act-2004-0-226•Pennsylvania Act 2004-226 — FIRST CLASS CITIES ECONOMIC DEVELOPMENT DISTRICT ACT - ENACTMENT
Pennsylvania Act 2004-226 — FIRST CLASS CITIES ECONOMIC DEVELOPMENT DISTRICT ACT - ENACTMENT
act-2004-0-2262004 Pa. Act 226Law
Act text
FIRST CLASS CITIES ECONOMIC DEVELOPMENT DISTRICT ACT - ENACTMENT
Act of Dec. 1, 2004, P.L. 1750, No. 226 Cl. 11
AN ACT
Providing for economic development districts in cities of the
first class; imposing penalties; and conferring powers and
duties on the Department of Community and Economic
Development and the Department of Revenue.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
GENERAL PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the First Class
Cities Economic Development District Act.
Section 102. Legislative findings.
The General Assembly finds and declares as follows:
(1) There currently exist in first class cities located
within this Commonwealth areas of economic distress
characterized by deteriorated property, high unemployment,
low investment of new capital and underutilized, obsolete or
abandoned industrial or commercial structures.
(2) These areas require coordinated efforts by private
and public entities to restore prosperity and enable the
areas to make significant contributions to the economic and
social life of this Commonwealth.
(3) Long-term economic viability of these areas requires
the cooperative involvement of residents, businesses, State
and local elected officials and community organizations. It
is in the best interest of the Commonwealth to assist and
encourage the creation of economic development districts and
to provide temporary relief from certain taxes within the
economic development districts to accomplish the purposes of
this act.
Section 103. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Business." An association, partnership, Subchapter S
corporation, corporation, sole proprietorship, limited liability
company or limited liability partnership.
"Corporation." A business subject to the tax imposed by
Article IV of the act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Deteriorated property." An area containing industrial or
commercial real property which is abandoned, vacant,
undervalued, underutilized or condemned or which contains
economically undesirable land use.
"Economic development district." A clearly defined
geographic area comprised of deteriorated property located in a
city of the first class which has been designated by the
Department of Community and Economic Development under section
301(d) as an economic development district.
"Political subdivision." A city of the first class or a
school district of the first class.
"Qualified business." A business that receives a certificate
under section 303 for the taxable year.
"Qualified pass-through entity." A partnership, association
or Subchapter S corporation which is a qualified business.
"Qualified political subdivision." A political subdivision
which has real property within its jurisdiction which has been
designated by the Department of Community and Economic
Development as an economic development district.
"Resident." An individual who is domiciled in an economic
development district.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
CHAPTER 3
ECONOMIC DEVELOPMENT DISTRICTS
Section 301. Program.
(a) Establishment.--There is established within the
department a program to be known as the First Class Cities
Economic Development District Program. The program shall
encourage development of deteriorated property by providing the
tax exemptions, deductions, abatements or credits provided by
this act to persons who own interests in qualified pass-through
entities and to residents of and qualified businesses located in
economic development districts.
(b) Proposal.--On or before July 15, 2005, the Governor may,
by executive order, propose the designation of deteriorated
property within cities of the first class as economic
development districts. The executive order shall specify the
period of time, not to extend beyond December 31, 2018, for
which the tax exemptions, deductions, abatements or credits
provided by this act may be granted. The department shall
immediately notify the owners of the deteriorated property and
the political subdivisions in which the deteriorated property is
located.
(c) Application.--Upon receipt of a request from the owners
of deteriorated property notified under subsection (b), a city
of the first class may apply to the department for approval of
the proposal to designate the deteriorated property as an
economic development district for the period specified under
subsection (b). The application shall be on a form provided by
the department and shall include a copy of an ordinance,
resolution or other required action from the governing body of
the city of the first class consistent with the requirements of
section 302.
(d) Designation.--If all political subdivisions within a
proposed economic development district submit timely, completed
applications, the department shall approve the applications and
designate the property as an economic development district. The
State tax exemptions, deductions, abatements or credits set
forth in this act and the local tax exemptions, deductions,
abatements or credits set forth in this act shall take effect on
the date the property is designated an economic development
district. Qualified businesses and persons who own interests in
qualified pass-through entities within the economic development
district shall be entitled to the State tax exemptions,
deductions, abatements or credits set forth in this act and the
local tax exemptions, deductions, abatements or credits set
forth in this act for the period for which the economic
development district has been designated.
(e) Limitation.--The aggregate amount of deteriorated
property proposed by the Governor under subsection (b) may not
exceed 85 acres.
Section 302. Local ordinances and resolutions.
(a) City action.--In order for an application to be
complete, a city of the first class in which a proposed economic
development district is to be located must adopt and provide
with its application a copy of an ordinance, resolution or other
required action from the governing body of the city of the first
class that exempts or provides the deductions, abatements or
credits required by Chapter 7 to qualified businesses upon
designation of the property as an economic development district.
The ordinance, resolution or other required action from the
governing body of the city of the first class shall suspend any
current abatement of real property taxation authorized under the
act of December 1, 1977 (P.L.237, No.76), known as the Local
Economic Revitalization Tax Assistance Act, on the deteriorated
property which will comprise the proposed economic development
district for the period for which the economic development
district will be designated. All appropriate ordinances and
resolutions shall be effective for the period specified in the
executive order and shall be binding and nonrevocable on the
city of the first class.
(b) School district action.--In addition to the completed
application and the ordinance, resolution or other required
action required by subsection (a), the city of the first class
must submit a copy of an ordinance, resolution or other required
action from the governing body of the school district in which
the proposed economic development district is located that
approves the ordinance, resolution or other required action of
the city of the first class exempting or providing the
deductions, abatements or credits required under Chapter 7. All
appropriate ordinances and resolutions shall be effective for
the period specified in the executive order and shall be binding
and nonrevocable on the political subdivisions.
(c) Preemption.--If deteriorated property is designated an
economic development district under this act, no political
subdivision with taxing jurisdiction over the deteriorated
property may impose additional taxes on or provide additional
tax exemptions, deductions, abatements or credits for the
deteriorated property for the period for which the deteriorated
property has been designated an economic development district.
Section 303. Qualified businesses.
(a) Qualifications.--In order to qualify each year for the
tax exemptions, deductions, abatements or credits provided under
this act, a business shall submit a statement to the department
stating that the business owns or leases real property in an
economic development district and that the business actively
conducts a trade, profession or business on the real property.
An agent, broker or representative of a business is not engaged
in the active conduct of a trade, profession or business for the
business. The department shall review the statement. Upon being
satisfied that the business is located and is in the active
conduct of a trade, profession or business within the economic
development district, the department shall, subject to
subsection (b), if applicable, grant the business a certificate.
The business shall obtain annual renewal of the certification
from the department to continue to qualify for the tax
exemptions, deductions, abatements or credits provided under
this act.
(b) Relocation.--If a business located in this Commonwealth
relocates from outside an economic development district into an
economic development district, the business shall not receive
the exemptions, deductions, abatements or credits provided under
this act unless the business has entered into a lease agreement
for property located within the economic development district
consistent with all of the following:
(1) The net present value of the lease agreement is at
least $50,000,000.
(2) The lease agreement is for at least 500,000 square
feet of property.
(3) The term of the lease agreement is at least
equivalent to the balance of the duration of the designation
of the property as an economic development district.
(4) Aggregate payment under the lease agreement to
support new capital investment is at least equivalent to 5%
of the gross revenues of the business in the immediately
preceding calendar or fiscal year.
(5) The property will be used for food distribution.
(6) The property consists of at least 85 acres.
(7) The property is publicly owned.
Section 304. Residency.
In order to qualify each year for a tax exemption, deduction,
abatement or credit under this act, an individual must be
domiciled and must reside in an economic development district
for a period of 184 consecutive days during each taxable year
beginning on the date the person first resides within the
economic development district.
Section 305. Reporting.
The department and the Department of Revenue shall report
annually to the General Assembly on the economic effects of this
act.
CHAPTER 5
STATE TAXES
SUBCHAPTER A
STATE TAXES GENERALLY
Section 501. State taxes.
(a) General rule.--A qualified business or a person who owns
an interest in a qualified pass-through entity shall receive the
exemptions, deductions, abatements or credits as provided in
this chapter for the duration of the economic development
district designation. Exemptions, deductions, abatements or
credits shall expire on the date of expiration of the economic
development district designation.
(b) Construction.--The Department of Revenue shall
administer, construe and enforce the provisions of this chapter
in conjunction with Articles II, III and IV of the Tax Reform
Code of 1971.
(c) Limitation.--A qualified business or a person who owns
an interest in a qualified pass-through entity may not apply an
exemption from income or a credit under this chapter for any
class of income against any other classes of income or gain.
SUBCHAPTER B
PARTICULAR STATE TAXES
Section 511. Sales and use tax.
(a) Exemption.--Sales at retail of services or tangible
personal property, other than motor vehicles, to a qualified
business for the exclusive use, consumption and utilization of
the tangible personal property or service by the qualified
business at its facility located within an economic development
district are exempt from the sales and use tax imposed under
Article II of the Tax Reform Code of 1971. No exemption shall be
allowed for activities conducted on the real property prior to
designation of the real property as an economic development
district.
(b) Construction contracts.--For a construction contract
performed in an economic development district, the exemption
provided in subsection (a) shall only apply to the sale at
retail of building machinery and equipment to a qualified
business, or to a construction contractor pursuant to a
construction contract with a qualified business, for the
exclusive use, consumption and utilization by the qualified
business at its facility located within the economic development
district. For the purposes of this subsection, building
machinery and equipment shall include distribution equipment
purchased for the exclusive use, consumption and utilization by
the qualified business at its facility located within the
economic development district.
Section 512. Personal income tax.
(a) General rule.--For tax years that begin on or after
January 1 of the tax years following the date an economic
development district is designated, a resident or person who
owns an interest in a qualified pass-through entity or who owns
a qualified business which is a sole proprietorship shall be
allowed an exemption for:
(1) Net income, except as provided in paragraphs (2) and
(3), from the operation of the qualified business received by
the person which is attributable to business activity
conducted by the qualified business within an economic
development district except that any qualified business which
operates both within and outside this Commonwealth, before
computing its economic development district exemption, shall
first determine its Pennsylvania activity over its activity
everywhere by applying the three-factor apportionment formula
as set forth in Department of Revenue personal income tax
regulations applicable to income apportionment in connection
with a business, trade or profession carried on both within
and outside this Commonwealth.
(2) Net gains or income, less net losses, derived from
the sale, exchange or other disposition of tangible personal
property located within an economic development district, as
determined in accordance with accepted accounting principles
and practices, received by the person which is attributable
to business activity conducted by the qualified business
within the economic development district. The exemption
provided for in this subparagraph shall not apply to the
sale, exchange or other disposition of any stock or goods,
merchandise or inventory or any operational assets unless the
transfer is in connection with the sale, exchange or other
disposition of all of the assets in complete liquidation of a
qualified business located in an economic development
district. The exemption provided for in this paragraph shall
apply to intangible personal property employed in a trade,
profession or business within the economic development
district by the qualified business but only when transferred
in connection with a sale, exchange or other disposition of
all of the assets in complete liquidation of the qualified
business. The exemption provided for in this paragraph shall
be prorated based on the percentage of time, based on
calendar days, the property was held by the person during the
time period the economic development district was in effect
in relation to the total time the property was held.
(3) Net gains or income derived from or in the form of
rents from the rental of tangible personal property which is
allocable to an economic development district received by the
person which is attributable to business activity conducted
by the qualified business within the economic development
district. For purposes of calculating this exemption, all of
the following shall apply:
(i) Net rents derived from tangible personal
property located within the economic development district
are allocable to the economic development district.
(ii) If the tangible personal property was used both
within and outside the economic development district
during the taxable year, only the net rents attributable
to use within the economic development district is
exempt. The net rents shall be multiplied by a fraction,
the numerator of which is the number of days the property
was used within the economic development district and the
denominator of which is the total days of use.
(b) Pass-through.--
(1) A partner or member of a qualified pass-through
entity shall be entitled to the exemptions under this section
for the partner's or member's share, whether or not
distributed, of the income or gain received by the
partnership or association for its taxable year.
(2) A shareholder of a qualified pass-through entity
shall be entitled to the exemptions under this section for
the shareholder's pro rata share, whether or not distributed,
of the income or gain received by the Subchapter S
corporation for its taxable year ending within or with the
shareholder's taxable year.
(c) Limitations.--
(1) No exemption shall be allowed for activities
conducted on the real property prior to designation of the
real property as an economic development district.
(2) A partnership, association, Subchapter S
corporation or person may not carry back or carry forward any
exemption under this section from year to year. The credit
allowed under this section shall not exceed the tax liability
of the person under Article III of the Tax Reform Code of
1971 for the tax year.
(d) Section not applicable to certain entities.--Any portion
of net income or gain which is attributable to the operation of
a railroad, truck, bus or airline company, pipeline or natural
gas company, water transportation company or entity which would
qualify as a regulated investment company under Article IV of
the Tax Reform Code of 1971 or would qualify as a holding
company under Article VI of the Tax Reform Code of 1971 shall
not be used to calculate an exemption under this section.
Section 513. Corporate net income tax.
(a) Credits.--For tax years that begin on or after January 1
of the tax years following the date an economic development
district is designated, a corporation which is a qualified
business may claim a credit against the tax imposed by Article
IV of the Tax Reform Code of 1971 for tax liability attributable
to business activity conducted within the economic development
district in the taxable year. No credit may be claimed for
activities conducted on the real property prior to designation
of the real property as an economic development district. The
business activity must be conducted directly by the corporation
in the economic development district in order for the
corporation to claim the tax credit.
(b) Tax liability determinations.--A corporation's tax
liability which is attributable to business activity conducted
within an economic development district shall be determined by
multiplying the corporation's taxable income which is
attributable to business activity conducted within the economic
development district by the rate of tax imposed under Article IV
of the Tax Reform Code of 1971 for the taxable year and shall be
computed, construed, administered and enforced in conformity
with Article IV of the Tax Reform Code of 1971 in accordance
with all of the following:
(1) If the entire business of the corporation in this
Commonwealth is transacted wholly within the economic
development district, the taxable income attributable to
business activity within the economic development district
shall consist of the Pennsylvania taxable income as
determined under Article IV of the Tax Reform Code of 1971.
(2) If the entire business of the corporation in this
Commonwealth is not transacted wholly within the economic
development district, the taxable income of the corporation
within the economic development district shall be determined
upon the portion of the Pennsylvania taxable income of the
corporation attributable to business activity conducted
within the economic development district and apportioned in
accordance with subsection (c).
(c) Income apportionment.--The taxable income of a
corporation which is a qualified business shall be apportioned
to the economic development district by multiplying the
Pennsylvania taxable income by a fraction, the numerator of
which is the property factor plus the payroll factor plus the
sales factor and the denominator of which is three, in
accordance with all of the following:
(1) The property factor is a fraction, the numerator of
which is the average value of the corporation's real and
tangible personal property owned or rented and used within
the economic development district during the tax period and
the denominator of which is the average value of all the
corporation's real and tangible personal property owned or
rented and used in this Commonwealth during the tax period
but shall not include the security interest of the
corporation as seller or lessor in personal property sold or
leased under a conditional sale, bailment lease, chattel
mortgage or other contract providing for the retention of a
lien or title as security for the sales price of the
property.
(2) The payroll factor is a fraction, the numerator of
which is the total compensation paid by the corporation in
the economic development district during the tax period by
the corporation for compensation and the denominator of which
is the total compensation paid by the corporation in this
Commonwealth during the tax period. Compensation is paid in
the economic development district if:
(i) the employee's service is performed entirely
within the economic development district;
(ii) the employee's service is performed both within
and outside the economic development district, but the
service performed outside the economic development
district is incidental to the employee's service within
the economic development district; or
(iii) some of the employee's service is performed in
the economic development district; and the base of
operations, or, if there is no base of operations, the
place from which the employee's service is directed or
controlled, is located within the economic development
district or the base of operations or the place from
which the employee's service is directed or controlled is
not in any location in which some part of the service is
performed, but the employee's residence is in the
economic development district.
(3) The sales factor is a fraction, the numerator of
which is the total sales of the corporation in the economic
development district during the tax period and the
denominator of which is the total sales of the corporation in
this Commonwealth during the tax period. The following shall
apply:
(i) Sales of tangible personal property are in the
economic development district if the property is
delivered or shipped to a purchaser within the economic
development district regardless of the F.O.B. point or
other conditions of the sale.
(ii) Sales other than sales of tangible personal
property are in the economic development district if:
(A) the income-producing activity is performed
within the economic development district; or
(B) the income-producing activity is performed
both within and outside the economic development
district and a greater proportion of the income-
producing activity is performed within the economic
development district than in any other location,
based on costs of performance.
(d) Computation.--A corporation shall compute its
Commonwealth taxable income in conformity with Article IV of the
Tax Reform Code of 1971 with no adjustments or subtractions for
economic development district taxable income.
(e) Limitation on amount of credit.--The credit allowed
under subsection (a) shall not exceed the tax liability of the
corporation under Article IV of the Tax Reform Code of 1971 for
the tax year.
(f) Section not applicable to certain businesses.--Any
portion of the corporation's taxable income which is
attributable to the operation of a railroad, truck, bus or
airline company, pipeline or natural gas company, water
transportation company, a corporation which qualifies as a
regulated investment company under Article IV of the Tax Reform
Code of 1971 or as a holding company as defined in Article VI of
the Tax Reform Code of 1971 shall not be used to calculate a
credit under this section.
CHAPTER 7
LOCAL TAXES
SUBCHAPTER A
LOCAL TAXES GENERALLY
Section 701. Local taxes.
Every qualified political subdivision shall exempt, deduct,
abate or credit local taxes in accordance with ordinances and
resolutions adopted in accordance with section 302. Violation of
this section shall result in the revocation of the economic
development district designation.
SUBCHAPTER B
PARTICULAR LOCAL TAXES
Section 711. Business privilege taxes.
If a qualified political subdivision has enacted a tax on the
privilege of engaging in a business or profession within the
boundaries of an economic development district pursuant to the
act of May 30, 1984 (P.L.345, No.69), known as the First Class
City Business Tax Reform Act, the qualified political
subdivision shall provide an exemption, deduction, abatement or
credit from the imposition and operation of the local tax
ordinance or resolution for the privilege of engaging in a
business or profession within the economic development district
by a qualified business. No exemption deduction, abatement or
credit may be granted for operations conducted on the real
property prior to designation of the real property as an
economic development district.
Section 712. Local sales and use tax.
(a) Exemption.--A qualified political subdivision shall
exempt the sale at retail of services or tangible personal
property, other than motor vehicles, to a qualified business for
the exclusive use, consumption and utilization of the tangible
personal property or service by the qualified business at its
facility located within an economic development district from a
city or county tax on purchase price authorized under the act of
June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class. No exemption may be granted for sales occurring on
the real property prior to designation of the real property as
an economic development district.
(b) Construction contracts.--For a construction contract
performed in an economic development district, the exemption
provided in subsection (a) shall only apply to the sale at
retail of building machinery and equipment to a qualified
business, or to a construction contractor pursuant to a
construction contract with a qualified business, for the
exclusive use, consumption and utilization by the qualified
business at its facility located within the economic development
district.
(c) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Building machinery and equipment." Includes distribution
equipment purchased for the exclusive use, consumption and
utilization within an economic development district facility.
"Sale at retail." As defined in section 201(k) of the act of
March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
1971.
"Tangible personal property." As defined in section 201(m)
of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
Reform Code of 1971.
Section 713. Real property tax.
(a) General rule.--Notwithstanding the act of May 22, 1933
(P.L.853, No.155), known as The General County Assessment Law, a
qualified political subdivision shall, by ordinance or
resolution, abate 100% of the real property taxation which is
not dedicated to a school district on the assessed valuation of
real property in an area designated as an economic development
district for the period the real property is designated an
economic development district beginning on or after January 1 of
the tax years following the date the economic development
district is designated. The real property tax abatement provided
for in this subsection shall apply to all real property located
in the economic development district, irrespective of the
business activity, if any, made of the realty by its owner. No
abatement may be provided to real property within the economic
development district prior to designation of the real property
as part of an economic development district.
(b) Annual real property report.--By January 31 each
calendar year, a qualified political subdivision shall submit to
the department a report listing the address of each real
property designated part of an economic development district and
its owner of record.
(c) Interest and penalties.--If the department or a
qualified political subdivision finds that a person claimed an
abatement of real property tax to which the person was not
entitled under this act, the person shall be liable for the
abated taxes and subject to the applicable interest and penalty
provisions provided by law.
(d) Calculations for education subsidy for school
districts.--In determining the market value of real property in
each school district, the State Tax Equalization Board shall
exclude any increase in value above the base value prior to the
effect of the abatement of local taxes under this section to the
extent and during the period of time that real estate tax
revenues attributable to such increased value are not available
to the school district for general school district purposes.
CHAPTER 9
ADMINISTRATION OF TAX PROVISIONS
Section 901. Transferability.
Any exemption, deduction, abatement or credit provided to any
person or qualified business under Chapter 5 or 7 is
nontransferable and cannot be applied, used or assigned to any
other person, business or tax account.
Section 902. Recapture.
(a) General rule.--If a qualified business located within an
economic development district has received an exemption,
deduction, abatement or credit under this act and subsequently
relocates outside of the economic development district during
the period the property is designated an economic development
district, the business shall refund to the Commonwealth and the
qualified political subdivisions which granted the exemption,
deduction, abatement or credit, in accordance with the
following:
(1) If the qualified business relocates within three
years from the date of first locating in the economic
development district, 75% of all the exemptions, deductions,
abatements or credits attributed to the qualified business's
participation in the economic development district shall be
refunded to the Commonwealth and the qualified political
subdivisions.
(2) If a qualified business relocates within four to
seven years from the date of first locating in the economic
development district, 50% of all exemptions, deductions,
abatements or credits attributed to the qualified business's
participation in the economic development district shall be
refunded to the Commonwealth and the qualified political
subdivisions.
(3) If the qualified business was located within a
facility operated by a nonprofit organization for food
distribution, no exemption, deduction, abatement or credit
shall be refunded.
(b) Waiver.--The department, in consultation with the
department of Revenue and the qualified political subdivisions,
may waive or modify the recapture requirements under this
section if the department determines that the qualified business
relocation was due to any of the following:
(1) Natural disaster.
(2) Unforeseen industry trends.
(3) Loss of a major supplier or market.
Section 903. Delinquent or deficient State or local taxes.
(a) Persons.--No person may claim or receive an exemption,
deduction, abatement or credit under this act unless the person
is in full compliance with all State and local tax laws,
ordinances and resolutions.
(b) Qualified business.--
(1) No qualified business may claim or receive an
exemption, deduction, abatement or credit under this act
unless the qualified business is in full compliance with all
State and local tax laws, ordinances and resolutions.
(2) No qualified business may claim or receive an
exemption, deduction, abatement or credit under this act if
any person or business with a 20% or greater interest in the
qualified business is not in full compliance with all State
and local tax laws, ordinances and resolutions.
(c) Later compliance and eligibility.--A qualified business
or a person who owns an interest in a qualified pass-through
entity or who owns a qualified business which is a sole
proprietorship that is not eligible to claim an exemption,
deduction, abatement or credit due to noncompliance with any
State or local tax law may become eligible if the qualified
business or person subsequently comes into full compliance with
all State and local tax laws to the satisfaction of the
Department of Revenue or the qualified political subdivisions
within the calendar year in which the noncompliance first
occurred. If full compliance is not attained by February 5 of
the calendar year following the calendar year during which
noncompliance first occurred, then the qualified business or
person shall be precluded from claiming any exemption,
deduction, abatement or credit for that calendar year, whether
or not full compliance is achieved subsequently.
Section 904. Code compliance.
(a) General rule.--A qualified business or person shall be
precluded from claiming any exemption, deduction, abatement or
credit provided for in this act if the qualified business or
person owns real property in an economic development district
and the real property is not in compliance with all applicable
State and local zoning, building and housing laws, ordinances or
codes.
(b) Opportunity to achieve compliance.--A qualified business
or a person who owns an interest in a qualified pass-through
entity or who owns a qualified business which is a sole
proprietorship that is not in compliance under subsection (a)
shall have until December 31 of the calendar year following
designation of the real property as an economic development
district to be in compliance in order to claim any State
exemptions, deductions, abatements or credits for that year. If
full compliance is not attained by December 31 of that calendar
year, the qualified business or person shall be precluded from
claiming any exemption, deduction or credit for that calendar
year, whether or not compliance is achieved in a subsequent
calendar year. A qualified political subdivision may extend the
time period in which a qualified business or a person who owns
an interest in a qualified pass-through entity or who owns a
qualified business which is a sole proprietorship must come into
compliance with a local ordinance or building code for a period
not to exceed one year if the political subdivision determines
that the qualified business or person has made and will continue
to make a good faith effort to come into compliance and that an
extension will enable the person or qualified business to
achieve full compliance. A qualified political subdivision is
required to notify the Department of Revenue in writing of all
qualified businesses or persons not in compliance with this
subsection within 30 days following the end of each calendar
year.
Section 905. Appeals.
A qualified business or a person who owns an interest in a
qualified pass-through entity or who owns a qualified business
which is a sole proprietorship shall be deemed to be in
compliance with State or local tax for purposes of this chapter
if the qualified business or person had made a timely
administrative or judicial appeal for a particular tax or has
entered into and is in compliance with an authorized deferred
payment plan with the Department of Revenue or the qualified
political subdivision for that particular tax.
Section 906. Certificates.
A business must file the statement required by section 303 in
a manner prescribed by the department by December 31 of each
calendar year for which the business claims an exemption,
deduction, abatement or credit under this act. No exemption,
deduction, abatement or credit may be claimed or received for
that calendar year until the business has been issued a
certificate under section 303.
Section 907. Other Commonwealth tax credits.
(a) Applicability.--This section shall apply only to the
taxes set forth in Subchapter B of Chapter 5 and Subchapter B of
Chapter 7.
(b) Accumulation.--
(1) A person or qualified business that is entitled to
claim an exemption, deduction, abatement or credit under this
act shall not be entitled to claim or accumulate a credit
under the Tax Reform Code of 1971 or under section 109 of the
act of December 19, 1996 (P.L.1478, No.190), referred to as
the Waste Tire Recycling Act, that it may otherwise have
qualified for due to activity within an economic development
district.
(2) The person or qualified business may apply the
exemptions, deductions, abatements or credits to income
realized from activity or transactions outside the economic
development district but only for the taxable year to which
the exemptions, deductions, abatements or credits apply.
CHAPTER 31
MISCELLANEOUS PROVISIONS
Section 3101. Illegal activity.
Funds or other forms of consideration received by a person or
business from conducting any type of illegal activity or from
gaming shall not be eligible for any of the exemptions,
deductions, abatements and credits or any other benefits that
are created under this act.
Section 3102. Regulations.
(a) Department.--The department may promulgate regulations
to administer this act.
(b) Department of Revenue.--The Department of Revenue may
promulgate regulations to administer this act.
Section 3103. Compliance.
A person or qualified business eligible for an exemption,
deduction, abatement or credit under this act shall comply with
all reporting, filing and compliance requirements of the Tax
Reform Code of 1971 unless otherwise provided for in this act.
Section 3104. Penalties.
(a) Civil penalty.--
(1) In addition to any penalties authorized by the Tax
Reform Code of 1971 for violations of that act, the
Department of Revenue may impose an additional administrative
penalty not to exceed $10,000 for any act or violation of
this act relating to State and local taxes, including the
filing of any false statement, return or document.
(2) The department may impose an administrative penalty
not to exceed $10,000 for a violation of this act, including
the filing of any false statement, return or document.
(3) This subsection is subject to 2 Pa.C.S. Ch. 5 Subch.
A (relating to practice and procedure of Commonwealth
agencies) and Ch. 7 Subch. A (relating to judicial review of
Commonwealth agency action).
(b) Criminal penalty.--In addition to any criminal penalty
under the Tax Reform Code of 1971, a person or business that
knowingly violates a provision of this act commits a misdemeanor
of the third degree.
Section 3105. Construction.
This act shall be interpreted to ensure that all provisions
relating to State and local tax exemptions, deductions,
abatements and credits are strictly construed in favor of the
Commonwealth and qualified political subdivisions.
Section 3106. Severability.
The provisions of this act are severable. If any provision of
this act or its application to any person or circumstance is
held invalid, the invalidity shall not affect other provisions
or applications of this act which can be given effect without
the invalid provision or application.
Section 3107. Applicability.
The provisions of this act shall be applied prospectively. No
person or business may claim any exemption, deduction, abatement
or credit until the person or business becomes qualified under
this act and, in the case of a business, receives certification
from the department under section 303.
Section 3108. Repeals.
All acts and parts of acts are repealed insofar as they are
inconsistent with this act.
Section 3109. Effective date.
This act shall take effect immediately.
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