PRINTER'S NO. 703
No. 645 Session of 1999
INTRODUCED BY MURPHY, JUBELIRER, HART, BRIGHTBILL, ROBBINS,
RHOADES, SCHWARTZ, SLOCUM, BELL, COSTA, HELFRICK, MUSTO,
WAGNER, O'PAKE, KASUNIC, WAUGH AND DENT, MARCH 24, 1999
REFERRED TO FINANCE, MARCH 24, 1999
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," adding a definition; and further providing for
11 exemptions from imposition of capital stock tax.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 601 of the act of March 4, 1971 (P.L.6,
15 No.2), known as the Tax Reform Code of 1971, is amended by
16 adding a definition to read:
17 Section 601. Definitions and Reports.--(a) The following
18 words, terms and phrases when used in this Article VI shall have
19 the meaning ascribed to them in this section, except where the
20 context clearly indicates a different meaning:
21 * * *
22 "High technology." The development, manufacture,
1 integration, or supply of high technology products, services,
2 materials or components. The term shall also include:
3 (1) the assembly and configuration of computer components;
4 (2) the assembly, configuration, and integration of computer
5 systems and software; and
6 (3) the assembly, configuration, and integration of computer
7 information systems, applications and services undertaken by
8 entities engaged in such activities.
9 * * *
10 Section 2. Section 602(a) and (b) of the act, amended April
11 23, 1998 (P.L.239, No.45), are amended to read:
12 Section 602. Imposition of Tax.--(a) That every domestic
13 entity from which a report is required under section 601 hereof,
14 shall be subject to, and pay to the department annually, a tax
15 which is the greater of (i) three hundred dollars ($300) or (ii)
16 the amount computed at the rates provided in subsection (h) upon
17 each dollar of the capital stock value as defined in section
18 601(a), except that any domestic entity or company subject to
19 the tax prescribed herein may elect to compute and pay its tax
20 under and in accordance with the provisions of subsection (b) of
21 this section 602: Provided, That, except for the imposition of
22 the three hundred dollar ($300) minimum tax, the provisions of
23 this section shall not apply to the taxation of the capital
24 stock of entities organized for manufacturing, processing, high
25 technology, research or development purposes, which is invested
26 in and actually and exclusively employed in carrying on
27 manufacturing, processing, high technology, research or
28 development within the State, except such entities as enjoy and
29 exercise the right of eminent domain, but every entity organized
30 for the purpose of manufacturing, processing, high technology,
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1 research or development except such entities as enjoy and
2 exercise the right of eminent domain shall pay the State tax of
3 the greater of (i) three hundred dollars ($300) or (ii) the
4 amount computed at the rates provided in subsection (h) upon
5 each dollar of the capital stock value as defined in section
6 601(a), upon such proportion of its capital stock, if any, as
7 may be invested in any property or business not strictly
8 incident or appurtenant to the manufacturing, processing, high
9 technology, research or development business, in addition to the
10 local taxes assessed upon its property in the district where
11 located, it being the object of this provision to relieve from
12 State taxation, except for imposition of the three hundred
13 dollar ($300) minimum tax under this section, only so much of
14 the capital stock as is invested purely in the manufacturing,
15 processing, high technology, research or development plant and
16 business: and Provided further, That, except for the imposition
17 of the minimum tax set forth in this section, the provisions of
18 this section shall not apply to the taxation of so much of the
19 capital stock value attributable to student loan assets owned or
20 held by an entity created for the securitization of student
21 loans or by a trustee on its behalf.
22 (b) (1) Every foreign entity from which a report is
23 required under section 601 hereof, shall be subject to and pay
24 to the department annually, a franchise tax which is the greater
25 of (i) three hundred dollars ($300) or (ii) the amount computed
26 at the rates provided in subsection (h) upon each dollar of the
27 capital stock value as defined in section 601(a), upon a taxable
28 value to be determined in the following manner. The capital
29 stock value shall be ascertained in the manner prescribed in
30 section 601(a) of this article. The taxable value shall then be
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1 determined by employing the relevant apportionment factors set
2 forth in Article IV: Provided, That the manufacturing,
3 processing, high technology, research and development exemptions
4 contained under section 602(a) shall also apply to foreign
5 corporations and in determining the relevant apportionment
6 factors the numerator of the property, payroll, or sales factors
7 shall not include any property, payroll or sales attributable to
8 manufacturing, processing, high technology, research or
9 development activities in the Commonwealth: and Provided
10 further, That, except for the imposition of the minimum tax set
11 forth in this section, the provisions of this section shall not
12 apply to the taxation of so much of the capital stock value
13 attributable to student loan assets owned or held by an entity
14 created for the securitization of student loans or by a trustee
15 on its behalf. Any foreign corporation, joint-stock association,
16 limited partnership or company subject to the tax prescribed
17 herein may elect to compute and pay its tax under section
18 602(a): Provided, That any foreign corporation, joint-stock
19 association, limited partnership or company electing to compute
20 and pay its tax under section 602(a) shall be treated as if it
21 were a domestic corporation for the purpose of determining which
22 of its assets are exempt from taxation and for the purpose of
23 determining the proportion of the value of its capital stock
24 which is subject to taxation.
25 (2) The provisions of this article shall apply to the
26 taxation of entities organized for manufacturing, processing,
27 high technology, research or development purposes, but shall not
28 apply to such entities as enjoy and exercise the right of
29 eminent domain.
30 * * *
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1 Section 3. This act shall take effect in 60 days.
B22L72JS/19990S0645B0703 - 5 -