How HB 2877 changes current law

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

The bill establishes a new tax credit for employers who hire qualified veterans.

• March 4, 1971 (P.L.6, No.2)

  ARTICLE XVII-M RETURNING HEROES EMPLOYMENT TAX CREDIT Section 1701-M. 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: "Department." The Department of Labor and Industry of the Commonwealth. "Pass-through entity." A partnership as defined in section 301(n.0) or a Pennsylvania S corporation as defined in section 301(n.1). "Qualified tax liability." The liability for taxes imposed under Article III, IV or VI. The term does not include any tax withheld by an employer from an employee under Article III. "Qualified veteran." An individual who is certified by the department as a qualified veteran under 26 U.S.C. § 51(d)(3) (relating to amount of credit). "Tax credit." The Returning Heroes Employment Tax Credit established under this article. "Taxpayer." An entity subject to tax under Article III, IV or VI. The term includes the shareholder of a Pennsylvania S corporation. Section 1702-M. Establishment. The Returning Heroes Employment Tax Credit is established to provide tax credits to a taxpayer against the taxpayer's qualified tax liability. Section 1703-M. Administration. (a) Submission to department.--A taxpayer may submit to the department proof required by the department to certify that an employee of the taxpayer is a qualified veteran. (b) Certificate.--If the taxpayer meets the requirements of the department, the department shall issue a certificate to the taxpayer for the tax credit. (c) Amount of tax credit.--Under this article, a taxpayer shall be eligible to receive a tax credit of $2,000 against the taxpayer's qualified tax liability. Section 1704-M. Carryover, carryback, refund and assignment. (a) Carryover.--If the taxpayer cannot use the entire amount of the tax credit for the taxable year in which the tax credit is first approved, the excess may be carried over to the succeeding taxable years and used as a credit against the qualified tax liability of the taxpayer 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 year. The tax credit may be carried over and applied to succeeding taxable years for no more than 15 taxable years following the first taxable year for which the taxpayer was entitled to claim the credit. (b) Application.--A tax credit shall be applied against the taxpayer's qualified tax liability for the current taxable year as of the date on which the credit was approved before the tax credit is applied. (c) Unused credit.--A taxpayer is not entitled to assign, carry back or obtain a refund of an unused tax credit. Section 1705-M. Limitation on credits. (a) Total amount.--The aggregate amount of tax credits approved by the department may not exceed $20,000,000 in any fiscal year. (b) Allocation.--Tax credits shall be allocated by the department on a first-come, first-served basis. Section 1706-M. Shareholder, owner or member of pass-through entity. (a) Shareholder.--If a Pennsylvania S corporation does not have an eligible tax liability against which the tax credit may be applied, a shareholder of the Pennsylvania S corporation is entitled to a tax credit equal to the tax credit determined for the Pennsylvania S corporation for the taxable year multiplied by the percentage of the Pennsylvania S corporation's distributive income to which the shareholder is entitled. (b) Pass-through entity.--If a pass-through entity other than a Pennsylvania S corporation does not have an eligible tax liability against which the tax credit may be applied, an owner or member of the pass-through entity is entitled to a tax credit equal to the tax credit determined for the pass-through entity for the taxable year multiplied by the percentage of the pass-through entity's distributive income to which the owner or member is entitled. (c) Additional credit.--The tax credit provided under subsection (a) or (b) shall be in addition to any other tax credit to which a shareholder, owner or member of a pass-through entity is entitled under this act, except that a pass-through entity and a shareholder, owner or member of a pass-through entity may not claim a tax credit under this article for the same expense. Section 1707-M. Reports. The secretary shall submit an annual report to the President pro tempore of the Senate, the Minority Leader of the Senate, the Speaker of the House of Representatives and the Minority Leader of the House of Representatives indicating the use and effectiveness of the tax credit no later than March 15 of each year. The report shall include the names of all businesses utilizing a tax credit as of the date of the report and the amount of tax credits approved and utilized by each taxpayer. Notwithstanding any law providing for the confidentiality of tax records, the information contained in the report shall be public information. The report may also include any recommendations for changes in the calculation or administration of the tax credit. Section 1708-M. Regulations. The Secretary of Revenue shall promulgate regulations necessary for the implementation and administration of this article. Section 1709-M. Applicability. This chapter shall apply to taxpayers during tax years beginning after December 31, 2024.

  This adds a new article to the Tax Reform Code that creates the Returning Heroes Employment Tax Credit.