PRIOR PRINTER'S NOS. 1586, 2299 PRINTER'S NO. 2565
No. 176 Session of 2005
Report of the Committee of Conference
To the Members of the House of Representatives and Senate:
We, the undersigned, Committee of Conference on the part of the House of Representatives and Senate for the purpose of considering House Bill No. 176, entitled: "An act amending the act of March 4, 1971 (P.L.6, No.2), entitled 'An act relating to tax reform and State taxation by codifying and enumerating certain subjects of taxation and imposing taxes thereon; * * * prescribing crimes, offenses and penalties,' further providing, in realty transfer tax, for determination and notice of tax and review; providing, in realty transfer tax, for sharing information; * * * providing, in local real estate transfer tax, for regulations, for documentary stamps, for collection agents, for disbursements, for judicial sale proceeds, for stamps, for determination and review, for liens, for refunds, for civil penalties, for violations and for information; and making repeals," respectfully submit the following bill as our report: SAMUEL H. SMITH BRETT FEESE DAVID K. LEVDANSKY (Committee on the part of the House of Representatives.) DAVID J. BRIGHTBILL JOHN N. WOZNIAK JANE M. EARLL (Committee on the part of the Senate.)
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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, in sales and use tax, for 11 alternate imposition; providing, in personal income tax, for 12 definitions, for classes of income and for contributions to 13 the Olympics; providing, in personal income tax, for 14 contributions for military family relief assistance and for 15 operational provisions; further providing, in personal income 16 tax, for additions, penalties and fees; further providing, in 17 corporate net income tax, for definitions; further providing, 18 in capital stock franchise tax, for definitions and reports; 19 further providing, in realty transfer tax, for determination 20 and notice; providing, in realty transfer tax, for sharing 21 information; further providing, in local real estate transfer 22 tax, for imposition and for administration; providing, in 23 local real estate transfer tax, for regulations, for 24 documentary stamps, for collection agents, for disbursements, 25 for proceeds of judicial sale, for failure to affix stamps, 26 for determination and notice of tax, for liens, for refunds, 27 for civil penalties, for unlawful acts and penalties and for 28 information; further providing, in the research and 29 development tax credit, for definitions and for Pennsylvania 30 S Corporation pass-through; further providing, in the film 31 production tax credit, for definitions and for credit for 32 qualified film production expenses; providing, in the film 33 production tax credit, for credits; further providing in the 34 film production tax credit, for disposition and for 35 limitation; providing, in the film production tax credit, for 36 penalties; further providing, in the film production tax 37 credit, for pass-through entities and report; further 38 providing, in the neighborhood assistance tax credit, for 39 grant; further providing, in general provisions, for bad 40 checks; providing, in general provisions, for electronic 41 transmissions and for reimbursement for costs of collection; 42 continuing ordinances and resolutions relating to real 43 property tax transfers; and making repeals. 44 The General Assembly of the Commonwealth of Pennsylvania 45 hereby enacts as follows: 46 Section 1. Section 205(a) of the act of March 4, 1971 47 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended 48 August 4, 1991 (P.L.97, No.22), is amended to read: 49 Section 205. Alternate Imposition of Tax; Credits.--(a) If 50 any person actively and principally engaged in the business of 20050H0176B2565 - 3 -
1 selling new or used motor vehicles, trailers or semi-trailers, 2 and registered with the department in the "dealer's class," 3 acquires a motor vehicle, trailer or semi-trailer for the 4 purpose of resale, and prior to such resale, uses the motor 5 vehicle, trailer or semi-trailer for a taxable use under this 6 act [during a period not exceeding one year from the date of 7 acquisition to the date of resale], such person may [within ten 8 days of the commencement of such use, elect to] pay a tax equal 9 to six per cent of the fair rental value of the motor vehicle, 10 trailer or semi-trailer during such use. [Should such motor 11 vehicle, trailer or semi-trailer be used for a taxable use after 12 a period of one year, the taxpayer shall be liable for a tax on 13 the fair market value of such motor vehicle, trailer or semi- 14 trailer at the time of acquisition, but shall be allowed a 15 credit equal to the tax paid pursuant to the election provided 16 for in this section.] This section shall not apply to the use of 17 a vehicle as a wrecker, parts truck, delivery truck or courtesy 18 car. 19 * * * 20 Section 2. Section 301 introductory paragraph, (a) and (d) 21 of the act, amended December 23, 1983 (P.L.370, No.90), April 22 23, 1998 (P.L.239, No.45) and June 29, 2002 (P.L.559, No.89), 23 are amended to read: 24 Section 301. Definitions.--Any reference in this article to 25 the Internal Revenue Code of 1986 shall mean the Internal 26 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), 27 as amended to January 1, 1997, unless the reference contains the 28 phrase "as amended" and refers to no other date, in which case 29 the reference shall be to the Internal Revenue Code of 1986 as 30 it exists as of the time of application of this article. The 20050H0176B2565 - 4 -
1 following words, terms and phrases when used in this article 2 shall have the meaning ascribed to them in this section except 3 where the context clearly indicates a different meaning[, and, 4 unless specifically provided otherwise, any reference in this 5 article to the Internal Revenue Code of 1986 shall mean the 6 Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 7 et seq.), as amended to January 1, 1997]: 8 (a) "Accepted accounting principles and practices" means, 9 unless otherwise explicitly provided for in this article, those 10 accounting principles, systems or practices, including the 11 installment sales method of reporting, which are acceptable by 12 standards of the accounting profession and which are not 13 inconsistent with the regulations of the department setting 14 forth such principles and practices. 15 * * * 16 (d) "Compensation" means and shall include salaries, wages, 17 commissions, bonuses and incentive payments whether based on 18 profits or otherwise, fees, tips and similar remuneration 19 received for services rendered, whether directly or through an 20 agent, and whether in cash or in property. The term 21 "compensation" shall include any part of a distribution under a 22 plan described in section 409A(d)(1) of the Internal Revenue 23 Code of 1986 (Public Law 99-514, 26 U.S.C. § 409A(d)(1)), as 24 amended, attributable to an elective deferral of income or the 25 income on any elective deferral of income, whether paid or 26 payable during employment or to a retired person upon or after 27 retirement from service. 28 The term "compensation" shall not mean or include: (i) 29 periodic payments for sickness and disability other than regular 30 wages received during a period of sickness or disability; or 20050H0176B2565 - 5 -
1 (ii) disability, retirement or other payments arising under 2 workmen's compensation acts, occupational disease acts and 3 similar legislation by any government; or (iii) payments 4 commonly recognized as old age or retirement benefits paid to 5 persons retired from service after reaching a specific age or 6 after a stated period of employment; or (iv) payments commonly 7 known as public assistance, or unemployment compensation 8 payments by any governmental agency; or (v) payments to 9 reimburse actual expenses; or (vi) payments made by employers or 10 labor unions, including payments made pursuant to a cafeteria 11 plan qualifying under section 125 of the Internal Revenue Code 12 of 1986 (Public Law 99-514, 26 U.S.C. § 125), for employe 13 benefit programs covering hospitalization, sickness, disability 14 or death, supplemental unemployment benefits or strike benefits: 15 Provided, That the program does not discriminate in favor of 16 highly compensated individuals as to eligibility to participate, 17 payments or program benefits; or (vii) any compensation received 18 by United States servicemen serving in a combat zone; or (viii) 19 payments received by a foster parent for in-home care of foster 20 children from an agency of the Commonwealth or a political 21 subdivision thereof or an organization exempt from Federal tax 22 under section 501(c)(3) of the Internal Revenue Code of 1954 23 which is licensed by the Commonwealth or a political subdivision 24 thereof as a placement agency; or (ix) payments made by 25 employers or labor unions for employe benefit programs covering 26 social security or retirement; or (x) personal use of an 27 employer's owned or leased property or of employer-provided 28 services. 29 * * * 30 Section 3. Section 303(a)(1) and (6) of the act, amended or 20050H0176B2565 - 6 -
1 added August 31, 1971 (P.L.362, No.93) and March 13, 1974 2 (P.L.179, No.32), are amended and the section is amended by 3 adding subsections to read: 4 Section 303. Classes of Income.--(a) The classes of income 5 referred to above are as follows: 6 (1) Compensation. 7 (i) All salaries, wages, commissions, bonuses and incentive 8 payments whether based on profits or otherwise, fees, tips and 9 similar remuneration received for services rendered whether 10 directly or through an agent and whether in cash or in property 11 except income derived from the United States Government for 12 active duty outside the Commonwealth of Pennsylvania as a member 13 of its armed forces. 14 (ii) Compensation of a cash basis taxpayer shall be 15 considered as received if the compensation is actually or 16 constructively received for Federal income tax purposes as 17 determined consistent with the United States Treasury 18 regulations and rulings under the Internal Revenue Code of 1986, 19 as amended, except that, for purposes of computing tax under 20 this article: 21 (A) Amounts lawfully deducted, not deferred, and withheld 22 from the compensation of employes shall be considered to have 23 been received by the employe as compensation at the time the 24 deduction is made. 25 (B) Contributions to an employes' trust, pooled fund, or 26 other arrangement which is not subject to the claims of 27 creditors of the employer made by an employer on behalf of an 28 employe or self-employed individual at the election of the 29 employe or self-employed individual pursuant to a cash or 30 deferred arrangement or salary reduction agreement shall be 20050H0176B2565 - 7 -
1 deemed to have been received by the employe or individual as 2 compensation at the time the contribution is made, regardless of 3 when the election is made or a payment is received. 4 (C) Any contribution to a plan by, on behalf of or 5 attributable to a self-employed person shall be deemed to have 6 been received at the time the contribution is made. 7 (D) Employer contributions to a Roth IRA custodial account 8 or employe annuity shall be deemed received, earned or acquired 9 only when distributed, when the plan fails to meet the 10 requirements of section 408A of the Internal Revenue Code of 11 1986 (26 U.S.C. § 408A), as amended, or when the plan is not 12 operated in accordance with such requirements. 13 (E) Employe contributions to an employes' trust or pooled 14 fund or custodial account or contract or employe annuity shall 15 not be deducted or excluded from compensation. 16 (iii) For purposes of determining when deferred compensation 17 of employes other than employes of exempt organizations and 18 State and local governments is required to be included in 19 income, the following apply: 20 (A) The rules of sections 83 and 451 of the Internal Revenue 21 Code of 1986 (26 U.S.C. §§ 83 and 451), as amended, shall apply. 22 (B) The rules of section 409A of the Internal Revenue Code 23 of 1986 (26 U.S.C. § 409A), as amended, shall apply. 24 (iv) For purposes of determining when deferred compensation 25 of employes of exempt organizations and State and local 26 governments is required to be included in income, the following 27 apply: 28 (A) The rules of sections 83, 451 and 457 of the Internal 29 Revenue Code of 1986, as amended, shall apply. 30 (B) The rules of section 409A of the Internal Revenue Code 20050H0176B2565 - 8 -
1 of 1986, as amended, shall apply. 2 * * * 3 (6) Interest derived from obligations which are not 4 statutorily free from State or local taxation under any other 5 act of the General Assembly of the Commonwealth of Pennsylvania 6 or under the laws of the United States and any amount paid under 7 contract of life insurance or endowment or annuity contract, 8 which is includable in gross income for Federal income tax 9 purposes. 10 * * * 11 (a.4) This article shall be subject to applicable Federal 12 limitations on state income taxation. 13 (a.5) The requirements of section 1035 of the Internal 14 Revenue Code of 1986 (26 U.S.C. § 1035), as amended, shall be 15 applicable. 16 * * * 17 Section 4. Section 315.5 of the act, added May 7, 1997 18 (P.L.85, No.7), is amended to read: 19 [Section 315.5. Contributions for Olympics.--(a) The 20 department shall provide a space on the Pennsylvania individual 21 income tax return form whereby an individual may voluntarily 22 designate a contribution of any amount desired to the United 23 States Olympic Committee, Pennsylvania Division. 24 (b) The amount so designated by an individual on the income 25 tax return form shall be deducted from the tax refund to which 26 such individual is entitled and shall not constitute a charge 27 against the income tax revenues due the Commonwealth. 28 (c) The department shall determine annually the total amount 29 designated pursuant to this section, less reasonable 30 administrative costs, and shall report such amount to the State 20050H0176B2565 - 9 -
1 Treasurer who shall transfer such amount from the General Fund 2 to the United States Olympic Committee, Pennsylvania Division.] 3 Section 5. The act is amended by adding sections to read: 4 Section 315.8. Contributions for Military Family Relief 5 Assistance.--(a) Beginning with taxable years ending after 6 December 31, 2004, the department shall provide a space on the 7 Pennsylvania individual income tax return form whereby an 8 individual may contribute to a fund for military family relief 9 assistance. Persons may do so by stating the amount of the 10 contribution, not less than one dollar ($1), on the return and 11 that the contribution will reduce the taxpayer's refund. 12 (b) The department shall determine annually the total amount 13 designated under this section, less reasonable administrative 14 costs, and shall report the amount to the State Treasurer who 15 shall transfer the amount to a restricted revenue account within 16 the General Fund to be used by the Department of Military and 17 Veterans Affairs for contributions to military family relief 18 assistance as provided by statute. 19 (c) The department shall provide adequate information 20 concerning the checkoff for military family relief assistance in 21 its instructions which accompany the Pennsylvania income tax 22 return forms. The information concerning the checkoff shall 23 include the listing of an address furnished by the Department of 24 Military and Veterans Affairs to which contributions may be sent 25 by taxpayers wishing to contribute to this effort but who do not 26 receive refunds. 27 (d) The Department of Military and Veterans Affairs shall 28 report annually to the respective committees of the Senate and 29 the House of Representatives which have jurisdiction over 30 military and veterans affairs on the amount received via the 20050H0176B2565 - 10 -
1 checkoff plan and how the funds were utilized. 2 Section 315.9. Operational Provisions.--(a) Except for the 3 checkoff established under sections 315.6 and 315.7 and except 4 as otherwise provided under subsection (b), the checkoffs 5 established under this part shall apply through taxable years 6 ending December 31, 2007. 7 (b) Any checkoff established under this part and applicable 8 for the first time in a taxable year beginning after December 9 31, 2003, shall expire four years after the beginning of such 10 first taxable year. 11 (c) Sections 315.2, 315.3 and 315.4 shall expire January 1, 12 2008. 13 Section 6. Section 352(d) and (f) of the act, amended August 14 4, 1991 (P.L.97, No.22), are amended to read: 15 Section 352. Additions, Penalties and Fees.--* * * 16 (d) (1) If any taxpayer fails to pay all or any part of an 17 installment of estimated tax, he shall be deemed to have made an 18 underpayment of estimated tax. There shall be added to the tax 19 for the taxable year an amount at the rate established pursuant 20 to section 806 of the act of April 9, 1929 (P.L.343, No.176), 21 known as "The Fiscal Code," upon the amount of the underpayment 22 for the period of the underpayment but not beyond the fifteenth 23 day of the fourth month following the close of the taxable year. 24 The amount of the underpayment shall be the excess of the amount 25 of the installment which would be required to be paid if the 26 estimated tax were equal to ninety per cent of the tax (two- 27 thirds in the case of an individual described in subsection (e) 28 of section 325) shown on the return for the taxable year (or if 29 no return was filed, of the tax for such year) over the amount, 30 if any, of the installments paid on or before the last day 20050H0176B2565 - 11 -
1 prescribed for such payment. No underpayment shall be deemed to 2 exist with respect to an installment otherwise due on or after 3 the taxpayer's death or, in the case of a decedent's estate or a 4 trust created by the decedent to receive the residue of the 5 decedent's estate, for a period of two years after the 6 decedent's death. 7 (2) No addition to tax shall be imposed if the total amount 8 of all payments of estimated tax made on or before the last date 9 prescribed for the payment of such installment equals or exceeds 10 the lesser of: 11 (A) The amount which would have been required to be paid on 12 or before such date if the estimated tax were an amount equal to 13 the tax computed, at the rates applicable to the taxable year, 14 but otherwise on the basis of the facts shown on his return for, 15 and the law applicable to, the preceding taxable year; or 16 (B) An amount equal to ninety per cent of the tax computed, 17 at the rates applicable to the taxable year, on the basis of the 18 actual income for the months in the taxable year ending before 19 the month in which the installment is required to be paid[.], 20 or, in the case of a trust or estate, an amount equal to ninety 21 per cent of the applicable percentage of the tax for the taxable 22 year as determined pursuant to section 6654(d)(2)(C)(ii) of the 23 Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 24 6654), as amended, at rates applicable to the taxable year, 25 computed on an annualized basis in accordance with United States 26 Treasury regulations, based upon the actual income for the 27 months of the taxable year ending with the last day of the 28 second preceding month prior to the month in which the 29 installment is required to be paid. 30 * * * 20050H0176B2565 - 12 -
1 (f) (1) Any person required under the provisions of section
2 317 to furnish a statement to an employe who wilfully furnishes
3 a false or fraudulent statement, or who wilfully fails to
4 furnish a statement in the manner, at the time, and showing the
5 information required under section 317 and the regulations
6 prescribed thereunder, shall, for each such failure, be subject
7 to a penalty of fifty dollars ($50) for each employe.
8 (2) Any person required by regulation to furnish an
9 information return who furnishes a false or fraudulent return
10 shall for each failure be subject to a penalty of [fifty dollars
11 ($50)] two hundred fifty dollars ($250).
12 * * *
13 Section 7. Section 401(1) of the act, amended June 29, 2002
14 (P.L.559, No.89) and December 23, 2003 (P.L.250, No.46), is
15 amended to read:
16 Section 401. Definitions.--The following words, terms, and
17 phrases, when used in this article, shall have the meaning
18 ascribed to them in this section, except where the context
19 clearly indicates a different meaning:
20 (1) "Corporation." Any of the following:
21 (i) A corporation.
22 (ii) A joint-stock association.
23 (iii) A business trust, limited liability company or other
24 entity which for Federal income tax purposes is classified as a
25 corporation.
26 The term does not include:
27 1. A business trust which qualifies as a real estate
28 investment trust under section 856 of the Internal Revenue Code
29 of 1986 (Public Law 99-514, 26 U.S.C. § 856) or which is a
30 qualified real estate investment trust subsidiary under section
20050H0176B2565 - 13 -
1 856(i) of the Internal Revenue Code of 1986 (26 U.S.C. § 2 856(i)). 3 2. A business trust which qualifies as a regulated 4 investment company under section 851 of the Internal Revenue 5 Code of 1986 (26 U.S.C. § 856(i)) and which is registered with 6 the United States Securities and Exchange Commission under the 7 Investment Company Act of 1940 or a related business trust which 8 confines its activities in this Commonwealth to the maintenance, 9 administration and management of intangible investments and 10 activities of regulated investment companies. 11 3. A corporation, trust or other entity which is an exempt 12 organization as defined by section 501 of the Internal Revenue 13 Code of 1986 (26 U.S.C. § 501). 14 4. A corporation, trust or other entity organized as a not- 15 for-profit under the laws of this Commonwealth or the laws of 16 any other state which: 17 (i) would qualify as an exempt organization as defined by 18 section 501 of the Internal Revenue Code of 1986 (26 U.S.C. § 19 501); 20 (ii) would qualify as a homeowners association as defined by 21 section 528(c) of the Internal Revenue Code of 1986 (26 U.S.C. § 22 528(c)); [or] 23 (iii) is a membership organization subject to the Federal 24 limitations on deductions from taxable income under section 277 25 of the Internal Revenue Code of 1986 (26 U.S.C. § 277) but only 26 if no pecuniary gain or profit inures to any member or related 27 entity from the membership organization[.]; or 28 (iv) is a nonstock commodity or nonstock stock exchange. 29 * * * 30 Section 8. The definition of "corporation" in section 601(a) 20050H0176B2565 - 14 -
1 of the act, amended December 23, 2003 (P.L.250, No.46), is 2 amended to read: 3 Section 601. Definitions and Reports.--(a) The following 4 words, terms and phrases when used in this Article VI shall have 5 the meaning ascribed to them in this section, except where the 6 context clearly indicates a different meaning: 7 * * * 8 "Corporation." (A) Any of the following entities: 9 (1) A corporation. 10 (2) A joint-stock association. 11 (3) A business trust. 12 (4) A limited liability company. This clause excludes a 13 restricted professional company which is subject to 15 Pa.C.S. 14 Ch. 89 Subch. L (relating to restricted professional companies) 15 and which is deemed to be a limited partnership pursuant to 15 16 Pa.C.S. § 8997 (relating to taxation of restricted professional 17 companies). 18 (5) An entity which for Federal income tax purposes is 19 classified as a corporation. 20 (6) A business trust which is a real estate investment trust 21 as defined in section 856 of the Internal Revenue Code of 1986 22 (Public Law 99-514, 26 U.S.C. § 856) more than fifty per cent of 23 the voting power or value of the beneficial interests or shares 24 of which are owned or controlled, directly or indirectly, by a 25 single corporation that is not: 26 (i) a real estate investment trust as defined in section 856 27 of the Internal Revenue Code of 1986; 28 (ii) a qualified real estate investment trust subsidiary 29 under section 856(i) of the Internal Revenue Code of 1986; 30 (iii) a regulated financial institution as defined by 20050H0176B2565 - 15 -
1 section 401(6) of Article IV; or 2 (iv) formed as a holding company, subsidiary or affiliate of 3 a regulated financial institution prior to December 1, 2003. 4 (7) A business trust which is a qualified real estate 5 investment trust subsidiary under section 856(i) of the Internal 6 Revenue Code of 1986 owned, directly or indirectly, by a real 7 estate investment trust as defined in section 856 of the 8 Internal Revenue Code of 1986 more than fifty per cent of the 9 voting power or value of the beneficial interests or shares of 10 which are owned or controlled, directly or indirectly, by a 11 single corporation that is not: 12 (i) a real estate investment trust as defined in section 856 13 of the Internal Revenue Code of 1986; 14 (ii) a qualified real estate investment trust subsidiary 15 under section 856(i) of the Internal Revenue Code of 1986; 16 (iii) a regulated financial institution as defined by 17 section 401(6) of Article IV; or 18 (iv) formed as a holding company, subsidiary or affiliate of 19 a regulated financial institution prior to December 1, 2003. 20 (B) The term does not include any of the following: 21 (1) A business trust which qualifies as a real estate 22 investment trust under section 856 of the Internal Revenue Code 23 of 1986 (26 U.S.C. § 856) or which is a qualified real estate 24 investment trust subsidiary under section 856(i) of the Internal 25 Revenue Code of 1986 (26 U.S.C. § 856(i)). 26 (2) A business trust which qualifies as a regulated 27 investment company under section 851 of the Internal Revenue 28 Code of 1986 (26 U.S.C. § 851) and which is registered with the 29 United States Securities and Exchange Commission under the 30 Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1 20050H0176B2565 - 16 -
1 et seq.) or a related business trust which confines its 2 activities in this Commonwealth to the maintenance, 3 administration and management of intangible investments and 4 activities of regulated investment companies. 5 (3) A corporation, trust or other entity which is an exempt 6 organization as defined by section 501 of the Internal Revenue 7 Code of 1986 (26 U.S.C. § 501). 8 (4) A corporation, trust or other entity organized as a not- 9 for-profit organization under the laws of this Commonwealth or 10 the laws of any other state which: 11 (i) would qualify as an exempt organization as defined by 12 section 501 of the Internal Revenue Code of 1986 (26 U.S.C. § 13 501); 14 (ii) would qualify as a homeowners association as defined by 15 section 528(c) of the Internal Revenue Code of 1986 (26 U.S.C. § 16 528(c)); [or] 17 (iii) is a membership organization subject to the Federal 18 limitations on deductions from taxable income under section 277 19 of the Internal Revenue Code of 1986 (26 U.S.C. § 277) but only 20 if no pecuniary gain or profit inures to any member or related 21 entity from the membership organization[.]; or 22 (iv) is a nonstock commodity or a nonstock stock exchange. 23 (5) A cooperative agricultural association subject to 15 24 Pa.C.S. Ch. 75 (relating to cooperative agricultural 25 associations). 26 (6) A business trust if the trust is all of the following: 27 (i) Created or managed by an entity which is subject to the 28 tax imposed by Article VII or XV or which is an affiliate of the 29 entity which shares at least eighty per cent common ownership. 30 (ii) Created and managed for the purpose of facilitating the 20050H0176B2565 - 17 -
1 securitization of intangible assets. 2 (iii) Classified as a partnership or a disregarded entity 3 for Federal income tax purposes. 4 * * * 5 Section 9. Section 1111-C(a) of the act, amended July 2, 6 1986 (P.L.318, No.77), is amended to read: 7 Section 1111-C. Determination and Notice of Tax; Review.-- 8 (a) If any person shall fail to pay any tax imposed by this 9 article for which he is liable, the department is hereby 10 authorized and empowered to make a determination of additional 11 tax and interest due by such person based upon any information 12 within its possession or that shall come into its possession. 13 All of such determinations shall be made within three years 14 after the date of the recording of the document[.], subject to 15 the following: 16 (1) If the taxpayer underpays the correct amount of the tax 17 by twenty-five per cent or more, the tax may be assessed at any 18 time within six years after the date of the recording of the 19 document. 20 (2) If any part of an underpayment of tax is due to fraud or 21 an undisclosed, intentional disregard of rules and regulations, 22 the full amount of the tax may be assessed at any time. 23 * * * 24 Section 10. The act is amended by adding a section to read: 25 Section 1114-C. Sharing Information.--Notwithstanding the 26 provisions of any other act, the department may divulge to the 27 proper officer of a political subdivision imposing a local real 28 estate transfer tax, or the authorized representative of that 29 officer, information gained pursuant to the department's 30 administration or collection respecting the collection of realty 20050H0176B2565 - 18 -
1 transfer tax under this article. 2 Section 11. Sections 1101-D and 1102-D of the act, added 3 July 2, 1986 (P.L.318, No.77), are amended to read: 4 Section 1101-D. Imposition.--The duly constituted 5 authorities of the following political subdivisions--cities of 6 the second class, cities of the second class A, cities of the 7 third class, boroughs, incorporated towns, townships of the 8 first class, townships of the second class, school districts of 9 the first class A, school districts of the second class, school 10 districts of the third class and school districts of the fourth 11 class, in all cases including independent school districts--may, 12 in their discretion, by ordinance or resolution, for general 13 revenue purposes, levy, assess and collect or provide for the 14 levying, assessment and collection of a tax upon a transfer of 15 real property or an interest in real property within the limits 16 of the political subdivision, regardless of where the 17 instruments making the transfers are made, executed or delivered 18 or where the actual settlements on the transfer take place, to 19 the extent that the transactions are subject to the tax imposed 20 by Article XI-C. [In addition, such political subdivision may 21 impose a local real estate transfer tax upon additional classes 22 or types of transactions if the tax was imposed by the political 23 subdivision under the act of December 31, 1965 (P.L.1257, 24 No.511), known as "The Local Tax Enabling Act," prior to the 25 effective date of this article.] A tax imposed under this 26 article shall be subject to rate limitations provided by section 27 5, section 8 and section 17 of the act of December 31, 1965 28 (P.L.1257, No.511), known as "The Local Tax Enabling Act." 29 Section 1102-D. Administration.--[A] (a) The tax [imposed] 30 authorized under this article shall be administered, collected 20050H0176B2565 - 19 -
1 and enforced under the act of December 31, 1965 (P.L.1257, 2 No.511), known as "The Local Tax Enabling Act[.]," provided, 3 however, that, if the correct amount of the tax is not paid by 4 the last date prescribed for timely payment as provided for in 5 section 1102-C, the department may determine the tax, interest 6 and penalty as provided for in section 1109-D and may collect 7 and enforce the tax, interest and penalty in the same manner as 8 tax, interest and penalty imposed by Article XI-C. 9 (b) Whenever a declaration is required to be filed under 10 Article XI-C, a declaration is also required to be filed under 11 this article. 12 Section 12. The act is amended by adding sections to read: 13 Section 1103-D. Regulations.--(a) The regulations 14 promulgated under Article XI-C shall be applicable to the taxes 15 imposed under this article. 16 (b) The Department of Revenue may promulgate and enforce 17 regulations not inconsistent with the provisions of this 18 article. 19 (c) The department, to cover its costs of administration, 20 shall retain an amount equal to costs but not to exceed ten per 21 cent of the tax, interest, and penalty collected and enforced by 22 the department under section 1102-D. 23 Section 1104-D. Documentary Stamps.--(a) The payment of the 24 tax imposed under this article shall be evidenced by the 25 affixing of a documentary stamp or stamps to every document by 26 the person making, executing, delivering or presenting for 27 recording such document. The stamps shall be affixed in such 28 manner that their removal will require the continued application 29 of steam or water, and the person using or affixing the stamps 30 shall write, stamp or cause to be written or stamped thereon the 20050H0176B2565 - 20 -
1 initials of that person's name and the date upon which the 2 stamps are affixed or used so that the stamps may not again be 3 used; provided that the Department of Revenue may prescribe such 4 other method of cancellation as it may deem expedient. 5 (b) The department may, in its discretion, use documentary 6 license meter impressions or similar indicia of payment in lieu 7 of stamps. 8 Section 1105-D. Collection Agent.--The recorder of deeds 9 shall be the collection agent for any political subdivision 10 levying a local real estate transfer tax under this article. The 11 recorder of deeds shall pay tax, interest and penalty collected 12 under this article over to the appropriate political subdivision 13 in accordance with section 6(c) of the act of November 1, 1971 14 (P.L.495, No.113), entitled, as amended, "An act providing for 15 the compensation of county officers in counties of the second 16 through eighth classes, for compensation of district attorneys 17 in cities and counties of the first class, for compensation of 18 district election officers in all counties, for the disposition 19 of fees, for filing of bonds in certain cases and for duties of 20 certain officers." 21 Section 1106-D. Disbursements.--The tax, interest and 22 penalty that the Department of Revenue collects under this 23 article shall be remitted in the manner provided by law to the 24 appropriate recorder of deeds along with the "State Tax Payment 25 Imprint Receipt" which shall provide sufficient information for 26 the recorder of deeds to determine which political subdivisions 27 are entitled to the collections. The recorder of deeds shall 28 record the "State Tax Payment Imprint Receipt" whether or not 29 signed and acknowledged by the Department of Revenue and shall 30 index in the grantor/grantee index to the original document upon 20050H0176B2565 - 21 -
1 which the tax has been paid. The department shall collect from 2 the taxpayer as part of its determination process the county 3 recording fee for the recording of the "State Tax Payment 4 Imprint Receipt." 5 Section 1107-D. Proceeds of Judicial Sale.--The tax imposed 6 under this article shall be fully paid and have priority out of 7 the proceeds of any judicial sale of real estate before any 8 other obligation, claim, lien, judgment, estate or costs of the 9 sale and of the writ upon which the sale is made. The sheriff or 10 other officer conducting the sale shall pay the tax imposed 11 under this article out of the first moneys paid to the sheriff 12 or officer in connection therewith. If the proceeds of the sale 13 are insufficient to pay the entire tax imposed under this 14 article, the purchaser shall be liable for the remaining tax. 15 Section 1108-D. Failure to Affix Stamps.--No document upon 16 which tax is imposed under this article shall at any time be 17 made the basis of any action or other legal proceeding, nor 18 shall proof thereof be offered or received in evidence in any 19 court of this Commonwealth or recorded in the office of any 20 recorder of deeds of any county of this Commonwealth unless a 21 documentary stamp or stamps as provided in this article have 22 been affixed thereto. 23 Section 1109-D. Determination and Notice of Tax; Review.-- 24 (a) If any person fails to pay any tax imposed under this 25 article for which that person is liable, a political subdivision 26 may authorize the Department of Revenue to make a determination 27 of additional tax, penalty and interest due under this section 28 by the person. The determination will be based upon any 29 information which is within the possession or which will come 30 into the possession of the department. The determination will be 20050H0176B2565 - 22 -
1 made within three years after the date of the recording of the 2 document, subject to the following: 3 (1) If the taxpayer underpays the correct amount of the tax 4 by twenty-five per cent or more, the tax may be assessed at any 5 time within six years after the date of the recording of the 6 document. 7 (2) If any part of an underpayment of tax is due to fraud or 8 an undisclosed, intentional disregard of rules and regulations, 9 the full amount of the tax may be assessed at any time. 10 (b) (1) Promptly after the date of such determination, the 11 department shall send by mail a copy thereof to the person 12 against whom it was made. Within ninety days after the date upon 13 which the copy of the determination was mailed, the person may 14 file with the department a petition for redetermination of the 15 taxes. 16 (2) Every petition for redetermination must state 17 specifically the reasons which the petitioner believes to be 18 entitled to redetermination and shall be supported by 19 affirmation that it is not made for the purpose of delay and 20 that the facts set forth therein are true. 21 (3) The department, within six months after the date of 22 filing of a petition for redetermination, shall dispose of the 23 petition. Notice of the action taken upon a petition for 24 redetermination shall be given to the petitioner promptly after 25 the date of redetermination by the department. 26 (c) A person shall have the right to review by the Board of 27 Finance and Revenue and appeal in the same manner and within the 28 same time as provided by law in the case of capital stock and 29 franchise taxes imposed upon corporations. 30 (d) (1) Notice of the action of the Board of Finance and 20050H0176B2565 - 23 -
1 Revenue shall be given by mail to the political subdivision. A 2 political subdivision shall have the right to appeal in the same 3 manner and within the same time as provided by law for the 4 Commonwealth in the case of capital stock and franchise taxes 5 imposed upon corporations. 6 (2) The political subdivision may request in writing the 7 Office of General Counsel to render such legal advice and such 8 representation as are required concerning every matter and issue 9 arising in connection with an appeal from a decision of the 10 Board of Finance and Revenue. 11 Section 1110-D. Lien.--(a) Any tax that the Department of 12 Revenue determines to be due under this article and remains 13 unpaid after demand for the same, and all penalties and interest 14 thereon, shall be a lien in favor of the affected political 15 subdivision upon the property, both real and personal, of the 16 person but only after the lien has been entered and docketed of 17 record by the prothonotary of the county where such property is 18 situated. 19 (b) (1) At any time after it makes a determination of 20 additional tax, penalty or interest under this article, the 21 department may transmit to the prothonotaries of the respective 22 counties certified copies of all liens for the taxes, penalties 23 and interest under this article or copies of all liens under 24 Article XI-C and this article on a single form. 25 (2) A prothonotary receiving the lien shall enter and docket 26 the lien of record in the prothonotary's office, which lien 27 shall be indexed as judgments are now indexed. 28 (3) After the department's determination becomes final, a 29 writ of execution may directly issue upon the lien without the 30 issuance and prosecution to judgment of a writ of scire facias; 20050H0176B2565 - 24 -
1 provided that not less than ten days before issuance of any 2 execution on the lien, notice shall be sent by certified mail to 3 the taxpayer at the taxpayer's last known post office address. 4 No prothonotary shall require as a condition precedent to the 5 entry of the liens, the payment of any costs incident thereto. 6 (c) (1) The lien imposed under this section shall have 7 priority from the date of its recording and shall be fully paid 8 and satisfied out of the proceeds of any judicial sale of 9 property subject thereto before any other obligation, judgment, 10 claim, lien or estate to which the property may subsequently 11 become subject, except costs of the sale and of the writ upon 12 which the sale was made, and real estate taxes and municipal 13 claims against such property, but shall be subordinate to 14 mortgages and other liens existing and duly recorded or entered 15 of record prior to the recording of the tax lien. 16 (2) In the case of a judicial sale of property subject to a 17 lien imposed under this section upon a lien or claim over which 18 the lien has priority, the sale shall discharge the lien to the 19 extent only that the proceeds are applied to its payment and the 20 lien shall continue in full force and effect as to the balance 21 remaining unpaid. 22 (d) A lien imposed under this article shall be equal in 23 priority to the lien imposed under Article XI-C. 24 Section 1111-D. Refunds.--(a) Whenever the amount due upon 25 determination, redetermination or review is less than the amount 26 paid on account thereof, the political subdivision shall refund 27 the difference. 28 (b) Where there has been no determination of unpaid tax, 29 application for refund shall be made to the political 30 subdivision in the manner prescribed by the act of December 31, 20050H0176B2565 - 25 -
1 1965 (P.L.1257, No.511), known as "The Local Tax Enabling Act," 2 53 Pa.C.S. Ch. 84 Subch. C (relating to local taxpayers bill of 3 rights) or as otherwise provided by law. 4 Section 1112-D. Civil Penalties.--(a) If any part of any 5 underpayment of tax imposed under this article is due to fraud, 6 an amount equal to fifty per cent of the underpayment shall be 7 added to the tax. 8 (b) In the case of failure to record a declaration required 9 under this article on the date prescribed therefor, unless it is 10 shown that such failure is due to reasonable cause, five per 11 cent of the amount of such tax shall be added to the tax if the 12 failure is for not more than one month, with an additional five 13 per cent for each additional month or fraction thereof during 14 which the failure continues, not exceeding fifty per cent in the 15 aggregate. 16 Section 1113-D. Unlawful Acts and Penalty.--(a) It shall be 17 unlawful for any person to: 18 (1) accept or present for recording or cause to be accepted 19 or presented for recording any document without the full amount 20 of tax thereon being duly paid; 21 (2) make use of any documentary stamp to denote payment of 22 any tax imposed under this article without cancelling such stamp 23 as required by this article or as prescribed by the Department 24 of Revenue; 25 (3) fail, neglect or refuse to comply with or violate the 26 rules and regulations prescribed, adopted and promulgated by the 27 department under this article; 28 (4) fraudulently cut, tear or remove from a document any 29 documentary stamp; 30 (5) fraudulently affix to any document upon which tax is 20050H0176B2565 - 26 -
1 imposed under this article any documentary stamp which has been 2 cut, torn or removed from any other document upon which tax is 3 imposed under this article, or any documentary stamp of 4 insufficient value, or any forged or counterfeited stamp, or any 5 impression of any forged or counterfeited stamp, die, plate or 6 other article; 7 (6) wilfully remove or alter the cancellation marks of any 8 documentary stamp, or restore any such documentary stamp, with 9 intent to use or cause the same to be used after it has already 10 been used, or knowingly buy, sell, offer for sale, or give away 11 such altered or restored stamp to any person for use, or 12 knowingly use the same; 13 (7) knowingly have in his possession any altered or restored 14 documentary stamp which has been removed from any document upon 15 which a tax is imposed under this article, provided that the 16 possession of such stamps shall be prima facie evidence of an 17 intent to violate the provisions of this clause; or 18 (8) knowingly or wilfully prepare, keep, sell, offer for 19 sale, or have in his possession any forged or counterfeited 20 documentary stamps. 21 (b) (1) Except as otherwise provided in clause (2), a 22 person who violates subsection (a) commits a misdemeanor of the 23 second degree. 24 (2) A person who violates subsection (a)(1), (2) or (3) 25 commits a summary offense. 26 (c) A person who makes a false statement of value or 27 declaration of acquisition, not believing the statement or 28 declaration to be true, commits a misdemeanor of the second 29 degree. 30 Section 1114-D. Information.--Notwithstanding the provisions 20050H0176B2565 - 27 -
1 of any other act, the officer of a political subdivision 2 imposing a local real estate transfer tax or the authorized 3 representative of the officer may divulge to the Department of 4 Revenue information concerning the administration or collection 5 of local real estate transfer tax authorized by this article. 6 Section 13. The definition of "qualified tax liability" in 7 section 1702-B of the act, added May 7, 1997 (P.L.85, No.7), is 8 amended and the section is amended by adding a definition to 9 read: 10 Section 1702-B. Definitions.--The following words and 11 phrases, when used in this article, shall have the meanings 12 given to them in this section, except where the context clearly 13 indicates a different meaning: 14 * * * 15 "Pass-through entity." A partnership as defined in section 16 301(n.0) or a Pennsylvania S corporation as defined in section 17 301(n.1). 18 * * * 19 "Qualified tax liability." The liability for taxes imposed 20 under Article III, IV or VI of this act. The term shall not 21 include [the liability for taxes imposed under Article III on a 22 shareholder of a Pennsylvania S corporation] any tax withheld by 23 an employer from an employe under Article III. 24 * * * 25 Section 14. Section 1710-B of the act, added May 7, 1997 26 (P.L.85, No.7), is amended to read: 27 Section 1710-B. [Pennsylvania S Corporation Shareholder] 28 Pass-Through Entity.--(a) If a [Pennsylvania S corporation does 29 not have an eligible tax liability against which the research 30 and development tax credit may be applied, a shareholder of the 20050H0176B2565 - 28 -
1 Pennsylvania S corporation is entitled to a research and 2 development tax credit equal to the research and development tax 3 credit determined for the Pennsylvania S corporation for the 4 taxable year multiplied by the percentage of the Pennsylvania S 5 corporation's] pass-through entity has any unused tax credit 6 under section 1704-B, the entity may elect, in writing, 7 according to the department's procedures to transfer all or a 8 portion of the credit to shareholders, members or partners in 9 proportion to the share of the entity's distributive income to 10 which the shareholder, member or partner is entitled. 11 (b) The credit provided under subsection (a) is in addition 12 to any research and development tax credit to which a 13 shareholder, member or partner of a [Pennsylvania S corporation] 14 pass-through entity is otherwise entitled under this article. 15 However, a [Pennsylvania S corporation] pass-through entity and 16 a shareholder, member or partner of a [Pennsylvania S 17 corporation] pass-through entity may not claim a credit under 18 this article for the same qualified research and development 19 expense. 20 (c) A shareholder, member or partner of a pass-through 21 entity to whom credit is transferred under subsection (a) must 22 immediately claim the credit in the taxable year in which the 23 transfer is made. The shareholder, member or partner may not 24 carry forward, carry back, obtain a refund of or sell or assign 25 the credit. 26 Section 15. The definitions of "film," "Pennsylvania 27 production expense," "production expense" and "taxpayer" in 28 section 1702-C of the act, added July 20, 2004 (P.L.801, No.95), 29 are amended and the section is amended by adding a definition 30 read: 20050H0176B2565 - 29 -
1 Section 1702-C. Definitions. 2 The following words and phrases when used in this article 3 shall have the meanings given to them in this section unless the 4 context clearly indicates otherwise: 5 * * * 6 "Film." [The term includes a] A feature film, a television 7 film, a television pilot or each episode of a television series 8 [and a television show of 15 minutes or more in length, 9 intended], which is intended as programming for a national 10 audience. The term does not include a production featuring news, 11 current events, weather and market reports, or public 12 programming, talk show, game show, sports event, awards show or 13 other gala event, a production that solicits funds, a production 14 that primarily markets a product or service, a production 15 containing obscene material or performances as defined in 18 16 Pa.C.S. § 5903(b) (relating to obscene and other sexual 17 materials and performances) or a production primarily for 18 private, political, industrial, corporate or institutional 19 purposes. 20 * * * 21 "Pennsylvania production expense." A production expense 22 incurred in this Commonwealth. The term includes only wages and 23 salaries on which the taxes imposed by Article III or IV will be 24 paid or accrued. 25 "Production expense." An expense incurred in the production 26 of a film. The term includes the aggregate amount of wages and 27 salaries of individuals each of whom receive less than 28 $1,000,000 and are employed in the production of [a film on 29 which the taxes imposed by Article III or IV have been paid or 30 accrued] the film; the costs of construction, operations, 20050H0176B2565 - 30 -
1 editing, photography, sound synchronization, lighting, wardrobe 2 and accessories; and the cost of rental of facilities and 3 equipment. The term does not include expenses incurred in 4 purchasing story rights, music rights, development costs, 5 marketing or advertising a film. 6 * * * 7 "Start date." The first day of principal photography in the 8 Commonwealth. 9 "Taxpayer." [An entity] A film production company subject to 10 tax under Article III, IV or VI. The term does not include 11 contractors or subcontractors of a film production company. 12 Section 16. Section 1703-C of the act, added July 20, 2004 13 (P.L.801, No.95), is amended to read: 14 Section 1703-C. Credit for qualified film production expenses. 15 [(a) General rule.--A taxpayer who incurs a qualified film 16 production expense in a taxable year may apply for a film 17 production tax credit as provided in this article. A taxpayer 18 seeking a credit under this article must submit an application 19 to the department by February 15 for qualified film production 20 expenses incurred in the taxable year that ended in the prior 21 calendar year. 22 (b) Amount of credit.--A taxpayer that is qualified under 23 subsection (a) shall receive a film production tax credit for 24 the taxable year in the amount of 20% of the qualified film 25 production expenses. 26 (c) Notification.--By August 15 of the calendar year 27 following the close of the taxable year during which the 28 qualified film production expense was incurred, the department 29 shall notify the taxpayer of the amount of the taxpayer's film 30 production tax credit approved by the department.] 20050H0176B2565 - 31 -
1 (a) Application.--A taxpayer may apply to the Department of 2 Community and Economic Development for a film production tax 3 credit. The application shall be on the form required by the 4 Department of Community and Economic Development. 5 (b) Review and approval.--The Department of Community and 6 Economic Development shall review the application. Upon 7 determining the qualified film production expense amount for the 8 taxpayer, the Department of Community and Economic Development 9 may approve the taxpayer for a film production tax credit. The 10 Department of Community and Economic Development shall give 11 priority considerations to applications with the earliest start 12 date. 13 (c) Contract.--If the Department of Community and Economic 14 Development approves the taxpayer's application under subsection 15 (b), the Department of Community and Economic Development and 16 the taxpayer shall enter into a contract containing the 17 following: 18 (1) An itemized list of production expenses to be 19 incurred. 20 (2) An itemized list of Pennsylvania production expenses 21 to be incurred. 22 (3) A commitment by the taxpayer to incur the qualified 23 film production expenses as itemized. 24 (4) The start date. 25 (5) Any other information the Department of Community 26 and Economic Development deems appropriate. 27 (d) Certificate.--Upon execution of the contract required by 28 subsection (c), the Department of Community and Economic 29 Development shall award the taxpayer a film production tax 30 credit and issue the taxpayer a film production tax credit 20050H0176B2565 - 32 -
1 certificate. 2 (e) Limitations.-- 3 (1) The aggregate amount of film production tax credits 4 awarded by the Department of Community and Economic 5 Development under subsection (d) shall not exceed $10,000,000 6 in any fiscal year. 7 (2) The aggregate amount of film production tax credits 8 awarded by the Department of Community and Economic 9 Development under subsection (d) to a taxpayer for a film may 10 not exceed 20% of the qualified film production expenses to 11 be incurred. 12 (3) For the 2005-2006 fiscal year, the first year in 13 which the credit is to be awarded, the amount of film 14 production tax credits to be approved under this article 15 shall not exceed $10,000,000, including the film production 16 tax credits to be awarded by the department by August 15, 17 2005, for expenses incurred for the period July 1, 2004, to 18 December 31, 2004, under this article. 19 Section 17. The act is amended by adding a section to read: 20 Section 1703.1-C. Film production tax credits. 21 (a) Claim.--In accordance with subsection (b), a taxpayer 22 may claim a film production tax credit against the qualified tax 23 liability of the taxpayer. 24 (b) Cap.--The aggregate amount of film production tax 25 credits claimed by a taxpayer under subsection (a) may not 26 exceed the amount awarded by the Department of Community and 27 Economic Development under section 1703-C(d) for the taxpayer 28 for that taxable year. 29 Section 18. Sections 1704-C and 1707-C of the act, added 30 July 20, 2004 (P.L.801, No.95), are amended to read: 20050H0176B2565 - 33 -
1 Section 1704-C. Carryover, carryback, refund and assignment of
2 credit.
3 (a) General rule.--If the taxpayer cannot use the entire
4 amount of the film production tax credit for the taxable year in
5 which the film production tax credit is first approved, then the
6 excess may be carried over to succeeding taxable years and used
7 as a credit against the qualified tax liability of the taxpayer
8 for those taxable years. Each time that the film production tax
9 credit is carried over to a succeeding taxable year, it shall be
10 reduced by the amount that was used as a credit during the
11 immediately preceding taxable year. The film production tax
12 credit provided by this article may be carried over and applied
13 to succeeding taxable years for no more than three taxable years
14 following the first taxable year for which the taxpayer was
15 entitled to claim the credit.
16 (b) Application.--A film production tax credit approved by
17 the Department of [Revenue] Community and Economic Development
18 for qualified film production expenses in a taxable year first
19 shall be applied against the taxpayer's qualified tax liability
20 for the current taxable year as of the date on which the credit
21 was approved before the film production tax credit can be
22 applied against any tax liability under subsection (a).
23 (c) No carryback.--A taxpayer is not entitled to carry back
24 or obtain a refund of an unused film production tax credit.
25 (d) Sale or assignment.--
26 (1) A taxpayer, upon application to and approval by the
27 Department of Community and Economic Development, may sell or
28 assign, in whole or in part, a film production tax credit
29 granted to the taxpayer under this article.
30 (2) The Department of Community and Economic Development
20050H0176B2565 - 34 -
1 and the department shall jointly promulgate regulations for 2 the approval of applications under this subsection. 3 (3) Before an application is approved, the department 4 must make a finding that the applicant has filed all required 5 State tax reports [for the taxable year for which the 6 qualified expenses were approved] and returns for all 7 applicable taxable years and paid any balance of State tax 8 due as determined at settlement, assessment or determination 9 by the department. 10 (4) Notwithstanding any other provision of law, the 11 department shall settle, assess or determine the tax of an 12 applicant under this subsection within 90 days of the filing 13 of all required final returns or reports in accordance with 14 section 806.1(a)(5) of the act of April 9, 1929 (P.L.343, 15 No.176), known as The Fiscal Code. 16 (e) Purchasers and assignees.--The purchaser or assignee of 17 a portion of a film production tax credit under subsection (d) 18 shall immediately claim the credit in the taxable year in which 19 the purchase or assignment is made. The amount of the film 20 production credit that a purchaser or assignee may use against 21 any one qualified tax liability may not exceed 50% of such 22 qualified tax liability for the taxable year. The purchaser or 23 assignee may not carry over, carry back, obtain a refund of or 24 sell or assign the film production tax credit. The purchaser or 25 assignee shall notify the Department of Revenue of the seller or 26 assignor of the film production tax credit in compliance with 27 procedures specified by the Department of Revenue. 28 [Section 1707-C. Limitation on credits. 29 (a) General rule.--The total amount of credits approved by 30 the department shall not exceed $10,000,000 in any fiscal year. 20050H0176B2565 - 35 -
1 (b) Exception.--If the total amount of film production tax 2 credits applied for by all taxpayers exceeds the amount 3 allocated for those credits, then the film production tax credit 4 to be received by each applicant shall be the product of the 5 allocated amount multiplied by the quotient of the film 6 production tax credit applied for by the applicant divided by 7 the total of all film production credits applied for by all 8 applicants, the algebraic equivalent of which is: 9 taxpayer's film production tax credit = amount allocated 10 for those credits X (film production tax credit applied 11 for by the applicant/total of all film production tax 12 credits applied for by all applicants).] 13 Section 19. The act is amended by adding a section to read: 14 Section 1707.1-C. Penalty. 15 A taxpayer which claims a film production tax credit and 16 fails to incur the amount of qualified film production expense 17 agreed to in section 1703-C(c)(3) for a film in that taxable 18 year shall refund to the Commonwealth the film production tax 19 credit claimed under this article for the film. 20 Section 20. Sections 1708-C and 1709-C of the act, added 21 July 20, 2004 (P.L.801, No.95) are amended to read: 22 Section 1708-C. Pass-through entity. 23 (a) General rule.--If a pass-through entity has any unused 24 tax credit under section 1704-C, it may elect in writing, 25 according to procedures established by the department, to 26 transfer all or a portion of the credit to shareholders, members 27 or partners in proportion to the share of its distributive 28 income to which the shareholder, member or partner is entitled. 29 (b) Limitation.--The credit provided under subsection (a) is 30 in addition to any film production tax credit to which a 20050H0176B2565 - 36 -
1 shareholder, member or partner of a pass-through entity is 2 otherwise entitled under this article. However, a pass-through 3 entity and a shareholder, member or partner of a pass-through 4 entity may not claim a credit under this article for the same 5 qualified film production expense. 6 (c) Application.--A shareholder, member or partner of a 7 pass-through entity to whom a credit is transferred under 8 subsection (a) shall immediately claim the credit in the taxable 9 year in which the transfer is made. [A credit transferred to a 10 natural person may be applied only against the income referred 11 to under section 303(a)(2).] The shareholder, member or partner 12 may not carry forward, carry back, obtain a refund of or sell or 13 assign the credit. 14 Section 1709-C. Report to General Assembly. 15 The [secretary] Secretary of Community and Economic 16 Development shall submit an annual report to the General 17 Assembly indicating the effectiveness of the film production tax 18 credit provided by this article no later than April 1 following 19 the year in which the credits were approved. The report shall 20 include the names of all taxpayers utilizing the credit as of 21 the date of the report and the amount of credits approved and 22 utilized by each taxpayer. Notwithstanding any law providing for 23 the confidentiality of tax records, the department may provide 24 to the Department of Community and Economic Development tax 25 information necessary to complete the report; and the 26 information contained in the report shall be public information. 27 The report may also include any recommendations for changes in 28 the calculation or administration of the credit. 29 Section 21. Sections 1905-A and 3003.9 of the act, amended 30 May 7, 1997 (P.L.85, No.7), are amended to read: 20050H0176B2565 - 37 -
1 Section 1905-A. Grant of Tax Credit.--The Department of 2 Revenue shall grant a tax credit against any tax due under 3 Article IV, VI, VII, VII-A, VIII, VIII-A, IX, X or XV of this 4 act, or any tax substituted in lieu thereof in an amount which 5 shall not exceed fifty per cent of the total amount invested 6 during the taxable year by the business firm or twenty per cent 7 of qualified investments by a private company in programs 8 approved pursuant to section 1904-A of this act: Provided, That 9 a tax credit of up to seventy per cent of the total amount 10 invested during the taxable year by a business firm or up to 11 thirty per cent of the amount of qualified investments by a 12 private company may be allowed for investment in programs where 13 activities fall within the scope of special program priorities 14 as defined with the approval of the Governor in regulations 15 promulgated by the secretary. [Regulations establishing special 16 program priorities are to be promulgated during the first month 17 of each fiscal year and at such times during the year as the 18 public interest dictates.] Such credit shall not exceed two 19 hundred fifty thousand dollars ($250,000) annually, except in 20 the case of comprehensive service projects which shall be 21 allowed an additional credit equal to seventy per cent of the 22 qualifying investments made in comprehensive service projects; 23 however, such additional credit shall not exceed three hundred 24 fifty thousand dollars ($350,000) annually. No tax credit shall 25 be granted to any bank, bank and trust company, insurance 26 company, trust company, national bank, savings association, 27 mutual savings bank or building and loan association for 28 activities that are a part of its normal course of business. Any 29 tax credit not used in the period the investment was made may be 30 carried over for the next five succeeding calendar or fiscal 20050H0176B2565 - 38 -
1 years until the full credit has been allowed. The total amount 2 of all tax credits allowed pursuant to this act shall not exceed 3 eighteen million dollars ($18,000,000) in any one fiscal year. 4 Section 3003.9. Bad Checks; and Electronic Funds Transfers 5 Not Credited Upon Transmission; Additions to Tax.--(a) If any 6 check in payment of any amount receivable under the laws of this 7 Commonwealth administered by the department is not paid upon 8 presentment, or any electronic funds transfer as payment of any 9 amount receivable under the laws of this Commonwealth 10 administered by the department is not credited upon 11 transmission, in addition to any interest or penalties provided 12 by law, the department shall charge the person who tendered the 13 check or authorized the electronic transmission an addition to 14 tax equal to ten per cent of the face amount of the check or 15 electronic funds transfer, plus interest and protest fees, 16 provided that the addition imposed by this section shall not 17 exceed [five hundred dollars ($500)] one thousand dollars 18 ($1,000) nor be less than twenty-five dollars ($25). 19 (b) This section shall apply to all checks presented for 20 payment [after December 31, 1997.] and all electronic funds 21 transfers authorized for payment. 22 Section 22. The act is amended by adding sections to read: 23 Section 3003.16. Electronic Transmissions.--Notwithstanding 24 the provisions of the act of December 16, 1999 (P.L.971, No.69), 25 known as the "Electronic Transactions Act," the department may, 26 at any time, transmit, by electronic or any other means, to the 27 prothonotaries of the respective counties of the Commonwealth, 28 to be entered of record by them, certified copies of all liens 29 imposed by this act. Notwithstanding the provisions of the 30 "Electronic Transactions Act," the department may pay for and 20050H0176B2565 - 39 -
1 satisfy such liens by electronic or any other means. 2 Section 3003.17. Reimbursement for Costs of Collection.--(a) 3 All costs of collection incurred by the department or the Office 4 of Attorney General on tax liability for taxes administered by 5 the department, other than fuel tax liabilities and motor 6 carrier road tax liabilities, including interest, penalties and 7 fees, must be paid before the liability is extinguished unless 8 collection costs are discharged by operation of law. For 9 purposes of this section, costs of collection include only lien 10 filing costs, costs imposed under a Federal or other State tax 11 refund offset program and cost incurred by paying commissions or 12 other remuneration to private agencies paid by the department or 13 the Office of Attorney General to collect department tax 14 liabilities. 15 (b) The cost of collection shall be added to the amount of 16 the liability for taxes administered by the department and shall 17 constitute a lien against the real or personal property of the 18 person. The unpaid costs may be collected by the department, the 19 Office of Attorney General or a private collection agency in any 20 way that the underlying tax liability could have been collected. 21 Section 23. Any ordinance or resolution providing for the 22 levying, assessment or collection of a tax upon a transfer of 23 real property or an interest in real property which has been 24 enacted by a political subdivision prior to the effective date 25 of this section shall continue in full force and effect, without 26 reenactment, insofar as the transactions upon which the tax is 27 levied, assessed or collected are also subject to the tax 28 imposed by Article XI-C of the act. The ordinance or resolution 29 shall continue in full force and effect with respect to 30 documents made, executed and delivered prior to the effective 20050H0176B2565 - 40 -
1 date of this section. 2 Section 24. This act shall apply as follows: 3 (1) The following provisions shall apply to taxable 4 years beginning after December 31, 1997: 5 (i) The amendment of section 401(1)4 of the act. 6 (ii) The amendment of the definition of 7 "corporation" in section 601(a) of the act. 8 (2) Except as provided in paragraphs (6) and (7)(ii), 9 the following provisions shall apply to taxable years 10 beginning after December 31, 2002: 11 (i) The amendment of section 301(a) of the act. 12 (ii) The amendment of section 303(a)(1) of the act. 13 (3) The following provisions shall apply to film 14 production expenses incurred after December 31, 2004: 15 (i) The amendment or addition of the definitions of 16 "film," "Pennsylvania production expense," "production 17 expense," "start date" and "taxpayer" in section 1702-C 18 of the act. 19 (ii) The amendment of section 1703-C of the act. 20 (iii) The addition of section 1703.1-C of the act. 21 (iv) The amendment of section 1704-C of the act. 22 (v) The amendment of section 1707-C of the act. 23 (vi) The addition of section 1707.1-C of the act. 24 (vii) The amendment of section 1708-C of the act. 25 (viii) The amendment of section 1709-C of the act. 26 (4) The provisions referred to in paragraph (3) shall 27 not affect: 28 (i) film production tax credits for production 29 expenses incurred after June 30, 2004, and before January 30 1, 2005; or 20050H0176B2565 - 41 -
1 (ii) the process for the approval and awarding of 2 the film production tax credits for these expenses as 3 provided for in the act of July 20, 2004 (P.L.801, 4 No.95), entitled "An act amending the act of March 4, 5 1971 (P.L.6, No.2), entitled 'An act relating to tax 6 reform and State taxation by codifying and enumerating 7 certain subjects of taxation and imposing taxes thereon; 8 providing procedures for the payment, collection, 9 administration and enforcement thereof; providing for tax 10 credits in certain cases; conferring powers and imposing 11 duties upon the Department of Revenue, certain employers, 12 fiduciaries, individuals, persons, corporations and other 13 entities; prescribing crimes, offenses and penalties,' 14 authorizing a film production tax credit; and providing 15 for the powers and duties of the Department of Community 16 and Economic Development and the Department of Revenue." 17 (5) The following provisions shall apply to any document 18 made, executed, delivered, accepted or presented for 19 recording 90 days after the effective date of this paragraph: 20 (i) The amendment of section 1111-C of the act. 21 (ii) The amendment of section 1101-D of the act. 22 (iii) The amendment of section 1102-D of the act. 23 (iv) The addition of section 1103-D of the act. 24 (v) The addition of section 1104-D of the act. 25 (vi) The addition of section 1105-D of the act. 26 (vii) The addition of section 1106-D of the act. 27 (viii) The addition of section 1107-D of the act. 28 (ix) The addition of section 1108-D of the act. 29 (x) The addition of section 1109-D of the act. 30 (xi) The addition of section 1110-D of the act. 20050H0176B2565 - 42 -
1 (xii) The addition of section 1111-D of the act. 2 (xiii) The addition of section 1112-D of the act. 3 (xiv) The addition of section 1113-D of the act. 4 (6) The amendment of sections 301(d) and 303(a)(1) of 5 the act shall apply to appeals which arise prior to or after 6 the effective date of this paragraph. 7 (7) The following provisions shall apply to taxable 8 years beginning after December 31, 2004: 9 (i) The amendment of section 301(d). 10 (ii) The addition of section 303(a)(1)(iii)(B) and 11 (iv)(B). 12 (8) The amendment of section 303(a)(6) of the act shall 13 apply to taxable years beginning after December 31, 2004. 14 (9) The following provisions shall apply to taxable 15 years beginning after December 31, 2004: 16 (i) The amendment of section 315.5 of the act. 17 (ii) The addition of section 315.8 of the act. 18 (10) The amendment of sections 1702-B and 1710-B shall 19 apply to taxable years beginning after December 31, 2005. 20 (11) The amendment of section 352(d) of the act shall 21 apply to payments made after June 30, 2006. 22 Section 25. Repeals are as follows: 23 (1) The following acts and parts of acts are repealed as 24 set forth in paragraph (2): 25 (i) Section 2 of the act of December 31, 1965 26 (P.L.1257, No.511), known as The Local Tax Enabling Act. 27 (ii) Section 652.1(a)(4) of the act of March 10, 28 1949 (P.L.30, No.14), known as the Public School Code of 29 1949. 30 (2) The acts and parts of acts referred to in paragraph 20050H0176B2565 - 43 -
1 (1) are repealed insofar as they are inconsistent with the 2 following provisions: 3 (i) The amendment of section 1111-C of the act. 4 (ii) The addition of section 1114-C of the act. 5 (iii) The amendment of section 1101-D of the act. 6 (iv) The amendment of section 1102-D of the act. 7 (v) The addition of section 1103-D of the act. 8 (vi) The addition of section 1104-D of the act. 9 (vii) The addition of section 1105-D of the act. 10 (viii) The addition of section 1106-D of the act. 11 (ix) The addition of section 1107-D of the act. 12 (x) The addition of section 1108-D of the act. 13 (xi) The addition of section 1109-D of the act. 14 (xii) The addition of section 1110-D of the act. 15 (xiii) The addition of section 1111-D of the act. 16 (xiv) The addition of section 1112-D of the act. 17 (xv) The addition of section 1113-D of the act. 18 (xvi) The addition of section 1114-D of the act. 19 Section 26. This act shall take effect as follows: 20 (1) Section 205(a) of the act shall take effect in 60 21 days. 22 (2) Section 23 of this act shall take effect in 90 days. 23 (3) The remainder of this act shall take effect 24 immediately. D8L72MSP/20050H0176B2565 - 44 -