PRINTER'S NO. 1600
No. 1367 Session of 1999
INTRODUCED BY BROWNE, HUTCHINSON, ZUG, McILHATTAN AND STEVENSON,
APRIL 21, 1999
REFERRED TO COMMITTEE ON FINANCE, APRIL 21, 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 assessment based upon
11 business classification effective rates, for extended time
12 for filing special petition for refund, for additions to tax
13 relating to sales and use tax, for amended returns, for
14 reports and payment of tax, for changes made by Federal
15 Government, for enforcement, rules and regulations and
16 confidentiality, for penalties relating to personal income
17 tax; imposing a cooperative agricultural association
18 corporate net income tax; further providing for procedure,
19 enforcement and penalties relating to certain taxes, for
20 imposition of tax, reporting, estimated tax and penalties
21 relating to public utility realty tax, for procedure,
22 enforcement and penalties relating to realty transfer tax,
23 for certification to Liquor Control Board and regulations,
24 for refund relating to malt beverage tax, for interest,
25 purchaser, mortgagee or leasee and refund relating to
26 inheritance tax; providing for collection of Commonwealth
27 moneys from certain officers, for procedure and
28 administration; and making repeals.
29 The General Assembly of the Commonwealth of Pennsylvania
30 hereby enacts as follows:
1 Section 1. Sections 231 and 256 of the act of March 4, 1971
2 (P.L.6, No.2), known as the Tax Reform Code of 1971, are amended
3 to read:
4 Section 231. [Mode and Time of Assessment] Assessment Based
5 Upon Business Classification Effective Rates.--[(a)
6 Underpayment of Tax. Within a reasonable time after any return
7 is filed, the department shall examine it and, if the return
8 shows a greater tax due or collected than the amount of tax
9 remitted with the return, the department shall issue an
10 assessment for the difference, together with an addition of
11 three per cent of such difference, which shall be paid to the
12 department within ten days after a notice of the assessment has
13 been mailed to the taxpayer. If such assessment is not paid
14 within ten days, there shall be added thereto and paid to the
15 department an additional three per cent of such difference for
16 each month thereof during which the assessment remains unpaid,
17 but the total of all additions shall not exceed eighteen per
18 cent of the difference shown on the assessment.
19 (b) Understatement of Tax. If the department determines that
20 any return or returns of any taxpayer understates the amount of
21 tax due, it shall determine the proper amount and shall
22 ascertain the difference between the amount of tax shown in the
23 return and the amount determined, such difference being
24 hereafter sometimes referred to as the "deficiency." A notice of
25 assessment for the deficiency and the reasons therefor shall
26 then be sent to the taxpayer. The deficiency shall be paid to
27 the department within thirty days after a notice of the
28 assessment thereof has been mailed to the taxpayer.
29 (c) Failure to File Return. In the event that any taxpayer
30 fails to file a return required by this article, the department
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1 may make an estimated assessment (based on information
2 available) of the proper amount of tax owing by the taxpayer. A
3 notice of assessment in the estimated amount shall be sent to
4 the taxpayer. The tax shall be paid within thirty days after a
5 notice of such estimated assessment has been mailed to the
6 taxpayer.
7 (d) Authority to Establish Effective Rates by Business
8 Classification.] The department is authorized to make the
9 studies necessary to compute effective rates by business
10 classification, based upon the ratio between the tax required to
11 be collected and taxable sales and to use such rates in arriving
12 at the apparent tax liability of a taxpayer.
13 Any assessment based upon such rates shall be prima facie
14 correct, except that such rate shall not be considered where a
15 taxpayer establishes that such rate is based on a sample
16 inapplicable to him.
17 Section 256. Extended Time for Filing Special Petition for
18 Refund.--Any party to a transaction who has paid tax by reason
19 of a transaction with respect to which the department is
20 assessing tax against another person may, within six months
21 after the filing by the department of the assessment against
22 such other person, file a special petition for refund,
23 notwithstanding his failure to [file a regular petition within
24 three years of the payment] timely file a petition pursuant to
25 section 2840. The provisions of [sections 253, 254 and 255] Part
26 V of Article XXVIII shall be applicable to such special petition
27 for refund, except that the department need not act on such
28 petition until there is a final determination as to the
29 propriety of the assessment filed against the other party to the
30 transaction. Where a petition is filed under this provision in
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1 order to take advantage of the extended period of limitations,
2 overpayments by the petitioner shall be refunded but only to the
3 extent of the actual tax (without consideration of interest and
4 penalties) paid by the other party to the transaction. The
5 purpose of this section is to avoid duplicate payment of tax
6 where a determination is made by the department that one party
7 to a transaction is subject to tax, and another party to the
8 transaction has previously paid tax with respect to such
9 transaction and, as such, this section shall be construed as
10 extending right beyond that provided for by section [253] 2840,
11 and not to limit such other section.
12 Section 2. Section 266 of the act, amended April 14, 1976
13 (P.L.112, No.49), is amended to read:
14 Section 266. Additions to Tax.--(a) Failure to File Return.
15 In the case of failure to file any return required by section
16 215 on the date prescribed therefor (determined with regard to
17 any extension of time for filing), [and in the case in which a
18 return filed understates the true amount due by more than fifty
19 per cent,] there shall be added to the amount of tax actually
20 due five per cent of the amount of such tax if the failure to
21 file a proper return is for not more than one month, with an
22 additional five per cent for each additional month, or fraction
23 thereof, during which such failure continues, not exceeding
24 twenty-five per cent in the aggregate. In every such case at
25 least two dollars ($2) shall be added.
26 (a.1) Addition for Underpayment. If the total amount of tax
27 shown on the return is greater than the amount remitted with the
28 return, the department shall issue an assessment for the amount
29 of the underpayment pursuant to Article XXVIII. There shall be
30 added to every assessment for underpayment an addition equal to
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1 three per cent of the amount of the underpayment. If the
2 assessment is not paid within ten days after the mailing date of
3 the notice of assessment, an additional three per cent of the
4 amount of the underpayment shall accrue and be paid to the
5 department for each month the assessment remains unpaid:
6 Provided, That the total of all additions under this subsection
7 shall not exceed eighteen per cent of the amount of the
8 underpayment shown on the assessment.
9 (b) Addition for Understatement. If the department
10 determines that any return understates the amount of tax due, it
11 shall issue an assessment for the amount of the understatement
12 pursuant to Article XXVIII. There shall be added to every
13 assessment [under subsection (b) of section 231] for
14 understatement of tax an addition equal to five per cent of the
15 amount of the understatement [and no addition to the tax shall
16 be paid under subsection (a) of section 231]. If the return
17 understates the amount of tax due the Commonwealth by more than
18 fifty per cent, an additional five per cent of the amount of the
19 understatement shall accrue and be paid to the department for
20 each month, or fraction thereof, the assessment remains unpaid:
21 Provided, That the total of all additions under this subsection
22 shall not exceed twenty-five per cent of the amount of the
23 understatement shown on the assessment.
24 [(c) Interest. If the department assesses a tax according to
25 subsection (a), (b) or (c) of section 231, there shall be added
26 to the amount of the deficiency interest at the rate of three-
27 fourths of one per cent per month for each month, or fraction
28 thereof, from the date prescribed by subsection (a) or (c) of
29 section 222 of this article for the payment of the tax to the
30 date of notice of the assessment.]
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1 Section 3. The act is amended by adding a section to read:
2 Section 332.1. Amended Returns.--A taxpayer shall make and
3 file an amended return within ninety days after the following:
4 (1) The discovery of additional information regarding any
5 item of income or gain, loss, deduction or credit that could not
6 have been previously obtained by the exercise of due diligence
7 that changes the tax of the taxpayer; or
8 (2) The occurrence of a contingent event that changes the
9 tax of the taxpayer.
10 Section 4. Section 403 of the act, amended September 9, 1971
11 (P.L.437, No.105), June 23, 1982 (P.L.610, No.172), July 1, 1985
12 (P.L.78, No.29), August 4, 1991 (P.L.97, No.22) and repealed in
13 part December 19, 1990 (P.L.834, No.198), is amended to read:
14 Section 403. Reports and Payment of Tax.--(a) [For the
15 purpose of ascertaining the amount of tax payable under this
16 article, it] It shall be the duty of every corporation, liable
17 to pay tax under this article, on or before April 15, 1972, and
18 each year thereafter, to transmit to the department, upon a form
19 prescribed[, prepared and furnished] by the department, an
20 annual report under oath or affirmation of its president, vice-
21 president [or other principal officer, and of its], treasurer
22 [or], assistant treasurer, or other duly authorized officer, of
23 net income taxable under the provisions of this article. Such
24 report shall set forth:
25 (1) A true copy of its return to the Federal Government of
26 the annual taxable income arising or accruing in the calendar or
27 fiscal year next preceding, or such part or portions of said
28 return, as the department may designate;
29 (2) If no return was filed with the Federal Government the
30 report made to the department shall show such information as
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1 would have been contained in a return to the Federal Government
2 had one been made; and
3 (3) Such other information as the department may require.
4 Upon receipt of the report, the department shall promptly
5 forward to the Department of State, the names of the president,
6 vice-president, secretary and treasurer of the corporation and
7 the complete street address of the principal office of the
8 corporation for inclusion in the records of the Department of
9 State relating to corporation.
10 (b) [For the purpose of ascertaining the amount of tax
11 payable under this article for the taxable year 1971, and each
12 taxable year thereafter, it shall be the duty of every
13 corporation liable to pay tax under this article, on or before
14 April 30, 1971, and on or before the end of the fourth month
15 after the close of its previous fiscal year for fiscal year
16 taxpayers, and each year thereafter, to transmit in like form
17 and manner an additional tentative report and make payment
18 pursuant to the provisions of section 3003: Provided, That in
19 making such report and payment for the calendar year 1971 and
20 each year thereafter and for fiscal years commencing during the
21 calendar year 1971, and each year thereafter the tax base from
22 the immediate prior year, upon which the tentative tax
23 computation is to be made under said section 3003, shall be
24 computed as if the tax base for such immediate prior year had
25 been determined under the applicable provisions of the act of
26 March 4, 1971 (Act No.2). For taxable years commencing with
27 calendar year 1986 and for each taxable year through taxable
28 year 1991, corporations shall not report and pay tentative tax
29 on account of the corporate net income tax, but shall, on or
30 before April 15 for calendar year taxpayers and on or before the
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1 fifteenth day of the fourth month of the fiscal year for fiscal
2 year taxpayers, report and pay estimated corporate net income
3 tax pursuant to section 3003.2 of this act: Provided, however,
4 That tentative tax on account of any other tax which is imposed
5 as the result of the adoption by reference of this part or
6 section shall continue to be imposed. For taxable years
7 commencing on or after January 1, 1992, corporations shall
8 report and pay estimated tax pursuant to section 3003.2 on or
9 before March 15 for calendar year taxpayers and on or before the
10 fifteenth day of the third month for fiscal year taxpayers.] It
11 shall be the duty of every corporation liable to pay tax under
12 this article to pay estimated tax pursuant to section 3003.2 and
13 to make final payment of the tax due for the taxable year with
14 the annual report required by this section.
15 (c) The amount of all taxes, imposed under the provisions of
16 this article, not paid on or before the times as above provided,
17 shall bear interest as provided in [section 806 of the act of
18 April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code,"
19 from the date they are due and payable until paid] Part IV of
20 Article XXVIII, except that if the taxable income has been, or
21 is increased by the Commissioner of Internal Revenue, or by any
22 other agency or court of the United States, interest shall be
23 computed on the additional tax due from [thirty] sixty days
24 after the corporation receives notice of the change of income
25 until paid: Provided, however, That any corporation may pay the
26 full amount of such tax, or any part thereof, together with
27 interest due to the date of payment, without prejudice to its
28 right to present and prosecute a petition [for resettlement, a
29 petition for review,] pursuant to Part V of Article XXVIII or an
30 appeal to court. If it be thereafter determined that such taxes
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1 were overpaid, the department shall enter a credit to the
2 account of such corporation, which may be used by it in the
3 manner prescribed by law.
4 (d) If the officers of any corporation shall neglect, or
5 refuse to make any report as herein required, or shall knowingly
6 make any false report, the following percentages of the amount
7 of the tax shall be added by the department to the tax
8 determined to be due on the first one thousand dollars ($1,000)
9 of tax ten per cent, on the next four thousand dollars ($4,000)
10 five per cent, and on everything in excess of five thousand
11 dollars ($5,000) one per cent, no such amounts added to the tax
12 shall bear any interest whatsoever.
13 (e) If any corporation closes its fiscal year not upon
14 December 31, but upon some other date, and reports to the
15 Federal Government as of such other date, or would so report
16 were it to make a return to the Federal Government, such
17 corporation shall certify such fact to the department, and shall
18 make the annual report, herein required, within thirty days
19 after the return to the Federal Government is due, or would be
20 due were it to be required of such corporation, subject in all
21 other respects to the provisions of this article. [The tentative
22 report required of such corporation shall be due not later than
23 four months after the end of the next preceding fiscal year.]
24 (f) If the corporation shall claim in its report that the
25 return made to the Federal Government was inaccurate, the amount
26 claimed by it to be the taxable income, taxable under this
27 article, and the basis of such claim of inaccuracy, shall be
28 fully specified.
29 Section 5. Section 406 of the act, amended September 9, 1971
30 (P.L.437, No.105), is amended to read:
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1 Section 406. Changes Made by Federal Government.--(a) If
2 the amount of the taxable income, as returned by any corporation
3 to the Federal Government, is finally changed or corrected by
4 the Commission of Internal Revenue or by any other agency or
5 court of the United States, such corporation, within [thirty]
6 sixty days after the receipt of such final change or correction,
7 shall make a corrected report, under oath or affirmation, to the
8 department showing such finally changed or corrected taxable
9 income, upon which the tax is required to be paid to the United
10 States. In case a corporation fails to file a report of such
11 correction, which results in an increase in taxable income
12 within the time prescribed, there shall be added to the tax, a
13 penalty of five dollars ($5) for every day during which such
14 corporation is in default, but the department may abate any such
15 penalty in whole or in part.
16 (b) If, as a result of such final change or correction,
17 there should be any change made in the amount of the taxable
18 income of any corporation upon which tax is imposed by this
19 article, the department shall have the power, and its duty shall
20 be to [resettle such taxes. Whenever a resettlement shall have
21 been made hereunder, the department shall resettle the account
22 according to law, and shall credit or charge, as the case may
23 be, the amount resulting from such resettlement upon the current
24 accounts of the corporation with which it is made. The
25 resettlement shall be subject to audit and approval by the
26 Department of the Auditor General, as in the case of original
27 settlements, and in case of the failure of the two departments
28 to agree, the resettlement shall be submitted to the Board of
29 Finance and Revenue, as in the case of original settlements.]
30 determine and assess the taxpayer's unpaid liability for tax,
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1 interest or penalty due the Commonwealth, or to credit the
2 taxpayer's account as appropriate.
3 (c) Where a report of change, correction, or redetermination
4 of Federal income, or Federal tax, has been filed after [a
5 petition for review, or] an administrative or judicial appeal
6 has been taken, such report shall be deemed a part of the
7 original annual report upon petition of the taxpayer at any
8 subsequent proceeding as though it had been filed with such
9 original report, and no separate [petition for review or] appeal
10 from [the resettlement] an assessment resulting from [such] the
11 report of change, correction, or redetermination shall be
12 necessary to the extent the identical issues for the taxable
13 year have been raised in the appeal.
14 (d) The provisions of this section shall not be construed so
15 as to permit [a resettlement] an assessment based upon the
16 allowance of any deduction on account of net operating losses,
17 sustained in other fiscal or calendar years, that are not
18 allowed as deductions under the definition of "taxable income"
19 as contained in this article.
20 (e) The provisions of this section shall apply to every
21 corporation which was doing business in Pennsylvania in the year
22 for which the Federal income has been changed, irrespective of
23 whether or not such corporation has thereafter merged,
24 consolidated, withdrawn or dissolved. Any clearance certificate
25 issued by the department shall be conditioned upon the
26 requirement that in the event of a change in Federal income for
27 any year for which taxes have been paid to the Commonwealth, the
28 corporation or its successor or its officers or its directors
29 shall file with the department a report of change and pay any
30 additional State tax resulting therefrom.
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1 Section 6. Section 408 heading and (b) of the act, amended
2 June 23, 1982 (P.L.610, No.172), are amended to read:
3 Section 408. Enforcement; Rules and Regulations;
4 [Inquisitorial Powers of the Department] Confidentiality.--* * *
5 (b) [The department, or any agent authorized in writing by
6 it, is hereby authorized to examine the books, papers, and
7 records, and to investigate the character of the business of any
8 corporation in order to verify the accuracy of any report made,
9 or if no report was made by such corporation, to ascertain and
10 settle the tax imposed by this article. Every such corporation
11 is hereby directed and required to give to the department, or
12 its duly authorized agent, the means, facilities, and
13 opportunity for such examinations and investigations, as are
14 hereby provided and authorized.] Any information gained by the
15 department, as a result of any returns, investigations, or
16 verifications required to be made by this article, shall be
17 confidential, except for official purposes, and any person
18 divulging such information shall be guilty of a misdemeanor,
19 and, upon conviction thereof, shall be sentenced to pay a fine
20 of not less than one hundred dollars ($100) or more than one
21 thousand dollars ($1,000) and costs of prosecution, or to
22 undergo imprisonment for not more than six months, or both.
23 Nothing in this section shall preclude the department from
24 providing public information, as defined in section 403(a)(3),
25 to other government units. Any identification number provided by
26 the department to another governmental unit for governmental
27 purposes shall continue to be confidential information.
28 * * *
29 Section 7. Section 410(a) of the act is amended to read:
30 Section 410. Penalties.--(a) Any person violating any of
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1 the provisions of section [409] 2812 as it applies to the tax
2 imposed by this article shall be guilty of a misdemeanor, and
3 shall, upon conviction thereof, be sentenced to pay a fine not
4 exceeding one thousand dollars ($1,000) and costs of
5 prosecution, or to undergo imprisonment for not more than six
6 months, or both.
7 * * *
8 Section 8. The act is amended by adding an article to read:
9 ARTICLE IV-A
10 COOPERATIVE AGRICULTURAL ASSOCIATION CORPORATE
11 NET INCOME TAX
12 Section 401-A. Definitions.--The following words, terms and
13 phrases when used in this Article IV-A shall have the meaning
14 given to them in this section, except where the context clearly
15 indicates a different meaning:
16 "Cooperative agricultural association." An incorporated,
17 cooperative agricultural association, composed of persons
18 engaged in agriculture and instituted for the purposes of mutual
19 help, either organized under the laws of this Commonwealth, the
20 United States, or any state, territory or foreign country, or
21 dependency, and doing business in this Commonwealth, or having
22 capital or property employed or used in this Commonwealth by or
23 in the name of itself, or any person, partnership or
24 association.
25 "Department." The Department of Revenue of the Commonwealth.
26 "Net income."
27 (1) If the entire business transacted by a cooperative
28 agricultural association is transacted within this Commonwealth,
29 net income for the calendar year or fiscal year shall be only an
30 amount equal to the sum of the dividends declared, or declared
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1 and paid, on the shares of common and preferred stock during the
2 year.
3 (2) If the entire business is not transacted by the
4 cooperative agricultural association within this Commonwealth,
5 the tax imposed by this article shall be based upon the portion
6 of the net income for the calendar or fiscal year as shall be
7 attributed to business transacted in this Commonwealth by
8 multiplying the net income by a fraction, of which the numerator
9 is the gross receipts received from business transacted within
10 this Commonwealth, and of which the denominator is the amount of
11 the gross receipts received from all business.
12 Section 402-A. Imposition of Tax.--(a) General rule.--Every
13 cooperative agricultural association shall be subject to, and
14 shall pay for the privilege of doing business in this
15 Commonwealth, or having capital or property employed or used in
16 this Commonwealth, by or in the name of itself or any other
17 person, partnership or association, a State excise tax at the
18 rate of four per cent per annum upon each dollar of net income.
19 (b) Tax in lieu of other excise taxes.--The tax imposed by
20 this article shall be collected in lieu of any other excise tax
21 except liquid fuels and fuel use taxes, sales and use taxes on
22 registered motor vehicles and unemployment compensation fund
23 contributions, but including corporate net income tax or
24 property tax.
25 (c) Tax not imposition of excise tax.--Nothing contained in
26 this article shall be construed to impose an excise tax upon any
27 subject of taxation when the subject of taxation is specifically
28 exempted under the statute levying the excise tax.
29 (d) Freedom from certain county taxes.--The property set
30 forth in subsection (a) shall be free from any county tax except
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1 taxes on real estate.
2 Section 403-A. Report and Payment of Tax.--(a) Report of
3 tax.--It shall be the duty of every cooperative agricultural
4 association liable to pay tax under this act, on or before the
5 fifteenth day of April of each year, to transmit to the
6 department upon a form prescribed by the department a report
7 under oath or affirmation, of its president, vice-president or
8 other principal officer and of its treasurer or assistant
9 treasurer of net income taxable under this article.
10 (b) Payment of tax.--It shall be the duty of every
11 cooperative agricultural association liable to pay tax under
12 this article to make payment of the tax due for the taxable year
13 with the annual report required by this section.
14 (c) Failure to file report.--If the officers of any
15 cooperative agricultural association shall neglect or refuse to
16 make any report, as required by this section, or shall knowingly
17 make any false report, an additional ten per cent of the amount
18 of the tax shall be added by the department to the tax
19 determined to be due.
20 (d) Fiscal year taxpayers.--If any cooperative agricultural
21 association closes its fiscal year not upon the thirty-first day
22 of December, but upon some other date, the cooperative
23 agricultural association shall certify such fact to the
24 department and shall make the report required by this section on
25 or before the fifteenth day of the fourth month after the close
26 of its fiscal year.
27 Section 404-A. Extension of Time to File Reports.--The
28 department may, upon application made to it in such form as it
29 shall prescribe, on or prior to the last day for filing any
30 report and upon proper cause shown, grant to the cooperative
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1 agricultural association required to file the report an
2 extension of not more than sixty days within which the report
3 may be filed, but the amount of tax due shall, in such cases,
4 nevertheless, be subject to interest from the due date and at
5 the rate established under section 2830.
6 Section 405-A. Failure to Retain Records; Penalty.-- Any
7 person violating any of the provisions of section 2812 as it
8 applies to the tax imposed by this article shall be guilty of a
9 misdemeanor and shall, upon conviction thereof, be sentenced to
10 pay a fine not exceeding one thousand dollars ($1,000) and costs
11 of prosecution, or to undergo imprisonment for not more than six
12 months, or both.
13 Section 406-A. Penalties.--(a) Perjury.--Any person who
14 shall wilfully make a false and fraudulent return of net income
15 made taxable by this article shall be guilty of wilful and
16 corrupt perjury, and upon conviction thereof, shall be subject
17 to punishment as provided by law. Such penalty shall be in
18 addition to any other penalties imposed by this act.
19 (b) Other conduct.--Any person who wilfully fails, neglects,
20 or refuses to make a report, or to pay the tax as prescribed in
21 this article, or who shall refuse to permit the department to
22 examine the books, papers and records of any cooperative
23 agricultural association liable to pay tax under this article,
24 shall be guilty of a misdemeanor, and upon conviction thereof,
25 shall be sentenced to pay a fine not exceeding one thousand
26 dollars ($1,000) and costs of prosecution, or to undergo
27 imprisonment not exceeding six months, or both. Such penalty
28 shall be in addition to any other penalties imposed by this act.
29 Section 9. Sections 603 and 702 of the act are amended to
30 read:
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1 Section 603. Procedure; Enforcement; Penalties.--Parts III,
2 [IV,] V[, VI,] and VII of Article IV are incorporated by
3 reference into this article in so far as they are applicable to
4 the tax imposed hereunder.
5 Section 702. Procedure; Enforcement; Penalties.--Parts III,
6 [IV,] V[, VI] and VII of Article IV are incorporated by
7 reference into this article in so far as they are applicable to
8 the tax imposed hereunder.
9 Section 10. Sections 711-A, 802 and 811-A of the act,
10 amended June 16, 1994 (P.L.279, No.48), are amended to read:
11 Section 711-A. Procedure; Enforcement; Penalties.--Parts
12 III, [IV,] V[, VI] and VII of Article IV and Part I of Article
13 VII are incorporated by reference into this article insofar as
14 they are applicable to the tax imposed under this article. The
15 taxable amount of shares under this article shall be apportioned
16 under the provisions of section 701.4.
17 Section 802. Procedure; Enforcement; Penalties.--Parts III,
18 [IV,] V[, VI] and VII of Article IV are incorporated by
19 reference into this article insofar as they are applicable to
20 the tax imposed hereunder. The taxable value of shares under
21 this article shall be apportioned under the provisions of
22 section 701.4, except that, in addition, for purposes of section
23 701.4(3), receipts from the issuance of title insurance shall be
24 located in the state in which the real property that is insured
25 is located.
26 Section 811-A. Procedure; Enforcement; Penalties.--Parts
27 III, [IV,] V[, VI] and VII of Article VI are incorporated by
28 reference into this article insofar as they are applicable to
29 the tax imposed under this article. The taxable value of shares
30 under this article shall be apportioned under the provisions of
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1 section 701.4, except that, in addition, for purposes of section
2 701.4(3), receipts from the issuance of title insurance shall be
3 located in the state in which the real property that is insured
4 is located.
5 Section 11. Section 904 of the act is amended to read:
6 Section 904. Procedure; Enforcement; Penalties.--(a) Parts
7 III, [IV,] V[, VI] and VII of Article IV are incorporated by
8 reference into this article in so far as they are applicable to
9 the tax imposed hereunder.
10 (b) Any addition, bonus, charge, cost, fee, tax, interest or
11 penalty imposed pursuant to section 212 of the act of May 17,
12 1921 (P.L.789, No.285), known as "The Insurance Department Act
13 of 1921," shall be determined by the department under Article
14 XXVIII.
15 Section 12. Section 1102 of the act, amended December 23,
16 1983 (P.L.360, No.89), is amended to read:
17 Section 1102. Procedure; Enforcement; Penalties.--Parts
18 III[, IV, VI,] and VII of Article IV are incorporated by
19 reference into this article in so far as they are consistent
20 with this article and applicable to the tax imposed hereunder.
21 However, notwithstanding the provisions of subsection (d) of
22 section 403 of this act, if the officers of any corporation
23 subject to tax under this article shall neglect or refuse to
24 make any report as herein required or shall knowingly make any
25 false report, there shall be added by the department to the tax
26 determined to be due a penalty of five per cent of the amount of
27 tax due for each month or fraction thereof until the penalty has
28 reached twenty-five per cent, and thereafter at the rate of one
29 per cent per month. No such amounts added to the tax shall bear
30 any interest whatsoever.
19990H1367B1600 - 18 -
1 Section 13. Section 1102-A of the act, amended or added July
2 4, 1979 (P.L.60, No.27) and August 4, 1991 (P.L.97, No.22), is
3 amended to read:
4 Section 1102-A. Imposition of Tax; Report; [Interest]
5 Estimated Tax and Penalties.--[(a) On or before the first day
6 of June of 1970 and of each year thereafter until and including
7 June 1, 1983, every public utility shall pay to the State
8 Treasurer, through the Department of Revenue, a tax at the rate
9 of thirty mills upon each dollar of the State taxable value of
10 its utility realty at the end of the preceding calendar year.
11 (1) On or before April 15, 1984, for tax year 1983, every
12 public utility shall report tax liability at the rate of thirty
13 mills upon each dollar of the State taxable value of its utility
14 realty at the end of calendar year 1983 and shall pay such tax
15 on or before June 1, 1984.
16 (2) On or before April 15, 1984, and each year thereafter,
17 every public utility shall report tentative tax liability for
18 the current tax year equal to ninety per cent of the tax
19 liability of the immediate prior year, and until December 31,
20 1991, pay twenty-five per cent of such amount on April 15, June
21 15, September 15 and December 15 of each year. For tax years
22 beginning with 1992 and each year thereafter, said tentative tax
23 shall be paid on April 15 of each year.
24 (3) On or before April 15, 1985, and every year thereafter,
25 every public utility shall pay the remaining portion, if any, of
26 the thirty mills tax due upon each dollar of the State taxable
27 value of its utility realty at the end of the preceding calendar
28 year, after accounting for any tentative tax payments made
29 pursuant to this act.
30 (b) Each such payment shall be accompanied by a report, upon
19990H1367B1600 - 19 -
1 oath of the owner or responsible officer of the public utility,
2 showing the amount and manner of computation of the State
3 taxable value upon which such payment is based.]
4 (b.1) There is hereby imposed on every public utility a tax
5 at the rate of thirty mills upon each dollar of the State
6 taxable value of its utility realty at the end of the calendar
7 year.
8 (b.2) On or before April 15 of each year, every public
9 utility shall make a report to the department of the tax imposed
10 by this article showing the amount and manner of computation of
11 the State taxable value of its utility realty at the end of the
12 preceding calendar year. The report shall be made upon a form
13 prescribed by the department under oath or affirmation of the
14 owner or responsible officer of the public utility. It shall be
15 the duty of every public utility liable to pay tax under this
16 article to make final payment of the tax due the Commonwealth
17 for the preceding calendar year with the report.
18 (b.3) On or before April 15 of each year, every public
19 utility shall pay estimated tax for the current calendar year
20 equal to ninety per cent of the tax liability of the immediate
21 prior calendar year. Underpayment of estimated tax shall be
22 subject to interest as provided in section 3003.3. For purposes
23 of section 3003.3, the term "safe harbor base year" shall mean
24 the preceding calendar year.
25 (c) Payment of the tax [hereby] imposed by this article may
26 be enforced by any means provided by law for the enforcement of
27 payment of taxes to the State. If the tax [hereby imposed] is
28 not paid by the date [herein] prescribed by this section, or
29 within any extension granted by the department, the unpaid tax
30 shall [bear interest at the rate of one per cent per month, and
19990H1367B1600 - 20 -
1 shall in addition] be subject to a penalty of five per cent of
2 the amount of the tax, which penalty may be waived or abated, in
3 whole or in part, by the department unless the public utility
4 has acted in bad faith, negligently, or with intent to defraud.
5 (d) This article shall not be construed to apply to nor
6 shall the tax be imposed upon any public utility furnishing any
7 public utility sewage services, or upon any municipality or
8 municipality authority furnishing any public utility services.
9 Section 14. The act is amended by adding a section to read:
10 Section 1114-C. Procedure; Enforcement; Penalties.--The
11 provisions of Article XXVIII shall apply to any tax imposed
12 under this article insofar as they are applicable to the tax
13 imposed.
14 Section 15. Section 1503 of the act, added December 1, 1983
15 (P.L.228, No.66), is amended to read:
16 Section 1503. [Settlement and Resettlement of Tax]
17 Procedure; Enforcement; Penalties.--[The settlement and
18 resettlement of taxes imposed by this article, including the
19 granting of extensions of time to file reports and the rights of
20 the taxpayer to present and prosecute a petition for
21 resettlement, a petition for review, or an appeal to court, or
22 to file a petition for refund, and the imposition of interest
23 and penalties, shall be governed by the provisions of the act of
24 April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code,"
25 relevant to capital stock and franchise taxes.] Parts III, V and
26 VII of Article IV shall apply to this article insofar as they
27 are applicable to the tax imposed.
28 Section 16. Section 2005 of the act, added December 22, 1989
29 (P.L.775, No.110), is amended to read:
30 Section 2005. [Assessment by Department] Certification to
19990H1367B1600 - 21 -
1 Liquor Control Board; Regulations.--[(a) If any person shall
2 fail to pay any tax imposed by this article for which he is
3 liable, the department is hereby authorized and empowered to
4 make an assessment of additional tax due by such person, based
5 upon any information within its possession, or that shall come
6 into its possession.
7 (b) Promptly after the date of such assessment, the
8 department shall send by registered mail a copy of the
9 assessment to the person against whom it was made. Within ninety
10 days after the date upon which the copy of any such assessment
11 was mailed, such person may file with the department a petition
12 for reassessment of such taxes. Every petition for reassessment
13 shall state specifically the reasons which the petitioner
14 believes entitle him to such reassessment, and it shall be
15 supported by affidavit that it is not made for the purpose of
16 delay, and that the facts set forth therein are true. It shall
17 be the duty of the department, within six months after the date
18 of any assessment, to dispose of any petition for reassessment.
19 Notice of the action taken upon any petition for reassessment
20 shall be given to the petitioner promptly after the date of
21 reassessment by the department.
22 (c) Within sixty days after the date of mailing of notice by
23 the department of the action taken on any petition for
24 reassessment filed with it, the person against whom such
25 assessment was made, may, by petition, request the Board of
26 Finance and Revenue to review such action. Every petition for
27 review filed hereunder shall state specifically the reason upon
28 which the petitioner relies, or shall incorporate by reference
29 the petition for reassessment in which such reasons shall have
30 been stated. The petition shall be supported by affidavit that
19990H1367B1600 - 22 -
1 it is not made for the purpose of delay, and that the facts
2 therein set forth are true. If the petitioner be a corporation,
3 joint-stock association or limited partnership, the affidavit
4 must be made by one of the principal officers thereof. A
5 petition for review may be amended by the petitioner at any time
6 prior to the hearing, as hereinafter provided. The Board of
7 Finance and Revenue shall act finally in disposition of such
8 petitions filed with it within six months after they have been
9 received, and, in the event of the failure of said board to
10 dispose of any such petition within six months, the action taken
11 by the department upon the petition for reassessment shall be
12 deemed sustained. The Board of Finance and Revenue may sustain
13 the action taken on the petition for reassessment, or it may
14 reassess the tax due upon such basis as it shall deem according
15 to law and equity. Notice of the action of the Board of Finance
16 and Revenue shall be given by mail, or otherwise, to the
17 department and to the petitioner.
18 (d) In all cases of petitions for reassessment, review or
19 appeal, the burden of proof shall be upon the petitioner or
20 appellant, as the case may be.
21 (e) Whenever any assessment of additional tax is not paid
22 within ninety days after the date of the assessment, if no
23 petition for reassessment has been filed, or within sixty days
24 from the date of reassessment, if no petition for review has
25 been filed, or within sixty days from the date of the decision
26 of the Board of Finance and Revenue upon a petition for review,
27 or the expiration of the board's time for acting upon such
28 petition, if no appeal has been made, and in all cases of
29 judicial sales, receiverships, assignments or bankruptcies, the
30 department may call upon the Office of Attorney General to
19990H1367B1600 - 23 -
1 collect such assessment. In such event, in a proceeding for the
2 collection of such taxes, the person against whom they were
3 assessed shall not be permitted to set up any ground of defense
4 that might have been determined by the department, the Board of
5 Finance and Revenue or the courts.] The department may [also]
6 certify to the Liquor Control Board, for such action as the
7 board may deem proper, the fact that any person has failed to
8 pay or duly appeal from such assessment of additional tax. The
9 department may also provide, adopt, promulgate and enforce such
10 rules and regulations, as may be appropriate, to prevent further
11 shipment or transportation of malt or brewed beverages into this
12 Commonwealth by any person against whom such unpaid assessment
13 shall have been made.
14 Section 17. Section 2009(f) of the act, amended May 7, 1997
15 (P.L.85, No.7), is amended to read:
16 Section 2009. Refund of Tax.--* * *
17 (f) In each of the above cases the department shall pay or
18 issue to the manufacturer credits of sufficient value to cover
19 the refund. Such credits may be used by the manufacturer for the
20 payment of any taxes due by him to the Commonwealth. The
21 procedure for refund in any case shall be completed by the
22 department within sixty days after the proper affidavits have
23 been filed with the department under section [3003.1] 2841.
24 Section 18. Sections 2143 and 2169 of the act, added August
25 4, 1991 (P.L.97, No.22), are amended to read:
26 Section 2143. Interest.--If the inheritance tax is not paid
27 before the date it becomes delinquent, interest on the unpaid
28 tax shall be charged after the date of delinquency at the rate
29 established pursuant to [section 806 of the act of April 9, 1929
30 (P.L.343, No.176), known as "The Fiscal Code."] section 2830.
19990H1367B1600 - 24 -
1 When payment of inheritance tax is not made because of
2 litigation or other unavoidable cause of delay and the property
3 on which the tax has been calculated has remained in the hands
4 of a fiduciary and has not produced a net income equal to the
5 rate of interest provided in this section annually, interest for
6 such period shall be calculated at the rate of the net income
7 produced by the property. [Any payment on delinquent inheritance
8 tax shall be applied first to any interest due on the tax at the
9 date of payment and then, if there is any balance, to the tax
10 itself.]
11 Section 2169. Purchaser, Mortgagee or Lessee.--Unless suit
12 for collection of the taxes imposed by this article is
13 instituted within twenty years after any tax becomes delinquent,
14 the lien shall cease as to any purchaser, mortgagee or lessee of
15 a devisee or heir of, or a beneficiary under a deed of trust of,
16 the real property subject to the lien. Any time within the
17 twenty-year period, if any tax on the real property is not paid,
18 the department shall have power to file a certificate, under its
19 seal, certifying to nonpayment which, when filed in the office
20 of the clerk of the county where the real property is situated,
21 shall continue the lien against decedent's real property [for an
22 additional period of five years from the date of the filing and
23 the lien shall be indexed in the office of the clerk. If the
24 taxes on the real property are not paid within the additional
25 period of five years, the department shall have power to extend
26 the lien for additional periods of five years by filing a
27 certificate in the manner provided in this section.] in full
28 force and effect until paid without the necessity of refiling or
29 revival.
30 Section 19. Section 2181 of the act, amended May 7, 1997
19990H1367B1600 - 25 -
1 (P.L.85, No.7), is amended to read:
2 Section 2181. Refund of Tax.--(a) A refund shall be made of
3 any tax to which the Commonwealth is not rightfully or equitably
4 entitled provided the Commonwealth determines the refund is due
5 or [application] a petition for refund is made [within the
6 appropriate time limit as set forth in subsection (d).] pursuant
7 to section 2841.
8 (b) Interest shall be paid on refundable tax at the [same
9 rate as the interest rate on deficiencies provided for in
10 section 2143.] rate established pursuant to section 2831.
11 (c) Refund shall be made in cash to the party who paid the
12 tax or to his assignee or as directed by the court.
13 [(d) Application for refund of tax shall be made within
14 three years after:
15 (1) the court has rescinded its order and adjudication of
16 presumed death when the refund is claimed for tax paid on the
17 transfer of the estate of a presumed decedent who is later
18 determined to be alive;
19 (2) termination of litigation establishing a right to a
20 refund; no application for refund shall be necessary when the
21 litigation has been with the Commonwealth over liability for the
22 tax or the amount of tax due;
23 (3) it has been finally determined that the whole or any
24 part of an alleged deficiency tax, asserted by the Federal
25 Government beyond that admitted to be payable, and in
26 consequence of which an estate tax was paid under section 2117
27 was not payable;
28 (4) a final judgment holding that a provision of this
29 article under which tax has been paid is unconstitutional or
30 that the interpretation of a provision of this article under
19990H1367B1600 - 26 -
1 which tax has been paid was erroneous; or
2 (5) the date of payment, or the date of the notice of the
3 assessment of the tax, or the date the tax becomes delinquent,
4 whichever occurs later, in all other cases.
5 (e) An application for refund of tax shall be made to the
6 department.
7 (e.1) A petition to review the decision and order of the
8 department on a petition for refund may be made to the Board of
9 Finance and Revenue under this article.
10 (f) The action of the Board of Finance and Revenue on all
11 applications for refund of tax may be appealed as provided for
12 in 42 Pa.C.S. § 933 (relating to appeals from government
13 agencies).
14 (g) As much of the moneys received as payment of tax under
15 this article as shall be necessary for the payment of the
16 refunds provided for in this article with interest is
17 appropriated for the payment of such refunds.]
18 Section 20. The act is amended by adding articles to read:
19 ARTICLE XXIV
20 COLLECTION OF COMMONWEALTH MONEY FROM
21 COUNTY OR CITY OFFICERS
22 Section 2401. Reports to the Department of Revenue.--On the
23 fifth day of each month, or at such times as may be prescribed
24 by the department, it shall be the duty of each judicial officer
25 of a court not of record, county officer and city officer to
26 render to the department, under oath or affirmation, returns of
27 money or as much as may be prescribed by the department received
28 during the applicable period for the use of or on behalf of the
29 Commonwealth, designating, under proper headings, the source
30 from which the money was received, and to pay the money into the
19990H1367B1600 - 27 -
1 State Treasury, through the department, less any compensation
2 and reimbursement for expenses allowable by law for having made
3 the collections.
4 Section 2402. Establishment of Federally Insured Interest-
5 Bearing Accounts for the Deposit of Commonwealth Money.--
6 Judicial officers of courts not of record, county officers and
7 city officers who receive money for the use of or on behalf of
8 the Commonwealth shall, when required by the department,
9 establish an insured interest-bearing account at a bank or
10 savings and loan association whose accounts are insured by an
11 instrumentality of the Federal Government. Money received for or
12 on behalf of the Commonwealth, except money deducted for
13 commissions and fees, shall be deposited in the account. Both
14 the principal and interest in such account established under
15 this section shall be transmitted to the Commonwealth as set
16 forth in section 2401.
17 Section 2403. Examination and Audit of Accounts.--Upon
18 receipt of the return required by section 2401, the department
19 shall examine the return and determine the amount due the
20 Commonwealth from the officer. The department shall credit or
21 assess the account of the officer as appropriate. A final
22 discharge may not be granted to any officer upon any amount due
23 the Commonwealth until the accounts and dockets of the officer
24 shall have been audited by the Department of the Auditor
25 General.
26 Section 2404. Failure to Make Return.--The department is
27 hereby authorized to examine the books and accounts of a
28 judicial officer of a court not of record, county officer or
29 city officer who shall refuse or neglect to make the return and
30 payment required by section 2401. Upon information obtained
19990H1367B1600 - 28 -
1 from the examination, the department shall issue an assessment
2 against the officer. There shall be added to the assessment a
3 penalty of five per cent per month, or fraction thereof, not to
4 exceed a total of fifty per cent of the amount of the
5 assessment, to provide for any losses which might otherwise
6 result to the Commonwealth from the neglect or refusal of the
7 officer to furnish the return.
8 Section 2405. Interest.--Money due the Commonwealth from
9 judicial officers of courts not of record, county officers or
10 city officers, as provided in this article, shall bear interest
11 at the rate established under section 2830 of Article XXVIII
12 from the due date for payment until paid.
13 Section 2406. Assessment of Accounts upon Request of the
14 Auditor General.--It shall be the duty of the Auditor General,
15 promptly upon auditing the accounts and dockets of the several
16 judicial officers of courts not of record, county officers and
17 city officers for any period, to furnish to the department a
18 detailed report of any errors or discrepancies in the monthly
19 reports of the officers filed with the department for the same
20 period, and it shall be the duty of the department to examine
21 the account of the officer and credit or assess the officer as
22 appropriate.
23 Section 2407. Failure of Officer to Make Return and Payment
24 to Department.--A judicial officer of a court not of record,
25 county officer or city officer who shall refuse or neglect to
26 make the return and payment required by section 2401 shall be
27 personally liable for a penalty of ten per cent of the amount of
28 money collected during the period to which the return and
29 payment apply, and which shall be added to the total amount
30 found to be due.
19990H1367B1600 - 29 -
1 Section 2408. Penalty for Failure to Establish Interest-
2 Bearing Account or Make Deposits.--A judicial officer of a court
3 not of record, county officer or city officer who shall refuse
4 or neglect, when required by the department, to establish a
5 federally insured interest-bearing account in a bank or savings
6 and loan association or to deposit therein the money received
7 for the use of or on behalf of the Commonwealth shall be
8 personally liable for a penalty of one per cent per month or
9 fraction thereof on the money collected for the period during
10 which the account is not established and the funds are not
11 deposited therein.
12 Section 2409. Removal of Officers Failing to Make Returns.--
13 If after the department or its agent examines the books and
14 accounts of a judicial officer of a court not of record, county
15 officer or city officer, as provided in section 2404, and the
16 officer refuses or neglects to file a return as required by
17 section 2401, it shall be the duty of the department to certify
18 the refusal to the Attorney General, who shall institute
19 proceedings for the purpose of ousting the delinquent officer
20 from his office. The proceedings shall be carried out as
21 provided by law, and it shall be the duty of the court, upon
22 finding that the defendant has repeatedly refused to file
23 returns required by section 2401, to oust the incumbent from
24 office and declare the office vacant. Upon the entry of the
25 decree, the court shall certify it to the Governor, who shall
26 revoke the commission issued to the officer and shall fill the
27 vacancy as provided by law.
28 ARTICLE XXVIII
29 PROCEDURE AND ADMINISTRATION
30 PART I
19990H1367B1600 - 30 -
1 PRELIMINARY PROVISIONS
2 Section 2801. Definitions.--The following words, terms and
3 phrases when used in this Article XXVIII shall have the meaning
4 given to them in this section, except where the context clearly
5 indicates a different meaning:
6 "Assessment." The Department of Revenue's determination of
7 the amount of unpaid tax, interest or penalty owed by the
8 taxpayer to the Commonwealth. The term includes a reassessment.
9 "Department." The Department of Revenue of the Commonwealth.
10 "Due date for payment of the tax." The last day prescribed
11 for making the payment of tax. The due date for payment of the
12 tax shall be determined without regard to any requirement for
13 the payment of estimated tax, prepayment of tax, or extension of
14 time for filing a tax report or making payment.
15 "Erroneous refund." A refund or credit of tax, interest or
16 penalty if either of the following applies:
17 (1) the refund or credit is made after the expiration of the
18 period of limitation for filing a petition for refund, unless
19 the refund is made pursuant to the disposition of a petition
20 filed under Part V; or
21 (2) the refund or credit is the result of a processing or
22 clerical error of the Department of Revenue.
23 "Field audit." The examination of a record, report or
24 transaction conducted on the premises of the taxpayer or the
25 office of a tax practitioner representing the taxpayer.
26 "Interest." Interest administered, imposed or collected by
27 the Department of Revenue.
28 "Penalty." A civil penalty administered, imposed or
29 collected by the Department of Revenue.
30 "Person." A natural person, association, corporation,
19990H1367B1600 - 31 -
1 estate, fiduciary, government entity, trust or other legal
2 entity. The term person, as applied to an association, shall
3 include the partners and members thereof and, as applied to a
4 corporation, the officers thereof.
5 "Property." Any real or personal property, including
6 tangible and intangible property.
7 "Record." An account, book, data, document, file, invoice,
8 journal, ledger, paper, report, return, schedule, stamp,
9 statement or other record, maintained in writing, electronically
10 or in any other manner or medium.
11 "Report." A printed form or other medium approved by the
12 Department of Revenue that is used by a taxpayer to document or
13 show the taxpayer's liability to the Commonwealth. The term
14 includes a return, account, required attachments and other
15 records.
16 "Tax." A tax, fee, addition, bonus, cost or other charge
17 administered, imposed or collected by the Department of Revenue.
18 "Taxpayer." A person upon which tax, interest or penalty is
19 imposed or that is liable to pay, collect or remit tax, interest
20 or penalty.
21 "Test audit." An audit of sampled transactions selected by
22 either a block sample or a statistical sample method. The term
23 includes a clustered sample or probability sample.
24 "Unpaid." An amount that is not paid, that is underpaid, or
25 that is understated and not paid.
26 Section 2802. Method of Filing; Signature.--(a) Electronic
27 filing.--Notwithstanding any provision of law, the department
28 may allow the electronic filing of any report.
29 (b) Alternative methods of signing.--The department may
30 determine alternative methods for the signing, subscribing or
19990H1367B1600 - 32 -
1 verifying of a report that shall have the same validity and
2 consequences as the actual signing by the taxpayer.
3 Section 2803. Timely Mailing Treated as Timely Filing and
4 Payment.--(a) General rule.--
5 (1) Whenever a report, payment or petition is required by
6 law to be received by the department on or before a day certain,
7 the taxpayer shall be deemed to have complied with the law if
8 the correctly addressed envelope transmitting the report,
9 payment or petition received by the department is postmarked by
10 the United States Postal Service on or prior to the final day on
11 which the report, payment or petition is required to be
12 received.
13 (2) For the purposes of this section, presentation of a
14 receipt from the United States Postal Service indicating that
15 the correctly addressed envelope transmitting the report,
16 payment or petition received by the department was mailed on or
17 before the due date shall be evidence of timely filing and
18 payment.
19 (b) Treatment of private delivery services.--The reference
20 in this section to a postmark by the United States Postal
21 Service shall include any date recorded or marked as described
22 in section 7502(f)(2)(C) of the Internal Revenue Code of 1986
23 (Public Law 99-514, 26 U.S.C. § 7502 et seq.) by a delivery
24 service designated by the Secretary of the Treasury of the
25 United States under section 7502(f)(2) of the Internal Revenue
26 Code of 1986.
27 (c) Exception.--This section shall not apply to a report,
28 payment or petition required by law to be delivered by a method
29 other than mailing.
30 Section 2804. Certification of Mailing Date.--Certification
19990H1367B1600 - 33 -
1 of the department of the mailing date of a notice or other
2 record shall be presumptive evidence that the notice or record
3 was mailed on the date specified. If the notice or other record
4 is generated or mailed through an automated or electronic
5 process, the department shall not be required to produce a copy
6 of the actual notice or other record mailed.
7 Section 2805. Audit by Department of the Auditor General.--
8 The Department of the Auditor General shall have the power and
9 duty to:
10 (1) Audit accounts for taxes or other money due the
11 Commonwealth, which are reported or paid to the Commonwealth
12 through the department.
13 (2) Request the department to assess accounts that are found
14 to have errors or discrepancies.
15 PART II
16 EXAMINATIONS AND ASSESSMENT OF TAX
17 Section 2810. Examinations.--(a) General rule.--In order to
18 verify the accuracy of a tax report, to determine tax, interest
19 or penalty due the Commonwealth or to collect tax, interest or
20 penalty due the Commonwealth, the department has the following
21 powers:
22 (1) To examine all records and property of a taxpayer.
23 (2) To examine all records and property of a person
24 necessary to the department's verification, determination or
25 collection of tax, interest or penalty.
26 (3) To conduct investigations.
27 (4) To administer necessary oaths and affirmations and to
28 take testimony and receive evidence.
29 (5) To compel the attendance and testimony of a person or to
30 compel the production of records or property by the issuance of
19990H1367B1600 - 34 -
1 a summons to the person or to the custodian of the records or
2 property to appear before the department at a time and place
3 named in the summons to give testimony and to produce the
4 requested documents. If the summons is not honored within sixty
5 days, the department may apply to the Commonwealth Court for a
6 writ of attachment for contempt against the person or custodian.
7 It shall be the duty of the court to hear the application and,
8 if satisfactory proof is made, to issue a writ of attachment for
9 the arrest of the person or custodian and to conduct a hearing
10 prior to the imposition of punishment for contempt.
11 (6) To compel, by an appropriate action in a court of
12 competent jurisdiction, the production of records and property
13 and the attendance and testimony of a person.
14 (b) Duty to provide means to examine.--Every taxpayer
15 subject to an examination under this section shall be required
16 to give the department the means, facilities and opportunity to
17 conduct the examination.
18 (c) Limitation on examinations.--Examinations under this
19 section shall be limited to that part of the record and property
20 that relates to the taxes administered, imposed or collected by
21 the department.
22 Section 2811. Determinations of Tax Liability.--(a)
23 Determinations.--The department may determine, by examination,
24 inquiry, verification or audit, a taxpayer's unpaid liability to
25 the Commonwealth for tax, interest or penalty. The determination
26 may be based upon any of the following:
27 (1) The information contained in the report being examined.
28 (2) Other information identified by the department in an
29 examination under section 2810.
30 (3) A reasonable test audit performed in accordance with the
19990H1367B1600 - 35 -
1 regulations of the department if any of the following apply:
2 (i) the taxpayer being audited does not have complete
3 records of transactions;
4 (ii) the taxpayer fails or refuses to provide records
5 requested by the department; or
6 (iii) the department determines that the review of each
7 transaction or invoice would place an undue burden on the
8 department to conduct an audit in a timely and efficient manner.
9 (b) Challenge of test audit.--A taxpayer may challenge the
10 reasonableness of a test audit by providing clear and convincing
11 evidence that the method used for the test audit is erroneous,
12 lacks a rational basis or produces a different result when the
13 complete records are examined.
14 (c) Inadequate taxpayer records.--If a taxpayer has
15 maintained inadequate or incomplete records, the department may
16 determine the taxpayer's unpaid liability based upon the records
17 and information available or that may come into the department's
18 possession.
19 Section 2812. Retention of Records.--(a) General rule.--
20 Each taxpayer shall maintain all records necessary to complete,
21 file and support its tax reports and other pertinent records, as
22 may be required by the department, for a period of three years
23 after the report is filed or until all administrative and
24 judicial appeals have been finally determined, whichever is
25 later.
26 (b) Personal income taxes.--With respect to personal income
27 tax, the records required to be maintained under subsection (a)
28 shall be retained for six years after the report is filed or
29 until all administrative and judicial appeals have been finally
30 determined, whichever is later.
19990H1367B1600 - 36 -
1 Section 2813. Assessments.--(a) Assessment of tax, interest
2 or penalty.--If the department determines that unpaid tax,
3 interest or penalty is due the Commonwealth, the department
4 shall issue an assessment.
5 (b) Notice of assessment.--A notice of assessment and demand
6 for payment shall be mailed to the taxpayer. The notice shall
7 include:
8 (1) The tax type and tax periods included within the
9 assessment.
10 (2) The amount of the unpaid tax, interest or penalty
11 included within the assessment, including the rate at which
12 interest or penalties will continue to accrue against any unpaid
13 amounts.
14 (3) The basis of the assessment.
15 (4) The taxpayer's appeal rights.
16 (c) Payment of assessment.--The assessment shall be paid to
17 the department upon receipt of the notice of assessment. Payment
18 of the assessment shall be without prejudice to the right of the
19 taxpayer to file a petition for reassessment in the manner
20 prescribed by Part V.
21 Section 2814. Estimated Assessments.--(a) Estimated
22 assessment for failure to file.--In the event that a taxpayer
23 fails to file a report required by law, the department may issue
24 an estimated assessment of tax, interest or penalty based upon
25 the records and information available or that may come into the
26 department's possession. If prior to the filing of the report
27 the department estimates that additional unpaid tax, interest or
28 penalty is due the Commonwealth, the department may issue
29 additional estimated assessments.
30 (b) Notice of estimated assessment.--A notice of estimated
19990H1367B1600 - 37 -
1 assessment and demand for payment shall be mailed to the
2 taxpayer. The notice of estimated assessment shall include:
3 (1) The tax report that the taxpayer has failed to file.
4 (2) The tax type and tax periods included within the
5 assessment.
6 (3) A statement that the assessment is an estimate based
7 upon the information and records in the department's possession.
8 (4) The amount of unpaid tax, interest or penalty included
9 within the assessment, including the rate at which interest or
10 penalties will continue to accrue against any unpaid amounts.
11 (5) A statement that the estimated assessment is not
12 appealable but shall be removed upon the filing of a report
13 containing sufficient required information to permit
14 verification of the tax liability shown on the report.
15 (c) Payment of estimated assessment.--The estimated
16 assessment shall be paid to the department upon receipt of the
17 notice of estimated assessment. Payment of the estimated
18 assessment does not eliminate the taxpayer's obligation to file
19 a report.
20 (d) No right to appeal estimated assessment.--A taxpayer
21 shall have no right to petition for reassessment or refund or
22 otherwise appeal a notice of estimated assessment except as
23 provided in subsection (e).
24 (e) Removal of estimated assessment.--The department shall
25 remove an estimated assessment upon the filing of a report
26 containing sufficient required information to permit
27 verification of the tax liability shown on the report. Upon the
28 filing of the report the department may issue an assessment
29 under section 2813.
30 Section 2815. Jeopardy Assessments.--(a) Jeopardy
19990H1367B1600 - 38 -
1 assessments.--If the department believes that the assessment or
2 the collection of unpaid tax, interest or penalty will be
3 jeopardized in whole or in part by delay, it shall issue a
4 jeopardy assessment.
5 (b) Closing of open tax periods.--If the department believes
6 that a taxpayer intends to depart from the Commonwealth, remove
7 his property from the Commonwealth, conceal himself or his
8 property from the Commonwealth, or do any other act that may
9 prejudice or render wholly or partly ineffectual an action to
10 collect any tax, interest or penalty for the prior or current
11 tax periods unless the action is brought without delay, the
12 department shall declare the current tax period of the taxpayer
13 immediately terminated. In such case, the department shall
14 issue a jeopardy assessment for the tax period declared
15 terminated and for all prior tax periods, regardless of whether
16 the time otherwise allowed by law for filing a report or paying
17 the tax has expired.
18 (c) Notice of jeopardy assessment.--A notice of jeopardy
19 assessment and demand for payment shall be mailed to the
20 taxpayer. The notice of jeopardy assessment shall include:
21 (1) The tax type and tax periods included within the
22 assessment.
23 (2) The amount of unpaid tax, interest or penalty included
24 within the assessment, including the rate at which interest or
25 penalties will continue to accrue against any unpaid amounts.
26 (3) The basis of the assessment.
27 (4) The taxpayer's appeal rights, including the amount of
28 the bond or other security required to stay collection of the
29 assessment.
30 (d) Payment of jeopardy assessment.--The jeopardy assessment
19990H1367B1600 - 39 -
1 shall be paid to the department upon receipt of the notice of
2 jeopardy assessment. Payment of the jeopardy assessment does not
3 eliminate the taxpayer's obligation to file a report. If prior
4 to the filing of a report the department estimates that
5 additional unpaid tax, interest or penalty is due the
6 Commonwealth, the department may issue additional jeopardy
7 assessments or estimated assessments under section 2814.
8 (e) Collection of jeopardy assessments.--A jeopardy
9 assessment is immediately due and payable and proceedings for
10 collection may be commenced at once.
11 (1) The collection of the whole or a portion of a jeopardy
12 assessment may be stayed, at any time before the assessment
13 becomes final, by filing with the department a bond or other
14 security in such amount as the department may deem necessary,
15 not exceeding one hundred twenty per cent of the tax, interest
16 and penalty for which the stay is desired.
17 (2) Upon the filing of the bond or other security the
18 collection of the amount assessed which is covered by the bond
19 or other security shall be stayed. The taxpayer shall have the
20 right to waive the stay at any time in respect to the whole or a
21 portion of the amount covered by the bond or other security. If
22 the taxpayer waives the stay on a portion of the amount covered
23 by the bond or other security, the bond or other security shall
24 be proportionately reduced upon payment of the amount on which
25 the stay is waived. If any portion of the jeopardy assessment is
26 abated, the bond or other security shall be proportionately
27 reduced at the request of the taxpayer.
28 (f) Appeal of jeopardy assessment.--
29 (1) A taxpayer may prevent a jeopardy assessment from
30 becoming final by filing a petition for reassessment with the
19990H1367B1600 - 40 -
1 department within thirty days after the mailing date of the
2 notice of jeopardy assessment. The petition shall be in the form
3 prescribed by section 2842. The issues to be addressed in the
4 review of the petition shall include:
5 (i) Whether the making of the jeopardy assessment is
6 reasonable under the circumstances.
7 (ii) Whether the amount assessed as a result of the jeopardy
8 assessment is appropriate under the circumstances.
9 (2) The department shall issue a decision and order
10 disposing of a petition filed under paragraph (1) within sixty
11 days after receipt of the petition. Notice of the department's
12 decision and order disposing of the petition shall be mailed to
13 the petitioner.
14 (3) A taxpayer may file a petition for review of the
15 department's decision and order under paragraph (2) in
16 Commonwealth Court within thirty days after the following:
17 (i) The mailing date of the department's notice of decision
18 and order on a petition for reassessment of a jeopardy
19 assessment.
20 (ii) If the petition is not disposed of by the department
21 within sixty days after receipt, the sixtieth day following the
22 date the petition was received by the department.
23 (4) If it is determined that the making of the jeopardy
24 assessment is unreasonable or that the amount assessed is
25 inappropriate, the assessment may be abated or redetermined in
26 whole or in part, or the department or the taxpayer may be
27 directed to take such other actions as may be appropriate.
28 (g) Finality of determination.--A determination made
29 pursuant to a petition for reassessment under this section shall
30 be final and conclusive upon exhaustion of the appeal rights
19990H1367B1600 - 41 -
1 under this section and shall not be reviewed in any other
2 proceeding.
3 (h) Burden of proof.--
4 (1) In an action under this section involving the issue of
5 whether the making of a jeopardy assessment is reasonable under
6 the circumstances, the burden of proof in respect to the issue
7 shall be upon the department.
8 (2) In an action under this section involving the issue of
9 whether an amount assessed as a result of jeopardy assessment is
10 appropriate under the circumstances, the burden of proof in
11 respect of the issue shall be upon the taxpayer.
12 Section 2816. Limitations on Assessments.--(a) General
13 rule.--Tax, interest or penalty may be assessed within three
14 years after the date the report is filed.
15 (b) Rule where no tax report required.--In the case of taxes
16 paid to the department under a law that does not require the
17 filing of a report of the tax due the Commonwealth, tax,
18 interest or penalty may be assessed within three years after the
19 due date for payment of the tax.
20 (c) Failure to file report.--Tax, interest or penalty may be
21 assessed at any time if a taxpayer fails to file a report
22 required by law.
23 (d) False or fraudulent report.--Tax, interest or penalty
24 may be assessed at any time if the taxpayer files a false or
25 fraudulent report with intent to evade tax, interest or penalty
26 imposed by the tax laws of this Commonwealth.
27 (e) Failure to remit trust fund taxes.--Tax, interest or
28 penalty may be assessed at any time for any trust fund tax
29 collected by a taxpayer but not remitted to the Commonwealth.
30 (f) Assessment for erroneous refund.--The department may
19990H1367B1600 - 42 -
1 issue an assessment to recover an erroneous refund made within
2 five years of payment of the refund or within the period in
3 which an assessment could have been filed by the department with
4 respect to the taxable period for which the refund was granted,
5 whichever is later.
6 (g) Reassessments; additional assessments.--If the
7 department is not satisfied with its determination of the
8 taxpayer's liability, it may strike all or part of a previously
9 issued assessment or may issue additional assessments of tax,
10 interest or penalty within the time limitations specified in
11 this section.
12 (h) Omission of personal income tax reportable amounts.--In
13 the case of personal income tax, the department may assess tax,
14 interest or penalty within six years after the date the report
15 is required to be filed if the taxpayer omits from its tax
16 report an amount in excess of twenty-five per cent of the income
17 stated in the report.
18 (i) Accrual of interest, additions and penalties.--Interest,
19 additions and penalties assessed within the time limitations of
20 this section shall continue to accrue as provided by law without
21 the necessity for the filing of additional assessments.
22 (j) Report filed before due date.--For purposes of this
23 section, a report filed before the last day prescribed by law
24 for filing as extended shall be deemed to have been filed on the
25 last day.
26 Section 2817. Extension of Assessment Time Period.--A
27 taxpayer may agree to extend the assessment period for the
28 department to assess tax, interest or penalty by executing a
29 written consent prior to the expiration of the assessment period
30 provided by section 2816. The consent shall specifically state
19990H1367B1600 - 43 -
1 the time period of the extension being granted. The assessment
2 period may be further extended by subsequent consents in writing
3 made before the expiration of the extended assessment period.
4 Section 2818. Application of Part to Inheritance and Estate
5 Taxes.--Sections 2813, 2814, 2815, 2816 and 2817 of this part
6 shall not apply to taxes imposed by Article XXI. Article XXI
7 shall provide the exclusive procedure for the appraisement and
8 assessment of taxes imposed by Article XXI.
9 PART III
10 CREDITS AND REFUNDS
11 Section 2820. Application, Assignment or Refund of Cash
12 Overpayment Credits.--(a) General rule.--
13 (1) If the total amount of tax, interest or penalty due the
14 Commonwealth as reported by the taxpayer or as determined by the
15 department is less than the amount paid to the department on
16 account of the tax, interest or penalty, the department shall
17 enter a credit in the amount of the difference to the account of
18 the taxpayer.
19 (2) The overpayment credit shall be immediately subject to
20 application, assignment or refund at the request of the
21 taxpayer: Provided, That an overpayment credit shall not be
22 assigned or refunded if the taxpayer has an unpaid liability for
23 any tax, interest or penalty or is delinquent in filing tax
24 reports.
25 (3) If the taxpayer has not provided specific instructions
26 for the application, assignment or refund of the full amount of
27 the overpayment credit, the department may take one of the
28 following actions:
29 (i) Issue a refund of the overpayment credit to the
30 taxpayer, provided the taxpayer is not delinquent in filing tax
19990H1367B1600 - 44 -
1 reports.
2 (ii) Apply the credit against any unpaid liability of tax,
3 interest or penalty due the Commonwealth from the taxpayer and
4 refund any balance to the taxpayer.
5 (b) Assignment of overpayment credits.--If all tax, interest
6 and penalty due the Commonwealth has been fully paid, the
7 taxpayer may assign an overpayment credit to any other person.
8 The assignee may use the credit as payment of any tax, interest
9 or penalty due the Commonwealth.
10 (c) Overpayment of estimated tax.--If a taxpayer has paid an
11 installment of estimated tax in excess of the correct amount of
12 the installment, the credit entered for the overpayment shall be
13 applied against any unpaid installments. If the total amount
14 paid, whether or not on the basis of installments, exceeds the
15 amount determined to be due the Commonwealth upon the filing of
16 the taxpayer's report, the credit entered for the overpayment
17 shall be applied, assigned or refunded as provided in
18 subsections (a) and (b).
19 (d) Tax credit programs.--Except as specifically authorized
20 by law, the assignment or refund of tax credits awarded or
21 granted under a Commonwealth tax credit program is prohibited.
22 Section 2821. Appropriations for Refunds.--So much of the
23 proceeds of the taxes imposed under the laws of this
24 Commonwealth as shall be necessary for the payment of refunds,
25 enforcement or administration is hereby appropriated for such
26 purposes from the respective funds to which such taxes were
27 deposited. This section shall not be interpreted to authorize
28 the appropriation or use of Commonwealth funds for the refund,
29 collection, enforcement or administration of local taxes
30 collected, enforced or administered by the department.
19990H1367B1600 - 45 -
1 Section 2822. Payment of Refunds.--(a) General rule.--
2 Refunds of tax, interest or penalty authorized by this article
3 shall be paid to the taxpayer, his successors or assigns that
4 actually paid the tax, interest or penalty.
5 (b) Exception.--In the case of sales or use tax imposed
6 under Article II, a refund granted pursuant to a petition filed
7 under Part V for tax paid in conjunction with a contract entered
8 into prior to July 1, 1998, with a charitable organization,
9 volunteer firemen's organization, nonprofit educational
10 institution, religious organization, the United States, the
11 Commonwealth or its instrumentalities or political subdivisions
12 shall be made to the aforementioned entities.
13 Section 2823. Allocation of Payments.--(a) Allocation
14 priority.--Unless otherwise requested by the taxpayer, all
15 voluntary payments with respect to any tax period for any tax
16 shall be allocated within the taxpayer's account in the
17 following priority:
18 (1) Tax.
19 (2) Addition to tax.
20 (3) Interest.
21 (4) Penalty.
22 (5) Any other fees or charges.
23 (b) Definition.--For purposes of this section, the term
24 "voluntary payment" shall mean payment of a tax liability made
25 pursuant to the free will of the taxpayer. The term does not
26 include a payment made as a result of distraint or levy or
27 pursuant to a legal action in which the Commonwealth is seeking
28 to collect or file a claim for delinquent taxes.
29 PART IV
30 INTEREST
19990H1367B1600 - 46 -
1 Section 2830. Interest on Underpayment of Taxes.--(a)
2 Unpaid taxes and penalties.--All taxes due the Commonwealth
3 shall bear simple interest from the due date for payment of the
4 tax until paid. Penalties, bad check fees and lien filing fees
5 shall not bear interest.
6 (b) Underpayment due to refund of overpayment credit.--If
7 the refund of an overpayment credit under section 2820 results
8 in an underpayment of tax due the Commonwealth, interest shall
9 be calculated on the amount of the underpayment from the date
10 the overpayment credit was refunded: Provided, That the
11 department may abate all or any part of the interest on an
12 underpayment attributed to an erroneous refund that is the
13 result of a processing or clerical error of the department.
14 (c) Recomputation of interest.--Whenever the tax liability
15 of a taxpayer is affected by a payment, credit or assessment in
16 a manner that changes the interest liability of the taxpayer,
17 the interest liability shall be recomputed and adjusted by the
18 department to correspond to the tax liability as changed.
19 (d) Interest rate.--
20 (1) The interest rate per annum during each calendar year
21 shall be the interest rate established pursuant to section
22 6621(a)(2) of the Internal Revenue Code of 1986 (Public Law 99-
23 514, 26 U.S.C. § 6621(a)(2)) for underpayment of taxes effective
24 January 1 of each calendar year, without regard to any change in
25 the Federal interest rate during the calendar year.
26 (2) The department shall publish the rate of interest for
27 each calendar year in the Pennsylvania Bulletin.
28 (3) The rate of interest for unpaid motor carriers road tax
29 imposed under 75 Pa.C.S. Ch. 96 (relating to motor carriers road
30 tax) shall be as provided in 75 Pa.C.S. §§ 9613 (relating to
19990H1367B1600 - 47 -
1 penalty and interest for failure to report or pay tax) and 9622
2 (relating to reciprocal agreements).
3 (e) Effect of payment.--The payment of interest shall not
4 relieve a taxpayer from any additional tax, commission or
5 penalty prescribed by law for neglect or refusal to furnish
6 timely reports to the department or to pay any claim due to the
7 Commonwealth from the taxpayer.
8 (f) Payment pending appeal.--A taxpayer shall have the right
9 at any time to pay to the department any tax due the
10 Commonwealth for the purpose of stopping the running of further
11 interest on the amount paid. The payment shall be without
12 prejudice to the right of the taxpayer to file a petition for
13 reassessment with the department, or a petition for review with
14 the Board of Finance and Revenue, or an appeal to a court of
15 competent jurisdiction, in the manner and within the times
16 provided by law.
17 Section 2831. Interest on Overpayment of Taxes.--(a)
18 General rule.--Overpayments of tax due the Commonwealth shall
19 bear simple interest from the date of overpayment until the date
20 of resolution.
21 (b) Interest rate.--Interest on overpayments shall be
22 allowed and paid at the same rate prescribed for underpayments
23 under section 2830. The department shall publish the rate of
24 interest for each calendar year in the Pennsylvania Bulletin.
25 (c) Exceptions to Commonwealth's obligation to pay
26 interest.--
27 (1) No interest shall be allowed if an overpayment is
28 refunded or applied against any other tax, interest or penalty
29 due the Commonwealth within seventy-five days after the last
30 date prescribed for filing the report of the tax liability due
19990H1367B1600 - 48 -
1 the Commonwealth or within seventy-five days after the date the
2 final report of the tax liability due the Commonwealth is filed,
3 whichever is later. For purposes of this paragraph, a final
4 report shall be deemed to have been filed only if, when it is
5 received by the department, it is a legible report containing:
6 (i) the taxpayer's name, address, signature and tax
7 identification numbers;
8 (ii) identification of the tax type and tax period; and
9 (iii) sufficient required information to permit the
10 verification of the tax liability shown on the report.
11 (2) Overpayments of interest or penalty shall not bear any
12 interest.
13 (3) Tax credits awarded or granted under a Commonwealth tax
14 credit program shall not bear any interest.
15 (d) Effect of acceptance of refund check.--A taxpayer's
16 acceptance of the Commonwealth's check shall be without
17 prejudice to the right of the taxpayer to claim an additional
18 overpayment and interest thereon. Tender of a refund check by
19 the department shall be deemed to be acceptance of the check by
20 the taxpayer for purposes of this section.
21 (e) Definitions.--The following words, terms and phrases,
22 when used in this section, shall have the meaning given to them
23 in this subsection, except where the context clearly indicates a
24 different meaning:
25 "Date of overpayment." The later of the date paid or the
26 date tax is deemed to have been overpaid as follows:
27 (1) Tax actually deducted and withheld at the source shall
28 be deemed to have been overpaid on the last day prescribed for
29 filing the report for the tax period determined without regard
30 to any extension of time for filing.
19990H1367B1600 - 49 -
1 (2) An amount overpaid as estimated tax for the tax period
2 shall be deemed to have been overpaid on the last day prescribed
3 for filing the final report for the tax period determined
4 without regard to any extension of time for filing.
5 (3) An overpayment made before the last day prescribed for
6 payment shall be deemed to have been paid on the last day.
7 (4) An amount claimed to be overpaid with respect to which
8 an administrative review or appellate procedure is initiated in
9 the manner provided by law by the taxpayer shall be deemed to
10 have been overpaid sixty days following the date of initiation
11 of the review or procedure.
12 (5) Tax paid to an officer, licensee or collector shall be
13 deemed to have been overpaid on the date the tax is required by
14 law to be reported and transmitted to the department by the
15 officer, licensee or collector.
16 (6) An amount shown not to be due on an amended final
17 personal income tax return shall be deemed to have been overpaid
18 sixty days following the date of filing of the return.
19 "Date of resolution." The date tax is refunded or credited
20 as follows:
21 (1) In the case of a cash refund, a date preceding the date
22 of the Commonwealth's refund check by not more than thirty days.
23 (2) In the case of a credit for an overpayment the earlier
24 of:
25 (i) the date of the Commonwealth's notice to the taxpayer of
26 the determination of the credit; or
27 (ii) the date for payment, estimated payment or prepayment
28 of the tax against which the credit is applied, whichever first
29 occurs;
30 Provided, That in the case of a cash refund of a previously
19990H1367B1600 - 50 -
1 determined credit, interest shall be paid on the amount of the
2 credit from a date ninety days after the filing of a request to
3 convert the credit to a cash refund to a date preceding the date
4 of the refund check by not more than thirty days, regardless of
5 whether the refund check is accepted by the taxpayer after
6 tender to the taxpayer.
7 "Overpayment." A payment of tax determined in the manner
8 provided by law not to be legally due.
9 PART V
10 ASSESSMENT AND REFUND APPEAL PROCEDURE
11 Section 2840. Petition for Reassessment.--(a) General
12 rule.--A taxpayer may file a petition for reassessment with the
13 department within ninety days after the mailing date of the
14 notice of assessment.
15 (b) Limitation on petition for reassessment of erroneous
16 refund assessment.--
17 (1) A taxpayer shall not be permitted to challenge its
18 liability for tax, interest or penalty due the Commonwealth, as
19 reported by the taxpayer or as assessed by the department, in a
20 petition for reassessment of an erroneous refund assessment
21 issued pursuant to section 2816(f).
22 (2) The only issue permitted to be raised in a petition for
23 reassessment of an erroneous refund assessment shall be whether
24 tax, interest or penalty due the Commonwealth as reported by the
25 taxpayer or, if an assessment was issued prior to the refund, as
26 assessed by the department prior to the refund, is less than the
27 amount paid to the department on account thereof.
28 (c) Application to inheritance and estate taxes.--This
29 section shall not apply to the taxes imposed by Article XXI.
30 Part XI of Article XXI shall provide the exclusive procedure for
19990H1367B1600 - 51 -
1 protesting the appraisement and assessment of taxes imposed by
2 Article XXI.
3 Section 2841. Petition for Refund.--(a) General rule.--
4 (1) A taxpayer may file a petition for refund of tax,
5 interest or penalty with the department within three years after
6 the due date for filing the report as extended or within two
7 years after payment, whichever is later. If no report is
8 required to be filed by the taxpayer, a taxpayer may file a
9 petition for refund of tax, interest or penalty with the
10 department within three years after payment.
11 (2) If the taxpayer files a petition for refund within three
12 years after the due date for filing the report as extended, the
13 amount of tax, interest or penalty that may be refunded shall
14 not exceed the amount of tax, interest or penalty paid prior to
15 the filing of the petition.
16 (3) If the taxpayer files a petition for refund more than
17 three years after the due date for filing the report as
18 extended, the amount of the tax, interest or penalty that may be
19 refunded shall not exceed the amount of tax, interest or penalty
20 paid within the two-year period immediately preceding the filing
21 of the petition.
22 (4) If a petition for refund is filed within three years
23 after payment by a taxpayer that is not required to file a
24 report, the amount of tax, interest or penalty that may be
25 refunded shall not exceed the amount of tax, interest or penalty
26 paid within the three-year period immediately preceding the
27 filing of the petition.
28 (b) Exceptions to general rule.--
29 (1) The department may grant a credit to a taxpayer for all
30 tax periods covered by a field audit. If a credit is not granted
19990H1367B1600 - 52 -
1 by the department, the taxpayer may file a petition for refund
2 with the department for all tax periods covered by the field
3 audit within the periods of limitation provided by subsection
4 (a) or within six months after the mailing date of the notice of
5 assessment, whichever is later.
6 (2) In the case of amounts paid as a result of an
7 assessment, a petition for refund must be filed with the
8 department within two years after the mailing date of the notice
9 of assessment.
10 (c) Refund of inheritance and estate tax.--A taxpayer may
11 file a petition for refund of tax, interest or penalty imposed
12 by Article XXI with the department within three years after:
13 (1) The court has rescinded its order and adjudication of
14 presumed death when the refund is claimed for tax paid on the
15 transfer of the estate of a presumed decedent who is later
16 determined to be alive.
17 (2) Termination of litigation establishing a right to a
18 refund. A petition for refund shall not be necessary when the
19 litigation has been with the Commonwealth over liability for the
20 tax or the amount of tax due.
21 (3) It has been finally determined that the whole or any
22 part of an alleged deficiency tax, asserted by the Federal
23 Government beyond that admitted to be payable, and in
24 consequence of which an estate tax was paid under section 2117
25 was not payable.
26 (4) The date of payment or the date of the notice of the
27 assessment of the tax, or the date the tax becomes delinquent,
28 whichever occurs later, in all other cases.
29 (d) Payment date.--For purposes of this section, any payment
30 of estimated tax, withholding of tax or other payment of tax
19990H1367B1600 - 53 -
1 made prior to the due date for payment of the tax shall be
2 deemed to have been made on the due date for payment of the tax.
3 (e) Report due date.--For purposes of this section, the
4 phrase due date for filing the report as extended shall mean the
5 last day prescribed for filing the report for the tax period as
6 extended determined without regard to any requirement for the
7 filing of an amended or corrected report.
8 (f) Liquid fuels and fuels tax claims made to the Board of
9 Finance and Revenue.--This section shall not apply to claims for
10 refund or reimbursement of liquid fuels and fuels tax required
11 to be submitted to the Board of Finance and Revenue under 75
12 Pa.C.S. Ch. 90 (relating to liquid fuels and fuels tax). The
13 provisions of 75 Pa.C.S. § 9017 (relating to refunds) shall
14 provide the exclusive procedure for such claims.
15 Section 2842. Petition Procedure.--(a) Content of
16 petition.--
17 (1) Every petition for reassessment shall state:
18 (i) The tax type and tax periods included within the
19 petition.
20 (ii) The amount of the tax, interest or penalty that the
21 taxpayer claims to have been erroneously assessed.
22 (iii) The basis upon which the taxpayer claims that the
23 assessment is erroneous.
24 (2) Every petition for refund shall state:
25 (i) The tax type and tax periods included within the
26 petition.
27 (ii) The amount of the tax, interest or penalty that the
28 taxpayer claims to have been overpaid.
29 (iii) The basis of the taxpayer's claim for refund.
30 (3) The petition shall be supported by an affidavit by the
19990H1367B1600 - 54 -
1 petitioner or an authorized representative that it is not made
2 for the purpose of delay and that the facts set forth therein
3 are true.
4 (b) Request for hearing.--Upon written request of the
5 petitioner or when deemed necessary by the department, the
6 department shall schedule a hearing to review a petition. The
7 petitioner shall be notified by the department of the date, time
8 and place the hearing will be held.
9 (c) Decision and order.--The department shall issue a
10 decision and order disposing of a petition on such basis as it
11 deems according to law.
12 (d) Time limit for decision and order.--The department shall
13 issue a decision and order disposing of a petition within six
14 months after receipt of the petition. The petitioner and the
15 department may agree to extend the time period for the
16 department to dispose of the petition for one additional six-
17 month period. Notice of the department's decision and order
18 disposing of the petition shall be mailed to the petitioner.
19 (e) Exception to time limit for decision and order.--If, at
20 the time of the filing of a petition, proceedings are pending in
21 a court of competent jurisdiction or at the Board of Finance and
22 Revenue in which a claim made in the petition may be
23 established, the department, upon the written request of the
24 petitioner, may defer consideration of the petition until the
25 final judgment determining the questions involved in the
26 petition have been decided. If consideration of the petition is
27 deferred, the department shall issue a decision and order
28 disposing of the petition within six months after final
29 judgment.
30 (f) Failure of department to take action.--The failure of
19990H1367B1600 - 55 -
1 the department to dispose of the petition within the time period
2 provided for by subsection (d) or (e) shall act as a denial of
3 the petition. Notice of the department's failure to take action
4 and the denial of the petition shall be mailed to the
5 petitioner.
6 Section 2843. Review by Board of Finance and Revenue.--(a)
7 Petition for review of a decision and order.--Within ninety days
8 after the mailing date of the department's notice of decision
9 and order on a petition filed with it, a taxpayer may petition
10 the Board of Finance and Revenue to review the decision and
11 order of the department.
12 (b) Petition for review of denial by department's failure to
13 act.--A petition for review may be filed with the Board of
14 Finance and Revenue within ninety days after the mailing date of
15 the department's notice to the petitioner of its failure to
16 dispose of the petition within the time periods prescribed by
17 section 2842(d) or (e).
18 (c) Content of petition.--
19 (1) Every petition for review of the department's decision
20 and order on a petition for reassessment shall state:
21 (i) The tax type and tax periods included within the
22 petition.
23 (ii) The amount of tax, interest or penalty which the
24 taxpayer claims to have been erroneously assessed.
25 (iii) The basis upon which the taxpayer claims that the
26 assessment is erroneous.
27 (2) Every petition for review of the department's decision
28 and order on a petition for refund shall state:
29 (i) The tax type and tax periods included within the
30 petition.
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1 (ii) The amount of tax, interest or penalty that the
2 taxpayer claims to have been overpaid.
3 (iii) The basis of the taxpayer's claim for refund.
4 (3) The petitioner may satisfy the requirements of
5 paragraphs (1) and (2) by incorporating by reference the
6 petition filed with the department containing the required
7 information.
8 (4) The petition shall be supported by an affidavit by the
9 petitioner or an authorized representative that it is not made
10 for the purpose of delay and that the facts set forth are true.
11 (d) Request for hearing.--Upon written request of the
12 petitioner or when deemed necessary by the board, the board
13 shall schedule a hearing to review the petition. The petitioner
14 shall be notified by the board of the date, time and place the
15 hearing will be held.
16 (e) Decision and order.--The board shall issue a decision
17 and order disposing of a petition on such basis as it deems
18 according to law and equity.
19 (f) Time limit for decision and order.--
20 (1) The board shall issue a decision and order disposing of
21 a petition for review relating to a petition for reassessment
22 within six months after receipt of the petition.
23 (2) The board shall issue a decision and order disposing of
24 a petition for review relating to a petition for refund within
25 twelve months after receipt of the petition.
26 (3) Notice of the decision and order of the board shall be
27 transmitted to the department and mailed to the petitioner.
28 (g) Exception to time limit for decision and order.--If the
29 determination of a petition is governed by litigation pending in
30 a court of competent jurisdiction, the board, upon the written
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1 request of the petitioner, may defer consideration of the
2 petition until the final judgment determining the questions
3 involved in the petition have been decided. If consideration of
4 the petition is deferred, the board shall issue a decision and
5 order disposing of the petition within twelve months after final
6 judgment.
7 (h) Failure of board to take action.--The failure of the
8 board to dispose of the petition within the time period provided
9 for by subsection (f) or (g) shall act as a denial of the
10 petition. Notice of the board's failure to take action and
11 denial of the petition shall be transmitted to the department
12 and mailed to the petitioner.
13 (i) Regulations.--The board shall promulgate regulations
14 governing the practice and procedure before the board as it
15 deems appropriate. Until such time as new regulations are
16 adopted, the current regulations of the board shall remain in
17 effect.
18 Section 2844. Appeal to Commonwealth Court.--Any taxpayer or
19 the Commonwealth aggrieved by a decision of the board on a
20 petition for review filed under this part may appeal in the
21 manner now or hereafter provided by law for appeals from
22 decisions of the board in tax cases.
23 Section 2845. Burden of Proof.--In all cases of petitions
24 filed under this part, the burden of proof shall be upon the
25 petitioner or appellant, as the case may be.
26 PART VI
27 COLLECTIONS
28 Section 2850. Actions to Collect Taxes; Defenses.--(a)
29 Collection actions.--The department may initiate actions to
30 collect tax, interest or penalty:
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1 (1) Immediately, in the case of an amount related to tax
2 reported as due the Commonwealth by the taxpayer and which is
3 not paid by the due date for payment of the tax.
4 (2) After ninety days from the mailing date of a notice of
5 assessment, if no petition for reassessment has been filed.
6 (3) After ninety days from the mailing date of the
7 department's decision and order disposing of a petition for
8 reassessment, if no petition for review has been filed.
9 (4) After thirty days from the mailing date of the decision
10 and order of the Board of Finance and Revenue upon a petition
11 for review or from the expiration of the board's time for acting
12 upon the petition, if no decision has been made.
13 (5) Immediately, in cases of judicial sales, receiverships,
14 assignments or bankruptcies.
15 (6) Immediately, in the case of jeopardy assessments under
16 section 2815(e).
17 (b) Limitation on defenses in collection actions.--A
18 taxpayer shall not be permitted to raise a defense to the
19 department's collection action that might have been determined
20 by the department, the Board of Finance and Revenue or the
21 courts if the taxpayer had properly pursued its administrative
22 remedies under this article. This limitation on defenses shall
23 not apply to the defense of failure of the department to mail
24 notice of assessment or reassessment to the taxpayer or the
25 defense of payment of assessment or reassessment. These two
26 defenses may be raised in proceedings for collection by a motion
27 to stay the proceedings.
28 Section 2851. Collection of Debts by Installments.--(a)
29 Authorization.--The department is authorized to enter into
30 agreements for the payment of a debt for unpaid tax, interest or
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1 penalty by installments where the department deems an agreement
2 to be in the public interest: Provided, That the amount of the
3 debt is not reduced, the security is not impaired and the debt
4 is to be paid within seven years of the date the first
5 installment is due.
6 (b) Extent to which agreements remain in effect.--
7 (1) Except as otherwise provided in this subsection, an
8 agreement entered into by the department under subsection (a)
9 shall remain in effect for the term of the agreement.
10 (2) The department may terminate any prior agreement entered
11 into under subsection (a) if:
12 (i) information which the taxpayer provided to the
13 department prior to the date of the agreement was inaccurate or
14 incomplete; or
15 (ii) the department believes that collection of a debt to
16 which an agreement under this section relates is in jeopardy.
17 (3) If the department finds that the financial condition of
18 the taxpayer has significantly changed, the department may
19 alter, modify or terminate the agreement, but only if:
20 (i) notice of the department's finding is provided to the
21 taxpayer no later than thirty days prior to the date the action
22 is to be taken;
23 (ii) the notice contains the reasons why the department
24 believes a significant change has occurred; and
25 (iii) the notice advises the taxpayer of the corrective
26 action, if any, that may be taken to avoid alteration,
27 modification or termination of the agreement.
28 (4) The department may alter, modify or terminate an
29 agreement entered into by the department under subsection (a) if
30 the taxpayer fails to do any of the following:
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1 (i) Pay any installment at the time the installment is due
2 under the agreement.
3 (ii) Pay any other liability for tax, interest or penalty at
4 the time the liability is due.
5 (iii) Provide a financial condition update as requested by
6 the department.
7 (c) Prepayment permitted.--Nothing in this section should be
8 construed as preventing a taxpayer from prepaying in whole or in
9 part an outstanding liability under an agreement the taxpayer
10 enters into with the department.
11 Section 2852. Compromising Certain Debts.--(a) General
12 rule.--
13 (1) If a taxpayer indebted to the Commonwealth for tax,
14 interest or penalty commences a liquidation, becomes insolvent,
15 ceases to carry on business, owns no real or personal property
16 that may be seized in execution by process issued out of any of
17 the courts of this or any other state, or if the property owned
18 by the taxpayer is insufficient to satisfy the debts due from
19 it, and there is no other person who is liable for all or part
20 of the tax, interest or penalty, the department, with the
21 approval of the Attorney General, may compromise any debts due
22 from the taxpayer on such terms as may be adjudged to be in the
23 best interests of the Commonwealth, and the lien of the
24 Commonwealth shall be reduced to the amount of the debt as
25 compromised.
26 (2) If property or another person who is liable for all or
27 part of the tax, interest or penalty is discovered at any time
28 after the compromise has been agreed upon, the compromise may be
29 rescinded by the department. In such case, the department may
30 proceed in any lawful manner to collect the debts that were
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1 compromised, including all accrued interest.
2 (3) The department shall not return any consideration to the
3 taxpayer with whom a compromise was entered into and the
4 taxpayer shall not be allowed to commence any administrative or
5 legal action to return any consideration paid to the department
6 pursuant to the agreement to compromise the debts due.
7 (b) Historically significant property.--In compromising
8 debts due from an insolvent taxpayer in bankruptcy or
9 reorganization under any Federal or State law, the department
10 may accept in lieu of cash any property, other than real
11 property, which the Pennsylvania Historical and Museum
12 Commission certifies as possessing historical significance of a
13 stated value, based upon not less than two competent independent
14 appraisals. Upon the certifications and upon acceptance of
15 delivery of the property by the commission, the amount of debt
16 as compromised shall be reduced by the amount certified by the
17 commission.
18 PART VII
19 LIENS
20 Section 2860. Liens of Taxes, Interest or Penalties.--(a)
21 Lien for reported tax.--Except as provided in section 2861, all
22 tax, interest or penalty related to tax that is reported as due
23 but not paid at the time the report is filed shall be a first
24 lien upon the franchises and property, both real and personal,
25 including after-acquired property, of the taxpayer from the date
26 the tax report is filed until paid.
27 (b) Lien for unreported tax.--Except as provided in section
28 2861, all unreported tax, interest or penalty assessed by the
29 department shall be a first lien upon the franchises and
30 property, both real and personal, including after-acquired
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1 property, of the taxpayer from the date of assessment until
2 paid.
3 (c) Lien for estimated assessment of tax.--
4 (1) Except as provided in section 2861, all tax, interest or
5 penalty assessed by the department by an estimated assessment
6 shall be a first lien upon the franchises and property, both
7 real and personal, including after-acquired property, of the
8 taxpayer from the date of the estimated assessment.
9 (2) Any amount of tax, interest or penalty due the
10 Commonwealth which is included in an estimated assessment shall
11 retain its priority as of the date of the estimated assessment
12 to the extent such amount is included within an assessment
13 issued upon the filing of a report as provided in section
14 2814(e).
15 (d) Payment of lien upon judicial sale.--If the franchise or
16 property of a taxpayer is sold at a judicial sale, all tax,
17 interest or penalty due the Commonwealth shall first be paid out
18 of the proceeds of the sale to the Commonwealth, before any
19 judgment, mortgage, claim or other lien against the taxpayer,
20 except as otherwise expressly provided by the law under which
21 the claim of the Commonwealth arises.
22 (e) Predecessor in title to taxpayer.--
23 (1) Upon the discharge by a judicial sale of the lien of a
24 ground rent, mortgage or other instrument created by or entered
25 against a predecessor in title to a taxpayer, or of a mortgage
26 or other instrument in which priority over the Commonwealth's
27 lien is allowed by the provisions of the law under which the
28 claim of the Commonwealth arises, the Commonwealth's lien shall
29 be transferred from the property sold to the proceeds realized
30 from the sale and the purchaser of the property shall take free
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1 of the Commonwealth's lien, notwithstanding that the proceeds of
2 the sale are insufficient to pay all or any part of the
3 Commonwealth's lien, unless the sale is upon a lien subordinate
4 to the Commonwealth's lien, in which case the Commonwealth's
5 lien, to the extent not paid from the proceeds of the judicial
6 sale, shall continue in full force and effect.
7 (2) Upon distribution of the proceeds of the judicial sale,
8 the Commonwealth's lien shall be postponed in payment to the
9 lien created by or entered against the predecessor in title,
10 mortgagee or lienholder having priority but shall not be
11 postponed in payment to local taxes or municipal claims, except
12 as otherwise expressly provided by the law under which the claim
13 of the Commonwealth arises.
14 (f) Entry of lien.--
15 (1) The department may transmit at any time to the
16 prothonotaries of the respective counties of the Commonwealth,
17 to be entered of record, certified copies of all liens for tax,
18 interest or penalty that arise under this section. The filing of
19 certified copies of the Commonwealth's liens shall not affect
20 the first lien status provided for in this section.
21 (2) A writ of execution may directly issue upon the lien at
22 any time without the issuance and prosecution to judgment of a
23 writ of scire facias: Provided, That not less than ten days
24 before issuance of any execution on the lien, notice of the
25 filing and effect of the lien shall be sent by certified mail to
26 the taxpayer's last-known post office address.
27 Section 2861. Liens for Certain Taxes Required to be
28 Filed.--(a) General rule.--For purposes of this section, the
29 term tax, interest or penalty shall mean any tax, interest,
30 penalty, fee, addition, bonus, cost or other charge
19990H1367B1600 - 64 -
1 administered, imposed or collected by the department in the
2 enforcement of the following taxes:
3 (1) The tax imposed by Article II.
4 (2) The tax imposed by Article III.
5 (3) The tax imposed by Article XI-C.
6 (4) The tax imposed by Article XVI-A.
7 (5) The tax imposed by Article XX.
8 (6) The tax imposed by Article XXIII.
9 (7) The tax imposed by 75 Pa.C.S. Ch. 90 (relating to liquid
10 fuels and fuels tax).
11 (8) The tax imposed by 75 Pa.C.S. Ch. 95 (relating to taxes
12 for highway maintenance and construction).
13 (9) The tax imposed by 75 Pa.C.S. Ch. 96 (relating to motor
14 carriers road tax).
15 (10) The taxes imposed by the act of December 5, 1933
16 (Sp.Sess., P.L.38, No.6), known as the "Spirituous and Vinous
17 Liquor Tax Law."
18 (11) The tax imposed by the act of June 9, 1936 (Sp.Sess.,
19 P.L.13, No.4), referred to as the Emergency Liquor Tax.
20 (b) Lien imposed.--All assessed tax, interest or penalty as
21 defined in this section shall be a lien in favor of the
22 Commonwealth upon the franchises and property, both real and
23 personal, including after-acquired property, of the taxpayer,
24 but only after the lien has been entered and docketed of record
25 by the prothonotary of the county where the property is located.
26 (c) Entry of lien.--
27 (1) The department may transmit at any time to the
28 prothonotaries of the respective counties of the Commonwealth,
29 to be entered of record, certified copies of all liens for tax,
30 interest or penalty that arise under this section. Prior notice
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1 of the filing and effect of the lien shall be sent to the
2 taxpayer.
3 (2) A writ of execution may directly issue upon the lien at
4 any time without the issuance and prosecution to judgment of a
5 writ of scire facias: Provided, That not less than ten days
6 before issuance of any execution on the lien, notice of the
7 filing and effect of the lien shall be sent by certified mail to
8 the taxpayer at the taxpayer's last-known post office address:
9 Provided further, That the lien shall have no effect upon any
10 stock of goods, wares or merchandise regularly sold or leased in
11 the ordinary course of business by the taxpayer against whom the
12 lien has been entered until a writ of execution has been issued
13 and a levy made upon the stock of goods, wares and merchandise.
14 (d) Priority of lien and effect on judicial sale when trust
15 fund taxes are involved.--When the lien imposed by this section
16 relates to tax, interest or penalty for a trust fund tax that
17 was collected but not remitted to the Commonwealth, the lien
18 imposed against the taxpayer shall be a first lien from the date
19 of its recording.
20 (1) Whenever the property of a taxpayer is sold at a
21 judicial sale, all tax, interest or penalty due the Commonwealth
22 shall first be paid out of the proceeds of the sale to the
23 Commonwealth before any judgment, mortgage, claim or other lien
24 against the taxpayer, except as otherwise expressly provided by
25 the law under which the claim of the Commonwealth arises.
26 (2) Predecessor in title to taxpayer.--
27 (i) Upon the discharge by a judicial sale of the lien of a
28 ground rent, mortgage or other instrument created by or entered
29 against a predecessor in title to a taxpayer, or of a mortgage
30 or other instrument in which priority over the Commonwealth's
19990H1367B1600 - 66 -
1 lien is allowed by the provisions of the law under which the
2 claim of the Commonwealth arises, the Commonwealth's lien shall
3 be transferred from the property sold to the proceeds realized
4 from the sale and the purchaser of the property shall take free
5 of the Commonwealth's lien, notwithstanding that the proceeds of
6 the sale are insufficient to pay all or any part of the
7 Commonwealth's lien, unless the sale is upon a lien subordinate
8 to the Commonwealth's lien, in which case the Commonwealth's
9 lien, to the extent not paid from the proceeds of the judicial
10 sale, shall continue in full force and effect.
11 (ii) Upon distribution of the proceeds of the judicial sale,
12 the Commonwealth's lien shall be postponed in payment to the
13 lien created by or entered against the predecessor in title,
14 mortgagee or lienholder having priority as aforesaid, but shall
15 not be postponed in payment to local taxes or municipal claims,
16 except as otherwise expressly provided by the law under which
17 the claim of the Commonwealth arises.
18 (e) Priority of lien and effect on judicial sale when trust
19 fund taxes are not involved.--
20 (1) When the lien imposed by this section does not relate to
21 tax, interest or penalty for a trust fund tax, the lien shall
22 have priority from the date of its recording.
23 (2) The lien imposed shall be fully paid and satisfied out
24 of the proceeds of any judicial sale of property subject to the
25 lien before any other judgment, mortgage, claim or other lien to
26 which the franchises and property may subsequently become
27 subject, except costs of the sale and of the writ upon which the
28 sale was made, and real estate taxes and municipal claims
29 against the property, but shall be subordinate to mortgages and
30 other liens existing and duly recorded or entered of record
19990H1367B1600 - 67 -
1 prior to the recording of the tax lien.
2 (3) In the case where a judicial sale is upon a lien
3 subordinate to a lien imposed under this section, the sale shall
4 discharge the lien imposed under this section only to the extent
5 that the proceeds are applied to its payment, and the lien shall
6 continue in full force and effect as to the balance remaining
7 unpaid.
8 (4) There shall be no inquisition or condemnation upon any
9 judicial sale of real estate made by the Commonwealth pursuant
10 to the provisions of this subsection.
11 (5) The lien of tax, interest or penalty shall continue
12 until paid.
13 (f) Priority of tax.--
14 (1) Except as provided in subsection (e), in the
15 distribution, voluntary or compulsory, in receivership,
16 bankruptcy or otherwise, of the property or estate of a
17 taxpayer, all unpaid tax, interest or penalty due the
18 Commonwealth shall be paid from the first money available for
19 distribution in priority to all other judgments, mortgages,
20 claims and other liens, except insofar as the laws of the United
21 States may give a prior claim to the Federal Government.
22 (2) A person charged with the administration or distribution
23 of such property or estate, who shall violate the provisions of
24 this section, shall be personally liable for any tax, interest
25 or penalty that is accrued and unpaid and chargeable against the
26 taxpayer whose property or estate is being administered or
27 distributed.
28 Section 2862. Protection of Commonwealth Liens in Judicial
29 Sales.--(a) Duty to issue estimated assessments.--It shall be
30 the duty of the department, after receiving notice of a judicial
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1 sale, to assess all tax, interest or penalty, to issue estimated
2 assessments of all tax, interest or penalty for which reports
3 have not been filed, and to issue jeopardy assessments of all
4 tax, interest or penalty for which reports have not been filed
5 up to the date of the sale, regardless of whether reports for
6 the tax are due prior to the date of the sale.
7 (b) Certified statement of account.--The department shall
8 furnish the officer having charge of the sale a certified
9 statement of account showing all liens for tax, interest or
10 penalty due the Commonwealth from the taxpayer. If no liens
11 exist, the department shall issue a certificate showing that
12 fact.
13 Section 2863. Bulk Sale of Assets.--(a) Definitions.--The
14 following words, terms and phrases, when used in this section,
15 shall have the meanings given to them in this section, except
16 where the context clearly indicates a different meaning:
17 "Bulk sale of assets." A sale or transfer in bulk in this
18 Commonwealth of fifty-one per cent or more of any of the
19 following classes of property in Pennsylvania:
20 (i) stock of goods, wares, merchandise or inventory;
21 (ii) fixtures;
22 (iii) machinery;
23 (iv) equipment;
24 (v) buildings;
25 (vi) real estate; or
26 (vii) any other assets;
27 Provided, That if the seller is a natural person who is required
28 to be licensed under Article II or a natural person who is an
29 employer as defined in section 301 of Article III, the term
30 shall mean a sale in bulk of fifty-one per cent or more of any
19990H1367B1600 - 69 -
1 of the above classes of property used or available for use in
2 the business for which the seller is required to be licensed or
3 for which the seller is defined as an employer.
4 "Person." The term includes:
5 (i) An association.
6 (ii) A corporation.
7 (iii) A natural person who is required to be licensed under
8 Article II.
9 (iv) A natural person who is an employer as defined in
10 section 301 of Article III.
11 (v) A business entity subject to any tax imposed under any
12 State law which the department is required to administer,
13 enforce and collect.
14 "Purchaser." A purchaser, assignee or transferee of an
15 interest in property.
16 "Sale." A sale, sale at auction, assignment or other
17 transfer of an interest in property.
18 "Seller." A person that sells, assigns or transfers an
19 interest in property.
20 (b) Seller's duty to request certificate.--Every seller
21 making a bulk sale of assets shall notify the department of the
22 sale in writing ten days prior to the date of the sale. It shall
23 be the duty of the seller to file all reports with the
24 department and to pay all tax, interest or penalty through the
25 date of the sale, regardless of whether, at the time of the
26 sale, the reports and taxes are due or all tax, interest or
27 penalty has been assessed. The seller shall present to the
28 purchaser a certificate from the department, showing that all
29 reports have been filed and all tax, interest or penalty has
30 been paid through the date of the sale.
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1 (c) Purchasers failure to require certificate.--If the
2 purchaser fails to require the certificate under this section,
3 all of the following shall apply:
4 (1) The assets that the seller is required to transfer to
5 the purchaser shall be subject to a first lien for all unpaid
6 tax, interest or penalty owed by the seller through the date of
7 the sale regardless of whether, at the time of the sale, the
8 tax, interest or penalty has been assessed.
9 (2) Any money, property, choses in action or other
10 consideration that the purchaser is required to transfer to the
11 seller shall be subject to a first lien for all unpaid tax,
12 interest or penalty owed by the seller through the date of the
13 sale regardless of whether, at the time of the sale, the tax,
14 interest or penalty has been assessed.
15 (3) (i) The purchaser shall be liable to the Commonwealth
16 for all unpaid tax, interest or penalty owed by the seller
17 through the date of the sale regardless of whether, at the time
18 of the sale, the reports and taxes were due and all tax,
19 interest or penalty has been assessed.
20 (ii) It shall not be necessary for the department to assess
21 the liability against the purchaser. The liability against the
22 purchaser shall arise as of the date of the bulk sale of assets.
23 (iii) Upon the enforcement of the liability against the
24 purchaser, the judgment shall have the full force and effect of
25 a lien as provided in section 2860 from the date of the bulk
26 sale of assets.
27 (d) Duty to issue assessments.--
28 (1) It shall be the duty of the department, after receiving
29 notice of a bulk sale, to assess all tax, interest or penalty
30 and to issue, where it deems necessary, estimated assessments of
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1 all tax, interest or penalty for which reports have not been
2 filed through the date of the sale, regardless of whether the
3 reports are due prior to the date of the sale.
4 (2) Whenever it shall become necessary for the department to
5 make an estimated assessment for the purpose of issuing a
6 certificate under this section, the department may remove the
7 estimated assessment or issue a revised assessment upon the
8 filing of a report and the determination by the department of
9 the tax, interest or penalty due the Commonwealth from the
10 taxpayer.
11 (e) Issuance of certificate.--
12 (1) Within sixty days after receipt of a request for a
13 certificate under subsection (b), the department shall review
14 the liability of the seller and issue a certificate of the tax,
15 interest or penalty due the Commonwealth.
16 (2) If the department provides written notice to a purchaser
17 that a possible claim for tax, interest or penalty due the
18 Commonwealth exists, any sums of money, property or choses in
19 action or other consideration, that the purchaser is required to
20 transfer to the seller, shall be subject to a first priority
21 right and lien for any taxes theretofore or thereafter
22 determined to be due from the seller.
23 (3) Upon receipt of the notice, the purchaser shall be
24 prohibited from transferring to the seller any sums of money,
25 property or choses in action to the extent of the amount of the
26 Commonwealth's claim.
27 (f) Sales under judicial order.--The provisions of this
28 section shall not apply to judicial sales or sales made pursuant
29 to an involuntary liquidation and dissolution authorized by the
30 act of December 21, 1988 (P.L.1444, No.177), known as the
19990H1367B1600 - 72 -
1 "General Association Act of 1988."
2 (g) Sale at auction.--The person conducting an auction sale
3 shall require a certificate from the department showing that all
4 reports have been filed and all tax, interest or penalty has
5 been paid through the date of the sale before the person
6 conducting the auction makes any distribution other than to the
7 Commonwealth of the proceeds realized at the sale.
8 Section 2864. Duty of Prothonotary to Enter Liens; Penalty
9 for Failure to Act.--(a) Duty to enter liens.--It shall be the
10 duty of a prothonotary receiving a lien for tax, interest or
11 penalty to enter and docket the lien of record in the
12 prothonotary's office. The lien shall be indexed as judgments
13 are indexed. No prothonotary shall require the payment of any
14 costs incident to the entry and docketing of the lien as a
15 condition precedent to the entry of the lien.
16 (b) Penalty for failure to act.--A prothonotary who shall
17 wilfully fail to carry out any duty imposed by this part shall
18 be guilty of a misdemeanor, and, upon conviction thereof, shall
19 be sentenced to pay a fine not exceeding one thousand dollars
20 ($1,000) and costs of prosecution, or to undergo imprisonment
21 not exceeding one year, or both.
22 Section 2865. Automatic Revival and Priority of Liens.--All
23 liens for tax, interest or penalty filed by the department shall
24 continue in full force and effect and shall retain their
25 priority until paid without the necessity of refiling or
26 revival.
27 Section 2866. Furnishing Record of Liens.--The department
28 shall furnish an applicant a certificate showing the character
29 and amount of all liens of record in the department against a
30 taxpayer under the laws of this Commonwealth. The department
19990H1367B1600 - 73 -
1 shall charge a fee of ten dollars ($10.00) for the certificate.
2 Section 2867. Release of Lien; Subordination of Lien; and
3 Certificate of Release or Subordination.--(a) Release of
4 Commonwealth's liens.--
5 (1) Upon request of a taxpayer, the owner of real or
6 personal property, or of a creditor, the department may release
7 from the Commonwealth's liens a portion of the real or personal
8 property subject to the liens upon payment of adequate
9 consideration, as determined by the department.
10 (2) Adequate consideration may be determined based on the
11 proportionate part of the liens, including accrued interest, as
12 the value of the real or personal property released bears to the
13 value of all real or personal property encumbered by the liens.
14 (3) In cases where the value of the real or personal
15 property to be released is less than the proportionate share of
16 the liens, including accrued interest, adequate consideration
17 shall be the amount determined to be equitable by the
18 department, but shall not exceed the value of the real or
19 personal property to be released.
20 (b) Subordination of Commonwealth liens.--The department may
21 subordinate the Commonwealth's liens to a judgment, mortgage,
22 claim or other lien upon payment of adequate consideration, as
23 determined by the department.
24 (c) Certificate of release or subordination of
25 Commonwealth's liens.--
26 (1) The department shall issue to the taxpayer or other
27 person paying adequate consideration a certificate showing the
28 real or personal property released from the Commonwealth's
29 liens.
30 (2) In the case of a subordination of the Commonwealth's
19990H1367B1600 - 74 -
1 liens, the department shall also issue to the taxpayer or other
2 person paying adequate consideration a certificate showing the
3 judgment, mortgage, claim or other lien to which the
4 Commonwealth's liens have been subordinated.
5 (3) The certificate showing the release or subordination may
6 be recorded in the office of the recorder of deeds of the county
7 in which the real or personal property is located.
8 Section 2868. No Judicial Dissolution or Judicial Sale Valid
9 Until Taxes are Paid.--(a) Judicial dissolution.--No
10 association or corporation made taxable by any act shall
11 hereafter be dissolved by decree of any court of competent
12 jurisdiction until all tax, interest or penalty have been fully
13 paid and a certificate to this effect has been filed with the
14 proceedings for dissolution in the proper court.
15 (b) Judicial sale.--A judicial sale involving a lien created
16 under section 2860 or 2861(b) and (c) shall not be valid and no
17 distribution of proceeds shall be made until all taxes due the
18 Commonwealth have been fully paid. The Commonwealth's lien shall
19 not be divested and shall continue to exist against any property
20 transferred at a judicial sale to the extent of the tax,
21 interest or penalty remaining unpaid.
22 Section 2869. Claims under Real Estate Tax Sale Law.--For
23 purposes of section 602(h) of Article VI of the act of July 7,
24 1947 (P.L.1368, No.542), known as the "Real Estate Tax Sale
25 Law," in the case of property owned by a taxpayer against whom
26 the department has imposed a lien under sections 2860 and
27 2861(d), the department shall also be required to include in its
28 proof of claim the taxes which are accorded priority by sections
29 2860 and 2861(d).
30 Section 2870. Authority to Remove Lien.--(a) General
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1 rule.--The department shall remove the lien on any property and
2 shall promptly notify the property owner that the lien has been
3 removed if:
4 (1) the debt which underlies the lien has been satisfied; or
5 (2) the taxpayer has entered into an agreement under section
6 2851 to satisfy the outstanding debt by means of installment
7 payments, and the agreement provides for the removal of the
8 lien.
9 (b) Removal of lien to facilitate collection of debt.--The
10 department may remove the lien on any property if it determines
11 that the removal of the lien will facilitate the collection of
12 the outstanding debt.
13 Section 2871. Application of Part to Inheritance and Estate
14 Taxes.--This part shall not apply to the taxes imposed by
15 Article XXI.
16 PART VIII
17 APPLICATION
18 Section 2880. Application of Article--(a) General rule.--
19 The provisions of this article shall be in addition to, but not
20 exclusive of, and shall supplement any other powers conferred
21 upon the department by law.
22 (b) Exclusive procedure.--Except as specifically provided
23 otherwise, the provisions of this article shall provide the
24 exclusive procedure for the issuance of assessments, the filing
25 and disposition of petitions for reassessment, refund or review;
26 the calculation of interest on overpayments and underpayments of
27 tax; and the creation of liens and the enforcement of the
28 Commonwealth's rights under such liens.
29 (c) Construction.--
30 (1) It is the intent of the General Assembly that the
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1 provisions of sections 2860 and 2861, insofar as they relate to
2 liens on after-acquired property, shall be construed as a
3 clarification of existing law and shall not be construed to be a
4 change from existing law.
5 (2) The addition of section 2830 is intended as a
6 replacement of section 806 of the act of April 9, 1929 (P.L.343,
7 No.176), known as "The Fiscal Code." The addition of section
8 2831 of the act is intended as a replacement of section 806.1 of
9 "The Fiscal Code." After the effective date of this section, any
10 reference in statute or regulation to section 806 of "The Fiscal
11 Code" shall be deemed a reference to section 2830 of this
12 article; and any reference in statute or regulation to section
13 806.1 of "The Fiscal Code" shall be deemed a reference to
14 section 2831 of this article.
15 Section 21. (a) Tax Reform Code.--Sections 220, 230, 232,
16 233, 234, 235, 236, 240, 241, 242, 250, 251, 252, 253, 254, 255,
17 258, 259, 260, 261, 265, 272, 321.1, 336, 338(c), 339, 340, 341,
18 342, 344, 345, 346, 347, 348, 349, 350, 351, 355, 403.1, 407,
19 409, 1111-C, 1112-C, 1113-C, 2166, 2915-A, 3003.1, 3003.2(i),
20 3003.5, 3003.6 and 3003.8 of the act are repealed.
21 (b) Specific.--The following acts and parts of acts are
22 repealed:
23 (1) Section 32 of the act of June 1, 1889 (P.L.420,
24 No.332), entitled "A further supplement to an act entitled
25 'An act to provide revenue by taxation,' approved the seventh
26 day of June, Anno Domini one thousand eight hundred and
27 seventy-nine."
28 (2) Sections 213, 401(a), 732, 801, 802, 803, 804, 805,
29 806, 806.1, 807, 808, 809, 901, 901.1, 902, 903, 904, 905,
30 1101, 1102, 1102.1, 1103, 1103.1, 1103.2, 1104.1, 1105, 1106,
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1 1107, 1108, 1401, 1402, 1403, 1404, 1404.1, 1405, 1406, 1407,
2 1409, 1410, 1710, 1710.1 and 1711 of the act of April 9, 1929
3 (P.L.343, No.176), known as The Fiscal Code.
4 (3) Section 5 of the act of December 5, 1933 (Sp.Sess.,
5 P.L.38, No.6), known as the Spirituous and Vinous Liquor Tax
6 Law.
7 (4) The act of May 23, 1945 (P.L.893, No.360), known as
8 the Co-operative Agricultural Association Corporate Net
9 Income Tax Act.
10 (5) Section 208(c) and the second sentence of section
11 219 of the act of December 17, 1981 (P.L.435, No.135), known
12 as the Race Horse Industry Reform Act.
13 (6) Sections 205, 209 and 211 of the act of December 20,
14 1996 (P.L.1504, No.195), known as the Taxpayers' Bill of
15 Rights.
16 (7) The provisions of 75 Pa.C.S. §§ 9007, 9616 and 9617.
17 (8) The provisions of 75 Pa.C.S. § 9009, to the extent
18 that it provides for records to be maintained for a period of
19 two years and that the period specified in section 2812
20 applies.
21 (9) The second and third sentences of 75 Pa.C.S. § 9610.
22 (c) General.--All other acts and parts of acts are repealed
23 insofar as they are inconsistent with the provisions of this
24 act.
25 Section 22. This act shall apply to all taxable periods
26 beginning on or after January 1, 2001.
27 Section 23. This act shall take effect January 1, 2001.
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