PRINTER'S NO. 1423
No. 1169 Session of 1997
INTRODUCED BY RHOADES, HELFRICK, KUKOVICH, GERLACH, SLOCUM,
ROBBINS, AFFLERBACH, O'PAKE, MOWERY, KASUNIC, CORMAN, LEMMOND
AND MUSTO, OCTOBER 23, 1997
REFERRED TO FINANCE, OCTOBER 23, 1997
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," providing for a program of tax incentives,
11 including investment tax credits and to stimulate the
12 development of a synthetic fuels industry within the
13 Commonwealth.
14 The General Assembly of the Commonwealth of Pennsylvania
15 hereby enacts as follows:
16 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
17 the Tax Reform Code of 1971, is amended by adding an article to
18 read:
19 ARTICLE XVIII-A
20 FOREIGN OIL DISPLACEMENT
21 Section 1801-A. Short Title.--This article shall be known
22 and may be cited as the "Foreign Oil Displacement Act."
23 Section 1802-A. Definitions.--The following words, terms and
1 phrases, when used in this article, shall have the meanings
2 ascribed to them in this section, except where the context
3 clearly indicates a different meaning:
4 "Act" means the act of March 4, 1971 (P.L.6, No.2), known as
5 the "Tax Reform Code of 1971," as amended.
6 "Department" means the Department of Revenue of the
7 Commonwealth of Pennsylvania.
8 "Developer" means the owner-operator of a facility as defined
9 herein or the operator of such a facility that has sold the
10 facility in new condition to a third party from whom that
11 operator has simultaneously leased back such facility for a
12 minimum period of twelve (12) years.
13 "Facility" means and includes all plant and equipment,
14 purchased or constructed by or on behalf of the developer, used
15 within this Commonwealth by the developer to produce one or more
16 qualified fuels.
17 "Internal Revenue Code" means the Internal Revenue Code of
18 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended.
19 "Qualified fuels" means those fuels produced from non-
20 traditional feedstocks, as further defined in section 29(c) of
21 the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
22 § 1 et seq.).
23 Section 1803-A. Investment Tax Credits Program.--(a) A new
24 developer of a new facility for the production of one or more
25 qualified fuels shall be allowed an investment tax credit
26 against the taxes imposed under Articles II, IV and VI of the
27 act. The amount of the credit shall be computed as a percentage
28 applied to the cost or other basis, for Federal income tax
29 purposes, of tangible personal property and other forms of
30 tangible property described in subsection (b).
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1 (b) Tangible personal property and other forms of tangible
2 property which qualify for investment tax credit treatment under
3 this section, hereinafter collectively identified as "qualifying
4 property," shall meet all of the following requirements:
5 (1) Be acquired through a purchase, as defined under section
6 179(d)(2) of the Internal Revenue Code, or constructed by the
7 developer for its own use.
8 (2) Be depreciable under section 167 of the Internal Revenue
9 Code.
10 (3) Have a useful life of greater than or equal to four
11 years.
12 (4) Be located within this Commonwealth.
13 (5) Be used by the developer in the production of qualified
14 fuels.
15 (6) Be acquired by purchase or constructed on or after
16 January 1, 1998, and before January 1, 2011.
17 (7) Not be the subject of any tax credit otherwise available
18 to the developer under this act.
19 (c) Only such portion of the cost or other basis of
20 qualifying property that is properly transferred to the
21 facility's basis for depreciation for Federal income tax
22 purposes between January 1, 1998, and December 31, 2010,
23 hereinafter identified as the "tax credit base," shall be
24 subject to the investment tax credit.
25 (d) (1) The investment tax credit shall be computed as
26 fifteen per cent of the tax credit base.
27 (2) The maximum investment tax credit available for
28 application, whether claimed by one or more taxpayers, shall not
29 exceed fifteen per cent of the capital cost of the facility.
30 (3) Any amount of allowable investment tax credit not used
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1 in the tax year for which the credit was claimed can be carried
2 forward by the claiming taxpayer to succeeding years until the
3 full amount of allowable credit has been used.
4 (e) (1) The developer, upon notice to the department as
5 specified by the department, may sell or assign, in whole or in
6 part, any investment tax credit afforded under this section to
7 one or more taxpayers, provided that no claim for allowance of
8 such credit has been filed.
9 (2) A taxpayer recipient by purchase or assignment of any
10 portion of the developer's investment tax credit under paragraph
11 (1) shall initially claim such credit, upon notice to the
12 department of the derivative basis of the credit in compliance
13 with procedures specified by the department, for the tax year in
14 which the purchase or assignment is made, but in no event
15 subsequent to the filing of an income tax return for the year
16 2010.
17 (3) Any taxpayer who acquires any portion of the developer's
18 investment tax credit by sale or assignment, for value and
19 without notice of any irregularity or invalidity, shall not
20 suffer any disallowance of the credit or the imposition of any
21 adjustment or fraud penalty attributable to conduct by the
22 developer.
23 (f) (1) If, prior to the expiration of any qualifying
24 property's useful life, as used to calculate depreciation for
25 Federal income tax purposes, the developer, upon mandatory
26 notice to the department in compliance with procedures specified
27 by the department, disposes of any qualifying property in a
28 transaction other than a sale-leaseback, upon which the
29 department has previously allowed an investment tax credit
30 claimed by any taxpayer, a portion of all such credit shall be
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1 recaptured and added to the developer's tax liability for the
2 tax year in which the qualifying property is disposed.
3 (2) The portion of the investment tax credit previously
4 allowed, which is subject to recapture from the developer, shall
5 be equal to a fraction whose numerator is the number of years
6 remaining to fully depreciate for Federal income tax purposes
7 the qualifying property disposed and whose denominator is the
8 total number of years over which the property would otherwise
9 have been subject to depreciation by the developer.
10 (3) In calculating the recapture percentage, the year of
11 disposition of the qualifying property is considered a year of
12 remaining depreciation.
13 (g) The department shall verify the validity of any claim
14 for allowance of any investment tax credit afforded under this
15 section and, in the case of a fraudulent claim, may assess
16 against the developer a penalty of one hundred and twenty-five
17 per cent of the credit improperly claimed.
18 Section 1804-A. Tax Exemption.--Any qualified fuel produced
19 by a facility subject to an investment tax credit afforded by
20 section 1803-A shall be exempt from any tax otherwise imposed by
21 75 Pa.C.S. Ch. 90 (relating to liquid fuels and fuels tax).
22 Section 2. This act shall take effect immediately.
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