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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY CHRISTIANA, MARSHALL, MATZIE AND GIBBONS, JUNE 18, 2012 |
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| REFERRED TO COMMITTEE ON FINANCE, JUNE 18, 2012 |
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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 a resource manufacturing tax |
11 | credit. |
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-G |
18 | RESOURCE MANUFACTURING TAX CREDIT |
19 | Section 1701-G. Scope. |
20 | This article establishes a resource manufacturing tax credit. |
21 | Section 1702-G. Definitions. |
22 | 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 | "Department." The Department of Revenue of the Commonwealth. |
4 | "Ethane." A colorless, odorless gaseous alkane, C2H6, which |
5 | occurs as a constituent of natural gas and is used as the raw |
6 | material in the manufacturing of ethylene. |
7 | "Gallon." A United States liquid gallon equal to a volume of |
8 | 231 cubic inches and equal to 3.785411784 liters or 0.13368 |
9 | cubic feet, where volumetric measurements made at ambient |
10 | flowing conditions are typically adjusted for composition and to |
11 | standard conditions using established industry standard |
12 | practices. |
13 | "Pass-through entity." Any of the following: |
14 | (1) A partnership as defined in section 301(n.0). |
15 | (2) A Pennsylvania S corporation as defined in section |
16 | 301(n.2). |
17 | (3) An unincorporated entity subject to section 307.21. |
18 | "Qualified tax liability." The liability for taxes imposed |
19 | under Articles III, IV, VI, VII, VIII, IX and XV. The term does |
20 | not include tax withheld under section 316. |
21 | "Qualified taxpayer." An entity purchasing ethane for use in |
22 | manufacturing ethylene at a facility in this Commonwealth which |
23 | has been placed in service on or after the effective date of |
24 | this article. The term does not include a contractor or |
25 | subcontractor of a manufacturer of ethylene. |
26 | "Tax credit." The resource manufacturing tax credit provided |
27 | under this article. |
28 | Section 1703-G. Application and approval of tax credit. |
29 | (a) Rate.--The tax credit shall be equal to $0.05 per gallon |
30 | of ethane purchased and used in manufacturing ethylene in this |
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1 | Commonwealth by a qualified taxpayer. |
2 | (b) Application.-- |
3 | (1) A qualified taxpayer may apply to the department for |
4 | a tax credit under this section. |
5 | (2) The application must be submitted to the department |
6 | by March 1 for the tax credit claimed for ethane purchased |
7 | and used by the qualified taxpayer during the prior calendar |
8 | year. The application must be on the form required by the |
9 | department. |
10 | (3) The department may require information necessary to |
11 | document the amount of ethane purchased and used. |
12 | (c) Review and approval.-- |
13 | (1) The department shall review and approve or |
14 | disapprove the applications by March 20. Failure to meet the |
15 | deadline under this paragraph shall be deemed an approval. |
16 | (2) Upon approval, the department shall issue a |
17 | certificate stating the amount of tax credit granted for |
18 | ethane purchased in the prior calendar year. |
19 | (d) Limitation.--The total amount of tax credits authorized |
20 | by this article shall not exceed $66,000,000 in a fiscal year. |
21 | (e) Apportionment.--If the total amount of tax credits |
22 | approved for all qualified taxpayers exceeds the amount |
23 | allocated for those credits, the tax credit to be received by |
24 | each applicant shall be determined as follows: |
25 | (1) Divide: |
26 | (i) the tax credit approved for the applicant; by |
27 | (ii) the total tax credits approved for all |
28 | applicants. |
29 | (2) Multiply: |
30 | (i) the quotient under paragraph (1); by |
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1 | (ii) the maximum amount allocated under subsection |
2 | (d). |
3 | Section 1704-G. Use of tax credits. |
4 | (a) Priority.--Prior to sale or assignment of a tax credit |
5 | under section 1706-G, a qualified taxpayer must first use a tax |
6 | credit against the qualified tax liability incurred in the |
7 | taxable year for which the tax credit was approved. |
8 | (b) Limit.--The credit shall be limited to 20% of the |
9 | qualified taxpayer's qualified tax liabilities incurred in the |
10 | taxable year for which the credit was approved. |
11 | Section 1705-G. Carryover, carryback and refund. |
12 | A tax credit cannot be carried back, carried forward or be |
13 | used to obtain a refund. |
14 | Section 1706-G. Sale or assignment. |
15 | (a) Authorization.--If a qualified taxpayer holds a tax |
16 | credit through the calendar year in which the tax credit was |
17 | awarded, the qualified taxpayer may sell or assign a tax credit, |
18 | in whole or in part. |
19 | (b) Application.-- |
20 | (1) To sell or assign a tax credit, a qualified taxpayer |
21 | must file an application for the sale or assignment of the |
22 | tax credit with the Department of Community and Economic |
23 | Development. The application must be on a form required by |
24 | the Department of Community and Economic Development. |
25 | (2) To approve an application, the Department of |
26 | Community and Economic Development must receive a finding |
27 | from the department that the applicant has: |
28 | (i) filed all required State tax reports and returns |
29 | for all applicable taxable years; and |
30 | (ii) paid any balance of State tax due as determined |
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1 | by assessment or determination by the department. |
2 | (c) Approval.--Upon approval by the Department of Community |
3 | and Economic Development, a qualified taxpayer may sell or |
4 | assign, in whole or in part, a tax credit. |
5 | (d) Time limit.--Notwithstanding any other provision of law, |
6 | the department shall assess or determine the tax of an applicant |
7 | under this section within 90 days of the filing of all required |
8 | final returns or reports in accordance with section 806.1(a)(5) |
9 | of the act of April 9, 1929 (P.L.343, No.176), known as The |
10 | Fiscal Code. |
11 | Section 1707-G. Purchasers and assignees. |
12 | (a) Time.--The purchaser or assignee under section 1706-G |
13 | must claim the tax credit in the calendar year in which the |
14 | purchase or assignment is made. |
15 | (b) Amount.--The amount of the tax credit that a purchaser |
16 | or assignee under section 1706-G may use against any one |
17 | qualified tax liability may not exceed 50% of any of the |
18 | qualified tax liabilities for the taxable year. |
19 | (c) Resale and reassignment.-- |
20 | (1) A purchaser under section 1706-G may not sell or |
21 | assign the purchased tax credit. |
22 | (2) An assignee under section 1706-G may not sell or |
23 | assign the assigned tax credit. |
24 | (d) Notice.--The purchaser or assignee under section 1706-G |
25 | shall notify the department of the seller or assignor of the tax |
26 | credit in compliance with procedures specified by the |
27 | department. |
28 | Section 1708-G. Pass-through entity. |
29 | (a) Election.--If a pass-through entity has an unused tax |
30 | credit, it may elect in writing, according to procedures |
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1 | established by the department, to transfer all or a portion of |
2 | the credit to shareholders, members or partners in proportion to |
3 | the share of the entity's distributive income to which the |
4 | shareholders, members or partners are entitled. |
5 | (b) Limitation.--The same tax credit under subsection (a) |
6 | may not be claimed by: |
7 | (1) the pass-through entity; and |
8 | (2) a shareholder, member or partner of the pass-through |
9 | entity. |
10 | (c) Amount.--The amount of the tax credit that a transferee |
11 | under subsection (a) may use against any one qualified tax |
12 | liability may not exceed 20% of any qualified tax liabilities |
13 | for the taxable year. |
14 | (d) Time.--A transferee under subsection (a) must claim the |
15 | tax credit in the calendar year in which the transfer is made. |
16 | (e) Sale and assignment.--A transferee under subsection (a) |
17 | may not sell or assign the tax credit. |
18 | Section 1709-G. Administration. |
19 | (a) Audits and assessments.--The department has the |
20 | following powers: |
21 | (1) To audit a qualified taxpayer claiming a tax credit |
22 | to ascertain the validity of the amount claimed. |
23 | (2) To issue an assessment against a qualified taxpayer |
24 | for an improperly issued tax credit. The procedures, |
25 | collection, enforcement and appeals of any assessment made |
26 | under this section shall be governed by Article II. |
27 | (b) Guidelines and regulations.--The department shall |
28 | develop written guidelines for the implementation of this |
29 | article. The guidelines shall be in effect until the department |
30 | promulgates regulations for the implementation of the provisions |
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1 | of this article. |
2 | Section 1710-G. Reports to General Assembly. |
3 | (a) Department.-- |
4 | (1) By June 1, 2018, and June 1 of each year thereafter, |
5 | the department shall submit a report on the tax credit |
6 | provided by this article to the chairman and minority |
7 | chairman of the Appropriations Committee of the Senate, the |
8 | chairman and minority chairman of the Finance Committee of |
9 | the Senate, the chairman and minority chairman of the |
10 | Appropriations Committee of the House of Representatives and |
11 | the chairman and minority chairman of the Finance Committee |
12 | of the House of Representatives. |
13 | (2) The report shall include the names of all qualified |
14 | taxpayers utilizing the tax credit as of the date of the |
15 | report and the amount of tax credits approved for, utilized |
16 | by or sold or assigned by each qualified taxpayer. The report |
17 | shall not disclose sensitive competitive information on the |
18 | qualified taxpayer's production. |
19 | (3) Notwithstanding any statute providing for the |
20 | confidentiality of tax records, the information in the report |
21 | shall be public information, and all report information shall |
22 | be posted on the department's Internet website. |
23 | (4) If the report is filed in a calendar year, the tax |
24 | credit shall remain in effect at the same rate for the next |
25 | calendar year. |
26 | (b) Department of Community and Economic Development.--By |
27 | December 31, 2042, the Department of Community and Economic |
28 | Development shall submit to the Secretary of the Senate and the |
29 | Chief Clerk of the House of Representatives a report on the |
30 | effectiveness of the tax credit, including recommendations on |
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1 | changes and continuation. |
2 | Section 1711-G. Reduction or extension. |
3 | To the extent a qualified taxpayer may claim a tax credit, |
4 | the tax credit shall not be reduced or abolished prior to |
5 | December 31, 2042. |
6 | Section 2. The addition of Article XVII-G of the act shall |
7 | apply to the purchase of ethane for the period from January 1, |
8 | 2017, through December 31, 2042. |
9 | Section 3. This act shall take effect immediately. |
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