SB 74 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, providing for pediatric cancer research tax credit.

PRIOR PRINTER'S NO.

339 PRINTER'STHE NO.GENERAL ASSEMBLY OF PENNSYLVANIA SENATE BILL Session of No.

1335 THE GENERAL ASSEMBLY OF PENNSYLVANIA SENATE BILL Session of No.

WARD, MENSCH, MARCHKILLION, 4,REGAN, 2019N,FONTANA FONTANA,AND BREWSTER, BLAKEMARCH AND4, BOSCOLA,2019 ASREFERRED AMENDEDTO ONFINANCE, SECONDMARCH CONSIDERATION,4, OCTOBER 29, 2019 AN ACT AmendingAmeact 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;

conferring powers and imposing duties upon the Department of Revenue, certain employers, fiduciaries, individuals, persons, corporations penalties,"and providingother forentities; pediatric cancer research tax credit.

prescribing crimes, offenses and credit.es," providing for pediatric cancer research tax The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

The term includes a pass-through <-- entity.

"Contribution." A donation of cashcash. TO A PEDIATRIC CANCER <-- RESEARCH INSTITUTION.

20190SB0074PN1335 - 2 - Section 1705-L.

20190SB0074PN0339 - 2 - (a) Application.--A business firm may submit an application to the department for a tax credit.

(D) APPLICATION IN THE ALTERNATIVE.--AT THE TIME OF <-- APPLICATION FOR A TAX CREDIT, THE DEPARTMENT SHALL ADVISE A BUSINESS FIRM THAT THE FIRM MAY ELECT THAT ITS APPLICATION FOR A TAX CREDIT FOR A CONTRIBUTION TO A PARTICULAR PEDIATRIC CANCER RESEARCH INSTITUTION WILL, IN THE ALTERNATIVE, BE DEEMED AN APPLICATION RECEIVED BY THE DEPARTMENT ON THE SAME DATE AS THE PREFERRED APPLICATION, BUT FOR A DIFFERENT PEDIATRIC CANCER RESEARCH INSTITUTION AUTHORIZED UNDER THIS ARTICLE IF THE BUSINESS FIRM'S PREFERRED CHOICE OF PEDIATRIC CANCER RESEARCH INSTITUTION HAS REACHED THE $2,500,000 LIMIT UNDER SECTION 1709- L.

IF A BUSINESS FIRM DOES NOT RECEIVE ITS PREFERRED CHOICE OF PEDIATRIC CANCER RESEARCH INSTITUTION, THE DEPARTMENT SHALL PROMPTLY CONSIDER THE BUSINESS FIRM'S APPLICATION IN THE ALTERNATIVE FOR A DIFFERENT PEDIATRIC CANCER RESEARCH INSTITUTION AUTHORIZED UNDER THIS ARTICLE.

20190SB0074PN1335 - 3 - (1) Promulgating regulations necessary to implement this article.

(b) Notice.-- (1) The department shall notify the business firm regarding the authorization of tax credits and its 20190SB0074PN0339 - 3 - determination, including the amount of the credit available.

(c) Appeals.--Appeals from determinations made under subsection (b) shall be made through the administrative provisions of this act, applicable to the particular taxes against which the business firm or its members, shareholders or beneficiaries PARTNERS claim the tax credits.

<-- Section 1708-L.

The certificate may be used against a tax liability owed to the 20190SB0074PN1335 - 4 - department by a business firm that provides proof of a contribution to a pediatric cancer research center in the taxable year in which the contribution is made.

The business firm may apply the credit against any tax due under Article III, IV, VI, VII, VIII, IX or XV, excluding any tax withheld by an <-- employer under Article III.

(c) Tax liability.--A tax credit granted for any one taxable <--20190SB0074PN0339 - 4 - year may not exceed the tax liability of a business firm.

SECTIONSection 1710-L.

CARRYOVER AND CARRYBACK.

<-- (A) GENERAL RULE.--IF A BUSINESS FIRM DOES NOT USE ALL OR ANY PORTION OF A TAX CREDIT FOR THE TAXABLE YEAR IN WHICH THE TAX CREDIT IS FIRST APPROVED, THEN THE EXCESS MAY BE CARRIED OVER TO SUCCEEDING TAXABLE YEARS AND USED AS A CREDIT AGAINST THE QUALIFIED TAX LIABILITY OF THE BUSINESS FIRM FOR THOSE TAXABLE YEARS.

EACH TIME THE TAX CREDIT IS CARRIED OVER TO A SUCCEEDING TAXABLE YEAR, IT SHALL BE REDUCED BY THE AMOUNT THAT WAS USED AS A CREDIT DURING THE IMMEDIATELY PRECEDING TAXABLE 20190SB0074PN1335 - 5 - YEAR.

THE TAX CREDIT PROVIDED BY THIS ARTICLE MAY BE CARRIED OVER AND APPLIED TO SUCCEEDING TAXABLE YEARS FOR NO MORE THAN THREE TAXABLE YEARS FOLLOWING THE FIRST TAXABLE YEAR FOR WHICH THE TAXPAYER WAS ENTITLED TO CLAIM THE CREDIT.

(B) APPLICATION.--A TAX CREDIT APPROVED BY THE DEPARTMENT IN A TAXABLE YEAR FIRST SHALL BE APPLIED AGAINST THE BUSINESS FIRM'S QUALIFIED TAX LIABILITY FOR THE CURRENT TAXABLE YEAR AS OF THE DATE ON WHICH THE TAX CREDIT WAS APPROVED BEFORE THE TAX CREDIT CAN BE APPLIED AGAINST A TAX LIABILITY UNDER SUBSECTION (A).

(C) NO CARRYBACK OR REFUND.--A BUSINESS FIRM IS NOT ENTITLED TO CARRY BACK OR OBTAIN A REFUND OF ALL OR ANY PORTION OF AN UNUSED TAX CREDIT GRANTED TO THE BUSINESS FIRM UNDER THIS ARTICLE.

SECTION 1711-L.

PASS-THROUGH ENTITY.

(A) GENERAL RULE.--IF A BUSINESS FIRM WHICH IS A PASS- THROUGH ENTITY HAS ANY UNUSED TAX CREDITS UNDER SECTION 1710-L, THE PASS-THROUGH ENTITY MAY ELECT IN WRITING, ACCORDING TO PROCEDURES ESTABLISHED BY THE DEPARTMENT, TO TRANSFER ALL OR A PORTION OF THE TAX CREDITS TO SHAREHOLDERS, MEMBERS OR PARTNERS IN PROPORTION TO THE SHARE OF THE ENTITY'S DISTRIBUTIVE INCOME TO WHICH EACH SHAREHOLDER, MEMBER OR PARTNER IS ENTITLED.

(B) LIMITATION.--A PASS-THROUGH ENTITY AND A SHAREHOLDER, MEMBER OR PARTNER OF A PASS-THROUGH ENTITY MAY NOT CLAIM THE TAX CREDIT UNDER SUBSECTION (A) FOR THE SAME CONTRIBUTION.

(C) APPLICATION.--A SHAREHOLDER, MEMBER OR PARTNER OF A PASS-THROUGH ENTITY TO WHOM A TAX CREDIT IS TRANSFERRED UNDER SUBSECTION (A) SHALL IMMEDIATELY CLAIM THE TAX CREDIT IN THE TAXABLE YEAR IN WHICH THE TRANSFER IS MADE.

THE SHAREHOLDER, MEMBER OR PARTNER MAY NOT CARRY FORWARD, CARRY BACK, OBTAIN A 20190SB0074PN1335 - 6 - REFUND OF OR SELL OR ASSIGN THE TAX CREDIT.

(D) AN INDIVIDUAL SHAREHOLDER, MEMBER OR PARTNER MAY APPLY A TAX CREDIT DISTRIBUTED UNDER THIS SECTION TO INCOME TAXABLE UNDER ARTICLE III TO THE SHAREHOLDER, MEMBER OR PARTNER, TO THE SPOUSE OF THE SHAREHOLDER, MEMBER OR PARTNER OR TO BOTH, IF BOTH THE SHAREHOLDER, MEMBER OR PARTNER AND THE SPOUSE REPORT INCOME ON A JOINT PERSONAL INCOME TAX RETURN.

SECTION 1712-L.

SALE OR ASSIGNMENT.

(A) AUTHORIZATION.--UPON APPROVAL BY THE DEPARTMENT, A BUSINESS FIRM MAY SELL OR ASSIGN, IN WHOLE OR IN PART, A TAX CREDIT GRANTED TO THE BUSINESS FIRM UNDER THIS ARTICLE.

(B) APPLICATION.--THE FOLLOWING SHALL APPLY:

(1) TO SELL OR ASSIGN A TAX CREDIT, A BUSINESS FIRM MUST FILE AN APPLICATION FOR THE SALE OR ASSIGNMENT OF THE TAX CREDIT WITH THE DEPARTMENT.

THE APPLICATION MUST BE ON A FORM REQUIRED BY THE DEPARTMENT.

(2) THE DEPARTMENT SHALL APPROVE A SALE OR ASSIGNMENT IF THE PURCHASER OR ASSIGNEE HAS: