PRINTER'S NO. 1057
No. 948 Session of 1999
INTRODUCED BY TANGRETTI, ARGALL, CORRIGAN, MAITLAND, SCHULER, MARKOSEK, READSHAW, GEIST, BEBKO-JONES, BELFANTI, SCRIMENTI, WOJNAROSKI, HALUSKA, PISTELLA, LAUGHLIN, CURRY, WALKO, PESCI, TRELLO, STURLA, STABACK, McILHINNEY, MICOZZIE, VAN HORNE, GIGLIOTTI, MELIO, RAMOS, McCALL, SOLOBAY, M. COHEN, L. I. COHEN, GRUCELA, ORIE, SAINATO, JAMES, FREEMAN, WILLIAMS, BELARDI, YOUNGBLOOD, BUNT, STEELMAN, PETRARCA, HUTCHINSON, ROSS, CIVERA, JOSEPHS, HARHAI, STETLER, SERAFINI, HERMAN, FRANKEL AND E. Z. TAYLOR, MARCH 22, 1999
REFERRED TO COMMITTEE ON FINANCE, MARCH 22, 1999
AN ACT 1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An 2 act relating to tax reform and State taxation by codifying 3 and enumerating certain subjects of taxation and imposing 4 taxes thereon; providing procedures for the payment, 5 collection, administration and enforcement thereof; providing 6 for tax credits in certain cases; conferring powers and 7 imposing duties upon the Department of Revenue, certain 8 employers, fiduciaries, individuals, persons, corporations 9 and other entities; prescribing crimes, offenses and 10 penalties," further providing for sales and use tax 11 definitions, for sales and use tax exclusions, for sales and 12 use tax penalties, for personal income tax definitions, for 13 classes of personal income, for personal income tax 14 penalties, for realty transfer tax definitions, for realty 15 transfer tax exclusions and for realty transfer tax 16 penalties; and conferring powers and duties on the 17 Pennsylvania Historical and Museum Commission. 18 The General Assembly of the Commonwealth of Pennsylvania 19 hereby enacts as follows: 20 Section 1. Section 201 of the act of March 4, 1971 (P.L.6, 21 No.2), known as the Tax Reform Code of 1971, is amended by 22 adding definitions to read:
1 Section 201. Definitions.--The following words, terms and 2 phrases when used in this Article II shall have the meaning 3 ascribed to them in this section, except where the context 4 clearly indicates a different meaning: 5 * * * 6 (uu) "Historic homesite." A building which complies with 7 all of the following: 8 (1) The building has been in existence for at least fifty 9 years. 10 (2) The building is occupied by the owner as a principal 11 residence. 12 (3) If partially leased by the owner, the building is 13 divided into no more than three units, other than the owner's 14 principal residence, leased for: 15 (i) residential use on at least a monthly basis; or 16 (ii) commercial use. 17 (4) The building: 18 (i) has been designated by Federal, State or local 19 government as a historic property; 20 (ii) is located in an area designated by Federal, State or 21 local government as a historic district; or 22 (iii) is located in a residential conservation district. 23 (vv) "Residential conservation district." A zoning overlay 24 district intended, in selected areas of residential districts, 25 to encourage: 26 (1) infill development which respects the historic context 27 of the environment; 28 (2) rehabilitation of existing housing through the use of 29 sound maintenance and repair rather than replacement; and 30 (3) preservation, protection and enhancement of streetscapes 19990H0948B1057 - 2 -
1 and areas of architectural, historic or cultural importance. 2 Section 2. Section 204 of the act is amended by adding a 3 clause to read: 4 Section 204. Exclusions from Tax.--The tax imposed by 5 section 202 shall not be imposed upon 6 * * * 7 (58) The sale at retail or use of tangible personal property 8 or services which are valued in excess of one thousand dollars 9 ($1,000) and which are used in the conversion to or 10 rehabilitation of a historic homesite if all of the conditions 11 set forth in this clause apply. This clause includes costs 12 chargeable to the rehabilitation and restoration of the physical 13 elements of the building, such as historic decorative elements; 14 upgrading of the structural, mechanical, electrical and plumbing 15 systems to applicable code; and alterations associated with the 16 conversion to a historic homesite. This clause does not include 17 costs attributable to the acquisition of the property; the 18 enlargement of an existing building; landscaping, driveways and 19 other site features; outbuildings or garages; nor personal labor 20 performed by the owner. The following conditions must be met: 21 (i) By the date of purchase, the purchaser covenants all of 22 the following with the department: 23 (A) Within five years of the date of purchase, the 24 rehabilitation work will be completed to the satisfaction of the 25 Pennsylvania Historical and Museum Commission in accordance with 26 36 CFR 67.7 (relating to standards for rehabilitation). 27 (B) The historic homesite: 28 (I) has been maintained, for a five-year period prior to the 29 date of purchase, as the principal residence of the purchaser; 30 (II) will be maintained, for a five-year period subsequent 19990H0948B1057 - 3 -
1 to the date of purchase, as the principal residence of the 2 purchaser or a successor in interest; or 3 (III) will have been maintained, for a total of five years 4 prior and subsequent to the date of purchase, as the principal 5 residence of the purchaser or a successor in interest. 6 (ii) The seller submits to the department the form which 7 provides for the exclusion under this clause. 8 (iii) The purchaser has not previously taken advantage of 9 the exemption under this clause for the same historic homesite. 10 Section 3. Section 267 of the act is amended to read: 11 Section 267. Penalties.--(a) Penalty Assessed as Tax. The 12 penalties, additions, interest and liabilities provided by this 13 article shall be paid upon notice and demand by the department, 14 and shall be assessed and collected in the same manner as taxes. 15 Except as otherwise provided, any reference in this article to 16 "tax" imposed by this article shall be deemed also to refer to 17 the penalties, additions, interest and liabilities provided by 18 this part. 19 (b) Attempt to Evade or Defeat Tax. Any person who wilfully 20 attempts, in any manner, to evade or defeat the tax imposed by 21 this article, or the payment thereof, or to assist any other 22 person to evade or defeat the tax imposed by this article, or 23 the payment thereof, or to receive a refund improperly, shall, 24 in addition to other penalties provided by law, be liable for a 25 penalty equal to one-half of the total amount of the tax evaded. 26 In any direct proceeding arising out of a petition for 27 reassessment or refund as provided in this article, in which an 28 issue of fact is raised with respect to whether a return is 29 fraudulent or with respect to the propriety of the imposition by 30 the department of the penalty prescribed in this subsection (b), 19990H0948B1057 - 4 -
1 the burden of proof with respect to such issue shall be upon the 2 department. 3 (c) Historic Homesite. If a purchaser fails to comply with 4 the covenant under section 204(58)(i), unless it determines that 5 the failure to comply is justified, the department shall assess 6 a penalty against the purchaser in the amount of twelve per cent 7 of the purchase price of the property. 8 Section 4. Section 301 introductory paragraph of the act is 9 amended and the section is amended by adding clauses to read: 10 Section 301. Definitions.--The following words, terms and 11 phrases when used in this article shall have the meaning 12 ascribed to them in this section except where the context 13 clearly indicates a different meaning[. Unless specifically 14 provided otherwise, any reference in this article to the 15 Internal Revenue Code shall include the Internal Revenue Code of 16 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended to 17 January 1, 1997]: 18 * * * 19 (i.3) "Historic homesite" means a building which complies 20 with all of the following: 21 (1) The building has been in existence for at least fifty 22 years. 23 (2) The building is divided into no more than four units 24 used or leased for: 25 (i) residential use on at least a monthly basis; or 26 (ii) commercial use. 27 (3) The building: 28 (i) has been designated by Federal, State or local 29 government as a historic property; 30 (ii) is located in an area designated by Federal, State or 19990H0948B1057 - 5 -
1 local government as a historic district; or 2 (iii) is located in a residential conservation district. 3 * * * 4 (o.4) "Residential conservation district" means a zoning 5 overlay district intended, in selected areas of residential 6 districts, to encourage: 7 (1) infill development which respects the historic context 8 of the environment; 9 (2) rehabilitation of existing housing through the use of 10 sound maintenance and repair rather than replacement; and 11 (3) preservation, protection and enhancement of streetscapes 12 and areas of architectural, historic or cultural importance. 13 * * * 14 Section 5. Section 303(a)(3)(vii) of the act, added April 15 23, 1998 (P.L.239, No.45), is amended and the paragraph is 16 amended by adding a subparagraph to read: 17 Section 303. Classes of Income.--(a) The classes of income 18 referred to above are as follows: 19 * * * 20 (3) Net gains or income from disposition of property. Net 21 gains or net income, less net losses, derived from the sale, 22 exchange or other disposition of property, including real 23 property, tangible personal property, intangible personal 24 property or obligations issued on or after the effective date of 25 this amendatory act by the Commonwealth; any public authority, 26 commission, board or other agency created by the Commonwealth; 27 any political subdivision of the Commonwealth or any public 28 authority created by any such political subdivision; or by the 29 Federal Government as determined in accordance with accepted 30 accounting principles and practices. For the purpose of this 19990H0948B1057 - 6 -
1 article: 2 * * * 3 (vii) The term "net gains or net income, less net losses," 4 shall not include any gain or loss from the sale, exchange or 5 other disposition of the taxpayer's principal residence unless 6 the residence is a historic homesite. 7 (A) For purposes of this subparagraph, the term "principal 8 residence" shall mean the property that has been owned and used 9 by the taxpayer as the taxpayer's principal residence for 10 periods aggregating two years or more during the five-year 11 period ending on the date of the sale, exchange or disposition: 12 Provided, however, That the following shall apply: 13 (I) In the case of property only a portion of which, during 14 the five-year period ending on the date of the sale, exchange or 15 disposition, has been owned or used by the taxpayer as the 16 taxpayer's principal residence for periods aggregating two years 17 or more, this subparagraph shall apply with respect to so much 18 of the gain from the sale, exchange or disposition of such 19 property as is determined under regulations prescribed by the 20 department to be attributable to that portion. 21 (II) In the case of a principal residence only a portion of 22 which has never been subject to the allowance for depreciation, 23 this subparagraph shall apply with respect to so much of the 24 gain from the sale, exchange or disposition of such property as 25 is determined under regulations prescribed by the department to 26 be attributable to that portion. 27 (B) The provisions of this subparagraph shall not apply to a 28 sale, exchange or disposition if, during the two-year period 29 ending upon the date of the sale, exchange or disposition, there 30 was a prior sale, exchange or disposition by the taxpayer of a 19990H0948B1057 - 7 -
1 principal residence unless the sale, exchange or disposition is 2 by reason of a change in employment, health or, to the extent 3 provided in regulations, unforeseen circumstances. 4 (C) The provisions of this subparagraph shall not apply to 5 any sale, exchange or disposition made prior to January 1, 1998. 6 (viii) The term "net gains or income" shall not include the 7 net gain on the sale of a historic homesite if all of the 8 following apply: 9 (A) By the date of transfer of title to the property, the 10 purchaser covenants with the Pennsylvania Historical and Museum 11 Commission to: 12 (I) within five years of the date of transfer of title to 13 the property complete, to the satisfaction of the commission, 14 the rehabilitation work in accordance with 36 CFR 67.7 (relating 15 to standards for rehabilitation) and occupy the premises as the 16 principal residence of the purchaser or a successor in interest; 17 (II) maintain the premises as the principal residence of the 18 purchaser or a successor in interest for at least five years 19 after the occupation begins; and 20 (III) if part of the premises is leased, divide the premises 21 into no more than three units, in addition to the unit 22 maintained as a residence by the purchaser or successor in 23 interest, leased for residential use on a monthly basis or for 24 commercial use. 25 (B) At the time of purchase, the purchaser provides a copy 26 of the covenant under clause (A) to the seller. 27 (C) The seller submits to the department a copy of the 28 covenant under clause (A) and the form which provides for the 29 exclusion under this subparagraph (vii). 30 (ix) The term "net gains or income" shall exclude twenty per 19990H0948B1057 - 8 -
1 cent of the cost of rehabilitating a historic homesite if all of 2 the following apply: 3 (A) The cost of the rehabilitation is in excess of one 4 thousand dollars ($1,000). 5 (B) Before commencing rehabilitation of the property, the 6 purchaser covenants with the department to: 7 (I) complete, to the satisfaction of the Pennsylvania 8 Historical and Museum Commission, the rehabilitation work in 9 accordance with 36 CFR 67.7 (relating to standards for 10 rehabilitation) within five years and occupy the premises as the 11 principal residence of the purchaser or a successor in interest; 12 (II) maintain the residence as the principal residence of 13 the purchaser or a successor in interest for at least five years 14 after the occupation begins; and 15 (III) if part of the premises is leased, divide the premises 16 into no more than three units, in addition to the unit 17 maintained as a residence by the purchaser or successor in 18 interest, leased for residential use on a monthly basis or for 19 commercial use. 20 (C) The seller submits to the department the form which 21 provides for the exclusion under this subparagraph (viii). 22 * * * 23 Section 6. Section 352 of the act is amended by adding a 24 subsection to read: 25 Section 352. Additions, Penalties and Fees.--* * * 26 (k) If a purchaser fails to comply with the covenant under 27 section 303(a)(3)(viii)(B), unless it determines that the 28 failure to comply is justified, the department shall assess a 29 penalty against the purchaser in the amount of ten per cent of 30 the assessed value of the property. 19990H0948B1057 - 9 -
1 Section 7. Section 1101-C of the act is amended by adding 2 definitions to read: 3 Section 1101-C. Definitions.--The following words when used 4 in this article shall have the meanings ascribed to them in this 5 section: 6 * * * 7 "Historic homesite." A building which complies with all of 8 the following: 9 (1) The building has been in existence for at least fifty 10 years. 11 (2) The building is divided into no more than four units 12 leased for: 13 (i) residential use on at least a monthly basis; or 14 (ii) commercial use. 15 (3) The building: 16 (i) has been designated by Federal, State or local 17 government as a historic property; 18 (ii) is located in an area designated by Federal, State or 19 local government as a historic district; or 20 (iii) is located in a residential conservation district. 21 * * * 22 "Residential conservation district." A zoning overlay 23 district intended, in selected areas of residential districts, 24 to encourage: 25 (1) infill development which respects the historic context 26 of the environment; 27 (2) rehabilitation of existing housing through the use of 28 sound maintenance and repair rather than replacement; and 29 (3) preservation, protection and enhancement of streetscapes 30 and areas of architectural, historic or cultural importance. 19990H0948B1057 - 10 -
1 * * *
2 Section 8. Section 1102-C.3 of the act, amended or added
3 July 2, 1986 (P.L.318, No.77), June 16, 1994 (P.L.279, No.48)
4 and May 7, 1997 (P.L.85, No.7), is amended to read:
5 Section 1102-C.3. Excluded Transactions.--(a) The tax
6 imposed by section 1102-C shall not be imposed upon:
7 (1) A transfer to the Commonwealth or to any of its
8 instrumentalities, agencies or political subdivisions by gift,
9 dedication or deed in lieu of condemnation or deed of
10 confirmation in connection with condemnation proceedings, or a
11 reconveyance by the condemning body of the property condemned to
12 the owner of record at the time of condemnation, which
13 reconveyance may include property line adjustments provided said
14 reconveyance is made within one year from the date of
15 condemnation.
16 (2) A document which the Commonwealth is prohibited from
17 taxing under the Constitution or statutes of the United States.
18 (3) A conveyance to a municipality, township, school
19 district or county pursuant to acquisition by the municipality,
20 township, school district or county of a tax delinquent property
21 at sheriff sale or tax claim bureau sale.
22 (4) A transfer for no or nominal actual consideration which
23 corrects or confirms a transfer previously recorded, but which
24 does not extend or limit existing record legal title or
25 interest.
26 (5) A transfer of division in kind for no or nominal actual
27 consideration of property passed by testate or intestate
28 succession and held by cotenants; however, if any of the parties
29 take shares greater in value than their undivided interest, tax
30 is due on the excess.
19990H0948B1057 - 11 -
1 (6) A transfer between husband and wife, between persons who 2 were previously husband and wife who have since been divorced, 3 provided the property or interest therein subject to such 4 transfer was acquired by the husband and wife or husband or wife 5 prior to the granting of the final decree in divorce, between 6 parent and child or the spouse of such child, between brother or 7 sister or spouse of a brother or sister and brother or sister or 8 the spouse of a brother or sister and between a grandparent and 9 grandchild or the spouse of such grandchild, except that a 10 subsequent transfer by the grantee within one year shall be 11 subject to tax as if the grantor were making such transfer. 12 (7) A transfer for no or nominal actual consideration of 13 property passing by testate or intestate succession from a 14 personal representative of a decedent to the decedent's devisee 15 or heir. 16 (8) A transfer for no or nominal actual consideration to a 17 trustee of an ordinary trust where the transfer of the same 18 property would be exempt if the transfer was made directly from 19 the grantor to all of the possible beneficiaries that are 20 entitled to receive the property or proceeds from the sale of 21 the property under the trust, whether or not such beneficiaries 22 are contingent or specifically named. A trust clause which 23 identifies the contingent beneficiaries by reference to the 24 heirs of the trust settlor as determined by the laws of the 25 intestate succession shall not disqualify a transfer from the 26 exclusion provided by this clause. No such exemption shall be 27 granted unless the recorder of deeds is presented with a copy of 28 the trust instrument that clearly identifies the grantor and all 29 possible beneficiaries. 30 (8.1) A transfer for no or nominal actual consideration to a 19990H0948B1057 - 12 -
1 trustee of a living trust from the settlor of the living trust. 2 No such exemption shall be granted unless the recorder of deeds 3 is presented with a copy of the living trust instrument. 4 (9) A transfer for no or nominal actual consideration from a 5 trustee of an ordinary trust to a specifically named beneficiary 6 that is entitled to receive the property under the recorded 7 trust instrument or to a contingent beneficiary where the 8 transfer of the same property would be exempt if the transfer 9 was made by the grantor of the property into the trust to that 10 beneficiary. However, any transfer of real estate from a living 11 trust during the settlor's lifetime shall be considered for the 12 purposes of this article as if such transfer were made directly 13 from the settlor to the grantee. 14 (9.1) A transfer for no or nominal actual consideration from 15 a trustee of a living trust after the death of the settlor of 16 the trust or from a trustee of a trust created pursuant to the 17 will of a decedent to a beneficiary to whom the property is 18 devised or bequeathed. 19 (9.2) A transfer for no or nominal actual consideration from 20 the trustee of a living trust to the settlor of the living trust 21 if such property was originally conveyed to the trustee by the 22 settlor. 23 (10) A transfer for no or nominal actual consideration from 24 trustee to successor trustee. 25 (11) A transfer: 26 (i) for no or nominal actual consideration between principal 27 and agent or straw party; or 28 (ii) from or to an agent or straw party where, if the agent 29 or straw party were his principal, no tax would be imposed under 30 this article. 19990H0948B1057 - 13 -
1 Where the document by which title is acquired by a grantee or 2 statement of value fails to set forth that the property was 3 acquired by the grantee from, or for the benefit of, his 4 principal, there is a rebuttable presumption that the property 5 is the property of the grantee in his individual capacity if the 6 grantee claims an exemption from taxation under this clause. 7 (12) A transfer made pursuant to the statutory merger or 8 consolidation of a corporation or statutory division of a 9 nonprofit corporation, except where the department reasonably 10 determines that the primary intent for such merger, 11 consolidation or division is avoidance of the tax imposed by 12 this article. 13 (13) A transfer from a corporation or association of real 14 estate held of record in the name of the corporation or 15 association where the grantee owns stock of the corporation or 16 an interest in the association in the same proportion as his 17 interest in or ownership of the real estate being conveyed and 18 where the stock of the corporation or the interest in the 19 association has been held by the grantee for more than two 20 years. 21 (14) A transfer from a nonprofit industrial development 22 agency or authority to a grantee of property conveyed by the 23 grantee to that agency or authority as security for a debt of 24 the grantee or a transfer to a nonprofit industrial development 25 agency or authority. 26 (15) A transfer from a nonprofit industrial development 27 agency or authority to a grantee purchasing directly from it, 28 but only if: 29 (i) the grantee shall directly use such real estate for the 30 primary purpose of manufacturing, fabricating, compounding, 19990H0948B1057 - 14 -
1 processing, publishing, research and development, 2 transportation, energy conversion, energy production, pollution 3 control, warehousing or agriculture; and 4 (ii) the agency or authority has the full ownership interest 5 in the real estate transferred. 6 (16) A transfer by a mortgagor to the holder of a bona fide 7 mortgage in default in lieu of a foreclosure or a transfer 8 pursuant to a judicial sale in which the successful bidder is 9 the bona fide holder of a mortgage, unless the holder assigns 10 the bid to another person. 11 (17) Any transfer between religious organizations or other 12 bodies or persons holding title for a religious organization if 13 such real estate is not being or has not been used by such 14 transferor for commercial purposes. 15 (18) A transfer to a conservancy which possesses a tax- 16 exempt status pursuant to section 501(c)(3) of the Internal 17 Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 501(c)(3)) and 18 which has as its primary purpose preservation of land for 19 historic, recreational, scenic, agricultural or open-space 20 opportunities; or a transfer from such a conservancy to the 21 United States, the Commonwealth or to any of their 22 instrumentalities, agencies or political subdivisions; or any 23 transfer from such a conservancy where the real estate is 24 encumbered by a perpetual agricultural conservation easement as 25 defined by the act of June 30, 1981 (P.L.128, No.43), known as 26 the "Agricultural Area Security Law," and such conservancy has 27 owned the real estate for at least two years immediately prior 28 to the transfer. 29 (19) A transfer of real estate devoted to the business of 30 agriculture to a family farm corporation by a member of the same 19990H0948B1057 - 15 -
1 family which directly owns at least seventy-five per cent of 2 each class of the stock thereof. 3 (19.1) A transfer of real estate devoted to the business of 4 agriculture to a family farm partnership by a member of the same 5 family, which family directly owns at least seventy-five per 6 cent of the interests in the partnership. 7 (20) A transfer between members of the same family of an 8 ownership interest in a real estate company, family farm 9 corporation or family farm partnership which owns real estate. 10 (21) A transaction wherein the tax due is one dollar ($1) or 11 less. 12 (22) Leases for the production or extraction of coal, oil, 13 natural gas or minerals and assignments thereof. 14 In order to exercise any exclusion provided in this section, the 15 true, full and complete value of the transfer shall be shown on 16 the statement of value. For leases of coal, oil, natural gas or 17 minerals, the statement of value may be limited to an 18 explanation of the reason such document is not subject to tax 19 under this article. 20 (b) The State tax imposed by section 1102-C shall not be 21 imposed upon a sale of a historic homesite as follows: 22 (1) To qualify for an exclusion under this subsection, all 23 of the following must apply: 24 (i) By the date of transfer of title to the property, the 25 purchaser covenants with the department to: 26 (A) within five years of the date of transfer of title to 27 the property complete, to the satisfaction of the Pennsylvania 28 Historical and Museum Commission, the rehabilitation work in 29 accordance with 36 CFR 67.7 (relating to standards for 30 rehabilitation) and occupy the premises as the principal 19990H0948B1057 - 16 -
1 residence of the purchaser or a successor in interest; 2 (B) maintain the residence as the principal residence of the 3 purchaser or a successor in interest for at least five years 4 after the occupation begins; and 5 (C) if part of the premises is leased, divide the premises 6 into no more than three units, in addition to the unit 7 maintained as a residence by the purchaser or successor in 8 interest, leased for residential use on a monthly basis or for 9 commercial use. 10 (ii) At the time of purchase, the purchaser provides a copy 11 of the covenant under subclause (i) to the seller. 12 (2) A taxpayer who has paid the tax and who is eligible for 13 exclusion under clause (1) is entitled to a refund. 14 (3) By July 31, a taxpayer requesting a refund under clause 15 (2) for the prior fiscal year must submit to the department 16 proof of all of the following: 17 (i) Payment of the tax. 18 (ii) Eligibility for exclusion under clause (1). 19 (4) Within ninety days of submission of proof under clause 20 (3), the department must approve or deny a refund. Failure to 21 meet time requirement of this clause shall be deemed an approval 22 of the refund. 23 (5) By August 31, the department shall compute the total 24 amount of approved refunds under clause (4). 25 (6) Refunds shall be made as follows: 26 (i) The department shall compute ten per cent of the tax 27 collected under section 1102-C for the prior fiscal year which, 28 after allocation to the Keystone Recreation, Park and 29 Conservation Fund, is allocated to the General Fund. 30 (ii) If the total amount of approved refunds is not more 19990H0948B1057 - 17 -
1 than the amount computed under subclause (i), the department 2 shall make, out of the amount computed under subclause (i), full 3 refunds. 4 (iii) If the total amount of approved refunds is more than 5 the amount computed under subclause (i), the department shall 6 make, out of the amount computed under subclause (i), 7 proportionate refunds in the ratio that each approved refund 8 bears to the total amount of approved refunds. 9 Section 9. Section 1109-C.1 of the act, added July 2, 1986 10 (P.L.318, No.77), is amended to read: 11 Section 1109-C.1. Civil Penalties.--(a) If any part of any 12 underpayment of tax imposed by this article is due to fraud, 13 there shall be added to the tax an amount equal to fifty per 14 cent of the underpayment. 15 (b) In the case of failure to record a declaration required 16 under this article on the date prescribed therefor, unless it is 17 shown that such failure is due to reasonable cause, there shall 18 be added to the tax five per cent of the amount of such tax if 19 the failure is for not more than one month, with an additional 20 five per cent for each additional month or fraction thereof 21 during which such failure continues, not exceeding fifty per 22 cent in the aggregate. 23 (c) If a purchaser fails to comply with the covenant under 24 section 1102-C.3(b)(1)(i), unless it determines that the failure 25 to comply is justified, the department shall assess a penalty 26 against the purchaser in the amount of ten per cent of the 27 assessed value of the property. 28 Section 10. The Pennsylvania Historical and Museum 29 Commission may promulgate regulations to administer this act. 30 Section 11. The amendment or addition of sections 19990H0948B1057 - 18 -
1 303(a)(3)(vii), (viii) and (ix) and 352(k) of the act shall 2 apply to taxable years beginning after December 31, 1998. 3 Section 12. This act shall take effect in 60 days. B16L72VDL/19990H0948B1057 - 19 -