SENATE AMENDED
PRIOR PRINTER'S NOS. 1573, 1750, 2683
PRINTER'S NO. 3731
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1198
Session of
2015
Report of the Committee of Conference
To the Members of the House of Representatives and Senate:
We, the undersigned, Committee of Conference on the part of
the House of Representatives and Senate for the purpose of
considering House Bill No. 1198, entitled:
"An act amending the act of March 4, 1971 (P.L.6, No.2),
entitled 'An act relating to tax reform and State taxation by
codifying and enumerating certain subjects of taxation and
imposing taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and imposing
duties upon the Department of Revenue, certain employers,
fiduciaries, individuals, persons, corporations and other
entities; prescribing crimes, offenses and penalties,' IN TAX
FOR EDUCATION, FURTHER PROVIDING FOR CRIMES; AND, in corporate
net income tax, providing for amended reports,"
respectfully submit the following bill as our report:
DAVE REED
WILLIAM F. ADOLPH, JR.
FRANK DERMODY
(Committee on the part of the House of Representatives.)
JAKE CORMAN
PATRICK M. BROWNE
VINCENT J. HUGHES
(Committee on the part of the Senate.)
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AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," as follows:
In sales and use tax:
further providing for definitions, for exclusions,
for discount and for crimes.
In personal income tax:
further providing for definitions, for classes of
income and for tax withheld;
providing for contributions for tuition account
programs; and
further providing for requirement of withholding tax,
for information statement, for time for filing employers'
returns, for payment of taxes withheld, for employer's
liability for withheld taxes, for employer's failure to
withhold, for declarations of estimated tax and for
citation authority.
In corporate net income tax:
further providing for reports and payment of tax;
providing for amended reports; and
further providing for enforcement, rules and
regulations and inquisitorial powers of the department.
In bank and trust company shares tax:
further providing for imposition, for ascertainment
of taxable amount and exclusion of United States
obligations, for apportionment and for definitions.
In gross receipts tax:
further providing for imposition.
In realty transfer tax:
further providing for definitions, for exempt parties
and for excluded transactions.
In cigarette tax:
further providing for incidence and rate, for floor
tax, for stamp as evidence, for commissions on sales and
for disposition of certain funds.
Imposing a tobacco products tax.
In research and development tax credit:
further providing for time limitations.
In film production tax credit:
making editorial changes;
further providing for definitions and for
limitations;
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providing for reissuance of film production tax
credits, for concert rehearsal and tour; and
providing for video game production.
Establishing the coal refuse energy and reclamation tax
credit.
Establishing the waterfront development tax credit.
In tax credit for new jobs:
further providing for definitions and for tax
credits.
In city revitalization and improvement zones:
further providing for definitions and for
establishment of contracting authority;
providing for contracting authority duties;
further providing for approval, for functions of
contracting authorities, for qualified businesses, for
funds, for reports, for calculation of baseline, for
certification, for transfers, for restrictions, for
transfer of property, for Commonwealth pledges and for
guidelines; and
providing for review.
Establishing the Manufacturing and Investment Tax Credit.
In neighborhood assistance tax credit:
further providing for definitions, for tax credit and
for grant of tax credit.
In neighborhood improvement zones:
further providing for definitions and for funds; and
providing for taxes, for property assessment and for
exceptions.
In Keystone Special Development Zone Program:
further providing for tax credit.
Providing for keystone opportunity zones, keystone
opportunity expansion zones and keystone opportunity
improvement zones.
Providing for mixed-use development tax credit, the
Mixed-use Development Program and Mixed-use Development
Program Fund.
Providing for Keystone Innovation Zones.
In malt beverage tax:
further providing for limited tax credits.
In inheritance tax:
further providing for definitions, for transfers not
subject to tax and for deductions not allowed.
In procedure and administration:
further providing for petition procedure.
Providing for table game taxes.
Establishing the computer data center equipment incentive
program.
Providing for a tax amnesty program.
Making related repeals.
Further providing for preemption of local government tax.
Directing the Office of Attorney General to attempt to
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obtain the consent of participating manufacturers under the
Master Settlement Agreement for amendments.
Providing for applicability for imposed taxes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 201(k)(8), (m) and (o)(4)(B) of the act
of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
1971, amended April 23, 1998 (P.L.239, No.45) and May 24, 2000
(P.L.106, No.23), are amended to read:
3731Section 201. Definitions.--The following words, terms
and phrases when used in this Article II shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
* * *
(k) "Sale at retail."
* * *
(8) Any retention of possession, custody or a license to use
or consume tangible personal property or any further obtaining
of services described in subclauses (2), (3) and (4) of this
clause pursuant to a rental or service contract or other
arrangement (other than as security).
The term "sale at retail" shall not include (i) any such
transfer of tangible personal property or rendition of services
for the purpose of resale, or (ii) such rendition of services or
the transfer of tangible personal property including, but not
limited to, machinery and equipment and parts therefor and
supplies to be used or consumed by the purchaser directly in the
operations of--
(A) The manufacture of tangible personal property.
(B) Farming, dairying, agriculture, timbering, horticulture
or floriculture when engaged in as a business enterprise. The
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term "farming" shall include the propagation and raising of
ranch raised fur-bearing animals and the propagation of game
birds for commercial purposes by holders of propagation permits
issued under 34 Pa.C.S. (relating to game) and the propagation
and raising of horses to be used exclusively for commercial
racing activities. The term "timbering" shall include:
(1) The business of producing or harvesting trees from
forests, woodlots or tree farms for the purpose of the
commercial production of wood, paper or energy products derived
from wood by a company primarily engaged in the business of
harvesting trees.
(2) All operations prior to the transport of the harvested
product necessary for the removal of timber or forest products
from the site, in-field processing of trees into logs or chips,
complying with environmental protection and safety requirements
applicable to the harvest of forest products, loading of forest
products onto highway vehicles for transport to storage or
processing facilities and postharvest site reclamation,
including those activities necessary to improve timber growth or
ensure natural or direct reforestation of the site. The term
shall not include the harvesting of trees for clearing land for
access roads.
(C) The producing, delivering or rendering of a public
utility service, or in constructing, reconstructing, remodeling,
repairing or maintaining the facilities which are directly used
in producing, delivering or rendering such service.
(D) Processing as defined in clause (d) of this section.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to any vehicle required to be registered under
The Vehicle Code, except those vehicles used directly by a
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public utility engaged in business as a common carrier; to
maintenance facilities; or to materials, supplies or equipment
to be used or consumed in the construction, reconstruction,
remodeling, repair or maintenance of real estate other than
directly used machinery, equipment, parts or foundations
therefor that may be affixed to such real estate.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to tangible personal property or services to be
used or consumed in managerial sales or other nonoperational
activities, nor to the purchase or use of tangible personal
property or services by any person other than the person
directly using the same in the operations described in
paragraphs (A), (B), (C) and (D) herein.
The exclusion provided in paragraph (C) shall not apply to
(i) construction materials, supplies or equipment used to
construct, reconstruct, remodel, repair or maintain facilities
not used directly by the purchaser in the production, delivering
or rendition of public utility service, (ii) construction
materials, supplies or equipment used to construct, reconstruct,
remodel, repair or maintain a building, road or similar
structure, or (iii) tools and equipment used but not installed
in the maintenance of facilities used directly in the
production, delivering or rendition of a public utility service.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to the services enumerated in clauses (k)(11)
through (18) and (w) through (kk), except that the exclusion
provided in this subclause for farming, dairying and agriculture
shall apply to the service enumerated in clause (z).
* * *
(m) "Tangible personal property."
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(1) Corporeal personal property including, but not limited
to, goods, wares, merchandise, steam and natural and
manufactured and bottled gas for non-residential use,
electricity for non-residential use, prepaid telecommunications,
premium cable or premium video programming service, spirituous
or vinous liquor and malt or brewed beverages and soft drinks,
interstate telecommunications service originating or terminating
in the Commonwealth and charged to a service address in this
Commonwealth, intrastate telecommunications service with the
exception of (i) subscriber line charges and basic local
telephone service for residential use and (ii) charges for
telephone calls paid for by inserting money into a telephone
accepting direct deposits of money to operate, provided further,
the service address of any intrastate telecommunications service
is deemed to be within this Commonwealth or within a political
subdivision, regardless of how or where billed or paid. In the
case of any such interstate or intrastate telecommunications
service, any charge paid through a credit or payment mechanism
which does not relate to a service address, such as a bank,
travel, credit or debit card, but not including prepaid
telecommunications, is deemed attributable to the address of
origination of the telecommunications service.
(2) The term shall include the following, whether
electronically or digitally delivered, streamed or accessed and
whether purchased singly, by subscription or in any other
manner, including maintenance, updates and support:
(i) video;
(ii) photographs;
(iii) books;
(iv) any other otherwise taxable printed matter;
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(v) applications, commonly known as apps;
(vi) games;
(vii) music;
(viii) any other audio, including satellite radio service;
(ix) canned software, notwithstanding the function
performed; or
(x) any other otherwise taxable tangible personal property
electronically or digitally delivered, streamed or accessed.
* * *
(o) "Use."
* * *
(4) The obtaining by a purchaser of the service of
repairing, altering, mending, pressing, fitting, dyeing,
laundering, drycleaning or cleaning tangible personal property
other than wearing apparel or shoes or applying or installing
tangible personal property as a repair or replacement part of
other tangible personal property other than wearing apparel or
shoes, whether or not the services are performed directly or by
any means other than by means of coin-operated self-service
laundry equipment for wearing apparel or household goods, and
whether or not any tangible personal property is transferred to
the purchaser in conjunction therewith, except such services as
are obtained in the construction, reconstruction, remodeling,
repair or maintenance of real estate: Provided, however, That
this subclause shall not be deemed to impose tax upon such
services in the preparation for sale of new items which are
excluded from the tax under clause (26) of section 204, or upon
diaper service: And provided further, That the term "use" shall
not include--
* * *
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(B) The use or consumption of tangible personal property,
including but not limited to machinery and equipment and parts
therefor, and supplies or the obtaining of the services
described in subclauses (2), (3) and (4) of this clause directly
in the operations of--
(i) The manufacture of tangible personal property.
(ii) Farming, dairying, agriculture, timbering, horticulture
or floriculture when engaged in as a business enterprise. The
term "farming" shall include the propagation and raising of
ranch-raised furbearing animals and the propagation of game
birds for commercial purposes by holders of propagation permits
issued under 34 Pa.C.S. (relating to game) and the propagation
and raising of horses to be used exclusively for commercial
racing activities. The term "timbering" shall include:
(1) The business of producing or harvesting trees from
forests, woodlots or tree farms for the purpose of the
commercial production of wood, paper or energy products derived
from wood by a company primarily engaged in the business of
harvesting trees.
(2) All operations prior to the transport of the harvested
product necessary for the removal of timber or forest products
from the site, in-field processing of trees into logs or chips,
complying with environmental protection and safety requirements
applicable to the harvest of forest products, loading of forest
products onto highway vehicles for transport to storage or
processing facilities and postharvest site reclamation,
including those activities necessary to improve timber growth or
ensure natural or direct reforestation of the site. The term
shall not include the harvesting of trees for clearing land for
access roads.
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(iii) The producing, delivering or rendering of a public
utility service, or in constructing, reconstructing, remodeling,
repairing or maintaining the facilities which are directly used
in producing, delivering or rendering such service.
(iv) Processing as defined in subclause (d) of this section.
The exclusions provided in subparagraphs (i), (ii), (iii) and
(iv) shall not apply to any vehicle required to be registered
under The Vehicle Code except those vehicles directly used by a
public utility engaged in the business as a common carrier; to
maintenance facilities; or to materials, supplies or equipment
to be used or consumed in the construction, reconstruction,
remodeling, repair or maintenance of real estate other than
directly used machinery, equipment, parts or foundations
therefor that may be affixed to such real estate. The exclusions
provided in subparagraphs (i), (ii), (iii) and (iv) shall not
apply to tangible personal property or services to be used or
consumed in managerial sales or other nonoperational activities,
nor to the purchase or use of tangible personal property or
services by any person other than the person directly using the
same in the operations described in subparagraphs (i), (ii),
(iii) and (iv).
The exclusion provided in subparagraph (iii) shall not apply
to (A) construction materials, supplies or equipment used to
construct, reconstruct, remodel, repair or maintain facilities
not used directly by the purchaser in the production, delivering
or rendition of public utility service or (B) tools and
equipment used but not installed in the maintenance of
facilities used directly in the production, delivering or
rendition of a public utility service.
The exclusion provided in subparagraphs (i), (ii), (iii) and
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(iv) shall not apply to the services enumerated in clauses (o)
(9) through (16) and (w) through (kk), except that the exclusion
provided in subparagraph (ii) for farming, dairying and
agriculture shall apply to the service enumerated in clause (z).
* * *
Section 2. Section 204(13) of the act, amended July 2, 2012
(P.L.751, No.85), is amended and the section is amended by
adding a clause to read:
Section 204. Exclusions from Tax.--The tax imposed by
section 202 shall not be imposed upon any of the following:
* * *
(13) The sale at retail, or use of wrapping paper, wrapping
twine, bags, cartons, tape, rope, labels, nonreturnable
containers and all other wrapping supplies, when such use is
incidental to the delivery of any personal property, except that
any charge for wrapping or packaging shall be subject to tax at
the rate imposed by section 202, unless the property wrapped or
packaged will be resold by the purchaser of the wrapping or
packaging service. As used in this paragraph, the term "cartons"
includes corrugated boxes used by a person engaged in the
manufacture of snack food products to deliver the manufactured
product, whether or not the boxes are returnable for potential
reuse.
* * *
(70) The sale at retail or use of services related to the
set up, tear down or maintenance of tangible personal property
rented by an authority to exhibitors at a convention center or a
public auditorium, established under 64 Pa.C.S. Ch. 60 (relating
to Pennsylvania Convention Center Authority), the act of July
28, 1953 (P.L.723, No.230), known as the Second Class County
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Code, or the act of August 9, 1955 (P.L.323, No.130), known as
The County Code.
Section 3. Section 227 of the act is amended to read:
Section 227. Discount.--If a return is filed by a licensee
and the tax shown to be due thereon less any discount is paid
all within the time prescribed, the licensee shall be entitled,
as compensation for the expense of collecting and remitting the
tax and as a consideration of the prompt payment of the tax, to
credit and apply against the tax payable by [him] the licensee a
discount of the lesser of:
(1) one per cent of the amount of the tax collected [by him
on and after the effective date of this article, as compensation
for the expense of collecting and remitting the same and as a
consideration of the prompt payment thereof.]; or
(2) as follows:
(i) twenty-five dollars ($25) per return for a monthly
filer;
(ii) seventy-five dollars ($75) per return for a quarterly
filer; or
(iii) one hundred fifty dollars ($150) per return for a
semiannual filer.
Section 4. Section 268(b) of the act, amended June 29, 2002
(P.L.559, No.89), is amended and the section is amended by
adding a subsection to read:
Section 268. Crimes.--* * *
(b) Other Crimes. [(1)] Except as otherwise provided by
subsection (a) of this section, any person who advertises or
holds out or states to the public or to any purchaser or user,
directly or indirectly, that the tax or any part thereof imposed
by this article will be absorbed by such person, or that it will
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not be added to the purchase price of the tangible personal
property or services described in subclauses (2), (3), (4) and
(11) through (18) of clause (k) of section 201 of this article
sold or, if added, that the tax or any part thereof will be
refunded, other than when such person refunds the purchase price
because of such property being returned to the vendor, and any
person selling or leasing tangible personal property or said
services the sale or use of which by the purchaser is subject to
tax hereunder, who shall wilfully fail to collect the tax from
the purchaser and timely remit the same to the department, and
any person who shall wilfully fail or neglect to timely file any
return or report required by this article or any taxpayer who
shall refuse to timely pay any tax, penalty or interest imposed
or provided for by this article, or who shall wilfully fail to
preserve his books, papers and records as directed by the
department, or any person who shall refuse to permit the
department or any of its authorized agents to examine his books,
records or papers, or who shall knowingly make any incomplete,
false or fraudulent return or report, or who shall do, or
attempt to do, anything whatever to prevent the full disclosure
of the amount or character of taxable sales purchases or use
made by himself or any other person, or shall provide any person
with a false statement as to the payment of tax with respect to
particular tangible personal property or said services, or shall
make, utter or issue a false or fraudulent exemption
certificate, shall be guilty of a misdemeanor, and, upon
conviction thereof, shall be sentenced to pay a fine not
exceeding one thousand dollars ($1000) and costs of prosecution,
or undergo imprisonment not exceeding one year, or both:
Provided, however, That any person maintaining a place of
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business outside this Commonwealth may absorb the tax with
respect to taxable sales made in the normal course of business
to customers present at such place of business without being
subject to the above penalty and fines: and Provided further,
That advertising tax-included prices shall be permissible, if
the prepaid services are sold by the service provider, for
prepaid telecommunications services not evidenced by the
transfer of tangible personal property or for prepaid mobile
telecommunications services.
[(2) The penalties imposed by this section shall be in
addition to any other penalties imposed by any provision of this
article.]
(c) (1) Notwithstanding any other provision of this part,
any person who purchases, installs or uses in this Commonwealth
an automated sales suppression device or zapper or phantomware
with the intent to defeat or evade the determination of an
amount due under this part commits a misdemeanor.
(i) Any person who, for commercial gain, sells, purchases,
installs, transfers or possesses in this Commonwealth an
automated sales suppression device or zapper or phantomware with
the knowledge that the sole purpose of the device is to defeat
or evade the determination of an amount due under this part
commits an offense which shall be punishable by a fine specified
under subparagraph (ii) or by imprisonment for not more than one
year, or by both. A person who uses an automated sales
suppression device or zapper or phantomware shall be liable for
all taxes, interest and penalties due as a result of the use of
that device.
(ii) If a person is guilty of an offense under this
paragraph and the person sold, installed, transferred or
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possessed not more than three automated sales suppression
devices or zappers or phantomware, the person commits an offense
punishable by a fine of not more than five thousand dollars
($5,000).
(iii) If a person commits an offense under this paragraph
and the person sold, installed, transferred or possessed more
than three automated sales suppression devices or zappers or
phantomware, the person commits an offense punishable by a fine
of not more than ten thousand dollars ($10,000).
(2) This subsection shall not apply to a corporation that
possesses an automated sales suppression device or zapper or
phantomware for the sole purpose of developing hardware or
software to combat the evasion of taxes by use of automated
sales suppression devices or zappers or phantomware.
(3) For purposes of this subsection:
"Automated sales suppression device" or "zapper" means a
software program carried on a memory stick or removable compact
disc, accessed through an Internet link or through any other
means, that falsifies the electronic records of electronic cash
registers and other point-of-sale systems, including, but not
limited to, transaction data and transaction reports.
"Electronic cash register" means a device that keeps a
register or supporting document through the means of an
electronic device or computer system designed to record
transaction data for the purpose of computing, compiling or
processing retail sales transaction data in whatever manner.
"Phantomware" means a hidden programming option, which is
either preinstalled or installed at a later time, embedded in
the operating system of an electronic cash register or hardwired
into the electronic cash register that can be used to create a
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virtual second till or may eliminate or manipulate a transaction
record that may or may not be preserved in digital formats to
represent the true or manipulated record of transactions in the
electronic cash register.
"Transaction data" includes information regarding items
purchased by a customer, the price for each item, a taxability
determination for each item, a segregated tax amount for each of
the taxed items, the amount of cash or credit tendered, the net
amount returned to the customer in change, the date and time of
the purchase, the name, address and identification number of the
vendor and the receipt or invoice number of the transaction.
(d) This section shall not preclude prosecution under any
other law.
(e) The penalties imposed by this section shall be in
addition to any other penalties imposed by any provision of this
article.
Section 5. (Reserved).
Section 6. Section 301(k), (o) and (w) of the act, amended
March 13, 1974 (P.L.179, No.32), December 23, 1983 (P.L.370,
No.90) and December 23, 2003 (P.L.250, No.46), are amended to
read:
Section 301. Definitions.--Any reference in this article to
the Internal Revenue Code of 1986 shall mean the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.),
as amended to January 1, 1997, unless the reference contains the
phrase "as amended" and refers to no other date, in which case
the reference shall be to the Internal Revenue Code of 1986 as
it exists as of the time of application of this article. The
following words, terms and phrases when used in this article
shall have the meaning ascribed to them in this section except
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where the context clearly indicates a different meaning:
* * *
(k) "Income from sources within this Commonwealth" for a
nonresident individual, estate or trust means the same as
compensation, net profits, gains, dividends, interest or income
enumerated and classified under section 303 of this article to
the extent that it is earned, received or acquired from sources
within this Commonwealth:
(1) By reason of ownership or disposition of any interest in
real or tangible personal property in this Commonwealth; or
(2) In connection with a trade, profession, occupation
carried on in this Commonwealth or for the rendition of personal
services performed in this Commonwealth; or
(3) As a distributive share of the income of an
unincorporated business, Pennsylvania S corporation, profession,
enterprise, undertaking or other activity as the result of work
done, services rendered or other business activities conducted
in this Commonwealth, except as allocated to another state
pursuant to regulations promulgated by the department under this
article; or
(4) From intangible personal property employed in a trade,
profession, occupation or business carried on in this
Commonwealth; or
(5) As gambling and lottery winnings by reason of a wager
placed in this Commonwealth, the conduct of a game of chance or
other gambling activity located in this Commonwealth or the
redemption of a lottery prize from a lottery conducted in this
Commonwealth, other than noncash prizes of the Pennsylvania
State Lottery.
Provided, however, That "income from sources within this
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Commonwealth" for a nonresident individual, estate or trust
shall not include any items of income enumerated above received
or acquired from an investment company registered with the
Federal Securities and Exchange Commission under the Investment
Company Act of 1940.
* * *
(o) "Person" means any individual, employer, association,
fiduciary, partnership, corporation or other entity, estate or
trust, resident or nonresident, and the plural as well as the
singular number. For the purpose of determining eligibility for
special tax provisions, the term "person" means a natural
individual.
* * *
(w) "Taxpayer" means any individual, estate or trust subject
to the tax imposed by this article, any partnership having a
partner who is a taxpayer under this act, any Pennsylvania S
corporation having a shareholder who is a taxpayer under this
act and any [employer] person required to withhold tax [on
compensation paid] under this article.
Section 7. Section 303(a)(7) and (a.8) of the act, amended
or added July 21, 1983 (P.L.63, No.29) and July 9, 2013
(P.L.270, No.52), are amended and the section is amended by
adding a subsection to read:
Section 303. Classes of Income.--(a) The classes of income
referred to above are as follows:
* * *
(7) Gambling and lottery winnings other than noncash prizes
of the Pennsylvania State Lottery.
* * *
(a.8) A person who incurs intangible drilling and
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development costs [shall capitalize the costs unless the
taxpayer elects to currently expense the costs for Federal
income tax purposes under] as defined in section 263(c) of the
Internal Revenue Code of 1986, as amended, and regulations
thereunder, is required to capitalize the costs and recover them
over a ten-year period in the taxable year the costs are
incurred; or a person may elect to currently expense up to one-
third of the costs in the taxable year in which the costs are
incurred and recover the remaining costs over a ten-year period
beginning in the taxable year the costs are incurred.
(a.9) The provisions of section 1033 of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 1033), as amended,
shall be applicable.
* * *
Section 8. Section 312 of the act, added August 31, 1971
(P.L.362, No.93), is amended to read:
Section 312. Tax Withheld.--The amount withheld under
section 316 shall be allowed to the [recipient of the
compensation] taxpayer from whose income the tax was withheld as
a credit against the tax imposed on him by this article.
Section 8.1. The act is amended by adding a section to read:
Section 315.12. Contributions for Tuition Account
Programs.--(a) Beginning with the 2016 Pennsylvania individual
income tax return, the department shall provide a space on the
income tax return form by which a taxpayer who is an account
owner may voluntarily designate a contribution to a
beneficiary's Tuition Account Guaranteed Savings Program or the
Tuition Account Investment Program established under the act of
April 3, 1992 (P.L.28, No.11), known as the "Tuition Account
Programs and College Savings Bond Act."
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(b) The amount designated under subsection (a) by a taxpayer
on the income tax return form shall be deducted from the tax
refund to which the individual is entitled and shall not
constitute a charge against the income tax revenues due to the
Commonwealth.
(c) The department shall determine the amount designated
under this section and shall report the amount to the State
Treasurer, who shall transfer the amount from the General Fund
to the appropriate account within the Tuition Account Guaranteed
Savings Program or the Tuition Account Investment Program.
(d) For purposes of this section, the following words and
phrases shall have the meanings ascribed to them in this
subsection:
"Account owner." As defined in section 302 of the "Tuition
Account Programs and College Savings Bond Act."
"Beneficiary." As defined in section 302 of the "Tuition
Account Programs and College Savings Bond Act."
Section 9. Section 316 of the act, added August 31, 1971
(P.L.362, No.93), is amended to read:
Section 316. Requirement of Withholding Tax.--(a) Every
employer maintaining an office or transacting business within
this Commonwealth and making payment of compensation (i) to a
resident individual, or (ii) to a nonresident individual
taxpayer performing services on behalf of such employer within
this Commonwealth, shall deduct and withhold from such
compensation for each payroll period a tax computed in such
manner as to result, so far as practicable, in withholding from
the employe's compensation during each calendar year an amount
substantially equivalent to the tax reasonably estimated to be
due for such year with respect to such compensation. The method
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of determining the amount to be withheld shall be prescribed by
regulations of the department.
(b) Whenever the Pennsylvania State Lottery or a person
making a Pennsylvania State Lottery prize payment in the form of
an annuity is required to withhold Federal income tax under
section 3402 of the Internal Revenue Code of 1986, as amended
(Public Law 99-514, 26 U.S.C. § 1 et seq.), or backup
withholding under section 3406 of the Internal Revenue Code of
1986, as amended, from a gambling or lottery prize payment
awarded by the Pennsylvania State Lottery that is taxable under
this article, the Pennsylvania State Lottery or the person
making the annuity payment shall deduct and withhold from the
prize payment an amount equal to the amount of the prize payment
subject to withholding under section 3402 or 3406 multiplied by
the tax rate in effect under this article at the time the prize
payment is made.
Section 10. Section 317 of the act, amended December 20,
1985 (P.L.489, No.115), is amended to read:
Section 317. Information Statement.--(a) Every employer
required to deduct and withhold tax under this article shall
furnish to each such employe to whom the employer has paid
compensation during the calendar year a written statement in
such manner and in such form as may be prescribed by the
department showing the amount of compensation paid by the
employer to the employe, the amount deducted and withheld as
tax, pursuant to this article, and such other information as the
department shall prescribe. Each statement required by this
section for a calendar year shall be furnished to the employe on
or before January 31 of the year succeeding such calendar year.
If the employe's employment is terminated before the close of
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such calendar year, the employer, at his option, shall furnish
the statement to the employe at any time after the termination
but no later than January 31 of the year succeeding such
calendar year. However, if an employe whose employment is
terminated before the close of such calendar year requests the
employer in writing to furnish him the statement at an earlier
time, and, if there is no reasonable expectation on the part of
both employer and employe of further employment during the
calendar year, then the employer shall furnish the statement to
the employe on or before the later of the 30th day after the day
of the request or the 30th day after the day on which the last
payment of wages is made.
(b) Every person required to deduct and withhold tax under
section 316(b) of this article shall report the prize and the
amount of withholding to the taxpayer on Internal Revenue
Service Form W-2G, or similar form used for reporting Federal
income tax withholding from the prize.
Section 11. Section 318 of the act, added August 31, 1971
(P.L.362, No.93), is amended to read:
Section 318. Time for Filing [Employers'] Withholding
Returns.--(a) Every employer required to deduct and withhold
tax under this article shall file a quarterly withholding return
on or before the last day of April, July, October and January
for the three months ending the last day of March, June,
September and December. Such quarterly returns shall be filed
with the department at its main office or at any branch office
which it may designate for filing returns.
(b) Every person required to deduct and withhold tax under
section 316(b) shall file a withholding tax return at the same
time the person is required to file its annual return of
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withheld Federal income tax (IRS Form 945) from nonpayroll
payments. The return shall be filed with the department.
Section 12. Section 319 of the act, amended October 9, 2009
(P.L.451, No.48), is amended to read:
Section 319. Payment of Taxes Withheld.--(a) Every employer
withholding tax under this article shall pay over to the
department or to a depository designated by it the tax required
to be deducted and withheld under this article.
(1) Where the aggregate amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be less than twelve hundred dollars ($1,200), such
employer shall file a return and pay the tax on or before the
last day for filing a quarterly return under section 318.
(2) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be twelve hundred dollars ($1,200) or more but less
than four thousand dollars ($4,000), such employer shall pay the
tax monthly, on or before the fifteenth day of the month
succeeding the months of January to November, inclusive, and on
or before the last day of January following the month of
December.
(3) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be four thousand dollars ($4,000) or more but less
than twenty thousand dollars ($20,000), such employer shall pay
the tax semi-monthly, within three banking days after the close
of the semi-monthly period.
(4) Where the aggregated amount required to be deducted and
withheld by any employer for a calendar year can reasonably be
expected to be twenty thousand dollars ($20,000) or more, such
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employer shall pay the tax on the Wednesday after payday if the
payday falls on a Wednesday, Thursday or Friday and on the
Friday after payday if the payday falls on a Saturday, Sunday,
Monday or Tuesday.
Notwithstanding anything in this [section] subsection to the
contrary, whenever any employer fails to deduct or truthfully
account for or pay over the tax withheld or file returns as
prescribed by this article, the department may serve a notice on
such employer requiring him to withhold taxes which are required
to be deducted under this article and deposit such taxes in a
bank approved by the department in a separate account in trust
for and payable to the department, and to keep the amount of
such tax in such account until payment over to the department.
Such notice shall remain in effect until a notice of
cancellation is served on the employer by the department.
(b) Every person deducting and withholding tax under section
316(b) shall remit the tax to the department on the same
frequency that the person is required to remit Federal income
tax withheld from nonpayroll payments.
Section 13. Sections 320 and 321 of the act, added August
31, 1971 (P.L.362, No.93), are amended to read:
Section 320. [Employer's] Liability for Withheld Taxes.--
Every [employer] person required to deduct and withhold tax
under this [article] part is hereby made liable for such tax.
For purposes of assessment and collection, any amount required
to be withheld and paid over to the department and any additions
to tax penalties and interest with respect thereto, shall be
considered the tax of the [employer] person. All taxes deducted
and withheld [from employes] pursuant to this [article] part or
under color of this article shall constitute a trust fund for
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the Commonwealth and shall be enforceable against such
[employer] person, his representative or any other person
receiving any part of such fund.
Section 321. [Employer's] Failure to Withhold.--If [an
employer] a person fails to deduct and withhold tax as
prescribed [herein] in this part and thereafter the tax against
which such tax may be credited is paid, the tax which was
required to be deducted and withheld shall not be collected from
the [employer] person, but the [employer] person shall not be
relieved of the liability for any penalty, interest, or
additions to the tax imposed with respect to such failure to
deduct and withhold.
Section 14. Section 325(a) of the act, amended May 12, 1999
(P.L.26, No.4), is amended to read:
Section 325. Declarations of Estimated Tax.--(a) Every
resident and nonresident individual, trust and estate shall at
the time hereinafter prescribed make a declaration of his or its
estimated tax for the taxable year, containing such information
as the department may prescribe by regulations, if his or its
income, other than from [compensation] income on which tax is
withheld under this article, can reasonably be expected to
exceed eight thousand dollars ($8,000).
* * *
Section 15. Section 352.2(a) of the act, added July 9, 2013
(P.L.270, No.52), is amended to read:
Section 352.2. Citation Authority.--(a) Notwithstanding any
other provision of this act, any person who does any of the
following commits a summary offense and, upon conviction, shall
be subject to the fines and penalties imposed under section
208(c):
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(1) Does not pay [employer] withholding tax, interest or
penalty within ninety days after the due date, and the tax
liability due has not been timely appealed or subject to a duly
authorized deferred payment plan.
(2) Underpays [an employer] a withholding tax, interest or
penalty within ninety days after the due date, and the tax
liability due has not been timely appealed or subject to a duly
authorized deferred payment plan.
(3) Fails to file a tax [employer] withholding return or
report or any other reporting document within ninety days after
the due date of the applicable payment or return, report or any
other reporting document.
* * *
Section 15.1. (Reserved).
Section 15.2. Section 403(a) of the act, amended October 18,
2006 (P.L.1149, No.119), is amended to read:
Section 403. Reports and Payment of Tax.--(a) (1) It shall
be the duty of every corporation, liable to pay tax under this
article, [on or before April 15, 1972, and each year
thereafter,] to transmit to the department, upon a form
prescribed by the department, an annual report under oath or
affirmation of its president, vice-president, treasurer,
assistant treasurer or other authorized officers of net income
taxable under the provisions of this article[. Such report]:
(i) on or before April 15, 1972, and every April 15 of each
year thereafter through April 15, 2016; and
(ii) for taxable years beginning after December 31, 2015, on
or before thirty days after the return to the Federal Government
is due, or would be due were it to be required of such
corporation, subject in all other respects to the provisions of
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this article.
(2) The report under paragraph (1) shall set forth:
[(1)] (i) A true copy of its return to the Federal
Government of the annual taxable income arising or accruing in
the calendar or fiscal year next preceding, or such part or
portions of said return, as the department may designate;
[(2)] (ii) If no return was filed with the Federal
Government the report made to the department shall show such
information as would have been contained in a return to the
Federal Government had one been made; and
[(3)] (iii) Such other information as the department may
require. Upon receipt of the report, the department shall
promptly forward to the Department of State, the names of the
president, vice-president, secretary and treasurer of the
corporation and the complete street address of the principal
office of the corporation for inclusion in the records of the
Department of State relating to corporation.
* * *
Section 15.3. The act is amended by adding a section to
read:
Section 406.1. Amended Reports.--(a) (1) Except as
provided under subsection (b) or section 406, a taxpayer may,
within three years after the due date of the original report,
including extensions, file an amended report on a form
prescribed by the department, under oath or affirmation, to
bring to the attention of the department a correction to the
original report and provide additional information that the
taxpayer requests the department to consider. An amended report
shall satisfy all the requirements of an original report.
(2) A taxpayer may file an amended report if a petition
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raising other issues is pending at the administrative or
judicial appeal level.
(b) A taxpayer may not file an amended report:
(1) instead of a timely appeal of an assessment, except if a
taxpayer would be entitled to an adjustment of the taxpayer's
tax liability as defined by regulations of the department;
(2) if an administrative appeal board or court has
previously addressed an issue raised in an amended report on its
merits for that particular tax year; or
(3) that takes a position that is contrary to law or
published department policy.
(c) (1) Notwithstanding section 407.3, the filing of an
amended report shall extend the department's authority to adjust
a taxpayer's tax liability, including the assessment of
additional tax for the tax year to one year from the date of the
filing of the amended report or three years from the filing of
the original report, whichever period expires later.
(2) At any time before the expiration of the applicable
statute of limitations, a taxpayer may consent to extend the
period for the department to consider an amended report.
(3) A taxpayer shall maintain records until the end of the
extended assessment period.
(d) An amended report filed with the department must contain
the following:
(1) The calculation of the amended tax liability.
(2) Revised Pennsylvania supporting schedules, if
applicable.
(3) An explanation of the changes being made and the reason
for the changes.
(4) Other information that the department may request to
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support the calculation of the amended tax liability.
(e) Where an amended report involving a tax year under
appeal has been filed after an administrative or judicial appeal
has been taken, the report shall be deemed a part of the
original annual report upon petition of the taxpayer at any
subsequent proceeding as though it had been filed with the
original report, and no separate appeal from an assessment
resulting from the report of change, correction or
redetermination shall be necessary to the extent the identical
issues for the taxable year have been raised in the appeal.
(f) (1) Unless the taxpayer has requested or consented to
an extension, the department shall review an amended report and
advise the taxpayer in writing within one year of the filing
date of the amended report whether the department accepts the
amended report. The notice shall provide an explanation of the
department's action.
(2) If the department fails to provide timely notice, the
amended report shall be deemed accepted as filed and the
department shall adjust its records accordingly.
(3) The acceptance of an amended report under this
subsection shall not limit the department's authority to issue
an assessment of additional tax as reported on the amended
report within the time period provided under subsection (c)(1).
(g) (1) A taxpayer who disagrees with the action of the
department may file a petition for review under section 2703(a)
(2.1) within ninety days of the mailing date of the written
notice required under subsection (f) except if:
(i) an amended report has been incorporated into an
administrative or judicial proceeding;
(ii) an amended report is filed instead of a petition for
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reassessment; or
(iii) a timely filed amended report requesting a refund or
credit was filed more than three years from the date the tax was
paid.
(2) A taxpayer that is not permitted to file a petition for
review under paragraph (1)(ii) and that disagrees with the
action of the department may pay the tax, interest and penalty
due and file a petition for refund in accordance with section
3003.1.
Section 15.4. Section 408(b) of the act, amended October 18,
2006 (P.L.1149, No.119), is amended to read:
Section 408. Enforcement; Rules and Regulations;
Inquisitorial Powers of the Department.--* * *
(b) The department, or any agent authorized in writing by
it, is hereby authorized to examine the books, papers, and
records, and to investigate the character of the business of any
corporation in order to verify the accuracy of any report made,
or if no report was made by such corporation, to ascertain and
assess the tax imposed by this article. Every such corporation
is hereby directed and required to give to the department, or
its duly authorized agent, the means, facilities, and
opportunity for such examinations and investigations, as are
hereby provided and authorized. Any information gained by the
department, as a result of any returns, investigations, or
verifications required to be made by this article, shall be
confidential, except for official purposes, and any person
divulging such information shall be guilty of a misdemeanor,
and, upon conviction thereof, shall be sentenced to pay a fine
of not less than one hundred dollars ($100) or more than one
thousand dollars ($1,000) and costs of prosecution, or to
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undergo imprisonment for not more than six months, or both.
Nothing in this section shall preclude the department from
providing public information, as defined in section [403(a)(3)]
403(a)(2)(iii), to other government units. Any identification
number provided by the department to another governmental unit
for governmental purposes shall continue to be confidential
information.
* * *
Section 15.5. Sections 701, 701.1 and 701.4(3)(xiii) of the
act, amended July 9, 2013 (P.L.270, No.52), are amended to read:
Section 701. Imposition of Tax.--(a) Every institution
doing business in this Commonwealth shall, on or before March 15
in each and every year, make to the Department of Revenue a
report in writing, verified as required by law, setting forth
the full number of shares of the capital stock subscribed for or
issued, as of the preceding January 1, by such institution, and
the taxable amount of such shares of capital stock determined
pursuant to section 701.1.
(b) It shall be the duty of the Department of Revenue to
assess such shares for the calendar years beginning January 1,
1971 through January 1, 1983, at the rate of fifteen mills and
for the calendar years beginning January 1, 1984 through January
1, 1988, at the rate of one and seventy-five one thousandths per
cent and for the calendar year beginning January 1, 1989, at the
rate of 10.77 per cent and for the calendar years beginning
January 1, 1990, through January 1, 2013, at the rate of 1.25
per cent and for the calendar [year] years beginning January 1,
2014, [and each calendar year thereafter at the rate of 0.89 per
cent] through January 1, 2016, at the rate of 0.89 per cent and
for the calendar year beginning January 1, 2017, and each
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calendar year thereafter at the rate of 0.95 per cent upon each
dollar of taxable amount thereof, the taxable amount of each
share of stock to be ascertained and fixed pursuant to section
701.1, and dividing this amount by the number of shares.
(c) It shall be the duty of every institution doing business
in this Commonwealth, at the time of making every report
required by this section, to compute the tax and to pay the
amount of said tax to the State Treasurer, through the
Department of Revenue either from its general fund, or from the
amount of said tax collected from its shareholders. Provided,
That in case any institution shall collect, annually, from the
shareholders thereof said tax, according to the provisions of
this article, that have been subscribed for or issued, and pay
the same into the State Treasury, through the Department of
Revenue, the shares, and so much of the capital and profits of
such institution as shall not be invested in real estate, shall
be exempt from local taxation under the laws of this
Commonwealth; and such institution shall not be required to make
any report to the local assessor or county commissioners of its
personal property owned by it in its own right for purposes of
taxation and shall not be required to pay any tax thereon.
Section 701.1. Ascertainment of Taxable Amount; Exclusion of
United States Obligations.--(a) (1) The taxable amount of
shares shall be ascertained and fixed by the book value of total
bank equity capital as determined by the Reports of Condition at
the end of the preceding calendar year in accordance with the
requirements of the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation or other applicable regulatory authority.
(2) If an institution does not file the Reports of
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Condition, book values shall be determined by generally accepted
accounting principles as of the end of the preceding calendar
year.
(3) For institutions which file Reports of Condition on a
consolidated basis with subsidiaries formed pursuant to 12 U.S.
Code § 611 (relating to formation authorized; fiscal agents;
depositaries in insular possessions), total bank equity capital
shall exclude the book value of total equity capital of the
subsidiaries in accordance with the following schedule:
(i) For the calendar year beginning January 1, 2018, the
exclusion for the book value of total equity capital of the
subsidiaries shall be limited to twenty per cent of the book
value of total equity capital of the subsidiaries.
(ii) For the calendar year beginning January 1, 2019, the
exclusion for the book value of total equity capital of the
subsidiaries shall be limited to forty per cent of the book
value of total equity capital of the subsidiaries.
(iii) For the calendar year beginning January 1, 2020, the
exclusion for the book value of total equity capital of the
subsidiaries shall be limited to sixty per cent of the book
value of total equity capital of the subsidiaries.
(iv) For the calendar year beginning January 1, 2021, the
exclusion for the book value of total equity capital of the
subsidiaries shall be limited to eighty per cent of the book
value of total equity capital of the subsidiaries.
(v) For the calendar year beginning January 1, 2022, and
each calendar year thereafter, the exclusion for the book value
of total equity capital of the subsidiaries shall be one hundred
per cent of the book value of total equity capital of the
subsidiaries.
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(b) A deduction for the value of United States obligations
shall be provided from the taxable amount of shares in an amount
equal to the same percentage of total bank equity capital as the
book value of obligations of the United States bears to the book
value of the total assets[, except that, for the value of shares
reported on tax returns due on March 15, 2008, and thereafter].
In computing the deduction for United States obligations, any
goodwill recorded as a result of the use of purchase accounting
for an acquisition or combination as described in this section
and occurring after June 30, 2001, [may] shall be subtracted
from the book value of total bank equity capital and disregarded
in determining the deduction provided for obligations of the
United States. For purposes of this article, United States
obligations shall be obligations coming within the scope of 31
U.S.C. § 3124 (relating to exemption from taxation). [In the
case of institutions which do not file such Reports of
Condition, book values shall be determined by generally accepted
accounting principles as of the end of the preceding calendar
year.]
(b.1) A deduction for goodwill shall be provided from the
taxable amount of shares in an amount equal to the value of any
goodwill recorded as a result of the use of purchase accounting
for an acquisition or combination as described in this section
and occurring after June 30, 2001.
(c) For purposes of this section:
(1) a mere change in identity, form or place of organization
of one institution, however effected, shall be treated as if a
single institution had been in existence prior to as well as
after such change; and
(2) if there is a combination of two or more institutions
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into one, the book values and deductions for United States
obligations from the Reports of Condition of the constituent
institutions shall be combined. For purposes of this section, a
combination shall include any acquisition required to be
accounted for by using the purchase method in accordance with
generally accepted accounting principles or a statutory merger
or consolidation.
Section 701.4. Apportionment.--An institution may apportion
its taxable amount of shares determined under section 701.1 in
accordance with this subsection if the institution is subject to
tax in another state based on or measured by net worth, gross
receipts, net income or some similar base of taxation, or if it
could be subject to such tax, whether or not such a tax has in
fact been enacted. The following shall apply:
* * *
(3) The receipts factor is a fraction, the numerator of
which is total receipts located in this Commonwealth and the
denominator of which is the total receipts located in all
states. The method of calculating receipts for purposes of the
denominator shall be the same as the method used in determining
receipts for purposes of the numerator. The location of receipts
shall be determined as follows:
* * *
(xiii) The following shall apply to receipts from an
institution's investment assets and activity and trading assets
and activity:
(A) Interest, dividends, net gains equal to zero or above,
and other income from investment assets and activities and from
trading assets and activities shall be included in the receipts
factor. Investment assets and activities and trading assets and
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activities shall include investment securities, trading account
assets, Federal funds, securities purchased and sold under
agreements to resell or repurchase, options, futures contracts,
forward contracts and notional principal contracts such as
swaps, equities and foreign currency transactions. For the
investment and trading assets and activities under subclauses
(I) and (II), the receipts factor shall include the amounts
under subclauses (I) and (II). The following shall apply:
(I) The receipts factor shall include the amount by which
interest from Federal funds sold and securities purchased under
resale agreements exceeds interest expense on Federal funds
purchased and securities sold under repurchase agreements.
(II) The receipts factor shall include the amount by which
interest, dividends, gains and other income from investment and
trading assets and activities, including assets and activities
in the matched book, in the arbitrage book and foreign currency
transactions, exceed amounts paid in lieu of interest, amounts
paid in lieu of dividends and losses from the assets and
activities.
(B) The numerator of the receipts factor shall include
[interest, dividends, net gains, equal to zero or above, and
other income from investment assets and activities and from
trading assets and activities] the receipts under clause (A)
that are attributable to this Commonwealth using one of the
following alternative methods:
(I) Method 1. The numerator shall be determined by
multiplying the total amount of receipts [from trading assets
and activities] under clause (A) by a fraction, the numerator of
which is the total amount of all other receipts attributable to
this Commonwealth and the denominator of which is the total
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amount of all other receipts.
(II) Method 2. The numerator shall be determined by
multiplying the total amount of receipts under clause (A) by a
fraction, the numerator of which is the average value of the
assets which generate the receipts which are properly assigned
to a regular place of business of the institution within this
Commonwealth and the denominator of which is the average value
of all such assets.
(C) Upon the election by the institution to use one of the
methods under clause (B) for tax imposed for a taxable year
beginning after December 31, 2016, the institution shall use the
method on all subsequent returns unless the institution receives
prior permission from the Department of Revenue to use a
different method.
(D) The following shall apply:
(I) An institution electing to use Method 2 shall have the
burden of proving that an investment asset or activity or
trading asset or activity was properly assigned to a regular
place of business outside of this Commonwealth by demonstrating
that the day-to-day decisions regarding the asset or activity
occurred at a regular place of business outside this
Commonwealth.
(II) If the day-to-day decisions regarding an investment
asset or activity or trading asset or activity occur at more
than one regular place of business and one regular place of
business is in this Commonwealth and one regular place of
business is outside this Commonwealth, the asset or activity
shall be considered to be located at the regular place of
business of the institution where the investment or trading
policies or guidelines with respect to the asset or activity are
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established.
(III) Unless the institution demonstrates to the contrary,
the investment or trading policies and guidelines under
subclause (II) shall be presumed to be established at the
commercial domicile of the institution.
[(E) Receipts apportioned under this subparagraph shall be
separately apportioned for:
(I) interest, dividends, net gains and other income from
investment assets and activities in an investment account;
(II) interest from Federal funds sold and purchased and from
securities purchased under resale agreements and securities sold
under repurchase agreements; and
(III) interest, dividends, gains and other income from
trading assets and activities, including assets and activities
in the matched book, in the arbitrage book and foreign currency
transactions.]
* * *
Section 16. The definitions of "doing business in this
Commonwealth" and "receipts" in section 701.5 of the act,
amended July 9, 2013 (P.L.270, No.52), are amended to read:
Section 701.5. Definitions.--The following words, terms and
phrases when used in this article shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
* * *
"Doing business in this Commonwealth." As follows:
(1) An institution is engaged in doing business in this
Commonwealth and is subject to the tax imposed under this
article if it satisfies any of the following requirements [and
generates gross receipts apportioned to this Commonwealth under
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section 701.4 in excess of $100,000]:
(i) The institution has an office or branch in this
Commonwealth.
(ii) One or more employes, representatives, independent
contractors or agents of the institution conduct business
activities of the institution in this Commonwealth.
(iii) A person, including an employe, representative,
independent contractor, agent or affiliate of the institution,
or an employe, representative, independent contractor or agent
of an affiliate of the institution, directly or indirectly
solicits business in this Commonwealth by or for the benefit of
the institution, through:
(A) person-to-person contact, mail, telephone or other
electronic means; or
(B) the use of advertising published, produced or
distributed in this Commonwealth.
(iv) The institution owns, leases or uses real or personal
property in this Commonwealth to conduct its business
activities.
(v) The institution holds a security interest, mortgage or
lien in real or personal property located in this Commonwealth.
(vi) A basis exists under section 701.4 to apportion the
institution's receipts to this Commonwealth.
(vii) The institution has a physical presence in this
Commonwealth for a period of more than one day during the tax
year or conducts an activity sufficient to create a nexus in
this Commonwealth for tax purposes under the Constitution of the
United States.
(2) The term shall not include:
(i) The use by the institution of a professional performing
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a service on behalf of the institution in this Commonwealth if
the services are not significantly associated with the
institution's ability to establish and maintain a market in this
Commonwealth.
(ii) The mere use of financial intermediaries in this
Commonwealth by an institution for the processing or transfer of
checks, credit card receivables, commercial paper and similar
items.
* * *
"Receipts." [As follows:
(1) Except as provided under paragraph (2), an item included
in taxable income returned to and ascertained by the Federal
Government.
(2) If consolidated returns are filed with the Federal
Government, an item that would be included in taxable income
returned to and ascertained by the Federal Government if a
separate return had been made to the Federal Government by the
institution, including the taxable income of a subsidiary of the
institution that are disregarded entities for purposes of
Federal taxation.] The total of all items of income reported on
the income statement of the institution's Reports of Condition
at the end of the preceding calendar year. If the institution
does not file quarterly Reports of Condition, the term shall
include all items of income included on an income statement
determined in accordance with generally accepted accounting
principles for the preceding calendar year.
* * *
Section 16.1. Section 1101(b.1), (c), (c.1), (e) and (j) of
the act, amended or added October 9, 2009 (P.L.451, No.48), are
amended to read:
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Section 1101. Imposition of Tax.--* * *
[(b.1) Managed Care Organizations.--Every managed care
organization now or hereafter incorporated or organized by or
under any law of the Commonwealth or a political subdivision
thereof, or now or hereafter organized or incorporated by any
other state or by the United States or any foreign government
and doing business in this Commonwealth that is a party to a
Medicaid managed care contract with the Department of Public
Welfare shall pay to the State Treasurer, through the Department
of Revenue, a tax of 59 mills upon each dollar of the gross
receipts received from payments pursuant to a Medicaid managed
care contract with the Department of Public Welfare through its
Medical Assistance Program under Subchapter XIX of the Social
Security Act (49 Stat. 620, 42 U.S.C. § 1396 et seq.). This
subsection shall also apply to a Medicaid managed care
organization, as defined in section 1903(m)(1)(A) of the Social
Security Act (42 U.S.C. § 1396b(m)(1)(A)); to a county Medicaid
managed care organization; and to a permitted assignee of a
Medicaid managed care contract. This subsection shall not apply
to an assignor of a Medicaid managed care contract. The revenue
collected under this subsection shall be placed in a restricted
receipts account in the General Fund and is appropriated as an
augmentation to the capitation appropriation of the Department
of Public Welfare. If the Centers for Medicare and Medicaid
Services of the Department of Health and Human Services issues a
written determination of a deferral, disallowance or disapproval
of Federal financial participation on the grounds that the tax
imposed under this subsection constitutes an impermissible
health care-related tax under Subchapter XIX of the Social
Security Act, the Secretary of Public Welfare shall notify the
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Secretary of Revenue of that determination. If notification is
made under this paragraph, the tax under this subsection shall
cease to be imposed after the last day of the month in which
notification is made.]
(c) Payment of Tax; Reports.--The said taxes imposed under
subsections (a)[, (b) and (b.1)] and (b) shall be paid within
the time prescribed by law, and for the purpose of ascertaining
the amount of the same, it shall be the duty of the treasurer or
other proper officer of the said company, copartnership, limited
partnership, association, joint-stock association or
corporation, or person or persons, to transmit to the Department
of Revenue on or before March 15 of each year an annual report,
and under oath or affirmation, of the amount of gross receipts
of the said companies, copartnerships, corporations,
associations, joint-stock associations, limited partnerships,
person or persons, derived from all sources, and of gross
receipts from business done wholly within this State and in the
case of electric energy producers that transmit energy to other
states referred to in clause (2) of subsection (b), a
compilation of the relevant information regarding operating and
maintenance expenses and depreciation, during the period of
twelve months immediately preceding January 1 of each year.
(c.1) Safe Harbor Base year.--For purposes of the estimated
tax requirements under sections 3003.2 and 3003.3, the "safe
harbor base year" tax amount for providers of mobile
telecommunications services [and for a managed care organization
subject to the provisions of subsection (b.1)] shall be the
amount that would have been required to be paid by the taxpayer
if the taxpayer had been subject to this article.
(e) Time to File Reports.--The time for filing annual
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reports may be extended, estimated assessments may be made by
the Department of Revenue if reports are not filed, and the
penalties for failing to file reports and pay the taxes imposed
under subsection (a)[, (b) and (b.1)] and (b) shall be as
prescribed by the laws defining the powers and duties of the
Department of Revenue. In any case where the works of any
corporation, company, copartnership, association, joint-stock
association, limited partnership, person or persons are operated
by another corporation, company, copartnership, association,
joint-stock association, limited partnership, person or persons,
the taxes imposed under subsections (a)[, (b) and (b.1)] and (b)
shall be apportioned between the corporations, companies,
copartnerships, associations, joint-stock associations, limited
partnerships, person or persons in accordance with the terms of
their respective leases or agreements, but for the payment of
the said taxes the Commonwealth shall first look to the
corporation, company, copartnership, association, joint-stock
association, limited partnership, person or persons operating
the works, and upon payment by the said company, corporation,
copartnership, association, joint-stick association, limited
partnership, person or persons of a tax upon the receipts, as
herein provided, derived from the operation thereof, no other
corporation, company, copartnership, association, joint-stock
association, limited partnership, person or persons shall be
held liable for any tax imposed under subsections (a)[, (b) and
(b.1)] and (b) upon the proportion of said receipts received by
said corporation, company, copartnership, association, joint-
stock association, limited partnership, person or persons for
the use of said works.
* * *
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(j) Schedule for Estimated Payments.--
(1) For calendar year 2004, the following schedule applies
to the payment of the tax under subsection (a)(3):
(i) Forty per cent of the estimated tax shall be due on
March 15, 2004.
(ii) Forty per cent of the estimated tax shall be due on
June 15, 2004.
(iii) Twenty per cent of the estimated tax shall be due on
September 15, 2004.
(2) For calendar years after 2004, the payment of the
estimated tax under subsection (a)(3) shall be due in accordance
with section 3003.2.
[(3) For calendar year 2009, the tax applicable to the
payment of the tax under subsection (b.1) shall be due on March
15, 2010.
(4) For calendar year 2010, payments of the estimated tax
under subsection (b.1) shall be due on May 15, 2010. For
calendar year 2011 and each calendar year thereafter, the
payment of the estimated tax under subsection (b.1) shall be due
in accordance with section 3003.2.]
* * *
Section 16.2. (Reserved).
Section 16.3. Section 1101-C of the act is amended by adding
definitions to read:
Section 1101-C. Definitions.--The following words when used
in this article shall have the meanings ascribed to them in this
section:
* * *
"Conservancy." A corporation or association that possesses a
tax-exempt status pursuant to section 501(c)(3) of the Internal
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Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 501(c)(3))
and which has as its primary purpose preservation of land for
historic, recreational, scenic, agricultural or open-space
opportunities.
* * *
"Veterans' organization." A not-for-profit organization that
is recognized by the Internal Revenue Service as a tax exempt
organization described under section 501(c)(19) of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 501(c)
(19)). For the purposes of this article, the term shall only
include a not-for-profit organization for the period in which
the organization has a valid tax exemption under section 501(c)
(19) of the Internal Revenue Code of 1986, as determined by the
Internal Revenue Service.
* * *
Section 16.4. Section 1102-C.2 of the act, added July 2,
1986 (P.L.318, No.77), is amended to read:
Section 1102-C.2. Exempt Parties.--The United States, the
Commonwealth or any of their instrumentalities, agencies or
political subdivisions, or veterans' organizations shall be
exempt from payment of the tax imposed by this article. The
exemption [of such governmental bodies] under this section shall
not, however, relieve any other party to a transaction from
liability for the tax.
Section 16.5. Section 1102-C.3(18) of the act, amended May
7, 1997 (P.L.85, No.7), is amended and the section is amended by
adding a paragraph to read:
Section 1102-C.3. Excluded Transactions.--The tax imposed by
section 1102-C shall not be imposed upon:
* * *
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(18) Any of the following:
(i) A transfer to a conservancy. [which possesses a tax-
exempt status pursuant to section 501(c)(3) of the Internal
Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 501(c)(3)) and
which has as its primary purpose preservation of land for
historic, recreational, scenic, agricultural or open-space
opportunities; or a]
(ii) A transfer from [such] a conservancy to the United
States, the Commonwealth or to any of their instrumentalities,
agencies or political subdivisions[; or any].
(iii) A transfer from [such] a conservancy where the real
estate is encumbered by a perpetual agricultural conservation
easement as defined by the act of June 30, 1981 (P.L.128,
No.43), known as the "Agricultural Area Security Law," and such
conservancy has owned the real estate for at least two years
immediately prior to the transfer.
(iv) A transfer of an agricultural conservation easement to
or from the Commonwealth, a county, a local government unit or a
conservancy under authority of the "Agricultural Area Security
Law."
(v) A transfer of a conservation easement or preservation
easement under the act of June 22, 2001 (P.L.390, No.29), known
as the "Conservation and Preservation Easements Act."
(vi) A transfer of a perpetual historic preservation
easement, a perpetual public trail easement or other perpetual
public recreational use easement, a perpetual scenic
preservation easement or a perpetual open-space preservation
easement to or from the United States, the Commonwealth, a
county, a local government unit or a conservancy.
* * *
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(24) A transfer of real estate to or by a land bank. For the
purposes of this clause, the term "land bank" shall have the
same meaning as given to it in 68 Pa.C.S. § 2103 (relating to
definitions).
Section 17. Sections 1206, 1206.1(a), 1215(g) and 1216 of
the act, amended October 9, 2009 (P.L.451, No.48), are amended
to read:
Section 1206. Incidence and Rate of Tax.--An excise tax is
hereby imposed and assessed upon the sale or possession of
cigarettes within this Commonwealth at the rate of [eight]
thirteen cents per cigarette.
Section 1206.1. Floor Tax.--(a) The following apply:
[(1) A person who possesses cigarettes on which the tax
imposed by section 1206 has been paid as of the effective date
of this section shall pay an additional tax at a rate of one and
twenty-five hundredths cents per cigarette. The tax shall be
paid and reported on a form prescribed by the department within
ninety days of the effective date of this section.
(2) On or after the effective date of this paragraph, a
person that possesses little cigars in a package which is
similar to a package of cigarettes other than little cigars and
which contains twenty to twenty-five little cigars shall pay a
tax at the rate of eight cents per little cigar. The tax shall
be paid and reported on a form prescribed by the department
within ninety days of the effective date of this paragraph.
(3) After January 3, 2010, a retailer that possesses little
cigars on which the tax imposed by this article has not been
paid shall pay a tax at the rate of eight cents per little
cigar. The tax shall be paid and reported on a form prescribed
by the department within ninety days of the effective date of
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this paragraph.]
(4) A person who possesses cigarettes on which the tax
imposed by section 1206 has been paid as of the effective date
of this paragraph shall pay an additional tax at a rate of five
cents per cigarette. The tax shall be paid and reported on a
form prescribed by the department within ninety days of the
effective date of this paragraph.
* * *
Section 1215. Stamp to Evidence the Tax.--* * *
(g) Stamps shall be affixed to all individual packages
containing from twenty to twenty-five cigarettes. Individual
packages containing less than twenty or more than twenty-five
cigarettes shall have stamps affixed unless the department
determines the affixing of stamps is physically impractical due
to the size or nature of the package or determines that the cost
of affixing the stamps is unreasonably disproportionate to the
tax to be collected. Stamps shall not be required to be affixed
to containers of roll-your-own tobacco.
* * *
Section 1216. Commissions on Sales.--A cigarette stamping
agent shall be entitled to a commission for the agent's services
and expenses in affixing cigarette tax stamps. The commission
shall be equal to [eighty-seven hundredths] five hundred eighty-
six thousandths per cent of the total value of Pennsylvania
cigarette tax stamps purchased by the agent from the department
or its authorized agents to be used in the stamping of unstamped
cigarettes for sale within this Commonwealth. The cigarette
stamping agent may deduct from the moneys to be paid to the
department or its authorized agents for the stamps an amount
equal to [eighty-seven hundredths] five hundred eighty-six
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thousandths per cent of the value of the stamps purchased. This
section shall not apply to purchases of stamps by a cigarette
stamping agent in an amount less than one hundred dollars
($100).
Section 17.1. Section 1296 of the act, amended June 29, 2002
(P.L.559, No.89), is amended to read:
Section 1296. Disposition of Certain Funds.--[Receipts from
the tax imposed by this article shall be deposited into the
General Fund. Twenty million four hundred eighty-five thousand
dollars ($20,485,000) of the receipts deposited into the General
Fund in accordance with this section shall be transferred
annually to the Agricultural Conservation Easement Purchase
Fund. Thirty million seven hundred thirty thousand dollars
($30,730,000) of the receipts deposited into the General Fund in
accordance with this section shall be transferred annually to
the Children's Health Fund for health care for indigent
children. The transfers required by this section shall be made
in two equal payments by July 15 and January 15.]
(a) Receipts from the tax imposed under this article shall
be deposited into the General Fund and used as follows:
(1) Twenty-five million four hundred eighty-five thousand
dollars ($25,485,000) shall be transferred annually to the
Agricultural Conservation Easement Purchase Fund.
(2) Thirty million seven hundred thirty thousand dollars
($30,730,000) shall be transferred annually to the Children's
Health Fund for health care for uninsured children.
(3) For the payments required under subsection (c).
(b) The transfers required under subsection (a)(1) and (2)
shall be made in two equal payments by July 15 and January 15.
(c) For any fiscal year after the effective date of this
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subsection in which the revenue deposited into the Local
Cigarette Tax Fund from an excise tax imposed and assessed upon
the sale or possession of cigarettes within a school district
that is coterminous with a city of the first class is less than
fifty eight million dollars ($58,000,000), the State Treasurer
shall transfer receipts deposited into the General Fund in
accordance with this section to the Local Cigarette Tax Fund in
an amount equal to the difference between the revenue deposited
during the fiscal year and fifty eight million dollars
($58,000,000) to be disbursed as provided under 53 Pa.C.S. §
8722(i) (relating to local option cigarette tax in school
districts of the first class). The Secretary of Revenue shall
determine the amount to be transferred. The transfers required
under this subsection shall be made annually by July 15.
Section 18. The act is amended by adding an article to read:
ARTICLE XII-A
TOBACCO PRODUCTS TAX
Section 1201-A. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Cigar." Any roll for smoking that weighs more than four
pounds per thousand and the wrapper or cover is made of natural
leaf tobacco or of any substance containing tobacco.
"Cigarette." As defined in section 1201.
"Consumer." An individual who purchases tobacco products for
personal use and not for resale.
"Contraband." Any tobacco product for which the tax imposed
by this article has not been paid.
"Dealer." A wholesaler or retailer. Nothing in this article
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shall preclude any person from being a wholesaler or retailer,
provided the person meets the requirements for a license in each
category of dealer.
"Department." The Department of Revenue of the Commonwealth.
"Electronic cigarettes." As follows:
(1) An electronic oral device, such as one composed of a
heating element and battery or electronic circuit, or both,
which provides a vapor of nicotine or any other substance and
the use or inhalation of which simulates smoking.
(2) The term includes:
(i) A device as described in paragraph (1),
notwithstanding whether the device is manufactured,
distributed, marketed or sold as an e-cigarette, e-cigar
and e-pipe or under any other product, name or
description.
(ii) A liquid or substance placed in or sold for use
in an electronic cigarette.
"Manufacturer." A person that produces tobacco products.
"Person." An individual, unincorporated association,
company, corporation, joint stock company, group, agency,
syndicate, trust or trustee, receiver, fiduciary, partnership,
conservator, any political subdivision of the Commonwealth or
any other state. If used in any of the provisions of this
article prescribing or imposing penalties, the term "person" as
applied to a partnership, unincorporated association or other
joint venture, shall mean the partners or members of the
partnership, unincorporated association or other joint venture,
and as applied to a corporation, shall mean each officer and
director of the corporation.
"Purchase price." The total value of anything paid or
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delivered, or promised to be paid or delivered, money or
otherwise, in complete performance of a sale or purchase,
without any deduction on account of the cost or value of the
property sold, cost or value of transportation, cost or value of
labor or service, interest or discount paid or allowed after the
sale is consummated, any other taxes imposed by the Commonwealth
or any other expense.
"Retailer." A person that purchases or receives tobacco
products from any source for the purpose of sale to a consumer,
or who owns, leases or otherwise operates one or more vending
machines for the purpose of sale of tobacco products to the
ultimate consumer. The term includes a vending machine operator
or a person that buys, sells, transfers or deals in tobacco
products and is not licensed as a tobacco products wholesaler
under this article.
"Roll-your-own tobacco." Any tobacco which, because of the
tobacco's appearance, type, packaging or labeling, is suitable
for use and is likely to be offered to, or purchased by,
consumers as tobacco for making cigarettes.
"Sale." Any transfer of ownership, custody or possession of
tobacco products for consideration; any exchange, barter or
gift; or any offer to sell or transfer the ownership, custody or
possession of tobacco products for consideration.
"Taxpayer." Any person subject to tax under this article.
"Tobacco products." As follows:
(1) Electronic cigarettes.
(2) Roll-your-own tobacco.
(3) Periques, granulated, plug cut, crimp cut, ready
rubbed and other smoking tobacco, snuff, dry snuff, snuff
flour, cavendish, plug and twist tobacco, fine-cut and other
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chewing tobaccos, shorts, refuse scraps, clippings, cuttings
and sweepings of tobacco and other kinds and forms of
tobacco, prepared in such manner as to be suitable for
chewing or ingesting or for smoking in a pipe or otherwise,
or any combination of chewing, ingesting or smoking.
(4) The term does not include:
(i) Any item subject to the tax under section 1206.
(ii) Cigars.
"Unclassified importer." A consumer who purchases tobacco
products using the Internet or mail order catalogs for personal
possession or use in this Commonwealth from persons that are not
licensed.
"Vending machine operator." A person who places or services
one or more tobacco product vending machines whether owned,
leased or otherwise operated by the person at locations from
which tobacco products are sold to the consumer. The owner or
tenant of the premises upon which a vending machine is placed
shall not be considered a vending machine operator if the
owner's or tenant's sole remuneration therefrom is a flat rental
fee or commission based upon the number or value of tobacco
products sold from the machine, unless the owner or tenant
actually owns the vending machine or leases the vending machine
under an agreement whereby any profits from the sale of the
tobacco products directly inure to the owner's or tenant's
benefit.
"Wholesaler." A person engaged in the business of selling
tobacco products that receives, stores, sells, exchanges or
distributes tobacco products to retailers or other wholesalers
in this Commonwealth or retailers who purchase from a
manufacturer or from another wholesaler who has not paid the tax
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imposed by this article.
Section 1202-A. Incidence and rate of tax.
(a) Imposition of tax on certain tobacco products.--A
tobacco products tax is imposed on the dealer or manufacturer at
the time the tobacco product is first sold to a retailer in this
Commonwealth at the rate of 55¢ per ounce for the purchase of
any tobacco product other than electronic cigarettes. The tax
rate shall include a proportionate tax at the rate of 55¢ per
ounce on all fractional parts of an ounce. The tax imposed on
tobacco products other than electronic cigarettes that weigh
less than 1.2 ounces per container is equal to the amount of the
tax imposed on tobacco products other than electronic cigarettes
that weigh 1.2 ounces. The tax shall be collected from the
retailer by whomever sells the tobacco product to the retailer
and remitted to the department. Any person required to collect
this tax shall separately state the amount of tax on an invoice
or other sales document.
(a.1) Imposition of tax on electronic cigarettes.--A tobacco
products tax is imposed on the dealer or manufacturer at the
time the electronic cigarette is first sold to a retailer in
this Commonwealth at the rate of 40% on the purchase price
charged to the retailer for the purchase of electronic
cigarettes. The tax shall be collected for the retailer by
whomever sells the electronic cigarette to the retailer and
remitted to the department. Any person required to collect this
tax shall separately state the amount of tax on an invoice or
other sales document.
(b) Retailer.--A retailer may only purchase tobacco products
from a licensed dealer. If the tax is not collected by the
seller from the retailer, the tax is imposed on the retailer at
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the time of purchase at the same rate as in subsections (a) and
(a.1) based on the retailer's purchase price of the tobacco
products. The retailer shall remit the tax to the department.
(c) Unclassified importer.--The tax is imposed on an
unclassified importer at the time of purchase at the same rate
as in subsections (a) and (a.1) based on the unclassified
importer's purchase price of the tobacco products. The
unclassified importer shall remit the tax to the department.
(d) Exceptions.--The tax shall not be imposed on any tobacco
products that:
(1) are exported for sale outside this Commonwealth; or
(2) are not subject to taxation by the Commonwealth
pursuant to any laws of the United States.
Section 1203-A. Floor tax.
(a) Payment.--
(1) Any retailer that, as of the effective date of this
paragraph, possesses tobacco products subject to the tax
imposed by section 1202-A other than roll-your-own tobacco
shall pay the tax in accordance with the rates specified in
section 1202-A. The tax shall be paid and reported on a form
prescribed by the department within 90 days of the effective
date of this paragraph.
(2) Any retailer that, as of the effective date of this
paragraph, possesses roll-your-own tobacco subject to the tax
imposed by section 1202-A shall pay the tax in accordance
with the rates specified in section 1202-A. The tax shall be
paid and reported on a form prescribed by the department
within 90 days of the effective date of this paragraph.
(b) Administrative penalty; license.--If a retailer fails to
file the report required by subsection (a) or fails to pay the
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tax imposed by subsection (a), the department may, in addition
to the interest and penalties provided in section 1215-A, do any
of the following:
(1) Impose an administrative penalty equal to the amount
of tax evaded or not paid. The penalty shall be added to the
tax evaded or not paid and assessed and collected at the same
time and in the same manner as the tax.
(2) Suspend, revoke or refuse to issue the retailer's
license.
(c) Criminal penalty.--In addition to any penalty imposed
under subsection (b), a person that willfully omits, neglects or
refuses to comply with a duty imposed under subsection (a)
commits a misdemeanor and shall, if convicted, be sentenced to
pay a fine of not less than $2,500 nor more than $5,000, to
serve a term of imprisonment not to exceed 30 days, or both.
Section 1204-A. Remittance of tax to department.
Wholesalers, retailers, unclassified importers and
manufacturers shall file monthly reports on a form prescribed by
the department by the 20th day of the month following the sale
or purchase of tobacco products from any other source on which
the tax levied by this article has not been paid. The tax is due
at the time the report is due. The department may require the
filing of reports and payment of tax on a less frequent basis at
its discretion.
Section 1205-A. (Reserved).
Section 1206-A. Procedures for claiming refund.
A claim for a refund of tax imposed by this article under
section 3003.1 and Article XXVII shall be in the form and
contain the information prescribed by the department by
regulation.
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Section 1207-A. Sales or possession of tobacco product when tax
not paid.
(a) Sales or possession.--Any person who sells or possesses
any tobacco product for which the proper tax has not been paid
commits a summary offense and shall, upon conviction, be
sentenced to pay costs of prosecution and a fine of not less
than $100 nor more than $1,000 or to imprisonment for not more
than 60 days, or both, at the discretion of the court. Any
tobacco products purchased from a wholesaler properly licensed
under this article shall be presumed to have the proper taxes
paid.
(b) Tax evasion.--Any person that shall falsely or
fraudulently, maliciously, intentionally or willfully with
intent to evade the payment of the tax imposed by this article
sells or possesses any tobacco product for which the proper tax
has not been paid commits a felony and shall, upon conviction,
be sentenced to pay costs of prosecution and a fine of not more
than $5,000 or to imprisonment for not more than five years, or
both, at the discretion of the court.
Section 1208-A. Assessment.
The department is authorized to make the inquiries,
determinations and assessments of the tax, including interest,
additions and penalties, imposed by this article.
Section 1209-A. (Reserved).
Section 1210-A. (Reserved).
Section 1211-A. Failure to file return.
Where no return is filed, the amount of the tax due may be
assessed and collected at any time as to taxable transactions
not reported.
Section 1212-A. False or fraudulent return.
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Where the taxpayer willfully files a false or fraudulent
return with intent to evade the tax imposed by this article, the
amount of tax due may be assessed and collected at any time.
Section 1213-A. Extension of limitation period.
Notwithstanding any other provision of this article, where,
before the expiration of the period prescribed for the
assessment of a tax, a taxpayer has consented, in writing, that
the period be extended, the amount of tax due may be assessed at
any time within the extended period. The period so extended may
be extended further by subsequent consents, in writing, made
before the expiration of the extended period.
Section 1214-A. Failure to furnish information, returning false
information or failure to permit inspection.
(a) Penalty.--Any taxpayer who fails to keep or make any
record, return, report, inventory or statement, or keeps or
makes any false or fraudulent record, return, report, inventory
or statement required by this article commits a misdemeanor and
shall, upon conviction, be sentenced to pay costs of prosecution
and a fine of $500 and to imprisonment for not more than one
year, or both, at the discretion of the court.
(b) Examination.--The department is authorized to examine
the books and records, the stock of tobacco products and the
premises and equipment of any taxpayer in order to verify the
accuracy of the payment of the tax imposed by this article. The
person subject to an examination shall give to the department or
its duly authorized representative, the means, facilities and
opportunity for the examination. Willful refusal to cooperate
with or permit an examination to the satisfaction of the
department shall be sufficient grounds for the suspension or
revocation of a taxpayer's license. In addition, a person who
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willfully refuses to cooperate with or permit an examination to
the satisfaction of the department commits a misdemeanor and
shall, upon conviction, be sentenced to pay costs of prosecution
and a fine of $500 or to imprisonment for not more than one
year, or both, at the discretion of the court.
(c) Dealer or manufacturer records.--A dealer or
manufacturer shall keep and maintain for a period of four years
records in the form prescribed by the department. The records
shall be maintained at the location for which the license is
issued.
(d) Reports.--A dealer or manufacturer shall file reports at
times and in the form prescribed by the department.
(e) Manufacturer, wholesaler or dealer records.--A
manufacturer, wholesaler or dealer located or doing business in
this Commonwealth who sells tobacco products to a wholesale or
retail license holder in this Commonwealth shall keep records
showing:
(1) A list by tobacco product and by brand family of the
number and kind of tobacco products sold, the amount of tax
due and the amount of tax paid. For roll-your-own tobacco,
the records shall include the total weight and the equivalent
stick count of roll-your-own tobacco by brand family which
the manufacturer, wholesaler or dealer sold, the amount of
tax due and the amount of tax paid. For purposes of this
paragraph, 0.09 ounces of roll-your-own tobacco shall
constitute one stick.
(2) The date the tobacco products were sold.
(3) The name and license number of the dealer the
tobacco products were sold to.
(4) The total weight of each of the tobacco products
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sold to the license holder.
(5) The place where the tobacco products were shipped.
(6) The name of the common carrier.
(f) Manufacturer, wholesaler or dealer.--A manufacturer,
wholesaler or dealer shall file with the department, on or
before the 20th day of each month, a report showing the
information listed in subsection (e) for the previous month.
(g) Records.--Each manufacturer, wholesaler and dealer shall
maintain and make available to the department and to the Office
of Attorney General all invoices and documentation of sales of
all tobacco products and any other information relied upon to
prepare the reports required under subsection (f) for a period
of five years after each report is filed with the department.
Section 1215-A. Other violations, peace officers and fines.
Sections 1278, 1279, 1280 and 1291 are incorporated by
reference into and shall apply to the tax imposed by this
article.
Section 1216-A. Sales reporting.
For purposes of reporting sales of roll-your-own tobacco
under the act of June 22, 2000 (P.L.394, No.54), known as the
Tobacco Settlement Agreement Act, 0.09 ounces of tobacco shall
constitute one individual unit sold.
Section 1217-A. (Reserved).
Section 1218-A. (Reserved).
Section 1219-A. Records of shipments and receipts of tobacco
products required.
The department may, in its discretion, require reports from
any common or contract carrier who transports tobacco products
to any point or points within this Commonwealth, and from any
bonded warehouseman or bailee who has in the possession of the
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warehouseman or bailee any tobacco products. The reports shall
contain the information concerning shipments of tobacco products
that the department determines to be necessary for the
administration of this article. All common and contract
carriers, bailees and warehousemen shall permit the examination
by the department or its authorized agents of any records
relating to the shipment or receipt of tobacco products.
Section 1220-A. Licensing of dealers and manufacturers.
(a) Prohibition.--No person, unless all sales of tobacco
products are exempt from Pennsylvania tobacco products tax,
shall sell, transfer or deliver any tobacco products in this
Commonwealth without first obtaining the proper license provided
for in this article.
(b) Application.--An applicant for a dealer's or
manufacturer's license shall complete and file an application
with the department. The application shall be in the form and
contain information prescribed by the department and shall set
forth truthfully and accurately the information desired by the
department. If the application is approved, the department shall
license the dealer or manufacturer for a period of one year and
the license may be renewed annually thereafter.
Section 1221-A. Licensing of manufacturers.
Any manufacturer doing business within this Commonwealth
shall first obtain a license to sell tobacco products by
submitting an application to the department containing the
information requested by the department and designating a
process agent. If a manufacturer designates no process agent,
the manufacturer shall be deemed to have made the Secretary of
State its agent for the service of process in this Commonwealth.
Section 1222-A. Licensing of wholesalers.
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(a) Requirements.--Applicants for a wholesale license or
renewal of that license shall meet the following requirements:
(1) The premises on which the applicant proposes to
conduct business are adequate to protect the revenue.
(2) The applicant is a person of reasonable financial
stability and reasonable business experience.
(3) The applicant, or any shareholder controlling more
than 10% of the stock if the applicant is a corporation or
any officer or director if the applicant is a corporation,
shall not have been convicted of any crime involving moral
turpitude.
(4) The applicant shall not have failed to disclose any
material information required by the department, including
information that the applicant has complied with this article
by providing a signed statement under penalty of perjury.
(5) The applicant shall not have made any material false
statement in the application.
(6) The applicant shall not have violated any provision
of this article.
(7) The applicant shall have filed all required State
tax reports and paid any State taxes not subject to a timely
perfected administrative or judicial appeal or subject to a
duly authorized deferred payment plan.
(b) Multiple locations.--The wholesale license shall be
valid for one specific location only. Wholesalers with more than
one location shall obtain a license for each location.
Section 1223-A. Licensing of retailers.
Applicants for retail license or renewal of that license
shall meet the following requirements:
(1) The premises in which the applicant proposes to
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conduct business are adequate to protect the revenues.
(2) The applicant shall not have failed to disclose any
material information required by the department.
(3) The applicant shall not have any material false
statement in the application.
(4) The applicant shall not have violated any provision
of this article.
(5) The applicant shall have filed all required State
tax reports and paid any State taxes not subject to a timely
perfected administrative or judicial appeal or subject to a
duly authorized deferred payment plan.
Section 1224-A. License for tobacco products vending machines.
Each tobacco products vending machine shall have a current
retail license which shall be conspicuously and visibly placed
on the machine. There shall be conspicuously and visibly placed
on every tobacco products vending machine the name and address
of the owner and the name and address of the operator.
Section 1225-A. License fees and issuance and display of
license.
(a) Application.--At the time of making any application or
license renewal application:
(1) An applicant for a tobacco products manufacturers
license shall pay the department a license fee of $1,500.
(2) An applicant for a wholesale tobacco products
dealer's license shall pay to the department a license fee of
$1,500.
(3) An applicant for a retail tobacco products dealer's
license shall pay to the department a license fee of $25.
(4) An applicant for a vending machine tobacco products
dealer's license shall pay to the department a license fee of
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$25.
(b) Proration.--Fees shall not be prorated.
(c) Issuance and display.--On approval of the application
and payment of the fees, the department shall issue the proper
license which must be conspicuously displayed at the location
for which it has been issued.
Section 1226-A. Electronic filing.
The department may at its discretion require that any or all
returns, reports or registrations that are required to be filed
under this article be filed electronically. Failure to
electronically file any return, report, registration or other
information the department may direct to be filed electronically
shall subject the taxpayer to a penalty of 5% of the tax due on
the return, up to a maximum of $1,000, but not less than $10.
This penalty shall be assessed at any time and collected in the
manner provided in this article. This penalty shall be in
addition to any civil penalty imposed in this article for
failure to furnish information or file a return. The criminal
penalty for failure to file a return electronically shall be the
same as the criminal penalty for failure to furnish information
or file a return under this article.
Section 1227-A. Expiration of license.
(a) Expiration.--A license shall expire on the last day of
February next succeeding the date upon which it was issued
unless the department at an earlier date suspends, surrenders or
revokes the license.
(b) Violation.--After the expiration date of the license or
sooner if the license is suspended, surrendered or revoked, it
shall be illegal for any dealer to engage directly or indirectly
in the business heretofore conducted by the dealer for which the
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