PRINTER'S NO. 3142
No. 2196 Session of 2008
INTRODUCED BY SHAPIRO, LEVDANSKY, THOMAS, BENNINGTON, BOYD,
BRENNAN, CALTAGIRONE, COHEN, DALEY, DePASQUALE, FREEMAN,
GINGRICH, GRUCELA, HARHAI, HARKINS, JAMES, JOSEPHS, KORTZ,
KULA, LEACH, LONGIETTI, MAHONEY, MANN, McGEEHAN, McILHATTAN,
McILVAINE SMITH, MELIO, MOYER, MURT, NAILOR, M. O'BRIEN,
PALLONE, PEIFER, PRESTON, READSHAW, REED, ROEBUCK, K. SMITH,
SOLOBAY, SURRA, J. TAYLOR, WALKO, WATERS, WHEATLEY, J. WHITE,
YOUNGBLOOD AND YUDICHAK, JANUARY 28, 2008
REFERRED TO COMMITTEE ON FINANCE, JANUARY 28, 2008
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 youth employment incentive tax
11 credit.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15 the Tax Reform Code of 1971, is amended by adding an article to
16 read:
17 ARTICLE XVII-F
18 YOUTH EMPLOYMENT INCENTIVE TAX CREDIT
19 Section 1701-F. Scope.
1 This article relates to youth employment incentive tax
2 credits.
3 Section 1702-F. Definitions.
4 The following words and phrases when used in this article
5 shall have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Department." The Department of Revenue of the Commonwealth.
8 "Pass-through entity." Any of the following:
9 (1) A partnership, limited partnership, limited
10 liability company, business trust or other unincorporated
11 entity that for Federal income tax purposes is taxable as a
12 partnership.
13 (2) A Pennsylvania S corporation.
14 "Qualified tax liability." The liability for taxes imposed
15 under Article III, IV or VI. The term shall include the
16 liability for taxes imposed under Article III on a shareholder
17 of a pass-through entity.
18 "Qualified youth employee." A Pennsylvania resident
19 individual between 14 and 21 years of age whose median family
20 income does not exceed 235% of the Federal poverty level
21 consistent with Temporary Assistance for Needy Families grants
22 that serve purposes similar to those of this article. The term
23 shall not make a distinction based on education.
24 "Qualified youth employment expense." Wages, fringe
25 benefits, related payroll and training expenses, and other
26 ancillary expenses paid by a taxpayer to or for the benefit of a
27 qualified youth employee, provided that any ancillary expenses
28 not enumerated in this definition are identified in the
29 taxpayer's application and approved by the Department of
30 Revenue. All qualified youth employment expenses incurred in a
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1 taxable year shall be combined and treated as one qualified
2 youth employment expense for purposes of this article.
3 "Secretary." The Secretary of Revenue of the Commonwealth.
4 "Tax credit." The Youth Employment Incentive Tax Credit
5 authorized under this article.
6 "Taxpayer." An entity subject to tax under Article III, IV
7 or VI or an entity that assigns credits to such entity in
8 accordance with section 1704-F. The term shall include the
9 shareholder, owner or member of a pass-through entity that
10 receives a tax credit.
11 Section 1703-F. Credit for qualified youth employment expense.
12 (a) Application.--A taxpayer who incurs a qualified youth
13 employment expense in a taxable year may apply for a tax credit
14 as provided in this article. A taxpayer must submit a youth
15 employment incentive tax credit application to its local
16 workforce investment board. The local workforce investment board
17 shall make a threshold determination as to whether the
18 application is consistent with its determined criteria. The
19 local workforce investment board shall submit applications that
20 meet the threshold criteria to the department for its review.
21 The Department of Community and Economic Development shall
22 establish guidelines for the review and approval of applications
23 under this subsection.
24 (b) Receipt.--If the department approves the taxpayer's
25 application, the taxpayer and department shall execute a
26 commitment letter containing the following:
27 (1) A description of the project.
28 (2) The number of new jobs to be created.
29 (3) The maximum youth employment incentive tax credit
30 amount the taxpayer may claim.
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1 (4) A signed statement that the taxpayer intends to
2 maintain its operation in this Commonwealth for five years
3 from the start date.
4 (5) Other information as the department deems
5 appropriate.
6 (c) Commitment letter.--After a commitment letter has been
7 signed by both the Commonwealth and the taxpayer, the taxpayer
8 shall receive a youth employment incentive tax credit
9 certificate and filing information.
10 (d) Amount.--A taxpayer shall receive a tax credit for the
11 taxable year in the amount of 70% of the taxpayer's total
12 qualified youth employment expense for the taxable year.
13 Section 1704-F. Carryover, carryback, refund and assignment of
14 credit.
15 (a) Carryover.--If the taxpayer cannot use the entire amount
16 of the tax credit for the taxable year in which the tax credit
17 is first approved, then the excess may be carried over to
18 succeeding taxable years and used as a credit against the
19 qualified tax liability of the taxpayer for those taxable years.
20 Each time that the tax credit is carried over to a succeeding
21 taxable year, it is to be reduced by the amount that was used as
22 a credit during the immediately preceding taxable year. The tax
23 credit may be carried over and applied to succeeding taxable
24 years for no more than 15 taxable years following the first
25 taxable year for which the taxpayer was entitled to claim the
26 credit.
27 (b) Application.--A tax credit approved by the department
28 for a qualified youth employment expense in a taxable year first
29 shall be applied in accordance with the commitment letter
30 between the Commonwealth and the taxpayer.
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1 (c) Prohibition.--A taxpayer is not entitled to carry back
2 or obtain a refund of an unused tax credit.
3 (d) Sale or assignment.--A taxpayer, upon application to and
4 approval by the Department of Community and Economic Development
5 in accordance with section 1703-F, may sell or assign, in whole
6 or in part, a tax credit granted to the taxpayer under this
7 article if no claim for allowance of the credit is filed within
8 one year from the date the credit is approved by the department
9 under section 1703-F. The Department of Community and Economic
10 Development shall establish guidelines for the approval of
11 applications under this subsection.
12 (e) Claim and use.--The purchaser or assignee of a portion
13 of a tax credit under subsection (d) shall immediately claim the
14 credit in the taxable year in which the purchase or assignment
15 is made. The amount of the tax credit that a purchaser or
16 assignee may use against any one qualified tax liability may not
17 exceed 75% of the qualified tax liability for the taxable year.
18 The purchaser or assignee may not carry back, obtain a refund of
19 or assign the tax credit. The purchaser or assignee shall notify
20 the department of the seller or assignor.
21 Section 1705-F. Time limitations.
22 Except as provided in section 1704-F(a), a taxpayer is not
23 entitled to a tax credit for qualified youth employment expenses
24 incurred in taxable years ending after December 31, 2012.
25 Section 1706-F. Limitation on credits.
26 The total amount of tax credits approved by the department
27 shall not exceed $20,000,000 in any fiscal year.
28 Section 1707-F. Shareholder, owner or member pass-through.
29 (a) Application to Pennsylvania S corporations.--If a
30 Pennsylvania S corporation does not have an eligible tax
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1 liability against which the tax credit may be applied, a
2 shareholder of the Pennsylvania S corporation is entitled to a
3 tax credit equal to the tax credit determined for the
4 Pennsylvania S corporation for the taxable year multiplied by
5 the percentage of the Pennsylvania S corporation's distributive
6 income to which the shareholder is entitled.
7 (b) Other applications.--If a pass-through entity other than
8 a Pennsylvania S corporation does not have an eligible tax
9 liability against which the tax credit may be applied, an owner
10 or member of the pass-through entity is entitled to a tax credit
11 equal to the tax credit determined for the pass-through entity
12 for the taxable year multiplied by the percentage of the pass-
13 through entities' distributive income to which the owner or
14 member is entitled.
15 (c) Additional credit.--The credit provided under subsection
16 (a) or (b) is in addition to any tax credit to which a
17 shareholder, owner or member of a pass-through entity is
18 otherwise entitled under this article. However, a pass-through
19 entity and a shareholder, owner or member of a pass-through
20 entity may not claim a credit under this article for the same
21 qualified youth employment expense.
22 Section 1708-F. Termination.
23 Except for carryovers of previously awarded tax credits, the
24 department shall not approve a tax credit under this article for
25 taxable years ending after December 31, 2012.
26 Section 1709-F. Regulations.
27 The secretary shall promulgate regulations necessary for the
28 implementation and administration of this article.
29 Section 2. This act shall apply to taxable years beginning
30 after December 31, 2008.
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1 Section 3. This act shall take effect in 60 days.
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