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| PRIOR PRINTER'S NO. 3206 | PRINTER'S NO. 3650 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY THOMAS, BELFANTI, BOYD, BRIGGS, DALEY, DeWEESE, GOODMAN, HENNESSEY, KORTZ, LENTZ, LONGIETTI, M. O'BRIEN, PAYTON, READSHAW, SIPTROTH, BRADFORD, CARROLL, K. SMITH AND HOUGHTON, FEBRUARY 9, 2010 |
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| AS REPORTED FROM COMMITTEE ON LABOR RELATIONS, HOUSE OF REPRESENTATIVES, AS AMENDED, APRIL 27, 2010 |
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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," further providing for the Tax Credit for New | <-- |
11 | Jobs; and providing for the Keystone Employment Job Creation | <-- |
12 | and Training Tax Credit. |
13 | The General Assembly of the Commonwealth of Pennsylvania |
14 | hereby enacts as follows: |
15 | Section 1. The act of March 4, 1971 (P.L.6, No.2), known as | <-- |
16 | the Tax Reform Code of 1971, is amended by adding an article to |
17 | read: |
18 | ARTICLE XVIII-E |
19 | KEYSTONE EMPLOYMENT AND TRAINING TAX CREDIT |
20 | Section 1801-E. Definitions. |
21 | The following words and phrases when used in this article |
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1 | shall have the meanings given to them in this section unless the |
2 | context clearly indicates otherwise: |
3 | "Base period." The year preceding the date on which a |
4 | company may begin creating new jobs which may be eligible for |
5 | tax credits under this article. |
6 | "Department." The Department of Community and Economic |
7 | Development of the Commonwealth. |
8 | "Keystone employment and training tax credit" or "tax |
9 | credit." A tax credit for which the department has issued a |
10 | certificate under this article. |
11 | "New job." A full-time job created within a municipality |
12 | located in this Commonwealth by a company within three years |
13 | from the start date. This term does not include a temporary or |
14 | seasonal job. |
15 | "Start date." The date on which a company may begin creating |
16 | new jobs which may be eligible for tax credits under this |
17 | article. |
18 | "Tax credit eligibility period." The period not exceeding |
19 | five years from the date in which a company is awarded its first |
20 | tax credit under this article. |
21 | "Year one." A one-year period immediately following the |
22 | start date. |
23 | "Year three." A one-year period immediately following the |
24 | end of year two. |
25 | "Year two." A one-year period immediately following the end |
26 | of year one. |
27 | Section 1802-E. Eligibility. |
28 | In order to be eligible to receive a keystone employment and |
29 | training tax credit, a company must demonstrate to the |
30 | department the following: |
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1 | (1) The ability to create the number of jobs required by |
2 | the department within two years from the start date. |
3 | (2) Financial stability and the project's financial |
4 | viability. |
5 | (3) The intent to maintain operations in this |
6 | Commonwealth for a period of five years from the date the |
7 | company submits its tax credit certificate to the Department |
8 | of Revenue. |
9 | (4) The ability to provide the level of training |
10 | prescribed by the department. |
11 | Section 1803-E. Application process. |
12 | (a) Application.--A company must complete and submit to the |
13 | department a tax credit application. |
14 | (b) Creation of jobs.--The applicant must agree to create at |
15 | least 25 new jobs or to increase the applicant's number of |
16 | employees by at least 20% within two years of the start date. |
17 | (c) Training requirement.--A company must agree to dedicate |
18 | at least 25% of its employees in new job's work time toward |
19 | training for a period of no less than six months in each year |
20 | during a company's tax credit eligibility period. |
21 | (d) Reporting training activities.--A company shall report |
22 | annually during the duration of the company's tax credit |
23 | eligibility period to the department all of the training |
24 | activities provided for employees in new jobs. |
25 | (e) Approval.--If the department approves the company's |
26 | application, the department and the company shall execute a |
27 | commitment letter containing the following: |
28 | (1) A description of the project. |
29 | (2) The number of new jobs to be created. |
30 | (3) A description of the training activities that will |
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1 | be offered. |
2 | (4) The amount of private capital investment in the |
3 | project. |
4 | (5) The maximum tax credit amount the company may claim. |
5 | (6) A signed statement that the company intends to |
6 | maintain its operation in this Commonwealth for five years |
7 | from the start date. |
8 | (7) Such other information as the department deems |
9 | appropriate. |
10 | (f) Commitment letter.--After a commitment letter has been |
11 | signed by both the Commonwealth and the company, the company |
12 | shall receive a tax credit certificate and filing information. |
13 | Section 1804-E. Tax credits. |
14 | (a) Maximum amount.--A company may claim a tax credit of |
15 | $1,000 per new job created and up to the maximum tax credit |
16 | amount which shall not exceed $100,000. |
17 | (b) Determination of new jobs created.-- |
18 | (1) New jobs shall be deemed created by a company in |
19 | year one to the extent that the company's average employment |
20 | by quarter during year one exceeds the company's average |
21 | employment level during the company's base period. |
22 | (2) New jobs shall be deemed created by a company in |
23 | year two to the extent that the company's average employment |
24 | by quarter during year two exceeds the company's average |
25 | employment by quarter during year one. |
26 | (3) New jobs shall be deemed created by a company in |
27 | year three to the extent that the company's average |
28 | employment by quarter during year three exceeds the company's |
29 | average employment by quarter during year two. |
30 | (c) Applicable taxes.--A company may apply the tax credit to |
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1 | 100% of the company's State corporate net income tax, capital |
2 | stock and franchise tax or the capital stock and franchise tax |
3 | of a shareholder of the company if the company is a Pennsylvania |
4 | S corporation, gross premiums tax, gross receipts tax, bank and |
5 | trust company shares tax, mutual thrift institution tax, title |
6 | insurance company shares tax, personal income tax or the |
7 | personal income tax of shareholders of a Pennsylvania S |
8 | corporation or any combination thereof. |
9 | (d) Tax credit term.--A company may claim a tax credit for |
10 | each new job created, as approved by the department, for a |
11 | period determined by the department but not to exceed five years |
12 | from the date the company first submits a tax credit |
13 | certificate. |
14 | (e) Availability of tax credits.--Each fiscal year, |
15 | $25,000,000 in tax credits shall be made available to the |
16 | department and may be awarded by the department in accordance |
17 | with this article. In addition, any unused tax credits or tax |
18 | credits which have been recaptured under section 1806-E(a), (b) |
19 | or (c) shall revert to the General Fund. |
20 | Section 1805-E. Prohibitions. |
21 | (a) General rule.--The following actions are prohibited in |
22 | relation to tax credits: |
23 | (1) Approval of jobs that have been created prior to the |
24 | start date. |
25 | (2) The assignment, transfer or use of tax credits by |
26 | any other company. |
27 | (b) Allocations.--Twenty-five percent of the total amount of |
28 | all tax credits authorized in any fiscal year under section |
29 | 1804-E(e) shall be available to companies with fewer than 100 |
30 | employees. Any portion of this allocation not committed by April |
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1 | 30 of each year shall be available to any business which meets |
2 | the remaining program criteria. |
3 | Section 1806-E. Penalties. |
4 | (a) Failure to maintain operations.--A company that receives |
5 | a tax credit and fails to substantially maintain existing |
6 | operations and the operations related to the tax credit in this |
7 | Commonwealth for a period of five years from the date the |
8 | company first submits a tax credit certificate to the Department |
9 | of Revenue shall refund to the Commonwealth the total amount of |
10 | the tax credit granted. |
11 | (b) Failure to create jobs.--A company that receives a tax |
12 | credit and fails to create the approved number of new jobs |
13 | within three years of the start date shall refund to the |
14 | Commonwealth the total amount of the tax credit granted. |
15 | (c) Failure to sustain training activities.--A company that |
16 | receives a tax credit and fails to adequately sustain training |
17 | activities as outlined in the company's commitment letter under |
18 | section 1803-E(e) shall refund to the Commonwealth the total |
19 | amount of credits granted. |
20 | (d) Waiver.--The department may waive the penalties |
21 | specified in subsection (a), (b) or (c) if it is determined that |
22 | a company's operations were not maintained or the new jobs were |
23 | not created because of circumstances beyond the company's |
24 | control. Such circumstances include, but are not limited to, |
25 | natural disasters, unforeseen industry trends or a loss of a |
26 | major supplier or market. |
27 | Section 2. This act shall take effect in 60 days. |
28 | Section 1. The heading of Article XVIII-B and sections 1801- | <-- |
29 | B, 1802-B, 1803-B, 1804-B, 1805-B and 1806-B of the act of March |
30 | 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, |
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1 | added June 22, 2001 (P.L.353, No.23), are amended to read: |
2 | ARTICLE XVIII-B |
3 | [TAX CREDIT FOR NEW JOBS] |
4 | KEYSTONE JOB CREATION AND TRAINING TAX CREDIT |
5 | Section 1801-B. Definitions. |
6 | The following words and phrases when used in this article |
7 | shall have the meanings given to them in this section unless the |
8 | context clearly indicates otherwise: |
9 | "Base period." The three years immediately preceding the |
10 | date on which a company may begin creating new jobs which may be |
11 | eligible for job creation and training tax credits. |
12 | "Department." The Department of Community and Economic |
13 | Development of the Commonwealth. |
14 | "Job creation and training tax credits." Tax credits for job |
15 | creation or job creation and training which the department has |
16 | issued a certificate under this article. |
17 | "Job training." Training designed to provide a trainee with |
18 | the skills and knowledge necessary to meet a company's |
19 | specifications for an occupation or trade whereupon the trainee |
20 | is continuously employed full-time by that company. |
21 | "New job." A full-time job, the average hourly rate, |
22 | excluding benefits, for which must be at least 150% of the |
23 | Federal minimum wage, created within a municipality located in |
24 | this Commonwealth by a company within three years from the start |
25 | date. This term does not include a temporary or seasonal job. |
26 | "Start date." The date on which a company may begin creating |
27 | new jobs which may be eligible for job creation and training tax |
28 | credits. |
29 | "Year one." A one-year period immediately following the |
30 | start date. |
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1 | "Year three." A one-year period immediately following the |
2 | end of year two. |
3 | "Year two." A one-year period immediately following the end |
4 | of year one. |
5 | Section 1802-B. Eligibility. |
6 | In order to be eligible to receive job creation and training |
7 | tax credits, a company must demonstrate to the department the |
8 | following: |
9 | (1) The company's ability to create the number of jobs |
10 | required by the department within three years from the start |
11 | date. |
12 | [(2) Leadership in the application, development or |
13 | deployment of leading technologies.] |
14 | (3) [Financial] The company's financial stability and |
15 | the project's financial viability. |
16 | (4) The company's express intent to maintain operations |
17 | in this Commonwealth for a period of five years from the date |
18 | the company submits its tax credit certificate to the |
19 | Department of Revenue. |
20 | (5) An affirmation by the company that the decision to |
21 | expand or locate in this Commonwealth was due in large part |
22 | to the availability of a job creation and training tax |
23 | credit. |
24 | (6) Where job training is claimed for tax credit, the |
25 | ability to provide the level of training prescribed by the |
26 | department. |
27 | Section 1803-B. Application process. |
28 | (a) Application.--A company must complete and submit to the |
29 | department a job creation and training tax credit application. |
30 | (b) Creation of jobs.--The applicant must agree to create at |
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1 | least 25 new jobs or to increase the applicant's number of |
2 | employees by at least 20% within three years of the start date. |
3 | (b.1) Training requirement.--Where a company claims a higher |
4 | tax credit for providing job training, the company must agree to |
5 | the creation of jobs as provided under subsection (b) and to |
6 | provide training as defined under this act. Each year the |
7 | company is eligible for job creation and training tax credits, |
8 | the company shall dedicate at least 25% of its new employees' |
9 | work time toward training for a period of no less than six |
10 | months within their first year of employment. While the company |
11 | is tax credit eligible, it shall file annual reports with the |
12 | department on all training activities provided for employees in |
13 | new jobs. |
14 | (b.2) Applicant priority.--The department shall give |
15 | priority to eligible applicants that will place the following |
16 | workers in new jobs and job training: |
17 | (1) Dislocated workers under the act of December 18, |
18 | 2001 (P.L.949, No.114), known as the Workforce Development |
19 | Act, who meet any one of the following conditions: |
20 | (i) Have been terminated or laid off or have |
21 | received notice of termination or layoff, and are |
22 | eligible for or have exhausted unemployment compensation |
23 | benefits. |
24 | (ii) Are unlikely to return to the industry or |
25 | occupation in which the individuals were employed. |
26 | (iii) Have been terminated or received notice of |
27 | termination as a result of the permanent closure or |
28 | relocation of a plant, facility or plant operation in |
29 | which the individuals were employed. |
30 | (iv) Are chronically unemployed. |
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1 | (v) Have limited opportunities of employment in the |
2 | geographic area in which the individuals reside. |
3 | (vi) Are individuals who may face substantial |
4 | barriers to employment because of age or disability. |
5 | (2) Workers who have been unemployed for at least six |
6 | months. |
7 | (3) Underemployed workers who require skill training to |
8 | meet industry demands or increase employment opportunities. |
9 | (4) Workers who will receive training related to high |
10 | priority occupations within this Commonwealth, identified in |
11 | consultation with the Department of Labor and Industry, and |
12 | including, but not limited to, green jobs, clean and |
13 | renewable energy and industry clusters. |
14 | (c) Approval.--If the department approves the company's |
15 | application, the department and the company shall execute a |
16 | commitment letter containing the following: |
17 | (1) A description of the project. |
18 | (2) The number of new jobs to be created. |
19 | (2.1) Where job training will be claimed for tax credit, |
20 | a description of the training activities that will be |
21 | offered. |
22 | (3) The amount of private capital investment in the |
23 | project. |
24 | (4) The maximum job creation and training tax credit |
25 | amount the company may claim. |
26 | (5) A signed statement that the company intends to |
27 | maintain its operation in this Commonwealth for five years |
28 | from the start date. |
29 | (6) Such other information as the department deems |
30 | appropriate. |
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1 | (d) Commitment letter.--After a commitment letter has been |
2 | signed by both the Commonwealth and the company, the company |
3 | shall receive a job creation and training tax credit certificate |
4 | and filing information. |
5 | Section 1804-B. Tax credits. |
6 | (a) Maximum amount.-- |
7 | (1) A company may claim a tax credit of $1,000 per new |
8 | job created and up to the maximum job creation and training |
9 | tax credit amount specified in the commitment letter, which |
10 | may not exceed $100,000 annually. |
11 | (2) When a training program is provided, the allowable |
12 | tax credit amount may be an amount equal to the lesser of 5% |
13 | of the employee's annual wages or $2,000 per new job and up |
14 | to the maximum job creation and training tax credit amount |
15 | specified in the commitment letter, which may not exceed |
16 | $100,000 annually. |
17 | (b) Determination of new jobs created.-- |
18 | (1) New jobs shall be deemed created in year one to the |
19 | extent that the company's average employment by quarter |
20 | during year one exceeds the company's average employment |
21 | level during the company's base period. |
22 | (2) New jobs shall be deemed created in year two to the |
23 | extent that the company's average employment by quarter |
24 | during year two exceeds the company's average employment by |
25 | quarter during year one. |
26 | (3) New jobs shall be deemed created in year three to |
27 | the extent that the company's average employment by quarter |
28 | during year three exceeds the company's average employment by |
29 | quarter during year two. |
30 | (c) Applicable taxes.--A company may apply the tax credit to |
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1 | 100% of the company's State corporate net income tax, capital |
2 | stock and franchise tax or the capital stock and franchise tax |
3 | of a shareholder of the company if the company is a Pennsylvania |
4 | S corporation, gross premiums tax, gross receipts tax, bank and |
5 | trust company shares tax, mutual thrift institution tax, title |
6 | insurance company shares tax, personal income tax or the |
7 | personal income tax of shareholders of a Pennsylvania S |
8 | corporation or any combination thereof. |
9 | (d) Tax credit term.--A company may claim the job creation |
10 | tax credit for each new job created, as approved by the |
11 | department, for a period determined by the department but not to |
12 | exceed five years from the date the company first submits a job |
13 | creation tax credit certificate. |
14 | (e) Availability of tax credits.--Each fiscal year, |
15 | $22,500,000 in tax credits shall be made available to the |
16 | department and may be awarded by the department in accordance |
17 | with this article. In addition, in any fiscal year, the |
18 | department may reissue or assign prior fiscal year tax credits |
19 | which have been recaptured under section 1806-B(a) or (b) and |
20 | may award prior fiscal year credits not previously issued. Prior |
21 | fiscal year credits may be reissued, assigned or awarded by the |
22 | department without limitation by section 1805-B(b). |
23 | Section 1805-B. Prohibitions. |
24 | (a) Prohibitions.--The following actions with regard to job |
25 | creation tax credits are prohibited: |
26 | (1) Approval of jobs that have been created prior to the |
27 | start date. |
28 | (2) Approval for a company which is relocating |
29 | operations from one municipality in this Commonwealth to |
30 | another unless special circumstances exist and the |
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1 | municipality that is losing the existing jobs has an |
2 | opportunity to submit comments prior to action by the |
3 | department. If the department approves the tax credits, the |
4 | company must commit to preserving the existing employees, and |
5 | the credit shall apply only to the new jobs. |
6 | (3) The assignment, transfer or use of credits by any |
7 | other company, provided, however, that tax credits may be |
8 | assigned in whole or in part to an affiliated entity. As used |
9 | in this paragraph, the term "affiliated entity" means an |
10 | entity which is part of the same "affiliated group," as |
11 | defined by section 1504(a)(1) of the Internal Revenue Code of |
12 | 1986 (Public Law 99-514, 26 U.S.C. § 1504(a)(1)), as the |
13 | company awarded the credit. |
14 | (b) Allocations.-- |
15 | (1) Twenty-five percent of the total amount of all tax |
16 | credits authorized in any fiscal year under section 1804-B(e) |
17 | shall be available to companies with fewer than 100 |
18 | employees. Any portion of this allocation not committed by |
19 | April 30 of each year shall be available to any [business] |
20 | company which meets the remaining program criteria. |
21 | (2) Twenty-five percent of the total amount of all tax |
22 | credits authorized in any fiscal year under section 1804-B(e) |
23 | shall be available to companies providing training under |
24 | section 1803-B(c). Any portion of this allocation not |
25 | committed by April 30 of each year shall be available to any |
26 | company that meets the remaining program criteria. |
27 | Section 1806-B. Penalties. |
28 | (a) Failure to maintain operations.--A company which |
29 | receives job creation and training tax credits and fails to |
30 | substantially maintain existing operations and the operations |
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1 | related to the job creation tax credits in this Commonwealth for |
2 | a period of five years from the date the company first submits a |
3 | job creation tax credit certificate to the Department of Revenue |
4 | shall be required to refund to the Commonwealth the total amount |
5 | of credit or credits granted. |
6 | (b) Failure to create jobs.--A company which receives job |
7 | creation and training tax credits and fails to create the |
8 | approved number of new jobs within three years of the start date |
9 | will be required to refund to the Commonwealth the total amount |
10 | of credit or credits granted. |
11 | (b.1) Failure to sustain training activities.--A company |
12 | that receives a tax credit for training activities and fails to |
13 | adequately sustain the training outlined in the company's |
14 | commitment letter shall refund to the Commonwealth the total |
15 | amount of credits granted. |
16 | (c) Waiver.--The department may waive the penalties outlined |
17 | in subsections (a) [and], (b) and (b.1) if it is determined that |
18 | a company's operations were not maintained or the new jobs were |
19 | not created because of circumstances beyond the company's |
20 | control. Such circumstances include natural disasters, |
21 | unforeseen industry trends or a loss of a major supplier or |
22 | market. |
23 | Section 2. The act is amended by adding sections to read: |
24 | Section 1807-B. Annual reports. |
25 | (a) Contents.--The department shall provide an annual report |
26 | on job creation and training tax credits which at a minimum |
27 | shall include: |
28 | (1) A list of all job creation and training tax credit |
29 | certificates provided during the previous fiscal year. |
30 | (2) The name and location of each company receiving job |
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1 | creation and training tax credit certificates. |
2 | (3) An analysis of the job creation and training tax |
3 | credits' ability to create jobs in this Commonwealth. |
4 | (4) Any other information that may be deemed relevant by |
5 | the department. |
6 | (b) Submission.--The annual report shall be submitted to the |
7 | Governor, the Majority Leader of the Senate, the Minority Leader |
8 | of the Senate, the Majority Leader of the House of |
9 | Representatives and the Minority Leader of the House of |
10 | Representatives by March 1 of the first full year following the |
11 | effective date of this section and March 1 of each year |
12 | thereafter. |
13 | Section 1808-B. Notice of availability of tax credits. |
14 | The department shall publish notice of the availability of |
15 | the job creation and training tax credit on its publicly |
16 | accessible Internet website and make information available |
17 | annually to the Department of Labor and Industry Workforce |
18 | Investment Board for distribution to local boards. |
19 | Section 3. This act shall take effect in 60 days. |
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