Regular Session 2015-2016 House Bill 1670 P.N. 2476

PRINTER'S NO. 2476

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1670

Session of

2015

INTRODUCED BY GROVE, MILLARD, HEFFLEY, BOBACK, McNEILL,

DRISCOLL, PHILLIPS-HILL, REGAN, LONGIETTI, STAATS, DIAMOND,

McGINNIS, JOZWIAK, PICKETT, METZGAR, KAUFFMAN AND WATSON,

OCTOBER 29, 2015

REFERRED TO COMMITTEE ON FINANCE, OCTOBER 29, 2015

AN ACT

Repealing the act of May 23, 1945 (P.L.893, No.360), entitled

"An act to provide revenue for State purposes by imposing an

excise tax on the net income of co-operative agricultural

associations having capital stock, in lieu of all other

taxes, except tax on real estate; providing for the

assessment, collection, settlement and resettlement of tax,

and reviews and appeal therefrom; conferring powers and

imposing duties on certain persons, co-operative agricultural

associations having capital stock, State and county officers,

boards and departments; and providing penalties."

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The act of May 23, 1945 (P.L.893, No.360), known

as the Co-operative Agricultural Association Corporate Net

Income Tax Act, is repealed:

[AN ACT

To provide revenue for State purposes by imposing an excise tax

on the net income of co-operative agricultural associations

having capital stock, in lieu of all other taxes, except tax

on real estate; providing for the assessment, collection,

settlement and resettlement of tax, and reviews and appeal

therefrom; conferring powers and imposing duties on certain

persons, co-operative agricultural associations having

capital stock, State and county officers, boards and

departments; and providing penalties.

TABLE OF CONTENTS

Section 1. Short title.

Section 2. Definitions.

Section 3. Imposition of tax.

Section 4. Report and Payment of Tax.

Section 5. Extension of Time to File Reports.

Section 6. Settlement and Resettlement.

Section 7. Enforcement; Rules and Regulations; Inquisitorial

Powers of the Department.

Section 8. Retention of Records by Associations; Penalty.

Section 9. Penalty.

Section 10. Constitutional Construction.

Section 11. Effective date.

Section 1. This act shall be known and may be cited as the

"Co-operative Agricultural Association Corporate Net Income Tax

Act."

Section 2. Definitions.--The following words, terms and

phrases, when used in this act, shall have the meaning ascribed

to them in this section, except where the context clearly

indicates a different meaning.

"Co-operative Agricultural Association."--An incorporated,

co-operative agricultural association, composed of persons

engaged in agriculture and instituted for the purposes of mutual

help, having capital stock, either organized under the laws of

this Commonwealth, the United States, or any state, territory or

foreign country, or dependency, and doing business in this

20150HB1670PN2476 - 2 -

Commonwealth, or having capital or property employed or used in

this Commonwealth by or in the name of itself, or any person,

partnership or association.

"Association."--Any co-operative agricultural association as

hereinbefore defined.

"Department."--The Department of Revenue of this

Commonwealth.

"Net Income."--In case the entire business transacted by the

association is transacted within this Commonwealth, net income

for the calendar year or fiscal year shall be only an amount

equal to the sum of the dividends declared, or declared and paid

on the shares of common and preferred stock during the year.

In case the entire business is not transacted by the

association within this Commonwealth, the tax imposed by this

act shall be based upon such portion of the net income for the

calendar or fiscal year, as defined herein, as shall be

attributed to business transacted in this Commonwealth by

multiplying such net income by a fraction, of which the

numerator is the gross receipts received from business

transacted within the Commonwealth, and of which the denominator

is the amount of the gross receipts received from all the

business.

Section 3. Imposition of Tax.--Every association shall be

subject to, and shall pay for, the privilege of doing business

in this Commonwealth, or having capital or property employed or

used in the Commonwealth, by, or in the name of itself, or any

other person, partnership or association, a State excise tax at

the rate of four per centum (4%) per annum upon each dollar of

the net income, which tax shall be collected in lieu of any

other excise tax except liquid fuel taxes, fuel use taxes, sales

20150HB1670PN2476 - 3 -

and use taxes on registered motor vehicles and unemployment

compensation fund contributions but including corporate net

income tax or property tax. Nothing contained herein shall be

construed to impose an excise tax upon any subject of taxation

when such subject of taxation is specifically exempted under the

statute levying the excise tax. The property shall be free from

any county tax excepting tax on real estate.

Section 4. Report and Payment of Tax.--For the purpose of

ascertaining the amount of tax payable under this act, it shall

be the duty of every association liable to pay tax under this

act, on or before the fifteenth day of April of each year, to

transmit to the department upon a form prescribed, prepared and

furnished by the department, a report under oath or affirmation,

of its president, vice-president or other principal officer and

of its treasurer or assistant treasurer of net income taxable

under the provisions of this act.

The failure of any association liable to pay tax under this

act to procure or receive any report form shall not excuse it

from making a report. Every association, upon the date its

report is required herein to be made, shall pay to the

department the tax due to the Commonwealth by it for the

preceding year.

The amount of the tax imposed under this act not paid on or

before the time, as above provided, shall bear interest at the

rate of six per centum (6%) per annum from the date it is due

and payable until paid: Provided, however, That any association

may pay the full amount of such tax, or any part thereof,

together with interest due to the date of payment, without

prejudice to its right to present and prosecute a petition for

resettlement, a petition for review, or an appeal to court. If

20150HB1670PN2476 - 4 -

it be thereafter determined that such taxes were overpaid the

department shall enter a credit to the account of such

association which may be used by it in the manner prescribed by

law.

If the officers of any association shall neglect or refuse to

make any report, as herein required, or shall knowingly make any

false report, an additional ten per centum (10%) of the amount

of the tax shall be added by the department to the tax

determined to be due.

If any association closes its fiscal year not upon the

thirty-first day of December, but upon some other date, such

association shall certify such fact to the Department of Revenue

and shall make the report herein required on or before the

fifteenth day of the fourth month after the close of its fiscal

year.

Section 5. Extension of Time to File Reports.--The

department may, upon application made to it in such form as it

shall prescribe, on or prior to the last day for filing any

report and upon proper cause shown, grant to the association

required to file such report, an extension of not more than

sixty (60) days within which such report may be filed, but the

amount of tax due shall, in such cases, nevertheless, be subject

to interest from the due date and at the rate fixed by this act.

Section 6. Settlement and Resettlement.--(a) All tax due

under this act shall be settled by the department and such

settlement shall be subject to audit and approval by the

Department of the Auditor General and shall, so far as possible,

be made so that notice thereof may reach the taxpayer before the

end of a year after the tax report was required to be made.

(b) Promptly after the date of any such settlement the

20150HB1670PN2476 - 5 -

department shall send, by mail or otherwise, a copy thereof to

such association. The tax imposed by this act shall be settled,

resettled and otherwise imposed and adjusted in the same manner

within the same periods of time, and right of resettlement,

review, appeal and refund as provided by law in the case of

capital stock and franchise taxes imposed upon business

corporations.

any settlement, the department is not satisfied with such

settlement the department is hereby authorized and empowered to

make a resettlement of the tax due by such association, based

upon the facts contained in the report, or upon any information

within its possession, or that shall come into its possession.

Whenever a resettlement shall have been made hereunder, the

department shall resettle the account according to law and shall

credit or charge, as the case may be, the amount resulting from

such resettlement upon the current accounts of the association

with which it is made.

The resettlement shall be subject to audit and approval by

the Department of the Auditor General, as in the case of

original settlement, and in case of the failure of the two

departments to agree, the resettlement shall be submitted to the

Board of Finance and Revenue, as in the case of original

settlements.

(d) If any association shall neglect or refuse to make any

report and payment of tax required by this act, the department

shall estimate the tax due by such association, and, subject to

audit and approval by the Department of Auditor General, settle

the amount due by it for tax penalties and interest thereon, as

prescribed herein, from which settlement there shall be no right

20150HB1670PN2476 - 6 -

of review or appeal, but the department, with the approval of

the Department of Auditor General, may require a report to be

filed and thereupon make a settlement based upon such report and

cancel the estimated settlement.

Section 7. Enforcement; Rules and Regulations; Inquisitorial

Powers of the Department.--(a) The department is hereby charged

with the enforcement of the provisions of this act, and is

hereby authorized and empowered to prescribe, adopt, promulgate,

and enforce rules and regulations not inconsistent with this act

relating to any matter or thing pertaining to the administration

and enforcement of the provisions of this act, and the

collections of tax, penalties and interest imposed by this act.

The department is hereby required to have such rules and

regulations promulgated and adopted, printed, and shall

distribute the same to any person upon request.

(b) The department or any agent, authorized in writing by

it, is hereby authorized to examine the books, papers and

records, and to investigate the character of the business

transacted by any association in order to verify the accuracy of

any report made, or if no report was made by such association,

to ascertain and settle the tax imposed by this act. Every such

association is hereby directed and required to give to the

department, or its duly authorized agent, the means, facilities

and opportunity for such examinations and investigations as are

hereby provided and authorized. Any information gained by the

department as a result of any returns, investigations, or

verifications required to be made by this act shall be

confidential, except for official purposes, and any person

divulging such information shall be guilty of a misdemeanor, and

upon conviction thereof, shall be sentenced to pay a fine of not

20150HB1670PN2476 - 7 -

less than one hundred dollars ($100), or more than one thousand

dollars ($1,000), and costs of prosecution, or to undergo

imprisonment for not more than six (6) months, or both, in the

discretion of the court.

department shall, in good faith, institute legal proceedings for

any violations of the provisions of this act, and for any reason

shall fail to recover costs of record, such costs shall be a

charge upon the proper county, as shall such costs in the event

defendant is imprisoned for failure to pay fine or costs, or

both, and shall be audited and paid as are costs of like

character in said county.

(d) The powers conferred by this act upon the department

relating to the administration or enforcement of this act shall

be in addition to, but not exclusive of, any other powers

heretofore or hereafter conferred upon the department by law.

Section 8. Retention of Records by Associations; Penalty.--

Each association shall maintain and keep for a period of three

(3) years after any report is filed under this act, such record

or records of business transacted by it within this Commonwealth

for the period covered by such report, and other pertinent

papers as may be required by the department.

Any person violating any of the provisions of this section

shall be guilty of a misdemeanor and shall, upon conviction

thereof, be sentenced to pay a fine not exceeding one thousand

dollars ($1,000) and costs of prosecution, or to undergo

imprisonment for not more than six (6) months, or both, in the

discretion of the court.

Section 9. Penalties.--(a) Any person who shall wilfully

make a false and fraudulent return of net income made taxable by

20150HB1670PN2476 - 8 -

this act shall be guilty of willful and corrupt perjury, and

upon conviction thereof, shall be subject to punishment as

provided by law. Such penalty shall be in addition to any other

penalties imposed by this act.

(b) Any person who wilfully fails, neglects, or refuses to

make a report, or to pay the tax as herein prescribed, or who

shall refuse to permit the department to examine the books,

papers and records of any association liable to pay tax under

this act, shall be guilty of a misdemeanor, and upon conviction

thereof, shall be sentenced to pay a fine not exceeding one

thousand dollars ($1,000) and costs of prosecution, or to

undergo imprisonment not exceeding six (6) months, or both, in

the discretion of the court. Such penalty shall be in addition

to any other penalties imposed by this act.

Section 10. Constitutional Construction.--The provisions of

this act are severable and if any of its provisions shall be

held unconstitutional, the decision of the court shall not

affect or impair any of the remaining provisions of this act. It

is hereby declared to be the legislative intent that this act

would have been adopted had such unconstitutional provisions not

been included herein.

Section 11. This act shall become effective immediately upon

its final enactment, and its provisions shall be applicable to

settlements of tax for the calendar year ending the thirty-first

day of December, one thousand nine hundred forty-four, or fiscal

year ending in the calendar year one thousand nine hundred

forty-five and every year thereafter.]

Section 2. This act shall take effect in 60 days.

20150HB1670PN2476 - 9 -