PRIOR PRINTER'S NO. 1057 PRINTER'S NO. 2263
No. 948 Session of 1999
INTRODUCED BY TANGRETTI, ARGALL, CORRIGAN, MAITLAND, SCHULER,
MARKOSEK, READSHAW, GEIST, BEBKO-JONES, BELFANTI, SCRIMENTI,
WOJNAROSKI, HALUSKA, PISTELLA, LAUGHLIN, CURRY, WALKO, PESCI,
TRELLO, STURLA, STABACK, McILHINNEY, MICOZZIE, VAN HORNE,
GIGLIOTTI, MELIO, RAMOS, McCALL, SOLOBAY, M. COHEN,
L. I. COHEN, GRUCELA, ORIE, SAINATO, JAMES, FREEMAN,
WILLIAMS, BELARDI, YOUNGBLOOD, BUNT, STEELMAN, PETRARCA,
HUTCHINSON, ROSS, CIVERA, JOSEPHS, HARHAI, STETLER, SERAFINI,
HERMAN, FRANKEL, E. Z. TAYLOR, ROEBUCK, DALEY, BOYES AND
RUBLEY, MARCH 22, 1999
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, SEPTEMBER 27, 1999
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 for sales and use tax
11 definitions, for sales and use tax exclusions, for sales and
12 use tax penalties, for personal income tax definitions AND <--
13 for classes of personal income; PROVIDING FOR A CREDIT <--
14 AGAINST PERSONAL INCOME TAX; FURTHER PROVIDING for personal
15 income tax penalties, for realty transfer tax definitions,
16 for realty transfer tax exclusions and for realty transfer
17 tax penalties; and conferring powers and duties on the
18 Pennsylvania Historical and Museum Commission.
19 The General Assembly of the Commonwealth of Pennsylvania
20 hereby enacts as follows:
21 Section 1. Section 201 of the act of March 4, 1971 (P.L.6,
1 No.2), known as the Tax Reform Code of 1971, is amended by
2 adding definitions 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 (uu) "Historic homesite." A building which complies with
9 all of the following:
10 (1) The building has been in existence for at least fifty
11 years.
12 (2) The building is occupied by the owner as a principal
13 residence.
14 (3) If partially leased by the owner, the building is
15 divided into no more than three units, other than the owner's
16 principal residence, leased for:
17 (i) residential use on at least a monthly basis; or
18 (ii) commercial use.
19 (4) The building:
20 (i) has been designated by Federal, State or local
21 government as a historic property;
22 (ii) is located in an area designated by Federal, State or
23 local government as a historic district; or
24 (iii) is located in a residential conservation district.
25 (vv) "Residential conservation district." A zoning overlay
26 district intended, in selected areas of residential districts,
27 to encourage:
28 (1) infill development which respects the historic context
29 of the environment;
30 (2) rehabilitation of existing housing through the use of
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1 sound maintenance and repair rather than replacement; and
2 (3) preservation, protection and enhancement of streetscapes
3 and areas of architectural, historic or cultural importance.
4 Section 2. Section 204 of the act is amended by adding a
5 clause to read:
6 Section 204. Exclusions from Tax.--The tax imposed by
7 section 202 shall not be imposed upon
8 * * *
9 (58) The sale at retail or use of tangible personal property
10 or services which are valued in excess of one thousand dollars
11 ($1,000) and which are used in the conversion to or
12 rehabilitation of a historic homesite if all of the conditions
13 set forth in this clause apply. This clause includes costs
14 chargeable to the rehabilitation and restoration of the physical
15 elements of the building, such as historic decorative elements;
16 upgrading of the structural, mechanical, electrical and plumbing
17 systems to applicable code; and alterations associated with the
18 conversion to a historic homesite. This clause does not include
19 costs attributable to the acquisition of the property; the
20 enlargement of an existing building; landscaping, driveways and
21 other site features; outbuildings or garages; nor personal labor
22 performed by the owner. The following conditions must be met:
23 (i) By the date of purchase, the purchaser covenants all of
24 the following with the department:
25 (A) Within five years of the date of purchase, the
26 rehabilitation work will be completed to the satisfaction of the
27 Pennsylvania Historical and Museum Commission in accordance with
28 36 CFR 67.7 (relating to standards for rehabilitation).
29 (B) The historic homesite:
30 (I) has been maintained, for a five-year period prior to the
19990H0948B2263 - 3 -
1 date of purchase, as the principal residence of the purchaser;
2 (II) will be maintained, for a five-year period subsequent
3 to the date of purchase, as the principal residence of the
4 purchaser or a successor in interest; or
5 (III) will have been maintained, for a total of five years
6 prior and subsequent to the date of purchase, as the principal
7 residence of the purchaser or a successor in interest.
8 (ii) The seller submits to the department the form which
9 provides for the exclusion under this clause.
10 (iii) The purchaser has not previously taken advantage of
11 the exemption under this clause for the same historic homesite.
12 Section 3. Section 267 of the act is amended to read:
13 Section 267. Penalties.--(a) Penalty Assessed as Tax. The
14 penalties, additions, interest and liabilities provided by this
15 article shall be paid upon notice and demand by the department,
16 and shall be assessed and collected in the same manner as taxes.
17 Except as otherwise provided, any reference in this article to
18 "tax" imposed by this article shall be deemed also to refer to
19 the penalties, additions, interest and liabilities provided by
20 this part.
21 (b) Attempt to Evade or Defeat Tax. Any person who wilfully
22 attempts, in any manner, to evade or defeat the tax imposed by
23 this article, or the payment thereof, or to assist any other
24 person to evade or defeat the tax imposed by this article, or
25 the payment thereof, or to receive a refund improperly, shall,
26 in addition to other penalties provided by law, be liable for a
27 penalty equal to one-half of the total amount of the tax evaded.
28 In any direct proceeding arising out of a petition for
29 reassessment or refund as provided in this article, in which an
30 issue of fact is raised with respect to whether a return is
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1 fraudulent or with respect to the propriety of the imposition by
2 the department of the penalty prescribed in this subsection (b),
3 the burden of proof with respect to such issue shall be upon the
4 department.
5 (c) Historic Homesite. If a purchaser fails to comply with
6 the covenant under section 204(58)(i), unless it determines that
7 the failure to comply is justified, the department shall assess
8 a penalty against the purchaser in the amount of twelve per cent
9 of the purchase price of the property.
10 Section 4. Section 301 introductory paragraph of the act is
11 amended and the section is amended by adding clauses to read:
12 Section 301. Definitions.--The following words, terms and
13 phrases when used in this article shall have the meaning
14 ascribed to them in this section except where the context
15 clearly indicates a different meaning[. Unless specifically
16 provided otherwise, any reference in this article to the
17 Internal Revenue Code shall include the Internal Revenue Code of
18 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended to
19 January 1, 1997]:
20 * * *
21 (i.3) "Historic homesite" means a building which complies
22 with all of the following:
23 (1) The building has been in existence for at least fifty
24 years.
25 (2) The building is divided into no more than four units
26 used or leased for:
27 (i) residential use on at least a monthly basis; or
28 (ii) commercial use.
29 (3) The building:
30 (i) has been designated by Federal, State or local
19990H0948B2263 - 5 -
1 government as a historic property;
2 (ii) is located in an area designated by Federal, State or
3 local government as a historic district; or
4 (iii) is located in a residential conservation district.
5 * * *
6 (o.4) "Residential conservation district" means a zoning
7 overlay district intended, in selected areas of residential
8 districts, to encourage:
9 (1) infill development which respects the historic context
10 of the environment;
11 (2) rehabilitation of existing housing through the use of
12 sound maintenance and repair rather than replacement; and
13 (3) preservation, protection and enhancement of streetscapes
14 and areas of architectural, historic or cultural importance.
15 * * *
16 Section 5. Section 303(a)(3)(vii) of the act, added April <--
17 23, 1998 (P.L.239, No.45), is amended and the paragraph
18 303(A)(3) OF THE ACT is amended by adding a subparagraph to <--
19 read:
20 Section 303. Classes of Income.--(a) The classes of income
21 referred to above are as follows:
22 * * *
23 (3) Net gains or income from disposition of property. Net
24 gains or net income, less net losses, derived from the sale,
25 exchange or other disposition of property, including real
26 property, tangible personal property, intangible personal
27 property or obligations issued on or after the effective date of
28 this amendatory act by the Commonwealth; any public authority,
29 commission, board or other agency created by the Commonwealth;
30 any political subdivision of the Commonwealth or any public
19990H0948B2263 - 6 -
1 authority created by any such political subdivision; or by the
2 Federal Government as determined in accordance with accepted
3 accounting principles and practices. For the purpose of this
4 article:
5 * * *
6 (vii) The term "net gains or net income, less net losses," <--
7 shall not include any gain or loss from the sale, exchange or
8 other disposition of the taxpayer's principal residence unless
9 the residence is a historic homesite.
10 (A) For purposes of this subparagraph, the term "principal
11 residence" shall mean the property that has been owned and used
12 by the taxpayer as the taxpayer's principal residence for
13 periods aggregating two years or more during the five-year
14 period ending on the date of the sale, exchange or disposition:
15 Provided, however, That the following shall apply:
16 (I) In the case of property only a portion of which, during
17 the five-year period ending on the date of the sale, exchange or
18 disposition, has been owned or used by the taxpayer as the
19 taxpayer's principal residence for periods aggregating two years
20 or more, this subparagraph shall apply with respect to so much
21 of the gain from the sale, exchange or disposition of such
22 property as is determined under regulations prescribed by the
23 department to be attributable to that portion.
24 (II) In the case of a principal residence only a portion of
25 which has never been subject to the allowance for depreciation,
26 this subparagraph shall apply with respect to so much of the
27 gain from the sale, exchange or disposition of such property as
28 is determined under regulations prescribed by the department to
29 be attributable to that portion.
30 (B) The provisions of this subparagraph shall not apply to a
19990H0948B2263 - 7 -
1 sale, exchange or disposition if, during the two-year period
2 ending upon the date of the sale, exchange or disposition, there
3 was a prior sale, exchange or disposition by the taxpayer of a
4 principal residence unless the sale, exchange or disposition is
5 by reason of a change in employment, health or, to the extent
6 provided in regulations, unforeseen circumstances.
7 (C) The provisions of this subparagraph shall not apply to
8 any sale, exchange or disposition made prior to January 1, 1998.
9 (viii) The term "net gains or income" shall not include the
10 net gain on the sale of a historic homesite if all of the
11 following apply:
12 (A) By the date of transfer of title to the property, the
13 purchaser covenants with the Pennsylvania Historical and Museum
14 Commission to:
15 (I) within five years of the date of transfer of title to
16 the property complete, to the satisfaction of the commission,
17 the rehabilitation work, IN AN AMOUNT NOT LESS THAN ONE THOUSAND <--
18 DOLLARS ($1,000), in accordance with 36 CFR 67.7 (relating to
19 standards for rehabilitation) and occupy the premises as the
20 principal residence of the purchaser or a successor in interest;
21 (II) maintain the premises as the principal residence of the
22 purchaser or a successor in interest for at least five years
23 after the occupation begins; and
24 (III) if part of the premises is leased, divide the premises
25 into no more than three units, in addition to the unit
26 maintained as a residence by the purchaser or successor in
27 interest, leased for residential use on a monthly basis or for
28 commercial use.
29 (B) At the time of purchase, the purchaser provides a copy
30 of the covenant under clause (A) to the seller.
19990H0948B2263 - 8 -
1 (C) The seller submits to the department a copy of the
2 covenant under clause (A) and the form which provides for the
3 exclusion under this subparagraph (vii) (VIII). <--
4 (ix) The term "net gains or income" shall exclude twenty per <--
5 cent of the cost of rehabilitating a historic homesite if all of
6 the following apply:
7 (A) The cost of the rehabilitation is in excess of one
8 thousand dollars ($1,000).
9 (B) Before commencing rehabilitation of the property, the
10 purchaser covenants with the department to:
11 (I) complete, to the satisfaction of the Pennsylvania
12 Historical and Museum Commission, the rehabilitation work in
13 accordance with 36 CFR 67.7 (relating to standards for
14 rehabilitation) within five years and occupy the premises as the
15 principal residence of the purchaser or a successor in interest;
16 (II) maintain the residence as the principal residence of
17 the purchaser or a successor in interest for at least five years
18 after the occupation begins; and
19 (III) if part of the premises is leased, divide the premises
20 into no more than three units, in addition to the unit
21 maintained as a residence by the purchaser or successor in
22 interest, leased for residential use on a monthly basis or for
23 commercial use.
24 (C) The seller submits to the department the form which
25 provides for the exclusion under this subparagraph (viii).
26 * * *
27 SECTION 6. THE ACT IS AMENDED BY ADDING A SECTION TO READ: <--
28 SECTION 314.1. REHABILITATION OF HISTORIC HOMESITE.--(A) A
29 RESIDENT TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX
30 OTHERWISE DUE UNDER THIS ARTICLE IN THE AMOUNT OF TWENTY PER
19990H0948B2263 - 9 -
1 CENT OF THE COST OF THE REHABILITATION OF A HISTORIC HOMESITE IF
2 ALL OF THE FOLLOWING APPLY:
3 (1) THE COST OF THE REHABILITATION IS IN EXCESS OF ONE
4 THOUSAND DOLLARS ($1,000).
5 (2) BEFORE COMMENCING REHABILITATION OF THE PROPERTY, THE
6 TAXPAYER COVENANTS WITH THE DEPARTMENT TO:
7 (I) COMPLETE, TO THE SATISFACTION OF THE PENNSYLVANIA
8 HISTORICAL AND MUSEUM COMMISSION, THE REHABILITATION WORK IN
9 ACCORDANCE WITH 36 CFR 67.7 (RELATING TO STANDARDS FOR
10 REHABILITATION) WITHIN FIVE YEARS AND OCCUPY THE PREMISES AS THE
11 PRINCIPAL RESIDENCE OF THE TAXPAYER OR A SUCCESSOR IN INTEREST;
12 (II) MAINTAIN THE RESIDENCE AS THE PRINCIPAL RESIDENCE OF
13 THE TAXPAYER OR A SUCCESSOR IN INTEREST FOR AT LEAST FIVE YEARS
14 AFTER THE OCCUPATION BEGINS; AND
15 (III) IF PART OF THE PREMISES IS LEASED, DIVIDE THE PREMISES
16 INTO NO MORE THAN THREE UNITS, IN ADDITION TO THE UNIT
17 MAINTAINED AS A RESIDENCE BY THE TAXPAYER OR SUCCESSOR IN
18 INTEREST, LEASED FOR RESIDENTIAL USE ON A MONTHLY BASIS OR FOR
19 COMMERCIAL USE.
20 (3) THE TAXPAYER SUBMITS TO THE DEPARTMENT THE FORM WHICH
21 PROVIDES FOR THE CREDIT UNDER THIS SUBSECTION.
22 (B) IF THE CREDIT UNDER SUBSECTION (A) EXCEEDS THE TAX DUE
23 UNDER THIS ARTICLE, THE TAXPAYER MAY CARRY THE CREDIT OVER TO
24 THE NEXT TAXABLE YEAR. NO CREDIT UNDER SUBSECTION (A) MAY BE
25 CARRIED OVER BEYOND THE FIFTH TAXABLE YEAR AFTER THE TAXPAYER
26 ENTERS INTO THE COVENANT UNDER SUBSECTION (B)(1).
27 Section 6 7. Section 352 of the act is amended by adding a <--
28 subsection SUBSECTIONS to read: <--
29 Section 352. Additions, Penalties and Fees.--* * *
30 (k) If a purchaser fails to comply with the covenant under
19990H0948B2263 - 10 -
1 section 303(a)(3)(viii)(B) 303(A)(3)(VIII)(A), unless it <--
2 determines that the failure to comply is justified, the
3 department shall assess a penalty against the purchaser in the
4 amount of ten per cent of the assessed value of the property.
5 (L) IF A TAXPAYER FAILS TO COMPLY WITH THE COVENANT UNDER <--
6 SECTION 314(A)(2), UNLESS IT DETERMINES THAT THE FAILURE TO
7 COMPLY IS JUSTIFIED, THE DEPARTMENT SHALL ASSESS A PENALTY
8 AGAINST THE TAXPAYER IN THE AMOUNT OF ONE HUNDRED TEN PER CENT
9 OF ANY TAX CREDITS RECEIVED UNDER SECTION 314.
10 Section 7 8. Section 1101-C of the act is amended by adding <--
11 definitions to read:
12 Section 1101-C. Definitions.--The following words when used
13 in this article shall have the meanings ascribed to them in this
14 section:
15 * * *
16 "Historic homesite." A building which complies with all of
17 the following:
18 (1) The building has been in existence for at least fifty
19 years.
20 (2) The building is divided into no more than four units
21 leased for:
22 (i) residential use on at least a monthly basis; or
23 (ii) commercial use.
24 (3) The building:
25 (i) has been designated by Federal, State or local
26 government as a historic property;
27 (ii) is located in an area designated by Federal, State or
28 local government as a historic district; or
29 (iii) is located in a residential conservation district.
30 * * *
19990H0948B2263 - 11 -
1 "Residential conservation district." A zoning overlay
2 district intended, in selected areas of residential districts,
3 to encourage:
4 (1) infill development which respects the historic context
5 of the environment;
6 (2) rehabilitation of existing housing through the use of
7 sound maintenance and repair rather than replacement; and
8 (3) preservation, protection and enhancement of streetscapes
9 and areas of architectural, historic or cultural importance.
10 * * *
11 Section 8 9. Section 1102-C.3 of the act, amended or added <--
12 July 2, 1986 (P.L.318, No.77), June 16, 1994 (P.L.279, No.48)
13 and May 7, 1997 (P.L.85, No.7), is amended to read:
14 Section 1102-C.3. Excluded Transactions.--(a) The tax
15 imposed by section 1102-C shall not be imposed upon:
16 (1) A transfer to the Commonwealth or to any of its
17 instrumentalities, agencies or political subdivisions by gift,
18 dedication or deed in lieu of condemnation or deed of
19 confirmation in connection with condemnation proceedings, or a
20 reconveyance by the condemning body of the property condemned to
21 the owner of record at the time of condemnation, which
22 reconveyance may include property line adjustments provided said
23 reconveyance is made within one year from the date of
24 condemnation.
25 (2) A document which the Commonwealth is prohibited from
26 taxing under the Constitution or statutes of the United States.
27 (3) A conveyance to a municipality, township, school
28 district or county pursuant to acquisition by the municipality,
29 township, school district or county of a tax delinquent property
30 at sheriff sale or tax claim bureau sale.
19990H0948B2263 - 12 -
1 (4) A transfer for no or nominal actual consideration which
2 corrects or confirms a transfer previously recorded, but which
3 does not extend or limit existing record legal title or
4 interest.
5 (5) A transfer of division in kind for no or nominal actual
6 consideration of property passed by testate or intestate
7 succession and held by cotenants; however, if any of the parties
8 take shares greater in value than their undivided interest, tax
9 is due on the excess.
10 (6) A transfer between husband and wife, between persons who
11 were previously husband and wife who have since been divorced,
12 provided the property or interest therein subject to such
13 transfer was acquired by the husband and wife or husband or wife
14 prior to the granting of the final decree in divorce, between
15 parent and child or the spouse of such child, between brother or
16 sister or spouse of a brother or sister and brother or sister or
17 the spouse of a brother or sister and between a grandparent and
18 grandchild or the spouse of such grandchild, except that a
19 subsequent transfer by the grantee within one year shall be
20 subject to tax as if the grantor were making such transfer.
21 (7) A transfer for no or nominal actual consideration of
22 property passing by testate or intestate succession from a
23 personal representative of a decedent to the decedent's devisee
24 or heir.
25 (8) A transfer for no or nominal actual consideration to a
26 trustee of an ordinary trust where the transfer of the same
27 property would be exempt if the transfer was made directly from
28 the grantor to all of the possible beneficiaries that are
29 entitled to receive the property or proceeds from the sale of
30 the property under the trust, whether or not such beneficiaries
19990H0948B2263 - 13 -
1 are contingent or specifically named. A trust clause which
2 identifies the contingent beneficiaries by reference to the
3 heirs of the trust settlor as determined by the laws of the
4 intestate succession shall not disqualify a transfer from the
5 exclusion provided by this clause. No such exemption shall be
6 granted unless the recorder of deeds is presented with a copy of
7 the trust instrument that clearly identifies the grantor and all
8 possible beneficiaries.
9 (8.1) A transfer for no or nominal actual consideration to a
10 trustee of a living trust from the settlor of the living trust.
11 No such exemption shall be granted unless the recorder of deeds
12 is presented with a copy of the living trust instrument.
13 (9) A transfer for no or nominal actual consideration from a
14 trustee of an ordinary trust to a specifically named beneficiary
15 that is entitled to receive the property under the recorded
16 trust instrument or to a contingent beneficiary where the
17 transfer of the same property would be exempt if the transfer
18 was made by the grantor of the property into the trust to that
19 beneficiary. However, any transfer of real estate from a living
20 trust during the settlor's lifetime shall be considered for the
21 purposes of this article as if such transfer were made directly
22 from the settlor to the grantee.
23 (9.1) A transfer for no or nominal actual consideration from
24 a trustee of a living trust after the death of the settlor of
25 the trust or from a trustee of a trust created pursuant to the
26 will of a decedent to a beneficiary to whom the property is
27 devised or bequeathed.
28 (9.2) A transfer for no or nominal actual consideration from
29 the trustee of a living trust to the settlor of the living trust
30 if such property was originally conveyed to the trustee by the
19990H0948B2263 - 14 -
1 settlor.
2 (10) A transfer for no or nominal actual consideration from
3 trustee to successor trustee.
4 (11) A transfer:
5 (i) for no or nominal actual consideration between principal
6 and agent or straw party; or
7 (ii) from or to an agent or straw party where, if the agent
8 or straw party were his principal, no tax would be imposed under
9 this article.
10 Where the document by which title is acquired by a grantee or
11 statement of value fails to set forth that the property was
12 acquired by the grantee from, or for the benefit of, his
13 principal, there is a rebuttable presumption that the property
14 is the property of the grantee in his individual capacity if the
15 grantee claims an exemption from taxation under this clause.
16 (12) A transfer made pursuant to the statutory merger or
17 consolidation of a corporation or statutory division of a
18 nonprofit corporation, except where the department reasonably
19 determines that the primary intent for such merger,
20 consolidation or division is avoidance of the tax imposed by
21 this article.
22 (13) A transfer from a corporation or association of real
23 estate held of record in the name of the corporation or
24 association where the grantee owns stock of the corporation or
25 an interest in the association in the same proportion as his
26 interest in or ownership of the real estate being conveyed and
27 where the stock of the corporation or the interest in the
28 association has been held by the grantee for more than two
29 years.
30 (14) A transfer from a nonprofit industrial development
19990H0948B2263 - 15 -
1 agency or authority to a grantee of property conveyed by the
2 grantee to that agency or authority as security for a debt of
3 the grantee or a transfer to a nonprofit industrial development
4 agency or authority.
5 (15) A transfer from a nonprofit industrial development
6 agency or authority to a grantee purchasing directly from it,
7 but only if:
8 (i) the grantee shall directly use such real estate for the
9 primary purpose of manufacturing, fabricating, compounding,
10 processing, publishing, research and development,
11 transportation, energy conversion, energy production, pollution
12 control, warehousing or agriculture; and
13 (ii) the agency or authority has the full ownership interest
14 in the real estate transferred.
15 (16) A transfer by a mortgagor to the holder of a bona fide
16 mortgage in default in lieu of a foreclosure or a transfer
17 pursuant to a judicial sale in which the successful bidder is
18 the bona fide holder of a mortgage, unless the holder assigns
19 the bid to another person.
20 (17) Any transfer between religious organizations or other
21 bodies or persons holding title for a religious organization if
22 such real estate is not being or has not been used by such
23 transferor for commercial purposes.
24 (18) A transfer to a conservancy which possesses a tax-
25 exempt status pursuant to section 501(c)(3) of the Internal
26 Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 501(c)(3)) and
27 which has as its primary purpose preservation of land for
28 historic, recreational, scenic, agricultural or open-space
29 opportunities; or a transfer from such a conservancy to the
30 United States, the Commonwealth or to any of their
19990H0948B2263 - 16 -
1 instrumentalities, agencies or political subdivisions; or any
2 transfer from such a conservancy where the real estate is
3 encumbered by a perpetual agricultural conservation easement as
4 defined by the act of June 30, 1981 (P.L.128, No.43), known as
5 the "Agricultural Area Security Law," and such conservancy has
6 owned the real estate for at least two years immediately prior
7 to the transfer.
8 (19) A transfer of real estate devoted to the business of
9 agriculture to a family farm corporation by a member of the same
10 family which directly owns at least seventy-five per cent of
11 each class of the stock thereof.
12 (19.1) A transfer of real estate devoted to the business of
13 agriculture to a family farm partnership by a member of the same
14 family, which family directly owns at least seventy-five per
15 cent of the interests in the partnership.
16 (20) A transfer between members of the same family of an
17 ownership interest in a real estate company, family farm
18 corporation or family farm partnership which owns real estate.
19 (21) A transaction wherein the tax due is one dollar ($1) or
20 less.
21 (22) Leases for the production or extraction of coal, oil,
22 natural gas or minerals and assignments thereof.
23 In order to exercise any exclusion provided in this section, the
24 true, full and complete value of the transfer shall be shown on
25 the statement of value. For leases of coal, oil, natural gas or
26 minerals, the statement of value may be limited to an
27 explanation of the reason such document is not subject to tax
28 under this article.
29 (b) The State tax imposed by section 1102-C shall not be
30 imposed upon a sale of a historic homesite as follows:
19990H0948B2263 - 17 -
1 (1) To qualify for an exclusion under this subsection, all
2 of the following must apply:
3 (i) By the date of transfer of title to the property, the
4 purchaser covenants with the department to:
5 (A) within five years of the date of transfer of title to
6 the property complete, to the satisfaction of the Pennsylvania
7 Historical and Museum Commission, the rehabilitation work in
8 accordance with 36 CFR 67.7 (relating to standards for
9 rehabilitation) and occupy the premises as the principal
10 residence of the purchaser or a successor in interest;
11 (B) maintain the residence as the principal residence of the
12 purchaser or a successor in interest for at least five years
13 after the occupation begins; and
14 (C) if part of the premises is leased, divide the premises
15 into no more than three units, in addition to the unit
16 maintained as a residence by the purchaser or successor in
17 interest, leased for residential use on a monthly basis or for
18 commercial use.
19 (ii) At the time of purchase, the purchaser provides a copy
20 of the covenant under subclause (i) to the seller.
21 (2) A taxpayer who has paid the tax and who is eligible for
22 exclusion under clause (1) is entitled to a refund.
23 (3) By July 31, a taxpayer requesting a refund under clause
24 (2) for the prior fiscal year must submit to the department
25 proof of all of the following:
26 (i) Payment of the tax.
27 (ii) Eligibility for exclusion under clause (1).
28 (4) Within ninety days of submission of proof under clause
29 (3), the department must approve or deny a refund. Failure to
30 meet time requirement of this clause shall be deemed an approval
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1 of the refund.
2 (5) By August 31, the department shall compute the total
3 amount of approved refunds under clause (4).
4 (6) Refunds shall be made as follows:
5 (i) The department shall compute ten per cent of the tax
6 collected under section 1102-C for the prior fiscal year which,
7 after allocation to the Keystone Recreation, Park and
8 Conservation Fund, is allocated to the General Fund.
9 (ii) If the total amount of approved refunds is not more
10 than the amount computed under subclause (i), the department
11 shall make, out of the amount computed under subclause (i), full
12 refunds.
13 (iii) If the total amount of approved refunds is more than
14 the amount computed under subclause (i), the department shall
15 make, out of the amount computed under subclause (i),
16 proportionate refunds in the ratio that each approved refund
17 bears to the total amount of approved refunds.
18 Section 9 10. Section 1109-C.1 of the act, added July 2, <--
19 1986 (P.L.318, No.77), is amended to read:
20 Section 1109-C.1. Civil Penalties.--(a) If any part of any
21 underpayment of tax imposed by this article is due to fraud,
22 there shall be added to the tax an amount equal to fifty per
23 cent of the underpayment.
24 (b) In the case of failure to record a declaration required
25 under this article on the date prescribed therefor, unless it is
26 shown that such failure is due to reasonable cause, there shall
27 be added to the tax five per cent of the amount of such tax if
28 the failure is for not more than one month, with an additional
29 five per cent for each additional month or fraction thereof
30 during which such failure continues, not exceeding fifty per
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1 cent in the aggregate.
2 (c) If a purchaser fails to comply with the covenant under
3 section 1102-C.3(b)(1)(i), unless it determines that the failure
4 to comply is justified, the department shall assess a penalty
5 against the purchaser in the amount of ten per cent of the
6 assessed value of the property.
7 Section 10 11. The Pennsylvania Historical and Museum <--
8 Commission may promulgate regulations to administer this act.
9 Section 11 12. The amendment or addition of sections <--
10 303(a)(3)(vii), (viii) and (ix) and 352(k) of the act shall <--
11 apply to taxable years beginning after December 31, 1998.
12 Section 12 13. This act shall take effect in 60 days. <--
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