Bill Text: PA HB85 | 2011-2012 | Regular Session | Introduced

---

Bill Title: Further providing for the Tax Credit for New Jobs; and providing for the Keystone Job Creation and Training Tax Credit.

Spectrum: Partisan Bill (Democrat 11-0)

Status: (Introduced - Dead) 2011-01-19 - Referred to FINANCE [HB85 Detail]

Download: Pennsylvania-2011-HB85-Introduced.html

---

PRINTER'S NO. 43
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 85 Session of2011
INTRODUCED BY THOMAS, CARROLL, CALTAGIRONE, M. O'BRIEN, LONGIETTI, STURLA, READSHAW, K. SMITH AND WAGNER, JANUARY 19, 2011
REFERRED TO COMMITTEE ON FINANCE, JANUARY 19, 2011
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," further providing for the Tax Credit for New
Jobs; and providing for the Keystone Job Creation and
Training Tax Credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The heading of Article XVIII-B and sections 1801-
B, 1802-B, 1803-B, 1804-B, 1805-B and 1806-B of the act of March
4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971,
added June 22, 2001 (P.L.353, No.23), are amended to read:
ARTICLE XVIII-B
[TAX CREDIT FOR NEW JOBS]
KEYSTONE JOB CREATION AND TRAINING TAX CREDIT
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 immediately preceding the
date on which a company may begin creating new jobs which may be
eligible for job creation and training tax credits.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Job creation and training tax credits." Tax credits for job
creation or job creation and training which the department has
issued a certificate under this article.
"Job training." Training designed to provide a trainee with
the skills and knowledge necessary to meet a company's
specifications for an occupation or trade whereupon the trainee
is continuously employed full-time by that company.
"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. This term does not include a temporary or seasonal job.
"Start date." The date on which a company may begin creating
new jobs which may be eligible for job creation and training tax
credits.
"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.
Section 1802-B. Eligibility.
20110HB0085PN0043 - 2 -
In order to be eligible to receive job creation and training
tax credits, a company must demonstrate to the department the
following:
(1) The company's 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] The company's financial stability and
the project's financial viability.
(4) The company's express 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 by the company that the decision to
expand or locate in this Commonwealth was due in large part
to the availability of a job creation and training tax
credit.
(6) Where job training is claimed for tax credit, the
ability to provide the level of training prescribed by the
department.
Section 1803-B. Application process.
(a) Application.--A company must complete and submit to the
department a job creation and training tax credit application.
(b) Creation of jobs.--The 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.
(b.1) Training requirement.--Where a company claims a higher
tax credit for providing job training, the company must agree to
the creation of jobs as provided under subsection (b) and to
20110HB0085PN0043 - 3 -
provide training as defined under this act. Each year the
company is eligible for job creation and training tax credits,
the company shall dedicate at least 25% of its new employees'
work time toward training for a period of no less than six
months within their first year of employment. While the company
is tax credit eligible, it shall file annual reports with the
department on all training activities provided for employees in
new jobs.
(b.2) Applicant priority.--The department shall give
priority to eligible applicants that will place the following
workers in new jobs and job training:
(1) Dislocated workers under the act of December 18,
2001 (P.L.949, No.114), known as the Workforce Development
Act, who meet any one of the following conditions:
(i) Have been terminated or laid off or have
received notice of termination or layoff, and are
eligible for or have exhausted unemployment compensation
benefits.
(ii) Are unlikely to return to the industry or
occupation in which the individuals were employed.
(iii) Have been terminated or received notice of
termination as a result of the permanent closure or
relocation of a plant, facility or plant operation in
which the individuals were employed.
(iv) Are chronically unemployed.
(v) Have limited opportunities of employment in the
geographic area in which the individuals reside.
(vi) Are individuals who may face substantial
barriers to employment because of age or disability.
(2) Workers who have been unemployed for at least six
20110HB0085PN0043 - 4 -
months.
(3) Underemployed workers who require skill training to
meet industry demands or increase employment opportunities.
(4) Workers who will receive training related to high
priority occupations within this Commonwealth, identified in
consultation with the Department of Labor and Industry, and
including, but not limited to, green jobs, clean and
renewable energy and industry clusters.
(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.
(2.1) Where job training will be claimed for tax credit,
a description of the training activities that will be
offered.
(3) The amount of private capital investment in the
project.
(4) The maximum job creation and training 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.
(d) Commitment letter.--After a commitment letter has been
signed by both the Commonwealth and the company, the company
shall receive a job creation and training tax credit certificate
and filing information.
Section 1804-B. Tax credits.
20110HB0085PN0043 - 5 -
(a) Maximum amount.--
(1) A company may claim a tax credit of $1,000 per new
job created and up to the maximum job creation and training
tax credit amount specified in the commitment letter, which
may not exceed $100,000 annually.
(2) When a training program is provided, the allowable
tax credit amount may be an amount equal to the lesser of 5%
of the employee's annual wages or $2,000 per new job and up
to the maximum job creation and training tax credit amount
specified in the commitment letter, which may not exceed
$100,000 annually.
(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
20110HB0085PN0043 - 6 -
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.--A company may claim the job creation
tax credit for each new job created, as approved by the
department, for a period determined by the department but not to
exceed five years from the date the company first submits a job
creation tax credit certificate.
(e) Availability of tax credits.--Each fiscal year,
$22,500,000 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).
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.
20110HB0085PN0043 - 7 -
(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.--
(1) 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]
company which meets the remaining program criteria.
(2) 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 providing training under
section 1803-B(c). Any portion of this allocation not
committed by April 30 of each year shall be available to any
company that meets the remaining program criteria.
Section 1806-B. Penalties.
(a) Failure to maintain operations.--A company which
receives job creation and training 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.
20110HB0085PN0043 - 8 -
(b) Failure to create jobs.--A company which receives job
creation and training 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.
(b.1) Failure to sustain training activities.--A company
that receives a tax credit for training activities and fails to
adequately sustain the training outlined in the company's
commitment letter shall refund to the Commonwealth the total
amount of credits granted.
(c) Waiver.--The department may waive the penalties outlined
in subsections (a) [and], (b) and (b.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. Such circumstances include natural disasters,
unforeseen industry trends or a loss of a major supplier or
market.
Section 2. The act is amended by adding sections to read:
Section 1807-B. Annual reports.
(a) Contents.--The department shall provide an annual report
on job creation and training tax credits which at a minimum
shall include:
(1) A list of all job creation and training tax credit
certificates provided during the previous fiscal year.
(2) The name and location of each company receiving job
creation and training tax credit certificates.
(3) An analysis of the job creation and training tax
credits' ability to create jobs in this Commonwealth.
(4) Any other information that may be deemed relevant by
the department.
20110HB0085PN0043 - 9 -
(b) Submission.--The annual report shall be submitted to the
Governor, the Majority Leader of the Senate, the Minority Leader
of the Senate, the Majority Leader of the House of
Representatives and the Minority Leader of the House of
Representatives by March 1 of the first full year following the
effective date of this section and March 1 of each year
thereafter.
Section 1808-B. Notice of availability of tax credits.
The department shall publish notice of the availability of
the job creation and training tax credit on its publicly
accessible Internet website and make information available
annually to the Department of Labor and Industry Workforce
Investment Board for distribution to local boards.
Section 3. This act shall take effect in 60 days.
20110HB0085PN0043 - 10 -