60) (Reserved).
(61) (Reserved).
(62) The sale at retail or use of tangible personal property or services which are directly used in farming, dairying or agriculture when engaged in as a business enterprise, regardless of whether the sale is made to the person directly engaged in the business enterprise or to a person contracting with the person directly engaged in the business enterprise for the production of food.
(63) (Reserved).
(64) The sale at retail to or use by a construction contractor, employed by a public school district pursuant to a construction contract, of any materials and building supplies which, during construction or reconstruction, are made part of any public school building utilized for instructional classroom education within this Commonwealth, if the construction or reconstruction:
(i) is necessitated by a disaster emergency, as defined in 35 Pa.C.S. § 7102 (relating to definitions); and
(ii) takes place during the period when there is a declaration of disaster emergency under 35 Pa.C.S. § 7301(c) (relating to general authority of Governor).
(65) (Reserved).
(66) The sale at retail or use of copies of an official document sold by a government agency or a court. For the purposes of this paragraph, the following terms or phrases shall have the following meanings:
(i) "court" includes:
(A) an appellate court as defined in 42 Pa.C.S. § 102 (relating to definitions);
(B) A court of common pleas as defined in 42 Pa.C.S. § 102; or
(C) the minor judiciary as defined in 42 Pa.C.S. § 102;
(ii) "government agency" means an agency as defined in section 102 of the act of February 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law; and
(iii) "official document" means a record as defined in section 102 of the Right-to-Know Law. The term shall include notes of court testimony, deposition transcripts, driving records, accident reports, birth and death certificates, deeds, divorce decrees and other similar documents.
(67) The sale at retail or use of repair or replacement parts, including the installation of those parts, exclusively for use in helicopters and similar rotorcraft or in overhauling or rebuilding of helicopters and similar rotorcraft or helicopters and similar rotorcraft components.
(68) The sale at retail or use of helicopters and similar rotorcraft.
(69) The sale at retail or use of goods or services that are part of a Medicare Part B transaction.
(70) The sale at retail or use of transportation of persons provided or funded by the Federal, State or local government.
(71) The sale at retail of insurance premiums.
(72) The sale at retail, between an owner of real property and a financial institution, of a mortgage.
(73) An investment or gain on an investment, including, but not limited to, bank deposits, stocks and bonds, including any commissions, maintenance costs and other charges, which commissions, maintenance costs and other charges related to the making of such investment or a gain thereon.
(74) The rental of real property.
(75) The sale at retail of tuition.
(76) The sale at retail of any of the following business, professional or technical services performed by a business and rendered to another business:
(i) Legal services.
(ii) Architectural, engineering and related services.
(iii) Accounting, auditing and bookkeeping services.
(iv) Specialized design services.
(v) Advertising, public relations and related services.
(vi) Services to building and dwellings.
(vii) Scientific, environmental and technical consulting services.
(viii) Scientific research and development services.
(ix) Information services.
(x) Administrative services.
(xi) Custom programming, design and data processing services.
(xii) Parking lot and garage services.
(77) The sale at retail of legal services relating to domestic relations matters or criminal matters.
(78) The sale at retail of services rendered as part of a transfer of an interest in real property.
(79) The sale at retail to or use by a person of legal services rendered by an attorney where the payment is made pursuant to a contingency fee based upon a percentage of the amount recovered with respect to a legal claim or dispute.
(80) The sale at retail to or use by a person of the services rendered by or under the supervision of a licensed real estate broker, associate broker or salesperson in connection with any aspect of the sale, lease or acquisition of any interest in real property.
(81) The sale at retail, or the use of motion picture film rented or licensed from a distributor for the purpose of commercial exhibition.
(82) The sale at retail or use of services performed by minors under 18 years of age and not on behalf of another person.
(83) The sale at retail or use of services performed by any person to the extent that the recipient or user of such services receives those services free of charge.
(84) The sale at retail or use of services provided by employees to their employers in exchange for wages and salaries when such services are rendered in the ordinary course of employment.
(85) The sale at retail or use of services performed for resale in the ordinary course of business of the purchaser or user of such services.
(86) The sale at retail or use of services that are otherwise taxable that are an integral, inseparable part of the services that are to be sold or used and that are taxable.
(87) (Reserved).
(88) The sale at retail of medical goods or services by a hospital, as defined in the act of December 20, 1985 (P.L.457, No.112), known as the Medical Practice Act of 1985.
(89) The sale at retail of medical or dental services, including charges for office visits.
Section 705. Alternate imposition of tax.
(a) General rule.--If any person actively and principally engaged in the business of selling new or used motor vehicles, trailers or semitrailers, and registered with the department in the "dealer's class," acquires a motor vehicle, trailer or semitrailer for the purpose of resale, and prior to such resale, uses the motor vehicle, trailer or semitrailer for a taxable use under this chapter or the Tax Reform Code of 1971, the person may pay a tax equal to 7% of the fair rental value of the motor vehicle, trailer or semitrailer during use.
(b) Aircraft.--A commercial aircraft operator who acquires an aircraft for the purpose of resale, or lease, or is entitled to claim another valid exemption at the time of purchase, and subsequent to the purchase, periodically uses the same aircraft for a taxable use under this chapter or the Tax Reform Code of 1971, may elect to pay a tax equal to 7% of the fair rental value of the aircraft during such use.
(c) Applicability.--This section shall not apply to the use of a vehicle as a wrecker, parts truck, delivery truck or courtesy car.
Section 706. Credit against tax.
(a) Tax paid to another state.--
(1) A credit against the tax imposed by section 702 shall be granted with respect to tangible personal property or services purchased for use outside the Commonwealth equal to the tax paid to another state by reason of the imposition by the other state of a tax similar to the tax imposed by this chapter.
(2) No credit under paragraph (1) shall be granted unless the other state grants substantially similar tax relief by reason of the payment of tax under this chapter or under the Tax Reform Code of 1971.
(b) Telecommunications services.--A credit against the tax imposed by section 702 on telecommunications services shall be granted to a call center for gross receipts tax paid by a telephone company on the receipts derived from the sale of incoming and outgoing interstate telecommunications services to the call center under section 1101(a)(2) of the Tax Reform Code of 1971. The following apply:
(1) A telephone company, on request, shall notify a call center of the amount of gross receipts tax paid by the telephone company on the receipts derived from the sale of incoming and outgoing interstate telecommunications services to the call center.
(2) A call center that is eligible for the credit in this subsection may apply for a tax credit as set forth in this subsection.
(3) By February 15, a taxpayer must submit an application to the department for gross receipts tax paid on the receipts derived from the sale of incoming and outgoing interstate telecommunications services incurred in the prior calendar year.
(4) By April 15 of the calendar year following the close of the calendar year during which the gross receipts tax was incurred, the department shall notify the applicant of the amount of the applicant's tax credit approved by the department.
(5) The total amount of tax credits provided for in this subsection and approved by the department shall not exceed $30,000,000 in any fiscal year. If the total amount of tax credits applied for by all applicants exceeds the amount allocated for those credits, then the credit to be received by each applicant shall be determined as follows:
(i) Divide:
(A) the tax credit applied for by the applicant; by
(B) the total of all tax credits applied for by all applicants.
(ii) Multiply:
(A) the quotient under subparagraph (i); by
(B) the amount allocated for all tax credits.
SUBCHAPTER D
LICENSES
Section 708. Licenses.
(a) Duty to obtain license.--Every person maintaining a place of business in this Commonwealth, selling or leasing services or tangible personal property, the sale or use of which is subject to tax and who has not obtained a license from the department, shall, prior to the beginning of business, make application to the department, on a form prescribed by the department, for a license. If such person maintains more than one place of business in this Commonwealth, the license shall be issued for the principal place of business in this Commonwealth.
(b) Criteria for issuance of license.--
(1) The department shall, after the receipt of an application, issue the license applied for under subsection (a) if the applicant filed all required State tax reports and paid any State taxes not subject to a timely perfected administrative or judicial appeal or subject to a duly authorized deferred payment plan. The license shall be nonassignable.
(2) All licenses in effect on the effective date of this section under former Article III of the Tax Reform Code of 1971 and all licenses issued or renewed on or after the effective date of this section shall be valid for a period of five years.
(b.1) Refusal of license.--
(1) If an applicant for a license or any person holding a license has not filed all required State tax reports and paid any State taxes not subject to a timely perfected administrative or judicial appeal or subject to a duly authorized deferred payment plan, the department may refuse to issue, may suspend or may revoke said license.
(2) The department shall notify the applicant or licensee of any refusal, suspension or revocation. The notice shall contain a statement that the refusal, suspension or revocation may be made public. The notice shall be made by first class mail.
(3) An applicant or licensee aggrieved by the determination of the department may file an appeal pursuant to the provisions for administrative appeals in this chapter. In the case of a suspension or revocation which is appealed, the license shall remain valid pending a final outcome of the appeals process.
(4) Notwithstanding section 774 or sections 353(f), 408(b), 603, 702, 802, 904 and 1102 of the Tax Reform Code of 1971, or any other provision of law to the contrary, if no appeal is taken or if an appeal is taken and denied at the conclusion of the appeal process, the department may disclose, by publication or otherwise, the identity of a person and the fact that the person's license has been refused, suspended or revoked under this subsection. Disclosure may include the basis for refusal, suspension or revocation.
(c) Penalties.--
(1) A person that maintains a place of business in this Commonwealth for the purpose of selling or leasing services or tangible personal property, the sale or use of which is subject to tax, without having first been licensed by the department shall be guilty of a summary offense and, upon conviction thereof, be sentenced to pay a fine of not less than $300 nor more than $1,500 and, in default thereof, a term of imprisonment of not less than five days nor more than 30 days.
(2) The penalties imposed by this subsection shall be in addition to any other penalties imposed by this chapter.
(3) For purposes of this subsection, the offering for sale or lease of any service or tangible personal property, the sale or use of which is subject to tax, during any calendar day shall constitute a separate violation.
(4) The secretary may designate employees of the department to enforce the provisions of this subsection. The employees shall exhibit proof of and be within the scope of the designation when instituting proceedings as provided by the Pennsylvania Rules of Criminal Procedure.
(d) Effect of failure to obtain license.--Failure of any person to obtain a license shall not relieve that person of liability to pay the tax imposed by this chapter.
SUBCHAPTER E
HOTEL OCCUPANCY TAX
Section 709. Definitions.
(a) General rule.--The following words and phrases when used in this subchapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:
"Hotel." A building or buildings in which the public may, for a consideration, obtain sleeping accommodations. The term does not include any charitable, educational or religious institution summer camp for children, hospital or nursing home.
"Occupancy." The use or possession or the right to the use or possession by any person, other than a permanent resident, of any room or rooms in a hotel for any purpose or the right to the use or possession of the furnishings or to the services and accommodations accompanying the use and possession of the room or rooms.
"Occupant." A person, other than a permanent resident, who, for a consideration, uses, possesses or has a right to use or possess any room or rooms in a hotel under any lease, concession, permit, right of access, license or agreement.
"Operator." Any person who operates a hotel.
"Permanent resident." Any occupant who has occupied or has the right to occupancy of any room or rooms in a hotel for at least 30 consecutive days.
"Rent." The consideration received for occupancy valued in money, whether received in money or otherwise, including all receipts, cash, credits and property or services of any kind or nature, and also any amount for which the occupant is liable for the occupancy without any deduction. The term "rent" shall not include a gratuity.
(b) Other definitions.--The following words and phrases, when used in Subchapters D and F, shall, in addition to the meaning ascribed to them by section 701, have the meaning ascribed to them in this subsection, except where the context clearly indicates a different meaning:
"Maintaining a place of business in this Commonwealth." Being the operator of a hotel in this Commonwealth.
"Purchase at retail." Occupancy.
"Purchase price." Rent.
"Purchaser." Occupant.
"Sale at retail." The providing of occupancy to an occupant by an operator.
"Services." Occupancy.
"Tangible personal property." Occupancy.
"Use." Occupancy.
"Vendor." Operator.
Section 710. Imposition of tax.
There is hereby imposed an excise tax of 7% of the rent on every occupancy of a room or rooms in a hotel in this Commonwealth, which tax shall be collected by the operator from the occupant and paid over to the Commonwealth as provided in this chapter and deposited into the Education Stabilization Fund.
Section 711. Seasonal tax returns.
Notwithstanding any other provisions in this chapter or the Tax Reform Code of 1971, the department may, by regulation, waive the requirement for the filing of quarterly returns in the case of any operator whose hotel is operated only during certain seasons of the year, and may provide for the filing of returns by such persons at times other than those provided by section 721.
SUBCHAPTER F
PROCEDURE AND ADMINISTRATION
Section 715. Persons required to make returns.
Every person required to pay tax to the department or collect and remit tax to the department shall file returns with respect to the tax.
Section 716. Form of returns.
The returns required by section 715 shall be on forms prescribed by the department and shall show such information with respect to the taxes imposed by this chapter as the department may reasonably require.
Section 717. Time for filing returns.
(a) Monthly reporting.--A return shall be filed monthly with respect to each month by every licensee whose total tax reported or, in the event no report is filed, the total tax which should have been reported, for the third calendar quarter of the preceding year equals or exceeds $600. The returns shall be filed on or before the 20th day of the next succeeding month with respect to which the return is made. Any licensee required to file monthly returns under this chapter shall be relieved from filing quarterly returns.
(b) Annual reporting.--No annual return shall be filed, except as may be required by rules and regulations of the department promulgated and published at least 60 days prior to the end of the year with respect to which the returns are made. Where such annual returns are required, licensees shall not be required to file such returns prior to the 20th day of the year succeeding the year with respect to which the returns are made.
(c) Persons other than licensees.--Any person, other than a licensee, liable to pay to the department any tax under this chapter, shall file a return on or before the 20th day of the month succeeding the month in which the person becomes liable for the tax.
(d) Waivers.--The department, by regulation, may waive the requirement for the filing of quarterly return in the case of any licensee whose individual tax collections do not exceed $75 per calendar quarter and may provide for reporting on a less frequent basis in such cases.
Section 718. Extension of time for filing returns.
The department may, on written application and for good cause shown, grant a reasonable extension of time for filing any return required under this subchapter. However, the time for making a return shall not be extended for more than three months.
Section 719. Place for filing returns.
Returns shall be filed with the department at its main office or at any branch office which it may designate for filing returns.
Section 720. Timely mailing treated as timely filing and payment.
(a) General rule.--Notwithstanding the provisions of any State tax law to the contrary, whenever a report or payment of all or any portion of a State tax is required by law to be received by the department or other agency of the Commonwealth on or before a day certain, the taxpayer shall be deemed to have complied with the law if the letter transmitting the report or payment of the tax which has been received by the department is postmarked by the United States Postal Service on or prior to the final day on which the payment is to be received.
(b) Presentation of receipt.--For the purposes of this chapter, presentation of a receipt indicating that the report or payment was mailed by registered or certified mail on or before the due date shall be evidence of timely filing and payment.
Section 721. Payment of tax.
When a return of tax is required under this subchapter, the person required to make the return shall pay the tax to the department.
Section 722. Time of payment.
(a) General rule.--The tax imposed by this chapter and incurred or collected by a licensee shall be due and payable by the licensee on the day the return is required to be filed under the provisions of section 717 and the payment must accompany the return for the preceding period.
(b) Other payments.--If the amount of tax due for the preceding year as shown by the annual return of a taxpayer is greater than the amount already paid by the taxpayer in connection with the taxpayer's monthly or quarterly returns, the taxpayer shall send with the annual return a remittance for the unpaid amount of tax for the year.
(c) Persons other than licensees.--Any person other than a licensee liable to pay any tax under this chapter shall remit the tax at the time of filing the return required by this chapter.
Section 723. Other times for payment.
In the event that the department authorizes a taxpayer to file a return at other times than those specified in section 717, the tax due shall be paid at the time the return is filed.
Section 724. Place for payment.
The tax imposed by this chapter shall be paid to the department at the place fixed for filing the return.
Section 725. Tax held in trust for Commonwealth.
(a) General rule.--All taxes collected by any person from purchasers in accordance with this chapter and all taxes collected by any person from purchasers under color of this chapter which have not been properly refunded by the person to the purchaser shall constitute a trust fund for the Commonwealth, and such trust shall be enforceable against such person, the person's representatives and any person, other than a purchaser to whom a refund has been made properly, receiving any part of the fund without consideration, or knowing that the taxpayer is committing a breach of trust.
(b) Presumption.--Any person receiving payment of a lawful obligation of the taxpayer from the fund identified under subsection (a) shall be presumed to have received the same in good faith and without any knowledge of the breach of trust.
(c) Right to petition and appeal.--Any person, other than a taxpayer, against whom the department makes any claim under this section shall have the same right to petition and appeal as is given taxpayers by any provisions of this subchapter.
Section 726. Local receivers of use tax.
(a) General rule.--In every county, except counties of the first class, the county treasurer shall receive use tax due and payable under this chapter from any person other than a licensee. The receiving of the taxes shall be pursuant to rules and regulations promulgated by the department and on forms furnished by the department.
(b) Deduction for administrative costs.--Each county treasurer shall remit to the department all use taxes received under the authority of this section minus the costs of administering this section not to exceed 1% of the amount of use taxes received, which amount shall be retained in lieu of any commission otherwise allowable by law for the collection of the tax.
Section 727. Discount.
(a) General rule.--Subject to the provisions of subsection (b), if a return is filed by a licensee and the tax shown to be due thereon less any discount is paid all within the time prescribed, the licensee shall be entitled to credit and apply against the tax payable by the licensee a discount of 1% of the amount of the tax collected by the licensee, as compensation for the expense of collecting and remitting the tax due by the licensee and as consideration of the prompt payment.
(b) Types of periodic filers.--For returns filed on or after the effective date of this section, the discount under subsection (a) shall be limited to the following:
(1) For a monthly filer, $25 per return.
(2) For a quarterly filer, $75 per return.
(3) For a semiannual filer, $150 per return.
Section 728. (Reserved).
Section 729. (Reserved).
Section 730. Assessment.
The department shall make the inquiries, determinations and assessments of the tax, including interest, additions and penalties, imposed by this chapter. A notice of assessment and demand for payment shall be mailed by certified mail to the taxpayer. The notice shall set forth the basis of the assessment.
Section 731. Mode and time of assessment.
(a) Duty to examine.--
(1) Within a reasonable time after any return is filed, the department shall examine it and, if the return shows a greater tax due or collected than the amount of tax remitted with the return, the department shall issue an assessment for the difference, together with an addition of 3% of the difference, which shall be paid to the department within ten days after a notice of the assessment has been mailed to the taxpayer.
(2) If such assessment is not paid within ten days, there shall be added and paid to the department an additional 3% of the difference for each month during which the assessment remains unpaid. The total of all additions shall not exceed 18% of the difference shown on the assessment.
(b) Underestimated tax on returns.--
(1) If the department determines that any return or returns of any taxpayer understates the amount of tax due, it shall determine the proper amount and shall ascertain the difference between the amount of tax shown in the return and the amount determined. The difference may be referred to as the deficiency.
(2) The department shall send a notice of assessment for the deficiency and the reasons to the taxpayer.
(3) The taxpayer shall pay the deficiency to the department within 30 days after a notice of the assessment has been mailed to the taxpayer.
(c) Estimated assessments.--
(1) In the event that any taxpayer fails to file a return required by this chapter, the department may make an estimated assessment, based on information available, of the proper amount of tax owed by the taxpayer and shall send a notice of assessment in the estimated amount to the taxpayer.
(2) The taxpayer shall pay the tax within 30 days after a notice of the estimated assessment has been mailed to the taxpayer.
(d) Studies.--
(1) The department may conduct the studies necessary to compute effective rates by business classification, based upon the ratio between the tax required to be collected and taxable sales and to use such rates in arriving at the apparent tax liability of a taxpayer.
(2) Any assessment based on such rates shall be prima facie correct, except that the rate shall not be considered where a taxpayer establishes the rate is based on a sample inapplicable to the taxpayer.
Section 732. Reassessment.
Any taxpayer against whom an assessment is made may petition the department for a reassessment under Article XXVII of the Tax Reform Code of 1971.
Section 733. (Reserved).
Section 734. Review by Board of Finance and Revenue.
(a) Procedure.--
(1) Within 60 days after the date of mailing of notice by the department of the decision on any petition for reassessment filed with it, the person against whom the assessment was made may, by petition, request the Board of Finance and Revenue to review the decision.
(2) The failure of the department to notify the petitioner of a decision within the time provided by section 732 shall act as a denial of such petition, and a petition for review may be filed with the Board of Finance and Revenue within 120 days of the date prior to which the department should have mailed to the petitioner its notice of decision.
(b) Contents of petition for review.--Each petition for review filed under this section shall state specifically the reasons on which the petitioner relies, or shall incorporate by reference the petition for reassessment in which the reasons are stated. The petition shall be supported by affidavit that it is not made for the purpose of delay and that the facts set forth in the petition are true.
(c) Action by board.--
(1) The Board of Finance and Revenue shall act finally in disposing of petitions filed with it within six months after they have been received.
(2) In the event of the failure of the board to dispose of any petition within six months, the action taken by the department, upon the petition for reassessment, shall be sustained.
(3) The Board of Finance and Revenue may sustain the action taken by the department on the petition for reassessment, or it may reassess the tax due on such basis as it deems according to law.
(4) The board shall give notice of its action to the department and to the petitioner.
Section 735. (Reserved).
Section 736. Burden of proof.
In all cases of petitions for reassessment, review or appeal, the burden of proof shall be on the petitioner or appellant, as applicable.
Section 737. Collection of tax.
(a) General rule.--The department shall collect the tax in the manner provided by law for the collection of taxes imposed by the laws of this Commonwealth.
(b) Collection by persons maintaining a place of business in the Commonwealth.--
(1) Every person maintaining a place of business in this Commonwealth and selling or leasing tangible personal property or services, the sale or use of which is subject to tax shall collect the tax from the purchaser or lessee at the time of making the sale or lease, and shall remit the tax to the department, unless the collection and remittance is otherwise provided for in this chapter.
(2) (i) Every person not otherwise required to collect tax that delivers tangible personal property to a location within this Commonwealth and that unpacks, positions, places or assembles the tangible personal property shall collect the tax from the purchaser at the time of delivery and shall remit the tax to the department if the person delivering the tangible personal property is responsible for collecting any portion of the purchase price of the tangible personal property delivered and the purchaser has not provided the person with proof that the tax imposed by this chapter has been or will be collected by the seller or that the purchaser provided the seller with a valid exemption certificate.
(ii) Every person required to collect tax under this paragraph shall be deemed to be selling or leasing tangible personal property or services, the sale or use of which is subject to the tax imposed under section 702.
(3) Any person required under this chapter to collect tax from another person, who shall fail to collect the proper amount of the tax, shall be liable for the full amount of the tax which the person should have collected.
(c) Certificate for tax-exempt sales or leases.--
(1) If the tax does not apply to the sale or lease of tangible personal property or services, the purchaser or lessee shall furnish to the vendor a certificate indicating that the sale is not legally subject to the tax. The certificate shall be in substantially such form as the department may, by regulation, prescribe.
(2) Where the tangible personal property or service is of a type which is never subject to the tax imposed or where the sale or lease is in interstate commerce, the certificate need not be furnished.
(3) Where a series of transactions are not subject to tax, a purchaser or user may furnish the vendor with a single exemption certificate in substantially such form and valid for such period of time as the department may, by regulation, prescribe.
(4) The department shall provide all school districts and intermediate units with a permanent tax exemption number.
(5) An exemption certificate, which is complete and regular and on its face discloses a valid basis of exemption if taken in good faith, shall relieve the vendor from the liability imposed by this section.
(6) An exemption certificate:
(i) accepted by a vendor from a natural person domiciled within this Commonwealth or any association, fiduciary, partnership, corporation or other entity, either authorized to do business within this Commonwealth or having an established place of business within this Commonwealth, in the ordinary course of the vendor's business;
(ii) which on its face discloses a valid basis of exemption consistent with the activity of the purchaser and character of the property or service being purchased or which is provided to the vendor by a charitable, religious, educational or volunteer firefighters' organization;
(iii) contains the organization's charitable exemption number; and
(iv) which, in the case of any purchase costing $200 or more, is accompanied by a sworn declaration on a form to be provided by the department of an intended usage of the property or service which would render it nontaxable,
shall be presumed to be taken in good faith and the burden of proving otherwise shall be on the department.
(d) Waivers.--
(1) The department may authorize a purchaser or lessee who acquires tangible personal property or services under circumstances which make it impossible at the time of acquisition to determine the manner in which the tangible personal property or service will be used, to pay the tax directly to the department, and waive the collection of the tax by the vendor.
(2) No such authority shall be granted or exercised, except on application to the department, and the issuance by the department, in its discretion, of a direct payment permit.
(3) If a direct payment permit is granted, its use shall be subject to conditions specified by the department, and the payment of tax on all acquisitions pursuant to the permit shall be made directly to the department by the permit holder.
Section 738. Collection of tax on motor vehicles, trailers and semitrailers.
(a) General rule.--Notwithstanding the provisions of section 737(b)(1), tax due on the sale at retail or use of a motor vehicle, trailer or semitrailer, except mobile homes as defined in 75 Pa.C.S. (relating to vehicles), required by law to be registered with the department under the provisions of 75 Pa.C.S. shall be paid by the purchaser or user directly to the department on application to the department for an issuance of a certificate of title on the motor vehicle, trailer or semitrailer.
(b) No issuance of certificate of title without payment of tax.--
(1) The department shall not issue a certificate of title until the tax has been paid, or evidence satisfactory to the department has been given to establish that tax is not due.
(2) The department may cancel or suspend any record of certificate of title or registration of a motor vehicle, trailer or semitrailer when the check received in payment of the tax on the vehicle is not paid on demand.
(c) First encumbrance.--The tax shall be considered as a first encumbrance against the vehicle and the vehicle may not be transferred without first payment in full of the tax and any interest additions or penalties which shall accrue in accordance with this chapter.
Section 739. Precollection of tax.
(a) Authorization.--
(1) Except as otherwise provided under paragraph (2), the department may, by regulation, authorize or require particular categories of vendors selling tangible personal property for resale to precollect from the purchaser the tax which the purchaser will collect on making a sale at retail of the tangible personal property.
(2) The department, pursuant to this section, may not require a vendor to precollect tax from a purchaser who purchases for resale more than $1,000 worth of tangible personal property from the vendor per year.
(b) No license required.--In any case in which a vendor has been authorized to prepay the tax to the person from whom the vendor purchased the tangible personal property for resale, the vendor authorized to prepay the tax may, under the regulations of the department, be relieved from the duty to secure a license if the duty arises only by reason of the vendor's sale of the tangible personal property with respect to which the vendor is, under authorization of the department, to prepay the tax.
(c) Reimbursement.--
(1) The vendor, on making a sale at retail of tangible personal property with respect to which the vendor has prepaid the tax, must separately state at the time of resale the proper amount of tax on the transaction, and reimburse itself on account of the taxes which the vendor has previously prepaid.
(2) If the vendor collects a greater amount of tax in any reporting period than the vendor previously prepaid on purchase of the goods with respect to which the vendor prepaid the tax, the vendor must file a return and remit the balance to the Commonwealth at the time at which a return would otherwise be due with respect to the sales.
Section 740. Bulk and auction sales.
A person who sells or causes to be sold at auction, or who sells or transfers in bulk, 51% or more of any stock, of goods, wares or merchandise of any kind, fixtures, machinery, equipment, buildings or real estate, involved in a business for which the person is licensed or required to be licensed under this chapter, or is liable for filing use tax returns in accordance with this chapter, shall be subject to the provisions of section 1403 of The Fiscal Code.
Section 741. Collection on failure to request reassessment, review or appeal.
(a) General rule.--The department may collect any tax:
(1) If an assessment of tax is not paid within ten days or 30 days, as the case may be, after notice of the assessment to the taxpayer and no petition for reassessment has been filed.
(2) Within 60 days from the date of reassessment, if no petition for review has been filed.
(3) Within 30 days from the date of the decision of the Board of Finance and Revenue on a petition for review, or of the expiration of the board's time for acting on the petition, if no appeal has been made.
(4) In all cases of judicial sales, receiverships, assignments or bankruptcies.
(b) Limitation on defenses.--
(1) Subject to the provisions of paragraph (2), in any such case in a proceeding for the collection of the taxes, the person against whom the taxes were assessed shall not be permitted to set up any ground of defense that might have been determined by the department, the Board of Finance and Revenue or the courts.
(2) The defense of failure of the department to mail notice of assessment or reassessment to the taxpayer and the defense of payment of assessment or reassessment may be raised in proceedings for collection by a motion to stay the proceedings.
Section 742. Lien for taxes.
(a) Nature and effect of lien.--
(1) If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount, including any interest, addition or penalty, together with any costs that may accrue in addition, shall be a lien in favor of the Commonwealth on the property, both real and personal, of the person but only after same has been entered and docketed of record by the prothonotary of the county where the property is situated.
(2) The department may, at any time, transmit to the prothonotaries of the respective counties certified copies of all liens for taxes imposed by this chapter or the Tax Reform Code of 1971 and penalties and interest.
(3) Each prothonotary receiving the lien shall enter and docket the lien of record in the prothonotary's office, which lien shall be indexed as judgments are now indexed.
(4) No prothonotary shall require, as a condition precedent to the entry of the liens, the payment of the costs incident thereto.
(b) Priority status.--
(1) The lien imposed under this section shall have priority from the date of its recording, and shall be fully paid and satisfied out of the proceeds of any judicial sale of property before any other obligation, judgment, claim, lien or estate to which the property may subsequently become subject, except costs of the sale and of the writ on which the sale was made, and real estate taxes and municipal claims against such property, but shall be subordinate to mortgages and other liens existing and duly recorded or entered of record prior to the recording of the tax lien.
(2) In the case of a judicial sale of property, subject to a lien imposed under this section, on a lien or claim over which the lien imposed under this section has priority, the sale shall discharge the lien imposed under this section to the extent only that the proceeds are applied to its payment, and the lien shall continue in full force and effect as to the balance remaining unpaid.
(3) There shall be no inquisition or condemnation upon any judicial sale of real estate made by the Commonwealth pursuant to the provisions of this section.
(4) (i) The lien of the taxes, interest and penalties, shall continue for five years from the date of entry, and may be revived and continued in the manner now or hereafter provided for renewal of judgments, or as may be provided in The Fiscal Code, and a writ of execution may directly issue upon the lien without the issuance and prosecution to judgment of a writ of scire facias.
(ii) Not less than ten days before issuance of any execution on the lien, notice of the filing and the effect of the lien shall be sent by registered mail to the taxpayer at the taxpayer's last known post office address.
(iii) The lien shall have no effect on any stock of goods, wares or merchandise regularly sold or leased in the ordinary course of business by the person against whom the lien has been entered, unless and until a writ of execution has been issued and a levy made on the stock of goods, wares and merchandise.
(c) Penalty.--Any willful failure of any prothonotary to carry out any duty imposed on the prothonotary under this section shall be a misdemeanor, and, upon conviction, the prothonotary shall be sentenced to pay a fine not more than $1,000 and costs of prosecution or to a term of imprisonment not exceeding one year, or both.
(d) Priority payment from distribution.--
(1) Except as otherwise provided under the law, in the distribution, voluntary or compulsory, in receivership, bankruptcy or otherwise, of the property or estate of any person, all taxes imposed by this chapter which are due and unpaid and are not collectible under section 725 shall be paid from the first money available for distribution in priority to all other claims and liens, except insofar as the laws of the United States may give a prior claim to the Federal Government.
(2) Any person charged with the administration or distribution of the property or estate, who violates the provisions of this section, shall be personally liable for any taxes imposed by this chapter, which are accrued and unpaid and are chargeable against the person whose property or estate is being administered or distributed.
(e) Construction.--Subject to the limitations contained in this chapter as to the assessment of taxes, nothing contained in this section shall be construed to restrict, prohibit or limit the use by the department in collecting taxes finally due and payable of any other remedy or procedure available at law or equity for the collection of debts.
Section 743. Suit for taxes.
(a) General rule.--At any time within three years after any tax or any amount of tax shall be finally due and payable, the department may commence an action in the courts of this Commonwealth, of any state or of the United States, in the name of the Commonwealth, to collect the amount of tax due together with additions, interest, penalties and costs in the manner provided at law or in equity for the collection of ordinary debts.
(b) Prosecution by Attorney General.--The Attorney General shall prosecute the action and, except as provided in this chapter, the provisions of the Rules of Civil Procedure and the provisions of the laws of this Commonwealth relating to civil procedures and remedies shall, to the extent that they are applicable, be available in such proceedings.
(c) Construction.--The provisions of this section are in addition to any process, remedy or procedure for the collection of taxes provided by this chapter or by the laws of this Commonwealth, and this section is neither limited by nor intended to limit any such process, remedy or procedure.
Section 744. Tax suit comity.
The courts of this Commonwealth shall recognize and enforce liabilities for sales and use taxes, lawfully imposed by any other state if the other state extends a like comity to this Commonwealth.
Section 745. Service.
(a) General rule.--Any person who maintains a place of business in this Commonwealth is deemed to have appointed the Secretary of the Commonwealth as the person's agent for the acceptance of service of process or notice in any proceedings for the enforcement of the civil provisions of this chapter, and any service made upon the Secretary of the Commonwealth as agent shall be of the same legal force and validity as if the service had been personally made on the person.
(b) Substitute service.--Where service cannot be made on the person in the manner provided by other laws of this Commonwealth relating to service of process, service may be made on the Secretary of the Commonwealth and, in such case, a copy of the process or notice shall also be personally served on any agent or representative of the person who may be found within this Commonwealth, or where no such agent or representative may be found a copy of the process or notice shall be sent by registered mail to the person at the last known address of the person's principal place of business, home office or residence.
Section 746. Collection and payment of tax on credit sales.
If any sale subject to tax under this chapter is wholly or partly on credit, the vendor shall require the purchaser to pay in cash at the time the sale is made, or within 30 days thereafter, the total amount of tax due upon the entire purchase price. The vendor shall remit the tax to the department, regardless of whether payment was made by the purchaser to the vendor, with the next return required to be filed under section 717.
Section 747. Prepayment of tax.
(a) General rule.--Whenever a vendor is prohibited by law or governmental regulation to charge and collect the purchase price in advance of or at the time of delivery, the vendor shall prepay the tax as required by section 722, but in that case, if the purchaser fails to pay to the vendor the total amount of the purchase price and the tax and the amount is written off as uncollectible by the vendor, the vendor shall not be liable for the tax and shall be entitled to a credit or refund of the tax paid.
(b) Subsequent collection of tax.--If the purchase price is thereafter collected, in whole or in part, the amount collected shall be first applied to the payment of the entire tax portion of the bill, and shall be remitted to the department by the vendor with the first return filed after such collection.
(c) Time period for refund.--Tax prepaid shall be subject to refund on petition to the department under the provisions of section 752, filed within 105 days of the close of the fiscal year in which the accounts are written off.
Section 747.1. Refund of sales tax attributed to bad debt.
(a) General rule.--A vendor may file a petition for refund of sales tax paid to the department that is attributed to a bad debt if all of the following apply:
(1) The purchaser fails to pay the vendor the total purchase price.
(2) The purchase price is written off, either in whole or in part, as a bad debt on the vendor's books and records.
(3) The bad debt has been deducted for Federal income tax purposes under section 166 of the Internal Revenue Code of 1986.
The petition must be filed with the department under Article XXVII of the Tax Reform Code of 1971 within the time limitations prescribed by section 3003.1 of the Tax Reform Code of 1971.
(b) Limitation.--
(1) The refund authorized by this section shall be limited to the sales tax paid to the department that is attributed to the bad debt, less any discount under section 727.
(2) Partial payments by the purchaser to the vendor shall be prorated between the original purchase price and the sales tax due on the sale.
(3) Payments made to a vendor on any transaction which includes both taxable and nontaxable components shall be allocated proportionally between the taxable and nontaxable components.
(c) Assignment.--A vendor may assign its right to petition and receive a refund of sales tax attributed to a bad debt to an affiliated entity. A vendor may not assign its right to petition and receive a refund of sales tax attributed to a bad debt to any other person.
(d) Items not refundable.--No refund shall be granted under this section for interest, finance charges or expenses incurred in attempting to collect any amount receivable.
(e) Contents of petition for refund.--The documentation, procedures and methods for claiming and calculating the refund allowed under this section shall be in such form as the department may prescribe.
(f) Subsequent collection.--If the purchase price that is attributed to a prior bad debt refund is collected in whole or in part, the vendor or affiliated entity shall remit the proportional tax to the department with the first return filed after the collection.
(g) Interest prohibited.--Notwithstanding the provisions of section 806.1 of The Fiscal Code, no interest shall be paid by the Commonwealth on refunds of sales tax attributed to bad debt under this section.
(h) Administration.--
(1) No refund or credit of sales tax shall be made for any uncollected purchase price or bad debt except as authorized by this section.
(2) No deduction or credit for bad debt may be taken on any return filed with the department.
(3) This section shall provide the exclusive procedure for claiming a refund or credit of sales tax attributed to uncollected purchase price or bad debt.
(i) Definition.--For purposes of this section, the term "affiliated entity" means any corporation that is part of the same affiliated group as the vendor as defined by section 1504(a)(1) of the Internal Revenue Code of 1986.
Section 748. Registration of transient vendors.
(a) General rule.--Prior to conducting business or otherwise commencing operations in this Commonwealth, a transient vendor shall register with the department. The application for registration shall be in such form and contain such information as the department, by regulation, shall prescribe and shall set forth truthfully and accurately the information desired by the department. This registration shall be renewed and updated annually.
(b) Certificate to be issued.--After registration and the posting of the bond required by section 748.1, the department shall issue to the transient vendor a certificate valid for one year. On renewal of registration, the department shall issue a new certificate valid for one year, if the department is satisfied that the transient vendor has complied with the provisions of this chapter.
(c) Possession and exhibition of certificate.--The transient vendor shall possess the certificate at all times when conducting business within this Commonwealth and shall exhibit the certificate upon demand by authorized employees of the department or any law enforcement officer.
(d) Contents of certificate.--The certificate issued by the department shall state that the transient vendor named in the certificate has registered with the department and shall provide notice to the transient vendor that:
(1) The transient vendor must notify the department in writing before it enters this Commonwealth to conduct business, of the location or locations where it intends to conduct business and the date or dates on which it intends to conduct business.
(2) Failure to notify or giving false information to the department may result in suspension or revocation of the transient vendor's certificate.
(3) Conducting business in this Commonwealth after a certificate has been suspended or revoked may result in criminal conviction and the imposition of fines or other penalties.
Section 748.1. Bond.
(a) General rule.--Upon registration with the department, a transient vendor shall also post a bond with the department in the amount of $500 as surety for compliance with the provisions of this chapter. After a period of demonstrated compliance with these provisions or, if the transient vendor provides the license number of a promoter who has notified the department of a show, in accordance with the provisions of section 748.6(a), the department may reduce the amount of bond required of a transient vendor or may eliminate the bond entirely.
(b) Voluntary suspension of certificate.--A transient vendor may file a request for voluntary suspension of certificate with the department. If the department is satisfied that the provisions of this chapter have been complied with and has possession of the transient vendor's certificate, it shall return the bond posted to the transient vendor.
Section 748.2. Notification to department.
(a) General rule.--Prior to entering this Commonwealth to conduct business, a transient vendor shall notify the department in writing of the location or locations where it intends to conduct business and the date or dates on which it intends to conduct business.
(b) Inspection of records.--While conducting business in this Commonwealth, the transient vendor shall permit authorized employees of the department to inspect its sales records, including, but not limited to, sales receipts and inventory or price lists and to permit inspection of the tangible personal property offered for sale at retail.
(c) Conditions for suspension or revocation of certificate.--The department may suspend or revoke a certificate issued to a transient vendor if the transient vendor:
(1) fails to notify the department as required by subsection (a);
(2) provides the department with false information regarding the conduct of business in this Commonwealth;
(3) fails to collect sales tax on all tangible personal property or services sold subject to the sales tax; or
(4) fails to file with the department a tax return as required by section 717.
(d) Regulations.--The department shall promulgate the rules and regulations necessary to implement this section.
Section 748.3. Seizure of property.
(a) General rule.--If a transient vendor conducting business in this Commonwealth fails to exhibit a valid certificate on demand by authorized employees of the department, those authorized employees shall seize, without warrant, the tangible personal property and the automobile, truck or other means of transportation used to transport or carry that property. All property seized shall be deemed contraband and shall be subject to immediate forfeiture proceedings instituted by the department pursuant to procedures adopted by regulation, except as otherwise provided by this section.
(b) Release of seized property.--Property seized pursuant to subsection (a) shall be released on:
(1) presentation of a valid certificate to authorized employees of the department; or
(2) registration by the transient vendor with the department and the posting of a bond in the amount of $500, either immediately or within 15 days after the property is seized.
Section 748.4. Fines.
Any transient vendor conducting business in this Commonwealth while its certificate is suspended or revoked, as provided by sections 748.1(b) and 748.2(c), commits a misdemeanor of the third degree and, upon conviction, shall be sentenced to pay a fine of not more than $2,500 for each offense.
Section 748.5. Transient vendors subject to chapter.
Except as otherwise provided, a transient vendor shall be subject to the provisions of this chapter in the same manner as a vendor who maintains a place of business in this Commonwealth.
Section 748.6. Promoters.
(a) General rule.--A promoter of a show or shows in this Commonwealth may annually file with the department an application for a promoter's license stating the location and dates of such show or shows. The application shall be filed at least 30 days prior to the opening of the first show and shall be in such form as the department may prescribe.
(b) License.--
(1) Except as otherwise provided in this chapter, the department shall, within 15 days after receipt of an application for a license, issue to the promoter without charge a license to operate such shows.
(2) If application for a license under this section has been timely filed and if the license has not been received by the promoter prior to the opening of the show, the authorization contained in this section with respect to the obtaining of a promoter's license shall be deemed to have been complied with, unless or until the promoter receives notice from the department denying the application for a promoter's license.
(c) Compliance.--Any promoter who is a vendor under the provisions of section 701 shall comply with all the provisions of this chapter applicable to vendors and with the provisions of this section applicable to promoters.
(d) Prohibited conduct.--No licensed promoter shall permit any person to display for sale or to sell tangible personal property or services subject to tax under section 702 at a show unless the person is licensed under section 708 and provides to the promoter the information required under law.
(e) Penalties.--
(1) Any licensed promoter who:
(i) permits any person to display for sale or to sell tangible personal property or service without first having been licensed under section 708;
(ii) fails to maintain records of a show as required by law; or
(iii) knowingly maintains false records or fails to comply with any provision contained in this section or any regulation promulgated by the department pertaining to shows,
shall be subject to denial of a license or the revocation of any existing license issued pursuant to this section.
(2) The department may deny the promoter a license certificate to operate a show for a period of not more than six months from the date of such denial. The penalty shall be in addition to any other penalty imposed by this chapter.
(3) Within 20 days of notice of denial or revocation of a license by the department, the promoter may petition the department for a hearing pursuant to 2 Pa.C.S. (relating to administrative law and procedure).
Section 749. (Reserved).
Section 750. (Reserved).
Section 751. (Reserved).
Section 752. Refunds.
(a) General rule.--Subject to the provisions of subsection (b), the department shall, pursuant to the provisions of Article XXVII of the Tax Reform Code of 1971, refund all taxes, interest and penalties paid to the Commonwealth under the provisions of this chapter and to which the Commonwealth is not rightfully entitled. The refunds shall be made to the person, the person's heirs, successors, assigns or other personal representatives, who actually paid the tax.
(b) Exception.--No refund shall be made under this section with respect to any payment made by reason of an assessment with respect to which a taxpayer has filed a petition for reassessment pursuant to section 2702 of the Tax Reform Code of 1971 to the extent that the petition has been determined adversely to the taxpayer by a decision which is no longer subject to further review or appeal.
(c) Construction.--Nothing contained in this section shall be deemed to prohibit a taxpayer who has filed a timely petition for reassessment from amending it to a petition for refund where the petitioner has paid the tax assessed.
Section 753. Refund petition.
(a) General rule.--Except as provided for in subsection (b) and section 756, the refund or credit of tax, interest or penalty provided for by section 752 shall be made only where the person who has actually paid the tax files a petition for refund with the department under Article XXVII of the Tax Reform Code of 1971, within the limits of section 3003.1 of the Tax Reform Code of 1971.
(b) Assessments.--A refund or credit of tax, interest or penalty paid as a result of an assessment made by the department under section 731 shall be made only where the person who has actually paid the tax files with the department a petition for a refund with the department under Article XXVII of the Tax Reform Code of 1971 within the time limits of section 3003.1 of the Tax Reform Code of 1971. The filing of a petition for refund under the provisions of this subsection shall not affect the abatement of interest, additions or penalties to which the person may be entitled by reason of the person's payment of the assessment.
Section 754. (Reserved).
Section 755. (Reserved).
Section 756. Extended time for filing special petition for refund.
(a) General rule.--Any party to a transaction who has paid tax by reason of a transaction with respect to which the department is assessing tax against another person may, within six months after the filing by the department of the assessment against the other person, file a special petition for refund, notwithstanding the person's failure to timely file a petition pursuant to section 3003.1 of the Tax Reform Code of 1971. The provisions of Article XXVII of the Tax Reform Code of 1971 shall be applicable to the special petition for refund, except that the department need not act on the petition until there is a final determination as to the propriety of the assessment filed against the other party to the transaction. Where a petition is filed under this provision in order to take advantage of the extended period of limitations, overpayments by the petitioner shall be refunded but only to the extent of the actual tax, without consideration of interest and penalties, paid by the other party to the transaction.
(b) Purpose.--The purpose of this section is to avoid duplicate payment of tax where a determination is made by the department that one party to a transaction is subject to tax, and another party to the transaction has previously paid tax with respect to the transaction and, as such, this section shall be construed as extending right beyond that provided for by section 753, and not to limit the other section.
Section 757. (Reserved).
Section 758. Limitation on assessment and collection.
The amount of the tax imposed by this chapter or the Tax Reform Code of 1971 shall be assessed within three years after the date when the return provided for by section 717(a) or (c) is filed or the end of the year in which the tax liability arises, whichever occurs later. Any assessment may be made at any time during the period notwithstanding that the department may have made one or more previous assessments against the taxpayer for the year in question, or for any part of the year. In any case, no credit shall be given for any penalty previously assessed or paid.
Section 759. Failure to file return.
Where no return is filed, the amount of the tax due may be assessed and collected at any time as to taxable transactions not reported.
Section 760. False or fraudulent return.
Where the taxpayer willfully files a false or fraudulent return with intent to evade the tax imposed by this chapter, the amount of tax due may be assessed and collected at any time.
Section 761. Extension of limitation period.
Notwithstanding any other provisions of this subchapter where, before the expiration of the period prescribed in that other provision for the assessment of a tax, a taxpayer has consented in writing that the period be extended, the amount of tax due may be assessed at any time within the extended period. The period so extended may be extended further by subsequent consents in writing made before the expiration of the extended period.
Section 762. (Reserved).
Section 763. (Reserved).
Section 764. (Reserved).
Section 765. Interest.
If any amount of tax imposed by this chapter is not paid to the department on or before the last date prescribed for payment, interest on the amount at the rate of .75% per month for each month, or fraction thereof, from the date, shall be paid for the period from the last date to the date paid. The last date prescribed for payment shall be determined under section 722(a) or (c) without regard to any extension of time for payment. In the case of any amount assessed as a deficiency or as an estimated assessment, the date prescribed for payment shall be 30 days after notice of the assessment.
Section 766. Additions to tax.
(a) Failure to file return.--In the case of failure to file any return required by section 715 on the date prescribed for the return, determined with regard to any extension of time for filing, and, in the case in which a return filed understates the true amount due by more than 50%, there shall be added to the amount of tax actually due 5% of the amount of the tax if the failure to file a proper return is for not more than one month, with an additional 5% for each additional month, or fraction thereof, during which such failure continues, not exceeding 25% in the aggregate. In every case at least $2 shall be added.
(b) Addition for understatement.--There shall be added to every assessment under section 731(b) an addition equal to 5% of the amount of the understatement and no addition to the tax shall be paid under section 731(a).
(c) Interest.--If the department assesses a tax according to section 731(a), (b) or (c), there shall be added to the amount of the deficiency interest at the rate of .75% per month for each month, or fraction thereof, from the date prescribed by subsection (a) or section 722(c) for the payment of the tax to the date of notice of the assessment.
Section 767. Penalties.
(a) General rule.--The penalties, additions, interest and liabilities provided by this chapter shall be paid on notice and demand by the department, and shall be assessed and collected in the same manner as taxes. Except as otherwise provided, any reference in this chapter to tax imposed by this chapter shall be deemed also to refer to the penalties, additions, interest and liabilities provided by this chapter.
(b) Monetary penalty.--Any person who willfully attempts, in any manner, to evade or defeat the tax imposed by this chapter, or the payment thereof, or to assist any other person to evade or defeat the tax imposed by this chapter, or the payment thereof, or to receive a refund improperly shall, in addition to other penalties provided by law, be liable for a penalty equal to one-half of the total amount of the tax evaded.
(c) Burden of proof.--In any direct proceeding arising out of a petition for reassessment or refund as provided in this chapter, in which an issue of fact is raised with respect to whether a return is fraudulent or with respect to the propriety of the imposition by the department of the penalty prescribed in subsection (b), the burden of proof with respect to the issue shall be on the department.
Section 768. Criminal offenses.
(a) False returns.--Any person who with intent to defraud the Commonwealth willfully makes, or causes to be made, any return required by this chapter which is false commits a misdemeanor and, upon conviction, shall be sentenced to pay a fine of not more than $2,000 or to imprisonment not exceeding three years, or both.
(b) Other offenses.--Except as otherwise provided by subsection (a) and subject to the provisions of subsection (c), any person who:
(1) advertises or holds out or states to the public or to any purchaser or user, directly or indirectly, that the tax or any part imposed by this chapter will be absorbed by the person, or that it will not be added to the purchase price of the tangible personal property or services described in section 701(k)(2), (3), (4) and (11) through (18) sold or, if added, that the tax or any part will be refunded, other than when the person refunds the purchase price because of the property being returned to the vendor;
(2) sells or leases tangible personal property or the services, the sale or use of which by the purchaser is subject to tax under this chapter, and willfully fails to collect the tax from the purchaser and timely remit the same to the department;
(3) willfully fails or neglects to timely file any return or report required by this chapter or, as a taxpayer, refuses to timely pay any tax, penalty or interest imposed or provided for by this chapter, or willfully fails to preserve the person's books, papers and records as directed by the department;
(4) refuses to permit the department or any of its authorized agents to examine the person's books, records or papers, or who knowingly makes any incomplete, false or fraudulent return or report;
(5) does or attempts to do anything to prevent the full disclosure of the amount or character of taxable sales purchases or use made by himself or any other person;
(6) provides any person with a false statement as to the payment of tax with respect to particular tangible personal property or services; or
(7) makes, utters or issues a false or fraudulent exemption certificate;
commits a misdemeanor and, upon conviction shall be sentenced to pay a fine of not more than $1,000 and costs of prosecution or to imprisonment for not more than one year, or both.
(c) Exceptions.--
(1) Any person who maintains a place of business outside this Commonwealth may absorb the tax with respect to taxable sales made in the normal course of business to customers present at that place of business without being subject to the penalty and fines.
(2) Advertising tax-included prices shall be permissible, if the prepaid services are sold by the service provider, for prepaid telecommunications services not evidenced by the transfer of tangible personal property or for prepaid mobile telecommunications services.
(d) Penalties are cumulative.--The penalties imposed by this section shall be in addition to any other penalties imposed by any provision of this chapter.
Section 769. Abatement of additions or penalties.
On the filing of a petition for reassessment or a petition for refund as provided under this chapter by a taxpayer, additions or penalties imposed on the taxpayer by this chapter or the Tax Reform Code of 1971 may be waived or abated, in whole or in part, where the petitioner has established that the petitioner has acted in good faith, without negligence and with no intent to defraud.
Section 770. Rules and regulations.
(a) General rule.--The department shall enforce the provisions of this chapter and shall prescribe, adopt, promulgate and enforce rules and regulations not inconsistent with the provisions of this chapter, relating to any matter or thing pertaining to the administration and enforcement of the provisions of this chapter, and the collection of taxes, penalties and interest imposed by this chapter. The department may prescribe the extent, if any, to which any of the rules and regulations shall be applied without retroactive effect.
(b) Determination of purchase price.--
(1) In determining the purchase price of taxable sales where, because of affiliation of interests between the vendor and the purchaser or irrespective of any such affiliation, if for any other reason, the purchase price of the sale is in the opinion of the department not indicative of the true value of the article or the fair price of the article, the department shall, pursuant to uniform and equitable rules, determine the amount of constructive purchase price on the basis of which the tax shall be computed and levied.
(2) The rules shall provide for a constructive amount of a purchase price for each sale, which price shall equal a price for the article which would naturally and fairly be charged in an arm's-length transaction in which the element of common interests between vendor and purchaser or, if no common interest exists, any other element causing a distortion of the price or value is absent.
(3) For the purpose of this chapter where a taxable sale occurs between a parent corporation and a subsidiary affiliate or controlled corporation of such parent, there shall be a rebuttable presumption that because of such common interest the transaction was not at arm's-length.
Section 771. Keeping of records.
(a) Persons liable for taxes.--Every person liable for any tax imposed by this chapter, or for the collection of the tax, shall keep the records, render such statements, make the returns and comply with the rules and regulations as the department may, from time to time, prescribe regarding matters pertinent to the person's business. Whenever in the judgment of the department it is necessary, it may require any person, by notice served on the person, or by regulations, to make the returns, render the statements or keep the records as the department deems sufficient to show whether the person is liable to pay or collect tax under this chapter.
(b) Persons collecting taxes.--Any person liable to collect tax from another person under the provisions of this chapter shall file reports, keep records, make payments and be subject to interest and penalties as provided for under this chapter, in the same manner as if the person were directly subject to the tax.
(c) Nonresidents.--
(1) A nonresident who does business in this Commonwealth as a retail dealer shall keep adequate records of the business and of the tax due with respect to the business, which records shall at all times be retained within this Commonwealth unless retention outside this Commonwealth is authorized by the department.
(2) No taxes collected from purchasers shall be sent outside this Commonwealth without the written consent of and in accordance with conditions prescribed by the department.
(3) The department may require a taxpayer who desires to retain records or tax collections outside this Commonwealth to assume reasonable out-of-State audit expenses.
(d) Retail dealers.--
(1) Any person doing business as a retail dealer who at the same time is engaged in another business which does not involve the making of sales taxable under this chapter shall keep separate books and records of the person's businesses so as to show the sales taxable under this chapter separately from the sales not taxable under this chapter.
(2) If the person fails to keep such separate books and records, the person shall be liable for tax at the rate designated in section 702 on the entire purchase price of sales from both or all of the person's businesses.
(e) Segregation of taxes required.--
(1) In those instances where a vendor gives no sales memoranda or uses registers showing only total sales, the vendor shall adopt some method of segregating tax from sales receipts and keep records showing the segregation, all in accordance with proper accounting and business practices.
(2) A vendor may apply to the department for permission to use a collection and recording procedure which will show the information as the law requires with reasonable accuracy and simplicity. The application must contain a detailed description of the procedure to be adopted.
(3) Permission to use the proposed procedure is not to be construed as relieving the vendor from remitting the full amount of tax collected.
(4) The department may revoke the permission on 30 days' notice to the vendor.
(5) Refusal of the department to grant permission in advance to use the procedure shall not be construed to invalidate a procedure which on examination shows the information as the law requires.
Section 771.1. Reports and records of promoters.
Every licensed promoter shall keep a record of the date and place of each show and the name, address, sales, use and hotel occupancy license number of every person whom the licensed promoter permits to display for sale or to sell tangible personal property or services subject to tax under section 702 at the show. The records shall be open for inspection and examination at any reasonable time by the department or a duly authorized representative, and the records shall, unless the department consents in writing to an earlier destruction, be preserved for three years after the date the report was filed or the date it was due, whichever occurs later, except that the department may by regulation require that they be kept for a longer period of time.
Section 772. Examinations.
(a) Power of department.--The department or any of its authorized agents may examine the books, papers and records of any taxpayer in order to verify the accuracy and completeness of any return made or if no return was made, to ascertain and assess the tax imposed by this chapter. The department may require the preservation of all such books, papers and records for any period deemed proper by it but not to exceed three years from the end of the calendar year to which the records relate.
(b) Duty of taxpayers.--Every taxpayer shall give to the department, or its agent, the means, facilities and opportunity for the examinations and investigation.
(c) Other powers of department.--
(1) The department is further authorized to examine any person, under oath, concerning taxable sales or use by any taxpayer or concerning any other matter relating to the enforcement or administration of this chapter, and to this end may compel the production of books, papers and records and the attendance of all persons whether as parties or witnesses whom it believes to have knowledge of such matters.
(2) The procedure for such hearings or examinations shall be the same as that provided by The Fiscal Code relating to inquisitorial powers of fiscal officers.
Section 773. Records and examinations of delivery agents.
Every agent for the purpose of delivery of goods shipped into this Commonwealth by a nonresident, including, but not limited to, a common carrier, shall maintain adequate records of such deliveries pursuant to rules and regulations adopted by the department and shall make the records available to the department upon request after due notice.
Section 774. Unauthorized disclosure.
Any information gained by the department as a result of any return, examination, investigation, hearing or verification required or authorized by this chapter shall be confidential, except for official purposes and except in accordance with proper judicial order or as otherwise provided by law, and any person unlawfully divulging such information commits a misdemeanor and, upon conviction, shall be sentenced to pay a fine of not more than $1,000 and costs of prosecution or to imprisonment for not more than one year, or both.
Section 775. Cooperation with other governments.
Notwithstanding the provisions of section 774, the department may permit the Commissioner of Internal Revenue of the United States, or the proper officer of any state, or the authorized representative of either such officer, to inspect the tax returns of any taxpayer, or may furnish to the officer or to the officer's authorized representative an abstract of the return of any taxpayer, or supply the officer or the authorized representative with information concerning any item contained in any return or disclosed by the report of any examination or investigation of the return of any taxpayer. This permission shall be granted only if the statutes of the United States or of such other state, as the case may be, grant substantially similar privileges to the proper officer of the Commonwealth charged with the administration of this chapter.
Section 776. Interstate compacts.
(a) General rule.--The Governor, or the Governor's authorized representative, may confer with the Governor and the authorized representatives of other states with respect to reciprocal use tax collection between the Commonwealth and such other states.
(b) Other powers.--The Governor, or the Governor's authorized representative, may join with the authorities of other states to conduct joint investigations, to exchange information, hold joint hearings and enter into compacts or interstate agreements with such other states to accomplish uniform reciprocal use tax collections between those states who are parties to any compact or interstate agreement and the Commonwealth.
Section 777. Bonds.
(a) Procedure.--
(1) Whenever the department, in its discretion, deems it necessary to protect the revenues to be obtained under the provisions of this chapter, it may require any nonresident natural person or any foreign corporation, association, fiduciary, partnership or other entity, not authorized to do in this Commonwealth or not having an established place of business in this Commonwealth and subject to the tax imposed by section 702, to file a bond issued by a surety company authorized to do business in this Commonwealth and approved by the Insurance Commissioner as to solvency and responsibility, in such amounts as it may fix, to secure the payment of any tax or penalties due, or which may become due, from a natural person or corporation.
(2) In order to protect the revenues to be obtained under the provisions of this chapter, the department shall require any nonresident natural person or any foreign corporation, association, fiduciary, partnership or entity, who or which is a building contractor, or who or which is a supplier delivering building materials for work in this Commonwealth and is not authorized to do business in this Commonwealth or does not have an established place of business in this Commonwealth and is subject to the tax imposed by section 702, to file a bond issued by a surety company authorized to do business in this Commonwealth and approved by the Insurance Commissioner as to solvency and responsibility, in the amounts as it may fix, to secure the payments of any tax or penalties due, or which may become due, from a natural person, corporation or other entity.
(3) The department may also require a bond of any person petitioning the department for reassessment, in the case of any assessment over $500 or where it is of the opinion that the ultimate collection is in jeopardy.
(4) (i) The department may, for a period of three years, require a bond of any person who has on three or more occasions within a 12-month period either filed a return or made payment to the department more than 30 days late.
(ii) If the department determines that a taxpayer is to file a bond, the department shall give notice to the taxpayer to that effect, specifying the amount of the bond required.
(iii) The taxpayer shall file a bond within five days after the giving of the notice by the department unless, within the five-day period, the taxpayer requests in writing a hearing before the secretary or the secretary's representative at which hearing the necessity, propriety and amount of the bond shall be determined by the secretary or a representative. The determination shall be final and shall be complied within 15 days after notice is mailed to the taxpayer.
(b) Alternative security.--
(1) In lieu of the bond required by this section, securities approved by the department, or cash in the amount as it may prescribe, may be deposited.
(2) Such securities or cash shall be kept in the custody of the department, who may, at any time, without notice to the depositor, apply them to any tax and/or interest or penalties due, and for that purpose the securities may be sold by the department, at public or private sale, on five days' written notice to the depositor.
(c) Lien may be filed.--
(1) The department may file a lien pursuant to section 742 against any taxpayer who fails to file a bond when required to do so under this section.
(2) All funds received on execution of the judgment on the lien shall be refunded to the taxpayer with 3% interest should a final determination be made that the taxpayer does not owe any payment to the department.
SUBCHAPTER G
FUNDING PROVISIONS
Section 780. (Reserved).
Section 781. Appropriation for refunds.
So much of the proceeds of the tax imposed by this chapter as shall be necessary for the payment of refunds, enforcement or administration under this chapter is hereby appropriated for those purposes.
Section 781.1. Construction.
To the extent that the language of this chapter is identical to that of equivalent provisions in the former act of March 6, 1956 (P.L.1228, No.381), known as the Tax Act of 1963 for Education, or Article II of the Tax Reform Code of 1971, that language shall be deemed a reenactment of such identical provisions.
Section 782. Transfers to Education Stabilization Fund.
(a) Legislative intent.--It is the intent of the General Assembly to increase the rate of the current sales and use tax and broaden the sales and use tax base in order to provide funds for the operating expenses of school districts and as a means to abolish the school property tax.
(b) Deposit of sales and use tax collected.--The secretary shall deposit into the Education Stabilization Fund revenues received on or after January 1, 2014, regardless of the transaction date, that equal the portion of the tax imposed by this chapter as follows:
(1) Except as otherwise provided in paragraphs (2) and (3), 1% of the tax collected on the sales at retail and use of tangible personal property and services as provided in section 702.
(2) All of the tax collected on the sale at retail of services under section 702, including those services subject to the tax as provided under sections 701(k)(4) and (o)(4) and 704(51).
(3) All of the tax collected on expanded sales and uses.
(c) Definition.--For purposes of this section, "expanded sales and uses" means:
(1) The sale at retail or use of disposable diapers; premoistened wipes; incontinence products; colostomy deodorants; toilet paper; sanitary napkins, tampons or similar items used for feminine hygiene; or toothpaste, toothbrushes or dental floss.
(2) The sale at retail or use of nonprescription medicines.
(3) The sale at retail or use of all vesture, wearing apparel, raiments, garments, footwear and other articles of clothing, except as excluded from the tax under section 704(26).
(4) The sale at retail or use of food and beverages for human consumption, except as excluded from the tax under section 704(29).
(5) The sale at retail or use of newspapers. For purposes of this section, the term "newspaper" shall mean a "legal newspaper" or a publication containing matters of general interest and reports of current events which qualifies as a "newspaper of general circulation" qualified to carry a "legal advertisement" as those terms are defined in 45 Pa.C.S. § 101 (relating to definitions), not including magazines. The term "newspaper" also includes any printed advertising materials circulated with such newspaper regardless of where or by whom such printed advertising material was produced.
(6) The sale at retail or use of caskets and burial vaults for human remains and markers and tombstones for human graves.
(7) The sale at retail or use of flags of the United States and the Commonwealth of Pennsylvania.
(8) The sale at retail or use of textbooks for use in schools, colleges and universities, either public or private, when purchased in behalf of or through such schools, colleges or universities provided such institutions of learning are recognized by the Department of Education.
(9) The sale at retail or use of motion picture film rented or licensed from a distributor for the purpose of commercial exhibition.
(10) The sale at retail or use of mail order catalogs and direct mail advertising literature or materials, including electoral literature or materials, such as envelopes, address labels and a one-time license to use a list of names and mailing addresses for each delivery of direct mail advertising literature or materials, including electoral literature or materials, through the United States Postal Service.
(11) The sale at retail of horses, if at the time of purchase, the seller is directed to ship or deliver the horse to an out-of-State location, whether or not the charges for shipment are paid for by the seller or the purchaser.
(12) The sale at retail of supplies and materials to tourist promotion agencies, which receive grants from the Commonwealth, for distribution to the public as promotional material or the use of such supplies and materials by said agencies for said purposes.
(13) The sale at retail or use of materials used in the construction and erection of objects purchased by not-for-profit organizations for purposes of commemoration and memorialization of historical events, provided that the object is erected upon publicly owned property or property to be conveyed to a public entity upon the commemoration or memorialization of the historical event.
(14) The sale at retail or use of candy or gum regardless of the location from which the candy or gum is sold.
(15) The sale at retail or use of horses to be used exclusively for commercial racing activities and the sale at retail and use of feed, bedding, grooming supplies, riding tack, farrier services, portable stalls and sulkies for horses used exclusively for commercial racing activities.
(16) The sale at retail to or use by a construction contractor of building machinery and equipment and services thereto that are:
(i) transferred pursuant to a construction contract for any charitable organization, volunteer firemen's organization, volunteer firefighters' relief association, nonprofit educational institution or religious organization for religious purposes, provided that the building machinery and equipment and services thereto are not used in any unrelated trade or business; or
(ii) transferred to the United States or the Commonwealth or its instrumentalities or political subdivisions.
(17) The sale or use of used prebuilt housing.
(18) The sale at retail to or use of food and nonalcoholic beverages by an airline which will transfer the food or nonalcoholic beverages to passengers in connection with the rendering of the airline service.
(19) The sale at retail or use of separately stated fees paid pursuant to 13 Pa.C.S. § 9525 (relating to fees).
(20) The sale at retail or use of investment metal bullion and investment coins. "Investment metal bullion" means any elementary precious metal which has been put through a process of smelting or refining, including, but not limited to, gold, silver, platinum and palladium, and which is in such state or condition that its value depends upon its content and not its form. "Investment metal bullion" does not include precious metal which has been assembled, fabricated, manufactured or processed in one or more specific and customary industrial, professional, aesthetic or artistic uses. "Investment coins" means numismatic coins or other forms of money and legal tender manufactured of gold, silver, platinum, palladium or other metal and of the United States or any foreign nation with a fair market value greater than any nominal value of such coins. "Investment coins" does not include jewelry or works of art made of coins, nor does it include commemorative medallions.
CHAPTER 9
(RESERVED)
CHAPTER 11
LIMITATIONS ON
SCHOOL DISTRICT TAXATION
Section 1101. Authority to levy taxes and effect of future Constitutional amendment.
(a) Abrogating authority to impose certain taxes.--
(1) The authority of any school district to levy, assess and collect any real property tax under the Public School Code of 1949, or any other act shall expire, subject to the provisions of section 1102, January 1, 2014.
(2) The authority of a city of the first class to impose or continue to provide for the imposition or continuation of any tax, including, but not limited to, the real property tax, for the use of a school district of the first class shall expire in accordance with section 1102(b).
(b) Collection of certain taxes unaffected.--The provisions of this section or any other provision of this act shall not prevent or interfere with any action of any school district to collect any tax owed by any taxpayer prior to the repeal of any law authorizing such tax after such law is repealed pursuant to this act.
(c) Limitations on adoption of personal income taxes and earned income taxes authorized under Chapter 3.--A school district that adopts a personal income tax pursuant to Chapter 3 may not adopt an earned income tax. A school district that adopts an earned income tax under Chapter 3 may not adopt a personal income tax.
Section 1102. Transitional taxes.
(a) Transitional taxes for school districts other than school districts of the first class.--Notwithstanding any other provision of the Public School Code of 1949 or any other law to the contrary:
(1) Any school district, other than a school district of the first class, may continue to levy, assess and collect a real property tax for fiscal year 2013-2014.
(2) For all fiscal years beginning after June 30, 2014, no school district shall have any power or authority to levy, assess and collect any real property tax, except as necessary to fund the annual debt service payments for its outstanding debt in existence on December 31, 2012.
(b) Transitional taxes for school districts of the first class.--Notwithstanding any other provision of the Public School Code of 1949 or any other law to the contrary:
(1) Any school district of the first class and city of the first class may continue to levy, assess and collect a real property tax and all other taxes in existence on July 31, 2013 at the rates in effect on that date for the use of a coterminous school district of the first class for fiscal year 2013-2014. The authority to levy, assess and collect such taxes for the use of coterminous school districts shall expire at midnight on December 31, 2013.
(2) For all fiscal years beginning after June 30, 2013, no city of the first class shall have any power or authority to levy, assess and collect any of the taxes identified under paragraph (1) for school purposes, except as necessary to fund the annual debt service payments for its outstanding debt in existence on December 31, 2012.
Section 1103. Consideration of State appropriations or reimbursements.
The personal income or earned income tax levied shall not be invalidated by reason of the fact that in determining the amount to be raised by such tax no deduction was made for appropriations or reimbursements paid or payable by the Commonwealth to the school district.
Section 1104. Taxes for cities and school districts of the first class.
Notwithstanding any other provision of the Public School Code of 1949 or any other law to the contrary, nothing in this act shall be construed to limit or impair a city of the first class from levying, assessing or collecting any tax for municipal purposes or from increasing the millage for real estate taxes or revenues if the revenues derived from the real property tax are used solely for municipal purposes.
CHAPTER 12
INDEBTEDNESS
Section 1201. Expiration of authority to issue debt.
No school district, including a school district of the first class, shall incur any electoral debt, lease rental debt or nonelectoral debt under 53 Pa.C.S. Pt. VII Subpt. B after the effective date of this section unless such debt is authorized under Chapter 3 or any other law.
Section 1202. Notices and reporting by school districts of debt outstanding.
(a) Duties.--
(1) Each school district, including a school district of the first class, shall identify the outstanding amount of all electoral debt, lease rental debt or nonelectoral debt incurred as of December 31, 2012.
(2) On or before September 30, 2013, each school district, including a school district of the first class, shall certify and report to the Department of Revenue the outstanding amount of all electoral debt, lease rental debt or nonelectoral debt incurred as of December 31, 2012, together with any information requested by the department in order for the Commonwealth to comply with requirements of this section.
(b) Audit by Department of Revenue.--
(1) The Department of Revenue shall audit each report submitted under subsection (a) and shall certify the amount of each report and the total aggregate amount of all reports to the State Treasurer on or before March 31, 2014.
(2) If the Department of Revenue disputes all or any portion of a report submitted under subsection (a), the department shall not include such amount in the certification to the State Treasurer and shall notify the school district in writing of the exclusion from the certification.
CHAPTER 13
FUNDING PROVISIONS
Section 1301. Definitions.
The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:
"Base revenue." The money a school district receives from school property taxes during fiscal year 2013-2014 less the amount necessary to fund the annual debt service payments for its outstanding debt in existence on December 31, 2012.
"Cost of living factor." The lesser of:
(1) the average annual percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U) for the Pennsylvania, New Jersey and Maryland area for the preceding calendar year; or
(2) the percentage increase in sales and use tax collected under section 702 from the previous calendar year.
"Department." The Department of Education of the Commonwealth.
"Fund." The Education Stabilization Fund established in section 1302.
Section 1302. Education Stabilization Fund.
(a) Establishment.--The Education Stabilization Fund is established as a separate fund in the State Treasury.
(b) Sources.--The following are the sources of the fund:
(1) Money collected by the department under:
(i) section 401; or
(ii) Chapter 7.
(2) All revenue transferred to or received by the property tax relief fund under:
(i) 4 Pa.C.S. § 1408(e) (relating to transfers from State Gaming Fund); and
(ii) 4 Pa.C.S. § 1409 (relating to Property Tax Relief Fund).
(3) Appropriations.
(4) Return on money in the fund.
(c) Use.--The department shall use the fund to make disbursements under section 1303.
(d) Continuing appropriation.--The money of the fund is hereby continuously appropriated to the department as provided in this act. This appropriation shall not lapse at the end of any fiscal year.
Section 1303. Standard disbursements to school districts from Education Stabilization Fund.
(a) General rule.--In fiscal year 2014-2015, the department shall make disbursements to each school district as follows:
(1) Ascertain base revenue.
(2) Multiply:
(i) the amount ascertained under paragraph (1); by
(ii) the cost of living factor.
(3) Divide:
(i) the product under paragraph (2); by
(ii) four.
(4) Each quarter, disburse the quotient under paragraph (3).
(b) Annual adjustment.--In fiscal year 2015-2016 and each fiscal year thereafter, the department shall make disbursements to each school district as follows:
(1) Take the amount received in the prior fiscal year under this section.
(2) Multiply:
(i) the amount ascertained under paragraph (1); by
(ii) the cost of living factor.
(3) Divide:
(i) the product under paragraph (2); by
(ii) four.
(4) Each quarter, disburse the quotient under paragraph (3).
CHAPTER 15
MISCELLANEOUS PROVISIONS
Section 1501. Transitional provision.
(a) Sales and use tax.--Notwithstanding the repeal of Article II of the Tax Reform Code of 1971, under section 1504, the department shall have the authority to enforce the collection of taxes imposed for transactions that occur prior to the effective date of this section under former Article II of the Tax Reform Code of 1971. The taxes collected after January 1, 2014, regardless of the transaction date, shall be deposited as provided in section 782.
(b) Other taxes.--Notwithstanding the repeal of any provision of the Public School Code of 1949 or of any other law authorizing school districts to impose taxes, a governing body shall have the authority to enforce, after the effective date of the repeal, the collection of taxes levied and assessed under those former provisions prior to the effective date of the repeal under section 1504.
Section 1502. Construction.
Any and all references in any other act to Article II or any provision in Article II of the Tax Reform Code of 1971 shall be deemed a reference to Chapter 7 of this act or the corresponding provisions in Chapter 7 of this act.
Section 1503. Severability.
The provisions of this act are severable as follows:
(1) If any provision of this act is held invalid, the invalidity shall not affect other provisions or applications of this act which can be given effect without the invalid provision or application.
(2) Under no circumstances shall the invalidity of any provision or application of this act affect the validity of any provision in this act that abolishes the power of the governing body and any school district and city of the first class or any other political subdivision to levy, assess or collect a tax on any interest in real property for school purposes.
Section 1504. Repeals.
(a) Intent.--The General Assembly declares that the repeals under subsection (b) are necessary to effectuate this act.
(b) Provisions.--The following acts and parts of acts are repealed:
(1) Section 631 of the act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949, is repealed.
(2) Any provision of the Public School Code of 1949 and of any other law relating to the authority of any school district to levy, assess and collect any tax on real property and the power of any city of the first class to levy, assess and collect any tax real property for school purposes is repealed upon the expiration of the respective schedule prescribed in sections 1101 and 1102.
(3) Any provision of the act of the Public School Code of 1949 and any other law relating to debt is repealed to the extent that it is inconsistent with this act.
(4) Any provision of the Public School Code of 1949 and any home rule charter adopted pursuant thereto is repealed insofar as it is inconsistent with this act.
(5) Any provision of the act of August 9, 1963 (P.L.643, No.341), known as the First Class City Public Education Home Rule Act, and any home rule school district charter adopted pursuant thereto is repealed insofar as it is inconsistent with this act.
(6) Article II of the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, is repealed.
(7) All acts and parts of acts that are inconsistent with this act are repealed to the extent of such inconsistency.
Section 1505. Applicability.
Section 1504(b)(6) and Chapter 7 shall apply January 1, 2014.
Section 1506. Effective date.
This act shall take effect as follows:
(1) Section 1504(b)(2) and (7) and Chapters 3 and 4 shall take effect January 1, 2014.
(2) The remainder of this act shall take effect immediately.
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