HB 1610

PRIOR PRINTER'S NO. 1914  PRINTER'S NO.    2012
             THE GENERAL ASSEMBLY OF PENNSYLVANIA
                 HOUSE BILL
                 No. 1610
                                        Session of
                                          2025
INTRODUCED BY FIEDLER, DALEY, SAMUELSON, KRAJEWSKI, SCOTT,
   DELLOSO, N. NELSON, SANCHEZ, PROBST, HANBIDGE, PIELLI, GIRAL,
   KHAN, NEILSON, CIRESI, HOHENSTEIN, SHUSTERMAN, FREEMAN,
   DONAHUE, HILL-EVANS, OTTEN, CERRATO, GREEN, WAXMAN, T. DAVIS
   AND WEBSTER, JUNE 12, 2025
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
   JUNE 24, 2025
                             AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An    <--
2    act relating to tax reform and State taxation by codifying
3    and enumerating certain subjects of taxation and imposing
4    taxes thereon; providing procedures for the payment,
5    collection, administration and enforcement thereof; providing
6    for tax credits in certain cases; conferring powers and
7    imposing duties upon the Department of Revenue, certain
8    employers, fiduciaries, individuals, persons, corporations
9    and other entities; prescribing crimes, offenses and
10    penalties," in corporate net income tax, further providing
11    for definitions, for determination of net loss deduction, for
12    imposition of tax, for reports and payment of tax, for timely
13    mailing treated as timely filing and payment and for
14    additional withholding requirements, repealing provisions
15    relating to consolidated reports, further providing for
16    extension of time to file reports, for changes made by
17    Federal Government, for limitations on assessments, for
18    definitions, for manufacturing innovation and reinvestment
19    deduction, for enforcement, rules and regulations,
20    inquisitorial powers of the department, for retention of
21    records and for penalties; in tax credit and tax benefit
22    administration, providing for application of tax credits or
23    tax benefits to a unitary business; and, in general
24    provisions, further providing for estimated tax, for
25    underpayment of estimated tax and for restatement of tax
26    liability under treaties.
27    The General Assembly of the Commonwealth of Pennsylvania
28 hereby enacts as follows:
1    Section 1.   Section 401(3)1(a) and (b), (3)2(a)(17)(E) and
2 (5) of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
3 Reform Code of 1971, are amended, (3)1 is amended by adding a
4 phrase, (3)1(t) is amended by adding a paragraph, (3)2(a)(1) is
5 amended by adding a subparagraph, (3)2(a)(9)(A) is amended by
6 adding a unit, (3)4 is amended by adding phrases and the section
7 is amended by adding clauses to read:
8    Section 401.   Definitions.--The following words, terms, and
9 phrases, when used in this article, shall have the meaning
10 ascribed to them in this section, except where the context
11 clearly indicates a different meaning:
12    * * *
13    (3)   "Taxable income."   1.    (a)    In case the entire business
14 of the corporation is transacted within this Commonwealth, for
15 any taxable year which begins on or after January 1, 1971,
16 taxable income for the calendar year or fiscal year as returned
17 to and ascertained by the Federal Government before special
18 deductions provided for in 26 U.S.C. Ch. 1 Subch. B Pt. VIII
19 (relating to special deductions for corporations), not including
20 the deductions provided for in 26 U.S.C. § 243 (relating to
21 dividends received by corporations), or in the case of a
22 corporation participating in the filing of consolidated returns
23 to the Federal Government or that is not required to file a
24 return with the Federal Government, the taxable income which
25 would have been returned to and ascertained by the Federal
26 Government before special deductions provided for in 26 U.S.C.
27 Ch. 1 Subch. B Pt. VIII, not including the deductions provided
28 for in 26 U.S.C. § 243, if separate returns had been made to the
29 Federal Government for the current and prior taxable years,
30 subject, however, to any correction thereof, for fraud, evasion,
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1 or error as finally ascertained by the Federal Government.
2    (b)   Additional deductions shall be allowed from taxable
3 income on account of any dividends received from any other
4 corporation but only to the extent that such dividends are
5 included in taxable income as returned to and ascertained by the
6 Federal Government. For tax years beginning on or after January
7 1, 1991, additional deductions shall only be allowed for amounts
8 included, under [section 78 of the Internal Revenue Code of 1986
9 (Public Law 99-514, 26 U.S.C. § 78)] 26 U.S.C. § 78 (relating to
10 gross up for deemed paid foreign tax credit), in taxable income
11 returned to and ascertained by the Federal Government and for
12 the amount of any dividends received from a foreign corporation
13 included in taxable income to the extent such dividends would be
14 deductible in arriving at Federal taxable income if received
15 from a domestic corporation. For taxable years beginning after
16 December 31, 2025, the additional deduction with respect to
17 dividends shall not be allowed for dividends between members of
18 a unitary business.
19    * * *
20    (p.1)   For taxable years beginning after December 31, 2025,
21 in the case of a corporation that is a member of a unitary
22 business, the term "taxable income" shall mean the combined
23 unitary income of the unitary business, as determined on a
24 water's-edge basis, plus the corporation's nonbusiness income.
25    * * *
26    (t)   * * *
27    (5)   The adjustment required under paragraph (1) shall not
28 apply to a transaction between the taxpayer and an affiliated
29 entity if the taxpayer and the affiliated entity file as part of
30 the same combined annual report in this State.
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1    * * *
2    2.    In case the entire business of any corporation, other
3 than a corporation engaged in doing business as a regulated
4 investment company as defined by the Internal Revenue Code of
5 1986, is not transacted within this Commonwealth, the tax
6 imposed by this article shall be based upon such portion of the
7 taxable income of such corporation for the fiscal or calendar
8 year, as defined in subclause 1 hereof, and may be determined as
9 follows:
10    (a)     Division of Income.
11    (1)     As used in this definition, unless the context otherwise
12 requires:
13    * * *
14    (E.1)     Notwithstanding subparagraph (E), in regard to the
15 sale, redemption, maturity or exchange of securities, held by
16 the taxpayer primarily for sale to customers in the ordinary
17 course of its trade or business, sales shall only include the
18 net gains, equal to zero or above, received by the taxpayer.
19    * * *
20    (9)     (A)    Except as provided in subparagraph (B):
21    * * *
22    (vi)     (a)   For taxable years beginning after December 31,
23 2025, the combined unitary income of a unitary business, as
24 determined on a water's-edge basis, shall be apportioned to this
25 State by multiplying said income by the member's sales factor,
26 the numerator of which shall be the member's total sales in this
27 State during the tax period, and the denominator of which shall
28 be the combined total sales of all members of the unitary
29 business everywhere during the tax period. In computing the
30 sales of each member for purposes of apportionment, the
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1 following sales are excluded from the numerator and denominator:
2    (I)    sales from transactions between or among members of the
3 unitary business that are deferred under 26 CFR 1.1502-13
4 (relating to intercompany transactions) for Federal taxable
5 income purposes; and
6    (II)   the sales of each member that are excluded from the
7 unitary business pursuant to the definition of water's-edge
8 basis.
9    (b)    The Pennsylvania sales of each nontaxable member shall
10 be determined based upon the apportionment rules applicable to
11 the member and shall be aggregated. Each taxable member of the
12 unitary business shall include in its sales factor numerator a
13 portion of the aggregate Pennsylvania sales of nontaxable
14 members during the tax period based on a ratio, the numerator of
15 which is the taxable member's Pennsylvania sales during the tax
16 period and the denominator of which is the aggregate
17 Pennsylvania sales of all the taxable members of the unitary
18 business during the tax period.
19    (c)    Nonbusiness income of each member of a unitary business
20 shall be allocated as provided in paragraphs (5) through (8) of
21 phrase (a) of subclause 2 of this definition.
22    (d)    A member of the unitary business shall be subject to tax
23 on its apportioned share of the combined unitary income of the
24 unitary business, as determined on a water's-edge basis, plus
25 its nonbusiness income or loss allocated to this State, minus
26 the member's net loss deduction, if applicable.
27    (e)    The aggregate of all such final sums of each member of
28 the unitary business from phrase (d) shall constitute the
29 portion of the unitary business's income subject to the tax
30 imposed by this article.
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1    (f)    (1)   The Secretary of Revenue may distribute, apportion
2 or allocate gross income, deductions, credits or allowances
3 between and among two or more corporations, persons, entities,
4 members or unitary businesses, whether or not incorporated,
5 whether or not organized in the United States and whether or not
6 affiliated, if:
7    (A)    the corporations, persons, entities, members or unitary
8 businesses are owned or controlled directly or indirectly by the
9 same interests within the meaning of 26 U.S.C. § 482 (relating
10 to allocation of income and deductions among taxpayers); and
11    (B)    the Secretary of Revenue determines that the
12 distribution, apportionment or allocation is necessary in order
13 to reflect an arm's length standard within the meaning of 26 CFR
14 1.482-1 (relating to allocation of income and deductions among
15 taxpayers) and to reflect clearly the income of those
16 corporations, persons, entities, members or unitary businesses.
17    (2)    The Secretary of Revenue shall apply the administrative
18 and judicial interpretations of 26 U.S.C. § 482 in administering
19 this section.
20    (g)    For taxable years beginning after December 31, 2025, any
21 member of a unitary business that would otherwise apportion its
22 share of the combined unitary income of the unitary business, as
23 determined on a water's-edge basis, under phrase (b), (c), (d)
24 or (e) of subclause 2 of this definition shall instead use a
25 sales factor as described in this section.
26    * * *
27    (17)    Sales, other than sales under paragraphs (16) and
28 (16.1), are in this State as follows:
29    * * *
30    (E)    [Gross receipts] Net gains, equal to zero or above, from
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1 the sale, redemption, maturity or exchange of securities, held
2 by the taxpayer primarily for sale to customers in the ordinary
3 course of its trade or business, if the customers are in this
4 State.
5    * * *
6    4.    * * *
7    (h)    Subject to the limitations of this subclause, any member
8 of a unitary business that has unused net loss from taxable
9 years that began prior to January 1, 2026, or that generates net
10 losses while a member of a unitary business may only take the
11 net loss deduction for taxable years beginning after December
12 31, 2025, to the extent of the member's share of taxable income
13 after allocation and apportionment and the net losses may not be
14 used by other members of the same unitary business except as
15 otherwise permitted by phrase (g) of subclause 2 of this
16 definition.
17    (i)    Any net loss realized for a taxable year unused by a
18 corporation which subsequently becomes a member of another
19 unitary business may only be used by that corporation except as
20 otherwise permitted by phrase (g) of subclause 2 of this
21 definition.
22    * * *
23    (5)    "Taxable year."   [The taxable year which the
24 corporation, or any consolidated group with which the
25 corporation participates in the filing of consolidated returns,
26 actually uses in reporting taxable income to the Federal
27 Government. With regard to the tax imposed by Article IV of this
28 act (relating to the Corporate Net Income Tax), the terms
29 "annual year," "fiscal year," "annual or fiscal year," "tax
30 year" and "tax period" shall be the same as the corporation's
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1 taxable year, as defined in this paragraph.]
2    1.   Except as set forth in subclause 2, the taxable year
3 which the corporation, or any consolidated group with which the
4 corporation participates in the filing of consolidated returns,
5 actually uses in reporting taxable income to the Federal
6 Government, or which the corporation would have used in
7 reporting taxable income to the Federal Government had it been
8 required to report its taxable income to the Federal Government.
9 With regard to the tax imposed by Article IV, the terms "annual
10 year," "fiscal year," "annual or fiscal year," "tax year" and
11 "tax period" shall be the same as the corporation's taxable
12 year, as defined in this subclause or subclause 2.
13    2.   All members of a unitary business shall have a common
14 taxable year for purposes of computing tax due under this
15 article. The taxable year shall be the common taxable year
16 adopted, in a manner prescribed by the department, by all
17 members of the unitary business. The common taxable year must be
18 used by all members of the unitary business in the year of
19 adoption and all future years unless otherwise permitted by the
20 department.
21    * * *
22    (12)    "Tax haven."   A jurisdiction that during the tax year
23 in question:
24    1.   has laws or practices that prevent effective exchange of
25 information for tax purposes with other governments on taxpayers
26 benefiting from the tax regime;
27    2.   has a tax regime which lacks transparency;
28    3.   facilitates the establishment of foreign-owned entities
29 without the need for a local substantive presence or prohibits
30 these entities from having any commercial impact on the local
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1 economy;
2    4.    explicitly or implicitly excludes the jurisdiction's
3 resident taxpayers from taking advantage of the tax regime
4 benefits or prohibits enterprises that benefit from the regime
5 from operating in the jurisdiction's domestic market; or
6    5.    has created a tax regime which is favorable for tax
7 avoidance, based upon an overall assessment of relevant factors,
8 including whether the jurisdiction has a significant untaxed
9 offshore financial or services sector relative to its overall
10 economy.
11    (13)    "Unitary business."   A single economic enterprise that
12 is made up of separate parts of a single corporation, of a
13 commonly controlled group of corporations, or both, that are
14 sufficiently interdependent, integrated and interrelated through
15 their activities so as to provide a synergy and mutual benefit
16 that produces a sharing or exchange of value among them and a
17 flow of value to the separate parts. A unitary business includes
18 all parts and corporations that are included in a unitary
19 business under the Constitution of the United States.
20    (14)    "Water's-edge basis."    A system of reporting that
21 includes the income and apportionment factors of certain members
22 of a unitary business, described as follows:
23    1.    Any member incorporated in the United States or formed
24 under the laws of any state of the United States, the District
25 of Columbia, any territory or possession of the United States or
26 the Commonwealth of Puerto Rico.
27    2.    Any member, regardless of the place incorporated or
28 formed, if at least twenty per cent of the member's sales factor
29 is within the United States, and the following shall apply:
30    (a)     For purposes of determining whether at least twenty per
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1 cent of a member's sales factor is within the United States, the
2 calculation must be performed on a stand-alone basis. Sales
3 shall be gross figures without eliminations for transactions
4 with other members of any unitary business.
5    (b)    Whether sales are within the United States is based on
6 the sales factor sourcing rules contained in clause (3)2.
7    3.    Any member which is one of the following:
8    (a)    A domestic international sales corporation as described
9 in 26 U.S.C. Ch. 1 Subch. N Pt. IV Subpt. A (relating to
10 treatment of qualifying corporations).
11    (b)    A foreign sales corporation as described in the former
12 26 U.S.C. §§ 921, 922, 923, 924, 925, 926 and 927.
13    (c)    An export trade corporation as described in 26 U.S.C.
14 Ch. 1 Subch. N Pt. III Subpt. G (relating to export trade
15 corporations).
16    4.    Any member not described in subclause 1, 2 or 3 shall
17 include the portion of the member's taxable income derived from
18 or attributable to sources within the United States, as
19 determined under 26 U.S.C. (relating to Internal Revenue Code)
20 without regard to Federal treaties, and its apportionment
21 factors related thereto.
22    5.    Any member that is a "controlled foreign corporation" as
23 defined in 26 U.S.C. § 957 (relating to controlled foreign
24 corporations; United States persons), to the extent the income
25 of that member is income defined in 26 U.S.C. § 952 (relating to
26 Subpart F income defined) as Subpart F income, not excluding
27 lower-tier subsidiaries' distributions of such income which were
28 previously taxed, determined without regard to Federal treaties,
29 and the apportionment factors related to that income; any item
30 of income received by a controlled foreign corporation and the
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1 apportionment factors related to such income shall be excluded
2 if the corporation establishes to the satisfaction of the
3 Secretary of Revenue that such income was subject to an
4 effective rate of income tax imposed by a foreign country
5 greater than ninety per cent of the maximum rate of tax
6 specified in 26 U.S.C. § 11 (relating to tax imposed). The
7 effective rate of income tax determination shall be based upon
8 the methodology under 26 CFR 1.954-1 (relating to foreign base
9 company income).
10    6.   Any member that is incorporated in or is doing business
11 in a tax haven unless it is proven to the satisfaction of the
12 secretary that such member is incorporated in or doing business
13 in a tax haven for a legitimate business purpose.
14    (15)    "Commonly controlled group."   For a corporation, the
15 corporation is a member of a group of two or more corporations
16 and more than fifty per cent of the voting stock or controlling
17 interest of each member of the group is directly or indirectly
18 owned by a common owner or by common owners, either corporate or
19 noncorporate, or by one or more of the member corporations of
20 the group.
21    (16)    "Combined unitary income."   The aggregate separate
22 company taxable income or loss of all members of a unitary
23 business subject to apportionment except:
24    1.   Income from an intercompany transaction between members
25 of a unitary business shall be deferred in a manner similar to
26 26 CFR 1.1502-13 for Federal taxable income purposes.
27    2.   Dividends paid by one member of a unitary business to
28 another.
29    3.   Income of the following corporations is not included in
30 the determination of combined unitary income:
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1    (a)    any corporation subject to taxation under Article VII,
2 VIII, IX or XV;
3    (b)    any corporation specified in the definition of
4 "institution" in section 701.5 that would be subject to taxation
5 under Article VII, were it doing business in this Commonwealth,
6 as defined in section 701.5;
7    (c)    any corporation commonly known as a title insurance
8 company that would be subject to taxation under Article VIII,
9 were it incorporated in this State;
10    (d)    any corporation specified as an insurance company,
11 association or exchange in Article IX that would be subject to
12 taxation under Article IX, were it transacting insurance
13 business in this State;
14    (e)    any corporation specified in the definition of
15 "institution" in section 1501 that would be subject to taxation
16 under Article XV, were it located, as defined in section 1501,
17 in this State; or
18    (f)    any corporation that has filed a timely election and has
19 qualified to be taxed as a regulated investment company under
20 the provisions of the Internal Revenue Code of 1954, as amended.
21    (17)    "Member."   A corporation that is a member of a unitary
22 business. The term does not include a corporation listed in
23 clause (16)3.
24    (18)    "Taxable member."   A member which would be subject to
25 the tax imposed by this article under section 402 on a separate
26 entity basis for exercising, whether in its own name or through
27 any person, association, business trust, corporation, joint
28 venture, limited liability company, limited partnership,
29 partnership, member or other entity, any of the privileges
30 included in section 402(a)(1), (2), (3), (4) and (5).
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1    (19)    "Nontaxable member."     A member which is not a taxable
2 member.
3    Section 2.     Section 401.1 of the act is amended by adding a
4 subsection to read:
5    Section 401.1.     Determination of Net Loss Deduction.--* * *
6    (f)    For taxable years beginning after December 31, 2025,
7 taxpayers filing combined annual reports must calculate the
8 available net loss deduction on a taxable member by taxable
9 member basis in accordance with the provisions of subclause 4 of
10 section 401(3).
11    Section 3.     Sections 402(a) introductory paragraph and (5)
12 (iii) and 403(c), (d) and (f) of the act are amended and the
13 sections are amended by adding subsections to read:
14    Section 402.    Imposition of Tax.--(a)    A corporation shall be
15 subject to and shall pay an excise tax for exercising, whether
16 in its own name or through any person, association, business
17 trust, corporation, joint venture, limited liability company,
18 limited partnership, partnership, member or other entity, any of
19 the following privileges:
20    * * *
21    (5)    * * *
22    (iii)    There shall be a rebuttable presumption that a
23 corporation, or in the context of a unitary business, a member
24 of a unitary business with $500,000 or more of sales sourced in
25 the current tax year to this Commonwealth under section 401 has
26 substantial nexus in this Commonwealth without regard to
27 physical presence in this Commonwealth.
28    * * *
29    (d)    For purposes of this section the term "corporation"
30 shall include a unitary business, except where the context
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1 clearly indicates a different meaning.
2    Section 403.     Reports and Payment of Tax.--* * *
3    (a.1)     (1)   Each corporation that is a member of a unitary
4 business that consists of two or more corporations, unless
5 excluded by the provisions of this article, shall file as part
6 of a combined annual report. The members of the unitary business
7 shall designate one member that is subject to tax under this
8 article to file the combined annual report and to act as agent
9 on behalf of all other members of the unitary business. Each
10 corporation that is a member of a unitary business shall be
11 liable for its tax liability under this article. The agent also
12 shall be liable for the aggregate amount of the unitary
13 business' tax liability pursuant to this article.
14    (2)     The oath or affirmation of the designated member's
15 president, vice president, treasurer, assistant treasurer or
16 other authorized officer shall constitute the oath or
17 affirmation of each corporation that is a member of that unitary
18 business.
19    (3)     The designated member shall transmit to the department
20 upon a form prescribed by the department a combined annual
21 report under oath or affirmation of the member's president, vice
22 president, treasurer, assistant treasurer or other authorized
23 officer.
24    (4)     In addition to the information required in subsection
25 (a), the combined annual report shall set forth:
26    (i)     All members included in the unitary business.
27    (ii)     All necessary data, both in the aggregate and for each
28 member of the unitary business, that sets forth the
29 determination of tax liability for each member of the unitary
30 business.
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1    (iii)   Any other information that the department may require.
2    (a.2)   A member of a unitary business of two or more
3 corporations must determine the member's income and
4 apportionment factors on a water's-edge basis.
5    * * *
6    (b.1)   It shall be the duty of each unitary business liable
7 to pay tax under this article to pay estimated tax under section
8 3003.2 and to make final payment of tax due for the taxable year
9 with the combined annual report required by this section.
10    (c)   The amount of all taxes, imposed under the provisions of
11 this article, not paid on or before the times as above provided,
12 shall bear interest as provided in section 806 of the act of
13 April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code,"
14 from the date they are due and payable until paid, except that
15 if the taxable income has been, or is increased by the
16 Commissioner of Internal Revenue, or by any other agency or
17 court of the United States, interest shall be computed on the
18 additional tax due from thirty days after the corporation
19 receives notice of the change of income until paid: Provided,
20 however, That any corporation or designated member responsible
21 for filing a combined annual report may pay the full amount of
22 such tax, or any part thereof, together with interest due to the
23 date of payment, without prejudice to its right to present and
24 prosecute, an administrative petition or an appeal to court. If
25 it be thereafter determined that such taxes were overpaid, the
26 department shall enter a credit to the account of such
27 corporation or designated member, which may be used by it in the
28 manner prescribed by law.
29    (d)   If the officers of any corporation or designated member
30 shall neglect, or refuse to make any report as herein required,
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1 or shall knowingly make any false report, a penalty of five
2 hundred dollars ($500) plus an additional one per cent for every
3 dollar of tax determined to be due in excess of twenty-five
4 thousand dollars ($25,000) shall be added to the tax determined
5 to be due. No amounts added to the tax shall bear any interest
6 whatsoever.
7    * * *
8    (e.1)   If the members of a unitary business have a common
9 taxable year that closes not upon December 31, but upon some
10 other date, such unitary business shall make the combined annual
11 report, herein required, on or before the fifteenth day of the
12 month following what is or would be the due date of the return
13 to the Federal Government, subject in all other respects to the
14 provisions of this article.
15    (f)   If the corporation or any members of the unitary
16 business shall claim in its report or in its combined annual
17 report that the return made to the Federal Government was
18 inaccurate, the amount claimed [by it] to be the taxable income,
19 taxable under this article, and the basis of such claim of
20 inaccuracy, shall be fully specified.
21    Section 4.   Sections 403.1 and 403.2(b) and (e) of the act
22 are amended to read:
23    Section 403.1.   Timely Mailing Treated as Timely Filing and
24 Payment.--Notwithstanding the provisions of any State tax law to
25 the contrary, whenever a report or payment of all or any portion
26 of a State tax is required by law to be received by the
27 Pennsylvania Department of Revenue or other agency of the
28 Commonwealth on or before a day certain, the corporation shall
29 be deemed to have complied with such law if the letter
30 transmitting the report or payment of such tax which has been
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1 received by the department is postmarked by the United States
2 Postal Service on or prior to the final day on which the payment
3 is to be received.
4    For the purposes of this article, presentation of a receipt
5 indicating that the report or payment was mailed by registered
6 or certified mail on or before the due date shall be evidence of
7 timely filing and payment.
8    For purposes of this section, the term "corporation" shall
9 include a unitary business.
10    Section 403.2.    Additional Withholding Requirements.--* * *
11    (b)   A partnership required to file a report under subsection
12 (a) shall withhold and pay to the department a tax on behalf of
13 its nonfiling corporate partners in an amount equal to its net
14 nonfiling corporate partners' shares of income and deductions as
15 reported to the Federal Government multiplied by the tax rate
16 applicable to the taxable year being reported. Any amount
17 withheld and paid to the department on behalf of a nonfiling
18 corporate partner shall be considered a tax payment by that
19 partner and credited to its account [as if it was directly paid
20 by the partner] or the account of the designated member of the
21 unitary business.
22    * * *
23    (e)   The following words, terms and phrases when used in this
24 section shall have the meaning ascribed to them in this section,
25 except where the context clearly indicates a different meaning:
26    "Net nonfiling corporate partners' shares of income and
27 deductions as reported to the Federal Government."   That portion
28 of the income, less the deductions:
29    (1)   reported on Schedule K of the Federal Form 1065, Return
30 of Partnership Income, filed with the Federal Government for the
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1 taxable year; and
2    (2)    allocated on Federal Schedule K-1 to nonfiling corporate
3 partners.
4 If the entire business of the partnership is not transacted in
5 this Commonwealth, the amount computed under this definition
6 shall be apportioned to this Commonwealth as provided in section
7 401(3)2 as if the partnership were a corporation subject to tax
8 under this article.
9    "Nonfiling corporate partner."        A partner which:
10    (1)    is a corporation as defined in section 401; and
11    (2)    has [not] neither filed a tax report nor been included
12 in a combined annual report and has not paid the tax required by
13 sections 402 and 403 for the previous taxable year.
14    "Partner."    An owner of an interest in the partnership, in
15 whatever manner that owner and ownership interest are
16 designated.
17    "Partnership."     An entity classified as a partnership for
18 Federal income tax purposes.
19    (1)    The term includes:
20    (i)    a partnership, limited partnership, limited liability
21 partnership or limited liability company; and
22    (ii)     any syndicate, group, pool, joint venture, business
23 trust, association or other unincorporated organization through
24 or by which a business, financial operation or venture is
25 carried on.
26    (2)    The term does not include an entity that is:
27    (i)    listed on a United States national stock exchange; or
28    (ii)     described in section 401(1)1 or 2.
29    Section 5.    Section 404 of the act is repealed:
30    [Section 404.     Consolidated Reports.--The department shall
20250HB1610PN2012  - 18 -
1 not permit any corporation owning or controlling, directly or
2 indirectly, any of the voting capital stock of another
3 corporation or of other corporations, subject to the provisions
4 of this article, to make a consolidated report, showing the
5 combined net income.]
6    Section 6.   Section 405 of the act is amended to read:
7    Section 405.   Extension of Time to File Reports.--The
8 department may, upon application made to it, in such form as it
9 shall prescribe, on or prior to the last day for filing any
10 annual report, and upon proper cause shown, grant to the
11 corporation, required to file such report, an extension of not
12 more than sixty days within which such report may be filed. If
13 the Federal income tax authorities grant an extension of time
14 for filing the reports with the Federal Government, the
15 department shall automatically grant an extension of time for
16 filing the annual report under this article until the fifteenth
17 day of the month following the termination of the Federal
18 extension, but the amount of tax due shall, in such cases,
19 nevertheless, be subject to interest from the due dates and at
20 the rates fixed by this article. For purposes of this section
21 the term "report," when used in the context of filings with the
22 department, shall include combined annual reports and the term
23 "corporation" shall include a unitary business.
24    Section 7.   Section 406(e) of the act is amended and the
25 section is amended by adding a subsection to read:
26    Section 406.   Changes Made by Federal Government.--* * *
27    (e)   The provisions of this section shall apply to every
28 corporation which was doing business in Pennsylvania in the year
29 for which the Federal income has been changed, irrespective of
30 whether or not such corporation or any member of a unitary
20250HB1610PN2012  - 19 -
1 business has thereafter merged, consolidated, withdrawn or
2 dissolved. Any clearance certificate issued by the department
3 shall be conditioned upon the requirement that in the event of a
4 change in Federal income for any year for which taxes have been
5 paid to the Commonwealth, the corporation or its successor or
6 its officers or its directors shall file with the department a
7 report of change and pay any additional State tax resulting
8 therefrom.
9    (f)   For purposes of this section, the term "corporation"
10 shall include a unitary business.
11    Section 8.   Sections 407.3(f), 407.6(a)(5), (6) and (8) and
12 407.7(d)(3) of the act are amended to read:
13    Section 407.3.   Limitations on Assessments.--* * *
14    (f)   For purposes of this section[,]:
15    (1)   a report filed before the last day prescribed for filing
16 shall be deemed to have been filed on the last day[.]; and
17    (2)   the term "report" shall include combined annual reports.
18    Section 407.6.   Definitions.--(a)   For the purposes of this
19 part only, the following words, terms and phrases shall have the
20 meaning ascribed to them in this subsection, except where the
21 context clearly indicates a different meaning:
22    * * *
23    (5)   "Qualified manufacturing innovation and reinvestment
24 deduction."   An allowable deduction as determined, calculated
25 and executed in a commitment letter between the department and
26 the taxpayer. The deduction shall be applied to the taxable
27 income of the taxpayer to reduce a qualified tax liability of
28 the taxpayer following the allocation and apportionment of the
29 income of the taxpayer. If the taxpayer is a unitary business
30 filing a combined annual return, the deduction shall be applied
20250HB1610PN2012  - 20 -
1 to the specific member of the unitary business which qualifies
2 under this part. Such member shall reduce taxable income
3 following allocation and the apportionment of the combined
4 unitary income of the unitary business, as determined on a
5 water's-edge basis, and the application of any net loss of the
6 member.
7    (6)    "Qualified tax liability."       A taxpayer's tax liability
8 under this article. In the case of a unitary business, the term
9 only includes the portion of the unitary business's overall tax
10 liability under this article associated with the taxable member
11 qualified to receive the deduction under this part.
12    * * *
13    (8)    "Taxpayer."    An employer subject to the tax under this
14 article. For purposes of this definition, an employer shall
15 include a member of a unitary business.
16    * * *
17    Section 407.7.      Manufacturing Innovation and Reinvestment
18 Deduction.--* * *
19    (d)    * * *
20    (3)    (i)     A taxpayer cannot use the deduction to reduce the
21 taxpayer's tax liability by more than fifty per cent of the tax
22 liability under this article for the taxable year. For a unitary
23 business, the limitation shall apply to the portion of the tax
24 liability of the unitary business under this article associated
25 with the taxable member which qualifies for the deduction under
26 this section.
27    (ii)    The deduction is nontransferable and any unused portion
28 in a tax year shall expire at the end of the corresponding tax
29 year.
30    Section 9.      Section 408 of the act is amended by adding a
20250HB1610PN2012  - 21 -
1 subsection to read:
2    Section 408.     Enforcement; Rules and Regulations;
3 Inquisitorial Powers of the Department.--* * *
4    (e)     As used in this section, the term "corporation" shall
5 include a unitary business.
6    Section 10.    Sections 409 and 410(c) of the act are amended
7 to read:
8    Section 409.     Retention of Records.--Each corporation shall
9 maintain and keep for a period of three years after any report
10 is filed under this article, such record or records of its
11 business within this Commonwealth for the period covered by such
12 report and other pertinent papers, as may be required by the
13 department. For purposes of this section, the term "corporation"
14 shall include a unitary business.
15    Section 410.     Penalties.--* * *
16    (c)     Any person, who wilfully fails, neglects, or refuses to
17 make a report or to pay the tax as herein prescribed, or who
18 shall refuse to permit the department to examine the books,
19 papers, and records of any corporation liable to pay tax under
20 this article, shall be guilty of a misdemeanor, and, upon
21 conviction thereof, shall be sentenced to pay a fine not
22 exceeding one thousand dollars ($1,000) and costs of
23 prosecution, or to undergo imprisonment not exceeding six
24 months, or both. Such penalty shall be in addition to any other
25 penalties imposed by this article. For purposes of this
26 subsection, the term "corporation" shall include a unitary
27 business.
28    Section 11.    The act is amended by adding a section to read:
29 Section 1710-A.1.    Application of tax credits or tax benefits to
30a unitary business.
20250HB1610PN2012  - 22 -
1    For purposes of determining the amount of tax credit or tax
2 benefit which is applicable to the tax due by a unitary business
3 under Article IV, any tax credit or tax benefit awarded to or
4 conferred upon a corporation which is a member of a unitary
5 business shall be calculated as if that member is a separate
6 company and can only be applied against that portion of the
7 unitary business's annual tax liability associated with that
8 member which receives the tax credit or tax benefit. For
9 purposes of this article, the term "unitary business" shall have
10 the same meaning as in section 401(13) and the term "member"
11 shall have the same meaning as in section 401(17).
12    Section 12.   Section 3003.2(b)(2) and (4.3) and (c)(1) of the
13 act are amended and subsection (a) is amended by adding a
14 paragraph to read:
15    Section 3003.2.   Estimated Tax.--(a)   The following taxpayers
16 are required to pay estimated tax:
17    * * *
18    (1.1)   Every unitary business subject to the corporate net
19 income tax imposed by Article IV, commencing with the calendar
20 year 2026 and fiscal years beginning during the calendar year
21 2026 and each taxable year thereafter, shall make payments of
22 estimated corporate net income tax.
23    * * *
24    (b)   The following words, terms and phrases when used in this
25 section and section 3003.3 shall have the following meanings
26 ascribed to them:
27    * * *
28    (2)   "Estimated corporate net income tax."   The amount which
29 the corporation or the unitary business estimates as the amount
30 of tax imposed by section 402 of Article IV for the taxable
20250HB1610PN2012  - 23 -
1 year.
2    * * *
3    (4.3)    "Person."   Any natural person, association, fiduciary,
4 partnership, corporation, unitary business or other entity,
5 including the Commonwealth, its political subdivisions and
6 instrumentalities and public authorities. Whenever used in any
7 clause prescribing and imposing a penalty or imposing a fine or
8 imprisonment, or both, the term "person," as applied to an
9 association, shall include the members thereof [and], as applied
10 to a corporation, the officers thereof and as applied to a
11 unitary business, the officers of the designated member.
12    * * *
13    (c)    Estimated tax shall be paid as follows:
14    (1)    Payments of estimated corporate net income tax shall be
15 made in equal installments on or before the fifteenth day of the
16 third, sixth, ninth and twelfth months of the taxable year. The
17 remaining portion of the corporate net income tax due, if any,
18 shall be paid upon the date the corporation's annual report or
19 the unitary business's combined annual report is required to be
20 filed without reference to any extension of time for filing such
21 report.
22    * * *
23    Section 13.    Section 3003.3(d) of the act is amended and the
24 section is amended by adding a subsection to read:
25    Section 3003.3.      Underpayment of Estimated Tax.--* * *
26    (d)    Notwithstanding the provisions of [the preceding
27 subsections,] this section, other than as set forth in
28 subsection (d.1), interest with respect to any underpayment of
29 any installment of estimated tax shall not be imposed if the
30 total amount of all payments of estimated tax made on or before
20250HB1610PN2012  - 24 -
1 the last date prescribed for the payment of such installment
2 equals or exceeds the amount which would have been required to
3 be paid on or before such date if the estimated tax were an
4 amount equal to the tax computed at the rates applicable to the
5 taxable year, including any minimum tax imposed, but otherwise
6 on the basis of the facts shown on the report of the taxpayer
7 for, and the law applicable to, the safe harbor base year,
8 adjusted for any changes to sections 401, 601, 602 and 1101
9 enacted for the taxable year, if a report showing a liability
10 for tax was filed by the taxpayer for the safe harbor base year.
11 If the total amount of all payments of estimated tax made on or
12 before the last date prescribed for the payment of such
13 installment does not equal or exceed the amount required to be
14 paid per the preceding sentence, but such amount is paid after
15 the date the installment was required to be paid, then the
16 period of underpayment shall run from the date the installment
17 was required to be paid to the date the amount required to be
18 paid per the preceding sentence is paid. Provided, that if the
19 total tax for the safe harbor base year exceeds the tax shown on
20 such report by ten per cent or more, the total tax adjusted to
21 reflect the current tax rate shall be used for purposes of this
22 subsection. In the event that the total tax for the safe harbor
23 base year exceeds the tax shown on the report by ten per cent or
24 more, interest resulting from the utilization of such total tax
25 in the application of the provisions of this subsection shall
26 not be imposed if, within forty-five days of the mailing date of
27 each assessment, payments are made such that the total amount of
28 all payments of estimated tax equals or exceeds the amount which
29 would have been required to be paid on or before such date if
30 the estimated tax were an amount equal to the total tax adjusted
20250HB1610PN2012  - 25 -
1 to reflect the current tax rate. In any case in which the
2 taxable year for which an underpayment of estimated tax may
3 exist is a short taxable year, in determining the tax shown on
4 the report or the total tax for the safe harbor base year, the
5 tax will be reduced by multiplying it by the ratio of the number
6 of installment payments made in the short taxable year to the
7 number of installment payments required to be made for the full
8 taxable year.
9    (d.1)   With respect to any underpayment of an installment of
10 estimated corporate net income tax for any tax year that begins
11 in taxable year 2026 or 2027 by a corporation required to file a
12 combined annual report pursuant to section 403(a.1)(1), interest
13 shall not be imposed if the total amount of all payments of
14 estimated corporate net income tax made on or before the last
15 date prescribed for the payment of such installment equals or
16 exceeds the amount which would have been required to be paid on
17 or before such date if the estimated tax were an amount equal to
18 the combined tax shown on the reports of all the members of the
19 unitary business for the safe harbor base year computed at the
20 rate applicable to the taxable year.
21    Section 14.   Section 3003.11 of the act is amended to read:
22    Section 3003.11.   Restatement of Tax Liability Under
23 Treaties.--In the absence of an express exemption from State
24 income taxes, no treaty of the Federal Government shall be
25 construed to exempt a corporation or a member of a unitary
26 business from the taxes imposed under Articles IV and VI. For
27 purposes of determining "taxable income" under Article IV, any
28 corporation or member of a unitary business not subject to
29 Federal income taxation or Federal reporting requirements
30 pursuant to such a treaty shall be required to file a report or
20250HB1610PN2012  - 26 -
1 file as part of a combined annual report with the department
2 showing the taxable income which would have been reported to and
3 ascertained by the Federal Government had it not been exempted
4 by the treaty.
5    Section 15.   The following provisions of the act shall apply
6 to tax years beginning on and after January 1, 2026:
7The amendment or addition of section 401(3)1(a) and (b),
8    (p.1) and (t)(5), 2(a)(1)(E.1), 2(a)(9)(A)(vi) and 2(a)(17)
9    (E) and 4(h) and (i), (5), (12), (13), (14), (15), (16),
10    (17), (18) and (19).
11The addition of section 401.1(f).
12The amendment or addition of sections 402(a) introductory
13    paragraph and (5)(iii), (b) and (d) and 403(a.1), (a.2),
14    (b.1), (c), (d), (e.1) and (f).
15The amendment of sections 403.1 and 403.2(b) and (e).
16The repeal of section 404.
17The amendment of section 405.
18The amendment or addition of section 406(e) and (f).
19The amendment of sections 407.3(f), 407.6(a)(5), (6) and
20    (8) and 407.7(d)(3).
21The addition of section 408(e).
22The amendment of sections 409 and 410(c).
23The addition of section 1710-A.1.
24The amendment or addition of section 3003.2(a)(1.1), (b)
25    (2) and (4.3) and (c)(1).
26The amendment or addition of section 3003.3(d) and (d.1).
27The amendment of section 3003.11.
28    Section 16.   This act shall take effect January 1, 2026, or
29 immediately, whichever is later.
30 AMENDING THE ACT OF MARCH 4, 1971 (P.L.6, NO.2), ENTITLED "AN      <--
31    ACT RELATING TO TAX REFORM AND STATE TAXATION BY CODIFYING
20250HB1610PN2012  - 27 -
1    AND ENUMERATING CERTAIN SUBJECTS OF TAXATION AND IMPOSING
2    TAXES THEREON; PROVIDING PROCEDURES FOR THE PAYMENT,
3    COLLECTION, ADMINISTRATION AND ENFORCEMENT THEREOF; PROVIDING
4    FOR TAX CREDITS IN CERTAIN CASES; CONFERRING POWERS AND
5    IMPOSING DUTIES UPON THE DEPARTMENT OF REVENUE, CERTAIN
6    EMPLOYERS, FIDUCIARIES, INDIVIDUALS, PERSONS, CORPORATIONS
7    AND OTHER ENTITIES; PRESCRIBING CRIMES, OFFENSES AND
8    PENALTIES," IN PERSONAL INCOME TAX, FURTHER PROVIDING FOR
9    DEFINITIONS AND FOR INCOME TAXES IMPOSED BY OTHER STATES AND
10    PROVIDING FOR PROVISIONS FOR OVERTIME PAY; IN CORPORATE NET
11    INCOME TAX, FURTHER PROVIDING FOR DEFINITIONS, FOR
12    DETERMINATION OF NET LOSS DEDUCTION, FOR IMPOSITION OF TAX,
13    FOR REPORTS AND PAYMENT OF TAX, FOR TIMELY MAILING TREATED AS
14    TIMELY FILING AND PAYMENT AND FOR ADDITIONAL WITHHOLDING
15    REQUIREMENTS, REPEALING PROVISIONS RELATING TO CONSOLIDATED
16    REPORTS, FURTHER PROVIDING FOR EXTENSION OF TIME TO FILE
17    REPORTS, FOR CHANGES MADE BY FEDERAL GOVERNMENT, FOR
18    LIMITATIONS ON ASSESSMENTS, FOR DEFINITIONS, FOR
19    MANUFACTURING INNOVATION AND REINVESTMENT DEDUCTION, FOR
20    ENFORCEMENT, RULES AND REGULATIONS, INQUISITORIAL POWERS OF
21    THE DEPARTMENT, FOR RETENTION OF RECORDS AND FOR PENALTIES;
22    IN TAX CREDIT AND TAX BENEFIT ADMINISTRATION, FURTHER
23    PROVIDING FOR DEFINITIONS AND PROVIDING FOR APPLICATION OF
24    TAX CREDITS OR TAX BENEFITS TO A UNITARY BUSINESS; PROVIDING
25    FOR WORKING PENNSYLVANIANS TAX CREDIT; AND, IN GENERAL
26    PROVISIONS, FURTHER PROVIDING FOR ESTIMATED TAX, FOR
27    UNDERPAYMENT OF ESTIMATED TAX AND FOR RESTATEMENT OF TAX
28    LIABILITY UNDER TREATIES.
29    THE GENERAL ASSEMBLY OF THE COMMONWEALTH OF PENNSYLVANIA
30 HEREBY ENACTS AS FOLLOWS:
31    SECTION 1.   SECTION 301(D) OF THE ACT OF MARCH 4, 1971
32 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED
33 AND THE SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:
34    SECTION 301.   DEFINITIONS.--ANY REFERENCE IN THIS ARTICLE TO
35 THE INTERNAL REVENUE CODE OF 1986 SHALL MEAN THE INTERNAL
36 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.),
37 AS AMENDED TO JANUARY 1, 1997, UNLESS THE REFERENCE CONTAINS THE
38 PHRASE "AS AMENDED" AND REFERS TO NO OTHER DATE, IN WHICH CASE
39 THE REFERENCE SHALL BE TO THE INTERNAL REVENUE CODE OF 1986 AS
40 IT EXISTS AS OF THE TIME OF APPLICATION OF THIS ARTICLE. THE
41 FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN THIS ARTICLE
42 SHALL HAVE THE MEANING ASCRIBED TO THEM IN THIS SECTION EXCEPT
43 WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:
44    * * *
20250HB1610PN2012  - 28 -
1    (D)   "COMPENSATION" MEANS AND SHALL INCLUDE SALARIES, WAGES,
2 COMMISSIONS, BONUSES, OVERTIME PAY AND INCENTIVE PAYMENTS
3 WHETHER BASED ON PROFITS OR OTHERWISE, FEES[, TIPS] AND SIMILAR
4 REMUNERATION RECEIVED FOR SERVICES RENDERED, WHETHER DIRECTLY OR
5 THROUGH AN AGENT, AND WHETHER IN CASH OR IN PROPERTY. THE TERM
6 "COMPENSATION" SHALL INCLUDE ANY PART OF A DISTRIBUTION UNDER A
7 PLAN DESCRIBED IN SECTION 409A(D)(1) OF THE INTERNAL REVENUE
8 CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 409A(D)(1)), AS
9 AMENDED, ATTRIBUTABLE TO AN ELECTIVE DEFERRAL OF INCOME OR THE
10 INCOME ON ANY ELECTIVE DEFERRAL OF INCOME, WHETHER PAID OR
11 PAYABLE DURING EMPLOYMENT OR TO A RETIRED PERSON UPON OR AFTER
12 RETIREMENT FROM SERVICE. TIPS AND GRATUITIES SHALL NOT BE
13 CONSIDERED COMPENSATION UNDER THIS ARTICLE.
14    THE TERM "COMPENSATION" SHALL NOT MEAN OR INCLUDE: (I)
15 PERIODIC PAYMENTS FOR SICKNESS AND DISABILITY OTHER THAN REGULAR
16 WAGES RECEIVED DURING A PERIOD OF SICKNESS OR DISABILITY; OR
17 (II) DISABILITY, RETIREMENT OR OTHER PAYMENTS ARISING UNDER
18 WORKMEN'S COMPENSATION ACTS, OCCUPATIONAL DISEASE ACTS AND
19 SIMILAR LEGISLATION BY ANY GOVERNMENT; OR (III) PAYMENTS
20 COMMONLY RECOGNIZED AS OLD AGE OR RETIREMENT BENEFITS PAID TO
21 PERSONS RETIRED FROM SERVICE AFTER REACHING A SPECIFIC AGE OR
22 AFTER A STATED PERIOD OF EMPLOYMENT; OR (IV) PAYMENTS COMMONLY
23 KNOWN AS PUBLIC ASSISTANCE, OR UNEMPLOYMENT COMPENSATION
24 PAYMENTS BY ANY GOVERNMENTAL AGENCY; OR (V) PAYMENTS TO
25 REIMBURSE ACTUAL EXPENSES; OR (VI) PAYMENTS MADE BY EMPLOYERS OR
26 LABOR UNIONS, INCLUDING PAYMENTS MADE PURSUANT TO A CAFETERIA
27 PLAN QUALIFYING UNDER SECTION 125 OF THE INTERNAL REVENUE CODE
28 OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 125), FOR EMPLOYE
29 BENEFIT PROGRAMS COVERING HOSPITALIZATION, SICKNESS, DISABILITY
30 OR DEATH, SUPPLEMENTAL UNEMPLOYMENT BENEFITS OR STRIKE BENEFITS:
20250HB1610PN2012  - 29 -
1 PROVIDED, THAT THE PROGRAM DOES NOT DISCRIMINATE IN FAVOR OF
2 HIGHLY COMPENSATED INDIVIDUALS AS TO ELIGIBILITY TO PARTICIPATE,
3 PAYMENTS OR PROGRAM BENEFITS; OR (VII) ANY COMPENSATION RECEIVED
4 BY UNITED STATES SERVICEMEN SERVING IN A COMBAT ZONE; OR (VIII)
5 PAYMENTS RECEIVED BY A FOSTER PARENT FOR IN-HOME CARE OF FOSTER
6 CHILDREN FROM AN AGENCY OF THE COMMONWEALTH OR A POLITICAL
7 SUBDIVISION THEREOF OR AN ORGANIZATION EXEMPT FROM FEDERAL TAX
8 UNDER SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE OF 1954
9 WHICH IS LICENSED BY THE COMMONWEALTH OR A POLITICAL SUBDIVISION
10 THEREOF AS A PLACEMENT AGENCY; OR (IX) PAYMENTS MADE BY
11 EMPLOYERS OR LABOR UNIONS FOR EMPLOYE BENEFIT PROGRAMS COVERING
12 SOCIAL SECURITY OR RETIREMENT; OR (X) PERSONAL USE OF AN
13 EMPLOYER'S OWNED OR LEASED PROPERTY OR OF EMPLOYER-PROVIDED
14 SERVICES.
15    * * *
16    (N.3)    "OVERTIME PAY" MEANS SALARIES OR WAGES PAID TO
17 EMPLOYES FOR HOURS OF WORK OFFICIALLY ORDERED OR APPROVED IN
18 EXCESS OF FORTY HOURS PER WEEK OR EIGHT HOURS PER DAY, AS
19 APPLICABLE, ACCORDING TO 29 U.S.C. § 207 (RELATING TO MAXIMUM
20 HOURS).
21    * * *
22    SECTION 1.1.    SECTION 314 OF THE ACT IS AMENDED TO READ:
23    SECTION 314.    INCOME TAXES IMPOSED BY OTHER STATES.--(A)   A
24 RESIDENT TAXPAYER BEFORE ALLOWANCE OF ANY CREDIT UNDER SECTION
25 312 SHALL BE ALLOWED A CREDIT AGAINST THE TAX OTHERWISE DUE
26 UNDER THIS ARTICLE FOR THE AMOUNT OF ANY INCOME TAX, WAGE TAX OR
27 TAX ON OR MEASURED BY GROSS OR NET EARNED OR UNEARNED INCOME
28 IMPOSED ON HIM OR ON A PENNSYLVANIA S CORPORATION, LIMITED
29 LIABILITY COMPANY OR PARTNERSHIP IN WHICH HE IS A DIRECT OR
30 INDIRECT SHAREHOLDER OR PARTNER, TO THE EXTENT [OF HIS PRO RATA
20250HB1610PN2012  - 30 -
1 SHARE THEREOF DETERMINED IN ACCORDANCE WITH SECTION 307.9,] THAT
2 THE TAX WAS IMPOSED ON THE TAXPAYER'S DISTRIBUTIVE SHARE OR
3 OTHER SHARE THEREOF BY ANOTHER STATE WITH RESPECT TO INCOME
4 WHICH IS ALSO SUBJECT TO TAX UNDER THIS ARTICLE. FOR PURPOSES OF
5 THIS SUBSECTION, THE TERM "STATE" SHALL ONLY INCLUDE A STATE OF
6 THE UNITED STATES, THE DISTRICT OF COLUMBIA, THE COMMONWEALTH OF
7 PUERTO RICO AND ANY TERRITORY OR POSSESSION OF THE UNITED
8 STATES.
9    (B)    THE CREDIT PROVIDED UNDER THIS SECTION SHALL NOT EXCEED
10 THE PROPORTION OF THE TAX OTHERWISE DUE UNDER THIS ARTICLE THAT
11 THE AMOUNT OF THE TAXPAYER'S INCOME SUBJECT TO TAX BY THE OTHER
12 JURISDICTION BEARS TO HIS ENTIRE TAXABLE INCOME.
13    (C)    IN LIEU OF SUBMITTING A COPY OF EACH STATE RETURN IN
14 WHICH A TAX LIABILITY IS REPORTED AND TAX IS PAID, A MEMBER,
15 PARTNER, SHAREHOLDER, PARTNERSHIP OR PENNSYLVANIA S CORPORATION
16 MAY PROVIDE A CERTIFIED STATEMENT THAT REFLECTS EACH MEMBER'S,
17 PARTNER'S OR SHAREHOLDER'S SHARE OF TAXABLE INCOME, AMOUNT OF
18 STATE INCOME TAX PAID AND OTHER INFORMATION THAT THE DEPARTMENT
19 REQUIRES.
20    SECTION 2.    THE ACT IS AMENDED BY ADDING A SECTION TO READ:
21    SECTION 357.1.    PROVISIONS FOR OVERTIME PAY.--(A)   AN
22 EMPLOYER REQUIRED TO WITHHOLD TAX UNDER SECTION 316.1 SHALL
23 WITHHOLD TAX FROM AN EMPLOYE'S COMPENSATION UNDER THE
24 REQUIREMENT OF THIS ARTICLE FOR ALL HOURS WORKED BY THE EMPLOYE,
25 INCLUDING OVERTIME HOURS AS PROVIDED FOR UNDER 29 U.S.C. § 207
26 (RELATING TO MAXIMUM HOURS).
27    (B)    AN EMPLOYER MAY NOT REDUCE OR DENY THE AVAILABILITY OF
28 OVERTIME HOURS TO EMPLOYES UNDER 29 U.S.C. § 207 AS A SOLE
29 RESULT OF THE DEDUCTION UNDER SUBSECTION (C), PROVIDED THAT
30 OVERTIME HOURS WOULD HAVE OTHERWISE BEEN AVAILABLE TO THE SAME
20250HB1610PN2012  - 31 -
1 EMPLOYES UNDER SIMILAR CIRCUMSTANCES. AN EMPLOYER FOUND TO BE IN
2 VIOLATION OF THIS SUBSECTION IS SUBJECT TO A FINE OF TWO
3 THOUSAND DOLLARS ($2,000).
4    (C)   WHEN CALCULATING TAXABLE INCOME ON THE ANNUAL PERSONAL
5 INCOME TAX RETURN, A TAXPAYER WHO RECEIVED OVERTIME PAY DURING
6 THE TAXABLE YEAR SHALL BE ELIGIBLE TO DEDUCT AN AMOUNT EQUAL TO
7 THE AMOUNT OF OVERTIME PAY RECEIVED. IF THE AMOUNT OF DEDUCTION
8 THAT THE TAXPAYER IS ELIGIBLE TO RECEIVE UNDER THIS SECTION
9 CAUSES THE TAXPAYER'S TAX LIABILITY UNDER THIS ARTICLE TO BE
10 LESS THAN ZERO, THE DEPARTMENT SHALL REFUND THE EXCESS AMOUNT TO
11 THE TAXPAYER.
12    (D)   THIS SECTION SHALL APPLY TO TAXABLE YEARS BEGINNING
13 AFTER DECEMBER 31, 2025.
14    SECTION 3.   SECTION 401(3)1(A) AND (B), (3)2(A)(17)(E) AND
15 (5) OF THE ACT ARE AMENDED, (3)1 IS AMENDED BY ADDING A PHRASE,
16 (3)1(T) IS AMENDED BY ADDING A PARAGRAPH, (3)2(A)(1) IS AMENDED
17 BY ADDING A SUBPARAGRAPH, (3)2(A)(9)(A) IS AMENDED BY ADDING A
18 UNIT, (3)4 IS AMENDED BY ADDING PHRASES AND THE SECTION IS
19 AMENDED BY ADDING CLAUSES TO READ:
20    SECTION 401.   DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND
21 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING
22 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
23 CLEARLY INDICATES A DIFFERENT MEANING:
24    * * *
25    (3)   "TAXABLE INCOME."   1.     (A)    IN CASE THE ENTIRE BUSINESS
26 OF THE CORPORATION IS TRANSACTED WITHIN THIS COMMONWEALTH, FOR
27 ANY TAXABLE YEAR WHICH BEGINS ON OR AFTER JANUARY 1, 1971,
28 TAXABLE INCOME FOR THE CALENDAR YEAR OR FISCAL YEAR AS RETURNED
29 TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT BEFORE SPECIAL
30 DEDUCTIONS PROVIDED FOR IN 26 U.S.C. CH. 1 SUBCH. B PT. VIII
20250HB1610PN2012  - 32 -
1 (RELATING TO SPECIAL DEDUCTIONS FOR CORPORATIONS), NOT INCLUDING
2 THE DEDUCTIONS PROVIDED FOR IN 26 U.S.C. § 243 (RELATING TO
3 DIVIDENDS RECEIVED BY CORPORATIONS), OR IN THE CASE OF A
4 CORPORATION PARTICIPATING IN THE FILING OF CONSOLIDATED RETURNS
5 TO THE FEDERAL GOVERNMENT OR THAT IS NOT REQUIRED TO FILE A
6 RETURN WITH THE FEDERAL GOVERNMENT, THE TAXABLE INCOME WHICH
7 WOULD HAVE BEEN RETURNED TO AND ASCERTAINED BY THE FEDERAL
8 GOVERNMENT BEFORE SPECIAL DEDUCTIONS PROVIDED FOR IN 26 U.S.C.
9 CH. 1 SUBCH. B PT. VIII, NOT INCLUDING THE DEDUCTIONS PROVIDED
10 FOR IN 26 U.S.C. § 243, IF SEPARATE RETURNS HAD BEEN MADE TO THE
11 FEDERAL GOVERNMENT FOR THE CURRENT AND PRIOR TAXABLE YEARS,
12 SUBJECT, HOWEVER, TO ANY CORRECTION THEREOF, FOR FRAUD, EVASION,
13 OR ERROR AS FINALLY ASCERTAINED BY THE FEDERAL GOVERNMENT.
14    (B)   ADDITIONAL DEDUCTIONS SHALL BE ALLOWED FROM TAXABLE
15 INCOME ON ACCOUNT OF ANY DIVIDENDS RECEIVED FROM ANY OTHER
16 CORPORATION BUT ONLY TO THE EXTENT THAT SUCH DIVIDENDS ARE
17 INCLUDED IN TAXABLE INCOME AS RETURNED TO AND ASCERTAINED BY THE
18 FEDERAL GOVERNMENT. FOR TAX YEARS BEGINNING ON OR AFTER JANUARY
19 1, 1991, ADDITIONAL DEDUCTIONS SHALL ONLY BE ALLOWED FOR AMOUNTS
20 INCLUDED, UNDER [SECTION 78 OF THE INTERNAL REVENUE CODE OF 1986
21 (PUBLIC LAW 99-514, 26 U.S.C. § 78)] 26 U.S.C. § 78 (RELATING TO
22 GROSS UP FOR DEEMED PAID FOREIGN TAX CREDIT), IN TAXABLE INCOME
23 RETURNED TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT AND FOR
24 THE AMOUNT OF ANY DIVIDENDS RECEIVED FROM A FOREIGN CORPORATION
25 INCLUDED IN TAXABLE INCOME TO THE EXTENT SUCH DIVIDENDS WOULD BE
26 DEDUCTIBLE IN ARRIVING AT FEDERAL TAXABLE INCOME IF RECEIVED
27 FROM A DOMESTIC CORPORATION. FOR TAXABLE YEARS BEGINNING AFTER
28 DECEMBER 31, 2025, THE ADDITIONAL DEDUCTION WITH RESPECT TO
29 DIVIDENDS SHALL NOT BE ALLOWED FOR DIVIDENDS BETWEEN MEMBERS OF
30 A UNITARY BUSINESS.
20250HB1610PN2012  - 33 -
1    * * *
2    (P.1)     FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025,
3 IN THE CASE OF A CORPORATION THAT IS A MEMBER OF A UNITARY
4 BUSINESS, THE TERM "TAXABLE INCOME" SHALL MEAN THE COMBINED
5 UNITARY INCOME OF THE UNITARY BUSINESS, AS DETERMINED ON A
6 WATER'S-EDGE BASIS, PLUS THE CORPORATION'S NONBUSINESS INCOME.
7    * * *
8    (T)     * * *
9    (5)     THE ADJUSTMENT REQUIRED UNDER PARAGRAPH (1) SHALL NOT
10 APPLY TO A TRANSACTION BETWEEN THE TAXPAYER AND AN AFFILIATED
11 ENTITY IF THE TAXPAYER AND THE AFFILIATED ENTITY FILE AS PART OF
12 THE SAME COMBINED ANNUAL REPORT IN THIS STATE.
13    * * *
14    2.    IN CASE THE ENTIRE BUSINESS OF ANY CORPORATION, OTHER
15 THAN A CORPORATION ENGAGED IN DOING BUSINESS AS A REGULATED
16 INVESTMENT COMPANY AS DEFINED BY THE INTERNAL REVENUE CODE OF
17 1986, IS NOT TRANSACTED WITHIN THIS COMMONWEALTH, THE TAX
18 IMPOSED BY THIS ARTICLE SHALL BE BASED UPON SUCH PORTION OF THE
19 TAXABLE INCOME OF SUCH CORPORATION FOR THE FISCAL OR CALENDAR
20 YEAR, AS DEFINED IN SUBCLAUSE 1 HEREOF, AND MAY BE DETERMINED AS
21 FOLLOWS:
22    (A)     DIVISION OF INCOME.
23    (1)     AS USED IN THIS DEFINITION, UNLESS THE CONTEXT OTHERWISE
24 REQUIRES:
25    * * *
26    (E.1)     NOTWITHSTANDING SUBPARAGRAPH (E), IN REGARD TO THE
27 SALE, REDEMPTION, MATURITY OR EXCHANGE OF SECURITIES, HELD BY
28 THE TAXPAYER PRIMARILY FOR SALE TO CUSTOMERS IN THE ORDINARY
29 COURSE OF ITS TRADE OR BUSINESS, SALES SHALL ONLY INCLUDE THE
30 NET GAINS, EQUAL TO ZERO OR ABOVE, RECEIVED BY THE TAXPAYER.
20250HB1610PN2012  - 34 -
1    * * *
2    (9)    (A)    EXCEPT AS PROVIDED IN SUBPARAGRAPH (B):
3    * * *
4    (VI)    (A)   FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31,
5 2025, THE COMBINED UNITARY INCOME OF A UNITARY BUSINESS, AS
6 DETERMINED ON A WATER'S-EDGE BASIS, SHALL BE APPORTIONED TO THIS
7 STATE BY MULTIPLYING SAID INCOME BY THE MEMBER'S SALES FACTOR,
8 THE NUMERATOR OF WHICH SHALL BE THE MEMBER'S TOTAL SALES IN THIS
9 STATE DURING THE TAX PERIOD, AND THE DENOMINATOR OF WHICH SHALL
10 BE THE COMBINED TOTAL SALES OF ALL MEMBERS OF THE UNITARY
11 BUSINESS EVERYWHERE DURING THE TAX PERIOD. IN COMPUTING THE
12 SALES OF EACH MEMBER FOR PURPOSES OF APPORTIONMENT, THE
13 FOLLOWING SALES ARE EXCLUDED FROM THE NUMERATOR AND DENOMINATOR:
14    (I)    SALES FROM TRANSACTIONS BETWEEN OR AMONG MEMBERS OF THE
15 UNITARY BUSINESS THAT ARE DEFERRED UNDER 26 CFR 1.1502-13
16 (RELATING TO INTERCOMPANY TRANSACTIONS) FOR FEDERAL TAXABLE
17 INCOME PURPOSES; AND
18    (II)    THE SALES OF EACH MEMBER THAT ARE EXCLUDED FROM THE
19 UNITARY BUSINESS PURSUANT TO THE DEFINITION OF WATER'S-EDGE
20 BASIS.
21    (B)    THE PENNSYLVANIA SALES OF EACH NONTAXABLE MEMBER SHALL
22 BE DETERMINED BASED UPON THE APPORTIONMENT RULES APPLICABLE TO
23 THE MEMBER AND SHALL BE AGGREGATED. EACH TAXABLE MEMBER OF THE
24 UNITARY BUSINESS SHALL INCLUDE IN ITS SALES FACTOR NUMERATOR A
25 PORTION OF THE AGGREGATE PENNSYLVANIA SALES OF NONTAXABLE
26 MEMBERS DURING THE TAX PERIOD BASED ON A RATIO, THE NUMERATOR OF
27 WHICH IS THE TAXABLE MEMBER'S PENNSYLVANIA SALES DURING THE TAX
28 PERIOD AND THE DENOMINATOR OF WHICH IS THE AGGREGATE
29 PENNSYLVANIA SALES OF ALL THE TAXABLE MEMBERS OF THE UNITARY
30 BUSINESS DURING THE TAX PERIOD.
20250HB1610PN2012  - 35 -
1    (C)   NONBUSINESS INCOME OF EACH MEMBER OF A UNITARY BUSINESS
2 SHALL BE ALLOCATED AS PROVIDED IN PARAGRAPHS (5) THROUGH (8) OF
3 PHRASE (A) OF SUBCLAUSE 2 OF THIS DEFINITION.
4    (D)   A MEMBER OF THE UNITARY BUSINESS SHALL BE SUBJECT TO TAX
5 ON ITS APPORTIONED SHARE OF THE COMBINED UNITARY INCOME OF THE
6 UNITARY BUSINESS, AS DETERMINED ON A WATER'S-EDGE BASIS, PLUS
7 ITS NONBUSINESS INCOME OR LOSS ALLOCATED TO THIS STATE, MINUS
8 THE MEMBER'S NET LOSS DEDUCTION, IF APPLICABLE.
9    (E)   THE AGGREGATE OF ALL SUCH FINAL SUMS OF EACH MEMBER OF
10 THE UNITARY BUSINESS FROM PHRASE (D) SHALL CONSTITUTE THE
11 PORTION OF THE UNITARY BUSINESS'S INCOME SUBJECT TO THE TAX
12 IMPOSED BY THIS ARTICLE.
13    (F)   (1)   THE SECRETARY OF REVENUE MAY DISTRIBUTE, APPORTION
14 OR ALLOCATE GROSS INCOME, DEDUCTIONS, CREDITS OR ALLOWANCES
15 BETWEEN AND AMONG TWO OR MORE CORPORATIONS, PERSONS, ENTITIES,
16 MEMBERS OR UNITARY BUSINESSES, WHETHER OR NOT INCORPORATED,
17 WHETHER OR NOT ORGANIZED IN THE UNITED STATES AND WHETHER OR NOT
18 AFFILIATED, IF:
19    (A)   THE CORPORATIONS, PERSONS, ENTITIES, MEMBERS OR UNITARY
20 BUSINESSES ARE OWNED OR CONTROLLED DIRECTLY OR INDIRECTLY BY THE
21 SAME INTERESTS WITHIN THE MEANING OF 26 U.S.C. § 482 (RELATING
22 TO ALLOCATION OF INCOME AND DEDUCTIONS AMONG TAXPAYERS); AND
23    (B)   THE SECRETARY OF REVENUE DETERMINES THAT THE
24 DISTRIBUTION, APPORTIONMENT OR ALLOCATION IS NECESSARY IN ORDER
25 TO REFLECT AN ARM'S LENGTH STANDARD WITHIN THE MEANING OF 26 CFR
26 1.482-1 (RELATING TO ALLOCATION OF INCOME AND DEDUCTIONS AMONG
27 TAXPAYERS) AND TO REFLECT CLEARLY THE INCOME OF THOSE
28 CORPORATIONS, PERSONS, ENTITIES, MEMBERS OR UNITARY BUSINESSES.
29    (2)   THE SECRETARY OF REVENUE SHALL APPLY THE ADMINISTRATIVE
30 AND JUDICIAL INTERPRETATIONS OF 26 U.S.C. § 482 IN ADMINISTERING
20250HB1610PN2012  - 36 -
1 THIS SECTION.
2    (G)    FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025, ANY
3 MEMBER OF A UNITARY BUSINESS THAT WOULD OTHERWISE APPORTION ITS
4 SHARE OF THE COMBINED UNITARY INCOME OF THE UNITARY BUSINESS, AS
5 DETERMINED ON A WATER'S-EDGE BASIS, UNDER PHRASE (B), (C), (D)
6 OR (E) OF SUBCLAUSE 2 OF THIS DEFINITION SHALL INSTEAD USE A
7 SALES FACTOR AS DESCRIBED IN THIS SECTION.
8    * * *
9    (17)    SALES, OTHER THAN SALES UNDER PARAGRAPHS (16) AND
10 (16.1), ARE IN THIS STATE AS FOLLOWS:
11    * * *
12    (E)    [GROSS RECEIPTS] NET GAINS, EQUAL TO ZERO OR ABOVE, FROM
13 THE SALE, REDEMPTION, MATURITY OR EXCHANGE OF SECURITIES, HELD
14 BY THE TAXPAYER PRIMARILY FOR SALE TO CUSTOMERS IN THE ORDINARY
15 COURSE OF ITS TRADE OR BUSINESS, IF THE CUSTOMERS ARE IN THIS
16 STATE.
17    * * *
18    4.    * * *
19    (H)    SUBJECT TO THE LIMITATIONS OF THIS SUBCLAUSE, ANY MEMBER
20 OF A UNITARY BUSINESS THAT HAS UNUSED NET LOSS FROM TAXABLE
21 YEARS THAT BEGAN PRIOR TO JANUARY 1, 2026, OR THAT GENERATES NET
22 LOSSES WHILE A MEMBER OF A UNITARY BUSINESS MAY ONLY TAKE THE
23 NET LOSS DEDUCTION FOR TAXABLE YEARS BEGINNING AFTER DECEMBER
24 31, 2025, TO THE EXTENT OF THE MEMBER'S SHARE OF TAXABLE INCOME
25 AFTER ALLOCATION AND APPORTIONMENT AND THE NET LOSSES MAY NOT BE
26 USED BY OTHER MEMBERS OF THE SAME UNITARY BUSINESS EXCEPT AS
27 OTHERWISE PERMITTED BY PHRASE (G) OF SUBCLAUSE 2 OF THIS
28 DEFINITION.
29    (I)    ANY NET LOSS REALIZED FOR A TAXABLE YEAR UNUSED BY A
30 CORPORATION WHICH SUBSEQUENTLY BECOMES A MEMBER OF ANOTHER
20250HB1610PN2012  - 37 -
1 UNITARY BUSINESS MAY ONLY BE USED BY THAT CORPORATION EXCEPT AS
2 OTHERWISE PERMITTED BY PHRASE (G) OF SUBCLAUSE 2 OF THIS
3 DEFINITION.
4    * * *
5    (5)    "TAXABLE YEAR."   [THE TAXABLE YEAR WHICH THE
6 CORPORATION, OR ANY CONSOLIDATED GROUP WITH WHICH THE
7 CORPORATION PARTICIPATES IN THE FILING OF CONSOLIDATED RETURNS,
8 ACTUALLY USES IN REPORTING TAXABLE INCOME TO THE FEDERAL
9 GOVERNMENT. WITH REGARD TO THE TAX IMPOSED BY ARTICLE IV OF THIS
10 ACT (RELATING TO THE CORPORATE NET INCOME TAX), THE TERMS
11 "ANNUAL YEAR," "FISCAL YEAR," "ANNUAL OR FISCAL YEAR," "TAX
12 YEAR" AND "TAX PERIOD" SHALL BE THE SAME AS THE CORPORATION'S
13 TAXABLE YEAR, AS DEFINED IN THIS PARAGRAPH.]
14    1.    EXCEPT AS SET FORTH IN SUBCLAUSE 2, THE TAXABLE YEAR
15 WHICH THE CORPORATION, OR ANY CONSOLIDATED GROUP WITH WHICH THE
16 CORPORATION PARTICIPATES IN THE FILING OF CONSOLIDATED RETURNS,
17 ACTUALLY USES IN REPORTING TAXABLE INCOME TO THE FEDERAL
18 GOVERNMENT, OR WHICH THE CORPORATION WOULD HAVE USED IN
19 REPORTING TAXABLE INCOME TO THE FEDERAL GOVERNMENT HAD IT BEEN
20 REQUIRED TO REPORT ITS TAXABLE INCOME TO THE FEDERAL GOVERNMENT.
21 WITH REGARD TO THE TAX IMPOSED BY ARTICLE IV, THE TERMS "ANNUAL
22 YEAR," "FISCAL YEAR," "ANNUAL OR FISCAL YEAR," "TAX YEAR" AND
23 "TAX PERIOD" SHALL BE THE SAME AS THE CORPORATION'S TAXABLE
24 YEAR, AS DEFINED IN THIS SUBCLAUSE OR SUBCLAUSE 2.
25    2.    ALL MEMBERS OF A UNITARY BUSINESS SHALL HAVE A COMMON
26 TAXABLE YEAR FOR PURPOSES OF COMPUTING TAX DUE UNDER THIS
27 ARTICLE. THE TAXABLE YEAR SHALL BE THE COMMON TAXABLE YEAR
28 ADOPTED, IN A MANNER PRESCRIBED BY THE DEPARTMENT, BY ALL
29 MEMBERS OF THE UNITARY BUSINESS. THE COMMON TAXABLE YEAR MUST BE
30 USED BY ALL MEMBERS OF THE UNITARY BUSINESS IN THE YEAR OF
20250HB1610PN2012  - 38 -
1 ADOPTION AND ALL FUTURE YEARS UNLESS OTHERWISE PERMITTED BY THE
2 DEPARTMENT.
3    * * *
4    (12)    "TAX HAVEN."   A JURISDICTION THAT DURING THE TAX YEAR
5 IN QUESTION:
6    1.   HAS LAWS OR PRACTICES THAT PREVENT EFFECTIVE EXCHANGE OF
7 INFORMATION FOR TAX PURPOSES WITH OTHER GOVERNMENTS ON TAXPAYERS
8 BENEFITING FROM THE TAX REGIME;
9    2.   HAS A TAX REGIME WHICH LACKS TRANSPARENCY;
10    3.   FACILITATES THE ESTABLISHMENT OF FOREIGN-OWNED ENTITIES
11 WITHOUT THE NEED FOR A LOCAL SUBSTANTIVE PRESENCE OR PROHIBITS
12 THESE ENTITIES FROM HAVING ANY COMMERCIAL IMPACT ON THE LOCAL
13 ECONOMY;
14    4.   EXPLICITLY OR IMPLICITLY EXCLUDES THE JURISDICTION'S
15 RESIDENT TAXPAYERS FROM TAKING ADVANTAGE OF THE TAX REGIME
16 BENEFITS OR PROHIBITS ENTERPRISES THAT BENEFIT FROM THE REGIME
17 FROM OPERATING IN THE JURISDICTION'S DOMESTIC MARKET; OR
18    5.   HAS CREATED A TAX REGIME WHICH IS FAVORABLE FOR TAX
19 AVOIDANCE, BASED UPON AN OVERALL ASSESSMENT OF RELEVANT FACTORS,
20 INCLUDING WHETHER THE JURISDICTION HAS A SIGNIFICANT UNTAXED
21 OFFSHORE FINANCIAL OR SERVICES SECTOR RELATIVE TO ITS OVERALL
22 ECONOMY.
23    (13)    "UNITARY BUSINESS."    A SINGLE ECONOMIC ENTERPRISE THAT
24 IS MADE UP OF SEPARATE PARTS OF A SINGLE CORPORATION, OF A
25 COMMONLY CONTROLLED GROUP OF CORPORATIONS, OR BOTH, THAT ARE
26 SUFFICIENTLY INTERDEPENDENT, INTEGRATED AND INTERRELATED THROUGH
27 THEIR ACTIVITIES SO AS TO PROVIDE A SYNERGY AND MUTUAL BENEFIT
28 THAT PRODUCES A SHARING OR EXCHANGE OF VALUE AMONG THEM AND A
29 FLOW OF VALUE TO THE SEPARATE PARTS. A UNITARY BUSINESS INCLUDES
30 ALL PARTS AND CORPORATIONS THAT ARE INCLUDED IN A UNITARY
20250HB1610PN2012  - 39 -
1 BUSINESS UNDER THE CONSTITUTION OF THE UNITED STATES.
2    (14)    "WATER'S-EDGE BASIS."   A SYSTEM OF REPORTING THAT
3 INCLUDES THE INCOME AND APPORTIONMENT FACTORS OF CERTAIN MEMBERS
4 OF A UNITARY BUSINESS, DESCRIBED AS FOLLOWS:
5    1.    ANY MEMBER INCORPORATED IN THE UNITED STATES OR FORMED
6 UNDER THE LAWS OF ANY STATE OF THE UNITED STATES, THE DISTRICT
7 OF COLUMBIA, ANY TERRITORY OR POSSESSION OF THE UNITED STATES OR
8 THE COMMONWEALTH OF PUERTO RICO.
9    2.    ANY MEMBER, REGARDLESS OF THE PLACE INCORPORATED OR
10 FORMED, IF AT LEAST TWENTY PER CENT OF THE MEMBER'S SALES FACTOR
11 IS WITHIN THE UNITED STATES, AND THE FOLLOWING SHALL APPLY:
12    (A)    FOR PURPOSES OF DETERMINING WHETHER AT LEAST TWENTY PER
13 CENT OF A MEMBER'S SALES FACTOR IS WITHIN THE UNITED STATES, THE
14 CALCULATION MUST BE PERFORMED ON A STAND-ALONE BASIS. SALES
15 SHALL BE GROSS FIGURES WITHOUT ELIMINATIONS FOR TRANSACTIONS
16 WITH OTHER MEMBERS OF ANY UNITARY BUSINESS.
17    (B)    WHETHER SALES ARE WITHIN THE UNITED STATES IS BASED ON
18 THE SALES FACTOR SOURCING RULES CONTAINED IN CLAUSE (3)2.
19    3.    ANY MEMBER WHICH IS ONE OF THE FOLLOWING:
20    (A)    A DOMESTIC INTERNATIONAL SALES CORPORATION AS DESCRIBED
21 IN 26 U.S.C. CH. 1 SUBCH. N PT. IV SUBPT. A (RELATING TO
22 TREATMENT OF QUALIFYING CORPORATIONS).
23    (B)    A FOREIGN SALES CORPORATION AS DESCRIBED IN THE FORMER
24 26 U.S.C. §§ 921, 922, 923, 924, 925, 926 AND 927.
25    (C)    AN EXPORT TRADE CORPORATION AS DESCRIBED IN 26 U.S.C.
26 CH. 1 SUBCH. N PT. III SUBPT. G (RELATING TO EXPORT TRADE
27 CORPORATIONS).
28    4.    ANY MEMBER NOT DESCRIBED IN SUBCLAUSE 1, 2 OR 3 SHALL
29 INCLUDE THE PORTION OF THE MEMBER'S TAXABLE INCOME DERIVED FROM
30 OR ATTRIBUTABLE TO SOURCES WITHIN THE UNITED STATES, AS
20250HB1610PN2012  - 40 -
1 DETERMINED UNDER 26 U.S.C. (RELATING TO INTERNAL REVENUE CODE)
2 WITHOUT REGARD TO FEDERAL TREATIES, AND ITS APPORTIONMENT
3 FACTORS RELATED THERETO.
4    5.   ANY MEMBER THAT IS A "CONTROLLED FOREIGN CORPORATION" AS
5 DEFINED IN 26 U.S.C. § 957 (RELATING TO CONTROLLED FOREIGN
6 CORPORATIONS; UNITED STATES PERSONS), TO THE EXTENT THE INCOME
7 OF THAT MEMBER IS INCOME DEFINED IN 26 U.S.C. § 952 (RELATING TO
8 SUBPART F INCOME DEFINED) AS SUBPART F INCOME, NOT EXCLUDING
9 LOWER-TIER SUBSIDIARIES' DISTRIBUTIONS OF SUCH INCOME WHICH WERE
10 PREVIOUSLY TAXED, DETERMINED WITHOUT REGARD TO FEDERAL TREATIES,
11 AND THE APPORTIONMENT FACTORS RELATED TO THAT INCOME; ANY ITEM
12 OF INCOME RECEIVED BY A CONTROLLED FOREIGN CORPORATION AND THE
13 APPORTIONMENT FACTORS RELATED TO SUCH INCOME SHALL BE EXCLUDED
14 IF THE CORPORATION ESTABLISHES TO THE SATISFACTION OF THE
15 SECRETARY OF REVENUE THAT SUCH INCOME WAS SUBJECT TO AN
16 EFFECTIVE RATE OF INCOME TAX IMPOSED BY A FOREIGN COUNTRY
17 GREATER THAN NINETY PER CENT OF THE MAXIMUM RATE OF TAX
18 SPECIFIED IN 26 U.S.C. § 11 (RELATING TO TAX IMPOSED). THE
19 EFFECTIVE RATE OF INCOME TAX DETERMINATION SHALL BE BASED UPON
20 THE METHODOLOGY UNDER 26 CFR 1.954-1 (RELATING TO FOREIGN BASE
21 COMPANY INCOME).
22    6.   ANY MEMBER THAT IS INCORPORATED IN OR IS DOING BUSINESS
23 IN A TAX HAVEN UNLESS IT IS PROVEN TO THE SATISFACTION OF THE
24 SECRETARY THAT SUCH MEMBER IS INCORPORATED IN OR DOING BUSINESS
25 IN A TAX HAVEN FOR A LEGITIMATE BUSINESS PURPOSE.
26    (15)   "COMMONLY CONTROLLED GROUP."   FOR A CORPORATION, THE
27 CORPORATION IS A MEMBER OF A GROUP OF TWO OR MORE CORPORATIONS
28 AND MORE THAN FIFTY PER CENT OF THE VOTING STOCK OR CONTROLLING
29 INTEREST OF EACH MEMBER OF THE GROUP IS DIRECTLY OR INDIRECTLY
30 OWNED BY A COMMON OWNER OR BY COMMON OWNERS, EITHER CORPORATE OR
20250HB1610PN2012  - 41 -
1 NONCORPORATE, OR BY ONE OR MORE OF THE MEMBER CORPORATIONS OF
2 THE GROUP.
3    (16)     "COMBINED UNITARY INCOME."   THE AGGREGATE SEPARATE
4 COMPANY TAXABLE INCOME OR LOSS OF ALL MEMBERS OF A UNITARY
5 BUSINESS SUBJECT TO APPORTIONMENT EXCEPT:
6    1.    INCOME FROM AN INTERCOMPANY TRANSACTION BETWEEN MEMBERS
7 OF A UNITARY BUSINESS SHALL BE DEFERRED IN A MANNER SIMILAR TO
8 26 CFR 1.1502-13 FOR FEDERAL TAXABLE INCOME PURPOSES.
9    2.    DIVIDENDS PAID BY ONE MEMBER OF A UNITARY BUSINESS TO
10 ANOTHER.
11    3.    INCOME OF THE FOLLOWING CORPORATIONS IS NOT INCLUDED IN
12 THE DETERMINATION OF COMBINED UNITARY INCOME:
13    (A)     ANY CORPORATION SUBJECT TO TAXATION UNDER ARTICLE VII,
14 VIII, IX OR XV;
15    (B)     ANY CORPORATION SPECIFIED IN THE DEFINITION OF
16 "INSTITUTION" IN SECTION 701.5 THAT WOULD BE SUBJECT TO TAXATION
17 UNDER ARTICLE VII, WERE IT DOING BUSINESS IN THIS COMMONWEALTH,
18 AS DEFINED IN SECTION 701.5;
19    (C)     ANY CORPORATION COMMONLY KNOWN AS A TITLE INSURANCE
20 COMPANY THAT WOULD BE SUBJECT TO TAXATION UNDER ARTICLE VIII,
21 WERE IT INCORPORATED IN THIS STATE;
22    (D)     ANY CORPORATION SPECIFIED AS AN INSURANCE COMPANY,
23 ASSOCIATION OR EXCHANGE IN ARTICLE IX THAT WOULD BE SUBJECT TO
24 TAXATION UNDER ARTICLE IX, WERE IT TRANSACTING INSURANCE
25 BUSINESS IN THIS STATE;
26    (E)     ANY CORPORATION SPECIFIED IN THE DEFINITION OF
27 "INSTITUTION" IN SECTION 1501 THAT WOULD BE SUBJECT TO TAXATION
28 UNDER ARTICLE XV, WERE IT LOCATED, AS DEFINED IN SECTION 1501,
29 IN THIS STATE; OR
30    (F)     ANY CORPORATION THAT HAS FILED A TIMELY ELECTION AND HAS
20250HB1610PN2012  - 42 -
1 QUALIFIED TO BE TAXED AS A REGULATED INVESTMENT COMPANY UNDER
2 THE PROVISIONS OF THE INTERNAL REVENUE CODE OF 1954, AS AMENDED.
3    (17)    "MEMBER."   A CORPORATION THAT IS A MEMBER OF A UNITARY
4 BUSINESS. THE TERM DOES NOT INCLUDE A CORPORATION LISTED IN
5 CLAUSE (16)3.
6    (18)    "TAXABLE MEMBER."    A MEMBER WHICH WOULD BE SUBJECT TO
7 THE TAX IMPOSED BY THIS ARTICLE UNDER SECTION 402 ON A SEPARATE
8 ENTITY BASIS FOR EXERCISING, WHETHER IN ITS OWN NAME OR THROUGH
9 ANY PERSON, ASSOCIATION, BUSINESS TRUST, CORPORATION, JOINT
10 VENTURE, LIMITED LIABILITY COMPANY, LIMITED PARTNERSHIP,
11 PARTNERSHIP, MEMBER OR OTHER ENTITY, ANY OF THE PRIVILEGES
12 INCLUDED IN SECTION 402(A)(1), (2), (3), (4) AND (5).
13    (19)    "NONTAXABLE MEMBER."     A MEMBER WHICH IS NOT A TAXABLE
14 MEMBER.
15    SECTION 4.     SECTION 401.1 OF THE ACT IS AMENDED BY ADDING A
16 SUBSECTION TO READ:
17    SECTION 401.1.      DETERMINATION OF NET LOSS DEDUCTION.--* * *
18    (F)    FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025,
19 TAXPAYERS FILING COMBINED ANNUAL REPORTS MUST CALCULATE THE
20 AVAILABLE NET LOSS DEDUCTION ON A TAXABLE MEMBER BY TAXABLE
21 MEMBER BASIS IN ACCORDANCE WITH THE PROVISIONS OF SUBCLAUSE 4 OF
22 SECTION 401(3).
23    SECTION 5.     SECTIONS 402(A) INTRODUCTORY PARAGRAPH AND (5)
24 (III) AND (B) AND 403(C), (D) AND (F) OF THE ACT ARE AMENDED AND
25 THE SECTIONS ARE AMENDED BY ADDING SUBSECTIONS TO READ:
26    SECTION 402.    IMPOSITION OF TAX.--(A)    A CORPORATION SHALL BE
27 SUBJECT TO AND SHALL PAY AN EXCISE TAX FOR EXERCISING, WHETHER
28 IN ITS OWN NAME OR THROUGH ANY PERSON, ASSOCIATION, BUSINESS
29 TRUST, CORPORATION, JOINT VENTURE, LIMITED LIABILITY COMPANY,
30 LIMITED PARTNERSHIP, PARTNERSHIP, MEMBER OR OTHER ENTITY, ANY OF
20250HB1610PN2012  - 43 -
1 THE FOLLOWING PRIVILEGES:
2    * * *
3    (5)     * * *
4    (III)     THERE SHALL BE A REBUTTABLE PRESUMPTION THAT A
5 CORPORATION, OR IN THE CONTEXT OF A UNITARY BUSINESS, A MEMBER
6 OF A UNITARY BUSINESS WITH $500,000 OR MORE OF SALES SOURCED IN
7 THE CURRENT TAX YEAR TO THIS COMMONWEALTH UNDER SECTION 401 HAS
8 SUBSTANTIAL NEXUS IN THIS COMMONWEALTH WITHOUT REGARD TO
9 PHYSICAL PRESENCE IN THIS COMMONWEALTH.
10    * * *
11    (B)     THE ANNUAL RATE OF TAX ON CORPORATE NET INCOME IMPOSED
12 BY SUBSECTION (A) FOR TAXABLE YEARS BEGINNING FOR THE CALENDAR
13 YEAR OR FISCAL YEAR ON OR AFTER THE DATES SET FORTH SHALL BE AS
14 FOLLOWS:
15TAXABLE YEAR  TAX RATE
16 JANUARY 1, 1995,
17    THROUGH DECEMBER
18    31, 2022  9.99%
19 JANUARY 1, 2023,
20    THROUGH DECEMBER
21    31, 2023  8.99%
22 JANUARY 1, 2024,
23    THROUGH DECEMBER
24    31, 2024  8.49%
25 JANUARY 1, 2025,
26    THROUGH DECEMBER
27    31, 2025  7.99%
28 JANUARY 1, 2026,
29    THROUGH DECEMBER
30    31, 2026  [7.49%] 7.24%
20250HB1610PN2012  - 44 -
1 JANUARY 1, 2027,
2    THROUGH DECEMBER
3    31, 2027  [6.99%] 6.49%
4 JANUARY 1, 2028,
5    THROUGH DECEMBER
6    31, 2028  [6.49%] 5.74%
7 JANUARY 1, 2029,
8    [THROUGH DECEMBER
9    31, 2029] AND EACH
10    TAXABLE YEAR
11    THEREAFTER  [5.99%] 4.99%
12 [JANUARY 1, 2030,
13    THROUGH DECEMBER
14    31, 2030  5.49%
15 JANUARY 1, 2031, AND
16    EACH TAXABLE YEAR
17    THEREAFTER  4.99%]
18    * * *
19    (D)   FOR PURPOSES OF THIS SECTION THE TERM "CORPORATION"
20 SHALL INCLUDE A UNITARY BUSINESS, EXCEPT WHERE THE CONTEXT
21 CLEARLY INDICATES A DIFFERENT MEANING.
22    SECTION 403.     REPORTS AND PAYMENT OF TAX.--* * *
23    (A.1)   (1)   EACH CORPORATION THAT IS A MEMBER OF A UNITARY
24 BUSINESS THAT CONSISTS OF TWO OR MORE CORPORATIONS, UNLESS
25 EXCLUDED BY THE PROVISIONS OF THIS ARTICLE, SHALL FILE AS PART
26 OF A COMBINED ANNUAL REPORT. THE MEMBERS OF THE UNITARY BUSINESS
27 SHALL DESIGNATE ONE MEMBER THAT IS SUBJECT TO TAX UNDER THIS
28 ARTICLE TO FILE THE COMBINED ANNUAL REPORT AND TO ACT AS AGENT
29 ON BEHALF OF ALL OTHER MEMBERS OF THE UNITARY BUSINESS. EACH
30 CORPORATION THAT IS A MEMBER OF A UNITARY BUSINESS SHALL BE
20250HB1610PN2012  - 45 -
1 LIABLE FOR ITS TAX LIABILITY UNDER THIS ARTICLE. THE AGENT ALSO
2 SHALL BE LIABLE FOR THE AGGREGATE AMOUNT OF THE UNITARY
3 BUSINESS' TAX LIABILITY PURSUANT TO THIS ARTICLE.
4    (2)     THE OATH OR AFFIRMATION OF THE DESIGNATED MEMBER'S
5 PRESIDENT, VICE PRESIDENT, TREASURER, ASSISTANT TREASURER OR
6 OTHER AUTHORIZED OFFICER SHALL CONSTITUTE THE OATH OR
7 AFFIRMATION OF EACH CORPORATION THAT IS A MEMBER OF THAT UNITARY
8 BUSINESS.
9    (3)     THE DESIGNATED MEMBER SHALL TRANSMIT TO THE DEPARTMENT
10 UPON A FORM PRESCRIBED BY THE DEPARTMENT A COMBINED ANNUAL
11 REPORT UNDER OATH OR AFFIRMATION OF THE MEMBER'S PRESIDENT, VICE
12 PRESIDENT, TREASURER, ASSISTANT TREASURER OR OTHER AUTHORIZED
13 OFFICER.
14    (4)     IN ADDITION TO THE INFORMATION REQUIRED IN SUBSECTION
15 (A), THE COMBINED ANNUAL REPORT SHALL SET FORTH:
16    (I)     ALL MEMBERS INCLUDED IN THE UNITARY BUSINESS.
17    (II)     ALL NECESSARY DATA, BOTH IN THE AGGREGATE AND FOR EACH
18 MEMBER OF THE UNITARY BUSINESS, THAT SETS FORTH THE
19 DETERMINATION OF TAX LIABILITY FOR EACH MEMBER OF THE UNITARY
20 BUSINESS.
21    (III)     ANY OTHER INFORMATION THAT THE DEPARTMENT MAY REQUIRE.
22    (A.2)     A MEMBER OF A UNITARY BUSINESS OF TWO OR MORE
23 CORPORATIONS MUST DETERMINE THE MEMBER'S INCOME AND
24 APPORTIONMENT FACTORS ON A WATER'S-EDGE BASIS.
25    * * *
26    (B.1)     IT SHALL BE THE DUTY OF EACH UNITARY BUSINESS LIABLE
27 TO PAY TAX UNDER THIS ARTICLE TO PAY ESTIMATED TAX UNDER SECTION
28 3003.2 AND TO MAKE FINAL PAYMENT OF TAX DUE FOR THE TAXABLE YEAR
29 WITH THE COMBINED ANNUAL REPORT REQUIRED BY THIS SECTION.
30    (C)     THE AMOUNT OF ALL TAXES, IMPOSED UNDER THE PROVISIONS OF
20250HB1610PN2012  - 46 -
1 THIS ARTICLE, NOT PAID ON OR BEFORE THE TIMES AS ABOVE PROVIDED,
2 SHALL BEAR INTEREST AS PROVIDED IN SECTION 806 OF THE ACT OF
3 APRIL 9, 1929 (P.L.343, NO.176), KNOWN AS "THE FISCAL CODE,"
4 FROM THE DATE THEY ARE DUE AND PAYABLE UNTIL PAID, EXCEPT THAT
5 IF THE TAXABLE INCOME HAS BEEN, OR IS INCREASED BY THE
6 COMMISSIONER OF INTERNAL REVENUE, OR BY ANY OTHER AGENCY OR
7 COURT OF THE UNITED STATES, INTEREST SHALL BE COMPUTED ON THE
8 ADDITIONAL TAX DUE FROM THIRTY DAYS AFTER THE CORPORATION
9 RECEIVES NOTICE OF THE CHANGE OF INCOME UNTIL PAID: PROVIDED,
10 HOWEVER, THAT ANY CORPORATION OR DESIGNATED MEMBER RESPONSIBLE
11 FOR FILING A COMBINED ANNUAL REPORT MAY PAY THE FULL AMOUNT OF
12 SUCH TAX, OR ANY PART THEREOF, TOGETHER WITH INTEREST DUE TO THE
13 DATE OF PAYMENT, WITHOUT PREJUDICE TO ITS RIGHT TO PRESENT AND
14 PROSECUTE, AN ADMINISTRATIVE PETITION OR AN APPEAL TO COURT. IF
15 IT BE THEREAFTER DETERMINED THAT SUCH TAXES WERE OVERPAID, THE
16 DEPARTMENT SHALL ENTER A CREDIT TO THE ACCOUNT OF SUCH
17 CORPORATION OR DESIGNATED MEMBER, WHICH MAY BE USED BY IT IN THE
18 MANNER PRESCRIBED BY LAW.
19    (D)   IF THE OFFICERS OF ANY CORPORATION OR DESIGNATED MEMBER
20 SHALL NEGLECT, OR REFUSE TO MAKE ANY REPORT AS HEREIN REQUIRED,
21 OR SHALL KNOWINGLY MAKE ANY FALSE REPORT, A PENALTY OF FIVE
22 HUNDRED DOLLARS ($500) PLUS AN ADDITIONAL ONE PER CENT FOR EVERY
23 DOLLAR OF TAX DETERMINED TO BE DUE IN EXCESS OF TWENTY-FIVE
24 THOUSAND DOLLARS ($25,000) SHALL BE ADDED TO THE TAX DETERMINED
25 TO BE DUE. NO AMOUNTS ADDED TO THE TAX SHALL BEAR ANY INTEREST
26 WHATSOEVER.
27    * * *
28    (E.1)   IF THE MEMBERS OF A UNITARY BUSINESS HAVE A COMMON
29 TAXABLE YEAR THAT CLOSES NOT UPON DECEMBER 31, BUT UPON SOME
30 OTHER DATE, SUCH UNITARY BUSINESS SHALL MAKE THE COMBINED ANNUAL
20250HB1610PN2012  - 47 -
1 REPORT, HEREIN REQUIRED, ON OR BEFORE THE FIFTEENTH DAY OF THE
2 MONTH FOLLOWING WHAT IS OR WOULD BE THE DUE DATE OF THE RETURN
3 TO THE FEDERAL GOVERNMENT, SUBJECT IN ALL OTHER RESPECTS TO THE
4 PROVISIONS OF THIS ARTICLE.
5    (F)   IF THE CORPORATION OR ANY MEMBERS OF THE UNITARY
6 BUSINESS SHALL CLAIM IN ITS REPORT OR IN ITS COMBINED ANNUAL
7 REPORT THAT THE RETURN MADE TO THE FEDERAL GOVERNMENT WAS
8 INACCURATE, THE AMOUNT CLAIMED [BY IT] TO BE THE TAXABLE INCOME,
9 TAXABLE UNDER THIS ARTICLE, AND THE BASIS OF SUCH CLAIM OF
10 INACCURACY, SHALL BE FULLY SPECIFIED.
11    SECTION 6.   SECTIONS 403.1 AND 403.2(B) AND (E) OF THE ACT
12 ARE AMENDED TO READ:
13    SECTION 403.1.    TIMELY MAILING TREATED AS TIMELY FILING AND
14 PAYMENT.--NOTWITHSTANDING THE PROVISIONS OF ANY STATE TAX LAW TO
15 THE CONTRARY, WHENEVER A REPORT OR PAYMENT OF ALL OR ANY PORTION
16 OF A STATE TAX IS REQUIRED BY LAW TO BE RECEIVED BY THE
17 PENNSYLVANIA DEPARTMENT OF REVENUE OR OTHER AGENCY OF THE
18 COMMONWEALTH ON OR BEFORE A DAY CERTAIN, THE CORPORATION SHALL
19 BE DEEMED TO HAVE COMPLIED WITH SUCH LAW IF THE LETTER
20 TRANSMITTING THE REPORT OR PAYMENT OF SUCH TAX WHICH HAS BEEN
21 RECEIVED BY THE DEPARTMENT IS POSTMARKED BY THE UNITED STATES
22 POSTAL SERVICE ON OR PRIOR TO THE FINAL DAY ON WHICH THE PAYMENT
23 IS TO BE RECEIVED.
24    FOR THE PURPOSES OF THIS ARTICLE, PRESENTATION OF A RECEIPT
25 INDICATING THAT THE REPORT OR PAYMENT WAS MAILED BY REGISTERED
26 OR CERTIFIED MAIL ON OR BEFORE THE DUE DATE SHALL BE EVIDENCE OF
27 TIMELY FILING AND PAYMENT.
28    FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION" SHALL
29 INCLUDE A UNITARY BUSINESS.
30    SECTION 403.2.    ADDITIONAL WITHHOLDING REQUIREMENTS.--* * *
20250HB1610PN2012  - 48 -
1    (B)   A PARTNERSHIP REQUIRED TO FILE A REPORT UNDER SUBSECTION
2 (A) SHALL WITHHOLD AND PAY TO THE DEPARTMENT A TAX ON BEHALF OF
3 ITS NONFILING CORPORATE PARTNERS IN AN AMOUNT EQUAL TO ITS NET
4 NONFILING CORPORATE PARTNERS' SHARES OF INCOME AND DEDUCTIONS AS
5 REPORTED TO THE FEDERAL GOVERNMENT MULTIPLIED BY THE TAX RATE
6 APPLICABLE TO THE TAXABLE YEAR BEING REPORTED. ANY AMOUNT
7 WITHHELD AND PAID TO THE DEPARTMENT ON BEHALF OF A NONFILING
8 CORPORATE PARTNER SHALL BE CONSIDERED A TAX PAYMENT BY THAT
9 PARTNER AND CREDITED TO ITS ACCOUNT [AS IF IT WAS DIRECTLY PAID
10 BY THE PARTNER] OR THE ACCOUNT OF THE DESIGNATED MEMBER OF THE
11 UNITARY BUSINESS.
12    * * *
13    (E)   THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN THIS
14 SECTION SHALL HAVE THE MEANING ASCRIBED TO THEM IN THIS SECTION,
15 EXCEPT WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:
16    "NET NONFILING CORPORATE PARTNERS' SHARES OF INCOME AND
17 DEDUCTIONS AS REPORTED TO THE FEDERAL GOVERNMENT."        THAT PORTION
18 OF THE INCOME, LESS THE DEDUCTIONS:
19    (1)   REPORTED ON SCHEDULE K OF THE FEDERAL FORM 1065, RETURN
20 OF PARTNERSHIP INCOME, FILED WITH THE FEDERAL GOVERNMENT FOR THE
21 TAXABLE YEAR; AND
22    (2)   ALLOCATED ON FEDERAL SCHEDULE K-1 TO NONFILING CORPORATE
23 PARTNERS.
24 IF THE ENTIRE BUSINESS OF THE PARTNERSHIP IS NOT TRANSACTED IN
25 THIS COMMONWEALTH, THE AMOUNT COMPUTED UNDER THIS DEFINITION
26 SHALL BE APPORTIONED TO THIS COMMONWEALTH AS PROVIDED IN SECTION
27 401(3)2 AS IF THE PARTNERSHIP WERE A CORPORATION SUBJECT TO TAX
28 UNDER THIS ARTICLE.
29    "NONFILING CORPORATE PARTNER."      A PARTNER WHICH:
30    (1)   IS A CORPORATION AS DEFINED IN SECTION 401; AND
20250HB1610PN2012  - 49 -
1    (2)    HAS [NOT] NEITHER FILED A TAX REPORT NOR BEEN INCLUDED
2 IN A COMBINED ANNUAL REPORT AND HAS NOT PAID THE TAX REQUIRED BY
3 SECTIONS 402 AND 403 FOR THE PREVIOUS TAXABLE YEAR.
4    "PARTNER."    AN OWNER OF AN INTEREST IN THE PARTNERSHIP, IN
5 WHATEVER MANNER THAT OWNER AND OWNERSHIP INTEREST ARE
6 DESIGNATED.
7    "PARTNERSHIP."    AN ENTITY CLASSIFIED AS A PARTNERSHIP FOR
8 FEDERAL INCOME TAX PURPOSES.
9    (1)    THE TERM INCLUDES:
10    (I)    A PARTNERSHIP, LIMITED PARTNERSHIP, LIMITED LIABILITY
11 PARTNERSHIP OR LIMITED LIABILITY COMPANY; AND
12    (II)    ANY SYNDICATE, GROUP, POOL, JOINT VENTURE, BUSINESS
13 TRUST, ASSOCIATION OR OTHER UNINCORPORATED ORGANIZATION THROUGH
14 OR BY WHICH A BUSINESS, FINANCIAL OPERATION OR VENTURE IS
15 CARRIED ON.
16    (2)    THE TERM DOES NOT INCLUDE AN ENTITY THAT IS:
17    (I)    LISTED ON A UNITED STATES NATIONAL STOCK EXCHANGE; OR
18    (II)    DESCRIBED IN SECTION 401(1)1 OR 2.
19    SECTION 7.    SECTION 404 OF THE ACT IS REPEALED:
20    [SECTION 404.    CONSOLIDATED REPORTS.--THE DEPARTMENT SHALL
21 NOT PERMIT ANY CORPORATION OWNING OR CONTROLLING, DIRECTLY OR
22 INDIRECTLY, ANY OF THE VOTING CAPITAL STOCK OF ANOTHER
23 CORPORATION OR OF OTHER CORPORATIONS, SUBJECT TO THE PROVISIONS
24 OF THIS ARTICLE, TO MAKE A CONSOLIDATED REPORT, SHOWING THE
25 COMBINED NET INCOME.]
26    SECTION 8.    SECTION 405 OF THE ACT IS AMENDED TO READ:
27    SECTION 405.    EXTENSION OF TIME TO FILE REPORTS.--THE
28 DEPARTMENT MAY, UPON APPLICATION MADE TO IT, IN SUCH FORM AS IT
29 SHALL PRESCRIBE, ON OR PRIOR TO THE LAST DAY FOR FILING ANY
30 ANNUAL REPORT, AND UPON PROPER CAUSE SHOWN, GRANT TO THE
20250HB1610PN2012  - 50 -
1 CORPORATION, REQUIRED TO FILE SUCH REPORT, AN EXTENSION OF NOT
2 MORE THAN SIXTY DAYS WITHIN WHICH SUCH REPORT MAY BE FILED. IF
3 THE FEDERAL INCOME TAX AUTHORITIES GRANT AN EXTENSION OF TIME
4 FOR FILING THE REPORTS WITH THE FEDERAL GOVERNMENT, THE
5 DEPARTMENT SHALL AUTOMATICALLY GRANT AN EXTENSION OF TIME FOR
6 FILING THE ANNUAL REPORT UNDER THIS ARTICLE UNTIL THE FIFTEENTH
7 DAY OF THE MONTH FOLLOWING THE TERMINATION OF THE FEDERAL
8 EXTENSION, BUT THE AMOUNT OF TAX DUE SHALL, IN SUCH CASES,
9 NEVERTHELESS, BE SUBJECT TO INTEREST FROM THE DUE DATES AND AT
10 THE RATES FIXED BY THIS ARTICLE. FOR PURPOSES OF THIS SECTION
11 THE TERM "REPORT," WHEN USED IN THE CONTEXT OF FILINGS WITH THE
12 DEPARTMENT, SHALL INCLUDE COMBINED ANNUAL REPORTS AND THE TERM
13 "CORPORATION" SHALL INCLUDE A UNITARY BUSINESS.
14    SECTION 9.   SECTION 406(E) OF THE ACT IS AMENDED AND THE
15 SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:
16    SECTION 406.   CHANGES MADE BY FEDERAL GOVERNMENT.--* * *
17    (E)   THE PROVISIONS OF THIS SECTION SHALL APPLY TO EVERY
18 CORPORATION WHICH WAS DOING BUSINESS IN PENNSYLVANIA IN THE YEAR
19 FOR WHICH THE FEDERAL INCOME HAS BEEN CHANGED, IRRESPECTIVE OF
20 WHETHER OR NOT SUCH CORPORATION OR ANY MEMBER OF A UNITARY
21 BUSINESS HAS THEREAFTER MERGED, CONSOLIDATED, WITHDRAWN OR
22 DISSOLVED. ANY CLEARANCE CERTIFICATE ISSUED BY THE DEPARTMENT
23 SHALL BE CONDITIONED UPON THE REQUIREMENT THAT IN THE EVENT OF A
24 CHANGE IN FEDERAL INCOME FOR ANY YEAR FOR WHICH TAXES HAVE BEEN
25 PAID TO THE COMMONWEALTH, THE CORPORATION OR ITS SUCCESSOR OR
26 ITS OFFICERS OR ITS DIRECTORS SHALL FILE WITH THE DEPARTMENT A
27 REPORT OF CHANGE AND PAY ANY ADDITIONAL STATE TAX RESULTING
28 THEREFROM.
29    (F)   FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION"
30 SHALL INCLUDE A UNITARY BUSINESS.
20250HB1610PN2012  - 51 -
1    SECTION 10.    SECTIONS 407.3(F), 407.6(A)(5), (6) AND (8) AND
2 407.7(D)(3) OF THE ACT ARE AMENDED TO READ:
3    SECTION 407.3.    LIMITATIONS ON ASSESSMENTS.--* * *
4    (F)    FOR PURPOSES OF THIS SECTION[,]:
5    (1)    A REPORT FILED BEFORE THE LAST DAY PRESCRIBED FOR FILING
6 SHALL BE DEEMED TO HAVE BEEN FILED ON THE LAST DAY[.]; AND
7    (2)    THE TERM "REPORT" SHALL INCLUDE COMBINED ANNUAL REPORTS.
8    SECTION 407.6.    DEFINITIONS.--(A)   FOR THE PURPOSES OF THIS
9 PART ONLY, THE FOLLOWING WORDS, TERMS AND PHRASES SHALL HAVE THE
10 MEANING ASCRIBED TO THEM IN THIS SUBSECTION, EXCEPT WHERE THE
11 CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:
12    * * *
13    (5)    "QUALIFIED MANUFACTURING INNOVATION AND REINVESTMENT
14 DEDUCTION."   AN ALLOWABLE DEDUCTION AS DETERMINED, CALCULATED
15 AND EXECUTED IN A COMMITMENT LETTER BETWEEN THE DEPARTMENT AND
16 THE TAXPAYER. THE DEDUCTION SHALL BE APPLIED TO THE TAXABLE
17 INCOME OF THE TAXPAYER TO REDUCE A QUALIFIED TAX LIABILITY OF
18 THE TAXPAYER FOLLOWING THE ALLOCATION AND APPORTIONMENT OF THE
19 INCOME OF THE TAXPAYER. IF THE TAXPAYER IS A UNITARY BUSINESS
20 FILING A COMBINED ANNUAL RETURN, THE DEDUCTION SHALL BE APPLIED
21 TO THE SPECIFIC MEMBER OF THE UNITARY BUSINESS WHICH QUALIFIES
22 UNDER THIS PART. SUCH MEMBER SHALL REDUCE TAXABLE INCOME
23 FOLLOWING ALLOCATION AND THE APPORTIONMENT OF THE COMBINED
24 UNITARY INCOME OF THE UNITARY BUSINESS, AS DETERMINED ON A
25 WATER'S-EDGE BASIS, AND THE APPLICATION OF ANY NET LOSS OF THE
26 MEMBER.
27    (6)    "QUALIFIED TAX LIABILITY."    A TAXPAYER'S TAX LIABILITY
28 UNDER THIS ARTICLE. IN THE CASE OF A UNITARY BUSINESS, THE TERM
29 ONLY INCLUDES THE PORTION OF THE UNITARY BUSINESS'S OVERALL TAX
30 LIABILITY UNDER THIS ARTICLE ASSOCIATED WITH THE TAXABLE MEMBER
20250HB1610PN2012  - 52 -
1 QUALIFIED TO RECEIVE THE DEDUCTION UNDER THIS PART.
2    * * *
3    (8)     "TAXPAYER."    AN EMPLOYER SUBJECT TO THE TAX UNDER THIS
4 ARTICLE. FOR PURPOSES OF THIS DEFINITION, AN EMPLOYER SHALL
5 INCLUDE A MEMBER OF A UNITARY BUSINESS.
6    * * *
7    SECTION 407.7.       MANUFACTURING INNOVATION AND REINVESTMENT
8 DEDUCTION.--* * *
9    (D)     * * *
10    (3)     (I)     A TAXPAYER CANNOT USE THE DEDUCTION TO REDUCE THE
11 TAXPAYER'S TAX LIABILITY BY MORE THAN FIFTY PER CENT OF THE TAX
12 LIABILITY UNDER THIS ARTICLE FOR THE TAXABLE YEAR. FOR A UNITARY
13 BUSINESS, THE LIMITATION SHALL APPLY TO THE PORTION OF THE TAX
14 LIABILITY OF THE UNITARY BUSINESS UNDER THIS ARTICLE ASSOCIATED
15 WITH THE TAXABLE MEMBER WHICH QUALIFIES FOR THE DEDUCTION UNDER
16 THIS SECTION.
17    (II)     THE DEDUCTION IS NONTRANSFERABLE AND ANY UNUSED PORTION
18 IN A TAX YEAR SHALL EXPIRE AT THE END OF THE CORRESPONDING TAX
19 YEAR.
20    SECTION 11.       SECTION 408 OF THE ACT IS AMENDED BY ADDING A
21 SUBSECTION TO READ:
22    SECTION 408.       ENFORCEMENT; RULES AND REGULATIONS;
23 INQUISITORIAL POWERS OF THE DEPARTMENT.--* * *
24    (E)     AS USED IN THIS SECTION, THE TERM "CORPORATION" SHALL
25 INCLUDE A UNITARY BUSINESS.
26    SECTION 12.       SECTIONS 409 AND 410(C) OF THE ACT ARE AMENDED
27 TO READ:
28    SECTION 409.       RETENTION OF RECORDS.--EACH CORPORATION SHALL
29 MAINTAIN AND KEEP FOR A PERIOD OF THREE YEARS AFTER ANY REPORT
30 IS FILED UNDER THIS ARTICLE, SUCH RECORD OR RECORDS OF ITS
20250HB1610PN2012  - 53 -
1 BUSINESS WITHIN THIS COMMONWEALTH FOR THE PERIOD COVERED BY SUCH
2 REPORT AND OTHER PERTINENT PAPERS, AS MAY BE REQUIRED BY THE
3 DEPARTMENT. FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION"
4 SHALL INCLUDE A UNITARY BUSINESS.
5    SECTION 410.     PENALTIES.--* * *
6    (C)   ANY PERSON, WHO WILFULLY FAILS, NEGLECTS, OR REFUSES TO
7 MAKE A REPORT OR TO PAY THE TAX AS HEREIN PRESCRIBED, OR WHO
8 SHALL REFUSE TO PERMIT THE DEPARTMENT TO EXAMINE THE BOOKS,
9 PAPERS, AND RECORDS OF ANY CORPORATION LIABLE TO PAY TAX UNDER
10 THIS ARTICLE, SHALL BE GUILTY OF A MISDEMEANOR, AND, UPON
11 CONVICTION THEREOF, SHALL BE SENTENCED TO PAY A FINE NOT
12 EXCEEDING ONE THOUSAND DOLLARS ($1,000) AND COSTS OF
13 PROSECUTION, OR TO UNDERGO IMPRISONMENT NOT EXCEEDING SIX
14 MONTHS, OR BOTH. SUCH PENALTY SHALL BE IN ADDITION TO ANY OTHER
15 PENALTIES IMPOSED BY THIS ARTICLE. FOR PURPOSES OF THIS
16 SUBSECTION, THE TERM "CORPORATION" SHALL INCLUDE A UNITARY
17 BUSINESS.
18    SECTION 12.1.    THE DEFINITION OF "TAX CREDIT" IN SECTION
19 1701-A.1 OF THE ACT IS AMENDED BY ADDING A PARAGRAPH TO READ:
20 SECTION 1701-A.1.    DEFINITIONS.
21    THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
22 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
23 CONTEXT CLEARLY INDICATES OTHERWISE:
24    * * *
25    "TAX CREDIT."    A TAX CREDIT AUTHORIZED UNDER ANY OF THE
26 FOLLOWING:
27* * *
28(14.2)   ARTICLE XVIII-I.
29* * *
30    SECTION 13.    THE ACT IS AMENDED BY ADDING A SECTION TO READ:
20250HB1610PN2012  - 54 -
1 SECTION 1710-A.1.    APPLICATION OF TAX CREDITS OR TAX BENEFITS TO
2A UNITARY BUSINESS.
3    FOR PURPOSES OF DETERMINING THE AMOUNT OF TAX CREDIT OR TAX
4 BENEFIT WHICH IS APPLICABLE TO THE TAX DUE BY A UNITARY BUSINESS
5 UNDER ARTICLE IV, ANY TAX CREDIT OR TAX BENEFIT AWARDED TO OR
6 CONFERRED UPON A CORPORATION WHICH IS A MEMBER OF A UNITARY
7 BUSINESS SHALL BE CALCULATED AS IF THAT MEMBER IS A SEPARATE
8 COMPANY AND CAN ONLY BE APPLIED AGAINST THAT PORTION OF THE
9 UNITARY BUSINESS'S ANNUAL TAX LIABILITY ASSOCIATED WITH THAT
10 MEMBER WHICH RECEIVES THE TAX CREDIT OR TAX BENEFIT. FOR
11 PURPOSES OF THIS ARTICLE, THE TERM "UNITARY BUSINESS" SHALL HAVE
12 THE SAME MEANING AS IN SECTION 401(13) AND THE TERM "MEMBER"
13 SHALL HAVE THE SAME MEANING AS IN SECTION 401(17).
14    SECTION 13.1.    THE ACT IS AMENDED BY ADDING AN ARTICLE TO
15 READ:
16ARTICLE XVIII-I
17WORKING PENNSYLVANIANS TAX CREDIT
18 SECTION 1801-I.    SCOPE OF ARTICLE.
19    THIS ARTICLE RELATES TO THE WORKING PENNSYLVANIANS TAX
20 CREDIT.
21 SECTION 1802-I.    DEFINITIONS.
22    THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
23 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
24 CONTEXT CLEARLY INDICATES OTHERWISE:
25    "DEPARTMENT."    THE DEPARTMENT OF REVENUE OF THE COMMONWEALTH.
26    "FEDERAL EARNED INCOME TAX CREDIT."       THE EARNED INCOME TAX
27 CREDIT PROVIDED UNDER 26 U.S.C. § 32 (RELATING TO EARNED
28 INCOME).
29    "QUALIFIED TAXPAYER."    A TAXPAYER ELIGIBLE TO RECEIVE A TAX
30 CREDIT UNDER SECTION 1804-I.
20250HB1610PN2012  - 55 -
1    "TAX CREDIT."     THE WORKING PENNSYLVANIANS TAX CREDIT PROVIDED
2 UNDER THIS ARTICLE.
3    "TAX LIABILITY."    TAX LIABILITY UNDER ARTICLE III.
4    "TAXPAYER."    AN INDIVIDUAL SUBJECT TO THE TAX UNDER ARTICLE
5 III.
6 SECTION 1803-I.    WORKING PENNSYLVANIANS TAX CREDIT.
7    (A)   APPLICATION OF TAX CREDIT.--A QUALIFIED TAXPAYER MAY
8 APPLY THE TAX CREDIT AGAINST THE QUALIFIED TAXPAYER'S TAX
9 LIABILITY.
10    (B)   SPOUSES WHO FILE SEPARATELY.--IN THE CASE OF SPOUSES WHO
11 ARE BOTH ELIGIBLE TO RECEIVE THE TAX CREDIT AND WHO FILE A JOINT
12 FEDERAL TAX RETURN BUT WHO ELECT TO DETERMINE THEIR TAXES
13 SEPARATELY, THE TAX CREDIT MAY ONLY BE USED BY THE SPOUSE WITH
14 THE GREATER TAX OTHERWISE DUE, COMPUTED WITHOUT REGARD TO THE
15 TAX CREDIT.
16    (C)   AMOUNT OF TAX CREDIT.--THE TAX CREDIT SHALL BE EQUAL TO
17 30% OF THE FEDERAL EARNED INCOME TAX CREDIT RECEIVED BY THE
18 TAXPAYER FOR THE SAME TAXABLE YEAR.
19    (D)   CREDIT REFUNDABLE.--IF THE AMOUNT OF CREDIT WHICH THE
20 QUALIFIED TAXPAYER IS ELIGIBLE TO RECEIVE UNDER THIS SECTION
21 EXCEEDS THE QUALIFIED TAXPAYER'S TAX LIABILITY, THE DEPARTMENT
22 SHALL REFUND THE EXCESS AMOUNT TO THE QUALIFIED TAXPAYER.
23 SECTION 1804-I.    ELIGIBILITY.
24    A TAXPAYER IS ELIGIBLE TO RECEIVE A TAX CREDIT IF THE
25 TAXPAYER CLAIMED THE FEDERAL EARNED INCOME TAX CREDIT DURING THE
26 SAME TAXABLE YEAR.
27 SECTION 1805-I.    REGULATIONS.
28    (A)   RULES AND REGULATIONS.--THE DEPARTMENT MAY PROMULGATE
29 RULES AND REGULATIONS TO ADMINISTER AND ENFORCE THIS ARTICLE.
30    (B)   GUIDELINES.--THE DEPARTMENT MAY DEVELOP WRITTEN
20250HB1610PN2012  - 56 -
1 GUIDELINES FOR THE IMPLEMENTATION OF THIS ARTICLE. THE
2 GUIDELINES SHALL BE IN EFFECT UNTIL THE DEPARTMENT PROMULGATES
3 RULES AND REGULATIONS FOR THE IMPLEMENTATION OF THE PROVISIONS
4 OF THIS ARTICLE.
5 SECTION 1806-I.    APPLICABILITY.
6    THIS ARTICLE SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER
7 DECEMBER 31, 2024.
8    SECTION 14.     SECTION 3003.2(B)(2) AND (4.3) AND (C)(1) OF THE
9 ACT ARE AMENDED AND SUBSECTION (A) IS AMENDED BY ADDING A
10 PARAGRAPH TO READ:
11    SECTION 3003.2.     ESTIMATED TAX.--(A)   THE FOLLOWING TAXPAYERS
12 ARE REQUIRED TO PAY ESTIMATED TAX:
13    * * *
14    (1.1)   EVERY UNITARY BUSINESS SUBJECT TO THE CORPORATE NET
15 INCOME TAX IMPOSED BY ARTICLE IV, COMMENCING WITH THE CALENDAR
16 YEAR 2026 AND FISCAL YEARS BEGINNING DURING THE CALENDAR YEAR
17 2026 AND EACH TAXABLE YEAR THEREAFTER, SHALL MAKE PAYMENTS OF
18 ESTIMATED CORPORATE NET INCOME TAX.
19    * * *
20    (B)   THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN THIS
21 SECTION AND SECTION 3003.3 SHALL HAVE THE FOLLOWING MEANINGS
22 ASCRIBED TO THEM:
23    * * *
24    (2)   "ESTIMATED CORPORATE NET INCOME TAX."    THE AMOUNT WHICH
25 THE CORPORATION OR THE UNITARY BUSINESS ESTIMATES AS THE AMOUNT
26 OF TAX IMPOSED BY SECTION 402 OF ARTICLE IV FOR THE TAXABLE
27 YEAR.
28    * * *
29    (4.3)   "PERSON."   ANY NATURAL PERSON, ASSOCIATION, FIDUCIARY,
30 PARTNERSHIP, CORPORATION, UNITARY BUSINESS OR OTHER ENTITY,
20250HB1610PN2012  - 57 -
1 INCLUDING THE COMMONWEALTH, ITS POLITICAL SUBDIVISIONS AND
2 INSTRUMENTALITIES AND PUBLIC AUTHORITIES. WHENEVER USED IN ANY
3 CLAUSE PRESCRIBING AND IMPOSING A PENALTY OR IMPOSING A FINE OR
4 IMPRISONMENT, OR BOTH, THE TERM "PERSON," AS APPLIED TO AN
5 ASSOCIATION, SHALL INCLUDE THE MEMBERS THEREOF [AND], AS APPLIED
6 TO A CORPORATION, THE OFFICERS THEREOF AND AS APPLIED TO A
7 UNITARY BUSINESS, THE OFFICERS OF THE DESIGNATED MEMBER.
8    * * *
9    (C)    ESTIMATED TAX SHALL BE PAID AS FOLLOWS:
10    (1)    PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX SHALL BE
11 MADE IN EQUAL INSTALLMENTS ON OR BEFORE THE FIFTEENTH DAY OF THE
12 THIRD, SIXTH, NINTH AND TWELFTH MONTHS OF THE TAXABLE YEAR. THE
13 REMAINING PORTION OF THE CORPORATE NET INCOME TAX DUE, IF ANY,
14 SHALL BE PAID UPON THE DATE THE CORPORATION'S ANNUAL REPORT OR
15 THE UNITARY BUSINESS'S COMBINED ANNUAL REPORT IS REQUIRED TO BE
16 FILED WITHOUT REFERENCE TO ANY EXTENSION OF TIME FOR FILING SUCH
17 REPORT.
18    * * *
19    SECTION 15.   SECTION 3003.3(D) OF THE ACT IS AMENDED AND THE
20 SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:
21    SECTION 3003.3.   UNDERPAYMENT OF ESTIMATED TAX.--* * *
22    (D)    NOTWITHSTANDING THE PROVISIONS OF [THE PRECEDING
23 SUBSECTIONS,] THIS SECTION, OTHER THAN AS SET FORTH IN
24 SUBSECTION (D.1), INTEREST WITH RESPECT TO ANY UNDERPAYMENT OF
25 ANY INSTALLMENT OF ESTIMATED TAX SHALL NOT BE IMPOSED IF THE
26 TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX MADE ON OR BEFORE
27 THE LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT
28 EQUALS OR EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO
29 BE PAID ON OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN
30 AMOUNT EQUAL TO THE TAX COMPUTED AT THE RATES APPLICABLE TO THE
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1 TAXABLE YEAR, INCLUDING ANY MINIMUM TAX IMPOSED, BUT OTHERWISE
2 ON THE BASIS OF THE FACTS SHOWN ON THE REPORT OF THE TAXPAYER
3 FOR, AND THE LAW APPLICABLE TO, THE SAFE HARBOR BASE YEAR,
4 ADJUSTED FOR ANY CHANGES TO SECTIONS 401, 601, 602 AND 1101
5 ENACTED FOR THE TAXABLE YEAR, IF A REPORT SHOWING A LIABILITY
6 FOR TAX WAS FILED BY THE TAXPAYER FOR THE SAFE HARBOR BASE YEAR.
7 IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX MADE ON OR
8 BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH
9 INSTALLMENT DOES NOT EQUAL OR EXCEED THE AMOUNT REQUIRED TO BE
10 PAID PER THE PRECEDING SENTENCE, BUT SUCH AMOUNT IS PAID AFTER
11 THE DATE THE INSTALLMENT WAS REQUIRED TO BE PAID, THEN THE
12 PERIOD OF UNDERPAYMENT SHALL RUN FROM THE DATE THE INSTALLMENT
13 WAS REQUIRED TO BE PAID TO THE DATE THE AMOUNT REQUIRED TO BE
14 PAID PER THE PRECEDING SENTENCE IS PAID. PROVIDED, THAT IF THE
15 TOTAL TAX FOR THE SAFE HARBOR BASE YEAR EXCEEDS THE TAX SHOWN ON
16 SUCH REPORT BY TEN PER CENT OR MORE, THE TOTAL TAX ADJUSTED TO
17 REFLECT THE CURRENT TAX RATE SHALL BE USED FOR PURPOSES OF THIS
18 SUBSECTION. IN THE EVENT THAT THE TOTAL TAX FOR THE SAFE HARBOR
19 BASE YEAR EXCEEDS THE TAX SHOWN ON THE REPORT BY TEN PER CENT OR
20 MORE, INTEREST RESULTING FROM THE UTILIZATION OF SUCH TOTAL TAX
21 IN THE APPLICATION OF THE PROVISIONS OF THIS SUBSECTION SHALL
22 NOT BE IMPOSED IF, WITHIN FORTY-FIVE DAYS OF THE MAILING DATE OF
23 EACH ASSESSMENT, PAYMENTS ARE MADE SUCH THAT THE TOTAL AMOUNT OF
24 ALL PAYMENTS OF ESTIMATED TAX EQUALS OR EXCEEDS THE AMOUNT WHICH
25 WOULD HAVE BEEN REQUIRED TO BE PAID ON OR BEFORE SUCH DATE IF
26 THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO THE TOTAL TAX ADJUSTED
27 TO REFLECT THE CURRENT TAX RATE. IN ANY CASE IN WHICH THE
28 TAXABLE YEAR FOR WHICH AN UNDERPAYMENT OF ESTIMATED TAX MAY
29 EXIST IS A SHORT TAXABLE YEAR, IN DETERMINING THE TAX SHOWN ON
30 THE REPORT OR THE TOTAL TAX FOR THE SAFE HARBOR BASE YEAR, THE
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1 TAX WILL BE REDUCED BY MULTIPLYING IT BY THE RATIO OF THE NUMBER
2 OF INSTALLMENT PAYMENTS MADE IN THE SHORT TAXABLE YEAR TO THE
3 NUMBER OF INSTALLMENT PAYMENTS REQUIRED TO BE MADE FOR THE FULL
4 TAXABLE YEAR.
5    (D.1)   WITH RESPECT TO ANY UNDERPAYMENT OF AN INSTALLMENT OF
6 ESTIMATED CORPORATE NET INCOME TAX FOR ANY TAX YEAR THAT BEGINS
7 IN TAXABLE YEAR 2026 OR 2027 BY A CORPORATION REQUIRED TO FILE A
8 COMBINED ANNUAL REPORT PURSUANT TO SECTION 403(A.1)(1), INTEREST
9 SHALL NOT BE IMPOSED IF THE TOTAL AMOUNT OF ALL PAYMENTS OF
10 ESTIMATED CORPORATE NET INCOME TAX MADE ON OR BEFORE THE LAST
11 DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT EQUALS OR
12 EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO BE PAID ON
13 OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO
14 THE COMBINED TAX SHOWN ON THE REPORTS OF ALL THE MEMBERS OF THE
15 UNITARY BUSINESS FOR THE SAFE HARBOR BASE YEAR COMPUTED AT THE
16 RATE APPLICABLE TO THE TAXABLE YEAR.
17    SECTION 16.   SECTION 3003.11 OF THE ACT IS AMENDED TO READ:
18    SECTION 3003.11.   RESTATEMENT OF TAX LIABILITY UNDER
19 TREATIES.--IN THE ABSENCE OF AN EXPRESS EXEMPTION FROM STATE
20 INCOME TAXES, NO TREATY OF THE FEDERAL GOVERNMENT SHALL BE
21 CONSTRUED TO EXEMPT A CORPORATION OR A MEMBER OF A UNITARY
22 BUSINESS FROM THE TAXES IMPOSED UNDER ARTICLES IV AND VI. FOR
23 PURPOSES OF DETERMINING "TAXABLE INCOME" UNDER ARTICLE IV, ANY
24 CORPORATION OR MEMBER OF A UNITARY BUSINESS NOT SUBJECT TO
25 FEDERAL INCOME TAXATION OR FEDERAL REPORTING REQUIREMENTS
26 PURSUANT TO SUCH A TREATY SHALL BE REQUIRED TO FILE A REPORT OR
27 FILE AS PART OF A COMBINED ANNUAL REPORT WITH THE DEPARTMENT
28 SHOWING THE TAXABLE INCOME WHICH WOULD HAVE BEEN REPORTED TO AND
29 ASCERTAINED BY THE FEDERAL GOVERNMENT HAD IT NOT BEEN EXEMPTED
30 BY THE TREATY.
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1  SECTION 17.   THIS ACT SHALL APPLY AS FOLLOWS:
2      (1)   THE AMENDMENT OR ADDITION OF SECTION 314(A) AND (C)
3  SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31,
4  2021.
5      (2)   THE FOLLOWING PROVISIONS OF THE ACT SHALL APPLY TO
6  TAX YEARS BEGINNING ON AND AFTER JANUARY 1, 2026:
7THE AMENDMENT OF SECTION 301.
8THE ADDITION OF SECTION 357.1.
9THE AMENDMENT OR ADDITION OF SECTION 401(3)1(A) AND
10      (B), (P.1) AND (T)(5), 2(A)(1)(E.1), 2(A)(9)(A)(VI) AND
11      2(A)(17)(E) AND 4(H) AND (I), (5), (12), (13), (14),
12      (15), (16), (17), (18) AND (19).
13THE ADDITION OF SECTION 401.1(F).
14THE AMENDMENT OR ADDITION OF SECTIONS 402(A)
15      INTRODUCTORY PARAGRAPH AND (5)(III), (B) AND (D) AND
16      403(A.1), (A.2), (B.1), (C), (D), (E.1) AND (F).
17THE AMENDMENT OF SECTIONS 403.1 AND 403.2(B) AND (E).
18THE REPEAL OF SECTION 404.
19THE AMENDMENT OF SECTION 405.
20THE AMENDMENT OR ADDITION OF SECTION 406(E) AND (F).
21THE AMENDMENT OF SECTIONS 407.3(F), 407.6(A)(5), (6)
22      AND (8) AND 407.7(D)(3).
23THE ADDITION OF SECTION 408(E).
24THE AMENDMENT OF SECTIONS 409 AND 410(C).
25THE ADDITION OF SECTION 1710-A.1.
26THE AMENDMENT OR ADDITION OF SECTION 3003.2(A)(1.1),
27      (B)(2) AND (4.3) AND (C)(1).
28THE AMENDMENT OR ADDITION OF SECTION 3003.3(D) AND
29      (D.1).
30THE AMENDMENT OF SECTION 3003.11.
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1   SECTION 18.   THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
2(1)   THE FOLLOWING SHALL TAKE EFFECT IMMEDIATELY:
3THIS SECTION.
4THE AMENDMENT OR ADDITION OF SECTION 314(A) AND (C).
5THE AMENDMENT OF THE DEFINITION OF "TAX CREDIT" IN
6SECTION 1701-A.1.
7THE ADDITION OF ARTICLE XVIII-I.
8(2)   THE REMAINDER OF THIS ACT SHALL TAKE EFFECT JANUARY
9   1, 2026, OR IMMEDIATELY, WHICHEVER IS LATER.
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