1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying 
3and enumerating certain subjects of taxation and imposing 
4taxes thereon; providing procedures for the payment, 
5collection, administration and enforcement thereof; providing 
6for tax credits in certain cases; conferring powers and 
7imposing duties upon the Department of Revenue, certain 
8employers, fiduciaries, individuals, persons, corporations 
9and other entities; prescribing crimes, offenses and 
10penalties," in sales tax, further providing for definitions
11and for credit against tax; in personal income tax, further
12providing for classes of income; in corporate net income tax,
13further providing for definitions; in realty transfer tax,
14further providing for definitions, for imposition and for
15acquired company; and further providing for coal waste
16removal and ultraclean fuels tax credit.

17The General Assembly of the Commonwealth of Pennsylvania
18hereby enacts as follows:

19Section 1. Sections 201(ddd) and 206 of the act of March 4,
201971 (P.L.6, No.2), known as the Tax Reform Code of 1971,
21amended or added December 23, 2003 (P.L.250, No.46), are amended
22to read:

23Section 201. Definitions.--The following words, terms and

1phrases when used in this Article II shall have the meaning
2ascribed to them in this section, except where the context
3clearly indicates a different meaning:

4* * *

5[(ddd) "Call center." The physical location in this
6Commonwealth:

7(1) where at least one hundred and fifty employes are
8employed to initiate or answer telephone calls;

9(2) where there are at least two hundred telephone lines;
10and

11(3) which utilizes an automated call distribution system for
12customer telephone calls in one or more of the following
13activities:

14(A) customer service and support;

15(B) technical assistance;

16(C) help desk service;

17(D) providing information;

18(E) conducting surveys;

19(F) revenue collections; or

20(G) receiving orders or reservations.

21For purposes of this clause, a physical location may include
22multiple buildings utilized by a taxpayer located within this
23Commonwealth.]

24Section 206. Credit Against Tax.--(a) A credit against the
25tax imposed by section 202 shall be granted with respect to
26tangible personal property or services purchased for use outside
27the Commonwealth equal to the tax paid to another state by
28reason of the imposition by such other state of a tax similar to
29the tax imposed by this article: Provided, however, That no such
30credit shall be granted unless such other state grants

1substantially similar tax relief by reason of the payment of tax
2under this article or under the Tax Act of 1963 for Education.

3[(b) A credit against the tax imposed by section 202 on
4telecommunications services shall be granted to a call center
5for gross receipts tax paid by a telephone company on the
6receipts derived from the sale of incoming and outgoing
7interstate telecommunications services to the call center under
8section 1101(a)(2). The following apply:

9(1) A telephone company, upon request, shall notify a call
10center of the amount of gross receipts tax paid by the telephone
11company on the receipts derived from the sale of incoming and
12outgoing interstate telecommunications services to the call
13center.

14(2) A call center that is eligible for the credit in this
15subsection may apply for a tax credit as set forth in this
16subsection.

17(3) By February 15, a taxpayer must submit an application to
18the department for gross receipts tax paid on the receipts
19derived from the sale of incoming and outgoing interstate
20telecommunications services incurred in the prior calendar year.

21(4) By April 15 of the calendar year following the close of
22the calendar year during which the gross receipts tax was
23incurred, the department shall notify the applicant of the
24amount of the applicant's tax credit approved by the department.

25(5) The total amount of tax credits provided for in this
26subsection and approved by the department shall not exceed
27thirty million dollars ($30,000,000) in any fiscal year. If the
28total amount of tax credits applied for by all applicants
29exceeds the amount allocated for those credits, then the credit
30to be received by each applicant shall be determined as follows:

1(i) Divide:

2(A) the tax credit applied for by the applicant; by

3(B) the total of all tax credits applied for by all
4applicants.

5(ii) Multiply:

6(A) the quotient under subparagraph (i); by

7(B) the amount allocated for all tax credits.]

8Section 2. Section 303(a)(2) of the act, added August 31, 
91971 (P.L.362, No.93), is amended and subsection (a)(3) is
10amended by adding a subparagraph to read:

11Section 303. Classes of Income.--(a) The classes of income
12referred to above are as follows:

13* * *

14(2) Net profits. The net income from the operation of a
15business, profession, or other activity, after provision for all
16costs and expenses incurred in the conduct thereof, determined
17either on a cash or accrual basis in accordance with accepted
18accounting principles and practices but without deduction of
19taxes based on income. For purposes of calculating net income 
20under this paragraph, to the extent a taxpayer properly deducts 
21an amount under section 195(b)(1)(A) of the Internal Revenue 
22Code of 1986 (26 U.S.C. § 195(b)(1)(A)), as amended, and the 
23regulations promulgated under section 195(b)(1)(A) of the 
24Internal Revenue Code of 1986, the taxpayer shall be permitted a 
25deduction in equal amount in the same taxable year.

26(3) Net gains or income from disposition of property. Net
27gains or net income, less net losses, derived from the sale,
28exchange or other disposition of property, including real
29property, tangible personal property, intangible personal
30property or obligations issued on or after the effective date of

1this amendatory act by the Commonwealth; any public authority,
2commission, board or other agency created by the Commonwealth;
3any political subdivision of the Commonwealth or any public
4authority created by any such political subdivision; or by the
5Federal Government as determined in accordance with accepted
6accounting principles and practices. For the purpose of this
7article:

8* * *

9(viii) The term "net gains or net income, less net losses"
10shall not include gain or loss from the exchange of property
11which is not recognized for Federal income tax purposes under
12section 1031 of the Internal Revenue Code of 1986 (26 U.S.C. §
131031), as amended, and the regulations promulgated under section
141031 of the Internal Revenue Code of 1986. For purposes of
15determining basis under subparagraph (i), section 1031(d) of the
16Internal Revenue Code of 1986 (26 U.S.C. § 1031(d)), as amended,
17and the regulations promulgated under section 1031 of the
18Internal Revenue Code of 1986 shall apply.

19* * *

20Section 3. Section 401(3)4(c)(1)(A) and (2)(B) of the act
21are amended by adding subparagraphs to read:

22Section 401. Definitions.--The following words, terms, and
23phrases, when used in this article, shall have the meaning
24ascribed to them in this section, except where the context
25clearly indicates a different meaning:

26* * *

27(3) "Taxable income." * * *

284. * * *

29(c) (1) The net loss deduction shall be the lesser of:

30(A) * * *

1(V) For taxable years beginning after December 31, 2013, the
2greater of twenty-five per cent of taxable income as determined
3under subclause 1 or, if applicable, subclause 2 or four million
4dollars ($4,000,000);

5(VI) For taxable years beginning after December 31, 2014,
6the greater of thirty per cent of taxable income as determined
7under subclause 1 or, if applicable, subclause 2 or five million
8dollars ($5,000,000); or

9* * *

10(2) * * *

11(B) The earliest net loss shall be carried over to the
12earliest taxable year to which it may be carried under this
13schedule. The total net loss deduction allowed in any taxable
14year shall not exceed:

15* * *

16(V) The greater of twenty-five per cent of taxable income as
17determined under subclause 1 or, if applicable, subclause 2 or
18four million dollars ($4,000,000) for taxable years beginning
19after December 31, 2013.

20(VI) The greater of thirty per cent of taxable income as
21determined under subclause 1 or, if applicable, subclause 2 or
22five million dollars ($5,000,000) for taxable years beginning
23after December 31, 2014.

24* * *

25Section 4. The definitions of "document," "real estate" and
26"real estate company" in section 1101-C of the act, amended July
272, 1986 (P.L.318, No.77), are amended to read:

28Section 1101-C. Definitions.--The following words when used
29in this article shall have the meanings ascribed to them in this
30section:

1* * *

2"Document." Any deed, instrument or writing which conveys,
3transfers, devises, vests, confirms or evidences any transfer or
4devise of title to real estate in this Commonwealth, but does
5not include wills, mortgages, deeds of trust or other
6instruments of like character given as security for a debt and
7deeds of release thereof to the debtor, land contracts whereby
8the legal title does not pass to the grantee until the total
9consideration specified in the contract has been paid or any
10cancellation thereof unless the consideration is payable over a
11period of time exceeding thirty years or instruments which
12solely grant, vest or confirm a public utility easement.
13"Document" shall also include a declaration of acquisition
14required to be presented for recording under section 1102-C.5 of
15this article.

16* * *

17"Real estate."

18(1) Any lands, tenements or hereditaments [within this
19Commonwealth], including, without limitation, buildings,
20structures, fixtures, mines, minerals, oil, gas, quarries,
21spaces with or without upper or lower boundaries, trees and
22other improvements, immovables or interests which by custom,
23usage or law pass with a conveyance of land, but excluding
24permanently attached machinery and equipment in an industrial
25plant.

26(2) A condominium unit.

27(3) A tenant-stockholder's interest in a cooperative housing
28corporation, trust or association under a proprietary lease or
29occupancy agreement.

30"Real estate company." A corporation or association which

1[is] meets any of the following:

2(1) Is  primarily engaged in the business of holding,
3selling or leasing real estate ninety per cent or more of the
4ownership interest in which is held by thirty-five or fewer
5persons and which:

6[(1)] (i) derives sixty per cent or more of its annual gross
7receipts from the ownership or disposition of real estate; or

8[(2)] (ii) holds real estate, the value of which comprises
9[ninety] fifty per cent or more of the value of its entire
10tangible asset holdings exclusive of tangible assets which are
11freely transferable and actively traded on an established
12market.

13(2) Owns a direct or indirect interest in a real estate
14company. An indirect ownership interest is an interest in a
15corporation or association whose purpose is the ownership of a
16real estate company either by itself or as part of a tiered
17structure of corporations or associations.

18* * *

19Section 5. Section 1102-C of the act, amended July 2, 1986
20(P.L.318, No.77), is amended to read:

21Section 1102-C. Imposition of Tax.--Every person who makes,
22executes, delivers, accepts or presents for recording any
23document or in whose behalf any document is made, executed,
24delivered, accepted or presented for recording, shall be subject
25to pay for and in respect to the transaction or any part
26thereof, or for or in respect of the vellum parchment or paper
27upon which such document is written or printed, a State tax at
28the rate of one per cent of the value of the real estate within 
29this Commonwealth represented by such document, which State tax
30shall be payable at the earlier of the time the document is

1presented for recording or within thirty days of acceptance of
2such document or within thirty days of becoming an acquired
3company.

4Section 6. Section 1102-C.5(a) of the act, amended July 2, 
52012 (P.L.751, No.85), is amended to read:

6Section 1102-C.5. Acquired Company.--(a) A real estate
7company is an acquired company upon a change in the ownership
8interest in the company, however effected, if the change:

9(1) does not affect the continuity of the company; and

10(2) of itself or together with prior changes has the effect
11of transferring, directly or indirectly, ninety per cent or more
12of the total ownership interest in the company within a period
13of three years.

14(3) For the purposes of paragraph (2), a transfer occurs
15within a period of three years of another transfer or transfers
16if, during the period[:

17(i) the transferring party provides a legally binding
18commitment, enforceable at a future date, to execute the
19transfer;

20(ii) the terms of the transfer are fixed and not subject to
21negotiation; and

22(iii) the transferring party receives full consideration, in
23any form, in exchange for the transfer.], the transferring party 
24provides the transferee a legally binding commitment or option, 
25enforceable at a future date, to execute the transfer.

26* * *

27Section 7. Article XVIII-A of the act, added May 12, 1999
28(P.L.26, No.4), is repealed:

29[ARTICLE XVIII-A

30COAL WASTE REMOVAL AND ULTRACLEAN FUELS

1TAX CREDIT

2Section 1801-A. Short Title.--This article shall be known
3and may be cited as the "Coal Waste Removal and Ultraclean Fuels
4Act."

5Section 1802-A. Definitions.--The following words, terms and
6phrases, when used in this article, shall have the meanings
7ascribed to them in this section, except where the context
8clearly indicates a different meaning:

9"Department" means the Department of Revenue of the
10Commonwealth.

11"Developer" means the owner-operator of a facility, as
12defined in this section, or the operator of the facility that
13has sold the facility in new condition to a third party from
14whom that operator has simultaneously leased back the facility
15for a minimum period of twelve years.

16"Facility" includes all plant and equipment purchased or
17constructed by or on behalf of the developer which is used
18within this Commonwealth by the developer to produce one or more
19qualified fuels.

20"Internal Revenue Code" means the Internal Revenue Code of
211986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

22"Qualified fuels" means those fuels produced from
23nontraditional coal culm and silt feedstocks as defined in
24section 29(c) of the Internal Revenue Code of 1986 (Public Law
2599-514, 26 U.S.C. § 29(c)).

26"Qualifying property" means tangible personal property and
27other forms of tangible property which qualify for investment
28tax credit treatment and which meet all of the following
29requirements:

30(1) Be acquired through a purchase, as defined under section

1179(d)(2) of the Internal Revenue Code (26 U.S.C. § 179(d)(2)),
2or constructed by the developer for its own use.

3(2) Be depreciable under section 167 of the Internal Revenue
4Code (26 U.S.C. § 167).

5(3) Have a useful life of greater than or equal to four
6years.

7(4) Be located within this Commonwealth.

8(5) Be used by the developer in the production of qualified
9fuels.

10(6) Be acquired by purchase or constructed on or after
11January 1, 2000, and before January 1, 2013.

12(7) Not be the subject of any tax credit otherwise available
13to the developer under this act.

14"Tax credit base" means only the cost or other basis of
15qualifying property that is properly transferred to the
16facility's basis for depreciation for Federal income tax
17purposes between January 1, 2000, and December 31, 2012.

18Section 1803-A. Investment Tax Credits Program.--(a) A
19developer of a new facility for the production of one or more
20qualified fuels shall be allowed an investment tax credit
21against the taxes imposed under Articles II, IV and VI of this
22act. The amount of the credit shall be computed as a percentage
23applied to the cost or other basis for Federal income tax
24purposes of qualifying property.

25(b) (1) The investment tax credit shall be computed as
26fifteen per cent of the tax credit base.

27(2) The maximum investment tax credit available for
28application, whether claimed by one or more taxpayers, shall not
29exceed fifteen per cent of the capital cost of the facility.

30(3) Any amount of allowable investment tax credit not used

1in the tax year for which the credit was claimed can be carried
2forward by the claiming taxpayer to succeeding years until the
3full amount of allowable credit has been used.

4(c) (1) The developer, upon notice to the department as
5specified by the department, may sell or assign, in whole or in
6part, any investment tax credit afforded under this section to
7one or more taxpayers if no claim for allowance of such credit
8has been filed.

9(2) A taxpayer recipient by purchase or assignment of any
10portion of the developer's investment tax credit under paragraph
11(1) shall initially claim such credit, upon notice to the
12department of the derivative basis of the credit in compliance
13with procedures specified by the department, for the tax year in
14which the purchase or assignment is made, but in no event
15subsequent to the filing of an income tax return for the year
162012.

17(3) Any taxpayer who acquires any portion of the developer's
18investment tax credit by sale or assignment for value and
19without notice by the developer of any irregularity or
20invalidity shall not suffer any disallowance of the credit or
21the imposition of any adjustment or fraud penalty attributable
22to conduct by the developer.

23(d) (1) If prior to the expiration of any qualifying
24property's useful life, as used to calculate depreciation for
25Federal income tax purposes, the developer, upon mandatory
26notice to the department in compliance with procedures specified
27by the department, disposes of any qualifying property, in a
28transaction other than a sale-leaseback transaction, upon which
29the department has previously allowed an investment tax credit
30claimed by any taxpayer, a portion of all such credit shall be

1recaptured and added to the developer's tax liability for the
2tax year in which the qualifying property is disposed.

3(2) The portion of the investment tax credit previously
4allowed, which is subject to recapture from the developer, shall
5be equal to a fraction whose numerator is the number of years
6remaining to fully depreciate for Federal income tax purposes
7the qualifying property disposed and whose denominator is the
8total number of years over which the property otherwise would
9have been subject to depreciation by the developer.

10(3) In calculating the recapture percentage, the year of
11disposition of the qualifying property is considered a year of
12remaining depreciation.

13(e) The department shall verify the validity of any claim
14for allowance of any investment tax credit afforded under this
15section and, in the case of a fraudulent claim, may assess
16against the developer a penalty of one hundred and twenty-five
17per cent of the credit improperly claimed.

18(f) The tax credits authorized by this section shall not
19exceed eighteen million dollars ($18,000,000) in the aggregate
20during any year.

21Section 1804-A. Contract Required.--(a) In order for a
22developer to claim investment tax credits under this article,
23the developer must enter into a contract with the Commonwealth
24that provides as follows:

25(1) The term of the contract shall be twenty-five years,
26beginning with the first tax year in which the investment tax
27credits are claimed.

28(2) The developer shall make periodic payments to the
29Commonwealth, which payments may not exceed in the aggregate
30forty-six million eight hundred thousand dollars ($46,800,000)

1over the term of the contract.

2(3) The periodic payments shall occur every five years and
3each payment shall be nine million three hundred sixty thousand
4dollars ($9,360,000), except as provided in paragraphs (4), (5)
5and (6).

6(4) For the first five-year period, the amount specified in
7paragraph (3) shall be reduced by:

8(i) An amount equal to the business losses of the developer,
9if any, relating to the facility that are sustained in the first
10and second years of the contract, provided such amount does not
11exceed three million seven hundred forty-four thousand dollars
12($3,744,000) for both years.

13(ii) Allowable offsets identified in subsection (b),
14provided that such offsets do not exceed nine million three
15hundred sixty thousand dollars ($9,360,000).

16(5) For the remaining five-year periods, the amount
17specified in paragraph (3) shall be reduced by the amount of
18allowable offsets identified in subsection (b), provided that
19such offsets do not exceed nine million three hundred sixty
20thousand dollars ($9,360,000) during any five-year period.

21(6) To the extent the amount of allowable offsets during any
22five-year period exceeds nine million three hundred sixty
23thousand dollars ($9,360,000), the excess may be carried over
24and added to the allowable offsets taken in the following five-
25year period, provided that the excess is applied first.

26(b) For purposes of this section, "allowable offset"
27includes all of the following:

28(1) An amount equal to the corporate net income tax, capital
29stock and franchise tax and personal income tax related to the
30construction, ownership and operation of the facility.

1(2) An amount equal to all personal income tax withheld from
2the developer's employes.

3(3) An amount equal to all sales and use tax related to the
4operation and construction of the facility.

5(4) The amount paid by the developer of any new tax enacted
6by the Commonwealth following the effective date of this
7article.

8Section 1805-A. Requirements.--Tax credits authorized by
9this article shall not be granted unless the developer has
10obtained an investment tax credit from the Federal Government or
11an investment by a person other than an agency or
12instrumentality of the Commonwealth, or any combination thereof,
13in an amount equal to or greater than the tax credit granted by
14this article.]

15Section 8. The following shall apply:

16(1) A tax credit may not be granted under section 206(b)
17of the act after June 30, 2013.

18(2) The amendment or addition of sections 303(a)(2) and
19401 of the act shall apply to tax years beginning after
20December 31, 2013.

21(3) The addition of section 303(a)(3)(viii) shall apply
22to tax years beginning after December 31, 2015.

23Section 9. This act shall take effect as follows:

24(1) The following shall take effect January 1, 2014, or
25immediately, whichever is later:

26(i) The amendments to the definitions of "document," 
27"real estate" and "real estate company" in section 1101-C 
28of the act.

29(ii) The amendments to sections 1102-C and 
301102-C.5(a) of the act.

1(2) The remainder of this act shall take effect
2immediately.