HB 1610 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in personal income tax, further providing for definitions and for income taxes imposed by other states and providing for provisions for overtime pay; in corporate net income tax, further providing for definitions, for determination of net loss deduction, for imposition of tax, for reports and payment of tax, for timely mailing treated as timely filing and payment and for additional withholding requirements, repealing provisions relating to consolidated reports, further providing for extension of time to file reports, for changes made by Federal Government, for limitations on assessments, for definitions, for manufacturing innovation and reinvestment deduction, for enforcement, rules and regulations, inquisitorial powers of the department, for retention of records and for penalties; in tax credit and tax benefit administration, further providing for definitions and providing for application of tax credits or tax benefits to a unitary business; providing for working Pennsylvanians tax credit; and, in general provisions, further providing for estimated tax, for underpayment of estimated tax and for restatement of tax liability under treaties.

For purposes of determining "taxable income" under Article IV, any corporation or member of a unitary business not subject to Federal income taxation or Federal reporting requirements pursuant to such a treaty shall be required to file a report or 20250HB1610PN2012 - 26 - file as part of a combined annual report with the department 20250HB1610PN1914 - 26 - showing the taxable income which would have been reported to and ascertained by the Federal Government had it not been exempted by the treaty.

AMENDING20250HB1610PN1914 THE ACT OF MARCH 4, 1971 (P.L.6, NO.2), ENTITLED "AN <-- ACT RELATING TO TAX REFORM AND STATE TAXATION BY CODIFYING 20250HB1610PN2012 - 27 - 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 PERSONAL INCOME TAX, FURTHER PROVIDING FOR DEFINITIONS AND FOR INCOME TAXES IMPOSED BY OTHER STATES AND PROVIDING FOR PROVISIONS FOR OVERTIME PAY;

IN CORPORATE NET INCOME TAX, FURTHER PROVIDING FOR DEFINITIONS, FOR DETERMINATION OF NET LOSS DEDUCTION, FOR IMPOSITION OF TAX, FOR REPORTS AND PAYMENT OF TAX, FOR TIMELY MAILING TREATED AS TIMELY FILING AND PAYMENT AND FOR ADDITIONAL WITHHOLDING REQUIREMENTS, REPEALING PROVISIONS RELATING TO CONSOLIDATED REPORTS, FURTHER PROVIDING FOR EXTENSION OF TIME TO FILE REPORTS, FOR CHANGES MADE BY FEDERAL GOVERNMENT, FOR LIMITATIONS ON ASSESSMENTS, FOR DEFINITIONS, FOR MANUFACTURING INNOVATION AND REINVESTMENT DEDUCTION, FOR ENFORCEMENT, RULES AND REGULATIONS, INQUISITORIAL POWERS OF THE DEPARTMENT, FOR RETENTION OF RECORDS AND FOR PENALTIES;

IN TAX CREDIT AND TAX BENEFIT ADMINISTRATION, FURTHER PROVIDING FOR DEFINITIONS AND PROVIDING FOR APPLICATION OF TAX CREDITS OR TAX BENEFITS TO A UNITARY BUSINESS;

PROVIDING FOR WORKING PENNSYLVANIANS TAX CREDIT;

AND, IN GENERAL PROVISIONS, FURTHER PROVIDING FOR ESTIMATED TAX, FOR UNDERPAYMENT OF ESTIMATED TAX AND FOR RESTATEMENT OF TAX LIABILITY UNDER TREATIES.

THE GENERAL ASSEMBLY OF THE COMMONWEALTH OF PENNSYLVANIA HEREBY ENACTS AS FOLLOWS:

SECTION 1.

SECTION 301(D) OF THE ACT OF MARCH 4, 1971 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED AND THE SECTION IS AMENDED BY ADDING A SUBSECTION 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 WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:

* * * 20250HB1610PN2012 - 28 - (D) "COMPENSATION" MEANS AND SHALL INCLUDE SALARIES, WAGES, COMMISSIONS, BONUSES, OVERTIME PAY AND INCENTIVE PAYMENTS WHETHER BASED ON PROFITS OR OTHERWISE, FEES[, TIPS] AND SIMILAR REMUNERATION RECEIVED FOR SERVICES RENDERED, WHETHER DIRECTLY OR THROUGH AN AGENT, AND WHETHER IN CASH OR IN PROPERTY.

THE TERM "COMPENSATION" SHALL INCLUDE ANY PART OF A DISTRIBUTION UNDER A PLAN DESCRIBED IN SECTION 409A(D)(1) OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C.

§ 409A(D)(1)), AS AMENDED, ATTRIBUTABLE TO AN ELECTIVE DEFERRAL OF INCOME OR THE INCOME ON ANY ELECTIVE DEFERRAL OF INCOME, WHETHER PAID OR PAYABLE DURING EMPLOYMENT OR TO A RETIRED PERSON UPON OR AFTER RETIREMENT FROM SERVICE.

TIPS AND GRATUITIES SHALL NOT BE CONSIDERED COMPENSATION UNDER THIS ARTICLE.

THE TERM "COMPENSATION" SHALL NOT MEAN OR INCLUDE:

(I) PERIODIC PAYMENTS FOR SICKNESS AND DISABILITY OTHER THAN REGULAR WAGES RECEIVED DURING A PERIOD OF SICKNESS OR DISABILITY;

OR (II) DISABILITY, RETIREMENT OR OTHER PAYMENTS ARISING UNDER WORKMEN'S COMPENSATION ACTS, OCCUPATIONAL DISEASE ACTS AND SIMILAR LEGISLATION BY ANY GOVERNMENT;

OR (III) PAYMENTS COMMONLY RECOGNIZED AS OLD AGE OR RETIREMENT BENEFITS PAID TO PERSONS RETIRED FROM SERVICE AFTER REACHING A SPECIFIC AGE OR AFTER A STATED PERIOD OF EMPLOYMENT;

OR (IV) PAYMENTS COMMONLY KNOWN AS PUBLIC ASSISTANCE, OR UNEMPLOYMENT COMPENSATION PAYMENTS BY ANY GOVERNMENTAL AGENCY;

OR (V) PAYMENTS TO REIMBURSE ACTUAL EXPENSES;

OR (VI) PAYMENTS MADE BY EMPLOYERS OR LABOR UNIONS, INCLUDING PAYMENTS MADE PURSUANT TO A CAFETERIA PLAN QUALIFYING UNDER SECTION 125 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C.

§ 125), FOR EMPLOYE BENEFIT PROGRAMS COVERING HOSPITALIZATION, SICKNESS, DISABILITY OR DEATH, SUPPLEMENTAL UNEMPLOYMENT BENEFITS OR STRIKE BENEFITS:

20250HB1610PN2012 - 29 - PROVIDED, THAT THE PROGRAM DOES NOT DISCRIMINATE IN FAVOR OF HIGHLY COMPENSATED INDIVIDUALS AS TO ELIGIBILITY TO PARTICIPATE, PAYMENTS OR PROGRAM BENEFITS;

OR (VII) ANY COMPENSATION RECEIVED BY UNITED STATES SERVICEMEN SERVING IN A COMBAT ZONE;

OR (VIII) PAYMENTS RECEIVED BY A FOSTER PARENT FOR IN-HOME CARE OF FOSTER CHILDREN FROM AN AGENCY OF THE COMMONWEALTH OR A POLITICAL SUBDIVISION THEREOF OR AN ORGANIZATION EXEMPT FROM FEDERAL TAX UNDER SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE OF 1954 WHICH IS LICENSED BY THE COMMONWEALTH OR A POLITICAL SUBDIVISION THEREOF AS A PLACEMENT AGENCY;

OR (IX) PAYMENTS MADE BY EMPLOYERS OR LABOR UNIONS FOR EMPLOYE BENEFIT PROGRAMS COVERING SOCIAL SECURITY OR RETIREMENT;

OR (X) PERSONAL USE OF AN EMPLOYER'S OWNED OR LEASED PROPERTY OR OF EMPLOYER-PROVIDED SERVICES.

* * * (N.3) "OVERTIME PAY" MEANS SALARIES OR WAGES PAID TO EMPLOYES FOR HOURS OF WORK OFFICIALLY ORDERED OR APPROVED IN EXCESS OF FORTY HOURS PER WEEK OR EIGHT HOURS PER DAY, AS APPLICABLE, ACCORDING TO 29 U.S.C.

§ 207 (RELATING TO MAXIMUM HOURS).

* * * SECTION 1.1.

SECTION 314 OF THE ACT IS AMENDED TO READ:

SECTION 314.

INCOME TAXES IMPOSED BY OTHER STATES.--(A) A RESIDENT TAXPAYER BEFORE ALLOWANCE OF ANY CREDIT UNDER SECTION 312 SHALL BE ALLOWED A CREDIT AGAINST THE TAX OTHERWISE DUE UNDER THIS ARTICLE FOR THE AMOUNT OF ANY INCOME TAX, WAGE TAX OR TAX ON OR MEASURED BY GROSS OR NET EARNED OR UNEARNED INCOME IMPOSED ON HIM OR ON A PENNSYLVANIA S CORPORATION, LIMITED LIABILITY COMPANY OR PARTNERSHIP IN WHICH HE IS A DIRECT OR INDIRECT SHAREHOLDER OR PARTNER, TO THE EXTENT [OF HIS PRO RATA 20250HB1610PN2012 - 30 - SHARE THEREOF DETERMINED IN ACCORDANCE WITH SECTION 307.9,] THAT THE TAX WAS IMPOSED ON THE TAXPAYER'S DISTRIBUTIVE SHARE OR OTHER SHARE THEREOF BY ANOTHER STATE WITH RESPECT TO INCOME WHICH IS ALSO SUBJECT TO TAX UNDER THIS ARTICLE.

FOR PURPOSES OF THIS SUBSECTION, THE TERM "STATE" SHALL ONLY INCLUDE A STATE OF THE UNITED STATES, THE DISTRICT OF COLUMBIA, THE COMMONWEALTH OF PUERTO RICO AND ANY TERRITORY OR POSSESSION OF THE UNITED STATES.

(B) THE CREDIT PROVIDED UNDER THIS SECTION SHALL NOT EXCEED THE PROPORTION OF THE TAX OTHERWISE DUE UNDER THIS ARTICLE THAT THE AMOUNT OF THE TAXPAYER'S INCOME SUBJECT TO TAX BY THE OTHER JURISDICTION BEARS TO HIS ENTIRE TAXABLE INCOME.

(C) IN LIEU OF SUBMITTING A COPY OF EACH STATE RETURN IN WHICH A TAX LIABILITY IS REPORTED AND TAX IS PAID, A MEMBER, PARTNER, SHAREHOLDER, PARTNERSHIP OR PENNSYLVANIA S CORPORATION MAY PROVIDE A CERTIFIED STATEMENT THAT REFLECTS EACH MEMBER'S, PARTNER'S OR SHAREHOLDER'S SHARE OF TAXABLE INCOME, AMOUNT OF STATE INCOME TAX PAID AND OTHER INFORMATION THAT THE DEPARTMENT REQUIRES.

SECTION 2.

THE ACT IS AMENDED BY ADDING A SECTION TO READ:

SECTION 357.1.

PROVISIONS FOR OVERTIME PAY.--(A) AN EMPLOYER REQUIRED TO WITHHOLD TAX UNDER SECTION 316.1 SHALL WITHHOLD TAX FROM AN EMPLOYE'S COMPENSATION UNDER THE REQUIREMENT OF THIS ARTICLE FOR ALL HOURS WORKED BY THE EMPLOYE, INCLUDING OVERTIME HOURS AS PROVIDED FOR UNDER 29 U.S.C.

§ 207 (RELATING TO MAXIMUM HOURS).

(B) AN EMPLOYER MAY NOT REDUCE OR DENY THE AVAILABILITY OF OVERTIME HOURS TO EMPLOYES UNDER 29 U.S.C.

§ 207 AS A SOLE RESULT OF THE DEDUCTION UNDER SUBSECTION (C), PROVIDED THAT OVERTIME HOURS WOULD HAVE OTHERWISE BEEN AVAILABLE TO THE SAME 20250HB1610PN2012 - 31 - EMPLOYES UNDER SIMILAR CIRCUMSTANCES.

AN EMPLOYER FOUND TO BE IN VIOLATION OF THIS SUBSECTION IS SUBJECT TO A FINE OF TWO THOUSAND DOLLARS ($2,000).

(C) WHEN CALCULATING TAXABLE INCOME ON THE ANNUAL PERSONAL INCOME TAX RETURN, A TAXPAYER WHO RECEIVED OVERTIME PAY DURING THE TAXABLE YEAR SHALL BE ELIGIBLE TO DEDUCT AN AMOUNT EQUAL TO THE AMOUNT OF OVERTIME PAY RECEIVED.

IF THE AMOUNT OF DEDUCTION THAT THE TAXPAYER IS ELIGIBLE TO RECEIVE UNDER THIS SECTION CAUSES THE TAXPAYER'S TAX LIABILITY UNDER THIS ARTICLE TO BE LESS THAN ZERO, THE DEPARTMENT SHALL REFUND THE EXCESS AMOUNT TO THE TAXPAYER.

(D) THIS SECTION SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025.

SECTION 3.

SECTION 401(3)1(A) AND (B), (3)2(A)(17)(E) AND (5) OF THE ACT ARE AMENDED, (3)1 IS AMENDED BY ADDING A PHRASE, (3)1(T) IS AMENDED BY ADDING A PARAGRAPH, (3)2(A)(1) IS AMENDED BY ADDING A SUBPARAGRAPH, (3)2(A)(9)(A) IS AMENDED BY ADDING A UNIT, (3)4 IS AMENDED BY ADDING PHRASES AND THE SECTION IS AMENDED BY ADDING CLAUSES TO READ:

SECTION 401.

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:

* * * (3) "TAXABLE INCOME." 1.

(A) IN CASE THE ENTIRE BUSINESS OF THE CORPORATION IS TRANSACTED WITHIN THIS COMMONWEALTH, FOR ANY TAXABLE YEAR WHICH BEGINS ON OR AFTER JANUARY 1, 1971, TAXABLE INCOME FOR THE CALENDAR YEAR OR FISCAL YEAR AS RETURNED TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT BEFORE SPECIAL DEDUCTIONS PROVIDED FOR IN 26 U.S.C.

CH.

1 SUBCH.

B PT.

VIII 20250HB1610PN2012 - 32 - (RELATING TO SPECIAL DEDUCTIONS FOR CORPORATIONS), NOT INCLUDING THE DEDUCTIONS PROVIDED FOR IN 26 U.S.C.

§ 243 (RELATING TO DIVIDENDS RECEIVED BY CORPORATIONS), OR IN THE CASE OF A CORPORATION PARTICIPATING IN THE FILING OF CONSOLIDATED RETURNS TO THE FEDERAL GOVERNMENT OR THAT IS NOT REQUIRED TO FILE A RETURN WITH THE FEDERAL GOVERNMENT, THE TAXABLE INCOME WHICH WOULD HAVE BEEN RETURNED TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT BEFORE SPECIAL DEDUCTIONS PROVIDED FOR IN 26 U.S.C.

CH.

1 SUBCH.

B PT.

VIII, NOT INCLUDING THE DEDUCTIONS PROVIDED FOR IN 26 U.S.C.

§ 243, IF SEPARATE RETURNS HAD BEEN MADE TO THE FEDERAL GOVERNMENT FOR THE CURRENT AND PRIOR TAXABLE YEARS, SUBJECT, HOWEVER, TO ANY CORRECTION THEREOF, FOR FRAUD, EVASION, OR ERROR AS FINALLY ASCERTAINED BY THE FEDERAL GOVERNMENT.

(B) ADDITIONAL DEDUCTIONS SHALL BE ALLOWED FROM TAXABLE INCOME ON ACCOUNT OF ANY DIVIDENDS RECEIVED FROM ANY OTHER CORPORATION BUT ONLY TO THE EXTENT THAT SUCH DIVIDENDS ARE INCLUDED IN TAXABLE INCOME AS RETURNED TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT.

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 1991, ADDITIONAL DEDUCTIONS SHALL ONLY BE ALLOWED FOR AMOUNTS INCLUDED, UNDER [SECTION 78 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C.

§ 78)] 26 U.S.C.

§ 78 (RELATING TO GROSS UP FOR DEEMED PAID FOREIGN TAX CREDIT), IN TAXABLE INCOME RETURNED TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT AND FOR THE AMOUNT OF ANY DIVIDENDS RECEIVED FROM A FOREIGN CORPORATION INCLUDED IN TAXABLE INCOME TO THE EXTENT SUCH DIVIDENDS WOULD BE DEDUCTIBLE IN ARRIVING AT FEDERAL TAXABLE INCOME IF RECEIVED FROM A DOMESTIC CORPORATION.

FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025, THE ADDITIONAL DEDUCTION WITH RESPECT TO DIVIDENDS SHALL NOT BE ALLOWED FOR DIVIDENDS BETWEEN MEMBERS OF A UNITARY BUSINESS.

20250HB1610PN2012 - 33 - * * * (P.1) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025, IN THE CASE OF A CORPORATION THAT IS A MEMBER OF A UNITARY BUSINESS, THE TERM "TAXABLE INCOME" SHALL MEAN THE COMBINED UNITARY INCOME OF THE UNITARY BUSINESS, AS DETERMINED ON A WATER'S-EDGE BASIS, PLUS THE CORPORATION'S NONBUSINESS INCOME.

* * * (T) * * * (5) THE ADJUSTMENT REQUIRED UNDER PARAGRAPH (1) SHALL NOT APPLY TO A TRANSACTION BETWEEN THE TAXPAYER AND AN AFFILIATED ENTITY IF THE TAXPAYER AND THE AFFILIATED ENTITY FILE AS PART OF THE SAME COMBINED ANNUAL REPORT IN THIS STATE.

* * * 2.

IN CASE THE ENTIRE BUSINESS OF ANY CORPORATION, OTHER THAN A CORPORATION ENGAGED IN DOING BUSINESS AS A REGULATED INVESTMENT COMPANY AS DEFINED BY THE INTERNAL REVENUE CODE OF 1986, IS NOT TRANSACTED WITHIN THIS COMMONWEALTH, THE TAX IMPOSED BY THIS ARTICLE SHALL BE BASED UPON SUCH PORTION OF THE TAXABLE INCOME OF SUCH CORPORATION FOR THE FISCAL OR CALENDAR YEAR, AS DEFINED IN SUBCLAUSE 1 HEREOF, AND MAY BE DETERMINED AS FOLLOWS:

(A) DIVISION OF INCOME.

(1) AS USED IN THIS DEFINITION, UNLESS THE CONTEXT OTHERWISE REQUIRES:

* * * (E.1) NOTWITHSTANDING SUBPARAGRAPH (E), IN REGARD TO THE SALE, REDEMPTION, MATURITY OR EXCHANGE OF SECURITIES, HELD BY THE TAXPAYER PRIMARILY FOR SALE TO CUSTOMERS IN THE ORDINARY COURSE OF ITS TRADE OR BUSINESS, SALES SHALL ONLY INCLUDE THE NET GAINS, EQUAL TO ZERO OR ABOVE, RECEIVED BY THE TAXPAYER.

20250HB1610PN2012 - 34 - * * * (9) (A) EXCEPT AS PROVIDED IN SUBPARAGRAPH (B):

* * * (VI) (A) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025, THE COMBINED UNITARY INCOME OF A UNITARY BUSINESS, AS DETERMINED ON A WATER'S-EDGE BASIS, SHALL BE APPORTIONED TO THIS STATE BY MULTIPLYING SAID INCOME BY THE MEMBER'S SALES FACTOR, THE NUMERATOR OF WHICH SHALL BE THE MEMBER'S TOTAL SALES IN THIS STATE DURING THE TAX PERIOD, AND THE DENOMINATOR OF WHICH SHALL BE THE COMBINED TOTAL SALES OF ALL MEMBERS OF THE UNITARY BUSINESS EVERYWHERE DURING THE TAX PERIOD.

IN COMPUTING THE SALES OF EACH MEMBER FOR PURPOSES OF APPORTIONMENT, THE FOLLOWING SALES ARE EXCLUDED FROM THE NUMERATOR AND DENOMINATOR:

(I) SALES FROM TRANSACTIONS BETWEEN OR AMONG MEMBERS OF THE UNITARY BUSINESS THAT ARE DEFERRED UNDER 26 CFR 1.1502-13 (RELATING TO INTERCOMPANY TRANSACTIONS) FOR FEDERAL TAXABLE INCOME PURPOSES;

AND (II) THE SALES OF EACH MEMBER THAT ARE EXCLUDED FROM THE UNITARY BUSINESS PURSUANT TO THE DEFINITION OF WATER'S-EDGE BASIS.

(B) THE PENNSYLVANIA SALES OF EACH NONTAXABLE MEMBER SHALL BE DETERMINED BASED UPON THE APPORTIONMENT RULES APPLICABLE TO THE MEMBER AND SHALL BE AGGREGATED.

EACH TAXABLE MEMBER OF THE UNITARY BUSINESS SHALL INCLUDE IN ITS SALES FACTOR NUMERATOR A PORTION OF THE AGGREGATE PENNSYLVANIA SALES OF NONTAXABLE MEMBERS DURING THE TAX PERIOD BASED ON A RATIO, THE NUMERATOR OF WHICH IS THE TAXABLE MEMBER'S PENNSYLVANIA SALES DURING THE TAX PERIOD AND THE DENOMINATOR OF WHICH IS THE AGGREGATE PENNSYLVANIA SALES OF ALL THE TAXABLE MEMBERS OF THE UNITARY BUSINESS DURING THE TAX PERIOD.

20250HB1610PN2012 - 35 - (C) NONBUSINESS INCOME OF EACH MEMBER OF A UNITARY BUSINESS SHALL BE ALLOCATED AS PROVIDED IN PARAGRAPHS (5) THROUGH (8) OF PHRASE (A) OF SUBCLAUSE 2 OF THIS DEFINITION.

(D) A MEMBER OF THE UNITARY BUSINESS SHALL BE SUBJECT TO TAX ON ITS APPORTIONED SHARE OF THE COMBINED UNITARY INCOME OF THE UNITARY BUSINESS, AS DETERMINED ON A WATER'S-EDGE BASIS, PLUS ITS NONBUSINESS INCOME OR LOSS ALLOCATED TO THIS STATE, MINUS THE MEMBER'S NET LOSS DEDUCTION, IF APPLICABLE.

(E) THE AGGREGATE OF ALL SUCH FINAL SUMS OF EACH MEMBER OF THE UNITARY BUSINESS FROM PHRASE (D) SHALL CONSTITUTE THE PORTION OF THE UNITARY BUSINESS'S INCOME SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE.

(F) (1) THE SECRETARY OF REVENUE MAY DISTRIBUTE, APPORTION OR ALLOCATE GROSS INCOME, DEDUCTIONS, CREDITS OR ALLOWANCES BETWEEN AND AMONG TWO OR MORE CORPORATIONS, PERSONS, ENTITIES, MEMBERS OR UNITARY BUSINESSES, WHETHER OR NOT INCORPORATED, WHETHER OR NOT ORGANIZED IN THE UNITED STATES AND WHETHER OR NOT AFFILIATED, IF:

(A) THE CORPORATIONS, PERSONS, ENTITIES, MEMBERS OR UNITARY BUSINESSES ARE OWNED OR CONTROLLED DIRECTLY OR INDIRECTLY BY THE SAME INTERESTS WITHIN THE MEANING OF 26 U.S.C.

§ 482 (RELATING TO ALLOCATION OF INCOME AND DEDUCTIONS AMONG TAXPAYERS);

AND (B) THE SECRETARY OF REVENUE DETERMINES THAT THE DISTRIBUTION, APPORTIONMENT OR ALLOCATION IS NECESSARY IN ORDER TO REFLECT AN ARM'S LENGTH STANDARD WITHIN THE MEANING OF 26 CFR 1.482-1 (RELATING TO ALLOCATION OF INCOME AND DEDUCTIONS AMONG TAXPAYERS) AND TO REFLECT CLEARLY THE INCOME OF THOSE CORPORATIONS, PERSONS, ENTITIES, MEMBERS OR UNITARY BUSINESSES.

(2) THE SECRETARY OF REVENUE SHALL APPLY THE ADMINISTRATIVE AND JUDICIAL INTERPRETATIONS OF 26 U.S.C.

§ 482 IN ADMINISTERING 20250HB1610PN2012 - 36 - THIS SECTION.

(G) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025, ANY MEMBER OF A UNITARY BUSINESS THAT WOULD OTHERWISE APPORTION ITS SHARE OF THE COMBINED UNITARY INCOME OF THE UNITARY BUSINESS, AS DETERMINED ON A WATER'S-EDGE BASIS, UNDER PHRASE (B), (C), (D) OR (E) OF SUBCLAUSE 2 OF THIS DEFINITION SHALL INSTEAD USE A SALES FACTOR AS DESCRIBED IN THIS SECTION.

* * * (17) SALES, OTHER THAN SALES UNDER PARAGRAPHS (16) AND (16.1), ARE IN THIS STATE AS FOLLOWS:

* * * (E) [GROSS RECEIPTS] NET GAINS, EQUAL TO ZERO OR ABOVE, FROM THE SALE, REDEMPTION, MATURITY OR EXCHANGE OF SECURITIES, HELD BY THE TAXPAYER PRIMARILY FOR SALE TO CUSTOMERS IN THE ORDINARY COURSE OF ITS TRADE OR BUSINESS, IF THE CUSTOMERS ARE IN THIS STATE.

* * * 4.

* * * (H) SUBJECT TO THE LIMITATIONS OF THIS SUBCLAUSE, ANY MEMBER OF A UNITARY BUSINESS THAT HAS UNUSED NET LOSS FROM TAXABLE YEARS THAT BEGAN PRIOR TO JANUARY 1, 2026, OR THAT GENERATES NET LOSSES WHILE A MEMBER OF A UNITARY BUSINESS MAY ONLY TAKE THE NET LOSS DEDUCTION FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025, TO THE EXTENT OF THE MEMBER'S SHARE OF TAXABLE INCOME AFTER ALLOCATION AND APPORTIONMENT AND THE NET LOSSES MAY NOT BE USED BY OTHER MEMBERS OF THE SAME UNITARY BUSINESS EXCEPT AS OTHERWISE PERMITTED BY PHRASE (G) OF SUBCLAUSE 2 OF THIS DEFINITION.

(I) ANY NET LOSS REALIZED FOR A TAXABLE YEAR UNUSED BY A CORPORATION WHICH SUBSEQUENTLY BECOMES A MEMBER OF ANOTHER 20250HB1610PN2012 - 37 - UNITARY BUSINESS MAY ONLY BE USED BY THAT CORPORATION EXCEPT AS OTHERWISE PERMITTED BY PHRASE (G) OF SUBCLAUSE 2 OF THIS DEFINITION.

* * * (5) "TAXABLE YEAR." [THE TAXABLE YEAR WHICH THE CORPORATION, OR ANY CONSOLIDATED GROUP WITH WHICH THE CORPORATION PARTICIPATES IN THE FILING OF CONSOLIDATED RETURNS, ACTUALLY USES IN REPORTING TAXABLE INCOME TO THE FEDERAL GOVERNMENT.

WITH REGARD TO THE TAX IMPOSED BY ARTICLE IV OF THIS ACT (RELATING TO THE CORPORATE NET INCOME TAX), THE TERMS "ANNUAL YEAR," "FISCAL YEAR," "ANNUAL OR FISCAL YEAR," "TAX YEAR" AND "TAX PERIOD" SHALL BE THE SAME AS THE CORPORATION'S TAXABLE YEAR, AS DEFINED IN THIS PARAGRAPH.] 1.

EXCEPT AS SET FORTH IN SUBCLAUSE 2, THE TAXABLE YEAR WHICH THE CORPORATION, OR ANY CONSOLIDATED GROUP WITH WHICH THE CORPORATION PARTICIPATES IN THE FILING OF CONSOLIDATED RETURNS, ACTUALLY USES IN REPORTING TAXABLE INCOME TO THE FEDERAL GOVERNMENT, OR WHICH THE CORPORATION WOULD HAVE USED IN REPORTING TAXABLE INCOME TO THE FEDERAL GOVERNMENT HAD IT BEEN REQUIRED TO REPORT ITS TAXABLE INCOME TO THE FEDERAL GOVERNMENT.

WITH REGARD TO THE TAX IMPOSED BY ARTICLE IV, THE TERMS "ANNUAL YEAR," "FISCAL YEAR," "ANNUAL OR FISCAL YEAR," "TAX YEAR" AND "TAX PERIOD" SHALL BE THE SAME AS THE CORPORATION'S TAXABLE YEAR, AS DEFINED IN THIS SUBCLAUSE OR SUBCLAUSE 2.

2.

ALL MEMBERS OF A UNITARY BUSINESS SHALL HAVE A COMMON TAXABLE YEAR FOR PURPOSES OF COMPUTING TAX DUE UNDER THIS ARTICLE.

THE TAXABLE YEAR SHALL BE THE COMMON TAXABLE YEAR ADOPTED, IN A MANNER PRESCRIBED BY THE DEPARTMENT, BY ALL MEMBERS OF THE UNITARY BUSINESS.

THE COMMON TAXABLE YEAR MUST BE USED BY ALL MEMBERS OF THE UNITARY BUSINESS IN THE YEAR OF 20250HB1610PN2012 - 38 - ADOPTION AND ALL FUTURE YEARS UNLESS OTHERWISE PERMITTED BY THE DEPARTMENT.

* * * (12) "TAX HAVEN." A JURISDICTION THAT DURING THE TAX YEAR IN QUESTION:

1.

HAS LAWS OR PRACTICES THAT PREVENT EFFECTIVE EXCHANGE OF INFORMATION FOR TAX PURPOSES WITH OTHER GOVERNMENTS ON TAXPAYERS BENEFITING FROM THE TAX REGIME;

2.

HAS A TAX REGIME WHICH LACKS TRANSPARENCY;

3.

FACILITATES THE ESTABLISHMENT OF FOREIGN-OWNED ENTITIES WITHOUT THE NEED FOR A LOCAL SUBSTANTIVE PRESENCE OR PROHIBITS THESE ENTITIES FROM HAVING ANY COMMERCIAL IMPACT ON THE LOCAL ECONOMY;

4.

EXPLICITLY OR IMPLICITLY EXCLUDES THE JURISDICTION'S RESIDENT TAXPAYERS FROM TAKING ADVANTAGE OF THE TAX REGIME BENEFITS OR PROHIBITS ENTERPRISES THAT BENEFIT FROM THE REGIME FROM OPERATING IN THE JURISDICTION'S DOMESTIC MARKET;

OR 5.

HAS CREATED A TAX REGIME WHICH IS FAVORABLE FOR TAX AVOIDANCE, BASED UPON AN OVERALL ASSESSMENT OF RELEVANT FACTORS, INCLUDING WHETHER THE JURISDICTION HAS A SIGNIFICANT UNTAXED OFFSHORE FINANCIAL OR SERVICES SECTOR RELATIVE TO ITS OVERALL ECONOMY.

(13) "UNITARY BUSINESS." A SINGLE ECONOMIC ENTERPRISE THAT IS MADE UP OF SEPARATE PARTS OF A SINGLE CORPORATION, OF A COMMONLY CONTROLLED GROUP OF CORPORATIONS, OR BOTH, THAT ARE SUFFICIENTLY INTERDEPENDENT, INTEGRATED AND INTERRELATED THROUGH THEIR ACTIVITIES SO AS TO PROVIDE A SYNERGY AND MUTUAL BENEFIT THAT PRODUCES A SHARING OR EXCHANGE OF VALUE AMONG THEM AND A FLOW OF VALUE TO THE SEPARATE PARTS.

A UNITARY BUSINESS INCLUDES ALL PARTS AND CORPORATIONS THAT ARE INCLUDED IN A UNITARY 20250HB1610PN2012 - 39 - BUSINESS UNDER THE CONSTITUTION OF THE UNITED STATES.

(14) "WATER'S-EDGE BASIS." A SYSTEM OF REPORTING THAT INCLUDES THE INCOME AND APPORTIONMENT FACTORS OF CERTAIN MEMBERS OF A UNITARY BUSINESS, DESCRIBED AS FOLLOWS:

1.

ANY MEMBER INCORPORATED IN THE UNITED STATES OR FORMED UNDER THE LAWS OF ANY STATE OF THE UNITED STATES, THE DISTRICT OF COLUMBIA, ANY TERRITORY OR POSSESSION OF THE UNITED STATES OR THE COMMONWEALTH OF PUERTO RICO.

2.

ANY MEMBER, REGARDLESS OF THE PLACE INCORPORATED OR FORMED, IF AT LEAST TWENTY PER CENT OF THE MEMBER'S SALES FACTOR IS WITHIN THE UNITED STATES, AND THE FOLLOWING SHALL APPLY:

(A) FOR PURPOSES OF DETERMINING WHETHER AT LEAST TWENTY PER CENT OF A MEMBER'S SALES FACTOR IS WITHIN THE UNITED STATES, THE CALCULATION MUST BE PERFORMED ON A STAND-ALONE BASIS.

SALES SHALL BE GROSS FIGURES WITHOUT ELIMINATIONS FOR TRANSACTIONS WITH OTHER MEMBERS OF ANY UNITARY BUSINESS.

(B) WHETHER SALES ARE WITHIN THE UNITED STATES IS BASED ON THE SALES FACTOR SOURCING RULES CONTAINED IN CLAUSE (3)2.

3.

ANY MEMBER WHICH IS ONE OF THE FOLLOWING:

(A) A DOMESTIC INTERNATIONAL SALES CORPORATION AS DESCRIBED IN 26 U.S.C.

CH.

1 SUBCH.

N PT.

IV SUBPT.

A (RELATING TO TREATMENT OF QUALIFYING CORPORATIONS).

(B) A FOREIGN SALES CORPORATION AS DESCRIBED IN THE FORMER 26 U.S.C.

§§ 921, 922, 923, 924, 925, 926 AND 927.

(C) AN EXPORT TRADE CORPORATION AS DESCRIBED IN 26 U.S.C.

CH.

1 SUBCH.

N PT.

III SUBPT.

G (RELATING TO EXPORT TRADE CORPORATIONS).

4.

ANY MEMBER NOT DESCRIBED IN SUBCLAUSE 1, 2 OR 3 SHALL INCLUDE THE PORTION OF THE MEMBER'S TAXABLE INCOME DERIVED FROM OR ATTRIBUTABLE TO SOURCES WITHIN THE UNITED STATES, AS 20250HB1610PN2012 - 40 - DETERMINED UNDER 26 U.S.C.

(RELATING TO INTERNAL REVENUE CODE) WITHOUT REGARD TO FEDERAL TREATIES, AND ITS APPORTIONMENT FACTORS RELATED THERETO.

5.

ANY MEMBER THAT IS A "CONTROLLED FOREIGN CORPORATION" AS DEFINED IN 26 U.S.C.

§ 957 (RELATING TO CONTROLLED FOREIGN CORPORATIONS;

UNITED STATES PERSONS), TO THE EXTENT THE INCOME OF THAT MEMBER IS INCOME DEFINED IN 26 U.S.C.

§ 952 (RELATING TO SUBPART F INCOME DEFINED) AS SUBPART F INCOME, NOT EXCLUDING LOWER-TIER SUBSIDIARIES' DISTRIBUTIONS OF SUCH INCOME WHICH WERE PREVIOUSLY TAXED, DETERMINED WITHOUT REGARD TO FEDERAL TREATIES, AND THE APPORTIONMENT FACTORS RELATED TO THAT INCOME;

ANY ITEM OF INCOME RECEIVED BY A CONTROLLED FOREIGN CORPORATION AND THE APPORTIONMENT FACTORS RELATED TO SUCH INCOME SHALL BE EXCLUDED IF THE CORPORATION ESTABLISHES TO THE SATISFACTION OF THE SECRETARY OF REVENUE THAT SUCH INCOME WAS SUBJECT TO AN EFFECTIVE RATE OF INCOME TAX IMPOSED BY A FOREIGN COUNTRY GREATER THAN NINETY PER CENT OF THE MAXIMUM RATE OF TAX SPECIFIED IN 26 U.S.C.

§ 11 (RELATING TO TAX IMPOSED).

THE EFFECTIVE RATE OF INCOME TAX DETERMINATION SHALL BE BASED UPON THE METHODOLOGY UNDER 26 CFR 1.954-1 (RELATING TO FOREIGN BASE COMPANY INCOME).

6.

ANY MEMBER THAT IS INCORPORATED IN OR IS DOING BUSINESS IN A TAX HAVEN UNLESS IT IS PROVEN TO THE SATISFACTION OF THE SECRETARY THAT SUCH MEMBER IS INCORPORATED IN OR DOING BUSINESS IN A TAX HAVEN FOR A LEGITIMATE BUSINESS PURPOSE.

(15) "COMMONLY CONTROLLED GROUP." FOR A CORPORATION, THE CORPORATION IS A MEMBER OF A GROUP OF TWO OR MORE CORPORATIONS AND MORE THAN FIFTY PER CENT OF THE VOTING STOCK OR CONTROLLING INTEREST OF EACH MEMBER OF THE GROUP IS DIRECTLY OR INDIRECTLY OWNED BY A COMMON OWNER OR BY COMMON OWNERS, EITHER CORPORATE OR 20250HB1610PN2012 - 41 - NONCORPORATE, OR BY ONE OR MORE OF THE MEMBER CORPORATIONS OF THE GROUP.

(16) "COMBINED UNITARY INCOME." THE AGGREGATE SEPARATE COMPANY TAXABLE INCOME OR LOSS OF ALL MEMBERS OF A UNITARY BUSINESS SUBJECT TO APPORTIONMENT EXCEPT:

1.

INCOME FROM AN INTERCOMPANY TRANSACTION BETWEEN MEMBERS OF A UNITARY BUSINESS SHALL BE DEFERRED IN A MANNER SIMILAR TO 26 CFR 1.1502-13 FOR FEDERAL TAXABLE INCOME PURPOSES.

2.

DIVIDENDS PAID BY ONE MEMBER OF A UNITARY BUSINESS TO ANOTHER.

3.

INCOME OF THE FOLLOWING CORPORATIONS IS NOT INCLUDED IN THE DETERMINATION OF COMBINED UNITARY INCOME:

(A) ANY CORPORATION SUBJECT TO TAXATION UNDER ARTICLE VII, VIII, IX OR XV;

(B) ANY CORPORATION SPECIFIED IN THE DEFINITION OF "INSTITUTION" IN SECTION 701.5 THAT WOULD BE SUBJECT TO TAXATION UNDER ARTICLE VII, WERE IT DOING BUSINESS IN THIS COMMONWEALTH, AS DEFINED IN SECTION 701.5;

(C) ANY CORPORATION COMMONLY KNOWN AS A TITLE INSURANCE COMPANY THAT WOULD BE SUBJECT TO TAXATION UNDER ARTICLE VIII, WERE IT INCORPORATED IN THIS STATE;

(D) ANY CORPORATION SPECIFIED AS AN INSURANCE COMPANY, ASSOCIATION OR EXCHANGE IN ARTICLE IX THAT WOULD BE SUBJECT TO TAXATION UNDER ARTICLE IX, WERE IT TRANSACTING INSURANCE BUSINESS IN THIS STATE;

(E) ANY CORPORATION SPECIFIED IN THE DEFINITION OF "INSTITUTION" IN SECTION 1501 THAT WOULD BE SUBJECT TO TAXATION UNDER ARTICLE XV, WERE IT LOCATED, AS DEFINED IN SECTION 1501, IN THIS STATE;

OR (F) ANY CORPORATION THAT HAS FILED A TIMELY ELECTION AND HAS 20250HB1610PN2012 - 42 - QUALIFIED TO BE TAXED AS A REGULATED INVESTMENT COMPANY UNDER THE PROVISIONS OF THE INTERNAL REVENUE CODE OF 1954, AS AMENDED.

(17) "MEMBER." A CORPORATION THAT IS A MEMBER OF A UNITARY BUSINESS.

THE TERM DOES NOT INCLUDE A CORPORATION LISTED IN CLAUSE (16)3.

(18) "TAXABLE MEMBER." A MEMBER WHICH WOULD BE SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE UNDER SECTION 402 ON A SEPARATE ENTITY BASIS FOR EXERCISING, WHETHER IN ITS OWN NAME OR THROUGH ANY PERSON, ASSOCIATION, BUSINESS TRUST, CORPORATION, JOINT VENTURE, LIMITED LIABILITY COMPANY, LIMITED PARTNERSHIP, PARTNERSHIP, MEMBER OR OTHER ENTITY, ANY OF THE PRIVILEGES INCLUDED IN SECTION 402(A)(1), (2), (3), (4) AND (5).

(19) "NONTAXABLE MEMBER." A MEMBER WHICH IS NOT A TAXABLE MEMBER.

SECTION 4.

SECTION 401.1 OF THE ACT IS AMENDED BY ADDING A SUBSECTION TO READ:

SECTION 401.1.

DETERMINATION OF NET LOSS DEDUCTION.--* * * (F) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025, TAXPAYERS FILING COMBINED ANNUAL REPORTS MUST CALCULATE THE AVAILABLE NET LOSS DEDUCTION ON A TAXABLE MEMBER BY TAXABLE MEMBER BASIS IN ACCORDANCE WITH THE PROVISIONS OF SUBCLAUSE 4 OF SECTION 401(3).

SECTION 5.

SECTIONS 402(A) INTRODUCTORY PARAGRAPH AND (5) (III) AND (B) AND 403(C), (D) AND (F) OF THE ACT ARE AMENDED AND THE SECTIONS ARE AMENDED BY ADDING SUBSECTIONS TO READ:

SECTION 402.

IMPOSITION OF TAX.--(A) A CORPORATION SHALL BE SUBJECT TO AND SHALL PAY AN EXCISE TAX FOR EXERCISING, WHETHER IN ITS OWN NAME OR THROUGH ANY PERSON, ASSOCIATION, BUSINESS TRUST, CORPORATION, JOINT VENTURE, LIMITED LIABILITY COMPANY, LIMITED PARTNERSHIP, PARTNERSHIP, MEMBER OR OTHER ENTITY, ANY OF 20250HB1610PN2012 - 43 - THE FOLLOWING PRIVILEGES:

* * * (5) * * * (III) THERE SHALL BE A REBUTTABLE PRESUMPTION THAT A CORPORATION, OR IN THE CONTEXT OF A UNITARY BUSINESS, A MEMBER OF A UNITARY BUSINESS WITH $500,000 OR MORE OF SALES SOURCED IN THE CURRENT TAX YEAR TO THIS COMMONWEALTH UNDER SECTION 401 HAS SUBSTANTIAL NEXUS IN THIS COMMONWEALTH WITHOUT REGARD TO PHYSICAL PRESENCE IN THIS COMMONWEALTH.

* * * (B) THE ANNUAL RATE OF TAX ON CORPORATE NET INCOME IMPOSED BY SUBSECTION (A) FOR TAXABLE YEARS BEGINNING FOR THE CALENDAR YEAR OR FISCAL YEAR ON OR AFTER THE DATES SET FORTH SHALL BE AS FOLLOWS:

TAXABLE YEAR TAX RATE JANUARY 1, 1995, THROUGH DECEMBER 31, 2022 9.99% JANUARY 1, 2023, THROUGH DECEMBER 31, 2023 8.99% JANUARY 1, 2024, THROUGH DECEMBER 31, 2024 8.49% JANUARY 1, 2025, THROUGH DECEMBER 31, 2025 7.99% JANUARY 1, 2026, THROUGH DECEMBER 31, 2026 [7.49%] 7.24% 20250HB1610PN2012 - 44 - JANUARY 1, 2027, THROUGH DECEMBER 31, 2027 [6.99%] 6.49% JANUARY 1, 2028, THROUGH DECEMBER 31, 2028 [6.49%] 5.74% JANUARY 1, 2029, [THROUGH DECEMBER 31, 2029] AND EACH TAXABLE YEAR THEREAFTER [5.99%] 4.99% [JANUARY 1, 2030, THROUGH DECEMBER 31, 2030 5.49% JANUARY 1, 2031, AND EACH TAXABLE YEAR THEREAFTER 4.99%] * * * (D) FOR PURPOSES OF THIS SECTION THE TERM "CORPORATION" SHALL INCLUDE A UNITARY BUSINESS, EXCEPT WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT MEANING.

SECTION 403.

REPORTS AND PAYMENT OF TAX.--* * * (A.1) (1) EACH CORPORATION THAT IS A MEMBER OF A UNITARY BUSINESS THAT CONSISTS OF TWO OR MORE CORPORATIONS, UNLESS EXCLUDED BY THE PROVISIONS OF THIS ARTICLE, SHALL FILE AS PART OF A COMBINED ANNUAL REPORT.

THE MEMBERS OF THE UNITARY BUSINESS SHALL DESIGNATE ONE MEMBER THAT IS SUBJECT TO TAX UNDER THIS ARTICLE TO FILE THE COMBINED ANNUAL REPORT AND TO ACT AS AGENT ON BEHALF OF ALL OTHER MEMBERS OF THE UNITARY BUSINESS.

EACH CORPORATION THAT IS A MEMBER OF A UNITARY BUSINESS SHALL BE 20250HB1610PN2012 - 45 - LIABLE FOR ITS TAX LIABILITY UNDER THIS ARTICLE.

THE AGENT ALSO SHALL BE LIABLE FOR THE AGGREGATE AMOUNT OF THE UNITARY BUSINESS' TAX LIABILITY PURSUANT TO THIS ARTICLE.

(2) THE OATH OR AFFIRMATION OF THE DESIGNATED MEMBER'S PRESIDENT, VICE PRESIDENT, TREASURER, ASSISTANT TREASURER OR OTHER AUTHORIZED OFFICER SHALL CONSTITUTE THE OATH OR AFFIRMATION OF EACH CORPORATION THAT IS A MEMBER OF THAT UNITARY BUSINESS.

(3) THE DESIGNATED MEMBER SHALL TRANSMIT TO THE DEPARTMENT UPON A FORM PRESCRIBED BY THE DEPARTMENT A COMBINED ANNUAL REPORT UNDER OATH OR AFFIRMATION OF THE MEMBER'S PRESIDENT, VICE PRESIDENT, TREASURER, ASSISTANT TREASURER OR OTHER AUTHORIZED OFFICER.

(4) IN ADDITION TO THE INFORMATION REQUIRED IN SUBSECTION (A), THE COMBINED ANNUAL REPORT SHALL SET FORTH:

(I) ALL MEMBERS INCLUDED IN THE UNITARY BUSINESS.

(II) ALL NECESSARY DATA, BOTH IN THE AGGREGATE AND FOR EACH MEMBER OF THE UNITARY BUSINESS, THAT SETS FORTH THE DETERMINATION OF TAX LIABILITY FOR EACH MEMBER OF THE UNITARY BUSINESS.

(III) ANY OTHER INFORMATION THAT THE DEPARTMENT MAY REQUIRE.

(A.2) A MEMBER OF A UNITARY BUSINESS OF TWO OR MORE CORPORATIONS MUST DETERMINE THE MEMBER'S INCOME AND APPORTIONMENT FACTORS ON A WATER'S-EDGE BASIS.

* * * (B.1) IT SHALL BE THE DUTY OF EACH UNITARY BUSINESS LIABLE TO PAY TAX UNDER THIS ARTICLE TO PAY ESTIMATED TAX UNDER SECTION 3003.2 AND TO MAKE FINAL PAYMENT OF TAX DUE FOR THE TAXABLE YEAR WITH THE COMBINED ANNUAL REPORT REQUIRED BY THIS SECTION.

(C) THE AMOUNT OF ALL TAXES, IMPOSED UNDER THE PROVISIONS OF 20250HB1610PN2012 - 46 - THIS ARTICLE, NOT PAID ON OR BEFORE THE TIMES AS ABOVE PROVIDED, SHALL BEAR INTEREST AS PROVIDED IN SECTION 806 OF THE ACT OF APRIL 9, 1929 (P.L.343, NO.176), KNOWN AS "THE FISCAL CODE," FROM THE DATE THEY ARE DUE AND PAYABLE UNTIL PAID, EXCEPT THAT IF THE TAXABLE INCOME HAS BEEN, OR IS INCREASED BY THE COMMISSIONER OF INTERNAL REVENUE, OR BY ANY OTHER AGENCY OR COURT OF THE UNITED STATES, INTEREST SHALL BE COMPUTED ON THE ADDITIONAL TAX DUE FROM THIRTY DAYS AFTER THE CORPORATION RECEIVES NOTICE OF THE CHANGE OF INCOME UNTIL PAID:

PROVIDED, HOWEVER, THAT ANY CORPORATION OR DESIGNATED MEMBER RESPONSIBLE FOR FILING A COMBINED ANNUAL REPORT MAY PAY THE FULL AMOUNT OF SUCH TAX, OR ANY PART THEREOF, TOGETHER WITH INTEREST DUE TO THE DATE OF PAYMENT, WITHOUT PREJUDICE TO ITS RIGHT TO PRESENT AND PROSECUTE, AN ADMINISTRATIVE PETITION OR AN APPEAL TO COURT.

IF IT BE THEREAFTER DETERMINED THAT SUCH TAXES WERE OVERPAID, THE DEPARTMENT SHALL ENTER A CREDIT TO THE ACCOUNT OF SUCH CORPORATION OR DESIGNATED MEMBER, WHICH MAY BE USED BY IT IN THE MANNER PRESCRIBED BY LAW.

(D) IF THE OFFICERS OF ANY CORPORATION OR DESIGNATED MEMBER SHALL NEGLECT, OR REFUSE TO MAKE ANY REPORT AS HEREIN REQUIRED, OR SHALL KNOWINGLY MAKE ANY FALSE REPORT, A PENALTY OF FIVE HUNDRED DOLLARS ($500) PLUS AN ADDITIONAL ONE PER CENT FOR EVERY DOLLAR OF TAX DETERMINED TO BE DUE IN EXCESS OF TWENTY-FIVE THOUSAND DOLLARS ($25,000) SHALL BE ADDED TO THE TAX DETERMINED TO BE DUE.

NO AMOUNTS ADDED TO THE TAX SHALL BEAR ANY INTEREST WHATSOEVER.

* * * (E.1) IF THE MEMBERS OF A UNITARY BUSINESS HAVE A COMMON TAXABLE YEAR THAT CLOSES NOT UPON DECEMBER 31, BUT UPON SOME OTHER DATE, SUCH UNITARY BUSINESS SHALL MAKE THE COMBINED ANNUAL 20250HB1610PN2012 - 47 - REPORT, HEREIN REQUIRED, ON OR BEFORE THE FIFTEENTH DAY OF THE MONTH FOLLOWING WHAT IS OR WOULD BE THE DUE DATE OF THE RETURN TO THE FEDERAL GOVERNMENT, SUBJECT IN ALL OTHER RESPECTS TO THE PROVISIONS OF THIS ARTICLE.

(F) IF THE CORPORATION OR ANY MEMBERS OF THE UNITARY BUSINESS SHALL CLAIM IN ITS REPORT OR IN ITS COMBINED ANNUAL REPORT THAT THE RETURN MADE TO THE FEDERAL GOVERNMENT WAS INACCURATE, THE AMOUNT CLAIMED [BY IT] TO BE THE TAXABLE INCOME, TAXABLE UNDER THIS ARTICLE, AND THE BASIS OF SUCH CLAIM OF INACCURACY, SHALL BE FULLY SPECIFIED.

SECTION 6.

SECTIONS 403.1 AND 403.2(B) AND (E) OF THE ACT ARE AMENDED TO READ:

SECTION 403.1.

TIMELY MAILING TREATED AS TIMELY FILING AND PAYMENT.--NOTWITHSTANDING THE PROVISIONS OF ANY STATE TAX LAW TO THE CONTRARY, WHENEVER A REPORT OR PAYMENT OF ALL OR ANY PORTION OF A STATE TAX IS REQUIRED BY LAW TO BE RECEIVED BY THE PENNSYLVANIA DEPARTMENT OF REVENUE OR OTHER AGENCY OF THE COMMONWEALTH ON OR BEFORE A DAY CERTAIN, THE CORPORATION SHALL BE DEEMED TO HAVE COMPLIED WITH SUCH LAW IF THE LETTER TRANSMITTING THE REPORT OR PAYMENT OF SUCH TAX WHICH HAS BEEN RECEIVED BY THE DEPARTMENT IS POSTMARKED BY THE UNITED STATES POSTAL SERVICE ON OR PRIOR TO THE FINAL DAY ON WHICH THE PAYMENT IS TO BE RECEIVED.

FOR THE PURPOSES OF THIS ARTICLE, PRESENTATION OF A RECEIPT INDICATING THAT THE REPORT OR PAYMENT WAS MAILED BY REGISTERED OR CERTIFIED MAIL ON OR BEFORE THE DUE DATE SHALL BE EVIDENCE OF TIMELY FILING AND PAYMENT.

FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION" SHALL INCLUDE A UNITARY BUSINESS.

SECTION 403.2.

ADDITIONAL WITHHOLDING REQUIREMENTS.--* * * 20250HB1610PN2012 - 48 - (B) A PARTNERSHIP REQUIRED TO FILE A REPORT UNDER SUBSECTION (A) SHALL WITHHOLD AND PAY TO THE DEPARTMENT A TAX ON BEHALF OF ITS NONFILING CORPORATE PARTNERS IN AN AMOUNT EQUAL TO ITS NET NONFILING CORPORATE PARTNERS' SHARES OF INCOME AND DEDUCTIONS AS REPORTED TO THE FEDERAL GOVERNMENT MULTIPLIED BY THE TAX RATE APPLICABLE TO THE TAXABLE YEAR BEING REPORTED.

ANY AMOUNT WITHHELD AND PAID TO THE DEPARTMENT ON BEHALF OF A NONFILING CORPORATE PARTNER SHALL BE CONSIDERED A TAX PAYMENT BY THAT PARTNER AND CREDITED TO ITS ACCOUNT [AS IF IT WAS DIRECTLY PAID BY THE PARTNER] OR THE ACCOUNT OF THE DESIGNATED MEMBER OF THE UNITARY BUSINESS.

* * * (E) THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN THIS SECTION SHALL HAVE THE MEANING ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:

"NET NONFILING CORPORATE PARTNERS' SHARES OF INCOME AND DEDUCTIONS AS REPORTED TO THE FEDERAL GOVERNMENT." THAT PORTION OF THE INCOME, LESS THE DEDUCTIONS:

(1) REPORTED ON SCHEDULE K OF THE FEDERAL FORM 1065, RETURN OF PARTNERSHIP INCOME, FILED WITH THE FEDERAL GOVERNMENT FOR THE TAXABLE YEAR;

AND (2) ALLOCATED ON FEDERAL SCHEDULE K-1 TO NONFILING CORPORATE PARTNERS.

IF THE ENTIRE BUSINESS OF THE PARTNERSHIP IS NOT TRANSACTED IN THIS COMMONWEALTH, THE AMOUNT COMPUTED UNDER THIS DEFINITION SHALL BE APPORTIONED TO THIS COMMONWEALTH AS PROVIDED IN SECTION 401(3)2 AS IF THE PARTNERSHIP WERE A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE.

"NONFILING CORPORATE PARTNER." A PARTNER WHICH:

(1) IS A CORPORATION AS DEFINED IN SECTION 401;

AND 20250HB1610PN2012 - 49 - (2) HAS [NOT] NEITHER FILED A TAX REPORT NOR BEEN INCLUDED IN A COMBINED ANNUAL REPORT AND HAS NOT PAID THE TAX REQUIRED BY SECTIONS 402 AND 403 FOR THE PREVIOUS TAXABLE YEAR.

"PARTNER." AN OWNER OF AN INTEREST IN THE PARTNERSHIP, IN WHATEVER MANNER THAT OWNER AND OWNERSHIP INTEREST ARE DESIGNATED.

"PARTNERSHIP." AN ENTITY CLASSIFIED AS A PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES.

(1) THE TERM INCLUDES:

(I) A PARTNERSHIP, LIMITED PARTNERSHIP, LIMITED LIABILITY PARTNERSHIP OR LIMITED LIABILITY COMPANY;

AND (II) ANY SYNDICATE, GROUP, POOL, JOINT VENTURE, BUSINESS TRUST, ASSOCIATION OR OTHER UNINCORPORATED ORGANIZATION THROUGH OR BY WHICH A BUSINESS, FINANCIAL OPERATION OR VENTURE IS CARRIED ON.

(2) THE TERM DOES NOT INCLUDE AN ENTITY THAT IS:

(I) LISTED ON A UNITED STATES NATIONAL STOCK EXCHANGE;

OR (II) DESCRIBED IN SECTION 401(1)1 OR 2.

SECTION 7.

SECTION 404 OF THE ACT IS REPEALED:

[SECTION 404.

CONSOLIDATED REPORTS.--THE DEPARTMENT SHALL NOT PERMIT ANY CORPORATION OWNING OR CONTROLLING, DIRECTLY OR INDIRECTLY, ANY OF THE VOTING CAPITAL STOCK OF ANOTHER CORPORATION OR OF OTHER CORPORATIONS, SUBJECT TO THE PROVISIONS OF THIS ARTICLE, TO MAKE A CONSOLIDATED REPORT, SHOWING THE COMBINED NET INCOME.] SECTION 8.

SECTION 405 OF THE ACT IS AMENDED TO READ:

SECTION 405.

EXTENSION OF TIME TO FILE REPORTS.--THE DEPARTMENT MAY, UPON APPLICATION MADE TO IT, IN SUCH FORM AS IT SHALL PRESCRIBE, ON OR PRIOR TO THE LAST DAY FOR FILING ANY ANNUAL REPORT, AND UPON PROPER CAUSE SHOWN, GRANT TO THE 20250HB1610PN2012 - 50 - CORPORATION, REQUIRED TO FILE SUCH REPORT, AN EXTENSION OF NOT MORE THAN SIXTY DAYS WITHIN WHICH SUCH REPORT MAY BE FILED.

IF THE FEDERAL INCOME TAX AUTHORITIES GRANT AN EXTENSION OF TIME FOR FILING THE REPORTS WITH THE FEDERAL GOVERNMENT, THE DEPARTMENT SHALL AUTOMATICALLY GRANT AN EXTENSION OF TIME FOR FILING THE ANNUAL REPORT UNDER THIS ARTICLE UNTIL THE FIFTEENTH DAY OF THE MONTH FOLLOWING THE TERMINATION OF THE FEDERAL EXTENSION, BUT THE AMOUNT OF TAX DUE SHALL, IN SUCH CASES, NEVERTHELESS, BE SUBJECT TO INTEREST FROM THE DUE DATES AND AT THE RATES FIXED BY THIS ARTICLE.

FOR PURPOSES OF THIS SECTION THE TERM "REPORT," WHEN USED IN THE CONTEXT OF FILINGS WITH THE DEPARTMENT, SHALL INCLUDE COMBINED ANNUAL REPORTS AND THE TERM "CORPORATION" SHALL INCLUDE A UNITARY BUSINESS.

SECTION 9.

SECTION 406(E) OF THE ACT IS AMENDED AND THE SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:

SECTION 406.

CHANGES MADE BY FEDERAL GOVERNMENT.--* * * (E) THE PROVISIONS OF THIS SECTION SHALL APPLY TO EVERY CORPORATION WHICH WAS DOING BUSINESS IN PENNSYLVANIA IN THE YEAR FOR WHICH THE FEDERAL INCOME HAS BEEN CHANGED, IRRESPECTIVE OF WHETHER OR NOT SUCH CORPORATION OR ANY MEMBER OF A UNITARY BUSINESS HAS THEREAFTER MERGED, CONSOLIDATED, WITHDRAWN OR DISSOLVED.

ANY CLEARANCE CERTIFICATE ISSUED BY THE DEPARTMENT SHALL BE CONDITIONED UPON THE REQUIREMENT THAT IN THE EVENT OF A CHANGE IN FEDERAL INCOME FOR ANY YEAR FOR WHICH TAXES HAVE BEEN PAID TO THE COMMONWEALTH, THE CORPORATION OR ITS SUCCESSOR OR ITS OFFICERS OR ITS DIRECTORS SHALL FILE WITH THE DEPARTMENT A REPORT OF CHANGE AND PAY ANY ADDITIONAL STATE TAX RESULTING THEREFROM.

(F) FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION" SHALL INCLUDE A UNITARY BUSINESS.

20250HB1610PN2012 - 51 - SECTION 10.

SECTIONS 407.3(F), 407.6(A)(5), (6) AND (8) AND 407.7(D)(3) OF THE ACT ARE AMENDED TO READ:

SECTION 407.3.

LIMITATIONS ON ASSESSMENTS.--* * * (F) FOR PURPOSES OF THIS SECTION[,]:

(1) A REPORT FILED BEFORE THE LAST DAY PRESCRIBED FOR FILING SHALL BE DEEMED TO HAVE BEEN FILED ON THE LAST DAY[.];

AND (2) THE TERM "REPORT" SHALL INCLUDE COMBINED ANNUAL REPORTS.

SECTION 407.6.

DEFINITIONS.--(A) FOR THE PURPOSES OF THIS PART ONLY, THE FOLLOWING WORDS, TERMS AND PHRASES SHALL HAVE THE MEANING ASCRIBED TO THEM IN THIS SUBSECTION, EXCEPT WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:

* * * (5) "QUALIFIED MANUFACTURING INNOVATION AND REINVESTMENT DEDUCTION." AN ALLOWABLE DEDUCTION AS DETERMINED, CALCULATED AND EXECUTED IN A COMMITMENT LETTER BETWEEN THE DEPARTMENT AND THE TAXPAYER.

THE DEDUCTION SHALL BE APPLIED TO THE TAXABLE INCOME OF THE TAXPAYER TO REDUCE A QUALIFIED TAX LIABILITY OF THE TAXPAYER FOLLOWING THE ALLOCATION AND APPORTIONMENT OF THE INCOME OF THE TAXPAYER.

IF THE TAXPAYER IS A UNITARY BUSINESS FILING A COMBINED ANNUAL RETURN, THE DEDUCTION SHALL BE APPLIED TO THE SPECIFIC MEMBER OF THE UNITARY BUSINESS WHICH QUALIFIES UNDER THIS PART.

SUCH MEMBER SHALL REDUCE TAXABLE INCOME FOLLOWING ALLOCATION AND THE APPORTIONMENT OF THE COMBINED UNITARY INCOME OF THE UNITARY BUSINESS, AS DETERMINED ON A WATER'S-EDGE BASIS, AND THE APPLICATION OF ANY NET LOSS OF THE MEMBER.

(6) "QUALIFIED TAX LIABILITY." A TAXPAYER'S TAX LIABILITY UNDER THIS ARTICLE.

IN THE CASE OF A UNITARY BUSINESS, THE TERM ONLY INCLUDES THE PORTION OF THE UNITARY BUSINESS'S OVERALL TAX LIABILITY UNDER THIS ARTICLE ASSOCIATED WITH THE TAXABLE MEMBER 20250HB1610PN2012 - 52 - QUALIFIED TO RECEIVE THE DEDUCTION UNDER THIS PART.

* * * (8) "TAXPAYER." AN EMPLOYER SUBJECT TO THE TAX UNDER THIS ARTICLE.

FOR PURPOSES OF THIS DEFINITION, AN EMPLOYER SHALL INCLUDE A MEMBER OF A UNITARY BUSINESS.

* * * SECTION 407.7.

MANUFACTURING INNOVATION AND REINVESTMENT DEDUCTION.--* * * (D) * * * (3) (I) A TAXPAYER CANNOT USE THE DEDUCTION TO REDUCE THE TAXPAYER'S TAX LIABILITY BY MORE THAN FIFTY PER CENT OF THE TAX LIABILITY UNDER THIS ARTICLE FOR THE TAXABLE YEAR.

FOR A UNITARY BUSINESS, THE LIMITATION SHALL APPLY TO THE PORTION OF THE TAX LIABILITY OF THE UNITARY BUSINESS UNDER THIS ARTICLE ASSOCIATED WITH THE TAXABLE MEMBER WHICH QUALIFIES FOR THE DEDUCTION UNDER THIS SECTION.

(II) THE DEDUCTION IS NONTRANSFERABLE AND ANY UNUSED PORTION IN A TAX YEAR SHALL EXPIRE AT THE END OF THE CORRESPONDING TAX YEAR.

SECTION 11.

SECTION 408 OF THE ACT IS AMENDED BY ADDING A SUBSECTION TO READ:

SECTION 408.

ENFORCEMENT;

RULES AND REGULATIONS;

INQUISITORIAL POWERS OF THE DEPARTMENT.--* * * (E) AS USED IN THIS SECTION, THE TERM "CORPORATION" SHALL INCLUDE A UNITARY BUSINESS.

SECTION 12.

SECTIONS 409 AND 410(C) OF THE ACT ARE AMENDED TO READ:

SECTION 409.

RETENTION OF RECORDS.--EACH CORPORATION SHALL MAINTAIN AND KEEP FOR A PERIOD OF THREE YEARS AFTER ANY REPORT IS FILED UNDER THIS ARTICLE, SUCH RECORD OR RECORDS OF ITS 20250HB1610PN2012 - 53 - BUSINESS WITHIN THIS COMMONWEALTH FOR THE PERIOD COVERED BY SUCH REPORT AND OTHER PERTINENT PAPERS, AS MAY BE REQUIRED BY THE DEPARTMENT.

FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION" SHALL INCLUDE A UNITARY BUSINESS.

SECTION 410.

PENALTIES.--* * * (C) ANY PERSON, WHO WILFULLY FAILS, NEGLECTS, OR REFUSES TO MAKE A REPORT OR TO PAY THE TAX AS HEREIN PRESCRIBED, OR WHO SHALL REFUSE TO PERMIT THE DEPARTMENT TO EXAMINE THE BOOKS, PAPERS, AND RECORDS OF ANY CORPORATION LIABLE TO PAY TAX UNDER THIS ARTICLE, SHALL BE GUILTY OF A MISDEMEANOR, AND, UPON CONVICTION THEREOF, SHALL BE SENTENCED TO PAY A FINE NOT EXCEEDING ONE THOUSAND DOLLARS ($1,000) AND COSTS OF PROSECUTION, OR TO UNDERGO IMPRISONMENT NOT EXCEEDING SIX MONTHS, OR BOTH.

SUCH PENALTY SHALL BE IN ADDITION TO ANY OTHER PENALTIES IMPOSED BY THIS ARTICLE.

FOR PURPOSES OF THIS SUBSECTION, THE TERM "CORPORATION" SHALL INCLUDE A UNITARY BUSINESS.

SECTION 12.1.

THE DEFINITION OF "TAX CREDIT" IN SECTION 1701-A.1 OF THE ACT IS AMENDED BY ADDING A PARAGRAPH TO READ:

SECTION 1701-A.1.

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:

* * * "TAX CREDIT." A TAX CREDIT AUTHORIZED UNDER ANY OF THE FOLLOWING:

* * * (14.2) ARTICLE XVIII-I.

* * * SECTION 13.

THE ACT IS AMENDED BY ADDING A SECTION TO READ:

20250HB1610PN2012 - 54 - SECTION 1710-A.1.

APPLICATION OF TAX CREDITS OR TAX BENEFITS TO A UNITARY BUSINESS.

FOR PURPOSES OF DETERMINING THE AMOUNT OF TAX CREDIT OR TAX BENEFIT WHICH IS APPLICABLE TO THE TAX DUE BY A UNITARY BUSINESS UNDER ARTICLE IV, ANY TAX CREDIT OR TAX BENEFIT AWARDED TO OR CONFERRED UPON A CORPORATION WHICH IS A MEMBER OF A UNITARY BUSINESS SHALL BE CALCULATED AS IF THAT MEMBER IS A SEPARATE COMPANY AND CAN ONLY BE APPLIED AGAINST THAT PORTION OF THE UNITARY BUSINESS'S ANNUAL TAX LIABILITY ASSOCIATED WITH THAT MEMBER WHICH RECEIVES THE TAX CREDIT OR TAX BENEFIT.

FOR PURPOSES OF THIS ARTICLE, THE TERM "UNITARY BUSINESS" SHALL HAVE THE SAME MEANING AS IN SECTION 401(13) AND THE TERM "MEMBER" SHALL HAVE THE SAME MEANING AS IN SECTION 401(17).

SECTION 13.1.

THE ACT IS AMENDED BY ADDING AN ARTICLE TO READ:

ARTICLE XVIII-I WORKING PENNSYLVANIANS TAX CREDIT SECTION 1801-I.

SCOPE OF ARTICLE.

THIS ARTICLE RELATES TO THE WORKING PENNSYLVANIANS TAX CREDIT.

SECTION 1802-I.

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 REVENUE OF THE COMMONWEALTH.

"FEDERAL EARNED INCOME TAX CREDIT." THE EARNED INCOME TAX CREDIT PROVIDED UNDER 26 U.S.C.

§ 32 (RELATING TO EARNED INCOME).

"QUALIFIED TAXPAYER." A TAXPAYER ELIGIBLE TO RECEIVE A TAX CREDIT UNDER SECTION 1804-I.

20250HB1610PN2012 - 55 - "TAX CREDIT." THE WORKING PENNSYLVANIANS TAX CREDIT PROVIDED UNDER THIS ARTICLE.

"TAX LIABILITY." TAX LIABILITY UNDER ARTICLE III.

"TAXPAYER." AN INDIVIDUAL SUBJECT TO THE TAX UNDER ARTICLE III.

SECTION 1803-I.

WORKING PENNSYLVANIANS TAX CREDIT.

(A) APPLICATION OF TAX CREDIT.--A QUALIFIED TAXPAYER MAY APPLY THE TAX CREDIT AGAINST THE QUALIFIED TAXPAYER'S TAX LIABILITY.

(B) SPOUSES WHO FILE SEPARATELY.--IN THE CASE OF SPOUSES WHO ARE BOTH ELIGIBLE TO RECEIVE THE TAX CREDIT AND WHO FILE A JOINT FEDERAL TAX RETURN BUT WHO ELECT TO DETERMINE THEIR TAXES SEPARATELY, THE TAX CREDIT MAY ONLY BE USED BY THE SPOUSE WITH THE GREATER TAX OTHERWISE DUE, COMPUTED WITHOUT REGARD TO THE TAX CREDIT.

(C) AMOUNT OF TAX CREDIT.--THE TAX CREDIT SHALL BE EQUAL TO 30% OF THE FEDERAL EARNED INCOME TAX CREDIT RECEIVED BY THE TAXPAYER FOR THE SAME TAXABLE YEAR.

(D) CREDIT REFUNDABLE.--IF THE AMOUNT OF CREDIT WHICH THE QUALIFIED TAXPAYER IS ELIGIBLE TO RECEIVE UNDER THIS SECTION EXCEEDS THE QUALIFIED TAXPAYER'S TAX LIABILITY, THE DEPARTMENT SHALL REFUND THE EXCESS AMOUNT TO THE QUALIFIED TAXPAYER.

SECTION 1804-I.

ELIGIBILITY.

A TAXPAYER IS ELIGIBLE TO RECEIVE A TAX CREDIT IF THE TAXPAYER CLAIMED THE FEDERAL EARNED INCOME TAX CREDIT DURING THE SAME TAXABLE YEAR.

SECTION 1805-I.

REGULATIONS.

(A) RULES AND REGULATIONS.--THE DEPARTMENT MAY PROMULGATE RULES AND REGULATIONS TO ADMINISTER AND ENFORCE THIS ARTICLE.

(B) GUIDELINES.--THE DEPARTMENT MAY DEVELOP WRITTEN 20250HB1610PN2012 - 56 - GUIDELINES FOR THE IMPLEMENTATION OF THIS ARTICLE.

THE GUIDELINES SHALL BE IN EFFECT UNTIL THE DEPARTMENT PROMULGATES RULES AND REGULATIONS FOR THE IMPLEMENTATION OF THE PROVISIONS OF THIS ARTICLE.

SECTION 1806-I.

APPLICABILITY.

THIS ARTICLE SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2024.

SECTION 14.

SECTION 3003.2(B)(2) AND (4.3) AND (C)(1) OF THE ACT ARE AMENDED AND SUBSECTION (A) IS AMENDED BY ADDING A PARAGRAPH TO READ:

SECTION 3003.2.

ESTIMATED TAX.--(A) THE FOLLOWING TAXPAYERS ARE REQUIRED TO PAY ESTIMATED TAX:

* * * (1.1) EVERY UNITARY BUSINESS SUBJECT TO THE CORPORATE NET INCOME TAX IMPOSED BY ARTICLE IV, COMMENCING WITH THE CALENDAR YEAR 2026 AND FISCAL YEARS BEGINNING DURING THE CALENDAR YEAR 2026 AND EACH TAXABLE YEAR THEREAFTER, SHALL MAKE PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX.

* * * (B) THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN THIS SECTION AND SECTION 3003.3 SHALL HAVE THE FOLLOWING MEANINGS ASCRIBED TO THEM:

* * * (2) "ESTIMATED CORPORATE NET INCOME TAX." THE AMOUNT WHICH THE CORPORATION OR THE UNITARY BUSINESS ESTIMATES AS THE AMOUNT OF TAX IMPOSED BY SECTION 402 OF ARTICLE IV FOR THE TAXABLE YEAR.

* * * (4.3) "PERSON." ANY NATURAL PERSON, ASSOCIATION, FIDUCIARY, PARTNERSHIP, CORPORATION, UNITARY BUSINESS OR OTHER ENTITY, 20250HB1610PN2012 - 57 - INCLUDING THE COMMONWEALTH, ITS POLITICAL SUBDIVISIONS AND INSTRUMENTALITIES AND PUBLIC AUTHORITIES.

WHENEVER USED IN ANY CLAUSE PRESCRIBING AND IMPOSING A PENALTY OR IMPOSING A FINE OR IMPRISONMENT, OR BOTH, THE TERM "PERSON," AS APPLIED TO AN ASSOCIATION, SHALL INCLUDE THE MEMBERS THEREOF [AND], AS APPLIED TO A CORPORATION, THE OFFICERS THEREOF AND AS APPLIED TO A UNITARY BUSINESS, THE OFFICERS OF THE DESIGNATED MEMBER.

* * * (C) ESTIMATED TAX SHALL BE PAID AS FOLLOWS:

(1) PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX SHALL BE MADE IN EQUAL INSTALLMENTS ON OR BEFORE THE FIFTEENTH DAY OF THE THIRD, SIXTH, NINTH AND TWELFTH MONTHS OF THE TAXABLE YEAR.

THE REMAINING PORTION OF THE CORPORATE NET INCOME TAX DUE, IF ANY, SHALL BE PAID UPON THE DATE THE CORPORATION'S ANNUAL REPORT OR THE UNITARY BUSINESS'S COMBINED ANNUAL REPORT IS REQUIRED TO BE FILED WITHOUT REFERENCE TO ANY EXTENSION OF TIME FOR FILING SUCH REPORT.

* * * SECTION 15.

SECTION 3003.3(D) OF THE ACT IS AMENDED AND THE SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:

SECTION 3003.3.

UNDERPAYMENT OF ESTIMATED TAX.--* * * (D) NOTWITHSTANDING THE PROVISIONS OF [THE PRECEDING SUBSECTIONS,] THIS SECTION, OTHER THAN AS SET FORTH IN SUBSECTION (D.1), INTEREST WITH RESPECT TO ANY UNDERPAYMENT OF ANY INSTALLMENT OF ESTIMATED TAX SHALL NOT BE IMPOSED IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX MADE ON OR BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT EQUALS OR EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO BE PAID ON OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO THE TAX COMPUTED AT THE RATES APPLICABLE TO THE 20250HB1610PN2012 - 58 - TAXABLE YEAR, INCLUDING ANY MINIMUM TAX IMPOSED, BUT OTHERWISE ON THE BASIS OF THE FACTS SHOWN ON THE REPORT OF THE TAXPAYER FOR, AND THE LAW APPLICABLE TO, THE SAFE HARBOR BASE YEAR, ADJUSTED FOR ANY CHANGES TO SECTIONS 401, 601, 602 AND 1101 ENACTED FOR THE TAXABLE YEAR, IF A REPORT SHOWING A LIABILITY FOR TAX WAS FILED BY THE TAXPAYER FOR THE SAFE HARBOR BASE YEAR.

IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX MADE ON OR BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT DOES NOT EQUAL OR EXCEED THE AMOUNT REQUIRED TO BE PAID PER THE PRECEDING SENTENCE, BUT SUCH AMOUNT IS PAID AFTER THE DATE THE INSTALLMENT WAS REQUIRED TO BE PAID, THEN THE PERIOD OF UNDERPAYMENT SHALL RUN FROM THE DATE THE INSTALLMENT WAS REQUIRED TO BE PAID TO THE DATE THE AMOUNT REQUIRED TO BE PAID PER THE PRECEDING SENTENCE IS PAID.

PROVIDED, THAT IF THE TOTAL TAX FOR THE SAFE HARBOR BASE YEAR EXCEEDS THE TAX SHOWN ON SUCH REPORT BY TEN PER CENT OR MORE, THE TOTAL TAX ADJUSTED TO REFLECT THE CURRENT TAX RATE SHALL BE USED FOR PURPOSES OF THIS SUBSECTION.

IN THE EVENT THAT THE TOTAL TAX FOR THE SAFE HARBOR BASE YEAR EXCEEDS THE TAX SHOWN ON THE REPORT BY TEN PER CENT OR MORE, INTEREST RESULTING FROM THE UTILIZATION OF SUCH TOTAL TAX IN THE APPLICATION OF THE PROVISIONS OF THIS SUBSECTION SHALL NOT BE IMPOSED IF, WITHIN FORTY-FIVE DAYS OF THE MAILING DATE OF EACH ASSESSMENT, PAYMENTS ARE MADE SUCH THAT THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX EQUALS OR EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO BE PAID ON OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO THE TOTAL TAX ADJUSTED TO REFLECT THE CURRENT TAX RATE.

IN ANY CASE IN WHICH THE TAXABLE YEAR FOR WHICH AN UNDERPAYMENT OF ESTIMATED TAX MAY EXIST IS A SHORT TAXABLE YEAR, IN DETERMINING THE TAX SHOWN ON THE REPORT OR THE TOTAL TAX FOR THE SAFE HARBOR BASE YEAR, THE 20250HB1610PN2012 - 59 - TAX WILL BE REDUCED BY MULTIPLYING IT BY THE RATIO OF THE NUMBER OF INSTALLMENT PAYMENTS MADE IN THE SHORT TAXABLE YEAR TO THE NUMBER OF INSTALLMENT PAYMENTS REQUIRED TO BE MADE FOR THE FULL TAXABLE YEAR.

(D.1) WITH RESPECT TO ANY UNDERPAYMENT OF AN INSTALLMENT OF ESTIMATED CORPORATE NET INCOME TAX FOR ANY TAX YEAR THAT BEGINS IN TAXABLE YEAR 2026 OR 2027 BY A CORPORATION REQUIRED TO FILE A COMBINED ANNUAL REPORT PURSUANT TO SECTION 403(A.1)(1), INTEREST SHALL NOT BE IMPOSED IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX MADE ON OR BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT EQUALS OR EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO BE PAID ON OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO THE COMBINED TAX SHOWN ON THE REPORTS OF ALL THE MEMBERS OF THE UNITARY BUSINESS FOR THE SAFE HARBOR BASE YEAR COMPUTED AT THE RATE APPLICABLE TO THE TAXABLE YEAR.

SECTION 16.

SECTION 3003.11 OF THE ACT IS AMENDED TO READ:

SECTION 3003.11.

RESTATEMENT OF TAX LIABILITY UNDER TREATIES.--IN THE ABSENCE OF AN EXPRESS EXEMPTION FROM STATE INCOME TAXES, NO TREATY OF THE FEDERAL GOVERNMENT SHALL BE CONSTRUED TO EXEMPT A CORPORATION OR A MEMBER OF A UNITARY BUSINESS FROM THE TAXES IMPOSED UNDER ARTICLES IV AND VI.

FOR PURPOSES OF DETERMINING "TAXABLE INCOME" UNDER ARTICLE IV, ANY CORPORATION OR MEMBER OF A UNITARY BUSINESS NOT SUBJECT TO FEDERAL INCOME TAXATION OR FEDERAL REPORTING REQUIREMENTS PURSUANT TO SUCH A TREATY SHALL BE REQUIRED TO FILE A REPORT OR FILE AS PART OF A COMBINED ANNUAL REPORT WITH THE DEPARTMENT SHOWING THE TAXABLE INCOME WHICH WOULD HAVE BEEN REPORTED TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT HAD IT NOT BEEN EXEMPTED BY THE TREATY.

20250HB1610PN2012 - 60 - SECTION 17.

THIS ACT SHALL APPLY AS FOLLOWS:

(1) THE AMENDMENT OR ADDITION OF SECTION 314(A) AND (C) SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2021.

(2) THE FOLLOWING PROVISIONS OF THE ACT SHALL APPLY TO TAX YEARS BEGINNING ON AND AFTER JANUARY 1, 2026:

THE AMENDMENT OF SECTION 301.

THE ADDITION OF SECTION 357.1.

THE AMENDMENT OR ADDITION OF SECTION 401(3)1(A) AND (B), (P.1) AND (T)(5), 2(A)(1)(E.1), 2(A)(9)(A)(VI) AND 2(A)(17)(E) AND 4(H) AND (I), (5), (12), (13), (14), (15), (16), (17), (18) AND (19).

THE ADDITION OF SECTION 401.1(F).

THE AMENDMENT OR ADDITION OF SECTIONS 402(A) INTRODUCTORY PARAGRAPH AND (5)(III), (B) AND (D) AND 403(A.1), (A.2), (B.1), (C), (D), (E.1) AND (F).

THE AMENDMENT OF SECTIONS 403.1 AND 403.2(B) AND (E).

THE REPEAL OF SECTION 404.

THE AMENDMENT OF SECTION 405.

THE AMENDMENT OR ADDITION OF SECTION 406(E) AND (F).

THE AMENDMENT OF SECTIONS 407.3(F), 407.6(A)(5), (6) AND (8) AND 407.7(D)(3).

THE ADDITION OF SECTION 408(E).

THE AMENDMENT OF SECTIONS 409 AND 410(C).

THE ADDITION OF SECTION 1710-A.1.

THE AMENDMENT OR ADDITION OF SECTION 3003.2(A)(1.1), (B)(2) AND (4.3) AND (C)(1).

THE AMENDMENT OR ADDITION OF SECTION 3003.3(D) AND (D.1).

THE AMENDMENT OF SECTION 3003.11.

20250HB1610PN2012 - 61 - SECTION 18.

THIS ACT SHALL TAKE EFFECT AS FOLLOWS:

(1) THE FOLLOWING SHALL TAKE EFFECT IMMEDIATELY:

THIS SECTION.

THE AMENDMENT OR ADDITION OF SECTION 314(A) AND (C).

THE AMENDMENT OF THE DEFINITION OF "TAX CREDIT" IN SECTION 1701-A.1.

THE ADDITION OF ARTICLE XVIII-I.

(2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT JANUARY 1, 2026, OR IMMEDIATELY, WHICHEVER IS LATER.

20250HB1610PN2012 - 62 -