PRIOR PRINTER'S NOS. 982, 2232, 2853 PRINTER'S NO. 4509
No. 859 Session of 2005
INTRODUCED BY TURZAI, REED, GERBER, EACHUS, S. H. SMITH,
DeWEESE, ALLEN, ARGALL, ARMSTRONG, BAKER BELARDI,
BENNINGHOFF, BLAUM, BOYD, BROWNE, BUNT, BUXTON, CALTAGIRONE,
CAPPELLI, CAWLEY, CIVERA, COSTA, DALLY, DeLUCA, DENLINGER,
DERMODY, DiGIROLAMO, ELLIS, FAIRCHILD, FEESE, FICHTER,
FORCIER, FRANKEL, GABIG, GANNON, GEIST, GEORGE, GILLESPIE,
GODSHALL, GOOD, GOODMAN, HALUSKA, HARHART, HARRIS, HASAY,
HENNESSEY, HERMAN, HERSHEY, HESS, HUTCHINSON, KILLION,
LaGROTTA, LEH, LESCOVITZ, LEVDANSKY, MANDERINO, MANN,
MARKOSEK, MARSICO, McCALL, McGILL, McILHATTAN, McNAUGHTON,
R. MILLER, MUNDY, MUSTIO, NAILOR, PAYNE, PETRARCA, PICKETT,
PRESTON, RAYMOND, READSHAW, REICHLEY, ROBERTS, ROONEY,
RUBLEY, SAINATO, SANTONI, SATHER, SAYLOR, SCAVELLO, SCHRODER,
SEMMEL, SHANER, B. SMITH, SOLOBAY, STABACK, STAIRS, STERN,
STETLER, R. STEVENSON, STURLA, SURRA, TANGRETTI,
E. Z. TAYLOR, TIGUE, WALKO, WATSON, WILT, YOUNGBLOOD, ADOLPH,
CREIGHTON, FLEAGLE, GINGRICH, HARPER, KAUFFMAN, ROSS, FLICK,
BARRAR, BASTIAN, CAUSER, CLYMER, J. TAYLOR, TRUE, WRIGHT,
ZUG, PERZEL, BALDWIN, O'NEILL, ROHRER, STEIL, T. STEVENSON,
HICKERNELL, METCALFE, S, MILLER, NICKOL, BEBKO-JONES,
BELFANTI, COHEN, CORRIGAN, CRAHALLA, CRUZ, DALEY, J.EVANS,
FABRIZIO, FLAHERTY, GERGELY, GRELL, GRUCELA, HANNA, HARHAI,
JOSEPHS, M. KELLER, W. KELLER, KENNEY, KIRKLAND, KOTIK,
LEACH, LEDERER, MACKERETH, MAJOR, MELIO, MICOZZIE, MILLARD,
MYERS, OLIVER, PAYNE, PETRONE, PHILLIPS, PYLE, QUIGLEY,
RAMALEY, RAPP, ROEBUCK, ROHRER, SHAPIRO, SIPTROTH, SONNEY,
YEWCIC, YUDICHAK, BEYER AND BIRMELIN, MARCH 14, 2005
AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES,
JULY 1, 2006
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
1 and other entities; prescribing crimes, offenses and
2 penalties," clarifying provisions relating to imposition of <--
3 certain realty transfer taxes. FURTHER PROVIDING, IN SALES <--
4 AND USE TAX, FOR DEFINITIONS AND FOR ALTERNATE IMPOSITION;
5 FURTHER PROVIDING, IN CORPORATE NET INCOME TAX, FOR
6 DEFINITIONS; AND FURTHER PROVIDING, IN RESEARCH AND
7 DEVELOPMENT TAX CREDIT, FOR CREDIT FOR RESEARCH AND
8 DEVELOPMENT EXPENSES, FOR TIME LIMITATIONS, FOR LIMITATIONS
9 ON CREDIT AND FOR TERMINATION.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 Section 1. Section 1101-D of the act of March 4, 1971 <--
13 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended
14 July 7, 2005 (P.L.149, No.40), is amended to read:
15 Section 1101-D. Imposition.--(a) The duly constituted
16 authorities of the following political subdivisions--cities of
17 the second class, cities of the second class A, cities of the
18 third class, boroughs, incorporated towns, townships of the
19 first class, townships of the second class, school districts of
20 the first class A, school districts of the second class, school
21 districts of the third class and school districts of the fourth
22 class, in all cases including independent school districts--may,
23 in their discretion, by ordinance or resolution, for general
24 revenue purposes, levy, assess and collect or provide for the
25 levying, assessment and collection of a tax upon a transfer of
26 real property or an interest in real property within the limits
27 of the political subdivision, regardless of where the
28 instruments making the transfers are made, executed or delivered
29 or where the actual settlements on the transfer take place, to
30 the extent that the transactions are subject to the tax imposed
31 by Article XI-C. [A]
32 (b) Except as set forth in subsection (c) or (d), a tax
33 imposed under this article shall be subject to rate limitations
34 provided by section 5, section 8 and section 17 of the act of
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1 December 31, 1965 (P.L.1257, No.511), known as "The Local Tax
2 Enabling Act."
3 (c) The limitations referred to in subsection (b) on the
4 rate of a tax imposed under this article shall not apply to a
5 municipality or a school district which has a higher rate of tax
6 pursuant to any other law.
7 (d) Notwithstanding section 25(1)(ii) and (2)(iii) of the
8 act of July 7, 2005 (P.L.149, No.40), entitled "An act amending
9 the act of March 4, 1971 (P.L.6, No.2), entitled 'An act
10 relating to tax reform and State taxation by codifying and
11 enumerating certain subjects of taxation and imposing taxes
12 thereon; providing procedures for the payment, collection,
13 administration and enforcement thereof; providing for tax
14 credits in certain cases; conferring powers and imposing duties
15 upon the Department of Revenue, certain employers, fiduciaries,
16 individuals, persons, corporations and other entities;
17 prescribing crimes, offenses and penalties,' further providing,
18 in sales and use tax, for alternate imposition; providing, in
19 personal income tax, for definitions, for classes of income and
20 for contributions to the Olympics; providing, in personal income
21 tax, for contributions for military family relief assistance and
22 for operational provisions; further providing, in personal
23 income tax, for additions, penalties and fees; further
24 providing, in corporate net income tax, for definitions; further
25 providing, in capital stock franchise tax, for definitions and
26 reports; further providing, in realty transfer tax, for
27 determination and notice; providing, in realty transfer tax, for
28 sharing information; further providing, in local real estate
29 transfer tax, for imposition and for administration; providing,
30 in local real estate transfer tax, for regulations, for
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1 documentary stamps, for collection agents, for disbursements,
2 for proceeds of judicial sale, for failure to affix stamps, for
3 determination and notice of tax, for liens, for refunds, for
4 civil penalties, for unlawful acts and penalties and for
5 information; further providing, in the research and development
6 tax credit, for definitions and for Pennsylvania S Corporation
7 pass-through; further providing, in the film production tax
8 credit, for definitions and for credit for qualified film
9 production expenses; providing, in the film production tax
10 credit, for credits; further providing in the film production
11 tax credit, for disposition and for limitation; providing, in
12 the film production tax credit, for penalties; further
13 providing, in the film production tax credit, for pass-through
14 entities and report; further providing, in the neighborhood
15 assistance tax credit, for grant; further providing, in general
16 provisions, for bad checks; providing, in general provisions,
17 for electronic transmissions and for reimbursement for costs of
18 collection; continuing ordinances and resolutions relating to
19 real property tax transfers; and making repeals," nothing in
20 this article shall be construed to prohibit a school district of
21 the first class A from levying a tax on the transfer of real
22 property or on an interest in real property at a rate of one per
23 cent.
24 Section 2. The amendment of section 1101-D of the act is
25 intended as a clarification of existing law and is not intended
26 to establish new rights nor enlarge existing rights of political
27 subdivisions or their employees or agents nor to establish new
28 obligations nor enlarge existing obligations of taxpayers.
29 Section 3. This act shall take effect immediately.
30 SECTION 1. SECTION 201(C) OF THE ACT OF MARCH 4, 1971 <--
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1 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, AMENDED MAY
2 7, 1997 (P.L.85, NO.7), IS AMENDED TO READ:
3 SECTION 201. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND
4 PHRASES WHEN USED IN THIS ARTICLE II SHALL HAVE THE MEANING
5 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
6 CLEARLY INDICATES A DIFFERENT MEANING:
7 * * *
8 (C) "MANUFACTURE." THE PERFORMANCE OF MANUFACTURING,
9 FABRICATING, COMPOUNDING, PROCESSING OR OTHER OPERATIONS,
10 ENGAGED IN AS A BUSINESS, WHICH PLACE ANY TANGIBLE PERSONAL
11 PROPERTY IN A FORM, COMPOSITION OR CHARACTER DIFFERENT FROM THAT
12 IN WHICH IT IS ACQUIRED WHETHER FOR SALE OR USE BY THE
13 MANUFACTURER, AND SHALL INCLUDE, BUT NOT BE LIMITED TO--
14 (1) EVERY OPERATION COMMENCING WITH THE FIRST PRODUCTION
15 STAGE AND ENDING WITH THE COMPLETION OF TANGIBLE PERSONAL
16 PROPERTY HAVING THE PHYSICAL QUALITIES (INCLUDING PACKAGING, IF
17 ANY, PASSING TO THE ULTIMATE CONSUMER) WHICH IT HAS WHEN
18 TRANSFERRED BY THE MANUFACTURER TO ANOTHER[;]. FOR PURPOSES OF
19 THIS CLAUSE "OPERATION" SHALL INCLUDE CLEAN ROOMS AND THEIR
20 COMPONENT SYSTEMS, INCLUDING; ENVIRONMENTAL CONTROL SYSTEMS,
21 ANTISTATIC VERTICAL WALLS AND MANUFACTURING PLATFORMS AND
22 FLOORS, WHICH ARE INDEPENDENT OF THE REAL ESTATE; PROCESS PIPING
23 SYSTEMS; SPECIALIZED LIGHTING SYSTEMS; DEIONIZED WATER SYSTEMS;
24 PROCESS VACUUM AND COMPRESSED AIR SYSTEMS; PROCESS AND SPECIALTY
25 GASES; AND ALARM OR WARNING DEVICES SPECIFICALLY DESIGNED TO
26 WARN OF THREATS TO THE INTEGRITY OF THE PRODUCT OR PEOPLE. FOR
27 PURPOSES OF THIS CLAUSE A "CLEAN ROOM" IS A LOCATION WITH A
28 SELF-CONTAINED, SEALED ENVIRONMENT WITH A CONTROLLED CLOSED AIR
29 SYSTEM INDEPENDENT FROM THE FACILITY'S GENERAL ENVIRONMENTAL
30 CONTROL SYSTEM.
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1 (2) THE PUBLISHING OF BOOKS, NEWSPAPERS, MAGAZINES AND OTHER
2 PERIODICALS AND PRINTING[;].
3 (3) REFINING, BLASTING, EXPLORING, MINING AND QUARRYING FOR,
4 OR OTHERWISE EXTRACTING FROM THE EARTH OR FROM WASTE OR STOCK
5 PILES OR FROM PITS OR BANKS ANY NATURAL RESOURCES, MINERALS AND
6 MINERAL AGGREGATES INCLUDING BLAST FURNACE SLAG[;].
7 (4) BUILDING, REBUILDING, REPAIRING AND MAKING ADDITIONS TO,
8 OR REPLACEMENTS IN OR UPON VESSELS DESIGNED FOR COMMERCIAL USE
9 OF REGISTERED TONNAGE OF FIFTY TONS OR MORE WHEN PRODUCED UPON
10 SPECIAL ORDER OF THE PURCHASER, OR WHEN REBUILT, REPAIRED OR
11 ENLARGED, OR WHEN REPLACEMENTS ARE MADE UPON ORDER OF, OR FOR
12 THE ACCOUNT OF THE OWNER[;].
13 (5) RESEARCH HAVING AS ITS OBJECTIVE THE PRODUCTION OF A NEW
14 OR AN IMPROVED (I) PRODUCT OR UTILITY SERVICE, OR (II) METHOD OF
15 PRODUCING A PRODUCT OR UTILITY SERVICE, BUT IN EITHER CASE NOT
16 INCLUDING MARKET RESEARCH OR RESEARCH HAVING AS ITS OBJECTIVE
17 THE IMPROVEMENT OF ADMINISTRATIVE EFFICIENCY.
18 (6) REMANUFACTURE FOR WHOLESALE DISTRIBUTION BY A
19 REMANUFACTURER OF MOTOR VEHICLE PARTS FROM USED PARTS ACQUIRED
20 IN BULK BY THE REMANUFACTURER USING AN ASSEMBLY LINE PROCESS
21 WHICH INVOLVES THE COMPLETE DISASSEMBLY OF SUCH PARTS AND
22 INTEGRATION OF THE COMPONENTS OF SUCH PARTS WITH OTHER USED OR
23 NEW COMPONENTS OF PARTS, INCLUDING THE SALVAGING, RECYCLING OR
24 RECLAIMING OF USED PARTS BY THE REMANUFACTURER.
25 (7) REMANUFACTURE OR RETROFIT BY A MANUFACTURER OR
26 REMANUFACTURER OF AIRCRAFT, ARMORED VEHICLES, OTHER DEFENSE-
27 RELATED VEHICLES HAVING A FINISHED VALUE OF AT LEAST FIFTY
28 THOUSAND DOLLARS ($50,000). REMANUFACTURE OR RETROFIT INVOLVES
29 THE DISASSEMBLY OF SUCH AIRCRAFT, VEHICLES, PARTS OR COMPONENTS,
30 INCLUDING ELECTRIC OR ELECTRONIC COMPONENTS, THE INTEGRATION OF
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1 THOSE PARTS AND COMPONENTS WITH OTHER USED OR NEW PARTS OR
2 COMPONENTS, INCLUDING THE SALVAGING, RECYCLING OR RECLAIMING OF
3 THE USED PARTS OR COMPONENTS AND THE ASSEMBLY OF THE NEW OR USED
4 AIRCRAFT, VEHICLES, PARTS OR COMPONENTS. FOR PURPOSES OF THIS
5 CLAUSE, THE FOLLOWING TERMS OR PHRASES HAVE THE FOLLOWING
6 MEANINGS:
7 (I) "AIRCRAFT" MEANS FIXED-WING AIRCRAFT, HELICOPTERS,
8 POWERED AIRCRAFT, TILT-ROTOR OR TILT-WING AIRCRAFT, UNMANNED
9 AIRCRAFT AND GLIDERS;
10 (II) "ARMORED VEHICLES" MEANS TANKS, ARMED PERSONNEL
11 CARRIERS AND ALL OTHER ARMED TRACK OR SEMITRACK VEHICLES; OR
12 (III) "OTHER DEFENSE-RELATED VEHICLES" MEANS TRUCKS, TRUCK-
13 TRACTORS, TRAILERS, JEEPS AND OTHER UTILITY VEHICLES, INCLUDING
14 ANY UNMANNED VEHICLES.
15 THE TERM "MANUFACTURE" SHALL NOT INCLUDE CONSTRUCTING,
16 ALTERING, SERVICING, REPAIRING OR IMPROVING REAL ESTATE OR
17 REPAIRING, SERVICING OR INSTALLING TANGIBLE PERSONAL PROPERTY,
18 NOR THE COOKING, FREEZING OR BAKING OF FRUITS, VEGETABLES,
19 MUSHROOMS, FISH, SEAFOOD, MEATS, POULTRY OR BAKERY PRODUCTS.
20 * * *
21 SECTION 1.1. SECTION 205(A) OF THE ACT, AMENDED JULY 7, 2005
22 (P.L.149, NO.40), IS AMENDED TO READ:
23 SECTION 205. ALTERNATE IMPOSITION OF TAX; CREDITS.--(A) IF
24 ANY PERSON ACTIVELY AND PRINCIPALLY ENGAGED IN THE BUSINESS OF
25 SELLING NEW OR USED MOTOR VEHICLES, TRAILERS OR SEMI-TRAILERS,
26 AND REGISTERED WITH THE DEPARTMENT IN THE "DEALER'S CLASS,"
27 ACQUIRES A MOTOR VEHICLE, TRAILER OR SEMI-TRAILER FOR THE
28 PURPOSE OF RESALE, AND PRIOR TO SUCH RESALE, USES THE MOTOR
29 VEHICLE, TRAILER OR SEMI-TRAILER FOR A TAXABLE USE UNDER THIS
30 ACT, [SUCH] THE PERSON MAY PAY A TAX EQUAL TO SIX PER CENT OF
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1 THE FAIR RENTAL VALUE OF THE MOTOR VEHICLE, TRAILER OR SEMI-
2 TRAILER DURING SUCH USE. THIS SECTION SHALL NOT APPLY TO THE USE
3 OF A VEHICLE AS A WRECKER, PARTS TRUCK, DELIVERY TRUCK OR
4 COURTESY CAR.
5 * * *
6 SECTION 2. SECTION 401(3)2(A)(9) AND 4(C) OF THE ACT,
7 AMENDED MAY 12, 1999 (P.L.26, NO.4) AND JUNE 29, 2002 (P.L.559,
8 NO.89), ARE AMENDED TO READ:
9 SECTION 401. DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND
10 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING
11 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
12 CLEARLY INDICATES A DIFFERENT MEANING:
13 * * *
14 (3) "TAXABLE INCOME." * * *
15 2. IN CASE THE ENTIRE BUSINESS OF ANY CORPORATION, OTHER
16 THAN A CORPORATION ENGAGED IN DOING BUSINESS AS A REGULATED
17 INVESTMENT COMPANY AS DEFINED BY THE INTERNAL REVENUE CODE OF
18 1986, IS NOT TRANSACTED WITHIN THIS COMMONWEALTH, THE TAX
19 IMPOSED BY THIS ARTICLE SHALL BE BASED UPON SUCH PORTION OF THE
20 TAXABLE INCOME OF SUCH CORPORATION FOR THE FISCAL OR CALENDAR
21 YEAR, AS DEFINED IN SUBCLAUSE 1 HEREOF, AND MAY BE DETERMINED AS
22 FOLLOWS:
23 (A) DIVISION OF INCOME.
24 * * *
25 (9) (A) EXCEPT AS PROVIDED IN SUBPARAGRAPH (B)[, ALL
26 BUSINESS INCOME SHALL BE APPORTIONED TO THIS STATE BY
27 MULTIPLYING THE INCOME BY A FRACTION, THE NUMERATOR OF WHICH IS
28 THE PROPERTY FACTOR PLUS THE PAYROLL FACTOR PLUS THREE TIMES THE
29 SALES FACTOR, AND THE DENOMINATOR OF WHICH IS FIVE.]:
30 (I) FOR TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 2007, ALL
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1 BUSINESS INCOME SHALL BE APPORTIONED TO THIS STATE BY
2 MULTIPLYING THE INCOME BY A FRACTION: THE NUMERATOR OF WHICH IS
3 THE PROPERTY FACTOR PLUS THE PAYROLL FACTOR PLUS THREE TIMES THE
4 SALES FACTOR; AND THE DENOMINATOR OF WHICH IS FIVE.
5 (II) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2006,
6 ALL BUSINESS INCOME SHALL BE APPORTIONED TO THIS STATE BY
7 MULTIPLYING THE INCOME BY A FRACTION: THE NUMERATOR OF WHICH IS
8 THE SUM OF FIFTEEN TIMES THE PROPERTY FACTOR, FIFTEEN TIMES THE
9 PAYROLL FACTOR AND SEVENTY TIMES THE SALES FACTOR; AND THE
10 DENOMINATOR OF WHICH IS ONE HUNDRED.
11 (B) FOR PURPOSES OF APPORTIONMENT OF THE CAPITAL STOCK -
12 FRANCHISE TAX AS PROVIDED IN SECTION 602 OF ARTICLE VI OF THIS
13 ACT, THE APPORTIONMENT FRACTION SHALL BE THE PROPERTY FACTOR
14 PLUS THE PAYROLL FACTOR PLUS THE SALES FACTOR AS THE NUMERATOR,
15 AND THE DENOMINATOR SHALL BE THREE.
16 * * *
17 4. * * *
18 (C) (1) THE NET LOSS DEDUCTION SHALL BE THE LESSER OF [TWO
19 MILLION DOLLARS ($2,000,000) OR THE]:
20 (A) (I) FOR TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 2007,
21 TWO MILLION DOLLARS ($2,000,000);
22 (II) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2006,
23 THE GREATER OF TWELVE AND ONE HALF PER CENT OF TAXABLE INCOME AS
24 DETERMINED UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR
25 THREE MILLION DOLLARS ($3,000,000); OR
26 (B) THE AMOUNT OF THE NET LOSS OR LOSSES WHICH MAY BE
27 CARRIED OVER TO THE TAXABLE YEAR OR TAXABLE INCOME AS DETERMINED
28 UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2.
29 (1.1) IN NO EVENT SHALL THE NET LOSS DEDUCTION INCLUDE MORE
30 THAN FIVE HUNDRED THOUSAND DOLLARS ($500,000), IN THE AGGREGATE,
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1 OF NET LOSSES FROM TAXABLE YEARS 1988 THROUGH 1994.
2 (2) (A) A NET LOSS FOR A TAXABLE YEAR MAY ONLY BE CARRIED
3 OVER PURSUANT TO THE FOLLOWING SCHEDULE:
4 TAXABLE YEAR CARRYOVER
5 1981 1 TAXABLE YEAR
6 1982 2 TAXABLE YEARS
7 1983-1987 3 TAXABLE YEARS
8 1988 2 TAXABLE YEARS PLUS
9 1 TAXABLE YEAR
10 STARTING WITH THE
11 1995 TAXABLE YEAR
12 1989 1 TAXABLE YEAR PLUS
13 2 TAXABLE YEARS
14 STARTING WITH THE
15 1995 TAXABLE YEAR
16 1990-1993 3 TAXABLE YEARS
17 STARTING WITH THE
18 1995 TAXABLE YEAR
19 1994 1 TAXABLE YEAR
20 1995
21 -1997 10 TAXABLE YEARS
22 1998 AND THEREAFTER 20 TAXABLE YEARS
23 (B) THE EARLIEST NET LOSS SHALL BE CARRIED OVER TO THE
24 EARLIEST TAXABLE YEAR TO WHICH IT MAY BE CARRIED UNDER THIS
25 SCHEDULE. THE TOTAL NET LOSS DEDUCTION ALLOWED IN ANY TAXABLE
26 YEAR SHALL NOT EXCEED [TWO MILLION DOLLARS ($2,000,000).]:
27 (I) TWO MILLION DOLLARS ($2,000,000) FOR TAXABLE YEARS
28 BEGINNING BEFORE JANUARY 1, 2007.
29 (II) THE GREATER OF TWELVE AND ONE HALF PER CENT OF THE
30 TAXABLE INCOME AS DETERMINED UNDER SUBCLAUSE 1 OR, IF
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1 APPLICABLE, SUBCLAUSE 2 OR THREE MILLION DOLLARS ($3,000,000)
2 FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2006.
3 * * *
4 SECTION 3. SECTION 1703-B OF THE ACT, ADDED MAY 7, 1997
5 (P.L.85, NO.7), IS AMENDED TO READ:
6 SECTION 1703-B. CREDIT FOR RESEARCH AND DEVELOPMENT
7 EXPENSES.--(A) A TAXPAYER WHO INCURS PENNSYLVANIA QUALIFIED
8 RESEARCH AND DEVELOPMENT EXPENSE IN A TAXABLE YEAR MAY APPLY FOR
9 A RESEARCH AND DEVELOPMENT TAX CREDIT AS PROVIDED IN THIS
10 ARTICLE. BY SEPTEMBER 15, A TAXPAYER MUST SUBMIT AN APPLICATION
11 TO THE DEPARTMENT FOR PENNSYLVANIA QUALIFIED RESEARCH AND
12 DEVELOPMENT EXPENSE INCURRED IN THE TAXABLE YEAR THAT ENDED IN
13 THE PRIOR CALENDAR YEAR.
14 (B) [A] THE FOLLOWING APPLY:
15 (1) EXCEPT AS PROVIDED IN PARAGRAPH (2), A TAXPAYER THAT IS
16 QUALIFIED UNDER SUBSECTION (A) SHALL RECEIVE A RESEARCH AND
17 DEVELOPMENT TAX CREDIT FOR THE TAXABLE YEAR IN THE AMOUNT OF TEN
18 PER CENT OF THE EXCESS OF THE TAXPAYER'S TOTAL PENNSYLVANIA
19 QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE FOR THE TAXABLE YEAR
20 OVER THE TAXPAYER'S PENNSYLVANIA BASE AMOUNT.
21 (2) A TAXPAYER THAT IS A SMALL BUSINESS AND IS QUALIFIED
22 UNDER SUBSECTION (A) SHALL RECEIVE A RESEARCH AND DEVELOPMENT
23 TAX CREDIT FOR THE TAXABLE YEAR IN THE AMOUNT OF TWENTY PER CENT
24 OF THE EXCESS OF THE TAXPAYER'S TOTAL PENNSYLVANIA QUALIFIED
25 RESEARCH AND DEVELOPMENT EXPENSE FOR THE TAXABLE YEAR OVER THE
26 TAXPAYER'S PENNSYLVANIA BASE AMOUNT.
27 (C) BY DECEMBER 15 OF THE CALENDAR YEAR FOLLOWING THE CLOSE
28 OF THE TAXABLE YEAR DURING WHICH THE PENNSYLVANIA QUALIFIED
29 RESEARCH AND DEVELOPMENT EXPENSE WAS INCURRED, THE DEPARTMENT
30 SHALL NOTIFY THE TAXPAYER OF THE AMOUNT OF THE TAXPAYER'S
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1 RESEARCH AND DEVELOPMENT TAX CREDIT APPROVED BY THE DEPARTMENT.
2 SECTION 4. SECTION 1707-B OF THE ACT, AMENDED JUNE 29, 2002
3 (P.L.559, NO.89), IS AMENDED TO READ:
4 SECTION 1707-B. TIME LIMITATIONS.--A TAXPAYER IS NOT
5 ENTITLED TO A RESEARCH AND DEVELOPMENT TAX CREDIT FOR
6 PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT EXPENSES
7 INCURRED IN TAXABLE YEARS ENDING AFTER DECEMBER 31, [2006] 2015.
8 THE TERMINATION DATE IN SECTION 41(H) OF THE INTERNAL REVENUE
9 CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 41(H)) DOES NOT
10 APPLY TO A TAXPAYER WHO IS ELIGIBLE FOR THE RESEARCH AND
11 DEVELOPMENT TAX CREDIT UNDER THIS ARTICLE FOR THE TAXABLE YEAR
12 IN WHICH THE PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT
13 EXPENSE IS INCURRED.
14 SECTION 5. SECTION 1709-B(A) OF THE ACT, AMENDED DECEMBER
15 23, 2003 (P.L.250, NO.46), IS AMENDED TO READ:
16 SECTION 1709-B. LIMITATION ON CREDITS.--(A) THE TOTAL
17 AMOUNT OF CREDITS APPROVED BY THE DEPARTMENT SHALL NOT EXCEED
18 [THIRTY MILLION DOLLARS ($30,000,000)] FORTY MILLION DOLLARS
19 ($40,000,000) IN ANY FISCAL YEAR. OF THAT AMOUNT, [SIX MILLION
20 DOLLARS ($6,000,000)] EIGHT MILLION DOLLARS ($8,000,000) SHALL
21 BE ALLOCATED EXCLUSIVELY FOR SMALL BUSINESSES. HOWEVER, IF THE
22 TOTAL AMOUNTS ALLOCATED TO EITHER THE GROUP OF APPLICANTS
23 EXCLUSIVE OF SMALL BUSINESSES OR THE GROUP OF SMALL BUSINESS
24 APPLICANTS IS NOT APPROVED IN ANY FISCAL YEAR, THE UNUSED
25 PORTION WILL BECOME AVAILABLE FOR USE BY THE OTHER GROUP OF
26 QUALIFYING TAXPAYERS.
27 * * *
28 SECTION 6. SECTION 1712-B OF THE ACT, AMENDED JUNE 29, 2002
29 (P.L.559, NO.89), IS AMENDED TO READ:
30 SECTION 1712-B. TERMINATION.--THE DEPARTMENT SHALL NOT
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1 APPROVE A RESEARCH AND DEVELOPMENT TAX CREDIT UNDER THIS ARTICLE
2 FOR TAXABLE YEARS ENDING AFTER DECEMBER 31, [2006] 2015.
3 SECTION 7. THIS ACT SHALL APPLY AS FOLLOWS:
4 (1) THE FOLLOWING PROVISIONS SHALL APPLY TO ALL CREDITS
5 AWARDED AFTER JUNE 30, 2006:
6 (I) THE AMENDMENT OF SECTION 1703-B OF THE ACT.
7 (II) THE AMENDMENT OF SECTION 1707-B OF THE ACT.
8 (III) THE AMENDMENT OF SECTION 1709-B(A) OF THE ACT.
9 (IV) THE AMENDMENT OF SECTION 1712-B OF THE ACT.
10 (2) THE AMENDMENT OF SECTION 401(3)2(A)(9) AND 4(C) OF
11 THE ACT SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER
12 31, 2006.
13 SECTION 8. THIS ACT SHALL TAKE EFFECT JULY 1, 2006, OR
14 IMMEDIATELY, WHICHEVER IS LATER.
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