TAX REFORM CODE OF 1971
Cl. 72Act of Mar. 4, 1971, P.L. 6, No. 2
AN ACT
Relating to tax reform and State taxation by codifying and
enumerating certain subjects of taxation and imposing taxes
thereon; providing procedures for the payment, collection,
administration and enforcement thereof; providing for tax
credits in certain cases; conferring powers and imposing
duties upon the Department of Revenue, certain employers,
fiduciaries, individuals, persons, corporations and other
entities; prescribing crimes, offenses and penalties.
TABLE OF CONTENTS
Article I. Short Title
Section 101. Short Title.
Article II. Tax For Education
Part I. Definitions
Section 201. Definitions.
Part II. Imposition of Tax
Section 202. Imposition of Tax.
Section 203. Computation of Tax.
Part III. Exclusions From Tax
Section 204. Exclusions from Tax.
Section 205. Alternate Imposition of Tax; Credits.
Section 206. Credit Against Tax.
Part IV. Licenses
Section 208. Licenses.
Part V. Hotel Occupancy Tax
Section 209. Definitions.
Section 210. Imposition of Tax.
Section 211. Seasonal Tax Returns.
Section 212. Tourism Promotion Fund.
Part V-A. Marketplace Sales
Section 213. Definitions.
Section 213.1. Election.
Section 213.2. Notice Requirements.
Section 213.3. Reports to Purchasers and Marketplace Sellers.
Section 213.4. Reports to Department.
Section 213.5. Liability and Penalties.
Section 213.6. Application.
Part VI. Procedure and Administration
Chapter I. Returns
Section 215. Persons Required to Make Returns.
Section 216. Form of Returns.
Chapter II. Time and Place for Filing Returns
Section 217. Time for Filing Returns.
Section 218. Extension of Time for Filing Returns.
Section 219. Place for Filing Returns.
Section 220. Timely Mailing Treated as Timely Filing and
Payment.
Chapter III. Payment of Tax
Section 221. Payment.
Section 222. Time of Payment.
Section 223. Other Times for Payment.
Section 224. Place for Payment.
Section 225. Tax Held in Trust for the Commonwealth.
Section 226. Local Receivers of Use Tax (Repealed).
Section 227. Discount.
Chapter IV. Assessment and Collection of Tax
Section 230. Assessment.
Section 231. Mode and Time of Assessment.
Section 232. Reassessment.
Section 233. Assessment to Recover Erroneous Refunds.
Section 234. Review by Board of Finance and Revenue (Deleted
by amendment).
Section 235. Appeal to Commonwealth Court (Deleted by
amendment).
Section 236. Burden of Proof.
Section 237. Collection of Tax.
Section 238. Collection of Tax on Motor Vehicles, Trailers and
Semi-Trailers.
Section 239. Precollection of Tax.
Section 240. Bulk and Auction Sales.
Section 241. Collection upon Failure to Request Reassessment,
Review or Appeal.
Section 242. Lien for Taxes.
Section 243. Suit for Taxes.
Section 244. Tax Suit Comity.
Section 245. Service.
Section 246. Collection and Payment of Tax on Credit Sales.
Section 247. Prepayment of Tax.
Section 247.1. Refund of Sales Tax Attributed to Bad Debt.
Section 248. Registration of Transient Vendors.
Section 248.1. Bond.
Section 248.2. Notification to Department; Inspection of
Records.
Section 248.3. Seizure of Property.
Section 248.4. Fines.
Section 248.5. Transient Vendors Subject to Article.
Section 248.6. Promoters.
Chapter V. Refunds and Credits
Section 250. Refund or Credit for Overpayment (Deleted by
amendment).
Section 251. Restriction on Refunds (Deleted by amendment).
Section 252. Refunds.
Section 253. Refund Petition.
Section 254. Review by Board of Finance and Revenue (Deleted
by amendment).
Section 255. Appeal to the Commonwealth Court (Deleted by
amendment).
Section 256. Extended Time for Filing Special Petition for
Refund.
Chapter VI. Limitations
Section 258. Limitation on Assessment and Collection.
Section 259. Failure to File Return.
Section 260. False or Fraudulent Return.
Section 261. Extension of Limitation Period.
Chapter VII. Interest, Additions, Penalties and Crimes
Section 265. Interest.
Section 266. Additions to Tax.
Section 267. Penalties.
Section 268. Crimes.
Section 269. Abatement of Additions or Penalties.
Chapter VIII. Enforcement and Examinations
Section 270. Rules and Regulations.
Section 271. Keeping of Records.
Section 271.1. Reports and Records of Promoters.
Section 272. Examinations.
Section 273. Records and Examinations of Delivery Agents.
Section 274. Unauthorized Disclosure.
Section 275. Cooperation with Other Governments.
Section 276. Interstate Compacts.
Section 277. Bonds.
Section 278. Remote Sales Reports.
Section 279. Class Actions.
Part VII. Repealer; Appropriation; Effective Date
Section 280. Repeal.
Section 281. Appropriation for Refunds, Etc.
Section 281.1. Construction of Article.
Section 281.2. Transfers to Public Transportation Assistance
Fund.
Section 282. Effective Date.
Article II-A. Special Situs for Local Sales Tax
Section 201-A. Situs of Local Sales Tax on Certain Leased or
Rental Vehicles or Crafts.
Section 202-A. Situs for Certain Construction Materials.
Section 203-A. Situs of Local Sales Tax on Mobile
Telecommunications Services.
Article II-B. Special Taxing Authority
Section 201-B. Special taxing authority.
Article III. (Original Article III Repealed)
Article III. Personal Income Tax
Part I. Definitions
Section 301. Definitions.
Part II. Imposition of Tax
Section 302. Imposition of Tax.
Section 302.1. Rate Changes Occurring During the Taxable Year.
Section 302.2. Imposition of Tax (Repealed).
Section 303. Classes of Income.
Section 304. Special Tax Provisions for Poverty.
Section 304.1. Alternative Special Tax Provision for Poverty
Study.
Section 304.2. Pennsylvania ABLE Savings Program Tax Exemption.
Part III. Estates and Trusts
Section 305. Taxability of Estates, Trusts and Their
Beneficiaries.
Part IV. Partnerships
Section 306. Taxability of Partners.
Section 306.1. Tax Treatment Determined at Partnership Level.
Section 306.2. Tax Imposed at Partnership Level.
Part IV-A. Pennsylvania S Corporations
Section 307. Election by Small Corporation.
Section 307.1. Manner of Making Election.
Section 307.2. Effective Years of Election.
Section 307.3. Revocation of Election.
Section 307.4. Termination by Corporation Ceasing to be a Small
Corporation.
Section 307.5. Termination Year.
Section 307.6. Election after Revocation or Termination (Deleted
by amendment).
Section 307.7. Taxable Year of a Pennsylvania S Corporation.
Section 307.8. Income of a Pennsylvania S Corporation.
Section 307.9. Income of Pennsylvania S Corporations Taxed to
Shareholders.
Section 307.10. Limitation on Pass-thru of Losses to
Shareholders.
Section 307.11. Adjustments to the Basis of the Stock of
Shareholders.
Section 307.12. Distributions.
Part IV-B. Other Entities
Section 307.21. Treatment of Unincorporated Entities With Single
Owners.
Part V. Nonresident Individuals
Section 308. Nonresident Individuals; Taxable Income.
Section 309. Husband and Wife.
Section 310. Allocation of Income of Nonresident.
Part VI. Credits Against Tax
Section 312. Tax Withheld.
Section 313. Tax Paid Under Previous Act.
Section 314. Income Taxes Imposed by Other States.
Section 315. Space on Form for Contributions (Repealed).
Part VI-A. Contributions of Refunds by Checkoff
Section 315.1. Definitions.
Section 315.2. Contributions to Breast and Cervical Cancer
Research.
Section 315.3. Contributions for Wild Resource Conservation.
Section 315.4. Contributions for Organ and Tissue Donation
Awareness.
Section 315.5. Contributions for Olympics (Deleted by
amendment).
Section 315.6. Contribution for Korea/Vietnam Memorial National
Education Center (Repealed).
Section 315.7. Contributions for Juvenile Diabetes Cure
Research.
Section 315.8. Contributions for Military Family Relief
Assistance.
Section 315.9. Operational Provisions.
Section 315.10. Contributions for the Children's Trust Fund.
Section 315.11. Contributions for American Red Cross.
Section 315.12. Contributions for Tuition Account Programs.
Section 315.13. Contributions for Pediatric Cancer Research.
Section 315.14. Contribution for Veterans' Trust Fund.
Part VII. Withholding of Tax
Section 316. Definitions.
Section 316.1. Requirement of Withholding Tax.
Section 316.2. Withholding Tax Requirement for Nonemployer
Payors.
Section 317. Information Statement.
Section 317.1. Information Statement for Nonemployer Payors.
Section 317.2. Information Statement for Payees.
Section 318. Time for Filing Withholding Returns.
Section 318.1. Time for Filing Payors' Returns.
Section 319. Payment of Taxes Withheld.
Section 319.1. Payment of Taxes Withheld for Nonemployer Payors.
Section 320. Liability for Withheld Taxes.
Section 320.1. Payor's Liability for Withheld Taxes.
Section 321. Failure to Withhold.
Section 321.1. Bulk and Auction Sales and Transfers, Notice.
Section 321.2. Payor's Failure to Withhold.
Section 322. Designation of Third Parties to Perform Acts
Required of Employers.
Section 323. When Withholding Not Required.
Part VII-A. Withholding Tax on Income from Sources Within
This Commonwealth
Section 324. General Rule.
Section 324.1. Amount of Withholding Tax.
Section 324.2. Treatment of Nonresident Partners, Members or
Shareholders.
Section 324.3. Liability for Tax, Interest, Penalties and
Additions.
Section 324.4. Withholding on Income.
Section 324.5. Annual Withholding Statement.
Part VIII. Estimated Tax
Section 325. Declarations of Estimated Tax.
Section 326. Payments of Estimated Tax.
Part IX. Returns and Payment of Tax
Section 330. Returns and Liability.
Section 330.1. Return of Pennsylvania S Corporation.
Section 330.2. COVID-19 Emergency Finance and Tax Provision
(Repealed).
Section 331. Returns of Married Individuals, Deceased or
Disabled Individuals and Fiduciaries.
Section 332. Time and Place for Filing Returns and Paying Tax.
Section 332.1. Electronic Payment.
Section 333. Signing of Returns and Other Documents.
Section 334. Extension of Time.
Section 335. Requirements Concerning Returns, Notices, Records
and Statements.
Section 336. Timely Mailing Treated as Timely Filing and
Payment.
Section 336.1. Procedure for Claiming Special Tax Provisions.
Section 336.2. Proof of Eligibility.
Section 336.3. Paid Tax Return Preparers; Required Information
on Personal Income Tax Returns.
Part X. Procedure and Administration
Section 337. Payment on Notice and Demand.
Section 338. Assessment.
Section 339. Jeopardy Assessments.
Section 340. Procedure for Reassessment.
Section 341. Review by Board of Finance and Revenue (Deleted
by amendment).
Section 342. Appeal to the Commonwealth Court (Deleted by
amendment).
Section 343. Collection of Tax.
Section 344. Collection upon Failure to Request
Reassessment, Review or Appeal.
Section 345. Lien for Tax.
Section 346. Refund or Credit of Overpayment.
Section 347. Restrictions on Refunds.
Section 348. Limitations on Assessment and Collection.
Section 349. Extension of Limitation Period.
Section 350. Limitations on Refund or Credit.
Section 351. Interest.
Section 352. Additions, Penalties and Fees.
Section 352.1. Abatement of Additions or Penalties.
Section 352.2. Citation Authority.
Section 353. Crimes.
Section 354. Rules and Regulations.
Section 355. Examination.
Section 356. Cooperation with Other Governmental Agencies.
Section 357. Appropriation for Refunds.
Part XI. Miscellaneous Provisions
Section 358. Constitutional Construction.
Section 359. Saving Clause and Limitations.
Section 360. Transfer of Funds (Deleted by amendment).
Section 360.1. Transfer to Clean Streams Fund.
Section 361. Effective Date.
Article IV. Corporate Net Income Tax
Part I. Preliminary Provisions
Section 401. Definitions.
Section 401.1. Determination of Net Loss Deduction.
Part II. Imposition of Tax
Section 402. Imposition of Tax.
Section 402.1. Allocation of Tax (Repealed).
Section 402.2. Interests in Unincorporated Entities.
Part III. Reports and Payment of Tax
Section 403. Reports and Payment of Tax.
Section 403.1. Timely Mailing Treated as Timely Filing and
Payment.
Section 403.2. Additional Withholding Requirements.
Section 404. Consolidated Reports.
Section 405. Extension of Time to File Reports.
Section 406. Changes Made by Federal Government.
Section 406.1. Amended Reports.
Part IV. Assessment and Collection of Tax
Section 407. Settlement and Resettlement.
Section 407.1. Assessments.
Section 407.2. Jeopardy Assessments.
Section 407.3. Limitations on Assessments.
Section 407.4. Extension of Limitation Period.
Section 407.5. Audit by Auditor General; Determination of Tax.
Part IV-A. Qualified Manufacturing Innovation and
Reinvestment Deduction
Section 407.6. Definitions.
Section 407.7. Manufacturing Innovation and Reinvestment
Deduction.
Part V. Enforcement: Rules and Regulations; Inquisitorial
Powers of the Department
Section 408. Enforcement; Rules and Regulations; Inquisitorial
Powers of the Department.
Section 408.1. Collection of Tax.
Part VI. Retention of Records by Corporation
Section 409. Retention of Records.
Part VII. Penalties
Section 410. Penalties.
Part VIII. Repealer; Effective Date
Section 411. Repeal.
Section 412. Effective Date.
Article V. Corporation Income Tax
Part I. Definitions
Section 501. Definitions (Repealed).
Part II. Imposition of Tax
Section 502. Imposition of Tax (Repealed).
Part III. Procedure; Enforcement; Penalties
Section 503. Procedure; Enforcement; Penalties (Repealed).
Part IV. Repealer; Effective Date
Section 505. Repeal (Repealed).
Section 506. Effective Date (Repealed).
Article VI. Capital Stock--Franchise Tax
Part I. Valuation of Capital Stock
Section 601. Definitions and Reports.
Part II. Imposition of Tax
Section 602. Imposition of Tax.
Section 602.1. Pollution Control Devices.
Section 602.2. Family Farm Corporation Exemption.
Section 602.3. Hazardous Sites Cleanup Fund.
Section 602.4. Separate Entities.
Section 602.5. Shows and Flea Markets.
Section 602.6. Interest in Unincorporated Entities.
Part III. Procedure; Enforcement; Penalties
Section 603. Procedure; Enforcement; Penalties.
Part IV. Repeal; Applicability; Expiration
Section 605. Repeal.
Section 606. Applicability.
Section 607. Expiration.
Article VII. Bank and Trust Company Shares Tax
Part I. Imposition of Tax
Section 701. Imposition of Tax.
Section 701.1. Ascertainment of Taxable Amount; Exclusion of
United States Obligations.
Section 701.2. Reserve for Loan Losses (Repealed).
Section 701.3. Amended Report for 1989.
Section 701.4. Apportionment.
Section 701.5. Definitions.
Part II. Procedure; Enforcement; Penalties
Section 702. Procedure; Enforcement; Penalties.
Part III. Repealer; Effective Date
Section 705. Repeal.
Section 706. Effective Date.
Article VII-A. Alternative Bank and Trust Company Shares Tax
(Repealed)
Section 701-A. Imposition of Tax (Repealed).
Section 702-A. Ascertainment of Value; Exclusion of United
States Obligations (Repealed).
Part II. Procedure; Enforcement; Penalties (Repealed)
Section 711-A. Procedure; Enforcement; Penalties (Repealed).
Part III. Miscellaneous Provisions (Repealed)
Section 721-A. Effective Date (Repealed).
Article VIII. Title Insurance Companies Shares Tax
Part I. Imposition of Tax
Section 801. Imposition of Tax.
Section 801.1. Ascertainment of Taxable Amount; Exclusion of
United States Obligations.
Section 801.2. Reserve for Loan Losses (Repealed).
Part II. Procedure; Enforcement; Penalties
Section 802. Procedure; Enforcement; Penalties.
Section 803. Amended Report for 1989.
Part III. Repealer; Effective Date
Section 805. Repeal.
Section 806. Effective Date.
Article VIII-A. Alternative Title Insurance Companies Shares
Tax (Repealed)
Section 801-A. Imposition of Tax (Repealed).
Section 802-A. Ascertainment of Value; Exclusion of United
States Obligations (Repealed).
Part II. Procedure; Enforcement; Penalties (Repealed)
Section 811-A. Procedure; Enforcement; Penalties (Repealed).
Part III. Miscellaneous Provisions (Repealed)
Section 821-A. Effective Date (Repealed).
Article IX. Insurance Premiums Tax
Part I. Definitions
Section 901. Definitions.
Part II. Imposition of Tax
Section 902. Imposition of Tax.
Section 902.1. Credits for Assessments Paid.
Part III. Annual Report
Section 903. Annual Report.
Part IV. Procedure; Enforcement; Penalties
Section 904. Procedure; Enforcement; Penalties.
Part V. Repealer; Effective Date
Section 905. Repeal.
Section 906. Effective Date.
Article X. Excise Tax on Foreign Corporations (Repealed)
Part I. Definitions (Repealed)
Section 1001. Definitions (Repealed).
Part II. Imposition of Tax (Repealed)
Section 1002. Imposition of Tax (Repealed).
Part III. Reports (Repealed)
Section 1003. Initial and Annual Report (Repealed).
Part IV. Procedure; Enforcement; Penalties (Repealed)
Section 1004. Procedure; Enforcement; Penalties (Repealed).
Part V. Repealer; Effective Date (Repealed)
Section 1005. Repeal (Repealed).
Section 1006. Effective Date (Repealed).
Article XI. Gross Receipts Tax
Part I. Imposition of Tax
Section 1101. Imposition of Tax.
Section 1101.1. Timely Mailing Treated as Timely Filing and
Payment.
Section 1101.2. Establishment of Revenue-Neutral Reconciliation.
Part II. Procedure; Enforcement; Penalties
Section 1102. Procedure; Enforcement; Penalties.
Part III. Repealer
Section 1103. Repeal.
Part IV. Definitions
Section 1104. Definitions (Repealed).
Article XI-A. Public Utility Realty Tax
Section 1101-A. Definitions.
Section 1102-A. Imposition of Tax; Report; Interest and
Penalties; Tentative Tax.
Section 1103-A. Assessment; Collection.
Section 1104-A. Effect of Payment; Additional Assessment;
Refunds; Rebate.
Section 1105-A. Local Assessment of Utility Realty; Initial
Assessment; Procedure and Appeals.
Section 1106-A. Reports by Local Taxing Authorities.
Section 1106.1-A. Duplicates.
Section 1106.2-A. Affiliates and Subsidiaries.
Section 1107-A. Distribution to Local Taxing Authorities.
Section 1108-A. Legislative Intent.
Section 1109-A. Objections by Public Utilities.
Section 1110-A. Tax Transitions Impact Limitations.
Section 1111-A. Surcharge.
Section 1112-A. Additional Tax.
Article XI-B. Fuel Taxes (Repealed)
Part I. Liquid Fuels Tax (Repealed)
Section 1101-B. Imposition of Additional Tax (Repealed).
Section 1102-B. Payment to Motor License Fund (Repealed).
Part II. Fuel Use Tax (Repealed)
Section 1121-B. Additional Tax Imposed (Repealed).
Article XI-C. Realty Transfer Tax
Section 1101-C. Definitions.
Section 1102-C. Imposition of Tax.
Section 1102-C.1. Recapture of Tax (Repealed).
Section 1102-C.2. Exempt Parties.
Section 1102-C.3. Excluded Transactions.
Section 1102-C.4. Documents Relating to Associations or
Corporations and Members, Partners, Stockholders
or Shareholders Thereof.
Section 1102-C.5. Acquired Company.
Section 1102-C.6. Transfer of Tax.
Section 1103-C. Credits Against Tax.
Section 1103-C.1. Extension of Lease.
Section 1104-C. Proceeds of Judicial Sale.
Section 1105-C. Documentary Stamps.
Section 1106-C. Stamps, Commissions, Payments and Transfers.
Section 1107-C. Enforcement; Rules and Regulations.
Section 1108-C. Failure to Affix Stamps.
Section 1109-C. Statement of Value; Penalty.
Section 1109-C.1. Civil Penalties.
Section 1110-C. Unlawful Acts; Penalty.
Section 1111-C. Assessment and Notice of Tax; Review.
Section 1112-C. Lien.
Section 1113-C. Refunds.
Section 1114-C. Sharing information.
Article XI-D. Local Real Estate Transfer Tax
Section 1101-D. Imposition.
Section 1102-D. Administration.
Section 1103-D. Regulations.
Section 1104-D. Documentary Stamps.
Section 1105-D. Collection Agent.
Section 1106-D. Disbursements.
Section 1107-D. Proceeds of Judicial Sale.
Section 1108-D. Failure to Affix Stamps.
Section 1109-D. Determination and Notice of Tax; Review.
Section 1110-D. Lien.
Section 1111-D. Refunds.
Section 1112-D. Civil Penalties.
Section 1113-D. Unlawful Acts and Penalty.
Section 1114-D. Information.
Article XII. Cigarette Tax
Part I. Introductory Provisions
Section 1201. Definitions.
Part II. Imposition of Tax
Section 1206. Incidence and Rate of Tax.
Section 1206.1. Floor Tax.
Section 1207. Sales to Commonwealth and Political Subdivisions.
Section 1208. Limitation of Tax.
Section 1209. Exemptions from Tax.
Section 1210. Liability for Collection of Tax.
Section 1211. Health Care Provider Retention Account (Deleted
by amendment).
Part III. Method of Payment of Tax
Section 1215. Stamp to Evidence the Tax.
Section 1216. Commissions on Sales.
Section 1216.1. Return and Payment of Tax for Unstamped
Cigarettes.
Section 1217. Sample Packs of Cigarettes.
Part IV. Licensing Provisions
Section 1221. Licensing of Cigarette Dealers (Repealed).
Section 1222. Licensing of Cigarette Stamping Agents
(Repealed).
Section 1223. Licensing of Wholesalers (Repealed).
Section 1224. Licensing of Retailers (Repealed).
Section 1225. Suspension or Revocation of License (Repealed).
Section 1226. Cigarette Tax Board (Repealed).
Section 1227. License Fees; Issuance and Posting of License
(Repealed).
Section 1228. Transfer of Licenses (Repealed).
Section 1229. Disposition of License Fees (Repealed).
Section 1230. Expiration of License (Repealed).
Section 1231. Duplicate License (Repealed).
Part V. Cigarette Vending Machines
Section 1235. Cigarette Vending Machines; Names of Owner and
Operator (Repealed).
Section 1236. License for Machine (Repealed).
Part VI. Business Records (Repealed)
Section 1241. Retention of Records (Repealed).
Section 1242. Reports (Repealed).
Section 1243. Examination of Records; Equipment and Premises
(Repealed).
Part VII. Refunds and Allowances
Section 1251. Refund of Tax.
Section 1252. Allowance for Nonpayment of Tax.
Section 1253. Limitations.
Section 1254. Procedures for Claiming Refund.
Part VIII. Advertising
Section 1261. Advertising (Repealed).
Part IX. Penalties and Enforcement
Section 1271. Sales without License (Repealed).
Section 1272. Sales of Unstamped Cigarettes.
Section 1273. Possession of Unstamped Cigarettes.
Section 1274. Counterfeiting.
Section 1275. Defacing of Cigarette Stamping Equipment.
Section 1276. Failure to Furnish Information, Returning False
Information or Failure to Permit an Inspection.
Section 1277. Right of Department to Impound Vending Machines
and Contents.
Section 1278. Other Violations.
Section 1279. Peace Officers; Powers.
Section 1280. Fines and Penalties Payable to Commonwealth.
Part X. Confiscation and Forfeiture
Section 1285. Property Rights.
Section 1286. Disposition of Unclaimed Motor Vehicles.
Part XI. Enforcement and Regulations
Section 1291. Enforcement; Regulations.
Part XII. Saving Clause: Payment: Repealer
Section 1295. Saving Clause.
Section 1296. Disposition of Certain Funds.
Section 1297. Repealer.
Article XII-A. Tobacco Products Tax
Section 1201-A. Definitions.
Section 1202-A. Incidence and rate of tax.
Section 1203-A. Floor tax.
Section 1204-A. Remittance of tax to department.
Section 1205-A. (Reserved).
Section 1206-A. Procedures for claiming refund.
Section 1207-A. Sales or possession of tobacco product when tax
not paid.
Section 1208-A. Assessment.
Section 1209-A. (Reserved).
Section 1210-A. (Reserved).
Section 1211-A. Failure to file return.
Section 1212-A. False or fraudulent return.
Section 1213-A. Extension of limitation period.
Section 1214-A. Failure to furnish information, returning false
information or failure to permit inspection.
Section 1215-A. Other violations, peace officers and fines.
Section 1216-A. Sales reporting.
Section 1217-A. (Reserved).
Section 1218-A. (Reserved).
Section 1219-A. Records of shipments and receipts of tobacco
products required.
Section 1220-A. Licensing of dealers and manufacturers.
Section 1221-A. Licensing of manufacturers.
Section 1222-A. Licensing of wholesalers.
Section 1223-A. Licensing of retailers.
Section 1224-A. License for tobacco products vending machines.
Section 1225-A. License fees and issuance and display of
license.
Section 1226-A. Electronic filing.
Section 1227-A. Expiration of license.
Section 1228-A. Administration powers and duties.
Section 1229-A. Sales without license.
Section 1230-A. Violations and penalties.
Section 1231-A. Property rights.
Section 1232-A. Sample of tobacco products.
Section 1233-A. Labeling and packaging.
Section 1234-A. Information exchange.
Article XIII. Single Excise Tax on Certain Banks, Title
Insurance Companies, Bank and Trust Companies
and Trust Companies (Repealed)
Section 1301. Imposition of Tax (Repealed).
Section 1302. Taxpayers Subject to Tax (Repealed).
Section 1303. Measurement of Tax (Repealed).
Section 1304. Publication of Total Refunds and Unpaid Shares
Taxes Subject to Protest (Repealed).
Section 1305. Aggregate Amount of Excise Tax (Repealed).
Section 1306. Payment of Tax (Repealed).
Section 1307. Credit for Refunds Due (Repealed).
Section 1308. Additional Credit (Repealed).
Section 1309. Applicability of Existing Law (Repealed).
Article XIV. Franchise Surtax Alternative on Banks (Repealed)
Section 1401. Definitions (Repealed).
Section 1402. Imposition of Surtax (Repealed).
Section 1403. Computation of Adjusted Net Worth (Repealed).
Section 1404. Procedure; Enforcement; Penalties (Repealed).
Article XIV-A. Franchise Surtax Alternative on Title Insurance
and Trust Companies (Repealed)
Section 1401-A. Definitions (Repealed).
Section 1402-A. Imposition of Surtax (Repealed).
Section 1403-A. Computation of Adjusted Net Worth (Repealed).
Section 1404-A. Procedure; Enforcement; Penalties (Repealed).
Article XV. Mutual Thrift Institutions Tax
Section 1501. Definitions.
Section 1502. Imposition; Report and Payment of Tax;
Exemptions.
Section 1502.1. Apportionment.
Section 1502.2. Credits.
Section 1502.3. Additional Reporting Requirements.
Section 1502.4. Restrictions on Lawsuits.
Section 1502.5. Sunset (Deleted by amendment).
Section 1503. Procedure; Enforcement; Penalties.
Section 1504. Timely Mailing Treated as Timely Filing and
Payment.
Section 1505. Tax Credits; Legislative Intent.
Section 1506. Measurement of Tax.
Article XVI. Financial Institution Alternative Franchise Tax
(Repealed)
Part I. Definitions (Repealed)
Section 1601. Definitions (Repealed).
Part II. Imposition of Tax (Repealed)
Section 1611. Imposition of Tax (Repealed).
Part III. Procedure; Enforcement; Penalties (Repealed)
Section 1621. Procedure; Enforcement; Penalties (Repealed).
Section 1622. Time Period (Repealed).
Part IV. Additional Reporting Requirements (Repealed)
Section 1631. Additional Reporting Requirements (Repealed).
Section 1632. Reports to General Assembly (Repealed).
Article XVI-A. Vehicle Rental Tax
Section 1601-A. Definitions.
Section 1602-A. Vehicle Rental Tax.
Section 1603-A. Reporting and Remittance of Tax.
Section 1604-A. Application.
Article XVI-B. Nonlicensed Corporation Pari-Mutuel Wagering
Tax (Repealed)
Section 1601-B. Scope (Repealed).
Section 1602-B. Definitions (Repealed).
Section 1603-B. Tax (Repealed).
Section 1604-B. Pari-mutuel tax return (Repealed).
Section 1605-B. Regulations (Repealed).
Section 1606-B. Advanced Deposit Wagering Collections Account
(Repealed).
Article XVII. Economic Revitalization Tax Credit (Repealed)
Section 1701. Short Title (Repealed).
Section 1702. Legislative Intent (Repealed).
Section 1703. Tax Credit (Repealed).
Section 1704. Qualified Investment Projects (Repealed).
Section 1705. Threshold Level (Repealed).
Section 1706. Portion of Excess Net Loss Carryover Claimable
as Credit (Repealed).
Section 1707. Amount of Credit (Repealed).
Section 1708. Utilization of Credits (Repealed).
Section 1709. Recapture of Credits (Repealed).
Section 1710. Application Procedures (Repealed).
Section 1711. Appropriation (Repealed).
Section 1712. Annual Reports (Repealed).
Section 1713. Evaluation of Tax Credit (Repealed).
Section 1714. Sunset (Repealed).
Article XVII-A. Employment Incentive Payments
Section 1701-A. Employment Incentive Payments (Deleted by
amendment).
Section 1702-A. Definitions.
Section 1703-A. Employment Incentive Payments.
Section 1704-A. Administration and Regulations.
Section 1705-A. Limitation on Credits.
Section 1706-A. Time Limitations and Report.
Article XVII-A.1. Tax Credit and Tax Benefit Administration
Section 1701-A.1. Definitions.
Section 1702-A.1. Determination of eligibility and method of
submission.
Section 1703-A.1. Application and administration.
Section 1704-A.1. Assessment.
Section 1705-A.1. Administering agency training.
Section 1706-A.1. Broker registration.
Section 1707-A.1. Tax credit and tax benefit reports.
Section 1708-A.1. Allocation of tax credits or tax benefits
awarded upon appeal.
Section 1709-A.1. Guidelines.
Article XVII-B. Research and Development Tax Credit
Section 1701-B. Short Title.
Section 1702-B. Definitions.
Section 1703-B. Credit for Research and Development Expenses.
Section 1704-B. Carryover, Carryback, Refund and Assignment of
Credit.
Section 1705-B. Application of Internal Revenue Code.
Section 1706-B. Determination of Qualified Research and
Development Expenses.
Section 1707-B. Time Limitations.
Section 1708-B. Transitional Rule.
Section 1709-B. Limitation on Credits.
Section 1710-B. Pass-Through Entity.
Section 1711-B. Report to General Assembly.
Section 1712-B. Termination (Repealed).
Section 1713-B. Regulations.
Article XVII-C. Film Production Tax Credit (Repealed).
Section 1701-C. Scope of article (Repealed).
Section 1702-C. Definitions (Repealed).
Section 1703-C. Credit for qualified film production expenses
(Repealed).
Section 1703.1-C. Film production tax credits (Repealed).
Section 1704-C. Carryover, carryback, refund and assignment of
credit (Repealed).
Section 1705-C. Determination of qualified film production
expenses (Repealed).
Section 1706-C. Time limitations (Repealed).
Section 1707-C. Limitation on credits (Deleted by amendment).
Section 1707.1-C. Penalty (Repealed).
Section 1708-C. Pass-through entity (Repealed).
Section 1709-C. Report to General Assembly (Repealed).
Section 1710-C. Termination (Repealed).
Section 1711-C. Regulations (Repealed).
Article XVII-D. Entertainment Production Tax Credit
Subarticle A. Preliminary Provisions
Section 1701-D. Scope of article.
Section 1702-D. Definitions.
Subarticle B. Film Production
Section 1711-D. Definitions.
Section 1712-D. Credit for qualified film production expenses.
Section 1713-D. Film production tax credits.
Section 1714-D. Carryover, carryback and assignment of credit.
Section 1715-D. Determination of Pennsylvania production
expenses.
Section 1716-D. Limitations.
Section 1716.1-D. Reissuance of film production tax credits.
Section 1716.2-D. Film production tax credit districts.
Section 1717-D. Penalty.
Section 1718-D. Pass-through entity.
Section 1719-D. Department guidelines and regulations.
Section 1720-D. Report to General Assembly.
Section 1721-D. Film Advisory Board.
Subarticle C. Concert Rehearsal and Tour (Repealed)
Section 1731-D. Definitions (Repealed).
Section 1732-D. Procedure (Repealed).
Section 1733-D. Claim (Repealed).
Section 1734-D. Carryover, carryback and assignment of tax
credit (Repealed).
Section 1735-D. Determination of Pennsylvania rehearsal and
tour expenses (Repealed).
Section 1736-D. Limitations (Repealed).
Section 1737-D. Penalty (Repealed).
Section 1738-D. Pass-through entity (Repealed).
Section 1739-D. Department guidelines and regulations
(Repealed).
Section 1740-D. Report to General Assembly (Repealed).
Subarticle D. Video Game Production
Section 1751-D. Scope of subarticle.
Section 1752-D. Definitions.
Section 1753-D. Credit for qualified video game production
expenses.
Section 1754-D. Video game production tax credits.
Section 1755-D. Carryover, carryback and assignment of credit.
Section 1756-D. Determination of Pennsylvania production
expenses.
Section 1757-D. Limitations.
Section 1758-D. Penalty.
Section 1759-D. Pass-through entity.
Section 1760-D. Department guidelines and regulations.
Section 1761-D. Report to General Assembly.
Subarticle E. Entertainment Economic Enhancement Program
Section 1771-D. Scope of subarticle.
Section 1772-D. Definitions.
Section 1773-D. Procedure.
Section 1774-D. Claim.
Section 1775-D. Carryover, carryback and assignment of tax
credit.
Section 1776-D. Determination of Pennsylvania rehearsal and
tour expenses.
Section 1777-D. Limitations.
Section 1778-D. Penalty.
Section 1779-D. Pass-through entity.
Section 1780-D. Department guidelines and regulations.
Section 1781-D. Report to General Assembly.
Section 1782-D. Pennsylvania live events industry COVID-19
emergency assistance.
Article XVII-E. Resource Enhancement and Protection Tax Credit
Section 1701-E. Scope of article.
Section 1702-E. Definitions.
Section 1703-E. Resource Enhancement and Protection Tax Credit
Program.
Section 1704-E. Tax credits.
Section 1705-E. Project certification.
Section 1706-E. Project maintenance and life expectancy.
Section 1707-E. Application, review and authorization by
commission.
Section 1708-E. Grant of tax credit.
Section 1709-E. Annual tax credits.
Section 1710-E. Report and public information.
Article XVII-F. Educational Tax Credits (Repealed)
Section 1701-F. Scope of article (Repealed).
Section 1702-F. Definitions (Repealed).
Section 1703-F. Qualification and application by organizations
(Repealed).
Section 1704-F. Application by business firms (Repealed).
Section 1705-F. Tax credits (Repealed).
Section 1706-F. Limitations (Repealed).
Section 1707-F. Lists (Repealed).
Section 1708-F. Guidelines (Repealed).
Section 1709-F. Opportunity scholarships (Repealed).
Section 1710-F. Low-achieving schools (Repealed).
Section 1711-F. School participation in program (Repealed).
Section 1712-F. Tuition grants by school districts (Repealed).
Section 1713-F. Original jurisdiction (Repealed).
Article XVII-G. Resource Manufacturing Tax Credit
Section 1701-G. Scope of article.
Section 1702-G. Definitions.
Section 1703-G. Application and approval of tax credit.
Section 1704-G. Use of tax credits.
Section 1705-G. Carryover, carryback and refund.
Section 1706-G. Sale or assignment.
Section 1707-G. Purchasers and assignees.
Section 1708-G. Pass-through entity.
Section 1709-G. Administration.
Section 1710-G. Reports to General Assembly.
Section 1711-G. Expiration.
Article XVII-G.1. Educational Opportunity Scholarship Tax
Credit (Repealed)
Section 1701-G.1. Scope of article (Repealed).
Section 1702-G.1. Definitions (Repealed).
Section 1703-G.1. Qualification and application (Repealed).
Section 1704-G.1. Tax credit application (Repealed).
Section 1705-G.1. Tax credit (Repealed).
Section 1706-G.1. Tax credit limitations (Repealed).
Section 1707-G.1. Tax credit lists (Repealed).
Section 1708-G.1. Scholarships (Repealed).
Section 1709-G.1. Low-achieving schools (Repealed).
Section 1710-G.1. School participation in program (Repealed).
Section 1711-G.1. Tuition grants by school districts (Repealed).
Section 1712-G.1. Original juridiction (Repealed).
Article XVII-H. Historic Preservation Incentive Tax Credit
Section 1701-H. Scope of article.
Section 1702-H. Definitions.
Section 1703-H. Tax credit certificates.
Section 1704-H. Claiming the credit.
Section 1705-H. Carryover, carryback and assignment of credit.
Section 1706-H. Pass-through entity.
Section 1707-H. Administration.
Section 1707.1-H. Annual report to General Assembly.
Section 1708-H. Application of Internal Revenue Code.
Section 1709-H. Limitation.
Section 1710-H. Recapture.
Article XVII-I. Community-based Services Tax Credit
Section 1701-I. Scope of article.
Section 1702-I. Definitions.
Section 1703-I. Community-based services tax credit program.
Section 1703.1-I. Restriction on use of contributions.
Section 1704-I. Availability of tax credits.
Section 1705-I. Grant of tax credits.
Section 1706-I. Amount of tax credits.
Section 1707-I. Guidelines.
Section 1708-I. Limitation.
Article XVII-J. Coal Refuse Energy and Reclamation Tax Credit
Section 1701-J. Scope of article.
Section 1702-J. (Reserved).
Section 1703-J. Definitions.
Section 1704-J. Application and approval of tax credit.
Section 1705-J. Claim of tax credit.
Section 1706-J. Carryover and carryback.
Section 1707-J. Limitation on tax credits.
Section 1708-J. Pass-through entity.
Section 1709-J. Use of credits by affiliates.
Section 1710-J. Sale or assignment.
Section 1711-J. Purchasers and assignees.
Section 1712-J. Administration.
Section 1713-J. Annual report to General Assembly.
Section 1714-J. Applicability.
Article XVII-K. Waterfront Development Tax Credit
Section 1701-K. Scope of article.
Section 1702-K. Definitions.
Section 1703-K. Waterfront Development Tax Credit Program.
Section 1704-K. Waterfront development organizations.
Section 1705-K. Waterfront development projects.
Section 1706-K. Tax credit.
Section 1707-K. Grant of tax credits.
Section 1708-K. Limitations.
Section 1709-K. Decision in writing.
Section 1710-K. Pass-through entity.
Article XVII-L. Pennsylvania Economic Development for a Growing
Economy (PA EDGE) Tax Credits
Subarticle A. Preliminary Provisions
Section 1701-L. Scope of article.
Section 1702-L. Definitions.
Subarticle B. Local Resource Manufacturing
Section 1711-L. Definitions.
Section 1712-L. Eligibility.
Section 1713-L. Application and approval of tax credit.
Section 1714-L. Use of tax credits.
Section 1715-L. Carryover, carryback and refund.
Section 1716-L. Sale or assignment.
Section 1717-L. Purchasers and assignees.
Section 1718-L. Pass-through entity.
Section 1719-L. (Reserved).
Section 1720-L. Administration.
Section 1721-L. Reports to General Assembly.
Section 1722-L. Applicability.
Section 1723-L. Expiration.
Subarticle C. Pennsylvania Milk Processing
Section 1731-L. Definitions.
Section 1732-L. Eligibility.
Section 1733-L. Application and approval of tax credit.
Section 1734-L. Use of tax credits.
Section 1735-L. Carryover, carryback and refund.
Section 1736-L. Sale or assignment.
Section 1737-L. Purchasers and assignees.
Section 1738-L. Pass-through entity.
Section 1739-L. (Reserved).
Section 1740-L. Guidelines and regulations.
Section 1741-L. Report to General Assembly.
Section 1742-L. Applicability.
Subarticle D. Regional Clean Hydrogen Hubs
Section 1751-L. Definitions.
Section 1752-L. Eligibility.
Section 1753-L. Application and approval of tax credit.
Section 1754-L. Use of tax credits.
Section 1755-L. Carryover, carryback and refund.
Section 1756-L. Sale or assignment.
Section 1757-L. Purchasers and assignees.
Section 1758-L. Pass-through entity.
Section 1759-L. (Reserved).
Section 1760-L. Guidelines and regulations.
Section 1761-L. Report to General Assembly.
Section 1762-L. Applicability.
Subarticle E. Semiconductor Manufacturing and Biomedical
Manufacturing and Research
Section 1771-L. Definitions.
Section 1772-L. Eligibility.
Section 1773-L. Application and approval of tax credit.
Section 1774-L. Use of tax credits.
Section 1775-L. Carryover, carryback and refund.
Section 1776-L. Sale or assignment.
Section 1777-L. Purchasers and assignees.
Section 1778-L. Pass-through entity.
Section 1779-L. (Reserved).
Section 1780-L. Guidelines and regulations.
Section 1781-L. Report to General Assembly.
Section 1782-L. Applicability.
Subarticle F. Application of Prevailing Wage Act
Section 1791-L. Definitions.
Section 1792-L. Prevailing wage.
Article XVIII. Organ and Bone Marrow Donation Credit
Section 1801. Scope.
Section 1802. Definitions.
Section 1803. Organ and bone marrow donor tax credit.
Section 1804. Duties of department.
Section 1805. Procedures.
Section 1806. Applicability.
Article XVIII-A. Coal Waste Removal and Ultraclean Fuels Tax
Credit (Repealed)
Section 1801-A. Short Title (Repealed).
Section 1802-A. Definitions (Repealed).
Section 1803-A. Investment Tax Credits Program (Repealed).
Section 1804-A. Contract Required (Repealed).
Section 1805-A. Requirements (Repealed).
Article XVIII-B. Tax Credit For New Jobs
Section 1801-B. Definitions.
Section 1802-B. Eligibility.
Section 1803-B. Application Process.
Section 1804-B. Tax credits.
Section 1805-B. Prohibitions.
Section 1806-B. Penalties.
Article XVIII-C. City Revitalization and Improvement Zones
Section 1801-C. Scope of article.
Section 1802-C. Definitions.
Section 1803-C. Establishment or designation of contracting
authority.
Section 1803.1-C. Contracting authority duties.
Section 1804-C. Approval.
Section 1805-C. Exclusions.
Section 1806-C. Functions of contracting authorities.
Section 1807-C. Qualified businesses.
Section 1808-C. Funds.
Section 1809-C. Reports.
Section 1810-C. Calculation of baseline.
Section 1811-C. Certification.
Section 1812-C. Transfers.
Section 1813-C. Restrictions.
Section 1814-C. Transfer of property.
Section 1815-C. Duration.
Section 1816-C. Commonwealth pledges.
Section 1817-C. Confidentiality.
Section 1818-C. Guidelines.
Section 1819-C. Review.
Article XVIII-D. Volunteer Responder Retention and Recruitment
Tax Credit
Section 1801-D. Definitions.
Section 1802-D. Application.
Section 1803-D. Taxpayer credit.
Section 1804-D. Taxpayer eligibilty.
Section 1805-D. Carryover and carryback.
Section 1806-D. Total amount of credits.
Section 1807-D. Point system.
Section 1808-D. (Reserved).
Section 1809-D. Certification.
Section 1810-D. Guidelines.
Section 1811-D. Report to General Assembly.
Section 1812-D. Penalty.
Article XVIII-E. Mobile Telecommunications Broadband Investment
Tax Credit
Section 1801-E. Definitions.
Section 1802-E. Tax credit.
Section 1803-E. Pass-through entity.
Section 1804-E. Procedure (Repealed).
Section 1805-E. Limitation (Repealed).
Article XVIII-F. Innovate in PA Tax Credit
Section 1801-F. Scope of article.
Section 1802-F. Legislative intent.
Section 1803-F. Definitions.
Section 1804-F. Tax credit.
Section 1805-F. Duties.
Section 1806-F. Use of tax credits by qualified taxpayers.
Section 1807-F. Sale, carryover and carryback.
Section 1808-F. Sale of tax credits to qualified taxpayers.
Section 1809-F. Payment for tax credits purchased and
certificates.
Section 1810-F. Failure to make contribution of capital and
reallocation.
Section 1811-F. Innovate in PA Program.
Section 1812-F. Guidelines.
Section 1813-F. Report.
Article XVIII-G. Manufacturing and Investment Tax Credit
Part I. Manufacturing Tax Credit
Section 1801-G. Definitions.
Section 1802-G. Eligibility.
Section 1803-G. Procedure.
Section 1804-G. Manufacturing tax credit.
Section 1805-G. Limitations.
Section 1806-G. Sale or assignment.
Section 1807-G. Pass-through entity.
Section 1808-G. Penalties.
Section 1809-G. Guidelines.
Part II. Rural Jobs and Investment Tax Credit
Section 1821-G. Scope of part.
Section 1822-G. Definitions.
Section 1823-G. Rural Jobs and Investment Tax Credit Program.
Section 1824-G. Rural growth funds.
Section 1825-G. Requirements.
Section 1826-G. Rural growth fund failure to comply.
Section 1827-G. Reporting obligations.
Section 1828-G. Business firms.
Section 1829-G. Tax credit certificates.
Section 1830-G. Claiming the tax credit.
Section 1831-G. Restrictions on tax credit utilization.
Section 1832-G. Prohibitions.
Section 1833-G. Revocation of tax credit certificates.
Section 1834-G. Exit.
Section 1835-G. Duties of department.
Article XVIII-H. Tax Credits Relating to Beginning Farmers
Section 1801-H. Scope of article.
Section 1802-H. Definitions.
Section 1803-H. Beginning farmer management tax credit.
Section 1804-H. Approval of tax credit.
Section 1805-H. Departmental duties.
Section 1806-H. Report.
Section 1807-H. Expiration.
Article XIX. New Bank Tax Credit (Repealed)
Section 1901. Short Title (Repealed).
Section 1902. Legislative Intent (Repealed).
Section 1903. Definitions (Repealed).
Section 1904. Tax Credit (Repealed).
Section 1905. Limitations on Tax Credits (Repealed).
Section 1906. Total Amount of Credits (Repealed).
Section 1907. Procedures of Claiming Credits (Repealed).
Section 1908. Report to General Assembly (Repealed).
Section 1909. Evaluation of Tax Credit (Repealed).
Article XIX-A. Neighborhood Assistance Tax Credit
Section 1901-A. Short Title.
Section 1902-A. Definitions.
Section 1903-A. Public Policy.
Section 1904-A. Tax Credit.
Section 1905-A. Grant of Tax Credit.
Section 1906-A. Decision in Writing.
Section 1907-A. Pass-Through Entity.
Section 1908-A. Reporting.
Article XIX-B. Neighborhood Improvement Zones
Section 1901-B. Scope of article.
Section 1902-B. Definitions.
Section 1903-B. Facility.
Section 1904-B. Neighborhood Improvement Zone Funds.
Section 1904.1-B. Taxes.
Section 1904.2-B. Property assessment.
Section 1904.3-B. Transfer of property.
Section 1905-B. Keystone Opportunity Zone.
Section 1906-B. Duration.
Section 1907-B. Commonwealth pledges.
Section 1908-B. Confidentiality.
Section 1909-B. Exceptions.
Article XIX-C. Keystone Special Development Zone Program
Section 1901-C. Scope of article.
Section 1902-C. Definitions.
Section 1903-C. Keystone Special Development Zone tax credit.
Section 1904-C. Tax liability attributable to Keystone Special
Development Zone.
Article XIX-D. Keystone Opportunity Zones, Keystone Opportunity
Expansion Zones and Keystone Opportunity
Improvement Zones
Part I. Preliminary Provisions
Section 1901-D. Scope of article.
Section 1902-D. Definitions.
Part II. Keystone Opportunity Zones
Section 1911-D. Additional keystone opportunity zones.
Section 1912-D. Extension for new job creation or new capital
investment.
Section 1913-D. Extension for keystone opportunity expansion
zone.
Part III. Additional Designations
Section 1921-D. Additional keystone opportunity expansion
zones.
Article XIX-E. Mixed-use Development Tax Credit
Section 1901-E. Scope of article.
Section 1902-E. Purpose.
Section 1903-E. Definitions.
Section 1904-E. Mixed-use Development Program.
Section 1905-E. Program administration.
Section 1906-E. Mixed-use Development Program Fund.
Section 1907-E. Mixed-use development tax credits.
Section 1908-E. Payment for mixed-use development tax credits.
Section 1909-E. Failure to make contribution of capital and
reallocation.
Section 1910-E. Claiming the credit.
Section 1911-E. Carryover, carry back and assignment of credit.
Article XIX-F. Keystone Innovation Zones
Section 1901-F. Scope of article.
Section 1902-F. Definitions.
Section 1903-F. Program.
Section 1904-F. Assistance.
Section 1905-F. Keystone innovation grants.
Section 1906-F. Keystone innovation zone tax credits.
Section 1907-F. Guidelines.
Section 1908-F. Annual report.
Article XIX-G. Pennsylvania Housing Tax Credit
Section 1901-G. Scope of article.
Section 1902-G. Definitions.
Section 1903-G. Pennsylvania Housing Tax Credit.
Section 1904-G. Use of tax credits.
Section 1905-G. Carryover, carryback and refund.
Section 1906-G. Sale or assignment.
Section 1907-G. Pass-through entity.
Section 1908-G. Purchasers and assignees.
Section 1909-G. Administration.
Section 1910-G. Annual report.
Article XIX-H. Airport Land Development Zones
Section 1901-H. Definitions.
Section 1902-H. Airport Land Development Zone Program.
Section 1903-H. Application and plan.
Section 1904-H. Airport land development zone tax credit.
Article XIX-I. Pennsylvania Child and Dependent Care
Enhancement Tax Credit Program (Repealed)
Section 1901-I. Scope of article (Repealed).
Section 1902-I. Definitions (Repealed).
Section 1903-I. Credit for child and dependent care
employment-related expenses (Repealed).
Section 1904-I. Prohibitions (Repealed).
Section 1905-I. Application of Internal Revenue Code of 1986
(Repealed).
Section 1906-I. Departmental duties (Repealed).
Section 1907-I. Report to General Assembly (Repealed).
Article XIX-J. 529 Savings Account Employer Matching
Contribution Tax Credit
Section 1901-J. Scope of article.
Section 1902-J. Definitions.
Section 1903-J. Credit for employer matching contributions to
tuition savings accounts and ABLE accounts.
Section 1904-J. Carryover, carryback, assignment and
pass-through of credit.
Section 1905-J. Departmental duties.
Section 1906-J. Nondiscrimination in matching contributions.
Section 1907-J. Report to General Assembly.
Article XIX-K. Employer Child Care Contribution Tax Credit
Section 1901-K. Scope of article.
Section 1902-K. Definitions.
Section 1903-K. Employer child care contribution tax credit.
Section 1904-K. Carryover, carryback, refund and assignment of
credit.
Section 1905-K. Pass-through entity.
Section 1906-K. Exclusion from classes of income.
Section 1907-K. Nondiscrimination in contributions.
Section 1908-K. Regulations.
Section 1909-K. Tax compliance.
Section 1910-K. Applicability.
Article XX. Malt Beverage Tax
Section 2001. Short Title.
Section 2002. Definitions.
Section 2003. Imposition of Tax.
Section 2004. Reports.
Section 2005. Assessment by Department.
Section 2006. Bond or Surety Required.
Section 2007. Monthly Reports.
Section 2008. Department Examinations.
Section 2009. Refund of Tax.
Section 2010. Limited Tax Credits.
Section 2011. Unlawful Transportation Activities.
Section 2012. Other Unlawful Activities.
Section 2013. Enforcement and Regulations.
Section 2014. Deposit of Proceeds.
Section 2015. Severability.
Section 2016. Legislative Intent.
Article XXI. Inheritance Tax
Part I. Preliminary Provisions
Section 2101. Short Title.
Section 2102. Definitions.
Section 2103. Powers of Department.
Part II. Transfers Subject to Tax
Section 2106. Imposition of Tax.
Section 2107. Transfers Subject to Tax.
Section 2108. Joint Tenancy.
Part III. Transfers Not Subject to Tax
Section 2111. Transfers Not Subject to Tax.
Section 2112. Exemption for Poverty (Repealed).
Section 2113. Trusts and Similar Arrangements for Spouses.
Part IV. Rate of Tax
Section 2116. Inheritance Tax.
Section 2117. Estate Tax.
Part V. Valuation
Section 2121. Valuation.
Section 2122. Valuation of Certain Farmland.
Part VI. Deductions
Section 2126. Deductions Generally.
Section 2127. Expenses.
Section 2128. Taxes.
Section 2129. Liabilities.
Section 2130. Deductions Not Allowed.
Part VII. Payment of Tax
Section 2136. Returns.
Section 2137. Appraisement.
Section 2138. Deductions.
Section 2139. Assessment of Tax.
Section 2140. Notice.
Section 2141. Failure to File Returns Not a Bar to Assessment
of Tax.
Section 2142. Payment Date and Discount.
Section 2143. Interest.
Section 2144. Source of Payment.
Section 2145. Estate Tax Return.
Section 2146. Deduction and Collection of Tax by Personal
Representative or Other Fiduciary.
Section 2147. Duties of Depositories.
Section 2148. Compromise by Department.
Section 2149. Interstate Compromise and Arbitration of
Inheritance Taxes.
Section 2150. Extension of Time for Payment.
Section 2151. Bond for Delinquent Tax.
Section 2152. Evidence of Payment of Tax for Real Estate in
Another County.
Section 2153. Penalties.
Section 2154. Payment of Tax for Small Business Transfers.
Part VIII. Uniform Act on Interstate Compromise and
Arbitration of Inheritance Taxes
Section 2156. Short Title.
Section 2157. Compromise Agreement and Filing, Interest or
Penalty for Nonpayment of Taxes.
Section 2158. Arbitration Agreement.
Section 2159. Arbitration Board.
Section 2160. Filing of Determination of Domicile and Other
Documents.
Section 2161. Interest or Penalties for Nonpayment of Taxes.
Section 2162. Compromise by Parties to Arbitration Agreement.
Section 2163. Reciprocal Application.
Part IX. Collection of Tax
Section 2166. Timely Mailing Treated as Timely Filing and
Payment.
Section 2167. Lien and Duration of Lien.
Section 2168. Limited and Future Interests.
Section 2169. Purchaser, Mortgagee or Lessee.
Section 2170. Sale by Fiduciary.
Section 2171. Sale by Heir, Devisee or Fiduciary.
Section 2172. Sale of Property Transferred Inter Vivos.
Section 2173. Subordination of Lien.
Section 2174. Cessation upon Approval of Bond.
Section 2175. Release of Lien.
Section 2176. Enforcement Procedure.
Part X. Refund of Tax
Section 2181. Refund of Tax.
Part XI. Disputed Tax
Section 2186. Protest, Notice and Appeal.
Section 2187. Bond.
Section 2188. Appeal and Removal from Department.
Part XII. Entry Into Safe Deposit Box
Section 2191. Entry Prohibited.
Section 2192. Entry Without Notice to Department.
Section 2193. Entry upon Notice to Department.
Section 2194. Subsequent Entries.
Section 2195. Confidential Nature of Contents.
Section 2196. Penalties.
Article XXIII. Public Transportation Assistance Fund
Section 2301. Public Transportation Assistance Fund.
Section 2302. Administration.
Article XXIV. Fireworks (Repealed)
Section 2401. Definitions (Repealed).
Section 2402. Permits (Repealed).
Section 2403. Request for extension (Repealed).
Section 2404. Use of consumer fireworks (Repealed).
Section 2404.1. Use of display fireworks (Repealed).
Section 2405. Agricultural purposes (Repealed).
Section 2406. Rules and regulations by municipality (Repealed).
Section 2407. Sales locations (Repealed).
Section 2408. Fees, granting of licenses and inspections
(Repealed).
Section 2409. Conditions for facilities (Repealed).
Section 2410. Temporary structures (Repealed).
Section 2411. Attorney General (Repealed).
Section 2412. Consumer fireworks tax (Repealed).
Section 2413. Disposition of certain funds (Repealed).
Section 2414. Penalties (Repealed).
Section 2415. Removal, storage and destruction (Repealed).
Section 2416. Transition (Repealed).
Article XXV. Table Game Taxes
Section 2501. Definitions.
Section 2502. Table game taxes.
Section 2502.1. General Fund deposit.
Section 2503. Expiration (Repealed).
Article XXVII. Procedure and Administration
Section 2701. Definitions.
Section 2702. Petition for reassessment.
Section 2703. Petition procedure.
Section 2703.1. Board.
Section 2704. Review by board.
Section 2705. Burden of proof.
Section 2706. Abatement of additions or penalties.
Section 2707. Compromise by secretary.
Article XXVIII. Tobacco Master Settlement Payment Revenue Bonds
and Sale of Revenue
Section 2801. Definitions.
Section 2802. Bond issuance or sales agreement.
Section 2803. Limitations on bond issuance.
Section 2803.1. Limitations on sales agreement.
Section 2804. Finance pledge.
Section 2805. Tobacco Revenue Bond Debt Service Account.
Section 2806. Service agreement for bond issuance authorized.
Section 2806.1. Service agreement for sales agreement
authorized.
Section 2807. Submission of sales agreement.
Section 2808. Deposit of proceeds.
Section 2809. Limitation on appropriations.
Article XXIX. Governmental Obligations
Section 2901. Taxability of Government Obligations.
Article XXIX-A. Tax Amnesty Program (Deleted by amendment)
Section 2901-A. Definitions (Deleted by amendment).
Section 2902-A. Establishment of Amnesty Program (Deleted by
amendment).
Section 2903-A. Required Payment (Deleted by amendment).
Section 2904-A. Amnesty Contingent on Continued Compliance
(Deleted by amendment).
Section 2905-A. Limitation of Deficiency Assessment (Deleted
by amendment).
Section 2906-A. Overpayment of Tax (Deleted by amendment).
Section 2907-A. Previously Paid Interest and Penalties (Deleted
by amendment).
Section 2908-A. Proceedings Relating to Tax Amnesty Return
Barred (Deleted by amendment).
Section 2909-A. Undisclosed Liabilities (Deleted by amendment).
Section 2910-A. Duties of Department (Deleted by amendment).
Section 2911-A. Method of Payment (Deleted by amendment).
Section 2912-A. Exemption from Review Process (Deleted by
amendment).
Section 2913-A. Use of Revenue (Deleted by amendment).
Section 2914-A. Penalties for Certain Corporate Officers
(Deleted by amendment).
Section 2915-A. Further Examination of Books and Records
(Deleted by amendment).
Section 2916-A. Additional Penalty (Deleted by amendment).
Section 2917-A. Application of Penalty and Powers (Deleted by
amendment).
Section 2918-A. Construction (Deleted by amendment).
Section 2919-A. Suspension of Inconsistent Acts (Deleted by
amendment).
Article XXIX-B. Homeowners' Century Tax Rebate (Expired)
Section 2901-B. Short Title of Article (Expired).
Section 2902-B. Definitions (Expired).
Section 2903-B. Rebate Qualifications (Expired).
Section 2904-B. Rebate Administration (Expired).
Section 2905-B. Petitions for Review (Expired).
Section 2906-B. Penalties (Expired).
Section 2907-B. Erroneous Rebates (Expired).
Section 2908-B. Construction (Expired).
Section 2909-B. Expiration (Expired).
Article XXIX-C. Strategic Development Areas (Expired)
Part I. Preliminary Provisions (Expired)
Section 2901-C. Scope (Expired).
Section 2902-C. Legislative findings (Expired).
Section 2903-C. Definitions (Expired).
Part III. Strategic Development Areas (Expired)
Section 2911-C. Strategic development areas (Expired).
Section 2912-C. Qualified businesses (Expired).
Section 2913-C. Procedure for approval by political subdivisions
(Expired).
Section 2914-C. Decertification (Expired).
Part V. State Taxes (Expired)
Subpart A. General Provisions (Expired)
Section 2921-C. State taxes (Expired).
Subpart B. Particular State Taxes (Expired)
Section 2931-C. Sales and use tax (Expired).
Section 2932-C. Personal income tax (Expired).
Section 2933-C. Nonresidency considerations (Expired).
Section 2934-C. (Reserved) (Expired).
Section 2935-C. Corporate net income tax (Expired).
Section 2936-C. Capital stock franchise tax (Expired).
Section 2937-C. (Reserved) (Expired).
Section 2938-C. Strategic development area job tax credit
(Expired).
Section 2939-C. Strategic development area job creation tax
credit (Expired).
Part VII. Local Taxes (Expired)
Section 2941-C. Local taxes (Expired).
Section 2942-C. Real property tax (Expired).
Section 2943-C. Local earned income and net profits taxes;
business privilege taxes (Expired).
Section 2944-C. Mercantile license tax (Expired).
Section 2945-C. Local sales and use tax (Expired).
Part IX. Administration of Tax Provisions (Expired)
Section 2951-C. Transferability (Expired).
Section 2952-C. Recapture (Expired).
Section 2953-C. Delinquent or deficient State or local taxes
(Expired).
Section 2954-C. Code compliance (Expired).
Section 2955-C. Appeals (Expired).
Section 2956-C. Notice requirements; State and local authorities
(Expired).
Section 2957-C. Application time (Expired).
Part XI. (Reserved) (Expired)
Part XIII. Miscellaneous Provisions (Expired)
Section 2971-C. Illegal activity (Expired).
Section 2972-C. Rules and regulations (Expired).
Section 2973-C. Compliance (Expired).
Section 2974-C. Penalties (Expired).
Section 2975-C. Construction (Expired).
Section 2976-C. Applicability (Expired).
Section 2977-C. Severability (Expired).
Section 2978-C. Repeals (Expired).
Section 2979-C. Expiration (Expired).
Article XXIX-D. Computer Data Center Equipment Incentive Program
Subarticle A. Preliminary Provisions
Section 2901-D. Definitions.
Subarticle B. Sales and Use Tax Refund Program
Section 2911-D. Sales and use tax refund.
Section 2912-D. Application for certification.
Section 2913-D. Review of application.
Section 2914-D. Separation of facilities.
Section 2915-D. Eligibility requirements.
Section 2916-D. Notification.
Section 2917-D. Revocation of certification.
Section 2918-D. Guidelines.
Section 2919-D. Confidential information.
Section 2920-D. List of tenants.
Section 2921-D. Sale or transfer.
Section 2922-D. Application.
Section 2923-D. Limitations.
Section 2924-D. Applicability.
Subarticle C. Sales and Use Tax Exemption Program
Section 2931-D. Sales and use tax exemption.
Section 2932-D. Application for certification.
Section 2933-D. Review of application.
Section 2934-D. Separation of facilities.
Section 2935-D. Eligibility requirements.
Section 2936-D. Notification and records.
Section 2937-D. Revocation of certification.
Section 2938-D. Guidelines.
Section 2939-D. Confidential information.
Section 2940-D. List of tenants.
Section 2941-D. Sale or transfer.
Section 2942-D. Certificate of exemption.
Article XXIX-E. Reduction of Tax Credits
Section 2901-E. Applicability of article.
Section 2902-E. Reduction.
Article XXIX-F. Tax Amnesty Program for Fiscal Year 2009-2010
Section 2901-F. Definitions.
Section 2902-F. Establishment of program.
Section 2903-F. Required payment.
Section 2904-F. Amnesty contingent on continued compliance.
Section 2905-F. Limitation of deficiency assessment.
Section 2906-F. Overpayment of tax.
Section 2907-F. Previously paid interest and penalties.
Section 2908-F. Proceedings relating to tax amnesty return
barred.
Section 2909-F. Undisclosed liabilities.
Section 2910-F. Duties of department.
Section 2911-F. Method of payment.
Section 2912-F. Use of revenue.
Section 2913-F. Additional penalty.
Section 2914-F. Construction.
Section 2915-F. Suspension of inconsistent acts.
Article XXIX-G. Tax Amnesty Program for Fiscal Year 2016-2017
Section 2901-G. Definitions.
Section 2902-G. Establishment of program.
Section 2903-G. Required payment.
Section 2904-G. Amnesty contingent on continued compliance.
Section 2905-G. Limitation of deficiency assessment.
Section 2906-G. Overpayment of tax.
Section 2907-G. Previously paid interest and penalties.
Section 2908-G. Proceedings relating to tax amnesty return
barred.
Section 2909-G. Undisclosed liabilities.
Section 2910-G. Duties of department.
Section 2911-G. Method of payment.
Section 2912-G. Use of revenue.
Section 2913-G. Additional penalty.
Section 2914-G. Construction.
Section 2915-G. Suspension of inconsistent acts.
Article XXIX-H. Independent Public Schools
Section 2901-H. Taxability of independent public schools.
Article XXIX-I. Tuition Account Programs
Section 2901-I. Definitions.
Section 2902-I. Fees.
Section 2903-I. Taxation of payment.
Article XXX. General Provisions
Section 3001. Saving Clause.
Section 3002. Constitutional Construction.
Section 3003. Prepayment of Tax (Deleted by amendment).
Section 3003.1. Petitions for Refunds.
Section 3003.2. Estimated Tax.
Section 3003.3. Underpayment of Estimated Tax.
Section 3003.4. Interest (Deleted by amendment).
Section 3003.5. Refund Petitions.
Section 3003.6. Timely Filing.
Section 3003.7. Failure to Make Payment by Electronic Fund
Transfer.
Section 3003.8. Method of Filing.
Section 3003.9. Bad Checks; Electronic Funds Transfers Not
Credited Upon Transmission; Additions to Tax.
Section 3003.10. Commercial Printers.
Section 3003.11. Restatement of Tax Liability Under Treaties.
Section 3003.12. Harness and Thoroughbred Racing.
Section 3003.13. Corporate Tax Treatment of Certain Automobile
Clubs.
Section 3003.14. Immediate Assessment, Settlement or Collection
to Prevent Tax Avoidance.
Section 3003.15. Authority to Attach Wages, Commissions and
Other Earnings.
Section 3003.16. Electronic Transmissions.
Section 3003.17. Reimbursement for Costs of Collection.
Section 3003.18. Assessments to be Made by Department.
Section 3003.19. Powder Metallurgy Parts.
Section 3003.20. Penalties for Certain Corporate Officers.
Section 3003.21. Further Examination of Books and Records.
Section 3003.22. Administrative Bank Attachment for Accounts
of Obligors to the Commonwealth.
Section 3003.23. Collection of Assessed Taxes.
Section 3003.24. Criminal Tax Prosecutions.
Section 3003.25. Allocation of Tax Credits.
Section 3004. Effective Date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
ARTICLE I
SHORT TITLE
Section 101. Short Title.--This act shall be known and may
be cited as the "Tax Reform Code of 1971."
ARTICLE II
TAX FOR EDUCATION
PART I
DEFINITIONS
Section 201. Definitions.--The following words, terms and
phrases when used in this Article II shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
(a) "Soft drinks." All nonalcoholic beverages, whether
carbonated or not, such as soda water, ginger ale, coca cola,
lime cola, pepsi cola, Dr. Pepper, fruit juice when plain or
carbonated water, flavoring or syrup is added, carbonated water,
orangeade, lemonade, root beer or any and all preparations,
commonly referred to as "soft drinks," of whatsoever kind, and
are further described as including any and all beverages,
commonly referred to as "soft drinks," which are made with or
without the use of any syrup. The term "soft drinks" shall not
include natural fruit or vegetable juices or their concentrates,
or non-carbonated fruit juice drinks containing not less than
twenty-five per cent by volume of natural fruit juices or of
fruit juice which has been reconstituted to its original state,
or natural concentrated fruit or vegetable juices reconstituted
to their original state, whether any of the foregoing natural
juices are frozen or unfrozen, sweetened or unsweetened,
seasoned with salt or spice or unseasoned, nor shall the term
"soft drinks" include coffee, coffee substitutes, tea, cocoa,
natural fluid milk or non-carbonated drinks made from milk
derivatives.
(b) "Maintaining a place of business in this Commonwealth."
(1) Having, maintaining or using within this Commonwealth,
either directly or through a subsidiary, representative or an
agent, an office, distribution house, sales house, warehouse,
service enterprise or other place of business; or any agent of
general or restricted authority, or representative, irrespective
of whether the place of business, representative or agent is
located here, permanently or temporarily, or whether the person
or subsidiary maintaining the place of business, representative
or agent is authorized to do business within this Commonwealth.
(2) Engaging in any activity as a business within this
Commonwealth by any person, either directly or through a
subsidiary, representative or an agent, in connection with the
lease, sale or delivery of tangible personal property or the
performance of services thereon for use, storage or consumption
or in connection with the sale or delivery for use of the
services described in subclauses (11) through (18) of clause
(k) of this section, including, but not limited to, having,
maintaining or using any office, distribution house, sales
house, warehouse or other place of business, any stock of goods
or any solicitor, canvasser, salesman, representative or agent
under its authority, at its direction or with its permission,
regardless of whether the person or subsidiary is authorized
to do business in this Commonwealth.
(3) Regularly or substantially soliciting orders within
this Commonwealth in connection with the lease, sale or delivery
of tangible personal property to or the performance thereon of
services or in connection with the sale or delivery of the
services described in subclauses (11) through (18) of clause
(k) of this section for residents of this Commonwealth by means
of catalogues or other advertising, whether the orders are
accepted within or without this Commonwealth.
(3.1) Entering this Commonwealth by any person to provide
assembly, service or repair of tangible personal property,
either directly or through a subsidiary, representative or an
agent.
(3.2) Delivering tangible personal property to locations
within this Commonwealth if the delivery includes the unpacking,
positioning, placing or assembling of the tangible personal
property.
(3.3) Having any contact within this Commonwealth which
would allow the Commonwealth to require a person to collect and
remit tax under the Constitution of the United States.
(3.4) Providing a customer's mobile telecommunications
service deemed to be provided by the customer's home service
provider under the Mobile Telecommunications Sourcing Act (4
U.S.C. § 116). For purposes of this clause, words and phrases
used in this clause shall have the meanings given to them in
the Mobile Telecommunications Sourcing Act.
(3.5) (i) Engaging in any activity as a business by any
person, either directly or through a subsidiary, representative
or an agent, in connection with the lease, sale or delivery of
tangible personal property into this Commonwealth or the
performance of services for use, storage or consumption or in
connection with the sale or delivery for use in this
Commonwealth of at least one hundred thousand dollars ($100,000)
during the preceding twelve-month calendar period.
(ii) For a marketplace facilitator, this activity includes
all sales, leases and deliveries of tangible personal property,
and all sales of services by the marketplace seller whose sales
are facilitated through the marketplace facilitator's forum.
(iii) For a peer-to-peer car-sharing program marketplace
facilitator, this activity includes all sales, leases and
deliveries of tangible personal property and all sales of
services by the marketplace seller whose sales are facilitated
through the peer-to-peer car-sharing program. ((iii) added July
8, 2022, P.L.513, No.53)
((3.5) added June 28, 2019, P.L.50, No.13)
(4) The term "maintaining a place of business in this
Commonwealth" shall not include:
(i) Owning or leasing of tangible or intangible property
by a person who has contracted with an unaffiliated commercial
printer for printing, provided that:
(A) the property is for use by the commercial printer; and
(B) the property is located at the Pennsylvania premises
of the commercial printer.
(ii) Visits by a person's employes or agents to the premises
in this Commonwealth of an unaffiliated commercial printer with
whom the person has contracted for printing in connection with
said contract.
((b) amended June 29, 2002, P.L.559, No.89)
(c) "Manufacture." The performance of manufacturing,
fabricating, compounding, processing or other operations,
engaged in as a business, which place any tangible personal
property in a form, composition or character different from
that in which it is acquired whether for sale or use by the
manufacturer, and shall include, but not be limited to--
(1) Every operation commencing with the first production
stage and ending with the completion of tangible personal
property having the physical qualities (including packaging,
if any, passing to the ultimate consumer) which it has when
transferred by the manufacturer to another. For purposes of
this clause, "operation" shall include clean rooms and their
component systems, including: environmental control systems,
antistatic vertical walls and manufacturing platforms and
floors, which are independent of the real estate; process piping
systems; specialized lighting systems; deionized water systems;
process vacuum and compressed air systems; process and specialty
gases; and alarm or warning devices specifically designed to
warn of threats to the integrity of the product or people. For
purposes of this clause, a "clean room" is a location with a
self-contained, sealed environment with a controlled, closed
air system independent from the facility's general environmental
control system.
(2) The publishing of books, newspapers, magazines and other
periodicals and printing.
(3) Refining, blasting, exploring, mining and quarrying
for, or otherwise extracting from the earth or from waste or
stock piles or from pits or banks any natural resources,
minerals and mineral aggregates including blast furnace slag.
(4) Building, rebuilding, repairing and making additions
to, or replacements in or upon vessels designed for commercial
use of registered tonnage of fifty tons or more when produced
upon special order of the purchaser, or when rebuilt, repaired
or enlarged, or when replacements are made upon order of, or
for the account of the owner.
(5) Research having as its objective the production of a
new or an improved (i) product or utility service, or (ii)
method of producing a product or utility service, but in either
case not including market research or research having as its
objective the improvement of administrative efficiency.
(6) Remanufacture for wholesale distribution by a
remanufacturer of motor vehicle parts from used parts acquired
in bulk by the remanufacturer using an assembly line process
which involves the complete disassembly of such parts and
integration of the components of such parts with other used or
new components of parts, including the salvaging, recycling or
reclaiming of used parts by the remanufacturer.
(7) Remanufacture or retrofit by a manufacturer or
remanufacturer of aircraft, armored vehicles, other
defense-related vehicles having a finished value of at least
fifty thousand dollars ($50,000). Remanufacture or retrofit
involves the disassembly of such aircraft, vehicles, parts or
components, including electric or electronic components, the
integration of those parts and components with other used or
new parts or components, including the salvaging, recycling or
reclaiming of the used parts or components and the assembly of
the new or used aircraft, vehicles, parts or components. For
purposes of this clause, the following terms or phrases have
the following meanings:
(i) "aircraft" means fixed-wing aircraft, helicopters,
powered aircraft, tilt-rotor or tilt-wing aircraft, unmanned
aircraft and gliders;
(ii) "armored vehicles" means tanks, armed personnel
carriers and all other armed track or semitrack vehicles; or
(iii) "other defense-related vehicles" means trucks,
truck-tractors, trailers, jeeps and other utility vehicles,
including any unmanned vehicles.
(8) Remanufacture by a remanufacturer of locomotive parts
from used parts acquired in bulk by the remanufacturer using
an assembly line process which involves the complete disassembly
of such parts and integration of the components of such parts
with other used or new components of parts, including the
salvaging, recycling or reclaiming of used parts by the
remanufacturer.
The term "manufacture" shall not include constructing,
altering, servicing, repairing or improving real estate or
repairing, servicing or installing tangible personal property,
nor the producing of a commercial motion picture, nor the
cooking, freezing or baking of fruits, vegetables, mushrooms,
fish, seafood, meats, poultry or bakery products.
((c) amended July 25, 2007, P.L.373, No.55)
(c.1) "Blasting." The use of any combustible or explosive
composition in the removal of material resources, minerals and
mineral aggregates from the earth including the separation of
the dirt, waste and refuse in which they are found. ((c.1) added
Nov. 26, 1978, P.L.1287, No.306)
(d) "Processing." The performance of the following
activities when engaged in as a business enterprise:
(1) The filtering or heating of honey, the cooking, baking
or freezing of fruits, vegetables, mushrooms, fish, seafood,
meats, poultry or bakery products, when the person engaged in
such business packages such property in sealed containers for
wholesale distribution.
(1.1) The processing of fruits or vegetables by cleaning,
cutting, coring, peeling or chopping and treating to preserve,
sterilize or purify and substantially extend the useful shelf
life of the fruits or vegetables, when the person engaged in
such activity packages such property in sealed containers for
wholesale distribution.
(2) The scouring, carbonizing, cording, combing, throwing,
twisting or winding of natural or synthetic fibers, or the
spinning, bleaching, dyeing, printing or finishing of yarns or
fabrics, when such activities are performed prior to sale to
the ultimate consumer.
(3) The electroplating, galvanizing, enameling, anodizing,
coloring, finishing, impregnating or heat treating of metals
or plastics for sale or in the process of manufacturing.
(3.1) The blanking, shearing, leveling, slitting or burning
of metals for sale to or use by a manufacturer or processor.
(4) The rolling, drawing or extruding of ferrous and
non-ferrous metals.
(5) The fabrication for sale of ornamental or structural
metal or of metal stairs, staircases, gratings, fire escapes
or railings (not including fabrication work done at the
construction site).
(6) The preparation of animal feed or poultry feed for sale.
(7) The production, processing and bottling of non-alcoholic
beverages for wholesale distribution.
(8) The operation of a saw mill or planing mill for the
production of lumber or lumber products for sale. The operation
of a saw mill or planing mill begins with the unloading by the
operator of the saw mill or planing mill of logs, timber,
pulpwood or other forms of wood material to be used in the saw
mill or planing mill.
(9) The milling for sale of flour or meal from grains.
(9.1) The aging, stripping, conditioning, crushing and
blending of tobacco leaves for use as cigar filler or as
components of smokeless tobacco products for sale to
manufacturers of tobacco products.
(10) The slaughtering and dressing of animals for meat to
be sold or to be used in preparing meat products for sale, and
the preparation of meat products including lard, tallow, grease,
cooking and inedible oils for wholesale distribution.
(11) The processing of used lubricating oils.
(12) The broadcasting of radio and television programs of
licensed commercial or educational stations.
(13) The cooking or baking of bread, pastries, cakes,
cookies, muffins and donuts when the person engaged in such
activity sells such items at retail at locations that do not
constitute an establishment from which ready-to-eat food and
beverages are sold. For purposes of this clause, a bakery, a
pastry shop and a donut shop shall not be considered an
establishment from which ready-to-eat food and beverages are
sold.
(14) The cleaning and roasting and the blending, grinding
or packaging for sale of coffee from green coffee beans or the
production of coffee extract.
(15) The preparation of dry or liquid fertilizer for sale.
(16) The production, processing and packaging of ice for
wholesale distribution.
(17) The producing of mobile telecommunications services.
(18) The collection, washing, sorting, inspecting and
packaging of eggs.
((d) amended July 2, 2012, P.L.751, No.85)
(e) "Person." Any natural person, association, fiduciary,
partnership, corporation or other entity, including the
Commonwealth of Pennsylvania, its political subdivisions and
instrumentalities and public authorities. Whenever used in any
clause prescribing and imposing a penalty or imposing a fine
or imprisonment, or both, the term "person," as applied to an
association, shall include the members thereof and, as applied
to a corporation, the officers thereof.
(f) "Purchase at retail."
(1) The acquisition for a consideration of the ownership,
custody or possession of tangible personal property other than
for resale by the person acquiring the same when such
acquisition is made for the purpose of consumption or use,
whether such acquisition shall be absolute or conditional, and
by whatsoever means the same shall have been effected.
(2) The acquisition of a license to use or consume, and the
rental or lease of tangible personal property, other than for
resale regardless of the period of time the lessee has
possession or custody of the property.
(3) The obtaining for a consideration of those services
described in subclauses (2), (3) and (4) of clause (k) of this
section other than for resale.
(4) A retention after March 7, 1956, of possession, custody
or a license to use or consume pursuant to a rental contract
or other lease arrangement (other than as security), other than
for resale.
(5) The obtaining for a consideration of those services
described in subclauses (11) through (18) of clause (k) of this
section.
The term "purchase at retail" with respect to "liquor" and
"malt or brewed beverages" shall include the purchase of
"liquor" from any "Pennsylvania Liquor Store" by any person for
any purpose, and the purchase of "malt or brewed beverages"
from a "manufacturer of malt or brewed beverages," "distributor"
or "importing distributor" by any person for any purpose, except
purchases from a "manufacturer of malt or brewed beverages" by
a "distributor" or "importing distributor" or purchases from
an "importing distributor" by a "distributor" within the meaning
of the "Liquor Code." The term "purchase at retail" shall not
include any purchase of "malt or brewed beverages" from a
"retail dispenser" or any purchase of "liquor" or "malt or
brewed beverages" from a person holding a "retail liquor
license" within the meaning of and pursuant to the provisions
of the "Liquor Code," but shall include any purchase or
acquisition of "liquor" or "malt or brewed beverages" other
than pursuant to the provisions of the "Liquor Code."
((f) amended Aug. 4, 1991, P.L.97, No.22)
(g) "Purchase price."
(1) The total value of anything paid or delivered, or
promised to be paid or delivered, whether it be money or
otherwise, in complete performance of a sale at retail or
purchase at retail, as herein defined, without any deduction
on account of the cost or value of the property sold, cost or
value of transportation, cost or value of labor or service,
interest or discount paid or allowed after the sale is
consummated, any other taxes imposed by the Commonwealth of
Pennsylvania or any other expense except that there shall be
excluded any gratuity or separately stated deposit charge for
returnable containers.
(2) There shall be deducted from the purchase price the
value of any tangible personal property actually taken in trade
or exchange in lieu of the whole or any part of the purchase
price. For the purpose of this clause, the amount allowed by
reason of tangible personal property actually taken in trade
or exchange shall be considered the value of such property.
(3) In determining the purchase price on the sale or use
of taxable tangible personal property or a service where,
because of affiliation of interests between the vendor and
purchaser, or irrespective of any such affiliation, if for any
other reason the purchase price declared by the vendor or
taxpayer on the taxable sale or use of such tangible personal
property or service is, in the opinion of the department, not
indicative of the true value of the article or service or the
fair price thereof, the department shall, pursuant to uniform
and equitable rules, determine the amount of constructive
purchase price upon the basis of which the tax shall be computed
and levied. Such rules shall provide for a constructive amount
of purchase price for each such sale or use which would
naturally and fairly be charged in an arms-length transaction
in which the element of common interest between the vendor or
purchaser is absent or if no common interest exists, any other
element causing a distortion of the price or value is likewise
absent. For the purpose of this clause where a taxable sale or
purchase at retail transaction occurs between a parent and a
subsidiary, affiliate or controlled corporation of such parent
corporation, there shall be a rebuttable presumption, that
because of such common interest such transaction was not at
arms-length.
(4) Where there is a transfer or retention of possession
or custody, whether it be termed a rental, lease, service or
otherwise, of tangible personal property including, but not
limited to linens, aprons, motor vehicles, trailers, tires,
industrial office and construction equipment, and business
machines the full consideration paid or delivered to the vendor
or lessor shall be considered the purchase price, even though
such consideration be separately stated and be designated as
payment for processing, laundering, service, maintenance,
insurance, repairs, depreciation or otherwise. Where the vendor
or lessor supplies or provides an employe to operate such
tangible personal property, the value of the labor thus supplied
may be excluded and shall not be considered as part of the
purchase price if separately stated. There shall also be
included as part of the purchase price the value of anything
paid or delivered, or promised to be paid or delivered by a
lessee, whether it be money or otherwise, to any person other
than the vendor or lessor by reason of the maintenance,
insurance or repair of the tangible personal property which a
lessee has the possession or custody of under a rental contract
or lease arrangement.
(5) With respect to the tax imposed by subsection (b) of
section 202 upon any tangible personal property originally
purchased by the user of such property six months or longer
prior to the first taxable use of such property within the
Commonwealth, such user may elect to pay tax on a substituted
base determined by considering the purchase price of such
property for tax purposes to be equal to the prevailing market
price of similar tangible personal property at the time and
place of such first use within the Commonwealth. Such election
must be made at the time of filing a tax return with the
department and reporting such tax liability and paying the
proper tax due plus all accrued penalties and interest, if there
be any, within six months of the due date of such report and
payment, as provided for by subsections (a) and (c) of section
217 of this article.
(6) The purchase price of employment agency services and
help supply services shall be the service fee paid by the
purchaser to the vendor or supplying entity. The term "service
fee," as used in this subclause, shall be the total charge or
fee of the vendor or supplying entity minus the costs of the
supplied employe which costs are wages, salaries, bonuses and
commissions, employment benefits, expense reimbursements and
payroll and withholding taxes, to the extent that these costs
are specifically itemized or that these costs in aggregate are
stated in billings from the vendor or supplying entity. To the
extent that these costs are not itemized or stated on the
billings, then the service fee shall be the total charge or fee
of the vendor or supplying entity.
(7) Unless the vendor separately states that portion of the
billing which applies to premium cable service as defined in
clause (ll) of this section, the total bill for the provision
of all cable services shall be the purchase price.
(8) The purchase price of prebuilt housing shall be sixty
per cent of the manufacturer's selling price: Provided, however,
That a manufacturer of prebuilt housing who precollects tax
from a prebuilt housing builder at the time of the sale to the
prebuilt housing builder shall have the option to collect tax
on sixty per cent of the selling price or on one hundred per
cent of the actual cost of the supplies and materials used in
the manufacture of the prebuilt housing. ((8) added May 24,
2000, P.L.106, No. 23)
(9) The purchase price of "malt or brewed beverages" sold
by a "manufacturer of malt or brewed beverages" directly to the
ultimate consumer for consumption on or off premises shall be
twenty-five per cent of the retail sales price of the "malt or
brewed beverages" sold for consumption on or off premises. ((9)
added June 28, 2019, P.L.50, No.13)
((g) amended Dec. 13, 1991, P.L.373, No.40)
(h) "Purchaser." Any person who acquires, for a
consideration, the ownership, custody or possession by sale,
lease or otherwise, of tangible personal property, or who
obtains services in exchange for a purchase price but not
including an employer who obtains services from his employes
in exchange for wages or salaries when such services are
rendered in the ordinary scope of their employment.
(i) "Resale."
(1) Any transfer of ownership, custody or possession of
tangible personal property for a consideration, including the
grant of a license to use or consume and transactions where the
possession of such property is transferred but where the
transferor retains title only as security for payment of the
selling price whether such transaction be designated as bailment
lease, conditional sale or otherwise.
(2) The physical incorporation of tangible personal property
as an ingredient or constituent into other tangible personal
property, which is to be sold in the regular course of business
or the performance of those services described in subclauses
(2), (3) and (4) of clause (k) of this section upon tangible
personal property which is to be sold in the regular course of
business or where the person incorporating such property has
undertaken at the time of purchase to cause it to be transported
in interstate commerce to a destination outside this
Commonwealth. The term "resale" shall include telecommunications
services purchased by a cable operator or video programmer that
are used to transport or deliver cable or video programming
services which are sold in the regular course of business. ((2)
amended June 30, 1995, P.L.139, No.21)
(3) The term "resale" shall also include tangible personal
property purchased or having a situs within this Commonwealth
solely for the purpose of being processed, fabricated or
manufactured into, attached to or incorporated into tangible
personal property and thereafter transported outside this
Commonwealth for use exclusively outside this Commonwealth.
(4) The term "resale" shall not include any sale of "malt
or brewed beverages" by a "retail dispenser," or any sale of
"liquor" or "malt or brewed beverages" by a person holding a
"retail liquor license" within the meaning of the "Liquor Code."
(5) The physical incorporation of tangible personal property
as an ingredient or constituent in the construction of
foundations for machinery or equipment the sale or use of which
is excluded from tax under the provisions of paragraphs (A),
(B), (C) and (D) of subclause (8) of clause (k) and
subparagraphs (i), (ii), (iii) and (iv) of paragraph (B) of
subclause (4) of clause (o) of this section, whether such
foundations at the time of construction or transfer constitute
tangible personal property or real estate.
(6) The term does not include the purchase price or repair
of a shared vehicle by a shared vehicle owner. ((6) added July
8, 2022, P.L.513, No.53)
((i) amended Aug. 4, 1991, P.L.97, No.22)
(j) "Resident."
(1) Any natural person (i) who is domiciled in the
Commonwealth, or (ii) who maintains a permanent place of abode
within the Commonwealth and spends in the aggregate more than
sixty days of the year within the Commonwealth.
(2) Any corporation (i) incorporated under the laws of this
Commonwealth, or (ii) authorized to do business or doing
business within this Commonwealth, or (iii) maintaining a place
of business within this Commonwealth.
(3) Any association, fiduciary, partnership or other entity
(i) domiciled in this Commonwealth, or (ii) authorized to do
business or doing business within this Commonwealth, or (iii)
maintaining a place of business within this Commonwealth.
(k) "Sale at retail."
(1) Any transfer, for a consideration, of the ownership,
custody or possession of tangible personal property, including
the grant of a license to use or consume whether such transfer
be absolute or conditional and by whatsoever means the same
shall have been effected.
(2) The rendition of the service of printing or imprinting
of tangible personal property for a consideration for persons
who furnish, either directly or indirectly the materials used
in the printing or imprinting.
(3) The rendition for a consideration of the service of--
(i) Washing, cleaning, waxing, polishing or lubricating of
motor vehicles of another, whether or not any tangible personal
property is transferred in conjunction therewith; and
(ii) Inspecting motor vehicles pursuant to the mandatory
requirements of "The Vehicle Code."
(4) The rendition for a consideration of the service of
repairing, altering, mending, pressing, fitting, dyeing,
laundering, drycleaning or cleaning tangible personal property
other than wearing apparel or shoes, or applying or installing
tangible personal property as a repair or replacement part of
other tangible personal property except wearing apparel or shoes
for a consideration, whether or not the services are performed
directly or by any means other than by coin-operated
self-service laundry equipment for wearing apparel or household
goods and whether or not any tangible personal property is
transferred in conjunction therewith, except such services as
are rendered in the construction, reconstruction, remodeling,
repair or maintenance of real estate: Provided, however, That
this subclause shall not be deemed to impose tax upon such
services in the preparation for sale of new items which are
excluded from the tax under clause (26) of section 204, or upon
diaper service.
(5) ((5) deleted by amendment May 7, 1997, P.L.85, No.7)
(6) ((6) deleted by amendment May 7, 1997, P.L.85, No.7)
(7) ((7) deleted by amendment May 7, 1997, P.L.85, No.7)
(8) Any retention of possession, custody or a license to
use or consume tangible personal property or any further
obtaining of services described in subclauses (2), (3) and (4)
of this clause pursuant to a rental or service contract or other
arrangement (other than as security).
The term "sale at retail" shall not include (i) any such
transfer of tangible personal property or rendition of services
for the purpose of resale, or (ii) such rendition of services
or the transfer of tangible personal property including, but
not limited to, machinery and equipment and parts therefor and
supplies to be used or consumed by the purchaser directly in
the operations of--
(A) The manufacture of tangible personal property.
(B) Farming, dairying, agriculture, timbering, horticulture
or floriculture when engaged in as a business enterprise. The
term "farming" shall include the propagation and raising of
ranch raised fur-bearing animals and the propagation of game
birds for commercial purposes by holders of propagation permits
issued under 34 Pa.C.S. (relating to game) and the propagation
and raising of horses to be used exclusively for commercial
racing activities. The term "timbering" shall include:
(1) The business of producing or harvesting trees from
forests, woodlots or tree farms for the purpose of the
commercial production of wood, paper or energy products derived
from wood by a company primarily engaged in the business of
harvesting trees.
(2) All operations prior to the transport of the harvested
product necessary for the removal of timber or forest products
from the site, in-field processing of trees into logs or chips,
complying with environmental protection and safety requirements
applicable to the harvesting of forest products, loading of
forest products onto highway vehicles for transport to storage
or processing facilities and postharvesting site reclamation,
including those activities necessary to improve timber growth
or ensure natural or direct reforestation of the site. The term
shall not include the harvesting of trees for clearing land for
access roads.
(C) The producing, delivering or rendering of a public
utility service, or in constructing, reconstructing, remodeling,
repairing or maintaining the facilities which are directly used
in producing, delivering or rendering such service.
(D) Processing as defined in clause (d) of this section.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to any vehicle required to be registered under
The Vehicle Code, except those vehicles used directly by a
public utility engaged in business as a common carrier; to
maintenance facilities; or to materials, supplies or equipment
to be used or consumed in the construction, reconstruction,
remodeling, repair or maintenance of real estate other than
directly used machinery, equipment, parts or foundations
therefor that may be affixed to such real estate.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to tangible personal property or services to
be used or consumed in managerial sales or other nonoperational
activities, nor to the purchase or use of tangible personal
property or services by any person other than the person
directly using the same in the operations described in
paragraphs (A), (B), (C) and (D) herein.
The exclusion provided in paragraph (C) shall not apply to
(i) construction materials, supplies or equipment used to
construct, reconstruct, remodel, repair or maintain facilities
not used directly by the purchaser in the production, delivering
or rendition of public utility service, (ii) construction
materials, supplies or equipment used to construct, reconstruct,
remodel, repair or maintain a building, road or similar
structure, or (iii) tools and equipment used but not installed
in the maintenance of facilities used directly in the
production, delivering or rendition of a public utility service.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to the services enumerated in clauses (k)(11)
through (18) and (w) through (kk), except that the exclusion
provided in this subclause for farming, dairying and agriculture
shall apply to the service enumerated in clause (z).
((8) amended July 13, 2016, P.L.526, No.84)
(9) Where tangible personal property or services are
utilized for purposes constituting a "sale at retail" and for
purposes excluded from the definition of "sale at retail," it
shall be presumed that such tangible personal property or
services are utilized for purposes constituting a "sale at
retail" and subject to tax unless the user thereof proves to
the department that the predominant purposes for which such
tangible personal property or services are utilized do not
constitute a "sale at retail."
(10) The term "sale at retail" with respect to "liquor" and
"malt or brewed beverages" shall include the sale of "liquor"
by any "Pennsylvania liquor store" to any person for any
purpose, and the sale of "malt or brewed beverages" by a
"manufacturer of malt or brewed beverages," "distributor" or
"importing distributor" to any person for any purpose, except
sales by a "manufacturer of malt or brewed beverages" to a
"distributor" or "importing distributor" or sales by an
"importing distributor" to a "distributor" within the meaning
of the "Liquor Code." The term "sale at retail" shall not
include any sale of "malt or brewed beverages" by a "retail
dispenser" or any sale of "liquor" or "malt or brewed beverages"
by a person holding a "retail liquor license" within the meaning
of and pursuant to the provisions of the "Liquor Code," but
shall include any sale of "liquor" or "malt or brewed beverages"
other than pursuant to the provisions of the "Liquor Code."
(11) The rendition for a consideration of lobbying services.
(12) The rendition for a consideration of adjustment
services, collection services or credit reporting services.
(13) The rendition for a consideration of secretarial or
editing services.
(14) The rendition for a consideration of disinfecting or
pest control services, building maintenance or cleaning
services.
(15) The rendition for a consideration of employment agency
services or help supply services.
(16) ((16) deleted by amendment May 7, 1997, P.L.85, No.7)
(17) The rendition for a consideration of lawn care service.
(18) The rendition for a consideration of self-storage
service.
(19) The rendition for a consideration of a mobile
telecommunications service. ((19) added June 29, 2002, P.L.559,
No.89)
(20) Car sharing through a shared vehicle owner,
peer-to-peer car-sharing program marketplace facilitator or
rental company. ((20) added July 8, 2022, P.L.513, No.53)
((k) amended May 7, 1997, P.L.85, No.7)
(l) "Storage." Any keeping or retention of tangible
personal property within this Commonwealth for any purpose
including the interim keeping, retaining or exercising any right
or power over such tangible personal property. This term is in
no way limited to the provision of self-storage service. ((l)
amended Dec. 13, 1991, P.L.373, No.40)
(m) "Tangible personal property."
(1) Corporeal personal property including, but not limited
to, goods, wares, merchandise, steam and natural and
manufactured and bottled gas for non-residential use,
electricity for non-residential use, prepaid telecommunications,
premium cable or premium video programming service, spirituous
or vinous liquor and malt or brewed beverages and soft drinks,
interstate telecommunications service originating or terminating
in the Commonwealth and charged to a service address in this
Commonwealth, intrastate telecommunications service with the
exception of (i) subscriber line charges and basic local
telephone service for residential use and (ii) charges for
telephone calls paid for by inserting money into a telephone
accepting direct deposits of money to operate, provided further,
the service address of any intrastate telecommunications service
is deemed to be within this Commonwealth or within a political
subdivision, regardless of how or where billed or paid. In the
case of any such interstate or intrastate telecommunications
service, any charge paid through a credit or payment mechanism
which does not relate to a service address, such as a bank,
travel, credit or debit card, but not including prepaid
telecommunications, is deemed attributable to the address of
origination of the telecommunications service.
(2) The term shall include the following, whether
electronically or digitally delivered, streamed or accessed and
whether purchased singly, by subscription or in any other
manner, including maintenance and updates:
(i) video;
(ii) photographs;
(iii) books;
(iv) any other otherwise taxable printed matter;
(v) applications, commonly known as apps;
(vi) games;
(vii) music;
(viii) any other audio, including satellite radio service;
(ix) canned software, notwithstanding the function
performed, including support, except separately invoiced help
desk or call center support; or
(x) any other otherwise taxable tangible personal property
electronically or digitally delivered, streamed or accessed.
((m) amended Oct. 30, 2017, P.L.672, No.43)
(n) "Taxpayer." Any person required to pay or collect the
tax imposed by this article, including a marketplace
facilitator, a marketplace seller, a peer-to-peer car-sharing
program marketplace facilitator and a shared vehicle owner.
((n) amended July 8, 2022, P.L.513, No.53)
(o) "Use."
(1) The exercise of any right or power incidental to the
ownership, custody or possession of tangible personal property
and shall include, but not be limited to transportation, storage
or consumption.
(2) The obtaining by a purchaser of the service of printing
or imprinting of tangible personal property when such purchaser
furnishes, either directly or indirectly, the articles used in
the printing or imprinting.
(3) The obtaining by a purchaser of the services of (i)
washing, cleaning, waxing, polishing or lubricating of motor
vehicles whether or not any tangible personal property is
transferred to the purchaser in conjunction with such services,
and (ii) inspecting motor vehicles pursuant to the mandatory
requirements of "The Vehicle Code."
(4) The obtaining by a purchaser of the service of
repairing, altering, mending, pressing, fitting, dyeing,
laundering, drycleaning or cleaning tangible personal property
other than wearing apparel or shoes or applying or installing
tangible personal property as a repair or replacement part of
other tangible personal property other than wearing apparel or
shoes, whether or not the services are performed directly or
by any means other than by means of coin-operated self-service
laundry equipment for wearing apparel or household goods, and
whether or not any tangible personal property is transferred
to the purchaser in conjunction therewith, except such services
as are obtained in the construction, reconstruction, remodeling,
repair or maintenance of real estate: Provided, however, That
this subclause shall not be deemed to impose tax upon such
services in the preparation for sale of new items which are
excluded from the tax under clause (26) of section 204, or upon
diaper service: And provided further, That the term "use" shall
not include--
(A) Any tangible personal property acquired and kept,
retained or over which power is exercised within this
Commonwealth on which the taxing of the storage, use or other
consumption thereof is expressly prohibited by the Constitution
of the United States or which is excluded from tax under other
provisions of this article.
(B) The use or consumption of tangible personal property,
including but not limited to machinery and equipment and parts
therefor, and supplies or the obtaining of the services
described in subclauses (2), (3) and (4) of this clause directly
in the operations of--
(i) The manufacture of tangible personal property.
(ii) Farming, dairying, agriculture, timbering, horticulture
or floriculture when engaged in as a business enterprise. The
term "farming" shall include the propagation and raising of
ranch-raised furbearing animals and the propagation of game
birds for commercial purposes by holders of propagation permits
issued under 34 Pa.C.S. (relating to game) and the propagation
and raising of horses to be used exclusively for commercial
racing activities. The term "timbering" shall include:
(1) The business of producing or harvesting trees from
forests, woodlots or tree farms for the purpose of the
commercial production of wood, paper or energy products derived
from wood by a company primarily engaged in the business of
harvesting trees.
(2) All operations prior to the transport of the harvested
product necessary for the removal of timber or forest products
from the site, in-field processing of trees into logs or chips,
complying with environmental protection and safety requirements
applicable to the harvesting of forest products, loading of
forest products onto highway vehicles for transport to storage
or processing facilities and postharvesting site reclamation,
including those activities necessary to improve timber growth
or ensure natural or direct reforestation of the site. The term
shall not include the harvesting of trees for clearing land for
access roads.
(iii) The producing, delivering or rendering of a public
utility service, or in constructing, reconstructing, remodeling,
repairing or maintaining the facilities which are directly used
in producing, delivering or rendering such service.
(iv) Processing as defined in subclause (d) of this section.
The exclusions provided in subparagraphs (i), (ii), (iii)
and (iv) shall not apply to any vehicle required to be
registered under The Vehicle Code except those vehicles directly
used by a public utility engaged in the business as a common
carrier; to maintenance facilities; or to materials, supplies
or equipment to be used or consumed in the construction,
reconstruction, remodeling, repair or maintenance of real estate
other than directly used machinery, equipment, parts or
foundations therefor that may be affixed to such real estate.
The exclusions provided in subparagraphs (i), (ii), (iii) and
(iv) shall not apply to tangible personal property or services
to be used or consumed in managerial sales or other
nonoperational activities, nor to the purchase or use of
tangible personal property or services by any person other than
the person directly using the same in the operations described
in subparagraphs (i), (ii), (iii) and (iv).
The exclusion provided in subparagraph (iii) shall not apply
to (A) construction materials, supplies or equipment used to
construct, reconstruct, remodel, repair or maintain facilities
not used directly by the purchaser in the production, delivering
or rendition of public utility service or (B) tools and
equipment used but not installed in the maintenance of
facilities used directly in the production, delivering or
rendition of a public utility service.
The exclusion provided in subparagraphs (i), (ii), (iii) and
(iv) shall not apply to the services enumerated in clauses
(o)(9) through (16) and (w) through (kk), except that the
exclusion provided in subparagraph (ii) for farming, dairying
and agriculture shall apply to the service enumerated in clause
(z).
((B) amended July 13, 2016, P.L.526, No.84)
((4) amended Apr. 23, 1998, P.L.239, No.45)
(5) Where tangible personal property or services are
utilized for purposes constituting a "use," as herein defined,
and for purposes excluded from the definition of "use," it shall
be presumed that such property or services are utilized for
purposes constituting a "sale at retail" and subject to tax
unless the user thereof proves to the department that the
predominant purposes for which such property or services are
utilized do not constitute a "sale at retail."
(6) The term "use" with respect to "liquor" and "malt or
brewed beverages" shall include the purchase of "liquor" from
any "Pennsylvania liquor store" by any person for any purpose
and the purchase of "malt or brewed beverages" from a
"manufacturer of malt or brewed beverages," "distributor" or
"importing distributor" by any person for any purpose, except
purchases from a "manufacturer of malt or brewed beverages" by
a "distributor" or "importing distributor," or purchases from
an "importing distributor" by a "distributor" within the meaning
of the "Liquor Code." The term "use" shall not include any
purchase of "malt or brewed beverages" from a "retail dispenser"
or any purchase of "liquor" or "malt or brewed beverages" from
a person holding a "retail liquor license" within the meaning
of and pursuant to the provisions of the "Liquor Code," but
shall include the exercise of any right or power incidental to
the ownership, custody or possession of "liquor" or "malt or
brewed beverages" obtained by the person exercising such right
or power in any manner other than pursuant to the provisions
of the "Liquor Code."
(7) The use of tangible personal property purchased at
retail upon which the services described in subclauses (2), (3)
and (4) of this clause have been performed shall be deemed to
be a use of said services by the person using said property.
(8) The term "use" shall not include the providing of a
motor vehicle to a nonprofit private or public school to be
used by such a school for the sole purpose of driver education.
(9) The obtaining by the purchaser of lobbying services.
(10) The obtaining by the purchaser of adjustment services,
collection services or credit reporting services.
(11) The obtaining by the purchaser of secretarial or
editing services.
(12) The obtaining by the purchaser of disinfecting or pest
control services, building maintenance or cleaning services.
(13) The obtaining by the purchaser of employment agency
services or help supply services.
(14) ((14) deleted by amendment May 7, 1997, P.L.85, No.7)
(15) The obtaining by the purchaser of lawn care service.
(16) The obtaining by the purchaser of self-storage service.
(17) The obtaining by a construction contractor of tangible
personal property or services provided to tangible personal
property which will be used pursuant to a construction contract
whether or not the tangible personal property or services are
transferred. ((17) added Apr. 23, 1998, P.L.239, No.45)
(18) The obtaining of mobile telecommunications service by
a customer. ((18) added June 29, 2002, P.L.559, No.89)
(19) Car sharing through a shared vehicle owner,
peer-to-peer car-sharing program marketplace facilitator or
rental company. ((19) added July 8, 2022, P.L.513, No.53)
((o) amended May 7, 1997, P.L.85, No.7)
(p) "Vendor." Any person maintaining a place of business
in this Commonwealth, selling or leasing tangible personal
property, or rendering services, the sale or use of which is
subject to the tax imposed by this article, including a
marketplace facilitator, marketplace seller, peer-to-peer
car-sharing program marketplace facilitator or shared vehicle
owner, but not including any employe who in the ordinary scope
of employment renders services to his employer in exchange for
wages and salaries. ((p) amended July 8, 2022, P.L.513, No.53)
(q) "Department." The Department of Revenue of the
Commonwealth of Pennsylvania.
(r) "Gratuity." Any amount paid or remitted for services
performed in conjunction with any sale of food or beverages,
or hotel or motel accommodations which amount is in excess of
the charges and the tax thereon for such food, beverages or
accommodations regardless of the method of billing or payment.
((r) added May 2, 1974, P.L.269, No.75)
(s) "Commercial aircraft operator." A person, excluding
scheduled airlines, who engages in any or all of the following:
charter of aircraft, leasing of aircraft, aircraft sales,
aircraft rental, flight instruction, air freight or any other
flight activities for compensation. ((s) added June 9, 1978,
P.L.463, No.62)
(t) "Transient vendor."
(1) Any person who--
(i) Brings into the Commonwealth, by automobile, truck or
other means of transportation, or purchases in the Commonwealth
tangible personal property the sale or use of which is subject
to the tax imposed by this article or comes into the
Commonwealth to perform services the sale or use of which is
subject to the tax imposed by this article;
(ii) Offers or intends to offer such tangible personal
property or services for sale at retail within the Commonwealth;
and
(iii) Does not maintain an established office, distribution
house, saleshouse, warehouse, service enterprise, residence
from which business is conducted or other place of business
within the Commonwealth.
(2) The term shall not include a person who delivers
tangible personal property within the Commonwealth pursuant to
orders for such property which were solicited or placed by mail
or other means.
(3) The term shall not include a person who handcrafts items
for sale at special events, including, but not limited to,
fairs, carnivals, art and craft shows and other festivals and
celebrations within this Commonwealth.
((t) amended Aug. 4, 1991, P.L.97, No.22)
(u) "Promoter." A person who either, directly or
indirectly, rents, leases or otherwise operates or grants
permission to any person to use space at a show for the display
for sale or for the sale of tangible personal property or
services subject to tax under section 202 of this article. ((u)
added May 2, 1985, P.L.28, No.13)
(v) "Show." An event, the primary purpose of which involves
the display or exhibition of any tangible personal property or
services for sale, including, but not limited to, a flea market,
antique show, coin show, stamp show, comic book show, hobby
show, automobile show, fair or any similar show, whether held
regularly or of a temporary nature, at which more than one
vendor displays for sale or sells tangible personal property
or services subject to tax under section 202 of this article.
((v) added May 2, 1985, P.L.28, No.13)
(w) "Lobbying services." Providing the services of a
lobbyist, as defined in the definition of "lobbyist" in section
2 of the act of September 30, 1961 (P.L.1778, No.712), known
as the "Lobbying Registration and Regulation Act." ((w) added
Aug. 4, 1991, P.L.97, No.22)
(x) "Adjustment services, collection services or credit
reporting services." Providing collection or adjustments of
accounts receivable or mercantile or consumer credit reporting,
including, but not limited to, services of the type provided
by adjustment bureaus or collection agencies, consumer or
mercantile credit reporting bureaus, credit bureaus or agencies,
credit clearinghouses or credit investigation services. Such
services do not include providing credit card service with
collection by a central agency, providing debt counseling or
adjustment services to individuals or billing or collection
services provided by local exchange telephone companies. ((x)
added Aug. 4, 1991, P.L.97, No.22)
(y) "Secretarial or editing services." Providing services
which include, but are not limited to, editing, letter writing,
proofreading, resume writing, typing or word processing. Such
services shall not include court reporting and stenographic
services. ((y) added Aug. 4, 1991, P.L.97, No.22)
(z) "Disinfecting or pest control services." Providing
disinfecting, termite control, insect control, rodent control
or other pest control services. Such services include, but are
not limited to, deodorant servicing of rest rooms, washroom
sanitation service, rest room cleaning service, extermination
service or fumigating service. As used in this clause, the term
"fumigating service" shall not include the fumigation of
agricultural commodities or containers used for agricultural
commodities. As used in this clause, the term "insect control"
shall not include the spraying of trees which are harvested for
commercial purposes for gypsy moth control. ((z) amended Dec.
13, 1991, P.L.373, No.40)
(aa) "Building maintenance or cleaning services." Providing
services which include, but are not limited to, janitorial,
maid or housekeeping service, office or interior building
cleaning or maintenance service, window cleaning service, floor
waxing service, lighting maintenance service such as bulb
replacement, cleaning, chimney cleaning service, acoustical
tile cleaning service, venetian blind cleaning, cleaning and
maintenance of telephone booths or cleaning and degreasing of
service stations. This term shall not include repairs on
buildings and other structures; nor shall this term include the
maintenance or repair of boilers, furnaces and residential air
conditioning equipment or parts thereof; the painting,
wallpapering or applying other like coverings to interior walls,
ceilings or floors; or the exterior painting of buildings. ((aa)
amended May 24, 2000, P.L.106, No.23)
(bb) "Employment agency services." Providing employment
services to a prospective employer or employe other than
employment services provided by theatrical employment agencies
and motion picture casting bureaus. Such services shall include,
but are not limited to, services of the type provided by
employment agencies, executive placing services and labor
contractor employment agencies other than farm labor. ((bb)
added Aug. 4, 1991, P.L.97, No.22)
(cc) "Help supply services." Providing temporary or
continuing help where the help supplied is on the payroll of
the supplying person or entity, but is under the supervision
of the individual or business to which help is furnished. Such
services include, but are not limited to, service of a type
provided by labor and manpower pools, employe leasing services,
office help supply services, temporary help services, usher
services, modeling services or fashion show model supply
services. Such services shall not include providing farm labor
services. The term shall not include human health-related
services, including nursing, home health care and personal care.
As used in this clause, "personal care" shall include providing
at least one of the following types of assistance to persons
with limited ability for self-care:
(1) dressing, bathing or feeding;
(2) supervising self-administered medication;
(3) transferring a person to or from a bed or wheelchair;
or
(4) routine housekeeping chores when provided in conjunction
with and supplied by the same provider of the assistance listed
in subclause (1), (2) or (3).
((cc) amended Dec. 13, 1991, P.L.373, No.40)
(dd) "Computer Programming Services." ((dd) deleted by
amendment May 7, 1997, P.L.85, No.7)
(ee) "Computer Integrated Systems Design." ((ee) deleted by
amendment May 7, 1997, P.L.85, No.7)
(ff) "Computer-Processing, Data Preparation or Processing
Services." ((ff) deleted by amendment May 7, 1997, P.L.85,
No.7)
(gg) "Information Retrieval Services." ((gg) deleted by
amendment May 7, 1997, P.L.85, No.7)
(hh) "Computer Facilities Management Services." ((hh) deleted
by amendment May 7, 1997, P.L.85, No.7)
(ii) "Other computer-related services." ((ii) deleted by
amendment May 7, 1997, P.L.85, No.7)
(jj) "Lawn care service." Providing services for lawn
upkeep, including, but not limited to, fertilizing, lawn mowing,
shrubbery trimming or other lawn treatment services. ((jj) added
Aug. 4, 1991, P.L.97, No.22)
(kk) "Self-storage service." Providing a building, a room
in a building or a secured area within a building with separate
access provided for each purchaser of self-storage service,
primarily for the purpose of storing personal property. The
term excludes providing:
(1) safe deposit boxes by financial institutions;
(2) storage in refrigerator or freezer units;
(3) storage in commercial warehouses;
(4) facilities for goods distribution; and
(5) lockers in airports, bus stations, museums and other
public places.
((kk) amended Dec. 13, 1991, P.L.373, No.40)
(ll) "Premium cable or premium video programming service."
That portion of cable television services, video programming
services, community antenna television services or any other
distribution of television, video, audio or radio services which
meets all of the following criteria:
(1) is transmitted with or without the use of wires to
purchasers;
(2) which consists substantially of programming
uninterrupted by paid commercial advertising which includes,
but is not limited to, programming primarily composed of
uninterrupted full-length motion pictures or sporting events,
pay-per-view, paid programming or like audio or radio
broadcasting; and
(3) does not constitute a component of a basic service tier
provided by a cable television system or a cable programming
service tier provided by a cable television system. A basic
service tier shall include all signals of domestic television
broadcast stations, any public, educational, governmental or
religious programming and any additional video programming
signals or service added to the basic service tier by the cable
operator. The basic service tier shall also include a single
additional lower-priced package of broadcast channels and access
information channels which is a subset of the basic service
tier as set forth above. A cable programming service tier
includes any video programming other than: (i) the basic service
tier; (ii) video programming offered on a pay-per-channel or
pay-per-view basis; or (iii) a combination of multiple channels
of pay-per-channel or pay-per-view programming offered as a
package.
If a purchaser receives or agrees to receive premium cable or
premium video programming service, then the following charges
are included in the purchase price: charges for installation
or repair of any premium cable or premium video programming
service, upgrade to include additional premium cable or premium
video programming service, downgrade to exclude all or some
premium cable or premium video programming service, additional
premium cable outlets in excess of ten or any other charge or
fee related to premium cable or premium video programming
services. The term shall not apply to transmissions by public
television, public radio services or official Federal, State
or local government cable services. Nor shall the term apply
to local origination programming which provides a variety of
public service programs unique to the community, programming
which provides coverage of public affairs issues which are
presented without commentary or analysis, including United
States Congressional proceedings, or programming which is
substantially related to religious subjects. Nor shall the term
"premium cable or premium video programming service" apply to
subscriber charges for access to a video dial tone system or
charges by a common carrier to a video programmer for the
transport of video programming.
((ll) amended May 7, 1997, P.L.85, No.7)
(mm) "Minimum pay television." ((mm) deleted by amendment
Dec. 13, 1991, P.L.373, No.40)
(nn) "Construction contract." A written or oral contract
or agreement for the construction, reconstruction, remodeling,
renovation or repair of real estate or a real estate structure.
The term shall not apply to services which are taxable under
clauses (k)(14) and (17) and (o)(12) and (15). ((nn) amended
June 29, 2002, P.L.559, No.89)
(oo) "Construction contractor." A person who performs an
activity pursuant to a construction contract, including a
subcontractor. ((oo) added Apr. 23, 1998, P.L.239, No.45)
(pp) "Building machinery and equipment." Generation
equipment, storage equipment, conditioning equipment,
distribution equipment and termination equipment, which shall
be limited to the following:
(1) air conditioning limited to heating, cooling,
purification, humidification, dehumidification and ventilation;
(2) electrical;
(3) plumbing;
(4) communications limited to voice, video, data, sound,
master clock and noise abatement;
(5) alarms limited to fire, security and detection;
(6) control system limited to energy management, traffic
and parking lot and building access;
(7) medical system limited to diagnosis and treatment
equipment, medical gas, nurse call and doctor paging;
(8) laboratory system;
(9) cathodic protection system; or
(10) furniture, cabinetry and kitchen equipment.
The term shall include boilers, chillers, air cleaners,
humidifiers, fans, switchgear, pumps, telephones, speakers,
horns, motion detectors, dampers, actuators, grills, registers,
traffic signals, sensors, card access devices, guardrails,
medial devices, floor troughs and grates and laundry equipment,
together with integral coverings and enclosures, whether or not
the item constitutes a fixture or is otherwise affixed to the
real estate, whether or not damage would be done to the item
or its surroundings upon removal or whether or not the item is
physically located within a real estate structure. The term
"building machinery and equipment" shall not include guardrail
posts, pipes, fittings, pipe supports and hangers, valves,
underground tanks, wire, conduit, receptacle and junction boxes,
insulation, ductwork and coverings thereof.
((pp) added Apr. 23, 1998, P.L.239, No.45)
(qq) "Real estate structure." A structure or item purchased
by a construction contractor pursuant to a construction contract
with:
(1) a charitable organization, a volunteer firemen's
organization, a nonprofit educational institution or a religious
organization for religious purposes and which qualifies as an
institution of purely public charity under the act of November
26, 1997 (P.L.508, No.55), known as the "Institutions of Purely
Public Charity Act";
(2) the United States; or
(3) the Commonwealth, its instrumentalities or political
subdivisions.
The term includes building machinery and equipment; developed
or undeveloped land; streets; roads; highways; parking lots;
stadiums and stadium seating; recreational courts; sidewalks;
foundations; structural supports; walls; floors; ceilings;
roofs; doors; canopies; millwork; elevators; windows and
external window coverings; outdoor advertising boards or signs;
airport runways; bridges; dams; dikes; traffic control devices,
including traffic signs; satellite dishes; antennas; guardrail
posts; pipes; fittings; pipe supports and hangers; valves;
underground tanks; wire; conduit; receptacle and junction boxes;
insulation; ductwork and coverings thereof; and any structure
or item similar to any of the foregoing, whether or not the
structure or item constitutes a fixture or is affixed to the
real estate, or whether or not damage would be done to the
structure or item or its surroundings upon removal.
((qq) amended June 29, 2002, P.L.559, No.89)
(rr) "Telecommunications service." Any one-way transmission
or any two-way, interactive transmission of sounds, signals or
other intelligence converted to like form which effects or is
intended to effect meaningful communications by electronic or
electromagnetic means via wire, cable, satellite, light waves,
microwaves, radio waves or other transmission media. The term
includes all types of telecommunication transmissions, such as
local, toll, wide-area or any other type of telephone service;
private line service; telegraph service; radio repeater service;
wireless communication service; personal communications system
service; cellular telecommunication service; specialized mobile
radio service; stationary two-way radio service; and paging
service. The term does not include any of the following:
(1) Subscriber charges for access to a video dial tone
system.
(2) Charges to video programmers for the transport of video
programming.
(3) Charges for access to the Internet. Access to the
Internet does not include any of the following:
(A) The transport over the Internet or any proprietary
network using the Internet protocol of telephone calls,
facsimile transmissions or other telecommunications traffic to
or from end users on the public switched telephone network if
the signal sent from or received by an end user is not in an
Internet protocol.
(B) Telecommunication services purchased by an Internet
service provider to deliver access to the Internet to its
customers.
(4) Mobile telecommunications services.
((rr) amended June 29, 2002, P.L.559, No.89)
(ss) "Internet." The international nonproprietary computer
network of both Federal and non-Federal interoperable packet
switched data networks. ((ss) added Apr. 23, 1998, P.L.239,
No.45)
(tt) "Commercial racing activities." Any of the following:
(1) Thoroughbred and harness racing at which pari-mutuel
wagering is conducted under the act of December 17, 1981
(P.L.435, No.135), known as the "Race Horse Industry Reform
Act."
(2) Fair racing sanctioned by the State Harness Racing
Commission.
((tt) added Apr. 23, 1998, P.L.239, No.45)
(uu) "Prepaid telecommunications." A tangible item
containing a prepaid authorization number that can be used
solely to obtain telecommunications service, including any
renewal or increases in the prepaid amount. ((uu) added May 24,
2000, P.L.106, No.23)
(vv) "Prebuilt housing." Either of the following:
(1) Manufactured housing, including mobile homes, which
bears a label as required by and referred to in the act of
November 17, 1982 (P.L.676, No.192), known as the "Manufactured
Housing Construction and Safety Standards Authorization Act."
(2) Industrialized housing as defined in the act of May 11,
1972 (P.L.286, No.70), known as the "Industrialized Housing
Act."
((vv) added May 24, 2000, P.L.106, No.23)
(ww) "Used prebuilt housing." Prebuilt housing that was
previously subject to a sale to a prebuilt housing purchaser.
((ww) added May 24, 2002, P.L.106, No.23)
(xx) "Prebuilt housing builder." A person who makes a
prebuilt housing sale to a prebuilt housing purchaser. ((xx)
added May 24, 2000, P.L.106, No.23)
(yy) "Prebuilt housing sale." A sale of prebuilt housing
to a prebuilt housing purchaser, including a sale to a landlord,
without regard to whether the person making the sale is
responsible for installing the prebuilt housing or whether the
prebuilt housing becomes a real estate structure upon
installation. Temporary installation by a prebuilt housing
builder for display purposes of a unit held for resale shall
not be considered occupancy for residential purposes. ((yy)
added May 24, 2000, P.L.106, No.23)
(zz) "Prebuilt housing purchaser." A person who purchases
prebuilt housing in a transaction and who intends to occupy the
unit for residential purposes in this Commonwealth. ((zz) added
May 24, 2000, P.L.106, No.23)
(aaa) "Mobile telecommunications service." Mobile
telecommunications service as that term is defined in the Mobile
Telecommunications Sourcing Act (4 U.S.C. § 116). ((aaa) added
June 29, 2002, P.L.559, No.89)
(bbb) "Fiscal Code." The act of April 9, 1929 (P.L.343,
No.176), known as "The Fiscal Code." ((bbb) added June 29, 2002,
P.L.559, No.89)
(ccc) "Prepaid mobile telecommunications service." Mobile
telecommunications service which is paid for in advance and
which enables the origination of calls using an access number,
authorization code or both, whether manually or electronically
dialed, if the remaining amount of units of the prepaid mobile
telecommunications service is known by the service provider of
the prepaid mobile telecommunications service on a continuous
basis. The term does not include the advance purchase of mobile
telecommunications service if the purchase is pursuant to a
service contract between the service provider and customer and
if the service contract requires the customer to make periodic
payments to maintain the mobile telecommunications service.
((ccc) added June 29, 2002, P.L.559, No.89)
(ddd) ((ddd) deleted by amendment July 9, 2013, P.L.270,
No.52)
(eee) "Liquor." Liquor as that term is defined in the
"Liquor Code." ((eee) added June 28, 2019, P.L.50, No.13)
(fff) "Malt or brewed beverages." Malt or brewed beverages
as that term is defined in the "Liquor Code." ((fff) added June
28, 2019, P.L.50, No.13)
(ggg) "Manufacturer of malt or brewed beverages."
Manufacturer of malt or brewed beverages as that term is
defined in the "Liquor Code." ((ggg) added June 28, 2019,
P.L.50, No.13)
(hhh) "Forum." A place where sales at retail occur, whether
physical or electronic. The term includes a store, a booth, an
Internet website, a catalog or similar place. ((hhh) added June
28, 2019, P.L.50, No.13)
(iii) "Marketplace facilitator." A person that facilitates
the sale at retail of tangible personal property. For purposes
of this article, a person facilitates a sale at retail if the
person or an affiliated person:
(1) lists or advertises tangible personal property for sale
at retail in any forum; and
(2) either directly or indirectly through agreements or
arrangements with third parties, collects the payment from the
purchaser and transmits the payment to the person selling the
property.
The term includes a person that may also be a vendor.
((iii) added June 28, 2019, P.L.50, No.13)
(jjj) "Marketplace seller." A person that has an agreement
with a marketplace facilitator to facilitate sales for the
person. ((jjj) added June 28, 2019, P.L.50, No.13)
(kkk) "Affiliated person." A person that, with respect to
another person:
(1) has a direct or indirect ownership interest of more
than five per cent in the other person; or
(2) is related to the other person because a third person,
or group of third persons who are affiliated with each other
as defined in this subsection, holds a direct or indirect
ownership interest of more than five per cent in the related
person.
((kkk) added June 28, 2019, P.L.50, No.13)
(lll) "Animal housing facility." A roofed structure or
facility, or a portion of the facility, used for occupation by
livestock or poultry. ((lll) added June 28, 2019, P.L.50, No.13)
(mmm) "Flight simulator." A device used for the training
or instruction of an individual on a helicopter and similar
rotorcraft. ((mmm) added July 8, 2022, P.L.513, No.53)
(nnn) "Car-sharing program agreement." The terms and
conditions that govern the use of a shared vehicle through a
peer-to-peer car-sharing program. ((nnn) added July 8, 2022,
P.L.513, No.53)
(ooo) "Peer-to-peer car sharing." The authorized use of a
shared vehicle by an individual, other than the owner of the
vehicle, through a peer-to-peer car-sharing program. ((ooo)
added July 8, 2022, P.L.513, No.53)
(ppp) "Peer-to-peer car-sharing payment." Full
consideration paid or delivered, or promised to be paid or
delivered, to the peer-to-peer car-sharing marketplace
facilitator under a car-sharing program agreement, excluding
charges for local sales or use tax, State sales or use tax or
public transportation assistance fund fees. ((ppp) added July
8, 2022, P.L.513, No.53)
(qqq) "Peer-to-peer car-sharing program." A business
platform that, through a peer-to-peer car-sharing marketplace,
connects shared vehicle owners with drivers to enable the
sharing of vehicles for financial consideration. ((qqq) added
July 8, 2022, P.L.513, No.53)
(rrr) "Peer-to-peer car-sharing program marketplace." A
forum on which a shared vehicle is listed or advertised for
peer-to-peer car sharing. ((rrr) added July 8, 2022, P.L.513,
No.53)
(sss) "Peer-to-peer car-sharing program marketplace
facilitator." A person that facilitates peer-to-peer car
sharing through a peer-to-peer car-sharing marketplace and
either directly or indirectly, through agreements or
arrangements with third parties, collects the peer-to-peer car-
sharing payment from the purchaser and transmits the payment
to the shared vehicle owner. ((sss) added July 8, 2022, P.L.513,
No.53)
(ttt) "Shared vehicle." A vehicle that is available for
sharing, including through a peer-to-peer car-sharing program.
((ttt) added July 8, 2022, P.L.513, No.53)
(uuu) "Shared vehicle owner." The registered owner, or a
person designated by the registered owner, of a vehicle made
available for sharing, including through a peer-to-peer
car-sharing program. ((uuu) added July 8, 2022, P.L.513, No.53)
Compiler's Note: Section 26 of Act 13 of 2019 provided that
the addition of sections 201(g)(9), (eee), (fff), (ggg)
and 202(h) of this act shall apply to sales of malt or
brewed beverages sold by a manufacturer of malt or brewed
beverages occurring after September 30, 2019.
See section 33 of Act 13 of 2019 for special
provisions relating to applicability.
Compiler's Note: Section 52(1) of Act 84 of 2016, which
amended subsections (k)(8), (m) and (o)(4)(B), provided
that, notwithstanding the provisions of the act of August
5, 1932 (Sp.Sess., P.L.45, No.45), referred to as the
Sterling Act, and the act of December 31, 1965 (P.L.1257,
No.511), known as The Local Tax Enabling Act, the
amendment shall not preempt any tax imposed by a unit
of local government as of the effective date of section
52 unless specifically provided for in Act 84.
Compiler's Note: Section 33(1) of Act 46 of 2003, which
added subsection (d)(17), provided that subsection
(d)(17) shall apply to sales at retail and uses after
June 30, 2004.
Compiler's Note: Section 19(1)(i) of Act 23 of 2000, which
added subsections (g)(8), (vv), (ww), (xx), (yy) and
(zz), provided that subsections (g)(8), (vv), (ww), (xx),
(yy) and (zz) shall apply to transactions for which
purchase agreements are executed after June 30, 2000.
Compiler's Note: Section 41 of Act 22 of 1991, which amended
section 201, provided that it is the intent of the
General Assembly that the amendment of subsection (c)(6)
is to clarify existing law and shall not be construed
to indicate a presumption that it is the intent of the
General Assembly to change the existing law.
Section 43(4) of Act 22 provided that no tax shall
be imposed on those services defined in subsections (w)
through (kk) which are predominantly used outside this
Commonwealth. Section 43(5) also provided that, in the
case of the tax on services defined in subsections (w)
through (kk), where contracts for the sale of the
services have been entered into prior to the effective
date of the amendments to Article II, the tax under
Article II shall be prorated as follows:
(i) Determine the total value of the contract.
(ii) Multiply the total value of the contract by
the ratio of:
(A) the remaining term of the contract on the
effective date of the amendments to Article II of
the act; to
(B) the total term of the contract.
Compiler's Note: The act of September 30, 1961 (P.L.1778,
No.712), known as the Lobbying Registration and Regulation
Act, referred to in subsection (w) was repealed by the
act of October 15, 1998 (P.L.729, No.93).
The act of December 17, 1981 (P.L.435, No.135), known
as the Race Horse Industry Reform Act, referred to in
subsection (tt)(1), was repealed by the act of February
23, 2016 (P.L.15, No.7).
PART II
IMPOSITION OF TAX
Section 202. Imposition of Tax.--(a) There is hereby
imposed upon each separate sale at retail of tangible personal
property or services, as defined herein, within this
Commonwealth a tax of six per cent of the purchase price, which
tax shall, except as otherwise provided, be collected by the
vendor or any other person required by this article from the
purchaser, and shall be paid over to the Commonwealth as herein
provided. ((a) amended June 28, 2019, P.L.50, No.13)
(b) There is hereby imposed upon the use, on and after the
effective date of this article, within this Commonwealth of
tangible personal property purchased at retail on or after the
effective date of this article, and on those services described
herein purchased at retail on and after the effective date of
this article, a tax of six per cent of the purchase price, which
tax shall be paid to the Commonwealth by the person who makes
such use as herein provided, except that such tax shall not be
paid to the Commonwealth by such person where he has paid the
tax imposed by subsection (a) of this section or has paid the
tax imposed by this subsection (b) to the vendor with respect
to such use, or such vendor advertises or holds out or states
to such person directly or indirectly subject to the conditions
set forth in section 268(b) that such vendor will pay the tax
imposed by subsection (a) or this subsection for such person.
The tax at the rate of six per cent imposed by this subsection
shall not be deemed applicable where the tax has been incurred
under the provisions of the "Tax Act of 1963 for Education."
((b) amended June 28, 2019, P.L.50, No.13)
(c) Notwithstanding any other provisions of this article,
the tax with respect to telecommunications service within the
meaning of clause (m) of section 201 of this article shall,
except for telegrams paid for in cash at telegraph offices, be
computed at the rate of six per cent upon the total amount
charged to customers for such services, irrespective of whether
such charge is based upon a flat rate or upon a message unit
charge, but in no event shall charges for telephone calls paid
for by inserting money into a telephone accepting direct
deposits of money to operate be subject to this tax. A
telecommunications service provider shall have no responsibility
or liability to the Commonwealth for billing, collecting or
remitting taxes that apply to services, products or other
commerce sold over telecommunications lines by third-party
vendors. To prevent actual multistate taxation of interstate
telecommunications service, any taxpayer, upon proof that the
taxpayer has paid a similar tax to another state on the same
interstate telecommunications service, shall be allowed a credit
against the tax imposed by this section on the same interstate
telecommunications service to the extent of the amount of such
tax properly due and paid to such other state. ((c) amended
Apr. 23, 1998, P.L.239, No.45)
(d) Notwithstanding any other provisions of this article,
the sale or use of food and beverages dispensed by means of
coin operated vending machines shall be taxed at the rate of
six per cent of the receipts collected from any such machine
which dispenses food and beverages heretofore taxable. ((d)
added Oct. 4, 1978, P.L.987, No.201)
(e) (1) Notwithstanding any provisions of this article,
the sale or use of prepaid telecommunications evidenced by the
transfer of tangible personal property shall be subject to the
tax imposed by subsections (a) and (b).
(2) The sale or use of prepaid telecommunications not
evidenced by the transfer of tangible personal property shall
be subject to the tax imposed by subsections (a) and (b) and
shall be deemed to occur at the purchaser's billing address.
(3) Notwithstanding clause (2), the sale or use of prepaid
telecommunications service not evidenced by the transfer of
tangible personal property shall be taxed at the rate of six
per cent of the receipts collected on each sale if the service
provider elects to collect the tax imposed by this article on
receipts of each sale. The service provider shall notify the
department of its election and shall collect the tax on receipts
of each sale until the service provider notifies the department
otherwise.
((e) amended June 29, 2002, P.L.559, No.89)
(e.1) (1) Notwithstanding any other provision of this
article, the sale or use of prepaid mobile telecommunications
service evidenced by the transfer of tangible personal property
shall be subject to the tax imposed by subsections (a) and (b).
(2) The sale or use of prepaid mobile telecommunications
service not evidenced by the transfer of tangible personal
property shall be subject to the tax imposed by subsections (a)
and (b) and shall be deemed to occur at the purchaser's billing
address or the location associated with the mobile telephone
number or the point of sale, whichever is applicable.
(3) Notwithstanding clause (2), the sale or use of prepaid
mobile telecommunications service not evidenced by the transfer
of tangible personal property shall be taxed at the rate of six
per cent of the receipts collected on each sale if the service
provider elects to collect the tax imposed by this article on
receipts of each sale. The service provider shall notify the
department of its election and shall collect the tax on receipts
of each sale until the service provider notifies the department
otherwise.
((e.1) added June 29, 2002, P.L.559, No.89)
(f) Notwithstanding any other provision of this article,
tax with respect to sales of prebuilt housing shall be imposed
on the prebuilt housing builder at the time of the prebuilt
housing sale within this Commonwealth and shall be paid and
reported by the prebuilt housing builder to the department in
the time and manner provided in this article: Provided, however,
That a manufacturer of prebuilt housing may, at its option,
precollect the tax from the prebuilt housing builder at the
time of sale to the prebuilt housing builder. In any case where
prebuilt housing is purchased and the tax is not paid by the
prebuilt housing builder or precollected by the manufacturer,
the prebuilt housing purchaser shall remit tax directly to the
department if the prebuilt housing is used in this Commonwealth
without regard to whether the prebuilt housing becomes a real
estate structure. ((f) added May 24, 2000, P.L.106, No.23)
(g) Notwithstanding any other provisions of this article
and in accordance with the Mobile Telecommunications Sourcing
Act (4 U.S.C. § 116), the sale or use of mobile
telecommunications services which are deemed to be provided to
a customer by a home service provider under section 117(a) and
(b) of the Mobile Telecommunications Sourcing Act shall be
subject to the tax of six per cent of the purchase price, which
tax shall be collected by the home service provider from the
customer, and shall be paid over to the Commonwealth as herein
provided if the customer's place of primary use is located
within this Commonwealth, regardless of where the mobile
telecommunications services originate, terminate or pass
through. For purposes of this subsection, words and phrases
used in this subsection shall have the same meanings given to
them in the Mobile Telecommunications Sourcing Act. ((g) added
June 29, 2002, P.L.559, No.89)
(h) (1) Notwithstanding any other provision of this
article, Article II-B, the act of July 28, 1953 (P.L.723,
No.230), known as the Second Class County Code, or Chapter 5
or 6 of the act of June 5, 1991 (P.L.9, No.6), known as the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class, the tax shall be imposed on a
manufacturer of malt or brewed beverages with respect to sales
of malt or brewed beverages sold by the manufacturer directly
to the ultimate consumer for consumption on or off premises.
(2) The tax imposed under clause (1) shall be paid and
reported by the manufacturer of malt or brewed beverages to the
department in the time and manner provided in this article.
(3) Notwithstanding any law to the contrary, a school
district or local government authorized to impose a local
alcoholic beverage tax under the act of June 10, 1971 (P.L.153,
No.7), known as the First Class School District Liquor Sales
Tax Act of 1971, or 53 Pa.C.S. § 8602 (relating to local
financial support), may impose or continue to impose a local
alcoholic beverage tax on the sale at retail of malt or brewed
beverages made by a manufacturer of malt or brewed beverages
to the ultimate consumer for consumption on or off premises at
the same rate as authorized under the First Class School
District Liquor Sales Tax Act of 1971 or 53 Pa.C.S. § 8602 and
notwithstanding anything to the contrary in such laws or in a
local law or ordinance in existence on the effective date of
this section.
(4) The payment of the tax imposed under clause (1) shall
eliminate the need for the ultimate consumer to pay or remit a
sales or use tax on the related transaction or upon the
subsequent use of the malt or brewed beverages.
((h) added June 28, 2019, P.L.50, No.13)
Compiler's Note: Section 26 of Act 13 of 2019 provided that
the addition of sections 201(g)(9), (eee), (fff), (ggg)
and 202(h) of this act shall apply to sales of malt or
brewed beverages sold by a manufacturer of malt or brewed
beverages occurring after September 30, 2019.
Section 203. Computation of Tax.--The amount of tax imposed
by section 202 of this article shall be computed as follows:
(a) If the purchase price is ten cents (10¢) or less, no
tax shall be collected.
(b) If the purchase price is eleven cents (11¢) or more but
less than eighteen cents (18¢), one cent (1¢) shall be
collected.
(c) If the purchase price is eighteen cents (18¢) or more
but less than thirty-five cents (35¢), two cents (2¢) shall be
collected.
(d) If the purchase price is thirty-five cents (35¢) or
more but less than fifty-one cents (51¢), three cents (3¢) shall
be collected.
(e) If the purchase price is fifty-one cents (51¢) or more
but less than sixty-eight cents (68¢), four cents (4¢) shall
be collected.
(f) If the purchase price is sixty-eight cents (68¢) or
more but less than eighty-five cents (85¢), five cents (5¢)
shall be collected.
(g) If the purchase price is eighty-five cents (85¢) or
more but less than one dollar and one cent ($1.01), six cents
(6¢) shall be collected.
(h) If the purchase price is more than one dollar ($1.00),
six per centum of each dollar of purchase price plus the above
bracket charges upon any fractional part of a dollar in excess
of even dollars shall be collected.
PART III
EXCLUSIONS FROM TAX
Section 204. Exclusions from Tax.--The tax imposed by
section 202 shall not be imposed upon any of the following:
(Intro. par. amended June 29, 2002, P.L.559, No.89)
(1) The sale at retail or use of tangible personal property
(other than motor vehicles, trailers, semi-trailers, motor
boats, aircraft or other similar tangible personal property
required under either Federal law or laws of this Commonwealth
to be registered or licensed) or services sold by or purchased
from a person not a vendor in an isolated transaction or sold
by or purchased from a person who is a vendor but is not a
vendor with respect to the tangible personal property or
services sold or purchased in such transaction: Provided, That
inventory and stock in trade so sold or purchased, shall not
be excluded from the tax by the provisions of this subsection.
(2) The use of tangible personal property purchased by a
nonresident person outside of, and brought into this
Commonwealth for use therein for a period not to exceed seven
days, or for any period of time when such nonresident is a
tourist or vacationer and, in either case not consumed within
the Commonwealth.
(3) The use of tangible personal property purchased outside
this Commonwealth for use outside this Commonwealth by a then
nonresident natural person or a business entity not actually
doing business within this Commonwealth, who later brings such
tangible personal property into this Commonwealth in connection
with his establishment of a permanent business or residence in
this Commonwealth: Provided, That such property was purchased
more than six months prior to the date it was first brought
into this Commonwealth or prior to the establishment of such
business or residence, whichever first occurs. This exclusion
shall not apply to tangible personal property temporarily
brought into Pennsylvania for the performance of contracts for
the construction, reconstruction, remodeling, repairing and
maintenance of real estate.
(4) The sale at retail or use of disposable diapers;
pre-moistened wipes; incontinence products; colostomy
deodorants; toilet paper; sanitary napkins, tampons or similar
items used for feminine hygiene; or toothpaste, toothbrushes
or dental floss. ((4) amended Dec. 13, 1991, P.L.373, No.40)
(5) The sale at retail or use of steam, natural and
manufactured and bottled gas, fuel oil, electricity or
intrastate subscriber line charges, basic local telephone
service or telegraph service when purchased directly by the
user thereof solely for his own residential use and charges for
telephone calls paid for by inserting money into a telephone
accepting direct deposits of money to operate. ((5) amended
June 30, 1995, P.L.139, No.21)
(6) ((6) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(7) ((7) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(8) ((8) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(9) ((9) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(10) The sale at retail to or use by (i) any charitable
organization, volunteer firemen's organization, volunteer
firefighters' relief association as defined in 35 Pa.C.S. §
7412 (relating to definitions) or nonprofit educational
institution, or (ii) a religious organization for religious
purposes of tangible personal property or services other than
pursuant to a construction contract: Provided, however, That
the exclusion of this clause shall not apply with respect to
any tangible personal property or services used in any unrelated
trade or business carried on by such organization or institution
or with respect to any materials, supplies and equipment used
and transferred to such organization or institution in the
construction, reconstruction, remodeling, renovation, repairs
and maintenance of any real estate structure, other than
building machinery and equipment, except materials and supplies
when purchased by such organizations or institutions for routine
maintenance and repairs. If the department has issued sales
tax-exempt status to a volunteer firefighters' organization or
a volunteer firefighters' relief association, the sales
tax-exempt status may not expire unless the activities of the
organization or association change so that the organization or
association does not qualify as an institution of purely public
charity in which case the organization or association shall
immediately notify the department of the change. If the
department ascertains that an organization or association no
longer qualifies as an institution of purely public charity,
the department may revoke the sales tax-exempt status of the
organization or association. ((10) amended July 2, 2012,
P.L.751, No.85)
(11) The sale at retail, or use of gasoline and other motor
fuels, the sales of which are otherwise subject to excise taxes
under the act of May 21, 1931 (P.L.194), known as the "Liquid
Fuels Tax Act," and the act of January 14, 1952 (P.L.1965),
known as the "Fuel Use Tax Act."
(12) The sale at retail to, or use by the United States,
this Commonwealth or its instrumentalities or political
subdivisions of tangible personal property or services.
(13) The sale at retail, or use of wrapping paper, wrapping
twine, bags, cartons, tape, rope, labels, nonreturnable
containers, all other wrapping supplies and kegs used to contain
malt or brewed beverages, when such use is incidental to the
delivery of any personal property, except that any charge for
wrapping or packaging shall be subject to tax at the rate
imposed by section 202, unless the property wrapped or packaged
will be resold by the purchaser of the wrapping or packaging
service. As used in this paragraph, the term "cartons" includes
corrugated boxes used by a person engaged in the manufacture
of snack food products to deliver the manufactured product,
whether or not the boxes are returnable for potential reuse.
((13) amended Oct. 30, 2017, P.L.672, No.43)
(14) Sale at retail or use of vessels designed for
commercial use of registered tonnage of fifty tons or more when
produced by the builders thereof upon special order of the
purchaser.
(15) Sale at retail of tangible personal property or
services used or consumed in building, rebuilding, repairing
and making additions to or replacements in and upon vessels
designed for commercial use of registered tonnage of fifty tons
or more upon special order of the purchaser, or when rebuilt,
repaired or enlarged, or when replacements are made upon order
of or for the account of the owner.
(16) The sale at retail or use of tangible personal property
or services to be used or consumed for ship cleaning or
maintenance or as fuel, supplies, ships' equipment, ships'
stores or sea stores on vessels designed for commercial use of
registered tonnage of fifty tons or more to be operated
principally outside the limits of the Commonwealth. ((16)
amended Aug. 4, 1991, P.L.97, No.22)
(17) The sale at retail or use of prescription or
non-prescription medicines, drugs or medical supplies, crutches
and wheelchairs for the use of cripples and invalids, artificial
limbs, artificial eyes and artificial hearing devices when
designed to be worn on the person of the purchaser or user,
false teeth and materials used by a dentist in dental treatment,
eyeglasses when especially designed or prescribed by an
ophthalmologist, oculist or optometrist for the personal use
of the owner or purchaser and artificial braces and supports
designed solely for the use of crippled persons or any other
therapeutic, prosthetic or artificial device designed for the
use of a particular individual to correct or alleviate a
physical incapacity, including but not limited to hospital beds,
iron lungs, and kidney machines. ((17) amended July 20, 1974,
P.L.535, No.183)
(18) The sale at retail or use of coal.
(19) ((19) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(20) ((20) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(21) ((21) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(22) ((22) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(23) ((23) deleted by amendment Aug. 4, 1991, P.L.97, No.22)
(24) The sale at retail or use of motor vehicles, trailers
and semi-trailers, or bodies attached to the chassis thereof,
sold to a nonresident of Pennsylvania to be used outside of
Pennsylvania and which are registered in a state other than
Pennsylvania within twenty days after delivery to the vendee.
(25) The sale at retail or use of water.
(26) The sale at retail or use of all vesture, wearing
apparel, raiments, garments, footwear and other articles of
clothing, including clothing patterns and items that are to be
a component part of clothing, worn or carried on or about the
human body but all accessories, ornamental wear, formal day or
evening apparel, and articles made of fur on the hide or pelt
or any material imitative of fur and articles of which such
fur, real, imitation or synthetic, is the component material
of chief value, but only if such value is more than three times
the value of the next most valuable component material, and
sporting goods and clothing not normally used or worn when not
engaged in sports shall not be excluded from the tax. ((26)
amended May 24, 2000, P.L.106, No.23)
(27) ((27) deleted by amendment July 21, 1983, P.L.63,
No.29)
(28) The sale at retail or use of religious publications
sold by religious groups and Bibles and religious articles.
(29) The sale at retail or use of food and beverages for
human consumption, except that this exclusion shall not apply
with respect to--
(i) Soft drinks;
(ii) Malt and brewed beverages and spirituous and vinous
liquors;
(iii) Food or beverages, whether sold for consumption on
or off the premises or on a "take-out" or "to go" basis or
delivered to the purchaser or consumer, when purchased (A) from
persons engaged in the business of catering; or (B) from persons
engaged in the business of operating establishments from which
ready-to-eat food and beverages are sold, including, but not
limited to, restaurants, cafes, lunch counters, private and
social clubs, taverns, dining cars, hotels, night clubs, fast
food operations, pizzerias, fairs, carnivals, lunch carts, ice
cream stands, snack bars, cafeterias, employe cafeterias,
theaters, stadiums, arenas, amusement parks, carryout shops,
coffee shops and other establishments whether mobile or
immobile. For purposes of this clause, a bakery, a pastry shop,
a donut shop, a delicatessen, a grocery store, a supermarket,
a farmer's market, a convenience store or a vending machine
shall not be considered an establishment from which food or
beverages ready to eat are sold except for the sale of meals,
sandwiches, food from salad bars, hand-dipped or hand-served
iced based products including ice cream and yogurt, hot soup,
hot pizza and other hot food items, brewed coffee and hot
beverages. For purposes of this subclause, beverages shall not
include malt and brewed beverages and spirituous and vinous
liquors but shall include soft drinks. The sale at retail of
food and beverages at or from a school or church in the ordinary
course of the activities of such organization is not subject
to tax.
((29) amended Apr. 23, 1998, P.L.239, No.45)
(30) The sale at retail or use of newspapers. For purposes
of this section, the term "newspaper" shall mean a "legal
newspaper" or a publication containing matters of general
interest and reports of current events which qualifies as a
"newspaper of general circulation" qualified to carry a "legal
advertisement" as those terms are defined in 45 Pa.C.S. § 101
(relating to definitions), not including magazines. This
exclusion shall also include any printed advertising materials
circulated with such newspaper regardless of where or by whom
such printed advertising material was produced. ((30) amended
Dec. 13, 1991, P.L.373, No.40)
(31) The sale at retail or use of caskets and burial vaults
for human remains and markers and tombstones for human graves.
(32) The sale at retail or use of flags of the United States
of America and the Commonwealth of Pennsylvania.
(33) The sale at retail or use of textbooks for use in
schools, colleges and universities, either public or private
when purchased in behalf of or through such schools, colleges
or universities provided such institutions of learning are
recognized by the Department of Education.
(34) The sale at retail, or use of motion picture film
rented or licensed from a distributor for the purpose of
commercial exhibition. ((34) added Aug. 31, 1971, P.L.362,
No.93)
(35) The sale at retail or use of mail order catalogs and
direct mail advertising literature or materials, including
electoral literature or materials, such as envelopes, address
labels and a one-time license to use a list of names and mailing
addresses for each delivery of direct mail advertising
literature or materials, including electoral literature or
materials, through the United States Postal Service. ((35)
amended Apr. 23, 1998, P.L.239, No.45)
(36) The sale at retail or use of rail transportation
equipment used in the movement of personalty. ((36) added Oct.
17, 1974, P.L.756, No.255)
(37) The sale at retail of buses to be used under contract
with school districts that are replacements for buses destroyed
or lost in the flood of 1977 for a period ending December 31,
1977 in the counties of Armstrong, Bedford, Cambria, Indiana,
Jefferson, Somerset and Westmoreland, or the use of such buses.
((37) added Dec. 14, 1977, P.L.322, No.93)
(38) The sale at retail of horses, if at the time of
purchase, the seller is directed to ship or deliver the horse
to an out-of-State location, whether or not the charges for
shipment are paid for by the seller or the purchaser; the seller
shall obtain a bill of lading, either from the carrier or from
the purchaser, who, in turn has obtained the bill of lading
from the carrier, reflecting delivery to the out-of-State
address to which the horse has been shipped. The seller shall
execute a "Certificate of Delivery to Destination Outside of
the Commonwealth" for each bill of lading reflecting
out-of-State delivery. The seller shall be required to retain
the certificate of delivery form to justify the noncollection
of sales tax with respect to the transaction to which the form
relates.
In transactions where a horse is sold by the seller and
delivered to a domiciled person, agent or corporation prior to
its being delivered to an out-of-State location, the
"Certificate of Delivery to Destination Outside of the
Commonwealth" form must have attached to it bills of lading
both for the transfer to the domiciled person, agent or
corporation and from the aforementioned to the out-of-State
location.
((38) added Oct. 27, 1979, P.L.242, No.79)
(39) The sale at retail or use of fish feed purchased by
or on behalf of sportsmen's clubs, fish cooperatives or
nurseries approved by the Pennsylvania Fish Commission. ((39)
added Dec. 8, 1980, P.L.1117, No.195)
(40) The sale at retail of supplies and materials to tourist
promotion agencies, which receive grants from the Commonwealth,
for distribution to the public as promotional material or the
use of such supplies and materials by said agencies for said
purposes. ((40) added Dec. 16, 1980, P.L.1240, No.223)
(41) The sale at retail of supplies and materials to tourist
promotion agencies, which receive grants from the Commonwealth,
for distribution to the public as promotional material or the
use of such supplies and materials by said agencies for said
purposes. ((41) added Oct. 22, 1981, P.L.314, No.109)
(42) The sale or use of brook trout (salvelinus fontinalis),
brown trout (Salmo trutta) or rainbow trout (Salmo gairdneri).
((42) added June 23, 1982, P.L.610, No.172)
(43) The sale at retail or use of buses to be used
exclusively for the transportation of children for school
purposes. ((43) added Dec. 9, 1982, P.L.1047, No.246)
(44) The sale at retail or use of firewood. For the purpose
of this clause, firewood shall mean the product of trees when
severed from the land and cut into proper lengths for burning
and pellets made from pure wood sawdust if used for fuel for
cooking, hot water production or to heat residential dwellings.
((44) amended June 22, 2001, P.L.353, No.23)
(45) The sale at retail or use of materials used in the
construction and erection of objects purchased by not-for-profit
organizations for purposes of commemoration and memorialization
of historical events, provided that the object is erected upon
publicly owned property or property to be conveyed to a public
entity upon the commemoration or memorialization of the
historical event. ((45) added Dec. 19, 1985, P.L.354, No.100)
(46) The sale at retail or use of tangible personal property
purchased in accordance with the Food Stamp Act of 1977, as
amended (Public Law 95-113, 7 U.S.C. §§ 2011-2029). ((46) added
July 13, 1987, P.L.317, No.58)
(47) ((47) expired December 31, 1999. See Act 22 of 1991.)
(48) ((48) expired December 31, 1999. See Act 22 of 1991.)
(49) The sale at retail or use of food and beverages by
nonprofit associations which support sports programs or youth
centers. For purposes of this clause, the phrases:
(i) "nonprofit association" means an entity which is
organized as a nonprofit corporation or nonprofit unincorporated
association under the laws of this Commonwealth or the United
States or any entity which is authorized to do business in this
Commonwealth as a nonprofit corporation or unincorporated
association under the laws of this Commonwealth, including, but
not limited to, youth or athletic associations, volunteer fire,
ambulance, religious, charitable, fraternal, veterans, civic,
or any separately chartered auxiliary of the foregoing, if
organized and operated on a nonprofit basis;
(ii) ((ii) deleted by amendment Apr. 23, 1998, P.L.239,
No.45)
(iii) ((iii) deleted by amendment Apr. 23, 1998, P.L.239,
No.45)
(iv) "sports program" means baseball (including softball),
football, basketball, soccer and any other competitive sport
formally recognized as a sport by the United States Olympic
Committee as specified by and under the jurisdiction of the
Amateur Sports Act of 1978 (Public Law 95-606, 36 U.S.C. § 371
et seq.), the Amateur Athletic Union or the National Collegiate
Athletic Association. The term shall be limited to a program
or that portion of a program that is organized for recreational
purposes and whose activities are substantially for such
purposes and which is primarily for participants who are 18
years of age or younger or whose 19th birthday occurs during
the year of participation or the competitive season, whichever
is longer. There shall, however, be no age limitation for
programs operated for persons with physical handicaps or persons
with mental retardation;
(v) "support" means:
(A) the funds raised from sales are used to pay the expenses
of a sports program or a youth center; or
(B) the nonprofit association sells the food and beverages
at a youth center or a location where a sports program is being
conducted under this act;
(vi) "youth center" means a fixed location used exclusively
for programs for individuals who are 19 years of age or younger
as long as the programs are:
(A) conducted primarily by volunteers;
(B) designed to advance recreational, civic or moral
objectives; and
(C) conducted by an organization that is qualified under
section 501(c)(3) of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 501(c)(3)) and that has obtained an
exemption number from the department as a charitable
organization under clause (10).
((49) amended June 28, 2019, P.L.50, No.13)
(50) The sale at retail or use of subscriptions for
magazines. The term "magazine" refers to a periodical published
at regular intervals not exceeding three months and which are
circulated among the general public, containing matters of
general interest and reports of current events published for
the purpose of disseminating information of a public character
or devoted to literature, the sciences, art or some special
industry. This exclusion shall also include any printed
advertising material circulated with the periodical or
publication regardless of where or by whom the printed
advertising material was produced. ((50) added June 16, 1994,
P.L.279, No.48)
(51) The sale at retail or use of interior office building
cleaning services but only as relates to the costs of the
supplied employe, which costs are wages, salaries, bonuses and
commissions, employment benefits, expense reimbursements, and
payroll and withholding taxes, to the extent that these costs
are specifically itemized or that these costs in aggregate are
stated in billings from the vender or supplying entity. ((51)
added June 16, 1994, P.L.279, No.48)
(52) ((52) deleted by amendment May 7, 1997, P.L.85, No.7)
(53) The sale at retail or use of candy or gum regardless
of the location from which the candy or gum is sold. ((53) added
May 7, 1997, P.L.85, No.7)
(54) ((54) deleted by amendment July 25, 2007, P.L.373,
No.55)
(55) The sale at retail or use of horses to be used
exclusively for commercial racing activities and the sale at
retail and use of feed, bedding, grooming supplies, riding tack,
farrier services, portable stalls and sulkies for horses used
exclusively for commercial racing activities. ((55) added Apr.
23, 1998, P.L.239, No.45)
(56) The sale at retail or use of tangible personal property
or services used, transferred or consumed in installing or
repairing equipment or devices designed to assist persons in
ascending or descending a stairway when:
(i) The equipment or devices are used by a person who, by
virtue of a physical disability, is unable to ascend or descend
stairs without the aid of such equipment or device.
(ii) The equipment or device is installed or used in such
person's place of residence.
(iii) A physician has certified the physical disability of
the person in whose residence the equipment or device is
installed or used.
((56) added Apr. 23, 1998, P.L.239, No.45)
(57) The sale at retail to or use by a construction
contractor of building machinery and equipment and services
thereto that are:
(i) transferred pursuant to a construction contract for any
charitable organization, volunteer firemen's organization,
volunteer firefighters' relief association, nonprofit
educational institution or religious organization for religious
purposes, provided that the building machinery and equipment
and services thereto are not used in any unrelated trade or
business; or
(ii) transferred to the United States or the Commonwealth
or its instrumentalities or political subdivisions; or
(iii) ((iii) repealed Dec. 20, 2000, P.L.841, No.119)
((57) amended July 2, 2012, P.L.751, No.85)
(58) The sale at retail or use of a personal computer, a
peripheral device or an Internet access device, or a service
contract or single-user licensed software purchased in
conjunction with a personal computer, peripheral device or
Internet access device, during the exclusion period by an
individual purchaser for nonbusiness use. The exclusion does
not include a sale at retail or use of, leasing, rental or
repair of a personal computer, peripheral device or Internet
access device; mainframe computers; network servers; local area
network hubs; routers and network cabling; network operating
systems; multiple-user licensed software; minicomputers;
hand-held computers; personal digital assistants without
Internet access; hardware word processors; graphical
calculators; video game consoles; telephones; digital cameras;
pagers; compact discs encoded with music or movies; and digital
versatile discs encoded with music or movies. For purposes of
this clause, the phrase "exclusion period" means the period of
time from August 5, 2001, to and including August 12, 2001, and
from February 17, 2002, to and including February 24, 2002. For
purposes of this clause, "purchaser" means an individual who
places an order and pays the purchase price by cash or credit
during the exclusion period even if delivery takes place after
the exclusion period. ((58) amended June 22, 2001, P.L.353,
No.23)
(59) The sale at retail or use of molds and related mold
equipment used directly and predominantly in the manufacture
of products, regardless of whether the person that holds title
to the equipment manufactures a product. ((59) added May 24,
2000, P.L.106, No.23)
(60) The sale or use of used prebuilt housing. ((60) added
May 24, 2000, P.L.106, No.23)
(61) The sale at retail to or use of food and nonalcoholic
beverages by an airline which will transfer the food or
nonalcoholic beverages to passengers in connection with the
rendering of the airline service. ((61) added June 22, 2001,
P.L.353, No.23)
(62) The sale at retail or use of tangible personal property
or services which are directly used in farming, dairying or
agriculture when engaged in as a business enterprise whether
or not the sale is made to the person directly engaged in the
business enterprise or to a person contracting with the person
directly engaged in the business enterprise for the production
of food. ((62) added June 29, 2002, P.L.559, No.89)
(63) The sale at retail or use of separately stated fees
paid pursuant to 13 Pa.C.S. § 9525 (relating to fees). ((63)
added June 29, 2002, P.L.559, No.89)
(64) The sale at retail to or use by a construction
contractor, employed by a public school district pursuant to a
construction contract, of any materials and building supplies
which, during construction or reconstruction, are made part of
any public school building utilized for instructional classroom
education within this Commonwealth, if the construction or
reconstruction:
(i) is necessitated by a disaster emergency, as defined in
35 Pa.C.S. § 7102 (relating to definitions); and
(ii) takes place during the period when there is a
declaration of disaster emergency under 35 Pa.C.S. § 7301(c)
(relating to general authority of Governor).
((64) added Dec. 23, 2003, P.L.250, No.46)
(65) The sale at retail or use of investment metal bullion
and investment coins. "Investment metal bullion" means any
elementary precious metal which has been put through a process
of smelting or refining, including, but not limited to, gold,
silver, platinum and palladium, and which is in such state or
condition that its value depends upon its content and not its
form. "Investment metal bullion" does not include precious metal
which has been assembled, fabricated, manufactured or processed
in one or more specific and customary industrial, professional,
aesthetic or artistic uses. "Investment coins" means numismatic
coins or other forms of money and legal tender manufactured of
gold, silver, platinum, palladium or other metal and of the
United States or any foreign nation with a fair market value
greater than any nominal value of such coins. "Investment coins"
does not include jewelry or works of art made of coins, nor
does it include commemorative medallions. ((65) added July 6,
2006, P.L.319, No.67)
(66) The sale at retail or use of copies of an official
document sold by a government agency or a court. For the
purposes of this clause, the following terms or phrases shall
have the following meanings:
(i) "court" includes:
(A) an "appellate court" as defined in 42 Pa.C.S. § 102
(relating to definitions);
(B) a "court of common pleas" as defined in 42 Pa.C.S. §
102;
(C) the "minor judiciary" as defined in 42 Pa.C.S. § 102;
(ii) "government agency" means an "agency" as defined in
section 1 of the act of June 21, 1957 (P.L.390, No.212),
referred to as the "Right-to-Know Law";
(iii) "official document" means a "record" as defined in
section 1 of the "Right-to-Know Law." The term shall include
notes of court testimony, deposition transcripts, driving
records, accident reports, birth and death certificates, deeds,
divorce decrees and other similar documents.
((66) added Nov. 29, 2006, P.L.1630, No.189)
(67) The sale at retail or use of repair or replacement
parts or software or software upgrades, including the
installation of those parts, software or software upgrades,
exclusively for use in helicopters and similar rotorcraft and
flight simulators or in overhauling or rebuilding of helicopters
and similar rotorcraft and flight simulators or helicopters and
similar rotorcraft and flight simulator components. ((67)
amended July 8, 2022, P.L.513, No.53)
(68) The sale at retail or use or lease of helicopters and
similar rotorcraft, and flight simulators, as well as training
materials, operational documents and publications relating to
the use or operation of helicopters and similar rotorcraft and
flight simulators. ((68) amended July 8, 2022, P.L.513, No.53)
(69) The sale at retail or use of aircraft parts, services
to aircraft and aircraft components. For purposes of this
clause, the term "aircraft" shall include a fixed-wing aircraft,
powered aircraft, tilt-rotor or tilt-wing aircraft, glider or
unmanned aircraft. ((69) added July 9, 2013, P.L.270, No.52)
(70) The sale at retail or use of services related to the
set up, tear down or maintenance of tangible personal property
rented by an authority to exhibitors at a convention center or
a public auditorium, established under 64 Pa.C.S. Ch. 60
(relating to Pennsylvania Convention Center Authority), the act
of July 28, 1953 (P.L.723, No.230), known as the Second Class
County Code, or the act of August 9, 1955 (P.L.323, No.130),
known as The County Code. ((70) added July 13, 2016, P.L.526,
No.84)
(71) The sale at retail or use of food and beverages by a
volunteer firemen's organization to raise funds for the purposes
of the volunteer firemen's organization. ((71) added June 28,
2019, P.L.50, No.13)
(72) The sale at retail of building materials and supplies
used for the construction or repair of an animal housing
facility, regardless if the sale is made to the purchaser
directly or pursuant to a construction contract. ((72) added
June 28, 2019, P.L.50, No.13)
(73) The sale at retail or use by a financial institution
of canned computer software directly utilized in conducting the
business of banking. For the purposes of this clause, the
following words and phrases shall have the following meanings:
"Directly utilized in conducting the business of banking"
includes the purchase of canned computer software by a financial
institution to be used in transactions with customers and
service providers. The term does not include the purchase of
canned computer software by entities, other than a financial
institution, such as holding companies and subsidiaries of a
financial institution.
"Financial institution" means an institution doing business
in this Commonwealth subject to the tax imposed by Article VII
or XV.
((73) added Nov. 27, 2019, P.L.651, No.90)
(74) The sale at retail or use of a multipurpose
agricultural vehicle operated for the benefit of or pursuant
to the operation of a farm owned or operated by the owner of
the vehicle or a business whose enterprises and activities are
considered part of farming. For the purposes of this clause,
the following terms or phrases shall have the following
meanings:
"Multipurpose agricultural vehicle" shall mean a motor
vehicle exempt from registration in accordance with 75 Pa.C.S.
§ 1302(17) (relating to vehicles exempt from registration) which
is 66 inches or less in width and 2,000 pounds or less in dry
weight and which is used exclusively for agricultural operations
and only incidentally operated or moved upon the highways.
"Use of a multipurpose agricultural vehicle in farming" shall
mean repairing and maintaining buildings, including houses,
garages, barns, stables, greenhouses, mushroom houses and
storehouses, fences and stanchions permanently affixed to real
estate, as well as transporting farming personnel, collecting,
conveying or transporting property to be used in farming and
transporting or conveying the farm product after the final
farming operation, which includes, but does not extend beyond,
the operation of packaging for the ultimate consumer and
storage.
((74) added June 30, 2021, P.L.124, No.25)
(75) The sale at retail or use of tangible personal property
manufactured for the purpose of initiating, supporting or
sustaining breast feeding. ((75) added June 30, 2021, P.L.124,
No.25)
(76) The sale at retail or use of services related to the
cleaning or maintenance of a storage trap utilized by a food
service or restaurant establishment to collect grease waste.
((76) added July 11, 2024, P.L. , No.56)
Compiler's Note: Section 30(1) of Act 56 of 2024 provided
that the addition of clause (76) shall apply to
transactions occurring after September 30, 2024.
Compiler's Note: Section 40(1) of Act 25 of 2021 provided
that the addition of clauses (74) and (75) shall apply
to sales at retail or uses after December 31, 2021.
Compiler's Note: See section 4 of Act 90 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Compiler's Note: Section 27 of Act 13 of 2019 provided
that the amendment or addition of clauses (49), (71) and
(72) shall apply to sales made after December 31, 2019.
Compiler's Note: Section 51(10) of Act 84 of 2016, which
added clause (70), provided that the addition of clause
(70) shall apply to the sale at retail or use of services
occurring after June 30, 2016.
Section 52(1) of Act 84 of 2016, which amended clause
(13) and added clause (70), provided that,
notwithstanding the provisions of the act of August 5,
1932 (Sp.Sess., P.L.45, No.45), referred to as the
Sterling Act, and the act of December 31, 1965 (P.L.1257,
No.511), known as The Local Tax Enabling Act, the
amendment or addition of clauses (13) and (70) shall not
preempt any tax imposed by a unit of local government
as of the effective date of section 52 unless
specifically provided for in Act 84.
Section 53.1 of Act 84 of 2016, which added clause
(70), provided that the addition of clause (70) may not
be used by the Department of Revenue or any party to an
audit, appeal or proceeding before the Department of
Revenue to determine the applicability of the tax imposed
under section 202 prior to the effective date of clause
(70).
Compiler's Note: Section 19(1)(iii) of Act 23 of 2000, which
added clause (60), provided that clause (60) shall apply
to transactions for which purchase agreements are
executed after June 30, 2000.
Compiler's Note: Section 32(6) of Act 4 of 1999, which
amended clause (57), provided that the amendment shall
apply to transactions which take place after December
31, 1998.
Compiler's Note: Section 15(b) of Act 55 of 1997 provided
that an exemption from tax under clause (10) existing
on the effective date of section 15 shall remain in
effect until the expiration of that exemption.
Compiler's Note: Section 6 of Act 68 of 1993, which added
clause (49), provided that the Department of Revenue
shall not take any action to collect or enforce any
unpaid tax liability incurred on or after January 1,
1991, for retail sales of food and beverages by nonprofit
corporations which would be excluded from tax under
clause (49).
Compiler's Note: The name of the Pennsylvania Fish
Commission, referred to in clause (39), was changed to
the Pennsylvania Fish and Boat Commission by Act 39 of
1991. See 30 Pa.C.S. § 308 (relating to designation of
commission).
Compiler's Note: Section 7 of Act 29 of 1983, which deleted
clause (27), provided that it is the intent of the
General Assembly that a portion of the revenues obtained
from the sales tax on cigarettes be used to fund the act
of December 18, 1980 (P.L.1241, No.224), known as the
Pennsylvania Cancer Control, Prevention and Research
Act.
Compiler's Note: The act of June 21, 1957 (P.L.390, No.212),
referred to as the Right-to-Know Law, referred to in
clause (66), was repealed by the act of Feb. 14, 2008
(P.L.6, No.3), known as the Right-to-Know Law.
Compiler's Note: The act of May 21, 1931 (P.L.194), known
as the Liquid Fuels Tax Act, referred to in paragraph
(11), was repealed by the act of May 26, 2017 (P.L.6,
No.3).
The act of January 14, 1952 (P.L.1965), known as the
Fuel Use Tax Act, referred to in paragraph (11), was
repealed by the act of May 26, 2017 (P.L.6, No.3).
Section 205. Alternate Imposition of Tax; Credits.--(a) If
any person actively and principally engaged in the business of
selling new or used motor vehicles, trailers or semi-trailers,
and registered with the department in the "dealer's class,"
acquires a motor vehicle, trailer or semi-trailer for the
purpose of resale, and prior to such resale, uses the motor
vehicle, trailer or semi-trailer for a taxable use under this
act, the person may pay a tax equal to six per cent of the fair
rental value of the motor vehicle, trailer or semi-trailer
during such use. This section shall not apply to the use of a
vehicle as a wrecker, parts truck, delivery truck or courtesy
car. ((a) amended July 12, 2006, P.L.1137, No.116)
(b) A commercial aircraft operator who acquires an aircraft
for the purpose of resale, or lease, or is entitled to claim
another valid exemption at the time of purchase, and subsequent
to such purchase, periodically uses the same aircraft for a
taxable use under this act, may elect to pay a tax equal to six
per cent of the fair rental value of the aircraft during such
use.
(205 amended June 9, 1978, P.L.463, No.62)
Section 206. Credit Against Tax.--(a) A credit against the
tax imposed by section 202 shall be granted with respect to
tangible personal property or services purchased for use outside
the Commonwealth equal to the tax paid to another state by
reason of the imposition by such other state of a tax similar
to the tax imposed by this article: Provided, however, That no
such credit shall be granted unless such other state grants
substantially similar tax relief by reason of the payment of
tax under this article or under the Tax Act of 1963 for
Education.
(b) ((b) deleted by amendment)
(206 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(1) of Act 52 of 2013, which
amended section 206, provided that a tax credit may not
be granted under subsection (b) after June 30, 2013.
PART IV
LICENSES
Section 208. Licenses.--(a) Every person maintaining a
place of business in this Commonwealth, with the exception of
a marketplace seller who makes no sales outside a forum for
which a marketplace facilitator is required to collect sales
tax on the seller's behalf and a shared vehicle owner who makes
no vehicle available for sharing outside a forum for which a
peer-to-peer car-sharing program marketplace facilitator is
required to collect sales tax on behalf of the shared vehicle
owner, selling or leasing services or tangible personal
property, the sale or use of which is subject to tax and who
has not hitherto obtained a license from the department, shall,
prior to the beginning of business thereafter, make application
to the department, on a form prescribed by the department, for
a license. If such person maintains more than one place of
business in this Commonwealth, the license shall be issued for
the principal place of business in this Commonwealth. ((a)
amended July 8, 2022, P.L.513, No.53)
(b) The department shall, after the receipt of an
application, issue the license applied for under subsection (a)
of this section, provided said applicant shall have filed all
required State tax reports and paid any State taxes not subject
to a timely perfected administrative or judicial appeal or
subject to a duly authorized deferred payment plan. Such license
shall be nonassignable. All licensees as of the effective date
of this subsection shall be required to file for renewal of
said license on or before January 31, 1992. Licenses issued
through April 30, 1992, shall be based on a staggered renewal
system established by the department. Thereafter, any license
issued shall be valid for a period of five years.
(b.1) If an applicant for a license or any person holding
a license has not filed all required State tax reports and paid
any State taxes not subject to a timely perfected administrative
or judicial appeal or subject to a duly authorized deferred
payment plan, the department may refuse to issue, may suspend
or may revoke said license. The department shall notify the
applicant or licensee of any refusal, suspension or revocation.
Such notice shall contain a statement that the refusal,
suspension or revocation may be made public. Such notice shall
be made by first class mail. An applicant or licensee aggrieved
by the determination of the department may file an appeal
pursuant to the provisions for administrative appeals in this
article, except that the appeal must be filed within thirty
days of the date of the notice. In the case of a suspension or
revocation which is appealed, the license shall remain valid
pending a final outcome of the appeals process. Notwithstanding
sections 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 of
the act or any other provision of law to the contrary, if no
appeal is taken or if an appeal is taken and denied at the
conclusion of the appeal process, the department may disclose,
by publication or otherwise, the identity of a person and the
fact that the person's license has been refused, suspended or
revoked under this subsection. Disclosure may include the basis
for refusal, suspension or revocation.
(c) A person that maintains a place of business in this
Commonwealth for the purpose of selling or leasing services or
tangible personal property, the sale or use of which is subject
to tax, without having a valid license at the time of the sale
or lease shall be guilty of a summary offense and, upon
conviction thereof, be sentenced to pay a fine of not less than
three hundred dollars ($300) nor more than one thousand five
hundred ($1,500) and, in default thereof, to undergo
imprisonment of not less than five days nor more than thirty
days. The penalties imposed by this subsection shall be in
addition to any other penalties imposed by this article. For
purposes of this subsection, the offering for sale or lease of
any service or tangible personal property, the sale or use of
which is subject to tax, during any calendar day shall
constitute a separate violation. The Secretary of Revenue may
designate employes of the department to enforce the provisions
of this subsection. The employes shall exhibit proof of and be
within the scope of the designation when instituting proceedings
as provided by the Pennsylvania Rules of Criminal Procedure.
(d) Failure of any person to obtain a license shall not
relieve that person of liability to pay the tax imposed by this
article.
(208 amended July 9, 2013, P.L.270, No.52)
PART V
HOTEL OCCUPANCY TAX
Section 209. Definitions.--(a) For the purposes of this
part V only, the following words, terms and phrases shall have
the meaning ascribed to them in this subsection, except where
the context clearly indicates a different meaning:
(1) "Hotel." ((1) deleted by amendment).
(1.1) "Accommodation fee." The amount by which the rent
exceeds the discount room charge, if any.
(1.2) "Booking agent." A person or entity which facilitates
or collects payment for hotel accommodations on behalf of or
for an operator. The term "booking agent" shall not include a
person who merely publishes advertisements for accommodations.
(1.3) "Discount room charge." The amount charged by an
operator to a booking agent in connection with the sale of an
accommodation by the booking agent.
(1.4) "Hotel." A building or buildings in which the public
may, for consideration, obtain sleeping accommodations. The
term "hotel" shall not include any charitable, educational or
religious institution summer camp for children, hospital or
nursing home.
(2) "Occupant." A person (other than a "permanent resident,"
as defined herein,) who, for a consideration, uses, possesses
or has a right to use or possess any room or rooms in a hotel
under any lease, concession, permit, right of access, license
or agreement.
(3) "Occupancy." The use or possession or the right to the
use or possession by any person (other than a "permanent
resident,") of any room or rooms in a hotel for any purpose or
the right to the use or possession of the furnishings or to the
services and accommodations accompanying the use and possession
of the room or rooms.
(4) "Operator." Any person operating a hotel or acting as
a booking agent.
(5) "Permanent resident." Any occupant who has occupied or
has the right to occupancy of any room or rooms in a hotel for
at least thirty consecutive days.
(6) "Rent." The consideration received for occupancy valued
in money, whether received in money or otherwise, including all
receipts, cash, credits and property or services of any kind
or nature, accommodation fees and any amount for which the
occupant is liable for the occupancy without any deduction
therefrom whatsoever, including any amount charged by a booking
agent. The term "rent" shall not include a gratuity.
((a) amended Oct. 24, 2018, P.L.707, No.109)
(b) The following words, terms and phrases and words, terms
and phrases of similar import, when used in parts IV and VI of
this article for the purposes of those parts only, shall, in
addition to the meaning ascribed to them by section 201 of this
article, have the meaning ascribed to them in this subsection,
except where the context clearly indicates a different meaning:
(1) "Maintaining a place of business in this Commonwealth,"
being the operator of a hotel in this Commonwealth.
(2) "Purchase at retail," occupancy.
(3) "Purchase price," rent.
(4) "Purchaser," occupant.
(5) "Sale at retail," the providing of occupancy to an
occupant by an operator.
(6) "Tangible personal property," occupancy.
(7) "Vendor," operator.
(8) "Services," occupancy.
(9) "Use," occupancy.
Section 210. Imposition of Tax.--(a) There is hereby
imposed an excise tax of six per cent of the rent upon every
occupancy of a room or rooms in a hotel in this Commonwealth,
which tax shall be collected by the operator from the occupant
and paid over to the Commonwealth as herein provided. If a
booking agent, acting for an operator, collects payment for
rent, the booking agent must collect and remit the following:
(1) The tax imposed under this section.
(2) Any additional or optional hotel tax imposed under:
(i) The act of June 5, 1991 (P.L.9, No.6), known as the
"Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class";
(ii) The act of December 21, 1998 (P.L.1307, No.174), known
as the "Community and Economic Improvement Act";
(iii) 64 Pa.C.S. Ch. 60 (relating to Pennsylvania Convention
Center Authority);
(iv) Articles XVII and XXIII of the act of August 9, 1955
(P.L.323, No.130), known as "The County Code"; or
(v) The act of July 28, 1953 (P.L.723, No.230), known as
the "Second Class County Code."
(b) Notwithstanding any provision of law to the contrary,
the following shall apply:
(1) The collected and remitted tax imposed under subsection
(a)(1) shall be deposited into the Tourism Promotion Fund
established under section 212.
(2) The collected and remitted tax imposed under subsection
(a)(2) shall be deposited in accordance with a county ordinance.
(c) An operator shall not be liable for tax owed regarding
an accommodation fee.
(d) A booking agent shall not be required to separately
disclose to an occupant the amount of the tax imposed that
relates to a discount room charge versus an accommodation fee.
(210 amended Oct. 24, 2018, P.L.707, No.109)
Section 211. Seasonal Tax Returns.--Notwithstanding any
other provisions in this act, the department may, by regulation,
waive the requirement for the filing of quarterly returns in
the case of any operator whose hotel is operated only during
certain seasons of the year, and may provide for the filing of
returns by such persons at times other than those provided by
section 221.
Section 212. Tourism Promotion Fund.--(a) A restricted
revenue account is established within the Treasury Department
to be known as the Tourism Promotion Fund.
(b) The tax collected by a booking agent on accommodation
fees under section 210 shall be deposited into the fund and
disbursed upon appropriation for the purpose of promoting
tourism in this Commonwealth.
(c) The department shall promulgate guidelines, rules and
regulations as necessary to achieve the purpose of promoting
tourism in this Commonwealth.
(c.1) Money from the fund may not be used for the promotion
or marketing operations of a tourism entity or for special
events or grants until thirty days after the publication of the
guidelines, rules and regulations under subsection (c) in the
Pennsylvania Bulletin.
(c.2) The following shall apply:
(1) No more than fifty per cent of the funds available for
disbursement under subsection (b) may be distributed for the
purposes of promotion or marketing operations of a tourism
entity or for special events or grants.
(2) Funding for the promotion or marketing operations of a
tourism entity, special events or grants shall require a fifty
per cent cash or in-kind match.
(3) A single recipient of funding under paragraph (2) may
not be awarded more than fifteen per cent of the total funds
available for disbursement under subsection (b). This paragraph
shall not apply to contracts entered into by the department for
Statewide tourism promotion or marketing.
(c.3) Funds available for disbursement under subsection (b)
may not be used for capital projects or for the design,
construction, rehabilitation, repair, installation or purchase
of any building, structure or sign in this Commonwealth.
(d) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection unless
the context clearly indicates otherwise:
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Fund." The Tourism Promotion Fund established under
subsection (a).
"Promoting tourism." Activities and expenditures designed
to increase tourism, including, but not limited to, the
following:
(1) Advertising, publicizing or otherwise distributing
information for the purpose of attracting and welcoming
tourists.
(2) Developing strategies to expand tourism.
(3) Funding the promotion or marketing operations of a
tourism entity.
(4) Funding marketing and operations of special events and
festivals designed to attract tourists.
"Tourism entity." A "tourism promotion agency" as defined
in section 2 of the act of July 4, 2008 (P.L.621, No.50), known
as the "Tourism Promotion Act," destination marketing
organization or regional attractions marketing agency.
(212 added Oct. 24, 2018, P.L.707, No.109)
PART V-A
MARKETPLACE SALES
(Pt. added Oct. 30. 2017, P.L.672, No.43)
Section 213. Definitions.--For the purposes of this part
V-A only, the following words, terms and phrases shall have the
meaning ascribed to them in this section, except where the
context clearly indicates a different meaning:
(a) "Affiliated person." A person that, with respect to
another person:
(1) has a direct or indirect ownership interest of more
than five percent in the other person; or
(2) is related to the other person because a third person,
or group of third persons who are affiliated with each other
as defined in this subsection, holds a direct or indirect
ownership interest of more than five percent in the related
person.
(b) "Forum." A place where sales at retail occur, whether
physical or electronic. The term includes a store, a booth, a
publicly accessible Internet website, a catalog or similar
place.
(c) "Marketplace facilitator." A person that facilitates
the sale at retail of tangible personal property. For purposes
of this section, a person facilitates a sale at retail if the
person or an affiliated person:
(1) lists or advertises tangible personal property for sale
at retail in any forum; and
(2) either directly or indirectly through agreements or
arrangements with third parties, collects the payment from the
purchaser and transmits the payment to the person selling the
property.
The term includes a person that may also be a vendor.
(d) "Marketplace seller." A person that has an agreement
with a marketplace facilitator pursuant to which the marketplace
facilitator facilitates sales for the person.
(e) "Notice and reporting requirements." The notice
requirements under section 213.2 and the reporting requirements
under sections 213.3 and 213.4.
(f) "Referral." The transfer by a referrer of a potential
purchaser to a person that advertises or lists products for
sale on the referrer's platform.
(g) "Referrer." A person, other than a person engaging in
the business of printing or publishing a newspaper, that,
pursuant to an agreement or arrangement with a marketplace
seller or remote seller, does the following:
(1) Agrees to list or advertise for sale at retail one or
more products of the marketplace seller or remote seller in a
physical or electronic medium.
(2) Receives consideration from the marketplace seller or
remote seller from the sale offered in the listing or
advertisement.
(3) Transfers by telecommunications, Internet link or other
means, a purchaser to a marketplace seller, remote seller or
affiliated person to complete a sale.
(4) Does not collect a receipt from the purchaser for the
sale.
The term does not include a person that:
(1) provides Internet advertising services; and
(2) does not provide the marketplace seller's or remote
seller's shipping terms or advertise whether a marketplace
seller or remote seller collects a sales or use tax.
The term includes a person that may also be a vendor.
(h) "Remote seller." A person, other than a marketplace
facilitator, a marketplace seller or a referrer, that does not
maintain a place of business in this Commonwealth that, through
a forum, sells tangible personal property at retail, the sale
or use of which is subject to the tax imposed by this article.
The term does not include an employe who in the ordinary scope
of employment renders services to his employer in exchange for
wages and salaries.
(213 added Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: See section 33 of Act 13 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Section 213.1. Election.--(a) Subject to the provisions
of subsections (c) and (d), on or before March 1, 2018, and on
or before June 1 of each calendar year thereafter, beginning
June 1, 2019, a remote seller, a marketplace facilitator or a
referrer that had aggregate sales at retail of tangible personal
property subject to tax under this article within this
Commonwealth or delivered to locations within this Commonwealth
worth at least ten thousand dollars ($10,000) during the
immediately preceding twelve-calendar-month period shall file
an election with the department to collect and remit the tax
imposed under section 202 or to comply with the notice and
reporting requirements. The election shall be made on a form
and in a manner prescribed by the department and, except as
provided in subsection (e), shall apply to the next succeeding
fiscal year.
(b) A remote seller, a marketplace facilitator or a referrer
that makes an election under subsection (a) to collect and remit
the tax imposed under section 202 shall obtain a license under
Part IV of this article.
(c) The requirement by a marketplace facilitator to make
an election under subsection (a) shall only apply to the
following:
(1) sales at retail through the marketplace facilitator's
forum made by or on behalf of a marketplace seller that does
not maintain a place of business in this Commonwealth; and
(2) sales at retail made by a marketplace facilitator on
its own behalf if the marketplace facilitator does not maintain
a place of business in this Commonwealth.
(d) The requirement by a referrer to make an election under
subsection (a) shall only apply to sales at retail:
(1) directly resulting from a referral of a purchaser to a
marketplace seller that does not maintain a place of business
in this Commonwealth;
(2) directly resulting from a referral of a purchaser to a
remote seller; and
(3) of the referrer's own products if the referrer does not
maintain a place of business in this Commonwealth.
A referrer may make an election under subsection (a) for the
sales described in paragraphs (1) and (2) that is different
from the election made for the sales described in paragraph
(3).
(e) An election made on or before March 1, 2018, shall be
in effect for the balance of the 2017-2018 fiscal year and for
the 2018-2019 fiscal year. A remote seller, a marketplace
facilitator or a referrer may change an election to comply with
the notice and reporting requirements to an election to collect
and remit the tax imposed under section 202 at any time during
a fiscal year by filing a new election with the department and
obtaining a license under Part IV of this article. The new
election shall be effective thirty days after the filing and
shall be effective for the balance of the fiscal year in which
the new election was filed and for the next succeeding fiscal
year.
(f) A remote seller, a marketplace facilitator or a referrer
who does not submit an election under subsection (a) or a new
election under subsection (e) shall be deemed to have elected
to comply with the notice and reporting requirements.
(g) In addition to records that may be required to be
maintained under other applicable provisions of this article
by a remote seller, a marketplace facilitator or a referrer, a
remote seller, a marketplace facilitator or a referrer subject
to this part shall also be subject to section 271 relating to
the keeping of records and section 272 relating to the
examination of records by the department and agents and employes
of the department.
(213.1 added Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: See section 33 of Act 13 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Section 213.2. Notice Requirements.--(a) A remote seller,
a marketplace facilitator or a referrer required to make an
election under section 213.1(a) that does not elect to collect
and remit the tax imposed by section 202 shall comply with the
applicable notice requirements of this section.
(b) A remote seller or marketplace facilitator subject to
the requirements of this section shall:
(1) Post a conspicuous notice on its forum that informs
purchasers intending to purchase tangible personal property for
delivery to a location within this Commonwealth that includes
all of the following:
(i) sales or use tax may be due in connection with the
purchase and delivery of the tangible personal property;
(ii) the Commonwealth requires the purchaser to file a
return if use tax is due in connection with the purchase and
delivery; and
(iii) the notice is required by this section.
(2) Provide a written notice to each purchaser at the time
of each sale at retail that includes all of the following:
(i) a statement that sales tax is not being collected in
connection with the purchase;
(ii) a statement that the purchaser may be required to remit
use tax directly to the department; and
(iii) instructions for obtaining additional information
from the department regarding whether and how to remit use tax
to the department.
(c) The notice required by subsection (b)(2) must be
prominently displayed on all invoices and order forms and on
each sales receipt or similar document, whether in paper or
electronic form, provided to the purchaser. No statement that
sales or use tax is not imposed on a transaction may be made
by a remote seller or marketplace facilitator unless the
transaction is exempt from sales and use tax pursuant to this
article or other applicable Commonwealth law.
(d) A referrer subject to the requirements of this section
shall post a conspicuous notice on its platform that informs
purchasers intending to purchase tangible personal property for
delivery to a location within this Commonwealth that includes
all of the following:
(1) Sales or use tax may be due in connection with the
purchase and delivery.
(2) The person to which the purchaser is being referred may
or may not collect and remit sales tax to the department in
connection with the transaction.
(3) The Commonwealth requires the purchaser to file a return
if use tax is due in connection with the purchase and delivery
and not collected by the person.
(4) The notice is required by this section.
(5) Instructions for obtaining additional information from
the department regarding whether and how to remit sales or use
tax to the department.
(6) If the person to whom the purchaser is being referred
does not collect sales tax on a subsequent purchase by the
purchaser, the person may be required to provide information
to the purchaser and the department about the purchaser's
potential sales or use tax liability.
(e) The notice required under subsection (d) must be
prominently displayed and may include pop-up boxes or
notification by other means that appears when the referrer
transfers a purchaser to another person to complete the sale.
(213.2 added Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: See section 33 of Act 13 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Compiler's Note: Section 47(1)(i) of Act 43 of 2017, which
added section 213.2, provided that section 213.2 shall
apply to transactions that occur after March 31, 2018.
Section 47(1)(ii) of Act 43 of 2017 provided that
section 213.2, as it relates to tangible personal property
described in section 201(m)(2), shall apply to
transactions that occur after March 31, 2019.
Section 49(5)(ii) of Act 43 of 2017 provided that
section 213.2, as it relates to tangible personal property
described in section 201(m)(2), shall take effect February
1, 2019.
Section 213.3. Reports to Purchasers and Marketplace
Sellers.--(a) A remote seller or marketplace facilitator
required to make an election under section 213.1(a) that does
not elect to collect and remit the tax imposed by section 202
shall, no later than January 31 of each year, provide a written
report to each purchaser required to receive the notice under
section 213.2(b)(2) during the immediately preceding calendar
year that includes all of the following:
(1) A statement that the remote seller or marketplace
facilitator did not collect sales tax in connection with the
purchaser's transactions with the remote seller or marketplace
facilitator and that the purchaser may be required to remit use
tax to the department.
(2) A list, by date, indicating the type and purchase price
of each product purchased or leased by the purchaser from the
remote seller or marketplace facilitator and delivered to a
location within this Commonwealth.
(3) Instructions for obtaining additional information from
the department regarding whether and how to remit use tax to
the department.
(4) A statement that the remote seller or marketplace
facilitator is required to submit a report to the department
under section 213.4 that includes the name of the purchaser and
the aggregate dollar amount of the purchaser's purchases from
the remote seller or marketplace facilitator.
(5) Such additional information as the department may
reasonably require.
(b) The department shall prescribe the form of the report
required under subsection (a) and shall make the form available
on its publicly accessible Internet website.
(c) The report required under subsection (a) shall be mailed
by first class mail in an envelope prominently marked with words
indicating that important tax information is enclosed to the
purchaser's billing address, if known, or, if unknown, to the
purchaser's shipping address. If the purchaser's billing and
shipping addresses are unknown, the report shall be sent
electronically to the purchaser's last known e-mail address
with a subject heading indicating that important tax information
is being provided.
(d) A referrer required to make an election under section
213.1(a) that does not elect to collect and remit the tax
imposed by section 202 shall, no later than January 31 of each
year, provide a written notice to each remote seller to whom
the referrer transferred a potential purchaser located in this
Commonwealth during the immediately preceding calendar year
that includes all of the following:
(1) A statement that a sales or use tax may be imposed by
the Commonwealth on the transaction.
(2) A statement that the remote seller may be required to
make the election required by section 213.1(a).
(3) Instructions for obtaining additional information
regarding sales and use tax from the department.
(213.3 added Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: See section 33 of Act 13 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Section 213.4. Reports to Department.--(a) A remote seller
or marketplace facilitator required to make an election under
section 213.1(a) that does not elect to collect and remit the
tax imposed by section 202 shall, no later than January 31 of
each year, submit a report to the department. The report shall
include, with respect to each purchaser required to receive the
notice under section 213.2(b)(2) during the immediately
preceding calendar year, the following:
(1) The purchaser's name.
(2) The purchaser's billing address and, if different, the
purchaser's last known mailing address.
(3) The address within this Commonwealth to which products
were delivered to the purchaser.
(4) The aggregate dollar amount of the purchaser's purchases
from the remote seller or marketplace facilitator.
(5) The name and address of the remote seller, marketplace
facilitator or marketplace seller that made the sales to the
purchaser.
(b) A referrer required to make an election under section
213.1(a) that does not elect to collect and remit the tax
imposed by section 202 shall, no later than January 31 of each
year, submit a report to the department. The report shall
include a list of persons who received the notice required under
section 213.3(d).
(c) The department shall prescribe the forms of the reports
required under this section and shall make them available on
its publicly accessible Internet website. The reports shall be
submitted electronically in such manner as the department shall
require.
(d) A report required under this section shall be submitted
by an officer of the remote seller, the marketplace facilitator
or the referrer and shall include a statement, made under
penalty of perjury, by the officer that the remote seller, the
marketplace facilitator or the referrer made reasonable efforts
to comply with the notice and reporting requirements of this
part.
(213.4 added Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: See section 33 of Act 13 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Section 213.5. Liability and Penalties.--(a) The department
shall assess a penalty in the amount of twenty thousand dollars
($20,000) or twenty per cent of total sales in Pennsylvania
during the previous twelve months, whichever is less, against
a remote seller, a marketplace facilitator or a referrer that
makes an election under section 213.1(a) to comply with the
notice and reporting requirements, or is deemed to have made
such election under section 213.1(f), and fails to comply with
the requirements under section 213.3 or 213.4. The penalty shall
be assessed separately for each violation but may only be
assessed once in a calendar year.
(b) A remote seller, a marketplace facilitator or a referrer
that makes an election under section 213.1(a) to collect and
remit the tax imposed under section 202 shall be subject to all
of the provisions of this article with respect to the collection
and remittance of such tax and shall be subject to all of the
penalties, interest and additions for failing to comply with
the provisions of this article except as provided in this
section.
(c) For a period of five years after the effective date of
this section, the department may abate or reduce any penalty
or addition imposed under subsection (b) due to hardship or for
good cause shown.
(d) A marketplace facilitator or a referrer is relieved of
liability under subsection (b) if the marketplace facilitator
or the referrer can show to the satisfaction of the department
that the failure to collect the correct amount of tax was due
to incorrect information given to the marketplace facilitator
or the referrer by a marketplace seller or remote seller.
(e) A class action may not be brought against a marketplace
facilitator or a referrer on behalf of purchasers arising from
or in any way related to an overpayment of sales or use tax
collected by the marketplace facilitator or the referrer,
regardless of whether such action is characterized as a tax
refund claim. Nothing in this subsection shall affect a
purchaser's right to seek a refund from the department under
other provisions of this article.
(213.5 added Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: See section 33 of Act 13 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Section 213.6. Application.--Nothing in this section affects
the obligations of a vendor to register with the department and
to collect and remit sales tax or use tax.
(213.6 added Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: See section 33 of Act 13 of 2019 in the
appendix to this act for special provisions relating to
applicability.
PART VI
PROCEDURE AND ADMINISTRATION
CHAPTER I
RETURNS
Section 215. Persons Required to Make Returns.--Every person
required to pay tax to the department or collect and remit tax
to the department, but not including a marketplace seller who
solely makes sales through a marketplace facilitator that is
required to collect sales tax on the seller's behalf and
receives a certification from the marketplace facilitator that
the marketplace facilitator will collect, report and remit the
proper sales tax, shall file returns with respect to such tax.
(215 amended June 28, 2019, P.L.50, No.13)
Section 216. Form of Returns.--The returns required by
section 215 shall be on forms prescribed by the department, and
shall show such information with respect to the taxes imposed
by this article as the department may reasonably require.
CHAPTER II
TIME AND PLACE FOR FILING RETURNS
Section 217. Time for Filing Returns.--(a) Quarterly and
Monthly Returns:
(1) For the year in which this article becomes effective
and in each year thereafter a return shall be filed quarterly
by every licensee on or before the twentieth day of April, July,
October and January for the three months ending the last day
of March, June, September and December.
(2) For the year in which this article becomes effective,
and in each year thereafter, a return shall be filed monthly
with respect to each month by every licensee whose actual tax
liability for the third calendar quarter of the preceding year
equals or exceeds six hundred dollars ($600) and is less than
twenty-five thousand dollars ($25,000). Such returns shall be
filed on or before the twentieth day of the next succeeding
month with respect to which the return is made. Any licensee
required to file monthly returns hereunder shall be relieved
from filing quarterly returns.
(3) With respect to every licensee whose actual tax
liability for the third calendar quarter of the preceding year
equals or exceeds twenty-five thousand dollars ($25,000) and
is less than one hundred thousand dollars ($100,000), the
licensee shall, on or before the twentieth day of each month,
file a single return consisting of all of the following:
(i) Either of the following:
(A) An amount equal to fifty per centum of the licensee's
actual tax liability for the same month in the preceding
calendar year if the licensee was a monthly filer or, if the
licensee was a quarterly or semi-annual filer, fifty per centum
of the licensee's average actual tax liability for that tax
period in the preceding calendar year. The average actual tax
liability shall be the actual tax liability for the tax period
divided by the number of months in that tax period. For
licensees that were not in business during the same month in
the preceding calendar year or were in business for only a
portion of that month, fifty per centum of the average actual
tax liability for each tax period the licensee has been in
business. If the licensee is filing a tax liability for the
first time with no preceding tax periods, the amount shall be
zero.
(B) An amount equal to or greater than fifty per centum of
the licensee's actual tax liability for the same month.
(ii) An amount equal to the taxes due for the preceding
month, less any amounts paid in the preceding month as required
by subclause (i).
(4) With respect to each month by every licensee whose
actual tax liability for the third calendar quarter of the
preceding year equals or exceeds one hundred thousand dollars
($100,000), the licensee shall, on or before the twentieth day
of each month, file a single return consisting of the amounts
under clause (3)(i)(A) and (ii).
(5) The amount due under clause (3)(i) or (4) shall be due
the same day as the remainder of the preceding month's tax.
(6) The department shall determine whether the amounts
reported under clause (3) or (4) shall be remitted as one
combined payment or as two separate payments.
(7) The department may require the filing of the returns
and the payments for these types of filers by electronic means
approved by the department.
(8) Any licensee filing returns under clause (3) or (4)
shall be relieved of filing quarterly returns.
(9) If a licensee required to remit payments under clause
(3) or (4) fails to make a timely payment or makes a payment
which is less than the required amount, the department may, in
addition to any applicable penalties, impose an additional
penalty equal to five per centum of the amount due under clause
(3) or (4) which was not timely paid. The penalty under this
clause shall be determined when the tax return is filed for the
tax period.
(b) Annual Returns. For the calendar year 1971, and for
each year thereafter, no annual return shall be filed, except
as may be required by rules and regulations of the department
promulgated and published at least sixty days prior to the end
of the year with respect to which the returns are made. Where
such annual returns are required licensees shall not be required
to file such returns prior to the twentieth day of the year
succeeding the year with respect to which the returns are made.
(c) Other Returns. Any person, other than a licensee, liable
to pay to the department any tax under this article, shall file
a return on or before the twentieth day of the month succeeding
the month in which such person becomes liable for the tax.
(d) Small Taxpayers. The department, by regulation, may
waive the requirement for the filing of quarterly return in the
case of any licensee whose individual tax collections do not
exceed seventy-five dollars ($75) per calendar quarter and may
provide for reporting on a less frequent basis in such cases.
(217 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 30(1) of Act 85 of 2012, which
amended section 217, provided that the amendment shall
apply to tax returns due after September 30, 2012. See
section 29.1 of Act 85 in the appendix to this act for
special provisions relating to continuation of prior
law.
Section 218. Extension of Time for Filing Returns.--The
department may, on written application and for good cause shown,
grant a reasonable extension of time for filing any return
required under this part. However, the time for making a return
shall not be extended for more than three months.
Section 219. Place for Filing Returns.--Returns shall be
filed with the department at its main office or at any branch
office which it may designate for filing returns.
Section 220. Timely Mailing Treated as Timely Filing and
Payment.--Notwithstanding the provisions of any State tax law
to the contrary, whenever a report or payment of all or any
portion of a State tax is required by law to be received by the
Pennsylvania Department of Revenue or other agency of the
Commonwealth on or before a day certain, the taxpayer shall be
deemed to have complied with such law if the letter transmitting
the report or payment of such tax which has been received by
the department is postmarked by the United States Postal Service
on or prior to the final day on which the payment is to be
received.
For the purposes of this article, presentation of a receipt
indicating that the report or payment was mailed by registered
or certified mail on or before the due date shall be evidence
of timely filing and payment.
(220 amended June 27, 1974, P.L.376, No.126)
CHAPTER III
PAYMENT OF TAX
Section 221. Payment.--When a return of tax is required
under this part, the person required to make the return shall
pay the tax to the department.
Section 222. Time of Payment.--(a) Monthly and Quarterly
Payments. The tax imposed by this article and incurred or
collected by a licensee shall be due and payable by the licensee
on the day the return is required to be filed under the
provisions of section 217 and such payment must accompany the
return.
(b) Annual Payments. If the amount of tax due for the
preceding year as shown by the annual return of any taxpayer
is greater than the amount already paid by him in connection
with his monthly or quarterly returns he shall send with such
annual return a remittance for the unpaid amount of tax for the
year.
(c) Other Payments. Any person other than a licensee liable
to pay any tax under this article shall remit the tax at the
time of filing the return required by this article.
(222 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 30(1) of Act 85 of 2012, which
amended section 222, provided that the amendment shall
apply to tax returns due after September 30, 2012. See
section 29.1 of Act 85 in the appendix to this act for
special provisions relating to continuation of prior
law.
Section 223. Other Times for Payment.--In the event that
the department authorizes a taxpayer to file a return at other
times than those specified in section 217, the tax due shall
be paid at the time such return is filed.
Section 224. Place for Payment.--The tax imposed by this
article shall be paid to the department at the place fixed for
filing the return.
Section 225. Tax Held in Trust for the Commonwealth.--All
taxes collected by any person from purchasers in accordance
with this article and all taxes collected by any person from
purchasers under color of this article, including all taxes
paid by any person who advertises or holds out or states,
directly or indirectly, that such person will pay the tax for
the purchaser, which have not been properly refunded by such
person to the purchaser shall constitute a trust fund for the
Commonwealth, and such trust shall be enforceable against such
person, his representatives and any person (other than a
purchaser to whom a refund has been made properly) receiving
any part of such fund without consideration, or knowing that
the taxpayer is committing a breach of trust: Provided, however,
That any person receiving payment of a lawful obligation of the
taxpayer from such fund shall be presumed to have received the
same in good faith and without any knowledge of the breach of
trust. Any person, other than a taxpayer, against whom the
department makes any claim under this section shall have the
same right to petition and appeal as is given taxpayers by any
provisions of this part.
(225 amended June 28, 2019, P.L.50, No.13)
Section 226. Local Receivers of Use Tax.--(226 repealed
July 9, 2013, P.L.270, No.52)
Section 227. Discount.--If a return is filed by a licensee
and the tax shown to be due thereon less any discount is paid
all within the time prescribed, the licensee shall be entitled,
as compensation for the expense of collecting and remitting the
tax and as a consideration of the prompt payment of the tax,
to credit and apply against the tax payable by the licensee a
discount of the lesser of:
(1) one per cent of the amount of the tax collected; or
(2) as follows:
(i) twenty-five dollars ($25) per return for a monthly
filer;
(ii) seventy-five dollars ($75) per return for a quarterly
filer; or
(iii) one hundred fifty dollars ($150) per return for a
semiannual filer.
(227 amended July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 51(1) of Act 84 of 2016, which
amended section 227, provided that the amendment of
section 227 shall apply to returns due on or after August
1, 2016.
Section 52(1) of Act 84 of 2016 provided that,
notwithstanding the provisions of the act of August 5,
1932 (Sp.Sess., P.L.45, No.45), referred to as the
Sterling Act, and the act of December 31, 1965 (P.L.1257,
No.511), known as The Local Tax Enabling Act, the
amendment of section 227 shall not preempt any tax
imposed by a unit of local government as of the effective
date of section 52 unless specifically provided for in
Act 84.
CHAPTER IV
ASSESSMENT AND COLLECTION OF TAX
Section 230. Assessment.--(a) The department is authorized
and required to make the inquiries, determinations and
assessments of the tax (including interest, additions and
penalties) imposed by this article. A notice of assessment and
demand for payment shall be mailed to the taxpayer. The notice
shall set forth the basis of the assessment.
(b) ((b) deleted by amendment).
(c) A marketplace facilitator is relieved of liability under
subsection (a) if the marketplace facilitator can show to the
satisfaction of the department that the failure to collect the
correct amount of tax was due to incorrect information given
to the marketplace facilitator by a marketplace seller. ((c)
added June 28, 2019, P.L.50, No.13)
(d) A marketplace seller is relieved of liability under
subsection (a) pertaining to those sales made through a
marketplace facilitator, when the marketplace facilitator
certifies to the seller that the marketplace facilitator will
collect, report and remit the proper sales tax, unless the
seller gave incorrect information to the marketplace
facilitator. ((d) added June 28, 2019, P.L.50, No.13)
(230 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 15 of Act 55 of 2007, which amended
section 230, provided that the amendment of section 230
shall apply to assessments issued after December 31,
2007.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 231. Mode and Time of Assessment.--(a) Underpayment
of Tax. Within a reasonable time after any return is filed, the
department shall examine it and, if the return shows a greater
tax due or collected than the amount of tax remitted with the
return, the department shall issue an assessment for the
difference, together with an addition of three per cent of such
difference, which shall be paid to the department within ten
days after a notice of the assessment has been mailed to the
taxpayer. If such assessment is not paid within ten days, there
shall be added thereto and paid to the department an additional
three per cent of such difference for each month thereof during
which the assessment remains unpaid, but the total of all
additions shall not exceed eighteen per cent of the difference
shown on the assessment.
(b) Understatement of Tax. If the department determines
that any return or returns of any taxpayer understates the
amount of tax due, it shall determine the proper amount and
shall ascertain the difference between the amount of tax shown
in the return and the amount determined, such difference being
hereafter sometimes referred to as the "deficiency." A notice
of assessment for the deficiency and the reasons therefor shall
then be sent to the taxpayer. The deficiency shall be paid to
the department within thirty days after a notice of the
assessment thereof has been mailed to the taxpayer.
(c) Failure to File Return. In the event that any taxpayer
fails to file a return required by this article, the department
may make an estimated assessment (based on information
available) of the proper amount of tax owing by the taxpayer.
A notice of assessment in the estimated amount shall be sent
to the taxpayer. The tax shall be paid within thirty days after
a notice of such estimated assessment has been mailed to the
taxpayer.
(d) Authority to Establish Effective Rates by Business
Classification. The department is authorized to make the studies
necessary to compute effective rates by business classification,
based upon the ratio between the tax required to be collected
and taxable sales and to use such rates in arriving at the
apparent tax liability of a taxpayer.
Any assessment based upon such rates shall be prima facie
correct, except that such rate shall not be considered where a
taxpayer establishes that such rate is based on a sample
inapplicable to him.
Section 232. Reassessment.--Any taxpayer against whom an
assessment is made may petition the department for a
reassessment pursuant to Article XXVII.
(232 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 233. Assessment to Recover Erroneous Refunds.--The
department may, within two years of the granting of any refund
or credit, or within the period in which an assessment could
have been filed by the department with respect to the
transaction pertaining to which the refund was granted,
whichever period shall last occur, file an assessment to recover
any refund or part thereof or credit or part thereof which was
erroneously made or allowed.
Section 234. Review by Board of Finance and Revenue.--(234
deleted by amendment Oct. 18, 2006, P.L.1149, No.119)
Section 235. Appeal to Commonwealth Court.--(235 deleted
by amendment Oct. 18, 2006, P.L.1149, No.119)
Section 236. Burden of Proof.--In all cases of petitions
for reassessment, review or appeal, the burden of proof shall
be upon the petitioner or appellant, as the case may be.
Section 237. Collection of Tax.--(a) Collection by
Department. The department shall collect the tax in the manner
provided by law for the collection of taxes imposed by the laws
of this Commonwealth.
(b) Collection by Persons Maintaining a Place of Business
in the Commonwealth. (1) Every person maintaining a place of
business in this Commonwealth and selling or leasing tangible
personal property or services, with the exception of a
marketplace seller who solely makes sales through a marketplace
facilitator that is required to collect sales tax on the
marketplace seller's behalf and receives a certification from
the marketplace facilitator that the marketplace facilitator
will collect, report and remit the proper sales tax, the sale
or use of which is subject to tax shall collect the tax from
the purchaser or lessee at the time of making the sale or lease,
and shall remit the tax to the department, unless such
collection and remittance is otherwise provided for in this
article. ((1) amended June 28, 2019, P.L.50, No.13)
(1.1) Every person not otherwise required to collect tax
that delivers tangible personal property to a location within
this Commonwealth and that unpacks, positions, places or
assembles the tangible personal property shall collect the tax
from the purchaser at the time of delivery and shall remit the
tax to the department if the person delivering the tangible
personal property is responsible for collecting any portion of
the purchase price of the tangible personal property delivered
and the purchaser has not provided the person with proof that
the tax imposed by this article has been or will be collected
by the seller or that the purchaser provided the seller with a
valid exemption certificate. Every person required to collect
tax under this clause shall be deemed to be selling or leasing
tangible personal property or services, the sale or use of which
is subject to the tax imposed under section 202. ((1.1) added
June 29, 2002, P.L.559, No.89)
(1.2) (i) A vendor maintaining a place of business within
this Commonwealth under section 201(b)(3.5) in calendar year
2018 shall collect sales tax from July 1, 2019, through March
31, 2020.
(ii) A vendor maintaining a place of business within this
Commonwealth under section 201(b)(3.5) in calendar years after
2018 shall collect sales tax from the second quarter, beginning
April 1, of the following calendar year through the first
quarter, ending March 31, of the next calendar year.
((1.2) added June 28, 2019, P.L.50, No.13)
(2) Any person required under this article to collect tax
from another person, who shall fail to collect the proper amount
of such tax, shall be liable for the full amount of the tax
which he should have collected.
((b) amended Dec. 28, 1972, P.L.1633, No.340)
(b.1) Collection by Marketplace Facilitators. A marketplace
facilitator maintaining a place of business in this Commonwealth
must collect and remit the sales tax on all sales, leases and
deliveries of tangible personal property, and all sales of
services, by marketplace sellers whose sales are facilitated
through the marketplace facilitator's forum. ((b.1) added June
28, 2019, P.L.50, No.13)
(c) Exemption Certificates. If the tax does not apply to
the sale or lease of tangible personal property or services,
the purchaser or lessee shall furnish to the vendor a
certificate indicating that the sale is not legally subject to
the tax. The certificate shall be in substantially such form
as the department may, by regulation, prescribe. Where the
tangible personal property or service is of a type which is
never subject to the tax imposed or where the sale or lease is
in interstate commerce, such certificate need not be furnished.
Where a series of transactions are not subject to tax, a
purchaser or user may furnish the vendor with a single exemption
certificate in substantially such form and valid for such period
of time as the department may, by regulation, prescribe. The
department shall provide all school districts and intermediate
units with a permanent tax exemption number. An exemption
certificate, which is complete and regular and on its face
discloses a valid basis of exemption if taken in good faith,
shall relieve the vendor from the liability imposed by this
section. An exemption certificate accepted by a vendor from a
natural person domiciled within this Commonwealth or any
association, fiduciary, partnership, corporation or other
entity, either authorized to do business within this
Commonwealth or having an established place of business within
this Commonwealth, in the ordinary course of the vendor's
business, which on its face discloses a valid basis of exemption
consistent with the activity of the purchaser and character of
the property or service being purchased or which is provided
to the vendor by a charitable, religious, educational, volunteer
firefighters' relief association or volunteer firemen's
organization and contains the organization's charitable
exemption number and which, in the case of any purchase costing
two hundred dollars ($200) or more, is accompanied by a sworn
declaration on a form to be provided by the department of an
intended usage of the property or service which would render
it nontaxable, shall be presumed to be taken in good faith and
the burden of proving otherwise shall be on the Department of
Revenue. ((c) amended July 2, 2012, P.L.751, No.85)
(c.1) Authorization to Obtain Information. In lieu of the
exemption certificate required under subsection (c), the
department may authorize a vendor to obtain similarly specific
information from the vendor's purchasers. This information
includes, but is not limited to, the name and address of the
purchaser and a valid basis for exemption. The purchases made
pursuant to this subsection must be made with a verifiable
source of payment connected to the specific purchaser. The
information regarding each purchase shall be available at the
time the return is filed for the period covering the purchase.
The information shall be retained in accordance with section
271. No such authority shall be granted or exercised, except
upon application to and acceptance by the department, in the
department's discretion. If authority is granted, it shall be
subject to conditions specified by the department. ((c.1) added
June 28, 2019, P.L.50, No.13)
(d) Direct Payment Permits. The department may authorize a
purchaser or lessee who acquires tangible personal property or
services under circumstances which make it impossible at the
time of acquisition to determine the manner in which the
tangible personal property or service will be used, to pay the
tax directly to the department, and waive the collection of the
tax by the vendor. No such authority shall be granted or
exercised, except upon application to the department, and the
issuance by the department, in its discretion, of a direct
payment permit. If a direct payment permit is granted, its use
shall be subject to conditions specified by the department, and
the payment of tax on all acquisitions pursuant to the permit
shall be made directly to the department by the permit holder.
Compiler's Note: See section 33 of Act 13 of 2019 for
special provisions relating to applicability.
Compiler's Note: Section 19(1)(iv) of Act 23 of 2000, which
amended subsection (b)(1), provided that the amendment
shall apply to transactions for which purchase agreements
are executed after June 30, 2000.
Section 238. Collection of Tax on Motor Vehicles, Trailers
and Semi-Trailers.--Notwithstanding the provisions of clause
(1) of subsection (b) of section 237 of this article, tax due
on the sale at retail or use of a motor vehicle, trailer or
semi-trailer, except mobilehomes as defined in "The Vehicle
Code," required by law to be registered with the department
under the provisions of "The Vehicle Code" shall be paid by the
purchaser or user directly to the department upon application
to the department for an issuance of a certificate of title
upon such motor vehicle, trailer or semi-trailer. The department
shall not issue a certificate of title until the tax has been
paid, or evidence satisfactory to the department has been given
to establish that tax is not due. The department may cancel or
suspend any record of certificate of title or registration of
a motor vehicle, trailer or semi-trailer when the check received
in payment of the tax on such vehicle is not paid upon demand.
Such tax shall be considered as a first encumbrance against
such vehicle and the vehicle may not be transferred without
first payment in full of such tax and any interest additions
or penalties which shall accrue thereon in accordance with this
article.
(238 amended Dec. 28, 1972, P.L.1633, No.340)
Section 239. Precollection of Tax.--The department may, by
regulation, authorize or require particular categories of
vendors selling tangible personal property for resale to
precollect from the purchaser the tax which such purchaser will
collect upon making a sale at retail of such tangible personal
property: Provided, however, That the department, pursuant to
this section, may not require a vendor to precollect tax from
a purchaser who purchases for resale more than one thousand
dollars ($1,000) worth of tangible personal property from such
vendor per year. In any case in which a vendor has been
authorized to prepay the tax to the person from whom he
purchased the tangible personal property for resale such vendor
so authorized to prepay the tax may, under the regulations of
the department, be relieved from his duty to secure a license
if such duty shall arise only by reason of his sale of the
tangible personal property with respect to which he is, under
authorization of the department, to prepay the tax. The vendor,
on making a sale at retail of tangible personal property with
respect to which he has prepaid the tax, must separately state
at the time of resale the proper amount of tax on the
transaction, and reimburse himself on account of the taxes which
he has previously prepaid. Should such vendor collect a greater
amount of tax in any reporting period than he had previously
prepaid upon purchase of the goods with respect to which he
prepaid the tax, he must file a return and remit the balance
to the Commonwealth at the time at which a return would
otherwise be due with respect to such sales.
Section 240. Bulk and Auction Sales.--A person that sells
or causes to be sold at auction, or that sells or transfers in
bulk, fifty-one per centum or more of any stock of goods, wares
or merchandise of any kind, fixtures, machinery, equipment,
buildings or real estate, involved in a business for which the
person is licensed or required to be licensed under the
provisions of this article, or is liable for filing use tax
returns in accordance with the provisions of this article, shall
be subject to the provisions of section 1403 of "The Fiscal
Code."
(240 amended June 29, 2002, P.L.559, No.89)
Section 241. Collection upon Failure to Request
Reassessment, Review or Appeal.--The department may collect any
tax:
(1) If an assessment of tax is not paid within ten days or
thirty days as the case may be after notice thereof to the
taxpayer, and no petition for reassessment has been filed;
(2) Within sixty days from the date of reassessment, if no
petition for review has been filed;
(3) Within thirty days from the date of the decision of the
Board of Finance and Revenue upon a petition for review, or of
the expiration of the board's time for acting upon such
petition, if no appeal has been made; and ((3) amended Dec. 3,
1975, P.L.476, No.140)
(4) In all cases of judicial sales, receiverships,
assignments or bankruptcies.
In any such case in a proceeding for the collection of such
taxes, the person against whom they were assessed shall not be
permitted to set up any ground of defense that might have been
determined by the department, the Board of Finance and Revenue
or the courts: Provided, That the defense of failure of the
department to mail notice of assessment or reassessment to the
taxpayer and the defense of payment of assessment or
reassessment may be raised in proceedings for collection by a
motion to stay the proceedings.
Section 242. Lien for Taxes.--(a) Lien Imposed. If any
person liable to pay any tax neglects or refuses to pay the
same after demand, the amount (including any interest, addition
or penalty, together with any costs that may accrue in addition
thereto) shall be a lien in favor of the Commonwealth upon the
property, both real and personal, of such person but only after
same has been entered and docketed of record by the prothonotary
of the county where such property is situated. The department
may, at any time, transmit, to the prothonotaries of the
respective counties, certified copies of all liens for taxes
imposed by this act and penalties and interest. It shall be the
duty of each prothonotary receiving the lien to enter and docket
the same of record in his office, which lien shall be indexed
as judgments are now indexed. No prothonotary shall require,
as a condition precedent to the entry of such liens, the payment
of the costs incident thereto.
(b) Priority of Lien and Effect on Judicial Sale; No
Discharge by Sale on Junior Lien. The lien imposed hereunder
shall have priority from the date of its recording as aforesaid,
and shall be fully paid and satisfied out of the proceeds of
any judicial sale of property subject thereto before any other
obligation, judgment, claim, lien or estate to which said
property may subsequently become subject, except costs of the
sale and of the writ upon which the sale was made, and real
estate taxes and municipal claims against such property, but
shall be subordinate to mortgages and other liens existing and
duly recorded or entered of record prior to the recording of
the tax lien. In the case of a judicial sale of property,
subject to a lien imposed hereunder, upon a lien or claim over
which the lien imposed hereunder has priority as aforesaid,
such sale shall discharge the lien imposed hereunder to the
extent only that the proceeds are applied to its payment, and
such lien shall continue in full force and effect as to the
balance remaining unpaid. There shall be no inquisition or
condemnation upon any judicial sale of real estate made by the
Commonwealth pursuant to the provisions hereof. The lien of the
taxes, interest and penalties, shall continue for five years
from the date of entry, and may be revived and continued in the
manner now or hereafter provided for renewal of judgments, or
as may be provided in "The Fiscal Code," and a writ of execution
may directly issue upon such lien without the issuance and
prosecution to judgment of a writ of scire facias: Provided,
That not less than ten days before issuance of any execution
on the lien, notice of the filing and the effect of the lien
shall be sent by registered mail to the taxpayer at his last
known post office address: And provided further, That the said
lien shall have no effect upon any stock of goods, wares or
merchandise regularly sold or leased in the ordinary course of
business by the person against whom said lien has been entered,
unless and until a writ of execution has been issued and a levy
made upon said stock of goods, wares and merchandise.
(c) Duty of Prothonotary. Any wilful failure of any
prothonotary to carry out any duty imposed upon him by this
section shall be a misdemeanor, and, upon conviction, he shall
be sentenced to pay a fine not exceeding one thousand dollars
($1,000) and costs of prosecution, or to undergo imprisonment
not exceeding one year, or both.
(d) Priority of Tax. Except as hereinbefore provided in the
distribution, voluntary or compulsory, in receivership,
bankruptcy or otherwise, of the property or estate of any
person, all taxes imposed by this article which are due and
unpaid and are not collectible under the provisions of section
225 hereof, shall be paid from the first money available for
distribution in priority to all other claims and liens, except
in so far as the laws of the United States may give a prior
claim to the Federal Government. Any person charged with the
administration or distribution of any such property or estate,
who shall violate the provisions of this section, shall be
personally liable for any taxes imposed by this article, which
are accrued and unpaid and are chargeable against the person
whose property or estate is being administered or distributed.
(e) Other Remedies. Subject to the limitations contained
in this article as to the assessment of taxes, nothing contained
in this section shall be construed to restrict, prohibit or
limit the use by the department in collecting taxes finally due
and payable of any other remedy or procedure available at law
or equity for the collection of debts.
Section 243. Suit for Taxes.--(a) Commencement. At any
time within three years after any tax or any amount of tax shall
be finally due and payable, the department may commence an
action in the courts of this Commonwealth, of any state or of
the United States, in the name of the Commonwealth of
Pennsylvania, to collect the amount of tax due together with
additions, interest, penalties and costs in the manner provided
at law or in equity for the collection of ordinary debts.
(b) Procedure. The Attorney General shall prosecute the
action and, except as provided herein, the provisions of the
Rules of Civil Procedure and the provisions of the laws of this
Commonwealth relating to civil procedures and remedies shall,
to the extent that they are applicable, be available in such
proceedings.
(c) Other Remedies. The provisions of this section are in
addition to any process, remedy or procedure for the collection
of taxes provided by this article or by the laws of this
Commonwealth, and this section is neither limited by nor
intended to limit any such process, remedy or procedure.
Section 244. Tax Suit Comity.--The courts of this
Commonwealth shall recognize and enforce liabilities for sales
and use taxes, lawfully imposed by any other state: Provided,
That such other state extends a like comity to this
Commonwealth.
Section 245. Service.--Any person maintaining a place of
business within this Commonwealth is deemed to have appointed
the Secretary of the Commonwealth his agent for the acceptance
of service of process or notice in any proceedings for the
enforcement of the civil provisions of this article, and any
service made upon the Secretary of the Commonwealth as such
agent shall be of the same legal force and validity as if such
service had been personally made upon such person. Where service
cannot be made upon such person in the manner provided by other
laws of this Commonwealth relating to service of process,
service may be made upon the Secretary of the Commonwealth and,
in such case, a copy of the process or notice shall also be
personally served upon any agent or representative of such
person who may be found within this Commonwealth, or where no
such agent or representative may be found a copy of the process
or notice shall forthwith be sent by registered mail to such
person at the last known address of his principal place of
business, home office or residence.
Section 246. Collection and Payment of Tax on Credit
Sales.--If any sale subject to tax hereunder is wholly or partly
on credit, the vendor shall require the purchaser to pay in
cash at the time the sale is made, or within thirty days
thereafter, the total amount of tax due upon the entire purchase
price. The vendor shall remit the tax to the department,
regardless of whether payment was made by the purchaser to the
vendor, with the next return required to be filed under section
217 of this act.
(246 amended May 12, 1999, P.L.26, No.4)
Compiler's Note: Section 32(3) of Act 4 of 1999, which
amended section 246, provided that the amendment shall
apply to amounts deducted as bad debt on Federal income
tax returns required to be filed after January 1, 1999.
Section 247. Prepayment of Tax.--Whenever a vendor is
forbidden by law or governmental regulation to charge and
collect the purchase price in advance of or at the time of
delivery, the vendor shall prepay the tax as required by section
222 of this article, but in such case if the purchaser shall
fail to pay to the vendor the total amount of the purchase price
and the tax, and such amount is written off as uncollectible
by the vendor, the vendor shall not be liable for such tax and
shall be entitled to a credit or refund of such tax paid. If
the purchase price is thereafter collected, in whole or in part,
the amount collected shall be first applied to the payment of
the entire tax portion of the bill, and shall be remitted to
the department by the vendor with the first return filed after
such collection. For any tax prepaid prior to the effective
date of this article, credit may be claimed on any returns filed
for the periods prior to the effective date of this article.
Tax prepaid after the effective date of this article shall be
subject to refund upon petition to the department under the
provisions of section 252 of this article, filed within one
hundred five days of the close of the fiscal year in which such
accounts are written off.
Section 247.1. Refund of Sales Tax Attributed to Bad
Debt.--(a) A vendor may file a petition for refund of sales
tax paid to the department that is attributed to a bad debt if
all of the following apply:
(1) The purchaser fails to pay the total purchase price.
(2) The purchase price is written off, either in whole or
in part, as a bad debt on the books and records of the vendor
or an affiliate of the vendor.
(3) The debt has been deducted for Federal income tax
purposes under section 166 of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 166).
(a.1) A petition for refund, which is authorized by this
section, must be filed with the department within the time
limitations prescribed by section 3003.1(a).
(a.2) In the case of private-label credit card accounts not
qualifying under subsection (a), a vendor or lender that makes
an election pursuant to subsection (a.3) shall be entitled to
file a petition for refund of sales tax that the vendor has
previously reported and paid to the department if all of the
following conditions are met:
(1) No refund was previously allowed with respect to the
portion of the account written off as a bad debt.
(2) The account has been found worthless and written off,
either in whole or in part, as bad debt on the books and records
of the lender or an affiliate of the lender.
(3) The account has been deducted for Federal income tax
purposes under section 166 of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 166) by the lender or an
affiliate of the lender.
(a.3) In order to be eligible for a refund under subsection
(a.2), the lender and the vendor must execute and file with the
department a joint election, signed by both parties, designating
which party is entitled to claim the refund. This election may
not be revoked unless a written notice is signed by the party
that signed the election being revoked and is filed with the
department.
(b) The refund authorized by this section shall be limited
to the sales tax paid to the department that is attributed to
the bad debt, less any discount under section 227 of this act.
Partial payments by the purchaser shall be prorated between the
original purchase price and the sales tax due on the sale.
Payments made on any transaction which includes both taxable
and nontaxable components shall be allocated proportionally
between the taxable and nontaxable components.
(c) A vendor or a lender may assign its right to petition
and receive a refund of sales tax attributed to a bad debt to
an affiliate.
(d) No refund shall be granted under this section for any
of the following:
(i) Interest.
(ii) Finance charges.
(iii) Expenses incurred in attempting to collect any amount
receivable.
(e) Documentation requirements are as follows:
(1) Any person claiming a refund under this section shall,
on request, make available adequate books, records or other
documentation supporting the claimed refund, including:
(i) Date of original sale and name and Pennsylvania sales
tax license number of the retailer.
(ii) Name and address of purchaser.
(iii) Amount that the purchaser paid or agreed to pay.
(iv) Taxable and nontaxable charges.
(v) Amount on which the retailer reported and paid sales
tax.
(vi) All payments or other credits applied to the account
of the purchaser.
(vii) Evidence that the uncollected amount has been
designated as a bad debt in the books and records of the vendor
or lender, as appropriate, and that the amount has been claimed
as a bad debt deduction for Federal income tax purposes.
(viii) The county in which any local sales tax was incurred.
(ix) The unpaid portion of the sales price.
(x) A certification, under penalty of perjury, that no
person has collected money on the bad debt for which the refund
is claimed.
(xi) Any other information required by the department.
(2) A person claiming a refund under this section may
provide alternative forms of documentation acceptable to the
department if appropriate in light of the volume and character
of uncollectible accounts. This includes the following:
(i) If a vendor remits sales or use tax to the Commonwealth
and to another state, the entity claiming a refund under this
section may use an apportionment method to substantiate the
amount of Pennsylvania tax included in the bad debts to which
the refund applies.
(ii) The apportionment method must use the vendor's
Pennsylvania and non-Pennsylvania sales, the vendor's taxable
and nontaxable sales and the amount of tax the vendor remitted
to Pennsylvania.
(f) The following apply:
(1) If the purchase price that is attributed to a prior bad
debt refund is thereafter collected, in whole or in part by the
vendor or lender, or an affiliate of the vendor or lender, the
entity claiming the refund shall remit the proportional tax to
the department with the first return filed after the collection.
If the entity is not required to file periodic returns, the
entity shall remit the proportional tax to the department with
another return pursuant to section 217(c).
(2) Any consideration received for the assignment, sale or
other transfer of a bad debt with respect to which a refund has
been granted shall be deemed to be a collection of a prior bad
debt. This paragraph shall not apply to a transfer to an entity
that is part of the same affiliated group, as defined by section
1504 of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1504).
(3) A person that collects, in whole or in part, the
purchase price attributed to a prior bad debt refund is required
to maintain adequate books, records or other documentation to
allow the department to determine whether the purchase price
attributed to a prior bad debt refund has been collected.
Information under this paragraph includes the pertinent facts
required by subsection (e).
(4) If it is determined by the department that a prior bad
debt has been collected, in whole or in part, and the
proportional tax has not been properly reported and paid to the
department, the person that claimed the refund on the
transaction shall report and pay the proportional tax to the
department plus applicable interest and penalty under this
article.
(g) Notwithstanding the provisions of section 806.1 of the
act of April 9, 1929 (P.L.343, No.176), known as "The Fiscal
Code," no interest shall be paid by the Commonwealth on refunds
of sales tax attributed to bad debt under this section.
(h) No refund or credit of sales tax shall be made for any
uncollected purchase price or bad debt except as authorized by
this section. No deduction or credit for bad debt may be taken
on any return filed with the department. This section shall
provide the exclusive procedure for claiming a refund or credit
of sales tax attributed to uncollected purchase price or bad
debt.
(i) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection:
(1) "Affiliate." A person that is:
(i) an affiliated entity, under section 1504 of the Internal
Revenue Code of 1986, of a vendor; or
(ii) a person described in paragraph (2)(i) or (ii) that
would be an affiliated entity, under section 1504 of the
Internal Revenue Code of 1986, of a vendor but for the fact the
person is not a corporation, an assignee or another transferee
of a person described in paragraph (2)(i) or (ii).
(2) "Lender." Any of the following:
(i) A person that owns or has owned a private-label credit
card account purchased directly from a vendor that reported the
tax under this article.
(ii) A person that owns or has owned a private-label credit
card account pursuant to a contract directly with the vendor
that reported the tax under this article.
(iii) A person that is:
(A) an affiliate of a person described in subparagraph (i)
or (ii); or
(B) an assignee or other transferee of a person described
in subparagraph (i) or (ii).
(3) "Private-label credit card." Any charge card, credit
card or other instrument serving similar purpose which carries,
refers to or is branded with the name or logo of a vendor and
which can be used for purchases from the vendor. The term does
not include a card or instrument which may also be used to make
purchases from persons other than the vendor whose name or logo
appears on the card or instrument or that vendor's affiliates.
Nothing in this paragraph authorizes a refund with respect to
bad debts attributable to sales by unrelated persons referred
to in this paragraph.
(247.1 amended July 25, 2007, P.L.373, No.55)
Compiler's Note: Section 15 of Act 55 of 2007, which amended
section 247.1, provided that the amendment of section
247.1 shall apply to amounts deducted as bad debts on
Federal income tax returns required to be filed after
January 1, 2008.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Compiler's Note: Section 26(5) of Act 23 of 2001, which
amended section 247.1, provided that the amendment shall
apply to amounts deducted as bad debts on Federal income
tax returns required to be filed after January 1, 2001.
Compiler's Note: Section 19(2) of Act 23 of 2000, which
amended subsection (b), provided that the amendment shall
apply to amounts deducted as bad debt on Federal income
tax returns required to be filed after January 1, 2000.
Compiler's Note: Section 32(3) of Act 4 of 1999, which added
section 247.1, provided that section 247.1 shall apply
to amounts deducted as bad debt on Federal income tax
returns required to be filed after January 1, 1999.
Section 248. Registration of Transient Vendors.--(a) Prior
to conducting business or otherwise commencing operations within
the Commonwealth, a transient vendor shall register with the
department. The application for registration shall be in such
form and contain such information as the department, by
regulation, shall prescribe and shall set forth truthfully and
accurately the information desired by the department. This
registration shall be renewed and updated annually.
(b) Upon registration and the posting of the bond required
by section 248.1, the department shall issue to the transient
vendor a certificate, valid for one year. Upon renewal of
registration, the department shall issue a new certificate,
valid for one year, providing the department is satisfied that
the transient vendor has complied with the provisions of this
article.
(c) The transient vendor shall possess the certificate at
all times when conducting business within the Commonwealth and
shall exhibit the certificate upon demand by authorized employes
of the department or any law enforcement officer.
(d) The certificate issued by the department shall state
that the transient vendor named therein has registered with the
department and shall provide notice to the transient vendor
that:
(1) The transient vendor must notify the department, in
writing, before it enters the Commonwealth to conduct business,
of the location or locations where it intends to conduct
business and the date or dates on which it intends to conduct
business;
(2) Failure to notify or giving false information to the
department may result in suspension or revocation of the
transient vendor's certificate; and
(3) Conducting business within the Commonwealth after a
certificate has been suspended or revoked may result in criminal
conviction and the imposition of fines or other penalties.
(248 added Dec. 22, 1983, P.L.300, No.82)
Section 248.1. Bond.--(a) Upon registration with the
department, a transient vendor shall also post a bond with the
department in the amount of five hundred dollars ($500) as
surety for compliance with the provisions of this article. After
a period of demonstrated compliance with these provisions, or,
if the transient vendor provides the license number of a
promoter who has notified the department of a show, in
accordance with the provisions of section 248.6(a), the
department may reduce the amount of bond required of a transient
vendor or may eliminate the bond entirely.
(b) A transient vendor may file a request for voluntary
suspension of certificate with the department. If the department
is satisfied that the provisions of this article have been
complied with and has possession of the transient vendor's
certificate, it shall return the bond posted to the transient
vendor.
(248.1 amended May 2, 1985, P.L.28, No.13)
Section 248.2. Notification to Department; Inspection of
Records.--(a) Prior to entering the Commonwealth to conduct
business, a transient vendor shall notify the department, in
writing, of the location or locations where it intends to
conduct business and the date or dates on which it intends to
conduct business.
(b) While conducting business within the Commonwealth, the
transient vendor shall permit authorized employes of the
department to inspect its sales records, including, but not
limited to, sales receipts and inventory or price lists and to
permit inspection of the tangible personal property offered for
sale at retail.
(c) The department may suspend or revoke a certificate
issued to a transient vendor if the transient vendor:
(1) Fails to notify the department as required by subsection
(a);
(2) Provides the department with false information regarding
the conduct of business within the Commonwealth;
(3) Fails to collect sales tax on all tangible personal
property or services sold subject to the sales tax; or
(4) Fails to file with the department a tax return as
required by section 217 of this act.
(d) The department shall promulgate the rules and
regulations necessary to implement this section.
(248.2 added Dec. 22, 1983, P.L.300, No.82)
Section 248.3. Seizure of Property.--(a) If a transient
vendor conducting business within the Commonwealth fails to
exhibit a valid certificate upon demand by authorized employes
of the department, those authorized employes shall have the
authority to seize, without warrant, the tangible personal
property and the automobile, truck or other means of
transportation used to transport or carry that property. All
property seized shall be deemed contraband and shall be subject
to immediate forfeiture proceedings instituted by the department
pursuant to procedures adopted by regulation, except as
otherwise provided by this section.
(b) Property seized pursuant to subsection (a) shall be
released upon:
(1) Presentation of a valid certificate to authorized
employes of the department; or
(2) Registration by the transient vendor with the department
and the posting of a bond in the amount of five hundred dollars
($500), either immediately or within fifteen days after the
property is seized.
(248.3 added Dec. 22, 1983, P.L.300, No.82)
Section 248.4. Fines.--Any transient vendor conducting
business within the Commonwealth while its certificate is
suspended or revoked, as provided by sections 248.1(b) and
248.2(c), shall be guilty of a misdemeanor of the third degree
and, upon conviction thereof, shall be sentenced to pay a fine
not exceeding two thousand five hundred dollars ($2,500) for
each offense.
(248.4 added Dec. 22, 1983, P.L.300, No.82)
Section 248.5. Transient Vendors Subject to Article.--Except
as otherwise provided, a transient vendor shall be subject to
the provisions of this article in the same manner as a vendor
who maintains a place of business within the Commonwealth.
(248.5 added Dec. 22, 1983, P.L.300, No.82)
Section 248.6. Promoters.--(a) A promoter of a show or
shows within this Commonwealth may annually file with the
department an application for a promoter's license stating the
location and dates of such show or shows. The application shall
be filed at least thirty days prior to the opening of the first
show and shall be in such form as the department may prescribe.
(b) Except as herein provided, the department shall, within
fifteen days after receipt of an application for a license,
issue to the promoter without charge a license to operate such
shows. If application for a license under this section has been
timely filed and if the license has not been received by the
promoter prior to the opening of the show, the authorization
contained in this section with respect to the obtaining of a
promoter's license shall be deemed to have been complied with,
unless or until the promoter receives notice from the department
denying the application for a promoter's license.
(c) Any promoter who is a vendor under the provisions of
section 201 of this article shall comply with all the provisions
of this article applicable to vendors and with the provisions
of this section applicable to promoters.
(d) No licensed promoter shall permit any person to display
for sale or to sell tangible personal property or services
subject to tax under section 202 of this article at a show
unless such person is licensed under section 208 and provides
to the promoter the information required under section 271.1.
(e) Any licensed promoter who permits any person to display
for sale or to sell tangible personal property or service
without first having been licensed under section 208 of this
article, fails to maintain records of a show under section
271.1, knowingly maintains false records or fails to comply
with any provision contained in this section or any regulation
promulgated by the department pertaining to shows shall be
subject to denial of a license or the revocation of any existing
license issued pursuant to this section. In addition, the
department may deny such promoter a license certificate to
operate a show for a period of not more than six months from
the date of such denial. Such penalty shall be in addition to
any other penalty imposed by this article. Within twenty days
of notice of denial or revocation of a license by the
department, the promoter may petition the department for a
hearing, pursuant to Title 2 of the Pennsylvania Consolidated
Statutes (relating to administrative law and procedure).
(248.6 added May 2, 1985, P.L.28, No.13)
CHAPTER V
REFUNDS AND CREDITS
Section 250. Refund or Credit for Overpayment.--(250 deleted
by amendment Oct. 18, 2006, P.L.1149, No.119)
Section 251. Restriction on Refunds.--(251 deleted by
amendment Oct. 18, 2006, P.L.1149, No.119)
Section 252. Refunds.--The department shall, pursuant to
the provisions of Article XXVII, refund all taxes, interest and
penalties paid to the Commonwealth under the provisions of this
article and to which the Commonwealth is not rightfully
entitled. Such refunds shall be made to the person, his heirs,
successors, assigns or other personal representatives, who
actually paid the tax: Provided, That no refund shall be made
under this section with respect to any payment made by reason
of an assessment with respect to which a taxpayer has filed a
petition for reassessment pursuant to section 2702 of Article
XXVII to the extent that said petition has been determined
adversely to the taxpayer by a decision which is no longer
subject to further review or appeal: Provided further, That
nothing contained herein shall be deemed to prohibit a taxpayer
who has filed a timely petition for reassessment from amending
it to a petition for refund where the petitioner has paid the
tax assessed.
(252 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 253. Refund Petition.--(a) Except as provided for
in section 256 and in subsection (b) of this section, the refund
or credit of tax, interest or penalty provided for by section
252 shall be made only where the person who has actually paid
the tax files a petition for refund with the department under
Article XXVII within the time limits of section 3003.1.
(b) A refund or credit of tax, interest or penalty, paid
as a result of an assessment made by the department under
section 231, shall be made only where the person who has
actually paid the tax files with the department a petition for
a refund with the department under Article XXVII within the
time limits of section 3003.1. The filing of a petition for
refund, under the provisions of this subsection, shall not
affect the abatement of interest, additions or penalties to
which the person may be entitled by reason of his payment of
the assessment.
(c) ((c) deleted by amendment)
(d) ((d) deleted by amendment)
(253 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 254. Review by Board of Finance and Revenue.--(254
deleted by amendment Oct. 18, 2006, P.L.1149, No.119)
Section 255. Appeal to the Commonwealth Court.--(255 deleted
by amendment Oct. 18, 2006, P.L.1149, No.119)
Section 256. Extended Time for Filing Special Petition for
Refund.--Any party to a transaction who has paid tax by reason
of a transaction with respect to which the department is
assessing tax against another person may, within six months
after the filing by the department of the assessment against
such other person, file a special petition for refund,
notwithstanding his failure to timely file a petition pursuant
to section 3003.1 of Article XXX. The provisions of Article
XXVII shall be applicable to such special petition for refund,
except that the department need not act on such petition until
there is a final determination as to the propriety of the
assessment filed against the other party to the transaction.
Where a petition is filed under this provision in order to take
advantage of the extended period of limitations, overpayments
by the petitioner shall be refunded but only to the extent of
the actual tax (without consideration of interest and penalties)
paid by the other party to the transaction. The purpose of this
section is to avoid duplicate payment of tax where a
determination is made by the department that one party to a
transaction is subject to tax, and another party to the
transaction has previously paid tax with respect to such
transaction and, as such, this section shall be construed as
extending right beyond that provided for by section 253, and
not to limit such other section.
(256 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
CHAPTER VI
LIMITATIONS
Section 258. Limitation on Assessment and Collection.--The
amount of the tax imposed by this act shall be assessed within
three years after the date when the return provided for by
subsection (a) or (c) of section 217 is filed or the end of the
year in which the tax liability arises whichever shall last
occur. Any such assessment may be made at any time during such
period notwithstanding that the department may have made one
or more previous assessments against the taxpayer for the year
in question, or for any part of such year. In any such case,
no credit shall be given for any penalty previously assessed
or paid.
(258 amended Sept. 9, 1971, P.L.437, No.105)
Section 259. Failure to File Return.--Where no return is
filed, the amount of the tax due may be assessed and collected
at any time as to taxable transactions not reported.
Section 260. False or Fraudulent Return.--Where the taxpayer
wilfully files a false or fraudulent return with intent to evade
the tax imposed by this article, the amount of tax due may be
assessed and collected at any time.
Section 261. Extension of Limitation
Period.--Notwithstanding any of the foregoing provisions of
this part, where, before the expiration of the period prescribed
therein for the assessment of a tax, a taxpayer has consented,
in writing, that such period be extended, the amount of tax due
may be assessed at any time within such extended period. The
period so extended may be extended further by subsequent
consents, in writing, made before the expiration of the extended
period.
CHAPTER VII
INTEREST, ADDITIONS, PENALTIES AND CRIMES
Section 265. Interest.--If any amount of tax imposed by
this article is not paid to the department on or before the
last date prescribed for payment, interest on such amount at
the rate of three-fourths of one per cent per month for each
month, or fraction thereof, from such date, shall be paid for
the period from such last date to the date paid. The last date
prescribed for payment shall be determined under subsection (a)
or (c) of section 222 without regard to any extension of time
for payment. In the case of any amount assessed as a deficiency
or as an estimated assessment, the date prescribed for payment
shall be thirty days after notice of such assessment.
(265 amended Apr. 14, 1976, P.L.111, No.48)
Section 266. Additions to Tax.--(a) Failure to File Return.
In the case of failure to file any return required by section
215 on the date prescribed therefor (determined with regard to
any extension of time for filing), and in the case in which a
return filed understates the true amount due by more than fifty
per cent, there shall be added to the amount of tax actually
due five per cent of the amount of such tax if the failure to
file a proper return is for not more than one month, with an
additional five per cent for each additional month, or fraction
thereof, during which such failure continues, not exceeding
twenty-five per cent in the aggregate. In every such case at
least two dollars ($2) shall be added.
(b) Addition for Understatement. There shall be added to
every assessment under subsection (b) of section 231 an addition
equal to five per cent of the amount of the understatement and
no addition to the tax shall be paid under subsection (a) of
section 231.
(c) Interest. If the department assesses a tax according
to subsection (a), (b) or (c) of section 231, there shall be
added to the amount of the deficiency interest at the rate of
three-fourths of one per cent per month for each month, or
fraction thereof, from the date prescribed by subsection (a)
or (c) of section 222 of this article for the payment of the
tax to the date of notice of the assessment. ((c) amended Apr.
14, 1976, P.L.112, No.49)
(d) ((d) deleted by amendment May 7, 1997, P.L.85, No.7)
Section 267. Penalties.--(a) Penalty Assessed as Tax. The
penalties, additions, interest and liabilities provided by this
article shall be paid upon notice and demand by the department,
and shall be assessed and collected in the same manner as taxes.
Except as otherwise provided, any reference in this article to
"tax" imposed by this article shall be deemed also to refer to
the penalties, additions, interest and liabilities provided by
this part.
(b) Attempt to Evade or Defeat Tax. Any person who wilfully
attempts, in any manner, to evade or defeat the tax imposed by
this article, or the payment thereof, or to assist any other
person to evade or defeat the tax imposed by this article, or
the payment thereof, or to receive a refund improperly, shall,
in addition to other penalties provided by law, be liable for
a penalty equal to one-half of the total amount of the tax
evaded.
In any direct proceeding arising out of a petition for
reassessment or refund as provided in this article, in which
an issue of fact is raised with respect to whether a return is
fraudulent or with respect to the propriety of the imposition
by the department of the penalty prescribed in this subsection
(b), the burden of proof with respect to such issue shall be
upon the department.
Section 268. Crimes.--(a) Fraudulent Return. Any person
who with intent to defraud the Commonwealth shall wilfully make,
or cause to be made, any return required by this article, which
is false, shall be guilty of a misdemeanor, and, upon conviction
thereof, shall be sentenced to pay a fine not exceeding two
thousand dollars ($2000), or undergo imprisonment not exceeding
three years, or both.
(b) Other Crimes. (1) Except as otherwise provided by
subsection (a) of this section, any person who advertises or
holds out or states to the public or to any purchaser or user,
directly or indirectly, that the tax or any part thereof imposed
by this article will not be added to the purchase price of the
tangible personal property or services described in subclauses
(2), (3), (4) and (11) through (18) of clause (k) of section
201 of this article or that the tax or any part thereof will
be refunded, other than when such person refunds the purchase
price because of such property being returned to the vendor,
and any person selling or leasing tangible personal property
or said services the sale or use of which by the purchaser is
subject to tax hereunder, who, except as otherwise provided,
shall wilfully fail to collect the tax from the purchaser and
timely remit the same to the department, and any person who
shall wilfully fail or neglect to timely file any return or
report required by this article or any taxpayer who shall refuse
to timely pay any tax, penalty or interest imposed or provided
for by this article, or who shall wilfully fail to preserve his
books, papers and records as directed by the department, or any
person who shall refuse to permit the department or any of its
authorized agents to examine his books, records or papers, or
who shall knowingly make any incomplete, false or fraudulent
return or report, or who shall do, or attempt to do, anything
whatever to prevent the full disclosure of the amount or
character of taxable sales purchases or use made by himself or
any other person, or shall provide any person with a false
statement as to the payment of tax with respect to particular
tangible personal property or said services, or shall make,
utter or issue a false or fraudulent exemption certificate,
shall be guilty of a misdemeanor, and, upon conviction thereof,
shall be sentenced to pay a fine not exceeding one thousand
dollars ($1000) and costs of prosecution, or undergo
imprisonment not exceeding one year, or both: Provided, however,
That any person may advertise or hold out or state to the public
or to any purchaser or user, directly or indirectly, that the
tax or any part thereof imposed by this article will be absorbed
and paid by such person subject to the following conditions:
(i) Such person shall expressly state on any receipt,
invoice, sales slip or other similar document evidencing such
sale given to the purchaser that such person will pay the tax
imposed by this article on behalf of such purchaser and shall
not indicate or imply that the transaction is exempt or excluded
from any tax imposed by this article.
(ii) Any receipt, invoice, sales slip or other similar
document evidencing a sale given to the purchaser shall
separately state the amount of tax.
(iii) Such person, when recording the sale in the person's
books and records, shall separately state the purchase price
and the tax.
(iv) The amount of tax shall be calculated by multiplying
the total purchase price by the rate of tax imposed by section
202.
(2) ((2) deleted by amendment)
(3) If any person advertises or holds out or states to the
public or to any purchaser or user, directly or indirectly,
that such person will absorb and pay the tax, subject to the
conditions of this subsection, such person shall be solely
responsible and liable for any tax imposed by this article,
notwithstanding any provisions of this article to the contrary,
and shall not be entitled to a refund of such tax.
((b) amended June 28, 2019, P.L.50, No.13)
(c) (1) Notwithstanding any other provision of this part,
any person who purchases, installs or uses in this Commonwealth
an automated sales suppression device or zapper or phantomware
with the intent to defeat or evade the determination of an
amount due under this part commits a misdemeanor.
(i) Any person who, for commercial gain, sells, purchases,
installs, transfers or possesses in this Commonwealth an
automated sales suppression device or zapper or phantomware
with the knowledge that the sole purpose of the device is to
defeat or evade the determination of an amount due under this
part commits an offense which shall be punishable by a fine
specified under subparagraph (ii) or by imprisonment for not
more than one year, or both. A person who uses an automated
sales suppression device or zapper or phantomware shall be
liable for all taxes, interest and penalties due as a result
of the use of that device.
(ii) If a person is guilty of an offense under this
paragraph and the person sold, installed, transferred or
possessed not more than three automated sales suppression
devices or zappers or phantomware, the person commits an offense
punishable by a fine of not more than five thousand dollars
($5,000).
(iii) If a person commits an offense under this paragraph
and the person sold, installed, transferred or possessed more
than three automated sales suppression devices or zappers or
phantomware, the person commits an offense punishable by a fine
of not more than ten thousand dollars ($10,000).
(2) This subsection shall not apply to a corporation that
possesses an automated sales suppression device or zapper or
phantomware for the sole purpose of developing hardware or
software to combat the evasion of taxes by use of automated
sales suppression devices or zappers or phantomware.
(3) For purposes of this subsection:
"Automated sales suppression device" or "zapper" means a
software program carried on a memory stick or removable compact
disc, accessed through an Internet link or through any other
means, that falsifies the electronic records of electronic cash
registers and other point-of-sale systems, including, but not
limited to, transaction data and transaction reports.
"Electronic cash register" means a device that keeps a
register or supporting document through the means of an
electronic device or computer system designed to record
transaction data for the purpose of computing, compiling or
processing retail sales transaction data in whatever manner.
"Phantomware" means a hidden programming option, which is
either preinstalled or installed at a later time, embedded in
the operating system of an electronic cash register or hardwired
into the electronic cash register that can be used to create a
virtual second till or may eliminate or manipulate a transaction
record that may or may not be preserved in digital formats to
represent the true or manipulated record of transactions in the
electronic cash register.
"Transaction data" includes information regarding items
purchased by a customer, the price for each item, a taxability
determination for each item, a segregated tax amount for each
of the taxed items, the amount of cash or credit tendered, the
net amount returned to the customer in change, the date and
time of the purchase, the name, address and identification
number of the vendor and the receipt or invoice number of the
transaction.
((c) added July 13, 2016, P.L.526, No.84)
(d) This section shall not preclude prosecution under any
other law. ((d) added July 13, 2016, P.L.526, No.84)
(e) The penalties imposed by this section shall be in
addition to any other penalties imposed by any provision of
this article. ((e) added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 52(1) of Act 84 of 2016, which
amended subsection (b) and added subsections (c), (d)
and (e), provided that, notwithstanding the provisions
of the act of August 5, 1932 (Sp.Sess., P.L.45, No.45),
referred to as the Sterling Act, and the act of December
31, 1965 (P.L.1257, No.511), known as The Local Tax
Enabling Act, the amendment or addition of subsections
(b) and (c) shall not preempt any tax imposed by a unit
of local government as of the effective date of section
52 unless specifically provided for in Act 84.
Section 269. Abatement of Additions or Penalties.--Upon the
filing of a petition for reassessment or a petition for refund
as provided under this article by a taxpayer, additions or
penalties imposed upon such taxpayer by this act may be waived
or abated, in whole or in part, where the petitioner has
established that he has acted in good faith, without negligence
and with no intent to defraud.
CHAPTER VIII
ENFORCEMENT AND EXAMINATIONS
Section 270. Rules and Regulations.--(a) General Provision.
The department is hereby charged with the enforcement of the
provisions of this article, and is hereby authorized and
empowered to prescribe, adopt, promulgate and enforce, rules
and regulations not inconsistent with the provisions of this
article, relating to any matter or thing pertaining to the
administration and enforcement of the provisions of this
article, and the collection of taxes, penalties and interest
imposed by this article. The department may prescribe the
extent, if any, to which any of such rules and regulations shall
be applied without retroactive effect.
(b) Sales between Affiliated Interests. In determining the
purchase price of taxable sales where, because of affiliation
of interests between the vendor and the purchaser or
irrespective of any such affiliation, if for any other reason,
the purchase price of such sale is in the opinion of the
department not indicative of the true value of the article or
the fair price thereof, the department shall, pursuant to
uniform and equitable rules, determine the amount of
constructive purchase price upon the basis of which the tax
shall be computed and levied. Such rules shall provide for a
constructive amount of a purchase price for each such sale,
which price shall equal a price for such article which would
naturally and fairly be charged in an arm's-length transaction
in which the element of common interests between vendor and
purchaser, or, if no common interest exists, any other element
causing a distortion of the price or value is absent. For the
purpose of this article where a taxable sale occurs between a
parent corporation and a subsidiary affiliate or controlled
corporation of such parent, there shall be a rebuttable
presumption that because of such common interest such
transaction was not at arm's-length.
Section 271. Keeping of Records.--(a) General Provision.
Every person liable for any tax imposed by this article, or for
the collection thereof, shall keep the records, render such
statements, make the returns and comply with such rules and
regulations as the department may, from time to time, prescribe
regarding matters pertinent to his business. Whenever in the
judgment of the department it is necessary, it may require any
person, by notice served upon such person, or by regulations,
to make such returns, render such statements or keep such
records as the department deems sufficient to show whether or
not such person is liable to pay or collect tax under this
article.
(b) Persons Collecting Tax from Others. Any person liable
to collect tax from another person under the provisions of this
article shall file reports, keep records, make payments and be
subject to interest and penalties as provided for under this
article, in the same manner as if he were directly subject to
the tax.
(c) Records of Nonresidents. A nonresident who does business
in this Commonwealth as a retail dealer shall keep adequate
records of such business or businesses and of the tax due with
respect thereto, which records shall at all times be retained
within this Commonwealth unless retention outside the
Commonwealth is authorized by the department. No taxes collected
from purchasers shall be sent outside the Commonwealth without
the written consent of, and in accordance with conditions
prescribed by the department. The department may require a
taxpayer who desires to retain records or tax collections
outside the Commonwealth to assume reasonable out-of-state audit
expenses.
(d) Keeping of Separate Records. Any person doing business
as a retail dealer who at the same time is engaged in another
business or businesses which do not involve the making of sales
taxable under this article, shall keep separate books and
records of his businesses so as to show the sales taxable under
this article separately from his sales not taxable hereunder.
If any such person fails to keep such separate books and
records, he shall be liable for tax at the rate designated in
section 202 of this article upon the entire purchase price of
sales from both or all of his businesses.
(e) Other Methods. In those instances where a vendor gives
no sales memoranda or uses registers showing only total sales,
the vendor must adopt some method of segregating tax from sales
receipts and keep records showing such segregation, all in
accordance with proper accounting and business practices.
A vendor may apply to the department for permission to use
a collection and recording procedure which will show such
information as the law requires with reasonable accuracy and
simplicity. Such application must contain a detailed description
of the procedure to be adopted. Permission to use the proposed
procedure is not to be construed as relieving the vendor from
remitting the full amount of tax collected. The department may
revoke such permission upon thirty days' notice to the vendor.
Refusal of the department to grant permission in advance to use
such procedure shall not be construed to invalidate a procedure
which upon examination shows such information as the law
requires.
Section 271.1. Reports and Records of Promoters.--Every
licensed promoter shall keep a record of the date and place of
each show and the name, address, sales, use and hotel occupancy
license number of every person whom he permits to display for
sale or to sell tangible personal property or services subject
to tax under section 202 at such show. Such records shall be
open for inspection and examination at any reasonable time by
the department or a duly authorized representative, and such
records shall, unless the department consents in writing to an
earlier destruction, be preserved for three years after the
date the report was filed or the date it was due, whichever
occurs later, except that the department may by regulation
require that they be kept for a longer period of time.
(271.1 added May 2, 1985, P.L.28, No.13)
Section 272. Examinations.--The department or any of its
authorized agents is hereby authorized to examine the books,
papers and records of any taxpayer in order to verify the
accuracy and completeness of any return made or, if no return
was made, to ascertain and assess the tax imposed by this
article. The department may require the preservation of all
such books, papers and records for any period deemed proper by
it but not to exceed three years from the end of the calendar
year to which the records relate. Every such taxpayer is hereby
required to give to the department, or its agent, the means,
facilities and opportunity for such examinations and
investigation. The department is further authorized to examine
any person, under oath, concerning taxable sales or use by any
taxpayer or concerning any other matter relating to the
enforcement or administration of this article, and to this end
may compel the production of books, papers and records and the
attendance of all persons whether as parties or witnesses whom
it believes to have knowledge of such matters. The procedure
for such hearings or examinations shall be the same as that
provided by The Fiscal Code relating to inquisitorial powers
of fiscal officers.
Section 273. Records and Examinations of Delivery
Agents.--Every agent for the purpose of delivery of goods
shipped into the Commonwealth by a nonresident including, but
not limited to, common carriers shall maintain adequate records
of such deliveries pursuant to rules and regulations adopted
by the department and shall make such records available to the
department upon request after due notice.
Section 274. Unauthorized Disclosure.--Any information
gained by the department as a result of any return, examination,
investigation, hearing or verification, required or authorized
by this article, shall be confidential, except for official
purposes and except in accordance with proper judicial order
or as otherwise provided by law, and any person unlawfully
divulging such information shall be guilty of a misdemeanor,
and, upon conviction thereof, shall be sentenced to pay a fine
not in excess of one thousand dollars ($1000) and costs of
prosecution, or to undergo imprisonment for not more than one
year, or both.
Section 275. Cooperation with Other
Governments.--Notwithstanding the provisions of section 274,
the department may permit the Commissioner of Internal Revenue
of the United States, or the proper officer of any state, or
the authorized representative of either such officer, to inspect
the tax returns of any taxpayer, or may furnish to such officer
or to his authorized representative an abstract of the return
of any taxpayer, or supply him with information concerning any
item contained in any return or disclosed by the report of any
examination or investigation of the return of any taxpayer.
This permission shall be granted only if the statutes of the
United States or of such other state, as the case may be, grant
substantially similar privileges to the proper officer of the
Commonwealth charged with the administration of this article.
Section 276. Interstate Compacts.--The Governor, or his
authorized representative, is hereby vested with authority to
confer with the Governor and the authorized representatives of
other states with respect to reciprocal use tax collection
between Pennsylvania and such other states.
The Governor, or his representative, is authorized to join
with such authorities of other states to conduct joint
investigations, to exchange information, hold joint hearings
and enter into compacts or interstate agreements with such other
states to accomplish uniform reciprocal use tax collections
between those states who are parties to any compact or
interstate agreement and the Commonwealth of Pennsylvania.
Section 277. Bonds.--(a) Taxpayer to File Bond. Whenever
the department in its discretion, deems it necessary to protect
the revenues to be obtained under the provisions of this
article, it may require any nonresident natural person or any
foreign corporation, association, fiduciary, partnership or
other entity, not authorized to do business within this
Commonwealth or not having an established place of business
therein and subject to the tax imposed by section 202 of this
article, to file a bond issued by a surety company authorized
to do business in this Commonwealth and approved by the
Insurance Commissioner as to solvency and responsibility, in
such amounts as it may fix, to secure the payment of any tax
or penalties due, or which may become due, from such natural
person or corporation. In order to protect the revenues to be
obtained under the provisions of this article, the department
shall require any nonresident natural person or any foreign
corporation, association, fiduciary, partnership or entity, who
or which is a building contractor, or who or which is a supplier
delivering building materials for work in this Commonwealth and
is not authorized to do business within this Commonwealth or
does not have an established place of business therein and is
subject to the tax imposed by section 202 of this article, to
file a bond issued by a surety company authorized to do business
in this Commonwealth and approved by the Insurance Commissioner
as to solvency and responsibility, in such amounts as it may
fix, to secure the payments of any tax or penalties due, or
which may become due, from such natural person, corporation or
other entity. The department may also require such a bond of
any person petitioning the department for reassessment, in the
case of any assessment over five hundred dollars ($500) or where
it is of the opinion that the ultimate collection is in
jeopardy. The department may, for a period of three years,
require such a bond of any person who has on three or more
occasions within a twelve month period either filed a return
or made payment to the department more than thirty days late.
In the event that the department determines that a taxpayer is
to file such a bond, it shall give notice to such taxpayer to
that effect, specifying the amount of the bond required. The
taxpayer shall file such bond within five days after the giving
of such notice by the department unless, within such five days,
the taxpayer shall request, in writing, a hearing before the
Secretary of Revenue or his representative at which hearing the
necessity, propriety and amount of the bond shall be determined
by the secretary or such representative. Such determination
shall be final and shall be complied with within fifteen days
after notice thereof is mailed to the taxpayer.
(b) Securities in Lieu of Bond. In lieu of the bond required
by this section, securities approved by the department, or cash
in such amount as it may prescribe, may be deposited. Such
securities or cash shall be kept in the custody of the
department, who may, at any time, without notice to the
depositor, apply them to any tax and/or interest or penalties
due, and for that purpose the securities may be sold by the
department, at public or private sale, upon five days written
notice to the depositor.
(c) Failure to File Bond. The department may file a lien
pursuant to section 242 against any taxpayer who fails to file
a bond when required to do so under this section. All funds
received upon execution of the judgment on such lien shall be
refunded to the taxpayer with three per cent interest should a
final determination be made that he does not owe any payment
to the department.
Section 278. Remote Sales Reports.--(a) Within ninety days
of the publication of the notice under subsection (b), the
Independent Fiscal Office, in conjunction with the Department
of Revenue, shall submit a detailed report to the chairman and
minority chairman of the Appropriations Committee of the Senate,
the chairman and minority chairman of the Finance Committee of
the Senate, the chairman and minority chairman of the
Appropriations Committee of the House of Representatives and
the chairman and minority chairman of the Finance Committee of
the House of Representatives outlining the plans concerning the
implementation of the legislation referenced in subsection (b)
or other substantially similar Federal legislation, which would
grant the Commonwealth the authority to impose and collect the
tax under this article due on sales from remote sellers. The
report shall include all of the following:
(1) The amount of State funds necessary to implement the
legislation referenced in subsection (b) or other substantially
similar legislation. The amount needed shall be itemized, and
all costs, including personnel, office expenses and other
related costs, shall be included.
(2) The amount of State tax revenue expected to result from
the implementation of the legislation referenced in subsection
(b) or other substantially similar legislation for the fiscal
year and for five fiscal years thereafter.
(3) The source of funds which will be utilized to pay for
the legislation referenced in subsection (b) or other
substantially similar legislation implementation program.
(4) The legal and practical issues concerning the propriety
of collecting and enforcing the tax imposed under this article
from remote sellers.
(5) The number of other states which have a similar law in
effect and the success or deficiencies of the law.
(6) Proposed draft legislation concerning the implementation
of the legislation referenced in subsection (b) or other
substantially similar legislation.
(7) A detailed timetable on when separate tasks must be
completed for full implementation on an estimated start date.
(b) The Secretary of Revenue shall publish notice in the
Pennsylvania Bulletin that Federal legislation relating to
remote sellers has been enacted.
(c) ((c) repealed June 22, 2018, P.L.281, No.42)
(d) As used in this section, the term "remote seller" shall
have the same meaning as defined in section 213. ((d) added
Oct. 30, 2017, P.L.672, No.43)
(278 added July 9, 2013, P.L.270, No.52)
Section 279. Class Actions.--A class action may not be
brought against a marketplace facilitator on behalf of
purchasers arising from or in any way related to an overpayment
of sales or use tax collected by the marketplace facilitator,
regardless of whether such action is characterized as a tax
refund claim. Nothing in this section shall affect a purchaser's
right to seek a refund from the department under other
provisions of this article.
(279 added June 28, 2019, P.L.50, No.13)
PART VII
REPEALER; APPROPRIATION; EFFECTIVE DATE
Section 280. Repeal.--The act of March 6, 1956 (P.L.1228),
known as the "Tax Act of 1963 for Education," is repealed
concurrently with the effective date of the various provisions
of this article.
Section 281. Appropriation for Refunds, Etc.--So much of
the proceeds of the tax imposed by this article as shall be
necessary for the payment of refunds, enforcement, or
administration, under this article, is hereby appropriated for
such purposes.
Section 281.1. Construction of Article.--To the extent that
the language of this Article II, is identical to that of
equivalent provisions in the Tax Act of 1963 for Education, the
said language shall be deemed a reenactment of such identical
provisions.
(281.1 added Sept. 9, 1971, P.L.437, No.105)
Section 281.2. Transfers to Public Transportation Assistance
Fund.--(a) All revenues received on or after July 1, 1992,
from the imposition of the tax on periodicals shall be
transferred to the Public Transportation Assistance Fund
according to the formula set forth in subsection (b).
(b) Within 30 days of the close of any calendar month, .44
per cent (.0044) of the taxes received in the previous month
under this article, less any amounts collected in that previous
calendar month under former 74 Pa.C.S. § 1314(d) (relating to
Public Assistance Transportation Fund), shall be transferred
to the Public Transportation Assistance Fund established under
Article XXIII.
(c) In fiscal year 1991-1992, the Secretary of Revenue will
ensure that ten million dollars ($10,000,000) is deposited in
the Public Assistance Transportation Fund from the combination
of revenues received under former 74 Pa.C.S. § 1314(d) and
transfers of periodical taxes received under this article.
(d) Within 30 days of the close of any calendar month, .09
per cent (.0009) of the taxes received in the previous month
under this article shall be transferred to the Public
Transportation Assistance Fund established under Article XXIII.
(e) Within 30 days of the close of a calendar month, .417
per cent (.00417) of the taxes received in the previous month
under this article shall be transferred to the Public
Transportation Assistance Fund established under Article XXIII.
(281.2 amended Dec. 23, 2003, P.L.250, No.46)
Compiler's Note: Section 33(2) of Act 46 of 2003, which
amended section 281.2, provided that the amendment shall
apply to deposits into the Public Transportation
Assistance Fund made after June 30, 2003.
Compiler's Note: Section 8 of Act 40 of 1991, which added
section 281.2, provided that the Secretary of Revenue
shall facilitate the transfer of funds under section
281.2.
Section 282. Effective Date.--The provisions of this article
shall take effect immediately, except that clauses (k)(4), (m)
and (o)(4) of section 201, clause (c) of section 202, and clause
(17) of section 204 shall take effect July 1, 1971.
ARTICLE II-A
SPECIAL SITUS FOR LOCAL SALES TAX
(Art. added June 16, 1994, P.L.279, No.48)
Section 201-A. Situs of Local Sales Tax on Certain Leased
or Rental Vehicles or Crafts.--(a) For purposes of this article
only, the lease of a motor vehicle, trailer, semitrailer or
mobilehome, as defined in 75 Pa.C.S. (relating to vehicles),
or of a motorboat, aircraft or other similar tangible personal
property required under either Federal or State laws to be
registered or licensed shall be deemed to have been completed
or used at the address of the lessee. In the case of a lease,
the tax shall be paid by the lessee to the lessor.
(b) For purposes of this article only, the rental of a motor
vehicle, trailer, semitrailer or mobilehome, as defined in 75
Pa.C.S., or of a motorboat, aircraft or other similar tangible
personal property required under either Federal or State laws
to be registered or licensed shall be deemed to be consummated
at the place of business of the retailer. In the case of a
rental, the tax due shall be paid by the renter to the retailer.
(c) This article shall only apply to any sales tax imposed
under Article XXXI-B of the act of July 28, 1953 (P.L.723,
No.230), known as the "Second Class County Code," and under the
act of June 5, 1991 (P.L.9, No.6), known as the "Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class."
(d) For purposes of this article only, "lease" shall mean
a contract for the use of a motor vehicle or other tangible
personal property referred to in subsection (a) for a period
of thirty days or more. "Rental" shall mean a contract for the
use of a motor vehicle or other tangible personal property
referred to in subsection (b) for a period of less than thirty
days.
(201-A added June 16, 1994, P.L.279, No.48)
Section 202-A. Situs for Certain Construction
Materials.--(a) Notwithstanding the provisions of section 504
of the act of June 5, 1991 (P.L.9, No.6), known as the
"Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class," the sale or use of road construction
material, including recycled asphalt, recycled concrete,
asphalt, concrete and road aggregates, shall be deemed to have
been consummated at the location of its final destination. Final
destination will be determined by reference to delivery or
shipping documents relating to such sales.
(b) This section shall apply to taxes levied under Chapter
5 of the "Pennsylvania Intergovernmental Cooperation Authority
Act for Cities of the First Class." This section shall not apply
to taxes levied under Article XXXI-B of the act of July 28,
1953 (P.L.723, No.230), known as the "Second Class County Code."
(202-A added June 22, 2001, P.L.353, No.23)
Section 203-A. Situs of Local Sales Tax on Mobile
Telecommunications Services.--(a) For purposes of this article
only, the situs of the sales or use of mobile telecommunications
services which are deemed to be provided to a customer by a
home service provider under section 117(a) and (b) of the Mobile
Telecommunications Sourcing Act (4 U.S.C. § 116) shall be the
customer's place of primary use regardless of where the mobile
telecommunications services originate, terminate or pass
through.
(b) For purposes of this section, words and phrases used
in this section shall have the meanings given to them in the
Mobile Telecommunications Sourcing Act.
(203-A added June 29, 2002, P.L.559, No.89)
ARTICLE II-B
SPECIAL TAXING AUTHORITY
(Art. added July 9, 2013, P.L.270, No.52)
Section 201-B. Special taxing authority.
(a) Imposition of tax.--
(1) A city of the first class may elect to impose a tax
on the sale at retail of tangible personal property or
services or use of tangible personal property or services
purchased at retail, as those terms are defined in section
201.
(2) The tax imposed under this section shall be in
addition to the tax authorized under section 503(a) and (b)
of the act of June 5, 1991 (P.L.9, No.6), known as the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class.
(3) The tax authorized under this subsection shall not
be levied, assessed and collected upon the occupancy of a
room in a hotel in the city of the first class.
(4) A tax imposed under this subsection on sales or
uses shall be paid to and received by the Department of
Revenue and, along with interest and penalties, less any
refunds and credits paid, shall be credited to the Local
Sales and Use Tax Fund created under the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of
the First Class. Money in the fund shall be disbursed as
provided in section 509 of the Pennsylvania Intergovernmental
Cooperation Authority Act for Cities of the First Class.
(b) Rate.--The tax authorized under subsection (a) shall
be imposed and collected at the rate of 1% and shall be computed
as set forth in section 503(e)(2) of the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class.
(c) Collection.--The tax authorized under subsection (a)
shall be administered, collected, deposited and disbursed in
the same manner as the tax imposed under Chapter 5 of the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class, and the situs of the tax shall be
determined in accordance with the Pennsylvania Intergovernmental
Cooperation Authority Act for Cities of the First Class and
Article II-A. The Department of Revenue shall use the money
received from the tax authorized under Chapter 5 of the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class to cover costs for the administration
of the tax authorized under subsection (a). The Department of
Revenue shall not retain any additional amounts for the cost
of collecting the tax authorized under subsection (a). No
additional fee shall be charged for a license or license renewal
other than the license or renewal fee authorized and imposed
under Article II.
(d) Municipal action.--In order to impose the tax, the
governing body of the city shall adopt an ordinance stating the
tax rate. The ordinance may be adopted prior to the effective
date of this subsection. The ordinance shall take effect no
earlier than 20 days after the adoption of the ordinance or 20
days after the effective date of this section, whichever is
later. A certified copy of the city ordinance shall be delivered
to the Department of Revenue within ten days prior to or after
the effective date of the ordinance. A certified copy of an
ordinance to repeal the tax authorized under subsection (a)
shall be delivered to the Department of Revenue at least 30
days prior to the effective date of repeal.
(e) Use of tax receipts.--
(1) Money received by the city from the levy, assessment
and collection of the tax authorized under subsection (a)
may only be paid to a school district of the first class in
an amount of up to $120,000,000 if the Secretary of Education
has made a determination, in the form of an annual
certification published in the Pennsylvania Bulletin, that
the school district of the first class has, in the judgment
of the Secretary of Education, began implementation of
reforms that provide for fiscal stability, educational
improvement and operational control.
(2) If the Secretary of Education determines that the
school district of the first class is implementing the
provisions outlined in paragraph (1), the Secretary of
Education shall:
(i) Deliver written certification of the
determination to the majority and minority chairpersons
of the Appropriations Committees of the Senate and the
House of Representatives, the majority and minority
chairpersons of the Education Committees of the Senate
and the House of Representatives, the chief executive
of the school district of the first class and the
Secretary of Revenue.
(ii) Upon receipt of the certification from the
Secretary of Education, the Secretary of Revenue shall
direct the State Treasurer to disburse, on or before the
tenth day of every month, to the school district of the
first class the total amount of money which is, as of
the last day of the previous month, contained in the
Local Sales and Use Tax Fund.
(iii) If the Secretary of Education does not issue
a written certification on or before December 31 of each
year, all money contained in the Local Sales and Use Tax
Fund shall be paid to a city of the first class.
(f) Remaining money.--Any remaining money above $120,000,000
paid to a school district of the first class pursuant to this
section shall be paid to a city of the first class as follows:
(1) for fiscal years 2014-2015, 2015-2016, 2016-2017
and 2017-2018, the first $15,000,000 in each of those fiscal
years may be retained for the payment of debt service
incurred by the city for the benefit of a school district
of the first class; and
(2) the remaining money shall be paid to a city of the
first class in accordance with the act of December 18, 1984
(P.L.1005, No.205), known as the Municipal Pension Plan
Funding Standard and Recovery Act.
(201-B added July 9, 2013, P.L.270, No.52)
ARTICLE III
PERSONAL INCOME TAX
(Art. added Aug. 31, 1971, P.L.362, No.93)
Compiler's Note. Section 44 of Act 22 of 1991, which amended
Article III, provided that the Department of Revenue
shall provide notice to employers, either in the
Pennsylvania Bulletin pursuant to 1 Pa. Code § 3.27 or
by other means, of the withholding rate equivalent to
the rate of tax in effect prior to the effective date
of the amendments of Article III plus the additional
rate necessary to equalize withholding over the remainder
of the taxable year to account for the revised annual
rate provided by the amendments to Article III, to be
effective from the first pay period of the employer
ending after the 14th day following the effective date
of section 302 and ending December 31, 1991. The
withholding rate during periods in calendar year 1992
shall correspond to the rate imposed by section 302 for
identical periods in calendar year 1992.
Compiler's Note: The provisions of the former Article III
were ruled unconstitutional by the Pennsylvania Supreme
Court in Amidon vs. Kane, 279 A.2d 531, 444 Pa. 38 (1971)
and were subsequently repealed August 31, 1971, P.L.362,
No.93, at which time a new Article III was added.
PART I
DEFINITIONS
(Part I added Aug. 31, 1971, P.L.362, No.93)
Section 301. Definitions.--Any reference in this article
to the Internal Revenue Code of 1986 shall mean the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.),
as amended to January 1, 1997, unless the reference contains
the phrase "as amended" and refers to no other date, in which
case the reference shall be to the Internal Revenue Code of
1986 as it exists as of the time of application of this article.
The following words, terms and phrases when used in this article
shall have the meaning ascribed to them in this section except
where the context clearly indicates a different meaning: (Intro.
par. amended July 7, 2005, P.L.149, No.40)
(a) "Accepted accounting principles and practices" means,
unless otherwise explicitly provided for in this article, those
accounting principles, systems or practices, including the
installment sales method of reporting, which are acceptable by
standards of the accounting profession and which are not
inconsistent with the regulations of the department setting
forth such principles and practices. ((a) amended July 7, 2005,
P.L.149, No.40)
(b) "Association" means any form of unincorporated
enterprise which:
(1) is subject to the tax imposed under Article IV; or
(2) is required to make a return under section 6042 of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
6042).
The term shall not include a partnership or investment company.
((b) amended June 22, 2001, P.L.353, No.23)
(c) "Business" means an enterprise, activity, profession,
vocation, trade, joint venture, commerce or any other
undertaking of any nature when engaged in as commercial
enterprise and conducted for profit or ordinarily conducted for
profit, whether by an individual, partnership, Pennsylvania S
corporation, association or other unincorporated entity. ((c)
amended Dec. 23, 1983, P.L.370, No.90)
(c.1) "Charitable trust" means a trust operated exclusively
for religious, charitable, scientific, literary or educational
purposes.
(c.2) "Claimant" means a person who is subject to the tax
imposed under this article, is not a dependent of another
taxpayer for purposes of section 151 of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 151), but is
entitled to claim against such tax the poverty tax provisions
as provided by this act. ((c.2) amended May 7, 1997, P.L.85,
No.7)
(d) "Compensation" means and shall include salaries, wages,
commissions, bonuses and incentive payments whether based on
profits or otherwise, fees, tips and similar remuneration
received for services rendered, whether directly or through an
agent, and whether in cash or in property. The term
"compensation" shall include any part of a distribution under
a plan described in section 409A(d)(1) of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 409A(d)(1)), as
amended, attributable to an elective deferral of income or the
income on any elective deferral of income, whether paid or
payable during employment or to a retired person upon or after
retirement from service.
The term "compensation" shall not mean or include: (i)
periodic payments for sickness and disability other than regular
wages received during a period of sickness or disability; or
(ii) disability, retirement or other payments arising under
workmen's compensation acts, occupational disease acts and
similar legislation by any government; or (iii) payments
commonly recognized as old age or retirement benefits paid to
persons retired from service after reaching a specific age or
after a stated period of employment; or (iv) payments commonly
known as public assistance, or unemployment compensation
payments by any governmental agency; or (v) payments to
reimburse actual expenses; or (vi) payments made by employers
or labor unions, including payments made pursuant to a cafeteria
plan qualifying under section 125 of the Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 125), for employe
benefit programs covering hospitalization, sickness, disability
or death, supplemental unemployment benefits or strike benefits:
Provided, That the program does not discriminate in favor of
highly compensated individuals as to eligibility to participate,
payments or program benefits; or (vii) any compensation received
by United States servicemen serving in a combat zone; or (viii)
payments received by a foster parent for in-home care of foster
children from an agency of the Commonwealth or a political
subdivision thereof or an organization exempt from Federal tax
under section 501(c)(3) of the Internal Revenue Code of 1954
which is licensed by the Commonwealth or a political subdivision
thereof as a placement agency; or (ix) payments made by
employers or labor unions for employe benefit programs covering
social security or retirement; or (x) personal use of an
employer's owned or leased property or of employer-provided
services.
((d) amended July 7, 2005, P.L.149, No.40)
(d.1) "Corporation," for purposes of applying the provisions
of section 303(a) with respect to a "reorganization" as defined
in that section, the term "corporation" shall include a business
trust to which 15 Pa.C.S. Ch. 95 (relating to business trusts)
applies, a common law business trust or a limited liability
company that for Federal income tax purposes is taxable as a
corporation or an investment company. ((d.1) amended May 7,
1997, P.L.85, No.7)
(d.2) "Corporate item" means an item, including income,
gain or loss, deduction or credit determined at the Pennsylvania
S corporation level, which is required to be taken into account
for a Pennsylvania S corporation's taxable year. ((d.2) added
July 9, 2013, P.L.270, No.52)
(e) "Department" means the Department of Revenue of this
Commonwealth.
(e.1) "Dependent" means a child who is the dependent of a
claimant for purposes of section 151 of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 151). ((e.1)
amended May 7, 1997, P.L.85, No.7)
(f) "Dividends" means any distribution in cash or property
made by a corporation, association, business trust or investment
company with respect to its stock out of accumulated earnings
and profits or out of earnings and profits of the year in which
such dividend is paid: Provided, however, That the term
"dividends" shall not include:
(i) a distribution of the stock of a corporation made by
the corporation originally issuing same to its own stockholders
if such distribution is not treated as personal income for
Federal individual income tax purposes; or
(ii) for taxable years beginning on or after January 1,
1993, a distribution made by an investment company out of
earnings and profits derived from interest that is statutorily
free from State and local taxation under Article XXIX of this
act or the act of August 31, 1971 (P.L.395, No.94), entitled
"An act exempting from taxation for State and local purposes
within the Commonwealth certain obligations, their transfer and
the income therefrom (including any profits made on the sale
thereof), issued by the Commonwealth, any public authority,
commission, board or other agency created by the Commonwealth,
any political subdivision of the Commonwealth or any public
authority created by any such political subdivision," or the
laws of the United States.
((f) amended Dec. 3, 1993, P.L.473, No.68)
(g) "Employe" means any individual from whose wages an
employer is required under the Internal Revenue Code to withhold
Federal income tax. ((g) amended Dec. 22, 1989, P.L.775, No.110)
(h) "Employer" means an individual, partnership,
association, corporation, governmental body or unit or agency,
or any other entity who or that is required under the Internal
Revenue Code to withhold Federal income tax from wages paid to
an employe. ((h) amended Dec. 22, 1989, P.L.775, No.110)
(i) "Fiduciary" means a guardian, trustee, executor,
administrator, receiver, conservator or any person acting in
any trust or similar capacity, whether domiciliary or ancillary.
(i.1) "Health savings account" has the meaning given in
section 223(d) of the Internal Revenue Code of 1986, as amended
(Public Law 99-514, 26 U.S.C. § 223(d)). ((i.1) added Nov. 20,
2006, P.L.1385, No.151)
(i.2) ((i.2) deleted by amendment Dec. 13, 1991, P.L.373,
No.40)
(j) "Income" for a resident individual, estate or trust
means the same as compensation, net profits, gains, dividends,
interest or income enumerated and classified under section 303
of this article.
(k) "Income from sources within this Commonwealth" for a
nonresident individual, estate or trust means the same as
compensation, net profits, gains, dividends, interest or income
enumerated and classified under section 303 of this article to
the extent that it is earned, received or acquired from sources
within this Commonwealth:
(1) By reason of ownership or disposition of any interest
in real or tangible personal property in this Commonwealth; or
(2) In connection with a trade, profession, occupation
carried on in this Commonwealth or for the rendition of personal
services performed in this Commonwealth; or
(3) As a distributive share of the income of an
unincorporated business, Pennsylvania S corporation, profession,
enterprise, undertaking or other activity as the result of work
done, services rendered or other business activities conducted
in this Commonwealth, except as allocated to another state
pursuant to regulations promulgated by the department under
this article; or
(4) From intangible personal property employed in a trade,
profession, occupation or business carried on in this
Commonwealth; or
(5) As gambling and lottery winnings by reason of a wager
placed in this Commonwealth, the conduct of a game of chance
or other gambling activity located in this Commonwealth or the
redemption of a lottery prize from a lottery conducted in this
Commonwealth, other than noncash prizes of the Pennsylvania
State Lottery.
Provided, however, That "income from sources within this
Commonwealth" for a nonresident individual, estate or trust
shall not include any items of income enumerated above received
or acquired from an investment company registered with the
Federal Securities and Exchange Commission under the Investment
Company Act of 1940.
((k) amended July 13, 2016, P.L.526, No.84)
(l) "Individual" means a natural person and shall include
the members of a partnership or association and the shareholders
of a Pennsylvania S corporation. ((l) amended Dec. 23, 1983,
P.L.370, No.90)
(l.1) "Installment sales method of reporting" means the
method by which a taxpayer reports the gain upon the sale of
tangible personal property or real property when at least one
payment is to be received in any taxable year following the
taxable year of sale, whether such property is sold or otherwise
disposed of in an isolated transaction or from the inventory
of a dealer or broker. Taxpayers may elect to allocate the gain
upon such transactions in equal proportion to each payment to
be received. Taxpayers who do not elect to allocate the gain
upon such transactions in equal proportion to each payment
received shall report all gains upon the sale in the taxable
year in which the transaction occurred. For the purposes of
this definition: (i) the gain upon the transaction shall be the
difference between the sales price and the seller's basis in
the property; and (ii) the sales price shall be the face amount
of the evidence of indebtedness given in exchange for the
property sold or otherwise disposed of together with the value
of any other consideration received by the seller. Where the
evidence of indebtedness fails to state a price, the evidence
of indebtedness will be valued at the fair market value of the
property sold, less the value of other property or cash received
in the same transaction. The installment sales method of
reporting shall not be used for transactions the object of which
is the lending of money or the rendering of services. ((l.1)
added Dec. 23, 1983, P.L.370, No.90)
(l.2) "Investment company" includes any incorporated or
unincorporated enterprise registered with the Federal Securities
and Exchange Commission under the Investment Company Act of
1940 (54 Stat. 789, 15 U.S.C. § 80a-1 et seq.). ((l.2) added
Dec. 3, 1993, P.L.473, No.68)
(m) "Nonresident individual" means any individual who is
not a resident of the Commonwealth.
(n) "Nonresident estate or trust" means any estate or trust
which is not a resident estate or trust. The term "nonresident
estate or trust" shall not include charitable trusts or pension
or profit sharing trusts.
(n.0) "Partnership" means a domestic or foreign general
partnership, joint venture, limited partnership, limited
liability company, business trust or other unincorporated entity
that for Federal income tax purposes is classified as a
partnership. ((n.0) amended Apr. 23, 1998, P.L.239, No.45)
(n.1) "Pennsylvania S corporation" means any small
corporation as defined in section 301(s.2) which does not have
a valid election under section 307 in effect. A qualified
Subchapter S subsidiary owned by a Pennsylvania S corporation
shall be treated as a Pennsylvania S corporation without regard
to whether an election under section 307 has been made with
respect to the subsidiary. ((n.1) amended July 6, 2006, P.L.319,
No.67)
(n.2) "Partnership item" means an item, including income,
gain or loss, deduction or credit determined at the partnership
level, which is required to be taken into account for a
partnership's taxable year. ((n.2) added July 9, 2013, P.L.270,
No.52)
(o) "Person" means any individual, employer, association,
fiduciary, partnership, corporation or other entity, estate or
trust, resident or nonresident, and the plural as well as the
singular number. For the purpose of determining eligibility for
special tax provisions, the term "person" means a natural
individual. ((o) amended July 13, 2016, P.L.526, No.84)
(o.1) "Poverty" means an economic condition wherein the
total amount of poverty income is insufficient to adequately
provide the claimant, his spouse and dependent children with
the necessities of life. ((o.1) added Mar. 13, 1974, P.L.179,
No.32)
(o.2) "Poverty income" means for the purpose of determining
eligibility for special tax provisions all moneys or property
(including interest, gains or income derived from obligations
which are statutorily free from State or local taxation under
any other act of the General Assembly of the Commonwealth of
Pennsylvania or under the laws of the United States) received
of whatever nature and from whatever source derived, but not
including (i) periodic payments for sickness and disability
other than regular wages received during a period of sickness
or disability; or (ii) disability, retirement or other payments
arising under workmen's compensation acts, occupational disease
acts and similar legislation by any government; or (iii)
payments commonly recognized as old age or retirement benefits
paid to persons retired from service after reaching a specific
age or after a stated period of employment; or (iv) payments
commonly known as public assistance or unemployment compensation
payments by any governmental agency; or (v) payments to
reimburse actual expenses; or (vi) payments made by employers
or labor unions for programs covering hospitalization, sickness,
disability or death, supplemental unemployment benefits, strike
benefits, Social Security and retirement; or (vii) any
compensation received by United States servicemen serving in a
combat zone. ((o.2) amended Dec. 13, 1991, P.L.373, No.40)
(o.3) "Qualified Subchapter S subsidiary" means a domestic
or foreign corporation which for Federal income tax purposes
is treated as a qualified Subchapter S subsidiary, as defined
in section 1361(b)(3)(B) of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1361), as amended to January
1, 2005. ((o.3) amended July 6, 2006, P.L.319, No.67)
(o.4) "Publicly traded partnership" means an entity defined
under section 7704 of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 7704) with equity securities registered
with the Securities and Exchange Commission under section 12
of the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C.
§ 78a). ((o.4) added July 9, 2013, P.L.270, No.52)
(o.5) "Qualified student loan" means indebtedness incurred
by a taxpayer to pay educational expenses, which are:
(1) incurred on behalf of the taxpayer at the time the
indebtedness is incurred;
(2) paid or incurred within a reasonable period of time
before or after the indebtedness is incurred; and
(3) attributable to education furnished during a period in
which the recipient is a student.
The term includes indebtedness used to refinance indebtedness
that qualifies as a qualified student loan. The term does not
include indebtedness owed by a taxpayer to a person related to
the taxpayer.
((o.5) added July 11, 2024, P.L. , No.56)
(p) "Resident individual" means an individual who is
domiciled in this Commonwealth unless he maintains no permanent
place of abode in this Commonwealth and does maintain a
permanent place of abode elsewhere and spends in the aggregate
not more than thirty days of the taxable year in this
Commonwealth; or who is not domiciled in this Commonwealth but
maintains a permanent place of abode in this Commonwealth and
spends in the aggregate more than one hundred eighty-three days
of the taxable year in this Commonwealth.
(q) "Received" for the purpose of computation of income
subject to tax under this article means "received, earned or
acquired" and the phrase "received, earned or acquired" shall
be construed according to the method of accounting required by
the department under this article for computing and reporting
income subject to the tax.
(r) "Resident estate" means the estate of a decedent who
at the time of his death was a resident individual.
(s) "Resident trust" means:
(1) A trust created by the will of a decedent who at the
time of his death was a resident individual; and
(2) Any trust created by, or consisting in whole or in part
of property transferred to a trust by a person who at the time
of such creation or transfer was a resident. The term "resident
trust" under this subclause (2) shall not include charitable
trusts or pension or profit sharing trusts.
(s.1) "Special tax provisions" means a refund or forgiveness
of all or part of the claimant's liability under the provisions
of this article. ((s.1) added Mar. 13, 1974, P.L.179, No.32)
(s.2) "Small corporation" means any corporation which has
a valid election in effect under Subchapter S of Chapter 1 of
the Internal Revenue Code of 1986, as amended to January 1,
2005. ((s.2) amended July 6, 2006, P.L.319, No.67)
(t) "State" means, except as provided under section 314(a),
any state or commonwealth of the United States, the District
of Columbia, the Commonwealth of Puerto Rico, any territory or
possession of the United States and any foreign country. ((t)
amended July 9, 2013, P.L.270, No.52)
(t.1) "Student loan interest" means interest paid during
the taxable year on a qualified student loan, including required
and voluntary interest payments, to attend a college,
university, vocational school or other postsecondary educational
institution eligible to participate in a student aid program
administered by the United States Department of Education.
((t.1) added July 11, 2024, P.L. , No.56)
(u) "Tax" includes interest, penalties and additions to
tax, and further includes the tax required to be withheld by
an employer on compensation paid, unless a more limited meaning
is disclosed by the context.
(v) "Taxable year" means the taxable period on the basis
of which a taxpayer or a claimant is required to file his
Federal income tax return pursuant to the Internal Revenue Code
or if he is not required to or does not file a Federal income
tax return, the calendar year provided that for the initial
period during which the tax is first imposed "taxable year"
means the period beginning June 1, 1971, and ending with the
taxable period on the basis of which a taxpayer is required to
file his Federal income tax return pursuant to the Internal
Revenue Code or if he is not required to or does not file a
Federal income tax return, December 31, 1971. ((v) amended Mar.
13, 1974, P.L.179, No.32)
(w) "Taxpayer" means any individual, estate or trust subject
to the tax imposed by this article, any partnership having a
partner who is a taxpayer under this act, any Pennsylvania S
corporation having a shareholder who is a taxpayer under this
act and any person required to withhold tax under this article.
((w) amended July 13, 2016, P.L.526, No.84)
(301 added Aug. 31, 1971, P.L.362, No.93)
Compiler's Note: Section 30(2) of Act 56 of 2024 provided
that the addition of subsections (o.5) and (t.1) shall
apply to taxable years commencing after December 31,
2023.
Compiler's Note: Section 51(4) of Act 84 of 2016, which
amended subsections (k), (o) and (w), provided that the
amendment of subsection (k)(5) concerning lottery
winnings shall apply retroactively to January 1, 2016.
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended subsection (t), (d.2) and (n.2) and added
subsection (0.4), provided that the amendment or addition
shall apply to tax years beginning after December 31,
2013.
Compiler's Note: See section 24(2)(i), (6) and (7)(i) of
Act 40 of 2005, which amended the introductory paragraph
and subsections (a) and (d), in the appendix to this act
for special provisions relating to applicability.
Compiler's Note: Section 33(3) of Act 46 of 2003, which
amended subsection (k), provided that the amendment shall
apply to taxable years beginning after December 31, 2003.
Compiler's Note: Section 26(4)(i) of Act 23 of 2001, which
amended subsection (b), provided that the amendment shall
apply to taxable years beginning after December 31, 2000.
Compiler's Note: Section 32(5) of Act 4 of 1999, which
amended subsection (s.2), provided that the amendment
shall apply to the taxable years beginning after December
31, 1998.
PART II
IMPOSITION OF TAX
(II added Aug. 31, 1971, P.L.362, No.93)
Section 302. Imposition of Tax.--(a) Except as provided
in subsection (c), every resident individual, estate or trust
shall be subject to, and shall pay for the privilege of
receiving each of the classes of income hereinafter enumerated
in section 303, a tax upon each dollar of income received by
that resident during that resident's taxable year at the rate
of three and seven hundredths per cent.
(b) Except as provided in subsection (c), every nonresident
individual, estate or trust shall be subject to, and shall pay
for the privilege of receiving each of the classes of income
hereinafter enumerated in section 303 from sources within this
Commonwealth, a tax upon each dollar of income received by that
nonresident during that nonresident's taxable year at the rate
of three and seven hundredths per cent.
(c) The classes of income under section 303 received by a
resident trust, and the classes of income received by a
nonresident trust from sources within this Commonwealth, shall
be taxable to the grantor of the trust or another person to the
extent the grantor or other person is treated as the owner of
the trust under sections 671, 672, 673, 674, 675, 676, 677, 678
and 679 of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.), as amended, whether or not such income
is distributed or distributable to the beneficiaries of the
trust or accumulated.
(302 amended Dec. 14, 2023, P.L. , No.64)
Compiler's Note: Section 2(1) of Act 64 of 2023, which
amended section 302, provided that the amendment shall
apply to tax years beginning on or after January 1
following the effective date of section 2.
Section 33(4) of Act 46 of 2003, which amended section
302, provided that the amendment shall apply to taxable
years beginning after December 31, 2003.
Section 302.1. Rate Changes Occurring During the Taxable
Year.--Notwithstanding the provisions of section 302, the tax
rate to be used for the computation of tax for any taxable year
where the rate changes during the taxable year shall be the
monthly weighted average of the rates applicable during the
taxable year, regardless of when during the taxable year the
income is received.
(302.1 amended Aug. 4, 1991, P.L.97, No.22)
Section 302.2. Imposition of Tax.--(302.2 repealed Aug. 4,
1991, P.L.97, No.22)
Section 303. Classes of Income.--(a) The classes of income
referred to above are as follows:
(1) Compensation.
(i) All salaries, wages, commissions, bonuses and incentive
payments whether based on profits or otherwise, fees, tips and
similar remuneration received for services rendered whether
directly or through an agent and whether in cash or in property
except income derived from the United States Government for
active duty outside the Commonwealth of Pennsylvania as a member
of its armed forces and income from the United States Government
or the Commonwealth of Pennsylvania for active State duty for
emergency within or outside the Commonwealth of Pennsylvania,
including duty ordered pursuant to 35 Pa.C.S. Ch. 76 (relating
to Emergency Management Assistance Compact).
(ii) Compensation of a cash-basis taxpayer shall be
considered as received if the compensation is actually or
constructively received for Federal income tax purposes as
determined consistent with the United States Treasury
regulations and rulings under the Internal Revenue Code of 1986,
as amended, except that, for purposes of computing tax under
this article:
(A) Amounts lawfully deducted, not deferred, and withheld
from the compensation of employes shall be considered to have
been received by the employe as compensation at the time the
deduction is made.
(B) Contributions to an employes' trust, pooled fund or
other arrangement which is not subject to the claims of
creditors of the employer made by an employer on behalf of an
employe or self-employed individual at the election of the
employe or self-employed individual pursuant to a cash or
deferred arrangement or salary reduction agreement shall be
deemed to have been received by the employe or individual as
compensation at the time the contribution is made, regardless
of when the election is made or a payment is received.
(C) Any contribution to a plan by, on behalf of or
attributable to a self-employed person shall be deemed to have
been received at the time the contribution is made.
(D) Employer contributions to a Roth IRA custodial account
or employe annuity shall be deemed received, earned or acquired
only when distributed, when the plan fails to meet the
requirements of section 408A of the Internal Revenue Code of
1986 (26 U.S.C. § 408A), as amended, or when the plan is not
operated in accordance with such requirements.
(E) Employe contributions to an employes' trust or pooled
fund or custodial account or contract or employe annuity shall
not be deducted or excluded from compensation.
(iii) For purposes of determining when deferred compensation
of employes other than employes of exempt organizations and
State and local governments is required to be included in
income, the following apply:
(A) The rules of sections 83 and 451 of the Internal Revenue
Code of 1986 (26 U.S.C. §§ 83 and 451), as amended, shall apply.
(B) The rules of section 409A of the Internal Revenue Code
of 1986 (26 U.S.C. § 409A), as amended, shall apply.
(iv) For purposes of determining when deferred compensation
of employes of exempt organizations and State and local
governments is required to be included in income, the following
apply:
(A) The rules of sections 83, 451 and 457 of the Internal
Revenue Code of 1986, as amended, shall apply.
(B) The rules of section 409A of the Internal Revenue Code
of 1986, as amended, shall apply.
((1) amended Nov. 29, 2006, P.L.1613, No.182)
(2) Net profits. The net income from the operation of a
business, profession, or other activity, after provision for
all costs and expenses incurred in the conduct thereof,
determined either on a cash or accrual basis in accordance with
accepted accounting principles and practices but without
deduction of taxes based on income. For purposes of calculating
net income under this paragraph, to the extent a taxpayer
properly deducts an amount under section 195(b)(1)(A) of the
Internal Revenue Code of 1986 (26 U.S.C. § 195(b)(1)(A)), as
amended, and the regulations promulgated under section
195(b)(1)(A) of the Internal Revenue Code of 1986, the taxpayer
shall be permitted a deduction in equal amount in the same
taxable year. ((2) amended July 9, 2013, P.L.270, No.52)
(3) Net gains or income from disposition of property. Net
gains or net income, less net losses, derived from the sale,
exchange or other disposition of property, including real
property, tangible personal property, intangible personal
property or obligations issued on or after the effective date
of this amendatory act by the Commonwealth; any public
authority, commission, board or other agency created by the
Commonwealth; any political subdivision of the Commonwealth or
any public authority created by any such political subdivision;
or by the Federal Government as determined in accordance with
accepted accounting principles and practices. For the purpose
of this article:
(i) For the determination of the basis of any property,
real and personal, if acquired prior to June 1, 1971, the date
of acquisition shall be adjusted to June 1, 1971, as if the
property had been acquired on that date. If the property was
acquired after June 1, 1971, the actual date of acquisition
shall be used in determination of the basis.
(ii) ((ii) deleted by amendment Apr. 23, 1998, P.L.239,
No.45)
(iii) The term "net gains or income" and "net losses" shall
not include gains or income or loss derived from obligations
which are statutorily free from State or local taxation under
the act of August 31, 1971 (P.L.395, No.94), entitled "An act
exempting from taxation for State and local purposes within the
Commonwealth certain obligations, their transfer and the income
therefrom (including any profits made on the sale thereof),
issued by the Commonwealth, any public authority, commission,
board or other agency created by the Commonwealth, any political
subdivision of the Commonwealth or any public authority created
by any such political subdivision," or under the laws of the
United States.
(iv) The term "sale, exchange or other disposition" shall
not include the exchange of stock or securities in a corporation
a party to a reorganization in pursuance of a plan of
reorganization, solely for stock or securities in such
corporation or in another corporation a party to the
reorganization and the transfer of property to a corporation
by one or more persons solely in exchange for stock or
securities in such corporation if immediately after the exchange
such person or persons are in control of the corporation. The
following shall apply:
(A) For purposes of this subparagraph (iv), stock or
securities issued for services shall not be considered as issued
in return for property.
(B) For purposes of this subparagraph (iv), the term
"reorganization" means any of the following:
(I) A statutory merger or consolidation.
(II) The acquisition by one corporation, in exchange solely
for all or a part of its voting stock (or in exchange solely
for all or a part of the voting stock of a corporation which
is in control of the acquiring corporation) of stock of another
corporation if, immediately after the acquisition, the acquiring
corporation has control of such other corporation (whether or
not such acquiring corporation had control immediately before
the acquisition).
(III) The acquisition by one corporation, in exchange solely
for all or a part of its voting stock (or in exchange solely
for all or a part of the voting stock of a corporation which
is in control of the acquiring corporation), of substantially
all of the properties of another corporation, but in determining
whether the exchange is solely for stock the assumption by the
acquiring corporation of a liability of the other, or the fact
that property acquired is subject to a liability, shall be
disregarded.
(IV) A transfer by a corporation of all or a part of its
assets to another corporation if immediately after the transfer
the transferor, or one or more of its shareholders (including
persons who were shareholders immediately before the transfer),
or any combination thereof, is in control of the corporation
to which the assets are transferred.
(V) A recapitalization.
(VI) A mere change in identity, form, or place of
organization however effected.
(C) The acquisition by one corporation, in exchange for
stock of a corporation (referred to in this clause (C) as
"controlling corporation") which is in control of the acquiring
corporation, of substantially all of the properties of another
corporation which in the transaction is merged into the
acquiring corporation shall not disqualify a transaction under
clause (B)(I) if such transaction would have qualified under
clause (B)(I) if the merger had been into the controlling
corporation, and no stock of the acquiring corporation is used
in the transaction.
(D) A transaction otherwise qualifying under clause (B)(I)
shall not be disqualified by reason of the fact that stock of
a corporation (referred to in this clause (D) as the
"controlling corporation") which before the merger was in
control of the merged corporation is used in the transaction,
if after the transaction, the corporation surviving the merger
holds substantially all of its properties and of the properties
of the merged corporation (other than stock of the controlling
corporation distributed in the transaction); and in the
transaction, former shareholders of the surviving corporation
exchanged, for an amount of voting stock of the controlling
corporation, an amount of stock in the surviving corporation
which constitutes control of such corporation.
(E) For purposes of this subparagraph (iv):
(I) The term "control" means the ownership of stock
possessing at least eighty per cent of the total combined voting
power of all classes of stock entitled to vote and at least
eighty per cent of the total number of shares of all other
classes of stock of the corporation.
(II) The term "a party to a reorganization" includes a
corporation resulting from a reorganization, and both
corporations, in the case of a reorganization resulting from
the acquisition by one corporation of stock or properties of
another. In the case of a reorganization qualifying under clause
(B)(I) by reason of clause (C) the term "a party to a
reorganization" includes the controlling corporation referred
to in clause (C).
(F) Notwithstanding any provisions hereof, upon every such
exchange or conversion, the taxpayer's base for the stock or
securities received shall be the same as the taxpayer's actual
or attributed base for the stock, securities or property
surrendered in exchange therefor.
(v) The term "sale, exchange or other disposition" shall
not include a transfer by a common trust fund described in
section 584 of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 584) of all or substantially all of its
assets to one or more companies described in section 851 of the
Internal Revenue Code of 1986 (26 U.S.C. § 851) in exchange for
stock or units of beneficial interest in the company or
companies to which such assets are transferred and the
distribution of such stock or units by the fund to its
participants in exchange for their interest in the fund, if no
gain or loss is recognized on the transfer or distribution for
Federal income tax purposes. Upon every such exchange, the
taxpayer's base for the stock or units or assets received shall
be the same as the taxpayer's actual or attributed base for the
assets, stock, units or interest surrendered in exchange
therefor.
(vi) The term "sale, exchange or other disposition" shall
not include a transfer of an interest in an enterprise treated
as a partnership for purposes of this article in exchange for
an interest in any other enterprise treated as a partnership
for purposes of this article, a liquidation made in connection
therewith or an exchange made pursuant to a statutory merger,
consolidation or division of enterprises so treated unless
taxable income or gain is recognized for Federal income tax
purposes. Upon every such exchange, the taxpayer's base for the
interest received shall be the same as the taxpayer's actual
or attributed base for the interest surrendered in exchange
therefor.
(vii) The term "net gains or net income, less net losses,"
shall not include any gain or loss from the sale, exchange or
other disposition of the taxpayer's principal residence.
(A) For purposes of this subparagraph, the term "principal
residence" shall mean the property that has been owned and used
by the taxpayer as the taxpayer's principal residence for
periods aggregating two years or more during the five-year
period ending on the date of the sale, exchange or disposition:
Provided, however, That the following shall apply:
(I) In the case of property only a portion of which, during
the five-year period ending on the date of the sale, exchange
or disposition, has been owned or used by the taxpayer as the
taxpayer's principal residence for periods aggregating two years
or more, this subparagraph shall apply with respect to so much
of the gain from the sale, exchange or disposition of such
property as is determined under regulations prescribed by the
department to be attributable to that portion.
(II) In the case of a principal residence only a portion
of which has never been subject to the allowance for
depreciation, this subparagraph shall apply with respect to so
much of the gain from the sale, exchange or disposition of such
property as is determined under regulations prescribed by the
department to be attributable to that portion.
(B) The provisions of this subparagraph shall not apply to
a sale, exchange or disposition if, during the two-year period
ending upon the date of the sale, exchange or disposition, there
was a prior sale, exchange or disposition by the taxpayer of a
principal residence unless the sale, exchange or disposition
is by reason of a change in employment, health or, to the extent
provided in regulations, unforeseen circumstances.
(C) The provisions of this subparagraph shall not apply to
any sale, exchange or disposition made prior to January 1, 1998.
((vii) added Apr. 23, 1998, P.L.239, No.45)
(viii) The term "net gains or income" and "net losses" shall
not include gains or income or losses which are excluded from
Federal taxation under section 1400Z-2 of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 1400Z-2), as
amended. Net gains or net income, less net losses, which are
excluded under this subparagraph shall be included in income
to the extent they are included in gross income under section
1400Z-2(b) of the Internal Revenue Code of 1986, as amended.
Section 1400Z-2(c) of the Internal Revenue Code of 1986, as
amended, shall apply in the computation of net gains or net
income and net losses. ((viii) added June 28, 2019, P.L.50,
No.13)
((3) amended May 7, 1997, P.L.85, No.7)
(4) Net gains or income derived from or in the form of
rents, royalties, patents and copyrights.
(5) Dividends. The term "dividends" shall not include gains
or income or losses which are excluded from Federal taxation
under section 1400Z-2 of the Internal Revenue Code of 1986, as
amended. Gains or income or losses which are excluded under
this subparagraph shall be included in income to the extent
they are included in gross income under section 1400Z-2(b) of
the Internal Revenue Code of 1986, as amended. Section
1400Z-2(c) of the Internal Revenue Code of 1986, as amended,
shall apply in the computation of net gains or net income and
net losses. ((5) amended June 28, 2019, P.L.50, No.13)
(6) Interest derived from obligations which are not
statutorily free from State or local taxation under any other
act of the General Assembly of the Commonwealth of Pennsylvania
or under the laws of the United States, any amount paid under
contract of life insurance or endowment or annuity contract
which is includable in gross income for Federal income tax
purposes and any amount paid out of the Archer Medical Savings
Account (Archer MSA) or health savings account that is
includable in the gross income of an account beneficiary for
Federal income tax purposes. ((6) amended July 6, 2006, P.L.319,
No.67)
(7) Gambling and lottery winnings other than noncash prizes
of the Pennsylvania State Lottery. ((7) amended July 13, 2016,
P.L.526, No.84)
(8) Net gains or income derived through estates or trusts.
To the extent that income or gain is subject to tax under one
of the classes of income enumerated in this section such income
or gain shall not be subject to tax under another of such
enumerated classes.
(a.1) Income shall be computed under the method of
accounting on the basis of which the taxpayer regularly computes
income in keeping the taxpayer's books. If the department
determines that no method has been regularly used or the method
used does not clearly reflect income, the computation of income
shall be made under a method which, in the opinion of the
department, clearly reflects income. ((a.1) added June 29, 2002,
P.L.559, No.89)
(a.2) In computing income, a depreciation deduction shall
be allowed for the exhaustion, wear and tear and obsolescence
of property being employed in the operation of a business or
held for the production of income. The deduction must be
reasonable and shall be computed in accordance with the
property's adjusted basis at the time placed in service,
reasonably estimated useful life and net salvage value at the
end of its reasonably estimated useful economic life under the
straight-line method or other method prescribed by the
department, except a taxpayer may use any depreciation method,
recovery method or convention that is also used by the taxpayer
in determining Federal net taxable income if, when placed in
service, the property has the same adjusted basis for Federal
income tax purposes and the method or convention is allowable
for Federal income tax purposes at the time the property is
placed in service or under the Internal Revenue Code of 1986,
whichever is earlier. The basis of property shall be reduced,
but not below zero, for depreciation by the greater of:
(1) The amount deducted on a return and not disallowed, but
only to the extent the deduction results in a reduction of
income; and
(2) The amount allowable using the straight-line method of
depreciation computed on the basis of the property's adjusted
basis at the time placed in service, reasonably estimated useful
life and net salvage value at the end of its reasonably
estimated useful economic life, regardless of whether the
deduction results in a reduction of income.
((a.2) added June 29, 2002, P.L.559, No.89)
(a.3) The cost of property commonly referred to as Section
179 Property may be treated as a deductible expense only to the
extent allowable under the version of section 179 of the
Internal Revenue Code in effect at the time the property is
placed in service. The basis of Section 179 Property shall be
reduced, but not below zero, for costs treated as a deductible
expense. The amount of the reduction shall be the amount
deducted on a return and not disallowed, regardless of whether
the deduction results in a reduction of income. ((a.3) amended
July 8, 2022, P.L.513, No.53)
(a.4) This article shall be subject to applicable Federal
limitations on state income taxation. ((a.4) added July 7, 2005,
P.L.149, No.40)
(a.5) The requirements of sections 1031 and 1035 of the
Internal Revenue Code of 1986 (26 U.S.C. §§ 1031 and 1035), as
amended, shall be applicable. ((a.5) amended July 8, 2022,
P.L.513, No.53)
(a.6) Except as provided in this article and without regard
to sections 220(f)(4) and 223(f)(4) of the Internal Revenue
Code of 1986, the requirements of sections 106(b) and (d), 220
and 223 of the Internal Revenue Code of 1986 shall be
applicable. ((a.6) amended Oct. 9, 2009, P.L.451, No.48)
(a.7) The following apply:
(1) An amount paid as a contribution into a qualified
tuition program shall be deductible from taxable income on the
annual personal income tax return. The amount paid as a
contribution to a qualified tuition program allowable as a
deduction under this subsection shall be subject to an annual
limitation not to exceed the threshold for exclusion from gifts
as provided in section 2503(b) of the Internal Revenue Code of
1986, as amended, per designated beneficiary. The deduction
shall not result in taxable income being less than zero.
(2) (i) The following shall not be subject to tax under
this article:
(A) Any amount distributed from a qualified tuition program
that is excludable from tax under section 529(c)(3)(B) of the
Internal Revenue Code of 1986, as amended.
(B) Any distribution that is excludable from tax under
section 529 of the Internal Revenue Code of 1986, as amended.
((B) amended July 11, 2024, P.L. , No.56)
(C) Undistributed earnings on a qualified tuition program.
(D) The value of a medal awarded by or prize money received
from the United States Olympic Committee on account of
competition in the Olympic Games or Paralympic Games.
(E) Any amount received by an employe through an employer's
matching contribution to an account as defined under Article
XIX-J. ((E) added July 11, 2024, P.L. , No.56)
(ii) A change in designated beneficiaries under section
529(c)(3)(C) of the Internal Revenue Code of 1986, as amended,
shall not constitute a taxable event under this article.
((2) amended June 28, 2019, P.L.50, No.13)
(3) Any amount distributed from a qualified tuition program
that is not described under paragraph (2) shall be taxable under
this article.
(4) For purposes of this subsection:
(i) The term "designated beneficiary" shall have the same
meaning as provided in section 529(e)(1) of the Internal Revenue
Code of 1986, as amended.
(ii) The term "qualified tuition program" shall have the
same meaning as provided in section 529(b)(1) of the Internal
Revenue Code of 1986, as amended.
(5) As follows:
(i) The classes of income under this section shall not
include any amount which is excluded from Federal gross income
under sections 276 and 278(a) of the COVID-Related Tax Relief
Act of 2020, enacted as Subtitle B of Title II of Division N
of the Consolidated Appropriations Act, 2021 (Public Law
116-260, 134 Stat. 1182).
(ii) No deduction may be disallowed from an expense that
is otherwise deductible if the payment of the expense results
in forgiveness of a covered loan under subparagraph (i).
((5) added July 8, 2022, P.L.513, No.53)
(6) The classes of income under this section shall not
include a payment received by an individual from the United
States under section 2201 of the Coronavirus Aid, Relief, and
Economic Security Act (Public Law 116-136, 134 Stat. 281) or
sections 272 and 273 of the Consolidated Appropriations Act,
2021. ((6) added July 8, 2022, P.L.513, No.53)
(7) An amount received from the Federal or State Government
or Norfolk Southern Railway, or an agent thereof, as a result
of the train derailment that occurred in East Palestine, Ohio,
on February 3, 2023, shall not be considered income subject to
the tax imposed by this article. ((7) added July 11, 2024, P.L.
, No.56)
((a.7) added July 6, 2006, P.L.319, No.67)
(a.8) A person who incurs intangible drilling and
development costs as defined in section 263(c) of the Internal
Revenue Code of 1986, as amended, and regulations thereunder,
is required to capitalize the costs and recover them over a
ten-year period in the taxable year the costs are incurred; or
a person may elect to currently expense up to one-third of the
costs in the taxable year in which the costs are incurred and
recover the remaining costs over a ten-year period beginning
in the taxable year the costs are incurred. ((a.8) amended July
13, 2016, P.L.526, No.84)
(a.9) The provisions of section 1033 of the Internal Revenue
Code of 1986 (26 U.S.C. § 1033), as amended, shall be
applicable. ((a.9) added July 13, 2016, P.L.526, No.84)
(a.10) The provisions of section 451(f) of the Internal
Revenue Code of 1986, as amended, shall be applicable. ((a.10)
added June 30, 2021, P.L.124, No.25)
(a.11) The amount of student loan interest paid during a
taxable year by a resident individual shall be deductible from
taxable income on the annual personal income tax return,
provided that the deduction may not:
(1) exceed two thousand five hundred dollars ($2,500) per
taxable year; and
(2) result in taxable income being less than zero.
((a.11) added July 11, 2024, P.L. , No.56)
(a.12) A person may claim a deduction for depletion of a
mine, oil and gas well and other natural deposit in accordance
with the provisions of sections 611, 612, 613, 613A, 614, 616
and 617 of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 611 et seq.) in effect on the effective date of
this subsection. ((a.12) added July 11, 2024, P.L. , No.56)
(b) It is hereby declared to be the intent of the General
Assembly that if one or more or part of one or more of the
classes of income enumerated in subsection (a) of this section
are, for any reason, held to be unconstitutional by a final
decision of a court of last resort, said unconstitutional class
or classes or part of a class or classes of income shall be
deemed severable, and the tax imposed by this article shall
apply with respect to all the remaining classes of income or
parts thereof enumerated in subsection (a) of this section as
if the unconstitutional class or classes of income or part or
parts thereof had not been included therein.
(303 added Aug. 31, 1971, P.L.362, No.93)
Compiler's Note: Section 30(3), (4) and (5) of Act 56 of
2024 provided that the addition of subsection (a.7)(7)
shall apply to taxable years commencing after December
31, 2022, the addition of subsection (a.11) shall apply
to taxable years commencing after December 31, 2024 and
the addition of subsection (a.12) shall apply to taxable
years commencing after December 31, 2023.
Compiler's Note: See section 23 of Act 53 of 2022 in the
appendix to this act for special provisions relating to
continuation of prior law. Section 24(1) of Act 53 of
2022 provided that the amendment of section 303(a.3)
shall apply to property placed in service in tax years
beginning after December 31, 2022. Section 24(2) of Act
53 of 2022 provided that the amendment of section
303(a.5) shall apply to transactions occurring in tax
years beginning after December 31, 2022.
Compiler's Note: Section 40(2) of Act 25 of 2021 provided
that the addition of subsection (a.10) shall apply to
taxable years beginning after December 31, 2020.
Compiler's Note: Section 28 of Act 13 of 2019 provided
that amendment or addition of subsection (a)(3)(viii)
and (5) shall apply to tax years beginning after December
31, 2019.
Compiler's Note: Section 51(3)(i) of Act 84 of 2016, which
amended subsections (a)(7) and (a.8) and added
subsection (a.9), provided that the amendment of
subsection (a.8) shall apply retroactively to January
1, 2014.
Section 51(4) of Act 84 of 2016 provided that the
amendment of subsection (a)(7) concerning lottery
winnings shall apply retroactively to January 1, 2016.
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended subsec. (a)(2), and added subsec. (a.8), provided
that the amendment or addition shall apply to tax years
beginning after December 31, 2013.
Compiler's Note: Section 2 of Act 182 of 2006, which amended
subsection (a), provided that the amendment shall apply
to taxable years beginning after December 31, 2006.
Compiler's Note: See section 24(2)(ii), (6), (7)(ii) and
(8) of Act 40 of 2005, which amended subsection (a)(1)
and (6), in the appendix to this act for special
provisions relating to applicability.
Compiler's Note: Section 20 of Act 45 of 1998, which added
subsection (a), provided that for the purpose of
implementing subsection (a)(3)(vii), the Department of
Revenue shall promulgate regulations which are final-form
regulations under the act of June 25, 1982 (P.L.633,
No.181), known as the Regulatory Review Act, and which
omit notice of proposed rulemaking under section 201 of
the act of July 31, 1968 (P.L.796, No.240), referred to
as the Commonwealth Documents Law. Regulations under
section 20 shall be submitted to the Legislative
Reference Bureau not later than November 24, 1998, for
publication in the Pennsylvania Bulletin.
Compiler's Note: Section 35 of Act 7 of 1997, which amended
subsection (a), provided that it is the intent of the
General Assembly that the amendment of section
303(a)(3)(v) is to clarify existing law and shall not
be construed to change existing law.
Section 304. Special Tax Provisions for Poverty.--(a) The
General Assembly, in recognition of the powers contained in
section 2(b)(ii) of Article VIII of the Constitution of the
Commonwealth of Pennsylvania which provides therein for the
establishing as a class or classes of subjects of taxation the
property or privileges of persons who, because of poverty are
determined to be in need of special tax provisions hereby
declares as its legislative intent and purpose to implement
such power under such constitutional provision by establishing
special tax provisions as hereinafter provided in this act.
(b) The General Assembly having determined that there are
persons within this Commonwealth whose incomes are such that
imposition of a tax thereon would deprive them and their
dependents of the bare necessities of life and having further
determined that poverty is a relative concept inextricably
joined with actual income and the number of people dependent
upon such income deems it to be a matter of public policy to
provide special tax provisions for that class of persons
hereinafter designated to relieve their economic burden.
(c) For the taxable year 1974 and each year thereafter any
claimant who meets the following standards of eligibility
established by this act as the test for poverty shall be deemed
a separate class of subject of taxation, and, as such, shall
be entitled to the benefit of the special provisions of this
act.
(d) Any claim for special tax provisions hereunder shall
be determined in accordance with the following:
(1) If the poverty income of the claimant during an entire
taxable year is six thousand five hundred dollars ($6,500) or
less, or, in the case of a married claimant, if the joint
poverty income of the claimant and the claimant's spouse during
an entire taxable year is thirteen thousand dollars ($13,000)
or less, the claimant shall be entitled to a refund or
forgiveness of any moneys which have been paid over to (or would
except for the provisions of this act be payable to) the
Commonwealth under the provisions of this article, with an
additional income allowance of nine thousand five hundred
dollars ($9,500) for each dependent of the claimant. For
purposes of this subsection, a claimant shall not be considered
to be married if:
(i) The claimant and the claimant's spouse file separate
returns; and
(ii) The claimant and the claimant's spouse live apart at
all times during the last six months of the taxable year or are
separated pursuant to a written separation agreement.
(2) If the poverty income of the claimant during an entire
taxable year does not exceed the poverty income limitations
prescribed by clause (1) by more than the dollar category
contained in subclauses (i), (ii), (iii), (iv), (v), (vi),
(vii), (viii) or (ix) of this clause, the claimant shall be
entitled to a refund or forgiveness based on the per centage
prescribed in such subclauses of any moneys which have been
paid over to (or would have been except for the provisions
herein be payable to) the Commonwealth under this article:
(i) Ninety per cent if not in excess of two hundred fifty
dollars ($250).
(ii) Eighty per cent if not in excess of five hundred
dollars ($500).
(iii) Seventy per cent if not in excess of seven hundred
fifty dollars ($750).
(iv) Sixty per cent if not in excess of one thousand dollars
($1,000).
(v) Fifty per cent if not in excess of one thousand two
hundred fifty dollars ($1,250).
(vi) Forty per cent if not in excess of one thousand five
hundred dollars ($1,500).
(vii) Thirty per cent if not in excess of one thousand seven
hundred fifty dollars ($1,750).
(viii) Twenty per cent if not in excess of two thousand
dollars ($2,000).
(ix) Ten per cent if not in excess of two thousand two
hundred fifty dollars ($2,250).
(3) If an individual has a taxable year of less than twelve
months, the poverty income thereof shall be annualized in such
manner as the department may prescribe.
((d) amended Dec. 23, 2003, P.L.250, No.46)
(304 amended Dec. 13, 1991, P.L.373, No.40)
Compiler's Note: Section 33(5) of Act 46 of 2003, which
amended subsection (d), provided that the amendment shall
apply to taxable years beginning after December 31, 2003.
Compiler's Note: Section 26(4)(ii) of Act 23 of 2001, which
amended subsection (d)(1), provided that the amendment
shall apply to taxable years beginning after December
31, 2000.
Compiler's Note: Section 19(3)(i) of Act 23 of 2000, which
amended subsection (d)(1), provided that the amendment
shall apply to taxable years beginning after December
31, 1999.
Compiler's Note: Section 32(5) of Act 4 of 1999, which
amended subsection (d)(1), provided that the amendment
shall apply to taxable years beginning after December
31, 1998.
Section 304.1. Alternative Special Tax Provision for Poverty
Study.--(a) The General Assembly directs the Joint State
Government Commission to conduct or provide for a comprehensive
study to determine whether alternative forms of special tax
provisions for poverty would be more beneficial to persons who,
because of poverty, are determined to be in need of special tax
provisions.
(b) The study shall include a comparison between the special
tax provisions for poverty set forth under section 304 and the
earned income credit allowable under section 32 of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 32), as
amended.
(c) The study shall consider any effects of linking the
alternative special tax provisions for poverty to Federal law,
including any misuse that may be inherent in the Federal
program.
(d) The study shall ascertain any differences between the
fiscal costs to the Commonwealth of the special tax provisions
for poverty set forth under section 304 and projected fiscal
costs of other alternative provisions.
(e) The Joint State Government Commission is authorized to
hire or retain consultants, utilizing a request for proposal
procedure, as necessary to assist in the performance of its
duties under this section.
(f) The executive director of the Joint State Government
Commission shall present a report summarizing the results of
this study to the chairman and the minority chairman of the
Finance Committee of the Senate and the chairman and the
minority chairman of the Finance Committee of the House of
Representatives after August 1, 2009, and before September 1,
2009.
(304.1 added July 9, 2008, P.L.922, No.66)
Section 304.2. Pennsylvania ABLE Savings Program Tax
Exemption.--(a) The following shall be exempt from all taxation
by the Commonwealth and its political subdivisions:
(1) Undistributed earnings on an account.
(2) An amount distributed from an account that is not
included in gross income under section 529A(c)(1) of the
Internal Revenue Code.
(b) The following shall apply:
(1) An amount contributed to an account shall be deductible
from the taxable income of the contributor under this article
for the tax year the contribution was made.
(2) The total contributions made by a contributor during a
taxable year to all accounts that are allowable as a deduction
under this section shall not exceed the dollar amount under
section 2503(b) of the Internal Revenue Code.
(3) The deduction shall not result in the contributor's
taxable income being less than zero.
(4) The department and the Treasury Department shall
cooperate in verifying account information relating to
contributions to an account itemized by a contributor and the
contributor's specific contributions.
(c) An amount that is distributed from an account and not
otherwise exempt from taxation under this section shall be
taxable income to the designated beneficiary under this article.
(d) A change in designated beneficiaries under section
529A(c) of the Internal Revenue Code shall not constitute a
taxable event.
(e) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection unless
the context clearly indicates otherwise:
"Account." An ABLE savings account as defined in section
102 of the Pennsylvania ABLE Act.
"Contributor." An individual who makes a contribution to
an account as defined in section 102 of the Pennsylvania ABLE
Act.
"Designated beneficiary." The term shall have the same
meaning as provided in section 102 of the Pennsylvania ABLE
Act.
"Internal Revenue Code." The Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended.
"Pennsylvania ABLE Act." The act of April 18, 2016 (P.L.128,
No.17), known as the Pennsylvania ABLE Act.
"Pennsylvania ABLE Savings Program." The program established
under the Pennsylvania ABLE Act.
"Qualified disability expense." The term shall have the
same meaning as provided in section 102 of the Pennsylvania
ABLE Act.
(304.2 added Oct. 30, 2017, P.L.672, No.43)
PART III
ESTATES AND TRUSTS
(III added Aug. 31, 1971, P.L.362, No.93)
Section 305. Taxability of Estates, Trusts and Their
Beneficiaries.--(a) Except as provided in subsection (b), the
income of a beneficiary of an estate or trust in respect of
such estate or trust shall consist of that part of the income
or gains received by the estate or trust for its taxable year
ending within or with the beneficiary's taxable year which,
under the governing instrument and applicable State law, is
required to be distributed currently or is in fact paid or
credited to said beneficiary. The income or gains of the estate
or trust, if any, taxable to such estate or trust shall consist
of the income or gains received by it which has not been
distributed or credited to its beneficiaries.
(b) Subsection (a) shall not apply to the extent the grantor
or another person is taxable on the income of the trust under
section 302(c).
(305 amended Dec. 14, 2023, P.L. , No.64)
Compiler's Note: Section 2(1) of Act 64 of 2023, which
amended section 305, provided that the amendment shall
apply to tax years beginning on or after January 1
following the effective date of section 2.
PART IV
PARTNERSHIPS
(Hdg. amended June 22, 2001, P.L.353, No.23)
Compiler's Note: Section 26(4)(iii) of Act 23 of 2001, which
amended the heading of Part IV, provided that the
amendment shall apply to taxable years beginning after
December 31, 2000.
Section 306. Taxability of Partners.--Except as provided
under section 306.2, a partnership as an entity shall not be
subject to the tax imposed by this article, but the income or
gain of a member of a partnership in respect of said partnership
shall be subject to the tax and the tax shall be imposed on his
share, whether or not distributed, of the income or gain
received by the partnership for its taxable year ending within
or with the member's taxable year.
(306 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended section 306, provided that the amendment shall
apply to tax years beginning after December 31, 2013.
Compiler's Note: Section 26(4)(iv) of Act 23 of 2001, which
amended section 306, provided that the amendment shall
apply to taxable years beginning after December 31, 2000.
Section 306.1. Tax Treatment Determined at Partnership
Level.--The classification or character of a partnership item
shall be determined at the partnership level. This section shall
not prohibit the department from adjusting a partner's return.
(306.1 added July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
added section 306.1, provided that section 306.1 shall
apply to tax years beginning after December 31, 2013.
Section 306.2. Tax Imposed at Partnership Level.--(a) A
partnership underreporting income by more than one million
dollars ($1,000,000) for any tax year shall be liable for the
tax, excluding interest, penalties or additions at the tax rate
applicable to the tax year, on the underreported income without
regard to the tax liability of the partners for the
underreported income. The department shall assess the
partnership for the tax on the underreported income. The
department shall not assess the partners for the underreported
income or the tax thereon; rather, the partnership shall be
required to provide an amended statement to each partner as
required under section 335(c)(3) of the partner's pro rata share
of the underreported income within ninety days of the assessment
becoming final. Nothing in this subsection shall relieve the
partners of their tax liability on the underreported income.
(a.1) Each partner shall be allowed a credit for such
partner's share of the tax assessed against the partnership
under subsection (a) and paid by the partnership. The credit
shall be allowed for the partner's taxable year in which the
underreported income was required to be reported.
(b) Subsection (a) shall apply to the following
partnerships:
(1) A partnership which has eleven or more partners who are
natural persons.
(2) A partnership which has at least one partner which is
a corporation, limited liability company, partnership or trust.
(3) A partnership which has only partners who are natural
persons and which elects to be subject to this subsection. The
election must be included on the partnership return to be filed
with the department.
(c) This section shall not apply to a publicly traded
partnership.
(d) Nothing under this section shall require one partner
to be liable for the payment of a tax liability of another
partner.
(e) Appeals involving a deficiency assessed under this
section may only be pursued by the partnership, and a
reassessment of tax liability shall be binding on the partners.
(306.2 added July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
added section 306.2, provided that section 306.2 shall
apply to tax years beginning after December 31, 2013.
PART IV-A
PENNSYLVANIA S CORPORATIONS
(IV-A added Dec. 23, 1983, P.L.370, No.90)
Section 307. Election by Small Corporation.--Any small
corporation may elect not to be taxed as a Pennsylvania S
corporation. Such election requires the consent of one hundred
per cent of the outstanding shares of the small corporation on
the day on which the election is made. A qualified Subchapter
S subsidiary owned by a Pennsylvania S corporation shall be
treated as a Pennsylvania S corporation whether or not an
election has been made with respect to such subsidiary.
(307 amended July 6, 2006, P.L.319, No.67)
Section 307.1. Manner of Making Election.--(a) An election
made pursuant to section 307 shall be made in such manner as
prescribed by the department.
(b) An election under section 307 may be made for any
taxable year at any time during the preceding taxable year or
at any time on or before the due date or extended due date of
the small corporation's tax return under Article IV.
(307.1 amended July 6, 2006, P.L.319, No.67)
Section 307.2. Effective Years of Election.--An election
made pursuant to section 307 shall be effective for the taxable
year for which the election is made and for each succeeding
taxable year unless revoked or terminated.
(307.2 added Dec. 23, 1983, P.L.370, No.90)
Section 307.3. Revocation of Election.--(a) An election
under section 307 may be revoked if shareholders holding more
than one-half of the shares of stock of the corporation on the
day on which the revocation is made consent to the revocation.
The corporation and any successor corporation shall not be
eligible to revoke an election under this section for any
taxable year prior to its fifth taxable year which begins after
the first taxable year for which an election is effective unless
the corporation becomes a qualified Subchapter S subsidiary.
(b) A revocation under subsection (a) shall be effective
on the first day of the taxable year if made on or before the
fifteenth day of the third month thereof; if the revocation is
made after such date, it shall be effective for the following
taxable year.
(c) ((c) deleted by amendment July 6, 2006, P.L.319, No.67)
(307.3 amended July 6, 2006, P.L.319, No.67)
Section 307.4. Termination by Corporation Ceasing to be a
Small Corporation.--(a) If a corporation ceases to be a small
corporation, as defined in section 301(s.2), the corporation's
status as a Pennsylvania S corporation shall terminate.
(b) Such termination shall be effective on the date on which
the corporation ceases to be a small corporation, as defined
in section 301(s.2).
(307.4 amended July 6, 2006, P.L.319, No.67)
Section 307.5. Termination Year.--(a) The portion of the
termination year of a Pennsylvania S corporation ending before
the first day for which the termination is effective shall be
treated as a short taxable year for which the corporation is a
Pennsylvania S corporation.
(b) The portion of such year beginning on the first day for
which the termination is effective shall be treated as a short
taxable year for purposes of the tax imposed by Article IV.
(c) The allocation of income and expense items to be taken
into consideration in each short year shall be made in
accordance with such regulations as may be issued by the
department.
(307.5 amended July 6, 2006, P.L.319, No.67)
Section 307.6. Election after Revocation or
Termination.--(307.6 deleted by amendment July 6, 2006, P.L.319,
No.67)
Compiler's Note: Section 32(5) of Act 4 of 1999, which
amended section 307.6, provided that the amendment shall
apply to taxable years beginning after December 31, 1998.
Section 307.7. Taxable Year of a Pennsylvania S
Corporation.--The taxable year of a Pennsylvania S corporation
shall be the same taxable year which the corporation uses for
Federal income tax purposes.
(307.7 added Dec. 23, 1983, P.L.370, No.90)
Section 307.8. Income of a Pennsylvania S Corporation.--(a)
A Pennsylvania S corporation shall not be subject to the tax
imposed by this article, except as provided under subsection
(f), but the shareholders of the Pennsylvania S corporation
shall be subject to the tax imposed under this article as
provided in this article. ((a) amended July 9, 2013, P.L.270,
No.52)
(b) If any tax is imposed on a Pennsylvania S corporation
(or any qualified Subchapter S subsidiary owned by such
Pennsylvania S corporation) pursuant to section 1374 of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
1374), as amended to January 1, 1997, or pursuant to Article
IV or Article VI for any taxable year, then, for purposes of
section 307.9, the amount of tax so imposed shall be treated
as a loss sustained by such Pennsylvania S corporation during
such years. In the case of taxes imposed pursuant to section
1374 of the Internal Revenue Code of 1986, as amended to January
1, 1997, or Article IV, the character of such loss shall be
determined by allocating the loss proportionately among the
recognized built-in gains giving rise to such tax.
(c) If a Pennsylvania S corporation makes a distribution
of property, other than an obligation of such corporation, with
respect to its stock and the fair market value of such property
exceeds its adjusted basis in the hands of the corporation,
then gain shall be recognized on the distribution as if the
property had been sold to the distributee at its fair market
value.
(d) Any election which may affect the computation of items
derived from a Pennsylvania S corporation shall be made by the
corporation.
(e) Any deduction, except a net loss deduction, which was
disallowed when a corporation was subject to the tax imposed
under Article IV shall be allowed in years in which the
corporation is a Pennsylvania S corporation to the same extent
and in the same manner that the deduction would have been
allowed if the corporation had remained subject to the tax
imposed under Article IV.
(f) A Pennsylvania S corporation with underreported income
shall be subject to the following:
(1) A Pennsylvania S corporation underreporting income by
more than one million dollars ($1,000,000) for any tax year
shall be liable for the tax, excluding interest, penalties or
additions, at the tax rate applicable to the tax year, on the
underreported income without regard to the tax liability of the
shareholders for the underreported income. The department shall
assess the Pennsylvania S corporation for the tax on the
underreported income. The department shall not assess the
shareholders for the underreported income or the tax thereon;
rather, the Pennsylvania S corporation shall be required to
provide an amended statement to each shareholder as required
under section 330.1 of the shareholder's pro rata share of the
underreported income within ninety days of the assessment
becoming final. Nothing in this subsection shall relieve the
shareholders of their tax liability on the underreported income.
(1.1) Each shareholder shall be allowed a credit for the
shareholder's share of the tax assessed against the Pennsylvania
S corporation under paragraph (1) and paid by the Pennsylvania
S corporation. The credit shall be allowed for the shareholder's
taxable year in which the underreported income was required to
be reported.
(2) Paragraph (1) shall apply to the following Pennsylvania
S corporations:
(i) A Pennsylvania S corporation which has eleven or more
shareholders.
(ii) A Pennsylvania S corporation which elects to be subject
to this subsection. The election must be included on the
Pennsylvania S corporation return to be filed with the
department.
(3) Nothing under this section shall require one shareholder
to be liable for the payment of a tax liability of another
shareholder.
(4) Appeals involving the deficiency assessed under this
section may be filed only by the Pennsylvania S corporation,
and a reassessment of tax liability shall be binding on the
shareholders.
((f) added July 9, 2013, P.L.270, No.52)
(307.8 amended May 7, 1997, P.L.85, No.7)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended subsec. (a) and added subsec. (f), provided that
the amendment or addition shall apply to tax years
beginning after December 31, 2013.
Section 307.9. Income of Pennsylvania S Corporations Taxed
to Shareholders.--(a) Each shareholder of a Pennsylvania S
corporation shall take into income such shareholder's pro rata
share of the income or loss in each applicable class of income
received by the corporation for its taxable year ending within
or with the shareholder's taxable year.
(b) Each shareholder's pro rata share of any item for any
taxable year shall be the sum of the amounts determined with
respect to the shareholder by assigning an equal portion of all
items to each day of the taxable year and then by dividing that
portion pro rata among the shares outstanding on such day.
(c) The character of any item included in the shareholder's
pro rata share shall be determined as if such item were realized
directly by the shareholder from the source from which it was
realized by the corporation or incurred in the same manner as
incurred by the corporation.
(d) With respect to any deduction allowed pursuant to
section 307.8(e), any nonresident shareholder shall be allowed
such deduction only to the extent that the previously disallowed
deduction would have been considered a deduction related to
income from sources within this Commonwealth, within the meaning
of section 301(k), during the taxable year when the deduction
was disallowed.
(e) For all purposes of this article, a qualified Subchapter
S subsidiary owned by a Pennsylvania S corporation shall not
be treated as a separate corporation, and all assets,
liabilities and items of income, deduction and credit of such
qualified Subchapter S subsidiary shall be treated as assets,
liabilities and items of income, deduction and credit of the
parent Pennsylvania S corporation.
(307.9 amended May 7, 1997, P.L.85, No.7)
Section 307.10. Limitation on Pass-thru of Losses to
Shareholders.--(a) The aggregate amount of losses taken into
account by a shareholder of a Pennsylvania S corporation under
section 307.9 shall not exceed the sum of the adjusted basis
of the shareholder's stock in the Pennsylvania S corporation,
determined after applying section 307.11(a) for the taxable
year and the shareholder's adjusted basis of any indebtedness
of the Pennsylvania S corporation to the shareholder, determined
before applying section 307.11(d) for the taxable year.
(b) There shall be no carryover of losses by the
shareholders of the Pennsylvania S corporation.
(307.10 added Dec. 23, 1983, P.L.370, No.90)
Section 307.11. Adjustments to the Basis of the Stock of
Shareholders.--(a) The basis of the stock of any shareholder
in a Pennsylvania S corporation shall be increased for any
period by his share of the corporation's income, including
nontaxable income, as determined under section 307.9.
(b) The basis of any shareholder's stock in a Pennsylvania
S corporation shall be decreased for any period, but not below
zero, by any distribution by the corporation to the shareholder
which was not included in the income of the shareholder pursuant
to section 307.12 and by his share of the corporation's losses
as determined under section 307.9 to the extent that the loss
reduced the shareholder's income subject to the tax imposed
under this article or a tax measured by net income, imposed on
the shareholder by any other state.
(c) If for any taxable year any shareholder's basis in the
stock of a Pennsylvania S corporation is reduced to zero, any
excess losses will reduce the shareholder's basis, but not below
zero, in any indebtedness of the Pennsylvania S corporation to
the shareholder.
(d) If a shareholder's basis in any indebtedness is reduced
under subsection (c) of this section, then such reduction shall
be restored before the shareholder's basis in the Pennsylvania
S corporation's stock is increased.
(307.11 added Dec. 23, 1983, P.L.370, No.90)
Section 307.12. Distributions.--(a) A distribution of
property by a Pennsylvania S corporation which has no
accumulated earnings and profits to a shareholder of the
corporation shall not be included in the shareholder's income
to the extent that it does not exceed the shareholder's adjusted
basis in the stock. Any amount of the distribution in excess
of the adjusted basis in the stock shall be treated as a gain
from the sale, exchange or other disposition of property.
(b) A distribution of property by a Pennsylvania S
corporation which has accumulated earnings and profits shall
be treated in the same manner as a distribution by a
Pennsylvania S corporation without earnings and profits to the
extent of the corporation's accumulated adjustment account.
That portion of the distribution in excess of the accumulated
adjustment account will be treated as a dividend to the extent
of the accumulated earnings and profits of the corporation. Any
portion of the distribution in excess of the accumulated
earnings and profits of the corporation shall be treated in the
same manner as a distribution from a Pennsylvania S corporation
without accumulated earnings and profits.
(c) Accumulated adjustment account means an account of the
Pennsylvania S corporation which is cumulatively adjusted for
the most recent continuous period during which the corporation
has been a Pennsylvania S corporation by increasing the account
for corporate income and decreasing the account for corporate
losses and all distributions of property by the corporation to
the shareholders which were not included in the income of the
shareholders: Provided, That no adjustment shall be made for
any income or loss not in any of the classes of income
enumerated in section 303 or for any non-deductible expense.
(d) In the case of a non-pro rata distribution of property,
the adjustment shall be limited to an amount which bears the
same ratio to the balance in such account as the number of
shares sold, exchanged or otherwise disposed of bears to the
number of shares in the corporation outstanding immediately
before such sale, exchange or disposition.
(307.12 added Dec. 23, 1983, P.L.370, No.90)
PART IV-B
OTHER ENTITIES
(IV-B added June 22, 2001, P.L.353, No.23)
Compiler's Note: Section 26(4)(v) of Act 23 of 2001, which
added Part IV-B, provided that Part IV-B shall apply to
taxable years beginning after December 31, 2000.
Section 307.21. Treatment of Unincorporated Entities with
Single Owners.--Unless subject to tax under Article IV, an
unincorporated entity that has a single owner shall be
disregarded as an entity separate from its owner.
(307.21 added June 22, 2001, P.L.353, No.23)
PART V
NONRESIDENT INDIVIDUALS
(V added Aug. 31, 1971, P.L.362, No.93)
Section 308. Nonresident Individuals; Taxable Income.--The
income of a nonresident individual shall be that part of his
income derived from sources within this Commonwealth as defined
in this article.
(308 added Aug. 31, 1971, P.L.362, No.93)
Section 309. Husband and Wife.--(a) Separate Return. If
the income of husband or wife who are both nonresidents of this
Commonwealth and are subject to tax under this article is
determined on a separately filed return, their incomes from
sources within this Commonwealth shall be separately determined.
(b) One Spouse a Nonresident. If either husband or wife is
a nonresident and the other a resident, separate taxes shall
be determined on their separate incomes on such forms as the
department shall prescribe, unless both elect to determine their
joint income as if both were residents, in which event their
tax liabilities shall be joint and several.
(309 added Aug. 31, 1971, P.L.362, No.93)
Section 310. Allocation of Income of Nonresident.--Where a
nonresident taxpayer earns, receives or acquires income from
sources partly within and partly without this Commonwealth or
engages in a business, trade, profession or occupation partly
within and partly without this Commonwealth, and, as a result
thereof or for other reasons that portion of the income derived
from or connected with sources within this Commonwealth cannot
readily or accurately be ascertained, the department shall by
regulation prescribe uniform rules for apportionment or
allocation of so much of such taxpayer's income as fairly and
equitably represents income, derived from sources within this
Commonwealth and subject to tax under this article.
(310 added Aug. 31, 1971, P.L.362, No.93)
PART VI
CREDITS AGAINST TAX
(VI added Aug. 31, 1971, P.L.362, No.93)
Section 312. Tax Withheld.--The amount withheld under
section 316.1 shall be allowed to the taxpayer from whose income
the tax was withheld as a credit against the tax imposed on him
by this article.
(312 amended Oct. 30, 2017, P.L.672, No.43)
Section 313. Tax Paid Under Previous Act.--The amount of
tax withheld from an employe and paid over to the Commonwealth
or paid over by a taxpayer as an estimated payment pursuant to
repealed Article III of the act of March 4, 1971 (Act No.2),
shall be held as a credit against the tax imposed by this
article.
(313 added Aug. 31, 1971, P.L.362, No.93)
Section 314. Income Taxes Imposed by Other States.--(a) A
resident taxpayer before allowance of any credit under section
312 shall be allowed a credit against the tax otherwise due
under this article for the amount of any income tax, wage tax
or tax on or measured by gross or net earned or unearned income
imposed on him or on a Pennsylvania S corporation in which he
is a shareholder, to the extent of his pro rata share thereof
determined in accordance with section 307.9, by another state
with respect to income which is also subject to tax under this
article. For purposes of this subsection, the term "state" shall
only include a state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico and any territory or
possession of the United States. ((a) amended July 9, 2013,
P.L.270, No.52)
(b) The credit provided under this section shall not exceed
the proportion of the tax otherwise due under this article that
the amount of the taxpayer's income subject to tax by the other
jurisdiction bears to his entire taxable income.
(314 amended Dec. 23, 1983, P.L.370, No.90)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended subsec. (a), provided that the amendment shall
apply to tax years beginning after December 31, 2013.
Section 315. Space on Form for Contributions.--(315 repealed
Dec. 18, 1992, P.L.1638 No.180)
PART VI-A
CONTRIBUTIONS OF REFUNDS BY CHECKOFF
(VI-A added May 7, 1997, P.L.85, No.7)
Section 315.1. Definitions.--The following words, terms and
phrases, when used in this part, shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Department." The Department of Revenue of the Commonwealth.
"Individual income tax." The tax imposed under this article.
(315.1 added May 7, 1997, P.L.85, No.7)
Section 315.2. Contributions to Breast and Cervical Cancer
Research.--(a) The department shall provide a space on the
Pennsylvania individual income tax return form whereby an
individual may voluntarily designate a contribution of any
amount desired to be utilized for breast and cervical cancer
research.
(b) The amount so designated on the individual income tax
return form shall be deducted from the tax refund to which the
individual is entitled and shall not constitute a charge against
the income tax revenues due to the Commonwealth.
(c) The department shall determine annually the total amount
designated under this section, less reasonable administrative
costs, and shall report the amount to the State Treasurer who
shall transfer the amount from the General Fund to the
Pennsylvania Breast Cancer Coalition.
(d) The department shall provide adequate information
concerning the checkoff for breast and cervical cancer research
in its instructions which accompany State income tax return
forms. The information concerning the checkoff shall include
the listing of an address furnished by the Department of Health
to which contributions may be sent by taxpayers wishing to
contribute to this effort but who do not receive refunds.
Additionally, the Pennsylvania Breast Cancer Coalition shall
be charged with the duty to conduct a public information
campaign on the availability of this opportunity to Pennsylvania
taxpayers.
(e) The Pennsylvania Breast Cancer Coalition shall report
annually to the respective committees of the Senate and the
House of Representatives which have jurisdiction over health
matters on the amount received via the checkoff plan and how
the funds were utilized.
(f) The General Assembly may, from time to time, appropriate
funds for breast and cervical cancer research.
(315.2 reenacted Oct. 9, 2009, P.L.451, No.48)
Section 315.3. Contributions for Wild Resource
Conservation.--(a) The department shall provide a space on the
Pennsylvania individual income tax return form whereby an
individual may voluntarily designate a contribution of any
amount desired to the Wild Resource Conservation Fund
established under section 5 of the act of June 23, 1982
(P.L.597, No.170), known as the "Wild Resource Conservation
Act."
(b) The amount so designated by an individual on the income
tax return form shall be deducted from the tax refund to which
such individual is entitled and shall not constitute a charge
against the income tax revenues due the Commonwealth.
(c) The department shall determine annually the total amount
designated pursuant to this section and shall report such amount
to the State Treasurer who shall transfer such amount from the
General Fund to the Wild Resource Conservation Fund for use as
provided in the "Wild Resource Conservation Act." The department
shall be reimbursed from the fund for any administrative costs
incurred above and beyond the cost savings it realizes as a
result of individual total refund designations.
(d) The department shall provide adequate information
concerning the Wild Resource Conservation Fund in its
instructions which accompany State income tax return forms,
which shall include the listing of an address furnished to it
by the Wild Resource Conservation Board to which contributions
may be sent by those taxpayers wishing to contribute to said
fund but who do not receive refunds.
(e) This section shall apply to taxable years beginning on
or after January 1, 1997.
(315.3 added May 7, 1997, P.L.85, No.7)
Section 315.4. Contributions for Organ and Tissue Donation
Awareness.--(a) The department shall provide a space on the
Pennsylvania individual income tax return form whereby an
individual may voluntarily designate a contribution of any
amount desired to the Governor Robert P. Casey Memorial Organ
and Tissue Donation Awareness Trust Fund established under 20
Pa.C.S. § 8622 (relating to the Governor Robert P. Casey
Memorial Organ and Tissue Donation Awareness Trust Fund).
(b) The amount so designated by an individual on the
Pennsylvania individual income tax return form shall be deducted
from the tax refund to which the individual is entitled and
shall not constitute a charge against the income tax revenues
due the Commonwealth.
(c) The department shall annually determine the total amount
designated pursuant to this section and shall report that amount
to the State Treasurer who shall transfer that amount to the
Governor Robert P. Casey Memorial Organ and Tissue Donation
Awareness Trust Fund.
(d) The department shall, in all taxable years following
the effective date of this section, provide on its forms or in
its instructions which accompany Pennsylvania individual income
tax return forms adequate information concerning the Governor
Robert P. Casey Memorial Organ and Tissue Donation Awareness
Trust Fund which shall include the listing of an address
furnished to it by the Organ Donation Advisory Committee to
which contributions may be sent by those taxpayers wishing to
contribute to the fund but who do not receive refunds.
(e) This section shall apply to taxable years beginning on
or after January 1, 1997.
(315.4 amended June 22, 2001, P.L.353, No.23)
Section 315.5. Contributions for Olympics.--(315.5 deleted
by amendment July 7, 2005, P.L.149, No.40)
Section 315.6. Contribution for Korea/Vietnam Memorial
National Education Center.--(315.6 repealed Oct. 30, 2017,
P.L.672, No. 43)
Section 315.7. Contributions for Juvenile Diabetes Cure
Research.--(a) The department shall provide a space on the
Pennsylvania individual income tax return form whereby an
individual may voluntarily designate a contribution of any
amount desired to be utilized for juvenile diabetes cure
research related to:
(1) restoring normal blood sugar levels;
(2) preventing and reversing complications; or
(3) preventing juvenile diabetes.
(b) The amount so designated on the Pennsylvania individual
income tax return form shall be deducted from the tax refund
to which the individual is entitled and shall not constitute a
charge against the income tax revenues due to the Commonwealth.
(c) (1) The department shall determine annually the total
amount designated under this section, less reasonable
administrative costs, and shall report the amount to the State
Treasurer, who shall transfer the amount to a restricted revenue
account within the General Fund to be used by the Department
of Health for aiding juvenile diabetes cure research.
(2) The Department of Health shall distribute the amounts
to institutions of higher education and independent research
institutes of this Commonwealth to support projects that have
been subject to an established peer and scientific review
process identical or similar to the National Institutes of
Health review system.
(d) The department shall provide adequate information
concerning the checkoff for juvenile diabetes cure research in
its instructions which accompany the Pennsylvania income tax
return forms. The information concerning the checkoff shall
include the listing of an address furnished by the Department
of Health to which contributions may be sent by taxpayers
wishing to contribute to this effort but who do not receive
refunds.
(e) The Department of Health shall report annually to the
respective committees of the Senate and the House of
Representatives which have jurisdiction over health matters on
the amount received via the checkoff plan and how the funds
were utilized.
(315.7 reenacted Oct. 9, 2009, P.L.451, No.48)
Compiler's Note: Section 2 of Act 133 of 2004, which added
section 315.7, provided that section 315.7 shall apply
to tax years beginning after December 31, 2004.
Section 315.8. Contributions for Military Family Relief
Assistance.--(a) Beginning with taxable years ending after
December 31, 2004, the department shall provide a space on the
Pennsylvania individual income tax return form whereby an
individual may contribute to a fund for military family relief
assistance. Persons may do so by stating the amount of the
contribution, not less than one dollar ($1), on the return and
that the contribution will reduce the taxpayer's refund.
(b) The department shall determine annually the total amount
designated under this section, less reasonable administrative
costs, and shall report the amount to the State Treasurer who
shall transfer the amount to a restricted revenue account within
the General Fund to be used by the Department of Military and
Veterans Affairs for contributions to military family relief
assistance as provided by statute.
(c) The department shall provide adequate information
concerning the checkoff for military family relief assistance
in its instructions which accompany the Pennsylvania income tax
return forms. The information concerning the checkoff shall
include the listing of an address furnished by the Department
of Military and Veterans Affairs to which contributions may be
sent by taxpayers wishing to contribute to this effort but who
do not receive refunds.
(d) The Department of Military and Veterans Affairs shall
report annually to the respective committees of the Senate and
the House of Representatives which have jurisdiction over
military and veterans affairs on the amount received via the
checkoff plan and how the funds were utilized.
(315.8 added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(9)(ii) of Act 40 of 2005, which
added section 315.8, provided that section 315.8 shall
apply to taxable years beginning after December 31, 2004.
Section 315.9. Operational Provisions.--(a) ((a) deleted
by amendment Oct. 9, 2009, P.L.451, No.48)
(b) Except as set forth in subsection (b.1), any checkoff
established under this part and applicable for the first time
in a taxable year beginning after December 31, 2009, shall
expire four years after the beginning of such first taxable
year.
(b.1) Notwithstanding subsection (b), the checkoffs
established in sections 315.2, 315.3, 315.4, 315.7, 315.8,
315.10 and 315.11 shall not expire. ((b.1) amended Oct. 30,
2017, P.L.672, No.43)
(c) ((c) deleted by amendment Oct. 30, 2017, P.L.672, No.43)
(315.9 amended July 9, 2013, P.L.270, No.52)
Section 315.10. Contributions for the Children's Trust
Fund.--(a) The department shall provide a space on the
Pennsylvania individual income tax return form whereby an
individual may voluntarily designate a contribution of any
amount desired to the Children's Trust Fund established in
section 8 of the act of December 15, 1988 (P.L.1235, No.151),
known as the "Children's Trust Fund Act."
(b) The amount designated under subsection (a) by an
individual on the income tax return form shall be deducted from
the tax refund to which that individual is entitled and shall
not constitute a charge against the income tax revenues due the
Commonwealth.
(c) The department shall determine annually the total amount
designated pursuant to this section, less reasonable
administrative costs, and shall report the amount to the State
Treasurer, who shall transfer the amount from the General Fund
to the Children's Trust Fund.
(315.10 added July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
added section 315.10, provided that section 315.10 shall
apply to tax years beginning after December 31, 2013.
Section 315.11. Contributions for American Red Cross.--(a)
The department shall provide a space on the Pennsylvania
individual income tax return form by which an individual may
voluntarily designate a contribution of any amount desired to
the American Red Cross established under 36 U.S.C. Ch. 3001
(relating to the American National Red Cross).
(b) The amount designated under subsection (a) by an
individual on the income tax return form shall be deducted from
the tax refund to which the individual is entitled and shall
not constitute a charge against the income tax revenues due the
Commonwealth.
(c) The department shall determine annually the total amount
designated under this section, less reasonable administrative
costs, and shall report the amount to the State Treasurer, who
shall transfer the amount from the General Fund to the American
Red Cross.
(315.11 added July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
added section 315.11, provided that section 315.11 shall
apply to tax years beginning after December 31, 2013.
Section 315.12. Contributions for Tuition Account
Programs.--(a) Beginning with the 2016 Pennsylvania individual
income tax return, the department shall provide a space on the
income tax return form by which a taxpayer who is an account
owner may voluntarily designate a contribution to a
beneficiary's Tuition Account Guaranteed Savings Program or the
Tuition Account Investment Program established under the act
of April 3, 1992 (P.L.28, No.11), known as the Tuition Account
Programs and College Savings Bond Act.
(b) The amount designated under subsection (a) by a taxpayer
on the income tax return form shall be deducted from the tax
refund to which the individual is entitled and shall not
constitute a charge against the income tax revenues due to the
Commonwealth.
(c) The department shall determine the amount designated
under this section and shall report the amount to the State
Treasurer, who shall transfer the amount from the General Fund
to the appropriate account within the Tuition Account Guaranteed
Savings Program or the Tuition Account Investment Program.
(d) For purposes of this section, the following words and
phrases shall have the meanings ascribed to them in this
subsection:
"Account owner." As defined in section 302 of the Tuition
Account Programs and College Savings Bond Act.
"Beneficiary." As defined in section 302 of the Tuition
Account Programs and College Savings Bond Act.
(315.12 added July 13, 2016, P.L.526, No.84)
Section 315.13. Contributions for Pediatric Cancer
Research.--(a) The department shall provide a space on the
Pennsylvania individual income tax return form whereby an
individual may voluntarily designate a contribution to be
utilized for pediatric cancer research. On or before December
1 of each year, the Secretary of Health shall designate
hospitals within this Commonwealth conducting pediatric cancer
research that are eligible to receive funding under this section
for the following calendar year.
(b) The amount designated on the individual income tax
return form shall be deducted from the tax refund to which the
individual is entitled and shall not constitute a charge against
the income tax revenues due to the Commonwealth.
(c) The department shall determine annually the total amount
designated under this section, less reasonable administrative
costs, and shall report the amount to the State Treasurer, who
shall transfer the amount from the General Fund to the
Pennsylvania Cancer Control, Prevention and Research Advisory
Board within the Department of Health.
(d) The department shall provide adequate information
concerning the checkoff for pediatric cancer research in its
instructions that accompany State income tax return forms. The
information concerning the checkoff shall include the listing
of an address furnished by the Department of Health to which
contributions may be sent by taxpayers wishing to contribute
to this effort but who do not receive refunds. Additionally,
the Department of Health shall be charged with the duty to
conduct a public information campaign on the availability of
this opportunity to Pennsylvania taxpayers.
(e) The Department of Health shall report annually to the
respective committees of the Senate and the House of
Representatives that have jurisdiction over health matters on
the amount received via the checkoff plan and how the funds
were utilized.
(315.13 added Oct. 30, 2017, P.L.377, No.39)
Compiler's Note: Section 2 of Act 39 of 2017, which added
section 315.13, provided that the addition of section
315.13 shall apply to taxable years beginning after
December 31, 2017.
Section 315.14. Contribution for Veterans' Trust Fund.--(a)
For taxable years beginning after December 31, 2019, the
department shall provide a space on the Pennsylvania individual
income tax return form whereby an individual may voluntarily
designate a contribution, in any amount, to the Veterans' Trust
Fund. The amount so designated shall be deducted from the tax
refund to which the individual is entitled and shall not
constitute a charge against the income tax revenues due to the
Commonwealth.
(b) The department shall determine annually the total amount
designated under this section, less reasonable administrative
costs, and shall report the amount to the State Treasurer who
shall transfer the amount to the Veterans' Trust Fund.
(c) The department shall provide adequate information
concerning the checkoff for the Veterans' Trust Fund in its
instructions which accompany the Pennsylvania income tax return
forms. The information concerning the checkoff shall include
the listing of an address furnished by the Department of
Military and Veterans Affairs to which contributions may be
sent by taxpayers wishing to contribute to this effort but who
do not receive refunds.
(d) The Department of Military and Veterans Affairs shall
report annually to the respective committees of the Senate and
the House of Representatives which have jurisdiction over
military and veterans affairs on the amount received via the
checkoff plan and how the funds were utilized.
(315.14 added June 28, 2019, P.L.50, No.13)
PART VII
WITHHOLDING OF TAX
(VII added Aug. 31, 1971, P.L.362, No.93)
Section 316. Definitions.--The following words, terms and
phrases, when used in this part, shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Payee." The person receiving the payments subject to
withholding under this part.
"Payments." The term does not include a partner or
shareholder's distributive share of income from a partnership
or Pennsylvania S corporation.
"Payor." The person required to withhold under this part.
(316 added Oct. 30, 2017, P.L.672, No.43)
Section 316.1. Requirement of Withholding Tax.--(a) Every
employer maintaining an office or transacting business within
this Commonwealth and making payment of compensation (i) to a
resident individual, or (ii) to a nonresident individual
taxpayer performing services on behalf of such employer within
this Commonwealth, shall deduct and withhold from such
compensation for each payroll period a tax computed in such
manner as to result, so far as practicable, in withholding from
the employe's compensation during each calendar year an amount
substantially equivalent to the tax reasonably estimated to be
due for such year with respect to such compensation. The method
of determining the amount to be withheld shall be prescribed
by regulations of the department.
(b) Whenever the Pennsylvania State Lottery or a person
making a Pennsylvania State Lottery prize payment in the form
of an annuity is required to withhold Federal income tax under
section 3402 of the Internal Revenue Code of 1986, as amended
(Public Law 99-514, 26 U.S.C. § 1 et seq.), or backup
withholding under section 3406 of the Internal Revenue Code of
1986, as amended, from a gambling or lottery prize payment
awarded by the Pennsylvania State Lottery that is taxable under
this article, the Pennsylvania State Lottery or the person
making the annuity payment shall deduct and withhold from the
prize payment an amount equal to the amount of the prize payment
subject to withholding under section 3402 or 3406 of the
Internal Revenue Code of 1986 multiplied by the tax rate in
effect under this article at the time the prize payment is made.
(316.1 renumbered from 316 Oct. 30, 2017, P.L.672, No.43)
Section 316.2. Withholding Tax Requirement for Nonemployer
Payors.--(a) To the extent not already required to withhold
tax on payments under section 316.1, a person that:
(1) makes payments of income from sources within this
Commonwealth described in section 303(a)(1) or (2) to either a
nonresident individual or an entity that is disregarded under
section 307.21 that has a nonresident member; and
(2) is required under section 335(f)(1) to file a copy of
form 1099-MISC or 1099-NEC with the department regarding the
payments;
shall deduct and withhold from the payments an amount equal to
the net amount of the payments multiplied by the tax rate
specified under section 302(b).
((a) amended June 30, 2021, P.L.124, No.25)
(b) Withholding of tax by payors is optional and at the
discretion of the payor with respect to payees who receive
payments of less than $5,000 annually from the payor.
(c) This section shall not apply to payments made by a payor
to a payee if the payor is:
(1) The United States or an agency or instrumentality
thereof; or
(2) The Commonwealth or an agency, instrumentality or
political subdivision thereof.
(d) The department may prescribe regulations to implement
and clarify the withholding requirement set forth in this
section.
(316.2 added Oct. 30, 2017, P.L.672, No.43)
Section 317. Information Statement.--(a) Every employer
required to deduct and withhold tax under section 316.1(a) shall
furnish to each such employe to whom the employer has paid
compensation during the calendar year a written statement in
such manner and in such form as may be prescribed by the
department showing the amount of compensation paid by the
employer to the employe, the amount deducted and withheld as
tax, pursuant to section 316.1(a), and such other information
as the department shall prescribe. Each statement required by
this section for a calendar year shall be furnished to the
employe on or before January 31 of the year succeeding such
calendar year. If the employe's employment is terminated before
the close of such calendar year, the employer, at his option,
shall furnish the statement to the employe at any time after
the termination but no later than January 31 of the year
succeeding such calendar year. However, if an employe whose
employment is terminated before the close of such calendar year
requests the employer in writing to furnish him the statement
at an earlier time, and, if there is no reasonable expectation
on the part of both employer and employe of further employment
during the calendar year, then the employer shall furnish the
statement to the employe on or before the later of the 30th day
after the day of the request or the 30th day after the day on
which the last payment of wages is made.
(b) Every person required to deduct and withhold tax under
section 316.1(b) shall report the prize and the amount of
withholding to the taxpayer on Internal Revenue Service Form
W-2G, or similar form used for reporting Federal income tax
withholding from the prize.
(317 amended Oct. 30, 2017, P.L.672, No.43)
Section 317.1. Information Statement for Nonemployer
Payors.--Every payor required to deduct and withhold tax under
section 316.2 shall furnish to a payee to whom the payor has
paid income from sources within this Commonwealth during the
calendar year a copy of form 1099-MISC or 1099-NEC required
under section 335(f)(1). The copy of form 1099-MISC or 1099-NEC
required by this section for each calendar year shall be
forwarded to the payee on or before March 1 of the year
succeeding the calendar year.
(317.1 amended June 30, 2021, P.L.124, No.25)
Section 317.2. Information Statement for Payees.--Every
payee receiving a copy of form 1099-MISC or 1099-NEC from a
payor under section 317.1 shall file a duplicate of such
information return with the payee's State income tax return.
(317.2 amended June 30, 2021, P.L.124, No.25)
Section 318. Time for Filing Withholding Returns.--(a)
Every employer required to deduct and withhold tax under
section 316.1(a) shall file a quarterly withholding return on
or before the last day of April, July, October and January for
the three months ending the last day of March, June, September
and December. Such quarterly returns shall be filed with the
department at its main office or at any branch office which it
may designate for filing returns.
(b) Every person required to deduct and withhold tax under
section 316.1(b) shall file a withholding tax return at the
same time the person is required to file its annual return of
withheld Federal income tax (IRS Form 945) from nonpayroll
payments. The return shall be filed with the department.
(318 amended Oct. 30, 2017, P.L.672, No.43)
Section 318.1. Time for Filing Payors' Returns.--Every payor
required to deduct and withhold tax under section 316.2 shall
file a quarterly withholding return on or before the last day
of April, July, October and January for each three-month period
ending the last day of March, June, September and December. The
quarterly returns shall be filed with the department in the
manner prescribed by regulation.
(318.1 added Oct. 30, 2017, P.L.672, No.43)
Section 319. Payment of Taxes Withheld.--(a) Every employer
withholding tax under section 316.1(a) shall pay over to the
department or to a depository designated by it the tax required
to be deducted and withheld under section 316.1(a).
(1) Where the aggregate amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be less than twelve hundred dollars ($1,200), such
employer shall file a return and pay the tax on or before the
last day for filing a quarterly return under section 318.
(2) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be twelve hundred dollars ($1,200) or more but less
than four thousand dollars ($4,000), such employer shall pay
the tax monthly, on or before the fifteenth day of the month
succeeding the months of January to November, inclusive, and
on or before the last day of January following the month of
December.
(3) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be four thousand dollars ($4,000) or more but less
than twenty thousand dollars ($20,000), such employer shall pay
the tax semi-monthly, within three banking days after the close
of the semi-monthly period.
(4) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be twenty thousand dollars ($20,000) or more, such
employer shall pay the tax on the Wednesday after payday if the
payday falls on a Wednesday, Thursday or Friday and on the
Friday after payday if the payday falls on a Saturday, Sunday,
Monday or Tuesday.
Notwithstanding anything in this subsection to the contrary,
whenever any employer fails to deduct or truthfully account for
or pay over the tax withheld or file returns as prescribed by
this article, the department may serve a notice on such employer
requiring him to withhold taxes which are required to be
deducted under section 316.1(a) and deposit such taxes in a
bank approved by the department in a separate account in trust
for and payable to the department, and to keep the amount of
such tax in such account until payment over to the department.
Such notice shall remain in effect until a notice of
cancellation is served on the employer by the department.
(b) Every person deducting and withholding tax under section
316.1(b) shall remit the tax to the department on the same
frequency that the person is required to remit Federal income
tax withheld from nonpayroll payments.
(319 amended Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: Section 14(1) of Act 48 of 2009, which
amended section 319, provided that the amendment shall
apply to tax returns due after May 31, 2010.
Section 319.1. Payment of Taxes Withheld for Nonemployer
Payors.--Every payor withholding tax under section 316.2 shall
pay over to the department or to a depository designated by the
department the tax required to be deducted and withheld under
section 316.2. The time for paying over the withheld tax shall
be as set forth in section 319(1), (2), (3) and (4).
(319.1 added Oct. 30, 2017, P.L.672, No.43)
Section 320. Liability for Withheld Taxes.--Every person
required to deduct and withhold tax under section 316.1 is
hereby made liable for such tax. For purposes of assessment and
collection, any amount required to be withheld and paid over
to the department and any additions to tax penalties and
interest with respect thereto, shall be considered the tax of
the person. All taxes deducted and withheld pursuant to section
316.1 or under color of section 316.1 shall constitute a trust
fund for the Commonwealth and shall be enforceable against such
person, his representative or any other person receiving any
part of such fund.
(320 amended Oct. 30, 2017, P.L.672, No.43)
Section 320.1. Payor's Liability for Withheld Taxes.--Every
payor required to deduct and withhold tax under section 316.2
is hereby made liable for such tax. For purposes of assessment
and collection, any amount required to be withheld and paid
over to the department and any additions to tax, penalties and
interest with respect thereto shall be considered the tax of
the payor. All taxes deducted and withheld from payees pursuant
to section 316.2 or under color of section 316.2 shall
constitute a trust fund for the Commonwealth and shall be
enforceable against such payor, his representative or any other
person receiving any part of such fund.
(320.1 added Oct. 30, 2017, P.L.672, No.43)
Section 321. Failure to Withhold.--If a person fails to
deduct and withhold tax as prescribed in this part and
thereafter the tax against which such tax may be credited is
paid, the tax which was required to be deducted and withheld
shall not be collected from the person, but the person shall
not be relieved of the liability for any penalty, interest, or
additions to the tax imposed with respect to such failure to
deduct and withhold.
(321 amended July 13, 2016, P.L.526, No.84)
Section 321.1. Bulk and Auction Sales and Transfers,
Notice.--(a) An employer that is liable for filing returns in
accordance with the provisions of this part and either sells
or causes to be sold at auction, or sells or transfers in bulk,
fifty-one per cent or more of any stock of goods, wares or
merchandise of any kind, fixtures, machinery, equipment,
buildings or real estate held by or on behalf of the employer
shall be subject to the provisions of section 1403 of "The
Fiscal Code."
(b) ((b) deleted by amendment)
(321.1 amended June 29, 2002, P.L.559, No.89)
Section 321.2. Payor's Failure to Withhold.--If a payor
fails to deduct and withhold tax as prescribed under section
316.2 and thereafter the tax which may be credited is paid, the
tax which was required to be deducted and withheld shall not
be collected from the payor, but the payor shall not be relieved
of the liability for any penalty, interest or additions to the
tax imposed with respect to such failure to deduct and withhold.
(321.2 added Oct. 30, 2017, P.L.672, No.43)
Section 322. Designation of Third Parties to Perform Acts
Required of Employers.--In case a fiduciary, agent or other
person has the control, receipt, custody or disposal of, or
pays the compensation of an employe or a group of employes,
employed by one or more employers, the department is authorized
to designate such fiduciary, agent, or other person to perform
such acts as are required of employers under this article as
the department may by regulation prescribe. Except as may be
otherwise prescribed by the department, all provisions of this
article which are applicable to an employer shall be applicable
to a fiduciary, agent or other person.
(322 added Aug. 31, 1971, P.L.362, No.93)
Section 323. When Withholding Not Required.--Notwithstanding
any provision of this code to the contrary, an employer on and
after January 1, 1975 shall not be required to withhold any tax
upon payment of wages to an employe if such employe can certify:
(1) that he incurred no personal income tax liability for
the preceding tax year; and
(2) that he anticipates no liability for personal income
tax for the current taxable year.
(323 added Mar. 13, 1974, P.L.179, No.32)
PART VII-A
WITHHOLDING TAX ON INCOME FROM SOURCES
WITHIN THIS COMMONWEALTH
(VII-A amended Oct. 30, 2017, P.L.672, No.43)
Section 324. General Rule.--(a) When a partnership, estate,
trust or Pennsylvania S corporation receives income from sources
within this Commonwealth for any taxable year and any portion
of the income is allocable to a nonresident partner,
beneficiary, member or shareholder thereof, the partnership,
estate, trust or Pennsylvania S corporation shall pay a
withholding tax under this section at the time and in the manner
prescribed by the department; however, notwithstanding any other
provision of this article, all such withholding tax shall be
paid over on or before the fifteenth day of the fourth month
following the end of the taxable year.
(b) This section shall not apply to any publicly traded
partnership as defined under section 7704 of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 7704) with
equity securities registered with the Securities and Exchange
Commission under section 12 of the Securities Exchange Act of
1934 (48 Stat. 881, 15 U.S.C. § 78a).
(324 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended section 324, provided that the amendment shall
apply to tax years beginning after December 31, 2013.
Compiler's Note: Section 26(4)(vi) of Act 23 of 2001, which
amended section 324, provided that the amendment shall
apply to taxable years beginning after December 31, 2000.
Section 324.1. Amount of Withholding Tax.--(a) The amount
of tax withheld from nonresidents and the amount of the
withholding tax payable under section 324 shall be equal to the
income from sources within this Commonwealth of the partnership,
association or Pennsylvania S corporation which is allocable
to nonresident partners, members or shareholders multiplied by
the tax rate specified in section 302(b).
(b) There shall not be taken into account any item of
income, gain, loss or deduction to the extent allocable to any
partner, member or shareholder who is not a nonresident.
(c) There shall not be taken into account any share of
income of nonresident partner, member or shareholder from
sources within this Commonwealth to the extent that the amount
was subject to withholding under section 324.4 and to the extent
withholding actually occurred under section 324.4 by the time
withholding is required to be made by the partnership,
association or Pennsylvania S corporation under section 324.
((c) added Oct. 30, 2017, P.L.672, No.43)
(324.1 added Aug. 4, 1991, P.L.97, No.22)
Section 324.2. Treatment of Nonresident Partners, Members
or Shareholders.--(a) Each nonresident partner, member,
shareholder or holder of a beneficial interest shall be allowed
a credit for such partner's, member's, shareholder's or holder
of a beneficial interest's share of the withholding tax paid
by the partnership, association or Pennsylvania S corporation.
Such credit shall be allowed for the partner's, member's,
shareholder's or holder of a beneficial interest's taxable year
in which, or with which, the partnership, association or
Pennsylvania S corporation taxable year (for which such tax was
paid) ends.
(b) Each nonresident lessor shall be allowed a credit for
the nonresident lessor's share of the withholding tax paid by
the lessee under section 324.4.
(c) The credits under this section shall be allowed for the
nonresident lessor's taxable year in which the lessee withheld
tax.
(324.2 amended Oct. 30, 2017, P.L.672, No.43)
Section 324.3. Liability for Tax, Interest, Penalties and
Additions.--If a partnership, association or Pennsylvania S
corporation fails to pay withholding tax as prescribed herein
and thereafter such tax is paid, the partnership, association
or Pennsylvania S corporation shall not be relieved of the
liability for any penalty, interest or addition as a result of
failure to properly withhold such tax.
(324.3 added Aug. 4, 1991, P.L.97, No.22)
Section 324.4. Withholding on Income.--(a) Every lessee
of Pennsylvania real estate who makes a lease payment in the
course of a trade or business to a nonresident lessor shall
withhold Pennsylvania personal income tax on rental payments
to such nonresident lessor.
(b) Every lessee shall withhold from each payment made to
a lessor an amount equal to the net amount payable to the lessor
multiplied by the tax rate specified under section 302(b).
(c) (Reserved).
(d) The withholding of tax under this section is optional
and at the discretion of the lessee with respect to payments
to a lessor who receives less than $5,000 annually on a lease.
(e) For purposes of this section, the term or phrase:
(1) "Lessor" shall include an individual, estate or trust.
(2) "Lease payment" shall include, but not be limited to,
rents, royalties, bonus payments, damage payments, delay rents
and other payments made pursuant to a lease, other than
compensation derived from intangible property having a taxable
or business situs in this Commonwealth. Classification as a
"lease payment" under this section is solely for the purposes
of establishing withholding requirements and shall not be
relevant for a determination as to the proper income
classification of any such lease payment.
(3) "In the course of a trade or business" shall include
any person or business entity making lease payments to a
nonresident or agent of a nonresident who collects rent or lease
payments on behalf of a nonresident owner other than a tenant
of residential property.
(324.4 added Oct. 30, 2017, P.L.672, No.43)
Section 324.5. Annual Withholding Statement.--(a) Every
lessee shall furnish to each lessor an annual statement at such
time and in such manner as may be prescribed by the department
showing the total payments made by the lessee to the lessor
during the preceding taxable year and showing the amount of the
tax deducted and withheld from the payments under section 324.4.
(b) Every lessee shall file with the department an annual
statement at such time and in such manner as may be prescribed
by the department showing the total payments made to each lessor
subject to withholding during the preceding taxable year or any
portion of the preceding taxable year and the total amount of
tax deducted and withheld under section 324.4.
(c) Every lessor shall file a duplicate of the annual
statement furnished by the lessee under this section with the
lessor's State income tax return.
(324.5 added Oct. 30, 2017, P.L.672, No.43)
PART VIII
ESTIMATED TAX
(VIII added Aug. 31, 1971, P.L.362, No.93)
Section 325. Declarations of Estimated Tax.--(a) (1) Every
resident and nonresident individual, trust and estate shall at
the time hereinafter prescribed make a declaration of his or
its estimated tax for the taxable year, containing such
information as the department may prescribe by regulations, if
his or its income, other than from income on which tax is
withheld under this article, can reasonably be expected to
exceed the following dollar amount for the applicable taxable
year:
DOLLAR AMOUNTTAXABLE YEAR
$8,0002023 and prior
9,5002024
11,0002025
14,0002026
17,0002027
20,0002028
(2) For taxable years beginning after December 31, 2028,
the dollar amount under paragraph (1) shall increase annually
by five hundred dollars ($500). The department shall submit a
notice containing the new dollar amount for the taxable year
to the Legislative Reference Bureau for publication in the
Pennsylvania Bulletin.
((a) amended Nov. 3, 2022, P.L.1695, No.108)
(b) For the purposes of this article, the term "estimated
tax" means the amount which an individual, trust or estate
estimates to be his or its tax due under this article for the
taxable year, less the amount which he or it estimates to be
the sum of any credits allowable against the tax under this
article.
(c) A husband and wife may make a joint declaration of
estimated tax hereunder as if they were one taxpayer, in which
case the liability with respect to the estimated tax shall be
joint and several. If a joint declaration is made but husband
and wife elect to determine their taxes separately, the
estimated tax for such year may be treated as the estimated tax
of either husband or wife, or may be divided between them, as
they may elect.
(d) Except as hereinafter provided, the date for filing a
declaration of estimated tax shall depend upon when the resident
or nonresident individual, trust or estate determines that his
or its income on which no tax has been withheld under this
article can reasonably be expected to exceed the dollar amount
under subsection (a), as follows: (Intro. par. amended Nov. 3,
2022, P.L.1695, No.108)
(1) If the determination is made on or before April 1 of
the taxable year, a declaration of estimated tax shall be filed
no later than April 15 of the taxable year.
(2) If the determination is made after April 1 but before
June 2 of the taxable year, the declaration shall be filed no
later than June 15 of such year.
(3) If the determination is made after June 1 but before
September 2 of the taxable year, the declaration shall be filed
no later than September 15 of such year.
(4) If the determination is made after September 1 of the
taxable year, the declaration shall be filed no later than
January 15 of the year succeeding the taxable year.
((d) amended May 12, 1999, P.L.26, No.4)
(e) Notwithstanding subsection (d) of this section, a
declaration of estimated tax of an individual having an
estimated gross income from farming for the taxable year which
is at least two-thirds of his total estimated gross income for
the taxable year may be filed at any time on or before January
15 of the succeeding year, but if the farmer files a final
return and pays the entire tax by March 1, the return may be
considered as his declaration due on or before January 15.
(f) A declaration of estimated tax of an individual, trust
or estate having a total estimated tax for the taxable year of
one hundred dollars ($100) or less may be filed at any time on
or before January 15 of the succeeding year under regulations
of the department.
(g) An individual, trust or estate may amend a declaration
under regulations of the department.
(h) If on or before January 31 of the year succeeding a
taxable year, an individual, trust or estate files his or its
return for the entire taxable year for which a declaration was
required to be filed within the time prescribed by subsection
(d)(4) of this section and pays therewith the full amount of
the tax shown to be due on the return:
(1) Such return shall be considered as his or its
declaration which was required to be filed no later than January
15.
(2) Such return shall be considered as the amendment
permitted by subsection (g) to be filed on or before January
15 provided the amount of the tax shown on the return is greater
than the amount of the estimated tax shown in a declaration
previously made.
(i) This article shall apply to a taxable year other than
a calendar year by the substitution of the months of such fiscal
year for the corresponding months specified in this section.
(j) This article shall apply to an individual, trust or
estate having a taxable year of less than twelve months in
accordance with procedures prescribed in regulations of the
department.
(325 amended Aug. 4, 1991, P.L.97, No.22)
Compiler's Note: Section 17 of Act 108 of 2022, which
amended section 325(a) and (d) intro. par., provided
that the amendment of section 325(d) shall apply to
taxable years beginning after December 31, 2022.
Compiler's Note: Section 32(11) of Act 4 of 1999, which
amended section 325(a) and (b), provided that the
amendment shall apply to taxable years beginning after
December 31, 1999.
Section 326. Payments of Estimated Tax.--(a) Subject to
the provisions of subsection (j) of section 325, the estimated
tax with respect to which a declaration is required shall be
paid as follows:
(1) If the declaration is filed on or before April 15 of
the taxable year, the estimated tax shall be paid in four equal
installments. The first installment shall be paid at the time
of the filing of the declaration, and the second, third and
fourth installments shall be paid on or before the succeeding
June 15, September 15, and January 15, respectively.
(2) If the declaration is not required to be filed on or
before April 15 of the taxable year and is filed after April
15, but before June 16 of the taxable year, the estimated tax
shall be paid in three equal installments. The first installment
shall be paid at the time of the filing of the declaration, and
the second and third installments shall be paid on the
succeeding September 15 and January 15, respectively.
(3) If the declaration is not required to be filed on or
before June 15 of the taxable year and is filed after June 15
but before September 16 of the taxable year, the estimated tax
shall be paid in two equal installments. The first installment
shall be paid at the time of the filing of the declaration, and
the second shall be paid on the succeeding January 15.
(4) If the declaration is not required to be filed on or
before September 15 of the taxable year and is filed after
September 15 of the taxable year, the estimated tax shall be
paid in full at the time of the filing of the declaration.
(5) If the declaration is not filed within the time
prescribed therefor, or after the expiration of any extension
of time therefor, clauses (2), (3) and (4) of this subsection
shall not apply, and there shall be paid at the time of such
filing the amount of all installments of estimated tax which
were due and payable on or before the date the declaration was
filed, and the remaining installments shall be paid at such
times and in such amounts as they would have been payable if
the declaration had been filed when due.
(b) If an individual described in subsection (e) of section
325 (relating to farmers) makes a declaration of estimated tax
after September 15 of the taxable year, but before the following
March 1, the estimated tax shall be paid in full at the time
of the filing of the declaration.
(c) If any amendment of a declaration is filed, the
remaining unpaid installments, if any, shall be ratably
increased or decreased, as the case may be, to reflect any
increase or decrease in the estimated tax by reason of such
amendment, and if any amendment is made after September 15 of
the taxable year, any increase in the estimated tax by reason
thereof shall be paid at the time of making such amendment.
(326 added Aug. 31, 1971, P.L.362, No.93)
PART IX
RETURNS AND PAYMENT OF TAX
(IX added Aug. 31, 1971, P.L.362, No.93)
Section 330. Returns and Liability.--(a) On or before the
date when the taxpayer's Federal income tax return is due or
would be due if the taxpayer were required to file a Federal
income tax return, under the Internal Revenue Code of 1954, a
tax return under this article shall be made and filed by or for
every taxpayer having income for the taxable year.
(b) (1) In the case of an individual serving in the armed
forces of the United States in an area designated by the
President of the United States by Executive order as a "combat
zone," as described in section 7508 of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 7508), as amended,
at any time during the period designated by the President by
Executive order as the period of combatant activities in the
combat zone or hospitalized as a result of injury received while
serving in the combat zone during such time, or an individual
serving in a military capacity as a result of a Federal callup
to active duty or civilian capacity outside the boundary of
this Commonwealth in support of such armed forces, the period
of service in such area, plus the period of qualified continuous
hospitalization attributable to such injury, and the next one
hundred eighty days thereafter shall be disregarded in
determining, under this article, in respect of any tax
liability, including any interest, penalty, additional amount
or addition to the tax of such individual:
(i) Whether any of the following acts were performed within
the time prescribed therefor:
(A) Filing any return of income tax, except income tax
withheld at source;
(B) Payment of any income tax, except income tax withheld
at source or any installment thereof or of any other liability
to the Commonwealth in respect thereof;
(C) Filing a petition for redetermination of a deficiency
or for review of a decision rendered by the department;
(D) Allowance of a credit or refund of any tax;
(E) Filing a claim for credit or refund of any tax;
(F) Bringing suit upon any such claim for credit;
(G) Assessment of any tax;
(H) Giving or making any notice or demand for the payment
of any tax or with respect to any liability to the Commonwealth
in respect of any tax;
(I) Collection by the department, by levy or otherwise, of
the amount of any liability in respect of any tax;
(J) Bringing suit by the Commonwealth, or any officer on
its behalf, in respect of any liability in respect of any tax;
and
(K) Any other act required or permitted under this article
specified in regulations prescribed by the department;
(ii) The amount of any credit or refund, including interest.
((1) amended Dec. 23, 2003, P.L.250, No.46)
(2) The provisions of this subsection shall apply to the
spouse of any individual entitled to the benefits of paragraph
(1). This paragraph shall not cause this subsection to apply
for any spouse for any taxable year beginning more than one
year after the date of termination of combatant activities in
a combat zone.
(3) The period of service in the area referred to in this
subsection shall include the period during which an individual
entitled to benefits under this subsection is in a missing
status.
(4) In the event that any qualified individual under
paragraph (1) is killed while serving in the combat zone, the
tax liability of that decedent for both the year of death and
the immediate prior year shall be waived by the Commonwealth.
(5) For purposes of paragraph (1), the phrase "period of
qualified continuous hospitalization" shall mean:
(i) any hospitalization outside the United States; and
(ii) any hospitalization inside the United States.
(330 amended Mar. 26, 1991, P.L.5, No.3)
Compiler's Note: Section 19(3)(iii) of Act 23 of 2000, which
amended subsections (a), (b), (e), (f), (g), (h) and
(i), provided that the amendment shall apply to taxable
years beginning after December 31, 1999.
Compiler's Note: Section 4 of Act 63 of 1999, which amended
subsection (b), provided that the amendment shall apply
to the taxable years beginning after December 31, 1998.
Compiler's Note: Section 32(5) of Act 4 of 1999, which
amended section 602, provided that the amendment shall
apply to the taxable years beginning after December 31,
1998.
Section 330.1. Return of Pennsylvania S Corporation.--(a)
Every Pennsylvania S corporation shall make a return for each
taxable year, stating specifically all items of gross income
and deductions, the names and addresses of all persons owning
stock in the corporation at any time during the taxable year,
the number of shares of stock owned by each shareholder at all
times during the taxable year, the amount of money and other
property distributed by the corporation during the taxable year
to each shareholder, the date of each distribution, each
shareholder's pro rata share of each item of the corporation
for the taxable year and such other information as the
department may require.
(b) The return shall be filed on or before thirty days after
the date when the corporation's Federal income tax return is
due.
(c) Every Pennsylvania S corporation shall also submit to
the department a true copy of the income tax return filed with
the Federal Government at the time the return required under
subsection (a) is filed.
(d) Each Pennsylvania S corporation required to file a
return under subsection (a) for a taxable year shall, on or
before the day on which the return for the taxable year was
filed, furnish to each person who is a shareholder at any time
during the taxable year a written statement of the shareholder's
pro rata share of each item on the corporate return in a form
required by the department.
(330.1 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended section 330.1, provided that the amendment shall
apply to tax years beginning after December 31, 2013.
Section 330.2. COVID-19 Emergency Finance and Tax
Provision.--(330.2 repealed July 8, 2022, P.L.513, No.53)
Compiler's Note: Section 3(2) of Act 10 of 2021, which added
section 330.2, provided that the addition of subsection
(d) shall apply to taxable years beginning after the
effective date of section 3.
Section 331. Returns of Married Individuals, Deceased or
Disabled Individuals and Fiduciaries.--(a) If the income tax
liability of husband or wife is determined on a separate return,
their income tax liabilities under this article shall be
separate.
(b) If the income tax liabilities of husband and wife are
determined on a joint return, their tax liabilities shall be
joint and several.
(c) If either husband or wife is a resident and the other
is a nonresident, they shall file separate tax returns under
this article on such single or separate forms as may be required
by the department, in which event their tax liabilities shall
be separate except as provided in subsection (d) unless both
elect to determine their joint taxable income as if both were
residents, in which event their tax liabilities shall be joint
and several.
(d) If husband and wife file separate tax returns under
this article on a single form pursuant to subsections (b) or
(c) and:
(1) If the sum of the payments by either spouse, including
withheld and estimated taxes, exceeds the amount of the tax for
which such spouse is separately liable, the excess may be
applied by the department to the credit of the other spouse if
the sum of the payments by such other spouse, including withheld
and estimated taxes, is less than the amount of the tax for
which such other spouse is separately liable.
(2) If the sum of the payments made by both spouses with
respect to the taxes for which they are separately liable,
including withheld and estimated taxes, exceeds the total of
the taxes due, refund of the excess may be made payable to both
spouses, or if either is deceased, to the survivor.
Provided, however, That the provisions of this subsection
(d) shall not apply if the return of either spouse includes a
demand that any overpayment made by him or her shall be applied
only on account of his or her separate liability.
(e) Except as provided under subsections (e.1) and (e.2),
the final return for any deceased individual shall be made,
signed and filed by his executor, administrator, or other
personal representative charged with his property. ((e) amended
July 2, 2012, P.L.751, No.85)
(e.1) (1) During the year in which a spouse dies, a
surviving spouse may file his or her return for the year jointly
with the final return of his or her deceased spouse if the joint
return could have been filed if both spouses were living for
the entire taxable year. If a personal representative, executor
or administrator or other fiduciary is appointed on behalf of
the deceased spouse before the deceased spouse's tax return is
filed, the surviving spouse may not file a joint return without
the consent of the fiduciary. If a joint return is filed, both
the fiduciary of the deceased spouse's estate and the surviving
spouse must sign the joint return.
(2) A surviving spouse may make, sign and file the final
tax return of his or her deceased spouse if the deceased spouse
did not previously file a return for that taxable year and if
a personal representative, executor or administrator has not
been appointed by the time the return is made, signed and filed.
If the surviving spouse properly files a final return for the
deceased spouse under this paragraph, a fiduciary who is later
appointed for the deceased spouse may supersede the final return
filed by the surviving spouse by filing a separate return for
the deceased spouse. Any joint return improperly filed by the
surviving spouse or superseded by the fiduciary shall be treated
as void. If the surviving spouse files his or her own tax return
jointly with the deceased spouse's return under this paragraph
and the return is superseded by the filing of a return by the
deceased spouse's fiduciary, the surviving spouse shall be
required to file a separate return within 90 days of the filing
of the fiduciary's return. The surviving spouse's separate
return shall be deemed to be filed:
(i) on the day the joint return was filed if it is filed
within such time; or
(ii) the date the department receives it.
((e.1) added July 2, 2012, P.L.751, No.85)
(e.2) If both taxpayers die during the same tax year, a
final return for each deceased spouse may be jointly filed if
a joint return could have been filed had both spouses lived for
the entire taxable year and with the consent of the personal
representatives, executors or administrators of both deceased
spouses under subsection (e.1) by the due date, including
extensions, of the joint tax return. Both fiduciaries must sign
the joint return. ((e.2) added July 2, 2012, P.L.751, No.85)
(f) The return for an individual who is unable to make a
return by reason of minority or other disability shall be made
and filed by his guardian, committee, fiduciary or other person
charged with the care of his person or property, or by his duly
authorized agent.
(g) The return for an estate or trust shall be made and
filed by the fiduciary. If two or more fiduciaries are acting
jointly, the return may be made by any one of them. If the
executor of the estate and trustee of the trust make an election
under section 645 of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 645), as amended, to treat the income
of the trust as part of the estate, the fiduciary may make and
file a joint tax return for the estate and trust under this
subsection for the taxable years when the trust income is
reported as part of the estate income in accordance with section
645 of the Internal Revenue Code of 1986, as amended. If the
income tax liabilities of the estate and trust are filed on a
joint tax return under this subsection, the tax liabilities of
the estate and trust shall be joint and several. The provisions
of subsection (d) shall be applicable to a joint tax return
filed under this subsection. ((g) amended June 28, 2019, P.L.50,
No.13)
(331 added Aug. 31, 1971, P.L.362, No.93)
Compiler's Note: Section 29 of Act 13 of 2019 provided that
the amendment or addition of sections 331(g) and 336.3
of this act shall apply to tax years beginning after
December 31, 2019.
Compiler's Note: Section 30(2) of Act 85 of 2012, which
amended subsec. (e) and added subsecs. (e.1) and (e.2),
provided that the amendment or additions shall apply to
tax years beginning on or after January 1, 2013.
Section 332. Time and Place for Filing Returns and Paying
Tax.--A person required to make and file a return under this
article shall, without assessment, notice or demand, pay any
tax due thereon to the department on or before the date fixed
for filing such return (determined without regard to any
extension of time for filing the return). The department shall
prescribe by regulation the place for filing and return,
declaration, statement, or other document required pursuant to
this article and for payment of any tax.
(332 added Aug. 31, 1971, P.L.362, No.93)
Section 332.1. Electronic Payment.--Any payment in the
amount of fifteen thousand dollars ($15,000) or more remitted
to the department for the tax imposed under this article shall
be remitted electronically as prescribed by the department.
This section shall not apply to employer withholding payments
under Part VII of this article and section 9 of the act of April
9, 1929 (P.L.343, No.176), known as "The Fiscal Code."
(332.1 added June 30, 2021, P.L.124, No.25)
Compiler's Note: Section 40(3) of Act 25 of 2021 provided
that the addition of section 332.1 shall apply to
payments made after December 31, 2021.
Section 333. Signing of Returns and Other
Documents.--(a) Any return other than an estimated return under
section 325, statement or other document required to be made
pursuant to this article shall be signed in accordance with
regulations or instructions prescribed by the department.
(b) Any return, statement, or other document required of a
partnership shall be signed by one or more partners. The fact
that a partner's name is signed to a return, statement, or other
document, shall be prima facie evidence for all purposes that
such partner is authorized to sign on behalf of the partnership.
(c) The making or filing of any return, declaration,
statement or other document or copy thereof required to be made
or filed pursuant to this article shall constitute a
certification by the person making or filing such return,
declaration, statement or other document or copy thereof that
the statements contained therein are true and that any copy
filed is a true copy.
(333 amended June 30, 1995, P.L.139, No.21)
Section 334. Extension of Time.--The department may, upon
application, grant a reasonable extension of time for filing
any return, declaration, statement, or other document required
pursuant to this article, on such terms and conditions as it
may require. Except for a taxpayer who is outside the United
States, no such extension for filing any return, declaration,
statement or other document, shall exceed six months.
(334 added Aug. 31, 1971, P.L.362, No.93)
Section 335. Requirements Concerning Returns, Notices,
Records and Statements.--(a) The department may prescribe by
regulation for the keeping of records, the content and form of
returns, declarations, statements and other documents and the
filing of copies of Federal income tax returns and
determinations. The department may require any person, by
regulation or notice served upon such person, to make such
returns, render such statements, or keep such records, as the
department may deem sufficient to show whether or not such
person is liable for tax under this article.
(b) (1) When required by regulations prescribed by the
department:
(i) Any person required under the authority of this article
to make a return, declaration, statement, or other document
shall include in such return, declaration, statement or other
document such identifying number as may be prescribed for
securing proper identification of such person.
(ii) Any person with respect to whom a return, declaration,
statement, or other document is required under the authority
of this article to make a return, declaration, statement, or
other document with respect to another person, shall request
from such other person, and shall include in any such return,
declaration, statement, or other document, such identifying
number as may be prescribed for securing proper identification
of such other person.
(2) For purposes of this section, the department is
authorized to require such information as may be necessary to
assign an identifying number to any person.
(c) (1) Every partnership, estate or trust having a
resident partner or a resident beneficiary or every partnership,
estate or trust having any income derived from sources within
this Commonwealth shall make a return for the taxable year
setting forth all items of income, loss and deduction, and such
other pertinent information as the department may require. Such
return shall be filed on or before the fifteenth day of the
fourth month following the close of each taxable year. For
purposes of this subsection, "taxable year" means year or period
which would be a taxable year of the partnership if it were
subject to tax under this article.
(2) Every partnership, estate or trust required to file a
return under paragraph (1) shall also file with the department
a true copy of the income tax return filed with the Federal
Government at the time the return required under paragraph (1)
is filed.
(3) Every partnership, estate or trust required to file a
return under paragraph (1) for any taxable year shall, on or
before the day the return is filed, furnish to each partner or
nominee for another person or to each beneficiary to whom the
income or gains of the estate or trust is taxable a written
statement of the partner's pro rata share of each item on the
partnership return or the beneficiary's pro rata share of income
on the estate or trust return in a form required by the
department.
(4) A partnership required to file a return under paragraph
(1) for a taxable year shall, on or before the day the return
is filed, furnish to each partner classified as a corporation,
partnership or disregarded entity for Federal income tax
purposes a copy of the Pennsylvania income tax form reporting
corporate partner apportioned business income or loss. A
reporting partnership shall not be required to provide a partner
who is either a partnership or disregarded entity a copy of
this form if the reporting partnership is able to determine
that an entity classified as a corporation for Federal income
tax purposes is not an indirect owner of the reporting
partnership.
(d) The department may prescribe regulations requiring
returns of information to be made and filed on or before
February 28 of each year as to the payment or crediting in any
calendar year of amounts of ten dollars ($10) or more to any
taxpayer. Such returns may be required of any person, including
lessees or mortgagors of real or personal property, fiduciaries,
employers and all officers and employes of this Commonwealth,
or of any municipal corporation or political subdivision of
this Commonwealth having the control, receipt, custody, disposal
or payment of interest, rents, salaries, wages, premiums,
annuities, compensations, remunerations, emoluments or other
fixed or determinable gains, profits or income, except interest
coupons payable to bearer. A duplicate of the statement as to
tax withheld on compensation required to be furnished by an
employer to an employe, shall constitute the return of
information required to be made under this section with respect
to such compensation.
(e) Any person who is required to make a form W-2G return
to the Secretary of the Treasury of the United States in regard
to taxable gambling or lottery winnings from sources within
this Commonwealth shall file a copy of the form with the
department by March 1 of each year or, if filed electronically,
by March 31 of each year.
(f) The following apply:
(1) Any person who:
(i) makes payments of Pennsylvania source income that fall
within any of the eight classes of income enumerated in section
303(a);
(ii) makes such payments to an individual, an entity treated
as a partnership for tax purposes or a single member limited
liability company; and
(iii) is required to make a form 1099-MISC or 1099-NEC
return to the Secretary of the Treasury of the United States
with respect to such payments, shall file a copy of such form
1099-MISC or 1099-NEC with the department on the due date of
the form 1099-MISC or 1099-NEC. If the form 1099-MISC or
1099-NEC filed by a payor with the Secretary of the Treasury
of the United States does not include the State income and State
tax withheld as required under section 316.2, the payor shall
update the copies of form 1099-MISC or 1099-NEC to be provided
pursuant to this section to reflect such information prior to
filing it with the department and sending it to the payee.
((1) amended June 30, 2021, P.L.124, No.25)
(2) If the payor is required to perform electronic filing
for Pennsylvania employer withholding purposes, the form
1099-MISC or 1099-NEC shall be filed electronically with the
department. ((2) amended June 30, 2021, P.L.124, No.25)
(3) As used in this subsection, the following words and
phrases shall have the meanings given to them in this paragraph
unless the context clearly indicates otherwise:
"Payee." The person receiving the payments subject to
withholding under this subsection.
"Payments." The term does not include a partner or
shareholder's distributive share of income from a partnership
or Pennsylvania S corporation.
"Payor." The person required to withhold under this
subsection.
((f) amended Oct. 30, 2017, P.L.672, No.43)
(g) (1) Every estate, trust, Pennsylvania S corporation
or partnership, other than a publicly traded partnership, shall
maintain at the end of the entity's taxable year an accurate
list of partners, members, beneficiaries or shareholders. The
list shall include the name, current address and tax
identification number of all existing partners, members,
beneficiaries or shareholders and of all partners, members,
beneficiaries or shareholders who were admitted or who withdrew
during the taxable year, including the date of withdrawal and
admittance.
(2) If the entity under paragraph (1) does not maintain an
accurate list as required, the tax, penalty and interest with
respect to the entity shall be considered the tax, penalty and
interest of the partnership, estate, trust or Pennsylvania S
corporation and of the general partner, tax matters partner,
corporate officer or trustee.
(335 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended section 335, provided that the amendment shall
apply to tax years beginning after December 31, 2013.
Compiler's Note: Section 33(7) of Act 46 of 2003, which
amended section 335, provided that the amendment shall
apply to taxable years beginning after December 31, 2003.
Section 336. Timely Mailing Treated as Timely Filing and
Payment.--Notwithstanding the provisions of any State tax law
to the contrary, whenever a report or payment of all or any
portion of a State tax is required by law to be received by the
Pennsylvania Department of Revenue or other agency of the
Commonwealth on or before a day certain, the taxpayer shall be
deemed to have complied with such law if the letter transmitting
the report or payment of such tax which has been received by
the department is postmarked by the United States Postal Service
on or prior to the final day on which the payment is to be
received.
For the purposes of this article, presentation of a receipt
indicating that the report or payment was mailed by registered
or certified mail on or before the due date shall be evidence
of timely filing and payment.
(336 amended June 27, 1974, P.L.376, No.126)
Section 336.1. Procedure for Claiming Special Tax
Provisions.--The following procedures shall be employed for
claiming the special tax provisions:
(1) The claimant may claim the special tax provisions upon
the expiration of his taxable year in connection with his filing
of an annual return under the provisions of this article.
Notwithstanding any other provisions of this article to the
contrary, the department shall have the power to promulgate
such rules or regulations as it may deem necessary to fairly
and reasonably implement the provisions of this section.
(2) If the claimant receives income as defined in this
article, other than compensation from an employer, he may claim
the special tax provisions in connection with his filing of
estimated tax returns.
(336.1 added Mar. 13, 1974, P.L.179, No.32)
Section 336.2. Proof of Eligibility.--The Department of
Revenue shall establish such rules, regulations, schedules or
other procedures as may be necessary for the submission and
establishment of proof of the eligibility of persons for the
special tax provisions or other matters relating to the
provisions of this act. Such procedures may include, but not
be limited to, the submission of requisite information and
certifications upon forms provided by the department, including
such special tax return or report forms as may be necessary.
(336.2 added Mar. 13, 1974, P.L.179, No.32)
Section 336.3. Paid Tax Return Preparers; Required
Information on Personal Income Tax Returns.--(a) For taxable
years beginning on or after January 1, 2020, any personal income
tax return prepared by a paid tax return preparer shall be
signed by the paid tax return preparer and shall bear the paid
tax return preparer's Internal Revenue Service preparer tax
identification number.
(b) (1) The department may impose an administrative penalty
of fifty dollars ($50) on a paid tax return preparer each time
the paid tax return preparer fails to sign the return or fails
to provide the preparer's tax identification number.
(2) The maximum amount imposed on any individual paid tax
return preparer under paragraph (1) shall not exceed twenty-five
thousand dollars ($25,000) per paid tax return preparer in a
calendar year.
(c) As used in this section:
"Paid tax return preparer" shall mean a person who prepares
for compensation, or employs one or more persons to prepare for
compensation, a personal income tax return required to be filed
under this act. Preparation of a substantial portion of a
personal income tax return shall be treated as if it were the
preparation of the personal income tax return.
(336.3 added June 28, 2019, P.L.50, No.13)
Compiler's Note: Section 29 of Act 13 of 2019 provided that
the amendment or addition of sections 331(g) and 336.3
of this act shall apply to tax years beginning after
December 31, 2019.
PART X
PROCEDURE AND ADMINISTRATION
(X added Aug. 31, 1971, P.L.362, No.93)
Section 337. Payment on Notice and Demand.--Upon receipt
of notice and demand from the department, there shall be paid
the amount of any tax due under the provisions of this article
stated in such notice and demand.
(337 added Aug. 31, 1971, P.L.362, No.93)
Section 338. Assessment.--(a) The department is authorized
and required to make the inquiries, determinations and
assessments of all taxes imposed by this article.
(b) If the mode or time for the assessment of any tax is
not otherwise provided for, the department may establish the
same by regulations.
(c) In the event that any taxpayer fails to file a return
required by this article, the department may make an estimated
assessment (based on information available) of the proper amount
of tax owing by the taxpayer. A notice of assessment in the
estimated amount shall be sent to the taxpayer. The tax shall
be paid within ninety days after a notice of such estimated
assessment has been mailed to the taxpayer, unless within such
period the taxpayer has filed a petition for reassessment in
the manner prescribed by Article XXVII.
(d) A notice of assessment issued by the department pursuant
to this article shall be mailed to the taxpayer. The notice
shall set forth the basis of the assessment.
(e) (Deleted by amendment).
(338 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 15 of Act 55 of 2007, which amended
section 338, provided that the amendment of section 338
shall apply to assessments issued after December 31,
2007.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 339. Jeopardy Assessments.--(a) Jeopardy
Assessments, Filing and Notice. If the department believes that
the assessment or the collection of a deficiency will be
jeopardized in whole or in part by delay, it may mail or issue
notice of its finding to the taxpayer, together with a demand
for immediate payment of the tax or the deficiency declared to
be in jeopardy including interest and penalties and additions
thereto, if any.
(b) Closing of Taxable Year. If the department believes
that a taxpayer designs quickly to depart from the State or to
remove his property therefrom or to conceal himself or his
property therein, or to do any other act tending to prejudice
or to render wholly or partly ineffectual proceedings to collect
the tax for the taxable year then last past or the taxable year
then current unless such proceedings be brought without delay,
the department shall declare the taxable period for such
taxpayer immediately terminated and shall cause notice of such
finding and declaration to be given the taxpayer, together with
a demand for immediate payment of the tax for the taxable period
so declared terminated and of the tax for the preceding taxable
year or so much of such tax as is unpaid, whether or not the
time otherwise allowed by law for filing return and paying the
tax has expired; and such taxes shall thereupon become
immediately due and payable.
(c) Jeopardy Assessments, Collection. A jeopardy assessment
is immediately due and payable, and proceedings for collection
may be commenced at once. The taxpayer, however, may stay
collection and prevent the jeopardy assessment from becoming
final by filing, within ten days after the date of the notice
of jeopardy assessment, a petition for reassessment,
notwithstanding the provisions of section 2702 to the contrary,
accompanied by a bond or other security in such amounts as the
department may deem necessary, not exceeding double the amount
(including interest and penalties and additions thereto) as to
which the stay is desired.
(d) Jeopardy Assessment, When Final. If a petition for
reassessment, accompanied by bond or other security is not filed
within the ten-day period, the assessment becomes final.
(e) Jeopardy Assessments, Hearing. If the taxpayer has so
requested in his petition, the department shall grant him or
his authorized representative an oral hearing.
(f) Jeopardy Assessments, Action on Petition for
Reassessment. The department shall consider the petition for
reassessment and notify the taxpayer of its decision thereon.
Its decision as to the validity of the jeopardy assessment shall
be final, unless the taxpayer within ninety days after
notification of the department's decision files a petition for
review authorized under section 2704.
(g) Jeopardy Assessments, Presumptive Evidence of Jeopardy.
In any proceeding brought to enforce payment of taxes made due
and payable by this section, the belief of the department under
subsection (a) whether made after notice to the taxpayer or
not, is for all purposes presumptive evidence that the
assessment or collection of the tax or the deficiency was in
jeopardy. A certificate of the department of the mailing or
issuing of the notices specified in this section is presumptive
evidence that the notices were mailed or issued.
(339 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 340. Procedure for Reassessment.--Any taxpayer
against whom an assessment is made may petition the department
for a reassessment pursuant to Article XXVII.
(340 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 341. Review by Board of Finance and Revenue.--(341
deleted by amendment Oct. 18, 2006, P.L.1149, No.119)
Section 342. Appeal to the Commonwealth Court.--(342 deleted
by amendment Oct. 18, 2006, P.L.1149, No.119)
Section 343. Collection of Tax.--The department shall
collect the taxes imposed by this article in the manner provided
by law for the collection of taxes imposed by the laws of this
Commonwealth.
(343 added Aug. 31, 1971, P.L.362, No.93)
Section 344. Collection upon Failure to Request
Reassessment, Review or Appeal.--The department may collect any
tax:
(1) After ninety days from the date of mailing of a copy
of the notice of assessment, if no petition for reassessment
has been filed;
(2) After ninety days from the date of mailing of notice
of the department's action thereon, if no petition for review
has been filed;
(3) Within thirty days from the date of mailing of notice
of the decision of the Board of Finance and Revenue upon a
petition for review or from the expiration of the board's time
for acting upon such petition, if no decision has been made;
or
(4) Immediately, in all cases of judicial sales,
receiverships, assignments or bankruptcies.
In any such proceeding for the collection of the tax imposed
by this article, the person against whom the assessment was
made shall not be permitted to set up any ground of defense
that might have been presented to the department, the Board of
Finance and Revenue or the Commonwealth Court if such person
had properly pursued his administrative remedies under this
article.
(344 amended Dec. 3, 1975, P.L.476, No.140)
Section 345. Lien for Tax.--(a) If any person liable to
pay any tax neglects or refuses to pay the same on the date the
tax becomes collectible, the amount of such tax, together with
any costs that may accrue in addition thereto, shall be a lien
in favor of the Commonwealth against the real and personal
property of such person but only after such lien has been duly
entered and docketed of record by the prothonotary of the county
where such property is situated. No prothonotary shall require,
as a condition precedent to the entry of such lien, the payment
of costs incident thereto.
(b) The department may, at any time, transmit to the
prothonotaries of the respective counties certified copies of
all liens for taxes imposed by this article. It shall be the
duty of each prothonotary receiving such lien to enter and
docket the same of record in his office, which lien shall be
indexed as judgments are now indexed. All such liens shall have
priority to, and be fully paid before, any other obligation,
judgment, claim, lien or estate paid and satisfied out of the
judicial sale of said real and personal property with which
said property may subsequently become charged, or for which it
may subsequently become liable, subject, however, to mortgage
or other liens existing and duly recorded at the time such tax
lien is recorded, save and except the cost of sale and of the
writ upon which it is made and real estate taxes imposed or
assessed upon said property. A writ of execution may directly
issue upon such lien without the issuance and prosecution to
judgment of a writ of scire facias: Provided, That not less
than ten days before issuance of any execution on the lien,
notice of the filing and effect of the lien shall be sent by
certified mail to the taxpayer at his last known post office
address: And provided further, That the said lien shall have
no effect upon any stock of goods, ware or merchandise regularly
sold or leased in the ordinary course of business by the person
against whom said lien had been entered, unless and until a
writ of execution has been issued and a levy made upon said
stock of goods, wares and merchandise. ((b) amended Aug. 4,
1991, P.L.97, No.22)
(c) Any wilful failure of any prothonotary to carry out any
duty imposed upon him by this section shall be a misdemeanor
and, upon conviction, he shall be sentenced to pay a fine not
exceeding one thousand dollars ($1,000) and cost of prosecution,
or to undergo imprisonment not exceeding one year, or both.
(345 amended July 1, 1978, P.L.594, No.114)
Section 346. Refund or Credit of Overpayment.--(a) In the
case of any payment of tax not due under this article, the
department may credit the amount of such overpayment against
any liability in respect of the tax imposed by this article on
the part of the person who made the overpayment and shall refund
any balance to such person. ((a) amended July 1, 1985, P.L.78,
No.29)
(b) The department is authorized to prescribe regulations
providing for the crediting against the estimated tax for any
taxable year of the amount determined to be an overpayment of
the tax for a preceding taxable year.
(c) If the taxpayer has paid as an installment of estimated
tax more than the correct amount of such installment, the
overpayment shall be credited against the unpaid installments,
if any. If the amount paid, whether or not on the basis of
installments, exceeds the amount determined to be the correct
amount of the tax, the overpayment shall be credited or refunded
as provided in subsection (a) or (b).
(346 added Aug. 31, 1971, P.L.362, No.93)
Compiler's Note: Section 42(b) of Act 48 of 1994 provided
that section 346 is repealed to the extent that it
conflicts with the provisions of Act 48 for filing with
the Board of Finance and Revenue of petitions for the
refund of taxes and other moneys collected by the
Department of Revenue.
Section 347. Restrictions on Refunds.--A credit or refund
may be made under section 346:
(1) By reason of the overpayment of an installment of
estimated tax;
(2) Upon reassessment;
(3) Upon the filing of a final return or amended final
return showing any overpayment of tax.
(347 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Compiler's Note: Section 42(b) of Act 48 of 1994 provided
that section 347 is repealed to the extent that it
conflicts with the provisions of Act 48 for filing with
the Board of Finance and Revenue of petitions for the
refund of taxes and other moneys collected by the
Department of Revenue.
Section 348. Limitations on Assessment and
Collection.--(a) The amount of any tax imposed by this article
shall be assessed within three years after the return is filed.
For the purposes of this subsection and subsection (b), a return
filed before the last day prescribed for the filing thereof,
or before the last day of any extension of time for the filing
thereof, shall be considered as filed on such last day.
(b) If the taxpayer omits from income an amount properly
includable therein which is in excess of twenty-five per cent
of the amount of income stated in the return, the tax may be
assessed at any time within six years after the return was
filed.
(c) Where no return is filed, or if a taxpayer shall fail,
when required, to file an amended return, the amount of the tax
due may be assessed at any time.
(d) Where the taxpayer files a false or fraudulent return
with intent to evade the tax imposed by this article, the amount
of tax due may be assessed at any time.
(e) The department may, within three years of the granting
of any refund or credit or within the period in which an
assessment or reassessment could have been filed by the
department with respect to the taxable period for which the
refund was granted, whichever period shall last occur, file an
assessment to recover any refund or part thereof or credit or
part thereof which was erroneously made or allowed. ((e) added
July 1, 1985, P.L.78, No.29)
(348 added Aug. 31, 1971, P.L.362, No.93)
Section 349. Extension of Limitation
Period.--Notwithstanding section 348, where, before the
expiration of the period prescribed therein a taxpayer has
consented in writing that such period be extended, the amount
of tax due may be assessed at any time within such extended
period. The period so extended may be further extended by
subsequent consents in writing made before the expiration of
the extended period.
(349 added Aug. 31, 1971, P.L.362, No.93)
Section 350. Limitations on Refund or Credit.--Any
application for refund must be filed with the department under
Article XXVII within the time limits of section 3003.1.
(350 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 351. Interest.--(a) If any amount of tax imposed
by Part II of this article is not paid on or before the last
date prescribed for payment, interest on such amount at the
rate established pursuant to section 806 of the act of April
9, 1929 (P.L.343, No.176), known as "The Fiscal Code," shall
be paid for the period from such last date to the date paid.
The last date prescribed for payment shall be determined without
regard to any extension of time for filing the return. This
section shall not apply to any failure to pay estimated tax.
(b) If any amount of tax required to be withheld by an
employer and paid to the department under Part VII of this
article is not paid by the due date prescribed under section
319, interest on the amount at the rate established under
section 806 of "The Fiscal Code" shall be paid from that date
for the period of underpayment.
(351 amended June 29, 1984, P.L.445, No.94)
Section 352. Additions, Penalties and Fees.--(a) In case
of failure to file any return required under this article on
the date prescribed therefor, determined with regard to any
extension of time for filing, unless it is shown that such
failure is due to reasonable cause and not due to wilful
neglect, there shall be added to the amount required to be shown
as tax on such return five per cent of the amount of such tax
if the failure is for not more than one month, with an
additional five per cent for each additional month or fraction
thereof during which such failure continues, not exceeding
twenty-five per cent, in the aggregate, but in no case shall
the amount added be less than five dollars ($5). The amount of
tax required to be shown on the return shall, for purposes of
computing the additions for the first month, be reduced by the
amount of any part of the tax which is paid on or before the
date prescribed for payment of the tax and by the amount of any
credit against the tax which may be claimed on the return. The
amount of tax required to be shown on the return shall, for
purposes of computing the addition for any subsequent month,
be reduced by the amount of any part of the tax which is paid
by the beginning of the subsequent month and by the amount of
any credit against the tax which may be claimed on the return.
(b) (1) If any part of any underpayment of any tax imposed
by Part II of this article is due to negligence or intentional
disregard of rules and regulations, but without intent to
defraud, there shall be added to the tax an amount equal to
five per cent of the underpayment.
(2) If any part of any underpayment of any tax imposed by
Part II of this article is due to negligence or intentional
disregard of rules and regulations, but without intent to
defraud, and the underpayment is from a taxpayer omitting from
income an amount properly includable therein which is in excess
of twenty-five per cent of the amount of income stated on the
taxpayer's return, there shall be added to the tax an amount
equal to twenty-five per cent of the underpayment.
((b) amended Aug. 4, 1991, P.L.97, No.22)
(c) If any part of any underpayment of tax required under
this article to be shown on a return is due to fraud, there
shall be added to the tax an amount equal to fifty per cent of
the underpayment. This amount shall be in lieu of any amount
determined under subsection (b) or (h).
(d) (1) If any taxpayer fails to pay all or any part of
an installment of estimated tax, he shall be deemed to have
made an underpayment of estimated tax. There shall be added to
the tax for the taxable year an amount at the rate established
pursuant to section 806 of the act of April 9, 1929 (P.L.343,
No.176), known as "The Fiscal Code," upon the amount of the
underpayment for the period of the underpayment but not beyond
the fifteenth day of the fourth month following the close of
the taxable year. The amount of the underpayment shall be the
excess of the amount of the installment which would be required
to be paid if the estimated tax were equal to ninety per cent
of the tax (two-thirds in the case of an individual described
in subsection (e) of section 325) shown on the return for the
taxable year (or if no return was filed, of the tax for such
year) over the amount, if any, of the installments paid on or
before the last day prescribed for such payment. No underpayment
shall be deemed to exist with respect to an installment
otherwise due on or after the taxpayer's death or, in the case
of a decedent's estate or a trust created by the decedent to
receive the residue of the decedent's estate, for a period of
two years after the decedent's death.
(2) No addition to tax shall be imposed if the total amount
of all payments of estimated tax made on or before the last
date prescribed for the payment of such installment equals or
exceeds the lesser of:
(A) The amount which would have been required to be paid
on or before such date if the estimated tax were an amount equal
to the tax computed after consideration of the special tax
provisions for poverty, at the rates applicable to the taxable
year, but otherwise on the basis of the facts shown on his
return for, and the law applicable to, the preceding taxable
year; or
(B) An amount equal to ninety per cent of the tax computed,
at the rates applicable to the taxable year, on the basis of
the actual income for the months in the taxable year ending
before the month in which the installment is required to be
paid, or, in the case of a trust or estate, an amount equal to
ninety per cent of the applicable percentage of the tax for the
taxable year as determined pursuant to section 6654(d)(2)(C)(ii)
of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. § 6654), as amended, at rates applicable to the taxable
year, computed on an annualized basis in accordance with United
States Treasury regulations, based upon the actual income for
the months of the taxable year ending with the last day of the
second preceding month prior to the month in which the
installment is required to be paid.
((2) amended July 2, 2012, P.L.751, No.85)
((d) amended July 7, 2005, P.L.149, No.40)
(e) Any person required to collect, account for and pay
over any tax imposed by this article who wilfully fails to
collect such tax or truthfully account for and pay over such
tax, or wilfully attempts in any manner to evade or defeat any
such tax or the payment thereof, shall, in addition to other
penalties provided by law, be liable to a penalty equal to the
total amount of the tax evaded or not collected or not accounted
for and paid over. No penalty shall be imposed under subsection
(b), (c) or (h) for any offense to which this subsection (e)
is applicable. The term "person" as used in this subsection
includes an officer or employe of a corporation, or a member
or employe of a partnership, who as such officer, employe or
member is under a duty to perform the act in respect of which
the violation occurs.
(f) (1) Any person required under the provisions of section
317 to furnish a statement to an employe who wilfully furnishes
a false or fraudulent statement, or who wilfully fails to
furnish a statement in the manner, at the time, and showing the
information required under section 317 and the regulations
prescribed thereunder, shall, for each such failure, be subject
to a penalty of fifty dollars ($50) for each employe.
(2) Any person required to furnish an information return
who furnishes a false or fraudulent return or who fails to file
or provide an information return shall be subject to a penalty
of two hundred fifty dollars ($250).
(3) Every partnership, estate, trust or Pennsylvania S
corporation required to file a return with the department under
the provisions of section 330.1 or 335(c) who furnishes a false
or fraudulent return or who fails to file the return in the
manner and at the time required under section 330.1 or 335(c)
shall be subject to a penalty of $250 for each failure.
(4) Any person required to file a copy of form 1099-MISC
or 1099-NEC with the department under the provisions of section
335(f) who wilfully furnishes a false or fraudulent form or who
wilfully fails to file the form in the manner, at the time and
showing the information required under section 335(f) shall,
for each such failure, be subject to a penalty of fifty dollars
($50). ((4) amended June 30, 2021, P.L.124, No.25)
(5) Any person required under the provisions of section
335(f) to furnish a copy of form 1099-MISC or 1099-NEC to a
payee who wilfully furnishes a false or fraudulent form or who
wilfully fails to furnish a form in the manner, at the time and
showing the information required by section 335(f) shall, for
each such failure, be subject to a penalty of fifty dollars
($50). ((5) amended June 30, 2021, P.L.124, No.25)
(6) Any person required to file an annual statement with
the department under the provisions of section 324.5 who
wilfully furnishes a false or fraudulent statement or who
wilfully fails to file the statement in the manner, at the time
and showing the information required under section 324.5 and
the regulations prescribed under section 324.5 shall, for each
such failure, be subject to a penalty of fifty dollars ($50).
(7) Any person required under the provisions of section
324.5 to furnish an annual statement to a lessor who wilfully
furnishes a false or fraudulent statement or who wilfully fails
to furnish a statement in the manner, at the time and showing
the information required by section 324.5 and the regulations
prescribed under section 324.5 shall, for each such failure,
be subject to a penalty of fifty dollars ($50).
((f) amended Oct. 30, 2017, P.L.672, No.43)
(g) ((g) deleted by amendment May 7, 1997, P.L.85, No.7)
(h) If any amount of tax required to be withheld by an
employer and paid over to the department under section 319 or
319.1 is not paid on or before the due date prescribed for
filing the quarterly return under section 318 or 318.1,
determined without regard to an extension of time for filing,
there shall be added to the tax and paid to the department each
month five per cent of such underpayment for each month or
fraction thereof from the due date, for the period from the due
date to the date paid; but the underpayment shall, for purposes
of computing the addition for any month, be reduced by the
amount of any part of the tax which is paid by the beginning
of that month. The total of such additions shall not exceed
fifty per cent of the amount of tax required to be shown on the
return reduced by the amount of any part of the tax which is
paid by the return due date and by the amount of any credit
against the tax which may be claimed on the return. ((h) amended
Oct. 30, 2017, P.L.672, No.43)
(i) If any individual, estate or trust files what purports
to be a return required under section 330 but which does not
contain information on which the substantial correctness of the
self-assessment may be judged, or contains information that on
its face indicates that the self-assessment is substantially
incorrect and the self-assessment is due to a position which
is frivolous or due to a desire (which appears on the purported
return) to delay or impede the administration of Pennsylvania
Income Tax laws, then such individual, estate or trust shall
pay a penalty of five hundred dollars ($500). The penalty
imposed by this subsection shall be in addition to any other
penalty provided by law. ((i) added Aug. 4, 1991, P.L.97, No.22)
(j) If any amount of tax required to be withheld by a
partnership, association, Pennsylvania S corporation or lessee
and paid over to the department under section 324 or 324.4 is
not paid on or before the date prescribed therefor, there shall
be added to the tax and paid to the department each month five
per cent of such underpayment for each month or fraction thereof
from the due date, for the period from the due date to the date
paid; but the underpayment shall, for purposes of computing the
addition for any month, be reduced by the amount of any part
of the tax which is paid by the beginning of that month. The
total of such additions shall not exceed fifty per cent of the
amount of such tax. ((j) amended Oct. 30, 2017, P.L.672, No.43)
(k) If a tax payment is made and the payment does not comply
with section 332.1 when required, the taxpayer that is liable
for the tax shall, in addition to any other penalty, interest
or addition provided by law, be liable for a penalty of three
per cent of the payment remitted not to exceed five hundred
dollars ($500). ((k) added June 30, 2021, P.L.124, No.25)
(352 amended June 29, 1984, P.L.445, No.94)
Compiler's Note: Section 40(3) of Act 25 of 2021 provided
that the addition of subsection (k) shall apply to
payments made after December 31, 2021.
Compiler's Note: Section 30(2) of Act 85 of 2012, which
amended subsec. (d)(2), provided that the amendment shall
apply to tax years beginning on or after January 1, 2013.
Compiler's Note: Section 24(11) of Act 40 of 2005, which
amended subsection (d), provided that the amendment shall
apply to payments made after January 30, 2006.
Section 352.1. Abatement of Additions or Penalties.--Upon
the filing of a petition for reassessment or petition for review
by a taxpayer (other than an employer) as provided by this
article, the department may waive or abate, in whole or in part,
additions or penalties of three hundred dollars ($300) or less
imposed upon such taxpayer for a taxable year, where the
taxpayer has established that he acted in good faith with no
negligence or intent to defraud.
(352.1 added July 1, 1985, P.L.78, No.29)
Section 352.2. Citation Authority.--(a) Notwithstanding
any other provision of this act, any person who does any of the
following commits a summary offense and, upon conviction, shall
be subject to the fines and penalties imposed under section
208(c):
(1) Does not pay withholding tax, interest or penalty within
ninety days after the due date, and the tax liability due has
not been timely appealed or subject to a duly authorized
deferred payment plan.
(2) Underpays a withholding tax, interest or penalty within
ninety days after the due date, and the tax liability due has
not been timely appealed or subject to a duly authorized
deferred payment plan.
(3) Fails to file a tax withholding return or report or any
other reporting document within ninety days after the due date
of the applicable payment or return, report or any other
reporting document.
((a) amended July 13, 2016, P.L.526, No.84)
(b) The penalties imposed under this section shall be in
addition to any other penalties imposed under this article.
(c) The Secretary of Revenue may designate employes of the
department to enforce this subsection. The employes shall
exhibit proof of and be within the scope of the designation
when instituting proceedings as provided under the Pennsylvania
Rules of Criminal Procedure.
(352.2 added July 9, 2013, P.L.270, No.52)
Section 353. Crimes.--(a) Any person who wilfully attempts
in any manner to evade or defeat any tax imposed by this article
or the payment thereof shall, in addition to other penalties
provided by law, be guilty of a misdemeanor and shall, upon
conviction, be sentenced to pay a fine not exceeding twenty-five
thousand dollars ($25,000), or to undergo imprisonment not
exceeding two years, or both.
(b) Any person required under this article to collect,
account for and pay over any tax imposed by this article who
wilfully fails to collect or truthfully account for and pay
over such tax, shall, in addition to other penalties provided
by law, be guilty of a misdemeanor, and shall, upon conviction,
be sentenced to pay a fine not exceeding twenty-five thousand
dollars ($25,000) or to undergo imprisonment not exceeding two
years, or both.
(c) Any person required under this article to pay any tax
or to make a return, keep any records or supply any information,
who wilfully fails to pay such tax or make such return, keep
such records or supply such information at the time or times
required by law or regulations, shall, in addition to other
penalties provided by law, be guilty of a misdemeanor and shall,
upon conviction, be sentenced to pay a fine not exceeding five
thousand dollars ($5,000), or to undergo imprisonment not
exceeding two years, or both.
(d) Any person who wilfully makes and subscribes any return,
statement or other document which contains or is verified by a
written declaration that it is made under the penalties of
perjury and which he does not believe to be true and correct
as to every material matter, or wilfully aids or assists in,
or procures, counsels or advises the preparation or
presentation, in connection with any matter arising under this
article, of a return, affidavit, claim or other document which
is fraudulent or is false as to any material matter, whether
or not such falsity or fraud is with the knowledge or consent
of the person authorized or required to present such return,
affidavit, claim or document, shall be guilty of a misdemeanor
and shall, upon conviction, be sentenced to pay a fine not
exceeding five thousand dollars ($5,000) or to undergo
imprisonment not exceeding two years, or both.
(e) Any person who wilfully delivers or discloses to the
department any list, return, account, statement or other
document known by him to be fraudulent or to be false as to any
material matter shall be guilty of a misdemeanor and shall,
upon conviction, be sentenced to pay a fine not exceeding five
thousand dollars ($5,000) or to undergo imprisonment not
exceeding two years, or both.
(f) It shall be unlawful for any officer, agent or employe
of the Commonwealth to divulge or to make known in any manner
whatever, not provided by law, except for official purposes,
to any person, the amount or source of income, profits, losses,
expenditures or any particular thereof set forth or disclosed
in any return, or to permit any return or copy thereof or any
book containing any abstract or particulars thereof, to be seen
or examined by any person except as provided by law, and it
shall be unlawful for any person to print or publish in any
manner whatsoever not provided by law, any return or any part
thereof or source of income, profits, losses or expenditures
appearing in any return, and any person committing an offense
against the foregoing provisions shall be guilty of a
misdemeanor and, upon conviction thereof, shall be fined not
more than one thousand dollars ($1,000), or imprisoned for not
more than one year, or both, together with the costs of
prosecution; and, if the offender be an officer or employe of
the Commonwealth, he shall be dismissed from office or
discharged from employment.
(g) Notwithstanding subsection (f), it shall be lawful for
any officer or employe of the Commonwealth having custody of
returns to produce them or evidence of anything contained in
them in any action or proceeding in any court on behalf of the
department under the provisions of this article to which it is
a party, or on behalf of any party to any action or proceeding
under the provisions of this article, when the returns or facts
shown thereby are directly involved in such action or
proceeding, in either of which events the court may require the
production of and may admit in evidence so much of said returns
or the facts shown thereby as are pertinent to the action or
proceeding and no more. Nothing herein shall be construed to
prohibit the delivery to a taxpayer or his duly authorized
representative of a certified copy of any return filed in
connection with his tax, nor to prohibit the publication of
statistics so classified as to prevent the identification of
particular returns and the items thereof or the inspection by
the Attorney General or other legal representatives of the
Commonwealth of the return of any taxpayer who shall bring
action to review the tax based thereon or against whom an action
or proceeding has been instituted for the collection or recovery
of the tax imposed by this article; nothing herein shall be
construed to prohibit the delivery to the Pennsylvania Higher
Education Assistance Agency of a certified copy or extract of
any State income tax return requested by the agency for use in
determining the eligibility of applicants for State grants,
when the Executive Director of the agency certifies that the
agency has in its possession a statement signed by the applicant
and his parent, parents, guardian or guardians, as the case may
be, authorizing the agency to obtain a certified copy or extract
of any State income tax return from the Director of the
Pennsylvania State Income Tax Bureau. ((g) amended Feb. 1, 1974,
P.L.32, No.14)
(353 added Aug. 31, 1971, P.L.362, No.93)
Compiler's Note: Section 7(c) of Act 93 of 1986 repealed
subsection (f) insofar as it is inconsistent with the
provisions of Title 34 (relating to game).
Section 354. Rules and Regulations.--The department is
hereby charged with the enforcement of the provisions of this
article, and is hereby authorized and empowered to prescribe,
adopt, promulgate and enforce rules and regulations relating
to any matter or thing pertaining to the administration and
enforcement of the provisions of this article and the collection
of taxes imposed by this article.
(354 added Aug. 31, 1971, P.L.362, No.93)
Section 355. Examination.--The department, or any agent
authorized in writing by it, is hereby authorized to examine
the books, papers and records of any taxpayer or supposed
taxpayer, and to require the production of a copy of his return
as made to and filed with the Federal Government, if one was
so made and filed in order to verify the accuracy of any return
made, or if no return was made, to ascertain and assess the tax
imposed by this article. Every such taxpayer or supposed
taxpayer is hereby directed and required to give to the
department or its duly authorized agent the means, facilities
and opportunity for such examinations and investigations as are
hereby provided and authorized. The department is hereby
authorized to examine any person under oath concerning any
income which was or should have been returned for taxation, and
to this end may compel the production of books, papers and
records and the attendance of all persons, whether as parties
or witnesses, whom it believes have knowledge of such income.
The procedure for such hearing or examination shall be the same
as that provided by "The Fiscal Code" relating to inquisitorial
powers of fiscal officers.
(355 added Aug. 31, 1971, P.L.362, No.93)
Section 356. Cooperation with Other Governmental
Agencies.--(a) Notwithstanding the provisions of subsection
(f) of section 353, the department may permit the Commissioner
of Internal Revenue of the United States, or the proper officer
of any political subdivision of this Commonwealth or of any
other state imposing tax based upon the incomes of individuals,
or the authorized representative of such officer, to inspect
the tax returns of any taxpayer, or may furnish to such officer
or his authorized representative an abstract of the return of
income of any taxpayer, or supply him with information
concerning any item of income contained in any return of any
taxpayer. Such permission shall be granted or such information
furnished to such officer or his representative only if the
statutes of the United States or of such other state, as the
case may be, grant substantially similar privileges to the
proper officer of this Commonwealth charged with the
administration of the personal income tax law thereof. An
officer or authorized agent of any county imposing a personal
property tax shall be furnished the following information from
such returns upon payment to the department of the cost of
collecting and reproducing the requested information:
(1) Name, address and social security number of the
taxpayer; and
(2) If the taxpayer has reported dividends or interest.
((a) amended Dec. 9, 1982, P.L.1047, No.246)
(b) The department may enter into an agreement with the
taxing authorities of any state which imposes a tax on or
measured by income to provide that compensation paid in such
state to residents of this Commonwealth shall be exempt from
such tax; in such case any compensation paid in this State to
residents of such state shall be exempt from Pennsylvania
personal income tax. The department, in such agreements, may
provide for reciprocal withholding, employer liability, exchange
of information and all other matters relating to cooperation
between the states.
(356 amended Dec. 6, 1972, P.L.1432, No.315)
Section 357. Appropriation for Refunds.--So much of the
proceeds of the tax imposed by this article as shall be
necessary for the payment of refunds, enforcement, or
administration, under this article, is hereby appropriated for
such purposes.
(357 added Aug. 31, 1971, P.L.362, No.93)
PART XI
MISCELLANEOUS PROVISIONS
(XI added Aug. 31, 1971, P.L.362, No.93)
Section 358. Constitutional Construction.--In addition to
the provisions relating to legislative intent contained in
subsection (b) of section 303 of this article, if any word,
phrase, clause, sentence, sections or provision of this article
is for any reason held to be unconstitutional, the decision of
the court shall not affect or impair any of the remaining
provisions of this article. It is hereby declared as the
legislative intent that this article would have been adopted
had such unconstitutional word, phrase, clause, sentence,
section or provision thereof not been included herein.
(358 added Aug. 31, 1971, P.L.362, No.93)
Section 359. Saving Clause and
Limitations.--(a) Notwithstanding anything contained in any
law to the contrary, including but not limited to the provisions
of the act of August 5, 1932 (Sp.Sess., P.L.45, No.45), referred
to as the Sterling Act, the validity of any ordinance or part
of any ordinance or any resolution or part of any resolution,
and any amendments or supplements thereto now or hereafter
enacted or adopted by any political subdivision of this
Commonwealth for or relating to the imposition, levy or
collection of any tax, shall not be affected or impaired by
anything contained in this article, except as hereinafter
provided in subsection (b) of this section.
(b) (1) Notwithstanding the provisions of subsection (a)
of this section to the contrary, any rate of tax imposed by
ordinance of a city of the first class pursuant to the above
cited Sterling Act on salaries, wages, commissions, compensation
or other income received or to be received for work done or
services performed within such city by persons who are not legal
residents of such city, shall not, except as hereinafter
provided, exceed the tax imposition rate of four and
five-sixteenths per cent for the tax year 1977 or for any tax
year thereafter.
(2) In the event such city by ordinance imposes a tax rate
on residents or nonresidents in excess of the aforesaid tax
rate on the income categories enumerated herein, the provisions
of the ordinance imposing such tax rate increase on income of
persons who are legal residents of such city, shall be deemed
valid and legally effective within the meaning and application
of subsection (a) herein. But the provisions of such ordinance
imposing a tax rate in excess of four and five-sixteenths per
cent with respect to persons who are not legal residents of
such city shall be deemed suspended and without any validity
to the extent that such tax rate exceeds the tax rate of four
and five-sixteenths per cent on income of such nonresidents.
And, such excess tax rate provisions shall remain suspended and
without any validity until such date as the city of the first
class, by ordinance, imposes a rate of tax on income of both
legal residents or nonresidents of such city in excess of the
tax rate imposition of five and three-fourths per cent per year.
In such case the Legislature hereby declares such suspension
to be removed and the tax rate valid as to nonresidents,
provided, however, that such suspension is removed and the rate
deemed valid only to the extent the tax rate imposed on income
of such nonresidents does not exceed seventy-five per cent of
the tax rate imposed by ordinance per year on the income of
legal residents of such city. It is the intention of the
Legislature by this subsection to impose certain terms and
conditions with respect to the validity and legal effectiveness
of the Sterling Act or of any ordinance of the city of the first
class enacted pursuant thereto which imposes a tax on the income
of nonresidents of such city.
(3) Notwithstanding the suspension provisions set forth
heretofore, each city of the first class which imposes a tax
pursuant to the above cited Sterling Act shall, by ordinance
direct every employer maintaining an office or transacting
business within such city and making payment of compensation
(i) to a resident individual, or (ii) to a nonresident
individual taxpayer performing services on behalf of such
employer within such city, shall deduct and withhold from such
compensation for each payroll period a tax computed in such
manner as to result, so far as practicable, in withholding from
the employe's compensation during each calendar year an amount
substantially equivalent to the tax reasonably estimated to be
due for such year with respect to such compensation. The method
of determining the amount to be withheld shall be to withhold
the highest amount of tax imposed with provision in such
ordinance to provide refunds of the excess tax withheld to
qualified nonresident taxpayers within four months of the end
of each calendar year.
(4) In the event that all or any part of the provisions of
subsection (b) of this section are declared by a court to be
unconstitutional, it shall be the duty of the court to construe
the remaining amendatory provisions to Article III in accordance
with section 358.
(c) (1) Every employer having a place of business within
this Commonwealth who employs one or more persons who are
residents of a city of the first class shall, within thirty
days after becoming such an employer, register with the revenue
commissioner of a city of the first class the employer's name
and address and such other information as the revenue
commissioner may require.
(2) Every employer having a place of business within this
Commonwealth who employs one or more persons who are residents
of a city of the first class shall deduct from the salary,
wages, commissions or compensation due that person, at the time
of payment thereof, the tax imposed by the city of the first
class on any salary, wage, commission or other compensation due
that employe.
(3) Employers required to withhold taxes under the
provisions of this subsection shall calculate the amount of
salary, wages, commissions and compensation of employes as
determined under the classes of income set forth in section 303
of this article.
(4) Every employer employing one or more persons who are
residents of a city of the first class who pay any tax imposed
under this article shall file a return and pay to the revenue
commissioner the amount of taxes deducted as provided under
clause (3) of this subsection. The return shall be on a form
or forms furnished by the revenue commissioner and shall set
forth the names and residences of each employe of that employer
during all or any part of the period covered by the return, the
amounts of salaries, wages, commissions or other compensation
earned during such period by each employe, together with such
other information as the revenue commissioner may require.
(5) The employer shall remit the return and the total tax
deducted in accordance with time frames established by section
319 of this article.
(6) Annually, on or before the twenty-eighth day of
February, every employer who has filed returns of tax withheld
and remitted the tax through the year shall be required to file
an Employer's Annual Reconciliation of Wage Tax Withheld, along
with a copy of Form W-2 of the Internal Revenue Service for
each employee, other listings or electronic data processing
tapes, setting forth the following information: (i) name and
address of employer; (ii) employer's Federal identification
number; (iii) full name and residence address of each employee;
(iv) employee's Social Security number; (v) total wages paid
during the year before any deductions; and (vi) employer's
city account number.
(7) Employers or their designated agents required to file
with the revenue commissioner under this subsection shall not
be required by the revenue commissioner to be bonded. Employer
liability for taxes withheld under this subsection shall be the
same as provided in sections 320 and 321 of this article.
(8) If an employer fails to deduct and withhold tax as
prescribed in this subsection, it shall not relieve the employee
from payment of such tax where payment cannot, for any reason,
be obtained from the employer.
(359 amended June 16, 1994, P.L.279, No.48)
Section 360. Transfer of Funds.--(360 deleted by amendment
May 12, 1999, P.L.26, No.4)
Compiler's Note: Section 32(9) of Act 4 of 1999, which
amended section 360, provided that the amendment shall
apply to prizes won after June 30, 1999.
Section 360.1. Transfer to Clean Streams Fund.--No later
than August 1, 2024, and each August 1 thereafter, the sum of
fifty million dollars ($50,000,000) shall be transferred from
the proceeds of the tax imposed under this article to the Clean
Streams Fund established under section 1712-A.2 of the act of
April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code."
(360.1 added July 11, 2024, P.L. , No.56)
Section 361. Effective Date.--Except as hereinafter provided
this article shall take effect immediately, except the tax shall
first apply and be imposed upon income received by or accrued
to a taxpayer on and after June 1, 1971: Provided, however,
That a taxpayer who filed returns on the basis of a fiscal year
or who is the beneficiary of an estate or trust or member of a
partnership which files its returns under this article on the
basis of a fiscal year, shall be subject to tax for his first
taxable period on the portion of his fiscal year or of the
fiscal year of the estate, trust or partnership which postdates
May 31, 1971, as prescribed by the department by regulations.
Section 1016 which provides for additions or penalties to the
tax shall not take effect until thirty days after the date on
which the department has promulgated and issued regulations
relating to the duties and liabilities imposed on taxpayers
under this article.
(361 added Aug. 31, 1971, P.L.362, No.93)
ARTICLE IV
CORPORATE NET INCOME TAX
PART I
PRELIMINARY PROVISIONS
(Pt. hdg. amended July 11, 2024, P.L. , No.56)
Section 401. Definitions.--The following words, terms, and
phrases, when used in this article, shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
(1) "Corporation." Any of the following:
(i) A corporation.
(ii) A joint-stock association.
(iii) A business trust, limited liability company or other
entity which for Federal income tax purposes is classified as
a corporation.
The term does not include:
1. A business trust which qualifies as a real estate
investment trust under section 856 of the Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 856) or which is a
qualified real estate investment trust subsidiary under section
856(i) of the Internal Revenue Code of 1986 (26 U.S.C. §
856(i)).
2. A business trust which qualifies as a regulated
investment company under section 851 of the Internal Revenue
Code of 1986 (26 U.S.C. § 856(i)) and which is registered with
the United States Securities and Exchange Commission under the
Investment Company Act of 1940 or a related business trust which
confines its activities in this Commonwealth to the maintenance,
administration and management of intangible investments and
activities of regulated investment companies.
3. A corporation, trust or other entity which is an exempt
organization as defined by section 501 of the Internal Revenue
Code of 1986 (26 U.S.C. § 501).
4. A corporation, trust or other entity organized as a
not-for-profit under the laws of this Commonwealth or the laws
of any other state which:
(i) would qualify as an exempt organization as defined by
section 501 of the Internal Revenue Code of 1986 (26 U.S.C. §
501);
(ii) would qualify as a homeowners association as defined
by section 528(c) of the Internal Revenue Code of 1986 (26
U.S.C. § 528(c));
(iii) is a membership organization subject to the Federal
limitations on deductions from taxable income under section 277
of the Internal Revenue Code of 1986 (26 U.S.C. § 277) but only
if no pecuniary gain or profit inures to any member or related
entity from the membership organization; or
(iv) is a nonstock commodity or nonstock stock exchange.
((1) amended July 7, 2005, P.L.149, No.40)
(2) "Department." The Department of Revenue of this
Commonwealth.
(3) "Taxable income." 1. (a) In case the entire business
of the corporation is transacted within this Commonwealth, for
any taxable year which begins on or after January 1, 1971,
taxable income for the calendar year or fiscal year as returned
to and ascertained by the Federal Government, or in the case
of a corporation participating in the filing of consolidated
returns to the Federal Government, the taxable income which
would have been returned to and ascertained by the Federal
Government if separate returns had been made to the Federal
Government for the current and prior taxable years, subject,
however, to any correction thereof, for fraud, evasion, or error
as finally ascertained by the Federal Government.
(b) Additional deductions shall be allowed from taxable
income on account of any dividends received from any other
corporation but only to the extent that such dividends are
included in taxable income as returned to and ascertained by
the Federal Government. For tax years beginning on or after
January 1, 1991, additional deductions shall only be allowed
for amounts included, under section 78 of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 78), in taxable
income returned to and ascertained by the Federal Government
and for the amount of any dividends received from a foreign
corporation included in taxable income to the extent such
dividends would be deductible in arriving at Federal taxable
income if received from a domestic corporation.
(b.1) An additional deduction shall be allowed from taxable
income in the amount of any interest income from securities
issued by the United States or agencies or instrumentalities
thereof, to the extent included in Federal taxable income but
exempt from the tax imposed by this article under the laws of
the United States, but reduced by any interest on indebtedness
incurred to carry the securities, any expenses incurred in the
production of such interest income and any other expenses
deducted on the Federal income tax return that would not have
been allowed under section 265 of the Internal Revenue Code of
1986 (26 U.S.C. § 265) if the interest were exempt from Federal
income tax. As used in the preceding sentence, "interest income"
includes any amount received as a distribution or dividend from
a regulated investment company, as defined in section 851 of
the Internal Revenue Code, to the extent such distribution or
dividend is derived from obligations free from State taxation
under Article XXIX of this act or securities issued by the
United States or agencies or instrumentalities thereof.
(b.2) An additional deduction shall be allowed from the
taxable income of a medical cannabis business in the amount of
the ordinary and necessary expenses that were paid or incurred
by the medical cannabis business during the taxable year that
are ordinarily deductible for Federal income tax purposes under
section 162 of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 162) if no deduction for ordinary and
necessary expenses paid or incurred by the medical cannabis
business was taken for Federal income tax purposes for the
taxable year. As used in this phrase, the term "medical cannabis
business" shall mean a medical marijuana organization as defined
in section 103 of the act of April 17, 2016 (P.L.84, No.16),
known as the "Medical Marijuana Act," that has an active
grower/processor permit during the taxable year for which the
deduction is sought. ((b.2) added July 11, 2024, P.L. , No.56)
(c) Further additional deductions shall be allowed from
taxable income in an amount equal to the amount of any reduction
in an employer's deduction for wages and salaries as a result
of the employer taking a credit for its FICA tax obligation on
its employes' tips or "targeted jobs" pursuant to section 45B
or section 51 of the Internal Revenue Code.
(d) Taxable income will include the sum of the following
tax preference items as defined in section 57 of the Internal
Revenue Code, as amended, (i) excess investment interest; (ii)
accelerated depreciation on real property; (iii) accelerated
depreciation on personal property subject to a net lease; (iv)
amortization of certified pollution control facilities; (v)
amortization of railroad rolling stock; (vi) stock options;
(vii) reserves for losses on bad debts of financial
institutions; (viii) capital gains; and (ix) accelerated cost
recovery deduction under section 57(a)(12)(B) of the Internal
Revenue Code, but only to the extent that such preference items
are not included in "taxable income" as returned to and
ascertained by the Federal Government.
(e) ((e) deleted by amendment).
(f) ((f) deleted by amendment).
(g) ((g) deleted by amendment).
(h) ((h) deleted by amendment).
(i) ((i) deleted by amendment).
(j) ((j) deleted by amendment).
(k) A taxpayer reporting on a 52-53 week basis which closes
its fiscal year on any of the last seven days in December or
the first seven days of January is deemed a calendar year
taxpayer with a year ending date of December 31.
(l) ((l) deleted by amendment June 29, 2002, P.L.559, No.89)
(m) No deduction shall be allowed for the amount of the net
operating loss deduction taken under section 172 of the Internal
Revenue Code.
(n) In the case of regulated investment companies as defined
by the Internal Revenue Code of 1954, as amended, "taxable
income" shall be investment company taxable income as defined
in the aforesaid Internal Revenue Code of 1954, as amended.
(o) In arriving at "taxable income" for Federal tax purposes
for any taxable year beginning on or after January 1, 1981, no
deduction shall be allowed for taxes imposed on or measured by
net income.
(p) For taxable years beginning on or after January 1, 1998,
in the case of a corporation that is a Pennsylvania S
corporation, as defined in section 301(n.1), the term "taxable
income" shall mean such corporation's net recognized built-in
gain to the extent of and as determined for Federal income tax
purposes under section 1374(d)(2) of the Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1374). For purposes of
this article, a Pennsylvania S corporation and each qualified
Subchapter S subsidiary, as defined in section 301(o.3), shall
be treated as separate corporations.
(q) Notwithstanding paragraph (a), taxable income shall
include the amount of the deduction for depreciation of
qualified property claimed and allowable under section 168(k)
of the Internal Revenue Code of 1986 (26 U.S.C. § 168(k)). ((q)
added June 29, 2002, P.L.559, No.89)
(r) The following apply:
(1) For property placed in service before September 28,
2017, notwithstanding paragraph (a), if a deduction for
depreciation of qualified property was included in taxable
income in accordance with paragraph (q), an additional deduction
for depreciation of the qualified property shall be allowed
from taxable income until the total amount included as taxable
income under paragraph (q) has been claimed. The additional
deduction shall be equal to the product of taking three sevenths
of the amount of the deduction for depreciation of the qualified
property allowable under section 167 of the Internal Revenue
Code of 1986 (26 U.S.C. § 167), not including the amount of the
deduction for depreciation of the qualified property claimed
and allowable under section 168(k) of the Internal Revenue Code
of 1986 (26 U.S.C. § 168(k)), for the tax year.
(2) For property placed in service after September 27, 2017,
notwithstanding paragraph (a), if a deduction for depreciation
of qualified property was included in taxable income in
accordance with paragraph (q), an additional deduction for
depreciation of the qualified property shall be allowed from
taxable income until the total amount included as taxable income
under paragraph (q) has been claimed. The additional deduction
shall be equal to the depreciation on the qualified property
for the taxable year as determined in accordance with sections
167 and 168 of the Internal Revenue Code of 1986 (26 U.S.C. §§
167 and 168), except that section 168(k) of the Internal Revenue
Code of 1986 (26 U.S.C. § 168(k)) shall not apply.
((r) amended June 28, 2018, P.L.494, No.72)
(s) The following apply:
(1) For property placed in service before September 28,
2017, an additional deduction shall be allowed from taxable
income in the earlier of the taxable year in which qualified
property is fully depreciated for Federal income tax purposes,
or is sold or otherwise disposed of by a taxpayer to the extent
the amount of depreciation claimed under section 168(k) of the
Internal Revenue Code of 1986 (26 U.S.C. § 168(k)), on the
qualified property and included in taxable income under
paragraph (q) has not been recovered through the additional
deductions provided under paragraph (r)(1).
(2) For property placed in service after September 27, 2017,
with respect to qualified property which is sold or otherwise
disposed of during a taxable year by a taxpayer and for which
depreciation was included as taxable income under paragraph
(q), an additional deduction shall be allowed from taxable
income to the extent the amount of depreciation claimed under
section 168(k) of the Internal Revenue Code of 1986 (26 U.S.C.
§ 168(k)) on the qualified property has not been recovered
through the additional deductions provided by paragraph (r)(2).
((s) amended June 28, 2018, P.L.494, No.72)
(t) (1) Except as provided in paragraph (2), (3) or (4)
for taxable years beginning after December 31, 2014, and in
addition to any authority the department has on the effective
date of this paragraph to deny a deduction related to a
fraudulent or sham transaction, no deduction shall be allowed
for an intangible expense or cost, or an interest expense or
cost, paid, accrued or incurred directly or indirectly in
connection with one or more transactions with an affiliated
entity. In calculating taxable income under this paragraph,
when the taxpayer is engaged in one or more transactions with
an affiliated entity that was subject to tax in this
Commonwealth or another state or possession of the United States
on a tax base that included the intangible expense or cost, or
the interest expense or cost, paid, accrued or incurred by the
taxpayer, the taxpayer shall receive a credit against tax due
in this Commonwealth in an amount equal to the apportionment
factor of the taxpayer in this Commonwealth multiplied by the
greater of the following:
(A) the tax liability of the affiliated entity with respect
to the portion of its income representing the intangible expense
or cost, or the interest expense or cost, paid, accrued or
incurred by the taxpayer; or
(B) the tax liability that would have been paid by the
affiliated entity under subparagraph (A) if that tax liability
had not been offset by a credit.
The credit issued under this paragraph shall not exceed the
taxpayer's liability in this Commonwealth attributable to the
net income taxed as a result of the adjustment required by this
paragraph.
(2) The adjustment required by paragraph (1) shall not apply
to a transaction that did not have as the principal purpose the
avoidance of tax due under this article and was done at arm's
length rates and terms.
(3) The adjustment required by paragraph (1) shall not apply
to a transaction between a taxpayer and an affiliated entity
domiciled in a foreign nation which has in force a comprehensive
income tax treaty with the United States providing for the
allocation of all categories of income subject to taxation, or
the withholding of tax, on royalties, licenses, fees and
interest for the prevention of double taxation of the respective
nations' residents and the sharing of information.
(4) The adjustment required by paragraph (1) shall not apply
to a transaction where an affiliated entity directly or
indirectly paid, accrued or incurred a payment to a person who
is not an affiliated entity, if the payment is paid, accrued
or incurred on the intangible expense or cost, or interest
expense or cost, and is equal to or less than the taxpayer's
proportional share of the transaction. The taxpayer's
proportional share shall be based on relative sales, assets,
liabilities or another reasonable method.
((t) added July 9, 2013, P.L.270, No.52)
(u) (1) To the extent a taxpayer makes the adjustment
required by phrase (t)(1), an affiliated entity which is subject
to tax under this article on a tax base that includes the
intangible expense or cost, or the interest expense or cost,
paid, accrued or incurred by the taxpayer may annually elect
to exclude the intangible expense or cost, or the interest
expense or cost, when determining the affiliated entity's
taxable income under this subclause or, if applicable, subclause
2. If such an election is made, the taxpayer that made the
adjustment required by phrase (t)(1) shall not be entitled to
receive any credit against tax due in this Commonwealth as
calculated under phrase (t)(1)(A) or (B).
(2) The election under paragraph (1) shall be made by the
affiliated entity with the filing of its original return. The
affiliated entity shall identify the name and Federal EIN of
the taxpayer to which the election applies. Nothing in this
paragraph shall otherwise impact nexus or apportionment of the
taxpayer or the affiliated entity.
(3) In no case shall the exclusion under paragraph (1)
exceed the intangible expense or cost, or the interest expense
or cost, paid, accrued or incurred by the taxpayer.
((u) added July 11, 2024, P.L. , No.56)
(1 amended May 12, 1999, P.L.26, No.4)
2. In case the entire business of any corporation, other
than a corporation engaged in doing business as a regulated
investment company as defined by the Internal Revenue Code of
1986, is not transacted within this Commonwealth, the tax
imposed by this article shall be based upon such portion of the
taxable income of such corporation for the fiscal or calendar
year, as defined in subclause 1 hereof, and may be determined
as follows: (Intro. par. amended June 29, 2002, P.L.559, No.89)
(a) Division of Income.
(1) As used in this definition, unless the context otherwise
requires:
(A) "Business income" means income arising from transactions
and activity in the regular course of the taxpayer's trade or
business and includes income from tangible and intangible
property if either the acquisition, the management or the
disposition of the property constitutes an integral part of the
taxpayer's regular trade or business operations. The term
includes all income which is apportionable under the
Constitution of the United States. ((A) amended June 22, 2001,
P.L.353, No.23)
(B) "Commercial domicile" means the principal place from
which the trade or business of the taxpayer is directed or
managed.
(C) "Compensation" means wages, salaries, commissions and
any other form of remuneration paid to employes for personal
services.
(D) "Nonbusiness income" means all income other than
business income. The term does not include income which is
apportionable under the Constitution of the United States. ((D)
amended June 22, 2001, P.L.353, No.23)
(E) "Sales" means all gross receipts of the taxpayer not
allocated under this definition other than dividends received,
interest on United States, state or political subdivision
obligations and gross receipts heretofore or hereafter received
from the sale, redemption, maturity or exchange of securities,
except those held by the taxpayer primarily for sale to
customers in the ordinary course of its trade or business. ((E)
amended Dec. 23, 1983, P.L.370, No.90)
(F) "State" means any state of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, any
territory or possession of the United States, and any foreign
country or political subdivision thereof.
(G) "This state" means the Commonwealth of Pennsylvania or,
in the case of application of this definition to the
apportionment and allocation of income for local tax purposes,
the subdivision or local taxing district in which the relevant
tax return is filed.
(2) Any taxpayer having income from business activity which
is taxable both within and without this State other than
activity as a corporation whose allocation and apportionment
of income is specifically provided for in section 401(3)2(b)(c)
and (d) shall allocate and apportion taxable income as provided
in this definition.
(3) For purposes of allocation and apportionment of income
under this definition, a taxpayer is taxable in another state
if in that state the taxpayer is subject to a net income tax,
a franchise tax measured by net income, a franchise tax for the
privilege of doing business, or a corporate stock tax or if
that state has jurisdiction to subject the taxpayer to a net
income tax regardless of whether, in fact, the state does or
does not. ((3) amended June 29, 2002, P.L.559, No.89)
(4) Rents and royalties from real or tangible personal
property, gains, interest, patent or copyright royalties, to
the extent that they constitute nonbusiness income, shall be
allocated as provided in paragraphs (5) through (8).
(5) (A) Net rents and royalties from real property located
in this State are allocable to this State.
(B) Net rents and royalties from tangible personal property
are allocable to this State if and to the extent that the
property is utilized in this State, or in their entirety if the
taxpayer's commercial domicile is in this State and the taxpayer
is not organized under the laws of or taxable in the state in
which the property is utilized.
(C) The extent of utilization of tangible personal property
in a state is determined by multiplying the rents and royalties
by a fraction, the numerator of which is the number of days of
physical location of the property in the state during the rental
or royalty period in the taxable year and the denominator of
which is the number of days of physical location of the property
everywhere during all rental or royalty periods in the taxable
year. If the physical location of the property during the rental
or royalty period is unknown or unascertainable by the taxpayer,
tangible personal property is utilized in the state in which
the property was located at the time the rental or royalty payer
obtained possession.
(6) (A) Gains and losses from sales or other disposition
of real property located in this State are allocable to this
State.
(B) Gains and losses from sales or other disposition of
tangible personal property are allocable to this State if the
property had a situs in this State at the time of the sale, or
the taxpayer's commercial domicile is in this State and the
taxpayer is not taxable in the state in which the property had
a situs.
(C) Gains and losses from sales or other disposition of
intangible personal property are allocable to this State if the
taxpayer's commercial domicile is in this State.
(7) Interest is allocable to this State if the taxpayer's
commercial domicile is in this State.
(8) (A) Patent and copyright royalties are allocable to
this State if and to the extent that the patent or copyright
is utilized by the payer in this State, or if and to the extent
that the patent copyright is utilized by the payer in a state
in which the taxpayer is not taxable and the taxpayer's
commercial domicile is in this State.
(B) A patent is utilized in a state to the extent that it
is employed in production, fabrication, manufacturing, or other
processing in the state or to the extent that a patented product
is produced in the state. If the basis of receipts from patent
royalties does not permit allocation to states or if the
accounting procedures do not reflect states of utilization, the
patent is utilized in the state in which the taxpayer's
commercial domicile is located.
(C) A copyright is utilized in a state to the extent that
printing or other publication originates in the state. If the
basis of receipts from copyright royalties does not permit
allocation to states or if the accounting procedures do not
reflect states of utilization, the copyright is utilized in the
state in which the taxpayer's commercial domicile is located.
(9) (A) Except as provided in subparagraph (B):
(i) For taxable years beginning before January 1, 2007, all
business income shall be apportioned to this State by
multiplying the income by a fraction, the numerator of which
is the property factor plus the payroll factor plus three times
the sales factor and the denominator of which is five.
(ii) For taxable years beginning after December 31, 2006,
all business income shall be apportioned to this State by
multiplying the income by a fraction, the numerator of which
is the sum of fifteen times the property factor, fifteen times
the payroll factor and seventy times the sales factor and the
denominator of which is one hundred.
(iii) For taxable years beginning after December 31, 2008,
all business income shall be apportioned to this State by
multiplying the income by a fraction, the numerator of which
is the sum of eight and a half times the property factor, eight
and a half times the payroll factor and eighty-three times the
sales factor and the denominator of which is one hundred.
(iv) For taxable years beginning after December 31, 2009,
all business income shall be apportioned to this State by
multiplying the income by a fraction, the numerator of which
is the sum of five times the property factor, five times the
payroll factor and ninety times the sales factor and the
denominator of which is one hundred.
(v) For taxable years beginning after December 31, 2012,
all business income shall be apportioned to this State by
multiplying the income by the sales factor.
((A) amended July 2, 2012, P.L.751, No.85)
(B) For purposes of apportionment of the capital stock -
franchise tax as provided in section 602 of Article VI of this
act, the apportionment fraction shall be the property factor
plus the payroll factor plus the sales factor as the numerator,
and the denominator shall be three.
((9) amended Oct. 9, 2009, P.L.451, No.48)
(10) The property factor is a fraction, the numerator of
which is the average value of the taxpayer's real and tangible
personal property owned or rented and used in this State during
the tax period and the denominator of which is the average value
of all the taxpayer's real and tangible personal property owned
or rented and used during the tax period but shall not include
the security interest of any corporation as seller or lessor
in personal property sold or leased under a conditional sale,
bailment lease, chattel mortgage or other contract providing
for the retention of a lien or title as security for the sales
price of the property.
(11) Property owned by the taxpayer is valued at its
original cost. Property rented by the taxpayer is valued at
eight times the net annual rental rate. Net annual rental rate
is the annual rental rate paid by the taxpayer less any annual
rental rate received by the taxpayer from subrentals.
(12) The average value of property shall be determined by
averaging the values at the beginning and ending of the tax
period but the tax administrator may require the averaging of
monthly values during the tax period if reasonably required to
reflect properly the average value of the taxpayer's property.
(13) The payroll factor is a fraction, the numerator of
which is the total amount paid in this State during the tax
period by the taxpayer for compensation and the denominator of
which is the total compensation paid everywhere during the tax
period.
(14) Compensation is paid in this State if:
(A) The individual's service is performed entirely within
the State;
(B) The individual's service is performed both within and
without this State, but the service performed without the State
is incidental to the individual's service within this State;
or
(C) Some of the service is performed in this State and the
base of operations or if there is no base of operations, the
place from which the service is directed or controlled is in
this State, or the base of operations or the place from which
the service is directed or controlled is not in any state in
which some part of the service is performed, but the
individual's residence is in this State.
(15) The sales factor is a fraction, the numerator of which
is the total sales of the taxpayer in this State during the tax
period, and the denominator of which is the total sales of the
taxpayer everywhere during the tax period.
(16) Sales of tangible personal property are in this State
if the property is delivered or shipped to a purchaser, within
this State regardless of the f.o.b. point or other conditions
of the sale.
(16.1) (A) Sales from the sale, lease, rental or other use
of real property, if the real property is located in this State.
If a single parcel of real property is located both in and
outside this State, the sale is in this State based upon the
percentage of original cost of the real property located in
this State.
(B) (I) Sales from the rental, lease or licensing of
tangible personal property, if the customer first obtained
possession of the tangible personal property in this State.
(II) If the tangible personal property is subsequently taken
out of this State, the taxpayer may use a reasonably determined
estimate of usage in this State to determine the extent of sale
in this State.
(C) (I) Sales from the sale of service, if the service is
delivered to a location in this State. If the service is
delivered both to a location in and outside this State, the
sale is in this State based upon the percentage of total value
of the service delivered to a location in this State.
(II) If the state or states of assignment under unit (I)
cannot be determined for a customer who is an individual that
is not a sole proprietor, a service is deemed to be delivered
at the customer's billing address.
(III) If the state or states of assignment under unit (I)
cannot be determined for a customer, except for a customer under
unit (II), a service is deemed to be delivered at the location
from which the services were ordered in the customer's regular
course of operations. If the location from which the services
were ordered in the customer's regular course of operations
cannot be determined, a service is deemed to be delivered at
the customer's billing address.
((16.1) added July 9, 2013, P.L.270, No.52)
(17) Sales, other than sales under paragraphs (16) and
(16.1), are in this State as follows:
(A) ((A) deleted by amendment).
(B) ((B) deleted by amendment).
(C) Gross receipts from the lease or license of intangible
property, including a sale or exchange of property where the
receipts from the sale or exchange derive from payments that
are contingent on the productivity, use or disposition of the
property, if and to the extent the property is used in this
State.
(D) Gross receipts from the sale of intangible property
where the property sold is a contract right, government license
or similar property that authorizes the holder to conduct a
business activity in a specific geographic area, if and to the
extent the property is used in or otherwise associated with
this State.
(E) Gross receipts from the sale, redemption, maturity or
exchange of securities, held by the taxpayer primarily for sale
to customers in the ordinary course of its trade or business,
if the customers are in this State.
(F) Gross receipts received by a corporation that regularly
lends funds to unaffiliated entities or to individuals from
interest, fees and penalties imposed in connection with loans
secured by real property as follows:
(i) The following shall apply to a calculation under this
subparagraph:
(I) The numerator of the sales factor shall include
interest, fees and penalties imposed in connection with loans
secured by real property if the property is located within this
State.
(II) If the real property under this subparagraph is located
both within this State and one or more other states, the gross
receipts under this subparagraph shall be included in the
numerator of the sales factor if more than fifty per cent of
the fair market value of the real property is located within
this State.
(III) If more than fifty per cent of the fair market value
of real property under this subparagraph is not located within
any single state, the gross receipts under this subparagraph
shall be included in the numerator of the sales factor if the
borrower is located in this State.
(ii) The determination of whether real property securing a
loan is located within this State shall be made as of the time
the original agreement was made, and all subsequent
substitutions of collateral shall be disregarded.
(G) Gross receipts received by a corporation that regularly
lends funds to unaffiliated entities or to individuals from
interest, fees and penalties imposed in connection with loans
related to the sale of tangible personal property. The following
shall apply to a calculation under this subparagraph:
(i) Except as provided under unit (ii), the numerator of
the sales factor shall include gross receipts received from
interest, fees and penalties imposed in connection with loans
related to the sale of tangible personal property if the
property is delivered or shipped to a purchaser in this State.
(ii) The following shall apply:
(I) Gross receipts received by a corporation that regularly
lends funds to unaffiliated entities or to individuals from
interest, fees and penalties imposed in connection with loans
related to the sale of transportation property shall be included
in the numerator of the sales factor to the extent that the
property is used in this State.
(II) The extent an aircraft shall be deemed to be used in
this State and the amount of gross receipts that shall be
included in the numerator of the sales factor shall be
determined by multiplying all the gross receipts from the
interest, fees and penalties imposed in connection with loans
related to the sale of the aircraft by a fraction, the numerator
of which is the number of landings of the aircraft in this State
and the denominator of which is the total number of landings
of the aircraft.
(III) A motor vehicle shall be deemed to be used wholly in
the state in which it is registered.
(IV) If the extent of the use of transportation property
within this State cannot be determined, the property shall be
deemed to be used wholly in the state in which the property was
delivered or shipped to the purchaser.
(H) Gross receipts received by a corporation that regularly
lends funds to unaffiliated entities or to individuals from
interest, fees and penalties imposed in connection with loans
not described in subparagraph (F) or (G), if the borrower is
located in this State.
(I) Gross receipts received from interest, fees and
penalties in the nature of interest from credit card receivables
and gross receipts from fees charged to cardholders, such as
annual fees, if the billing address of the cardholder is in
this State.
(J) Gross receipts received from interest, not otherwise
described in this paragraph, shall be included in the numerator
of the sales factor if the lender's commercial domicile is in
this State.
(K) Gross receipts received from intangible property, not
otherwise described in this paragraph, shall be excluded from
the numerator and the denominator of the sales factor.
(L) The department shall promulgate the rules and
regulations necessary to implement this paragraph.
((17) amended July 8, 2022, P.L.513, No.53)
(18) If the allocation and apportionment provisions of this
definition do not fairly represent the extent of the taxpayer's
business activity in this State, the taxpayer may petition the
Secretary of Revenue or the Secretary of Revenue may require,
in respect to all or any part of the taxpayer's business
activity:
(A) Separate accounting;
(B) The exclusion of any one or more of the factors;
(C) The inclusion of one or more additional factors which
will fairly represent the taxpayer's business activity in this
State; or
(D) The employment of any other method to effectuate an
equitable allocation and apportionment of the taxpayer's income.
In determining the fairness of any allocation or apportionment,
the Secretary of Revenue may give consideration to the
taxpayer's previous reporting and its consistency with the
requested relief.
((18) amended Aug. 4, 1991, P.L.97, No.22)
(b) Railroad, Truck, Bus, Airline or Qualified Air Freight
Forwarding Companies.
(1) All business income of railroad, truck, bus, airline
and qualified air freight forwarding companies shall be
apportioned to this Commonwealth by multiplying the income by
a fraction, the numerator of which is the taxpayer's total
revenue miles within this Commonwealth during the tax period
and the denominator of which is the total revenue miles of the
taxpayer everywhere during the tax period. For purposes of this
paragraph revenue mile shall mean the average receipts derived
from the transportation by the taxpayer of persons or property
one mile. Where revenue miles are derived from the
transportation of both persons and property, the revenue mile
fractions attributable to each such class of transportation
shall be computed separately, and the average of the two
fractions, weighted in accordance with the ratio of total
receipts from each such class of transportation everywhere to
total receipts from both such classes of transportation
everywhere, shall be used in apportioning income to this
Commonwealth.
(2) Nonbusiness income of railroad, truck, bus, airline and
qualified air freight forwarding companies shall be allocated
as provided in paragraphs (5) through (8) of phrase (a) of
subclause 2 of the definition of taxable income.
(3) As used in this phrase, "qualified air freight
forwarding company" shall mean a company that:
(A) is engaged in the air freight forwarding business;
(B) primarily uses an airline with which it has common
ownership and control; and
(C) will use the revenue miles of the airline under
subparagraph (B).
((b) amended Oct. 24, 2018, P.L.802, No.131)
(c) Pipeline or Natural Gas Companies.
(1) All business income of pipeline companies shall be
apportioned to this Commonwealth by multiplying the income by
a fraction, the numerator of which is the revenue ton miles,
revenue barrel miles or revenue cubic feet miles within this
Commonwealth during the tax period and the denominator of which
is the total revenue ton miles, revenue barrel miles or the
revenue cubic feet miles of the taxpayer everywhere during the
tax period. For purposes of this paragraph a revenue ton mile,
revenue barrel mile or a revenue cubic foot mile shall mean
respectively the receipts derived from the transportation by
the taxpayer of one ton of solid property, one barrel of liquid
property or one cubic foot of gaseous property transported one
mile.
(2) All business income of natural gas companies subject
to regulation by the Federal Power Commission or by the
Pennsylvania Public Utility Commission shall be apportioned to
this Commonwealth by multiplying the income by a fraction, the
numerator of which shall be the cubic foot capacity of the
taxpayer's pipelines in this Commonwealth, and the denominator
of which shall be the cubic foot capacity of the taxpayer's
pipelines everywhere, at the end of the tax period. For the
purpose of this paragraph, the cubic foot capacity of a pipeline
shall be determined by multiplying the square of its radius (in
feet) by its length (in feet).
(3) Nonbusiness income of pipeline companies or natural gas
companies subject to regulation by the Federal Power Commission
or by the Pennsylvania Public Utility Commission shall be
allocated as provided in paragraphs (5) through (8) of phrase
(a) of subclause 2 of the definition of taxable income.
(d) Water Transportation Companies.
(1) Water Transportation Companies Operating on High Seas.
All business income of water transportation companies operating
on high seas shall be apportioned to this Commonwealth by
multiplying the business income by a fraction, the numerator
of which is the number of port days spent inside the
Commonwealth and the denominator of which is the total number
of port days spent inside and outside of the Commonwealth. The
term "port days" does not include periods when the ships are
not in use because of strikes or withheld from service for
repair or because of seasonal reduction of services. Days in
port are computed by dividing the aggregate number of hours in
all ports by twenty-four.
(2) Water Transportation Companies Operating in Inland
Waters. All business income of water transportation companies
operating on inland waters shall be apportioned to this
Commonwealth by multiplying the business income by a fraction,
the numerator of which is the taxpayer's total revenue miles
within this Commonwealth during the tax period and the
denominator of which is the total revenue miles of the taxpayer
everywhere during the tax period. In the determination of
revenue miles, one-half of the mileage of all navigable
waterways bordering between the Commonwealth and another state
shall be considered Commonwealth miles. For purposes of this
paragraph, revenue miles shall mean the revenue receipts derived
from the transportation by the taxpayer of persons or property
one mile.
(3) Nonbusiness income of water transportation companies
shall be allocated as provided in paragraphs (5) through (8)
of phrase (a) of subclause 2 of the definition of taxable
income.
(e) Satellite Television Services Providers.
(1) All business income of providers of satellite television
services shall be apportioned to this Commonwealth by
multiplying the income by a fraction, the numerator of which
is the value of equipment located in this Commonwealth that is
owned or rented by the taxpayer or owned by an entity that is
included with the taxpayer in a controlled group, as defined
in section 267(f) of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 166), and used by the taxpayer in
generating, processing or transmitting satellite television
services, whether or not such equipment is affixed to real
estate, and the denominator of which is the value of all such
equipment located everywhere. The value of property owned by
the taxpayer or owned by an entity included with the taxpayer
in a controlled group and used by the taxpayer shall be its
cost less depreciation per the books and records of the owner.
The value of rented equipment shall be determined in accordance
with paragraph (11) of phrase (a) of subclause 2 of this
definition.
(2) Nonbusiness income of providers of satellite television
services shall be allocated as provided in paragraphs (5), (6),
(7) and (8) of subclause 2 of this definition.
((e) added July 9, 2013, P.L.270, No.52)
(2 amended Sept. 9, 1971, P.L.437, No.105)
3. In case the entire business of a corporation which has
filed a timely election and has qualified to be taxed as a
regulated investment company under the provisions of the
Internal Revenue Code of 1954, as amended, is not transacted
within this Commonwealth, the tax imposed by this article shall
be based upon such portion of the taxable income of such
corporation for the fiscal or calendar year as defined in
subclause 1 hereof, as shall be attributable to business
transacted within this Commonwealth by multiplying such taxable
income by a fraction, the numerator of which is the sum of the
corporation's gross receipts from (i) sales of its own shares
to Pennsylvania investors and (ii) sales of its portfolio
securities, where the orders for such sales are placed with or
credited to Pennsylvania offices of registered securities
dealers and the denominator of which fraction is the
corporation's total gross receipts from (i) sales of its own
shares and (ii) sales of its portfolio securities. Pennsylvania
investors shall mean individuals residing in Pennsylvania at
the time of the sale or corporations or other entities having
their principal place of business located in Pennsylvania at
such time. (3 amended Sept. 9, 1971, P.L.437, No.105)
4. (a) For taxable years beginning in 1982 through taxable
years beginning in 1990 and for the taxable year beginning in
1995 and each taxable year thereafter, a net loss deduction
shall be allowed from taxable income as arrived at under
subclause 1 or, if applicable, subclause 2. For taxable years
beginning in 1991, 1992, 1993 and 1994, the net loss deduction
allowed for years prior to 1991 shall be suspended, and no
carryover of net losses from taxable years 1988, 1989, 1990,
1991, 1992 and 1993 shall be utilized in calculating net income
for the 1991, 1992, 1993 and 1994 taxable years, but such net
losses may be used as provided in paragraph (c) in calculating
net income for the 1995 taxable year and for two taxable years
thereafter.
(b) A net loss for a taxable year is the negative amount
for said taxable year determined under subclause 1 or, if
applicable, subclause 2. Negative amounts under subclause 1
shall be allocated and apportioned in the same manner as
positive amounts.
(c) (1) The net loss deduction shall be the lesser of:
(A) (I) For taxable years beginning before January 1, 2007,
two million dollars ($2,000,000);
(II) For taxable years beginning after December 31, 2006,
the greater of twelve and one-half per cent of taxable income
as determined under subclause 1 or, if applicable, subclause 2
or three million dollars ($3,000,000);
(III) For taxable years beginning after December 31, 2008,
the greater of fifteen per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or three
million dollars ($3,000,000);
(IV) For taxable years beginning after December 31, 2009,
the greater of twenty per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or three
million dollars ($3,000,000);
(V) For taxable years beginning after December 31, 2013,
the greater of twenty-five per cent of taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
four million dollars ($4,000,000);
(VI) For taxable years beginning after December 31, 2014,
the greater of thirty per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 or five million
dollars ($5,000,000);
(VII) For taxable years beginning after December 31, 2017,
thirty-five per cent of taxable income as determined under
subclause 1 or, if applicable, subclause 2;
(VIII) For taxable years beginning after December 31, 2018,
forty per cent of taxable income as determined under subclause
1 or, if applicable, subclause 2;
(IX) For taxable years beginning after December 31, 2024,
the percentage of taxable income as determined under section
401.1; or
((A) amended July 11, 2024, P.L. , No.56)
(B) The amount of the net loss or losses which may be
carried over to the taxable year or taxable income as determined
under subclause 1 or, if applicable, subclause 2.
(1.1) In no event shall the net loss deduction include more
than five hundred thousand dollars ($500,000), in the aggregate,
of net losses from taxable years 1988 through 1994.
(2) (A) A net loss for a taxable year may only be carried
over pursuant to the following schedule:
CarryoverTaxable Year
1 taxable year1981
2 taxable years1982
3 taxable years1983-1987
2 taxable years plus1988
1 taxable year
starting with the
1995 taxable year
1 taxable year plus1989
2 taxable years
starting with the
1995 taxable year
3 taxable years1990-1993
starting with the
1995 taxable year
1 taxable year1994
10 taxable years1995-1997
20 taxable years1998 and thereafter
(B) The earliest net loss shall be carried over to the
earliest taxable year to which it may be carried under this
schedule. The total net loss deduction allowed in any taxable
year shall not exceed:
(I) Two million dollars ($2,000,000) for taxable years
beginning before January 1, 2007.
(II) The greater of twelve and one-half per cent of the
taxable income as determined under subclause 1 or, if
applicable, subclause 2 or three million dollars ($3,000,000)
for taxable years beginning after December 31, 2006.
(III) The greater of fifteen per cent of the taxable income
as determined under subclause 1 or, if applicable, subclause 2
or three million dollars ($3,000,000) for taxable years
beginning after December 31, 2008.
(IV) The greater of twenty per cent of the taxable income
as determined under subclause 1 or, if applicable, subclause 2
or three million dollars ($3,000,000) for taxable years
beginning after December 31, 2009.
(V) The greater of twenty-five per cent of taxable income
as determined under subclause 1 or, if applicable, subclause 2
or four million dollars ($4,000,000) for taxable years beginning
after December 31, 2013.
(VI) The greater of thirty per cent of taxable income as
determined under subclause 1 or, if applicable, subclause 2 or
five million dollars ($5,000,000) for taxable years beginning
after December 31, 2014.
(VII) Thirty-five per cent of taxable income as determined
under subclause 1 or, if applicable, subclause 2 for taxable
years beginning after December 31, 2017.
(VIII) Forty per cent of taxable income as determined under
subclause 1 or, if applicable, subclause 2 for taxable years
beginning after December 31, 2018.
(IX) The percentage of taxable income as determined under
section 401.1 for taxable years beginning after December 31,
2024.
((B) amended July 11, 2024, P.L. , No.56)
((c) amended Oct. 30, 2017, P.L.672, No.43)
(c.1) A deduction under Part IV-A shall be allowed from
taxable income as prescribed in a satisfaction commitment letter
executed between the Department of Community and Economic
Development and a taxpayer under section 407.7(c). ((c.1) added
Oct. 30, 2017, P.L.672, No.43)
(d) No loss shall be a carryover from a taxable year when
the corporation elects to be treated as a Pennsylvania S
corporation pursuant to section 307 of Article III of this act
to a taxable year when the corporation is subject to the tax
imposed under this article.
(e) Paragraph (d) shall not prevent a taxable year when a
corporation is a Pennsylvania S corporation from being
considered a taxable year for determining the number of taxable
years to which a net loss may be a carryover.
(f) For purposes of the net loss deduction, the short
taxable year of a corporation, after the revocation or
termination of an election to be treated as a Pennsylvania S
corporation pursuant to sections 307.3 and 307.4 of Article III
of this act, shall be treated as a taxable year.
(g) In the case of a change in ownership by purchase,
liquidation, acquisition of stock or reorganization of a
corporation in the manner described in section 381 or 382 of
the Internal Revenue Code of 1954, as amended, the limitations
provided in the Internal Revenue Code with respect to net
operating losses shall apply for the purpose of computing the
portion of a net loss carryover recognized under paragraph
(3)4(c) of this section. When any acquiring corporation or a
transferor corporation participated in the filing of
consolidated returns to the Federal Government, the entitlement
of the acquiring corporation to the Pennsylvania net loss
carryover of the acquiring corporation or the transferor
corporation will be determined as if separate returns to the
Federal Government had been filed prior to the change in
ownership by purchase, liquidation, acquisition of stock or
reorganization.
(4 amended Apr. 23, 1998, P.L.239, No.45)
(4) "Person." Every natural person, association or
corporation. Whenever used in any clause prescribing and
imposing a fine or imprisonment, or both, the term "person,"
as applied to associations, shall mean the partners or members
thereof, and as applied to corporations the officers thereof.
(5) "Taxable year." The taxable year which the corporation,
or any consolidated group with which the corporation
participates in the filing of consolidated returns, actually
uses in reporting taxable income to the Federal Government.
With regard to the tax imposed by Article IV of this act
(relating to the Corporate Net Income Tax), the terms "annual
year," "fiscal year," "annual or fiscal year," "tax year" and
"tax period" shall be the same as the corporation's taxable
year, as defined in this paragraph. ((5) added July 1, 1985,
P.L.78, No.29)
(6) "Regulated financial institution." An entity subject
to tax under articles VII or XV and regulated by the
Pennsylvania Department of Banking, the Federal Reserve Board,
the Office of the Comptroller of the Currency, the Office of
Thrift Supervision, the National Credit Union Administration
or the Federal Deposit Insurance Corporation. ((6) added Dec.
23, 2003, P.L.250, No.46)
(7) "Determination." The ascertainment of tax liability.
The term includes a redetermination. ((7) added Oct. 18, 2006,
P.L.1149, No.119)
(8) "Intangible expense or cost." Royalties, licenses or
fees paid for the acquisition, use, maintenance, management,
ownership, sale, exchange or other disposition of patents,
patent applications, trade names, trademarks, service marks,
copyrights, mask works or other similar expenses or costs. ((8)
added July 9, 2013, P.L.270, No.52)
(9) "Interest expense or cost." A deduction allowed under
section 163 of the Internal Revenue Code of 1986 (26 U.S.C. §
163) to the extent that such deduction is directly related to
an intangible expense or cost. ((9) added July 9, 2013, P.L.270,
No.52)
(10) "Affiliated entity." A person with a relationship to
the taxpayer during all or any portion of the taxable year that
is any of the following:
(i) a stockholder who is an individual, or a member of the
stockholder's family as set forth in section 318 of the Internal
Revenue Code of 1986 (26 U.S.C. § 318), if the stockholder and
the members of the stockholder's family own, directly,
indirectly, beneficially or constructively, in the aggregate,
more than fifty per cent of the value of the taxpayer's
outstanding stock;
(ii) a stockholder, or a stockholder's partnership, limited
liability company, estate, trust or corporation, if the
stockholder and the stockholder's partnerships, limited
liability companies, estates, trusts and corporations own
directly, indirectly, beneficially or constructively, in the
aggregate, more than fifty per cent of the value of the
taxpayer's outstanding stock;
(iii) a corporation, or a party related to the corporation
in a manner that would require an attribution of stock from the
corporation to the party or from the party to the corporation
under the attribution rules of the Internal Revenue Code of
1986, if the taxpayer owns, directly, indirectly, beneficially
or constructively, more than fifty per cent of the value of the
corporation's outstanding stock. The attribution rules of
section 318 of the Internal Revenue Code of 1986 shall apply
for purposes of determining whether the ownership requirements
of this definition have been met;
(iv) a component member as defined in section 1563(b) of
the Internal Revenue Code of 1986 (26 U.S.C. § 1563(b)); or
(v) a person to or from whom there is attribution of stock
ownership in accordance with section 1563(e) of the Internal
Revenue Code of 1986.
((10) added July 9, 2013, P.L.270, No.52)
(11) "Unaffiliated entity." Any entity that is not an
affiliated entity as defined under section 401(10). ((11) added
July 8, 2022, P.L.513, No.53)
Compiler's Note: Section 30(6) and (7) of Act 56 of 2024
provided that the addition of phrase (3)1(b.2) shall
apply to taxable years commencing after December 31,
2023, and the addition of phrase (3)1(u) shall apply to
taxable years commencing after December 31, 2022.
Compiler's Note: Section 24(3)(i) of Act 53 of 2022
provided that the amendment of section 401(3)2(a)(17)
shall apply to taxable years beginning after December
31, 2022.
Compiler's Note: Section 2 of Act 131 of 2018, which
amended clause (3)2(b), provided that the amendment shall
apply to taxable years beginning after December 31, 2016.
Compiler's Note: Section 2 of Act 72 of 2018, which amended
clause (3)1(r) and (s), provided that the amendment shall
apply to tax years beginning on or after January 1, 2017.
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended clause (3)2(a)(17) and 4(c)(1)(A)(IV) and added
clause (3)1(t)(1), 2(a)(16.1) and (e) and 4(c)(1)(A)(V)
and (VI) and (2)(V) and (VI) and (8), (9) and (10),
provided that the amendment or addition shall apply to
tax years beginning after December 31, 2013.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Compiler's Note: Section 24(1)(i) of Act 40 of 2005, which
amended clause (1)4, provided that the amendment shall
apply to taxable years beginning after December 31, 1997.
Compiler's Note: Section 33(8) of Act 46 of 2003, which
amended clause (1)1, provided that the deletion of the
phrase "or a related business trust which confines its
activities in this Commonwealth to the maintenance,
administration, and management of intangible investments
and activities of real estate investment trusts or
qualified real estate investment trust subsidiaries"
from clause(1)1 of the act shall apply to tax years
beginning after December 31, 2003, and the deletion of
the sentence "A business trust which is a qualified real
estate investment trust subsidiary under section 856(i)
of the Internal Revenue Code of 1986 (26 U.S.C. § 856(i))
shall be treated as part of the real estate investment
trust which owns all of the stock of the qualified real
estate investment trust subsidiary." in clause (1)1 of
the act shall apply retroactively to June 29, 2002, and
shall be considered as a codification of the law then
in effect.
Compiler's Note: Section 25 of Act 23 of 2001, which amended
clauses (1) and (3)2(a)(1)(A) and (D), provided that the
General Assembly finds and declares that the intent of
the amendment of clause (3)2(a)(1)(A) and (D) is to
clarify existing law. Section 26(2) of Act 23 provided
that clause (3)2(a)(1)(A) and (D) shall apply to taxable
years beginning after December 31, 1998. Section
26(4)(vii) of Act 23 provided that clause (1) shall apply
to taxable years beginning after December 31, 2000.
Compiler's Note: Section 32(4)(i) of Act 4 of 1999, which
amended clause (1), provided that the amendment shall
apply to the taxable years beginning after December 31,
1997. Section 32(5) of Act 4 of 1999, which amended
clause (3)2(a)(9) and 4(c), provided that the amendment
shall apply to the taxable years beginning after December
31, 1998.
Compiler's Note: Section 46 of Act 43 of 2017, which amended
clause (3)4(c) and added (c.1), provided that if all or
a part of the net loss deduction under section 401(3)4(c)
of the act has been deemed unconstitutional as a result
of a decision by the Pennsylvania Supreme Court, the
Secretary of Revenue shall submit a notice of the
decision for publication in the Pennsylvania Bulletin.
Section 49(3) of Act 43 of 2017 provided that the
amendment or addition of section 401(3)4(c)(1)(A)(VI),
(VII) and (VIII) and (2)(B)(VII) and (VIII) of the act
shall take effect on the date of the publication of the
notice under section 46 of Act 43.
Compiler's Note: The Pennsylvania Department of Banking,
referred to in clause (6), is now known as the Department
of Banking and Securities.
2017 Unconstitutionality. Section 401(3)4(c)(1)(A)(II) was
declared unconstitutional on October 18, 2017, by the
Supreme Court of Pennsylvania in Nextel Communications
of Mid-Atlantic, Inc. v. Commonwealth, Department of
Revenue, 72 P.S. 7401(3)4(c)(1)(A)(II), 171 A.3d 682
(2017).
2020 Unconstitutionality. Section 401(3)4(c)(1)(A)(I) was
declared unconstitutional on November 21, 2019, by the
Commonwealth Court in General Motors Corp. v.
Commonwealth, 72 P.S. 7401(3)4(c)(1)(A)(I), 222 A.3d 454
(2019).
Section 401.1. Determination of Net Loss Deduction.--(a)
For taxable years beginning after December 31, 2024, and prior
to January 1, 2026, the net loss deduction shall be determined
as follows:
(1) Deduct forty per cent of taxable income as determined
under subclause 1 of section 401(3) or, if applicable, subclause
2 of section 401(3), for a net loss incurred in a taxable year
beginning prior to January 1, 2025.
(2) (Reserved).
(b) For taxable years beginning after December 31, 2025,
and prior to January 1, 2027, the net loss deduction shall be
determined as follows:
(1) Deduct forty per cent of taxable income as determined
under subclause 1 of section 401(3) or, if applicable, subclause
2 of section 401(3), for a net loss incurred in a taxable year
beginning prior to January 1, 2025.
(2) For a net loss incurred in a taxable year beginning
after December 31, 2024, deduct an amount equal to:
(i) fifty per cent minus the actual percentage of taxable
income deducted under paragraph (1); multiplied by
(ii) the taxable income as determined under subclause 1 of
section 401(3) or, if applicable, subclause 2 of section 401(3).
(c) For taxable years beginning after December 31, 2026,
and prior to January 1, 2028, the net loss deduction shall be
determined as follows:
(1) Deduct forty per cent of taxable income as determined
under subclause 1 of section 401(3) or, if applicable, subclause
2 of section 401(3), for a net loss incurred in a taxable year
beginning prior to January 1, 2025.
(2) For a net loss incurred in a taxable year beginning
after December 31, 2024, deduct an amount equal to:
(i) sixty per cent minus the actual percentage of taxable
income deducted under paragraph (1); multiplied by
(ii) the taxable income as determined under subclause 1 of
section 401(3) or, if applicable, subclause 2 of section 401(3).
(d) For taxable years beginning after December 31, 2027,
and prior to January 1, 2029, the net loss deduction shall be
determined as follows:
(1) Deduct forty per cent of taxable income as determined
under subclause 1 of section 401(3) or, if applicable, subclause
2 of section 401(3), for a net loss incurred in a taxable year
beginning prior to January 1, 2025.
(2) For a net loss incurred in a taxable year beginning
after December 31, 2024, deduct an amount equal to:
(i) seventy per cent minus the actual percentage of taxable
income deducted under paragraph (1); multiplied by
(ii) the taxable income as determined under subclause 1 of
section 401(3) or, if applicable, subclause 2 of section 401(3).
(e) For taxable years beginning after December 31, 2028,
the net loss deduction shall be determined as follows:
(1) Deduct forty per cent of taxable income as determined
under subclause 1 of section 401(3) or, if applicable, subclause
2 of section 401(3), for a net loss incurred in a taxable year
beginning prior to January 1, 2025.
(2) For a net loss incurred in a taxable year beginning
after December 31, 2024, deduct an amount equal to:
(i) eighty per cent minus the actual percentage of taxable
income deducted under paragraph (1); multiplied by
(ii) the taxable income as determined under subclause 1 of
section 401(3) or, if applicable, subclause 2 of section 401(3).
(401.1 added July 11, 2024, P.L. , No.56)
PART II
IMPOSITION OF TAX
Section 402. Imposition of Tax.--(a) A corporation shall
be subject to and shall pay an excise tax for exercising,
whether in its own name or through any person, association,
business trust, corporation, joint venture, limited liability
company, limited partnership, partnership or other entity, any
of the following privileges:
(1) Doing business in this Commonwealth.
(2) Carrying on activities in this Commonwealth, including
solicitation which is not protected activity under the act of
September 14, 1959 (Public Law 86-272, 15 U.S.C. § 381 et seq.).
(3) Having capital or property employed or used in this
Commonwealth.
(4) Owning property in this Commonwealth.
(5) (i) Having substantial nexus in this Commonwealth.
Substantial nexus in this Commonwealth means a direct or
indirect business activity that is sufficient to grant the
Commonwealth authority under the Constitution of the United
States to impose tax under this article and for which a basis
exists under section 401 to apportion or allocate the
corporation's income to this Commonwealth.
(ii) For purposes of this section, business activity
includes, but is not limited to:
(A) the leasing or licensing of intangible property that
is utilized in this Commonwealth;
(B) regularly engaging in transactions with customers in
this Commonwealth involving intangible property, including loans
made by a corporation that regularly lends funds to unaffiliated
entities or to individuals; or
(C) sales of intangible property that was utilized by the
corporation within this Commonwealth.
(iii) There shall be a rebuttable presumption that a
corporation with $500,000 or more of sales sourced in the
current tax year to this Commonwealth under section 401 has
substantial nexus in this Commonwealth without regard to
physical presence in this Commonwealth.
(6) Paragraph (5) shall not apply to an affiliated entity
domiciled in a foreign nation which has in force a comprehensive
income tax treaty with the United States providing for the
allocation of all categories of income subject to taxation, or
the withholding of tax, on royalties, licenses, fees and
interest for the prevention of double taxation of the respective
nations' residents and the sharing of information.
(b) The annual rate of tax on corporate net income imposed
by subsection (a) for taxable years beginning for the calendar
year or fiscal year on or after the dates set forth shall be
as follows:
Tax RateTaxable Year
January 1, 1995,
through December
31, 2022 9.99%
January 1, 2023,
through December
31, 2023 8.99%
January 1, 2024,
through December
31, 2024 8.49%
January 1, 2025,
through December
31, 2025 7.99%
January 1, 2026,
through December
31, 2026 7.49%
January 1, 2027,
through December
31, 2027 6.99%
January 1, 2028,
through December
31, 2028 6.49%
January 1, 2029,
through December
31, 2029 5.99%
January 1, 2030,
through December
31, 2030 5.49%
January 1, 2031, and
each taxable year
thereafter 4.99%
(c) An entity subject to taxation under Article VII, VIII,
IX or XV shall not be subject to the tax imposed by this
article.
(402 amended July 8, 2022, P.L.513, No.53)
Compiler's Note: Section 24(3)(ii) of Act 53 of 2022
provided that the amendment of section 401(a)(5) and (6)
shall apply to taxable years beginning after December
31, 2022.
Section 402.1. Allocation of Tax.--(402.1 repealed June 16,
1994, (P.L.279, No.48)
Section 402.2. Interests in Unincorporated
Entities.--(a) Except as set forth in subsection (b), for
purposes of this article, a corporation's interest in an entity
which is not a corporation shall be considered a direct
ownership interest in the assets of the entity rather than an
intangible interest.
(b) Subsection (a) does not apply to a corporation's
interest in an entity described in section 401(1)1 or section
401(1)2 other than:
(1) A business trust which is a real estate investment trust
as defined in section 856 of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 856) more than fifty per cent
of the voting power or value of the beneficial interests or
shares of which are owned or controlled, directly or indirectly,
by a single corporation that is not:
(i) a real estate investment trust as defined in section
856 of the Internal Revenue Code of 1986;
(ii) a qualified real estate investment trust subsidiary
under section 856(i) of the Internal Revenue Code of 1986;
(iii) a regulated financial institution; or
(iv) formed as a holding company, subsidiary or affiliate
of a regulated financial institution prior to December 1, 2003.
(2) A business trust which is a qualified real estate trust
subsidiary under section 856(i) of the Internal Revenue Code
of 1986 owned, directly or indirectly, by a real estate
investment trust as defined in section 856 of the Internal
Revenue Code of 1986 more than fifty per cent of the voting
power or value of the beneficial interests or shares of which
are owned or controlled, directly or indirectly, by a single
corporation that is not:
(i) a real estate investment trust as defined in section
856 of the Internal Revenue Code of 1986;
(ii) a qualified real estate investment trust subsidiary
under section 856(i) of the Internal Revenue Code of 1986;
(iii) a regulated financial institution; or
(iv) formed as a holding company, subsidiary or affiliate
of a regulated financial institution prior to December 1, 2003.
((b) amended Dec. 23, 2003, P.L.250, No.46)
(402.2 added June 29, 2002, P.L.559, No.89 and amended Dec.
30, 2002, P.L.2080, No.232)
Compiler's Note: Section 33(9) of Act 46 of 2003, which
added subsection (b), provided that the amendment shall
apply to tax years beginning after December 31, 2003.
Compiler's Note: Section 2 of Act 232 of 2002, which amended
section 402.2, provided that the General Assembly finds
and declares that the amendment of section 402.2 is
intended to clarify existing law and shall not be
construed to change that law.
PART III
REPORTS AND PAYMENT OF TAX
Section 403. Reports and Payment of Tax.--(a) (1) It shall
be the duty of every corporation, liable to pay tax under this
article, to transmit to the department, upon a form prescribed
by the department, an annual report under oath or affirmation
of its president, vice-president, treasurer, assistant treasurer
or other authorized officers of net income taxable under the
provisions of this article:
(i) on or before April 15, 1972, and every April 15 of each
year thereafter through April 15, 2016;
(ii) for taxable years beginning after December 31, 2015,
on or before thirty days after the return to the Federal
Government is due, or would be due were it to be required of
such corporation, subject in all other respects to the
provisions of this article; and
(iii) for taxable years beginning after December 31, 2020,
on or before the fifteenth day of the month following the due
date of the return to the Federal Government, or would be due
were it to be required of such corporation, subject in all other
respects to the provisions of this article.
((1) amended Apr. 22, 2021, P.L.36, No.10)
(2) The report under paragraph (1) shall set forth:
(i) A true copy of its return to the Federal Government of
the annual taxable income arising or accruing in the calendar
or fiscal year next preceding, or such part or portions of said
return, as the department may designate;
(ii) If no return was filed with the Federal Government the
report made to the department shall show such information as
would have been contained in a return to the Federal Government
had one been made; and
(iii) Such other information as the department may require.
Upon receipt of the report, the department shall promptly
forward to the Department of State, the names of the president,
vice-president, secretary and treasurer of the corporation and
the complete street address of the principal office of the
corporation for inclusion in the records of the Department of
State relating to corporation.
((a) amended July 13, 2016, P.L.526, No.84)
(b) It shall be the duty of each corporation liable to pay
tax under this article to pay estimated tax under section 3003.2
and to make final payment of tax due for the taxable year with
the annual report required by this section.
(c) The amount of all taxes, imposed under the provisions
of this article, not paid on or before the times as above
provided, shall bear interest as provided in section 806 of the
act of April 9, 1929 (P.L.343, No.176), known as "The Fiscal
Code," from the date they are due and payable until paid, except
that if the taxable income has been, or is increased by the
Commissioner of Internal Revenue, or by any other agency or
court of the United States, interest shall be computed on the
additional tax due from thirty days after the corporation
receives notice of the change of income until paid: Provided,
however, That any corporation may pay the full amount of such
tax, or any part thereof, together with interest due to the
date of payment, without prejudice to its right to present and
prosecute, an administrative petition or an appeal to court.
If it be thereafter determined that such taxes were overpaid,
the department shall enter a credit to the account of such
corporation, which may be used by it in the manner prescribed
by law.
(d) If the officers of any corporation shall neglect, or
refuse to make any report as herein required, or shall knowingly
make any false report, a penalty of five hundred dollars ($500)
plus an additional one per cent for every dollar of tax
determined to be due in excess of twenty-five thousand dollars
($25,000) shall be added to the tax determined to be due. No
amounts added to the tax shall bear any interest whatsoever.
((d) amended July 9, 2013, P.L.270, No.52)
(e) If any corporation closes its fiscal year not upon
December 31, but upon some other date, and reports to the
Federal Government as of such other date, or would so report
were it to make a return to the Federal Government, such
corporation shall certify such fact to the department, and shall
make the annual report, herein required, on or before the
fifteenth day of the month following the due date of the return
to the Federal Government, or would be due were it to be
required of such corporation, subject in all other respects to
the provisions of this article. ((e) amended Apr. 22, 2021,
P.L.36, No.10)
(f) If the corporation shall claim in its report that the
return made to the Federal Government was inaccurate, the amount
claimed by it to be the taxable income, taxable under this
article, and the basis of such claim of inaccuracy, shall be
fully specified.
(403 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: Section 3(1) of Act 10 of 2021, which
amended subsecs. (a)(1) and (e), provided that the
amendment of subsec. (a)(1) and (e) shall apply to taxable
years beginning after December 31, 2020.
Compiler's Note: Section 51(3.1) of Act 84 of 2016, which
amended subsection (a), provided that the amendment shall
apply to taxable years beginning after December 31, 2015.
Compiler's Note: Section 42(2) of Act 52 of 2013, which
amended subsection (d), provided that the amendment shall
apply to tax years beginning after December 31, 2013.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 403.1. Timely Mailing Treated as Timely Filing and
Payment.--Notwithstanding the provisions of any State tax law
to the contrary, whenever a report or payment of all or any
portion of a State tax is required by law to be received by the
Pennsylvania Department of Revenue or other agency of the
Commonwealth on or before a day certain, the corporation shall
be deemed to have complied with such law if the letter
transmitting the report or payment of such tax which has been
received by the department is postmarked by the United States
Postal Service on or prior to the final day on which the payment
is to be received.
For the purposes of this article, presentation of a receipt
indicating that the report or payment was mailed by registered
or certified mail on or before the due date shall be evidence
of timely filing and payment.
(403.1 amended June 27, 1974, P.L.376, No.126)
Section 403.2. Additional Withholding Requirements.--(a)
Every partnership exercising, whether in its own name or
through any person, association, business trust, corporation,
joint venture, limited liability company, limited partnership,
partnership or other entity, any of the privileges specified
in section 402(a)(1) through (4) shall make a return for the
taxable year of its net nonfiling corporate partners' shares
of income and deductions.
(b) A partnership required to file a report under subsection
(a) shall withhold and pay to the department a tax on behalf
of its nonfiling corporate partners in an amount equal to its
net nonfiling corporate partners' shares of income and
deductions as reported to the Federal Government multiplied by
the tax rate applicable to the taxable year being reported. Any
amount withheld and paid to the department on behalf of a
nonfiling corporate partner shall be considered a tax payment
by that partner and credited to its account as if it was
directly paid by the partner.
(c) If an amount of tax required to be withheld and paid
under this section is not paid on or before the date prescribed,
a penalty of five per cent of the underpayment for each month
or fraction of a month from the due date to the date paid shall
be added to the tax and paid to the department. The underpayment
shall, for purposes of computing the addition for any month,
be reduced by the amount of the part of the tax which is paid
by the beginning of that month. The total of the additions shall
not exceed fifty per cent of the amount of the tax.
(d) The report required by subsection (a) shall be filed
with the department in a form prescribed by the department, and
the payment required by subsection (b) shall be paid to the
department on or before the fifteenth day of the fourth month
following the end of the taxable year.
(e) The following words, terms and phrases when used in
this section shall have the meaning ascribed to them in this
section, except where the context clearly indicates a different
meaning:
"Net nonfiling corporate partners' shares of income and
deductions as reported to the Federal Government." That portion
of the income, less the deductions:
(1) reported on Schedule K of the Federal Form 1065, Return
of Partnership Income, filed with the Federal Government for
the taxable year; and
(2) allocated on Federal Schedule K-1 to nonfiling corporate
partners.
If the entire business of the partnership is not transacted in
this Commonwealth, the amount computed under this definition
shall be apportioned to this Commonwealth as provided in section
401(3)2 as if the partnership were a corporation subject to tax
under this article.
"Nonfiling corporate partner." A partner which:
(1) is a corporation as defined in section 401; and
(2) has not filed a tax report and paid the tax required
by sections 402 and 403 for the previous taxable year.
"Partner." An owner of an interest in the partnership, in
whatever manner that owner and ownership interest are
designated.
"Partnership." An entity classified as a partnership for
Federal income tax purposes.
(1) The term includes:
(i) a partnership, limited partnership, limited liability
partnership or limited liability company; and
(ii) any syndicate, group, pool, joint venture, business
trust, association or other unincorporated organization through
or by which a business, financial operation or venture is
carried on.
(2) The term does not include an entity that is:
(i) listed on a United States national stock exchange; or
(ii) described in section 401(1)1 or 2.
(403.2 added Dec. 23, 2003, P.L.250, No.46)
Compiler's Note: Section 33(10) of Act 46 of 2003, which
added section 403.2, provided that section 403.2 shall
apply to taxable years beginning after December 31, 2003.
Section 404. Consolidated Reports.--The department shall
not permit any corporation owning or controlling, directly or
indirectly, any of the voting capital stock of another
corporation or of other corporations, subject to the provisions
of this article, to make a consolidated report, showing the
combined net income.
Section 405. Extension of Time to File Reports.--The
department may, upon application made to it, in such form as
it shall prescribe, on or prior to the last day for filing any
annual report, and upon proper cause shown, grant to the
corporation, required to file such report, an extension of not
more than sixty days within which such report may be filed. If
the Federal income tax authorities grant an extension of time
for filing the reports with the Federal Government, the
department shall automatically grant an extension of time for
filing the annual report under this article until the fifteenth
day of the month following the termination of the Federal
extension, but the amount of tax due shall, in such cases,
nevertheless, be subject to interest from the due dates and at
the rates fixed by this article.
(405 amended Apr. 22, 2021, P.L.36, No.10)
Compiler's Note: Section 3(1) of Act 10 of 2021, which
amended section 405, provided that the amendment shall
apply to taxable years beginning after December 31, 2020.
Compiler's Note: Section 30(2) of Act 85 of 2012, which
amended section 405, provided that the amendment shall
apply to tax years beginning on or after January 1, 2013.
Section 406. Changes Made by Federal Government.--(a) If
the amount of the taxable income, as returned by any corporation
to the Federal Government, is finally changed or corrected by
the Commission of Internal Revenue or by any other agency or
court of the United States, such corporation, within six months
after the receipt of such final change or correction, shall
make a report of change, under oath or affirmation, to the
department showing such finally changed or corrected taxable
income, upon which the tax is required to be paid to the United
States. In case a corporation fails to file a report of change,
which results in an increase in taxable income within the time
prescribed, there shall be added to the tax, a penalty of five
dollars ($5) for every day during which such corporation is in
default, but the department may abate any such penalty in whole
or in part.
(b) If, as a result of such final change or correction, a
corporation should report any change in the amount of the
taxable income of any corporation upon which tax is imposed by
this article, the department shall adjust the corporation's tax
on the department's records to conform to the revised tax as
reported and shall credit the taxpayer's account to the extent
of any overpayment resulting from the adjustment. The department
shall then have the power, and its duty shall be, to determine
and assess the taxpayer's unpaid and unreported liability for
tax, interest or penalty due the Commonwealth, or to credit the
taxpayer's account.
(c) Where a report of change, of Federal income, or Federal
tax, has been filed after an administrative or judicial appeal
has been taken, the report shall be deemed a part of the
original annual report upon petition of the taxpayer at any
subsequent proceeding as though it had been filed with the
original report, and no separate appeal from an assessment
resulting from the report of change, correction, or
redetermination shall be necessary to the extent the identical
issues for the taxable year have been raised in the appeal.
(d) The provisions of this section shall not be construed
so as to permit an assessment based upon the allowance of any
deduction on account of net operating losses, sustained in other
fiscal or calendar years, that are not allowed as deductions
under the definition of "taxable income" as contained in this
article.
(e) The provisions of this section shall apply to every
corporation which was doing business in Pennsylvania in the
year for which the Federal income has been changed, irrespective
of whether or not such corporation has thereafter merged,
consolidated, withdrawn or dissolved. Any clearance certificate
issued by the department shall be conditioned upon the
requirement that in the event of a change in Federal income for
any year for which taxes have been paid to the Commonwealth,
the corporation or its successor or its officers or its
directors shall file with the department a report of change and
pay any additional State tax resulting therefrom.
(406 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 30(2) of Act 85 of 2012, which
amended section 406, provided that the amendment shall
apply to tax years beginning on or after January 1, 2013.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 406.1. Amended Reports.--(a) (1) Except as
provided under subsection (b) or section 406, a taxpayer may,
within three years after the due date of the original report,
including extensions, file an amended report on a form
prescribed by the department, under oath or affirmation, to
bring to the attention of the department a correction to the
original report and provide additional information that the
taxpayer requests the department to consider. An amended report
shall satisfy all the requirements of an original report.
(2) A taxpayer may file an amended report if a petition
raising other issues is pending at the administrative or
judicial appeal level.
(b) A taxpayer may not file an amended report:
(1) instead of a timely appeal of an assessment, except if
a taxpayer would be entitled to an adjustment of the taxpayer's
tax liability as defined by regulations of the department;
(2) if an administrative appeal board or court has
previously addressed an issue raised in an amended report on
its merits for that particular tax year; or
(3) that takes a position that is contrary to law or
published department policy.
(c) (1) Notwithstanding section 407.3, the filing of an
amended report shall extend the department's authority to adjust
a taxpayer's tax liability, including the assessment of
additional tax for the tax year to one year from the date of
the filing of the amended report or three years from the filing
of the original report, whichever period expires later.
(2) At any time before the expiration of the applicable
statute of limitations, a taxpayer may consent to extend the
period for the department to consider an amended report.
(3) A taxpayer shall maintain records until the end of the
extended assessment period.
(d) An amended report filed with the department must contain
the following:
(1) The calculation of the amended tax liability.
(2) Revised Pennsylvania supporting schedules, if
applicable.
(3) An explanation of the changes being made and the reason
for the changes.
(4) Other information that the department may request to
support the calculation of the amended tax liability.
(e) Where an amended report involving a tax year under
appeal has been filed after an administrative or judicial appeal
has been taken, the report shall be deemed a part of the
original annual report upon petition of the taxpayer at any
subsequent proceeding as though it had been filed with the
original report, and no separate appeal from an assessment
resulting from the report of change, correction or
redetermination shall be necessary to the extent the identical
issues for the taxable year have been raised in the appeal.
(f) (1) Unless the taxpayer has requested or consented to
an extension, the department shall review an amended report and
advise the taxpayer in writing within one year of the filing
date of the amended report whether the department accepts the
amended report. The notice shall provide an explanation of the
department's action.
(2) If the department fails to provide timely notice, the
amended report shall be deemed accepted as filed and the
department shall adjust its records accordingly.
(3) The acceptance of an amended report under this
subsection shall not limit the department's authority to issue
an assessment of additional tax as reported on the amended
report within the time period provided under subsection (c)(1).
(g) (1) A taxpayer who disagrees with the action of the
department may file a petition for review under section
2703(a)(2.1) within ninety days of the mailing date of the
written notice required under subsection (f) except if:
(i) an amended report has been incorporated into an
administrative or judicial proceeding;
(ii) an amended report is filed instead of a petition for
reassessment; or
(iii) a timely filed amended report requesting a refund or
credit was filed more than three years from the date the tax
was paid.
(2) A taxpayer that is not permitted to file a petition for
review under paragraph (1)(ii) and that disagrees with the
action of the department may pay the tax, interest and penalty
due and file a petition for refund in accordance with section
3003.1.
(406.1 added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 51(8) of Act 84 of 2016, which
added section 406.1, provided that the addition of
section 406.1 shall apply to amended reports filed after
December 31, 2016.
PART IV
ASSESSMENT AND COLLECTION OF TAX
(Hdg. amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 407. Settlement and Resettlement.--(a) All taxes
due under this article shall be settled by the department, and
such settlement shall be subject to audit and approval by the
Department of the Auditor General, and shall, so far as
possible, be made so that notice thereof may reach the taxpayer
within eighteen months after the tax report was required to be
made. The Secretary of Revenue, after consultation with the
Auditor General, may develop and implement procedures for the
settlement of taxes employing, among other means, automatic
data processing, statistical analysis, computer analysis,
mechanical handling and issuance of settlement documents,
including documents without original signatures, such that will
facilitate what he determines to be the most efficient and
productive use of the resources within his control required to
adequately and reasonably ensure the proper collection of taxes.
The Secretary of Revenue shall provide documentation of such
procedures to the chairmen of the Appropriations Committee and
the Finance Committee of the Senate and of the House of
Representatives.
(b) If, within a period of three years after the date of
any settlement, the department is not satisfied with such
settlement, or if at any time the net income as returned by any
corporation to the Federal Government is finally changed or
corrected by the Commissioner of Internal Revenue or by any
other agency or court of the United States with the result that
tax, in addition to the amount paid, is due under this article,
the department is hereby authorized and empowered to make a
resettlement of the tax due by such corporation, based upon the
facts contained in the report, or upon any information within
its possession or that shall come into its possession.
Whenever a resettlement shall have been made hereunder, the
department shall resettle the account according to law and shall
credit or charge, as the case may be, the amount resulting from
such resettlement upon the current accounts of the corporation
with which it is made.
The resettlement shall be subject to audit and approval by
the Department of the Auditor General as in the case of original
settlement, and in case of the failure of the two departments
to agree, the resettlement shall be submitted to the Board of
Finance and Revenue as in the case of original settlements.
(c) Promptly after the date of any such settlement, the
department shall send, by mail or otherwise, a copy thereof to
such corporation. The tax, interest, and penalty imposed by
this article shall be subject to the right of resettlement,
review, and refund within the time and in the manner now or
hereafter provided for by law for petitions for resettlement,
review and refund and to the right of appeal in the manner now
or hereafter provided for by law for appeals in the case of tax
settlements.
(d) If any corporation shall neglect or refuse to make any
report and payment of tax required by this article, the
department shall estimate the tax due by such corporation and
subject to audit and approval by the Department of the Auditor
General, settle the amount due by it for taxes, penalties, and
interest thereon as prescribed herein, from which settlement
there shall be no right of review or appeal, but the department,
with the approval of the Department of the Auditor General, may
require a report to be filed, and thereupon make a settlement
based upon such report and cancel the estimated settlement.
(e) ((e) repealed June 22, 2001, P.L.353, No.23)
(e.1) This section applies to settlements mailed by the
department prior to January 1, 2008. ((e.1) added Oct. 18, 2006,
P.L.1149, No.119)
(407 amended Aug. 4, 1991, P.L.97, No.22)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Compiler's Note: Section 26(4)(viii) of Act 23 of 2001,
which repealed subsection (e), provided that the repeal
shall apply to taxable years beginning after December
31, 2000.
Section 407.1. Assessments.--(a) If the department
determines that unpaid or unreported tax is due the
Commonwealth, the department shall issue an assessment under
this section and sections 407.2, 407.3, 407.4 and 407.5. Such
an assessment is not subject to the settlement procedure in the
act of April 9, 1929 (P.L.343, No.176), known as The Fiscal
Code.
(b) A notice of assessment and demand for payment shall be
mailed to the taxpayer. The notice shall set forth the basis
of the assessment. The assessment shall be paid to the
department upon receipt of the notice of assessment. Payment
of the assessment shall be without prejudice to the right of
the taxpayer to file a petition for reassessment in the manner
prescribed by Article XXVII.
(c) In the event that a taxpayer fails to file a report for
a tax governed by this article, the department may issue an
estimated assessment based upon the records and information
available or that may come into the department's possession.
If prior to the filing of a report the department estimates
that additional unpaid or unreported tax is due the
Commonwealth, the department may issue additional estimated
assessments.
(d) A notice of estimated assessment and demand for payment
shall be mailed to the taxpayer. The assessment shall be paid
to the department upon receipt of the notice of assessment.
Payment of the estimated assessment does not eliminate the
taxpayer's obligation to file a report.
(e) A taxpayer shall have no right to petition for
reassessment, petition for refund or otherwise appeal a notice
of estimated assessment except as provided in subsection (f).
(f) The department shall remove an estimated assessment
within ninety days of the filing of a report and other
information required to determine the tax due the Commonwealth,
whereupon the department may issue an assessment as provided
in subsection (a). Any tax due the Commonwealth that is included
in an estimated assessment shall retain its lien priority as
of the date of the estimated assessment to the extent such
amount is included with an assessment issued upon the review
of the filed report.
(g) (Deleted by amendment).
(407.1 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 15 of Act 55 of 2007, which amended
section 407.1, provided that the amendment of section
407.1 shall apply to assessments issued after December
31, 2007.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 407.2. Jeopardy Assessments.--(a) If the department
believes that the assessment or the collection of unpaid or
unreported tax will be jeopardized in whole or in part by delay,
it shall issue a jeopardy assessment.
(b) If the department believes that a taxpayer intends to
depart from the Commonwealth, remove the taxpayer's property
from the Commonwealth, conceal himself or property of the
taxpayer from the Commonwealth, or to do any other act that may
prejudice or render wholly or partly ineffectual any action to
collect any tax for the prior or current tax periods unless the
action is brought without delay, the department shall declare
the current tax period of the taxpayer immediately terminated.
In this case, the department shall issue a jeopardy assessment
for the tax period declared terminated and for all prior tax
periods, whether or not the time otherwise allowed by law for
filing a report or paying the tax has expired.
(c) A notice of jeopardy assessment and demand for payment
shall be mailed by certified mail to the taxpayer. The notice
of jeopardy assessment shall include the amount of the bond or
other security required to stay collection of the assessment.
(d) The jeopardy assessment shall be paid to the department
upon receipt of the notice of jeopardy assessment. Payment of
the jeopardy assessment does not eliminate the taxpayer's
obligation to file a report. If prior to the filing of a report
the department estimates that additional unpaid tax is due the
Commonwealth, the department may issue additional jeopardy
assessments or estimated assessments pursuant to section 407.1.
(e) A jeopardy assessment is immediately due and payable,
and proceedings for collection may be commenced at once. The
following apply:
(1) The collection of the whole or any amount of a jeopardy
assessment may be stayed, at any time before the assessment
becomes final, by filing with the department a bond or other
security in such amounts as the department may deem necessary,
not exceeding one hundred twenty per cent of the tax for which
the stay is desired.
(2) Upon the filing of the bond or other security, the
collection of the amount assessed that is covered by the bond
or other security shall be stayed. The taxpayer shall have the
right to waive the stay at any time in respect to the whole or
any part of the amount covered by the bond or other security.
If the taxpayer waives any part of the amount covered by the
bond or other security, then the bond or other security shall
be proportionately reduced upon payment of the amount waived.
If any portion of the jeopardy assessment is abated, the bond
or other security shall be proportionately reduced at the
request of the taxpayer.
(f) (1) A taxpayer may prevent a jeopardy assessment from
becoming final by filing a petition for reassessment with the
department within thirty days after the mailing date of the
notice of jeopardy assessment. The issues to be addressed in
the review of the petition shall include:
(i) Whether the making of the jeopardy assessment is
reasonable under the circumstances.
(ii) Whether the amount assessed as a result of the jeopardy
assessment is appropriate under the circumstances.
(2) The department shall issue a decision and order
disposing of a petition filed under paragraph (1) within sixty
days after receipt of the petition. Notice of the department's
decision and order disposing of the petition shall be mailed
to the petitioner.
(3) A taxpayer may file a petition for review of the
department's decision and order under paragraph (2) in
Commonwealth Court within 30 days after the following:
(i) The mailing date of the department's notice of decision
and order on a petition for reassessment of a jeopardy
assessment.
(ii) If the petition is not disposed of by the department
within sixty days after receipt, the sixtieth day following the
date the petition was received by the department.
(4) If it is determined that the making of the jeopardy
assessment is unreasonable or that the amount assessed is
inappropriate, the assessment may be abated, the assessment may
be redetermined in whole or in part, or the department or the
taxpayer may be directed to take such other actions as may be
appropriate.
(g) Any determination made pursuant to a petition for
reassessment under this section shall be final and conclusive
upon exhaustion of the appeal rights provided in this section
and shall not be reviewed in any other proceeding.
(h) (1) In an action under this section involving the issue
of whether the making of a jeopardy assessment is reasonable
under the circumstances, the burden of proof in respect to such
issue shall be upon the department.
(2) In an action under this section involving the issue of
whether an amount assessed as a result of jeopardy assessment
is appropriate under the circumstances, the burden of proof in
respect to such issue shall be upon the taxpayer.
(407.2 added Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 407.3. Limitations on Assessments.--(a) Tax may
be assessed within three years after the date the report is
filed.
(b) Tax may be assessed at any time if a taxpayer fails to
file a report required by law.
(c) Tax may be assessed at any time if the taxpayer files
a false or fraudulent report with intent to evade tax imposed
by the tax laws of this Commonwealth.
(d) If at any time within the time limitations specified
in this section the department is not satisfied with its
determination of the taxpayer's liability, the department may
strike all, or any part of, a previously issued assessment or
may issue additional assessments of tax.
(e) The department may, within three years of the granting
of any refund or credit or within the period in which an
assessment could have been filed by the department with respect
to the taxable period for which the refund was granted,
whichever period shall last occur, file an assessment to recover
any refund or part thereof or credit or part thereof which was
erroneously made or allowed.
(f) For purposes of this section, a report filed before the
last day prescribed for filing shall be deemed to have been
filed on the last day.
(407.3 added Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 407.4. Extension of Limitation
Period.--Notwithstanding section 407.3, where, before the
expiration of the period prescribed in section 407.3, a taxpayer
has consented in writing that such period be extended, the
amount of tax due may be assessed at any time within the
extended period. The period so extended may be further extended
by subsequent consents in writing made before the expiration
of the extended period.
(407.4 added Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 407.5. Audit by Auditor General; Determination of
Tax.--(a) The Department of the Auditor General shall have the
power to do all of the following:
(1) Audit and approve all determinations by the department
of tax liability as reported by the taxpayer, including
determinations resulting from a field audit, prior to the
department's issuance of a determination of the taxpayer's
account.
(2) Review any tax report filed with the department,
determine the amount of tax liability for the tax period covered
by the report and issue to the department for concurrence a
determination of tax liability for the tax period.
(3) Audit the procedures implemented by the department under
this part for the determination of tax liability or the issuance
of an assessment, refund or credit or other action taken by the
department with regard to tax liability under this part.
(b) Upon the concurrence of the department and the Auditor
General on the determination of tax liability under subsection
(a)(1) or (2), the department shall issue an assessment under
this article, a refund or a credit, under section 1108 of the
act of April 9, 1929 (P.L.343, No.176), known as "The Fiscal
Code," or take other appropriate action.
(c) In case of the failure of the department and the
Department of the Auditor General to agree on a determination
of tax liability under subsection (a)(1) or (2) within four
months, the matter shall be submitted to the Board of Finance
and Revenue for decision. If the board fails to reach a decision
within three months, the determination of the Department of
Revenue shall automatically become valid. The decision of the
Board of Finance and Revenue shall be implemented by the
issuance of an assessment under this article, a refund or a
credit, under section 1108 of "The Fiscal Code," or other
appropriate action.
(d) The Secretary of Revenue and the Auditor General shall
agree on the development and implementation of procedures for
the automated determination of taxes that will facilitate the
most efficient and productive use of the resources of their
respective agencies required to adequately and reasonably ensure
the proper collection of taxes.
(e) Nothing in this part shall limit any powers and duties
conferred upon the Department of the Auditor General by statute,
including the Constitution of Pennsylvania and Article IV of
"The Fiscal Code."
(407.5 added Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
PART IV-A
QUALIFIED MANUFACTURING INNOVATION
AND REINVESTMENT DEDUCTION
(Pt. added Oct. 30, 2017, P.L.672, No.43)
Section 407.6. Definitions.--(a) For the purposes of this
part only, the following words, terms and phrases shall have
the meaning ascribed to them in this subsection, except where
the context clearly indicates a different meaning:
(1) "Annual taxable payroll." The total amount of wages
paid in this Commonwealth by a taxpayer for the base year or
year one, as applicable, from which personal income tax under
Article III is withheld.
(2) "Base year." The four calendar quarters preceding the
start date.
(3) "Department." The Department of Community and Economic
Development of the Commonwealth.
(4) "Manufacture." The mechanical, physical, biological
or chemical transformation of materials, substances or
components into new products that are creations of new items
of tangible personal property for sale.
(5) "Qualified manufacturing innovation and reinvestment
deduction." An allowable deduction as determined, calculated
and executed in a commitment letter between the department and
the taxpayer. The deduction shall be applied to the taxable
income of the taxpayer to reduce a qualified tax liability of
the taxpayer following the allocation and apportionment of the
income of the taxpayer. ((5) amended June 30, 2021, P.L.124,
No.25)
(6) "Qualified tax liability." A taxpayer's tax liability
under this article.
(7) "Start date." The first day of the calendar quarter
in which a taxpayer advises the department of the taxpayer's
intent to initiate an eligible project unless the applicant
requests and the department agrees to a later start date.
(8) "Taxpayer." An employer subject to the tax under this
article.
(9) "Year one." The four calendar quarters immediately
following the start date.
(b) (Reserved).
(407.6 added Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: Section 40(4) of Act 25 of 2021 provided
that the amendment of subsection (a)(5) shall apply to
taxable years beginning after December 31, 2020.
Section 407.7. Manufacturing Innovation and Reinvestment
Deduction.--(a) In order to be eligible to receive a
manufacturing innovation and reinvestment deduction, a taxpayer
must demonstrate to the department a private capital investment
in excess of fifty million dollars ($50,000,000) for the
creation of new or refurbished manufacturing capacity within
the applicable time period specified in subsection (b). The
department's calculation of eligible expenses for a qualified
manufacturing innovation and reinvestment deduction shall
include payments made in advance of the start date of a project
if the payments are made for the purchase of, or partial payment
for, new equipment for the project that exceeds one million
dollars ($1,000,000) in value.
(b) (1) A taxpayer must advise the department in advance
of the start date of any project for which the taxpayer may
seek a qualified manufacturing innovation and reinvestment
deduction. A taxpayer must attest the taxpayer's intent to meet
the eligibility criteria and provide relevant information
pertinent to the project's size and scope in a manner as
determined by the department.
(2) For a private capital investment of less than or equal
to one hundred fifty million dollars ($150,000,000), the
following shall apply:
(i) The project must be completed within three years of the
project's start date.
(ii) Within five years of the project's start date, the
taxpayer must complete to the department's satisfaction an
application on a form and in a manner as determined by the
department to attest that the project has been completed and
the eligibility criteria has been satisfied.
(3) For a private capital investment of more than one
hundred fifty million one dollars ($150,000,001) and less than
two hundred fifty million dollars ($250,000,000), the following
shall apply:
(i) The project must be completed within five years of the
project's start date.
(ii) Within seven years of the project's start date, the
taxpayer must complete to the department's satisfaction an
application on a form and in a manner as determined by the
department to attest that the project has been completed and
the eligibility criteria has been satisfied.
(4) For a private capital investment of more than two
hundred fifty million one dollars ($250,000,001) and less than
three hundred fifty million dollars ($350,000,000), the
following shall apply:
(i) The project must be completed within seven years of the
project's start date.
(ii) Within nine years of the project's start date, the
taxpayer must complete to the department's satisfaction an
application on a form and in a manner as determined by the
department to attest that the project has been completed and
the eligibility criteria has been satisfied.
(5) For a private capital investment of more than three
hundred fifty million one dollars ($350,000,001), the department
shall establish the time period from the project's start date
in which the project must be completed and the time period in
which the application as described in paragraph (4) must be
completed.
(c) Upon the receipt of the taxpayer's application, the
Department of Revenue shall make a finding whether the applicant
has filed all required State tax reports and returns for all
applicable tax years and paid any balance of State tax due as
determined at settlement, assessment or determination, and the
department, then in conjunction with the Department of Revenue,
shall make an eligibility or satisfaction determination within
ninety days of submission. If the department makes a
satisfaction determination, the department and the taxpayer
shall execute a satisfaction commitment letter containing the
following:
(1) The number of new jobs created and their corresponding
description.
(2) The number of new jobs created during construction of
the project.
(3) The amount of private capital investment in the creation
of new jobs.
(4) The increase in the annual taxable payroll attributable
to new manufacturing jobs.
(5) A determination of the maximum allowable deduction
against a taxpayer's qualified tax liability under this article.
(6) Any other information as the department deems
appropriate.
(d) (1) ((1) deleted by amendment June 28, 2019, P.L.50,
No.13).
(1.1) If the private capital investment is in excess of
sixty million dollars ($60,000,000), but not more than one
hundred million dollars ($100,000,000), the maximum allowable
deduction shall be equal to thirty-seven and one-half per cent
of the private capital investment utilized in the creation of
new or refurbished manufacturing capacity. A taxpayer may
utilize the deduction in an amount not to exceed seven and
one-half per cent of the private capital investment utilized
in the creation of new or refurbished manufacturing capacity
in any one year of the succeeding ten tax years immediately
following the department's satisfaction determination and the
execution of a satisfaction commitment letter, up to the maximum
allowable deduction. This paragraph shall only apply to
applications made prior to January 1, 2024.
(1.2) If a taxpayer's private capital investment for a
project exceeds fifty million dollars ($50,000,000), the maximum
allowable deduction shall be equal to twenty-five per cent of
the private capital investment utilized in the creation of new
or refurbished manufacturing capacity. A taxpayer may utilize
the deduction in an amount not to exceed five per cent of the
private capital investment utilized in the creation of new or
refurbished manufacturing capacity in any one year during a
time period equal to the time period specified in section
401(3)4(c)(2)(A) for the year immediately following the
department's satisfaction determination and the execution of a
satisfaction commitment letter, up to the maximum allowable
deduction.
(2) ((2) deleted by amendment June 28, 2019, P.L.50, No.13).
(3) A taxpayer cannot use the deduction to reduce the
taxpayer's tax liability by more than fifty per cent of the tax
liability under this article for the taxable year. The deduction
is nontransferable and any unused portion in a tax year shall
expire at the end of the corresponding tax year.
(407.7 amended Dec. 14, 2023, P.L. , No.64)
Compiler's Note: Section 2(2) of Act 64 of 2023, which
amended section 407.7, provided that the amendment shall
apply to tax years beginning after December 31, 2023.
Section 30 of Act 13 of 2019 provided that the
amendment or addition of section 407.7(a) and (d)(1),
(1.1) and (1.2) of this act shall apply to tax years
beginning after December 31, 2019.
PART V
ENFORCEMENT: RULES AND REGULATIONS;
INQUISITORIAL POWERS OF THE DEPARTMENT
Section 408. Enforcement; Rules and Regulations;
Inquisitorial Powers of the Department.--(a) The department
is hereby charged with the enforcement of the provisions of
this article, and is hereby authorized and empowered to
prescribe, adopt, promulgate, and enforce rules and regulations,
not inconsistent with this article, relating to any matter or
thing pertaining to the administration and enforcement of the
provisions of this article, and the collection of taxes,
penalties, and interest imposed by this article. The department
is hereby required to have such rules and regulations,
promulgated and adopted, printed and shall distribute the same
to any person upon request.
(b) The department, or any agent authorized in writing by
it, is hereby authorized to examine the books, papers, and
records, and to investigate the character of the business of
any corporation in order to verify the accuracy of any report
made, or if no report was made by such corporation, to ascertain
and assess the tax imposed by this article. Every such
corporation is hereby directed and required to give to the
department, or its duly authorized agent, the means, facilities,
and opportunity for such examinations and investigations, as
are hereby provided and authorized. Any information gained by
the department, as a result of any returns, investigations, or
verifications required to be made by this article, shall be
confidential, except for official purposes, and any person
divulging such information shall be guilty of a misdemeanor,
and, upon conviction thereof, shall be sentenced to pay a fine
of not less than one hundred dollars ($100) or more than one
thousand dollars ($1,000) and costs of prosecution, or to
undergo imprisonment for not more than six months, or both.
Nothing in this section shall preclude the department from
providing public information, as defined in section
403(a)(2)(iii), to other government units. Any identification
number provided by the department to another governmental unit
for governmental purposes shall continue to be confidential
information. ((b) amended July 13, 2016, P.L.526, No.84)
(c) Whenever any person, acting for or on behalf of the
department, shall in good faith institute legal proceedings for
any violations of the provisions of this article, and for any
reason shall fail to recover costs of record, such costs shall
be a charge upon the proper county, as shall such costs in the
event defendant is imprisoned for failure to pay fine or costs,
or both, and shall be audited and paid as are costs of like
character in said county.
(d) The powers, conferred by this article upon the
department, relating to the administration or enforcement of
this article, shall be in addition to, but not exclusive of,
any other powers heretofore or hereafter conferred upon the
department by law.
Compiler's Note: See section 33 of Act 119 of 2006, which
amended subsec. (b), in the appendix to this act for
special provisions relating to determinations and
assessments of tax liability by the Department of Revenue
after December 31, 2007, and applicability of Act 119
on proceedings, prosecutions, actions, suits or appeals
involving assessments, determinations or settlements of
tax liability by the Department of Revenue prior to
January 1, 2008.
Section 408.1. Collection of Tax.--(a) The department shall
collect the taxes imposed by this article in the manner provided
by law for the collection of taxes imposed by the laws of this
Commonwealth.
(b) The department may collect any tax:
(1) Immediately, in the case of any amount related to tax
reported as due the Commonwealth by the taxpayer that is not
paid by the due date for payment of the tax.
(2) After ninety days from the mailing date of a notice of
assessment, if no petition for reassessment has been filed.
(3) After ninety days from the mailing date of the
department's decision and order disposing of a petition for
reassessment, if no petition for review has been filed.
(4) After thirty days from the mailing date of the decision
and order of the Board of Finance and Revenue upon a petition
for review or from the expiration of the board's time for acting
upon such petition, if no decision has been made.
(5) Immediately, in all cases of judicial sales,
receiverships, assignments or bankruptcies.
(6) Immediately, in the case of jeopardy assessments as
provided by section 407.2.
(c) A taxpayer shall not be permitted to raise any defense
to the department's collection of tax that might have been
determined by the department, the Board of Finance and Revenue
or the courts if the taxpayer had properly pursued its
administrative remedies under this article.
(408.1 added Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
PART VI
RETENTION OF RECORDS BY CORPORATION
Section 409. Retention of Records.--Each corporation shall
maintain and keep for a period of three years after any report
is filed under this article, such record or records of its
business within this Commonwealth for the period covered by
such report and other pertinent papers, as may be required by
the department.
PART VII
PENALTIES
Section 410. Penalties.--(a) Any person violating any of
the provisions of section 409 shall be guilty of a misdemeanor,
and shall, upon conviction thereof, be sentenced to pay a fine
not exceeding one thousand dollars ($1,000) and costs of
prosecution, or to undergo imprisonment for not more than six
months, or both.
(b) Any person who shall wilfully make a false and
fraudulent return of taxable income made taxable by this
article, shall be guilty of wilful and corrupt perjury, and,
upon conviction thereof, shall be subject to punishment as
provided by law. Such penalty shall be in addition to any other
penalties imposed by this article. ((b) amended Sept. 9, 1971,
P.L.437, No.105)
(c) Any person, who wilfully fails, neglects, or refuses
to make a report or to pay the tax as herein prescribed, or who
shall refuse to permit the department to examine the books,
papers, and records of any corporation liable to pay tax under
this article, shall be guilty of a misdemeanor, and, upon
conviction thereof, shall be sentenced to pay a fine not
exceeding one thousand dollars ($1,000) and costs of
prosecution, or to undergo imprisonment not exceeding six
months, or both. Such penalty shall be in addition to any other
penalties imposed by this article.
PART VIII
REPEALER; EFFECTIVE DATE
Section 411. Repeal.--The act of May 16, 1935 (P.L.208),
known as the "Corporate Net Income Tax Act," is repealed.
Section 412. Effective Date.--This article shall take effect
immediately, and the tax imposed shall apply to taxable years
beginning January 1, 1971 and thereafter.
ARTICLE V
CORPORATION INCOME TAX
PART I
DEFINITIONS
Section 501. Definitions.--(501 repealed Dec. 21, 1981,
P.L.482, No.141)
PART II
IMPOSITION OF TAX
Section 502. Imposition of Tax.--(502 repealed Dec. 21,
1981, P.L.482, No.141)
PART III
PROCEDURE; ENFORCEMENT; PENALTIES
Section 503. Procedure; Enforcement; Penalties.--(503
repealed Dec. 21, 1981, P.L.482, No.141)
PART IV
REPEALER; EFFECTIVE DATE
Section 505. Repeal.--(505 repealed Dec. 21, 1981, P.L.482,
No.141)
Section 506. Effective Date.--(506 repealed Dec. 21, 1981,
P.L.482, No.141)
ARTICLE VI
CAPITAL STOCK--FRANCHISE TAX
Compiler's Note: Section 607 provides that Article VI shall
expire for taxable years beginning after December 31,
2015.
PART I
VALUATION OF CAPITAL STOCK
Section 601. Definitions and Reports.--(a) The following
words, therms and phrases when used in this Article VI shall
have the meaning ascribed to them in this section, except where
the context clearly indicates a different meaning:
"Average net income." The sum of the net income or loss for
each of the current and immediately preceding four years,
divided by five. If the entity has not been in existence for a
period of five years, the average net income shall be the
average net income for the number of years that the entity has
actually been in existence. In computing average net income,
losses shall be entered as computed, but in no case shall
average net income be less than zero. The net income or loss
of the entity for any taxable year shall be the amount set forth
as income per books on the income tax return filed by the entity
with the Federal Government for such taxable year, or if no
such return is made, as would have been set forth had such a
return been made, subject, however, in either case to any
correction thereof, for fraud, evasion or error. In the case
of any entity which has an investment in another corporation,
the net income or loss shall be computed on an unconsolidated
basis exclusive of the net income or loss of such other
corporation without regard to how the corporation is treated
for Federal income tax purposes. In the case of a limited
liability company or business trust that is not taxable as a
corporation for Federal income tax purposes, the net income or
loss of the limited liability company or business trust for any
given year shall be reduced by the amount of distributions made
by such limited liability company or business trust to any
member of such limited liability company or business trust to
any member of such limited liability company or business trust
who is deemed to be materially participating in the activities
conducted by such limited liability company or business trust
for purposes of section 469 of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 469). In the case of a
limited liability company or business trust that for Federal
income tax purposes is a disregarded entity of a natural person,
the net income or loss of the limited liability company or
business trust for any given year shall be reduced by the amount
of distributions made by the limited liability company or
business trust to a natural person. For this purpose,
distributions which are made to a member of a limited liability
company or business trust within thirty (30) days of the end
of a given year may be treated as having been made in the
preceding year and not in the year in which such distribution
is actually made. (Def. amended July 6, 2006, P.L.319, No.67)
"Capital stock." The capital stock, certificates,
memberships and all other interests in a domestic or foreign
entity. (Def. amended May 7, 1997, P.L.85, No.7)
Capital stock value." The amount computed pursuant to the
following formula: the product of one-half times the sum of the
average net income capitalized at the rate of nine and one-half
per cent plus seventy-five per cent of net worth, from which
product shall be subtracted one hundred sixty thousand dollars
($160,000), the algebraic equivalent of which is
(.5 X (average net income/.095 + (.75)
(net worth))) - $160,000
(Def. amended Oct. 9, 2009, P.L.451, No.48.)
"Corporation." (A) Any of the following entities:
(1) A corporation.
(2) A joint-stock association.
(3) A business trust.
(4) A limited liability company. This clause excludes a
restricted professional company which is subject to 15 Pa.C.S.
Ch. 89 Subch. L (relating to restricted professional companies).
(5) An entity which for Federal income tax purposes is
classified as a corporation.
(6) A business trust which is a real estate investment trust
as defined in section 856 of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 856) more than fifty per cent
of the voting power or value of the beneficial interests or
shares of which are owned or controlled, directly or indirectly,
by a single corporation that is not:
(i) a real estate investment trust as defined in section
856 of the Internal Revenue Code of 1986;
(ii) a qualified real estate investment trust subsidiary
under section 856(i) of the Internal Revenue Code of 1986;
(iii) a regulated financial institution as defined by
section 401(6) of Article IV; or
(iv) formed as a holding company, subsidiary or affiliate
of a regulated financial institution prior to December 1, 2003.
(7) A business trust which is a qualified real estate
investment trust subsidiary under section 856(i) of the Internal
Revenue Code of 1986 owned, directly or indirectly, by a real
estate investment trust as defined in section 856 of the
Internal Revenue Code of 1986 more than fifty per cent of the
voting power or value of the beneficial interests or shares of
which are owned or controlled, directly or indirectly, by a
single corporation that is not:
(i) a real estate investment trust as defined in section
856 of the Internal Revenue Code of 1986;
(ii) a qualified real estate investment trust subsidiary
under section 856(i) of the Internal Revenue Code of 1986;
(iii) a regulated financial institution as defined by
section 401(6) of Article IV; or
(iv) formed as a holding company, subsidiary or affiliate
of a regulated financial institution prior to December 1, 2003.
(B) The term does not include any of the following:
(1) A business trust which qualifies as a real estate
investment trust under section 856 of the Internal Revenue Code
of 1986 (26 U.S.C. § 856) or which is a qualified real estate
investment trust subsidiary under section 856(i) of the Internal
Revenue Code of 1986 (26 U.S.C. § 856(i)).
(2) A business trust which qualifies as a regulated
investment company under section 851 of the Internal Revenue
Code of 1986 (26 U.S.C. § 851) and which is registered with the
United States Securities and Exchange Commission under the
Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1
et seq.) or a related business trust which confines its
activities in this Commonwealth to the maintenance,
administration and management of intangible investments and
activities of regulated investment companies.
(3) A corporation, trust or other entity which is an exempt
organization as defined by section 501 of the Internal Revenue
Code of 1986 (26 U.S.C. § 501).
(4) A corporation, trust or other entity organized as a
not-for-profit organization under the laws of this Commonwealth
or the laws of any other state which:
(i) would qualify as an exempt organization as defined by
section 501 of the Internal Revenue Code of 1986 (26 U.S.C. §
501);
(ii) would qualify as a homeowners association as defined
by section 528(c) of the Internal Revenue Code of 1986 (26
U.S.C. § 528(c));
(iii) is a membership organization subject to Federal
limitations on deductions from taxable income under section 277
of the Internal Revenue Code of 1986 (26 U.S.C. § 277) but only
if no pecuniary gain or profit inures to any member or related
entity from the membership organization; or
(iv) is a nonstock commodity or a nonstock stock exchange.
(5) A cooperative agricultural association subject to 15
Pa.C.S. Ch. 75 (relating to cooperative agricultural
associations).
(6) A business trust if the trust is all of the following:
(i) Created or managed by an entity which is subject to the
tax imposed by Article Vii or XV or which is an affiliate of
the entity which shares at least eighty per cent common
ownership.
(ii) Created and managed for the purpose of facilitating
the securitization of intangible assets.
(iii) Classified as a partnership or a disregarded entity
for Federal income tax purposes.
(Def. amended July 6, 2006, P.L.319, No.67)
"Department." The Department of Revenue.
"Domestic entity." A corporation organized under the laws
of the Commonwealth. (Def. amended June 29, 2002, P.L.559,
No.89)
"Entity." (Def. deleted by amendment June 29, 2002, P.L.559,
No.89)
"Foreign entity." A corporation organized by or under the
laws of any jurisdiction other than the Commonwealth which
exercises, whether in its own name or through any individual,
association, business trust, corporation, joint venture, limited
liability company, limited partnership, partnership or other
entity, any of the following privileges:
(1) Doing business in this Commonwealth.
(2) Carrying on activities in this Commonwealth, including
solicitation.
(3) Having capital or property employed or used in this
Commonwealth.
(4) Owning property in this Commonwealth.
(Def. amended June 29, 2002, P.L.559, No.89)
"Holding company." Any corporation (i) at least ninety per
cent of the gross income of which for the taxable year is
derived from dividends, interest, gains from the sale, exchange
or other disposition of stock or securities and the rendition
of management and administrative services to subsidiary
corporations, and (ii) at least sixty per cent of the actual
value of the total assets of which consists of stock securities
or indebtedness of subsidiary corporations.
"Net worth."
(1) Net worth shall be the sum of the entity's issued and
outstanding capital stock, surplus and undivided profits as per
books set forth for the close of such tax year on the income
tax return filed by the entity with the Federal Government, or
if no such return is made, as would have been set forth had
such return been made, subject, however, in either case to any
correction thereof for fraud, evasion or error. In the case of
any entity which has investments in other corporations, the net
worth shall be the consolidated net worth of such entity
computed in accordance with generally accepted accounting
principles. In the case of a limited liability company or a
business trust, net worth for any tax year shall be the entity's
assets minus its liabilities as of the close of such tax year.
Net worth shall in no case be less than zero.
(2) If net worth as arrived at under clause (1) for the
current tax year is greater than twice or less than one-half
of the net worth which would have been calculated under clause
(1) as of the first day of the current tax year, then net worth
for the current tax year shall be the average of these two
amounts.
(Def. amended May 7, 1997, P.L.85, No.7)
"Processing." The following activities when engaged in as
a business enterprise:
(1) The filtering or heating of honey, the cooking or
freezing of fruits, vegetables, mushrooms, fish, seafood, meats
or poultry, when the person engaged in such business packages
such property in sealed containers for wholesale distribution.
(1.1) The processing of fruits or vegetables by cleaning,
cutting, coring, peeling or chopping and treating to preserve,
sterilize or purify and substantially extend the useful shelf
life of the fruits or vegetables, when the person engaged in
such activity packages such property in sealed containers for
wholesale distribution.
(2) The scouring, carbonizing, cording, combing, throwing,
twisting or winding of natural or synthetic fibers, or the
spinning, bleaching, dyeing, printing or finishing of yarns or
fabrics, when such activities are performed prior to sale to
the ultimate consumer.
(3) The electroplating, galvanizing, enameling, anodizing,
coloring, finishing, impregnating or heat treating of metals
or plastics for sale or in the process of manufacturing.
(3.1) The blanking, shearing, leveling, slitting or burning
of metals for sale to or use by a manufacturer or processor.
(4) The rolling, drawing or extruding of ferrous and
nonferrous metals.
(5) The fabrication for sale of ornamental or structural
metal or metal stairs, staircases, gratings, fire escapes or
railings (not including fabrication work done at the
construction site).
(6) The preparation of animal feed or poultry feed for sale.
(7) The production, processing and bottling of nonalcoholic
beverages for wholesale distribution.
(8) The slaughtering and dressing of animals for meat to
be sold or to be used in preparing meat products for sale, and
the preparation of meat products, including lard, tallow,
grease, cooking and inedible oils for wholesale distribution.
(9) The operation of a saw mill or planing mill for the
production of lumber or lumber products for sale. The operation
of a saw mill or planing mill begins with the unloading by the
operator of the saw mill or planing mill of logs, timber,
pulpwood or other forms of wood material to be used in the saw
mill or planing mill.
(10) The milling for sale of flour or meal from grains.
(10.1) The aging, stripping, conditioning, crushing and
blending of tobacco leaves for use as cigar filler or as
components of smokeless tobacco products for sale to
manufacturers of tobacco products.
(11) The publishing of books, newspapers, magazines or other
periodicals, printing and broadcasting radio and television
programs by licensed commercial or educational stations.
(12) The processing of used lubricating oils.
(13) The blending, rectification or production by
distillation or otherwise of alcohol or alcoholic liquors,
except the distillation of alcohol from byproducts of winemaking
for the sole purpose of fortifying wine.
(14) The salvaging, recycling or reclaiming of used
materials to be recycled into a manufacturing process.
(15) The development or substantial modification of computer
programs or software for sale to unrelated persons for their
direct and independent use.
(16) The cleaning and roasting and the blending, grinding
or packaging for sale of coffee from green coffee beans or the
production of coffee extract.
(17) The refining, blasting, exploring, mining and quarrying
for or otherwise extracting limestone, sand, gravel or slag
from the earth or from wast or stock piles or from pits or banks
and the cleaning, crushing, grinding, pulverizing, sizing or
screening of limestone, sand, gravel or slag, including blast
furnace slag.
(18) The preparation of dry or liquid fertilizer for sale.
(19) The production, processing and packaging of ice for
wholesale distribution.
(Def. amended June 22, 2001, P.L.353, No.23)
"Research and development." The activities relating to the
discovery of new and the refinement of known substances,
products, processes, theories and ideas, but not including
activities directed primarily to the accumulation or analysis
of commercial, financial or mercantile data.
"Student loan assets." The term includes the following
assets:
(1) Student loan notes.
(2) Federal, State or private subsidies or guarantees of
student loans.
(3) Instruments that represent a guarantee of debt,
certificates or other securities issued by an entity created
for the securitization of student loans or by a trustee on its
behalf.
(4) Contract rights to acquire or dispose of student loans
and interest rate swap agreements related to student loans.
(5) Interests in or debt obligations of other student loan
securitization trusts or entities.
(6) Cash or cash equivalents representing reserve funds or
payments on or with respect to student loan notes, the
securities issued by an entity created for the securitization
of student loans or the other student loan-related assets.
Solely for purposes of this definition, "cash or cash
equivalents" shall include direct obligations of the United
States Department of the Treasury, obligations of Federal
agencies which obligations represent the full faith and credit
of the United States, investment grade debt obligations or
commercial paper, deposit accounts, Federal funds and banker's
acceptances, prefunded municipal obligations, money market
instruments and money market funds.
(Def. added Apr. 23, 1998, P.L.239, No.45)
"Subsidiary corporation." Any corporation, a majority of
the total issued and outstanding shares of voting stock of which
are owned by the taxpayer corporation directly or through one
or more intervening subsidiary corporations.
(b) It shall be the duty of every domestic and foreign
entity to make for each taxable year, as defined in section
401(5), a written report verified in accordances with
requirements of the department on a form or forms to be
prescribed and furnished by it setting forth the information
required. The time for filing reports may be extending; the
procedure in case the department is not satisfied with the
reports for the entity, and the penalties for failing to file
reports and pay taxes shall be as prescribed by law. ((b)
amended July 1, 1985, P.L.78, No.29)
(601 amended Dec. 23, 1983, P.L.360, No.89)
Compiler's Note: Section 14(2) of Act 48 of 2009, which
amended the def. of "capital stock value", provided that
the amendment shall apply to taxable years beginning
after December 31, 2009.
PART II
IMPOSITION OF TAX
Section 602. Imposition of Tax.--(a) That every domestic
entity from which a report is required under section 601 hereof
shall be subject to, and pay to the department annually, a tax
which is the amount computed by multiplying each dollar of the
capital stock value as defined in section 601(a) by the
appropriate rate of tax as set forth in subsection (h); except
that any domestic entity or company subject to the tax
prescribed herein may elect to compute and pay its tax under
and in accordance with the provisions of subsection (b) of this
section 602: Provided, That the provisions of this section shall
not apply to the taxation of the capital stock of entities
organized for manufacturing, processing, research or development
purposes, which is invested in and actually and exclusively
employed in carrying on manufacturing, processing, research or
development within the State, except such entities as enjoy and
exercise the right of eminent domain, but every entity organized
for the purpose of manufacturing, processing, research or
development except such entities as enjoy and exercise the right
of eminent domain shall pay the State tax of the amount computed
by multiplying each dollar of the capital stock value as defined
in section 601(a) by the appropriate rate of tax as set forth
in subsection (h) upon such proportion of its capital stock,
if any, as may be invested in any property or business not
strictly incident or appurtenant to the manufacturing,
processing, research or development business, in addition to
the local taxes assessed upon its property in the district where
located, it being the object of this provision to relieve from
State taxation only so much of the capital stock as is invested
purely in the manufacturing, processing, research or development
plant and business: and Provided further, That the provisions
of this section shall not apply to the taxation of so much of
the capital stock value attributable to student loan assets
owned or held by an entity created for the securitization of
student loans or by a trustee on its behalf. ((a) amended May
24, 2000, P.L.106, No.23)
(b) (1) Every foreign entity from which a report is
required under section 601 hereof shall be subject to and pay
to the department annually a franchise tax which is the amount
computed by multiplying each dollar of the capital stock value
as defined in section 601(a) by the appropriate rate of tax as
set forth in subsection (h) upon a taxable value to be
determined in the following manner. The capital stock value
shall be ascertained in the manner prescribed in section 601(a)
of this article. The taxable value shall then be determined by
employing the relevant apportionment factors set forth in
Article IV: Provided, That the manufacturing, processing,
research and development exemptions contained under section
602(a) shall also apply to foreign corporations. In determining
the relevant apportionment factors, the following shall apply:
(i) for taxable years beginning before January 1, 1999, the
numerator of the property, payroll or sales factors shall not
include any property, payroll or sales attributable to
manufacturing, processing, research or development activities
in the Commonwealth;
(ii) for taxable years beginning after December 31, 1998,
the numerator of the property or payroll factors shall not
include any property or payroll attributable to manufacturing,
processing, research or development activities in the
Commonwealth, and any property or payroll attributable to
manufacturing, processing, research or development activities
outside of the Commonwealth shall also be excluded from the
numerator of the property or payroll factors. The provisions
of this section shall not apply to the taxation of so much of
the capital stock value attributable to student loan assets
owned or held by an entity created for the securitization of
student loans or by a trustee on its behalf. Any foreign
corporation, joint-stock association, limited partnership or
company subject to the tax prescribed herein may elect to
compute and pay its tax under section 602(a): Provided, That
any foreign corporation, joint-stock association, limited
partnership or company electing to compute and pay its tax under
section 602(a) shall be treated as if it were a domestic
corporation for the purpose of determining which of its assets
are exempt from taxation and for the purpose of determining the
proportion of the value of its capital stock which is subject
to taxation.
(2) The provisions of this article shall apply to the
taxation of entities organized for manufacturing, processing,
research or development purposes, but shall not apply to such
entities as enjoy and exercise the right of eminent domain.
((b) amended May 24, 2000, P.L.106, No.23)
(c) ((c) deleted by amendment)
(d) It shall be the duty of the treasurer or other officers
having charge of any domestic or foreign entity, upon which a
tax is imposed by this section, to transmit the amount of tax
to the department within the time prescribed by law: Provided,
That for the purposes of this act interest in limited
partnerships or joint-stock associations shall be deemed to be
capital stock, and taxable accordingly: Provided, further, That
entities liable to a tax under this section, shall not be
required to pay any further tax on the mortgages, bonds, and
other securities owned by them and in which the whole body of
stockholders or members, as such, have the entire equitable
interest in remainder; but entities owning or holding such
securities as trustees, executors, administrators, guardians,
or in any other manner than for the whole body of stockholders
or members thereof as sole equitable owners in remainder, shall
return and pay the tax imposed by this act upon all securities
so owned or held by them, as in the case of individuals.
(e) Any holding company subject to the capital stock tax
or the franchise tax imposed by this section may elect to
compute the capital stock or franchise tax by applying the rate
of tax provided in subsection (h) to ten per cent of the capital
stock value as defined in section 601(a). If exercised, this
election shall be in lieu of any other apportionment or
allocation to which such company would otherwise be entitled.
((e) amended May 24, 2000, P.L.106, No.23)
(f) Every domestic corporation and every foreign corporation
(i) registered to do business in Pennsylvania; (ii) which
maintains an office in Pennsylvania; (iii) which has filed a
timely election to be taxed as a regulated investment company
with the Federal Government; and (iv) which duly qualifies to
be taxed as a regulated investment company under the provisions
of the Internal Revenue Code of 1954 as amended, shall be taxed
as a regulated investment company and shall be subject to the
capital stock or franchise tax imposed by section 602, in either
case for the privilege of having an office in Pennsylvania,
which tax shall be computed pursuant to the provisions of this
subsection in lieu of all other provisions of this section 602.
The tax shall be in an amount which is the sum of the amounts
determined pursuant to clauses (1) and (2):
(1) The amount determined pursuant to this clause shall be
seventy-five dollars ($75) times that number which is the result
of dividing the net asset value of the regulated investment
company by one million, rounded to the nearest multiple of
seventy-five dollars ($75). Net asset value shall be determined
by adding the monthly net asset values as of the last day of
each month during the taxable period and dividing the total sum
by the number of months involved. Each such monthly net asset
value shall be the actual market value of all assets owned
without any exemptions or exclusions, less all liabilities,
debts and other obligations.
(2) The amount determined pursuant to this clause shall be
the amount which is the result of multiplying the rate of
taxation applicable for purposes of the personal income tax
during the same taxable year times the apportioned undistributed
personal income tax income of the regulated investment company.
For the purposes of this clause:
(A) Personal income tax income shall mean income to the
extent enumerated and classified in section 303.
(B) Undistributed personal income tax income shall mean all
personal income tax income other than personal income tax income
undistributed on account of the capital stock or foreign
franchise tax, less all personal income tax income distributed
to shareholders. At the election of the company, income
distributed after the close of a taxable year, but deemed
distributed during the taxable year for Federal income tax
purposes, shall be deemed distributed during that year for
purposes of this clause. If a company in a taxable year has
both current income and income accumulated from a prior year,
distributions during the year shall be deemed to have been made
first from current income.
(C) Undistributed personal income tax income shall be
apportioned to Pennsylvania by a fraction, the numerator of
which is all income distributed during the taxable period to
shareholders who are resident individuals, estates or trusts
and the denominator of which is all income distributed during
the taxable period. Resident trusts shall not include
charitable, pension or profit-sharing, or retirement trusts.
(D) Personal income tax income and other income of a company
shall each be deemed to be either distributed to shareholders
or undistributed in the proportion each category bears to all
income received by the company during the taxable year.
((f) amended May 24, 2000, P.L.106, No.23)
(g) In the event that a domestic or foreign entity is
required to file a report pursuant to section 601(b) on other
than an annual basis, the tax imposed by this section shall be
prorated to reflect the portion of a taxable year for which the
report is filed by multiplying the tax liability by a fraction
equal to the number of days in the taxable year divided by three
hundred sixty-five days. ((g) amended May 24, 2000, P.L.106,
No.23)
(h) The rate of tax for purposes of the capital stock and
franchise tax for taxable years beginning within the dates set
forth shall be as follows:
Total RateSurtaxRegular RateTaxable Year
January 1, 1971, to
December 31, 1986 10 mills010 mills
January 1, 1987, to
December 31, 1987 9 mills09 mills
January 1, 1988, to
December 31, 1990 9.5 mills09.5 mills
January 1, 1991, to
December 31, 1991 13 mills2 mills11 mills
January 1, 1992, to
December 31, 1997 12.75 mills1.75 mills11 mills
January 1, 1998, to
December 31, 1998 11.99 mills.99 mills11 mills
January 1, 1999, to
December 31, 1999 10.99 mills010.99 mills
January 1, 2000, to
December 31, 2000 8.99 mills08.99 mills
January 1, 2001, to
December 31, 2001 7.49 mills07.49 mills
January 1, 2002, to
December 31, 2003 7.24 mills07.24 mills
January 1, 2004, to
December 31, 2004 6.99 mills06.99 mills
January 1, 2005, to
December 31, 2005 5.99 mills05.99 mills
January 1, 2006, to
December 31, 2006 4.89 mills04.89 mills
January 1, 2007, to
December 31, 2007 3.89 mills03.89 mills
January 1, 2008, to
December 31, 2011 2.89 mills02.89 mills
January 1, 2012, to
December 31, 2012 1.89 mills01.89 mills
January 1, 2013, to
December 31, 2013 .89 mills0.89 mills
January 1, 2014, to
December 31, 2014 .67 mills0.67 mills
January 1, 2015, to
December 31, 2015 .45 mills0.45 mills
((h) amended July 9, 2013, P.L.270, No.52)
(i) An entity subject to taxation under Article VII, VIII,
IX or XV shall not not subject to the tax imposed by this
article. ((i) added June 29, 2002, P.L.599, No.89)
(602 amended May 12, 1999, P.L.26, No.14)
Compiler's Note: Section 19(3)(iii) of Act 23 of 2000, which
amended subsections (a), (b), (e), (f), (g), (h) and
(i), provided that the amendment shall apply to taxable
years beginning after December 31, 1999.
Compiler's Note: Section 4 of Act 63 of 1999, which amended
subsection (b), provided that the amendment shall apply
to the taxable years beginning after December 31, 1998.
Compiler's Note: Section 32(5) of Act 4 of 1999, which
amended section 602, provided that the amendment shall
apply to the taxable years beginning after December 31,
1998.
Compiler's Note: Section 21(2)(vi) of Act 45 of 1998, which
amended section 602, provided that the amendment of
section 602 shall apply to the taxable years beginning
after December 31, 1997.
Compiler's Note: Section 43 of Act 22 of 1991, which amended
section 602, provided that the amendment of section 602
shall apply retroactively to the taxable years beginning on or
after January 1, 1991.
Section 602.1. Pollution Control Devices.--Notwithstanding
the foregoing provisions of section 602, to the contrary,
equipment, machinery, facilities and other tangible property
employed or utilized within the Commonwealth of Pennsylvania
for water and air pollution control or abatement devices which
are being employed or utilized for the benefit of the general
public shall be exempt from the tax imposed under this Article
VI. The Department of Revenue shall have the power, through
publication in the Pennsylvania Bulletin, to prescribe the
manner and method by which such exemption shall be granted and
claimed.
(602.1 amended Aug. 4, 1991, P.L.97, No.22)
Section 602.2. Family Farm Corporation Exemption.--(a) The
provisions of section 602 shall not apply to family farm
corporations. Family farm corporations shall be exempt from the
tax imposed by section 602.
(b) (1) Family farm corporation means a Pennsylvania
corporation at least seventy-five per cent of the assets of
which are devoted to the business of agriculture, which
business, for the purposes of this definition, shall not be
deemed to include (i) recreational activities such as, but not
limited to, hunting, fishing, camping, skiing, show competition
or racing; (ii) the raising, breeding or training of game
animals or game birds, fish, cats, dogs or pets, or animals
intended for use in sporting or recreational activities; (iii)
fur farming; (iv) stockyard and slaughterhouse operations; or
(v) manufacturing or processing operations of any kind:
Provided, however, That at least seventy-five per cent of all
of the stock of the corporation must be owned by members of the
same family.
(2) Members of the same family shall mean an individual,
such individual's brothers and sisters, the brothers and sisters
of such individual's parents and grandparents, the ancestors
and lineal descendents of any of the foregoing and a spouse of
any of the foregoing. Individuals related by the half blood or
by legal adoption shall be treated as if they were related by
the whole blood.
(3) Assets devoted to the business of agriculture shall
include leasing to members of the same family of assets which
are directly and principally used for agricultural purposes.
(602.2 amended Apr. 23, 1998, P.L.239, No.45)
Section 602.3. Hazardous Sites Cleanup Fund.--(602.3
repealed Dec. 18, 2007, P.L.486, No.77)
Compiler's Note: Section 32(5) of Act 4 of 1999, which
amended section 602.3, provided that the amendment shall
apply to the taxable years beginning after December 31,
1998.
Section 602.4. Separate Entities.--For purposes of this
article, each Pennsylvania S corporation and each qualified
Subchapter S subsidiary, as defined in section 301(o.3), shall
be treated as separate corporations.
(602.4 added May 7, 1997, P.L.85, No.7)
Section 602.5. Shows and Flea Markets.--(602.5 deleted by
amendment May 24, 2000, P.L.106, No.23)
Section 602.6. Interest in Unincorporated
Entities.--(a) Except as set forth in subsection (b), for
purposes of this article, a corporation's interest in an entity
which is not a corporation shall be considered a direct
ownership interest in the assets of the entity rather than an
intangible interest.
(b) Subsection (a) does not apply to a corporation's
interest in an entity described in section 601(a)(B)(1) or (2)
of the definition of "corporation."
(602.6 added June 29, 2002, P.L.559, No.89 and amended Dec.
30, 2002, P.L.2080, No.232)
Compiler's Note: Section 2 of Act 232 of 2002, which amended
section 602.6, provided that the General Assembly finds
and declares that the amendment of section 602.6 is
intended to clarify existing law and shall not be
construed to change that law.
PART III
PROCEDURE; ENFORCEMENT; PENALTIES
Section 603. Procedure; Enforcement; Penalties.--Parts III,
IV, V, VI, and VII of Article IV are incorporated by reference
into this article in so far as they are applicable to the tax
imposed hereunder.
PART IV
REPEAL; APPLICABILITY; EXPIRATION
(Hdg. amended June 29, 2002, P.L.559, No.89)
Section 605. Repeal.--Sections 20 and 21, act of June 1,
1889 (P.L.420), entitled "A further supplement to an act
entitled 'An act to provide revenue by taxation,' approved the
seventh day of June, Anno Domini one thousand eight hundred and
seventy-nine," are repealed.
Section 606. Applicability.--Except as provided in section
607, the tax imposed under this article shall apply to taxable
years beginning January 1, 1971 and thereafter.
(606 amended June 29, 2002, P.L.559, No.89)
Section 607. Expiration.--This article shall expire for
taxable years beginning after December 31, 2015.
(607 amended July 9, 2013, P.L.270, No.52)
ARTICLE VII
BANK AND TRUST COMPANY SHARES TAX
(Hdg. amended June 16, 1994, P.L.279, No.48)
PART I
IMPOSITION OF TAX
Section 701. Imposition of Tax.--(a) Every institution
doing business in this Commonwealth shall, on or before March
15 in each and every year, make to the Department of Revenue a
report in writing, verified as required by law, setting forth
the full number of shares of the capital stock subscribed for
or issued, as of the preceding January 1, by such institution,
and the taxable amount of such shares of capital stock
determined pursuant to section 701.1.
(b) It shall be the duty of the Department of Revenue to
assess such shares for the calendar years beginning January 1,
1971 through January 1, 1983, at the rate of fifteen mills and
for the calendar years beginning January 1, 1984 through January
1, 1988, at the rate of one and seventy-five one thousandths
per cent and for the calendar year beginning January 1, 1989,
at the rate of 10.77 per cent and for the calendar years
beginning January 1, 1990, through January 1, 2013, at the rate
of 1.25 per cent and for the calendar years beginning January
1, 2014 through January 1, 2016, at the rate of 0.89 per cent
and for the calendar year beginning January 1, 2017, and each
calendar year thereafter at the rate of 0.95 per cent upon each
dollar of taxable amount thereof, the taxable amount of each
share of stock to be ascertained and fixed pursuant to section
701.1, and dividing this amount by the number of shares.
(c) It shall be the duty of every institution doing business
in this Commonwealth, at the time of making every report
required by this section, to compute the tax and to pay the
amount of said tax to the State Treasurer, through the
Department of Revenue either from its general fund, or from the
amount of said tax collected from its shareholders. Provided,
That in case any institution shall collect, annually, from the
shareholders thereof said tax, according to the provisions of
this article, that have been subscribed for or issued, and pay
the same into the State Treasury, through the Department of
Revenue, the shares, and so much of the capital and profits of
such institution as shall not be invested in real estate, shall
be exempt from local taxation under the laws of this
Commonwealth; and such institution shall not be required to
make any report to the local assessor or county commissioners
of its personal property owned by it in its own right for
purposes of taxation and shall not be required to pay any tax
thereon.
(701 amended July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 42(2.1) of Act 52 of 2013, which
amended section 701, provided that the amendment shall
apply to the calendar year beginning on January 1, 2014,
and to each calendar thereafter. See section 43 of Act
52 in the appendix to this act for special provisions
relating to applicability.
Section 701.1. Ascertainment of Taxable Amount; Exclusion
of United States Obligations.--(a) (1) The taxable amount of
shares shall be ascertained and fixed by the book value of total
bank equity capital as determined by the Reports of Condition
at the end of the preceding calendar year in accordance with
the requirements of the Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation or other applicable regulatory
authority.
(2) If an institution does not file the Reports of
Condition, book values shall be determined by generally accepted
accounting principles as of the end of the preceding calendar
year.
(3) For institutions which file Reports of Condition on a
consolidated basis with subsidiaries formed pursuant to 12
U.S.C. § 611 (relating to formation authorized; fiscal agents;
depositaries in insular possessions), total bank equity capital
shall exclude the book value of total equity capital of the
subsidiaries in accordance with the following schedule:
(i) For the calendar year beginning January 1, 2018, the
exclusion for the book value of total equity capital of the
subsidiaries shall be limited to twenty per cent of the book
value of total equity capital of the subsidiaries.
(ii) For the calendar year beginning January 1, 2019, the
exclusion for the book value of total equity capital of the
subsidiaries shall be limited to forty per cent of the book
value of total equity capital of the subsidiaries.
(iii) For the calendar year beginning January 1, 2020, the
exclusion for the book value of total equity capital of the
subsidiaries shall be limited to sixty per cent of the book
value of total equity capital of the subsidiaries.
(iv) For the calendar year beginning January 1, 2021, the
exclusion for the book value of total equity capital of the
subsidiaries shall be limited to eighty per cent of the book
value of total equity capital of the subsidiaries.
(v) For the calendar year beginning January 1, 2022, and
each calendar year thereafter, the exclusion for the book value
of total equity capital of the subsidiaries shall be one hundred
per cent of the book value of total equity capital of the
subsidiaries.
(b) A deduction for the value of United States obligations
shall be provided from the taxable amount of shares in an amount
equal to the same percentage of total bank equity capital as
the book value of obligations of the United States bears to the
book value of the total assets. In computing the deduction for
United States obligations, any goodwill deducted from the
taxable amount of shares under subsection (b.1) shall be
subtracted from the book value of total bank equity capital and
disregarded in determining the deduction provided for
obligations of the United States. For purposes of this article,
United States obligations shall be obligations coming within
the scope of 31 U.S.C. § 3124 (relating to exemption from
taxation). ((b) amended July 11, 2024, P.L. , No.56)
(b.1) A deduction for goodwill shall be provided from the
taxable amount of shares in an amount equal to the value of any
goodwill recorded in the Reports of Condition of the institution
pursuant to generally accepted accounting principles because
of an acquisition or business combination and occurring after
June 30, 2001. ((b.1) amended July 11, 2024, P.L. , No.56)
(c) ((c) deleted by amendment July 11, 2024, P.L. , No.56)
(701.1 amended July 13, 2016, P.L.526, No.84)
Compiler's Note: See sections 27 and 28 of Act 56 of 2024
in the appendix to this act for special provisions
relating to applicability and findings and declarations.
Compiler's Note: Section 51(3)(ii) of Act 84 of 2016, which
amended section 701.1, provided that the amendment or
addition of subsections (b) and (b.1) shall apply
retroactively to January 1, 2014.
Compiler's Note: Section 42(2.1) of Act 52 of 2013, which
amended section 701.1, provided that the amendment shall
apply to the calendar year beginning on January 1, 2014,
and to each calendar thereafter. See section 43 of Act
52 in the appendix to this act for special provisions
relating to applicability.
Compiler's Note: Section 14 of Act 55 of 2007, which amended
section 701.1, provided that the amendment of section
701.1 is not intended to reverse or modify the ruling
of First Union National Bank v. Commonwealth, 867 A.2d
711 (Pa. Commonwealth 2005).
Compiler's Note: See sections 1, 3 and 4 of Act 317 of 1982
in the appendix to this act for special provisions
relating to legislative intent and applicability.
Section 701.2. Reserve for Loan Losses.--(701.2 repealed
Dec. 1, 1983, P.L.228, No.66)
Section 701.3. Amended Report for 1989.--Within one hundred
twenty days of the effective date of this section, every bank
subject to tax under section 701 shall make to the Department
of Revenue on a form prescribed, prepared and furnished by the
Department of Revenue an amended report of the tax payable on
its shares computed as of January 1, 1989, and shall pay to the
Commonwealth at the time of making such amended report eighty
per cent of the tax due, if any, as shown by such amended report
less the amount paid, if any, upon filing of an original report
for the year 1989 heretofore required to be made and the
remaining tax due, if any, shall be paid when the report
required by section 701 for the year next succeeding is made.
For all purposes under this act, the act of April 9, 1929
(P.L.343, No.176), known as "The Fiscal Code," and other
applicable statutes, the date of the amended report and the
date for payment of the balance, if any, of the tax payable at
the time of making the amended report shall be substituted for
the date of the report formerly required for the 1989 report
and the date of the payment of the tax payable with such report.
(701.3 added July 1, 1989, P.L.95, No.21)
Section 701.4. Apportionment.--An institution may apportion
its taxable amount of shares determined under section 701.1 in
accordance with this subsection if the institution is subject
to tax in another state based on or measured by net worth, gross
receipts, net income or some similar base of taxation, or if
it could be subject to such tax, whether or not such a tax has
in fact been enacted. The following shall apply:
(1) (i) For calendar years beginning prior to January 1,
2014, the taxable amount of shares shall be apportioned in
accordance with a fraction, the numerator of which is the sum
of the payroll factor, the receipts factor and the deposits
factor, and the denominator of which is three. If one of the
factors is inapplicable, the denominator is two. If two of the
factors are inapplicable, the denominator is one.
(ii) For the calendar year beginning January 1, 2014, and
each calendar year thereafter, the taxable amount of shares
shall be apportioned based upon the receipts factor, and the
payroll and deposits factors shall be disregarded.
(2) The payroll factor is a fraction, the numerator of which
is the total wages paid in this Commonwealth and the denominator
of which is the total wages paid in all states. Wages are paid
in a state if paid to an employe having a regular presence
therein.
(3) The receipts factor is a fraction, the numerator of
which is total receipts located in this Commonwealth and the
denominator of which is the total receipts located in all
states. The method of calculating receipts for purposes of the
denominator shall be the same as the method used in determining
receipts for purposes of the numerator. The location of receipts
shall be determined as follows:
(i) The numerator of the receipts factor shall include
receipts from the lease or rental of real property owned by the
institution if the property is located within this Commonwealth
or receipts from the sublease of real property if the property
is located within this Commonwealth.
(ii) The following shall apply to receipts from the lease
or rental of tangible personal property owned by the
institution:
(A) Except as provided under clause (B), the numerator of
the receipts factor shall include receipts from the lease or
rental of tangible personal property owned by the institution
if the property is located within this Commonwealth when it is
first placed in service by the lessee.
(B) The following shall apply:
(I) Receipts from the lease or rental of transportation
property owned by the institution shall be included in the
numerator of the receipts factor to the extent that the property
is used in this Commonwealth.
(II) The extent an aircraft shall be deemed to be used in
this Commonwealth and the amount of receipts that shall be
included in the numerator of this Commonwealth's receipts factor
shall be determined by multiplying all the receipts from the
lease or rental of the aircraft by a fraction, the numerator
of which is the number of landings of the aircraft in this
Commonwealth and the denominator of which is the total number
of landings of the aircraft.
(III) A motor vehicle shall be deemed to be used wholly in
the state in which it is registered.
(IV) If the extent of the use of transportation property
within this Commonwealth cannot be determined, the property
shall be deemed to be used wholly in the state in which the
property has its principal base of operations.
(iii) The following shall apply to interest, fees and
penalties in connection with loans secured by real property:
(A) The following shall apply to a calculation under this
subparagraph:
(I) The numerator of the receipts factor shall include
interest, fees and penalties imposed in connection with loans
secured by real property if the property is located within this
Commonwealth.
(II) If the real property under subclause (I) is located
both within this Commonwealth and one or more other states, the
receipts under this subsection shall be included in the
numerator of the receipts factor if more than fifty per cent
of the fair market value of the real property is located within
this Commonwealth.
(III) If more than fifty per cent of the fair market value
of real property under subclause (I) is not located within any
single state, the receipts under this subsection shall be
included in the numerator of the receipts factor if the borrower
is located in this Commonwealth.
(B) The determination of whether real property securing a
loan is located within this Commonwealth shall be made as of
the time the original agreement was made, and all subsequent
substitutions of collateral shall be disregarded.
(iv) The numerator of the receipts factor shall include
interest, fees and penalties imposed in connection with loans
not secured by real property if the borrower is located in this
Commonwealth.
(v) The numerator of the receipts factor shall include net
gains from the sale of loans. Net gains from the sale of a loan
shall include income recorded under the coupon stripping rules
of section 1286 of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 1286). The following shall apply:
(A) The amount of net gains, equal to zero or above, from
the sale of loans secured by real property included in the
numerator shall be determined by multiplying the net gains by
a fraction, the numerator of which is the amount included in
the numerator of the receipts factor under subparagraph (iii)
and the denominator of which is the total amount of interest
and fees or penalties in the nature of interest from loans
secured by real property.
(B) The amount of net gains, equal to zero or above, from
the sale of loans not secured by real property included in the
numerator shall be determined by multiplying the net gains by
a fraction, the numerator of which is the amount included in
the numerator of the receipts factor under subparagraph (iv)
and the denominator of which is the total amount of interest
and fees or penalties in the nature of interest from loans not
secured by real property.
(vi) The numerator of the receipts factor shall include
interest, fees and penalties charged to credit, debit or similar
cardholders, including annual fees and overdraft fees, if the
billing address of the cardholder is in this Commonwealth.
(vii) The numerator of the receipts factor shall include
net gains, equal to zero or above, from the sale of credit card
receivables multiplied by a fraction, the numerator of which
is the amount included in the numerator of the receipts factor
under subparagraph (vi) and the denominator of which is the
institution's total amount of interest and fees or penalties
in the nature of interest from credit card receivables and fees
charged to cardholders.
(viii) For card issuer's reimbursement fees, the numerator
of the receipts factor shall include:
(A) All credit card issuer's reimbursement fees multiplied
by a fraction, the numerator of which is the amount of fees,
interest and penalties charged to credit cardholders included
in the numerator of the receipts factor under subparagraph (vi)
and the denominator of which is the institution's total amount
of fees, interest and penalties charged to credit cardholders.
(B) All card issuer's reimbursement fees, except as provided
under clause (A), multiplied by a fraction, the numerator of
which is the amount of the fees, interest and penalties charged
to all other cardholders included in the numerator of the
receipts factor under subparagraph (vi) and the denominator of
which is the institution's total amount of fees, interest and
penalties charged to all other cardholders.
(ix) The following shall apply to receipts from merchant's
discounts:
(A) If the institution can readily determine the location
of the merchant and if the merchant is in this Commonwealth,
the numerator of the receipts factor shall include receipts
from merchant discount.
(B) If the institution cannot readily determine the location
of the merchant, the numerator of the receipts factor shall
include the receipts from the merchant discount multiplied by
a fraction:
(I) For a merchant discount related to the use of a credit
card, the numerator of which shall be the amount of fees,
interest and penalties charged to credit cardholders that is
included in the numerator of the receipts factor under
subparagraph (vi) and the denominator of which is the
institution's total amount of fees, interest and penalties
charged to credit cardholders.
(II) For a merchant discount related to the use of a debit
card, the numerator of which shall be the amount of fees,
interest and penalties charged to debit cardholders that is
included in the numerator of the receipts factor under
subparagraph (vi) and the denominator of which is the
institution's total amount of fees, interest and penalties
charged to debit cardholders.
(III) For a merchant discount related to the use of cards,
except as provided under subclauses (I) and (II), the numerator
of which shall be the amount of fees, interest and penalties
charged to all other cardholders that is included in the
numerator of the receipts factors under subparagraph (vi) and
the denominator of which is the institution's total amount of
fees, interest and penalties charged to all other cardholders.
(x) The receipts factor shall include automated teller
machine fees that are not forwarded directly to another bank.
The following shall apply:
(A) The numerator of the receipts factor shall include fees
charged to a cardholder for the use at an automated teller
machine of a card issued by the institution if the cardholder's
billing address is in this Commonwealth.
(B) The numerator of the receipts factor shall include fees
charged to a cardholder, other than the institution's
cardholder, for the use of the card at an automated teller
machine owned or rented by the institution, if the automated
teller machine is in this Commonwealth.
(xi) The following shall apply to loan servicing fees:
(A) (I) The numerator of the receipts factor shall include
loan servicing fees derived from loans secured by real property
multiplied by a fraction, the numerator of which is the amount
included in the numerator of the receipts factor under
subparagraph (iii) and the denominator of which is the total
amount of interest and fees or penalties in the nature of
interest from loans secured by real property.
(II) The numerator of the receipts factor shall include
loan servicing fees derived from loans not secured by real
property multiplied by a fraction, the numerator of which is
the amount included in the numerator of the receipts factor
under subparagraph (iv) and the denominator of which is the
total amount of interest and fees or penalties in the nature
of interest from loans not secured by real property.
(B) If the institution receives loan servicing fees for
servicing the secured or the unsecured loans of another
institution, the numerator of the receipts factor shall include
loan servicing fees if the borrower is located in this
Commonwealth.
(xii) The numerator of the receipts factor shall include
receipts from services not otherwise apportioned under this
section if the recipient of the services receives all of the
benefit of the services in this Commonwealth. If the recipient
of the services receives some of the benefit of the services
in this Commonwealth, the receipts shall be included in the
numerator of the apportionment factor in proportion to the
extent that the recipient receives benefit of the services in
this Commonwealth.
(xiii) The following shall apply to receipts from an
institution's investment assets and activity and trading assets
and activity:
(A) Interest, dividends, net gains equal to zero or above,
and other income from investment assets and activities and from
trading assets and activities shall be included in the receipts
factor. Investment assets and activities and trading assets and
activities shall include investment securities, trading account
assets, Federal funds, securities purchased and sold under
agreements to resell or repurchase, options, futures contracts,
forward contracts and notional principal contracts such as
swaps, equities and foreign currency transactions. For the
investment and trading assets and activities under subclauses
(I) and (II), the receipts factor shall include the amounts
under subclauses (I) and (II). The following shall apply:
(I) The receipts factor shall include the amount by which
interest from Federal funds sold and securities purchased under
resale agreements exceeds interest expense on Federal funds
purchased and securities sold under repurchase agreements.
(II) The receipts factor shall include the amount by which
interest, dividends, gains and other income from investment and
trading assets and activities, including assets and activities
in the matched book, in the arbitrage book and foreign currency
transactions, exceed amounts paid in lieu of interest, amounts
paid in lieu of dividends and losses from the assets and
activities.
(B) The numerator of the receipts factor shall include the
receipts under clause (A) that are attributable to this
Commonwealth using one of the following alternative methods:
(I) Method 1. The numerator shall be determined by
multiplying the total amount of receipts under clause (A) by a
fraction, the numerator of which is the total amount of all
other receipts attributable to this Commonwealth and the
denominator of which is the total amount of all other receipts.
(II) Method 2. The numerator shall be determined by
multiplying the total amount of receipts under clause (A) by a
fraction, the numerator of which is the average value of the
assets which generate the receipts which are properly assigned
to a regular place of business of the institution within this
Commonwealth and the denominator of which is the average value
of all such assets.
(C) Upon the election by the institution to use one of the
methods under clause (B) for tax imposed for a taxable year
beginning after December 31, 2016, the institution shall use
the method on all subsequent returns unless the institution
receives prior permission from the Department of Revenue to use
a different method.
(D) The following shall apply:
(I) An institution electing to use Method 2 shall have the
burden of proving that an investment asset or activity or
trading asset or activity was properly assigned to a regular
place of business outside of this Commonwealth by demonstrating
that the day-to-day decisions regarding the asset or activity
occurred at a regular place of business outside this
Commonwealth.
(II) If the day-to-day decisions regarding an investment
asset or activity or trading asset or activity occur at more
than one regular place of business and one regular place of
business is in this Commonwealth and one regular place of
business is outside this Commonwealth, the asset or activity
shall be considered to be located at the regular place of
business of the institution where the investment or trading
policies or guidelines with respect to the asset or activity
are established.
(III) Unless the institution demonstrates to the contrary,
the investment or trading policies and guidelines under
subclause (II) shall be presumed to be established at the
commercial domicile of the institution.
(E) (E) deleted by amendment)
((xiii) amended July 13, 2016, P.L.526, No.84)
(xiv) The following shall apply to receipts from the sale
or disposition of property:
(A) The numerator of the receipts factor shall include
receipts from the sale or disposition of tangible personal
property if the property is delivered or shipped to a purchaser
within this Commonwealth regardless of the f.o.b. point or other
conditions of the sale.
(B) The numerator of the receipts factor shall include all
receipts from the sale or disposition of real property if the
property is located in this Commonwealth.
(C) The numerator of the receipts factor shall include all
receipts from the sale or disposition of intangible property
if:
(I) the commercial domicile of the purchaser or recipient
of the property is located in this Commonwealth; or
(II) the purchaser or recipient does not have a commercial
domicile, and the billing address of the purchaser or recipient
is located in this Commonwealth.
(xv) The following shall apply to receipts not provided for
under this paragraph:
(A) The numerator of the receipts factor for receipts not
otherwise apportioned under this section shall include receipts
if:
(I) the benefit to the customer is received in this
Commonwealth; or
(II) the billing address of the customer is located within
this Commonwealth; and:
(a) the location where the benefit to the customer is
received cannot be determined;
(b) the commercial domicile of the customer is in this
Commonwealth; or
(c) the customer does not have a commercial domicile.
(B) If receipts subject to this paragraph are not received
from a customer, the receipts shall be excluded from both the
numerator and denominator of the receipts factor.
(xvi) For purposes of determining the location where
benefits are received from under subparagraphs (xii) and (xv),
if a service or other activity generating the receipts provides
benefits to two or more recipients located in different states
or provides benefits to a recipient in more than one state, the
location where benefits are received may be estimated using
reasonable procedures to estimate the locations in which
benefits are received.
(xvii) Receipts which would be assigned under this section
to a state in which the institution is not subject to a business
privilege tax, a net income tax, a franchise tax measured by
net income, a franchise tax for the privilege of doing business
or a corporate stock tax or shares tax of the type imposed under
this article shall be included in the numerator of the receipts
factor if the institution's commercial domicile is in this
Commonwealth.
(4) The deposits factor is a fraction, the numerator of
which is the average value of deposits located in this
Commonwealth during the taxable year and the denominator of
which is the average value of the total deposits during the
taxable year. The average value of deposits is to be computed
on a quarterly basis. Deposits are located in the state in which
the institution maintains an office which properly treats the
deposits as a liability on its books or records. A deposit is
considered to be properly treated as a liability on the books
or records of the office with which it has a greater portion
of contact. In determining whether a deposit has a greater
portion of contact with a particular office, consideration is
given to:
(i) Whether the deposit account was opened at or transferred
to that office by or at the direction of the depositor,
regardless of where subsequent deposits or withdrawals are made.
(ii) Whether employes regularly connected with that office
are primarily responsible for servicing the depositor's general
banking and other financial needs.
(iii) Whether the deposit was solicited by an employe
regularly connected with that office, regardless of where such
deposit was actually solicited.
(iv) Whether the terms governing the deposit were negotiated
by employes regularly connected with that office, regardless
of where the negotiations were actually conducted.
(v) Whether essential records relating to the deposit are
kept at that office and whether the deposit is serviced at that
office.
(701.4 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 51(3)(iii) of Act 84 of 2016, which
amended paragraph (3)(xiii), provided that the amendment
shall apply retroactively to January 1, 2014.
Compiler's Note: Section 42(2.1) of Act 52 of 2013, which
amended section 701.4, provided that the amendment shall
apply to the calendar year beginning on January 1, 2014,
and to each calendar thereafter. See section 43 of Act
52 in the appendix to this act for special provisions
relating to applicability.
Section 701.5. Definitions.--The following words, terms and
phrases when used in this article shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Billing address." The location indicated in the books and
records of an institution on the first day of the taxable year
or on a later date in the taxable year when the customer
relationship began, as the address where a notice, statement
and bill relating to a customer's account is mailed.
"Commercial domicile." As follows:
(1) the place from which a trade or business is principally
managed and directed; or
(2) if a trade or business is organized under the laws of
a foreign country, the person's commercial domicile shall be
deemed to be the state of the United States or the District of
Columbia from which the institution's trade or business in the
United States is principally managed and directed. It shall be
presumed, subject to rebuttal, that the location from which a
trade or business is principally managed and directed is the
state of the United States or the District of Columbia to which
the greatest number of employes are regularly connected or out
of which they are working, notwithstanding where the services
of the employes are performed, as of the last day of the taxable
year.
"Card issuer's reimbursement fee." The fee an institution
receives from a merchant's bank because one of the persons to
whom the institution has issued a credit, debit or similar type
of card has charged merchandise or services to the card.
"Credit card." A card, or other means of providing
information, that entitles the holder to charge the cost of
purchases or a cash advance, against a line of credit.
"Debit card." A card, or other means of providing
information, that enables the holder to charge the cost of
purchases or cash withdrawal, against the holder's bank account
or a remaining balance on the card.
"Deposits." Deposits consist of those items specified for
inclusion as such in quarterly Reports of Condition, but do not
include deposits made by the Federal Government, its agencies
or instrumentalities.
"Doing business in this Commonwealth." As follows:
(1) An institution is engaged in doing business in this
Commonwealth and is subject to the tax imposed under this
article if it satisfies any of the following requirements:
(i) The institution has an office or branch in this
Commonwealth.
(ii) One or more employes, representatives, independent
contractors or agents of the institution conduct business
activities of the institution in this Commonwealth.
(iii) A person, including an employe, representative,
independent contractor, agent or affiliate of the institution,
or an employe, representative, independent contractor or agent
of an affiliate of the institution, directly or indirectly
solicits business in this Commonwealth by or for the benefit
of the institution, through:
(A) person-to-person contact, mail, telephone or other
electronic means; or
(B) the use of advertising published, produced or
distributed in this Commonwealth.
(iv) The institution owns, leases or uses real or personal
property in this Commonwealth to conduct its business
activities.
(v) The institution holds a security interest, mortgage or
lien in real or personal property located in this Commonwealth.
(vi) A basis exists under section 701.4 to apportion the
institution's receipts to this Commonwealth.
(vii) The institution has a physical presence in this
Commonwealth for a period of more than one day during the tax
year or conducts an activity sufficient to create a nexus in
this Commonwealth for tax purposes under the Constitution of
the United States.
(2) The term shall not include:
(i) The use by the institution of a professional performing
a service on behalf of the institution in this Commonwealth if
the services are not significantly associated with the
institution's ability to establish and maintain a market in
this Commonwealth.
(ii) The mere use of financial intermediaries in this
Commonwealth by an institution for the processing or transfer
of checks, credit card receivables, commercial paper and similar
items.
(Def. amended July 13, 2016, P.L.526, No.84)
"Employe." Any individual to whom wages are paid within the
meaning of 26 U.S.C. § 3401.
"Institution." As follows:
(1) The term shall mean:
(i) Every bank operating as such and having capital stock
which is incorporated under any law of this Commonwealth, under
the law of the United States or under the law of any other
jurisdiction.
(ii) Every operating company having capital stock and having
any of the powers of companies entitled to the benefits of an
act, entitled "An act conferring upon certain fidelity,
insurance, safety deposit, trust, and savings companies, the
powers and privileges of companies incorporated under the
provisions of section 29 of an act, entitled 'An act to provide
for the incorporation and regulation of certain corporations,'
approved April 29, 1874, and of the supplements thereto,"
approved June 27, 1895, commonly known as trust companies.
(iii) Every company organized and operating as a bank and
trust company or as trust company having capital stock, whether
the institution is incorporated under any law of this
Commonwealth, the law of the United States or any law of any
jurisdiction. The term shall not include any of such companies,
all of the shares of capital stock of which, other than shares
necessary to qualify directors, are owned by a company which
is liable to pay to the Commonwealth a tax pursuant to this
article.
(iv) A corporation organized under 12 U.S.C. Ch. 6 Subch.
II (relating to organization of corporations to do foreign
banking).
(v) An agency or branch of a foreign depository as defined
in 12 U.S.C. § 3101 (relating to definitions).
(2) The term shall not include a "mutual thrift institution"
or "institution," as defined in section 1501, which is subject
to the tax imposed under Article XV.
"Lease." Any leasing transaction in which the lessor would
be treated as owner of the leased property under generally
accepted accounting principles. All other transactions
purporting to be leases shall be treated as loans for purposes
of this article.
"Loan." As follows:
(1) The term shall mean any of the following:
(i) An extension of credit resulting from direct
negotiations between the institution and its customer.
(ii) The purchase, in whole or in part, of the extension
of credit under subparagraph (i) from another person.
(2) The term shall include a participation, syndication and
lease treated as a loan for Federal income tax purposes.
(3) The term shall not include:
(i) Futures or forward contracts.
(ii) An option.
(iii) A notional principal contract such as swaps.
(iv) A credit card receivable, including a purchased credit
card relationship.
(v) A noninterest bearing balance due from a depository
institution.
(vi) A cash item in the process of collection.
(vii) A Federal fund sold.
(viii) A security purchased under an agreement to resell.
(ix) An asset held in a trading account.
(x) A security.
(xi) An interest in a real estate mortgage investment
conduit or other mortgage-backed or asset-backed security.
(xii) An item similar to an item listed under this
paragraph.
"Loan secured by real property." A loan for which at least
fifty per cent of the aggregate value of the collateral used
to secure a loan or other obligation, when valued at fair market
value as of the time the original loan or obligation was
incurred, was real property.
"Located." (Def. deleted by amendment)
"Maintains an office." (Def. deleted by amendment)
"Merchant discount." The fee or negotiated discount charged
to a merchant by an institution for the privilege of
participating in a program by which a credit, debit or similar
type of card is accepted in payment for merchandise or services
sold to the cardholder, net of any cardholder charge-back and
unreduced by any interchange transaction or issuer reimbursement
fee paid to another for a charge or purchase made by its
cardholder.
"Origination of loans." A loan is deemed to have originated
in the state in which the office is located which properly
treats the loan as an asset on its books or records. However,
if an institution maintains an office in a state, the following
rules apply:
(1) Loans secured primarily by real property are deemed to
have originated at an office within the state in which the
predominant part of the security real property is or will be
located, if at least one of the following activities occurs at
an office in the state:
(i) application for the loan;
(ii) negotiation for the loan;
(iii) approval of the loan; or
(iv) administrative responsibility for the loan.
(2) All other loans made to borrowers residing or having
their commercial domicile within the state are deemed to have
originated at an office within the state, if at least one of
the following activities occurs at an office in the state:
(i) application for the loan;
(ii) negotiation for the loan;
(iii) approval of the loan; or
(iv) administrative responsibility for the loan.
"Principal base of operations." As follows:
(1) With respect to transportation property, the place from
which the property is regularly directed or controlled.
(2) With respect to an employe, the place of more or less
permanent nature from which the employe regularly:
(i) starts work and to which the employe customarily returns
in order to receive instructions from the employe's employer;
(ii) communicates with customers or other people; or
(iii) performs any other function necessary to the exercise
of the employe's trade or profession at some other point.
"Property located in a state."
(1) Except as otherwise provided in this definition,
tangible property, including leased property, shall be deemed
to be located in the state in which the property is physically
situated.
(2) Tangible personal property which is characteristically
moving property, such as motor vehicles, rolling stock,
aircraft, vessels, mobile equipment and the like, shall be
deemed to be located in a state if:
(i) the operation of the property is entirely within the
state or the operation outside of the state is occasional or
incidental to its operation within the state;
(ii) the operation of the property is in two or more states,
but the principal base of operations from which the property
is sent out is in the state; or
(iii) the state is the residence or commercial domicile of
the lessee or other user of the property, where there is no
principal base of operations and the operation of the property
is in two or more states.
"Real property owned" and "tangible property owned." As
follows:
(1) Real and tangible personal property, respectively,:
(i) on which the institution may claim depreciation for
Federal income tax purposes; or
(ii) property to which the institution holds legal title
and on which no other person may claim depreciation for Federal
income tax purposes, or could claim depreciation if subject to
Federal income tax.
(2) The term does not include coin, currency or property
acquired in lieu of or pursuant to a foreclosure.
"Receipts." The total of all items of income reported on
the income statement of the institution's Reports of Condition
at the end of the preceding calendar year. If there is a
combination of two or more institutions into one, the total of
all items of income that would be reported on the income
statements of the Reports of Condition of the constituent
institutions shall be combined as if a single institution had
been in existence for the year. For purposes of this definition,
a combination shall include any acquisition required to be
accounted for by using the purchase method in accordance with
generally accepted accounting principles or a statutory merger
or consolidation. If the institution does not file quarterly
Reports of Condition, the term shall include all items of income
included on an income statement determined in accordance with
generally accepted accounting principles for the preceding
calendar year. (Def. amended June 30, 2021, P.L.124, No.25)
"Regular place of business." An office at which an
institution carries on its business in a regular and systematic
manner and which is continuously maintained, occupied and used
by employes of an institution.
"Regular presence of employes." An employe shall be deemed
to have a regular presence in a state if:
(1) a majority of the employe's service is performed within
the state; or
(2) the office from which his activities are directed or
controlled is located in the state, where a majority of the
employe's service is not performed in any one state.
"State." Any of the several states of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, any
territory or possession of the United States and any foreign
country.
"Syndication." An extension of credit in which two or more
people provide funds and each person is at risk for up to a
specified percentage of the total extension of credit or for
up to a specified dollar amount.
"Transportation property." A vehicle and vessel capable of
moving under its own power, such as an aircraft, a train, a
water vessel and a motor vehicle. The term includes equipment
or a container attached to the property, such as rolling stock,
a barge, a trailer or similar equipment or container.
(701.5 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 51(5)(ii) of Act 84 of 2016, which
amended the definitions of "doing business in this
Commonwealth" and "receipts," provided that the amendment
shall apply to taxable years beginning after December
31, 2016.
Compiler's Note: Section 42(2.1) of Act 52 of 2013, which
amended section 701.5, provided that the amendment shall
apply to the calendar year beginning on January 1, 2014,
and to each calendar thereafter. See section 43 of Act
52 in the appendix to this act for special provisions
relating to applicability.
PART II
PROCEDURE; ENFORCEMENT; PENALTIES
Section 702. Procedure; Enforcement; Penalties.--(a) Except
as set forth in subsection (b), Parts III, IV, V, VI and VII
of Article IV are incorporated by reference into this article
in so far as they are applicable to the tax imposed hereunder.
(b) The Department of Revenue may, upon application made
by the last day for filing and in a form prescribed by the
department, grant an extension of not more than six months for
filing the annual report required by section 701.
(702 amended June 22, 2001, P.L.353, No.23)
Compiler's Note: Section 26(4)(x) of Act 23 of 2001, which
amended section 702, provided that the amendment shall
apply to taxable years beginning after December 31, 2000.
PART III
REPEALER; EFFECTIVE DATE
Section 705. Repeal.--Clause 1 of section 1, act of July
15, 1897 (P.L.292), entitled "An act to provide revenue by
taxation," is repealed.
Section 706. Effective Date.--This article shall take effect
immediately, and the tax imposed shall apply to taxable years
beginning January 1, 1971 and thereafter.
ARTICLE VII-A
ALTERNATIVE BANK AND TRUST
COMPANY SHARES TAX
(Art. VII-A repealed June 22, 2001, P.L.353, No.23)
Section 701-A. Imposition of Tax.--(701-A repealed June 22,
2001, P.L.353, No.23)
Section 702-A. Ascertainment of Value; Exclusion of United
States Obligations.--(702-A repealed June 22, 2001, P.L.353,
No.23)
PART II
PROCEDURE; ENFORCEMENT; PENALTIES
(Pt. II repealed June 22, 2001, P.L.353, No.23)
Section 711-A. Procedure; Enforcement; Penalties.--(711-A
repealed June 22, 2001, P.L.353, No.23)
PART III
MISCELLANEOUS PROVISIONS
(Pt. III repealed June 22, 2001, P.L.353, No.23)
Section 721-A. Effective Date.--(721-A repealed June 22,
2001, P.L.353, No.23)
ARTICLE VIII
TITLE INSURANCE COMPANIES SHARES TAX
(Hdg. amended June 16, 1994, P.L.279, No.48)
PART I
IMPOSITION OF TAX
Section 801. Imposition of Tax.--(a) Every company
incorporated under the provisions of section 29 of an act,
entitled "An act to provide for the incorporation and regulation
of certain corporations," approved April 29, 1874, and its
supplements, or any other act of Assembly heretofore or
hereafter approved, for the insurance of owners of real estate,
mortgages, and others interested in real estate, from loss by
reason of defective titles, liens, and encumbrances, commonly
known as title insurance companies, except any such companies,
all of the shares of capital stock of which (other than shares
necessary to qualify directors) are owned by a company which
is liable to pay to the Commonwealth a tax on shares, shall,
on or before March 15 in each and every year, make to the
Department of Revenue a report in writing, setting forth the
full number of shares of the capital stock subscribed for or
issued by such company, and the taxable amount of such shares
of capital stock determined pursuant to section 801.1. It shall
be the duty of the Department of Revenue, to assess such shares
for taxation for calendar years beginning January 1, 1971
through January 1, 1983, at the rate of fifteen mills and for
the calendar years beginning January 1, 1984, through January
1, 1988, at the rate of one and seventy-five one thousandths
per cent and for the calendar year beginning January 1, 1989,
at the rate of 10.77 per cent and for the calendar year
beginning January 1, 1990, and each calendar year thereafter
at the rate of 1.25 per cent upon each dollar of the taxable
amount thereof, the taxable amount of each share of stock to
be ascertained and fixed pursuant to section 801.1, and dividing
this amount by the number of shares.
(b) It shall be the duty of every such company, at the time
of making every report required by this section, to compute the
tax and to pay the amount of said tax to the State Treasurer,
through the Department of Revenue, either from its general fund,
or from the amount of said tax collected from its shareholders:
Provided, That for the calendar years beginning January 1, 1971
through January 1, 1991, every such company shall, at the time
of making its report for the calendar years beginning January
1, 1971 through January 1, 1991, compute the tax and pay to the
State Treasurer, through the Department of Revenue, either from
its general fund, or from the amount of said tax collected from
its shareholders, not less than eighty per cent of the tax due
to the Commonwealth by it for such calendar year and the
remaining tax due shall be paid at the time when the report
herein required for the year next succeeding is made: Provided,
That upon the payment of the tax fixed by this act into the
State Treasury, through the Department of Revenue, the shares
and so much of the capital stock, surplus, profits, and deposits
of such company as shall not be invested in real estate, shall
be exempt from all other taxation under the laws of this
Commonwealth. The procedure, in case the Department of Revenue
be not satisfied with the report made by any title insurance
company, and the penalties for failing to make such report and
pay the tax, shall be as provided by law.
(801 amended June 16, 1994, P.L.279, No.48)
Section 801.1. Ascertainment of Taxable Amount; Exclusion
of United States Obligations.--(a) The taxable amount of shares
shall be ascertained and fixed by adding together the value
determined under subsection (b) for the current and preceding
five years and dividing the resulting sum by six. If a company
has not been in existence for a period of six years, the taxable
amount of shares shall be ascertained and fixed by adding
together the value determined under subsection (b) for the
number of years the company has been in existence and dividing
the resulting sum by such number of years.
(b) The value for each year required by subsection (a) shall
be determined by adding together the book value of capital stock
paid in, the book value of the surplus, the book value of
undivided profits and the book value of the unearned premium
reserve with a deduction from the total thereof of an amount
equal to the same percentage of such total as the book value
of obligations of the United States bears to the book value of
the total assets. For purposes of this subsection, in the case
of title insurance companies, book values and the deduction for
United States obligations for each year shall be determined by
generally accepted accounting principles as of the end of each
calendar quarter in the preceding calendar year and book values
shall in all cases be averaged as calculated by averaging book
values as determined at the end of each calendar quarter. For
the purposes of this article, United States obligations shall
be obligations coming within the scope of 31 U.S.C. § 3124. For
any year in which a bank or bank and trust company does not
file four quarterly Reports of Condition, book values and
deductions for United States obligations shall be determined
by adding together the book values and deductions for United
States obligations from each quarterly Reports of Condition
filed for such year and dividing the resulting sums by the
number of such Reports of Condition. For any year in which a
title insurance company is not in existence for the full year,
book values and deductions for United States obligations shall
be determined by adding together the book values and deductions
for United States obligations as of the end of each calendar
quarter in which the company was in existence at the end of
such calendar quarter and dividing the resulting sums by the
number of such calendar quarters. For purposes of this section,
a partial year shall be treated as a full year.
(c) For purposes of this section:
(1) a mere change in identity, form or place of organization
of one company, however effected, shall be treated as if a
single company had been in existence prior to as well as after
such change; and
(2) the combination of two or more companies into one shall
be treated as if the constituent companies had been a single
company in existence prior to as well as after the combination
and the book values and deductions for United States obligations
as determined by generally accepted accounting principles as
of the end or each calendar quarter of the constituent companies
shall be combined. For purposes of the preceding sentence, a
combination shall include any acquisition required to be
accounted for by the surviving company under the pooling of
interest method in accordance with generally accepted accounting
principles or a statutory merger or consolidation.
(801.1 amended June 16, 1994, P.L.279, No.48)
Section 801.2. Reserve for Loan Losses.--(801.2 repealed
Dec. 1, 1983, P.L.228, No.66)
PART II
PROCEDURE; ENFORCEMENT; PENALTIES
Section 802. Procedure; Enforcement; Penalties.--Parts III,
IV, V, VI and VII of Article IV are incorporated by reference
into this article insofar as they are applicable to the tax
imposed hereunder. The taxable value of shares under this
article shall be apportioned under the provisions of section
701.4, except that, in addition, for purposes of section
701.4(3), receipts from the issuance of title insurance shall
be located in the state in which the real property that is
insured is located.
(802 amended June 16, 1994, P.L.279, No.48)
Section 803. Amended Report for 1989.--Within one hundred
twenty days of the effective date of this section, every company
subject to tax under section 801 shall make to the Department
of Revenue on a form prescribed, prepared and furnished by the
Department of Revenue an amended report of the tax payable on
its shares computed as of January 1, 1989, and shall pay to the
Commonwealth at the time of making such amended report eighty
per cent of the tax due, if any, as shown by such amended report
less the amount paid, if any, upon filing of an original report
for the year 1989 heretofore required to be made, and the
remaining tax due, if any, shall be paid when the report
required by section 701 for the year next succeeding is made.
For all purposes under this act, the act of April 9, 1929
(P.L.343, No.176), known as "The Fiscal Code," and other
applicable statutes, the date of the amended report and the
date for payment of the balance, if any, of the tax payable at
the time of making the amended report shall be substituted for
the date of the report formerly required for the 1989 report
and the date of the payment of the tax payable with such report.
(803 added July 1, 1989, P.L.95, No.21)
PART III
REPEALER; EFFECTIVE DATE
Section 805. Repeal.--Section 1, act of June 13, 1907
(P.L.640), entitled "An act to provide revenue by levying a tax
upon the shares of stock of companies incorporated under the
provisions of section twenty-nine of an act, entitled 'An act
to provide for the incorporation and regulation of certain
corporations,' approved April twenty-ninth, one thousand eight
hundred and seventy-four, and the supplements thereto; for the
insurance of owners of real estate, mortgages, and others
interested in real estate, from loss by reason of defective
titles, liens, and encumbrances; and of companies entitled to
the benefits of, and of companies having any of the powers of,
companies entitled to the benefits of an act, entitled 'An act
conferring upon certain fidelity, insurance, safety deposit,
trust, and savings companies the powers and privileges of
companies incorporated under the provisions of section
twenty-nine of an act, entitled "An act to provide for the
incorporation and regulation of certain corporations," approved
April twenty-ninth, Anno Domini one thousand eight hundred and
seventy-four, and of the supplements thereto,' approved June
twenty-seventh, one thousand eight hundred and ninety-five,
commonly known as title insurance or trust companies," is
repealed.
Section 806. Effective Date.--This article shall take effect
immediately, and the tax imposed shall apply to taxable years
beginning January 1, 1971 and thereafter.
ARTICLE VIII-A
ALTERNATIVE TITLE INSURANCE
COMPANIES SHARES TAX
(Art. VIII-A repealed June 22, 2001, P.L.353, No.23)
Section 801-A. Imposition of Tax.--(801-A repealed June 22,
2001, P.L.353, No.23)
Section 802-A. Ascertainment of Value; Exclusion of United
States Obligations.--(802-A repealed June 22, 2001, P.L.353,
No.23)
PART II
PROCEDURE; ENFORCEMENT; PENALTIES
(Pt. II repealed June 22, 2001, P.L.353, No.23)
Section 811-A. Procedure; Enforcement; Penalties.--(811-A
repealed June 22, 2001, P.L.353, No.23)
PART III
MISCELLANEOUS PROVISIONS
(Pt. III repealed June 22, 2001, P.L.353, No.23)
Section 821-A. Effective Date.--(821-A repealed June 22,
2001, P.L.353, No.23)
ARTICLE IX
INSURANCE PREMIUMS TAX
PART I
DEFINITIONS
Section 901. Definitions.--The following terms, when used
in this article, shall have the meaning ascribed to them in
this section: (Intro. par. amended July 2, 2012, P.L.751, No.85)
(1) "Insurance company" means every insurance company,
association or exchange, incorporated or organized by or under
the laws of this Commonwealth, the United States, territories,
dependencies, other states, or foreign governments, and engaged
in transacting insurance business of any kind or classification
within this Commonwealth, except title insurance companies
subject to tax under Article VIII or XVI of this act, as the
case may be, except purely mutual beneficial associations whose
funds for the benefit of members and families or heirs are made
up entirely of the weekly, monthly, quarterly, semi-annual or
annual contributions to their members and the accumulated
interest thereon and corporations organized under the act of
June 21, 1937 (P.L.1948), known as the "Nonprofit Hospital Plan
Act," and the act of June 27, 1939 (P.L.1125), known as the
"Nonprofit Medical, Osteopathic, Dental and Podiatry Service
Corporation Act."
(2) "Gross premiums" means premiums, premium deposits or
assessments received by any insurance company, whether received
in money or in the form of notes, credits, or any other
substitutes for money, and whether collected in this
Commonwealth or elsewhere. Gross premiums shall not include:
(i) amounts returned on policies canceled or not taken; (ii)
premiums received for reinsurance; (iii) in the case of mutual
insurance companies, associations, exchanges, and stock
companies with participating features, that portion of the
advanced premiums, premium deposits or assessments returned in
cash or credited to members or policyholders, whether as
dividends, earnings, savings, or return deposits, upon the
expiration or termination of their contracts; and (iv) notes
or other obligations received by mutual insurance companies to
secure contingent premium liabilities to the extent that no
assessment has been made and collected against said notes or
obligations.
(3) ((3) deleted by amendment June 30, 1995, P.L.139, No.21)
(4) "Assessment" means an assessment imposed by the guaranty
association pursuant to section 1808 of the act of May 17, 1921
(P.L.682, No.284), known as "The Insurance Company Law of 1921."
((4) added May 24, 2000, P.L.106, No.23)
(5) "Guaranty association" means the Pennsylvania Property
and Casualty Insurance Guaranty Association created pursuant
to section 1803 of the act of May 17, 1921 (P.L.682, No.284),
known as "The Insurance Company Law of 1921." ((5) added May
24, 2000, P.L.106, No.23)
(6) "Member insurer" means an insurance company, association
or exchange which is required to participate in the guaranty
association pursuant to Article XVIII of the act of May 17,
1921 (P.L.682, No.284), known as "The Insurance Company Law of
1921." ((6) added May 24, 2000, P.L.106, No.23)
(7) "Assessment base" means the amount of net direct
written premiums used by the guaranty association to calculate
a member insurer's assessment on an account under section 1808
of the act of May 17, 1921 (P.L.682, No.284), known as "The
Insurance Company Law of 1921." ((7) added June 22, 2001,
P.L.353, No.23)
(901 amended Dec. 1, 1983, P.L.228, No.66)
Compiler's Note: Section 26(1)(i) of Act 23 of 2001, which
added clause (7), provided that clause (7) shall apply
to assessments paid after December 31, 1998. Section
26(3)(i) of Act 23 provided that clause (7) shall apply
to taxes paid for calendar year 2000 and thereafter.
Compiler's Note: Section 19(4)(i) of Act 23 of 2000, which
added clauses (4), (5) and (6), provided that clauses
(4), (5) and (6) shall apply to assessments paid after
December 31, 1998. Section 19(5)(i) of Act 23 provided
that clauses (4), (5) and (6) shall apply to taxes paid
for calendar year 2000 and thereafter.
PART II
IMPOSITION OF TAX
Section 902. (a) Imposition of Tax.--Every insurance
company, as herein defined, transacting business in the
Commonwealth of Pennsylvania, shall pay to the department, a
tax at the rate of two per cent of the gross premiums received
from business done within this Commonwealth during each calendar
year.
(b) Disposition of Taxes.--The total of the money received
from the following taxes and charges shall be deposited into
the General Fund:
(1) The tax imposed by subsection (a).
(2) The retaliatory charge imposed by section 212 of the
act of May 17, 1921 (P.L.789, No.285), known as "The Insurance
Department Act of 1921."
(3) The surplus lines tax imposed by section 1621 of the
act of May 17, 1921 (P.L.682, No.284), known as "The Insurance
Company Law of 1921."
(4) The tax on independently procured insurance imposed by
section 1622 of "The Insurance Company Law of 1921."
(5) The marine insurance tax imposed by section 2 of the
act of May 13, 1927 (P.L.998, No.486), entitled "An act imposing
a tax for State purposes on marine insurance underwriting
profits, and providing for the collection of such tax."
(6) The tax on contracts with unauthorized companies imposed
by section 1 of the act of July 6, 1917 (P.L.723, No.262),
entitled "An act imposing a tax on premiums of insurance and
reinsurance in foreign insurance companies and associations not
registered in this Commonwealth; providing the method of
collection of such tax, and imposing penalties."
(b.1) The following transfers will occur each fiscal year:
(1) Fire Insurance Tax Fund:
(i) On or before June 30, 2023, and on or before each June
30 thereafter, the greater of eighty-five million dollars
($85,000,000) or eight and one-half per cent of the total taxes
and charges under subsection (b) received during the current
fiscal year shall be transferred to the Fire Insurance Tax Fund.
(ii) On or before July 15, 2023, and on or before each July
15 thereafter, if taxes or charges are deposited after the
transfer under subparagraph (i) and before July 1, 2023, and
each July 1 thereafter, an additional transfer shall occur if
eight and one-half per cent of total collections under
subsection (b) for the prior fiscal year is greater than
eighty-five million dollars ($85,000,000). The calculation for
the additional transfer shall equal eight and one-half per cent
of the total taxes and charges under subsection (b) minus the
transfer amount under subparagraph (i).
(iii) The transfers under subparagraphs (i) and (ii) shall
be used for firemen's relief pension or retirement purposes,
as provided by section 706(b) of the act of December 18, 1984
(P.L.1005, No.205), known as the "Municipal Pension Plan Funding
Standard and Recovery Act."
(2) Municipal Pension Aid Fund:
(i) On or before June 30, 2023, and on or before each June
30 thereafter, the greater of three hundred forty-five million
dollars ($345,000,000) or thirty-eight per cent of the total
taxes and charges under subsection (b) received during the
current fiscal year shall be transferred to the Municipal
Pension Aid Fund.
(ii) On or before July 15, 2023, and on or before each July
15 thereafter, if taxes or charges are deposited after the
transfer under subparagraph (i) and before July 1, 2023, and
each July 1 thereafter, an additional transfer shall occur if
thirty-eight per cent of total collections under subsection (b)
for the prior fiscal year is greater than three hundred
forty-five million dollars ($345,000,000). The calculation for
that additional transfer shall equal thirty-eight per cent of
the total taxes and charges under subsection (b) minus the
transfer amount under subparagraph (i).
(iii) The transfers under subparagraphs (i) and (ii) shall
be used for police pension, retirement or disability purposes
as provided by the act of May 12, 1943 (P.L.259, No.120),
entitled "An act providing for the payment by the State
Treasurer, of the amount of the tax on premiums paid by foreign
casualty insurance companies, to the treasurers of the several
cities, boroughs, towns, townships, and certain counties, and
for the payment thereof into police pension funds, and in
certain cases into the Municipal Employes' Retirement System,
and for Pension Annuity Contracts, and in certain other cases
into the State Employes' Retirement Fund, for certain purposes."
(c) Other taxes.--(Deleted by amendment).
(902 amended July 8, 2022, P.L.513, No.53)
Compiler's Note: Section 24(4)(i) of Act 53 of 2022 provided
that the amendment of section 902 shall apply to fiscal
years beginning after June 30, 2022.
Section 902.1. Credits for Assessments Paid.--(a) A member
insurer that has paid assessments to the guaranty association
shall be entitled to a credit as authorized by this section.
The credit shall be equal to the amount by which the assessment
paid to the guaranty association exceeds one per cent of the
member insurer's assessment base. Except as provided in
subsection (e), the credit authorized by this section shall be
applied against the taxes due under this article in equal
portions for each of the five calendar years following payment
of the assessment. In the event a member insurer should cease
doing business, all unused credits may be applied against its
premium tax liability for the year it ceases doing business. A
member insurer is not entitled to a refund of any unused credit.
(b) Any sums which are acquired by a member insurer from
the guaranty association either by refund or by receipt of an
offset which may be used against an assessment and which have
been used in calculating a credit under subsection (a) shall
reduce the amount of unused credits or shall be paid by such
insurer to the Commonwealth, as the Department of Revenue may
require. The guaranty association shall notify the department
and the Insurance Commissioner that such sums have been acquired
by the member insurer.
(c) No credit against premium tax liability shall be
permitted to the extent that a member insurer's rates and
premiums have been adjusted as permitted in section 1810 of the
act of May 17, 1921 (P.L.682, No.284), known as "The Insurance
Company Law of 1921."
(d) ((d) deleted by amendment July 8, 2022, P.L.513, No.53).
(e) Credits taken by an insurer under this section shall
not be included in determining liability for retaliatory taxes
imposed under section 212 of the act of May 17, 1921 (P.L.789,
No.285), known as "The Insurance Department Act of 1921."
(902.1 amended June 22, 2001, P.L.353, No.23)
Compiler's Note: Section 24(4)(ii) of Act 53 of 2022
provided that the amendment of section 902.1(d) shall
apply to fiscal years beginning after June 30, 2022.
Compiler's Note: Section 26(1)(ii) of Act 23 of 2001, which
amended section 902.1, provided that the amendment shall
apply to assessments paid after December 31, 1998.
Section 26(3)(ii) of Act 23 provided that the amendment
shall apply to taxes paid for calendar year 2000 and
thereafter.
Compiler's Note: Section 19(4)(ii) of Act 23 of 2000, which
added section 902.1, provided that section 902.1 shall
apply to assessments paid after December 31, 1998.
Section 19(5)(ii) of Act 23 provided that section 902.1
shall aplly to taxes paid for calendar year 2000 and
thereafter.
PART III
ANNUAL REPORT
Section 903. Annual Report.--Every insurance company shall
make a report to the department on a form prescribed by it on
or before April 15 of each year, showing the gross premiums
received from business transacted in the Commonwealth during
the year ending December 31 preceding. When making such report,
the insurance company shall compute and pay to the Commonwealth
the tax upon the gross premiums received from business
transacted within this Commonwealth during such preceding year.
(903 amended June 30, 1995, P.L.139, No.21)
PART IV
PROCEDURE; ENFORCEMENT; PENALTIES
Section 904. Procedure; Enforcement; Penalties.--Parts III,
IV, V, VI and VII of Article IV are incorporated by reference
into this article in so far as they are applicable to the tax
imposed hereunder.
PART V
REPEALER; EFFECTIVE DATE
(Hdg. amended Sept. 9, 1971, P.L.437, No.105)
Section 905. Repeal.--The act of February 21, 1961 (P.L.33),
entitled "An act imposing a State tax on gross premiums, premium
deposits, and assessments received from business transacted
within this Commonwealth by certain insurance companies,
associations, and exchanges; requiring the filing of annual and
tentative reports and the computation and payment of tax;
providing for the rights, powers and duties of the Department
of Revenue, the taxpayers and officers thereof; and providing
penalties," is repealed.
Section 906. Effective Date.--This article shall take effect
immediately, and the tax imposed shall apply to taxable years
beginning January 1, 1971 and thereafter.
ARTICLE X
EXCISE TAX ON FOREIGN
CORPORATIONS
(Art. repealed June 22, 2001, P.L.353, No.23)
PART I
DEFINITIONS
(Pt. I repealed June 22, 2001, P.L.353, No.23)
Section 1001. Definitions.--(1001 repealed June 22, 2001,
P.L.353, No.23)
PART II
IMPOSITION OF TAX
(Pt. II repealed June 22, 2001, P.L.353, No.23)
Section 1002. Imposition of Tax.--(1002 repealed June 22,
2001, P.L.353, No.23)
PART III
REPORTS
Section 1003. Initial and Annual Report.--(1003 repealed
June 22, 2001, P.L.353, No.23)
PART IV
PROCEDURE; ENFORCEMENT; PENALTIES
Section 1004. Procedure; Enforcement; Penalties.--(1004
repealed June 22, 2001, P.L.353, No.23)
PART V
REPEALER; EFFECTIVE DATE
(Pt. V repealed June 22, 2001, P.L.353, No.23)
Section 1005. Repeal.--(1005 repealed June 22, 2001,
P.L.353, No.23)
Section 1006. Effective Date.--(1006 repealed June 22, 2001,
P.L.353, No.23)
ARTICLE XI
GROSS RECEIPTS TAX
(Hdg. amended Dec. 23, 2003, P.L.250, No.46)
Section 1101. Imposition of Tax.--(a) General Rule.--Every
pipeline company, conduit company, steamboat company, canal
company, slack water navigation company, transportation company,
and every other company, association, joint-stock association,
or limited partnership, now or hereafter incorporated or
organized by or under any law of this Commonwealth, or now or
hereafter organized or incorporated by any other state or by
the United States or any foreign government, and doing business
in this Commonwealth, and every copartnership, person or persons
owing, operating or leasing to or from another corporation,
company, association, joint-stock association, limited
partnership, copartnership, person or persons, any pipeline,
conduit, steamboat, canal, slack water navigation, or other
device for the transportation of freight, passengers, baggage,
or oil, except motor vehicles and railroads, and every limited
partnership, association, joint-stock association, corporation
or company engaged in, or hereinafter engaged in, the
transportation of freight or oil within this State, and every
telephone company, telegraph company or provider of mobile
telecommunications services now or hereafter incorporated or
organized by or under any law of this Commonwealth, or now or
hereafter organized or incorporated by any other state or by
the United States or any foreign government and doing business
in this Commonwealth, and every limited partnership,
association, joint-stock association, copartnership, person or
persons, engaged in telephone or telegraph business or providing
mobile telecommunications services in this Commonwealth, shall
pay to the State Treasurer, through the Department of Revenue,
a tax of forty-five mills with a surtax equal to five mills
upon each dollar of the gross receipts of the corporation,
company or association, limited partnership, joint-stock
association, copartnership, person or persons received from:
(1) passengers, baggage, oil and freight transported wholly
within this State;
(2) telegraph or telephone messages transmitted wholly
within this State and telegraph or telephone messages
transmitted in interstate commerce where such messages originate
or terminate in this State and the charges for such messages
are billed to a service address in this State, except gross
receipts derived from:
(i) the sales of access to the Internet, as set forth in
Article II, made to the ultimate consumer;
(ii) the sales for resale to persons, partnerships,
associations, corporations, or political subdivisions subject
to the tax imposed by this article upon gross receipts derived
from such resale of telecommunications services, including:
(A) telecommunications exchange access to interconnect with
a local exchange carrier's network;
(B) network elements on an unbundled basis; and
(C) sales of telecommunications services to interconnect
with providers of mobile telecommunications services; and
(iii) the sales of telephones, telephone handsets, modems,
tablets and related accessories, including cases, chargers,
holsters, clips, hands-free devices, screen protectors and
batteries; and
((2) amended June 28, 2018, P.L.369, No.52)
(3) mobile telecommunications services messages sourced to
this Commonwealth based on the place of primary use standard
set forth in the Mobile Telecommunications Sourcing Act (4
U.S.C. § 117), except gross receipts derived from:
(i) the sales of access to the Internet, as set forth in
Article II, made to the ultimate consumer;
(ii) the sales for resale to persons, partnerships,
associations, corporations or political subdivisions subject
to the tax imposed by this article upon gross receipts derived
from
such resale of mobile telecommunications services, including
sales of mobile telecommunications services to interconnect
with providers of telecommunications services; and
(iii) the sales of telephones, telephone handsets, modems,
tablets and related accessories, including cases, chargers,
holsters, clips, hands-free devices, screen protectors and
batteries.
((3) amended June 28, 2018, P.L.369, No.52)
((a) amended Dec. 23, 2003, P.L.250, No.46)
(a.1) Credit.--Telegraph or telephone companies or providers
of mobile telecommunications services that pay a gross receipts
tax to another state on messages or services which are taxable
under this article are entitled to a credit against the tax due
under this article. The credit allowed with respect to the
messages or services shall not exceed the tax under this article
with respect to the messages or services. ((a.1) added Dec. 23,
2003, P.L.250, No.46)
(b) Electric Light, Waterpower and Hydro-electric
Utilities.--Every electric light company, waterpower company
and hydro-electric company now or hereafter incorporated or
organized by or under any law of this Commonwealth, or now or
hereafter organized or incorporated by any other state or by
the United States or any foreign government and doing business
in this Commonwealth, and every limited partnership,
association, joint-stock association, copartnership, person or
persons, engaged in electric light and power business,
waterpower business and hydro-electric business in this
Commonwealth, shall pay to the State Treasurer, through the
Department of Revenue, a tax of forty-four mills upon each
dollar of the gross receipts of the corporation, company or
association, limited partnership, joint-stock association,
copartnership, person or persons, received from:
(1) the sales of electric energy within this State, except
gross receipts derived from the sales for resale of electric
energy to persons, partnerships, associations, corporations or
political subdivisions subject to the tax imposed by this
subsection upon gross receipts derived from such resale; and
(2) the sales of electric energy produced in Pennsylvania
and made outside of Pennsylvania in a state that has taken
action since December 21, 1977 which results in higher costs
for electric energy produced in that state and sold in
Pennsylvania unless the action that was taken after December
21, 1977 is rescinded according to the following apportionment
formula: except for gross receipts derived from sales under
clause (1), the gross receipts from all sales of electricity
of the producer shall be apportioned to the Commonwealth of
Pennsylvania by the ratio of the producer's operating and
maintenance expenses in Pennsylvania and depreciation
attributable to property in Pennsylvania to the producer's total
operating and maintenance expenses and depreciation.
((b) amended July 13, 1987, P.L.317, No.58)
(b.1) Managed Care Organizations.--((b.1) deleted by
amendment July 13, 2016, P.L.526, No.84)
(c) Payment of Tax; Reports.--The said taxes imposed under
subsections (a) and (b) shall be paid within the time prescribed
by law, and for the purpose of ascertaining the amount of the
same, it shall be the duty of the treasurer or other proper
officer of the said company, copartnership, limited partnership,
association, joint-stock association or corporation, or person
or persons, to transmit to the Department of Revenue on or
before March 15 of each year an annual report, and under oath
or affirmation, of the amount of gross receipts of the said
companies, copartnerships, corporations, associations,
joint-stock associations, limited partnerships, person or
persons, derived from all sources, and of gross receipts from
business done wholly within this State and in the case of
electric energy producers that transmit energy to other states
referred to in clause (2) of subsection (b), a compilation of
the relevant information regarding operating and maintenance
expenses and depreciation, during the period of twelve months
immediately preceding January 1 of each year. ((c) amended July
13, 2016, P.L.526, No.84)
(c.1) Safe Harbor Base year.--For purposes of the estimated
tax requirements under sections 3003.2 and 3003.3, the "safe
harbor base year" tax amount for providers of mobile
telecommunications services shall be the amount that would have
been required to be paid by the taxpayer if the taxpayer had
been subject to this article. ((c.1) amended July 13, 2016,
P.L.526, No.84)
(d) Tax Computation.--((d) repealed June 29, 2002, P.L.559,
No.89)
(e) Time to File Reports.--The time for filing annual
reports may be extended, estimated assessments may be made by
the Department of Revenue if reports are not filed, and the
penalties for failing to file reports and pay the taxes imposed
under subsection (a) and (b) shall be as prescribed by the laws
defining the powers and duties of the Department of Revenue.
In any case where the works of any corporation, company,
copartnership, association, joint-stock association, limited
partnership, person or persons are operated by another
corporation, company, copartnership, association, joint-stock
association, limited partnership, person or persons, the taxes
imposed under subsections (a) and (b) shall be apportioned
between the corporations, companies, copartnerships,
associations, joint-stock associations, limited partnerships,
person or persons in accordance with the terms of their
respective leases or agreements, but for the payment of the
said taxes the Commonwealth shall first look to the corporation,
company, copartnership, association, joint-stock association,
limited partnership, person or persons operating the works, and
upon payment by the said company, corporation, copartnership,
association, joint-stock association, limited partnership,
person or persons of a tax upon the receipts, as herein
provided, derived from the operation thereof, no other
corporation, company, copartnership, association, joint-stock
association, limited partnership, person or persons shall be
held liable for any tax imposed under subsections (a) and (b)
upon the proportion of said receipts received by said
corporation, company, copartnership, association, joint-stock
association, limited partnership, person or persons for the use
of said works. ((e) amended July 13, 2016, P.L.526, No.84)
(f) Application to Municipalities.--This article shall be
construed to apply to municipalities, and to impose a tax upon
the gross receipts derived from any municipality owned or
operated public utility or from any public utility service
furnished by any municipality, except that gross receipts shall
be exempt from the tax, to the extent that such gross receipts
are derived from business done inside the limits of the
municipality, owning or operating the public utility or
furnishing the public utility service.
(g) Certain Gross Receipts not Taxed.--The tax otherwise
imposed pursuant to this section upon gross receipts derived
from the sale of electricity shall not however be imposed upon
those portions of the gross receipts of an electric light
company attributable to the following sources:
(1) the net increase in its gross receipts resulting from
recovery from its customers of the costs of purchases of
additional energy necessitated by the physical or legal
inability to operate a nuclear generating facility as a result
of an accident or natural disaster causing material damage to
that facility or to a similar associated facility located
immediately adjacent, whereupon either the damaged facility,
another located immediately adjacent, or both, have been removed
from the company's rate base for a period exceeding twenty-five
months. The Department of Revenue shall request the Public
Utility Commission to determine, for each such facility, the
net increase in the gross receipts of its electric company owner
for the immediate prior twelve-month period. This determination
shall reflect the difference between the increased gross
receipts of the company attributable to recovery of costs for
purchase of replacement energy which otherwise would have been
normally generated by the inoperative facility in such
twelve-month period less the reduction in the company's gross
receipts attributable to removal of the capital costs of the
facility from the company's rate base and less the reduction
in the company's gross receipts attributable to reduction in
operating expenses that would have otherwise been incurred by
normal operation of the facility in such twelve-month period.
The Public Utility Commission shall, immediately after supplying
the requested data, proceed to make the appropriate revision
in the State tax adjustment charge of the electric company;
(2) recovery from its customers of costs incurred in
connection with the clean-up and decontamination of a nuclear
generating facility which has experienced a major accident or
natural disaster and had been removed from the electric light
company's rate base; and
(3) recovery from its customers of costs for the
amortization of investments in a nuclear generating facility
whose removal from the rate base of an electric light company
has been approved by the Public Utility Commission on account
of a major accident or natural disaster.
((g) added June 23, 1982, P.L.610, No.172)
(h) Benefits to Consumer.--For purposes of this article,
the reduction in the taxes imposed under subsections (a) and
(b) shall derive to the benefit of the consumer purchasing
services from said utilities. Said benefit shall be provided
in the form of a reduction in the State tax surcharge. Failure
to pass through the reduction to the consumer shall subject the
public utility to a civil penalty of at least one thousand
dollars ($1,000), but not more than five thousand dollars
($5,000), and such additional relief as the court may deem
appropriate. ((h) added July 13, 1987, P.L.317, No.58)
(i) Itemization of Gross Receipts Tax.--
(1) Interexchange telecommunications carriers may surcharge
and disclose as a separate line item on a customer's bill all
gross receipts taxes imposed on interexchange telecommunications
carriers services performed wholly within this Commonwealth.
(2) For four monthly billing cycles from the effective date
of this act, all interexchange telecommunications carriers shall
provide the customer with information in the carriers' monthly
billing that the gross receipts line item surcharge is not a
tax increase, but merely a disclosure of taxes presently and
previously paid by the customer.
(3) As used in this subsection, the term "interexchange
telecommunications carrier" has the meaning as defined in 66
Pa.C.S. § 3002 (relating to definitions).
((i) added June 16, 1994, P.L.279, No.48)
(j) Schedule for Estimated Payments.--
(1) For calendar year 2004, the following schedule applies
to the payment of the tax under subsection (a)(3):
(i) Forty per cent of the estimated tax shall be due on
March 15, 2004.
(ii) Forty per cent of the estimated tax shall be due on
June 15, 2004.
(iii) Twenty per cent of the estimated tax shall be due on
September 15, 2004.
(2) For calendar years after 2004, the payment of the
estimated tax under subsection (a)(3) shall be due in accordance
with section 3003.2.
(3) ((3) deleted by amendment).
(4) ((4) deleted by amendment).
((j) amended July 13, 2016, P.L.526, No.84)
(k) Penalty for Substantial Underpayment of Initial
Estimated Gross Receipts Tax.--
(1) If the amount of the estimated gross receipts tax on
account of a taxpayer's first applicable taxable year under
subsection (a)(3) paid by a due date in subsection (j) is
underpaid, a penalty shall be imposed in the amount of five per
cent of the underpayment per month for the period of the
underpayment, up to a maximum of twenty-five per cent of the
underpayment.
(2) The penalty imposed by this subsection is in addition
to any interest imposed on underpayments by section 3003.3.
((k) added Dec. 23, 2003, P.L.250, No.46)
(1101 amended Dec. 11, 1979, P.L.499, No.107)
Compiler's Note: Section 2 of Act 52 of 2018, which amended
subsection (a)(2) and (3), provided that the amendment
of subsection (a)(2) and (3) shall apply retroactively
to gross receipts from transactions occurring on or after
January 1, 2004, except no claim for refund or credit
for a tax paid prior to the effective date of the
amendment of subsection (a)(3) shall be based on Act 52.
Compiler's Note: Section 51(9) of Act 84 of 2016, which
amended subsections (c), (c.1), (e) and (j) and deleted
subsection (b.1), provided that the amendment or deletion
of subsections (b.1), (c), (c.1), (e) and (j) shall apply
to gross receipts received after December 31, 2016.
Compiler's Note: The Department of Public Welfare, referred
to in this section, was redesignated as the Department
of Human Services by Act 132 of 2014.
Compiler's Note: Section 14(4) of Act 48 of 2009, which
added subsection (b.1), provided that subsection (b.1)
shall apply to calendar years beginning after December
31, 2008, and to gross receipts received after September
30, 2009.
Compiler's Note: See section 33 of Act 119 of 2006, which
amended subsection (e), in the appendix to this act for
special provisions relating to determinations and
assessments of tax liability by the Department of Revenue
after December 31, 2007, and applicability of Act 119
on proceedings, prosecutions, actions, suits or appeals
involving assessments, determinations or settlements of
tax liability by the Department of Revenue prior to
January 1, 2008.
Compiler's Note: Section 33(12) of Act 46 of 2003, which
amended section 1101, provided that the amendment shall
apply to gross receipts derived from transactions
occurring after December 31, 2003.
Compiler's Note: Section 19(3)(v) of Act 23 of 2000, which
amended subsection (a), provided that the amendment shall
apply to taxable years beginning after December 31, 1999.
Compiler's Note: Section 33(3) of Act 4 of 1999, which
amended subsection (a), provided that the amendment shall
take effect on January 1 of the first taxable year
following enactment of legislation to restructure and
deregulate the natural gas utility industry in the
Commonwealth and to allow customers to purchase natural
gas supply services from their choice of supplier.
Section 7 of Act 21 of 1999 provided that Act 21
constitutes the legislation referred to in section 33(3)
of Act 4. The Secretary of Revenue shall publish notice
of the enactment of Act 21 in the Pennsylvania Bulletin.
Section 1101.1. Timely Mailing Treated as Timely Filing and
Payment.--Notwithstanding the provisions of any State tax law
to the contrary, whenever payment of all or any portion of a
State tax is required by law to be received by the Pennsylvania
Department of Revenue or other agency of the Commonwealth on
or before a day certain, the taxpayer shall be deemed to have
complied with such law if the letter transmitting payment of
such tax which has been received by the department is postmarked
by the United States Postal Service on or prior to the final
day on which the payment is to be received.
(1101.1 added Mar. 13, 1974, P.L.179, No.32)
Section 1101.2. Establishment of Revenue-Neutral
Reconciliation.--Notwithstanding the provisions of 66 Pa.C.S.
§ 2810(c)(1) (relating to revenue-neutral reconciliation), the
rate of tax established under 66 Pa.C.S. § 2810(c)(2) for the
period beginning January 1, 2002, shall continue in force
without further adjustment for periods beginning January 1,
2003, and thereafter, and the Secretary of Revenue shall not
deliver any further reports under 66 Pa.C.S. § 2810(c)(3).
(1101.2 added June 29, 2002, P.L.559, No.89)
PART II
PROCEDURE; ENFORCEMENT; PENALTIES
Section 1102. Procedure; Enforcement; Penalties.--Parts
III, IV, VI, and VII of Article IV are incorporated by reference
into this article in so far as they are consistent with this
article and applicable to the tax imposed hereunder. However,
notwithstanding the provisions of subsection (d) of section 403
of this act, if the officers of any corporation subject to tax
under this article shall neglect or refuse to make any report
as herein required or shall knowingly make any false report,
there shall be added by the department to the tax determined
to be due a penalty of five per cent of the amount of tax due
for each month or fraction thereof until the penalty has reached
twenty-five per cent, and thereafter at the rate of one per
cent per month. No such amounts added to the tax shall bear any
interest whatsoever.
(1102 amended Dec. 23, 1983, P.L.360, No.89)
PART III
REPEALER
Section 1103. Repeal.--Section 23, act of June 1, 1889
(P.L.420), entitled "A further supplement to an act entitled
'An act to provide revenue by taxation,' approved the seventh
day of June, Anno Domini one thousand eight hundred and
seventy-nine," is repealed.
PART IV
DEFINITIONS
(IV added Aug. 4, 1991, P.L.97, No.22)
Section 1104. Definitions.--(1104 repealed May 12, 1999,
P.L.26, No.4)
Compiler's Note: Section 33(3) of Act 4 of 1999, which
repealed section 1104, provided that the repeal shall
take effect on January 1 of the first taxable year
following enactment of legislation to restructure and
deregulate the natural gas utility industry in the
Commonwealth and to allow customers to purchase natural
gas supply services from their choice of supplier. The
Secretary of Revenue shall publish notice of the
enactment of this legislation in the Pennsylvania
Bulletin. Section 7 of Act 21 of 1999 provided that Act
21 constitutes the legislation referred to in section
33(3) of Act 4. The Secretary of Revenue shall publish
notice of the enactment of Act 21 in the Pennsylvania
Bulletin.
ARTICLE XI-A
PUBLIC UTILITY REALTY TAX
(Art. added July 4, 1979, P.L.60, No.27)
Compiler's Note: Section 6 of Act 27 of 1979, which added
Article XI-A, provided that nothing contained in Act 27
shall be construed to relieve any person, corporation
or other entity from the filing returns or from any
taxes, penalties or interest imposed by the provisions
of any laws which were in effect prior to being repealed
by Act 27, or affect or terminate any petitions,
investigations, prosecutions, legal or otherwise, or
other proceedings pending under the provisions of any
such laws or prevent the commencement or further
prosecution of any proceedings by the proper authorities
of the Commonwealth for violation of any such laws or
for the assessment, settlement, collection or recovery
of taxes, penalties or interest due to the Commonwealth
under any of the laws which were in effect prior to being
repealed by Act 27.
Section 1101-A. Definitions.--The following words, terms
and phrases when used in this article shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
(1) "Department." The Department of Revenue of the
Commonwealth of Pennsylvania.
(2) "Public utility." Any person, partnership, association,
corporation or other entity furnishing public utility service
under the jurisdiction of the Pennsylvania Public Utility
Commission or the corresponding regulatory agency of any other
state or of the United States on December 31 of the taxable
year; and any electric cooperative corporation furnishing public
utility service on December 31 of the taxable year, but shall
not mean any public utility furnishing public utility sewage
services, or municipality or municipality authority furnishing
public utility services.
(3) "Utility realty." All lands, together with all
buildings, towers, smokestacks, dams, dikes, canals, cooling
towers, storage tanks, reactor structures, pump houses,
supporting foundations, enclosing structures, supporting
structures, containment structures, reactor containment outer
shells, reactor containment vessels, turbine buildings, recovery
tanks, solid waste area enclosures, primary auxiliary buildings,
containment auxiliary safeguard structures, fuel buildings,
decontamination buildings, and, all other structures and
enclosures whatsoever which are physically affixed to the land,
no matter how such structures and enclosures are designated and
without regard to the classification thereof for local real
estate taxation purposes, but not including machinery and
equipment, whether or not housed within such building, structure
or enclosure, or, after December 31, 1999, land and improvements
to land that are indispensable to the generation of electricity,
located within this Commonwealth that at the end of the taxable
year are owned by a public utility or its affiliate either
directly or by or through a subsidiary and are used or in the
course of development or construction for use, in whole or in
part, in the furnishing, including producing, storing,
distributing or transporting, of public utility service and
which are not subject to local real estate taxation under any
law in effect on April 23, 1968: Provided, however, That the
following specified items shall be exempt from the tax hereby
imposed:
(i) Easements or similar interests.
(ii) Railroad beds or rails, land owned or used by a railroad
as a right-of-way for a rail line and superstructures thereon.
This subclause does not include stations, buildings, warehouses,
shops, engine houses, plants or miscellaneous structures or the
land appurtenant thereto.
(iii) Pole, transmission tower, pipe, rail or other lines
whether or not said lines are attached to the land or to any
structure or enclosure which is physically affixed to the land.
(iv) ((iv) deleted by amendment)
(4) "State taxable value." Current market value calculated
by adjusting the assessed value for county real estate tax
purposes for the taxable year for the common level ratio of
assessed values to market values of the county as established
by the State Tax Equalization Board after July 1 of the taxable
year. During the pendency of an assessment appeal, the term
means the amount which the public utility has stipulated or
alleged as the current market value for the taxable year.
(5) "Local taxing authority." A county, city, institution
district, borough, town, township or school district having
authority to impose taxes on real estate.
(6) "Realty tax equivalent." The total amount of real
estate taxes which a local taxing authority could have imposed
on utility realty for its fiscal year beginning in the taxable
year but for this article, and unless otherwise provided shall
be the product of the real estate property tax rate and the
assessed valuation of utility realty.
(7) "Total tax receipts." The actual amount collected by
a local taxing authority under all statutes authorizing the
imposition of taxes, but shall not include fines, penalties,
fees, licenses or receipts from any source other than taxes.
(8) "Assessed valuation." The assessed valuation of utility
realty for county real estate tax purposes contained in the
last adjusted valuation for the taxable year.
(9) "Millage rate."
(i) An amount calculated by the department by dividing the
amount of the total realty tax equivalent reported to the
department under section 1106-A by the amount of the total State
taxable value of all utility realty located within this
Commonwealth reported under section 1102-A. The amount shall
be calculated to four decimal places.
(ii) For taxable year 1998, an amount calculated by the
department by dividing the amount of the total State taxable
value of all utility realty located within this Commonwealth
reporting under section 1102-A into the greater of the total
realty tax equivalent reported under section 1106-A or one
hundred thirty-three million two hundred thousand dollars
($133,200,000).
(10) "Affiliate." An affiliated interest as defined in 66
Pa.C.S. § 2101 (relating to definition of affiliated interest).
(11) "Subsidiary." An entity:
(i) in which a public utility or affiliate is the beneficial
owner, directly or indirectly, of shares of the entity that
would entitle the public utility or affiliate to cast in excess
of fifty per cent of the votes that all shareholders would be
entitled to cast in the election of directors of the entity;
or
(ii) which is a partnership, joint venture, limited
liability company or similar entity, in which a public utility
is a partner, is a participant, is a member or is in a similar
relationship.
(12) "Assessment authority." The board of revision of
taxes, board for the assessment and revision of taxes of a
county, county commissioners in a county with no board of
revision of taxes or board for the assessment and revision of
taxes, or council of a city of the third class that has not
elected to accept county assessments.
(1101-A amended May 12, 1999, P.L.26 No.4)
Section 1102-A. Imposition of Tax; Report; Interest and
Penalties; Tentative Tax.--(a) A tax is hereby imposed on the
State taxable value of utility realty at a millage rate
calculated under subsection (b).
(b) On or before November 1, 1999, for taxable year 1998,
and on or before August 1, 2000, for taxable year 1999, and
every year thereafter, the department shall calculate the
millage rate for the taxable year and notify the public utility
of the millage rate and the State taxable value of its utility
realty. If an error in addition, subtraction, multiplication
or division is present in a report or if an entry on a report
is inconsistent with another entry and it is apparent which
entry is correct, the millage rate shall be calculated using
the correct mathematical result or entry. The public utility
shall pay to the State Treasurer through the department a tax
equal to the product of the millage rate and the State taxable
value within forty-five days after the mailing date of the
notice of determination.
(c) On or before May 1, 2000, for taxable year 2000, and
every year thereafter, a public utility shall pay tentative tax
equal to the lesser of:
(1) The tax imposed by this article for the second preceding
taxable year.
(2) An amount equal to the tax computed under the law
applicable to the taxable year and the estimated State taxable
value of the public utility's utility realty for the taxable
year at the rate applicable to the second preceding taxable
year, except that the estimated tentative tax shall not be less
than ninety per cent of the amount determined by the department
to be due for the taxable year.
(d) Any amounts paid for taxable years 1998 and 1999 shall
be deemed to be payment on account of tentative tax for those
taxable years.
(e) If the tax hereby imposed is not paid by the date herein
prescribed, or within any extension granted by the department,
the unpaid tax shall bear interest at the rate set forth in
section 806 of the act of April 9, 1929 (P.L.343, No.176), known
as "The Fiscal Code," and shall in addition be subject to a
penalty of five per cent of the amount of the tax, which penalty
may be waived or abated, in whole or in part, by the department
unless the public utility has acted in bad faith, negligently,
or with intent to defraud. If tentative tax is not paid by the
date required under this section, the unpaid tentative tax shall
bear interest at the rate set forth in section 806 of "The
Fiscal Code" for the period of underpayment but not beyond
September 15 of the year following the close of the taxable
year.
(f) A payment of tax under subsection (c) shall include a
report of the amount and manner of computation of the State
taxable value of all utility realty and adjustments for the
immediate preceding year. The report shall be made as prescribed
by the department under oath or affirmation of the owner or
responsible officer of the public utility. The report shall
include:
(1) The State taxable values, locations and real estate tax
parcel identification numbers of all utility realty.
(2) Any adjustment to the State taxable value previously
reported under clause (1).
(3) Certified copies of all appeals filed under section
1105-A.
(g) Reports required under this section for taxable year
1998 shall be submitted on or before September 1, 1999.
(1102-A amended May 12, 1999, P.L.26, No.4)
Section 1103-A. Assessment; Collection.--(a) The department
shall make all inquiries, determinations and assessments of
tax, interest, additions and penalties necessary to enforce
this article.
(b) The provisions of sections 337 through 345 shall apply
to the assessment and collection of public utility realty tax
under this article. A public utility shall not raise a defense
or objection in a proceeding that could have been presented as
part of an administrative or judicial remedy under section
1105-A or 1109-A.
(c) The amount of any tax or penalty imposed under this
article shall be assessed within three years after the close
of the taxable year or within one year of a final determination
resulting from the public utility's appeal under section 1105-A,
whichever is later.
(1103-A amended May 12, 1999, P.L.26, No.4)
Section 1104-A. Effect of Payment; Additional Assessment;
Refunds; Rebates.--(a) Payment of, or any exemption from the
tax imposed by this article and the distribution to local taxing
authorities prescribed by section 1107-A, shall be in lieu of
local taxes upon utility realty, as contemplated by Article
VIII, section 4, of the Constitution of Pennsylvania.
(b) The department may annually determine for every
assessable taxable year whether the total amount of tax due
under section 1102-A(a) exceeds the total amount of tax
collected and the ratio that the amount of the excess bears to
the total State taxable value of all utility realty reported
under section 1102-A. The ratio shall be calculated to four
decimal places. The department shall notify a reporting public
utility of the ratio. Within forty-five days of the mailing
date of the notice, the public utility shall pay to the State
Treasurer, through the department, an additional amount of tax
equal to the product of the ratio and the State taxable value
shown in the public utility's report under section 1102-A.
Section 1103-A shall apply to the additional amount of tax.
(c) If for a taxable year the amount due on notice of
determination is less than the amount paid by the public utility
to the department on account of that amount and the public
utility is satisfied with the amount due, the department shall
enter the amount of the difference as a credit to the account
of the public utility.
(d) If for a taxable year the total amount of tax collected
under section 1102-A is finally determined to exceed the amount
determined by the department under section 1107-A(a)(2) or if
for taxable year 1998 the total amount of tax collected under
section 1102-A is finally determined to exceed the greater of
the total State taxable value of all utility realty reported
to the department pursuant to section 1102-A or one hundred
thirty-three million two hundred thousand dollars
($133,200,000), the department shall compute the ratio, to four
decimal places, that the amount of the excess bears to the total
State taxable value of all utility realty under 1102-A. The
department shall notify the reporting public utility of the
ratio, and the State Treasurer shall rebate the excess to the
public utility as a credit in an amount equal to the product
of the ratio and the State taxable value of its utility realty.
For purposes of section 806.1 of the act of April 9, 1929
(P.L.343, No.176), known as "The Fiscal Code," any amount
rebated shall be deemed to have been overpaid seventy-five days
following the date of notice.
(1104-A amended May 12, 1999, P.L.26, No.4)
Section 1105-A. Local Assessment of Utility Realty; Initial
Assessment; Procedure and Appeals.--(a) It shall be the duty
of the several elected and appointed assessors of real property
to assess, value and enroll all utility realty in the same
manner as is provided by law for the assessment, valuation and
enrollment of real estate. After December 31, 1998, assessors
shall enroll utility realty separately from the other real
estate of a public utility, affiliate or subsidiary.
(b) Such utility realty shall be initially assessed on or
before October 1, 1970, whichever is later, and thereafter shall
be assessed or reassessed at the same time and in the same
manner as real estate.
(c) Except as provided in subsection (d), a public utility
may appeal from the assessment of its utility realty, including
the initial assessment, in the manner provided by law for
appeals from assessment of real estate. If appeals are pending
at the time a local taxing authority prepares its report for
submission to the department as prescribed by section 1106-A,
the report shall include as the assessment for the utility
realty appealed the amount which the public utility has
stipulated or alleged as the proper assessment.
(d) Notwithstanding any other provision of law, for taxable
years 1998 and 1999, a public utility may file an appeal from
the assessment of its utility realty on or before July 30, 1999.
(e) In an administrative or court proceeding under this
section regarding the local assessment of utility realty, a
local taxing authority that has substantially prevailed may be
awarded reasonable costs incurred in relation to the
administrative or court proceeding.
(1105-A amended May 12, 1999, P.L.26, No.4)
Section 1106-A. Reports by Local Taxing Authorities.--(a)
Except for taxable year 1998, on or before the first day of
April of 1971 and of each year thereafter, each local taxing
authority shall submit to the department as prescribed by the
department:
(1) The name and address of each public utility owning
utility realty within its jurisdiction, and the assessed
valuations, State taxable values, realty tax equivalents, real
estate tax rates and real estate parcel identification numbers
of such utility realty for the local taxing authority's fiscal
year which began in the taxable year.
(2) ((2) deleted by amendment)
(3) ((3) deleted by amendment)
(4) Its total tax receipts for its last completed fiscal
year.
(5) Any adjustment to the assessed values, tax rates, realty
tax equivalents or total tax receipts previously reported
pursuant to clauses (1) and (4).
(b) If a local taxing authority shall fail to file the
report required by subsection (a) by the date therein
prescribed, or within any extension granted by the department,
it shall forfeit its right to share in the next-ensuing
distribution made pursuant to section 1107-A.
(c) Notwithstanding section 731 of the act of April 9, 1929
(P.L.343, No.176), known as "The Fiscal Code," relating to
confidential information, reports filed under this section shall
be public.
(d) A report filed by a local taxing authority shall be
deemed to be prima facie correct unless rebutted by a
preponderance of the evidence.
(e) If an amount reported under section 1102-A or this
section is finally changed or corrected under section 1105-A
or 1109-A, the local taxing authority and the public utility
shall make a compensating adjustment on the first report filed
following the change or corrections as an adjustment to the
taxable year's total realty tax equivalent and total State
taxable value so that amounts raised under this article shall
not be less than the gross amount of real estate taxes which a
local taxing authority could have imposed on real property but
for the exemption provided under this article.
(f) A report required by this section for taxable year 1998
shall be submitted on or before September 1, 1999.
(1106-A amended May 12, 1999, P.L.26, No.4)
Section 1106.1-A. Duplicates.--(a) By July 1, 1999, the
appropriate assessment authority shall provide written notice
to all public utilities of the assessment, valuation and
predetermined ratio relating to utility realty for the current
and immediate preceding fiscal year and the requirements to
appeal the assessment, valuation or ratio.
(b) By April 1, 2000, and every year thereafter, the
appropriate assessment authority shall provide written notice
to a public utility of a new or changed assessment, valuation
and predetermined ratio and the requirements to appeal the
assessment, valuation or ratio.
(1106.1-A added May 12, 1999, P.L.26, No.4)
Section 1106.2-A. Affiliates and Subsidiaries.--An affiliate
or subsidiary of a public utility shall notify the local taxing
authority in which the utility realty is located within thirty
days if the entity is no longer an affiliate or subsidiary of
the public utility.
(1106.2-A added May 12, 1999, P.L.26, No.4)
Section 1107-A. Distribution to Local Taxing
Authorities.--(a) From the reports received by it in each year
pursuant to section 1106-A, the department shall determine:
(1) The total tax receipts shown in all such reports.
(2) The total realty tax equivalent shown in all such
reports.
(b) Except as provided in subsection (b.1), on or before
the first day of October of 1971 and of each year thereafter,
the department shall distribute to each reporting local taxing
authority its share of the total realty tax equivalent
determined pursuant to subsection (a)(2), which share shall be
the ratio which the total tax receipts reported by that local
taxing authority bear to the total tax receipts determined
pursuant to subsection (a)(1).
(b.1) On or before October 1, 1999, the department shall
distribute to each reporting local taxing authority its share
of the greater of:
(1) the total realty tax equivalent determined pursuant to
subsection (b); or
(2) one hundred thirty-three million two hundred thousand
dollars ($133,200,000).
(c) For the purpose of making such payment, the department
shall make requisition therefor in the manner prescribed by
"The Fiscal Code."
(1107-A amended May 12, 1999, P.L.26, No.4)
Section 1108-A. Legislative Intent.--(a) It is the
legislative intent that the tax imposed by this act shall be
in addition to any tax now or hereafter imposed upon the gross
receipts of public utilities under the act of June 1, 1889
(P.L.420, No.332), and this act shall not be construed in any
manner as to constitute a replacement for or a repealer of the
above cited act.
(b) It is specifically declared as the legislative intent
of the General Assembly that for purposes of imposition or
nonimposition of tax herein, that this Article XI-A shall not
be construed or determined in any way by any court of record
that this article is in pari materia with any county assessment
law heretofore or hereafter enacted, nor shall such courts have
the authority to construe the tax assessment base relating to
industrial realty classification under such county assessment
laws as being in conformity with or in any way applicable to
the utility realty tax assessment base as defined in this
article. Accordingly, whether or not public utility property
is subject to tax or is exempted from tax under this article
shall be determined solely by the application of the term
"utility realty," as that term is specifically defined by the
General Assembly under section 1101-A(3).
(1108-A added July 4, 1979, P.L.60, No.27)
Section 1109-A. Objections by Public Utilities.--(a) Except
as provided in subsection (b), a public utility may appeal a
finding affecting the calculation of the millage rate,
additional assessment or rebate by filing a petition for
recalculation with the Board of Finance and Revenue within
thirty days after the date of notice of the millage rate,
assessment or rebate. The petition shall include evidence that
the finding is incorrect and arguments substantiating its claim.
(b) A defense in a proceeding for the collection of the tax
under this article or an objection raised as part of a
proceeding may not be raised if the defense or objection could
have been presented had the person appealed under subsection
(a).
(c) The petition shall include an affidavit that it is not
made for the purpose of delay and that the facts set forth
therein are true.
(d) The Board of Finance and Revenue shall dispose of the
petition for recalculation within thirty days of its receipt.
(e) The action of the Board of Finance and Revenue on a
petition filed under this section shall be final.
(f) For purposes of this section, the term "finding" shall
mean:
(1) an entry on a report that is inconsistent with another
entry, the correctness of which is apparent; or
(2) a ministerial computation that is made without the use
of administrative discretion or judgment.
(1109-A added May 12, 1999, P.L.26, No.4)
Section 1110-A. Tax Transitions Impact Limitations.--(a)
Notwithstanding any provision of this article to the contrary:
(1) The total tax imposed on the utility realty of a public
utility for taxable year 1998 shall not exceed two hundred fifty
per cent of the total tax imposed upon such utility realty for
taxable year 1997. This clause shall not apply to the
calculation of the millage rate under sections 1102-A(b) and
1104-A(b).
(2) The total tax imposed on the utility realty of a public
utility for taxable year 1999 shall not exceed two hundred fifty
per cent of the total tax imposed upon such utility realty for
taxable year 1998.
(3) The total tax imposed on the utility realty of a public
utility for taxable year 2000 shall not exceed two hundred fifty
per cent of the total tax imposed upon such utility realty for
taxable year 1999.
(4) The total tax imposed on the utility realty of a public
utility for taxable year 2001 shall not exceed two hundred fifty
per cent of the total tax imposed upon such utility realty for
taxable year 2000.
(5) For purposes of this subsection, any reduction in a
public utility's total tax liability as a result of the two
hundred fifty per cent limitation shall not exceed one hundred
thousand dollars ($100,000) in each of the taxable years
specified in clauses (1) through (4).
(b) Any portion of the total assessed valuations of utility
realty of a public utility which is excluded under subsection
(a) in any taxable year shall not be included in the
calculations required under this article for that taxable year.
(c) The Secretary of Revenue shall transfer funds to the
Public Transportation Assistance Fund as a result of any impact
this section may have on revenue received under section 2301.
(d) As used in this section, the term "total tax" means the
sum of taxes paid under sections 1102-A and 1104-A.
(1110-A added May 24, 2000, P.L.106, No.23)
Compiler's Note: Section 19(9) of Act 23 of 2000, which
added section 1110-A, provided that section 1110-A shall
apply to taxable years beginning after December 31, 1997.
Section 1111-A. Surcharge.--(a) By August 1, 2003, and by
each August 1 thereafter, the Attorney General shall certify
to the department a report containing the total reduction of
liabilities, paid or unpaid, to the Commonwealth which are the
result of a final adjudication of litigation or a settlement
of litigation entered into by the Office of Attorney General
for claims made under this article during the prior fiscal year.
(b) By August 1, 2003, and by each August 1 thereafter, the
State Treasurer shall certify to the department a report
containing the total reduction of liabilities, paid or unpaid,
to the Commonwealth granted by the Board of Finance and Revenue
which are the result of a final order not appealed by the
department for claims made under this article during the prior
fiscal year.
(c) If the total reduction of liabilities reported to the
department under subsections (a) and (b) exceed five million
dollars ($5,000,000) for the fiscal year, each entity subject
to the tax imposed by section 1101 shall pay to the Commonwealth
a surcharge upon each dollar of the gross receipts required to
be reported under section 1101, except gross receipts from
providing mobile telecommunications services and telegraph or
telephone messages transmitted in interstate commerce, at the
rate determined in accordance with subsection (d) for the
following calendar year.
(d) The Secretary of Revenue shall establish a surcharge
rate by adding the total reduction in liabilities reported to
the department under subsections (a) and (b) and dividing the
sum by the total amount of taxable gross receipts reported to
the department under section 1101, except gross receipts from
providing mobile telecommunications services and telegraph or
telephone messages transmitted in interstate commerce, for the
prior calendar year or settled by the department as of August
1 in the year the return is due. The surcharge rate shall be
rounded to four decimal places, certified by the Secretary of
Revenue to the Appropriations Committee of the Senate and the
Appropriations Committee of the House of Representatives and
published by the department by October 1, 2003, and by each
October 1 thereafter in the Pennsylvania Bulletin.
(e) If a surcharge is imposed for a calendar year, the
secretary shall require entities subject to the surcharge to
file a report consistent with the requirements of section 1101
by March 15 of that calendar year.
(f) The surcharge imposed by subsection (c) shall be paid
within the time prescribed by law. Parts III, IV, V, VI and VII
of Article IV are incorporated by reference into this section
insofar as they are consistent with this section and applicable
to the surcharge imposed hereunder.
(1111-A amended Dec. 23, 2003, P.L.250, No.46)
Section 1112-A. Additional Tax.--Every entity required to
pay the tax imposed under this article shall, in addition to
that tax, pay an additional tax of seven and six-tenths (7.6)
mills upon each dollar of the State taxable value of its utility
realty.
(1112-A added Dec. 23, 2003, P.L.250, No.46)
Compiler's Note: Section 33(12.1) of Act 46 of 2003, which
added section 1112-A, provided that section 1112-A shall
apply to deposits into the Transportation Assistance
Fund made after June 30, 2003.
ARTICLE XI-B
FUEL TAXES
(Art. XI-B repealed Apr. 17, 1997, P.L.6, No.3)
PART I
LIQUID FUELS TAX
(Pt. I repealed Apr. 17, 1997, P.L.6, No.3)
Section 1101-B. Imposition of Additional Tax.--(1101-B
repealed Apr. 17, 1997, P.L.6, No.3)
Section 1102-B. Payment to Motor License Fund.--(1102-B
repealed Apr. 17, 1997, P.L.6, No.3)
PART II
FUEL USE TAX
(Pt. II repealed Apr. 17, 1997, P.L.6, No.3)
Section 1121-B. Additional Tax Imposed.--(1121-B repealed
Apr. 17, 1997, P.L.6, No.3)
ARTICLE XI-C
REALTY TRANSFER TAX
(Art. added May 5, 1981, P.L.36, No.14)
Compiler's Note: See section 2 of Act 175 of 2016 in the
appendix to this act for special provisions relating to
time limitations for filing petition for refund.
Compiler's Note: See section 23 of Act 40 of 2005 in the
appendix to this act for special provisions relating to
continuation of ordinaces and resolutions.
Compiler's Note: Section 5 of Act 14 of 1981, which added
Article XI-C, provided that the validity of any law or
any ordinance or part of law or of any ordinance, or any
resolution or part of any resolution, and any amendments
or supplements thereto, now or hereafter enacted or
adopted by the Commonwealth or any political subdivision
thereof, providing for or relating to the imposition,
levy or collection of any tax, shall not be affected or
impaired by anything contained in Article XI-C.
Section 1101-C. Definitions.--The following words when used
in this article shall have the meanings ascribed to them in
this section:
"Agricultural production." As defined in section 3 of the
act of June 30, 1981 (P.L.128, No.43), known as the
"Agricultural Area Security Law." (Def. added June 28, 2019,
P.L.50, No.13)
"Association." A general partnership, limited partnership,
limited liability partnership or any other form of
unincorporated enterprise, owned or conducted by two or more
persons other than a private trust or decedent's estate. (Def.
amended July 2, 2012, P.L.751, No.85)
"Conservancy." A corporation or association that possesses
a tax-exempt status pursuant to section 501(c)(3) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
501(c)(3)) and which has as its primary purpose preservation
of land for historic, recreational, scenic, agricultural or
open-space opportunities. (Def. added July 13, 2016, P.L.526,
No.84)
"Corporation." A corporation, joint-stock association,
business trust or banking institution which is organized under
the laws of this Commonwealth, the United States, or any other
state, territory, or foreign country, or dependency.
"Department." The Department of Revenue of this
Commonwealth.
"Document." Any deed, instrument or writing which conveys,
transfers, demises, vests, confirms or evidences any transfer
or demise of title to real estate in this Commonwealth, but
does not include wills, mortgages, deeds of trust or other
instruments of like character given as security for a debt and
deeds of release thereof to the debtor, land contracts whereby
the legal title does not pass to the grantee until the total
consideration specified in the contract has been paid or any
cancellation thereof unless the consideration is payable over
a period of time exceeding thirty years or instruments which
solely grant, vest or confirm a public utility easement.
"Document" shall also include a declaration of acquisition
required to be presented for recording under section 1102-C.5
of this article. (Def. amended June 30, 2021, P.L.124, No.25)
"Family farm business." A corporation or association of
which at least seventy-five per cent of its assets are devoted
to the business of agriculture and at least seventy-five per
cent of each class of stock of the corporation or the interests
in the association is continuously owned by members of the same
family. The business of agriculture shall include the leasing
to members of the same family or the leasing to a corporation
or association owned by members of the same family of property
which is directly and principally used for agricultural
purposes. The business of agriculture shall not be deemed to
include:
(1) recreational activities such as, but not limited to,
hunting, fishing, camping, skiing, show competition or racing;
(2) the raising, breeding or training of game animals or
game birds, fish, cats, dogs or pets or animals intended for
use in sporting or recreational activities;
(3) fur farming;
(4) stockyard and slaughterhouse operations; or
(5) manufacturing or processing operations of any kind.
(Def. added July 2, 2012, P.L.751, No.85)
"Family farm corporation." (Def. deleted by amendment July
2, 2012, P.L.751, No.85)
"Family farm partnership." (Def. deleted by amendment July
2, 2012, P.L.751, No.85)
"Living trust." Any trust, other than a business trust,
intended as a will substitute by the settlor which becomes
effective during the lifetime of the settlor, but from which
trust distributions cannot be made to any beneficiaries other
than the settlor prior to the death of the settlor. (Def. added
May 7, 1997, P.L.85, No.7)
"Members of the same family." Any individual, such
individual's brothers and sisters, the brothers and sisters of
such individual's parents and grandparents, the ancestors and
lineal descendents of any of the foregoing, a spouse of any of
the foregoing and the estate of any of the foregoing.
Individuals related by the half blood or legal adoption shall
be treated as if they were related by the whole blood.
"Ordinary trust." Any trust, other than a business trust
or a living trust, which takes effect during the lifetime of
the settlor and for which the trustees of the trust take title
to property primarily for the purpose of protecting, managing
or conserving it until distribution to the named beneficiaries
of the trust. An ordinary trust does not include a trust that
has an objective to carry on business and divide gains, nor
does it either expressly or impliedly have any of the following
features: the treatment of beneficiaries as associates, the
treatment of the interests in the trust as personal property,
the free transferability of beneficial interests in the trust,
centralized management by the trustee or the beneficiaries, or
continuity of life. (Def. added May 7, 1997, P.L.85, No.7)
"Person." Every natural person, association, or corporation.
Whenever used in any clause prescribing and imposing a fine or
imprisonment, or both, the term "person" as applied to
associations, shall include the responsible members or general
partners thereof, and as applied to corporations, the officers
thereof.
"Qualified beginner farmer." A person that:
(1) Has demonstrated experience in the agriculture industry
or related field or has transferable skills as determined by
the Department of Agriculture.
(2) Has not received Federal gross income from agricultural
production for more than the ten most recent taxable years.
(3) Intends to engage in agricultural production within the
borders of this Commonwealth and to provide the majority of the
labor and management involved in that agricultural production.
(4) Has obtained written certification from the Department
of Agriculture confirming qualified beginner farmer status.
(Def. added June 28, 2019, P.L.50, No.13)
"Real estate."
(1) Any lands, tenements or hereditaments, including,
without limitation, buildings, structures, fixtures, mines,
minerals, oil, gas, quarries, spaces with or without upper or
lower boundaries, trees and other improvements, immovables or
interests which by custom, usage or law pass with a conveyance
of land, but excluding permanently attached machinery and
equipment in an industrial plant.
(2) A condominium unit.
(3) A tenant-stockholder's interest in a cooperative housing
corporation, trust or association under a proprietary lease or
occupancy agreement.
(Def. amended July 9, 2013, P.L.270, No.52)
"Real estate company." A corporation or association which
meets any of the following:
(1) Is primarily engaged in the business of holding, selling
or leasing real estate ninety per cent or more of the ownership
interest in which is held by thirty-five or fewer persons and
which:
(i) derives sixty per cent or more of its annual gross
receipts from the ownership or disposition of real estate; or
(ii) holds real estate, the value of which comprises ninety
per cent or more of the value of its entire tangible asset
holdings exclusive of tangible assets which are freely
transferable and actively traded on an established market.
(2) Ninety per cent or more of the ownership interest in
the corporation or association is held by thirty-five or fewer
persons, and the corporation or association owns, as ninety per
cent or more of the fair market value of its assets, a direct
or indirect interest in a real estate company. An indirect
ownership interest is an interest in a corporation or
association, ninety per cent or more of the ownership interest
which is held by thirty-five or fewer persons whose purpose is
the ownership of a real estate company.
(Def. amended July 9, 2013, P.L.270, No.52)
"Title to real estate."
(1) Any interest in real estate which endures for a period
of time, the termination of which is not fixed or ascertained
by a specific number of years, including, without limitation,
an estate in fee simple, life estate or perpetual leasehold;
or
(2) any interest in real estate enduring for a fixed period
of years but which, either by reason of the length of the term
or the grant of a right to extend the term by renewal or
otherwise, consists of a group of rights approximating those
of an estate in fee simple, life estate or perpetual leasehold,
including, without limitation, a leasehold interest or
possessory interest under a lease or occupancy agreement for a
term of thirty years or more or a leasehold interest or
possessory interest in real estate in which the lessee has
equity.
"Transaction." The making, executing, delivering, accepting,
or presenting for recording of a document.
"Value."
(1) In the case of any bona fide sale of real estate at
arm's length for actual monetary worth, the amount of the actual
consideration therefor, paid or to be paid, including liens or
other encumbrances thereon existing before the transfer and not
removed thereby, whether or not the underlying indebtedness is
assumed, and ground rents, or a commensurate part thereof where
such liens or other encumbrances and ground rents also encumber
or are charged against other real estate: Provided, That where
such documents shall set forth a nominal consideration, the
"value" thereof shall be determined from the price set forth
in or actual consideration for the contract of sale;
(2) in the case of a gift, sale by execution upon a judgment
or upon the foreclosure of a mortgage by a judicial officer,
transactions without consideration or for consideration less
than the actual monetary worth of the real estate, a taxable
lease, an occupancy agreement, a leasehold or possessory
interest, any exchange of properties, or the real estate of an
acquired company, the actual monetary worth of the real estate
determined by adjusting the assessed value of the real estate
for local real estate tax purposes for the common level ratio
of assessed values to market values of the taxing district as
established by the State Tax Equalization Board, or a
commensurate part of the assessment where the assessment
includes other real estate;
(3) in the case of an easement or other interest in real
estate the value of which is not determinable under clause (1)
or (2), the actual monetary worth of such interest; or
(4) the actual consideration for or actual monetary worth
of any executory agreement for the construction of buildings,
structures or other permanent improvements to real estate
between the grantor and other persons existing before the
transfer and not removed thereby or between the grantor, the
agent or principal of the grantor or a related corporation,
association or partnership and the grantee existing before or
effective with the transfer.
"Veterans' service organization." A not-for-profit
organization that has been chartered by the Congress of the
United States to service veterans or is a member of the State
Veterans' Commission under 51 Pa.C.S. Ch. 17 (relating to State
Veterans' Commission and Deputy Adjutant General for Veterans'
Affairs). (Def. amended Oct. 30, 2017, P.L.672, No.43)
"Volunteer emergency medical services agency." The term
shall have the same meaning as given to the term "volunteer
ambulance service" in 35 Pa.C.S. § 7802 (relating to
definitions). (Def. added July 9, 2013, P.L.270, No.52)
"Volunteer fire company." As defined in 35 Pa.C.S. § 7802
(relating to definitions). (Def. added July 9, 2013, P.L.270,
No.52)
"Volunteer rescue company." As defined in 35 Pa.C.S. § 7802
(relating to definitions). (Def. added July 9, 2013, P.L.270,
No.52)
(1101-C amended July 2, 1986, P.L.318, No.77)
Compiler's Note: See Act 25 of 2021 in the appendix to this
act for special provisions relating to findings and
declarations.
Compiler's Note: Act 84 of 2016 added the definitions of
"conservancy" and "veterans' organization" in section
1101-C.
Section 51(11)(i) of Act 84 provided that the addition of
the definitions of "conservancy" and "veterans'
organization" shall apply to transfers at least 60 days
following the effective date of section 51.
Section 51(11) of Act 84 was amended November 21, 2016,
P.L.1517, No.175, retroactive to July 13, 2016.
Section 51(11)(i)(A) of Act 84, as amended, provided that
the addition of the definition of "conservancy" in section
1101-C shall apply to transfers made after December 31,
2012, and section 51(11)(ii)(A) of Act 84, as amended,
provided that the addition of the definition of "veterans'
organization" shall apply to transfers made after
September 12, 2016.
Compiler's Note: Section 27 of Act 85 of 2012, which amended
the definition of "association," deleted the definitions
of "family farm corporation" and "family farm partnership"
and added the definition of "family farm business,"
provided that a reference in any law to the former "family
farm corporation" or "family farm partnership" in section
1101-C shall be deemed to be references to a "family farm
business" under section 1101-C.
Section 30(4) of Act 85 provided that the amendment of
section 1101-C shall apply retroactively to any document
made, executed, delivered, accepted or presented for
recording on or after July 1, 2010.
Compiler's Note: The term "volunteer ambulance service,"
referred to in the definition of "volunteer emergency
medical services agency," was amended by the act of June
30, 2016 (P.L.432, No.60).
Section 1102-C. Imposition of Tax.--Every person who makes,
executes, delivers, accepts or presents for recording any
document or in whose behalf any document is made, executed,
delivered, accepted or presented for recording, shall be subject
to pay for and in respect to the transaction or any part
thereof, or for or in respect of the vellum parchment or paper
upon which such document is written or printed, a State tax at
the rate of one per cent of the value of the real estate within
this Commonwealth represented by such document, which State tax
shall be payable at the earlier of the time the document is
presented for recording or within thirty days of acceptance of
such document or within thirty days of becoming an acquired
company.
(1102-C amended July 9, 2013, P.L.270, No.52)
Section 1102-C.1. Recapture of Tax.--(1102-C.1 repealed
July 2, 1986, P.L.318, No.77)
Section 1102-C.2. Exempt Parties.--The United States, the
Commonwealth or any of their instrumentalities, agencies or
political subdivisions, or veterans' service organizations shall
be exempt from payment of the tax imposed by this article. The
exemption under this section shall not, however, relieve any
other party to a transaction from liability for the tax.
(1102-C.2 amended Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: Act 84 of 2016 amended section 1102-C.2.
Section 51(11)(ii) of Act 84 provided that the amendment
shall apply to transfers at least 60 days following the
effective date of section 51 of Act 84.
Section 51(11) of Act 84 was amended November 21, 2016,
P.L.1517, No.175, retroactive to July 13, 2016.
Section 51(11)(ii)(B) of Act 84, as amended, provided
that the amendment shall apply to transfers made after
September 12, 2016.
Section 1102-C.3. Excluded Transactions.--The tax imposed
by section 1102-C shall not be imposed upon:
(1) A transfer to the Commonwealth or to any of its
instrumentalities, agencies or political subdivisions by gift,
dedication or deed in lieu of condemnation or deed of
confirmation in connection with condemnation proceedings, or a
reconveyance by the condemning body of the property condemned
to the owner of record at the time of condemnation, which
reconveyance may include property line adjustments provided
said reconveyance is made within one year from the date of
condemnation.
(2) A document which the Commonwealth is prohibited from
taxing under the Constitution or statutes of the United States.
(3) A conveyance to a municipality, township, school
district or county pursuant to acquisition by the municipality,
township, school district or county of a tax delinquent property
at sheriff sale or tax claim bureau sale.
(4) A transfer for no or nominal actual consideration which
corrects or confirms a transfer previously recorded, but which
does not extend or limit existing record legal title or
interest.
(5) A transfer of division in kind for no or nominal actual
consideration of property passed by testate or intestate
succession and held by cotenants; however, if any of the parties
take shares greater in value than their undivided interest, tax
is due on the excess.
(6) A transfer between husband and wife, between persons
who were previously husband and wife who have since been
divorced, provided the property or interest therein subject to
such transfer was acquired by the husband and wife or husband
or wife prior to the granting of the final decree in divorce,
between parent and child or the spouse of such child, between
a stepparent and a stepchild or the spouse of the stepchild,
between brother or sister or spouse of a brother or sister and
brother or sister or the spouse of a brother or sister and
between a grandparent and grandchild or the spouse of such
grandchild, except that a subsequent transfer by the grantee
within one year shall be subject to tax as if the grantor were
making such transfer. ((6) amended July 2, 2012, P.L.751, No.85)
(7) A transfer for no or nominal actual consideration of
property passing by testate or intestate succession from a
personal representative of a decedent to the decedent's devisee
or heir.
(8) A transfer for no or nominal actual consideration to a
trustee of an ordinary trust where the transfer of the same
property would be exempt if the transfer was made directly from
the grantor to all of the possible beneficiaries that are
entitled to receive the property or proceeds from the sale of
the property under the trust, whether or not such beneficiaries
are contingent or specifically named. A trust clause which
identifies the contingent beneficiaries by reference to the
heirs of the trust settlor as determined by the laws of the
intestate succession shall not disqualify a transfer from the
exclusion provided by this clause. No such exemption shall be
granted unless the recorder of deeds is presented with a copy
of the trust instrument that clearly identifies the grantor and
all possible beneficiaries. ((8) amended May 7, 1997, P.L.85,
No.7)
(8.1) A transfer for no or nominal actual consideration to
a trustee of a living trust from the settlor of the living
trust. No such exemption shall be granted unless the recorder
of deeds is presented with a copy of the living trust
instrument. ((8.1) added May 7, 1997, P.L.85, No.7)
(9) A transfer for no or nominal actual consideration from
a trustee of an ordinary trust to a specifically named
beneficiary that is entitled to receive the property under the
recorded trust instrument or to a contingent beneficiary where
the transfer of the same property would be exempt if the
transfer was made by the grantor of the property into the trust
to that beneficiary. However, any transfer of real estate from
a living trust during the settlor's lifetime shall be considered
for the purposes of this article as if such transfer were made
directly from the settlor to the grantee. ((9) amended May 7,
1997, P.L.85, No.7)
(9.1) A transfer for no or nominal actual consideration
from a trustee of a living trust after the death of the settlor
of the trust or from a trustee of a trust created pursuant to
the will of a decedent to a beneficiary to whom the property
is devised or bequeathed. ((9.1) added May 7, 1997, P.L.85,
No.7)
(9.2) A transfer for no or nominal actual consideration
from the trustee of a living trust to the settlor of the living
trust if such property was originally conveyed to the trustee
by the settlor. ((9.2) added May 7, 1997, P.L.85, No.7)
(10) A transfer for no or nominal actual consideration from
trustee to successor trustee.
(11) A transfer:
(i) for no or nominal actual consideration between principal
and agent or straw party; or
(ii) from or to an agent or straw party where, if the agent
or straw party were his principal, no tax would be imposed under
this article.
Where the document by which title is acquired by a grantee or
statement of value fails to set forth that the property was
acquired by the grantee from, or for the benefit of, his
principal, there is a rebuttable presumption that the property
is the property of the grantee in his individual capacity if
the grantee claims an exemption from taxation under this clause.
(12) A transfer made pursuant to the statutory merger or
consolidation of a corporation or statutory division of a
nonprofit corporation, except where the department reasonably
determines that the primary intent for such merger,
consolidation or division is avoidance of the tax imposed by
this article.
(13) A transfer from a corporation or association of real
estate held of record in the name of the corporation or
association where the grantee owns stock of the corporation or
an interest in the association in the same proportion as his
interest in or ownership of the real estate being conveyed and
where the stock of the corporation or the interest in the
association has been held by the grantee for more than two
years.
(14) A transfer from a nonprofit industrial development
agency or authority to a grantee of property conveyed by the
grantee to that agency or authority as security for a debt of
the grantee or a transfer to a nonprofit industrial development
agency or authority.
(15) A transfer from a nonprofit industrial development
agency or authority to a grantee purchasing directly from it,
but only if:
(i) the grantee shall directly use such real estate for the
primary purpose of manufacturing, fabricating, compounding,
processing, publishing, research and development,
transportation, energy conversion, energy production, pollution
control, warehousing or agriculture; and
(ii) the agency or authority has the full ownership interest
in the real estate transferred.
(16) A transfer by a mortgagor to the holder of a bona fide
mortgage in default in lieu of a foreclosure or a transfer
pursuant to a judicial sale in which the successful bidder is
the bona fide holder of a mortgage, unless the holder assigns
the bid to another person.
(17) Any transfer between religious organizations or other
bodies or persons holding title for a religious organization
if such real estate is not being or has not been used by such
transferor for commercial purposes.
(18) Any of the following:
(i) A transfer to a conservancy.
(ii) A transfer from a conservancy to the United States,
the Commonwealth or to any of their instrumentalities, agencies
or political subdivisions.
(iii) A transfer from a conservancy where the real estate
is encumbered by a perpetual agricultural conservation easement
as defined by the act of June 30, 1981 (P.L.128, No.43), known
as the "Agricultural Area Security Law," and such conservancy
has owned the real estate for at least two years immediately
prior to the transfer.
(iv) A transfer of an agricultural conservation easement
to or from the Commonwealth, a county, a local government unit
or a conservancy under authority of the "Agricultural Area
Security Law."
(v) A transfer of a conservation easement or preservation
easement under the act of June 22, 2001 (P.L.390, No.29), known
as the "Conservation and Preservation Easements Act."
(vi) A transfer of a perpetual historic preservation
easement, a perpetual public trail easement or other perpetual
public recreational use easement, a perpetual scenic
preservation easement or a perpetual open-space preservation
easement to or from the United States, the Commonwealth, a
county, a local government unit or a conservancy.
(vii) A transfer of real estate that is subject to an
agricultural conservation easement established under authority
of the act of June 30, 1981 (P.L.128, No.43), known as the
"Agricultural Area Security Law," to a qualified beginner
farmer. ((vii) added June 28, 2019, P.L.50, No.13)
((18) amended July 13, 2016, P.L.526, No.84)
(19) A transfer of real estate devoted to the business of
agriculture to a family farm business by:
(i) a member of the same family which directly owns at least
seventy-five per cent of each class of the stock thereof or the
interests in that family farm business; or
(ii) a family farm business, which family directly owns at
least seventy-five per cent of each class of stock thereof or
the interests in that family farm business.
((19) amended July 2, 2012, P.L.751, No.85)
(19.1) ((19.1) deleted by amendment July 2, 2012, P.L.751,
No.85)
(20) A transfer between members of the same family of an
ownership interest in a real estate company or family farm
business that owns real estate. ((20) amended July 2, 2012,
P.L.751, No.85)
(21) A transaction wherein the tax due is one dollar ($1)
or less.
(22) Leases for the production or extraction of coal, oil,
natural gas or minerals and assignments thereof.
In order to exercise any exclusion provided in this section,
the true, full and complete value of the transfer shall be shown
on the statement of value. For leases of coal, oil, natural gas
or minerals, the statement of value may be limited to an
explanation of the reason such document is not subject to tax
under this article.
(23) A transfer of real estate to or by a volunteer EMS
company, volunteer fire company or volunteer rescue company as
those terms are defined in 35 Pa.C.S. § 7802 (relating to
definitions).
(i) ((i) deleted by amendment)
(ii) ((ii) deleted by amendment)
((23) amended July 23, 2020, P.L. 654, No.66)
(24) A transfer of real estate to or by a land bank. For
the purposes of this clause, the term "land bank" shall have
the same meaning as given to it in 68 Pa.C.S. § 2103 (relating
to definitions). ((24) added July 13, 2016, P.L.526, No.84)
(25) Beginning on or after December 31, 2015, a transfer
of real estate by a housing authority created under the act of
May 28, 1937 (P.L.955, No.265), referred to as the Housing
Authorities Law, to a nonprofit organization which is utilizing
the real estate for the purpose of Rental Assistance
Demonstration administered by the United States Department of
Housing and Urban Development under the Consolidated and Further
Continuing Appropriations Act, 2012 (Public Law 112-55, 125
Stat. 552). ((25) added Oct. 24, 2018, P.L.675, No.100)
(1102-C.3 added July 2, 1986, P.L.318, No.77)
Compiler's Note: Section 2 of Act 66 of 2020 provided that
the amendment of paragraph (23) shall be retroactive to
January 1, 2019.
Compiler's Note: Section 4 of Act 100 of 2018 provided
that the addition of paragraph (25) shall apply to a
county of the fifth class with a population of between
115,000 and 118,000 in the 2010 Federal Decennial Census
which filed an appeal with the Board of Finance and
Revenue after December 31, 2015.
Act 84 of 2016 amended paragraph (18) and added
paragraph (24) in section 1102-C.3. Section 51(11)(iii)
of Act 84 provided that the amendment or addition of
paragraphs (18) and (24) shall apply to transfers at
least 60 days following the effective date of section
51 of Act 84.
Section 51(11) of Act 84 was amended November 21, 2016,
P.L.1517, No.175, retroactive to July 13, 2016.
Section (51)(11)(i)(B) of Act 84, as amended, provided
that the amendment or addition of paragraphs (18) and
(24) in section 1102-C.3 shall apply to transfers made
after December 31, 2012.
Compiler's Note: Section 42(3) of Act 52 of 2013, which
added par (23), provided that par. (23) shall apply to
transactions occurring on or after November 1, 2011.
Compiler's Note: Section 30(4) of Act 85 of 2012, which
amended section 1102-C.5, provided that the amendment
shall apply retroactively to any document made, executed,
delivered, accepted or presented for recording on or
after July 1, 2010.
Section 1102-C.4. Documents Relating to Associations or
Corporations and Members, Partners, Stockholders or Shareholders
Thereof.--Except as otherwise provided in sections 1102-C.3 and
1102-C.5, documents which make, confirm or evidence any transfer
or demise of title to real estate between associations or
corporations and the members, partners, shareholders or
stockholders thereof are fully taxable. For the purposes of
this article, corporations and associations are entities
separate from their members, partners, stockholders or
shareholders.
(1102-C.4 amended June 30, 2021, P.L.124, No.25)
Compiler's Note: See Act 25 of 2021 in the appendix to this
act for special provisions relating to findings and
declarations.
Compiler's Note: Section 30(4) of Act 85 of 2012, which
amended section 1102-C.4, provided that the amendment
shall apply retroactively to any document made, executed,
delivered, accepted or presented for recording on or
after July 1, 2010.
Section 1102-C.5. Acquired Company.--(a) A real estate
company is an acquired company upon a change in the ownership
interest in the company, however effected, if the change:
(1) does not affect the continuity of the company; and
(2) of itself or together with prior changes has the effect
of transferring, directly or indirectly, ninety per cent or
more of the total ownership interest in the company within a
period of three years.
(3) For the purposes of paragraph (2), a transfer occurs
within a period of three years of another transfer or transfers
if, during the period, the transferring party provides the
transferee a legally binding commitment or option, enforceable
at a future date, to execute the transfer.
((a) amended July 9, 2013, P.L.270, No.52)
(b) (Deleted by amendment).
(b.1) (Deleted by amendment).
(b.2) A family farm business is an acquired company when,
because of voluntary or involuntary dissolution, it ceases to
be a family farm business or when, because of the issuance or
transfer of stock in the corporation or transfer of interests
in the association or because of acquisition or transfer of
assets that are devoted to the business of agriculture, it fails
to meet the minimum requirements of a family farm business under
this article.
(b.3) The conveyance of assets held by one family farm
business to another family farm business shall not be considered
a transfer of assets under this article if the same individuals
hold at least fifty per cent of the ownership interest in each
family farm business.
(c) Within thirty days after becoming an acquired company,
the company shall present a declaration of acquisition with the
recorder of each county in which it holds real estate for the
affixation of documentary stamps and recording. Such declaration
shall set forth the value of real estate holdings of the
acquired company in such county.
(1102-C.5 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 30(4) of Act 85 of 2012, which
amended section 1102-C.4, provided that the amendment
shall apply retroactively to any document made, executed,
delivered, accepted or presented for recording on or
after July 1, 2010.
Section 30(5) of Act 85 provided that subsec. (a)(3)
shall not apply to a transaction or a series of
transactions occurring in part or entirely before January
1, 2013.
Section 1102-C.6. Transfer of Tax.--(a) Beginning July 31,
2019, and each July 31 thereafter, the State Treasurer shall
transfer from the General Fund to the Housing Affordability and
Rehabilitation Enhancement Fund under Article IV-D of the act
of December 3, 1959 (P.L.1688, No.621), known as the "Housing
Finance Agency Law," an amount under subsection (b).
(1) ((1) deleted by amendment).
(2) ((2) deleted by amendment).
((a) amended July 11, 2024, P.L. , No.56)
(b) The amount transferred under subsection (a) shall be
equal to the following:
(1) For each fiscal year beginning after June 30, 2019, and
ending prior to July 1, 2023, forty million dollars
($40,000,000).
(2) For the fiscal year beginning after June 30, 2023, and
ending prior to July 1, 2024, sixty million dollars
($60,000,000).
(3) For the fiscal year beginning after June 30, 2024, and
ending prior to July 1, 2025, seventy million dollars
($70,000,000).
(4) For the fiscal year beginning after June 30, 2025, and
ending prior to July 1, 2026, eighty million dollars
($80,000,000).
(5) For the fiscal year beginning after June 30, 2026, and
ending prior to July 1, 2027, ninety million dollars
($90,000,000).
(6) For the fiscal year beginning July 1, 2027, and each
fiscal year thereafter, one hundred million dollars
($100,000,000).
((b) amended July 11, 2024, P.L. , No.56)
(c) Nothing in this section shall be construed to reduce
or prohibit increased funding for the Housing Affordability and
Rehabilitation Enhancement Fund or the Keystone Recreation,
Park and Conservation Fund as provided in the "Housing Finance
Agency Law" or other law.
(d) Nothing in this section shall be construed to increase
the rate of tax imposed under section 1102-C. ((d) added July
11, 2024, P.L. , No.56)
(1102-C.6 added June 28, 2019, P.L.50, No.13)
Compiler's Note: See section 36 of Act 13 of 2019 in the
appendix to this act for provisions relating to
continuation of prior law.
Section 1103-C. Credits Against Tax.--(a) Where there is
a transfer of a residential property by a licensed real estate
broker which property was transferred to him within the
preceding year as consideration for the purchase of other
residential property, a credit for the amount of the tax paid
at the time of the transfer to him shall be given to him toward
the amount of the tax due upon the transfer.
(b) Where there is a transfer by a builder of residential
property which was transferred to the builder within the
preceding year as consideration for the purchase of new,
previously unoccupied residential property, a credit for the
amount of the tax paid at the time of the transfer to the
builder shall be given to the builder toward the amount of the
tax due upon the transfer.
(c) Where there is a transfer of real estate which is
demised by the grantor, a credit for the amount of tax paid at
the time of the demise shall be given the grantor toward the
tax due upon the transfer. ((c) amended June 30, 2021, P.L.124,
No.25)
(d) Where there is a conveyance by deed of real estate which
was previously sold under a land contract by the grantor, a
credit for the amount of tax paid at the time of the sale shall
be given the grantor toward the tax due upon the deed.
(e) If the tax due upon the transfer is greater than the
credit given under this section, the difference shall be paid.
If the credit allowed is greater than the amount of tax due,
no refund or carryover credit shall be allowed.
(1103-C amended July 2, 1986, P.L.318, No.77)
Compiler's Note: See Act 25 of 2021 in the appendix to this
act for special provisions relating to findings and
declarations.
Section 1103-C.1. Extension of Lease.--In determining the
term of a lease, it shall be presumed that a right or option
to renew or extend a lease will be exercised if the rental
charge to the lessee is fixed or if a method for calculating
the rental charge is established.
(1103-C.1 added July 2, 1986, P.L.318, No.77)
Section 1104-C. Proceeds of Judicial Sale.--The tax herein
imposed shall be fully paid, and have priority out of the
proceeds of any judicial sale of real estate before any other
obligation, claim, lien, judgment, estate or costs of the sale
and of the writ upon which the sale is made, and the sheriff,
or other officer, conducting said sale, shall pay the tax herein
imposed out of the first moneys paid to him in connection
therewith. If the proceeds of the sale are insufficient to pay
the entire tax herein imposed, the purchaser shall be liable
for the remaining tax.
(1104-C amended July 2, 1986, P.L.318, No.77)
Section 1105-C. Documentary Stamps.--(a) The payment of
the tax imposed by this article shall be evidenced by the
affixing of a documentary stamp or stamps to every document by
the person making, executing, delivering or presenting for
recording such document. Such stamps shall be affixed in such
manner that their removal will require the continued application
of steam or water, and the person using or affixing such stamps
shall write or stamp or cause to be written or stamped thereon
the initials of his name and the date upon which such stamps
are affixed or used so that such stamps may not again be used:
Provided, That the department may prescribe such other method
of cancellation as it may deem expedient.
(b) The use of documentary license meter impressions or
similar indicia of payment in lieu of stamps as required by
this article may be permitted in the discretion of the
department.
(1105-C amended July 2, 1986, P.L.318, No.77)
Section 1106-C. Stamps, Commissions, Payments and
Transfers.--(a) The department shall prescribe, prepare and
furnish stamps to each recorder of deeds, of such denominations
and quantities as may be necessary, for the payment of the tax
imposed and assessed by this article.
(b) The department shall allow each county a commission
equal to one per cent of the face value of the stamps sold or
two hundred fifty dollars ($250) whichever is greater. The
recorder of deeds shall pay the commission herein allowed to
the general fund of the county. The department shall pay the
premium or premiums on any bond or bonds required by law to be
procured by recorder of deeds for the performance of their
duties under this article.
(c) All moneys paid in accordance with this article shall
be credited to the General Fund.
(d) At the end of each month, the State Treasurer shall
transfer from the General Fund to the Keystone Recreation, Park
and Conservation Fund an amount equal to the tax credited to
the General Fund under subsection (c) for the previous month
multiplied by the applicable transfer factor. The applicable
transfer factor for each month shall be as follows:
Transfer FactorMonth
July 1994 through
December 2001 0.15
January 2002 through
June 2002 0.10
July 2002 through
June 2003 0.075
July 2003 through
June 2006 0.15
July 2006 through
June 2007 0.021
July 2007 and each
month thereafter 0.15
(1106-C amended July 6, 2006, P.L.319, No.67)
Section 1107-C. Enforcement; Rules and Regulations.--The
department is hereby charged with the enforcement of the
provisions of this article and is hereby authorized and
empowered to prescribe, adopt, promulgate and enforce rules and
regulations relating to:
(1) The method and means to be used in affixing or
cancelling of stamps in substitution for or in addition to the
method and means provided in this article.
(2) The denominations and sale of stamps.
(3) Any other matter or thing pertaining to the
administration and enforcement of the provisions of this
article.
(1107-C added May 5, 1981, P.L.36, No.14)
Section 1108-C. Failure to Affix Stamps.--No document upon
which tax is imposed by this article shall at any time be made
the basis of any action or other legal proceeding, nor shall
proof thereof be offered or received in evidence in any court
of this Commonwealth, or recorded in the office of any recorder
of deeds of any county of this Commonwealth, unless a
documentary stamp or stamps as provided in this article have
been affixed thereto.
(1108-C amended July 2, 1986, P.L.318, No.77)
Section 1109-C. Statement of Value; Penalty.--(a) Every
document lodged with or presented to any recorder of deeds in
this Commonwealth for recording, shall set forth therein and
as a part of such document the true, full and complete value
thereof, or shall be accompanied by a statement of value
executed by a responsible person connected with the transaction
showing such connection and setting forth the true, full and
complete value thereof or the reason, if any, why such document
is not subject to tax under this article. The provisions of
this subsection shall not apply to any excludable real estate
transfers which are exempt from taxation based on family
relationship. Other documents presented for the affixation of
stamps shall be accompanied by a certified copy of the document
and statement of value executed by a responsible person
connected with the transaction showing such connection and
setting forth the true, full and complete value thereof or the
reason, if any, why such document is not subject to tax under
this article.
(b) Any recorder of deeds who shall record any document
upon which tax is imposed by this article without the proper
documentary stamp or stamps affixed thereto as required by this
article as is indicated in such document or accompanying
statement of value shall, upon summary conviction, be sentenced
to pay a fine of fifty dollars ($50) and costs of prosecution,
and in default of payment thereof, undergo imprisonment for not
more than thirty days.
(1109-C amended July 2, 1986, P.L.318, No.77)
Section 1109-C.1. Civil Penalties.--(a) If any part of any
underpayment of tax imposed by this article is due to fraud,
there shall be added to the tax an amount equal to fifty per
cent of the underpayment.
(b) In the case of failure to record a declaration required
under this article on the date prescribed therefor, unless it
is shown that such failure is due to reasonable cause, there
shall be added to the tax five per cent of the amount of such
tax if the failure is for not more than one month, with an
additional five per cent for each additional month or fraction
thereof during which such failure continues, not exceeding fifty
per cent in the aggregate.
(1109-C.1 added July 2, 1986, P.L.318, No.77)
Section 1110-C. Unlawful Acts; Penalty.--(a) It shall be
unlawful for any person to:
(1) accept or present for recording or cause to be accepted
or presented for recording any document, without the full amount
of tax thereon being duly paid; or,
(2) make use of any documentary stamp to denote payment of
any tax imposed by this article without cancelling such stamp
as required by this article or as prescribed by the department;
or,
(3) fail, neglect or refuse to comply with or violate the
rules and regulations prescribed, adopted and promulgated by
the department under the provisions of this article.
(b) Any person violating any of the provisions of subsection
(a) shall be guilty of a summary offense.
(c) It shall be unlawful for any person to:
(1) fraudulently cut, tear or remove from a document any
documentary stamp; or,
(2) fraudulently affix to any document upon which tax is
imposed by this article any documentary stamp which has been
cut, torn or removed from any other document upon which tax is
imposed by this article, or any documentary stamp of
insufficient value, or any forged or counterfeited stamp, or
any impression of any forged or counterfeited stamp, die, plate
or other article; or,
(3) wilfully remove or alter the cancellation marks of any
documentary stamp, or restore any such documentary stamp, with
intent to use or cause the same to be used after it has already
been used, or knowingly buy, sell, offer for sale, or give away
any such altered or restored stamp to any person for use, or
knowingly use the same; or,
(4) knowingly have in his possession any altered or restored
documentary stamp which has been removed from any document upon
which tax is imposed by this article: Provided, That the
possession of such stamps shall be prima facie evidence of an
intent to violate the provisions of this clause; or,
(5) knowingly or wilfully prepare, keep, sell, offer for
sale, or have in his possession, any forged or counterfeited
documentary stamps.
(d) Any person violating any of the provisions of subsection
(c) shall be guilty of a misdemeanor of the second degree.
(e) A person who makes a false statement of value or
declaration of acquisition, when he does not believe the
statement or declaration to be true, is guilty of a misdemeanor
of the second degree.
(1110-C amended July 2, 1986, P.L.318, No.77)
Section 1111-C. Assessment and Notice of Tax; Review.--(a)
If any person shall fail to pay any tax imposed by this article
for which he is liable, the department is hereby authorized and
empowered to make an assessment of additional tax and interest
due by such person based upon any information within its
possession or that shall come into its possession. All of such
assessments shall be made within three years after the date of
the recording of the document, subject to the following:
(1) If the taxpayer underpays the correct amount of the tax
by twenty-five per cent or more, the tax may be assessed at any
time within six years after the date of the recording of the
document.
(2) If any part of an underpayment of tax is due to fraud
or an undisclosed, intentional disregard of rules and
regulations, the full amount of the tax may be assessed at any
time.
(b) Promptly after the date of such assessment, the
department shall send a copy thereof, including the basis of
the assessment, to the person against whom it was made. Any
taxpayer against whom an assessment is made may petition the
department for a reassessment pursuant to Article XXVII.
(c) ((c) deleted by amendment Oct. 18, 2006, P.L.49, No.119)
(d) (Deleted by amendment).
(1111-C amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 15 of Act 55 of 2007, which amended
section 1111-C, provided that the amendment of section
1111-C shall apply to assessments issued after December
31, 2007.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Compiler's Note: Section 24(5)(i) of Act 40 of 2005, which
amended section 1111-C, provided that the amendment shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1112-C. Lien.--(a) Any tax determined to be due
by the department and remaining unpaid after demand for the
same, and all penalties and interest thereon, shall be a lien
in favor of the Commonwealth upon the property, both real and
personal, of such person but only after said lien has been
entered and docketed of record by the prothonotary of the county
where such property is situated.
(a.1) At any time after it makes an assessment of additional
tax, penalty or interest, the department may transmit to the
prothonotaries of the respective counties certified copies of
all liens for such taxes, penalties and interest, and it shall
be the duty of each prothonotary receiving the lien to enter
and docket the same of record in his office, which lien shall
be indexed as judgments are now indexed. After the department's
assessment becomes final, a writ of execution may directly issue
upon such lien without the issuance and prosecution to judgment
of a writ of scire facias: Provided, That not less than ten
days before issuance of any execution on the lien, notice shall
be sent by certified mail to the taxpayer at his last known
post office address. No prothonotary shall require as a
condition precedent to the entry of such liens, the payment of
any costs incident thereto.
(b) The lien imposed hereunder shall have priority from the
date of its recording as aforesaid, and shall be fully paid and
satisfied out of the proceeds of any judicial sale of property
subject thereto before any other obligation, judgment, claim,
lien or estate to which said property may subsequently become
subject, except costs of the sale and of the writ upon which
the sale was made, and real estate taxes and municipal claims
against such property, but shall be subordinate to mortgages
and other liens existing and duly recorded or entered of record
prior to the recording of the tax lien. In the case of a
judicial sale of property subject to a lien imposed hereunder
upon a lien or claim over which the lien imposed hereunder has
priority, as aforesaid, such sale shall discharge the lien
imposed hereunder to the extent only that the proceeds are
applied to its payment, and such lien shall continue in full
force and effect as to the balance remaining unpaid.
(c) The lien imposed hereunder shall continue for five years
from the date of its entry of record, and may be renewed and
continued in the manner now or hereafter provided for the
renewal of judgments, or as may be provided in the act of April
9, 1929 (P.L.343, No.176), known as "The Fiscal Code."
(1112-C amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 1113-C. Refunds.--(a) Whenever the amount due upon
assessment or review is less than the amount paid to the
department on account thereof, the department shall enter a
credit in the amount of such difference to the account of the
person who paid the tax.
(b) Where there has been no assessment of unpaid tax, the
department shall have the power, and its duty shall be, to hear
and decide any application for refund and, upon the allowance
of such application, to enter a credit in the amount of the
overpayment to the account of the person who paid the tax. Such
application must be filed under Article XXVII.
(1113-C amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 1114-C. Sharing Information.--Notwithstanding the
provisions of any other act, the department may divulge to the
proper officer of a political subdivision imposing a local real
estate transfer tax, or the authorized representative of that
officer, information gained pursuant to the department's
administration or collection respecting the collection of realty
transfer tax under this article.
(1114-C added July 7, 2005, P.L.149, No.40)
ARTICLE XI-D
LOCAL REAL ESTATE TRANSFER TAX
(Art. added July 2, 1986, P.L.318, No.77)
Section 1101-D. Imposition.--The duly constituted
authorities of the following political subdivisions--cities of
the second class, cities of the second class A, cities of the
third class, boroughs, incorporated towns, townships of the
first class, townships of the second class, school districts
of the first class A, school districts of the second class,
school districts of the third class and school districts of the
fourth class, in all cases including independent school
districts--may, in their discretion, by ordinance or resolution,
for general revenue purposes, levy, assess and collect or
provide for the levying, assessment and collection of a tax
upon a transfer of real property or an interest in real property
within the limits of the political subdivision, regardless of
where the instruments making the transfers are made, executed
or delivered or where the actual settlements on the transfer
take place, to the extent that the transactions are subject to
the tax imposed by Article XI-C. A tax imposed under this
article shall be subject to rate limitations provided by section
5, section 8 and section 17 of the act of December 31, 1965
(P.L.1257, No.511), known as "The Local Tax Enabling Act."
(1101-D amended July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(ii) of Act 40 of 2005, which
amended section 1101-D, provided that the amendment shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1102-D. Administration.--(a) The tax authorized
under this article shall be administered, collected and enforced
under the act of December 31, 1965 (P.L.1257, No.511), known
as "The Local Tax Enabling Act," provided, however, that, if
the correct amount of the tax is not paid by the last date
prescribed for timely payment as provided for in section 1102-C,
the department may determine the tax, interest and penalty as
provided for in section 1109-D and may collect and enforce the
tax, interest and penalty in the same manner as tax, interest
and penalty imposed by Article XI-C.
(b) Whenever a declaration is required to be filed under
Article XI-C, a declaration is also required to be filed under
this article.
(1102-D amended July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(iii) of Act 40 of 2005, which
amended section 1102-D, provided that the amendment shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1103-D. Regulations.--(a) The regulations
promulgated under Article XI-C shall be applicable to the taxes
imposed under this article.
(b) The Department of Revenue may promulgate and enforce
regulations not inconsistent with the provisions of this
article.
(c) The department, to cover its costs of administration,
shall retain an amount equal to costs but not to exceed ten per
cent of the tax, interest and penalty collected and enforced
by the department under section 1102-D.
(1103-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(iv) of Act 40 of 2005, which
added section 1103-D, provided that section 1103-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1104-D. Documentary Stamps.--(a) The payment of
the tax imposed under this article shall be evidenced by the
affixing of a documentary stamp or stamps to every document by
the person making, executing, delivering or presenting for
recording such document. The stamps shall be affixed in such
manner that their removal will require the continued application
of steam or water, and the person using or affixing the stamps
shall write, stamp or cause to be written or stamped thereon
the initials of that person's name and the date upon which the
stamps are affixed or used so that the stamps may not again be
used, provided that the Department of Revenue may prescribe
such other method of cancellation as it may deem expedient.
(b) The department may, in its discretion, use documentary
license meter impressions or similar indicia of payment in lieu
of stamps.
(1104-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(v) of Act 40 of 2005, which
added section 1104-D, provided that section 1104-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1105-D. Collection Agent.--The recorder of deeds
shall be the collection agent for any political subdivision
levying a local real estate transfer tax under this article.
The recorder of deeds shall pay tax, interest and penalty
collected under this article over to the appropriate political
subdivision in accordance with section 6(c) of the act of
November 1, 1971 (P.L.495, No.113), entitled, as amended, "An
act providing for the compensation of county officers in
counties of the second through eighth classes, for compensation
of district attorneys in cities and counties of the first class,
for compensation of district election officers in all counties,
for the disposition of fees, for filing of bonds in certain
cases and for duties of certain officers."
(1105-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(vi) of Act 40 of 2005, which
added section 1105-D, provided that section 1105-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1106-D. Disbursements.--The tax, interest and
penalty that the Department of Revenue collects under this
article shall be remitted in the manner provided by law to the
appropriate recorder of deeds along with the "State Tax Payment
Imprint Receipt" which shall provide sufficient information for
the recorder of deeds to determine which political subdivisions
are entitled to the collections. The recorder of deeds shall
record the "State Tax Payment Imprint Receipt" whether or not
signed and acknowledged by the Department of Revenue and shall
index in the grantor/grantee index to the original document
upon which the tax has been paid. The department shall collect
from the taxpayer as part of its determination process the
county recording fee for the recording of the "State Tax Payment
Imprint Receipt."
(1106-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(vii) of Act 40 of 2005, which
added section 1106-D, provided that section 1106-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1107-D. Proceeds of Judicial Sale.--The tax imposed
under this article shall be fully paid and have priority out
of the proceeds of any judicial sale of real estate before any
other obligation, claim, lien, judgment, estate or costs of the
sale and of the writ upon which the sale is made. The sheriff
or other officer conducting the sale shall pay the tax imposed
under this article out of the first moneys paid to the sheriff
or officer in connection therewith. If the proceeds of the sale
are insufficient to pay the entire tax imposed under this
article, the purchaser shall be liable for the remaining tax.
(1107-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(viii) of Act 40 of 2005,
which added section 1107-D, provided that section 1107-D
shall apply to any document made, executed, delivered,
accepted or presented for recording 90 days after the
effective date of section 24(5).
Section 1108-D. Failure to Affix Stamps.--No document upon
which tax is imposed under this article shall at any time be
made the basis of any action or other legal proceeding nor shall
proof thereof be offered or received in evidence in any court
of this Commonwealth or recorded in the office of any recorder
of deeds of any county of this Commonwealth unless a documentary
stamp or stamps as provided in this article have been affixed
thereto.
(1108-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(ix) of Act 40 of 2005, which
added section 1108-D, provided that section 1108-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1109-D. Determination and Notice of Tax;
Review.--(a) If any person fails to pay any tax imposed under
this article for which that person is liable, a political
subdivision may authorize the Department of Revenue to make a
determination of additional tax, penalty and interest due under
this section by the person. The determination will be based
upon any information which is within the possession or which
will come into the possession of the department. The
determination will be made within three years after the date
of the recording of the document, subject to the following:
(1) If the taxpayer underpays the correct amount of the tax
by twenty-five per cent or more, the tax may be assessed at any
time within six years after the date of the recording of the
document.
(2) If any part of an underpayment of tax is due to fraud
or an undisclosed, intentional disregard of rules and
regulations, the full amount of the tax may be assessed at any
time.
(b) (1) Promptly after the date of such determination, the
department shall send by mail a copy thereof to the person
against whom it was made. Within ninety days after the date
upon which the copy of the determination was mailed, the person
may file with the department a petition for redetermination of
the taxes.
(2) Every petition for redetermination must state
specifically the reasons which the petitioner believes to be
entitled to redetermination and shall be supported by
affirmation that it is not made for the purpose of delay and
that the facts set forth therein are true.
(3) The department, within six months after the date of
filing of a petition for redetermination, shall dispose of the
petition. Notice of the action taken upon a petition for
redetermination shall be given to the petitioner promptly after
the date of redetermination by the department.
(c) A person shall have the right to review by the Board
of Finance and Revenue and appeal in the same manner and within
the same time as provided by law in the case of capital stock
and franchise taxes imposed upon corporations.
(d) (1) Notice of the action of the Board of Finance and
Revenue shall be given by mail to the political subdivision. A
political subdivision shall have the right to appeal in the
same manner and within the same time as provided by law for the
Commonwealth in the case of capital stock and franchise taxes
imposed upon corporations.
(2) The political subdivision may request in writing the
Office of General Counsel to render such legal advice and such
representation as are required concerning every matter and issue
arising in connection with an appeal from a decision of the
Board of Finance and Revenue.
(1109-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(x) of Act 40 of 2005, which
added section 1109-D, provided that section 1109-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1110-D. Lien.--(a) Any tax that the Department of
Revenue determines to be due under this article and remains
unpaid after demand for the same, and all penalties and interest
thereon, shall be a lien in favor of the affected political
subdivision upon the property, both real and personal, of the
person but only after the lien has been entered and docketed
of record by the prothonotary of the county where such property
is situated.
(b) (1) At any time after it makes a determination of
additional tax, penalty or interest under this article, the
department may transmit to the prothonotaries of the respective
counties certified copies of all liens for the taxes, penalties
and interest under this article or copies of all liens under
Article XI-C and this article on a single form.
(2) A prothonotary receiving the lien shall enter and docket
the lien of record in the prothonotary's office, which lien
shall be indexed as judgments are now indexed.
(3) After the department's determination becomes final, a
writ of execution may directly issue upon the lien without the
issuance and prosecution to judgment of a writ of scire facias,
provided that, not less than ten days before issuance of any
execution on the lien, notice shall be sent by certified mail
to the taxpayer at the taxpayer's last known post office
address. No prothonotary shall require as a condition precedent
to the entry of the liens the payment of any costs incident
thereto.
(c) (1) The lien imposed under this section shall have
priority from the date of its recording and shall be fully paid
and satisfied out of the proceeds of any judicial sale of
property subject thereto before any other obligation, judgment,
claim, lien or estate to which the property may subsequently
become subject, except costs of the sale and of the writ upon
which the sale was made, and real estate taxes and municipal
claims against such property, but shall be subordinate to
mortgages and other liens existing and duly recorded or entered
of record prior to the recording of the tax lien.
(2) In the case of a judicial sale of property subject to
a lien imposed under this section upon a lien or claim over
which the lien has priority, the sale shall discharge the lien
to the extent only that the proceeds are applied to its payment,
and the lien shall continue in full force and effect as to the
balance remaining unpaid.
(d) A lien imposed under this article shall be equal in
priority to the lien imposed under Article XI-C.
(1110-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(xi) of Act 40 of 2005, which
added section 1110-D, provided that section 1110-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1111-D. Refunds.--(a) Whenever the amount due upon
determination, redetermination or review is less than the amount
paid on account thereof, the political subdivision shall refund
the difference.
(b) Where there has been no determination of unpaid tax,
application for refund shall be made to the political
subdivision in the manner prescribed by the act of December 31,
1965 (P.L.1257, No.511), known as "The Local Tax Enabling Act,"
53 Pa.C.S. Ch. 84 Subch. C (relating to local taxpayers bill
of rights) or as otherwise provided by law.
(1111-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(xii) of Act 40 of 2005, which
added section 1111-D, provided that section 1111-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1112-D. Civil Penalties.--(a) If any part of any
underpayment of tax imposed under this article is due to fraud,
an amount equal to fifty per cent of the underpayment shall be
added to the tax.
(b) In the case of failure to record a declaration required
under this article on the date prescribed therefor, unless it
is shown that such failure is due to reasonable cause, five per
cent of the amount of such tax shall be added to the tax if the
failure is for not more than one month, with an additional five
per cent for each additional month or fraction thereof during
which the failure continues, not exceeding fifty per cent in
the aggregate.
(1112-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(xiii) of Act 40 of 2005,
which added section 1112-D, provided that section 1112-D
shall apply to any document made, executed, delivered,
accepted or presented for recording 90 days after the
effective date of section 24(5).
Section 1113-D. Unlawful Acts and Penalty.--(a) It shall
be unlawful for any person to:
(1) accept or present for recording or cause to be accepted
or presented for recording any document without the full amount
of tax thereon being duly paid;
(2) make use of any documentary stamp to denote payment of
any tax imposed under this article without cancelling such stamp
as required by this article or as prescribed by the Department
of Revenue;
(3) fail, neglect or refuse to comply with or violate the
rules and regulations prescribed, adopted and promulgated by
the department under this article;
(4) fraudulently cut, tear or remove from a document any
documentary stamp;
(5) fraudulently affix to any document upon which tax is
imposed under this article any documentary stamp which has been
cut, torn or removed from any other document upon which tax is
imposed under this article, or any documentary stamp of
insufficient value, or any forged or counterfeited stamp, or
any impression of any forged or counterfeited stamp, die, plate
or other article;
(6) wilfully remove or alter the cancellation marks of any
documentary stamp, or restore any such documentary stamp, with
intent to use or cause the same to be used after it has already
been used, or knowingly buy, sell, offer for sale or give away
such altered or restored stamp to any person for use, or
knowingly use the same;
(7) knowingly have in his possession any altered or restored
documentary stamp which has been removed from any document upon
which a tax is imposed under this article, provided that the
possession of such stamps shall be prima facie evidence of an
intent to violate the provisions of this clause; or
(8) knowingly or wilfully prepare, keep, sell, offer for
sale or have in his possession any forged or counterfeited
documentary stamps.
(b) (1) Except as otherwise provided in clause (2), a
person who violates subsection (a) commits a misdemeanor of the
second degree.
(2) A person who violates subsection (a)(1), (2) or (3)
commits a summary offense.
(c) A person who makes a false statement of value or
declaration of acquisition, not believing the statement or
declaration to be true, commits a misdemeanor of the second
degree.
(1113-D added July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(5)(xiv) of Act 40 of 2005, which
added section 1113-D, provided that section 1113-D shall
apply to any document made, executed, delivered, accepted
or presented for recording 90 days after the effective
date of section 24(5).
Section 1114-D. Information.--Notwithstanding the provisions
of any other act, the officer of a political subdivision
imposing a local real estate transfer tax or the authorized
representative of the officer may divulge to the Department of
Revenue information concerning the administration or collection
of local real estate transfer tax authorized by this article.
(1114-D added July 7, 2005, P.L.149, No.40)
ARTICLE XII
CIGARETTE TAX
(Art. added Dec. 21, 1981, P.L.482, No.141)
Compiler's Note: Section 6 of Act 141 of 1981 renumbered
former Article XII to Article XXX and added present
Article XII.
Compiler's Note: Section 13.1 of Act 48 of 2009 provided
that the inclusion of "little cigars" in Article XII is
not intended to effect the Master Settlement Agreement
and related documents entered into November 23, 1998,
by the Commonwealth and leading United States tobacco
product manufacturers approved by the Court of Common
Pleas, Philadelphia County, January 13, 1999.
PART I
INTRODUCTORY PROVISIONS
(I added Dec. 21, 1981, P.L.482, No.141)
Section 1201. Definitions.--As used in this article:
"Article." Article XII and the rules and regulations
promulgated thereunder.
"Bureau." (Def. repealed July 2, 1993, P.L.250, No.46)
"Cigarette." Any roll for smoking made wholly or in part
of tobacco, the wrapper or cover of which is made of any
substance or material other than tobacco regardless of the size
or shape of the roll and regardless of whether or not the
tobacco is flavored, adulterated or mixed with any other
ingredient or a little cigar. (Def. amended Oct. 9, 2009,
P.L.451, No.48)
"Cigarette stamping agency." Any person, as defined in this
article, who shall be licensed as such by the department for
the purpose of affixing cigarette tax stamps to packages of
cigarettes and transmitting the proper tax to the Commonwealth,
and who maintains separate warehousing facilities for the
purpose of receiving and distributing cigarettes and conducting
their business, who have received commitments from at least two
cigarette manufacturers whose aggregate market share is at least
forty per cent of the Commonwealth cigarette market and
purchases cigarettes directly from cigarette manufacturers.
(Def. amended Aug. 4, 1991, P.L.97, No.22)
"Cigarette tax stamp." Any stamp, tax meter impression,
label, print or impression which the department by regulation
shall authorize to evidence the payment of the tax imposed by
this article.
"Cigarette vending machine." Any mechanical device from
which cigarettes are dispensed for a consideration.
"Dealer." Any cigarette stamping agency, wholesaler or
retailer as these terms are more specifically defined herein.
Whenever, in the provisions of this article, the word "dealer"
is used, it shall include all of the above mentioned categories.
Nothing contained in this article shall preclude any person
from being a cigarette stamping agency, wholesaler, or retailer,
provided such person meets the requirements for each category
of dealer.
"Department." The Department of Revenue of the Commonwealth
of Pennsylvania.
"Invoice or delivery ticket." Any invoice or delivery ticket
which shows the true name and complete and exact address of the
consignor or seller, the true name and complete and exact
address of the consignee or purchaser, the quantity and brands
of the cigarettes transported, the correct date of purchase or
shipment and the true name and complete and exact address of
the person who shall assume the payment of the Pennsylvania
State tax or the tax, if any, of the state or foreign country
at the point of ultimate destination.
"Little cigar." Any roll for smoking that weighs not more
than four pounds per thousand, where the wrapper or cover is
made of natural leaf tobacco or of any substance containing
tobacco. (Def. added Oct. 9, 2009, P.L.451, No.48)
"Pack of cigarettes." The smallest package, box or container
in or from which retail sales of cigarettes are normally made.
"Person." Any individual, unincorporated association,
company, corporation, joint stock company, group, agency,
syndicate, trust or trustee, receiver, fiduciary, partnership,
conservator, and any political subdivision of the Commonwealth
of Pennsylvania, or any other state. Whenever used in any of
the provisions of this article prescribing or imposing
penalties, the word "person" as applied to a partnership,
unincorporated association or other joint venture, means the
partners or members thereof, and as applied to a corporation,
means all the officers and directors thereof.
"Retailer." Any of the following:
(1) Any person who, in the usual course of business,
purchases or receives cigarettes from any source whatsoever for
the purpose of sale to the ultimate consumer.
(2) Any person who, in the usual course of business, owns,
leases or otherwise operates one or more vending machines for
the purpose of sale of cigarettes to the ultimate consumer.
(3) Any person who buys, sells, transfers or deals in
cigarettes for profit and is not licensed as a cigarette
stamping agency or wholesaler under Article II-A of the act of
April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code."
(Def. added Oct. 9, 2009, P.L.451, No.48)
"Sale." Any transfer of ownership, custody or possession
of cigarettes for a consideration; any exchange, barter or gift;
or any offer to sell or transfer the ownership, custody or
possession of cigarettes for consideration.
"Unstamped cigarettes." Any pack of cigarettes to which the
proper amount of genuine Pennsylvania cigarette tax stamps have
not been affixed or any cigarette for which the proper amount
of cigarette tax imposed under this article has not been paid.
Any pack of cigarettes containing a forged, bogus or counterfeit
Pennsylvania cigarette tax stamp or any pack of cigarettes
bearing stolen, lost or misplaced genuine Pennsylvania cigarette
tax stamps which have not been affixed to said pack of
cigarettes by a proper cigarette stamping agency as provided
for in this article, or any pack of cigarettes bearing genuine
Pennsylvania cigarette tax stamps for which the tax has not
been paid as a result of any wilful or intentional act for the
purpose of evading the payment of the Pennsylvania cigarette
tax shall be considered, under the provisions of this article,
to be a package of "unstamped cigarettes." (Def. amended Oct.
9, 2009, P.L.451, No.48)
"Vending machine operator." Any person who places or
services one or more cigarette vending machines, whether owned,
leased or otherwise operated by him, at locations from which
cigarettes are sold to the ultimate consumer. The owner or
tenant of the premises upon which a vending machine is placed
shall not be considered a vending machine operator if his sole
remuneration therefrom is a flat rental fee or commission based
upon the number or value of cigarettes sold from the machine,
unless said owner or tenant actually owns said vending machine
or leases said vending machine under an agreement whereby the
profits from the sale of said cigarettes directly inure to his
benefit.
"Wholesaler." Any of the following:
(1) Any person that meets all of the following:
(i) In the usual course of business, purchases cigarettes
from a cigarette stamping agent or other wholesaler and
receives, stores, sells and distributes within this Commonwealth
at least seventy-five per cent of the cigarettes purchased by
him or her to retail dealers or wholesale dealers or any
combination who buys the cigarettes from him or her for the
purpose of resale to the ultimate consumer.
(ii) Maintains an established place of business for the
receiving, storage and distribution of cigarettes.
(2) Any person that meets all of the following:
(i) Is engaged in the business of distributing cigarettes
through vending machines to the ultimate consumer by means of
placing the cigarette vending machines, owned or leased by him,
in various outlets within this Commonwealth.
(ii) Pays to the owner or lessee of the premises a
commission or rental for the use of the premises.
(iii) Operates at least ten vending machines.
(iv) Meets all the other requirements for licensing of
wholesalers under Article II-A of the act of April 9, 1929
(P.L.343, No.176), known as "The Fiscal Code," including
maintaining an established place of business for the receiving,
storage and distribution of cigarettes.
(3) Any person, including a franchisee, that meets all of
the following:
(i) Owns and operates no fewer than three retail outlets
in this Commonwealth, having one hundred per cent common
ownership.
(ii) Purchases cigarettes from a cigarette stamping agency
or another wholesaler for resale to the ultimate consumer.
(iii) Maintains complete and accurate records of all
purchases and sales in his or her main office and also in the
retail outlet.
(Def. amended July 2, 2012, P.L.751, No.85)
(1201 added Dec. 21, 1981, P.L.482, No.141)
PART II
IMPOSITION OF TAX
(II added Dec. 21, 1981, P.L.482, No.141)
Section 1206. Incidence and Rate of Tax.--An excise tax is
hereby imposed and assessed upon the sale or possession of
cigarettes within this Commonwealth at the rate of thirteen
cents per cigarette.
(1206 amended July 13, 2016, P.L.526, No.84)
Section 1206.1. Floor Tax.--(a) The following apply:
(1) ((1) deleted by amendment)
(2) ((2) deleted by amendment)
(3) ((3) deleted by amendment)
(4) A person who possesses cigarettes on which the tax
imposed by section 1206 has been paid as of the effective date
of this paragraph shall pay an additional tax at a rate of five
cents per cigarette. The tax shall be paid and reported on a
form prescribed by the department within ninety days of the
effective date of this paragraph.
((a) amended July 13, 2016, P.L.526, No.84)
(b) If a cigarette dealer fails to file the report required
by subsection (a) or fails to pay the tax imposed by subsection
(a), the department may, in addition to the interest and
penalties provided in section 1278, do any of the following:
(1) Impose an administrative penalty equal to the amount
of tax evaded or not paid. The penalty shall be added to the
tax evaded or not paid and assessed and collected at the same
time and in the same manner as the tax.
(2) Suspend or revoke a cigarette dealer's license.
(c) In addition to any penalty imposed under subsection
(b), a person who wilfully omits, neglects or refuses to comply
with a duty imposed under subsection (a) commits a misdemeanor
and shall, upon conviction, be sentenced to pay a fine of not
less than two thousand five hundred dollars ($2,500) nor more
than five thousand dollars ($5,000), to serve a term of
imprisonment not to exceed thirty days or both.
(1206.1 amended Oct. 9, 2009, P.L.451, No.48)
Section 1207. Sales to Commonwealth and Political
Subdivisions.--The excise tax imposed by this article is hereby
levied upon the sale of cigarettes to any person as defined
under the provisions of this article and to the Commonwealth
of Pennsylvania or any other state, or any department, board,
commission, authority or agency thereof.
(1207 added Dec. 21, 1981, P.L.482, No.141)
Section 1208. Limitation of Tax.--Only one sale shall be
taxable and used in computing the amount of tax due hereunder
whether said sale be of individual cigarettes, packages, cartons
or cases.
(1208 added Dec. 21, 1981, P.L.482, No.141)
Section 1209. Exemptions from Tax.--(a) No tax imposed by
this article shall be levied upon the possession or sale of
cigarettes which this Commonwealth is prohibited from taxing
under the Constitution or statutes of the United States. In
addition, when the seller and purchaser have registered with
the department and have obtained exemption certificates in
accordance with such regulations as the department shall
prescribe, the following sales are exempt:
(1) Sales to veterans' organizations approved by the
department, if the cigarettes are being purchased by the
organization for gratuitous issue to veteran patients in
Federal, State or State-aided hospitals.
(2) Sales to voluntary unincorporated organizations of
military forces personnel operating under regulations
promulgated by the United States Secretary of Defense or
departments under his jurisdiction.
(3) Sales to retail dealers located in Veterans'
Administration hospitals for sales to patients in such
hospitals.
(b) The department may otherwise promulgate regulations to
relieve manufacturers and dealers from payment of tax on
cigarettes sold and delivered to points inside and outside the
Commonwealth for sale and use outside the Commonwealth or sold
to purchasers designated as exempt by the provisions of this
section. However, all sales shall be presumed to be taxable and
the burden shall be upon the person claiming an exemption to
prove his right thereto.
(1209 added Dec. 21, 1981, P.L.482, No.141)
Section 1210. Liability for Collection of Tax.--(a) Every
person shall be liable to pay into the State Treasury, through
the department, the tax imposed by this article on all
cigarettes received by him to which Pennsylvania cigarette tax
stamps have not been previously affixed, the tax paid, or
exempted by the provisions of this article. Nothing in this
section shall relieve a cigarette stamping agency from its
liability to pay the tax imposed by this article on all
cigarettes received by it to which Pennsylvania cigarette tax
stamps have not been previously affixed, the tax paid, or
exempted by the provisions of this article.
(b) For sales to a retailer of cigarettes not required to
be stamped under section 1215, the retailer shall be required
to pay the tax imposed by this article to the wholesaler or
other seller of the cigarettes. The wholesaler or other seller
shall be liable to collect and remit the tax to the department.
Failure of the seller or retailer to obtain the applicable
license shall not relieve the seller or retailer of the
liability to pay the tax imposed under this article.
(1210 amended Oct. 9, 2009, P.L.451, No.48)
Section 1211. Health Care Provider Retention Account.--
(1211 deleted by amendment Oct. 9, 2009, P.L.451, No.48)
PART III
METHOD OF PAYMENT OF TAX
(III added Dec. 21, 1981, P.L.482, No.141)
Section 1215. Stamp to Evidence the Tax.--(a) The
department shall by regulation require every cigarette stamping
agency or ultimate consumer, to use cigarette tax stamps to
evidence the payment of the tax imposed by this article unless
such stamps have been affixed to the packs of unstamped
cigarettes and properly cancelled before such cigarette stamping
agency or ultimate consumer received them or unless otherwise
provided in subsection (g).
(b) The department shall by regulation authorize the sale
of cigarette tax stamps at such places and at such times as it
deems necessary and the department shall prescribe the manner,
time and conditions under which the payment of tax shall be
made.
(c) The department shall also prescribe the type of
cigarette tax stamps which shall be used, to evidence payment
of the tax. Nothing in this provision shall be construed as a
limitation upon the department to prescribe various methods of
affixing cigarette tax stamps and said department shall have
the authority to prescribe one or more of several types of tax
stamps which shall be used by a particular cigarette stamping
agency whenever, in the reasonable exercise of its powers, it
shall be deemed necessary for the protection of the revenue.
(d) Under no circumstances shall any cigarette stamping
agency be permitted to sell, transfer or deliver to any person
any unstamped cigarettes, or any unused cigarette tax stamps
unless specifically permitted by the provisions of this article.
(e) The department shall by regulation permit a cigarette
stamping agency to pay for purchases on a deferred basis, upon
the filing of a surety bond, of the type approved by the
department, with the department, in an amount deemed sufficient
by the department to protect the revenue, said bond to be
executed by the cigarette stamping agency as principal and by
a corporate surety company, duly authorized to engage in such
business in the Commonwealth of Pennsylvania, as surety. In
lieu of the bond required by this subsection, the department
shall accept other forms of security, such as a line of credit,
if the department deems the security sufficient to protect the
revenue. The department shall deny deferred purchase plans to
any stamping agency in any state where such state denies
stamping agencies in Pennsylvania the right to use deferred
purchase plans. The department may deny any cigarette stamping
agent the right to purchase cigarette tax stamps if the
cigarette stamping agent is delinquent in remitting cigarette
taxes or fines owed the Commonwealth.
(f) The department shall, upon application, permit a
cigarette stamping agency to post a surety bond with the
department for fifty per cent of the amount of the tax stamp
purchase, provided that the agency has a record of timely
payments of the tax for a three-year period prior to application
and further provided that the agency files with the department
a financial statement that demonstrates assets sufficient to
protect the revenues. To preserve the discounted bond
arrangement an agency may be required to provide an updated
financial statement at the request of the department. If the
department determines the cigarette stamping agency's financial
condition and the type and amount of security posted by the
cigarette stamping agency is insufficient to protect the
revenue, the department may require additional security in the
type and amount necessary to protect the revenue. If the
cigarette stamping agency fails to post the type and amount of
security requested within ten days of the mailing date of the
request, the department may revoke the cigarette stamping
agency's license.
(g) Stamps shall be affixed to all individual packages
containing from twenty to twenty-five cigarettes. Individual
packages containing less than twenty or more than twenty-five
cigarettes shall have stamps affixed unless the department
determines the affixing of stamps is physically impractical due
to the size or nature of the package or determines that the
cost of affixing the stamps is unreasonably disproportionate
to the tax to be collected. Stamps shall not be required to be
affixed to containers of roll-your-own tobacco. ((g) amended
July 13, 2016, P.L.526, No.84)
(h) Where the department has determined that a cigarette
package is not required to be stamped under subsection (g), the
tax shall be collected on the sale of the cigarette from the
wholesaler to the retailer. To verify the payment of this tax,
the following shall be required:
(1) The wholesaler must maintain documentation to show the
monthly total number of unstamped cigarette packages purchased
and sold listed by brand name and how many cigarettes were in
each unstamped cigarette package.
(2) The wholesaler must maintain a copy of a paid
manufacturer's or other wholesaler's dated invoices to
substantiate the total number of cigarettes purchased by the
wholesaler. The invoices must list the total quantities of every
different brand name purchased, the total number of each type
of package of each brand name, the number of cigarettes in
each package, the purchase price and any other information the
department may require.
(3) Every invoice to a retailer must list all the
information required in paragraph (2) along with the amount of
tax charged on each package of cigarettes sold to the retailer.
(i) For purposes of determining the weight of little cigars,
a person shipping little cigars within or into this Commonwealth
shall provide the department with the weight per thousand
shipped, segregated by brand name, package type, number per
package and any other information required by the department.
This information shall be reported on a form prescribed by the
department and shall be filed with the department within
fourteen days of shipment or on a schedule determined by the
department by regulation. If the person shipping the little
cigars into this Commonwealth is not the manufacturer, the
person shall obtain the information as to the weight of the
little cigars from the manufacturer and report the weight on
the form and by the date referred to in this subsection.
(1215 amended Oct. 9, 2009, P.L.451, No.48)
Compiler's Note: Section 53(5)(i) of Act 84 of 2016, which
amended subsection (g), provided that the amendment shall
take effect 60 days after the Office of Attorney General
publishes the notice of the consents under section
53(3)(ii) of Act 84.
Section 1216. Commissions on Sales.--A cigarette stamping
agent shall be entitled to a commission for the agent's services
and expenses in affixing cigarette tax stamps. The commission
shall be equal to five hundred eighty-six thousandths per cent
of the total value of Pennsylvania cigarette tax stamps
purchased by the agent from the department or its authorized
agents to be used in the stamping of unstamped cigarettes for
sale within this Commonwealth. The cigarette stamping agent may
deduct from the moneys to be paid to the department or its
authorized agents for the stamps an amount equal to five hundred
eighty-six thousandths per cent of the value of the stamps
purchased. This section shall not apply to purchases of stamps
by a cigarette stamping agent in an amount less than one hundred
dollars ($100).
(1216 amended July 13, 2016, P.L.526, No.84)
Section 1216.1. Return and Payment of Tax for Unstamped
Cigarettes.--(a) By the twentieth day of each month, every
person selling unstamped cigarettes to retailers shall file a
return with the department reporting the tax imposed by this
article on the sales of unstamped cigarettes in the prior
calendar month.
(b) By the twentieth day of each month, every person
purchasing unstamped cigarettes on which the tax imposed by
this article was not paid to the seller or wholesaler shall
file a return with the department reporting the amount of tax
due on the purchase of unstamped cigarettes in the prior
calendar month.
(c) The return shall be on a form prescribed by the
department and must contain any information required by the
department.
(d) When a return of tax is required under this section,
the person required to file the return shall pay the tax to the
department on the date the return is due.
(e) Unless otherwise specifically noted, the provisions of
Article II shall apply to the returns, payment, penalties,
enforcement, collections and appeals of the tax imposed on
unstamped cigarettes.
(1216.1 added Oct. 9, 2009, P.L.451, No.48)
Section 1217. Sample Packs of Cigarettes.--(a) The
department shall, by regulation, govern the receipt,
distribution of and payment of tax on sample packs of cigarettes
issued for free distribution.
(b) Nothing in this article or the regulations promulgated
thereunder shall prohibit the bringing into this Commonwealth
by a manufacturer of sample packs of cigarettes containing not
more than five cigarettes and such packs shall be delivered and
distributed only through licensed dealers or the manufacturers
or their sales representatives. The tax shall be paid by the
manufacturer but no tax stamp or tax impression need be used
on the sample packs of cigarettes provided all such packs bear
the legend "all applicable State taxes have been paid." Under
no circumstances shall any unstamped sample cigarettes be sold
within the Commonwealth of Pennsylvania.
(1217 added Dec. 21, 1981, P.L.482, No.141)
PART IV
LICENSING PROVISIONS
(IV added Dec. 21, 1981, P.L.482, No.141)
Section 1221. Licensing of Cigarette Dealers.--(1221
repealed July 2, 1993, P.L.250, No.46)
Section 1222. Licensing of Cigarette Stamping Agents.--(1222
repealed July 2, 1993, P.L.250, No.46)
Section 1223. Licensing of Wholesalers.--(1223 repealed
July, 1993, P.L.250, No.46)
Section 1224. Licensing of Retailers.--(1224 repealed July
2, 1993, P.L.250, No.46)
Section 1225. Suspension or Revocation of License.--(1225
repealed July 2, 1993, P.L.250, No.46)
Section 1226. Cigarette Tax Board.--(1226 repealed July 2,
1993, P.L.250, No.46)
Section 1227. License Fees; Issuance and Posting of
License.--(1227 repealed July 2, 1993, P.L.250, No.46)
Section 1228. Transfer of Licenses.--(1228 repealed July
2, 1993, P.L.250, No.46)
Section 1229. Disposition of License Fees.--(1229 repealed
July 2, 1993, P.L.250, No.46)
Section 1230. Expiration of License.--(1230 repealed July
2, 1993, P.L.250, No.46)
Section 1231. Duplicate License.--(1231 repealed July 2,
1993, P.L.250, No.46)
PART V
CIGARETTE VENDING MACHINES
(V added Dec. 21, 1981, P.L.482, No.141)
Section 1235. Cigarette Vending Machines; Names of Owner
and Operator.--(1235 repealed July 2, 1993, P.L.250, No.46)
Section 1236. License for Machine.--(1236 repealed July 2,
1993, P.L.250, No.46)
PART VI
BUSINESS RECORDS
(VI added Dec. 21, 1981, P.L.482, No.141)
Section 1241. Retention of Records.--(1241 repealed July
2, 1993, P.L.250, No.46)
Section 1242. Reports.--(1242 repealed July 2, 1993,
P.L.250, No.46)
Section 1243. Examination of Records; Equipment and
Premises.--(1243 repealed July 2, 1993, P.L.250, No.46)
PART VII
REFUNDS AND ALLOWANCES
(VII added Dec. 21, 1981, P.L.482, No.141)
Section 1251. Refund of Tax.--A refund of any tax imposed
by this article shall be made to a person on proof satisfactory
to the department, that the claimant:
(1) Paid the tax on cigarettes withdrawn by him from the
market.
(2) Shipped cigarettes into another state for sale or use
therein under the conditions as provided by the regulations
promulgated by the department.
(3) Sold to persons exempt from the tax under the provisions
of this article or regulations prescribed thereunder.
(4) Had possession of cigarettes which were lost (otherwise
than by theft) or destroyed by fire, casualty or act of God.
(5) Paid the tax in error.
(6) Has no further use for cigarette stamps originally
purchased by him.
(1251 added Dec. 21, 1981, P.L.482, No.141)
Section 1252. Allowance for Nonpayment of Tax.--If the tax
has not yet been paid on cigarettes for which a refund of said
tax would be allowed under section 1251, relief from the payment
of the tax on such cigarettes may be given upon the filing of
a claim for allowance in the same manner as a claim for refund,
or in any other manner provided by regulations.
(1252 added Dec. 21, 1981, P.L.482, No.141)
Section 1253. Limitations.--Claims for refund or allowance
of tax imposed by this article shall be filed under section
3003.1 and shall be in such form and contain such information
as the department shall, by regulation, prescribe.
(1253 amended May 7, 1997, P.L.85, No.7)
Section 1254. Procedures for Claiming Refund.--(a) A dealer
shall make a claim for a refund of tax on a form and in the
manner prescribed by the department.
(b) If the department is satisfied that the dealer is
entitled to the refund it shall certify the proposed amount of
such refund to the Board of Finance and Revenue for approval
and, having obtained approval from the Board of Finance and
Revenue, it shall thereafter issue to the dealer the proper
refund.
(c) Claims for allowance for nonpayment of tax shall be
allowed by the department if the department shall be satisfied
that the dealer is entitled to such allowance.
(1254 added Dec. 21, 1981, P.L.482, No.141)
Compiler's Note: Section 42(b) of Act 48 of 1994 provided
that section 1254 is repealed to the extent that it
conflicts with the provisions of Act 48 for filing with
the Board of Finance and Revenue of petitions for the
refund of taxes and other moneys collected by the
Department of Revenue.
PART VIII
ADVERTISING
(VIII added Dec. 21, 1981, P.L.482, No.141)
Section 1261. Advertising.--(1261 repealed July 2, 1993,
P.L.250, No.46)
PART IX
PENALTIES AND ENFORCEMENT
(IX added Dec. 21, 1981, P.L.482, No.141)
Section 1271. Sales without License.--(1271 repealed July
2, 1993, P.L.250, No.46)
Section 1272. Sales of Unstamped Cigarettes.--(a) Any
person who shall sell any unstamped cigarettes shall, upon
conviction in a summary proceeding be sentenced to pay costs
of prosecution and a fine of not less than one hundred dollars
($100) nor more than one thousand dollars ($1000) or to suffer
imprisonment for a term of not more than sixty days, or both,
at the discretion of the court.
(b) Any person who shall falsely or fraudulently,
maliciously, intentionally or wilfully with intent to evade the
payment of the Pennsylvania cigarette tax, sell any unstamped
cigarettes shall be guilty of a felony and upon conviction
thereof shall be sentenced to pay a fine of not more than
fifteen thousand dollars ($15,000), plus costs of prosecution
or to suffer imprisonment for a term of not more than five
years, or both, at the discretion of the court.
(c) For the purposes of this section, the sale of unstamped
cigarettes for which the tax has not been paid as a result of
any wilful or intentional act for the purpose of avoiding the
payment of the Pennsylvania cigarette tax shall be considered
an illegal sale subjecting the seller to the penalties provided
in subsection (b).
(1272 amended Oct. 9, 2009, P.L.451, No.48)
Section 1273. Possession of Unstamped Cigarettes.--(a) Any
person other than a duly licensed stamping agency or other
person specifically exempted by the provisions of this article
who shall possess more than two hundred but less than one
thousand unstamped cigarettesshall be guilty of a summary
offense and upon conviction thereof shall pay a fine of three
hundred dollars ($300), plus costs of prosecution or to suffer
imprisonment for not more than ninety days, or both, at the
discretion of the court.
(b) Any person other than a duly licensed stamping agency
or other person specifically exempted by the provisions of this
article who shall possess one thousand or more unstamped
cigarettes shall be guilty of a misdemeanor and upon conviction
thereof shall be sentenced to a fine of not less than one
thousand dollars ($1000) nor more than fifteen thousand dollars
($15,000) and costs of prosecution or to suffer imprisonment
for not more than three years, or both, at the discretion of
the court.
(c) Any person who shall falsely or fraudulently,
maliciously, intentionally or wilfully with intent to evade the
payment of the Pennsylvania cigarette tax possess any unstamped
cigarettes shall be guilty of a felony and upon conviction
thereof shall be sentenced to pay a fine of not more than five
thousand dollars ($5000) and costs of prosecution and to suffer
imprisonment for a term of not more than five years.
(d) Every person other than a common carrier engaged in
interstate commerce who shall possess or transport more than
two hundred unstamped cigarettes upon the public highways, roads
or streets of this Commonwealth, shall be required to have in
his possession invoices or delivery tickets for such cigarettes.
The invoices or delivery tickets shall show the correct date
of purchase or shipment, true name and complete and exact
address of the consignor or seller, the true name and complete
and exact address of the consignee or purchaser, the quantity
and brands of the cigarettes so transported and the true name
and complete and exact address of the person who shall assume
the payment of the Pennsylvania State tax or the tax, if any,
of the state or foreign country at the point of ultimate
destination. If the cigarettes are consigned to or purchased
by any person in the Commonwealth of Pennsylvania such consignee
or purchaser must be a licensed cigarette stamping agency or
otherwise authorized by this article to possess unstamped
cigarettes within the boundaries of this Commonwealth. The
absence of such invoices or delivery tickets shall be prima
facie evidence that the possession of such cigarettes is
contrary to the provisions of this article and shall subject
the possessor to the penalties imposed herein.
(e) In the absence of such invoices or delivery tickets or,
if the name or address of the purchaser or consignor is
falsified, or if the purchaser or consignee in this Commonwealth
is not authorized to possess unstamped cigarettes then and in
that event the cigarettes so transported shall be subject to
confiscation at the discretion of the Secretary of Revenue as
is more fully described in section 1285.
(f) For the purpose of this section the possession of
genuine Pennsylvania cigarette tax stamps for which the tax has
not been paid as a result of any wilful or intentional act for
the purpose of avoiding the payment of the Pennsylvania
cigarette tax shall be considered a violation of this article
subjecting the possessor thereof to the penalties provided in
subsection (c).
(g) Transportation of cigarettes from a point outside of
this Commonwealth to a final destination outside of this
Commonwealth shall not be considered a violation of this section
provided that the person so transporting such cigarettes has
in his possession invoices, bills of lading or delivery tickets
which give the true name and true address of such out-of-state
consignor or seller and such out-of-state consignee or
purchaser: Provided, however, That such consignor or consignee
shall be authorized by the laws of such states to receive or
possess cigarettes on which the taxes imposed by such other
states have not been paid.
(h) In any case, where agents of the department have reason
to believe that any vehicle is carrying or transporting
cigarettes in violation of this article, then and in that event,
the agents of the department shall be and are hereby authorized
to stop such vehicle, make an inspection and confiscate all
such unstamped or improperly stamped cigarettes found therein
and confiscate the vehicle used to transport such unstamped or
improperly stamped cigarettes.
(1273 amended Oct. 9, 2009, P.L.451, No.48)
Section 1274. Counterfeiting.--(a) Any person who falsely
or fraudulently makes, forges, alters or counterfeits, or who
has in his possession any stamping device, stencil, machine,
or other material of any nature whatsoever designed to produce
counterfeit tax stamps with the intent to produce counterfeit
tax stamps or who causes or procures to be falsely or
fraudulently made, forged, altered or counterfeited any
cigarette tax stamp or any stamping device, stencil, machine,
or other material of any nature whatsoever designed to produce
counterfeit stamps with the intent to produce counterfeit stamps
or knowingly and wilfully possesses, utters, purchases,
publishes, sells, passes, distributes, or tenders any such
false, altered, forged, or counterfeit stamp or any stamping
device, stencil, machine or other material of any nature
whatsoever designed to produce counterfeit stamps with the
intent to produce counterfeit stamps for the purpose of evading
the tax hereby imposed and assessed, shall be guilty of a
felony, and upon conviction thereof shall be sentenced to pay
a fine of not more than ten thousand dollars ($10,000) and costs
of prosecution and suffer imprisonment for a term of not more
than ten years.
(b) Possession of a forged, altered or counterfeited stamp
or of any stamping device, stencil, machine, or other material,
of any nature whatsoever designed to produce counterfeit stamps
shall be prima facie evidence that such person has intended to
produce counterfeit stamps for the purpose of evading the tax
due under the provisions of this act.
(1274 added Dec. 21, 1981, P.L.482, No.141)
Section 1275. Defacing of Cigarette Stamping Equipment.--Any
person who shall wilfully, maliciously and for the purpose of
evading the tax hereby imposed and assessed, shall in any manner
deface, modify, change, tamper with, alter any cigarette tax
meter, machine, or stamping equipment or do any other act, the
result of which would be likely to affect the proper working
order of said cigarette tax meter, machine, or stamping
equipment shall be guilty of a felony, and upon conviction
thereof shall be sentenced to pay a fine of five thousand
dollars ($5000) and to suffer imprisonment for a term of not
more than five years.
(1275 added Dec. 21, 1981, P.L.482, No.141)
Section 1276. Failure to Furnish Information, Returning
False Information or Failure to Permit an Inspection.--(a) Any
dealer who fails to keep or make any record, return, report,
inventory or statement, or keeps or makes any false or
fraudulent record, return, report, inventory or statement
required by this article or section 214-A, 215-A or 216-A of
the act of April 9, 1929 (P.L.343, No.176), known as "The Fiscal
Code," shall be guilty of a misdemeanor, and, upon conviction
thereof, shall be sentenced to pay a fine of five hundred
dollars ($500) and costs of prosecution and to suffer
imprisonment of not more than one year, or both, in the
discretion of the court. Notwithstanding any fine imposed by a
court of competent jurisdiction in accordance with this
subsection or by the department under section 229-A(c) of "The
Fiscal Code," if the dealer is a cigarette stamping agent, the
department may impose an administrative fine of not more than
five thousand dollars ($5,000) and, upon notice, may suspend
the right of the cigarette stamping agent to purchase cigarette
tax stamps for six months. If a cigarette stamping agent's right
to purchase cigarette tax stamps is suspended pursuant to this
subsection more than twice, after a hearing, the department
shall revoke the license of the cigarette stamping agent; and,
for a period of two years, the department shall reject any
application by the stamping agent for a license under section
204-A of "The Fiscal Code."
(b) The department is hereby authorized to examine the books
and records, the stock of cigarettes and the premises and
equipment of any dealer in order to verify the accuracy of the
payment of the tax imposed by this article. Every such person
is hereby directed and required to give to the department or
its duly authorized representative, the means, facilities and
opportunity for such examinations. Wilful refusal to cooperate
with or permit such examination to the satisfaction of the
department shall be sufficient grounds for the suspension or
revocation of any license issued hereunder, and in addition
thereto shall constitute a misdemeanor, and, upon conviction
thereof, shall be sentenced to pay a fine of five hundred
dollars ($500) and costs of prosecution and to suffer
imprisonment of not more than one year or both.
(1276 amended June 22, 2001, P.L.353, No.23)
Section 1277. Right of Department to Impound Vending
Machines and Contents.--(a) Whenever any cigarettes are found
or are suspected to be in any vending machine in violation of
the provisions of this article, or whenever a vending machine
is not properly licensed or labeled, the duly authorized agents
or employes of the department shall seal the machine by the
means of impounding stickers to prevent sale or removal of any
cigarettes from the machine until such time as the violation
is corrected in the presence of a duly authorized agent or
employe of the department.
(b) Anyone other than the duly authorized agents or employes
of the department who shall remove or otherwise tamper with any
impounding stickers placed on any vending machine, contents,
or other evidence shall be guilty of a misdemeanor and subject
to a fine of not more than one thousand dollars ($1000) and
costs of prosecution and to suffer imprisonment of not more
than one year or both.
(1277 added Dec. 21, 1981, P.L.482, No.141)
Section 1278. Other Violations.--(a) Any person who
wilfully omits, neglects, or refuses to comply with any duty
imposed upon him by this article or does anything prohibited
by this article for which no specific penalty is otherwise
provided, shall upon conviction in a summary proceeding be
sentenced to pay a fine not to exceed five hundred dollars
($500) and costs of prosecution, and, in default of payment
thereof, to undergo imprisonment for not more than thirty days.
(b) Any person who wilfully omits or neglects to file any
return required or pay any tax imposed by this article, or
attempts in any manner to evade or defeat the tax or payment
thereof, shall, in addition to any other penalty provided in
this article, be liable to a penalty equal to the amount of tax
evaded or not paid, which penalty shall be added to the tax and
assessed and collected at the same time in the same manner as
a part of the tax.
(c) Any person who fails to file any required return or pay
tax at the time prescribed shall, in addition to any other
penalty provided in this article, be liable to a penalty of
five per cent of the tax due but unpaid for each month or
fraction thereof the tax remains unpaid together with the
interest at the rate established pursuant to section 806 of the
act of April 9, 1929 (P.L.343, No.176), known as "The Fiscal
Code," on such tax from the time the tax became due. The
penalties provided in this subsection shall be added to the tax
and assessed and collected at the same time in the same manner
and as a part of the tax.
(1278 amended Oct. 9, 2009, P.L.451, No.48)
Section 1279. Peace Officers; Powers.--Such employes of the
department as are officially designated by the Secretary of
Revenue as field investigators of the bureau, and who carry
identification of such capacity, are hereby declared to be peace
officers and they, as well as other peace officers of the
Commonwealth are hereby given police powers and authority
throughout the Commonwealth to arrest on view, except in private
homes, without warrant, any person actually engaged in the
unlawful sale of unstamped or counterfeit cigarettes or any
counterfeit devices, or any person unlawfully having in his
possession unstamped cigarettes, counterfeit cigarettes or
counterfeiting devices contrary to the provisions of this
article. Such peace officer shall have the power and authority
upon reasonable and probable cause to search for and seize
without warrant or process, except in private homes, any
unstamped cigarettes, counterfeit cigarettes or counterfeiting
devices which are unlawfully possessed.
(1279 added Dec. 21, 1981, P.L.482, No.141)
Section 1280. Fines and Penalties Payable to
Commonwealth.--All fines and penalties imposed and collected
under the provisions of this article shall be payable to the
Commonwealth and are hereby appropriated to the department to
be used in enforcing this article.
(1280 added Dec. 21, 1981, P.L.482, No.141)
PART X
CONFISCATION AND FORFEITURE
(X added Dec. 21, 1981, P.L.482, No.141)
Section 1285. Property Rights.--(a) No property rights
shall exist in any vending machine in which unstamped cigarettes
are found, nor shall any property rights exist in any vehicle
containing two thousand or more unstamped cigarettes or
containing more than two hundred unstamped cigarettes if the
owner has been previously convicted of the illegal sale,
possession or transportation of unstamped cigarettes in this
or any other jurisdiction. The said vending machine, all
cigarettes contained therein, and the vehicle which contained
said unstamped cigarettes shall be deemed contraband and shall
be confiscated at the discretion of the Secretary of Revenue,
and shall be forfeited to the Commonwealth as provided in
subsections (e) and (f). No such property, when in the custody
of the department, the police or other proper peace officers
shall be seized or taken therefrom by any writ of replevin or
other judicial process unless a petition for forfeiture is not
timely filed.
(b) Upon said forfeiture or confiscation, the department
shall dispose of any forfeited machine or forfeited cigarettes
in accordance with subsections (e) and (f).
(c) No property rights shall exist in any packages of
cigarettes which have been taken from any person who has been
found in violation of the provisions of section 1273 or any
cigarettes sold or offered for sale by any person without a
proper license or any cigarettes sold or offered for sale by
any person not possessing proper documentation showing legal
purchase of said cigarettes and all such packages of cigarettes
shall be deemed contraband, shall be confiscated and shall be
forfeited to the Commonwealth without further proceedings and
shall be delivered to the agents of the department at the time
of conviction by the judge, justice of the peace, magistrate
or alderman. ((c) amended Aug. 4, 1991, P.L.97, No.22)
(d) No property rights shall exist in any machinery,
equipment, fixtures, stenciling device, stamp, stamping device,
or other paraphernalia designed or used to counterfeit
Pennsylvania cigarette tax stamps nor shall any property rights
exist in any packages of cigarettes confiscated in connection
with the operation of any counterfeiting or other scheme
designed to evade the payment of proper Pennsylvania cigarette
tax. Said machinery, equipment, fixtures, stenciling device,
stamp, stamping device or other paraphernalia and cigarettes
shall be confiscated and at the discretion of the Secretary of
Revenue, shall be forfeited to the Commonwealth in accordance
with the provisions of this article.
(e) The department shall dispose of cigarettes forfeited
under the provisions of this article by the sale or destruction
of cigarettes pursuant to regulations promulgated by the
Secretary of Revenue. ((e) amended June 22, 2001, P.L.353,
No.23)
(f) The proceedings for the forfeiture of any cigarette
vending machine or motor vehicle, in which are found unstamped
cigarettes shall be in rem. The Commonwealth shall be the
plaintiff and the property shall be the defendant. A petition
shall be filed within ten days after confiscation in the court
of common pleas of the county in which the property or vehicle
was taken by agents of the department, the police or other such
authorized peace officer, verified by oath or affirmation of
any cigarette tax enforcement officer, police officer or other
person. In the event that such petition is not filed within the
time prescribed herein, such confiscated vending machine or
motor vehicle shall be immediately returned to the person from
whom confiscated or the owner thereof. ((f) amended June 22,
2001, P.L.353, No.23)
(g) The petition shall contain the following:
(1) The description of the property or vehicle seized.
(2) A statement of the time when and place where seized.
(3) The name and address of the owner, if known.
(4) The name and address of the person in possession, if
known.
(5) The statement of the circumstances under which the
property was found and the number and description of all
unstamped or improperly stamped cigarettes found therein.
(6) A prayer for an order forfeiting said property to the
Commonwealth, unless cause be shown to the contrary.
(h) A copy of the petition shall be served in any manner
provided by law for service of process or complaint in an action
in assumpsit on the owner if he can be found within the
Commonwealth. If the owner cannot be found within the
Commonwealth, a copy of the petition shall be served on the
owner by registered mail or certified mail, return receipt
requested, addressed to the last known address of the owner.
The person in possession and all encumbrance holders having a
perfected security interest in the property confiscated shall
be notified in a like manner. The copies shall have endorsed
thereon a notice substantially similar to the following:
"To the claimant of the within property: You are required
to file an answer to this petition setting forth your title in
and right to possession of said property, within twenty days
from the service hereof, and you are also notified that if you
fail to file said answer, a decree of forfeiture will be entered
against said property."
(i) The notice shall be signed by the petitioner or his
attorney or the district attorney or Attorney General.
(j) If the owner of the property is unknown, notice of the
petition shall also be given by an advertisement in only one
newspaper of general circulation published in the county where
the property was seized, once a week for two successive weeks.
No other advertisement of any sort shall be necessary, any other
law to the contrary notwithstanding. The notice shall contain
a statement of the seizure of the property, with the description
thereof, the place and date of seizure, and shall direct any
claimants thereof to file a claim therefor, on or before a date
given in the notice, which shall not be less than ten days from
the date of the last publication.
(k) Upon the filing of any claim for the property setting
forth a right of possession thereof, the case shall be deemed
at issue and a hearing shall be held within ten days thereof.
((k) amended June 22, 2001, P.L.353, No.23)
(l) At the time of the hearing, if the Commonwealth shall
prove by competent evidence to the satisfaction of the court
that the machine or motor vehicle in question was found to
contain unstamped or improperly stamped cigarettes, then and
in that event the claimant shall show that he is the owner of
the cigarette vending machine or other equipment, motor vehicle
or cigarettes, and that all cigarettes found in the machine,
or any other place from which the cigarettes were seized, did
contain the proper amount of genuine Pennsylvania cigarette tax
stamps, or that he is otherwise not subject to the provisions
of this section as the result of any exemption or allowance
provided for in other sections of this article.
(m) The claimant shall have the burden of proving that he
is not subject to the provisions of this section, but the burden
of proof shall be upon the Commonwealth to prove all other facts
necessary for the forfeiture of a cigarette vending machine or
motor vehicle. In the event that the Commonwealth has not met
its burden by a preponderance of the evidence, or the claimant
has proved that he is not subject to the provisions of this
section, the court shall order the machine, motor vehicle or
other equipment returned to the claimant; otherwise, the court
shall order the same forfeited to the Commonwealth: Provided,
however, That in the case of a motor vehicle, should the
claimant prove to the satisfaction of the court that he is the
registered owner of the motor vehicle and that he did not know,
nor had reason to know, that it was being used to carry
unstamped or improperly stamped cigarettes or tobacco products,
the court in its discretion, may order the same returned to the
claimant.
(n) In the case of a motor vehicle, should the claimant
prove that he holds a valid encumbrance upon such motor vehicle,
notice of which encumbrance has been duly noted on the
certificate of title to said motor vehicle in accordance with
the provisions of Title 75 of the Pennsylvania Consolidated
Statutes (relating to vehicles), such forfeiture shall be
subject to such encumbrance as of the date of the seizure less
prepaid or unearned interest and before said motor vehicle may
be sold, exchanged or otherwise transferred or retained for use
by the Commonwealth, the outstanding amount of such encumbrance
shall be paid to the claimant; or possession of the motor
vehicle shall be turned over to the claimant who shall expose
the same to public sale and shall pay over to the Commonwealth
any amount realized in excess of the outstanding amount of such
encumbrance less the reasonable costs incurred by claimant in
conducting such sale.
(1285 added Dec. 21, 1981, P.L.482, No.141)
Compiler's Note: Section 28 of Act 207 of 2004 provided
that any and all references in any other law to a
"district justice" or "justice of the peace" shall be
deemed to be references to a magisterial district judge.
Section 1286. Disposition of Unclaimed Motor Vehicles.--If
the court orders a motor vehicle returned to the owner or
claimant and the owner or claimant fails to remove the vehicle
from Commonwealth property, the department shall give the owner
or claimant notice, in the manner provided in section 1285 for
service of notice of the petition, to remove the vehicle within
ninety days. Should the owner or claimant fail to remove the
vehicle within ninety days from the date notice was given, the
vehicle shall, without regard to any other period of
limitations, be disposed of as provided in the act of August
9, 1971 (P.L.286, No.74), known as the "Disposition of Abandoned
and Unclaimed Property Act."
(1286 added Dec. 21, 1981, P.L.482, No.141)
PART XI
ENFORCEMENT AND REGULATIONS
(XI added Dec. 21, 1981, P.L.482, No.141)
Section 1291. Enforcement; Regulations.--The department is
hereby charged with the enforcement of the provisions of this
article and it is hereby authorized to promulgate regulations
relating to the administration and enforcement of the provisions
of this article. The violation of a regulation promulgated under
the authority of this article shall be considered to be a
violation of the article.
(1291 added Dec. 21, 1981, P.L.482, No.141)
PART XII
SAVING CLAUSE: PAYMENT: REPEALER
(XII added Dec. 21, 1981, P.L.482, No.141)
Section 1295. Saving Clause.--(a) This article shall be
deemed to be a continuation of prior law. All cigarette tax
stamps and licenses sold or issued pursuant to any act repealed
hereby shall continue in full force and effect in accordance
with their terms and any cigarettes upon which tax has once
been paid shall not be taxed a second time. All licenses issued
after the effective date of this article shall be issued in
accordance with the requirements of and the schedule of fees
provided in this article. The enactment of this article shall
not affect or impair any act done or right existing or accrued
or affect any action presently pending before a court involving
the enactment or validity of the article or any criminal suit,
action, proceeding or prosecution to enforce any right acquired
or prosecute any violation committed under the provisions of
any law repealed hereby.
(b) If any section, sentence, clause or part of this article
is for any reason held to be unconstitutional, the decision of
the court shall not affect or impair the remaining provisions
of this article. It is hereby declared to be the legislative
intent that this article would have been adopted had such
unconstitutional section, sentence, clause or part thereof not
been included therein.
(1295 added Dec. 21, 1981, P.L.482, No.141)
Section 1296. Disposition of Certain Funds.--
(a) Receipts from the tax imposed under this article shall
be deposited into the General Fund and used as follows:
(1) Twenty-five million four hundred eighty-five thousand
dollars ($25,485,000) shall be transferred annually to the
Agricultural Conservation Easement Purchase Fund.
(2) Thirty million seven hundred thirty thousand dollars
($30,730,000) shall be transferred annually to the Children's
Health Fund for health care for uninsured children.
(3) For the payments required under subsection (c).
(b) The transfers required under subsection (a)(1) and (2)
shall be made in two equal payments by July 15 and January 15.
(c) For any fiscal year after the effective date of this
subsection in which the revenue deposited into the Local
Cigarette Tax Fund from an excise tax imposed and assessed upon
the sale or possession of cigarettes within a school district
that is coterminous with a city of the first class is less than
fifty eight million dollars ($58,000,000), the State Treasurer
shall transfer receipts deposited into the General Fund in
accordance with this section to the Local Cigarette Tax Fund
in an amount equal to the difference between the revenue
deposited during the fiscal year and fifty eight million dollars
($58,000,000) to be disbursed as provided under 53 Pa.C.S. §
8722(i) (relating to local option cigarette tax in school
districts of the first class). The Secretary of Revenue shall
determine the amount to be transferred. The transfers required
under this subsection shall be made annually by July 15.
(1296 amended July 13, 2016, P.L.526, No.84)
Section 1297. Repealer.--The act of July 22, 1970 (P.L.513,
No.178), known as the "Pennsylvania Cigarette Tax Act," is
repealed.
(1297 added Dec. 21, 1981, P.L.482, No.141)
ARTICLE XII-A
TOBACCO PRODUCTS TAX
(Art. added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 52(2) of Act 84 of 2016, which
added Article XII-A, provided that, notwithstanding the
provisions of the act of August 5, 1932 (Sp.Sess.,
P.L.45, No.45), referred to as the Sterling Act, and the
act of December 31, 1965 (P.L.1257, No.511), known as
The Local Tax Enabling Act, the addition of Article XII-A
shall not preempt any tax imposed by a unit of local
government as of the effective date of section 52 unless
specifically provided for in Act 84.
See section 53 of Act 84 of 2016 in the appendix to
this act for special provisions relating to
applicability.
Section 1201-A. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Cigar." Any roll for smoking that weighs more than four
pounds per thousand and the wrapper or cover is made of natural
leaf tobacco or of any substance containing tobacco.
"Cigarette." As defined in section 1201.
"Consumer." An individual who purchases tobacco products
for personal use and not for resale.
"Contraband." Any tobacco product for which the tax imposed
by this article has not been paid.
"Dealer." A wholesaler or retailer. Nothing in this article
shall preclude any person from being a wholesaler or retailer,
provided the person meets the requirements for a license in
each category of dealer.
"Department." The Department of Revenue of the Commonwealth.
"Electronic cigarettes." As follows:
(1) An electronic oral device, such as one composed of
a heating element and battery or electronic circuit, or both,
which provides a vapor of nicotine or any other substance
and the use or inhalation of which simulates smoking.
(2) The term includes:
(i) A device as described in paragraph (1),
notwithstanding whether the device is manufactured,
distributed, marketed or sold as an e-cigarette, e-cigar
and e-pipe or under any other product, name or
description.
(ii) A liquid or substance placed in or sold for
use in an electronic cigarette.
"Manufacturer." A person that produces tobacco products.
"Person." An individual, unincorporated association,
company, corporation, joint stock company, group, agency,
syndicate, trust or trustee, receiver, fiduciary, partnership,
conservator, any political subdivision of the Commonwealth or
any other state. If used in any of the provisions of this
article prescribing or imposing penalties, the term "person"
as applied to a partnership, unincorporated association or other
joint venture, shall mean the partners or members of the
partnership, unincorporated association or other joint venture,
and as applied to a corporation, shall mean each officer and
director of the corporation.
"Purchase price." The total value of anything paid or
delivered, or promised to be paid or delivered, money or
otherwise, in complete performance of a sale or purchase,
without any deduction on account of the cost or value of the
property sold, cost or value of transportation, cost or value
of labor or service, interest or discount paid or allowed after
the sale is consummated, any other taxes imposed by the
Commonwealth or any other expense.
"Retailer." A person that purchases or receives tobacco
products from any source for the purpose of sale to a consumer,
or who owns, leases or otherwise operates one or more vending
machines for the purpose of sale of tobacco products to the
ultimate consumer. The term includes a vending machine operator
or a person that buys, sells, transfers or deals in tobacco
products and is not licensed as a tobacco products wholesaler
under this article.
"Roll-your-own tobacco." Any tobacco which, because of the
tobacco's appearance, type, packaging or labeling, is suitable
for use and is likely to be offered to, or purchased by,
consumers as tobacco for making cigarettes.
"Sale." Any transfer of ownership, custody or possession
of tobacco products for consideration; any exchange, barter or
gift; or any offer to sell or transfer the ownership, custody
or possession of tobacco products for consideration.
"Taxpayer." Any person subject to tax under this article.
"Tobacco products." As follows:
(1) Electronic cigarettes.
(2) Roll-your-own tobacco.
(3) Periques, granulated, plug cut, crimp cut, ready
rubbed and other smoking tobacco, snuff, dry snuff, snuff
flour, cavendish, plug and twist tobacco, fine-cut and other
chewing tobaccos, shorts, refuse scraps, clippings, cuttings
and sweepings of tobacco and other kinds and forms of
tobacco, prepared in such manner as to be suitable for
chewing or ingesting or for smoking in a pipe or otherwise,
or any combination of chewing, ingesting or smoking.
(4) The term does not include:
(i) Any item subject to the tax under section 1206.
(ii) Cigars.
"Unclassified importer." A consumer who purchases tobacco
products using the Internet or mail-order catalogs for personal
possession or use in this Commonwealth from persons that are
not licensed.
"Vending machine operator." A person who places or services
one or more tobacco product vending machines whether owned,
leased or otherwise operated by the person at locations from
which tobacco products are sold to the consumer. The owner or
tenant of the premises upon which a vending machine is placed
shall not be considered a vending machine operator if the
owner's or tenant's sole remuneration therefrom is a flat rental
fee or commission based upon the number or value of tobacco
products sold from the machine, unless the owner or tenant
actually owns the vending machine or leases the vending machine
under an agreement whereby any profits from the sale of the
tobacco products directly inure to the owner's or tenant's
benefit.
"Wholesaler." A person engaged in the business of selling
tobacco products that receives, stores, sells, exchanges or
distributes tobacco products to retailers or other wholesalers
in this Commonwealth or retailers who purchase from a
manufacturer or from another wholesaler who has not paid the
tax imposed by this article.
(1201-A added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 53(5)(ii)(A) and (B) of Act 84 of
2016, which added section 1201-A, provided that the
definition of "roll-your-own tobacco" and par. (2) of
the definition of "tobacco products" shall take effect
60 days after the Office of Attorney General publishes
the notice of the consents under section 53(3)(ii) of
Act 84.
Section 1202-A. Incidence and rate of tax.
(a) Imposition of tax on certain tobacco products.--A
tobacco products tax is imposed on the dealer or manufacturer
at the time the tobacco product is first sold to a retailer in
this Commonwealth at the rate of 55¢ per ounce for the purchase
of any tobacco product other than electronic cigarettes. The
tax rate shall include a proportionate tax at the rate of 55¢
per ounce on all fractional parts of an ounce. The tax imposed
on tobacco products other than electronic cigarettes that weigh
less than 1.2 ounces per container is equal to the amount of
the tax imposed on tobacco products other than electronic
cigarettes that weigh 1.2 ounces. The tax shall be collected
from the retailer by whomever sells the tobacco product to the
retailer and remitted to the department. Any person required
to collect this tax shall separately state the amount of tax
on an invoice or other sales document.
(a.1) Imposition of tax on electronic cigarettes.--A tobacco
products tax is imposed on the dealer or manufacturer at the
time the electronic cigarette is first sold to a retailer in
this Commonwealth at the rate of 40% on the purchase price
charged to the retailer for the purchase of electronic
cigarettes. The tax shall be collected for the retailer by
whomever sells the electronic cigarette to the retailer and
remitted to the department. Any person required to collect this
tax shall separately state the amount of tax on an invoice or
other sales document.
(b) Retailer.--A retailer may only purchase tobacco products
from a licensed dealer. If the tax is not collected by the
seller from the retailer, the tax is imposed on the retailer
at the time of purchase at the same rate as in subsections (a)
and (a.1) based on the retailer's purchase price of the tobacco
products. The retailer shall remit the tax to the department.
(c) Unclassified importer.--The tax is imposed on an
unclassified importer at the time of purchase at the same rate
as in subsections (a) and (a.1) based on the unclassified
importer's purchase price of the tobacco products. The
unclassified importer shall remit the tax to the department.
(d) Exceptions.--The tax shall not be imposed on any tobacco
products that:
(1) are exported for sale outside this Commonwealth;
or
(2) are not subject to taxation by the Commonwealth
pursuant to any laws of the United States.
(1202-A added July 13, 2016, P.L.526, No.84)
Section 1203-A. Floor tax.
(a) Payment.--
(1) Any retailer that, as of the effective date of this
paragraph, possesses tobacco products subject to the tax
imposed by section 1202-A other than roll-your-own tobacco
shall pay the tax in accordance with the rates specified in
section 1202-A. The tax shall be paid and reported on a form
prescribed by the department within 90 days of the effective
date of this paragraph.
(2) Any retailer that, as of the effective date of this
paragraph, possesses roll-your-own tobacco subject to the
tax imposed by section 1202-A shall pay the tax in accordance
with the rates specified in section 1202-A. The tax shall
be paid and reported on a form prescribed by the department
within 90 days of the effective date of this paragraph.
(b) Administrative penalty; license.--If a retailer fails
to file the report required by subsection (a) or fails to pay
the tax imposed by subsection (a), the department may, in
addition to the interest and penalties provided in section
1215-A, do any of the following:
(1) Impose an administrative penalty equal to the amount
of tax evaded or not paid. The penalty shall be added to the
tax evaded or not paid and assessed and collected at the
same time and in the same manner as the tax.
(2) Suspend, revoke or refuse to issue the retailer's
license.
(c) Criminal penalty.--In addition to any penalty imposed
under subsection (b), a person that willfully omits, neglects
or refuses to comply with a duty imposed under subsection (a)
commits a misdemeanor and shall, if convicted, be sentenced to
pay a fine of not less than $2,500 nor more than $5,000, to
serve a term of imprisonment not to exceed 30 days, or both.
(1203-A added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 53(5)(ii)(C) of Act 84 of 2016,
which added section 1203-A, provided that subsection
(a) (2) shall take effect 60 days after the Office of
Attorney General publishes the notice of the consents
under section 53(3)(ii) of Act 84.
Section 1204-A. Remittance of tax to department.
Wholesalers, retailers, unclassified importers and
manufacturers shall file monthly reports on a form prescribed
by the department by the 20th day of the month following the
sale or purchase of tobacco products from any other source on
which the tax levied by this article has not been paid. The tax
is due at the time the report is due. The department may require
the filing of reports and payment of tax on a less frequent
basis at its discretion.
(1204-A added July 13, 2016, P.L.526, No.84)
Section 1205-A. (Reserved).
(1205-A added July 13, 2016, P.L.526, No.84)
Section 1206-A. Procedures for claiming refund.
A claim for a refund of tax imposed by this article under
section 3003.1 and Article XXVII shall be in the form and
contain the information prescribed by the department by
regulation.
(1206-A added July 13, 2016, P.L.526, No.84)
Section 1207-A. Sales or possession of tobacco product when
tax not paid.
(a) Sales or possession.--Any person who sells or possesses
any tobacco product for which the proper tax has not been paid
commits a summary offense and shall, upon conviction, be
sentenced to pay costs of prosecution and a fine of not less
than $100 nor more than $1,000 or to imprisonment for not more
than 60 days, or both, at the discretion of the court. Any
tobacco products purchased from a wholesaler properly licensed
under this article shall be presumed to have the proper taxes
paid.
(b) Tax evasion.--Any person that shall falsely or
fraudulently, maliciously, intentionally or willfully with
intent to evade the payment of the tax imposed by this article
sell or possess any tobacco product for which the proper tax
has not been paid commits a felony and shall, upon conviction,
be sentenced to pay costs of prosecution and a fine of not more
than $5,000 or to imprisonment for not more than five years,
or both, at the discretion of the court.
(1207-A added July 13, 2016, P.L.526, No.84)
Section 1208-A. Assessment.
The department is authorized to make the inquiries,
determinations and assessments of the tax, including interest,
additions and penalties, imposed by this article.
(1208-A added July 13, 2016, P.L.526, No.84)
Section 1209-A. (Reserved).
(1209-A added July 13, 2016, P.L.526, No.84)
Section 1210-A. (Reserved).
(1210-A added July 13, 2016, P.L.526, No.84)
Section 1211-A. Failure to file return.
Where no return is filed, the amount of the tax due may be
assessed and collected at any time as to taxable transactions
not reported.
(1211-A added July 13, 2016, P.L.526, No.84)
Section 1212-A. False or fraudulent return.
Where the taxpayer willfully files a false or fraudulent
return with intent to evade the tax imposed by this article,
the amount of tax due may be assessed and collected at any time.
(1212-A added July 13, 2016, P.L.526, No.84)
Section 1213-A. Extension of limitation period.
Notwithstanding any other provision of this article, where,
before the expiration of the period prescribed for the
assessment of a tax, a taxpayer has consented, in writing, that
the period be extended, the amount of tax due may be assessed
at any time within the extended period. The period so extended
may be extended further by subsequent consents, in writing,
made before the expiration of the extended period.
(1213-A added July 13, 2016, P.L.526, No.84)
Section 1214-A. Failure to furnish information, returning false
information or failure to permit inspection.
(a) Penalty.--Any taxpayer who fails to keep or make any
record, return, report, inventory or statement, or keeps or
makes any false or fraudulent record, return, report, inventory
or statement required by this article commits a misdemeanor and
shall, upon conviction, be sentenced to pay costs of prosecution
and a fine of $500 and to imprisonment for not more than one
year, or both, at the discretion of the court.
(b) Examination.--The department is authorized to examine
the books and records, the stock of tobacco products and the
premises and equipment of any taxpayer in order to verify the
accuracy of the payment of the tax imposed by this article. The
person subject to an examination shall give to the department
or its duly authorized representative the means, facilities and
opportunity for the examination. Willful refusal to cooperate
with or permit an examination to the satisfaction of the
department shall be sufficient grounds for the suspension or
revocation of a taxpayer's license. In addition, a person who
willfully refuses to cooperate with or permit an examination
to the satisfaction of the department commits a misdemeanor and
shall, upon conviction, be sentenced to pay costs of prosecution
and a fine of $500 or to imprisonment for not more than one
year, or both, at the discretion of the court.
(c) Dealer or manufacturer records.--A dealer or
manufacturer shall keep and maintain for a period of four years
records in the form prescribed by the department. The records
shall be maintained at the location for which the license is
issued.
(d) Reports.--A dealer or manufacturer shall file reports
at times and in the form prescribed by the department.
(e) Manufacturer, wholesaler or dealer records.--A
manufacturer, wholesaler or dealer located or doing business
in this Commonwealth who sells tobacco products to a wholesale
or retail license holder in this Commonwealth shall keep records
showing:
(1) A list by tobacco product and by brand family of
the number and kind of tobacco products sold, the amount of
tax due and the amount of tax paid. For roll-your-own
tobacco, the records shall include the total weight and the
equivalent stick count of roll-your-own tobacco by brand
family which the manufacturer, wholesaler or dealer sold,
the amount of tax due and the amount of tax paid. For
purposes of this paragraph, 0.09 ounces of roll-your-own
tobacco shall constitute one stick.
(2) The date the tobacco products were sold.
(3) The name and license number of the dealer the
tobacco products were sold to.
(4) The total weight of each of the tobacco products
sold to the license holder.
(5) The place where the tobacco products were shipped.
(6) The name of the common carrier.
(f) Manufacturer, wholesaler or dealer.--A manufacturer,
wholesaler or dealer shall file with the department, on or
before the 20th day of each month, a report showing the
information listed in subsection (e) for the previous month.
(g) Records.--Each manufacturer, wholesaler and dealer shall
maintain and make available to the department and to the Office
of Attorney General all invoices and documentation of sales of
all tobacco products and any other information relied upon to
prepare the reports required under subsection (f) for a period
of five years after each report is filed with the department.
(1214-A added July 13, 2016, P.L.526, No.84)
Section 1215-A. Other violations, peace officers and fines.
Sections 1278, 1279, 1280 and 1291 are incorporated by
reference into and shall apply to the tax imposed by this
article.
(1215-A added July 13, 2016, P.L.526, No.84)
Section 1216-A. Sales reporting.
For purposes of reporting sales of roll-your-own tobacco
under the act of June 22, 2000 (P.L.394, No.54), known as the
Tobacco Settlement Agreement Act, 0.09 ounces of tobacco shall
constitute one individual unit sold.
(1216-A added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 53(5)(ii)(D) of Act 84 of 2016,
which added section 1216-A, provided that section 1216-A
shall take effect 60 days after the Office of Attorney
General publishes the notice of the consents under
section 53(3)(ii) of Act 84.
Section 1217-A. (Reserved).
(1217-A added July 13, 2016, P.L.526, No.84)
Section 1218-A. (Reserved).
(1218-A added July 13, 2016, P.L.526, No.84)
Section 1219-A. Records of shipments and receipts of tobacco
products required.
The department may, in its discretion, require reports from
any common or contract carrier who transports tobacco products
to any point or points within this Commonwealth, and from any
bonded warehouseman or bailee who has in the possession of the
warehouseman or bailee any tobacco products. The reports shall
contain the information concerning shipments of tobacco products
that the department determines to be necessary for the
administration of this article. All common and contract
carriers, bailees and warehousemen shall permit the examination
by the department or its authorized agents of any records
relating to the shipment or receipt of tobacco products.
(1219-A added July 13, 2016, P.L.526, No.84)
Section 1220-A. Licensing of dealers and manufacturers.
(a) Prohibition.--No person, unless all sales of tobacco
products are exempt from Pennsylvania tobacco products tax,
shall sell, transfer or deliver any tobacco products in this
Commonwealth without first obtaining the proper license provided
for in this article.
(b) Application.--An applicant for a dealer's or
manufacturer's license shall complete and file an application
with the department. The application shall be in the form and
contain information prescribed by the department and shall set
forth truthfully and accurately the information desired by the
department. If the application is approved, the department shall
license the dealer or manufacturer for a period of one year and
the license may be renewed annually thereafter.
(1220-A added July 13, 2016, P.L.526, No.84)
Section 1221-A. Licensing of manufacturers.
Any manufacturer doing business within this Commonwealth
shall first obtain a license to sell tobacco products by
submitting an application to the department containing the
information requested by the department and designating a
process agent. If a manufacturer designates no process agent,
the manufacturer shall be deemed to have made the Secretary of
State its agent for the service of process in this Commonwealth.
(1221-A added July 13, 2016, P.L.526, No.84)
Section 1222-A. Licensing of wholesalers.
(a) Requirements.--Applicants for a wholesale license or
renewal of that license shall meet the following requirements:
(1) The premises on which the applicant proposes to
conduct business are adequate to protect the revenue.
(2) The applicant is a person of reasonable financial
stability and reasonable business experience.
(3) The applicant, or any shareholder controlling more
than 10% of the stock if the applicant is a corporation or
any officer or director if the applicant is a corporation,
shall not have been convicted of any crime involving moral
turpitude.
(4) The applicant shall not have failed to disclose any
material information required by the department, including
information that the applicant has complied with this article
by providing a signed statement under penalty of perjury.
(5) The applicant shall not have made any material false
statement in the application.
(6) The applicant shall not have violated any provision
of this article.
(7) The applicant shall have filed all required State
tax reports and paid any State taxes not subject to a timely
perfected administrative or judicial appeal or subject to a
duly authorized deferred payment plan.
(b) Multiple locations.--The wholesale license shall be
valid for one specific location only. Wholesalers with more
than one location shall obtain a license for each location.
(1222-A added July 13, 2016, P.L.526, No.84)
Section 1223-A. Licensing of retailers.
Applicants for a retail license or renewal of that license
shall meet the following requirements:
(1) The premises in which the applicant proposes to
conduct business are adequate to protect the revenues.
(2) The applicant shall not have failed to disclose any
material information required by the department.
(3) The applicant shall not have any material false
statement in the application.
(4) The applicant shall not have violated any provision
of this article.
(5) The applicant shall have filed all required State
tax reports and paid any State taxes not subject to a timely
perfected administrative or judicial appeal or subject to a
duly authorized deferred payment plan.
(1223-A added July 13, 2016, P.L.526, No.84)
Section 1224-A. License for tobacco products vending machines.
Each tobacco products vending machine shall have a current
retail license which shall be conspicuously and visibly placed
on the machine. There shall be conspicuously and visibly placed
on every tobacco products vending machine the name and address
of the owner and the name and address of the operator.
(1224-A added July 13, 2016, P.L.526, No.84)
Section 1225-A. License fees and issuance and display of
license.
(a) Application.--At the time of making any application or
license renewal application:
(1) An applicant for a tobacco products manufacturers
license shall pay the department a license fee of $1,500.
(2) An applicant for a wholesale tobacco products
dealer's license shall pay to the department a license fee
of $1,500.
(3) An applicant for a retail tobacco products dealer's
license shall pay to the department a license fee of $25.
(4) An applicant for a vending machine tobacco products
dealer's license shall pay to the department a license fee
of $25.
(b) Proration.--Fees shall not be prorated.
(c) Issuance and display.--On approval of the application
and payment of the fees, the department shall issue the proper
license which must be conspicuously displayed at the location
for which it has been issued.
(1225-A added July 13, 2016, P.L.526, No.84)
Section 1226-A. Electronic filing.
The department may at its discretion require that any or all
returns, reports or registrations that are required to be filed
under this article be filed electronically. Failure to
electronically file any return, report, registration or other
information the department may direct to be filed electronically
shall subject the taxpayer to a penalty of 5% of the tax due
on the return, up to a maximum of $1,000, but not less than
$10. This penalty shall be assessed at any time and collected
in the manner provided in this article. This penalty shall be
in addition to any civil penalty imposed in this article for
failure to furnish information or file a return. The criminal
penalty for failure to file a return electronically shall be
the same as the criminal penalty for failure to furnish
information or file a return under this article.
(1226-A added July 13, 2016, P.L.526, No.84)
Section 1227-A. Expiration of license.
(a) Expiration.--A license shall expire on the last day of
February next succeeding the date upon which it was issued
unless the department at an earlier date suspends, surrenders
or revokes the license.
(b) Violation.--After the expiration date of the license
or sooner if the license is suspended, surrendered or revoked,
it shall be illegal for any dealer to engage directly or
indirectly in the business heretofore conducted by the dealer
for which the license was issued. Any licensee who shall, after
the expiration date of the license, engage in the business
theretofore conducted by the licensee either by way of purchase,
sale, distribution or in any other manner directly or indirectly
engaged in the business of dealing with tobacco products for
profit shall be in violation of this article and be subject to
the penalties provided in this article.
(1227-A added July 13, 2016, P.L.526, No.84)
Section 1228-A. Administration powers and duties.
(a) Department.--The administration of this article is
vested in the department. The department shall adopt rules and
regulations for the enforcement of this article. The department
may impose fees as may be necessary to cover the costs incurred
in administering this section.
(b) Joint administration.--The department is authorized to
jointly administer this article with other provisions of this
act, including joint reporting of information, forms, returns,
statements, documents or other information submitted to the
department.
(1228-A added July 13, 2016, P.L.526, No.84)
Section 1229-A. Sales without license.
(a) Penalty.--Any person who shall, without being the holder
of a proper unexpired dealer's license, engage in purchasing,
selling, distributing or in any other manner directly or
indirectly engaging in the business of dealing with tobacco
products for profit commits a summary offense and shall, upon
conviction, be sentenced to pay costs of prosecution and a fine
of not less than $250 nor more than $1,000 or to imprisonment
for not more than 30 days, or both, at the discretion of the
court.
(b) Prima facie evidence.--Open display of tobacco products
in any manner shall be prima facie evidence that the person
displaying such tobacco products is directly or indirectly
engaging in the business of dealing with tobacco products for
profit.
(1229-A added July 13, 2016, P.L.526, No.84)
Section 1230-A. Violations and penalties.
(a) Suspension.--The license of any person who violates
this article may be suspended after due notice and opportunity
for a hearing for a period of not less than five days or more
than 30 days for a first violation and shall be revoked or
suspended for any subsequent violation.
(b) Fine.--In addition to the provisions of subsection (a),
upon adjudication of a first violation, the person shall be
fined not less than $2,500 nor more than $5,000. For subsequent
violations, the person shall, upon adjudication thereof, be
fined not less than $5,000 nor more than $15,000.
(c) Civil penalty.--A person who violates section 1214-A
(b), (c) or (d) or 1225-A(c) shall be subject to a civil penalty
not to exceed $300 per violation but shall not be subject to
subsections (a) and (b).
(1230-A added July 13, 2016, P.L.526, No.84)
Section 1231-A. Property rights.
(a) Incorporation.--Subject to subsection (b), section 1285
is incorporated by reference into and shall apply to this
article.
(b) Alterations.--
(1) References in section 1285 to cigarettes shall apply
to tobacco products in this article.
(2) References in section 1285 to 2,000 or more
unstamped cigarettes shall apply to tobacco products worth
at least $500 in this article.
(3) References in section 1285 to more than 200
unstamped cigarettes shall apply to tobacco products worth
at least $50 in this article.
(1231-A added July 13, 2016, P.L.526, No.84)
Section 1232-A. Sample of tobacco products.
(a) Samples.--The department shall, by regulation, govern
the receipt, distribution of and payment of tax on sample
tobacco products issued for free distribution.
(b) Construction.--Nothing in this article or the
regulations promulgated under this article shall prohibit the
bringing into this Commonwealth by a manufacturer samples of
tobacco products to be delivered and distributed only through
licensed dealers or the manufacturers or their sales
representatives. The tax shall be paid by the manufacturer
provided all such packs bear the legend "all applicable State
taxes have been paid." Under no circumstances shall any untaxed
tobacco products be sold within this Commonwealth.
(1232-A added July 13, 2016, P.L.526, No.84)
Section 1233-A. Labeling and packaging.
It shall be unlawful to knowingly possess, sell, give,
transfer or deliver to any person any tobacco product where the
packaging of which has been modified or altered by a person
other than the original manufacturer. Modification or alteration
shall include the placement of a sticker, writing or mark to
cover information on the packages. For purposes of this section,
a tobacco product package shall not be construed to have been
modified or altered by a person other than the manufacturer if
the most recent modification or alteration was made by the
manufacturer or person authorized by the manufacturer and
approved by the department.
(1233-A added July 13, 2016, P.L.526, No.84)
Section 1234-A. Information exchange.
The department is authorized to exchange information with
any other Federal, State or local enforcement agency for
purposes of enforcing this article.
(1234-A added July 13, 2016, P.L.526, No.84)
ARTICLE XIII
SINGLE EXCISE TAX ON CERTAIN BANKS,
TITLE INSURANCE COMPANIES, BANK AND
TRUST COMPANIES AND TRUST COMPANIES
(Art. repealed July 1, 1989, P.L.95, No.21)
Section 1301. Imposition of Tax.--(1301 repealed July 1,
1989, P.L.95, No.21)
Section 1302. Taxpayers Subject to Tax.--(1302 repealed
July 1, 1989, P.L.95, No.21)
Section 1303. Measurement of Tax.--(1303 repealed July 1,
1989, P.L.95, No.21)
Section 1304. Publication of Total Refunds and Unpaid Shares
Taxes Subject to Protest.--(1304 repealed July 1, 1989, P.L.95,
No.21)
Section 1305. Aggregate Amount of Excise Tax.--(1305
repealed July 1, 1989, P.L.95, No.21)
Section 1306. Payment of Tax.--(1306 repealed July 1, 1989,
P.L.95, No.21)
Section 1307. Credit for Refunds Due.--(1307 repealed July
1, 1989, P.L.95, No.21)
Section 1308. Additional Credit.--(1308 repealed July 1,
1989, P.L.95, No.21)
Section 1309. Applicability of Existing Law.--(1309 repealed
July 1, 1989, P.L.95, No.21)
ARTICLE XIV
FRANCHISE SURTAX ALTERNATIVE ON BANKS
(Art. repealed July 1, 1989, P.L.95, No.21)
Section 1401. Definitions.--(1401 repealed July 1, 1989,
P.L.95, No.21)
Section 1402. Imposition of Surtax.--(1402 repealed July
1, 1989, P.L.95, No.21)
Section 1403. Computation of Adjusted Net Worth.--(1403
repealed July 1, 1989, P.L.95, No.21)
Section 1404. Procedure; Enforcement; Penalties.--(1404
repealed July 1, 1989, P.L.95, No.21)
ARTICLE XIV-A
FRANCHISE SURTAX ALTERNATIVE ON TITLE INSURANCE
AND TRUST COMPANIES
(Art. repealed July 1, 1989, P.L.95, No.21)
Section 1401-A. Definitions.--(1401-A repealed July 1, 1989,
P.L.95, No.21)
Section 1402-A. Imposition of Surtax.--(1402-A repealed
July 1, 1989, P.L.95, No.21)
Section 1403-A. Computation of Adjusted Net Worth.--(1403-A
repealed July 1, 1989, P.L.95, No.21)
Section 1404-A. Procedure; Enforcement; Penalties.--(1404-A
repealed July 1, 1989, P.L.95, No.21)
ARTICLE XV
MUTUAL THRIFT INSTITUTIONS TAX
(Art. added Dec. 1, 1983, P.L.228, No.66)
Section 1501. Definitions.--The following words, terms and
phrases when used in this article shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Deposits."
(1) The unpaid balance of money or its equivalent which is
received or held by an institution in the usual course of
business and for which it has given or is obligated to give
credit, either conditionally or unconditionally, to a
commercial, checking, savings, time or thrift account, or which
is evidenced by its certificate of deposit, thrift certificate,
investment certificate, certificate of indebtedness or other
similar name, or a check or draft drawn against a deposit
account and certified by the institution or a letter of credit
or a traveler's check on which the institution is primarily
liable: Provided, That, without limiting the generality of the
term "money or its equivalent," any such account or instrument
must be regarded as evidencing the receipt of the equivalent
of money when credited or issued in exchange for checks or
drafts or for a promissory note upon which the person obtaining
any such credit or instrument is primarily or secondarily
liable, or for a charge against a deposit account, or in
settlement of checks, drafts or other instruments forwarded to
such institution for collection.
(2) Trust funds received or held by an institution, whether
held in the trust department or held or deposited in any other
department of the institution.
(3) Money received or held by an institution, or the credit
given for money or its equivalent received or held by an
institution in the usual course of business for a special or
specific purpose, regardless of the legal relationship thereby
established, including, without being limited to, escrow funds,
funds held as security for an obligation due to the institution
or others (including funds held as dealers reserves) or for
securities loaned by the institution, funds deposited by a
debtor to meet maturing obligations, funds deposited as advance
payment on subscriptions to United States Government securities,
funds held for distribution or purchase of securities, funds
held to meet its acceptances or letters of credit, and withheld
taxes: Provided, That there shall not be included funds which
are received by the institution for immediate application to
the reduction of an indebtedness to the receiving institution
or under condition that the receipt thereof immediately reduces
or extinguishes such an indebtedness.
(4) Outstanding drafts (including advice or authorization
to charge an institution's balance in another institution or
bank), cashier's checks, money orders, or other officer's checks
issued in the usual course of business for any purpose, but not
including those issued in payment for services, dividends, or
purchases or other costs or expenses of the institution itself.
(5) Deposits do not include deposits made by the Federal
Government, its agencies and instrumentalities.
"Employe." Any individual to whom wages are paid within the
meaning of 26 U.S.C. § 3401.
"Lease." Any leasing transaction in which the lessor would
be treated as owner of the leased property under generally
accepted accounting principles. All other transactions
purporting to be leases shall be treated as loans for purposes
of this article.
"Located." An institution is located in this Commonwealth
in a taxable year only if any one of the following apply:
(1) Such institution maintains an office here.
(2) One or more employes of the institution has or have a
regular presence here.
(3) Such institution has employes, representatives or
independent contractors conducting business activities in its
behalf in this Commonwealth.
(4) Such institution engages in regular solicitation in
this Commonwealth (whether at a place of business, by traveling
loan officers or other representatives, by mail, by telephone
or other electronic means), and the solicitation results in the
creation of a depository or direct debtor/creditor relationship
with a resident of this Commonwealth. For purposes of this
regulation, mere processing or transfer through financial
intermediaries of checks, credit card receivables, commercial
paper and the like does not create a debtor/creditor
relationship. A financial institution is engaged in regular
solicitation within this Commonwealth if it has entered into
any of the relationships listed in this clause with twenty or
more residents of this Commonwealth during any tax period or
if it has five million dollars ($5,000,000) or more of assets
attributable to sources within this Commonwealth at any time
during the tax period.
(5) Such institution owns tangible property which is located
here and which is leased to others for their use.
(6) Such institution owns or leases tangible property which
is located here and which it uses in connection with its
activities here.
"Maintains an office." An institution maintains an office
wherever it has established a regular, continuous and fixed
place of business.
"Mutual thrift institution" or "institution." Every:
(1) savings bank without capital stock;
(2) building and loan association;
(3) savings and loan association; and
(4) savings institution having capital stock;
whether the institution is incorporated under any law of this
Commonwealth or under the law of the United States, or is
incorporated under the law of any other jurisdiction and is
located within this Commonwealth.
"Origination of loans." A loan is deemed to have originated
in the state in which the office is located which properly
treats the loan as an asset on its books or records. However,
if an institution maintains an office in a state, the following
rules will apply:
(1) Loans secured primarily by real property are deemed to
have originated at an office within the state in which the
predominant part of the security real property is or will be
located, if at least one of the following activities occurs at
an office in the state:
(i) Application for the loan.
(ii) Negotiation for the loan.
(iii) Approval of the loan.
(iv) Administrative responsibility for the loan.
(2) All other loans made to borrowers residing or having
their commercial domicile within the state are deemed to have
originated at an office within the state, if at least one of
the following activities occurs at an office in the state:
(i) Application for the loan.
(ii) Negotiation for the loan.
(iii) Approval of the loan.
(iv) Administrative responsibility for the loan.
"Property located in a state."
(1) Except as otherwise provided in this definition,
tangible property, including leased property, shall be deemed
to be located in the state in which the property is physically
situated.
(2) Tangible personal property which is characteristically
moving property, such as motor vehicles, rolling stock,
aircraft, vessels, mobile equipment and the like, shall be
deemed to be located in a state if:
(i) the operation of the property is entirely within the
state, or the operation without the state is occasional or
incidental to its operation within the state;
(ii) the operation of the property is in two or more states,
but the principal base of operations from which the property
is sent out is in the state; or
(iii) the state is the residence or commercial domicile of
the lessee or other user of the property, where there is no
principal base of operations and the operation of the property
is in two or more states.
"Regular presence of employes." An employe shall be deemed
to have a regular presence in a state if:
(1) a majority of the employe's service is performed within
the state; or
(2) the office from which his activities are directed or
controlled is located in the state, where a majority of the
employe's service is not performed in any one state.
"State." Any of the several states of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, any
territory or possession of the United States and any foreign
country.
"Taxable net income." The net income of an institution after
apportionment and after any deduction for a net loss carryover.
"Taxable year." The taxable year which the institution, or
any consolidated group with which the institution participates
in the filing of consolidated returns, actually uses in
reporting taxable income to the Federal Government. For purposes
of this article, the terms "year," "annual year," "fiscal year,"
"annual or fiscal year," "tax year" and "tax period" shall be
the same as the institution's taxable year, as defined in this
paragraph.
(1501 amended Oct. 14, 1988, P.L.737, No.106)
Section 1502. Imposition; Report and Payment of Tax;
Exemptions.--(a) Every institution shall annually, by April
15 of each year beginning in the year 1984, make a report to
the Department of Revenue, setting forth the entire amount of
taxable net income received or accrued by said institution from
all sources during the preceding year, and such other
information as the department may require, and upon such taxable
net income the said institution shall pay into the State
Treasury, through the Department of Revenue, for the use of the
Commonwealth, a State excise tax at the rate of eleven and
one-half per cent for the calendar years 1983, 1984, 1985 and
1986 and fiscal years beginning in 1983, 1984, 1985 and 1986,
at the rate of twenty per cent for calendar years 1987, 1988,
1989 and 1990 and fiscal years beginning in 1987, 1988, 1989
and 1990 and at the rate of twelve and one-half per cent for
calendar year 1991 and fiscal years beginning in 1991 and at
the rate of eleven and one-half per cent for calendar year 1992
and each calendar year thereafter and fiscal years beginning
in 1992 and each fiscal year thereafter upon such annual taxable
net income, for the privilege of doing business in the
Commonwealth. Every institution shall be required to make
payment of estimated tax pursuant to the provisions of sections
3003.2, 3003.3 and 3003.4 of Article XXX for taxable years
beginning after December 31, 1991. For taxable years beginning
before January 1, 1992, every institution shall be required to
make payment of tentative tax pursuant to the provisions of
Article XXX. The remaining portion of the tax due shall be paid
at the time the report prescribed herein is required to be made.
((a) amended July 1, 1989, P.L.95, No.21)
(b) If, however, any such institution closes its fiscal
year, not upon December 31 but upon some other date, the tax
shall be imposed upon such taxable net income received or
accrued during its fiscal year beginning in the year 1983 and
during each fiscal year thereafter, and the annual report of
taxable net income received or accrued during each fiscal year
shall be made, and the remaining tax due thereon shall be paid
within one hundred five days after the close of such fiscal
year. Each such institution shall be required to make payment
of estimated tax pursuant to the provisions of sections 3003.2,
3003.3 and 3003.4 of Article XXX for taxable years beginning
after December 31, 1991. For taxable years beginning before
January 1, 1992, every institution shall be required to make
payment of tentative tax pursuant to the provision of Article
XXX.
(c) Net income or net loss shall be determined in accordance
with generally accepted accounting principles, except that:
(1) Net income or net loss shall be determined on a separate
company unconsolidated basis, using cost in lieu of equity
accounting for investments in a subsidiary.
(2) The accounting method may be on a cash, combined cash
and accrual, or accrual basis, depending on the method of
bookkeeping employed by the institution.
(3) In the case of a business combination entered into after
December 31, 1986, which is treated as a reorganization for
purposes of section 368 of the Internal Revenue Code of 1986,
or a similar successor provision, and accounted for under the
purchase accounting method, net income or net loss shall be
determined as though the acquisition had been accounted for
under the pooling of interest method.
(4) Net income or net loss shall exclude amounts credited
or paid as interest to holders of accounts or depositors or as
dividends to shareholders, except that no deduction shall be
permitted for dividends paid by an institution having capital
stock to its stockholders with regard to their stock.
(5) Net income or net loss shall exclude income or loss
derived from obligations of the United States which, by Federal
law, are exempt from local and state taxation and from
obligations of the Commonwealth which, by Pennsylvania law, are
exempt from taxation by the Commonwealth. For purposes of this
article, United States obligations shall be obligations coming
within the scope of 31 U.S.C. § 3124, and Commonwealth
obligations shall be obligations of the Commonwealth, any public
authority, commission, board or other agency created by the
Commonwealth, any political subdivision of the Commonwealth or
any public authority created by such political subdivision
which, by Pennsylvania law, are exempt from taxation by the
Commonwealth.
(6) No deduction shall be allowed for that portion of the
institution's interest expense which is allocable to tax-exempt
income derived from United States obligations and Commonwealth
obligations. An institution's interest expense shall include
amounts credited or paid as interest to holders of accounts or
depositors or as dividends to shareholders except dividends
paid by an institution having capital stock to its shareholders
with regard to their stock. For purposes of this clause, the
portion of the institution's interest expense which is allocable
to tax-exempt income derived from United States obligations and
Commonwealth obligations is an amount which bears the same ratio
to such interest expense as the institution's interest income
from United States obligations and Commonwealth obligations
bears to the total interest income of the institution.
(d) (1) In determining taxable net income, there shall be
allowed a net loss carryover deduction as provided by this
subsection.
(2) The net loss carryover deduction for a taxable year
shall be that amount which is the sum of any net losses for the
preceding three taxable years, beginning with the earliest year,
to the extent that any such net loss has not previously been
allowed as a deduction in a prior taxable year, except that the
deduction shall not exceed the amount of the net income for the
current year determined after apportionment.
(3) A net loss for a preceding taxable year shall be an
amount determined as a negative amount for the year in
accordance with subsection (c), after any apportionment
applicable to the preceding year, except that, for taxable years
beginning before 1987, any net loss shall be determined without
regard to clause (6) of subsection (c).
(e) Institutions subject to the provisions of this article
shall be exempt from all other corporate taxes imposed by the
Commonwealth for State purposes. Such institutions, any shares
of stock in such institutions and the property of such
institutions shall be exempt from all local taxation imposed
by political subdivisions of this Commonwealth under the
authority of the laws of this Commonwealth, except taxes on
real estate or transfers thereof.
(e.1) In the case of a change in ownership by purchase,
liquidation, acquisition of stock or reorganization of an
institution in the manner described in section 381 or 382 of
the Internal Revenue Code of 1954, as amended, certain
limitations provided in the Internal Revenue Code with respect
to net operating losses shall apply for the purpose of computing
the portion of a net loss carryover recognized pursuant to this
article. The applicable limitations shall include all those
limitations imposed solely on account of a change in ownership,
including, but not limited to, sections 269, 318 (insofar as
it defines the scope of section 382), 381 and 382. The carryover
of tax losses shall not be limited by the Federal consolidated
return regulations or section 338, providing for the deemed
termination of corporate existence upon the making of certain
elections for Federal income tax purposes. When any acquiring
institution or a transferor institution participated in the
filing of consolidated returns to the Federal Government, the
entitlement of the acquiring institution to the Pennsylvania
net loss carryover of the acquiring institution or the
transferor institution will be determined as if separate returns
to the Federal Government had been filed prior to the change
in ownership by purchase, liquidation, acquisition of stock or
reorganization.
(f) If any institution shall neglect or refuse to make any
report required by this article, such institution shall be
liable to a penalty of five thousand dollars ($5,000), which
shall be assessed in the same manner as the tax imposed by this
article is assessed. ((f) amended Oct. 18, 2006, P.L.1149,
No.119)
(1502 amended Oct. 14, 1988, P.L.737, No.106)
Compiler's Note: See section 33 of Act 119 of 2006, which
amended subsec. (f), in the appendix to this act for
special provisions relating to determinations and
assessments of tax liability by the Department of Revenue
after December 31, 2007, and applicability of Act 119
on proceedings, prosecutions, actions, suits or appeals
involving assessments, determinations or settlements of
tax liability by the Department of Revenue prior to
January 1, 2008.
Section 1502.1. Apportionment.--Net income or net loss shall
be apportioned in accordance with this section. An institution
may apportion its net income or net loss if the institution is
subject to tax in another state based on or measured by net
worth, gross receipts, net income or some similar base of
taxation, or if it could be subject to such a tax, whether or
not such a tax has in fact been enacted.
(b) Income or loss shall be apportioned in accordance with
a fraction, the numerator of which is the sum of the payroll
factor, the receipts factor and the deposits factor, and the
denominator of which is three.
(c) The payroll factor is a fraction, the numerator of which
is the total wages paid in this State and the denominator of
which is the total wages paid in all states. Wages are paid in
a state if paid to an employe having a regular presence therein.
(d) The receipts factor is a fraction, the numerator of
which is total receipts located in this State and the
denominator of which is the total receipts located in all
states. Receipts do not include principal repayments on loans
or credit, travel and entertainment cards. Receipts from sale
or disposition of intangible and tangible property include only
the net gain therefrom. The location of receipts shall be
determined as follows:
(1) Receipts from loans are located at the place of
origination.
(2) All receipts from performance of services are located
in a state to the extent the services are performed in the
state. If services are performed partly within two or more
states, the receipts located in each state shall be measured
by the ratio which the time spent in performing such services
in the state bears to the total time spent in performing such
services in all states. Time spent in performing services in a
state is the time spent by employes having a regular presence
in the state in performing such services.
(3) Receipts from lease transactions are located in the
state in which the leased property is deemed located.
(4) Interest or service charges (excluding merchant
discounts) from credit, travel and entertainment card
receivables and credit card holders' fees are located in the
state in which the credit card holder resides in the case of
an individual or, if a corporation, in the state of the
cardholder's commercial domicile if, in either case, the
institution maintains an office in such state. Otherwise, the
receipts are located in the state in which the institution
maintains an office which treats such receivables as assets on
its books or records.
(5) Interest, dividends and net gains from the sale or
disposition of intangibles, exclusive of those receipts
described elsewhere in this section, are located in the state
in which the depository maintains an office which treats such
intangibles as assets on its books or records.
(6) Fees or charges from the issuance of traveler's checks
and money orders are located in the state in which such
traveler's checks or money orders are issued.
(7) Receipts from sales of tangible property are located
in the state in which the property is delivered or shipped to
a purchaser, regardless of the f.o.b. point or other conditions
of the sale.
(8) All receipts not specifically treated under this
subsection are located in the state where the greatest portion
of the income-producing activities are performed, based on costs
of performance.
(e) The deposits factor is a fraction, the numerator of
which is the average value of deposits located in this State
during the taxable year and the denominator of which is the
average value of total deposits during the taxable year. The
average value of deposits is to be computed on a quarterly
basis. The location of deposits shall be determined as follows:
(1) Deposits received from individuals are located in the
state in which the individual resides, if the institution
maintains an office in that state.
(2) Deposits received from a corporation are located in the
state of the corporation's commercial domicile, if the
institution maintains an office in that state.
(3) Deposits received from a state government, its political
subdivisions, agencies and instrumentalities are located in
such state, if the institution maintains an office in that
state.
(4) In all other cases, deposits are located in the state
in which the institution maintains an office which treats the
deposits as liabilities on its books or records.
(1502.1 added Oct. 14, 1988, P.L.737, No.106)
Section 1502.2. Credits.--(a) For taxable years beginning
in 1987 through taxable years beginning in 1991, an institution
may elect to take a credit for taxes based on or measured by
income or taxes imposed in lieu thereof paid to other states
against its tax liability determined under this article.
(b) The amount of the credit shall be determined as follows:
For each state in which the institution is subject to tax,
the amount of the credit shall be the lesser of:
(1) the applicable tax actually paid to such state; or
(2) the total tax due under this article without regard to
apportionment multiplied by a fraction the numerator of which
is the amount of the institution's income (or other applicable
basis of taxation) subject to tax by such state and the
denominator of which is the amount of the institution's entire
income (or other applicable basis of taxation) to which a system
of apportionment or allocation is applied by such state; except
that, if a state does not apply a system of allocation or
apportionment, the numerator of such fraction is the amount of
the institution's income (or other applicable basis of taxation)
which would be subject to taxation in such state if the
apportionment fraction were computed in accordance with the
provisions of this article.
(c) If exercised, this election shall be in lieu of any
other apportionment to which the institution would otherwise
be entitled.
(1502.2 added Oct. 14, 1988, P.L.737, No.106)
Section 1502.3. Additional Reporting Requirements.--(a)
For the calendar years 1987, 1988, 1989, 1990 and 1991 and
fiscal years beginning in 1987, 1988, 1989, 1990 and 1991, every
institution shall report to the Department of Revenue upon a
form prescribed, prepared and furnished by the Department of
Revenue the information necessary to determine the income or
loss that would otherwise be apportioned in accordance with
this section:
(1) Income or loss shall be apportioned in accordance with
a fraction, the numerator of which is the sum of the payroll
factor and the receipts factor, and the denominator of which
is two.
(2) The payroll factor is a fraction, the numerator of which
is the total wages paid in this State and the denominator of
which is the total wages paid in all states. Wages are paid in
a state to the extent of the time spent by the employe in the
state.
(3) The receipts factor is a fraction, the numerator of
which is total receipts located in this State and the
denominator of which is the total receipts located in all
states. Receipts do not include principal repayments on loans
or credit, travel and entertainment cards. Receipts from sale
or disposition of intangible and tangible property include only
the net gain therefrom. The location of receipts shall be
determined as follows:
(i) Receipts from loans are located at the residence or
commercial domicile of the debtor, except that receipts from
loans secured by real or tangible personal property are located
at the location of the property.
(ii) All receipts from performance of services are located
in a state to the extent the services are performed in the
state. If services are performed partly within two or more
states, the receipts located in each state shall be measured
by the ratio which the time spent in performing such services
in the state bears to the total time spent in performing such
services in all states.
(iii) Receipts from lease transactions are located in the
state in which the leased property is deemed located.
(iv) Interest or service charges (excluding merchant
discounts) from credit, travel and entertainment card
receivables and credit card holders' fees are located in the
state in which the credit card holder resides in the case of
an individual or, if a corporation, in the state of the
cardholder's commercial domicile. Otherwise, the receipts are
located in the state in which the credit card holder receives
billing notices.
(v) Interest, dividends and net gains from the sale or
disposition of intangibles, exclusive of those receipts
described elsewhere in this section, are located in the state
in which the depository maintains an office which treats such
intangibles as assets on its books or records.
(vi) Fees or charges from the issuance of traveler's checks
and money orders are located in the state in which such
traveler's checks or money orders are issued.
(vii) Receipts from sales of tangible property are located
in the state in which the property is delivered or shipped to
a purchaser, regardless of the f.o.b. point or other conditions
of the sale.
(4) All receipts not specifically treated under clause (3)
of this subsection are located in the state where the greatest
portion of the income-producing activities are performed, based
on costs of performance.
(b) Such reports shall set forth such other information as
the Department of Revenue may require, including, but not
limited to, information relative to the situs of its payroll
and receipts.
(1502.3 added Oct. 14, 1988, P.L.737, No.106)
Section 1502.4. Restrictions on Lawsuits.--No institution
which is subject to the tax imposed by this article and which
fails to file the annual report required by section 1502 shall
be permitted to initiate any action in any court of this
Commonwealth until the institution files with the Department
of Revenue the required report. The failure of an institution
to file the annual report required by section 1502 shall not
impair the validity of any contract or act of the institution
and shall not prevent the institution from defending any action
in any court of this Commonwealth.
(1502.4 added Oct. 14, 1988, P.L.737, No.106)
Section 1502.5. Sunset.--(1502.5 deleted by amendment Dec.
13, 1991 P.L.373, No.40)
Section 1503. Procedure; Enforcement; Penalties.--(a) Except
as set forth in subsection (b), Parts III, IV, V, VI and VII
of Article IV are incorporated by reference into this article
insofar as they are applicable to the tax imposed under this
article.
(b) The Department of Revenue may, upon application made
by the last day for filing and in a form prescribed by the
department, grant an extension of not more than six months for
filing the annual report required by section 1502.
(1503 amended June 22, 2001, P.L.353, No.23)
Compiler's Note: Section 26(4)(xi) of Act 23 of 2001, which
amended section 1503, provided that the amendment shall
apply to taxable years beginning after December 31, 2000.
Section 1504. Timely Mailing Treated as Timely Filing and
Payment.--Notwithstanding the provisions of any State law to
the contrary, whenever a report or payment of all or any portion
of a State tax is required by law to be received by the
Department of Revenue or other agency of the Commonwealth on
or before a day certain, the institution shall be deemed to
have complied with such law if the letter transmitting the
report or payment of such tax which has been received by the
department is postmarked by the United States Postal Service
on or prior to the final day on which the payment is to be
received. For the purposes of this article, presentation of a
receipt indicating that the report or payment was mailed by
registered or certified mail on or before the due date shall
be evidence of timely filing and payment.
(1504 added Dec. 1, 1983, P.L.228, No.66)
Section 1505. Tax Credits; Legislative Intent.--Any tax
paid by any mutual thrift institution under the provisions of
the act of June 22, 1964 (P.L.16, No.2), known as "The Mutual
Thrift Institutions Tax Act," as amended, the act of June 25,
1982 (P.L.652, No.184), entitled "An act amending the act of
June 22, 1964 (P.L.16, No.2), entitled 'An act imposing a State
excise tax on net earnings or income of mutual thrift
institutions; requiring the filing of reports and payment of
the tax; providing certain exemptions from the tax and repealing
part of an act imposing other taxes,' providing for the
deduction and carryover of net operating losses in determining
net earnings for the tax on mutual thrift institutions," for
taxable years beginning during 1983 shall be credited to and
applied against the tax imposed by this article without the
necessity for the filing of any petition or request by the
taxpayer with the Department of Revenue, it being the intention
of the General Assembly that this article be a reenactment of
such act, although amending such act to include "savings
institutions with capital stock" within the definition of
"mutual thrift institution." Any institution which would have
been entitled to a net operating loss carryforward under the
provisions of the act of June 22, 1964 (P.L.16, No.2), known
as "The Mutual Thrift Institutions Tax Act," as amended, to
calendar year 1983 and fiscal years beginning after January 1,
1983 shall remain entitled to such loss carryforward.
(1505 added Dec. 1, 1983, P.L.228, No.66)
Section 1506. Measurement of Tax.--(a) The Department of
Revenue shall ascertain the total amount of revenue, realized
or unrealized, that was lost for all taxable years beginning
before January 1, 1987, as a result of the decision of the
Supreme Court of Pennsylvania in First Federal Savings and Loan
Association of Philadelphia vs Commonwealth, 515 Pa. 369 (1987).
In ascertaining this amount, the department shall consider any
refunds, including interest paid, granted to institutions as
well as any reductions in settled or resettled taxes or other
reductions which arose or are supported by the First Federal
decision. The department shall also ascertain the difference
in the revenue produced by the tax imposed by this article for
taxable years beginning in 1987, 1988, 1989 and 1990 at the
rate of twenty per cent and the revenue which would have been
received if the tax rate was set at twelve and one-half per
cent for such taxable years. After such information has been
compiled and determined, the department shall reduce the rate
of the tax imposed by this article for taxable years beginning
in 1987, 1988, 1989 and 1990 to the nearest one-tenth of a per
cent in order that the revenue resulting from the rate of tax
in excess of twelve and one-half per cent equals the foregone
tax revenues due to the First Federal decision as ascertained
pursuant to this section. If such adjustment is made, the
department shall reduce and recalculate the tax of each
institution for taxable years beginning in 1987, 1988, 1989 and
1990 and shall notify each institution of its reduced tax
liability. Each institution shall then be entitled to apply for
a cash refund or credit in the manner provided by law, except
that no interest shall accrue on the refund or credit granted
pursuant to this subsection.
(b) The department shall also submit to the General Assembly
the information required to be ascertained by subsection (a)
of this section.
(1506 amended July 1, 1989, P.L.95, No.21)
ARTICLE XVI
FINANCIAL INSTITUTION ALTERNATIVE FRANCHISE TAX
(Art. repealed July 1, 1989, P.L.95, No.21)
PART I
DEFINITIONS
(I repealed July 1, 1989, P.L.95, No.21)
Section 1601. Definitions.--(1601 repealed July 1, 1989,
P.L.95, No.21)
PART II
IMPOSITION OF TAX
(II repealed July 1, 1989, P.L.95, No.21)
Section 1611. Imposition of Tax.--(1611 repealed July 1,
1989, P.L.95, No.21)
PART III
PROCEDURE; ENFORCEMENT; PENALTIES
(III repealed July 1, 1989, P.L.95, No.21)
Section 1621. Procedure; Enforcement; Penalties.--(1621
repealed July 1, 1989, P.L.95, No.21)
Section 1622. Time Period.--(1622 repealed July 1, 1989,
P.L.95, No.21)
PART IV
ADDITIONAL REPORTING REQUIREMENTS
(IV repealed July 1, 1989, P.L.95, No.21)
Section 1631. Additional Reporting Requirements.--(1631
repealed July 1, 1989, P.L.95, No.21)
Section 1632. Reports to General Assembly.--(1632 repealed
July 1, 1989, P.L.95, No.21)
ARTICLE XVI-A
VEHICLE RENTAL TAX
(Hdg. amended May 7, 1997, P.L.85, No.7)
Section 1601-A. Definitions.--The following words, terms
and phrases, when used in this article, shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Peer-to-peer car-sharing program." As defined under section
201(qqq).
"Rental vehicle." A private passenger motor vehicle designed
to transport fifteen or fewer passengers or a truck, trailer
or semitrailer used in the transportation of property other
than commercial freight, that is rented without a driver and
is part of a fleet of five or more rental vehicles used for
that purpose, owned or leased by the same person or entity.
"Shared vehicle." A vehicle that is available for sharing
through a peer-to-peer car-sharing program. The term does not
include a rental vehicle as defined under this article.
"Vehicle rental company." Any business entity engaged in
the business of renting motor vehicles in this Commonwealth.
(1601-A amended July 8, 2022, P.L.513, No.53)
Section 1602-A. Vehicle Rental Tax.--(a) Except as provided
under subsection (b), each vehicle rental company shall collect,
at the time the rental vehicle is rented in this Commonwealth,
on each rental contract for a period of twenty-nine or fewer
consecutive days, a tax equal to two per cent of the purchase
price of the rental.
(b) The tax imposed under subsection (a) shall not apply
to a shared vehicle that is rented through a peer-to-peer
car-sharing program.
(1602-A amended July 8, 2022, P.L.513, No.53)
Section 1603-A. Reporting and Remittance of Tax.--(a) The
tax shall be reported and remitted in the same manner as the
tax imposed by Article XXIII of this act, except that, no later
than February 15 of each calendar year, each vehicle rental
company shall file a report with the Department of Revenue on
a form prescribed by the department. The report shall include
the amount of tax remitted during the previous calendar year
and the total amount of rental vehicle licensing and title fees
imposed by the Commonwealth under 75 Pa.C.S. (relating to
vehicles) on the vehicle rental company's rental vehicles and
paid to the Commonwealth by the vehicle rental company in the
previous calendar year.
(b) When reconciling the reports and remittances filed
during the previous calendar year with the annual report, the
department shall allow against the tax imposed by subsection
(a) a credit equal to the total amount of licensing and title
fees imposed by the Commonwealth under 75 Pa.C.S. on the vehicle
rental company's rental vehicles and paid to the Commonwealth
by the vehicle rental company in the previous calendar year.
The department shall refund to the taxpayer the credit verified
from the annual report. The amount of such verified credit shall
not exceed the amount of tax collected and remitted by the
taxpayer for the calendar year for which the claim is made. If
the amount of the tax collected exceeds the amount of licensing
fees and title fees paid the Commonwealth, the excess collection
shall be deposited by the department into the General Fund.
(c) Unless otherwise noted, the provisions of Article II
of this act shall apply to the tax required under this article.
(1603-A amended May 7, 1997, P.L.85, No.7)
Section 1604-A. Application.--This article shall apply to
all rental contracts entered into on or after July 1, 1997.
(1604-A amended May 7, 1997, P.L.85, No.7)
ARTICLE XVI-B
NONLICENSED CORPORATION PARI-MUTUEL WAGERING TAX
(Art. repealed Feb. 23, 2016, P.L.15, No.7)
Section 1601-B. Scope. (1601-B repealed Feb. 23, 2016, P.L.15,
No.7)
Section 1602-B. Definitions. (1602-B repealed Feb. 23, 2016,
P.L.15, No.7)
Section 1603-B. Tax. (1603-B repealed Feb. 23, 2016, P.L.15,
No.7)
Section 1604-B. Pari-mutuel tax return. (1604-B repealed Feb.
23, 2016, P.L.15, No.7)
Section 1605-B. Regulations. (1605-B repealed Feb. 23, 2016,
P.L.15, No.7)
Section 1606-B. Advanced Deposit Wagering Collections Account.
(1606-B repealed Feb. 23, 2016, P.L.15, No.7)
ARTICLE XVII
ECONOMIC REVITALIZATION TAX CREDIT
(Art. XVII repealed June 22, 2001, P.L.353, No.23)
Section 1701. Short Title.--(1701 repealed June 22, 2001,
P.L.353, No.23)
Section 1702. Legislative Intent.--(1702 repealed June 22,
2001, P.L.353, No.23)
Section 1703. Tax Credit.--(1703 repealed June 22, 2001,
P.L.353, No.23)
Section 1704. Qualified Investment Projects.--(1704 repealed
June 22, 2001, P.L.353, No.23)
Section 1705. Threshold Level.--(1705 repealed June 22,
2001, P.L.353, No.23)
Section 1706. Portion of Excess Net Loss Carryover Claimable
as Credit.--(1706 repealed June 22, 2001, P.L.353, No.23)
Section 1707. Amount of Credit.--(1707 repealed June 22,
2001, P.L.353, No.23)
Section 1708. Utilization of Credits.--(1708 repealed June
22, 2001, P.L.353, No.23)
Section 1709. Recapture of Credits.--(1709 repealed June
22, 2001, P.L.353, No.23)
Section 1710. Application Procedures.--(1710 repealed June
22, 2001, P.L.353, No.23)
Section 1711. Appropriation.--(1711 repealed June 22, 2001,
P.L.353, No.23)
Section 1712. Annual Reports.--(1712 repealed June 22, 2001,
P.L.353, No.23)
Section 1713. Evaluation of Tax Credit.--(1713 repealed
June 22, 2001, P.L.353, No.23)
Section 1714. Sunset.--(1714 repealed June 22, 2001,
P.L.353, No.23)
ARTICLE XVII-A
EMPLOYMENT INCENTIVE PAYMENTS
(Art. added Dec. 19, 1985,
P.L.356, No.102)
Section 1701-A. Employment Incentive Payments.--(1701-A
deleted by amendment Dec. 15, 1999, P.L.926, No.63)
Section 1702-A. Definitions.--The following words, terms
and phrases when used in this article shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Eligible individual" means any of the following:
(1) A person who at any time within the twelve months
preceding the date of hire received general assistance.
(2) A person who at any time within the twelve months
preceding the date of hire received temporary assistance to
needy families.
(3) A person who:
(i) has a physical or mental disability which, for such
individual, constitutes or results in a substantial handicap
to employment; and
(ii) is referred to the employer upon completion of or while
receiving rehabilitative services pursuant to an individualized
written rehabilitation plan under a State plan for vocational
rehabilitation services approved under the Rehabilitation Act
of 1973 (Public Law 93-112, 29 U.S.C. § 701 et seq.), or a
program of vocational rehabilitation carried out under Title I
of the Veterans' Rehabilitation and Education Amendments of
1980 (Public Law 96-466, 94 Stat. 2171).
"Employment incentive payment" means the employment incentive
payment credit provided by this article.
"Pass-through entity" means any of the following:
(1) A partnership, limited partnership, limited liability
company, business trust or other unincorporated entity that for
Federal income tax purposes is taxable as a partnership.
(2) A Pennsylvania S corporation.
"Qualified first-year wages" means the qualified wages
attributable to service rendered by an eligible individual
during the one-year period beginning with the day the eligible
individual begins work for the employer.
"Qualified second-year wages" means the qualified wages
attributable to service rendered by an eligible individual
during the one-year period beginning one year after the eligible
individual begins work for the employer.
"Qualified tax liability" means the liability for taxes
imposed under Article III, IV, VII, VIII, IX or XV of this act.
The term includes the liability for taxes imposed under Article
III of this act on the owner or owners of a pass-through entity.
The term does not include amounts withheld or required to be
withheld from employees under Article III of this act.
"Qualified third-year wages" means the qualified wages
attributable to service rendered by an eligible individual
during the one-year period beginning two years after the
eligible individual begins work for the employer.
"Qualified wages" means wages as that term is defined in
section 51A(b)(5) of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 51A(b)(5)).
"Taxpayer" means a person or entity subject to tax under
Article III, IV, VII, VIII, IX or XV of this act. This term
includes a pass-through entity.
(1702-A added Dec. 15, 1999, P.L.926, No.63)
Compiler's Note: The short title of the act of June 13,
1967 (P.L.31, No.21), known as the Public Welfare Code,
referred to in this section, was amended by the act of
December 28, 2015 (P.L.500, No.92). The amended short
title is now the Human Services Code.
Compiler's Note: Section 5 of Act 63 of 1999, which added
section 1702-A, provided that it is the intent of the
General Assembly that the addition of sections 1702-A
through 1706-A shall be deemed to be a continuation and
expansion of the employment incentive payments program
authorized in section 491 of the act of June 13, 1967
(P.L.31, No.21), known as the Public Welfare Code.
Accordingly:
(1) Nothing in Act 63 shall be construed to preclude
consideration of applications for credits filed under
section 1701-A of this act or section 491 of the Public
Welfare Code, which applications were filed prior to or
on the effective date of Act 63.
(2) Nothing in Act 63 shall be construed to preclude
the utilization of credits which were approved but not
applied under section 1701-A of this act or section 491
of the Public Welfare Code after the effective date of
Act 63.
Section 1703-A. Employment Incentive Payments.--(a) A
taxpayer who employs an eligible individual shall be entitled
to employment incentive payments as provided by this article.
(b) No employment incentive payment shall be provided for:
(1) The employment of a person who displaces any other
individual from employment except persons discharged for cause
as certified by the Department of Labor and Industry.
(2) The employment of a person closely related, as defined
by clauses (1) through (8) of section 152(a) of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 152(a)(1)
through(8)), to the taxpayer or, if the taxpayer is a
corporation, to an individual who owns, directly or indirectly,
more than 50% of the outstanding stock of the taxpayer.
(3) Wages paid to an individual during the time period for
which the employer received federally funded or State funded
job training payments for that individual.
(c) The employment incentive payment shall be calculated
on an annual basis as provided in clauses (1) and (2):
(1) The employment incentive payment shall be the sum of
thirty per cent of the first nine thousand dollars ($9,000) of
qualified first-year wages, twenty per cent of the first nine
thousand dollars ($9,000) of qualified second-year wages and
ten per cent of the first nine thousand dollars ($9,000) of
qualified third-year wages.
(2) A taxpayer eligible to receive a credit under clause
(1) shall be eligible to receive an additional employment
incentive payment as provided in this clause if:
(i) the taxpayer provides or pays for day care services for
the children of an eligible individual; or
(ii) the taxpayer provides or pays for transportation
services that enable an eligible individual to travel to and
from work.
The additional employment incentive payments under this clause
shall be the expenses incurred by the taxpayer for services
listed in subclauses (i) and (ii), but in no case shall the
additional employment incentive payment for each eligible
individual exceed eight hundred dollars ($800) during the first
year of employment, six hundred dollars ($600) during the second
year of employment or four hundred dollars ($400) during the
third year of employment.
(d) The employment incentive payment shall be utilized as
a credit against a qualified tax liability to which the taxpayer
is subject. The employment incentive payment applicable to a
pass-through entity shall be allocated in the same manner as
income is allocated.
(e) (1) Except in cases where an eligible individual
voluntarily leaves the employment of the taxpayer, becomes
disabled or is terminated for cause, no taxpayer shall be
entitled to receive an employment incentive payment if the
eligible individual is employed by the taxpayer for less than
one year.
(2) If the eligible individual leaves the employment of the
taxpayer voluntarily, becomes disabled or is terminated for
cause in less than one year, the employment incentive payment
shall be reduced by the proportion of the year not worked.
(f) The total employment incentive payment credit shall not
exceed ninety per cent of the total taxes paid by the employer
against which the employment incentive payments may be claimed
as a credit.
(g) Employment incentive payments unused as a tax credit
in a taxable year may be carried over against a qualified tax
liability in the ten immediately subsequent taxable years.
(h) For the purposes of computing a tax liability against
which the employment incentive payments may be applied,
deductions from taxable income shall be reduced by the
employment incentive payments.
(1703-A added Dec. 15, 1999, P.L.926, No.63)
Compiler's Note: The short title of the act of June 13,
1967 (P.L.31, No.21), known as the Public Welfare Code,
referred to in this section, was amended by the act of
December 28, 2015 (P.L.500, No.92). The amended short
title is now the Human Services Code.
Compiler's Note: Section 5 of Act 63 of 1999, which added
section 1703-A, provided that it is the intent of the
General Assembly that the addition of sections 1702-A
through 1706-A shall be deemed to be a continuation and
expansion of the employment incentive payments program
authorized in section 491 of the act of June 13, 1967
(P.L.31, No.21), known as the Public Welfare Code.
Accordingly:
(1) Nothing in Act 63 shall be construed to preclude
consideration of applications for credits filed under
section 1701-A of this act or section 491 of the Public
Welfare Code, which applications were filed prior to or
on the effective date of Act 63.
(2) Nothing in Act 63 shall be construed to preclude
the utilization of credits which were approved but not
applied under section 1701-A of this act or section 491
of the Public Welfare Code after the effective date of
Act 63.
Section 1704-A. Administration and Regulations.--The
department, in cooperation with the Department of Public Welfare
and the Department of Labor and Industry, shall administer the
provisions of this article, promulgate appropriate rules,
regulations and forms for that purpose and make such
determinations as may be required. Determinations made with
respect to the employment incentive payment provided in this
section may be reviewed and appealed in the manner provided by
law for other corporate or personal tax credits.
(1704-A added Dec. 15, 1999, P.L.926, No.63)
Compiler's Note: The short title of the act of June 13,
1967 (P.L.31, No.21), known as the Public Welfare Code,
referred to in this section, was amended by the act of
December 28, 2015 (P.L.500, No.92). The amended short
title is now the Human Services Code.
Compiler's Note: The Department of Public Welfare, referred
to in this section, was redesignated as the Department
of Human Services by Act 132 of 2014.
Compiler's Note: Section 5 of Act 63 of 1999, which added
section 1704-A, provided that it is the intent of the
General Assembly that the addition of sections 1702-A
through 1706-A shall be deemed to be a continuation and
expansion of the employment incentive payments program
authorized in section 491 of the act of June 13, 1967
(P.L.31, No.21), known as the Public Welfare Code.
Accordingly:
(1) Nothing in Act 63 shall be construed to preclude
consideration of applications for credits filed under
section 1701-A of this act or section 491 of the Public
Welfare Code, which applications were filed prior to or
on the effective date of Act 63.
(2) Nothing in Act 63 shall be construed to preclude
the utilization of credits which were approved but not
applied under section 1701-A of this act or section 491
of the Public Welfare Code after the effective date of
Act 63.
Section 1705-A. Limitation on Credits.--The total amount
of employment incentive payments authorized by this article
shall not exceed twenty-five million dollars ($25,000,000) in
any fiscal year. To insure that credits are not claimed in
excess of this amount, a taxpayer may claim the incentive
payments only upon presentation of an authorizing certificate.
Certificates will be issued to the taxpayer by the Department
of Labor and Industry upon presentation to the Department of
Labor and Industry of evidence of a qualifying offer of
employment. If necessary to avoid certificate issuances in
excess of the maximum authorized amount for any fiscal year,
the department shall advise the Department of Labor and Industry
of the total number of certificates which may be issued in each
calendar quarter.
(1705-A added Dec. 15, 1999, P.L.926, No.63)
Compiler's Note: The short title of the act of June 13,
1967 (P.L.31, No.21), known as the Public Welfare Code,
referred to in this section, was amended by the act of
December 28, 2015 (P.L.500, No.92). The amended short
title is now the Human Services Code.
Compiler's Note: Section 5 of Act 63 of 1999, which added
section 1705-A, provided that it is the intent of the
General Assembly that the addition of sections 1702-A
through 1706-A shall be deemed to be a continuation and
expansion of the employment incentive payments program
authorized in section 491 of the act of June 13, 1967
(P.L.31, No.21), known as the Public Welfare Code.
Accordingly:
(1) Nothing in Act 63 shall be construed to preclude
consideration of applications for credits filed under
section 1701-A of this act or section 491 of the Public
Welfare Code, which applications were filed prior to or
on the effective date of Act 63.
(2) Nothing in Act 63 shall be construed to preclude
the utilization of credits which were approved but not
applied under section 1701-A of this act or section 491
of the Public Welfare Code after the effective date of
Act 63.
Section 1706-A. Time Limitations and Report.--Employment
incentive payments shall not be available for employees hired
after December 31, 2009, unless reenacted by the General
Assembly. Not later than July 1, 2004, and December 31, 2008,
the Secretary of Public Welfare shall report to the General
Assembly on the effectiveness of incentive payments to encourage
the employment of general assistance and temporary assistance
to needy families recipients and recommend whether the program
should be continued. Credits may be claimed against taxes
payable for tax years beginning January 1, 2000, and thereafter,
and may be claimed for employees hired after December 31, 1999.
(1706-A amended Nov. 19, 2004, P.L.873, No.116)
Compiler's Note: The short title of the act of June 13,
1967 (P.L.31, No.21), known as the Public Welfare Code,
referred to in this section, was amended by the act of
December 28, 2015 (P.L.500, No.92). The amended short
title is now the Human Services Code.
Compiler's Note: The Secretary of Public Welfare, referred
to in this section, was redesignated as the Secretary of
Human Services by Act 132 of 2014.
Compiler's Note: Section 5 of Act 63 of 1999, which added
section 1706-A, provided that it is the intent of the
General Assembly that the addition of sections 1702-A
through 1706-A shall be deemed to be a continuation and
expansion of the employment incentive payments program
authorized in section 491 of the act of June 13, 1967
(P.L.31, No.21), known as the Public Welfare Code.
Accordingly:
(1) Nothing in Act 63 shall be construed to
preclude consideration of applications for credits
filed under section 1701-A of this act or section 491
of the Public Welfare Code, which applications were
filed prior to or on the effective date of Act 63.
(2) Nothing in Act 63 shall be construed to
preclude the utilization of credits which were approved
but not applied under section 1701-A of this act or
section 491 of the Public Welfare Code after the
effective date of Act 63.
ARTICLE XVII-A.1
TAX CREDIT AND TAX BENEFIT ADMINISTRATION
(Art. hdg. amended June 30, 2021, P.L.124, No.25)
Section 1701-A.1. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Administering agency." A department, board or commission
that administers a tax credit or tax benefit as required by a
law of this Commonwealth. The term does not include a keystone
innovation zone coordinator under Article XIX-F. (Def. added
June 30, 2021, P.L.124, No.25)
"Applicant." A person applying to an administering agency
for a tax credit or a tax benefit. (Def. added June 30, 2021,
P.L.124, No.25)
"Application." An application submitted to an administering
agency by an applicant for a tax credit or tax benefit. The
term includes a transfer application and supplemental
documentation required to be provided by an applicant, including
reports, returns and statements. (Def. added June 30, 2021,
P.L.124, No.25)
"Broker." A person that engages in the business of
effectuating transactions in tax credits for the account of
others, including assisting a taxpayer to apply for, sell,
transfer, assign or purchase a tax credit. The term includes
an entity and all of the following that perform similar
functions for the entity:
(1) A partner, officer or director of the entity.
(2) An affiliate of the entity.
(3) Any other person occupying a similar status of the
entity.
(Def. added June 30, 2021, P.L.124, No.25)
"Department." The Department of Revenue of the Commonwealth.
"Person." Any individual, employer, association, fiduciary,
partnership, corporation, entity, estate or trust, whether a
resident or nonresident of this Commonwealth. (Def. added June
30, 2021, P.L.124, No.25)
"Program year." The annual period in which the tax credit
or tax benefit operates. (Def. added June 30, 2021, P.L.124,
No.25)
"Recipient." A person that is sold, assigned or transferred
a transferrable tax credit. (Def. added June 30, 2021, P.L.124,
No.25)
"Tax benefit." For purposes of this article, a tax benefit
authorized under any of the following:
(1) Article XVII-A.
(2) Article XVIII-C.
(3) Article XIX-B.
(4) Article XIX-D.
(5) Article XXIX-C.
(6) Article XXIX-D.
(7) The act of October 6, 1998 (P.L.705, No.92), known
as the Keystone Opportunity Zone, Keystone Opportunity
Expansion Zone and Keystone Opportunity Improvement Zone
Act.
(Def. added June 30, 2021, P.L.124, No.25)
"Tax credit." A tax credit authorized under any of the
following:
(1) Article XVII-B.
(2) Article XVII-D.
(3) Article XVII-E.
(4) Article XVII-G.
(5) Article XVII-H.
(6) Article XVII-I.
(7) Article XVII-J.
(8) Article XVII-K.
(8.1) Article XVII-L.
(9) Article XVIII.
(10) Article XVIII-B.
(11) Article XVIII-D.
(12) Article XVIII-E.
(13) Article XVIII-F.
(14) Article XVIII-G.
(14.1) Article XVIII-H.
(15) Article XIX-A.
(15.1) Article XIX-C.
(16) Article XIX-E.
(16.1) Article XIX-F.
(17) Section 2010.
(18) ((18) deleted by amendment).
(19) Article XX-B of the act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949.
(20) The act of December 1, 2004 (P.L.1750, No.226),
known as the First Class Cities Economic Development District
Act.
(21) 12 Pa.C.S. Ch. 34 (relating to Infrastructure and
Facilities Improvement Program).
(22) Any other program established by a law of this
Commonwealth in which a person applies for and receives a
credit against a tax. This paragraph shall not apply to a
credit against a tax liability as a result of an overpayment.
(Def. amended June 30, 2021, P.L.124, No.25)
"Taxpayer." A person that was approved for a tax credit or
tax benefit or that received a transferrable tax credit by sale,
assignment or transfer. (Def. added June 30, 2021, P.L.124,
No.25)
"Transfer application." An application submitted to the
department or the administering agency by an applicant or a
recipient as part of the sale, assignment or transfer of a
transferrable tax credit to a recipient. (Def. added June 30,
2021, P.L.124, No.25)
"Transferrable tax credit." A tax credit which may be sold,
assigned or transferred from an applicant to a different
taxpayer. The term includes a tax credit which may be
transferred to a shareholder, member or partner of an applicant.
(Def. added June 30, 2021, P.L.124, No.25)
(1701-A.1 added Oct. 30, 2017, P.L.672, No.43)
Section 1702-A.1. Determination of eligibility and method of
submission.
(a) Tax reports and returns.--Except as otherwise provided
by law, before a tax credit or tax benefit may be awarded, the
department or administering agency, as applicable, shall make
a finding that an applicant or a recipient has filed all
required State tax reports and returns for all applicable
taxable years and paid any balance of State tax due as
determined at settlement or assessment by the department, unless
the tax due is under appeal at the time the finding was made
by the department or administering agency.
(b) Notification.--For a tax credit authorized under Article
XX-B of the act of March 10, 1949 (P.L.30, No.14), known as the
Public School Code of 1949, the department shall notify the
Department of Community and Economic Development of any finding
required under subsection (a) within 30 days of the Department
of Community and Economic Development receiving a completed
application.
(c) Electronic applications.--The department or
administering agency, as applicable, may require an application
for a tax credit or tax benefit to be filed electronically.
(1702-A.1 amended June 30, 2021, P.L.124, No.25)
Section 1703-A.1. Application and administration.
(a) Insufficient application.--If an administering agency
finds that an application is insufficient for the administering
agency to determine whether the applicant is eligible to receive
a tax credit or tax benefit, the department, in consultation
with the administering agency, may do all of the following for
applicants other than individuals who own less than 20% of the
applicant:
(1) Require the submission of additional documentation
or verification which verifies material in the application.
Additional documentation or verification required under this
paragraph may include any of the following:
(i) A copy of the photo identification of the
applicant's or recipient's chief executive officer and
any authorized representative responsible for submitting
the application. A copy of photo identification under
this subparagraph shall include the individual's name
and address.
(ii) Bank account statements relating to the
business.
(iii) Business records, including receipts and
expenditures.
(iv) Business origination documents, including
articles of incorporation, partnership or reference to
documents under this subparagraph in records of the
Department of State or similar entity in another
jurisdiction.
(v) Any other information required by the department
or administering agency to determine that the applicant
is eligible to receive a tax credit or tax benefit with
the application.
(2) For an applicant that is not an individual, require
that the applicant or broker meet for a virtual or in-person
interview with representatives or agents of the department
or the administering agency to verify the contents of the
application.
(3) For an applicant that is not an individual, require
the applicant or broker to agree to submit to scheduled or
unscheduled site inspections by the department, the
administering agency or representatives or agents of the
department or administering agency. If the site is located
in an area where unscheduled site visits are not feasible,
the department or administering agency shall provide
sufficient notice prior to the visit. The department shall
establish a policy to ensure the confidentiality of
information collected or observed during a site inspection.
The policy shall include a prohibition on the taking of
photos, video and audio recordings which are not related to
the subjects regulated by the department.
(b) Risk criteria.--The department and an administering
agency may jointly develop risk-scoring criteria to determine
when an applicant other than an individual who owns less than
20% of the applicant may be required to do any of the following:
(1) As a condition of approval of the application, one
of the following:
(i) If the amount of the tax credit or tax benefit
is equal to or exceeds $100,000, hire an independent
auditor to prepare audited financial statements. The
independent auditor under this subparagraph shall be a
certified public accountant.
(ii) If the amount of the tax credit or tax benefit
is less than $100,000, provide an agreed-upon procedure
report or a certification-of-costs report prepared by
an independent certified public accountant.
(2) Provide information which shall be included in the
audited financial statements under paragraph (1)(i) or
agreed-upon procedure report or certification-of-costs report
under paragraph (1)(ii) to be submitted to the department.
(3) Require the audited financial statements under
paragraph (1)(i) or agreed-upon procedure report or
certification-of-costs report under paragraph (1)(ii) be
submitted to the department.
(c) Reports.--After approval and until a tax credit or tax
benefit is fully used, an applicant that is approved for a tax
credit or tax benefit shall file an annual report with the
department or administering agency detailing all of the
following, to the extent that the following is applicable to
the tax credit or tax benefit:
(1) For a transferrable tax credit, all of the
following:
(i) Whether the applicant used, sold, assigned or
transferred a portion or all of the tax credit in the
prior program year.
(ii) Whether the tax credit was sold, assigned or
transferred for consideration in the prior program year
and the name of the recipient.
(iii) If the tax credit was sold, assigned or
transferred for consideration, the amount of the
consideration.
(iv) If the tax credit was sold, assigned or
transferred for consideration, whether the sale,
assignment or transfer was conducted with the assistance
of a broker and the name and registration number of the
broker.
(2) If applicable, an itemization of expenses and jobs
generated as a result of the receipt of the tax credit or
tax benefit.
(3) Any other information that the department or
administering agency deems necessary.
(d) Submission of data.--The department or administering
agency shall provide the information submitted under subsection
(c)(2) to the Independent Fiscal Office for use in preparing a
tax credit report under section 5 of the act of October 30,
2017 (P.L.797, No.48), known as the Performance-Based Budgeting
and Tax Credit Efficiency Act.
(1703-A.1 added June 30, 2021, P.L.124, No.25)
Section 1704-A.1. Assessment.
(a) General rule.--The department may issue an assessment
against a taxpayer if the department determines that a tax
credit or tax benefit was improperly issued or the benefits of
the tax credit or tax benefit were improperly conferred.
(b) Transferred tax credit assessment.--If a tax credit is
sold, transferred or assigned to a bona fide purchaser for
consideration, the department may issue an assessment authorized
by subsection (a) against the applicant and the broker which
signed the certification required by section 1706-A.1(g). An
applicant and broker shall be jointly and severally liable for
an assessment under this subsection.
(c) Liability restrictions.--A broker shall not be held
jointly and severally liable for the amount due when the broker
is purchasing or selling a tax credit or tax benefit in which
the broker did not sign the certification required under section
1706-A.1(g) for the initial tax credit or tax benefit
application. A broker under this subsection shall be liable
only for the financial amount reported to the department on the
program transfer application.
(d) Amount.--An assessment authorized by subsection (a)
shall not exceed the face value of the tax credit or tax benefit
or the benefits of the tax credit or tax benefit sold,
transferred, assigned or otherwise improperly conferred and
applicable interest.
(e) Procedures.--The procedures, collection, enforcement
and appeals of an assessment made under subsection (a) or (b)
shall be subject to Part X of Article III, except that the
limitations on assessment and collection under section 348 shall
not apply.
(f) Limitations.--
(1) Except as provided under paragraph (2), the
department must issue an assessment under subsection (a) or
(b) within three years of the date the tax credit or tax
benefit is awarded or within three years of the date the tax
credit is sold, transferred or assigned, whichever is later.
(2) If a taxpayer obtains a tax credit or tax benefit
by fraud, the department may issue an assessment under
subsection (a) or (b) at any time.
(3) If a broker is determined to have acted in good
faith and was not negligent in duties regarding the
information provided to the broker by the taxpayer, the
department may not make an assessment against the broker.
(1704-A.1 added June 30, 2021, P.L.124, No.25)
Section 1705-A.1. Administering agency training.
(a) Training.--An administering agency shall provide agency
employees, representatives and agents of the administering
agency that assist applicants with applications with training
on all of the following:
(1) The requirements for a tax credit or tax benefit.
(2) Advising an applicant that has been issued a tax
credit or tax benefit of the duty of the applicant to file
reports concerning use of the tax credit or tax benefit as
required by the laws of this Commonwealth.
(3) Conducting site inspections to verify compliance
with the requirements relating to application for and
issuance of a tax credit or tax benefit.
(4) Conducting scheduled and unscheduled visits to the
site of a taxpayer to ensure compliance with the requirements
of the tax credit or tax benefit.
(b) (Reserved).
(1705-A.1 added June 30, 2021, P.L.124, No.25)
Section 1706-A.1. Broker registration.
(a) Registration required.--A person that acts as a broker
shall register with the department under this section. An agent
or other party representing a broker or assisting a broker on
behalf of an applicant, including a person that executes an
application for an applicant, or the sale, assignment or
transfer of a transferrable tax credit shall register under
this section.
(b) Guidelines.--The department, in consultation with the
Department of Community and Economic Development, shall
establish guidelines providing for the application and
registration of a broker under this section. The guidelines
shall require all of the following:
(1) The name and address of the broker.
(2) The name and address of the business with which the
broker is employed or otherwise associated that is located
and maintaining a place of business in this Commonwealth.
(3) That the broker be at least 18 years of age.
(4) The minimum educational requirements, qualifications
and experience necessary for the issuance of a registration
under this section.
(5) A criminal background check prepared by the
Pennsylvania State Police that demonstrates the broker has
not been convicted of a felony offense or an offense that
involved fraud or misrepresentation in this Commonwealth or
any other jurisdiction.
(6) A list of each professional license that has been
issued to the broker and whether the broker is in good
standing with the licensing authority.
(7) Verification that the application is submitted in
accordance with 18 Pa.C.S. §§ 4903 (relating to false
swearing) and 4904 (relating to unsworn falsification to
authorities).
(8) Payment of any required application, licensing and
registration fees.
(9) Tax clearance showing satisfaction of all State and
local taxes.
(c) Applications.--A broker shall obtain an initial or
renewed registration by filing an application with the
department, providing the renewal information and documentation
and paying all fees as required by the department.
(d) Duration of registration.--A registration under this
section shall be valid for a period of two years from the date
of issuance.
(e) Registration number.--A registration under this section
shall include a unique registration number for the broker. A
registration under this section may be suspended or revoked by
the department for good cause.
(f) Appeals.--A broker who is denied a registration under
this section, or whose registration is suspended or revoked,
may appeal the department's determination in the same manner
as provided by Article XXVII.
(g) Attachment of certification.--A broker executing the
sale of a transferrable tax credit or assisting an applicant
or a taxpayer to apply for or purchase a tax credit shall do
all of the following:
(1) Attach a certification to the application that the
statements and representations made in the application are
true and correct and subject to the penalties as set forth
in 18 Pa.C.S. § 4903 or 4904.
(2) Include the broker's unique registration number
issued by the department in the certification under this
subsection.
(h) Fees.--The department may require the payment of an
application fee to review and process a registration under this
subsection.
(i) Penalties.--A person who violates the requirements
specified under this section shall pay a civil fine of up to
$25,000 for the first offense and up to $50,000 for each
additional offense to the department.
(j) Bond required.--A broker registered under this section
shall post a bond of $50,000 with the department.
(1706-A.1 added June 30, 2021, P.L.124, No.25)
Section 1707-A.1. Tax credit and tax benefit reports.
(a) Reports.--Notwithstanding any law providing for the
confidentiality of tax credits, beginning with the first program
year which begins after the effective date of this section and
each program year thereafter, the administering agency shall
publish a report for each tax credit or tax benefit, which shall
include the following information:
(1) The name of each applicant that received a tax
credit or tax benefit in the prior program year.
(2) For a tax credit, the amount of tax credit awarded
to each applicant.
(3) For a transferrable tax credit, whether an applicant
under paragraph (1) sold, assigned or transferred a
transferrable tax credit in the prior program year.
(4) If applicable, a summary of the data submitted under
section 1703-A.1(c)(2).
(5) If available to the administering agency, all of
the following relating to a transferrable tax credit:
(i) The name of the recipient to which the
transferrable tax credit under paragraph (3) was sold,
assigned or transferred in the prior program year. The
name of an individual receiving a transferrable tax
credit without consideration from a pass-through entity
in which the individual is a shareholder, member or
partner shall not be published.
(ii) The amount of the transferrable tax credit
under paragraph (3) that was sold, assigned or
transferred.
(iii) The price for which a tax credit under
paragraph (2) was sold, assigned or transferred.
(b) Publication.--
(1) Except as provided under paragraph (2), an
administering agency shall publish a report on each tax
credit or tax benefit under subsection (a) on the
administering agency's publicly accessible Internet website
no later than 45 days after the end of a program year.
(2) If an administering agency is required by a law of
this Commonwealth to prepare an annual report on the tax
credit or tax benefit, the information under subsection (a)
shall be included in the annual report required by the law
of this Commonwealth.
(1707-A.1 added June 30, 2021, P.L.124, No.25)
Section 1708-A.1. Allocation of tax credits or tax benefits
awarded upon appeal.
(a) Appeal.--If an administering agency denies an
applicant's application for a tax credit or tax benefit program,
the applicant may appeal the administering agency's
determination in the same manner as provided by Article XXVII.
(b) Awarding of tax credit or tax benefit upon appeal.--The
following shall apply to an allocation of tax credits awarded
upon the final resolution of an appeal:
(1) If an applicant is awarded a tax credit which is
subject to a total annual limitation, upon the final
resolution of an appeal after the full allocation of credits
available for a fiscal year is completely expended, the
administering agency shall include the awarded tax credit
within the distribution of tax credits in the next program
year after the resolution of the appeal for which an amount
for allocation is available.
(2) When awarding a tax credit to an applicant under
paragraph (1), the administering agency shall apply any
reduction in the awarded tax credit amount as was applied
in the program year for which the credit was denied if the
reduction was applied due to the total credits applied for
exceeding the amount of credits allocated for the program
year.
(3) When awarding a tax credit to an applicant under
paragraph (1), the administering agency shall reduce the
total amount of credits available for allocation in the next
program year by the amount of credits awarded.
(4) The awarded tax credits under paragraph (1) shall
apply for the program year in which the credit was denied.
(c) Appeal.--If the Department of Community and Economic
Development denies an applicant's application for a tax credit
or tax benefit program, the applicant may appeal in a manner
established by the Department of Community and Economic
Development.
(d) Definition.--As used in this section, the term
"administering agency" does not include the Department of
Community and Economic Development.
(1708-A.1 added June 30, 2021, P.L.124, No.25)
Section 1709-A.1. Guidelines.
The department shall establish guidelines for the
implementation of this article.
(1709-A.1 added June 30, 2021, P.L.124, No.25)
ARTICLE XVII-B
RESEARCH AND DEVELOPMENT TAX CREDIT
(XVII-B added May 7, 1997, P.L.85, No.7)
Section 1701-B. Short Title.--This article shall be known
and may be cited as the Research and Development Tax Credit
Law.
(1701-B added May 7, 1997, P.L.85, No.7)
Section 1702-B. Definitions.--The following words and
phrases, when used in this article, shall have the meanings
given to them in this section, except where the context clearly
indicates a different meaning:
"Department." The Department of Revenue of the Commonwealth.
"Gross receipts." Gross receipts for any taxable year shall
consist only of gross receipts which are effectively connected
with the conduct of a trade or business within this
Commonwealth. The determination of whether gross receipts are
effectively connected with the conduct of a trade or business
within this Commonwealth shall be made by reference to the
standard established in section 401(3)2(a)(16) and (17) of this
act.
"Internal Revenue Code." The Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Pass-through entity." A partnership as defined in section
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1). (Def. added July 7, 2005, P.L.149, No.40)
"Pennsylvania base amount." Base amount as defined in
section 41(c) of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 41(c)), except that references to "qualified
research expense" shall mean "Pennsylvania qualified research
and development expense" and references to "qualified research"
shall mean "Pennsylvania qualified research and development."
References to "fixed base percentage" shall mean the percentage
which the Pennsylvania qualified research and development
expense for the four taxable years immediately preceding the
taxable year in which the expense is incurred is to the gross
receipts for such years. The fixed base percentage for a
taxpayer who has fewer than four but at least one taxable year
shall be determined in the same manner using the number of
immediately preceding taxable years to arrive at the percentage.
"Pennsylvania qualified research and development." Qualified
research and development as defined in section 41(d) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
41(d)) that is conducted in this Commonwealth.
"Pennsylvania qualified research and development expense."
Qualified research expense as defined in section 41(b) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.C.S. §
41(b)) incurred for Pennsylvania qualified research and
development.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV or VI of this act. The term shall not
include any tax withheld by an employer from an employe under
Article III. (Def. amended July 7, 2005, P.L.149, No.40)
"Research and development tax credit." The credit provided
under this article.
"Secretary." The Secretary of Revenue of the Commonwealth.
"Small business." A for-profit corporation, limited
liability company, partnership or proprietorship with net book
value of assets totaling, at the beginning or end of the taxable
year for which Pennsylvania qualified research and development
expense is incurred, as reported on the balance sheet, less
than five million dollars ($5,000,000).
"Taxpayer." An entity subject to tax under Article III, IV
or VI of this act. The term shall include the shareholder of a
Pennsylvania S corporation that receives a research and
development tax credit.
(1702-B added May 7, 1997, P.L.85, No.7)
Compiler's Note: Section 24(10) of Act 40 of 2005, which
amended section 1702-B, provided that the amendment shall
apply to taxable years beginning after December 31, 2005.
Section 1703-B. Credit for Research and Development
Expenses.--(a) A taxpayer who incurs Pennsylvania qualified
research and development expense in a taxable year may apply
for a research and development tax credit as provided in this
article. By December 1, a taxpayer must submit an application
to the department for Pennsylvania qualified research and
development expense incurred in the taxable year that ended in
the prior calendar year. ((a) amended June 30, 2021, P.L.124,
No.25)
(b) The following apply:
(1) Except as provided in paragraph (2), a taxpayer that
is qualified under subsection (a) shall receive a research and
development tax credit for the taxable year in the amount of
ten per cent of the excess of the taxpayer's total Pennsylvania
qualified research and development expense for the taxable year
over the taxpayer's Pennsylvania base amount.
(2) A taxpayer that is a small business and is qualified
under subsection (a) shall receive a research and development
tax credit for the taxable year in the amount of twenty per
cent of the excess of the taxpayer's total Pennsylvania
qualified research and development expense for the taxable year
over the taxpayer's Pennsylvania base amount.
(c) By May 1 of the second calendar year following the close
of the taxable year during which the Pennsylvania qualified
research and development expense was incurred, the department
shall notify the taxpayer of the amount of the taxpayer's
research and development tax credit approved by the department.
((c) amended June 30, 2021, P.L.124, No.25)
(1703-B amended July 12, 2006, P.L.1137, No.116)
Section 1704-B. Carryover, Carryback, Refund and Assignment
of Credit.--(a) If the taxpayer cannot use the entire amount
of the research and development tax credit for the first taxable
year in which the taxpayer applied for a research and
development tax credit, then the excess may be carried over to
succeeding taxable years and used as a credit against the
qualified tax liability of the taxpayer for those taxable years.
Each time that the research and development tax credit is
carried over to a succeeding taxable year, it is to be reduced
by the amount that was used as a credit during the immediately
preceding taxable year. The research and development tax credit
provided by this article may be carried over and applied to
succeeding taxable years for no more than fifteen taxable years
following the first taxable year for which the taxpayer was
entitled to claim the credit. ((a) amended June 30, 2021,
P.L.124, No.25)
(b) A research and development tax credit approved by the
department for Pennsylvania qualified research and development
expense in a taxable year first shall be applied against the
taxpayer's qualified tax liability for the current taxable year
as of the date on which the taxpayer applied for the credit
before the research and development tax credit is applied
against any tax liability under subsection (a). ((b) amended
June 30, 2021, P.L.124, No.25)
(c) A taxpayer is not entitled to carry back or obtain a
refund of an unused research and development tax credit.
(d) A taxpayer, upon application to and approval by the
Department of Community and Economic Development, may sell or
assign, in whole or in part, a research and development tax
credit granted to the taxpayer under this article. The
Department of Community and Economic Development shall establish
guidelines for the approval of applications under this
subsection.
(e) The purchaser or assignee of a portion of a research
and development tax credit under subsection (d) shall
immediately claim the credit in the taxable year in which the
purchase or assignment is made. The amount of the research and
development credit that a purchaser or assignee may use against
any one qualified tax liability may not exceed seventy-five per
cent of such qualified tax liability for the taxable year. The
purchaser or assignee may not carry over, carry back, obtain a
refund of or assign the research and development tax credit.
The purchaser or assignee shall notify the department of the
seller or assignor of the research and development tax credit
in compliance with procedures specified by the department.
(1704-B amended Oct. 9, 2009, P.L.451, No.48)
Compiler's Note: Section 33(13) of Act 46 of 2003, which
amended subsection (b), provided that the amendment shall
apply to taxable years beginning after December 31, 2004.
Section 33(14), which amended or added subsections (c),
(d) and (e), provided that the amendment or addition
shall apply to credits awarded after December 31, 2002.
Section 1705-B. Application of Internal Revenue Code.--The
provisions of section 41 of the Internal Revenue Code and the
regulations promulgated regarding those provisions shall apply
to the department's interpretation and administration of the
credit provided by this article. References to the Internal
Revenue Code shall mean the sections of the Internal Revenue
Code as existing on any date of interpretation of this article.
However, if those sections of the Internal Revenue Code
referenced in this article are repealed or terminated,
references to the Internal Revenue Code shall mean those
sections last having full force and effect. If after repeal or
termination the Internal Revenue Code sections are revised or
reenacted, references herein to Internal Revenue Code sections
shall mean those revised or reenacted sections.
(1705-B added May 7, 1997, P.L.85, No.7)
Section 1706-B. Determination of Qualified Research and
Development Expenses.--In prescribing standards for determining
which qualified research and development expense are considered
Pennsylvania qualified research and development expense for
purposes of computing the credit provided by this article, the
department may consider:
(1) The location where the services are performed.
(2) The residence or business location of the person or
persons performing the service.
(3) The location where qualified research and development
supplies are consumed.
(4) Other factors that the department determines are
relevant for the determination.
(1706-B added May 7, 1997, P.L.84, No.7)
Section 1707-B. Time Limitations.--The termination date in
section 41(h) of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 41(h)) does not apply to a taxpayer who is
eligible for the research and development tax credit under this
article for the taxable year in which the Pennsylvania qualified
research and development expense is incurred.
(1707-B amended July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 51(1.2) of Act 84 of 2016, which
amended section 1707-B, provided that the amendment of
section 1707-B shall apply retroactively to January 1,
2016.
Section 1708-B. Transitional Rule.--For the purpose of
calculating Pennsylvania qualified research and development
expense used in calculating the Pennsylvania base amount for
taxable years ending after 1991 and before 1997, if the taxpayer
has incurred qualified research and development expense both
inside and outside this Commonwealth and is unable to determine
the amount of Pennsylvania qualified research and development
expense, the taxpayer may calculate Pennsylvania qualified
research and development expense by multiplying qualified
research and development expense everywhere by the average of
the payroll and property factors calculated in accordance with
Article IV of this act for the corresponding taxable years in
question.
(1708-B added May 7, 1997, P.L.85, No.7)
Section 1709-B. Limitation on Credits.--(a) The total
amount of credits approved by the department shall not exceed
sixty million dollars ($60,000,000) in any fiscal year. Of that
amount, twelve million dollars ($12,000,000) shall be allocated
exclusively for small businesses. However, if the total amounts
allocated to either the group of applicants exclusive of small
businesses or the group of small business applicants is not
approved in any fiscal year, the unused portion will become
available for use by the other group of qualifying taxpayers.
((a) amended July 8, 2022, P.L.513, No.53)
(b) If the total amount of research and development tax
credits applied for by all taxpayers, exclusive of small
businesses, exceeds the amount allocated for those credits,
then the research and development tax credit to be received by
each applicant shall be the product of the allocated amount
multiplied by the quotient of the research and development tax
credit applied for by the applicant divided by the total of all
research and development credits applied for by all applicants,
the algebraic equivalent of which is:
taxpayer's research and development tax credit=amount
allocated for those credits X (research and development
tax credit applied for by the applicant/total of all
research and development tax credits applied for by all
applicants).
(c) If the total amount of research and development tax
credits applied for by all small business taxpayers exceeds the
amount allocated for those credits, then the research and
development tax credit to be received by each small business
applicant shall be the product of the allocated amount
multiplied by the quotient of the research and development tax
credit applied for by the small business applicant divided by
the total of all research and development credits applied for
by all small business applicants, the algebraic equivalent of
which is:
taxpayer's research and development tax credit=amount
allocated for those credits X (research and development
tax credit applied for by the small business/total of
all research and development tax credits applied for by
all small business applicants).
(1709-B added May 7, 1997, P.L.85, No.7)
Compiler's Note: Section 24(4)(iii) of Act 53 of 2022
provided that the amendment of section 1709-B shall apply
to fiscal years beginning after June 30, 2022.
Compiler's Note: Section 33(15) of Act 46 of 2003, which
amended subsection (a), provided that the amendment shall
apply to credits awarded after December 31, 2003.
Section 1710-B. Pass-Through Entity.--(a) If a pass-through
entity has any unused tax credit under section 1704-B, the
entity may elect, in writing, according to the department's
procedures, to transfer all or a portion of the credit to
shareholders, members or partners in proportion to the share
of the entity's distributive income to which the shareholder,
member or partner is entitled.
(b) The credit provided under subsection (a) is in addition
to any research and development tax credit to which a
shareholder, member or partner of a pass-through entity is
otherwise entitled under this article. However, a pass-through
entity and a shareholder, member or partner of a pass-through
entity may not claim a credit under this article for the same
qualified research and development expense.
(c) A shareholder, member or partner of a pass-through
entity to whom credit is transferred under subsection (a) must
immediately claim the credit in the taxable year in which the
transfer is made. The shareholder, member or partner may not
carry forward, carry back, obtain a refund of or sell or assign
the credit.
(1710-B amended July 7, 2005, P.L.149, No.40)
Compiler's Note: Section 24(10) of Act 40 of 2005, which
amended section 1710-B, provided that the amendment shall
apply to taxable years beginning after December 31, 2005.
Section 1711-B. Report to General Assembly.--The secretary
shall submit an annual report to the General Assembly indicating
the effectiveness of the credit provided by this article no
later than October 1 following the calendar year in which the
credits were approved. The report shall include the names of
all taxpayers utilizing the credit as of the date of the report
and the amount of credits approved and utilized by each
taxpayer. Notwithstanding any law providing for the
confidentiality of tax records, the information contained in
the report shall be public information. The report may also
include any recommendations for changes in the calculation or
administration of the credit.
(1711-B amended June 30, 2021, P.L.124, No.25)
Compiler's Note: Section 33(16) of Act 46 of 2003, which
amended section 1711-B, provided that the amendment shall
apply to credits awarded after December 31, 2003.
Section 1712-B. Termination.--(1712-B repealed July 2, 2012,
P.L.751, No.85)
Section 1713-B. Regulations.--The secretary shall promulgate
regulations necessary for the implementation and administration
of this article.
(1713-B added May 7, 1997, P.L.85, No.7)
ARTICLE XVII-C
FILM PRODUCTION TAX CREDIT
(Art. repealed May 11, 2006, P.L.167, No.42)
Compiler's Note: Section 3 of Act 42 of 2006, which repealed
Art. XVII-C, provided that the repeal shall not apply
to any film production tax credit approved or issued
prior to the effective date of section 3.
Section 1701-C. Scope of article (1701-C repealed May 11, 2006,
P.L.167, No.42)
Section 1702-C. Definitions (1702-C repealed May 11, 2006,
P.L.167, No.42)
Section 1703-C. Credit for qualified film production expenses
(1703-C repealed May 11, 2006, P.L.167, No.42)
Section 1703.1-C. Film production tax credits (1703.1-C
repealed May 11, 2006, P.L.167, No.42)
Section 1704-C. Carryover, carryback, refund and assignment
of credit (1704-C repealed May 11, 2006, P.L.167,
No.42)
Section 1705-C. Determination of qualified film production
expenses (1705-C repealed May 11, 2006, P.L.167,
No.42)
Section 1706-C. Time limitations (1706-C repealed May 11, 2006,
P.L.167, No.42)
Section 1707-C. Limitation on credits (1707-C deleted by
amendment, July 7, 2005, P.L.149, No.40)
Section 1707.1-C. Penalty (1707.1-C repealed May 11, 2006,
P.L.167, No.42)
Section 1708-C. Pass-through entity (1708-C repealed May 11,
2006, P.L.167, No.42)
Section 1709-C. Report to General Assembly (1709-C repealed
May 11, 2006, P.L.167, No.42)
Section 1710-C. Termination (1710-C repealed May 11, 2006,
P.L.167, No.42)
Section 1711-C. Regulations (1711-C repealed May 11, 2006,
P.L.167, No.42)
ARTICLE XVII-D
ENTERTAINMENT PRODUCTION TAX CREDIT
(Art. amended July 13, 2016, P.L.526, No.84)
SUBARTICLE A
PRELIMINARY PROVISIONS
(Subart. hdg. added July 13, 2016, P.L.526, No.84)
Section 1701-D. Scope of article.
This article relates to entertainment production tax credits.
(1701-D amended July 13, 2016, P.L.526, No.84)
Section 1702-D. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Department." The Department of Community and Economic
Development of the Commonwealth.
(prior 1702-D renumbered to 1711-D and amended and current
1702-D added July 13, 2016, P.L.526, No.84)
SUBARTICLE B
FILM PRODUCTION
(Subart. hdg. added July 13, 2016, P.L.526, No.84)
Section 1711-D. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Department." (Def. deleted by amendment).
"Deteriorated property." Any blighted, impoverished area
containing industrial, commercial or other real property that
is abandoned, unsafe, vacant, undervalued, underutilized,
overgrown, defective, condemned, demolished or which contains
economically undesirable land use. (Def. added Oct. 30, 2017,
P.L.672, No.43)
"Film." A feature film, a television film, a television
talk or game show series, a television commercial or a
television pilot or each episode of a television series which
is intended as programming for a national audience. The term
does not include a production featuring news, current events,
weather and market reports, public programming, sports events,
awards shows or other gala events, a production that solicits
funds, a production containing obscene material or performances
as defined in 18 Pa.C.S. § 5903(b) (relating to obscene and
other sexual materials and performances) or a production
primarily for private, political, industrial, corporate or
institutional purposes.
"Film production tax credit district." A district authorized
under section 1716.2-D. (Def. added Oct. 30, 2017, P.L.672,
No.43)
"Minimum stage filming requirements." Include:
(1) Taxpayers with a Pennsylvania production expense
of less than $30,000,000 per production must:
(i) build at least one set at a qualified production
facility;
(ii) shoot for a minimum of ten days at a qualified
production facility; and
(iii) spend or incur a minimum of $1,500,000 in
direct expenditures relating to the use or rental of
tangible property or for performance of services provided
by a qualified production facility.
(2) Taxpayers with a Pennsylvania production expense
of at least $30,000,000 per production must:
(i) build at least two sets at a qualified
production facility;
(ii) shoot for a minimum of 15 days at a qualified
production facility; and
(iii) spend or incur a minimum of $5,000,000 in
direct expenditures relating to the use or rental of
tangible property at or for performance of services
provided by a qualified production facility.
"Multifilm." (Def. deleted by amendment July 8, 2022,
P.L.513, No.53)
"Multifilm production." A series of separate and distinct
films that are produced by the same taxpayer, or directly or
indirectly produced by the same taxpayers who have no less than
80% common ownership, over a period of no more than four years
from the time of application. (Def. added July 8, 2022, P.L.513,
No.53)
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Pennsylvania film producer." A Pennsylvania domiciled film
production company that meets the following:
(1) The principal tax jurisdiction is this Commonwealth.
(2) A majority of the taxpayer's owners are Pennsylvania
residents.
(3) The taxpayer employs fewer than 15 full-time
employees.
(Def. added July 8, 2022, P.L.513, No.53)
"Pennsylvania production expense." Production expense
incurred in this Commonwealth. The term includes:
(1) A payment made by a taxpayer to a person upon which
withholding will be made on the payment by the taxpayer as
required under Part VII of Article III.
(2) Payment to a personal service corporation
representing individual talent if the tax imposed by Article
IV will be paid or accrued on the net income of the
corporation for the taxable year.
(3) Payment to a pass-through entity representing
individual talent for which withholding will be made by the
pass-through entity on the payment as required under Part
VII or VII-A of Article III.
(4) The cost of transportation incurred while
transporting to or from a train station, bus depot or
airport, located in this Commonwealth.
(5) The cost of insurance coverage purchased through
an insurance agent based in this Commonwealth.
(6) The purchase of music or story rights if any of the
following subparagraphs apply:
(i) The purchase is from a resident of this
Commonwealth.
(ii) The purchase is from an entity subject to
taxation in this Commonwealth, and the transaction is
subject to taxation under Article III, IV or VI.
(7) The cost of rental of facilities and equipment
rented from or through a resident of this Commonwealth or
an entity subject to taxation in this Commonwealth.
(8) A qualified postproduction expense.
"Postproduction expense." A postproduction expense of
original content for a film as follows:
(1) The term includes traditional, emerging and new
work-flow techniques used in postproduction for any of the
following:
(i) Picture, sound and music editorial, rerecording
and mixing.
(ii) Visual effects.
(iii) Graphic design.
(iv) Original scoring.
(v) Animation.
(vi) Musical composition.
(vii) Mastering.
(viii) Dubbing.
(ix) The purchase of music rights if the following
apply:
(A) The purchase is from a resident of this
Commonwealth.
(B) The purchase is from an entity subject to
taxation in this Commonwealth and the transaction
is subject to taxation under Article III, IV or VI.
(2) The term does not include any of the following:
(i) Editing previously produced content for a film.
(ii) News or current affairs.
(iii) Talk shows.
(iv) Instructional videos.
(v) Content which contains obscene material or
performances as defined in 18 Pa.C.S. § 5903(b).
(Def. amended June 28, 2019, P.L.50, No.13)
"Production expense." As follows:
(1) The term includes all of the following:
(i) Compensation paid to an individual employed in
the production of the film.
(ii) Payment to a personal service corporation
representing individual talent.
(iii) Payment to a pass-through entity representing
individual talent.
(iv) The costs of construction, operations, editing,
photography, sound synchronization, lighting, wardrobe
and accessories.
(v) The cost of leasing vehicles.
(vi) The cost of transportation to or from a train
station, bus depot or airport.
(vii) The cost of insurance coverage.
(viii) The costs of food and lodging.
(ix) The purchase of music or story rights.
(x) The cost of rental of facilities and equipment.
(2) The term does not include any of the following:
(i) Deferred, leveraged or profit participation
paid or to be paid to individuals employed in the
production of the film or paid to entities representing
an individual for services provided in the production
of the film.
(ii) Development cost.
(iii) Expense incurred in marketing or advertising
a film.
(iv) Cost related to the sale or assignment of a
film production tax credit under section 1714-D(e).
"Qualified film production expense." All Pennsylvania
production expenses if Pennsylvania production expenses comprise
at least 60% of the film's total production expenses. The term
shall not include more than $15,000,000 in the aggregate of
compensation paid to individuals or payment made to entities
representing an individual for services provided in the
production of the film.
"Qualified postproduction expense." A postproduction expense
incurred at a qualified postproduction facility.
"Qualified postproduction facility." A permanent facility
where Pennsylvania postproduction activities are conducted and
expenses are incurred to which all of the following apply:
(1) The facility is located in this Commonwealth.
(2) The facility is approved by the department.
(3) The facility employs at least ten full-time
employees who reside in this Commonwealth.
(4) There is at least $500,000 of capital investment
in the facility.
"Qualified production facility." A film production facility
located within this Commonwealth that contains at least one
sound stage with a column-free, unobstructed floor space and
meets either of the following criteria:
(1) Has had a minimum of $10,000,000 invested in the
film production facility in land or a structure purchased
or ground-up, purpose-built new construction or renovation
of existing improvement.
(2) Meets at least three of the following criteria:
(i) A sound stage having an industry standard noise
criteria rating of 25 or better.
(ii) A permanent grid with a minimum point load
capacity of no less than 1,000 pounds at a minimum of
25 points.
(iii) Built-in power supply available at a minimum
of 4,000 amps per sound stage without the need for
supplemental generators.
(iv) A height from sound stage floor to permanent
grid of a minimum of 20 feet.
(v) A sound stage with a sliding or roll-up access
door with a minimum height of 14 feet.
(vi) A built-in HVAC capacity during shoot days
with a minimum of 50 tons of cooling capacity available
per sound stage.
(vii) Perimeter security that includes a 24-hour,
seven-days-a-week security presence and use of access
control identification badges.
(viii) On-site lighting and grip department with
an available inventory stored at the film production
facility with a minimum cost of investment of $500,000.
(ix) A sound stage with contiguous production
offices with a minimum of 5,000 square feet per sound
stage.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV, VI, VII, VIII, IX or XV. The term shall
not include any tax withheld by an employer from an employee
under Article III.
"Start date." As follows:
(1) For a film:
(i) the first day of principal photography in this
Commonwealth; or
(ii) an earlier date approved by the Pennsylvania
Film Office.
(2) For a postproduction project, a date approved by
the Pennsylvania Film Office.
"Tax credit." The film production tax credit provided under
this subarticle.
"Tax district capital investment." Investment within a film
production tax credit district that may consist of new
construction, renovation, real property improvement and a
similar investment as well as other economic development
expenditures within the Commonwealth arising directly from the
investment. (Def. added June 28, 2019, P.L.50, No.13)
"Taxpayer." A film production company subject to tax under
Article III, IV or VI. The term does not include contractors
or subcontractors of a film production company.
(1711-D renumbered from 1702-D and amended July 13, 2016,
P.L.526, No.84)
Compiler's Note: Section 24(4)(iv) of Act 53 of 2022
provided that the amendment of section 1711-D shall
apply to fiscal years beginning after June 30, 2022.
Compiler's Note: Section 51(5)(iii) of Act 84 of 2016, which
renumbered and amended section 1702-D to 1711-D, provided
that the amendment of section 1711-D, renumbered from
section 1702-D, shall apply to taxable years beginning
after December 31, 2016.
Compiler's Note: Section 42(1.1) of Act 52 of 2013, which
amended section 1702-D, provided that the amendment shall
apply to tax credits awarded after June 30, 2013.
Section 1712-D. Credit for qualified film production
expenses.
(a) Application.--A taxpayer may apply to the department
for a tax credit under this section. The application shall be
on the form required by the department.
(b) Review and approval.--The department shall establish
application periods not to exceed 90 days each. All applications
received during the application period shall be reviewed and
evaluated by the department based on the following criteria:
(1) The anticipated number of production days in a
qualified production facility.
(2) The anticipated number of Pennsylvania employees.
(3) The number of preproduction days through
postproduction days in Pennsylvania.
(4) The anticipated number of days spent in Pennsylvania
hotels.
(5) The Pennsylvania production expenses in comparison
to the production budget.
(5.1) For a Pennsylvania film producer, the portion of
all preproduction expenses, production expenses and
postproduction expenses incurred in Pennsylvania. ((5.1)
added July 8, 2022, P.L.513, No.53)
(6) The use of studio resources.
(7) If the application includes a qualified
postproduction expense:
(i) The qualified postproduction facility where the
activity will occur.
(ii) The anticipated type of postproduction activity
that will be conducted.
(7.1) If a multifilm production application is
submitted, the department shall consider the ability of the
taxpayer to produce multiple films within this Commonwealth
during the proposed period of production and the potential
economic impact, including tourism impact, of the multiple
films to this Commonwealth. The taxpayer may supplement the
multifilm production application with additional films during
the period of production. The department may annually extend
the multifilm production application's period of production
before the expiration of the period of production. The
taxpayer may not include a film in the multifilm production
application that was the subject of an application submitted
under this subsection before January 1, 2022. ((7.1) amended
July 8, 2022, P.L.513, No.53)
(7.2) The film will be produced by a Pennsylvania film
producer. ((7.2) added July 8, 2022, P.L.513, No.53)
(8) Other criteria that the Director of the Pennsylvania
Film Office deems appropriate to ensure maximum employment
and benefit within this Commonwealth.
Upon determining the taxpayer has incurred or will incur
qualified film production expenses, the department may approve
the taxpayer for a tax credit. Applications not approved may
be reviewed and considered in subsequent application periods.
The department may approve a taxpayer for a tax credit based
on its evaluation of the criteria under this subsection.
(b.1) Review and approval of applications for film
production tax credit district activity.--For applications
involving film production expenses incurred within a designated
film production tax credit district authorized under section
1716.2-D, the department shall accept applications at any time.
Applications shall be reviewed by the department utilizing the
criteria required under subsection (b). Upon determining the
taxpayer has incurred or will incur qualified film production
expenses, the department shall approve the taxpayer for a tax
credit utilizing the tax credits authorized under section
1716.2-D, not to exceed the amount authorized for the fiscal
year. ((b.1 added Oct. 30, 2017, P.L.672, No.43)
(c) Contract.--If the department approves the taxpayer's
application under subsection (b), the department and the
taxpayer shall enter into a contract containing the following:
(1) An itemized list of production expenses incurred
or to be incurred for the film.
(2) An itemized list of Pennsylvania production expenses
incurred or to be incurred for the film.
(3) With respect to a contract entered into prior to
completion of production, a commitment by the taxpayer to
incur the qualified film production expenses as itemized.
(4) The start date.
(5) Any other information the department deems
appropriate.
(d) Certificate.--Upon execution of the contract required
by subsection (c), the department shall award the taxpayer a
film production tax credit and issue the taxpayer a film
production tax credit certificate.
(1712-D renumbered from 1703-D and amended July 13, 2016,
P.L.526, No.84)
Compiler's Note: Section 24(4)(v) and (vi) of Act 53 of
2022 provided that the addition of section 1712-D(b)(5.1)
and (7.2) and the amendment of subsection (b)(7.1) shall
apply to fiscal years beginning after June 30, 2022.
Compiler's Note: Section 51(5)(iii) of Act 84 of 2016,
which renumbered and amended section 1703-D to 1712-D,
provided that the amendment tosection 1712-D, renumbered
from 1703-D, shall apply to taxable years beginning after
December 31, 2016.
Compiler's Note: Section 42(1.1) of Act 52 of 2013, which
amended section 1703-D, provided that the amendment shall
apply to tax credits awarded after June 30, 2013.
Compiler's Note: Section 1703-D was renumbered to 1712-D
and amended July 13, 2016, P.L.526, No.84.
Section 1713-D. Film production tax credits.
A taxpayer may claim a tax credit against the qualified tax
liability of the taxpayer.
(1713-D renumbered from 1704-D July 13, 2016, P.L.526, No.84)
Section 1714-D. Carryover, carryback and assignment of credit.
(a) General rule.--If the taxpayer cannot use the entire
amount of the tax credit for the taxable year in which the tax
credit is first approved, then the excess may be carried over
to succeeding taxable years and used as a credit against the
qualified tax liability of the taxpayer for those taxable years.
Each time the tax credit is carried over to a succeeding taxable
year, it shall be reduced by the amount that was used as a
credit during the immediately preceding taxable year. The tax
credit provided by this subarticle may be carried over and
applied to succeeding taxable years for no more than three
taxable years following the first taxable year for which the
taxpayer was entitled to claim the credit.
(b) Application.--A tax credit approved by the department
in a taxable year first shall be applied against the taxpayer's
qualified tax liability for the current taxable year as of the
date on which the credit was approved before the tax credit can
be applied against any tax liability under subsection (a).
(c) No carryback or refund.--A taxpayer is not entitled to
carry back or obtain a refund of all or any portion of an unused
tax credit granted to the taxpayer under this subarticle.
(d) (Reserved).
(e) Sale or assignment.--The following shall apply:
(1) A taxpayer, upon application to and approval by the
department, may sell or assign, in whole or in part, a tax
credit granted to the taxpayer under this subarticle.
(2) The department and the Department of Revenue shall
jointly promulgate regulations for the approval of
applications under this subsection.
(3) Before an application is approved, the Department
of Revenue must make a finding that the applicant has filed
all required State tax reports and returns for all applicable
taxable years and paid any balance of State tax due as
determined at settlement, assessment or determination by the
Department of Revenue.
(4) Notwithstanding any other provision of law, the
Department of Revenue shall settle, assess or determine the
tax of an applicant under this subsection within 90 days of
the filing of all required final returns or reports in
accordance with section 806.1(a)(5) of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code.
(f) Purchasers and assignees.--Except as provided in
subsections (g) and (h), the following apply:
(1) The purchaser or assignee of all or a portion of a
tax credit under subsection (e) shall immediately claim the
credit in the taxable year in which the purchase or
assignment is made.
(2) The amount of the tax credit that a purchaser or
assignee may use against any one qualified tax liability may
not exceed 50% of such qualified tax liability for the
taxable year.
(3) The purchaser or assignee may not carry forward,
carry back or obtain a refund of or sell or assign the tax
credit.
(4) The purchaser or assignee shall notify the
Department of Revenue of the seller or assignor of the tax
credit in compliance with procedures specified by the
Department of Revenue.
((f) amended June 28, 2019, P.L.50, No.13)
(g) Limited carry forward of tax credits by a purchaser or
assignee.--A purchaser or assignee may carry forward all or any
unused portion of a tax credit purchased or assigned in:
(1) Calendar year 2010 against qualified tax liabilities
incurred in taxable years 2011 and 2012.
(2) Calendar year 2013 against qualified tax liabilities
incurred in taxable year 2014.
(3) Calendar year 2014 against qualified tax liabilities
incurred in taxable year 2015.
(h) Full utilization of tax credits.--A tax credit awarded
under this article may be sold or assigned to a purchaser or
assignee included in the same Federal consolidated tax return
as permitted under sections 1501 and 1502 of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §§ 1501 and
1502), filed by the taxpayer under subsection (a) to reduce or
eliminate the qualified tax liability to the same extent
allowable for the taxpayer under subsections (a), (b) and (c).
Tax credits sold or assigned under this subsection are limited
to the taxable year in which the purchase or assignment is made
and may only be carried forward for the remainder of the
carryforward period of the original credit. ((h) added June 28,
2019, P.L.50, No.13)
(1714-D renumbered from 1705-D and amended July 13, 2016,
P.L.526, No.84)
Section 1715-D. Determination of Pennsylvania production
expenses.
In prescribing standards for determining which production
expenses are considered Pennsylvania production expenses for
purposes of computing the credit provided by this subarticle,
the department shall consider:
(1) The location where services are performed.
(2) The location where supplies are consumed.
(3) Other factors the department determines are
relevant.
(1715-D renumbered from 1706-D and amended July 13, 2016,
P.L.526, No.84)
Section 1716-D. Limitations.
(a) Cap.--Except for tax credits reissued under section
1716.1-D, in no case shall the aggregate amount of tax credits
awarded in any fiscal year under this subarticle exceed
$100,000,000. The department may, in its discretion, award in
one fiscal year up to: (Intro. par. amended July 8, 2022,
P.L.513, No.53)
(1) Thirty percent of the dollar amount of film
production tax credits available to be awarded in the next
succeeding fiscal year.
(2) Twenty percent of the dollar amount of film
production tax credits available to be awarded in the second
successive fiscal year.
(3) Ten percent of the dollar amount of film production
tax credits available to be awarded in the third successive
fiscal year.
((a) amended June 28, 2019, P.L.50, No.13)
(a.1) Advance award of credits.--The advance award of film
tax credits under subsection (a) shall:
(1) count against the total dollar amount of credits
that the department may award in that next succeeding fiscal
year; and
(2) reduce the dollar amount of credits that the
department may award in that next succeeding fiscal year.
The individual limitations on the awarding of film production
tax credits apply to an advance award of film production tax
credits under subsection (a) and to a combination of film
production tax credits awarded against the current fiscal year
cap and against the next succeeding fiscal year's cap.
(b) Individual limitations.--The following shall apply:
(1) Except as set forth in paragraph (1.1) or (1.2),
the aggregate amount of film production tax credits awarded
by the department under section 1712-D(d) to a taxpayer for
a film may not exceed 25% of the qualified film production
expenses to be incurred.
(1.1) In addition to the tax credit under paragraph
(1), a taxpayer is eligible for a credit in the amount of
5% of the qualified film production expenses incurred by the
taxpayer if the taxpayer:
(i) films a feature film, television film or
television series, which is intended as programming for
a national audience; and
(ii) films in a qualified production facility which
meets the minimum stage filming requirements.
(1.2) A qualified postproduction expense shall qualify
for a 30% credit.
(2) A taxpayer that has received a grant under 12
Pa.C.S. § 4106 (relating to approval) shall not be eligible
for a film production tax credit under this act for the same
film.
(c) Qualified production facility.--To be considered a
qualified production facility or qualified postproduction
facility, the owner of a facility shall provide evidence to the
department to verify the development or facility specifications
and capital investment costs incurred for the facility so that
the threshold amounts set in the definitions of "qualified
production facility" and "qualified postproduction facility"
are satisfied, and upon verification, the facility shall be
registered by the department officially as a qualified
production facility or qualified postproduction facility.
(d) Waiver.--The department may make a determination that
the financial benefit to this Commonwealth resulting from the
direct investment in or payments made to Pennsylvania facilities
outweighs the benefit of maintaining the 60% requirement
contained in the definition of "qualified film production
expense." If such determination is made, the department may
waive the requirement that 60% of a film's total production or
postproduction expenses be comprised of Pennsylvania production
expenses for a film, television film or television series that
is intended as programming for a national audience and is filmed
or produced in a qualified production facility or qualified
postproduction facility if the taxpayer who has Pennsylvania
production expenses of at least $30,000,000 per production meets
the minimum stage filming requirements.
(e) Pennsylvania film producer reserve.--The department
shall annually reserve and allocate $5,000,000 of the tax
credits authorized under this subarticle in support of projects
produced by a Pennsylvania film producer. A Pennsylvania film
producer shall not be limited in eligibility for a tax credit
solely to the Pennsylvania film producer reserve in any fiscal
year. ((e) added July 8, 2022, P.L.513, No.53)
(f) If the total amount of tax credits reserved and
allocated under subsection (e) is not awarded in a fiscal year,
the amount not awarded shall be made available for use by
taxpayers who are not Pennsylvania film producers. ((f) added
July 8, 2022, P.L.513, No.53)
(1716-D renumbered from 1707-D and amended July 13, 2016,
P.L.526, No.84)
Compiler's Note: Section 24(4)(vii) of Act 53 of 2022
provided that the amendment of section 1716-D(a) shall
apply to fiscal years beginning after June 30, 2022.
Compiler's Note: Section 31 of Act 13 of 2019 provided that
the amendment of sections 1716-D(a), 1777-D, 1709-E,
1702-H, 1703-H, 1705-H(d) and (e) and 1706-H(a) of this
act shall apply to fiscal years beginning on or after
July 1, 2019.
Compiler's Note: Section 51(7) of Act 84 of 2016, which
renumbered and amended section 1707-D to 1716-D, provided
that the amendment of section 1716-D, renumbered from
1707-D, shall apply to fiscal years beginning after June
30, 2017.
Section 1716.1-D. Reissuance of film production tax credits.
(a) Reissuance.--In any fiscal year, the department may
reissue a tax credit which meets all of the following:
(1) The tax credit was approved under section 1712-D(b).
(2) The contract was signed under section 1712-D(c).
(3) The tax credit was awarded and a certificate was
issued under section 1712-D(d).
(4) If an individual film that was issued a tax credit
as part of a multifilm production application is canceled,
the department may reissue that tax credit only after
allowing the taxpayer or the taxpayer's affiliate 90 days
to submit an application for an alternative individual film,
produced by the taxpayer or the taxpayer's affiliate for
that tax credit. The department may approve or reject the
application. ((4) amended July 8, 2022, P.L.513, No.53)
(b) Amount.--The amount of a tax credit to be reissued shall
be calculated as the difference between the amounts in
subsection (a)(1) and (3).
(c) Applicability.--This section shall apply to a tax credit
awarded under this article in any fiscal year beginning after
June 30, 2017.
(1716.1 added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 24(4)(viii) of Act 53 of 2022
provided that the amendment of section 1716.1-D(a)(4)
shall apply to fiscal years beginning after June 30,
2022.
Compiler's Note: Section 51(7) of Act 84 of 2016, which
added section 1716.1-D, provided that the addition of
section 1716.1-D shall apply to fiscal years beginning
after June 30, 2017.
Section 1716.2-D. Film production tax credit districts.
(a) Establishment.--The department may designate not more
than two film production tax credit districts for the purpose
of enhancing, promoting and expanding film production
opportunities and establishing a film production industry within
this Commonwealth.
(b) Criteria.--A film production tax credit district shall:
(1) Be at least 55 acres in size.
(2) Be located on deteriorated property.
(3) Be comprised of a parcel that is or will be occupied
by two or more qualified businesses that:
(i) in the aggregate, make a tax district capital
investment of at least $400,000,000 within eight years
after the effective date of the designation of the
district; and
(ii) are dedicated to film production activity,
postproduction activity or other activities that directly
or indirectly support film production activity occurring
within the district or within this Commonwealth.
(4) Contain at least one qualified production facility
and two sound stages.
((b) amended June 28, 2019, P.L.50, No.13)
(c) Application.--The following apply:
(1) An application to designate a film production tax
credit district may be made by the county or municipality
in which all or part of the district will be located. The
department shall review the application and, if approved,
issue a designation for the film production tax credit
district. The application period shall be set by the
department.
(2) The application shall contain the following
information:
(i) The geographic area of the proposed film
production tax credit district.
(ii) A detailed map of the proposed district,
including geographic boundaries, total area and present
use and conditions of the land and structures.
(iii) A description of the current social, economic
and demographic characteristics of the proposed district
and anticipated improvements in education, health, human
services, public safety and employment that will result
from designation of the district.
(iv) A description of anticipated film production
activity and ancillary activities in the proposed
district.
(v) Evidence of potential private and public
investment in the proposed district.
(vi) The role of the proposed district in regional
economic and community development.
(d) Designation period.--A district designated under
subsection (c) shall expire 15 years after the effective date
of the designation.
(e) Construction.--The tax credits authorized under this
section are in addition to the tax credits under section
1716-D(a) and are available exclusively for activities occurring
within the designated district.
(f) Annual tax credits.--The department may authorize a tax
credit for a film production tax credit district in fiscal year
2019-2020 and in each fiscal year thereafter.
(1716.2-D added Oct. 30, 2017, P.L.672, No.43)
Section 1717-D. Penalty.
A taxpayer which claims a tax credit and fails to incur the
amount of qualified film production expenses agreed to in
section 1712-D(c)(3) for a film in that taxable year shall repay
to the Commonwealth the amount of the film production tax credit
claimed under this subarticle for the film.
(1717-D renumbered from 1708-D and amended July 13, 2016,
P.L.526, No.84)
Section 1718-D. Pass-through entity.
(a) General rule.--If a pass-through entity has any unused
tax credit under section 1714-D, it may elect in writing,
according to procedures established by the Department of
Revenue, to transfer all or a portion of the credit to
shareholders, members or partners in proportion to the share
of the entity's distributive income to which the shareholder,
member or partner is entitled.
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity shall not claim the
credit under subsection (a) for the same qualified film
production expense.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a credit is transferred under
subsection (a) shall immediately claim the credit in the taxable
year in which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund of
or sell or assign the credit.
(1718-D renumbered from 1709-D and amended July 13, 2016,
P.L.526, No.84)
Section 1719-D. Department guidelines and regulations.
The department shall develop written guidelines for the
implementation of the provisions of this subarticle. The
guidelines shall be in effect until such time as the department
promulgates regulations for the implementation of the provisions
of this subarticle. The department shall promulgate regulations
for the implementation of this subarticle within two years of
the effective date of this section.
(1719-D renumbered from 1710-D and amended July 13, 2016,
P.L.526, No.84)
Section 1720-D. Report to General Assembly.
(a) General rule.--No later than June 1, 2008, and September
1 of each year thereafter, the Secretary of Community and
Economic Development shall submit a report to the General
Assembly summarizing the effectiveness of the tax credit
provided by this subarticle. The report shall include the name
of the film produced, the names of all taxpayers utilizing the
credit as of the date of the report and the amount of credits
approved for, utilized by or sold or assigned by each taxpayer.
The report may also include any recommendations for changes in
the calculation or administration of the tax credit. The report
shall be submitted to the chairman and minority chairman of the
Appropriations and Finance Committees of the Senate and the
chairman and minority chairman of the Appropriations and Finance
Committees of the House of Representatives. In addition to the
information set forth above, the report shall include the
following information, which shall be separated by geographic
location within this Commonwealth:
(1) The amount of credits claimed during the fiscal
year by film.
(2) The total amount spent in this Commonwealth during
the fiscal year by film.
(3) The total amount of tax revenues generated by this
Commonwealth during the fiscal year by film.
(4) The total number of jobs created during the fiscal
year by film, including the duration of the jobs.
(b) Public information.--Notwithstanding any law providing
for the confidentiality of tax records, the information in the
report shall be public information, and all report information
shall be posted on the department's Internet website.
(1720-D renumbered from 1711-D and amended July 13, 2016,
P.L.526, No.84)
Section 1721-D. Film Advisory Board.
(a) Composition.--A Film Advisory Board is established. The
board shall work with the Pennsylvania Film Office and the
regional film offices to promote the film industry throughout
this Commonwealth and to examine and file a written report on
the effectiveness of the tax credit and grant programs. The
report shall be included in the department's report required
under section 1720-D. The board shall consist of the following
members:
(1) The Secretary of Community and Economic Development,
or a designee.
(2) A member appointed by the Governor.
(3) A member appointed by the President pro tempore of
the Senate.
(4) A member appointed by the Minority Leader of the
Senate.
(5) A member appointed by the Majority Leader of the
House of Representatives.
(6) A member appointed by the Minority Leader of the
House of Representatives.
(b) Compensation.--Members of the board shall not be
compensated for their service as board members, but shall be
compensated for their reasonable expenses. The department shall
provide administrative support for the board.
(c) Meetings.--The board shall meet no less than twice each
year.
(d) Chairman.--The members of the board shall elect the
chairman.
(1721-D renumbered from 1712-D and amended July 13, 2016,
P.L.526, No.84)
SUBARTICLE C
CONCERT REHEARSAL AND TOUR
(Subart. repealed June 22, 2017, P.L.202, No.7)
Section 1731-D. Definitions.--(Repealed June 22, 2017, P.L.202,
No.7)
Section 1732-D. Procedure.--(Repealed June 22, 2017, P.L.202,
No.7)
Section 1733-D. Claim.--(Repealed June 22, 2017, P.L.202, No.7)
Section 1734-D. Carryover, carryback and assignment of tax
credit.--(Repealed June 22, 2017, P.L.202, No.7)
Section 1735-D. Determination of Pennsylvania rehearsal and
tour expenses.--(Repealed June 22, 2017, P.L.202,
No.7)
Section 1736-D. Limitations.--(Repealed June 22, 2017, P.L.202,
No.7)
Section 1737-D. Penalty.--(Repealed June 22, 2017, P.L.202,
No.7)
Section 1738-D. Pass-through entity.--(Repealed June 22, 2017,
P.L.202, No.7)
Section 1739-D. Department guidelines and
regulations.--(Repealed June 22, 2017, P.L.202,
No.7)
Section 1740-D. Report to General Assembly.--(Repealed June
22, 2017, P.L.202, No.7)
SUBARTICLE D
VIDEO GAME PRODUCTION
(Subart. added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 51(6) of Act 84 of 2016, which
added Subarticle D, provided that the addition of
Subarticle D shall apply to fiscal years beginning after
June 30, 2016.
Section 1751-D. Scope of subarticle.
This subarticle relates to video game production tax credits.
(1751-D added July 13, 2016, P.L.526, No.84)
Section 1752-D. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Pennsylvania production expense." Production expense
incurred in this Commonwealth. The term includes:
(1) A payment made by a taxpayer to a person upon which
withholding will be made on the payment by the taxpayer as
required under Part VII of Article III.
(2) Payment to a personal service corporation
representing individual talent if the tax imposed by Article
IV will be paid or accrued on the net income of the
corporation for the taxable year.
(3) Payment to a pass-through entity representing
individual talent if withholding will be made by the
pass-through entity on the payment as required under Part
VII or VII-A of Article III.
(4) The cost of transportation incurred while
transporting to or from a train station, bus depot or airport
located in this Commonwealth.
(5) The cost of insurance coverage purchased through
an insurance agent based in this Commonwealth.
(6) The purchase of music or story rights if any of the
following subparagraphs apply:
(i) The purchase is from a resident of this
Commonwealth.
(ii) The purchase is from an entity subject to
taxation in this Commonwealth, and the transaction is
subject to taxation under Article III or IV.
(7) The cost of rental of facilities and equipment
rented from or through a resident of this Commonwealth or
an entity subject to taxation in this Commonwealth.
(8) The development and manufacture of video game
equipment.
"Production expense." As follows:
(1) The term includes all of the following:
(i) Compensation paid to an individual employed in
the production of a video game.
(ii) Payment to a personal service corporation
representing individual talent.
(iii) Payment to a pass-through entity representing
individual talent.
(iv) The costs of construction, operations, editing,
photography, sound synchronization, lighting, wardrobe
and accessories.
(v) The cost of leasing vehicles.
(vi) The cost of transportation to or from a train
station, bus depot or airport.
(vii) The cost of insurance coverage.
(viii) The costs of food and lodging.
(ix) The purchase of music or story rights.
(x) The cost of rental of facilities and equipment.
(xi) Development and production costs relating to
video games.
(2) The term does not include any of the following:
(i) Deferred, leveraged or profit participation
paid or to be paid to individuals employed in the
production of a video game or paid to entities
representing an individual for services provided in the
production of a video game.
(ii) Expenses incurred in marketing or advertising
a video game.
(iii) Costs related to the sale or assignment of a
video game production tax credit under section 1755-D(e).
"Qualified tax liability." The liability for taxes imposed
under Article III, IV, VI, VII, VIII, IX or XV. The term does
not include a tax withheld by an employer from an employee under
Article III.
"Qualified video game production expense." All Pennsylvania
production expenses if Pennsylvania production expenses comprise
at least 60% of the video game's total production expenses. The
term does not include more than $1,000,000 in the aggregate of
compensation paid to individuals or payment made to entities
representing an individual for services provided in the
production of the video game.
"Start date." The first day of principal production of a
video game in this Commonwealth.
"Tax credit." The video game production tax credit provided
under this subarticle.
"Taxpayer." A video game production company subject to tax
under Article III, IV or VI. The term does not include
contractors or subcontractors of a video game production
company.
"Video game." An electronic game that involves interaction
with a user interface to generate visual feedback on a video
device. The term does not include a game that contains obscene
material or performances as defined in 18 Pa.C.S. § 5903(b)
(relating to obscene and other sexual materials and
performances) or a game designed primarily for private,
political, industrial, corporate or institutional purposes.
"Video game equipment." Equipment that is required for the
development or functioning of a video game. The term includes:
(1) Integrated video and audio equipment, networking
routers, switches, network cabling and any other
computer-related hardware necessary to create or operate a
video game.
(2) Software, notwithstanding the method of delivery,
transfer or access.
(3) Computer code.
(4) Image files, music files, audio files, video files,
scripts and plays.
(5) Concept mock-ups.
(6) Software tools.
(7) Testing procedures.
(8) A component part of an item listed under paragraph
(2), (3), (4), (5), (6) or (7), necessary and integral to
create, develop or produce a video game.
(1752-D added July 13, 2016, P.L.526, No.84)
Section 1753-D. Credit for qualified video game production
expenses.
(a) Application.--A taxpayer may apply to the department
for a tax credit under this section. The application shall be
on the form required by the department.
(b) Review and approval.--The department shall review and
approve or disapprove the applications in the order in which
they are received. Upon determining that the taxpayer has
incurred or will incur qualified video game production expenses,
the department may approve the taxpayer for a tax credit.
(c) Contract.--If the department approves the taxpayer's
application under subsection (b), the department and the
taxpayer shall enter into a contract containing the following:
(1) An itemized list of production expenses incurred
or to be incurred for the video game.
(2) An itemized list of Pennsylvania production expenses
incurred or to be incurred for the video game.
(3) With respect to a contract entered into prior to
completion of production, a commitment by the taxpayer to
incur the qualified video game production expenses as
itemized.
(4) The principal production start date.
(5) Any other information the department deems
appropriate.
(c.1) Prohibition.--A tax credit may not be awarded for
fiscal years prior to fiscal year 2017-2018.
(d) Certificate.--Upon execution of the contract required
by subsection (c), the department shall award the taxpayer a
video game production tax credit and issue the taxpayer a video
game production tax credit certificate.
(1753-D added July 13, 2016, P.L.526, No.84)
Section 1754-D. Video game production tax credits.
Beginning July 1, 2017, a taxpayer may claim a tax credit
against the qualified tax liability of the taxpayer.
(1754-D added July 13, 2016, P.L.526, No.84)
Section 1755-D. Carryover, carryback and assignment of credit.
(a) General rule.--If the taxpayer cannot use the entire
amount of the tax credit for the taxable year in which the tax
credit is first approved, the excess may be carried over to
succeeding taxable years and used as a credit against the
qualified tax liability of the taxpayer for those taxable years.
Each time the tax credit is carried over to a succeeding taxable
year, it shall be reduced by the amount that was used as a
credit during the immediately preceding taxable year. The tax
credit may be carried over and applied to succeeding taxable
years for no more than three taxable years following the first
taxable year for which the taxpayer was entitled to claim the
tax credit.
(b) Application.--A tax credit approved by the department
in a taxable year first shall be applied against the taxpayer's
qualified tax liability for the current taxable year as of the
date on which the tax credit was approved before the tax credit
can be applied against any tax liability under subsection (a).
(c) No carryback or refund.--A taxpayer is not entitled to
carry back or obtain a refund of all or any portion of an unused
tax credit granted to the taxpayer under this subarticle.
(d) (Reserved).
(e) Sale or assignment.--The following shall apply:
(1) A taxpayer, upon application to and approval by the
department, may sell or assign, in whole or in part, a tax
credit granted to the taxpayer under this subarticle.
(2) The department and the Department of Revenue shall
jointly promulgate regulations for the approval of
applications under this subsection.
(3) Before an application is approved, the Department
of Revenue must make a finding that the applicant has filed
all required State tax reports and returns for all applicable
taxable years and paid any balance of State tax due as
determined at settlement, assessment or determination by the
Department of Revenue.
(4) Notwithstanding any other provision of law, the
Department of Revenue shall settle, assess or determine the
tax of an applicant under this subsection within 90 days of
the filing of all required final returns or reports in
accordance with section 806.1(a)(5) of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code.
(f) Purchasers and assignees.--The purchaser or assignee
of all or a portion of a tax credit under subsection (e) shall
immediately claim the tax credit in the taxable year in which
the purchase or assignment is made. The amount of the tax credit
that a purchaser or assignee may use against any one qualified
tax liability may not exceed 50% of such qualified tax liability
for the taxable year. The purchaser or assignee may not carry
forward, carry back or obtain a refund of or sell or assign the
tax credit. The purchaser or assignee shall notify the
Department of Revenue of the seller or assignor of the tax
credit in compliance with procedures specified by the Department
of Revenue.
(1755-D added July 13, 2016, P.L.526, No.84)
Section 1756-D. Determination of Pennsylvania production
expenses.
In prescribing standards for determining which production
expenses are considered Pennsylvania production expenses for
purposes of computing the tax credit, the department shall
consider:
(1) The location where services are performed.
(2) The location where supplies are consumed.
(3) Other factors the department determines are
relevant.
(1756-D added July 13, 2016, P.L.526, No.84)
Section 1757-D. Limitations.
(a) Cap.--In no case shall the aggregate amount of tax
credits awarded in a fiscal year under this subarticle exceed
$1,000,000.
(b) Individual limitations.--The aggregate amount of video
game production tax credits awarded by the department under
section 1753-D(d) to a taxpayer for a video game may not exceed
25% of the qualified video game production expenses to be
incurred during each of the first four years that the video
game production expenses are incurred and 10% for each year
thereafter that the video game production expenses are incurred.
(1757-D added July 13, 2016, P.L.526, No.84)
Section 1758-D. Penalty.
A taxpayer which claims a tax credit and fails to incur the
amount of qualified video game production expenses agreed to
in section 1753-D(c)(3) for a video game in that taxable year
shall repay to the Commonwealth the amount of the video game
production tax credit claimed under this subarticle for the
video game.
(1758-D added July 13, 2016, P.L.526, No.84)
Section 1759-D. Pass-through entity.
(a) General rule.--If a pass-through entity has an unused
tax credit under section 1755-D, it may elect in writing,
according to procedures established by the Department of
Revenue, to transfer all or a portion of the tax credit to
shareholders, members or partners in proportion to the share
of the entity's distributive income to which the shareholder,
member or partner is entitled.
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity shall not claim the
tax credit under subsection (a) for the same qualified video
game production expense.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a tax credit is transferred under
subsection (a) shall immediately claim the tax credit in the
taxable year in which the transfer is made. The shareholder,
member or partner may not carry forward, carry back, obtain a
refund of or sell or assign the tax credit.
(1759-D added July 13, 2016, P.L.526, No.84)
Section 1760-D. Department guidelines and regulations.
The department shall develop written guidelines for the
implementation of the provisions of this subarticle. The
guidelines shall be in effect until such time as the department
promulgates regulations for the implementation of the provisions
of this subarticle. The department shall promulgate regulations
for the implementation of this subarticle within two years of
the effective date of this section.
(1760-D added July 13, 2016, P.L.526, No.84)
Section 1761-D. Report to General Assembly.
(a) General rule.--No later than June 1 of the second year
that commences after the effective date of this section, and
September 1 of each year thereafter, the Secretary of Community
and Economic Development shall submit a report to the General
Assembly summarizing the effectiveness of the tax credit. The
report shall include the name of the video game produced, the
names of all taxpayers utilizing the tax credit as of the date
of the report and the amount of tax credits approved for,
utilized by or sold or assigned by each taxpayer. The report
may also include recommendations for changes in the calculation
or administration of the tax credit. The report shall be
submitted to the chairperson and minority chairperson of the
Appropriations Committee of the Senate and the chairperson and
minority chairperson of the Finance Committee of the Senate and
the chairperson and minority chairperson of the Appropriations
Committee of the House of Representatives and the chairperson
and minority chairperson of the Finance Committee of the House
of Representatives. In addition to the information stated in
this section, the report shall include the following information
which shall be separated by geographic location within this
Commonwealth:
(1) The amount of tax credits claimed by taxpayers
during the fiscal year.
(2) The total amount spent on video game production in
this Commonwealth during the fiscal year.
(3) The total amount of tax revenues collected from the
production of video games in this Commonwealth during the
fiscal year.
(4) The total number of jobs created by taxpayers during
the fiscal year, including the duration of the jobs.
(b) Public information.--Notwithstanding any law providing
for the confidentiality of tax records, the information in the
report shall be public information, and all report information
shall be posted on the department's publicly accessible Internet
website.
(1761-D added July 13, 2016, P.L.526, No.84)
SUBARTICLE E
ENTERTAINMENT ECONOMIC ENHANCEMENT PROGRAM
(Subart. added Oct. 30, 2017, P.L.672, No.43)
Section 1771-D. Scope of subarticle.
This subarticle relates to the Entertainment Economic
Enhancement Program.
(1771-D added Oct. 30, 2017, P.L.672, No.43)
Section 1772-D. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Class 1 venue." A stadium, arena, other structure or
property owned by a municipality or an authority formed under
Article XXV-A of the act of July 28, 1953 (P.L.723, No.230),
known as the Second Class County Code, at which concerts are
performed and which is all of the following:
(1) Located in a city of the first class or a county
of the second class.
(2) Constructed in a manner in which the venue has a
seating capacity of at least 14,000.
"Class 2 venue." A stadium, arena or other structure at
which concerts are performed and which is all of the following:
(1) Located outside the geographic boundaries of a city
of the first class or a county of the second class.
(2) Constructed in a manner in which the venue has a
seating capacity of at least 6,000.
"Class 3 venue." A stadium, arena or other structure which
is any of the following:
(1) Located within a neighborhood improvement zone, as
defined in section 1902-B.
(2) Owned by or affiliated with a State-related
institution as defined in 62 Pa.C.S. § 103 (relating to
definitions).
(3) Owned by the Commonwealth and affiliated with the
State System of Higher Education.
"Concert." A live performance of music in the presence of
individuals who view the performance.
"Concert tour equipment." Includes stage, set, scenery,
design elements, automation, rigging, trusses, spotlights,
lighting, sound equipment, video equipment, special effects,
cases, communication devices, power distribution equipment,
backline, personal protective equipment and other miscellaneous
equipment or supplies used during a concert or rehearsal. (Def.
amended June 30, 2021, P.L.124, No.25)
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Maintained a place of business" or "maintaining a place of
business." All of the following:
(1) Having, maintaining or using within this
Commonwealth an office, warehouse or other place of business.
(2) Regularly engaging in an activity as a business
within this Commonwealth in connection with the lease, sale
or delivery of tangible personal property or the performance
of a service for residents of this Commonwealth.
"Minimum rehearsal and tour requirements." During a tour,
all of the following must occur:
(1) The purchase or rental of concert tour equipment
delivered to a location in this Commonwealth, in an amount
of at least $3,000,000, from companies located and
maintaining a place of business in this Commonwealth for use
on the tour.
(2) A rehearsal at a qualified rehearsal facility for
a minimum of 10 days.
(3) At least one concert performed at a class 1 venue.
(4) At least one concert performed at a venue which is
located in a municipality other than the municipality in
which the class 1 venue under paragraph (3) is located.
(5) The taxpayer shall maintain a place of business in
this Commonwealth or employ a representative for the period
beginning with the start date and ending with the award of
tax certificates under section 1773-D(e).
(Def. amended June 28, 2019, P.L.50, No.13)
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Pennsylvania live events industry." A qualified rehearsal
facility, vendors of concert tour equipment located and
maintaining a place of business in this Commonwealth, venues
located in this Commonwealth and any promoter of live
performances located and maintaining a place of business in
this Commonwealth. (Def. added June 30, 2021, P.L.124, No.25)
"Pennsylvania rehearsal and tour expenses." The sum of
Pennsylvania rehearsal expenses and tour expenses. The term
includes Pennsylvania rehearsal expenses and tour expenses paid
prior to or during a rehearsal or tour.
"Pennsylvania rehearsal expense." A rehearsal expense which
is incurred or will be incurred within this Commonwealth. The
term includes:
(1) A payment which is made or will be made by a
recipient to a person upon which withholding will be made
on the payment by the recipient as required under Part VII
of Article III or a payment which is made or will be made
to a person who is required to make estimated payments under
Part VIII of Article III.
(2) A payment which is made or will be made to a
personal service corporation representing individual talent
if the tax imposed by Article IV will be paid or accrued on
the net income of the corporation for the taxable year.
(3) A payment which is made or will be made to a
pass-through entity representing individual talent for which
withholding will be made by the pass-through entity on the
payment as required under Part VII or VII-A of Article III.
"Personal protective equipment." Includes equipment,
services and supplies necessary to screen, test, shield or
protect performers or individuals from health pathogens during
a rehearsal, streaming performance or tour. The term includes
costs associated with cleaning and disinfecting qualified
rehearsal facilities and venues used on a tour and costs
associated with complying with safety-protocols established to
combat COVID-19 and other health pathogens. (Def. added June
30, 2021, P.L.124, No.25)
"Qualified rehearsal and tour expense." All Pennsylvania
rehearsal and tour expenses if Pennsylvania rehearsal expenses
comprise or will comprise at least 60% of the total rehearsal
expenses. The term shall not include more than $2,000,000 in
the aggregate of compensation paid or to be paid to individuals
or payment made or to be made to entities representing an
individual for services provided in the tour.
"Qualified rehearsal facility." A rehearsal facility which
meets at least six of the following criteria:
(1) Has had a minimum of $8,000,000 invested in the
rehearsal facility in land or structure, or a combination
of land and structure.
(2) Has a permanent grid system with a capacity of
1,000,000 pounds.
(3) Has a built-in power supply system available at a
minimum of 3,200 amps without the need for supplemental
generators.
(4) Has a height from floor to permanent grid of a
minimum of 80 feet.
(5) Has at least two sliding or roll-up access doors
with a minimum height of 14 feet.
(6) Has a perimeter security system which includes
24-hour, seven-days-a-week security cameras and the use of
access control identification badges.
(7) Has a service area with production offices, catering
and dressing rooms with a minimum of 5,000 square feet.
(8) Is located within one mile of a minimum of two
companies which provide concert tour equipment for use on a
tour.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV, VI, VII or IX. The term does not include
tax withheld by an employer from an employee under Article III.
"Recipient." A taxpayer that has been awarded a tax credit
under section 1773-D(e) or 1782-D(e). (Def. amended June 30,
2021, P.L.124, No.25)
"Rehearsal." An event or series of events which occur in
preparation for a tour prior to the start of the tour or during
a tour when additional preparation may be needed.
"Rehearsal expense." All of the following when incurred or
will be incurred during a rehearsal:
(1) Compensation paid or to be paid to an individual
employed in the rehearsal of the performance.
(2) Payment to a personal service corporation
representing individual talent.
(3) Payment to a pass-through entity representing
individual talent.
(4) The costs of construction, operations, editing,
photography, staging, lighting, wardrobe and accessories.
(5) The cost of leasing vehicles.
(6) The cost of transportation of people or concert
tour equipment to or from a train station, bus depot, airport
or other transportation facility or directly from a residence
or business entity.
(6.1) The cost of ground transportation of individuals
for an entire tour if the ground transportation is purchased
or will be purchased from a transportation company
maintaining a place of business in this Commonwealth and is
provided or will be provided by a resident of this
Commonwealth.
(6.2) The cost of ground transportation of concert tour
equipment for an entire tour if the ground transportation
is purchased or will be purchased from a transportation
company maintaining a place of business in this Commonwealth
and is provided or will be provided by a resident of this
Commonwealth.
(7) The cost of insurance coverage for an entire tour
if the insurance coverage is purchased or will be purchased
through an insurance agent maintaining a place of business
in this Commonwealth.
(8) The cost of food and lodging.
(9) The cost of purchase or rental of concert tour
equipment.
(10) The cost of renting a rehearsal facility.
(11) The cost of emergency or medical support services
required to conduct a rehearsal.
(Def. amended June 28, 2019, P.L.50, No.13)
"Rehearsal facility." As follows:
(1) A facility primarily used for rehearsals which is
all of the following:
(i) Located within this Commonwealth.
(ii) Has a minimum of 20,000 square feet of
column-free, unobstructed floor space.
(2) The term does not include a facility at which
concerts are capable of being held.
(Def. amended June 28, 2019, P.L.50, No.13)
"Representative." A person that meets all of the following
criteria:
(1) Is authorized to communicate with the department
on behalf of a taxpayer regarding an application submitted
under section 1773-D(e).
(2) Maintains a place of business in this Commonwealth.
(3) Has substantial experience working with the
Pennsylvania live events industry.
(Def. added June 28, 2019, P.L.50, No.13)
"Start date." The date the first set of concert tour
equipment arrives or is expected to arrive at a qualified
rehearsal facility.
"Streaming performance." A live performance which is
performed at a qualified rehearsal facility to be remotely
viewed by individuals. The term includes streaming and
broadcasting of a performance. (Def. added June 30, 2021,
P.L.124, No.25)
"Tax credit." The concert rehearsal and tour tax credit as
provided under this subarticle.
"Taxpayer." A musical performer or performers or a concert
tour management company of a musical performer or performers
subject to tax under Article III, IV or VI. The term does not
include contractors or subcontractors of a musical performer
or performers or of a concert tour management company of a
musical performer or performers. For fiscal years beginning
July 1, 2021, and ending June 30, 2023, the term also includes
a management company of a professional sports league, a news
broadcasting station, a production company, a creative agency
or a broadcaster, subject to tax under Article III or IV. (Def.
amended June 30, 2021, P.L.124, No.25)
"Tour." A series of concerts performed or to be performed
by a musical performer in more than one location. The term
includes at least one rehearsal. For fiscal years beginning
July 1, 2021, and ending June 30, 2023, the term also includes
a streaming performance. (Def. amended June 30, 2021, P.L.124,
No.25)
"Tour expense." As follows:
(1) Costs incurred or which will be incurred during a
tour for venues located in this Commonwealth. The term
includes all of the following:
(i) A payment which is made or will be made by a
recipient to a person upon which withholding will be
made on the payment by the recipient as required under
Part VII of Article III or a payment which is made or
will be made to a person who is required to make
estimated payments under Part VIII of Article III.
(ii) The cost of transportation of people which is
incurred or will be incurred while transporting to or
from a train station, bus depot, airport or other
transportation facility or while transporting directly
from a residence or business entity located in this
Commonwealth, or which is incurred or will be incurred
for transportation provided by a company which is subject
to the tax imposed under Article III or IV.
(iii) The cost of leasing vehicles upon which the
tax imposed by Article II will be paid or accrued.
(iv) ((iv) deleted by amendment).
(v) The cost of purchasing or renting facilities
and equipment from or through a resident of this
Commonwealth or an entity subject to taxation in this
Commonwealth.
(vi) The cost of food and lodging which is incurred
or will be incurred from a facility located in this
Commonwealth.
(vii) Expenses which are incurred or will be
incurred in marketing or advertising a tour at venues
located within this Commonwealth.
(viii) The cost of merchandise which is purchased
or will be purchased from a company located within this
Commonwealth and used on the tour.
(ix) A payment which is made or will be made to a
personal service corporation representing individual
talent if the tax imposed by Article IV will be paid or
accrued on the net income of the corporation for the
taxable year.
(x) A payment which is made or will be made to a
pass-through entity representing individual talent for
which withholding will be made by the pass-through entity
on the payment as required under Part VII or VII-A of
Article III.
(1.1) The cost of concert tour equipment not used during
rehearsal but used for an entire tour if the concert tour
equipment is purchased or will be purchased from a company
maintaining a place of business in this Commonwealth and
subject to the tax imposed under Article III or IV. The term
includes the cost of personal protective equipment which is
purchased or will be purchased from a company located within
this Commonwealth and used on the tour.
(2) The term does not include development cost,
including the writing of music or lyrics.
(Def. amended June 30, 2021, P.L.124, No.25)
"Venue." A class 1, class 2 or class 3 venue. For fiscal
years beginning July 1, 2021, and ending June 30, 2023, the
term also includes a qualified rehearsal facility when used for
a streaming performance. (Def. amended June 30, 2021, P.L.124,
No.25)
(1772-D added Oct. 30, 2017, P.L.672, No.43)
Section 1773-D. Procedure.
(a) Application.--A taxpayer may apply to the department
for a tax credit under this section. The application shall be
on the form required by the department.
(b) Review and approval.--
(1) The department shall establish application periods
not to exceed 30 days. All applications received during an
application period shall be reviewed and evaluated by the
department based on the following criteria:
(i) The anticipated number of rehearsal days in a
qualified rehearsal facility.
(ii) The anticipated number of concerts at class 1
venues.
(iii) The anticipated number of concerts at class
2 venues.
(iv) The anticipated number of concerts at class 3
venues.
(v) The anticipated amount of Pennsylvania rehearsal
expenses in comparison to the anticipated aggregate
amount of rehearsal expenses.
(vi) The anticipated amount of the tour expenses.
(vii) The anticipated amount of the concert tour
equipment expenses which are or will be purchased or
rented from a company located and maintaining a place
of business in this Commonwealth and which will be used
on the tour.
(viii) The anticipated number of days spent in
Commonwealth hotels.
(ix) Other criteria that the department deems
appropriate to ensure maximum employment opportunities
and entertainment benefits for the residents of this
Commonwealth.
(2) Except as provided in subsection (c) and upon
determining that the taxpayer has paid the applicable
application fee not to exceed $300, has met or will meet the
minimum rehearsal and tour requirements and has incurred or
will incur qualified rehearsal and tour expenses, the
department may approve the taxpayer for a tax credit.
Applications not approved may be reviewed and considered in
subsequent application periods. The department may approve
a taxpayer for a tax credit based on its evaluation of the
criteria under this subsection.
(c) Restriction.--The department may only consider
rehearsals held or to be held, and qualified rehearsal and tour
expenses incurred or to be incurred, after January 1, 2017, in
determining whether a taxpayer has met or will meet the minimum
rehearsal and tour requirements.
(d) Contract.--If the department approves the taxpayer's
application under subsection (b), the department and the
taxpayer shall enter into a contract containing the following:
(1) An itemized list of rehearsal expenses incurred or
to be incurred for the tour.
(2) An itemized list of Pennsylvania rehearsal expenses
incurred or to be incurred for the tour.
(3) With respect to a contract entered into prior to
completion of a tour, a commitment by the taxpayer to incur
the Pennsylvania rehearsal expenses as itemized.
(4) An itemized list of the qualified rehearsal and
tour expenses incurred or to be incurred for the tour.
(5) With respect to a contract entered into prior to
completion of a tour, a commitment by the taxpayer to incur
the qualified rehearsal and tour expenses as itemized.
(6) With respect to a contract entered into prior to
completion of a tour, a commitment by the taxpayer to hold
at least one concert at a class 1 venue.
(7) With respect to a contract entered into prior to
completion of a tour, a commitment by the taxpayer to hold
at least one concert at a venue located in a municipality
other than the municipality in which the class 1 venue under
paragraph (6) is located.
(8) The start date or the expected start date.
(9) Any other information the department deems
appropriate.
(e) Certificate.--Upon execution of the contract required
by subsection (d), the department shall award the taxpayer a
concert rehearsal and tour tax credit and issue the recipient
a tax credit certificate.
(1773-D added Oct. 30, 2017, P.L.672, No.43)
Section 1774-D. Claim.
Beginning July 1, 2017, a recipient may claim a concert
rehearsal and tour tax credit against the qualified tax
liability of the recipient.
(1774-D added Oct. 30, 2017, P.L.672, No.43)
Section 1775-D. Carryover, carryback and assignment of tax
credit.
(a) General rule.--If a recipient cannot use the entire
amount of a tax credit for the taxable year in which the tax
credit is first approved, the excess may be carried over to
succeeding taxable years and used as a tax credit against the
qualified tax liability of the recipient for those taxable
years. Each time the tax credit is carried over to a succeeding
taxable year, the tax credit shall be reduced by the amount
that was used as a credit during the immediately preceding
taxable year. The tax credit may be carried over and applied
to succeeding taxable years for no more than three taxable years
following the first taxable year for which the recipient was
entitled to claim the tax credit.
(b) Application.--A tax credit approved by the department
in a taxable year first shall be applied against the recipient's
qualified tax liability for the current taxable year as of the
date on which the tax credit was approved before the tax credit
can be applied against tax liability under subsection (a).
(c) No carryback or refund.--A recipient shall not be
entitled to carry back or obtain a refund of any portion of an
unused tax credit granted to the recipient under this
subarticle.
(d) Sale or assignment.--The following shall apply:
(1) A recipient, upon application to and approval by
the department, may sell or assign, in whole or in part, a
tax credit granted to the recipient under this subarticle.
(2) The department and the Department of Revenue shall
jointly promulgate regulations for the approval of
applications under this subsection.
(3) Before an application is approved, the Department
of Revenue must make a finding that the recipient has filed
all required State tax reports and returns for all applicable
taxable years and paid any balance of State tax due as
determined at settlement, assessment or determination by the
Department of Revenue.
(4) Notwithstanding any other provision of law, the
Department of Revenue shall settle, assess or determine the
tax of a taxpayer under this subsection within 60 days of
the filing of all required final returns or reports in
accordance with section 806.1(a)(5) of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code.
(e) Purchasers and assignees.--The following apply:
(1) The purchaser or assignee of all or a portion of a
tax credit under subsection (d) shall immediately claim the
tax credit in the taxable year in which the purchase or
assignment is made.
(2) The amount of the tax credit that a purchaser or
assignee may use against one qualified tax liability may not
exceed 50% of the qualified tax liability for the taxable
year.
(3) The purchaser or assignee may not carry forward,
carry back or obtain a refund of or sell or assign the tax
credit.
(4) The purchaser or assignee shall notify the
Department of Revenue of the seller or assignor of the tax
credit in compliance with procedures specified by the
Department of Revenue.
(f) Exception.--Notwithstanding any other provision of law
to the contrary, a recipient which held a rehearsal after
January 1, 2017, but before October 1, 2018, may use the tax
credit granted to the recipient under this subarticle against
the recipient's 2018 qualified tax liability or may sell or
assign the tax credit granted to the recipient under this
subarticle upon satisfaction of the recipient's 2018 qualified
tax liability.
(1775-D amended June 28, 2019, P.L.50, No.13)
Section 1776-D. Determination of Pennsylvania rehearsal and
tour expenses.
When prescribing standards for determining which rehearsal
or tour expenses are considered Pennsylvania rehearsal and tour
expenses for purposes of computing the tax credit provided by
this subarticle, the department shall consider:
(1) The location where services are performed.
(2) The location where concert tour equipment is
purchased, rented, delivered and used.
(3) The location where rehearsals or concerts are held.
(4) Other factors the department determines are
relevant.
(1776-D added Oct. 30, 2017, P.L.672, No.43)
Section 1777-D. Limitations.
(a) Cap.--
(1) The aggregate amount of tax credits awarded in a
fiscal year under this subarticle may not exceed $24,000,000.
((1) amended July 8, 2022, P.L.513, No.53)
(2) In a fiscal year, the department may, in the
department's discretion, advance the award of tax credits
for qualified rehearsal and tour expenses incurred or to be
incurred equal to $2,000,000 of the tax credits available
to be awarded in the succeeding fiscal year.
(3) If, in a fiscal year, the maximum amount of credits
authorized by this subsection are not awarded by the
department, the department may increase the total amount of
tax credits that the department may award for qualified
rehearsal and tour expenses incurred or to be incurred
related to a tour in the immediately succeeding fiscal year
by the amount that was not awarded in the preceding fiscal
year.
((a) amended June 30, 2021, P.L.124, No.25)
(b) Advance award of credits.--The advance award of tax
credits under subsection (a)(2) shall:
(1) count against the total amount of tax credits that
the department may award for qualified rehearsal and tour
expenses incurred or to be incurred related to a tour in
that next succeeding fiscal year; and
(2) reduce the total amount of tax credits that the
department may award for qualified rehearsal and tour
expenses incurred or to be incurred related to a tour in
that next succeeding fiscal year.
((b) amended June 30, 2021, P.L.124, No.25)
(c) Individual limitations.--The following shall apply:
(1) If a taxpayer's purchase or rental of concert tour
equipment from companies located and maintaining a place of
business in this Commonwealth for use on a tour is at least
$3,000,000 but less than $4,000,000, the taxpayer may not
be awarded more than $800,000 of tax credits for the tour.
(1.1) If a taxpayer's purchase or rental of concert
tour equipment from companies located and maintaining a place
of business in this Commonwealth for use on a tour is at
least $4,000,000 but less than $8,000,000, the taxpayer may
not be awarded more than $1,250,000 of tax credits for the
tour.
(1.2) If a taxpayer's purchase or rental of concert
tour equipment from companies located and maintaining a place
of business in this Commonwealth for use on a tour is at
least $8,000,000, the taxpayer may not be awarded more than
$2,000,000 of tax credits for the tour.
(2) Except as provided under paragraph (5), the
aggregate amount of tax credits awarded by the department
under section 1773-D(e) to a taxpayer for a tour with
concerts at two class 1 venues or a class 1 venue and a class
2 venue may not exceed 25% of the qualified rehearsal and
tour expenses incurred or to be incurred.
(3) Except as provided under paragraph (5), the
aggregate amount of tax credits awarded by the department
under section 1773-D(e) to a taxpayer for a tour with
concerts at a class 1 venue and a class 3 venue may not
exceed 30% of the qualified rehearsal and tour expenses
incurred or to be incurred.
(4) Except as provided under paragraph (5), the
aggregate amount of tax credits awarded by the department
under section 1773-D(e) to a taxpayer for a tour with
concerts at a class 1 venue and a class 3 venue which does
not serve alcohol may not exceed 35% of the qualified
rehearsal and tour expenses incurred or to be incurred.
(5) In addition to the tax credits under paragraph (2),
(3) or (4), a taxpayer is eligible for a tax credit in the
amount of 5% of the qualified rehearsal and tour expenses
incurred or to be incurred by the taxpayer if the taxpayer
holds concerts at a total of two or more class 2 venues or
class 3 venues.
(d) Qualified rehearsal facility.--To be considered a
qualified rehearsal facility under this subarticle, the owner
of a rehearsal facility shall provide evidence to the department
to verify the development or facility specifications and capital
improvement costs incurred for the rehearsal facility so that
the threshold amounts set in the definition of qualified
rehearsal facility under section 1772-D are satisfied, and,
upon verification, the rehearsal facility shall be registered
by the department officially as a qualified rehearsal facility.
(e) Waiver.--The department may make a determination that
the financial benefit to this Commonwealth resulting from the
direct investment in or payments made to Pennsylvania rehearsal
and concert facilities outweighs the benefit of maintaining the
60% Pennsylvania rehearsal expenses requirement contained in
the definition of qualified rehearsal and tour expense under
section 1772-D. If the determination is made, the department
may waive the requirement that 60% of a tour's aggregate
rehearsal expenses be comprised of Pennsylvania rehearsal
expenses.
(1777-D amended June 28, 2019, P.L.50, No.13)
Compiler's Note: Section 24(4)(ix) of Act 53 of 2022
provided that the amendment of section 1777-D(a)(1) shall
apply to fiscal years beginning after June 30, 2022.
Compiler's Note: Section 31 of Act 13 of 2019 provided that
the amendment of sections 1716-D(a), 1777-D, 1709-E,
1702-H, 1703-H, 1705-H(d) and (e) and 1706-H(a) of this
act shall apply to fiscal years beginning on or after
July 1, 2019.
Section 1778-D. Penalty.
A recipient which claims a tax credit and fails to incur the
amount of qualified rehearsal and tour expenses agreed to under
section 1773-D(d)(4) for a tour in that taxable year shall repay
to the Commonwealth an amount equal to 110% of the difference
between the amount agreed to under section 1773-D(d)(4) and the
amount of qualified rehearsal and tour expenses actually
incurred by the recipient. The penalty shall be assessed and
collected under Article II.
(1778-D added Oct. 30, 2017, P.L.672, No.43)
Section 1779-D. Pass-through entity.
(a) General rule.--If a pass-through entity has any unused
tax credits under section 1775-D, the pass-through entity may
elect in writing, according to procedures established by the
Department of Revenue, to transfer all or a portion of the tax
credits to shareholders, members or partners in proportion to
the share of the entity's distributive income to which each
shareholder, member or partner is entitled.
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity may not claim the
tax credit under subsection (a) for the same qualified rehearsal
and tour expense.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a tax credit is transferred under
subsection (a) shall immediately claim the tax credit in the
taxable year in which the transfer is made. The shareholder,
member or partner may not carry forward, carry back, obtain a
refund of or sell or assign the tax credit.
(1779-D added Oct. 30, 2017, P.L.672, No.43)
Section 1780-D. Department guidelines and regulations.
The department shall develop written guidelines for the
implementation of this subarticle. The guidelines shall be in
effect until the department promulgates regulations for the
implementation of this subarticle.
(1780-D added Oct. 30, 2017, P.L.672, No.43)
Section 1781-D. Report to General Assembly.
No later than June 1, 2018, and September 1 of each year
thereafter, the Secretary of Community and Economic Development
shall submit a report to the General Assembly summarizing the
effectiveness of the tax credits provided by this subarticle.
The report shall include the name of the tours which rehearsed
in this Commonwealth, the names of all recipients awarded a tax
credit as of the date of the report and the amount of tax
credits approved for each recipient. The report may also include
recommendations for changes in the calculation or administration
of the tax credits provided under this subarticle. The report
shall be submitted to the chairperson and minority chairperson
of the Appropriations Committee of the Senate, the chairperson
and minority chairperson of the Finance Committee of the Senate,
the chairperson and minority chairperson of the Appropriations
Committee of the House of Representatives and the chairperson
and minority chairperson of the Finance Committee of the House
of Representatives. The report shall include the following
information, which shall be separated by geographic location
within this Commonwealth:
(1) The amount of tax credits claimed during the fiscal
year by tour.
(2) The total amount spent in this Commonwealth during
the fiscal year by tours and concert tour promotion companies
for services and supplies.
(3) The total amount of tax revenues, both directly and
indirectly, generated for the Commonwealth during the fiscal
year by the concert rehearsal and tour industry.
(1781-D added Oct. 30, 2017, P.L.672, No.43)
Section 1782-D. Pennsylvania live events industry COVID-19
emergency assistance.
(a) Intent.--It is the intent of the General Assembly to
assist the Pennsylvania live events industry which has been
severely impacted by the COVID-19 virus by providing a temporary
procedure to further encourage live event performers to purchase
Pennsylvania products and services while safely entertaining
residents of this Commonwealth.
(b) Application.--For fiscal years beginning July 1, 2021,
and ending June 30, 2023, and notwithstanding section 1773-D,
a taxpayer may apply to the department for a tax credit related
to a streaming performance under this section. The application
shall be on the form required by the department.
(c) Review and approval.--
(1) The department shall establish application periods
not to exceed 10 days on a bimonthly basis. All applications
received during an application period shall be reviewed and
evaluated by the department based on the following criteria:
(i) The anticipated number of rehearsal days in a
qualified rehearsal facility.
(ii) The anticipated number of streaming
performances.
(iii) The anticipated amount of Pennsylvania
rehearsal and tour expenses.
(iv) The anticipated amount of the concert tour
equipment expenses which are or will be purchased or
rented from companies located and maintaining a place
of business in this Commonwealth and which will be used
for the rehearsal and streaming performances.
(v) The anticipated amount of the concert tour
equipment expenses which are not or will not be purchased
or rented from companies located and maintaining a place
of business in this Commonwealth and which will be used
for the rehearsal and streaming performances.
(vi) The anticipated number of days spent in
Commonwealth hotels.
(vii) Other criteria that the department deems
appropriate to ensure maximum employment opportunities
and entertainment benefits for the residents of this
Commonwealth.
(2) The department may approve the taxpayer for a tax
credit upon determining all of the following:
(i) That the taxpayer has paid the applicable
application fee, not to exceed $300.
(ii) That the taxpayer has met or will meet all of
the following:
(A) Has or will rehearse at a qualified
rehearsal facility for a minimum of seven days.
(B) Has or will perform at least one streaming
performance at a qualified rehearsal facility.
(C) Has incurred or will incur Pennsylvania
rehearsal and tour expenses in an amount of at least
$300,000 from companies located and maintaining a
place of business in this Commonwealth.
(D) Has or will purchase or rent concert tour
equipment to be delivered to a qualified rehearsal
facility in an amount of at least $225,000 from
companies located and maintaining a place of business
in this Commonwealth.
(E) Has or will purchase or rent at least 70%
of the concert tour equipment to be used for the
rehearsal and any streaming performances from
companies located and maintaining a place of business
in this Commonwealth.
(F) Maintains a place of business in this
Commonwealth or employs a representative for the
period beginning with the start date and ending with
the award of tax certificates under this section.
(d) Contract.--If the department approves the taxpayer's
application under subsection (c)(2), the department and the
taxpayer shall enter into a contract containing the following:
(1) The start date or the expected start date.
(2) With respect to a contract entered into prior to
completion of a streaming performance, a commitment by the
taxpayer to hold at least one streaming performance at a
qualified rehearsal facility.
(3) With respect to a contract entered into prior to
completion of a streaming performance, a commitment by the
taxpayer to incur the Pennsylvania rehearsal and tour
expenses as itemized.
(4) Any other information the department deems
appropriate.
(e) Certificate.--Upon execution of the contract required
by subsection (d), the department shall award the taxpayer a
tax credit and issue the recipient a tax credit certificate.
(f) Limitations.--
(1) A taxpayer may not be awarded more than 25% of
Pennsylvania rehearsal and tour expenses the taxpayer
incurred or will incur for a tour.
(2) A taxpayer may not be awarded more than $250,000
of tax credits for a tour.
(g) Cap.--Any award of tax credits made under this section
shall count against and reduce the total amount of tax credits
that the department may award under section 1777-D(a) for
qualified rehearsal and tour expenses incurred or to be incurred
related to a tour in that fiscal year.
(1782-D added June 30, 2021, P.L.124, No.25)
ARTICLE XVII-E
RESOURCE ENHANCEMENT AND PROTECTION TAX CREDIT
(Art. added July 25, 2007, P.L.373, No.55)
Section 1701-E. Scope of article.
This article relates to resource enhancement and protection
tax credits.
(1701-E added July 25, 2007, P.L.373, No.55)
Section 1702-E. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Agricultural erosion and sedimentation control plan." A
site-specific plan that:
(1) meets the requirements of the act of June 22, 1937
(P.L.1987, No.394), known as The Clean Streams Law, and 25
Pa. Code Ch. 102 (relating to erosion and sediment control);
and
(2) identifies best management practices to minimize
accelerated erosion and sediment from an agricultural
operation.
"Agricultural operation." The property on which occur the
management and use of farming resources for the production of
crops, livestock or poultry or for equine activity.
"Animal concentration areas." An exterior area of an
agricultural operation subject to rainfall where livestock
congregate, including a barnyard, a feedlot, a loafing area,
an exercise lot or other similar animal confinement area that
will not maintain a growing crop, or where deposited manure
nutrients are in excess of crop needs. The term does not include
areas managed as a pasture or other cropland and pasture
accessways if they do not cause direct flow of nutrients to
surface water or groundwater.
"Best management practice." A practice or combination of
practices determined by the State Conservation Commission or
United States Department of Agriculture Natural Resources and
Conservation Service to be effective and practical, considering
technological, economic and institutional factors, to manage
nutrients and sediment to protect surface water and groundwater.
"Business firm." An entity authorized to do business in
this Commonwealth and subject to the taxes imposed by Article
III, IV, VI, VII, VIII, IX or XV.
"Commission." The State Conservation Commission.
"Conservation district." A county conservation district
established under the act of May 15, 1945 (P.L.547, No.217),
known as the Conservation District Law.
"Conservation plan." A United States Department of
Agriculture Natural Resources Conservation Service plan,
including a schedule for implementation, that identifies
site-specific conservation best management practices on an
agricultural operation. (Def. amended June 28, 2019, P.L.50,
No.13)
"Department." The Department of Revenue of the Commonwealth.
"Eligible applicants." Any of the following subject to the
taxes imposed by Article III, IV, VI, VII, VIII, IX or XV:
(1) A business firm.
(2) An individual.
(3) Individuals filing jointly.
(Def. amended June 28, 2019, P.L.50, No.13)
"Equine activity." The term includes the following
activities:
(1) The boarding of equines.
(2) The training of equines.
(3) The instruction of people in handling, driving or
riding equines.
(4) The use of equines for riding or driving purposes.
(5) The pasturing of equines.
The term does not include activity licensed under the act of
December 17, 1981 (P.L.435, No.135), known as the Race Horse
Industry Reform Act.
"Individual." A natural person.
"Legacy sediment." Sediment that meets all of the following
conditions:
(1) Was eroded from upland areas after the arrival of
early Pennsylvania settlers and during centuries of intensive
land use.
(2) Was deposited in valley bottoms along stream
corridors, burying presettlement streams, floodplains,
wetlands and valley bottoms.
(3) Altered and continues to impair the hydrologic,
biologic, aquatic, riparian and water quality functions of
presettlement and modern environments.
"Manure management plan." A written site-specific plan that:
(1) outlines practices for the land application of
manure and agricultural process wastewaters acceptable to
the commission; and
(2) is developed to meet the requirements of 25 Pa.
Code § 91.36(b) (relating to pollution control and prevention
at agricultural operations).
(Def. added June 28, 2019, P.L.50, No.13)
"Nutrient management plan." As defined under 3 Pa.C.S. Ch.
5 (relating to nutrient management and odor management).
"Nutrient management specialist." As defined under 3 Pa.C.S.
Ch. 5 (relating to nutrient management and odor management).
"Pass-through entity." A partnership as defined in section
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1).
"Qualified tax liability." The liability for taxes imposed
upon an eligible applicant under Article III, IV, VI, VII, VIII,
IX or XV. The term shall not include any tax withheld by an
employer from an employee under Article III.
"Riparian forest buffer." An area of mostly trees or shrubs
which is adjacent to and up-gradient from watercourses or water
bodies and which meets standards established or adopted by the
commission. (Def. amended June 28, 2019, P.L.50, No.13)
"Technical service provider." An individual, entity or
public agency certified by the United States Department of
Agriculture Natural Resources Conservation Service and placed
on the approved list to provide technical services to program
participants or to the United States Department of Agriculture
program participants.
"Total maximum daily load" or "TMDL." The sum of individual
waste load allocations for point sources, load allocations for
nonpoint sources and natural quality and a margin of safety
expressed in terms of mass per time, toxicity or other
appropriate measures. (Def. added June 28, 2019, P.L.50, No.13)
"USDA-NRCS." The United States Department of Agriculture
Natural Resources and Conservation Service.
(1702-E added July 25, 2007, P.L.373, No.55)
Section 1703-E. Resource Enhancement and Protection Tax Credit
Program.
(a) Establishment.--The Resource Enhancement and Protection
Tax Credit Program is established to encourage private
investment in the implementation of best management practices
on agricultural operations, the planting of riparian forest
buffers and the remediation of legacy sediment.
(b) Limits.--The following limits shall apply:
(1) Except as set forth in paragraph (5), an eligible
applicant may be granted a maximum of $250,000 in tax credits
in any consecutive seven-year period, calculated from the
date the tax credit is issued. ((1) amended June 28, 2019,
P.L.50, No.13)
(2) An agricultural operation may be granted a maximum
of $250,000 in tax credits in any consecutive seven-year
period, calculated from the date the tax credit is issued.
((2) amended June 28, 2019, P.L.50, No.13)
(3) An eligible applicant may submit an application for
a single project or multiple applications for multiple
projects within the limits of this section.
(4) There shall be no limit on the amount of tax credits
that may be purchased from or be assigned from an eligible
applicant.
(5) Notwithstanding paragraph (1), there shall be no
limit on the amount of tax credits granted to a sponsor under
subsection (e), except the commission may establish annual
aggregate limits on tax credits awarded to sponsors to ensure
fair and equitable distribution of tax benefits to eligible
applicants. ((5) amended June 28, 2019, P.L.50, No.13)
(6) The credits for legacy sediment shall not be issued
prior to July 1, 2008. Applications for legacy sediment
remediation will not be accepted prior to July 1, 2008.
(c) Carryover.--
(1) If the eligible applicant cannot use the entire
amount of the tax credit for the taxable year in which the
tax credit is first granted, then the excess may be carried
over to succeeding taxable years and used as a credit against
the qualified tax liability of the eligible applicant for
those taxable years. Each time that the tax credit is carried
over to a succeeding taxable year, it is to be reduced by
the amount that was used as a credit during the immediately
preceding taxable year. The tax credit provided by this
article may be carried over and applied to succeeding taxable
years for no more than 15 taxable years following the first
taxable year for which the eligible applicant was entitled
to claim the credit.
(2) A tax credit granted by the department shall be
applied against the taxpayer's qualified tax liability for
the current taxable year as of the date on which the credit
was granted before the tax credit is applied against any tax
liability under paragraph (1).
(2.1) A tax credit granted under this article may be
applied to the tax liability of the spouse of an eligible
applicant if both the eligible applicant and the spouse
report income on a joint income tax return.
(3) A tax credit granted under this article shall not
be carried back or refunded.
((c) amended June 28, 2019, P.L.50, No.13)
(d) Sale or assignment of credit.--
(1) An eligible applicant, upon application to and
approval by the commission, may sell or assign, in whole or
in part, a tax credit granted to the eligible applicant under
this article if no claim for allowance of the credit is filed
within one year from the date the credit is granted by the
department under section 1708-E. The commission, in
consultation with the department, shall establish guidelines
for the approval of applications under this subsection.
(2) The purchaser or assignee of a portion of a tax
credit under this subsection shall immediately claim the
credit in the taxable year in which the purchase or
assignment is made. The amount of the credit that a purchaser
or assignee may use against a qualified tax liability may
not exceed 75% of the qualified tax liability for the taxable
year. The purchaser or assignee may not carry over, carry
back, obtain a refund of or sell or assign the tax credit.
The purchaser or assignee shall notify the department of the
seller or assignor of the tax credit in compliance with
procedures specified by the department.
(3) Before an application is approved, the department
must make a finding that the applicant has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined
at settlement, assessment or determination by the department.
(4) Notwithstanding any other provision of law, the
department shall settle, assess or determine the tax of an
applicant under this subsection within 90 days of the filing
of all required final returns or reports in accordance with
section 806.1(a)(5) of the act of April 9, 1929 (P.L.343,
No.176), known as The Fiscal Code.
(e) Sponsorship.--An eligible applicant may be a sponsor
by applying for a tax credit for a project authorized under
section 1707-E if a written agreement between the eligible
applicant and the owner of property on which the project will
be completed is submitted to the commission, certifying that
the property owner will comply with all the provisions of this
article.
(f) Tax credits for pass-through entities.--
(1) If a pass-through entity has any unused tax credit
under section 1704-E, it may elect in writing, according to
procedures established by the department, to transfer all
or a portion of the credit to shareholders, members or
partners in proportion to the share of the entity's
distributive income to which the shareholder, member or
partner is entitled.
(2) The credit provided under paragraph (1) is in
addition to any tax credit to which the shareholder, member
or partner is otherwise entitled under this article. However,
a pass-through entity and its shareholders, members or
partners shall not claim a tax credit under this article for
the same project authorized under section 1707-E.
(3) A shareholder, member or partner of a pass-through
entity to whom credit is transferred under paragraph (1)
shall immediately claim the credit in the taxable year in
which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund
of or sell or assign the credit.
(1703-E added July 25, 2007, P.L.373, No.55)
Section 1704-E. Tax credits.
(a) General eligibility.--Projects shall be eligible for a
tax credit as follows:
(1) Only best management practices completed after the
effective date of this article shall be eligible for a tax
credit.
(2) An agricultural operation shall have in place a
current conservation plan or a current agricultural erosion
and sediment control plan if engaged in plowing and tilling,
and a current nutrient management plan or manure management
plan, if required, or the development of such plans shall
be included in an application for a tax credit. ((2) amended
June 28, 2019, P.L.50, No.13)
(3) An agricultural operation with an animal
concentration area shall have implemented best management
practices necessary to abate storm water runoff, loss of
sediment, loss of nutrients and runoff of other pollutants
from the animal concentration area, or the implementation
of such best management practices shall be included in an
application for a tax credit.
(4) An agricultural operation with an uncompleted best
management practice of either a conservation plan or an
agricultural erosion and sediment control plan if engaged
in plowing and tilling or a nutrient management plan or
manure management plan, if required, shall first include the
remaining best management practices included in such plans
in an application for a tax credit. ((4) amended June 28,
2019, P.L.50, No.13)
(5) A project shall meet the planning, design,
construction and certification standards established by the
commission. If standards do not exist for a best management
practice approved by the commission, the commission may
establish or approve planning, design, construction and
certification standards for such a best management practice.
((5) amended June 28, 2019, P.L.50, No.13)
(b) Amount of tax credit.--
(1) A tax credit equal to 75% of the eligible costs
under subsection (c) of a project authorized under section
1707-E shall be granted for any of the following:
(i) Development of a voluntary or mandatory nutrient
management plan or manure management plan. ((i) amended
June 28, 2019, P.L.50, No.13)
(ii) Development of an agricultural erosion and
sediment control plan or a conservation plan.
(iii) For an animal concentration area, design and
implementation of best management practices necessary
to abate storm water runoff, loss of sediment, loss of
nutrients and runoff of other pollutants.
(iv) Design and implementation of best management
practices necessary to restrict livestock access to
streams if there is established and maintained a riparian
forest buffer with a minimum width of 50 feet.
(v) Establishment of a riparian forest buffer with
a minimum width of 50 feet.
(2) A tax credit equal to 50% of the eligible costs
under subsection (c) of a project authorized under section
1707-E shall be granted for any of the following:
(i) For an agricultural operation, design and
implementation of agricultural best management practices
or the installation and use of equipment, provided that
the best management practice or equipment is necessary
to reduce existing sediment and nutrient pollution to
surface waters. Such best management practices and
equipment shall be identified by the commission and may
include manure storage systems, alternative uses for
manure, filter strips, grassed waterways, management
intensive grazing systems and no-till planting equipment.
(ii) Design and implementation of best management
practices necessary to exclude livestock access to
streams through fencing, stabilized crossings and
improved watering systems, if there is established and
maintained a vegetated riparian or riparian forest buffer
with a minimum width of 35 feet.
(iii) The remediation of legacy sediment, if the
legacy sediment is exposed and discharges or threatens
to discharge into surface waters as a result of acute
stream bank erosion. The project shall meet standards
established by the commission as being effective in
mitigating or eliminating the harmful effects of legacy
sediment.
((2) amended June 28, 2019, P.L.50, No.13)
(3) ((3) deleted by amendment June 28, 2019, P.L.50,
No.13).
(4) Notwithstanding any other provision of this section,
a tax credit equal to 90% of the eligible costs under
subsection (c) of a project authorized under section 1707-E
may be granted for certain high-priority best management
practices as determined by the commission and implemented
within a watershed covered under an approved TMDL, including:
(i) Riparian forest buffers and their maintenance.
(ii) Livestock exclusion from streams and supporting
practices.
(iii) Stream crossings.
(iv) Cover crops.
(v) Soil health best management practices as
determined appropriate by the commission.
(vi) Other best management practices as determined
appropriate by the commission.
((4) added June 28, 2019, P.L.50, No.13)
(c) Costs of project.--
(1) The following shall be considered eligible costs
of a project to which a tax credit may be applied:
(i) Project design, engineering and associated
planning.
(ii) Project management costs, including
contracting, document preparation and applications.
(iii) Project construction or installation.
(iv) Equipment, materials and all other components
of projects eligible under subsection (a).
(v) Postconstruction inspections.
(vi) Interest payments on loans for project
implementation for up to one year prior to the award of
the tax credit.
(2) A tax credit shall not be applied to that portion
of a project cost for which public funding was received.
(3) Eligible costs of a project shall include any of
the services listed in paragraph (1) that may be provided
by a conservation district.
(4) Notwithstanding any other provision of this article,
tax credits for annual maintenance best management practices,
such as cover crops, buffer maintenance and other annual
practices approved by the commission, shall not exceed fixed
rates or schedules established by the commission in annual
program guidelines.
((c) amended June 28, 2019, P.L.50, No.13)
(1704-E added July 25, 2007, P.L.373, No.55)
Section 1705-E. Project certification.
A project shall be certified by the commission as meeting
standards under section 1704-E(a)(5) by the following:
(1) a best management practice that currently requires
review and certification by a registered professional
engineer under current law or applicable regulation:
registered professional engineer;
(2) riparian forest buffer: technical service provider
or staff from a conservation district or USDA-NRCS approved
by the commission; ((2) amended June 28, 2019, P.L.50, No.13)
(3) nutrient management plan or manure management plan:
a nutrient management specialist or any person trained and
experienced in manure and nutrient management planning
techniques and whose qualifications are acceptable to the
commission; and ((3) amended June 28, 2019, P.L.50, No.13)
(4) agricultural erosion and sediment control plan or
conservation plan: any person trained and experienced in
erosion and sediment control or conservation methods and
techniques and whose qualifications are determined acceptable
by the commission.
(1705-E added July 25, 2007, P.L.373, No.55)
Section 1706-E. Project maintenance and life expectancy.
(a) Best management practice.--An agricultural operation
shall maintain a best management practice for the life of the
practice as established by the commission. A riparian forest
buffer shall be maintained for a minimum of 15 years.
(b) Failure.--If the commission determines that a best
management practice is not maintained for the period required
under subsection (a), the owner of the property upon which the
project exists shall return to the department the amount of the
tax credit originally granted. Any amount paid to the department
under this subsection shall be deposited in the General Fund.
(c) Exception.--If the recipient of a tax credit provides
prior written notification to the commission that the recipient
will be unable to maintain a best management practice due to
sale of the property, cessation of an agricultural operation
or other factors, the commission may direct the department to
prorate the amount of the tax credit that shall be returned
based on the remaining lifespan of the best management practice
in question.
(1706-E added July 25, 2007, P.L.373, No.55)
Section 1707-E. Application, review and authorization by
commission.
(a) Application process.--An eligible applicant shall apply
to the commission for authorization that a project is eligible
for a tax credit under this program. An application shall be
developed by the commission and shall include:
(1) Type and location of project under section
1704-E(b).
(2) Total cost of project as outlined in section
1704-E(c).
(3) Verification of eligibility under section 1704-E(a).
(b) Review, notification and authorization.--The commission
shall, within 60 days of receipt, review each application and
notify an eligible applicant whether or not the eligible
applicant meets the requirements and is authorized to receive
a tax credit under this article.
(c) Authorization of tax credit.--The commission shall not
authorize tax credits that exceed the limits under sections
1703-E(b) and 1709-E. The commission shall authorize tax credits
on a first-come, first-served basis.
(d) Completion of project.--Upon completion of a project
authorized under this section, an eligible applicant shall
submit to the commission written notice of project completion.
Such notice shall include:
(1) Proof of certification as required by section 1705-E
that the project is complete.
(2) A maintenance plan as required by section 1707-E(a)
for each best management practice, if applicable to the
project.
(3) Any other documents as may be required by the
commission.
(e) Notification to department.--Upon determination that a
project authorized under this section is complete, the
commission shall provide notification to the department:
(1) that the eligible applicant has completed a project
which meets the criteria for a tax credit under this article;
and
(2) the amount of tax credit for the eligible applicant.
(f) Inspection.--Projects authorized under this section may
be subject to inspection by the commission or its designated
agent.
(1707-E added July 25, 2007, P.L.373, No.55)
Section 1708-E. Grant of tax credit.
The following shall apply:
(1) The department shall grant a tax credit authorized
under section 1707-E. The department shall, within 60 days
of receipt of notice under section 1707-E(e), issue a notice
of grant of a tax credit to the eligible applicant.
(2) Before a tax credit is granted, the department must
make a finding that the applicant has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined
at settlement or assessment by the department.
(1708-E added July 25, 2007, P.L.373, No.55)
Section 1709-E. Annual tax credits.
(a) Total amount.--The total amount of tax credits
authorized by the commission shall not exceed $13,000,000 in
any fiscal year.
(b) Chesapeake Bay watershed
prioritization.--Notwithstanding any provision of this article
to the contrary, the commission may reserve and target up to
$3,000,000 of the total amount under subsection (a) in any
fiscal year for geographic areas and best management practices
for nutrient and sediment reductions within the Chesapeake Bay
watershed area.
(1709-E amended June 28, 2019, P.L.50, No.13)
Compiler's Note: Section 31 of Act 13 of 2019 provided that
the amendment of sections 1716-D(a), 1777-D, 1709-E,
1702-H, 1703-H, 1705-H(d) and (e) and 1706-H(a) of this
act shall apply to fiscal years beginning on or after
July 1, 2019.
Section 1710-E. Report and public information.
(a) General rule.--The commission, in consultation with the
department, shall annually report to the General Assembly on
the Resource Enhancement and Protection Tax Credit Program as
follows:
(1) The number of projects and the dollar amount of tax
credits granted under the program in the aggregate, by best
management practice and per project.
(2) The types, locations and costs of projects.
(3) The estimated benefits of the projects, including
pollution reduction.
(b) Identity.--The identity of each taxpayer utilizing a
resource enhancement and protection tax credit under this
article and the amount of credits approved and utilized by each
taxpayer shall be made available annually within a year of when
the credits were granted and shall constitute a public record,
notwithstanding any law providing for the confidentiality of
tax records. This information regarding taxpayer use of resource
enhancement and protection tax credits shall be made available
in accordance with the laws applicable to public information
and public records generally and need not be included in the
annual report to the General Assembly.
(1710-E added July 25, 2007, P.L.373, No.55)
ARTICLE XVII-F
EDUCATIONAL TAX CREDITS
(Art. repealed July 13, 2016, P.L.716, No.86)
Section 1701-F. Scope of article. (1701-F repealed July 13,
2016, P.L.716, No.86)
Section 1702-F. Definitions. (1702-F repealed July 13, 2016,
P.L.716, No.86)
Section 1703-F. Qualification and application by organizations.
(1703-F repealed July 13, 2016, P.L.716, No.86)
Section 1704-F. Application by business firms. (1704-F
repealed July 13, 2016, P.L.716, No.86)
Section 1705-F. Tax credits. (1705-F repealed July 13, 2016,
P.L.716, No.86)
Section 1706-F. Limitations. (1706-F repealed July 13, 2016,
P.L.716, No.86)
Section 1707-F. Lists. (1707-F repealed July 13, 2016,
P.L.716, No.86)
Section 1708-F. Guidelines. (1708-F repealed July 13, 2016,
P.L.716, No.86)
Section 1709-F. Opportunity scholarships. (1709-F repealed
July 13, 2016, P.L.716, No.86)
Section 1710-F. Low-achieving schools. (1710-F repealed July
13, 2016, P.L.716, No.86)
Section 1711-F. School participation in program. (1711-F
repealed July 13, 2016, P.L.716, No.86)
Section 1712-F. Tuition grants by school districts. (1712-F
repealed July 13, 2016, P.L.716, No.86)
Section 1713-F. Original jurisdiction. (1713-F repealed July
13, 2016, P.L.716, No.86)
ARTICLE XVII-G
RESOURCE MANUFACTURING TAX CREDIT
(Art. added July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 30(6) of Act 85 of 2012, which
added Article XVII-G, provided that Article XVII-G shall
apply to the purchase of ethane for the period after
December 31, 2016, and before January 1, 2043.
Section 1701-G. Scope of article.
This article establishes a resource manufacturing tax credit.
(1701-G added July 2, 2012, P.L.751, No.85)
Section 1702-G. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Company." Any corporation, partnership, limited liability
company, limited liability partnership, business trust,
affiliate, unincorporated joint venture or other business
entity, doing business within this Commonwealth.
"Department." The Department of Revenue of the Commonwealth.
"Downstream company." Includes a company that uses chemical
products or chemical compounds manufactured or processed by a
qualified taxpayer as a raw material in its production process
in this Commonwealth.
"Ethane." A colorless, odorless gaseous alkane, C2H6, which
occurs as a constituent of natural gas and is used as the raw
material in the manufacturing of ethylene.
"Ethylene." An organic hydrocarbon compound with the formula
C2H4 or H2C=CH2, that is derived from natural gas and petroleum.
"Gallon." A United States liquid gallon equal to a volume
of 231 cubic inches and equal to 3.785411784 liters or 0.13368
cubic feet, where volumetric measurements made at ambient
flowing conditions are typically adjusted for composition and
to standard conditions using established industry standard
practices.
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified tax liability." The liability for taxes imposed
under Articles III, IV, VI, VII, VIII, IX, XI and XV. The term
does not include tax withheld under section 316.1. (Def. amended
Oct. 30, 2017, P.L.672, No.43)
"Qualified taxpayer." A company that satisfies all of the
following:
(1) Purchases ethane for use in manufacturing ethylene
at a facility in this Commonwealth which has been placed in
service on or after the effective date of this article.
(2) Has made a capital investment of at least
$1,000,000,000 in order to construct the facility and place
it into service in this Commonwealth.
(3) Has created at least 2,500 full-time equivalent
jobs during the construction phase in order to construct the
facility and place it into service in this Commonwealth.
"Tax credit." The resource manufacturing tax credit provided
under this article.
"Upstream company." Includes a company that is engaged in
the exploration, development, production, processing, refining
or transportation of natural gas, natural gas liquids or
petroleum in this Commonwealth.
(1702-G added July 2, 2012, P.L.751, No.85)
Section 1703-G. Application and approval of tax credit.
(a) Rate.--The tax credit shall be equal to $0.05 per gallon
of ethane purchased and used in manufacturing ethylene in this
Commonwealth by a qualified taxpayer.
(b) Application.--
(1) A qualified taxpayer may apply to the department
for a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed for ethane purchased
and used by the qualified taxpayer during the prior calendar
year. The application must be on the form required by the
department.
(3) The department may require information necessary
to document the amount of ethane purchased and used.
(c) Review and approval.--
(1) The department shall review and approve or
disapprove the applications by March 20.
(2) Upon approval, the department shall issue a
certificate stating the amount of tax credit granted for
ethane purchased in the prior calendar year.
(1703-G added July 2, 2012, P.L.751, No.85)
Section 1704-G. Use of tax credits.
(a) Initial use.--Prior to sale or assignment of a tax
credit under section 1706-G, a qualified taxpayer must first
use a tax credit against the qualified tax liability incurred
in the taxable year for which the tax credit was approved.
(b) Eligibility.--The credit may be applied against up to
20% of the qualified taxpayer's qualified tax liabilities
incurred in the taxable year for which the credit was approved.
(c) Application.--The tax credit shall be applied against
the qualified taxpayer's liability only after all other
statutory tax credits and deductions available to the qualified
taxpayer have been used.
(d) Limit.--A qualified taxpayer that has been granted a
tax credit under this article shall be ineligible for any other
tax credit provided under this act.
(1704-G added July 2, 2012, P.L.751, No.85)
Section 1705-G. Carryover, carryback and refund.
A tax credit cannot be carried back, carried forward or be
used to obtain a refund.
(1705-G added July 2, 2012, P.L.751, No.85)
Section 1706-G. Sale or assignment.
(a) Authorization.--If a qualified taxpayer holds a tax
credit through the end of the calendar year in which the tax
credit was granted, the qualified taxpayer may sell or assign
a tax credit, in whole or in part.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must file an application for the sale or assignment of the
tax credit with the Department of Community and Economic
Development. The application must be on a form required by
the Department of Community and Economic Development.
(2) To approve an application, the Department of
Community and Economic Development must receive:
(i) a finding from the department that the applicant
has:
(A) filed all required State tax reports and
returns for all applicable taxable years; and
(B) paid any balance of State tax due as
determined by assessment or determination by the
department and not under timely appeal; and
(ii) in the case of a sale or assignment to a
company that is not an upstream company or downstream
company, a certification from the qualified taxpayer
that the qualified taxpayer had offered to sell or assign
the tax credit:
(A) exclusively to a downstream company for a
period of 30 days following approval of the tax
credit under section 1703-G(c); and
(B) to an upstream company or downstream company
for a period of 30 days following expiration of the
period under clause (A).
(c) Approval.--Upon approval by the Department of Community
and Economic Development, a qualified taxpayer may sell or
assign, in whole or in part, a tax credit.
(1706-G added July 2, 2012, P.L.751, No.85)
Section 1707-G. Purchasers and assignees.
(a) Time.--The purchaser or assignee under section 1706-G
must claim the tax credit in the calendar year in which the
purchase or assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1706-G may use against any one
qualified tax liability may not exceed 50% of any of the
qualified tax liabilities for the taxable year.
(c) Resale and reassignment.--
(1) A purchaser under section 1706-G may not sell or
assign the purchased tax credit.
(2) An assignee under section 1706-G may not sell or
assign the assigned tax credit.
(d) Notice.--The purchaser or assignee under section 1706-G
shall notify the department of the seller or assignor of the
tax credit in compliance with procedures specified by the
department.
(1707-G added July 2, 2012, P.L.751, No.85)
Section 1708-G. Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, it may elect in writing, according to procedures
established by the department, to transfer all or a portion of
the credit to shareholders, members or partners in proportion
to the share of the entity's distributive income to which the
shareholders, members or partners are entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Amount.--The amount of the tax credit that a transferee
under subsection (a) may use against any one qualified tax
liability may not exceed 20% of any qualified tax liabilities
for the taxable year.
(d) Time.--A transferee under subsection (a) must claim the
tax credit in the calendar year in which the transfer is made.
(e) Sale and assignment.--A transferee under subsection (a)
may not sell or assign the tax credit.
(1708-G added July 2, 2012, P.L.751, No.85)
Section 1709-G. Administration.
(a) Audits and assessments.--The department has the
following powers:
(1) To audit a qualified taxpayer claiming a tax credit
to ascertain the validity of the amount claimed.
(2) To issue an assessment against a qualified taxpayer
for an improperly issued tax credit. The procedures,
collection, enforcement and appeals of any assessment made
under this section shall be governed by Article II.
(b) Guidelines and regulations.--The department shall
develop written guidelines for the implementation of this
article. The guidelines shall be in effect until the department
promulgates regulations for the implementation of the provisions
of this article.
(1709-G added July 2, 2012, P.L.751, No.85)
Section 1710-G. Reports to General Assembly.
(a) Annual report.--By October 1, 2018, and October 1 of
each year thereafter, the department shall submit a report on
the tax credit provided by this article to the chairman and
minority chairman of the Appropriations Committee of the Senate,
the chairman and minority chairman of the Finance Committee of
the Senate, the chairman and minority chairman of the
Appropriations Committee of the House of Representatives and
the chairman and minority chairman of the Finance Committee of
the House of Representatives. The report must include the names
of the qualified taxpayers utilizing the tax credit as of the
date of the report and the amount of tax credits approved for,
utilized by or sold or assigned by a qualified taxpayer.
(b) Reconciliation report.--On May 1, 2028, the Department
of Community and Economic Development shall submit to the
Secretary of the Senate and the Chief Clerk of the House of
Representatives a reconciliation report on the effectiveness
of this article. This report shall include, at a minimum, the
following information for the preceding ten years:
(1) The name and business address of all qualified
taxpayers who have been granted tax credits under this
article.
(2) The amount of tax credits granted to each qualified
taxpayer.
(3) The total number of jobs created by the qualified
taxpayer, upstream company and downstream company and any
companies that provide goods, utilities or other services
that support the business operations of the qualified
taxpayer and upstream company and downstream company. This
paragraph includes the average annual salary and hourly wage
information.
(4) The amount of taxes paid under Article II by the
qualified taxpayer, upstream company and downstream company
and any companies that provide goods, utilities or other
services that support the business operations of the
qualified taxpayer and upstream company and downstream
company.
(5) The amount of taxes withheld from employees or paid
by members, partners or shareholders of the pass-through
entities under Article III of the qualified taxpayer,
upstream company and downstream company, and any companies
that provide goods, utilities or other services that support
the business operations of the qualified taxpayer and
upstream company and downstream company.
(6) The amount of taxes paid under Article IV by the
qualified taxpayer, upstream company and downstream company
and any companies that provide goods, utilities or other
services that support the business operations of the
qualified taxpayer and upstream company and downstream
company.
(7) The amount of taxes paid under Article VI by the
qualified taxpayer, upstream company and downstream company
and any companies that provide goods, utilities or other
services that support the business operations of the
qualified taxpayer and upstream company and downstream
company.
(8) The amount of taxes paid under Article XI by the
qualified taxpayer, upstream company and downstream company
and any companies that provide goods, utilities or other
services that support the business operations of the
qualified taxpayer and upstream company and downstream
company.
(9) The amount of any other State or local taxes paid
by the qualified taxpayer, upstream company and downstream
company and any companies that provide goods, utilities or
other services that support the business operations of the
qualified taxpayer and upstream company and downstream
company.
(10) Any other information pertaining to the economic
impact of this article in this Commonwealth.
(c) Reduction.--If the reconciliation report issued under
subsection (b) reveals that the total amount of the tax credits
granted under this article exceeds the total amount of tax
revenue reported under subsection (b)(4) through (9), the report
must include any recommendation for changes in the calculation
of the credit.
(d) Publication.--The reports required by this section shall
be public records and shall be available electronically on the
Internet website of either the department or the Department of
Community and Economic Development. The reports required by
this section shall not contain "confidential proprietary
information" as defined in section 102 of the act of February
14, 2008 (P.L.6, No.3), known as the Right-to-Know Law.
(1710-G added July 2, 2012, P.L.751, No.85)
Section 1711-G. Expiration.
This article shall expire December 31, 2044.
(1711-G added July 2, 2012, P.L.751, No.85)
ARTICLE XVII-G.1
EDUCATIONAL OPPORTUNITY SCHOLARSHIP TAX CREDIT
(Art. hdg. repealed Oct. 31, 2014, P.L.2929, No.194)
Section 1701-G.1. Scope of article. (1701-G.1 repealed Oct.
31, 2014, P.L.2929, No.194)
Section 1702-G.1. Definitions. (1702-G.1 repealed Oct. 31,
2014, P.L.2929, No.194)
Section 1703-G.1. Qualification and application. (1703-G.1
repealed Oct. 31, 2014, P.L.2929, No.194)
Section 1704-G.1. Tax credit application. (1704-G.1 repealed
Oct. 31, 2014, P.L.2929, No.194)
Section 1705-G.1. Tax credit. (1705-G.1 repealed Oct. 31,
2014, P.L.2929, No.194)
Section 1706-G.1. Tax credit limitations. (1706-G.1 repealed
Oct. 31, 2014, P.L.2929, No.194)
Section 1707-G.1. Tax credit lists. (1707-G.1 repealed Oct.
31, 2014, P.L.2929, No.194)
Section 1708-G.1. Scholarships. (1708-G.1 repealed Oct. 31,
2014, P.L.2929, No.194)
Section 1709-G.1. Low-achieving schools. (1709-G.1 repealed
Oct. 31, 2014, P.L.2929, No.194)
Section 1710-G.1. School participation in program. (1710-G.1
repealed Oct. 31, 2014, P.L.2929, No.194)
Section 1711-G.1. Tuition grants by school districts.
(1711-G.1 repealed Oct. 31, 2014, P.L.2929, No.194)
Section 1712-G.1. Original jurisdiction. (1712-G.1 repealed
Oct. 31, 2014, P.L.2929, No.194)
ARTICLE XVII-H
HISTORIC PRESERVATION INCENTIVE TAX CREDIT
(Art. added July 2, 2012, P.L.751, No.85)
Section 1701-H. Scope of article.
This article relates to the historic preservation incentive
tax credit.
(1701-H added July 2, 2012, P.L.751, No.85)
Section 1702-H. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Commission." The Pennsylvania Historical and Museum
Commission.
"Completed project." The completion of the rehabilitation
of a qualified historic structure in accordance with a qualified
rehabilitation plan and the receipt of an occupancy certificate
for the structure.
"Department." The Department of Revenue of the Commonwealth.
"Internal Revenue Code." The Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Qualified expenditures." The costs and expenses incurred
by a qualified taxpayer in the rehabilitation of a qualified
historic structure pursuant to a qualified rehabilitation plan
and which are defined as qualified rehabilitation expenditures
under section 47(c)(2) of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 47(c)(2)).
"Qualified historic structure." A building located in this
Commonwealth that qualifies as a certified historic structure
under section 47(c)(3) of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 47(c)(3)).
"Qualified rehabilitation plan." A plan to rehabilitate a
qualified historic structure that is approved by the
Pennsylvania Historical and Museum Commission as being
consistent with the standards for rehabilitation and guidelines
for rehabilitation of historic buildings as adopted by the
United States Secretary of the Interior.
"Qualified tax liability." Tax liability imposed on a
taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV,
excluding any tax withheld by an employer under Article III.
"Qualified taxpayer." Any natural person, corporation,
business trust, limited liability company, partnership, limited
liability partnership, association or any other form of legal
business entity that:
(1) Is subject to a tax imposed under Article III, IV,
VI, VII, VIII, IX, XI or XV, excluding any tax withheld by
an employer under Article III.
(2) Owns a qualified historic structure.
"Region." A community action team region as established by
the Department of Community and Economic Development.
"Workforce housing project." A completed project in which,
for a period of seven years after the building is placed in
service, at least 20% of the units meet the Department of
Housing and Urban Development's definition of "affordable" for
individuals earning 80% of the area median income.
(1702-H amended June 28, 2019, P.L.50, No.13)
Compiler's Note: Section 31 of Act 13 of 2019 provided that
the amendment of sections 1716-D(a), 1777-D, 1709-E,
1702-H, 1703-H, 1705-H(d) and (e) and 1706-H(a) of this
act shall apply to fiscal years beginning on or after
July 1, 2019.
Section 1703-H. Tax credit certificates.
(a) Application.--
(1) A qualified taxpayer may apply to the Department
of Community and Economic Development for a tax credit
certificate under this section.
(2) The application shall be on the form required by
the Department of Community and Economic Development, shall
include a qualified rehabilitation plan, shall state whether
the project meets the definition of "workforce housing
project" and, if applicable, shall include the plan for the
project to meet the definition of "workforce housing
project."
(3) The Department of Community and Economic Development
shall establish an application processing fee. The fee
structure shall be tiered based on the amount of tax credits
requested and in no case shall exceed $2,000.
(4) The proceeds of the fee under paragraph (3) shall
be deposited into the Historic Rehabilitation Tax Credit
Administration Account, which is established as a special
fund in the State Treasury. The money in the account shall
be appropriated on a continuing basis to the Department of
Community and Economic Development and used by the commission
and the Department of Community and Economic Development to
offset the costs of the review of tax credit applications
and awarding of tax credit certificates.
(5) The Department of Community and Economic Development
shall begin accepting applications for credit certificates
on October 1 and close the initial application period on
October 31.
(b) Review, recommendation and approval.--
(1) The Department of Community and Economic Development
shall forward applications received under this section to
the commission for review.
(2) ((2) deleted by amendment).
(2.1) The commission shall review the proposed
rehabilitation plan in each application, verify that the
building is a qualified historic structure and by December
1 provide the Department of Community and Economic
Development with a list of eligible projects.
(2.2) The Department of Community and Economic
Development shall allocate the credits and release a list
of allocated projects within 15 days. Applicants with
approved allocations shall be provided with an award letter.
(2.3) Any amount of tax credit certificates up to the
annual program limit of $20,000,000 not awarded within the
initial application period shall be available on a
first-come, first-served basis through a process determined
by the Department of Community and Economic Development.
((2.3) amended July 11, 2024, P.L. , No.56)
(3) The commission shall notify the Department of
Community and Economic Development of verification of a
completed project and notify the Department of Community and
Economic Development of the amount of qualified expenditures
incurred by the taxpayer in connection with the completed
project.
(4) If the Department of Community and Economic
Development has approved the application and received
notification of a completed project, it shall issue the
qualified taxpayer a tax credit certificate within 45 days
of the receipt of an approved, completed project. A tax
credit certificate issued under this section shall not exceed
either:
(i) twenty-five percent of qualified expenditures
determined by the commission to have been incurred by
the qualified taxpayer in connection with the completed
project; or
(ii) thirty percent of qualified expenditures
determined by the commission to have been incurred by
the qualified taxpayer in connection with a workforce
housing project.
(5) In granting tax credit certificates under this
article, the Department of Community and Economic
Development:
(i) Shall not grant more than $20,000,000 in tax
credit certificates in any fiscal year exclusive of any
tax credit certificates not awarded or returned from
previous fiscal years. ((i) amended July 11, 2024, P.L.
, No.56)
(ii) Shall not grant more than $500,000 in tax
credit certificates to a single qualified taxpayer in
any fiscal year.
(iii) Shall assure that credits are awarded in an
equitable manner to each region in this Commonwealth.
However, credits allocated to a region that are unclaimed
shall be promptly reallocated to eligible projects in
other regions.
(6) ((6) deleted by amendment).
(1703-H amended June 28, 2019, P.L.50, No.13)
Compiler's Note: Section 30(8) of Act 56 of 2024 provided
that the amendment of subsection (b) shall apply to fiscal
years beginning after June 30, 2024.
Compiler's Note: Section 31 of Act 13 of 2019 provided
that the amendment of sections 1716-D(a), 1777-D, 1709-E,
1702-H, 1703-H, 1705-H(d) and (e) and 1706-H(a) of this
act shall apply to fiscal years beginning on or after
July 1, 2019.
Section 1704-H. Claiming the credit.
Upon presenting a tax credit certificate to the department,
the qualified taxpayer may claim a tax credit against the
qualified tax liability of the qualified taxpayer.
(1704-H added July 2, 2012, P.L.751, No.85)
Section 1705-H. Carryover, carryback and assignment of credit.
(a) General rule.--If a qualified taxpayer cannot use the
entire amount of the tax credit for the taxable year in which
the tax credit is first approved, then the excess may be carried
over to succeeding taxable years and used as a credit against
the qualified tax liability of the qualified taxpayer for those
taxable years. Each time the tax credit is carried over to a
succeeding taxable year, it shall be reduced by the amount that
was used as a credit during the immediately preceding taxable
year. The tax credit provided by this article may be carried
over and applied to succeeding taxable years for not more than
seven taxable years following the first taxable year for which
the qualified taxpayer was entitled to claim the credit.
(b) Application.--A tax credit certificate received by the
department in a taxable year first shall be applied against the
qualified taxpayer's qualified tax liability for the current
taxable year as of the date on which the credit was issued
before the tax credit can be applied against any qualified tax
liability under subsection (a).
(c) No carryback or refund.--A qualified taxpayer may not
carry back or obtain a refund of all or any portion of an unused
tax credit granted to the qualified taxpayer under this article.
(d) Sale or assignment.--The following shall apply:
(1) A qualified taxpayer or a purchaser or assignee of
a tax credit obtained under section 1703-H or a shareholder,
member or partner of a pass-through entity that was
transferred the tax credit or a portion of the tax credit
from such pass-through entity subject to section 1706-H,
upon application to and approval by the Department of
Community and Economic Development, may sell or assign, in
whole or in part, a tax credit granted to the qualified
taxpayer under this article.
(2) Before an application is approved, the department
must find that the applicant has filed all required State
tax reports and returns for all applicable taxable years and
paid any balance of State tax due as determined at
settlement, assessment or determination by the department.
((d) amended June 28, 2019, P.L.50, No.13)
(e) Purchasers and assignees.--
(1) If a purchaser or assignee of all or a portion of
a tax credit obtained under section 1703-H cannot use the
entire amount of the tax credit for the taxable year in which
the tax credit was purchased or assigned, the excess may be
carried over to succeeding taxable years and used as a credit
against the qualified tax liability of the purchaser or
assignee for those taxable years.
(2) Each time a tax credit is carried over to a
succeeding taxable year, the tax credit shall be reduced by
the amount that was used as a credit during the immediately
preceding taxable year.
(3) The tax credit may be carried over and applied to
succeeding taxable years for not more than seven taxable
years following the first taxable year for which the
qualified taxpayer was entitled to claim the credit.
(4) The purchaser or assignee may not carry back the
credit or obtain a refund.
((e) amended June 28, 2019, P.L.50, No.13)
(1705-H added July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 31 of Act 13 of 2019 provided that
the amendment of sections 1716-D(a), 1777-D, 1709-E,
1702-H, 1703-H, 1705-H(d) and (e) and 1706-H(a) of this
act shall apply to fiscal years beginning on or after
July 1, 2019.
Section 1706-H. Pass-through entity.
(a) General rule.--If a pass-through entity has any unused
tax credit under section 1705-H, it may elect, in writing,
according to procedures established by the department, to
transfer all or a portion of the credit to its shareholders,
members or partners in proportion to the share of the entity's
distributive income to which the shareholder, member or partner
is entitled. ((a) amended June 28, 2019, P.L.50, No.13)
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity shall not claim the
credit under subsection (a) for the same qualified expenditures.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a credit is transferred under
subsection (a) shall immediately claim the credit in the taxable
year in which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund of
or sell or assign the credit.
(1706-H added July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 31 of Act 13 of 2019 provided that
the amendment of sections 1716-D(a), 1777-D, 1709-E,
1702-H, 1703-H, 1705-H(d) and (e) and 1706-H(a) of this
act shall apply to fiscal years beginning on or after
July 1, 2019.
Section 1707-H. Administration.
The Department of Community and Economic Development, the
commission and the department shall jointly develop written
guidelines for the implementation of the provisions of this
article.
(1707-H added July 2, 2012, P.L.751, No.85)
Section 1707.1-H. Annual report to General Assembly.
(a) Report on tax credit.--By October 1, 2020, and October
1 of each year thereafter, the Department of Community and
Economic Development shall submit a report on the tax credit
under this article to:
(1) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
(2) The chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(3) The chairperson and minority chairperson of the
Finance Committee of the Senate.
(4) The chairperson and minority chairperson of the
Finance Committee of the House of Representatives.
(b) Report content.--The report shall include:
(1) The list of completed projects that have been
awarded tax credits.
(2) The amount of Federal rehabilitation tax credits
received by each completed project.
(3) The amount of State historic preservation incentive
tax credits received by each completed project.
(4) Total project costs and the amount of private
investment in each completed project.
(5) The total number of completed projects placed into
service in the past year that were vacant for at least 12
months prior to commencement of rehabilitation work.
(6) The total number of completed projects placed into
service in the past year that had not paid property taxes
for at least 12 months prior to the commencement of
rehabilitation work.
(7) The total number of temporary construction jobs and
permanent jobs created by completed projects placed into
service in the prior year.
(8) The amount of workforce housing projects placed
into service in the prior year.
(c) Information to be posted on public Internet
website.--Notwithstanding any law providing for the
confidentiality of tax records, the information in the report
shall be public information and shall be posted on the
Department of Community and Economic Development's publicly
accessible Internet website.
(d) Review of tax credit program.--The Department of
Community and Economic Development, in cooperation with the
commission, shall undertake a review of the Historic
Preservation Incentive Tax Credit Program to determine the
effectiveness of the program in preserving and rehabilitating
the Commonwealth's historic structures and the impact these
efforts have had on the stimulation of investment in this
Commonwealth. The results of the review shall be included in
the annual report due October 1, 2025.
(1707.1-H added June 28, 2019, P.L.50, No.13)
Section 1708-H. Application of Internal Revenue Code.
The provisions of section 47 of the Internal Revenue Code
and the regulations promulgated regarding those provisions shall
apply to the department's interpretation and administration of
the credit provided under this article without regard to ratably
allocating the credit over a five-year period as required by
section 47(a) of the Internal Revenue Code. References to the
Internal Revenue Code shall mean the sections of the Internal
Revenue Code as existing on any date of interpretation of this
article, except, if those sections of the Internal Revenue Code
referenced in this article are repealed or terminated,
references to the Internal Revenue Code shall mean those
sections last having full force and effect without regard to
ratably allocating the credit over a five-year period as
required by section 47(a) of the Internal Revenue Code. If after
repeal or termination the Internal Revenue Code sections are
revised or reenacted, references in this article to Internal
Revenue Code sections shall mean those revised or reenacted
sections.
(1708-H amended June 28, 2019, P.L.50, No.13)
Section 1709-H. Limitation.
Taxpayers shall not be entitled to apply for historic
preservation tax credits after February 1, 2031.
(1709-H amended June 28, 2019, P.L.50, No.13)
Section 1710-H. Recapture.
In the event that a tax credit or a portion of a tax credit
is subject to recapture and the tax credit has been purchased,
assigned or transferred, the Commonwealth shall pursue its
recapture remedies and rights against the qualified taxpayer
that applied for the credit. No redress shall be sought against
an assignee, purchaser or transferee of the tax credit if the
assignee, purchaser or transferee acquired the tax credit by
way of an arm's-length transaction, for value and without notice
of violation, fraud or misrepresentation.
(1710-H added June 28, 2019, P.L.50, No.13)
ARTICLE XVII-I
COMMUNITY-BASED SERVICES TAX CREDIT
(Art. added July 2, 2012, P.L.751, No.85)
Section 1701-I. Scope of article.
This article relates to community-based services tax credits.
(1701-I added July 2, 2012, P.L.751, No.85)
Section 1702-I. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Business firm." An entity authorized to do business in
this Commonwealth and subject to taxes imposed under Article
III, IV, VI, VII, VIII, IX or XV.
"Contribution." A donation of cash, personal property or
services, the value of which is the net cost of the donation
to the donor or the pro rata hourly wage, including benefits,
of the individual performing the service.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Individual." An individual who is eligible for
community-based services funded through the Office of
Developmental Programs and the Office of Mental Health and
Substance Abuse Services of the Department of Public Welfare.
"Provider." A nonprofit entity that meets all of the
following:
(1) Provides community-based services to individuals
with intellectual disabilities or mental illness.
(2) Is exempt from Federal taxation under section
501(c)(3) of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 1 et seq.).
(1702-I added July 2, 2012, P.L.751, No.85)
Compiler's Note: The Department of Public Welfare, referred
to in this section, was redesignated as the Department
of Human Services by Act 132 of 2014.
Section 1703-I. Community-based services tax credit program.
(a) Establishment.--A community-based services tax credit
program is established to supplement, not supplant, existing
Federal and State funding for community-based services for
individuals in this Commonwealth.
(b) Information.--In order to qualify under this article,
a provider must submit information to the department that
enables the department to confirm that the provider is exempt
from taxation under section 501(c)(3) of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
(c) Provider application.--
(1) An application submitted to the department by the
provider must describe the community-based services it
provides to individuals on a form provided by the department.
(2) The department shall consult with the Department
of Public Welfare as necessary to determine that the provider
provides community-based services for individuals. The
department shall review and approve or disapprove the
application.
(d) Notification.--The department shall notify the provider
that the provider meets the requirements under this article for
that fiscal year no later than 60 days after the provider has
submitted the application required under this section.
(e) Publication.--The department shall annually publish a
list of each provider qualified under this section in the
Pennsylvania Bulletin. The list shall also be posted and updated
as necessary on the publicly accessible Internet website of the
department.
(1703-I added July 2, 2012, P.L.751, No.85)
Compiler's Note: The Department of Public Welfare, referred
to in this section, was redesignated as the Department
of Human Services by Act 132 of 2014.
Section 1703.1-I. Restriction on use of contributions.
The contributions received by a provider from a business
firm claiming a tax credit under this article must be used for
direct care or services relating to direct care of individuals.
(1703.1-I added July 2, 2012, P.L.751, No.85)
Section 1704-I. Availability of tax credits.
(a) Application.--A business firm may apply to the
department for a tax credit under section 1705-I. A business
firm may receive a tax credit under this article if the provider
that receives the contribution from the business firm appears
on the list under section 1703-I(e).
(b) Availability of tax credits.--Tax credits under this
section shall be made available by the department on a
first- come, first-served basis within the limitation
established under section 1706-I(a).
(c) Contributions.--A contribution by a business firm to a
provider shall be made no later than 60 days following the
approval of an application under subsection (a).
(1704-I added July 2, 2012, P.L.751, No.85)
Section 1705-I. Grant of tax credits.
(a) General rule.--In accordance with section 1706-I(a),
the department shall grant a tax credit certificate. The
certificate may be used against a tax liability owed to the
department by a business firm that provides proof of a
contribution to a provider in the taxable year in which the
contribution is made. The business firm may apply the credit
against any tax due under Article III, IV, VI, VII, VIII, IX
or XV, excluding any tax withheld by an employer under Article
III.
(b) Limitation.--The tax credit shall not exceed 50% of the
total amount contributed by a business firm to a provider during
the taxable year of the business firm. The tax credit shall not
exceed $100,000 annually per business firm.
(c) Additional amount.--
(1) A business firm that contributes to a provider in
two or more consecutive years shall qualify for a 75% tax
credit for the contributions made in the second year and
every consecutive year of making a contribution to a
provider.
(2) Nothing in this section shall be construed to
require a business firm to contribute to the same provider
every year in order for the business firm to qualify for a
tax credit under this subsection.
(1705-I added July 2, 2012, P.L.751, No.85)
Section 1706-I. Amount of tax credits.
(a) General rule.--The total aggregate amount of all tax
credits approved shall not exceed $3,000,000 in a fiscal year.
(b) Activities.--No tax credit shall be approved for
activities that are part of a business firm's normal course of
business.
(c) Tax liability.--A tax credit granted for any one taxable
year may not exceed the tax liability of a business firm.
(d) Use.--A tax credit not used in the taxable year the
contribution was made may not be carried forward or carried
back and is not refundable or transferable.
(1706-I added July 2, 2012, P.L.751, No.85)
Section 1707-I. Guidelines.
The department, in conjunction with the Department of Revenue
and the Department of Public Welfare may establish guidelines
as necessary to implement this article.
(1707-I added July 2, 2012, P.L.751, No.85)
Compiler's Note: The Department of Public Welfare, referred
to in this section, was redesignated as the Department
of Human Services by Act 132 of 2014.
Section 1708-I. Limitation.
A business firm shall not be entitled to apply for a tax
credit after the seventh fiscal year following the effective
date of this article.
(1708-I added July 2, 2012, P.L.751, No.85)
ARTICLE XVII-J
COAL REFUSE ENERGY AND
RECLAMATION TAX CREDIT
(Art. added July 13, 2016, P.L.526, No.84)
Section 1701-J. Scope of article.
This article establishes a coal refuse energy and reclamation
tax credit in recognition of the significant and tangible
benefits to the environment and savings in Commonwealth funds
provided by eligible facilities in reclaiming coal refuse piles
and previously mined lands.
(1701-J added July 13, 2016, P.L.526, No.84)
Section 1702-J. (Reserved).
(1702-J added July 13, 2016, P.L.526, No.84)
Section 1703-J. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Affiliate." A person that directly or indirectly through
one or more intermediaries controls, is controlled by or is
under common control with a qualified taxpayer. For purposes
of this definition, the terms "control," "controlling,"
"controlled by" and "under common control with" mean the
possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of a person,
whether through the ownership of 20% or more of the voting
securities, capital interests, profit interests or any similar
equity interests in a business association of a person by
contract or otherwise.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Eligible facility." An electric generating facility placed
in service before the effective date of this section consisting
of one or more units placed in service before the effective
date of this section that generates electricity located on the
same property and that:
(1) combusts qualified coal refuse or fuel composed of
at least 75% qualified coal refuse by BTU energy value in
the prior calendar year;
(2) utilizes at a minimum a circulating fluidized bed
combustion unit or pressurized fluidized bed combustion unit
equipped with a limestone injection system for control of
acid gases and a fabric filter particulate emission control
system; and
(3) beneficially uses ash produced by the facility in
the prior calendar year to reclaim mining-affected sites in
accordance with 25 Pa. Code Ch. 290 (relating to beneficial
use of coal ash) in amounts equal to at least 50% of the ash
produced by the facility in the prior calendar year.
"Federal coal refuse reclamation tax credit amount." The
actual amount of tax credits obtained by an eligible facility
under a Federal coal refuse reclamation tax credit program in
the four Federal tax quarters that precede the fiscal year in
which credits are awarded under section 1707-J(a). (Def. added
June 28, 2019, P.L.50, No.13)
"Federal coal refuse reclamation tax credit program." A
program established under the Federal Internal Revenue Code
that provides a tax credit for an eligible facility against
Federal income taxes based upon the amount of coal refuse used
at the eligible facility. (Def. added June 28, 2019, P.L.50,
No.13)
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified coal refuse." Any waste coal, rock, shale,
slurry, culm, gob, boney, slate, clay and related materials
associated with or near a coal seam that are either brought
above ground or otherwise removed from a coal mine in the
process of mining coal or that are separated from coal during
the cleaning or preparation operations. The term includes
underground development wastes, coal processing wastes and
excess spoil, but does not include overburden from surface
mining activities.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV, VI, VII, VIII, IX, XI or XV. The term
does not include tax withheld by an employer from an employee
under Article III.
"Qualified taxpayer." A person that owns an eligible
facility in this Commonwealth or is a transferor, purchaser,
affiliate or assignee of a person to which a tax credit
certificate is issued under this article.
"Tax credit." The coal refuse energy and reclamation tax
credit provided under this article.
"Ton." Two thousand pounds of qualified coal refuse,
including inherent moisture, ash, sulphur and other noncalorific
substances, but excluding excess moisture.
(1703-J added July 13, 2016, P.L.526, No.84)
Section 1704-J. Application and approval of tax credit.
(a) Application.--The following shall apply:
(1) A qualified taxpayer may apply to the department
for a tax credit under this section. The application shall
be on the form required by the department.
(2) The application must be submitted to the department
by February 1 of each year for the tax credit claimed for
qualified coal refuse used at an eligible facility during
the prior calendar year.
(b) Amount.--Except as otherwise provided under section
1707-J, a qualified taxpayer shall receive a tax credit equal
to $8 multiplied by the tons of qualified coal refuse used to
generate electricity at an eligible facility in this
Commonwealth by a qualified taxpayer in the previous calendar
year. ((b) amended July 11, 2024, P.L. , No.56)
(c) Review and approval.--The following shall apply:
(1) The department shall review and approve applications
meeting the requirements of this article by March 20 of each
year.
(2) The department may require information necessary
to document that a facility qualifies as an eligible facility
and the amount of qualified coal refuse used to generate
electricity at the eligible facility.
(3) In the review of applications for tax credits, the
department shall consult with the Department of Environmental
Protection with respect to whether a facility qualifies as
an eligible facility and to review the eligible facility's
calculation of the amount of qualified coal refuse used to
generate electricity.
(3.1) Prior to approving an application, the applicant
must have:
(i) filed all required State tax reports and returns
for all applicable taxable years; and
(ii) paid any balance of State tax due as determined
by assessment or determination by the Department of
Revenue and not under timely appeal.
(4) Upon approval, the department shall issue a
certificate stating the amount of tax credit granted for
qualified coal refuse used in the prior calendar year.
(c.1) Netting of Federal tax credit.--If a Federal coal
refuse reclamation tax credit program is adopted and becomes
effective, the following shall apply:
(1) Each eligible facility shall report as part of its
application under subsection (a) the Federal coal refuse
reclamation tax credit amount received by the eligible
facility for the four Federal tax quarters that immediately
preceded the submittal of the application.
(2) The amount of tax credits received by an eligible
facility as calculated under subsection (b) shall be reduced
by the Federal coal refuse reclamation tax credit amount
received by the eligible facility for the four Federal tax
quarters that immediately preceded the submittal of the
application under this section.
((c.1) added June 28, 2019, P.L.50, No.13)
(d) Expiration.--The department may not approve an
application for a tax credit under this article after December
31, 2036. ((d) amended June 28, 2019, P.L.50, No.13)
(1704-J added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 30(9) of Act 56 of 2024 provided
that the amendment of subsection (b) shall apply to fiscal
years beginning after June 30, 2024.
Section 1705-J. Claim of tax credit.
(a) General rule.--A qualified taxpayer may claim a tax
credit against the qualified tax liability of the qualified
taxpayer.
(b) Coal refuse use.--A tax credit may be claimed against
a qualified tax liability for a taxable year which begins in
the same calendar year that the qualified coal refuse was used
at the eligible facility to generate the tax credit.
(1705-J added July 13, 2016, P.L.526, No.84)
Section 1706-J. Carryover and carryback.
(a) General rule.--If a qualified taxpayer does not use all
or any portion of a tax credit for the taxable year in which
the tax credit is first approved, then the excess may be carried
over to succeeding taxable years and used as a credit against
the qualified tax liability of the qualified taxpayer for those
taxable years. Each time the tax credit is carried over to a
succeeding taxable year, it shall be reduced by the amount that
was used as a credit during the immediately preceding taxable
year. The tax credit provided by this article may be carried
over and applied to succeeding taxable years for no more than
15 taxable years following the first taxable year for which the
taxpayer was entitled to claim the credit.
(b) No carryback or refund.--A qualified taxpayer is not
entitled to carry back or obtain a refund of all or any portion
of an unused tax credit granted to the qualified taxpayer under
this article.
(1706-J added July 13, 2016, P.L.526, No.84)
Section 1707-J. Limitation on tax credits.
(a) Amount.--The total amount of tax credits issued by the
department may not exceed $7,500,000 in fiscal year 2016-2017,
$10,000,000 in fiscal years 2017-2018 and 2018-2019, $20,000,000
in fiscal years 2019-2020, 2020-2021, 2021-2022, 2022-2023 and
2023-2024 and $55,000,000 annually beginning in the 2024-2025
fiscal year and continuing each fiscal year thereafter. ((a)
amended July 11, 2024, P.L. , No.56)
(b) Proration.--If the total amount of otherwise approvable
tax credits applied for by all qualified taxpayers exceeds the
amount under subsection (a), the tax credit to be received by
each qualified taxpayer shall be the product of the amount under
subsection (a) multiplied by the quotient of the tax credits
otherwise approvable for the qualified taxpayer divided by the
total of all tax credits otherwise approvable for all qualified
taxpayers.
(c) Restriction.--Notwithstanding subsection (b), the
department may not grant more than 26.5% of the amount under
subsection (a) in tax credits to a single eligible facility in
any fiscal year. ((c) amended July 11, 2024, P.L. , No.56)
(d) Exception.--In a fiscal year where the full amount of
the tax credit is not utilized due to the restriction in
subsection (c), a facility not receiving the full per ton tax
credit for which the facility would otherwise be eligible shall
be provided, on a prorated basis as described in subsection
(b), up to the maximum per ton tax credit amount the facility
would otherwise be authorized to receive under this section.
((d) added July 11, 2024, P.L. , No.56)
(1707-J added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 30(9) of Act 56 of 2024 provided
that the amendment or addition of subsections (a), (c)
and (d) shall apply to fiscal years beginning after June
30, 2024.
Section 1708-J. Pass-through entity.
(a) Election.--If a tax credit certificate is issued to a
pass-through entity, the pass-through entity may elect in
writing, according to procedures established by the department,
to transfer all or a portion of the credit to shareholders,
members or partners in proportion to the share of the entity's
distributive income to which the shareholders, members or
partners are entitled or in any other manner designated by the
pass-through entity in accordance with its governance documents
and without regard to how distributive income, losses or credits
are allocated for other tax purposes.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or patron of the pass-through
entity.
(c) Time.--A transferee under subsection (a) may only use
a tax credit during a taxable year for which use of the credit
is authorized under sections 1704-J(c)(4) and 1706-J.
(1708-J added July 13, 2016, P.L.526, No.84)
Section 1709-J. Use of credits by affiliates.
In addition to reducing or eliminating the qualified tax
liability of a qualified taxpayer, a tax credit under this
article may be applied to reduce or eliminate the qualified tax
liability of any affiliate of a qualified taxpayer. An affiliate
may only use a tax credit during a taxable year for which use
of the credit is authorized under sections 1704-J(c)(4) and
1706-J.
(1709-J added July 13, 2016, P.L.526, No.84)
Section 1710-J. Sale or assignment.
(a) Authorization.--Upon approval by the Department of
Revenue, a qualified taxpayer may sell or assign, in whole or
in part, a tax credit granted to the taxpayer under this
article.
(b) Application.--The following shall apply:
(1) To sell or assign a tax credit, a qualified taxpayer
must file an application for the sale or assignment of the
tax credit with the Department of Revenue. The application
must be on a form required by the Department of Revenue.
(2) The Department of Revenue shall approve a sale or
assignment if the purchaser or assignee has:
(i) filed all required State tax reports and returns
for all applicable taxable years; and
(ii) paid any balance of State tax due as determined
by assessment or determination by the Department of
Revenue and not under timely appeal.
(1710-J added July 13, 2016, P.L.526, No.84)
Section 1711-J. Purchasers and assignees.
(a) Claim.--The purchaser or assignee of all or a portion
of a tax credit under section 1710-J shall immediately claim
the credit in the taxable year in which the purchase or
assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee may use against any one qualified tax liability may
not exceed 75% of such qualified tax liability for the taxable
year.
(c) Use.--The purchaser or assignee may not carry forward,
carry back or obtain a refund of or sell or assign the tax
credit.
(1711-J added July 13, 2016, P.L.526, No.84)
Section 1712-J. Administration.
(a) Audits and assessments.--The Department of Revenue has
the following powers:
(1) To audit a qualified taxpayer claiming a tax credit
to ascertain the validity of the amount claimed.
(2) To issue an assessment against a qualified taxpayer
for an improperly issued tax credit. The procedures,
collection, enforcement and appeals of any assessment made
under this section shall be governed by Article IV.
(b) Guidelines.--The department shall develop written
guidelines for the implementation of this article.
(1712-J added July 13, 2016, P.L.526, No.84)
Section 1713-J. Annual report to General Assembly.
By October 1, 2017, and October 1 of each year thereafter,
the department shall submit a report on the tax credit provided
by this article to the chairperson and minority chairperson of
the Appropriations Committee of the Senate, the chairperson and
minority chairperson of the Finance Committee of the Senate,
the chairperson and minority chairperson of the Appropriations
Committee of the House of Representatives and the chairperson
and minority chairperson of the Finance Committee of the House
of Representatives. The report must include:
(1) the names of the qualified taxpayers utilizing the
tax credit as of the date of the report and the amount of
tax credits approved for, utilized by or sold or assigned
by a qualified taxpayer; and
(2) data concerning the benefits provided to the
Commonwealth in terms of the quantity of coal refuse utilized
by qualifying facilities and the volume of coal ash generated
by qualifying facilities which is beneficially used to
reclaim mine-affected lands.
(1713-J added July 13, 2016, P.L.526, No.84)
Section 1714-J. Applicability.
The tax credit established under this article shall apply
to taxable years beginning after December 31, 2015.
(1714-J added July 13, 2016, P.L.526, No.84)
ARTICLE XVII-K
WATERFRONT DEVELOPMENT TAX CREDIT
(Art. added July 13, 2016, P.L.526, No.84)
Section 1701-K. Scope of article.
This article relates to the Waterfront Development Tax
Credit.
(1701-K added July 13, 2016, P.L.526, No.84)
Section 1702-K. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Business firm." An entity authorized to do business in
this Commonwealth and subject to taxes imposed under Article
III, IV, VI, VII, VIII, IX or XV or the tax under Article XVI
of the act of May 17, 1921 (P.L.682, No.284), known as The
Insurance Company Law of 1921. The term includes a pass-through
entity.
"Contribution." A donation of cash or personal property
made by a business firm to a waterfront development organization
to fund a waterfront development project under this article.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Pass-through entity." Any of the following:
(1) A partnership as defined under section 301(n.0).
(2) A Pennsylvania S corporation as defined under
section 301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Tax credit." The waterfront development tax credit
authorized by this article.
"Waterfront." A site that is directly adjacent to a body
of water.
"Waterfront development organization." An authority
established under the act of December 6, 1972 (P.L.1392,
No.298), known as the Third Class City Port Authority Act, or
a nonprofit entity that meets all of the following:
(1) For a nonprofit entity, is exempt from Federal
taxation under section 501(c)(3) of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 501(c)(3)).
(2) Has been in existence for a minimum of five years.
(3) Has a board of directors which meets at least once
annually.
(4) Has completed a waterfront development plan.
"Waterfront development plan." A plan approved by the
Department of Community and Economic Development that meets all
of the following:
(1) Provides for the development or enhancement of
waterfront property that creates public access to the water,
increases property values, restores ecology and catalyzes
further financial investment and job creation to incentivize
future economic development.
(2) Adheres to current environmental practices.
(3) Considers and integrates approaches that support
natural and native habitat.
(4) Considers and integrates architectural and landscape
design elements and standards.
"Waterfront development project." A project to develop a
waterfront site or area or a project that creates or improves
public access and connections to the waterfront. The term may
include:
(1) Streets and public rights-of-way.
(2) Waterfront parks, gardens and open spaces.
(3) Enhancement of access to public utilities.
(4) The promotion of erosion control, storm water
management and other environmental projects that promote
economic development.
(5) Water transportation facilities for use by the
public, including water transit landings and boat docking.
(6) Amenities, including infrastructure and recreational
projects.
(1702-K added July 13, 2016, P.L.526, No.84)
Section 1703-K. Waterfront Development Tax Credit Program.
The Waterfront Development Tax Credit Program is established
in the department to encourage private investment in waterfront
property that creates public access to the water, increases
property values, restores ecology and catalyzes further
financial investment and job creation.
(1703-K added July 13, 2016, P.L.526, No.84)
Section 1704-K. Waterfront development organizations.
(a) Applications.--An application to qualify as a waterfront
development organization must be submitted on a form and in a
manner as required by the department.
(b) Information.--An application to qualify as a waterfront
development organization shall include all of the following:
(1) Confirmation that the organization is a waterfront
development organization.
(2) The age of the organization.
(3) The board of directors meeting schedule.
(4) Waterfront development plans completed within the
last five years.
(5) A list of completed, ongoing and planned waterfront
development projects.
(c) Approval.--No later than 60 days after a waterfront
development organization has submitted an application under
this section, the department shall notify a waterfront
development organization if the organization meets the
requirements of this section for the current fiscal year.
(d) Renewal of waterfront organization status.--A waterfront
development organization shall annually file a renewal
application on a form provided by the department to maintain
eligibility as a waterfront development organization. The
renewal application shall include:
(1) The total number of waterfront development projects
funded, by municipality, during the immediately preceding
year.
(2) The total amount expended for waterfront development
projects, by municipality, during the immediately preceding
year.
(3) The total amount expended on waterfront development
projects, by municipality, attributable to contributions
from business firms.
(4) The number of waterfront development projects
completed, by municipality, during the immediately preceding
year.
(5) A copy of the Federal Form 990 or other Federal
form of the waterfront development organization that
indicates the tax status of the organization for Federal tax
purposes, if any.
(6) A copy of a compilation, review or audit of the
financial statements of the waterfront development
organization conducted by a certified public accounting firm.
(1704-K added July 13, 2016, P.L.526, No.84)
Section 1705-K. Waterfront development projects.
(a) General rule.--To qualify for a tax credit,
contributions made to a waterfront development organization
must be used by the waterfront development organization for a
waterfront development project approved under this section.
(b) Submission.--After approval of a waterfront development
organization's application under section 1704-K(c), the
organization may submit, on a form and in a manner required by
the department, waterfront development projects for approval
by the department. The submission shall include for each
waterfront development project:
(1) The location of the waterfront development project.
(2) The type of waterfront development project.
(3) A detailed description of the waterfront development
project, including architectural and engineering drawings.
(4) The status of the waterfront development project.
(5) The anticipated start date and completion date for
the waterfront development project.
(6) The life expectancy of the waterfront development
project and a plan for maintenance following completion.
(7) The estimated cost of the waterfront development
project.
(8) Analysis of the direct current and future economic
benefits derived from the waterfront development project,
including indirect and direct job creation projections.
(9) The manner in which the waterfront development
organization will do all of the following:
(i) Verify eligibility of costs.
(ii) Monitor progress of the waterfront development
project.
(iii) Assure that contributions received are used
for the waterfront development project for which the
contributions have been designated.
(10) Any other information required by the department.
(c) Review of applications.--The department, in conjunction
with the Department of Conservation and Natural Resources, shall
review applications received from waterfront development
organizations under this section.
(d) Notice of approval or disapproval.--
(1) Within 60 days after receipt of an application, the
department shall notify the waterfront development
organization of its approval or disapproval of a waterfront
development project.
(2) If the application is disapproved, the notice of
disapproval shall include the reasons for disapproval.
(3) A waterfront development organization may resubmit
the application within 30 days after receipt of a notice of
disapproval.
(e) Publication.--The department shall annually publish a
list of each waterfront development organization, its approved
waterfront development projects under this section and the total
aggregate cost of the waterfront development projects in the
Pennsylvania Bulletin. The list shall be posted and updated as
necessary on the publicly accessible Internet website of the
department.
(f) Completion.--Upon completion of a waterfront development
project approved under subsection (b), the waterfront
development organization shall submit written notice of project
completion to the department. The notice shall include all of
the following information:
(1) Certification that the waterfront development
project is complete.
(2) An upkeep and maintenance plan, if applicable, to
the waterfront development project.
(3) Any other information required by the department.
(g) Inspection.--Waterfront development projects approved
under subsection (b) may be subject to inspection by the
department or its designated agent.
(h) Administrative fees.--No more than 5% of the
contributions received under this article may be used for
administrative fees.
(1705-K added July 13, 2016, P.L.526, No.84)
Section 1706-K. Tax credit.
(a) General rule.--A business firm that provides
contributions to a waterfront development organization to fund
waterfront development projects approved by the department under
section 1705-K shall receive a tax credit as provided in section
1707-K, within the limitations of section 1708-K, if the
department approves the waterfront development projects. The
application must specify the waterfront development organization
the contribution is being made to and the waterfront development
projects being conducted by the organization.
(b) Rules and regulations.--
(1) The department may promulgate rules and regulations
for the approval or disapproval of applications by business
firms.
(2) The department shall provide a report listing all
applications received and the disposition of the applications
in each fiscal year to the General Assembly by October 1 of
the following fiscal year. The department's report shall
include all taxpayers utilizing the tax credit and the amount
of tax credits approved, sold or assigned.
(3) Notwithstanding any law providing for the
confidentiality of tax records, the information in the report
shall be public information, and all report information shall
be posted on the department's publicly accessible Internet
website.
(c) Availability of tax credits.--Tax credits shall be made
available by the department on a first-come, first-served basis
within the limitation established under section 1708-K.
(d) Sale or assignment of tax credits.--
(1) A taxpayer, upon application to and approval by the
department, may sell or assign, in whole or in part, a
waterfront development tax credit granted to the business
firm under this article if no claim for allowance of the
credit is filed within one year from the date the credit is
granted by the Department of Revenue under section 1707-K.
The department and the Department of Revenue shall jointly
promulgate guidelines for the approval of applications under
this subsection.
(2) The purchaser or assignee of a waterfront
development tax credit under subsection (d) shall immediately
claim the tax credit in the taxable year in which the
purchase or assignment is made.
(3) The purchaser or assignee may not carry over, carry
back, obtain a refund of or sell or assign the tax credit.
(4) The purchaser or assignee shall notify the
Department of Revenue of the seller or assignor of the
waterfront development tax credit in compliance with
procedures specified by the Department of Revenue.
(e) Application of tax credit.--The waterfront development
tax credit approved by the department shall be applied against
the business firm's tax liability for the taxes under section
1707-K for the current taxable year as of the date on which the
tax credit was approved before the waterfront development tax
credit may be carried over, sold or assigned.
(1706-K added July 13, 2016, P.L.526, No.84)
Section 1707-K. Grant of tax credits.
(a) General rule.--The Department of Revenue shall grant a
tax credit against any tax due under Article III, IV, VI, VII,
VIII, IX or XV or Article XVI of the act of May 17, 1921
(P.L.682, No.284), known as The Insurance Company Law of 1921,
or any tax substituted in lieu thereof.
(b) Prohibition.--A tax credit may not be granted for fiscal
years prior to fiscal year 2017-2018.
(1707-K added July 13, 2016, P.L.526, No.84)
Section 1708-K. Limitations.
The following limitations shall apply to the tax credits:
(1) No tax credit may exceed 75% of the total
contribution made by a business firm during a taxable year.
(2) No tax credit shall be granted to a business firm
for activities that are a part of its normal course of
business or in which the business firm has a pecuniary
interest.
(3) A tax credit not used in the period the contribution
or investment was made may be carried over for the next five
succeeding calendar or fiscal years until the full credit
has been allowed. No business firm may carry back or obtain
a refund of an unused tax credit.
(4) The total amount of all tax credits shall not exceed
$5,000,000 in any one fiscal year. ((4) amended July 8, 2022,
P.L.513, No.53)
(5) In any one fiscal year, the department may not
approve more tax credits for contributions made to a
waterfront development organization than the total aggregate
cost of waterfront development projects approved under
section 1705-K(d).
(1708-K added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 24(4)(x) of Act 53 of 2022 provided
that the amendment of section 1708-K(4) shall apply to
fiscal years beginning after June 30, 2022.
Section 1709-K. Decision in writing.
The decision of the department to approve or disapprove a
project under section 1705-K(d) shall be in writing and, if the
project is approved by the department, it shall state the
maximum credit allowable to the business firm. A copy of the
decision of the department shall be transmitted to the Governor
and to the Secretary of Revenue.
(1709-K added July 13, 2016, P.L.526, No.84)
Section 1710-K. Pass-through entity.
(a) General rule.--If a pass-through entity has an unused
tax credit under section 1707-K, the entity may elect, in
writing, according to the department's procedures, to transfer
all or a portion of the tax credit to shareholders, members or
partners in proportion to the share of the entity's distributive
income to which the shareholder, member or partner is entitled.
(b) Limitations.--
(1) The credit provided under subsection (a) is in
addition to any waterfront development tax credit to which
a shareholder, member or partner of a pass-through entity
is otherwise entitled under this article. However, a
pass-through entity and a shareholder, member or partner of
a pass-through entity may not claim a credit under this
article for the same waterfront development project.
(2) A shareholder, member or partner of a pass-through
entity to whom credit is transferred under subsection (a)
must immediately claim the credit in the taxable year in
which the transfer is made.
(3) The shareholder, member or partner may not carry
forward, carry back, obtain a refund of or sell or assign
the credit.
(1710-K added July 13, 2016, P.L.526, No.84)
ARTICLE XVII-L
PENNSYLVANIA ECONOMIC DEVELOPMENT FOR A GROWING
ECONOMY (PA EDGE) TAX CREDITS
(Art. hdg. amended Nov. 3, 2022, P.L.1695, No.108)
SUBARTICLE A
PRELIMINARY PROVISIONS
(Subart. hdg. added Nov. 3, 2022, P.L.1695, No.108)
Section 1701-L. Scope of article.
This article relates to Pennsylvania Economic Development
for a Growing Economy (PA EDGE) tax credits.
(1701-L amended Nov. 3, 2022, P.L.1695, No.108)
Section 1702-L. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Capital investment." The amount of money or assets invested
by a qualified taxpayer in constructing and placing into service
one of the following in this Commonwealth:
(1) A project facility as defined in section 1711-L.
(2) A project facility as defined in section 1731-L.
(3) A project facility as defined in section 1751-L.
(4) A project facility as defined in section 1771-L.
"Company." A corporation, partnership, limited liability
company, limited liability partnership, business trust,
affiliate, unincorporated joint venture or other business entity
doing business in this Commonwealth.
"Department." The Department of Revenue of the Commonwealth.
"Downstream company." A company that purchases products or
chemical compounds manufactured or processed by a qualified
taxpayer.
"Full-time-equivalent job." The quotient obtained by
dividing the total number of hours for which employees were
compensated for employment over the preceding 12-month period
by 2,080.
"Natural gas." As defined in 58 Pa.C.S. § 2301 (relating
to definitions).
"New job." A full-time-equivalent job created during the
construction of the project facility and paying the prevailing
minimum wage and benefit rates for each craft or classification
as determined by the Department of Labor and Industry under the
Prevailing Wage Act.
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Permanent job." A full-time-equivalent job created to
support the ongoing operation of the project facility.
"Prevailing Wage Act." The act of August 15, 1961 (P.L.987,
No.442), known as the Pennsylvania Prevailing Wage Act.
"Qualified tax liability." The liability for taxes imposed
under Articles III, IV, VII, VIII, IX, XI and XV. The term does
not include tax withheld under section 316.1.
"Tax credit." The Pennsylvania Economic Development for a
Growing Economy (PA EDGE) tax credit provided under this
article.
"Unit." One thousand cubic feet of natural gas at a
temperature of 60 degrees Fahrenheit and an absolute pressure
of 14.73 pounds per square inch, in accordance with American
Gas Association standards and according to Boyle's law for the
measurement of gas under varying pressures with deviations
therefrom as follows:
(1) The average absolute atmospheric pressure shall be
assumed to be 14.4 pounds to the square inch, notwithstanding
the actual elevation or location of point of delivery above
sea level or variations in the atmospheric pressure.
(2) The temperature of the gas passing the meters shall
be determined by the continuous use of a recording
thermometer installed so that the thermometer may properly
record the temperature of the gas flowing through the meters.
The arithmetic average of the temperature recorded each
24-hour day shall be used in computing gas volumes. If a
recording thermometer is not installed, or if installed and
not operating properly, an average flowing temperature of
60 degrees Fahrenheit shall be used in computing gas volume.
(3) The specific gravity of the gas shall be determined
by tests made by the use of an Edwards or Acme gravity
balance annually or at intervals as are found necessary in
practice. Specific gravity shall be used in computing gas
volumes.
(4) The deviation of the natural gas from Boyle's law
shall be determined by tests annually or at other shorter
intervals as are found necessary in practice. The apparatus
and the method to be used in making the tests shall be in
accordance with recommendations of the National Bureau of
Standards of the Department of Commerce or Report No. 3 of
the Gas Measurement Committee of the American Gas Association
on the effective date of this section. The results of the
tests shall be used in computing the volume of gas delivered.
"Upstream company." The term includes a company that is
engaged in the exploration, development, manufacturing,
production, processing, refining or transportation of natural
gas, clean hydrogen, milk or products used in semiconductor
manufacturing, biomedical manufacturing or biomedical research
in this Commonwealth.
(1702-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1703-L. Eligibility.
In order to be eligible to receive a tax credit, a company
shall demonstrate the following:
(1) The company meets the requirements of a qualified
taxpayer.
(2) The use of carbon capture and sequestration
technology, or similar technologies, at the project facility
to the extent it is cost effective and feasible at the
discretion of the qualified taxpayer.
(3) Confirmation that the company has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined
by assessment or determination by the department and not
under timely appeal.
(1703-L added July 23, 2020, P.L.654, No.66)
Section 1704-L. Application and approval of tax credit.
(a) Rate.--The tax credit shall be equal to $0.47 per unit
of dry natural gas that is purchased and used in the
manufacturing of petrochemicals or fertilizers at the project
facility by a qualified taxpayer.
(b) Application.--
(1) A qualified taxpayer may apply to the department
for a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed for dry natural gas
purchased and used in manufacturing of petrochemicals or
fertilizers by the qualified taxpayer at the project facility
during the prior calendar year.
(3) The application must be on the form required by the
department which shall include the following:
(i) information required by the department to
document the amount of dry natural gas purchased and
used in the manufacture of petrochemicals or fertilizers
at the project facility;
(ii) information required by the department to
verify that the applicant is a qualified taxpayer; and
(iii) any other information as the department deems
appropriate.
(c) Review and approval.--
(1) The department shall review the applications and
shall issue an approval or disapproval by May 1.
(2) Upon approval, the department shall issue a
certificate stating the amount of tax credit granted for dry
natural gas purchased and used in the manufacture of
petrochemicals or fertilizers at the project facility in the
prior calendar year.
(d) Availability of tax credits.--
(1) Each fiscal year, $26,666,668 in tax credits shall
be made available to the department in accordance with this
article.
(2) No more than two qualified taxpayers shall receive
a tax credit annually, for a maximum credit of $6,666,667
each.
(3) The department shall issue unallocated credits to
no more than one qualified taxpayer, notwithstanding the
maximum credit limit under paragraph (2), if the qualified
taxpayer:
(i) has made a total capital investment of at least
$1,000,000,000 in order to construct the project facility
and place the project facility into service in this
Commonwealth;
(ii) has created a minimum aggregate total of 1,800
new jobs and permanent jobs; and
(iii) has satisfied all other eligibility
requirements for a qualified taxpayer under this article.
(4) For purposes of paragraph (3), the term "unallocated
credits" means the difference between tax credits authorized
under paragraph (1) and approved under paragraph (2).
((d) amended June 30, 2021, P.L.124, No.25)
(1704-L added July 23, 2020, P.L.654, No.66)
Section 1705-L. Use of tax credits.
(a) Initial use.--Prior to sale or assignment of a tax
credit under section 1707-L, a qualified taxpayer must first
use a tax credit against the qualified tax liability incurred
in the taxable year for which the tax credit was approved.
(b) Eligibility.--The tax credit may be applied against up
to 20% of the qualified taxpayer's qualified tax liabilities
incurred in the taxable year for which the tax credit was
approved.
(c) Limit.--A qualified taxpayer that has been granted a
tax credit under this article shall be ineligible for any other
tax credit provided under this act.
(1705-L added July 23, 2020, P.L.654, No.66)
Section 1706-L. Carryover, carryback and refund.
A tax credit cannot be carried back, carried forward or be
used to obtain a refund.
(1706-L added July 23, 2020, P.L.654, No.66)
Section 1707-L. Sale or assignment.
(a) Authorization.--If the qualified taxpayer holds a tax
credit through the end of the calendar year in which the tax
credit was granted, the qualified taxpayer may sell or assign
a tax credit, in whole or in part, provided the sale is
effective by the close of the following calendar year.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must file an application for the sale or assignment of the
tax credit with the department. The application must be on
a form required by the department.
(2) To approve an application, the department must
receive:
(i) a finding from the department that the applicant
has:
(A) filed all required State tax reports and
returns for all applicable taxable years; and
(B) paid any balance of State tax due as
determined by assessment or determination by the
department and not under timely appeal; and
(ii) for a sale or assignment to a company that is
not an upstream company or downstream company, a
certification from the qualified taxpayer that the
qualified taxpayer has offered to sell or assign the tax
credit:
(A) exclusively to a downstream company for a
period of 30 days following approval of the tax
credit under section 1704-L(c); and
(B) to an upstream company or downstream company
for a period of 30 days following expiration of the
period under clause (A).
(c) Approval.--Upon approval by the department, a qualified
taxpayer may sell or assign, in whole or in part, a tax credit.
(1707-L added July 23, 2020, P.L.654, No.66)
Section 1708-L. Purchasers and assignees.
(a) Time.--The purchaser or assignee under section 1707-L
must claim the tax credit in the calendar year in which the
purchase or assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1707-L may use against any one
qualified tax liability may not exceed 50% of any of the
qualified tax liabilities of the purchaser or assignee for the
taxable year.
(c) Resale and assignment.--
(1) A purchaser under section 1707-L may not sell or
assign the purchased tax credit.
(2) An assignee under section 1707-L may not sell or
assign the assigned tax credit.
(d) Notice.--The purchaser or assignee under section 1707-L
shall notify the department of the seller or assignor of the
tax credit in compliance with procedures specified by the
department.
(1708-L added July 23, 2020, P.L.654, No.66)
Section 1709-L. Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, the pass-through entity may elect, in writing, according
to procedures established by the department, to transfer all
or a portion of the credit to shareholders, members or partners
in proportion to the share of the entity's distributive income
to which the shareholders, members or partners are entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Amount.--The amount of the tax credit that a transferee
under subsection (a) may use against any one qualified tax
liability may not exceed 20% of any qualified tax liabilities
for the taxable year.
(d) Time.--A transferee under subsection (a) must claim the
tax credit in the calendar year in which the transfer is made.
(e) Sale and assignment.--A transferee under subsection (a)
may not sell or assign the tax credit.
(1709-L added July 23, 2020, P.L.654, No.66)
Section 1710-L. (Reserved).
(1710-L added July 23, 2020, P.L.654, No.66)
SUBARTICLE B
LOCAL RESOURCE MANUFACTURING
(Subart. hdg. added Nov. 3, 2022, P.L.1695, No.108)
Section 1711-L. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Company." (Def. deleted by amendment).
"Department." (Def. deleted by amendment).
"Downstream company." (Def. deleted by amendment).
"Dry natural gas." Natural gas in which there are no
appreciable natural gas liquids recoverable by separation at
the wellhead.
"Fertilizer." A chemical product derived from petrochemicals
which is added to soil or land to increase fertility.
"Natural gas." (Def. deleted by amendment).
"Natural gas liquids." As defined in 58 Pa.C.S. § 3203
(relating to definitions).
"New job." (Def. deleted by amendment).
"Pass-through entity." (Def. deleted by amendment).
"Permanent job." (Def. deleted by amendment).
"Petrochemical." Chemical products obtained from refining
and processing natural gas. The term does not include
liquefaction or other processing of natural gas for the purpose
of transport.
"Prevailing Wage Act." (Def. deleted by amendment).
"Project facility." A facility located in this Commonwealth
which manufactures petrochemicals or fertilizers using dry
natural gas and which required a capital investment of at least
$400,000,000 to construct and place into service.
"Qualified tax liability." (Def. deleted by amendment).
"Qualified taxpayer." A company that satisfies all of the
following:
(1) Purchases and uses dry natural gas produced in this
Commonwealth in the manufacture of petrochemicals or
fertilizers at a project facility in this Commonwealth that
has been placed in service on or after the effective date
of this section.
(2) Has made a capital investment of at least
$400,000,000 in order to construct the project facility and
place the project facility into service in this Commonwealth.
(3) Has created a minimum aggregate total of 800 new
jobs and permanent jobs.
(4) Has made good faith efforts to recruit and employ,
and to encourage any contractors or subcontractors to recruit
and employ, workers from the local labor market for
employment during the construction of the project facility.
(5) Has demonstrated that the new jobs created at the
project facility or for work covered by Subarticle F are
paid at least the prevailing minimum wage and benefit rates
for each craft or classification as determined by the
Department of Labor and Industry.
(6) The construction work to place a project facility
into service shall be performed subject to the act of March
3, 1978 (P.L.6, No.3), known as the Steel Products
Procurement Act.
"Tax credit." (Def. deleted by amendment).
"Unit." (Def. deleted by amendment).
"Upstream company." (Def. deleted by amendment).
(1711-L renumbered from 1702-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1712-L. Eligibility.
In order to be eligible to receive a tax credit, a company
shall demonstrate the following:
(1) The company meets the requirements of a qualified
taxpayer.
(2) The use of carbon capture and sequestration
technology, or similar technologies, at the project facility
to the extent it is cost effective and feasible at the
discretion of the qualified taxpayer.
(3) Confirmation that the company has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined
by assessment or determination by the department and not
under timely appeal.
(1712-L renumbered from 1703-L Nov. 3, 2022, P.L.1695,
No.108)
Section 1713-L. Application and approval of tax credit.
(a) Rate.--The tax credit shall be equal to $0.47 per unit
of dry natural gas that is purchased and used in the
manufacturing of petrochemicals or fertilizers at the project
facility by a qualified taxpayer.
(b) Application.--
(1) A qualified taxpayer may apply to the department
for a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed for dry natural gas
purchased and used in manufacturing of petrochemicals or
fertilizers by the qualified taxpayer at the project facility
during the prior calendar year.
(3) The application must be on the form required by the
department which shall include the following:
(i) information required by the department to
document the amount of dry natural gas purchased and
used in the manufacture of petrochemicals or fertilizers
at the project facility;
(ii) information required by the department to
verify that the applicant is a qualified taxpayer; and
(iii) any other information as the department deems
appropriate.
(c) Review and approval.--
(1) The department shall review the applications and
shall issue an approval or disapproval by May 1.
(2) Upon approval, the department shall issue a
certificate stating the amount of tax credit granted for dry
natural gas purchased and used in the manufacture of
petrochemicals or fertilizers at the project facility in the
prior calendar year.
(d) Availability of tax credits.--
(1) Each fiscal year, $56,666,668 in tax credits shall
be made available to the department in accordance with this
subarticle.
(2) No more than two qualified taxpayers shall receive
a tax credit annually, for a maximum credit of $6,666,667
each.
(3) The department shall issue unallocated tax credits
to no more than one qualified taxpayer, notwithstanding the
maximum credit limit under paragraph (2), if the qualified
taxpayer:
(i) has made a total capital investment of at least
$1,000,000,000 in order to construct the project facility
and place the project facility into service in this
Commonwealth;
(ii) has created a minimum aggregate total of 1,800
new jobs and permanent jobs; and
(iii) has satisfied all other eligibility
requirements for a qualified taxpayer under this
subarticle.
(4) For purposes of paragraph (3), the term "unallocated
tax credits" means the difference between tax credits
authorized under paragraph (1) and approved under paragraph
(2).
(1713-L renumbered from 1704-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1714-L. Use of tax credits.
(a) Initial use.--Prior to sale or assignment of a tax
credit under section 1716-L, a qualified taxpayer must first
use a tax credit against the qualified tax liability incurred
in the taxable year for which the tax credit was approved.
(b) Eligibility.--The tax credit may be applied against up
to 20% of the qualified taxpayer's qualified tax liabilities
incurred in the taxable year for which the tax credit was
approved.
(c) Limit.--A qualified taxpayer that has been granted a
tax credit under this subarticle shall be ineligible for any
other tax credit provided under this act.
(1714-L renumbered from 1705-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1715-L. Carryover, carryback and refund.
A tax credit cannot be carried back, carried forward or be
used to obtain a refund.
(1715-L renumbered from 1706-L Nov. 3, 2022, P.L.1695,
No.108)
Section 1716-L. Sale or assignment.
(a) Authorization.--If the qualified taxpayer holds a tax
credit through the end of the calendar year in which the tax
credit was granted, the qualified taxpayer may sell or assign
a tax credit, in whole or in part, provided the sale is
effective by the close of the following calendar year.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must file an application for the sale or assignment of the
tax credit with the department. The application must be on
a form required by the department.
(2) To approve an application, the department must
receive:
(i) a finding from the department that the applicant
has:
(A) filed all required State tax reports and
returns for all applicable taxable years; and
(B) paid any balance of State tax due as
determined by assessment or determination by the
department and not under timely appeal; and
(ii) for a sale or assignment to a company that is
not an upstream company or downstream company, a
certification from the qualified taxpayer that the
qualified taxpayer has offered to sell or assign the tax
credit:
(A) exclusively to a downstream company for a
period of 30 days following approval of the tax
credit under section 1713-L(c); and
(B) to an upstream company or downstream company
for a period of 30 days following expiration of the
period under clause (A).
(c) Approval.--Upon approval by the department, a qualified
taxpayer may sell or assign, in whole or in part, a tax credit.
(1716-L renumbered from 1707-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1717-L. Purchasers and assignees.
(a) Time.--The purchaser or assignee under section 1716-L
must claim the tax credit in the calendar year in which the
purchase or assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1716-L may use against any one
qualified tax liability may not exceed 50% of any of the
qualified tax liabilities of the purchaser or assignee for the
taxable year.
(c) Resale and assignment.--
(1) A purchaser under section 1716-L may not sell or
assign the purchased tax credit.
(2) An assignee under section 1716-L may not sell or
assign the assigned tax credit.
(d) Notice.--The purchaser or assignee under section 1716-L
shall notify the department of the seller or assignor of the
tax credit in compliance with procedures specified by the
department.
(1717-L renumbered from 1708-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1718-L. Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, the pass-through entity may elect, in writing, according
to procedures established by the department, to transfer all
or a portion of the tax credit to shareholders, members or
partners in proportion to the share of the entity's distributive
income to which the shareholders, members or partners are
entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Amount.--The amount of the tax credit that a transferee
under subsection (a) may use against any one qualified tax
liability may not exceed 20% of any qualified tax liabilities
for the taxable year.
(d) Time.--A transferee under subsection (a) must claim the
tax credit in the calendar year in which the transfer is made.
(e) Sale and assignment.--A transferee under subsection (a)
may not sell or assign the tax credit.
(1718-L renumbered from 1709-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1719-L. (Reserved).
(1719-L renumbered from 1710-L Nov. 3, 2022, P.L.1695,
No.108)
Section 1720-L. Administration.
(a) Audits and assessments.--
(1) The department may audit a taxpayer awarded a tax
credit to ascertain the validity of the amount awarded.
(2) The department may issue an assessment against a
taxpayer for an improperly issued tax credit. The procedures,
collection, enforcement and appeals of an assessment made
under this section shall be governed by Article II.
(b) Guidelines and regulations.--The department shall
develop written guidelines for the implementation of this
subarticle. The guidelines shall be in effect until the
department promulgates regulations for the implementation of
the provisions of this subarticle.
(1720-L renumbered from 1711-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1721-L. Reports to General Assembly.
(a) Annual report.--No later than the year after which tax
credits are first awarded under this subarticle, and each
October 1 thereafter, the department shall submit a report on
the tax credit provided under this subarticle to the chairperson
and minority chairperson of the Appropriations Committee of the
Senate, the chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives, the
chairperson and minority chairperson of the Finance Committee
of the Senate and the chairperson and minority chairperson of
the Finance Committee of the House of Representatives. The
report must include the names of the qualified taxpayers
utilizing the tax credit as of the date of the report and the
amount of tax credits approved for, utilized by or sold or
assigned by a qualified taxpayer.
(b) Reconciliation report.--On May 1 of the year which is
10 years after the year in which tax credits are first awarded
under this subarticle, the department shall submit to the
Secretary of the Senate and the Chief Clerk of the House of
Representatives a reconciliation report on the effectiveness
of this subarticle. The report shall include, to the extent
possible, the following information for the preceding 10 years:
(1) The name and business address of all qualified
taxpayers who have been granted tax credits under this
subarticle.
(2) The amount of tax credits granted to each qualified
taxpayer.
(3) The total number of jobs created by the qualified
taxpayer, upstream company and downstream company and any
companies that provide goods, utilities or other services
that support the business operations of the qualified
taxpayer, upstream company and downstream company. This
paragraph includes the average annual salary and hourly wage
information.
(4) The amount of taxes paid under Article II by the
qualified taxpayer, upstream company and downstream company
and any companies that provide goods, utilities or other
services that support the business operations of the
qualified taxpayer, upstream company and downstream company.
(5) The amount of taxes withheld from employees or paid
by members, partners or shareholders of the pass-through
entities under Article III of the qualified taxpayer,
upstream company and downstream company and any companies
that provide goods, utilities or other services that support
the business operations of the qualified taxpayer, upstream
company and downstream company.
(6) The amount of taxes paid under Article IV by the
qualified taxpayer, upstream company and downstream company
and any companies that provide goods, utilities or other
services that support the business operations of the
qualified taxpayer, upstream company and downstream company.
(7) The amount of taxes paid under Article XI by the
qualified taxpayer, upstream company and downstream company
and any companies that provide goods, utilities or other
services that support the business operations of the
qualified taxpayer, upstream company and downstream company.
(8) The amount of any other State or local taxes paid
by the qualified taxpayer, upstream company and downstream
company and any companies that provide goods, utilities or
other services that support the business operations of the
qualified taxpayer, upstream company and downstream company.
(9) Any other information pertaining to the economic
impact of this subarticle on this Commonwealth.
(c) Reduction.--If the reconciliation report issued under
subsection (b) reveals that the total amount of the tax credits
granted under this subarticle exceeds the total amount of tax
revenue reported under subsection (b)(4), (5), (6), (7), (8)
and (9), the report must include any recommendation for changes
in the calculation of the credit.
(d) Publication.--The reports required by this section shall
be a public record as defined under section 102 of the act of
February 14, 2008 (P.L.6, No.3), known as the Right-to-Know
Law, and shall be available electronically on the publicly
accessible Internet website of the department. The reports
required under this section may not contain "confidential
proprietary information" as defined in section 102 of the
Right-to-Know Law.
(1721-L renumbered from 1712-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1722-L. Applicability.
This subarticle shall apply to the purchase of dry natural
gas produced in this Commonwealth for the period beginning
January 1, 2024, and ending December 31, 2049.
(1722-L renumbered from 1714-L and amended Nov. 3, 2022,
P.L.1695, No.108)
Section 1723-L. Expiration.
This subarticle shall expire December 31, 2050.
(1723-L renumbered from 1715-L and amended Nov. 3, 2022,
P.L.1695, No.108)
SUBARTICLE C
PENNSYLVANIA MILK PROCESSING
(Subart. added Nov. 3, 2022, P.L.1695, No.108)
Section 1731-L. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Gallon." A United States liquid gallon equal to a volume
of 231 cubic inches and equal to 3.785411784 liters or 0.13368
cubic feet, where volumetric measurements made at ambient
flowing conditions are typically adjusted for composition and
to standard conditions using established industry standard
practices.
"Milk." The lacteal secretion, practically free from
colostrum, obtained by the complete milking of one or more
healthy cows.
"Project facility." A facility located in this Commonwealth
which is owned and operated by a qualified taxpayer and which
utilizes milk purchased from sources within this Commonwealth
and processed by a qualified taxpayer at the project facility.
"Qualified taxpayer." A company that satisfies all of the
following:
(1) Purchases and processes milk produced in this
Commonwealth at a project facility in this Commonwealth that
has been placed in service on or after the effective date
of this section.
(2) Has made a capital investment of at least
$500,000,000 in order to construct the project facility and
place the project facility into service in this Commonwealth.
(3) Has created a minimum aggregate total of 1,200 new
jobs and permanent jobs.
(4) Has made good faith efforts to recruit and employ,
and to encourage any contractors or subcontractors to recruit
and employ, workers from the local labor market for
employment during the construction of the project facility.
(5) Has demonstrated that the new jobs created at the
project facility or for work covered by Subarticle F are
paid at least the prevailing minimum wage and benefit rates
for each craft or classification as determined by the
Department of Labor and Industry.
(6) The construction work to place a project facility
into service shall be performed subject to the act of March
3, 1978 (P.L.6, No.3), known as the Steel Products
Procurement Act.
(1731-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1732-L. Eligibility.
In order to be eligible to receive a tax credit, a company
shall demonstrate the following:
(1) The company meets the requirements of a qualified
taxpayer.
(2) Confirmation that the company has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined
by assessment or determination by the department and not
under timely appeal.
(1732-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1733-L. Application and approval of tax credit.
(a) Rate.--The tax credit shall be equal to $0.05 per gallon
of milk purchased and produced from sources exclusively within
this Commonwealth and processed at the project facility by a
qualified taxpayer.
(b) Application.--
(1) A qualified taxpayer may apply to the department
for a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed for milk purchased and
processed by the qualified taxpayer at the project facility
during the prior calendar year.
(3) The application must be on the form required by the
department which shall include the following:
(i) information required by the department to
document the amount of milk purchased and processed at
the project facility;
(ii) information required by the department to
verify that the applicant is a qualified taxpayer; and
(iii) any other information as the department deems
appropriate.
(c) Review and approval.--
(1) The department shall review the applications and
shall issue an approval or disapproval by May 1.
(2) Upon approval, the department shall issue a
certificate stating the amount of tax credit granted for
milk purchased and processed at the project facility in the
prior calendar year.
(d) Availability of tax credits.--
(1) Each fiscal year, $15,000,000 in tax credits shall
be made available to the department in accordance with this
subarticle.
(2) The department shall issue up to $15,000,000 in tax
credits in a fiscal year to the qualified taxpayer which
first meets the qualifications to receive a tax credit under
this subarticle.
(3) An amount under paragraph (1) which remains
unallocated under paragraph (2) shall be issued to the
qualified taxpayer which next meets the qualifications to
receive a tax credit under this subarticle.
(4) The total aggregate amount of tax credits awarded
to a qualified taxpayer under this subarticle may not exceed
25% of the capital investment made to construct a project
facility and place the project facility into service in this
Commonwealth.
(1733-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1734-L. Use of tax credits.
(a) Initial use.--Prior to sale or assignment of a tax
credit under section 1736-L, a qualified taxpayer must first
use a tax credit against the qualified tax liability incurred
in the taxable year for which the tax credit was approved.
(b) Eligibility.--The tax credit may be applied against up
to 20% of a qualified taxpayer's qualified tax liabilities
incurred in the taxable year for which the tax credit was
approved.
(c) Limit.--A qualified taxpayer that has been granted a
tax credit under this subarticle shall be ineligible for any
other tax credit provided under this act or a tax benefit as
defined in section 1701-A.1.
(1734-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1735-L. Carryover, carryback and refund.
A tax credit cannot be carried back, carried forward or be
used to obtain a refund.
(1735-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1736-L. Sale or assignment.
(a) Authorization.--If the qualified taxpayer holds a tax
credit through the end of the calendar year in which the tax
credit was granted, the qualified taxpayer may sell or assign
a tax credit, in whole or in part, provided the sale is
effective by the close of the following calendar year.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must file an application for the sale or assignment of the
tax credit with the department. The application must be on
a form required by the department.
(2) To approve an application, the department must
receive:
(i) a finding from the department that the applicant
has:
(A) filed all required State tax reports and
returns for all applicable taxable years; and
(B) paid any balance of State tax due as
determined by assessment or determination by the
department and not under timely appeal; and
(ii) for a sale or assignment to a company that is
not an upstream company or downstream company, a
certification from the qualified taxpayer that the
qualified taxpayer has offered to sell or assign the tax
credit:
(A) exclusively to a downstream company for a
period of 30 days following approval of the tax
credit under section 1733-L(c); and
(B) to an upstream company or downstream company
for a period of 30 days following expiration of the
period under clause (A).
(c) Approval.--Upon approval by the department, a qualified
taxpayer may sell or assign, in whole or in part, a tax credit.
(1736-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1737-L. Purchasers and assignees.
(a) Time.--The purchaser or assignee under section 1736-L
must claim the tax credit in the calendar year in which the
purchase or assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1736-L may use against any one
qualified tax liability may not exceed 50% of any of the
qualified tax liabilities of the purchaser or assignee for the
taxable year.
(c) Resale and assignment.--
(1) A purchaser under section 1736-L may not sell or
assign the purchased tax credit.
(2) An assignee under section 1736-L may not sell or
assign the assigned tax credit.
(d) Notice.--The purchaser or assignee under section 1736-L
shall notify the department of the seller or assignor of the
tax credit in compliance with procedures specified by the
department.
(1737-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1738-L. Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, the pass-through entity may elect, in writing, according
to procedures established by the department, to transfer all
or a portion of the tax credit to shareholders, members or
partners in proportion to the share of the entity's distributive
income to which the shareholders, members or partners are
entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Amount.--The amount of the tax credit that a transferee
under subsection (a) may use against any one qualified tax
liability may not exceed 20% of any qualified tax liabilities
for the taxable year.
(d) Time.--A transferee under subsection (a) must claim the
tax credit in the calendar year in which the transfer is made.
(e) Sale and assignment.--A transferee under subsection (a)
may not sell or assign the tax credit.
(1738-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1739-L. (Reserved).
(1739-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1740-L. Guidelines and regulations.
The department shall develop written guidelines for the
implementation of this subarticle. The guidelines shall be in
effect until the department promulgates regulations for the
implementation of the provisions of this subarticle.
(1740-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1741-L. Report to General Assembly.
(a) Report.--
(1) No later than the year after which tax credits are
first awarded under this subarticle, and each October 1
thereafter, the department shall submit a report to the
General Assembly summarizing the effectiveness of the tax
credit. The report shall include the names of all qualified
taxpayers utilizing the tax credit as of the date of the
report and the amount of tax credits approved for, utilized
by or sold or assigned by each qualified taxpayer. The report
shall be submitted to the following:
(i) The chair and minority chair of the Agriculture
and Rural Affairs Committee of the Senate.
(ii) The chair and minority chair of the Agriculture
and Rural Affairs Committee of the House of
Representatives.
(iii) The chair and minority chair of the Finance
Committee of the Senate.
(iv) The chair and minority chair of the Finance
Committee of the House of Representatives.
(2) In addition to the information required under
paragraph (1), the report shall include the following
information in a manner that is separated by geographic
location within this Commonwealth:
(i) The amount of tax credits claimed by qualified
taxpayers during the fiscal year.
(ii) The total number of new jobs and permanent
jobs created by qualified taxpayers during the fiscal
year, including the duration of the jobs.
(b) Public information.--Notwithstanding any law providing
for the confidentiality of tax records, the information in the
report under subsection (a) shall be public information, and
all report information shall be posted on the department's
publicly accessible Internet website.
(1741-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1742-L. Applicability.
(a) Duration.--The tax credit under this subarticle shall
apply to the purchase and processing of milk produced in this
Commonwealth for a period of eight years from the date the first
project facility is placed into service.
(b) Limitation.--The total aggregate amount of tax credits
awarded by the department under this subarticle may not exceed
$120,000,000.
(1742-L added Nov. 3, 2022, P.L.1695, No.108)
SUBARTICLE D
REGIONAL CLEAN HYDROGEN HUBS
(Subart. added Nov. 3, 2022, P.L.1695, No.108)
Section 1751-L. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Clean hydrogen." Hydrogen used in a project which has been
determined by the United States Department of Energy to
demonstrably aid achievement of the clean hydrogen production
standard under section 822 of the Energy Policy Act of 2005
(Public Law 109-58, 11 Stat. 594) by mitigating emissions across
the supply chain through aggressive carbon capture, by measures
to mitigate fugitive methane emissions or by the use of clean
electricity or other technologies or practices approved by the
United States Department of Energy.
"Project facility." A facility located in this Commonwealth
which is owned by a qualified taxpayer which is part of a
Regional Clean Hydrogen Hub designated by the United States
Department of Energy authorized under section 813 of the Energy
Policy Act of 2005.
"Qualified taxpayer." A company that satisfies all of the
following:
(1) Owns and operates a project facility located within
a Regional Clean Hydrogen Hub designated by the United States
Department of Energy authorized under section 813 of the
Energy Policy Act of 2005.
(2) Has entered into a commitment letter under section
1752-L(b) to purchase clean hydrogen from a Regional Clean
Hydrogen Hub within this Commonwealth for use in
manufacturing at a project facility in this Commonwealth
which has been placed in service on or after the effective
date of this section.
(3) Has made a capital investment of at least
$500,000,000 in order to construct the project facility and
place the project facility into service in this Commonwealth.
(4) Has created a minimum aggregate total of 1,200 new
jobs and permanent jobs.
(5) Has made good faith efforts to recruit and employ,
and to encourage any contractors or subcontractors to recruit
and employ, workers from the local labor market for
employment during the construction of the project facility.
(6) Has demonstrated that the new jobs created at the
project facility or for work covered by Subarticle F are
paid at least the prevailing minimum wage and benefit rates
for each craft or classification as determined by the
Department of Labor and Industry.
(7) The construction work to place a project facility
into service shall be performed subject to the act of March
3, 1978 (P.L.6, No.3), known as the Steel Products
Procurement Act.
(1751-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1752-L. Eligibility.
(a) Demonstration.--In order to be eligible to receive a
tax credit, a company shall demonstrate the following:
(1) The company meets the requirements of a qualified
taxpayer.
(2) Confirmation that the company has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined
by assessment or determination by the department and not
under timely appeal.
(b) Commitment letter.--A company that applies for and
receives a tax credit under this subarticle shall enter into a
commitment letter with the Department of Community and Economic
Development to prescribe the date by which the project facility
will begin to purchase clean hydrogen from sources within the
Regional Clean Hydrogen Hub in this Commonwealth for use in
manufacturing at the project facility.
(1752-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1753-L. Application and approval of tax credit.
(a) Rate.--The tax credit shall be equal to any one or more
of the following:
(1) $0.81 per kilogram of clean hydrogen purchased from
a Regional Clean Hydrogen Hub within this Commonwealth and
used in manufacturing at the project facility by a qualified
taxpayer.
(2) $0.47 per unit of natural gas that is purchased and
used in manufacturing at the project facility by a qualified
taxpayer.
(b) Application.--
(1) A qualified taxpayer may apply to the department
for a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed for clean hydrogen or
natural gas purchased and used in manufacturing by the
qualified taxpayer at the project facility during the prior
calendar year.
(3) The application must be on a form required by the
department which shall include the following:
(i) information required by the department to
document the amount of natural gas purchased and used
in manufacturing at the project facility;
(ii) information required by the department to
document the amount of clean hydrogen to be purchased
from sources within the Regional Clean Hydrogen Hub in
this Commonwealth and used in manufacturing at the
project facility;
(iii) information required by the department to
verify that the applicant is a qualified taxpayer; and
(iv) any other information as the department deems
appropriate.
(c) Review and approval.--
(1) The department shall review the applications and
shall issue an approval or disapproval by May 1.
(2) Upon approval, the department shall issue a
certificate stating the amount of the tax credit granted for
natural gas purchased and used in manufacturing at the
project facility in the prior calendar year.
(3) Upon approval, the department shall issue a
certificate stating the amount of the tax credit granted for
clean hydrogen purchased from sources located in a Regional
Clean Hydrogen Hub located in this Commonwealth and used in
manufacturing at the project facility in the prior calendar
year.
(d) Availability of tax credits.--
(1) Each fiscal year, $50,000,000 in tax credits shall
be made available to the department in accordance with this
subarticle.
(2) The department shall issue up to $50,000,000 in a
fiscal year to the qualified taxpayer which first meets the
qualifications to receive a tax credit under this subarticle.
(3) An amount under paragraph (1) which remains
unallocated under paragraph (2) shall be issued to the
qualified taxpayer which next meets the qualifications to
receive a tax credit under this subarticle.
(4) The total aggregate amount of tax credits awarded
to a qualified taxpayer under this subarticle may not exceed
50% of the capital investment made to construct a project
facility and place the project facility into service in this
Commonwealth.
(1753-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1754-L. Use of tax credits.
(a) Initial use.--Prior to sale or assignment of a tax
credit under section 1756-L, a qualified taxpayer must first
use a tax credit against the qualified tax liability incurred
in the taxable year for which the tax credit was approved.
(b) Eligibility.--The tax credit may be applied against up
to 20% of the qualified taxpayer's qualified tax liabilities
incurred in the taxable year for which the tax credit was
approved.
(c) Limit.--A qualified taxpayer that has been granted a
tax credit under this subarticle shall be ineligible for any
other tax credit provided under this act or a tax benefit as
defined in section 1701-A.1.
(1754-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1755-L. Carryover, carryback and refund.
A tax credit cannot be carried back, carried forward or be
used to obtain a refund.
(1755-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1756-L. Sale or assignment.
(a) Authorization.--If the qualified taxpayer holds a tax
credit through the end of the calendar year in which the tax
credit was granted, the qualified taxpayer may sell or assign
a tax credit, in whole or in part, provided the sale is
effective by the close of the following calendar year.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must submit an application for the sale or assignment of the
tax credit with the department. The application must be on
a form required by the department.
(2) To approve an application, the department must
receive:
(i) a finding from the department that the applicant
has:
(A) filed all required State tax reports and
returns for all applicable taxable years; and
(B) paid any balance of State tax due as
determined by assessment or determination by the
department and not under timely appeal; and
(ii) for a sale or assignment to a company that is
not an upstream company or downstream company, a
certification from the qualified taxpayer that the
qualified taxpayer has offered to sell or assign the tax
credit:
(A) exclusively to a downstream company for a
period of 30 days following approval of the tax
credit under section 1753-L(c); and
(B) to an upstream company or downstream company
for a period of 30 days following expiration of the
period under clause (A).
(c) Approval.--Upon approval by the department, a qualified
taxpayer may sell or assign, in whole or in part, a tax credit.
(1756-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1757-L. Purchasers and assignees.
(a) Time.--The purchaser or assignee under section 1756-L
must claim the tax credit in the calendar year in which the
purchase or assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1756-L may use against any one
qualified tax liability may not exceed 50% of any of the
qualified tax liabilities of the purchaser or assignee for the
taxable year.
(c) Resale and assignment.--
(1) A purchaser under section 1756-L may not sell or
assign the purchased tax credit.
(2) An assignee under section 1756-L may not sell or
assign the assigned tax credit.
(d) Notice.--The purchaser or assignee under section 1756-L
shall notify the department of the seller or assignor of the
tax credit in compliance with procedures specified by the
department.
(1757-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1758-L. Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, the pass-through entity may elect, in writing, according
to procedures established by the department, to transfer all
or a portion of the tax credit to shareholders, members or
partners in proportion to the share of the entity's distributive
income to which the shareholders, members or partners are
entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Amount.--The amount of the tax credit that a transferee
under subsection (a) may use against any one qualified tax
liability may not exceed 20% of any qualified tax liabilities
for the taxable year.
(d) Time.--A transferee under subsection (a) must claim the
tax credit in the calendar year in which the transfer is made.
(e) Sale and assignment.--A transferee under subsection (a)
may not sell or assign the tax credit.
(1758-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1759-L. (Reserved).
(1759-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1760-L. Guidelines and regulations.
The department shall develop written guidelines for the
implementation of this subarticle. The guidelines shall be in
effect until the department promulgates regulations for the
implementation of the provisions of this subarticle.
(1760-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1761-L. Report to General Assembly.
(a) Report.--
(1) No later than the year after which tax credits are
first awarded under this subarticle, and each October 1
thereafter, the department shall submit a report to the
General Assembly summarizing the effectiveness of the tax
credit. The report shall include the names of all qualified
taxpayers utilizing the tax credit as of the date of the
report and the amount of tax credits approved for, utilized
by or sold or assigned by each qualified taxpayer. The report
shall be submitted to all of the following:
(i) The chair and minority chair of the
Appropriations Committee of the Senate.
(ii) The chair and minority chair of the
Appropriations Committee of the House of Representatives.
(iii) The chair and minority chair of the Finance
Committee of the Senate.
(iv) The chair and minority chair of the Finance
Committee of the House of Representatives.
(v) The chair and minority chair of the
Environmental Resources and Energy Committee of the
Senate.
(vi) The chair and minority chair of the
Environmental Resources and Energy Committee of the House
of Representatives.
(2) In addition to the information required under
paragraph (1), the report shall include the following
information in a manner separated by geographic location
within this Commonwealth:
(i) The amount of tax credits claimed by qualified
taxpayers during the fiscal year.
(ii) The total number of new jobs and permanent
jobs created by qualified taxpayers during the fiscal
year, including the duration of the jobs.
(b) Public information.--Notwithstanding any law providing
for the confidentiality of tax records, the information in the
report under subsection (a) shall be public information, and
all report information shall be posted on the department's
publicly accessible Internet website.
(1761-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1762-L. Applicability.
This subarticle shall apply to the purchase of clean hydrogen
from sources located in a Regional Clean Hydrogen Hub within
this Commonwealth or natural gas used in manufacturing at a
project facility for the period beginning January 1, 2024, and
ending December 31, 2043.
(1762-L added Nov. 3, 2022, P.L.1695, No.108)
SUBARTICLE E
SEMICONDUCTOR MANUFACTURING AND BIOMEDICAL
MANUFACTURING AND RESEARCH
(Subart. added Nov. 3, 2022, P.L.1695, No.108)
Section 1771-L. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Biomedical manufacturing." The manufacture of products or
the creation of processes that advance the understanding,
treatment and prevention of disease.
"Biomedical research." Scientific research encompassing the
application of the biological sciences, especially biochemistry,
molecular biology and genetics, for the understanding, treatment
and prevention of disease.
"Project facility." A facility located in this Commonwealth
which is owned and operated by the qualified taxpayer and where
semiconductor manufacturing, biomedical manufacturing or
biomedical research is conducted by the qualified taxpayer at
the project facility.
"Qualified taxpayer." A company that satisfies all of the
following:
(1) Conducts semiconductor manufacturing, biomedical
manufacturing or biomedical research in this Commonwealth
at a project facility in this Commonwealth that has been
placed in service on or after the effective date of this
section.
(2) Has made a capital investment of at least
$200,000,000 in order to construct the project facility and
place the project facility into service in this Commonwealth.
(3) Has created a minimum aggregate total of 800
permanent jobs.
(4) Has made good faith efforts to recruit and employ,
and to encourage any contractors or subcontractors to recruit
and employ, workers from the local labor market for
employment during the construction of the project facility.
(5) Has demonstrated that the new jobs created at the
project facility or for work covered by Subarticle F are
paid at least the prevailing minimum wage and benefit rates
for each craft or classification as determined by the
Department of Labor and Industry.
(6) The construction work to place a project facility
into service shall be performed subject to the act of March
3, 1978 (P.L.6, No.3), known as the Steel Products
Procurement Act.
"Semiconductor manufacturing." The manufacture of components
or the creation of advanced processes or technology within the
semiconductor manufacturing and related equipment and material
supplier sector.
(1771-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1772-L. Eligibility.
In order to be eligible to receive a tax credit, a company
shall demonstrate the following:
(1) The company meets the requirements of a qualified
taxpayer.
(2) Confirmation that the company has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined
by assessment or determination by the department and not
under timely appeal.
(1772-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1773-L. Application and approval of tax credit.
(a) Determination of tax credit amount.--The annual tax
credit amount may be determined based upon any one or more of
the following:
(1) No more than 2.5% of the capital investment.
(2) No more than 100% of tax withheld from employees
and paid under Article III or $20,000, whichever is less,
for each permanent job at the project facility.
(b) Application.--
(1) A qualified taxpayer may apply to the department
for a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed for semiconductor
manufacturing, biomedical manufacturing or biomedical
research conducted by the qualified taxpayer at the project
facility during the prior calendar year.
(3) The application must be on the form required by the
department which shall include the following:
(i) information required by the department to
document the semiconductor manufacturing, biomedical
manufacturing or biomedical research conducted at the
project facility;
(ii) information required by the department to
verify that the applicant is a qualified taxpayer; and
(iii) any other information as the department deems
appropriate.
(c) Review and approval.--
(1) The department shall review the applications and
shall issue an approval or disapproval by May 1.
(2) Upon approval, the department shall issue a
certificate stating the amount of the tax credit granted for
semiconductor manufacturing, biomedical manufacturing or
biomedical research conducted at the project facility in the
prior calendar year.
(d) Availability of tax credits.--
(1) Each fiscal year, $20,000,000 in tax credits shall
be made available to the department in accordance with this
subarticle.
(2) The department shall issue up to $10,000,000 in a
fiscal year to the qualified taxpayer engaged in
semiconductor manufacturing which first meets the
qualifications to receive a tax credit under this subarticle.
(3) The department shall issue up to $10,000,000 in a
fiscal year to the qualified taxpayer engaged in biomedical
manufacturing or biomedical research which first meets the
qualifications to receive a tax credit under this subarticle.
(4) An amount under paragraph (1) which remains
unallocated under paragraph (2) or (3) shall be issued to
the qualified taxpayer which next meets the qualifications
to receive a tax credit under this subarticle.
(5) The total aggregate amount of tax credits awarded
to a qualified taxpayer under this subarticle may not exceed
25% of the capital investment made to construct a project
facility.
(1773-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1774-L. Use of tax credits.
(a) Initial use.--Prior to sale or assignment of a tax
credit under section 1776-L, a qualified taxpayer must first
use a tax credit against the qualified tax liability incurred
in the taxable year for which the tax credit was approved.
(b) Eligibility.--The tax credit may be applied against up
to 20% of the qualified taxpayer's qualified tax liabilities
incurred in the taxable year for which the tax credit was
approved.
(c) Limit.--A qualified taxpayer that has been granted a
tax credit under this subarticle shall be ineligible for any
other tax credit provided under this act or a tax benefit as
defined in section 1701-A.1.
(1774-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1775-L. Carryover, carryback and refund.
A tax credit cannot be carried back, carried forward or be
used to obtain a refund.
(1775-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1776-L. Sale or assignment.
(a) Authorization.--If the qualified taxpayer holds a tax
credit through the end of the calendar year in which the tax
credit was granted, the qualified taxpayer may sell or assign
a tax credit, in whole or in part, provided the sale is
effective by the close of the following calendar year.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must file an application for the sale or assignment of the
tax credit with the department. The application must be on
a form required by the department.
(2) To approve an application, the department must
receive:
(i) a finding from the department that the applicant
has:
(A) filed all required State tax reports and
returns for all applicable taxable years; and
(B) paid any balance of State tax due as
determined by assessment or determination by the
department and not under timely appeal; and
(ii) for a sale or assignment to a company that is
not an upstream company or downstream company, a
certification from the qualified taxpayer that the
qualified taxpayer has offered to sell or assign the tax
credit:
(A) exclusively to a downstream company for a
period of 30 days following approval of the tax
credit under section 1773-L(c); and
(B) to an upstream company or downstream company
for a period of 30 days following expiration of the
period under clause (A).
(c) Approval.--Upon approval by the department, a qualified
taxpayer may sell or assign, in whole or in part, a tax credit.
(1776-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1777-L. Purchasers and assignees.
(a) Time.--The purchaser or assignee under section 1776-L
must claim the tax credit in the calendar year in which the
purchase or assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1776-L may use against any one
qualified tax liability may not exceed 50% of any of the
qualified tax liabilities of the purchaser or assignee for the
taxable year.
(c) Resale and assignment.--
(1) A purchaser under section 1776-L may not sell or
assign the purchased tax credit.
(2) An assignee under section 1776-L may not sell or
assign the assigned tax credit.
(d) Notice.--The purchaser or assignee under section 1776-L
shall notify the department of the seller or assignor of the
tax credit in compliance with procedures specified by the
department.
(1777-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1778-L. Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, the pass-through entity may elect, in writing, according
to procedures established by the department, to transfer all
or a portion of the tax credit to shareholders, members or
partners in proportion to the share of the entity's distributive
income to which the shareholders, members or partners are
entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Amount.--The amount of the tax credit that a transferee
under subsection (a) may use against any one qualified tax
liability may not exceed 20% of any qualified tax liabilities
for the taxable year.
(d) Time.--A transferee under subsection (a) must claim the
tax credit in the calendar year in which the transfer is made.
(e) Sale and assignment.--A transferee under subsection (a)
may not sell or assign the tax credit.
(1778-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1779-L. (Reserved).
(1779-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1780-L. Guidelines and regulations.
The department shall develop written guidelines for the
implementation of this subarticle. The guidelines shall be in
effect until the department promulgates regulations for the
implementation of the provisions of this subarticle.
(1780-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1781-L. Report to General Assembly.
(a) Report.--
(1) No later than the year after which tax credits are
first awarded under this subarticle, and each October 1
thereafter, the department shall submit a report to the
General Assembly summarizing the effectiveness of the tax
credit. The report shall include the names of all qualified
taxpayers utilizing the tax credit as of the date of the
report and the amount of tax credits approved for, utilized
by or sold or assigned by each qualified taxpayer. The report
shall be submitted to the following:
(i) The chair and minority chair of the
Appropriations Committee of the Senate.
(ii) The chair and minority chair of the
Appropriations Committee of the House of Representatives.
(iii) The chair and minority chair of the Finance
Committee of the Senate.
(iv) The chair and minority chair of the Finance
Committee of the House of Representatives.
(2) In addition to the information required under
paragraph (1), the report shall include the following
information in a manner separated by geographic location
within this Commonwealth:
(i) The amount of tax credits claimed by qualified
taxpayers during the fiscal year.
(ii) The total number of new jobs and permanent
jobs created by qualified taxpayers during the fiscal
year, including the duration of the jobs.
(b) Public information.--Notwithstanding any law providing
for the confidentiality of tax records, the information in the
report under subsection (a) shall be public information, and
all report information shall be posted on the department's
publicly accessible Internet website.
(1781-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1782-L. Applicability.
(a) Duration.--The tax credit under this subarticle shall
apply to semiconductor manufacturing, biomedical manufacturing
or biomedical research conducted at each project facility for
a period of five years.
(b) Limitation.--The total aggregate amount of tax credits
awarded by the department under this subarticle may not exceed
$100,000,000.
(1782-L added Nov. 3, 2022, P.L.1695, No.108)
SUBARTICLE F
APPLICATION OF PREVAILING WAGE ACT
(Subart. added Nov. 3, 2022, P.L.1695, No.108)
Section 1791-L. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Qualified project facility." Any of the following:
(1) A project facility as defined in section 1711-L.
(2) A project facility as defined in section 1731-L.
(3) A project facility as defined in section 1751-L.
(4) A project facility as defined in section 1771-L.
"Qualified tax credit recipient." Any of the following who
have been awarded a tax credit:
(1) A qualified taxpayer as defined in section 1711-L.
(2) A qualified taxpayer as defined in section 1731-L.
(3) A qualified taxpayer as defined in section 1751-L.
(4) A qualified taxpayer as defined in section 1771-L.
(1791-L added Nov. 3, 2022, P.L.1695, No.108)
Section 1792-L. Prevailing wage.
(a) Application.--A qualified project facility for which a
qualified tax credit is sought and awarded under this article
is deemed to meet each of the minimum requirements necessary
to apply the wage and benefit rates, and related certification
of payroll records, required by the Prevailing Wage Act. A
qualified tax credit recipient, or the qualified tax credit
recipient's agent, and all contractors and subcontractors, of
every tier, engaged to perform on the qualified project facility
must comply with all provisions and requirements of the
Prevailing Wage Act for all new jobs and for all crafts or
classifications performing construction, reconstruction,
demolition, alteration and repair work, other than maintenance
work, undertaken at the qualified project facility during the
initial construction and during any period in which qualified
tax credits are sought and awarded for the qualified project
facility.
(b) Compliance.--The Department of Labor and Industry shall
enforce this section and shall apply the same administration
and enforcement applicable to any project of construction,
reconstruction, demolition, alteration and repair work, other
than maintenance work, undertaken pursuant to the requirements
of the Prevailing Wage Act to ensure compliance.
(c) Notification.--Prior to the solicitation of bids or
proposals of any contract or subcontract covered under
subsection (a), the qualified tax credit recipient, or the
qualified tax credit recipient's agent, shall notify the
Department of Labor and Industry of the solicitation and request
the issuance of a wage and benefit rate determination for all
crafts and classifications anticipated to perform at the
qualified project facility. Rate requests shall be in conformity
with the procedures of the Prevailing Wage Act, and the
Department of Labor and Industry shall issue rates upon request
as required pursuant to this section and the provisions of the
Prevailing Wage Act.
(d) Violation.--In addition to enforcement authorized under
the Prevailing Wage Act and subsection (b), if, after notice
and hearing, the Department of Labor and Industry determines
that the qualified tax credit recipient intentionally failed
to pay or intentionally caused another to fail to pay prevailing
wage rates or benefit rates as specified under section 11(h)
of the Prevailing Wage Act for work covered under subsection
(a), or ratified an intentional failure by any contractors or
subcontractors of the qualified tax credit recipient, the
qualified tax credit recipient shall be required to refund 10%
of the amount of the tax credits awarded to the qualified tax
credit recipient for the first fiscal year for which qualified
tax credits are awarded, in the case of initial construction,
or the fiscal year in which the intentional noncompliance
occurred as determined by the department.
(e) Appeal.--A finding of a violation under subsection (d)
shall be appealable under section 2.2(e)(1) of the Prevailing
Wage Act and 34 Pa. Code § 213.3 (relating to appeals from
determinations of the secretary). Any final determination by
the appeals board under the Prevailing Wage Act may be appealed
under 2 Pa.C.S. (relating to administrative law and procedure).
(1792-L added Nov. 3, 2022, P.L.1695, No.108)
ARTICLE XVIII
ORGAN AND BONE MARROW DONATION CREDIT
(Art. added Oct. 31, 2014, P.L.2925, No.193)
Compiler's Note: See the preamble to Act 193 in the appendix
to this act for special provisions relating to legislative
findings.
Section 1801. Scope.
This article relates to tax credits for organ and bone marrow
donation.
(1801 added Oct. 31, 2014, P.L.2925, No.193)
Section 1802. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Business firm." An entity authorized to do business in
this Commonwealth and subject to the taxes imposed by Article
III, IV, VI, VII, VIII, IX or XV. This term also includes a
natural person as such or as a member of a partnership or a
shareholder in a Pennsylvania S corporation and estates and
trusts receiving income as set forth in section 1803.
"Department." The Department of Revenue of the Commonwealth.
"Leave of absence period." The period, not exceeding five
working days or the hourly equivalent of five working days per
employee, during which a business firm provides a paid leave
of absence to the employee for the purpose of organ or bone
marrow donation. The term does not include a period during which
an employee utilizes any annual leave or sick days that the
employee has been given by the employer.
"Pass-through entity." A partnership or Pennsylvania S
corporation as defined in section 301(n.0) and (s.2),
respectively.
(1802 added Oct. 31, 2014, P.L.2925, No.193)
Section 1803. Organ and bone marrow donor tax credit.
(a) Qualification.--
(1) Except as set forth in paragraph (2), every business
firm which provides one or more paid leaves of absence to
employees for the specific purpose of organ or bone marrow
donation shall qualify for the organ or bone marrow donor
tax credit. A business firm which qualifies for the credit
may apply that credit against any tax due under Article III,
IV, VI, VII, VIII, IX or XV.
(2) Notwithstanding paragraph (1), the credit shall not
be applied against any tax withheld by an employer from an
employee under Article III.
(b) Calculation of credit.--
(1) The tax credit amount shall be equal to the amount
of employee compensation paid during the leave of absence
period, the cost of temporary replacement help, if any,
during the leave of absence period and any miscellaneous
expenses authorized by regulation that are incurred in
connection with the leave of absence period. Credits
calculated for a business firm subject to tax in another
state shall be apportioned to this Commonwealth in the manner
specified by regulation.
(2) If the employee on paid leave of absence is employed
by a business firm organized as a pass-through entity, the
credit shall be calculated in proportion to the member's or
shareholder's portion of the pass-through entity's income.
In the case of a trust or estate with income credited to or
distributed to a beneficiary, the credit shall be measured
in proportion to the beneficiary's share of income.
(c) Unused credit.--Credits not used for the taxable year
during which a leave of absence was granted may be carried over
for three taxable years. Credits shall not be carried back
against preceding taxable years and shall not be refundable.
(1803 added Oct. 31, 2014, P.L.2925, No.193)
Section 1804. Duties of department.
(a) Duties enumerated.--The department shall:
(1) In the manner provided by law, promulgate the
regulations necessary to implement section 1803.
(2) Create and publish forms upon which taxpayers may
apply for the tax credit authorized by this article.
(3) Within five months after the close of any calendar
year during which tax credits granted pursuant to this
article were used, furnish to the members of the General
Assembly an annual report providing, as to each business
firm which used tax credits during the preceding calendar
year pursuant to this article, the employer's name, address,
standard industrial classification code and the amount of
tax credits granted.
(b) Certain provisions not to apply.--The provisions of
sections 353(f) and 408(b), relating to confidentiality of
information, and any other provisions of law preventing the
disclosure of information required under subsection (a)(3),
shall not apply when the information is divulged for the
purposes of subsection (a)(3).
(1804 added Oct. 31, 2014, P.L.2925, No.193)
Section 1805. Procedures.
(a) Deadline for filing applications.--Applications for tax
credits shall be filed not later than the 15th day of the fourth
month following the close of the business firm's taxable year.
(b) Notification of tax credit authorization and incomplete
applications.--
(1) The department shall notify the business firm
regarding the authorization of tax credits, including the
amount of the credit available.
(2) The department may return an incomplete application
to the business firm or request additional information,
documents or signatures from the business firm.
(3) An application shall be complete and processible
only if it is signed by an authorized representative of the
business firm and contains the individual's or entity's name,
identifying numbers, address and sufficient proof, which the
department may require at its discretion, including written
verification by a physician or similar documentation of the
length and purpose of the donor's leave and the amount of
the employee's compensation and costs associated with
temporary replacement help and proof that temporary
replacement help is needed because of the donor's leave.
(c) Appeals.--Appeals from determinations made pursuant to
this article shall be made through the administrative provisions
of this act, applicable to the particular taxes against which
the business firm or its members, shareholders or beneficiaries
claim such credits.
(1805 added Oct. 31, 2014, P.L.2925, No.193)
Section 1806. Applicability.
(a) Prior law.--This article shall not affect taxable years
governed by section 6 of the former act of July 2, 2006
(P.L.292, No.65), known as the Organ and Bone Marrow Donor Act.
(b) Current law.--This article shall apply to taxable years
beginning after December 31, 2010.
(1806 added Oct. 31, 2014, P.L.2925, No.193)
Section 1807. Procedures.--(1807 repealed June 22, 2001,
P.L.353, No.23)
Section 1808. Expiration of Tax Credit.--(1808 repealed
June 22, 2001, P.L.353, No.23)
Section 1809. Sunset.--(1809 repealed June 22, 2001,
P.L.353, No.23)
ARTICLE XVIII-A
COAL WASTE REMOVAL AND ULTRACLEAN FUELS
TAX CREDIT
(Art. repealed July 9, 2013, P.L.270, No.52)
Section 1801-A. Short Title.--(1801-A repealed July 9, 2013,
P.L.270, No.52)
Section 1802-A. Definitions.--(1802-A repealed July 9, 2013,
P.L.270, No.52)
Section 1803-A. Investment Tax Credits Program.--(1803-A
repealed July 9, 2013, P.L.270, No.52)
Section 1804-A. Contract Required.--(1804-A repealed July
9, 2013, P.L.270, No.52)
Section 1805-A. Requirements.--(1805-A repealed July 9,
2013, P.L.270, No.52)
ARTICLE XVIII-B
TAX CREDIT FOR NEW JOBS
(Art. added June 22, 2001, P.L.353, No.23)
Section 1801-B. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Base period." The three years preceding the date on which
a company may begin creating new jobs which may be eligible for
job creation tax credits.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Job creation tax credits." Tax credits for which the
department has issued a certificate under this article.
"New job." A full-time job, the average hourly rate,
excluding benefits, for which must be at least 150% of the
Federal minimum wage, created within a municipality located in
this Commonwealth by a company within three years from the start
date.
"Small business." A company that is engaged in a for-profit
enterprise and that employs 100 or fewer individuals. (Def.
added July 2, 2012, P.L.751, No.85)
"Start date." The date on which a company may begin creating
new jobs which may be eligible for job creation tax credits.
"Unemployed individual." An individual who at the time of
hiring meets all of the following:
(1) Is hired on or after July 1, 2012.
(2) Certifies by signed affidavit, under penalty of
perjury, that the individual has not been employed during
the 60-day period ending on the date the individual begins
employment.
(3) Is not employed by the company to replace another
employee of the company unless the other employee separated
from employment voluntarily or for cause.
(4) Will perform duties connected to the new job for
at least 52 consecutive weeks.
(Def. added July 2, 2012, P.L.751, No.85)
"Veteran." An individual who served on active duty in the
United States Armed Forces, including any of the following:
(1) A reservist or member of the National Guard who was
discharged or released from the service under honorable
conditions.
(2) A reservist or member of the National Guard who
completed an initial term of enlistment or qualifying period
of service.
(3) A reservist or member of the National Guard who was
disabled in the line of duty during training.
(Def. added July 13, 2016, P.L.526, No.84)
"Year one." A one-year period immediately following the
start date.
"Year three." A one-year period immediately following the
end of year two.
"Year two." A one-year period immediately following the end
of year one.
(1801-B added June 22, 2001, P.L.353, No.23)
Section 1802-B. Eligibility.
In order to be eligible to receive job creation tax credits,
a company must demonstrate to the department the following:
(1) The ability to create the number of jobs required
by the department within three years from the start date.
(2) Leadership in the application, development or
deployment of leading technologies.
(3) Financial stability and the project's financial
viability.
(4) The intent to maintain operations in this
Commonwealth for a period of five years from the date the
company submits its tax credit certificate to the Department
of Revenue.
(5) An affirmation that the decision to expand or locate
in this Commonwealth was due in large part to the
availability of a job creation tax credit.
(1802-B added June 22, 2001, P.L.353, No.23)
Section 1803-B. Application process.
(a) Application.--A company must complete and submit to the
department a job creation tax credit application.
(b) Creation of jobs.--Except as provided under this
subsection, an applicant must agree to create at least 25 new
jobs or to increase the applicant's number of employees by at
least 20% within three years of the start date. A small business
applicant must agree to increase the applicant's number of
employees by at least 10% within three years after the start
date. ((b) amended July 2, 2012, P.L.751, No.85)
(c) Approval.--If the department approves the company's
application, the department and the company shall execute a
commitment letter containing the following:
(1) A description of the project.
(2) The number of new jobs to be created.
(3) The amount of private capital investment in the
project.
(3.1) A statement authorizing the per job credit as a
single year or multiple year credit.
(4) The maximum job creation tax credit amount the
company may claim.
(5) A signed statement that the company intends to
maintain its operation in this Commonwealth for five years
from the start date.
(6) Such other information as the department deems
appropriate.
((c) amended July 2, 2012, P.L.751, No.85)
(d) Commitment letter.--After a commitment letter has been
signed by both the Commonwealth and the company, the company
shall receive a job creation tax credit certificate and filing
information.
(e) Expiration.--The department may not approve an
application for a tax credit under this article after June 30,
2020. ((e) added June 28, 2019, P.L.50, No.13)
(1803-B added June 22, 2001, P.L.353, No.23)
Section 1804-B. Tax credits.
(a) Maximum amount.--A company may claim a tax credit of
$1,000 per new job created, or $2,500 per each new job created
if the newly created job is filled by a veteran or an unemployed
individual, up to the maximum job creation tax credit amount
specified in the commitment letter. ((a) amended July 13, 2016,
P.L.526, No.84)
(b) Determination of new jobs created.--
(1) New jobs shall be deemed created in year one to the
extent that the company's average employment by quarter
during year one exceeds the company's average employment
level during the company's base period.
(2) New jobs shall be deemed created in year two to the
extent that the company's average employment by quarter
during year two exceeds the company's average employment by
quarter during year one.
(3) New jobs shall be deemed created in year three to
the extent that the company's average employment by quarter
during year three exceeds the company's average employment
by quarter during year two.
(c) Applicable taxes.--A company may apply the tax credit
to 100% of the company's State corporate net income tax, capital
stock and franchise tax or the capital stock and franchise tax
of a shareholder of the company if the company is a Pennsylvania
S corporation, gross premiums tax, gross receipts tax, bank and
trust company shares tax, mutual thrift institution tax, title
insurance company shares tax, personal income tax or the
personal income tax of shareholders of a Pennsylvania S
corporation or any combination thereof.
(d) Tax credit term.--
(1) A company may claim the job creation tax credit for
each new job created, as approved by the department, for a
one-year, two-year or three-year period as authorized by the
department, except that no tax credit may be claimed for
more than five years from the date the company first submits
a job creation tax credit certificate. The department may
award the total amount of tax credit authorized for a
multiple-year tax credit in the first year in which the new
job is created and the tax credit earned.
(2) Notwithstanding the provisions of paragraph (1),
nothing in this article shall be construed to prohibit the
Department of Community and Economic Development from
awarding the total amount of tax credit authorized for a
multiple-year tax credit in the first year in which the new
job is created and the tax credit earned.
((d) amended July 13, 2016, P.L.526, No.84)
(e) Availability of tax credits.--Each fiscal year,
$10,100,000 in tax credits shall be made available to the
department and may be awarded by the department in accordance
with this article. In addition, in any fiscal year, the
department may reissue or assign prior fiscal year tax credits
which have been recaptured under section 1806-B(a) or (b) and
may award prior fiscal year credits not previously issued. Prior
fiscal year credits may be reissued, assigned or awarded by the
department without limitation by section 1805-B(b). ((e) amended
July 2, 2012, P.L.751, No.85)
(1804-B added June 22, 2001, P.L.353, No.23)
Compiler's Note: Section 27.1 of Act 85 of 2012, which
amended the subsecs. (a), (d) and (e), provided that a
company may claim the tax credit under section 1804-B
for each newly created job filled by an unemployed
individual on or after the effective date of section
27.1.
Section 1805-B. Prohibitions.
(a) Prohibitions.--The following actions with regard to job
creation tax credits are prohibited:
(1) Approval of jobs that have been created prior to
the start date.
(2) Approval for a company which is relocating
operations from one municipality in this Commonwealth to
another unless special circumstances exist and the
municipality that is losing the existing jobs has an
opportunity to submit comments prior to action by the
department. If the department approves the tax credits, the
company must commit to preserving the existing employees,
and the credit shall apply only to the new jobs.
(3) The assignment, transfer or use of credits by any
other company, provided, however, that tax credits may be
assigned in whole or in part to an affiliated entity. As
used in this paragraph, the term "affiliated entity" means
an entity which is part of the same "affiliated group," as
defined by section 1504(a)(1) of the Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1504(a)(1)), as the
company awarded the credit.
(b) Allocations.--Twenty-five percent of the total amount
of all tax credits authorized in any fiscal year under section
1804-B(e) shall be available to companies with fewer than 100
employees. Any portion of this allocation not committed by April
30 of each year shall be available to any business which meets
the remaining program criteria.
(1805-B added June 22, 2001, P.L.353, No.23)
Section 1806-B. Penalties.
(a) Failure to maintain operations.--A company which
receives job creation tax credits and fails to substantially
maintain existing operations and the operations related to the
job creation tax credits in this Commonwealth for a period of
five years from the date the company first submits a job
creation tax credit certificate to the Department of Revenue
shall be required to refund to the Commonwealth the total amount
of credit or credits granted.
(b) Failure to create jobs.--A company which receives job
creation tax credits and fails to create the approved number
of new jobs within three years of the start date will be
required to refund to the Commonwealth the total amount of
credit or credits granted.
(c) Waiver.--The department may waive the penalties outlined
in subsections (a) and (b) if it is determined that a company's
operations were not maintained or the new jobs were not created
because of circumstances beyond the company's control. Such
circumstances include natural disasters, unforeseen industry
trends or a loss of a major supplier or market.
(1806-B added June 22, 2001, P.L.353, No.23)
ARTICLE XVIII-C
CITY REVITALIZATION AND IMPROVEMENT ZONES
(Art. hdg. amended July 9, 2013, P.L.270, No.52)
Section 1801-C. Scope of article.
This article relates to city revitalization and improvement
zones.
(1801-C added July 9, 2013, P.L.270, No.52)
Section 1802-C. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Baseline tax amount." The amount of State or local eligible
taxes paid relating to each qualified business that is not a
new business, less eligible State or local tax refunds, relating
to each qualified business for the first full calendar year in
which the qualified business established a presence in the zone.
"Baseline year." The calendar year in which a zone was
established.
"Bond." The term includes any public or private financing,
note, mortgage, loan, deed of trust, instrument, refunding note
or other evidence of indebtedness or obligation.
"Business personal property." The term includes furniture,
fixtures, equipment and other similar property purchased and
used in the zone.
"City." A city of the second class A or third class or a
home rule city or a municipality with a population of at least
20,000 based on the most recent Federal decennial census. The
term does not include a city that is determined to be distressed
under the act of July 10, 1987 (P.L.246, No.47), known as the
Municipalities Financial Recovery Act. (Def. amended July 11,
2024, P.L. , No.56)
"City revitalization and improvement zone." An area of not
more than 130 acres in a city or municipality, that may include
an area in one or more contiguous municipalities, comprised of
parcels designated by the contracting authority, which will
provide economic development and job creation within a city or
one or more contiguous municipalities. (Def. amended July 11,
2024, P.L. , No.56)
"Contracting authority." A new or existing authority
established or designated by a city, municipality or home rule
county to designate and administer zones. The term shall
include:
(1) An authority established under 53 Pa.C.S. Ch. 56
(relating to municipal authorities).
(2) An authority established under the former act of
December 27, 1994 (P.L.1375, No.162), known as the Third
Class County Convention Center Authority Act, or under
Article XXIII(n) or (o) of the act of August 9, 1955
(P.L.323, No.130), known as the County Code.
(3) An authority established by a contiguous
municipality under 53 Pa.C.S. Ch. 56 for the purposes of
this act.
"Department." The Department of Revenue of the Commonwealth.
"Earned income tax." A tax imposed on earned income within
a zone under the act of December 31, 1965 (P.L.1257, No.511),
known as The Local Tax Enabling Act, which a city, or a school
district contained entirely within the boundaries of or
coterminous with the city, is entitled to receive.
"Eligible tax." Any of the following taxes:
(1) Corporate net income tax, capital stock and
franchise tax, bank shares tax, personal income tax paid by
shareholders, members or partners of Subchapter S
corporations, limited liability companies, partnerships or
sole proprietors on income other than passive activity income
as defined under section 469 of the Internal Revenue Code
of 1986 (Public Law 99-516, 26 U.S.C. § 1 et seq.) or
business privilege tax, calculated and apportioned as to
amount attributable to the location within the zone and
calculated under section 1904-B(b) and (c).
(1.1) For a zone designated after July 1, 2024,
insurance premiums tax, calculated and apportioned as to the
amount attributable to the location within the zone and
calculated under section 1904-B(c).
(2) Amusement tax, only to the extent the tax is related
to the activity of a qualified business within the zone.
(3) Sales and use tax, only to the extent the tax is
related to the activity of a qualified business within the
zone. The term includes sales and use taxes on material used
for construction in the zone and business personal property
to be used by the qualified business in the zone.
(3.1) The hotel occupancy tax imposed under Part V of
Article II.
(4) Personal income tax withheld from its employees by
a qualified business for work performed in the zone.
(5) Local services tax withheld from its employees by
a qualified business for work performed in the zone.
(6) Earned income tax withheld from its employees by a
qualified business for work performed in the zone.
(7) All taxes paid to the Commonwealth, or an amount
equal to all of the taxes paid to the Commonwealth, related
to the purchase or sale of liquor, wine or malt or brewed
beverages by a licensee located in the zone for purchases
that occurred outside the zone.
The term does not include cigarette tax.
(Def. amended July 11, 2024, P.L. , No.56)
"Facility." A structure or complex of structures in a zone
to be used for commercial, industrial, sports, exhibition,
hospitality, conference, retail, community, office, recreational
or mixed-use purposes.
"Increment." The amount of eligible taxes generated by a
new business, taxes excluded from the baseline tax amount
pursuant to section 1810-C(b)(3) and amount of eligible taxes
generated by a qualified business above the qualified business's
baseline tax amount.
"Infrastructure." Any improvements in or out of the zone
that the contracting authority determines to be related to the
development of a facility in the zone, including, but not
limited to, improvements to utilities, water, sewer, storm
water, parking, road improvements or telecommunications within
the city or municipality or within a municipality contiguous
to that city or municipality. (Def. amended June 28, 2019,
P.L.50, No.13)
"Licensee." An individual licensed under the act of April
12, 1951 (P.L.90, No.21), known as the Liquor Code.
"Lobbyist." As defined in 65 Pa.C.S. § 13A03 (relating to
definitions).
"Municipality." An incorporated town, a township or a
borough. The term does not include an incorporated town, a
township or a borough that is determined to be distressed under
the Municipalities Financial Recovery Act. (Def. amended July
11, 2024, P.L. , No.56)
"New business." Any of the following:
(1) any new or separate legal entity that locates or
has a location in the zone; or
(2) a business already located in this Commonwealth and
conducting operations outside the zone which expands into
the zone with a new operation as evidenced by a new facility,
business personal property, products or additional employees
and continues operations outside the zone without substantial
change in business. Only eligible taxes related to activity
within the zone shall be attributable to the location in the
zone.
"Office." The Office of the Budget.
"Pilot zone." An area of not more than 100 acres designated
by the contracting authority prior to July 1, 2024, following
application and approval by the Department of Community and
Economic Development, the office and the department which will
provide economic development and job creation within one or
more municipalities, with a total population of at least 7,000
based on the most recent Federal decennial census. (Def. amended
July 11, 2024, P.L. , No.56)
"Professional services." Any of the following:
(1) Legal services.
(2) Advertising or public relations services.
(3) Engineering services.
(4) Architectural, landscaping or surveying services.
(5) Accounting, auditing or actuarial services.
(6) Security consultant services.
(7) Computer and information technology services, except
telephone service.
(8) Insurance underwriting services.
(9) Compliance services.
(10) Financial auditing services.
"Qualified business." As follows:
(1) An entity located or partially located in a zone
which meets the requirements of all of the following:
(i) Has conducted an active trade or business in
the zone.
(ii) Appears on the timely filed list under section
1807-C(a).
(2) A construction contractor engaged in construction,
including infrastructure or site preparation, reconstruction
or renovation of a facility.
(3) The term does not include an agent, broker or
representative of a business.
"Zone." Any of the following:
(1) A city revitalization and improvement zone.
(2) A pilot zone.
"Zone Fund." A city revitalization and improvement zone or
pilot zone fund established under section 1808-C.
(1802-C amended July 13, 2016, P.L.526, No.84)
Section 1803-C. Establishment or designation of contracting
authority.
(a) Authorization.--The following shall apply:
(1) A city, municipality or municipalities may establish
or designate a contracting authority to designate a zone
under this article.
(2) The board of directors of the contracting authority
of a zone designated after July 1, 2024, shall include:
(i) members with diverse skill sets in the areas
of government, law, finance, banking, economic
development, community development, planning, project
management, project engineering, real estate development
and environmental remediation;
(ii) residents of the zone and business owners
located in the zone; and
(iii) residents, business owners and business
representatives from the city, municipality or
municipalities that created the zone.
(b) Distressed cities.--((b) deleted by amendment).
(c) Counties.--((c) deleted by amendment).
(1803-C amended July 11, 2024, P.L. , No.56)
Section 1803.1-C. Contracting authority duties.
A contracting authority shall:
(1) Hold at least one public hearing on the plan for
the designation of a zone. At the public hearing, any
interested party may be heard.
(2) Prior to designation of the zone, post the name and
address of the owner of each business and property to be
located within the zone and a map of the zone on the website
of the city or municipality where the zone will be located,
if one exists. If a website does not exist, the map and list
of names shall be published in a newspaper of general
circulation serving the county where the zone is located.
The map and list of names shall be made available for public
inspection.
(3) Issue bonds and engage in the financing,
construction, acquisition, development, related site
preparation and infrastructure, reconstruction or renovation
of facilities in accordance with this article.
(1803.1 added July 13, 2016, P.L.526, No.84)
Section 1804-C. Approval.
(a) Submission.--A contracting authority may apply to the
Department of Community and Economic Development for approval
of a zone plan. The application must include all of the
following:
(1) A plan to establish one or more facilities which
will promote economic development.
(2) An economic development plan, including a plan for
the repayment of all bonds.
(3) Specific information relating to the facility which
will be constructed, including infrastructure and site
preparation, reconstructed or renovated as part of the plan.
(4) Other information as required by the Department of
Community and Economic Development, the office or the
department.
(5) A designation of the specific geographic area,
including parcel numbers and a map of the zone with parcel
numbers, of which the zone will consist.
(b) Agencies.--The Department of Community and Economic
Development, the office and the department must approve each
application.
(b.1) Review.--The Department of Community and Economic
Development, the department and the office shall consider the
following when determining a designation:
(1) Economic impact of the zone.
(2) Number of jobs that will be created.
(3) Potential State and local tax revenue impact.
(4) Financial fitness and ability of the applicant to
repay bonds.
(5) The proximity to previously approved zones.
(6) Any other relevant factor.
(b.2) Additional approval.--Following the effective date
of this subsection, applications may be approved for:
(1) Up to two zones for one or more municipalities with
a population between 7,000 and 19,999 based on the most
recent Federal decennial census.
(2) Up to two zones for one or more cities or
municipalities with a population of 20,000 or more based on
the most recent Federal decennial census.
((b.2) added July 11, 2024, P.L. , No.56)
(c) Approval schedule.--((c) deleted by amendment July 11,
2024, P.L. , No.56).
(c.1) Agreement.--An area that covers contiguous cities or
municipalities shall require an agreement among each participant
to be included in the zone, evidenced by a resolution of each
participant.
(c.2) Single approval.--An application for one zone located
in a city of the third class incorporated under optional charter
which is located in a home rule county of the third class, is
its county's seat and has a population of between 93,500 and
95,500 based on the 2020 Federal decennial census may be
approved in the first year after the effective date of this
subsection. A contracting authority designated under section
1803-C by a city of the third class incorporated under optional
charter which is located in a home rule county of the third
class, is its county's seat and has a population of between
93,500 and 95,500 based on the 2020 Federal decennial census
shall have a board of directors consisting of nine members. The
following shall apply:
(1) One voting member shall be appointed by the mayor
and shall serve a five-year term.
(2) Two voting members shall be appointed by the State
Representative of the 1st District. The following apply:
(i) One member appointed under this paragraph shall
serve a two-year term.
(ii) One member appointed under this paragraph shall
serve a five-year term.
(3) Two voting members shall be appointed by the State
Representative of the 2nd District. The following apply:
(i) One member appointed under this paragraph shall
serve a two-year term.
(ii) One member appointed under this paragraph shall
serve a three-year term.
(4) Four voting members shall be appointed by the
Senator from the 49th District.
(i) One member appointed under this paragraph shall
serve a two-year term.
(ii) Two members appointed under this paragraph
shall serve three-year terms.
(iii) One member appointed under this paragraph
shall serve a five-year term.
(5) Terms specified in paragraphs (1), (2), (3) and (4)
shall commence upon the date of appointment. Members may be
reappointed for five-year terms following the expiration of
the initial appointed term.
(6) Members serve without compensation.
(7) A vacancy on the board shall be filled by the same
appointing authority as the initial appointment in accordance
with paragraphs (1), (2), (3) and (4).
((c.2) added July 11, 2024, P.L. , No.56)
(d) Schedule.--The Department of Community and Economic
Development shall establish application deadlines and publish
the deadlines on its publicly accessible Internet website. ((d)
amended July 11, 2024, P.L. , No.56)
(e) Reapplication.--If an application is not approved under
this section, the applicant may revise the application and plan
and reapply for approval. ((e) amended July 11, 2024, P.L. ,
No.56)
(f) Limitation.--No more than one zone may exist in a city
or municipality at any given time.
(1804-C amended July 13, 2016, P.L.526, No.84)
Section 1805-C. Exclusions.
A part of a zone may not include a keystone opportunity zone,
keystone opportunity expansion zone, keystone opportunity
improvement zone, keystone innovation zone, keystone special
development zone, neighborhood improvement zone or strategic
development area.
(1805-C added July 9, 2013, P.L.270, No.52)
Section 1806-C. Functions of contracting authorities.
(a) Powers.--The contracting authority may do all of the
following:
(1) Designate a zone where a facility may be acquired,
constructed, including infrastructure and site preparation,
reconstructed or renovated.
(2) Engage in the acquisition, development,
construction, including infrastructure and site preparation,
reconstruction or renovation of facilities.
(3) Engage in the public or private financing of the
acquisition, development, construction, including
infrastructure and site preparation, reconstruction or
renovation of facilities.
(4) Utilize money under section 1813-C.
(b) Money from fund.--A member of the contracting authority
may not receive money directly or indirectly from the fund.
(c) Prohibitions.--The following shall apply:
(1) A member, officer or employee of the contracting
authority or a member of the governing body or the chief
executive officer of the city, municipality or home rule
county that created the contracting authority may not:
(i) Receive money from the zone fund for personal
use.
(ii) Have a direct ownership interest in a property
or parcel included in the zone.
(2) No member, officer, director or employee of the
contracting authority, no member of the governing body and
no chief executive officer may:
(i) Solicit, accept or receive from a person, firm,
corporation or other business or professional
organization doing business in the zone or with the
contracting authority a gift or a gratuity. This
subparagraph shall not apply to a gift or business
entertainment of less than $250.
(ii) Directly or indirectly use for personal gain
information not available to the public concerning the
development of a project which comes to that individual
as a result of the affiliation with the contracting
authority city or municipality involved in the
development or operation of the zone.
(c.1) Disclosure.--The board of directors of the contracting
authority, governing body of a city or municipality, consultant,
lobbyist or independent contractor of the contracting authority,
city or municipality or home rule county creating the
contracting authority must disclose the nature and extent of
any financial interest as defined in 65 Pa.C.S. Ch. 11 (relating
to ethics standards and financial disclosure) or that of his
or her immediate family in property within the zone to the
contracting authority, the city or municipality where the zone
is located and to the Department of Community and Economic
Development. The Department of Community and Economic
Development must place the disclosures on the Department of
Community and Economic Development's publicly accessible
Internet website.
(d) Action by contracting authority.--The board of directors
of the contracting authority or the governing body of a city
or municipality in which the zone is located must avoid a
conflict of interest or impropriety with regard to a property
or project in the zone or the operation or management of the
zone. Each disclosure statement shall be made a part of the
minutes of the contracting authority, city or municipality at
a regular or special meeting.
(e) Copy.--The contracting authority must provide a copy
of the disclosure under this section to each member, officer,
director, employee, consultant, lobbyist and independent
contractor of the contracting authority or governing body of
the city or municipality in which the zone is located.
(f) Disciplinary action.--The contracting authority shall
refer suspected violations to the State Ethics Commission or
the county district attorney, if appropriate.
(g) Ethics.--A member of the contracting authority must
comply with 65 Pa.C.S. Ch. 11.
(1806-C amended July 13, 2016, P.L.526, No.84)
Section 1807-C. Qualified businesses.
(a) List.--By June 1 following the end of the baseline year,
and for every year thereafter, each contracting authority shall
file with the department a complete list of all businesses
located in the zone and all businesses engaged in acquisition,
development, construction, including infrastructure and site
preparation, reconstruction or renovation of a facility in the
zone in the prior calendar year. The list shall include for
each business the address, the names of the business owners or
corporate officers, State tax identification number and parcel
number and a map of the zone with parcel numbers.
(b) Time.--If the list under subsection (a) is not timely
provided to the department, no eligible State tax shall be
certified by the department for the prior calendar year.
(c) Audit.--The contracting authority shall hire an
independent auditing firm to perform an annual audit verifying
all of the following and shall submit the audit to the
Department of Community and Economic Development and the
Department of Revenue as well as post on the contracting
authority's publicly accessible Internet website:
(1) The correct amount of the eligible local tax was
submitted to the local taxing authorities.
(2) The local taxing authorities transferred the correct
amount of eligible local tax to the State Treasurer.
(3) The moneys transferred to the fund were expended
in accordance with this article.
(4) The correct amount was requested under section
1812-C(c).
(1807-C amended July 13, 2016, P.L.526, No.84)
Section 1808-C. Funds.
(a) Notice.--Following the designation of a zone, the
contracting authority shall notify the State Treasurer.
(b) Establishment.--Upon receipt of notice under subsection
(a), the State Treasurer shall establish for each zone a special
fund for the benefit of the contracting authority to be known
as the City Revitalization and Improvement Zone Fund or Pilot
Zone Fund. Interest income derived from investment of money in
the zone fund shall be credited by the State Treasury to the
zone fund.
(1808-C amended July 13, 2016, P.L.526, No.84)
Section 1809-C. Reports.
(a) State zone report.--No later than June 15 following the
baseline year and each year thereafter, each qualified business
shall file a report with the department in a form or manner
required by the department which includes all of the following:
(1) Amount of each eligible tax which was paid to the
Commonwealth by the qualified business in the prior calendar
year.
(2) Amount of each eligible tax refund received from
the Commonwealth in the prior calendar year by the qualified
business.
(3) The number of new jobs created by the qualified
business for the prior calendar year in the zone.
(4) The total wages and salaries for employees of the
qualified business for the prior calendar year in the zone.
(5) The amount of private capital investment made by
the qualified business in the prior calendar year in the
zone.
((a) amended July 11, 2024, P.L. , No.56)
(a.1) Information.--Notwithstanding any other provision of
law, the department may provide information obtained under
subsection (a)(3), (4) and (5) to the Department of Community
and Economic Development. ((a.1) added July 11, 2024, P.L. ,
No.56)
(b) Local zone report.--No later than June 15 following the
baseline year and for each year thereafter, each qualified
business shall file a report with the local taxing authority
which includes all of the following:
(1) Amount of each eligible tax which was paid to the
local taxing authority by the qualified business in the prior
calendar year.
(2) Amount of each eligible tax refund received from
the local taxing authority in the prior calendar year by the
qualified business.
((b) amended July 11, 2024, P.L. , No.56)
(c) Penalties.--
(1) Failure to file a timely and complete report under
subsection (a) or (b) may result in the imposition of a
penalty of the lesser of:
(i) ten percent of all eligible tax due the taxing
authority in the prior calendar year; or
(ii) one thousand dollars.
(2) The department shall notify the contracting
authority of all qualified businesses that violated
subsection (a) prior to December 31 of the year in which the
report was to be filed. A penalty for a violation of
subsection (a) shall be imposed, assessed and collected by
the department under procedures set forth in Article II.
Money collected under this paragraph shall be deposited in
the General Fund. ((2) amended July 8, 2022, P.L.513, No.53)
(3) A penalty for a violation of subsection (b) shall
be imposed, assessed and collected by the city or
municipality under procedures for imposing penalties under
local tax collection laws.
(4) If a local taxing authority imposes the penalty,
the money shall be transferred to the State Treasurer for
deposit in the zone fund.
(5) No penalty shall be imposed by the department or
the local taxing authority for failure to file a timely and
complete report under subsection (a) or (b) in 2019 or 2020.
((5) added July 23, 2020, P.L.665, No.68 and Nov. 3, 2020,
P.L.1074, No.107)
(1809-C amended July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 24(4)(xi) of Act 53 of 2022
provided that the amendment of section 1809-C(c)(2) shall
apply to fiscal years beginning after June 30, 2022.
Compiler's Note: Acts 68 and 107 of 2020 amended subsecs.
(a) and (b) and added subsec. (c)(5). Act 107 overlooked
the amendment by Act 68, but the amendments do not
conflict in substance and have both been given effect in
setting forth the text of subsecs. (a), (b) and (c)(5).
Section 1810-C. Calculation of baseline.
(a) Baseline tax amount.--By October 15 following the end
of the baseline year and for each year thereafter, the
department shall verify the State baseline tax amount for each
qualified business in a zone which consists of the following:
(1) For each qualified business that files timely State
zone reports under section 1809-C(a), the amount of eligible
State tax paid, less State eligible tax refunds.
(2) For each qualified business not included under
paragraph (1) but located or partially located in the zone
as determined by the department or included in the
information received by the department under section
1809-C(a), the amount of State eligible tax paid, less State
eligible tax refunds.
(b) Moves and noninclusions.--
(1) This subsection applies to a qualified business
that:
(i) moves into a zone from within this Commonwealth
after the baseline year; or
(ii) is in a zone but not included in the
calculation of the State baseline tax amount under
subsection (a).
(2) A qualified business subject to paragraph (1) shall
file a State zone report under section 1809-C following the
end of the first full calendar year in which the qualified
business conducted business in the zone and each calendar
year thereafter. The amount of eligible State tax verified
by the department for the qualified business for the first
full calendar year shall be the qualified business' fixed
baseline tax amount. The amount added shall remain part of
the baseline tax amount each year thereafter until such time
as the qualified business ceases to conduct business in the
zone, upon which event such amount previously added shall
be deducted from the State baseline tax amount.
(3) The following taxes shall be excluded from the
baseline tax amount calculation under this section:
(i) Taxes on business personal property to be
utilized at a new facility.
(ii) The eligible taxes of:
(A) A new business.
(B) A qualified business moving into the zone
from outside this Commonwealth.
(C) A contractor engaged in acquisition,
development or construction, including infrastructure
and site preparation, reconstruction or renovation
of a facility.
(c) Recalculation.--The department shall not recalculate
the baseline of a zone designated prior to the effective date
of this subsection to include the hotel occupancy tax imposed
under Part V of Article II.
(1810-C amended July 13, 2016, P.L.526, No.84)
Section 1811-C. Certification.
(a) Amounts.--By the October 15 following the baseline year,
and each year thereafter, the department shall do all of the
following for each qualified business within a zone for the
prior calendar year:
(1) Subject to paragraph (1.1), make the following
calculation for qualified businesses which file State zone
reports under section 1809-C(a), separately for each
business:
(i) Subtract:
(A) the amount of eligible State tax refunds
received; from
(B) the amount of eligible State tax paid.
(ii) Except as set forth in subparagraph (iii),
subtract:
(A) the State tax baseline amount for the
business; from
(B) the difference under subparagraph (i).
(iii) If the difference under subparagraph (ii) is
a negative number, state the difference as zero.
(1.1) Make the following calculation for a qualified
business subject to section 1810-C(b)(1) separately for each
business:
(i) Subtract:
(A) the amount of State eligible tax refunds
received; from
(B) the amount of State eligible tax paid.
(ii) Except as set forth in subparagraph (iii),
subtract:
(A) the State tax baseline amount for the
business; from
(B) the difference under subparagraph (i).
(iii) If the difference under subparagraph (ii) is
a negative number, state the difference as zero.
(2) Certify to the office the sum derived from adding
paragraph (1) to paragraph (1.1).
(b) Content.--
(1) The certification may include the following:
(i) Adjustment made to timely filed zone reports
by the department for State eligible tax actually paid
by a qualified business in the prior calendar year.
(ii) State eligible tax refunds paid to a qualified
business in the zone in a prior calendar year.
(iii) State tax penalties paid by a qualified
business in the prior year under section 1809-C(c).
(2) The certification shall not include the following:
(i) Tax paid by a qualified business that did not
file a timely State zone report under section 1809-C(a).
(ii) Tax paid by a qualified business whose tax was
not included in the State tax baseline amount calculation
under section 1810-C.
(iii) Tax paid by a qualified business not appearing
on a timely filed list under section 1807-C(a).
(3) The department shall request documentation regarding
State eligible taxes paid or refunds received from the agency
required to collect the taxes or issue the refunds before
requiring such documentation from the qualified business.
Instructions issued by the department after the effective
date of this section shall include a statement that the
qualified business will not be required to submit supporting
documentation with the qualified business's request for
certification under this article. Nothing in this paragraph
shall prohibit the department from auditing reports submitted
by qualified businesses for compliance with this article.
((3) added Oct. 30, 2017, P.L.672, No.43)
(c) Submission.--The following shall apply:
(1) An entity collecting a local eligible tax within
the zone for each qualified business which files a zone
report under section 1809-C(b) shall, by October 15 following
the baseline year and each year thereafter, submit the
following to the State Treasurer for transfer to the fund:
(i) The local eligible tax collected in the prior
calendar year.
(ii) Less the amount of local eligible tax refunds
issued in the prior calendar year.
(iii) Less the amount of local baseline tax amount.
(iv) If the difference under subparagraph (iii) is
a negative number, state the difference as zero.
(2) The information under this subsection shall also
be certified by the local taxing authority to the Department
of Community and Economic Development, the office and the
department.
(d) Confidential report.--No later than October 15 of the
baseline year and each year thereafter, the department and the
local taxing authority shall provide the contracting authority
with a report detailing the baseline tax amount for each
qualified business and the amount of eligible tax paid by each
qualified business. The report shall be confidential and shall
not be publicly accessible under the act of February 14, 2008
(P.L.6, No.3), known as the Right-to-Know Law.
(1811-C amended July 13, 2016, P.L.526, No.84)
Section 1812-C. Transfers.
(a) Office.--Within ten days of receiving the certification
from the department under section 1811-C, the office shall
direct the State Treasurer to transfer the amount of certified
eligible State zone tax from the General Fund to each fund of
a contracting authority. The following shall apply:
(1) For zones designated after July 1, 2024, the office
shall direct the State Treasurer to transfer the amount of
certified eligible State zone tax up to the maximum of
$15,000,000 from the General Fund to each fund of a
contracting authority within ten days of receiving the
certification from the department under section 1811-C.
(2) The maximum amount of certified eligible State zone
tax under paragraph (1) shall be annually adjusted beginning
July 1, 2025, and each July 1 thereafter to reflect any
upward change in the Consumer Price Index for All Urban
Consumers (CPI-U) for the Philadelphia-Camden-Wilmington,
PA-NJ-DE-MD area for the prior 12-month period.
((a) amended July 11, 2024, P.L. , No.56)
(b) State Treasurer.--Within ten days of receiving direction
under subsection (a), the State Treasurer shall pay into the
fund the amount directed under subsection (a) until bonds issued
to finance the acquisition, development, construction, including
related infrastructure and site preparation, reconstruction or
renovation of a facility or other eligible project in the zone,
are retired.
(c) Notification.--((c) deleted by amendment July 11, 2024,
P.L. , No.56)
(1812-C amended July 13, 2016, P.L.526, No.84)
Section 1813-C. Restrictions.
(a) Utilization.--Money transferred under section 1812-C
may only be utilized for the following:
(1) Payment of debt service on bonds issued or
refinanced for the acquisition, development, construction,
including related infrastructure and site preparation,
reconstruction, renovation or refinancing of a facility in
the zone and normal and customary fees for professional
services associated with the issuance or refinance of the
bonds.
(1.1) Payment of debt service on bonds issued or
refinanced to establish a revolving fund that will provide
financial assistance in the form of a grant or a loan to a
qualified business acquiring property for the business,
constructing a new facility, reconstructing or renovating
an existing facility or acquiring new equipment to be used
by the qualifying business in a zone. ((1.1) amended July
8, 2022, P.L.513, No.53)
(1.2) ((1.2 expired June 30, 2021. See Act 107 of 2020.)
(2) Acquisition, development, construction, including
related infrastructure and site preparation, reconstruction,
renovation or refinancing of all or a part of a facility.
(3) Replenishment of amounts in debt service reserve
funds established to pay debt service on bonds.
(4) Employment of an independent auditing firm to
perform the duties under section 1807-C(c).
(5) Improvement or development of all or part of a zone.
(6) Improvement projects, including fixtures and
equipment for a facility owned, in whole or in part, by a
public authority.
(7) Payment or reimbursement of reasonable
administrative, auditing and compliance services required
by this article. Reasonable administrative costs may not
exceed 5% of the money transferred under section 1812-C. For
purposes of this paragraph, professional services shall not
be considered administrative costs.
(b) Prohibition.--
(1) Money transferred under section 1812-C may not be
utilized for maintenance or repair of a facility.
(2) Paragraph (1) shall not apply for the period of
April 1, 2020, through June 30, 2021.
((b) amended July 23, 2020, P.L.665, No.68 and Nov. 3, 2020,
P.L.1074, No.107)
(c) Excess money.--
(1) Except as set forth in paragraph (4) or (5), for
the first five calendar years of the zone designated after
July 1, 2024, if the amount of money transferred to the fund
under sections 1811-C(c) and 1812-C in any one calendar year
exceeds the money utilized, budgeted or appropriated by
official resolution of the contracting authority under this
section in that calendar year, the contracting authority may
carry forward any excess up to a total sum of $3,000,000 for
the five-year calendar period. For the sixth calendar year
and each calendar year thereafter, if the amount of money
transferred to the fund under sections 1811-C(c) and 1812-C
in any one calendar year exceeds the money utilized, budgeted
or appropriated by official resolution of the contracting
authority under this section in that calendar year, the
contracting authority shall submit by April 15 following the
end of the calendar year any money not utilized, budgeted
or appropriated by official resolution of the contracting
authority to the State Treasurer for deposit into the General
Fund. ((1) amended July 11, 2024, P.L. , No.56)
(2) At the time of submission to the State Treasurer,
the contracting authority shall submit to the State
Treasurer, the office and the department a detailed
accounting of the calculation resulting in the excess money.
(3) The excess money shall be credited to the
contracting authority and applied to the amount required to
be repaid under section 1812-C(c)(5) until there is full
repayment.
(4) Paragraph (1) does not apply to money utilized in
a pilot zone provided the excess money is used in accordance
with subsection (a).
(5) Other than a zone described in paragraph (1) or
(4), for a zone designation prior to July 1, 2024, if the
amount of money transferred to the fund under sections
1811-C(c) and 1812-C in any one calendar year exceeds the
money utilized, budgeted or appropriated by official
resolution of the contracting authority under this section
in that calendar year, the contracting authority shall submit
any money not utilized, budgeted or appropriated by official
resolution to the State Treasurer for deposit into the
General Fund by April 15 of the following calendar year.
((5) added July 11, 2024, P.L. , No.56)
(d) Matching funds.--
(1) The amount of money transferred from the fund
utilized for the acquisition, development, construction,
including related site preparation and infrastructure,
reconstruction or renovation of facilities, or normal and
customary fees for professional services shall be matched
by private, Federal or local money at a ratio of five fund
dollars to one private, Federal or local dollar. The
contracting authority shall verify the private, Federal or
local match for a project at the time of the bond and report
proof of the match to the agencies. All of the following
shall be deemed private money:
(i) Equity.
(ii) Private developer debt and financing.
(iii) Soft costs associated with land development.
(iv) Costs of professional services associated with
development.
(v) Costs associated with improvements of the
parcel.
(vi) Costs of land acquisition and real estate
transactions.
(1.1) Payment of debt service on bonds issued or
refinanced to establish a revolving fund that will provide
financial assistance in the form of a grant or a loan to a
qualified business acquiring property for the business,
constructing a new facility, reconstructing or renovating
an existing facility or acquiring new equipment to be used
by the qualifying business in a zone. ((1.1) amended July
8, 2022, P.L.513, No.53)
(2) By April 1 following the baseline year and for each
year thereafter, the contracting authority shall file an
annual report with the Department of Community and Economic
Development, the office and the department that contains a
detailed account of the fund money expenditures and the
private, Federal or local money expenditures and a
calculation of the ratio in paragraph (1) for the prior
calendar year.
(3) If it is determined that insufficient private,
Federal or local money was utilized under paragraph (1), the
amount of fund money utilized under paragraph (1) in the
prior calendar year shall be deducted from the next transfer
of the fund.
(1813-C amended Oct. 30, 2017, P.L.672, No.43)
Compiler's Note: Section 24(4)(xii) of Act 53 of 2022
provided that the amendment of section 1813-C(a)(1.1)
shall apply to fiscal years beginning after June 30,
2022.
Compiler's Note: Acts 68 and 107 of 2020 amended subsecs.
(b) and (c)(1) and added subsec. (a)(1.2). Act 107
overlooked the amendment by Act 68, but the amendments
do not conflict in substance and have both been given
effect in setting forth the text of subsecs. (b), (c)(1)
and (a)(1.2).
Section 4 of Act 107 of 2020 provided that the
amendment of subsec. (b) and (c)(1) of Act 107 shall
apply retroactively to January 1, 2019.
Section 6 of Act 68 of 2020, which amended subsecs.
(b) and (c)(1) and added subsec. (a)(1.2), provided that
the amendment of subsecs. (b) and (c)(1) shall apply
retroactively to January 1, 2019.
Section 1814-C. Transfer of property.
(a) Property.--A parcel or parcels in a zone where no zone
fund dollars were expended upon the parcel or parcels or where
a facility has not been constructed, reconstructed or renovated
using money under this article may be transferred out of the
zone, if the contracting authority provides a notarized
certification, confirmed in the annual audit required under
section 1807-C(c), that no fund dollars were used on the parcel
or parcels. Additional acreage, not to exceed the acreage
transferred out of the zone, may be added to the zone. ((a)
amended July 11, 2024, P.L. , No.56)
(a.1) Public meeting.--Prior to requesting approval, the
contracting authority shall hold a public meeting to consider
the proposed transfer. At the meeting, any interested party may
attend and offer comment on the proposal change.
(a.2) Infeasibility.--
(1) If no activity in furtherance of development has
taken place on the parcel within eight years of the enactment
of this section or designation of the zone, whichever occurs
later, the contracting authority may conduct a public hearing
on the feasibility of the parcel to continue with the
designation pursuant to a request from the city or
municipality where the parcel sits. The hearing shall be
held and notice provided to the owner of the parcel in
accordance with section 908 of the act of July 31, 1968
(P.L.805, No.247), known as the Pennsylvania Municipalities
Planning Code. For purposes of this section, activity shall
include, but not be limited to, construction, building,
renovation, reconstruction, site preparation and site
development.
(2) If the contracting authority determines that the
project is no longer feasible, the contracting authority
shall issue a written opinion within 45 days of the hearing
setting forth the reasons supporting the determination and
verifying that no activity has taken place. The decision may
be appealed in accordance with section 1001-A of the
Pennsylvania Municipalities Planning Code.
(b) Review and approval.--The following apply:
(1) A transfer may be reviewed and approved by the
Department of Community and Economic Development in
consultation with the office and the department. The
contracting authority shall submit a written request to the
Department of Community and Economic Development to approve
the transfer of a parcel or parcels. In addition to the
written request, the contracting authority shall submit the
following to the Department of Community and Economic
Development:
(i) The certification under subsection (a).
(ii) A resolution of the contracting authority board
approving the transfer of the parcel or parcels.
(iii) Any additional information as required by the
Department of Community and Economic Development, the
office or the department.
(2) A determination regarding a request to approve a
transfer of a parcel or parcels shall be made within 90 days
of receipt of the written request from the contracting
authority board.
((b) amended July 11, 2024, P.L. , No.56)
(1814-C amended Oct. 30, 2017, P.L.672, No.43)
Section 1815-C. Duration.
A zone shall be in effect for a period equal to the length
of time for the repayment of debt incurred for the zone,
including bonds issued. Bonds shall be paid, and all zones shall
cease no later than 30 years following the initial issuance of
the bonds.
(1815-C added July 9, 2013, P.L.270, No.52)
Section 1816-C. Commonwealth pledges.
(a) Pledge.--If and to the extent the contracting authority
pledges amounts required to be transferred to its fund under
section 1812-C for payment of bonds until all of the bonds,
together with interest, are fully paid or provided for, the
Commonwealth pledges to and agrees with any person, firm,
corporation or government agency, in this Commonwealth or
elsewhere, and pledges to and agrees with any Federal agency
subscribing to or acquiring the bonds that the Commonwealth
itself will not nor will it authorize any government entity to
do any of the following:
(1) Abolish or reduce the size of the zone, or transfer
zone designation from a parcel contrary to section 1814-C.
(2) Amend or repeal section 1810-C, 1811-C, 1812-C,
1813-C, 1814-C, 1815-C or this section to the detriment of
the issuer of any bonds.
(3) Limit or alter the rights vested in the contracting
authority in a manner inconsistent with the obligations of
the contracting authority with respect to the bonds issued
by the contracting authority.
(4) Impair revenue to be paid under this article to the
contracting authority necessary to pay debt service on bonds.
(b) Limitation.--Nothing in this section shall limit the
authority of the Commonwealth or a political subdivision
government entity to change the rate, base or subject of a
specific tax or to repeal or enact any tax.
(1816-C amended July 13, 2016, P.L.526, No.84)
Section 1817-C. Confidentiality.
(a) Sole use.--A zone report or certification under this
article shall only be used by the contracting authority to
verify the amount of the State tax baseline amount calculated
under section 1810-C, the State tax certification under section
1811-C and the amount allocated to any uses specified under
section 1813-C. ((a) amended July 8, 2022, P.L.513, No.53)
(b) Prohibition.--Use of a zone report other than as set
forth in subsection (a) is prohibited and shall be subject to
the law applicable to the confidentiality of tax records.
(1817-C added July 9, 2013, P.L.270, No.52)
Section 1818-C. Guidelines.
The Department of Community and Economic Development, the
office and the department shall develop, update and publish
guidelines necessary to implement this article.
(1818-C amended July 13, 2016, P.L.526, No.84)
Section 1819-C. Review.
(a) Department of Community and Economic Development.--By
December 31, 2021, and annually each March 31 thereafter, the
Department of Community and Economic Development shall, in
cooperation with the office and the department, complete a
review and analysis of all active zones. The review shall
include an analysis of: ((a) intro. par. amended July 11, 2024,
P.L. , No.56)
(1) The number of new jobs created.
(2) The cost to and impact of the zones on the
Commonwealth and the revenue of the Commonwealth.
(3) Economic development to the city, or municipality
in a zone and to the Commonwealth.
(4) Any negative impact on adjacent municipalities or
the Commonwealth.
(b) Other review.--By June 30, 2021, the Independent Fiscal
Office shall complete a review and analysis of all zones. The
review shall include an analysis of the factors under subsection
(a).
(c) Posting.--Reviews under subsections (a) and (b) shall
be posted on the Department of Community and Economic
Development's publicly accessible Internet website as well as
the Independent Fiscal Office's publicly accessible Internet
website.
(1819-C added July 13, 2016, P.L.526, No.84)
ARTICLE XVIII-D
VOLUNTEER RESPONDER RETENTION
AND RECRUITMENT TAX CREDIT
(Art. added July 9, 2008, P.L.922, No.66)
Compiler's Note: Section 4 of Act 66 of 2008, which added
Article XVIII-D, provided that Article XVIII-D shall
apply to taxable years beginning after December 31, 2007,
and ending January 1, 2009.
Section 1801-D. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Active volunteer." A volunteer for a volunteer ambulance
service, volunteer fire company or volunteer rescue company
certified as meeting the criteria of this act as set forth under
section 1807-D.
"Commissioner." The State Fire Commissioner appointed under
section 3 of the act of November 13, 1995 (P.L.604, No.61),
known as the State Fire Commissioner Act.
"Department." The Department of Revenue of the Commonwealth.
"Director." The director of the Emergency Medical Services
Office in the Department of Health.
"Qualified tax liability." The liability for taxes imposed
under Article III for the taxable year beginning after December
31, 2007 and ending before January 1, 2009.
"Tax credit." The tax credit available to active volunteers
under this article.
"Taxpayer." An individual subject to payment of taxes under
Article III.
"Volunteer ambulance service." As defined in section 102
of the act of July 31, 2003 (P.L.73, No.17), known as the
Volunteer Fire Company and Volunteer Ambulance Service Grant
Act.
"Volunteer fire company." As defined in section 102 of the
act of July 31, 2003 (P.L.73, No.17), known as the Volunteer
Fire Company and Volunteer Ambulance Service Grant Act.
"Volunteer rescue company." As defined in section 102 of
the act of July 31, 2003 (P.L.73, No.17), known as the Volunteer
Fire Company and Volunteer Ambulance Service Grant Act.
(1801-D added July 9, 2008, P.L.922, No.66)
Section 1802-D. Application.
(a) Application to department.--A taxpayer may submit an
application for a tax credit under this article in a manner
required by the department. The application shall contain the
following information:
(1) The name and tax identification number of the
taxpayer.
(2) The name and location of the volunteer fire company,
volunteer ambulance service or volunteer rescue company of
which the taxpayer is an active volunteer.
(3) A certification for the applicant described in
section 1809-D.
(4) Any other information deemed appropriate by the
department.
(b) Procedure.--The application shall be attached to the
applicant's annual tax return required to be filed under Article
III.
(1802-D added July 9, 2008, P.L.922, No.66)
Section 1803-D. Taxpayer credit.
A taxpayer may claim a tax credit against the qualified tax
liability of the taxpayer.
(1803-D added July 9, 2008, P.L.922, No.66)
Section 1804-D. Taxpayer eligibility.
(a) Credit.--A taxpayer shall be eligible for a tax credit
under subsection (b) against the tax imposed under Article III
if the taxpayer is an active volunteer within this Commonwealth.
(b) Maximum credit.--The following shall apply:
(1) A taxpayer who qualifies under subsection (a) may
claim a tax credit of $100.
(2) (i) If the taxpayer is not an active volunteer for
the entire tax year, the amount of the tax credit shall
be prorated and the credit amount shall equal the maximum
amount of credit for the tax year, divided by 12,
multiplied by the number of months in the tax year the
taxpayer was an active volunteer. The credit shall be
rounded to the nearest $5.
(ii) If the taxpayer is an active volunteer during
any part of a month, the taxpayer shall be considered
an active volunteer for the entire month.
(1804-D added July 9, 2008, P.L.922, No.66)
Section 1805-D. Carryover and carryback.
(a) General rule.--If the taxpayer cannot use the entire
amount of the tax credit for the taxable year in which the
taxpayer is eligible for the credit, the excess may be carried
over to succeeding taxable years and used as a credit against
the qualified tax liability of the taxpayer for those taxable
years. Each time the tax credit is carried over to a succeeding
taxable year, it shall be reduced by the amount that was used
as a credit during the immediately preceding taxable year. The
tax credit provided by this article may be carried over and
applied to succeeding taxable years for no more than three
taxable years following the first taxable year for which the
taxpayer was entitled to claim the credit.
(b) Application.--A tax credit approved by the department
in a taxable year shall first be applied against the taxpayer's
qualified liability for the current taxable year as of the date
on which the credit was approved before the tax credit can be
applied against any tax liability under subsection (a).
(c) Limitations.--A taxpayer is not entitled to carry back,
obtain a refund of, sell or assign an unused tax credit.
(1805-D added July 9, 2008, P.L.922, No.66)
Section 1806-D. Total amount of credits.
The total amount of tax credits authorized by this article
shall not exceed $4,500,000.
(1806-D added July 9, 2008, P.L.922, No.66)
Section 1807-D. Point system.
(a) General rule.--The commissioner and the director shall
jointly develop and implement a point system establishing the
annual requirements for certification of active volunteers.
(b) Factors.--To determine whether to certify an individual
as an active volunteer, the point system shall consider the
following factors:
(1) The number of emergency calls responded to.
(2) The volunteer's level of training and participation
in formal training and drills.
(3) Time spent on administration and support activities,
including fundraising and maintenance of facilities and
equipment.
(4) Involvement in other projects that directly benefit
the organization's financial viability, emergency response
or operational readiness.
(1807-D added July 9, 2008, P.L.922, No.66)
Section 1808-D. (Reserved).
(1808-D (Reserved) added July 9, 2008, P.L.922, No.66)
Section 1809-D. Certification.
(a) Self certification.--The active volunteer shall sign
and submit the application to the chief of the volunteer fire
company or the supervisor or chief of the volunteer ambulance
service or volunteer rescue company fire or EMS department where
he or she serves.
(b) Local sign-off.--The chief and another officer of the
volunteer fire company, the supervisor or chief and another
officer of the volunteer ambulance service or volunteer rescue
company shall sign the application attesting to the individual's
status as an active volunteer. The application shall then be
forwarded to the department for final review and processing.
(1809-D added July 9, 2008, P.L.922, No.66)
Section 1810-D. Guidelines.
The department shall adopt guidelines, including forms,
necessary to administer this article. The department may require
proof of the claim for tax credit.
(1810-D added July 9, 2008, P.L.922, No.66)
Section 1811-D. Report to General Assembly.
No later than June 1, 2009, the department shall submit a
report on the tax credits granted under this article and the
applicability of the tax credit to the retention of active
volunteers of a volunteer ambulance service, volunteer fire
company or volunteer rescue company. The report shall include
the names of taxpayers who utilized the credit as of the date
of the report and the amount of credits approved. The report
may include recommendations for changes in the calculation or
administration of the tax credit. The report shall be submitted
to the chairman and minority chairman of the Appropriations
Committee of the Senate, the chairman and minority chairman of
the Appropriations Committee of the House of Representatives,
the chairman and minority chairman of the Finance Committee of
the Senate and the chairman and minority chairman of the Finance
Committee of the House of Representatives. The report may
include other information that the department deems appropriate.
(1811-D added July 9, 2008, P.L.922, No.66)
Section 1812-D. Penalty.
A taxpayer who claims a credit under this article but fails
to meet the standards under section 1804-D shall repay the full
amount of the tax credit to the Commonwealth.
(1812-D added July 9, 2008, P.L.922, No.66)
ARTICLE XVIII-E
MOBILE TELECOMMUNICATIONS BROADBAND INVESTMENT TAX CREDIT
(Art. added July 9, 2013, P.L.270, No.52)
Section 1801-E. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Mobile telecommunication services." As defined in section
201(aaa).
"Qualified broadband equipment." Machinery and equipment
located in this Commonwealth that is used by a mobile
telecommunication services provider to provide Internet access
service and is capable of sending, receiving, storing,
transmitting, retransmitting, amplifying, switching or routing
data, video or other electronic information. The term does not
include machinery or equipment that is used to provide voice
communication service.
"Tax credit." The credit provided under this article.
(1801-E added July 9, 2013, P.L.270, No.52)
Section 1802-E. Tax credit.
(a) General rule.--For tax years beginning after December
31, 2013, and ending before January 1, 2024, a taxpayer that
is a provider of mobile telecommunication services shall be
allowed a tax credit against the tax imposed under Article IV
for investment in qualified broadband equipment placed into
service in this Commonwealth during a taxable year.
(b) Amount.--
(1) The amount of the tax credit shall be 5% of the
purchase price of the qualified broadband equipment under
subsection (a).
(2) The amount of the tax credit that may be taken in
a taxable year is limited to an amount not greater than 50%
of the taxpayer's liability under section 402.
(3) Any credit claimed under this article but not used
in the taxable year may be carried forward for not more than
five consecutive taxable years. The tax credit may not be
used to obtain a refund.
(1802-E added July 9, 2013, P.L.270, No.52)
Section 1803-E. Pass-through entity.
(a) Transfer.--If a pass-through entity has any unused tax
credit under this section, the entity may elect, in writing,
according to the department's procedures, to transfer all or a
portion of the credit to shareholders, members or partners in
proportion to the share of the entity's distributive income to
which the shareholder, member or partner is entitled.
(b) Additional tax credit.--The tax credit provided under
subsection (a) shall be in addition to any tax credit to which
a shareholder, member or partner of a pass-through entity is
otherwise entitled under this article, except that a
pass-through entity and a shareholder, member or partner of a
pass-through entity may not claim a tax credit under this
article for the same qualified broadband equipment.
(c) Claim.--A shareholder, member or partner of a
pass-through entity to whom credit is transferred under
subsection (a) must immediately claim the credit in the taxable
year in which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund of
or sell or assign the tax credit.
(1803-E added July 9, 2013, P.L.270, No.52)
Section 1804-E. Procedure. (1804-E repealed Nov. 25, 2020,
P.L.1253, No.132)
Section 1805-E. Limitation. (1805-E repealed Nov. 25, 2020,
P.L.1253, No.132)
ARTICLE XVIII-F
INNOVATE IN PA TAX CREDIT
(Art. added July 9, 2013, P.L.270, No.52)
Section 1801-F. Scope of article.
This article relates to the Innovate in PA Tax Credit.
(1801-F added July 9, 2013, P.L.270, No.52)
Section 1802-F. Legislative intent.
It is the intent of this article to invest in innovation as
a catalyst for economic growth. Investment in the Ben Franklin
Technology Development Authority, the Ben Franklin Technology
Partners, regional biotechnology research centers, the
department and venture capital funds will advance the
competitiveness of this Commonwealth's companies in the global
economy.
(1802-F added July 9, 2013, P.L.270, No.52)
Section 1803-F. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Allocation amount." The total amount of tax credits
purchased by a qualified taxpayer.
"Authority." The Ben Franklin Technology Development
Authority established to manage and fund programs in this
Commonwealth that support the development of technology as
described in the act of June 22, 2001 (P.L.569, No.38), known
as The Ben Franklin Technology Development Authority Act.
"Ben Franklin Technology Partners Program." A program under
the Ben Franklin Technology Development Authority that funds
four regionally based economic development organizations
dedicated to a common mission of technology commercialization.
"Capital." The amount of money that a purchaser invests
under the Innovate in PA Program.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Fund." The Innovate in PA Fund.
"Impact investment." An investment intended to solve social
or environmental challenges while generating financial profit.
Impact investing recognizes that investments have social and
environmental returns in addition to financial returns and
attempts to maximize the three returns rather than one at the
expense of others.
"Insurance premiums tax liability." Any liability incurred
by an insurance company under Article IX.
"Program." The Innovate in PA Program.
"Qualified taxpayer." Any of the following that has
insurance premiums tax liability and contributes capital to
purchase premiums tax credits under this article:
(1) An insurance company authorized to do business in
this Commonwealth.
(2) A holding company that has at least one insurance
company subsidiary authorized to do business in this
Commonwealth.
"Recipient." An entity that receives a distribution of funds
under section 1811-F(c).
"Regional biotechnology research center." A regional
biotechnology research center established under Chapter 17 of
the act of June 26, 2001 (P.L.755, No.77), known as the Tobacco
Settlement Act.
"Tax credit." A credit against insurance premiums tax
liability offered to or held by a qualified taxpayer under this
article.
"Venture Investment Program." A program under the Ben
Franklin Technology Development Authority dedicated to
increasing the availability of venture capital in this
Commonwealth.
(1803-F added July 9, 2013, P.L.270, No.52)
Section 1804-F. Tax credit.
A qualified taxpayer may purchase tax credits from the
department in accordance with this article and may apply the
tax credits against its insurance premiums tax liability in
accordance with this article.
(1804-F added July 9, 2013, P.L.270, No.52)
Section 1805-F. Duties.
(a) Sale of tax credits.--The department shall have the
authority to sell up to $100,000,000 in tax credits to qualified
taxpayers. The sale of the tax credits shall be in accordance
with section 1808-F.
(b) Time of sale.--The sale authorized under subsection (a)
may not occur before October 1, 2013.
(c) Transfers of amounts.--((c) deleted by amendment July
8, 2022, P.L.513, No.53).
(1805-F added July 9, 2013, P.L.270, No.52)
Compiler's Note: Section 24(4)(xiii) of Act 53 of 2022
provided that the amendment of section 1805-F(c) shall
apply to fiscal years beginning after June 30, 2022.
Section 1806-F. Use of tax credits by qualified taxpayers.
(a) Use against insurance premiums tax liability.--A
qualified taxpayer that purchases tax credits under section
1805-F may claim the credits beginning in calendar year 2017
against insurance premiums tax liability incurred for a taxable
year that begins on or after January 1, 2016.
(b) Application to department.--A qualified taxpayer seeking
to use purchased tax credits may submit an application to the
department in a manner prescribed by the department.
(c) Construction.--The following shall apply:
(1) A qualified taxpayer may not be required to reduce
the amount of insurance premiums tax included by the taxpayer
in connection with ratemaking for any insurance contract
written in this Commonwealth because of a reduction of the
taxpayer's insurance premiums tax liability derived from the
tax credit purchased under this article.
(2) If, under the insurance laws of this Commonwealth,
the assets of the qualified taxpayer are examined or
considered, the taxpayer's balance of tax credits shall be
treated as an admitted asset subject to the same financial
rating as held by the Commonwealth.
(d) Limitations.--The following shall apply:
(1) The total amount of tax credits applied against
insurance premiums tax liability by all qualified taxpayers
in a fiscal year may not exceed $20,000,000 per year
beginning in calendar year 2017.
(2) The credit to be applied in any one year may not
exceed the insurance premiums tax liability of the qualified
taxpayer for that taxable year.
(1806-F added July 9, 2013, P.L.270, No.52)
Section 1807-F. Sale, carryover and carryback.
(a) Carryover.--If the qualified taxpayer cannot use the
entire amount of the tax credit for the taxable year in which
the taxpayer is eligible for the credit, the excess may be
carried over to succeeding taxable years and used as a credit
against the qualified tax liability of the taxpayer for those
taxable years, provided that the credit may not be carried over
to any taxable year that begins after December 31, 2025.
(b) Sale.--No sooner than 30 days after providing the
Insurance Department and the department written notice of the
intent to transfer tax credits, a qualified taxpayer may
transfer tax credits held without restriction to any entity
that is a qualified taxpayer in good standing with the Insurance
Department and that agrees to assume all of the transferor's
obligations with respect to the tax credit.
(c) Carryback.--A qualified taxpayer may not carry back a
tax credit.
(1807-F added July 9, 2013, P.L.270, No.52)
Section 1808-F. Sale of tax credits to qualified taxpayers.
(a) Conduct of sale.--The sale of tax credits authorized
under section 1805-F(a) shall be conducted in accordance with
this section.
(b) Process.--The department may sell the tax credits
authorized under this article or may contract with an
independent third party to conduct a bidding process among
qualified taxpayers to purchase the credits. In raising capital
for the program, the department shall have the discretion to
distribute credits using a market-driven approach or any
approach that maximizes the yield to the Commonwealth.
(c) Application.--A qualified taxpayer seeking to purchase
tax credits may apply to the department in the manner prescribed
by the department.
(d) Bidding process.--Using procedures adopted by the
department or, if applicable, by an independent third party,
each qualified taxpayer that submits an application shall make
a timely and irrevocable offer, subject only to the department's
issuance to the taxpayer of tax credit certificates, to make
specified contributions of capital to the department on dates
specified by the department.
(e) Contents of offer.--The offer under subsection (d) must
include all of the following:
(1) The requested amount of tax credits, which may not
be less than $500,000.
(2) The qualified taxpayer's capital contribution for
each tax credit dollar requested, which may not be less than
the greater of either of the following:
(i) Seventy-five percent of the requested dollar
amount of tax credits.
(ii) The percentage of the requested dollar amount
of tax credits that the department and, if applicable,
the independent third party determines to be consistent
with market conditions as of the offer date.
(3) Any other information the department or, if
applicable, independent third party requires.
(f) Notice of approval.--Each qualified taxpayer that
submits an application under this section shall receive a
written notice from the department indicating whether or not
it has been approved as a purchaser of tax credits and, if so,
the amount of tax credits allocated.
(g) Limitation.--No tax credits may be sold if the bidding
process, upon completion, has failed to yield at least
$40,000,000 in revenue.
(1808-F added July 9, 2013, P.L.270, No.52)
Section 1809-F. Payment for tax credits purchased and
certificates.
(a) Payment of capital.--Capital committed by a qualified
taxpayer shall be paid to the department for deposit into the
fund. Nothing under this section shall prohibit the department
from establishing an installment payment schedule for capital
payments to be made by the qualified taxpayer.
(b) Issuance of tax credit certificates.--On receipt of
payment of capital, the department shall issue to each qualified
taxpayer a tax credit certificate representing a fully vested
credit against insurance premiums tax liability.
(c) Certificate issued in accordance with bidding
process.--The department shall issue tax credit certificates
to qualified taxpayers in accordance with the bidding process
selected by the department or the independent third party.
(d) Contents.--The tax credit certificate shall state all
of the following:
(1) The total amount of premiums tax credits that the
qualified taxpayer may claim.
(2) The amount of capital that the qualified taxpayer
has contributed or agreed to contribute in return for the
issuance of the tax credit certificate.
(3) The dates on which the tax credits will be available
for use by the qualified taxpayer.
(4) Any penalties or other remedies for noncompliance.
(5) The procedures to be used for transferring the tax
credits.
(6) Any other requirements the department considers
necessary.
(1809-F added July 9, 2013, P.L.270, No.52)
Section 1810-F. Failure to make contribution of capital and
reallocation.
(a) Prohibition.--A tax credit certificate under section
1809-F may not be issued to any qualified taxpayer that fails
to make a contribution of capital within the time the department
specifies.
(b) Penalty.--A qualified taxpayer that fails to make a
contribution of capital within the time the department specifies
shall be subject to a penalty equal to 10% of the amount of
capital that remains unpaid. The penalty shall be paid to the
department within 30 days after demand.
(c) Reallocation.--The department may offer to reallocate
the defaulted capital among other qualified taxpayers, so that
the result after reallocation is the same as if the initial
allocation had been performed without considering the tax credit
allocation to the defaulting qualified taxpayer.
(d) Contribution.--If the reallocation of capital under
subsection (c) results in the contribution by another qualified
taxpayer of the amount of capital not contributed by the
defaulting qualified taxpayer, the department may waive the
penalty provided under subsection (b).
(e) Transfer.--A qualified taxpayer that fails to make a
contribution of capital within the time specified may avoid the
imposition of the penalty by transferring the allocation of tax
credits to a new or existing qualified taxpayer within 30 days
after the due date of the defaulted installment. Any transferee
of an allocation of tax credits of a defaulting qualified
taxpayer under this subsection shall agree to make the required
contribution of capital within 30 days after the date of the
transfer.
(1810-F added July 9, 2013, P.L.270, No.52)
Section 1811-F. Innovate in PA Program.
(a) Establishment.--The Innovate in PA Program is
established within the authority.
(b) Fund.--The authority shall have the power and duty to
establish the Innovate in PA Fund within this authority.
(c) Distribution.--The department shall distribute the net
proceeds received by the department as a result of the sale of
tax credits under section 1805-F(a) as follows:
(1) Fifty percent shall be distributed to the Ben
Franklin Technology Partners Program for use according to
program guidelines.
(2) Forty-five percent shall be distributed to the
Venture Investment Program for use according to program
guidelines, including traditional venture investments or
impact investments. The authority may consider impact
investments based on performance. Impact investments may not
exceed 15% of the Venture Investment Program distribution
under this paragraph.
(3) Five percent to the three regional biotechnology
research centers for distribution in equal proportions to
each regional biotechnology research center.
(1811-F added July 9, 2013, P.L.270, No.52)
Section 1812-F. Guidelines.
The department, in consultation with the authority and each
regional biotechnology research center, shall promulgate
guidelines implementing this article.
(1812-F added July 9, 2013, P.L.270, No.52)
Section 1813-F. Report.
(a) Duties.--On or before January 1, 2015, and January 1
of each subsequent year, the department, in consultation with
the authority and each regional biotechnology research center,
shall do the following:
(1) Submit a report on the implementation of the program
to all of the following:
(i) The Governor.
(ii) The chairman and minority chairman of the
Appropriations Committee of the Senate.
(iii) The chairman and minority chairman of the
Appropriations Committee of the House of Representatives.
(2) Publish the report under paragraph (1) on the
department's publicly accessible Internet website.
(b) Contents.--The report under subsection (a) shall include
the following:
(1) The name of the purchaser of premiums tax credits.
(2) The amount of premiums tax credits allocated to the
purchaser.
(3) The amount of capital the purchaser contributed for
the issuance of the tax credit certificate.
(4) The amount of any tax credits that have been
transferred under section 1810-F(e).
(5) The amount of funds received by the recipients
during the previous year.
(6) The cumulative amount of capital received by the
department in connection with the sale of the tax credits.
(7) The amount of capital remaining uninvested at the
end of the preceding calendar year.
(8) The names and locations of businesses receiving
capital from the recipients, the reason for the investment
and the amount of the investment.
(9) The total number of jobs created in this
Commonwealth by the investment and the average wages paid
for the jobs.
(10) The total number of jobs retained in this
Commonwealth as a result of the investment and the average
wages paid for the jobs.
(1813-F added July 9, 2013, P.L.270, No.52)
ARTICLE XVIII-G
MANUFACTURING AND INVESTMENT
TAX CREDIT
(Art. added July 13, 2016, P.L.526, No.84)
PART I
MANUFACTURING TAX CREDIT
(Pt. added July 13, 2016, P.L.526, No.84)
Section 1801-G. Definitions.
The following words and phrases when used in this part shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Annual taxable payroll." The total amount of wages paid
by an employer for the base year or year one, as applicable,
from which personal income tax under Article III is withheld.
"Base year." The four calendar quarters preceding the start
date.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Manufacturing tax credit." A tax credit for which the
department has issued a certificate under this part.
"New job." A full-time job created in year one which has
an average wage at least equal to the county average wage where
the job is located and which includes employer-provided health
benefits.
"Pass-through entity."
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified tax liability." A taxpayer's tax liability under
Article III, IV, VI, VII, VIII, IX, XI or XV.
"Start date." The first day of the calendar quarter in which
an application is submitted to the department unless the
applicant requests and the department agrees to a later start
date.
"Taxpayer." An entity that is engaged in the mechanical,
physical or chemical transformation of materials, substances
or components into new products that are creations of new items
of tangible personal property for sale.
"Wages." Remuneration paid by an employer to an individual
with respect to the individual's employment.
"Year one." The four calendar quarters immediately following
the start date.
(1801-G added July 13, 2016, P.L.526, No.84)
Section 1802-G. Eligibility.
In order to be eligible to receive a manufacturing tax
credit, a taxpayer must demonstrate to the department the
following:
(1) The ability of the taxpayer to create an increase
in the taxpayer's annual taxable payroll in year one by at
least $1,000,000 above the amount in the base year solely
through the creation of new jobs and to maintain the increase
for a period of at least five years from the start date.
(2) The ability to maintain new jobs for a period of
at least five years from the start date.
(3) The intent to maintain existing operations in this
Commonwealth for a period of at least five years from the
start date.
(1802-G added July 13, 2016, P.L.526, No.84)
Section 1803-G. Procedure.
(a) Application.--A taxpayer applying to claim a
manufacturing tax credit must complete and submit to the
department a manufacturing tax credit application on a form and
in a manner as determined by the department.
(b) Creation of new jobs.--In order to receive a
manufacturing tax credit, the taxpayer must agree to create in
year one new jobs that increase the taxpayer's annual taxable
payroll above the base year annual taxable payroll by
$1,000,000. The taxpayer must agree to retain the new jobs and
increase in payroll for at least five years from the start date.
(c) Approval.--If the department approves the taxpayer's
application, the department and the taxpayer shall execute a
commitment letter containing the following:
(1) A description of the new jobs created.
(2) The number of new jobs to be created.
(3) The amount of private capital investment in the
creation of new jobs.
(4) The increase in year one of the annual taxable
payroll for new jobs above the base year amount of annual
taxable payroll.
(5) The maximum manufacturing tax credit amount the
taxpayer may claim.
(6) A signed statement that the taxpayer intends to
maintain existing operations in this Commonwealth for at
least five years from the start date.
(7) Any other information as the department deems
appropriate.
(d) Commitment letter.--After a commitment letter has been
signed by both the Commonwealth and the taxpayer, the taxpayer
must increase the annual taxable payroll in year one by at least
$1,000,000 above the base year amount from the creation of new
jobs up to the amount specified in the commitment letter. If
the taxpayer does not increase the annual taxable payroll as
provided under this subsection, the commitment letter shall be
revoked and deemed to be null and void.
(1803-G added July 13, 2016, P.L.526, No.84)
Section 1804-G. Manufacturing tax credit.
(a) Maximum amount.--The department may award a
manufacturing tax credit of up to 5% of the taxpayer's increase
in annual taxable payroll if the annual taxable payroll
increases in year one by at least $1,000,000 above the base
year amount from the creation of new jobs up to the amount
specified in the commitment letter.
(b) Determination.--The annual taxable payroll in year one
for a new job shall be the sum of the amount of annual taxable
payroll in year one for the new jobs created above the taxable
payroll in the base year.
(c) Certificate.--After verification by the department that
the taxpayer has increased the annual taxable payroll in year
one by at least $1,000,000 above the base year amount from the
creation of new jobs up to the amount specified and any other
conditions required by the department and specified in the
commitment letter, the taxpayer shall receive a manufacturing
tax credit certificate and filing information.
(d) Applicable taxes.--A taxpayer may apply the
manufacturing tax credit to 100% of the taxpayer's qualified
tax liability.
(e) Term.--A taxpayer may claim the manufacturing tax credit
for a period determined by the department, not to exceed the
earlier of:
(1) five years from the date the taxpayer receives the
manufacturing tax credit certificate; or
(2) six years from the start date.
(f) Availability.--A manufacturing tax credit shall be made
available by the department on a first-come, first-served basis.
(g) Limitation.--For each fiscal year beginning after June
30, 2017, $4,000,000 in manufacturing tax credits shall be made
available to the department and may be awarded by the department
in accordance with this part. In any fiscal year, the department
may reissue, assign or award prior fiscal year manufacturing
tax credits which have been recaptured under section 1808-G(a)
or (b) and may award prior fiscal year manufacturing tax credits
not previously issued.
(1804-G added July 13, 2016, P.L.526, No.84)
Section 1805-G. Limitations.
The following apply to manufacturing tax credits:
(1) If the taxpayer cannot use the entire amount of the
manufacturing tax credit for the taxable year in which the
manufacturing tax credit is first approved, the excess may
be carried over to succeeding taxable years and used as a
credit against the qualified tax liability of the taxpayer
for the taxable years. Each time the manufacturing tax credit
is carried over to a succeeding taxable year, the
manufacturing tax credit shall be reduced by the amount of
the manufacturing tax credit used as a credit during the
immediately preceding taxable year. The manufacturing tax
credit may be carried over and applied to succeeding taxable
years for no more than three taxable years following the
first taxable year for which the taxpayer was entitled to
claim the credit.
(2) A manufacturing tax credit approved by the
department in a taxable year first shall be applied against
the taxpayer's qualified tax liability for the current
taxable year as of the date on which the credit was approved
before the manufacturing tax credit can be applied against
any tax liability under paragraph (1).
(3) A taxpayer shall not be entitled to carry back or
obtain a refund of all or any portion of an unused
manufacturing tax credit granted to the taxpayer under this
part.
(1805-G added July 13, 2016, P.L.526, No.84)
Section 1806-G. Sale or assignment.
(a) Application.--A taxpayer, upon application to and
approval by the department, may sell or assign, in whole or in
part, a manufacturing tax credit granted to the taxpayer. The
following shall apply:
(1) The department and the Department of Revenue shall
jointly issue guidelines for the approval of applications
under this paragraph.
(2) Before an application is approved, the Department
of Revenue must make a finding that the applicant has filed
all required State tax reports and returns for all applicable
taxable years and paid any balance of State tax due as
determined at settlement, assessment or determination by the
Department of Revenue.
(3) Notwithstanding any other provision of law, the
Department of Revenue must settle, assess or determine the
tax of an applicant under this paragraph within 90 days of
the filing of each required final return or report in
accordance with section 806.1(a)(5) of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code.
(b) Use by purchaser or assignee.--The purchaser or assignee
of all or a portion of a manufacturing tax credit under
subsection (a) must immediately claim the credit in the taxable
year in which the purchase or assignment is made.
(1) The amount of the manufacturing tax credit that a
purchaser or assignee may use against any one qualified tax
liability may not exceed 50% of the qualified tax liability
for the taxable year.
(2) The purchaser or assignee may not carry forward,
carry back or obtain a refund of or sell or assign the
manufacturing tax credit.
(3) The purchaser or assignee shall notify the
Department of Revenue of the seller or assignor of the
manufacturing tax credit in compliance with procedures
specified by the Department of Revenue.
(1806-G added July 13, 2016, P.L.526, No.84)
Section 1807-G. Pass-through entity.
(a) General rule.--If a pass-through entity has any unused
tax credits under section 1805-G, the entity may elect in
writing, according to procedures established by the Department
of Revenue, to transfer all or a portion of the credit to
shareholders, members or partners in proportion or the share
of the entity's distributive income to which the shareholder,
member or partner is entitled.
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity may not claim the
credit under subsection (a) for the same new job.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a credit is transferred under
subsection (a) shall immediately claim the credit in the taxable
year in which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund of
or sell or assign the credit.
(1807-G added July 13, 2016, P.L.526, No.84)
Section 1808-G. Penalties.
(a) Failure to maintain operations.--A taxpayer which
receives a manufacturing tax credit and fails to maintain
existing operations related to the manufacturing tax credits
in this Commonwealth for a period of at least five years from
the start date must refund to the Commonwealth the total amount
of manufacturing tax credits granted. The Department of Revenue
may issue an assessment, including interest, additions and
penalties, for the total amount of each manufacturing tax credit
to be refunded to the Commonwealth.
(b) Failure to maintain jobs.--A taxpayer which receives a
manufacturing tax credit and fails to maintain new jobs along
with the increase in taxable payroll for a period of at least
five years from the start date must refund to the Commonwealth
the total amount of manufacturing tax credits granted. The
Department of Revenue may issue an assessment, including
interest, additions and penalties, for the total amount of
manufacturing tax credits to be refunded to the Commonwealth.
(c) Waiver.--The department may waive the penalties under
subsections (a) and (b) if it is determined that a company's
existing operations were not maintained or the new jobs and
increase to payroll were not created because of circumstances
beyond the company's control. Circumstances shall include
natural disasters, unforeseen industry trends or a loss of a
major supplier or market.
(1808-G added July 13, 2016, P.L.526, No.84)
Section 1809-G. Guidelines.
The department shall develop and publish guidelines necessary
to implement this part.
(1809-G added July 13, 2016, P.L.526, No.84)
PART II
RURAL JOBS AND INVESTMENT TAX CREDIT
(Pt. added July 13, 2016, P.L.526, No.84)
Section 1821-G. Scope of part.
This part relates to the Rural Jobs and Investment Tax
Credit.
(1821-G added July 13, 2016, P.L.526, No.84)
Section 1822-G. Definitions.
The following words and phrases when used in this part shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Affiliate." An entity that directly or indirectly, through
one or more intermediaries, controls, is controlled by or is
under common control with another entity. For the purposes of
this part, an entity is "controlled by" another entity if the
controlling person holds, directly or indirectly, the majority
voting or ownership interest in the controlled entity or has
control over the day-to-day operations of the controlled entity
by contract or by law.
"Business firm." An entity authorized to do business in
this Commonwealth and subject to taxes imposed under Article
VII, VIII, IX or XV, the tax under Article XVI of the act of
May 17, 1921 (P.L.682, No.284), known as The Insurance Company
Law of 1921, or amounts imposed under section 212 of the act
of May 17, 1921 (P.L.789, No.285), known as The Insurance
Department Act of 1921.
"Closing date."
(1) With respect to program one tax credit authority,
the date on which a rural growth fund has collected all of
the amounts specified by section 1825-G.
(2) With respect to program two tax credit authority,
either:
(i) the date on which a rural growth fund has
collected all of the amounts specified under 1825-G; or
(ii) investment authority reallocated under section
1826-G(b) or 1833-G(c).
(Def. amended July 11, 2024, P.L. , No.56)
"Credit-eligible capital contribution." An investment of
cash by a business firm in a rural growth fund that equals the
amount specified on a tax credit certificate issued by the
department under section 1829-G. The investment shall purchase
an equity interest in the rural growth fund or purchase, at par
value or premium, a debt instrument that has a maturity date
at least five years from the closing date.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Full-time equivalent employee." The quotient obtained by
dividing the total number of hours for which employees were
compensated for employment over the preceding 12-month period
by 2,080. (Def. added June 28, 2019, P.L.50, No.13)
"Investment authority." The amount stated on the notice
issued under section 1824-G approving the rural growth fund.
"Jobs created." Full-time equivalent employee positions
that:
(1) Are created by the rural business.
(2) Are currently located in this Commonwealth.
(3) Were not located in this Commonwealth at the time
of the rural growth investment in the rural business.
(4) Pay at least 150% of the Federal or State minimum
wage, whichever is greater.
(Def. added June 28, 2019, P.L.50, No.13)
"Jobs retained." Full-time equivalent employee positions
that:
(1) Are located in this Commonwealth.
(2) Existed before the initial rural growth investment
in the rural business.
(3) Pay at least 150% of the Federal or State minimum
wage, whichever is greater.
(4) Would have been lost or moved out of this
Commonwealth had a rural growth investment not been made,
as certified in writing by an executive officer of the rural
business and approved by the department.
(Def. added June 28, 2019, P.L.50, No.13)
"Principal business operations." The place or places where
at least 60% of a rural business' employees work or where
employees that are paid at least 60% of the business' payroll
work. An out-of-State business that has agreed to relocate
employees or an in-State business that has agreed to hire
employees using the proceeds of a rural growth investment to
establish principal business operations in a rural area in this
Commonwealth shall be deemed to have the principal business
operations in this new location if the business satisfies this
definition within 180 days after receiving the rural growth
investment, unless the department agrees to a later date. (Def.
amended June 28, 2019, P.L.50, No.13)
"Program one tax credit authority." Investment authority
issued by the department before January 1, 2024. (Def. added
July 11, 2024, P.L. , No.56)
"Program two tax credit authority." Investment authority
issued by the department on or after January 1, 2024. (Def.
added July 11, 2024, P.L. , No.56)
"Qualified tax liability." The liability for taxes imposed
under Article VII, VIII, IX or XV, the tax under Article XVI
of the act of May 17, 1921 (P.L.682, No.284), known as The
Insurance Company Law of 1921, or amounts imposed under section
212 of the act of May 17, 1921 (P.L.789, No.285), known as The
Insurance Department Act of 1921, and any other retaliatory tax
imposed on a business firm in this Commonwealth. (Def. amended
July 23, 2020, P.L.665, No.68)
"Rural area." Either of the following:
(1) An area of the Commonwealth that is not in:
(i) A city with a population of more than 50,000
according to the latest decennial census of the United
States.
(ii) An urbanized area contiguous and adjacent to
a city that has a population of more than 50,000
inhabitants.
(2) An area determined to be rural in character by the
Under Secretary for Rural Development within the United
States Department of Agriculture.
"Rural business." A business that, at the time of the
initial rural growth investment in the business by a rural
growth fund, meets the following conditions:
(1) Has fewer than 150 employees and not more than
$15,000,000 in net income as determined by generally accepted
accounting principles for the preceding calendar year.
(2) Has principal business operations in one or more
rural areas in this Commonwealth.
(3) Is engaged in industries related to manufacturing,
plant sciences, services or technology or, if not engaged
in those industries, the department makes a determination
that the investment will be highly beneficial to the economic
growth of this Commonwealth.
(Def. amended June 28, 2019, P.L.50, No.13)
"Rural growth fund." An entity approved by the department
under section 1824-G.
"Rural growth investment." A capital or equity investment
in a rural business or any loan to a rural business with a
stated maturity at least one year after the date of issuance.
A secured loan or a revolving line of credit provided to a rural
business is a rural growth investment only if the growth fund
obtains an affidavit from the president or chief executive
officer or equivalent position of the rural business attesting
that the rural business sought and was denied similar financing
from a commercial bank. The term does not include any investment
used by a rural business or its affiliates to refinance a prior
rural growth investment made with program one tax credit
authority. (Def. amended July 11, 2024, P.L. , No.56)
"State repayment amount." The amount by which the rural
growth fund's credit-eligible capital contributions exceed the
product obtained by multiplying $30,000 by the aggregate number
of jobs created and jobs retained reported in annual reports
under section 1827-G(b). (Def. added June 28, 2019, P.L.50,
No.13)
"Tax credit." The Rural Jobs and Investment Tax Credit
provided under this part.
(1822-G added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 30(10) of Act 56 of 2024 provided
that the amendment of section 1822-G shall apply to fiscal
years beginning after June 30, 2024.
Section 1823-G. Rural Jobs and Investment Tax Credit Program.
The Rural Jobs and Investment Tax Credit Program is
established in the department to attract capital to:
(1) Stimulate business development in rural areas.
(2) Retain and attract new rural business and industry
to the Commonwealth.
(3) Create good-paying rural jobs.
(4) Stimulate growth in rural businesses that are
prepared to make impactful economic development investments.
(1823-G added July 13, 2016, P.L.526, No.84)
Section 1824-G. Rural growth funds.
(a) Application.--Beginning on the effective date of this
section, an application to qualify as a rural growth fund must
be submitted on a form and in a manner as required by the
department.
(b) Information.--An application to qualify as a rural
growth fund shall include all of the following:
(1) The total investment authority sought by the
applicant under the business plan.
(2) Documents and other evidence sufficient to prove
to the satisfaction of the department that the applicant
meets all of the following criteria:
(i) The applicant or an affiliate of the applicant
is licensed as a rural business investment company under
the Consolidated Farm and Rural Development Act (Public
Law 87-128, 75 Stat. 307) or as a small business
investment company under the Small Business Investment
Act of 1958 (Public Law 85-699, 72 Stat. 689).
(ii) Evidence that as of the date the application
is submitted, the applicant or affiliates of the
applicant have invested at least $100,000,000 in
nonpublic companies located in rural areas of this
Commonwealth or other states.
(iii) At least one principal in a rural business
investment company or a small business investment company
has been an officer or employee of the applicant or of
an affiliate of the applicant for at least four years
prior to the date the application is submitted.
((2) amended June 28, 2019, P.L.50, No.13)
(3) An estimate of the number of jobs created or
retained in this Commonwealth that will result from the
applicant's rural growth investments. ((3) amended June 28,
2019, P.L.50, No.13)
(4) A business plan that includes a revenue impact
assessment projecting State and local tax revenue to be
generated by the applicant's proposed rural growth
investments prepared by a nationally recognized third-party
independent economic forecasting firm using a dynamic
economic forecasting model that analyzes the applicant's
business plan over the 10 years following the date the
application is submitted to the department.
(5) A signed affidavit from each investor stating the
amount of credit-eligible capital contributions each business
firm commits to make.
(6) A nonrefundable application fee of $500.
(c) Review of applications.--The department shall review
applications received from rural growth funds under this
section. Subject to the limitation in subsection (f), the
department shall make allocations of investment authority for
approved applications in the order in which the applications
are received. Applications received on the same day shall be
deemed to have been received simultaneously. If requests for
investment authority on approved applications exceed the
limitation in subsection (f), the department shall reduce the
investment authority and the credit-eligible capital
contributions proportionally based upon the amount of investment
authority sought in the application for each approved
application as necessary to not exceed the limitation in
subsection (f).
(d) Notice of approval or disapproval.--
(1) Within 60 days after receipt of an application, the
department shall notify the applicant of its approval or
disapproval as a rural growth fund under this part.
(2) A notice of approval shall specify the amount of
the applicant's investment authority as determined by the
department after reviewing the information submitted in
accordance with subsection (b) and the amount of
credit-eligible contribution authority allocated to each
business firm that submitted an affidavit in the application.
At least 60% of a growth fund's investment authority shall
be comprised of credit-eligible capital contributions. ((2)
amended July 23, 2020, P.L.665, No.68)
(3) If the application is disapproved, the notice of
disapproval shall include the reasons for disapproval.
(4) An applicant may resubmit the application within
30 days after receipt of a notice of disapproval and provide
additional information to complete, clarify or cure defects
identified in the application by the department. The
department shall consider that application submitted before
any pending applications submitted after the date the
application was originally submitted. ((4) amended June 28,
2019, P.L.50, No.13)
(e) Request for determination.--A rural growth fund, before
making a rural growth investment, may request from the
department a written opinion as to whether the business in which
the rural growth fund proposes to invest is a rural business.
The department shall notify the rural growth fund of the
determination within 15 days after receipt of the request. If
the department fails to notify a rural growth fund of the
determination within 15 days, the business in which the rural
growth fund proposes to invest shall be considered a rural
business. ((e) amended June 28, 2019, P.L.50, No.13)
(f) Limitation.--The department may not approve more than
$50,000,000 in investment authority with respect to program one
tax credit authority and $50,000,000 in investment authority
with respect to program two tax credit authority under this
part. ((f) amended July 11, 2024, P.L. , No.56)
(1824-G added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 30(10) of Act 56 of 2024 provided
that the amendment of section 1824-G shall apply to fiscal
years beginning after June 30, 2024.
Section 1825-G. Requirements.
(a) Collections.--Upon receiving approval under section
1824-G, a rural growth fund must do all of the following within
60 days:
(1) Collect the credit-eligible capital contributions
from each business firm issued a tax credit certificate under
section 1829-G.
(2) Collect one or more investments of cash that, when
added to the contributions collected under paragraph (1),
equal the rural growth fund's investment authority. At least
10% of the rural growth fund's investment authority shall
be comprised of equity investments contributed, directly or
indirectly, by affiliates of the rural growth fund, including
employees, officers and directors of the affiliates. ((2)
amended June 28, 2019, P.L.50, No.13)
(b) Documentation.--Within 65 days of approval under section
1824-G, a rural growth fund must provide to the department
documentation sufficient to prove that the amounts specified
in subsection (a) have been collected.
(1825-G added July 13, 2016, P.L.526, No.84)
Section 1826-G. Rural growth fund failure to comply.
(a) Revocation.--If a rural growth fund fails to meet the
requirements of section 1825-G, the rural growth fund's approval
shall be revoked, and, the corresponding investment authority
and credit-eligible capital contributions may not be included
in determining the limits on total investment authority and
credit-eligible capital contributions prescribed in sections
1824-G(f) and 1828-G(c), respectively. ((a) amended June 28,
2019, P.L.50, No.13)
(b) Reallocation.--Any investment authority and
credit-eligible capital contributions related to a rural growth
fund whose approval has been revoked under subsection (a) shall
be reallocated by awarding the investment authority related to
a revocation on a pro rata basis to each rural growth fund that
was awarded less than the requested investment authority under
section 1824-G.
(c) Discretion.--A rural growth fund may allocate any
investment authority reallocated to it under subsection (b) to
its investor business firms at its discretion.
(d) Unallocated investment authority.--Subsequent to the
reallocation in subsection (b), any remaining investment
authority may be awarded by the department to new applicants.
(1826-G added July 13, 2016, P.L.526, No.84)
Section 1827-G. Reporting obligations.
(a) Initial report.--Each rural growth fund shall submit a
report to the department on or before the fifth business day
after the second anniversary of the closing date. The report
shall provide documentation as to the rural growth fund's rural
growth investments and include the following information:
(1) A bank statement evidencing each rural growth
investment.
(2) The name, location and industry of each business
receiving a rural growth investment, including either the
determination letter issued by the department under section
1824-G(e) or other evidence that the business qualified as
a rural business at the time the investment was made.
(3) ((3) deleted by amendment).
(4) Any other information required by the department.
(5) A copy of the commitment letter or summary of the
terms and conditions of the rural growth investment offered
to and accepted by the rural business.
(b) Annual report.--No later than March 1 of each year
following the closing date the rural growth fund shall submit
an annual report to the department that includes the following
information:
(1) The number of jobs created and retained by each
rural business. The number of jobs created and retained shall
be calculated as follows:
(i) The number of jobs created by a rural business
is calculated each year by subtracting the number of
full-time equivalent employee positions in this
Commonwealth at the time of the initial rural growth
investment in the rural business from the monthly average
of those employment positions for that year. If the
number calculated is less than zero, the number shall
be reported as zero. The monthly average of full-time
equivalent employee positions for a year is calculated
by adding together the number of full-time equivalent
employee positions existing on the last day of each month
of the year and dividing by 12.
(ii) The number of jobs retained by a rural business
is calculated each year based on the monthly average of
full-time equivalent employee positions for that year.
The monthly average of full-time equivalent employee
positions for a year is calculated by adding together
the number of full-time equivalent employee positions
existing on the last day of each month of the year and
dividing by 12. The reported number of jobs retained for
a year may not exceed the number reported on the annual
report under this subsection. The rural growth fund shall
reduce the number of jobs retained for a year if
employment at the rural business drops below the number
reported on the annual report.
(1.1) If not provided under subsection (a)(2), the name
and location of each business receiving a rural growth
investment, including either the determination letter issued
by the department under section 1824-G(e) or other evidence
that the business qualified as a rural business at the time
the investment was made.
(2) The average hourly wage of the jobs reported in
paragraph (1).
(3) Any other information required by the department.
(c) Report of rural business.--
(1) No later than March 1 of each year following the
year in which the report required under subsection (a) is
due, a rural business that receives a rural growth investment
shall submit the following information on a form required
by the department:
(i) The number of jobs existing at the rural
business prior to the rural growth investment.
(ii) The number of new jobs created as a result of
the rural growth investment.
(iii) The number of jobs retained as a result of
the rural growth investment.
(2) Failure by the rural business to submit the report
may result in the reduction of investment authority or
credit-eligible contribution authority of the rural growth
fund.
(1827-G amended June 28, 2019, P.L.50, No.13)
Section 1828-G. Business firms.
(a) General rule.--To qualify for a tax credit,
credit-eligible capital contributions made by a business firm
to a rural growth fund must be used by the rural growth fund
for rural growth investments in a rural business under this
part.
(b) Submission.--In connection with the documentation
submitted under section 1825-G(b), a rural growth fund shall
submit, on behalf of its business firm investors, on a form and
in a manner required by the department, a description of
credit-eligible capital contributions for approval by the
department. The submission shall include for each
credit-eligible capital contribution:
(1) The amount of the credit-eligible capital
contribution.
(2) The name of the rural growth fund to which the
credit-eligible capital contribution was made.
(3) The closing date.
(4) Any other information required by the department.
(c) Limitation.--The department may not approve more than
$30,000,000 in credit-eligible capital contributions under this
part. ((c) amended June 28, 2019, P.L.50, No.13)
(1828-G added July 13, 2016, P.L.526, No.84)
Section 1829-G. Tax credit certificates.
(a) Application.--
(1) A business firm may apply to the department for a
tax credit certificate under this section for the tax credits
that are earned and vested as a result of the business firm's
credit-eligible capital contribution.
(2) The application shall be on a form required by the
department and shall include the amount of the business
firm's credit-eligible capital contribution approved under
section 1828-G(b).
(3) The application shall be filed no later than
February 1 for credit-eligible capital contributions made
in the preceding calendar year.
(b) Review, recommendation and approval.--
(1) The department shall review the credit-eligible
capital contributions, verify that the credit-eligible
capital contributions were made to an approved rural growth
fund with adequate investment authority and approve or
disapprove the application within 30 days of receipt of the
application for review.
(2) If the department has approved the application, it
shall award the business firm a tax credit certificate by
April 1.
(2.1) Tax credits awarded under this section to a
business firm shall not exceed the amount of the
credit-eligible capital contributions made by the business
firm. ((2.1) amended June 28, 2019, P.L.50, No.13)
(3) In awarding tax credit certificates under this part,
the department:
(i) Beginning with fiscal year 2020-2021, may not
award tax credit certificates that would result in the
utilization of more than $6,000,000 in tax credits in
any fiscal year, except for tax credits carried forward.
(ii) May not award more than $30,000,000 in tax
credit certificates, in the aggregate, under this part.
((3) amended July 23, 2020, P.L.665, No.68)
(1829-G added July 13, 2016, P.L.526, No.84)
Section 1830-G. Claiming the tax credit.
(a) Presentation.--
(1) Beginning July 1, 2020, with respect to program one
tax credit authority, upon presenting a tax credit
certificate to the Department of Revenue, a business firm
may claim a tax credit of up to 20% of the amount awarded
under section 1829-G for each of the taxable years that
includes the third, fourth, fifth, sixth and seventh
anniversaries of the closing date, exclusive of any tax
credit amounts carried over under section 1831-G(b).
(2) Beginning July 1, 2024, with respect to program two
tax credit authority, upon presenting a tax credit
certificate to the Department of Revenue, a business firm
may claim a tax credit of up to 20% of the amount awarded
under section 1829-G for each of the taxable years that
includes the third, fourth, fifth, sixth and seventh
anniversaries of the closing date, exclusive of any tax
credit amounts carried over under section 1831-G(b).
((a) amended July 11, 2024, P.L. , No.56)
(b) Allowance.--The Department of Revenue shall allow a tax
credit against any tax due under Article VII, VIII, IX or XV,
the tax under Article XVI of the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921, amounts
imposed under section 212 of the act of May 17, 1921 (P.L.789,
No.285), known as The Insurance Department Act of 1921, any
retaliatory taxes imposed by this Commonwealth or any tax
substituted in lieu of one of the taxes under this subsection.
(1830-G amended July 23, 2020, P.L.665, No.68)
Compiler's Note: Section 30(10) of Act 56 of 2024 provided
that the amendment of section 1830-G shall apply to fiscal
years beginning after June 30, 2024.
Section 1831-G. Restrictions on tax credit utilization.
(a) Limitation.--A tax credit to be applied in any one year
may not exceed the qualified tax liability of the business firm
or affiliate to which a tax credit was sold or assigned for
that taxable year.
(b) Carryover.--A tax credit not used in the period the
credit is first eligible for use under subsection (a) may be
carried over for the next five succeeding calendar years until
the full tax credit has been allowed.
(1831-G added July 13, 2016, P.L.526, No.84)
Section 1832-G. Prohibitions.
(a) Sale or assignment.--A business firm may not sell or
assign, in whole or in part, a tax credit awarded under this
part other than to an affiliate having a qualified tax
liability.
(b) Carryback or refund.--A business firm may not carry
back or obtain a refund of an unused tax credit.
(c) Business activities.--Neither a rural growth fund nor
any business firm that invests in the rural growth fund shall
be an affiliate of or have a pecuniary interest in a rural
business that receives a rural growth investment from the rural
growth fund prior to the rural growth fund's initial rural
growth investment in the rural business. ((c) amended June 28,
2019, P.L.50, No.13)
(1832-G added July 13, 2016, P.L.526, No.84)
Section 1833-G. Revocation of tax credit certificates.
(a) Revocation.--The department shall revoke a tax credit
certificate awarded under section 1829-G if any of the following
occur with respect to a rural growth fund before the rural
growth fund exits the program under section 1834-G:
(1) The rural growth fund in which the credit-eligible
capital contribution was made does not invest all of its
investment authority in rural growth investments in this
Commonwealth within three years of the closing date with at
least 25% of its investment authority initially invested in
rural businesses engaged in manufacturing.
(2) The rural growth fund, after satisfying the
conditions of paragraph (1), fails to maintain rural growth
investments equal to 100% of its investment authority until
the seventh anniversary of the closing date. For the purposes
of this paragraph, a rural growth investment is "maintained"
even if the rural growth investment is sold or repaid so
long as the rural growth fund reinvests an amount equal to
the capital returned or recovered by the rural growth fund
from the original rural growth investment, exclusive of any
profits realized, in other rural growth investments in this
Commonwealth within 12 months of the receipt of the capital.
Amounts received periodically by a rural growth fund shall
be treated as continually invested in rural growth
investments if the amounts are reinvested in one or more
rural growth investments by the end of the following calendar
year. A rural growth fund is not required to reinvest capital
returned from rural growth investments after the sixth
anniversary of the closing date, and the rural growth
investments shall be considered held continuously by the
rural growth fund through the seventh anniversary of the
closing date.
(3) The rural growth fund, before exiting the program
in accordance with section 1834-G, makes a distribution or
payment that results in the rural growth fund having less
than 100% of its investment authority invested in rural
growth investments in this Commonwealth or available for
investment in rural growth investments and held in cash and
other marketable securities.
(4) The following apply:
(i) With respect to program one tax credit
authority, the rural growth fund invests more than 20%
of its investment authority, exclusive of receipts or
redeemed rural growth investments, in the same rural
business, including amounts invested in affiliates of
the rural business.
(ii) With respect to program two tax credit
authority, the rural growth fund invests more than
$5,000,000 of its investment authority, exclusive of
receipts or redeemed rural growth investments, in the
same rural business, including amounts invested in
affiliates of the rural business.
((4) amended July 11, 2024, P.L. , No.56)
(5) The rural growth fund makes a rural growth
investment in a rural business that directly or indirectly
through an affiliate owns, has the right to acquire an
ownership interest, makes a loan to or makes an investment
in the rural growth fund, an affiliate of the rural growth
fund or an investor in the rural growth fund. This paragraph
does not apply to investments in publicly traded securities
by a rural business or an owner or affiliate of a rural
business. For purposes of this paragraph, a rural growth
fund shall not be considered an affiliate of a rural business
solely as a result of its rural growth investment.
((a) amended July 23, 2020, P.L.665, No.68)
(b) Notification.--Before revoking one or more tax credit
certificates under this section, the department shall notify
the rural growth fund of the reasons for the pending revocation.
The rural growth fund shall have 90 days from the date the
notice was made to correct any violation outlined in the notice
to the satisfaction of the department and avoid revocation of
a tax credit certificate.
(c) Reallocation.--If a tax credit certificate is revoked
under this section, the associated investment authority and
credit-eligible capital contributions may not count toward the
limit on total investment authority and credit-eligible capital
contributions allowed under this part. The department shall
first reallocate investment authority on a pro rata basis to
each rural growth fund that was allocated less than the
requested investment authority under section 1824-G. The
department may then allocate any remaining investment authority
to new applicants.
(d) Rural growth investment cap.--With respect to any one
rural business, the maximum amount of rural growth investments
made in that business, on a collective basis with all of its
affiliates that may be counted toward the satisfaction of
subsection (a), shall be $15,000,000, exclusive of receipts of
redeemed rural growth investments. ((d) added July 11, 2024,
P.L. , No.56)
(1833-G added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 30(10) of Act 56 of 2024 provided
that the amendment of section 1833-G shall apply to fiscal
years beginning after June 30, 2024.
Section 1834-G. Exit.
(a) Application for exit.--On or after the seventh
anniversary of the closing date, a rural growth fund may apply
to the department to exit the Rural Jobs and Investment Tax
Credit Program and no longer be subject to regulation under
this part. A rural growth fund shall calculate the State
repayment amount in its application for exit and if the product
is greater than the rural growth fund's credit-eligible capital
contributions, the State repayment amount shall equal zero. The
department shall respond to the application within 30 days after
receipt and confirm the State repayment amount. In evaluating
the application, the fact that no tax credit certificates have
been revoked and that the rural growth fund has not received a
notice of revocation that has not been cured under section
1833-G(b) shall be sufficient evidence to show that the rural
growth fund is eligible for exit. The department may not deny
an application submitted under this subsection without
reasonable cause. If the application is denied, the department
shall issue a notice which shall include the reasons for the
denial. If the rural growth fund owes a State repayment amount,
the rural growth fund may not be permitted to make distributions
or payments in excess of the investment authority until the
rural growth fund first remits the State repayment amount to
the department. All amounts received by the department under
this section shall be credited to the General Fund. ((a) amended
June 28, 2019, P.L.50, No.13)
(b) Exit.--The department may not revoke a tax credit
certificate after a rural growth fund exits from the Rural Jobs
and Investment Tax Credit Program under this section.
(1834-G added July 13, 2016, P.L.526, No.84)
Section 1835-G. Duties of department.
(a) Rules and regulations.--The department may promulgate
rules and regulations to administer this part.
(b) Reports by department.--The department shall provide a
report listing all applications received for tax credit
certificates and the disposition of the applications in each
fiscal year to the General Assembly by October 1 of the
following fiscal year. The department's report shall include
all business firms approved for a tax credit certificate and
the amount of tax credit certificates approved for each business
firm.
(c) Confidentiality.--Notwithstanding any law providing for
the confidentiality of tax records, the information in the
report under subsection (b) shall be public information, and
all report information shall be posted on the department's
publicly accessible Internet website.
(1835-G added July 13, 2016, P.L.526, No.84)
ARTICLE XVIII-H
TAX CREDITS RELATING TO BEGINNING FARMERS
(Art. added July 2, 2019, P.L.399, No.65)
Section 1801-H. Scope of article.
This article relates to the tax credits to owners of
agricultural assets who sell or rent agricultural assets to
beginning farmers.
(1801-H added July 2, 2019, P.L.399, No.65)
Section 1802-H. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Agricultural assets." Agricultural land, livestock,
facilities, buildings and machinery used for farming.
"Agricultural production." As defined in section 3 of the
act of June 30, 1981 (P.L.128, No.43), known as the Agricultural
Area Security Law.
"Beginning farmer." A person who:
(1) Has demonstrated experience in the agriculture
industry or related field or has transferable skills as
determined by the department.
(2) Has not received Federal gross income from
agricultural production for more than the 10 most recent
taxable years.
(3) Intends to engage in agricultural production within
the borders of this Commonwealth and to provide the majority
of the labor and management involved in that agricultural
production.
(4) Has obtained written certification from the
department confirming beginning farmer status.
(5) Is not, and whose spouse is not, a partner, member,
shareholder or trustee of the owner of agricultural assets
from whom the person seeks to purchase or rent agricultural
assets.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Farm." Real property on which farming occurs.
"Farming." The active use, management and operation of real
and personal property for agricultural production.
"Lease." A written agreement between parties for the lease
of real property on which farming occurs.
"Owner of agricultural assets." An individual, trust or
pass-through entity that is the owner in fee of agricultural
land or has legal title to any other agricultural asset. The
term does not include an equipment dealer, livestock dealer or
comparable entity that is engaged in the business of selling
agricultural assets for profit and that is not engaged in
farming as its primary business activity.
"Tax credit." A tax credit established by this article.
(1802-H added July 2, 2019, P.L.399, No.65)
Section 1803-H. Beginning farmer management tax credit.
(a) General rule.--An owner of agricultural assets may take
a credit against the tax due under Article III for the sale or
rental of agricultural assets to a beginning farmer in the
amount approved by the department. An owner of agricultural
assets is eligible for allocation of a tax credit equal to:
(1) five percent of the lesser of the sale price or the
fair market value of the agricultural asset, up to a maximum
of $32,000; or
(2) ten percent of the gross rental income in each of
the first, second and third years of a rental agreement, up
to a maximum of $7,000 per year.
(b) Application.--
(1) The tax credit may be claimed only after approval
and certification by the department and is limited to the
amount stated on the certificate issued under section 1804-H.
(2) An owner of agricultural assets must apply to the
department for approval of a tax credit, in a form and manner
prescribed by the department. The application shall:
(i) identify the beginning farmer who has been
certified by the department under paragraph (3) and to
whom the agricultural assets are sold or rented; and
(ii) specify whether the beginning farmer is a
brother, sister, ancestor or lineal descendant of the
applicant.
(3) A person may apply to the department for
certification that the person is a beginning farmer for
purposes of this article. The application shall be in a form
and manner prescribed by the department and shall require
that the applicant provide:
(i) Projected earnings statements to demonstrate
the profit potential for the farming conducted by the
applicant.
(ii) Verification that the farming conducted by the
applicant will be a significant source of income for the
applicant.
(iii) Verification that the applicant will, if
certified as a beginning farmer by the department, notify
the department if the farmer no longer meets the
certification and eligibility requirements within the
three-year certification period, in which case
eligibility for tax credits ends.
(iv) Verification that the applicant is not engaged
in farming by means of a joint business venture.
(v) Verification and documentation as necessary to
meet other eligibility requirements as may be established
by the department.
(c) Termination of rental agreement.--
(1) An owner of agricultural assets or a beginning
farmer may terminate a rental agreement for reasonable cause
upon approval of the department.
(2) If a rental agreement is terminated without the
fault of the owner of agricultural assets, the tax credits
shall not be retroactively disallowed.
(3) In determining reasonable cause, the department
shall consider which party was at fault in the termination
of the agreement.
(4) If the department determines the owner of
agricultural assets did not have reasonable cause, the owner
of agricultural assets must repay all tax credits received
as a result of the rental agreement to the Commonwealth. The
repayment is additional income tax for the taxable year in
which the department makes its decision.
(d) Duration of tax credit.--The credit is limited to the
liability for tax as computed under Article III for the taxable
year. The tax credit may not be sold, passed through, carried
forward or refunded. No credits granted under this section shall
be applied against any tax withheld by an employer from an
employee under Article III.
(1803-H added July 2, 2019, P.L.399, No.65)
Section 1804-H. Approval of tax credit.
(a) General rule.--The tax credit may be claimed only after
approval and certification by the department. The department
shall review the application of a tax credit in consultation
with the Department of Agriculture.
(b) Tax clearance.--Before an application is approved, the
Department of Revenue must find that the applicant has filed
all required State tax reports and returns for all applicable
taxable years and paid any balance of State tax due as
determined at settlement or assessment or as otherwise
determined by the Department of Revenue.
(1804-H added July 2, 2019, P.L.399, No.65)
Section 1805-H. Departmental duties.
(a) Duties.--The department shall:
(1) Share information with the Secretary of Revenue to
the extent necessary to administer provisions under this
article and Article III.
(2) Annually notify the Secretary of Revenue of approval
and certification or recertification of beginning farmers
and owners of agricultural assets under this section. For
tax credits under section 1803-H, the notification must
include the amount of tax credit approved by the department
and stated on the tax credit certificate.
(b) Validity of certification.--The certification of a
beginning farmer or an owner of agricultural assets under this
article is valid for the year of the certification and the two
following years, after which time the beginning farmer or owner
of agricultural assets must apply to the department for
recertification.
(c) Limitation on amount.--
(1) For tax credits for owners of agricultural assets
allowed under section 1803-H, the department may allocate
no more than $5,000,000 for the taxable year beginning after
December 31, 2019, and may allocate no more than $6,000,000
for the taxable years beginning after December 31, 2020.
(2) The department shall allocate tax credits on a
first-come, first-served basis beginning on January 1 of
each year, except that recertifications for the second and
third years of tax credits under section 1803-H(a)(1) and
(2) have first priority. Any amount authorized but not
allocated in any taxable year does not cancel and is added
to the allocation for the next taxable year.
(1805-H added July 2, 2019, P.L.399, No.65)
Section 1806-H. Report.
(a) Duty to report.--No later than February 1, 2025, the
department, in consultation with the Secretary of Revenue, shall
provide a report to the General Assembly on the tax credits
issued in tax years beginning after December 31, 2019.
(b) Contents of report.--
(1) The report must include background information on
beginning farmers and any other information the department
finds relevant to evaluating the effect of the tax credits
on increasing opportunities for and the number of beginning
farmers.
(2) For tax credits issued under section 1803-H(a), the
report shall include:
(i) The number and amount of tax credits issued
under each paragraph.
(ii) The geographic distribution of tax credits
issued under each paragraph.
(iii) The type of agricultural assets for which tax
credits were issued under section 1803-H(a)(1).
(iv) The number and geographic distribution of
beginning farmers whose purchase or rental of assets
resulted in tax credits for the seller or owner of the
asset.
(v) The number and amount of tax credits disallowed
under section 1803-H(d).
(vi) Data on the number of beginning farmers by
geographic region in the tax years covered in the report.
(vii) The number and amount of tax credit
applications that exceeded the allocation available in
each year.
(1806-H added July 2, 2019, P.L.399, No.65)
Section 1807-H. Expiration.
This article shall expire for taxable years beginning after
December 31, 2029.
(1807-H added July 2, 2019, P.L.399, No.65)
ARTICLE XIX
NEW BANK TAX CREDIT
(Art. XIX repealed June 22, 2001, P.L.353, No.23)
Section 1901. Short Title.--(1901 repealed June 22, 2001,
P.L.353, No.23)
Section 1902. Legislative Intent.--(1902 repealed June 22,
2001, P.L.353, No.23)
Section 1903. Definitions.--(1903 repealed June 22, 2001,
P.L.353, No.23)
Section 1904. Tax Credit.--(1904 repealed June 22, 2001,
P.L.353, No.23)
Section 1905. Limitations on Tax Credits.--(1905 repealed
June 22, 2001, P.L.353, No.23)
Section 1906. Total Amount of Credits.--(1906 repealed June
22, 2001, P.L.353, No.23)
Section 1907. Procedures for Claiming Credits.--(1907
repealed June 22, 2001, P.L.353, No.23)
Section 1908. Report to General Assembly.--(1908 repealed
June 22, 2001, P.L.353, No.23)
Section 1909. Evaluation of Tax Credit.--No later than
September 30, 1992, the Secretary of Revenue, in cooperation
with the Secretary of Banking, shall report to the Governor and
the General Assembly concerning the impact of the tax credits
provided by this article upon the growth and stability of the
banking industry in the Commonwealth. The report shall discuss
whether tax credits of the type provided by this article are
an efficient and effective method of fostering the growth and
stability of the banking industry and shall recommend whether
this article should be reauthorized or extended.
(1909 added July 1, 1989, P.L.109, No.23)
ARTICLE XIX-A
NEIGHBORHOOD ASSISTANCE TAX CREDIT
(Art. added June 16, 1994, P.L.279, No.48)
Compiler's Note: Section 301(a)(9) of Act 58 of 1996, which
created the Department of Community and Economic
Development and abolished the Department of Community
Affairs, provided that housing, community assistance and
other functions under Article XIX-A are transferred from
the Department of Community Affairs to the Department
of Community and Economic Development.
Section 1901-A. Short Title.--This article shall be known
and may be cited as the Neighborhood Assistance Act.
(1901-A added June 16, 1994, P.L.279, No.48)
Section 1902-A. Definitions.--The following words, terms
and phrases, when used in this article, shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Affordable housing." Housing that serves median-income,
low-income, very low-income and extremely low-income families
as those terms are defined in section 3 of the United States
Housing Act of 1937 (50 Stat. 888, 42 U.S.C. § 1437 et seq.)
based on the area median income as determined by the Federal
Housing Finance Agency. (Def. added July 13, 2016, P.L.526,
No.84)
"Business firm." Any business entity authorized to do
business in this Commonwealth and subject to taxes imposed by
Article III, IV, VI, VII, VIII, IX or XV of this act. The term
shall include a pass-through entity. (Def. amended July 25,
2007, P.L.373, No.55)
"Charitable food program." An emergency food provider or a
regional food bank as defined in section 2 of the act of
December 11, 1992 (P.L.807, No.129), known as the "State Food
Purchase Program Act." (Def. added July 2, 2012, P.L.751, No.85)
"Community services." Any type of counseling and advice,
emergency assistance, food assistance or medical care furnished
to individuals or groups in an impoverished area. (Def. amended
July 2, 2012, P.L.751, No.85)
"Comprehensive service plan." A strategy developed jointly
by a neighborhood organization and a sponsoring business firm
or private company for the stabilization and improvement of an
impoverished area within an urban neighborhood or rural
community.
"Comprehensive service project." Any activity conducted
jointly by a neighborhood organization and a sponsoring business
firm which implements a comprehensive service plan.
"Crime prevention." Any activity which aids in the reduction
of crime in an impoverished area.
"Domestic violence or veterans' housing assistance."
Furnishing financial assistance, labor, material and technical
advice to aid in the acquisition, construction, renovation or
rehabilitation of real property in an impoverished area that
will be used to provide housing for victims of domestic violence
or veterans. (Def. added July 13, 2016, P.L.526, No.84)
"Education." Any type of scholastic instruction or
scholarship assistance to an individual who resides in an
impoverished area that enables that individual to prepare for
better life opportunities.
"Enterprise zones." Specific locations with identifiable
boundaries within impoverished areas which are designated as
enterprise zones by the Secretary of Community and Economic
Development.
"Impoverished area." Any area in this Commonwealth which
is certified as such by the Department of Community and Economic
Development and the certification is approved by the Governor.
Such certification shall be made on the basis of Federal census
studies and current indices of social and economic conditions.
"Job training." Any type of instruction to an individual
who resides in an impoverished area that enables that individual
to acquire vocational skills so that the individual can become
employable or be able to seek a higher grade of employment.
"Neighborhood assistance." Furnishing financial assistance,
labor, material and technical advice to aid in the physical
improvement of any part or all of an impoverished area.
"Neighborhood organization." Any organization performing
community services, offering neighborhood assistance or
providing job training, affordable housing, domestic violence
or veterans' housing assistance, education or crime prevention
in an impoverished area, holding a ruling from the Internal
Revenue Service of the United States Department of the Treasury
that the organization is exempt from income taxation under the
provisions of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 1 et seq.) and approved by the Department
of Community and Economic Development. (Def. amended July 13,
2016, P.L.526, No.84)
"Pass-through entity." A partnership as defined under
section 301(n.0) or a Pennsylvania S corporation as defined
under section 301(n.1). (Def. added July 25, 2007, P.L.373,
No.55)
"Private company." Any agricultural, industrial,
manufacturing or research and development enterprise as defined
in section 3 of the act of May 17, 1956 (1955 P.L.1609, No.537),
known as the "Pennsylvania Industrial Development Authority
Act," or any commercial enterprise as defined in section 3 of
the act of August 23, 1967 (P.L.251, No.102), known as the
"Economic Development Financing Law."
"Qualified investments." Any investments made by a private
company which promote community economic development pursuant
to a plan which has been developed in cooperation with and
approved by a neighborhood organization operating pursuant to
a plan for the administration of tax credits approved by the
Department of Community and Economic Development.
"Secretary." The Secretary of Community and Economic
Development of the Commonwealth.
"Youth and adolescent development services." Financial
assistance to provide services to youth and adolescents who are
21 years of age and younger, including job training and
apprenticeship programs, job placement and retention training,
education and after school programs, such as school programs
with shared governance by students, teachers and parents, and
activities for youth between the hours of 3 p.m. and 11 p.m.,
mentoring programs, conflict resolution skills training, sports,
arts, life skills, employment and recreation programs, summer
jobs, summer recreation programs and alternative school
resources for youth who have dropped out of school or
demonstrate chronic truancy. (Def. added June 28, 2019, P.L.50,
No.13)
(1902-A amended May 7, 1997, P.L.85, No.7)
Section 1903-A. Public Policy.--It is hereby declared to
be public policy of this Commonwealth to encourage investment
by business firms in offering neighborhood assistance and
providing job training, education, crime prevention, youth and
adolescent development services and community services, to
encourage contributions by business firms to neighborhood
organizations which offer and provide such assistance and
services and to promote qualified investments made by private
companies to rehabilitate, expand or improve buildings or land
which promote community economic development and which occur
in portions of impoverished areas which have been designated
as enterprise zones.
(1903-A amended June 28, 2019, P.L.50, No.13)
Section 1904-A. Tax Credit.--(a) Any business firm which
engages or contributes to a neighborhood organization which
engages in the activities of providing neighborhood assistance,
comprehensive service projects, affordable housing, domestic
violence or veterans' housing assistance, job training or
education for individuals, community services, youth and
adolescent development services or crime prevention in an
impoverished area or private company which makes qualified
investment to rehabilitate, expand or improve buildings or land
located within portions of impoverished areas which have been
designated as enterprise zones shall receive a tax credit as
provided in section 1905-A if the secretary annually approves
the proposal of such business firm or private company. The
proposal shall set forth the program to be conducted, the
impoverished area selected, the estimated amount to be invested
in the program and the plans for implementing the program. ((a)
amended June 28, 2019, P.L.50, No.13)
(b) The secretary is hereby authorized to promulgate rules
and regulations for the approval or disapproval of such
proposals by business firms or private companies. The secretary
shall provide a report listing of all applications received and
their disposition in each fiscal year to the General Assembly
by October 1 of the following fiscal year. The secretary's
report shall include all taxpayers utilizing the credit and the
amount of credits approved, sold or assigned. Notwithstanding
any law providing for the confidentiality of tax records, the
information in the report shall be public information, and all
report information shall be posted on the secretary's Internet
website.
(b.1) The secretary shall take into special consideration,
when approving applications for neighborhood assistance tax
credits, applications which involve:
(1) multiple projects in various markets throughout this
Commonwealth;
(2) charitable food programs; and
(3) youth and adolescent development services.
((b.1) amended June 28, 2019, P.L.50, No.13)
(b.2) The secretary, in cooperation with the Department of
Agriculture, shall promulgate guidelines for the approval or
disapproval of applications for tax credits by business firms
that contribute food or money to charitable food programs.
(b.3) The secretary, in cooperation with the Department of
Military and Veterans Affairs, shall promulgate guidelines for
the approval or disapproval for tax credits by business firms
that contribute to veterans' housing assistance.
(c) The total amount of tax credit granted for programs
approved under this act shall not exceed seventy-two million
dollars ($72,000,000) of tax credit in any fiscal year. ((c)
amended July 11, 2024, P.L. , No.56)
(c.1) No more than two million dollars ($2,000,000) of the
total amount of tax credit available under subsection (c) shall
be used for youth and adolescent development services. ((c.1)
added June 28, 2019, P.L.50, No.13)
(d) A taxpayer, upon application to and approval by the
Department of Community and Economic Development, may sell or
assign, in whole or in part, a neighborhood assistance tax
credit granted to the business firm under this article if no
claim for allowance of the credit is filed within one year from
the date the credit is granted by the Department of Revenue
under section 1905-A. The Department of Community and Economic
Development and the Department of Revenue shall jointly
promulgate guidelines for the approval of applications under
this subsection.
(e) The purchaser or assignee of a neighborhood assistance
tax credit under subsection (d) shall immediately claim the
credit in the taxable year in which the purchase or assignment
is made. The purchaser or assignee may not carry over, carry
back, obtain a refund of or sell or assign the neighborhood
assistance tax credit. The purchaser or assignee shall notify
the Department of Revenue of the seller or assignor of the
neighborhood assistance tax credit in compliance with procedures
specified by the Department of Revenue.
(f) The neighborhood assistance tax credit approved by the
Department of Community and Economic Development shall be
applied against the business firm's tax liability for the taxes
under section 1905-A for the current taxable year as of the
date on which the credit was approved before the neighborhood
assistance tax credit may be carried over, sold or assigned.
(1904-A amended July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 30(9) of Act 56 of 2024 provided
that the amendment of subsection (c) shall apply to fiscal
years beginning after June 30, 2024.
Section 1905-A. Grant of Tax Credit.--(a) The Department
of Revenue shall grant a tax credit against any tax due under
Article III, IV, VI, VII, VIII, IX or XV of this act, or any
tax substituted in lieu thereof in an amount which shall not
exceed sixty-five per cent of the total amount contributed
during the taxable year by a business firm or twenty-five per
cent of qualified investments by a private company in programs
approved pursuant to section 1904-A of this act: Provided, That
a tax credit of up to ninety per cent of the total amount
contributed during the taxable year by a business firm or up
to thirty-five per cent of the amount of qualified investments
by a private company may be allowed for investment in programs
where activities fall within the scope of special program
priorities as defined with the approval of the Governor in
regulations promulgated by the secretary, and Provided further,
That a tax credit of up to ninety per cent of the total amount
contributed during the taxable year by a business firm in
comprehensive service projects with five-year commitments and
up to ninety-five per cent of the total amount contributed
during the taxable year by a business firm in comprehensive
service projects with six-year or longer commitments shall be
granted, and Provided further, That a tax credit of up to ninety
per cent of the total amount contributed during the taxable
year by a business firm in veterans' housing assistance approved
under section 1904-A(b.3) shall be granted. Such credit shall
not exceed one million dollars ($1,000,000) annually for
contributions or investments to fewer than four projects or two
million five hundred thousand dollars ($2,500,000) annually for
contributions or investments to four or more projects. No tax
credit shall be granted to any bank, bank and trust company,
insurance company, trust company, national bank, savings
association, mutual savings bank or building and loan
association for activities that are a part of its normal course
of business. Any tax credit not used in the period the
contribution or investment was made may be carried over for the
next five succeeding calendar or fiscal years until the full
credit has been allowed. A business firm shall not be entitled
to carry back or obtain a refund of an unused tax credit. The
total amount of all tax credits allowed pursuant to this act
shall not exceed seventy-two million dollars ($72,000,000) in
any one fiscal year. Of that amount, two million dollars
($2,000,000) shall be allocated exclusively for pass-through
entities. However, if the total amounts allocated to either the
group of applicants, exclusive of pass-through entities, or the
group of pass-through entity applicants is not approved in any
fiscal year, the unused portion shall become available for use
by the other group of qualifying taxpayers. ((a) amended July
11, 2024, P.L. , No.56)
(b) Notwithstanding any other provision of law and except
for the tax credits which are granted under subsection (a) on
the effective date of this subsection, no additional tax credits
may be granted under this article.
(1905-A amended Oct. 24, 2018, P.L.675, No.100)
Compiler's Note: Section 30(9) of Act 56 of 2024 provided
that the amendment of subsection (a) shall apply to fiscal
years beginning after June 30, 2024.
Section 1906-A. Decision in Writing.--The decision of the
secretary to approve or disapprove a proposal pursuant to
section 1904-A of this act shall be in writing, and, if it
approves the proposal, it shall state the maximum credit
allowable to the business firm. A copy of the decision of the
secretary shall be transmitted to the Governor and to the
Secretary of Revenue.
(1906-A amended May 7, 1997, P.L.85, No.7)
Section 1907-A. Pass-Through Entity.--(a) If a pass-through
entity has any unused tax credit under section 1905-A, the
entity may elect, in writing, according to the department's
procedures, to transfer all or a portion of the credit to
shareholders, members or partners in proportion to the share
of the entity's distributive income to which the shareholder,
member or partner is entitled.
(b) The credit provided under subsection (a) is in addition
to any neighborhood assistance tax credit to which a
shareholder, member or partner of a pass-through entity is
otherwise entitled under this article. However, a pass-through
entity and a shareholder, member or partner of a pass-through
entity may not claim a credit under this article for the same
qualified neighborhood assistance investment or contribution.
(c) A shareholder, member or partner of a pass-through
entity to whom credit is transferred under subsection (a) must
immediately claim the credit in the taxable year in which the
transfer is made. The shareholder, member or partner may not
carry forward, carry back, obtain a refund of or sell or assign
the credit.
(1907-A added July 25, 2007, P.L.373, No.55)
Section 1908-A. Reporting.--The Department of Community and
Economic Development shall issue a report within 12 months of
the effective date of this section and each five years
thereafter. The report shall include a funding evaluation of
the neighborhood assistance program and recommendations for the
tax credit, specifically including ways the department can
interact with and promote the inclusion of community
organizations that have not previously been included in projects
receiving credits. Copies of the report shall be submitted to
the chair and minority chair of the Finance Committee of the
Senate and the chair and minority chair of the Finance Committee
of the House of Representatives.
(1908-A added Oct. 24, 2018, P.L.675, No.100)
ARTICLE XIX-B
NEIGHBORHOOD IMPROVEMENT ZONES
(Art. added July 9, 2013, P.L.270, No.52)
Compiler's Note: See section 42(7) of Act 52 of 2013 in the
appendix to this act for special provisions relating to
continuation of prior law.
Section 1901-B. Scope of article.
This article relates to neighborhood improvement zones.
(1901-B added July 9, 2013, P.L.270, No.52)
Section 1902-B. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Bonds." Includes notes, instruments, refunding notes and
bonds and other evidences of indebtedness or obligations.
"Capital Facilities Debt Enabling Act." The act of February
9, 1999 (P.L.1, No.1), known as the Capital Facilities Debt
Enabling Act.
"City." A city of the third class with, on the date of the
designation of a neighborhood improvement zone by the
contracting authority, a population of at least 106,000, based
on the most recent Federal decennial census.
"Contracting authority." An authority created under 53
Pa.C.S. Ch. 56 (relating to municipal authorities) for the
purpose of designating a neighborhood improvement zone and
constructing a facility or other authority created under the
laws of this Commonwealth which is eligible to apply for and
receive redevelopment assistance capital grants under Chapter
3 of the act of February 9, 1999 (P.L.1, No.1), known as the
Capital Facilities Debt Enabling Act.
"Department." The Department of Revenue of the Commonwealth.
"Earned income tax." A tax or portion of a tax imposed on
earned income within a neighborhood improvement zone under the
act of December 31, 1965 (P.L.1257, No.511), known as The Local
Tax Enabling Act, which a city, or a school district contained
entirely within the boundaries of or coterminous with the city,
is entitled to receive.
"Facility." A stadium, arena or other structure owned or
leased by a professional sports organization at which
professional athletic events are conducted in the presence of
individuals who pay admission to view the event constructed or
operated by the contracting authority.
"Facility complex." A development or complex of residential,
commercial, exhibition, hospitality, conference, retail and
community uses which includes a stadium arena or other place
owned, leased or utilized by a professional sports organization
at which a professional athletic event or other events are
conducted in the presence of individuals who pay admission to
view the event.
"Fund." A Neighborhood Improvement Zone Fund established
under section 1904-B.
"Master list." A list maintained by the contracting
authority of the legal business names, principal business
addresses within a neighborhood improvement zone and parcel
numbers of all qualified businesses which are required to file
reports for the calendar year under section 1904-B(a.1)(1). The
term shall also include the name, telephone number and e-mail
address of the person employed by the qualified business who
is primarily responsible for completing reports for the
qualified business required under section 1904-B(a.1). (Def.
added July 13, 2016, P.L.526, No.84)
"Neighborhood improvement zone." A neighborhood improvement
zone designated by the contracting authority for the purposes
of neighborhood improvement and development within a city.
"Operating organization." An entity which contracts directly
with the contracting authority to lease or operate a facility.
(Def. added July 13, 2016, P.L.526, No.84)
"Professional sports organization." A sole proprietorship,
corporation, limited liability company, partnership or
association that meets all of the following:
(1) Owns a professional sports franchise.
(2) Conducts professional athletic events of the sports
franchise at a facility.
"Qualified business." An entity authorized to conduct
business in this Commonwealth which is located or partially
located within a neighborhood improvement zone and is engaged
in the active conduct of a trade or business for the taxable
year. An agent, broker or representative of a business shall
not be considered to be in the active conduct of trade or
business for the business.
(1902-B added July 9, 2013, P.L.270, No.52)
Section 1903-B. Facility.
The contracting authority may designate a neighborhood
improvement zone of not greater than 130 acres in which a
facility or facility complex may be constructed and may borrow
funds for the purpose of improvement and development within the
neighborhood improvement zone and construction of a facility
or facility complex within the zone.
(1903-B added July 9, 2013, P.L.270, No.52)
Section 1904-B. Neighborhood Improvement Zone Funds.
(a) Special funds.--Following the designation of a
neighborhood improvement zone, the contracting authority shall,
within ten days of making the designation or, in the case of a
neighborhood improvement zone designated prior to July 1, 2012,
within ten days of July 2, 2012, notify the State Treasurer of
the designation. Upon the notice, the State Treasurer shall
establish a special fund for the benefit of each contracting
authority to be known as the Neighborhood Improvement Zone Fund.
Interest income derived from investment of the money in each
fund shall be credited by the Treasury Department to the fund.
(a.1) Certification.--
(1) Within 31 days of the end of each calendar year,
each qualified business shall file a report with the
department which complies with all of the following:
(i) States each State tax, calculated in accordance
with subsection (b), which was paid by the qualified
business in the prior calendar year.
(ii) Lists each State tax refund which complies
with all of the following:
(A) The refund is for a tax:
(I) set forth in subsection (b); and
(II) certified as paid under subsection (b).
(B) The refund was received in the prior
calendar year by the qualified business.
(iii) Is in a form and manner required by the
department.
(2) In addition to any penalties imposed under this act
for failure to timely pay State taxes, the following shall
apply:
(i) Failure to file a timely and complete report
under paragraph (1) shall result in the imposition of a
penalty of 10% of all State taxes, calculated in
accordance with subsection (b), which were payable by
the qualified business in the prior calendar year. In
no case shall the penalty imposed be less than $1,000.
When the penalty is received, the money shall be
transferred from the General Fund to the fund of the
contracting authority that designated the neighborhood
improvement zone in which the qualifying business is
located. Failure to file a timely and complete report
under paragraph (4) shall result in the imposition of a
penalty of 10% of all local taxes, calculated in
accordance with subsection (b) by a contracting authority
which were payable by the qualified business in the prior
calendar year. In no case shall the penalty imposed be
less than $250.
(ii) Failure to report a qualified business
operating in the facility to the contracting authority
by an operating organization in accordance with
subsection (a.3)(2) shall result in the imposition of a
penalty by the contracting authority upon the operating
organization, of 100% of the taxes which would be
certified under subsection (b) for each qualified
business which is not reported to the contracting
authority or $1,000, whichever is greater. The
contracting authority may not waive or abate any
penalties imposed under this subparagraph. When the
penalty is received, the money shall be transferred from
the General Fund to the fund of the contracting authority
that designated the neighborhood improvement zone in
which the qualifying business is located.
(iii) Failure to file a timely and complete report
under paragraph (1) by a qualified business engaged in
the active conduct of a trade or business during the
calendar year in the facility shall result in the
imposition of a penalty by the contracting authority
upon the operating organization equal to 100% of the
taxes paid which would be certified under subsection (b)
for each qualified business which fails to file a timely
and complete report. The penalty may not be less than
$1,000. If the qualified business is properly included
on the master list provided under subsection (a.3), the
contracting authority may waive or abate penalties
imposed under this subparagraph equal to the total taxes
paid by the qualified business which are certified under
subsection (b). When the penalty is received, the money
shall be deposited in the fund of the contracting
authority that designated the neighborhood improvement
zone in which the qualifying business is located.
(3) Except as otherwise provided under paragraph (2)(ii)
and (iii), any penalty imposed under this subsection shall
be imposed, assessed and collected by the department under
the provisions for imposing, assessing and collecting
penalties under Article II. When the penalty is received,
the money shall be transferred from the General Fund to the
fund of the contracting authority that designated the
neighborhood improvement zone in which the qualified business
is located.
(4) Within 31 days of the end of each calendar year,
each qualified business shall file a report with the local
taxing authority reporting all local taxes, calculated in
accordance with subsection (b), which were paid by the
qualified business in the prior calendar year. The report
from each qualified business shall also list any local tax
refunds of taxes set forth in subsection (b) received in the
prior calendar year by the qualified business and any refunds
related to the local taxes as calculated in accordance with
subsection (b). The report shall be in a form and manner
required by the department.
((a.1) amended July 13, 2016, P.L.526, No.84)
(a.2) Transition.--
(1) Subject to paragraphs (3) and (4), within 15 days
of July 2, 2012, the State Treasurer shall:
(i) determine the amount of money in the
Neighborhood Improvement Zone Fund existing on July 2,
2012, which is attributable to each neighborhood
improvement zone; and
(ii) transfer the amount of money in the
Neighborhood Improvement Zone Fund existing on July 2,
2012, to the fund for each contracting authority for
which money was deposited.
(2) An entity collecting a local tax that, on July 2,
2012, is in possession of money attributable to a local tax
not included in the amount to be calculated and certified
under subsection (b) shall promptly remit that money to the
local taxing authority entitled to receive the money.
(3) Transfer and repayment is subject to the following:
(i) Before making the transfer under paragraph (1),
the State Treasurer shall:
(A) determine the amount of money deposited in
the fund which was attributable to earned income
taxes that a contracting authority is not entitled
to receive under subsection (b); and
(B) deduct the amount of money determined under
clause (A) from the money to be transferred under
paragraph (1).
(ii) If any amount of the money under subparagraph
(i)(A) has already been transferred to a contracting
authority, the State Treasurer shall take action as
necessary to recover the money from the contracting
authority, including by way of setoff from money to be
paid to the contracting authority under paragraph (1).
The contracting authority shall comply with a demand
made by the State Treasurer for the repayment of money
under this paragraph.
(4) As to the money deducted or recovered under
paragraph (3), the State Treasurer shall:
(i) identify the local taxing authorities that were
entitled to receive the money which was deposited in the
fund;
(ii) determine the amount to which each local taxing
authority was entitled; and
(iii) remit the amount under subparagraph (ii) to
the proper local taxing authority.
(a.3) Master list.--The following shall apply:
(1) Except as provided under paragraph (2), within five
days of the end of each month, the legal business names,
business addresses within the neighborhood improvement zone
and parcel numbers of all qualified businesses engaged in
the active conduct of a trade or business during the previous
month shall be provided to the contracting authority by or
on behalf of the qualified business for purposes of inclusion
on the master list. The name, telephone number and e-mail
address of the person employed by the qualified business who
is primarily responsible for completing reports for the
qualified business required under subsection (a.1) shall
also be provided.
(2) For purposes of inclusion on the master list, within
five days of the end of each month during a calendar year,
an operating organization shall provide to the contracting
authority the legal business names and business addresses
within the neighborhood improvement zone of all qualified
businesses engaged in the active conduct of a trade or
business in the facility during the previous month along
with the name, phone number and e-mail address of the
individual employed by the qualified business who is
primarily responsible for completing the reports for the
qualified business required under subsection (a.1).
(3) Within 10 days of the end of each calendar year,
the contracting authority shall provide to the department
the master list. The department may not certify any taxes
paid directly or indirectly by a qualified business as
provided under subsection (b) during the prior calendar year
when the qualified business is not included on the master
list.
(4) A contracting authority shall impose penalties for
failure to comply with this section.
((a.3) added July 13, 2016, P.L.526, No.84)
(b) Calculation.--Within 60 days of the end of each calendar
year, the department shall certify separately for each
neighborhood improvement zone the amounts of State taxes paid,
less any State tax refunds received, by the qualified businesses
filing reports under subsection (a.1)(1) to the Office of the
Budget. Beginning in the first full calendar year following the
designation of a neighborhood improvement zone and in each
calendar year thereafter, by November 1, the department shall
calculate, in accordance with this subsection, amounts of State
taxes actually received by the Commonwealth from each qualified
business that filed a report under subsection (a.1)(1) in the
prior calendar year, and the department shall certify the
amounts received to the office. The department shall include
reports filed five months after the due date under subsection
(a.1)(1) in the November 1 certification. An entity collecting
a local tax within the neighborhood improvement zone shall,
within 31 days of the end of each calendar year, submit all of
the local taxes that are to be calculated under this subsection
and which were paid in the prior calendar year, less any
certified local tax refunds received by a qualified business
in the prior calendar year, to the State Treasurer to be
deposited in the fund under subsection (d) of the contracting
authority that established the neighborhood improvement zone.
This subsection shall not apply to any taxes subject to a valid
pledge or security interest entered into in order to secure
debt service on bonds if the pledge or security interest was
entered into prior to May 1, 2011, or, in the case of the
neighborhood improvement zone designated after July 1, 2011,
on the date of the designation, and is still in effect. The
following shall be the amounts calculated and certified
separately for each neighborhood improvement zone:
(1) An amount equal to all corporate net income tax,
capital stock and franchise tax, personal income tax,
business privilege tax, business privilege licensing fees
and earned income tax related to the ownership and operation
of a professional sports organization conducting professional
athletic events at the facility or facility complex.
(2) An amount equal to all of the following:
(i) All personal income tax, earned income tax and
local services tax withheld from its employees by a
professional sports organization conducting professional
athletic events at the facility or facility complex.
(ii) All personal income tax, earned income tax and
local services tax withheld from the employees of any
provider of events at or services to or any operator of
an enterprise in the facility or facility complex.
(iii) All personal income tax, earned income tax
and local services tax to which the Commonwealth would
be entitled from performers or other participants,
including visiting teams, at an event or activity at the
facility or facility complex.
(3) An amount equal to all sales and use tax related
to the operation of the professional sports organization and
the facility and enterprises developed as part of the
facility complex. This paragraph shall include sales and use
tax paid by any provider of events or activities at or
services to the facility or facility complex, including sales
and use tax paid by vendors and concessionaires and
contractors at the facility or facility complex.
(4) An amount equal to all tax paid to the Commonwealth
related to the sale of any liquor, wine or malt or brewed
beverage in the facility or facility complex.
(5) The amount paid by the professional sports
organization or by any provider of events or activities at
or services to the facility or facility complex of any new
tax enacted by the Commonwealth following October 9, 2009.
(6) An amount equal to all personal income tax, earned
income tax and local services tax withheld from personnel
by the professional sports organization or by a contractor
or other entity involved in the construction of the facility
or facility complex.
(7) An amount equal to all sales and use tax paid on
materials and other construction costs, whether withheld or
paid by the professional sports organization or other entity,
directly related to the construction of the facility or
facility complex.
(8) An amount equal to all of the following:
(i) All corporate net income tax, capital stock and
franchise tax, personal income tax, business privilege
tax, business privilege licensing fees and earned income
tax related to the ownership and operation of any
qualified business within the neighborhood improvement
zone.
(ii) All personal income tax, earned income tax and
local services tax withheld from its employees by a
qualified business within the neighborhood improvement
zone.
(iii) All personal income tax, earned income tax
and local services tax withheld from the employees of a
qualified business that provides events, activities or
services in the neighborhood improvement zone.
(iv) All personal income tax, earned income tax and
local services tax to which the Commonwealth would be
entitled from performers or other participants at an
event or activity in the neighborhood improvement zone.
(v) All sales and use tax related to the operation
of a qualified business within the neighborhood
improvement zone. This subparagraph shall include sales
and use tax paid by a qualified business that provides
events, activities or services in the neighborhood
improvement zone.
(vi) All tax paid by a qualified business to the
Commonwealth related to the sale of any liquor, wine or
malt or brewed beverage within the neighborhood
improvement zone.
(vii) The amount paid by a qualified business within
the neighborhood improvement zone of any new tax enacted
by the Commonwealth following October 9, 2009.
(viii) All personal income tax, earned income tax
and local services tax withheld from personnel by a
qualified business involved in the improvement,
development or construction of the neighborhood
improvement zone.
(ix) All sales and use tax paid on materials and
other construction costs, whether withheld or paid by
the professional sports organization or other qualified
business, directly related to the improvement,
development or construction of the neighborhood
improvement zone.
(x) An amount equal to any amusement tax paid by a
qualified business operating in the neighborhood
improvement zone. No political subdivision or other
entity authorized to collect amusement taxes may impose
or increase the rate of any tax on admissions to places
of entertainment, exhibition or amusement or upon
athletic events in the neighborhood improvement zone
which are not in effect on the date the neighborhood
improvement zone is designated by the contracting
authority.
(9) Except for a tax levied against real property and
notwithstanding any other law, an amount equal to any tax
imposed by the Commonwealth or any of its political
subdivisions on a qualified business engaged in an activity
within the neighborhood improvement zone or directly or
indirectly on any sale or purchase of goods or services,
where the point of sale or purchase is within the
neighborhood improvement zone.
((b) amended July 13, 2016, P.L.526, No.84)
(c) State tax liability apportionment.--For the purpose of
making the calculations under subsection (b), the State tax
liability of a qualified business shall be apportioned to the
neighborhood improvement zone by multiplying the Pennsylvania
State tax liability by a fraction, the numerator of which is
the property factor plus the payroll factor plus the sales
factor and the denominator of which is three, in accordance
with the following:
(1) The property factor is a fraction, the numerator
of which is the average value of the taxpayer's real and
tangible personal property owned or rented and used in the
neighborhood improvement zone during the tax period and the
denominator of which is the average value of all the
taxpayer's real and tangible personal property owned or
rented and used in this Commonwealth during the tax period
but shall not include the security interest of any
corporation as seller or lessor in personal property sold
or leased under a conditional sale, bailment lease, chattel
mortgage or other contract providing for the retention of a
lien or title as security for the sale price of the property.
(2) The following apply:
(i) The payroll factor is a fraction, the numerator
of which is the total amount paid in the neighborhood
improvement zone during the tax period by the taxpayer
for compensation and the denominator of which is the
total compensation paid in this Commonwealth during the
tax period.
(ii) Compensation is paid in the neighborhood
improvement zone if:
(A) the person's service is performed entirely
within the neighborhood improvement zone;
(B) the person's service is performed both
within and without the neighborhood improvement zone,
but the service performed without the neighborhood
improvement zone is incidental to the person's
service within the neighborhood improvement zone;
or
(C) some of the service is performed in the
neighborhood improvement zone and the base of
operations or, if there is no base of operations,
the place from which the service is directed or
controlled is in the neighborhood improvement zone,
or the base of operations or the place from which
the service is directed or controlled is not in any
location in which some part of the service is
performed, but the person's residence is in the
neighborhood improvement zone.
(3) The sales factor is a fraction, the numerator of
which is the total sales of the taxpayer in the neighborhood
improvement zone during the tax period and the denominator
of which is the total sales of the taxpayer in this
Commonwealth during the tax period.
(i) Sales of tangible personal property are in the
neighborhood improvement zone if the property is
delivered or shipped to a purchaser that takes possession
within the neighborhood improvement zone regardless of
the F.O.B. point or other conditions of the sale.
(ii) Sales other than sales of tangible personal
property are in the neighborhood improvement zone if:
(A) the income-producing activity is performed
in the neighborhood improvement zone; or
(B) the income-producing activity is performed
both within and without the neighborhood improvement
zone and a greater proportion of the income-producing
activity is performed in the neighborhood improvement
zone than in any other location, based on costs of
performance.
(d) Transfers.--
(1) Within ten days of receiving certification under
subsection (b), the Secretary of the Budget shall direct the
State Treasurer to, notwithstanding any other law, transfer
the amounts certified under subsection (b) for each
neighborhood improvement zone from the General Fund to the
fund of the contracting authority that established the
neighborhood improvement zone. Beginning in the second
calendar year following the designation of a neighborhood
improvement zone and in each year thereafter, the amounts
certified by the secretary to the State Treasurer and the
amounts transferred by the State Treasurer to the fund of
each contracting authority shall be determined as follows:
(i) Add amounts certified by the department under
subsection (b) for the prior calendar year.
(ii) Subtract from the sum under subparagraph (i)
any State tax refunds paid as certified by the department
under subsection (b).
(iii) Add to the difference under subparagraph (ii)
any amounts certified under subsection (b) with respect
to the second prior calendar year.
(iv) Subtract from the sum under subparagraph (iii)
any amounts certified under subsection (b) which are
less than the amounts previously certified under
subsection (b) with respect to the second prior calendar
year.
(2) The State Treasurer shall provide an annual transfer
to the contracting authority until the bonds issued to
finance and refinance the improvement and development of the
neighborhood improvement zone and the construction of the
facility or facility complex are retired. Each annual
transfer to the contracting authority shall be equal to the
balance of the fund of the contracting authority on the date
of the transfer under paragraph (1).
(e) Restriction on use of money.--Money transferred under
subsection (d) is subject to the following:
(1) The money may only be utilized as follows:
(i) For payment of debt service, directly or
indirectly through a multitiered ownership structure or
other structure authorized by a contracting authority
to facilitate financing mechanisms, on bonds or on
refinancing loans used to repay bonds issued to finance
or refinance:
(A) the improvement and development of all or
any part of the neighborhood improvement zone; and
(B) the construction of all or part of a
facility or facility complex.
(ii) For payment of debt service on bonds issued
to refund those bonds.
(iii) For replenishment of amounts required in any
debt service reserve funds established to pay debt
service on bonds.
(1.1) The term of a bond to be refunded shall not exceed
the maximum term permitted for the original bond issued for
the improvement or development of the neighborhood
improvement zone and the construction of a facility or
facility complex.
(2) The money may not be utilized for purposes of
renovating or repairing a facility or facility complex,
except for capital maintenance and improvement projects.
(f) Ticket surcharge.--The entity operating the facility
may collect a capital repair and improvement ticket surcharge,
the proceeds of which shall be deposited into the fund of each
contracting authority. The fund of each contracting authority
shall be maintained and utilized as follows:
(1) The money deposited under this subsection may not
be encumbered for any reason and shall be transferred to the
entity for capital repair and improvement projects upon
request from the entity.
(2) Upon the expiration of the neighborhood improvement
zone under section 1906-B, any and all portions of the fund
attributable to the ticket surcharge shall be immediately
transferred to the contracting authority to be held in escrow
where they shall be unencumbered and maintained by the
contracting authority in the same manner as the fund. Upon
the transfer, any ticket surcharge collected by the operating
entity shall thereafter be deposited in the account
maintained by the contracting authority and dispersed for a
capital repair and improvement project upon request by the
operating entity.
(g) Excess money.--Within 30 days of the end of each
calendar year, any money remaining in the fund of each
contracting authority at the end of the prior calendar year
after the required payments under subsection (d)(2) were made
in the prior calendar year shall be refunded in the following
manner:
(1) Money shall first be returned to the General Fund
to the extent that the excess money is part of the transfer
under subsection (d)(1).
(2) Money shall next be paid to the contracting
authority to the extent that the amounts paid under
subsection (d)(2) consisted of local taxes. The contracting
authority shall return the money to the appropriate entities
collecting local tax who submitted the local taxes to the
State Treasurer under subsection (b).
(h) Audit.--
(1) The contracting authority shall hire an independent
auditing firm to perform an annual audit verifying all of
the following:
(i) The correct amount of the eligible local tax
was submitted to the local taxing authorities.
(ii) The local taxing authorities transferred the
correct amount of eligible local tax to the State
Treasurer.
(iii) The money transferred to the fund was properly
expended.
(iv) The correct amount of excess money was refunded
in accordance with the provisions of subsection (g).
(2) A copy of the annual audit shall be sent to the
Department of Revenue and the Secretary of the Budget.
(3) For purposes of this paragraph, an auditing firm
will not be considered independent if it provides services
to an operating organization or any qualified business within
a neighborhood improvement zone which is a party to a
separate agreement with a contracting authority for the
allocation of funds from the contracting authority.
((h) added July 13, 2016, P.L.526, No.84)
(1904-B added July 9, 2013, P.L.270, No.52)
Section 1904.1-B. Taxes.
(a) Prohibition.--A division of local government may not
assess real estate taxes on any property in a neighborhood
improvement zone owned by a contracting authority.
(b) Local hotel tax.--Notwithstanding any other law, revenue
generated from local hotel taxes levied in a neighborhood
improvement zone must first be set aside for new development
and capital improvement of hotel properties in the neighborhood
improvement zone. If there is no new hotel property development
or capital improvement in the neighborhood improvement zone,
the revenue generated from hotel taxes must be distributed as
provided under local hotel tax law.
(c) Amount.--For purposes of this article, revenue collected
from local hotel taxes shall only include the amount of local
hotel taxes collected from hotel activities which exceed the
amount collected from hotel activities occurring prior to the
designation of a neighborhood improvement zone by the
contracting authority.
(1904.1-B added July 13, 2016, P.L.526, No.84)
Section 1904.2-B. Property assessment.
Notwithstanding 53 Pa.C.S. Ch. 88 (relating to consolidated
county assessment), for purposes of determining the assessed
value of property located in a neighborhood improvement zone,
the actual fair market value of the property shall be
established without utilizing or considering the cost approach
to valuation, and any funds received by the contracting
authority and utilized directly or indirectly in connection
with the property shall not be considered real property or
income attributable to the property.
(1904.2-B added July 13, 2016, P.L.526, No.84)
Section 1904.3-B. Transfer of property.
(a) Transfer of parcels.--Parcels in a zone may be
transferred out of the zone and replaced with parcels not to
exceed the acreage transferred out of the zone by the
contracting authority, if:
(1) The department certifies that there is currently
no activity in the parcels transferred in the zone that
generates tax receipts or other revenue to the Commonwealth.
(2) The municipality where the zone is located certifies
that there is currently no activity in the parcels
transferred into the zone that generates tax receipts or
other revenue, other than taxes on real property, to the
municipality and the school district and county where the
zone is located.
(b) Public hearing.--The following apply:
(1) For a parcel identified by the contracting authority
to be transferred out of the zone, the contracting authority
may conduct a public hearing pursuant to a request from an
owner of real estate located within the parcel or the city
or municipality where the parcel sits. The hearing shall be
held and notice of the hearing provided to the owner of the
parcel in accordance with section 908 of the act of July 31,
1968 (P.L.805, No.247), known as the Pennsylvania
Municipalities Planning Code.
(2) If the contracting authority determines that it
will transfer a parcel out of the zone, the contracting
authority shall issue a written opinion within 45 days of
the hearing setting forth the reasons supporting the
determination.
(1904.3-B added Oct. 30, 2017, P.L.672, No.43)
Section 1905-B. Keystone Opportunity Zone.
Within four months following the designation of a
neighborhood improvement zone, a city may apply to the
Department of Community and Economic Development to decertify
and remove the designation of all or part of the Keystone
Opportunity Zone on behalf of all political subdivisions. The
provisions of section 309 of the act of October 6, 1998
(P.L.705, No.92), known as the Keystone Opportunity Zone,
Keystone Opportunity Expansion Zone and Keystone Opportunity
Improvement Zone Act, shall be deemed satisfied as to all
political subdivisions. The Department of Community and Economic
Development shall act on the application within 30 days.
(1905-B added July 9, 2013, P.L.270, No.52)
Section 1906-B. Duration.
The neighborhood improvement zone shall be in effect for a
period equal to one year following retirement of all bonds
issued to finance or refinance the improvement and development
of the neighborhood improvement zone or the construction of the
facility or the facility complex. The maximum term of the bond,
including the refunding of the bond, shall not exceed 30 years.
(1906-B added July 9, 2013, P.L.270, No.52)
Section 1907-B. Commonwealth pledges.
If and to the extent that the contracting authority pledges
amounts required to be transferred to the fund of the
contracting authority under section 1904-B for the payment of
bonds issued by the contracting authority, until all bonds
secured by the pledge of the contracting authority, together
with the interest on the bonds, are fully paid or provided for,
the Commonwealth pledges to and agrees with any person, firm,
corporation or government agency, whether in this Commonwealth
or elsewhere, and to and with any Federal agency subscribing
to or acquiring the bonds issued by the contracting authority
that the Commonwealth itself will not nor will it authorize any
government entity to abolish or reduce the size of the
neighborhood improvement zone; to amend or repeal section
1904-B(a.1), (b) or (d); to limit or alter the rights vested
in the contracting authority in a manner inconsistent with the
obligations of the contracting authority with respect to the
bonds issued by the contracting authority; or to otherwise
impair revenues to be paid under this article to the contracting
authority necessary to pay debt service on bonds. Nothing in
this section shall limit the authority of the Commonwealth or
any government entity to change the rate, tax bases or any
subject of any specific tax or repealing or enacting any tax.
(1907-B added July 9, 2013, P.L.270, No.52)
Section 1908-B. Confidentiality.
Notwithstanding any law providing for the confidentiality
of tax records, the contracting authority and the local taxing
authorities shall have access to any reports and certifications
filed under this article, and the contracting authority shall
have access to any State or local tax information filed by a
qualified business in the neighborhood improvement zone solely
for the purpose of documenting the certifications required by
this article or determining the amount allocated to any uses
specified under section 1904-B(e)(1). Any other use of the tax
information shall be prohibited as provided under law.
(1908-B amended July 8, 2022, P.L.513, No.53)
Section 1909-B. Exceptions.
Beginning with the 2016 calendar year, none of the following
may be employed by, be contracting with or provide services for
a contracting authority:
(1) An individual employed by, contracting with or
providing service for a city that has a neighborhood
improvement zone.
(2) An entity contracting with or providing services
for a city that has a neighborhood improvement zone.
(3) An individual owning an entity or an entity with
ownership interest in a separate entity which is contracting
with a city that has a neighborhood improvement zone.
(4) An individual or an entity employed by, contracting
with or providing services for a qualified business within
the neighborhood improvement zone which is party to a
separate agreement with a contracting authority for the
allocation of funds from the contracting authority.
(5) An individual or an entity employed by, contracting
with or providing services for an operating organization.
(6) A current board member of a contracting authority.
(7) An entity which is owned by or employs a current
board member of a contracting authority.
(1909-B added July 13, 2016, P.L.526, No.84)
ARTICLE XIX-C
KEYSTONE SPECIAL DEVELOPMENT ZONE PROGRAM
(Art. added July 9, 2013, P.L.270, No.52)
Compiler's Note: See section 42(8) of Act 52 of 2013 in the
appendix to this act for special provisions relating to
continuation of prior law.
Section 1901-C. Scope of article.
This article relates to the Keystone Special Development
Zone program.
(1901-C added July 9, 2013, P.L.270, No.52)
Section 1902-C. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Affiliate." As follows:
(1) an entity which is part of the same "affiliated
group," as defined in section 1504(a) of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 1504(a)), as a
Keystone Special Development Zone employer; or
(2) an entity that would be part of the same "affiliated
group" except that the entity or the Keystone Special
Development Zone employer is not a corporation.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Employee." An individual who:
(1) is employed in this Commonwealth by a Keystone
Special Development Zone employer, or its predecessor, after
June 30, 2011;
(2) is employed for at least 35 hours per week by a
Keystone Special Development Zone employer; and
(3) spends at least 90% of his or her working time for
the Keystone Special Development Zone employer at the
Keystone Special Development Zone location.
"Full-time equivalent employee." The whole number of
employees, rounded down, that equals the sum of:
(1) the total paid hours, including paid time off and
family leave under the Family and Medical Leave Act of 1993
(Public Law 103-3, 29 U.S.C. § 2601 et seq.), of all of a
Keystone Special Development Zone employer's employees
classified as nonexempt during the Keystone Special
Development Zone employer's tax year divided by 2000; and
(2) a total number arrived at by adding, for each
Keystone Special Development Zone employer's employee
classified as exempt scheduled to work at least 35 hours per
week, the fraction equal to the portion of the year the
exempt employee was paid by the Keystone Special Development
Zone employer. Whether an employee shall be classified as
exempt or nonexempt shall be determined under the Fair Labor
Standards Act of 1938 (52 Stat. 1060, 29 U.S.C. § 201 et
seq.).
The calculation under this definition excludes employees
previously employed by an affiliate and employees previously
employed by the Keystone Special Development Zone employer
outside of a Keystone Special Development Zone.
"Keystone Special Development Zone." A parcel of real
property that meets all of the following:
(1) On July 1, 2011, was within a special industrial
area, as described in section 305(a) of the act of May 19,
1995 (P.L.4, No.2), known as the Land Recycling and
Environmental Remediation Standards Act, for which the
Department of Environmental Protection has executed a special
industrial area consent order and agreement, as provided
under section 502(a) of the Land Recycling and Environmental
Remediation Standards Act.
(2) On July 1, 2011:
(i) had no permanent vertical structures affixed
to it; or
(ii) had a permanent vertical structure affixed to
it which has been deteriorated or abandoned for at least
20 years.
(3) Is certified by the Department of Environmental
Protection as meeting the requirements of paragraphs (1) and
(2).
"Keystone Special Development Zone employer." A person or
entity subject to the taxes imposed under Article III, IV, VI,
VII, VIII or XV, who employs one or more employees at a Keystone
Special Development Zone. The term shall include a pass-through
entity. The term shall not include any of the following:
(1) An employer who, after January 1, 1990,
intentionally or negligently caused or contributed to, in
any material respect, a level of regulated substance above
the cleanup standards in the act of May 19, 1995 (P.L.4,
No.2), known as the Land Recycling and Environmental
Remediation Standards Act, on, in or under the Keystone
Special Development Zone at which an employee is employed.
(2) An employer engaged in construction improvements
on a Keystone Special Development Zone.
"Pass-through entity." A partnership as defined in section
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1).
"Qualified tax liability." Any tax owed by a Keystone
Special Development Zone employer attributable to a business
activity conducted within a Keystone Special Development Zone
for a tax year under Article III, IV, VI, VII, VIII or XV.
(1902-C added July 9, 2013, P.L.270, No.52)
Section 1903-C. Keystone Special Development Zone tax credit.
(a) Tax credit.--A Keystone Special Development Zone
employer shall be entitled to claim a tax credit against its
qualified tax liability as provided in this article.
(b) Process.--
(1) A Keystone Special Development Zone employer shall
notify the department of its qualification for a tax credit
under this article by February 1 for tax credits earned
during a taxable year ending in the prior calendar year.
(2) The notification shall contain the following:
(i) The name, address and taxpayer identification
number of the Keystone Special Development Zone employer.
(ii) Verification that it is a Keystone Special
Development Zone employer located in a Keystone Special
Development Zone.
(iii) The names, addresses and Social Security
numbers of all employees for which the credit is claimed.
(iv) Verification that each employee identified in
subparagraph (iii) spent at least 90% of the employee's
working time for the Keystone Special Development Zone
employer at the employer's Keystone Special Development
Zone location.
(v) Any other information required by the
department.
(3) To qualify for the credit, the Department of Revenue
must certify that the Keystone Special Development Zone
employer is current with all tax liabilities.
(4) By March 1 of each year, the department shall send
the Keystone Special Development Zone employer who submitted
the notification a certificate of its qualification for the
credit, which certificate the Keystone Special Development
Zone employer shall present to the Department of Revenue
when filing its return claiming the credit.
(c) Amount.--The amount of the tax credit a Keystone Special
Development Zone employer may earn in any tax year shall be
equal to $2,100 for each full-time equivalent employee in excess
of the number of full-time equivalent employees employed by the
Keystone Special Development Zone employer prior to January 1,
2012.
(d) Application of tax credits.--A Keystone Special
Development Zone employer must first use its Keystone Special
Development Zone tax credit against its qualified tax liability.
(d.1) Sale or assignment of tax credit.--
(1) If the Keystone Special Development Zone employer
is entitled to a credit in any year that exceeds its
qualified tax liability for that year, upon application to
and approval by the department, a Keystone Special
Development Zone employer which has been awarded a tax credit
may sell or assign, in whole or in part, the tax credit
granted to the Keystone Special Development Zone employer.
The application must be on the form required by the
department and must include or demonstrate all of the
following:
(i) The applicant's name and address.
(ii) A copy of the tax credit certificate previously
issued by the department.
(iii) A statement as to whether any part of the tax
credit has been applied to tax liability of the applicant
and the amount so applied.
(iv) Any other information required by the
department.
(2) The department shall review the application and,
upon being satisfied that all requirements have been met,
shall approve the application and shall notify the Department
of Revenue.
(3) The purchaser or assignee of all or a portion of a
Keystone Special Development Zone tax credit under this
section shall claim the credit in the taxable year in which
the purchase or assignment is made. The purchaser or assignee
of a tax credit may use the tax credit against any tax
liability of the purchaser or assignee under Article III,
IV, VI, VII, VIII or XV. The amount of the tax credit used
may not exceed 75% of the purchaser's or assignee's tax
liability for the taxable year. The purchaser or assignee
may not carry over, carry back, obtain a refund of or assign
the Keystone Special Development Zone tax credit. The
purchaser or assignee shall notify the department and the
Department of Revenue of the seller or assignor of the
Keystone Special Development Zone tax credit in compliance
with procedures specified by the department.
(e) Use and carryforward.--
(1) A Keystone Special Development Zone employer may
earn the tax credit allowed under this article beginning in
any tax year beginning in 2012 and for a period of up to ten
tax years during the period beginning July 1, 2012, and
ending June 30, 2035. ((1) amended July 13, 2016, P.L.526,
No.84)
(2) A Keystone Special Development Zone employer may
carry forward for up to ten years a tax credit earned under
this article:
(i) which it is unable to use; or
(ii) which it does not sell or assign.
(3) Tax credits carried forward under paragraph (2)
shall be used on a first-in-first-out basis.
(f) Dual-use prohibited.--In a given year, a Keystone
Special Development Zone employer may only earn tax credits
under subsection (c) or (d) or under the act of October 6, 1998
(P.L.705, No.92), known as the Keystone Opportunity Zone,
Keystone Opportunity Expansion Zone and Keystone Opportunity
Improvement Zone Act. A Keystone Special Development Zone
employer may not claim a credit under both this section and
Article XVIII-B.
(g) Pass-through entities.--
(1) If a Keystone Special Development Zone employer is
a pass-through entity and it has any unused tax credit under
subsection (c), (d) or (e), it may elect in writing,
according to procedures established by the Department of
Revenue, to transfer all or a portion of the credit to
shareholders, members or partners in proportion to the share
of the entity's distributive income to which the shareholder,
member or partner is entitled.
(2) A Keystone Special Development Zone employer that
is a pass-through entity and a shareholder, member or partner
of that Keystone Special Development Zone employer may not
both claim the Keystone Special Development Zone tax credit
earned by the Keystone Special Development Zone employer for
any tax year.
(3) A shareholder, member or partner of a Keystone
Special Development Zone employer that is a pass-through
entity to whom a credit is transferred under this subsection
shall immediately claim the credit in the taxable year in
which the transfer is made.
(h) Transfer.--Any tax credit or tax credit carryforward
that a Keystone Special Development Zone employer is entitled
to use may be transferred to a successor entity of the Keystone
Special Development Zone employer.
(i) Penalties.--The following shall apply:
(1) A company which receives Keystone Special
Development Zone tax credits and fails to substantially
maintain the operations related to the Keystone Special
Development Zone tax credits in this Commonwealth for a
period of five years from the date the company first submits
a Keystone Special Development Zone tax credit certificate
to the Department of Revenue shall be required to refund to
the Commonwealth the total amount of credits granted, with
interest and a penalty of 20% of the amount of credits
granted.
(2) The department may waive the penalties in subsection
(a) if it is determined that a company's operations were not
maintained or the new jobs were not created because of
circumstances beyond the company's control. Circumstances
include natural disasters, unforeseen industry trends or a
loss of a major supplier or market.
(1903-C added July 9, 2013, P.L.270, No.52)
Section 1904-C. Tax liability attributable to Keystone Special
Development Zone.
(a) Determinations of attributable tax liability.--Tax
liability attributable to business activity conducted within a
Keystone Special Development Zone shall be computed, construed,
administered and enforced in conformity with Article III, IV,
VI, VII, VIII or XV, whichever is applicable, and with specific
reference to the following:
(1) If the entire business of the employer in this
Commonwealth is transacted wholly within the Keystone Special
Development Zone, the tax liability attributable to business
activity within a Keystone Special Development Zone shall
consist of the Pennsylvania income as determined under
Article III, IV, VI, VII, VIII or XV, whichever is
applicable.
(2) If the entire business of the employer in this
Commonwealth is not transacted wholly within the Keystone
Special Development Zone, the tax liability of an employer
in a Keystone Special Development Zone shall be determined
upon such portion of the Pennsylvania tax liability of such
employer attributable to business activity conducted within
the Keystone Special Development Zone and apportioned in
accordance with subsection (b).
(b) Tax liability apportionment.--The tax liability of an
employer shall be apportioned to the Keystone Special
Development Zone by multiplying the Pennsylvania tax liability
by a fraction, the numerator of which is the property factor
plus the payroll factor and the denominator of which is two,
in accordance with the following:
(1) The property factor is a fraction, the numerator
of which is the average value of the employer's real and
tangible personal property owned or rented and used in the
Keystone Special Development Zone during the tax period and
the denominator of which is the average value of the
employer's real and tangible personal property owned or
rented and used in this Commonwealth during the tax period
but shall not include the security interest of any employer
as seller or lessor in personal property sold or leased under
a conditional sale, bailment lease, chattel mortgage or other
contract providing for the retention of a lien or title as
security for the sale price of the property.
(2) The payroll factor is a fraction, the numerator of
which is the total amount paid in the Keystone Special
Development Zone during the tax period by the employer to
an employee as compensation and the denominator of which is
the total compensation paid by the employer in this
Commonwealth during the tax period.
(1904-C added July 9, 2013, P.L.270, No.52)
ARTICLE XIX-D
KEYSTONE OPPORTUNITY ZONES, KEYSTONE OPPORTUNITY EXPANSION
ZONES AND KEYSTONE OPPORTUNITY IMPROVEMENT ZONES
(Art. added July 13, 2016, P.L.526, No.84)
PART I
PRELIMINARY PROVISIONS
(Pt. added July 13, 2016, P.L.526, No.84)
Section 1901-D. Scope of article.
This article relates to keystone opportunity zones, keystone
opportunity expansion zones and keystone opportunity improvement
zones.
(1901-D added July 13, 2016, P.L.526, No.84)
Section 1902-D. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Business." As defined in section 103 of the KOZ Act.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Keystone opportunity expansion zone." As defined in section
103 of the KOZ Act.
"Keystone opportunity zone." As defined in section 103 of
the KOZ Act.
"KOZ Act." The act of October 6, 1998 (P.L.705, No.92),
known as the Keystone Opportunity Zone, Keystone Opportunity
Expansion Zone and Keystone Opportunity Improvement Zone Act.
"Person." As defined in section 103 of the KOZ Act.
"Political subdivision." As defined in section 103 of the
the KOZ Act.
"Qualified business." As defined in section 103 of the KOZ
Act.
"Qualified political subdivision." As defined in section
103 of the KOZ Act.
"Subzone." As defined in section 103 of the KOZ Act.
"Unoccupied parcel." As defined in section 103 of the KOZ
Act.
(1902-D added July 13, 2016, P.L.526, No.84)
PART II
KEYSTONE OPPORTUNITY ZONES
(Pt. added July 13, 2016, P.L.526, No.84)
Section 1911-D. Additional keystone opportunity zones.
(a) Establishment.--In addition to any designations under
section 301.1 of the KOZ Act, the department may designate up
to 12 additional keystone opportunity expansion zones that will
create new jobs in accordance with this section. Each additional
keystone opportunity expansion zone shall:
(1) Not be less than 10 acres in size, unless contiguous
to an existing zone.
(2) Not exceed, in the aggregate, a total of 375 acres.
(3) Be comprised of parcels that are deteriorated,
underutilized or unoccupied on the effective date of this
paragraph.
(b) Authorization.--Persons and businesses within an
additional keystone opportunity expansion zone authorized under
subsection (a) shall be entitled to all tax exemptions,
deductions, abatements or credits set forth under this section
and exemptions for sales and use tax under section 511(a) or
705(a) of the KOZ Act for a period of 10 years. Exemptions for
sales and use taxes under sections 511 and 705 of the KOZ Act
shall commence upon issuance of a certificate under section 307
of the KOZ Act by the department.
(c) Application.--In order to receive a designation under
this section, the department must receive an application from
a political subdivision or its designee no later than October
1, 2018. The application must contain the information required
under section 302(a)(1), (2)(i) and (ix), (5) and (6) of the
KOZ Act. The department, in consultation with the Department
of Revenue, shall review the application and, if approved, issue
a certification of all tax exemptions, deductions, abatements
or credits under this act for the zone within three months of
receipt of the application. The department shall act on an
application for a designation under section 302(a)(1) of the
KOZ Act by December 31, 2018. The department may make
designations under this section on a rolling basis during the
application period. ((c) amended Oct. 30, 2017, P.L.672, No.43)
(d) Additional eligibility.--A parcel previously included
in an application submitted for designation in a city of the
first class prior to the effective date of this subsection that
previously complied with all requirements of section 302 of the
KOZ Act shall be eligible for designation as a zone under this
section if the parcel was acquired by a new owner and will be
used for a higher and better use or will provide greater levels
of job creation or investment.
(e) Applicability.--All exemptions, deductions, abatements
and credits authorized under the KOZ Act shall apply to the
parcels for a period of 10 years.
(1911-D added July 13, 2016, P.L.526, No.84)
Section 1912-D. Extension for new job creation or new capital
investment.
(a) Approval and effect.--
(1) The department may approve an application to grant
an extension for a parcel located within a keystone
opportunity zone, keystone opportunity expansion zone or
keystone opportunity improvement zone upon application by:
(i) one qualified business as a sole applicant; or
(ii) two or more qualified businesses as a joint
applicant.
(2) All exemptions, deductions, abatements and credits
authorized under Chapter 5 of the KOZ Act shall be extended
to the continued parcel for an additional period of 10 years
following the expiration date of the existing keystone
opportunity zone, keystone opportunity expansion zone or
keystone opportunity improvement zone or subzone.
(a.1) Affiliates.--If an affiliate of a qualified business
whose individual or joint extension application under subsection
(a) was approved and the affiliate locates within an extended
parcel before the expiration of the certification issued under
subsection (b)(3), the affiliate is entitled to the tax
exemptions, deductions, abatements or credits specified under
this section, provided the affiliate meets the requirements of
section 307(a) of the KOZ Act. ((a.1) added July 8, 2022,
P.L.513, No.53)
(b) Application.--
(1) In order to receive approval under subsection
(a)(1), the department must receive an application from one
or more qualified businesses located within the zone or
subzone no later than three months prior to the expiration
date of the existing zone or subzone. The application shall
include all information required by the department as set
forth in guidelines to be published by the department.
(2) In order to submit an application under paragraph
(1), the applicant must:
(i) Have a cumulative minimum of 2,500 employees
located within this Commonwealth at the time of the
application.
(ii) Demonstrate a total prior minimum capital
investment within this Commonwealth of at least $300
million.
(iii) Conduct active business operations from one
or more facilities located on the parcel or parcels which
are the subject of the application.
(iv) Otherwise be in compliance with the provisions
of the KOZ Act.
(3) The department, in consultation with the Department
of Revenue, shall review the application and, if approved,
issue a certification of all tax exemptions, deductions,
abatements or credits authorized under Chapter 5 of the KOZ
Act for the extended parcel within three months of receipt
of the application, subject to the requirements of this
section. If the department determines that all qualifications
and requirements under this section and the KOZ Act have
been met, a certification for the extension period shall be
issued within 90 days of receipt of the application.
(4) The certification under paragraph (3) shall be
effective as of the day following the expiration date of the
existing zone or subzone and shall be effective for an
additional period of 10 years.
(c) Qualifications.--
(1) The department shall issue to each qualified
business that is approved as part of the application
submitted under subsection (a) a certification as described
under section 307 of the KOZ Act.
(2) For an applicant with multiple parcels that will
expire during the time periods under subsection (e), in order
to receive certification under paragraph (1), the applicant
must commit that between the effective date of this paragraph
and three years following the date of certification of the
initial parcel applied for, the applicant shall:
(i) create at least 350 new jobs in this
Commonwealth; or
(ii) make a capital investment of at least
$35,000,000 in this Commonwealth.
(3) Each qualified business that fails to meet the
requirements of paragraph (2) shall refund to the
Commonwealth the amount of the exemptions, deductions,
abatements and credits under Chapter 5 of the KOZ Act which
were received by that business during the three years
following receipt of the certification under paragraph (1).
(d) Expiration.--The following apply:
(1) All continuations shall expire no later than 10
years following the effective date of certification by the
department.
(2) If the qualified business that is a sole applicant
removes itself from the extended parcel or parcel prior to
the expiration of the extension and no affiliate remains
within the continued parcel, the extension shall expire upon
the date of departure of that qualified business. If one or
more affiliates remain within the extended parcel, the
extension shall expire upon the date of departure of the
last remaining affiliate or upon the expiration of the
extension date, whichever occurs first.
(3) If two or more qualified businesses submitted an
application under subsection (a) as joint applicants and all
the joint applicants remove themselves from the parcel prior
to the expiration of the extension and no affiliate of a
joint applicant is located on or remains within the extended
parcel, the extension shall expire upon the date of departure
of the last qualified business. If one or more affiliates
remain, the extension shall expire upon the departure date
of the last remaining affiliate or upon the expiration of
the extension date, whichever occurs first.
((d) amended July 8, 2022, P.L.513, No.53)
(e) Applicability.--
(1) This section applies only to existing zones or
subzones that expire in 2018 or at any time following 2018
and prior to January 1, 2026.
(2) This section does not apply to exemptions,
deductions, abatements or credits authorized under Chapter
7 of the KOZ Act, and the department may not require that
the qualified political subdivision in which the continued
parcel or parcels are located approve any application
submitted under subsection (b).
(3) The exemptions, deductions, abatements or credits
authorized under Chapter 5 of the KOZ Act apply only to
business activity carried out within the parcel or parcels
which are approved for extension.
(4) A determination by the department as to whether the
employment or capital investment requirements of subsections
(b) and (c) have been met shall be binding upon the
Department of Revenue.
(f) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Affiliate." A person who directly or indirectly:
(1) owns or controls another person;
(2) is owned or controlled by another person; or
(3) is under common ownership or control with another
person.
"Person." As defined under 1 Pa.C.S. § 1991 (relating to
definitions).
((f) added July 8, 2022, P.L.513, No.53)
(1912-D added July 13, 2016, P.L.526, No.84)
Section 1913-D. Extension for keystone opportunity expansion
zone.
(a) General rule.--The department may approve an application
to grant an extension for a parcel located within a keystone
opportunity zone, keystone opportunity expansion zone or
keystone opportunity improvement zone upon application by a
political subdivision.
(b) Application.--This section shall apply to a parcel
located within a keystone opportunity zone, keystone opportunity
expansion zone or keystone opportunity improvement zone that
expires in 2022, if the parcel is located within a county of
the third class with a population of at least 350,000 but less
than 410,000 based on the 2010 Federal decennial census.
(c) Extension period.--An extension granted under this
section shall be for a period of five years.
(1913-D added June 30, 2021, P.L.124, No.25)
PART III
ADDITIONAL DESIGNATIONS
(Pt. added June 28, 2019, P.L.50, No.13)
Section 1921-D. Additional keystone opportunity expansion
zones.
(a) Establishment.--In addition to any designations under
Part II or section 301.1 of the KOZ Act, the department may
designate one or more additional keystone opportunity expansion
zones within the following counties:
(1) A county that has a population of at least 500,000
but less than 525,000 based on the 2010 Federal decennial
census.
(2) A county that has a population of at least 140,000
but less than 145,000 based on the 2010 Federal decennial
census.
(3) A county that has a population of at least 80,000
but less than 85,000 based on the 2010 Federal decennial
census.
(b) Criteria.--Notwithstanding Part II and the KOZ Act, an
additional keystone opportunity expansion zone under this part:
(1) May be less than 10 acres in size.
(2) May not exceed, in the aggregate, a total of 375
acres.
(3) Shall be comprised of parcels that are deteriorated,
underutilized or unoccupied on the effective date of this
paragraph.
(c) Authorization.--
(1) Persons and businesses within an additional keystone
opportunity expansion zone authorized under subsection (a)
shall be entitled to all tax exemptions, deductions,
abatements or credits under this section and exemptions for
sales and use tax under section 511(a) or 705(a) of the KOZ
Act for a period of 10 years.
(2) Exemptions for sales and use taxes under sections
511 and 705 of the KOZ Act shall commence upon issuance of
a certificate under section 307 of the KOZ Act by the
department.
(d) Application.--
(1) In order to receive a designation under this
section, the department must receive an application from a
political subdivision or its designee no later than October
1, 2023. The application must contain the information
required under section 302(a)(1), (2)(i) and (ix), (5) and
(6) of the KOZ Act. ((1) amended July 8, 2022, P.L.513,
No.53)
(2) The department, in consultation with the Department
of Revenue, shall review the application and, if approved,
issue a certification of all tax exemptions, deductions,
abatements or credits under this act for the zone within
three months of receipt of the application.
(3) The department shall act on an application for a
designation under section 302(a)(1) of the KOZ Act by
December 31, 2023. ((3) amended July 8, 2022, P.L.513, No.53)
(4) The department may make designations under this
section on a rolling basis during the application period.
((d) amended June 30, 2021, P.L.124, No.25)
(e) Disapproval.--If the department does not approve of a
designation as an additional keystone opportunity expansion
zone of a parcel under subsection (d), the department shall
hold a public hearing in the municipality for which the
application was made within 30 days of the disapproval. The
Secretary of Community and Economic Development, or a designee,
shall provide the following information at the public hearing:
(1) The reason for the disapproval.
(2) The estimated number of new jobs that would have
been created in the parcel.
(3) The estimated dollar amount of new investment that
would have been made in the parcel.
(4) An alternative economic development plan developed
by the department that would, if implemented, provide an
equivalent number of jobs and amount of investment in the
municipality for which the application was made.
(f) Transparency.--The department shall conduct the public
hearing required under subsection (e) in accordance with
applicable provisions of 65 Pa.C.S. Ch. 7 (relating to open
meetings).
(1921-D added June 28, 2019, P.L.50, No.13)
ARTICLE XIX-E
MIXED-USE DEVELOPMENT TAX CREDIT
(Art. added July 13, 2016, P.L.526, No.84)
Section 1901-E. Scope of article.
This article establishes the Mixed-use Development Tax
Credit, the Mixed-use Development Program and the Mixed-use
Development Program Fund.
(1901-E added July 13, 2016, P.L.526, No.84)
Section 1902-E. Purpose.
The implementation and use of this program shall be for the
purposes of:
(1) Increasing affordable housing and commercial
corridor development opportunities in areas of this
Commonwealth where significant need and impact can be
identified.
(2) Maximizing the leveraging of private and public
resources.
(3) Fostering sustainable partnerships committed to
addressing community needs.
(4) Ensuring that resources are used to effectively and
efficiently meet community needs.
(5) Establishing a transparent application, allocation
and reporting process for all stakeholders.
(6) Providing financing to critical projects as part
of an overall strategy for revitalizing communities.
(1902-E added July 13, 2016, P.L.526, No.84)
Section 1903-E. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Agency." The Pennsylvania Housing Finance Agency.
"Department." The Department of Revenue of the Commonwealth.
"Eligible projects." A building or buildings to be
constructed or rehabilitated and any related real or personal
property:
(1) located in a commercial corridor where a
comprehensive neighborhood revitalization strategy is either
in place or being developed;
(2) sponsored by an entity with development experience
in this Commonwealth, with the capacity to complete the
project, and qualified under the criteria established in
guidelines developed by the agency;
(3) financed by a combination of public or private debt
financing, gap financing or owner equity sufficient to ensure
the financial feasibility of the project;
(4) has sufficiently demonstrated site control and the
ability to proceed;
(5) complies with any other eligibility requirements
the agency determines to be appropriate.
"Fund." The Mixed-use Development Program Fund established
under section 1906-E.
"Mixed-use development tax credits." Amounts made available
to qualified taxpayers to offset against qualified tax liability
as authorized and allocated under this article, as evidenced
by tax credit certificates and meeting all of the criteria set
forth in this article.
"Program." The Mixed-use Development Program established
under section 1904-E.
"Qualified tax liability." The tax liability imposed on a
taxpayer under Article III, IV, VI, VII, VIII, IX, XI or XV,
excluding any tax withheld by an employer under Article III.
"Qualified taxpayer." Any natural person, business firm,
corporation, business trust, limited liability company,
partnership, limited liability partnership, association or any
other form of legal business entity that:
(1) is subject to a tax imposed under Article III, IV,
VI, VII, VIII, IX, XI or XV, excluding any tax withheld by
an employer under Article III; and
(2) meets the criteria set forth in guidelines
established by the agency.
"Tax credit certificates." The document provided by the
agency to the qualified taxpayer evidencing the allocation of
mixed-use development tax credits under section 1907-E.
(1903-E added July 13, 2016, P.L.526, No.84)
Section 1904-E. Mixed-use Development Program.
(a) Establishment.--The Mixed-use Development Program is
established as a program of the agency.
(b) Administration.--The program shall be administered by
the agency in accordance with section 1905-E and with guidelines
adopted and promulgated pursuant to this article.
(1904-E added July 13, 2016, P.L.526, No.84)
Section 1905-E. Program administration.
(a) Authorization.--The agency is authorized to perform all
necessary and convenient actions to implement the program.
(b) Application.--Eligible project owners may apply to the
agency for program funding for an eligible project. The agency
shall promulgate guidelines for applying for program funding
under this section.
(c) Selection.--The agency shall review applications
submitted for program funds and, in accordance with the
procedures established in the agency guidelines, shall select
and shall conditionally commit program funds to the eligible
projects. Eligible project owners shall provide the agency with
all program requirements necessary for closing and funding of
the eligible project in a form and a timely manner as determined
by the agency.
(d) Disbursement.--Funds shall be disbursed to the eligible
project owner as determined by the agency.
(e) Monitoring and cost certification.--The agency shall
establish procedures for the monitoring of the use of funds and
for a cost certification process at the end of the construction
or rehabilitation process.
(f) Agency guidelines.--Within 180 days of the effective
date of this article, the agency shall perform the following:
(1) Adopt guidelines establishing the agency's
priorities.
(2) Establish a method for:
(i) applying and distributing program funds; and
(ii) the sale of the tax credits under section
1907-E(d).
(g) Notice and comment.--The agency shall publish proposed
guidelines, including a comment response document, in the
Pennsylvania Bulletin and on the agency's publicly accessible
Internet website for public comments no later than 45 days prior
to adoption. All comments submitted to the agency in writing
shall be public records and shall be incorporated into the
comment response document.
(h) Report.--Within 90 days following the close of the first
calendar year in which tax credits are made available, and by
July 1 of every year thereafter, the agency, in consultation
with the department, shall issue a report containing:
(1) A financial statement.
(2) An itemized list of the following:
(i) projects funded;
(ii) qualified taxpayers applying for tax credits;
and
(iii) tax credits certificates issued.
(3) A description of other expenditures in the preceding
calendar year.
(i) Submission of report.--The report under subsection (h)
shall constitute a public record and shall be published on the
agency's publicly accessible Internet website and submitted to
the following:
(1) The Governor.
(2) The Auditor General.
(3) The chairperson and minority chairperson of the
Urban Affairs and Housing Committee of the Senate.
(4) The chairperson and minority chairperson of the
Commerce Committee of the House of Representatives.
(1905-E added July 13, 2016, P.L.526, No.84)
Section 1906-E. Mixed-use Development Program Fund.
(a) Establishment.--The Mixed-use Development Program Fund
is established as a separate account within the agency for the
sole purpose of implementing the provisions of this article.
(b) Prohibition.--No other agency funds, money or interest
earnings shall be utilized for purposes of this article.
(c) Deposit.--All money allocated or appropriated to the
program shall be deposited into the fund and shall be
appropriated to the agency on a continuing basis to carry out
the provisions of this article.
(d) Funds.--The fund shall include money and proceeds
generated through the sale and allocation of mixed-use
development tax credits, capital investments, penalties, fees
and costs, interest and earnings pursuant to this article as
well as grants or donations from other sources and any funds
that may be appropriated for these purposes by the General
Assembly under this article. Interest and any other earnings
shall remain in the fund.
(e) Use of money.--The agency may use any available money
in the fund for administrative costs and for purposes consistent
with this article.
(1906-E added July 13, 2016, P.L.526, No.84)
Section 1907-E. Mixed-use development tax credits.
(a) Tax credit authority.--For purposes, and in accordance
with the provisions of this article, the agency may allocate
an amount not to exceed $4,500,000 in each fiscal year in
mixed-use development tax credits and is directed to deposit
proceeds and earnings derived from the sale into the fund. ((a)
amended June 30, 2021, P.L.124, No.25)
(b) Establishment and authorization.--The agency shall have
the authority to perform actions necessary or convenient to
establish protocols and procedures to sell and distribute
mixed-use development tax credits, directly or indirectly, to
achieve the purposes of this program.
(c) Limitations.--A qualified taxpayer may only purchase
mixed-use development tax credits from the agency and may only
apply such credits against the qualified taxpayer's qualified
tax liability in accordance with this article.
(d) Sale procedures.--Mixed-use development tax credits may
be offered by the agency through direct or negotiated sale to
qualified taxpayers.
(e) Procedures.--The agency shall adopt procedures and
application criteria that shall be designed to deliver the
mixed-use development tax credits in the manner deemed most
appropriate to maximize the highest yield to the Commonwealth,
to achieve a timely and equitable execution of the delivery of
mixed-use development tax credits and to achieve the goals and
purposes of the program. Procedures for the sale and application
criteria proposed by the agency shall be made available for
public comment in a manner consistent with section 1905-E(g).
(f) Application.--A qualified taxpayer seeking to purchase
a mixed-use development tax credit may apply to the agency in
the manner prescribed by the agency as set forth in the
guidelines adopted pursuant to this article. The agency may
require applicants to provide evidence of the taxpayer's
qualifications.
(1907-E added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 40(5) of Act 25 of 2021 provided
that the amendment of subsection (a) shall apply to fiscal
years beginning after June 30, 2021.
Section 1908-E. Payment for mixed-use development tax credits.
(a) Payment of capital.--Capital committed by a qualified
taxpayer shall be paid to the agency for deposit into the fund.
The agency may establish an installment payment schedule for
payments to be made by the qualified taxpayer in accordance
with guidelines established by the agency.
(b) Issuance of tax credit certificates.--Beginning July
1, 2017, the agency shall issue to each qualified taxpayer a
tax credit certificate upon receipt of payment of capital.
(c) Certificate form.--The agency shall issue tax credit
certificates to qualified taxpayers in a form determined by the
agency in consultation with the department.
(d) Contents.--The tax credit certificate shall contain all
of the following:
(1) The total amount of tax credits that a qualified
taxpayer may claim.
(2) The amount of capital that the qualified taxpayer
has contributed or agreed to contribute in return for the
issuance of the tax credit certificate.
(3) The possible penalties or other remedies for
noncompliance.
(4) The requirements for transferring the tax credits
to other qualified taxpayers.
(5) Limitations and procedures for carryover of the tax
credit.
(6) Reporting requirements.
(7) Any other requirements or content the agency, in
consultation with the department, considers appropriate.
(1908-E added July 13, 2016, P.L.526, No.84)
Section 1909-E. Failure to make contribution of capital and
reallocation.
(a) Prohibition.--A tax credit certificate under section
1908-E may not be issued to a qualified taxpayer who fails to
comply with agency guidelines.
(b) Penalty.--After the agency issues a tax credit
certificate, a qualified taxpayer who fails to contribute
capital in accordance with the agreed upon schedule of payments,
or other conditions as determined by the agency, shall be
subject to a penalty equal to 10% of the amount of capital that
remains unpaid and assessment of costs and fees by the agency.
The penalty shall be paid to the agency within 30 days after
demand. A qualified taxpayer who fails to make a contribution
within the specified time period may be subject to Commonwealth
debarment, forfeiture or liquidation of any pledged collateral
or to such other actions as deemed appropriate by the agency.
All penalties, fees and costs shall be deposited into the fund
to be used for the program.
(c) Reallocation.--The agency may, under guidelines
promulgated by the agency, recapture and redeploy any defaulted
capital. The agency shall make the credit available to other
qualified taxpayers with minimal delay and cost to the program.
(d) Avoidance of penalty.--The agency may allow a qualified
taxpayer that fails to make a contribution of capital within
the time specified to avoid a penalty by transferring the
allocation of tax credits to another qualified taxpayer within
30 days after the due date of the defaulted installment. Any
transferee of an allocation of tax credits of a defaulting
qualified taxpayer under this subsection shall be subject to
all requirements of the agency and must agree to make the
required contribution of capital within 30 days after the date
of the transfer.
(1909-E added July 13, 2016, P.L.526, No.84)
Section 1910-E. Claiming the credit.
(a) General rule.--Upon presenting a tax credit certificate
issued and verified by the agency to the department, the
qualified taxpayer may claim a tax credit against the qualified
tax liability of the qualified taxpayer.
(b) Time period.--Presentation must be made no later than
the last day of the second calendar month of the calendar year
in which the credit is available. No tax credit will be provided
unless the qualified taxpayer provides presentation to both the
agency and to the department.
(1910-E added July 13, 2016, P.L.526, No.84)
Section 1911-E. Carryover, carry back and assignment of credit.
(a) General rule.--The agency, in consultation with the
department, shall establish guidelines that include procedures
for the carryover, assignment and transfer of credits and
reports on utilization.
(b) Carryover.--If a qualified taxpayer cannot use the
entire amount of the tax credit for the taxable year in which
the tax credit is first approved, the excess credit may be
carried over to subsequent taxable years and used as a credit
against the qualified tax liability of the qualified taxpayer
for those taxable years. Each time the tax credit is carried
over to a succeeding taxable year, it shall be reduced by the
amount that was used as a credit during the immediately
preceding taxable year. In no event shall tax credits provided
by this article be carried over and applied to succeeding
taxable years more than seven taxable years following the first
taxable year for which the qualified taxpayer was entitled to
claim the credit.
(c) Application.--A tax credit received by the department
in a taxable year shall first be applied against the qualified
taxpayer's qualified tax liability for the current taxable year
as of the date on which the credit was issued before any carried
over tax credits can be applied against any qualified tax
liability.
(d) No carry back or refund.--A qualified taxpayer may not
carry back or obtain a refund of all or any portion of an unused
tax credit granted to the qualified taxpayer under this article.
(e) Sale or assignment.--A qualified taxpayer, upon
application and approval by the agency and in conformance with
the agency's guidelines, may sell or assign, in whole or in
part, a tax credit granted to the qualified taxpayer under this
article.
(f) Purchasers and assignees.--The purchaser or assignee
of all or a portion of a tax credit obtained under subsection
(e) must be a qualified taxpayer and must immediately claim the
credit in the taxable year in which the purchase or assignment
is made. The purchaser or assignee may not carry over, carry
back or obtain a refund or otherwise sell or assign the tax
credit. The purchaser or assignee shall notify the agency of
the utilization of the tax credit in compliance with procedures
specified by the agency.
(g) Pass-through entity distributions.--The following shall
apply:
(1) A pass-through entity may elect, in writing,
according to procedures established by the agency, to
transfer all or a portion of unused tax credits to
shareholders, members or partners in proportion to the share
of the entity's distributive income to which the shareholder,
member or partner is entitled.
(2) A pass-through entity and a shareholder, member or
partner of a pass-through entity shall not claim the credit
under paragraph (1) for the same qualified expenditures.
(3) A shareholder, member or partner of a pass-through
entity to whom a credit is transferred under paragraph (1)
must claim the credit in the taxable year in which the
transfer is made. The shareholder, member or partner may not
carry over, carry back, obtain a refund of or sell or assign
the credit.
(1911-E added July 13, 2016, P.L.526, No.84)
ARTICLE XIX-F
KEYSTONE INNOVATION ZONES
(Art. added July 13, 2016, P.L.526, No.84)
Section 1901-F. Scope of article.
This article relates to the Keystone Innovation Zone Program.
(1901-F added July 13, 2016, P.L.526, No.84)
Section 1902-F. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Institution of higher education." A public or private
institution within this Commonwealth authorized by the
Department of Education to grant an associate degree or higher
degree. The term includes a branch or satellite campus of the
institution.
"Keystone innovation zone." A clearly defined contiguous
geographic area comprised of portions of one or more political
subdivisions.
"Keystone innovation zone company." A for-profit business
entity which is all of the following:
(1) Located within a keystone innovation zone.
(2) Has been in operation for less than eight years.
(3) Falls within one of the targeted industry segments
adopted by the keystone innovation zone partnership in its
strategic plan.
"Keystone innovation zone coordinator." A nonprofit
organization which is all of the following:
(1) Not an institution of higher education.
(2) Chosen by a keystone innovation zone partnership
and agreed to by the department to administer the activities
of a keystone innovation zone.
"Keystone innovation zone partnership." Any association or
group which is all of the following:
(1) Comprised of at least one institution of higher
education and a combination of private businesses, business
support organizations, commercial lending institutions,
venture capital companies, angel investor networks or
foundations.
(2) Formed for the creation and administration of a
keystone innovation zone.
"KIZ." A keystone innovation zone.
"KIZ company." A keystone innovation zone company.
"KIZ coordinator." A keystone innovation zone coordinator.
"KIZ partnership." A keystone innovation zone partnership.
(1902-F added July 13, 2016, P.L.526, No.84)
Section 1903-F. Program.
(a) Establishment.--There is established a program in the
department to be known as the Keystone Innovation Zone Program.
The program shall provide economic assistance to KIZ companies
for the purpose of improving and encouraging research and
development efforts and technology commercialization efforts
resulting in employment growth and revitalization of
communities.
(b) Application.--A keystone innovation zone partnership
may apply to the department to establish a KIZ. All applications
must be received by July 1, 2007, be on the form required by
the department and include and demonstrate all of the following:
(1) The KIZ coordinator's name and address.
(2) A statement that the applicant is a KIZ partnership
and the identity of its members.
(3) The geographic boundaries of the proposed KIZ.
(4) A copy of a written strategic plan adopted by the
KIZ partnership describing the targeted industry segments
which the KIZ will foster.
(5) Any other information required by the department.
(c) Review and designation.--The department shall review
the application. Upon being satisfied that all requirements
have been met, the department may approve the application. If
the department approves the application, the department shall
designate the identified area as a KIZ and accept the
organization designated as the KIZ coordinator for the zone.
(1903-F added July 13, 2016, P.L.526, No.84)
Section 1904-F. Assistance.
(a) Existing programs.--A KIZ company shall be eligible and
may be given priority consideration in applying for assistance
under any of the following:
(1) 12 Pa.C.S. (relating to commerce and trade).
(2) The act of May 17, 1956 (1955 P.L.1609, No.537),
known as the Pennsylvania Industrial Development Authority
Act.
(3) The act of August 23, 1967 (P.L.251, No.102), known
as the Economic Development Financing Law.
(4) The act of June 22, 2001 (P.L.569, No.38), known
as The Ben Franklin Technology Development Authority Act.
(5) The act of June 29, 1996 (P.L.434, No.67), known
as the Job Enhancement Act.
(6) The act of June 26, 2001 (P.L.755, No.77), known
as the Tobacco Settlement Act.
(7) Any other act enacted after the effective date of
this subsection which has economic development assistance
as its primary objective.
(b) Loans of the Pennsylvania Industrial Development
Authority.--The board of the Pennsylvania Industrial Development
Authority may provide loans to entities for land and structures,
including structures providing space for research and
development activities, in which, when completed, at least one
KIZ company will be located. If the structure is intended to
accommodate more than one KIZ company, at least 80% of the space
in the structure must be leased to KIZ companies. The board may
establish the eligibility criteria, the interest rate, the loan
term and the participation rate to be applied to these projects.
(c) KIZ operation grants.--
(1) The Ben Franklin Technology Development Authority
may provide an annual KIZ operation grant of up to $250,000
to a KIZ coordinator for administrative costs incurred in
establishing and implementing the KIZ.
(2) In subsequent years, a grant shall be reduced in
accordance with all of the following:
(i) By 25% of the initial amount of the grant in
the second year.
(ii) By 50% of the initial amount of the grant in
the third year.
(iii) By 75% of the initial amount of the grant in
the fourth year.
(3) The Ben Franklin Technology Development Authority
shall develop guidelines for the application, receipt and
use of operation grant funds.
(1904-F added July 13, 2016, P.L.526, No.84)
Section 1905-F. Keystone innovation grants.
(a) Grants.--The department may provide keystone innovation
grants to institutions of higher education to facilitate
technology transfer, including patent filings, technology
licensing, intellectual property and royalty agreements and
other designated resource needs. The application must be on the
form required by the department and must include or demonstrate
all of the following:
(1) The applicant's name and address.
(2) The KIZ partnership of which the applicant is a
member.
(3) A written proposal. The proposal must state all of
the following:
(i) The technology transfer activities to be
undertaken. The activities may include the addition of
personnel who are directly related in transferring
technology to the local businesses.
(ii) The quantifiable goals and objectives to be
achieved.
(iii) How the activities, goals and objectives will
integrate with the strategic plan adopted for the KIZ.
(iv) The role of the applicant and other members
of the KIZ partnership.
(4) Identification of a dollar-to-dollar match, which
may be in kind if the department determines that the proposed
match can be readily identified and tracked and which is
directly related to the stated goals and objectives.
(5) Any other information required by the department.
(b) Approval.--The department shall review the application
and, upon being satisfied that all requirements have been met,
the department may approve the application. Prior to releasing
grant funds, the department shall enter into a contract with
the applicant that contains all of the following:
(1) The grant may not exceed $250,000 per year.
(2) Grants under this program shall not exceed $750,000
in the aggregate per applicant under this program.
(3) The aggregate amount of grants awarded to all
applicants under this subsection shall not exceed $10,000,000
under this program.
(c) Penalty.--
(1) Except as provided in paragraph (2), the department
shall impose a penalty upon a recipient of a grant for any
of the following:
(i) If the recipient fails to use the grant for the
technology transfer activities specified in the
application.
(ii) If the recipient's membership in the KIZ
partnership is terminated voluntarily or involuntarily.
(2) The department may waive the penalty required by
paragraph (1) if the department determines that the failure
was due to circumstances outside the control of the grant
recipient.
(3) A penalty imposed under paragraph (1) shall be equal
to the full amount of the grant received plus an additional
amount of up to 10% of the amount of the grant received. The
penalty shall be payable in one lump sum or in installments,
with or without interest, as the department deems
appropriate.
(1905-F added July 13, 2016, P.L.526, No.84)
Section 1906-F. Keystone innovation zone tax credits.
(a) Tax credit.--A KIZ company may claim a tax credit equal
to 50% of the increase in the KIZ company's gross revenues in
the immediately preceding taxable year attributable to
activities in the KIZ over the KIZ company's gross revenues in
the second preceding taxable year attributable to its activities
in the KIZ. A tax credit for a KIZ company shall not exceed
$100,000 annually. For the purposes of the keystone innovation
zone tax credit, the term "gross revenues" may include grants
received by the KIZ company from any source whatsoever.
(b) Application for tax credit.--A KIZ company may file an
application for a tax credit with the department. An application
under this subsection must be filed by December 1 for the prior
tax year. The application must be submitted on a form required
by the department and must be accompanied by a certification
from the KIZ coordinator that the KIZ company falls within a
targeted industry segment identified in the strategic plan
adopted by the KIZ partnership, and meets any other requirements
specified by the department. The department shall review the
application and, upon being satisfied that all requirements
have been met, the department shall issue a tax credit
certificate to the KIZ company. All certificates shall be
awarded by May 1 of each year following the calendar year of
application. ((b) amended June 30, 2021, P.L.124, No.25)
(c) Limitation on tax credits.--
(1) The total amount of tax credits approved by the
department shall not exceed $15,000,000 for any one taxable
year.
(2) If $15,000,000 of the tax credits are not approved
for any one taxable year, the unused portion shall not be
available for use in future taxable years.
(3) If the total amount of tax credits applied for by
all taxpayers for any one taxable year exceeds $15,000,000,
then the tax credit to be received by each applicant shall
be determined as follows:
(i) Divide:
(A) the eligible tax credit applied for by the
applicant; by
(B) the total of all eligible tax credits
applied for by all applicants.
(ii) Multiply:
(A) the quotient under subparagraph (i); by
(B) $15,000,000.
(d) Application of tax credit and election.--A tax credit
approved under this section must be first applied against the
KIZ company's tax liability under Article III, IV or VI, for
the taxable year in which the taxpayer applied for the tax
credit. If the amount of tax liability owed by the KIZ company
is less than the amount of the tax credit, the KIZ company may
elect to carry forward the amount of the remaining tax credit
for a period not to exceed four additional taxable years and
to apply the credit against tax liability incurred during those
tax years; or the KIZ company may elect to sell or assign a
portion of the tax credit in accordance with the provisions of
subsection (f). A KIZ company may not carry back or obtain a
refund of an unused keystone innovation zone tax credit. ((d)
amended June 30, 2021, P.L.124, No.25)
(e) Pennsylvania S corporation shareholder pass-through.--
(1) If a Pennsylvania S corporation does not have an
eligible tax liability against which the tax credit may be
applied, a shareholder of the Pennsylvania S corporation is
entitled to a tax credit equal to the product of:
(i) the tax credit determined for the Pennsylvania
S corporation for the taxable year; and
(ii) the percentage of the Pennsylvania S
corporation's distributive income to which the
shareholder is entitled.
(2) The credit provided under paragraph (1) is in
addition to any tax credit to which a shareholder of the
Pennsylvania S corporation is otherwise entitled. However,
a Pennsylvania S corporation and a shareholder of the
Pennsylvania S corporation may not claim a tax credit under
this section for the same activity.
(f) Sale or assignment of tax credit.--
(1) Upon application to and approval by the department,
a KIZ company which has been awarded a tax credit may sell
or assign, in whole or in part, the tax credit granted to
the KIZ company. The application must be on the form required
by the department and must include or demonstrate all of the
following:
(i) The applicant's name and address.
(ii) A copy of the tax credit certificate previously
issued by the department.
(iii) A statement as to whether any part of the tax
credit has been applied to tax liability of the applicant
and the amount so applied.
(iv) Any other information required by the
department.
(2) The department shall review the application and,
upon being satisfied that all requirements have been met,
the department may approve the application and shall notify
the Department of Revenue.
(g) Use of sold or assigned tax credit.--The purchaser or
assignee of all or a portion of a keystone innovation zone tax
credit under this section shall claim the credit in the taxable
year in which the purchase or assignment is made. The purchaser
or assignee of a tax credit may use the tax credit against any
tax liability of the purchaser or assignee under Article III,
IV, VI, VII, VIII, IX or XV. The amount of the tax credit used
may not exceed 75% of the purchaser's or assignee's tax
liability for the taxable year. The purchaser or assignee may
not carry over, carry back, obtain a refund of or assign the
keystone innovation zone tax credit. The purchaser or assignee
shall notify the department and the Department of Revenue of
the seller or assignor of the keystone innovation zone tax
credit in compliance with procedures specified by the
department.
(1906-F added July 13, 2016, P.L.526, No.84)
Section 1907-F. Guidelines.
Before any KIZ is approved by the department, the department
shall approve written guidelines for the program and shall
provide a copy of the guidelines to the Majority Leader and
Minority Leader of the Senate, the Majority Leader and Minority
Leader of the House of Representatives, the chairperson and
minority chairperson of the Appropriations Committee of the
Senate and the chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(1907-F added July 13, 2016, P.L.526, No.84)
Section 1908-F. Annual report.
The department shall submit an annual report to the Secretary
of the Senate and the Chief Clerk of the House of
Representatives indicating the effectiveness of the keystone
innovation zone tax credit provided by this article by October
1 of each year following the calendar year of application.
Notwithstanding any law providing for the confidentiality of
tax records, the report shall include the names of all taxpayers
awarded the credits, all taxpayers utilizing the credits, the
amount of credits approved and utilized by each taxpayer and
the locations of the KIZ companies awarded the credits. The
report shall be a public document.
(1908-F amended June 30, 2021, P.L.124, No.25)
ARTICLE XIX-G
PENNSYLVANIA HOUSING TAX CREDIT
(Art. added Nov. 3, 2020, P.L.1704, No.107)
Section 1901-G. Scope of article.
This article establishes the Pennsylvania Housing Tax Credit.
(1901-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1902-G. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Agency." The Pennsylvania Housing Finance Agency.
"Credit period." A five-year period that begins with the
taxable year in which a taxpayer is awarded a tax credit
certificate in accordance with section 1903-G.
"Department." The Department of Revenue of the Commonwealth.
"Federal housing tax credit." The Federal tax credit created
under section 42 of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 42).
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S Corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified allocation plan." The agency's plan for
allocation of Federal housing tax credits developed under
section 42(m)(1) of the Internal Revenue Code of 1986.
"Qualified low-income housing project." The term shall have
the same meaning as provided under section 42(g)(1) of the
Internal Revenue Code of 1986.
"Qualified tax liability." The tax liability imposed on a
taxpayer under Article III, IV, VII, VIII, IX, XI or XV,
excluding any tax withheld by an employer under Article III.
"Tax credit." The Pennsylvania Housing Tax Credit
established under this article.
"Taxable year." The term shall have the same meaning as
provided under section 441(b) of the Internal Revenue Code of
1986.
"Taxpayer." An individual, business firm, corporation,
business trust, limited liability company, partnership, limited
liability partnership, association or any other form of legal
business entity.
(1902-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1903-G. Pennsylvania Housing Tax Credit.
(a) Establishment.--The Pennsylvania Housing Tax Credit is
established to encourage the development of qualified low-income
housing projects in this Commonwealth. The agency and department
shall administer the tax credit as provided in this article.
(b) Availability.--
(1) Beginning in fiscal year 2021-2022 and each fiscal
year thereafter, the agency may award a total of $10,000,000
in tax credits per fiscal year in accordance with this
article.
(2) In addition to the amount allocated under paragraph
(1), the agency may award any unallocated tax credits from
the preceding fiscal year.
((b) amended June 30, 2021, P.L.124, No.25)
(c) Maximum amount.--No taxpayer may be awarded a tax credit
for an amount that exceeds $1,500,000 for a qualified low-income
housing project. ((c) amended June 30, 2021, P.L.124, No.25)
(c.1) Notice.--((c.1) deleted by amendment June 30, 2021,
P.L.124, No.25)
(d) Application.--
(1) ((1) Deleted by amendment).
(1.1) A taxpayer may apply to the agency for a tax
credit under this section by submitting an application on a
form required by the agency.
(2) The agency may require such information on the
application as necessary to verify compliance with this act.
(3) Except as otherwise provided by law, before the tax
credit may be awarded, the department must find that the
taxpayer has filed all required State tax reports and returns
for all applicable tax years and paid any balance of State
tax due as determined at settlement or assessment by the
department, unless the tax due is currently under appeal.
((d) amended June 30, 2021, P.L.124, No.25)
(e) Review of application by agency.--
(1) The agency shall review applications submitted for
a tax credit and, in accordance with the procedures
established by the agency under section 1909-G, conditionally
reserve tax credits for a qualified low-income housing
project.
(2) The agency shall conditionally reserve tax credits
in a manner that the agency, at the time of conditional
reservation, reasonably believes will result in at least 10%
of the tax credits being used to provide housing units
targeting households with incomes at or below 30% of the
area median income.
(3) The agency shall determine the amount of tax credits
conditionally reserved to a taxpayer based on the merits of
the qualified low-income housing project.
(f) Tax credit certificates.--Upon notification that a
qualified low-income housing project receiving a conditional
reservation of tax credits has been completed, the agency shall
determine compliance with this act. Following verification of
compliance, the agency shall issue the tax credit certificates
in an amount not to exceed 20% of the conditional reservation
for each taxable year in the tax credit period.
(1903-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1904-G. Use of tax credits.
(a) Claiming the credit.--Upon presentation of a tax credit
certificate to the department, the taxpayer may claim a tax
credit against the qualified tax liability.
(b) Amount.--The tax credit may be claimed at an amount not
to exceed 50% of the taxpayer's qualified tax liability for a
single taxable year.
(1904-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1905-G. Carryover, carryback and refund.
(a) General rule.--A taxpayer shall be entitled to carry
forward a tax credit for a period not to exceed five taxable
years from the taxable year in which the tax credit was awarded.
Each time the tax credit is carried over to a succeeding taxable
year, the tax credit shall be reduced by the amount that was
used as a credit during the immediately preceding taxable year.
(b) Application.--A tax credit certificate received by the
department in a taxable year shall first be applied against the
taxpayer's qualified tax liability for the current taxable year
as of the date on which the credit was issued before the tax
credit can be applied against a qualified tax liability under
subsection (a).
(c) No carryback or refund.--A taxpayer may not carry back
or obtain a refund of all or any portion of an unused tax credit
granted to the taxpayer under this article.
(1905-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1906-G. Sale or assignment.
(a) Application.--A taxpayer, upon application to and
approval by the department, may sell or assign, in whole or in
part, a tax credit granted to the taxpayer under this article.
(b) Compliance.--Before an application under subsection (a)
is approved, the department must find that the applicant has
filed all required State tax reports and returns for all
applicable taxable years and paid any balance of State tax due
as determined at settlement, assessment or determination by the
department.
(1906-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1907-G. Pass-through entity.
(a) General rule.--If a pass-through entity has any unused
tax credit under section 1904-G, the taxpayer may elect in
writing, according to procedures established by the department,
to transfer all or a portion of the tax credit to shareholders,
members or partners in proportion to the share of the entity's
distributive income to which the shareholder, member or partner
is entitled.
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity may not claim the
credit under subsection (a) for the same qualified project.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a credit is transferred under
subsection (a) shall immediately claim the credit in the taxable
year in which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund of
or sell or assign the tax credit.
(1907-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1908-G. Purchasers and assignees.
The purchaser or assignee of all or a portion of the tax
credit under section 1906-G shall immediately claim the tax
credit in the taxable year in which the purchase or assignment
is made, subject to the following:
(1) If a purchaser or assignee of all or a portion of
the tax credit obtained under section 1906-G cannot use the
entire amount of the tax credit for the taxable year in which
the tax credit was purchased or assigned, the excess may be
carried over to succeeding taxable years and used as a credit
against the qualified tax liability of the purchaser or
assignee for those taxable years.
(2) Each time a tax credit is carried over to a
succeeding taxable year, the tax credit shall be reduced by
the amount that was used as a credit during the immediately
preceding taxable year.
(3) The tax credit may be carried over and applied to
succeeding taxable years for the remainder of the
carryforward period from the original tax credit certificate.
(4) The purchaser or assignee may not carry back the
credit or obtain a refund.
(1908-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1909-G. Administration.
(a) Agency guidelines and procedures.--The agency shall
issue guidelines and procedures for the administration of the
tax credit in conjunction with the qualified allocation plan
and when possible, administer the tax credit using the same
guidelines, procedures and priorities that the agency uses to
administer the Federal housing tax credit.
(b) Recapture.--The department, in consultation with the
agency, shall establish guidelines that include procedures for
recapture of tax credits during the credit period that are
similar in structure and effect to events of noncompliance under
section 42 of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 42). The guidelines shall provide for the
mechanism and formula that the tax credit may be recaptured
over the remaining credit period.
(c) Fraud or misrepresentation.--If a taxpayer engages in
fraud or intentional misrepresentation of information required
to be provided to the agency or the department under this
article or the agency's guidelines, the department may:
(1) Recapture all or a portion of the tax credit.
(2) Deem ineligible the applicant or taxpayer from
future tax credits.
(3) Impose other penalties as specified in the agency's
guidelines.
(d) Fee.--The agency may charge a taxpayer applying for a
tax credit a reasonable fee not to exceed 5% of the tax credit
awarded for the administrative expenses of the agency for
processing applications under this article.
(1909-G added Nov. 3, 2020, P.L.1074, No.107)
Section 1910-G. Annual report.
(a) Duty of agency.--On or before October 1, 2022, and each
October 1 thereafter, the agency shall submit a report on the
tax credit to the chairperson and minority chairperson of the
Appropriations Committee of the Senate, the chairperson and
minority chairperson of the Appropriations Committee of the
House of Representatives, the chairperson and minority
chairperson of the Urban Affairs and Housing Committee of the
Senate and the chairperson and minority chairperson of the Urban
Affairs Committee of the House of Representatives. The report
shall include the following information for the prior fiscal
year:
(1) The number and amount of tax credits awarded.
(2) The taxpayers that were awarded tax credits.
(3) The amount of tax credits issued to each taxpayer.
((a) amended June 30, 2021, P.L.124, No.25)
(b) Public posting.--The agency shall make the report
identified in subsection (a) available on the agency's publicly
accessible Internet website.
(1910-G added Nov. 3, 2020, P.L.1074, No.107)
ARTICLE XIX-H
AIRPORT LAND DEVELOPMENT ZONES
(Art. added July 8, 2022, P.L.513, No.53)
Compiler's Note: Section 24(4)(xiv) of Act 53 of 2022
provided that the addition of Article XIX-H shall apply
to fiscal years beginning after June 30, 2022.
Section 1901-H. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Affiliate." As follows:
(1) an entity which is part of the same affiliated group
as defined in section 1504(a) of the Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1504(a)), as an
airport land development zone employer; or
(2) an entity that would be part of the same affiliated
group except that the entity or the airport land development
zone employer is not a corporation.
"Airport." A commercial service airport or a noncommercial
service airport.
"Airport land development zone." As follows:
(1) An area of no more than 300 acres, consisting of
parcels of real property that are owned by a commercial
service airport or leased under paragraph (3), with, as of
December 31, 2021, no permanent vertical structures affixed
or buildings with businesses located in the structures. The
total acres for all commercial service airports in the
program may not exceed 2,000 acres.
(2) An area of no more than 50 acres, consisting of
parcels of real property that are owned by a noncommercial
service airport or leased under paragraph (3), with, as of
December 31, 2021, no permanent vertical structures affixed
or vacant buildings with businesses located in the
structures. The total acres for all noncommercial service
airports in the program may not exceed 2,000 acres.
(3) A parcel of real property in the zone may be leased
or ground leased to a third party while continuing to be
owned by a commercial service airport or a noncommercial
service airport for the duration of the program.
"Airport land development zone employer." A person or entity
subject to the taxes imposed under Article III, IV, VII, VIII
or XV who employs at least one employee in an airport land
development zone. The term shall include a pass-through entity.
The term shall not include an employer engaged in construction
improvements in an airport land development zone.
"Airport land development zone plan." The document submitted
to the department that details the parcels included in the
airport land development zone by an airport. The plan shall
include the following:
(1) A legal description, identification number and
acreage of each parcel included in the zone.
(2) Certification by an airport that any building in
the zone was vacant and any parcel in the zone had no
permanent vertical structures affixed to the parcel on or
after December 31, 2021.
(3) A map and diagram of each parcel included in the
plan.
"Commercial service airport." A publicly owned airport with
at least 2,500 annual enplanements and scheduled air carrier
service. The term includes a public use airport in a county of
the fourth class with a population of between 140,000 and
148,000 people under the 2020 decennial census.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Employee." An individual who meets all of the following:
(1) Is employed in this Commonwealth by an airport land
development zone employer or its predecessor after the
effective date of this section.
(2) Is employed for at least 35 hours per week by an
airport land development zone employer.
(3) Spends at least 90% of the individual's working
time for the airport land development zone employer at the
airport land development zone location.
"Full-time equivalent employee." As follows:
(1) The whole number of employees, rounded down, that
equals the sum of:
(i) the total paid hours, including paid time off
and family leave under the Family and Medical Leave Act
of 1993 (Public Law 103-3, 29 U.S.C. § 2601 et seq.),
of all of an airport land development zone employer's
employees classified as nonexempt during the airport
land development zone employer's tax year divided by
2,000; and
(ii) a total number arrived at by adding, for each
airport land development zone employer's employees
classified as exempt scheduled to work at least 35 hours
per week, the fraction equal to the portion of the year
the exempt employee was paid by the airport land
development zone employer. Whether an employee shall be
classified as exempt or nonexempt shall be determined
under the Fair Labor Standards Act of 1938 (52 Stat.
1060, 29 U.S.C. § 201 et seq.).
(2) The calculation under paragraph (1) shall exclude
employees previously employed by an affiliate and employees
previously employed by the airport land development zone
employer outside of an airport land development zone.
"Noncommercial service airport." An airport that is publicly
or privately owned, open to the public, with less than 2,500
annual enplanements and without scheduled air carrier service.
"Pass-through entity." A partnership as defined in section
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1).
"Plan." An airport land development zone plan.
"Program." The Airport Land Development Zone Program
established under section 1902-H.
"Qualified tax liability." A tax owed by an airport land
development zone employer attributable to a business activity
conducted within an airport land development zone for a tax
year under Article III, IV, VII, VIII or XV, excluding any tax
withheld by an employer under Article III.
"Zone." An airport land development zone.
(1901-H added July 8, 2022, P.L.513, No.53)
Section 1902-H. Airport Land Development Zone Program.
The Airport Land Development Zone Program is established to
encourage and promote the creation of new jobs on land and
buildings owned by airports within this Commonwealth, while
accelerating economic activity at and around airports on
undeveloped land or vacant buildings owned by airports that can
provide new revenue sources for airports.
(1902-H added July 8, 2022, P.L.513, No.53)
Section 1903-H. Application and plan.
(a) Application.--Within four months of the effective date
of this section, the department shall publish guidelines and
an application for airports.
(b) Filing plan.--The department shall begin accepting plans
from each airport 30 days after the department publishes the
guidelines and application.
(c) Approval of plan.--Upon receipt of a plan submitted by
an airport under subsection (b), the department shall have 60
calendar days to review the plan for appropriateness and
conformity. If the proposed plan conforms with this article,
the department shall approve the plan. If the proposed plan
does not conform, the department shall notify the applicant in
writing. The airport may revise the plan to make the plan
conform with this article. Upon receipt of the revised plan,
the department shall have 60 days to approve the revised plan.
(d) Acreage limit.--In the event the area covered by the
aggregate applications received by the department would cause
the area covered under the program to exceed the 2,000-acre
zone limit, applications shall be approved by the department
in the order received.
(e) Notification.--When a plan submitted by an airport under
subsection (b) is approved, the department shall notify the
Department of Revenue of parcels included in the zone within
60 days of approval.
(f) Change.--An airport may change the approved plan by
subdividing a parcel, changing the legal description of a
parcel, moving the zone designation to another qualifying parcel
owned by an airport or making physical changes to a vacant
building in the zone by adding to the building's size or
reducing the building's size after the plan has been approved.
If an airport chooses to make the changes, the airport shall
notify the department and the Department of Revenue of the
changes. The department shall issue a document confirming the
changes to the airport's zone.
(1903-H added July 8, 2022, P.L.513, No.53)
Section 1904-H. Airport land development zone tax credit.
(a) Tax credit.--An airport land development zone employer
may claim a tax credit against a qualified tax liability as
provided under this article.
(b) Process.--
(1) An airport land development zone employer shall
notify the department and the Department of Revenue of the
airport land development zone employer's qualification for
a tax credit under this section by February 15 for tax
credits earned during a taxable year ending in the prior
calendar year.
(2) The notification under paragraph (1) shall contain
the following:
(i) The name, address and taxpayer identification
number of the airport land development zone employer.
(ii) Verification that the airport land development
zone employer is an airport land development zone
employer located in an airport land development zone.
(iii) A file prepared for the Department of Revenue
containing the names, addresses and Social Security
numbers of each employee for which the credit is claimed.
(iv) A file prepared for the Department of Revenue
containing verification that each employee identified
in subparagraph (iii) spent at least 90% of the
employee's working time for the airport land development
zone employer at the employer's airport land development
zone location.
(v) Any other information required by the department
or the Department of Revenue.
(3) To qualify for the credit, the Department of Revenue
must certify that the airport land development zone employer
is current with all tax liabilities.
(4) By May 15 of each year, the department shall send
the airport land development zone employer who submitted the
notification a certificate of the airport land development
zone employer's qualification for the credit. The airport
land development zone employer shall present the certificate
to the Department of Revenue when filing the airport land
development zone employer's return claiming the credit.
(c) Amount.--The amount of the tax credit an airport land
development zone employer may earn in any tax year shall be
equal to $2,100 for each full-time equivalent employee in excess
of the number of full-time equivalent employees employed by the
airport land development zone employer prior to January 1, 2021.
(d) Application of tax credits.--An airport land development
zone employer must first use the airport land development zone
employer's airport land development zone tax credit against the
airport land development zone employer's qualified tax
liability.
(d.1) Sale or assignment of tax credit.--
(1) If the airport land development zone employer is
entitled to a credit in any year that exceeds the airport
land development zone employer's qualified tax liability for
that year, upon application to and approval by the
department, an airport land development zone employer that
has been awarded a tax credit may sell or assign, in whole
or in part, the tax credit granted to the airport land
development zone employer. The application must be on the
form required by the department and must include or
demonstrate all of the following:
(i) The applicant's name and address.
(ii) A copy of the tax credit certificate previously
issued by the department.
(iii) A statement as to whether any part of the tax
credit has been applied to tax liability of the applicant
and the amount so applied.
(iv) Any other information required by the
department.
(v) Before an application for sale or assignment
is approved, the Department of Revenue must find that
the applicant has filed all required State tax reports
and returns for all applicable taxable years and paid
any balance of State tax due as determined at settlement,
assessment or determination by the Department of Revenue.
(2) The department shall review the application and,
if all requirements have been met, approve the application
and notify the Department of Revenue.
(3) The purchaser or assignee of all or a portion of
an airport land development zone tax credit under this
section shall claim the credit in the taxable year in which
the purchase or assignment is made. The purchaser or assignee
of a tax credit may use the tax credit against any tax
liability of the purchaser or assignee under Article III,
IV, VII, VIII or XV, excluding any tax withheld by an
employer under Article III. The amount of the tax credit
used may not exceed 75% of the purchaser's or assignee's tax
liability for the taxable year. The purchaser or assignee
may not carry over, carry back, obtain a refund of or assign
the airport land development zone credit. The purchaser or
assignee shall notify the department and the Department of
Revenue of the seller or assignor of the airport land
development zone tax credit in compliance with procedures
specified by the department.
(e) Use and carryforward.--
(1) An airport land development zone employer may earn
the tax credit allowed under this article in any tax year
beginning in 2022 and for a period of up to 10 tax years
during the 20-year period beginning July 1, 2022, and ending
June 30, 2041.
(2) An airport land development zone employer may carry
forward for up to 10 years a tax credit earned under this
article:
(i) which the airport land development zone employer
is unable to use; or
(ii) which the airport land development zone
employer does not sell or assign.
(3) Tax credits carried forward under paragraph (2)
shall be used on a first-in, first-out basis.
(f) Dual-use prohibited.--Each year, an airport land
development zone employer may only earn tax credits under
subsection (c) or (d) or under the act of October 6, 1998
(P.L.705, No.92), known as the Keystone Opportunity Zone,
Keystone Opportunity Expansion Zone and Keystone Opportunity
Improvement Zone Act. An airport land development zone employer
may not claim a credit under both this section and Article
XVIII-B.
(g) Pass-through entities.--
(1) If an airport land development zone employer is a
pass-through entity and has an unused tax credit under
subsection (c), (d) or (e), the airport land development
zone employer may elect in writing, according to procedures
established by the Department of Revenue, to transfer all
or a portion of the credit to shareholders, members or
partners in proportion to the share of the entity's
distributive income to which the shareholder, member or
partner is entitled.
(2) An airport land development zone employer that is
a pass-through entity and a shareholder, member or partner
of that airport land development zone employer may not both
claim the airport land development zone tax credit earned
by the airport land development zone employer for any tax
year.
(3) A shareholder, member or partner of an airport land
development zone employer that is a pass-through entity to
whom a credit is transferred under this subsection shall
immediately claim the credit in the taxable year in which
the transfer is made.
(h) Transfer.--A tax credit or tax credit carryforward that
an airport land development zone employer is entitled to use
may be transferred to a successor entity of the airport land
development zone employer.
(i) Penalties.--The following apply:
(1) A company which receives airport land development
zone tax credits and fails to substantially maintain the
operations related to the airport land development zone tax
credits in this Commonwealth for a period of five years from
the date the company first submits an airport land
development zone tax credit certificate to the Department
of Revenue shall be required to refund to the Commonwealth
the total amount of credits granted.
(2) The department may waive the penalty under paragraph
(1) if it is determined that a company's operations were not
maintained or the new jobs were not created because of
circumstances beyond the company's control. Circumstances
shall include natural disasters, unforeseen industry trends
or a loss of a major supplier or market.
(1904-H added July 8, 2022, P.L.513, No.53)
ARTICLE XIX-I
PENNSYLVANIA CHILD AND DEPENDENT
CARE ENHANCEMENT TAX CREDIT PROGRAM
(Art. XIX-I repealed Dec. 13, 2023, P.L.251, No.34)
Section 1901-I. Scope of article.--(1901-I repealed Dec. 13,
2023, P.L.251, No.34)
Section 1902-I. Definitions.--(1902-I repealed Dec. 13, 2023,
P.L.251, No.34)
Section 1903-I. Credit for child and dependent care
employment-related expenses.--(1903-I repealed
Dec. 13, 2023, P.L.251, No.34)
Section 1904-I. Prohibitions.--(1904-I repealed Dec. 13, 2023,
P.L.251, No.34)
Section 1905-I. Application of Internal Revenue Code of
1986.--(1905-I repealed Dec. 13, 2023, P.L.251,
No.34)
Section 1906-I. Departmental duties.--(1906-I repealed Dec.
13, 2023, P.L.251, No.34)
Section 1907-I. Report to General Assembly.--(1907-I repealed
Dec. 13, 2023, P.L.251, No.34)
ARTICLE XIX-J
529 SAVINGS ACCOUNT EMPLOYER
MATCHING CONTRIBUTION TAX CREDIT
(Art. added July 11, 2024, P.L. , No.56)
Compiler's Note: Section 30(11) of Act 56 of 2024 provided
that the addition of Article XIX-J shall apply to taxable
years commencing after December 31, 2024.
Section 1901-J. Scope of article.
This article relates to the 529 savings account employer
matching contribution tax credit program.
(1901-J added July 11, 2024, P.L. , No.56)
Section 1902-J. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"ABLE account." An account under the act of April 18, 2016
(P.L.128, No.17), known as the Pennsylvania ABLE Act.
"ABLE account contract." As defined in section 102 of the
Pennsylvania ABLE Act.
"Account." An account owned by an employee who has entered
into a Tuition Account Program Contract under the act of April
3, 1992 (P.L.28, No.11), known as the Tuition Account Programs
and College Savings Bond Act, or an ABLE account contract, or
a tuition account program contract or an ABLE account program
administered by another state, notwithstanding the named
beneficiary of the account.
"Department." The Department of Revenue of the Commonwealth.
"Matching contribution." A deposit of money by an employer
into an employee-owned account during the tax year that does
not exceed the amount of deposits made into that account by the
employee during the same tax year.
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"State tax liability." Any of the taxes due under Article
III, IV, VII, VIII, IX or XV. The term shall not include any
tax withheld by an employer from an employee under Article III.
"Tax credit." The 529 savings account employer matching
contribution tax credit established under section 1903-J.
"Tuition Account Program Contract." As defined in section
302 of the Tuition Account Programs and College Savings Bond
Act.
(1902-J added July 11, 2024, P.L. , No.56)
Section 1903-J. Credit for employer matching contributions to
tuition savings accounts and ABLE accounts.
(a) Tax credit.--For taxable years beginning after December
31, 2024, and ending before January 1, 2030, an employer that
makes a matching contribution to an account owned by an employee
under this article or an ABLE account may claim a tax credit
against the employer's State tax liability.
(b) Amount of tax credit.--The amount of the tax credit
under subsection (a) shall be equal to 25% of the employer's
aggregate matching contributions made to accounts owned by
employees during the tax year.
(c) Tax credit limit for employers.--The total amount of
matching contributions to accounts owned by employees for which
an employer may claim a tax credit shall be no more than $500
per employee during the tax year.
(d) Proof of matching contribution.--In order to receive
the tax credit, an employer shall provide the department with
proof that the employer has made qualifying matching
contributions to employee-owned accounts under this article at
the time of filing the employer's tax return.
(e) Proof of employee contribution.--In a manner prescribed
by the employer, an employee shall provide to the employer
evidence of the total amount deposited into the employee's
account during the previous tax year.
(1903-J added July 11, 2024, P.L. , No.56)
Section 1904-J. Carryover, carryback, assignment and
pass-through of credit.
(a) General rule.--If the amount of the tax credit allowed
under this article exceeds the employer's tax liability in the
tax year in which the tax credit is approved, the excess tax
credit may be carried over to succeeding tax years for a period
not to exceed three years to reduce the employer's tax liability
during those tax years. The following shall apply:
(1) A tax credit that is carried over to succeeding tax
years must be applied first to the earliest tax year
possible.
(2) Any credit remaining after three tax years following
the initial approval of a tax credit under this article shall
not be refunded or credited to the employer.
(b) No carryback or refund.--An employer approved for a tax
credit is not entitled to carry back or obtain a refund of all
or any portion of an unused tax credit granted to the employer
under this article.
(c) Pass-through entity.--If an employer is a pass-through
entity and has an unused tax credit under section 1903-J, the
employer may elect in writing, according to procedures
established by the department, to transfer all or a portion of
the credit to shareholders, members or partners in proportion
to the share of the entity's distributive income to which the
shareholder, member or partner is entitled. The following apply:
(1) The same unused tax credit under subsection (b) may
not be claimed by:
(i) the pass-through entity; and
(ii) a shareholder, member or patron of the
pass-through entity.
(2) A shareholder, member or partner of a pass-through
entity to whom a credit is transferred under this subsection
shall immediately claim the credit in the taxable year in
which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund
of or sell or assign the credit.
(1904-J added July 11, 2024, P.L. , No.56)
Section 1905-J. Departmental duties.
The department shall publish guidelines and may promulgate
regulations necessary for the implementation and administration
of this article.
(1905-J added July 11, 2024, P.L. , No.56)
Section 1906-J. Nondiscrimination in matching contributions.
(a) Accounts owned by employees.--An employee who owns an
account shall have equal opportunity to receive a matching
contribution from the employer.
(b) Duty of employers.--If an employer chooses to make
matching contributions to employee-owned accounts for the
purposes of claiming the tax credit, the employer shall make
equal matching contributions during the tax year to any employee
that either owns an account or chooses to open an account while
employed by the employer.
(c) Rights of employees.--An employee who owns an account
may voluntarily opt out of an employer matching contribution
benefit during any tax year. An employee who opts out of a
matching contribution benefit from the employer during one tax
year may elect to receive the matching contribution benefit
during another succeeding tax year.
(1906-J added July 11, 2024, P.L. , No.56)
Section 1907-J. Report to General Assembly.
(a) Annual report.--No later than July 1, 2025, and each
July 1 thereafter, the department shall submit a report to the
General Assembly indicating the effectiveness of the tax credit
under this article.
(b) Information required.--The report required under
subsection (a) shall include the following information:
(1) The number of tax credits approved under this
article.
(2) The amount of tax credits approved under this
article.
(3) The number of tax credits denied and the reason for
denial.
(1907-J added July 11, 2024, P.L. , No.56)
ARTICLE XIX-K
EMPLOYER CHILD CARE CONTRIBUTION TAX CREDIT
(Art. added July 11, 2024, P.L. , No.56)
Compiler's Note: Section 30(11) of Act 56 of 2024 provided
that the addition of Article XIX-K shall apply to taxable
years commencing after December 31, 2024.
Section 1901-K. Scope of article.
This article establishes the employer child care contribution
tax credit.
(1901-K added July 11, 2024, P.L. , No.56)
Section 1902-K. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Aggregate contribution." The aggregate contribution that
a qualified taxpayer makes to all employees during the taxable
year for which the qualified taxpayer seeks the employer child
care contribution tax credit established under this article,
provided that only the first $500 in contributions per employee
shall count toward the aggregate contribution.
"Child-care provider." Includes:
(1) A child care center as defined under 55 Pa. Code §
3270.4 (relating to definitions).
(2) A group child care home as defined under 55 Pa.
Code § 3280.4 (relating to definitions).
(3) A family child care home as defined under 55 Pa.
Code § 3290.4 (relating to definitions).
"Contribution." A payment made to a child-care provider by
an employer to subsidize an employee's eligible child-care
costs.
"Department." The Department of Revenue of the Commonwealth.
"Eligible child-care costs." Costs incurred by an employee
for services rendered by a child-care provider that are incurred
to enable the employee to be gainfully employed by a qualified
taxpayer.
"Employee." An individual employed by a qualified taxpayer.
The term shall not include:
(1) An officer of an entity subject to tax under Article
IV, VII, VIII or XV.
(2) An officer of an insurance company subject to tax
under Article IX.
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified tax liability." Any of the taxes due under
Article III, IV, VII, VIII or XV. The term shall not include
any tax withheld by an employer from an employee under Article
III.
"Qualified taxpayer." An individual, partnership,
association, corporation, governmental body or unit or agency
or other entity that:
(1) is subject to a tax imposed under Article III, IV,
VII, VIII, IX or XV; and
(2) is required under the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.) to withhold
Federal income tax from wages paid to an employee.
(1902-K added July 11, 2024, P.L. , No.56)
Section 1903-K. Employer child care contribution tax credit.
(a) General rule.--For taxable years beginning after
December 31, 2024, a qualified taxpayer may claim the employer
child care contribution tax credit for a contribution made
during the taxable year toward an employee's eligible child-care
costs and may apply the tax credit against its qualified tax
liability.
(b) Application.--A qualified taxpayer applying to claim
an employer child care contribution tax credit must complete
and submit to the department a child care contribution tax
credit application on a form and in a manner as determined by
the department. The form shall require the qualified taxpayer
to provide the following:
(1) The names, addresses and Social Security numbers
of all employees to which the qualified taxpayer made a
contribution during the taxable year.
(2) The names, addresses and employer identification
numbers of the child-care providers that provided child-care
services to each participating employee.
(3) The amount contributed to each participating
employee.
(4) The aggregate contribution.
(c) Amount of tax credit.--The amount of the tax credit
under subsection (a) shall be equal to 30% of the aggregate
contribution made to employees during the tax year.
(1903-K added July 11, 2024, P.L. , No.56)
Section 1904-K. Carryover, carryback, refund and assignment
of credit.
(a) Carryover, carryback and refund.--A qualified taxpayer
is not entitled to carry forward, carry back or obtain a refund
of all or a portion of an unused tax credit granted to the
qualified taxpayer under this article.
(b) Sale or assignment of tax credit.--A qualified taxpayer
may not sell or assign a tax credit granted to the qualified
taxpayer under this article.
(1904-K added July 11, 2024, P.L. , No.56)
Section 1905-K. Pass-through entity.
(a) Election.--If the qualified taxpayer is a pass-through
entity, the qualified taxpayer may elect in writing, according
to procedures established by the department, to transfer all
or a portion of the credit to shareholders, members or partners
in proportion to the share of the qualified taxpayer's
distributive income to which the shareholders, members or
partners are entitled or in any other manner designated by the
qualified taxpayer in accordance with its governance documents
and without regard to how distributive income, losses or credits
are allocated for other tax purposes.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Time.--A shareholder, member or partner of a
pass-through entity under subsection (a) may only use a tax
credit during a taxable year for which use of the credit is
authorized. The shareholder, member or partner of the
pass-through entity may not carry forward, carry back, obtain
a refund of or sell or assign the tax credit.
(1905-K added July 11, 2024, P.L. , No.56)
Section 1906-K. Exclusion from classes of income.
Notwithstanding any other provision of law, contributions
made under this article to an employee's eligible child-care
costs during the taxable year may not be included in any of the
classes of income enumerated under section 303.
(1906-K added July 11, 2024, P.L. , No.56)
Section 1907-K. Nondiscrimination in contributions.
(a) Employees.--An employee who has incurred eligible
child-care costs shall have equal opportunity to receive a
contribution from the employer.
(b) Duty of employers.--If an employer chooses to make
contributions to a child-care provider for the purposes of
claiming the tax credit, the employer shall make equal
contributions during the tax year to any employee that has
eligible child-care costs.
(1907-K added July 11, 2024, P.L. , No.56)
Section 1908-K. Regulations.
(a) Promulgation.--The department shall promulgate
regulations to implement the provisions of this article.
(b) Guidelines.--The department shall develop written
guidelines for the implementation of this article. The
guidelines shall be in effect until the department promulgates
regulations for the implementation of the provisions of this
article.
(1908-K added July 11, 2024, P.L. , No.56)
Section 1909-K. Tax compliance.
The provisions of Article XVII-A.1 apply to the application
of this article.
(1909-K added July 11, 2024, P.L. , No.56)
Section 1910-K. Applicability.
The provisions of this article shall apply to taxable years
beginning after December 31, 2024.
(1910-K added July 11, 2024, P.L. , No.56)
ARTICLE XX
MALT BEVERAGE TAX
(Art. added Dec. 22, 1989, P.L.775, No.110)
Compiler's Note: Section 18 of Act 86 of 1998 provided that
Article XX is repealed insofar as it is inconsistent
with the amendment or addition of sections 102 and 505.2
and Article X of Act 21 of 1951 which were amended or
added by Act 86 of 1998.
Section 2001. Short Title.--This article shall be known and
may be cited as the Malt Beverage Tax Law.
(2001 added Dec. 22, 1989, P.L.775, No.110)
Section 2002. Definitions.--The following words, terms and
phrases, when used in this article, shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Department." The Department of Revenue of the Commonwealth.
"Distributor." A person engaged in the purchase and resale
of malt or brewed beverages in the original sealed packages as
prepared for market by the manufacturer, including any who or
which:
(1) Imports or causes to be imported from any other state
or territory of the United States, or from any foreign country,
malt or brewed beverages for his own use in the Commonwealth,
or for sale and delivery in and after reaching the Commonwealth.
(2) Imports or causes to be imported from any other state
or territory of the United States, or from any foreign country,
malt or brewed beverages for his own use in the Commonwealth,
or for sale or delivery therein, after the same have come to
rest or storage therein, in the original package, receptacle
or container.
(3) Purchases or receives malt or brewed beverages in the
original package, receptacle or container in the Commonwealth
for his own use, or for sale and delivery therein, from any
person who has imported the same from a foreign country.
(4) Purchases or receives malt or brewed beverages in the
original package, receptacle or container in the Commonwealth
for his own use therein, or for sale and delivery therein, from
any person who has imported the same from any other state or
territory of the United States, in case such malt or brewed
beverages have not, prior to such purchase or receipt, come to
rest or storage in the Commonwealth.
"Malt or Brewed Beverages." Alcoholic beverages, which
include beer, lager beer, ale, porter or similar fermented malt
liquor, containing one-half of one per cent or more of alcohol,
by whatever name such liquors may be called.
"Manufacturer." A person engaged in the brewing or
manufacturing of malt or brewed beverages for sale, and, for
the purposes of posting bond and payment of taxes required under
the provisions of this article, shall include importing agents
for foreign manufacturers.
"Original Container." Bottle, cask, keg or other container
that has been securely capped, sealed or corked by the
manufacturer, with the name and address of the manufacturer
permanently affixed to the bottle, cask, keg or other container,
or to the cap or cork used in sealing the same, or to a label
securely affixed to a bottle.
"Person." An individual or an unincorporated association,
including a partnership, a limited partnership, or any other
form of unincorporated enterprise owned by two or more
individuals, or a corporation. Whenever used in any section
prescribing and imposing a fine or imprisonment, or both, the
term "person," as applied to a partnership, limited partnership,
or any other form of unincorporated enterprise, shall mean the
partners or members thereof, and, as applied to corporations
and their officers.
"Retail Dealer." A person engaged in the retail sale of
malt or brewed beverages either for consumption on the premises
or not for consumption on the premises where sold.
"Sale." Any transfer for a consideration, exchange, barter,
gift, offer for sale, and distribution, in any manner or by any
means whatsoever.
(2002 added Dec. 22, 1989, P.L.775, No.110)
Section 2003. Imposition of Tax.--(a) (1) Each
manufacturer shall be subject to pay to the Commonwealth the
taxes imposed by this section upon all malt or brewed beverages
manufactured and sold by him in this Commonwealth for use in
this Commonwealth or manufactured by him outside this
Commonwealth and sold to an importing distributor or any person
for importation into, and use in, this Commonwealth.
(2) Every person who ships or transports malt or brewed
beverages into this Commonwealth for sale, delivery or storage
in this Commonwealth shall pay to the Commonwealth the taxes
imposed in this section.
(b) (1) Such taxes, payable in the manner prescribed in
subsections (a) and (b) of section 2004 of this article, shall
be at the rate of two-thirds cent (2/3¢) per half pint of eight
(8) fluid ounces or fraction thereof, and in larger quantities
at the rate of one cent (1¢) per pint of sixteen (16) fluid
ounces or fraction thereof.
(2) The tax rates per original container or standard
fraction thereof are as follows:
Malt BeverageStandard
Fraction VolumeTax Rate
31 gal.$2.481 barrel
15 1/2 gal.1.241/2 barrel
10 1/3 gal..841/3 barrel
7 3/4 gal..621/4 barrel
5 1/6 gal..421/6 barrel
3 7/8 gal..321/8 barrel
.081 gallon
.041/2 gallon
.021 quart
.011 pint
.00661/2 pint
(c) If the tax shall not be paid when due, there shall be
added to the amount of the tax as a penalty a sum equivalent
to ten per cent of the amount of the tax, and in addition
thereto interest on the tax and penalty at the rate of one per
cent per month or fraction of a month from the date the tax
became due until paid. Nothing herein contained shall be
construed to relieve any person otherwise liable from liability
for payment of the tax.
(d) (1) Notwithstanding any other provision of this
article, a manufacturer or his agent who fails to file the
required monthly return and pay when due the tax imposed under
this article shall be declared delinquent by the Secretary of
Revenue and shall continue to be delinquent until he files the
required monthly return and pays the tax.
(2) During a period of delinquency no malt or brewed
beverages in possession or control of a manufacturer may be
removed from his licensed premises for sale in the Commonwealth,
nor shipped in from outside the Commonwealth.
(e) In the event that any state, territory or country shall
impose upon malt or brewed beverages, which have been
manufactured in Pennsylvania, a higher tax or fee than is
imposed upon malt or brewed beverages manufactured within such
state, territory or country, every manufacturer whose malt or
brewed beverages manufactured within such state, territory or
country are sold to an importing distributor or any person for
importation into, and use in, this Commonwealth shall, as to
such beverages, pay to this Commonwealth, in addition to the
tax imposed by this section, a tax equal to such excess tax or
fee which is imposed in such state, territory or country on
Pennsylvania manufactured malt or brewed beverages. Such
additional tax shall be levied, assessed and collected in the
same manner as the other taxes imposed by this article.
(f) Manufacturers whose malt or brewed beverages are sold
in this Commonwealth or are sold to importing distributors or
any person for importation into, and use in, this Commonwealth
shall be liable to the Commonwealth as taxpayers for the payment
of the taxes imposed by this article.
(2003 added Dec. 22, 1989, P.L.775, No.110)
Section 2004. Reports.--(a) Each manufacturer whose malt
or brewed beverages are sold in or imported into this
Commonwealth shall, on or before the fifteenth day of each
month, file with the department, on forms prescribed by it, a
report showing for the preceding calendar month the quantities
of such malt and brewed beverages:
(1) Manufactured by him in this Commonwealth, and
constituting his beginning and ending inventory in this
Commonwealth for the month.
(2) Sold by him in this Commonwealth for use in this
Commonwealth or sold to an importing distributor or any person
for importation into, and use in, this Commonwealth,
specifically naming the distributors to whom such sales were
made and the quantity sold to each.
(3) Sold to purchasers or persons outside this Commonwealth
for exportation from, and use outside, this Commonwealth, or
sold in other tax-exempt transactions, naming the purchasers
and the quantity sold to each and specifically indicating those
sales or transactions to which the tax imposed by this article
is not applicable.
(4) Such additional information as the department may
reasonably require to assure the accuracy of the tax computation
and payment and the proper administration of this article.
(b) The tax payable on all malt or brewed beverages first
sold in this Commonwealth for use in this Commonwealth or first
sold to an importing distributor or any person for importation
into, and use in, this Commonwealth during such month in the
amount disclosed by the report, shall accompany the report and
be paid by the manufacturer to the department.
(c) Persons licensed as "Public Service Licensees," under
the provisions of any law of this Commonwealth relating to the
sale of malt or brewed beverages:
(1) shall keep such records of the sales of such malt or
brewed beverages in this Commonwealth as the department shall
prescribe;
(2) shall, on or before the fifteenth day of each month,
submit monthly reports of such sales and of such other
information as the department may require to the department
upon a form prescribed by said department; and
(3) shall pay the tax due on all such sales at the rate
provided by the provisions of this article at the time such
reports are filed.
(d) It is the intent and purpose of this section to require
all manufacturers and other persons whose malt or brewed
beverages are sold or used in this Commonwealth to pay the tax
on all such malt or brewed beverages in the month following
that in which such beverages are first sold in this Commonwealth
for use in this Commonwealth or first sold to an importing
distributor or any person for importation into and use in this
Commonwealth, except that as to malt or brewed beverages sold
to public service licensees, the public service licensees, and
not the manufacturer, shall report and pay the tax on all malt
or brewed beverages sold by them within the Commonwealth.
(2004 amended Apr. 23, 1998, P.L.239, No.45)
Section 2005. Assessment by Department.--(a) If any person
shall fail to pay any tax imposed by this article for which he
is liable, the department is hereby authorized and empowered
to make an assessment of additional tax due by such person,
based upon any information within its possession, or that shall
come into its possession.
(b) Promptly after the date of such assessment, the
department shall send a copy of the assessment, including the
basis of the assessment, to the person against whom it was made.
Within ninety days after the date upon which the copy of any
such assessment was mailed, such person may file with the
department a petition for reassessment of such taxes. Every
petition for reassessment shall state specifically the reasons
which the petitioner believes entitle him to such reassessment,
and it shall be supported by affidavit that it is not made for
the purpose of delay, and that the facts set forth therein are
true. It shall be the duty of the department, within six months
after the date of any assessment, to dispose of any petition
for reassessment. Notice of the action taken upon any petition
for reassessment shall be given to the petitioner promptly after
the date of reassessment by the department.
(b.1) (Deleted by amendment).
(c) Within ninety days after the date of mailing of notice
by the department of the action taken on any petition for
reassessment filed with it, the person against whom such
assessment was made, may, by petition, request the Board of
Finance and Revenue to review such action. Every petition for
review filed hereunder shall state specifically the reason upon
which the petitioner relies, or shall incorporate by reference
the petition for reassessment in which such reasons shall have
been stated. The petition shall be supported by affidavit that
it is not made for the purpose of delay, and that the facts
therein set forth are true. If the petitioner be a corporation,
joint-stock association or limited partnership, the affidavit
must be made by one of the principal officers thereof. A
petition for review may be amended by the petitioner at any
time prior to the hearing, as hereinafter provided. The Board
of Finance and Revenue shall act finally in disposition of such
petitions filed with it within six months after they have been
received, and, in the event of the failure of said board to
dispose of any such petition within six months, the action taken
by the department upon the petition for reassessment shall be
deemed sustained. The Board of Finance and Revenue may sustain
the action taken on the petition for reassessment, or it may
reassess the tax due upon such basis as it shall deem according
to law and equity. Notice of the action of the Board of Finance
and Revenue shall be given by mail, or otherwise, to the
department and to the petitioner.
(d) In all cases of petitions for reassessment, review or
appeal, the burden of proof shall be upon the petitioner or
appellant, as the case may be.
(e) Whenever any assessment of additional tax is not paid
within ninety days after the date of the assessment, if no
petition for reassessment has been filed, or within ninety days
from the date of reassessment, if no petition for review has
been filed, or within thirty days from the date of the decision
of the Board of Finance and Revenue upon a petition for review,
or the expiration of the board's time for acting upon such
petition, if no appeal has been made, and in all cases of
judicial sales, receiverships, assignments or bankruptcies, the
department may call upon the Office of Attorney General to
collect such assessment. In such event, in a proceeding for the
collection of such taxes, the person against whom they were
assessed shall not be permitted to set up any ground of defense
that might have been determined by the department, the Board
of Finance and Revenue or the courts. The department may also
certify to the Liquor Control Board, for such action as the
board may deem proper, the fact that any person has failed to
pay or duly appeal from such assessment of additional tax. The
department may also provide, adopt, promulgate and enforce such
rules and regulations, as may be appropriate, to prevent further
shipment or transportation of malt or brewed beverages into
this Commonwealth by any person against whom such unpaid
assessment shall have been made.
(2005 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 15 of Act 55 of 2007, which amended
section 2005, provided that the amendment of section
2005 shall apply to assessments issued after December
31, 2007.
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 2006. Bond or Surety Required.--(a) No malt or
brewed beverages shall be sold in or imported into the
Commonwealth until and unless the manufacturer of such malt or
brewed beverage has on file with the department and in full
force and effect an approved bond, duly executed, payable to
the Commonwealth, together with a warrant of attorney to confess
judgment in a sum equal to the amount of his highest two month
average tax liability during the last year prior to the time
of giving bond, but in no event less than five thousand dollars
($5,000). All such bonds shall be conditioned upon the payment
of the tax imposed by this article and shall have as surety a
duly authorized surety company, or shall have deposited
therewith, as collateral security, cash or negotiable
obligations of the United States of America or the Commonwealth
of Pennsylvania in the same amount as herein provided for the
penal sum of such bonds.
(b) In all cases where cash or securities in lieu of other
surety have been deposited with the department, the depositor
shall be permitted to continue the same deposit from year to
year, but in no event shall he be permitted to withdraw his
deposit during the time he holds a license, or until six months
after the expiration of the license, if any, held by him, or
while revocation proceedings are pending against such licensee,
or while forfeiture proceedings are pending against the
depositor's bond.
(c) All cash or securities received by the department in
lieu of other surety shall be turned over by the department to
the State Treasurer and held by him. The State Treasurer shall
repay or return money or securities deposited with him to the
respective depositors only on the order of the department.
(d) After notice from the department that such a bond has
been forfeited, the State Treasurer shall immediately pay into
the General Fund all cash deposited as collateral with such
bond, and when securities have been deposited with such a bond,
the State Treasurer shall sell at private sale, at not less
than the prevailing market price, any such securities so
deposited as collateral with any such forfeited bond. The State
Treasurer shall thereafter deposit in the General Fund the net
amount realized from the sale of such securities, except that
if the amount so realized, after deducting proper costs and
expenses, is in excess of the penal amount of the bond, such
excess shall be paid over by him to the obligor on such
forfeited bond.
(e) Every such bond shall be turned over to the Department
of Justice to be collected if and when the depositor shall have
been held liable for the unlawful nonpayment of taxes imposed
by this article.
(2006 added Dec. 22, 1989, P.L.775, No.110)
Section 2007. Monthly Reports.--(a) For the purpose of
verifying the tax payments required by this article, it shall
be the duty of every transporter for hire, bailee for hire,
warehouseman, distributor and retail licensee, on or before the
fifteenth day of the succeeding month, to transmit to the
department, on forms supplied by the department, a report, under
oath or affirmation, of malt or brewed beverages which were
imported and came to rest or storage at his place of business
in this Commonwealth during the preceding month, or which were
transported from a point outside the Commonwealth to a point
within the Commonwealth. Such report shall show the number of
barrels, or standard fraction thereof, imported, transported
or stored during the period for which it is made, and such
further information as the department shall prescribe.
(b) Each manufacturer, transporter for hire, bailee for
hire, warehouseman, distributor and retail licensee shall
maintain and keep, for a period of two years, such record or
records of malt or brewed beverages manufactured, sold by a
manufacturer or distributor, transported from a point outside
of the Commonwealth to a point within the Commonwealth,
imported, or substantiating the other information required on
his report, together with invoices, bills of lading and other
pertinent papers, as may be required by the department.
(2007 added Dec. 22, 1989, P.L.775, No.110)
Section 2008. Department Examinations.--The department, or
any agent appointed in writing by it, is hereby authorized to
examine the books, papers, invoices and other records, and the
stock of malt or brewed beverages in and upon any premises where
the same are placed, stored or sold, and in or on any car,
vessel, truck, vehicle or other means of transportation, to
verify the payment of or liability for the tax imposed by this
article. Any person in possession of such malt or brewed
beverages is hereby directed and required to give the Secretary
of Revenue, or his duly authorized representative, the means,
facilities and opportunities for such examination. The
department, or any of its duly authorized agents, is hereby
authorized to confiscate any malt or brewed beverages stored,
sold or transported in violation of the provisions of this
article.
(2008 added Dec. 22, 1989, P.L.775, No.110)
Section 2009. Refund of Tax.--(a) In case any malt or
brewed beverages upon which the tax has been paid by a
manufacturer have been sold or shipped by him to a licensed or
regular dealer in such malt or brewed beverages in another
state, such manufacturer in this Commonwealth shall be entitled
to a refund of the actual amount of tax paid by him, upon
condition that the seller in this Commonwealth shall make
affidavit that the malt or brewed beverages were so sold and
shipped, and that he shall furnish from the purchaser an
affidavit, or in cases where the total purchase price is five
dollars ($5) or less, a written certificate in lieu of an
affidavit from the purchaser, or, upon satisfactory proof that
such affidavit or certificate cannot be obtained, other evidence
satisfactory to the department that he has received such malt
or brewed beverages for sale or consumption outside this
Commonwealth, together with the name and address of the
purchaser.
(b) In case any malt or brewed beverages upon which the tax
has been paid by a manufacturer have been sold to commissaries,
ship's stores or voluntary unincorporated organizations of the
armed forces personnel operating under regulations promulgated
by the Secretary of Defense, such manufacturer shall be entitled
to a refund of the actual amount of tax paid by him, upon
condition that he shall make affidavit and furnish proof that
the malt or brewed beverages were so sold.
(c) In case any malt or brewed beverages upon which the tax
has been paid by an out-of-State manufacturer and subsequently
sold by an importing distributor to commissaries, ship's stores
or voluntary unincorporated organizations of the armed forces
personnel operating under regulations promulgated by the
Secretary of Defense, such manufacturer shall be entitled to a
refund of the actual amount of tax paid by him upon condition
that he shall make affidavit and furnish proof that the malt
or brewed beverages were so sold.
(d) In case any malt or brewed beverages upon which the tax
has been paid by a manufacturer shall be rendered unsalable by
reason of damage or destruction, such manufacturer shall be
entitled to a refund of the actual amount of tax paid by him,
upon condition that he shall make affidavit and furnish proof
satisfactory to the department that the malt beverages were so
damaged or destroyed.
(e) In case any malt or brewed beverages upon which the tax
has been paid by a manufacturer have been sold and delivered
to a public service licensee who is obligated to pay the tax
thereon, such manufacturer shall be entitled to a refund of the
actual amount of tax paid by him, upon condition that he shall
make affidavit and furnish proof satisfactory to the department
of such facts.
(f) In each of the above cases the department shall pay or
issue to the manufacturer credits of sufficient value to cover
the refund. Such credits may be used by the manufacturer for
the payment of any taxes due by him to the Commonwealth. The
procedure for refund in any case shall be completed by the
department within sixty days after the proper affidavits have
been filed with the department under section 3003.1.
(2009 amended May 7, 1997, P.L.85, No.7)
Compiler's Note: Section 42(b) of Act 48 of 1994 provided
that section 2009 is repealed to the extent that it
conflicts with the provisions of Act 48 for filing with
the Board of Finance and Revenue of petitions for the
refund of taxes and other moneys collected by the
Department of Revenue.
Section 2010. Limited Tax Credits.--(a) The General
Assembly of the Commonwealth, conscious of the financial
pressures facing small brewers in Pennsylvania and the attendant
risk of business failure and loss of employment opportunity,
declares it public policy that renewal and improvement of small
brewers be encouraged and assisted by a limited tax subsidy to
be granted during the period set forth in this section.
(b) As used in this section:
"Amounts paid." The phrase means (i) amounts actually paid,
or (ii) at the taxpayer's election, amounts promised to be paid
under firm purchase contracts actually executed during any
calendar year falling within the effective period of this
section: Provided, however, That there shall be no duplication
of "amounts paid" under this definition.
"Effective period." The period from January 1, 1974, to
December 31, 2008, and the period after June 30, 2017,
inclusive.
"Qualifying capital expenditures." Amounts paid by a
taxpayer during the effective period of this section for the
purchase of items of plant, machinery or equipment for use by
the taxpayer within this Commonwealth in the manufacture and
sale of malt or brewed beverages: Provided, however, That the
total amount of qualifying capital expenditures made by a
taxpayer within a single calendar year shall not exceed two
hundred thousand dollars ($200,000).
"Secretary." The Secretary of Revenue of the Commonwealth
of Pennsylvania where not otherwise qualified.
"Taxpayer." A manufacturer of malt or brewed beverages
claiming a tax credit or credits under this section.
(c) A tax credit or credits shall be allowed for each
calendar year to a taxpayer, as hereinafter provided, not to
exceed in total amount the amount of qualifying capital
expenditures made by the taxpayer and certified by the
secretary.
(d) A taxpayer desiring to claim a tax credit or credits
under this section shall, within one year of the date of the
original purchase of the qualifying capital expenditures, in
accordance with regulations promulgated by the secretary, report
annually to the secretary the nature, amounts and dates of
qualifying capital expenditures made by him and such other
information as the secretary shall require. If satisfied as to
the correctness of such a report, the secretary shall issue to
the taxpayer a certificate establishing the amount of qualifying
capital expenditures made by the taxpayer and included within
said report. The taxpayer shall also provide to the secretary
the number of employes, total production of malt or brewed
beverages and the amount of capital expenditures made by the
taxpayer at each location operated by the taxpayer or a parent
corporation, subsidiary, joint venture or affiliate. Also, the
taxpayer shall notify the secretary of any contract for
production held with another manufacturer. The secretary shall
file a report annually with the Chief Clerk of the House of
Representatives and with the Secretary of the Senate outlining
the employment, production, expenditures and tax credits
authorized under this section.
(e) Upon receipt from a taxpayer of a certificate from the
secretary issued under subsection (c), the Secretary of Revenue
shall grant a tax credit or credits in the amount certified
against any tax due under this article in the calendar year in
which the expenditures were incurred or against any tax becoming
due from the taxpayer under this article in the following three
calendar years. No credit shall be allowed against any tax due
for any taxable period ending after December 31, 2008, and
beginning before July 1, 2017.
(f) The total amount of tax credits granted under this
section shall not exceed five million dollars ($5,000,000) in
any fiscal year.
(g) If the total amount of tax credits granted for all
taxpayers exceeds the limitation on the amount of tax credits
under this section in a fiscal year, the tax credit to be
received by each applicant shall be determined as follows:
(1) Divide:
(i) the tax credit granted for the taxpayer; by
(ii) the total of all tax credits granted for all taxpayers.
(2) Multiply:
(i) the amount under subsection (f); by
(ii) the quotient under paragraph (1).
(3) The algebraic form of the calculation under this
subsection is:
Taxpayer's tax credit = amount allocated for those tax
credits X (tax credit granted to the taxpayer/total of all tax
credits granted to all taxpayers).
(2010 amended July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 19(6) of Act 23 of 2000, which
amended subsection (e), provided that the amendment shall
apply retroactively to tax credits authorized after
December 31, 1998.
Compiler's Note: Section 32(5) of Act 4 of 1999, which
amended section 2010, provided that the amendment shall
apply to the taxable years beginning after December 31,
1998.
Section 2011. Unlawful Transportation Activities.--It shall
be unlawful for any person to transport into the Commonwealth,
taxable malt or brewed beverages in containers on which the tax
is not paid or provisions for the payment of the tax are not
made pursuant to the provisions of this article. The
transportation of malt or brewed beverages in violation of this
section shall be a misdemeanor, and, upon conviction in a
summary proceeding before a district magistrate, such person
shall be fined ten dollars ($10) for each container so
transported, and, in default of payment, shall undergo
imprisonment for not more than five days for each container so
transported. Transportation into Pennsylvania of malt or brewed
beverages in containers other than in the manner prescribed by
the regulations of the department shall be prima facie evidence
of violation of this section.
(2011 added Dec. 22, 1989, P.L.775, No.110)
Section 2012. Other Unlawful Activities.--Any person who
shall fail, neglect or refuse to comply with or shall violate
any provision of this article, for which violation no specific
penalty is provided, or any of the rules and regulations
prescribed, adopted and promulgated by the department under the
provisions of this article, or who shall refuse to permit the
department, or any agent appointed by it in writing, to examine
his books, papers, invoices and other records, his stock of
malt or brewed beverages in and upon any premises where the
same are prepared, stored and sold, in or on any car, vessel,
truck, vehicle or other means of transportation, and his
equipment pertaining to the manufacture, transportation, storage
or sale of malt or brewed beverages taxable under this article,
shall be guilty of a misdemeanor, and, upon conviction, shall
be sentenced to pay a fine of not less than one hundred dollars
($100) or more than five hundred dollars ($500), or to suffer
imprisonment of not more than six months, or both, in the
discretion of the court.
(2012 added Dec. 22, 1989, P.L.775, No.110)
Section 2013. Enforcement and Regulations.--(a) The
department is hereby charged with the enforcement of the
provisions of this article and is hereby authorized and
empowered to prescribe, adopt, promulgate and enforce rules and
regulations relating to any matter or thing pertaining to the
administration and enforcement of the provisions of this article
and the collection of taxes, penalties and interest imposed by
this article.
(b) The department is hereby authorized and directed to
prescribe, adopt, promulgate and enforce rules and regulations
relating to the transportation of malt or brewed beverages
through this Commonwealth and from points outside of this
Commonwealth to points within this Commonwealth, and to
prescribe, adopt, promulgate and enforce rules and regulations
reciprocal to those of, or laws of, any other state or territory
affecting the transportation of malt or brewed beverages
manufactured in Pennsylvania.
(c) The department shall promulgate rules and regulations
to relieve manufacturers from paying the tax on such goods as
are sold and shipped to points outside this Commonwealth, or
as are sold in other tax-exempt transactions.
(2013 added Dec. 22, 1989, P.L.775, No.110)
Section 2014. Deposit of Proceeds.--All taxes, fines,
penalties and interest received, collected or accruing under
the provisions of this article shall be paid into the general
fund of the State Treasury by and through the department.
(2014 added Dec. 22, 1989, P.L.775, No.110)
Section 2015. Severability.--The provisions of this article
are severable, and, if any of its provisions shall be held to
be unconstitutional, the decision of the court shall not affect
or impair any of the remaining provisions of this article. It
is hereby declared to be the legislative intent that this
article would have been adopted had such unconstitutional
provisions not been included herein.
(2015 added Dec. 22, 1989, P.L.775, No.110)
Section 2016. Legislative Intent.--In enacting this article
it is the intent of the General Assembly to transfer the former
provisions of the act of May 5, 1933 (P.L.284, No.104), known
as the "Malt Beverage Tax Law," to the "Tax Reform Code of 1971"
and, except for changes in section 2010 relating to tax credits,
to make that codification without effecting a change in
substantive law, and the article shall be interpreted and
construed to effectuate this intent.
(2016 added Dec. 22, 1989, P.L.775, No.110)
ARTICLE XXI
INHERITANCE TAX
(Art. added Aug. 4, 1991, P.L.97, No.22)
PART I
PRELIMINARY PROVISIONS
(I added Aug. 4, 1991, P.L.97, No.22)
Section 2101. Short Title.--This article shall be known and
may be cited as the "Inheritance and Estate Tax Act."
(2101 added Aug. 4, 1991, P.L.97, No.22)
Section 2102. Definitions.--The following words, terms and
phrases, when used in this article, shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning: (Intro. par. amended
Dec. 23, 2003, P.L.250, No.46)
"Adverse interest." A substantial beneficial interest in
the property transferred which might be adversely affected by
the exercise or nonexercise of the power or right reserved or
possessed by the transferor.
"Business of agriculture." The term shall include the
leasing to members of the same family or the leasing to a
corporation or association owned by members of the same family
of property which is directly and principally used for
agricultural purposes. The business of agriculture shall not
be deemed to include:
(1) recreational activities such as, but not limited to,
hunting, fishing, camping, skiing, show competition or racing;
(2) the raising, breeding or training of game animals or
game birds, fish, cats, dogs or pets or animals intended for
use in sporting or recreational activities;
(3) fur farming;
(4) stockyard and slaughterhouse operations; or
(5) manufacturing or processing operations of any kind.
(Def. added July 2, 2012, P.L.751, No.85)
"Children." Includes natural children whether or not they
have been adopted by others, adopted children and stepchildren.
"Clerk." The clerk of the orphans' court division of the
court of common pleas having jurisdiction.
"Court." The orphans' court division of the court of common
pleas of:
(1) The county in which the decedent resided at the time
of his death.
(2) The county in which letters, if any, are granted if the
decedent was a nonresident of this Commonwealth.
(3) Dauphin County in all other cases.
"Date of death." The date of actual death or, in the case
of a presumed decedent, the date found by the final decree to
be the date of the absentee's presumed death. For the purpose
of determining interest and discount, "date of death" means the
date upon which the court enters its final decree of presumptive
death.
"Death taxes." Includes inheritance, succession, transfer
and estate taxes and any other taxes levied against the estate
of a decedent by reason of his death.
"Decedent" or "transferor." Any person by or from whom a
transfer is made and includes any testator, intestate, grantor,
settlor, bargainor, vendor, assignor, donor, joint tenant and
insured.
"Department." The Department of Revenue of the Commonwealth.
"Exemption income." All moneys or property, including,
without limitation, interest, gains or income derived from
obligations which are statutorily free from State or local
taxation under any other Federal or State laws, received of
whatever nature and from whatever source derived.
"Federal estate tax." (Def. deleted by amendment Dec. 23,
2003, P.L.250, No.46)
"Financial institution." A bank, a national banking
association, a bank and trust company, a trust company, a
savings and loan association, a building and loan association,
a mutual savings bank, a credit union, a savings bank and a
company that rents safe deposit boxes.
"Future interest." Includes a successive life interest and
a successive interest for a term certain.
"Lineal descendants." All children of the natural parents
and their descendants, whether or not they have been adopted
by others, adopted descendants and their descendants and
stepdescendants.
"Members of the same family." Any individual, such
individual's brothers and sisters, the brothers and sisters of
such individual's parents and grandparents, the ancestors and
lineal descendents of any of the foregoing, a spouse of any of
the foregoing and the estate of any of the foregoing.
Individuals related by the half blood or legal adoption shall
be treated as if they were related by the whole blood. For a
transfer made by a surviving spouse, the term shall include any
individual considered to be a member of the same family of the
decedent spouse. (Def. amended July 13, 2016, P.L.526, No.84)
"Notice." Written notice.
"Presumed decedent." A person found to be presumptively
dead under the provisions of 20 Pa.C.S. Ch. 57 (relating to
absentees and presumed decedents) or, if a nonresident of this
Commonwealth, under the laws of his domicile.
"Property" or "estate." Includes the following:
(1) All real property and all tangible personal property
of a resident decedent or transferor having its situs in this
Commonwealth.
(2) All intangible personal property of a resident decedent
or transferor.
(3) All real property and all tangible personal property
of a resident decedent having its situs outside this
Commonwealth, which the decedent had contracted to sell,
provided the jurisdiction in which the property has its situs
does not subject it to death tax.
(4) All real property and all tangible personal property
of a nonresident decedent or transferor having its situs in
this Commonwealth, including property held in trust.
(5) A liquor license issued by the Commonwealth.
"Register." The register of wills having jurisdiction to
grant letters testamentary or of administration in the estate
of the decedent or transferor.
"Safe deposit box of a decedent." A safe deposit box in a
financial institution located within this Commonwealth in the
name of the decedent alone or in the names of the decedent and
one or more persons other than the spouse of the decedent.
"Secretary." The Secretary of Revenue of the Commonwealth.
"Sibling." An individual who has at least one parent in
common with the decedent, whether by blood or by adoption. (Def.
added May 24, 2000, P.L.106, No.23)
"Territory." Includes the District of Columbia and all
possessions of the United States.
"Transfer." Includes the passage of ownership of property,
or interest in property or income from property, in possession
or enjoyment, present or future, in trust or otherwise.
"Transferee." Any person to whom a transfer is made and
includes any legatee, devisee, heir, next of kin, grantee,
beneficiary, vendee, assignee, donee, surviving joint tenant
and insurance beneficiary.
"Transfer of property for the sole use." A transfer to or
for the use of a transferee if, during the transferee's
lifetime, the transferee is entitled to all income and principal
distributions from the property and no person, including the
transferee, possesses an inter vivos power of appointment over
the property. (Def. amended Dec. 23, 2003, P.L.250, No.46)
"Value." The price at which the property would be sold by
a willing seller, not compelled to sell, to a willing buyer,
not compelled to buy, both of whom have reasonable knowledge
of the relevant facts. In determining the value of property,
no reduction shall be made on account of income, excise or other
taxes which may become payable subsequent to the valuation date
by the transferee or out of the property. Value as to land in
agricultural use, agricultural reserve or forest reserve means
the value which the land has for its particular use according
to the standards provided in section 2122.
(2102 added Aug. 4, 1991, P.L.97, No.22)
Compiler's Note: Section 51(1.1) of Act 84 of 2016, which
amended the definition of "members of the same family,"
provided that the amendment of section 2102 shall apply
to inheritance tax imposed as to a decedent whose date
of death is after December 31, 2012.
Compiler's Note: Section 30(7) of Act 85 of 2012, which
added the definitions of "business of agriculture" and
"members of the same family," provided that the amendment
of section 2102 shall apply to estates of decedents dying
after June 30, 2012.
Compiler's Note: Section 33(17) of Act 46 of 2003, which
amended the definitions of "Federal estate tax" and
"transfer of property for the sole use," provided that
the amendment shall apply to the estates of decedents
who die after June 30, 2002.
Compiler's Note: Section 19(7)(i) of Act 23 of 2000, which
added the definition of "sibling," provided that the
definition shall apply to the estates of decedents dying
after June 30, 2000. Section 19(8)(i) provided that the
definition shall apply to inter vivos transfers made by
decedents dying after June 30, 2000, regardless of the
date of the transfer.
Section 2103. Powers of Department.--(a) The department
may adopt and enforce rules and regulations for the just
administration of this article.
(b) The department shall have complete supervision of the
making of appraisements, the allowance of deductions and the
assessment of tax, including, but not limited to, the power to
regulate the actions of registers in the allowance and
disallowance of deductions and assessment of tax. The
department's supervision of the making of appraisements includes
the employment and compensation of investigators, appraisers
and expert appraisers. The compensation of investigators,
appraisers and expert appraisers shall be paid from the
inheritance tax collections in the respective counties.
(c) The department shall, in the event that the register
fails to take the necessary proceedings in connection with the
appraisement, allowance of deductions, assessment of tax or
collection of tax, have all the powers vested in the register
in this article and, at its option, may take the necessary
action and shall charge to the register and deduct from any
commissions or fees otherwise due him all costs and expenses
incurred by the department in connection with the proceedings.
(2103 added Aug. 4, 1991, P.L.97, No.22)
PART II
TRANSFERS SUBJECT TO TAX
(II added Aug. 4, 1991, P.L.97, No.22)
Section 2106. Imposition of Tax.--An inheritance tax for
the use of the Commonwealth is imposed upon every transfer
subject to tax under this article at the rates specified in
section 2116.
(2106 added Aug. 4, 1991, P.L.97, No.22)
Section 2107. Transfers Subject to Tax.--(a) The transfers
enumerated in this section are subject to the tax imposed by
section 2106.
(b) All transfers of property by will, by the intestate
laws of this Commonwealth or, in the case of a transfer from a
nonresident, by the laws of succession of another jurisdiction
are subject to tax. The transfer of property of a person
determined by decree of a court of competent jurisdiction to
be a presumed decedent is subject to tax within the meaning of
this section and section 2108.
(c) (1) All transfers of property specified in subclauses
(3) through (7) which are made by a resident or a nonresident
during his lifetime are subject to tax to the extent that they
are made without valuable and adequate consideration in money
or money's worth at the time of transfer.
(2) When the decedent retained or reserved an interest or
power with respect to only a part of the property transferred,
in consequence of which a tax is imposed under subclauses (4)
through (7), the amount of the taxable transfer is only the
value of that portion of the property transferred which is
subject to the retained or reserved interest or power.
(3) A transfer conforming to subclause (1) and made within
one year of the death of the transferor is subject to tax only
to the extent that the value at the time of the transfer or
transfers in the aggregate to or for the benefit of the
transferee exceeds three thousand dollars ($3,000) during any
calendar year.
(4) A transfer conforming to subclause (1) which takes
effect in possession or enjoyment at or after the death of the
transferor and under which the transferor has retained a
reversionary interest in the property, the value of which
interest immediately before the death of the transferor exceeds
five per cent of the value of the property transferred, is
subject to tax. The term "reversionary interest" includes a
possibility that property transferred may return to the
transferor or his estate or may be subject to a power of
disposition by him, but the term does not include a possibility
that the income alone from the property may return to him or
become subject to a power of disposition by him.
(5) A transfer conforming to subclause (1), and under which
the transferor expressly or impliedly reserves for his life or
any period which does not in fact end before his death, the
possession or enjoyment of, or the right to the income from,
the property transferred, or the right, either alone or in
conjunction with any person not having an adverse interest, to
designate the persons who shall possess or enjoy the property
transferred or the income from the property, is subject to tax.
(6) A transfer conforming to subclause (1), and under which
the transferee promises to make payments to, or for the benefit
of, the transferor or to care for the transferor during the
remainder of the transferor's life, is subject to tax.
(7) A transfer conforming to subclause (1), and under which
the transferor has at his death, either in himself alone or in
conjunction with any person not having an adverse interest, a
power to alter, amend or revoke the interest of the beneficiary,
is subject to tax. Similarly, the relinquishment of such a power
within one year of the death of the transferor is a transfer
subject to tax except as otherwise provided in subclause (3).
(d) All succeeding interests which follow the interest of
a surviving spouse in a trust or similar arrangement, to the
extent specified in section 2113, are transfers subject to tax
as if the surviving spouse were the transferor. ((d) reenacted
June 30, 1995, P.L.139, No.21)
Compiler's Note: Section 24 of Act 21 of 1995, which
reenacted subsection (d), provided that section 43(4)(ii)
of Act 48 of 1994 is repealed insofar as it limits the
amendment or addition of Article XXI from applying to
the estates of decedents dying on or after January 1,
1995.
Section 2108. Joint Tenancy.--(a) When any property is
held in the names of two or more persons or is deposited in a
financial institution in the names of two or more persons so
that, upon the death of one of them, the survivor or survivors
have a right to the immediate ownership or possession and
enjoyment of the whole property, the accrual of such right,
upon the death of one of them, shall be deemed a transfer
subject to tax of a fractional portion of such property to be
determined by dividing the value of the whole property by the
number of joint tenants in existence immediately preceding the
death of the deceased joint tenant.
(b) Except as provided in subsection (c), this section shall
not apply to property or interests in property passing by right
of survivorship to the survivor of husband and wife. ((b)
amended June 30, 1995, P.L.139, No.21)
(c) If the co-ownership was created within one year prior
to the death of the co-tenant, the entire interest transferred
shall be subject to tax only under, and to the extent stated
in, subsection (c)(3) of section 2107 as though a part of the
estate of the person who created the co-ownership.
(2108 added Aug. 4, 1991, P.L.97, No.22)
Compiler's Note: Section 24 of Act 21 of 1995, which amended
subsection (b), provided that section 43(4)(ii) of Act
48 of 1994 is repealed insofar as it limits the amendment
or addition of Article XXI from applying to the estates
of decedents dying on or after January 1, 1995.
PART III
TRANSFERS NOT SUBJECT TO TAX
(III added Aug. 4, 1991, P.L.97, No.22)
Section 2111. Transfers Not Subject to Tax.--(a) The
transfers enumerated in this section are not subject to the tax
imposed by this article.
(b) Transfers of property to or for the use of any of the
following are exempt from inheritance tax:
(1) The United States of America.
(2) The Commonwealth of Pennsylvania.
(3) A political subdivision of the Commonwealth of
Pennsylvania.
(c) Transfers of property to or for the use of any of the
following are exempt from inheritance tax:
(1) Any corporation, unincorporated association or society
organized and operated exclusively for religious, charitable,
scientific, literary or educational purposes, including the
encouragement of art and the prevention of cruelty to children
or animals, no part of the net earnings of which inures to the
benefit of any private stockholder or individual and no
substantial part of the activities of which is carrying on
propaganda or otherwise attempting to influence legislation.
(2) Any trustee or trustees or any fraternal society, order
or association operating under the lodge system, but only if
the property transferred is to be used by the trustee or
trustees or by the fraternal society, order or association
exclusively for religious, charitable, scientific, literary or
educational purposes or for the prevention of cruelty to
children or animals, and no substantial part of the activities
of the trustee or trustees or of the fraternal society, order
or association is carrying on propaganda or otherwise attempting
to influence legislation.
(3) Any veterans' organization incorporated by act of
Congress or its departments or local chapters or posts, no part
of the net earnings of which inures to the benefit of any
private shareholder or individual.
(d) All proceeds of insurance on the life of the decedent
are exempt from inheritance tax. Refunds of unearned premiums
for the current policy period and post mortem dividends shall
be considered exempt proceeds.
(e) All proceeds of any Federal War Risk Insurance, National
Service Life Insurance or similar governmental insurance are
exempt from inheritance tax. Refunds of unearned premiums for
the current policy period and post mortem dividends shall be
considered exempt proceeds.
(f) The pay and allowances determined by the United States
to be due a member of its armed forces for service in the
Vietnam conflict after August 5, 1964, for the period between
the date declared by it as the beginning of his
missing-in-action status to the date determined by it to be the
date of his death, are exempt from inheritance tax.
(g) Inter vivos transfers as defined in subsection (c) of
section 2107 which might otherwise be subject to inheritance
tax are exempt where the transferee is a governmental body as
provided in subsection (b) or a charity as provided in
subsection (c).
(h) Intangible personal property held by, for or for the
benefit of a decedent who, at the time of his death, was a
nonresident is exempt from inheritance tax.
(i) A transfer made as an advancement of or on account of
an intestate share or in satisfaction or partial satisfaction
of a gift by will, but not within the meaning of subsection
(c)(3) of section 2107, is exempt from inheritance tax.
(j) Adjusted service certificates issued under the act of
Congress of May 19, 1924, and adjusted service bonds issued
under the act of Congress of January 27, 1936, are exempt from
inheritance tax.
(k) Property subject to a power of appointment, whether or
not the power is exercised, and notwithstanding any blending
of such property with the property of the donee, is exempt from
inheritance tax in the estate of the donee of the power of
appointment. ((k) amended June 30, 1995, P.L.139, No.21)
(l) Property awarded to the Commonwealth as statutory heir
by escheat or without escheat, otherwise than as custodian for
a known distributee, is exempt from inheritance tax. Inheritance
tax shall be deducted at the applicable rate without interest
from any such exempt funds thereafter distributed by the
Commonwealth.
(m) Property owned by husband and wife with right of
survivorship is exempt from inheritance tax. If the ownership
was created within the meaning of section 2107(c)(3), the entire
interest transferred shall be subject to tax under section
2107(c)(3) as though a part of the estate of the spouse who
created the co-ownership. ((m) amended June 30, 1995, P.L.139,
No.21)
(n) Property held in the name of a decedent who had no
beneficial interest in the property is exempt from inheritance
tax.
(o) Obligations owing to the decedent which are worthless
immediately before death are exempt from inheritance tax
although collectible from the obligor's distributive share of
the estate.
(p) The lump-sum death payment from the Social Security
Administration or Veterans' Administration or any county
veterans' death benefit or other similar death benefit, whether
or not paid to the decedent's estate, is exempt from inheritance
tax.
(q) The lump-sum burial benefit from the United States
Railroad Retirement Board, whether or not paid to the decedent's
estate, is exempt from inheritance tax.
(r) Payments under pension, stock bonus, profit-sharing and
other retirement plans, including H.R.10 plans, individual
retirement accounts, individual retirement annuities and
individual retirement bonds to distributees designated by the
decedent or designated in accordance with the terms of the plan,
are exempt from inheritance tax to the extent that the decedent
before his death did not otherwise have the right to possess
(including proprietary rights at termination of employment),
enjoy, assign or anticipate the payment made. In addition to
this exemption, whether or not the decedent possessed any of
these rights, the payments are exempt from inheritance tax to
the same extent that they are exempt from Federal estate tax
under the provisions of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended, any
supplement to the code or any similar provision in effect from
time to time for Federal estate tax purposes, except that a
payment which would otherwise be exempt for Federal estate tax
purposes if it had not been made in a lump-sum or other
nonexempt form of payment shall be exempt from inheritance tax
even though paid in a lump-sum or other form of payment. The
proceeds of life insurance otherwise exempt under subsection
(d) shall not be subject to inheritance tax because they are
paid under a pension, stock bonus, profit-sharing, H.R.10 or
other retirement plan. ((r) amended Dec. 23, 2003, P.L.250,
No.46)
(s) A transfer of real estate devoted to the business of
agriculture to or for the benefit of members of the same family,
provided that after the transfer the real estate continues to
be devoted to the business of agriculture for a period of seven
years beyond the transferor's date of death, the real estate
derives a yearly gross income of at least two thousand dollars
($2,000) and the real estate is reported on a timely filed
inheritance tax return, provided that:
(1) Any tract of land under this article which is no longer
devoted to the business of agriculture within seven years beyond
the transferor's date of death or does not derive a yearly gross
income of at least two thousand dollars ($2,000) shall be
subject to inheritance tax due the Commonwealth under section
2107, in the amount that would have been paid or payable on the
basis of valuation authorized under section 2121 for nonexempt
transfers of property, plus interest thereon accruing as of the
transferor's date of death, at the rate established in section
2143.
(2) Any tax imposed under section 2107 shall be a lien in
favor of the Commonwealth upon the property no longer being
devoted to the business of agriculture or which does not derive
a yearly gross income of at least two thousand dollars ($2,000),
as well as the personal obligation of the owner of the property
at the time of the event causing the property to fail to qualify
for exemption and all beneficiaries of any trust that is an
owner of the property. Liability for the tax shall be joint and
several.
(3) Every owner of real estate exempt under this subsection
shall certify to the department on an annual basis that the
land qualifies for this exemption and shall notify the
department within thirty days of any transaction or occurrence
causing the real estate to fail to qualify for the exemption.
Each year the department shall inform all owners of their
obligation to provide an annual certification under this
subclause. This certification and notification shall be
completed in the form and manner as provided by the department.
((s) amended July 13, 2016, P.L.526, No.84)
(s.1) A transfer of an agricultural commodity, agricultural
conservation easement, agricultural reserve, agricultural use
property or a forest reserve, as those terms are defined in
section 2122(a), to or for the benefit of lineal descendants
or siblings is exempt from inheritance tax, provided the
foregoing property is reported on a timely filed inheritance
tax return. ((s.1) amended July 13, 2016, P.L.526, No.84)
(t) A qualified family-owned business. The following shall
apply:
(1) A transfer of a qualified family-owned business interest
to or for the benefit of members of the same family is exempt
from inheritance tax if the qualified family-owned business
interest:
(i) continues to be owned by members of the same family or
a trust whose beneficiaries are comprised solely of members of
the same family for a minimum of seven years after the
decedent's date of death; and
(ii) is reported on a timely filed inheritance tax return.
(2) A qualified family-owned business interest that was
exempted from inheritance tax under this subsection that is no
longer owned by members of the same family or a trust whose
beneficiaries are comprised solely of members of the same family
at any time within seven years after the decedent's date of
death shall be subject to inheritance tax due the Commonwealth
under section 2107, in an amount equal to the inheritance tax
that would have been paid or payable on the value of the
qualified family-owned business interest using the valuation
authorized under section 2121 for nonexempt transfers of
property. Interest shall accrue from the payment date
established under section 2142 at the rate established under
section 2143.
(2.1) The exemption under this subsection shall not apply
to property transferred by the decedent into the qualified
family-owned business within one year of the death of the
decedent unless the property was transferred for a legitimate
business purpose.
(3) Inheritance tax due under section 2107 as a result of
disqualification under paragraphs (2) or (4), plus interest on
the inheritance tax, shall be a lien in favor of the
Commonwealth on the real and personal property of the owner of
the qualified family-owned business interest at the time of the
transaction or occurrence that disqualified the qualified
family-owned business interest from the exemption provided under
this subsection. The inheritance tax due and interest shall be
the personal obligation of the owner of the qualified
family-owned business interest at the time of the transaction
or occurrence that disqualified the qualified family-owned
business interest from the exemption provided under this
subsection and all beneficiaries of any trust that is an owner
of the qualified family-owned business interest. Liability for
the tax shall be joint and several. The lien shall remain until
the inheritance tax and accrued interest are paid in full.
(4) Each owner of a qualified family-owned business interest
exempted from inheritance tax under this subsection shall
certify to the department, on an annual basis, for seven years
after the decedent's date of death, that the qualified
family-owned business interest continues to be owned by members
of the same family or a trust whose beneficiaries are comprised
solely of members of the same family and shall notify the
department within thirty days of any transaction or occurrence
causing the qualified family-owned business interest to fail
to qualify for the exemption. Each year, the department shall
inform all owners of a qualified family-owned business interest
exempted from inheritance tax under this subsection of their
obligation to provide an annual certification under this
paragraph. The certification and notification shall be completed
in the form and manner as provided by the department. An owner's
failure to comply with the certification or notification
requirements shall result in the loss of the exemption, and the
qualified family-owned business interest shall be subject to
inheritance tax due the Commonwealth under section 2107, in an
amount equal to the inheritance tax that would have been paid
or payable on the value of the qualified family-owned business
interest using the valuation authorized under section 2121 for
nonexempt transfers of property. Interest shall accrue from the
payment date established in section 2142 at the rate established
in section 2143.
(5) For purposes of this subsection, the term "qualified
family-owned business interest" shall be as follows:
(i) an interest as a proprietor in a trade or business
carried on as a proprietorship, if the proprietorship has fewer
than fifty full-time equivalent employees as of the date of the
decedent's death, the proprietorship has a net book value of
assets totaling less than five million dollars ($5,000,000) as
of the date of the decedent's death and has been in existence
for five years prior to the date of the decedent's death; or
(ii) an interest in an entity carrying on a trade or
business, if:
(A) the entity has fewer than fifty full-time equivalent
employees as of the date of the decedent's death;
(B) the entity has a net book value of assets totaling less
than five million dollars ($5,000,000) as of the date of the
decedent's death;
(C) as of the date of the decedent's death, the entity is
wholly owned by the decedent, by the decedent and members of
the same family, by a trust whose beneficiaries are comprised
solely of members of the same family or by an entity that is
owned solely by members of the same family;
(D) the entity is engaged in a trade or business the
principal purpose of which is not the management of investments
or income-producing assets owned by the entity; and
(E) the entity has been in existence for five years prior
to the decedent's date of death.
((t) amended July 13, 2016, P.L.526, No.84)
(u) The transfer of personal property, whether tangible or
intangible, that is the result of a decedent military member.
(1) For purposes of this subsection, the term "decedent
military member" shall mean an individual who, while serving
in the armed forces, a reserve component or the National Guard
of the United States, died as a result of injury or illness
received while on active duty, including active duty for
training.
(2) The term shall include both Federal and State active
duty as evidenced by official activation order.
((u) added July 8, 2022, P.L.513, No.53)
(2111 added Aug. 4, 1991, P.L.97, No.22)
Compiler's Note: Section 24(2.1) of Act 53 of 2022 provided
that the addition of section 2111(u) shall apply to
inheritance tax imposed as to a decedent whose date of
death is after the effective date of section 24.
Compiler's Note: Section 51(1.1) of Act 84 of 2016, which
amended subsections (s) and (s.1), provided that the
amendment of subsections (s) and (s.1) shall apply to
inheritance tax imposed as to a decedent whose date of
death is after December 31, 2012.
Section 51(2) of Act 84 of 2016, which amended
subsection (t), provided that the amendment of subsection
(t) shall apply to inheritance tax imposed as to a
decedent whose date of death is after June 30, 2013.
Compiler's Note: Section 42(4) of Act 52 of 2013, which
added subsection (t), provided that subsection (t) shall
apply to the estates of decedents who die on or after
July 1, 2013.
Compiler's Note: Section 30(7) of Act 85 of 2012, which
added subsections (s) and (s.1), provided that
subsections (s) and (s.1) shall apply to estates of
decedents dying after June 30, 2012.
Compiler's Note: Section 33(17) of Act 46 of 2003, which
amended subsection (r), provided that the amendment shall
apply to the estates of decedents who die after June 30,
2002.
Compiler's Note: Section 24 of Act 21 of 1995, which amended
subsections (k) and (m), provided that section 43(4)(ii)
of Act 48 of 1994 is repealed insofar as it limits the
amendment or addition of Article XXI from applying to
the estates of decedents dying on or after January 1,
1995.
Section 2112. Exemption for Poverty.--(2112 repealed July
9, 2013, P.L.270, No.52)
Section 2113. Trusts and Similar Arrangements for Spouses.--
(a) In the case of a transfer of property for the sole use of
the transferor's surviving spouse during the surviving spouse's
entire lifetime, all succeeding interests which follow the
interest of the surviving spouse shall not be subject to tax
as transfers by the transferor if the transfer was made by a
decedent dying on or after January 1, 1995, provided that the
transferor's personal representative may elect, on a timely
filed inheritance tax return, to have this section not apply
to a trust or similar arrangement or portion of a trust or
similar arrangement.
(b) Succeeding interests not subject to tax as transfers
by the transferor by reason of subsection (a) shall be deemed
to be transfers subject to tax by the surviving spouse of the
property held in the trust or similar arrangement at the death
of the surviving spouse. The tax on that property shall be based
upon its value at the death of the surviving spouse, the tax
rates applicable to dispositions by the surviving spouse or by
the transferor, whichever are lower, and any exemptions relating
to the kind or location of property held in the trust or similar
arrangement at the surviving spouse's death.
(c) Subsection (b) shall apply even if the succeeding
interests not subject to tax as transfers by the transferor by
reason of subsection (a) were also not subject to tax by reason
of an exemption based upon the kind or location of property at
the transferor's death.
(d) This section shall not apply to inter vivos transfers
otherwise exempt from inheritance tax.
(2113 amended June 30, 1995, P.L.139, No.21)
Compiler's Note: Section 24 of Act 21 of 1995, which amended
section 2113, provided that section 43(4)(ii) of Act 48
of 1994 is repealed insofar as it limits the amendment
or addition of Article XXI from applying to the estates
of decedents dying on or after January 1, 1995.
PART IV
RATE OF TAX
(IV added Aug. 4, 1991, P.L.97, No.22)
Section 2116. Inheritance Tax.--(a) (1) Inheritance tax
upon the transfer of property passing to or for the use of any
of the following shall be at the rate of four and one-half per
cent:
(i) grandfather, grandmother, father, mother, except
transfers under subclause (1.2), and lineal descendants; or
(ii) wife or widow and husband or widower of a child.
(1.1) Inheritance tax upon the transfer of property passing
to or for the use of a husband or wife shall be:
(i) At the rate of three per cent for estates of decedents
dying on or after July 1, 1994, and before January 1, 1995.
(ii) At a rate of zero per cent for estates of decedents
dying on or after January 1, 1995.
(1.2) Inheritance tax upon the transfer of property from a
child twenty-one years of age or younger to or for the use of
a natural parent, an adoptive parent or a stepparent of the
child shall be at the rate of zero per cent.
(1.3) Inheritance tax upon the transfer of property passing
to or for the use of a sibling shall be at the rate of twelve
per cent.
(1.4) Inheritance tax upon the transfer of property to or
for the use of a child twenty-one years of age or younger from
a natural parent, an adoptive parent or a stepparent of the
child shall be at the rate of zero per cent. ((1.4) added
June 28, 2019, P.L.50, No.13)
(2) Inheritance tax upon the transfer of property passing
to or for the use of all persons other than those designated
in subclause (1), (1.1), (1.2), (1.3) or (1.4) or exempt under
section 2111(m) shall be at the rate of fifteen per cent. ((2)
amended June 28, 2019, P.L.50, No.13)
(3) When property passes to or for the use of a husband and
wife with right of survivorship, one of whom is taxable at a
rate lower than the other, the lower rate of tax shall be
applied to the entire interest.
((a) amended May 24, 2000, P.L.106, No.23)
(b) (1) When the decedent was a resident, the tax shall
be computed upon the value of the property, in excess of the
deductions specified in Part VI, at the rates in effect at the
transferor's death.
(2) When the decedent was a nonresident, the tax shall be
computed upon the value of real property and tangible personal
property having its situs in this Commonwealth, in excess of
unpaid property taxes assessed on the property and any
indebtedness for which it is liened, mortgaged or pledged, at
the rates in effect at the transferor's death. The person liable
to make the return under section 2136 may elect to have the tax
computed as if the decedent was a resident and his entire estate
was property having its situs in this Commonwealth, and the tax
due shall be the amount which bears the same ratio to the tax
thus computed as the real property and tangible personal
property located in this Commonwealth bears to the entire estate
of the decedent.
(b.1) The inheritance tax due upon the transfer of property
passing to or for the use of a husband or wife shall be the
lesser of the tax imposed under subsection (a)(1.1) or the tax
due after the allowance of the credit provided for under section
2112. ((b.1) added June 16, 1994, P.L.279, No.48)
(c) When any person entitled to a distributive share of an
estate, whether under an inter vivos trust, a will or the
intestate law, renounces his right to receive the distributive
share receiving therefor no consideration, or exercises his
elective rights under 20 Pa.C.S. Ch. 22 (relating to elective
share of surviving spouse) receiving therefor no consideration
other than the interest in assets passing to him as the electing
spouse, the tax shall be computed as though the persons who
benefit by such renunciation or election were originally
designated to be the distributees, conditioned upon an
adjudication or decree of distribution expressly confirming
distribution to such distributees. The renunciation shall be
made within nine months after the death of the decedent. In the
case of a surviving spouse taking his elective share of an
estate, the renunciation shall be made within the time for
election and any extension thereof under 20 Pa.C.S. § 2210(b)
(relating to procedure for election; time limit). Notice of the
filing of the account and of its call for audit or confirmation
shall include notice of the renunciation or election to the
department. When an unconditional vesting of a future interest
does not occur at the decedent's death, the renunciation
specified in this subsection of the future interest may be made
within three months after the occurrence of the event or
contingency which resolves the vesting of the interest in
possession and enjoyment. ((c) amended May 24, 2000, P.L.106,
No.23)
(d) In case of a compromise of a dispute regarding rights
and interests of transferees, made in good faith, the tax shall
be computed as though the persons so receiving distribution
were originally entitled to it as transferees of the property
received in the compromise, conditioned upon an adjudication
or decree of distribution expressly confirming distribution to
such distributees. Notice of the filing of the account and of
its call for audit or confirmation shall include notice to the
department.
(e) If the rate of tax which will be applicable when an
interest vests in possession and enjoyment cannot be established
with certainty, the department, after consideration of relevant
actuarial factors, valuations and other pertinent circumstances,
may enter into an agreement with the person responsible for
payment to establish a specified amount of tax which, when paid
within sixty days after the agreement, shall constitute full
payment of all tax otherwise due upon such transfer. Rights of
withdrawal of a surviving spouse not exercised within nine
months of the transferor's death shall be ignored in making
such calculations. ((e) amended June 16, 1994, P.L.279, No.48)
(f) Property subject to a power of appointment, whether or
not the power is exercised and notwithstanding any blending of
the property with the property of the donee, shall be taxed
only as part of the estate of the donor.
(2116 added Aug. 4, 1991, P.L.97, No.22)
Compiler's Note: Section 32 of Act 13 of 2019 provided that
the amendment or addition of section 2116(a)(1.4) and
(2) of this act shall apply to property transferred by
a natural parent, an adoptive parent or a stepparent who
dies after December 31, 2019.
Compiler's Note: Section 19(8)(ii) of Act 23 of 2000, which
amended subsections (a) and (c), provided that the
amendment shall apply to the estates of decedents dying
after June 30, 2000. Section 19(8)(ii) provided that the
amendment shall apply to inter vivos transfers made by
decedents dying after June 30, 2000, regardless of the
date of the transfer.
Section 2117. Estate Tax.--(a) In the event that a Federal
estate tax is payable to the Federal Government on the transfer
of the taxable estate of a decedent who was a resident of this
Commonwealth at the time of his death, and the inheritance tax,
if any, actually paid to the Commonwealth by reason of the death
of the decedent (disregarding interest or the amount of any
discount allowed under section 2142) is less than the maximum
credit for State death taxes allowable under section 2011 of
the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
§ 2011), a tax equal to the difference is imposed. If a resident
decedent owned or had an interest in real property or tangible
personal property having a situs in another state, the tax so
imposed shall be reduced by the greater of:
(1) the amount of death taxes actually paid to the other
state with respect to the estate of the decedent, excluding any
death tax expressly imposed to receive the benefit of the credit
for state death taxes allowed under section 2011 of the Internal
Revenue Code of 1986 (26 U.S.C. § 2011); or
(2) an amount computed by multiplying the maximum credit
for state death taxes allowable under section 2011 of the
Internal Revenue Code of 1986 (26 U.S.C. § 2011) by a fraction,
the numerator of which is the value of the real property and
tangible personal property to the extent included in the
decedent's gross estate for Federal estate tax purposes and
having a situs in the other state and the denominator of which
is the value of the decedent's gross estate for Federal estate
tax purposes.
(b) In the event that a Federal estate tax is payable to
the Federal Government on the transfer of the taxable estate
of a decedent who was not a resident of this Commonwealth at
the time of his death but who owned or had an interest in real
property or tangible personal property having a situs in this
Commonwealth, a tax is imposed in an amount computed by
multiplying the maximum credit for State death taxes allowable
under section 2011 of the Internal Revenue Code of 1986 (26
U.S.C. § 2011) by a fraction, the numerator of which is the
value of the real property and tangible personal property to
the extent included in the decedent's gross estate for Federal
estate tax purposes having a situs in this Commonwealth and the
denominator of which is the value of the decedent's gross estate
for Federal estate tax purposes, and deducting from that amount
the inheritance tax, if any, actually paid to the Commonwealth
(disregarding interest or the amount of any discount allowed
under section 2142).
(c) When an inheritance tax is imposed after an estate tax
imposed under subsection (a) or (b) has been paid, the estate
tax paid shall be credited against any inheritance tax later
imposed.
(2117 amended Dec. 23, 2003, P.L.250, No.46)
Compiler's Note: Section 33(17) of Act 46 of 2003, which
amended section 2117, provided that the amendment shall
apply to the estates of decedents who die after June 30,
2002.
PART V
VALUATION
(V added Aug. 4, 1991, P.L.97, No.22)
Section 2121. Valuation.--(a) Except as otherwise provided
in this part, the valuation date shall be the date of the
transferor's death. When the transfer was made during lifetime
and was not in trust, the property transferred shall be valued
at the transferor's death. When the transfer was to an inter
vivos trust, the property to be valued shall be that comprising
the portion of the trust, if any, which exists at the
transferor's death and which portion is traceable from property
the transfer of which is subject to tax under this article.
(b) The value of a life interest shall be determined in
accordance with rules and regulations promulgated by the
department. Until the promulgation of rules and regulations to
the contrary, the regulations in effect for Federal estate tax
purposes shall apply.
(c) The value of an interest for a term certain shall be
determined in accordance with rules and regulations promulgated
by the department. Until the promulgation of rules and
regulations to the contrary, the regulations in effect for
Federal estate tax purposes shall apply.
(d) If an annuity or a life estate is terminated by the
death of the annuitant or life tenant or by the happening of a
contingency within nine months after the death of the
transferor, the value of the annuity or estate shall be the
value, at the date of the transferor's death, of the amount of
the annuity or income actually paid or payable to the annuitant
or life tenant during the period he was entitled to the annuity
or was in possession of the estate. If an appraisement of an
annuity or life estate has been filed before the termination,
the appraisement and any assessment based on the appraisement
shall be revised in accordance with this section upon request
of any party in interest, including the Commonwealth and the
personal representative, insofar as the appraisement and any
assessment based on the appraisement relates to the valuation
of the terminated annuity or life estate, without the necessity
of the party in interest following any procedure described in
Part XI.
(e) The value of a future interest shall be determined in
accordance with rules and regulations promulgated by the
department. Until the promulgation of rules and regulations to
the contrary, the regulations in effect for Federal estate tax
purposes shall apply.
(f) When a decedent's property is subject, during his
lifetime and at the time of his death, to a binding option or
agreement to sell, the appraised value of the property shall
not exceed the amount of the established price payable for it
provided the option or agreement is a bona fide arrangement and
not a device to transfer the property for less than an adequate
and full consideration in money or money's worth. If the option
or agreement is not exercised and consummated, the value at
which the property is appraised shall not be limited to the
established price payable for the property, and it shall not
exceed the value of the property on the date of the transferor's
death. When tax has been assessed on the basis of an established
price and the option or agreement is not exercised and
consummated or an amount greater than the established price is
received for the property, the fiduciary or transferee shall
file a supplemental return reporting the facts.
(2121 added Aug. 4, 1991, P.L.97, No.22)
Section 2122. Valuation of Certain Farmland.--(a) The
following words and phrases, when used in this section, shall
have the meaning ascribed to them in this section, except where
the context clearly indicates a different meaning:
"Agricultural commodity." Any and all plant and animal
products, including Christmas trees produced in this
Commonwealth for commercial purposes.
"Agricultural conservation easement." As defined in section
3 of the act of June 30, 1981 (P.L.128, No.43), known as the
"Agricultural Area Security Law." (Def. added July 6, 2006,
P.L.319, No.67)
"Agricultural reserve." Noncommercial open space lands used
for outdoor recreation or the enjoyment of scenic or natural
beauty and open to the public for such use, without charge or
fee, on a nondiscriminatory basis.
"Agricultural use." Use of the land for the purpose of
producing an agricultural commodity or when devoted to and
meeting the requirements and qualifications for payments or
other compensation pursuant to a soil conservation program under
an agreement with an agency of the Federal Government.
"Forest reserve." Land, ten acres or more, stocked by forest
trees of any size and capable of producing timber or other wood
products.
"Separation." A division, by conveyance or other action of
the owner, of lands devoted to agricultural use, agricultural
reserve or forest reserve and preferentially assessed under the
provisions of this section into two or more tracts of land which
continue to be agricultural use, agricultural reserve or forest
reserve and all tracts so formed meet the requirements of
section 3 of the act of December 19, 1974 (P.L.973, No.319),
known as the "Pennsylvania Farmland and Forest Land Assessment
Act of 1974."
"Split-off." A division, by conveyance or other action of
the owner, of lands devoted to agricultural use, agricultural
reserve or forest reserve and preferentially assessed under the
provisions of this section into two or more tracts of land, the
use of which on one or more of such tracts does not meet the
requirements of section 3 of the act of December 19, 1974
(P.L.973, No.319), known as the "Pennsylvania Farmland and
Forest Land Assessment Act of 1974."
(b) (1) The value for transfer inheritance tax purposes
of land or an interest in land which is owned by a decedent and
devoted to agricultural use, agricultural reserve or forest
reserve shall be that value which such land has for its
particular use if it also meets the following conditions:
(i) in the case of land devoted to agricultural use, the
land was devoted to such agricultural use for the three years
preceding the death of such decedent and is not less than ten
contiguous acres in area or has an anticipated yearly gross
income derived from agricultural use of two thousand dollars
($2,000);
(ii) in the case of land devoted to agricultural reserve,
the land is not less than ten contiguous acres in area;
(iii) in the case of land presently devoted to forest
reserve, the land is not less than ten contiguous acres in area;
or
(iv) the contiguous tract of land for which application is
made is not less than the entire contiguous area of the owner
used for agricultural use, agricultural reserve or forest
reserve purposes.
(2) In determining the value of land in agricultural use,
agricultural reserve or forest reserve for its particular use,
consideration shall be given to available evidence of such
land's capability for its particular use as derived from the
soil survey at The Pennsylvania State University, the National
Cooperative Soil Survey, the United States Census of
Agricultural Categories of land use classes and other evidence
of the capability of the land devoted to such use and also, if
the land is assessed under the provisions of the "Pennsylvania
Farmland and Forest Land Assessment Act of 1974," to the
valuation determined by the local county assessor thereunder.
(c) (1) If any tract of land in agricultural use,
agricultural reserve or forest reserve, which is valued for
inheritance tax purposes under the provisions of this part, is
applied to a use other than agricultural use, agricultural
reserve or forest reserve or for any other reason, except
condemnation thereof, is removed from the category of land
preferentially valued under this part within seven years
following the death of such decedent, the owner at such time
the land is so removed shall be subject and liable to tax due
the Commonwealth in an amount equal to the difference, if any,
between the taxes paid or payable on the basis of the valuation
authorized under this section and the taxes that would have
been paid or payable had that land been valued and taxed on the
basis of its market value at the death of the decedent, plus
interest thereon for the period from the date of death to the
change of use at the rate established in section 2143.
(2) The tax shall be a lien upon the property in favor of
the Commonwealth, collectible in the manner provided by law for
the collection of delinquent real estate taxes, as well as the
personal obligation of the owner at the time of such change of
use. The tax shall become due on the date of change of use.
(3) Every owner of land preferentially valued under this
section shall notify the register of wills of the county or
counties in which the land is located of any change or proposed
change in the use of the land. Any owner failing to make
notification commits a misdemeanor of the third degree.
(d) (1) The split-off of a part of the land which has been
valued, assessed and taxed under this article for a use other
than agricultural use, agricultural reserve or forest reserve
within the seven-year period provided for by subsection (c)
shall, except when the split-off occurs through condemnation,
subject the land divided and the entire parcel from which the
land was divided to liability for taxes as otherwise set forth
in this article except as provided in subclause (2).
(2) The owner of property subject to a preferential tax
assessment may split off land covered by the preferential tax
assessment within the seven-year period. The tract of land so
split-off shall not exceed two acres annually and may only be
used for residential use, agricultural use, agricultural reserve
or forest reserve and the construction of a residential dwelling
to be occupied by the person to whom the land is transferred.
The total parcel or parcels of land split-off under the
provisions of this subsection shall not exceed ten per cent or
ten acres, whichever is less, of the entire tract subject to
the preferential tax assessment. The split-off of a parcel of
land which meets the requirements of this subsection shall not
invalidate the preferential tax assessment if it continues to
meet the requirements of subsection (b).
(3) The owner of property subject to a preferential use
assessment may separate land covered by the preferential use
assessment. The separation shall not invalidate the preferential
tax assessment unless a subsequent abandonment of preferential
use occurs within seven years of the separation. The abandonment
shall subject the entire tract of land separated to liability
for taxes, which are to be paid by the person changing the use,
as set forth in this article.
(4) When property subject to preferential tax assessment
is separated among the beneficiaries taxed under subsection
(a)(1) of section 2116, a subsequent change within the
seven-year period provided for in subsection (b) in the use of
one beneficiary's portion of the property shall subject only
that tract held by the beneficiary who changes the use to
liability under this article.
(e) The value for transfer inheritance tax purposes of land
or an interest in land which is part of an agricultural
conservation easement shall be at fifty per cent of the value
otherwise determined under this section. ((e) added July 6,
2006, P.L.319, No.67)
(2122 added Aug. 4, 1991, P.L.97, No.22)
PART VI
DEDUCTIONS
(VI added Aug. 4, 1991, P.L.97, No.22)
Section 2126. Deductions Generally.--The only deductions
from the value of the property transferred shall be those set
forth in this part. Except as otherwise provided in this
article, they shall be deductible regardless of whether or not
assets comprising the decedent's taxable estate are employed
in the payment or discharge of the deductible items. When a tax
is imposed upon a transfer described in subsection (c) of
section 2107 and section 2108, the deductions shall be allowed
to the transferee only to the extent that the transferee has
actually paid the deductible items and either the transferee
was legally obligated to pay the deductible items or the estate
subject to administration by a personal representative is
insufficient to pay the deductible items.
(2126 added Aug. 4, 1991, P.L.97, No.22)
Section 2127. Expenses.--The following expenses may be
deducted from the value of the property transferred:
(1) Administration expenses. All reasonable expenses of
administration of the decedent's estate and of the assets
includable in the decedent's taxable estate are deductible.
(2) Bequest to fiduciary or attorney in lieu of fees. A
transfer to an executor, trustee or attorney in lieu of
compensation for services is deductible to the extent it does
not exceed reasonable compensation for the services to be
performed.
(3) Family exemption. The family exemption is deductible.
(4) Funeral and burial expenses. Reasonable and customary
funeral expenses, including the cost of a family burial lot or
other resting place, are deductible.
(5) Tombstones and gravemarkers. Reasonable and customary
expenses for the purchase and erection of a monument, gravestone
or marker on decedent's burial lot or final resting place are
deductible.
(6) Burial trusts or contracts. Bequests or devises in
trust, or funds placed in trust after decedent's death or funds
paid under a contract after decedent's death, in reasonable
amounts, to the extent that the funds or income from the funds
is to be applied to the care and preservation of the family
burial lot or other final resting place in which the decedent
is buried or the remains of the decedent repose and the
structure on the burial lot or other final resting place, are
deductible.
(7) Bequests for religious services. Bequests in reasonable
amounts for the performance or celebration of religious rites,
rituals, services or ceremonies, in consequence of the death
of the decedent, shall be deductible.
(2127 added Aug. 4, 1991, P.L.97, No.22)
Section 2128. Taxes.--The following taxes may be deducted
from the value of the property transferred:
(1) Property taxes. Taxes imposed against the decedent or
against any property constituting a part of decedent's gross
taxable estate and which are owing prior to decedent's death
are deductible. However, taxes for which decedent is not
personally liable shall not be deductible in an amount exceeding
the value of the property against which the taxes are liened.
(2) State and foreign death taxes. Death taxes other than
the Federal estate tax, disregarding interest and penalty, paid
to other states and territories of the United States and to
taxing jurisdictions outside the United States and its
territories on assets, the transfer of which is subject to tax
under this article, if the taxes are required to be paid to
bring the assets into this Commonwealth, or to transfer them
to the new owner, are deductible.
(2128 added Aug. 4, 1991, P.L.97, No.22)
Section 2129. Liabilities.--(a) Except as set forth in
section 2130(5), all liabilities of the decedent shall be
deductible subject to the limitations set forth in this section.
(b) Except as otherwise provided in subsections (h) and
(i), the deductions for indebtedness of the decedent, when
founded upon a promise or agreement, shall be limited to the
extent that it was contracted bona fide and for an adequate and
full consideration in money or money's worth.
(c) Except as provided by subclause (4) of section 2130,
indebtedness owing by the decedent upon a secured loan is
deductible whether or not the security is a part of the gross
taxable estate.
(d) Except as provided by subclause (4) of section 2130,
the decedent's liability (net of all collectible contribution)
on a joint obligation is deductible whether or not payment of
the obligation is secured by entireties property or property
which passes to another under the right of survivorship.
(e) Indebtedness arising from a contract for the support
of the decedent is deductible.
(f) Decedent's obligation is deductible whether or not
discharged by testamentary gift.
(g) Decedent's debt, which is unenforceable because of any
statute of limitations, is deductible if paid by the estate.
(h) A pledge to a transferee exempt under the provisions
of subsection (c) of section 2111 is deductible if paid by the
estate, whether or not it is legally enforceable.
(i) Liabilities arising from the decedent's tort or from
decedent's status as an accommodation endorser, guarantor or
surety are deductible, except to the extent that it can be
reasonably anticipated that decedent's estate will be exonerated
or reimbursed by others primarily liable or subject to
contribution.
(j) The fact that a surviving spouse is legally liable and
financially able to pay any item which, if the deceased spouse
were unmarried, would qualify as a deduction under this part
shall not result in the disallowance of such item as a
deduction.
(k) Obligations for decedent's medical expenses are not
deductible to the extent decedent's estate will be exonerated
or reimbursed for such expenses from other sources.
(2129 amended July 9, 2013, P.L.270, No.52)
Section 2130. Deductions Not Allowed.--The following are
not deductible:
(1) ((1) deleted by amendment June 16, 1994, P.L.279, No.48)
(2) Claims of a former spouse, or others, under an agreement
between the former spouse and the decedent, insofar as they
arise in consideration of a relinquishment or promised
relinquishment of marital or support rights.
(3) Litigation expenses of beneficiaries.
(4) Indebtedness secured by real property or tangible
personal property, all of which has its situs outside of this
Commonwealth, except to the extent the indebtedness exceeds the
value of the property.
(5) Expenses, debts, obligations and liabilities incurred
in connection with a qualified family-owned business interest
exempted from inheritance under section 2111(t) and any property
exempted from inheritance tax under section 2111(s) or (s.1).
(2130 amended July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 24 of Act 21 of 1995, which
reenacted and amended section 2130, provided that section
43(4)(ii) of Act 48 of 1994 is repealed insofar as it
limits the amendment or addition of Article XXI from
applying to the estates of decedents dying on or after
January 1, 1995.
PART VII
PAYMENT OF TAX
(VII added Aug. 4, 1991, P.L.97, No.22)
Section 2136. Returns.--(a) The following persons shall
make a return:
(1) The personal representative of the estate of the
decedent as to property of the decedent administered by him and
additional property which is or may be subject to inheritance
tax of which he shall have or acquire knowledge.
(2) The transferee of property upon the transfer of which
inheritance tax is or may be imposed by this article, including
a trustee of property transferred in trust. No separate return
need be made by the transferee of property included in the
return of a personal representative.
(b) The inclusion of property in the return shall not
constitute an admission that its transfer is taxable.
(c) Any person required to file a return under subsection
(a) shall promptly file a supplemental return with respect to
additional assets and transfers which come to his knowledge
after the original return has been filed.
(d) The returns required by subsection (a) shall be filed
within nine months after the death of the decedent. At any time
prior to the expiration of the nine-month period, the
department, in its discretion, may grant an extension of the
time for filing a return for an additional period of six months.
(e) The returns required by subsections (a) and (c) shall
be made in the form prescribed by the department.
(f) When the decedent was a resident, the returns shall be
filed with the register. When the decedent was a nonresident,
the returns shall be filed with the register who issued letters,
if any, in this Commonwealth; otherwise, the returns shall be
filed with the department.
(2136 added Aug. 4, 1991, P.L.97, No.22)
Section 2137. Appraisement.--The department shall have
supervision over, and make or cause to be made, fair and
conscionable appraisements of property the transfer of which
is subject to tax under this article. The appraisement, unless
suspended until audit, shall be made within six months after
the return has been filed and, if not so made, shall be made
within an additional period as the court, upon application of
any party in interest, including the personal representative,
shall fix.
(2137 added Aug. 4, 1991, P.L.97, No.22)
Section 2138. Deductions.--The official with whom the return
is required by subsection (f) of section 2136 to be filed shall
determine the allowance or disallowance of all deductions
claimed. The determination, unless suspended until audit, shall
be made within six months after the claim for allowance has
been filed and, if not so made, shall be made within such
further period as the court, upon application by any party in
interest, including the personal representative, shall fix.
However, the court, at the request of the fiduciary at the audit
of his account, may determine and allow, as deductions, all
properly deductible credits claimed in the account or allowed
at the audit without requiring the filing of a separate claim
for them, and the court may then fix the amount of the tax and
decree payment of the tax. Deductions exceeding one hundred
dollars ($100) in the aggregate shall not be allowed by the
court unless the Commonwealth is represented at the audit by
counsel or unless there is proof that the register has had at
least thirty days notice of the claim.
(2138 added Aug. 4, 1991, P.L.97, No.22)
Section 2139. Assessment of Tax.--After the appraisement
has been made and the allowance or disallowance of deductions
determined, the inheritance tax, as affected by the court's
determination of the allowance or disallowance of deductions
as provided in section 2138, shall be assessed by the official
with whom the return is required to be filed under subsection
(f) of section 2136. The assessment, unless suspended until
audit, shall be made within one month after the filing of the
appraisement or determination of deductions, whichever occurs
later, and, if not so made, shall be made within an additional
period as the court, upon application by any party in interest,
including the personal representative, shall fix.
(2139 added Aug. 4, 1991, P.L.97, No.22)
Section 2140. Notice.--The department shall give, or cause
to be given, notice of the filing of the appraisement, the
determination of the allowance or disallowance of deductions
and the amount of tax assessed, and all supplements, to the
personal representative and to any transferee who filed a tax
return or to their respective attorneys.
(2140 added Aug. 4, 1991, P.L.97, No.22)
Section 2141. Failure to File Returns Not a Bar to
Assessment of Tax.--Failure to file a return of a taxable
transfer shall not bar the making of an appraisement or
supplemental appraisement or assessment of tax or supplemental
assessment of tax based upon taxable transfers not returned
under the provisions of this article.
(2141 added Aug. 4, 1991, P.L.97, No.22)
Section 2142. Payment Date and Discount.--Inheritance tax
is due at the date of the decedent's death and shall become
delinquent at the expiration of nine months after the decedent's
death. To the extent that the inheritance tax is paid within
three months after the death of the decedent, a discount of
five per cent shall be allowed.
(2142 added Aug. 4, 1991, P.L.97, No.22)
Section 2143. Interest.--If the inheritance tax is not paid
before the date it becomes delinquent, interest on the unpaid
tax shall be charged after the date of delinquency at the rate
established pursuant to section 806 of the act of April 9, 1929
(P.L.343, No.176), known as "The Fiscal Code." When payment of
inheritance tax is not made because of litigation or other
unavoidable cause of delay and the property on which the tax
has been calculated has remained in the hands of a fiduciary
and has not produced a net income equal to the rate of interest
provided in this section annually, interest for such period
shall be calculated at the rate of the net income produced by
the property. Any payment on delinquent inheritance tax shall
be applied first to any interest due on the tax at the date of
payment and then, if there is any balance, to the tax itself.
(2143 added Aug. 4, 1991, P.L.97, No.22)
Section 2144. Source of Payment.--(a) In the absence of a
contrary intent appearing in the will, the inheritance tax,
including interest, on the transfer of property which passes
by will absolutely and in fee, and which is not part of the
residuary estate, shall be paid out of the residuary estate and
charged in the same manner as a general administration expense
of the estate. The payments shall be made by the personal
representative and, if not so paid, shall be made by the
transferee of the residuary estate.
(b) In the absence of a contrary intent appearing in the
inter vivos trust, the inheritance tax, including interest, on
the transfer of property which passes absolutely and in fee by
inter vivos trust, and which is not part of the residue of the
inter vivos trust, shall be paid out of the residue of the trust
and charged in the same manner as a general administration
expense of the trust. The payment shall be made by the trustee
and, if not so paid, shall be made by the transferee of the
residue of the trust.
(c) In the absence of a contrary intent appearing in the
will, the inheritance tax, including interest, on the transfer
of property which passes by will other than absolutely and in
fee, and which is not part of the residuary estate, shall be
paid out of the residuary estate and charged in the same manner
as a general administration expense of the estate. The payment
shall be made by the personal representative and, if not so
paid, shall be made by the transferee of the residuary estate.
(d) In the absence of a contrary intent appearing in the
inter vivos trust, the inheritance tax, including interest, on
the transfer of property which passes other than absolutely and
in fee by inter vivos trust, and which is not part of the
residue of the inter vivos trust, shall be paid out of the
residue of the trust and charged in the same manner as a general
administration expense of the trust. The payment shall be made
by the trustee and, if not so paid, shall be made by the
transferee of the residue of the trust.
(e) In the absence of a contrary intent appearing in the
will or other instrument of transfer, the inheritance tax, in
the case of a transfer of any estate, income or interest for a
term of years, for life or for other limited period, shall be
paid out of the principal of the property by which the estate,
income or interest is supported, except as otherwise provided
in subsection (c) or (d). The payment shall be made by the
personal representative or trustee and, if not so paid, shall
be made by the transferee of such principal.
(e.1) In the absence of a contrary intent appearing in the
will or other instrument of transfer creating the trust or
similar arrangement, and in the absence of a contrary intent
appearing in the will or other instrument of transfer of the
surviving spouse which expressly refers to the trust or similar
arrangement, the inheritance tax, including interest, due at
the death of a surviving spouse with respect to a trust or
similar arrangement to which section 2113(b) is applicable shall
be paid out of the residue of the principal of the trust or
similar arrangement and charged as a general administration
expense of the trust or similar arrangement. The payment shall
be made by the trustee or other fiduciary in possession of the
property and, if not so paid, shall be made by the transferee
of the residue of the trust or similar arrangement. ((e.1)
reenacted and amended June 30, 1995, P.L.139, No.21)
(f) In the absence of a contrary intent appearing in the
will or other instrument of transfer and except as otherwise
provided in this section, the ultimate liability for the
inheritance tax, including interest, shall be upon each
transferee.
(2144 added Aug. 4, 1991, P.L.97, No.22)
Compiler's Note: Section 24 of Act 21 of 1995, which
reenacted and amended subsection (e.1), provided that
section 43(4)(ii) of Act 48 of 1994 is repealed insofar
as it limits the amendment or addition of Article XXI
from applying to the estates of decedents dying on or
after January 1, 1995.
Section 2145. Estate Tax Return.--(a) The person or persons
required by section 2136 to make the inheritance tax return
shall be initially liable for payment of the estate tax.
(b) The personal representative of every decedent or, if
there is no personal representative, any other fiduciary charged
by law with the duty of filing a Federal estate tax return,
within one month of the filing or receipt of the return shall
file with the register or, if the decedent was a nonresident,
with the register who issued letters, if any, in this
Commonwealth, or otherwise with the department, a copy of the
decedent's Federal estate tax return and of any communication
from the Federal Government making any final change in the
return or of the tax due. The assessment of estate tax shall
be made by the register or department within three months after
the filing of the documents required to be filed and, if not
so made, shall be made within an additional period as the court,
upon application of any party in interest, including the
personal representative, shall fix.
(c) The estate tax is due at the date of the decedent's
death but shall not become delinquent until the expiration of
nine months after decedent's death. Any estate tax occasioned
by a final change in the Federal return or of the tax due shall
not become delinquent until the expiration of one month after
the person or persons liable to pay the tax have received final
notice of the increase in the Federal estate tax.
(d) No discount shall be allowed in paying the estate tax.
(e) If the estate tax is not paid before the date it becomes
delinquent under subsection (c), interest on the unpaid tax
shall be charged after the date of delinquency at the rate
established in section 2143.
(f) The estate tax shall be apportioned and ultimately borne
in accordance with the provisions of 20 Pa.C.S. Ch. 37 (relating
to apportionment of death taxes) unless otherwise provided by
this article or in the instrument of transfer.
(g) When the decedent was a resident, the estate tax shall
be paid to the register. When the decedent was a nonresident,
the estate tax shall be paid to the register who issued letters,
if any, in this Commonwealth; otherwise, it shall be paid to
the department.
(2145 amended Dec. 23, 2003, P.L.250, No.46)
Compiler's Note: Section 33(17) of Act 46 of 2003, which
amended section 2145, provided that the amendment shall
apply to the estates of decedents who die after June 30,
2002.
Section 2146. Deduction and Collection of Tax by Personal
Representative or Other Fiduciary.--Subject to the provisions
of sections 2144 and 2154, every personal representative or
other fiduciary (other than a trustee of a pension, stock-bonus,
profit-sharing, retirement annuity, deferred compensation,
disability, death benefit, or other employe benefit plan) in
charge of or in possession of any property, or instrument
evidencing ownership of property, the transfer of which is
subject to a tax imposed by this article other than a tax on a
future interest not yet delinquent, shall deduct the tax from
the property, if money, or shall collect the tax from the
transferee. Any delivery of property or instrument by the
fiduciary to a transferee, except in accordance with a decree
of distribution of the court or pursuant to a duly executed
notice of election filed under section 2154, shall not relieve
him of personal liability for a tax imposed by this article.
No personal representative or other fiduciary in charge of or
in possession of any property subject to this article shall be
compelled to pay or deliver it to the transferee except upon
payment to him of the tax due other than tax on a future
interest not yet delinquent. If the transferee neglects or
refuses to pay the tax, the personal representative or other
fiduciary may sell the property subject to the tax, or so much
of the property as is necessary, under direction of the court.
All money retained by the personal representative or other
fiduciary, or paid to him on account of the taxes imposed by
this article, shall be remitted by him before the tax becomes
delinquent or, if received after the tax becomes delinquent,
shall be remitted by him promptly upon its receipt.
(2146 added Aug. 4, 1991, P.L.97, No.22)
Section 2147. Duties of Depositories.--When money is
deposited or invested in a financial institution located in
this Commonwealth in the names of two or more persons, other
than husband and wife, or in the name of a person or persons
in trust for another or others, and one of the parties to the
deposit or investment dies, it shall be the duty of the
financial institution, within ten days after knowledge of the
death, to notify the department, giving the name of the deceased
person, the date of the creation of the joint or trust deposit
or investment, the amount invested or on deposit at the date
of death with the financial institution and the name and address
of the survivor or survivors to the account. No notification
shall be required in regard to the account when the deposit at
the time of death does not exceed three hundred dollars ($300).
(2147 added Aug. 4, 1991, P.L.97, No.22)
Section 2148. Compromise by Department.--The department,
with the approval of the Attorney General, may compromise in
writing, with the person liable, the tax, including interest
on the tax, payable on any transfer of property included in the
estate of any decedent who it is alleged was a nonresident at
the time of his death. A copy of the compromise agreement shall
be filed with the register who issued letters, if any, in this
Commonwealth; otherwise, it shall be filed with the department.
The compromise agreement shall constitute a final determination
of the matters covered by it and the payment of the tax, as
fixed by the agreement, shall discharge all persons and property
from liability with respect to the tax.
(2148 added Aug. 4, 1991, P.L.97, No.22)
Section 2149. Interstate Compromise and Arbitration of
Inheritance Taxes.--When the register or the department alleges
that a decedent was a resident of this Commonwealth at the time
of his death, and the taxing authorities of another state or
territory make a like claim on behalf of their state or
territory, a written agreement of compromise or a written
agreement to submit the controversy to a board of arbitrators
may be made under Part VIII.
(2149 added Aug. 4, 1991, P.L.97, No.22)
Section 2150. Extension of Time for Payment.--The department
may, for reasonable cause, extend the time for payment of any
part of the inheritance tax and may, if deemed necessary for
the protection of the interest of this Commonwealth, require
the transferee in present possession or, if a trust is involved,
the trustee to file a bond in the name of the Commonwealth with
sufficient surety, in an amount not exceeding twice the tax
computed when the bond is given at the highest rate possible
in the specific contingencies involved (reduced by the amount
of any partial payment made) and conditioned for the payment
of the tax at such postponed due date, together with interest
from the due date to the payment date. No bond shall be required
under this section if the trustee or one of the trustees is a
bank and trust company or a trust company incorporated in this
Commonwealth or a national banking association having its
principal office in this Commonwealth. The bond required shall
be filed in the office of the register.
(2150 added Aug. 4, 1991, P.L.97, No.22)
Section 2151. Bond for Delinquent Tax.--The court, in its
discretion, at any time after a tax imposed by this article
becomes delinquent, upon application of the department, may
require any person liable for a tax imposed by this article to
give a bond for its payment. The bond shall be in the name of
the Commonwealth, in such amount and with such surety as the
court approves and conditioned for the payment of the tax, plus
interest at the same rate as the interest rate on deficiencies
provided for in section 2143, commencing on the date the tax
became delinquent, within a time certain to be fixed by the
court and specified in the bond. The bond required shall be
filed in the office of the register.
(2151 added Aug. 4, 1991, P.L.97, No.22)
Section 2152. Evidence of Payment of Tax for Real Estate
in Another County.--When any tax is imposed and paid under this
article on real estate located in a county other than that of
the register who received payment, the register shall, upon
request, immediately forward to the register of the county where
the real estate is located a certificate of the payment of the
tax on the real estate which shall be entered of record in his
office. The register of the county where the real estate is
located shall be entitled to a fee of two dollars ($2) for
entering the record of payment to be paid as a part of the
administration expenses of the decedent's estate.
(2152 amended Apr. 23, 1998, P.L.239, No.45)
Section 2153. Penalties.--(a) Any person who willfully
fails to file a return or other report required of him under
the provisions of sections 2136 and 2145 shall be personally
liable, in addition to any liability imposed elsewhere in this
article, to a penalty of twenty-five per cent of the tax
ultimately found to be due or one thousand dollars ($1,000),
whichever is less, to be recovered by the department as debts
of like amount are recoverable by law.
(b) Any financial institution which fails to give the notice
required by section 2147 shall be liable to a penalty of one
hundred dollars ($100) to be recovered by the department as
debts of like amount are recoverable by law.
(c) Any person who willfully makes a false return or report
required of him under the provisions of this article, in
addition to any liability imposed elsewhere in this article,
commits a misdemeanor of the third degree.
(2153 added Aug. 4, 1991, P.L.97, No.22)
Section 2154. Payment of Tax for Small Business
Transfers.--(a) Notwithstanding the provisions of section 2142,
the inheritance tax due under this article on the transfer of
a small business interest may be paid by the qualified
transferee in consecutive quarterly installments beginning
immediately following the expiration of nine months after the
decedent's death. The tax may be paid in twenty consecutive
quarterly installments.
(b) The tax shall be paid in consecutive quarterly
installments due on March 31, June 30, September 30 and December
31 of each year, provided the return required by section 2136
is timely filed, along with a notice of election executed by
the qualified transferee and joined in by the personal
representative which shall relieve the personal representative
or other fiduciary of liability for the collection and payment
of tax under section 2146. The notice of election shall be
completed on a form prescribed by the department containing at
least the following information:
(1) The name of the decedent and date of death.
(2) The name or names of the personal representative or
other fiduciary.
(3) The name or names of the qualified transferees filing
the election.
(4) A description and estimated valuation of the business
interest on which tax is due.
(5) A statement that the qualified transferees assume full
personal responsibility for the tax.
Each notice of election shall be affirmed before an officer
empowered to administer oaths. The installment payment of tax
shall bear interest at the rate of nine per cent per annum.
(c) In the event any portion of a small business interest
on which the installment payment of tax has been elected is
sold, exchanged or otherwise disposed of prior to the expiration
of five years following the date of death and that portion
equals or exceeds fifty per cent of the total value of the small
business interest received by the qualified transferee, the
transferee shall immediately provide written notice of the sale,
exchange or disposition to the department, and the full amount
of the tax then outstanding on that portion shall become due
and payable at the expiration of sixty days following the date
of sale, exchange or other disposition.
(d) For purposes of this section, the term "small business
interest" means an interest in an operating trade or business
entity the principal purpose of which is not the management of
investments or income producing assets owned by the entity which
has employed an average of less than fifty full-time employes
during the twelve months immediately preceding the date of death
and which meets one of the following criteria:
(1) An interest as a proprietor in a trade or business
carried on as a proprietorship.
(2) An interest as a partner in a partnership carrying on
a trade or business if:
(i) twenty per cent or more of the total capital interest
in the partnership is included in determining the gross estate
of the decedent; or
(ii) the partnership had ten or less partners.
(3) Stock in a corporation carrying on a trade or business
if:
(i) twenty per cent or more in value of the voting stock
of the corporation is included in determining the gross estate
of the decedent; or
(ii) the corporation had ten or less shareholders.
(e) Qualified transferee defined.--For purposes of this
section, the term "qualified transferee" means a legatee or
other transferee receiving:
(1) ten per cent or more of the value of a proprietorship
qualifying as a small business interest as defined in subsection
(d);
(2) ten per cent or more of the total capital interest in
a partnership qualifying as a small business interest as defined
in subsection (d); or
(3) ten per cent or more in value of the voting stock of a
corporation qualifying as a small business interest as defined
in subsection (d).
(2154 added Aug. 4, 1991, P.L.97, No.22)
PART VIII
UNIFORM ACT ON INTERSTATE COMPROMISE AND
ARBITRATION OF INHERITANCE TAXES
(VIII added Aug. 4, 1991, P.L.97, No.22)
Section 2156. Short Title.--This part shall be known and
may be cited as the "Uniform Act on Interstate Compromise and
Arbitration of Inheritance Taxes."
(2156 added Aug. 4, 1991, P.L.97, No.22)
Section 2157. Compromise Agreement and Filing, Interest or
Penalty for Nonpayment of Taxes.--When the department or the
register claims a decedent was domiciled in this Commonwealth
at the time of his death and the taxing authority of another
state makes a like claim on behalf of its state, the department
may, with the approval of the Attorney General, make a written
agreement of compromise with the other taxing authority and the
executor or administrator of the decedent that a certain sum
shall be accepted in full satisfaction of any and all
inheritance taxes imposed by this Commonwealth, including any
interest or penalties to the date of signing the agreement. The
agreement shall also fix the amount to be accepted by the other
state in full satisfaction of inheritance taxes. The executor
or administrator of the decedent is authorized to make the
agreement. The agreement shall conclusively fix the amount of
tax payable to the Commonwealth without regard to any other
provision of the laws of this Commonwealth. Unless the tax
agreed upon is paid within sixty days after the signing of the
agreement, interest or penalties shall accrue upon the amount
fixed in the agreement, but the time between the decedent's
death and the signing of the agreement shall not be included
in computing the interest or penalties. In the event the
aggregate amount payable under the agreement to the states
involved is less than the maximum credit allowable to the estate
against the Federal estate tax imposed with respect to the
estate, the personal representatives shall also pay to the
department so much of the difference between the aggregate
amount and the amount of such credit as the amount payable to
the department under the agreement bears to the aggregate
amount. A copy of the agreement shall be filed in the office
of the proper register, and any existing appraisement shall be
deemed modified according to the agreement. In the event no
appraisement has been made and filed prior to the agreement,
the department shall direct an appraisement to be made and filed
in the office of the proper register in accordance with the
agreement.
(2157 added Aug. 4, 1991, P.L.97, No.22)
Section 2158. Arbitration Agreement.--When the department
or the register claims that a decedent was domiciled in this
Commonwealth at the time of his death and the taxing authority
of another state makes a like claim on behalf of its state, the
department may, with the approval of the Attorney General, make
a written agreement with the other taxing authority and with
the executor or administrator of the decedent to submit the
controversy to the decision of a board consisting of one or any
uneven number of arbitrators. The executor or administrator of
the decedent is authorized to make the agreement. The parties
to the agreement shall select the arbitrator or arbitrators.
(2158 added Aug. 4, 1991, P.L.97, No.22)
Section 2159. Arbitration Board.--(a) The board shall have
the power to administer oaths, take testimony, subpoena and
require the attendance of witnesses and the production of books,
papers and documents and issue commissions to take testimony.
Subpoenas may be signed by any member of the board. In case of
failure to obey a subpoena, any judge of a court of record of
this Commonwealth, upon application by the board, may make an
order requiring compliance with the subpoena, and the court may
punish failure to obey the order as a contempt.
(b) The board shall hold hearings at a time and place it
may determine, upon reasonable notice to the parties to the
agreement, all of whom shall be entitled to be heard, to present
evidence and to examine and cross-examine witnesses.
(c) Except as provided in subsection (a) in respect to the
issuance of subpoenas, all questions arising in the course of
the proceedings shall be determined by a majority vote of the
board.
(d) The board shall, by a majority vote, determine the
domicile of the decedent at the time of his death. This
determination shall be final for the purpose of imposing and
collecting inheritance taxes but for no other purpose.
(e) The compensation and expenses of the members of the
board and its employes may be agreed upon among the members and
the executor or administrator and, if they cannot agree, shall
be fixed by any court having jurisdiction over probate matters
of the State determined by the board to be the domicile of the
decedent. The amounts so agreed upon or fixed shall be deemed
an administration expense and shall be payable by the executor
or administrator.
(2159 added Aug. 4, 1991, P.L.97, No.22)
Section 2160. Filing of Determination of Domicile and Other
Documents.--The department, register or board, or the executor
or administrator of the decedent, shall file the determination
of the board as to domicile, the record of the board's
proceedings and the agreement, or a duplicate, made pursuant
to section 2158 with the authority having jurisdiction to assess
or determine the inheritance taxes in the State determined by
the board to be the domicile of the decedent and shall file
copies of the documents with the authorities that would have
been empowered to assess or determine the inheritance taxes in
each of the other states involved.
(2160 added Aug. 4, 1991, P.L.97, No.22)
Section 2161. Interest or Penalties for Nonpayment of
Taxes.--In any case where it is determined by the board that
the decedent died domiciled in this Commonwealth, interest or
penalties, if otherwise imposed by law, for nonpayment of
inheritance taxes between the date of the agreement and of
filing of the determination of the board as to domicile shall
not exceed the rate provided for in section 2143.
(2161 added Aug. 4, 1991, P.L.97, No.22)
Section 2162. Compromise by Parties to Arbitration
Agreement.--The provisions of this part shall not prevent at
any time a written compromise, if otherwise lawful, by all
parties to the agreement made pursuant to section 2157, fixing
the amounts to be accepted by this Commonwealth and any other
state involved in full satisfaction of inheritance taxes.
(2162 added Aug. 4, 1991, P.L.97, No.22)
Section 2163. Reciprocal Application.--The provisions of
this part relative to arbitration shall apply only to cases in
which and so far as each of the states involved has a law
identical or substantially similar to this part.
(2163 added Aug. 4, 1991, P.L.97, No.22)
PART IX
COLLECTION OF TAX
(IX added Aug. 4, 1991, P.L.97, No.22)
Section 2166. Timely Mailing Treated as Timely Filing and
Payment.--Notwithstanding the provisions of any State tax law
to the contrary, whenever a report or payment of all or any
portion of a State tax is required by law to be received by the
department or other agency of the Commonwealth on or before a
day certain, the taxpayer shall be deemed to have complied with
the law if the letter transmitting the report or payment of the
tax which has been received by the department is postmarked by
the United States Postal Service on or prior to the final day
on which the payment is to be received. For the purposes of
this article, presentation of a receipt indicating that the
report or payment was mailed by registered or certified mail
on or before the due date shall be evidence of timely filing
and payment. Any inheritance tax return filed after July 1,
2012, under section 2136 that reports transfers of property
that are exempt from the inheritance tax under section 2111(s),
(s.1) and (t) shall be considered timely filed if filed within
one year of the tax return due date, including an extended due
date.
(2166 amended Oct. 30, 2017, P.L.672, No.43)
Section 2167. Lien and Duration of Lien.--The taxes imposed
by this article, together with any interest on the taxes, shall
be a lien upon the real property included in the transfer on
which the taxes are imposed. Except as otherwise provided in
this part, the lien shall remain until the taxes and interest
are paid in full.
(2167 added Aug. 4, 1991, P.L.97, No.22)
Section 2168. Limited and Future Interests.--In the case
of a transfer of any estate, income or interest for a term of
years, for life or for other limited period, or constituting a
future interest, the taxes imposed by this article, together
with any interest on the tax, shall remain a lien until paid
upon the entire real property by which the estate, income or
interest is supported, or of which it is a part, and the lien
shall be limited to the real property so transferred.
(2168 added Aug. 4, 1991, P.L.97, No.22)
Section 2169. Purchaser, Mortgagee or Lessee.--Unless suit
for collection of the taxes imposed by this article is
instituted within twenty years after any tax becomes delinquent,
the lien shall cease as to any purchaser, mortgagee or lessee
of a devisee or heir of, or a beneficiary under a deed of trust
of, the real property subject to the lien. Any time within the
twenty-year period, if any tax on the real property is not paid,
the department shall have power to file a certificate, under
its seal, certifying to nonpayment which, when filed in the
office of the clerk of the county where the real property is
situated, shall continue the lien against decedent's real
property for an additional period of five years from the date
of the filing and the lien shall be indexed in the office of
the clerk. If the taxes on the real property are not paid within
the additional period of five years, the department shall have
power to extend the lien for additional periods of five years
by filing a certificate in the manner provided in this section.
(2169 added Aug. 4, 1991, P.L.97, No.22)
Section 2170. Sale by Fiduciary.--If real property subject
to the lien of taxes imposed by this article is sold or
exchanged by a fiduciary who is subject to the jurisdiction of
the court and who has given bond as required by 20 Pa.C.S.
(relating to decedents, estates and fiduciaries), or is a
corporate fiduciary which need not file bond under 20 Pa.C.S.,
the lien on the property sold shall cease.
(2170 added Aug. 4, 1991, P.L.97, No.22)
Section 2171. Sale by Heir, Devisee or Fiduciary.--If real
property subject to the lien of taxes imposed by this article
is sold or exchanged or otherwise disposed of by an heir,
devisee or fiduciary, and if the inheritance tax, together with
interest, is paid on all property reported in the tax return,
including the property sold, which property has been appraised
and tax assessed, the lien of any unpaid tax imposed by this
article shall cease as to the property sold.
(2171 added Aug. 4, 1991, P.L.97, No.22)
Section 2172. Sale of Property Transferred Inter
Vivos.--When real property or any income or interest in the
real property or income has been transferred within the meaning
of subsection (c) of section 2107 and the transferee has sold,
mortgaged or leased the property or any income or interest in
the property, the interest of a bona fide purchaser, mortgagee
or lessee in the property shall not be subject to any lien for
the taxes imposed by this article.
(2172 added Aug. 4, 1991, P.L.97, No.22)
Section 2173. Subordination of Lien.--If real property
subject to the lien is mortgaged or leased by a fiduciary who
is subject to the jurisdiction of the court and who has given
a bond as required by 20 Pa.C.S. (relating to decedents, estates
and fiduciaries), or is a corporate fiduciary which need not
file bond under 20 Pa.C.S., the lien shall become subject and
subordinate to the rights and interests of the mortgagee, lessee
or other person so secured.
(2173 added Aug. 4, 1991, P.L.97, No.22)
Section 2174. Cessation Upon Approval of Bond.--Upon
approval of a bond for the payment of taxes imposed upon a
transfer, the lien upon the real property shall cease. The
amount of the bond shall not exceed the value of the real
property transferred.
(2174 added Aug. 4, 1991, P.L.97, No.22)
Section 2175. Release of Lien.--(a) In case of a transfer,
other than by will or intestacy, the department, upon
satisfactory proof that no taxes are due which would be a lien
on the real property transferred by reason of the death of the
transferor, may release all or any portion of the property from
any lien imposed by this article to which the property otherwise
might be subject.
(b) The department may, at any time, release all or any
portion of the real property subject to any lien imposed by
this article from such lien or subordinate such lien to other
liens and encumbrances if it determines that the taxes are
sufficiently secured by a lien on other property of the decedent
or that the release or subordination of the lien will not
endanger or jeopardize the collection of the taxes.
(c) When inheritance tax in respect to the transfer of
particular real property is paid on the value of the property
without diminution for any deductions authorized by this
article, other than a mortgage on the property existing at the
date of the decedent's death, the department, upon request of
a party in interest, shall issue a certificate evidencing the
release of the property from the lien of tax.
(d) A certificate by the department to the effect that any
real property or interest in real property subject to any lien
imposed by this article has been released from the lien, or
that the lien has been subordinated to other liens and
encumbrances, shall be conclusive evidence as to any bona fide
purchaser, encumbrancer or lessee that the lien has been
released or subordinated.
(2175 added Aug. 4, 1991, P.L.97, No.22)
Section 2176. Enforcement Procedure.--(a) The court, at
the request of the register, department or Office of Attorney
General, shall issue a citation, directed to those liable for
the payment of the taxes or subject to any other duty imposed
by this article, commanding the person or persons to appear and
show cause why the requirements of this article should not be
met.
(b) The court may issue any decree warranted by the facts,
according to equity.
(c) A citation to enforce payment of taxes due under this
article or compliance with the duties required by this article
shall be issued by the court upon application of the register,
department or Office of Attorney General whenever any of the
following occurs:
(1) A tax return is not filed within the time required by
this article.
(2) Any tax due under this article remains delinquent.
(3) A Federal estate tax return has been filed but a copy
of the return or a communication making a final change on the
return has not been filed as required by section 2145.
(4) Any other duty imposed by this article remains
unperformed.
(d) The register or department may issue subpoenas to compel
the production of documents and the attendance of witnesses
necessary for the administration of this article.
(e) Execution may be issued by the court against any real
property in the decedent's estate on which a lien for the
payment of the taxes imposed by this article exists or against
any property belonging to a transferee liable for the tax.
(f) The department may bring suits in the courts of other
states to collect death taxes (including interest and penalties
on the taxes) imposed by this article. An official of another
state which extends a like comity to the Commonwealth may sue
for the collection of death taxes (including interest and
penalties on the taxes) in the courts of this Commonwealth. A
certificate by the Secretary of State of another state, under
the seal of that state, that an official has authority to
collect its death taxes shall be conclusive evidence of the
authority of the official in any suit for the collection of the
taxes in any court of this Commonwealth.
(2176 added Aug. 4, 1991, P.L.97, No.22)
PART X
REFUND OF TAX
(X added Aug. 4, 1991, P.L.97, No.22)
Section 2181. Refund of Tax.--(a) A refund shall be made
of any tax to which the Commonwealth is not rightfully or
equitably entitled provided the Commonwealth determines the
refund is due or application for refund is made within the
appropriate time limit as set forth in subsection (d).
(b) Interest shall be paid on refundable tax at the same
rate as the interest rate on deficiencies provided for in
section 2143.
(c) Refund shall be made in cash to the party who paid the
tax or to his assignee or as directed by the court.
(d) Application for refund of tax shall be made within three
years after:
(1) the court has rescinded its order and adjudication of
presumed death when the refund is claimed for tax paid on the
transfer of the estate of a presumed decedent who is later
determined to be alive;
(2) termination of litigation establishing a right to a
refund; no application for refund shall be necessary when the
litigation has been with the Commonwealth over liability for
the tax or the amount of tax due;
(3) it has been finally determined that the whole or any
part of an alleged deficiency tax, asserted by the Federal
Government beyond that admitted to be payable, and in
consequence of which an estate tax was paid under section 2117
was not payable;
(4) a final judgment holding that a provision of this
article under which tax has been paid is unconstitutional or
that the interpretation of a provision of this article under
which tax has been paid was erroneous; or
(5) the date of payment, or the date of the notice of the
assessment of the tax, or the date the tax becomes delinquent,
whichever occurs later, in all other cases.
(e) An application for refund of tax shall be made to the
department.
(e.1) A petition to review the decision and order of the
department on a petition for refund may be made to the Board
of Finance and Revenue under this article.
(f) The action of the Board of Finance and Revenue on all
applications for refund of tax may be appealed as provided for
in 42 Pa.C.S. § 933 (relating to appeals from government
agencies).
(g) As much of the moneys received as payment of tax under
this article as shall be necessary for the payment of the
refunds provided for in this article with interest is
appropriated for the payment of such refunds.
(2181 amended May 7, 1997, P.L.85, No.7)
Compiler's Note: Section 42(b) of Act 48 of 1994 provided
that section 2181 is repealed to the extent that it
conflicts with the provisions of Act 48 for filing with
the Board of Finance and Revenue of petitions for the
refund of taxes and other moneys collected by the
Department of Revenue.
PART XI
DISPUTED TAX
(XI added Aug. 4, 1991, P.L.97, No.22)
Section 2186. Protest, Notice and Appeal.--(a) Any party
in interest, including the Commonwealth and the personal
representative, not satisfied with the appraisement, the
allowance or disallowance of deductions, the assessment of tax,
or supplements or any other matter relating to any tax imposed
by this article, within sixty days after receipt of notice of
the action complained of may:
(1) file with the department a written protest, sending a
copy thereof to the Office of Attorney General;
(2) notify the register in writing that he elects to have
the correctness of the action complained of determined at the
audit of the account of the personal representative; or
(3) appeal to the court to have the correctness of the
action complained of determined at the audit of the account of
the personal representative, or at a time the court shall fix.
The protest, notification or appeal shall specify all the
objections to the action complained of. When the protest,
notification or appeal is filed by the Commonwealth, a copy
shall also be sent to the personal representative and to all
other persons who filed a tax return.
(b) If a notification or appeal has been filed from an
assessment of tax where it is contended that the rate of tax
which will be applicable when a future interest vests in
possession and enjoyment cannot presently be established with
certainty and no compromise has been entered into pursuant to
subsection (e) of section 2116, the court, after consideration
of relevant actuarial factors, valuations and other pertinent
circumstances, shall determine what portion of the transfer is
to become taxed at each of the rates which might be applicable.
(c) Whenever any appeal or protest is brought pursuant to
this part and the subject matter of the appeal concerns the
valuation of certain farmland as set forth in section 2122, the
forum designated by the department to hear the appeal or protest
shall include at least two farmers and the Secretary of
Agriculture. The farmers and the Secretary of Agriculture shall
be accorded full powers within the forum with full voting
rights.
(2186 added Aug. 4, 1991, P.L.97, No.22)
Section 2187. Bond.--No bond shall be required of any party
in interest who files a protest or notification against, or
appeals from, an appraisement, allowance or disallowance of a
deduction, assessment of tax or supplements or other matter
relating to the tax or from the decision of the department
following a protest or who petitions for removal of the record
to the court.
(2187 added Aug. 4, 1991, P.L.97, No.22)
Section 2188. Appeal and Removal from Department.--(a) Any
party in interest, including the Commonwealth and the personal
representative, not satisfied with the decision of the
department upon a protest may appeal from the department to the
court within sixty days after receipt of notice of the entry
of the decision of the department. When no decision has been
rendered by the department within thirty days after the protest
has been filed with the department, the court upon petition of
any party in interest may direct the department to transmit the
entire record to the court. When an appeal is taken from the
decision of the department or the court directs the department
to transmit the entire record to the court, the court shall
either proceed to a determination of the issues protested to
the department or suspend the determination until the audit of
the account of the personal representative.
(b) If the appeal or removal arises from an assessment of
tax where it is contended that the rate of tax which will be
applicable when a future interest vests in possession and
enjoyment cannot presently be established with certainty, and
no compromise has been entered into pursuant to subsection (e)
of section 2116, the court after consideration of relevant
actuarial factors, valuations and other pertinent circumstances
shall determine what portion of the transfer is to become taxed
at each of the rates which might be applicable.
(2188 added Aug. 4, 1991, P.L.97, No.22)
PART XII
ENTRY INTO SAFE DEPOSIT BOX
(XII added Aug. 4, 1991, P.L.97, No.22)
Section 2191. Entry Prohibited.--Unless provided otherwise
in this part, no person having actual knowledge of the death
of a decedent shall enter a safe deposit box of the decedent.
This part shall not be construed to confer upon any person any
right of entry into a safe deposit box of a decedent which he
does not otherwise have.
(2191 added Aug. 4, 1991, P.L.97, No.22)
Section 2192. Entry Without Notice to Department.--(a) A
safe deposit box of a decedent may be entered and any or all
of the contents removed in the presence of an employe of the
financial institution in which the box is located. The employe
shall make, or cause to be made, a record of the contents of
the box, which record he shall attest under penalty of perjury
to be correct and complete. The financial institution may make
a reasonable charge for the attendance of its employe at the
entry of the box and the listing of the contents, which charge
shall be deductible as an administration expense under subclause
(1) of section 2127.
(b) A safe deposit box of a decedent may be entered and any
or all of the contents removed in the presence of a
representative of the department authorized by the secretary.
The department shall authorize at least one such representative
in and for each county of this Commonwealth. The representative
present at the time of entry into the box shall make or cause
to be made a record of the contents of the box.
(c) The court for cause shown may order that a designated
person or persons be permitted to enter a safe deposit box of
a decedent and remove the contents described in the order, under
supervision as the court may direct. The order may also require
that a record be made of the contents of the box.
(d) Notwithstanding any of the provisions of this part, the
department, at any time and without relation to the death of a
specific decedent, by a certificate issued to a firm whose
business requires ready access to safe deposit boxes, may issue
a general authorization for the entry into, and removal of the
contents of, a safe deposit box of a decedent, under terms and
conditions as it may prescribe. A financial institution may
permit such entry and removal upon presentation to it of such
certificates issued by the department.
(e) Nothing in this part shall prohibit a financial
institution from permitting entry into a safe deposit box of a
decedent for the sole purpose of removing the decedent's will
and evidence of ownership of the burial lot in which the
decedent is to be interred. An employe of the financial
institution must be present at the opening of the box and make
or cause to be made a record of the documents removed from the
safe deposit box during the entry and attest the record to be
correct and complete under penalty of perjury.
(2192 added Aug. 4, 1991, P.L.97, No.22)
Section 2193. Entry Upon Notice to Department.--(a) When
entry into a safe deposit box of a decedent is not or cannot
be made under the provisions of subsection (a), (b), (c) or (d)
of section 2192, a safe deposit box of a decedent may be entered
at the time fixed in a notice mailed to the Department of
Revenue, Harrisburg, Pennsylvania, and to the financial
institution in which the box is located, in the manner specified
in this section. The date fixed for entry and contained in the
notice shall not be less than seven days after the date of
notice is mailed. A representative of the department may be
present at the time fixed for entry and may make or cause to
be made a record of the contents of the box.
(b) The notice required under subsection (a) shall be
delivered to the United States Postal Service for mailing in a
manner that will provide for a record of the mailing being made
by the United States Postal Service and a receipt being
furnished to the sender. An exact copy of the notice shall be
transmitted to the financial institution in which the box is
located.
(c) At the time fixed in the notice required by subsection
(a), although no representative of the department is present,
it shall be lawful for a financial institution in which a safe
deposit box of a decedent is located to permit, and it shall
permit, entry into the box and removal of its contents by a
person who furnishes a signed statement under penalty of perjury
that he or someone in his behalf has given such notice.
(2193 added Aug. 4, 1991, P.L.97, No.22)
Section 2194. Subsequent Entries.--Nothing in this part
shall be construed to impose any restriction upon reentry into
a safe deposit box of a decedent at any time subsequent to an
entry made in accordance with any of the provisions of this
part other than subsection (e) of section 2192.
(2194 added Aug. 4, 1991, P.L.97, No.22)
Section 2195. Confidential Nature of Contents.--Any
information gained from the contents of a safe deposit box of
a decedent by a person whose attendance at the entry into the
box was required by this part shall be confidential and shall
not be disclosed for other than official purposes to collect
the taxes imposed by this article.
(2195 added Aug. 4, 1991, P.L.97, No.22)
Section 2196. Penalties.--(a) Any employe of a financial
institution in which the safe deposit box of a decedent is
located who, having actual knowledge of the death of the
decedent, enters or permits the entry by any person into a safe
deposit box of the decedent in violation of the provisions of
this part commits a misdemeanor of the third degree.
(b) Any person, other than an employe of a financial
institution in which the safe deposit box of a decedent is
located, who, having actual knowledge of the death of a
decedent, enters a safe deposit box of the decedent in violation
of the provisions of this part commits a misdemeanor of the
third degree.
(c) Any person who violates the provisions of section 2195
commits a misdemeanor of the third degree.
(2196 added Aug. 4, 1991, P.L.97, No.22)
ARTICLE XXIII
PUBLIC TRANSPORTATION ASSISTANCE FUND
(Art. added July 1, 1994, P.L.413, No.67)
Section 2301. Public Transportation Assistance Fund.--(a)
There is hereby created a special fund in the State Treasury
to be known as the Public Transportation Assistance Fund. Moneys
deposited into the fund and interest which accrues from those
funds shall be used for the purposes delineated in 74 Pa.C.S.
§ 1310 (relating to distribution of funding).
(b) Funds received under the provisions of this section,
as estimated and certified by the Secretary of Revenue, shall
be deposited within five days of the end of each month into the
fund. Unless otherwise specifically noted, the provisions of
Article II shall apply to the fees and taxes imposed by
subsections (c), (d) and (e).
(c) There is hereby imposed a fee on each sale in this
Commonwealth of new tires for highway use at the rate of one
dollar ($1) per tire. The fee shall be collected by the seller
from the purchaser and remitted to the Department of Revenue.
No exclusions or exemptions, other than those for governmental
entities provided under Article II, shall apply to the fees and
taxes imposed by this section.
(d) (1) There is hereby imposed on each lease of a motor
vehicle subject to tax under Article II an additional tax of
three per cent of the total lease price charged.
(2) As used in this subsection on and after April 1, 1995,
the term "motor vehicle" does not include trucks in Class 4 or
higher as defined in 75 Pa.C.S. § 1916(a)(1) (relating to trucks
and truck tractors).
(e) Except as provided in subsection (e.1), there is hereby
imposed on each rental of a motor vehicle subject to tax under
Article II a fee of two dollars ($2) for each day or part of a
day for which the vehicle is rented. ((e) amended Oct. 30, 2017,
P.L.672, No.43)
(e.1) (1) There is hereby imposed on each rental of a motor
vehicle subject to tax under Article II and used in carsharing,
a peer-to-peer car-sharing program or car sharing by a shared
vehicle owner a fee for each day or part of a day computed
according to the following schedule:
FeeRental Interval
$0.25Less than 2 hours
$0.502 to 3 hours
$1.25
More than 3, but
less than 6 hours
$2.006 hours or more
(2) For purposes of this subsection, the term "carsharing"
shall mean a membership-based service that provides an
alternative to personal car ownership and which meets the
following conditions:
(i) Does not require a trip-specific written agreement each
time a member rents a vehicle.
(ii) Does not require an attendant to be present at the
beginning or end of a rental.
(iii) Offers members access to a dispersed network of shared
vehicles 24 hours per day, 7 days per week, 365 days per year.
(iv) Allows a vehicle to be rented on a per minute, per
hour, per day, or per trip basis, and at per mile or per
kilometer rates, which typically include fuel, insurance and
maintenance.
(3) For purposes of this subsection:
(i) The term "peer-to-peer car-sharing program" shall be
as defined in section 201(qqq).
(ii) The term "shared vehicle owner" shall be as defined
in section 201(uuu).
((e.1) amended July 8, 2022, P.L.513, No.53)
(f) ((f) deleted by amendment).
(2301 amended Dec. 23, 2003, P.L.250, No.46)
Compiler's Note: Section 33(18) of Act 46 of 2003, which
amended section 2301, provided that the amendment shall
apply to deposits into the Transportation Assistance
Fund made after June 30, 2003.
Compiler's Note: Section 1310 of Title 74 (Transportation),
referred to in subsection (a), was repealed by the act
of July 18, 2007 (P.L.169, No.44).
Section 2302. Administration.--For fiscal years beginning
after June 30, 2003, the Department of Revenue shall not make
any transfers into or out of the Public Transportation
Assistance Fund to adjust for prior year payments, credits,
refunds or appeals.
(2302 added Dec. 23, 2003, P.L.250, No.46)
Compiler's Note: Section 33(19) of Act 46 of 2003, which
added section 2302, provided that section 2302 shall
apply to deposits into the Transportation Assistance
Fund made after June 30, 2003.
ARTICLE XXIV
FIREWORKS
(Art. XXIV repealed July 11, 2022, P.L.762, No.74)
Section 2401. Definitions.--(2401 repealed July 11, 2022,
P.L.762, No.74)
Section 2402. Permits--(2402 repealed July 11, 2022, P.L.762,
No.74)
Section 2403. Request for extension.--(2403 repealed July 11,
2022, P.L.762, No.74)
Section 2404. Use of consumer fireworks.--(2404 repealed July
11, 2022, P.L.762, No.74)
Section 2404.1. Use of display fireworks.--(2404.1 repealed
July 11, 2022, P.L.762, No.74)
Section 2405. Agricultural purposes.--(2405 repealed July 11,
2022, P.L.762, No.74)
Section 2406. Rules and regulations by municipality.--(2406
repealed July 11, 2022, P.L.762, No.74)
Section 2407. Sales locations.--(2407 repealed July 11, 2022,
P.L.762, No.74)
Section 2408. Fees, granting of licenses and
inspections.--(2408 repealed July 11, 2022, P.L.762,
No.74)
Section 2409. Conditions for facilities.--(2409 repealed July
11, 2022, P.L.762, No.74)
Section 2410. Temporary structures.--(2410 repealed July 11,
2022, P.L.762, No.74)
Section 2411. Attorney General.--(2411 repealed July 11, 2022,
P.L.762, No.74)
Section 2412. Consumer fireworks tax.--(2412 repealed July 11,
2022, P.L.762, No.74)
Section 2413. Disposition of certain funds.--(2413 repealed
July 11, 2022, P.L.762, No.74)
Section 2414. Penalties.--(2414 repealed July 11, 2022,
P.L.762, No.74)
Section 2415. Removal, storage and destruction.--(2415 repealed
July 11, 2022, P.L.762, No.74)
Section 2416. Transition.--(2416 repealed July 11, 2022,
P.L.762, No.74)
ARTICLE XXV
TABLE GAME TAXES
(Art. hdg. reenacted June 28, 2019, P.L.50, No.13)
Section 2501. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Certificate holder." As defined in 4 Pa.C.S. § 1103
(relating to definitions).
"Gross table game revenue." As defined in 4 Pa.C.S. § 1103.
"Table game." As defined in 4 Pa.C.S. § 1103.
(2501 reenacted June 28, 2019, P.L.50, No.13)
Section 2502. Table game taxes.
Commencing August 1, 2016, in addition to the tax payable
under 4 Pa.C.S. § 13A62(a)(1) (relating to table game taxes),
each certificate holder shall report to the Department of
Revenue and pay from its daily gross table game revenue an
additional tax of 2% of its daily gross table game revenue. The
additional tax shall be subject to all provisions of 4 Pa.C.S.
Ch. 13A (relating to table games) relating to the payment of
taxes by a certificate holder in the same manner as the tax
payable under 4 Pa.C.S. § 13A62(a)(1).
(2502 reenacted June 28, 2019, P.L.50, No.13)
Section 2502.1. General Fund deposit.
Notwithstanding 4 Pa.C.S. § 13A62(c) (relating to table game
taxes), beginning on July 1, 2022, the tax imposed under section
2502 and the tax imposed under 4 Pa.C.S. § 13A62(a) shall be
deposited into the General Fund.
(2502.1 added July 8, 2022, P.L.513, No.53)
Compiler's Note: Section 25 of Act 53 of 2022 provided that
the addition of section 2502.1 shall apply retroactively
to July 1, 2022.
Section 2503. Expiration.--(2503 repealed June 30, 2021,
P.L.124, No.25).
Compiler's Note: Section 32.1 of Act 13 of 2019 provided
that the reenactment and amendment of section 2503 of
this act shall apply retroactively to June 29, 2019.
ARTICLE XXVII
PROCEDURE AND ADMINISTRATION
(Art. added Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006, which
added Article XXVII, in the appendix to this act for
special provisions relating to determinations and
assessments of tax liability by the Department of Revenue
after December 31, 2007, and applicability of Act 119
on proceedings, prosecutions, actions, suits or appeals
involving assessments, determinations or settlements of
tax liability by the Department of Revenue prior to
January 1, 2008.
Section 2701. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Board." The Board of Finance and Revenue.
"Department." The Department of Revenue of the Commonwealth.
"Party." The term includes both a taxpayer and the
department.
"Petitioner." A taxpayer.
"Return." The term includes a tax report.
"Secretary." The Secretary of Revenue of the Commonwealth.
(2701 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: See section 42(5) of Act 52 of 2013 in the
appendix to this act for special provisions relating to
applicability.
Section 2702. Petition for reassessment.
(a) General rule.--A taxpayer may file a petition for
reassessment with the department within 60 days after the
mailing date of the notice of assessment. ((a) amended Oct. 30,
2017, P.L.672, No.43)
(a.1) Petition for review of tax adjustment not resulting
in an increase in liability.--
(1) A petition for reassessment under subsection (a)
may include a request for review of the department's
adjustment of a tax item if the adjustment did not result
in a tax increase in the year of adjustment but may increase
the tax due in a subsequent year. A request for review may
include:
(i) Recalculation of the taxpayer's corporate net
income tax net loss under Article IV as adjusted by the
department.
(ii) Recalculation of the taxpayer's capital stock
franchise tax average net income under Article VI as
adjusted by the department.
(iii) Recalculation of the personal income tax basis
of an asset under Article III as adjusted by the
department.
(2) A taxpayer must file a petition for review under
this subsection within 60 days of the mailing date of the
department's notice of adjustment. A taxpayer's failure to
file a petition under this subsection shall not prejudice
the taxpayer's right to file a petition in a subsequent tax
year. ((2) amended Oct. 30, 2017, P.L.672, No.43)
(a.2) Petition for review of denial of tax credit or tax
benefit.--The following apply:
(1) A petition for reassessment under subsection (a)
may include a request for review of a denial of an
application for a tax credit or tax benefit made by an
administering agency.
(2) The administering agency shall have the right to
be represented in all proceedings before the department. An
applicant filing a petition under paragraph (1) shall provide
a copy of the petition to the administering agency within
30 days of the applicant filing the petition with the
department.
(3) The department's review of a petition filed under
paragraph (1) shall be limited to the administering agency's
denial of a tax credit or tax benefit and shall not include
a review of any underlying tax determinations.
(4) For the purposes of this subsection:
(i) The terms "applicant," "tax benefit" and "tax
credit" shall have the same meaning as in section
1701-A.1.
(ii) The term "administering agency" shall have the
same meaning as in section 1701-A.1 but shall not include
the Department of Community and Economic Development.
((a.2) added June 30, 2021, P.L.124, No.25)
(b) Special rule for shares taxes.--((b) repealed July 9,
2013, P.L.270, No.52)
(c) Application to inheritance and estate taxes.--This
section shall not apply to the taxes imposed by Article XXI.
Part XI of Article XXI shall provide the exclusive procedure
for protesting the appraisement and assessment of taxes imposed
by Article XXI.
(2702 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 42(5.1) of Act 52 of 2013, which
repealed subsec. (b), provided that the repeal shall
apply to a petition for reassessment filed with the
Department of Revenue on or after the effective date of
par. (5.1). See section 43 of Act 52 in the appendix to
this act for special provisions relating to
applicability.
Compiler's Note: Section 30(8) of Act 85 of 2012, which
added subsec. (a.1), provided that subsec. (a.1) shall
apply to tax periods which, on the effective date of
section 30, are open under Act 2; to administrative
appeals pending on the effective date of section 30; and
to judicial appeals pending on the effective date of
section 30.
Compiler's Note: Section 47(2)(i) of Act 43 of 2017, which
amended section 2702(a) and (a.1)(2), provided that the
amendment of section 2702(a) and (a.1)(2) shall apply
to petitions for refunds, petitions for reassessments
and petitions for redeterminations filed with the
department on or after 60 days from the effective date
of section 47 of Act 43.
Section 2703. Petition procedure.
(a) Content of petition.--
(1) A petition for reassessment shall state:
(i) The tax type and tax periods included within
the petition.
(ii) The amount of the tax that the taxpayer claims
to have been erroneously assessed.
(iii) The basis upon which the taxpayer claims that
the assessment is erroneous.
(iv) The basis upon which the taxpayer claims that
the adjustment of a tax item is erroneous.
(2) A petition for refund shall state:
(i) The tax type and tax periods included within
the petition.
(ii) The amount of the tax that the taxpayer claims
to have been overpaid.
(iii) The basis of the taxpayer's claim for refund.
(2.1) A petition for review of the denial of an amended
report under section 406.1 shall state:
(i) The tax type and tax period included within the
petition.
(ii) The reasons why the tax stated in the amended
report should be accepted.
((2.1) added July 13, 2016, P.L.526, No.84)
(2.2) A petition for review of tax adjustment not
resulting in an increase in liability shall state:
(i) The tax type and tax periods included within
the petition.
(ii) The amount of the tax that the taxpayer claims
to have been erroneously adjusted.
(iii) The basis upon which the taxpayer claims that
the adjustment is erroneous.
((2.2) added June 30, 2021, P.L.124, No.25)
(2.3) A petition for review of denial of tax credit or
tax benefit shall state:
(i) The tax credit or tax benefit program for which
the applicant was denied.
(ii) The amount of the tax credit or tax benefit
that the taxpayer claims to have been erroneously denied.
(iii) The basis upon which the taxpayer claims that
the denial is erroneous.
((2.3) added June 30, 2021, P.L.124, No.25)
(3) The petition shall be supported by an affidavit by
the petitioner or the petitioner's authorized representative
that the petition is not made for the purpose of delay and
that the facts set forth in the petition are true.
(b) Request for hearing.--Upon written request of the
petitioner or when deemed necessary by the department, the
department shall schedule a hearing to review a petition. The
petitioner shall be notified by the department of the date,
time and place where the hearing will be held.
(b.1) Participation of administering agency.--An
administering agency of a tax credit or tax benefit shall be
permitted to participate in a hearing before the department.
The department shall notify the administering agency of the
date, time and place where the hearing will be held. The
administering agency shall be provided the opportunity to
comment upon any submitted evidence and provide written and
oral argument to support its denial. ((b.1) added June 30, 2021,
P.L.124, No.25)
(c) Decision and order.--The department shall issue a
decision and order disposing of a petition on such basis as it
deems to be in accordance with law. The department shall provide
a written explanation of the basis for any denial of relief.
(d) Time limit for decision and order.--The department shall
issue a decision and order disposing of a petition within six
months after receipt of the petition. The petitioner and the
department may agree to extend the time period for the
department to dispose of the petition for one additional
six-month period. Notice of the department's decision and order
disposing of the petition shall be issued to the petitioner.
(e) Exception to time limit for decision and order.--If at
the time of the filing of a petition proceedings are pending
in a court of competent jurisdiction wherein any claim made in
the petition may be established, the department, upon the
written request of the petitioner, may defer consideration of
the petition until the final judgment determining the question
or questions involved in the petition has been decided. If
consideration of the petition is deferred, the department shall
issue a decision and order disposing of the petition within six
months after the final judgment.
(f) Failure of department to take action.--The failure of
the department to dispose of the petition within the time period
provided for by subsection (d) or (e) shall act as a denial of
the petition. Notice of the department's failure to take action
and the denial of the petition shall be mailed to the
petitioner.
(2703 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: Section 51(8) of Act 84 of 2016, which
added subsection (a)(2.1), provided that the addition
of subsection (a)(2.1) shall apply to amended reports
filed after December 31, 2016.
Compiler's Note: Section 30(8) of Act 85 of 2012, which
added subsec. (a)(1)(iv), provided that subsec.
(a) (1) (iv) shall apply to tax periods which, on the
effective date of section 30, are open under Act 2; to
administrative appeals pending on the effective date of
section 30; and to judicial appeals pending on the
effective date of section 30.
Section 2703.1. Board.
(a) Membership.--Notwithstanding any other law to the
contrary, the Board of Finance and Revenue shall consist of the
the following members:
(1) the State Treasurer or the State Treasurer's
designee; and
(2) two members nominated by the Governor and approved
by the Senate.
The State Treasurer or the State Treasurer's designee shall
have one vote on the board, and the other two members shall
each have one vote on the board.
(b) Terms.--Members nominated by the Governor and approved
by the Senate shall serve an initial term of four and six years
respectively as designated by the Governor at the time of
nomination and until their successors have qualified. After the
initial terms, members nominated by the Governor and approved
by the Senate shall serve for a term of six years and until a
successor has qualified.
(c) Member qualifications.--Each member nominated by the
Governor and each member who is a designee of the State
Treasurer must satisfy and maintain the following criteria:
(1) Be a citizen of the United States.
(2) Be a resident of the Commonwealth of Pennsylvania.
(3) Be an attorney in good standing before the Supreme
Court of Pennsylvania or be a certified public accountant
in good standing before the State Board of Accountancy.
(4) Have at least ten years of experience in a position
requiring substantial knowledge of Pennsylvania tax law.
(5) Devote full time to the duties of the office and,
while a member, may not engage in any other gainful
employment or business nor hold another office or position
of profit in a government of this Commonwealth, any other
state or the United States. Nothing in this section may be
interpreted to prohibit members of the board from serving
in the National Guard and the reserves of the armed forces
of the United States while a member of the board.
(d) Initial term.--The initial term of the members nominated
by the Governor and approved by the Senate shall begin January
1, 2014.
(e) Nomination and approval.--The Governor may nominate and
the Senate may approve the two board members referred to in
subsection (a)(2) as of the effective date of this section.
(f) Renomination.--A member may be renominated upon the
expiration of the member's term.
(g) Vacancies.--Any vacancy shall be filled for the
unexpired term in the same manner as set forth in this section.
(h) Salary.--Each of the members of the board who are
nominated by the Governor and approved by the Senate shall
receive an annual salary to be determined by the executive board
commensurate with the annual salary received by other boards
and commissions.
(i) Operation of board.--Two members of the board shall
constitute a quorum. The board shall elect a secretary, who
need not be a member of the board. The State Treasurer shall
be the chairman of the board and shall, in consultation with
the other members, select and appoint the counsel, clerks and
other employees as may be necessary to administer the
responsibilities of the board and for the proper conduct of its
work.
(j) Oath of office.--Before entering upon the duties of
office, a member shall take and subscribe to an oath or
affirmation to faithfully discharge the duties of the office.
(k) Actions of board.--The board may take any action that
is necessary to properly exercise the duties, functions and
powers given the board upon the effective date of this section.
(l) Need for majority.--The powers and duties vested in and
imposed upon the board shall in all cases be exercised or
performed by a majority of the board.
(m) Powers.--The board is authorized to promulgate and adopt
all rules, regulations and forms as may be necessary or
appropriate.
(2703.1 added July 9, 2013, P.L.270, No.52)
Compiler's Note: See section 42(6) of Act 52 of 2013 in the
appendix to this act for special provisions relating to
applicability.
Section 2704. Review by board.
(a) Petition for review of a decision and order.--Within
60 days after the mailing date of the department's notice of
decision and order on a petition filed with it, a taxpayer may
petition the board to review the decision and order of the
department. ((a) amended Oct. 30, 2017, P.L.672, No.43)
(b) Petition for review of denial by department's failure
to act.--A petition for review may be filed with the board
within 60 days after the mailing date of the department's notice
to the petitioner of its failure to dispose of the petition
within the time periods prescribed by section 2703(d) or (e).
((b) amended Oct. 30, 2017, P.L.672, No.43)
(c) Contents of petition.--
(1) A petition for review of the department's decision
and order on a petition for reassessment shall state all of
the following:
(i) The tax type and tax periods included within
the petition.
(ii) The amount of the tax that the taxpayer claims
to have been erroneously assessed.
(iii) The basis upon which the taxpayer claims that
the assessment is erroneous.
(2) A petition for review of the department's decision
and order on a petition for refund shall state all of the
following:
(i) The tax type and tax periods included within
the petition.
(ii) The amount of the tax that the taxpayer claims
to have been overpaid.
(iii) The basis of the taxpayer's claims for refund.
(2.1) All petitions for review shall identify a mailing
address to which all correspondence and decisions can be
mailed and received and, if so desired, an e-mail address
to which all correspondence and decisions can be
electronically sent. The board shall be permitted to rely
upon the accuracy of the address provided by the taxpayer,
and it shall be the duty of the taxpayer to notify the board
if there is any change in an address provided to the board.
(3) A petition may satisfy the requirements of
paragraphs (1)(iii) or (2)(iii) by incorporating by reference
the petition filed with the department in which the basis
of the taxpayer's claim is specifically stated.
(d) Affidavit.--A petition shall be supported by an
affidavit by the petitioner or the petitioner's authorized
representative that the petition is not made for the purpose
of delay and that the facts set forth in the petition are true.
(d.1) Representation.--
(1) Appearances in tax appeal proceedings conducted by
the board may be by the taxpayer or by an attorney,
accountant or other representative provided the
representation does not constitute the unauthorized practice
of law as administered by the Pennsylvania Supreme Court.
(2) The department shall have the right to be
represented in all tax appeal proceedings before the board.
The secretary or the secretary's designee shall notify the
board as to whom copies of all communications, notices and
decisions should be sent on behalf of the department.
Communications with the department's appointed representative
shall be by electronic means.
(3) An administering agency of a tax credit or tax
benefit shall be permitted to participate in all proceedings
before the board. The board shall notify the administering
agency of the date, time and place where the hearing will
be held. The administering agency shall be provided the
opportunity to comment upon any submitted evidence and
provide written and oral argument to support its denial.
((3) added June 30, 2021, P.L.124, No.25)
(d.2) Evidence.--The petitioner and the department shall
be entitled to present oral and documentary evidence in support
of their positions. The petitioner and the department will be
provided the opportunity to comment upon any submitted evidence
and provide written and oral argument to support their
positions.
(d.3) Ex parte communications.--The members or staff of the
board shall not participate in any ex parte communications with
the petitioner or the department or their representatives
regarding the merits of any tax appeal pending before the board.
Any information or documentation provided to the members or
staff of the board by the petitioner or the department or their
representatives in a communication regarding the merits of any
appeal pending before the board shall also be promptly provided
to the other party.
(d.4) Access to department's database.--The board shall be
provided access to the department's records relating to a
petition before the board.
(d.5) Request for hearing.--Upon written request of the
petitioner or the department or when deemed necessary by the
board, the board shall schedule a hearing to review a petition.
The petitioner and the department shall be notified by the board
of the date, time and place where the hearing will be held.
(d.6) Hearing practice.--Hearings shall be open to the
public and shall be conducted in accordance with such rules of
practice and procedure as the board may adopt and promulgate.
On request of either party or on its own accord, the board may
conduct part or all of the hearing as an executive session to
the extent that if held in public it would violate a lawful
privilege or lead to the disclosure of information or
confidentiality protected by law.
(d.7) Compromise settlement.--The board shall establish
procedures to facilitate the compromise settlement of issues
on appeal. A compromise settlement shall be ordered by the board
only with the agreement of both the petitioner and the
department. The provisions of section 2707(c) shall be
applicable to compromise settlements under this section.
(e) Decision and order.--The board shall issue a decision
and order in writing disposing of a petition on any basis as
it deems to be in accordance with law and equity. A decision
and order shall include the conclusions reached and the facts
on which the decision was based. The decision and order shall
be approved by a majority of the board. A copy of the decision
and order and any dissenting opinion shall be sent to the
petitioner utilizing the method identified by the petitioner
and by electronic means to the department.
(f) Time limit for decision and order.--
(1) Except as provided in paragraphs (2) and (3), the
board shall issue a decision and order disposing of a
petition within six months after receipt of the petition.
Upon the request of the petitioner or the department, the
board may extend the time period for the board to dispose
of the petition for one additional six-month period.
(2) If at the time of the filing of a petition
proceedings are pending in a court of competent jurisdiction
in which any claim made in the petition may be established,
the board, upon the written request of the petitioner, may
defer consideration of the petition until the final judgment
determining the question or questions involved in the
petition has been decided. If consideration of the petition
is deferred, the board shall issue a decision and order
disposing of the petition within six months after the final
judgment.
(3) If a matter pending before the board would be
materially affected by an audit or other proceeding before
the Internal Revenue Service or by an audit or other
proceeding conducted by another state, the board, upon the
written request of the petitioner, may defer consideration
of the petition until such time as the other audit or
proceeding is completed. If consideration of the petition
is deferred, the board shall issue a decision and order
disposing of the petition within six months after the audit
or other proceeding is final.
(g) Failure of board to take action.--The failure of the
board to dispose of the petition within the time period provided
for by subsection (f) shall act as a denial of the petition.
Notice of the board's failure to take action and the denial of
the petition shall be issued to the petitioner and the
department. The mailing date of the notice shall begin the time
for filing any appeal.
(h) Publication of decisions.--
(1) The board shall publish each decision, along with
any dissenting opinion, which grants or denies in whole or
in part a petition for review or a petition for refund.
(2) Prior to publication of a decision, the board shall
edit the decision to redact the following:
(i) Information identified by the petitioner as and
that meets the definition of a trade secret or
confidential proprietary information as defined in
section 102 of the act of February 14, 2008 (P.L.6,
No.3), known as the Right-to-Know Law.
(ii) An individual's Social Security number, home
address, driver's license number, personal financial
information as defined in section 102 of the
Right-to-Know Law, home, cellular or personal telephone
numbers, personal e-mail addresses, employee number or
other confidential personal identification number and a
record identifying the name, home address or date of
birth of a child 17 years of age or younger.
(iii) Specific dollar amounts of tax.
(iv) Information pursuant to the Right-to-Know Law.
(3) The disclosure of any remaining information,
including the name of the taxpayer and the nature of the
taxpayer's business, shall be deemed not to violate any
provision of law to the contrary, including:
(i) Sections 274, 353 and 408.
(ii) 18 Pa.C.S. § 7326 (relating to disclosure of
confidential tax information).
(iii) Section 731 of the act of April 9, 1929
(P.L.343, No.176), known as The Fiscal Code.
(4) Decisions shall be indexed and published on a
publicly accessible Internet website maintained by the board.
(i) Appeals.--An appeal from a decision of the board shall
be to the Commonwealth Court and shall be de novo.
(2704 amended July 9, 2013, P.L.270, No.52)
Compiler's Note: See section 42(5) of Act 52 of 2013 in the
appendix to this act for special provisions relating to
applicability.
Compiler's Note: Section 47(2)(ii) of Act 43 of 2017, which
amended section 2704(a) and (b), provided that the
amendment of section 2704(a) and (b) shall apply to
petitions for refunds, petitions for reassessments and
petitions for redeterminations filed with the department
on or after 60 days from the effective date of section
47 of Act 43.
Section 2705. Burden of proof.
Except as otherwise provided by this act, in all cases of
petitions filed pursuant to this article, the burden of proof
shall be upon the petitioner or appellant, as the case may be.
(2705 added Oct. 18, 2006, P.L.1149, No.119)
Section 2706. Abatement of additions or penalties.
Upon the filing of a petition for reassessment or a petition
for refund as provided under this act by a taxpayer, additions
or penalties imposed upon the taxpayer by the laws of this
Commonwealth may be waived or abated, in whole or in part, where
the petitioner has established that he has acted in good faith,
without negligence and with no intent to defraud.
(2706 added Oct. 18, 2006, P.L.1149, No.119)
Section 2707. Compromise by secretary.
(a) General rule.--A taxpayer who has filed a petition for
relief under section 2703 or any other statutory provision
allowing for administrative tax appeal to the department may
propose a compromise of the amount of liability for tax,
interest, penalty, additions or fees administered by the
department. The compromise offer must be submitted prior to a
final decision by the department on the petition. An informal
conference, in person or by telephone, may be conducted by the
department with representatives of the department and the
petitioner. If the compromise offer is accepted, the department
shall issue an order reflecting the compromise that shall not
be subject to further appeal.
(b) Bases for compromise.--There shall be two bases for
compromise:
(1) doubt as to liability; and
(2) the promotion of effective tax administration.
(c) Ineligible for compromise.--The following are not
eligible for compromise:
(1) a petition of denial of property tax or rent rebate
claim;
(2) a petition of denial of a charitable tax exemption;
(3) a petition of the revocation of a sales tax license;
(4) a petition of jeopardy assessments; or
(5) a petition arising under 4 Pa.C.S. Pt. II (relating
to gaming).
(2707 added July 2, 2012, P.L.751, No.85)
ARTICLE XXVIII
TOBACCO MASTER SETTLEMENT PAYMENT REVENUE
BONDS AND SALE OF REVENUE
(Art. added Oct. 30, 2017, P.L.672, No.43)
Section 2801. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Account." The Tobacco Revenue Bond Debt Service Account
established in section 2805.
"Annual payment." A payment received by the Commonwealth
under section IX(c)(1) of the Master Settlement Agreement.
"Authority." The Commonwealth Financing Authority
established under 64 Pa.C.S. Ch. 15 (relating to Commonwealth
Financing Authority).
"Executive director." The executive director of the
Commonwealth Financing Authority.
"Finance." The issuance of revenue bonds utilizing a portion
of annual payments due to the Commonwealth under the Master
Settlement Agreement.
"Fund." The Tobacco Settlement Fund.
"Master Settlement Agreement." The settlement agreement and
related documents entered into on November 23, 1998, by the
Commonwealth and leading United States tobacco product
manufacturers approved by the Court of Common Pleas,
Philadelphia County, on January 13, 1999.
"Office." The Governor's Office of the Budget.
"Sales agreement." A written contract entered into under
section 2803.1 under which a portion of the revenue the
Commonwealth will receive under the Master Settlement Agreement
is sold.
"Secretary." The Secretary of the Budget of the
Commonwealth.
"Tobacco Settlement Act." The act of June 26, 2001 (P.L.755,
No.77), known as the Tobacco Settlement Act.
(2801 added Oct. 30, 2017, P.L.672, No.43)
Section 2802. Bond issuance or sales agreement.
(a) Declaration of policy.--The General Assembly finds and
declares that:
(1) The Commonwealth experienced a revenue deficit of
$1,106,700,308 in General Fund revenue collections for fiscal
year 2016-2017.
(2) The Commonwealth's General Fund continues to
experience a structural deficit where annual expenditures
exceed recurring revenue collections.
(3) The General Fund for fiscal year 2016-2017 revenue
shortfall in combination with the structural deficit,
increased expenditure needs and increased tax refunds
resulted in a significant negative ending balance in the
General Fund of approximately $1,539,000,000 for fiscal year
2016-2017.
(4) A significant portion of the Commonwealth's General
Fund annual expenditures are dedicated to the protection of
the health, safety and general welfare of the people of this
Commonwealth and the furtherance of economic development and
efficiency within this Commonwealth by providing basic
services and facilities.
(5) The ability of the Commonwealth to provide for the
protection of the health, safety and general welfare of the
people of this Commonwealth and the provision of basic
services and facilities is jeopardized by the General Fund
for fiscal year 2016-2017 revenue deficit and the continuing
structural deficit.
(6) The provisions of 64 Pa.C.S. Ch. 15 (relating to
Commonwealth Financing Authority) are entitled to liberal
construction in order to effect legislative and public
purposes.
(7) One of the stated purposes of 64 Pa.C.S. Ch. 15 is
"to protect the health, safety and general welfare of the
people of this Commonwealth and to further encourage economic
development and efficiency within this Commonwealth by
providing basic services and facilities, it is necessary to
provide additional or alternate means of financing
infrastructure facilities, transportation systems, industrial
parks, energy conversion facilities, facilities for the
furnishing of energy, water and telecommunications,
facilities for the collection or treatment of wastewater and
storm water, tourism, parking facilities, health care
facilities and other basic service and related facilities
which are conducive to economic activity within this
Commonwealth" under 64 Pa.C.S. § 1503(6) (relating to
findings and declaration of policy).
(8) The fund is a special revenue fund established for
the purpose of providing funding for various Commonwealth
programs.
(9) Utilizing a portion of annual payments received
through the Master Settlement Agreement and deposited in the
fund to leverage funding to offset the effect of the fiscal
year 2016-2017 revenue deficit and the structural deficit
is in the best interest of the Commonwealth to provide
General Fund budgetary relief necessary for the protection
of the health, safety and general welfare of the people of
this Commonwealth and the provision of basic services and
facilities.
(b) Authority.--Notwithstanding any other law, the authority
is authorized to enter into a sales agreement on behalf of the
Commonwealth or to issue bonds, the proceeds of either of which
shall be deposited in the General Fund to provide General Fund
budgetary relief necessary for the protection of the health,
safety and general welfare of the people of this Commonwealth
and the furtherance of economic development and efficiency
within this Commonwealth by providing basic services and
facilities.
(c) Duty.--The authority shall issue bonds under section
2803 or enter into a sales agreement under section 2803.1. An
issuance or sale under this article shall be undertaken in a
manner consistent with the best interest of the Commonwealth
and in a way that provides the greatest value to taxpayers and
furthers the purposes of this article.
(d) Procedures for sale.--A sale under this article shall
be in accordance with the following:
(1) No later than 45 days after the effective date of
this section, the executive director shall accept statements
of qualifications and expressions of interest from persons
in relation to a sale under this article. The executive
director may specify a uniform format for statements of
qualifications and required information. Persons may amend
these statements at any time by filing a new statement.
(2) The executive director or a designee of the
executive director may conduct discussions with any
responsible offeror to determine the offeror's qualifications
for further consideration. Discussions shall not disclose
any information derived from proposals submitted by other
offerors.
(3) The State Employees' Retirement System and the
Public School Employees' Retirement System may each submit
to the executive director a statement of qualification and
expression of interest under paragraph (1).
(4) An award to enter into a sales agreement under this
article shall be made to the responsible offeror determined
in writing by the authority to be best qualified based on
the evaluation factors set forth in the request for
proposals. The provisions of 64 Pa.C.S. § 1512(d)(1)
(relating to board) shall apply to a decision to award under
this paragraph. If terms cannot be agreed upon with the
best-qualified, responsible offeror, negotiations will be
formally terminated with the offeror. If proposals were
submitted by one or more other responsible offerors,
negotiations may be conducted with the other responsible
offeror or responsible offerors in the order of their
respective qualification ranking. The sales agreement may
be entered into with the responsible offeror then ranked as
best qualified if the amount of compensation is determined
to be fair and reasonable.
(e) Debt or liability.--
(1) Bonds issued or a sales agreement entered into under
this article shall not be a debt or liability of the
Commonwealth and shall not create or constitute an
indebtedness, liability or obligation of the Commonwealth.
(2) Bond obligations or obligations under a sales
agreement shall be payable solely from revenues or funds
pledged or available for repayment or payment as authorized
under this article.
(3) Each bond must contain on its face a statement that:
(i) The authority is obligated to pay the principal
of or interest on the bonds only from the revenues or
funds pledged or available for repayment as authorized
under this article.
(ii) The Commonwealth shall not be obligated to pay
the principal of or interest on the bonds.
(iii) The full faith and credit of the Commonwealth
is not pledged to the payment of the principal of or the
interest on the bonds.
(4) Each sales agreement under this article must contain
a statement that:
(i) The authority is obligated to pay the portion
of the revenue the Commonwealth will receive under the
Master Settlement Agreement only from the revenues or
funds identified or available for payment as authorized
under this article.
(ii) The Commonwealth shall not be obligated to pay
any amount provided in the sales agreement.
(iii) The full faith and credit of the Commonwealth
is not pledged to the payment of any amount provided in
the sales agreement.
(2802 added Oct. 30, 2017, P.L.672, No.43)
Section 2803. Limitations on bond issuance.
(a) Maximum principal amount.--If the authority issues bonds
under this article, the authority may issue bonds in a maximum
aggregate principal amount sufficient to raise net proceeds of
$1,500,000,000.
(b) Limitation.--The authority shall not issue any bonds
under this article, except refunding bonds, after June 30, 2018.
The authority, in consultation with the office, shall determine
the principal amounts of taxable bonds and tax-exempt bonds to
be issued during fiscal year 2017-2018.
(c) Refunding bonds.--Notwithstanding any other limitation,
the authority, at the request of the secretary, may issue
refunding bonds at any time while bonds issued under this
article are outstanding, provided that the final maturity of a
series of bonds being refunded shall not be extended.
(d) Interest.--Interest on bonds issued under this article
and refunding bonds authorized under this section shall be
payable at the time or times the authority determines in the
resolution authorizing the bonds and, except as provided under
subsection (e), shall otherwise be subject to the other
provisions of 64 Pa.C.S. Ch. 15 (relating to Commonwealth
Financing Authority). Interest may be capitalized for a period
not to exceed two years.
(e) Debt limitations.--The aggregate principal amount of
bonds specified in this section shall not be subject to the
debt limitations specified in 64 Pa.C.S. § 1543 (relating to
indebtedness).
(f) Term of bonds.--The term of the bonds issued under this
article may not exceed 30 years.
(2803 added Oct. 30, 2017, P.L.672, No.43)
Section 2803.1. Limitations on sales agreement.
(a) Maximum amount.--If the authority enters into a sales
agreement under this article, the authority may enter into a
sales agreement to sell a portion of the revenue the
Commonwealth will receive under the Master Settlement Agreement
in a maximum aggregate amount sufficient to raise net proceeds
of $1,500,000,000 during the 2017-2018 fiscal year.
(b) Limitation.--The authority shall not enter into an
agreement under this article after June 30, 2018.
(c) Terms of agreement.--The sales agreement may not provide
for a sale of revenue in excess of 10 years' worth of payments
received by the Commonwealth under the Master Settlement
Agreement. No payments from the Master Settlement Agreement may
be required under the sales agreement before July 1, 2018.
(2803.1 added Oct. 30, 2017, P.L.672, No.43)
Section 2804. Finance pledge.
(a) Annual payments for bond issuance.--
(1) For a bond issuance under this article, annual
payments received under the Master Settlement Agreement are
pledged by the Commonwealth in the amount certified by the
secretary under paragraph (2) for payment of principal and
interest for bonds issued by the authority under this
article.
(2) The secretary shall certify the amount of annual
payments to be pledged for payment of principal and interest
for the bonds issued by the authority under this article
within 30 days of the closing date of the bond transaction.
The certification shall be published as a notice in the
Pennsylvania Bulletin.
(b) Annual payments for sales agreement.--
(1) Annual payments received under the Master Settlement
Agreement are pledged by the Commonwealth in the amount
provided in the sales agreement entered into by the authority
under this article.
(2) The secretary shall certify the amount of annual
payments under the Master Settlement Agreement to be pledged
for payment under the sales agreement entered into by the
authority under this article within 30 days of the effective
date of the sales agreement. The certification shall be
published as a notice in the Pennsylvania Bulletin.
(c) General revenues.--
(1) For a bond issuance, the Commonwealth may pledge
revenues collected by the Commonwealth under Article II for
the payment of principal and interest for the bonds issued
by the authority under this article. A pledge made under
this subsection shall be subordinate to the pledge of Article
II revenues made before the effective date of this section
for outstanding indebtedness of the authority.
(2) The secretary shall certify the maximum annual
amount of general revenues to be pledged to supplement
amounts pledged under subsection (a) for payment of principal
and interest for bonds issued by the authority under this
article within 30 days of the closing date of the bond
transaction. The certification shall be published as a notice
in the Pennsylvania Bulletin.
(2804 added Oct. 30, 2017, P.L.672, No.43)
Section 2805. Tobacco Revenue Bond Debt Service Account.
(a) Establishment.--There is established in the State
Treasury a restricted account in the General Fund to be known
as the Tobacco Revenue Bond Debt Service Account.
(b) Annual payments.--The amount of each annual payment
received under the Master Settlement Agreement and pledged by
the Commonwealth under section 2804 and certified by the
secretary for the payment of principal and interest for bonds
issued under this article shall be deposited in the account
upon receipt of each annual payment.
(c) General revenue.--General revenues pledged by the
Commonwealth in section 2804 and certified by the secretary for
the payment of principal and interest for bonds issued under
this article shall be deposited in the accounts in amounts
determined by the secretary.
(d) Payments on bonds.--Payments of principal and interest
due on the bonds shall be made from the account.
(2805 added Oct. 30, 2017, P.L.672, No.43)
Section 2806. Service agreement for bond issuance authorized.
(a) Authorization.--For a bond issuance under this article,
the authority and the office may enter into an agreement or
service agreement to effectuate the purposes of this article,
including an agreement to secure bonds issued under this
article, under which the secretary shall agree to pay service
charges to the authority in each fiscal year that the bonds or
refunding bonds are outstanding in amounts sufficient to timely
pay in full the debt service and any other financing costs due
on the bonds issued under this article.
(b) Payment of service charges.--The office's payment of
any service charges shall be subject to and dependent upon
approval by the authority and the appropriation of funds by the
General Assembly to the office for payment of any service
charges.
(c) Amendment of agreement.--The service agreement may be
amended or supplemented by the authority and the office in
connection with the issuance of a series of bonds or refunding
bonds authorized in this section.
(2806 added Oct. 30, 2017, P.L.672, No.43)
Section 2806.1. Service agreement for sales agreement
authorized.
(a) Authorization.--For a sales agreement under this
article, the authority and the office may enter into an
agreement or service agreement to effectuate the purposes of
this article, including a direction to the secretary to pay all
or a specified portion of the tobacco settlement revenues
directly to a person who has entered into a sales agreement
under this article.
(b) Payment of service charges.--The office's payment of
any service charges shall be subject to and dependent upon
approval by the authority and the appropriation of funds by the
General Assembly to the office for payment of any service
charges.
(c) Amendment of agreement.--The service agreement may be
amended or supplemented by the authority and the office in
connection with a sales agreement under this article.
(2806.1 added Oct. 30, 2017, P.L.672, No.43)
Section 2807. Submission of sales agreement.
A certified copy of a sales agreement entered into under
this article shall be submitted to the Governor, State
Treasurer, office, President pro tempore of the Senate, Minority
Leader of the Senate, Speaker of the House of Representatives
and Minority Leader of the House of Representatives promptly
upon execution and delivery of the sales agreement.
(2807 added Oct. 30, 2017, P.L.672, No.43)
Section 2808. Deposit of proceeds.
The net proceeds of a sales agreement entered into or bonds
issued under this article, other than refunding bonds, exclusive
of costs of issuance, reserves and other financing charges,
shall be transferred by the authority to the State Treasurer
for deposit into the General Fund and shall be available for
expenditure as provided in this article in accordance with
appropriations by the General Assembly.
(2808 added Oct. 30, 2017, P.L.672, No.43)
Section 2809. Limitation on appropriations.
The amount of annual payments from the Master Settlement
Agreement that are pledged and certified by the secretary under
section 2804 for the payment of principal and interest for bonds
issued under this article or for payments required under a sales
agreement under this article shall not be subject to
appropriation under section 1713-A.1 of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code.
(2809 added Oct. 30, 2017, P.L.672, No.43)
ARTICLE XXIX
GOVERNMENTAL OBLIGATIONS
(Art. added Dec. 3, 1993, P.L.473, No.68)
Section 2901. Taxability of Government
Obligations.--(a) Except as provided in subsections (b) and
(c), all obligations, interest on obligations and income from
obligations issued on or after the effective date of this
section by the Commonwealth, any public authority, commission,
board or other agency created by the Commonwealth or any
political subdivision of the Commonwealth or any public
authority created by any political subdivision of the
Commonwealth shall at all times be free from taxation for State
and local purposes within the Commonwealth.
(b) Government obligations described in subsection (a) shall
continue to be subject to inheritance and estate taxes imposed
by Article XXI.
(c) Profits, gains or income derived from the sale, exchange
or other disposition of government obligations described in
subsection (a) shall be subject to State or local taxation.
(2901 added Dec. 3, 1993, P.L.473, No.68)
ARTICLE XXIX-A
TAX AMNESTY PROGRAM
(Art. deleted by amendment Oct. 9, 2009, P.L.451, No.48)
Section 2901-A. Definitions.--(2901-A deleted by amendment
Oct. 9, 2009, P.L.451, No.48)
Section 2902-A. Establishment of Amnesty Program.--(2902-A
deleted by amendment Oct. 9, 2009, P.L.451, No.48)
Section 2903-A. Required Payment.--(2903-A deleted by
amendment Oct. 9, 2009, P.L.451, No.48)
Section 2904-A. Amnesty Contingent on Continued
Compliance.--(2904-A deleted by amendment Oct. 9, 2009, P.L.451,
No.48)
Section 2905-A. Limitation of Deficiency
Assessment.--(2905-A deleted by amendment Oct. 9, 2009, P.L.451,
No.48)
Section 2906-A. Overpayment of Tax.--(2906-A deleted by
amendment Oct. 9, 2009, P.L.451, No.48)
Section 2907-A. Previously Paid Interest and
Penalties.--(2907-A deleted by amendment Oct. 9, 2009, P.L.451,
No.48)
Section 2908-A. Proceedings Relating to Tax Amnesty Return
Barred.--(2908-A deleted by amendment Oct. 9, 2009, P.L.451,
No.48)
Section 2909-A. Undisclosed Liabilities.--(2909-A deleted
by amendment Oct. 9, 2009, P.L.451, No.48)
Section 2910-A. Duties of Department.--(2910-A deleted by
amendment Oct. 9, 2009, P.L.451, No.48)
Section 2911-A. Method of Payment.--(2911-A deleted by
amendment Oct. 9, 2009, P.L.451, No.48)
Section 2912-A. Exemption from Review Process.--(2912-A
deleted by amendment Oct. 9, 2009, P.L.451, No.48)
Section 2913-A. Use of Revenue.--(2913-A deleted by
amendment Oct. 9, 2009, P.L.451, No.48)
Section 2914-A. Penalties for Certain Corporate
Officers.--(2914-A deleted by amendment Oct. 9, 2009, P.L.451,
No.48)
Section 2915-A. Further Examination of Books and
Records.--(2915-A deleted by amendment Oct. 9, 2009, P.L.451,
No.48)
Section 2916-A. Additional Penalty.--(2916-A deleted by
amendment Oct. 9, 2009, P.L.451, No.48)
Section 2917-A. Application of Penalty and Powers.--(2917-A
deleted by amendment Oct. 9, 2009, P.L.451, No.48)
Section 2918-A. Construction.--(2918-A deleted by amendment
Oct. 9, 2009, P.L.451, No.48)
Section 2919-A. Suspension of Inconsistent Acts.--(2919-A
deleted by amendment Oct. 9, 2009, P.L.451, No.48)
ARTICLE XXIX-B
HOMEOWNERS' CENTURY TAX REBATE
(Art. expired December 31, 2001. See Act 23 of 2000.)
Section 2901-B. Short Title of Article.--(2901-B expired
December 31, 2001. See Act 23 of 2000.)
Section 2902-B. Definitions.--(2902-B expired December 31,
2001. See Act 23 of 2000.)
Section 2903-B. Rebate Qualifications.--(2903-B expired
December 31, 2001. See Act 23 of 2000.)
Section 2904-B. Rebate Administration.--(2904-B expired
December 31, 2001. See Act 23 of 2000.)
Section 2905-B. Petitions for Review.--(2905-B expired
December 31, 2001. See Act 23 of 2000.)
Section 2906-B. Penalties.--(2906-B expired December 31,
2001. See Act 23 of 2000.)
Section 2907-B. Erroneous Rebates.--(2907-B expired December
31, 2001. See Act 23 of 2000.)
Section 2908-B. Construction.-(2908-B expired December 31,
2001. See Act 23 of 2000.)
Section 2909-B. Expiration.--(2909-B expired December 31,
2001. See Act 23 of 2000.)
ARTICLE XXIX-C
STRATEGIC DEVELOPMENT AREAS
(Art. expired December 31, 2022. See Act 151 of 2006.)
PART I
PRELIMINARY PROVISIONS
(Pt. expired December 31, 2022. See Act 151 of 2006.)
Section 2901-C. Scope.
(2901-C expired December 31, 2022. See Act 151 of 2006.)
Section 2902-C. Legislative findings.
(2902-C expired December 31, 2022. See Act 151 of 2006.)
Section 2903-C. Definitions.
(2903-C expired December 31, 2022. See Act 151 of 2006.)
PART III
STRATEGIC DEVELOPMENT AREAS
(Pt. III expired December 31, 2022. See Act 151 of 2006.)
Section 2911-C. Strategic development areas.
(2911-C expired December 31, 2022. See Act 151 of 2006.)
Section 2912-C. Qualified businesses.
(2912-C expired December 31, 2022. See Act 151 of 2006.)
Section 2913-C. Procedure for approval by political
subdivisions.
(2913-C expired December 31, 2022. See Act 151 of 2006.)
Section 2914-C. Decertification.
(2914-C expired December 31, 2022. See Act 151 of 2006.)
PART V
STATE TAXES
(Pt. V expired December 31, 2022. See Act 151 of 2006.)
SUBPART A
GENERAL PROVISIONS
(Subpt. A expired December 31, 2022. See Act 151 of 2006.)
Section 2921-C. State taxes.
(2921-C expired December 31, 2022. See Act 151 of 2006.)
SUBPART B
PARTICULAR STATE TAXES
(Subpt. B expired December 31, 2022. See Act 151 of 2006.)
Section 2931-C. Sales and use tax.
(2931-C expired December 31, 2022. See Act 151 of 2006.)
Section 2932-C. Personal income tax.
(2932-C expired December 31, 2022. See Act 151 of 2006.)
Section 2933-C. Nonresidency considerations.
(2933-C expired December 31, 2022. See Act 151 of 2006.)
Section 2934-C. (Reserved).
(2934-C expired December 31, 2022. See Act 151 of 2006.)
Section 2935-C. Corporate net income tax.
(2935-C expired December 31, 2022. See Act 151 of 2006.)
Section 2936-C. Capital stock franchise tax.
(2936-C expired December 31, 2022. See Act 151 of 2006.)
Section 2937-C. (Reserved).
(2937-C expired December 31, 2022. See Act 151 of 2006.)
Section 2938-C. Strategic development area job tax credit.
(2938-C expired December 31, 2022. See Act 151 of 2006.)
Section 2939-C. Strategic development area job creation tax
credit.
(2939-C expired December 31, 2022. See Act 151 of 2006.)
PART VII
LOCAL TAXES
(Pt. VII expired December 31, 2022. See Act 151 of 2006.)
Section 2941-C. Local taxes.
(2941-C expired December 31, 2022. See Act 151 of 2006.)
Section 2942-C. Real property tax.
(2942-C expired December 31, 2022. See Act 151 of 2006.)
Section 2943-C. Local earned income and net profits taxes;
business privilege taxes.
(2943-C expired December 31, 2022. See Act 151 of 2006.)
Section 2944-C. Mercantile license tax.
(2944-C expired December 31, 2022. See Act 151 of 2006.)
Section 2945-C. Local sales and use tax.
(2945-C expired December 31, 2022. See Act 151 of 2006.)
PART IX
ADMINISTRATION OF TAX PROVISIONS
(Pt. IX expired December 31, 2022. See Act 151 of 2006.)
Section 2951-C. Transferability.
(2951-C expired December 31, 2022. See Act 151 of 2006.)
Section 2952-C. Recapture.
(2952-C expired December 31, 2022. See Act 151 of 2006.)
Section 2953-C. Delinquent or deficient State or local taxes.
(2953-C expired December 31, 2022. See Act 151 of 2006.)
Section 2954-C. Code compliance.
(2954-C expired December 31, 2022. See Act 151 of 2006.)
Section 2955-C. Appeals.
(2955-C expired December 31, 2022. See Act 151 of 2006.)
Section 2956-C. Notice requirements; State and local
authorities.
(2956-C expired December 31, 2022. See Act 151 of 2006.)
Section 2957-C. Application time.
(2957-C expired December 31, 2022. See Act 151 of 2006.)
PART XI
(RESERVED)
(Pt. XI (Reserved) expired December 31, 2022. See Act 151 of
2006.)
PART XIII
MISCELLANEOUS PROVISIONS
(Pt. XIII expired December 31, 2022. See Act 151 of 2006.)
Section 2971-C. Illegal activity.
(2971-C expired December 31, 2022. See Act 151 of 2006.)
Section 2972-C. Rules and regulations.
(2972-C expired December 31, 2022. See Act 151 of 2006.)
Section 2973-C. Compliance.
(2973-C expired December 31, 2022. See Act 151 of 2006.)
Section 2974-C. Penalties.
(2974-C expired December 31, 2022. See Act 151 of 2006.)
Section 2975-C. Construction.
(2975-C expired December 31, 2022. See Act 151 of 2006.)
Section 2976-C. Applicability.
(2976-C expired December 31, 2022. See Act 151 of 2006.)
Section 2977-C. Severability.
(2977-C expired December 31, 2022. See Act 151 of 2006.)
Section 2978-C. Repeals.
(2978-C expired December 31, 2022. See Act 151 of 2006.)
Section 2979-C. Expiration.
(2979-C expired December 31, 2022. See Act 151 of 2006.)
SUBARTICLE A
PRELIMINARY PROVISIONS
(Subart. hdg. added June 30, 2021, P.L.124, No.25)
Compiler's Note: See section 29 of Act 56 of 2024 in the
appendix to this act for special provisions relating to
certification requirements.
Section 2901-D. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Blockchain." A distributed ledger technology in which the
data is:
(1) shared across a network that creates a digital
ledger of verified transactions or information among network
participants; and
(2) typically linked using cryptography to maintain the
integrity of the digital ledger and execute other functions,
including the transfer of ownership or value.
(Def. added July 11, 2024, P.L. , No.56)
"Computer data center." All or part of a facility that may
be composed of one or more businesses, owners or tenants, that
is or will be predominantly used to house working servers or
similar data storage systems and that may have uninterruptible
energy supply or generator backup power, or both, cooling
systems, towers and other temperature control infrastructure.
"Computer data center equipment." Equipment that is used
to outfit, operate or benefit a computer data center and
component parts, installations, refreshments, replacements and
upgrades to the equipment, whether any of the equipment is
affixed to or incorporated into real property, including:
(1) All equipment necessary for the transformation,
generation, distribution or management of electricity that
is required to operate computer servers or similar data
storage equipment, including generators, uninterruptible
energy supplies, conduit, gaseous fuel piping, cabling, duct
banks, switches, switchboards, batteries and testing
equipment.
(2) All equipment necessary to cool and maintain a
controlled environment for the operation of the computer
servers or data storage systems and other components of the
computer data center, including mechanical equipment,
refrigerant piping, gaseous fuel piping, adiabatic and free
cooling systems, cooling towers, water softeners, air
handling units, indoor direct exchange units, fans, ducting
and filters.
(3) All water conservation systems, including facilities
or mechanisms that are designed to collect, conserve and
reuse water.
(4) All software, including, but not limited to,
enabling software and licensing agreements, computer servers
or similar data storage equipment, chassis, networking
equipment, switches, racks, cabling, trays and conduits.
(5) All monitoring equipment and security systems.
(6) Modular data centers and preassembled components
of any item described in this definition, including
components used in the manufacturing of modular data centers.
(7) Other tangible personal property that is essential
to the operations of a computer data center.
"Department." The Department of Revenue of the Commonwealth.
"Facility." One or more parcels of land in this Commonwealth
and any structures and personal property contained on the land.
"New investment." Construction, expansion or build out of
data center space at either a new or an existing computer data
center on or after January 1, 2014, and the purchase and
installation of computer data center equipment, except for items
described under paragraph (4) of the definition of "computer
data center equipment."
"Owner or operator." Includes a single entity, multiple
entities or affiliated entities.
"Proof of work crypto-asset mining." The process of
performing computations to add a valid block of data to a
blockchain, excluding computations required to validate
individual transactions, typically in exchange for a reward or
fee. (Def. added July 11, 2024, P.L. , No.56)
"Qualification period." Except as provided under sections
2931-D(d), 2935-D(b) and 2937-D(c), as follows:
(1) With respect to the owner or operator of a computer
data center certified under this article, a period of time
beginning on the date of certification of the computer data
center and expiring at the end of the fifteenth full calendar
year following the calendar year in which the owner or
operator filed an application for certification.
(2) With respect to a qualified tenant of the owner or
operator of a computer data center certified under this
article, a period of time beginning on the date that the
qualified tenant enters into an agreement concerning the use
or occupancy of the computer data center and expiring at the
earlier of the expiration of the term of the agreement or
the end of the 10th full calendar year following the calendar
year in which the qualified tenant enters into the agreement.
(Def. amended July 8, 2022, P.L.513, No.53)
"Qualified tenant." An entity that contracts with the owner
or operator of a computer data center that is certified pursuant
to this article to use or occupy part of the computer data
center for at least 100 kilowatts per month for two or more
years.
"Tax exemption." The tax exemption provided under Subarticle
C. (Def. added June 30, 2021, P.L.124, No.25)
"Tax refund." The tax refund provided for under Subarticle
B. (Def. amended June 30, 2021, P.L.124, No.25)
"Telecommunications provider." A provider of
telecommunications services as defined in 61 Pa. Code § 60.20
(relating to telecommunications service). (Def. added June 30,
2021, P.L.124, No.25)
"Tenant." An entity that contracts with the owner or
operator of a computer data center to use or occupy part of the
computer data center.
(2901-D added July 13, 2016, P.L.526, No.84)
Compiler's Note: Section 30(12) of Act 56 of 2024 provided
that the addition of section 2901-D shall apply to taxable
years commencing after December 31, 2025.
SUBARTICLE B
SALES AND USE TAX REFUND PROGRAM
(Subart. hdg. added June 30, 2021, P.L.124, No.25)
Section 2911-D. Sales and use tax refund.
(a) Application.--Beginning July 1, 2017, an owner or
operator or qualified tenant of a computer data center certified
under this article may apply for a tax refund of taxes paid
under Article II upon the sale at retail or use of computer
data center equipment for installation in a computer data
center, purchased by:
(1) An owner or operator of a computer data center
certified under this article.
(2) A qualified tenant certified under this article.
(b) Applicability.--Taxes paid under Article II during the
qualification period shall be eligible for a refund under this
article.
(c) Exclusions.--The following do not qualify for a tax
refund:
(1) Computer data center equipment used by the computer
data center to:
(i) generate electricity for resale purposes to a
power utility, except for sales incidental to the primary
sale to computer data centers and which qualify under
subparagraph (ii); or
(ii) generate, provide or sell more than 5% of its
electricity outside of the computer data center.
(2) (Reserved).
(2911-D renumbered from 2902-D June 30, 2021, P.L.124, No.25)
Section 2912-D. Application for certification.
To be considered for a certification, an owner or operator
of a computer data center shall submit to the department an
application on a form prescribed by the department that includes
the following:
(1) The owner's or operator's name, address and
telephone number.
(2) The address of the site where the facility is or
will be located, including, if applicable, information
sufficient to identify the specific portion or portions of
the facility comprising the computer data center.
(3) If the computer data center is to qualify under
section 2915-D(1), the following information:
(i) The anticipated investment associated with the
computer data center for which the certification is being
sought.
(ii) An affirmation, signed by an authorized
executive representing the owner or operator, that the
computer data center is expected to satisfy the
certification requirements prescribed in section
2915-D(1).
(4) If the computer data center is to qualify under
section 2915-D(2), an affirmation, signed by an authorized
executive representing the owner or operator, that the
computer data center has satisfied, or will satisfy, the
certification requirements prescribed in section 2915-D(2).
(5) The department shall begin accepting applications
no later than 90 days after the effective date of this
section.
(2912-D renumbered from 2903-D and amended June 30, 2021,
P.L.124, No.25)
Section 2913-D. Review of application.
(a) General rule.--Within 60 days after receiving a complete
and correct application, the department shall review the
application and either issue a written certification that the
computer data center qualifies for the certification or provide
written reasons for its denial.
(b) Deemed approval.--Failure of the department to approve
or deny an application within 60 days after the date the owner
or operator of a computer data center submits the application
to the department constitutes certification of the computer
data center, and the department shall issue written
certification to the owner or operator within 14 days. The
department may not certify any computer data center after
December 31, 2021.
(2913-D renumbered from 2904-D and amended June 30, 2021,
P.L.124, No.25)
Section 2914-D. Separation of facilities.
(a) Separate certification.--An owner or operator of a
computer data center may separate a facility into one or more
computer data centers, which may each receive a separate
certification, if each computer data center individually meets
the requirements prescribed in section 2915-D.
(b) Limitation.--A portion of a facility or an article of
computer data equipment shall not be deemed to be a part of
more than one computer data center.
(c) Aggregation.--An owner or operator may aggregate one
or more parcels, buildings or condominiums in a facility into
a single computer data center if, in the aggregate, the parcels,
buildings and condominiums meet the requirements of this
article.
(2914-D renumbered from 2905-D and amended June 30, 2021,
P.L.124, No.25)
Section 2915-D. Eligibility requirements.
A computer data center must meet one of the following
requirements, after taking into account the combined investments
made and annual compensation paid by the owner or operator of
the computer data center or the qualified tenant:
(1) On or before the fourth anniversary of
certification, the computer data center creates a minimum
investment of:
(i) At least $25,000,000 of new investment if the
computer data center is located in a county with a
population of 250,000 or fewer individuals; or
(ii) At least $50,000,000 of new investment if the
computer data center is located in a county with a
population of more than 250,000 individuals.
(2) One or more taxpayers operating or occupying a
computer data center, in the aggregate, pay annual
compensation of at least $1,000,000 to employees at the
certified computer data center site for each year of the
certification after the fourth anniversary of certification.
(2915-D renumbered from 2906-D June 30, 2021, P.L.124, No.25)
Section 2916-D. Notification.
(a) Requirements satisfied.--On or before the fourth
anniversary of the certification of a computer data center, the
owner or operator of a computer data center shall notify the
department in writing whether the computer data center for which
the certification is requested has satisfied the requirements
prescribed in section 2915-D.
(b) Records.--Until a computer data center satisfies the
requirements prescribed in section 2915-D, the owner, operator
and qualified tenants shall maintain detailed records of all
investments created by the computer data center, including costs
of buildings and computer data center equipment, and all tax
refunds directly received by the owner, operator or qualified
tenant.
(2916-D renumbered from 2907-D and amended June 30, 2021,
P.L.124, No.25)
Section 2917-D. Revocation of certification.
(a) Revocation.--If the department determines that the
requirements of section 2915-D have not been satisfied, the
department may revoke the certification of a computer data
center.
(b) Appeal.--The owner or operator of the computer data
center may appeal the revocation. Appeals filed under this
section shall be governed by Article II.
(c) Recapture.--If certification is revoked pursuant to
this section, the qualification period of any owner, operator
or qualified tenant of the computer data center expires, and
the department may recapture from the owner, operator or
qualified tenant all or part of the tax refund provided directly
to the owner or operator or qualified tenant. The department
may give special consideration or allow a temporary exemption
from recapture of the tax refund if there is extraordinary
hardship due to factors beyond the control of the owner or
operator or qualified tenant.
(2917-D renumbered from 2908-D and amended June 30, 2021,
P.L.124, No.25)
Section 2918-D. Guidelines.
The department shall publish guidelines and prescribe forms
and procedures as necessary for the purposes of this article.
(2918-D renumbered from 2909-D June 30, 2021, P.L.124, No.25)
Section 2919-D. Confidential information.
Proprietary business information contained in the application
form described in section 2912-D and the written notice
described in section 2916-D, as well as information concerning
the identity of a qualified tenant, are confidential and may
not be disclosed to the public. The department may disclose the
name of a computer data center that has been certified under
this article.
(2919-D renumbered from 2910-D and amended June 30, 2021,
P.L.124, No.25)
Section 2920-D. List of tenants.
An owner or operator of a computer data center shall provide,
to the extent permissible under Federal law, the department
with a list of qualified tenants, including the commencement
and expiration dates of each qualified tenant's agreement to
use or occupy part of the computer data center. The list shall
be provided to the department annually, upon request by the
department.
(2920-D renumbered from 2911-D June 30, 2021, P.L.124, No.25)
Section 2921-D. Sale or transfer.
Except as provided in section 2917-D, a computer data center
retains its certification regardless of a transfer, sale or
other disposition, directly or indirectly, of the computer data
center.
(2921-D renumbered from 2912-D and amended June 30, 2021,
P.L.124, No.25)
Section 2922-D. Application.
(a) General rule.--An owner, operator or qualified tenant
may apply for a tax refund under this article on or before July
30, 2017, and each July 30 thereafter.
(b) Notification.--No later than September 30, 2017, and
each September 30 thereafter, the department shall notify each
applicant of the amount of tax refund approved by the
department.
(2922-D renumbered from 2913-D June 30, 2021, P.L.124, No.25)
Section 2923-D. Limitations.
(a) Total.--The total amount of State tax refunds approved
by the department under this article shall not exceed $7,000,000
in any fiscal year.
(b) Allocation.--If the total amount of tax refunds approved
for all applicants exceeds the limitation on the amount of tax
refunds in subsection (a) in a fiscal year, the tax refund to
be received by each applicant shall be determined as follows:
(1) Divide:
(i) the tax refund approved for the applicant; by
(ii) the total of all tax refunds approved for all
applicants.
(2) Multiply:
(i) the amount under subsection (a); by
(ii) the quotient under paragraph (1).
(3) The algebraic form of the calculation under this
subsection is:
Taxpayer's tax refund = amount allocated for those
tax refunds X (tax refund approved for the
applicant/total of all tax refunds approved for all
applicants).
(2923-D renumbered from 2914-D June 30, 2021, P.L.124, No.25)
Section 2924-D. Applicability.
Notwithstanding any other provision of this article, the
department may not issue a tax refund under this subarticle for
the tax imposed upon the sale at retail or use of computer data
center equipment purchased after December 31, 2021.
(2924-D added June 30, 2021, P.L.124, No.25)
SUBARTICLE C
SALES AND USE TAX EXEMPTION PROGRAM
(Subart. added June 30, 2021, P.L.124, No.25)
Section 2931-D. Sales and use tax exemption.
(a) Sales and use tax.--Beginning January 1, 2022, the tax
imposed under Article II shall not be imposed upon the sale at
retail or use of computer data center equipment purchased for
installation in a certified computer data center, if purchased
by any of the following:
(1) An owner or operator of a computer data center
certified under this subarticle.
(2) A qualified tenant of a computer data center
certified under this subarticle.
(b) Applicability.--A tax exemption approved under this
subarticle shall apply during the qualification period as
provided under section 2942-D.
(c) Exclusions.--The following shall not qualify for a tax
exemption:
(1) A telecommunications provider's computer data center
that does not have retail or wholesale customers being billed
or paying for services and does provide a majority of
services for internal use or use by the telecommunications
provider's subsidiaries.
(2) Computer data center equipment used by the certified
computer data center for any of the following purposes:
(i) Generating electricity for resale purposes to
a power utility.
(ii) Generating, providing or selling more than 5%
of its electricity outside of the certified computer
data center.
(iii) Proof of work crypto-asset mining. ((iii)
added July 11, 2024, P.L. , No.56)
(3) Laptop computers, handheld devices and motor
vehicles for use both inside and outside the computer data
center.
(d) Definition.--As used in this section, the term
"qualification period" shall mean the following:
(1) With respect to the owner or operator of a computer
data center certified under this article, a period of time
beginning on the date of certification of the computer data
center and expiring at the end of the 25th full calendar
year following the calendar year in which the owner or
operator filed an application for certification.
(2) With respect to a qualified tenant of the owner or
operator of a computer data center certified under this
article, a period of time beginning on the date that the
qualified tenant enters into an agreement concerning the use
or occupancy of the computer data center and expiring at the
earlier of the expiration of the term of the agreement or
the end of the 10th full calendar year following the calendar
year in which the qualified tenant enters into the agreement.
((d) added July 8, 2022, P.L.513, No.53)
(2931-D added June 30, 2021, P.L.124, No.25)
Compiler's Note: Section 30(12) of Act 56 of 2024 provided
that the addition of subsection (c)(2)(iii) shall apply
to taxable years commencing after December 31, 2025.
Section 2932-D. Application for certification.
(a) Application.--To be considered for a certification, an
owner or operator of a computer data center shall submit to the
department an application on a form prescribed by the department
that includes all of the following:
(1) The owner's or operator's name, address and
telephone number.
(2) The address of the site where the computer data
center is or will be located, including, if applicable,
information sufficient to identify the specific portion of
a facility comprising the computer data center.
(3) An affirmation, signed by an authorized executive
representing the owner or operator, that the computer data
center is expected to satisfy the certification requirements
prescribed under section 2935-D.
(b) Acceptance.--The department shall begin accepting
applications no later than 60 days after the effective date of
this section.
(c) Compliance in reporting.--An owner or operator or
qualified tenant eligible for a certification shall comply with
all reporting, filing and compliance requirements under this
act.
(d) Compliance in tax laws.--No owner or operator or
qualified tenant may receive a certification under this
subarticle unless that owner or operator or qualified tenant
is in full compliance with all State tax laws.
(2932-D added June 30, 2021, P.L.124, No.25)
Section 2933-D. Review of application.
(a) General rule.--Within 60 days after receiving a complete
and correct application, the department shall review the
application and either issue a written certification that the
computer data center qualifies for the certification or provide
written reasons for its denial.
(b) Deemed approval.--Failure of the department to approve
or deny an application that has been acknowledged as received
by the department within 60 days after the date the owner or
operator of a computer data center submits the application to
the department shall constitute certification of the computer
data center, and the department shall issue written
certification to the owner or operator within 14 days.
(2933-D added June 30, 2021, P.L.124, No.25)
Section 2934-D. Separation of facilities.
(a) Separate certification.--An owner or operator of a
computer data center may separate a facility into one or more
computer data centers, which may each receive a separate
certification, if each computer data center individually meets
the requirements prescribed in section 2935-D.
(b) Limitation.--A portion of a facility or an article of
computer data equipment shall not be deemed to be a part of
more than one computer data center for certification under this
subarticle.
(c) Aggregation.--An owner or operator may aggregate one
or more parcels, buildings or condominiums in a facility into
a single computer data center for certification under this
subarticle if, in the aggregate, the parcels, buildings and
condominiums meet the requirements prescribed in section 2935-D.
(2934-D added June 30, 2021, P.L.124, No.25)
Section 2935-D. Eligibility requirements.
(a) General rule.--In order to be certified under this
subarticle, an owner or operator of a computer data center must
meet all of the following requirements:
(1) On or before the fourth anniversary of
certification, the combined investment, in the aggregate,
of the owner or operator or qualified tenant of the computer
data center must total a minimum of any of the following:
(i) At least $75,000,000 of new investment if the
computer data center is located in a county with a
population of 250,000 or fewer individuals and creates
25 new jobs.
(ii) At least $100,000,000 of new investment if the
computer data center is located in a county with a
population of more than 250,000 individuals and creates
45 new jobs.
(2) On or before the fourth anniversary of
certification, the owner or operator or qualified tenant of
a computer data center, in the aggregate, must pay annual
compensation of at least $1,000,000 to employees at the
certified computer data center site for each year of the
certification after the fourth anniversary of certification.
(b) Prior applications.--A computer data center that has
met the eligibility requirements as prescribed under section
2915-D and has, prior to July 1, 2021, been certified under
section 2913-D shall be deemed to meet the certification
requirements of this section. The certification shall not be
revoked, except as provided under section 2917-D, and shall
remain in effect for the remainder of the qualification period,
as defined in section 2931-D(d). ((b) amended July 8, 2022,
P.L.513, No.53)
(c) Limitation.--The department may not certify any computer
data center under this subarticle after December 31, 2032.
(d) Definition.--As used in this section, the term "new
investment" means construction, expansion or build out of data
center space at either a new or an existing computer data center
on or after January 1, 2022, and the purchase and installation
of computer data center equipment, except for items described
under paragraph (4) of the definition of "computer data center
equipment" in section 2901-D.
(2935-D added June 30, 2021, P.L.124, No.25)
Section 2936-D. Notification and records.
(a) Requirements satisfied.--On or before the fourth
anniversary of the certification of a computer data center, the
owner or operator of the computer data center shall notify the
department in writing whether the computer data center for which
the certification is requested has satisfied the requirements
prescribed under section 2935-D.
(b) Records.--The owner or operator or qualified tenant
shall:
(1) Maintain detailed records of all investments created
by the computer data center, including costs of buildings
and computer data center equipment and all tax exemptions
received by the owner or operator or qualified tenant.
(2) Maintain purchase journals for examination by the
department.
(2936-D added June 30, 2021, P.L.124, No.25)
Section 2937-D. Revocation of certification.
(a) Revocation.--If the department determines that the
requirements of section 2935-D have not been satisfied, the
department may revoke the certification of a computer data
center.
(b) Appeal.--The owner or operator of the computer data
center may appeal the revocation. Appeals filed under this
section shall be governed by Article II.
(c) Recapture.--If certification is revoked under this
section, the qualification period, as defined in section
2931-D(d), of any owner or operator or qualified tenant of the
computer data center shall expire and the department may
recapture from the owner or operator or qualified tenant all
or part of the tax exemption received by the owner or operator
or qualified tenant under section 2942-D. The department may
give special consideration or allow a temporary exemption from
recapture of the tax exemption if there is extraordinary
hardship due to factors beyond the control of the owner or
operator or qualified tenant. The department may require the
owner or operator or qualified tenant to file appropriate
amended tax returns in order to reflect any recapture of the
tax exemption. ((c) amended July 8, 2022, P.L.513, No.53)
(d) Limitation on assessment.--Notwithstanding the
limitation on assessment and collection in section 258, the
department shall assess any tax determined not to be properly
exempted under this subarticle within five years from the date
an owner or operator or qualified tenant of a computer data
center purchases property exempt from a tax. A taxpayer may
consent to an extension of the period as set forth in section
261.
(2937-D added June 30, 2021, P.L.124, No.25)
Section 2938-D. Guidelines.
The department shall publish guidelines and prescribe forms
and procedures as necessary for the purposes of this article.
(2938-D added June 30, 2021, P.L.124, No.25)
Section 2939-D. Confidential information.
Proprietary business information contained in the application
form described under section 2932-D and the written notice
described under section 2936-D, as well as information
concerning the identity of a qualified tenant, shall be
confidential and may not be disclosed to the public. The
department may disclose the name of a computer data center that
has been certified under this subarticle.
(2939-D added June 30, 2021, P.L.124, No.25)
Section 2940-D. List of tenants.
An owner or operator of a certified computer data center
shall provide, to the extent permissible under Federal law, the
department with a list of qualified tenants, including the
commencement and expiration dates of each qualified tenant's
agreement to use or occupy part of the certified computer data
center. The list shall be provided to the department annually,
upon request by the department.
(2940-D added June 30, 2021, P.L.124, No.25)
Section 2941-D. Sale or transfer.
Except as provided under section 2937-D, a computer data
center retains its certification regardless of a transfer, sale
or other disposition, directly or indirectly, of the computer
data center.
(2941-D added June 30, 2021, P.L.124, No.25)
Section 2942-D. Certificate of exemption.
(a) General rule.--A qualified owner or operator or
qualified tenant of a computer data center certified under this
subarticle may submit for a sales and use tax certificate of
exemption in a manner prescribed by the department on or before
October 1, 2021, and renew each October 1 thereafter. The
following shall apply:
(1) The owner or operator or qualified tenant of a
certified computer data center eligible for a sales and use
tax certificate of exemption shall comply with all reporting,
filing and compliance requirements under this act.
(2) No owner or operator or qualified tenant may receive
a sales and use tax certificate of exemption under this
subarticle unless that owner or operator or qualified tenant
is in full compliance with all State tax laws.
(b) Notification.--No later than 60 days after the
submission under subsection (a) for a sales and use tax
certificate of exemption, the department shall issue a sales
and use tax certificate of exemption to each applicant approved
by the department.
(c) Exempt purchases.--The owner or operator or qualified
tenant of a certified computer data center shall prepare and
deliver a properly executed sales and use tax certificate of
exemption to a vendor from which the owner or operator or
qualified tenant purchases exempt computer data center
equipment.
(2942-D added June 30, 2021, P.L.124, No.25)
ARTICLE XXIX-E
REDUCTION OF TAX CREDITS
(Art. added Oct. 9, 2009, P.L.451, No.48)
Section 2901-E. Applicability of article.
This article shall apply to tax credits awarded in fiscal
years 2009-2010 and 2010-2011.
(2901-E added Oct. 9, 2009, P.L.451, No.48)
Section 2902-E. Reduction.
(a) Article XVII-D.--For the tax credit established under
Article XVII-D, the amount available to be awarded pursuant to
section 1707-D(a) shall be reduced from $75,000,000 per fiscal
year to $42,000,000 in fiscal year 2009-2010 and to $60,000,000
in fiscal year 2010-2011.
(b) Article XVII-F.--For the tax credit established under
Article XVII-F, the amount available to be awarded pursuant to
section 1706-F(a) shall be reduced from $75,000,000 per fiscal
year to $60,000,000 in fiscal year 2009-2010 and to $50,000,000
in fiscal year 2010-2011. The amount available to be awarded
under section 1706-F(a)(1) and (2) shall be as follows:
(1) The total aggregate amount of all tax credits
approved shall not exceed $53,600,000 in fiscal year
2009-2010. No less than $37,967,000 of the total aggregate
amount shall be used to provide tax credits from
contributions from business firms to scholarship
organizations. No less than $15,633,000 of the total
aggregate amount shall be used to provide tax credits for
contributions from business firms to educational improvement
organizations.
(2) The total aggregate amount of all tax credits
approved for contributions from business firms to
pre-kindergarten scholarship programs shall not exceed
$ 6,400,000 in fiscal year 2009-2010.
(3) The total aggregate amount of all tax credits
approved shall not exceed $44,670,000 in fiscal year
2010-2011. No less than $33,502,000 of the total aggregate
amount shall be used to provide tax credits for contributions
from business firms to scholarship organizations. No less
than $11,168,000 of the total aggregate amount shall be used
to provide tax credits for contributions from business firms
to educational improvement organizations.
(4) The total aggregate amount of all tax credits
approved for contributions from business firms to
pre-kindergarten scholarship programs shall not exceed
$5,330,000 in fiscal year 2010-2011.
Notwithstanding section 1704-F(c), in fiscal year 2009-2010,
if valid applications for tax credits received by the Department
of Community and Economic Development before October 1, 2009,
exceed the limitation under this section, tax credits shall be
made available on a pro-rata basis to all valid applications
received before October 1, 2009.
(c) Article XVII-B.--For the tax credit established under
Article XVII-B, the amounts available to be awarded pursuant
to section 1709-B(a) shall be equal to 50% of the maximum
amounts otherwise available for award in fiscal year 2009-2010
and 45% of the maximum amounts otherwise available for award
in fiscal year 2010-2011.
(d) Certain other credits.--For the tax credits established
under section 206(b) and Articles XVII-A, XVII-E, XVIII-B and
XIX-A and under Chapter 5 Subchapter B and Chapter 9 of the act
of December 1, 2004 (P.L.1750, No.226), known as the First Class
Cities Economic Development District Act, the amounts available
for award to each eligible taxpayer shall be determined such
that the total amount available for award shall be 50% of the
amounts otherwise available for award in total pursuant to the
applicable sections or articles in fiscal year 2009-2010, and
45% of the amounts otherwise available for award in total
pursuant to all applicable sections or articles in fiscal year
2010-2011.
(e) Hiatus.--Notwithstanding any other provision of law, a
taxpayer is not entitled to a tax credit under Chapter 7 of the
act of July 9, 2008 (1st Sp.Sess., P.L.1873, No.1), known as
the Alternative Energy Investment Act.
(2902-E added Oct. 9, 2009, P.L.451, No.48)
ARTICLE XXIX-F
TAX AMNESTY PROGRAM FOR
FISCAL YEAR 2009-2010
(Art. added Oct. 9, 2009, P.L.451, No.48)
Section 2901-F. Definitions.
The following words, terms and phrases, when used in this
article, shall have the meanings ascribed to them in this
section, except where the context clearly indicates a different
meaning:
"Amnesty period." The period from April 26, 2010, through
June 18, 2010, inclusive. The estimates under section 2910-F(a)
shall be completed 30 days prior to April 26, 2010.
"Department." The Department of Revenue of the Commonwealth.
"Eligible tax." Any tax administered by the Department of
Revenue delinquent as of June 30, 2009. The term includes any
interest or penalty on an eligible tax. For an unknown
liability, the term shall only include taxes due within five
years prior to June 30, 2009. For purposes of taxes collected
under the International Fuel Tax Agreement, the term shall apply
only to taxes, interest and penalties owed to the Commonwealth,
not to other states or Canadian provinces.
"Program." The tax amnesty program established under section
2902-F as provided for in this article.
"Taxpayer." Any person, association, fiduciary, partnership,
corporation or other entity required to pay or collect any of
the eligible taxes. The term shall not include a taxpayer who,
prior to the amnesty period, has received notice that the
taxpayer is the subject of a criminal investigation for an
alleged violation of any law imposing an eligible tax or who,
prior to the amnesty period, has been named as a defendant in
a criminal complaint alleging a violation of any law imposing
an eligible tax or is a defendant in a pending criminal action
for an alleged violation of any law imposing an eligible tax.
"Unknown liability." A liability for an eligible tax for
which either:
(1) no return or report has been filed, no payment has
been made and the taxpayer has not been contacted by the
department concerning the unfiled returns or reports or
unpaid tax; or
(2) a return or report has been filed, the tax was
underreported and the taxpayer has not been contacted by the
department concerning the underreported tax.
(2901-F added Oct. 9, 2009, P.L.451, No.48)
Section 2902-F. Establishment of program.
(a) Program established.--There is established a tax amnesty
program which shall be administered by the department.
(b) Applicability.--The program shall apply to a taxpayer
who is delinquent on payment of a liability for an eligible tax
as of June 30, 2009, including a liability for returns not
filed, liabilities according to records of the department as
of June 30, 2009, liabilities not reported, underreported or
not established, but delinquent as of June 30, 2009.
(c) Future amnesty program participation.--A taxpayer who
participates in the program shall not be eligible to participate
in a future tax amnesty program.
(d) Deferred payment plan agreement.--Existing deferred
payment plan agreements between a taxpayer and the department
where the agreement applies to a tax liability for which amnesty
is sought by the taxpayer for amounts remaining on the tax
liability, the taxpayer, as a condition of receiving amnesty,
shall pay the liability, notwithstanding terms of the agreement
to the contrary, in full during the amnesty period.
(2902-F added Oct. 9, 2009, P.L.451, No.48)
Section 2903-F. Required payment.
(a) Taxpayer requirements.--Subject to section 2904-F, all
taxpayers who participate in the program shall comply with all
of the following:
(1) During the amnesty period, file a tax amnesty return
in such form and containing such information as the
department shall require. A tax amnesty return shall be
considered to be timely filed if it is postmarked during the
amnesty period or timely electronically or otherwise filed.
(2) During the amnesty period, make payment of all taxes
and one-half of the interest due to the Commonwealth in
accordance with the tax amnesty return that is filed. The
taxpayer shall not be required to pay any penalty applicable
to an eligible tax.
(3) File complete tax returns for all required years
for which the taxpayer previously has not filed a tax return
and file complete amended returns for all required years for
which the taxpayer underreported eligible tax liability.
(b) Prohibitions.--
(1) The department shall not collect the penalties or
interest waived under subsection (a)(2). Except as otherwise
provided in this article, the department shall not pursue
any administrative or judicial proceeding against a taxpayer
with respect to any eligible tax that is disclosed on a tax
amnesty return.
(2) A taxpayer with unknown liabilities reported and
paid under this program and who complies with all other
requirements of this article shall not be liable for any
taxes of the same type due prior to July 1, 2004. A taxpayer
shall not be owed a refund under this article.
(c) Financial hardship.--A taxpayer otherwise eligible for
amnesty who certifies on an amnesty return that making payment
of the full amount of the liability for which amnesty is sought
at the time such return is made would create a severe financial
hardship for such taxpayer, shall retain eligibility for amnesty
if:
(1) Fifty percent or more of the amount due as computed
is paid with the amnesty return or within the amnesty period.
(2) The balance due, including interest under subsection
(a)(2), is paid, in no more than two installments on or before
the end of the amnesty period.
(2903-F added Oct. 9, 2009, P.L.451, No.48)
Section 2904-F. Amnesty contingent on continued compliance.
Notwithstanding any other provision of this article, the
department may assess and collect from a taxpayer all penalties
and interest waived through the tax amnesty program established
in this article if, within two years after the end of the
program, either of the following occurs:
(1) the taxpayer granted amnesty under this article
becomes delinquent for three consecutive periods in payment
of taxes due or filing of returns required on a semimonthly,
monthly, quarterly or other basis and the taxpayer has not
contested the tax liability through a timely valid
administrative or judicial appeal; or
(2) the taxpayer granted amnesty under this article becomes
delinquent and is eight or more months late in payment of taxes
due or filing of returns on an annual basis and the taxpayer
has not contested the liability through a timely valid
administrative or judicial appeal.
(2904-F added Oct. 9, 2009, P.L.451, No.48)
Section 2905-F. Limitation of deficiency assessment.
If, subsequent to the amnesty period, the department issues
a deficiency assessment with respect to a tax amnesty return,
the department shall have the authority to impose penalties and
to pursue a criminal action only with respect to the difference
between the amount shown on that tax amnesty return and the
current amount of tax.
(2905-F added Oct. 9, 2009, P.L.451, No.48)
Section 2906-F. Overpayment of tax.
Notwithstanding any other provisions of this article or any
other act, if an overpayment of eligible tax is refunded or
credited within 180 days after the tax amnesty return is filed
or the eligible tax is paid, whichever is later, no interest
shall be allowed on the overpayment.
(2906-F added Oct. 9, 2009, P.L.451, No.48)
Section 2907-F. Previously paid interest and penalties.
No refund or credit shall be allowed for any interest or
penalty on eligible taxes paid to the department prior to the
amnesty period.
(2907-F added Oct. 9, 2009, P.L.451, No.48)
Section 2908-F. Proceedings relating to tax amnesty return
barred.
Participation in the program is conditioned upon the
taxpayer's agreement that the right to protest or pursue an
administrative or judicial proceeding with regard to tax amnesty
returns filed under the program or to claim any refund of money
paid under the program is barred.
(2908-F added Oct. 9, 2009, P.L.451, No.48)
Section 2909-F. Undisclosed liabilities.
Nothing in this article shall be construed to prohibit the
department from instituting civil or criminal proceedings
against any taxpayer with respect to any amount of tax that is
not disclosed on the tax amnesty return or any amount disclosed
on the amnesty return that is not paid.
(2909-F added Oct. 9, 2009, P.L.451, No.48)
Section 2910-F. Duties of department.
(a) Guidelines.--The department shall develop guidelines
to implement the provisions of this article. The guidelines
must be published in the Pennsylvania Bulletin within 60 days
of the effective date of this article and shall contain, but
not be limited to, the following information:
(1) An explanation of the program and the requirements
for eligibility for the program.
(2) The dates during which a tax amnesty return may be
filed.
(3) A specimen copy of the tax amnesty return.
(4) The amnesty revenue estimates required under section
2912-F(b).
(b) Publicity.--The department shall publicize the program
to maximize public awareness of and participation in the
program. The department shall coordinate to the highest degree
possible its publicity efforts and other actions taken to
implement this article.
(c) Reports.--The department shall issue reports to the
General Assembly detailing program implementation. The reports
shall contain the following information:
(1) Within 30 days after the end of the amnesty period:
(i) A detailed breakdown of the department's
administrative costs in implementing the program.
(ii) The total dollar amount of revenue collected
by the program.
(2) Within 180 days after the end of the amnesty period:
(i) The number of tax amnesty returns filed and a
breakdown of the number and dollar amount of revenue
raised for each tax by calendar year during which the
tax period ended. In addition, the gross revenues shall
be broken down in the following categories:
(A) Amounts represented by assessments
receivable established by the department on or before
the first day of the amnesty period.
(B) All other amounts.
(ii) The total dollar amount of penalties and
interest waived under the program.
(iii) The demographic characteristics of tax amnesty
participants, including North American Industry
Classification System codes of participants, type of
taxpayer, consisting of individual, partnership,
corporation or other entity, size of tax liability and
geographical location.
(d) Notification.--The department shall notify in writing
all known tax delinquents at the taxpayers' last known address
of the existence of the tax amnesty program. The sole purpose
of the letter sent by the department to taxpayers must be
notification of the program.
(2910-F added Oct. 9, 2009, P.L.451, No.48)
Section 2911-F. Method of payment.
All tax payments under the program shall be made by certified
check, money order, electronic transfer, credit card, cash or
its equivalent.
(2911-F added Oct. 9, 2009, P.L.451, No.48)
Section 2912-F. Use of revenue.
(a) Restricted revenue account.--Except as set forth in
subsection (c), all revenue generated by this article shall be
deposited into a restricted revenue account in the General Fund.
Revenue from the restricted revenue account shall be distributed
as follows:
(1) All money from General Fund sources shall be
deposited in the General Fund no later than June 30, 2010,
less repayment of any costs for administration of the program
to the department.
(2) All revenue from Motor License Fund sources shall
be deposited in the Motor License Fund no later than June
30, 2010.
(3) All revenue from Liquid Fuels Tax Fund sources shall
be deposited in the Liquid Fuels Tax Fund no later than June
30, 2010.
(b) Revenue estimates.--
(1) The department shall submit, for publication in the
Pennsylvania Bulletin, a separate amnesty revenue estimate
for revenue generated by this article from the following
sources:
(i) the General Fund;
(ii) the Motor License Fund;
(iii) the Liquid Fuels Tax Fund; and
(iv) the methodology used to develop the estimate.
(2) All amnesty revenue estimates shall be submitted
for publication pursuant to section 2910-F(a)(4).
(c) Budget Stabilization Reserve Fund.--((c) repealed July
6, 2010, P.L.279, No.46)
(2912-F added Oct. 9, 2009, P.L.451, No.48)
Section 2913-F. Additional penalty.
(a) Penalty.--Subject to the limitations provided under
subsection (b), a penalty of 5% of the unpaid tax liability and
penalties and interest shall be levied against a taxpayer
subject to an eligible tax if the taxpayer had failed to remit
an eligible tax due or had an unreported or underreported
liability for an eligible tax on or after the first day
following the end of the amnesty period.
(b) Nonapplicability.--The penalty provided in this section
shall not apply to a taxpayer who:
(1) has paid the liability in full or entered into a
duly approved and executed deferred payment plan on or before
the last day of the amnesty period; or
(2) has filed a timely and valid administrative or
judicial appeal contesting the liability on or before the
last day of the amnesty period.
(c) Penalty in addition.--The penalty provided by this
section shall be in addition to all other penalties provided
by law.
(2913-F added Oct. 9, 2009, P.L.451, No.48)
Section 2914-F. Construction.
Except as expressly provided in this article, this article
shall not:
(1) be construed to relieve any person, corporation or
other entity from the filing of returns or from any taxes,
penalties or interest imposed by the provisions of any laws;
(2) affect or terminate any petitions, investigations,
prosecutions, legal or otherwise, or other proceedings
pending under the provisions of any such laws; or
(3) prevent the commencement or further prosecution of any
proceedings by the proper authorities of the Commonwealth for
violation of any such laws or for the assessment, settlement,
collection or recovery of taxes, penalties or interest due to
the Commonwealth under any such laws.
(2914-F added Oct. 9, 2009, P.L.451, No.48)
Section 2915-F. Suspension of inconsistent acts.
All acts or parts of acts inconsistent with the provisions
of this article are suspended to the extent necessary to carry
out the provisions of this article.
(2915-F added Oct. 9, 2009, P.L.451, No.48)
ARTICLE XXIX-G
TAX AMNESTY PROGRAM FOR FISCAL YEAR 2016-2017
(Art. added July 13, 2016, P.L.526, No.84)
Section 2901-G. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Amnesty period." The time period of 60 consecutive days
established by the Governor ending no later than June 30, 2017.
"Department." The Department of Revenue of the Commonwealth.
"Eligible tax." Any tax administered by the Department of
Revenue delinquent as of December 31, 2015. The term includes
any interest, penalty or fees on an eligible tax. For an unknown
liability, the term shall only include taxes due within five
years prior to December 31, 2015. For purposes of taxes
collected under the International Fuel Tax Agreement, the term
shall apply only to taxes, interest and penalties owed to the
Commonwealth, not to other states or Canadian provinces.
"Program." The tax amnesty program established under section
2902-G as provided for in this article.
"Taxpayer." Any person, association, fiduciary, partnership,
corporation or other entity required to pay or collect any of
the eligible taxes. The term shall not include a taxpayer who,
prior to the amnesty period, has received notice that the
taxpayer is the subject of a criminal investigation for an
alleged violation of any law imposing an eligible tax or who,
prior to the amnesty period, has been named as a defendant in
a criminal complaint alleging a violation of any law imposing
an eligible tax or is a defendant in a pending criminal action
for an alleged violation of any law imposing an eligible tax.
"Unknown liability." A liability for an eligible tax for
which either:
(1) no return or report has been filed, no payment has
been made and the taxpayer has not been contacted by the
department concerning the unfiled returns or reports or
unpaid tax; or
(2) a return or report has been filed, the tax was
underreported and the taxpayer has not been contacted by the
department concerning the underreported tax and is not
already under audit when the amnesty period begins.
(2901-G added July 13, 2016, P.L.526, No.84)
Section 2902-G. Establishment of program.
(a) General rule.--Except as provided in section 2902-F(c),
a tax amnesty program is established and shall be administered
by the department.
(b) Applicability.--Except as provided in section 2902-F(c),
the program shall apply to a taxpayer who is delinquent on
payment of a liability for an eligible tax as of December 31,
2015, including a liability for returns not filed, liabilities
according to records of the department as of December 31, 2015,
liabilities not reported, underreported or not established, but
delinquent as of December 31, 2015.
(c) Future amnesty program participation.--A taxpayer who
participates in the program shall not be eligible to participate
in a future tax amnesty program.
(d) Deferred payment plan agreement.--Existing deferred
payment plan agreements between a taxpayer and the department
where the agreement applies to a tax liability for which amnesty
is sought by the taxpayer for amounts remaining on the tax
liability, the taxpayer, as a condition of receiving amnesty,
shall pay the liability, notwithstanding terms of the agreement
to the contrary, in full during the amnesty period.
(2902-G added July 13, 2016, P.L.526, No.84)
Section 2903-G. Required payment.
(a) Taxpayer requirements.--Subject to section 2904-G, all
taxpayers who participate in the program shall comply with all
of the following:
(1) During the amnesty period, file a tax amnesty return
in such form and containing such information as the
department shall require. A tax amnesty return shall be
considered to be timely filed if it is postmarked during the
amnesty period or timely electronically or otherwise filed.
(2) During the amnesty period, make payment of all taxes
and one-half of the interest due to the Commonwealth in
accordance with the tax amnesty return that is filed. The
taxpayer shall not be required to pay any penalty or fees
applicable to an eligible tax.
(3) File complete tax returns for all required years
for which the taxpayer previously has not filed a tax return
and file complete amended returns for all required years for
which the taxpayer underreported eligible tax liability.
(b) Prohibitions.--
(1) The department may not collect the penalties,
interest or fees waived under subsection (a)(2). Except as
otherwise provided in this article, the department shall not
pursue administrative or judicial proceeding against a
taxpayer with respect to an eligible tax that is disclosed
on a tax amnesty return.
(2) A taxpayer with unknown liabilities reported and
paid under the program and who complies with all other
requirements of this article shall not be liable for any
taxes of the same type due prior to January 1, 2011. A
taxpayer shall not be owed a refund under this article.
(2903-G added July 13, 2016, P.L.526, No.84)
Section 2904-G. Amnesty contingent on continued compliance.
Notwithstanding any other provision of this article, the
department may assess and collect from a taxpayer all penalties
and interest waived through the program if, within two years
after the end of the program, either of the following occurs:
(1) the taxpayer granted amnesty under this article
becomes delinquent for three consecutive periods in payment
of taxes due or filing of returns required on a semimonthly,
monthly, quarterly or other basis, and the taxpayer has not
contested the tax liability through a timely valid
administrative or judicial appeal; or
(2) the taxpayer granted amnesty under this article
becomes delinquent and is eight or more months late in
payment of taxes due or filing of returns on an annual basis,
and the taxpayer has not contested the liability through a
timely valid administrative or judicial appeal.
(2904-G added July 13, 2016, P.L.526, No.84)
Section 2905-G. Limitation of deficiency assessment.
If, subsequent to the amnesty period, the department issues
a deficiency assessment with respect to a tax amnesty return,
the department may impose penalties and pursue a criminal action
only with respect to the difference between the amount shown
on that tax amnesty return and the current amount of tax.
(2905-G added July 13, 2016, P.L.526, No.84)
Section 2906-G. Overpayment of tax.
Notwithstanding any other provisions of this article or any
other act, if an overpayment of eligible tax is refunded or
credited within 180 days after the tax amnesty return is filed
or the eligible tax is paid, whichever is later, no interest
shall be allowed on the overpayment.
(2906-G added July 13, 2016, P.L.526, No.84)
Section 2907-G. Previously paid interest and penalties.
No refund or credit shall be allowed for any interest or
penalty on eligible taxes paid to the department prior to the
amnesty period.
(2907-G added July 13, 2016, P.L.526, No.84)
Section 2908-G. Proceedings relating to tax amnesty return
barred.
Participation in the program shall be conditioned upon the
taxpayer's agreement that the right to protest or pursue an
administrative or judicial proceeding with regard to tax amnesty
returns filed under the program or to claim any refund of money
paid under the program is barred.
(2908-G added July 13, 2016, P.L.526, No.84)
Section 2909-G. Undisclosed liabilities.
Nothing in this article shall be construed to prohibit the
department from instituting civil or criminal proceedings
against a taxpayer with respect to an amount of tax that is not
disclosed on the tax amnesty return or an amount disclosed on
the amnesty return that is not paid.
(2909-G added July 13, 2016, P.L.526, No.84)
Section 2910-G. Duties of department.
(a) Guidelines.--The department shall develop guidelines
to implement the provisions of this article. The guidelines
shall be published in the Pennsylvania Bulletin within 60 days
of the effective date of this section and shall contain, but
not be limited to, the following information:
(1) An explanation of the program and the requirements
for eligibility for the program.
(2) The dates during which a tax amnesty return may be
filed.
(3) A specimen copy of the tax amnesty return.
(4) The amnesty revenue estimates required under section
2912-G(b).
(b) Publicity.--The department shall publicize the program
to maximize public awareness of and participation in the
program. The department shall coordinate to the highest degree
possible its publicity efforts and other actions taken to
implement this article.
(c) Reports.--The department shall issue reports to the
General Assembly detailing program implementation. The reports
shall contain the following information:
(1) Within 30 days after the end of the amnesty period:
(i) A detailed breakdown of the department's
administrative costs in implementing the program.
(ii) The total dollar amount of revenue collected
by the program.
(2) Within 180 days after the end of the amnesty period:
(i) The number of tax amnesty returns filed and a
breakdown of the number and dollar amount of revenue
raised for each tax by calendar year during which the
tax period ended. In addition, the gross revenues shall
be broken down in the following categories:
(A) Amounts represented by assessments
receivable established by the department on or before
the first day of the amnesty period.
(B) All other amounts.
(ii) The total dollar amount of penalties and
interest waived under the program.
(iii) The demographic characteristics of tax amnesty
participants, including North American Industry
Classification System codes of participants, type of
taxpayer, consisting of individual, partnership,
corporation or other entity, size of tax liability and
geographical location.
(d) Notification.--The department shall notify in writing
all known tax delinquents at the taxpayers' last known valid
addresses of the existence of the program. The sole purpose of
the letter sent by the department to taxpayers shall be
notification of the program.
(2910-G added July 13, 2016, P.L.526, No.84)
Section 2911-G. Method of payment.
All tax payments under the program shall be made by certified
check, money order, electronic transfer, credit card or other
financial instrument acceptable to the department.
(2911-G added July 13, 2016, P.L.526, No.84)
Section 2912-G. Use of revenue.
(a) Restricted revenue account.--Except as set forth in
subsection (c), all revenue generated by this article shall be
deposited into a restricted revenue account in the General Fund.
Revenue from the restricted revenue account shall be distributed
as follows:
(1) All money from General Fund sources shall be
deposited in the General Fund no later than June 30, 2017,
less repayment of any costs for administration of the program
to the department.
(2) All revenue from Motor License Fund sources shall
be deposited in the Motor License Fund no later than June
30, 2017.
(3) All revenue from Liquid Fuels Tax Fund sources shall
be deposited in the Liquid Fuels Tax Fund no later than June
30, 2017.
(b) Revenue estimates.--
(1) The department shall submit, for publication in the
Pennsylvania Bulletin:
(i) a separate amnesty revenue estimate for revenue
generated under this article from the following sources:
(A) The General Fund.
(B) The Motor License Fund.
(C) The Liquid Fuels Tax Fund.
(ii) The methodology used to develop the estimate.
(2) All amnesty revenue estimates shall be submitted
for publication pursuant to section 2910-G(a)(4).
(2912-G added July 13, 2016, P.L.526, No.84)
Compiler's Note: Subsection (c), referred to in subsection
(a), does not exist.
Section 2913-G. Additional penalty.
(a) General rule.--Subject to the limitations provided under
subsection (b), a penalty of 5% of the unpaid tax liability and
penalties and interest shall be levied against a taxpayer
subject to an eligible tax if the taxpayer failed to remit an
eligible tax due or had an unreported or underreported liability
for an eligible tax on or after the first day following the end
of the amnesty period.
(b) Nonapplicability.--The penalty provided in this section
shall not apply to a taxpayer who:
(1) pays the liability in full or entered into a duly
approved and executed deferred payment plan on or before the
last day of the amnesty period; or
(2) has filed a timely and valid administrative or
judicial appeal contesting the liability on or before the
last day of the amnesty period.
(c) Penalty in addition.--The penalty provided by this
section shall be in addition to all other penalties provided
by law.
(2913-G added July 13, 2016, P.L.526, No.84)
Section 2914-G. Construction.
Except as expressly provided in this article, this article
shall not:
(1) be construed to relieve a person, corporation or
other entity from the filing of a return or from a tax,
penalty or interest imposed by the provisions of any law;
(2) affect or terminate a petition, investigation,
prosecution, legal or otherwise, or other proceeding pending
under the provisions of any such law; or
(3) prevent the commencement or further prosecution of
a proceeding by the proper authorities of the Commonwealth
for violation of any such law or for the assessment,
settlement, collection or recovery of tax, penalty or
interest due to the Commonwealth under any such law.
(2914-G added July 13, 2016, P.L.526, No.84)
Section 2915-G. Suspension of inconsistent acts.
All acts or parts of acts inconsistent with the provisions
of this article are suspended to the extent necessary to carry
out the provisions of this article.
(2915-G added July 13, 2016, P.L.526, No.84)
ARTICLE XXIX-H
INDEPENDENT PUBLIC SCHOOLS
(Art. added June 28, 2019, P.L.50, No.13)
Section 2901-H. Taxability of independent public schools.
A charter school, regional charter school or cyber charter
school, as defined in section 1703-A of the act of March 10,
1949 (P.L.30, No.14), known as the Public School Code of 1949,
is an independent public school and shall be free from taxation
within this Commonwealth to the same extent as a school district
for purposes of the surplus lines tax under section 1621 of the
act of May 17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921.
(2901-H added June 28, 2019, P.L.50, No.13)
ARTICLE XXIX-I
TUITION ACCOUNT PROGRAMS
(Art. added July 11, 2024, P.L. , No.56)
Section 2901-I. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless
the context clearly indicates otherwise:
"Account." As defined in section 302 of the act of April
3, 1992 (P.L.28, No.11), known as the Tuition Account Programs
and College Savings Bond Act.
"Account owner." As defined in section 302 of the Tuition
Account Programs and College Savings Bond Act.
"Beneficiary." As defined in section 302 of the Tuition
Account Programs and College Savings Bond Act.
"Tuition Account Program Contract." As defined in section
302 of the Tuition Account Programs and College Savings Bond
Act.
(2901-I added July 11, 2024, P.L. , No.56)
Section 2902-I. Fees.
Notwithstanding section 313(c) of the act of April 3, 1992
(P.L.28, No.11), known as the Tuition Account Programs and
College Savings Bond Act, the Treasury Department may not impose
a fee on the termination of an account if the termination was
a result of the death or disability of the beneficiary.
(2902-I added July 11, 2024, P.L. , No.56)
Section 2903-I. Taxation of payment.
Notwithstanding section 313(d) of the act of April 3, 1992
(P.L.28, No.11), known as the Tuition Account Programs and
College Savings Bond Act, if a Tuition Account Program Contract
is terminated under section 313(a) of the Tuition Account
Programs and College Savings Bond Act, a payment received by
an account owner from the Treasury Department shall not be
considered in the classes of income under section 303 for the
purpose of computing the tax under Article III.
(2903-I added July 11, 2024, P.L. , No.56)
ARTICLE XXX
GENERAL PROVISIONS
(Art. renumbered from Art. XII Dec. 21, 1981,
P.L.482, No.141)
Section 3001. Saving Clause.--(a) Notwithstanding anything
contained in any law to the contrary, the validity of any
ordinance or part of any ordinance or any resolution or part
of any resolution, and any amendments or supplements thereto
now or hereinafter enacted or adopted by any political
subdivision of this Commonwealth for or relating to the
imposition, levy or collection of any tax, shall not be affected
or impaired by anything contained in this code.
(b) Nothing contained in this code shall be construed to
relieve any person, corporation or other entity from the filing
returns or from any taxes, penalties or interest imposed by the
provisions of any laws which were in effect prior to being
repealed by this code, or affect or terminate any petitions,
investigations, prosecutions, legal or otherwise, or other
proceedings pending under the provisions of any such laws or
prevent the commencement or further prosecution of any
proceedings by the proper authorities of the Commonwealth for
violation of any such laws or for the assessment, settlement,
collection or recovery of taxes, penalties or interest due to
the Commonwealth under any of the laws which were in effect
prior to being repealed by this code.
(3001 renumbered from 1201 Dec. 21, 1981, P.L.482, No.141)
Section 3002. Constitutional Construction.--If any word,
phrase, clause, sentence, section or provision of this code is
for any reason held to be unconstitutional, the decision of the
court shall not affect or impair any of the remaining provisions
of this code. It is hereby declared as the legislative intent
that this code would have been adopted had such unconstitutional
word, phrase, clause, sentence, section or provision thereof
not been included herein.
(3002 renumbered from 1202 Dec. 21, 1981, P.L.482, No.141)
Section 3003. Prepayment of Tax.--(3003 deleted by amendment
May 7, 1997, P.L.85, No.7)
Section 3003.1. Petitions for Refunds.--(a) For a tax
collected by the Department of Revenue, a taxpayer who has
actually paid tax, interest or penalty to the Commonwealth or
to an agent or licensee of the Commonwealth authorized to
collect taxes may petition the Department of Revenue for refund
or credit of the tax, interest or penalty. Except as otherwise
provided by statute, a petition for refund must be made to the
department within three years of actual payment of the tax,
interest or penalty.
(b) The department may grant a refund or credit to a
taxpayer for all tax periods covered by a departmental audit.
If a credit is not granted by the department in the audit
report, the taxpayer must file a petition for refund for taxes
paid with respect to the audit period within six months of the
mailing date of the notice of assessment, determination or
settlement or within three years of actual payment of the tax,
whichever is later.
(c) ((c) repealed June 29, 2002, P.L.559, No.89)
(d) In the case of amounts paid as a result of an
assessment, determination, settlement or appraisement, a
petition for refund must be filed with the department within
six months of the actual payment of the tax.
(e) A taxpayer may petition the Board of Finance and Revenue
to review the decision and order of the department on a petition
for refund. The petition for review must be filed with the board
within ninety days of the mailing date of a decision and order
of the department upon a petition for refund.
(3003.1 amended July 2, 2012, P.L.751, No.85)
Compiler's Note: See section 2 of Act 175 of 2016 in the
appendix to this act for special provisions relating to
time limitations for filing petition for refund.
Compiler's Note: Section 30(9) of Act 85 of 2012, which
amended section 3003.1, provided that the amendment shall
apply to petitions filed after July 1, 2012.
Compiler's Note: Section 42(b) of Act 48 of 1994 provided
that section 3003.1 is repealed to the extent that it
conflicts with the provisions of Act 48 for filing with
the Board of Finance and Revenue of petitions for the
refund of taxes and other moneys collected by the
Department of Revenue.
Section 3003.2. Estimated Tax.--(a) The following taxpayers
are required to pay estimated tax:
(1) Every corporation subject to the corporate net income
tax imposed by Article IV of this act, commencing with the
calendar year 1986 and fiscal years beginning during the
calendar year 1986 and each taxable year thereafter, shall make
payments of estimated corporate net income tax.
(2) Every corporation subject to the capital stock and
franchise tax imposed by Article VI of this act, commencing
with the calendar year 1988 and fiscal years beginning during
the calendar year 1988 and each taxable year thereafter, shall
make payments of estimated capital stock and franchise tax
during its taxable year as provided herein.
(3) Every "mutual thrift institution" or "institution"
subject to the tax imposed by Article XV of this act, commencing
with the calendar year 1992 and fiscal years beginning during
the calendar year 1992 and each taxable year thereafter, shall
make payments of estimated mutual thrift institution tax during
its taxable year.
(4) Every "insurance company" subject to the tax imposed
by Article IX of this act shall make payments of estimated
insurance premiums tax during its taxable year.
(5) Every person subject to the tax imposed by Article XI
of this act shall make payments of estimated gross receipts tax
during its taxable year. ((5) amended Dec. 23, 2003, P.L.250,
No.46)
(6) Every person subject to the surcharge imposed by section
1111-A of this act shall make payments of estimated public
utility realty surcharge during its taxable year.
(b) The following words, terms and phrases when used in
this section and section 3003.3 shall have the following
meanings ascribed to them: (Intro. par. amended Dec.23, 2003,
P.L.250, No.46)
(1) "Estimated tax." Estimated corporate net income tax,
estimated capital stock and franchise tax, estimated mutual
thrift institution tax, estimated insurance premiums tax,
estimated gross receipts tax or estimated public utility realty
surcharge. ((1) amended Dec. 23, 2003, P.L.250, No.46)
(2) "Estimated corporate net income tax." The amount which
the corporation estimates as the amount of tax imposed by
section 402 of Article IV for the taxable year.
(3) "Estimated capital stock and franchise tax." The amount
which the corporation estimates as the amount of tax imposed
by section 602 of Article VI for the taxable year.
(4) "Estimated mutual thrift institution tax." The amount
which the institution estimates as the amount of tax imposed
by section 1502 of Article XV for the taxable year.
(4.1) "Estimated insurance premiums tax." The amount which
the insurance company estimates as the amount of tax imposed
by section 902 of Article IX for the taxable year.
(4.2) "Estimated gross receipts tax." The amount which the
taxpayer estimates as the amount of tax imposed by section 1101
of Article XI for the taxable year. ((4.2) amended Dec. 23,
2003, P.L.250, No.46)
(4.3) "Person." Any natural person, association, fiduciary,
partnership, corporation or other entity, including the
Commonwealth, its political subdivisions and instrumentalities
and public authorities. Whenever used in any clause prescribing
and imposing a penalty or imposing a fine or imprisonment, or
both, the term "person," as applied to an association, shall
include the members thereof and, as applied to a corporation,
the officers thereof.
(4.4) "Safe harbor base year." The taxpayer's second
preceding taxable year. If the second preceding taxable year
is less than twelve months, then the "safe harbor base year"
shall mean the taxpayer's annualized second preceding taxable
year. If the taxpayer has filed only one previous report, the
"safe harbor base year" shall mean the first preceding taxable
year. If the first preceding taxable year is less than twelve
months, then the "safe harbor base year" shall mean the
taxpayer's annualized first preceding taxable year.
(4.5) "Estimated public utility realty surcharge." The
amount which the taxpayer estimates as the amount of surcharge
imposed by section 1111-A of Article XI-A for the taxable year.
(5) "Taxpayer." Any person required to pay a tax imposed
by Article IV, VI, IX, XI or XV of this act.
(6) "Total tax." The total tax liability of the taxpayer
for the tax period including the tax reported by the taxpayer
and settled, resettled or assessed by the department. ((6) added
Oct. 18, 2006, P.L.1149, No.119)
(c) Estimated tax shall be paid as follows:
(1) Payments of estimated corporate net income tax shall
be made in equal installments on or before the fifteenth day
of the third, sixth, ninth and twelfth months of the taxable
year. The remaining portion of the corporate net income tax
due, if any, shall be paid upon the date the corporation's
annual report is required to be filed without reference to any
extension of time for filing such report.
(2) Payment of estimated capital stock and franchise tax
shall be made in equal installments on or before the fifteenth
day of the third, sixth, ninth and twelfth months of the taxable
year. The remaining portion of the capital stock and franchise
tax due, if any, shall be paid upon the date the corporation's
annual report is required to be filed without reference to any
extension of time for filing such report.
(3) Payment of the estimated mutual thrift institution tax
shall be made in equal installments on or before the fifteenth
day of the third, sixth, ninth and twelfth months of the taxable
year. The remaining portion of the mutual thrift institution
tax due, if any, shall be paid upon the date the institution's
annual report is required to be filed without reference to any
extension of time for filing such report.
(4) Payment of the estimated insurance premiums tax shall
be made in a single installment on or before the fifteenth day
of March of the taxable year. The remaining portion of the
insurance premiums tax due, if any, shall be paid upon the date
the insurance company's annual report is required to be filed
without reference to any extension of time for filing the
report.
(5) Payment of the estimated gross receipts tax shall be
made in a single installment on or before the fifteenth day of
March of the taxable year. The remaining portion of the gross
receipts tax due, if any, shall be paid upon the date the annual
report is required to be filed without reference to any
extension of time for filing the report. ((5) amended Dec. 23,
2003, P.L.250, No.46)
(6) Payment of the estimated public utility realty surcharge
shall be made in a single installment on or before the fifteenth
day of March of the taxable year. The remaining portion of the
public utility realty surcharge due, if any, shall be paid upon
the date the report is required to be filed without reference
to any extension of time for filing the report.
(d) If, after paying any installment of estimated tax, the
taxpayer makes a new estimate, the amount of each remaining
installment due, if any, shall be such as to bring the total
installment payments made on account of the tax due for the
current year up to an amount that would have been due had the
new estimate been the basis for paying all previous
installments.
(e) Every taxpayer with a taxable year of less than twelve
months shall pay such installments as become due during the
course of its taxable year and pay the remaining tax due on or
before the due date of the annual report (determined without
regard to any extension of time for filing).
(f) At the election of the taxpayer, any installment of
estimated tax may be paid before the date prescribed for its
payment.
(g) For all purposes of this section and section 3003.3,
estimated corporate net income tax, estimated capital stock and
franchise tax, estimated mutual thrift institutions tax,
estimated insurance premiums tax, estimated gross receipts tax
and estimated public utility realty surcharge shall be
separately reported, determined and treated. ((g) amended Dec.
23, 2003, P.L.250, No.46)
(h) The tax imposed on shares of institutions and title
insurance companies shall be paid in the manner and within the
time prescribed by Article VII or VIII of this act, but subject
to the interest provided in section 3003.3 of this article.
(i) Whenever the amount shown as due on the annual report,
including any assessment of the tax period, is less than the
amount paid to the department on account of that amount under
this article, the department shall enter a credit in the amount
of the difference to the account of the taxpayer, which credit
shall be immediately subject to application, assignment or
refund, at the request of the taxpayer under section 1108 of
the act of April 9, 1929 (P.L.343, No.176), known as "The Fiscal
Code," or at the initiative of the department. If the
application, assignment or refund of credit under this
subsection results in an underpayment of the tax due upon
assessment, interest shall be calculated on the amount of the
underpayment from the date credit was applied, assigned or
refunded. ((i) amended Oct. 18, 2006, P.L.1149, No.119)
(3003.2 amended June 29, 2002, P.L.559, No.89)
Compiler's Note: See section 33 of Act 119 of 2006, which
amended subsec. (i) and added subsec. (b)(6), in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 3003.3. Underpayment of Estimated Tax.--(a) In
case of any underpayment of an installment of estimated tax by
a taxpayer, there shall be imposed interest for the taxable
year in an amount determined at the annual rate as provided by
law upon the amount of the underpayment for the period of the
underpayment, except that, in case of any substantial
underpayment of estimated tax by a taxpayer, such interest for
the taxable year shall be imposed in an amount determined at
one hundred twenty per cent of the annual rate as provided by
law upon the entire underpayment for the period of the
substantial underpayment. For the purpose of this subsection,
a substantial underpayment shall be deemed to exist for any
period during which the amount of the underpayment equals or
exceeds twenty-five per cent of the cumulative amount of
installments of estimated tax which would be required to be
paid if the estimated tax were equal to the amount as determined
in subsection (b)(1).
(b) (1) For purposes of this section, the amount of the
underpayment, if any, shall be the excess of:
(i) the cumulative amount of installments which would be
required to be paid as of each installment date as defined in
section 3003.2(c) if the estimated tax were equal to ninety per
cent of the tax shown on the report for the taxable year, except
that, if the total tax exceeds the tax shown on the report by
ten per cent or more, the amount of the underpayment shall be
based on ninety per cent of the amount of the total tax; over
(ii) the cumulative amount of installments paid on or before
the last date prescribed for payment.
(2) If the total tax is revised, the amount of underpayment
shall be calculated without the necessity of the filing of any
petition by the department or by the taxpayer.
((b) amended Oct. 18, 2006, P.L.1149, No.119)
(c) The period of the underpayment shall run from the date
the installment was required to be paid to whichever of the
following dates is the earlier:
(1) The fifteenth day of the fourth month following the
close of the taxable year.
(2) With respect to any portion of the underpayment, the
date on which such portion is paid.
(d) Notwithstanding the provisions of the preceding
subsections, interest with respect to any underpayment of any
installment of estimated tax shall not be imposed if the total
amount of all payments of estimated tax made on or before the
last date prescribed for the payment of such installment equals
or exceeds the amount which would have been required to be paid
on or before such date if the estimated tax were an amount equal
to the tax computed at the rates applicable to the taxable year,
including any minimum tax imposed, but otherwise on the basis
of the facts shown on the report of the taxpayer for, and the
law applicable to, the safe harbor base year, adjusted for any
changes to sections 401, 601, 602 and 1101 enacted for the
taxable year, if a report showing a liability for tax was filed
by the taxpayer for the safe harbor base year. If the total
amount of all payments of estimated tax made on or before the
last date prescribed for the payment of such installment does
not equal or exceed the amount required to be paid per the
preceding sentence, but such amount is paid after the date the
installment was required to be paid, then the period of
underpayment shall run from the date the installment was
required to be paid to the date the amount required to be paid
per the preceding sentence is paid. Provided, that if the total
tax for the safe harbor base year exceeds the tax shown on such
report by ten per cent or more, the total tax adjusted to
reflect the current tax rate shall be used for purposes of this
subsection. In the event that the total tax for the safe harbor
base year exceeds the tax shown on the report by ten per cent
or more, interest resulting from the utilization of such total
tax in the application of the provisions of this subsection
shall not be imposed if, within forty-five days of the mailing
date of each assessment, payments are made such that the total
amount of all payments of estimated tax equals or exceeds the
amount which would have been required to be paid on or before
such date if the estimated tax were an amount equal to the total
tax adjusted to reflect the current tax rate. In any case in
which the taxable year for which an underpayment of estimated
tax may exist is a short taxable year, in determining the tax
shown on the report or the total tax for the safe harbor base
year, the tax will be reduced by multiplying it by the ratio
of the number of installment payments made in the short taxable
year to the number of installment payments required to be made
for the full taxable year. ((d) amended Oct. 18, 2006, P.L.1149,
No.119)
(e) ((e) deleted by amendment May 7, 1997, P.L.85, No.7)
(3003.3 amended May 7, 1997, P.L.85, No.7)
Compiler's Note: Section 14(3) of Act 48 of 2009 provided
that for the purposes of determining the amount of any
underpayment under subsec. (d), the amendment of section
602(h) shall not be taken into account for any payment
of estimated capital stock or franchise tax due prior
to January 1, 2010.
Section 3003.4. Interest.--(3003.4 deleted by amendment
May 7, 1997, P.L.85, No.7)
Section 3003.5. Refund Petitions.--(a) Effective January
1, 1995, petitions for refund of taxes, penalties, fines,
additions and other moneys collected by the Department of
Revenue except those claims for refunds of liquid fuels taxes
paid by political subdivisions, farmers, nonpublic schools not
operated for profit, volunteer fire companies, volunteer rescue
squads, volunteer ambulance services, users of liquid fuel in
propeller-driven aircraft or engines and agencies of the Federal
Government and of the Commonwealth and the Boat Fund of the
Pennsylvania Fish and Boat Commission shall be heard and
determined by the Department of Revenue as provided in the act
of April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code,"
and the Department of Revenue shall thereafter have, except as
set forth in Article XXVII, the powers and duties formerly
granted to the Board of Finance and Revenue with respect to
such refunds. Also effective January 1, 1995, the Board of
Finance and Revenue shall no longer have the power and duty to
hear and determine any petition for refund of taxes, penalties,
fines, additions or other moneys collected by the Department
of Revenue, except that thereafter the board may either hear
and determine any such petitions filed with it prior to January
1, 1995, or it may transfer such petitions to the Department
of Revenue.
(b) Appeals.--The decision of the Department of Revenue on
a petition for refund under this section may, in the first
instance, be appealed to the Board of Finance and Revenue in
the manner provided by section 1103 of "The Fiscal Code" except
that the Board of Finance and Revenue shall act finally in
disposition of such petitions within twelve months after they
have been received.
(3003.5 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 3003.6. Timely Filing.--A taxpayer shall be deemed
to have timely filed a petition for reassessment or any other
protest relating to the assessment of tax or any other matter
relating to any tax imposed by this act if the letter
transmitting the petition is received by the Department of
Revenue or is postmarked by the United States Postal Service
on or prior to the final day on which the petition is required
to be filed.
(3003.6 amended Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 3003.7. Failure to Make Payment by Electronic Fund
Transfer.--Any person who fails to make a payment covered by
section 9 of the act of April 9, 1929 (P.L.343, No.176), known
as "The Fiscal Code," by a method prescribed in that section
shall in addition to any other penalty, interest or addition
provided by law, be liable for a penalty of three per cent of
the total tax due, not exceeding one thousand dollars ($1,000).
(3003.7 added June 16, 1994, P.L.279, No.48)
Section 3003.8. Method of Filing.--(a) Notwithstanding any
provision of law, the Department of Revenue may allow the
electronic filing of any tax return or documents.
(b) For the purposes of this section, the Department of
Revenue may determine alternative methods for the signing,
subscribing or verifying of a return, statement or other
document that shall have the same validity and consequences as
the actual signing by the taxpayer.
(3003.8 added June 16, 1994, P.L.279, No.48)
Section 3003.9. Bad Checks; Electronic Funds Transfers Not
Credited Upon Transmission; Additions to Tax.--(a) If any check
in payment of any amount receivable under the laws of this
Commonwealth administered by the department is not paid upon
presentment, or any electronic funds transfer as payment of any
amount receivable under the laws of this Commonwealth
administered by the department is not credited upon
transmission, in addition to any interest or penalties provided
by law, the department shall charge the person who tendered the
check or authorized the electronic transmission an addition to
tax equal to ten per cent of the face amount of the check or
electronic funds transfer, plus interest and protest fees,
provided that the addition imposed by this section shall not
exceed one hundred dollars ($100) nor be less than twenty-five
dollars ($25). ((a) amended June 30, 2021, P.L.124, No.25)
(b) This section shall apply to all checks presented for
payment and all electronic funds transfers authorized for
payment.
(3003.9 amended July 7, 2005, P.L.149, No.40)
Section 3003.10. Commercial Printers.--For purposes of
defining the phrases "doing business in this Commonwealth,"
"carrying on activities in this Commonwealth," "having capital
or property employed or used in this Commonwealth" or "owning
property in this Commonwealth" in section 401 of Article IV and
substantially similar phrases in section 601 of Article VI, the
following activities shall be excluded:
(1) Owning or leasing of tangible or intangible property
by a person who has contracted with an unaffiliated commercial
printer for printing, provided that:
(i) the property is for use by the commercial printer; and
(ii) the property is located at the Pennsylvania premises
of the commercial printer.
(2) Visits by a person's employes or agents to the premises
in this Commonwealth of an unaffiliated commercial printer with
whom the person has contracted for printing in connection with
said contract.
(3) Owning of printed matter and other items packaged
therewith by a person who has contracted with an unaffiliated
commercial printer for printing on the premises of such
unaffiliated commercial printer prior to delivery of the
property regardless of to whom or by whom the printed matter
is delivered or mailed.
(3003.10 added June 30, 1995, P.L.139, No.21)
Section 3003.11. Restatement of Tax Liability Under
Treaties.--In the absence of an express exemption from State
income taxes, no treaty of the Federal Government shall be
construed to exempt a corporation from the taxes imposed under
Articles IV and VI. For purposes of determining "taxable income"
under Article IV, any corporation not subject to Federal income
taxation or Federal reporting requirements pursuant to such a
treaty shall be required to file a report with the department
showing the taxable income which would have been reported to
and ascertained by the Federal Government had it not been
exempted by the treaty.
(3003.11 added Apr. 23, 1998, P.L.239, No.45)
Compiler's Note: Section 19 of Act 45 of 1998, which added
section 3003.11, provided that the General Assembly
declares that the intent of the addition of section
3003.11 is to clarify existing law. The addition of
section 3003.11 shall not be construed to change existing
law.
Section 3003.12. Harness and Thoroughbred
Racing.--Notwithstanding the provisions of section 222 of the
act of December 17, 1981 (P.L.435, No.135), known as the "Race
Horse Industry Reform Act," regarding the payment of taxes, all
corporations licensed to conduct harness horse race meetings
or thoroughbred horse race meetings shall remit the taxes
imposed under section 222(a.1) within twenty days of the close
of each calendar month.
(3003.12 added May 12, 1999, P.L.26, No.4)
Section 3003.13. Corporate Tax Treatment of Certain
Automobile Clubs.--(a) Notwithstanding any other provision of
law, the "taxable income" of an automobile club for purposes
of the tax imposed by Article IV of this act shall be separately
computed and limited to income from the following activities:
(1) The conduct of the business of insurance by the
automobile club, or subsidiary or affiliate thereof, in the
capacity of an insurance company, association or exchange,
insurance agency or brokerage, as these terms are defined in
the act of May 17, 1921 (P.L.789, No.285), known as "The
Insurance Department Act of 1921."
(2) The conduct of a travel agency business.
(b) Notwithstanding any other provision of law, the "capital
stock value" of an automobile club for purposes of the tax
imposed by Article VI of this act shall be separately computed
and limited to the value attributed to the following activities:
(1) The conduct of the business of insurance by the
automobile club, or subsidiary or affiliate thereof, in the
capacity of an insurance company, association or exchange,
insurance agency or brokerage, as these terms are defined in
"The Insurance Department Act of 1921."
(2) The conduct of a travel agency business.
(c) For purposes of the taxes imposed by Articles IV and
VI of this act, an automobile club shall be deemed not to be a
membership organization subject to the Federal limitations on
deductions from taxable income under section 277 of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 277).
(d) The following words, terms and phrases, when used in
this section, shall have the meaning ascribed to them in this
section, except where the context clearly indicates a different
meaning:
"Automobile club." A nonprofit corporation, trust or other
entity whose membership is open to the general public, and that
provides services and conducts activities on behalf of its
members, including all of the following:
(1) Motor vehicle registration, title transfer and license
application and renewal services.
(2) Motor vehicle travel assistance, including road maps,
trip itineraries, tour guides and emergency roadside assistance.
(3) Promotion of the development and provision of safe and
convenient motor vehicle travel conditions, services and
facilities.
(4) Promotion of the construction, maintenance and use of
efficient, adequate and safe highway systems.
(5) Education of motorists and the traveling public in the
principles of traffic and motor vehicle safety and related
matters.
"Travel agency business." The arrangement, in exchange for
a fee, commission or salary, of vacation or travel packages or
services, sightseeing tours, travel reservations or
accommodations, tickets for domestic or foreign travel by air,
rail, ship, bus or other mode of transportation or hotel or
other accommodations.
(3003.13 added May 12, 1999, P.L.26, No.4)
Compiler's Note: Section 32(4) of Act 4 of 1999, which added
section 3003.13, provided that section 3003.13 shall
apply to the taxable years beginning after December 31,
1997.
Section 3003.14. Immediate Assessment, Settlement or
Collection to Prevent Tax Avoidance.--(a) Notwithstanding
Articles IV, VIII and X of the act of April 9, 1929 (P.L.343,
No.176), known as "The Fiscal Code," and section 407 of this
act, the Department of Revenue may make an immediate assessment
or settlement of any tax imposed in accordance with Article II,
IV or VI and any interest or penalty due if the department finds
that, without immediate action by the department, the tax,
interest or penalty due will be in jeopardy of not being
collected because the taxpayer intends to do any of the
following without paying the tax, interest or penalty due:
(1) Immediately depart this Commonwealth.
(2) Remove property from this Commonwealth used in
activities which are subject to any tax imposed by this act.
(3) Discontinue doing business in this Commonwealth.
(4) Do any other act which would prejudice or render
ineffective, either in whole or in part, proceedings to assess,
settle or collect any tax, interest or penalty due.
(b) The department shall give notice to the person and a
demand for filing an immediate return or report and paying the
tax, interest or penalty due.
(c) The department may issue a civil citation to collect
any assessment or settlement made under subsection (a).
(d) Except as provided in subsection (e), the department
may compel security, including the detention of tangible
personal property, for any tax, interest or penalty assessed
or settled under subsection (a).
(e) The department may not detain tangible personal property
of a taxpayer under this section if the taxpayer does any of
the following:
(1) Presents a valid Pennsylvania sales tax license to the
authorized employes of the department.
(2) Posts bond in an amount to be determined by the
department.
(3) Pays the tax, interest or penalty due under this
section.
(3003.14 added June 29, 2002, P.L.559, No.89)
Section 3003.15. Authority to Attach Wages, Commissions and
Other Earnings.--(a) The Department of Revenue may, upon the
presentation of a written notice and demand certifying that the
information contained within is true and correct and containing
the name of the taxpayer and the amount of delinquent State tax
due plus the department's costs, demand, receive and collect
the amount from any entity:
(1) employing persons owing delinquent State taxes; or
(2) having in its possession unpaid commissions or earnings
belonging to any person or persons owing delinquent State taxes.
(b) Subject to the limitations in subsection (c), upon the
receipt of a written notice and demand pursuant to subsection
(a), an entity shall deduct from the wages of an individual
employe the amount shown on the notice and shall forward the
amount to the department within sixty days after receipt of the
notice.
(c) No more than ten per cent of the wages of an individual
employe who is a delinquent taxpayer may be deducted at any one
time for delinquent State taxes and costs. The entity is
entitled to deduct from the amount collected from the individual
employe the costs incurred by the entity for the extra
bookkeeping necessary to record the transactions but not to
exceed two per cent of the amount collected from the individual
employe.
(d) Upon the failure of an entity to deduct or forward an
amount required under this section within the time period
required under subsection (b), the entity shall pay the amount
of the delinquent State tax and costs for each individual
employe who is a delinquent taxpayer subject to a demand in
addition to a penalty in accordance with section 352(h). An
entity paying delinquent taxes, costs and a penalty pursuant
to this subsection shall not have the benefit of any stay of
execution or exemption law.
(e) The following words, terms and phrases when used in
this section shall have the meaning ascribed to them in this
section, except where the context clearly indicates a different
meaning:
"Entity." The United States, the Commonwealth or any of its
political subdivisions, a corporation, an association, a
company, a firm or an individual.
"Wages." Any wages, commissions or earnings of an individual
employe:
(1) which are currently owed to the individual employe;
(2) which shall become due within sixty days of receipt of
a written notice and demand pursuant to subsection (b);
(3) any unpaid commissions or earnings of an individual
employe in the entity's possession; or
(4) any unpaid commissions or earnings of an individual
employe that comes into the entity's possession within sixty
days of receipt of a written notice and demand pursuant to
subsection (a).
(3003.15 added Dec. 23, 2003, P.L.250, No.46)
Section 3003.16. Electronic Transmissions.--Notwithstanding
the provisions of the act of December 16, 1999 (P.L.971, No.69),
known as the "Electronic Transactions Act," the department may
at any time transmit, by electronic or any other means, to the
prothonotaries of the respective counties of the Commonwealth,
to be entered of record by them, certified copies of all liens
imposed by this act. Notwithstanding the provisions of the
"Electronic Transactions Act," the department may pay for and
satisfy such liens by electronic or any other means.
(3003.16 added July 7, 2005, P.L.149, No.40)
Section 3003.17. Reimbursement for Costs of
Collection.--(a) All costs of collection incurred by the
department or the Office of Attorney General on tax liability
for taxes administered by the department, other than fuel tax
liabilities and motor carrier road tax liabilities, including
interest, penalties and fees, must be paid before the liability
is extinguished unless collection costs are discharged by
operation of law. For purposes of this section, costs of
collection include only lien filing costs, costs imposed under
a Federal or other State tax refund offset program and costs
incurred by paying commissions or other remuneration to private
agencies paid by the department or the Office of Attorney
General to collect department tax liabilities.
(b) The costs of collection shall be added to the amount
of the liability for taxes administered by the department and
shall constitute a lien against the real or personal property
of the person. The unpaid costs may be collected by the
department, the Office of Attorney General or a private
collection agency in any way that the underlying tax liability
could have been collected.
(3003.17 added July 7, 2005, P.L.149, No.40)
Section 3003.18. Assessments to be Made by Department.--(a)
Parts IV, V, VI and VII of Article IV shall apply to all of
the following:
(1) The tax imposed by section 17 of the act of June 22,
1935 (P.L.414, No.182), known as the "State Personal Property
Tax Act."
(2) The tax imposed by the act of May 23, 1945 (P.L.893,
No.360), known as the "Co-operative Agricultural Association
Corporate Net Income Tax Act." The reference to petition for
resettlement in section 4 of the "Co-operative Agricultural
Association Corporate Net Income Tax Act" shall be interpreted
as a petition for reassessment.
(3) The State admissions tax and the pari-mutuel wagering
tax imposed by sections 208 and 222 of the act of December 17,
1981 (P.L.435, No.135), known as the "Race Horse Industry Reform
Act."
(4) All taxes, fees, additions, bonuses, costs, penalties
or charges collected by the department either:
(i) subject to settlement or determination by the department
prior to the effective date of this section; or
(ii) for which no other method for the establishment of the
unpaid or unreported liability to be collected by the department
is provided by law.
(b) The powers conferred upon the department by this section
shall be in addition to, but not exclusive of, any powers
conferred upon the department by law before or after the
effective date of this section.
(c) This section shall not apply to any of the following:
(1) The procedure for collection of moneys due the
Commonwealth by county or city officers as provided by Article
IX of the act of April 9, 1929 (P.L.343, No.176), known as "The
Fiscal Code."
(2) The taxes imposed by 75 Pa.C.S. Chs. 90 (relating to
liquid fuels and fuels tax), 95 (relating to taxes for highway
maintenance and construction) and 96 (relating to motor carriers
road tax).
(3003.18 added Oct. 18, 2006, P.L.1149, No.119)
Compiler's Note: See section 33 of Act 119 of 2006 in the
appendix to this act for special provisions relating to
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007, and
applicability of Act 119 on proceedings, prosecutions,
actions, suits or appeals involving assessments,
determinations or settlements of tax liability by the
Department of Revenue prior to January 1, 2008.
Section 3003.19. Powder Metallurgy Parts.--For purposes of
defining the phrases "doing business in this Commonwealth,"
"carrying on activities in this Commonwealth," "having capital
or property employed or used in this Commonwealth" or "owning
property in this Commonwealth" in sections 401 and 402 of
Article IV and substantially similar phrases in section 601 of
Article VI, the following activities shall be excluded:
(1) Owning or leasing of intangible and tangible property,
including dies, molds, tooling and related equipment, by a
person who has contracted with an unaffiliated manufacturer of
powder metallurgy products for manufacturing, provided that:
(i) the property is for use by the powder metallurgy product
manufacturer;
(ii) the property is located at the Pennsylvania premises
of the powder metallurgy product manufacturer; and
(iii) the products manufactured using such property are
incorporated into products produced outside this Commonwealth
by the owner or lessor of the property.
(2) Visits by a person's employes or agents to the premises
in this Commonwealth of an unaffiliated powder metallurgy
product manufacturer with whom the person has contracted for
manufacturing in connection with the contract.
(3) Owning of manufactured powder metallurgy products, and
other items packaged therewith, by a person who has contracted
with an unaffiliated powder metallurgy products manufacturer
for manufacturing of products, on the premises of the
unaffiliated powder metallurgy products manufacturer prior to
delivery of the property.
(3003.19 added July 25, 2007, P.L.373, No.55)
Compiler's Note: Section 15 of Act 55 of 2007, which added
section 3003.19, provided that the addition of section
3003.19 shall apply to taxable years beginning after
December 31, 2004, and taxable years as to which there
is an appeal prior to the effective date of the addition
of section 3003.19.
Section 3003.20. Penalties for Certain Corporate
Officers.--If an officer of a corporation or association
intentionally fails to make reports to the Auditor General or
to the Department of Revenue, or successively to the Auditor
General and to the department, as required by law, for any two
successive tax years, the officer commits a misdemeanor and
shall, upon conviction, be sentenced to pay a fine of not less
than two thousand five hundred dollars ($2,500) nor more than
five thousand dollars ($5,000). This fine shall be in addition
to any fine or prison sentence under section 1704 of the act
of April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code."
(3003.20 added Oct. 9, 2009, P.L.451, No.48)
Section 3003.21. Further Examination of Books and
Records.--(a) The Department of Revenue or any of its
authorized agents is authorized to examine the books, papers
and records of any taxpayer or other persons in order to verify
the accuracy and completeness of a return or report or, if no
return or report is made, to ascertain and assess any tax or
other liability owed the Commonwealth.
(b) The department may determine, by desk, field or other
audit, the amount of tax or other liability required to be paid
to the Commonwealth. The department may determine the liability
based upon the facts contained in the return or report being
audited or upon other information in the department's
possession. The department may determine the liability based
upon a reasonable statistical sample or test audit performed
in accordance with the regulations of the department if the
individual being audited does not have complete records of
transactions or if the review of each transaction or invoice
would place an undue burden on the department to conduct an
audit in a timely and efficient manner.
(c) The taxpayer may challenge the accuracy of a statistical
sample or test audit by providing clear and convincing evidence
that the method used for the statistical sample or test audit
is erroneous, lacks a rational basis or produces a different
result when the complete records are considered.
(3003.21 added Oct. 9, 2009, P.L.451, No.48)
Section 3003.22. Administrative Bank Attachment for Accounts
of Obligors to the Commonwealth.--(a) The following shall
apply:
(1) Except as prohibited by Federal or State law, a
financial institution doing business in this Commonwealth shall,
upon request, and not more often than quarterly, undertake
reasonable efforts to provide a report containing identifying
information and asset information as the department may specify
for any obligor as identified by the department by name and
Social Security number, Federal employer identification number
or other taxpayer identification number. The report and
information shall be in the form and format as prescribed by
the department pursuant to subsections (e) and (p).
(2) The department shall provide information identifying
the obligors for which financial institutions are required to
provide reports under paragraph (1) in a standard and generally
utilized electronic machine readable format. If requested by a
financial institution, the department shall coordinate the
requests and the submission of reports under this section with
similar procedures utilized for data exchanges under 23 Pa.C.S.
§ 4304.1 (relating to cooperation of government and
nongovernment agencies).
(3) Reports providing identifying and asset information
under this subsection shall be provided to the department within
thirty days of receipt of requests for reports from the
department, unless the department for good cause extends the
deadline for providing reports.
(b) The department and financial institutions are authorized
to enter into agreements for the purpose of carrying out the
provisions of this section, which may modify the procedures
contained in the department's guidelines as otherwise provided
by subsection (p).
(c) The following shall apply:
(1) Information transmitted, provided or collected pursuant
to this section shall be confidential and may be used by the
department solely for official purposes relating to the
administration and collection of taxes.
(2) Information transmitted, provided or collected pursuant
to this section by a financial institution or the institution's
agents and sent to the department shall not constitute a breach
of confidentiality and this section shall not impose additional
confidentiality requirements upon a financial institution.
(3) The department shall establish procedures to review,
on at least a quarterly basis, whether information collected
pursuant to this section continues to be needed to collect
delinquent taxes and, upon a determination that the information
is not needed, to require the permanent expungement of the
information from the department's records and the records of
any person to which the information has been made available,
including any automated data exchange utilized by the
department. Within seven days following the receipt of new
reports and information under subsection (a), all previous
information collected pursuant to this section shall be
permanently expunged from the records of the department and the
department's representatives, including any automated data
exchange utilized by the department.
(4) Any employe or agent of the department, or an automated
data exchange who divulges or retains information in a manner
not provided in this subsection, or lacks good faith for a
disclosure not authorized under this section, commits a
misdemeanor of the third degree and, upon conviction, shall be
sentenced to pay a fine of up to one thousand dollars ($1,000)
per violation and costs and shall be subject to a term of
imprisonment of not more than one year, or both.
(d) A financial institution shall be entitled to payment
from the department in the amount of two hundred fifty dollars
($250) per quarter for conducting data matches pursuant to this
section.
(e) The department, in consultation with associations
representing financial institutions, shall develop proposed
guidelines and the department shall publish final guidelines
for the department's data matching processes and uses for the
collection of information required under this section, which
shall be conducted no more frequently than on a quarterly basis.
The department may designate an agent for the collection of
information under this section from the financial institutions,
which may include an automated data exchange organization who
shall have the authority to enter into agreements for the manner
of providing information exchanges as the agent and financial
institution may agree. The guidelines shall not be subject to
review under section 205 of the act of July 31, 1968 (P.L.769,
No.240), referred to as the Commonwealth Documents Law, section
204(b) of the act of October 15, 1980 (P.L.950, No.164), known
as the Commonwealth Attorneys Act, or the act of June 25, 1982
(P.L.633, No.181), known as the Regulatory Review Act.
(f) Provided that an obligor has not entered into and is
in compliance with a deferred payment plan with the department,
the department may order the attachment and seizure of funds
in an obligor's account that the department reasonably believes
to hold property subject to a tax lien recorded in favor of the
Commonwealth for tax, interest, additions or penalties due to
the Commonwealth. Upon receiving seized funds, the department
shall apply the amount seized to the obligor's tax lien
obligation.
(g) (1) If the department has a reasonable belief that an
obligor's account holds property subject to a tax lien in favor
of the Commonwealth, the department may order the attachment
of funds in the obligor's account by sending a notice to the
financial institution.
(2) The notice given to a financial institution attaching
an account of the obligor shall be sent by an electronic format
or any other reasonable manner as agreed to by the department
and the financial institution.
(3) The notice shall include all of the following:
(i) The name of the obligor.
(ii) The amount of the Commonwealth's tax lien, including
interest and penalty accrued up to forty-five days after the
date of notice.
(iii) The current or last known address of the obligor.
(iv) The Social Security number, Federal employer
identification number or other taxpayer identification number
of the obligor.
(v) An order to immediately attach one or more accounts
held by the financial institution in the name of the obligor
for an aggregate amount equal to the lesser of the amounts in
all accounts or the Commonwealth's tax lien.
(h) (1) Upon receipt of the notice described in subsection
(g), the financial institution shall, by the end of the fifth
business day following the date of the notice, attach one or
more of the accounts of the obligor held by the financial
institution for an aggregate amount equal to the lesser of:
(i) the total of the amounts in all the accounts of the
obligor held by the financial institution as of the date of
attachment; or
(ii) the amount stated in the notice.
Upon the attachment and until the financial institution receives
further notice from the department or on order of a court, as
provided in this section, the financial institution may not
allow any activity to reduce the amounts in any of the accounts
below the amount of the attachment.
(2) Within five days after date of notice to the financial
institution described in subsection (g), the financial
institution shall inform the department that the financial
institution has complied with the attachment order and shall
specify the aggregate amount attached pursuant to the order.
(3) Financial institution fees for costs are allowable as
follows:
(i) The financial institution may assess a reasonable
administrative fee against the accounts or the obligor in
addition to the amount attached. An administrative fee may
include a fee permitted to be assessed under an agreement
between the obligor and the financial institution in connection
with the early withdrawal of a certificate of deposit attached
under this section.
(ii) In the case of insufficient funds to cover both the
fee authorized by subparagraph (i) and the amount identified
in the notice under subsection (g), the financial institution
may first deduct the fee from the amount attached and retain
it from the amount seized and forwarded to the department as
provided in this section.
(iii) A financial institution shall not be required to
reimburse fees assessed against an account or an obligor as a
result of the department instituting an action under this
section or as otherwise permitted by law or authorized by
contract even if there is a successful challenge or relief is
granted under subsection (j).
(i) (1) Except as otherwise provided in paragraph (3), no
later than five business days after the date of the notice in
subsection (g)(2), the department shall send a notice to the
obligor by first class mail to the obligor's current or last
known address and may attempt to deliver personal notice to the
obligor.
(2) The notice shall contain the following information:
(i) The address of the department.
(ii) The telephone number, address and name of a contact
person at the department.
(iii) The name and Social Security number, Federal employer
identification number or other taxpayer identification number
of the obligor.
(iv) The current or last known address of the obligor.
(v) The total amount of the Commonwealth's tax lien owed
by the obligor, including interest and penalty accrued up to
forty-five days after the date of notice.
(vi) The date the notice is being sent.
(vii) A statement informing the obligor that the department
has ordered the financial institution to attach the amount of
the Commonwealth's tax lien owed by the obligor from one or
more of the accounts of the obligor.
(viii) For each account of the obligor, the name of the
financial institution that has been given notice to attach
amounts as required by this section.
(ix) A statement that the order may be challenged or relief
from the order requested in accordance with subsection (j).
(x) A statement informing the obligor that unless a timely
challenge is made by the obligor, the financial institution or
an account holder of interest under subsection (j), the
department shall notify the financial institution to seize the
amount attached by the financial institution and forward it to
the department.
(3) The department shall not be required to send the notice
described under this subsection if, prior to the time that the
notice must be sent, the department and the obligor agree to
an arrangement under which the obligor will pay amounts owed
under the Commonwealth's tax lien.
(j) (1) An obligor, the financial institution or an account
holder of interest may challenge the actions of the department
under this section by filing a petition with the court of common
pleas within ten days of the date of the notice sent under
subsection (i).
(2) An obligor, the financial institution or an account
holder of interest may challenge or seek relief from the actions
of the department based on:
(i) a mistake as to any of the following:
(A) The identity of the obligor.
(B) The ownership of the account.
(C) The contents of the account.
(D) The amount of the tax lien obligation due.
(ii) the exclusion of the account from attachment under
this section;
(iii) the failure of the department to properly record the
tax lien upon which the attachment is based;
(iv) the failure of the department to send notice to the
obligor of the assessment or determination of the tax, interest,
penalties or addition to tax upon which the attachment is based;
(v) severe economic hardship;
(vi) a request for spousal relief from joint liability; or
(vii) any other good cause.
(3) Except as provided in paragraph (2)(iv), an obligor,
the financial institution or an account holder of interest may
not challenge the actions of the department based on a mistake
or error in the original assessment underlying a tax lien
against the obligor.
(k) (1) If a timely challenge or request from relief is
not made by the obligor, the financial institution or an account
holder of interest under subsection (j), the department shall
direct the financial institution to:
(i) seize the amount attached by the financial institution
and forward it to the department;
(ii) reduce the amount attached by the financial institution
to a revised amount as stated by the department, seize the
revised amount and forward it to the department and release the
balance of the account; or
(iii) release the amount attached by the financial
institution.
(2) The department may direct a financial institution to
seize and forward attached funds before the time for filing a
timely challenge under subsection (j) upon agreement among the
department, the obligor and, in cases where the department is
aware of an account holder of interest, the account holder of
interest.
(l) (1) If a determination is made by the court, pursuant
to a challenge or request for relief under subsection (j), that
the account of the obligor should not have been attached, the
department shall notify the financial institution, in the manner
specified in subsection (g)(2), to release the amount attached
by the financial institution.
(2) If a determination is made by the court, pursuant to a
challenge or request for relief under subsection (j), to reduce
the amount attached by the financial institution, the department
shall notify the financial institution, in the manner specified
in subsection (g)(2), to revise the amount as stated by the
department, to seize and forward the revised amount to the
department and to release the balance of the account attached
by the financial institution.
(3) If a determination is made by the court, pursuant to a
challenge or request for relief made under subsection (j), that
the attachment by the financial institution was proper, the
department shall notify the financial institution, in the manner
specified in subsection (g)(2), to seize the amount attached
by the financial institution and forward it to the department.
(m) A person, government agency or financial institution
shall not be subject to any civil or criminal liability for
providing, reporting or matching information and data or
encumbering or surrendering assets under this section. The
immunity provided under this subsection shall not apply to any
person or agent of a government agency or financial institution
who knowingly supplies false information under this section.
(n) The following shall apply:
(1) The department may impose a penalty upon a financial
institution that willfully fails to comply or respond to, or
refuses to process without reasonable cause, a request by the
department for information pursuant to subsection (a).
(2) The department shall provide a financial institution
twenty-five days' notice and a hearing before the Board of
Finance and Revenue prior to imposing a penalty under paragraph
(1). The penalty shall be in an amount equal to fifty dollars
($50) for each record not provided and the total penalty imposed
on any financial institution for all such failures during any
calendar year shall not exceed ten thousand dollars ($10,000).
(3) If, under the provisions of this section, a financial
institution fails to attach accounts as required in a timely
manner or fails to forward the proper amount of funds attached
to the department at the time and in the manner required by
this section, the financial institution may be subject to a
penalty of five per cent of the amount of funds which should
have been attached or forwarded for each month or fraction
thereof from the date the funds should have been attached or
forwarded to the date the funds are attached or forwarded. The
total amount of the penalty shall not exceed fifty per cent of
the proper amount of funds which should have been attached or
forwarded.
(4) The penalty imposed by this section shall be assessed,
enforced, administered or collected under the provisions of
Article II.
(o) This section shall not be construed to prohibit the
department or any other Commonwealth agency from requesting
information or collecting obligations due from an obligor in
any other manner authorized by law.
(p) Prior to requesting information or attaching an account
under this section, the department shall develop guidelines:
(1) describing its tax collection procedures;
(2) describing the rights and remedies available to
taxpayers;
(3) describing acceptable formats of information reports
between the department and financial institution pursuant to
subsection (b);
(4) describing the manner in which accounts must be
disclosed by the financial institution completing the reports;
(5) disclosing the circumstances in which the department
may attach an account under this section;
(6) describing the policies regarding spousal relief and
severe economic hardship relief;
(7) advising financial institutions of the requirements of
this section; and
(8) describing the department's policies and procedures
used to attach and seize accounts under this section.
(q) Accounts, funds and property subject to attachment under
this section shall not include the following:
(1) An account subject to a security interest, control
agreement or pledged security for a loan or other obligation.
(2) Money or property deposited to an account after the
time that a financial institution initially attaches the
account.
(3) An account that a financial institution has a present
right to exercise a right of setoff either under an agreement
between the financial institution and the obligor or otherwise
under applicable law.
(4) An account that has an account holder of interest named
as an owner on the account.
(5) An account to which an obligor does not have an
unconditional right of access.
(6) An account that may not be attached under Federal law.
(r) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection:
"Account." Any of the following:
(1) Funds from a demand deposit account, checking account,
negotiable order of withdrawal account, savings account, time
deposit account, money market mutual fund account or certificate
of deposit account.
(2) Funds paid toward the purchase of shares or other
interest in an entity as described in paragraphs (1) and (2)
of the definition of "financial institution."
(3) Funds or property held by a depository institution as
described in paragraph (3) of the definition of "financial
institution."
"Account holder of interest." A person, other than an
obligor of an account, who asserts an interest in an account
based upon ownership, possession of a security interest, lien
or judgment.
"Asset information." Account balances and account
identifying information provided by a report requested under
subsection (a).
"Department." The Department of Revenue of the Commonwealth.
"Financial institution." Any of the following:
(1) A depository institution as defined in section 3(c) of
the Federal Deposit Insurance Act (64 Stat. 873, 12 U.S.C. §
1813(c)).
(2) A Federal credit union or State credit union as defined
in section 1752(1) of the Federal Credit Union Act (48 Stat.
1216, 12 U.S.C. § 1752(1)).
(3) A benefit association, safe deposit company, money
market mutual fund or similar entity doing business in this
Commonwealth that holds property or maintains accounts
reflecting property belonging to others.
"Identifying information." Name, record address, Social
Security number of an individual or other taxpayer
identification number.
"Obligor." Any of the following:
(1) An entity engaged in a business whose property is
subject to a Commonwealth tax lien or liens totaling at least
one thousand dollars ($1,000).
(2) An individual operating as a sole proprietor whose
property is subject to a Commonwealth tax lien or liens totaling
at least one thousand dollars ($1,000).
(3) A shareholder, member or partner of a pass-through
entity whose property is subject to a Commonwealth tax lien or
liens totaling at least one thousand dollars ($1,000).
(4) A corporate officer or other responsible individual who
has been assessed pursuant to the provisions of section 225 or
320 and whose property is subject to a Commonwealth tax lien
or liens totaling at least one thousand dollars ($1,000).
"Pass-through entity." A partnership as defined in section
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1).
"Tax lien."
(1) A lien recorded as provided by law to reflect a final
tax liability. A tax lien may be recorded only after:
(i) an assessment or similar determination that a taxpayer
has a tax liability is issued by the department;
(ii) the assessment or similar determination under
subparagraph (i) is issued in the manner required by law; and
(iii) the appeal rights to the assessment or similar
determination have expired, the liability was sustained through
the appeals process or the taxpayer failed to provide an appeal
bond if required to do so by the department as authorized by
law.
(2) A tax lien does not include a statutory lien that has
not been recorded in accordance with paragraph (1).
(3003.22 amended Nov. 27, 2019, P.L.651, No.90)
Compiler's Note: See section 4 of Act 90 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Section 3003.23. Collection of Assessed Taxes.--(a) The
following shall apply:
(1) For a tax administered by the Department of Revenue,
except under Article XXI, the Department of Revenue may collect
the tax owed if collection commences within ten years of the
date the settlement, determination or assessment of the tax
becomes final. For nonfiled returns, the Department of Revenue
shall induce the filing of a return or settle, determine or
assess the tax liability of a nonfiled tax period within ten
years of the tax return due date. The filing of a tax lien shall
not extend the ten-year period to collect a tax.
(2) Paragraph (1) shall not affect the Department of
Revenue's ability to set off tax overpayments by the taxpayer
against any taxes and other obligations owing the Commonwealth
by the taxpayer or to set off tax liabilities owed to the
Commonwealth with moneys owed the taxpayer by the Commonwealth
within the applicable collection period.
(b) The following shall apply:
(1) The Department of Revenue shall have no time limitation
to collect taxes in the following cases:
(i) For trust fund tax liabilities a taxpayer either
collected or withheld, as an agent of or in trust for the
Commonwealth, but wilfully failed, grossly neglected or refused
to remit to the Commonwealth notwithstanding whether the
taxpayer filed a return.
(ii) If a taxpayer files a false and fraudulent tax return
or report.
(iii) If a taxpayer wilfully fails to file a tax return or
report as required by law.
(iv) If a taxpayer attempts to evade or defeat a tax.
(v) For a tax offense for which a taxpayer has been
criminally charged and convicted in which tax liabilities remain
unpaid.
(vi) For liabilities of eligible taxes unknown to the
Department of Revenue that have not been extinguished under
subsection (a) prior to the commencement of the tax amnesty
period of a subsequently enacted or approved tax amnesty program
administered by the Department of Revenue.
(2) The collection expiration date shall be tolled for the
time when any of the following events are pending, plus one
year:
(i) During a bankruptcy or proceeding during which the
taxpayer's assets are in the control or custody of an
administrative body, court or duly appointed guardian, receiver
or trustee.
(ii) The period during which a taxpayer's
offer-in-compromise is under consideration by the Department
of Revenue.
(iii) The duration of an installment agreement or deferred
payment plan between the taxpayer and the Department of Revenue.
(iv) The duration, from commencement through final
determination, of a proceeding which constitutes a tax appeal
or which opposes a collection action before an administrative
tribunal or court of law or in which the taxpayer has filed a
lawsuit or brought a cause of action against the Department of
Revenue.
(v) The duration of a taxpayer's military service for which
the taxpayer is eligible for and has received a Federal
extension.
(vi) For a period of time as the taxpayer and the Department
of Revenue may agree, in writing, to extend the collection
expiration date.
(c) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection:
"Tax." A tax, interest, addition to tax, penalty, fee and
other cost, including the cost of collection.
(3003.23 added Nov. 27, 2019, P.L.651, No.90)
Compiler's Note: See section 4 of Act 90 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Section 3003.24. Criminal Tax Prosecutions.--(a) A person
shall not be prosecuted, tried or punished for an offense under
a tax statute administered by the Department of Revenue except
if prosecution is instituted within three years after the
commission of the offense.
(b) If the period under subsection (a) has expired, a
prosecution may be instituted for:
(1) An offense a material element of which is either fraud
or a breach of fiduciary obligation within one year after the
discovery of the offense. This paragraph shall not extend the
period under subsection (a) otherwise applicable by more than
two years.
(2) The offense of wilfully attempting to evade or defeat
a tax or the payment of a tax within one year after the
discovery of the offense. This paragraph shall not extend the
period under subsection (a) otherwise applicable by more than
three years.
(c) In addition to a criminal offense identified in the tax
statutes administered by the Department of Revenue, a person
may be prosecuted for an offense provided for under 18 Pa.C.S.
(relating to crimes and offenses), relating to misconduct under
the tax statutes, if the prosecution is instituted within five
years after the commission of the offense.
(d) In addition to the imposition of a fine and imprisonment
and if a taxpayer has been convicted of a tax-related offense
under a statutory provision, the defendant taxpayer shall be
ordered and required to pay the Department of Revenue
restitution of each tax liability for which a conviction has
been entered. The amount of restitution shall be the taxes,
interest and penalties accrued through the date of payment.
(3003.24 added Nov. 27, 2019, P.L.651, No.90)
Compiler's Note: See section 4 of Act 90 of 2019 in the
appendix to this act for special provisions relating to
applicability.
Section 3003.25. Allocation of Tax Credits.--(a)
Notwithstanding any other provision of this act, the amount
of tax credits that may be awarded for tax credit programs
specified under this subsection shall remain at the amount
allocated for fiscal years beginning after June 30, 2022, and
ending before July 1, 2025:
(1) Article XVII-B.
(2) Subarticle B of Article XVII-D.
(2.1) Subarticle E of Article XVII-D.
(3) Article XVII-K.
(b) Notwithstanding any other provision of this act, the
amount of tax credit earned for each full-time equivalent
employe under Article XIX-H shall remain at the amount specified
under section 1904-H(c) for fiscal years beginning after June
30, 2022, and ending before July 1, 2025.
(3003.25 added July 8, 2022, P.L.513, No.53)
Compiler's Note: Section 24(4)(xvi) of Act 53 of 2022
provided that the addition of section 3003.25 shall apply
to fiscal years beginning after June 30, 2022.
Section 3004. Effective Date.--The provisions of this code,
except as otherwise specified, shall take effect immediately.
(3004 renumbered from 1203 Dec. 21, 1981, P.L.482, No.141)
APPENDIX
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Supplementary Provisions of Amendatory Statutes
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1982, DECEMBER 17, P.L.1385, NO.317
Section 1. The General Assembly finds and declares as
follows:
(a) Article VII of the "Tax Reform Code of 1971," the Bank
Shares Tax, was derived from the act of July 15, 1897 (P.L.292,
No.227), as amended, and Article VIII, the Title Insurance and
Trust Companies Shares Tax, was derived from the act of June
13, 1907 (P.L.640, No.512). Both these taxes were enacted in
conformity with the authority of section 548 of Title 12, U.S.C.
(b) At the time of enactment of the "Tax Reform Code of
1971," the aforesaid taxes could have been enacted either in
the form of privilege taxes or in the form of property taxes.
(c) Although the constitutionality and legality of taxing
financial institutions in Pennsylvania using the value of
capital stock in the hands of shareholders as the measure of
taxing, and including Federal obligations in the ascertainment
of said value, appears to be well settled, a recent decision
of the Supreme Court of the State of Montana has, by a
three-to-two decision, cast doubt upon the propriety of
including obligations of the United States in the tax base of
a property tax based upon the value of bank stock.
(d) If the rationale of the decision of the Montana Court
were to be applied to Articles VII and VIII of the "Tax Reform
Code of 1971" by a decision of a court of competent jurisdiction
in Pennsylvania, the Commonwealth of Pennsylvania would suffer
a financial crisis. Approximately $400,000,000 would have to
be refunded to the financial institutions as an undeserved
windfall, and current revenues based upon Articles VII and VIII
of the "Tax Reform Code of 1971" effectually would be
terminated.
(e) Until the Montana decision in 1978, Pennsylvania
financial institutions voluntarily have paid the taxes in
question, and the moneys have been collected, appropriated to
public use and expended in good faith, and for the common weal.
Payment of the aforesaid refunds and termination of existing
revenues derived from said taxes would require the enactment
of new and onerous taxes, to the detriment of the general
public.
(f) The General Assembly finds it essential to the public
welfare that the taxes voluntarily paid heretofore under the
provisions of Articles VII and VIII of the "Tax Reform Code of
1971" not be refunded, and that present and prospective revenues
therefrom not be prejudiced.
Compiler's Note: Act 317 added sections 701.1, 701.2, and
801.1 of Act 2.
Section 3. The provisions of section 2, adding sections
701.1 and 801.1, shall have retroactive effect to March 4, 1971,
being deemed a part of the act of March 4, 1971 (P.L.6, No.2),
known as the "Tax Reform Code of 1971," and shall be construed
as a part of, and read together with, the original statute as
if originally enacted on March 4, 1971. Acts done and taxes
collected under the said act from said date and prior to this
amendment are hereby ratified. If, however, it should be finally
determined by a court of competent jurisdiction that such
retroactive effect and construction may not be so applied to
the said act as hereby amended, the provisions of section 2
shall be construed to have retroactive effect to the earliest
date to which such retroactive effect may be given.
Section 4. Notwithstanding any provision of any law to the
contrary, including but not limited to the provisions of the
act of April 9, 1929 (P.L.343, No.176), known as "The Fiscal
Code," from and after the effective date of this act, no cash
refund shall be made and no tax credit shall be allowed arising
from any voluntary payment of tax under any provision of Article
VII or VIII of the "Tax Reform Code of 1971," upon the basis
that the inclusion of United States obligations in the tax base
was or is unconstitutional or illegal or in the case of taxes
due prior to the effective date of this act upon the basis of
the inclusion in the law of section 701.2, nor shall any action
or proceeding be commenced or further prosecuted for the
attainment, directly or indirectly, of any such cash refund or
tax credit, without regard to the legal or equitable entitlement
of the Commonwealth to such taxes voluntarily paid. Nor shall
any suit, proceeding, or action, whether brought before or after
the effective date hereof, be maintained in any administrative
board, tribunal, or court of record for the recovery,
recoupment, setoff, refund, credit or counterclaim for any such
tax payment upon any such basis. For the purpose of this
section, every tax payment shall be presumed to be a voluntary
payment and the payment of tax under mere protest shall be
deemed to constitute a voluntary payment. Only the payment of
these taxes under actual and direct duress, coercion or
compulsion against the individual payor shall not be deemed to
be a voluntary payment.
1986, JULY 2, P.L.318, NO.77
Section 21. Notwithstanding anything contained in any law
to the contrary, the validity of any ordinance or part of any
ordinance, or any resolution or part of any resolution, and any
amendments or supplements thereto, now or hereafter enacted or
adopted by any political subdivision, providing for or relating
to the imposition, levy or collection of any tax, shall not be
affected or impaired by anything contained in this act.
Section 22. If any word, phrase, clause, sentence, section
or provision of Article XI-C or XI-D of the act is for any
reason held to be unconstitutional, the decision of the court
shall not affect or impair any of the remaining provisions of
this act. It is hereby declared as the legislative intent that
this act would have been adopted had such unconstitutional word,
phrase, clause,
1991, AUGUST 4, P.L.97, NO.22
Section 44. The Department of Revenue shall provide notice
to employers, either in the Pennsylvania Bulletin under 1 Pa.
Code § 3.27 or by other means, of the withholding rate
equivalent to the rate of tax in effect prior to the effective
date of the amendments of Article III of the act plus the
additional rate necessary to equalize withholding over the
remainder of the taxable year to account for the revised annual
rate provided by the amendments to Article III of the act, to
be effective from the first pay period of the employer ending
after the 14th day following the effective date of section 302
of the act and ending December 31, 1991. The withholding rate
during periods in calendar year 1992 shall correspond to the
rate imposed by section 302 of the act for identical periods
in calendar year 1992.
Section 46. The provisions of this act are severable. If
any provision of this act or its application to any person or
circumstance is held invalid, the invalidity shall not affect
other provisions or applications of this act which can be given
effect without the invalid provision or application.
1999, MAY 12, P.L.26, NO.4
Section 29. Nothing contained in section 1101-A, 1102-A,
1103-A, 1104-A, 1105-A, 1106-A, 1106.1-A, 1106.2-A, 1107-A,
1109-A, 2301(f) or 3003.2(h) of the act shall be construed to
relieve any person, corporation or other entity from the filing
of reports or from any tax, tentative tax, penalty or interest
imposed by the provisions of any laws which were in effect prior
to being amended or repealed by this act, or affect or terminate
any petitions, investigations, prosecutions, legal or otherwise,
or other proceedings by the proper authorities of the
Commonwealth for violation of any such laws or for the
assessment, settlement, collection or recovery of any tax,
tentative tax, penalty or interest due to the Commonwealth under
any of the laws which were in effect prior to being amended or
repealed by this act
Compiler's Note. Act 4 amended, added or repealed sections
201, 204, 246, 247.1, 301, 304, 307.6, 325, 360, 401, 601, 602,
602.3, 602.5, 1101, 1104, 1101-A, 1102-A, 1103-A, 1104-A,
1105-A, 1106-A, 1106.1-A, 1106.2-A, 1107-A and 1109-A, Art.
XVIII-A and sections 2010, 2301, 3003.2, 3003.12 and 3003.13
of Act 2.
Section 30. Nothing in the amendment of section 2301(f) of
the act shall constitute a change in a rate of a tax requiring
an adjustment in the 1995-1996 fiscal tax revenue base under
66 Pa.C.S. § 2810(c)(4) or a rate change under 74 Pa.C.S. §
1765.
Section 32. This act shall apply as follows:
(1) Notwithstanding the time limitations of section
307.1(b) of the act, a small corporation which is subject
to the tax imposed under Article IV of the act or which owns
a qualified Subchapter S corporation subsidiary which is
subject to the tax under Article IV of the act may elect to
be taxed as a Pennsylvania S corporation for taxable years
beginning after December 31, 1998, if the limitations of
section 307.6 of the act do not apply. Such election shall
be valid for a taxable year commencing after December 31,
1998, through the effective date of this section if the
election is filed with the department before September 16,
1999.
(2) Notwithstanding paragraph (1), any corporation which
made a Pennsylvania S corporation election under section 307
of the act which was terminated for exceeding the passive
investment income limitation for a taxable year beginning
prior to January 1, 1999, may elect to be taxed as a
Pennsylvania S corporation for taxable years beginning after
December 31, 1998. Such election shall be valid for a taxable
year commencing after December 31, 1998, through the
effective date of this section if the election is filed with
the department before September 16, 1999.
* * *
2003, DECEMBER 23, P.L.250, NO.46
Section 32. By April 1, 2004, the Department of Revenue
shall submit a detailed report to the chairman and minority
chairman of the Appropriations Committee and the Finance
Committee of the Senate and the chairman and minority chairman
of the Appropriations Committee and the Finance Committee of
the House of Representatives outlining the plans and costs
concerning a Statewide tax clearance for licenses, permits and
registrations. The report shall include all of the following:
(1) The amount of State revenue necessary to perform
tax clearances for all licenses, permits and registrations
for the department, the Department of Labor and Industry,
the Department of Environmental Protection, the Department
of Banking, the Department of State, the Insurance Department
and the Pennsylvania Securities Commission. The amount needed
shall be itemized, and all costs, including personnel, office
expenses and other related costs, shall be included.
(2) The number of licenses, permits and registrations
for each agency and the costs associated with the program
by agency.
(3) The source of funds which will be utilized to pay
for the tax clearance program.
(4) The legal issues concerning the propriety of
restricting or revoking a license, permit or registration
due to the delinquency of a tax owed.
(5) The number of other states which have a similar law
in effect and the success or deficiencies of the law.
(6) Proposed draft legislation concerning tax clearance.
(7) A detailed timetable on when separate tasks must
be completed for full implementation on an estimated start
date.
Compiler's Note: Act 46 amended or added sections 201, 204,
206, 208, 281.2, 301, 302, 304, 330, 335, 401, 402.2,
601, 602 and 607, the heading of Article XI, sections
1101, 1111-A, 1112-A, 1206, 1206.1, 1211, 1215, 1216,
1704-B, 1709-B, 1711-B, 2010, 2102, 2111, 2117, 2145,
2301, 2302, 3003.2, 3003.3 and 3003.15 of Act 2.
2005, JULY 7, P.L.149, NO.40
Section 23. Any ordinance or resolution providing for the
levying, assessment or collection of a tax upon a transfer of
real property or an interest in real property which has been
enacted by a political subdivision prior to the effective date
of this section shall continue in full force and effect, without
reenactment, insofar as the transactions upon which the tax is
levied, assessed or collected are also subject to the tax
imposed by Article XI-C of the act. The ordinance or resolution
shall continue in full force and effect with respect to
documents made, executed and delivered prior to the effective
date of this section.
Compiler's Note: Act 40 amended, added or deleted sections
205, 301, 303, 315.5, 352, 401, 601, 1111-C, 1114-C, 1101-D,
1103-D, 1104-D, 1105-D, 1106-D, 1107-D, 1108-D, 1109-D, 1110-D,
1111-D, 1112-D, 1113-D, 1114-D, 1702-B, 1710-B, 1702-C, 1703-C,
1703.1-C, 1704-C, 1707-C, 1707.1-C, 1708-C, 1709-C, 1905-A,
3003.9, 3003.17 and 3003.17 of Act 2.
Section 24. This act shall apply as follows:
* * *
(2) Except as provided in paragraphs (6) and (7)(ii),
the following provisions shall apply to taxable years
beginning after December 31, 2002:
(i) The amendment of section 301(a) of the act.
(ii) The amendment of section 303(a)(1) of the act.
(3) The following provisions shall apply to film
production expenses incurred after December 31, 2004:
(i) The amendment or addition of the definitions of
"film," "Pennsylvania production expense," "production
expense," "start date" and "taxpayer" in section 1702-C
of the act.
(ii) The amendment of section 1703-C of the act.
(iii) The addition of section 1703.1-C of the act.
(iv) The amendment of section 1704-C of the act.
(v) The amendment of section 1707-C of the act.
(vi) The addition of section 1707.1-C of the act.
(vii) The amendment of section 1708-C of the act.
(viii) The amendment of section 1709-C of the act.
(4) The provisions referred to in paragraph (3) shall
not affect:
(i) film production tax credits for production
expenses incurred after June 30, 2004, and before January
1, 2005; or
(ii) the process for the approval and awarding of
the film production tax credits for these expenses as
provided for in the act of July 20, 2004 (P.L.801,
No.95), entitled "An act amending the act of March 4,
1971 (P.L.6, No.2), entitled 'An act relating to tax
reform and State taxation by codifying and enumerating
certain subjects of taxation and imposing taxes thereon;
providing procedures for the payment, collection,
administration and enforcement thereof; providing for
tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons,
corporations and other entities; prescribing crimes,
offenses and penalties,' authorizing a film production
tax credit; and providing for the powers and duties of
the Department of Community and Economic Development and
the Department of Revenue."
* * *
(6) The amendment of sections 301(d) and 303(a)(1) of
the act shall apply to appeals which arise prior to or after
the effective date of this paragraph.
(7) The following provisions shall apply to taxable
years beginning after December 31, 2004:
(i) The amendment of section 301(d).
(ii) The addition of section 303(a)(1)(iii)(B) and
(iv)(B).
(8) The amendment of section 303(a)(6) of the act shall
apply to taxable years beginning after December 31, 2004.
* * *
2006, OCTOBER 18, P.L.1149, NO.119
Section 33. This act shall apply as follows:
(1) The provisions of this act shall apply to all
determinations and assessments of tax liability by the
Department of Revenue after December 31, 2007.
(2) The provisions of this act shall not apply to or
effect any proceeding, prosecution, action, suit or appeal
involving assessments, determinations or settlements of tax
liability by the Department of Revenue prior to January 1,
2008, and any reassessment, redetermination or resettlement
resulting from such proceeding, prosecution, suit or appeal.
For all proceedings, prosecutions, actions, suits or appeals
involving assessments, determinations or settlements of tax
liability by the Department of Revenue prior to January 1,
2008, the procedures in place prior to the effective date
of this section shall apply until final resolution by
withdrawal, reassessment, redetermination or resettlement
by the Department of Revenue or an administrative board or
a decision by a court of competent jurisdiction.
Compiler's Note: Act 119 of 2006 amended, added or deleted
sections 230, 232, 234, 235, 247.1, 250, 251, 252, 253,
254, 255, 256, 338, 339, 340, 341, 342, 347, 350, 401,
403, 406, Part IV of Article IV heading, 407, 407.1,
407.2, 407.3, 407.4, 407.5, 408, 408.1, 1101, 1111-C,
1112-C, 1113-C, 1502, 2005, Article XXVII, 3003.2,
3003.3, 3003.5, 3003.6 and 3003.18 of Act 2.
2009, OCTOBER 9, P.L.451, NO.48
Section 13. The addition of Article XVII-F of the act is a
continuation of the act of March 10, 1949 (P.L.30, No.14), known
as the Public School Code of 1949. Except as otherwise provided
in Article XVII-F of the act, all activities initiated under
Article XX-B of the Public School Code of 1949 shall continue
and remain in full force and effect and may be completed under
Article XVII-F of the act. Orders, regulations, rules and
decisions which were made under Article XX-B of the Public
School Code of 1949 and which are in effect on the effective
date of section 12(2) of this act shall remain in full force
and effect until revoked, vacated or modified under Article
XVII-F of the act.
Compiler's Note: Act 48 of 2009 amended, added, reenacted
or deleted sections 204, 217, 222, 303, 315.2, 315.7,
315.9, 319, 401, 601, 602, 607, 701.1, 1101, 1201, 1206,
1206.1, 1210, 1211, 1215, 1216, 1216.1, 1272, 1273, 1278
and 1704-B and Articles XVII-F, XXVIX-A, XXIX-D, XXIX-E
and XXIX-F of Act 2.
2012, JULY 2, P.L.751, NO.85
Secion 29.1. The amendment of sections 217 and 222 of the
act are a continuation of section 202.2 of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code. Except as
otherwise provided in sections 217 and 222 of the act, all
activities initiated under section 202.2 of The Fiscal Code
shall continue and remain in full force and effect and may be
completed under sections 217 and 222 of the act. Orders,
regulations, rules and decisions which were made under section
202.2 of The Fiscal Code and which are in effect on the
effective date of the amendment of sections 217 and 222 of the
act shall remain in full force and effect until revoked, vacated
or modified under section 217 or 222 of the act.
Compiler's Note: Act 85 amended, added or repealed sections
201, 204, 217, 222, 230, 237, 331, 335, 338, 352, 401,
405, 406, 407.1, 901, 902, 1101-C, 1102-C.3, 1102-C.4,
1102-C.5, 1111-C, 1201, 1709-B, 1712-B, 1702-D, 1703-D,
1705-D, 1707-D, 1702-F, 1703-F, 1705-F and 1706-F,
Articles XVII-G, XVII-G.1, XVII-H and XVII-I and sections
1801-B, 1803-B, 1804-B, 1902-A, 1904-A, 2005, 2102, 2111,
2702, 2703, 2707, 3003.1 and 3002.22 of Act 2.
2013, JULY 9, P.L.270, NO.52
Section 42. The following shall apply:
* * *
(6) Section 2703.1 of the act shall apply on April 1,
2014, or when the two Board of Finance and Revenue members
referred to in section 2703.1(a)(2) have been sworn in,
whichever is later. The members of the Board of Finance and
Revenue in office before April 1, 2014, shall continue their
terms until at least two members of the board under section
2703.1 have been sworn in.
(7) The addition of Article XIX-B of the act is a
continuation of Article XVI-B of The Fiscal Code. Except as
otherwise provided in Article XIX-B of the act, all
activities initiated under Article XVI-B of The Fiscal Code
shall continue and remain in full force and effect and may
be completed under Article XIX-B of the act. Orders,
regulations, rules and decisions which were made under
Article XVI-B of The Fiscal Code and which are in effect on
the effective date of section 41(9) of this act shall remain
in full force and effect until revoked, vacated or modified
under Article XIX-B of the act. Contracts, obligations and
collective bargaining agreements entered into under Article
XVI-B of The Fiscal Code are not affected nor impaired by
the repeal of Article XVI-B of The Fiscal Code and shall
remain in full force and effect under the terms of the
contracts, obligations and collective bargaining agreements.
(8) The addition of Article XIX-C of the act is a
continuation of Article XVI-F of The Fiscal Code. Except as
otherwise provided in Article XIX-C of the act, all
activities initiated under Article XVI-F of The Fiscal Code
shall continue and remain in full force and effect and may
be completed under Article XIX-C of the act. Orders,
regulations, rules and decisions which were made under
Article XVI-F of The Fiscal Code and which are in effect on
the effective date of section 41(11) of this act shall remain
in full force and effect until revoked, vacated or modified
under Article XIX-C of the act. Contracts, obligations and
collective bargaining agreements entered into under Article
XVI-F of The Fiscal Code are not affected nor impaired by
the repeal of Article XVI-F of The Fiscal Code.
Compiler's Note: Act 52 amended, added, deleted or repealed
sections 202, 204, 206, 208, 226 and 278, Article II-B,
sections 301, 303, 306, 306.1, 306.2, 307.8, 314, 315.9,
315.10, 315.11, 324, 330.1, 352, 352.2, 401, 403, 602,
607, 701, 701.1, 701.4, 701.5, 1101-C, 1102-C, 1102-C.3
and 1102-C.5, Article XVI-B, sections 1705-D and 1708-G.1,
Article XVIII-A, section 1804-B, Articles XVIII-C,
XVIII-E, XVIII-F, XIX-B and XIX-C and sections 2111, 2112,
2129, 2130, 2701, 2702, 2703 and 2704.
Section 43. The following shall apply:
(1) Within 18 months of the effective date of this
section, the Department of Revenue, working jointly with the
Secretary of Banking and Securities and representatives from
the banking industry in this Commonwealth, shall submit a
detailed report to the chairman and minority chairman of the
Appropriations Committee of the Senate, the chairman and
minority chairman of the Finance Committee of the Senate,
the chairman and minority chairman of the Appropriations
Committee of the House of Representatives and the chairman
and minority chairman of the Finance Committee of the House
of Representatives ascertaining whether the adjustment, under
the amendment or repeal of sections 701, 701.1, 701.4, 701.5
and 2702(b) of the act, to the rate of tax under Article VII
of the act sufficiently addresses the significant changes
in the structure and regulatory environment within the
banking industry. The report shall include recommendations
with regard to all of the following:
(i) An appropriate tax base on which to calculate
tax liabilities, which shall include recognition of the
effect of a final court decision and pending litigation
on the tax base.
(ii) An appropriate rate of tax necessary to provide
fair, stable and predictable tax revenues to the
Commonwealth to ensure that the total amount of tax
imposed on an institution subject to the tax under
Article VII of the act and the rate of growth of the tax
liabilities will be competitive with taxes imposed by
other states, particularly those adjacent to this
Commonwealth. Consideration shall be given to the
adjustment to the rate of tax under the amendment or
repeal of sections 701, 701.1, 701.4, 701.5 and 2702(b)
of the act in order to determine whether future
adjustments are warranted.
(iii) An appropriate methodology to allocate and
apportion the tax base in instances where the entire
business of a taxpayer subject to Article VII of the act
is not conducted in this Commonwealth.
(iv) Proposed draft legislation concerning the
implementation of recommended changes to Article VII of
the act.
(2) (Reserved).
2006, OCTOBER 18, P.L.1149, NO.119
Preamble
The General Assembly finds as follows:
(1) Each year an estimated 137,000 Americans contract
leukemia, lymphoma anemia or other fatal blood diseases.
(2) If a matched bone marrow donor can be found, many
of these victims can be cured.
(3) There is now a National Marrow Donor Program, and
the United States is working with 30 other countries to
establish a worldwide registry.
(4) Marrow donation does not involve considerable risk
to the donor.
(5) There are approximately 110,500 patients in the
United States and approximately 8,000 patients in this
Commonwealth awaiting lifesaving organ transplants.
(6) Many patients awaiting organ transplants could
benefit from living organ donation, including approximately
93,000 kidney patients, 16,900 liver patients and 2,000 lung
patients.
(7) Of the more than 1,700 organ transplants performed
in this Commonwealth in 2010, approximately 300 were from
living donors.
(8) There continues to be a great need for bone marrow
and organ donors among the African-American, Asian, Native
American and Hispanic communities.
(9) Potential living bone marrow and organ donors should
be able to perform their lifesaving service without risk of
loss of income or employment.
Compiler's Note: Act 193 added Article XVIII.
2016, JULY 13, P.L.526, NO.84
Section 53. The following shall apply:
(1) The inclusion of roll-your-own tobacco in the
addition of Article XII-A of the act requires the amendment
of the definition of "units sold" in section 3 of the act
of June 22, 2000 (P.L.394, No.54), known as the Tobacco
Settlement Agreement Act, and in section 102 of the act of
December 30, 2003 (P.L.441, No.64), known as the Tobacco
Product Manufacturer Directory Act.
(2) The Office of Attorney General shall attempt to
obtain the consent of the participating manufacturers under
the Master Settlement Agreement to the amendments specified
under paragraph (1). For the purposes of this paragraph, the
term "Master Settlement Agreement" shall mean the settlement
agreement and related documents entered into on November 23,
1998, by the Commonwealth and leading United States tobacco
product manufacturers and approved by the court in
Commonwealth v. Philip Morris, April Term, 1997, No.2443
(C.P. Philadelphia County), on January 13, 1999.
(3) If the consents under paragraph (2) are obtained,
the Office of Attorney General shall:
(i) provide notice to the Secretary of Revenue; and
(ii) submit for publication in the Pennsylvania
Bulletin a notice of the consent.
(4) If the consents under paragraph (2) are not
obtained, the Office of Attorney General shall:
(i) notify the Secretary of Revenue; and
(ii) submit for publication in the Pennsylvania
Bulletin a notice of the refusal.
(5) The following provisions shall take effect 60 days
after the Office of Attorney General publishes the notice
of the consents under paragraph (3)(ii):
(i) The amendment of section 1215(g) of the act.
(ii) The addition of the following:
(A) The definition of "roll-your-own tobacco"
in section 1201-A of the act.
(B) Paragraph (2) of the definition of "tobacco
products" in section 1201-A of the act.
(C) Section 1203-A(a)(2) of the act.
(D) Section 1216-A of the act.
Compiler's Note: Act 84 amended, renumbered, added, deleted
or repealed sections 201, 204, 227, 268, 301, 303, 312,
315.12, 316, 317, 318, 319, 320, 321, 325, 352.2, 403,
406.1, 408, 701, 701.1, 701.4, 701.5, 1101, 1101-C,
1102-C.2, 1102-C.3, 1206, 1206.1, 1215, 1216, 1296,
Article XVII-A, section 1707-B, Articles XVIII-D, XVII-J
and XVII-K, sections 1801-B, 1804-B, 1802-C, 1803-C,
1803.1-C, 1804-C, 1806-C, 1807-C, 1808-C, 1809-C, 1810-C,
1811-C, 1812-C, 1813-C, 1814-C, 1816-C, 1818-C, 1819-C,
Article XVIII-G, sections 1902-A, 1904-A, 1905-A, 1902-B,
1904-B, 1904.1-B, 1904.2-B, 1909-B, 1903-C, Articles XIX-D
and XIX-E, XIX-F, sections 2010, 2102, 2111, 2130, Article
XXV, section 2703 and Articles XXIX-D and XXIX-G of Act
2, section 312 of Act 91 of 1971, Act 206 of 2012, 12
Pa.C.S. Chapter 37 and 53 Pa.C.S. § 8722.
2016, NOVEMBER 21, P.L.1517, NO.175
Section 2. Notwithstanding the time limitations for filing
a petition for refund under section 3003.1 of the act of March
4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971:
(1) a person that would be entitled to a refund of the
tax imposed under Article XI-C of the Tax Reform Code of
1971 as a result of the amendment of section 51(11) of the
amendatory act as it relates to transfers of real estate to
or by a land bank; and
(2) a person that would be entitled to a refund of tax
as a result of the addition of the definition of
"conservancy" in section 1101-C of the Tax Reform Code of
1971 and the amendment of section 1102-C.3(18) of the Tax
Reform Code of 1971
but for the time limitations contained under section 3003.1 of
the Tax Reform Code of 1971 may file for and obtain a refund
of tax actually paid as long as the petition for refund is filed
within six months of the effective date of this section.
Compiler's Note: Act 175 amended section 51 of Act 84 of
2016.
2019, JUNE 28, P.L.50, NO.13
Section 33. The following shall apply:
(1) The operation of sections 213, 213.1, 213.2, 213.3,
213.4, 213.5 and 213.6 of the act shall be suspended as of
July 1, 2019.
(2) If section 201(b)(3.5) or 237(b)(1.2) of the act
are deemed unconstitutional as a result of a decision of the
Pennsylvania Supreme Court or if a substantially similar
statute from another state is deemed unconstitutional by a
decision of the United States Supreme Court, the Secretary
of Revenue shall submit a notice of the decision to the
Legislative Reference Bureau for publication in the
Pennsylvania Bulletin.
(3) The suspension of sections 213, 213.1, 213.2, 213.3,
213.4, 213.5 and 213.6 of the act shall lapse as of the date
of the publication of the notice under paragraph (2).
Section 36. Continuation is as follows:
(1) The addition of section 1102-C.6 of the act is a
continuation of section 406-D(c) of the act of December 3,
1959 (P.L.1688, No.621), known as the Housing Finance Agency
Law. The following apply:
(i) All activities initiated under section 406-D(c)
of the Housing Finance Agency Law shall continue and
remain in full force and effect and may be completed
under section 1102-C.6 of the act of March 4, 1971
(P.L.6, No.2) known as the Tax Reform Code of 1971.
Orders, regulations, rules and decisions which were made
under section 406-D(c) of the Housing Finance Agency Law
and which are in effect on the effective date of section
35 of this act shall remain in full force and effect
until revoked, vacated or modified under section 1102-C.6
of the Tax Reform Code of 1971. Contracts, obligations
and collective bargaining agreements entered into under
section 406-D(c) of the Housing Finance Agency Law are
not affected nor impaired by the repeal of section
406-D(c) of the Housing Finance Agency Law.
(ii) Any difference in language between section
1102-C.6 of the Tax Reform Code of 1971 and section
406-D(c) of the Housing Finance Agency Law is not
intended to change or affect the legislative intent,
judicial construction or administration and
implementation of section 406-D(c) of the Housing Finance
Agency Law.
(2) (Reserved).
Compiler's Note: Act 13 amended, added, reenacted or deleted
by amendment sections 201, 202, 204, 208, 215, 225, 230,
237, 268, 279, 303, 315.14, 331, 336.3, 407.7, 1101-C,
1102-C.3, 1102-C.6, 1711-D, 1714-D, 1716-D, 1716.2-D,
1772-D, 1775-D, 1777-D, 1702-E, 1703-E, 1704-E, 1705-E,
1709-E, 1702-H, 1703-H, 1705-H, 1706-H, 1707.1-H, 1708-H,
1709-H, 17010-H, 1703-J, 1704-J, 1707-J, 1803-B, 1802-C,
1813-C, 1822-G, 1824-G, 1825-G, 1826-G, 1827-G, 1828-G,
1829-G, 1830-G, 1832-G, 1833-G, 1834-G, Article XVIII-H,
sections 1902-A, 1903-A, 1904-A, Part III, sections
1907-E, 2116, 2401, 2407, 2408, 2410, Article XXV heading,
2501, 2502, 2503 and 2931-C, 2945-C, 2914-D and Article
XXIX-H of this act.
2019, NOVEMBER 27, P.L.651, NO.90
Section 4. The following apply:
(1) The addition of section 204(73) of the act shall
apply to the sale at retail or use of canned software on or
after the effective date of this section.
(2) The addition of sections 3003.23 and 3003.24 of the
act shall not relieve a person of a tax, interest, addition
to a tax, penalty, fee and other cost payable by the person
on the effective date of this section.
(3) If a court of competent jurisdiction holds that a
tax, interest, addition to tax, penalty, fee and other cost
or money payable to the Commonwealth, or any officer or
agency of the Commonwealth, cannot be settled, assessed or
collected under the procedure provided by the addition of
sections 3003.23 and 3003.24 of the act, the matters shall
continue to be settled or assessed and collected under the
laws in force prior to the effective date of this section.
(4) The following apply to the addition of section
3003.23 of the act:
(i) For a settlement, determination or assessment
issued before the effective date of this section, the
ten-year collection period shall begin on the effective
date of this section or when the settlement,
determination or assessment becomes final, whichever is
later.
(ii) For a tax return due and not filed as of the
effective date of this section, the ten-year period
applicable to a nonfiled return shall begin on the
effective date of this section.
(iii) For a tax return due and not filed as of the
effective date of this section, the ten-year period
applicable to a nonfiled return shall begin on the
effective date of this section.
(5) A tax lien created prior to January 1, 2021, shall
not be impaired, shall remain in full force and effect
and shall retain the priority under the provision imposing
the tax lien, without the necessity of refiling or
revival, until January 1, 2031.
Compiler's Note: Act 90 amended or added sections 204,
3003.22, 3003.23 and 3003.24 of this act.
2021, JUNE 30, P.L.124, NO.25
Section 1. The General Assembly finds and declares as
follows:
(1) An error appeared in the publication of section 8
of the act of July 2, 1986 (P.L.318, No.77): The amendment
of the definition of "document" in section 1101-C of the act
of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
of 1971, used the word "devises" instead of the word
"demises" and the word "devise" instead of the word "demise."
(2) An error appeared in the publication of section 11
of Act 77 of 1986: The addition of section 1102-C.4 of the
Tax Reform Code of 1971, used the word "devise" instead of
the word "demise."
(3) An error appeared in the publication of section 12
of Act 77 of 1986: The addition of section 1103-C(c) of the
Tax Reform Code of 1971, used the word "devise" instead of
the word "demise" and the word "devised" instead of the word
"demised."
(4) The publication of the official law, without a
footnote, does not match the enrolled bill nor comport with
the interpretive regulation of the Department of Revenue at
61 Pa. Code §§ 91.111(a) (relating to imposition of tax on
documents) and 91.112(a) (relating to statement of value).
(5) The errors are corrected by the amendment of the
definition of "document" in section 1101-C and sections
1102-C.4 and 1103-C(c) of the Tax Reform Code of 1971.
Compiler's Note: Act 25 amended or added sections 204, 303,
316.2, 317.1, 317.2, 332.1, 335, 352, 407.6, 701.5,
1101-C, 1102-C.4, 1103-C, 1701-A.1 and the heading of
Article XVII-A.1, sections 1702-A.1, 1703-A.1, 1704-A.1,
1705-A.1, 1706-A.1, 1707-A.1, 1708-A.1, 1709-A.1, 1703-B,
1704-B, 1711-B, 1711-D, 1712-D, 1716.1-D, 1772-D, 1777-D,
1782-D, 1704-L, 1913-D, 1921-D, 1907-E, 1906-F, 1908-F,
1903-G, 1910-G, 2503, 2702, 2703, 2704, 2901-D, 2902-D,
2903-D, 2904-D, 2905-D, 2906-D, 2907-D, 2908-D, 2909-D,
2910-D, 2911-D, 2912-D, 2913-D, 2914-D, 2915-D, 2916-D,
2917-D, 2918-D, 2919-D, 2920-D, 2921-D, 2922-D, 2923-D,
2924-D and Subarticle C of Article XXIX-D and section
3003.9 of this act.
2022, JULY 8, P.L.513, NO.53
Section 23. The addition of section 303(a.7)(5) and (6) of
the act are a continuation of section 104-A of the act of April
9, 1929 (P.L.343, No.176), known as The Fiscal Code. Except as
provided in section 303(a.7)(5) and (6) of the act, all
activities initiated under section 104-A of The Fiscal Code
shall continue and remain in full force and effect and may be
completed under section 303(a.7)(5) and (6) of the act. Orders,
regulations, rules and decisions which were made under section
104-A of The Fiscal Code and which are in effect on the
effective date of section 303(a.7)(5) and (6) of the act shall
remain in full force and effect until revoked, vacated or
modified under section 303(a.7)(5) and (6) of the act.
Contracts, obligations and collective bargaining agreements
entered into under section 104-A of The Fiscal Code are not
affected nor impaired by the repeal of section 104-A of The
Fiscal Code.
Compiler's Note: Act 53 amended, added, deleted by amendment
or repealed sections 201, 204, 208, 303, 330.2, 401, 402,
902, 902.1, 1601-A, 1602-A, 1709-B, 1711-D, 1712-D,
1716-D, 1716.1-D, 1777-D, 1708-K, 1809-C, 1813-C, 1817-C,
1805-F, 1908-D, 1912-D and 1921-D, Articles XIX-H and
XIX-I, sections 2111 and 2301, Article XXIV, sections
2502.1, 2901-D, 2931-D, 2935-D, 2937-D and 3003.25.
2024, JULY 11, P.L. , NO.56
Section 27. The amendment of section 701.1(b), (b.1) and
(c) of the act shall apply to the ascertainment of the taxable
amount of shares after December 31, 2024, and to the report and
the payment of the bank and trust company shares tax due after
March 14, 2025.
Section 28. The General Assembly finds and declares as
follows:
(1) The amendment of section 701.1(b), (b.1) and (c)
of the act shall not be relied upon to:
(i) ascertain the taxable amount of shares for a
period prior to January 1, 2025;
(ii) ascertain the amount of tax due prior to March
15, 2025; or
(iii) authorize a refund of a tax paid for a period
for which a report was due prior to March 15, 2025,
beyond the extent to which the refund would have
otherwise been due notwithstanding the amendment of
section 701.1(b), (b.1) and (c) of the act.
(2) In ascertaining the taxable amount of shares for a
period prior to January 1, 2025, the amount of goodwill
subtracted and disregarded in calculating the deduction for
United States obligations under section 701.1(b) of the act,
and the amount of goodwill deducted from the taxable amount
of shares under section 701.1(b.1) of the act, shall be
determined based on the law as in effect prior to the
effective date of this section, without any inference that
the amendment of section 701.1(b), (b.1) and (c) of the act
expanded, or confirmed any administrative determination that
limited or restricted, the extent to which goodwill could
be subtracted and disregarded under section 701.1(b) of the
act or deducted under section 701.1(b.1) of the act.
Section 29. A computer data center that has met the
eligibility requirements and has been certified under Article
XXIX-D prior to the effective date of this section shall be
deemed to meet the certification requirements of Article XXIX-D.
The certification may not be revoked, except as provided under
section 2917-D of the act, and shall remain in effect for the
remainder of the qualification period, as defined in section
2931-D(d).
Compiler's Note: Act 56