THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY SEIP, KESSLER, GOODMAN, HOUGHTON, MAHONEY, MURPHY, PASHINSKI, SANTONI, K. SMITH AND HORNAMAN, MAY 26, 2010

REFERRED TO COMMITTEE ON APPROPRIATIONS, MAY 26, 2010  

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," in sales and use tax, further providing for

definitions and for exclusions from tax; providing for

special and interfund transfers; and establishing the

Homestead Exclusion Fund and the Highway and Bridge

Enhancement Fund.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 201(k) and (o) of the act of March 4,

1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, are

amended by adding clauses to read:

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:

* * *

(k)  "Sale at retail."

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(20)  (i)  The rendition for a consideration of any service,

other than (A) funeral parlors, crematories and death care

services, (B) health services, including, but not limited to,

physician or dental services, (C) professional and technical

services, including, but not limited to, legal services,

architectural services and specialized design services, (D)

tuition, or (E) electrical, plumbing, heating and air

conditioning service fees, when the primary objective of the

purchaser is the receipt of any benefit of the service

performed, as distinguished from the receipt of property. In

determining what is a service, the intended use or stated

objective of the contracting parties shall not necessarily be

controlling.

(ii)  Any service performed in this Commonwealth shall be

subject to the tax imposed under this article unless

specifically exempted in this article. With respect to services,

other than telecommunications services, the services shall be

considered to be performed in this Commonwealth if:

(A)  performed completely in this Commonwealth;

(B)  performed partially in this Commonwealth and partially

outside this Commonwealth when the recipient or user of the

service is located in this Commonwealth;

(C)  performed partially in this Commonwealth and partially

outside this Commonwealth if the recipient or user of the

service is not located in this Commonwealth, but only to the

extent of those services actually performed in this

Commonwealth; or

(D)  the place of performance cannot be determined if the

recipient or user of the service is located in this

Commonwealth.

(iii)  With respect to services, other than

telecommunications services, the services performed partially in

this Commonwealth and partially outside this Commonwealth shall

be presumed to have been performed completely in this

Commonwealth unless the taxpayer can show the place of

performance by clear and convincing evidence.

(iv)  With respect to interstate telecommunications services,

only those charges for interstate telecommunications which

originate or are terminated in this Commonwealth and which are

billed and charged to a service address in this Commonwealth

shall be subject to tax.

(v)  With respect to services, other than telecommunications

services, that are performed in this Commonwealth for a

recipient or user of the services located in another state in

which the services, had they been performed in that state, would

not be subject to a sales or use tax under the laws of that

state, no tax may be imposed under this article.

(vi)  The tax on the sale or use of services shall become due

at the time payment or other consideration is made for the

portion of services actually paid.

* * *

(o)  "Use."

* * *

(19)  (i)  The obtaining by the purchaser of any service, not

otherwise set forth in this definition, other than (A) funeral

parlors, crematories and death care services, (B) health

services, including, but not limited to, physician or dental

services, (C) professional and technical services, including,

but not limited to, legal services, architectural services and

specialized design services, (D) tuition, or (E) electrical,

plumbing, heating and air conditioning service fees, when the

primary objective of the purchaser is the receipt of any benefit

of the service performed, as distinguished from the receipt of

property. In determining what is a service, the intended use or

stated objective of the contracting parties shall not

necessarily be controlling.

(ii)  Any service performed in this Commonwealth shall be

subject to the tax imposed under this article unless

specifically exempted in this article. With respect to services,

other than telecommunications services, such services shall be

considered to be performed in this Commonwealth if:

(A)  performed completely in this Commonwealth;

(B)  performed partially in this Commonwealth and partially

outside this Commonwealth when the recipient or user of the

service is located in this Commonwealth;

(C)  performed partially in this Commonwealth and partially

outside this Commonwealth if the recipient or user of the

service is not located in this Commonwealth, but only to the

extent of those services actually performed in this

Commonwealth; or

(D)  the place of performance cannot be determined if the

recipient or user of the service is located in this

Commonwealth.

(iii)  With respect to services, other than telecommunication

services, such services performed partially in this Commonwealth

and partially outside this Commonwealth shall be presumed to

have been performed completely in this Commonwealth unless the

taxpayer shows the place of performance by clear and convincing

evidence.

(iv)  With respect to interstate telecommunications services,

only those charges for interstate telecommunications which

originate or are terminated in this Commonwealth and which are

billed and charged to a service address in this Commonwealth

shall be subject to tax.

(v)  With respect to services, other than telecommunications

services, that are performed in this Commonwealth for a

recipient or user of the services located in another state in

which the services, had they been performed in that state, would

not be subject to a sales or use tax under the laws of that

state, no tax may be imposed under this article.

* * *

Section 2.  Section 204(13), (30), (32), (33), (34), (35),

(38), (41), (50), (51), (53), (61), (63) and (65) of the act,

amended or added August 31, 1971 (P.L.362, No.93), October 27,

1979 (P.L.242, No.79), October 22, 1981 (P.L.314, No.109),

December 13, 1991 (P.L.373, No.40), June 16, 1994 (P.L.279,

No.48), May 7, 1997 (P.L.85, No.7), April 23, 1998 (P.L.239,

No.45), June 22, 2001 (P.L.353, No.23), June 29, 2002 (P.L.559,

No.89) and July 6, 2006 (P.L.319, No.67), are amended and the

section is amended by adding clauses to read:

Section 204.  Exclusions from Tax.--The tax imposed by

section 202 shall not be imposed upon any of the following:

* * *

[(13)  The sale at retail, or use of wrapping paper, wrapping

twine, bags, cartons, tape, rope, labels, nonreturnable

containers and all other wrapping supplies, 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.]

* * *

[(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.]

* * *

[(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.

(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.]

* * *

[(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.]

* * *

[(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.]

* * *

[(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.

(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.

(53)  The sale at retail or use of candy or gum regardless of

the location from which the candy or gum is sold.]

* * *

[(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.]

* * *

[(63)  The sale at retail or use of separately stated fees

paid pursuant to 13 Pa.C.S. § 9525 (relating to fees).]

* * *

[(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.]

* * *

(67)  The sale at retail of medical goods or services by a

hospital, as defined in the act of December 20, 1985 (P.L.457,

No.112), known as the "Medical Practice Act of 1985."

(68)  The sale at retail of medical or dental services,

including, but not limited to, charges for office visits.

(69)  The sale at retail or use of goods or services that are

part of a Medicare Part B transaction.

(70)  The sale at retail of medical, dental and vision

insurance premiums.

(71)  The sale at retail to or use of home health care,

nursing care and other ambulatory health care services.

(72)  The sale at retail to or use of funeral parlors,

crematories and death care services.

(73)  The sale at retail to or use of social services,

including, but not limited to, day care.

(74)  The sale at retail of tuition.

(75)  The sale at retail to or use of any of the following

professional services:

(i)  Legal services.

(ii)  Accounting, auditing and bookkeeping services.

(iii)  Architectural and engineering services.

(76)  The sale at retail to or use of electrical, plumbing,

heating and air conditioning service fees.

Section 3.  The act is amended by adding a section to read:

Section 281.3.  Special and Interfund Transfers.--(a)  Within

30 days of the close of the 2009-2010 fiscal year, 2010-2011

fiscal year and 2011-2012 fiscal year, one hundred million

dollars ($100,000,000) shall be transferred to each city of the

first class.

(b)  Within 30 days of the close of the 2010-2011 fiscal

year, 2011-2012 fiscal year and 2012-2013 fiscal year, three

billion five hundred million dollars ($3,500,000,000) shall be

transferred to the Property Tax Relief Fund.

(c)  (1)  Within 30 days of the close of the 2010-2011 fiscal

year, 2011-2012 fiscal year and 2012-2013 fiscal year, one

billion dollars ($1,000,000,000) shall be transferred to the

Homestead Exclusion Fund, which fund is hereby established in

the State Treasury.

(2)  Except as otherwise provided in subclause (3), no funds

may be transferred or disbursed from the Homestead Exclusion

Fund.

(3)  On July 1, 2013, the balance of the Homestead Exclusion

Fund shall be transferred to the Property Tax Relief Fund.

(d)  Within 30 days of the close of the 2009-2010 fiscal

year, and each fiscal year thereafter, five hundred million

dollars ($500,000,000) shall be transferred to the Highway and

Bridge Enhancement Fund, which fund is hereby established in the

State Treasury. The moneys in this fund shall be used for the

maintenance, upkeep and improvement of highways and bridges in

this Commonwealth.

Section 4.  This act shall take effect in 60 days.