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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY REICHLEY, BEYER, BOYD, CREIGHTON, DALLY, EVERETT, GEIST, KILLION, MAJOR, MURT, MUSTIO, RAPP, SIPTROTH, YOUNGBLOOD AND QUINN, MARCH 11, 2009 |
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| REFERRED TO COMMITTEE ON FINANCE, MARCH 11, 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," providing for an information technology services |
11 | tax credit; and further providing for new job tax credits. |
12 | The General Assembly of the Commonwealth of Pennsylvania |
13 | hereby enacts as follows: |
14 | Section 1. The act of March 4, 1971 (P.L.6, No.2), known as |
15 | the Tax Reform Code of 1971, is amended by adding an article to |
16 | read: |
17 | ARTICLE XVII-F |
18 | INFORMATION TECHNOLOGY SERVICES TAX CREDIT |
19 | Section 1701-F. Scope of article. |
20 | This article relates to information technology services tax |
21 | credits. |
22 | Section 1702-F. Definitions. |
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1 | The following words and phrases when used in this article |
2 | shall have the meanings given to them in this section unless the |
3 | context clearly indicates otherwise: |
4 | "Department." The Department of Revenue of the Commonwealth. |
5 | "Information technology services." An organization or |
6 | business that uses electronic computers and computer software in |
7 | the study, design, development, implementation, support or |
8 | management to convert, store, protect, process, transmit and |
9 | receive information. |
10 | "Qualified information technology services expense." Any |
11 | costs or expenses incurred by a business or organization in the |
12 | information technology services industry as a result of |
13 | relocating in this Commonwealth or establishing a presence in |
14 | this Commonwealth. |
15 | "Qualified tax liability." The liability for taxes imposed |
16 | under Article III, IV or VI. The term shall include the |
17 | liability for taxes imposed under Article III on an owner of a |
18 | pass-through entity. |
19 | "Pass-through entity." Any of the following: |
20 | (1) A partnership, limited partnership, limited |
21 | liability company, business trust or other unincorporated |
22 | entity that for Federal income tax purposes is taxable as a |
23 | partnership. |
24 | (2) A Pennsylvania S corporation. |
25 | "Secretary." The Secretary of Revenue of the Commonwealth. |
26 | "Tax credit." The information technology services tax credit |
27 | authorized under this article. |
28 | "Taxpayer." An entity subject to tax under Article III, IV |
29 | or VI. The term shall include the shareholder, owner or member |
30 | of a pass-through entity that receives a tax credit. |
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1 | Section 1703-F. Credit. |
2 | (a) Application.--A taxpayer who incurs a qualified |
3 | information technology services expense in a taxable year may |
4 | apply for a tax credit as provided under this article. By |
5 | September 15, a taxpayer must submit an application to the |
6 | department for the qualified information technology services |
7 | expense incurred in the taxable year that ended in the prior |
8 | calendar year. |
9 | (b) Amount.--A taxpayer that is qualified under subsection |
10 | (a) shall receive a tax credit for the taxable year in the |
11 | amount of 30% of the qualified information technology services |
12 | expense. |
13 | (c) Notification.--By December 15 of the calendar year |
14 | following the close of the taxable year during which the |
15 | qualified information technology services expense was incurred, |
16 | the department shall notify the taxpayer of the amount of the |
17 | taxpayer's tax credit approved by the department. |
18 | Section 1704-F. Carryover, carryback, refund and assignment. |
19 | (a) Carryover.--If the taxpayer cannot use the entire amount |
20 | of the tax credit for the taxable year in which the tax credit |
21 | is first approved, then the excess may be carried over to the |
22 | succeeding taxable years and used as a credit against the |
23 | qualified tax liability of the taxpayer for those taxable years. |
24 | Each time that the tax credit is carried over to a succeeding |
25 | taxable year, it is to be reduced by the amount that was used as |
26 | a credit during the immediately preceding taxable year. The tax |
27 | credit may be carried over and applied to succeeding taxable |
28 | years for no more than 15 taxable years following the first |
29 | taxable year for which the taxpayer was entitled to claim the |
30 | credit. |
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1 | (b) Application.--A tax credit approved by the department |
2 | for a qualified information technology services expense in a |
3 | taxable year first shall be applied against the taxpayer's |
4 | qualified tax liability for the current taxable year as of the |
5 | date on which the credit was approved before the tax credit is |
6 | applied against any tax liability under subsection (a). |
7 | (c) Unused credit.--A taxpayer is not entitled to assign, |
8 | carry back or obtain a refund of an unused tax credit. |
9 | Section 1705-F. Time limitations. |
10 | A taxpayer shall not be entitled to a tax credit for a |
11 | qualified information technology service expense incurred in |
12 | taxable years ending after December 31, 2013. |
13 | Section 1706-F. Limitation on credits. |
14 | (a) Total amount.--The total amount of tax credits approved |
15 | by the department shall not exceed $40,000,000 in any fiscal |
16 | year. |
17 | (b) Proration.--If the total amount of tax credits applied |
18 | for by all taxpayers exceeds the amount allocated for those |
19 | credits, the tax credit to be received by each applicant shall |
20 | be prorated by the department among all applicants who have |
21 | qualified for the credit. |
22 | Section 1707-F. Shareholder, owner or member pass-through. |
23 | (a) Shareholder.--If a Pennsylvania S corporation does not |
24 | have an eligible tax liability against which the tax credit may |
25 | be applied, a shareholder of the Pennsylvania S corporation is |
26 | entitled to a tax credit equal to the tax credit determined for |
27 | the Pennsylvania S corporation for the taxable year multiplied |
28 | by the percentage of the Pennsylvania S corporation's |
29 | distributive income to which the shareholder is entitled. |
30 | (b) Pass-through.--If a pass-through entity other than a |
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1 | Pennsylvania S corporation does not have an eligible tax |
2 | liability against which the tax credit may be applied, an owner |
3 | or member of the pass-through entity is entitled to a tax credit |
4 | equal to the tax credit determined for the pass-through entity |
5 | for the taxable year multiplied by the percentage of the pass- |
6 | through entity's distributive income to which the owner or |
7 | member is entitled. |
8 | (c) Additional credit.--The credit provided under subsection |
9 | (a) or (b) shall be in addition to any other tax credit to which |
10 | a shareholder, owner or member of a pass-through entity is |
11 | entitled under this article, except that a pass-through entity |
12 | and a shareholder, owner or member of a pass-through entity may |
13 | not claim a credit under this article for the same qualified |
14 | information technology service expense. |
15 | Section 1708-F. Report. |
16 | The secretary shall submit an annual report to the General |
17 | Assembly indicating the effectiveness of the credit provided |
18 | under this article no later than March 15 following the year in |
19 | which the credits were approved. The report shall include the |
20 | names of all taxpayers utilizing the credit as of the date of |
21 | the report and the amount of credits approved and utilized by |
22 | each taxpayer. Notwithstanding any law providing for the |
23 | confidentiality of tax records, the information contained in the |
24 | report shall be public information. The report may also include |
25 | any recommendations for changes in the calculation or |
26 | administration of the credit. |
27 | Section 1709-F. Termination. |
28 | The department shall not approve a tax credit under this |
29 | article for taxable years ending after December 31, 2013. |
30 | Section 1710-F. Regulations. |
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1 | The secretary shall promulgate regulations necessary for the |
2 | implementation and administration of this article. |
3 | Section 2. Section 1804-B of the act, added June 22, 2001 |
4 | (P.L.353, No.23), is amended to read: |
5 | Section 1804-B. Tax credits. |
6 | (a) Maximum amount.--A company may claim a tax credit of |
7 | $1,000 per new job created up to the maximum job creation tax |
8 | credit amount specified in the commitment letter. |
9 | (b) Determination of new jobs created.-- |
10 | (1) New jobs shall be deemed created in year one to the |
11 | extent that the company's average employment by quarter |
12 | during year one exceeds the company's average employment |
13 | level during the company's base period. |
14 | (2) New jobs shall be deemed created in year two to the |
15 | extent that the company's average employment by quarter |
16 | during year two exceeds the company's average employment by |
17 | quarter during year one. |
18 | (3) New jobs shall be deemed created in year three to |
19 | the extent that the company's average employment by quarter |
20 | during year three exceeds the company's average employment by |
21 | quarter during year two. |
22 | (c) Applicable taxes.--A company may apply the tax credit to |
23 | 100% of the company's State corporate net income tax, capital |
24 | stock and franchise tax or the capital stock and franchise tax |
25 | of a shareholder of the company if the company is a Pennsylvania |
26 | S corporation, gross premiums tax, gross receipts tax, bank and |
27 | trust company shares tax, mutual thrift institution tax, title |
28 | insurance company shares tax, personal income tax or the |
29 | personal income tax of shareholders of a Pennsylvania S |
30 | corporation or any combination thereof. |
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1 | (d) Tax credit term.--A company may claim the job creation |
2 | tax credit for each new job created, as approved by the |
3 | department, for a period determined by the department but not to |
4 | exceed five years from the date the company first submits a job |
5 | creation tax credit certificate. |
6 | [(e) Availability of tax credits.--Each fiscal year, |
7 | $22,500,000 in tax credits shall be made available to the |
8 | department and may be awarded by the department in accordance |
9 | with this article. In addition, in any fiscal year, the |
10 | department may reissue or assign prior fiscal year tax credits |
11 | which have been recaptured under section 1806-B(a) or (b) and |
12 | may award prior fiscal year credits not previously issued. Prior |
13 | fiscal year credits may be reissued, assigned or awarded by the |
14 | department without limitation by section 1805-B(b).] |
15 | Section 3. The addition of Article XVII-F of the act shall |
16 | apply to tax years beginning after December 31, 2009. |
17 | Section 4. This act shall take effect immediately. |
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