PRINTER'S NO. 2958
No. 2131 Session of 1998
INTRODUCED BY HUTCHINSON, BAKER, FARGO, LYNCH, SAYLOR, CLARK,
EGOLF, FAIRCHILD, HANNA, HENNESSEY, HERSHEY, McCALL, RAMOS,
STEELMAN AND McILHATTAN, FEBRUARY 11, 1998
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 11, 1998
AN ACT
1 Authorizing counties to impose sales, use, occupancy, personal
2 income or earned income and net profits taxes; authorizing
3 municipalities to impose personal income, earned income and
4 net profits and municipal service taxes; empowering
5 municipalities and school districts to require county sales
6 and use taxes; authorizing school districts to impose taxes
7 on personal income, earned income and net profits; providing
8 for the levying, assessment and collection of such taxes;
9 providing for the powers and duties of the Department of
10 Community and Economic Development, the Department of Revenue
11 and the State Treasurer; providing an additional exemption
12 from the tax on intangible personal property; and providing
13 for limitations on debt of school districts.
14 TABLE OF CONTENTS
15 Chapter 1. General Provisions
16 Section 101. Short title.
17 Section 102. Definitions.
18 Section 103. Scope and limitations.
19 Section 104. Preemption.
20 Section 105. Home rule counties and municipalities.
21 Section 106. Certain rates of taxation limited.
22 Section 107. Limitations on the incurring of debt by school
23 districts.
1 Chapter 3. Subjects of Taxation
2 Subchapter A. Tax Authorization
3 Section 301. General tax authorization.
4 Section 302. Continuity of tax.
5 Section 303. Election to participate under act.
6 Section 304. Public referendum requirements for increasing
7 property taxes previously reduced.
8 Section 305. Local tax study commission.
9 Subchapter B. County Sales and Use Tax
10 Section 311. Construction.
11 Section 312. Imposition.
12 Section 313. Situs.
13 Section 314. Licenses.
14 Section 315. Rules and regulations; collection costs.
15 Section 316. Procedure and administration.
16 Section 317. County sales and use tax funds.
17 Section 318. Disbursements.
18 Section 319. Adoption of municipal resolutions
19 and school district petitions.
20 Section 320. Qualified municipalities and school districts.
21 Section 320.1. Municipal and school district sales and
22 use tax initiative.
23 Subchapter C. Personal Income Tax
24 Section 321. Construction.
25 Section 322. Local personal income tax.
26 Section 323. Collections.
27 Section 324. Rules and regulations.
28 Section 325. Procedure and administration.
29 Subchapter D. Earned Income and Net Profits Tax
30 Section 331. Earned income and net profits tax.
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1 Section 332. Collections.
2 Section 333. Rules and regulations.
3 Section 334. Procedure and administration.
4 Subchapter E. Municipal Service Tax
5 Section 341. Municipal service tax.
6 Section 342. Multiple employment locations.
7 Section 343. Collection procedures.
8 Subchapters F through I (Reserved)
9 Chapter 5. Credits, Exemptions and Deferrals
10 Subchapter A. Credits and Exemptions
11 Section 501. Credits.
12 Section 502. Low-income tax provisions.
13 Section 503. Municipal service tax exemption.
14 Section 504. Regulations.
15 Subchapters B through J (Reserved)
16 Chapter 7. Disposition of Tax Revenues
17 Section 701. Sales tax revenues.
18 Section 702. Income tax and municipal
19 service tax revenues.
20 Section 703. Revenue limitation exceptions.
21 Chapter 9. Register for Certain Taxes
22 Section 901. Definitions.
23 Section 902. Register for taxes under this act.
24 Section 903. Information for register.
25 Section 904. Availability and effective period of register.
26 Section 905. Effect of nonfiling.
27 Section 906. Effect of chapter on liability of taxpayer.
28 Chapter 51. Miscellaneous Provisions
29 Section 5101. Effective date.
30 The General Assembly of the Commonwealth of Pennsylvania
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1 hereby enacts as follows:
2 CHAPTER 1
3 GENERAL PROVISIONS
4 Section 101. Short title.
5 This act shall be known and may be cited as the Optional
6 Local Tax Enabling Act.
7 Section 102. Definitions.
8 The following words and phrases when used in this act shall
9 have the meanings given to them in this section unless the
10 context clearly indicates otherwise:
11 "Association." As defined in section 301 of the act of March
12 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
13 "Board of county commissioners." Includes the successor in
14 function to the board of county commissioners in a county which
15 has adopted a home rule charter under the former act of April
16 13, 1972 (P.L.184, No.62), known as the Home Rule Charter and
17 Optional Plans Law, or under 53 Pa.C.S. Pt. III Subpt. E
18 (relating to home rule and optional plan government), but does
19 not include the city council of a city of the first class.
20 "Budgeted revenue." The revenue from taxes actually levied
21 and assessed by a local government unit. The term does not
22 include revenue from:
23 (1) Delinquent taxes.
24 (2) Payments in lieu of taxes.
25 (3) The real estate transfer tax.
26 (4) The Public Utility Realty Tax, commonly known as
27 PURTA.
28 (5) Interest or dividend earnings.
29 (6) Federal or State grants, contracts or
30 appropriations.
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1 (7) Income generated from operations.
2 (8) Any other source that is revenue not derived
3 directly from taxes levied and assessed by a local government
4 unit.
5 "Business." As defined in section 301 of the act of March 4,
6 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
7 "Compensation." As defined in section 301 of the act of
8 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
9 1971.
10 "County." A county-level municipality within this
11 Commonwealth, regardless of classification. The term includes a
12 county which has adopted a home rule charter or optional plan of
13 government under the former act of April 13, 1972 (P.L.184,
14 No.62), known as the Home Rule Charter and Optional Plans Law,
15 or under 53 Pa.C.S. Pt. III Subpt. E (relating to home rule and
16 optional plan government). The term does not include a county of
17 the first class, second class or second class A.
18 "Current year." The calendar year or fiscal year for which
19 the tax is levied.
20 "Department." The Department of Revenue of the Commonwealth.
21 "Domicile." As defined in section 13 of the act of December
22 31, 1965 (P.L.1257, No.511), known as The Local Tax Enabling
23 Act.
24 "Earned income." The classes of income defined as earned
25 income in section 13 of the act of December 31, 1965 (P.L.1257,
26 No.511), known as The Local Tax Enabling Act.
27 "Employer." As defined in section 301 of the act of March 4,
28 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
29 "Governing body." The board of county commissioners,
30 including the successor in function to the board of county
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1 commissioners in a county which has adopted a home rule charter
2 under the former act of April 13, 1972 (P.L.184, No.62), known
3 as the Home Rule Charter and Optional Plans Law, or under 53
4 Pa.C.S. Pt. III Subpt. E (relating to home rule and optional
5 plan government), city council, borough council, incorporated
6 town council, board of township commissioners, board of township
7 supervisors, a governing council of a home rule municipality or
8 optional plan municipality, a governing council of any similar
9 general purpose unit of government which may hereafter be
10 created by statute, or a board of school directors of a school
11 district. The term does not include the city council of a city
12 of the first class.
13 "Home rule municipality." A city, borough, incorporated town
14 or township which has adopted a home rule charter under the
15 former act of April 13, 1972 (P.L.184, No.62), known as the Home
16 Rule Charter and Optional Plans Law, or under 53 Pa.C.S. Pt. III
17 Subpt. E (relating to home rule and optional plan government).
18 "Individual." As defined in section 301 of the act of March
19 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
20 "Inverse per capita income." A factor determined by dividing
21 the integer one by the per capita income of the municipality, as
22 determined by the most recent survey by the Department of
23 Community and Economic Development.
24 "Local Tax Enabling Act." The act of December 31, 1965
25 (P.L.1257, No.511), known as The Local Tax Enabling Act.
26 "Municipal service tax." A tax upon residents and
27 nonresidents employed within a municipality.
28 "Municipality." A city of the second class, city of the
29 second class A, city of the third class, borough, incorporated
30 town, township of the first class, township of the second class,
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1 home rule municipality, optional plan municipality, optional
2 form municipality or similar general purpose unit of government
3 which may hereafter be created by statute, except a city of the
4 first class and any municipality located within a county of the
5 first class, second class or second class A.
6 "Net profits." The classes of income defined as net profits
7 in section 13 of the act of December 31, 1965 (P.L.1257,
8 No.511), known as The Local Tax Enabling Act.
9 "Nonresident." An individual domiciled outside the
10 municipality.
11 "Optional form municipality." A city which has adopted an
12 optional form of government under the act of July 15, 1957
13 (P.L.901, No.399), known as the Optional Third Class City
14 Charter Law.
15 "Optional plan municipality." A city, borough, incorporated
16 town or township which has adopted an optional plan of
17 government under the former act of April 13, 1972 (P.L.184,
18 No.62), known as the Home Rule Charter and Optional Plans Law,
19 or under 53 Pa.C.S. Pt. III Subpt. E (relating to home rule and
20 optional plan government).
21 "Ordinance." Includes a resolution.
22 "Personal income." Income enumerated in section 303 of the
23 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
24 of 1971, as returned to and ascertained by the Department of
25 Revenue, subject, however, to any correction thereof for fraud,
26 evasion or error as finally ascertained by the Commonwealth.
27 "Preceding year." The calendar year or fiscal year before
28 the current year.
29 "Register." The register provided for in Chapter 9.
30 "Relative tax effort." The total tax revenues from all
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1 sources of a municipality as reported to the Department of
2 Community and Economic Development, divided by the total tax
3 revenues from all sources from all municipalities in the county.
4 "Resident individual." An individual who is domiciled in a
5 municipality or school district.
6 "School district." A school district of the first class A,
7 second class, third class or fourth class, including any
8 independent school district. The term shall not include any
9 school district located in a county of the first class, second
10 class or second class A.
11 "Statewide average weekly wage." That amount determined
12 annually for each calendar year by the Department of Labor and
13 Industry under section 105.1 of the act of June 2, 1915
14 (P.L.736, No.338), known as the Workers' Compensation Act.
15 "Succeeding year." The calendar year or fiscal year
16 following the current year.
17 "Tax officer." The person, public employee or private agency
18 designated by a governing body to collect and administer the
19 municipal service tax imposed under this act.
20 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
21 known as the Tax Reform Code of 1971.
22 "Taxpayer." An individual required under this act to file a
23 tax return or to pay a tax.
24 "Weighted formula." A formula dividing an allocation into
25 thirds, with one-third based on relative population, one-third
26 based on relative tax effort and one-third based on the relative
27 inverse per capita income.
28 Section 103. Scope and limitations.
29 (a) General rule.--Except as provided in subsections (b),
30 (c), (d) and (e), it is the intent of this act to confer upon
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1 each county, municipality and school district the power to levy,
2 assess and collect taxes upon the subjects of taxation set forth
3 in this act.
4 (b) Real estate transfer taxes.--This act does not affect
5 the powers of a municipality or school district to levy, assess
6 and collect a real estate transfer tax, including any real
7 estate transfer tax levied under the authority of section
8 652.1(a)(4) of the act of March 10, 1949 (P.L.30, No.14), known
9 as the Public School Code of 1949.
10 (c) Amusement taxes.--Notwithstanding any other provision of
11 this act, any municipality or school district which has elected
12 to participate under section 303(a) and has on or before January
13 1, 1997, levied, assessed or collected or provided for the
14 levying, assessment or collection of an amusement tax may
15 continue to levy, assess and collect such tax on such subjects
16 upon which the tax was imposed by the municipality or school
17 district as of January 1, 1997, at a rate not to exceed the rate
18 imposed by the municipality or school district as of January 1,
19 1997.
20 (d) Mercantile or business privilege taxes on gross
21 receipts.--Nothing in this act shall, either explicitly or
22 implicitly, permit a county, municipality or school district to
23 impose or increase the rate of any mercantile or business
24 privilege tax on gross receipts not otherwise permitted prior to
25 the effective date of this act, nor shall any provision of this
26 act affect the prohibitions on business gross receipts taxes as
27 set forth in section 2 of the Local Tax Enabling Act, section
28 533 of the act of December 13, 1988 (P.L.1121, No.145), known as
29 the Local Tax Reform Act, the Tax Reform Code and any other
30 relevant act.
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1 (e) Limitations.--
2 (1) The provisions of this act shall not apply to any
3 county of the first class, second class or second class A.
4 (2) The provisions of this act shall not apply to any
5 municipality or school district located within a county of
6 the first class, second class or second class A.
7 (3) The provisions of this act shall not apply to any
8 city of the first class.
9 Section 104. Preemption.
10 No act of the General Assembly will vacate or preempt any
11 ordinance adopted under this act providing for the imposition of
12 a tax by a county, municipality or school district unless the
13 act of the General Assembly expressly vacates or preempts the
14 authority to adopt the ordinance.
15 Section 105. Home rule counties and municipalities.
16 (a) Participation under act.--Except for the case when a
17 governing body of a home rule county elects to adopt the tax
18 authorized under section 312, the governing body of a home rule
19 county or home rule municipality which desires to participate
20 under the provisions of this act shall not be subject to the
21 public referendum requirements of section 303(b). The governing
22 body of a home rule county which desires to adopt the tax
23 authorized under section 312 shall be subject to the public
24 referendum requirements of section 303(b).
25 (b) Public referendum requirements for increasing property
26 taxes previously reduced.--Any governing body of a home rule
27 county or home rule municipality which elects to participate
28 under this act is not subject to the provisions of section 304.
29 (c) Ending participation under act.--The governing body of a
30 home rule county or home rule municipality which desires to end
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1 participation under the provisions of this act shall not be
2 subject to the public referendum requirements of section 303.
3 (d) Rates of taxation.--A home rule county shall not have
4 the right or authority to fix the rate of taxation for the
5 subjects of taxation authorized under Chapter 3 in excess of the
6 rates fixed in Chapter 3.
7 (e) Disposition of revenues.--Home rule counties which elect
8 to participate under the provisions of this act shall be subject
9 to all the provisions of sections 701(a) and 702(d)(1),
10 including the provision that any increase in revenues between
11 the transition year and the prior year's budgeted revenues not
12 exceed 5% or the annual increase in the Statewide average weekly
13 wage, whichever is less.
14 Section 106. Certain rates of taxation limited.
15 If a municipality and school district both impose an earned
16 income tax on the same individual under the Local Tax Enabling
17 Act and the municipality and school district are limited to, or
18 have agreed upon, a division of the tax rate in accordance with
19 section 8 of the Local Tax Enabling Act, then the municipality
20 and school district which continue to levy the income tax under
21 the Local Tax Enabling Act shall remain subject to that
22 limitation or agreement in the event that one or the other opts
23 to impose a tax under section 322 or 331.
24 Section 107. Limitations on the incurring of debt by school
25 districts.
26 (a) Limitation.--Except as provided under subsection (b) and
27 for purposes of refinancing existing debt under 53 Pa.C.S. Pt.
28 VII Subpt. B (relating to indebtedness and borrowing), no school
29 district of the first class A through fourth classes shall incur
30 any new nonelectoral debt or lease rental debt, if the aggregate
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1 net principal amount of such new debt together with any other
2 net nonelectoral debt and lease rental debt then outstanding,
3 would cause the outstanding total of net nonelectoral debt plus
4 net lease rental debt of the school district to exceed 150% of
5 the school district's borrowing base as defined in the Local
6 Government Unit Debt Act and 200% of the school district's total
7 local tax revenues averaged over the three full fiscal years
8 immediately preceding the date of the incurring of nonelectoral
9 debt or lease rental debt.
10 (b) Applicability.--The provisions of subsection (a) shall
11 not apply to any school district that has elected to participate
12 under the provisions of this act in accordance with section 303
13 and which does not increase the rate of any tax imposed under
14 this act or any other act for the purpose of incurring
15 additional debt under the Local Government Unit Debt Act.
16 CHAPTER 3
17 SUBJECTS OF TAXATION
18 SUBCHAPTER A
19 TAX AUTHORIZATION
20 Section 301. General tax authorization.
21 (a) General rule.--Subject to sections 303 and 304 and
22 except as provided in subsection (b), each county, municipality
23 or school district shall have the power and may by ordinance
24 levy, assess and collect or provide for the levying, assessment
25 and collection of such taxes on the subjects specified in this
26 chapter for general revenue purposes as it shall determine on
27 any or all of the subjects of taxation set forth in this act
28 within the geographical limits of the county, municipality or
29 school district.
30 (b) Exclusions.--No county, municipality or school district
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1 which levies a tax authorized by this act shall have any power
2 or authority to levy, assess or collect:
3 (1) A tax based upon a flat rate or on a millage rate on
4 an assessed valuation of a particular trade, occupation or
5 profession, commonly known as an occupation tax.
6 (2) A tax at a set or flat rate upon persons employed
7 within the taxing district, commonly known as an occupational
8 privilege tax.
9 (3) A per capita, poll, residence or similar head tax.
10 (4) The earned income and net profits tax levied under
11 the Local Tax Enabling Act.
12 (5) Any other tax authorized or permitted under the
13 Local Tax Enabling Act except a mercantile or business
14 privilege tax on gross receipts, as modified by paragraph
15 (9).
16 (6) An earned income tax under the act of August 24,
17 1961 (P.L.1135, No.508), referred to as the First Class A
18 School District Earned Income Tax Act, or under the
19 additional authority in section 652.1(a)(2) of the act of
20 March 10, 1949 (P.L.30, No.14), known as the Public School
21 Code of 1949.
22 (7) Any tax under section 652.1(a)(4) of the Public
23 School Code of 1949 except as it pertains to real estate
24 transfer taxes.
25 (8) The intangible personal property tax under the act
26 of June 17, 1913 (P.L.507, No.335), referred to as the
27 Intangible Personal Property Tax Law.
28 (9) Any mercantile or business privilege tax on gross
29 receipts, as limited by section 533 of the act of December
30 13, 1988 (P.L.1121, No.145), known as the Local Tax Reform
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1 Act, after one year from the date of the election to
2 participate under this act pursuant to section 303.
3 (10) Any other tax authorized under the Local Tax
4 Enabling Act as limited by the provisions of this act.
5 (c) Delinquent taxes.--The provisions of subsection (b)
6 shall not apply to collection of delinquent taxes.
7 Section 302. Continuity of tax.
8 Every tax levied under the provisions of this act shall
9 continue in force on a calendar or fiscal year basis, as the
10 case may be, without annual reenactment unless the rate of tax
11 is increased or the tax is subsequently repealed.
12 Section 303. Election to participate under act.
13 (a) General rule.--
14 (1) Any governing body which desires to participate
15 under the provisions of this act shall make that
16 determination by using the procedures set forth in subsection
17 (b).
18 (2) Any governing body after making an election to
19 participate under this act may, after a period of at least
20 three full calendar years or fiscal years of participation,
21 elect, under the provisions of subsection (b), to levy,
22 assess and collect the taxes prohibited by section 301(b) to
23 the extent otherwise provided by law. If the electorate
24 approves such referendum, the governing body shall lose the
25 authority to continue to levy any tax authorized under this
26 act.
27 (3) If a municipality, county or school district does
28 not act as authorized under subsection (b) within five years
29 following the effective date of this act, a referendum on the
30 question of whether a tax study commission shall be appointed
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1 in accordance with the terms and conditions of this act may
2 be initiated by electors of the municipality, county or
3 school district. A petition containing a proposal for
4 referendum on the question of appointing a tax study
5 commission, signed by electors comprising 2% of the number of
6 electors voting for the office of Governor in the last
7 gubernatorial general election in the municipality, county or
8 school district, may be filed with the election officials at
9 least 90 days prior to the next general election.
10 (i) The name and address of the person filing the
11 petition shall be clearly stated on the petition.
12 (ii) The election officials shall, within ten days
13 after filing, review the initiative petition as to the
14 number and qualifications of signers. If the petition
15 appears to be defective, the election officials shall
16 immediately notify the person filing the petition of the
17 defect.
18 (iii) The initiative petition as submitted to the
19 election officials along with the list of signatories
20 shall be open to public inspection in the office of the
21 election officials.
22 (iv) When the election officials find that the
23 petition as submitted is in proper order, they shall send
24 copies of the initiative petition without signatures
25 thereon to the governing body of the municipality, county
26 or school district involved.
27 (v) The procedure for the referendum shall be
28 governed by the act of June 3, 1937 (P.L.1333, No.320),
29 known as the Pennsylvania Election Code.
30 (vi) When the election officials find the initiative
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1 petition as submitted by the electors meets the
2 requirements of this act, they shall place the proposal
3 on the ballot in a manner fairly representing the content
4 of the initiative petition for decision by referendum at
5 the proper election.
6 (vii) The election officials shall certify the date
7 for the referendum and shall so notify the governing body
8 of the municipality, county or school district at least
9 30 days prior to such date.
10 (viii) At least 30 days' notice of the referendum
11 shall be given by proclamation of the governing body of
12 the municipality, county or school district. A copy of
13 the proclamation shall be posted at each polling place on
14 the day of the election and shall be published once in at
15 least one newspaper of general circulation in the
16 municipality, county or school district during the 30-day
17 period prior to the election.
18 (ix) Approval of a referendum shall be by a majority
19 vote of those voting in each municipality, county or
20 school district involved.
21 (x) The election officials shall certify the results
22 of the referendum to the governing body.
23 (b) Public referendum requirements to participate or end
24 participation under act.--Subject to the notice and public
25 hearing requirements of section 316(a), 325(a) or 334, whichever
26 is applicable, a governing body may elect to participate or, in
27 accordance with subsection (a)(2), may elect to end
28 participation under this act by obtaining the approval of the
29 electorate of the affected county, municipality or school
30 district in a public referendum at only the November election
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1 preceding the calendar year or fiscal year when the taxes will
2 be initially imposed. The referendum question must state the
3 initial rate of the proposed tax, the reason for the tax and the
4 amount of proposed revenue growth, if any, in the fiscal year of
5 transition to the tax system authorized under this act,
6 expressed as a percent increase over the prior year's budgeted
7 revenue. Any increase in revenues between the transition year
8 and the prior year's budgeted revenue shall not exceed 5% or the
9 annual percent change in the Statewide average weekly wage,
10 whichever is less. The governing body must frame the question in
11 clear language that is readily understandable by the layperson.
12 For the purpose of illustration, a referendum question could be
13 framed as follows:
14 Do you favor the imposition of an X% (name of tax) to be
15 used to replace certain existing local taxes, make
16 reductions in real property taxes and provide for a one-
17 time spending increase of X% over the preceding fiscal
18 year?
19 A nonlegal interpretative statement must accompany the question
20 in accordance with section 201.1 of the act of June 3, 1937
21 (P.L.1333, No.320), known as the Pennsylvania Election Code,
22 that includes the following: the initial rate of the tax or
23 taxes to be imposed and the maximum allowable rate of the tax or
24 taxes imposed under this act; the estimated revenues to be
25 derived from the initial rate of the tax or taxes imposed under
26 this act; the amount of proposed revenue growth, if any, in the
27 fiscal year of transition to the tax system authorized under
28 this act; the estimated tax savings from the reduction in real
29 property taxes and the elimination of certain existing taxes
30 under this act; the identification of the existing taxes to be
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1 eliminated under this act; the method or methods to be used to
2 reduce real property taxes; the class or classes of real
3 property for which real property taxes would be reduced; the
4 estimated amount of real property tax reduction by class,
5 expressed as an average percent reduction by class. Any
6 governing body which uses the procedures under this section
7 shall not be subject to the provisions of section 304 for any
8 future increases in income tax rates. Any future real property
9 tax rate increases are subject to the provisions of section 304.
10 If there is a failed attempt to participate under the provisions
11 of this act pursuant to section 303, section 303 or 304 shall
12 not require the approval of the electorate as a prerequisite to
13 the increase in the rate of any tax which the governing body of
14 the affected county, municipality or school district is
15 authorized to levy and increase pursuant to any other act.
16 Section 304. Public referendum requirements for increasing
17 property taxes previously reduced.
18 (a) General rule.--Except as provided in subsection (c), a
19 governing body of a municipality, county or school district
20 which elects to participate under this act pursuant to section
21 303(a) may not increase the rate of real property taxes that
22 were reduced using revenue derived from an income and/or sales
23 tax imposed under this act or any other act by an amount
24 exceeding the annual percent change in the Statewide average
25 weekly wage in the preceding year without first obtaining
26 approval of the electorate of the affected county, municipality
27 or school district in a public referendum at the November
28 election immediately preceding the calendar year of the proposed
29 tax increase for entities operating on a calendar year fiscal
30 basis and at the primary election for the calendar year of the
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1 proposed tax increase for entities operating on a July to June
2 fiscal basis.
3 (b) Disapproval.--Whenever the electorate fails to approve
4 the proposed referendum question as required under subsection
5 (a) increasing the rates of tax, the governing body shall be
6 limited to the tax rate in effect prior to the referendum.
7 (c) Referendum exceptions.--The provisions of subsection (a)
8 shall not apply to any necessary tax increases in the following
9 cases:
10 (1) To respond to or recover from an emergency or
11 disaster declared pursuant to 35 Pa.C.S. Pt. V (relating to
12 emergency management services), for the duration of the
13 emergency or disaster or for the costs of the recovery from
14 the emergency or disaster.
15 (2) To implement a court order or an administrative
16 decision of a Federal or State agency. In instances where the
17 tax increase is necessary to respond to a court order or an
18 administrative decision of a Federal or State agency
19 requiring a temporary increase in local expenditures, the
20 rate increase shall be rescinded following fulfillment of the
21 court order or administrative decision.
22 (3) To pay interest and principal on any indebtedness
23 incurred under 53 Pa.C.S. Pt. VII Subpt. B (relating to
24 indebtedness and borrowing). However, in no case may a taxing
25 jurisdiction incur additional debt under this paragraph,
26 except for the refinancing of existing debt, including the
27 payment of costs and expenses related to such refinancing and
28 the establishment or funding of appropriate debt service
29 reserves.
30 (4) Taxes levied under section 607(f) of the act of
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1 December 18, 1984 (P.L.1005, No.205), known as the Municipal
2 Pension Plan Funding Standard and Recovery Act, or levied to
3 pay increases in pension fund requirements which are in
4 excess of the annual average increase over the immediately
5 preceding five fiscal years.
6 (5) To increase revenues when actual and projected local
7 tax revenues, including any share of a county sales and use
8 tax, decline from the immediately preceding year but only to
9 the extent of the revenue decline.
10 (6) To respond to conditions that pose a threat of
11 immediate harm or injury to the students, staff or residents
12 of the county, municipality or school district.
13 (7) Special purpose tax levies approved by the
14 electorate.
15 (8) To respond to a Federal or State statute, regulation
16 or order adding to or significantly altering responsibilities
17 and duties or requiring expenditure of county or local funds
18 to the extent not funded by the Federal or State Government.
19 This provision shall apply only to a Federal or State
20 statute, regulation or order taking effect after the
21 effective date of this act.
22 (d) Court action.--Prior to any tax increase under
23 subsection (c)(1), (4), (5), (6) or (8), approval is required by
24 the court of common pleas in the judicial district in which the
25 governing body is located. The following shall apply to any
26 proceedings instituted under this subsection:
27 (1) The governing body must prove by a preponderance of
28 evidence the necessity for the tax increase.
29 (2) The court may retain continuing jurisdiction in
30 these cases and may, on its own motion or on petition of an
19980H2131B2958 - 20 -
1 interested party, revoke approval for a tax increase.
2 (e) Distressed municipality or county.--This section shall
3 not be construed to prohibit any municipality or county declared
4 distressed under the act of July 10, 1987 (P.L.246, No.47),
5 known as the Municipalities Financial Recovery Act, from
6 petitioning the court of common pleas for a tax increase in
7 accordance with section 123(c) of the Municipalities Financial
8 Recovery Act.
9 (f) Standing.--Any taxpayer or business shall have standing
10 as a party to a proceeding under this section as long as the
11 taxpayer or business resides within or pays real property taxes
12 to the taxing jurisdiction of the governing body instituting the
13 action.
14 Section 305. Local tax study commission.
15 (a) First-year implementation.--Before any municipality,
16 school district or county seeks referendum approval for the
17 levy, assessment or collection of any tax under the authority of
18 this act, the governing body may appoint a local tax study
19 commission in accordance with the following provisions:
20 (1) Membership.--The local tax study commission shall
21 consist of members appointed by the governing body. One
22 member of the local tax study commission may be a member of
23 the governing body, as deemed appropriate by the governing
24 body. No member of the local tax study commission shall be a
25 relative, by blood or marriage, of an official or employee of
26 the municipality, school district or county. All members
27 shall be residents of the municipality, school district or
28 county. In municipalities with a population of less than
29 5,000, there shall be a minimum of three members. In
30 municipalities with a population of 5,000 or more, and in
19980H2131B2958 - 21 -
1 counties and school districts, the local tax study commission
2 shall consist of five, seven or nine members. Representatives
3 on a local tax study commission must reasonably reflect the
4 socioeconomic, age and occupational diversity of the
5 municipality, school district or county.
6 (2) Staff and expenses.--The governing body shall
7 provide necessary and reasonable staff to support the local
8 tax study commission and shall reimburse the members of the
9 local tax study commission for necessary and reasonable
10 expenses in the discharge of their duties.
11 (3) Contents of study.--The local tax study commission
12 shall study the existing taxes levied, assessed and collected
13 by the municipality, school district or county and the effect
14 of any county or municipal taxes imposed concurrently with a
15 school district and shall determine if and how the tax
16 policies of the municipality, school district or county could
17 be strengthened or made more equitable by adopting for levy,
18 assessment and collection one or a combination of any of the
19 following taxes: local personal income tax, earned income and
20 net profits tax, real estate tax or realty transfer tax at
21 such levels and in such combinations on permissible subjects
22 of taxation as do not exceed the limitations in this act.
23 This study shall include, but not be limited to,
24 consideration of all of the following:
25 (i) Historic rate and revenue provided by taxes
26 currently levied, assessed and collected by the
27 municipality, school district or county.
28 (ii) The percentage of total revenues provided by
29 taxes currently levied, assessed and collected.
30 (iii) The age, income, employment and property use
19980H2131B2958 - 22 -
1 characteristics of the existing tax base.
2 (iv) The projected revenues of any taxes currently
3 levied, assessed and collected.
4 (v) The projected revenues of any taxes referred to
5 in this paragraph not currently levied, assessed and
6 collected by the municipality, school district or county.
7 (4) Recommendation.--Within 60 days of its appointment,
8 the local tax study commission shall make a nonbinding
9 recommendation to the governing body of the appropriate tax
10 or combination of taxes, identified in paragraph (3), to be
11 levied, assessed and collected commencing the next fiscal
12 year. Except as provided for in paragraph (5), if the
13 governing body appoints a commission, no tax may be levied,
14 assessed or collected for the next fiscal year until receipt
15 of the recommendation of the local tax study commission. No
16 later than 30 days prior to the commencement of the next
17 fiscal year, the governing body shall accept or reject the
18 recommendation of the local tax study commission or adopt any
19 other appropriate tax or combination of taxes for the
20 municipality, school district or county commencing the next
21 fiscal year as provided by law.
22 (5) Failure to issue recommendation.--If the local tax
23 study commission fails to make a nonbinding recommendation
24 within 60 days of its appointment, the governing body shall
25 discharge the appointed local tax study commission and
26 appoint itself as the local tax study commission. No later
27 than 30 days prior to the commencement of the next fiscal
28 year, the governing body shall adopt the appropriate tax or
29 combination of taxes for the municipality, school district or
30 county commencing the next fiscal year as provided by law.
19980H2131B2958 - 23 -
1 (6) Public distribution of report.--The local tax study
2 commission shall publish or cause to be published, within 30
3 days of making its recommendation, a final report of its
4 activities and recommendations and shall deliver the final
5 report to the secretary of the governing body who shall
6 supply copies to any interested persons upon request.
7 (7) Receipts.--Receipts are required for all
8 reimbursable expenses under paragraph (2).
9 (8) Materials.--All the records, receipts, tapes,
10 minutes of meetings and written discussions of the local tax
11 study commission shall, upon its discharge, be turned over to
12 the secretary or chief clerk of the municipality, school
13 district or county for permanent safekeeping. The secretary
14 or chief clerk shall make such materials available for public
15 inspection at any time during regular business hours.
16 (9) Discharge.--The local tax study commission shall be
17 discharged upon the filing of its final report.
18 (b) Three-year review.--Any municipality, school district or
19 county that levies, assesses and collects, or provides for the
20 levy, assessment or collection of, any tax, after having
21 received the recommendations of a local tax study commission,
22 shall continue to levy, assess and collect the same tax or
23 combination of taxes for the next three fiscal years. However,
24 nothing herein shall preclude the governing body from changing
25 or altering the rates of any such tax or combination of taxes if
26 it deems necessary. Before the third fiscal year following the
27 municipality, school district or county action on the
28 recommendations of a local tax study commission, and every third
29 fiscal year thereafter, the governing body may appoint a local
30 tax study commission in the manner provided in subsection (a).
19980H2131B2958 - 24 -
1 The local tax study commission appointed under this subsection
2 shall be charged with all of the same powers and duties provided
3 for the local tax study commission under subsection (a).
4 SUBCHAPTER B
5 COUNTY SALES AND USE TAX
6 Section 311. Construction.
7 The tax imposed by the governing body of a county under this
8 subchapter shall be in addition to any tax imposed by the
9 Commonwealth under Article II of the Tax Reform Code. Except for
10 the differing situs provisions under section 313, the provisions
11 of Article II of the Tax Reform Code shall apply to the tax.
12 Section 312. Imposition.
13 (a) Sales.--The governing body of a county, except for a
14 county of the second class, may levy and assess upon each
15 separate sale at retail of tangible personal property or
16 services, as defined in Article II of the Tax Reform Code,
17 within the boundaries of the county, a tax on the purchase
18 price. The tax shall be collected by the vendor from the
19 purchaser and shall be paid over to the Commonwealth as provided
20 in this subchapter. The sales tax shall not be paid to the
21 Commonwealth by any person who has paid the tax imposed under
22 Chapter 5 of the act of June 5, 1991 (P.L.9, No.6), known as the
23 Pennsylvania Intergovernmental Cooperation Authority Act for
24 Cities of the First Class, or subdivision (e) of Article XXXI-B
25 of the act of July 28, 1953 (P.L.723, No.230), known as the
26 Second Class County Code, equal to or greater than the tax
27 imposed under this subsection.
28 (b) Use.--In any county, except for a county of the second
29 class, within which the tax authorized in subsection (a) is
30 imposed, there shall be levied, assessed and collected upon the
19980H2131B2958 - 25 -
1 use, within the county, of tangible personal property purchased
2 at retail and on services purchased at retail, as defined in
3 Article II of the Tax Reform Code, a tax on the purchase price.
4 The tax shall be paid over to the Commonwealth by the person who
5 makes the use. The use tax imposed under this subchapter shall
6 not be paid over to the Commonwealth by any person who has paid
7 the tax imposed under:
8 (1) Subsection (a).
9 (2) This subsection to the vendor with respect to the
10 use.
11 (3) Chapter 5 of the Pennsylvania Intergovernmental
12 Cooperation Authority Act for Cities of the First Class,
13 equal to or greater than the tax imposed under either
14 subsection (a) or this subsection.
15 (4) Subdivision (e) of Article XXXI-B of the Second
16 Class County Code equal to or greater than the tax imposed
17 under either subsection (a) or this subsection.
18 (c) Occupancy.--In any county within which a tax authorized
19 by subsection (a) is imposed, there shall be levied, assessed
20 and collected an excise tax on the rent upon every occupancy of
21 a room or rooms in a hotel in the county. The tax shall be
22 collected by the operator or owner from the occupant and paid
23 over to the Commonwealth.
24 (d) Rate and uniformity.--
25 (1) The tax authorized by subsections (a), (b) and (c)
26 shall be imposed at a rate of 1%.
27 (2) The tax imposed by subsections (a), (b) and (c)
28 shall be uniform.
29 (e) Computation.--The tax imposed under this section shall
30 be computed in the manner set forth in section 503(e)(2) of the
19980H2131B2958 - 26 -
1 Pennsylvania Intergovernmental Cooperation Authority Act for
2 Cities of the First Class.
3 (f) Exception.--The optional provisions of subsections (a),
4 (b) and (c) shall be subject to the provisions of section 320.1.
5 Section 313. Situs.
6 (a) General rule.--Except as provided in subsections (b) and
7 (c), the situs of sales at retail or uses, including leases, of
8 motor vehicles, aircraft, motorcraft and utility services shall
9 be determined in the manner specified by section 504 of the act
10 of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
11 Intergovernmental Cooperation Authority Act for Cities of the
12 First Class, as well as the act of March 4, 1971 (P.L.6, No.2),
13 known as the Tax Reform Code of 1971.
14 (b) Premium cable services.--The sale or use of premium
15 cable service shall be deemed to occur at the service address in
16 the county which is the address where the customer cable
17 connection is located. This subsection shall determine the situs
18 of premium cable service for the purpose of all local sales
19 taxes, including those imposed pursuant to Chapter 5 of the
20 Pennsylvania Intergovernmental Cooperation Authority Act for
21 Cities of the First Class and pursuant to subdivision (e) of
22 Article XXXI-B of the act of July 28, 1953 (P.L.723, No.230),
23 known as the Second Class County Code.
24 (c) Telecommunications service.--The situs of
25 telecommunications service under this act shall be determined in
26 accordance with regulations adopted by the department, which
27 shall be uniform among all counties, and shall be consistent
28 with regulations promulgated under Subdivision (e) of Article
29 XXXI-B of the act of July 28, 1953 (P.L.723, No.230), known as
30 the Second Class County Code, Article II of the Tax Reform Code
19980H2131B2958 - 27 -
1 of 1971 and Chapter 5 of the act of June 5, 1991 (P.L.9, No.6),
2 known as the Pennsylvania Intergovernmental Cooperation
3 Authority Act for Cities of the First Class.
4 Section 314. Licenses.
5 A license for the collection of the tax imposed by this
6 subchapter shall be issued in the same manner as is provided for
7 in section 505 of the act of June 5, 1991 (P.L.9, No.6), known
8 as the Pennsylvania Intergovernmental Cooperation Authority Act
9 for Cities of the First Class. Licensees shall be entitled to
10 the same discount as provided in section 227 of the Tax Reform
11 Code.
12 Section 315. Rules and regulations; collection costs.
13 (a) Regulations.--Rules and regulations shall be applicable
14 to the taxes imposed under section 312 in the same manner as is
15 provided for in section 506(1) and (2) of the act of June 5,
16 1991 (P.L.9, No.6), known as the Pennsylvania Intergovernmental
17 Cooperation Authority Act for Cities of the First Class.
18 (b) Administrative costs.--The department, to cover its
19 costs of administration under this subchapter, shall be entitled
20 to retain a sum equal to the costs of administration. When the
21 annual operating budget for the department is submitted to the
22 General Assembly, the department shall also submit to the
23 chairman and minority chairman of the Appropriations Committee
24 of the Senate and to the chairman and minority chairman of the
25 Appropriations Committee of the House of Representatives a
26 report of the actual sums retained for costs of collection in
27 the preceding fiscal year, together with all supporting details.
28 Section 316. Procedure and administration.
29 (a) Ordinance.--Any county desiring to impose the tax
30 authorized by section 312 shall give at least 60 days' written
19980H2131B2958 - 28 -
1 notice to every municipality and school district located in the
2 county of its intent to impose the tax and shall adopt an
3 ordinance after the expiration of 60 days after the date of such
4 notice. The notice and ordinance shall state the tax rate and
5 refer to this subchapter. The ordinance shall authorize the
6 imposition of all taxes provided for in section 312. Prior to
7 adopting an ordinance imposing the tax authorized by section
8 312, the governing body of the county shall give public notice
9 of its intent to adopt the ordinance in the manner provided by
10 section 4 of the Local Tax Enabling Act and shall conduct at
11 least one public hearing regarding the proposed adoption of the
12 ordinance.
13 (b) Notification to department.--A certified copy of the
14 county ordinance shall be delivered to the department by June 1
15 of the year prior to the effective date thereof. The county
16 ordinance shall become effective on the January 1 following at
17 least seven months after the date of enactment of the county
18 ordinance.
19 (c) Delivery of repeal ordinance.--A certified copy of a
20 repeal ordinance shall be delivered to the department at least
21 120 days prior to the effective date of the repeal.
22 Section 317. County sales and use tax funds.
23 There is hereby created for each county levying the tax under
24 section 312 the (proper name) County Sales and Use Tax Fund. The
25 State Treasurer shall be custodian of the funds which shall be
26 subject to the provisions of law applicable to funds listed in
27 section 302 of the act of April 9, 1929 (P.L.343, No.176), known
28 as The Fiscal Code. Taxes imposed under section 312 shall be
29 received by the department and paid to the State Treasurer and,
30 along with interest and penalties, less any collection costs
19980H2131B2958 - 29 -
1 allowed under this subchapter and any refunds and credits paid,
2 shall be credited to the funds not less frequently than every
3 two weeks. During any period prior to the credit of moneys to
4 the funds, interest earned on moneys received by the department
5 and paid to the State Treasurer under this subchapter shall be
6 deposited into the funds. All moneys in the funds, including,
7 but not limited to, moneys credited to the funds under this
8 section, prior year encumbrances and the interest earned
9 thereon, shall not lapse or be transferred to any other fund,
10 but shall remain in the funds. Pending their disbursement,
11 moneys received on behalf of or deposited into the funds shall
12 be invested or reinvested as are other moneys in the custody of
13 the State Treasurer in the manner provided by law. All earnings
14 received from the investment or reinvestment of the moneys shall
15 be credited to the respective funds. The Auditor General shall
16 periodically audit the records of the department relative to its
17 duties under this section and shall furnish the results of such
18 audit to any county levying the sales and use tax under section
19 312 and to any municipality or school district qualified under
20 section 320.
21 Section 318. Disbursements.
22 (a) General rule.--On or before the tenth day of every
23 month, the State Treasurer shall make the disbursements on
24 behalf of the county imposing the tax out of the moneys which
25 are, as of the last day of the previous month, contained in the
26 respective county sales and use tax fund.
27 (b) Disbursement to counties.--The State Treasurer shall
28 disburse to a county imposing the tax authorized under section
29 312 an amount of money equal to 50% of the tax collected in that
30 county and remitted to the department and deposited in the
19980H2131B2958 - 30 -
1 respective county sales and use tax fund. The county shall
2 deposit the revenue from the respective county sales and use tax
3 fund into the county general fund for disposition as provided
4 under section 701(a).
5 (c) Disbursement to municipalities.--The State Treasurer
6 shall, at the same time, disburse to the municipalities 25% of
7 the tax collected in their respective counties as provided in
8 section 320. Each municipality's portion shall be deposited in
9 the municipal general fund for disposition as provided in
10 section 701(b).
11 (d) Disbursement to school districts.--The State Treasurer
12 shall, at the same time, disburse to the school districts 25% of
13 the tax collected in their respective counties as provided in
14 section 320. Each school district's portion shall be deposited
15 in the school district's general fund for disposition as
16 provided in section 701(b).
17 Section 319. Adoption of municipal resolutions and school
18 district petitions.
19 (a) General rule.--No municipality shall be entitled to a
20 disbursement under section 318(c) and no school district shall
21 be entitled to a disbursement under section 318(d) unless one of
22 the following applies:
23 (1) Prior to enactment of the county ordinance, it
24 adopts a municipal resolution or a school district petition
25 containing the statement:
26 We strongly urge the county to enact a county sales
27 and use tax and intend to accept disbursements of the
28 sales and use taxes collected.
29 Any municipality which does not enact a resolution and any
30 school district which does not enact a petition in compliance
19980H2131B2958 - 31 -
1 with this paragraph shall not be entitled to and shall not
2 receive any distribution from funds collected during the
3 first 24 months immediately following the initial date of
4 imposition of such tax.
5 (2) Prior to October 1 of any year after the enactment
6 of the county resolution, it adopts a municipal resolution or
7 a school district petition containing the statement:
8 We support the enactment by the county of the county
9 sales and use tax and strongly urge its continuation
10 and intend to accept disbursements of the sales and
11 use taxes collected.
12 (b) Delivery.--A certified copy of the municipal resolution
13 or the school district petition shall be delivered to the county
14 commissioners, the department and the State Treasurer on or
15 before the enactment of the county resolution or October 15 of
16 any year thereafter, as the case may be.
17 Section 320. Qualified municipalities and school districts.
18 (a) General rule.--
19 (1) The State Treasurer shall distribute, on a weighted
20 formula basis, to each municipality that qualifies under
21 subsection (c) the appropriate percentage of revenues
22 received from the county sales and use tax.
23 (2) The State Treasurer shall distribute to each school
24 district that qualifies under subsection (c) a portion of the
25 total disbursement to school districts which is equal to the
26 total disbursement to school districts multiplied by the
27 ratio of average daily membership of the school district
28 divided by the sum of the average daily membership of all
29 school districts in the county. For the purposes of this
30 section, "average daily membership" shall mean "average daily
19980H2131B2958 - 32 -
1 membership" as defined by the act of March 10, 1949 (P.L.30,
2 No.14), known as the Public School Code of 1949. For school
3 districts located in more than one county, the average daily
4 membership shall be multiplied by a factor calculated by
5 dividing the square mileage of the school district located in
6 the county by the total square mileage of the school
7 district.
8 (b) Retention by county.--If a municipality or school
9 district fails to meet the requirements of subsection (c), its
10 disbursement shall be included in the disbursement to the county
11 under section 318(b).
12 (c) Qualifications.--Municipalities and school districts
13 qualified to receive disbursements under this section are
14 municipalities and school districts located within the county
15 which adopt in a timely fashion the resolution or petition
16 required under section 319.
17 Section 320.1. Municipal and school district sales and use tax
18 initiative.
19 (a) General rule.--Whenever the governing body of a county
20 elects to impose a tax on personal income under section
21 322(c)(1) or a local tax on earned income under section 331(c),
22 at least a majority of the municipalities and school districts
23 within that county can require the governing body of the county
24 to also impose the sales and use tax as provided in section 312.
25 (b) Procedure.--
26 (1) Whenever any municipality or school district of a
27 county determines that the governing body of that county has
28 elected not to impose a tax under section 312, that
29 municipality or school district may place before the
30 governing bodies of all the municipalities and school
19980H2131B2958 - 33 -
1 districts of that county the following question:
2 Do you favor the imposition of a county sales and use
3 tax at the rate of 1% as provided in section 312 of
4 the Optional Local Tax Enabling Act?
5 (2) The affirmative votes of the governing bodies of
6 municipalities and school districts representing at least a
7 majority of the municipalities and school districts within
8 the county shall be required to approve the question.
9 (3) The governing body of the county, upon receipt of
10 certifications from the participating municipalities and
11 school districts indicating approval of the question shall,
12 for the next calendar year and thereafter, impose the tax
13 authorized under section 312, provided that approval of the
14 electorate is obtained pursuant to the provisions of section
15 303(b).
16 (4) Municipalities and school districts intending to
17 receive proceeds from the imposition of the tax shall also
18 meet the requirements of section 319, provided that
19 municipalities and school districts voting affirmatively
20 under this subsection shall be deemed to meet the
21 requirements of section 319 for the year of initial
22 imposition.
23 SUBCHAPTER C
24 PERSONAL INCOME TAX
25 Section 321. Construction.
26 The tax imposed by the governing body of a county,
27 municipality or school district under this subchapter shall be
28 in addition to any tax imposed by the Commonwealth under Article
29 III of the Tax Reform Code. Except for the differing provisions
30 under sections 501 and 502, the provisions of Article III of the
19980H2131B2958 - 34 -
1 Tax Reform Code shall apply to the tax.
2 Section 322. Local personal income tax.
3 (a) Municipalities.--A municipality shall have the power to
4 levy, assess and collect a local tax on the personal income of
5 resident individuals of the municipality up to a maximum rate of
6 1%, in increments of 0.25 of 1%.
7 (b) School districts.--Each school district shall have the
8 power to levy, assess and collect a local tax on personal income
9 of resident individuals of the school district up to a maximum
10 rate of 2%, in increments of 0.25 of 1%.
11 (c) Counties.--
12 (1) Except as provided in paragraph (2), in lieu of
13 imposing the tax under section 312, each county shall have
14 the power and may levy, assess and collect a local tax on the
15 personal income of resident taxpayers of the county up to a
16 maximum rate of 0.5%, in increments of 0.25%. Any county
17 which imposes a tax under this paragraph may not impose a tax
18 under section 312.
19 (2) If the governing body of a county is required to
20 also impose a sales and use tax under section 320.1(a), in
21 addition to imposing the tax under section 312, the county
22 shall have the power and may levy, assess and collect a local
23 tax on the personal income of resident taxpayers of the
24 county up to a maximum rate of 0.5%, in increments of 0.25%.
25 Section 323. Collections.
26 Any county, municipality or school district imposing a tax
27 under section 322(a), (b) or (c) shall designate the tax officer
28 who is appointed under section 10 of the Local Tax Enabling Act,
29 or otherwise by law, as the collector of the county,
30 municipality or school district local personal income tax. In
19980H2131B2958 - 35 -
1 the performance of the tax collection duties under this
2 subchapter, the designated tax officer shall have all the same
3 powers, rights, responsibilities and duties for the collection
4 of the taxes which may be imposed under the Local Tax Enabling
5 Act or as otherwise provided by law.
6 Section 324. Rules and regulations.
7 Taxes imposed under section 322 will be subject to the rules
8 and regulations adopted by the department pursuant to Article
9 III of the Tax Reform Code.
10 Section 325. Procedure and administration.
11 The governing body of the municipality, school district or
12 county, in order to impose the tax authorized by section 322,
13 shall adopt an ordinance which shall refer to this subchapter.
14 Prior to adopting an ordinance imposing the tax authorized by
15 section 322, the governing body shall give public notice of its
16 intent to adopt the ordinance in the manner provided by section
17 4 of the Local Tax Enabling Act and shall conduct at least one
18 public hearing regarding the proposed adoption of the ordinance.
19 SUBCHAPTER D
20 EARNED INCOME AND NET PROFITS TAX
21 Section 331. Earned income and net profits tax.
22 (a) Municipalities.--In lieu of imposing the tax under
23 section 322, a municipality shall have the power to levy, assess
24 and collect a tax on the earned income and net profits of
25 resident individuals of the municipality up to a maximum rate of
26 1%, in increments of 0.25 of 1%. Any municipality which imposes
27 a tax under this subsection shall not impose any tax under
28 section 322.
29 (b) School districts.--In lieu of imposing the tax under
30 section 322, a school district shall have the power to levy,
19980H2131B2958 - 36 -
1 assess and collect a tax on the earned income and net profits of
2 resident individuals of the school district up to a maximum rate
3 of 2%, in increments of 0.25 of 1%. Any school district which
4 imposes a tax under this subsection shall not impose any tax
5 under section 322.
6 (c) Counties.--
7 (1) Except as provided in paragraph (2), in lieu of
8 imposing the tax under section 312, each county shall have
9 the power and may levy, assess and collect a tax on the
10 earned income and net profits of resident taxpayers of the
11 county up to a maximum rate of 0.5% in increments of 0.25% of
12 1%. Any county which imposes a tax under this paragraph may
13 not impose a tax under section 322.
14 (2) If the governing body of a county is required to
15 also impose a sales and use tax under section 320.1(a), in
16 addition to imposing a tax under section 312, the county
17 shall have the power and may levy, assess and collect a tax
18 on the earned income and net profits of resident taxpayers of
19 the county up to a maximum rate of 0.5% in increments of
20 0.25%.
21 Section 332. Collections.
22 Any municipality, school district or county imposing a tax
23 under section 331 shall designate the tax officer who is
24 appointed under section 10 of the Local Tax Enabling Act, or
25 otherwise by law, as the collector of the earned income and net
26 profits tax. In the performance of the tax collection duties
27 under this subchapter, the designated tax officer shall have all
28 the same powers, rights, responsibilities and duties for the
29 collection of the taxes which may be imposed under the Local Tax
30 Enabling Act or as otherwise provided by law.
19980H2131B2958 - 37 -
1 Section 333. Rules and regulations.
2 Taxes imposed under section 331 will be subject to the rules
3 and regulations pursuant to section 13 of the Local Tax Enabling
4 Act.
5 Section 334. Procedure and administration.
6 The governing body of the municipality, school district or
7 county, in order to impose the tax authorized by section 331,
8 shall adopt an ordinance which shall refer to this subchapter.
9 Prior to adopting an ordinance imposing the tax authorized by
10 section 331, the respective governing body shall give public
11 notice of its intent to adopt the ordinance in the manner
12 provided by section 4 of the Local Tax Enabling Act, and shall
13 conduct at least one public hearing regarding the proposed
14 adoption of the ordinance.
15 SUBCHAPTER E
16 MUNICIPAL SERVICE TAX
17 Section 341. Municipal service tax.
18 (a) General rule.--Subject to the limitations established in
19 section 342, each municipality in which a taxpayer is employed
20 may levy, assess and collect a municipal service tax.
21 (b) Amount of tax.--A municipal service tax levied by a
22 municipality under an ordinance passed under the authority of
23 this act shall not exceed $30.
24 (c) Situs for tax.--Subject to the limitations in section
25 342, the situs of a municipal service tax shall be the place of
26 employment.
27 Section 342. Multiple employment locations.
28 (a) Priority of claim.--In the event a person is engaged in
29 more than one occupation or an occupation which requires the
30 person to work in more than one municipality during the calendar
19980H2131B2958 - 38 -
1 year, the priority of claim to collect the municipal service tax
2 shall be in the following order:
3 (1) The municipality in which a person maintains his
4 principal office or is principally employed.
5 (2) The municipality in which the person resides and
6 works if the tax is levied by that municipality.
7 (3) The municipality nearest in miles to the person's
8 home in which the person is employed if the tax is levied by
9 that municipality.
10 (b) Place of employment.--The place of employment shall be
11 determined as of the day the taxpayer first becomes subject to
12 the tax during the calendar year.
13 (c) Liability.--No person shall be required to pay more than
14 $30 in any calendar year without regard to the number of
15 municipalities within which the person may be employed.
16 Section 343. Collection procedures.
17 (a) Collector.--Any municipality which imposes a tax under
18 section 341 shall designate the tax officer who is appointed
19 under section 10 of the Local Tax Enabling Act, or otherwise by
20 law, as the collector of the municipality municipal services
21 tax. In the performance of the tax collection duties under this
22 subchapter, the designated tax officer shall have all the same
23 powers, rights, responsibilities and duties for the collection
24 of the taxes which may be imposed under the Local Tax Enabling
25 Act, or otherwise by law.
26 (b) Employer withholding.--Any municipality imposing a
27 municipal service tax shall have the power and may by ordinance
28 require employers to withhold the municipal service tax from the
29 compensation of employees. Any municipality which requires
30 employer withholding shall follow the procedures pursuant to
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1 section 9 of the Local Tax Enabling Act.
2 SUBCHAPTERS F THROUGH I (RESERVED)
3 CHAPTER 5
4 CREDITS, EXEMPTIONS AND DEFERRALS
5 SUBCHAPTER A
6 CREDITS AND EXEMPTIONS
7 Section 501. Credits.
8 The provisions of section 14 of the Local Tax Enabling Act
9 shall be used to determine any credits under the provisions of
10 this act for any taxes imposed under section 322 on the earned
11 income portion of the personal income tax or under section 331.
12 Section 502. Low-income tax provisions.
13 The provisions of section 304 of the Tax Reform Code shall be
14 applied by any municipality, school district or county which
15 levies a tax under section 322 or 331.
16 Section 503. Municipal service tax exemption.
17 Each municipality which levies a municipal service tax shall
18 have the power and may, by ordinance, exempt any person whose
19 total compensation is less than $7,500 from the municipal
20 service tax.
21 Section 504. Regulations.
22 Each county, municipality or school district may adopt
23 regulations for the processing of claims under sections 501, 502
24 and 503.
25 SUBCHAPTERS B THROUGH J (RESERVED)
26 CHAPTER 7
27 DISPOSITION OF TAX REVENUES
28 Section 701. Sales tax revenues.
29 (a) Counties.--In the fiscal year of implementation, each
30 county that imposes a sales and use tax under this act shall use
19980H2131B2958 - 40 -
1 all revenues from the tax first to offset any lost revenue to
2 the county from the taxes prohibited under section 301(b) in an
3 amount equal to the revenue the county collected from the
4 prohibited taxes in the immediately preceding fiscal year;
5 second, to provide for an increase in budgeted revenues over the
6 preceding fiscal year in accordance with the amount specified in
7 the referendum question approved by the voters under section 303
8 and then to reduce the county real property tax by means of a
9 homestead exemption. The department shall provide to each county
10 that imposes a sales and use tax an estimate of the total dollar
11 amount of revenue that the county can expect to receive from the
12 county's share of the 1% county sales and use tax for the fiscal
13 year of implementation. The department may charge the county for
14 the actual costs of calculating the requested estimates.
15 Guidelines concerning the costs shall be published in the
16 Pennsylvania Bulletin. In the event the actual amount of sales
17 and use tax revenue received by a county is less than the
18 estimate of sales and use tax revenue provided by the
19 department, the county may increase its real property tax
20 millage rate to the level necessary to offset any shortfall
21 resulting from an overestimation of sales and use tax revenue,
22 as certified by the department, in the fiscal year of
23 implementation. Such increase shall not be subject to the
24 provisions of section 304(a).
25 (b) Municipalities and school districts under Chapter 3.--
26 (1) All sales and use tax revenues received by any
27 municipality or school district which has elected to
28 participate under sections 303 and 319 shall be used to
29 reduce the municipal real property tax or the school district
30 real property tax, respectively, by means of a homestead
19980H2131B2958 - 41 -
1 exemption.
2 (2) A municipality or school district which has elected
3 to proceed only under section 319 shall use the sales and use
4 tax revenues received to reduce or eliminate the real
5 property tax or any taxes prohibited under section 301(b).
6 Section 702. Income tax and municipal service tax revenues.
7 (a) Municipalities.--The disposition of revenue from an
8 income tax or municipal service tax or an increase in the rate
9 of an income tax or municipal service tax imposed by a
10 municipality under the authority of this act shall occur in the
11 following manner:
12 (1) For the fiscal year of implementation of a newly
13 imposed income tax or municipal service tax, all revenues
14 received by a municipality shall first be used to offset any
15 lost revenue to the municipality from the taxes prohibited
16 under section 301(b) in an amount equal to the revenue the
17 municipality collected from the prohibited taxes in the
18 immediately preceding fiscal year; second, to provide for an
19 increase in budgeted revenues over the preceding fiscal year
20 in accordance with the amount specified in the referendum
21 question approved by the voters under section 303 and then to
22 reduce the municipal real property tax by means of a
23 homestead exemption.
24 (2) For the fiscal year of implementation of an increase
25 in the rate of income tax or increase in the rate of the
26 municipal service tax, all revenues received by a
27 municipality in excess of current revenue plus the percentage
28 increase in the Statewide average weekly wage or 5%,
29 whichever is less, shall be used to reduce the municipal real
30 property tax by means of a homestead exemption.
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1 (b) Second through fourth class school districts.--The
2 disposition of revenue from an income tax or an increase in the
3 rate of an income tax imposed by school districts of the second
4 through fourth class under the authority of this act shall occur
5 in the following manner:
6 (1) For the fiscal year of implementation of a newly
7 imposed income tax, all revenues received by a school
8 district of the second through fourth class shall first be
9 used to offset any lost revenue to the school district from
10 the taxes prohibited under section 301(b) in an amount equal
11 to the revenue the school district collected from the
12 prohibited taxes in the immediately preceding fiscal year;
13 second, to provide for an increase in budgeted revenues over
14 the preceding fiscal year in accordance with the amount
15 specified in the referendum question approved by the voters
16 under section 303 and then to reduce the school district real
17 property tax by means of a homestead exemption.
18 (2) For the fiscal year of implementation of an increase
19 in the rate of income tax, all revenues received by a school
20 district in excess of current revenue plus the percentage
21 increase in the Statewide average weekly wage or 5%,
22 whichever is less, shall be used to reduce the school
23 district of the second through fourth class real property tax
24 by means of a homestead exemption.
25 (c) Counties.--The disposition of revenue from an income tax
26 or an increase in the rate of an income tax imposed by a county
27 under the authority of this act shall occur in the following
28 manner:
29 (1) For the fiscal year of implementation of a newly
30 imposed income tax, all revenues received by a county shall
19980H2131B2958 - 43 -
1 first be used to offset any lost revenue to the county from
2 the taxes prohibited under section 301(b) in an amount equal
3 to the revenue the county collected from the prohibited taxes
4 in the immediately preceding fiscal year; second, to provide
5 for an increase in budgeted revenues over the preceding
6 fiscal year in accordance with the amount specified in the
7 referendum question approved by the voters under section 303
8 and then to reduce the county real property tax by means of a
9 homestead exemption.
10 (2) For the fiscal year of implementation of an increase
11 in the rate of income tax, all revenues received by a county
12 in excess of current revenue plus the percentage increase in
13 the Statewide average weekly wage or 5%, whichever is less,
14 shall be used to reduce the county real property tax by means
15 of a homestead exemption.
16 (d) Revenue estimates of department.--The department shall
17 provide to each taxing jurisdiction that imposes an income tax
18 under this act an estimate of the total dollar amount of revenue
19 that the taxing jurisdiction can expect to receive from an
20 income tax for the fiscal year of implementation. The department
21 may charge the taxing jurisdiction for the actual costs of
22 calculating the requested estimates. Guidelines concerning the
23 costs shall be published in the Pennsylvania Bulletin. In the
24 event the actual dollar amount of income tax revenue received by
25 a taxing jurisdiction is less than the estimate of income tax
26 revenue provided by the department, the taxing jurisdiction may
27 increase its real property tax millage rate to the level
28 necessary to offset any shortfall resulting from an
29 overestimation of income tax revenue, as certified by the
30 department, in the fiscal year of implementation. Such increase
19980H2131B2958 - 44 -
1 shall not be subject to the provisions of section 304(a).
2 Section 703. Revenue limitation exceptions.
3 (a) Exceptions listed.--The limitations in sections 701 and
4 702 may be waived, but only to the degree necessary, in the
5 following cases:
6 (1) To respond to or recover from an emergency or
7 disaster declared pursuant to 35 Pa.C.S. Pt. V (relating to
8 emergency management services), for the duration of the
9 emergency or duration of the disaster or for the costs of the
10 recovery from the emergency or disaster.
11 (2) To implement a court order or an administrative
12 decision of a Federal or State agency. In instances where the
13 tax increase is necessary to respond to a court order or an
14 administrative decision of a Federal or State agency
15 requiring a temporary increase in local expenditures, the
16 rate increase shall be rescinded following fulfillment of the
17 court order or administrative decision.
18 (3) To pay interest and principal on any indebtedness
19 incurred under 53 Pa.C.S. Pt. VII Subpt. B (relating to
20 indebtedness and borrowing). However, in no case may a taxing
21 jurisdiction incur additional debt under this paragraph,
22 except for the refinancing of existing debt, including the
23 payment of costs and expenses related to such refinancing and
24 the establishment or funding of appropriate debt service
25 reserves.
26 (4) Taxes levied under section 607(f) of the act of
27 December 18, 1984 (P.L.1005, No.205), known as the Municipal
28 Pension Plan Funding Standard and Recovery Act, or levied to
29 pay increases in pension fund requirements which are in
30 excess of the annual average increase over the immediately
19980H2131B2958 - 45 -
1 preceding five fiscal years.
2 (5) To increase revenues when actual and projected local
3 tax revenues, including any share of a county sales and use
4 tax, decline from the immediately preceding year but only to
5 the extent of the revenue decline.
6 (6) To respond to conditions that pose a threat of
7 immediate harm or injury to the students, staff or residents
8 of the county, municipality or school district.
9 (7) Special purpose tax levies approved by the
10 electorate.
11 (8) To respond to a Federal or State statute, regulation
12 or order adding to or significantly altering responsibilities
13 and duties or requiring expenditure of county or local funds
14 to the extent not funded by the Federal or State Government.
15 This provision shall apply only to a Federal or State
16 statute, regulation or order taking effect after the
17 effective date of this act.
18 (b) Court action.--Prior to any waiver under subsection
19 (a)(1), (4), (5), (6) or (8), approval is required by the court
20 of common pleas in the judicial district in which the governing
21 body is located. The following shall apply to any proceedings
22 instituted under this subsection:
23 (1) The governing body must prove by a preponderance of
24 evidence the necessity for the waiver.
25 (2) The court may retain continuing jurisdiction in
26 these cases and may, on its own motion or on petition of an
27 interested party, revoke approval for the waiver.
28 (c) Distressed municipality or county.--This section shall
29 not be construed to prohibit any municipality or county declared
30 distressed under the act of July 10, 1987 (P.L.246, No.47),
19980H2131B2958 - 46 -
1 known as the Municipalities Financial Recovery Act, from
2 petitioning the court of common pleas for a tax increase in
3 accordance with section 123(c) of the Municipalities Financial
4 Recovery Act.
5 (d) Standing.--Any taxpayer or business shall have standing
6 as a party to a proceeding under this section as long as the
7 taxpayer or business resides within or pays real property taxes
8 to the taxing jurisdiction of the governing body instituting the
9 action.
10 CHAPTER 9
11 REGISTER FOR CERTAIN TAXES
12 Section 901. Definitions.
13 The following words and phrases when used in this chapter
14 shall have the meanings given to them in this section unless the
15 context clearly indicates otherwise:
16 "Department." The Department of Community and Economic
17 Development of the Commonwealth.
18 Section 902. Register for taxes under this act.
19 (a) General rule.--It shall be the duty of the department to
20 have available an official continuing register supplemented
21 annually of all sales and use, local personal income, earned
22 income and net profits and municipal service taxes levied under
23 this act.
24 (b) Contents of register.--The register and its supplements
25 shall list:
26 (1) The counties, municipalities or school districts
27 levying local personal income tax, earned income and net
28 profits tax, municipal service tax or sales and use tax.
29 (2) The rate of tax as stated in the ordinance levying
30 the tax.
19980H2131B2958 - 47 -
1 (3) The rate on taxpayers.
2 (4) The name and address of the tax officer responsible
3 for administering the collection of the tax and from whom
4 information, forms for reporting and copies of rules and
5 regulations are available.
6 Section 903. Information for register.
7 Information for the register shall be furnished by the chief
8 clerk or secretary of each county, municipality or school
9 district to the department in such manner and on such forms as
10 the department may prescribe. The information must be received
11 by the department no later than July 15 of each year to show new
12 tax enactments, repeals and changes. Failure to comply with this
13 date for filing may result in the omission of the tax levy from
14 the register for that year. Failure of the department to receive
15 information of taxes continued without change may be construed
16 by the department to mean that the information contained in the
17 previous register remains in force.
18 Section 904. Availability and effective period of register.
19 The department shall have the register, with such annual
20 supplements as may be required by new tax enactments, repeals or
21 changes, available upon request no later than August 15 of each
22 year. The effective period for each register shall be from July
23 1 of the year in which it is issued to June 30 of the following
24 year.
25 Section 905. Effect of nonfiling.
26 Employers shall not be required by any ordinance to withhold
27 from the compensation of their employees any local personal
28 income tax, earned income and net profits tax or municipal
29 service tax imposed under the provisions of this act which is
30 not listed in the register or to make reports of compensation in
19980H2131B2958 - 48 -
1 connection with taxes not so listed. If the register is not
2 available by August 15, the register of the previous year shall
3 continue temporarily in effect for an additional period of not
4 more than one year.
5 Section 906. Effect of chapter on liability of taxpayer.
6 The provisions of this chapter shall not affect the liability
7 of any taxpayer for taxes lawfully imposed under this act.
8 CHAPTER 51
9 MISCELLANEOUS PROVISIONS
10 Section 5101. Effective date.
11 This act shall take effect January 1, 1999.
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