PRINTER'S NO. 2759
No. 2117 Session of 1999
INTRODUCED BY DALEY, FARGO, HERMAN, MARKOSEK, ARGALL,
McILHATTAN, BELFANTI, WOJNAROSKI, McCALL, ROBERTS, HALUSKA,
LAUGHLIN, DeWEESE, BASTIAN, PETRARCA, PIPPY, ROBINSON, GEIST,
MAHER, YOUNGBLOOD, VAN HORNE, COSTA, SHANER, COLAFELLA,
KIRKLAND, LEVDANSKY, STAIRS, STEELMAN, YUDICHAK, RAMOS AND
HARHAI, DECEMBER 7, 1999
REFERRED TO COMMITTEE ON FINANCE, DECEMBER 7, 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," providing for a credit against capital stock-
11 franchise tax.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 601 of the act of March 4, 1971 (P.L.6,
15 No.2), known as the Tax Reform Code of 1971, is amended by
16 adding a definition to read:
17 Section 601. Definitions and Reports.--(a) The following
18 words, terms and phrases when used in this Article VI shall have
19 the meaning ascribed to them in this section, except where the
20 context clearly indicates a different meaning:
1 * * *
2 "Research and development cost." An expenditure which is:
3 (1) made by an entity, either directly or through a holding
4 company, an affiliate or another person or organization, such as
5 a research institute, industry association, foundation,
6 university, engineering company or similar contractor, in
7 pursuing research and development, including experimentation,
8 design, installation, construction and operation; and
9 (2) reasonably related to the existing or future business,
10 broadly defined, of the entity or related to the environment in
11 which the entity operates or expects to operate. The term
12 includes an expenditure incidental to the design, development or
13 implementation of an experimental facility, a plant process, a
14 product, a formula, an invention, a system or a similar item and
15 to the improvement of an already existing item of a like nature;
16 an expenditure in connection with the proposed delivery of
17 electricity, heat or hot water which utilizes coal mined from
18 coal reserves located in this Commonwealth; and an expenditure
19 for obtaining a patent, such as attorney fees expended in making
20 and perfecting a patent application. The term does not include
21 expenditures for efficiency surveys; studies of management,
22 management techniques and organization; or consumer surveys,
23 advertising promotions or items of a like nature.
24 * * *
25 Section 2. The act is amended by adding a section to read:
26 Section 602.6. Tax Credits for Coal Use, Research and
27 Development.--(a) (1) For taxable years beginning after
28 December 31, 1998, an entity shall be allowed a credit against
29 the tax imposed by section 602 in the amount of one dollar ($1)
30 per ton for each ton of coal mined from coal reserves located in
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1 this Commonwealth which is purchased for the production of
2 electricity, heat or hot water by the entity in excess of the
3 number of tons of coal mined from coal reserves located in this
4 Commonwealth which were purchased for such production by the
5 entity in 1997. This credit shall be prorated equally against
6 the entity's estimated payments for the taxable year in which
7 the coal is purchased.
8 (2) For taxable years beginning after December 31, 1999, an
9 entity shall be allowed an additional credit against the tax
10 imposed by section 602 in the amount of one dollar ($1) per ton
11 for each ton of coal mined from coal reserves located in this
12 Commonwealth which is purchased by the entity in excess of the
13 number of tons of coal mined from coal reserves located in this
14 Commonwealth which were purchased by the entity in 1997. The
15 credit shall be prorated equally against the entity's estimated
16 payments for the taxable year in which the coal is purchased.
17 (b) (1) For taxable years beginning after December 31,
18 1998, an entity shall be allowed a credit against the tax
19 imposed by section 602 equivalent to twenty-five per cent of the
20 amount spent by the entity for research and development cost,
21 capital and operating costs for equipment and process or
22 consumption methods, which encourage nonfuel coal use or utilize
23 clean coal technologies or clean coal and natural gas
24 technologies for the purpose of complying with Federal and State
25 clean air mandates for the control of sulfur dioxide, nitrogen
26 oxide, carbon dioxide, mercury and other toxic pollutants and
27 which:
28 (i) result in increased use of coal mined from coal reserves
29 located in this Commonwealth; or
30 (ii) continue the consumption of coal mined from coal
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1 reserves located in this Commonwealth which may have been
2 curtailed except for the performance of research, development or
3 demonstration.
4 (2) The tax credit shall be in addition to any other credits
5 which result from increased coal usage.
6 (3) An eligible entity may recover in taxable years
7 beginning after December 31, 1998, research and development
8 costs from taxable years beginning after December 31, 1996.
9 (4) An entity may receive the credit under this subsection
10 in the taxable year in which the expenditure occurs. Credits for
11 multi-year projects will be subject to rescission if the
12 completed project does not satisfy the requirements of this
13 subsection for increasing or maintaining use of Pennsylvania
14 coal.
15 (5) The Office of Science, Technology and Workforce in the
16 Department of Community and Economic Development shall review
17 research, development and demonstration expenditures submitted
18 to the department under this subsection to determine eligibility
19 for the tax credit. The authority shall advise the department of
20 its determination and the reasons therefor within sixty (60)
21 days of receipt of a request from the department to conduct such
22 a review.
23 (c) If an entity is entitled to a tax credit under this
24 section in an amount which exceeds the entity's tax liability
25 for the tax imposed by section 602, the excess credit shall be
26 applied against any tax imposed on the entity by section 401.
27 Section 3. This act shall take effect immediately.
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