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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY GREENLEAF, KASUNIC, TARTAGLIONE, BROWNE, O'PAKE, ERICKSON, WOZNIAK, RAFFERTY, WONDERLING AND WILLIAMS, FEBRUARY 2, 2009 |
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| REFERRED TO FINANCE, FEBRUARY 2, 2009 |
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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," in personal income tax, further providing for |
11 | classes of income. |
12 | The General Assembly of the Commonwealth of Pennsylvania |
13 | hereby enacts as follows: |
14 | Section 1. Section 303(a)(1) of the act of March 4, 1971 |
15 | (P.L.6, No.2), known as the Tax Reform Code of 1971, amended |
16 | November 29, 2006 (P.L.1613, No.182), is amended to read: |
17 | Section 303. Classes of Income.--(a) The classes of income |
18 | referred to above are as follows: |
19 | (1) Compensation. |
20 | (i) All salaries, wages, commissions, bonuses and incentive |
21 | payments whether based on profits or otherwise, fees, tips and |
22 | similar remuneration received for services rendered whether |
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1 | directly or through an agent and whether in cash or in property |
2 | except income derived from the United States Government for |
3 | active duty outside the Commonwealth of Pennsylvania as a member |
4 | of its armed forces and income from the United States Government |
5 | or the Commonwealth of Pennsylvania for active State duty for |
6 | emergency within or outside the Commonwealth of Pennsylvania, |
7 | including duty ordered pursuant to 35 Pa.C.S. Ch. 76 (relating |
8 | to Emergency Management Assistance Compact). |
9 | (ii) Compensation of a cash-basis taxpayer shall be |
10 | considered as received if the compensation is actually or |
11 | constructively received for Federal income tax purposes as |
12 | determined consistent with the United States Treasury |
13 | regulations and rulings under the Internal Revenue Code of 1986, |
14 | as amended, except that, for purposes of computing tax under |
15 | this article: |
16 | (A) Amounts lawfully deducted, not deferred, and withheld |
17 | from the compensation of employes shall be considered to have |
18 | been received by the employe as compensation at the time the |
19 | deduction is made. |
20 | (B) Contributions to an employes' trust, pooled fund or |
21 | other arrangement which is not subject to the claims of |
22 | creditors of the employer made by an employer on behalf of an |
23 | employe or self-employed individual at the election of the |
24 | employe or self-employed individual pursuant to a cash or |
25 | deferred arrangement or salary reduction agreement shall be |
26 | deemed to have been received by the employe or individual as |
27 | compensation at the time the contribution is made, regardless of |
28 | when the election is made or a payment is received. |
29 | (C) Any contribution to a plan by, on behalf of or |
30 | attributable to a self-employed person shall be deemed to have |
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1 | been received at the time the contribution is made. |
2 | (D) Employer contributions to a Roth IRA custodial account |
3 | or employe annuity shall be deemed received, earned or acquired |
4 | only when distributed, when the plan fails to meet the |
5 | requirements of section 408A of the Internal Revenue Code of |
6 | 1986 (26 U.S.C. § 408A), as amended, or when the plan is not |
7 | operated in accordance with such requirements. |
8 | (E) Employe contributions to an employes' trust or pooled |
9 | fund or custodial account or contract or employe annuity shall |
10 | not be deducted or excluded from compensation. |
11 | (iii) For purposes of determining when deferred compensation |
12 | of employes other than employes of exempt organizations and |
13 | State and local governments is required to be included in |
14 | income, the following apply: |
15 | (A) The rules of sections 83 and 451 of the Internal Revenue |
16 | Code of 1986 (26 U.S.C. §§ 83 and 451), as amended, shall apply. |
17 | (B) The rules of section 409A of the Internal Revenue Code |
18 | of 1986 (26 U.S.C. § 409A), as amended, shall apply. |
19 | (iv) For purposes of determining when deferred compensation |
20 | of employes of exempt organizations and State and local |
21 | governments is required to be included in income, the following |
22 | apply: |
23 | (A) The rules of sections 83, 451 and 457 of the Internal |
24 | Revenue Code of 1986, as amended, shall apply. |
25 | (B) The rules of section 409A of the Internal Revenue Code |
26 | of 1986, as amended, shall apply. |
27 | (v) Notwithstanding any other provision of this act, |
28 | unreimbursed child and dependent care expenses which are used in |
29 | calculating the Federal child and dependent care credit in |
30 | accordance with section 21 of the Internal Revenue Code of 1986 |
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1 | (Public Law 99-514, 26 U.S.C. § 1 et seq.) shall be excluded |
2 | from the definition of the term "compensation" provided that the |
3 | taxpayer submits a copy of the requisite Federal tax form on |
4 | which the child and dependent care expenses are claimed when |
5 | filing the tax return under section 330. |
6 | * * * |
7 | Section 2. This act shall apply to the taxable years |
8 | beginning after December 31, 2009. |
9 | Section 3. This act shall take effect immediately. |
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