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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY DINNIMAN, MELLOW, FONTANA, BOSCOLA, COSTA, ERICKSON, FARNESE, FERLO, KITCHEN, O'PAKE, STACK, STOUT, D. WHITE, WILLIAMS, WOZNIAK, HUGHES, TARTAGLIONE AND GREENLEAF, NOVEMBER 8, 2010 |
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| REFERRED TO FINANCE, NOVEMBER 8, 2010 |
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| AN ACT |
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1 | Amending Title 72 (Taxation and Fiscal Affairs) of the |
2 | Pennsylvania Consolidated Statutes, providing for Marcellus |
3 | shale job creation tax credit. |
4 | The General Assembly of the Commonwealth of Pennsylvania |
5 | hereby enacts as follows: |
6 | Section 1. Title 72 of the Pennsylvania Consolidated |
7 | Statutes is amended by adding a chapter to read: |
8 | Chapter |
9 | 31. Marcellus Shale Job Creation Tax Credit |
10 | CHAPTER 31 |
11 | MARCELLUS SHALE JOB CREATION TAX CREDIT |
12 | Sec. |
13 | 3101. Definitions. |
14 | 3102. Eligibility. |
15 | 3103. Application process. |
16 | 3104. Tax credits. |
17 | 3105. Prohibitions. |
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1 | 3106. Penalties. |
2 | 3107. Annual reports. |
3 | 3108. Notice of availability of tax credits. |
4 | § 3101. Definitions. |
5 | The following words and phrases when used in this chapter |
6 | shall have the meanings given to them in this section unless the |
7 | context clearly indicates otherwise: |
8 | "Base period." As follows: |
9 | (1) Except as set forth in paragraph (2), the three |
10 | years immediately preceding the date on which a company may |
11 | begin creating new jobs which may be eligible for job |
12 | creation tax credits. |
13 | (2) If a company has been in business in this |
14 | Commonwealth for less than three years, the period which it |
15 | has been in business in this Commonwealth. |
16 | "Department." The Department of Labor and Industry of the |
17 | Commonwealth. |
18 | "Job creation tax credits." Tax credits for job creation for |
19 | which the department has issued a certificate under this |
20 | chapter. |
21 | "New job." A full-time job, the average hourly rate, |
22 | excluding benefits, for which must be at least 350% 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. The term includes a job which was previously held by a |
26 | nonresident and is filled by a resident. The term does not |
27 | include a temporary or seasonal job. |
28 | "Nonresident." An individual who does not reside in this |
29 | Commonwealth. |
30 | "Qualified apprenticeship training program." A program |
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1 | registered with the Apprenticeship and Training council within |
2 | the Department of Labor and Industry that is in compliance with |
3 | applicable Federal and State laws and regulations and which |
4 | requires at least 2,000 but not more than 10,000 hours of on- |
5 | the-job apprenticeship training. |
6 | "Resident." Any natural person who is considered a resident |
7 | of this Commonwealth under the act of March 4, 1971 (P.L.6, |
8 | No.2), known as the Tax Reform Code of 1971. |
9 | "Start date." The date on which a company may begin creating |
10 | new jobs which may be eligible for job creation tax credits. |
11 | "Year one." A one-year period immediately following the |
12 | start date. |
13 | "Year three." A one-year period immediately following the |
14 | end of year two. |
15 | "Year two." A one-year period immediately following the end |
16 | of year one. |
17 | § 3102. Eligibility. |
18 | In order to be eligible to receive job creation tax credits |
19 | under this chapter, a company must demonstrate to the department |
20 | the following: |
21 | (1) The company's financial stability and the project's |
22 | financial viability. |
23 | (2) The company's express intent to maintain operations |
24 | in this Commonwealth for a period of five years from the date |
25 | the company submits its tax credit certificate to the |
26 | Department of Revenue. |
27 | (3) The company is in conformity with industry laws and |
28 | regulations overseen and enforced by the Department of |
29 | Environmental Protection. |
30 | (4) The ability to conduct business in this Commonwealth |
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1 | including the appropriate licenses and certifications. |
2 | (5) The intent to employ residents in new jobs that are |
3 | full-time, family sustaining and provide an average hourly |
4 | rate and benefits. |
5 | § 3103. Application process. |
6 | (a) Application.--A company must complete and submit to the |
7 | department a job creation tax credit application along with a |
8 | copy of the permit issued by the Department of Environmental |
9 | Protection providing that the company has obtained the necessary |
10 | permit allowing the company to drill in this Commonwealth or a |
11 | statement from the Department of Environmental Protection |
12 | stating the same. The Department of Environmental Protection |
13 | shall notify the department, the Department of Revenue and the |
14 | department upon suspension or revocation of drilling permits or |
15 | other changes that affect the company's ability to continuously |
16 | drill in this Commonwealth. |
17 | (b) Employment of residents.--At least 80% of the |
18 | applicant's work force in this Commonwealth must be composed of |
19 | residents. |
20 | (c) Applicant priority.--The department shall give priority |
21 | to eligible applicants that will place the following residents |
22 | in new jobs: |
23 | (1) Workers who have completed a qualified |
24 | apprenticeship training program or a job training program |
25 | approved by the department. |
26 | (2) Dislocated workers under the act of December 18, |
27 | 2001 (P.L.949, No.114), known as the Workforce Development |
28 | Act, who meet any one of the following conditions: |
29 | (i) Have been terminated or laid off or have |
30 | received notice of termination or layoff, and are |
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1 | eligible for or have exhausted unemployment compensation |
2 | benefits. |
3 | (ii) Are unlikely to return to the industry or |
4 | occupation in which the individuals were employed. |
5 | (iii) Have been terminated or received notice of |
6 | termination as a result of the permanent closure or |
7 | relocation of a plant, facility or plant operation in |
8 | which the individuals were employed. |
9 | (iv) Are chronically unemployed. |
10 | (v) Have limited opportunities of employment in the |
11 | geographic area in which the individuals reside. |
12 | (vi) Are individuals who may face substantial |
13 | barriers to employment because of age or disability. |
14 | (3) Workers who have been unemployed for at least six |
15 | months. |
16 | (4) Underemployed workers who require skill training to |
17 | meet industry demands or increase employment opportunities. |
18 | (d) Approval.--If the department approves the company's |
19 | application, the department and the company shall execute a |
20 | commitment letter containing the following: |
21 | (1) A description of the project. |
22 | (2) The number of Pennsylvania residents employed in new |
23 | jobs. |
24 | (3) The amount of private capital investment in the |
25 | project. |
26 | (4) The maximum job creation tax credit amount the |
27 | company may claim. |
28 | (5) A signed statement that the company intends to |
29 | maintain its operation in this Commonwealth for five years |
30 | from the start date. |
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1 | (6) A signed statement from the company that the company |
2 | will provide to the department a list of workers which |
3 | satisfies the requirements of subsection (b) for which the |
4 | company will claim tax credit, including documentation of |
5 | each worker's status as a resident of this Commonwealth. |
6 | (7) A signed statement that the company will refund the |
7 | Commonwealth all job creation tax credits in accordance with |
8 | section 3106 (relating to penalties) for noncompliance. |
9 | (8) Such other information as the department deems |
10 | appropriate. |
11 | (e) Commitment letter.--After a commitment letter has been |
12 | signed by both the Commonwealth and the company, the company |
13 | shall receive a job creation tax credit certificate and filing |
14 | information. |
15 | § 3104. Tax credits. |
16 | (a) Maximum amount.--A company may claim a tax credit of |
17 | $2,500 per resident employed in a new job and up to the maximum |
18 | job creation tax credit amount specified in the commitment |
19 | letter. |
20 | (b) Determination of new jobs created.-- |
21 | (1) New jobs shall be deemed created in year one to the |
22 | extent that the company's average employment by quarter |
23 | during year one exceeds the company's average employment |
24 | level during the company's base period, as adjusted for any |
25 | job held by a nonresident during the period which is no |
26 | longer held by a nonresident. |
27 | (2) New jobs shall be deemed created in year two to the |
28 | extent that the company's average employment by quarter |
29 | during year two exceeds the company's average employment by |
30 | quarter during year one. |
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1 | (3) New jobs shall be deemed created in year three to |
2 | the extent that the company's average employment by quarter |
3 | during year three exceeds the company's average employment by |
4 | quarter during year two. |
5 | (c) Applicable taxes.--A company may apply the tax credit to |
6 | 100% of the company's corporate net income tax, capital stock |
7 | and franchise tax or the capital stock and franchise tax of a |
8 | shareholder of the company if the company is a Pennsylvania S |
9 | corporation, personal income tax or the personal income tax of |
10 | shareholders of a Pennsylvania S corporation or any combination |
11 | thereof. |
12 | (d) Tax credit term.--A company may claim the job creation |
13 | tax credit for each resident employed in a new job, as approved |
14 | by the department, for a period determined by the department but |
15 | not to exceed five years from the date the company first submits |
16 | a job creation tax credit certificate. |
17 | (e) Availability of tax credits.--Each fiscal year, |
18 | $24,000,000 in tax credits shall be made available to the |
19 | department and may be awarded by the department in accordance |
20 | with this chapter. In addition, in any fiscal year, the |
21 | department may reissue or assign prior fiscal year tax credits |
22 | which have been recaptured under section 3106(a) or (b) |
23 | (relating to penalties) and may award prior fiscal year credits |
24 | not previously issued. Prior fiscal year credits may be |
25 | reissued, assigned or awarded by the department. |
26 | § 3105. Prohibitions. |
27 | The following actions with regard to job creation tax credits |
28 | are prohibited: |
29 | (1) Approval of jobs that have been created prior to the |
30 | start date, unless the job was held by a nonresident who has |
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1 | been replaced by a resident. |
2 | (2) The assignment, transfer or use of credits by any |
3 | other company, provided, however, that tax credits may be |
4 | assigned in whole or in part to an affiliated entity. As used |
5 | in this paragraph, the term "affiliated entity" means an |
6 | entity which is part of the same "affiliated group," as |
7 | defined by section 1504(a)(1) of the Internal Revenue Code of |
8 | 1986 (Public Law 99-514, 26 U.S.C. § 1504(a)(1)), as the |
9 | company awarded the credit. |
10 | § 3106. Penalties. |
11 | (a) Failure to maintain operations.--A company which |
12 | receives job creation tax credits and fails to substantially |
13 | maintain existing operations and the operations related to the |
14 | job creation tax credits in this Commonwealth for a period of |
15 | five years from the date the company first submits a job |
16 | creation tax credit certificate to the Department of Revenue |
17 | shall be required to refund to the Commonwealth the total amount |
18 | of credit or credits granted. |
19 | (b) Failure to employ residents in new jobs.--A company |
20 | which receives job creation tax credits and fails to: |
21 | (1) Continuously employ the approved number of residents |
22 | in new jobs within three years of the start date will be |
23 | required to refund to the Commonwealth the total amount of |
24 | credit or credits granted. |
25 | (2) It shall not be considered failure to employ |
26 | residents under this section if a company continues to |
27 | provide remuneration to employees during a work stoppage that |
28 | is due to an event or circumstances beyond the employer's |
29 | control. |
30 | (c) Waiver.-- |
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1 | (1) The department may waive the penalties outlined in |
2 | subsection (b) if it is determined that a company's |
3 | operations were not maintained or the residents employed in |
4 | new jobs because of circumstances beyond the company's |
5 | control. Such circumstances include natural disasters or |
6 | unforeseen industry trends or a loss of a major supplier |
7 | market. |
8 | (2) A company may seek a waiver for failure to employ |
9 | residents in at least 80% of its Commonwealth work force due |
10 | to the availability of technical or professional personnel |
11 | needed if the company has conducted a reasonable search to |
12 | employ residents. |
13 | § 3107. Annual reports. |
14 | (a) Contents.--The department shall provide an annual report |
15 | on job creation tax credits which at a minimum shall include: |
16 | (1) A list of all job creation tax credit certificates |
17 | provided during the previous fiscal year. |
18 | (2) The name and location of each company receiving job |
19 | creation tax credit certificates. |
20 | (3) An analysis of the job creation tax credits' ability |
21 | to create jobs in this Commonwealth. |
22 | (4) Any other information that may be deemed relevant by |
23 | the department. |
24 | (b) Submission.--The annual report shall be submitted to the |
25 | Governor, the Majority Leader of the Senate, the Minority Leader |
26 | of the Senate, the Majority Leader of the House of |
27 | Representatives and the Minority Leader of the House of |
28 | Representatives by March 1 of the first full year following the |
29 | effective date of this section and March 1 of each year |
30 | thereafter. |
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1 | § 3108. Notice of availability of tax credits. |
2 | The department shall publish notice of the availability of |
3 | the job creation tax credit on its publicly accessible Internet |
4 | website and make information available annually to the |
5 | Department of Labor and Industry Workforce Investment Board for |
6 | distribution to local boards. |
7 | Section 2. This act shall take effect in 60 days. |
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