PRINTER'S NO. 986
No. 820 Session of 2003
INTRODUCED BY PICCOLA, KUKOVICH, EARLL, FUMO, MOWERY, DENT,
WONDERLING, M. WHITE, COSTA, ORIE, KITCHEN, WAUGH, WENGER,
LEMMOND, O'PAKE, D. WHITE, RHOADES, BOSCOLA, ROBBINS,
C. WILLIAMS, WAGNER, FERLO, JUBELIRER AND SCHWARTZ,
JUNE 17, 2003
REFERRED TO FINANCE, JUNE 17, 2003
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," further providing for sales and use tax
11 definitions, for sales and use tax exclusions, for personal
12 income tax definitions and for classes of personal income;
13 providing for a credit against personal income tax; further
14 providing for realty transfer tax definitions, for realty
15 transfer tax exclusions and for penalties for failing to
16 fulfill a historic covenant; providing for tax credits for
17 historic commercial sites; and conferring powers and duties
18 on the Department of Community and Economic Development, the
19 Pennsylvania Historical and Museum Commission and the
20 Department of Revenue.
21 The General Assembly of the Commonwealth of Pennsylvania
22 hereby enacts as follows:
23 Section 1. Sections 201, 204 and 301 of the act of March 4,
24 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, are
25 amended by adding clauses to read:
1 Section 201. Definitions.--The following words, terms and
2 phrases when used in this Article II shall have the meaning
3 ascribed to them in this section, except where the context
4 clearly indicates a different meaning:
5 * * *
6 (ddd) "Historic homesite." A building which complies with
7 all of the following:
8 (1) The building is divided into no more than four units,
9 one of which is used as the owner's principal residence. The
10 requirements of this subclause shall be satisfied if the
11 purchaser of a building has entered into a covenant with the
12 Pennsylvania Historical and Museum Commission to divide the
13 building into no more than four units, one of which will be used
14 as the purchaser's principal residence beginning no later than
15 four months after the date of the transfer of title to the real
16 property.
17 (2) The building:
18 (i) has been designated by Federal or State Government as a
19 historic property;
20 (ii) is located in an area designated by Federal or State
21 Government as a historic district;
22 (iii) is located in an area designated as a historic
23 district under section 2 of the act of June 13, 1961 (P.L.282,
24 No.167), entitled "An act authorizing counties, cities,
25 boroughs, incorporated towns and townships to create historic
26 districts within their geographic boundaries; providing for the
27 appointment of Boards of Historical Architectural Review;
28 empowering governing bodies of political subdivisions to protect
29 the distinctive historical character of these districts and to
30 regulate the erection, reconstruction, alteration, restoration,
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1 demolition or razing of buildings within the historic
2 districts";
3 (iv) has been designated as a historic property or is
4 located in an area designated as a historic district pursuant to
5 the Historic Preservation Ordinance, Section 14-2007 of the
6 Philadelphia City Code; or
7 (v) has been designated as a historic property or is located
8 in an area designated as a historic district pursuant to Title
9 11 of the Pittsburgh City Code, chapter 1, section 3, as amended
10 by City Council on July 22, 1997.
11 (3) The owner or purchaser of the building has entered into
12 a covenant with the Pennsylvania Historical and Museum
13 Commission providing that:
14 (i) rehabilitation or restoration work, with a total cost of
15 rehabilitation or restoration valued in excess of one thousand
16 dollars ($1,000), will be completed to the satisfaction of the
17 commission in accordance with 36 CFR 67.7 (relating to standards
18 for rehabilitation) within five years of the date the covenant
19 was entered into with the commission; and
20 (ii) the building:
21 (A) has been or will be occupied as the principal residence
22 of the owner or, for good cause consented to by the Pennsylvania
23 Historical and Museum Commission, of a successor in interest for
24 at least five consecutive years, including the date the covenant
25 was entered into with the commission; or
26 (B) will be occupied as the principal residence of the
27 purchaser or, for good cause consented to by the Pennsylvania
28 Historical and Museum Commission, of a successor in interest for
29 at least five consecutive years, beginning no later than four
30 months after the date of transfer of title to the real property.
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1 (eee) "Cost of rehabilitation or restoration." Costs
2 attributed to the rehabilitation or restoration of a historic
3 homesite, including historic decorative elements; upgrading of
4 the structural, mechanical, electrical and plumbing systems to
5 applicable code; architectural fees; and alterations associated
6 with the conversion of the building to residential use. The term
7 shall not include costs attributable to the acquisition of the
8 real property; the enlargement of an existing building;
9 landscaping, driveways and other site features; outbuildings or
10 garages which do not meet the requirements of clause (ddd)(2);
11 and personal labor performed by the owner.
12 Section 204. Exclusions from Tax.--The tax imposed by
13 section 202 shall not be imposed upon any of the following:
14 * * *
15 (64) The sale at retail or use of tangible personal property
16 or services which are costs of rehabilitation or restoration of
17 a historic homesite. The purchaser shall furnish to the vendor a
18 certificate substantially in the form as the Pennsylvania
19 Historical and Museum Commission, in conjunction with the
20 department, shall prescribe stating that the sale is exempt from
21 tax pursuant to this clause.
22 Section 301. Definitions.--The following words, terms and
23 phrases when used in this article shall have the meaning
24 ascribed to them in this section except where the context
25 clearly indicates a different meaning and, unless specifically
26 provided otherwise, any reference in this article to the
27 Internal Revenue Code of 1986 shall mean the Internal Revenue
28 Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as
29 amended to January 1, 1997:
30 * * *
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1 (i.3) "Historic homesite" means a historic homesite as
2 defined in section 201(ddd).
3 * * *
4 Section 2. Section 303(a)(3) of the act is amended by adding
5 a subparagraph to read:
6 Section 303. Classes of Income.--(a) The classes of income
7 referred to above are as follows:
8 * * *
9 (3) Net gains or income from disposition of property. Net
10 gains or net income, less net losses, derived from the sale,
11 exchange or other disposition of property, including real
12 property, tangible personal property, intangible personal
13 property or obligations issued on or after the effective date of
14 this amendatory act by the Commonwealth; any public authority,
15 commission, board or other agency created by the Commonwealth;
16 any political subdivision of the Commonwealth or any public
17 authority created by any such political subdivision; or by the
18 Federal Government as determined in accordance with accepted
19 accounting principles and practices. For the purpose of this
20 article:
21 * * *
22 (viii) The term "net gains or income" shall not include the
23 net gain on the sale of a historic homesite site. No later than
24 the date of transfer of title to the real property, the
25 purchaser shall provide a copy of the covenant with the
26 Pennsylvania Historical and Museum Commission to the seller.
27 * * *
28 Section 3. The act is amended by adding a section to read:
29 Section 314.1. Historic Rehabilitation Credit.--(a) An
30 individual shall be allowed a credit against the tax otherwise
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1 due under this article for the rehabilitation or restoration of
2 a historic homesite upon certification by the Pennsylvania
3 Historical and Museum Commission that rehabilitation or
4 restoration work, with a total cost of rehabilitation or
5 restoration valued in excess of one thousand dollars ($1,000)
6 for a historic homesite, has been completed to the satisfaction
7 of the commission in accordance with 36 CFR 67.7 (relating to
8 standards for rehabilitation).
9 (b) The credit authorized under this section shall be twenty
10 per cent of the amount expended by the individual during the
11 taxable year on tangible personal property or services that
12 qualify for a sales and use tax exclusion under section 204(64)
13 as certified by the commission.
14 (c) If the taxpayer cannot use the entire amount of the
15 historic rehabilitation credit for the taxable year in which the
16 expenditures are first certified, then the excess may be carried
17 over to succeeding taxable years. Each time that the historic
18 rehabilitation credit is carried over to a succeeding taxable
19 year, it shall be reduced by the amount that was used as a
20 credit during the immediately preceding taxable year. The credit
21 may be carried over and applied to succeeding taxable years for
22 no more than five taxable years following the first taxable year
23 for which the taxpayer was entitled to claim the credit.
24 (d) The aggregate of historic rehabilitation credits in a
25 fiscal year shall not exceed five million dollars ($5,000,000).
26 Section 4. Section 1101-C of the act is amended by adding a
27 definition to read:
28 Section 1101-C. Definitions.--The following words when used
29 in this article shall have the meanings ascribed to them in this
30 section:
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1 * * *
2 "Historic homesite." A historic homesite as defined in
3 section 201(ddd).
4 * * *
5 Section 5. Section 1102-C.3 of the act, amended or added
6 July 2, 1986 (P.L.318, No.77), June 16, 1994 (P.L.279, No.48)
7 and May 7, 1997 (P.L.85, No.7), is amended to read:
8 Section 1102-C.3. Excluded Transactions.--The tax imposed by
9 section 1102-C shall not be imposed upon:
10 (1) A transfer to the Commonwealth or to any of its
11 instrumentalities, agencies or political subdivisions by gift,
12 dedication or deed in lieu of condemnation or deed of
13 confirmation in connection with condemnation proceedings, or a
14 reconveyance by the condemning body of the property condemned to
15 the owner of record at the time of condemnation, which
16 reconveyance may include property line adjustments provided said
17 reconveyance is made within one year from the date of
18 condemnation.
19 (2) A document which the Commonwealth is prohibited from
20 taxing under the Constitution or statutes of the United States.
21 (3) A conveyance to a municipality, township, school
22 district or county pursuant to acquisition by the municipality,
23 township, school district or county of a tax delinquent property
24 at sheriff sale or tax claim bureau sale.
25 (4) A transfer for no or nominal actual consideration which
26 corrects or confirms a transfer previously recorded, but which
27 does not extend or limit existing record legal title or
28 interest.
29 (5) A transfer of division in kind for no or nominal actual
30 consideration of property passed by testate or intestate
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1 succession and held by cotenants; however, if any of the parties
2 take shares greater in value than their undivided interest, tax
3 is due on the excess.
4 (6) A transfer between husband and wife, between persons who
5 were previously husband and wife who have since been divorced,
6 provided the property or interest therein subject to such
7 transfer was acquired by the husband and wife or husband or wife
8 prior to the granting of the final decree in divorce, between
9 parent and child or the spouse of such child, between brother or
10 sister or spouse of a brother or sister and brother or sister or
11 the spouse of a brother or sister and between a grandparent and
12 grandchild or the spouse of such grandchild, except that a
13 subsequent transfer by the grantee within one year shall be
14 subject to tax as if the grantor were making such transfer.
15 (7) A transfer for no or nominal actual consideration of
16 property passing by testate or intestate succession from a
17 personal representative of a decedent to the decedent's devisee
18 or heir.
19 (8) A transfer for no or nominal actual consideration to a
20 trustee of an ordinary trust where the transfer of the same
21 property would be exempt if the transfer was made directly from
22 the grantor to all of the possible beneficiaries that are
23 entitled to receive the property or proceeds from the sale of
24 the property under the trust, whether or not such beneficiaries
25 are contingent or specifically named. A trust clause which
26 identifies the contingent beneficiaries by reference to the
27 heirs of the trust settlor as determined by the laws of the
28 intestate succession shall not disqualify a transfer from the
29 exclusion provided by this clause. No such exemption shall be
30 granted unless the recorder of deeds is presented with a copy of
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1 the trust instrument that clearly identifies the grantor and all
2 possible beneficiaries.
3 (8.1) A transfer for no or nominal actual consideration to a
4 trustee of a living trust from the settlor of the living trust.
5 No such exemption shall be granted unless the recorder of deeds
6 is presented with a copy of the living trust instrument.
7 (9) A transfer for no or nominal actual consideration from a
8 trustee of an ordinary trust to a specifically named beneficiary
9 that is entitled to receive the property under the recorded
10 trust instrument or to a contingent beneficiary where the
11 transfer of the same property would be exempt if the transfer
12 was made by the grantor of the property into the trust to that
13 beneficiary. However, any transfer of real estate from a living
14 trust during the settlor's lifetime shall be considered for the
15 purposes of this article as if such transfer were made directly
16 from the settlor to the grantee.
17 (9.1) A transfer for no or nominal actual consideration from
18 a trustee of a living trust after the death of the settlor of
19 the trust or from a trustee of a trust created pursuant to the
20 will of a decedent to a beneficiary to whom the property is
21 devised or bequeathed.
22 (9.2) A transfer for no or nominal actual consideration from
23 the trustee of a living trust to the settlor of the living trust
24 if such property was originally conveyed to the trustee by the
25 settlor.
26 (10) A transfer for no or nominal actual consideration from
27 trustee to successor trustee.
28 (11) A transfer:
29 (i) for no or nominal actual consideration between principal
30 and agent or straw party; or
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1 (ii) from or to an agent or straw party where, if the agent
2 or straw party were his principal, no tax would be imposed under
3 this article.
4 Where the document by which title is acquired by a grantee or
5 statement of value fails to set forth that the property was
6 acquired by the grantee from, or for the benefit of, his
7 principal, there is a rebuttable presumption that the property
8 is the property of the grantee in his individual capacity if the
9 grantee claims an exemption from taxation under this clause.
10 (12) A transfer made pursuant to the statutory merger or
11 consolidation of a corporation or statutory division of a
12 nonprofit corporation, except where the department reasonably
13 determines that the primary intent for such merger,
14 consolidation or division is avoidance of the tax imposed by
15 this article.
16 (13) A transfer from a corporation or association of real
17 estate held of record in the name of the corporation or
18 association where the grantee owns stock of the corporation or
19 an interest in the association in the same proportion as his
20 interest in or ownership of the real estate being conveyed and
21 where the stock of the corporation or the interest in the
22 association has been held by the grantee for more than two
23 years.
24 (14) A transfer from a nonprofit industrial development
25 agency or authority to a grantee of property conveyed by the
26 grantee to that agency or authority as security for a debt of
27 the grantee or a transfer to a nonprofit industrial development
28 agency or authority.
29 (15) A transfer from a nonprofit industrial development
30 agency or authority to a grantee purchasing directly from it,
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1 but only if:
2 (i) the grantee shall directly use such real estate for the
3 primary purpose of manufacturing, fabricating, compounding,
4 processing, publishing, research and development,
5 transportation, energy conversion, energy production, pollution
6 control, warehousing or agriculture; and
7 (ii) the agency or authority has the full ownership interest
8 in the real estate transferred.
9 (16) A transfer by a mortgagor to the holder of a bona fide
10 mortgage in default in lieu of a foreclosure or a transfer
11 pursuant to a judicial sale in which the successful bidder is
12 the bona fide holder of a mortgage, unless the holder assigns
13 the bid to another person.
14 (17) Any transfer between religious organizations or other
15 bodies or persons holding title for a religious organization if
16 such real estate is not being or has not been used by such
17 transferor for commercial purposes.
18 (18) A transfer to a conservancy which possesses a tax-
19 exempt status pursuant to section 501(c)(3) of the Internal
20 Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 501(c)(3)) and
21 which has as its primary purpose preservation of land for
22 historic, recreational, scenic, agricultural or open-space
23 opportunities; or a transfer from such a conservancy to the
24 United States, the Commonwealth or to any of their
25 instrumentalities, agencies or political subdivisions; or any
26 transfer from such a conservancy where the real estate is
27 encumbered by a perpetual agricultural conservation easement as
28 defined by the act of June 30, 1981 (P.L.128, No.43), known as
29 the "Agricultural Area Security Law," and such conservancy has
30 owned the real estate for at least two years immediately prior
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1 to the transfer.
2 (19) A transfer of real estate devoted to the business of
3 agriculture to a family farm corporation by a member of the same
4 family which directly owns at least seventy-five per cent of
5 each class of the stock thereof.
6 (19.1) A transfer of real estate devoted to the business of
7 agriculture to a family farm partnership by a member of the same
8 family, which family directly owns at least seventy-five per
9 cent of the interests in the partnership.
10 (20) A transfer between members of the same family of an
11 ownership interest in a real estate company, family farm
12 corporation or family farm partnership which owns real estate.
13 (21) A transaction wherein the tax due is one dollar ($1) or
14 less.
15 (22) Leases for the production or extraction of coal, oil,
16 natural gas or minerals and assignments thereof.
17 In order to exercise any exclusion provided in this section, the
18 true, full and complete value of the transfer shall be shown on
19 the statement of value. For leases of coal, oil, natural gas or
20 minerals, the statement of value may be limited to an
21 explanation of the reason such document is not subject to tax
22 under this article.
23 (23) A transfer of a historic homesite. No later than the
24 date of transfer of title to the real property, the purchaser
25 shall provide a copy of the covenant with the Pennsylvania
26 Historical and Museum Commission to the seller.
27 Section 6. The act is amended by adding an article to read:
28 ARTICLE XVII-C
29 HISTORIC REHABILITATION AND ECONOMIC
30 REVITALIZATION TAX CREDIT
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1 Section 1701-C. Scope.
2 This article deals with historic rehabilitation and economic
3 revitalization tax credits.
4 Section 1702-C. Definitions.
5 The following words and phrases when used in this article
6 shall have the meanings given to them in this section unless the
7 context clearly indicates otherwise:
8 "Certified rehabilitation." The rehabilitation of a historic
9 commercial site which has been certified by the commission as
10 complying with 36 CFR 67.7 (relating to standards for
11 Rehabilitation).
12 "Commission." The Pennsylvania Historical and Museum
13 Commission.
14 "Department." The Department of Community and Economic
15 Development of the Commonwealth.
16 "Historic commercial site." A building which complies with
17 all of the following:
18 (1) The building is located within this Commonwealth and
19 is a certified historic structure as defined in section
20 47(c)(3) of the Internal Revenue Code of 1986 (Public Law 99-
21 514, 26 U.S.C. § 47(c)(3)).
22 (2) The building has income-producing capability.
23 (3) The owner or purchaser of the building has entered
24 into a covenant with the commission providing that:
25 (i) rehabilitation or restoration work, with a total
26 cost of rehabilitation or restoration valued in excess of
27 $5,000, will be completed to the satisfaction of the
28 commission in accordance with 36 CFR 67.7 (relating to
29 standards for Rehabilitation) within two years of the
30 date the covenant was entered into with the commission;
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1 and
2 (ii) neither the owner nor a successor in interest
3 will make a material alteration, as determined by the
4 commission, to the work under subparagraph (i) for at
5 least ten consecutive years, including the date the
6 covenant was entered into with the commission.
7 "Qualified rehabilitation expenditure." As defined in
8 section 47(c)(2) of the Internal Revenue Code of 1986 (Public
9 Law 99-514, 26 U.S.C. § 47(c)(2)).
10 "Owner." The term includes a lessee for a minimum term
11 specified by regulation of the commission.
12 "Substantial rehabilitation." As defined in section
13 47(c)(1)(C) of the Internal Revenue Code of 1986 (Public Law 99-
14 514, 26 U.S.C. § 47(c)(1)(C)).
15 Section 1703-C. Agencies.
16 (a) Commission.--The commission has the following powers and
17 duties:
18 (1) Enter into covenants in accordance with paragraph
19 (3) of the definition of "historic commercial site" in
20 section 1702-C.
21 (2) Notify the Department of Revenue of a breach of a
22 covenant under paragraph (1).
23 (3) Make recommendations to the department of potential
24 sites for rehabilitation.
25 (4) Cooperate with the department and the Department of
26 Revenue in the implementation of sections 1704-C and 1705-C.
27 (5) Promulgate regulations to determine whether a lessee
28 is an owner.
29 (b) Department.--The department has the following powers and
30 duties:
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1 (1) Award tax credits under section 1704-C. This
2 includes adopting a geographic allocation strategy to insure
3 equitable distributions of tax credits.
4 (2) Coordinate activities of the commission and the
5 Department of Revenue in the implementation of sections 1704-
6 C and 1705-C.
7 (3) Compile and maintain a list of potential sites for
8 rehabilitation in cooperation with the commission, political
9 subdivisions, citizens groups and individuals.
10 (4) Promulgate regulations to administer section 1704-C.
11 This paragraph includes all of the following:
12 (i) A fee schedule for applications for tax credits
13 to defray the cost of processing applications.
14 (ii) Recapture and reallocation of tax credits
15 reserved but not claimed.
16 Section 1704-C. Tax credits.
17 (a) Authorization.--The department may award the owner of a
18 historic commercial site a credit against the tax imposed by
19 Articles III, IV, VI, VII, IX and XI.
20 (b) Amount.--The amount of the credit under subsection (a)
21 is 20% of the qualified rehabilitation expenditures made in
22 connection with the certified rehabilitation of a historic
23 commercial site. If the person claiming the credit cannot use
24 the entire amount of the credit for the taxable year in which
25 the historic commercial site is placed in service, then the
26 excess may be carried over to each succeeding taxable year for
27 up to 15 taxable years.
28 (c) Procedure.--
29 (1) A person seeking a credit under this section must do
30 all of the following:
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1 (i) Obtain documentation from the commission that
2 the project is a certified rehabilitation.
3 (ii) Make application to the local redevelopment
4 authority board stating its intention to claim a credit
5 under this section for the rehabilitation of a specific
6 historic commercial site within the board's jurisdiction.
7 In the event that the local redevelopment authority board
8 shall approve the application, it shall adopt a
9 resolution of approval, which the applicant shall attach
10 to its application to the Secretary of Community and
11 Economic Development.
12 (iii) Enter into the appropriate covenant in
13 accordance with paragraph (3) of the definition of
14 "historic commercial site" in section 1702-C.
15 (iv) Apply to the department for a tax credit.
16 (2) The department may reserve a credit in an amount
17 based on the amount of estimated qualified rehabilitation
18 expenditures stated in the application, subject to the
19 availability of total tax credits, as follows:
20 (i) Not more than $20,000,000 in total tax credits
21 under this section may be awarded in a year.
22 (ii) If the amount of tax credits available in any
23 fiscal year exceeds the amount of tax credits reserved by
24 the department in such year, the excess shall carry over
25 to the next succeeding fiscal year and be available in
26 addition to the $20,000,000 available in that year.
27 (iii) Not more than $4,000,000 in tax credits shall
28 be allowed in connection with a single application for a
29 tax credit under this section.
30 (iv) Not more than 20% of the total dollar amount of
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1 tax credits allowed in any year shall be allowed for
2 projects located in any one political subdivision.
3 (3) In determining whether to reserve a tax credit under
4 this section, the department shall weigh the following
5 factors:
6 (i) The extent to which such award will contribute
7 to the revitalization of deteriorated commercial
8 districts in smaller communities, aging suburbs and large
9 urban areas.
10 (ii) The historic, cultural or architectural
11 importance of the resource proposed to be rehabilitated.
12 (iii) The extent to which such award satisfies the
13 geographic allocation strategy under section 1703-
14 C(b)(4).
15 (iv) The extent to which such award extends the
16 benefits of the act to both small and large historic
17 commercial sites.
18 (4) The department shall deny or grant an application
19 within 30 days. Failure to act within this time period shall
20 be deemed a reservation of a credit. The time period may be
21 extended by mutual agreement of the applicant and the
22 department.
23 (5) Denial of a credit is subject to appeal under 2
24 Pa.C.S. Ch. 7 Subch. A (relating to judicial review of
25 Commonwealth agency action).
26 (6) A person for whom a tax credit has been reserved may
27 claim the credit for the taxable year in which the building
28 is placed in service. If actual qualified rehabilitation
29 expenditures exceed the amount of estimated expenditures on
30 which the credit reserved is based, the credit shall be based
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1 on estimated expenditures. If estimated expenditures exceed
2 actual expenditures, the credit shall be based on actual
3 expenditures.
4 (7) Credits allowed to a partnership, a limited
5 liability company taxed as a partnership or multiple owners
6 of property shall be passed through to the persons designated
7 as partners, members or owners respectively pro rata or
8 pursuant to an executed agreement among such persons
9 documenting an alternate distribution method, without regard
10 to the sharing of other tax or economic attributes of such
11 entity. If a person entitled to credits has not claimed such
12 credits, the person may assign, transfer or convey the
13 unclaimed credits, in whole or in part, by sale or otherwise,
14 to one or more individuals or entities. The assignee or
15 assignees may use the credits against any taxes against which
16 the assignor would have been entitled to use the credit and
17 may carry forward any unused credits over to each next
18 succeeding taxable year for up to 15 years commencing with
19 the taxable year in which the credit was allowed. Each
20 assignee must perfect the transfer by notifying the
21 department and the Department of Revenue in writing within 30
22 calendar days following the effective date of the transfer
23 and must provide such information as required by the
24 department and the Department of Revenue to administer and
25 carry out the provisions of this section.
26 (8) Neither credits authorized by this section nor the
27 proceeds of the sale, assignment or transfer of credits shall
28 constitute income taxable under Article III.
29 Section 1705-C. Penalty.
30 (a) Imposition.--The Department of Revenue may impose an
20030S0820B0986 - 18 -
1 administrative penalty on a person that breaches a covenant
2 under paragraph (3) of the definition of "historic commercial
3 site" in section 1702-C.
4 (b) Amount.--The penalty shall be equal to the recapture
5 percentage of the awarded credit. The recapture percentage shall
6 be calculated under section 50(a)(1) of the Internal Revenue
7 Code of 1986 (Public Law 99-514, 26 U.S.C. § 50(a)(1)).
8 Section 1706-C. Review.
9 By November 30, 2008, the commission, the department and the
10 Department of Revenue shall file with the Secretary of the
11 Senate and the Chief Clerk of the House of Representatives a
12 report on the program under section 1704-C for fiscal years July
13 1, 2003, through June 30, 2008.
14 Section 1707-C. Expiration.
15 (a) General rule.--Except as set forth in subsection (b),
16 this article shall expire June 30, 2014.
17 (b) Exception.--Credits under section 1704-C(b) may be
18 carried over to taxable years ending before July 1, 2029.
19 Section 7. The act is amended by adding a section to read:
20 Section 3003.15. Failure to Fulfill Historic Homesite
21 Covenant.--(a) The Pennsylvania Historical and Museum
22 Commission shall notify the department when an individual who
23 has entered into a covenant to rehabilitate or restore a
24 historic homesite under section 201(ddd), 301(i.3) or 1101-C
25 fails to abide by the terms of the covenant.
26 (b) Upon notification by the Pennsylvania Historical and
27 Museum Commission that the individual has failed to abide by the
28 terms of the covenant, the department shall levy a penalty
29 against that individual equal to one hundred per cent of the tax
30 benefits granted under sections 204(64), 303(a)(3)(viii), 314.1
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1 and 1102-C.3 with respect to the historic homesite to which the
2 covenant applied.
3 (c) The penalty provided by subsection (b), or any portion
4 thereof, may be abated if the failure to abide by the terms of
5 the covenant is justified by reason of change in employment,
6 health or, to the extent provided in regulation, unforeseen
7 circumstances. The department and the Pennsylvania Historical
8 and Museum Commission shall promulgate regulations to implement
9 this subsection.
10 Section 8. Except for the addition of Article XVII-C of the
11 act, this act shall apply to covenants with the Pennsylvania
12 Historical and Museum Commission which are entered into after
13 June 30, 2003.
14 Section 9. This act shall take effect as follows:
15 (1) The addition of Article XVII-C of the act shall take
16 effect in 60 days.
17 (2) This section shall take effect immediately.
18 (3) The remainder of this act shall take effect July 1,
19 2003, or immediately, whichever is later.
E16L72BIL/20030S0820B0986 - 20 -