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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY FOLMER, BROWNE, ALLOWAY, EARLL, ORIE, SMUCKER, ERICKSON, PICCOLA, CORMAN, PILEGGI, WAUGH, WONDERLING, M. WHITE, BAKER AND D. WHITE, MARCH 2, 2009 |
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| REFERRED TO FINANCE, MARCH 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," providing for a small business health savings |
11 | account tax 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-F |
18 | SMALL BUSINESS HEALTH SAVINGS ACCOUNT TAX CREDIT |
19 | Section 1701-F. Scope. |
20 | This article relates to small business health savings account |
21 | tax credit. |
22 | Section 1702-F. Definitions. |
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1 | The following words and phrases when used in this article |
2 | shall have the meanings given to them in this section unless the |
3 | context clearly indicates otherwise: |
4 | "Department." The Department of Revenue of the Commonwealth. |
5 | "Employee" or "employees." An individual or group of |
6 | individuals employed by a small business. The term shall also |
7 | include a sole proprietor. |
8 | "Health insurance policy." An individual or group health, |
9 | sickness or accident policy or subscriber contract or |
10 | certificate issued by an entity subject to any one of the |
11 | following: |
12 | (1) The act of May 17, 1921 (P.L.682, No.284), known as |
13 | The Insurance Company Law of 1921. |
14 | (2) The act of December 29, 1972 (P.L.1701, No.364), |
15 | known as the Health Maintenance Organization Act. |
16 | (3) The act of May 18, 1976 (P.L.123, No.54), known as |
17 | the Individual Accident and Sickness Insurance Minimum |
18 | Standards Act. |
19 | (4) 40 Pa.C.S. Ch. 61 (relating to hospital plan |
20 | corporations) or 63 (relating to professional health services |
21 | plan corporations). |
22 | "Health Savings Account." As defined in section 223(d) of |
23 | the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. |
24 | § 223(d)). |
25 | "Qualified high deductible health plan." A health insurance |
26 | policy that would qualify as a high deductible health plan under |
27 | section 223(c)(2) of the Internal Revenue Code of 1986 (Public |
28 | Law 99-514, 26 U.S.C. § 223(c)(2)). |
29 | "Qualified tax liability." The liability for taxes imposed |
30 | under Article III, IV or VI. The term shall include the |
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1 | liability for taxes imposed under Article III on an owner of a |
2 | pass-through entity. |
3 | "Pass-through entity." Any of the following: |
4 | (1) A partnership, limited partnership, limited |
5 | liability company, business trust or other unincorporated |
6 | entity that for Federal income tax purposes is taxable as a |
7 | partnership. |
8 | (2) A Pennsylvania S corporation. |
9 | "Secretary." The Secretary of Revenue of the Commonwealth. |
10 | "Small business." An employer who, on at least 50% of its |
11 | working days during the taxable year, employed fewer than 100 |
12 | employees. |
13 | "Tax credit." The small business health savings account tax |
14 | credit authorized under this article. |
15 | "Taxpayer." A small business subject to tax under Article |
16 | III, IV or VI. The term includes: |
17 | (1) the partner, shareholder, owner or member of a pass- |
18 | through entity; or |
19 | (2) a sole proprietor. |
20 | Section 1703-F. Credit for Health Savings Account |
21 | contributions. |
22 | (a) Application.--A taxpayer who purchases and provides a |
23 | qualified high deductible health plan to employees and makes a |
24 | contribution to a health savings account on behalf of employees |
25 | in a taxable year may apply for a tax credit as provided in this |
26 | article. By September 15, a taxpayer must submit an application |
27 | to the department for the aggregate contribution made by the |
28 | taxpayer to employee health savings accounts in the taxable year |
29 | that ended in the prior calendar year. |
30 | (b) Computation.--A taxpayer who qualifies under subsection |
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1 | (a) shall receive a tax credit for the taxable year in |
2 | accordance with the following: |
3 | (1) Fifty percent of the aggregate contribution made by |
4 | the taxpayer to employee health savings accounts when the |
5 | contribution is provided for the benefit of employees, |
6 | spouses and dependents for the taxable year. |
7 | (2) Twenty-five percent of the aggregate contribution |
8 | made by the taxpayer to employee health savings accounts when |
9 | the contribution is provided solely for the benefit of an |
10 | employee. |
11 | (c) Notification.--By December 15 of the calendar year |
12 | following the close of the taxable year during which the |
13 | contribution to employee health savings accounts was made, the |
14 | department shall notify the taxpayer of the amount of the |
15 | taxpayer's tax credit approved by the department. |
16 | Section 1704-F. Limitation on credits. |
17 | (a) Limit.--The total amount of credits approved by the |
18 | department shall not exceed $30,000,000 in any fiscal year. |
19 | (b) Calculation.--If the total amount of small business |
20 | health savings account tax credits applied for by all taxpayers |
21 | exceeds the amount allocated for those credits, then the small |
22 | business health savings account tax credit to be received by |
23 | each applicant shall be the product of the allocated amount |
24 | multiplied by the quotient of the small business health savings |
25 | account tax credit applied for by the applicant divided by the |
26 | total of all small business health savings account credits |
27 | applied for by all applicants, the algebraic equivalent of which |
28 | is: |
29 | taxpayer's small business health savings account tax |
30 | credit=amount allocated for those credits X (small business |
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1 | health savings account tax credit applied for by the |
2 | applicant/total of all small business health savings account tax |
3 | credits applied for by all applicants). |
4 | Section 1705-F. Carryover, carryback, refund and assignment of |
5 | credit. |
6 | (a) Carryover.--If the taxpayer cannot use the entire amount |
7 | of the tax credit for the taxable year in which the tax credit |
8 | is first approved, then the excess may be carried over to |
9 | succeeding taxable years and used as a credit against the |
10 | qualified tax liability of the taxpayer for those taxable years. |
11 | Each time that the tax credit is carried over to a succeeding |
12 | taxable year, it is to be reduced by the amount that was used as |
13 | a credit during the immediately preceding taxable year. The tax |
14 | credit may be carried over and applied to succeeding taxable |
15 | years for no more than 15 taxable years following the first |
16 | taxable year for which the taxpayer was entitled to claim the |
17 | credit. |
18 | (b) Application of credit.--A tax credit approved by the |
19 | department for monetary contributions made to employee health |
20 | savings accounts in a taxable year first shall be applied |
21 | against the taxpayer's qualified tax liability for the current |
22 | taxable year as of the date on which the credit was approved |
23 | before the tax credit is applied against any tax liability under |
24 | subsection (a). |
25 | (c) Prohibition.--A taxpayer is not entitled to assign, |
26 | carry back or obtain a refund of an unused tax credit. |
27 | Section 1706-F. Shareholder, owner or member pass-through. |
28 | (a) Shareholder's calculation.--If a Pennsylvania S |
29 | corporation does not have an eligible tax liability against |
30 | which the tax credit may be applied, a shareholder of the |
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1 | Pennsylvania S corporation is entitled to a tax credit equal to |
2 | the tax credit determined for the Pennsylvania S corporation for |
3 | the taxable year multiplied by the percentage of the |
4 | Pennsylvania S corporation's distributive income to which the |
5 | shareholder is entitled. |
6 | (b) Owner or member calculation.--If a pass-through entity |
7 | other than a Pennsylvania S corporation does not have an |
8 | eligible tax liability against which the tax credit may be |
9 | applied, an owner or member of the pass-through entity is |
10 | entitled to a tax credit equal to the tax credit determined for |
11 | the pass-through entity for the taxable year multiplied by the |
12 | percentage of the pass-through entity's distributive income to |
13 | which the owner or member is entitled. |
14 | (c) Application and restrictions.--The credit provided under |
15 | subsection (a) or (b) is in addition to any tax credit to which |
16 | a shareholder, owner or member of a pass-through entity is |
17 | otherwise entitled under this article. However, a pass-through |
18 | entity and a shareholder, owner or member of a pass-through |
19 | entity may not claim a credit under this article for the same |
20 | contributions made to employee health savings accounts. |
21 | Section 1707-F. Report to General Assembly. |
22 | The secretary shall submit an annual report to the General |
23 | Assembly indicating the effectiveness of the credit provided by |
24 | this article no later than March 15 following the year in which |
25 | the credits were approved. The report shall include the names of |
26 | all taxpayers utilizing the credit as of the date of the report |
27 | and the amount of credits approved and utilized by each |
28 | taxpayer. Notwithstanding any law providing for the |
29 | confidentiality of tax records, the information contained in the |
30 | report shall be public information. The report may also include |
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1 | any recommendations for changes in the calculation or |
2 | administration of the credit. |
3 | Section 1708-F. Regulations. |
4 | The secretary shall promulgate regulations necessary for the |
5 | implementation and administration of this article. |
6 | Section 2. This act shall apply to all tax years beginning |
7 | after December 31, 2008. |
8 | Section 3. This act shall take effect immediately. |
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