2020 Pennsylvania Consolidated & Unconsolidated Statutes
Act 68 - TAX REFORM CODE OF 1971 - OMNIBUS AMENDMENTS

Session of 2020

No. 2020-68

 

HB 1437

 

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 city revitalization and improvement zones, further providing for reports and for restrictions; and, in rural jobs and investment tax credit, further providing for definitions, for rural growth funds, for tax credit certificates, for claiming the tax credit and for revocation of tax credit certificates.

 

The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

 

Section 1.  Section 1809-C(a) and (b) of the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, are amended and subsection (c) is amended by adding a paragraph to read:

Section 1809-C.  Reports.

(a)  State zone report.--No later than June 15 following the baseline year and each year thereafter, or by August 31 for reports due in 2020, each qualified business shall file a report with the department in a form or manner required by the department which includes all of the following:

(1)  Amount of each eligible tax which was paid to the Commonwealth by the qualified business in the prior calendar year.

(2)  Amount of each eligible tax refund received from the Commonwealth in the prior calendar year by the qualified business.

(b)  Local zone report.--No later than June 15 following the baseline year and for each year thereafter, or by August 31 for reports due in 2020, each qualified business shall file a report with the local taxing authority which includes all of the following:

(1)  Amount of each eligible tax which was paid to the local taxing authority by the qualified business in the prior calendar year.

(2)  Amount of each eligible tax refund received from the local taxing authority in the prior calendar year by the qualified business.

(c)  Penalties.--

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(5)  No penalty shall be imposed by the department or the local taxing authority for failure to file a timely and complete report under subsection (a) or (b) in 2019 or 2020.

Section 2.  Section 1813-C(b) and (c)(1) of the act are amended and subsection (a) is amended by adding a paragraph to read:

Section 1813-C.  Restrictions.

(a)  Utilization.--Money transferred under section 1812-C may only be utilized for the following:

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(1.2)  Payment of grants and loans to qualifying businesses, political subdivisions and municipal authorities operating within the zone for business operating expenses, working capital, business loan payments to financial institutions, payroll to current employees as a means of retaining employees, establishment of loan guarantee accounts with financial institutions to guarantee short-term loans provided by the financial institutions to qualifying businesses negatively impacted by the proclamation of disaster emergency issued by the Governor on March 6, 2020, published at 50 Pa.B. 1644 (March 21, 2020), and any renewal of the state of disaster emergency. This paragraph shall expire June 30, 2021.

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(b)  Prohibition.--

(1)  Money transferred under section 1812-C may not be utilized for maintenance or repair of a facility.

(2)  Paragraph (1) shall not apply for the period of April 1, 2020, through June 30, 2021.

(c)  Excess money.--

(1)  Except as set forth in paragraph (4), if the amount of money transferred to the fund under sections 1811-C(c) and 1812-C in any one calendar year exceeds the money utilized, budgeted or appropriated by official resolution of the contracting authority under this section in that calendar year, the contracting authority shall submit by April 15 following the end of the calendar year [the excess money]any money not utilized, budgeted or appropriated by official resolution of the contracting authority to the State Treasurer for deposit into the General Fund.

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Section 3.  The definition of "qualified tax liability" in section 1822-G of the act is amended to read:

Section 1822-G.  Definitions.

The following words and phrases when used in this part shall have the meanings given to them in this section unless the context clearly indicates otherwise:

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"Qualified tax liability."  The liability for taxes imposed under Article VII, VIII, IX or XV, the tax under Article XVI of the act of May 17, 1921 (P.L.682, No.284), known as The Insurance Company Law of 1921, or amounts imposed under section 212 of the act of May 17, 1921 (P.L.789, No.285), known as The Insurance Department Act of 1921, and any other retaliatory tax imposed on a business firm in this Commonwealth.

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Section 4.  Section 1824-G(d)(2) and (f) of the act are amended to read:

Section 1824-G.  Rural growth funds.

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(d)  Notice of approval or disapproval.--

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(2)  A notice of approval shall specify the amount of the applicant's investment authority as determined by the department after reviewing the information submitted in accordance with subsection (b) and the amount of credit-eligible contribution authority allocated to each business firm that submitted an affidavit in the application. At least 60% of a growth fund's investment authority shall be comprised of credit-eligible capital contributions.

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(f)  Limitation.--The department may not approve more than [$100,000,000] $50,000,000 in investment authority under this part.

Section 5.  Sections 1829-G(b)(3), 1830-G and 1833-G(a) of the act, amended June 28, 2019 (P.L.50, No.13), are amended to read:

Section 1829-G.  Tax credit certificates.

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(b)  Review, recommendation and approval.--

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(3)  In awarding tax credit certificates under this part, the department:

(i)  Beginning with fiscal year [2019-2020] 2020-2021, may not award tax credit certificates that would result in the utilization of more than $6,000,000 in tax credits in any fiscal year, except for tax credits carried forward.

(ii)  May not award more than $30,000,000 in tax credit certificates, in the aggregate, under this part.

Section 1830-G.  Claiming the tax credit.

(a)  Presentation.--Beginning July 1, [2019] 2020, upon presenting a tax credit certificate to the Department of Revenue, a business firm may claim a tax credit of up to 20% of the amount awarded under section 1829-G for each of the taxable years that includes the third, fourth, fifth, sixth and seventh anniversaries of the closing date, exclusive of any tax credit amounts carried over under section 1831-G(b).

(b)  Allowance.--The Department of Revenue shall allow a tax credit against any tax due under Article VII, VIII, IX or XV, the tax under Article XVI of the act of May 17, 1921 (P.L.682, No.284), known as The Insurance Company Law of 1921, amounts imposed under section 212 of the act of May 17, 1921 (P.L.789, No.285), known as The Insurance Department Act of 1921, any retaliatory taxes imposed by this Commonwealth or any tax substituted in lieu of one of the taxes under this subsection.

Section 1833-G.  Revocation of tax credit certificates.

(a)  Revocation.--The department shall revoke a tax credit certificate awarded under section 1829-G if any of the following occur with respect to a rural growth fund before the rural growth fund exits the program under section 1834-G:

(1)  The rural growth fund in which the credit-eligible capital contribution was made does not invest all of its investment authority in rural growth investments in this Commonwealth within three years of the closing date with at least 25% of its investment authority initially invested in rural businesses engaged in manufacturing.

(2)  The rural growth fund, after satisfying the conditions of paragraph (1), fails to maintain rural growth investments equal to 100% of its investment authority until the seventh anniversary of the closing date. For the purposes of this paragraph, a rural growth investment is "maintained" even if the rural growth investment is sold or repaid so long as the rural growth fund reinvests an amount equal to the capital returned or recovered by the rural growth fund from the original rural growth investment, exclusive of any profits realized, in other rural growth investments in this Commonwealth within 12 months of the receipt of the capital. Amounts received periodically by a rural growth fund shall be treated as continually invested in rural growth investments if the amounts are reinvested in one or more rural growth investments by the end of the following calendar year. A rural growth fund is not required to reinvest capital returned from rural growth investments after the sixth anniversary of the closing date, and the rural growth investments shall be considered held continuously by the rural growth fund through the seventh anniversary of the closing date.

(3)  The rural growth fund, before exiting the program in accordance with section 1834-G, makes a distribution or payment that results in the rural growth fund having less than 100% of its investment authority invested in rural growth investments in this Commonwealth or available for investment in rural growth investments and held in cash and other marketable securities.

(4)  The rural growth fund invests more than 20% of its investment authority, exclusive of receipts or redeemed rural growth investments, in the same rural business, including amounts invested in affiliates of the rural business.

(5)  The rural growth fund makes a rural growth investment in a rural business that directly or indirectly through an affiliate owns, has the right to acquire an ownership interest, makes a loan to or makes an investment in the rural growth fund, an affiliate of the rural growth fund or an investor in the rural growth fund. This paragraph does not apply to investments in publicly traded securities by a rural business or an owner or affiliate of a rural business. For purposes of this paragraph, a rural growth fund shall not be considered an affiliate of a rural business solely as a result of its rural growth investment. [The amount by which a rural growth investment in a rural business, exclusive of receipts or redeemed rural growth investments, exceeds 20% of a rural growth fund's investment authority may not count toward the satisfaction of the requirements of subsections (a)(1) and (2).]

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Section 6.  The amendment of section 1813-C(b) and (c)(1) of the act shall apply retroactively to January 1, 2019.

Section 7.  This act shall take effect as follows:

(1)  The amendment of sections 1822-G, 1824-G(d)(2) and (f), 1829-G(b)(3), 1830-G and 1833-G(a) of the act shall take effect in 60 days.

(2)  The remainder of this act shall take effect immediately.

 

APPROVED--The 23rd day of July, A.D. 2020.

 

TOM WOLF