SENATE AMENDED PRIOR PRINTER'S NOS. 143, 269, 1484 PRINTER'S NO. 1706
No. 134 Session of 1997
INTRODUCED BY TRUE, SCHULER, PETTIT, THOMAS, VANCE, MANDERINO, BARLEY, RUBLEY, JOSEPHS, BROWN, MILLER, EGOLF, HERSHEY, ARMSTRONG, MASLAND, BEBKO-JONES, MUNDY, LAUGHLIN, YOUNGBLOOD, MAITLAND, BOYES, STRITTMATTER, GEORGE, HENNESSEY, MARSICO, WOJNAROSKI, WALKO, READSHAW, NAILOR, DALEY, GIGLIOTTI, CHADWICK, FLEAGLE, HALUSKA, ZUG, CAPPABIANCA, MELIO, FICHTER, SANTONI, KELLER, SAINATO, FARGO, MARKOSEK, FAIRCHILD, PESCI, JAROLIN, LAWLESS, PLATTS, RYAN, PERZEL, E. Z. TAYLOR, STERN, ROONEY, SHANER, OLASZ, BAKER, CURRY, BATTISTO, COY, McCALL, LaGROTTA, STURLA, TRAVAGLIO, TANGRETTI, ADOLPH, JAMES, LEH, HERMAN, LEVDANSKY, J. TAYLOR, COLAFELLA, CORNELL, STEELMAN, BARD, FEESE, LUCYK, TRELLO, LEDERER, BROWNE, PETRARCA, WAUGH, DeLUCA, D. W. SNYDER, C. WILLIAMS, CIVERA, ALLEN, DiGIROLAMO, DENT, HUTCHINSON, WILT, RAMOS, L. I. COHEN, PHILLIPS, BARRAR, WASHINGTON, ROHRER, FLICK, EACHUS, SCHRODER, SEYFERT, BELARDI, AND ROSS, JANUARY 29, 1997
SENATOR TILGHMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS AMENDED, MAY 5, 1997
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 personal income tax definitions and for 12 special tax provisions on poverty; providing for income tax 13 refund checkoffs for breast and cervical cancer research; 14 further providing for realty transfer tax definitions, for 15 exclusions, FOR NEIGHBORHOOD ASSISTANCE TAX CREDITS AND FOR <-- 16 INHERITANCE TAX; EXCLUDING CERTAIN COMPUTER SERVICES FROM 17 SALES AND USE TAX; FURTHER DEFINING "CLAIMANT" AND 18 "DEPENDENT"; FURTHER PROVIDING FOR SPECIAL TAX PROVISIONS FOR
1 POVERTY, FOR THE DETERMINATION OF CAPITAL STOCK VALUE AND FOR 2 ALLOCATION OF CIGARETTE TAX RECEIPTS TO THE CHILDREN'S HEALTH 3 FUND; FURTHER DEFINING "COMPENSATION" FOR PERSONAL INCOME TAX 4 PURPOSES TO EXCLUDE CAFETERIA PLANS AND CERTAIN OTHER 5 BENEFITS; EXTENDING THE NEIGHBORHOOD ASSISTANCE TAX CREDIT TO 6 PERSONAL INCOME TAXES IMPOSED UNDER ARTICLE III; and making 7 repeals. PENALTIES," MAKING AMENDMENTS RELATING TO THE SALES <-- 8 AND USE TAX, THE PERSONAL INCOME TAX, THE CORPORATE NET 9 INCOME TAX, THE CAPITAL STOCK FRANCHISE TAX, THE REALTY 10 TRANSFER TAX, THE NEIGHBORHOOD ASSISTANCE TAX CREDIT, THE 11 MALT BEVERAGE TAX AND THE INHERITANCE TAX; ADDING PROVISIONS 12 RELATING TO A RESEARCH AND DEVELOPMENT TAX CREDIT; AND MAKING 13 REPEALS. 14 The General Assembly of the Commonwealth of Pennsylvania 15 hereby enacts as follows: 16 Section 1. Section 201(b), (c), (d), (f), (g), (k), (o) and <-- 17 (jj) SECTION 201(C), (D), (K), (O), (DD), (EE), (FF), (GG), <-- 18 (HH), (II) AND (LL) of the act of March 4, 1971 (P.L.6, No.2), 19 known as the Tax Reform Code of 1971, amended or added August 4, 20 1991 (P.L.97, No.22), December 13, 1991 (P.L.373, No.40), June 21 16, 1994 (P.L.279, No.48) and June 30, 1995 (P.L.139, No.21), 22 are amended to read: 23 Section 201. Definitions.--The following words, terms and 24 phrases when used in this Article II shall have the meaning 25 ascribed to them in this section, except where the context 26 clearly indicates a different meaning: 27 * * * 28 (b) "Maintaining a place of business in this Commonwealth." <-- 29 (1) Having or maintaining within this Commonwealth, directly 30 or by a subsidiary, an office, distribution house, sales house, 31 warehouse, service enterprise or other place of business, or any 32 agent of general or restricted authority irrespective of whether 33 the place of business or agent is located here permanently or 34 temporarily or whether the person or subsidiary maintaining such 35 place of business or agent is authorized to do business within 36 this Commonwealth; or 19970H0134B1706 - 2 -
1 (2) The engaging in any activity as a business within this 2 Commonwealth by any person, directly or by a subsidiary, in 3 connection with the lease, sale or delivery of tangible personal 4 property or the performance of services thereon for use, storage 5 or consumption or in connection with the sale or delivery for 6 use of the services described in subclauses (11) through (16) 7 and (18) of clause (k) of this section, including, but not 8 limited to, having, maintaining or using any office, 9 distribution house, sales house, warehouse or other place of 10 business, any stock of goods or any solicitor, salesman, agent 11 or representative under its authority, at its direction or with 12 its permission, regardless of whether the person or subsidiary 13 is authorized to do business in this Commonwealth. 14 (3) Regularly or substantially soliciting orders within this 15 Commonwealth in connection with the lease, sale or delivery of 16 tangible personal property to or the performance thereon of 17 services or in connection with the sale or delivery of the 18 services described in subclauses (11) through (16) and (18) of 19 clause (k) of this section for residents of this Commonwealth by 20 means of catalogues or other advertising, whether such orders 21 are accepted within or without this Commonwealth. 22 (c) "Manufacture." The performance of manufacturing, 23 fabricating, compounding, processing or other operations, 24 engaged in as a business, which place any tangible personal 25 property in a form, composition or character different from that 26 in which it is acquired whether for sale or use by the 27 manufacturer, and shall include, but not be limited to-- 28 (1) Every operation commencing with the first production 29 stage and ending with the completion of tangible personal 30 property having the physical qualities (including packaging, if 19970H0134B1706 - 3 -
1 any, passing to the ultimate consumer) which it has when 2 transferred by the manufacturer to another; 3 (2) The publishing of books, newspapers, magazines and other 4 periodicals and printing; 5 (3) Refining, blasting, exploring, mining and quarrying for, 6 or otherwise extracting from the earth or from waste or stock 7 piles or from pits or banks any natural resources, minerals and 8 mineral aggregates including blast furnace slag; 9 (4) Building, rebuilding, repairing and making additions to, 10 or replacements in or upon vessels designed for commercial use 11 of registered tonnage of fifty tons or more when produced upon 12 special order of the purchaser, or when rebuilt, repaired or 13 enlarged, or when replacements are made upon order of, or for 14 the account of the owner; 15 (5) Research having as its objective the production of a new 16 or an improved (i) product or utility service, or (ii) method of 17 producing a product or utility service, but in either case not 18 including market research or research having as its objective 19 the improvement of administrative efficiency. 20 (6) Remanufacture for wholesale distribution by a 21 remanufacturer of motor vehicle parts from used parts acquired 22 in bulk by the remanufacturer using an assembly line process 23 which involves the complete disassembly of such parts and 24 integration of the components of such parts with other used or 25 new components of parts, including the salvaging, recycling or 26 reclaiming of used parts by the remanufacturer. 27 (7) Remanufacture or retrofit by a manufacturer or 28 remanufacturer of aircraft, armored vehicles, other defense- 29 related vehicles having a finished value of at least fifty 30 thousand dollars ($50,000). Remanufacture or retrofit involves 19970H0134B1706 - 4 -
1 the disassembly of such aircraft, vehicles, parts or components, 2 including electric or electronic components, the integration of 3 those parts and components with other used or new parts or 4 components, including the salvaging, recycling or reclaiming of 5 the used parts or components and the assembly of the new or used 6 aircraft, vehicles, parts or components. For purposes of this 7 clause, the following terms or phrases have the following 8 meanings: 9 (i) "aircraft" means fixed-wing aircraft, helicopters, 10 powered aircraft, tilt-rotor or tilt-wing aircraft, unmanned 11 aircraft and gliders; 12 (ii) "armored vehicles" means tanks, armed personnel 13 carriers and all other armed track or semitrack vehicles; or 14 (iii) "other defense-related vehicles" means trucks, truck- 15 tractors, trailers, jeeps and other utility vehicles, including 16 any unmanned vehicles. 17 The term "manufacture[,]" shall not include constructing, 18 altering, servicing, repairing or improving real estate or 19 repairing, servicing or installing tangible personal property, 20 nor the cooking[,] or freezing [or baking], FREEZING OR BAKING <-- 21 of fruits, vegetables, mushrooms, fish, seafood, meats[,] or <-- 22 poultry [or bakery products]., POULTRY OR BAKERY PRODUCTS. <-- 23 * * * 24 (d) "Processing." The performance of the following 25 activities when engaged in as a business enterprise: 26 (1) The filtering or heating of honey, the cooking[, baking] <-- 27 or freezing of fruits, vegetables, mushrooms, fish, seafood, 28 meats[,] or poultry [or bakery products], POULTRY OR BAKERY <-- 29 PRODUCTS, when the person engaged in such business packages such 30 property in sealed containers for wholesale distribution. 19970H0134B1706 - 5 -
1 (1.1) The processing of vegetables by cleaning, cutting, 2 coring or chopping and treating to preserve, sterilize or purify 3 and substantially extend the useful shelf life of the 4 vegetables, when the person engaged in such activity packages 5 such property in sealed containers for wholesale distribution. 6 (2) The scouring, carbonizing, cording, combing, throwing, 7 twisting or winding of natural or synthetic fibers, or the 8 spinning, bleaching, dyeing, printing or finishing of yarns or 9 fabrics, when such activities are performed prior to sale to the 10 ultimate consumer. 11 (3) The electroplating, galvanizing, enameling, anodizing, 12 coloring, finishing, impregnating or heat treating of metals or 13 plastics for sale or in the process of manufacturing. 14 (3.1) THE BLANKING, SHEARING, LEVELING, SLITTING OR BURNING <-- 15 OF METALS FOR SALE TO OR USE BY A MANUFACTURER OR PROCESSOR. 16 (4) The rolling, drawing or extruding of ferrous and non- 17 ferrous metals. 18 (5) The fabrication for sale of ornamental or structural 19 metal or of metal stairs, staircases, gratings, fire escapes or 20 railings (not including fabrication work done at the 21 construction site). 22 (6) The preparation of animal feed or poultry feed for sale. 23 (7) The production, processing and bottling of non-alcoholic 24 beverages for wholesale distribution. 25 (8) The operation of a saw mill or planing mill for the 26 production of lumber or lumber products for sale. 27 (9) The milling for sale of flour or meal from grains. 28 (9.1) THE AGING, STRIPPING, CONDITIONING, CRUSHING AND <-- 29 BLENDING OF TOBACCO LEAVES FOR USE AS CIGAR FILLER OR AS 30 COMPONENTS OF SMOKELESS TOBACCO PRODUCTS FOR SALE TO 19970H0134B1706 - 6 -
1 MANUFACTURERS OF TOBACCO PRODUCTS. 2 (10) The slaughtering and dressing of animals for meat to be 3 sold or to be used in preparing meat products for sale, and the 4 preparation of meat products including lard, tallow, grease, 5 cooking and inedible oils for wholesale distribution. 6 (11) The processing of used lubricating oils. 7 (12) The broadcasting of radio and television programs of 8 licensed commercial or educational stations. 9 (13) THE COOKING OR BAKING OF BREAD, PASTRIES, CAKES, <-- 10 COOKIES, MUFFINS AND DONUTS, WHEN THE PERSON ENGAGED IN SUCH 11 ACTIVITY SELLS SUCH ITEMS AT RETAIL AT LOCATIONS THAT DO NOT 12 CONSTITUTE AN ESTABLISHMENT FROM WHICH READY-TO-EAT FOOD AND 13 BEVERAGES ARE SOLD. FOR PURPOSES OF THIS CLAUSE, A BAKERY, A 14 PASTRY SHOP AND A DONUT SHOP SHALL NOT BE CONSIDERED AN 15 ESTABLISHMENT FROM WHICH READY-TO-EAT FOOD AND BEVERAGES ARE 16 SOLD. 17 * * * 18 (f) "Purchase at retail." <-- 19 (1) The acquisition for a consideration of the ownership, 20 custody or possession of tangible personal property other than 21 for resale by the person acquiring the same when such 22 acquisition is made for the purpose of consumption or use, 23 whether such acquisition shall be absolute or conditional, and 24 by whatsoever means the same shall have been effected. 25 (2) The acquisition of a license to use or consume, and the 26 rental or lease of tangible personal property, other than for 27 resale regardless of the period of time the lessee has 28 possession or custody of the property. 29 (3) The obtaining for a consideration of those services 30 described in subclauses (2), (3) and (4) of clause (k) of this 19970H0134B1706 - 7 -
1 section other than for resale. 2 (4) A retention after March 7, 1956, of possession, custody 3 or a license to use or consume pursuant to a rental contract or 4 other lease arrangement (other than as security), other than for 5 resale. 6 (5) The obtaining for a consideration of those services 7 described in subclauses (11) through (16) and (18) of clause (k) 8 of this section. 9 The term "purchase at retail" with respect to "liquor" and 10 "malt or brewed beverages" shall include the purchase of 11 "liquor" from any "Pennsylvania Liquor Store" by any person for 12 any purpose, and the purchase of "malt or brewed beverages" from 13 a "manufacturer of malt or brewed beverages," "distributor" or 14 "importing distributor" by any person for any purpose, except 15 purchases from a "manufacturer of malt or brewed beverages" by a 16 "distributor" or "importing distributor" or purchases from an 17 "importing distributor" by a "distributor" within the meaning of 18 the "Liquor Code." The term "purchase at retail" shall not 19 include any purchase of "malt or brewed beverages" from a 20 "retail dispenser" or any purchase of "liquor" or "malt or 21 brewed beverages" from a person holding a "retail liquor 22 license" within the meaning of and pursuant to the provisions of 23 the "Liquor Code," but shall include any purchase or acquisition 24 of "liquor" or "malt or brewed beverages" other than pursuant to 25 the provisions of the "Liquor Code." 26 (g) "Purchase price." 27 (1) The total value of anything paid or delivered, or 28 promised to be paid or delivered, whether it be money or 29 otherwise, in complete performance of a sale at retail or 30 purchase at retail, as herein defined, without any deduction on 19970H0134B1706 - 8 -
1 account of the cost or value of the property sold, cost or value 2 of transportation, cost or value of labor or service, interest 3 or discount paid or allowed after the sale is consummated, any 4 other taxes imposed by the Commonwealth of Pennsylvania or any 5 other expense except that there shall be excluded any gratuity 6 or separately stated deposit charge for returnable containers. 7 (2) There shall be deducted from the purchase price the 8 value of any tangible personal property actually taken in trade 9 or exchange in lieu of the whole or any part of the purchase 10 price. For the purpose of this clause, the amount allowed by 11 reason of tangible personal property actually taken in trade or 12 exchange shall be considered the value of such property. 13 (3) In determining the purchase price on the sale or use of 14 taxable tangible personal property or a service described in 15 subclauses (11) through (16) and (18) of clause (k) of this 16 section where, because of affiliation of interests between the 17 vendor and purchaser, or irrespective of any such affiliation, 18 if for any other reason the purchase price declared by the 19 vendor or taxpayer on the taxable sale or use of such tangible 20 personal property or service is, in the opinion of the 21 department, not indicative of the true value of the article or 22 service or the fair price thereof, the department shall, 23 pursuant to uniform and equitable rules, determine the amount of 24 constructive purchase price upon the basis of which the tax 25 shall be computed and levied. Such rules shall provide for a 26 constructive amount of purchase price for each such sale or use 27 which would naturally and fairly be charged in an arms-length 28 transaction in which the element of common interest between the 29 vendor or purchaser is absent or if no common interest exists, 30 any other element causing a distortion of the price or value is 19970H0134B1706 - 9 -
1 likewise absent. For the purpose of this clause where a taxable 2 sale or purchase at retail transaction occurs between a parent 3 and a subsidiary, affiliate or controlled corporation of such 4 parent corporation, there shall be a rebuttable presumption, 5 that because of such common interest such transaction was not at 6 arms-length. 7 (4) Where there is a transfer or retention of possession or 8 custody, whether it be termed a rental, lease, service or 9 otherwise, of tangible personal property including, but not 10 limited to linens, aprons, motor vehicles, trailers, tires, 11 industrial office and construction equipment, and business 12 machines the full consideration paid or delivered to the vendor 13 or lessor shall be considered the purchase price, even though 14 such consideration be separately stated and be designated as 15 payment for processing, laundering, service, maintenance, 16 insurance, repairs, depreciation or otherwise. Where the vendor 17 or lessor supplies or provides an employe to operate such 18 tangible personal property, the value of the labor thus supplied 19 may be excluded and shall not be considered as part of the 20 purchase price if separately stated. There shall also be 21 included as part of the purchase price the value of anything 22 paid or delivered, or promised to be paid or delivered by a 23 lessee, whether it be money or otherwise, to any person other 24 than the vendor or lessor by reason of the maintenance, 25 insurance or repair of the tangible personal property which a 26 lessee has the possession or custody of under a rental contract 27 or lease arrangement. 28 (5) With respect to the tax imposed by subsection (b) of 29 section 202 upon any tangible personal property originally 30 purchased by the user of such property six months or longer 19970H0134B1706 - 10 -
1 prior to the first taxable use of such property within the 2 Commonwealth, such user may elect to pay tax on a substituted 3 base determined by considering the purchase price of such 4 property for tax purposes to be equal to the prevailing market 5 price of similar tangible personal property at the time and 6 place of such first use within the Commonwealth. Such election 7 must be made at the time of filing a tax return with the 8 department and reporting such tax liability and paying the 9 proper tax due plus all accrued penalties and interest, if there 10 be any, within six months of the due date of such report and 11 payment, as provided for by subsections (a) and (c) of section 12 217 of this article. 13 (6) The purchase price of employment agency services and 14 help supply services shall be the service fee paid by the 15 purchaser to the vendor or supplying entity. The term "service 16 fee," as used in this subclause, shall be the total charge or 17 fee of the vendor or supplying entity minus the costs of the 18 supplied employe which costs are wages, salaries, bonuses and 19 commissions, employment benefits, expense reimbursements and 20 payroll and withholding taxes, to the extent that these costs 21 are specifically itemized or that these costs in aggregate are 22 stated in billings from the vendor or supplying entity. To the 23 extent that these costs are not itemized or stated on the 24 billings, then the service fee shall be the total charge or fee 25 of the vendor or supplying entity. 26 (7) Unless the vendor separately states that portion of the 27 billing which applies to premium cable service as defined in 28 clause (ll) of this section, the total bill for the provision of 29 all cable services shall be the purchase price. 30 * * * 19970H0134B1706 - 11 -
1 (k) "Sale at retail." 2 (1) Any transfer, for a consideration, of the ownership, 3 custody or possession of tangible personal property, including 4 the grant of a license to use or consume whether such transfer 5 be absolute or conditional and by whatsoever means the same 6 shall have been effected. 7 (2) The rendition of the service of printing or imprinting 8 of tangible personal property for a consideration for persons 9 who furnish, either directly or indirectly the materials used in 10 the printing or imprinting. 11 (3) The rendition for a consideration of the service of-- 12 (i) Washing, cleaning, waxing, polishing or lubricating of 13 motor vehicles of another, whether or not any tangible personal 14 property is transferred in conjunction therewith; and 15 (ii) Inspecting motor vehicles pursuant to the mandatory 16 requirements of "The Vehicle Code." 17 (4) The rendition for a consideration of the service of 18 repairing, altering, mending, pressing, fitting, dyeing, 19 laundering, drycleaning or cleaning tangible personal property 20 other than wearing apparel or shoes, or applying or installing 21 tangible personal property as a repair or replacement part of 22 other tangible personal property except wearing apparel or shoes 23 for a consideration, whether or not the services are performed 24 directly or by any means other than by coin-operated self- 25 service laundry equipment for wearing apparel or household goods 26 and whether or not any tangible personal property is transferred 27 in conjunction therewith, except such services as are rendered 28 in the construction, reconstruction, remodeling, repair or 29 maintenance of real estate: Provided, however, That this 30 subclause shall not be deemed to impose tax upon such services 19970H0134B1706 - 12 -
1 in the preparation for sale of new items which are excluded from 2 the tax under clause (26) of section 204, or upon diaper 3 service. 4 (8) Any retention of possession, custody or a license to use 5 or consume tangible personal property or any further obtaining 6 of services described in subclauses (2), (3) and (4) of this 7 clause pursuant to a rental or service contract or other 8 arrangement (other than as security). 9 The term "sale at retail" shall not include (i) any such 10 transfer of tangible personal property or rendition of services 11 for the purpose of resale, or (ii) such rendition of services or 12 the transfer of tangible personal property including, but not 13 limited to, machinery and equipment and parts therefor and 14 supplies to be used or consumed by the purchaser directly in the 15 operations of-- 16 (A) The manufacture of tangible personal property; 17 (B) Farming, dairying, agriculture, horticulture or 18 floriculture when engaged in as a business enterprise. The term 19 "farming" shall include the propagation and raising of ranch 20 raised fur-bearing animals and the propagation of game birds for 21 commercial purposes by holders of propagation permits issued 22 under 34 Pa.C.S. (relating to game); 23 (C) The producing, delivering or rendering of a public 24 utility service, or in constructing, reconstructing, remodeling, 25 repairing or maintaining the facilities which are directly used 26 in producing, delivering or rendering such service; 27 (D) Processing as defined in clause (d) of this section. 28 The exclusions provided in paragraphs (A), (B), (C) and (D) 29 shall not apply to any vehicle required to be registered under 30 The Vehicle Code, except those vehicles used directly by a 19970H0134B1706 - 13 -
1 public utility engaged in business as a common carrier; to 2 maintenance facilities; or to materials, supplies or equipment 3 to be used or consumed in the construction, reconstruction, 4 remodeling, repair or maintenance of real estate other than 5 directly used machinery, equipment, parts or foundations 6 therefor that may be affixed to such real estate. 7 The exclusions provided in paragraphs (A), (B), (C) and (D) 8 shall not apply to tangible personal property or services to be 9 used or consumed in managerial sales or other nonoperational 10 activities, nor to the purchase or use of tangible personal 11 property or services by any person other than the person 12 directly using the same in the operations described in 13 paragraphs (A), (B), (C) and (D) herein. 14 The exclusion provided in paragraph (C) shall not apply to 15 (i) construction materials, supplies or equipment used to 16 construct, reconstruct, remodel, repair or maintain facilities 17 not used directly by the purchaser in the production, delivering 18 or rendition of public utility service, (ii) construction 19 materials, supplies or equipment used to construct, reconstruct, 20 remodel, repair or maintain a building, road or similar 21 structure, or (iii) tools and equipment used but not installed 22 in the maintenance of facilities used directly in the 23 production, delivering or rendition of a public utility service. 24 The exclusions provided in paragraphs (A), (B), (C) and (D) 25 shall not apply to the services enumerated in clauses (k)(11) 26 through (16) and (18) and (w) through (ii) and (kk), except that <-- 27 the exclusion provided in this subclause for farming, dairying 28 and agriculture shall apply to the service enumerated in clause 29 (z). 30 (9) Where tangible personal property or services are 19970H0134B1706 - 14 -
1 utilized for purposes constituting a "sale at retail" and for 2 purposes excluded from the definition of "sale at retail," it 3 shall be presumed that such tangible personal property or 4 services are utilized for purposes constituting a "sale at 5 retail" and subject to tax unless the user thereof proves to the 6 department that the predominant purposes for which such tangible 7 personal property or services are utilized do not constitute a 8 "sale at retail." 9 (10) The term "sale at retail" with respect to "liquor" and 10 "malt or brewed beverages" shall include the sale of "liquor" by 11 any "Pennsylvania liquor store" to any person for any purpose, 12 and the sale of "malt or brewed beverages" by a "manufacturer of 13 malt or brewed beverages," "distributor" or "importing 14 distributor" to any person for any purpose, except sales by a 15 "manufacturer of malt or brewed beverages" to a "distributor" or 16 "importing distributor" or sales by an "importing distributor" 17 to a "distributor" within the meaning of the "Liquor Code." The 18 term "sale at retail" shall not include any sale of "malt or 19 brewed beverages" by a "retail dispenser" or any sale of 20 "liquor" or "malt or brewed beverages" by a person holding a 21 "retail liquor license" within the meaning of and pursuant to 22 the provisions of the "Liquor Code," but shall include any sale 23 of "liquor" or "malt or brewed beverages" other than pursuant to 24 the provisions of the "Liquor Code." 25 (11) The rendition for a consideration of lobbying services. 26 (12) The rendition for a consideration of adjustment 27 services, collection services or credit reporting services. 28 (13) The rendition for a consideration of secretarial or 29 editing services. 30 (14) The rendition for a consideration of disinfecting or 19970H0134B1706 - 15 -
1 pest control services, building maintenance or cleaning 2 services. 3 (15) The rendition for a consideration of employment agency 4 services or help supply services. 5 [(16) The rendition for a consideration of computer <-- 6 programming services; computer-integrated systems design 7 services; computer processing, data preparation or processing 8 services; information retrieval services; computer facilities 9 management services; or other computer-related services. At a 10 minimum, such services shall not include services that are part 11 of electronic fund transfers, electronic financial transactions 12 or services, banking or trust services, or management or 13 administrative services, including transfer agency, shareholder, 14 custodial and portfolio accounting services, provided directly 15 to any entity that duly qualifies to be taxed as a regulated 16 investment company or a real estate investment trust under the 17 provisions of the Internal Revenue Code of 1986 (Public Law 99- 18 514, 26 U.S.C. § 1 et seq.) or to an entity that provides such 19 services to an entity so qualifying.] <-- 20 [(17) The rendition for a consideration of lawn care <-- 21 service.] <-- 22 (18) The rendition for a consideration of self-storage 23 service. 24 * * * 25 (o) "Use." 26 (1) The exercise of any right or power incidental to the 27 ownership, custody or possession of tangible personal property 28 and shall include, but not be limited to transportation, storage 29 or consumption. 30 (2) The obtaining by a purchaser of the service of printing 19970H0134B1706 - 16 -
1 or imprinting of tangible personal property when such purchaser 2 furnishes, either directly or indirectly, the articles used in 3 the printing or imprinting. 4 (3) The obtaining by a purchaser of the services of (i) 5 washing, cleaning, waxing, polishing or lubricating of motor 6 vehicles whether or not any tangible personal property is 7 transferred to the purchaser in conjunction with such services, 8 and (ii) inspecting motor vehicles pursuant to the mandatory 9 requirements of "The Vehicle Code." 10 (4) The obtaining by a purchaser of the service of 11 repairing, altering, mending, pressing, fitting, dyeing, 12 laundering, drycleaning or cleaning tangible personal property 13 other than wearing apparel or shoes or applying or installing 14 tangible personal property as a repair or replacement part of 15 other tangible personal property other than wearing apparel or 16 shoes, whether or not the services are performed directly or by 17 any means other than by means of coin-operated self-service 18 laundry equipment for wearing apparel or household goods, and 19 whether or not any tangible personal property is transferred to 20 the purchaser in conjunction therewith, except such services as 21 are obtained in the construction, reconstruction, remodeling, 22 repair or maintenance of real estate: Provided, however, That 23 this subclause shall not be deemed to impose tax upon such 24 services in the preparation for sale of new items which are 25 excluded from the tax under clause (26) of section 204, or upon 26 diaper service: And provided further, That the term "use" shall 27 not include-- 28 (A) Any tangible personal property acquired and kept, 29 retained or over which power is exercised within this 30 Commonwealth on which the taxing of the storage, use or other 19970H0134B1706 - 17 -
1 consumption thereof is expressly prohibited by the Constitution 2 of the United States or which is excluded from tax under other 3 provisions of this article. 4 (B) The use or consumption of tangible personal property, 5 including but not limited to machinery and equipment and parts 6 therefor, and supplies or the obtaining of the services 7 described in subclauses (2), (3) and (4) of this clause directly 8 in the operations of-- 9 (i) The manufacture of tangible personal property; 10 (ii) Farming, dairying, agriculture, horticulture or 11 floriculture when engaged in as a business enterprise. The term 12 "farming" shall include the propagation and raising of ranch- 13 raised furbearing animals and the propagation of game birds for 14 commercial purposes by holders of propagation permits issued 15 under 34 Pa.C.S. (relating to game); 16 (iii) The producing, delivering or rendering of a public 17 utility service, or in constructing, reconstructing, remodeling, 18 repairing or maintaining the facilities which are directly used 19 in producing, delivering or rendering such service; 20 (iv) Processing as defined in subclause (d) of this section. 21 The exclusions provided in subparagraphs (i), (ii), (iii) and 22 (iv) shall not apply to any vehicle required to be registered 23 under The Vehicle Code except those vehicles directly used by a 24 public utility engaged in the business as a common carrier; to 25 maintenance facilities; or to materials, supplies or equipment 26 to be used or consumed in the construction, reconstruction, 27 remodeling, repair or maintenance of real estate other than 28 directly used machinery, equipment, parts or foundations 29 therefor that may be affixed to such real estate. The exclusions 30 provided in subparagraphs (i), (ii), (iii) and (iv) shall not 19970H0134B1706 - 18 -
1 apply to tangible personal property or services to be used or 2 consumed in managerial sales or other nonoperational activities, 3 nor to the purchase or use of tangible personal property or 4 services by any person other than the person directly using the 5 same in the operations described in subparagraphs (i), (ii), 6 (iii) and (iv). 7 The exclusion provided in subparagraph (iii) shall not apply 8 to (A) construction materials, supplies or equipment used to 9 construct, reconstruct, remodel, repair or maintain facilities 10 not used directly by the purchaser in the production, delivering 11 or rendition of public utility service or (B) tools and 12 equipment used but not installed in the maintenance of 13 facilities used directly in the production, delivering or 14 rendition of a public utility service. 15 The exclusion provided in subparagraphs (i), (ii), (iii) and 16 (iv) shall not apply to the services enumerated in clauses 17 (o)(9) through (14) and (16) and (w) through (ii) and (kk), <-- 18 except that the exclusion provided in subparagraph (ii) for 19 farming, dairying and agriculture shall apply to the service 20 enumerated in clause (z). 21 (5) Where tangible personal property or services are 22 utilized for purposes constituting a "use," as herein defined, 23 and for purposes excluded from the definition of "use," it shall 24 be presumed that such property or services are utilized for 25 purposes constituting a "sale at retail" and subject to tax 26 unless the user thereof proves to the department that the 27 predominant purposes for which such property or services are 28 utilized do not constitute a "sale at retail." 29 (6) The term "use" with respect to "liquor" and "malt or 30 brewed beverages" shall include the purchase of "liquor" from 19970H0134B1706 - 19 -
1 any "Pennsylvania liquor store" by any person for any purpose 2 and the purchase of "malt or brewed beverages" from a 3 "manufacturer of malt or brewed beverages," "distributor" or 4 "importing distributor" by any person for any purpose, except 5 purchases from a "manufacturer of malt or brewed beverages" by a 6 "distributor" or "importing distributor," or purchases from an 7 "importing distributor" by a "distributor" within the meaning of 8 the "Liquor Code." The term "use" shall not include any purchase 9 of "malt or brewed beverages" from a "retail dispenser" or any 10 purchase of "liquor" or "malt or brewed beverages" from a person 11 holding a "retail liquor license" within the meaning of and 12 pursuant to the provisions of the "Liquor Code," but shall 13 include the exercise of any right or power incidental to the 14 ownership, custody or possession of "liquor" or "malt or brewed 15 beverages" obtained by the person exercising such right or power 16 in any manner other than pursuant to the provisions of the 17 "Liquor Code." 18 (7) The use of tangible personal property purchased at 19 retail upon which the services described in subclauses (2), (3) 20 and (4) of this clause have been performed shall be deemed to be 21 a use of said services by the person using said property. 22 (8) The term "use" shall not include the providing of a 23 motor vehicle to a nonprofit private or public school to be used 24 by such a school for the sole purpose of driver education. 25 (9) The obtaining by the purchaser of lobbying services. 26 (10) The obtaining by the purchaser of adjustment services, 27 collection services or credit reporting services. 28 (11) The obtaining by the purchaser of secretarial or 29 editing services. 30 (12) The obtaining by the purchaser of disinfecting or pest 19970H0134B1706 - 20 -
1 control services, building maintenance or cleaning services. 2 (13) The obtaining by the purchaser of employment agency 3 services or help supply services. 4 [(14) The obtaining by the purchaser of computer programming <-- 5 services; computer-integrated systems design services; computer 6 processing, data preparation or processing services; information 7 retrieval services; computer facilities management services; or 8 other computer-related services. At a minimum, such services 9 shall not include services that are part of electronic fund 10 transfers, electronic financial transactions or services, 11 banking or trust services, or management or administrative 12 services, including transfer agency, shareholder, custodial and 13 portfolio accounting services, provided directly to any entity 14 that duly qualifies to be taxed as a regulated investment 15 company or a real estate investment trust under the provisions 16 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 17 U.S.C. § 1 et seq.) or to an entity that provides such services 18 to an entity so qualifying.] <-- 19 [(15) The obtaining by the purchaser of lawn care service.] <-- 20 (16) The obtaining by the purchaser of self-storage service. 21 * * * 22 [(jj) "Lawn care service." Providing services for lawn <-- 23 upkeep, including, but not limited to, fertilizing, lawn mowing, 24 shrubbery trimming or other lawn treatment services.] 25 [(DD) "COMPUTER PROGRAMMING SERVICES." PROVIDING COMPUTER <-- 26 PROGRAMMING OR COMPUTER SOFTWARE DESIGN AND ANALYSIS. SUCH 27 SERVICES INCLUDE, BUT ARE NOT LIMITED TO, SERVICES OF THE TYPE 28 PROVIDED BY OR THROUGH COMPUTER PROGRAMMING SERVICES, CUSTOMER 29 COMPUTER PROGRAMMING SERVICES, COMPUTER CODE AUTHORS AND FREE- 30 LANCE COMPUTER SOFTWARE WRITERS, SOFTWARE MODIFICATION, CUSTOM 19970H0134B1706 - 21 -
1 SOFTWARE PROGRAMMING, CUSTOM COMPUTER PROGRAMS OR SYSTEM 2 SOFTWARE DEVELOPMENT, CUSTOM COMPUTER SOFTWARE SYSTEMS ANALYSIS 3 AND DESIGN, CUSTOM APPLICATIONS SOFTWARE PROGRAMMING, COMPUTER 4 CODE AUTHORS OR FREE-LANCE COMPUTER SOFTWARE WRITERS. 5 (EE) "COMPUTER INTEGRATED SYSTEMS DESIGN." DEVELOPING OR 6 MODIFYING COMPUTER SOFTWARE AND PACKAGING OR BUNDLING THE 7 SOFTWARE WITH COMPUTER HARDWARE (COMPUTERS AND COMPUTER 8 PERIPHERAL EQUIPMENT) TO CREATE AND MARKET AN INTEGRATED SYSTEM 9 FOR SPECIFIC APPLICATION. A BUSINESS IS PROVIDING SUCH SERVICES 10 UNDER THIS CLAUSE ONLY IF IT PROVIDES EACH OF THE FOLLOWING 11 SERVICES: 12 (1) THE DEVELOPMENT OR MODIFICATION OF THE COMPUTER 13 SOFTWARE; 14 (2) THE MARKETING OF COMPUTER HARDWARE; AND 15 (3) INVOLVEMENT IN ALL PHASES OF SYSTEMS DEVELOPMENT FROM 16 DESIGN THROUGH INSTALLATION. 17 SUCH SERVICES UNDER THIS CLAUSE INCLUDE, BUT ARE NOT LIMITED TO, 18 COMPUTER SYSTEMS INTEGRATION, COMPUTER NETWORK SYSTEMS 19 INTEGRATION, LOCAL AREA NETWORK (LAN) SYSTEMS INTEGRATION, 20 OFFICE AUTOMATION, COMPUTER SYSTEMS VALUE-ADDED RESELLERS, 21 COMPUTER SYSTEMS TURNKEY VENDORS, COMPUTER-AIDED DESIGN (CAD) 22 SYSTEMS SERVICES, COMPUTER-AIDED ENGINEERING (CAE) SYSTEMS 23 SERVICES OR COMPUTER-AIDED MANUFACTURING (CAM) SYSTEMS SERVICES. 24 (FF) "COMPUTER PROCESSING, DATA PREPARATION OR PROCESSING 25 SERVICES." SUCH SERVICES INCLUDE, BUT ARE NOT LIMITED TO, 26 PROVIDING PROCESSING AND PREPARATION OF REPORTS FROM DATA 27 SUPPLIED BY THE CUSTOMER OR A SPECIALIZED SERVICE, SUCH AS DATA 28 ENTRY; MAKING DATA PROCESSING EQUIPMENT AVAILABLE ON AN HOURLY, 29 TIME-SHARING OR OTHER BASIS; COMPUTER TIMESHARING AND LEASING OR 30 RENTAL OF COMPUTER TIME; COMPUTER TABULATING AND CALCULATING 19970H0134B1706 - 22 -
1 SERVICES; DATA ENTRY, PROCESSING OR VERIFICATION SERVICES; 2 KEYPUNCH SERVICES; OR OPTICAL SCANNING DATA SERVICES. 3 (GG) "INFORMATION RETRIEVAL SERVICES." PROVIDING COMPUTER 4 ON-LINE INFORMATION RETRIEVAL SERVICES. SUCH SERVICES INCLUDE, 5 BUT ARE NOT LIMITED TO, DATA BASE INFORMATION RETRIEVAL 6 SERVICES, ON-LINE INFORMATION RETRIEVAL SERVICES, ON-LINE DATA 7 BASE INFORMATION RETRIEVAL SERVICES OR REMOTE DATA BASE 8 INFORMATION RETRIEVAL SERVICES. 9 (HH) "COMPUTER FACILITIES MANAGEMENT SERVICES." PROVIDING 10 ONSITE MANAGEMENT OR CONTROLLING THE OPERATION OF DATA 11 PROCESSING FACILITIES OR SIMILAR SERVICES. 12 (II) "OTHER COMPUTER-RELATED SERVICES." SUPPLYING COMPUTER- 13 RELATED SERVICES NOT DESCRIBED ELSEWHERE IN CLAUSES (DD) THROUGH 14 (HH). SUCH SERVICES INCLUDE, BUT ARE NOT LIMITED TO, COMPUTER 15 CONSULTING SERVICES; DATA BASE DEVELOPMENT AND DATA PROCESSING 16 CONSULTING SERVICES; DISK, DISKETTE OR TAPE CONVERSION SERVICES; 17 DISK, DISKETTE OR TAPE RECERTIFICATION SERVICES; COMPUTER 18 HARDWARE AND SOFTWARE REQUIREMENT ANALYSIS SERVICES; SOFTWARE 19 DOCUMENTATION SERVICES; SOFTWARE INSTALLATION SERVICES; SOFTWARE 20 TRAINING SERVICES IF PROVIDED IN CONJUNCTION WITH THE PURCHASE 21 OF SOFTWARE; OR REFORMATTING OR EDITING SERVICES.] 22 * * * 23 (LL) "PREMIUM CABLE OR PREMIUM VIDEO PROGRAMMING SERVICE." <-- 24 THAT PORTION OF CABLE TELEVISION SERVICES, VIDEO PROGRAMMING 25 SERVICES, COMMUNITY ANTENNA TELEVISION SERVICES OR ANY OTHER 26 DISTRIBUTION OF TELEVISION, VIDEO, AUDIO OR RADIO SERVICES WHICH 27 MEETS ALL OF THE FOLLOWING CRITERIA: 28 (1) IS TRANSMITTED WITH OR WITHOUT THE USE OF WIRES TO 29 PURCHASERS; [AND] 30 (2) WHICH CONSISTS SUBSTANTIALLY OF PROGRAMMING 19970H0134B1706 - 23 -
1 UNINTERRUPTED BY PAID COMMERCIAL ADVERTISING WHICH INCLUDES, BUT 2 IS NOT LIMITED TO, PROGRAMMING PRIMARILY COMPOSED OF 3 UNINTERRUPTED FULL-LENGTH MOTION PICTURES OR SPORTING EVENTS, 4 PAY-PER-VIEW, PAID PROGRAMMING OR LIKE AUDIO OR RADIO 5 BROADCASTING[.]; AND 6 (3) DOES NOT CONSTITUTE A COMPONENT OF A BASIC SERVICE TIER 7 PROVIDED BY A CABLE TELEVISION SYSTEM OR A CABLE PROGRAMMING 8 SERVICE TIER PROVIDED BY A CABLE TELEVISION SYSTEM. A BASIC 9 SERVICE TIER SHALL INCLUDE ALL SIGNALS OF DOMESTIC TELEVISION 10 BROADCAST STATIONS, ANY PUBLIC, EDUCATIONAL, GOVERNMENTAL OR 11 RELIGIOUS PROGRAMMING AND ANY ADDITIONAL VIDEO PROGRAMMING 12 SIGNALS OR SERVICE ADDED TO THE BASIC SERVICE TIER BY THE CABLE 13 OPERATOR. THE BASIC SERVICE TIER SHALL ALSO INCLUDE A SINGLE 14 ADDITIONAL LOWER-PRICED PACKAGE OF BROADCAST CHANNELS AND ACCESS 15 INFORMATION CHANNELS WHICH IS A SUBSET OF THE BASIC SERVICE TIER 16 AS SET FORTH ABOVE. A CABLE PROGRAMMING SERVICE TIER INCLUDES 17 ANY VIDEO PROGRAMMING OTHER THAN: (I) THE BASIC SERVICE TIER; 18 (II) VIDEO PROGRAMMING OFFERED ON A PAY-PER-CHANNEL OR PAY-PER- 19 VIEW BASIS; OR (III) A COMBINATION OF MULTIPLE CHANNELS OF PAY- 20 PER-CHANNEL OR PAY-PER-VIEW PROGRAMMING OFFERED AS A PACKAGE. 21 IF A PURCHASER RECEIVES OR AGREES TO RECEIVE PREMIUM CABLE OR 22 PREMIUM VIDEO PROGRAMMING SERVICE, THEN THE FOLLOWING CHARGES 23 ARE INCLUDED IN THE PURCHASE PRICE: CHARGES FOR INSTALLATION OR 24 REPAIR OF ANY PREMIUM CABLE OR PREMIUM VIDEO PROGRAMMING 25 SERVICE, UPGRADE TO INCLUDE ADDITIONAL PREMIUM CABLE OR PREMIUM 26 VIDEO PROGRAMMING SERVICE, DOWNGRADE TO EXCLUDE ALL OR SOME 27 PREMIUM CABLE OR PREMIUM VIDEO PROGRAMMING SERVICE, ADDITIONAL 28 PREMIUM CABLE OUTLETS IN EXCESS OF TEN OR ANY OTHER CHARGE OR 29 FEE RELATED TO PREMIUM CABLE OR PREMIUM VIDEO PROGRAMMING 30 SERVICES. THE TERM SHALL NOT APPLY TO TRANSMISSIONS BY PUBLIC 19970H0134B1706 - 24 -
1 TELEVISION, PUBLIC RADIO SERVICES OR OFFICIAL FEDERAL, STATE OR 2 LOCAL GOVERNMENT CABLE SERVICES. NOR SHALL THE TERM APPLY TO 3 LOCAL ORIGINATION PROGRAMMING WHICH PROVIDES A VARIETY OF PUBLIC 4 SERVICE PROGRAMS UNIQUE TO THE COMMUNITY, PROGRAMMING WHICH 5 PROVIDES COVERAGE OF PUBLIC AFFAIRS ISSUES WHICH ARE PRESENTED 6 WITHOUT COMMENTARY OR ANALYSIS, INCLUDING UNITED STATES 7 CONGRESSIONAL PROCEEDINGS, OR PROGRAMMING WHICH IS SUBSTANTIALLY 8 RELATED TO RELIGIOUS SUBJECTS. NOR SHALL THE TERM "PREMIUM CABLE 9 OR PREMIUM VIDEO PROGRAMMING SERVICE" APPLY TO SUBSCRIBER 10 CHARGES FOR ACCESS TO A VIDEO DIAL TONE SYSTEM OR CHARGES BY A 11 COMMON CARRIER TO A VIDEO PROGRAMMER FOR THE TRANSPORT OF VIDEO 12 PROGRAMMING. 13 Section 2. Section 301 introductory paragraph and (s.2) of <-- 14 the act, amended or added August 31, 1971 (P.L.362, No.93) and 15 December 23, 1983 (P.L.370, No.90), are amended to read: 16 SECTION 2. SECTION 204 OF THE ACT IS AMENDED BY ADDING A <-- 17 CLAUSE TO READ: 18 SECTION 2. SECTION 204(29) AND (52) OF THE ACT, AMENDED OR <-- 19 ADDED AUGUST 4, 1991 (P.L.97, NO.22), DECEMBER 13, 1991 20 (P.L.373, NO.40) AND JUNE 30, 1995 (P.L.139, NO.21), ARE AMENDED 21 AND THE SECTION IS AMENDED BY ADDING CLAUSES TO READ: 22 SECTION 204. EXCLUSIONS FROM TAX.--THE TAX IMPOSED BY 23 SECTION 202 SHALL NOT BE IMPOSED UPON 24 * * * 25 (53) THE SALE AT RETAIL TO OR USE BY A HOTEL, AS THE WORD IS <-- 26 DEFINED UNDER SECTION 209 OF THIS ARTICLE, OF COMPUTER 27 PROGRAMMING SERVICES, COMPUTER-INTEGRATED SYSTEMS DESIGN, 28 COMPUTER PROCESSING, DATA PREPARATION OR PROCESSING SERVICES, 29 INFORMATION RETRIEVAL SERVICES, COMPUTER FACILITIES MANAGEMENT 30 SERVICES, OR OTHER COMPUTER-RELATED SERVICES THAT WILL BE USED 19970H0134B1706 - 25 -
1 TO MAKE ROOM RESERVATIONS.
2 (29) THE SALE AT RETAIL OR USE OF FOOD AND BEVERAGES FOR <--
3 HUMAN CONSUMPTION, [INCLUDING CANDY AND GUM,] EXCEPT THAT THIS
4 EXCLUSION SHALL NOT APPLY WITH RESPECT TO--
5 (I) SOFT DRINKS;
6 (II) MALT AND BREWED BEVERAGES AND SPIRITUOUS AND VINOUS
7 LIQUORS;
8 (III) FOOD OR BEVERAGES, WHETHER SOLD FOR CONSUMPTION ON OR
9 OFF THE PREMISES OR ON A "TAKE-OUT" OR "TO GO" BASIS OR
10 DELIVERED TO THE PURCHASER OR CONSUMER, WHEN PURCHASED (A) FROM
11 PERSONS ENGAGED IN THE BUSINESS OF CATERING; OR (B) FROM PERSONS
12 ENGAGED IN THE BUSINESS OF OPERATING ESTABLISHMENTS FROM WHICH
13 READY-TO-EAT FOOD AND BEVERAGES ARE SOLD, INCLUDING, BUT NOT
14 LIMITED TO, RESTAURANTS, CAFES, LUNCH COUNTERS, PRIVATE AND
15 SOCIAL CLUBS, TAVERNS, DINING CARS, HOTELS, NIGHT CLUBS, FAST
16 FOOD OPERATIONS, PIZZERIAS, FAIRS, CARNIVALS, LUNCH CARTS, ICE
17 CREAM STANDS, SNACK BARS, CAFETERIAS, EMPLOYE CAFETERIAS,
18 THEATERS, STADIUMS, ARENAS, AMUSEMENT PARKS, CARRYOUT SHOPS,
19 COFFEE SHOPS AND OTHER ESTABLISHMENTS WHETHER MOBILE OR
20 IMMOBILE. FOR PURPOSES OF THIS CLAUSE, A BAKERY, A PASTRY SHOP,
21 A DONUT SHOP, A DELICATESSEN, GROCERY STORE, SUPERMARKET,
22 FARMER'S MARKET OR A CONVENIENCE STORE SHALL NOT BE CONSIDERED
23 AN ESTABLISHMENT FROM WHICH FOOD OR BEVERAGES READY TO EAT ARE
24 SOLD EXCEPT FOR THE SALE OF MEALS, SANDWICHES, FOOD FROM SALAD
25 BARS, HAND-DIPPED OR HAND-SERVED ICED BASED PRODUCTS INCLUDING
26 ICE CREAM AND YOGURT, HOT SOUP, HOT PIZZA AND OTHER HOT FOOD
27 ITEMS, BREWED COFFEE AND HOT BEVERAGES. FOR PURPOSES OF THIS
28 SUBCLAUSE, BEVERAGES SHALL NOT INCLUDE MALT AND BREWED BEVERAGES
29 AND SPIRITUOUS AND VINOUS LIQUORS BUT SHALL INCLUDE SOFT DRINKS.
30 THE SALE AT RETAIL OF FOOD AND BEVERAGES AT OR FROM A SCHOOL OR
19970H0134B1706 - 26 -
1 CHURCH IN THE ORDINARY COURSE OF THE ACTIVITIES OF SUCH 2 ORGANIZATION IS NOT SUBJECT TO TAX. 3 * * * 4 [(52) THE SALE AT RETAIL OR USE OF COMPUTER SERVICES TO 5 KEYPUNCH, COUNT, SORT, TABULATE OR OTHERWISE PREPARE FOR PAYMENT 6 PROMOTIONAL PRICE REDUCTION OFFERS SUCH AS DISCOUNT COUPONS, 7 "CENTS-OFF" COUPONS AND REBATE OFFERS.] 8 (53) THE SALE AT RETAIL OR USE OF CANDY OR GUM REGARDLESS OF 9 THE LOCATION FROM WHICH THE CANDY OR GUM IS SOLD. 10 (54) THE SALE AT RETAIL TO OR USE BY A PRODUCER OF 11 COMMERCIAL MOTION PICTURES OF ANY TANGIBLE PERSONAL PROPERTY 12 DIRECTLY USED IN THE PRODUCTION OF A FEATURE-LENGTH COMMERCIAL 13 MOTION PICTURE DISTRIBUTED TO A NATIONAL AUDIENCE: PROVIDED, 14 HOWEVER, THAT THE PRODUCTION OF ANY MOTION PICTURE FOR WHICH THE 15 PROPERTY WILL BE USED DOES NOT VIOLATE ANY FEDERAL OR STATE LAW; 16 AND, PROVIDED FURTHER, THAT THE PURCHASER SHALL FURNISH TO THE 17 VENDOR A CERTIFICATE SUBSTANTIALLY IN THE FORM AS THE DEPARTMENT 18 OF COMMUNITY AND ECONOMIC DEVELOPMENT MAY, BY REGULATION, 19 PRESCRIBE, STATING THAT THE SALE IS EXEMPT FROM TAX PURSUANT TO 20 THIS CLAUSE. 21 SECTION 3. SECTION 253 OF THE ACT, AMENDED APRIL 8, 1976 22 (P.L.92, NO.38) AND JULY 1, 1985 (P.L.78, NO.29), IS AMENDED TO 23 READ: 24 SECTION 253. REFUND PETITION.--(A) EXCEPT AS PROVIDED FOR 25 IN SECTION 256 AND IN SUBSECTION (B) AND (D) OF THIS SECTION, 26 THE REFUND OR CREDIT OF TAX, INTEREST OR PENALTY PROVIDED FOR BY 27 SECTION 252 SHALL BE MADE ONLY WHERE THE PERSON WHO HAS ACTUALLY 28 PAID THE TAX FILES A PETITION FOR REFUND WITH THE DEPARTMENT 29 [WITHIN THREE YEARS OF THE ACTUAL PAYMENT OF THE TAX TO THE 30 COMMONWEALTH] UNDER SECTION 3003.1. SUCH PETITION FOR REFUND 19970H0134B1706 - 27 -
1 MUST SET FORTH IN REASONABLE DETAIL THE GROUNDS UPON WHICH THE
2 TAXPAYER CLAIMS THAT THE COMMONWEALTH IS NOT RIGHTFULLY ENTITLED
3 TO SUCH TAX, INTEREST OR PENALTY, IN WHOLE OR IN PART, AND SHALL
4 BE ACCOMPANIED BY AN AFFIDAVIT AFFIRMING THAT THE FACTS
5 CONTAINED THEREIN ARE TRUE AND CORRECT. THE DEPARTMENT MAY HOLD
6 SUCH HEARINGS AS MAY BE NECESSARY FOR THE PURPOSE AT SUCH TIMES
7 AND PLACES AS IT MAY DETERMINE, AND EACH PERSON WHO HAS DULY
8 FILED A REFUND PETITION SHALL BE NOTIFIED BY THE DEPARTMENT OF
9 THE TIME WHEN, AND THE PLACE WHERE, SUCH HEARING IN HIS CASE
10 WILL BE HELD.
11 (B) A REFUND OR CREDIT OF TAX, INTEREST OR PENALTY, PAID AS
12 A RESULT OF AN ASSESSMENT MADE BY THE DEPARTMENT UNDER SECTION
13 231, SHALL BE MADE ONLY WHERE THE PERSON WHO HAS ACTUALLY PAID
14 THE TAX FILES WITH THE DEPARTMENT A PETITION FOR A REFUND WITH
15 THE DEPARTMENT [WITHIN SIX MONTHS AFTER THE DATE THE NOTICE OF
16 ASSESSMENT WAS MAILED] UNDER SECTION 3003.1(D). THE FILING OF A
17 PETITION FOR REFUND, UNDER THE PROVISIONS OF THIS SUBSECTION,
18 SHALL NOT AFFECT THE ABATEMENT OF INTEREST, ADDITIONS OR
19 PENALTIES TO WHICH THE PERSON MAY BE ENTITLED BY REASON OF HIS
20 PAYMENT OF THE ASSESSMENT.
21 (C) IT SHALL BE THE DUTY OF THE DEPARTMENT, WITHIN SIX
22 MONTHS AFTER RECEIVING A PETITION FOR REFUND, TO DISPOSE OF THE
23 ISSUE RAISED BY SUCH PETITION, AND MAIL NOTICE OF THE
24 DEPARTMENT'S DECISION TO THE PETITIONER: PROVIDED, HOWEVER, THAT
25 THE TAXPAYER AND THE DEPARTMENT MAY, BY STIPULATION, EXTEND SUCH
26 DISPOSAL TIME BY NOT MORE THAN SIX ADDITIONAL MONTHS.
27 (D) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION
28 WHERE ANY TAX, INTEREST OR PENALTY HAS BEEN PAID UNDER A
29 PROVISION OF THIS ARTICLE SUBSEQUENTLY HELD BY FINAL JUDGMENT OF
30 A COURT OF COMPETENT JURISDICTION TO BE UNCONSTITUTIONAL, OR
19970H0134B1706 - 28 -
1 UNDER AN INTERPRETATION OF SUCH PROVISION SUBSEQUENTLY HELD BY 2 SUCH COURT TO BE ERRONEOUS, A PETITION FOR REFUND MAY BE FILED 3 EITHER BEFORE OR SUBSEQUENT TO FINAL JUDGMENT, BUT SUCH PETITION 4 MUST BE FILED [WITHIN THREE YEARS OF THE DATE OF THE PAYMENT OF 5 WHICH A REFUND IS REQUESTED] UNDER SECTION 3003.1. THE 6 DEPARTMENT SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY 7 SUCH PETITION FILED PRIOR TO SUCH FINAL JUDGMENT ONLY IF, AT THE 8 TIME OF FILING OF THE PETITION, PROCEEDINGS ARE PENDING IN A 9 COURT OF COMPETENT JURISDICTION WHEREIN THE CLAIM OF 10 UNCONSTITUTIONALITY OR OF ERRONEOUS INTERPRETATION, MADE IN THE 11 PETITION FOR REFUND MAY BE ESTABLISHED, AND IN SUCH CASE, THE 12 DEPARTMENT SHALL NOT TAKE FINAL ACTION UPON THE PETITION FOR 13 REFUND UNTIL THE JUDGMENT DETERMINING THE QUESTION INVOLVED IN 14 SUCH PETITION HAS BECOME FINAL. 15 SECTION 4. SECTION 266(D) OF THE ACT IS AMENDED TO READ: 16 SECTION 266. ADDITIONS TO TAX.--* * * 17 [(D) UNCOLLECTIBLE CHECKS. WHENEVER ANY CHECK ISSUED IN 18 PAYMENT OF ANY TAX OR FOR ANY OTHER PURPOSE SHALL BE RETURNED TO 19 THE DEPARTMENT AS UNCOLLECTIBLE, THE SECRETARY SHALL CHARGE A 20 FEE OF TEN PER CENT OF THE FACE AMOUNT THEREOF PLUS ALL PROTEST 21 FEES, TO THE PERSON PRESENTING SUCH CHECK TO HIM TO COVER THE 22 COST OF ITS COLLECTION IN ADDITION TO THE INTEREST AND PENALTIES 23 OTHERWISE PROVIDED FOR BY THIS ARTICLE: PROVIDED, HOWEVER, THAT 24 THE ADDITIONS IMPOSED HEREBY SHALL NOT EXCEED TWO HUNDRED 25 DOLLARS ($200) NOR BE LESS THAN TEN DOLLARS ($10).] 26 SECTION 3 5. SECTION 301 INTRODUCTORY PARAGRAPH, (C.2), (D), <-- 27 (D.1), (E.1) AND (S.2) OF THE ACT, AMENDED OR ADDED AUGUST 31, 28 1971 (P.L.362, NO.93), DECEMBER 23, 1983 (P.L.370, NO.90), 29 DECEMBER 13, 1991 (P.L.373, NO.40) AND JUNE 30, 1995 (P.L.139, 30 NO.21), ARE AMENDED AND THE SECTION IS AMENDED BY ADDING CLAUSES 19970H0134B1706 - 29 -
1 TO READ: 2 Section 301. Definitions.--The following words, terms and 3 phrases when used in this article shall have the meaning 4 ascribed to them in this section except where the context 5 clearly indicates a different meaning. [Any] Unless specifically 6 provided otherwise, any reference in this article to the 7 Internal Revenue Code shall include the Internal Revenue Code of 8 [1954] 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.), as <-- 9 amended to [the date on which this article is effective] JANUARY <-- 10 1, 1997: 11 * * * 12 (C.2) "CLAIMANT" MEANS A PERSON WHO IS SUBJECT TO THE TAX <-- 13 IMPOSED UNDER THIS ARTICLE, IS NOT A DEPENDENT OF ANOTHER 14 [PERSON] TAXPAYER FOR PURPOSES OF SECTION 151 OF THE INTERNAL 15 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 151), BUT 16 IS ENTITLED TO CLAIM AGAINST SUCH TAX THE POVERTY TAX PROVISIONS 17 AS PROVIDED BY THIS ACT. 18 (D) "COMPENSATION" MEANS AND SHALL INCLUDE SALARIES, WAGES, 19 COMMISSIONS, BONUSES AND INCENTIVE PAYMENTS WHETHER BASED ON 20 PROFITS OR OTHERWISE, FEES, TIPS AND SIMILAR REMUNERATION 21 RECEIVED FOR SERVICES RENDERED, WHETHER DIRECTLY OR THROUGH AN 22 AGENT, AND WHETHER IN CASH OR IN PROPERTY. 23 THE TERM "COMPENSATION" SHALL NOT MEAN OR INCLUDE: (I) 24 PERIODIC PAYMENTS FOR SICKNESS AND DISABILITY OTHER THAN REGULAR 25 WAGES RECEIVED DURING A PERIOD OF SICKNESS OR DISABILITY; OR 26 (II) DISABILITY, RETIREMENT OR OTHER PAYMENTS ARISING UNDER 27 WORKMEN'S COMPENSATION ACTS, OCCUPATIONAL DISEASE ACTS AND 28 SIMILAR LEGISLATION BY ANY GOVERNMENT; OR (III) PAYMENTS 29 COMMONLY RECOGNIZED AS OLD AGE OR RETIREMENT BENEFITS PAID TO 30 PERSONS RETIRED FROM SERVICE AFTER REACHING A SPECIFIC AGE OR 19970H0134B1706 - 30 -
1 AFTER A STATED PERIOD OF EMPLOYMENT; OR (IV) PAYMENTS COMMONLY 2 KNOWN AS PUBLIC ASSISTANCE, OR UNEMPLOYMENT COMPENSATION 3 PAYMENTS BY ANY GOVERNMENTAL AGENCY; OR (V) PAYMENTS TO 4 REIMBURSE ACTUAL EXPENSES; OR (VI) PAYMENTS MADE BY EMPLOYERS OR 5 LABOR UNIONS [FOR], INCLUDING PAYMENTS MADE PURSUANT TO A 6 CAFETERIA PLAN QUALIFYING UNDER SECTION 125 OF THE INTERNAL 7 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 125 ET 8 SEQ.), FOR EMPLOYE BENEFIT PROGRAMS COVERING HOSPITALIZATION, 9 SICKNESS, DISABILITY OR DEATH, SUPPLEMENTAL UNEMPLOYMENT 10 BENEFITS[,] OR STRIKE BENEFITS[, SOCIAL SECURITY AND 11 RETIREMENT]: PROVIDED, THAT THE PROGRAM DOES NOT DISCRIMINATE IN 12 FAVOR OF HIGHLY COMPENSATED INDIVIDUALS AS TO ELIGIBILITY TO 13 PARTICIPATE, PAYMENTS OR PROGRAM BENEFITS; OR (VII) ANY 14 COMPENSATION RECEIVED BY UNITED STATES SERVICEMEN SERVING IN A 15 COMBAT ZONE; OR (VIII) PAYMENTS RECEIVED BY A FOSTER PARENT FOR 16 IN-HOME CARE OF FOSTER CHILDREN FROM AN AGENCY OF THE 17 COMMONWEALTH OR A POLITICAL SUBDIVISION THEREOF OR AN 18 ORGANIZATION EXEMPT FROM FEDERAL TAX UNDER SECTION 501(C)(3) OF 19 THE INTERNAL REVENUE CODE OF 1954 WHICH IS LICENSED BY THE 20 COMMONWEALTH OR A POLITICAL SUBDIVISION THEREOF AS A PLACEMENT 21 AGENCY[.]; OR (IX) PAYMENTS MADE BY EMPLOYERS OR LABOR UNIONS 22 FOR EMPLOYE BENEFIT PROGRAMS COVERING SOCIAL SECURITY OR 23 RETIREMENT. 24 (D.1) "CORPORATION," [AS USED IN THE DEFINITION OF A "SMALL <-- 25 CORPORATION" IN THIS SECTION AND] FOR PURPOSES OF APPLYING THE 26 PROVISIONS OF SECTION 303(A) WITH RESPECT TO A "REORGANIZATION" 27 AS DEFINED IN THAT SECTION, THE TERM "CORPORATION" SHALL INCLUDE 28 A BUSINESS TRUST TO WHICH 15 PA.C.S. CH. 95 (RELATING TO 29 BUSINESS TRUSTS) APPLIES [AND], A COMMON LAW BUSINESS TRUST OR A 30 LIMITED LIABILITY COMPANY, THAT FOR FEDERAL INCOME TAX PURPOSES 19970H0134B1706 - 31 -
1 IS TAXABLE AS A CORPORATION OR AN INVESTMENT COMPANY. [THE TERM 2 DOES NOT INCLUDE: 3 (1) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS 4 A REAL ESTATE INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL 5 REVENUE CODE OR A QUALIFIED REAL ESTATE INVESTMENT TRUST 6 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OR 7 ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES 8 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 9 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 10 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL 11 ESTATE INVESTMENT TRUST SUBSIDIARIES. A QUALIFIED REAL ESTATE 12 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL 13 REVENUE CODE SHALL BE TREATED AS PART OF THE REAL ESTATE 14 INVESTMENT TRUST THAT OWNS ALL OF THE STOCK OF THE QUALIFIED 15 REAL ESTATE INVESTMENT TRUST SUBSIDIARY. 16 (2) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS 17 A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL 18 REVENUE CODE AND IS REGISTERED WITH THE UNITED STATES SECURITIES 19 AND EXCHANGE COMMISSION UNDER THE INVESTMENT COMPANY ACT OF 1940 20 OR ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES 21 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 22 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS OF 23 REGULATED INVESTMENT COMPANIES.] 24 * * * 25 (E.1) "DEPENDENT" MEANS A [SPOUSE OR CHILD WHO DERIVES MORE 26 THAN ONE-HALF OF HIS TOTAL SUPPORT DURING THE ENTIRE TAXABLE 27 YEAR FROM A CLAIMANT ENTITLED TO CLAIM THE POVERTY EXEMPTION. 28 ANY PERSON WHO IS A DEPENDENT PURSUANT TO THE PROVISIONS OF THE 29 INTERNAL REVENUE CODE DURING A TAXABLE YEAR SHALL PRIMA FACIE BE 30 DEEMED A DEPENDENT FOR PURPOSES OF THIS ACT.] CHILD WHO IS THE 19970H0134B1706 - 32 -
1 DEPENDENT OF A CLAIMANT FOR PURPOSES OF SECTION 151 OF THE 2 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 3 151). 4 * * * 5 (N.0) "PARTNERSHIP" MEANS A DOMESTIC OR FOREIGN GENERAL <-- 6 PARTNERSHIP, JOINT VENTURE, LIMITED PARTNERSHIP, LIMITED 7 LIABILITY COMPANY, BUSINESS TRUST OR OTHER UNINCORPORATED ENTITY 8 THAT FOR FEDERAL INCOME TAX PURPOSES IS TAXABLE AS A 9 PARTNERSHIP. 10 * * * 11 (O.3) "QUALIFIED SUBCHAPTER S SUBSIDIARY" MEANS A DOMESTIC 12 OR FOREIGN CORPORATION WHICH, FOR FEDERAL INCOME TAX PURPOSES, 13 IS TREATED AS A QUALIFIED SUBCHAPTER S SUBSIDIARY, AS DEFINED IN 14 SECTION 1361(B)(3)(B) OF THE INTERNAL REVENUE CODE OF 1986 15 (PUBLIC LAW 99-514, 26 U.S.C. § 1361), AS AMENDED TO JANUARY 1, 16 1997. 17 * * * 18 (s.2) "Small corporation" means any corporation which has a 19 valid election in effect under subchapter S of Chapter 1 of the 20 [Internal Revenue Code of 1954, as amended as of January 1, 21 1983] Internal Revenue Code of 1986, as amended by the act of <-- 22 August 20, 1996, (Public Law 104-188) TO JANUARY 1, 1997, and <-- 23 which does not have passive investment income in excess of 24 twenty-five per cent of its gross receipts. For purposes of this 25 clause, "passive investment income" means gross receipts derived 26 from royalties, rents, dividends, interest, annuities and sales 27 or exchanges of stock or securities (gross receipts from such 28 sales or exchanges being taken into account only to the extent 29 of gains therefrom). FOR PURPOSES OF DETERMINING WHETHER A <-- 30 CORPORATION QUALIFIES AS A SMALL CORPORATION FOR PURPOSES OF 19970H0134B1706 - 33 -
1 THIS ARTICLE, (I) A QUALIFIED SUBCHAPTER S SUBSIDIARY OWNED BY A 2 SMALL CORPORATION SHALL NOT BE TREATED AS A SEPARATE 3 CORPORATION, AND ALL GROSS RECEIPTS AND PASSIVE INVESTMENT 4 INCOME OF SUCH QUALIFIED SUBCHAPTER S SUBSIDIARY SHALL BE 5 TREATED AS EARNED BY THE PARENT CORPORATION AND (II) ALL INTER- 6 CORPORATE PAYMENTS OR DISTRIBUTIONS BETWEEN THE PARENT 7 CORPORATION AND ANY QUALIFIED SUBCHAPTER S SUBSIDIARY OWNED BY 8 SUCH CORPORATION SHALL BE ELIMINATED. 9 * * * 10 SECTION 6. SECTION 303(A)(3) OF THE ACT, AMENDED JULY 13, <-- 11 1987 (P.L.325, NO.59) AND DECEMBER 3, 1993 (P.L.473, NO.68), IS 12 AMENDED TO READ: 13 SECTION 303. CLASSES OF INCOME.--(A) THE CLASSES OF INCOME 14 REFERRED TO ABOVE ARE AS FOLLOWS: 15 * * * 16 (3) NET GAINS OR INCOME FROM DISPOSITION OF PROPERTY. NET 17 GAINS OR NET INCOME, LESS NET LOSSES, DERIVED FROM THE SALE, 18 EXCHANGE OR OTHER DISPOSITION OF PROPERTY, INCLUDING REAL 19 PROPERTY, TANGIBLE PERSONAL PROPERTY, INTANGIBLE PERSONAL 20 PROPERTY OR OBLIGATIONS ISSUED ON OR AFTER THE EFFECTIVE DATE OF 21 THIS AMENDATORY ACT BY THE COMMONWEALTH; ANY PUBLIC AUTHORITY, 22 COMMISSION, BOARD OR OTHER AGENCY CREATED BY THE COMMONWEALTH; 23 ANY POLITICAL SUBDIVISION OF THE COMMONWEALTH OR ANY PUBLIC 24 AUTHORITY CREATED BY ANY SUCH POLITICAL SUBDIVISION; OR BY THE 25 FEDERAL GOVERNMENT AS DETERMINED IN ACCORDANCE WITH ACCEPTED 26 ACCOUNTING PRINCIPLES AND PRACTICES. FOR THE PURPOSE OF THIS 27 [ACT, FOR] ARTICLE: 28 (I) FOR THE DETERMINATION OF THE BASIS OF ANY PROPERTY, REAL 29 AND PERSONAL, IF ACQUIRED PRIOR TO JUNE 1, 1971, THE DATE OF 30 ACQUISITION SHALL BE ADJUSTED TO JUNE 1, 1971, AS IF THE 19970H0134B1706 - 34 -
1 PROPERTY HAD BEEN ACQUIRED ON THAT DATE. IF THE PROPERTY WAS 2 ACQUIRED AFTER JUNE 1, 1971, THE ACTUAL DATE OF ACQUISITION 3 SHALL BE USED IN DETERMINATION OF THE BASIS. 4 (II) AT THE ELECTION OF THE TAXPAYER, THE TERM "NET GAINS OR 5 INCOME" SHALL NOT INCLUDE NET GAIN IN AN AMOUNT NOT TO EXCEED 6 ONE HUNDRED THOUSAND DOLLARS ($100,000), OR A PRO RATA PART OF 7 ONE HUNDRED THOUSAND DOLLARS ($100,000) IF THE PROPERTY IS OWNED 8 BY MORE THAN ONE TAXPAYER, FROM THE SALE OR EXCHANGE OF THE 9 TAXPAYER'S PRINCIPAL RESIDENCE IF THE TAXPAYER HAS ATTAINED 10 FIFTY-FIVE YEARS OF AGE BEFORE THE DATE OF THE SALE OR EXCHANGE. 11 IF THE PROPERTY IS HELD BY A HUSBAND AND WIFE AND THEY MAKE A 12 JOINT RETURN FOR THE TAXABLE YEAR OF THE SALE OR EXCHANGE AND 13 ONE SPOUSE SATISFIES THE AGE, OWNERSHIP AND USE REQUIREMENTS OF 14 THIS [CLAUSE] SUBPARAGRAPH (II) WITH RESPECT TO THE PROPERTY, 15 THEN BOTH HUSBAND AND WIFE SHALL BE TREATED AS SATISFYING THE 16 AGE, OWNERSHIP AND USE REQUIREMENTS OF THIS [CLAUSE] 17 SUBPARAGRAPH (II). 18 (A) FOR PURPOSES OF THIS [CLAUSE, IN] SUBPARAGRAPH(II): 19 (I) IN THE CASE OF AN UNREMARRIED INDIVIDUAL WHOSE SPOUSE IS 20 DECEASED ON THE DATE OF SALE OR EXCHANGE OF THE PROPERTY, IF THE 21 DECEASED SPOUSE, DURING THE FIVE-YEAR PERIOD ENDING ON THE DATE 22 OF SALE OR EXCHANGE SATISFIED THE HOLDING AND USE REQUIREMENTS 23 WITH RESPECT TO SUCH PROPERTY, THEN SUCH INDIVIDUAL SHALL BE 24 TREATED AS SATISFYING HOLDING AND USE REQUIREMENTS WITH RESPECT 25 TO SUCH PROPERTY. [FOR THE PURPOSES OF THIS CLAUSE, THE] 26 (II) THE TERM "SALE OR EXCHANGE" SHALL INCLUDE INVOLUNTARY 27 CONVERSIONS SUCH AS THE DESTRUCTION, THEFT, SEIZURE, REQUISITION 28 OR CONDEMNATION OF THE PROPERTY. [FOR THE PURPOSES OF THIS 29 CLAUSE, THE] 30 (III) THE TERM "PRINCIPAL RESIDENCE" SHALL MEAN THE PROPERTY 19970H0134B1706 - 35 -
1 THAT HAS BEEN OWNED AND USED BY THE TAXPAYER AS HIS PRINCIPAL 2 RESIDENCE FOR PERIODS AGGREGATING THREE YEARS OR MORE DURING THE 3 FIVE-YEAR PERIOD ENDING ON THE DATE OF THE SALE OR EXCHANGE. IN 4 THE CASE OF PROPERTY ONLY A PORTION OF WHICH, DURING THE FIVE- 5 YEAR PERIOD ENDING ON THE DATE OF THE SALE OR EXCHANGE, HAS BEEN 6 OWNED OR USED BY THE TAXPAYER AS THE TAXPAYER'S PRINCIPAL 7 RESIDENCE FOR PERIODS AGGREGATING THREE YEARS OR MORE, THIS 8 [SECTION] SUBPARAGRAPH (II) SHALL APPLY WITH RESPECT TO SO MUCH 9 OF THE GAIN FROM THE SALE OR EXCHANGE OF SUCH PROPERTY AS IS 10 DETERMINED UNDER REGULATIONS PRESCRIBED BY THE DEPARTMENT TO BE 11 ATTRIBUTABLE TO THE PORTION OF THE PROPERTY SO OWNED AND USED BY 12 THE TAXPAYER. 13 (IV) THE TERM "USED" SHALL INCLUDE TIME THE PROPERTY WAS NOT 14 USED FOR RENTAL PURPOSES AND WAS UNOCCUPIED BY THE TAXPAYER DUE 15 TO THE TAXPAYER BEING IN A HOSPITAL, NURSING HOME OR PERSONAL 16 CARE FACILITY, OR FOR A PERIOD OF LESS THAN NINETY CONSECUTIVE 17 DAYS. 18 (B) THE PROVISIONS OF THIS [CLAUSE] SUBPARAGRAPH (II) SHALL 19 NOT APPLY TO ANY SALE OR EXCHANGE MADE PRIOR TO JULY 1, 1987. 20 (C) AN ELECTION UNDER THIS [CLAUSE] SUBPARAGRAPH (II) MAY BE 21 MADE OR REVOKED AT ANY TIME BEFORE THE EXPIRATION OF THE PERIOD 22 FOR MAKING A CLAIM FOR A REFUND OF THE TAX IMPOSED BY THIS 23 ARTICLE FOR THE TAXABLE YEAR IN WHICH THE SALE OR EXCHANGE 24 OCCURRED. 25 (D) THE PROVISIONS OF THIS [CLAUSE] SUBPARAGRAPH (II) SHALL 26 BE USED ONLY ONCE DURING THE LIFETIME OF THE TAXPAYER. 27 (III) THE TERM "NET GAINS OR INCOME" AND "NET LOSSES" SHALL 28 NOT INCLUDE GAINS OR INCOME OR LOSS DERIVED FROM OBLIGATIONS 29 WHICH ARE STATUTORILY FREE FROM STATE OR LOCAL TAXATION UNDER 30 THE ACT OF AUGUST 31, 1971 (P.L.395, NO.94), ENTITLED "AN ACT 19970H0134B1706 - 36 -
1 EXEMPTING FROM TAXATION FOR STATE AND LOCAL PURPOSES WITHIN THE 2 COMMONWEALTH CERTAIN OBLIGATIONS, THEIR TRANSFER AND THE INCOME 3 THEREFROM (INCLUDING ANY PROFITS MADE ON THE SALE THEREOF), 4 ISSUED BY THE COMMONWEALTH, ANY PUBLIC AUTHORITY, COMMISSION, 5 BOARD OR OTHER AGENCY CREATED BY THE COMMONWEALTH, ANY POLITICAL 6 SUBDIVISION OF THE COMMONWEALTH OR ANY PUBLIC AUTHORITY CREATED 7 BY ANY SUCH POLITICAL SUBDIVISION," OR UNDER THE LAWS OF THE 8 UNITED STATES. 9 (IV) THE TERM "SALE, EXCHANGE OR OTHER DISPOSITION" SHALL 10 NOT INCLUDE THE EXCHANGE OF STOCK OR SECURITIES IN A CORPORATION 11 A PARTY TO A REORGANIZATION IN PURSUANCE OF A PLAN OF 12 REORGANIZATION, SOLELY FOR STOCK OR SECURITIES IN SUCH 13 CORPORATION OR IN ANOTHER CORPORATION A PARTY TO THE 14 REORGANIZATION AND THE TRANSFER OF PROPERTY TO A CORPORATION BY 15 ONE OR MORE PERSONS SOLELY IN EXCHANGE FOR STOCK OR SECURITIES 16 IN SUCH CORPORATION IF IMMEDIATELY AFTER THE EXCHANGE SUCH 17 PERSON OR PERSONS ARE IN CONTROL OF THE CORPORATION. THE 18 FOLLOWING SHALL APPLY: 19 (A) FOR PURPOSES OF THIS [CLAUSE] SUBPARAGRAPH (IV), STOCK 20 OR SECURITIES ISSUED FOR SERVICES SHALL NOT BE CONSIDERED AS 21 ISSUED IN RETURN FOR PROPERTY. 22 (B) FOR PURPOSES OF THIS [CLAUSE] SUBPARAGRAPH (IV), THE 23 TERM "REORGANIZATION" MEANS[-- 24 (I) A] ANY OF THE FOLLOWING: 25 (I) A STATUTORY MERGER OR CONSOLIDATION[; THE 26 (II)]. 27 (II) THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE SOLELY 28 FOR ALL OR A PART OF ITS VOTING STOCK (OR IN EXCHANGE SOLELY FOR 29 ALL OR A PART OF THE VOTING STOCK OF A CORPORATION WHICH IS IN 30 CONTROL OF THE ACQUIRING CORPORATION) OF STOCK OF ANOTHER 19970H0134B1706 - 37 -
1 CORPORATION IF, IMMEDIATELY AFTER THE ACQUISITION, THE ACQUIRING 2 CORPORATION HAS CONTROL OF SUCH OTHER CORPORATION (WHETHER OR 3 NOT SUCH ACQUIRING CORPORATION HAD CONTROL IMMEDIATELY BEFORE 4 THE ACQUISITION)[; 5 (III) THE]. 6 (III) THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE SOLELY 7 FOR ALL OR A PART OF ITS VOTING STOCK (OR IN EXCHANGE SOLELY FOR 8 ALL OR A PART OF THE VOTING STOCK OF A CORPORATION WHICH IS IN 9 CONTROL OF THE ACQUIRING CORPORATION), OF SUBSTANTIALLY ALL OF 10 THE PROPERTIES OF ANOTHER CORPORATION, BUT IN DETERMINING 11 WHETHER THE EXCHANGE IS SOLELY FOR STOCK THE ASSUMPTION BY THE 12 ACQUIRING CORPORATION OF A LIABILITY OF THE OTHER, OR THE FACT 13 THAT PROPERTY ACQUIRED IS SUBJECT TO A LIABILITY, SHALL BE 14 DISREGARDED[; 15 (IV) A]. 16 (IV) A TRANSFER BY A CORPORATION OF ALL OR A PART OF ITS 17 ASSETS TO ANOTHER CORPORATION IF IMMEDIATELY AFTER THE TRANSFER 18 THE TRANSFEROR, OR ONE OR MORE OF ITS SHAREHOLDERS (INCLUDING 19 PERSONS WHO WERE SHAREHOLDERS IMMEDIATELY BEFORE THE TRANSFER), 20 OR ANY COMBINATION THEREOF, IS IN CONTROL OF THE CORPORATION TO 21 WHICH THE ASSETS ARE TRANSFERRED[; 22 (V) A]. 23 (V) A RECAPITALIZATION[; 24 (VI) A]. 25 (VI) A MERE CHANGE IN IDENTITY, FORM, OR PLACE OF 26 ORGANIZATION HOWEVER EFFECTED[; OR 27 (VII) THE]. 28 (C) THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE FOR 29 STOCK OF A CORPORATION (REFERRED TO IN THIS [SUBCLAUSE] CLAUSE 30 (C) AS "CONTROLLING CORPORATION") WHICH IS IN CONTROL OF THE 19970H0134B1706 - 38 -
1 ACQUIRING CORPORATION, OF SUBSTANTIALLY ALL OF THE PROPERTIES OF 2 ANOTHER CORPORATION WHICH IN THE TRANSACTION IS MERGED INTO THE 3 ACQUIRING CORPORATION SHALL NOT DISQUALIFY A TRANSACTION UNDER 4 [SUBCLAUSE (I)] CLAUSE (B)(I) IF SUCH TRANSACTION WOULD HAVE 5 QUALIFIED UNDER [SUBCLAUSE (I)] CLAUSE(B)(I) IF THE MERGER HAD 6 BEEN INTO THE CONTROLLING CORPORATION, AND NO STOCK OF THE 7 ACQUIRING CORPORATION IS USED IN THE TRANSACTION[; 8 (VIII) A]. 9 (D) A TRANSACTION OTHERWISE QUALIFYING UNDER [SUBCLAUSE (I)] 10 CLAUSE (B)(I) SHALL NOT BE DISQUALIFIED BY REASON OF THE FACT 11 THAT STOCK OF A CORPORATION (REFERRED TO IN THIS [SUBCLAUSE] 12 CLAUSE (D) AS THE "CONTROLLING CORPORATION") WHICH BEFORE THE 13 MERGER WAS IN CONTROL OF THE MERGED CORPORATION IS USED IN THE 14 TRANSACTION, IF AFTER THE TRANSACTION, THE CORPORATION SURVIVING 15 THE MERGER HOLDS SUBSTANTIALLY ALL OF ITS PROPERTIES AND OF THE 16 PROPERTIES OF THE MERGED CORPORATION (OTHER THAN STOCK OF THE 17 CONTROLLING CORPORATION DISTRIBUTED IN THE TRANSACTION); AND IN 18 THE TRANSACTION, FORMER SHAREHOLDERS OF THE SURVIVING 19 CORPORATION EXCHANGED, FOR AN AMOUNT OF VOTING STOCK OF THE 20 CONTROLLING CORPORATION, AN AMOUNT OF STOCK IN THE SURVIVING 21 CORPORATION WHICH CONSTITUTES CONTROL OF SUCH CORPORATION. 22 (E) FOR PURPOSES OF THIS [CLAUSE, THE] SUBPARAGRAPH (IV): 23 (I) THE TERM "CONTROL" MEANS THE OWNERSHIP OF STOCK 24 POSSESSING AT LEAST EIGHTY PER CENT OF THE TOTAL COMBINED VOTING 25 POWER OF ALL CLASSES OF STOCK ENTITLED TO VOTE AND AT LEAST 26 EIGHTY PER CENT OF THE TOTAL NUMBER OF SHARES OF ALL OTHER 27 CLASSES OF STOCK OF THE CORPORATION. 28 [FOR PURPOSES OF THIS CLAUSE, THE] (II) THE TERM "A PARTY TO 29 A REORGANIZATION" INCLUDES A CORPORATION RESULTING FROM A 30 REORGANIZATION, AND BOTH CORPORATIONS, IN THE CASE OF A 19970H0134B1706 - 39 -
1 REORGANIZATION RESULTING FROM THE ACQUISITION BY ONE CORPORATION 2 OF STOCK OR PROPERTIES OF ANOTHER. IN THE CASE OF A 3 REORGANIZATION QUALIFYING UNDER [SUBCLAUSE (I)] CLAUSE (B)(I) BY 4 REASON OF [SUBCLAUSE (VII)] CLAUSE (C) THE TERM "A PARTY TO A 5 REORGANIZATION" INCLUDES THE CONTROLLING CORPORATION REFERRED TO 6 IN [SUCH SUBCLAUSE (VII)] CLAUSE (C). 7 (F) NOTWITHSTANDING ANY PROVISIONS HEREOF, UPON EVERY SUCH 8 EXCHANGE OR CONVERSION, THE TAXPAYER'S BASE FOR THE STOCK OR 9 SECURITIES RECEIVED SHALL BE THE SAME AS THE TAXPAYER'S ACTUAL 10 OR ATTRIBUTED BASE FOR THE STOCK, SECURITIES OR PROPERTY 11 SURRENDERED IN EXCHANGE THEREFOR. 12 (V) THE TERM "SALE, EXCHANGE OR OTHER DISPOSITION" SHALL NOT 13 INCLUDE A TRANSFER BY A COMMON TRUST FUND DESCRIBED IN SECTION 14 584 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 15 U.S.C. § 584), OF ALL OR SUBSTANTIALLY ALL OF ITS ASSETS TO ONE 16 OR MORE COMPANIES DESCRIBED IN SECTION 851 OF THE INTERNAL 17 REVENUE CODE OF 1986 (26 U.S.C. § 851) IN EXCHANGE FOR STOCK OR 18 UNITS OF BENEFICIAL INTEREST IN THE COMPANY OR COMPANIES TO 19 WHICH SUCH ASSETS ARE TRANSFERRED AND THE DISTRIBUTION OF SUCH 20 STOCK OR UNITS BY THE FUND TO ITS PARTICIPANTS IN EXCHANGE FOR 21 THEIR INTEREST IN THE FUND, IF NO GAIN OR LOSS IS RECOGNIZED ON 22 THE TRANSFER OR DISTRIBUTION FOR FEDERAL INCOME TAX PURPOSES. 23 UPON EVERY SUCH EXCHANGE, THE TAXPAYER'S BASE FOR THE STOCK OR 24 UNITS OR ASSETS RECEIVED SHALL BE THE SAME AS THE TAXPAYER'S 25 ACTUAL OR ATTRIBUTED BASE FOR THE ASSETS, STOCK, UNITS OR 26 INTEREST SURRENDERED IN EXCHANGE THEREFOR. 27 (VI) THE TERM "SALE, EXCHANGE OR OTHER DISPOSITION" SHALL 28 NOT INCLUDE A TRANSFER OF AN INTEREST IN AN ENTERPRISE TREATED 29 AS A PARTNERSHIP FOR PURPOSES OF THIS ARTICLE IN EXCHANGE FOR AN 30 INTEREST IN ANY OTHER ENTERPRISE TREATED AS A PARTNERSHIP FOR 19970H0134B1706 - 40 -
1 PURPOSES OF THIS ARTICLE, A LIQUIDATION MADE IN CONNECTION 2 THEREWITH, OR AN EXCHANGE MADE PURSUANT TO A STATUTORY MERGER, 3 CONSOLIDATION, OR DIVISION OF ENTERPRISES SO TREATED, UNLESS 4 TAXABLE INCOME OR GAIN IS RECOGNIZED FOR FEDERAL INCOME TAX 5 PURPOSES. UPON EVERY SUCH EXCHANGE, THE TAXPAYER'S BASE FOR THE 6 INTEREST RECEIVED SHALL BE THE SAME AS THE TAXPAYER'S ACTUAL OR 7 ATTRIBUTED BASE FOR THE INTEREST SURRENDERED IN EXCHANGE 8 THEREFOR. 9 * * * 10 Section 3. Section 304(d)(1) of the act, amended June 16, <-- 11 1994 (P.L.279, No.48), is amended to read: 12 SECTION 4 7. SECTION 304(D) OF THE ACT, AMENDED DECEMBER 13, <-- 13 1991 (P.L.373, NO.40) AND JUNE 16, 1994 (P.L.279, NO.48), IS 14 AMENDED TO READ: 15 Section 304. Special Tax Provisions for Poverty.--* * * 16 (d) Any claim for special tax provisions hereunder shall be 17 determined in accordance with the following: 18 (1) If the poverty income of the claimant during an entire 19 taxable year is [six thousand three hundred dollars ($6,300)] <-- 20 seven thousand three hundred dollars ($7,300) or less, OR, IN <-- 21 THE CASE OF A MARRIED CLAIMANT, IF THE JOINT POVERTY INCOME OF 22 THE CLAIMANT AND THE CLAIMANT'S SPOUSE DURING AN ENTIRE TAXABLE 23 YEAR IS FOURTEEN THOUSAND SIX HUNDRED DOLLARS ($14,600) TWELVE <-- 24 THOUSAND SIX HUNDRED DOLLARS ($12,600) OR LESS, the claimant 25 shall be entitled to a refund or forgiveness of any moneys which 26 have been paid over to (or would except for the provisions of 27 this act be payable to) the Commonwealth under the provisions of 28 this article, with an additional income allowance of [three 29 thousand dollars ($3,000)] four thousand dollars ($4,000) for 30 the first additional dependent and an additional income 19970H0134B1706 - 41 -
1 allowance of [three thousand dollars ($3,000)] four thousand 2 dollars ($4,000) for each additional dependent of the claimant. 3 FOR PURPOSES OF THIS SUBSECTION, A CLAIMANT SHALL NOT BE <-- 4 CONSIDERED TO BE MARRIED IF: 5 (I) THE CLAIMANT AND THE CLAIMANT'S SPOUSE FILE SEPARATE 6 RETURNS; AND 7 (II) THE CLAIMANT AND THE CLAIMANT'S SPOUSE LIVE APART AT 8 ALL TIMES DURING THE LAST SIX MONTHS OF THE TAXABLE YEAR OR ARE 9 SEPARATED PURSUANT TO A WRITTEN SEPARATION AGREEMENT. 10 (2) IF THE POVERTY INCOME OF THE CLAIMANT DURING AN ENTIRE 11 TAXABLE YEAR DOES NOT EXCEED THE POVERTY INCOME LIMITATIONS 12 PRESCRIBED BY CLAUSE (1) BY MORE THAN THE DOLLAR CATEGORY 13 CONTAINED IN SUBCLAUSES (I), (II), (III), (IV), (V), (VI), 14 (VII), (VIII) OR (IX) OF THIS CLAUSE, THE CLAIMANT SHALL BE 15 ENTITLED TO A REFUND OR FORGIVENESS BASED ON THE PER CENTAGE 16 PRESCRIBED IN SUCH SUBCLAUSES OF ANY MONEYS WHICH HAVE BEEN PAID 17 OVER TO (OR WOULD EXCEPT FOR THE PROVISIONS HEREIN BE PAYABLE 18 TO) THE COMMONWEALTH UNDER THIS ARTICLE: 19 (I) NINETY PER CENT IF NOT IN EXCESS OF ONE HUNDRED DOLLARS 20 ($100). 21 (II) EIGHTY PER CENT IF NOT IN EXCESS OF TWO HUNDRED DOLLARS 22 ($200). 23 (III) SEVENTY PER CENT IF NOT IN EXCESS OF THREE HUNDRED 24 DOLLARS ($300). 25 (IV) SIXTY PER CENT IF NOT IN EXCESS OF FOUR HUNDRED DOLLARS 26 ($400). 27 (V) FIFTY PER CENT IF NOT IN EXCESS OF FIVE HUNDRED DOLLARS 28 ($500). 29 (VI) FORTY PER CENT IF NOT IN EXCESS OF SIX HUNDRED DOLLARS 30 ($600). 19970H0134B1706 - 42 -
1 (VII) THIRTY PER CENT IF NOT IN EXCESS OF SEVEN HUNDRED 2 DOLLARS ($700). 3 (VIII) TWENTY PER CENT IF NOT IN EXCESS OF EIGHT HUNDRED 4 DOLLARS ($800). 5 (IX) TEN PER CENT IF NOT IN EXCESS OF NINE HUNDRED DOLLARS 6 ($900). 7 (3) IF AN INDIVIDUAL HAS A TAXABLE YEAR OF LESS THAN TWELVE 8 MONTHS, THE POVERTY INCOME THEREOF SHALL BE ANNUALIZED IN SUCH 9 MANNER AS THE DEPARTMENT MAY PRESCRIBE. 10 * * * <-- 11 SECTION 8. SECTIONS 307, 307.6, 307.8 AND 307.9 OF THE ACT, <-- 12 AMENDED OR ADDED DECEMBER 23, 1983 (P.L.370, NO.90), ARE AMENDED 13 TO READ: 14 SECTION 307. ELECTION BY SMALL CORPORATION.--EXCEPT AS 15 PROVIDED IN SECTION 307.6, ANY SMALL CORPORATION THAT IS SUBJECT 16 TO THE TAX IMPOSED UNDER ARTICLE IV OR OWNS A QUALIFIED S 17 CORPORATION SUBSIDIARY THAT IS SUBJECT TO THE TAX IMPOSED UNDER 18 ARTICLE IV MAY ELECT [NOT TO BE SUBJECT TO THE TAX IMPOSED UNDER 19 ARTICLE IV.] TO BE TAXED AS A PENNSYLVANIA S CORPORATION. SUCH 20 ELECTION SHALL BE VALID ONLY IF ALL THE SHAREHOLDERS OF THE 21 CORPORATION ON THE DAY ON WHICH THE ELECTION IS MADE CONSENT TO 22 THE ELECTION. A QUALIFIED SUBCHAPTER S SUBSIDIARY OWNED BY A 23 PENNSYLVANIA S CORPORATION SHALL BE TREATED AS A PENNSYLVANIA S 24 CORPORATION WHETHER OR NOT AN ELECTION HAS BEEN MADE WITH 25 RESPECT TO SUCH SUBSIDIARY. 26 SECTION 307.6. ELECTION AFTER REVOCATION OR TERMINATION.--IF 27 A CORPORATION HAS MADE AN ELECTION UNDER SECTION 307 AND IF SUCH 28 ELECTION HAS BEEN REVOKED PURSUANT TO SECTION 307.3 OR 29 TERMINATED FOR EXCEEDING THE PASSIVE INVESTMENT INCOME 30 LIMITATION IN SECTION 301(S.2), SUCH CORPORATION, AND ANY 19970H0134B1706 - 43 -
1 SUCCESSOR CORPORATION, SHALL NOT BE ELIGIBLE TO MAKE AN ELECTION 2 UNDER SECTION 307 FOR ANY TAXABLE YEAR PRIOR TO ITS FIFTH 3 TAXABLE YEAR WHICH BEGINS AFTER THE FIRST TAXABLE YEAR FOR WHICH 4 SUCH REVOCATION OR TERMINATION IS EFFECTIVE. 5 SECTION 307.8. INCOME OF A PENNSYLVANIA S CORPORATION.--(A) 6 A PENNSYLVANIA S CORPORATION [AS SUCH] SHALL NOT BE SUBJECT TO 7 THE TAX IMPOSED BY THIS ARTICLE, BUT THE SHAREHOLDERS OF THE 8 PENNSYLVANIA S CORPORATION SHALL BE SUBJECT TO THE TAX IMPOSED 9 UNDER THIS ARTICLE AS PROVIDED IN THIS ARTICLE. 10 [(B) NO DEDUCTION SHALL BE ALLOWED FOR TAXES BASED ON INCOME 11 OR TAXES PAID BY THE PENNSYLVANIA S CORPORATION PURSUANT TO 12 SUBCHAPTER S OF CHAPTER 1 OR SECTION 58(D) OF THE INTERNAL 13 REVENUE CODE OF 1954, AS AMENDED AS OF JANUARY 1, 1983.] 14 (B) IF ANY TAX IS IMPOSED ON A PENNSYLVANIA S CORPORATION 15 (OR ANY QUALIFIED SUBCHAPTER S SUBSIDIARY OWNED BY SUCH 16 PENNSYLVANIA S CORPORATION) PURSUANT TO SECTION 1374 OF THE 17 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 18 1374), AS AMENDED TO JANUARY 1, 1997 OR PURSUANT TO ARTICLE IV 19 OR ARTICLE VI FOR ANY TAXABLE YEAR, THEN, FOR PURPOSES OF 20 SECTION 307.9, THE AMOUNT OF TAX SO IMPOSED SHALL BE TREATED AS 21 A LOSS SUSTAINED BY SUCH PENNSYLVANIA S CORPORATION DURING SUCH 22 YEARS. IN THE CASE OF TAXES IMPOSED PURSUANT TO SECTION 1374 OF 23 THE INTERNAL REVENUE CODE OF 1986, AS AMENDED TO JANUARY 1, 1997 24 OR ARTICLE IV, THE CHARACTER OF SUCH LOSS SHALL BE DETERMINED BY 25 ALLOCATING THE LOSS PROPORTIONATELY AMONG THE RECOGNIZED BUILT- 26 IN GAINS GIVING RISE TO SUCH TAX. 27 (C) IF A PENNSYLVANIA S CORPORATION MAKES A DISTRIBUTION OF 28 PROPERTY, OTHER THAN AN OBLIGATION OF SUCH CORPORATION, WITH 29 RESPECT TO ITS STOCK AND THE FAIR MARKET VALUE OF SUCH PROPERTY 30 EXCEEDS ITS ADJUSTED BASIS IN THE HANDS OF THE CORPORATION, THEN 19970H0134B1706 - 44 -
1 GAIN SHALL BE RECOGNIZED ON THE DISTRIBUTION AS IF THE PROPERTY 2 HAD BEEN SOLD TO THE DISTRIBUTEE AT ITS FAIR MARKET VALUE. 3 (D) ANY ELECTION WHICH MAY AFFECT THE COMPUTATION OF ITEMS 4 DERIVED FROM A PENNSYLVANIA S CORPORATION SHALL BE MADE BY THE 5 CORPORATION. 6 (E) ANY DEDUCTION, EXCEPT A NET LOSS DEDUCTION, WHICH WAS 7 DISALLOWED WHEN A CORPORATION WAS SUBJECT TO THE TAX IMPOSED 8 UNDER ARTICLE IV SHALL BE ALLOWED IN YEARS IN WHICH THE 9 CORPORATION IS A PENNSYLVANIA S CORPORATION TO THE SAME EXTENT 10 AND IN THE SAME MANNER THAT THE DEDUCTION WOULD HAVE BEEN 11 ALLOWED IF THE CORPORATION HAD REMAINED SUBJECT TO THE TAX 12 IMPOSED UNDER ARTICLE IV. 13 SECTION 307.9. INCOME OF PENNSYLVANIA S CORPORATIONS TAXED 14 TO SHAREHOLDERS.--(A) EACH SHAREHOLDER OF A PENNSYLVANIA S 15 CORPORATION SHALL TAKE INTO INCOME SUCH SHAREHOLDER'S PRO RATA 16 SHARE OF THE INCOME OR LOSS IN EACH APPLICABLE CLASS OF INCOME 17 RECEIVED BY THE CORPORATION FOR ITS TAXABLE YEAR ENDING WITHIN 18 OR WITH THE SHAREHOLDER'S TAXABLE YEAR. 19 (B) EACH SHAREHOLDER'S PRO RATA SHARE OF ANY ITEM FOR ANY 20 TAXABLE YEAR SHALL BE THE SUM OF THE AMOUNTS DETERMINED WITH 21 RESPECT TO THE SHAREHOLDER BY ASSIGNING AN EQUAL PORTION OF ALL 22 ITEMS TO EACH DAY OF THE TAXABLE YEAR AND THEN BY DIVIDING THAT 23 PORTION PRO RATA AMONG THE SHARES OUTSTANDING ON SUCH DAY. 24 (C) THE CHARACTER OF ANY ITEM INCLUDED IN THE SHAREHOLDER'S 25 PRO RATA SHARE SHALL BE DETERMINED AS IF SUCH ITEM WERE REALIZED 26 DIRECTLY BY THE SHAREHOLDER FROM THE SOURCE FROM WHICH IT WAS 27 REALIZED BY THE CORPORATION OR INCURRED IN THE SAME MANNER AS 28 INCURRED BY THE CORPORATION. 29 (D) WITH RESPECT TO ANY DEDUCTION ALLOWED PURSUANT TO 30 SECTION 307.8(E), ANY NONRESIDENT SHAREHOLDER SHALL BE ALLOWED 19970H0134B1706 - 45 -
1 SUCH DEDUCTION ONLY TO THE EXTENT THAT THE PREVIOUSLY DISALLOWED 2 DEDUCTION WOULD HAVE BEEN CONSIDERED A DEDUCTION RELATED TO 3 INCOME FROM SOURCES WITHIN THIS COMMONWEALTH, WITHIN THE MEANING 4 OF SECTION 301(K), DURING THE TAXABLE YEAR WHEN THE DEDUCTION 5 WAS DISALLOWED. 6 (E) FOR ALL PURPOSES OF THIS ARTICLE, A QUALIFIED SUBCHAPTER 7 S SUBSIDIARY OWNED BY A PENNSYLVANIA S CORPORATION SHALL NOT BE 8 TREATED AS A SEPARATE CORPORATION, AND ALL ASSETS, LIABILITIES 9 AND ITEMS OF INCOME, DEDUCTION AND CREDIT OF SUCH QUALIFIED 10 SUBCHAPTER S SUBSIDIARY SHALL BE TREATED AS ASSETS, LIABILITIES 11 AND ITEMS OF INCOME, DEDUCTION AND CREDIT OF THE PARENT 12 PENNSYLVANIA S CORPORATION. 13 Section 4 5 9. Article III of the act is amended by adding a <-- 14 part to read: 15 PART VI-A 16 CONTRIBUTIONS OF REFUNDS BY CHECKOFF 17 Section 315.1. Definitions.--The following words, terms and 18 phrases, when used in this part, shall have the meanings 19 ascribed to them in this section, except where the context 20 clearly indicates a different meaning: 21 "Department." The Department of Revenue of the Commonwealth. 22 "Individual income tax." The tax imposed under this article. 23 Section 315.2. Contributions to Breast and Cervical Cancer 24 Research.--(a) The department shall provide a space on the face <-- 25 of the Pennsylvania individual income tax return form whereby an 26 individual may voluntarily designate a contribution of any 27 amount desired to be utilized for breast and cervical cancer 28 research in the Department of Health. 29 (b) The amount so designated on the individual income tax 30 return form shall be deducted from the tax refund to which the 19970H0134B1706 - 46 -
1 individual is entitled and shall not constitute a charge against 2 the income tax revenues due to the Commonwealth. 3 (c) The department shall determine annually the total amount 4 designated under this section, less reasonable administrative 5 costs, and shall report the amount to the State Treasurer, who 6 shall transfer the amount from the General Fund to the 7 Pennsylvania Cancer Control, Prevention and Research Advisory 8 Board within the Department of Health. 9 (d) The department shall provide adequate information 10 concerning the checkoff for breast and cervical cancer research 11 in its instructions which accompany State income tax return 12 forms. The information concerning the checkoff shall include the 13 listing of an address furnished by the Department of Health, to 14 which contributions may be sent by taxpayers wishing to 15 contribute to this effort, but who do not receive refunds. 16 Additionally, the Department of Health shall be charged with the 17 duty to conduct a public information campaign on the 18 availability of this opportunity to Pennsylvania taxpayers. 19 (e) The Department of Health shall report annually to the 20 respective committees of the Senate and the House of 21 Representatives which have jurisdiction over health matters on 22 the amount received via the checkoff plan and how the funds were 23 utilized. 24 (f) The General Assembly may, from time to time, appropriate 25 funds for breast and cervical cancer research within the 26 Department of Health. 27 Section 315.3. Contributions for Wild Resource 28 Conservation.--(a) The department shall provide a space on the <-- 29 face of the Pennsylvania individual income tax return form 30 whereby an individual may voluntarily designate a contribution 19970H0134B1706 - 47 -
1 of any amount desired, to the Wild Resource Conservation Fund 2 established under section 5 of the act of June 23, 1982 3 (P.L.597, No.170), known as the "Wild Resource Conservation 4 Act." 5 (b) The amount so designated by an individual on the income 6 tax return form shall be deducted from the tax refund to which 7 such individual is entitled and shall not constitute a charge 8 against the income tax revenues due the Commonwealth. 9 (c) The department shall determine annually the total amount 10 designated pursuant to this section and shall report such amount 11 to the State Treasurer, who shall transfer such amount from the 12 General Fund to the Wild Resource Conservation Fund for use as 13 provided in the "Wild Resource Conservation Act." The department 14 shall be reimbursed from the fund for any administrative costs 15 incurred above and beyond the cost savings it realizes as a 16 result of individual total refund designations. 17 (d) The department shall provide adequate information 18 concerning the Wild Resource Conservation Fund in its 19 instructions which accompany State income tax return forms, 20 which shall include the listing of an address, furnished to it 21 by the Wild Resource Conservation Board, to which contributions 22 may be sent by those taxpayers wishing to contribute to said 23 fund but who do not receive refunds. 24 (e) This section shall apply to taxable years beginning on 25 or after January 1, 1997. 26 Section 315.4. Contributions for Organ Donation Awareness.-- 27 (a) The department shall provide a space on the face of the <-- 28 Pennsylvania individual income tax return form for the 1997 tax <-- 29 year and the 2000 tax year whereby an individual may voluntarily 30 designate a contribution of any amount desired to the Organ 19970H0134B1706 - 48 -
1 Donation Awareness Trust Fund established under 20 Pa.C.S. § 2 8622 (relating to Organ Donation Awareness Trust Fund). 3 (b) The amount so designated by an individual on the 4 Pennsylvania individual income tax return form shall be deducted 5 from the tax refund to which the individual is entitled and 6 shall not constitute a charge against the income tax revenues 7 due the Commonwealth. 8 (c) The department shall annually determine the total amount 9 designated pursuant to this section and shall report that amount 10 to the State Treasurer who shall transfer that amount to the 11 Organ Donation Awareness Trust Fund. 12 (d) The department shall, in all taxable years following the 13 effective date of this section, provide on its forms or in its 14 instructions which accompany Pennsylvania individual income tax 15 return forms adequate information concerning the Organ Donation 16 Awareness Trust Fund which shall include the listing of an 17 address, furnished to it by the Organ Donation Advisory 18 Committee, to which contributions may be sent by those taxpayers 19 wishing to contribute to the fund but who do not receive 20 refunds. 21 (e) This section shall apply to taxable years beginning on 22 or after January 1, 1997. 23 Section 315.5. Contributions for Olympics.--(a) The 24 department shall provide a space on the face of the Pennsylvania <-- 25 individual income tax return form whereby an individual may 26 voluntarily designate a contribution of any amount desired to 27 the United States Olympic Committee, Pennsylvania Division. 28 (b) The amount so designated by an individual on the income 29 tax return form shall be deducted from the tax refund to which 30 such individual is entitled and shall not constitute a charge 19970H0134B1706 - 49 -
1 against the income tax revenues due the Commonwealth. 2 (c) The department shall determine annually the total amount 3 designated pursuant to this section, less reasonable 4 administrative costs, and shall report such amount to the State 5 Treasurer, who shall transfer such amount from the General Fund 6 to the United States Olympic Committee, Pennsylvania Division. 7 Section 315.6. Contributions to Korea/Vietnam Memorial <-- 8 National Education Center.--(a) For tax years 1997, 1998, 1999 9 and 2000, the department shall provide a space on the face of 10 the Pennsylvania individual income tax return form whereby an 11 individual may voluntarily designate a contribution of any 12 amount from the individual's tax refund to KVM. 13 (b) The amount designated by an individual on the 14 Pennsylvania individual income tax return form shall be deducted 15 from the tax refund to which such individual is entitled and 16 shall not constitute a charge against the income tax revenues 17 due the Commonwealth. 18 (c) The department shall determine annually the total amount 19 designated by individual taxpayers under this section and shall 20 report the amount to the State Treasurer who shall prepare the 21 appropriate documentation and transfer the designated amount 22 from the General Fund to KVM for use as provided in section 23 2507(b) of the act of April 9, 1929 (P.L.177, No.175), known as 24 "The Administrative Code of 1929." 25 (d) The department shall provide adequate information 26 regarding the center and its purposes in its instructions for 27 tax years 1997, 1998, 1999 and 2000 which accompany Pennsylvania 28 individual income tax return forms to include the address of KVM 29 to which contributions may be sent by taxpayers who wish to make 30 additional contributions to the center. 19970H0134B1706 - 50 -
1 (e) This subsection shall apply solely to taxable years 2 1997, 1998, 1999 and 2000. 3 SECTION 6. THE DEFINITION OF "CAPITAL STOCK VALUE" IN <-- 4 SECTION 601 OF THE ACT, AMENDED JUNE 30, 1995 (P.L.139, NO.21), 5 IS AMENDED TO READ: 6 SECTION 10. SECTION 324 OF THE ACT, AMENDED JUNE 16, 1994 <-- 7 (P.L.270, NO.48), IS AMENDED TO READ: 8 SECTION 324. GENERAL RULE.--(A) WHEN A PARTNERSHIP, 9 ASSOCIATION OR PENNSYLVANIA S CORPORATION RECEIVES INCOME FROM 10 SOURCES WITHIN THIS COMMONWEALTH FOR ANY TAXABLE YEAR AND ANY 11 PORTION OF SUCH INCOME IS ALLOCABLE TO A NONRESIDENT PARTNER, 12 MEMBER OR SHAREHOLDER THEREOF, SUCH PARTNERSHIP, ASSOCIATION OR 13 PENNSYLVANIA S CORPORATION SHALL PAY A WITHHOLDING TAX UNDER 14 THIS SECTION AT SUCH TIME AND IN SUCH MANNER AS THE DEPARTMENT 15 SHALL PRESCRIBE; HOWEVER, NOTWITHSTANDING ANY OTHER PROVISION OF 16 THIS ARTICLE, ALL SUCH WITHHOLDING TAX SHALL BE PAID OVER ON OR 17 BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE END 18 OF THE TAXABLE YEAR. 19 (B) THIS SECTION SHALL NOT APPLY TO ANY PUBLICLY TRADED 20 PARTNERSHIP, AS DEFINED UNDER SECTION 7704 OF THE INTERNAL 21 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.) 22 WITH EQUITY SECURITIES REGISTERED WITH THE SECURITIES AND 23 EXCHANGE COMMISSION UNDER SECTION 12 OF THE SECURITIES EXCHANGE 24 ACT OF 1934 (48 STAT. 881, 15 U.S.C. § 78A ET SEQ.). 25 SECTION 11. SECTION 324.2 OF THE ACT, ADDED AUGUST 4, 1991 26 (P.L.97, NO.22), IS AMENDED TO READ: 27 SECTION 324.2. TREATMENT OF NONRESIDENT PARTNERS, MEMBERS OR 28 SHAREHOLDERS.--EACH NONRESIDENT PARTNER, MEMBER [OR], 29 SHAREHOLDER OR HOLDER OF A BENEFICIAL INTEREST SHALL BE ALLOWED 30 A CREDIT FOR SUCH PARTNER'S, MEMBER'S [OR], SHAREHOLDER'S OR 19970H0134B1706 - 51 -
1 HOLDER OF A BENEFICIAL INTEREST'S SHARE OF THE WITHHOLDING TAX 2 PAID BY THE PARTNERSHIP, ASSOCIATION OR PENNSYLVANIA S 3 CORPORATION. SUCH CREDIT SHALL BE ALLOWED FOR THE PARTNER'S, 4 MEMBER'S [OR], SHAREHOLDER'S OR HOLDER OF A BENEFICIAL 5 INTEREST'S TAXABLE YEAR IN WHICH, OR WITH WHICH, THE 6 PARTNERSHIP, ASSOCIATION OR PENNSYLVANIA S CORPORATION TAXABLE 7 YEAR (FOR WHICH SUCH TAX WAS PAID) ENDS. 8 SECTION 12. SECTION 350 OF THE ACT, ADDED AUGUST 31, 1971 9 (P.L.362, NO.93), IS AMENDED TO READ: 10 SECTION 350. LIMITATIONS ON REFUND OR CREDIT.--ANY 11 APPLICATION FOR REFUND MUST BE FILED WITH THE [BOARD OF FINANCE 12 AND REVENUE WITHIN THREE YEARS FROM THE TIME THE RETURN IS 13 REQUIRED TO BE FILED] DEPARTMENT UNDER SECTION 3003.1. 14 SECTION 13. SECTION 352(G) OF THE ACT, AMENDED JUNE 29, 1984 15 (P.L.445, NO.94), IS AMENDED AND THE SECTION IS AMENDED BY 16 ADDING A SUBSECTION TO READ: 17 SECTION 352. ADDITIONS, PENALTIES AND FEES.--* * * 18 [(G) WHENEVER ANY CHECK ISSUED IN PAYMENT OF ANY TAX, OR FOR 19 ANY OTHER PURPOSE REQUIRED BY THIS ARTICLE, SHALL BE RETURNED TO 20 THE DEPARTMENT AS UNCOLLECTIBLE, THE DEPARTMENT SHALL CHARGE A 21 FEE OF TEN PER CENT OF THE FACE AMOUNT THEREOF, PLUS ALL PROTEST 22 FEES, TO THE PERSON PRESENTING SUCH CHECK TO THE DEPARTMENT, TO 23 COVER THE COST OF ITS COLLECTION IN ADDITION TO THE INTEREST AND 24 PENALTIES OTHERWISE PROVIDED FOR IN THIS ARTICLE: PROVIDED, 25 THAT THE ADDITIONS IMPOSED BY THIS SUBSECTION SHALL NOT EXCEED 26 TWO HUNDRED DOLLARS ($200) NOR BE LESS THAN TEN DOLLARS ($10).] 27 * * * 28 (J) IF ANY AMOUNT OF TAX REQUIRED TO BE WITHHELD BY A 29 PARTNERSHIP, ASSOCIATION OR PENNSYLVANIA S CORPORATION AND PAID 30 OVER TO THE DEPARTMENT UNDER SECTION 324 IS NOT PAID ON OR 19970H0134B1706 - 52 -
1 BEFORE THE DATE PRESCRIBED THEREFOR, THERE SHALL BE ADDED TO THE 2 TAX AND PAID TO THE DEPARTMENT EACH MONTH FIVE PER CENT OF SUCH 3 UNDERPAYMENT FOR EACH MONTH OR FRACTION THEREOF FROM THE DUE 4 DATE, FOR THE PERIOD FROM THE DUE DATE TO THE DATE PAID; BUT THE 5 UNDERPAYMENT SHALL, FOR PURPOSES OF COMPUTING THE ADDITION FOR 6 ANY MONTH, BE REDUCED BY THE AMOUNT OF ANY PART OF THE TAX WHICH 7 IS PAID BY THE BEGINNING OF THAT MONTH. THE TOTAL OF SUCH 8 ADDITIONS SHALL NOT EXCEED FIFTY PER CENT OF THE AMOUNT OF SUCH 9 TAX. 10 SECTION 14. SECTION 401(1) OF THE ACT, AMENDED JUNE 16, 1994 11 (P.L.279, NO.48), IS AMENDED AND CLAUSE (3)1 IS AMENDED BY 12 ADDING A PHRASE TO READ: 13 SECTION 401. DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND 14 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING 15 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 16 CLEARLY INDICATES A DIFFERENT MEANING: 17 (1) "CORPORATION." A CORPORATION [HAVING CAPITAL STOCK], 18 JOINT-STOCK ASSOCIATION, [OR LIMITED PARTNERSHIP EITHER 19 ORGANIZED UNDER THE LAWS OF THIS COMMONWEALTH, THE UNITED 20 STATES, OR ANY OTHER STATE, TERRITORY, OR FOREIGN COUNTRY, OR 21 DEPENDENCY,] OR A BUSINESS TRUST TO WHICH 15 PA.C.S. CH. 95 22 (RELATING TO BUSINESS TRUSTS) APPLIES [AND], A COMMON LAW 23 BUSINESS TRUST OR A LIMITED LIABILITY COMPANY, THAT FOR FEDERAL 24 INCOME TAX PURPOSES IS TAXABLE AS A CORPORATION, AND (I) IS 25 DOING BUSINESS IN THIS COMMONWEALTH; OR (II) IS CARRYING ON 26 ACTIVITIES IN THIS COMMONWEALTH; (III) [HAVING] HAS CAPITAL OR 27 PROPERTY EMPLOYED OR USED IN THIS COMMONWEALTH; OR (IV) [OWNING] 28 OWNS PROPERTY IN THIS COMMONWEALTH, BY OR IN THE NAME OF ITSELF, 29 OR ANY PERSON, PARTNERSHIP, ASSOCIATION, LIMITED PARTNERSHIP, 30 JOINT-STOCK ASSOCIATION OR CORPORATION. THE WORD "CORPORATION" 19970H0134B1706 - 53 -
1 SHALL NOT INCLUDE BUILDING AND LOAN ASSOCIATIONS, BANKS, BANK 2 AND TRUST COMPANIES, NATIONAL BANKS, SAVINGS INSTITUTIONS, TRUST 3 COMPANIES, INSURANCE AND SURETY COMPANIES AND PENNSYLVANIA S 4 CORPORATIONS. THE WORD SHALL NOT INCLUDE: 5 1. ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS 6 A REAL ESTATE INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL 7 REVENUE CODE OR A QUALIFIED REAL ESTATE INVESTMENT TRUST 8 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OR 9 ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES 10 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 11 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 12 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL 13 ESTATE INVESTMENT TRUST SUBSIDIARIES. A QUALIFIED REAL ESTATE 14 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL 15 REVENUE CODE SHALL BE TREATED AS PART OF THE REAL ESTATE 16 INVESTMENT TRUST THAT OWNS ALL OF THE STOCK OF THE QUALIFIED 17 REAL ESTATE INVESTMENT TRUST SUBSIDIARY. 18 2. ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS 19 A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL 20 REVENUE CODE AND IS REGISTERED WITH THE UNITED STATES SECURITIES 21 AND EXCHANGE COMMISSION UNDER THE INVESTMENT COMPANY ACT OF 1940 22 OR ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES 23 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 24 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 25 ACTIVITIES OF REGULATED INVESTMENT COMPANIES. 26 3. ANY NONPROFIT CORPORATION, TRUST, OR OTHER ENTITY THAT IS 27 AN EXEMPT ORGANIZATION AS DEFINED BY SECTION 501 OF THE INTERNAL 28 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 501). 29 4. ANY CORPORATION ORGANIZED AS A NOT-FOR-PROFIT UNDER THE 30 LAWS OF THIS COMMONWEALTH OR THE LAWS OF ANY OTHER STATE. 19970H0134B1706 - 54 -
1 * * * 2 (3) "TAXABLE INCOME." 1. * * * 3 (P) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY 1, 1998, 4 IN THE CASE OF A CORPORATION THAT IS A PENNSYLVANIA S 5 CORPORATION, AS DEFINED IN SECTION 301(N.1), THE TERM "TAXABLE 6 INCOME" SHALL MEAN SUCH CORPORATION'S NET RECOGNIZED BUILT-IN 7 GAIN TO THE EXTENT OF AND AS DETERMINED FOR FEDERAL INCOME TAX 8 PURPOSES UNDER SECTION 1374(D)(2) OF THE INTERNAL REVENUE CODE 9 OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1374). FOR PURPOSES OF 10 THIS ARTICLE, A PENNSYLVANIA S CORPORATION AND EACH QUALIFIED 11 SUBCHAPTER S SUBSIDIARY, AS DEFINED IN SECTION 301(O.3), SHALL 12 BE TREATED AS SEPARATE CORPORATIONS. 13 SECTION 15. THE DEFINITIONS OF "AVERAGE NET INCOME," 14 "CAPITAL STOCK," "CAPITAL STOCK VALUE," "DOMESTIC ENTITY," 15 "FOREIGN ENTITY," "NET WORTH" AND "PROCESSING" IN SECTION 601 OF 16 THE ACT, AMENDED OR ADDED JULY 1, 1985 (P.L.78, NO.29), JULY 2, 17 1986 (P.L.318, NO.77), JUNE 16, 1994 (P.L.279, NO.48) AND JUNE 18 30, 1995 (P.L.139, NO.21), ARE AMENDED TO READ: 19 SECTION 601. DEFINITIONS AND REPORTS.--(A) THE FOLLOWING 20 WORDS, TERMS AND PHRASES WHEN USED IN THIS ARTICLE VI SHALL HAVE 21 THE MEANING ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE 22 CONTEXT CLEARLY INDICATES A DIFFERENT MEANING: 23 * * * <-- 24 "AVERAGE NET INCOME." THE SUM OF THE NET INCOME OR LOSS FOR <-- 25 EACH OF THE CURRENT AND IMMEDIATELY PRECEDING FOUR YEARS, 26 DIVIDED BY FIVE. IF THE ENTITY HAS NOT BEEN IN EXISTENCE FOR A 27 PERIOD OF FIVE YEARS, THE AVERAGE NET INCOME SHALL BE THE 28 AVERAGE NET INCOME FOR THE NUMBER OF YEARS THAT THE ENTITY HAS 29 ACTUALLY BEEN IN EXISTENCE. IN COMPUTING AVERAGE NET INCOME, 30 LOSSES SHALL BE ENTERED AS COMPUTED, BUT IN NO CASE SHALL 19970H0134B1706 - 55 -
1 AVERAGE NET INCOME BE LESS THAN ZERO. THE NET INCOME OR LOSS OF 2 THE ENTITY FOR ANY TAXABLE YEAR SHALL BE THE AMOUNT SET FORTH AS 3 INCOME PER BOOKS ON THE INCOME TAX RETURN FILED BY THE ENTITY 4 WITH THE FEDERAL GOVERNMENT FOR SUCH TAXABLE YEAR, OR IF NO SUCH 5 RETURN IS MADE, AS WOULD HAVE BEEN SET FORTH HAD SUCH A RETURN 6 BEEN MADE, SUBJECT, HOWEVER, IN EITHER CASE TO ANY CORRECTION 7 THEREOF, FOR FRAUD, EVASION OR ERROR. IN THE CASE OF ANY ENTITY 8 WHICH HAS AN INVESTMENT IN ANOTHER CORPORATION, THE NET INCOME 9 OR LOSS SHALL BE COMPUTED ON AN UNCONSOLIDATED BASIS EXCLUSIVE 10 OF THE NET INCOME OR LOSS OF SUCH OTHER CORPORATION. IN THE CASE 11 OF A LIMITED LIABILITY COMPANY OR BUSINESS TRUST TAXABLE AS A 12 PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES, THE NET INCOME OR 13 LOSS OF THE LIMITED LIABILITY COMPANY OR BUSINESS TRUST FOR ANY 14 GIVEN YEAR SHALL BE REDUCED BY THE AMOUNT OF DISTRIBUTIONS MADE 15 BY SUCH LIMITED LIABILITY COMPANY OR BUSINESS TRUST TO ANY 16 MEMBER OF SUCH LIMITED LIABILITY COMPANY OR BUSINESS TRUST WHO 17 IS DEEMED TO BE MATERIALLY PARTICIPATING IN THE ACTIVITIES 18 CONDUCTED BY SUCH LIMITED LIABILITY COMPANY OR BUSINESS TRUST 19 FOR PURPOSES OF SECTION 469 OF THE INTERNAL REVENUE CODE OF 1986 20 (PUBLIC LAW 99-514, 26 U.S.C. § 469). FOR THIS PURPOSE, 21 DISTRIBUTIONS WHICH ARE MADE TO A MEMBER OF A LIMITED LIABILITY 22 COMPANY OR BUSINESS TRUST WITHIN THIRTY (30) DAYS OF THE END OF 23 A GIVEN YEAR MAY BE TREATED AS HAVING BEEN MADE IN THE PRECEDING 24 YEAR, AND NOT IN THE YEAR IN WHICH SUCH DISTRIBUTION IS ACTUALLY 25 MADE. 26 "CAPITAL STOCK." THE CAPITAL STOCK [OF AN ENTITY], 27 CERTIFICATES, MEMBERSHIPS AND ALL OTHER INTERESTS IN A DOMESTIC 28 OR FOREIGN [CORPORATION] ENTITY. 29 "CAPITAL STOCK VALUE." THE AMOUNT COMPUTED PURSUANT TO THE 30 FOLLOWING FORMULA: THE PRODUCT OF ONE-HALF TIMES THE SUM OF THE 19970H0134B1706 - 56 -
1 AVERAGE NET INCOME CAPITALIZED AT THE RATE OF NINE AND ONE-HALF 2 PER CENT PLUS SEVENTY-FIVE PER CENT OF NET WORTH, FROM WHICH 3 PRODUCT SHALL BE SUBTRACTED SEVENTY-FIVE PER CENT OF NET WORTH, 4 FROM WHICH PRODUCT SHALL BE SUBTRACTED [ONE HUNDRED THOUSAND 5 DOLLARS ($100,000)] ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS 6 ($125,000), THE ALGEBRAIC EQUIVALENT OF WHICH IS 7 (.5 X (AVERAGE NET INCOME/.095 + (.75) 8 (NET WORTH))) - [$100,000] $125,000 9 "DOMESTIC ENTITY." EVERY CORPORATION [HAVING CAPITAL STOCK], <-- 10 EVERY JOINT-STOCK ASSOCIATION, [LIMITED PARTNERSHIP AND EVERY 11 COMPANY WHATSOEVER, NOW OR HEREAFTER ORGANIZED OR INCORPORATED 12 BY OR UNDER ANY LAWS OF THE COMMONWEALTH,] OR EVERY BUSINESS 13 TRUST TO WHICH 15 PA.C.S. CH. 95 (RELATING TO BUSINESS TRUSTS) 14 APPLIES [AND THAT FOR FEDERAL INCOME TAX PURPOSES IS TAXABLE AS 15 A CORPORATION], EVERY COMMON LAW BUSINESS TRUST OR EVERY LIMITED 16 LIABILITY COMPANY OTHER THAN A RESTRICTED PROFESSIONAL 17 CORPORATION SUBJECT TO 15 PA.C.S. CH. 89 (RELATING TO LIMITED 18 LIABILITY COMPANIES) ORGANIZED OR INCORPORATED BY OR UNDER ANY 19 LAWS OF THE COMMONWEALTH, OTHER THAN CORPORATIONS OF THE FIRST 20 CLASS, NONPROFIT CORPORATIONS, TRUSTS OR OTHER ENTITIES THAT ARE 21 EXEMPT ORGANIZATIONS AS DEFINED IN SECTION 501 OF THE INTERNAL 22 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 501), 23 CORPORATIONS ORGANIZED AS NOT-FOR-PROFIT UNDER THE LAWS OF THE 24 COMMONWEALTH OR THE LAWS OF ANY OTHER STATE AND COOPERATIVE 25 AGRICULTURAL ASSOCIATIONS NOT HAVING CAPITAL STOCK AND NOT 26 CONDUCTED FOR PROFIT, BANKS, SAVINGS INSTITUTIONS, TITLE 27 INSURANCE OR TRUST COMPANIES, BUILDING AND LOAN ASSOCIATIONS AND 28 INSURANCE COMPANIES IS A DOMESTIC ENTITY. THE TERM "DOMESTIC 29 ENTITY" SHALL NOT INCLUDE: 30 (1) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS 19970H0134B1706 - 57 -
1 A REAL ESTATE INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL 2 REVENUE CODE OR A QUALIFIED REAL ESTATE INVESTMENT TRUST 3 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OR 4 ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES 5 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 6 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 7 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL 8 ESTATE INVESTMENT TRUST SUBSIDIARIES. A QUALIFIED REAL ESTATE 9 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL 10 REVENUE CODE SHALL BE TREATED AS PART OF THE REAL ESTATE 11 INVESTMENT TRUST THAT OWNS ALL OF THE STOCK OF THE QUALIFIED 12 REAL ESTATE INVESTMENT TRUST SUBSIDIARY. 13 (2) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS 14 A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL 15 REVENUE CODE AND IS REGISTERED WITH THE UNITED STATES SECURITIES 16 AND EXCHANGE COMMISSION UNDER THE INVESTMENT COMPANY ACT OF 1940 17 OR ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES 18 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 19 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 20 ACTIVITIES OF REGULATED INVESTMENT COMPANIES. 21 * * * 22 "FOREIGN ENTITY." EVERY CORPORATION, JOINT-STOCK 23 ASSOCIATION, [LIMITED PARTNERSHIP AND COMPANY WHATSOEVER, NOW OR 24 HEREAFTER INCORPORATED OR ORGANIZED BY OR UNDER THE LAW OF ANY 25 OTHER STATE OR TERRITORY OF THE UNITED STATES, OR BY THE UNITED 26 STATES, OR BY OR UNDER THE LAW OF ANY FOREIGN GOVERNMENT,] OR 27 EVERY BUSINESS TRUST TO WHICH 15 PA.C.S. CH. 95 (RELATING TO 28 BUSINESS TRUSTS) APPLIES [AND THAT FOR FEDERAL INCOME TAX 29 PURPOSES IS TAXABLE AS A CORPORATION], COMMON LAW BUSINESS 30 TRUST, OR EVERY LIMITED LIABILITY COMPANY OTHER THAN A 19970H0134B1706 - 58 -
1 RESTRICTED PROFESSIONAL CORPORATION SUBJECT TO 15 PA.C.S. CH. 89 2 (RELATING TO LIMITED LIABILITY COMPANIES) INCORPORATED OR 3 ORGANIZED BY OR UNDER THE LAWS OF ANY JURISDICTION OTHER THAN 4 THE COMMONWEALTH, AND DOING BUSINESS IN AND LIABLE TO TAXATION 5 WITHIN THE COMMONWEALTH OR CARRYING ON ACTIVITIES IN THE 6 COMMONWEALTH, INCLUDING SOLICITATION OR EITHER OWNING OR HAVING 7 CAPITAL OR PROPERTY EMPLOYED OR USED IN THE COMMONWEALTH BY OR 8 IN THE NAME OF ANY LIMITED PARTNERSHIP OR JOINT-STOCK 9 ASSOCIATION, COPARTNERSHIP OR COPARTNERSHIPS, PERSON OR PERSONS, 10 OR IN ANY OTHER MANNER DOING BUSINESS WITHIN AND LIABLE TO 11 TAXATION WITHIN THE COMMONWEALTH OTHER THAN NONPROFIT 12 CORPORATIONS, TRUSTS OR OTHER ENTITIES THAT ARE EXEMPT 13 ORGANIZATIONS AS DEFINED IN SECTION 501 OF THE INTERNAL REVENUE 14 CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 501), CORPORATIONS 15 ORGANIZED AS NOT-FOR-PROFIT UNDER THE LAWS OF A JURISDICTION 16 OTHER THAN THE COMMONWEALTH, BANKS, SAVINGS INSTITUTIONS, TITLE 17 INSURANCE OR TRUST COMPANIES, BUILDING AND LOAN ASSOCIATIONS AND 18 INSURANCE COMPANIES IS A FOREIGN ENTITY. THE TERM "FOREIGN 19 ENTITY" SHALL NOT INCLUDE: 20 (1) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS 21 A REAL ESTATE INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL 22 REVENUE CODE OR A QUALIFIED REAL ESTATE INVESTMENT TRUST 23 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OR 24 ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES 25 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 26 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 27 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL 28 ESTATE INVESTMENT TRUST SUBSIDIARIES. A QUALIFIED REAL ESTATE 29 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL 30 REVENUE CODE SHALL BE TREATED AS PART OF THE REAL ESTATE 19970H0134B1706 - 59 -
1 INVESTMENT TRUST THAT OWNS ALL OF THE STOCK OF THE QUALIFIED 2 REAL ESTATE INVESTMENT TRUST SUBSIDIARY. 3 (2) ANY DOMESTIC OR FOREIGN BUSINESS TRUST THAT QUALIFIES AS 4 A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL 5 REVENUE CODE AND IS REGISTERED WITH THE UNITED STATES SECURITIES 6 AND EXCHANGE COMMISSION UNDER THE INVESTMENT COMPANY ACT OF 1940 7 OR ANY RELATED DOMESTIC OR FOREIGN BUSINESS TRUST WHICH CONFINES 8 ITS ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 9 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 10 ACTIVITIES OF REGULATED INVESTMENT COMPANIES. 11 "NET WORTH." 12 (1) NET WORTH SHALL BE THE SUM OF THE ENTITY'S ISSUED AND 13 OUTSTANDING CAPITAL STOCK, SURPLUS AND UNDIVIDED PROFITS AS PER 14 BOOKS SET FORTH FOR THE CLOSE OF SUCH TAX YEAR ON THE INCOME TAX 15 RETURN FILED BY THE ENTITY WITH THE FEDERAL GOVERNMENT, OR IF NO 16 SUCH RETURN IS MADE, AS WOULD HAVE BEEN SET FORTH HAD SUCH 17 RETURN BEEN MADE, SUBJECT, HOWEVER, IN EITHER CASE TO ANY 18 CORRECTION THEREOF FOR FRAUD, EVASION OR ERROR. IN THE CASE OF 19 ANY ENTITY WHICH HAS INVESTMENTS IN [THE COMMON STOCK OF] OTHER 20 CORPORATIONS, THE NET WORTH SHALL BE THE CONSOLIDATED NET WORTH 21 OF SUCH ENTITY COMPUTED IN ACCORDANCE WITH GENERALLY ACCEPTED 22 ACCOUNTING PRINCIPLES. IN THE CASE OF A LIMITED LIABILITY 23 COMPANY OR A BUSINESS TRUST, NET WORTH FOR ANY TAX YEAR SHALL BE 24 THE ENTITY'S ASSETS MINUS ITS LIABILITIES AS OF THE CLOSE OF 25 SUCH TAX YEAR. NET WORTH SHALL IN NO CASE BE LESS THAN ZERO. 26 (2) IF NET WORTH AS ARRIVED AT UNDER CLAUSE (1) FOR THE 27 CURRENT TAX YEAR IS GREATER THAN TWICE OR LESS THAN ONE-HALF OF 28 THE NET WORTH WHICH WOULD HAVE BEEN CALCULATED UNDER CLAUSE (1) 29 AS OF THE FIRST DAY OF THE CURRENT TAX YEAR, THEN NET WORTH FOR 30 THE CURRENT TAX YEAR SHALL BE THE AVERAGE OF THESE TWO AMOUNTS. 19970H0134B1706 - 60 -
1 "PROCESSING." THE FOLLOWING ACTIVITIES WHEN ENGAGED IN AS A 2 BUSINESS ENTERPRISE: 3 (1) THE FILTERING OR HEATING OF HONEY, THE COOKING OR 4 FREEZING OF FRUITS, VEGETABLES, MUSHROOMS, FISH, SEAFOOD, MEATS 5 OR POULTRY, WHEN THE PERSON ENGAGED IN SUCH BUSINESS PACKAGES 6 SUCH PROPERTY IN SEALED CONTAINERS FOR WHOLESALE DISTRIBUTION. 7 (1.1) THE PROCESSING OF VEGETABLES BY CLEANING, CUTTING, 8 CORING OR CHOPPING AND TREATING TO PRESERVE, STERILIZE OR PURIFY 9 AND SUBSTANTIALLY EXTEND THE USEFUL SHELF LIFE OF THE 10 VEGETABLES, WHEN THE PERSON ENGAGED IN SUCH ACTIVITY PACKAGES 11 SUCH PROPERTY IN SEALED CONTAINERS FOR WHOLESALE DISTRIBUTION. 12 (2) THE SCOURING, CARBONIZING, CORDING, COMBING, THROWING, 13 TWISTING OR WINDING OF NATURAL OR SYNTHETIC FIBERS, OR THE 14 SPINNING, BLEACHING, DYEING, PRINTING OR FINISHING OF YARNS OR 15 FABRICS, WHEN SUCH ACTIVITIES ARE PERFORMED PRIOR TO SALE TO THE 16 ULTIMATE CONSUMER. 17 (3) THE ELECTROPLATING, GALVANIZING, ENAMELING, ANODIZING, 18 COLORING, FINISHING, IMPREGNATING OR HEAT TREATING OF METALS OR 19 PLASTICS FOR SALE OR IN THE PROCESS OF MANUFACTURING. 20 (3.1) THE BLANKING, SHEARING, LEVELING, SLITTING OR BURNING 21 OF METALS FOR SALE TO OR USE BY A MANUFACTURER OR PROCESSOR. 22 (4) THE ROLLING, DRAWING OR EXTRUDING OF FERROUS AND 23 NONFERROUS METALS. 24 (5) THE FABRICATION FOR SALE OF ORNAMENTAL OR STRUCTURAL 25 METAL OR METAL STAIRS, STAIRCASES, GRATINGS, FIRE ESCAPES OR 26 RAILINGS (NOT INCLUDING FABRICATION WORK DONE AT THE 27 CONSTRUCTION SITE). 28 (6) THE PREPARATION OF ANIMAL FEED OR POULTRY FEED FOR SALE. 29 (7) THE PRODUCTION, PROCESSING AND BOTTLING OF NONALCOHOLIC 30 BEVERAGES FOR WHOLESALE DISTRIBUTION. 19970H0134B1706 - 61 -
1 (8) THE SLAUGHTERING AND DRESSING OF ANIMALS FOR MEAT TO BE 2 SOLD OR TO BE USED IN PREPARING MEAT PRODUCTS FOR SALE, AND THE 3 PREPARATION OF MEAT PRODUCTS, INCLUDING LARD, TALLOW, GREASE, 4 COOKING AND INEDIBLE OILS FOR WHOLESALE DISTRIBUTION. 5 (9) THE OPERATION OF A SAWMILL OR PLANING MILL FOR THE 6 PRODUCTION OF LUMBER OR LUMBER PRODUCTS FOR SALE. 7 (10) THE MILLING FOR SALE OF FLOUR OR MEAL FROM GRAINS. 8 (10.1) THE AGING, STRIPPING, CONDITIONING, CRUSHING AND 9 BLENDING OF TOBACCO LEAVES FOR USE AS CIGAR FILLER OR AS 10 COMPONENTS OF SMOKELESS TOBACCO PRODUCTS FOR SALE TO 11 MANUFACTURERS OF TOBACCO PRODUCTS. 12 (11) THE PUBLISHING OF BOOKS, NEWSPAPERS, MAGAZINES OR OTHER 13 PERIODICALS, PRINTING AND BROADCASTING RADIO AND TELEVISION 14 PROGRAMS BY LICENSED COMMERCIAL OR EDUCATIONAL STATIONS. 15 (12) THE PROCESSING OF USED LUBRICATING OILS. 16 (13) THE BLENDING, RECTIFICATION OR PRODUCTION BY 17 DISTILLATION OR OTHERWISE OF ALCOHOL OR ALCOHOLIC LIQUORS, 18 EXCEPT THE DISTILLATION OF ALCOHOL FROM BYPRODUCTS OF WINEMAKING 19 FOR THE SOLE PURPOSE OF FORTIFYING WINE. 20 (14) THE SALVAGING, RECYCLING OR RECLAIMING OF USED 21 MATERIALS TO BE RECYCLED INTO A MANUFACTURING PROCESS. 22 (15) THE DEVELOPMENT OR SUBSTANTIAL MODIFICATION OF COMPUTER 23 PROGRAMS OR SOFTWARE FOR SALE TO UNRELATED PERSONS FOR THEIR 24 DIRECT AND INDEPENDENT USE. 25 * * * 26 SECTION 16. THE ACT IS AMENDED BY ADDING SECTIONS TO READ: 27 SECTION 602.4. SEPARATE ENTITIES.--FOR PURPOSES OF THIS 28 ARTICLE, EACH PENNSYLVANIA S CORPORATION AND EACH QUALIFIED 29 SUBCHAPTER S SUBSIDIARY, AS DEFINED IN SECTION 301(O.3), SHALL 30 BE TREATED AS SEPARATE CORPORATIONS. 19970H0134B1706 - 62 -
1 SECTION 602.5. SHOWS AND FLEA MARKETS.--A CORPORATION THAT 2 CONFINES ITS ACTIVITIES IN THIS COMMONWEALTH DURING THE COURSE 3 OF A CALENDAR YEAR TO ATTENDANCE AT AN ORGANIZED "SHOW" OR "FLEA 4 MARKET" FOR THE PURPOSE OF EXHIBITING ITS GOODS AND MAKING SALES 5 THEREFROM SHALL NOT BE SUBJECT TO THE MINIMUM TAX IMPOSED UNDER 6 ARTICLE VI BASED SOLELY UPON SUCH ATTENDANCE IF LIMITED TO NO 7 MORE THAN TWENTY DAYS DURING THE YEAR, WITH NO MORE THAN FIVE 8 DAYS BEING CONSECUTIVE. 9 Section 5 7 17. Section 1101-C of the act is amended by <-- 10 adding definitions to read: 11 Section 1101-C. Definitions.--The following words when used 12 in this article shall have the meanings ascribed to them in this 13 section: 14 * * * 15 "Living trust." Any trust, other than a business trust, 16 intended as a will substitute by the settlor which becomes 17 effective during the lifetime of the settlor, but from which 18 trust distributions cannot be made to any beneficiaries other 19 than the settlor prior to the death of the settlor. 20 * * * 21 "Ordinary trust." Any trust, other than a business trust or 22 a living trust, which takes effect during the lifetime of the 23 settlor and for which the trustees of the trust take title to 24 property primarily for the purpose of protecting, managing or 25 conserving it until distribution to the named beneficiaries of 26 the trust. An ordinary trust does not include a trust that has 27 an objective to carry on business and divide gains nor does it 28 either expressly or impliedly have any of the following 29 features: the treatment of beneficiaries as associates, the 30 treatment of the interests in the trust as personal property, 19970H0134B1706 - 63 -
1 the free transferability of beneficial interests in the trust, 2 centralized management by the trustee or the beneficiaries, or 3 continuity of life. 4 * * * 5 Section 6 8. Section 1102-C.3(8) and (9) of the act, added <-- 6 July 2, 1986 (P.L.318, No.77), are amended and the section is 7 amended by adding clauses to read: 8 SECTION 18. SECTION 1102-C.3(8), (9) AND (18) OF THE ACT, <-- 9 AMENDED OR ADDED JULY 2, 1986 (P.L.318, NO.77) AND JULY 1, 1989 10 (P.L.95, NO.21), ARE AMENDED AND THE SECTION IS AMENDED BY 11 ADDING CLAUSES TO READ: 12 Section 1102-C.3. Excluded Transactions.--The tax imposed by 13 section 1102-C shall not be imposed upon: 14 * * * 15 (8) A transfer for no or nominal actual consideration to a 16 trustee of an ordinary trust where the transfer of the same 17 property would be exempt if the transfer was made directly from 18 the grantor to all of the possible beneficiaries that are 19 entitled to receive the property or proceeds from the sale of 20 the property under the trust, whether or not such beneficiaries 21 are contingent or specifically named. A trust clause which 22 identifies the contingent beneficiaries by reference to the 23 heirs of the trust settlor as determined by the laws of the 24 intestate succession shall not disqualify a transfer from the 25 exclusion provided by this clause. No such exemption shall be 26 granted unless the recorder of deeds is presented with a copy of 27 the trust instrument that clearly identifies the grantor and all 28 possible beneficiaries. 29 (8.1) A transfer for no or nominal actual consideration to a 30 trustee of a living trust from the settlor of the living trust. 19970H0134B1706 - 64 -
1 No such exemption shall be granted unless the recorder of deed 2 is presented with a copy of the living trust instrument. 3 (9) A transfer for no or nominal actual consideration from a 4 trustee [to a beneficiary of an ordinary trust.] of an ordinary 5 trust to a specifically named beneficiary that is entitled to 6 receive the property under the recorded trust instrument or to a 7 contingent beneficiary where the transfer of the same property 8 would be exempt if the transfer was made by the grantor of the 9 property into the trust to that beneficiary. However, any 10 transfer of real estate from a living trust during the settlor's 11 lifetime shall be considered for the purposes of this article as 12 if such transfer were made directly from the settlor to the 13 grantee. 14 (9.1) A transfer for no or nominal actual consideration from 15 a trustee of a living trust after the death of the settlor of 16 the trust or from a trustee of a trust created pursuant to the 17 will of a decedent to a beneficiary to whom the property is 18 devised or bequeathed. 19 (9.2) A transfer for no or nominal actual consideration from 20 the trustee of a living trust to the settlor of the living trust 21 if such property was originally conveyed to the trustee by the 22 settlor. 23 * * * 24 (18) A TRANSFER TO A CONSERVANCY WHICH POSSESSES A TAX- <-- 25 EXEMPT STATUS PURSUANT TO SECTION 501(C)(3) OF THE INTERNAL 26 REVENUE CODE OF 1954 (68A STAT. 3, 26 U.S.C. § 501(C)(3)) AND 27 WHICH HAS AS ITS PRIMARY PURPOSE PRESERVATION OF LAND FOR 28 HISTORIC, RECREATIONAL, SCENIC, AGRICULTURAL OR OPEN-SPACE 29 OPPORTUNITIES[,]; OR A TRANSFER FROM SUCH A CONSERVANCY TO THE 30 UNITED STATES, THE COMMONWEALTH OR TO ANY OF THEIR 19970H0134B1706 - 65 -
1 INSTRUMENTALITIES, AGENCIES OR POLITICAL SUBDIVISIONS[.]; OR ANY 2 TRANSFER FROM SUCH A CONSERVANCY WHERE THE REAL ESTATE IS 3 ENCUMBERED BY A PERPETUAL AGRICULTURAL CONSERVATION EASEMENT AS 4 DEFINED BY THE ACT OF JUNE 30, 1981 (P.L.128, NO.43), KNOWN AS 5 THE "AGRICULTURAL AREA SECURITY LAW," AND SUCH CONSERVANCY HAS 6 OWNED THE REAL ESTATE FOR AT LEAST TWO YEARS IMMEDIATELY PRIOR 7 TO THE TRANSFER. 8 * * * 9 SECTION 19. SECTION 1113-C OF THE ACT, ADDED JULY 2, 1986 10 (P.L.318, NO.77), IS AMENDED TO READ: 11 SECTION 1113-C. REFUNDS.--(A) WHENEVER THE AMOUNT DUE UPON 12 DETERMINATION, REDETERMINATION OR REVIEW IS LESS THAN THE AMOUNT 13 PAID TO THE DEPARTMENT ON ACCOUNT THEREOF, THE DEPARTMENT SHALL 14 ENTER A CREDIT IN THE AMOUNT OF SUCH DIFFERENCE TO THE ACCOUNT 15 OF THE PERSON WHO PAID THE TAX. 16 (B) WHERE THERE HAS BEEN NO DETERMINATION OF UNPAID TAX, THE 17 DEPARTMENT SHALL HAVE THE POWER, AND ITS DUTY SHALL BE, TO HEAR 18 AND DECIDE ANY APPLICATION FOR REFUND AND, UPON THE ALLOWANCE OF 19 SUCH APPLICATION, TO ENTER A CREDIT IN THE AMOUNT OF THE 20 OVERPAYMENT TO THE ACCOUNT OF THE PERSON WHO PAID THE TAX. SUCH 21 APPLICATION MUST BE FILED [WITHIN TWO YEARS AFTER THE DATE OF 22 PAYMENT] UNDER SECTION 3003.1. 23 SECTION 20. SECTION 1253 OF THE ACT, ADDED DECEMBER 21, 1981 24 (P.L.482, NO.141), IS AMENDED TO READ: 25 SECTION 1253. LIMITATIONS.--CLAIMS FOR REFUND OR ALLOWANCE 26 OF TAX IMPOSED BY THIS ARTICLE SHALL BE FILED [WITHIN ONE YEAR 27 FROM THE DATE OF PAYMENT OF THE TAX OR FROM THE DATE OF THE 28 OCCURRENCE GIVING RISE TO THE REFUND OR ALLOWANCE] UNDER SECTION 29 3003.1 AND SHALL BE IN SUCH FORM AND CONTAIN SUCH INFORMATION AS 30 THE DEPARTMENT SHALL, BY REGULATION, PRESCRIBE. 19970H0134B1706 - 66 -
1 SECTION 9 21. SECTION 1296 OF THE ACT, AMENDED AUGUST 4, <-- 2 1991 (P.L.97, NO.22), IS AMENDED TO READ: 3 SECTION 1296. DISPOSITION OF CERTAIN FUNDS.--ALL CIGARETTE 4 TAX REVENUES COLLECTED BY THE DEPARTMENT OF REVENUE UNDER THIS 5 ARTICLE AND HERETOFORE PAID INTO THE PARENT REIMBURSEMENT FUND 6 IN ACCORDANCE WITH THE ACT OF AUGUST 27, 1971 (P.L.358, NO.92), 7 KNOWN AS THE "PARENT REIMBURSEMENT ACT FOR NONPUBLIC EDUCATION," 8 SHALL BE TRANSFERRED INTO THE GENERAL FUND. BEGINNING JULY 1, 9 1993, TWO THIRTY-FIRSTS OF CIGARETTE TAX RECEIPTS SHALL BE 10 TRANSFERRED INTO THE AGRICULTURAL CONSERVATION EASEMENT PURCHASE 11 FUND, AND BEGINNING [JULY 1, 1992, TWO THIRTY-FIRSTS] JANUARY 1, 12 1997, THREE THIRTY-FIRSTS OF CIGARETTE TAX RECEIPTS SHALL BE 13 PAID INTO A RESTRICTED ACCOUNT TO BE KNOWN AS THE CHILDREN'S 14 HEALTH FUND FOR HEALTH CARE FOR INDIGENT CHILDREN, AND THE 15 REMAINDER SHALL BE PAID INTO THE GENERAL FUND. MONEYS IN THE 16 CHILDREN'S HEALTH FUND SHALL NOT BE EXPENDED UNTIL THE ENACTMENT 17 OF LEGISLATION TO IMPLEMENT A PROGRAM OF EXPANDED ACCESS TO 18 HEALTH CARE FOR CHILDREN. THE TRANSFERS REQUIRED BY THIS SECTION 19 SHALL BE MADE BY JULY 15 FOR THE PRECEDING SIX MONTHS AND BY 20 JANUARY 15 FOR THE PRECEDING SIX MONTHS. 21 SECTION 10. THE DEFINITION OF "BUSINESS FIRM" IN SECTION <-- 22 1902-A OF THE ACT, AMENDED JULY 1, 1994 (P.L.413, NO.67), IS 23 AMENDED TO READ: 24 SECTION 1902-A. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 25 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS 26 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 27 CLEARLY INDICATES A DIFFERENT MEANING: 28 "BUSINESS FIRM." ANY BUSINESS ENTITY AUTHORIZED TO DO 29 BUSINESS IN THIS COMMONWEALTH AND SUBJECT TO TAXES IMPOSED BY 30 ARTICLE IV, VI, VII, VII-A, VIII, VIII-A, IX, X OR XV OF THIS 19970H0134B1706 - 67 -
1 ACT. THE TERM ALSO INCLUDES BUSINESSES OPERATING AS S 2 CORPORATIONS, SOLE PROPRIETORSHIPS OR PARTNERSHIPS WHICH ARE 3 SUBJECT TO TAXES IMPOSED UNDER ARTICLE III OF THIS ACT. 4 * * * 5 SECTION 22. THE HEADING OF ARTICLE XVI-A OF THE ACT IS <-- 6 AMENDED TO READ: 7 ARTICLE XVI-A 8 [PASSENGER CAR] VEHICLE RENTAL TAX 9 SECTION 23. SECTIONS 1601-A, 1602-A, 1603-A AND 1604-A OF 10 THE ACT, ADDED JUNE 16, 1994 (P.L.279, NO.48), ARE AMENDED TO 11 READ: 12 SECTION 1601-A. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 13 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS 14 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 15 CLEARLY INDICATES A DIFFERENT MEANING: 16 "[MOTOR] RENTAL VEHICLE." A PRIVATE PASSENGER MOTOR VEHICLE 17 DESIGNED TO TRANSPORT FIFTEEN OR FEWER PASSENGERS OR A TRUCK, 18 TRAILER OR SEMITRAILER USED IN THE TRANSPORTATION OF PROPERTY 19 OTHER THAN COMMERCIAL FREIGHT, THAT IS RENTED WITHOUT A DRIVER 20 AND IS PART OF A FLEET OF FIVE OR MORE [PASSENGER] RENTAL 21 VEHICLES USED FOR THAT PURPOSE, OWNED OR LEASED BY THE SAME 22 PERSON OR ENTITY. 23 "VEHICLE RENTAL COMPANY." ANY BUSINESS ENTITY ENGAGED IN THE 24 BUSINESS OF RENTING MOTOR VEHICLES IN THIS COMMONWEALTH. 25 SECTION 1602-A. [PASSENGER CAR] VEHICLE RENTAL TAX.--(A) 26 EACH VEHICLE RENTAL COMPANY SHALL COLLECT, AT THE TIME THE 27 [MOTOR] RENTAL VEHICLE IS RENTED IN THIS COMMONWEALTH, ON EACH 28 RENTAL CONTRACT FOR A PERIOD OF TWENTY-NINE OR FEWER CONSECUTIVE 29 DAYS, A TAX EQUAL TO TWO PER CENT OF THE PURCHASE PRICE OF THE 30 RENTAL. 19970H0134B1706 - 68 -
1 SECTION 1603-A. REPORTING AND REMITTANCE OF TAX.--(A) THE 2 TAX SHALL BE REPORTED AND REMITTED IN THE SAME MANNER AS THE TAX 3 IMPOSED BY ARTICLE XXIII OF THIS ACT, EXCEPT THAT, NO LATER THAN 4 FEBRUARY 15 OF EACH CALENDAR YEAR, EACH VEHICLE RENTAL COMPANY 5 SHALL FILE A REPORT WITH THE DEPARTMENT OF REVENUE ON A FORM 6 PRESCRIBED BY THE DEPARTMENT. THE REPORT SHALL INCLUDE THE 7 AMOUNT OF TAX REMITTED DURING THE PREVIOUS CALENDAR YEAR AND THE 8 TOTAL AMOUNT OF [MOTOR] RENTAL VEHICLE LICENSING AND TITLE FEES 9 IMPOSED BY THE COMMONWEALTH UNDER 75 PA.C.S. (RELATING TO 10 VEHICLES) ON THE VEHICLE RENTAL COMPANY'S [MOTOR] RENTAL 11 VEHICLES AND PAID TO THE COMMONWEALTH BY THE VEHICLE RENTAL 12 COMPANY IN THE PREVIOUS CALENDAR YEAR. 13 (B) WHEN RECONCILING THE REPORTS AND REMITTANCES FILED 14 DURING THE PREVIOUS CALENDAR YEAR WITH THE ANNUAL REPORT, THE 15 DEPARTMENT SHALL ALLOW AGAINST THE TAX IMPOSED BY SUBSECTION (A) 16 A CREDIT EQUAL TO THE TOTAL AMOUNT OF LICENSING AND TITLE FEES 17 IMPOSED BY THE COMMONWEALTH UNDER 75 PA.C.S. ON THE VEHICLE 18 RENTAL COMPANY'S [MOTOR] RENTAL VEHICLES AND PAID TO THE 19 COMMONWEALTH BY THE VEHICLE RENTAL COMPANY IN THE PREVIOUS 20 CALENDAR YEAR. THE DEPARTMENT SHALL REFUND TO THE TAXPAYER THE 21 CREDIT VERIFIED FROM THE ANNUAL REPORT. THE AMOUNT OF SUCH 22 VERIFIED CREDIT SHALL NOT EXCEED THE AMOUNT OF TAX COLLECTED AND 23 REMITTED BY THE TAXPAYER FOR THE CALENDAR YEAR FOR WHICH THE 24 CLAIM IS MADE. IF THE AMOUNT OF THE TAX COLLECTED EXCEEDS THE 25 AMOUNT OF LICENSING FEES AND TITLE FEES PAID THE COMMONWEALTH, 26 THE EXCESS COLLECTION SHALL BE DEPOSITED BY THE DEPARTMENT INTO 27 THE GENERAL FUND. 28 (C) UNLESS OTHERWISE NOTED, THE PROVISIONS OF ARTICLE II OF 29 THIS ACT SHALL APPLY TO THE TAX REQUIRED UNDER THIS ARTICLE. 30 SECTION 1604-A. APPLICATION.--THIS ARTICLE SHALL APPLY TO 19970H0134B1706 - 69 -
1 ALL RENTAL CONTRACTS ENTERED INTO ON OR AFTER JULY 1, [1994] 2 1997. 3 SECTION 24. THE ACT IS AMENDED BY ADDING AN ARTICLE TO READ: 4 ARTICLE XVII-B 5 RESEARCH AND DEVELOPMENT TAX CREDIT 6 SECTION 1701-B. SHORT TITLE.--THIS ARTICLE SHALL BE KNOWN 7 AND MAY BE CITED AS THE RESEARCH AND DEVELOPMENT TAX CREDIT LAW. 8 SECTION 1702-B. DEFINITIONS.--THE FOLLOWING WORDS AND 9 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS 10 GIVEN TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT CLEARLY 11 INDICATES A DIFFERENT MEANING: 12 "DEPARTMENT." THE DEPARTMENT OF REVENUE OF THE COMMONWEALTH. 13 "GROSS RECEIPTS." GROSS RECEIPTS FOR ANY TAXABLE YEAR SHALL 14 CONSIST ONLY OF GROSS RECEIPTS WHICH ARE EFFECTIVELY CONNECTED 15 WITH THE CONDUCT OF A TRADE OR BUSINESS WITHIN THIS 16 COMMONWEALTH. THE DETERMINATION OF WHETHER GROSS RECEIPTS ARE 17 EFFECTIVELY CONNECTED WITH THE CONDUCT OF A TRADE OR BUSINESS 18 WITHIN THIS COMMONWEALTH SHALL BE MADE BY REFERENCE TO THE 19 STANDARD ESTABLISHED IN SECTION 401(3)2.(A)(16) AND (17) OF THIS 20 ACT. 21 "INTERNAL REVENUE CODE." THE INTERNAL REVENUE CODE OF 1986 22 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.). 23 "PENNSYLVANIA BASE AMOUNT." BASE AMOUNT AS DEFINED IN 24 SECTION 41(C) OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 25 99-514, 26 U.S.C. § 41(C)), EXCEPT THAT REFERENCES TO "QUALIFIED 26 RESEARCH EXPENSE" SHALL MEAN "PENNSYLVANIA QUALIFIED RESEARCH 27 AND DEVELOPMENT EXPENSE" AND REFERENCES TO "QUALIFIED RESEARCH" 28 SHALL MEAN "PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT." 29 REFERENCES TO "FIXED BASE PERCENTAGE" SHALL MEAN THE PERCENTAGE 30 WHICH THE PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT 19970H0134B1706 - 70 -
1 EXPENSE FOR THE FOUR TAXABLE YEARS IMMEDIATELY PRECEDING THE 2 TAXABLE YEAR IN WHICH THE EXPENSE IS INCURRED IS TO THE GROSS 3 RECEIPTS FOR SUCH YEARS. THE FIXED BASE PERCENTAGE FOR A 4 TAXPAYER WHO HAS FEWER THAN FOUR BUT AT LEAST ONE TAXABLE YEAR 5 SHALL BE DETERMINED IN THE SAME MANNER USING THE NUMBER OF 6 IMMEDIATELY PRECEDING TAXABLE YEARS TO ARRIVE AT THE PERCENTAGE. 7 "PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT." QUALIFIED 8 RESEARCH AND DEVELOPMENT AS DEFINED IN SECTION 41(D) OF THE 9 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 10 41(D)), THAT IS CONDUCTED IN THIS COMMONWEALTH. 11 "PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE." 12 QUALIFIED RESEARCH EXPENSE AS DEFINED IN SECTION 41(B) OF THE 13 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.C.S. § 14 41(B)) INCURRED FOR PENNSYLVANIA QUALIFIED RESEARCH AND 15 DEVELOPMENT. 16 "QUALIFIED TAX LIABILITY." THE LIABILITY FOR TAXES IMPOSED 17 UNDER ARTICLE III, IV OR VI OF THIS ACT. THE TERM SHALL INCLUDE 18 THE LIABILITY FOR TAXES IMPOSED UNDER ARTICLE III ON A 19 SHAREHOLDER OF A PENNSYLVANIA S CORPORATION. 20 "RESEARCH AND DEVELOPMENT TAX CREDIT." THE CREDIT PROVIDED 21 UNDER THIS ARTICLE. 22 "SECRETARY." THE SECRETARY OF REVENUE OF THE COMMONWEALTH. 23 "SMALL BUSINESS." A FOR-PROFIT CORPORATION, LIMITED 24 LIABILITY COMPANY, PARTNERSHIP OR PROPRIETORSHIP WITH NET BOOK 25 VALUE OF ASSETS TOTALING, AT THE BEGINNING OR END OF THE TAXABLE 26 YEAR FOR WHICH PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT 27 EXPENSE IS INCURRED, AS REPORTED ON THE BALANCE SHEET, LESS THAN 28 FIVE MILLION DOLLARS ($5,000,000). 29 "TAXPAYER." AN ENTITY SUBJECT TO TAX UNDER ARTICLE III, IV 30 OR VI OF THIS ACT. THE TERM SHALL INCLUDE THE SHAREHOLDER OF A 19970H0134B1706 - 71 -
1 PENNSYLVANIA S CORPORATION THAT RECEIVES A RESEARCH AND 2 DEVELOPMENT TAX CREDIT. 3 SECTION 1703-B. CREDIT FOR RESEARCH AND DEVELOPMENT 4 EXPENSES.--(A) A TAXPAYER WHO INCURS PENNSYLVANIA QUALIFIED 5 RESEARCH AND DEVELOPMENT EXPENSE IN A TAXABLE YEAR MAY APPLY FOR 6 A RESEARCH AND DEVELOPMENT TAX CREDIT AS PROVIDED IN THIS 7 ARTICLE. BY SEPTEMBER 15, A TAXPAYER MUST SUBMIT AN APPLICATION 8 TO THE DEPARTMENT FOR PENNSYLVANIA QUALIFIED RESEARCH AND 9 DEVELOPMENT EXPENSE INCURRED IN THE TAXABLE YEAR THAT ENDED IN 10 THE PRIOR CALENDAR YEAR. 11 (B) A TAXPAYER THAT IS QUALIFIED UNDER SUBSECTION (A) SHALL 12 RECEIVE A RESEARCH AND DEVELOPMENT TAX CREDIT FOR THE TAXABLE 13 YEAR IN THE AMOUNT OF TEN PER CENT OF THE EXCESS OF THE 14 TAXPAYER'S TOTAL PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT 15 EXPENSE FOR THE TAXABLE YEAR OVER THE TAXPAYER'S PENNSYLVANIA 16 BASE AMOUNT. 17 (C) BY DECEMBER 15 OF THE CALENDAR YEAR FOLLOWING THE CLOSE 18 OF THE TAXABLE YEAR DURING WHICH THE PENNSYLVANIA QUALIFIED 19 RESEARCH AND DEVELOPMENT EXPENSE WAS INCURRED, THE DEPARTMENT 20 SHALL NOTIFY THE TAXPAYER OF THE AMOUNT OF THE TAXPAYER'S 21 RESEARCH AND DEVELOPMENT TAX CREDIT APPROVED BY THE DEPARTMENT. 22 SECTION 1704-B. CARRYOVER, CARRYBACK, REFUND AND ASSIGNMENT 23 OF CREDIT.--(A) THE AMOUNT OF THE RESEARCH AND DEVELOPMENT TAX 24 CREDIT THAT A TAXPAYER MAY USE AGAINST ANY ONE QUALIFIED TAX 25 LIABILITY DURING ANY YEAR MAY NOT EXCEED FIFTY PER CENT OF SUCH 26 QUALIFIED TAX LIABILITY FOR THAT TAXABLE YEAR. IF THE TAXPAYER 27 CANNOT USE THE ENTIRE AMOUNT OF THE RESEARCH AND DEVELOPMENT TAX 28 CREDIT FOR THE TAXABLE YEAR IN WHICH THE RESEARCH AND 29 DEVELOPMENT TAX CREDIT IS FIRST APPROVED, THEN THE EXCESS MAY BE 30 CARRIED OVER TO SUCCEEDING TAXABLE YEARS AND USED AS A CREDIT 19970H0134B1706 - 72 -
1 AGAINST THE QUALIFIED TAX LIABILITY OF THE TAXPAYER FOR THOSE 2 TAXABLE YEARS. EACH TIME THAT THE RESEARCH AND DEVELOPMENT TAX 3 CREDIT IS CARRIED OVER TO A SUCCEEDING TAXABLE YEAR, IT IS TO BE 4 REDUCED BY THE AMOUNT THAT WAS USED AS A CREDIT DURING THE 5 IMMEDIATELY PRECEDING TAXABLE YEAR. THE RESEARCH AND DEVELOPMENT 6 TAX CREDIT PROVIDED BY THIS ARTICLE MAY BE CARRIED OVER AND 7 APPLIED TO SUCCEEDING TAXABLE YEARS FOR NO MORE THAN FIFTEEN 8 TAXABLE YEARS FOLLOWING THE FIRST TAXABLE YEAR FOR WHICH THE 9 TAXPAYER WAS ENTITLED TO CLAIM THE CREDIT. 10 (B) A RESEARCH AND DEVELOPMENT TAX CREDIT APPROVED BY THE 11 DEPARTMENT FOR PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT 12 EXPENSE IN A TAXABLE YEAR FIRST SHALL BE APPLIED AGAINST THE 13 TAXPAYER'S QUALIFIED TAX LIABILITY FOR THE CURRENT TAXABLE YEAR 14 AS OF THE DATE ON WHICH THE CREDIT WAS APPROVED BEFORE THE 15 RESEARCH AND DEVELOPMENT TAX CREDIT IS APPLIED AGAINST ANY TAX 16 LIABILITY UNDER SUBSECTION (A). 17 (C) A TAXPAYER IS NOT ENTITLED TO CARRYBACK, OBTAIN A REFUND 18 OF, OR ASSIGN AN UNUSED RESEARCH AND DEVELOPMENT TAX CREDIT. 19 SECTION 1705-B. APPLICATION OF INTERNAL REVENUE CODE.--THE 20 PROVISIONS OF SECTION 41 OF THE INTERNAL REVENUE CODE AND THE 21 REGULATIONS PROMULGATED REGARDING THOSE PROVISIONS SHALL APPLY 22 TO THE DEPARTMENT'S INTERPRETATION AND ADMINISTRATION OF THE 23 CREDIT PROVIDED BY THIS ARTICLE. REFERENCES TO THE INTERNAL 24 REVENUE CODE SHALL MEAN THE SECTIONS OF THE INTERNAL REVENUE 25 CODE AS EXISTING ON ANY DATE OF INTERPRETATION OF THIS ARTICLE. 26 HOWEVER, IF THOSE SECTIONS OF THE INTERNAL REVENUE CODE 27 REFERENCED IN THIS ARTICLE ARE REPEALED OR TERMINATED, 28 REFERENCES TO THE INTERNAL REVENUE CODE SHALL MEAN THOSE 29 SECTIONS LAST HAVING FULL FORCE AND EFFECT. IF, AFTER REPEAL OR 30 TERMINATION, THE INTERNAL REVENUE CODE SECTIONS ARE REVISED OR 19970H0134B1706 - 73 -
1 REENACTED, REFERENCES HEREIN TO INTERNAL REVENUE CODE SECTIONS 2 SHALL MEAN THOSE REVISED OR REENACTED SECTIONS. 3 SECTION 1706-B. DETERMINATION OF QUALIFIED RESEARCH AND 4 DEVELOPMENT EXPENSES.--IN PRESCRIBING STANDARDS FOR DETERMINING 5 WHICH QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE ARE CONSIDERED 6 PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE FOR 7 PURPOSES OF COMPUTING THE CREDIT PROVIDED BY THIS ARTICLE, THE 8 DEPARTMENT MAY CONSIDER: 9 (1) THE LOCATION WHERE THE SERVICES ARE PERFORMED. 10 (2) THE RESIDENCE OR BUSINESS LOCATION OF THE PERSON OR 11 PERSONS PERFORMING THE SERVICE. 12 (3) THE LOCATION WHERE QUALIFIED RESEARCH AND DEVELOPMENT 13 SUPPLIES ARE CONSUMED. 14 (4) OTHER FACTORS THAT THE DEPARTMENT DETERMINES ARE 15 RELEVANT FOR THE DETERMINATION. 16 SECTION 1707-B. TIME LIMITATIONS.--A TAXPAYER IS NOT 17 ENTITLED TO A RESEARCH AND DEVELOPMENT TAX CREDIT FOR 18 PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT EXPENSES 19 INCURRED IN TAXABLE YEARS ENDING AFTER DECEMBER 31, 2004. THE 20 TERMINATION DATE IN SECTION 41(H) OF THE INTERNAL REVENUE CODE 21 DOES NOT APPLY TO A TAXPAYER WHO IS ELIGIBLE FOR THE RESEARCH 22 AND DEVELOPMENT TAX CREDIT UNDER THIS ARTICLE FOR THE TAXABLE 23 YEAR IN WHICH THE PENNSYLVANIA QUALIFIED RESEARCH AND 24 DEVELOPMENT EXPENSE IS INCURRED. 25 SECTION 1708-B. TRANSITIONAL RULE.--FOR THE PURPOSE OF 26 CALCULATING PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT 27 EXPENSE USED IN CALCULATING THE PENNSYLVANIA BASE AMOUNT FOR 28 TAXABLE YEARS ENDING AFTER 1991 AND BEFORE 1997, IF THE TAXPAYER 29 HAS INCURRED QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE BOTH 30 INSIDE AND OUTSIDE THIS COMMONWEALTH AND IS UNABLE TO DETERMINE 19970H0134B1706 - 74 -
1 THE AMOUNT OF PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT 2 EXPENSE, THE TAXPAYER MAY CALCULATE PENNSYLVANIA QUALIFIED 3 RESEARCH AND DEVELOPMENT EXPENSE BY MULTIPLYING QUALIFIED 4 RESEARCH AND DEVELOPMENT EXPENSE EVERYWHERE BY THE AVERAGE OF 5 THE PAYROLL AND PROPERTY FACTORS CALCULATED IN ACCORDANCE WITH 6 ARTICLE IV OF THIS ACT FOR THE CORRESPONDING TAXABLE YEARS IN 7 QUESTION. 8 SECTION 1709-B. LIMITATION ON CREDITS.--(A) THE TOTAL 9 AMOUNT OF CREDITS APPROVED BY THE DEPARTMENT SHALL NOT EXCEED 10 FIFTEEN MILLION DOLLARS ($15,000,000) IN ANY FISCAL YEAR. OF 11 THAT AMOUNT, THREE MILLION DOLLARS ($3,000,000) SHALL BE 12 ALLOCATED EXCLUSIVELY FOR SMALL BUSINESSES. HOWEVER, IF THE 13 TOTAL AMOUNTS ALLOCATED TO EITHER THE GROUP OF APPLICANTS 14 EXCLUSIVE OF SMALL BUSINESSES OR THE GROUP OF SMALL BUSINESS 15 APPLICANTS IS NOT APPROVED IN ANY FISCAL YEAR, THE UNUSED 16 PORTION WILL BECOME AVAILABLE FOR USE BY THE OTHER GROUP OF 17 QUALIFYING TAXPAYERS. 18 (B) IF THE TOTAL AMOUNT OF RESEARCH AND DEVELOPMENT TAX 19 CREDITS APPLIED FOR BY ALL TAXPAYERS, EXCLUSIVE OF SMALL 20 BUSINESSES, EXCEEDS THE AMOUNT ALLOCATED FOR THOSE CREDITS, THEN 21 THE RESEARCH AND DEVELOPMENT TAX CREDIT TO BE RECEIVED BY EACH 22 APPLICANT SHALL BE THE PRODUCT OF THE ALLOCATED AMOUNT 23 MULTIPLIED BY THE QUOTIENT OF THE RESEARCH AND DEVELOPMENT TAX 24 CREDIT APPLIED FOR BY THE APPLICANT DIVIDED BY THE TOTAL OF ALL 25 RESEARCH AND DEVELOPMENT CREDITS APPLIED FOR BY ALL APPLICANTS, 26 THE ALGEBRAIC EQUIVALENT OF WHICH IS: 27 TAXPAYER'S RESEARCH AND DEVELOPMENT TAX CREDIT=AMOUNT 28 ALLOCATED FOR THOSE CREDITS X (RESEARCH AND DEVELOPMENT 29 TAX CREDIT APPLIED FOR BY THE APPLICANT/TOTAL OF ALL 30 RESEARCH AND DEVELOPMENT TAX CREDITS APPLIED FOR BY ALL 19970H0134B1706 - 75 -
1 APPLICANTS). 2 (C) IF THE TOTAL AMOUNT OF RESEARCH AND DEVELOPMENT TAX 3 CREDITS APPLIED FOR BY ALL SMALL BUSINESS TAXPAYERS EXCEEDS THE 4 AMOUNT ALLOCATED FOR THOSE CREDITS, THEN THE RESEARCH AND 5 DEVELOPMENT TAX CREDIT TO BE RECEIVED BY EACH SMALL BUSINESS 6 APPLICANT SHALL BE THE PRODUCT OF THE ALLOCATED AMOUNT 7 MULTIPLIED BY THE QUOTIENT OF THE RESEARCH AND DEVELOPMENT TAX 8 CREDIT APPLIED FOR BY THE SMALL BUSINESS APPLICANT DIVIDED BY 9 THE TOTAL OF ALL RESEARCH AND DEVELOPMENT CREDITS APPLIED FOR BY 10 ALL SMALL BUSINESS APPLICANTS, THE ALGEBRAIC EQUIVALENT OF WHICH 11 IS: 12 TAXPAYER'S RESEARCH AND DEVELOPMENT TAX CREDIT=AMOUNT 13 ALLOCATED FOR THOSE CREDITS X (RESEARCH AND DEVELOPMENT 14 TAX CREDIT APPLIED FOR BY THE SMALL BUSINESS/TOTAL OF ALL 15 RESEARCH AND DEVELOPMENT TAX CREDITS APPLIED FOR BY ALL 16 SMALL BUSINESS APPLICANTS). 17 SECTION 1710-B. PENNSYLVANIA S CORPORATION SHAREHOLDER PASS- 18 THROUGH.--(A) IF A PENNSYLVANIA S CORPORATION DOES NOT HAVE AN 19 ELIGIBLE TAX LIABILITY AGAINST WHICH THE RESEARCH AND 20 DEVELOPMENT TAX CREDIT MAY BE APPLIED, A SHAREHOLDER OF THE 21 PENNSYLVANIA S CORPORATION IS ENTITLED TO A RESEARCH AND 22 DEVELOPMENT TAX CREDIT EQUAL TO THE RESEARCH AND DEVELOPMENT TAX 23 CREDIT DETERMINED FOR THE PENNSYLVANIA S CORPORATION FOR THE 24 TAXABLE YEAR MULTIPLIED BY THE PERCENTAGE OF THE PENNSYLVANIA S 25 CORPORATION'S DISTRIBUTIVE INCOME TO WHICH THE SHAREHOLDER IS 26 ENTITLED. 27 (B) THE CREDIT PROVIDED UNDER SUBSECTION (A) IS IN ADDITION 28 TO ANY RESEARCH AND DEVELOPMENT TAX CREDIT TO WHICH A 29 SHAREHOLDER OF A PENNSYLVANIA S CORPORATION IS OTHERWISE 30 ENTITLED UNDER THIS ARTICLE. HOWEVER, A PENNSYLVANIA S 19970H0134B1706 - 76 -
1 CORPORATION AND A SHAREHOLDER OF A PENNSYLVANIA S CORPORATION 2 MAY NOT CLAIM A CREDIT UNDER THIS ARTICLE FOR THE SAME QUALIFIED 3 RESEARCH AND DEVELOPMENT EXPENSE. 4 SECTION 1711-B. REPORT TO GENERAL ASSEMBLY.--THE SECRETARY 5 SHALL SUBMIT AN ANNUAL REPORT TO THE GENERAL ASSEMBLY INDICATING 6 THE EFFECTIVENESS OF THE CREDIT PROVIDED BY THIS ARTICLE NO 7 LATER THAN MARCH 15, FOLLOWING THE YEAR IN WHICH THE CREDITS 8 WERE APPROVED. THE REPORT SHALL INCLUDE THE NUMBER OF TAXPAYERS 9 UTILIZING THE CREDIT AS OF THE DATE OF THE REPORT AND THE AMOUNT 10 OF CREDITS APPROVED AND UTILIZED. THE REPORT MAY ALSO INCLUDE 11 ANY RECOMMENDATIONS FOR CHANGES IN THE CALCULATION OR 12 ADMINISTRATION OF THE CREDIT. 13 SECTION 1712-B. TERMINATION.--THE DEPARTMENT SHALL NOT 14 APPROVE A RESEARCH AND DEVELOPMENT TAX CREDIT UNDER THIS ARTICLE 15 FOR TAXABLE YEARS ENDING AFTER DECEMBER 31, 2004. 16 SECTION 1713-B. REGULATIONS.--THE SECRETARY SHALL PROMULGATE 17 REGULATIONS NECESSARY FOR THE IMPLEMENTATION AND ADMINISTRATION 18 OF THIS ARTICLE. 19 SECTION 11 25. SECTION 1902-A OF THE ACT, AMENDED OR ADDED <-- 20 JUNE 16, 1994 (P.L.279, NO.48) AND JULY 1, 1994 (P.L.413, 21 NO.67), IS AMENDED TO READ: 22 SECTION 1902-A. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 23 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS 24 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 25 CLEARLY INDICATES A DIFFERENT MEANING: 26 "BUSINESS FIRM." ANY BUSINESS ENTITY AUTHORIZED TO DO 27 BUSINESS IN THIS COMMONWEALTH AND SUBJECT TO TAXES IMPOSED BY 28 ARTICLE III, IV, VI, VII, VII-A, VIII, VIII-A, IX, X OR XV OF <-- 29 THIS ACT. 30 "COMMUNITY SERVICES." ANY TYPE OF COUNSELING AND ADVICE, 19970H0134B1706 - 77 -
1 EMERGENCY ASSISTANCE, ENERGY ASSISTANCE OR MEDICAL CARE <-- 2 FURNISHED TO INDIVIDUALS OR GROUPS IN AN IMPOVERISHED AREA. THE <-- 3 TERM INCLUDES FOOD ASSISTANCE AND NUTRITION SERVICES OFFERED BY 4 ORGANIZATIONS SUCH AS FOOD BANKS. 5 "COMPREHENSIVE SERVICE PLAN." A STRATEGY DEVELOPED JOINTLY 6 BY A NEIGHBORHOOD ORGANIZATION AND A SPONSORING BUSINESS FIRM OR 7 PRIVATE COMPANY FOR THE STABILIZATION AND IMPROVEMENT OF AN 8 IMPOVERISHED AREA WITHIN AN URBAN NEIGHBORHOOD OR RURAL 9 COMMUNITY. 10 "COMPREHENSIVE SERVICE PROJECT." ANY ACTIVITY CONDUCTED 11 JOINTLY BY A NEIGHBORHOOD ORGANIZATION AND A SPONSORING BUSINESS 12 FIRM WHICH IMPLEMENTS A COMPREHENSIVE SERVICE PLAN. 13 "CRIME PREVENTION." ANY ACTIVITY WHICH AIDS IN THE REDUCTION 14 OF CRIME IN AN IMPOVERISHED AREA. 15 "EDUCATION." ANY TYPE OF SCHOLASTIC INSTRUCTION OR 16 SCHOLARSHIP ASSISTANCE TO AN INDIVIDUAL WHO RESIDES IN AN 17 IMPOVERISHED AREA THAT ENABLES [HIM TO PREPARE HIMSELF] THAT 18 INDIVIDUAL TO PREPARE FOR BETTER LIFE OPPORTUNITIES. 19 "ENTERPRISE ZONES." SPECIFIC LOCATIONS WITH IDENTIFIABLE 20 BOUNDARIES WITHIN IMPOVERISHED AREAS WHICH ARE DESIGNATED AS 21 ENTERPRISE ZONES BY THE [SECRETARY OF COMMUNITY AFFAIRS] 22 SECRETARY OF COMMUNITY AND ECONOMIC DEVELOPMENT. 23 "IMPOVERISHED AREA." ANY AREA IN THIS COMMONWEALTH WHICH IS 24 CERTIFIED AS SUCH BY THE [DEPARTMENT OF COMMUNITY AFFAIRS] 25 DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT AND THE 26 CERTIFICATION IS APPROVED BY THE GOVERNOR. SUCH CERTIFICATION 27 SHALL BE MADE ON THE BASIS OF FEDERAL CENSUS STUDIES AND CURRENT 28 INDICES OF SOCIAL AND ECONOMIC CONDITIONS. 29 "JOB TRAINING." ANY TYPE OF INSTRUCTION TO AN INDIVIDUAL WHO 30 RESIDES IN AN IMPOVERISHED AREA THAT ENABLES [HIM] THAT 19970H0134B1706 - 78 -
1 INDIVIDUAL TO ACQUIRE VOCATIONAL SKILLS SO THAT [HE] THE 2 INDIVIDUAL CAN BECOME EMPLOYABLE OR BE ABLE TO SEEK A HIGHER 3 GRADE OF EMPLOYMENT. 4 "NEIGHBORHOOD ASSISTANCE." FURNISHING FINANCIAL ASSISTANCE, 5 LABOR, MATERIAL AND TECHNICAL ADVICE TO AID IN THE PHYSICAL 6 IMPROVEMENT OF ANY PART OR ALL OF AN IMPOVERISHED AREA. 7 "NEIGHBORHOOD ORGANIZATION." ANY ORGANIZATION PERFORMING 8 COMMUNITY SERVICES, OFFERING NEIGHBORHOOD ASSISTANCE OR 9 PROVIDING JOB TRAINING, EDUCATION OR CRIME PREVENTION IN AN 10 IMPOVERISHED AREA, HOLDING A RULING FROM THE INTERNAL REVENUE 11 SERVICE OF THE UNITED STATES DEPARTMENT OF THE TREASURY THAT THE 12 ORGANIZATION IS EXEMPT FROM INCOME TAXATION UNDER THE PROVISIONS 13 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 14 U.S.C. § 1 ET SEQ.) AND APPROVED BY THE DEPARTMENT OF COMMUNITY 15 AFFAIRS. 16 "PRIVATE COMPANY." ANY AGRICULTURAL, INDUSTRIAL, 17 MANUFACTURING OR RESEARCH AND DEVELOPMENT ENTERPRISE AS DEFINED 18 IN SECTION 3 OF THE ACT OF MAY 17, 1956 (1955 P.L.1609, NO.537), 19 KNOWN AS THE "PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY 20 ACT," OR ANY COMMERCIAL ENTERPRISE AS DEFINED IN SECTION 3 OF 21 THE ACT OF AUGUST 23, 1967 (P.L.251, NO.102), KNOWN AS THE 22 "ECONOMIC DEVELOPMENT FINANCING LAW." 23 "QUALIFIED INVESTMENTS." ANY INVESTMENTS MADE BY A PRIVATE 24 COMPANY WHICH PROMOTE COMMUNITY ECONOMIC DEVELOPMENT PURSUANT TO 25 A PLAN WHICH HAS BEEN DEVELOPED IN COOPERATION WITH AND APPROVED 26 BY A NEIGHBORHOOD ORGANIZATION OPERATING PURSUANT TO A PLAN FOR 27 THE ADMINISTRATION OF TAX CREDITS APPROVED BY THE [DEPARTMENT OF 28 COMMUNITY AFFAIRS] DEPARTMENT OF COMMUNITY AND ECONOMIC 29 DEVELOPMENT. 30 "SECRETARY." THE SECRETARY OF COMMUNITY AND ECONOMIC 19970H0134B1706 - 79 -
1 DEVELOPMENT OF THE COMMONWEALTH. 2 SECTION 12 26. SECTIONS 1904-A AND 1905-A OF THE ACT, <-- 3 AMENDED JUNE 30, 1995 (P.L.139, NO.21), ARE AMENDED TO READ: 4 SECTION 1904-A. TAX CREDIT.--(A) ANY BUSINESS FIRM WHICH 5 ENGAGES OR CONTRIBUTES TO A NEIGHBORHOOD ORGANIZATION WHICH 6 ENGAGES IN THE ACTIVITIES OF PROVIDING NEIGHBORHOOD ASSISTANCE, 7 JOB TRAINING OR EDUCATION FOR INDIVIDUALS, COMMUNITY SERVICES OR 8 CRIME PREVENTION IN AN IMPOVERISHED AREA OR PRIVATE COMPANY 9 WHICH MAKES QUALIFIED INVESTMENT TO REHABILITATE, EXPAND OR 10 IMPROVE BUILDINGS OR LAND LOCATED WITHIN PORTIONS OF 11 IMPOVERISHED AREAS WHICH HAVE BEEN DESIGNATED AS ENTERPRISE 12 ZONES SHALL RECEIVE A TAX CREDIT AS PROVIDED IN SECTION 1905-A 13 IF THE [SECRETARY OF COMMUNITY AFFAIRS] SECRETARY ANNUALLY 14 APPROVES THE PROPOSAL OF SUCH BUSINESS FIRM OR PRIVATE COMPANY. 15 THE PROPOSAL SHALL SET FORTH THE PROGRAM TO BE CONDUCTED, THE 16 IMPOVERISHED AREA SELECTED, THE ESTIMATED AMOUNT TO BE INVESTED 17 IN THE PROGRAM AND THE PLANS FOR IMPLEMENTING THE PROGRAM. 18 (B) THE [SECRETARY OF COMMUNITY AFFAIRS] SECRETARY IS HEREBY 19 AUTHORIZED TO PROMULGATE RULES AND REGULATIONS FOR THE APPROVAL 20 OR DISAPPROVAL OF SUCH PROPOSALS BY BUSINESS FIRMS OR PRIVATE 21 COMPANIES AND PROVIDE A LISTING OF ALL APPLICATIONS RECEIVED AND 22 THEIR DISPOSITION IN EACH FISCAL YEAR TO THE GENERAL ASSEMBLY BY 23 OCTOBER 1 OF THE FOLLOWING FISCAL YEAR. 24 (C) THE TOTAL AMOUNT OF TAX CREDIT GRANTED FOR PROGRAMS 25 APPROVED UNDER THIS ACT SHALL NOT EXCEED [SIXTEEN MILLION SEVEN 26 HUNDRED FIFTY THOUSAND DOLLARS ($16,750,000)] TWENTY MILLION <-- 27 SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($20,750,000) EIGHTEEN <-- 28 MILLION DOLLARS ($18,000,000) OF TAX CREDIT IN ANY FISCAL YEAR, 29 SUBJECT TO THE FOLLOWING: 30 (1) [TWO MILLION DOLLARS ($2,000,000)] FIVE MILLION DOLLARS <-- 19970H0134B1706 - 80 -
1 ($5,000,000) THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS <-- 2 ($3,250,000) OF THE TOTAL AMOUNT OF TAX CREDIT SHALL BE 3 ALLOCATED FOR COMPREHENSIVE SERVICE PROJECTS, BUT THE [SECRETARY <-- 4 OF COMMUNITY AFFAIRS] SECRETARY MAY REALLOCATE ANY UNUSED <-- 5 PORTION OF THE [TWO MILLION DOLLARS ($2,000,000)] FIVE MILLION <-- 6 DOLLARS ($5,000,000) THREE MILLION TWO HUNDRED FIFTY THOUSAND <-- 7 DOLLARS ($3,250,000) FOR ANY OTHER PROGRAM AUTHORIZED BY THIS 8 ACT IF INSUFFICIENT APPLICATIONS ARE MADE FOR COMPREHENSIVE 9 SERVICE PROJECTS; AND 10 (2) [FOUR MILLION DOLLARS ($4,000,000)] SEVEN MILLION <-- 11 DOLLARS ($7,000,000) OF THE TOTAL AMOUNT OF TAX CREDIT SHALL BE 12 SET ASIDE EXCLUSIVELY FOR PRIVATE COMPANIES WHICH MAKE QUALIFIED 13 INVESTMENTS TO REHABILITATE, EXPAND OR IMPROVE BUILDINGS OR LAND 14 WHICH PROMOTE COMMUNITY ECONOMIC DEVELOPMENT AND WHICH OCCUR IN 15 PORTIONS OF IMPOVERISHED AREAS WHICH HAVE BEEN DESIGNATED AS 16 ENTERPRISE ZONES. 17 SECTION 1905-A. GRANT OF TAX CREDIT.--THE DEPARTMENT OF 18 REVENUE SHALL GRANT A TAX CREDIT AGAINST ANY TAX DUE UNDER 19 ARTICLE III, IV, VI, VII, VII-A, VIII, VIII-A, IX, X OR XV OF <-- 20 THIS ACT, OR ANY TAX SUBSTITUTED IN LIEU THEREOF IN AN AMOUNT 21 WHICH SHALL NOT EXCEED FIFTY PER CENT OF THE TOTAL AMOUNT 22 INVESTED DURING THE TAXABLE YEAR BY THE BUSINESS FIRM OR TWENTY 23 PER CENT OF QUALIFIED INVESTMENTS BY A PRIVATE COMPANY IN 24 PROGRAMS APPROVED PURSUANT TO SECTION 1904-A OF THIS ACT: 25 PROVIDED, THAT A TAX CREDIT OF UP TO SEVENTY PER CENT OF THE 26 TOTAL AMOUNT INVESTED DURING THE TAXABLE YEAR BY A BUSINESS FIRM 27 OR UP TO THIRTY PER CENT OF THE AMOUNT OF QUALIFIED INVESTMENTS 28 BY A PRIVATE COMPANY MAY BE ALLOWED FOR INVESTMENT IN PROGRAMS 29 WHERE ACTIVITIES FALL WITHIN THE SCOPE OF SPECIAL PROGRAM 30 PRIORITIES AS DEFINED WITH THE APPROVAL OF THE GOVERNOR IN 19970H0134B1706 - 81 -
1 REGULATIONS PROMULGATED BY THE [SECRETARY OF THE DEPARTMENT OF 2 COMMUNITY AFFAIRS] SECRETARY. REGULATIONS ESTABLISHING SPECIAL 3 PROGRAM PRIORITIES ARE TO BE PROMULGATED DURING THE FIRST MONTH 4 OF EACH FISCAL YEAR AND AT SUCH TIMES DURING THE YEAR AS THE 5 PUBLIC INTEREST DICTATES. SUCH CREDIT SHALL NOT EXCEED [TWO <-- 6 HUNDRED FIFTY THOUSAND DOLLARS ($250,000)] FIVE HUNDRED THOUSAND <-- 7 DOLLARS ($500,000) ANNUALLY, EXCEPT IN THE CASE OF COMPREHENSIVE 8 SERVICE PROJECTS WHICH SHALL BE ALLOWED AN ADDITIONAL CREDIT 9 EQUAL TO SEVENTY PER CENT OF THE QUALIFYING INVESTMENTS MADE IN 10 COMPREHENSIVE SERVICE PROJECTS; HOWEVER, SUCH ADDITIONAL CREDIT 11 SHALL NOT EXCEED [ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS <-- 12 ($175,000)] THREE HUNDRED FIFTY THOUSAND DOLLARS ($350,000) <-- 13 ANNUALLY. NO TAX CREDIT SHALL BE GRANTED TO ANY BANK, BANK AND 14 TRUST COMPANY, INSURANCE COMPANY, TRUST COMPANY, NATIONAL BANK, 15 SAVINGS ASSOCIATION, MUTUAL SAVINGS BANK OR BUILDING AND LOAN 16 ASSOCIATION FOR ACTIVITIES THAT ARE A PART OF ITS NORMAL COURSE 17 OF BUSINESS. ANY TAX CREDIT NOT USED IN THE PERIOD THE 18 INVESTMENT WAS MADE MAY BE CARRIED OVER FOR THE NEXT [FIVE] TEN <-- 19 SUCCEEDING CALENDAR OR FISCAL YEARS UNTIL THE FULL CREDIT HAS 20 BEEN ALLOWED. THE TOTAL AMOUNT OF ALL TAX CREDITS ALLOWED 21 PURSUANT TO THIS ACT SHALL NOT EXCEED [SIXTEEN MILLION SEVEN 22 HUNDRED FIFTY THOUSAND DOLLARS ($16,750,000)] TWENTY MILLION <-- 23 SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($20,750,000) EIGHTEEN <-- 24 MILLION DOLLARS ($18,000,000) IN ANY ONE FISCAL YEAR. 25 SECTION 13 27. SECTION 1906-A OF THE ACT, ADDED JUNE 16, <-- 26 1994 (P.L.279, NO.48), IS AMENDED TO READ: 27 SECTION 1906-A. DECISION IN WRITING.--THE DECISION OF THE 28 [SECRETARY OF COMMUNITY AFFAIRS] SECRETARY TO APPROVE OR 29 DISAPPROVE A PROPOSAL PURSUANT TO SECTION 1904-A OF THIS ACT 30 SHALL BE IN WRITING, AND, IF IT APPROVES THE PROPOSAL, IT SHALL 19970H0134B1706 - 82 -
1 STATE THE MAXIMUM CREDIT ALLOWABLE TO THE BUSINESS FIRM. A COPY 2 OF THE DECISION OF THE [SECRETARY OF COMMUNITY AFFAIRS] 3 SECRETARY SHALL BE TRANSMITTED TO THE GOVERNOR AND TO THE 4 SECRETARY OF REVENUE. 5 SECTION 14. SECTION 2116 OF THE ACT, AMENDED OR ADDED AUGUST <-- 6 4, 1991 (P.L.97, NO.22), JUNE 16, 1994 (P.L.279, NO.48) AND JUNE 7 30, 1995 (P.L.139, NO.21), IS AMENDED TO READ: 8 SECTION 2116. INHERITANCE TAX.--(A) (1) [INHERITANCE] 9 EXCEPT AS PROVIDED IN SUBSECTION (G), INHERITANCE TAX UPON THE 10 TRANSFER OF PROPERTY PASSING TO OR FOR THE USE OF ANY OF THE 11 FOLLOWING SHALL BE AT THE RATE OF SIX PER CENT: 12 (I) GRANDFATHER, GRANDMOTHER, FATHER, MOTHER AND LINEAL 13 DESCENDANTS; OR 14 (II) WIFE OR WIDOW AND HUSBAND OR WIDOWER OF A CHILD. 15 (1.1) [INHERITANCE] EXCEPT AS PROVIDED IN SUBSECTION (G), 16 INHERITANCE TAX UPON THE TRANSFER OF PROPERTY PASSING TO OR FOR 17 THE USE OF A HUSBAND OR WIFE SHALL BE: 18 (I) AT THE RATE OF THREE PER CENT FOR ESTATES OF DECEDENTS 19 DYING ON OR AFTER JULY 1, 1994, AND BEFORE JANUARY 1, 1995. 20 (II) AT THE RATE OF ZERO PER CENT FOR ESTATES OF DECEDENTS 21 DYING ON OR AFTER JANUARY 1, 1995. 22 (2) [INHERITANCE] EXCEPT AS PROVIDED IN SUBSECTION (G), 23 INHERITANCE TAX UPON THE TRANSFER OF PROPERTY PASSING TO OR FOR 24 THE USE OF ALL PERSONS OTHER THAN THOSE DESIGNATED IN SUBCLAUSE 25 (1) OR (1.1) OR EXEMPT UNDER SECTION 2111(M) SHALL BE AT THE 26 RATE OF FIFTEEN PER CENT. 27 (3) WHEN PROPERTY PASSES TO OR FOR THE USE OF A HUSBAND AND 28 WIFE WITH RIGHT OF SURVIVORSHIP, ONE OF WHOM IS TAXABLE AT A 29 RATE LOWER THAN THE OTHER, THE LOWER RATE OF TAX SHALL BE 30 APPLIED TO THE ENTIRE INTEREST. 19970H0134B1706 - 83 -
1 (B) (1) WHEN THE DECEDENT WAS A RESIDENT, THE TAX SHALL BE 2 COMPUTED UPON THE VALUE OF THE PROPERTY, IN EXCESS OF THE 3 DEDUCTIONS SPECIFIED IN PART VI, AT THE RATES IN EFFECT AT THE 4 TRANSFEROR'S DEATH. 5 (2) WHEN THE DECEDENT WAS A NONRESIDENT, THE TAX SHALL BE 6 COMPUTED UPON THE VALUE OF REAL PROPERTY AND TANGIBLE PERSONAL 7 PROPERTY HAVING ITS SITUS IN THIS COMMONWEALTH, IN EXCESS OF 8 UNPAID PROPERTY TAXES ASSESSED ON THE PROPERTY AND ANY 9 INDEBTEDNESS FOR WHICH IT IS LIENED, MORTGAGED OR PLEDGED, AT 10 THE RATES IN EFFECT AT THE TRANSFEROR'S DEATH. THE PERSON LIABLE 11 TO MAKE THE RETURN UNDER SECTION 2136 MAY ELECT TO HAVE THE TAX 12 COMPUTED AS IF THE DECEDENT WAS A RESIDENT AND HIS ENTIRE ESTATE 13 WAS PROPERTY HAVING ITS SITUS IN THIS COMMONWEALTH, AND THE TAX 14 DUE SHALL BE THE AMOUNT WHICH BEARS THE SAME RATIO TO THE TAX 15 THUS COMPUTED AS THE REAL PROPERTY AND TANGIBLE PERSONAL 16 PROPERTY LOCATED IN THIS COMMONWEALTH BEARS TO THE ENTIRE ESTATE 17 OF THE DECEDENT. 18 (B.1) THE INHERITANCE TAX DUE UPON THE TRANSFER OF PROPERTY 19 PASSING TO OR FOR THE USE OF A HUSBAND OR WIFE SHALL BE THE 20 LESSER OF THE TAX IMPOSED UNDER SUBSECTION (A)(1.1) OR THE TAX 21 DUE AFTER THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER SECTION 22 2112. 23 (C) WHEN ANY PERSON ENTITLED TO A DISTRIBUTIVE SHARE OF AN 24 ESTATE, WHETHER UNDER AN INTER VIVOS TRUST, A WILL OR THE 25 INTESTATE LAW, RENOUNCES HIS RIGHT TO RECEIVE THE DISTRIBUTIVE 26 SHARE RECEIVING THEREFOR NO CONSIDERATION, OR EXERCISES HIS 27 ELECTIVE RIGHTS UNDER 20 PA.C.S. CH. 22 (RELATING TO ELECTIVE 28 SHARE OF SURVIVING SPOUSE) RECEIVING THEREFOR NO CONSIDERATION 29 OTHER THAN THE INTEREST IN ASSETS PASSING TO HIM AS THE ELECTING 30 SPOUSE, THE TAX SHALL BE COMPUTED AS THOUGH THE PERSONS WHO 19970H0134B1706 - 84 -
1 BENEFIT BY SUCH RENUNCIATION OR ELECTION WERE ORIGINALLY 2 DESIGNATED TO BE THE DISTRIBUTEES, CONDITIONED UPON AN 3 ADJUDICATION OR DECREE OF DISTRIBUTION EXPRESSLY CONFIRMING 4 DISTRIBUTION TO SUCH DISTRIBUTEES. THE RENUNCIATION SHALL BE 5 MADE WITHIN NINE MONTHS AFTER THE DEATH OF THE DECEDENT OR, IN 6 THE CASE OF A SURVIVING SPOUSE, WITHIN THE TIME FOR ELECTION AND 7 ANY EXTENSION THEREOF UNDER 20 PA.C.S. § 2210(B) (RELATING TO 8 PROCEDURE FOR ELECTION; TIME LIMIT). NOTICE OF THE FILING OF THE 9 ACCOUNT AND OF ITS CALL FOR AUDIT OR CONFIRMATION SHALL INCLUDE 10 NOTICE OF THE RENUNCIATION OR ELECTION TO THE DEPARTMENT. WHEN 11 AN UNCONDITIONAL VESTING OF A FUTURE INTEREST DOES NOT OCCUR AT 12 THE DECEDENT'S DEATH, THE RENUNCIATION SPECIFIED IN THIS 13 SUBSECTION OF THE FUTURE INTEREST MAY BE MADE WITHIN THREE 14 MONTHS AFTER THE OCCURRENCE OF THE EVENT OR CONTINGENCY WHICH 15 RESOLVES THE VESTING OF THE INTEREST IN POSSESSION AND 16 ENJOYMENT. 17 (D) IN CASE OF A COMPROMISE OF A DISPUTE REGARDING RIGHTS 18 AND INTERESTS OF TRANSFEREES, MADE IN GOOD FAITH, THE TAX SHALL 19 BE COMPUTED AS THOUGH THE PERSONS SO RECEIVING DISTRIBUTION WERE 20 ORIGINALLY ENTITLED TO IT AS TRANSFEREES OF THE PROPERTY 21 RECEIVED IN THE COMPROMISE, CONDITIONED UPON AN ADJUDICATION OR 22 DECREE OF DISTRIBUTION EXPRESSLY CONFIRMING DISTRIBUTION TO SUCH 23 DISTRIBUTEES. NOTICE OF THE FILING OF THE ACCOUNT AND OF ITS 24 CALL FOR AUDIT OR CONFIRMATION SHALL INCLUDE NOTICE TO THE 25 DEPARTMENT. 26 (E) IF THE RATE OF TAX WHICH WILL BE APPLICABLE WHEN AN 27 INTEREST VESTS IN POSSESSION AND ENJOYMENT CANNOT BE ESTABLISHED 28 WITH CERTAINTY, THE DEPARTMENT, AFTER CONSIDERATION OF RELEVANT 29 ACTUARIAL FACTORS, VALUATIONS AND OTHER PERTINENT CIRCUMSTANCES, 30 MAY ENTER INTO AN AGREEMENT WITH THE PERSON RESPONSIBLE FOR 19970H0134B1706 - 85 -
1 PAYMENT TO ESTABLISH A SPECIFIED AMOUNT OF TAX WHICH, WHEN PAID 2 WITHIN SIXTY DAYS AFTER THE AGREEMENT, SHALL CONSTITUTE FULL 3 PAYMENT OF ALL TAX OTHERWISE DUE UPON SUCH TRANSFER. RIGHTS OF 4 WITHDRAWAL OF A SURVIVING SPOUSE NOT EXERCISED WITHIN NINE 5 MONTHS OF THE TRANSFEROR'S DEATH SHALL BE IGNORED IN MAKING SUCH 6 CALCULATIONS. 7 (F) PROPERTY SUBJECT TO A POWER OF APPOINTMENT, WHETHER OR 8 NOT THE POWER IS EXERCISED AND NOTWITHSTANDING ANY BLENDING OF 9 THE PROPERTY WITH THE PROPERTY OF THE DONEE, SHALL BE TAXED ONLY 10 AS PART OF THE ESTATE OF THE DONOR. 11 (G) THE FIRST ONE HUNDRED THOUSAND DOLLARS ($100,000) OF THE 12 TAXABLE VALUE OF PROPERTY SOLELY OWNED BY THE DECEDENT THAT IS 13 TRANSFERRED IS EXEMPT FROM THE TAX IMPOSED UNDER SUBSECTION 14 (A)(1), (1.1) OR (2). 15 Section 7 15. (a) The following acts and parts of acts are <-- 16 repealed: 17 Sections 2506 and 2507(a) of the act of April 9, 1929 18 (P.L.177, No.175), known as The Administrative Code of 1929. 19 Section 4 of the act of June 23, 1982 (P.L.597, No.170), 20 known as the Wild Resource Conservation Act. 21 20 Pa.C.S. § 8618. 22 (b) Section 12 of the act of June 23, 1982 (P.L.597, 23 No.170), known as the Wild Resource Conservation Act, is 24 repealed insofar as it is inconsistent with this act. 25 Section 8 16. This act shall apply as follows: <-- 26 (1) The following provisions shall apply to taxable 27 years beginning on or after January 1, 1997: 28 (i) The amendment of section 301 introductory 29 paragraph, (C.2), (E.1) and (s.2) of the act. <-- 30 (ii) The amendment of section 304(d)(1) 304(D) of <-- 19970H0134B1706 - 86 -
1 the act. 2 (iii) The addition of Part VI-A of Article III of 3 the act. 4 (IV) SECTION 7 OF THIS ACT. <-- 5 (IV) THE AMENDMENT OF THE DEFINITION OF "CAPITAL 6 STOCK VALUE" IN SECTION 601 OF THE ACT. 7 (V) SECTION 15 OF THIS ACT. 8 (2) The amendment of section 201(c) and (d) SECTIONS <-- 9 201(C), (D), (K)(8) AND (O)(4), 204, 1902-A, 1904-A, 1905-A 10 AND 1906-A of the act shall apply on and after July 1, 1997. 11 (3) THE AMENDMENT OF SECTION 301(D) OF THE ACT SHALL <-- 12 APPLY TO TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 1998. 13 (3) (4) The amendment of sections 1101-C and 1102-C.3 of <-- 14 the act shall apply to any document made, executed, 15 delivered, accepted or presented for recording after the 16 effective date of this act. 17 Section 9. This act shall take effect immediately. <-- 18 SECTION 17. THE AMENDMENT OF SECTIONS 1296, 1902-A AND 1905- <-- 19 A OF THE ACT SHALL BE RETROACTIVE TO JANUARY 1, 1997. 20 SECTION 18. THIS ACT SHALL TAKE EFFECT AS FOLLOWS: 21 (1) THE AMENDMENT OR ADDITION OF SECTIONS 201(B), (C), 22 (D), (F), (G), (K), (O) AND (JJ) AND 204(53) OF THE ACT SHALL 23 TAKE EFFECT JULY 1, 1997. 24 (2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT 25 IMMEDIATELY. 26 SECTION 28. SECTION 2009 OF THE ACT, ADDED DECEMBER 22, 1989 <-- 27 (P.L.775, NO.110), IS AMENDED TO READ: 28 SECTION 2009. REFUND OF TAX.--(A) IN CASE ANY MALT OR 29 BREWED BEVERAGES UPON WHICH THE TAX HAS BEEN PAID BY A 30 MANUFACTURER HAVE BEEN SOLD OR SHIPPED BY HIM TO A LICENSED OR 19970H0134B1706 - 87 -
1 REGULAR DEALER IN SUCH MALT OR BREWED BEVERAGES IN ANOTHER 2 STATE, SUCH MANUFACTURER IN THIS COMMONWEALTH SHALL BE ENTITLED 3 TO A REFUND OF THE ACTUAL AMOUNT OF TAX PAID BY HIM, UPON 4 CONDITION THAT THE SELLER IN THIS COMMONWEALTH SHALL MAKE 5 AFFIDAVIT THAT THE MALT OR BREWED BEVERAGES WERE SO SOLD AND 6 SHIPPED, AND THAT HE SHALL FURNISH FROM THE PURCHASER AN 7 AFFIDAVIT, OR IN CASES WHERE THE TOTAL PURCHASE PRICE IS FIVE 8 DOLLARS ($5) OR LESS, A WRITTEN CERTIFICATE IN LIEU OF AN 9 AFFIDAVIT FROM THE PURCHASER, OR, UPON SATISFACTORY PROOF THAT 10 SUCH AFFIDAVIT OR CERTIFICATE CANNOT BE OBTAINED, OTHER EVIDENCE 11 SATISFACTORY TO THE DEPARTMENT THAT HE HAS RECEIVED SUCH MALT OR 12 BREWED BEVERAGES FOR SALE OR CONSUMPTION OUTSIDE THIS 13 COMMONWEALTH, TOGETHER WITH THE NAME AND ADDRESS OF THE 14 PURCHASER. 15 (B) IN CASE ANY MALT OR BREWED BEVERAGES UPON WHICH THE TAX 16 HAS BEEN PAID BY A MANUFACTURER HAVE BEEN SOLD TO COMMISSARIES, 17 SHIP'S STORES OR VOLUNTARY UNINCORPORATED ORGANIZATIONS OF THE 18 ARMED FORCES PERSONNEL OPERATING UNDER REGULATIONS PROMULGATED 19 BY THE SECRETARY OF DEFENSE, SUCH MANUFACTURER SHALL BE ENTITLED 20 TO A REFUND OF THE ACTUAL AMOUNT OF TAX PAID BY HIM, UPON 21 CONDITION THAT HE SHALL MAKE AFFIDAVIT AND FURNISH PROOF THAT 22 THE MALT OR BREWED BEVERAGES WERE SO SOLD. 23 (C) IN CASE ANY MALT OR BREWED BEVERAGES UPON WHICH THE TAX 24 HAS BEEN PAID BY AN OUT-OF-STATE MANUFACTURER AND SUBSEQUENTLY 25 SOLD BY AN IMPORTING DISTRIBUTOR TO COMMISSARIES, SHIP'S STORES 26 OR VOLUNTARY UNINCORPORATED ORGANIZATIONS OF THE ARMED FORCES 27 PERSONNEL OPERATING UNDER REGULATIONS PROMULGATED BY THE 28 SECRETARY OF DEFENSE, SUCH MANUFACTURER SHALL BE ENTITLED TO A 29 REFUND OF THE ACTUAL AMOUNT OF TAX PAID BY HIM UPON CONDITION 30 THAT HE SHALL MAKE AFFIDAVIT AND FURNISH PROOF THAT THE MALT OR 19970H0134B1706 - 88 -
1 BREWED BEVERAGES WERE SO SOLD. 2 (D) IN CASE ANY MALT OR BREWED BEVERAGES UPON WHICH THE TAX 3 HAS BEEN PAID BY A MANUFACTURER SHALL BE RENDERED UNSALABLE BY 4 REASON OF DAMAGE OR DESTRUCTION, SUCH MANUFACTURER SHALL BE 5 ENTITLED TO A REFUND OF THE ACTUAL AMOUNT OF TAX PAID BY HIM, 6 UPON CONDITION THAT HE SHALL MAKE AFFIDAVIT AND FURNISH PROOF 7 SATISFACTORY TO THE DEPARTMENT THAT THE MALT BEVERAGES WERE SO 8 DAMAGED OR DESTROYED. 9 (E) IN CASE ANY MALT OR BREWED BEVERAGES UPON WHICH THE TAX 10 HAS BEEN PAID BY A MANUFACTURER HAVE BEEN SOLD AND DELIVERED TO 11 A PUBLIC SERVICE LICENSEE WHO IS OBLIGATED TO PAY THE TAX 12 THEREON, SUCH MANUFACTURER SHALL BE ENTITLED TO A REFUND OF THE 13 ACTUAL AMOUNT OF TAX PAID BY HIM, UPON CONDITION THAT HE SHALL 14 MAKE AFFIDAVIT AND FURNISH PROOF SATISFACTORY TO THE DEPARTMENT 15 OF SUCH FACTS. 16 (F) IN EACH OF THE ABOVE CASES THE DEPARTMENT SHALL[, WITH 17 THE APPROVAL OF THE BOARD OF FINANCE AND REVENUE,] PAY OR ISSUE 18 TO THE MANUFACTURER CREDITS OF SUFFICIENT VALUE TO COVER THE 19 REFUND. SUCH CREDITS MAY BE USED BY THE MANUFACTURER FOR THE 20 PAYMENT OF ANY TAXES DUE BY HIM TO THE COMMONWEALTH. THE 21 PROCEDURE FOR REFUND IN ANY CASE SHALL BE COMPLETED BY THE 22 [DEPARTMENT OF REVENUE AND THE BOARD OF FINANCE AND REVENUE] 23 DEPARTMENT WITHIN SIXTY DAYS AFTER THE PROPER AFFIDAVITS HAVE 24 BEEN FILED WITH THE DEPARTMENT UNDER SECTION 3003.1. 25 SECTION 29. SECTION 2181 OF THE ACT, ADDED AUGUST 4, 1991, 26 (P.L.97, NO.22), IS AMENDED TO READ: 27 SECTION 2181. REFUND OF TAX.--(A) A REFUND SHALL BE MADE OF 28 ANY TAX TO WHICH THE COMMONWEALTH IS NOT RIGHTFULLY OR EQUITABLY 29 ENTITLED PROVIDED THE COMMONWEALTH DETERMINES THE REFUND IS DUE 30 OR APPLICATION FOR REFUND IS MADE WITHIN THE APPROPRIATE TIME 19970H0134B1706 - 89 -
1 LIMIT AS SET FORTH IN SUBSECTION (D). 2 (B) INTEREST SHALL BE PAID ON REFUNDABLE TAX AT THE SAME 3 RATE AS THE INTEREST RATE ON DEFICIENCIES PROVIDED FOR IN 4 SECTION 2143. 5 (C) REFUND SHALL BE MADE IN CASH TO THE PARTY WHO PAID THE 6 TAX OR TO HIS ASSIGNEE OR AS DIRECTED BY THE COURT. 7 (D) APPLICATION FOR REFUND OF TAX SHALL BE MADE WITHIN [TWO] 8 THREE YEARS AFTER: 9 (1) THE COURT HAS RESCINDED ITS ORDER AND ADJUDICATION OF 10 PRESUMED DEATH WHEN THE REFUND IS CLAIMED FOR TAX PAID ON THE 11 TRANSFER OF THE ESTATE OF A PRESUMED DECEDENT WHO IS LATER 12 DETERMINED TO BE ALIVE; 13 (2) TERMINATION OF LITIGATION ESTABLISHING A RIGHT TO A 14 REFUND; NO APPLICATION FOR REFUND SHALL BE NECESSARY WHEN THE 15 LITIGATION HAS BEEN WITH THE COMMONWEALTH OVER LIABILITY FOR THE 16 TAX OR THE AMOUNT OF TAX DUE; 17 (3) IT HAS BEEN FINALLY DETERMINED THAT THE WHOLE OR ANY 18 PART OF AN ALLEGED DEFICIENCY TAX, ASSERTED BY THE FEDERAL 19 GOVERNMENT BEYOND THAT ADMITTED TO BE PAYABLE, AND IN 20 CONSEQUENCE OF WHICH AN ESTATE TAX WAS PAID UNDER SECTION 2117 21 WAS NOT PAYABLE; 22 (4) A FINAL JUDGMENT HOLDING THAT A PROVISION OF THIS 23 ARTICLE UNDER WHICH TAX HAS BEEN PAID IS UNCONSTITUTIONAL OR 24 THAT THE INTERPRETATION OF A PROVISION OF THIS ARTICLE UNDER 25 WHICH TAX HAS BEEN PAID WAS ERRONEOUS; OR 26 (5) THE DATE OF PAYMENT, OR THE DATE OF THE NOTICE OF THE 27 ASSESSMENT OF THE TAX, OR THE DATE THE TAX BECOMES DELINQUENT, 28 WHICHEVER OCCURS LATER, IN ALL OTHER CASES. 29 (E) AN APPLICATION FOR REFUND OF TAX SHALL BE MADE TO THE 30 [BOARD OF FINANCE AND REVENUE.] DEPARTMENT. 19970H0134B1706 - 90 -
1 (E.1) A PETITION TO REVIEW THE DECISION AND ORDER OF THE 2 DEPARTMENT ON A PETITION FOR REFUND MAY BE MADE TO THE BOARD OF 3 FINANCE AND REVENUE UNDER THIS ARTICLE. 4 (F) THE ACTION OF THE BOARD OF FINANCE AND REVENUE ON ALL 5 APPLICATIONS FOR REFUND OF TAX MAY BE APPEALED AS PROVIDED FOR 6 IN 42 PA.C.S. § 933 (RELATING TO APPEALS FROM GOVERNMENT 7 AGENCIES). 8 (G) AS MUCH OF THE MONEYS RECEIVED AS PAYMENT OF TAX UNDER 9 THIS ARTICLE AS SHALL BE NECESSARY FOR THE PAYMENT OF THE 10 REFUNDS PROVIDED FOR IN THIS ARTICLE WITH INTEREST IS 11 APPROPRIATED FOR THE PAYMENT OF SUCH REFUNDS. 12 SECTION 30. SECTION 3003 OF THE ACT, AMENDED DECEMBER 21, 13 1981 (P.L.482, NO.141), JUNE 29, 1984, (P.L.445, NO.94), JULY 1, 14 1985 (P.L.78, NO.29), JULY 2, 1986 (P.L.318, NO.77), JULY 13, 15 1987 (P.L.317, NO.58), OCTOBER 14, 1988 (P.L.737, NO.106) AND 16 JUNE 16, 1994 (P.L.279, NO.48), IS AMENDED TO READ: 17 [SECTION 3003. PREPAYMENT OF TAX.--(A) NOTWITHSTANDING THE 18 PROVISIONS OF THIS ACT, OR ANY OTHER STATE TAX LAW TO THE 19 CONTRARY, WHICH REQUIRED TAXPAYERS TO MAKE PAYMENT OF TENTATIVE 20 TAX, INCLUDING BUT NOT LIMITED TO THE CAPITAL STOCK AND 21 FRANCHISE TAX, CORPORATE NET INCOME AND CORPORATION INCOME TAX, 22 GROSS RECEIPTS TAX ON PUBLIC SERVICE COMPANIES, TRANSPORTATION 23 BY MOTOR VEHICLES AND TRACKLESS TROLLEYS, OTHER THAN MOTOR 24 VEHICLES FOR HIRE, INSURANCE PREMIUMS TAX, MUTUAL THRIFT 25 INSTITUTIONS TAX, NET EARNINGS TAX, OR OTHER SIMILAR TAX LAW 26 REQUIRING PAYMENT OF TENTATIVE TAX, BUT EXCLUDING THE PREPAYMENT 27 BY INSTITUTIONS UNDER ARTICLE VII AND TITLE INSURANCE COMPANIES 28 UNDER ARTICLE VIII, AND PUBLIC UTILITIES UNDER ARTICLE XI-A OF 29 THIS ACT, SUCH TAXPAYERS, COMMENCING WITH THE CALENDAR YEAR 1970 30 AND FISCAL YEARS BEGINNING DURING THE CALENDAR YEAR 1970 AND 19970H0134B1706 - 91 -
1 EACH TAXABLE YEAR THEREAFTER, ON OR BEFORE THE FIFTEENTH DAY OF 2 MARCH FOR CALENDAR YEAR TAXPAYERS, AND ON OR BEFORE THE 3 FIFTEENTH DAY OF THE THIRD MONTH AFTER THE CLOSE OF ITS PREVIOUS 4 FISCAL YEAR FOR FISCAL YEAR TAXPAYERS, SHALL REPORT ANNUALLY AND 5 PAY ON ACCOUNT OF THE TAX DUE FOR THE CURRENT YEAR, AN AMOUNT TO 6 BE COMPUTED BY APPLYING THE CURRENT TAX RATE TO NINETY PER CENT 7 OF SUCH TAX BASE FROM THE IMMEDIATE PRIOR YEAR AS MAY BE 8 APPLICABLE WITH RESPECT TO THE TAX BEING REPORTED. 9 (B) FOR THE TAXABLE YEARS COMMENCING WITH CALENDAR YEAR 1979 10 AND FOR EACH TAXABLE YEAR THEREAFTER, THE TENTATIVE TAX DUE FOR 11 THE CURRENT YEAR SHALL BE COMPUTED BY APPLYING THE CURRENT TAX 12 RATE TO NINETY PER CENT OF SUCH TAX BASE FROM THE YEAR PRECEDING 13 THE IMMEDIATE PRIOR YEAR AS MAY BE APPLICABLE WITH RESPECT TO 14 THE TAX BEING REPORTED; EXCEPT THAT WITH RESPECT TO THE 15 AFORESAID GROSS RECEIPTS TAX ON PUBLIC SERVICE COMPANIES, 16 TRANSPORTATION BY MOTOR VEHICLES AND TRACKLESS TROLLEYS, OTHER 17 THAN MOTOR VEHICLES FOR HIRE, AND THE AFORESAID INSURANCE 18 PREMIUMS TAX, SUCH AMOUNT SHALL CONTINUE TO BE COMPUTED BY 19 APPLYING THE CURRENT TAX RATE TO NINETY PER CENT OF THE TAX BASE 20 FROM THE IMMEDIATE PRIOR YEAR AS MAY BE APPLICABLE WITH RESPECT 21 TO THE TAX BEING REPORTED; EXCEPT THAT CORPORATIONS SHALL NOT BE 22 REQUIRED TO REPORT OR PAY TENTATIVE TAX WITH RESPECT TO THE 23 CORPORATE NET INCOME TAX ON ACCOUNT OF ANY TAXABLE YEAR 24 COMMENCING WITH CALENDAR YEAR 1986 AND EACH TAXABLE YEAR 25 THEREAFTER; EXCEPT THAT CORPORATIONS SHALL NOT BE REQUIRED TO 26 REPORT OR PAY TENTATIVE TAX WITH RESPECT TO THE CAPITAL STOCK 27 AND FRANCHISE TAX ON ACCOUNT OF ANY TAXABLE YEAR COMMENCING WITH 28 CALENDAR YEAR 1988 AND EACH TAXABLE YEAR THEREAFTER; EXCEPT THAT 29 THE TENTATIVE TAX WITH RESPECT TO THE MUTUAL THRIFT 30 INSTITUTION'S TAX FOR CALENDAR YEAR 1988 AND FISCAL YEARS 19970H0134B1706 - 92 -
1 BEGINNING IN 1988 SHALL BE COMPUTED BY APPLYING THE CURRENT TAX 2 RATE TO NINETY PER CENT OF THE TAX BASE FROM THE IMMEDIATE PRIOR 3 YEAR; AND EXCEPT THAT THE MUTUAL THRIFT INSTITUTION SHALL NOT BE 4 REQUIRED TO REPORT OR PAY TENTATIVE TAX WITH RESPECT TO THE 5 MUTUAL THRIFT INSTITUTION'S TAX ON ACCOUNT OF ANY TAXABLE YEAR 6 COMMENCING WITH TAX YEAR 1992 AND ANY TAXABLE YEAR THEREAFTER. 7 THE TAX IMPOSED ON SHARES OF INSTITUTIONS AND TITLE INSURANCE 8 COMPANIES AND THE TAX IMPOSED ON PUBLIC UTILITY REALTY SHALL BE 9 PAID IN THE MANNER AND WITHIN THE TIME PRESCRIBED BY ARTICLE 10 VII, ARTICLE VIII OR ARTICLE XI-A, AS THE CASE MAY BE, BUT 11 SUBJECT TO THE ADDITIONS AND INTEREST PROVIDED IN SUBSECTION (E) 12 OF THIS SECTION. 13 (B.1) NOTWITHSTANDING THE PROVISIONS OF SUBSECTIONS (A) AND 14 (B), THE TENTATIVE TAX DUE WITH RESPECT TO THE CAPITAL STOCK AND 15 FRANCHISE TAX FOR TAXABLE YEARS COMMENCING DURING CALENDAR YEAR 16 1986 SHALL BE COMPUTED BY APPLYING THE CURRENT TAX RATE TO 17 EIGHTY-FIVE PER CENT OF SUCH TAX BASE FROM THE YEAR PRECEDING 18 THE IMMEDIATE PRIOR YEAR. 19 (B.2) NOTWITHSTANDING THE PROVISIONS OF SUBSECTIONS (A), (B) 20 AND (B.1), THE TENTATIVE TAX DUE, WITH RESPECT TO THE CAPITAL 21 STOCK AND FRANCHISE TAX FOR TAXABLE YEARS COMMENCING DURING 22 CALENDAR YEAR 1987 SHALL BE COMPUTED BY APPLYING THE FOLLOWING 23 TAX RATES TO EIGHTY PER CENT OF SUCH TAX BASE FROM THE YEAR 24 PRECEDING THE IMMEDIATE PRIOR YEAR: 25 (1) ANY PAYMENT OF TENTATIVE TAX DUE PRIOR TO THE EFFECTIVE 26 DATE OF THIS PARAGRAPH SHALL BE PAYABLE AT THE TAX RATE 27 APPLICABLE TO CALENDAR YEAR 1986. 28 (2) ANY PAYMENT OF TENTATIVE TAX DUE SUBSEQUENT TO THE 29 EFFECTIVE DATE OF THIS PARAGRAPH SHALL BE PAYABLE AT THE TAX 30 RATE APPLICABLE TO CALENDAR YEAR 1987. 19970H0134B1706 - 93 -
1 (C) PAYMENT OF TAXES IMPOSED BY ARTICLES IV, IX, XI AND XV 2 OF THIS ACT MAY AT THE TAXPAYER'S ELECTION BE AN AMOUNT 3 ESTIMATED BY THE TAXPAYER WHICH ESTIMATED AMOUNT SHALL NOT BE 4 LESS THAN NINETY PER CENT OF THE TAX AS IS FINALLY REPORTED IN 5 THE ANNUAL TAX REPORT FOR THE CURRENT CALENDAR OR FISCAL YEAR. 6 (D) A CORPORATION WITH RESPECT TO THE CORPORATE NET INCOME 7 TAX IMPOSED BY ARTICLE IV OF THIS ACT MAY, AT ITS ELECTION, 8 REPORT AND PAY IN INSTALLMENTS ON ACCOUNT OF THE TAX DUE FOR THE 9 CURRENT TAXABLE YEAR AN AMOUNT COMPUTED EITHER BY APPLYING THE 10 CURRENT TAX RATE TO NINETY PER CENT OF THE TAX BASE AS 11 DETERMINED IN SUBSECTION (A) OR (B) OF THIS SECTION, OR AS 12 COMPUTED ON THE BASIS ESTIMATED BY THE TAXPAYER TO BE DUE FOR 13 THE CURRENT YEAR WHICH ESTIMATED AMOUNT SHALL NOT BE LESS THAN 14 NINETY PER CENT OF THE TAX AS IS FINALLY REPORTED IN THE ANNUAL 15 TAX REPORT FOR THE CURRENT YEAR AS PROVIDED IN SUBSECTION (C) OF 16 THIS SECTION. THE INSTALLMENTS SHALL BE PAID IN ACCORDANCE WITH 17 THE FOLLOWING SCHEDULES: 18 FIRST SECOND THIRD FOURTH 19 YEAR IN DUE ON THE 15TH DAY OF THE FOLLOWING MONTHS 20 WHICH TAX AFTER CLOSE OF THE PREVIOUS TAX YEAR: 21 YEAR BEGINS 4TH MONTH 6TH MONTH 9TH MONTH 12TH MONTH 22 1978 95% 0% 5% 0% 23 1979 95% 0% 5% 0% 24 1980 80% 0% 10% 10% 25 1981 40% 30% 20% 10% 26 1982 30% 30% 25% 15% 27 1983 THROUGH 28 AND INCLUDING 29 1985 25% 25% 25% 25% 30 ANY TAXPAYER WHICH HAS ELECTED TO COMPUTE ITS TENTATIVE TAX 19970H0134B1706 - 94 -
1 LIABILITY ON THE AFORESAID ESTIMATED BASIS AND WHICH HAS ELECTED 2 TO REPORT AND PAY SAID ESTIMATED TAX IN INSTALLMENTS, MAY WHEN 3 REPORTING AND PAYING ITS THIRD OR FOURTH INSTALLMENT, BASE SUCH 4 INSTALLMENT ON AN AMENDED TENTATIVE TAX REPORT REFLECTING THE 5 TAXPAYER'S NEW ESTIMATE OF ITS TAX LIABILITY FOR THE TAX YEAR: 6 PROVIDED, THAT THE NEW ESTIMATE REFLECTS A LOWER TAX LIABILITY 7 THAN WAS PREVIOUSLY REPORTED IN ITS ORIGINAL OR, IF APPLICABLE, 8 AMENDED TENTATIVE TAX REPORT. IF AN AMENDED TENTATIVE TAX REPORT 9 IS FILED, EACH REMAINING INSTALLMENT PAYMENT DUE, IF ANY, SHALL 10 BE SUCH AS TO BRING THE TOTAL INSTALLMENT PAYMENTS MADE ON 11 ACCOUNT OF THE TAX DUE FOR THE CURRENT TAXABLE YEAR UP TO AN 12 AMOUNT DETERMINED BY MULTIPLYING THE TENTATIVE TAX DUE FOR THE 13 YEAR AS REPORTED IN THE AMENDED REPORT BY THE SUM OF THE 14 PERCENTAGES SET FORTH IN THE ABOVE SCHEDULE FOR THE APPLICABLE 15 ELAPSED INSTALLMENTS. 16 THE REMAINING PORTION OF THE TAX DUE, IF ANY, SHALL BE PAID 17 UPON THE DATE THE TAXPAYER'S ANNUAL REPORT IS REQUIRED TO BE 18 FILED UNDER THE APPLICABLE TAX STATUTE, DETERMINED WITHOUT 19 REFERENCE TO ANY EXTENSION OF TIME FOR FILING SUCH REPORT. 20 (E) FOR TAXABLE YEARS BEGINNING PRIOR TO JANUARY 1, 1979, 21 SHOULD IT SUBSEQUENTLY BE DETERMINED THAT THE AMOUNT OF THE 22 ANNUAL OR ANY INSTALLMENT PAYMENT OF TENTATIVE TAX DUE WAS 23 UNDERSTATED BY MORE THAN FIVE PER CENT, THERE SHALL BE ADDED TO 24 THE TAX DETERMINED TO BE DUE AN ADDITIONAL TEN PER CENT OF THE 25 UNDERSTATEMENT AND SAID PERCENTAGE ADDITION TO THE 26 UNDERSTATEMENT SHALL BE DEEMED AN ADDITIONAL TAX AND SHALL BEAR 27 INTEREST FROM THE DATE THE TENTATIVE TAX WAS DUE. 28 FOR TAXABLE YEARS BEGINNING JANUARY 1, 1979 AND THEREAFTER, 29 SHOULD IT SUBSEQUENTLY BE DETERMINED THAT THE AMOUNT OF THE 30 ANNUAL OR ANY INSTALLMENT PAYMENT OF TENTATIVE TAX DUE WAS 19970H0134B1706 - 95 -
1 UNDERPAID, THERE SHALL BE IMPOSED AN ADDITIONAL TAX OF TEN PER 2 CENT OF THE UNDERPAYMENT AND SAID TAX SHALL BEAR INTEREST FROM 3 THE DATE THE ANNUAL OR ANY INSTALLMENT PAYMENT OF TENTATIVE TAX 4 WAS DUE. FAILURE TO REMIT THE ANNUAL OR ANY INSTALLMENT OF 5 TENTATIVE TAX PAYMENTS ON OR BEFORE THE DUE DATES PRESCRIBED IN 6 THIS ACT SHALL RESULT IN THE ASSESSMENT OF INTEREST AND 7 ADDITIONS, IF ANY, IN THE SAME MANNER AS PRESCRIBED BY LAW. 8 (F) WHENEVER THE AMOUNT SHOWN AS DUE ON THE ANNUAL REPORT IS 9 LESS THAN THE AMOUNT PAID TO THE DEPARTMENT ON ACCOUNT OF THAT 10 AMOUNT UNDER THIS ARTICLE, THE DEPARTMENT SHALL ENTER A CREDIT 11 IN THE AMOUNT OF THE DIFFERENCE TO THE ACCOUNT OF THE TAXPAYER, 12 WHICH CREDIT SHALL BE IMMEDIATELY SUBJECT TO APPLICATION, 13 ASSIGNMENT OR REFUND AT THE REQUEST OF THE TAXPAYER UNDER 14 SECTION 1108 OF THE ACT OF APRIL 9, 1929 (P.L.343, NO.176), 15 KNOWN AS "THE FISCAL CODE." NOTIFICATION TO THE TAXPAYER BY THE 16 DEPARTMENT OF THE AVAILABLE CREDIT UNDER THIS SUBSECTION, IF 17 PROVIDED WITHIN 60 DAYS OF FILING THE ANNUAL REPORT, SHALL BE 18 DEEMED A NOTICE OF FINAL DETERMINATION OF THE CREDIT SOLELY FOR 19 THE PURPOSES OF STOPPING THE ACCRUING OF INTEREST UNDER SECTION 20 806.1(C)(2)(I) OF "THE FISCAL CODE." IF THE APPLICATION, 21 ASSIGNMENT OR REFUND OF CREDIT UNDER THIS SUBSECTION RESULTS IN 22 AN UNDERPAYMENT OF THE TAX DUE UPON SETTLEMENT OR RESETTLEMENT, 23 THEN INTEREST SHALL BE CALCULATED ON THE AMOUNT OF THE 24 UNDERPAYMENT FROM THE DATE THE CREDIT WAS APPLIED, ASSIGNED OR 25 REFUNDED.] 26 SECTION 31. SECTION 3003.1 OF THE ACT, ADDED JULY 1, 1985 27 (P.L.78, NO.29), IS AMENDED TO READ: 28 SECTION 3003.1. PETITIONS FOR REFUNDS.--(A) FOR A TAX 29 COLLECTED BY THE DEPARTMENT OF REVENUE, A TAXPAYER WHO HAS 30 ACTUALLY PAID TAX, INTEREST OR PENALTY TO THE COMMONWEALTH OR TO 19970H0134B1706 - 96 -
1 AN AGENT OR LICENSEE OF THE COMMONWEALTH AUTHORIZED TO COLLECT 2 TAXES MAY PETITION THE DEPARTMENT OF REVENUE FOR REFUND OR 3 CREDIT OF THE TAX, INTEREST OR PENALTY. EXCEPT AS OTHERWISE 4 PROVIDED BY STATUTE, A PETITION FOR REFUND MUST BE MADE TO THE 5 DEPARTMENT WITHIN THREE YEARS OF ACTUAL PAYMENT OF THE TAX, 6 INTEREST OR PENALTY. 7 (B) THE DEPARTMENT MAY GRANT A REFUND OR CREDIT TO A 8 TAXPAYER FOR ALL TAX PERIODS COVERED BY A DEPARTMENTAL AUDIT. IF 9 A CREDIT IS NOT GRANTED BY THE DEPARTMENT IN THE AUDIT REPORT, 10 THE TAXPAYER MUST FILE A PETITION FOR REFUND WITHIN SIX MONTHS 11 OF THE MAILING DATE OF THE NOTICE OF ASSESSMENT, DETERMINATION 12 OR SETTLEMENT. 13 (C) WHEN ANY TAX OR OTHER MONEY HAS BEEN PAID TO THE 14 COMMONWEALTH UNDER A PROVISION OF THIS ACT OR ANY OTHER STATUTE 15 SUBSEQUENTLY HELD BY FINAL JUDGMENT OF A COURT OF COMPETENT 16 JURISDICTION TO BE UNCONSTITUTIONAL OR UNDER AN INTERPRETATION 17 OF SUCH PROVISION SUBSEQUENTLY HELD BY SUCH COURT TO BE 18 ERRONEOUS, A PETITION FOR REFUND MAY BE FILED WITH THE [BOARD OF 19 FINANCE AND REVENUE] DEPARTMENT EITHER PRIOR OR SUBSEQUENT TO 20 SUCH FINAL JUDGMENT BUT MUST BE FILED WITHIN THREE YEARS OF THE 21 PAYMENT OF WHICH A REFUND IS REQUESTED, OR WITHIN THREE YEARS OF 22 THE ASSESSMENT, SETTLEMENT OR DETERMINATION OF SUCH TAXES OR 23 OTHER MONEYS DUE THE COMMONWEALTH, WHICHEVER PERIOD LAST 24 EXPIRES. THE [BOARD] DEPARTMENT SHALL HAVE JURISDICTION TO HEAR 25 AND DETERMINE ANY PETITION FOR REFUND FILED PRIOR TO SUCH FINAL 26 JUDGMENT ONLY IF, AT THE TIME OF THE FILING THEREOF, PROCEEDINGS 27 ARE PENDING IN A COURT OF COMPETENT JURISDICTION WHEREIN THE 28 CLAIMS OF UNCONSTITUTIONALITY OR ERRONEOUS INTERPRETATION MADE 29 IN THE PETITION FOR REFUND MAY BE ESTABLISHED[,]; AND, IN SUCH 30 CASE, THE [BOARD] DEPARTMENT SHALL NOT ACT UPON THE PETITION FOR 19970H0134B1706 - 97 -
1 REFUND UNTIL THE FINAL JUDGMENT DETERMINING THE QUESTION OR 2 QUESTIONS INVOLVED IN SUCH PETITION HAS BEEN HANDED DOWN. 3 (D) IN THE CASE OF AMOUNTS PAID AS A RESULT OF AN 4 ASSESSMENT, DETERMINATION, SETTLEMENT OR APPRAISEMENT, A 5 PETITION FOR REFUND MUST BE FILED WITH THE DEPARTMENT WITHIN SIX 6 MONTHS OF THE MAILING DATE OF THE NOTICE OF ASSESSMENT, 7 DETERMINATION, SETTLEMENT OR APPRAISEMENT. 8 (E) A TAXPAYER MAY PETITION THE BOARD OF FINANCE AND REVENUE 9 TO REVIEW THE DECISION AND ORDER OF THE DEPARTMENT ON A PETITION 10 FOR REFUND. THE PETITION FOR REVIEW MUST BE FILED WITH THE BOARD 11 WITHIN NINETY DAYS OF THE MAILING DATE OF A DECISION AND ORDER 12 OF THE DEPARTMENT UPON A PETITION FOR REFUND. 13 SECTION 32. SECTIONS 3003.2 AND 3003.3 OF THE ACT, AMENDED 14 OCTOBER 14, 1988 (P.L.737, NO.106) AND AUGUST 4, 1991 (P.L.97, 15 NO.22), ARE AMENDED TO READ: 16 SECTION 3003.2. ESTIMATED TAX.--(A) THE FOLLOWING TAXPAYERS 17 ARE REQUIRED TO PAY ESTIMATED TAX: 18 (1) EVERY CORPORATION SUBJECT TO THE CORPORATE NET INCOME 19 TAX IMPOSED BY ARTICLE IV OF THIS ACT, COMMENCING WITH THE 20 CALENDAR YEAR 1986 AND FISCAL YEARS BEGINNING DURING THE 21 CALENDAR YEAR 1986 AND EACH TAXABLE YEAR THEREAFTER, SHALL MAKE 22 PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX. 23 (2) EVERY CORPORATION SUBJECT TO THE CAPITAL STOCK AND 24 FRANCHISE TAX IMPOSED BY ARTICLE VI OF THIS ACT, COMMENCING WITH 25 THE CALENDAR YEAR 1988 AND FISCAL YEARS BEGINNING DURING THE 26 CALENDAR YEAR 1988 AND EACH TAXABLE YEAR THEREAFTER, SHALL MAKE 27 PAYMENTS OF ESTIMATED CAPITAL STOCK AND FRANCHISE TAX DURING ITS 28 TAXABLE YEAR AS PROVIDED HEREIN. 29 (3) EVERY "MUTUAL THRIFT INSTITUTION" OR "INSTITUTION" 30 SUBJECT TO THE TAX IMPOSED BY ARTICLE XV OF THIS ACT, COMMENCING 19970H0134B1706 - 98 -
1 WITH THE CALENDAR YEAR 1992 AND FISCAL YEARS BEGINNING DURING 2 THE CALENDAR YEAR 1992 AND EACH TAXABLE YEAR THEREAFTER, SHALL 3 MAKE PAYMENTS OF ESTIMATED MUTUAL THRIFT INSTITUTION TAX DURING 4 ITS TAXABLE YEAR. 5 (4) EVERY "INSURANCE COMPANY" SUBJECT TO THE TAX IMPOSED BY 6 ARTICLE IX OF THIS ACT SHALL MAKE PAYMENTS OF ESTIMATED 7 INSURANCE PREMIUMS TAX DURING ITS TAXABLE YEAR. 8 (5) EVERY PERSON SUBJECT TO THE TAX IMPOSED BY ARTICLE XI OF 9 THIS ACT SHALL MAKE PAYMENTS OF ESTIMATED UTILITIES GROSS 10 RECEIPTS TAX DURING ITS TAXABLE YEAR. 11 (B) THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN 12 [SECTION] SECTIONS 3003.2 THROUGH 3003.4 OF THIS ARTICLE SHALL 13 HAVE THE FOLLOWING MEANINGS ASCRIBED TO THEM: 14 (1) "ESTIMATED TAX." ESTIMATED CORPORATE NET INCOME TAX 15 [OR], ESTIMATED CAPITAL STOCK AND FRANCHISE TAX [OR], ESTIMATED 16 MUTUAL THRIFT INSTITUTION TAX, ESTIMATED INSURANCE PREMIUMS TAX 17 OR ESTIMATED UTILITIES GROSS RECEIPTS TAX. 18 (2) "ESTIMATED CORPORATE NET INCOME TAX." THE AMOUNT WHICH 19 THE CORPORATION ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY 20 SECTION 402 OF ARTICLE IV FOR THE TAXABLE YEAR. 21 (3) "ESTIMATED CAPITAL STOCK AND FRANCHISE TAX." THE AMOUNT 22 WHICH THE CORPORATION ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY 23 SECTION 602 OF ARTICLE VI FOR THE TAXABLE YEAR. 24 (4) "ESTIMATED MUTUAL THRIFT INSTITUTION TAX." THE AMOUNT 25 WHICH THE INSTITUTION ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY 26 SECTION 1502 OF ARTICLE XV FOR THE TAXABLE YEAR. 27 (4.1) "ESTIMATED INSURANCE PREMIUMS TAX." THE AMOUNT WHICH 28 THE INSURANCE COMPANY ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY 29 SECTION 902 OF ARTICLE IX FOR THE TAXABLE YEAR. 30 (4.2) "ESTIMATED UTILITIES GROSS RECEIPTS TAX." THE AMOUNT 19970H0134B1706 - 99 -
1 WHICH THE TAXPAYER ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY 2 SECTION 1101 OF ARTICLE XI FOR THE TAXABLE YEAR. 3 (4.3) "PERSON." ANY NATURAL PERSON, ASSOCIATION, FIDUCIARY, 4 PARTNERSHIP, CORPORATION OR OTHER ENTITY, INCLUDING THE 5 COMMONWEALTH, ITS POLITICAL SUBDIVISIONS AND INSTRUMENTALITIES 6 AND PUBLIC AUTHORITIES. WHENEVER USED IN ANY CLAUSE PRESCRIBING 7 AND IMPOSING A PENALTY OR IMPOSING A FINE OR IMPRISONMENT, OR 8 BOTH, THE TERM "PERSON," AS APPLIED TO AN ASSOCIATION, SHALL 9 INCLUDE THE MEMBERS THEREOF AND, AS APPLIED TO A CORPORATION, 10 THE OFFICERS THEREOF. 11 (4.4) "SAFE HARBOR BASE YEAR." THE TAXPAYER'S SECOND 12 PRECEDING TAXABLE YEAR. IF THE SECOND PRECEDING TAXABLE YEAR IS 13 LESS THAN TWELVE MONTHS, THEN THE "SAFE HARBOR BASE YEAR" SHALL 14 MEAN THE TAXPAYER'S ANNUALIZED SECOND PRECEDING TAXABLE YEAR. IF 15 THE TAXPAYER HAS FILED ONLY ONE PREVIOUS REPORT, THE "SAFE 16 HARBOR BASE YEAR" SHALL MEAN THE FIRST PRECEDING TAXABLE YEAR. 17 IF THE FIRST PRECEDING TAXABLE YEAR IS LESS THAN TWELVE MONTHS, 18 THEN THE "SAFE HARBOR BASE YEAR" SHALL MEAN THE TAXPAYER'S 19 ANNUALIZED FIRST PRECEDING TAXABLE YEAR. 20 (5) "TAXPAYER." [A CORPORATION REQUIRED TO PAY A TAX UNDER 21 ARTICLE IV OR VI OF THIS ACT OR AN INSTITUTION REQUIRED TO PAY A 22 TAX UNDER ARTICLE XV OF THIS ACT.] ANY PERSON REQUIRED TO PAY A 23 TAX IMPOSED BY ARTICLE IV, VI, IX, XI OR XV OF THIS ACT. 24 (C) ESTIMATED TAX SHALL BE PAID AS FOLLOWS: 25 (1) PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX SHALL BE 26 MADE IN EQUAL INSTALLMENTS ON OR BEFORE THE FIFTEENTH DAY OF THE 27 THIRD, SIXTH, NINTH AND TWELFTH MONTHS OF THE TAXABLE YEAR. THE 28 REMAINING PORTION OF THE CORPORATE NET INCOME TAX DUE, IF ANY, 29 SHALL BE PAID UPON THE DATE THE CORPORATION'S ANNUAL REPORT IS 30 REQUIRED TO BE FILED WITHOUT REFERENCE TO ANY EXTENSION OF TIME 19970H0134B1706 - 100 -
1 FOR FILING SUCH REPORT. 2 (2) [PAYMENT OF ESTIMATED CAPITAL STOCK AND FRANCHISE TAX 3 SHALL BE MADE IN INSTALLMENTS IN ACCORDANCE WITH THE FOLLOWING 4 SCHEDULES: 5 FIRST SECOND THIRD FOURTH 6 YEAR IN DUE ON THE 15TH DAY OF THE FOLLOWING MONTHS 7 WHICH TAX AFTER CLOSE OF THE PREVIOUS TAX YEAR: 8 YEAR BEGINS 3RD MONTH 6TH MONTH 9TH MONTH 12TH MONTH 9 1988 44% 44% 6% 6% 10 1989 34% 34% 16% 16% 11 1990 29% 29% 21% 21% 12 1991 AND 13 THEREAFTER 25% 25% 25% 25%] 14 PAYMENT OF ESTIMATED CAPITAL STOCK AND FRANCHISE TAX SHALL BE 15 MADE IN EQUAL INSTALLMENTS ON OR BEFORE THE FIFTEENTH DAY OF THE 16 THIRD, SIXTH, NINTH AND TWELFTH MONTHS OF THE TAXABLE YEAR. THE 17 REMAINING PORTION OF THE CAPITAL STOCK AND FRANCHISE TAX DUE, IF 18 ANY, SHALL BE PAID UPON THE DATE THE CORPORATION'S ANNUAL REPORT 19 IS REQUIRED TO BE FILED WITHOUT REFERENCE TO ANY EXTENSION OF 20 TIME FOR FILING SUCH REPORT. 21 (3) [BEGINNING IN CALENDAR YEAR 1992 AND EACH CALENDAR YEAR 22 THEREAFTER AND FISCAL YEARS BEGINNING IN 1992 AND EACH FISCAL 23 YEAR THEREAFTER, PAYMENT] PAYMENT OF THE ESTIMATED MUTUAL THRIFT 24 INSTITUTION TAX SHALL BE MADE IN EQUAL INSTALLMENTS ON OR BEFORE 25 THE FIFTEENTH DAY OF THE THIRD, SIXTH, NINTH AND TWELFTH MONTHS 26 OF THE TAXABLE YEAR. THE REMAINING PORTION OF THE MUTUAL THRIFT 27 INSTITUTION TAX DUE, IF ANY, SHALL BE PAID UPON THE DATE THE 28 INSTITUTION'S ANNUAL REPORT IS REQUIRED TO BE FILED WITHOUT 29 REFERENCE TO ANY EXTENSION OF TIME FOR FILING SUCH REPORT. 30 (4) PAYMENT OF THE ESTIMATED INSURANCE PREMIUMS TAX SHALL BE 19970H0134B1706 - 101 -
1 MADE IN A SINGLE INSTALLMENT ON OR BEFORE THE FIFTEENTH DAY OF 2 MARCH OF THE TAXABLE YEAR. THE REMAINING PORTION OF THE 3 INSURANCE PREMIUMS TAX DUE, IF ANY, SHALL BE PAID UPON THE DATE 4 THE INSURANCE COMPANY'S ANNUAL REPORT IS REQUIRED TO BE FILED 5 WITHOUT REFERENCE TO ANY EXTENSION OF TIME FOR FILING THE 6 REPORT. 7 (5) PAYMENT OF THE ESTIMATED UTILITIES GROSS RECEIPTS TAX 8 SHALL BE MADE IN A SINGLE INSTALLMENT ON OR BEFORE THE FIFTEENTH 9 DAY OF MARCH OF THE TAXABLE YEAR. THE REMAINING PORTION OF THE 10 UTILITIES GROSS RECEIPTS TAX DUE, IF ANY, SHALL BE PAID UPON THE 11 DATE THE ANNUAL REPORT IS REQUIRED TO BE FILED WITHOUT REFERENCE 12 TO ANY EXTENSION OF TIME FOR FILING THE REPORT. 13 (D) IF, AFTER PAYING ANY INSTALLMENT OF ESTIMATED TAX, THE 14 TAXPAYER MAKES A NEW ESTIMATE, THE AMOUNT OF EACH REMAINING 15 INSTALLMENT DUE, IF ANY, SHALL BE SUCH AS TO BRING THE TOTAL 16 INSTALLMENT PAYMENTS MADE ON ACCOUNT OF THE TAX DUE FOR THE 17 CURRENT YEAR UP TO AN AMOUNT THAT WOULD HAVE BEEN DUE HAD THE 18 NEW ESTIMATE BEEN THE BASIS FOR PAYING ALL PREVIOUS 19 INSTALLMENTS. 20 (E) EVERY TAXPAYER WITH A TAXABLE YEAR OF LESS THAN TWELVE 21 MONTHS SHALL PAY SUCH INSTALLMENTS AS BECOME DUE DURING THE 22 COURSE OF ITS TAXABLE YEAR AND PAY THE REMAINING TAX DUE ON OR 23 BEFORE THE DUE DATE OF THE ANNUAL REPORT (DETERMINED WITHOUT 24 REGARD TO ANY EXTENSION OF TIME FOR FILING). 25 (F) AT THE ELECTION OF THE TAXPAYER, ANY INSTALLMENT OF 26 ESTIMATED TAX MAY BE PAID BEFORE THE DATE PRESCRIBED FOR ITS 27 PAYMENT. 28 (G) FOR ALL PURPOSES OF SECTIONS 3003.2 THROUGH 3003.4 OF 29 THIS ARTICLE, ESTIMATED CORPORATE NET INCOME TAX [AND], 30 ESTIMATED CAPITAL STOCK AND FRANCHISE TAX, ESTIMATED MUTUAL 19970H0134B1706 - 102 -
1 THRIFT INSTITUTIONS TAX, ESTIMATED INSURANCE PREMIUMS TAX AND 2 ESTIMATED UTILITIES GROSS RECEIPTS TAX SHALL BE SEPARATELY 3 REPORTED, DETERMINED AND TREATED. 4 (H) THE TAX IMPOSED ON SHARES OF INSTITUTIONS AND TITLE 5 INSURANCE COMPANIES AND THE TAX IMPOSED ON PUBLIC UTILITY REALTY 6 SHALL BE PAID IN THE MANNER AND WITHIN THE TIME PRESCRIBED BY 7 ARTICLE VII, VIII OR XI-A OF THIS ACT, BUT SUBJECT TO THE 8 INTEREST PROVIDED IN SECTION 3003.3 OF THIS ARTICLE. 9 (I) WHENEVER THE AMOUNT SHOWN AS DUE ON THE ANNUAL REPORT, 10 INCLUDING ANY SETTLEMENT OF THE ANNUAL REPORT, IS LESS THAN THE 11 AMOUNT PAID TO THE DEPARTMENT ON ACCOUNT OF THAT AMOUNT UNDER 12 THIS ARTICLE, THE DEPARTMENT SHALL ENTER A CREDIT IN THE AMOUNT 13 OF THE DIFFERENCE TO THE ACCOUNT OF THE TAXPAYER, WHICH CREDIT 14 SHALL BE IMMEDIATELY SUBJECT TO APPLICATION, ASSIGNMENT OR 15 REFUND, AT THE REQUEST OF THE TAXPAYER UNDER SECTION 1108 OF THE 16 ACT OF APRIL 9, 1929 (P.L.343, NO.176), KNOWN AS "THE FISCAL 17 CODE," OR AT THE INITIATIVE OF THE DEPARTMENT. IF THE 18 APPLICATION, ASSIGNMENT OR REFUND OF CREDIT UNDER THIS 19 SUBSECTION RESULTS IN AN UNDERPAYMENT OF THE TAX DUE UPON 20 SETTLEMENT OR RESETTLEMENT, INTEREST SHALL BE CALCULATED ON THE 21 AMOUNT OF THE UNDERPAYMENT FROM THE DATE CREDIT WAS APPLIED, 22 ASSIGNED OR REFUNDED. 23 SECTION 3003.3. UNDERPAYMENT OF ESTIMATED TAX.--(A) IN CASE 24 OF ANY UNDERPAYMENT OF AN INSTALLMENT OF ESTIMATED TAX BY A 25 TAXPAYER, THERE SHALL BE IMPOSED [AN ADDITION TO THE TAX] 26 INTEREST FOR THE TAXABLE YEAR IN AN AMOUNT DETERMINED AT THE 27 ANNUAL RATE AS PROVIDED BY LAW [FOR THE PAYMENT OF INTEREST] 28 UPON THE AMOUNT OF THE UNDERPAYMENT FOR THE PERIOD OF THE 29 UNDERPAYMENT, EXCEPT THAT, IN CASE OF ANY SUBSTANTIAL 30 UNDERPAYMENT OF ESTIMATED TAX BY A TAXPAYER, SUCH [ADDITION TO 19970H0134B1706 - 103 -
1 THE TAX] INTEREST FOR THE TAXABLE YEAR SHALL BE IMPOSED IN AN
2 AMOUNT DETERMINED AT ONE HUNDRED TWENTY PER CENT OF THE ANNUAL
3 RATE AS PROVIDED BY LAW [FOR THE PAYMENT OF INTEREST] UPON THE
4 ENTIRE UNDERPAYMENT FOR THE PERIOD OF THE SUBSTANTIAL
5 UNDERPAYMENT. FOR THE PURPOSE OF THIS SUBSECTION, A SUBSTANTIAL
6 UNDERPAYMENT SHALL BE DEEMED TO EXIST FOR ANY PERIOD DURING
7 WHICH THE AMOUNT OF THE UNDERPAYMENT EQUALS OR EXCEEDS TWENTY-
8 FIVE PER CENT OF THE CUMULATIVE AMOUNT OF INSTALLMENTS OF
9 ESTIMATED TAX WHICH WOULD BE REQUIRED TO BE PAID IF THE
10 ESTIMATED TAX WERE EQUAL TO THE AMOUNT AS DETERMINED IN
11 SUBSECTION (B)(1).
12 (B) (1) FOR PURPOSES OF THIS SECTION, THE AMOUNT OF THE
13 UNDERPAYMENT, IF ANY, SHALL BE THE EXCESS OF:
14 (I) THE CUMULATIVE AMOUNT OF INSTALLMENTS WHICH WOULD BE
15 REQUIRED TO BE PAID AS OF EACH INSTALLMENT DATE AS DEFINED IN
16 SECTION 3003.2(C) IF THE ESTIMATED TAX WERE EQUAL TO NINETY PER
17 CENT OF THE TAX SHOWN ON THE REPORT FOR THE TAXABLE YEAR, EXCEPT
18 THAT, IF THE SETTLED TAX OR, IF THE TAX IS RESETTLED, THE
19 RESETTLED TAX EXCEEDS THE TAX SHOWN ON THE REPORT BY TEN PER
20 CENT OR MORE, THE AMOUNT OF THE UNDERPAYMENT SHALL BE BASED ON
21 NINETY PER CENT OF THE AMOUNT OF SUCH SETTLED OR RESETTLED TAX;
22 OVER
23 (II) THE CUMULATIVE AMOUNT OF INSTALLMENTS PAID ON OR BEFORE
24 THE LAST DATE PRESCRIBED FOR PAYMENT.
25 (2) IF THE SETTLED OR RESETTLED TAX IS USED IN CALCULATING
26 THE AMOUNT OF UNDERPAYMENT, THE AMOUNT OF TAX AS SETTLED OR
27 RESETTLED SHALL BE UTILIZED IN DETERMINING THE AMOUNT OF
28 UNDERPAYMENT WITHOUT THE NECESSITY OF THE FILING OF ANY PETITION
29 BY THE DEPARTMENT OR BY THE TAXPAYER.
30 (C) THE PERIOD OF THE UNDERPAYMENT SHALL RUN FROM THE DATE
19970H0134B1706 - 104 -
1 THE INSTALLMENT WAS REQUIRED TO BE PAID TO WHICHEVER OF THE 2 FOLLOWING DATES IS THE EARLIER: 3 (1) THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE 4 CLOSE OF THE TAXABLE YEAR. 5 (2) WITH RESPECT TO ANY PORTION OF THE UNDERPAYMENT, THE 6 DATE ON WHICH SUCH PORTION IS PAID. 7 (D) NOTWITHSTANDING THE PROVISIONS OF THE PRECEDING 8 SUBSECTIONS, [THE ADDITION TO THE TAX] INTEREST WITH RESPECT TO 9 ANY UNDERPAYMENT OF ANY INSTALLMENT OF ESTIMATED TAX SHALL NOT 10 BE IMPOSED IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX 11 MADE ON OR BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF 12 SUCH INSTALLMENT EQUALS OR EXCEEDS THE AMOUNT WHICH WOULD HAVE 13 BEEN REQUIRED TO BE PAID ON OR BEFORE SUCH DATE IF THE ESTIMATED 14 TAX WERE AN AMOUNT EQUAL TO THE TAX COMPUTED AT THE RATES 15 APPLICABLE TO THE TAXABLE YEAR, INCLUDING ANY MINIMUM TAX 16 IMPOSED, BUT OTHERWISE ON THE BASIS OF THE FACTS SHOWN ON THE 17 REPORT OF THE TAXPAYER FOR, AND THE LAW APPLICABLE TO, THE 18 [SECOND PRECEDING TAXABLE YEAR] SAFE HARBOR BASE YEAR, ADJUSTED 19 FOR ANY CHANGES TO SECTIONS 401, 601 AND 602 ENACTED FOR [TAX 20 YEARS BEGINNING ON OR AFTER JANUARY 1, 1991] THE TAXABLE YEAR, 21 IF A REPORT SHOWING A LIABILITY FOR TAX WAS FILED BY THE 22 TAXPAYER FOR THE [SECOND PRECEDING TAXABLE YEAR AND SUCH SECOND 23 PRECEDING YEAR WAS A TAXABLE YEAR OF TWELVE MONTHS] SAFE HARBOR 24 BASE YEAR. IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX 25 MADE ON OR BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF 26 SUCH INSTALLMENT DOES NOT EQUAL OR EXCEED THE AMOUNT REQUIRED TO 27 BE PAID PER THE PRECEDING SENTENCE, BUT SUCH AMOUNT IS PAID 28 AFTER THE DATE THE INSTALLMENT WAS REQUIRED TO BE PAID, THEN THE 29 PERIOD OF UNDERPAYMENT SHALL RUN FROM THE DATE THE INSTALLMENT 30 WAS REQUIRED TO BE PAID TO THE DATE THE AMOUNT REQUIRED TO BE 19970H0134B1706 - 105 -
1 PAID PER THE PRECEDING SENTENCE IS PAID. [FOR TAXPAYERS THAT 2 HAVE FILED ONLY ONE OR TWO PREVIOUS RETURNS, IF THE SECOND 3 PRECEDING TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THEN THE 4 FIRST PRECEDING TAXABLE YEAR SHALL BE USED; OR, IF THERE IS NO 5 SECOND PRECEDING TAXABLE YEAR, THEN THE FIRST PRECEDING TAXABLE 6 YEAR SHALL BE USED. IF THE FIRST PRECEDING TAXABLE YEAR IS LESS 7 THAN TWELVE MONTHS, THEN THE ANNUALIZED FIRST PRECEDING TAXABLE 8 YEAR SHALL BE USED.] PROVIDED, [HOWEVER,] THAT IF THE SETTLED 9 TAX FOR THE [SECOND PRECEDING YEAR] SAFE HARBOR BASE YEAR 10 EXCEEDS THE TAX SHOWN ON SUCH REPORT BY TEN PER CENT OR MORE, 11 THE SETTLED TAX ADJUSTED TO REFLECT THE CURRENT TAX RATE SHALL 12 BE USED FOR PURPOSES OF THIS SUBSECTION, EXCEPT THAT, IF THE 13 SETTLED TAX IS SUBSEQUENTLY RESETTLED, THE AMOUNT OF TAX AS 14 RESETTLED SHALL BE UTILIZED IN THE APPLICATION OF THIS 15 SUBSECTION WITHOUT THE NECESSITY OF THE FILING OF ANY PETITION 16 BY THE DEPARTMENT OR BY THE TAXPAYER. IN THE EVENT THAT THE 17 SETTLED OR RESETTLED TAX FOR THE [SECOND PRECEDING YEAR] SAFE 18 HARBOR BASE YEAR EXCEEDS THE TAX SHOWN ON THE REPORT BY TEN PER 19 CENT OR MORE, [AN ADDITION TO THE TAX] INTEREST RESULTING FROM 20 THE UTILIZATION OF SUCH SETTLED OR RESETTLED TAX IN THE 21 APPLICATION OF THE PROVISIONS OF THIS SUBSECTION SHALL NOT BE 22 IMPOSED IF, WITHIN FORTY-FIVE DAYS OF THE MAILING DATE OF SUCH 23 SETTLEMENT OR RESETTLEMENT, PAYMENTS ARE MADE SUCH THAT THE 24 TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX EQUALS OR EXCEEDS 25 THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO BE PAID ON OR 26 BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO 27 SUCH SETTLED OR RESETTLED TAX ADJUSTED TO REFLECT THE CURRENT 28 TAX RATE. IN ANY CASE IN WHICH THE TAXABLE YEAR FOR WHICH AN 29 UNDERPAYMENT OF ESTIMATED TAX MAY EXIST IS A SHORT TAXABLE YEAR, 30 IN DETERMINING THE TAX SHOWN ON THE REPORT OR THE SETTLED OR 19970H0134B1706 - 106 -
1 RESETTLED TAX FOR THE [SECOND PRECEDING TAXABLE] SAFE HARBOR 2 BASE YEAR, THE TAX WILL BE REDUCED BY MULTIPLYING IT BY THE 3 [NUMBER OF DAYS IN THE SHORT TAXABLE YEAR AND DIVIDING THE 4 RESULTING AMOUNT BY THREE HUNDRED SIXTY-FIVE] RATIO OF THE 5 NUMBER OF INSTALLMENT PAYMENTS MADE IN THE SHORT TAXABLE YEAR TO 6 THE NUMBER OF INSTALLMENT PAYMENTS REQUIRED TO BE MADE FOR THE 7 FULL TAXABLE YEAR. 8 [(E) (1) WHEN THE AMENDMENTS TO SECTIONS 401, 601 AND 602 9 AND SUBSECTION (D) RESULT IN AN INCREASE OF A TAXPAYER'S 10 ESTIMATED TAXES FOR 1991 AND 1992 OR THE REQUIRED SAFE HARBOR 11 AMOUNT, THE ADDITIONAL REQUIRED INSTALLMENT PAYMENTS OF 12 ESTIMATED TAX AS WELL AS THE ADDITIONAL AMOUNT OF THE REQUIRED 13 INSTALLMENT PAYMENTS TO MEET THE "SAFE HARBOR" SHALL BE TREATED 14 AS PROVIDED BY THIS SUBSECTION FOR ADDITIONAL ESTIMATED 15 PAYMENTS, SAFE HARBOR PAYMENTS AND THE RECOMPUTATION AND 16 PRESERVATION OF THE "SAFE HARBOR." 17 (2) (I) FOR PURPOSES OF COMPUTING THE ESTIMATED TAX "SAFE 18 HARBOR" PURSUANT TO SUBSECTION (D) FOR TAX YEARS 1991 AND 1992, 19 THE SECOND PRECEDING TAXABLE YEAR (BASE YEAR) SHALL BE 20 RECOMPUTED WITH THE AMENDED SECTIONS 401, 601 AND 602. 21 (II) ANY TAXPAYER WHOSE "SAFE HARBOR" IS AFFECTED BY THIS 22 SECTION MUST FILE A RECOMPUTATION OF ITS SAFE HARBOR YEAR WITHIN 23 SIXTY DAYS OF THE EFFECTIVE DATE OF THIS ACT FOR CALENDAR YEAR 24 1991 OR TAXABLE YEARS BEGINNING IN 1991 AND WITHIN SEVENTY-FIVE 25 DAYS OF THE BEGINNING OF ITS TAXABLE YEAR FOR CALENDAR YEAR 1992 26 OR TAXABLE YEARS BEGINNING IN 1992. THE RECOMPUTATION SHALL BE 27 ON FORMS AS PRESCRIBED BY THE DEPARTMENT OF REVENUE. ANY 28 TAXPAYER FAILING TO FILE A RECOMPUTATION AS REQUIRED SHALL BE 29 DENIED THE USE OF THE "SAFE HARBOR" PROVISIONS OF SUBSECTION 30 (D). 19970H0134B1706 - 107 -
1 (3) TO THE EXTENT THE AMENDMENTS TO SECTIONS 401, 601 AND 2 602 AND SUBSECTION (D) RESULT IN AN INCREASE IN THE 3 CORPORATION'S ESTIMATED TAX OR THE SAFE HARBOR AMOUNT, 4 INSTALLMENTS DUE AFTER THE EFFECTIVE DATE OF THIS ACT SHALL BE 5 MADE PURSUANT TO SECTION 3003.2 AND THIS SECTION EXCEPT: 6 (I) ADDITIONAL AMOUNTS ASSOCIATED WITH INSTALLMENT PAYMENT 7 OF ESTIMATED TAX DUE PRIOR TO THE EFFECTIVE DATE OF THIS ACT 8 UNDER SECTION 3003.2 OR SUBSECTION (D) SHALL BE CONSIDERED 9 TIMELY PAID IF PAID WITHIN SIXTY DAYS OF THE EFFECTIVE DATE OF 10 THIS ACT OR ON THE DUE DATE OF THE NEXT INSTALLMENT. 11 (II) ADDITIONAL AMOUNTS ASSOCIATED WITH INSTALLMENT PAYMENT 12 OF ESTIMATED TAX DUE WITHIN SIXTY DAYS OF THE EFFECTIVE DATE OF 13 THIS ACT UNDER SECTION 3003.2 OR SUBSECTION (D) SHALL BE 14 CONSIDERED TIMELY PAID IF PAID WITHIN SIXTY DAYS OF THE 15 EFFECTIVE DATE OF THIS ACT OR ON THE DUE DATE OF THE NEXT 16 INSTALLMENT.] 17 SECTION 33. SECTION 3003.4 OF THE ACT, ADDED JULY 1, 1985 18 (P.L.78, NO.29), IS AMENDED TO READ: 19 [SECTION 3003.4. INTEREST.--(A) INTEREST ON UNDERPAYMENTS 20 OF ESTIMATED TAX. UNDERPAYMENTS OF INSTALLMENTS OF ESTIMATED TAX 21 SHALL NOT BEAR INTEREST DURING THE PERIOD OF SUCH UNDERPAYMENT. 22 HOWEVER, ANY AMOUNT OF TAX FINALLY DETERMINED TO BE DUE, WHICH 23 IS NOT PAID BY THE DATE THE ANNUAL REPORT IS DUE (DETERMINED 24 WITHOUT REGARD TO ANY EXTENSION OF TIME FOR FILING), SHALL BEAR 25 INTEREST FROM SUCH DATE UNTIL PAID. 26 (B) INTEREST ON ADDITIONS TO THE TAX. ADDITIONS TO THE TAX 27 SHALL BEAR INTEREST FROM THE DATE THE ANNUAL REPORT IS DUE UNTIL 28 THE DATE PAID.] 29 SECTION 34. SECTION 3003.9 OF THE ACT, ADDED JUNE 16, 1994 30 (P.L.279, NO.48), IS AMENDED TO READ: 19970H0134B1706 - 108 -
1 SECTION 3003.9. BAD CHECKS; ADDITIONS TO TAX.--[IF ANY CHECK 2 IN PAYMENT OF ANY AMOUNT RECEIVABLE UNDER ARTICLE IV, VI, VII, 3 IX, XI OR XXX IS NOT PAID UPON PRESENTMENT, IN ADDITION TO ANY 4 OTHER PENALTIES PROVIDED BY LAW, THE DEPARTMENT OF REVENUE SHALL 5 CHARGE THE PERSON WHO TENDERED SUCH CHECK A FEE EQUAL TO TEN 6 PERCENT OF THE FACE AMOUNT THEREOF, PLUS ANY PROTEST FEES, 7 PROVIDED THAT THE ADDITION IMPOSED HEREBY SHALL NOT EXCEED FIVE 8 HUNDRED DOLLARS ($500) NOR BE LESS THAN TEN DOLLARS ($10).] 9 (A) IF ANY CHECK IN PAYMENT OF ANY AMOUNT RECEIVABLE UNDER 10 THE LAWS OF THIS COMMONWEALTH ADMINISTERED BY THE DEPARTMENT IS 11 NOT PAID UPON PRESENTMENT, IN ADDITION TO ANY INTEREST OR 12 PENALTIES PROVIDED BY LAW, THE DEPARTMENT SHALL CHARGE THE 13 PERSON WHO TENDERED THE CHECK AN ADDITION TO TAX EQUAL TO TEN 14 PER CENT OF THE FACE AMOUNT OF THE CHECK, PLUS INTEREST AND 15 PROTEST FEES, PROVIDED THAT THE ADDITION IMPOSED BY THIS SECTION 16 SHALL NOT EXCEED FIVE HUNDRED DOLLARS ($500) NOR BE LESS THAN 17 TWENTY-FIVE DOLLARS ($25). 18 (B) THIS SECTION SHALL APPLY TO ALL CHECKS PRESENTED FOR 19 PAYMENT AFTER DECEMBER 31, 1997. 20 SECTION 35. IT IS THE INTENT OF THE GENERAL ASSEMBLY THAT 21 THE AMENDMENT OF SECTION 303(A)(3)(V) OF THE ACT IS TO CLARIFY 22 EXISTING LAW. THE AMENDMENT OF SECTION 303(A)(3)(V) OF THE ACT 23 SHALL NOT BE CONSTRUED TO CHANGE EXISTING LAW. 24 SECTION 35.1. (A) THE FOLLOWING ACTS AND PARTS OF ACTS ARE 25 REPEALED: 26 SECTION 2506 OF THE ACT OF APRIL 9, 1929 (P.L.177, NO.175), 27 KNOWN AS THE ADMINISTRATIVE CODE OF 1929. 28 SECTION 4 OF THE ACT OF JUNE 23, 1982 (P.L.597, NO.170), 29 KNOWN AS THE WILD RESOURCE CONSERVATION ACT. 30 20 PA.C.S. § 8618. 19970H0134B1706 - 109 -
1 (B) THE FOLLOWING ACTS AND PARTS OF ACTS ARE REPEALED 2 INSOFAR AS THEY ARE INCONSISTENT WITH THIS ACT: 3 SECTION 503(A), (B) AND (C) OF THE ACT OF APRIL 9, 1929 4 (P.L.343, NO.176), KNOWN AS THE FISCAL CODE. 5 SECTION 217(A) OF THE ACT OF DECEMBER 17, 1981 (P.L.435, 6 NO.135), KNOWN AS THE RACE HORSE INDUSTRY REFORM ACT. 7 SECTION 12 OF THE ACT OF JUNE 23, 1982 (P.L.597, NO.170), 8 KNOWN AS THE WILD RESOURCE CONSERVATION ACT. 9 15 PA.C.S. §§ 8925 AND 8997. 10 (C) 75 PA.C.S. § 9017 IS REPEALED INSOFAR AS IT RELATES TO 11 REFUNDS. 12 SECTION 36. (A) THE FOLLOWING PROVISIONS SHALL APPLY 13 RETROACTIVELY TO JANUARY 1, 1997: 14 (1) THE AMENDMENT OF SECTION 301(D.1)(1) AND (2) OF THE 15 ACT. 16 (2) THE AMENDMENT OF SECTION 303(A)(3)(V) OF THE ACT. 17 (3) THE AMENDMENT OF SECTION 1296 OF THE ACT. 18 (4) SECTION 35 OF THIS ACT. 19 (B) THE FOLLOWING PROVISIONS SHALL APPLY RETROACTIVELY TO 20 TAXABLE YEARS BEGINNING ON OR AFTER JANUARY 1, 1997: 21 (1) THE AMENDMENT OR ADDITION OF THE INTRODUCTORY 22 PARAGRAPH AND CLAUSES (C.2), (D), (E.1), (O.3) AND (S.2) OF 23 SECTION 301 OF THE ACT. 24 (2) THE AMENDMENT OF SECTION 304(D) OF THE ACT. 25 (3) THE AMENDMENT OF SECTIONS 307, 307.6, 307.8 AND 26 307.9 OF THE ACT. 27 (4) THE ADDITION OF PART VI-A OF ARTICLE III OF THE ACT. 28 (5) THE AMENDMENT OF THE DEFINITIONS OF "CAPITAL STOCK 29 VALUE" AND "PROCESSING" IN SECTION 601 OF THE ACT. 30 (6) THE ADDITION OF SECTIONS 602.4 AND 602.5 OF THE ACT. 19970H0134B1706 - 110 -
1 (C) THE FOLLOWING PROVISIONS SHALL APPLY TO TAXABLE YEARS 2 BEGINNING ON OR AFTER JANUARY 1, 1998: 3 (1) THE AMENDMENT OR ADDITION OF SECTION 301(D.1) AND 4 (N.0) OF THE ACT. 5 (2) THE AMENDMENT OF SECTION 303(A)(3)(VI) OF THE ACT. 6 (3) THE AMENDMENT OF SECTION 324.2 OF THE ACT. 7 (4) THE AMENDMENT OR ADDITION OF SECTION 401(1) AND 8 (3)1(P) OF THE ACT. 9 (5) THE AMENDMENT OF THE DEFINITIONS OF "AVERAGE NET 10 INCOME," "CAPITAL STOCK," "DOMESTIC ENTITY," "FOREIGN ENTITY" 11 AND "NET WORTH" IN SECTION 601 OF THE ACT. 12 (6) THE AMENDMENT OF SECTIONS 3003, 3003.2, 3003.3 AND 13 3003.4 OF THE ACT. 14 (D) THE FOLLOWING PROVISIONS SHALL APPLY TO PAYMENTS MADE ON 15 OR AFTER JANUARY 1, 1998: 16 (1) THE AMENDMENT OF SECTION 253 OF THE ACT. 17 (2) THE AMENDMENT OF SECTION 350 OF THE ACT. 18 (3) THE AMENDMENT OF SECTION 1113-C OF THE ACT. 19 (4) THE AMENDMENT OF SECTION 2009 OF THE ACT. 20 (5) THE AMENDMENT OF SECTION 2181 OF THE ACT. 21 (6) THE AMENDMENT OF SECTION 3003.1 AND 3003.9 OF THE 22 ACT. 23 (7) SECTION 35.1(C) OF THIS ACT. 24 SECTION 37. THIS ACT SHALL TAKE EFFECT AS FOLLOWS: 25 (1) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT 26 IMMEDIATELY: 27 (I) THE AMENDMENT OR ADDITION OF THE INTRODUCTORY 28 PARAGRAPH AND CLAUSES (C.2), (D), (D.1)(1) AND (2), 29 (E.1), (O.3) AND (S.2) OF SECTION 301 OF THE ACT. 30 (II) THE AMENDMENT OF SECTIONS 303(A)(3)(V) AND 19970H0134B1706 - 111 -
1 304(D) OF THE ACT. 2 (III) THE AMENDMENT OF SECTIONS 307, 307.6, 307.8 3 AND 307.9 OF THE ACT. 4 (IV) THE ADDITION OF PART VI-A OF ARTICLE III OF THE 5 ACT. 6 (V) THE AMENDMENT OF THE DEFINITIONS OF "CAPITAL 7 STOCK VALUE" AND "PROCESSING" IN SECTION 601 OF THE ACT. 8 (VI) THE ADDITION OF SECTIONS 602.4 AND 602.5 OF THE 9 ACT. 10 (VII) THE AMENDMENT OF SECTION 1296 OF THE ACT. 11 (VIII) SECTION 35 OF THIS ACT. 12 (IX) SECTION 35.1(A) OF THIS ACT. 13 (X) SECTION 36 OF THIS ACT. 14 (XI) THIS SECTION. 15 (2) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT JANUARY 16 1, 1998: 17 (I) THE AMENDMENT OF SECTION 266 OF THE ACT. 18 (II) THE AMENDMENT OF SECTION 303(A)(3)(VI) OF THE 19 ACT. 20 (III) THE AMENDMENT OF SECTION 352 OF THE ACT. 21 (IV) SECTION 35.1(B) AND (C) OF THIS ACT. 22 (3) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT JULY 1, 23 1997, OR IMMEDIATELY, WHICHEVER IS LATER. A22L72JAM/19970H0134B1706 - 112 -