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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY SONNEY, ADOLPH, CREIGHTON, DENLINGER, J. EVANS, EVERETT, GABLER, GINGRICH, HUTCHINSON, M. KELLER, MURT, OBERLANDER, PYLE, RAPP, ROAE, SIPTROTH AND YOUNGBLOOD, JUNE 16, 2009 |
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| REFERRED TO COMMITTEE ON FINANCE, JUNE 16, 2009 |
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| AN ACT |
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1 | Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An |
2 | act relating to tax reform and State taxation by codifying |
3 | and enumerating certain subjects of taxation and imposing |
4 | taxes thereon; providing procedures for the payment, |
5 | collection, administration and enforcement thereof; providing |
6 | for tax credits in certain cases; conferring powers and |
7 | imposing duties upon the Department of Revenue, certain |
8 | employers, fiduciaries, individuals, persons, corporations |
9 | and other entities; prescribing crimes, offenses and |
10 | penalties," in film production tax credit, further providing |
11 | for limitations; and authorizing an onsite use natural gas |
12 | well tax credit. |
13 | The General Assembly of the Commonwealth of Pennsylvania |
14 | hereby enacts as follows: |
15 | Section 1. Section 1707-D(a) of the act of March 4, 1971 |
16 | (P.L.6, No.2), known as the Tax Reform Code of 1971, added July |
17 | 25, 2007 (P.L.373, No.55), is amended to read: |
18 | Section 1707-D. Limitations. |
19 | (a) Cap.--In no case shall the aggregate amount of tax |
20 | credits awarded in any fiscal year under this article exceed |
21 | [$75,000,000] $50,000,000. |
22 | * * * |
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1 | Section 2. The act is amended by adding an article to read: |
2 | ARTICLE XVII-F |
3 | ONSITE USE NATURAL GAS WELL TAX CREDIT |
4 | Section 1701-F. Scope. |
5 | This article authorizes an onsite use natural gas well tax |
6 | credit. |
7 | Section 1702-F. Definitions. |
8 | The following words and phrases when used in this article |
9 | shall have the meanings given to them in this section unless the |
10 | context clearly indicates otherwise: |
11 | "Cogeneration." The use of a heat engine or power station to |
12 | simultaneously generate space or water heat as well as |
13 | electricity. |
14 | "Department." The Department of Revenue of the Commonwealth. |
15 | "Expense." Any actual cost incurred by a taxpayer through |
16 | the construction of a qualified natural gas well. |
17 | "Pass-through entity." Any of the following: |
18 | (1) A partnership, limited partnership, limited |
19 | liability company, business trust or other unincorporated |
20 | entity that for Federal income tax purposes is taxable as a |
21 | partnership. |
22 | (2) A Pennsylvania S corporation. |
23 | "Qualified natural gas well." A bore hole drilled on real |
24 | property owned or leased by a taxpayer for the purpose of |
25 | producing or extracting gas to be used for the following |
26 | purposes: |
27 | (1) onsite by the taxpayer for the purposes of space or |
28 | water heating for use in the taxpayer's primary residence; or |
29 | (2) onsite by the taxpayer for the purposes of space or |
30 | water heating or cogeneration for use in the taxpayer's small |
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1 | business. |
2 | "Qualified tax liability." The liability for taxes imposed |
3 | under Article III, IV or VI. The term includes liability for |
4 | taxes imposed under Article III on an owner of a pass-through |
5 | entity. |
6 | "Secretary." The Secretary of Revenue of the Commonwealth. |
7 | "Small business." A Pennsylvania business employing 100 or |
8 | fewer employees during the taxable year for which a tax credit |
9 | article is sought. |
10 | "Tax credit." The onsite use natural gas well tax credit |
11 | authorized under this article. |
12 | "Taxpayer." A person or small business subject to tax under |
13 | Article III, IV or VI. The term includes the shareholder, owner |
14 | or member of a pass-through entity that receives a tax credit. |
15 | Section 1703-F. Credit for onsite use natural gas wells. |
16 | (a) General rule.--A taxpayer that incurs expenses through |
17 | drilling and construction of a qualified natural gas well in a |
18 | taxable year may apply for a tax credit as provided in this |
19 | article. By September 15, a taxpayer must submit an application |
20 | to the department for qualified natural gas well expenses |
21 | incurred in the taxable year that ended in the prior calendar |
22 | year. |
23 | (b) Amount of tax credit.--A taxpayer that is qualified |
24 | under subsection (a) shall receive a tax credit for the taxable |
25 | year in the amount of 25% of the total qualified natural gas |
26 | well expenses, not to exceed $1,000,000. |
27 | (c) Notification to taxpayer.--By December 15 of the |
28 | calendar year following the close of the taxable year during |
29 | which the qualified natural gas well expenses were incurred, the |
30 | department shall notify the taxpayer of the amount of the |
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1 | taxpayer's tax credit approved by the department. |
2 | Section 1704-F. Carryover, carryback, refund and assignment of |
3 | tax credit. |
4 | A tax credit is subject to the following provisions: |
5 | (1) If a taxpayer cannot use the entire amount of the |
6 | tax credit for the taxable year in which the tax credit is |
7 | first approved, then the excess may be carried over to |
8 | succeeding taxable years and used as a credit against the |
9 | qualified tax liability of the taxpayer for those taxable |
10 | years. Each time that the tax credit is carried over to a |
11 | succeeding taxable year, it shall be reduced by the amount |
12 | that was used as a credit during the immediately preceding |
13 | taxable year. The tax credit may be carried over and applied |
14 | to succeeding taxable years for no more than 15 taxable years |
15 | following the first taxable year for which the taxpayer was |
16 | entitled to claim the credit. |
17 | (2) The tax credit approved by the department for |
18 | qualified natural gas well expenses in a taxable year first |
19 | shall be applied against the taxpayer's qualified tax |
20 | liability for the current taxable year as of the date on |
21 | which the credit was approved before the tax credit is |
22 | applied against any tax liability under paragraph (1). |
23 | (3) A taxpayer is not entitled to assign, carry back or |
24 | obtain a refund of an unused tax credit. |
25 | Section 1705-F. Time limitations. |
26 | A taxpayer is not entitled to a tax credit for qualified |
27 | natural gas well expenses incurred in taxable years ending after |
28 | December 31, 2015. |
29 | Section 1706-F. Limitation on tax credits. |
30 | (a) Cap.--In no case shall the aggregate amount of tax |
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1 | credits awarded in any fiscal year exceed $25,000,000. |
2 | (b) Proration.--If the total amount of tax credits applied |
3 | for by all taxpayers exceeds the amount allocated for those |
4 | credits, then the tax credit to be received by each applicant |
5 | shall be prorated by the department among all applicants. |
6 | Section 1707-F. Shareholder, owner or member pass-through. |
7 | (a) General rule.--If a Pennsylvania S corporation does not |
8 | have an eligible tax liability against which the tax credit may |
9 | be applied, a shareholder of the Pennsylvania S corporation is |
10 | entitled to a tax credit equal to the tax credit determined for |
11 | the Pennsylvania S corporation for the taxable year multiplied |
12 | by the percentage of the Pennsylvania S corporation's |
13 | distributive income to which the shareholder is entitled. |
14 | (b) Pass-through entities.--If a pass-through entity other |
15 | than a Pennsylvania S corporation does not have an eligible tax |
16 | liability against which the tax credit may be applied, an owner |
17 | or member of the pass-through entity is entitled to a tax credit |
18 | equal to the tax credit determined for the pass-through entity |
19 | for the taxable year multiplied by the percentage of the pass- |
20 | through entities' distributive income to which the owner or |
21 | member is entitled. |
22 | (c) Nature of tax credit.--The tax credit provided under |
23 | subsection (a) or (b) is in addition to any tax credit to which |
24 | a shareholder, owner or member of a pass-through entity is |
25 | otherwise entitled under this article. However, a pass-through |
26 | entity and a shareholder, owner or member of a pass-through |
27 | entity may not claim a credit under this article for the same |
28 | qualified natural gas well expenses. |
29 | Section 1708-F. Report to General Assembly. |
30 | The secretary shall submit an annual report to the General |
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1 | Assembly indicating the effectiveness of the tax credit no later |
2 | than March 15 following the year in which the tax credits were |
3 | approved. The report shall include the names of all taxpayers |
4 | utilizing the tax credit as of the date of the report and the |
5 | amount of tax credits approved and utilized by each taxpayer. |
6 | Notwithstanding any law providing for the confidentiality of tax |
7 | records, the information contained in the report shall be public |
8 | information. The report may also include any recommendations for |
9 | changes in the calculation or administration of the tax credit. |
10 | Section 1709-F. Regulations. |
11 | The secretary, in conjunction with the Department of |
12 | Environmental Protection, shall promulgate regulations necessary |
13 | for the implementation and administration of this article. |
14 | Section 3. This act shall apply to taxable years beginning |
15 | after December 31, 2009. |
16 | Section 4. This act shall take effect immediately. |
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