THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DENLINGER, BEAR, BISHOP, BOYD, CALTAGIRONE, CAUSER, CREIGHTON, CUTLER, EVERETT, FARRY, FLECK, GEIST, GINGRICH, GODSHALL, GROVE, HARHART, HARRIS, HESS, HORNAMAN, JOHNSON, KAUFFMAN, LONGIETTI, METZGAR, MIRABITO, MURT, MUSTIO, PEIFER, RAPP, ROHRER, SAYLOR, SIPTROTH, SONNEY, STEVENSON, TRUE AND VULAKOVICH, APRIL 29, 2010

REFERRED TO COMMITTEE ON FINANCE, APRIL 29, 2010  

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," providing for the Youth Employment Incentive Tax

Credit.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971, is amended by adding an article to

read:

ARTICLE XVII-F

YOUTH EMPLOYMENT INCENTIVE TAX CREDIT

Section 1701-F.  Scope.

This article relates to youth employment incentive tax

credits.

Section 1702-F.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

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

"Minimum wage."  As prescribed by section 4 of the act

January 17, 1968 (P.L.11, No.5), known as The Minimum Wage Act

of 1968.

"Pass-through entity."  Any of the following:

(1)  A partnership, limited partnership, limited

liability company, business trust or other unincorporated

entity that for Federal income tax purposes is taxable as a

partnership.

(2)  A Pennsylvania S corporation.

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV or VI. The term shall include the

liability for taxes imposed under Article III on a shareholder

of a pass-through entity.

"Qualified youth employee."  A Pennsylvania resident

individual at least 14 years of age and no older than 17 years

of age. 

"Qualified youth employment expense."  Wages paid by a

taxpayer to a qualified youth employee in the amount equal to

the difference between minimum wage and $5 per hour per

employee. This amount shall not exceed $4 per hour per employee.

Qualified youth employment expenses incurred in a taxable year

shall be combined and treated as one qualified youth employment

expense for purposes of this article.

"Tax credit."  The Youth Employment Incentive Tax Credit

authorized under this article.

"Taxpayer."  An entity subject to tax under Article III, IV

or VI. The term shall include the shareholder, owner or member

of a pass-through entity that receives a tax credit.

Section 1703-F.  Credit for qualified youth employment expense.

(a)  Application.--A taxpayer that incurs a qualified youth

employment expense in a taxable year may apply for a tax credit

as provided in this article. By September 15 a taxpayer must

submit an application to the department for a qualified youth

employment expense incurred in the taxable year that ended in

the prior calendar year.

(b)  Receipt.--A taxpayer that is qualified under subsection

(a) shall receive a tax credit for the taxable year in the

amount of 50% of the taxpayer's total qualified youth employment

expense for the taxable year.

(c)  Notification.--By December 15 of the calendar year

following the close of the taxable year during which the

qualified youth employment expense was incurred, the department

shall notify the taxpayer of the amount of the taxpayer's tax

credit approved by the department.

Section 1704-F.  Carryover, carryback, refund and assignment of

credit.

(a)  Carryover.--If the taxpayer cannot use the entire amount

of the tax credit for the taxable year in which the tax credit

is first approved, then the excess may be carried over

succeeding taxable years and used as a credit against the

qualified tax liability of the taxpayer for those taxable years.

Each time that the tax credit is carried over to a succeeding

taxable year, it is to be reduced by the amount that was used as

a credit during the immediately preceding taxable year. The tax

credit provided by this article may be carried over and applied

to succeeding taxable years for no more than 15 taxable years

following the first taxable year for which the taxpayer was

entitled to claim the credit.

(b)  Application of tax credit.--A tax credit approved by the

department for qualified youth employment expense in a taxable

year first shall be applied against the taxpayer's qualified tax

liability for the current taxable year as of the date on which

the credit was approved before the tax credit is applied against

any tax liability under subsection (a).

(c)  Carryback or refund.--A taxpayer is not entitled to

carry back or obtain a refund of an unused tax credit.

(d)  Assignment.--A taxpayer, upon application to and

approval by the Department of Community and Economic

Development, may sell or assign, in whole or in part, a tax

credit granted to the taxpayer under this article if no claim

for allowance of the credit is filed within one year from the

date the credit is approved by the department under section

1703-F. The Department of Community and Economic Development

shall establish guidelines for the approval of applications

under this subsection.

(e)  Purchaser or assignee.--The purchaser or assignee of a

portion of a tax credit under subsection (d) shall immediately

claim the credit in the taxable year in which the purchase or

assignment is made. The amount of the tax credit that a

purchaser or assignee may use against any one qualified tax

liability may not exceed 75% of the qualified tax liability for

the taxable year. The purchaser or assignee may not carry over,

carry back, obtain a refund of or assign the tax credit. The

purchaser or assignee shall notify the department of the seller

or assignor of the tax credit in compliance with procedures

specified by the department. 

Section 1705-F.  Time limitations.

A taxpayer is not entitled to a tax credit for qualified

youth employment expenses incurred in taxable years ending after

December 31, 2015.

Section 1706-F.  Limitation on credits.

(a)  Total amount.--The total amount of tax credits approved

by the department shall not exceed $15,000,000 in any fiscal

year.

(b)  Allocation.--Tax credits under this article shall not

exceed $50,000 annually per taxpayer and shall be made available

by the department on a first-come, first-served basis.

Section 1707-F.  Shareholder, owner or member pass-through.

(a)  Application to Pennsylvania S corporations.--If a

Pennsylvania S corporation does not have an eligible tax

liability against which the tax credit may be applied, a

shareholder of the Pennsylvania S corporation is entitled to a

tax credit equal to the tax credit determined for the

Pennsylvania S corporation for the taxable year multiplied by

the percentage of the Pennsylvania S corporation's distributive

income to which the shareholder is entitled. 

(b)  Other applications.--If a pass-through entity other than

a Pennsylvania S corporation does not have an eligible tax

liability against which the tax credit may be applied, an owner

or member of the pass-through entity is entitled to a tax credit

equal to the tax credit determined for the pass-through entity

for the taxable year multiplied by the percentage of the pass-

through entities' distributive income to which the owner or

member is entitled.

(c)  Additional credit.--The credit provided under subsection

(a) or (b) is in addition to any tax credit to which a

shareholder, owner or member of a pass-through entity is

otherwise entitled under this article. However, a pass-through

entity and a shareholder, owner or member of a pass-through

entity may not claim a credit under this article for the same

qualified youth employment expense.

Section 1708-F.  Termination.

The department shall not approve a tax credit under this

article for taxable years ending after December 31, 2015. 

Section 1709-F.  Regulations.

The department shall promulgate regulations necessary for the

implementation and administration of this article.

Section 2.  The addition of Article XVII-F of the act shall

apply to taxable years beginning after December 31, 2009.

Section 3.  This act shall take effect July 1, 2010.