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A06346
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
30
Session of
2019
INTRODUCED BY KILLION, VOGEL, HUGHES, HAYWOOD, ARGALL, BLAKE,
BROWNE, COSTA, FONTANA, LEACH, MUTH, SANTARSIERO,
TARTAGLIONE, J. WARD, YUDICHAK, STREET, DINNIMAN, FARNESE AND
L. WILLIAMS, MARCH 21, 2019
AS REPORTED FROM COMMITTEE ON URBAN AFFAIRS, HOUSE OF
REPRESENTATIVES, AS AMENDED, JUNE 9, 2020
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," providing for Pennsylvania Housing Tax Credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding an article to
read:
ARTICLE XIX-G
PENNSYLVANIA HOUSING TAX CREDIT
Section 1901-G. Scope of article.
This article establishes the Pennsylvania Housing Tax Credit.
Section 1902-G. Definitions.
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The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Agency." The Pennsylvania Housing Finance Agency.
"Credit period." A 5-year period that begins with the
taxable year in which the qualified low-income housing project
is eligible to claim the credit under section 1907-G or, at the
irrevocable election of the eligible applicant, the next
succeeding taxable year.
"Department." The Department of Revenue of the Commonwealth.
"Eligible applicant." An applicant that meets the agency's
applicant criteria for Federal housing tax credits.
"Federal housing tax credit." The Federal tax credit created
under section 42 of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 42).
"Qualified allocation plan." The agency's plan for
allocation of Federal housing tax credits developed under 26
C.F.R. § 1.42-17 (relating to qualified allocation plan).
"Qualified low-income housing project." The term shall have
the same meaning as provided under section 42(g)(1) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
42(g)(1)).
"Qualified tax liability." The tax liability imposed on a
taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV,
excluding any tax withheld by an employer under Article III.
"Qualified taxpayer." An individual, business firm,
corporation, business trust, limited liability company,
partnership, limited liability partnership, association or any
other form of legal business entity that:
(1) is subject to a tax imposed under Article III, IV,
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VI, VII, VIII, IX, XI or XV, excluding any tax withheld by an
employer under Article III; and
(2) meets the criteria set forth in guidelines adopted
and promulgated by the agency in accordance with section
1904-G.
"Tax credit." An amount made available to qualified
taxpayers to offset against qualified tax liability as
authorized and allocated under this article.
"Tax credit certificates." The document provided by the
agency evidencing the allocation of tax credits under section
1906-G.
"Taxable year." The term shall have the same meaning as
provided under section 441(b) of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 441(b)).
Section 1903-G. Pennsylvania Housing Tax Credit.
(a) Tax credit authority.--The agency may allocate tax
credits in an amount not to exceed the sum of:
(1) $10 million per fiscal year;
(2) unused and unallocated tax credits for the preceding
fiscal years ; and
(3) tax credits returned to the agency for the preceding
fiscal years.
(b) Application.--An eligible applicant may apply to the
agency for tax credits for a qualified low-income housing
project.
(c) Selection.--The agency shall review applications
submitted for tax credits and, in accordance with this article
and the procedures established by the agency, shall select and
shall conditionally award tax credits to eligible applicants.
(d) Integration with the Federal housing tax credit.--The
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agency shall, as much as practical and unless otherwise
indicated in this article, administer the tax credit using the
same guidelines, procedures and priorities that the agency uses
to administer the Federal housing tax credit.
(e) Income targeting.--The agency shall allocate tax credits
in a manner that the agency, at the time of allocation,
reasonably believes will result in at least 10% of the tax
credits being used to provide housing units targeting households
with incomes at or below 30% of area median income.
Section 1904-G. Guidelines and procedures.
The agency shall adopt guidelines and procedures for the tax
credit in conjunction with the qualified allocation plan and
administrative guidelines.
Section 1905-G. Reporting.
The agency shall annually publish a report on the tax credit
allocations on the agency's publicly accessible Internet
website. The report shall include:
(1) Tax credits awarded.
(2) Eligible applicants receiving tax credits.
(3) The amount of tax credits issued to each recipient.
Section 1906-G. Tax credit certificate.
The agency shall issue tax credit certificates in a form
determined by the agency in consultation with the department.
Section 1907-G. Claiming the credit.
(a) General rule.--On presentation to the department, a
qualified taxpayer may claim a dollar for dollar tax credit
against the qualified tax liability of the qualified taxpayer if
a tax credit certificate, issued by the agency after a
determination by the agency that the qualified low-income
housing project for which the tax credit was allocated, has
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fully certified its costs and is in compliance with agency
requirements.
(b) Exception.--The agency shall only issue the
certification under subsection (a) for the first year that the
qualified taxpayer claims the tax credit.
(c) Time period.--Presentation under subsection (a) shall be
made within the time specified by the guidelines issued by the
agency in consultation with the department.
Section 1908-G. Carryover, sale and assignment.
(a) General rule.--The department, in consultation with the
agency, shall establish guidelines that include procedures for
the carryover, sale and assignment of credits.
(b) Application.--A tax credit certification presented to
the department in accordance with section 1907-G shall first be
applied against the qualified taxpayer's qualified tax liability
for the current taxable year as of the date on which the tax
credit certification was presented and before any carryover is
applied against the qualified tax liability.
(c) Carryover.--If a qualified taxpayer cannot use the
entire amount of the tax credit for the taxable year in which it
is first claimed, the excess may be carried over to subsequent
taxable years. Each time a tax credit is carried-over to a
succeeding taxable year, the tax credit shall be reduced by the
amount that was used as a credit during the immediately
preceding taxable year. In no event shall tax credits provided
by this article be carried over and applied to succeeding
taxable years more than five taxable years following the first
taxable year for which the qualified taxpayer claimed the
credit.
(d) No carryback or refund.--A qualified taxpayer may not
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carry back or obtain a refund of all or any portion of an unused
tax credit granted to the qualified taxpayer under this article.
(e) Sale or assignment.--A qualified taxpayer, on
application and approval by the department, in consultation with
the agency and in conformance with department and agency
guidelines, may sell or assign, in whole or in part, a tax
credit granted to the qualified taxpayer under this article. No
relation to the eligible applicant is required of a purchaser or
assignee of tax credits under this article.
(f) Purchasers and assignees.--The purchaser or assignee of
all or a portion of a tax credit obtained under subsection (e)
must be a qualified taxpayer and must, unless determined to be a
pass-through entity distribution under subsection (g),
immediately claim the credit in the taxable year in which the
purchase or assignment is made. The purchaser or assignee may
not carryover, carryback or obtain a refund for the tax credit.
The purchaser or assignee shall notify the department and the
agency of the purchase or assignment of the tax credit in
compliance with procedures specified by the department.
(g) Pass-through entity distributions.--The department shall
establish guidelines that include procedures and limitations for
pass-through entity distributions of tax credits. Subject to the
provisions of section 1909-G, the guidelines shall include, but
not be limited to, provisions allowing the allocation of the tax
credit to the following in order to assign the tax credit to a
qualified taxpayer who wishes to claim the tax credit:
(1) A partner or member.
(2) The parent organizations of any partner or member.
(3) Any successive parent organization.
(h) Tax credit allocation.--The distribution under
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subsection (g) may be allocated in any manner provided by the
partnership agreement or other agreement governing the
operations of an eligible applicant. Tax credits allocated under
this subsection may, in accordance with subsection (e) and
agency guidelines, be sold or assigned.
Section 1909-G. Recapture.
(a) Guidelines.--The department, in consultation with the
agency, shall establish guidelines that include procedures for
recapture of tax credits during the credit period that are
similar in structure and effect to events of noncompliance under
section 42 of the Internal Revenue Code of 1986 (Public Law 99-
514, 26 U.S.C. § 42). The guidelines shall provide for:
(1) An affirmative duty to notify the agency and the
department of any recapture of Federal housing tax credits
within sixty days of the Federal recapture during the five-
year credit period.
(2) The mechanism and formula that the tax credit may be
recaptured over the remaining credit period.
(b) Failure to notify agency and department of Federal
recapture.--A qualified taxpayer receiving tax credits under
this section that fails to give timely notice to the agency and
the department of Federal housing tax credit recapture shall be
subject to debarment of future tax credits and Federal housing
tax credits.
Section 1910-G. Eligible uses.
The use of any money generated in connection with the sale,
assignment or pass-through of tax credits under this article
shall be limited to the uses allowed under the Federal housing
tax credit set forth in guidelines issued by the agency.
Section 1911-G. Fraud and misrepresentation.
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If an eligible applicant or a qualified taxpayer engages in
fraud or intentional misrepresentation of information required
to be provided to the agency or the department under this
article or the agency's guidelines, the department may:
(1) Recapture all or a portion of the tax credit.
(2) Debar the applicant or qualified taxpayer from
future tax credits and Federal housing tax credit
opportunities.
(3) Impose other penalties as specified in the agency's
guidelines.
Section 2. This act shall take effect in 60 days.
ARTICLE XIX-G
PENNSYLVANIA HOUSING TAX CREDIT
SECTION 1901-G. SCOPE OF ARTICLE.
THIS ARTICLE ESTABLISHES THE PENNSYLVANIA HOUSING TAX CREDIT.
SECTION 1902-G. DEFINITIONS.
THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
CONTEXT CLEARLY INDICATES OTHERWISE:
"AGENCY." THE PENNSYLVANIA HOUSING FINANCE AGENCY.
"CREDIT PERIOD." A 5-YEAR PERIOD THAT BEGINS WITH THE
TAXABLE YEAR IN WHICH A TAXPAYER IS AWARDED A TAX CREDIT
CERTIFICATE IN ACCORDANCE WITH SECTION 1904-G OR, AT THE
IRREVOCABLE ELECTION OF A TAXPAYER, THE NEXT SUCCEEDING TAXABLE
YEAR FOLLOWING THE COMPLETION OF A QUALIFIED LOW-INCOME HOUSING
PROJECT.
"DEPARTMENT." THE DEPARTMENT OF REVENUE OF THE COMMONWEALTH.
"FEDERAL HOUSING TAX CREDIT." THE FEDERAL TAX CREDIT CREATED
UNDER SECTION 42 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC
LAW 99-514, 26 U.S.C. § 42).
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"PASS-THROUGH ENTITY." ANY OF THE FOLLOWING:
(1) A PARTNERSHIP AS DEFINED IN SECTION 301(N.1).
(2) A PENNSYLVANIA S CORPORATION AS DEFINED IN SECTION
301(N.1).
(3) AN UNINCORPORATED ENTITY SUBJECT TO SECTION 307.21.
"QUALIFIED ALLOCATION PLAN." THE AGENCY'S PLAN FOR
ALLOCATION OF FEDERAL HOUSING TAX CREDITS DEVELOPED UNDER
SECTION 42(M)(1) OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC
LAW 99-514, 26 U.S.C. § 42(M)(1)).
"QUALIFIED LOW-INCOME HOUSING PROJECT." THE TERM SHALL HAVE
THE SAME MEANING AS PROVIDED UNDER SECTION 42(G)(1) OF THE
INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. §
42(G)(1)).
"QUALIFIED TAX LIABILITY." THE TAX LIABILITY IMPOSED ON A
TAXPAYER UNDER ARTICLE III, IV, VII, VIII, IX, XI OR XV,
EXCLUDING ANY TAX WITHHELD BY AN EMPLOYER UNDER ARTICLE III.
"TAX CREDIT." THE PENNSYLVANIA HOUSING TAX CREDIT
ESTABLISHED UNDER THIS ARTICLE.
"TAXABLE YEAR." THE TERM SHALL HAVE THE SAME MEANING AS
PROVIDED UNDER SECTION 441(B) OF THE INTERNAL REVENUE CODE OF
1986 (PUBLIC LAW 99-514, 26 U.S.C. § 441(B)).
"TAXPAYER." AN INDIVIDUAL, BUSINESS FIRM, CORPORATION,
BUSINESS TRUST, LIMITED LIABILITY COMPANY, PARTNERSHIP, LIMITED
LIABILITY PARTNERSHIP, ASSOCIATION OR ANY OTHER FORM OF LEGAL
BUSINESS ENTITY.
SECTION 1903-G. PENNSYLVANIA HOUSING TAX CREDIT.
(A) ESTABLISHMENT.--THE PENNSYLVANIA HOUSING TAX CREDIT IS
ESTABLISHED TO ENCOURAGE THE DEVELOPMENT OF QUALIFIED LOW-INCOME
HOUSING PROJECTS IN THIS COMMONWEALTH. THE AGENCY AND DEPARTMENT
SHALL ADMINISTER THE TAX CREDIT AS PROVIDED IN THIS ARTICLE.
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(B) AVAILABILITY.--
(1) BEGINNING IN FISCAL YEAR 2020-2021 AND EACH FISCAL
YEAR THEREAFTER, THE AGENCY MAY AWARD A TOTAL OF $10,000,000
IN TAX CREDITS PER FISCAL YEAR IN ACCORDANCE WITH THIS
ARTICLE.
(2) IN ADDITION TO THE AMOUNT AVAILABLE UNDER PARAGRAPH
(1), THE AGENCY MAY AWARD THE FOLLOWING, AS AVAILABLE, DURING
A FISCAL YEAR:
(I) UNUSED AND UNALLOCATED TAX CREDITS FOR THE
PRECEDING FISCAL YEAR; AND
(II) TAX CREDITS RETURNED TO THE AGENCY.
(C) MAXIMUM AMOUNT.--NO TAXPAYER MAY BE AWARDED A TAX CREDIT
IN AN AMOUNT THAT EXCEEDS $1,500,000 FOR A QUALIFIED LOW-INCOME
HOUSING PROJECT.
(D) APPLICATION.--
(1) A TAXPAYER MAY APPLY TO THE AGENCY FOR A TAX CREDIT
UNDER THIS SECTION BY SUBMITTING AN APPLICATION ON A FORM
REQUIRED BY THE AGENCY.
(2) THE AGENCY MAY REQUIRE SUCH INFORMATION ON THE
APPLICATION AS NECESSARY TO VERIFY THE COSTS INCURRED IN
CONSTRUCTING THE QUALIFIED LOW-INCOME HOUSING PROJECT.
(E) REVIEW OF APPLICATION BY AGENCY.--
(1) THE AGENCY SHALL REVIEW APPLICATIONS SUBMITTED FOR A
TAX CREDIT AND, IN ACCORDANCE WITH THE PROCEDURES ESTABLISHED
BY THE AGENCY UNDER SECTION 1909-G, ISSUE A CERTIFICATE
STATING THE AMOUNT OF THE TAX CREDIT FOR A QUALIFIED LOW-
INCOME HOUSING PROJECT.
(2) THE AGENCY SHALL CONDITIONALLY AWARD A TAX CREDIT IN
A MANNER THAT THE AGENCY, AT THE TIME OF ALLOCATION,
REASONABLY BELIEVES WILL RESULT IN AT LEAST 10% OF THE TAX
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CREDITS BEING USED TO PROVIDE HOUSING UNITS TARGETING
HOUSEHOLDS WITH INCOMES AT OR BELOW 30% OF AREA MEDIAN
INCOME.
(3) THE AGENCY SHALL DETERMINE THE AMOUNT OF A TAX
CREDIT CONDITIONALLY AWARDED TO A TAXPAYER BASED ON THE
MERITS OF THE QUALIFIED LOW-INCOME HOUSING PROJECT.
SECTION 1904-G. USE OF TAX CREDITS.
(A) INITIAL USE.--
(1) UNLESS OTHERWISE PERMITTED UNDER PARAGRAPH (2),
PRIOR TO THE SALE OR ASSIGNMENT OF A TAX CREDIT UNDER SECTION
1905-G, A TAXPAYER MUST FIRST USE A TAX CREDIT AGAINST THE
QUALIFIED TAX LIABILITY INCURRED IN THE TAXABLE YEAR IN WHICH
THE TAX CREDIT WAS APPROVED.
(2) A TAXPAYER MAY ELECT TO USE A TAX CREDIT THE NEXT
SUCCEEDING TAXABLE YEAR FOLLOWING THE COMPLETION OF A
QUALIFIED LOW-INCOME HOUSING PROJECT.
(B) APPLICATION.--THE TAX CREDIT SHALL BE APPLIED AGAINST A
TAXPAYER'S QUALIFIED TAX LIABILITY ONLY AFTER ALL OTHER TAX
CREDITS AND DEDUCTIONS AVAILABLE TO THE TAXPAYER UNDER ACT OF
THE GENERAL ASSEMBLY HAVE BEEN USED.
(C) AMOUNT.--THE TAX CREDIT MAY BE CLAIMED FOR AN AMOUNT NOT
TO EXCEED 50% OF THE TAXPAYER'S QUALIFIED TAX LIABILITY OR 20%
OF THE AMOUNT CERTIFIED PER TAXABLE YEAR DURING THE CREDIT
PERIOD, WHICHEVER IS LESS.
SECTION 1905-G. CARRYOVER, SALE AND ASSIGNMENT.
(A) GENERAL RULE.--A TAXPAYER SHALL BE ENTITLED TO CARRY
FORWARD A TAX CREDIT FOR A PERIOD NOT TO EXCEED FIVE TAXABLE
YEARS FROM THE TAXABLE YEAR IN WHICH THE TAX CREDIT WAS AWARDED.
EACH TIME THE TAX CREDIT IS CARRIED OVER TO A SUCCEEDING TAXABLE
YEAR, THE TAX CREDIT SHALL BE REDUCED BY THE AMOUNT THAT WAS
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USED AS A CREDIT DURING THE IMMEDIATELY PRECEDING TAXABLE YEAR.
(B) APPLICATION.--A TAX CREDIT CERTIFICATE RECEIVED BY THE
DEPARTMENT IN A TAXABLE YEAR SHALL FIRST BE APPLIED AGAINST THE
TAXPAYER'S QUALIFIED TAX LIABILITY FOR THE CURRENT TAXABLE YEAR
AS OF THE DATE ON WHICH THE CREDIT WAS ISSUED BEFORE THE TAX
CREDIT CAN BE APPLIED AGAINST A QUALIFIED TAX LIABILITY UNDER
SUBSECTION (A).
(C) NO CARRYBACK OR REFUND.--A TAXPAYER MAY NOT CARRY BACK
OR OBTAIN A REFUND OF ALL OR ANY PORTION OF AN UNUSED TAX CREDIT
GRANTED TO THE TAXPAYER UNDER THIS ARTICLE.
SECTION 1906-G. PASS-THROUGH ENTITY.
(A) GENERAL RULE.--IF A PASS-THROUGH ENTITY HAS ANY UNUSED
TAX CREDIT UNDER SECTION 1906-G, THE TAXPAYER MAY ELECT IN
WRITING, ACCORDING TO PROCEDURES ESTABLISHED BY THE DEPARTMENT,
TO TRANSFER ALL OR A PORTION OF THE TAX CREDIT TO SHAREHOLDERS,
MEMBERS OR PARTNERS IN PROPORTION TO THE SHARE OF THE ENTITY'S
DISTRIBUTIVE INCOME TO WHICH THE SHAREHOLDER, MEMBER OR PARTNER
IS ENTITLED.
(B) LIMITATION.--A PASS-THROUGH ENTITY AND A SHAREHOLDER,
MEMBER OR PARTNER OF A PASS-THROUGH ENTITY MAY NOT CLAIM THE
CREDIT UNDER SUBSECTION (A) FOR THE SAME QUALIFIED PROJECT.
(C) APPLICATION.--A SHAREHOLDER, MEMBER OR PARTNER OF A
PASS-THROUGH ENTITY TO WHOM A CREDIT IS TRANSFERRED UNDER
SUBSECTION (A) SHALL IMMEDIATELY CLAIM THE CREDIT IN THE TAXABLE
YEAR IN WHICH THE TRANSFER IS MADE. THE SHAREHOLDER, MEMBER OR
PARTNER MAY NOT CARRY FORWARD, CARRY BACK, OBTAIN A REFUND OF OR
SELL OR ASSIGN THE TAX CREDIT.
(D) TAX CREDIT ALLOCATION.--THE DISTRIBUTION UNDER SECTION
1908-G MAY BE ALLOCATED IN ANY MANNER PROVIDED BY THE
PARTNERSHIP AGREEMENT OR OTHER AGREEMENT GOVERNING THE
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OPERATIONS OF THE TAXPAYER.
SECTION 1907-G. SALE OR ASSIGNMENT.
(A) AUTHORIZATION.--UPON APPROVAL BY THE DEPARTMENT, A
QUALIFIED TAXPAYER MAY SELL OR ASSIGN, IN WHOLE OR IN PART, A
TAX CREDIT GRANTED TO THE TAXPAYER UNDER THIS ARTICLE.
(B) APPLICATION.--THE FOLLOWING PROVISIONS SHALL APPLY TO
THE SALE AND ASSIGNMENT OF A TAX CREDIT:
(1) TO SELL OR ASSIGN A TAX CREDIT, A QUALIFIED TAXPAYER
MUST FILE AN APPLICATION FOR THE SALE OR ASSIGNMENT OF THE
TAX CREDIT WITH THE DEPARTMENT. THE APPLICATION MUST BE ON A
FORM REQUIRED BY THE DEPARTMENT.
(2) THE DEPARTMENT SHALL APPROVE A SALE OR ASSIGNMENT IF
THE PURCHASER OR ASSIGNEE HAS:
(I) FILED ALL REQUIRED STATE TAX REPORTS AND RETURNS
FOR ALL APPLICABLE TAXABLE YEARS; AND
(II) PAID ANY BALANCE OF STATE TAX DUE AS DETERMINED
BY ASSESSMENT OR DETERMINATION BY THE DEPARTMENT AND NOT
UNDER TIMELY APPEAL.
SECTION 1908-G. PURCHASERS AND ASSIGNEES.
(A) CLAIM.--THE PURCHASER OR ASSIGNEE OF ALL OR A PORTION OF
A TAX CREDIT UNDER SECTION 1710-J SHALL IMMEDIATELY CLAIM THE
TAX CREDIT IN THE TAXABLE YEAR IN WHICH THE PURCHASE OR
ASSIGNMENT IS MADE.
(B) AMOUNT.--THE AMOUNT OF THE TAX CREDIT THAT A PURCHASER
OR ASSIGNEE MAY USE AGAINST ANY ONE QUALIFIED TAX LIABILITY MAY
NOT EXCEED 75% OF SUCH QUALIFIED TAX LIABILITY FOR THE TAXABLE
YEAR.
(C) USE.--THE PURCHASER OR ASSIGNEE MAY NOT CARRY FORWARD,
CARRY BACK OR OBTAIN A REFUND OF OR SELL OR ASSIGN THE TAX
CREDIT.
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SECTION 1909-G. ADMINISTRATION.
(A) AGENCY GUIDELINES AND PROCEDURES.--THE AGENCY SHALL
ISSUE GUIDELINES AND PROCEDURES FOR THE ADMINISTRATION OF THE
TAX CREDIT IN CONJUNCTION WITH THE QUALIFIED ALLOCATION PLAN AND
WHEN POSSIBLE, ADMINISTER THE TAX CREDIT USING THE SAME
GUIDELINES, PROCEDURES AND PRIORITIES THAT THE AGENCY USES TO
ADMINISTER THE FEDERAL HOUSING TAX CREDIT.
(B) RECAPTURE.--THE DEPARTMENT, IN CONSULTATION WITH THE
AGENCY, SHALL ESTABLISH GUIDELINES THAT INCLUDE PROCEDURES FOR
RECAPTURE OF TAX CREDITS DURING THE CREDIT PERIOD THAT ARE
SIMILAR IN STRUCTURE AND EFFECT TO EVENTS OF NONCOMPLIANCE UNDER
SECTION 42 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-
514, 26 U.S.C. § 42). THE GUIDELINES SHALL PROVIDE FOR THE
MECHANISM AND FORMULA THAT THE TAX CREDIT MAY BE RECAPTURED OVER
THE REMAINING CREDIT PERIOD.
(C) FRAUD OR MISREPRESENTATION.--IF A TAXPAYER ENGAGES IN
FRAUD OR INTENTIONAL MISREPRESENTATION OF INFORMATION REQUIRED
TO BE PROVIDED TO THE AGENCY OR THE DEPARTMENT UNDER THIS
ARTICLE OR THE AGENCY'S GUIDELINES, THE DEPARTMENT MAY:
(1) RECAPTURE ALL OR A PORTION OF THE TAX CREDIT.
(2) DEEM INELIGIBLE THE APPLICANT OR TAXPAYER FROM
FUTURE TAX CREDITS.
(3) IMPOSE OTHER PENALTIES AS SPECIFIED IN THE AGENCY'S
GUIDELINES.
(D) FEE.--THE AGENCY MAY CHARGE A TAXPAYER APPLYING FOR A
TAX CREDIT A REASONABLE FEE NOT TO EXCEED 5% OF THE TAX CREDIT
ALLOCATED FOR THE ADMINISTRATIVE EXPENSES OF THE AGENCY FOR
PROCESSING APPLICATIONS UNDER THIS ARTICLE.
SECTION 1910-G. ANNUAL REPORT.
(A) DUTY OF AGENCY.--BY JUNE 30, 2021, AND EACH JUNE 30
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THEREAFTER, THE AGENCY SHALL SUBMIT A REPORT ON THE TAX CREDIT
TO THE CHAIRPERSON AND MINORITY CHAIRPERSON OF THE
APPROPRIATIONS COMMITTEE OF THE SENATE, THE CHAIRPERSON AND
MINORITY CHAIRPERSON OF THE APPROPRIATIONS COMMITTEE OF THE
HOUSE OF REPRESENTATIVES, THE CHAIRPERSON AND MINORITY
CHAIRPERSON OF THE URBAN AFFAIRS AND HOUSING COMMITTEE OF THE
SENATE AND THE CHAIRPERSON AND MINORITY CHAIRPERSON OF THE URBAN
AFFAIRS COMMITTEE OF THE HOUSE OF REPRESENTATIVES. THE REPORT
SHALL INCLUDE:
(1) THE NUMBER AND AMOUNT OF TAX CREDITS AWARDED.
(2) THE TAXPAYERS THAT WERE AWARDED TAX CREDITS.
(3) THE AMOUNT OF TAX CREDITS ISSUED TO EACH TAXPAYER.
(B) PUBLIC POSTING.--THE AGENCY SHALL MAKE THE REPORT
IDENTIFIED IN SUBSECTION (A) AVAILABLE ON THE AGENCY'S PUBLICLY
ACCESSIBLE INTERNET WEBSITE.
SECTION 2. THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
ARTICLE XIX-G
PENNSYLVANIA HOUSING TAX CREDIT
Section 1901-G. Scope of article.
This article establishes the Pennsylvania Housing Tax Credit.
Section 1902-G. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Agency." The Pennsylvania Housing Finance Agency.
"Credit period." A five-year period that begins with the
taxable year in which a taxpayer is awarded a tax credit
certificate in accordance with section 1903-G.
"Department." The Department of Revenue of the Commonwealth.
"Federal housing tax credit." The Federal tax credit created
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under section 42 of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 42).
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.1).
(2) A Pennsylvania S Corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified allocation plan." The agency's plan for
allocation of Federal housing tax credits developed under
section 42(m)(1) of the Internal Revenue Code of 1986.
"Qualified low-income housing project." The term shall have
the same meaning as provided under section 42(g)(1) of the
Internal Revenue Code of 1986.
"Qualified tax liability." The tax liability imposed on a
taxpayer under Article III, IV, VII, VIII, IX, XI or XV,
excluding any tax withheld by an employer under Article III.
"Tax credit." The Pennsylvania Housing Tax Credit
established under this article.
"Taxable year." The term shall have the same meaning as
provided under section 441(b) of the Internal Revenue Code of
1986.
"Taxpayer." An individual, business firm, corporation,
business trust, limited liability company, partnership, limited
liability partnership, association or any other form of legal
business entity.
Section 1903-G. Pennsylvania Housing Tax Credit.
(a) Establishment.--The Pennsylvania Housing Tax Credit is
established to encourage the development of qualified low-income
housing projects in this Commonwealth. The agency and department
shall administer the tax credit as provided in this article.
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(b) Availability.--
(1) Beginning in fiscal year 2021-2022 and each fiscal
year thereafter, the agency may award a total of $10,000,000
in tax credits per fiscal year in accordance with this
article.
(2) In addition to the amount available under paragraph
(1), the agency may award unallocated tax credits from the
preceding fiscal year.
(c) Maximum amount.--No taxpayer may be awarded a tax credit
in an amount that exceeds $1,500,000 for a qualified low-income
housing project.
(d) Application.--
(1) A taxpayer may apply to the agency for a tax credit
under this section by submitting an application on a form
required by the agency.
(2) The agency may require such information on the
application as necessary to verify compliance with this act.
(3) Except as otherwise provided by law, before the tax
credit may be awarded, the department must find that the
taxpayer has filed all required State tax reports and returns
for all applicable tax years and paid any balance of State
tax due as determined at settlement or assessment by the
department, unless the tax due is currently under appeal.
(e) Review of application by agency.--
(1) The agency shall review applications submitted for a
tax credit and, in accordance with the procedures established
by the agency under section 1909-G, conditionally reserve tax
credits for a qualified low-income housing project.
(2) The agency shall conditionally reserve tax credits
in a manner that the agency, at the time of conditional
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reservation, reasonably believes will result in at least 10%
of the tax credits being used to provide housing units
targeting households with incomes at or below 30% of the area
median income.
(3) The agency shall determine the amount of tax credits
conditionally reserved to a taxpayer based on the merits of
the qualified low-income housing project.
(f) Tax credit certificates.--Upon notification that a
qualified low-income housing project receiving a conditional
reservation of tax credits has been completed, the agency shall
determine compliance with this act. Following verification of
compliance, the agency shall issue the tax credit certificates
in an amount not to exceed 20% of the conditional reservation
for each taxable year in the tax credit period.
Section 1904-G. Use of tax credits.
(a) Claiming the credit.--Upon presentation of a tax credit
certificate to the department, the taxpayer may claim a tax
credit against the qualified tax liability.
(b) Amount.--The tax credit may be claimed at an amount not
to exceed 50% of the taxpayer's qualified tax liability for a
single taxable year.
Section 1905-G. Carryover, carryback and refund.
(a) General rule.--A taxpayer shall be entitled to carry
forward a tax credit for a period not to exceed five taxable
years from the taxable year in which the tax credit was awarded.
Each time the tax credit is carried over to a succeeding taxable
year, the tax credit shall be reduced by the amount that was
used as a credit during the immediately preceding taxable year.
(b) Application.--A tax credit certificate received by the
department in a taxable year shall first be applied against the
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taxpayer's qualified tax liability for the current taxable year
as of the date on which the credit was issued before the tax
credit can be applied against a qualified tax liability under
subsection (a).
(c) No carryback or refund.--A taxpayer may not carry back
or obtain a refund of all or any portion of an unused tax credit
granted to the taxpayer under this article.
Section 1906-G. Sale or assignment.
(a) Application.--A taxpayer, upon application to and
approval by the department, may sell or assign, in whole or in
part, a tax credit granted to the taxpayer under this article.
(b) Compliance.--Before an application under subsection (a)
is approved, the department must find that the applicant has
filed all required State tax reports and returns for all
applicable taxable years and paid any balance of State tax due
as determined at settlement, assessment or determination by the
department.
Section 1907-G. Pass-through entity.
(a) General rule.--If a pass-through entity has any unused
tax credit under section 1904-G, the taxpayer may elect in
writing, according to procedures established by the department,
to transfer all or a portion of the tax credit to shareholders,
members or partners in proportion to the share of the entity's
distributive income to which the shareholder, member or partner
is entitled.
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity may not claim the
credit under subsection (a) for the same qualified project.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a credit is transferred under
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subsection (a) shall immediately claim the credit in the taxable
year in which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund of or
sell or assign the tax credit.
Section 1908-G. Purchasers and assignees.
The purchaser or assignee of all or a portion of the tax
credit under section 1906-G shall immediately claim the tax
credit in the taxable year in which the purchase or assignment
is made, subject to the following:
(1) If a purchaser or assignee of all or a portion of
the tax credit obtained under section 1906-G cannot use the
entire amount of the tax credit for the taxable year in which
the tax credit was purchased or assigned, the excess may be
carried over to succeeding taxable years and used as a credit
against the qualified tax liability of the purchaser or
assignee for those taxable years.
(2) Each time a tax credit is carried over to a
succeeding taxable year, the tax credit shall be reduced by
the amount that was used as a credit during the immediately
preceding taxable year.
(3) The tax credit may be carried over and applied to
succeeding taxable years for the remainder of the
carryforward period from the original tax credit certificate.
(4) The purchaser or assignee may not carry back the
credit or obtain a refund.
Section 1909-G. Administration.
(a) Agency guidelines and procedures.--The agency shall
issue guidelines and procedures for the administration of the
tax credit in conjunction with the qualified allocation plan and
when possible, administer the tax credit using the same
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guidelines, procedures and priorities that the agency uses to
administer the Federal housing tax credit.
(b) Recapture.--The department, in consultation with the
agency, shall establish guidelines that include procedures for
recapture of tax credits during the credit period that are
similar in structure and effect to events of noncompliance under
section 42 of the Internal Revenue Code of 1986 (Public Law 99-
514, 26 U.S.C. § 42). The guidelines shall provide for the
mechanism and formula that the tax credit may be recaptured over
the remaining credit period.
(c) Fraud or misrepresentation.--If a taxpayer engages in
fraud or intentional misrepresentation of information required
to be provided to the agency or the department under this
article or the agency's guidelines, the department may:
(1) Recapture all or a portion of the tax credit.
(2) Deem ineligible the applicant or taxpayer from
future tax credits.
(3) Impose other penalties as specified in the agency's
guidelines.
(d) Fee.--The agency may charge a taxpayer applying for a
tax credit a reasonable fee not to exceed 5% of the tax credit
awarded for the administrative expenses of the agency for
processing applications under this article.
Section 1910-G. Annual report.
(a) Duty of agency.--By June 30, 2022, and each June 30
thereafter, the agency shall submit a report on the tax credit
to the chairperson and minority chairperson of the
Appropriations Committee of the Senate, the chairperson and
minority chairperson of the Appropriations Committee of the
House of Representatives, the chairperson and minority
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