PRIOR PRINTER'S NOS. 982, 2232, 2853 PRINTER'S NO. 4509
No. 859 Session of 2005
INTRODUCED BY TURZAI, REED, GERBER, EACHUS, S. H. SMITH, DeWEESE, ALLEN, ARGALL, ARMSTRONG, BAKER BELARDI, BENNINGHOFF, BLAUM, BOYD, BROWNE, BUNT, BUXTON, CALTAGIRONE, CAPPELLI, CAWLEY, CIVERA, COSTA, DALLY, DeLUCA, DENLINGER, DERMODY, DiGIROLAMO, ELLIS, FAIRCHILD, FEESE, FICHTER, FORCIER, FRANKEL, GABIG, GANNON, GEIST, GEORGE, GILLESPIE, GODSHALL, GOOD, GOODMAN, HALUSKA, HARHART, HARRIS, HASAY, HENNESSEY, HERMAN, HERSHEY, HESS, HUTCHINSON, KILLION, LaGROTTA, LEH, LESCOVITZ, LEVDANSKY, MANDERINO, MANN, MARKOSEK, MARSICO, McCALL, McGILL, McILHATTAN, McNAUGHTON, R. MILLER, MUNDY, MUSTIO, NAILOR, PAYNE, PETRARCA, PICKETT, PRESTON, RAYMOND, READSHAW, REICHLEY, ROBERTS, ROONEY, RUBLEY, SAINATO, SANTONI, SATHER, SAYLOR, SCAVELLO, SCHRODER, SEMMEL, SHANER, B. SMITH, SOLOBAY, STABACK, STAIRS, STERN, STETLER, R. STEVENSON, STURLA, SURRA, TANGRETTI, E. Z. TAYLOR, TIGUE, WALKO, WATSON, WILT, YOUNGBLOOD, ADOLPH, CREIGHTON, FLEAGLE, GINGRICH, HARPER, KAUFFMAN, ROSS, FLICK, BARRAR, BASTIAN, CAUSER, CLYMER, J. TAYLOR, TRUE, WRIGHT, ZUG, PERZEL, BALDWIN, O'NEILL, ROHRER, STEIL, T. STEVENSON, HICKERNELL, METCALFE, S, MILLER, NICKOL, BEBKO-JONES, BELFANTI, COHEN, CORRIGAN, CRAHALLA, CRUZ, DALEY, J.EVANS, FABRIZIO, FLAHERTY, GERGELY, GRELL, GRUCELA, HANNA, HARHAI, JOSEPHS, M. KELLER, W. KELLER, KENNEY, KIRKLAND, KOTIK, LEACH, LEDERER, MACKERETH, MAJOR, MELIO, MICOZZIE, MILLARD, MYERS, OLIVER, PAYNE, PETRONE, PHILLIPS, PYLE, QUIGLEY, RAMALEY, RAPP, ROEBUCK, ROHRER, SHAPIRO, SIPTROTH, SONNEY, YEWCIC, YUDICHAK, BEYER AND BIRMELIN, MARCH 14, 2005
AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES, JULY 1, 2006
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
1 and other entities; prescribing crimes, offenses and 2 penalties," clarifying provisions relating to imposition of <-- 3 certain realty transfer taxes. FURTHER PROVIDING, IN SALES <-- 4 AND USE TAX, FOR DEFINITIONS AND FOR ALTERNATE IMPOSITION; 5 FURTHER PROVIDING, IN CORPORATE NET INCOME TAX, FOR 6 DEFINITIONS; AND FURTHER PROVIDING, IN RESEARCH AND 7 DEVELOPMENT TAX CREDIT, FOR CREDIT FOR RESEARCH AND 8 DEVELOPMENT EXPENSES, FOR TIME LIMITATIONS, FOR LIMITATIONS 9 ON CREDIT AND FOR TERMINATION. 10 The General Assembly of the Commonwealth of Pennsylvania 11 hereby enacts as follows: 12 Section 1. Section 1101-D of the act of March 4, 1971 <-- 13 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended 14 July 7, 2005 (P.L.149, No.40), is amended to read: 15 Section 1101-D. Imposition.--(a) The duly constituted 16 authorities of the following political subdivisions--cities of 17 the second class, cities of the second class A, cities of the 18 third class, boroughs, incorporated towns, townships of the 19 first class, townships of the second class, school districts of 20 the first class A, school districts of the second class, school 21 districts of the third class and school districts of the fourth 22 class, in all cases including independent school districts--may, 23 in their discretion, by ordinance or resolution, for general 24 revenue purposes, levy, assess and collect or provide for the 25 levying, assessment and collection of a tax upon a transfer of 26 real property or an interest in real property within the limits 27 of the political subdivision, regardless of where the 28 instruments making the transfers are made, executed or delivered 29 or where the actual settlements on the transfer take place, to 30 the extent that the transactions are subject to the tax imposed 31 by Article XI-C. [A] 32 (b) Except as set forth in subsection (c) or (d), a tax 33 imposed under this article shall be subject to rate limitations 34 provided by section 5, section 8 and section 17 of the act of 20050H0859B4509 - 2 -
1 December 31, 1965 (P.L.1257, No.511), known as "The Local Tax 2 Enabling Act." 3 (c) The limitations referred to in subsection (b) on the 4 rate of a tax imposed under this article shall not apply to a 5 municipality or a school district which has a higher rate of tax 6 pursuant to any other law. 7 (d) Notwithstanding section 25(1)(ii) and (2)(iii) of the 8 act of July 7, 2005 (P.L.149, No.40), entitled "An act amending 9 the act of March 4, 1971 (P.L.6, No.2), entitled 'An act 10 relating to tax reform and State taxation by codifying and 11 enumerating certain subjects of taxation and imposing taxes 12 thereon; providing procedures for the payment, collection, 13 administration and enforcement thereof; providing for tax 14 credits in certain cases; conferring powers and imposing duties 15 upon the Department of Revenue, certain employers, fiduciaries, 16 individuals, persons, corporations and other entities; 17 prescribing crimes, offenses and penalties,' further providing, 18 in sales and use tax, for alternate imposition; providing, in 19 personal income tax, for definitions, for classes of income and 20 for contributions to the Olympics; providing, in personal income 21 tax, for contributions for military family relief assistance and 22 for operational provisions; further providing, in personal 23 income tax, for additions, penalties and fees; further 24 providing, in corporate net income tax, for definitions; further 25 providing, in capital stock franchise tax, for definitions and 26 reports; further providing, in realty transfer tax, for 27 determination and notice; providing, in realty transfer tax, for 28 sharing information; further providing, in local real estate 29 transfer tax, for imposition and for administration; providing, 30 in local real estate transfer tax, for regulations, for 20050H0859B4509 - 3 -
1 documentary stamps, for collection agents, for disbursements, 2 for proceeds of judicial sale, for failure to affix stamps, for 3 determination and notice of tax, for liens, for refunds, for 4 civil penalties, for unlawful acts and penalties and for 5 information; further providing, in the research and development 6 tax credit, for definitions and for Pennsylvania S Corporation 7 pass-through; further providing, in the film production tax 8 credit, for definitions and for credit for qualified film 9 production expenses; providing, in the film production tax 10 credit, for credits; further providing in the film production 11 tax credit, for disposition and for limitation; providing, in 12 the film production tax credit, for penalties; further 13 providing, in the film production tax credit, for pass-through 14 entities and report; further providing, in the neighborhood 15 assistance tax credit, for grant; further providing, in general 16 provisions, for bad checks; providing, in general provisions, 17 for electronic transmissions and for reimbursement for costs of 18 collection; continuing ordinances and resolutions relating to 19 real property tax transfers; and making repeals," nothing in 20 this article shall be construed to prohibit a school district of 21 the first class A from levying a tax on the transfer of real 22 property or on an interest in real property at a rate of one per 23 cent. 24 Section 2. The amendment of section 1101-D of the act is 25 intended as a clarification of existing law and is not intended 26 to establish new rights nor enlarge existing rights of political 27 subdivisions or their employees or agents nor to establish new 28 obligations nor enlarge existing obligations of taxpayers. 29 Section 3. This act shall take effect immediately. 30 SECTION 1. SECTION 201(C) OF THE ACT OF MARCH 4, 1971 <-- 20050H0859B4509 - 4 -
1 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, AMENDED MAY 2 7, 1997 (P.L.85, NO.7), IS AMENDED TO READ: 3 SECTION 201. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 4 PHRASES WHEN USED IN THIS ARTICLE II SHALL HAVE THE MEANING 5 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 6 CLEARLY INDICATES A DIFFERENT MEANING: 7 * * * 8 (C) "MANUFACTURE." THE PERFORMANCE OF MANUFACTURING, 9 FABRICATING, COMPOUNDING, PROCESSING OR OTHER OPERATIONS, 10 ENGAGED IN AS A BUSINESS, WHICH PLACE ANY TANGIBLE PERSONAL 11 PROPERTY IN A FORM, COMPOSITION OR CHARACTER DIFFERENT FROM THAT 12 IN WHICH IT IS ACQUIRED WHETHER FOR SALE OR USE BY THE 13 MANUFACTURER, AND SHALL INCLUDE, BUT NOT BE LIMITED TO-- 14 (1) EVERY OPERATION COMMENCING WITH THE FIRST PRODUCTION 15 STAGE AND ENDING WITH THE COMPLETION OF TANGIBLE PERSONAL 16 PROPERTY HAVING THE PHYSICAL QUALITIES (INCLUDING PACKAGING, IF 17 ANY, PASSING TO THE ULTIMATE CONSUMER) WHICH IT HAS WHEN 18 TRANSFERRED BY THE MANUFACTURER TO ANOTHER[;]. FOR PURPOSES OF 19 THIS CLAUSE "OPERATION" SHALL INCLUDE CLEAN ROOMS AND THEIR 20 COMPONENT SYSTEMS, INCLUDING; ENVIRONMENTAL CONTROL SYSTEMS, 21 ANTISTATIC VERTICAL WALLS AND MANUFACTURING PLATFORMS AND 22 FLOORS, WHICH ARE INDEPENDENT OF THE REAL ESTATE; PROCESS PIPING 23 SYSTEMS; SPECIALIZED LIGHTING SYSTEMS; DEIONIZED WATER SYSTEMS; 24 PROCESS VACUUM AND COMPRESSED AIR SYSTEMS; PROCESS AND SPECIALTY 25 GASES; AND ALARM OR WARNING DEVICES SPECIFICALLY DESIGNED TO 26 WARN OF THREATS TO THE INTEGRITY OF THE PRODUCT OR PEOPLE. FOR 27 PURPOSES OF THIS CLAUSE A "CLEAN ROOM" IS A LOCATION WITH A 28 SELF-CONTAINED, SEALED ENVIRONMENT WITH A CONTROLLED CLOSED AIR 29 SYSTEM INDEPENDENT FROM THE FACILITY'S GENERAL ENVIRONMENTAL 30 CONTROL SYSTEM. 20050H0859B4509 - 5 -
1 (2) THE PUBLISHING OF BOOKS, NEWSPAPERS, MAGAZINES AND OTHER 2 PERIODICALS AND PRINTING[;]. 3 (3) REFINING, BLASTING, EXPLORING, MINING AND QUARRYING FOR, 4 OR OTHERWISE EXTRACTING FROM THE EARTH OR FROM WASTE OR STOCK 5 PILES OR FROM PITS OR BANKS ANY NATURAL RESOURCES, MINERALS AND 6 MINERAL AGGREGATES INCLUDING BLAST FURNACE SLAG[;]. 7 (4) BUILDING, REBUILDING, REPAIRING AND MAKING ADDITIONS TO, 8 OR REPLACEMENTS IN OR UPON VESSELS DESIGNED FOR COMMERCIAL USE 9 OF REGISTERED TONNAGE OF FIFTY TONS OR MORE WHEN PRODUCED UPON 10 SPECIAL ORDER OF THE PURCHASER, OR WHEN REBUILT, REPAIRED OR 11 ENLARGED, OR WHEN REPLACEMENTS ARE MADE UPON ORDER OF, OR FOR 12 THE ACCOUNT OF THE OWNER[;]. 13 (5) RESEARCH HAVING AS ITS OBJECTIVE THE PRODUCTION OF A NEW 14 OR AN IMPROVED (I) PRODUCT OR UTILITY SERVICE, OR (II) METHOD OF 15 PRODUCING A PRODUCT OR UTILITY SERVICE, BUT IN EITHER CASE NOT 16 INCLUDING MARKET RESEARCH OR RESEARCH HAVING AS ITS OBJECTIVE 17 THE IMPROVEMENT OF ADMINISTRATIVE EFFICIENCY. 18 (6) REMANUFACTURE FOR WHOLESALE DISTRIBUTION BY A 19 REMANUFACTURER OF MOTOR VEHICLE PARTS FROM USED PARTS ACQUIRED 20 IN BULK BY THE REMANUFACTURER USING AN ASSEMBLY LINE PROCESS 21 WHICH INVOLVES THE COMPLETE DISASSEMBLY OF SUCH PARTS AND 22 INTEGRATION OF THE COMPONENTS OF SUCH PARTS WITH OTHER USED OR 23 NEW COMPONENTS OF PARTS, INCLUDING THE SALVAGING, RECYCLING OR 24 RECLAIMING OF USED PARTS BY THE REMANUFACTURER. 25 (7) REMANUFACTURE OR RETROFIT BY A MANUFACTURER OR 26 REMANUFACTURER OF AIRCRAFT, ARMORED VEHICLES, OTHER DEFENSE- 27 RELATED VEHICLES HAVING A FINISHED VALUE OF AT LEAST FIFTY 28 THOUSAND DOLLARS ($50,000). REMANUFACTURE OR RETROFIT INVOLVES 29 THE DISASSEMBLY OF SUCH AIRCRAFT, VEHICLES, PARTS OR COMPONENTS, 30 INCLUDING ELECTRIC OR ELECTRONIC COMPONENTS, THE INTEGRATION OF 20050H0859B4509 - 6 -
1 THOSE PARTS AND COMPONENTS WITH OTHER USED OR NEW PARTS OR
2 COMPONENTS, INCLUDING THE SALVAGING, RECYCLING OR RECLAIMING OF
3 THE USED PARTS OR COMPONENTS AND THE ASSEMBLY OF THE NEW OR USED
4 AIRCRAFT, VEHICLES, PARTS OR COMPONENTS. FOR PURPOSES OF THIS
5 CLAUSE, THE FOLLOWING TERMS OR PHRASES HAVE THE FOLLOWING
6 MEANINGS:
7 (I) "AIRCRAFT" MEANS FIXED-WING AIRCRAFT, HELICOPTERS,
8 POWERED AIRCRAFT, TILT-ROTOR OR TILT-WING AIRCRAFT, UNMANNED
9 AIRCRAFT AND GLIDERS;
10 (II) "ARMORED VEHICLES" MEANS TANKS, ARMED PERSONNEL
11 CARRIERS AND ALL OTHER ARMED TRACK OR SEMITRACK VEHICLES; OR
12 (III) "OTHER DEFENSE-RELATED VEHICLES" MEANS TRUCKS, TRUCK-
13 TRACTORS, TRAILERS, JEEPS AND OTHER UTILITY VEHICLES, INCLUDING
14 ANY UNMANNED VEHICLES.
15 THE TERM "MANUFACTURE" SHALL NOT INCLUDE CONSTRUCTING,
16 ALTERING, SERVICING, REPAIRING OR IMPROVING REAL ESTATE OR
17 REPAIRING, SERVICING OR INSTALLING TANGIBLE PERSONAL PROPERTY,
18 NOR THE COOKING, FREEZING OR BAKING OF FRUITS, VEGETABLES,
19 MUSHROOMS, FISH, SEAFOOD, MEATS, POULTRY OR BAKERY PRODUCTS.
20 * * *
21 SECTION 1.1. SECTION 205(A) OF THE ACT, AMENDED JULY 7, 2005
22 (P.L.149, NO.40), IS AMENDED TO READ:
23 SECTION 205. ALTERNATE IMPOSITION OF TAX; CREDITS.--(A) IF
24 ANY PERSON ACTIVELY AND PRINCIPALLY ENGAGED IN THE BUSINESS OF
25 SELLING NEW OR USED MOTOR VEHICLES, TRAILERS OR SEMI-TRAILERS,
26 AND REGISTERED WITH THE DEPARTMENT IN THE "DEALER'S CLASS,"
27 ACQUIRES A MOTOR VEHICLE, TRAILER OR SEMI-TRAILER FOR THE
28 PURPOSE OF RESALE, AND PRIOR TO SUCH RESALE, USES THE MOTOR
29 VEHICLE, TRAILER OR SEMI-TRAILER FOR A TAXABLE USE UNDER THIS
30 ACT, [SUCH] THE PERSON MAY PAY A TAX EQUAL TO SIX PER CENT OF
20050H0859B4509 - 7 -
1 THE FAIR RENTAL VALUE OF THE MOTOR VEHICLE, TRAILER OR SEMI- 2 TRAILER DURING SUCH USE. THIS SECTION SHALL NOT APPLY TO THE USE 3 OF A VEHICLE AS A WRECKER, PARTS TRUCK, DELIVERY TRUCK OR 4 COURTESY CAR. 5 * * * 6 SECTION 2. SECTION 401(3)2(A)(9) AND 4(C) OF THE ACT, 7 AMENDED MAY 12, 1999 (P.L.26, NO.4) AND JUNE 29, 2002 (P.L.559, 8 NO.89), ARE AMENDED TO READ: 9 SECTION 401. DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND 10 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING 11 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 12 CLEARLY INDICATES A DIFFERENT MEANING: 13 * * * 14 (3) "TAXABLE INCOME." * * * 15 2. IN CASE THE ENTIRE BUSINESS OF ANY CORPORATION, OTHER 16 THAN A CORPORATION ENGAGED IN DOING BUSINESS AS A REGULATED 17 INVESTMENT COMPANY AS DEFINED BY THE INTERNAL REVENUE CODE OF 18 1986, IS NOT TRANSACTED WITHIN THIS COMMONWEALTH, THE TAX 19 IMPOSED BY THIS ARTICLE SHALL BE BASED UPON SUCH PORTION OF THE 20 TAXABLE INCOME OF SUCH CORPORATION FOR THE FISCAL OR CALENDAR 21 YEAR, AS DEFINED IN SUBCLAUSE 1 HEREOF, AND MAY BE DETERMINED AS 22 FOLLOWS: 23 (A) DIVISION OF INCOME. 24 * * * 25 (9) (A) EXCEPT AS PROVIDED IN SUBPARAGRAPH (B)[, ALL 26 BUSINESS INCOME SHALL BE APPORTIONED TO THIS STATE BY 27 MULTIPLYING THE INCOME BY A FRACTION, THE NUMERATOR OF WHICH IS 28 THE PROPERTY FACTOR PLUS THE PAYROLL FACTOR PLUS THREE TIMES THE 29 SALES FACTOR, AND THE DENOMINATOR OF WHICH IS FIVE.]: 30 (I) FOR TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 2007, ALL 20050H0859B4509 - 8 -
1 BUSINESS INCOME SHALL BE APPORTIONED TO THIS STATE BY 2 MULTIPLYING THE INCOME BY A FRACTION: THE NUMERATOR OF WHICH IS 3 THE PROPERTY FACTOR PLUS THE PAYROLL FACTOR PLUS THREE TIMES THE 4 SALES FACTOR; AND THE DENOMINATOR OF WHICH IS FIVE. 5 (II) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2006, 6 ALL BUSINESS INCOME SHALL BE APPORTIONED TO THIS STATE BY 7 MULTIPLYING THE INCOME BY A FRACTION: THE NUMERATOR OF WHICH IS 8 THE SUM OF FIFTEEN TIMES THE PROPERTY FACTOR, FIFTEEN TIMES THE 9 PAYROLL FACTOR AND SEVENTY TIMES THE SALES FACTOR; AND THE 10 DENOMINATOR OF WHICH IS ONE HUNDRED. 11 (B) FOR PURPOSES OF APPORTIONMENT OF THE CAPITAL STOCK - 12 FRANCHISE TAX AS PROVIDED IN SECTION 602 OF ARTICLE VI OF THIS 13 ACT, THE APPORTIONMENT FRACTION SHALL BE THE PROPERTY FACTOR 14 PLUS THE PAYROLL FACTOR PLUS THE SALES FACTOR AS THE NUMERATOR, 15 AND THE DENOMINATOR SHALL BE THREE. 16 * * * 17 4. * * * 18 (C) (1) THE NET LOSS DEDUCTION SHALL BE THE LESSER OF [TWO 19 MILLION DOLLARS ($2,000,000) OR THE]: 20 (A) (I) FOR TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 2007, 21 TWO MILLION DOLLARS ($2,000,000); 22 (II) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2006, 23 THE GREATER OF TWELVE AND ONE HALF PER CENT OF TAXABLE INCOME AS 24 DETERMINED UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR 25 THREE MILLION DOLLARS ($3,000,000); OR 26 (B) THE AMOUNT OF THE NET LOSS OR LOSSES WHICH MAY BE 27 CARRIED OVER TO THE TAXABLE YEAR OR TAXABLE INCOME AS DETERMINED 28 UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2. 29 (1.1) IN NO EVENT SHALL THE NET LOSS DEDUCTION INCLUDE MORE 30 THAN FIVE HUNDRED THOUSAND DOLLARS ($500,000), IN THE AGGREGATE, 20050H0859B4509 - 9 -
1 OF NET LOSSES FROM TAXABLE YEARS 1988 THROUGH 1994. 2 (2) (A) A NET LOSS FOR A TAXABLE YEAR MAY ONLY BE CARRIED 3 OVER PURSUANT TO THE FOLLOWING SCHEDULE: 4 TAXABLE YEAR CARRYOVER 5 1981 1 TAXABLE YEAR 6 1982 2 TAXABLE YEARS 7 1983-1987 3 TAXABLE YEARS 8 1988 2 TAXABLE YEARS PLUS 9 1 TAXABLE YEAR 10 STARTING WITH THE 11 1995 TAXABLE YEAR 12 1989 1 TAXABLE YEAR PLUS 13 2 TAXABLE YEARS 14 STARTING WITH THE 15 1995 TAXABLE YEAR 16 1990-1993 3 TAXABLE YEARS 17 STARTING WITH THE 18 1995 TAXABLE YEAR 19 1994 1 TAXABLE YEAR 20 1995 21 -1997 10 TAXABLE YEARS 22 1998 AND THEREAFTER 20 TAXABLE YEARS 23 (B) THE EARLIEST NET LOSS SHALL BE CARRIED OVER TO THE 24 EARLIEST TAXABLE YEAR TO WHICH IT MAY BE CARRIED UNDER THIS 25 SCHEDULE. THE TOTAL NET LOSS DEDUCTION ALLOWED IN ANY TAXABLE 26 YEAR SHALL NOT EXCEED [TWO MILLION DOLLARS ($2,000,000).]: 27 (I) TWO MILLION DOLLARS ($2,000,000) FOR TAXABLE YEARS 28 BEGINNING BEFORE JANUARY 1, 2007. 29 (II) THE GREATER OF TWELVE AND ONE HALF PER CENT OF THE 30 TAXABLE INCOME AS DETERMINED UNDER SUBCLAUSE 1 OR, IF 20050H0859B4509 - 10 -
1 APPLICABLE, SUBCLAUSE 2 OR THREE MILLION DOLLARS ($3,000,000) 2 FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2006. 3 * * * 4 SECTION 3. SECTION 1703-B OF THE ACT, ADDED MAY 7, 1997 5 (P.L.85, NO.7), IS AMENDED TO READ: 6 SECTION 1703-B. CREDIT FOR RESEARCH AND DEVELOPMENT 7 EXPENSES.--(A) A TAXPAYER WHO INCURS PENNSYLVANIA QUALIFIED 8 RESEARCH AND DEVELOPMENT EXPENSE IN A TAXABLE YEAR MAY APPLY FOR 9 A RESEARCH AND DEVELOPMENT TAX CREDIT AS PROVIDED IN THIS 10 ARTICLE. BY SEPTEMBER 15, A TAXPAYER MUST SUBMIT AN APPLICATION 11 TO THE DEPARTMENT FOR PENNSYLVANIA QUALIFIED RESEARCH AND 12 DEVELOPMENT EXPENSE INCURRED IN THE TAXABLE YEAR THAT ENDED IN 13 THE PRIOR CALENDAR YEAR. 14 (B) [A] THE FOLLOWING APPLY: 15 (1) EXCEPT AS PROVIDED IN PARAGRAPH (2), A TAXPAYER THAT IS 16 QUALIFIED UNDER SUBSECTION (A) SHALL RECEIVE A RESEARCH AND 17 DEVELOPMENT TAX CREDIT FOR THE TAXABLE YEAR IN THE AMOUNT OF TEN 18 PER CENT OF THE EXCESS OF THE TAXPAYER'S TOTAL PENNSYLVANIA 19 QUALIFIED RESEARCH AND DEVELOPMENT EXPENSE FOR THE TAXABLE YEAR 20 OVER THE TAXPAYER'S PENNSYLVANIA BASE AMOUNT. 21 (2) A TAXPAYER THAT IS A SMALL BUSINESS AND IS QUALIFIED 22 UNDER SUBSECTION (A) SHALL RECEIVE A RESEARCH AND DEVELOPMENT 23 TAX CREDIT FOR THE TAXABLE YEAR IN THE AMOUNT OF TWENTY PER CENT 24 OF THE EXCESS OF THE TAXPAYER'S TOTAL PENNSYLVANIA QUALIFIED 25 RESEARCH AND DEVELOPMENT EXPENSE FOR THE TAXABLE YEAR OVER THE 26 TAXPAYER'S PENNSYLVANIA BASE AMOUNT. 27 (C) BY DECEMBER 15 OF THE CALENDAR YEAR FOLLOWING THE CLOSE 28 OF THE TAXABLE YEAR DURING WHICH THE PENNSYLVANIA QUALIFIED 29 RESEARCH AND DEVELOPMENT EXPENSE WAS INCURRED, THE DEPARTMENT 30 SHALL NOTIFY THE TAXPAYER OF THE AMOUNT OF THE TAXPAYER'S 20050H0859B4509 - 11 -
1 RESEARCH AND DEVELOPMENT TAX CREDIT APPROVED BY THE DEPARTMENT. 2 SECTION 4. SECTION 1707-B OF THE ACT, AMENDED JUNE 29, 2002 3 (P.L.559, NO.89), IS AMENDED TO READ: 4 SECTION 1707-B. TIME LIMITATIONS.--A TAXPAYER IS NOT 5 ENTITLED TO A RESEARCH AND DEVELOPMENT TAX CREDIT FOR 6 PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT EXPENSES 7 INCURRED IN TAXABLE YEARS ENDING AFTER DECEMBER 31, [2006] 2015. 8 THE TERMINATION DATE IN SECTION 41(H) OF THE INTERNAL REVENUE 9 CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 41(H)) DOES NOT 10 APPLY TO A TAXPAYER WHO IS ELIGIBLE FOR THE RESEARCH AND 11 DEVELOPMENT TAX CREDIT UNDER THIS ARTICLE FOR THE TAXABLE YEAR 12 IN WHICH THE PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT 13 EXPENSE IS INCURRED. 14 SECTION 5. SECTION 1709-B(A) OF THE ACT, AMENDED DECEMBER 15 23, 2003 (P.L.250, NO.46), IS AMENDED TO READ: 16 SECTION 1709-B. LIMITATION ON CREDITS.--(A) THE TOTAL 17 AMOUNT OF CREDITS APPROVED BY THE DEPARTMENT SHALL NOT EXCEED 18 [THIRTY MILLION DOLLARS ($30,000,000)] FORTY MILLION DOLLARS 19 ($40,000,000) IN ANY FISCAL YEAR. OF THAT AMOUNT, [SIX MILLION 20 DOLLARS ($6,000,000)] EIGHT MILLION DOLLARS ($8,000,000) SHALL 21 BE ALLOCATED EXCLUSIVELY FOR SMALL BUSINESSES. HOWEVER, IF THE 22 TOTAL AMOUNTS ALLOCATED TO EITHER THE GROUP OF APPLICANTS 23 EXCLUSIVE OF SMALL BUSINESSES OR THE GROUP OF SMALL BUSINESS 24 APPLICANTS IS NOT APPROVED IN ANY FISCAL YEAR, THE UNUSED 25 PORTION WILL BECOME AVAILABLE FOR USE BY THE OTHER GROUP OF 26 QUALIFYING TAXPAYERS. 27 * * * 28 SECTION 6. SECTION 1712-B OF THE ACT, AMENDED JUNE 29, 2002 29 (P.L.559, NO.89), IS AMENDED TO READ: 30 SECTION 1712-B. TERMINATION.--THE DEPARTMENT SHALL NOT 20050H0859B4509 - 12 -
1 APPROVE A RESEARCH AND DEVELOPMENT TAX CREDIT UNDER THIS ARTICLE
2 FOR TAXABLE YEARS ENDING AFTER DECEMBER 31, [2006] 2015.
3 SECTION 7. THIS ACT SHALL APPLY AS FOLLOWS:
4 (1) THE FOLLOWING PROVISIONS SHALL APPLY TO ALL CREDITS
5 AWARDED AFTER JUNE 30, 2006:
6 (I) THE AMENDMENT OF SECTION 1703-B OF THE ACT.
7 (II) THE AMENDMENT OF SECTION 1707-B OF THE ACT.
8 (III) THE AMENDMENT OF SECTION 1709-B(A) OF THE ACT.
9 (IV) THE AMENDMENT OF SECTION 1712-B OF THE ACT.
10 (2) THE AMENDMENT OF SECTION 401(3)2(A)(9) AND 4(C) OF
11 THE ACT SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER
12 31, 2006.
13 SECTION 8. THIS ACT SHALL TAKE EFFECT JULY 1, 2006, OR
14 IMMEDIATELY, WHICHEVER IS LATER.
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