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                                                      PRINTER'S NO. 1586

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 176 Session of 2005


        INTRODUCED BY SCAVELLO, ARMSTRONG, BELARDI, BELFANTI,
           BENNINGHOFF, BIRMELIN, BOYD, CALTAGIRONE, CAPPELLI, CRAHALLA,
           CREIGHTON, DALLY, DeLUCA, DENLINGER, GEIST, GRUCELA, HERMAN,
           HERSHEY, McILHATTAN, MILLARD, R. MILLER, MUSTIO, O'NEILL,
           PICKETT, RUBLEY, SCHRODER, SHANER, SIPTROTH, B. SMITH,
           STABACK, STURLA, E. Z. TAYLOR, TIGUE AND YOUNGBLOOD,
           APRIL 12, 2005

        REFERRED TO COMMITTEE ON FINANCE, APRIL 12, 2005

                                     AN ACT

     1  Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
     2     act relating to tax reform and State taxation by codifying
     3     and enumerating certain subjects of taxation and imposing
     4     taxes thereon; providing procedures for the payment,
     5     collection, administration and enforcement thereof; providing
     6     for tax credits in certain cases; conferring powers and
     7     imposing duties upon the Department of Revenue, certain
     8     employers, fiduciaries, individuals, persons, corporations
     9     and other entities; prescribing crimes, offenses and
    10     penalties," further providing, in realty transfer tax, for
    11     determination and notice of tax and review; providing, in
    12     realty transfer tax, for sharing information; further
    13     providing, in local real estate transfer tax, for imposition
    14     and for administration; providing, in local real estate
    15     transfer tax, for regulations, for documentary stamps, for
    16     collection agents, for disbursements, for judicial sale
    17     proceeds, for stamps, for determination and review, for
    18     liens, for refunds, for civil penalties, for violations and
    19     for information; and making repeals.

    20     The General Assembly of the Commonwealth of Pennsylvania
    21  hereby enacts as follows:
    22     Section 1.  Section 1111-C(a) of the act of March 4, 1971
    23  (P.L.6, No.2), known as the Tax Reform Code of 1971, amended
    24  July 2, 1986 (P.L.318, No.77), is amended to read:

     1     Section 1111-C.  Determination and Notice of Tax; Review.--
     2  (a)  If any person shall fail to pay any tax imposed by this
     3  article for which he is liable, the department is hereby
     4  authorized and empowered to make a determination of additional
     5  tax and interest due by such person based upon any information
     6  within its possession or that shall come into its possession.
     7  All of such determinations shall be made within three years
     8  after the date of the recording of the document[.], subject to
     9  the following:
    10     (1)  If the taxpayer underpays the correct amount of the tax
    11  by twenty-five per cent or more, the tax may be assessed at any
    12  time within six years after the date of the recording of the
    13  document.
    14     (2)  If any part of an underpayment of tax is due to fraud or
    15  an undisclosed, intentional disregard of rules and regulations,
    16  the full amount of the tax may be assessed at any time.
    17     * * *
    18     Section 2.  The act is amended by adding a section to read:
    19     Section 1114-C. Sharing Information.--Notwithstanding the
    20  provisions of any other act, the department may divulge to the
    21  proper officer of a political subdivision imposing a realty
    22  transfer tax, or the authorized representative of that officer,
    23  information gained pursuant to the department's administration
    24  or collection respecting the collection of realty transfer tax
    25  under this article.
    26     Section 3.  Sections 1101-D and 1102-D of the act, added July
    27  2, 1986 (P.L.318, No.77), are amended to read:
    28     Section 1101-D.  Imposition.--The duly constituted
    29  authorities of the following political subdivisions--cities of
    30  the second class, cities of the second class A, cities of the
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     1  third class, boroughs, incorporated towns, townships of the
     2  first class, townships of the second class, school districts of
     3  the first class A, school districts of the second class, school
     4  districts of the third class and school districts of the fourth
     5  class, in all cases including independent school districts--may,
     6  in their discretion, by ordinance or resolution, for general
     7  revenue purposes, levy, assess and collect or provide for the
     8  levying, assessment and collection of a tax upon a transfer of
     9  real property or an interest in real property within the limits
    10  of the political subdivision, regardless of where the
    11  instruments making the transfers are made, executed or delivered
    12  or where the actual settlements on the transfer take place, to
    13  the extent that the transactions are subject to the tax imposed
    14  by Article XI-C. [In addition, such political subdivision may
    15  impose a local real estate transfer tax upon additional classes
    16  or types of transactions if the tax was imposed by the political
    17  subdivision under the act of December 31, 1965 (P.L.1257,
    18  No.511), known as "The Local Tax Enabling Act," prior to the
    19  effective date of this article. A] Except as to a city of the
    20  second class which is a home rule municipality, a tax imposed
    21  under this article shall be subject to rate limitations provided
    22  by section 5 and section 17 of the act of December 31, 1965
    23  (P.L.1257, No.511), known as "The Local Tax Enabling Act."
    24     Section 1102-D.  Administration.--[A] (a)  The tax [imposed]
    25  authorized under this article shall be administered, collected
    26  and enforced under the act of December 31, 1965 (P.L.1257,
    27  No.511), known as "The Local Tax Enabling Act[.]," provided,
    28  however, that, if the correct amount of the tax is not paid by
    29  the last date prescribed for timely payment as provided for in
    30  section 1102-C, the department may determine the tax, interest
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     1  and penalty as provided for in section 1109-D and may collect
     2  and enforce the tax, interest and penalty in the same manner as
     3  tax, interest and penalty imposed by Article XI-C.
     4     (b)  Whenever a declaration is required to be filed under
     5  Article XI-C, a declaration is also required to be filed under
     6  this article.
     7     Section  4.  The act is amended by adding sections to read:
     8     Section 1103-D.  Regulations.--(a)  The regulations
     9  promulgated under Article XI-C shall be applicable to the taxes
    10  imposed under this article.
    11     (b)  The Department of Revenue may promulgate and enforce
    12  regulations not inconsistent with the provisions of this
    13  article.
    14     (c)  The department, to cover its costs of administration,
    15  shall retain an amount equal to costs but not to exceed ten per
    16  cent of the tax, interest, and penalty collected and enforced by
    17  the department under section 1102-D.
    18     Section 1104-D.  Documentary Stamps.--(a)  The payment of the
    19  tax imposed under this article shall be evidenced by the
    20  affixing of a documentary stamp or stamps to every document by
    21  the person making, executing, delivering or presenting for
    22  recording such document. The stamps shall be affixed in such
    23  manner that their removal will require the continued application
    24  of steam or water, and the person using or affixing the stamps
    25  shall write, stamp or cause to be written or stamped thereon the
    26  initials of that person's name and the date upon which the
    27  stamps are affixed or used so that the stamps may not again be
    28  used; provided that the Department of Revenue may prescribe such
    29  other method of cancellation as it may deem expedient.
    30     (b)  The department may, in its discretion, use documentary
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     1  license meter impressions or similar indicia of payment in lieu
     2  of stamps.
     3     Section 1105-D.  Collection Agent.--The recorder of deeds
     4  shall be the collection agent for any political subdivision
     5  levying a local realty transfer tax under this article. The
     6  recorder of deeds shall pay tax, interest and penalty collected
     7  under this article over to the appropriate political subdivision
     8  in accordance with section 6(c) of the act of November 1, 1971
     9  (P.L.495, No.113), entitled, as amended, "An act providing for
    10  the compensation of county officers in counties of the second
    11  through eighth classes, for compensation of district attorneys
    12  in cities and counties of the first class, for compensation of
    13  district election officers in all counties, for the disposition
    14  of fees, for filing of bonds in certain cases and for duties of
    15  certain officers."
    16     Section 1106-D.  Disbursements.--The tax, interest and
    17  penalty that the Department of Revenue collects under this
    18  article shall be remitted in the manner provided by law to the
    19  appropriate recorder of deeds along with the "State Tax Payment
    20  Imprint Receipt" which shall provide sufficient information for
    21  the recorder of deeds to determine which political subdivisions
    22  are entitled to the collections. The recorder of deeds shall
    23  record the "State Tax Payment Imprint Receipt" whether or not
    24  signed and acknowledged by the Department of Revenue and shall
    25  index in the grantor/grantee index to the original document upon
    26  which the tax has been paid. The department shall collect from
    27  the taxpayer as part of its determination process the county
    28  recording fee for the recording of the "State Tax Payment
    29  Imprint Receipt."
    30     Section 1107-D.  Proceeds of Judicial Sale.--The tax imposed
    20050H0176B1586                  - 5 -     

     1  under this article shall be fully paid and have priority out of
     2  the proceeds of any judicial sale of real estate before any
     3  other obligation, claim, lien, judgment, estate or costs of the
     4  sale and of the writ upon which the sale is made. The sheriff or
     5  other officer conducting the sale shall pay the tax imposed
     6  under this article out of the first moneys paid to the sheriff
     7  or officer in connection therewith. If the proceeds of the sale
     8  are insufficient to pay the entire tax imposed under this
     9  article, the purchaser shall be liable for the remaining tax.
    10     Section 1108-D.  Failure to Affix Stamps.--No document upon
    11  which tax is imposed under this article shall at any time be
    12  made the basis of any action or other legal proceeding, nor
    13  shall proof thereof be offered or received in evidence in any
    14  court of this Commonwealth or recorded in the office of any
    15  recorder of deeds of any county of this Commonwealth unless a
    16  documentary stamp or stamps as provided in this article have
    17  been affixed thereto.
    18     Section 1109-D.  Determination and Notice of Tax; Review.--
    19  (a)  If any person fails to pay any tax imposed under this
    20  article for which that person is liable, a political subdivision
    21  may authorize the Department of Revenue to make a determination
    22  of additional tax, penalty and interest due under this section
    23  by the person. The determination will be based upon any
    24  information which is within the possession or which will come
    25  into the possession of the department. The determination will be
    26  made within three years after the date of the recording of the
    27  document, subject to the following:
    28     (1)  If the taxpayer underpays the correct amount of the tax
    29  by twenty-five per cent or more, the tax may be assessed at any
    30  time within six years after the date of the recording of the
    20050H0176B1586                  - 6 -     

     1  document.
     2     (2)  If any part of an underpayment of tax is due to fraud or
     3  an undisclosed, intentional disregard of rules and regulations,
     4  the full amount of the tax may be assessed at any time.
     5     (b)  (1)  Promptly after the date of such determination, the
     6  department shall send by mail a copy thereof to the person
     7  against whom it was made. Within ninety days after the date upon
     8  which the copy of the determination was mailed, the person may
     9  file with the department a petition for redetermination of the
    10  taxes.
    11     (2)  Every petition for redetermination must state
    12  specifically the reasons which the petitioner believes to be
    13  entitled to redetermination and shall be supported by
    14  affirmation that it is not made for the purpose of delay and
    15  that the facts set forth therein are true.
    16     (3)  The department, within six months after the date of
    17  filing of a petition for redetermination, shall dispose of the
    18  petition. Notice of the action taken upon a petition for
    19  redetermination shall be given to the petitioner promptly after
    20  the date of redetermination by the department.
    21     (c)  A person shall have the right to review by the Board of
    22  Finance and Revenue and appeal in the same manner and within the
    23  same time as provided by law in the case of capital stock and
    24  franchise taxes imposed upon corporations.
    25     (d)  (1)  Notice of the action of the Board of Finance and
    26  Revenue shall be given by mail to the political subdivision. A
    27  political subdivision shall have the right to appeal in the same
    28  manner and within the same time as provided by law for the
    29  Commonwealth in the case of capital stock and franchise taxes
    30  imposed upon corporations.
    20050H0176B1586                  - 7 -     

     1     (2)  The political subdivision may request in writing the
     2  Office of General Counsel to render such legal advice and such
     3  representation as are required concerning every matter and issue
     4  arising in connection with an appeal from a decision of the
     5  Board of Finance and Revenue.
     6     Section 1110-D.  Lien.--(a)  Any tax that the Department of
     7  Revenue determines to be due under this article and remains
     8  unpaid after demand for the same, and all penalties and interest
     9  thereon, shall be a lien in favor of the affected political
    10  subdivision upon the property, both real and personal, of the
    11  person but only after the lien has been entered and docketed of
    12  record by the prothonotary of the county where such property is
    13  situated.
    14     (b)  (1)  At any time after it makes a determination of
    15  additional tax, penalty or interest under this article, the
    16  department may transmit to the prothonotaries of the respective
    17  counties certified copies of all liens for the taxes, penalties
    18  and interest under this article or copies of all liens under
    19  Article XI-C and this article on a single form.
    20     (2)  A prothonotary receiving the lien shall enter and docket
    21  the lien of record in the prothonotary's office, which lien
    22  shall be indexed as judgments are now indexed.
    23     (3)  After the department's determination becomes final, a
    24  writ of execution may directly issue upon the lien without the
    25  issuance and prosecution to judgment of a writ of scire facias;
    26  provided that not less than ten days before issuance of any
    27  execution on the lien, notice shall be sent by certified mail to
    28  the taxpayer at the taxpayer's last known post office address.
    29  No prothonotary shall require as a condition precedent to the
    30  entry of the liens, the payment of any costs incident thereto.
    20050H0176B1586                  - 8 -     

     1     (c)  (1)  The lien imposed under this section shall have
     2  priority from the date of its recording and shall be fully paid
     3  and satisfied out of the proceeds of any judicial sale of
     4  property subject thereto before any other obligation, judgment,
     5  claim, lien or estate to which the property may subsequently
     6  become subject, except costs of the sale and of the writ upon
     7  which the sale was made, and real estate taxes and municipal
     8  claims against such property, but shall be subordinate to
     9  mortgages and other liens existing and duly recorded or entered
    10  of record prior to the recording of the tax lien.
    11     (2)  In the case of a judicial sale of property subject to a
    12  lien imposed under this section upon a lien or claim over which
    13  the lien has priority, the sale shall discharge the lien to the
    14  extent only that the proceeds are applied to its payment and the
    15  lien shall continue in full force and effect as to the balance
    16  remaining unpaid.
    17     (d)  A lien imposed under this article shall be equal in
    18  priority to the lien imposed under Article XI-C.
    19     Section 1111-D.  Refunds.--(a)  Whenever the amount due upon
    20  determination, redetermination or review is less than the amount
    21  paid on account thereof, the political subdivision shall refund
    22  the difference.
    23     (b)  Where there has been no determination of unpaid tax,
    24  application for refund shall be made to the political
    25  subdivision in the manner prescribed by the act of December 31,
    26  1965 (P.L.1257, No.511), known as "The Local Tax Enabling Act."
    27     Section 1112-D.  Civil Penalties.--(a)  If any part of any
    28  underpayment of tax imposed under this article is due to fraud,
    29  an amount equal to fifty per cent of the underpayment shall be
    30  added to the tax.
    20050H0176B1586                  - 9 -     

     1     (b)  In the case of failure to record a declaration required
     2  under this article on the date prescribed therefor, unless it is
     3  shown that such failure is due to reasonable cause, five per
     4  cent of the amount of such tax shall be added to the tax if the
     5  failure is for not more than one month, with an additional five
     6  per cent for each additional month or fraction thereof during
     7  which the failure continues, not exceeding fifty per cent in the
     8  aggregate.
     9     Section 1113-D.  Unlawful Acts and Penalty.--(a)  It shall be
    10  unlawful for any person to:
    11     (1)  accept or present for recording or cause to be accepted
    12  or presented for recording any document without the full amount
    13  of tax thereon being duly paid;
    14     (2)  make use of any documentary stamp to denote payment of
    15  any tax imposed under this article without cancelling such stamp
    16  as required by this article or as prescribed by the Department
    17  of Revenue;
    18     (3)  fail, neglect or refuse to comply with or violate the
    19  rules and regulations prescribed, adopted and promulgated by the
    20  department under this article;
    21     (4)  fraudulently cut, tear or remove from a document any
    22  documentary stamp;
    23     (5)  fraudulently affix to any document upon which tax is
    24  imposed under this article any documentary stamp which has been
    25  cut, torn or removed from any other document upon which tax is
    26  imposed under this article, or any documentary stamp of
    27  insufficient value, or any forged or counterfeited stamp, or any
    28  impression of any forged or counterfeited stamp, die, plate or
    29  other article;
    30     (6)  wilfully remove or alter the cancellation marks of any
    20050H0176B1586                 - 10 -     

     1  documentary stamp, or restore any such documentary stamp, with
     2  intent to use or cause the same to be used after it has already
     3  been used, or knowingly buy, sell, offer for sale, or give away
     4  such altered or restored stamp to any person for use, or
     5  knowingly use the same;
     6     (7)  knowingly have in his possession any altered or restored
     7  documentary stamp which has been removed from any document upon
     8  which a tax is imposed under this article, provided that the
     9  possession of such stamps shall be prima facie evidence of an
    10  intent to violate the provisions of this clause; or
    11     (8)  knowingly or wilfully prepare, keep, sell, offer for
    12  sale, or have in his possession any forged or counterfeited
    13  documentary stamps.
    14     (b)  (1)  Except as otherwise provided in clause (2), a
    15  person who violates subsection (a) commits a misdemeanor of the
    16  second degree.
    17     (2)  A person who violates subsection (a) (1), (2) or (3)
    18  commits a summary offense.
    19     (c)  A person who makes a false statement of value or
    20  declaration of acquisition, not believing the statement or
    21  declaration to be true, commits a misdemeanor of the second
    22  degree.
    23     Section 1114-D.  Information.--Notwithstanding the provisions
    24  of any other act, the officer of a political subdivision
    25  imposing a realty transfer tax or the authorized representative
    26  of the officer may divulge to the Department of Revenue
    27  information concerning the administration or collection of
    28  realty transfer tax authorized by this article.
    29     Section 5.  Any ordinance or resolution providing for the
    30  levying, assessment or collection of a tax upon a transfer of
    20050H0176B1586                 - 11 -     

     1  real property or an interest in real property which has been
     2  enacted by a political subdivision prior to the effective date
     3  of this section shall continue in full force and effect, without
     4  reenactment, insofar as the transactions upon which the tax is
     5  levied, assessed or collected are also subject to the tax
     6  imposed by Article XI-C of the act. The ordinance or resolution
     7  shall continue in full force and effect with respect to
     8  documents made, executed and delivered prior to the effective
     9  date of this section.
    10     Section 6.  The following provisions shall apply to any
    11  document made, executed, delivered, accepted or presented for
    12  recording after November 30, 2005:
    13         (1)  The amendment of section 1101-D of the act.
    14         (2)  The amendment of section 1102-D of the act.
    15         (3)  The addition of section 1103-D of the act.
    16         (4)  The addition of section 1104-D of the act.
    17         (5)  The addition of section 1105-D of the act.
    18         (6)  The addition of section 1106-D of the act.
    19         (7)  The addition of section 1107-D of the act.
    20         (8)  The addition of section 1108-D of the act.
    21         (9)  The addition of section 1109-D of the act.
    22         (10)  The addition of section 1110-D of the act.
    23         (11)  The addition of section 1111-D of the act.
    24         (12)  The addition of section 1112-D of the act.
    25         (13)  The addition of section 1113-D of the act.
    26     Section 7.  Repeals are as follows:
    27         (1)  The following acts and parts of acts are repealed as
    28     set forth in paragraph (2):
    29             (i)  Section 2(1) of the act of December 31, 1965
    30         (P.L.1257, No.511), known as The Local Tax Enabling Act.
    20050H0176B1586                 - 12 -     

     1             (ii)  Section 652.1(a)(4) of the act of March 10,
     2         1949 (P.L.30, No.14), known as the Public School Code of
     3         1949.
     4         (2)  The acts and parts of acts referred to in paragraph
     5     (1) are repealed insofar as they are inconsistent with the
     6     following provisions:
     7             (i)  The amendment of section 1111-C of the act.
     8             (ii)  The addition of section 1114-C of the act.
     9             (iii)  The amendment of section 1101-D of the act.
    10             (iv)  The amendment of section 1102-D of the act.
    11             (v)  The addition of section 1103-D of the act.
    12             (vi)  The addition of section 1104-D of the act.
    13             (vii)  The addition of section 1105-D of the act.
    14             (viii)  The addition of section 1106-D of the act.
    15             (ix)  The addition of section 1107-D of the act.
    16             (x)  The addition of section 1108-D of the act.
    17             (xi)  The addition of section 1109-D of the act.
    18             (xii)  The addition of section 1110-D of the act.
    19             (xiii)  The addition of section 1111-D of the act.
    20             (xiv)  The addition of section 1112-D of the act.
    21             (xv)  The addition of section 1113-D of the act.
    22             (xvi)  The addition of section 1114-D of the act.
    23     Section 8.  This act shall take effect immediately.





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