PRIOR PRINTER'S NOS. 1057, 2263 PRINTER'S NO. 3702
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, RUBLEY, LEH, NICKOL, CLYMER AND CAPPABIANCA, MARCH 22, 1999
AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 12, 2000
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 19990H0948B3702 - 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 19990H0948B3702 - 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 19990H0948B3702 - 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 19990H0948B3702 - 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) of the act is amended by adding 17 a subparagraph to read: 18 Section 303. Classes of Income.--(a) The classes of income 19 referred to above are as follows: 20 * * * 21 (3) Net gains or income from disposition of property. Net 22 gains or net income, less net losses, derived from the sale, 23 exchange or other disposition of property, including real 24 property, tangible personal property, intangible personal 25 property or obligations issued on or after the effective date of 26 this amendatory act by the Commonwealth; any public authority, 27 commission, board or other agency created by the Commonwealth; 28 any political subdivision of the Commonwealth or any public 29 authority created by any such political subdivision; or by the 30 Federal Government as determined in accordance with accepted 19990H0948B3702 - 6 -
1 accounting principles and practices. For the purpose of this 2 article: 3 * * * 4 (viii) The term "net gains or income" shall not include the 5 net gain on the sale of a historic homesite if all of the 6 following apply: 7 (A) By the date of transfer of title to the property, the 8 purchaser covenants with the Pennsylvania Historical and Museum 9 Commission to: 10 (I) within five years of the date of transfer of title to 11 the property complete, to the satisfaction of the commission, 12 the rehabilitation work, in an amount not less than one thousand 13 dollars ($1,000), in accordance with 36 CFR 67.7 (relating to 14 standards for rehabilitation) and occupy the premises as the 15 principal residence of the purchaser or a successor in interest; 16 (II) maintain the premises as the principal residence of the 17 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 (B) At the time of purchase, the purchaser provides a copy 25 of the covenant under clause (A) to the seller. 26 (C) The seller submits to the department a copy of the 27 covenant under clause (A) and the form which provides for the 28 exclusion under this subparagraph (viii). 29 * * * 30 Section 6. The act is amended by adding a section to read: 19990H0948B3702 - 7 -
1 Section 314.1. Rehabilitation of Historic Homesite.--(a) A 2 resident taxpayer shall be allowed a credit against the tax 3 otherwise due under this article in the amount of twenty per 4 cent of the cost of the rehabilitation of a historic homesite if 5 all of the following apply: 6 (1) The cost of the rehabilitation is in excess of one 7 thousand dollars ($1,000). 8 (2) Before commencing rehabilitation of the property, the 9 taxpayer covenants with the department to: 10 (i) complete, to the satisfaction of the Pennsylvania 11 Historical and Museum Commission, the rehabilitation work in 12 accordance with 36 CFR 67.7 (relating to standards for 13 rehabilitation) within five years and occupy the premises as the 14 principal residence of the taxpayer or a successor in interest; 15 (ii) maintain the residence as the principal residence of 16 the taxpayer or a successor in interest for at least five years 17 after the occupation begins; and 18 (iii) if part of the premises is leased, divide the premises 19 into no more than three units, in addition to the unit 20 maintained as a residence by the taxpayer or successor in 21 interest, leased for residential use on a monthly basis or for 22 commercial use. 23 (3) The taxpayer submits to the department the form which 24 provides for the credit under this subsection. 25 (b) If the credit under subsection (a) exceeds the tax due 26 under this article, the taxpayer may carry the credit over to 27 the next taxable year. No credit under subsection (a) may be 28 carried over beyond the fifth taxable year after the taxpayer 29 enters into the covenant under subsection (b)(1). 30 Section 7. Section 352 of the act is amended by adding 19990H0948B3702 - 8 -
1 subsections to read: 2 Section 352. Additions, Penalties and Fees.--* * * 3 (k) If a purchaser fails to comply with the covenant under 4 section 303(a)(3)(viii)(A), unless it determines that the 5 failure to comply is justified, the department shall assess a 6 penalty against the purchaser in the amount of ten per cent of 7 the assessed value of the property. 8 (l) If a taxpayer fails to comply with the covenant under 9 section 314(a)(2), unless it determines that the failure to 10 comply is justified, the department shall assess a penalty 11 against the taxpayer in the amount of one hundred ten per cent 12 of any tax credits received under section 314. 13 Section 8. Section 1101-C of the act is amended by adding 14 definitions to read: 15 Section 1101-C. Definitions.--The following words when used 16 in this article shall have the meanings ascribed to them in this 17 section: 18 * * * 19 "Historic homesite." A building which complies with all of 20 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 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 19990H0948B3702 - 9 -
1 local government as a historic district; or 2 (iii) is located in a residential conservation district. 3 * * * 4 "Residential conservation district." A zoning overlay 5 district intended, in selected areas of residential districts, 6 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 9. Section 1102-C.3 of the act, amended or added 15 July 2, 1986 (P.L.318, No.77), June 16, 1994 (P.L.279, No.48) 16 and May 7, 1997 (P.L.85, No.7), is amended to read: 17 Section 1102-C.3. Excluded Transactions.--(a) The tax 18 imposed by section 1102-C shall not be imposed upon: 19 (1) A transfer to the Commonwealth or to any of its 20 instrumentalities, agencies or political subdivisions by gift, 21 dedication or deed in lieu of condemnation or deed of 22 confirmation in connection with condemnation proceedings, or a 23 reconveyance by the condemning body of the property condemned to 24 the owner of record at the time of condemnation, which 25 reconveyance may include property line adjustments provided said 26 reconveyance is made within one year from the date of 27 condemnation. 28 (2) A document which the Commonwealth is prohibited from 29 taxing under the Constitution or statutes of the United States. 30 (3) A conveyance to a municipality, township, school 19990H0948B3702 - 10 -
1 district or county pursuant to acquisition by the municipality, 2 township, school district or county of a tax delinquent property 3 at sheriff sale or tax claim bureau sale. 4 (4) A transfer for no or nominal actual consideration which 5 corrects or confirms a transfer previously recorded, but which 6 does not extend or limit existing record legal title or 7 interest. 8 (5) A transfer of division in kind for no or nominal actual 9 consideration of property passed by testate or intestate 10 succession and held by cotenants; however, if any of the parties 11 take shares greater in value than their undivided interest, tax 12 is due on the excess. 13 (6) A transfer between husband and wife, between persons who 14 were previously husband and wife who have since been divorced, 15 provided the property or interest therein subject to such 16 transfer was acquired by the husband and wife or husband or wife 17 prior to the granting of the final decree in divorce, between 18 parent and child or the spouse of such child, between brother or 19 sister or spouse of a brother or sister and brother or sister or 20 the spouse of a brother or sister and between a grandparent and 21 grandchild or the spouse of such grandchild, except that a 22 subsequent transfer by the grantee within one year shall be 23 subject to tax as if the grantor were making such transfer. 24 (7) A transfer for no or nominal actual consideration of 25 property passing by testate or intestate succession from a 26 personal representative of a decedent to the decedent's devisee 27 or heir. 28 (8) A transfer for no or nominal actual consideration to a 29 trustee of an ordinary trust where the transfer of the same 30 property would be exempt if the transfer was made directly from 19990H0948B3702 - 11 -
1 the grantor to all of the possible beneficiaries that are 2 entitled to receive the property or proceeds from the sale of 3 the property under the trust, whether or not such beneficiaries 4 are contingent or specifically named. A trust clause which 5 identifies the contingent beneficiaries by reference to the 6 heirs of the trust settlor as determined by the laws of the 7 intestate succession shall not disqualify a transfer from the 8 exclusion provided by this clause. No such exemption shall be 9 granted unless the recorder of deeds is presented with a copy of 10 the trust instrument that clearly identifies the grantor and all 11 possible beneficiaries. 12 (8.1) A transfer for no or nominal actual consideration to a 13 trustee of a living trust from the settlor of the living trust. 14 No such exemption shall be granted unless the recorder of deeds 15 is presented with a copy of the living trust instrument. 16 (9) A transfer for no or nominal actual consideration from a 17 trustee of an ordinary trust to a specifically named beneficiary 18 that is entitled to receive the property under the recorded 19 trust instrument or to a contingent beneficiary where the 20 transfer of the same property would be exempt if the transfer 21 was made by the grantor of the property into the trust to that 22 beneficiary. However, any transfer of real estate from a living 23 trust during the settlor's lifetime shall be considered for the 24 purposes of this article as if such transfer were made directly 25 from the settlor to the grantee. 26 (9.1) A transfer for no or nominal actual consideration from 27 a trustee of a living trust after the death of the settlor of 28 the trust or from a trustee of a trust created pursuant to the 29 will of a decedent to a beneficiary to whom the property is 30 devised or bequeathed. 19990H0948B3702 - 12 -
1 (9.2) A transfer for no or nominal actual consideration from 2 the trustee of a living trust to the settlor of the living trust 3 if such property was originally conveyed to the trustee by the 4 settlor. 5 (10) A transfer for no or nominal actual consideration from 6 trustee to successor trustee. 7 (11) A transfer: 8 (i) for no or nominal actual consideration between principal 9 and agent or straw party; or 10 (ii) from or to an agent or straw party where, if the agent 11 or straw party were his principal, no tax would be imposed under 12 this article. 13 Where the document by which title is acquired by a grantee or 14 statement of value fails to set forth that the property was 15 acquired by the grantee from, or for the benefit of, his 16 principal, there is a rebuttable presumption that the property 17 is the property of the grantee in his individual capacity if the 18 grantee claims an exemption from taxation under this clause. 19 (12) A transfer made pursuant to the statutory merger or 20 consolidation of a corporation or statutory division of a 21 nonprofit corporation, except where the department reasonably 22 determines that the primary intent for such merger, 23 consolidation or division is avoidance of the tax imposed by 24 this article. 25 (13) A transfer from a corporation or association of real 26 estate held of record in the name of the corporation or 27 association where the grantee owns stock of the corporation or 28 an interest in the association in the same proportion as his 29 interest in or ownership of the real estate being conveyed and 30 where the stock of the corporation or the interest in the 19990H0948B3702 - 13 -
1 association has been held by the grantee for more than two 2 years. 3 (14) A transfer from a nonprofit industrial development 4 agency or authority to a grantee of property conveyed by the 5 grantee to that agency or authority as security for a debt of 6 the grantee or a transfer to a nonprofit industrial development 7 agency or authority. 8 (15) A transfer from a nonprofit industrial development 9 agency or authority to a grantee purchasing directly from it, 10 but only if: 11 (i) the grantee shall directly use such real estate for the 12 primary purpose of manufacturing, fabricating, compounding, 13 processing, publishing, research and development, 14 transportation, energy conversion, energy production, pollution 15 control, warehousing or agriculture; and 16 (ii) the agency or authority has the full ownership interest 17 in the real estate transferred. 18 (16) A transfer by a mortgagor to the holder of a bona fide 19 mortgage in default in lieu of a foreclosure or a transfer 20 pursuant to a judicial sale in which the successful bidder is 21 the bona fide holder of a mortgage, unless the holder assigns 22 the bid to another person. 23 (17) Any transfer between religious organizations or other 24 bodies or persons holding title for a religious organization if 25 such real estate is not being or has not been used by such 26 transferor for commercial purposes. 27 (18) A transfer to a conservancy which possesses a tax- 28 exempt status pursuant to section 501(c)(3) of the Internal 29 Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 501(c)(3)) and 30 which has as its primary purpose preservation of land for 19990H0948B3702 - 14 -
1 historic, recreational, scenic, agricultural or open-space 2 opportunities; or a transfer from such a conservancy to the 3 United States, the Commonwealth or to any of their 4 instrumentalities, agencies or political subdivisions; or any 5 transfer from such a conservancy where the real estate is 6 encumbered by a perpetual agricultural conservation easement as 7 defined by the act of June 30, 1981 (P.L.128, No.43), known as 8 the "Agricultural Area Security Law," and such conservancy has 9 owned the real estate for at least two years immediately prior 10 to the transfer. 11 (19) A transfer of real estate devoted to the business of 12 agriculture to a family farm corporation by a member of the same 13 family which directly owns at least seventy-five per cent of 14 each class of the stock thereof. 15 (19.1) A transfer of real estate devoted to the business of 16 agriculture to a family farm partnership by a member of the same 17 family, which family directly owns at least seventy-five per 18 cent of the interests in the partnership. 19 (20) A transfer between members of the same family of an 20 ownership interest in a real estate company, family farm 21 corporation or family farm partnership which owns real estate. 22 (21) A transaction wherein the tax due is one dollar ($1) or 23 less. 24 (22) Leases for the production or extraction of coal, oil, 25 natural gas or minerals and assignments thereof. 26 In order to exercise any exclusion provided in this section, the 27 true, full and complete value of the transfer shall be shown on 28 the statement of value. For leases of coal, oil, natural gas or 29 minerals, the statement of value may be limited to an 30 explanation of the reason such document is not subject to tax 19990H0948B3702 - 15 -
1 under this article. 2 (b) The State tax imposed by section 1102-C shall not be 3 imposed upon a sale of a historic homesite as follows: 4 (1) To qualify for an exclusion under this subsection, all 5 of the following must apply: 6 (i) By the date of transfer of title to the property, the 7 purchaser covenants with the department to: 8 (A) within five years of the date of transfer of title to 9 the property complete, to the satisfaction of the Pennsylvania 10 Historical and Museum Commission, the rehabilitation work in 11 accordance with 36 CFR 67.7 (relating to standards for 12 rehabilitation) and occupy the premises as the principal 13 residence of the purchaser or a successor in interest; 14 (B) maintain the residence as the principal residence of the 15 purchaser or a successor in interest for at least five years 16 after the occupation begins; and 17 (C) if part of the premises is leased, divide the premises 18 into no more than three units, in addition to the unit 19 maintained as a residence by the purchaser or successor in 20 interest, leased for residential use on a monthly basis or for 21 commercial use. 22 (ii) At the time of purchase, the purchaser provides a copy 23 of the covenant under subclause (i) to the seller. 24 (2) A taxpayer who has paid the tax and who is eligible for 25 exclusion under clause (1) is entitled to a refund. 26 (3) By July 31, a taxpayer requesting a refund under clause 27 (2) for the prior fiscal year must submit to the department 28 proof of all of the following: 29 (i) Payment of the tax. 30 (ii) Eligibility for exclusion under clause (1). 19990H0948B3702 - 16 -
1 (4) Within ninety days of submission of proof under clause 2 (3), the department must approve or deny a refund. Failure to 3 meet time requirement of this clause shall be deemed an approval 4 of the refund. 5 (5) By August 31, the department shall compute the total 6 amount of approved refunds under clause (4). 7 (6) Refunds shall be made as follows: 8 (i) The department shall compute ten per cent of the tax 9 collected under section 1102-C for the prior fiscal year which, 10 after allocation to the Keystone Recreation, Park and 11 Conservation Fund, is allocated to the General Fund. 12 (ii) If the total amount of approved refunds is not more 13 than the amount computed under subclause (i), the department 14 shall make, out of the amount computed under subclause (i), full 15 refunds. 16 (iii) If the total amount of approved refunds is more than 17 the amount computed under subclause (i), the department shall 18 make, out of the amount computed under subclause (i), 19 proportionate refunds in the ratio that each approved refund 20 bears to the total amount of approved refunds. 21 Section 10. Section 1109-C.1 of the act, added July 2, 1986 22 (P.L.318, No.77), is amended to read: 23 Section 1109-C.1. Civil Penalties.--(a) If any part of any 24 underpayment of tax imposed by this article is due to fraud, 25 there shall be added to the tax an amount equal to fifty per 26 cent of the underpayment. 27 (b) In the case of failure to record a declaration required 28 under this article on the date prescribed therefor, unless it is 29 shown that such failure is due to reasonable cause, there shall 30 be added to the tax five per cent of the amount of such tax if 19990H0948B3702 - 17 -
1 the failure is for not more than one month, with an additional 2 five per cent for each additional month or fraction thereof 3 during which such failure continues, not exceeding fifty per 4 cent in the aggregate. 5 (c) If a purchaser fails to comply with the covenant under 6 section 1102-C.3(b)(1)(i), unless it determines that the failure 7 to comply is justified, the department shall assess a penalty 8 against the purchaser in the amount of ten per cent of the 9 assessed value of the property. 10 Section 11. The Pennsylvania Historical and Museum 11 Commission may promulgate regulations to administer this act. 12 Section 12. The amendment or addition of sections 13 303(a)(3)(viii) and (ix) and 352(k) of the act shall apply to 14 taxable years beginning after December 31, 1998. 15 Section 13. This act shall take effect in 60 days. 16 SECTION 1. SECTION 201 OF THE ACT OF MARCH 4, 1971 (P.L.6, <-- 17 NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED BY 18 ADDING A CLAUSE TO READ: 19 SECTION 201. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 20 PHRASES WHEN USED IN THIS ARTICLE II SHALL HAVE THE MEANING 21 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 22 CLEARLY INDICATES A DIFFERENT MEANING: 23 * * * 24 (AAA) "HISTORIC HOMESITE." A BUILDING WHICH COMPLIES WITH 25 ALL OF THE FOLLOWING: 26 (1) THE BUILDING HAS BEEN IN EXISTENCE FOR AT LEAST FIFTY 27 YEARS. 28 (2) THE BUILDING IS DIVIDED INTO NO MORE THAN FOUR UNITS, 29 ONE OF WHICH IS USED AS THE OWNER'S PRINCIPAL RESIDENCE. THE 30 REQUIREMENTS OF THIS CLAUSE SHALL BE SATISFIED IF THE PURCHASER 19990H0948B3702 - 18 -
1 OF A BUILDING HAS ENTERED INTO A COVENANT WITH THE PENNSYLVANIA 2 HISTORICAL AND MUSEUM COMMISSION TO DIVIDE THE BUILDING INTO NO 3 MORE THAN FOUR UNITS, ONE OF WHICH WILL BE USED AS THE 4 PURCHASER'S PRINCIPAL RESIDENCE BEGINNING NO LATER THAN FOUR 5 MONTHS AFTER THE DATE OF THE TRANSFER OF TITLE TO THE REAL 6 PROPERTY. 7 (3) THE BUILDING: 8 (I) HAS BEEN DESIGNATED BY FEDERAL OR STATE GOVERNMENT AS A 9 HISTORIC PROPERTY; 10 (II) IS LOCATED IN AN AREA DESIGNATED BY FEDERAL OR STATE 11 GOVERNMENT AS A HISTORIC DISTRICT; 12 (III) IS LOCATED IN AN AREA DESIGNATED AS A HISTORIC 13 DISTRICT UNDER SECTION 2 OF THE ACT OF JUNE 13, 1961 (P.L.282, 14 NO.167), ENTITLED "AN ACT AUTHORIZING COUNTIES, CITIES, 15 BOROUGHS, INCORPORATED TOWNS AND TOWNSHIPS TO CREATE HISTORIC 16 DISTRICTS WITHIN THEIR GEOGRAPHIC BOUNDARIES; PROVIDING FOR THE 17 APPOINTMENT OF BOARDS OF HISTORICAL ARCHITECTURAL REVIEW; 18 EMPOWERING GOVERNING BODIES OF POLITICAL SUBDIVISIONS TO PROTECT 19 THE DISTINCTIVE HISTORICAL CHARACTER OF THESE DISTRICTS AND TO 20 REGULATE THE ERECTION, RECONSTRUCTION, ALTERATION, RESTORATION, 21 DEMOLITION OR RAZING OF BUILDINGS WITHIN THE HISTORIC 22 DISTRICTS." 23 (IV) HAS BEEN DESIGNATED AS A HISTORIC PROPERTY OR IS 24 LOCATED IN AN AREA DESIGNATED AS A HISTORIC DISTRICT PURSUANT TO 25 THE HISTORIC PRESERVATION ORDINANCE, SECTION 14-2007 OF THE 26 PHILADELPHIA CITY CODE; OR 27 (V) HAS BEEN DESIGNATED AS A HISTORIC PROPERTY OR IS LOCATED 28 IN AN AREA DESIGNATED AS A HISTORIC DISTRICT PURSUANT TO TITLE 29 11 OF THE PITTSBURGH CITY CODE, CHAPTER 1, SECTION 3, AS AMENDED 30 BY CITY COUNCIL ON JULY 22, 1997. 19990H0948B3702 - 19 -
1 (4) THE OWNER OR PURCHASER OF THE BUILDING HAS ENTERED INTO 2 A COVENANT WITH THE PENNSYLVANIA HISTORICAL AND MUSEUM 3 COMMISSION PROVIDING THAT: 4 (I) REHABILITATION OR RESTORATION WORK, WITH A TOTAL COST OF 5 REHABILITATION OR RESTORATION VALUED IN EXCESS OF ONE THOUSAND 6 DOLLARS ($1,000), WILL BE COMPLETED TO THE SATISFACTION OF THE 7 PENNSYLVANIA HISTORICAL AND MUSEUM COMMISSION IN ACCORDANCE WITH 8 36 CFR 67.7 (RELATING TO STANDARDS FOR REHABILITATION) WITHIN 9 FIVE YEARS OF THE DATE THE COVENANT WAS ENTERED INTO WITH THE 10 PENNSYLVANIA HISTORICAL AND MUSEUM COMMISSION; AND 11 (II) THE BUILDING: 12 (A) HAS BEEN OR WILL BE OCCUPIED AS THE PRINCIPAL RESIDENCE 13 OF THE OWNER OR SUCCESSOR IN INTEREST FOR AT LEAST FIVE 14 CONSECUTIVE YEARS, INCLUDING THE DATE THE COVENANT WAS ENTERED 15 INTO WITH THE PENNSYLVANIA HISTORICAL AND MUSEUM COMMISSION; OR 16 (B) WILL BE OCCUPIED AS THE PRINCIPAL RESIDENCE OF THE 17 PURCHASER OR SUCCESSOR IN INTEREST FOR AT LEAST FIVE CONSECUTIVE 18 YEARS, BEGINNING NO LATER THAN FOUR MONTHS AFTER THE DATE OF 19 TRANSFER OF TITLE TO THE REAL PROPERTY. 20 (BBB) "COST OF REHABILITATION OR RESTORATION." COSTS 21 ATTRIBUTED TO THE REHABILITATION OR RESTORATION OF A HISTORIC 22 HOMESITE, INCLUDING HISTORIC DECORATIVE ELEMENTS; UPGRADING OF 23 THE STRUCTURAL, MECHANICAL, ELECTRICAL AND PLUMBING SYSTEMS TO 24 APPLICABLE CODE; AND ALTERATIONS ASSOCIATED WITH THE CONVERSION 25 OF THE BUILDING TO RESIDENTIAL USE. THE TERM SHALL NOT INCLUDE 26 COSTS ATTRIBUTABLE TO THE ACQUISITION OF THE REAL PROPERTY; THE 27 ENLARGEMENT OF AN EXISTING BUILDING; LANDSCAPING, DRIVEWAYS AND 28 OTHER SITE FEATURES; OUTBUILDINGS OR GARAGES; AND PERSONAL LABOR 29 PERFORMED BY THE OWNER. 30 SECTION 2. SECTION 204 OF THE ACT IS AMENDED BY ADDING A 19990H0948B3702 - 20 -
1 CLAUSE TO READ: 2 SECTION 204. EXCLUSIONS FROM TAX.--THE TAX IMPOSED BY 3 SECTION 202 SHALL NOT BE IMPOSED UPON 4 * * * 5 (61) THE SALE AT RETAIL OR USE OF TANGIBLE PERSONAL PROPERTY 6 OR SERVICES WHICH ARE COSTS OF REHABILITATION OR RESTORATION OF 7 A HISTORIC HOMESITE. THE PURCHASER SHALL FURNISH TO THE VENDOR A 8 CERTIFICATE SUBSTANTIALLY IN THE FORM AS THE PENNSYLVANIA 9 HISTORICAL AND MUSEUM COMMISSION, IN CONJUNCTION WITH THE 10 DEPARTMENT, SHALL PRESCRIBE STATING THAT THE SALE IS EXEMPT FROM 11 TAX PURSUANT TO THIS CLAUSE. 12 SECTION 3. SECTION 301 OF THE ACT IS AMENDED BY ADDING A 13 CLAUSE TO READ: 14 SECTION 301. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 15 PHRASES WHEN USED IN THIS ARTICLE SHALL HAVE THE MEANING 16 ASCRIBED TO THEM IN THIS SECTION EXCEPT WHERE THE CONTEXT 17 CLEARLY INDICATES A DIFFERENT MEANING. UNLESS SPECIFICALLY 18 PROVIDED OTHERWISE, ANY REFERENCE IN THIS ARTICLE TO THE 19 INTERNAL REVENUE CODE SHALL INCLUDE THE INTERNAL REVENUE CODE OF 20 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.), AS AMENDED TO 21 JANUARY 1, 1997: 22 * * * 23 (I.3) "HISTORIC HOMESITE" MEANS A HISTORIC HOMESITE AS 24 DEFINED IN SECTION 201(AAA). 25 SECTION 4. SECTION 303(A)(3) OF THE ACT IS AMENDED BY ADDING 26 A SUBPARAGRAPH TO READ: 27 SECTION 303. CLASSES OF INCOME.--(A) THE CLASSES OF INCOME 28 REFERRED TO ABOVE ARE AS FOLLOWS: 29 * * * 30 (3) NET GAINS OR INCOME FROM DISPOSITION OF PROPERTY. NET 19990H0948B3702 - 21 -
1 GAINS OR NET INCOME, LESS NET LOSSES, DERIVED FROM THE SALE, 2 EXCHANGE OR OTHER DISPOSITION OF PROPERTY, INCLUDING REAL 3 PROPERTY, TANGIBLE PERSONAL PROPERTY, INTANGIBLE PERSONAL 4 PROPERTY OR OBLIGATIONS ISSUED ON OR AFTER THE EFFECTIVE DATE OF 5 THIS AMENDATORY ACT BY THE COMMONWEALTH; ANY PUBLIC AUTHORITY, 6 COMMISSION, BOARD OR OTHER AGENCY CREATED BY THE COMMONWEALTH; 7 ANY POLITICAL SUBDIVISION OF THE COMMONWEALTH OR ANY PUBLIC 8 AUTHORITY CREATED BY ANY SUCH POLITICAL SUBDIVISION; OR BY THE 9 FEDERAL GOVERNMENT AS DETERMINED IN ACCORDANCE WITH ACCEPTED 10 ACCOUNTING PRINCIPLES AND PRACTICES. FOR THE PURPOSE OF THIS 11 ARTICLE: 12 * * * 13 (VIII) THE TERM "NET GAINS OR INCOME" SHALL NOT INCLUDE THE 14 NET GAIN ON THE SALE OF A HISTORIC HOMESITE. NO LATER THAN THE 15 DATE OF TRANSFER OF TITLE TO THE REAL PROPERTY, THE PURCHASER 16 SHALL PROVIDE A COPY OF THE COVENANT WITH THE PENNSYLVANIA 17 HISTORICAL AND MUSEUM COMMISSION TO THE SELLER. 18 * * * 19 SECTION 5. THE ACT IS AMENDED BY ADDING A SECTION TO READ: 20 SECTION 314.1. HISTORIC HOMESITE REHABILITATION CREDIT.--(A) 21 AN INDIVIDUAL SHALL BE ALLOWED A CREDIT AGAINST THE TAX 22 OTHERWISE DUE UNDER THIS ARTICLE FOR THE REHABILITATION OR 23 RESTORATION OF A HISTORIC HOMESITE. 24 (B) SUBJECT TO SUBSECTION (C), THE CREDIT AUTHORIZED UNDER 25 THIS SECTION SHALL BE TWENTY PER CENT OF THE AMOUNT EXPENDED BY 26 THE INDIVIDUAL DURING THE TAXABLE YEAR ON TANGIBLE PERSONAL 27 PROPERTY OR SERVICES THAT QUALIFY FOR A SALES AND USE TAX 28 EXCLUSION UNDER SECTION 204(61) AS CERTIFIED BY THE PENNSYLVANIA 29 HISTORICAL AND MUSEUM COMMISSION. 30 (C) THE CUMULATIVE CREDIT FOR REHABILITATION OR RESTORATION 19990H0948B3702 - 22 -
1 OF A HISTORIC HOMESITE SHALL NOT EXCEED SIX THOUSAND DOLLARS 2 ($6,000), REGARDLESS OF THE NUMBER OF YEARS OVER WHICH THE 3 QUALIFYING EXPENDITURES TAKE PLACE. 4 (D) IF THE TAXPAYER CANNOT USE THE ENTIRE AMOUNT OF THE 5 HISTORIC HOMESITE REHABILITATION CREDIT FOR THE TAXABLE YEAR IN 6 WHICH THE EXPENDITURES ARE FIRST MADE, THEN THE EXCESS MAY BE 7 CARRIED OVER TO SUCCEEDING TAXABLE YEARS. EACH TIME THAT THE 8 HISTORIC HOMESITE REHABILITATION CREDIT IS CARRIED OVER TO A 9 SUCCEEDING TAXABLE YEAR, IT SHALL BE REDUCED BY THE AMOUNT THAT 10 WAS USED AS A CREDIT DURING THE IMMEDIATELY PRECEDING TAXABLE 11 YEAR. THE CREDIT MAY BE CARRIED OVER AND APPLIED TO SUCCEEDING 12 TAXABLE YEARS FOR NO MORE THAN FIVE TAXABLE YEARS FOLLOWING THE 13 FIRST TAXABLE YEAR FOR WHICH THE TAXPAYER WAS ENTITLED TO CLAIM 14 THE CREDIT. 15 SECTION 6. SECTION 1101-C OF THE ACT IS AMENDED BY ADDING A 16 DEFINITION TO READ: 17 SECTION 1101-C. DEFINITIONS.--THE FOLLOWING WORDS WHEN USED 18 IN THIS ARTICLE SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THIS 19 SECTION: 20 * * * 21 "HISTORIC HOMESITE." A HISTORIC HOMESITE AS DEFINED IN 22 SECTION 201(AAA). 23 * * * 24 SECTION 7. SECTION 1102-C.3 OF THE ACT, AMENDED OR ADDED 25 JULY 2, 1986 (P.L.318, NO.77), JUNE 16, 1994 (P.L.279, NO.48) 26 AND MAY 7, 1997 (P.L.85, NO.7), IS AMENDED TO READ: 27 SECTION 1102-C.3. EXCLUDED TRANSACTIONS.--THE TAX IMPOSED BY 28 SECTION 1102-C SHALL NOT BE IMPOSED UPON: 29 (1) A TRANSFER TO THE COMMONWEALTH OR TO ANY OF ITS 30 INSTRUMENTALITIES, AGENCIES OR POLITICAL SUBDIVISIONS BY GIFT, 19990H0948B3702 - 23 -
1 DEDICATION OR DEED IN LIEU OF CONDEMNATION OR DEED OF 2 CONFIRMATION IN CONNECTION WITH CONDEMNATION PROCEEDINGS, OR A 3 RECONVEYANCE BY THE CONDEMNING BODY OF THE PROPERTY CONDEMNED TO 4 THE OWNER OF RECORD AT THE TIME OF CONDEMNATION, WHICH 5 RECONVEYANCE MAY INCLUDE PROPERTY LINE ADJUSTMENTS PROVIDED SAID 6 RECONVEYANCE IS MADE WITHIN ONE YEAR FROM THE DATE OF 7 CONDEMNATION. 8 (2) A DOCUMENT WHICH THE COMMONWEALTH IS PROHIBITED FROM 9 TAXING UNDER THE CONSTITUTION OR STATUTES OF THE UNITED STATES. 10 (3) A CONVEYANCE TO A MUNICIPALITY, TOWNSHIP, SCHOOL 11 DISTRICT OR COUNTY PURSUANT TO ACQUISITION BY THE MUNICIPALITY, 12 TOWNSHIP, SCHOOL DISTRICT OR COUNTY OF A TAX DELINQUENT PROPERTY 13 AT SHERIFF SALE OR TAX CLAIM BUREAU SALE. 14 (4) A TRANSFER FOR NO OR NOMINAL ACTUAL CONSIDERATION WHICH 15 CORRECTS OR CONFIRMS A TRANSFER PREVIOUSLY RECORDED, BUT WHICH 16 DOES NOT EXTEND OR LIMIT EXISTING RECORD LEGAL TITLE OR 17 INTEREST. 18 (5) A TRANSFER OF DIVISION IN KIND FOR NO OR NOMINAL ACTUAL 19 CONSIDERATION OF PROPERTY PASSED BY TESTATE OR INTESTATE 20 SUCCESSION AND HELD BY COTENANTS; HOWEVER, IF ANY OF THE PARTIES 21 TAKE SHARES GREATER IN VALUE THAN THEIR UNDIVIDED INTEREST, TAX 22 IS DUE ON THE EXCESS. 23 (6) A TRANSFER BETWEEN HUSBAND AND WIFE, BETWEEN PERSONS WHO 24 WERE PREVIOUSLY HUSBAND AND WIFE WHO HAVE SINCE BEEN DIVORCED, 25 PROVIDED THE PROPERTY OR INTEREST THEREIN SUBJECT TO SUCH 26 TRANSFER WAS ACQUIRED BY THE HUSBAND AND WIFE OR HUSBAND OR WIFE 27 PRIOR TO THE GRANTING OF THE FINAL DECREE IN DIVORCE, BETWEEN 28 PARENT AND CHILD OR THE SPOUSE OF SUCH CHILD, BETWEEN BROTHER OR 29 SISTER OR SPOUSE OF A BROTHER OR SISTER AND BROTHER OR SISTER OR 30 THE SPOUSE OF A BROTHER OR SISTER AND BETWEEN A GRANDPARENT AND 19990H0948B3702 - 24 -
1 GRANDCHILD OR THE SPOUSE OF SUCH GRANDCHILD, EXCEPT THAT A 2 SUBSEQUENT TRANSFER BY THE GRANTEE WITHIN ONE YEAR SHALL BE 3 SUBJECT TO TAX AS IF THE GRANTOR WERE MAKING SUCH TRANSFER. 4 (7) A TRANSFER FOR NO OR NOMINAL ACTUAL CONSIDERATION OF 5 PROPERTY PASSING BY TESTATE OR INTESTATE SUCCESSION FROM A 6 PERSONAL REPRESENTATIVE OF A DECEDENT TO THE DECEDENT'S DEVISEE 7 OR HEIR. 8 (8) A TRANSFER FOR NO OR NOMINAL ACTUAL CONSIDERATION TO A 9 TRUSTEE OF AN ORDINARY TRUST WHERE THE TRANSFER OF THE SAME 10 PROPERTY WOULD BE EXEMPT IF THE TRANSFER WAS MADE DIRECTLY FROM 11 THE GRANTOR TO ALL OF THE POSSIBLE BENEFICIARIES THAT ARE 12 ENTITLED TO RECEIVE THE PROPERTY OR PROCEEDS FROM THE SALE OF 13 THE PROPERTY UNDER THE TRUST, WHETHER OR NOT SUCH BENEFICIARIES 14 ARE CONTINGENT OR SPECIFICALLY NAMED. A TRUST CLAUSE WHICH 15 IDENTIFIES THE CONTINGENT BENEFICIARIES BY REFERENCE TO THE 16 HEIRS OF THE TRUST SETTLOR AS DETERMINED BY THE LAWS OF THE 17 INTESTATE SUCCESSION SHALL NOT DISQUALIFY A TRANSFER FROM THE 18 EXCLUSION PROVIDED BY THIS CLAUSE. NO SUCH EXEMPTION SHALL BE 19 GRANTED UNLESS THE RECORDER OF DEEDS IS PRESENTED WITH A COPY OF 20 THE TRUST INSTRUMENT THAT CLEARLY IDENTIFIES THE GRANTOR AND ALL 21 POSSIBLE BENEFICIARIES. 22 (8.1) A TRANSFER FOR NO OR NOMINAL ACTUAL CONSIDERATION TO A 23 TRUSTEE OF A LIVING TRUST FROM THE SETTLOR OF THE LIVING TRUST. 24 NO SUCH EXEMPTION SHALL BE GRANTED UNLESS THE RECORDER OF DEEDS 25 IS PRESENTED WITH A COPY OF THE LIVING TRUST INSTRUMENT. 26 (9) A TRANSFER FOR NO OR NOMINAL ACTUAL CONSIDERATION FROM A 27 TRUSTEE OF AN ORDINARY TRUST TO A SPECIFICALLY NAMED BENEFICIARY 28 THAT IS ENTITLED TO RECEIVE THE PROPERTY UNDER THE RECORDED 29 TRUST INSTRUMENT OR TO A CONTINGENT BENEFICIARY WHERE THE 30 TRANSFER OF THE SAME PROPERTY WOULD BE EXEMPT IF THE TRANSFER 19990H0948B3702 - 25 -
1 WAS MADE BY THE GRANTOR OF THE PROPERTY INTO THE TRUST TO THAT 2 BENEFICIARY. HOWEVER, ANY TRANSFER OF REAL ESTATE FROM A LIVING 3 TRUST DURING THE SETTLOR'S LIFETIME SHALL BE CONSIDERED FOR THE 4 PURPOSES OF THIS ARTICLE AS IF SUCH TRANSFER WERE MADE DIRECTLY 5 FROM THE SETTLOR TO THE GRANTEE. 6 (9.1) A TRANSFER FOR NO OR NOMINAL ACTUAL CONSIDERATION FROM 7 A TRUSTEE OF A LIVING TRUST AFTER THE DEATH OF THE SETTLOR OF 8 THE TRUST OR FROM A TRUSTEE OF A TRUST CREATED PURSUANT TO THE 9 WILL OF A DECEDENT TO A BENEFICIARY TO WHOM THE PROPERTY IS 10 DEVISED OR BEQUEATHED. 11 (9.2) A TRANSFER FOR NO OR NOMINAL ACTUAL CONSIDERATION FROM 12 THE TRUSTEE OF A LIVING TRUST TO THE SETTLOR OF THE LIVING TRUST 13 IF SUCH PROPERTY WAS ORIGINALLY CONVEYED TO THE TRUSTEE BY THE 14 SETTLOR. 15 (10) A TRANSFER FOR NO OR NOMINAL ACTUAL CONSIDERATION FROM 16 TRUSTEE TO SUCCESSOR TRUSTEE. 17 (11) A TRANSFER: 18 (I) FOR NO OR NOMINAL ACTUAL CONSIDERATION BETWEEN PRINCIPAL 19 AND AGENT OR STRAW PARTY; OR 20 (II) FROM OR TO AN AGENT OR STRAW PARTY WHERE, IF THE AGENT 21 OR STRAW PARTY WERE HIS PRINCIPAL, NO TAX WOULD BE IMPOSED UNDER 22 THIS ARTICLE. 23 WHERE THE DOCUMENT BY WHICH TITLE IS ACQUIRED BY A GRANTEE OR 24 STATEMENT OF VALUE FAILS TO SET FORTH THAT THE PROPERTY WAS 25 ACQUIRED BY THE GRANTEE FROM, OR FOR THE BENEFIT OF, HIS 26 PRINCIPAL, THERE IS A REBUTTABLE PRESUMPTION THAT THE PROPERTY 27 IS THE PROPERTY OF THE GRANTEE IN HIS INDIVIDUAL CAPACITY IF THE 28 GRANTEE CLAIMS AN EXEMPTION FROM TAXATION UNDER THIS CLAUSE. 29 (12) A TRANSFER MADE PURSUANT TO THE STATUTORY MERGER OR 30 CONSOLIDATION OF A CORPORATION OR STATUTORY DIVISION OF A 19990H0948B3702 - 26 -
1 NONPROFIT CORPORATION, EXCEPT WHERE THE DEPARTMENT REASONABLY 2 DETERMINES THAT THE PRIMARY INTENT FOR SUCH MERGER, 3 CONSOLIDATION OR DIVISION IS AVOIDANCE OF THE TAX IMPOSED BY 4 THIS ARTICLE. 5 (13) A TRANSFER FROM A CORPORATION OR ASSOCIATION OF REAL 6 ESTATE HELD OF RECORD IN THE NAME OF THE CORPORATION OR 7 ASSOCIATION WHERE THE GRANTEE OWNS STOCK OF THE CORPORATION OR 8 AN INTEREST IN THE ASSOCIATION IN THE SAME PROPORTION AS HIS 9 INTEREST IN OR OWNERSHIP OF THE REAL ESTATE BEING CONVEYED AND 10 WHERE THE STOCK OF THE CORPORATION OR THE INTEREST IN THE 11 ASSOCIATION HAS BEEN HELD BY THE GRANTEE FOR MORE THAN TWO 12 YEARS. 13 (14) A TRANSFER FROM A NONPROFIT INDUSTRIAL DEVELOPMENT 14 AGENCY OR AUTHORITY TO A GRANTEE OF PROPERTY CONVEYED BY THE 15 GRANTEE TO THAT AGENCY OR AUTHORITY AS SECURITY FOR A DEBT OF 16 THE GRANTEE OR A TRANSFER TO A NONPROFIT INDUSTRIAL DEVELOPMENT 17 AGENCY OR AUTHORITY. 18 (15) A TRANSFER FROM A NONPROFIT INDUSTRIAL DEVELOPMENT 19 AGENCY OR AUTHORITY TO A GRANTEE PURCHASING DIRECTLY FROM IT, 20 BUT ONLY IF: 21 (I) THE GRANTEE SHALL DIRECTLY USE SUCH REAL ESTATE FOR THE 22 PRIMARY PURPOSE OF MANUFACTURING, FABRICATING, COMPOUNDING, 23 PROCESSING, PUBLISHING, RESEARCH AND DEVELOPMENT, 24 TRANSPORTATION, ENERGY CONVERSION, ENERGY PRODUCTION, POLLUTION 25 CONTROL, WAREHOUSING OR AGRICULTURE; AND 26 (II) THE AGENCY OR AUTHORITY HAS THE FULL OWNERSHIP INTEREST 27 IN THE REAL ESTATE TRANSFERRED. 28 (16) A TRANSFER BY A MORTGAGOR TO THE HOLDER OF A BONA FIDE 29 MORTGAGE IN DEFAULT IN LIEU OF A FORECLOSURE OR A TRANSFER 30 PURSUANT TO A JUDICIAL SALE IN WHICH THE SUCCESSFUL BIDDER IS 19990H0948B3702 - 27 -
1 THE BONA FIDE HOLDER OF A MORTGAGE, UNLESS THE HOLDER ASSIGNS 2 THE BID TO ANOTHER PERSON. 3 (17) ANY TRANSFER BETWEEN RELIGIOUS ORGANIZATIONS OR OTHER 4 BODIES OR PERSONS HOLDING TITLE FOR A RELIGIOUS ORGANIZATION IF 5 SUCH REAL ESTATE IS NOT BEING OR HAS NOT BEEN USED BY SUCH 6 TRANSFEROR FOR COMMERCIAL PURPOSES. 7 (18) A TRANSFER TO A CONSERVANCY WHICH POSSESSES A TAX- 8 EXEMPT STATUS PURSUANT TO SECTION 501(C)(3) OF THE INTERNAL 9 REVENUE CODE OF 1954 (68A STAT. 3, 26 U.S.C. § 501(C)(3)) AND 10 WHICH HAS AS ITS PRIMARY PURPOSE PRESERVATION OF LAND FOR 11 HISTORIC, RECREATIONAL, SCENIC, AGRICULTURAL OR OPEN-SPACE 12 OPPORTUNITIES; OR A TRANSFER FROM SUCH A CONSERVANCY TO THE 13 UNITED STATES, THE COMMONWEALTH OR TO ANY OF THEIR 14 INSTRUMENTALITIES, AGENCIES OR POLITICAL SUBDIVISIONS; OR ANY 15 TRANSFER FROM SUCH A CONSERVANCY WHERE THE REAL ESTATE IS 16 ENCUMBERED BY A PERPETUAL AGRICULTURAL CONSERVATION EASEMENT AS 17 DEFINED BY THE ACT OF JUNE 30, 1981 (P.L.128, NO.43), KNOWN AS 18 THE "AGRICULTURAL AREA SECURITY LAW," AND SUCH CONSERVANCY HAS 19 OWNED THE REAL ESTATE FOR AT LEAST TWO YEARS IMMEDIATELY PRIOR 20 TO THE TRANSFER. 21 (19) A TRANSFER OF REAL ESTATE DEVOTED TO THE BUSINESS OF 22 AGRICULTURE TO A FAMILY FARM CORPORATION BY A MEMBER OF THE SAME 23 FAMILY WHICH DIRECTLY OWNS AT LEAST SEVENTY-FIVE PER CENT OF 24 EACH CLASS OF THE STOCK THEREOF. 25 (19.1) A TRANSFER OF REAL ESTATE DEVOTED TO THE BUSINESS OF 26 AGRICULTURE TO A FAMILY FARM PARTNERSHIP BY A MEMBER OF THE SAME 27 FAMILY, WHICH FAMILY DIRECTLY OWNS AT LEAST SEVENTY-FIVE PER 28 CENT OF THE INTERESTS IN THE PARTNERSHIP. 29 (20) A TRANSFER BETWEEN MEMBERS OF THE SAME FAMILY OF AN 30 OWNERSHIP INTEREST IN A REAL ESTATE COMPANY, FAMILY FARM 19990H0948B3702 - 28 -
1 CORPORATION OR FAMILY FARM PARTNERSHIP WHICH OWNS REAL ESTATE. 2 (21) A TRANSACTION WHEREIN THE TAX DUE IS ONE DOLLAR ($1) OR 3 LESS. 4 (22) LEASES FOR THE PRODUCTION OR EXTRACTION OF COAL, OIL, 5 NATURAL GAS OR MINERALS AND ASSIGNMENTS THEREOF. 6 IN ORDER TO EXERCISE ANY EXCLUSION PROVIDED IN THIS SECTION, THE 7 TRUE, FULL AND COMPLETE VALUE OF THE TRANSFER SHALL BE SHOWN ON 8 THE STATEMENT OF VALUE. FOR LEASES OF COAL, OIL, NATURAL GAS OR 9 MINERALS, THE STATEMENT OF VALUE MAY BE LIMITED TO AN 10 EXPLANATION OF THE REASON SUCH DOCUMENT IS NOT SUBJECT TO TAX 11 UNDER THIS ARTICLE. 12 (23) A TRANSFER OF A HISTORIC HOMESITE. NO LATER THAN THE 13 DATE OF TRANSFER OF TITLE TO THE REAL PROPERTY, THE PURCHASER 14 SHALL PROVIDE A COPY OF THE COVENANT WITH THE PENNSYLVANIA 15 HISTORICAL AND MUSEUM COMMISSION TO THE SELLER. 16 SECTION 8. THE ACT IS AMENDED BY ADDING A SECTION TO READ: 17 SECTION 3003.14. FAILURE TO FULFILL HISTORIC HOMESITE 18 COVENANT.--(A) THE PENNSYLVANIA HISTORICAL AND MUSEUM 19 COMMISSION SHALL NOTIFY THE DEPARTMENT WHEN AN INDIVIDUAL WHO 20 HAS ENTERED INTO A COVENANT TO REHABILITATE OR RESTORE A 21 HISTORIC HOMESITE UNDER SECTION 201(AAA), 301(I.3) OR 1101-C 22 FAILS TO ABIDE BY THE TERMS OF THE COVENANT. 23 (B) UPON NOTIFICATION BY THE PENNSYLVANIA HISTORICAL AND 24 MUSEUM COMMISSION THAT THE INDIVIDUAL HAS FAILED TO ABIDE BY THE 25 TERMS OF THE COVENANT, THE DEPARTMENT SHALL LEVY A PENALTY 26 AGAINST THAT INDIVIDUAL EQUAL TO TWO HUNDRED PER CENT OF THE TAX 27 BENEFITS GRANTED UNDER SECTIONS 204(61), 303(A)(3)(VIII), 314.1 28 AND 1102-C.3 WITH RESPECT TO THE HISTORIC HOMESITE TO WHICH THE 29 COVENANT APPLIED. 30 (C) THE PENALTY PROVIDED BY SUBSECTION (B), OR ANY PORTION 19990H0948B3702 - 29 -
1 THEREOF, MAY BE ABATED IF THE FAILURE TO ABIDE BY THE TERMS OF 2 THE COVENANT IS JUSTIFIED BY REASON OF CHANGE IN EMPLOYMENT, 3 HEALTH OR, TO THE EXTENT PROVIDED IN REGULATION, UNFORESEEN 4 CIRCUMSTANCES. THE DEPARTMENT AND THE PENNSYLVANIA HISTORICAL 5 AND MUSEUM COMMISSION SHALL PROMULGATE REGULATIONS TO IMPLEMENT 6 THIS SUBSECTION. 7 SECTION 9. THIS ACT SHALL APPLY TO COVENANTS WITH THE 8 PENNSYLVANIA HISTORICAL AND MUSEUM COMMISSION WHICH ARE ENTERED 9 INTO AFTER JUNE 30, 2000. 10 SECTION 10. THIS ACT SHALL TAKE EFFECT JULY 1, 2000, OR 11 IMMEDIATELY, WHICHEVER IS LATER. B16L72VDL/19990H0948B3702 - 30 -