H2297B3347A06858 RLE:SRA 05/02/08 #90 A06858 AMENDMENTS TO HOUSE BILL NO. 2297 Sponsor: REPRESENTATIVE DALEY Printer's No. 3347 1 Amend Title, page 1, lines 1 through 16, by striking out all 2 of said lines and inserting 3 Amending the act of October 6, 1998 (P.L.705, No.92), entitled, 4 as amended, "An act providing for the creation of keystone 5 opportunity zones and keystone opportunity expansion zones to 6 foster economic opportunities in this Commonwealth, to 7 facilitate economic development, stimulate industrial, 8 commercial and residential improvements and prevent physical 9 and infrastructure deterioration of geographic areas within 10 this Commonwealth; authorizing expenditures; providing tax 11 exemptions, tax deductions, tax abatements and tax credits; 12 creating additional obligations of the Commonwealth and local 13 governmental units; and prescribing powers and duties of 14 certain State and local departments, agencies and officials," 15 providing for extension for unoccupied parcels, for 16 additional subzones authorized and for substitution of 17 parcels; and further providing for sales and use tax, for 18 corporate net income tax, for local earned income, net 19 profits and business privilege taxes and for local sales and 20 use tax. 21 Amend Bill, page 1, lines 9 through 24; pages 2 through 6, 22 lines 1 through 30; page 7, lines 1 through 12, by striking out 23 all of said lines on said pages and inserting 24 Section 1. The act of October 6, 1998 (P.L.705, No.92), 25 known as the Keystone Opportunity Zone, Keystone Opportunity 26 Expansion Zone and Keystone Opportunity Improvement Zone Act, is 27 amended by adding sections to read: 28 Section 301.3. Extension for unoccupied parcels. 29 (a) Requests.--Notwithstanding any other provisions of this 30 act, the department may, as provided in this section, grant 31 requests for the extension of all deductions, abatements or 32 credits for any subzones or keystone opportunity improvement 33 zones previously certified under this act. 34 (b) Requirements.--Extensions of deductions, abatements or 35 credits under this section shall apply only to properties which 36 are unoccupied and which qualify as deteriorated on a basis 37 other than being underutilized. 38 (c) Applications.--Applications under this section shall be
1 made to the department no later than May 31, 2009. Applications 2 must include all ordinances, resolutions or other required 3 action of all affected political subdivisions approving the 4 extension of deductions, abatements or credits set forth under 5 this act. The department shall certify the extensions by June 6 30, 2009. 7 (d) Expiration.--For subzones or keystone opportunity 8 improvement zones that expire December 31, 2008, an application 9 may be submitted to the department to temporarily delay the 10 expiration of the deductions, abatements and credits under the 11 existing subzone until June 30, 2009. The application shall 12 include all ordinances, resolutions or other required action of 13 all affected political subdivisions approving the requested 14 delay in the expiration of the subzone or keystone opportunity 15 improvement zone and shall be submitted to the department by 16 November 30, 2008. The department shall certify the delay in the 17 expiration by December 31, 2008. Subzones or keystone 18 opportunity improvement zones whose expiration is delayed under 19 this subsection may apply for an extension under subsection (c) 20 and an extension granted under this section shall be deemed to 21 have begun January 1, 2009. 22 (e) Duration of extension.--The department may approve an 23 application for extension of the deductions, abatements and 24 credits under subsection (c) for: 25 (1) seven years, provided that the deductions, 26 abatements and credits, for the extended period shall 27 commence only upon occupancy and terminate seven years from 28 the termination date of the existing subzone or keystone 29 opportunity improvement zone; or 30 (2) ten years, provided that the deductions, abatements 31 and credits, for the extended period, shall commence only 32 upon occupancy and terminate ten years from the date of 33 occupancy if the property is occupied within seven years 34 following the termination date of the existing subzone or 35 keystone opportunity improvement zone. 36 Section 301.4. Additional subzones authorized. 37 (a) Designation.--Notwithstanding any provision of this act, 38 the department may designate additional subzones in any county. 39 (b) Requirements.--Subzones designated under this 40 subsection: 41 (1) may not be less than ten acres in size, unless 42 contiguous to an existing subzone, in which case no minimum 43 acreage shall be required; 44 (2) may not, in the aggregate, exceed 350 acres in each 45 county; and 46 (3) shall be comprised only of parcels which: 47 (i) qualify as deteriorated only on a basis other 48 than being underutilized and are unoccupied as of the 49 effective date of this subsection; or 50 (ii) are occupied by a business that: 51 (A) creates or retains at least 1,400 full-time 52 jobs in this Commonwealth within three years of 53 approval of the subzone; and 54 (B) makes a capital investment of at least 55 $750,000,000 in the subzone within three years of 56 approval of the subzone. 57 (c) Application and approval.--Application for a subzone 58 under this section shall be made to the department in accordance 59 with the provisions of section 302(a)(1), (2), (3), (5) and (6) HB2297A06858 - 2 -
1 no later than May 31, 2009, and shall be certified by the 2 department on or before June 30, 2009. 3 (d) Duration of subzones.--Subzones designated under this 4 section shall be entitled to all tax exemptions, deductions, 5 abatements and credits set forth in this act for a period not to 6 exceed ten years, beginning January 1, 2009, and ending December 7 31, 2018. 8 Section 301.5. Substitution of parcels within a subzone. 9 (a) Approval.--In the event of a decertification and removal 10 of the designation of a deteriorated property as part of a 11 subzone under section 309, the department may approve a 12 substitution of other parcels within the zone or subzone 13 containing no more than the aggregate acreage being decertified. 14 (b) Application and approval.--Applications to substitute 15 parcels under this section shall be made to the department no 16 later than May 31, 2009. Applications under this section shall 17 be made to the department in accordance with section 302(a)(1), 18 (2), (3), (5) and (6). The department shall certify the 19 substitutions by June 30, 2009. 20 (c) Subzones set to expire on December 31, 2008.--For 21 subzones that expire December 31, 2008, an application may be 22 submitted to the department to temporarily delay the expiration 23 of the deductions, abatements and credits under the existing 24 subzone until June 30, 2009. The application shall include all 25 ordinances, resolutions or other required action of all affected 26 political subdivisions approving the requested delay in the 27 expiration of the subzone and shall be submitted to the 28 department by November 30, 2008. The department shall certify 29 the delay in the expiration by December 31, 2008. Subzones whose 30 expiration are delayed under this subsection may apply for a 31 substitution of parcels under subsection (a). 32 (d) Extension of substituted parcels.--Upon approval by the 33 department of a substitution of parcels under this section, the 34 department may approve an extension of the substituted parcels 35 under section 301.3. 36 Section 2. Section 511 of the act, amended December 9, 2002 37 (P.L.1727, No.217), is amended to read: 38 Section 511. Sales and use tax. 39 [(a) Exemption.--]Sales at retail of services or tangible 40 personal property, other than motor vehicles, to a qualified 41 business or a construction contractor pursuant to a construction 42 contract with a qualified business, for the exclusive use, 43 consumption and utilization of the tangible personal property or 44 service by the qualified business or the construction contractor 45 at [its] the qualified business's facility located within a 46 subzone, improvement subzone or expansion subzone are exempt 47 from the sales and use tax imposed under Article II of the Tax 48 Reform Code of 1971. No person shall be allowed an exemption for 49 sales conducted prior to designation of the real property as 50 part of a subzone or expansion subzone. 51 [(b) Construction contracts.--For any construction contract 52 performed in a subzone, improvement subzone or expansion 53 subzone, the exemption provided in subsection (a) shall only 54 apply to the sale at retail or use of building machinery and 55 equipment to a qualified business, or to a construction 56 contractor pursuant to a construction contract with a qualified 57 business, for the exclusive use, consumption and utilization by 58 the qualified business at its facility in a subzone, improvement 59 subzone or expansion subzone. For the purposes of the subzone, HB2297A06858 - 3 -
1 improvement subzone or expansion subzone exemption, building 2 machinery and equipment shall include distribution equipment 3 purchased for the exclusive use, consumption and utilization in 4 a subzone, improvement subzone or expansion subzone facility.] 5 Section 3. Section 515(d)(3) of the act, amended December 6 23, 2003 (P.L.360, No.51), is amended to read: 7 Section 515. Corporate net income tax. 8 * * * 9 (d) Income apportionment.--The taxable income of a 10 corporation that is a qualified business shall be apportioned to 11 the subzone, improvement subzone or expansion subzone by 12 multiplying the Pennsylvania taxable income by a fraction, the 13 numerator of which is the property factor plus the payroll 14 factor [plus the sales factor] and the denominator of which is 15 [three] two, in accordance with the following: 16 * * * 17 [(3) The sales factor is a fraction, the numerator of 18 which is the total sales of the taxpayer in the subzone, 19 improvement subzone or expansion subzone during the tax 20 period and the denominator of which is the total sales of the 21 taxpayer in this Commonwealth during the tax period. 22 (i) Sales of tangible personal property are in the 23 subzone, improvement subzone or expansion subzone if the 24 property is delivered or shipped to a purchaser that 25 takes possession within the subzone, improvement subzone 26 or expansion subzone regardless of the F.O.B. point or 27 other conditions of the sale. 28 (ii) Sales other than sales of tangible personal 29 property are in the subzone, improvement subzone or 30 expansion subzone if: 31 (A) the income-producing activity is performed 32 in the subzone, improvement subzone or expansion 33 subzone; or 34 (B) the income-producing activity is performed 35 both within and without the subzone, improvement 36 subzone or expansion subzone and a greater proportion 37 of the income-producing activity is performed in the 38 subzone, improvement subzone or expansion subzone 39 than in any other location, based on costs of 40 performance.] 41 * * * 42 Section 3.1. Section 703 of the act is amended by adding a 43 subsection to read: 44 Section 703. Local earned income and net profits taxes; 45 business privilege taxes. 46 * * * 47 (g) Determination of exemption.--For the purposes of 48 determining an exemption under this section, a tax on or 49 measured by any of the following shall be attributed to business 50 activity conducted within a subzone, improvement zone or 51 expansion zone by applying the apportionment factors under 52 section 515(d): 53 (1) Business gross receipts. 54 (2) Gross or net income. 55 (3) Gross or net profits. 56 Section 4. Section 705 of the act, amended December 9, 2002 57 (P.L.1727, No.217), is amended to read: 58 Section 705. Local sales and use tax. 59 (a) General rule.--The political subdivision shall exempt HB2297A06858 - 4 -
1 sales at retail of services or tangible personal property, 2 except motor vehicles, to a qualified business or a construction 3 contractor pursuant to a construction contract with a qualified 4 business, for the exclusive use, consumption and utilization of 5 the tangible personal property or service by the qualified 6 business or the construction contractor at [its] the qualified 7 business's facility located within a subzone, improvement 8 subzone or expansion subzone from a city or county tax on 9 purchase price authorized under Article XXXI-B of the act of 10 July 28, 1953 (P.L.723, No.230), known as the Second Class 11 County Code, as amended, and the act of June 5, 1991 (P.L.9, 12 No.6), known as the Pennsylvania Intergovernmental Cooperation 13 Authority Act for Cities of the First Class, as amended. No 14 exemption may be granted for sales occurring prior to 15 designation of the real property as part of a subzone or 16 expansion subzone. 17 (b) [Construction contracts.--For any construction contract 18 performed in a subzone, improvement subzone or expansion 19 subzone, the exemption provided in subsection (a) shall only 20 apply to the sale at retail or use of building machinery and 21 equipment to a qualified business, or to a construction 22 contractor pursuant to a construction contract with a qualified 23 business, for the exclusive use, consumption and utilization by 24 the qualified business at its facility in a subzone, improvement 25 subzone or expansion subzone. For the purposes of the subzone, 26 improvement subzone or expansion subzone exemption, building 27 machinery and equipment shall include distribution equipment 28 purchased for the exclusive use, consumption and utilization in 29 a subzone, improvement subzone or expansion subzone facility.] 30 (Reserved). 31 (c) Definition.--Sales at retail of tangible personal 32 property and services shall be defined in accordance with 33 Article II of the Tax Reform Code of 1971. 34 Section 5. The amendment of section 515 of the act shall 35 apply to taxable years beginning after December 31, 2008. 36 Section 6. This act shall take effect immediately. E2L90RLE/HB2297A06858 - 5 -