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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY REED, BAKER, BEAR, BELFANTI, BEYER, BOYD, BROOKS, CAUSER, CLYMER, CREIGHTON, DENLINGER, EVERETT, FAIRCHILD, FLECK, FRANKEL, GEIST, GEORGE, GIBBONS, GOODMAN, HARKINS, HENNESSEY, HESS, HICKERNELL, HUTCHINSON, KAUFFMAN, M. KELLER, KOTIK, MAJOR, MARSICO, MUSTIO, O'NEILL, PETRI, PICKETT, RAPP, REICHLEY, ROCK, ROHRER, SCAVELLO, SIPTROTH, SONNEY, STERN, STEVENSON, TURZAI AND VULAKOVICH, FEBRUARY 13, 2009 |
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| REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 13, 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," establishing a career development tax credit. |
11 | The General Assembly of the Commonwealth of Pennsylvania |
12 | hereby enacts as follows: |
13 | Section 1. The act of March 4, 1971 (P.L.6, No.2), known as |
14 | the Tax Reform Code of 1971, is amended by adding an article to |
15 | read: |
16 | ARTICLE XVII-F |
17 | CAREER DEVELOPMENT TAX CREDIT |
18 | Section 1701-F. Short title of article. |
19 | This article shall be known and may be cited as the Career |
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1 | Development Tax Credit Act. |
2 | Section 1702-F. Definitions. |
3 | The following words and phrases when used in this article |
4 | shall have the meanings given to them in this section unless the |
5 | context clearly indicates otherwise: |
6 | "Career development tax credit" or "tax credit." The credit |
7 | provided under this article. |
8 | "Department." The Department of Revenue of the Commonwealth. |
9 | "Nonqualified individual." |
10 | (1) An individual who is one of the following: |
11 | (i) an officer of a business entity; |
12 | (ii) a member or shareholder owning more than 5% of |
13 | the voting power or value of all classes of stock of a |
14 | business entity; or |
15 | (iii) an individual who, for the preceding taxable |
16 | year: |
17 | (A) received compensation from an employer in |
18 | excess of the Federal limitation, after adjustment by |
19 | the Secretary of the United States Treasury for |
20 | inflation, set forth in section 414(q)(1)(B) of the |
21 | Internal Revenue Code of 1986 (Public Law 99-514, 26 |
22 | U.S.C. § 414(q)(1)(B)); or |
23 | (B) is in the group consisting of the top 20% of |
24 | all full-time employees of the employer with at least |
25 | three years of service when ranked on the basis of |
26 | compensation paid during the taxable year. |
27 | (2) A partner or self-employed individual. |
28 | (3) A physician. |
29 | (4) A veterinarian. |
30 | (5) An attorney. |
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1 | (6) An executive. |
2 | "Nonqualified training expense." All of the following: |
3 | (1) Expenditures either reimbursed or subject to |
4 | reimbursement through any Federal or State training program. |
5 | (2) Federal, State or local grants or other payments to |
6 | provide training or retraining. |
7 | (3) Capital expenses. |
8 | (4) Equipment, materials and software used beyond the |
9 | training program. |
10 | (5) Expenses for out-of-State travel. |
11 | (6) Convention or conference expenses, unless directly |
12 | related to a qualified career development training program. |
13 | "Qualified career development training program." A training |
14 | program that is certified by the Department of Labor and |
15 | Industry as meeting recognized industry standards, designed to |
16 | meet the special requirements of an employer, and conducted with |
17 | a commitment by the employer to continue to employ an individual |
18 | on successful completion of the training. The term does not |
19 | include the following: |
20 | (1) Any program in which 50% or more of the employee's |
21 | time is spent on activities other than those directly related |
22 | to the training program. |
23 | (2) An executive training program. |
24 | (3) A personal enrichment program. |
25 | (4) A general health program. |
26 | (5) A seminar or conference unless directly related to |
27 | the employee's job requirements. |
28 | "Qualified employee." A Commonwealth resident who is |
29 | employed in this Commonwealth by a taxpayer and who averages at |
30 | least 30 hours of work per week at the time training commences |
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1 | and for a period of 12 months following the employee's |
2 | completion of the qualified career development program. The term |
3 | excludes an individual who is a nonqualified individual. |
4 | "Qualified tax liability." The liability for taxes imposed |
5 | under Article III, IV or VI. The term includes the liability for |
6 | taxes imposed under Article III on a shareholder of a |
7 | Pennsylvania S corporation. |
8 | "Qualified training expense." Wages paid to a qualified |
9 | employee during normal working hours while participating in a |
10 | qualified career development training program. The term includes |
11 | preskill and postskill assessment, direct costs of instructors, |
12 | instructional materials, instructional supplies, instructional |
13 | media, necessary training equipment, tuition reimbursement, |
14 | travel costs to and from class and other instructional |
15 | activities. The term excludes nonqualified training expense. |
16 | "Secretary." The Secretary of Revenue of the Commonwealth. |
17 | "Taxpayer." An entity that is engaged in the business of |
18 | manufacturing and subject to tax under Article III, IV or VI. |
19 | The term includes the shareholder of a Pennsylvania S |
20 | corporation that receives a career development tax credit or the |
21 | member of a limited liability company that receives a career |
22 | development tax credit. |
23 | Section 1703-F. Tax credit for qualified training expenses. |
24 | (a) General rule.--A taxpayer who incurs qualified training |
25 | expenses in a taxable year may apply for a career development |
26 | tax credit as provided in this article. By September 15, a |
27 | taxpayer must submit an application to the department for |
28 | qualified training expense incurred in the taxable year that |
29 | ended in the prior calendar year. |
30 | (b) Amount of tax credit.--A taxpayer that is qualified |
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1 | under subsection (a) shall receive a career development tax |
2 | credit for the taxable year in the amount of 25% of the |
3 | taxpayer's total qualified training expense for the taxable |
4 | year. |
5 | (c) Notification of approved tax credit.--By December 15 of |
6 | the calendar year following the close of the taxable year during |
7 | which the qualified training expense was incurred, the |
8 | department shall notify the taxpayer of the amount of the |
9 | taxpayer's career development tax credit approved by the |
10 | department. |
11 | Section 1704-F. Carryover, carryback, refund and assignment of |
12 | tax credit. |
13 | (a) General rule.--If the taxpayer cannot use the entire |
14 | amount of the career development tax credit for the taxable year |
15 | in which the career development tax credit is first approved, |
16 | then the excess may be carried over to succeeding taxable years |
17 | and used as a credit against the qualified tax liability of the |
18 | taxpayer for those taxable years. Each time that the career |
19 | development tax credit is carried over to a succeeding taxable |
20 | year, it is to be reduced by the amount that was used as a |
21 | credit during the immediately preceding taxable year. The career |
22 | development tax credit provided by this article may be carried |
23 | over and applied to succeeding taxable years for no more than 15 |
24 | taxable years following the first taxable year for which the |
25 | taxpayer was entitled to claim the credit. |
26 | (b) Taxable year in which tax credit applied.--A career |
27 | development tax credit approved by the department for qualified |
28 | training expenses in a taxable year first shall be applied |
29 | against the taxpayer's qualified tax liability for the current |
30 | taxable year as of the date on which the credit was approved |
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1 | before the career development tax credit is applied against any |
2 | tax liability under subsection (a). |
3 | (c) Limitation.--A taxpayer is not entitled to carry back or |
4 | obtain a refund of an unused career development tax credit. |
5 | Section 1705-F. Time limitations. |
6 | A taxpayer is not entitled to a career development tax credit |
7 | for qualified training expenses incurred in taxable years ending |
8 | after December 31, 2011. |
9 | Section 1706-F. Limitation on tax credits. |
10 | (a) General rule.--The total amount of career development |
11 | tax credits approved by the department shall not exceed |
12 | $20,000,000 in any fiscal year. |
13 | (b) Proration required.--If the total amount of career |
14 | development tax credits applied for by all taxpayers exceeds the |
15 | amount allocated for those credits, then the career development |
16 | tax credit to be received by each applicant shall be prorated by |
17 | the department among all applicants who have qualified for the |
18 | tax credit. |
19 | Section 1707-F. Pennsylvania S corporation shareholder pass- |
20 | through. |
21 | (a) General rule.--If a Pennsylvania S corporation does not |
22 | have an eligible tax liability against which the career |
23 | development tax credit may be applied, a shareholder of the |
24 | Pennsylvania S corporation is entitled to a tax credit equal to |
25 | the tax credit determined for the Pennsylvania S corporation for |
26 | the taxable year multiplied by the percentage of the |
27 | Pennsylvania S corporation's distributive income to which the |
28 | shareholder is entitled. |
29 | (b) Operation of tax credit.--The career development tax |
30 | credit provided under subsection (a) is in addition to any |
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1 | career development tax credit to which a shareholder of a |
2 | Pennsylvania S corporation is otherwise entitled under this |
3 | article. However, a Pennsylvania S corporation and a shareholder |
4 | of a Pennsylvania S corporation may not claim a tax credit for |
5 | the same qualified training expense. |
6 | Section 1708-F. Pennsylvania limited liability company member |
7 | pass-through. |
8 | (a) General rule.--If a limited liability company does not |
9 | have an eligible tax liability against which the career |
10 | development tax credit may be applied, a member of the limited |
11 | liability company is entitled to a tax credit equal to the tax |
12 | credit determined for the limited liability company for the |
13 | taxable year multiplied by the percentage of the limited |
14 | liability company's distributive income to which the member is |
15 | entitled. |
16 | (b) Operation of tax credit.--The career development tax |
17 | credit under subsection (a) is in addition to any career |
18 | development tax credit to which a member of a limited liability |
19 | company is otherwise entitled under this article. A limited |
20 | liability company and a member of a limited liability company |
21 | may not claim a tax credit for the same qualified training |
22 | expense. |
23 | Section 1709-F. Recapture of credit. |
24 | (a) General rule.--If an employee for whom a credit has been |
25 | awarded does not maintain continuous employment with the |
26 | taxpayer for a period of 12 months following the completion of |
27 | the qualified career development training program, the |
28 | department shall recapture any credit awarded to the taxpayer |
29 | for the qualified training expense of that employee. |
30 | (b) Nonapplicability.--This section shall not apply if the |
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1 | employee: |
2 | (1) is deceased; |
3 | (2) is disabled; |
4 | (3) voluntarily leaves employment; or |
5 | (4) is discharged for cause as certified by the |
6 | Department of Labor and Industry. |
7 | Section 1710-F. Report to General Assembly. |
8 | The secretary shall submit an annual report to the General |
9 | Assembly indicating the effectiveness of the career development |
10 | tax credit no later than March 15 following the year in which |
11 | the tax credits were approved. The report shall include the |
12 | names of all taxpayers utilizing the tax credit as of the date |
13 | of the report and the amount of tax credits approved and |
14 | utilized by each taxpayer. Notwithstanding any law providing for |
15 | the confidentiality of tax records, the information contained in |
16 | the report shall be public information. The report may also |
17 | include any recommendations for changes in the calculation or |
18 | administration of the tax credit. |
19 | Section 1711-F. Termination. |
20 | The department shall not approve a career development tax |
21 | credit for taxable years ending after December 31, 2011. |
22 | Section 1712-F. Regulations. |
23 | The secretary shall promulgate regulations necessary for the |
24 | implementation and administration of this article. |
25 | Section 2. This act shall apply to taxable years commencing |
26 | after December 31, 2008. |
27 | Section 3. This act shall take effect immediately. |
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