2012 Pennsylvania Consolidated Statutes
Title 12 - COMMERCE AND TRADE
Chapter 37 - Keystone Innovation Zones
Section 3706 - Keystone innovation zone tax credits

     § 3706.  Keystone innovation zone tax credits.
        (a)  Tax credit.--A KIZ company may claim a tax credit equal
     to 50% of the increase in the KIZ company's gross revenues in
     the immediately preceding taxable year attributable to
     activities in the KIZ over the KIZ company's gross revenues in
     the second preceding taxable year attributable to its activities
     in the KIZ. A tax credit for a KIZ company shall not exceed
     $100,000 annually. For the purposes of the keystone innovation
     zone tax credit, the term "gross revenues" may include grants
     received by the KIZ company from any source whatsoever.
        (b)  Application for tax credit.--A KIZ company may file an
     application for a tax credit with the department. An application
     under this subsection must be filed by September 15 of each year
     for the prior taxable year, beginning September 15, 2006. The
     application must be submitted on a form required by the
     department and must be accompanied by a certification from the
     KIZ coordinator that the KIZ company falls within a targeted
     industry segment identified in the strategic plan adopted by the
     KIZ partnership. The department shall review the application
     and, upon being satisfied that all requirements have been met,
     the department shall issue a tax credit certificate to the KIZ
     company. All certificates shall be awarded by December 15 of
     each year.
        (c)  Limitation on tax credits.--
            (1)  The total amount of tax credits approved by the
        department shall not exceed $25,000,000 for any one taxable
        year.
            (2)  If $25,000,000 of the tax credits are not approved
        for any one taxable year, the unused portion shall not be
        available for use in future taxable years.
            (3)  If the total amount of tax credits applied for by
        all taxpayers for any one taxable year exceeds $25,000,000,
        then the tax credit to be received by each applicant shall be
        determined as follows:
                (i)  Divide:
                    (A)  the eligible tax credit applied for by the
                applicant; by
                    (B)  the total of all eligible tax credits
                applied for by all applicants.
                (ii)  Multiply:
                    (A)  the quotient under subparagraph (i); by
                    (B)  $25,000,000.
        (d)  Application of tax credit and election.--A tax credit
     approved under this section must be first applied against the
     KIZ company's tax liability under Article III, IV or VI of the
     act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
     of 1971, for the taxable year during which the tax credit is
     approved. If the amount of tax liability owed by the KIZ company
     is less than the amount of the tax credit, the KIZ company may
     elect to carry forward the amount of the remaining tax credit
     for a period not to exceed four additional taxable years and to
     apply the credit against tax liability incurred during those tax
     years; or the KIZ company may elect to sell or assign a portion
     of the tax credit in accordance with the provisions of
     subsection (f). A KIZ company may not carry back or obtain a
     refund of an unused keystone innovation zone tax credit.
        (e)  Pennsylvania S corporation shareholder pass-through.--
            (1)  If a Pennsylvania S corporation does not have an
        eligible tax liability against which the tax credit may be
        applied, a shareholder of the Pennsylvania S corporation is
        entitled to a tax credit equal to the product of:
                (i)  the tax credit determined for the Pennsylvania S
            corporation for the taxable year; and
                (ii)  the percentage of the Pennsylvania S
            corporation's distributive income to which the
            shareholder is entitled.
            (2)  The credit provided under paragraph (1) is in
        addition to any tax credit to which a shareholder of the
        Pennsylvania S corporation is otherwise entitled. However, a
        Pennsylvania S corporation and a shareholder of the
        Pennsylvania S corporation may not claim a tax credit under
        this section for the same activity.
        (f)  Sale or assignment of tax credit.--
            (1)  Upon application to and approval by the department,
        a KIZ company which has been awarded a tax credit may sell or
        assign, in whole or in part, the tax credit granted to the
        KIZ company. The application must be on the form required by
        the department and must include or demonstrate all of the
        following:
                (i)  The applicant's name and address.
                (ii)  A copy of the tax credit certificate previously
            issued by the department.
                (iii)  A statement as to whether any part of the tax
            credit has been applied to tax liability of the applicant
            and the amount so applied.
                (iv)  Any other information required by the
            department.
            (2)  The department shall review the application and,
        upon being satisfied that all requirements have been met, the
        department may approve the application and shall notify the
        Department of Revenue.
        (g)  Use of sold or assigned tax credit.--The purchaser or
     assignee of all or a portion of a keystone innovation zone tax
     credit under this section shall claim the credit in the taxable
     year in which the purchase or assignment is made. The purchaser
     or assignee of a tax credit may use the tax credit against any
     tax liability of the purchaser or assignee under Article III,
     IV, VI, VII, VIII, IX or XV of the Tax Reform Code of 1971. The
     amount of the tax credit used may not exceed 75% of the
     purchaser's or assignee's tax liability for the taxable year.
     The purchaser or assignee may not carry over, carry back, obtain
     a refund of or assign the keystone innovation zone tax credit.
     The purchaser or assignee shall notify the department and the
     Department of Revenue of the seller or assignor of the keystone
     innovation zone tax credit in compliance with procedures
     specified by the department.

        Effective Date.  Section 6(2) of Act 12 of 2004 provided that
     section 3706 shall take effect July 1, 2004.