PRIOR PRINTER'S NO. 1057 PRINTER'S NO. 2263
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, E. Z. TAYLOR, ROEBUCK, DALEY, BOYES AND RUBLEY, MARCH 22, 1999
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES, AS AMENDED, SEPTEMBER 27, 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 AND <-- 13 for classes of personal income; PROVIDING FOR A CREDIT <-- 14 AGAINST PERSONAL INCOME TAX; FURTHER PROVIDING for personal 15 income tax penalties, for realty transfer tax definitions, 16 for realty transfer tax exclusions and for realty transfer 17 tax penalties; and conferring powers and duties on the 18 Pennsylvania Historical and Museum Commission. 19 The General Assembly of the Commonwealth of Pennsylvania 20 hereby enacts as follows: 21 Section 1. Section 201 of the act of March 4, 1971 (P.L.6,
1 No.2), known as the Tax Reform Code of 1971, is amended by 2 adding definitions 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 (uu) "Historic homesite." A building which complies with 9 all of the following: 10 (1) The building has been in existence for at least fifty 11 years. 12 (2) The building is occupied by the owner as a principal 13 residence. 14 (3) If partially leased by the owner, the building is 15 divided into no more than three units, other than the owner's 16 principal residence, leased for: 17 (i) residential use on at least a monthly basis; or 18 (ii) commercial use. 19 (4) The building: 20 (i) has been designated by Federal, State or local 21 government as a historic property; 22 (ii) is located in an area designated by Federal, State or 23 local government as a historic district; or 24 (iii) is located in a residential conservation district. 25 (vv) "Residential conservation district." A zoning overlay 26 district intended, in selected areas of residential districts, 27 to encourage: 28 (1) infill development which respects the historic context 29 of the environment; 30 (2) rehabilitation of existing housing through the use of 19990H0948B2263 - 2 -
1 sound maintenance and repair rather than replacement; and 2 (3) preservation, protection and enhancement of streetscapes 3 and areas of architectural, historic or cultural importance. 4 Section 2. Section 204 of the act is amended by adding a 5 clause to read: 6 Section 204. Exclusions from Tax.--The tax imposed by 7 section 202 shall not be imposed upon 8 * * * 9 (58) The sale at retail or use of tangible personal property 10 or services which are valued in excess of one thousand dollars 11 ($1,000) and which are used in the conversion to or 12 rehabilitation of a historic homesite if all of the conditions 13 set forth in this clause apply. This clause includes costs 14 chargeable to the rehabilitation and restoration of the physical 15 elements of the building, such as historic decorative elements; 16 upgrading of the structural, mechanical, electrical and plumbing 17 systems to applicable code; and alterations associated with the 18 conversion to a historic homesite. This clause does not include 19 costs attributable to the acquisition of the property; the 20 enlargement of an existing building; landscaping, driveways and 21 other site features; outbuildings or garages; nor personal labor 22 performed by the owner. The following conditions must be met: 23 (i) By the date of purchase, the purchaser covenants all of 24 the following with the department: 25 (A) Within five years of the date of purchase, the 26 rehabilitation work will be completed to the satisfaction of the 27 Pennsylvania Historical and Museum Commission in accordance with 28 36 CFR 67.7 (relating to standards for rehabilitation). 29 (B) The historic homesite: 30 (I) has been maintained, for a five-year period prior to the 19990H0948B2263 - 3 -
1 date of purchase, as the principal residence of the purchaser; 2 (II) will be maintained, for a five-year period subsequent 3 to the date of purchase, as the principal residence of the 4 purchaser or a successor in interest; or 5 (III) will have been maintained, for a total of five years 6 prior and subsequent to the date of purchase, as the principal 7 residence of the purchaser or a successor in interest. 8 (ii) The seller submits to the department the form which 9 provides for the exclusion under this clause. 10 (iii) The purchaser has not previously taken advantage of 11 the exemption under this clause for the same historic homesite. 12 Section 3. Section 267 of the act is amended to read: 13 Section 267. Penalties.--(a) Penalty Assessed as Tax. The 14 penalties, additions, interest and liabilities provided by this 15 article shall be paid upon notice and demand by the department, 16 and shall be assessed and collected in the same manner as taxes. 17 Except as otherwise provided, any reference in this article to 18 "tax" imposed by this article shall be deemed also to refer to 19 the penalties, additions, interest and liabilities provided by 20 this part. 21 (b) Attempt to Evade or Defeat Tax. Any person who wilfully 22 attempts, in any manner, to evade or defeat the tax imposed by 23 this article, or the payment thereof, or to assist any other 24 person to evade or defeat the tax imposed by this article, or 25 the payment thereof, or to receive a refund improperly, shall, 26 in addition to other penalties provided by law, be liable for a 27 penalty equal to one-half of the total amount of the tax evaded. 28 In any direct proceeding arising out of a petition for 29 reassessment or refund as provided in this article, in which an 30 issue of fact is raised with respect to whether a return is 19990H0948B2263 - 4 -
1 fraudulent or with respect to the propriety of the imposition by 2 the department of the penalty prescribed in this subsection (b), 3 the burden of proof with respect to such issue shall be upon the 4 department. 5 (c) Historic Homesite. If a purchaser fails to comply with 6 the covenant under section 204(58)(i), unless it determines that 7 the failure to comply is justified, the department shall assess 8 a penalty against the purchaser in the amount of twelve per cent 9 of the purchase price of the property. 10 Section 4. Section 301 introductory paragraph of the act is 11 amended and the section is amended by adding clauses to read: 12 Section 301. Definitions.--The following words, terms and 13 phrases when used in this article shall have the meaning 14 ascribed to them in this section except where the context 15 clearly indicates a different meaning[. Unless specifically 16 provided otherwise, any reference in this article to the 17 Internal Revenue Code shall include the Internal Revenue Code of 18 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended to 19 January 1, 1997]: 20 * * * 21 (i.3) "Historic homesite" means a building which complies 22 with all of the following: 23 (1) The building has been in existence for at least fifty 24 years. 25 (2) The building is divided into no more than four units 26 used or leased for: 27 (i) residential use on at least a monthly basis; or 28 (ii) commercial use. 29 (3) The building: 30 (i) has been designated by Federal, State or local 19990H0948B2263 - 5 -
1 government as a historic property; 2 (ii) is located in an area designated by Federal, State or 3 local government as a historic district; or 4 (iii) is located in a residential conservation district. 5 * * * 6 (o.4) "Residential conservation district" means a zoning 7 overlay district intended, in selected areas of residential 8 districts, to encourage: 9 (1) infill development which respects the historic context 10 of the environment; 11 (2) rehabilitation of existing housing through the use of 12 sound maintenance and repair rather than replacement; and 13 (3) preservation, protection and enhancement of streetscapes 14 and areas of architectural, historic or cultural importance. 15 * * * 16 Section 5. Section 303(a)(3)(vii) of the act, added April <-- 17 23, 1998 (P.L.239, No.45), is amended and the paragraph 18 303(A)(3) OF THE ACT is amended by adding a subparagraph to <-- 19 read: 20 Section 303. Classes of Income.--(a) The classes of income 21 referred to above are as follows: 22 * * * 23 (3) Net gains or income from disposition of property. Net 24 gains or net income, less net losses, derived from the sale, 25 exchange or other disposition of property, including real 26 property, tangible personal property, intangible personal 27 property or obligations issued on or after the effective date of 28 this amendatory act by the Commonwealth; any public authority, 29 commission, board or other agency created by the Commonwealth; 30 any political subdivision of the Commonwealth or any public 19990H0948B2263 - 6 -
1 authority created by any such political subdivision; or by the 2 Federal Government as determined in accordance with accepted 3 accounting principles and practices. For the purpose of this 4 article: 5 * * * 6 (vii) The term "net gains or net income, less net losses," <-- 7 shall not include any gain or loss from the sale, exchange or 8 other disposition of the taxpayer's principal residence unless 9 the residence is a historic homesite. 10 (A) For purposes of this subparagraph, the term "principal 11 residence" shall mean the property that has been owned and used 12 by the taxpayer as the taxpayer's principal residence for 13 periods aggregating two years or more during the five-year 14 period ending on the date of the sale, exchange or disposition: 15 Provided, however, That the following shall apply: 16 (I) In the case of property only a portion of which, during 17 the five-year period ending on the date of the sale, exchange or 18 disposition, has been owned or used by the taxpayer as the 19 taxpayer's principal residence for periods aggregating two years 20 or more, this subparagraph shall apply with respect to so much 21 of the gain from the sale, exchange or disposition of such 22 property as is determined under regulations prescribed by the 23 department to be attributable to that portion. 24 (II) In the case of a principal residence only a portion of 25 which has never been subject to the allowance for depreciation, 26 this subparagraph shall apply with respect to so much of the 27 gain from the sale, exchange or disposition of such property as 28 is determined under regulations prescribed by the department to 29 be attributable to that portion. 30 (B) The provisions of this subparagraph shall not apply to a 19990H0948B2263 - 7 -
1 sale, exchange or disposition if, during the two-year period 2 ending upon the date of the sale, exchange or disposition, there 3 was a prior sale, exchange or disposition by the taxpayer of a 4 principal residence unless the sale, exchange or disposition is 5 by reason of a change in employment, health or, to the extent 6 provided in regulations, unforeseen circumstances. 7 (C) The provisions of this subparagraph shall not apply to 8 any sale, exchange or disposition made prior to January 1, 1998. 9 (viii) The term "net gains or income" shall not include the 10 net gain on the sale of a historic homesite if all of the 11 following apply: 12 (A) By the date of transfer of title to the property, the 13 purchaser covenants with the Pennsylvania Historical and Museum 14 Commission to: 15 (I) within five years of the date of transfer of title to 16 the property complete, to the satisfaction of the commission, 17 the rehabilitation work, IN AN AMOUNT NOT LESS THAN ONE THOUSAND <-- 18 DOLLARS ($1,000), in accordance with 36 CFR 67.7 (relating to 19 standards for rehabilitation) and occupy the premises as the 20 principal residence of the purchaser or a successor in interest; 21 (II) maintain the premises as the principal residence of the 22 purchaser or a successor in interest for at least five years 23 after the occupation begins; and 24 (III) if part of the premises is leased, divide the premises 25 into no more than three units, in addition to the unit 26 maintained as a residence by the purchaser or successor in 27 interest, leased for residential use on a monthly basis or for 28 commercial use. 29 (B) At the time of purchase, the purchaser provides a copy 30 of the covenant under clause (A) to the seller. 19990H0948B2263 - 8 -
1 (C) The seller submits to the department a copy of the 2 covenant under clause (A) and the form which provides for the 3 exclusion under this subparagraph (vii) (VIII). <-- 4 (ix) The term "net gains or income" shall exclude twenty per <-- 5 cent of the cost of rehabilitating a historic homesite if all of 6 the following apply: 7 (A) The cost of the rehabilitation is in excess of one 8 thousand dollars ($1,000). 9 (B) Before commencing rehabilitation of the property, the 10 purchaser covenants with the department to: 11 (I) complete, to the satisfaction of the Pennsylvania 12 Historical and Museum Commission, the rehabilitation work in 13 accordance with 36 CFR 67.7 (relating to standards for 14 rehabilitation) within five years and occupy the premises as the 15 principal residence of the purchaser or a successor in interest; 16 (II) maintain the residence as the principal residence of 17 the purchaser or a successor in interest for at least five years 18 after the occupation begins; and 19 (III) if part of the premises is leased, divide the premises 20 into no more than three units, in addition to the unit 21 maintained as a residence by the purchaser or successor in 22 interest, leased for residential use on a monthly basis or for 23 commercial use. 24 (C) The seller submits to the department the form which 25 provides for the exclusion under this subparagraph (viii). 26 * * * 27 SECTION 6. THE ACT IS AMENDED BY ADDING A SECTION TO READ: <-- 28 SECTION 314.1. REHABILITATION OF HISTORIC HOMESITE.--(A) A 29 RESIDENT TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX 30 OTHERWISE DUE UNDER THIS ARTICLE IN THE AMOUNT OF TWENTY PER 19990H0948B2263 - 9 -
1 CENT OF THE COST OF THE REHABILITATION OF A HISTORIC HOMESITE IF 2 ALL OF THE FOLLOWING APPLY: 3 (1) THE COST OF THE REHABILITATION IS IN EXCESS OF ONE 4 THOUSAND DOLLARS ($1,000). 5 (2) BEFORE COMMENCING REHABILITATION OF THE PROPERTY, THE 6 TAXPAYER 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 TAXPAYER OR A SUCCESSOR IN INTEREST; 12 (II) MAINTAIN THE RESIDENCE AS THE PRINCIPAL RESIDENCE OF 13 THE TAXPAYER 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 TAXPAYER OR SUCCESSOR IN 18 INTEREST, LEASED FOR RESIDENTIAL USE ON A MONTHLY BASIS OR FOR 19 COMMERCIAL USE. 20 (3) THE TAXPAYER SUBMITS TO THE DEPARTMENT THE FORM WHICH 21 PROVIDES FOR THE CREDIT UNDER THIS SUBSECTION. 22 (B) IF THE CREDIT UNDER SUBSECTION (A) EXCEEDS THE TAX DUE 23 UNDER THIS ARTICLE, THE TAXPAYER MAY CARRY THE CREDIT OVER TO 24 THE NEXT TAXABLE YEAR. NO CREDIT UNDER SUBSECTION (A) MAY BE 25 CARRIED OVER BEYOND THE FIFTH TAXABLE YEAR AFTER THE TAXPAYER 26 ENTERS INTO THE COVENANT UNDER SUBSECTION (B)(1). 27 Section 6 7. Section 352 of the act is amended by adding a <-- 28 subsection SUBSECTIONS to read: <-- 29 Section 352. Additions, Penalties and Fees.--* * * 30 (k) If a purchaser fails to comply with the covenant under 19990H0948B2263 - 10 -
1 section 303(a)(3)(viii)(B) 303(A)(3)(VIII)(A), unless it <-- 2 determines that the failure to comply is justified, the 3 department shall assess a penalty against the purchaser in the 4 amount of ten per cent of the assessed value of the property. 5 (L) IF A TAXPAYER FAILS TO COMPLY WITH THE COVENANT UNDER <-- 6 SECTION 314(A)(2), UNLESS IT DETERMINES THAT THE FAILURE TO 7 COMPLY IS JUSTIFIED, THE DEPARTMENT SHALL ASSESS A PENALTY 8 AGAINST THE TAXPAYER IN THE AMOUNT OF ONE HUNDRED TEN PER CENT 9 OF ANY TAX CREDITS RECEIVED UNDER SECTION 314. 10 Section 7 8. Section 1101-C of the act is amended by adding <-- 11 definitions to read: 12 Section 1101-C. Definitions.--The following words when used 13 in this article shall have the meanings ascribed to them in this 14 section: 15 * * * 16 "Historic homesite." A building which complies with all of 17 the following: 18 (1) The building has been in existence for at least fifty 19 years. 20 (2) The building is divided into no more than four units 21 leased for: 22 (i) residential use on at least a monthly basis; or 23 (ii) commercial use. 24 (3) The building: 25 (i) has been designated by Federal, State or local 26 government as a historic property; 27 (ii) is located in an area designated by Federal, State or 28 local government as a historic district; or 29 (iii) is located in a residential conservation district. 30 * * * 19990H0948B2263 - 11 -
1 "Residential conservation district." A zoning overlay 2 district intended, in selected areas of residential districts, 3 to encourage: 4 (1) infill development which respects the historic context 5 of the environment; 6 (2) rehabilitation of existing housing through the use of 7 sound maintenance and repair rather than replacement; and 8 (3) preservation, protection and enhancement of streetscapes 9 and areas of architectural, historic or cultural importance. 10 * * * 11 Section 8 9. Section 1102-C.3 of the act, amended or added <-- 12 July 2, 1986 (P.L.318, No.77), June 16, 1994 (P.L.279, No.48) 13 and May 7, 1997 (P.L.85, No.7), is amended to read: 14 Section 1102-C.3. Excluded Transactions.--(a) The tax 15 imposed by section 1102-C shall not be imposed upon: 16 (1) A transfer to the Commonwealth or to any of its 17 instrumentalities, agencies or political subdivisions by gift, 18 dedication or deed in lieu of condemnation or deed of 19 confirmation in connection with condemnation proceedings, or a 20 reconveyance by the condemning body of the property condemned to 21 the owner of record at the time of condemnation, which 22 reconveyance may include property line adjustments provided said 23 reconveyance is made within one year from the date of 24 condemnation. 25 (2) A document which the Commonwealth is prohibited from 26 taxing under the Constitution or statutes of the United States. 27 (3) A conveyance to a municipality, township, school 28 district or county pursuant to acquisition by the municipality, 29 township, school district or county of a tax delinquent property 30 at sheriff sale or tax claim bureau sale. 19990H0948B2263 - 12 -
1 (4) A transfer for no or nominal actual consideration which 2 corrects or confirms a transfer previously recorded, but which 3 does not extend or limit existing record legal title or 4 interest. 5 (5) A transfer of division in kind for no or nominal actual 6 consideration of property passed by testate or intestate 7 succession and held by cotenants; however, if any of the parties 8 take shares greater in value than their undivided interest, tax 9 is due on the excess. 10 (6) A transfer between husband and wife, between persons who 11 were previously husband and wife who have since been divorced, 12 provided the property or interest therein subject to such 13 transfer was acquired by the husband and wife or husband or wife 14 prior to the granting of the final decree in divorce, between 15 parent and child or the spouse of such child, between brother or 16 sister or spouse of a brother or sister and brother or sister or 17 the spouse of a brother or sister and between a grandparent and 18 grandchild or the spouse of such grandchild, except that a 19 subsequent transfer by the grantee within one year shall be 20 subject to tax as if the grantor were making such transfer. 21 (7) A transfer for no or nominal actual consideration of 22 property passing by testate or intestate succession from a 23 personal representative of a decedent to the decedent's devisee 24 or heir. 25 (8) A transfer for no or nominal actual consideration to a 26 trustee of an ordinary trust where the transfer of the same 27 property would be exempt if the transfer was made directly from 28 the grantor to all of the possible beneficiaries that are 29 entitled to receive the property or proceeds from the sale of 30 the property under the trust, whether or not such beneficiaries 19990H0948B2263 - 13 -
1 are contingent or specifically named. A trust clause which 2 identifies the contingent beneficiaries by reference to the 3 heirs of the trust settlor as determined by the laws of the 4 intestate succession shall not disqualify a transfer from the 5 exclusion provided by this clause. No such exemption shall be 6 granted unless the recorder of deeds is presented with a copy of 7 the trust instrument that clearly identifies the grantor and all 8 possible beneficiaries. 9 (8.1) A transfer for no or nominal actual consideration to a 10 trustee of a living trust from the settlor of the living trust. 11 No such exemption shall be granted unless the recorder of deeds 12 is presented with a copy of the living trust instrument. 13 (9) A transfer for no or nominal actual consideration from a 14 trustee of an ordinary trust to a specifically named beneficiary 15 that is entitled to receive the property under the recorded 16 trust instrument or to a contingent beneficiary where the 17 transfer of the same property would be exempt if the transfer 18 was made by the grantor of the property into the trust to that 19 beneficiary. However, any transfer of real estate from a living 20 trust during the settlor's lifetime shall be considered for the 21 purposes of this article as if such transfer were made directly 22 from the settlor to the grantee. 23 (9.1) A transfer for no or nominal actual consideration from 24 a trustee of a living trust after the death of the settlor of 25 the trust or from a trustee of a trust created pursuant to the 26 will of a decedent to a beneficiary to whom the property is 27 devised or bequeathed. 28 (9.2) A transfer for no or nominal actual consideration from 29 the trustee of a living trust to the settlor of the living trust 30 if such property was originally conveyed to the trustee by the 19990H0948B2263 - 14 -
1 settlor. 2 (10) A transfer for no or nominal actual consideration from 3 trustee to successor trustee. 4 (11) A transfer: 5 (i) for no or nominal actual consideration between principal 6 and agent or straw party; or 7 (ii) from or to an agent or straw party where, if the agent 8 or straw party were his principal, no tax would be imposed under 9 this article. 10 Where the document by which title is acquired by a grantee or 11 statement of value fails to set forth that the property was 12 acquired by the grantee from, or for the benefit of, his 13 principal, there is a rebuttable presumption that the property 14 is the property of the grantee in his individual capacity if the 15 grantee claims an exemption from taxation under this clause. 16 (12) A transfer made pursuant to the statutory merger or 17 consolidation of a corporation or statutory division of a 18 nonprofit corporation, except where the department reasonably 19 determines that the primary intent for such merger, 20 consolidation or division is avoidance of the tax imposed by 21 this article. 22 (13) A transfer from a corporation or association of real 23 estate held of record in the name of the corporation or 24 association where the grantee owns stock of the corporation or 25 an interest in the association in the same proportion as his 26 interest in or ownership of the real estate being conveyed and 27 where the stock of the corporation or the interest in the 28 association has been held by the grantee for more than two 29 years. 30 (14) A transfer from a nonprofit industrial development 19990H0948B2263 - 15 -
1 agency or authority to a grantee of property conveyed by the 2 grantee to that agency or authority as security for a debt of 3 the grantee or a transfer to a nonprofit industrial development 4 agency or authority. 5 (15) A transfer from a nonprofit industrial development 6 agency or authority to a grantee purchasing directly from it, 7 but only if: 8 (i) the grantee shall directly use such real estate for the 9 primary purpose of manufacturing, fabricating, compounding, 10 processing, publishing, research and development, 11 transportation, energy conversion, energy production, pollution 12 control, warehousing or agriculture; and 13 (ii) the agency or authority has the full ownership interest 14 in the real estate transferred. 15 (16) A transfer by a mortgagor to the holder of a bona fide 16 mortgage in default in lieu of a foreclosure or a transfer 17 pursuant to a judicial sale in which the successful bidder is 18 the bona fide holder of a mortgage, unless the holder assigns 19 the bid to another person. 20 (17) Any transfer between religious organizations or other 21 bodies or persons holding title for a religious organization if 22 such real estate is not being or has not been used by such 23 transferor for commercial purposes. 24 (18) A transfer to a conservancy which possesses a tax- 25 exempt status pursuant to section 501(c)(3) of the Internal 26 Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 501(c)(3)) and 27 which has as its primary purpose preservation of land for 28 historic, recreational, scenic, agricultural or open-space 29 opportunities; or a transfer from such a conservancy to the 30 United States, the Commonwealth or to any of their 19990H0948B2263 - 16 -
1 instrumentalities, agencies or political subdivisions; or any 2 transfer from such a conservancy where the real estate is 3 encumbered by a perpetual agricultural conservation easement as 4 defined by the act of June 30, 1981 (P.L.128, No.43), known as 5 the "Agricultural Area Security Law," and such conservancy has 6 owned the real estate for at least two years immediately prior 7 to the transfer. 8 (19) A transfer of real estate devoted to the business of 9 agriculture to a family farm corporation by a member of the same 10 family which directly owns at least seventy-five per cent of 11 each class of the stock thereof. 12 (19.1) A transfer of real estate devoted to the business of 13 agriculture to a family farm partnership by a member of the same 14 family, which family directly owns at least seventy-five per 15 cent of the interests in the partnership. 16 (20) A transfer between members of the same family of an 17 ownership interest in a real estate company, family farm 18 corporation or family farm partnership which owns real estate. 19 (21) A transaction wherein the tax due is one dollar ($1) or 20 less. 21 (22) Leases for the production or extraction of coal, oil, 22 natural gas or minerals and assignments thereof. 23 In order to exercise any exclusion provided in this section, the 24 true, full and complete value of the transfer shall be shown on 25 the statement of value. For leases of coal, oil, natural gas or 26 minerals, the statement of value may be limited to an 27 explanation of the reason such document is not subject to tax 28 under this article. 29 (b) The State tax imposed by section 1102-C shall not be 30 imposed upon a sale of a historic homesite as follows: 19990H0948B2263 - 17 -
1 (1) To qualify for an exclusion under this subsection, all 2 of the following must apply: 3 (i) By the date of transfer of title to the property, the 4 purchaser covenants with the department to: 5 (A) within five years of the date of transfer of title to 6 the property complete, to the satisfaction of the Pennsylvania 7 Historical and Museum Commission, the rehabilitation work in 8 accordance with 36 CFR 67.7 (relating to standards for 9 rehabilitation) and occupy the premises as the principal 10 residence of the purchaser or a successor in interest; 11 (B) maintain the residence as the principal residence of the 12 purchaser or a successor in interest for at least five years 13 after the occupation begins; and 14 (C) if part of the premises is leased, divide the premises 15 into no more than three units, in addition to the unit 16 maintained as a residence by the purchaser or successor in 17 interest, leased for residential use on a monthly basis or for 18 commercial use. 19 (ii) At the time of purchase, the purchaser provides a copy 20 of the covenant under subclause (i) to the seller. 21 (2) A taxpayer who has paid the tax and who is eligible for 22 exclusion under clause (1) is entitled to a refund. 23 (3) By July 31, a taxpayer requesting a refund under clause 24 (2) for the prior fiscal year must submit to the department 25 proof of all of the following: 26 (i) Payment of the tax. 27 (ii) Eligibility for exclusion under clause (1). 28 (4) Within ninety days of submission of proof under clause 29 (3), the department must approve or deny a refund. Failure to 30 meet time requirement of this clause shall be deemed an approval 19990H0948B2263 - 18 -
1 of the refund. 2 (5) By August 31, the department shall compute the total 3 amount of approved refunds under clause (4). 4 (6) Refunds shall be made as follows: 5 (i) The department shall compute ten per cent of the tax 6 collected under section 1102-C for the prior fiscal year which, 7 after allocation to the Keystone Recreation, Park and 8 Conservation Fund, is allocated to the General Fund. 9 (ii) If the total amount of approved refunds is not more 10 than the amount computed under subclause (i), the department 11 shall make, out of the amount computed under subclause (i), full 12 refunds. 13 (iii) If the total amount of approved refunds is more than 14 the amount computed under subclause (i), the department shall 15 make, out of the amount computed under subclause (i), 16 proportionate refunds in the ratio that each approved refund 17 bears to the total amount of approved refunds. 18 Section 9 10. Section 1109-C.1 of the act, added July 2, <-- 19 1986 (P.L.318, No.77), is amended to read: 20 Section 1109-C.1. Civil Penalties.--(a) If any part of any 21 underpayment of tax imposed by this article is due to fraud, 22 there shall be added to the tax an amount equal to fifty per 23 cent of the underpayment. 24 (b) In the case of failure to record a declaration required 25 under this article on the date prescribed therefor, unless it is 26 shown that such failure is due to reasonable cause, there shall 27 be added to the tax five per cent of the amount of such tax if 28 the failure is for not more than one month, with an additional 29 five per cent for each additional month or fraction thereof 30 during which such failure continues, not exceeding fifty per 19990H0948B2263 - 19 -
1 cent in the aggregate. 2 (c) If a purchaser fails to comply with the covenant under 3 section 1102-C.3(b)(1)(i), unless it determines that the failure 4 to comply is justified, the department shall assess a penalty 5 against the purchaser in the amount of ten per cent of the 6 assessed value of the property. 7 Section 10 11. The Pennsylvania Historical and Museum <-- 8 Commission may promulgate regulations to administer this act. 9 Section 11 12. The amendment or addition of sections <-- 10 303(a)(3)(vii), (viii) and (ix) and 352(k) of the act shall <-- 11 apply to taxable years beginning after December 31, 1998. 12 Section 12 13. This act shall take effect in 60 days. <-- B16L72VDL/19990H0948B2263 - 20 -