1Amending Title 12 (Commerce and Trade) of the Pennsylvania
2Consolidated Statutes, providing for the Returning Heroes
3Supplemental Tax Credit Program.

4The General Assembly of the Commonwealth of Pennsylvania
5hereby enacts as follows:

6Section 1. Title 12 of the Pennsylvania Consolidated
7Statutes is amended by adding a chapter to read:

8CHAPTER 44

9RETURNING HEROES SUPPLEMENTAL TAX CREDIT PROGRAM

10Sec.

114401. Scope of chapter.

124402. Definitions.

134403. Establishment.

144404. Application.

154405. Carryover, carryback, refund and assignment.

164406. Limitation on credits.

174407. Shareholder, owner or member of pass-through entity.

14408. Reports.

24409. Regulations.

34410. Applicability.

4§ 4401. Scope of chapter.

5This chapter relates to the Returning Heroes Supplemental Tax
6Credit Program.

7§ 4402. Definitions.

8The following words and phrases when used in this chapter
9shall have the meanings given to them in this section unless the
10context clearly indicates otherwise:

11"Department." The Department of Revenue of the Commonwealth.

12"Federal Returning Heroes Tax Credit." A tax credit 
13established under Section 261 of the VOW to Hire Heroes Act of 
142011 (Public Law 112-56, 125 Stat. 711).

15"Pass-through entity." A partnership as defined in section
16301(n.0) of the act of March 4, 1971 (P.L.6, No.2), known as the
17Tax Reform Code of 1971, or a Pennsylvania S corporation as
18defined in section 301(n.1) of the Tax Reform Code of 1971.

19"Qualified tax liability." The liability for taxes imposed
20under Article III, IV or VI of the act of March 4, 1971 (P.L.6,
21No.2), known as the Tax Reform Code of 1971. The term shall not
22include any tax withheld by an employer from an employee under
23Article III of the Tax Reform Code of 1971.

24"Secretary." The Secretary of Revenue of the Commonwealth.

25"Supplemental tax credit." The Returning Heroes Supplemental
26Tax Credit established under this chapter.

27"Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
28known as the Tax Reform Code of 1971.

29"Taxpayer." An entity subject to tax under Article III, IV
30or VI of the act of March 4, 1971 (P.L.6, No.2), known as the

1Tax Reform Code of 1971. The term shall include the shareholder
2of a Pennsylvania S corporation that receives a Returning Heroes
3Supplemental Tax Credit.

4§ 4403. Establishment.

5There is established a tax credit program to be known as the
6Returning Heroes Supplemental Tax Credit Program. The program
7shall provide supplemental tax credits to taxpayers who receive
8a Federal Returning Heroes Tax Credit and meet the program
9requirements.

10§ 4404. Application.

11(a) General rule.--By September 15, 2014, a taxpayer must
12submit an application and proof to the department of all Federal
13Returning Heroes Tax Credits that were awarded to the taxpayer
14during tax years 2012 and 2013. By September 15 of each
15subsequent year, a taxpayer must submit an application and proof
16to the department of all Federal Returning Heroes Tax Credits
17that were awarded to the taxpayer in the prior taxable year.

18(b) Amount.--A taxpayer who receives a Federal Returning
19Heroes Tax Credit shall be eligible to receive from the
20department a supplemental tax credit of $2,000.

21(c) Notification.--By December 15 of the calendar year
22following the close of the taxable year during which a Federal
23Returning Heroes Tax Credit was awarded to the taxpayer, the
24department shall notify the taxpayer if its supplemental tax
25credit application was approved or denied. If the application is
26denied, the department shall state the reasons for the denial,
27including a description of deficiencies in the application.

28§ 4405. Carryover, carryback, refund and assignment.

29(a) Carryover.--If the taxpayer cannot use the entire amount
30of the supplemental tax credit for the taxable year in which the

1supplemental tax credit is first approved, then the excess may
2be carried over to the succeeding taxable years and used as a
3credit against the qualified tax liability of the taxpayer for
4those taxable years. Each time that the supplemental tax credit
5is carried over to a succeeding taxable year, it is to be
6reduced by the amount that was used as a credit during the
7immediately preceding taxable year. The supplemental tax credit
8may be carried over and applied to succeeding taxable years for
9no more than 15 taxable years following the first taxable year
10for which the taxpayer was entitled to claim the credit.

11(b) Application.--A supplemental tax credit approved by the
12department shall be applied against the taxpayer's qualified tax
13liability for the current taxable year as of the date on which
14the credit was approved before the tax credit is applied against
15any tax liability under subsection (a).

16(c) Unused credit.--A taxpayer is not entitled to assign,
17carry back or obtain a refund of an unused supplemental tax
18credit.

19§ 4406. Limitation on credits.

20(a) Total amount.--The total amount of supplemental tax
21credits approved by the department shall not exceed $20,000,000
22in any fiscal year.

23(b) Allocation.--Tax credits shall be allocated by the
24department on a first-come, first-served basis.

25§ 4407. Shareholder, owner or member of pass-through entity.

26(a) Shareholder.--If a Pennsylvania S corporation does not
27have an eligible tax liability against which the supplemental
28tax credit may be applied, a shareholder of the Pennsylvania S
29corporation is entitled to a supplemental tax credit equal to
30the tax credit determined for the Pennsylvania S corporation for

1the taxable year multiplied by the percentage of the
2Pennsylvania S corporation's distributive income to which the
3shareholder is entitled.

4(b) Pass-through entity.--If a pass-through entity other
5than a Pennsylvania S corporation does not have an eligible tax
6liability against which the supplemental tax credit may be
7applied, an owner or member of the pass-through entity is
8entitled to a supplemental tax credit equal to the tax credit
9determined for the pass-through entity for the taxable year
10multiplied by the percentage of the pass-through entity's
11distributive income to which the owner or member is entitled.

12(c) Additional credit.--The supplemental tax credit provided
13under subsection (a) or (b) shall be in addition to any other
14tax credit to which a shareholder, owner or member of a pass-
15through entity is entitled under this chapter, except that a
16pass-through entity and a shareholder, owner or member of a
17pass-through entity may not claim a supplemental tax credit
18under this chapter for the same expense.

19§ 4408. Reports.

20The secretary shall submit an annual report to the General
21Assembly indicating the use and effectiveness of the
22supplemental tax credits no later than March 15 following the
23year in which the credits were approved. The report shall
24include the names of all businesses utilizing the supplemental
25tax credits as of the date of the report and the amount of
26credits approved and utilized by each taxpayer. Notwithstanding
27any law providing for the confidentiality of tax records, the
28information contained in the report shall be public information.
29The report may also include any recommendations for changes in
30the calculation or administration of the credit.

1§ 4409. Regulations.

2The secretary shall promulgate regulations necessary for the
3implementation and administration of this chapter.

4§ 4410. Applicability.

5This chapter shall apply to taxpayers receiving Federal
6Returning Heroes Tax Credits during tax years beginning after
7December 31, 2012.

8Section 2. This act shall take effect immediately.